0000915912avb:AvalonMerrickParkMemberavb:DevelopmentCommunitiesMember2022-12-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172023
OR
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ______
Commission file numbernumber: 1-12672
AVALONBAY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
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| Maryland | | 77-0404318 |
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Maryland | | 77-0404318 |
| (State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
Ballston Tower
671 N. Glebe Rd,4040 Wilson Blvd., Suite 8001000
Arlington, Virginia 22203
(Address of principal executive offices, including zipoffices) (Zip code)
(703) 329-6300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
| | |
(Title of each class)class | Trading Symbol (s) | (Name of each exchange on which registered)registered |
Common Stock, par value $.01$0.01 per share | | AVB | | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No ý
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)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 90 days.
Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý No o
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. ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer ýAccelerated filer o | | | | | | | | | | | | | | | | | | | | |
| Large accelerated filer | ☒ | | Accelerated filer | ☐ | |
| Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | |
| | | | Emerging growth company | ☐ | |
Non-accelerated filer (Do not check if a smaller reporting company) oSmaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o☐ No ý
The aggregate market value of the registrant's Common Stock, par value $.01 per share, held by nonaffiliates of the registrant, as of June 30, 20172023 was $26,425,741,640.$26,794,136,352.
The number of shares of the registrant's Common Stock, par value $.01 per share, outstanding as of January 31, 20182024 was 138,095,504.142,025,313.
Documents Incorporated by Reference
Portions of AvalonBay Communities, Inc.'s Proxy Statement for the 20182024 annual meeting of stockholders, a definitive copy of which will be filed with the SECSecurities and Exchange Commission 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
PART I
This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934.1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 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” included in this Form 10-K. You should also review Item 1A. “Risk Factors” for a discussion of various risks that could adversely affect us.
ITEM 1. BUSINESS
General
AvalonBay Communities, Inc. (the “Company,” “we,” “our” and “us” which term,terms, unless the context otherwise requires, refersrefer to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes. We develop, redevelop, acquire, own and operate multifamily apartment communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California.California, as well as in our expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado. We focus on leading metropolitan areas in these regions that we believe are generally characterized by growing employment in high wage sectors of the economy, higher cost of home ownership and a diverse and vibrant quality of life. We believe these market characteristics have offered, and will continue to offer, the opportunity for superior risk-adjusted returns over the long-term on apartment community investments relative to other markets that do not have these characteristics.
At January 31, 2018,2024, we owned or held a direct or indirect ownership interest in:
267•279 operating apartment communities containing 77,61483,655 apartment homes in 12 states and the District of Columbia, of which 256271 communities containing 74,99881,408 apartment homes were consolidated for financial reporting purposes fiveand eight communities containing 1,5392,247 apartment homes were held by joint venturesunconsolidated entities in which we hold an ownership interest,interest.
•19 wholly-owned development apartment communities that are under construction or completed and six communities containing 1,077 apartment homes were owned by Archstone Multifamily Partners AC LP (the “U.S. Fund”). Nine of the consolidated communities containing 3,752 apartment homes were under redevelopment, as discussed below;
21 communities under development thatin lease-up and are expected to contain an aggregate of 6,5446,539 apartment homes when completed and one ofunconsolidated investment which holds an apartment community under development and is expected to contain 265475 apartment homes is being developed through a joint venture; and
when completed.
rights•Rights to develop an additional 2930 communities that, if developed as expected, will contain 9,49610,801 apartment homes.
We generally obtain ownership in an apartment community by developing a new community on either vacant land or land with improvements that we raze, or by acquiring an existing community. In selecting sites for development or acquisition, we favor locations that are near expanding employment centers and convenient to transportation, recreation areas, entertainment, shopping and dining.
Our consolidated real estate investments consist of the following reportable segments: Established Communities, Other Stabilized Communities and Development/Redevelopment Communities.
Established Communities are generally operating communities that were owned and had stabilized occupancy as of the beginning of the prior year such that year-over-year comparisons are meaningful. Other Stabilized Communities are generally all other operating communities that have stabilized occupancy during the current year, but that were not owned or had not achieved stabilization as of the beginning of the prior year such that year-over-year comparisons are not meaningful, as well as communities that are planned for disposition during the current year. Development/Redevelopment Communities consist of communities that are under construction, communities where substantial redevelopment is in progress or is planned to begin during the current year and communities under lease-up. A more detailed description of these segments and other related information can be found in Note 8, “Segment Reporting,” of the Consolidated Financial Statements set forth in Item 8 of this report.
Our principal financial goal is to increase long-term shareholder value through the development, redevelopment, acquisition, ownership, operation and asset management and, when appropriate, disposition of apartment communities in our markets. To help meet this goal, we regularly (i) monitor our investment allocation by geographic market and product type, (ii) develop, redevelop and acquire interests in apartment communities in our selected markets, (iii) efficiently operate our communities to maximize resident satisfaction and shareholder return, (iv) selectively sell apartment communities that no longer meet our long-term strategy or when opportunities are presented to realize a portion of the value created through our investment and redeploy the proceeds from those sales and (iv) endeavor to(v) maintain a capital structure that we believe is aligned with our business risks with a viewand allows us to maintainingmaintain continuous access to cost-effective capital. We pursuealso seek to generate additional shareholder value from investments in other real estate-related ventures, including through the Structured Investment Program (“SIP”), our development, redevelopment, investment and operating activities with the purpose of Creating a Better Wayplatform to Live. Our strategic vision isprovide mezzanine loans or preferred equity to be the leading apartment company in select US markets, providing a range of distinctive living experiences that customers value. We pursue this vision by targeting what we believe are among the best markets and submarkets, leveraging our strategic capabilities in market research and consumer insight and being disciplinedthird-party multifamily developers in our capital allocation and balance sheet management.existing regions. We operate our apartment communities under three core brands Avalon, AVA and Eaves by Avalon, described in Item 2. "Communities." We pursueundertake our development and redevelopment activities primarily through in-house development and in-house redevelopment teams, which are complemented byand buy and dispose of assets through our in-house acquisitioninvestments platform. We believe that our organizational structure, which includes dedicated development and operational teams, in each of our regions, and strong culture are key differentiators, providingdifferentiators. We pursue our development, redevelopment, investment and operating activities with the purpose of “Creating a Better Way to Live.”
We seek to be a leading apartment company in select U.S. markets that are characterized by growing employment in high wage sectors of the economy, higher home prices and a diverse and vibrant quality of life. From an operating perspective, we seek to deliver seamless, personalized experiences for our residents on an efficient and effective basis by our resident-focused on-site associates that are supported by our centralized shared services operating organization and flexible technology platform that incorporates automation and artificial intelligence. We operate our apartment communities under four core brands:
•Avalon, our core “Avalon” brand, focuses on upscale apartment living and high end amenities and services;
•AVA targets customers in high energy, transit-served neighborhoods and generally feature smaller apartments, many of which are designed for roommate living, and a variety of active common spaces that encourage socialization;
•eaves by Avalon is targeted to the cost conscious, “value” segment primarily in suburban areas; and
•Kanso is designed to create an apartment living experience that offers simplicity without sacrifice at a more moderate price point, featuring high-quality apartment homes, limited-to-no community amenities and a low-touch, largely self- service operating model that leverages technology and smart access.
We believe that this branding differentiation allows us with highly talented, dedicatedto target our product offerings to multiple customer groups and capable associates.submarkets within our existing geographic footprint.
During the three years ended December 31, 2017, we 2023, we:
•acquired eight apartment communities and disposed of 1614 apartment communities, excluding activity for unconsolidated investments, inclusiveinvestments;
•disposed of the Funds (as defined below). During the three years ended December 31, 2017, we completed the development of 3522 apartment communities, and the redevelopment of 21 apartment communities.excluding unconsolidated investments;
On February 27, 2013, pursuant to an asset purchase agreement dated November 26, 2012, the Company, together with Equity Residential, acquired, directly or indirectly, all of the assets owned by Archstone Enterprise LP (“Archstone,” which has since changed its name to Jupiter Enterprise LP), including all of the ownership interests in joint ventures and other entities owned by Archstone, and assumed Archstone’s liabilities, both known and unknown, with certain limited exceptions. Under the terms of the purchase agreement, the Company acquired approximately 40.0% of Archstone's assets and liabilities and Equity Residential acquired approximately 60.0% of Archstone’s assets and liabilities (the “Archstone Acquisition”).
In March 2005, we formed AvalonBay Value Added Fund, L.P. (“Fund I”), a private discretionary real estate investment vehicle, which we managed and in which we owned a 15.2% interest. Fund I acquired communities with the objective of either redeveloping or repositioning them, or taking advantage of market cycle timing and improved operating performance. From its inception in 2005 through the close of its investment period in 2008, Fund I acquired 20 communities. Fund I disposed of the last of its communities in 2014, and was dissolved in 2015.
In September 2008, we formed AvalonBay Value Added Fund II, L.P. (“Fund II”), a second private discretionary real estate investment fund which we manage and in which we own a 31.3% interest. From the commencement of Fund II in 2008 through the close of its investment period in 2011, Fund II acquired 13 operating communities. During the three years ended December 31, 2017, we •realized our pro rata share of the gain from the sale of 10five communities owned by Fund II. During 2017, Fund II sold its finalunconsolidated real estate entities; and
•completed the development of 21 apartment communities, including unconsolidated investments, and we expect to complete the dissolutionredevelopment of Fund II in 2018.two apartment communities.
In conjunction with the Archstone Acquisition, through subsidiaries, we acquired and own the general partner interest and hold a 28.6% interest in the U.S. Fund. The U.S. Fund was formed in July 2011 and is fully invested. As of December 31, 2017, the U.S. Fund owns six communities containing 1,077 apartment homes, one of which includes a marina containing 229 boat slips. During the three years ended December 31, 2017, we realized our pro rata share of the gain from the sale of three communities owned by the U.S. Fund.
In conjunction with the Archstone Acquisition, through subsidiaries, we acquired a 20.0% ownership interest in Archstone Multifamily Partners AC JV LP (the “AC JV”). The AC JV is a joint venture that was formed in 2011 and as of December 31, 2017, owns three operating apartment communities containing 921 apartment homes. The AC JV partnership agreement contains provisions that require us to provide a right of first offer (“ROFO”) to the AC JV in connection with additional opportunities to acquire or develop additional interests in multifamily real estate assets within a specified geographic radius of the existing assets, generally one mile or less. The ROFO restriction expires in 2019.
A more detailed description of Fund II and the U.S. Fund (collectively, the “Funds”), the AC JV and other joint venturesour unconsolidated real estate entities and the related investment activity can be found in the discussion in Note 5, “Investments, in Real Estate Entities,” of the Consolidated Financial Statements in Item 8 of this report and in Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations.”
In conjunction with the Archstone Acquisition, through subsidiaries, we entered into three limited liability company agreements with Equity Residential (collectively, the “Residual JV”) through which we and Equity Residential acquired (i) certain assets of Archstone that we and Equity Residential have substantially divested (the “Residual Assets”), and (ii) various liabilities of Archstone that we and Equity Residential agreed to assume (the “Residual Liabilities”). The Residual Assets included a 20.0% interest in Lake Mendota Investments, LLC and Subsidiaries (“SWIB”), a joint venture which disposed of the last of its communities in 2015, various licenses, insurance policies, contracts, office leases and other miscellaneous assets. The Residual Liabilities include most existing or future litigation and claims related to Archstone’s operations for periods before the close of the Archstone Acquisition, except for (i) claims that principally relate to the physical condition of the assets acquired directly by us or Equity Residential, which generally remain the sole responsibility of us or Equity Residential, as applicable, and (ii) certain tax and other litigation between Archstone and various equity holders in Archstone related to periods before the close of the Archstone Acquisition, and claims which may arise due to changes in the capital structure of Archstone that occurred prior to closing, for which the seller has agreed to indemnify us and Equity Residential. We jointly control the Residual JV with Equity Residential and we hold a 40.0% economic interest in the Residual JV.
During 2017, we sold 10 operating communities including sales by unconsolidated entities and recognized a gain in accordance with U.S. generally accepted accounting principles (“GAAP”) of $291,273,000.
A further discussion of our development, redevelopment, disposition, acquisition, operating and property management and related strategies follows.
Development Strategy. We 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 rental apartment communities in our selected markets, we maintain regional offices to identify and support development opportunities through local market presence and access to local market information achieved through our regional offices.information. In addition to our principal executive office in Arlington, Virginia, we also maintainhave regional offices, administrative offices or specialty offices, including offices that are in or near the following cities:
•Austin, Texas;
•Bellevue, Washington;
•Boston, Massachusetts;
•Chapel Hill, North Carolina;
•Denver, Colorado;
Fairfield, Connecticut;•Fort Lauderdale, Florida;
•Irvine, California;
Iselin, New Jersey;•Los Angeles, California;
•Melville, New York;
Los Angeles, California;
•New York, New York;
•San Diego, California;Antonio, Texas;
•San Francisco, California;
•San Jose, California; and
•Shelton, Connecticut;
•Virginia Beach, Virginia.Virginia; and
•Westfield, New Jersey.
After selecting a target site for development, we usually negotiate for the right to acquire the site either through an option or a long-term conditional contract. Options and long-term conditional contracts generally allow us to acquire an interest in the target site after the completion of entitlements and shortly before the start of construction, which reduces development-related risks and preserves capital. However, as a result of competitive market conditions for land suitable for development, we have sometimes acquired and held land prior to construction for extended periods while entitlements are obtained, or acquired land zoned for uses other than residential with the potential for rezoning. For further discussion of our Development Rights, refer to Item 2. “Communities” in this report.
We generally act as our own general contractor and construction manager, except for certain mid-rise and high-rise apartment communities, where we may elect to use third-party general contractors as construction managers. We generally perform these functions directly (although we may use a wholly-owned subsidiary) both for ourselves and for the joint ventures and partnerships of which we are a member or a partner. We believe direct involvement in construction enables us to achieve higher construction quality, greater control over construction schedules and cost savings. Our development, property management and construction teams monitor construction progress to ensure quality workmanship and a smooth and timely transition into the leasing and operating phase.
During periods where competition for development land is more intense, we may acquireobtained. When acquiring improved land with existing commercial uses and rezone the site for multifamily residential use. During the period that we hold these buildings for futureprior to development, any rent received in excess of expenses from these operations, which we consider to be incidental, is accounted for as a reduction in our investment in the development pursuit and not as net income. Any expenses relating to these operations, in excess of any rents received, are accounted for as a reductionrecognized in net income. In addition, we have previously identified, and may again in the future identify, opportunities to increase value by expanding the density of certain existing operating communities. We have also participated, and may in the future participate, in master planned or other large multi-use developments where we commit to build infrastructure (such as roads) to be used by other participants or commit to act as construction manager or general contractor in building structures or spaces for third parties (such as unimproved ground floor retailcommercial space, municipal garages or parks). Costs we incur in connection with these activities may be accounted for as additional invested capital in the community or we may earn fee income for providing these services. Particularly with large scale, urban in-fill developments, we may engage in significant environmental remediation efforts to prepare a site for construction. For further discussion of our Development Rights, refer to Item 2. “Properties” in this report.
We generally act as our own development manager, general contractor and construction manager directly (although we may use a wholly-owned subsidiary), and will elect to use a third-party developer or general contractor where we believe it is beneficial to do so, such as in our expansion regions where we may have limited resources or scale. We believe direct involvement in construction enables us to achieve higher construction quality, greater control over construction schedules and cost savings. Our development, property management and construction teams monitor construction progress to ensure quality workmanship and a smooth and timely transition into the leasing and operating phase.
Throughout this report, the term “development” is used to refer to the entire property development cycle, including pursuit of zoning approvals, procurement of architectural and engineering designs and the construction process. References to “construction” refer to the actual construction of the property, which is only one element of the development cycle.
Redevelopment Strategy. When we undertake the redevelopment of a community, our goal is to renovate and/or rebuild an existing community so that our total investment is generally below replacement cost and the community is well positioned in the market to achieve attractive returns on our capital. In addition to large scale redevelopment where a community is classified as a redevelopment, we undertake smaller scale redevelopment activities related to the apartment interiors to enhance the resident experience at our operating communities. We have dedicated redevelopment teams and procedures that are intended to control both the cost and risks of redevelopment. Our redevelopment teams, which include redevelopment, construction and property management personnel, monitor redevelopment progress. We believe we achieve significant cost savings by undertaking the redevelopment primarily through an occupied turn strategy, in which we continue to operate the community as we install improvements, and frequently install improvements in occupied apartment homes, working to minimize any impact on our current residents.
Throughout this report, the term “redevelopment” is used to refer to the entire redevelopment cycle, including planning and procurement of architectural and engineering designs, budgeting and actual renovation work. The actual renovation work is referred to as “reconstruction,” which is only one element of the redevelopment cycle.
Disposition Strategy. We sell assets that no longer meet our long-term strategy or when real estate market conditions are favorable, and we redeploy the proceeds from those sales to develop, redevelop and acquire communities and to rebalance our portfolio across or within geographic regions. This also allows us to realize a portion of the value created through our investments and provides additional liquidity. We are then able to redeployliquidity by redeploying the net proceeds from our dispositions in lieu of raising that amount of capital externally. When we decide to sell a community, we generally solicit competing bids from unrelated parties for these individual assets and consider the sales price and other terms of each proposal.
As part of the Archstone Acquisition in 2013 (as defined in Item 1. “Business” in the Company's Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2019), we acquired, and still own, 14 assets that had previously been contributed by third parties on a tax-deferred basis to an Archstone partnership in which the third parties received ownership interests. To protect the tax-deferred nature of the contribution, the third parties are entitled to cash payments if we trigger tax obligations to the third parties by selling, or failing to maintain sufficient levels of secured financing on, the contributed assets. Our tax protection payment obligations with respect to these assets expire at different times and in some cases don’t expire until the death of a third party who contributed ownership interests to the Archstone partnership. After review and investigation of Archstone’s tax and accounting records, we estimate that, had we sold or taken other triggering actions in 20172023 with respect to all 14 assets, the aggregate amount of the tax protection payments that would have been triggered would have been approximately $50,600,000.$44,100,000. At the present time, we do not intend to take actions that would cause us to be required to make tax protection payments with respect to any of these assets.
Acquisition Strategy. Our core competencies in development and redevelopment discussed above allow us to be selective in the acquisitions we target. Acquisitions allow us to achieve rapid penetration into markets in which we desire an increased presence. Acquisitions (and dispositions) also help us achieve our desired product mix or rebalance our portfolio. Portfolio growth also allows for fixed general and administrative costs to be a smaller percentage of overall community Net Operating Income (“NOI”).
While we have achieved growthare primarily focused on acquisitions in the past through the establishmentour expansion regions of discretionary real estateRaleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado, we may pursue additional investments funds, which placed certain limitationsin our established regions based on our ability to acquire new communities during their investments periods, we are not presently pursuing the formation of a new discretionary real estate investment fund, preferring at this time to maintain flexibility in shaping our portfolio of wholly-owned assets through acquisitions and dispositions.market conditions.
Operating & Property Management Strategy. We seek to increase operating income through innovative, proactive property management that will result in higher revenue from communities while constraining operating expenses. Our principal strategies to maximize revenueoperating income include:
•focusing on associate engagement and resident satisfaction;
•employing an innovative and continually evolving operating model that combines effective onsite associates with the capabilities of our centralized shared services center, technology platform and digital offerings and various automation technologies;
•utilizing data science and our operating experience to optimize revenue from the portfolio, including making operating decisions that reduce customer acquisition, transaction and retention costs;
•staggering lease terms such that lease expirations are better matched to traffic patterns;with seasonal demand; and
balancing•delivering high occupancy with premium pricing and increasing rents as market conditions permit; andfor various customer segments.
employing revenue management software to optimize the pricing and term of leases.
Constraining growth in operating expenses is another way in which we seek to increase earnings growth. 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 constrain growth in operating expenses in a variety of ways, which include, but are not limited to, the following:
we use •purchase order controls, including acquiring goods and services from pre-approved vendors;
we use •national negotiated contracts and also purchase supplies in bulk purchases where possible;
we bid•bidding third-party contracts on a volume basis;
we strive to retain•retaining residents through high levels of service, in order to eliminate the cost of preparing anwhich reduces apartment home for a new resident and to reduceturnover costs, marketing and vacant apartment utility costs;
we perform•performing turnover work in-house or hirehiring third parties, generally considering the most cost effectivecost-effective approach as well as expertise needed to perform the work;
we undertake•regular preventive maintenance regularly to maximize resident safety and satisfaction as well as to maximizeand property and equipment life;
we have a customer care center, centralizing•centralization of lease renewal activity, as well as many community administration and improving the efficiency and consistency in the application ofsupport tasks at our policies for many of the administrative tasks associated with owning and operating apartment communities;shared service center;
we aggressively pursue•pursuing real estate tax appeals; and
we install•installing high efficiency lighting and water fixtures, cogeneration systems and implement sustainability initiatives in our operating platform.solar panels; and
•implementing technology for resident and prospect services such as package lockers and self-guided or virtual tours.
On-site property management teams receive bonuses based largely upon the revenue, expense, NOINet Operating Income (“NOI”), prospect conversion, resident retention and customer service metrics produced at their respective communities. We use and continuously seek ways to improve technology applications to help manage our communities, believing that technology applications can improve the delivery and efficiency of our services and aid in the accurate collection of financial and resident data, which will enable us to maximize revenue and control costs through careful leasing decisions, maintenance decisions and financial management.
We generally manage the operation and leasing activity of our communities directly (although we may use a wholly-owned subsidiary) both for ourselves and the joint ventures and partnerships of which we are a member or a partner. From time to time, we may engage a third party to manage leasing and/or maintenance activity at one or more of our communities.communities, including in our expansion regions where we may have limited resources or scale.
From time to time we also pursue or arrange ancillary services for our residents to provide additional revenue sources or increase resident satisfaction. As a REIT, we generally cannot provide direct services to our residents that are not customarily provided by a landlord, nor can we directly share in the income of a third party that provides such services. However, we canWe provide such non-customary services to residents or share in the revenue or income from such services if we do so through a “taxabletaxable REIT subsidiary” (“TRS”), which is a subsidiary that is treated as a “C corporation” subject to federal income taxes. See “Tax Matters” below.
Financing Strategy. Our financing strategy is to endeavor to maintain a capital structure that provides financial flexibility to help ensure we can select cost effectivecost-effective capital market options that are well matched to our business risks. We estimate that our short-term liquidity needs will be met from cash on hand, borrowings under our $1,500,000,000$2,250,000,000 revolving variable rate unsecured credit facility (the “Credit Facility”) and our $500,000,000 unsecured commercial paper note program (the “Commercial Paper Program”), sales of current operating communities and/or issuance of additional debt or equity securities. A determination to engage in an equity or debt offering depends on a variety of factors such as general market and economic conditions, our short and long-term liquidity needs, the relative costs of debt and equity capital and growth opportunities. A summary of debt and equity activity for the last three years is reflected on our Consolidated Statement of Cash Flows of the Consolidated Financial Statements set forth in Item 8 of this report.
We have entered into, and may continue in the future to enter into, joint ventures (including limited liability companies or partnerships) through which we would develop and/or own an indirect economic interest of less than 100% of the community or communities owned directly by such joint ventures. Our decision to either hold an apartment community in fee simple or to have an indirect interest in the community through a joint venture is based on a variety of factors and considerations, including: (i) the economic and tax terms required by a seller of land or of a community; (ii) our desire to diversify our portfolio of communities by market, submarket and product type; (iii) our desire at times to preserve our capital resources to maintain liquidity or balance sheet strength; and (iv) our projection, in some circumstances, that we will achieve higher returns on our invested capital or reduce our risk if a joint venture vehicle is used. Investments in joint ventures are not limited to a specified percentage of our assets. Each joint venture agreement is individually negotiated, and our ability to operate and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement.
In addition, from time to time, we may offer shares of our equity securities, debt securities or options to purchase stock in exchange for property. We may also acquire properties in exchange for properties we currently own.
Other Strategies and Activities. While we emphasize equity real estate investments in rental apartment communities, we have the ability to invest in other types ofactivities and to make non-equity investments, including the following:
•Structured Investment Program: while we generally invest in multifamily real estate mortgages (including participatingthrough fee simple ownership or convertible mortgages), securities of other REITsan equity investment in a joint venture, we operate an investment platform through which we provide mezzanine loans or real estate operating companies, or securities of technology companies that relatepreferred equity to third-party multifamily developers in our real estate operations or of companies that provide services to us or our residents, in each case consistent with our qualification as a REIT. In addition,existing regions.
•Commercial space: we develop, own and lease retailcommercial space at our communities when either (i) the highest and best use of the space is for retailcommercial (e.g., street level in an urban area); (ii) we believe the retailcommercial space will enhance the attractiveness of the community to residents or;residents; or (iii) some component of retailcommercial space is required to obtain entitlements to build apartment homes. As
•Property technology and environmentally focused companies and investment management funds: we have also invested, either through a wholly-owned TRS, or in an investment vehicle that has elected to be treated as a TRS, in companies (and in venture funds that invest in companies) that provide technology services to the real estate industry, and we have invested, through a TRS, in environmentally focused companies and investment management funds to further our sustainability efforts and learning.
•For-sale real estate development: we had a total of 771,288 square feet of rentable retail space, excluding retail space within communities currently under development. Gross rental revenue provided by leased retail space in 2017 was $29,137,000 (1.3% of total revenue). We may also develop a property in conjunction with another real estate company that will own and operate the retailcommercial or for-sale residential components of a mixed-use building or project that we help develop. If we secure a development right and believe that its best use, in whole or in part, isWe may from time to develop the real estate with the intent to sell rather than hold the asset, we may,time, through a taxable REIT subsidiary,TRS, develop real estate for sale. Any investment in securities of other entities, and any development of real estatehold it for sale is subject toupon completion if we believe that this will be the percentage of ownership limitations, gross income tests, and other limitations that must be observedbest use or disposition opportunity for REIT qualification.the property.
We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers and do not intend to do so. At all times we intend to make investments in a manner so as to qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code of 1986, as amended (the “Code”) (or the Treasury Regulations thereunder), our Board of Directors determines that it is no longer in our best interest to qualify as a REIT.
We conduct many of the administrative functions associated with our property operations (including billing, collections, and response to resident inquiries) through an internally operated shared services center, rather than having on-site associates conduct such activities. We believe this centralized platform allows our on-site associates to focus more on current and prospective resident services, while at the same time enabling us to reduce costs, mitigate risk and increase our availability and responsiveness to our residents. Since mid-2023, we have provided various back-office, financial administrative support services for a third party leveraging the economies of scale at our center to produce an additional revenue stream.
Tax Matters
We filed an election with our 1994 federal income tax return to be taxed as a REIT under the Code and intend to maintain our qualification as a REIT in the future. As a REIT, with limited exceptions, such as those described under “Property Management Strategy” above, we will not be taxed under federal and certain state income tax laws at the corporate level on our taxable net income to the extent such taxable net income is distributed to our stockholders. We expect to make sufficient distributions to avoid income tax at the corporate level. While we believe that we are organized and qualified as a REIT and we intend to operate in a manner that will allow us to continue to qualify as a REIT, there can be no assurance that we will be successful in this regard. Qualification as a REIT involves the application of highly technical and complex provisions of the Code for which there are limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control.
Competition
We face competition from other real estate investors, including insurance companies, pension and investment funds, REITs both in the multifamily as well as other REITs,sectors, and other well capitalized investors, to acquire and develop apartment communities and acquire land for future development. As an owner and operator of apartment communities, we also face competition for prospective residents from other operators whose communities may be perceived to offer a better location or better amenities or whose rentpricing may be perceived as a better value given the quality, location, terms and amenities that the prospective resident seeks. We also compete against condominiums and single-family homes that are for sale or rent.rent, including those offered through online platforms. Although we often compete against large, sophisticated developers and operators for development opportunities and for prospective residents, real estate developers and operators of any size can provide effective competition for both real estate assets and potential residents.
Environmental and RelatedRegulatory Matters
Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material. We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 and related laws and regulations.
Environmental Regulations.As a current or prior owner, operator and developer of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances and also could be liable to third parties resulting from environmental contamination or noncompliance at our communities. For some Development Communities, we undertake extensive environmental remediation to prepare the site for construction, which could be a significant portion of our total construction cost. Environmental remediation efforts could expose us to possible liabilities for accidents or improper handling of contaminated materials during construction. These
Regulations Relating to the Construction, Operation and Leasing of Our Communities. The construction, operation and leasing of our communities is subject to federal, state and local laws and regulations, include zoning laws, building codes, requirements
that our communities be accessible to persons with disabilities, fair housing laws, and, depending on the jurisdiction, regulations regarding the charging of rents and fees and increases in such amounts upon renewal of leases. Some laws relating to the setting of rents apply broadly, such as in California, where residential rent increases at renewal in communities older than fifteen years are limited to the lesser of 10% or 5% plus local consumer price index (CPI), and in New York, where laws regulate increases on those units that are subject to rent-control or rent-stabilization. In California, the Governor and local governments have the ability to enact (and have in recent years exercised such right, for example, in connection with wildfires) local or statewide states of emergency which limit our ability to increase new and renewal rents to no more than 10% over the rent in place on the date such state of emergency was declared, which has impacted some of our California communities. We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider new or modified rent control regulations, rent stabilization, or other risks relatedlaws that may limit or delay our ability to environmental matters are described in more detail incharge market rents, increase rents, charge ancillary fees orevict tenants.
See Part I, Item 1A. “Risk Factors.Factors” for a discussion of material risks to us, including, to the extent material, to our competitive position, relating to governmental regulations, and see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” together with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report, for a discussion of material information relevant to an assessment of our financial condition and results of operations.
Human Capital
Attracting, motivating, developing, and retaining talented associates is important to our long-term success. We engage with our associates to understand our purpose, “Creating a Better Way to Live,” our core values (a commitment to integrity, a spirit of caring and a focus on continuous improvement) and our cultural norms (we collaborate, excel, innovate, act like owners, are thoughtful and thorough, show appreciation, and champion inclusion and diversity).
At January 31, 2024, we had 3,039 employees, of which approximately 98% were employed on a full-time basis. Approximately 65% of our associates work on-site at our operating communities and the balance work on other matters. None of our associates are represented by a union.
We consider the following aspects of human capital management to be important:
Diversity and Inclusion. We value workforce diversity and an inclusive culture. We believe that a diverse workplace will produce a variety of perspectives, motivate associates and help us understand and better serve our customers and the communities in which we do business. At January 31, 2024, 37% of our associates self-identified as White, 30% as Hispanic, 16% as Black, 6% as Asian, and 11% as other ethnicities, two or more government regulationethnicities or did not respond. At January 31, 2024, 59% of energy use, along withour associates self-identified as male and 41% as female. We are committed to promoting and achieving greater workplace diversity and have undertaken active steps to further this goal, including by supporting associate resource groups.
Associate Engagement. We monitor the engagement of our associates, receive feedback from our associates, and benchmark our performance by having a greater focusthird party firm conduct anonymous associate perspective surveys each year. The results are discussed and presented both on environmental protection, may, over time, have a significant impactcompany-wide basis and within each functional group.
Safety. We take workplace safety seriously at our construction sites, our operating communities and our offices. Through our Construction Site Safety Observation program and our dedicated safety team, we monitor project-level safety performance metrics at our construction sites, and elements of compensation for our construction group and our CEO are based on urban growth patterns. If changessafety compliance performance. Our maintenance associates are required to take monthly safety training on a variety of subjects, and our risk management group monitors incident reports from our offices and communities.
Training. To help our associates develop the skills they need to advance in zoning to encourage greater densitytheir careers and proximity to mass transit do occur, such changes could benefit multifamily housingsucceed at AvalonBay, we train them in a variety of ways, including providing job aids and those companies with a competency in high-density development. However, there can be no assurance as to whether or when such changes in regulations or zoning will occur or, if they do occur, whether the multifamily industry or the Company will benefit from such changes.quick reference guides, web-based courses and videos, in-person and virtual, instructor-led training and on-the-job learning. Our learning management system, AvalonBay University, offers approximately 700 courses providing functional, technical, management, ethics, compliance, cyber-awareness and safety training.
Available Information
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may obtain copies of our SEC filings, free of charge, from the SEC's website at www.sec.gov.
We maintain a website at www.avalonbay.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including exhibits and amendments to those reports, filed or furnished pursuant to the Securities Exchange Act of 1934 are available free of charge in the “Investor Relations” section of our website as soon as reasonably practicable after the reports are filed with or furnished to the SEC. In addition, the charters of our Board's Nominating, Governance and Corporate GovernanceResponsibility Committee, Audit Committee and Compensation Committee, as well as our Director Independence Standards, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Policy Regarding Shareholder Rights Agreements, Policy Regarding Shareholder Approval of Future Severance Agreements, ExecutiveSenior Officer Stock Ownership Guidelines, Policy on Political Contributions and Government Relations, Compensation Recovery Policy, on Recoupment,AvalonBay Sanctions Compliance and SustainabilityAnti-Corruption Policy and Environmental, Social, and Governance Reports, are available free of charge in that section of our website or by writing to AvalonBay Communities, Inc., Ballston Tower,4040 Wilson Blvd., Suite 800, 671 N. Glebe Rd.,1000, Arlington, Virginia 22203, Attention: Chief Financial Officer. To the extent required by the rules of the SEC and the NYSE,New York Stock Exchange (the “NYSE”), we will disclose amendments and waivers relating to these documents in the same place on our website. The information posted on our website is not incorporated into this Annual Report on Form 10-K.
We were incorporated under the laws
ITEM 1A. RISK FACTORS
Our operations involve various risks that could have adverse consequences, including those described below. This Item 1A. includes forward-looking statements. You should refer to our discussion of the qualifications and limitations on forward-looking statements in this Form 10-K.
Risks related to investments through acquisitions, construction, development, and joint ventures
Development, redevelopment construction and operatingconstruction risks could affect our profitability.
We intend to continue to develop and redevelop apartment home communities. These activities can include long planning and entitlement timelines and can involve complex and costly activities, including significant environmental remediation or construction work in high-density urban areas. These activities may be exposedexpose us to the following risks:risks, among others:
•we have recently, and may in the future, abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs or we may impair land held for development, and as a result, we may fail to recover expenses already incurred in exploring those opportunities;
•occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;
•we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy or other required governmental or third party permits and authorizations, which could result in increased costs, or the delay or abandonment of opportunities;
•we may incur costs that exceed our original estimates due to increased material, labor or other costs;costs or supply chain disruptions which could impact our overall return from our development, redevelopment or construction activity;
•we may be unable to complete construction and lease-up of a community on schedule or for the originally projected cost resulting in increased construction and financing costs and a decrease in expected rental revenues;costs;
we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a community, which may cause us to delay or abandon an opportunity;
•we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and
•we may incur liability if our communities are not constructed and operated in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements. Noncompliance could result in imposition of fines, an award of damages to private litigants and a requirement that we undertake structural modifications to remedy the noncompliance.
We estimate construction costs based on market conditions at the time we prepareRefer to our budgets,“Risks related to liquidity and our projections include changes that we anticipate but cannot predict with certainty. Construction costs may increase, particularlyfinancing” section below for labor and certain materials and, for some of our Development Communities and Development Rights (as defined below), the total construction costs may be higher than the original budget. Total capitalized cost includes all capitalized costs incurred and projected to be incurred to develop or redevelop a community, determined in accordance with GAAP, including:
land and/or property acquisition costs;
fees paid to secure air rights and/or tax abatements;
construction or reconstruction costs;
costs of environmental remediation;
real estate taxes;
capitalized interest and insurance;
loan fees;
permits;
professional fees;
allocated development or redevelopment overhead; and
other regulatory fees.
Costs to redevelop communities that have been acquired have, in some cases, exceeded our original estimates and similar increases in costs may be experienced in the future. We cannot assure you that market rents in effect at the time new Development or Redevelopment Communities complete lease-up will be sufficient to fully offset the effects of any increased construction or reconstruction costs.
Theadditional construction and maintenance of our communities includes a risk of major casualty events that could materially damage our property and the property of others and pose the risk of personal injury. While we carry insurance for suchdevelopment risks in amounts we deem reasonable, we cannot assure that such insurance will be adequate, and when we have incurred and in the future may incur such casualties, we are subjectrelated to losses on account of deductibles and self-insured amounts in any event. Such casualties may also expose us in the future to higher insurance premiums, greater construction or operating costs (either voluntarily assumed by us or as a result of new local regulations), and risks to our reputation among prospective residents or municipalities from which we may seek approvals in the future, all of which could have a material adverse effect on our business and our financial condition and results of operations.financing.
Unfavorable changes in market and economic conditions could adversely affect occupancy, rental rates, operating expenses, and the overall market value of our real estate assets.
Local conditions in our markets significantly affect occupancy, rental rates and the operating performance of our communities. The risks that may adversely affect conditions in those markets include the following:
corporate restructurings and/or layoffs, industry slowdowns and other factors that adversely affect the local economy;
an oversupply of, or a reduced demand for, apartment homes;
a decline in household formation or employment or lack of employment growth;
the inability or unwillingness of residents to pay rent increases;
rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents sufficiently to offset increases in operating costs; and
economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.
Rent control and other changes in applicable laws, or noncompliance with applicable laws, could adversely affect our operations or expose us to liability.
We must develop, construct and operate our communities in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, landlord/tenant laws and other laws generally applicable to business operations. Noncompliance with laws could expose us to liability.
Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements and the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) rent control or rent stabilization laws or other residential landlord/tenant laws, or (iii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
We have seen a recent increase in municipalities considering or being urged by advocacy groups to consider rent control or rent stabilization laws and regulations or take other actions which could limit our ability to raise rents based solely on market conditions. Depending on the nature of such laws or regulations and the number of our communities that become subject to any such restriction on rent increases, our revenues and net income could be adversely affected. For example, in 2016 in Mountain View, California, the voters passed a referendum that limits rent increases on existing tenants (but not on new move-ins) in communities built before 1995. We have three communities with a total of 946 apartment homes that are subject to the new law. We are aware of efforts in other municipalities to enact similar controls, as well as an effort in California to overturn a state law that currently limits municipal rent control in that state to (i) apartments built before 1995 and (ii) renewal increases in rent (not new tenancies upon a vacancy).
Short-term leases expose us to the effects of declining market rents.
Substantially all of our apartment leases are for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.
Competition could limit our ability to lease apartment homes or increase or maintain rents.
Our apartment communities compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing in a particular area could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.
Attractive investment opportunities may not be available, which could adversely affect our profitability.
We expect that other real estate investors, including insurance companies, pension and investment funds, other REITs and other well-capitalized investors, will compete with us to acquire existing properties and to develop new properties. This competition could increase prices for properties of the type we would likely pursue and adversely affect our profitability for new investments.
Acquisitions may not yield anticipated results. Our business strategy of acquiring communities may have the following risks: (i) acquisitions may not perform as we expected; (ii) our estimate of the costs of operating, repositioning or redeveloping an acquisition may be inaccurate; and (iii) acquisitions may subject us to unknown liabilities.
Failure to succeed in new markets, or with new brands and community formats, or in activities other than the development, ownership and operation of residential rental communities may have adverse consequences. We have engaged, and may continue from time to time to engage in development, acquisition and operating activity outside of our pre-existing market areas. Our historical experience in our existing markets in developing, owning and operating rental communities does not ensure that we will be able to operate successfully in new markets. We may be exposed to a variety of risks when we enter a new market, including an inability to accurately evaluate local apartment market conditions and an inability to obtain land for development or to identify appropriate acquisition opportunities. In order to more rapidly expand in our new markets, we have relied on third party developers to source and manage developments and on third party general contractors to manage construction more than we have in our existing markets. Relying on third parties to assist with and/or oversee development and construction creates additional and different risks than when we manage these activities directly, including that the third party may not perform to our standards, may breach contractual arrangements, or may incur liquidity constraints.
We also may engage or have an interest in for-sale activity, such as the sale of the residential condominiums at The Park Loggia, a mixed-use development located in New York, New York. We may be unsuccessful at developing real estate with the intent to sell or in selling condominiums at originally underwritten values, or at all, as a disposition strategy for an asset, which could have an adverse effect on our results of operations.
During 2023, we began to provide, through our internally operated shared service center, various back-office, financial administrative support services to a third party for a fee, and we may in the future provide such services to other third parties. There can be no assurance that we will be successful in providing such services, and the provision of such services creates additional sources of risk and potential liability for us with respect to the professional commitments and service levels we undertake when providing such services.
We are exposed to risks associated with investment in technology and environmentally focused venture funds and companies. We have invested in, and may in the future invest in, venture funds that invest in companies seeking innovation through new processes and the application of technology to property operations, development, construction and energy management. We have also invested directly in, and may in the future invest directly in, companies that engage in these activities. While such investments give us a greater understanding of new and emerging technologies, such investments involve risks, including the possibility that our investments will decline substantially in value.
Our investments in technology companies, or in funds that invest in technology companies, are generally held through TRSs pursuant to which we will incur taxable gains upon the disposition of our interests. In addition, the value of these investments may be volatile and declines in value may impact our reported income even if we do not sell the investment.
We are exposed to risks associated with investment in, and management of, joint ventures. At times we invest directly and indirectly in real estate as a partner or a co-venturer with other investors. Joint venture investments (including investments through partnerships or limited liability companies) involve risks, including the possibility that our partner might become insolvent or otherwise refuse to make capital contributions when due; that we may be responsible to our partner for indemnifiable losses or the debt and obligations of an investment; that our investments may lose all or some of their value; that our partner might have business goals that are inconsistent with ours which may result in the venture or investment being unable to implement certain decisions that we consider beneficial; that our partner may be in a position to take action or withhold consent contrary to our instructions or requests; that, in cases where we are the general partner or managing member, our partners holding a majority of the equity interests may remove us from such role in certain cases involving cause; and that we may be liable and/or our status as a REIT may be jeopardized if either the investments, or the REIT entities associated with the investments, fail to comply with various tax or other regulatory matters. Frequently, we and our partner may each have the right to trigger a buy-sell or similar arrangement that could cause us to sell our interest, acquire our partner's interest or force a sale of the asset, which could occur at a time when we otherwise would not have initiated such a transaction or on terms that are not most advantageous to us.
Mezzanine debt and preferred equity investments could cause us to incur expenses, which could adversely affect our results of operations. We make mezzanine loans to borrowers and obtain preferred equity interests in projects owned by third party sponsors as part of our SIP. Some of these instruments may have some recourse to their borrower or sponsor, while others are limited to the collateral securing the loan or the right to remove the sponsor as manager of the venture in preferred equity investments. In the event of a default under these obligations, we may elect to take possession of the collateral securing these interests, or remove a sponsor from management of a preferred equity investment. Borrowers of mezzanine loans may contest our enforcement actions, including, foreclosure, assignment in lieu of foreclosure, or other remedies, and sponsors may contest our removal actions. In addition, borrowers and sponsors may seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce their obligations to us. Declines in the value of the underlying properties may prevent us from realizing an amount equal to our investment upon foreclosure or other remedies even if we make substantial improvements or repairs to maximize such properties' investment potential.
We cannot be certain that our estimate of future credit losses will be adequate over time because of unanticipated adverse changes in the economy or events adversely affecting specific properties, assets, tenants, borrowers, industries in which our tenants and borrowers operate or markets in which our tenants and borrowers or their properties are located. The ultimate resolutions may differ from our expectation, and we could suffer losses that would have a material adverse effect on our financial performance, the trading price of our securities and our ability to pay dividends and distributions.
We are exposed to risks associated with real estate assets that are subject to ground leases that may restrict our ability to finance, sell or otherwise transfer our interests in those assets, limit our use and expose us to loss if such agreements are breached by us or terminated. We own assets that are subject to long-term ground leases. These ground leases may impose
limitations on our use or improvement of the properties, restrict our ability to finance, sell or otherwise transfer our interests or restrict the leasing of the properties. These restrictions may limit our ability to timely sell or exchange the properties, impair the properties’ value or negatively impact our ability to operate the properties. In addition, we could lose our interests in the properties if the ground leases are breached by us, terminated or lapse. As we get closer to the lease termination dates, the values of the properties could decrease if we are unable to agree upon an extension of the lease with the lessor. Certain of these ground leases have payments subject to annual escalations and/or periodic fair market value adjustments which could adversely affect our financial condition or results of operations.
Land we hold with no current intent to develop may be subject to future impairment charges. We own land parcels that we do not currently intend to develop. As discussed in Item 2. “Properties—Other Land and Real Estate Assets,” in the event that the fair market value, less the cost to dispose of a parcel, changes such that it is less than the carrying basis of the parcel, we would be subject to an impairment charge, which would reduce our net income.
Our various technology-related initiatives to improve our operating margins and customer experience may fail to perform as expected. We have developed and may continue to develop initiatives that are intended to serve our customers better and operate more efficiently, including “smart home” technology and self-service options that are accessible to residents through smart devices or otherwise. Such initiatives have involved and may involve our employees having new or different responsibilities and processes. We may incur significant costs and divert resources in connection with such initiatives, and these initiatives may not perform as expected, which could adversely affect our business, results of operations, cash flows and financial condition.
Risks related to liquidity and financing
Capital and credit market conditions may adversely affect our access to various sources of capital and/or the cost of capital, which could impact our business activities, dividends, earnings and common stock price, among other things.
In periods when the capital and credit markets experience significant volatility, the amounts, sources and cost of capital available to us may be adversely affected. We primarily use external financing as one source of capital to fund construction and to refinance indebtedness as it matures. If sufficient sources of external financing are not available to us on cost effectivecost-effective terms, we could be forced to limit our development and redevelopment activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets, reducing our cash dividend or paying out less than 100% of our taxable income. To the extent thatissuing equity or debt securities. If we are able and/or choose to access capital at a higher cost than we have experienced in recent years, (reflected in higher interest rates for debt financing or a lower stock price for equity financing), absent changes in other factors, our earnings per share and cash flows could be adversely affected. In addition, the price of our common stock may fluctuate significantly and/or decline in a high interest rate environment or a volatile economic environment. We believeenvironment, or if we dilute the interest of stockholders by issuing additional equity. Further, events involving limited liquidity, defaults, non-performance or other adverse developments that affect the lenders under our Credit Facility, will fulfill their lending obligations thereunder, but if economic conditions deteriorate, there canthe dealers under our Commercial Paper Program, financial institutions where we have deposits, transactional counterparties or other companies in the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, could result in losses or defaults by these institutions or counterparties or could lead to market-wide liquidity problems. Disruptions and uncertainty with respect to financial institutions, including as a result of recent bank failures and liquidity concerns, may negatively impact our ability to refinance existing indebtedness and access additional financing at reasonable terms or at all or may cause us or our transactional counterparties to be no assurance that the abilityunable to complete transactions as intended, all of those lenders to fulfill their obligations would not be adversely impacted.which could have a material adverse effect on our financial condition and results of operations.
Insufficient cash flow could affect our debt financing and create refinancing risk.
We are subject to the risks associated with debt financing, including the risk that our available cash will be insufficient to meet required payments of principal and interest on our debt. In this regard, in order forFor us to continue to qualify as a REIT, we are required to annually distribute dividends generally equal to at least 90% of our REIT taxable income, computed without regard to the dividends paid deduction and excluding any net capital gain. This requirementwhich limits the amount of our cash flow available to meet required principal and interest payments. The principal outstanding balance on a portion of our debt will not be fully amortized prior to its maturity. Although we may be able to repay our debt by using our cash flows, weWe cannot assure you that we will have sufficient cash flows available to make all required principal payments. Therefore, we mayexpect that we will generally need to refinance at least a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that a refinancing will not be done on as favorable terms; either of these outcomes could have a material adverse effect on our financial condition and results of operations.
Rising interest rates could increase interest costs and could affect the market price of our common stock.
We currently have,stock, and may in the futureefforts to hedge such risk could be ineffective and cause us to incur contractual variable interest rate debt. In addition, we regularly seek access to both fixed and variable rate debt financing to repay maturing debt and to finance our development and redevelopment activity. Accordingly, ifadditional costs. If interest rates increase, our interest costs on variable rate debt will also rise unless we have made arrangements that hedgehedged the risk of rising interest rates. In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock.
We may use interest rate derivatives to manage our exposure to fluctuations in interest rates, such as by entering into interest rate contracts. For example, when we anticipate issuing debt securities, we may seek to limit our exposure to fluctuations in interest rates prior to debt issuance by entering into interest rate hedging contracts. Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to us if interest rates decline. The interest rate derivatives we use, primarily to manage interest rate risk for our anticipated debt issuance activity, could result in a material charge to earnings if we do not issue the anticipated debt, or are otherwise unsuccessful in our hedging activities. In addition, our use of hedging arrangements may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may default on the contract. There can be no assurance that our hedging activities will be effective reducing the risks associated with interest rate fluctuations.
Bond financing and zoning and other compliance requirements could limit our income, restrict the use of communities and cause favorable financing to become unavailable.
We have financed some of our apartment communities with obligations issued by local government agencies because the interest paid to the holders of this debt is generally exempt from federal income taxes, and, therefore, thewhich typically provides a more favorable interest rate is generally more favorable tofor us. These obligations are commonly referred to as “tax-exempt bonds” and generally must be secured by mortgages on our communities. As a condition to obtaining (i) tax-exempt financing, or on occasion as a condition to obtaining(ii) favorable zoning or (iii) an agreement relating to property taxes in some jurisdictions, we will commit to make some of the apartments in a community available to households whose income does not exceed certain thresholds (e.g., 50% or 80% of area median income), or who meet other qualifying tests. As of December 31, 2017, 5.9%2023, 4.6% of our apartment homes at current operating communities were under income limitations such as these. These
commitments, which may run without expiration or may not expire, after a period of time (such as 15 or 20 years), may limit our ability to raise rents, and, as a consequence, may also adversely affectaffecting the value of the communities subject to these restrictions. If we fail to observe these commitments, we could lose benefits (such as reduced property taxes) or face liabilities including liability for the benefits we received under tax exempt bonds, tax credits or agreements related to property taxes.
In addition, some of ourOur tax-exempt bond financing documentsbonds may require us to obtain a guarantee from a financial institution of payment of the principal of, and interest on the bonds. The guarantee may take the form ofbonds, such as a letter of credit, surety bond, guarantee agreement or other additional collateral. If the financial institution defaults in its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur under the applicable tax-exempt bonds and the community could be foreclosed upon if we do not redeem the tax exempt bonds.
Risks related to indebtedness.
We have a Credit Facility and Commercial Paper Program with a syndicate of commercial banks.banks as well as secured and unsecured notes. Our organizational documents do not limit the amount or percentage of indebtedness that may be incurred. Accordingly, subject to compliance with outstanding debt covenants, we could incur more debt, resulting in an increased risk of default on our obligations and an increase in debt service requirements that could adversely affect our financial condition and results of operations.
The mortgages on properties that are subject to secured debt, our Credit Facility, Commercial Paper Program and the indentureindentures under which a substantial portion of our debt was issued contain customary restrictions, requirements and other limitations, as well as certain financial and operating covenants including maintenance of certain financial ratios. Maintaining compliance with these restrictions could limit our flexibility. A default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could materially adversely affect our liquidity and increase our financing costs. Refer to Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” for further discussion.
The mortgages on properties that areA substantial portion of our debt is subject to secured debt generally include provisions which stipulate a prepayment penaltypenalties or paymentpremiums that we will be obligated to pay in the event that we elect to repayprepay the mortgage notedebt prior to the earlier of (i) theits stated maturity of the note, or (ii) the date at which the mortgage note is prepayable without such penalty or payment.another stated date. If we elect to repay some or allprepay a significant amount of the outstanding principal balance fordebt, our mortgage notes, we may incur prepayment penalties or payments under these provisions which could materially adversely affect our results of operations.
Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity and access to capital markets.
There are two major debt rating agencies that routinely evaluate and rate our debt. Their ratings are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality, amount of real estate under development, and sustainability of cash flow and earnings, among other factors. If market conditions change, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity and access to capital markets.
Debt financing may not be available and equity issuances could be dilutive to our stockholders.
Our ability to execute our business strategy depends on our access to cost effective debt and equity financing. Debt financing may not be available in sufficient amounts or on favorable terms. If we issue additional equity securities, the interests of existing stockholders could be diluted.
Failure to generate sufficient revenue or other liquidity needs could limit cash flow available for distributions to stockholders.
A decrease in rental revenue, or liquidity needs such as the repayment of indebtedness or funding of our development activities, could have an adverse effect on our ability to pay distributions to our stockholders. Significant expenditures associated with each community such as debt service payments, if any, real estate taxes, insurance and maintenance costs are generally not reduced when circumstances cause a reduction in income from a community.
The form, timing and/or amount of dividend distributions in future periods may vary and be impacted by our revenue generation, other liquidity needs and economic and other considerations.
The form, timing and/or amount of dividend distributions will be declared at the discretion of the Board of Directors and will depend on our rental revenue, actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the
Code and other factors as the Board of Directors may consider relevant. The Board of Directors may modify our dividend policy from time to time.
We may experience barriers to selling apartment communities that could limit financial flexibility. Difficulties in selling real estate at prices we find acceptable in a timely manner may limit our ability to quickly change or reduce the apartment communities in our portfolio in response to changes in economic, regulatory, or other conditions. Federal tax laws may also limit our ability to sell properties when desired. See “Risks related to our REIT or tax status or reliance on various tax regulations” section for more information on federal tax law risks. In addition, the capitalization rates/disposition yields at which apartment communities may be sold could also be higher than historic rates, thereby reducing our potential proceeds from sale.
Increased scrutiny and changing expectations from investors, tenants and others regarding our environmental, social and governance (“ESG”) practices and reporting could impact our business practices, cause us to incur additional costs and expose us to new risks. ESG evaluations, including ESG scores and ratings, are important to some investors and other stakeholders and may impact the price of our securities and business practices. Investors may focus on, and consider a company's ESG-related business practices, scores and reporting when choosing to allocate their capital in making investment decisions, including if they invest in our securities. This has included or may in the future include expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor and risk oversight, and could expand the nature, scope, and complexity of matters that we are required to control, assess and report, which may prove difficult, expensive and time consuming. In addition, the adoption of increased government regulations and changes in investor preference related to ESG and similar matters may result in changes to our business practices, including increasing expenses or capital expenditures. We have communicated certain initiatives and goals regarding ESG matters and we may in the future communicate revised or additional initiatives or goals. If we fail to satisfy the expectations of investors, residents and other stakeholders, our initiatives are not executed as planned, or we do not satisfy our goals, our reputation and financial results could be adversely affected.
Risks related to operations of our communities
Laws, regulations and orders imposing rent control or rent stabilization, or limiting our rights as a landlord, could adversely affect our operations and revenue. A number of states and municipalities have implemented or are seeking to implement rent control or rent stabilization laws and regulations or take other actions that could limit or delay our ability to raise rents, charge non-rent fees, screen and evict tenants for non-payment of rent or other lease violations. For example, the State of California has statewide rent control for communities older than fifteen years, limiting rent increases to the lesser of 10% or 5% plus local CPI, and the State of New York has rules for rent-controlled and rent-stabilized units that limit the way rent increases are calculated for renewal leases, basing increases solely on rent actually paid and eliminating the ability to increase the renewal rent to a higher “registered rent.” Furthermore, in California the Governor has the ability to enact local or statewide states of emergency which limit our ability to increase new and renewal rents more than 10% over the rent in place on the date such state of emergency was declared, which has impacted some of our California communities. We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider regulations of the types described above. Additionally, the Biden Administration published a white paper entitled the Blueprint for a Renters Bill of Rights and various federal agencies have engaged in accompanying efforts aimed at increasing fairness in the rental market. Current and future enactments of rent control or rent stabilization laws or other laws regulating rental housing may limit our ability to charge market rents, increase rents, charge non-rent fees, screen and evict tenants or recover increases in our operating expenses and could make it more difficult for us to dispose of properties in certain circumstances. Expenses associated with our investment in these communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community.
We face risks related to multifamily rental antitrust, regulatory scrutiny and new litigation. Lawsuits, government investigations and proposed legislation relating to antitrust matters in the multifamily rental market are ongoing and may impact the Company, whether or not we are found directly liable for an antitrust violation. For example, a purported class action has been brought by private litigants against RealPage, Inc., a provider of revenue management systems, and numerous multifamily rental companies; while we were originally named as a defendant, the Company was voluntarily dismissed without prejudice from this case after explaining to plaintiffs’ counsel why the Company believed that these cases were without merit as they pertained to the Company. Subsequently, on November 1, 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc. and 14 owners and/or operators of multifamily housing in the District of Columbia, including the Company, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data. While the Company intends to vigorously defend against this lawsuit, given the early stage of the District of Columbia’s lawsuit, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuit. The Company is also aware that governmental investigations regarding antitrust matters in the multifamily industry are ongoing. Municipalities other than the
District of Columbia or federal agencies may also bring suits against multifamily rental providers. Regardless of whether the Company remains named in the District of Columbia lawsuit or any other lawsuits or becomes the focus of any governmental investigation, the Company may incur substantial costs related to these lawsuits, whether as a defendant or as a third-party witness. As well, settlements by RealPage, Inc. or other defendants in such cases could impact the multifamily industry in ways that have an adverse effect on the Company. In addition, state and federal legislation has been introduced that could regulate the use by multifamily apartment rental companies of third party algorithmic revenue management systems, and if legislation of this type passes, the impact on the Company is difficult to predict. Lawsuits, government investigations and new legislation related to antitrust matters may, among other things, be costly to comply with, result in negative publicity, require significant management time and attention and subject us to remedies or burdensome requirements that adversely affect our business.
Noncompliance with applicable laws in the building and operation of our communities could adversely affect our operations or expose us to liability. We must develop, construct and operate our communities in compliance with federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, landlord/tenant laws and other laws generally applicable to business operations. Noncompliance with laws could expose us to liability. Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements or other conditions, or (ii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
Short-term leases expose us to the effects of declining market rents. Substantially all of our apartment leases are for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.
Competition could limit our ability to lease apartment homes or increase or maintain rents. Our apartment communities compete with other apartment operators as well as rental housing alternatives, such as single-family homes for rent and short term furnished offerings such as those available from extended stay hotels or through online listing services. In addition, our residents and prospective residents also consider, as an alternative to renting, the purchase of a new or existing condominium or single-family home. Competitive residential housing could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.
Unfavorable changes in market and economic conditions could adversely affect occupancy, rental rates, operating expenses, and the overall market value of our real estate assets. Local conditions in our regions significantly affect occupancy, rental rates and the operating performance of our communities, and may be adversely affected by the following risks:
•corporate restructurings and/or layoffs, and industry slowdowns;
•an oversupply of, or a reduced demand for, apartment homes;
•a decline in household formation or employment or lack of employment growth;
•the inability or unwillingness of residents to pay rent increases; and
•economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.
Risks related to a pandemic’s impact on multifamily rental housing. The national and global impacts of a pandemic, such as the COVID-19 pandemic, may present material uncertainty and risk with respect to our financial condition, results of operations and cash flows. Moreover, many of the risk factors set forth in this Form 10-K could be interpreted as heightened risks as a result of the impact of a pandemic. Impacts from a pandemic may include the following:
•State, local, and federal entities may impose restrictions, for varying times and to varying degrees, on our ability to enforce residents’ contractual lease obligations, and this may affect our ability to enforce all our remedies (such as pursuing collections and seeking evictions) for the failure to pay rent.
•Consumers whose income has declined or who are working remotely may decide to live in a location other than our markets. Demand from students and demand for corporate apartment homes may be negatively impacted by trends in remote learning and work, and the adoption of new online technologies.
•Various state, local and federal rules may require us, in some jurisdictions or for some properties, to waive late fees and certain other customary fees associated with our apartment rental business. These requirements or practices may result in foregone revenue.
•Our properties may incur significant costs or losses related to shelter-in-place or stay-at-home orders, quarantines, infection, clean-up costs or other related factors.
•Impacts on the general economy and our industry caused by (i) supply chain constraints and (ii) inflation caused by both supply chain constraints and governmental fiscal and monetary policies. Supply chain constraints could cause delays in our construction and redevelopment activity, and inflation could cause our construction and operating costs to increase without a commensurate increase in our rental revenue.
Emergency orders shutting down non-essential businesses, limiting congregations of people, and requiring social distancing may at times disrupt our development and construction activity. To the extent we experience delays in construction, our construction costs may increase and we may not achieve, on the schedule we originally planned, the cash flows that we expect when we begin leasing a completed property. We may also delay the start of construction of additional development communities which, if constructed and leased as originally planned, would have been a source of future additional cash flow.
The same factors as described immediately above may also impact our workforce. A disruption in the normal operations of our workforce, as well as the possibility of illness among our associates or a substantial portion of our workforce, could also adversely affect our operations.
Risks related to commercial leasing operations. Although we are primarily in the multifamily rental business, we also own and lease ancillary commercial space. Gross rental revenue provided by leased commercial space in our portfolio represented 1.5% of our total revenue in 2023. The long term nature of our commercial leases and characteristics of many of our tenants (small, local businesses) may subject us to certain risks. We may not be able to lease new space for rents that are consistent with our projections or at market rates. Also, when leases for our existing commercial space expire, the space may not be relet or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the current lease terms. Our properties compete with other properties with commercial space. If our commercial tenants experience financial distress or bankruptcy, they may fail to comply with their contractual obligations, seek concessions in order to continue operations or cease their operations, which could adversely impact our results of operations and financial condition.
Inflation and related volatility in the economy could negatively impact our residents and our results of operations. Inflation accelerated rapidly in 2022, continued at an elevated level in 2023 and may continue at the present level or increase. Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our residents’ ability to pay rents or our results of operations. Substantially all of our apartment leases are for a term of one year or less, which we believe mitigates our exposure to inflation by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance). However, inflation could outpace any increases in rent and adversely affect us. We may not be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation, and any related adverse effects on our results of operations and financial condition, are unknown at this time. Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so.
Inflation may also increase the costs to complete our development projects, including costs of materials, labor and services from third-party contractors and suppliers. Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development projects.
Risks related to our REIT or tax status or reliance on various tax regulations
Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to stockholders. If we fail to qualify as a REIT for federal income tax purposes, we will be subject to regular federal corporate income tax on our taxable income. In addition, unless we are entitled to relief under applicable statutory provisions, we would be ineligible to make an election for treatment as a REIT for the four taxable years following the year we lose our qualification. The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of funds available for distribution to our stockholders. Furthermore, we would no longer be required to make distributions to our stockholders. Thus, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital and would adversely affect the value of our common stock.
We believe that we are organized and qualified as a REIT, and we intend to operate in a manner that will allow us to continue to qualify as a REIT. However, we cannot assure you that we are qualified as a REIT, or that we will remain qualified in the future. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code
for which there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control. Our qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. In addition, future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT for federal income tax purposes or the federal income tax consequences of such qualification. Additionally, our expanding range of investments (such as investments in mezzanine loans, preferred equity, and technology and environmentally focused venture funds and companies) may add additional REIT compliance challenges, some of which may involve determinations or circumstances that may be beyond our control.
Even if we qualify as a REIT, we will be subject to certain federal, state and local taxes on our income and property and on taxable income that we do not distribute to our stockholders. In addition, we hold certain assets and engage in certain activities through our TRSs that a REIT could not engage in directly. We also use TRSs to hold certain assets that we believe would be subject to the 100% prohibited transaction tax if sold at a gain outside of a TRS or to engage in activities that generate non-qualifying REIT income. Our TRSs are subject to federal income tax as regular corporations.
Legislative or other actions affecting REITs could have a negative effect on us or our stockholders. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service ("IRS") and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive legislation, could adversely affect us or our stockholders. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in our Company. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if transactions with our TRSs are not conducted on arm’s-length terms. We have established several TRSs. The TRSs must pay federal income tax on their taxable income as regular corporations. While we will attempt to ensure that our dealings with our TRSs do not adversely affect our REIT qualification, we cannot provide assurances that it will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, to the extent dealings between us and our TRSs are not deemed to be arm’s-length in nature. We intend that our dealings with our TRSs will be on an arm’s-length basis. No assurances can be given, however, that the IRS will not assert a contrary position.
Failure of one or more of our subsidiaries to qualify as a REIT could adversely affect our ability to qualify as a REIT. We have owned and may in the future own interests in subsidiaries that have elected (or will elect) to be taxed as REITs under the Code. These subsidiary REITs were or will be subject to the REIT qualification requirements and other limitations that are applicable to us. If any of our subsidiary REITs were to fail to qualify as a REIT, then (i) the subsidiary REIT would become subject to federal income tax, (ii) our ownership of shares in such subsidiary REIT would cease to be a qualifying asset for purposes of the asset tests applicable to REITs, and (iii) it is possible that we could also fail to qualify as a REIT.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes. We may transfer or otherwise dispose of some of our properties. Under the Code, unless certain exceptions apply, any gain resulting from transfers of properties that we hold as inventory or primarily for sale to customers in the ordinary course of business could be treated as income from a prohibited transaction subject to a 100% penalty tax from the gain on the sale of the property, which could potentially adversely impact our status as a REIT unless we own the property through a TRS. Since we acquire properties for investment purposes, we do not believe that our occasional transfers or disposals of property should be treated as prohibited transactions. However, whether property is held for investment purposes depends on the facts and circumstances surrounding the particular transaction. The IRS may contend that certain of our transfers or disposals of properties are prohibited transactions. If the IRS were to argue successfully that a transfer or disposition of property was a prohibited transaction, then we would be required to pay a 100% penalty tax on any gain allocable to it from the prohibited transaction, and our ability to retain proceeds from real property sales may be jeopardized.
We may face risks in connection with Section 1031 exchanges. We may dispose of real properties in transactions intended to qualify as “like-kind exchanges” under Section 1031 of the Code. If a transaction intended to qualify as a Section 1031 exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of real properties on a tax-deferred basis.
We may choose to pay dividends in our own stock, in which case, stockholders may be required to pay tax in excess of the cash they receive.
We may distribute taxable dividends that are payable in part in our stock, as we did in the fourth quarter of 2008.stock. Taxable stockholders receiving
such dividends will be required to include the full amount of the dividend as income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of the cash dividend received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, the trading price of our stock would experience downward pressure if a significant number of our stockholders sell shares of our stock in order to pay taxes owed on dividends.
We may experience regulatory or economic barriers to selling apartment communitiesRisks that could limit liquidity and financial flexibility.
Potential difficulties in selling real estate in our markets may limit our ability to change or reduce the apartment communities in our portfolio promptly in response to changes in economic or other conditions. Federal tax laws may limit our ability to earn a gain on the sale of a community (unless we own it through a subsidiary which will incur a taxable gain upon sale) if we are found to have held, acquired or developed the community primarily with the intent to resell the community, and this limitation may affect our ability to sell communities without adversely affecting returns to our stockholders. In addition, real estate in our markets can at times be difficult to sell quickly at prices we find acceptable.
Acquisitions may not yield anticipated results.
Our business strategy includes acquiring as well as developing communities. Our acquisition activities may be exposed to the following risks:
an acquired property may fail to perform as we expected in analyzing our investment; and
our estimate of the costs of operating, repositioning or redeveloping an acquired property may prove inaccurate.
Failure to succeed in new markets, or with new brands and community formats, or in activities other than the development, ownership and operation of residential rental communities may have adverse consequences.
We may from time to time commence development activity or make acquisitions outside of our existing market areas if appropriate opportunities arise. Our historical experience in our existing markets in developing, owning and operating rental communities does not ensure that we will be able to operate successfully in new markets, should we choose to enter them. We may be exposed to a variety of risks if we choose to enter new markets, including an inability to accurately evaluate local apartment market conditions; an inability to obtain land for development or to identify appropriate acquisition opportunities; an inability to hire and retain key personnel; and a lack of familiarity with local governmental and permitting procedures.
Although we are primarily in the multifamily business, we also own and lease ancillary retail space when retail represents the best use of the space, as is often the case with large urban in-fill developments. We also may engage or have an interest in for-sale activity. We may be unsuccessful in owning and leasing retail space at our communities or in developing real estate with the intent to sell, which could have an adverse effect on our results of operations.
Land we hold with no current intent to develop may be subject to future impairment charges.
We own parcels of land that we do not currently intend to develop. As discussed in Item 2. “Communities—Other Land and Real Estate Assets,” in the event that the fair market value of a parcel changes such that we determine that the carrying basis of the parcel reflected in our financial statements is greater than the parcel's then current fair value, less costs to dispose, we would be subject to an impairment charge, which would reduce our net income.
We are exposed to various risks from our real estate activity through joint ventures.
Instead of acquiring or developing apartment communities as a wholly-owned investment, at times we may invest in real estate as a partner or a co-venturer with other investors. Joint venture investments (including investments through partnerships or limited liability companies) involve risks, including the possibility that our partner might become insolvent or otherwise refuse to make capital contributions when due; that we may be responsible to our partner for indemnifiable losses; that our partner might at any time have business goals that are inconsistent with ours; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. Frequently, we and our partner may each have the right to trigger a buy-sell arrangement that could cause us to sell our interest, or acquire our partner's interest, at a time when we otherwise would not have initiated such a transaction.
We are exposed to risks associated with investment in and management of discretionary real estate investment funds and joint ventures.
We have investment interests in the Funds and joint ventures (collectively, the "ventures") ranging from 20.0% to 55.0%. The ventures present risks, including the following:
our subsidiaries that are the general partner or managing member of the ventures are generally liable, under applicable law or the governing agreement of a venture, for the debts and obligations of the respective venture, subject to certain exculpation and indemnification rights pursuant to the terms of the governing agreement;
investors in the ventures holding a majority of the equity interests may remove us as the general partner or managing member in certain cases involving cause;
while we have broad discretion to manage the ventures, the investors or an advisory committee comprised of representatives of the investors must approve certain matters, and as a result we may be unable to cause the ventures to implement certain decisions that we consider beneficial; and
we may be liable and/or our status as a REIT may be jeopardized if either the ventures, or the REIT entities associated with the ventures, fail to comply with various tax or other regulatory matters.
The governance provisions of our joint ventures with Equity Residential could adversely affect our flexibility in dealing with such joint venture assets and liabilities.
In connection with the Archstone Acquisition, we created joint ventures with Equity Residential that manage or have an interest in certain of the acquired assets and liabilities. These structures involve participation in the ventures by Equity Residential whose interests and rights may not be the same as ours. Joint ownership of an investmentinsured in real estate involves risks not associated with direct ownership of real estate, including the risk that Equity Residential may at any time have economicfull or other business interests or goals which become inconsistent with our business interests or goals, including inconsistent goals relating to the sale of properties held in the joint ventures or the timing of the termination and liquidation of the joint ventures. Under the form for the joint venture arrangements, neither we nor Equity Residential expect to individually have the sole power to control the ventures, and an impasse could occur, which could adversely affect the applicable joint venture and decrease potential returns to us and our investors.part
We rely on information technology in our operations, and any breach, interruption or security failure of that technology could have a negative impact on our business, results of operations, financial condition and/or reputation.
Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber attacks.
We collect and hold personally identifiable information of our residents and prospective residents in connection with our leasing and property management activities, and we collect and hold personally identifiable information of our associates in connection with their employment. In addition, we engage third party service providers that may have access to such personally identifiable information in connection with providing necessary information technology and security and other business services to us.
We address potential breaches or disclosure of this confidential personally identifiable information by implementing a variety of security measures intended to protect the confidentiality and security of this information including (among others) engaging reputable, recognized firms to help us design and maintain our information technology and data security systems, including testing and verification of their proper and secure operations on a periodic basis. We also maintain cyber risk insurance to provide some coverage for certain risks arising out of data and network breaches.
However, there can be no assurance that we will be able to prevent unauthorized access to this information. Any failure in or breach of our operational or information security systems, or those of our third party service providers, as a result of cyber attacks
or information security breaches, could result in a wide range of potentially serious harm to our business operations and financial prospects, including (among others) disruption of our business and operations, disclosure or misuse of confidential or proprietary information (including personal information of our residents and/or associates), damage to our reputation, and/or potentially significant legal and/or financial liabilities and penalties.
We are exposed to risks that are either uninsurable, not economically insurable or in excess of our insurance coverage, including risks discussed below.
Earthquake risk. As further described in Item 2. “Communities—Insurance and Risk of Uninsured Losses,” many of our West Coast communities are located in the general vicinity of active earthquake faults. We cannot assure you that an earthquake would not cause damage or losses greater than insured levels. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected community, as well as anticipated future revenue from that community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. Any such loss could materially and adversely affect our business and our financial condition and results of operations.
Insurance coverage for earthquakesvarious risks can be costly and in limited supply. As a result, we may experience shortages in desired coverage levels if market conditions are such that insurance is not available or the cost of insurance makes it, in the Company'sour view, economically impractical. Incidents that directly or indirectly damage our communities, both physically and financially, or cause losses that exceed our insurance coverage could have a material adverse effect on our business, financial condition and results of operations including increased maintenance, repair, and delays in construction. In addition, we would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community which could have a material adverse effect on our business and our financial condition and results of operations. The following risks are uninsurable or insurance coverage is limited due to premium rates (See Item 2. “Properties—Insurance and Risk of Uninsured Losses”):
Severe•Earthquake risk. As further described in Item 2. “Properties—Insurance and Risk of Uninsured Losses,” many of our West Coast communities are located in the general vicinity of active earthquake faults. Insurance coverage for earthquakes can be costly and in limited supply.
•Climate and severe or inclement weather risk. ParticularlyMany of our markets, particularly those located in New England and the Metro New York/New Jersey area, wecoastal cities, are exposed to risks associated with inclement or severe weather including those arising from climate change such as hurricanes, severe winter storms and coastal flooding. Severe or inclement weather may result in increased costs resulting from increased maintenance, repair of water
•Terrorism and wind damage, removal of snow and ice, and, in the case of our Development Communities, delays in construction that result in increased construction costs and delays in realizing rental revenues from a community.
A single catastrophe that affects one of our regions, such as an earthquake that affects the West Coast or a hurricane or severe winter storm that affects the Mid-Atlantic, Metro New York/New Jersey or New England regions, may have a significant negative effect on our financial condition and results of operations.
Climate changeother risk. To the extent that significant changes in the climate occur in areas where our communities are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including significant property damage to or destruction of our communities, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our existing properties and our new development properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our net income.
Terrorism risk. We have significant investments in large metropolitan markets such as Metro New York/New Jersey and Washington, D.C., which markets have in the past been or may in the future be the target of actual or threatened terrorist attacks. Future terrorist attacks in these markets could directly or indirectly damage our communities, both physically and financially, or cause losses that exceed our insurance coverage and that could have a material adverse effect on our business, financial condition and results of operations.
A significant uninsured property or liability loss could have a material adverse effect on our financial condition and results of operations.
In addition to the earthquake insurance discussed above, weWe carry commercial general liability insurance, property insurance and terrorism insurance with respect to our communities on terms and in amounts we consider commercially reasonable. There are, however, certain types of losses (such as losses arising from acts of war) that arewe do not insured,insure, in full or in part, because they are either uninsurable or we believe the cost of insurance makes it,is economically impractical.
We may incur costs related to climate change. We may experience climate change impacts including extreme weather, sea level rise, the effects of declines in the Company's view, economically impractical. If an uninsured property loss available water supplies and changes in precipitation, temperature and wildfire exposure, all of which may result in physical damage to and/or a property lossdecrease in excessdemand for properties located in areas affected by these conditions. Should the impact of insured limits were tothese conditions be material in nature or occur we could lose our capital invested in a community, as well as the anticipated future revenues from such community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. If an uninsured liability to a third party were to occur, we would incur the costfor lengthy periods of defense and settlement with, or court ordered damages to, that third party. A significant uninsured property or liability loss could have a material adverse effect on our business andtime, our financial condition andor results of operations may be adversely affected, and may negatively impact the types and pricing of insurance we are able to procure. In addition, implementation of new or changes in existing federal, state and local regulations based on concerns about climate change could result in increased capital expenditures or operating expenses on our existing properties (for example, requiring retrofitting of existing systems) and our new development properties (for example, to improve energy efficiency, reduce greenhouse gas emissions and/or improve resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our results of operations. Further, laws and regulations at the federal, state and local level requiring climate-related disclosures, including the rules proposed by the SEC and the legislation recently enacted in the state of California, may increase compliance and data collection costs if, and when, such laws and regulations become effective.
We may incur costs due to environmental contamination or non-compliance.
Under various federal, state and local environmental and public health laws regulations and ordinances,regulations, we may be required, regardless of knowledge or responsibility, to investigate and remediate the presence or effects of hazardous or toxic substances such as asbestos, lead paint, chemical vapors from soils or groundwater, petroleum product releases, at our properties (including in some casesand natural substances such as methane and radon gas) andgas. We may be held liable under these laws or common law to a governmental entity or to third parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the contamination. These damages and costs may be substantial and may exceed any insurance coverage we have for such events. The presence of these substances, or the failure to properly remediate or contain the contamination, may adversely affect our ability to borrow against, develop, sell or rent the affected property. In addition,
some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination.
The development, construction and operation of our communities are subject to environmental, health and safety regulations and permitting under various federal, state and local laws, regulations and ordinances, which regulate matters including wetlands protection, storm water runoff and wastewater discharge. These laws and regulations may impose restrictions on the manner in whichhow our communities may be developed, and noncompliance with these laws and regulations may subject us to fines and penalties.penalties and may subject us to liability in connection with personal injury.
Certain federal, statelaws 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 renovation or demolition of a building. These laws and the common law may impose liability for release of ACMs and may allow third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs. We are not aware that any ACMs were used in the construction of the communities we developed. ACMs were, however, used in the construction of a number of the communities that we have acquired. WeAlthough we implement an operations and maintenance program at each of the communities at which ACMs are detected.
detected, we may fail to adequately observe such program or a disturbance of ACMs may occur nevertheless, exposing us to liability. We are aware that some of our communities have lead paint and have implemented an operations and maintenance program at each of those communities.
Environmental agencies and third parties may assert claims for remediation or personal injury based on the alleged actual or potential intrusion into buildings of chemical vapors from soils or groundwater underlying or in the vicinity of those buildings or on nearby properties.
All of our stabilized operating communities, and all of the communities that we are currently developing, have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or groundwater sampling. These assessments, together with subsurface assessments conducted on some properties, have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. In connection with our ownership, operation and development of communities, from time to time we may undertake substantial remedial action in response to the presence of subsurface or other contaminants, including contaminants in soil, groundwater and soil vapor beneath or affecting our buildings. In some cases, an indemnity exists upon which we may be able to rely if environmental liability arises from the contamination or remediation costs exceed estimates. There can be no assurance, however, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that environmental liability arises.
Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Certain molds may in some instances lead to adverse health effects, including allergic or other reactions. To help limit mold growth, we educate residents about the importance of adequate ventilation and request or require that they notify us when they see mold or excessive moisture. We have established procedures for promptly addressing and remediating mold or excessive moisture from apartment homes when we become aware of its presence regardless of whether we or the resident believe a health risk is presented. However, we cannot provide assurance that mold or excessive moisture will be detected and remediated in a timely manner. If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities that may exceed any applicable insurance coverage.
Additionally, we have occasionally been 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 relate to the release or presence of hazardous or toxic substances or petroleum products at such properties.
We cannot assure you that:
•the environmental assessments described above have 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 have developed since the 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 our communities;
•future uses or conditions, including, without limitation, changes in applicable environmental laws and regulations, will not result in the imposition of environmental liability; and
•no environmental liabilities will arise at communities that we have sold for which we may have liability.
Our success depends on key personnel whose continued service is not guaranteed.General Risk Factors
Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. Our executive officers make important capital allocation decisions or recommendations to our Board of Directors from among the opportunities identified by our regional offices. There is substantial competition for qualified personnel in the real estate industry, and the loss of our key personnel could adversely affect the Company.
Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to stockholders.
If we fail to qualify as a REIT for federal income tax purposes, we will be subject to regular U.S. federal corporate income tax on our taxable income. In addition, unless we are entitled to relief under applicable statutory provisions, we would be ineligible to make an election for treatment as a REIT for the four taxable years following the year in which we lose our qualification. The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of funds available for distribution to our stockholders. Furthermore, we would no longer be required to make distributions to our stockholders. Thus, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital, and would adversely affect the value of our common stock.
We believe that we are organized and qualified as a REIT, and we intend to operate in a manner that will allow us to continue to qualify as a REIT. However, we cannot assure you that we are qualified as a REIT, or that we will remain qualified in the future. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code for which there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. In addition, future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT for federal income tax purposes or the federal income tax consequences of this qualification.
Even if we qualify as a REIT, we will be subject to certain federal, state and local taxes on our income and property and on taxable income that we do not distribute to our stockholders. In addition, we may hold through our taxable REIT subsidiaries certain assets and engage in certain activities that a REIT could not engage in directly. We also may use taxable REIT subsidiaries to hold certain assets that we believe would be subject to the 100% prohibited transaction tax if sold at a gain outside of a taxable REIT subsidiary. Our taxable REIT subsidiaries are subject to U.S. tax as regular corporations. The Archstone Acquisition increased the amount of assets held through our taxable REIT subsidiaries.
Legislative or regulatory action related to federal income tax laws could adversely affect our stockholders, holders of debt securities and/or our business.
On December 22, 2017, H.R. 1, informally titled the Tax Cuts and Jobs Act (the “TCJA”), was enacted. The TCJA makes major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their stockholders. Among the changes made by the TCJA are (i) permanently reducing the generally applicable corporate tax rate, (ii) generally reducing the tax rate applicable to individuals and other non-corporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026, (iii) eliminating or modifying certain previously allowed deductions (including substantially limiting interest deductibility and, for individuals, the deduction for non-business state and local taxes), and (iv) for taxable years beginning after December 31, 2017 and before January 1, 2026, providing for preferential rates of taxation through a deduction of up to 20% (subject to certain limitations) on most ordinary REIT dividends and certain trade or business income of non-corporate taxpayers. The TCJA also imposes new limitations on the deduction of net operating losses, which may result in us having to make additional
taxable distributions to our stockholders in order to comply with REIT distribution requirements or avoid taxes on retained income and gains. The effect of the significant changes made by the TCJA is highly uncertain, and administrative guidance will be required in order to fully evaluate the effect of many provisions. The effect of any technical corrections with respect to the TCJA could have an adverse effect on us or our stockholders or holders of our debt securities. Investors should consult their tax advisors regarding the implications of the TCJA on their investment in our common stock, preferred stock or debt securities.
In addition, in recent years, numerous legislative, judicial and administrative changes have been made to the federal income tax laws applicable to investments in REITs and similar entities. Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. We cannot assure you that future changes to tax laws and regulations will not have an adverse effect on an investment in our common stock.
The ability of our stockholders to control our policies and effect a change of control of our company is limited by certain provisions of our charter and bylaws and by Maryland law.
There are provisions in our charter and bylaws that may discourage a third party from making a proposal to acquire us, even if some of our stockholders might consider the proposal to be in their best interests.us. These provisions include the following:
Our charter authorizes our Board of Directors to issue up to 50,000,000 shares of preferred stock without stockholder approval and to establish the preferences and rights, including voting rights, of any series of preferred stock issued. The Board of Directors may issue preferred stock without stockholder approval, whichThis could allow the Board to issue one or more classes or series of preferred stock that could discourage or delay a tender offer or a change in control.
To maintain our qualification as a REIT for federal income tax purposes, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by or for five or fewer individuals at any time during the last half of any taxable year. To maintain this qualification, and/or to address other concerns about concentrations of ownership of our stock, our charter generally prohibits ownership (directly, indirectly by virtue of the attribution provisions of the Code, or beneficially as defined in Section 13 of the Securities Exchange Act) by any single stockholder of more than 9.8% of the issued and outstanding shares of any class or series of our stock. In general, under our charter, pension plans and mutual funds may directly and beneficially own up to 15% of the outstanding shares of any class or series of stock. Under our charter, our Board of Directors may in its sole discretion waive or modify the ownership limit for one or more persons, but it is not required to do so even if such waiver would not affect our qualification as a REIT. These ownership limits may prevent or delay a change in control and, as a result, could adversely affect our stockholders' ability to realize a premium for their shares of common stock.
As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law. Maryland law imposes restrictions onLaw which restricts some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, which may delay or prevent offers to acquire us or increase the difficulty of completing any offers, even if they are in our stockholders' best interests. In addition, other provisions of the Maryland General Corporation Law permit the Board of Directors to make elections and to take actions without stockholder approval (such as classifying our Board such that the entire Board is not up for re-election annually) that, if made or taken, could have the effect of discouraging or delaying a change in control.
Litigation could adversely affect our business. We are and may in the future become involved in legal proceedings, claims, actions, inquiries and/or investigations in connection with our operations, which may result in defense costs, settlements, fines and/or judgments against us, some of which are not, or cannot be, covered by insurance, including risks related to the multifamily rental antitrust litigation discussed below. Legal proceedings and other claims, if decided adversely to or settled by us, and not covered by insurance, could result in liability material to our financial condition, results of operations or cash flows. Likewise, regardless of outcome, legal proceedings and other claims may result in substantial costs and expenses, affect the availability or cost of some of our insurance coverage and significantly divert the attention of our management. With respect to any legal proceeding or other claim, there can be no assurance that we will be able to prevail, or achieve a favorable settlement or outcome, or that our insurance and/or any contractual indemnities will be enough to cover all of our defense costs or any resulting liabilities.
Changes in U.S. accounting standards may materially and adversely affect the reporting of our operations. We follow accounting principles generally accepted in the United States (“GAAP”). GAAP is established by the Financial Accounting Standards Board (“FASB”), an independent body whose standards are recognized by the SEC as authoritative for publicly held companies. The FASB and the SEC create and interpret accounting standards and may change the interpretation and application of these standards that govern the preparation of our financial statements. These changes could have a material impact on our reported consolidated results of operations and financial position.
We rely on information technology in our operations, and any breach, interruption or security failure of that technology, or any non-compliance with applicable laws with respect to the use of that technology, could have a negative impact on our business, results of operations, financial condition and/or reputation. We rely on information technology, including the internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, personally identifiable information (“PII”), and tenant and lease data. Our business requires us and some of our vendors to use and store PII and other confidential and sensitive information of our residents and employees. Privacy and information security laws and regulations for PII continue to evolve and may be inconsistent from one jurisdiction to another. Compliance with all such laws and regulations may increase our operating costs and adversely impact our ability to market our properties and services.
Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. Cyber-attacks can include third parties gaining access to data using stolen or inferred credentials, computer malware, viruses, spamming, phishing attacks, ransomware, and other deliberate attacks and attempts to gain unauthorized access to our or our vendors’ data or information technology systems. Although our and our vendors' information technology systems are essential to the operation of our business and our ability to perform day-to-day operations, even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the
techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk. These threats, in turn, may lead to increased costs to protect our information systems, detect and respond to threats, and recover from cyber incidents. Our insurance program may not be adequate to cover all losses relating to such events.
There can be no assurance that we will be able to prevent unauthorized access to PII or to our network or business systems in general. Any failure in or breach of our operational or information security systems, or those of our vendors, as a result of cyber-attacks or other security incidents, could materially adversely impact our operations and financial position, including disruption of our operations caused by an inability to access network systems, disclosure or misuse of confidential or proprietary information (including PII of our residents and/or associates), damage to our reputation, and/or potentially significant legal and/or financial liabilities and penalties.
Various laws and regulations and interpretations thereof, as well as agreements with payment processors, require, or may require, us to comply with rules related to our business and our websites used by residents and prospective residents, including requirements related to accessibility of our websites to persons with disabilities and our handling and use of data, including personal data, that we collect. We could face liabilities for failure to comply with these requirements. Privacy laws and regulations, such as the California Consumer Privacy Act as amended by the California Privacy Rights Act (“CCPA”), related regulations and other U.S. state privacy laws, are evolving and may be subject to differing interpretations. We could incur costs to comply with stricter and more complex data privacy, data collection and information security laws and standards.
Any material weaknesses identified in our internal control over financial reporting could have an impact on our Company. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal control over financial reporting. One or more material weaknesses in our internal control over financial reporting could result in misstatements of our results of operations and related restatements, a decline in the price/value of our securities, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.
Our success depends on key personnel whose continued service is not guaranteed. Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. There is substantial competition for qualified personnel in the real estate industry, and the loss of our key personnel could adversely affect us.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management, Strategy and Governance
We have implemented and maintain a risk management framework designed to identify, assess, and mitigate risks from cybersecurity threats. We assess our cybersecurity program (“CSP”), as part of our enterprise risk management program, against the National Institute of Standards and Technology’s Cybersecurity Framework (“NIST CSF”) and also use as a model the Center for Internet Security (“CIS”) control framework’s Implementation Group 2 (“IG2”). We perform annual assessments against NIST CSF benchmarks and focus on continuous improvement over those criteria. We use a list of factors based on business risk tolerance and external compliance requirements to determine if a business asset, data, system, process, or service provider should be included within the scope of the CSP. Prior to contracting with an outside vendor that hosts our data, such as Company information, or PII of our associates or residents, or that integrates with our systems, our policy is to conduct a cybersecurity risk assessment, which includes, as appropriate, a due diligence questionnaire completed by the vendor, a System and Organization Controls 1 (“SOC1”) report from major vendors and a review of the vendor’s scope of access to our IT systems and data.
We also utilize third-party service providers to enhance our CSP, including engaging them annually to assess our CSP against the NIST CSF. We use one or more third-party managed security solution providers, who provide us with threat intelligence information and managed threat detection and response capabilities. We have also engaged a third party to assist with associate cybersecurity training. Additionally, we have engaged outside breach response legal counsel to assist the Company with cybersecurity counseling and incident response.
Although we have not experienced any material cybersecurity incidents, a future incident could materially affect us. We rely on information technology to process, transmit and store electronic information, and to manage or support a variety of business
processes, including financial transactions, PII, and resident and lease data. Our business requires us and some of our vendors, to use and store PII and other confidential and sensitive information of our residents and associates. Any failure in or breach of our operational or information security systems or those of our vendors as a result of cyber-attacks or other security incidents, could materially adversely impact our operations and financial position, including disruption of our operations caused by an inability to access network systems, disclosure or misuse of confidential or proprietary information (including PII of our residents and/or associates), damage to our reputation, and/or potentially significant legal and/or financial liabilities and penalties.
You should carefully review Part I, Item 1A. “Risk Factors” of this Form 10-K for a discussion of the risks to the Company related to cybersecurity.
Our cybersecurity team is headed by our Senior Director of Cybersecurity, who has over 15 years of experience with IT and cybersecurity. The cybersecurity team reports to our Senior Vice President-Information Technology. The Senior Director of Cybersecurity and the Senior Vice President-Information Technology are part of, and work with, a management Cybersecurity Steering Committee (“CSC”), which meets regularly. The CSC works to ensure strategic alignment of the CSP with our business objectives and priorities. The CSC is chaired by the Senior Director of Cybersecurity and is composed of our Chief Financial Officer, Chief Operating Officer, General Counsel and senior members of our finance, legal, IT, risk management and internal audit teams. The Company has designated an incident response team and defined criteria to guide responses to cybersecurity incidents.
The Audit Committee of our Board of Directors provides Board-level oversight of risks from cybersecurity threats. In addition to providing periodic reports, at least annually the Senior Director of Cybersecurity and the Senior Vice President-Information Technology meet with the Audit Committee regarding cybersecurity risks and assessments and related Company policies and initiatives. The Audit Committee and management have adopted a policy that categorizes cybersecurity incidents and sets out incident escalation procedures to the full Board of Directors.
ITEM 2. COMMUNITIESPROPERTIES
Our real estate investments consist primarily of current operating apartment communities (“Current Communities”), consolidated and unconsolidated communities in various stages of development (“Development Communities”)Development” communities and “Unconsolidated Development” communities) and Development Rights (as defined below). Our current operating communitiesCurrent Communities are further distinguishedclassified as Established Communities,Same Store communities, Other Stabilized Communities, Lease-Up Communities,communities, Redevelopment Communitiescommunities and Unconsolidated Communities.communities. While we generally establish the classification of communities on an annual basis, we intend to update the classification of communities during the calendar year to the extent that our plans with regard to the disposition or redevelopment of a community change during the year.change. The following is a description of each category:
Current Communities are categorized as Established,Same Store, Other Stabilized, Lease-Up, Redevelopment or Unconsolidated according to the following attributes:
Established Communities (also known as •Same Store Communities) are is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the respective prior year. The Established Communities foryear period. For the year ended December 31, 2017 are2023, Same Store communities that are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2016, are2022, did not conducting or planning to conduct substantial redevelopment activities and are not held for sale or planned for disposition within the current year.as of December 31, 2023. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 95%90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.
•Other Stabilized Communities are all otheris composed of completed consolidated communities that we own and that are not Same Store but which have stabilized occupancy, as defined above.above, as of January 1, 2023, or which were acquired subsequent to January 1, 2022. Other Stabilized Communities do not includeexcludes communities that are conducting or planning to conductconducted substantial redevelopment activities within the current year.
year, as defined below.
Lease-Up Communities are consolidated communities where construction has been complete for less than one year and where physical occupancy has not reached 95%.
•Redevelopment Communities areis composed of consolidated communities where substantial redevelopment occurred or is in progress or is planned to begin during the current year.progress. Redevelopment is considered substantial when (i) capital invested during the reconstruction effort is expected to exceed the lesser of $5,000,000 or 10% of the community's pre-redevelopment basis and (ii) physical occupancy is below or is expected to havebe below 90% during, or as a material impact on the operationsresult of, the community, including occupancy levels and future rental rates.
redevelopment activity.
•Unconsolidated Communities are is composed of communities that we have an indirect ownership interest in through our investment interest in an unconsolidated entity.
joint venture.
Development Communities are is composed of consolidated communities that are either currently under construction, were under construction and were completed during the current year or where construction has been complete for which a certificate or certificates of occupancy for the entire communityless than one year and that do not have not been received.stabilized occupancy. These communities may be partially or fully complete and operating.
Unconsolidated Development is composed of communities that are either currently under construction, or were under construction and were completed during the current year, in which we have an indirect ownership interest through our investment interest in an unconsolidated joint venture. These communities may be partially or fully complete and operating.
Development Rights are development opportunities in the early phase of the development process where we either have an option to acquire land or enter into a leasehold interest, where we are the buyer under a long-term conditional contract to purchase land, where we control the land through a ground lease or own land to develop a new community, or where we are the designated developer in a public-private partnership. We capitalize related pre-development costs incurred in pursuit of new developments for which we currently believe future development is probable.
We currently lease our corporate headquarters located in Arlington, Virginia, as well as our other regional and administrative offices, under operating leases.
As of December 31, 2017,2023, communities that we owned or held a direct or indirect interest in were classified as follows:
| | | | | | | | | | | |
| | Number of
communities | | Number of
apartment homes |
| Current Communities | | | |
| | | |
| Same Store: | | | |
| New England | 39 | | | 9,577 | |
| Metro NY/NJ | 41 | | | 12,766 | |
| Mid-Atlantic | 39 | | | 13,301 | |
| Southeast Florida | 7 | | | 2,187 | |
| Denver, CO | 4 | | | 1,086 | |
| Pacific Northwest | 20 | | | 5,474 | |
| Northern California | 40 | | | 12,133 | |
| Southern California | 58 | | | 17,281 | |
| Other Expansion Regions | 4 | | | 925 | |
| Total Same Store | 252 | | | 74,730 | |
| | | |
| Other Stabilized: | | | |
| New England | 1 | | | 350 | |
| Metro NY/NJ | — | | | — | |
| Mid-Atlantic | 4 | | | 1,895 | |
| Southeast Florida | 1 | | | 650 | |
| Denver, CO | 2 | | | 453 | |
| Pacific Northwest | — | | | — | |
| Northern California | — | | | — | |
| Southern California | 1 | | | 653 | |
| Other Expansion Regions | 5 | | | 1,587 | |
| Total Other Stabilized | 14 | | | 5,588 | |
| | | |
| Redevelopment | — | | | — | |
| | | |
| Unconsolidated | 8 | | | 2,247 | |
| | | |
| Total Current | 274 | | | 82,565 | |
| | | |
| Development | 24 | | | 7,629 | |
| | | |
| Unconsolidated Development | 1 | | | 475 | |
| | | |
| Total Communities | 299 | | | 90,669 | |
| | | |
| Development Rights | 30 | | | 10,801 | |
|
| | | | | |
| | Number of communities | | Number of apartment homes |
| Current Communities | |
| | |
|
| | | | |
| Established Communities: | |
| | |
|
| New England | 37 |
| | 8,397 |
|
| Metro NY/NJ | 35 |
| | 10,371 |
|
| Mid-Atlantic | 25 |
| | 8,985 |
|
| Pacific Northwest | 13 |
| | 3,305 |
|
| Northern California | 35 |
| | 10,325 |
|
| Southern California | 45 |
| | 13,330 |
|
| Total Established | 190 |
| | 54,713 |
|
| | | | |
| Other Stabilized Communities: | |
| | |
|
| New England | 6 |
| | 1,727 |
|
| Metro NY/NJ | 8 |
| | 2,090 |
|
| Mid-Atlantic | 8 |
| | 2,883 |
|
| Pacific Northwest | 2 |
| | 373 |
|
| Northern California | 4 |
| | 1,279 |
|
| Southern California | 10 |
| | 1,856 |
|
| Expansion Markets | 2 |
| | 622 |
|
| Non-Core | 3 |
| | 1,014 |
|
| Total Other Stabilized | 43 |
| | 11,844 |
|
| | | | |
| Lease-Up Communities | 14 |
| | 4,689 |
|
| | | | |
| Redevelopment Communities (1) | 9 |
| | 3,752 |
|
| | | | |
| Unconsolidated Communities | 11 |
| | 2,616 |
|
| | | | |
| Total Current Communities | 267 |
| | 77,614 |
|
| | | | |
| Development Communities (2) | 21 |
| | 6,544 |
|
| | | | |
| Total Communities | 288 |
| | 84,158 |
|
| | | | |
| Development Rights | 29 |
| | 9,496 |
|
| |
(1) | Redevelopment Communities includes the reconstruction of the building destroyed in the Edgewater casualty loss. Due to the nature of this reconstruction, the 240 apartment homes we expect the new building to contain upon completion are not included in the apartment home count presented, and will be included upon completion. |
| |
(2) | Development Communities includes AVA North Point, expected to contain 265 apartment homes, which is being developed within an unconsolidated joint venture. |
Our holdings under each of the above categories are discussed on the following pages.
We generally establish the composition of our Established CommunitiesSame Store communities portfolio annually. Changes in the Established CommunitiesSame Store communities portfolios for the years ended December 31, 2017, 20162023, 2022 and 20152021 were as follows:
| | | | | |
| Number of
communities |
| | |
| Number of
Same Store communities |
Established Communities as of December 31, 20142020 | 172232 | |
| Communities added | 1315 | |
Communities removed (1): | |
Redevelopment Communitiescommunities | (4— | | )
Disposed Communitiescommunities | (3(9) | | )
Other Stabilized (2) | (1(1) | | )
Established CommunitiesSame Store communities as of December 31, 20152021 | 177237 | |
| Communities added | 258 | |
Communities removed (1): | |
Redevelopment Communitiescommunities | (3(1) | | )
Disposed Communitiescommunities | (6(9) | | )
Communities with multiple phases combined | (2 | ) |
Established CommunitiesSame Store communities as of December 31, 20162022 | 191235 | |
| Communities added | 1721 | |
Communities removed (1): | |
Redevelopment Communitiescommunities | (10— | | )
Disposed Communitiescommunities | (6(4) | | )
Other Stabilized (2) | (1 | ) |
Communities with multiple phases combined | (1 | ) |
Established CommunitiesSame Store communities as of December 31, 20172023 | 190252 | |
| |
(1) | We remove a community from our Established Communities portfolio for the upcoming year (and then generally maintain that designation) if we believe that planned activity for a community for the upcoming year will result in that community's expected operations not being comparable to the prior year period. We believe that a community's expected operations will not be comparable to the prior year period when we intend either (i) to undertake a significant capital renovation of the community, such that we would consider the community to be classified as a Redevelopment Community; (ii) to dispose of a community through a sale or other disposition transaction; or (iii) when a significant casualty loss occurs. |
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(2) | Community was moved from the Established Communities portfolio to the Other Stabilized portfolio as a result of a casualty loss that occurred during the year. |
(1) Communities were removed from our Same Store portfolio if we believed that planned activity for the upcoming year would result in that community's expected operations not being comparable to the prior year, including (i) when we intended to undertake a significant capital renovation, such that the community was classified as a Redevelopment community; (ii) when we intended to dispose of a community; or (iii) when a significant casualty loss occurred.
Current Communities
Our Current Communities include garden-style apartment communities consisting of multi-story buildings of stacked flats and/or townhome apartments in landscaped settings, as well as mid and high rise apartment communities consisting of larger elevator-served buildings of four or more stories, frequently with structured parking. As of January 31, 2018,2024, our Current Communities consisted of the following:
| | | | | | | | | | | |
| | Number of
communities | | Number of
apartment homes |
| Garden-style | 131 | | | 41,026 | |
| Mid-rise | 120 | | | 34,187 | |
| High-rise | 28 | | | 8,442 | |
| Total Current Communities | 279 | | | 83,655 | |
|
| | | | | |
| | Number of communities | | Number of apartment homes |
| Garden-style | 131 |
| | 39,961 |
|
| Mid-rise | 110 |
| | 29,901 |
|
| High-rise | 26 |
| | 7,752 |
|
| Total Current Communities | 267 |
| | 77,614 |
|
As discussed in Item 1. “Business,” we operate under threefour core brands brands: Avalon, AVA, eaves by Avalon and Eaves by Avalon.Kanso. We believe that this branding differentiation allows us to target our product offerings to multiple customer groups and submarkets within our existing geographic footprint. Our core “Avalon” brand focuses on upscale apartment living and high end amenities and services. “AVA” targets customers in high energy, transit-served urban neighborhoods and generally feature smaller apartments, many of which are designed for roommate living with an emphasis on modern design and a technology focus. “Eaves by Avalon” is targeted to the cost conscious, “value” segment in suburban areas. We believe that these brands allow us to further penetrate our existing markets by targeting our market by consumer preference and attitude as well as by location and price.
We also have an extensive and ongoing maintenance program to continually maintain and enhance our communities and apartment homes. The aesthetic appeal of our communities, and a service-oriented property management team that is focused on the specific needs of residents, enhances market appeal to discriminating residents.appeal. We believe our mission of Creating“Creating a Better Way To Liveto Live” helps us achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses.
Our Current Communities are located in the following geographic markets:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of
communities at | | Number of
apartment homes at | | Percentage of total
apartment homes at |
| | 1/31/2023 | | 1/31/2024 | | 1/31/2023 | | 1/31/2024 | | 1/31/2023 | | 1/31/2024 |
| New England | 41 | | | 42 | | | 10,221 | | | 10,328 | | | 12.4 | % | | 12.4 | % |
| | | | | | | | | | | |
| Metro NY/NJ | 47 | | | 49 | | | 14,296 | | | 14,756 | | | 17.4 | % | | 17.6 | % |
| New York City, NY | 14 | | | 14 | | | 5,089 | | | 5,089 | | | 6.2 | % | | 6.1 | % |
| New York Suburban | 12 | | | 13 | | | 3,792 | | | 3,878 | | | 4.6 | % | | 4.6 | % |
| New Jersey | 21 | | | 22 | | | 5,415 | | | 5,789 | | | 6.6 | % | | 6.9 | % |
| | | | | | | | | | | |
| Mid-Atlantic | 45 | | | 44 | | | 15,770 | | | 15,501 | | | 19.2 | % | | 18.5 | % |
| Washington Metro | 39 | | | 36 | | | 13,808 | | | 12,784 | | | 16.8 | % | | 15.3 | % |
| Baltimore, MD | 6 | | | 8 | | | 1,962 | | | 2,717 | | | 2.4 | % | | 3.2 | % |
| | | | | | | | | | | |
| Southeast Florida | 8 | | | 8 | | | 2,837 | | | 2,837 | | | 3.4 | % | | 3.4 | % |
| | | | | | | | | | | |
| Denver, Colorado | 6 | | | 6 | | | 1,539 | | | 1,539 | | | 1.9 | % | | 1.8 | % |
| | | | | | | | | | | |
| Pacific Northwest | 21 | | | 21 | | | 5,802 | | | 5,802 | | | 7.0 | % | | 6.9 | % |
| | | | | | | | | | | |
| Northern California | 42 | | | 41 | | | 12,641 | | | 12,446 | | | 15.3 | % | | 14.9 | % |
| San Jose, CA | 12 | | | 12 | | | 4,723 | | | 4,723 | | | 5.7 | % | | 5.7 | % |
| Oakland-East Bay, CA | 15 | | | 15 | | | 4,338 | | | 4,338 | | | 5.3 | % | | 5.2 | % |
| San Francisco, CA | 15 | | | 14 | | | 3,580 | | | 3,385 | | | 4.3 | % | | 4.0 | % |
| | | | | | | | | | | |
| Southern California | 59 | | | 59 | | | 17,924 | | | 17,934 | | | 21.7 | % | | 21.4 | % |
| Los Angeles, CA | 39 | | | 39 | | | 12,133 | | | 12,143 | | | 14.7 | % | | 14.5 | % |
| Orange County, CA | 13 | | | 13 | | | 4,024 | | | 4,024 | | | 4.9 | % | | 4.8 | % |
| San Diego, CA | 7 | | | 7 | | | 1,767 | | | 1,767 | | | 2.1 | % | | 2.1 | % |
| | | | | | | | | | | |
| Other Expansion Regions | 6 | | | 9 | | | 1,381 | | | 2,512 | | | 1.7 | % | | 3.1 | % |
| North Carolina | 4 | | | 5 | | | 760 | | | 963 | | | 0.9 | % | | 1.2 | % |
| Texas | 2 | | | 4 | | | 621 | | | 1,549 | | | 0.8 | % | | 1.9 | % |
| 275 | | | 279 | | | 82,411 | | | 83,655 | | | 100.0 | % | | 100.0 | % |
|
| | | | | | | | | | | | | | | | | |
| | Number of communities at | | Number of apartment homes at | | Percentage of total apartment homes at |
| | 1/31/2017 | | 1/31/2018 | | 1/31/2017 | | 1/31/2018 | | 1/31/2017 | | 1/31/2018 |
| New England | 50 |
| | 50 |
| | 11,783 |
| | 12,392 |
| | 15.7 | % | | 15.9 | % |
| Boston, MA | 37 |
| | 40 |
| | 9,234 |
| | 10,422 |
| | 12.3 | % | | 13.4 | % |
| Fairfield-New Haven, CT | 13 |
| | 10 |
| | 2,549 |
| | 1,970 |
| | 3.4 | % | | 2.5 | % |
| | | | | | | | | | | | |
| Metro NY/NJ | 49 |
| | 51 |
| | 14,604 |
| | 14,470 |
| | 19.4 | % | | 18.6 | % |
| New York City, NY | 12 |
| | 13 |
| | 4,583 |
| | 4,909 |
| | 6.1 | % | | 6.3 | % |
| New York Suburban | 17 |
| | 18 |
| | 4,513 |
| | 4,419 |
| | 6.0 | % | | 5.7 | % |
| New Jersey | 20 |
| | 20 |
| | 5,508 |
| | 5,142 |
| | 7.3 | % | | 6.6 | % |
| | | | | | | | | | | | |
| Mid-Atlantic | 39 |
| | 40 |
| | 14,374 |
| | 14,461 |
| | 19.2 | % | | 18.6 | % |
| Washington Metro/Baltimore, MD | 39 |
| | 40 |
| | 14,374 |
| | 14,461 |
| | 19.2 | % | | 18.6 | % |
| | | | | | | | | | | | |
| Pacific Northwest | 17 |
| | 18 |
| | 4,092 |
| | 4,669 |
| | 5.5 | % | | 6.0 | % |
| Seattle, WA | 17 |
| | 18 |
| | 4,092 |
| | 4,669 |
| | 5.5 | % | | 6.0 | % |
| | | | | | | | | | | | |
| Northern California | 42 |
| | 41 |
| | 12,410 |
| | 12,222 |
| | 16.5 | % | | 15.8 | % |
| San Jose, CA | 13 |
| | 12 |
| | 4,905 |
| | 4,713 |
| | 6.5 | % | | 6.1 | % |
| Oakland-East Bay, CA | 13 |
| | 13 |
| | 3,843 |
| | 3,847 |
| | 5.1 | % | | 5.0 | % |
| San Francisco, CA | 16 |
| | 16 |
| | 3,662 |
| | 3,662 |
| | 4.9 | % | | 4.7 | % |
| | | | | | | | | | | | |
| Southern California | 59 |
| | 62 |
| | 16,761 |
| | 17,764 |
| | 22.3 | % | | 23.0 | % |
| Los Angeles, CA | 38 |
| | 40 |
| | 11,291 |
| | 11,916 |
| | 15.0 | % | | 15.4 | % |
| Orange County, CA | 12 |
| | 13 |
| | 3,243 |
| | 3,621 |
| | 4.3 | % | | 4.7 | % |
| San Diego, CA | 9 |
| | 9 |
| | 2,227 |
| | 2,227 |
| | 3.0 | % | | 2.9 | % |
| | | | | | | | | | | | |
| Expansion markets | — |
| | 2 |
| | — |
| | 622 |
| | — |
| | 0.8 | % |
| Denver, CO | — |
| | 1 |
| | — |
| | 252 |
| | — |
| | 0.3 | % |
| Southeast Florida | — |
| | 1 |
| | — |
| | 370 |
| | — |
| | 0.5 | % |
| | | | | | | | | | | | |
| Non-Core | 3 |
| | 3 |
| | 1,014 |
| | 1,014 |
| | 1.4 | % | | 1.3 | % |
| | 259 |
| | 267 |
| | 75,038 |
| | 77,614 |
| | 100.0 | % | | 100.0 | % |
We manage and operate substantially all of our Current Communities. During the year ended December 31, 2017,2023, we completed construction of 14six communities containing 5,1891,393 apartment homes, acquired three communities containing 1,131 apartment homes and sold 10four operating communities containing an aggregate of 3,182987 apartment homes. The average age of our Current Communities, on a weighted average basis according to number of apartment homes, is 18.7 years. When adjusted to reflect redevelopment activity, as if redevelopment were a new construction completion date, the weighted average age of our Current Communities is 11.5 years.
Of the Current Communities, as of January 31, 2018,2024, we owned (directly or through wholly-owned subsidiaries):
254•270 operating communities, including 241263 with a full fee simple or absolute ownership interest, and 13seven that are on land subject to a land lease, two of which are dual-branded communities governed by a single land lease. The land leases have various expiration dates from October 2026July 2046 to March 2142,April 2106, and sixthree of the land leases are used to support tax advantaged structures that ultimately allow us to purchase the land upon lease expiration;expiration.
a general partnership interest and an indirect limited partnership•A membership interest in the U.S. Fund and the AC JV. Subsidiariesfive limited liability companies. One of the U.S. Fund own a fee simple interest in six operating communities, of which one is subject to a land lease, andventures, the NYTA MF Investors LLC, through subsidiaries of the AC JV ownowns a fee simple interest in three operating communities;
communities and a general partnershipleasehold interest in one partnership structured as a “DownREIT,” as described more fully below, that owns one community; and
a membership interest in three limited liability companies, thattwo additional operating communities. The other four ventures each hold a fee simple interest in an operating community.community, one of which is consolidated for financial reporting purposes.
In addition to our Current Communities, we also hold, directly or through wholly-owned subsidiaries, thea full fee simple ownership interest in 20 of the 21 Development Communities. One Development Community is being developed within a joint venture.
In our partnership structured as a DownREIT, one of our wholly-owned subsidiaries is the general partner,Development Communities and there are limited partners whosea membership interest in the partnership is represented by units ofone limited partnership interest. Limited partners are entitled to receiveliability company that holds a fee simple interest in an initial distribution before any distribution is made to the general partner. Under the partnership agreement for the DownREIT, the distributions per unit paid to the holders of units of limited partnership interests are equal to our current common stock dividend amount. The holders of units of limited partnership interest have the right to present all or some of their units for redemption for a cash amount as determined by the partnership agreement and based on the fair value of our common stock. In lieu of a cash redemption by the partnership, we may elect to acquire any unit presented for redemption for one share of our common stock or for such cash amount. As of January 31, 2018, there were 7,500 DownREIT partnership units outstanding. The DownREIT partnership is consolidated for financial reporting purposes.Unconsolidated Development Community.
Development Communities
As of December 31, 2017,2023, we owned or held a direct or indirect interest in 2117 Development Communities under construction. We expect these Development Communities, when completed, to add a total of 6,5446,064 apartment homes and 97,00059,000 square feet of retailcommercial space to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $2,979,000,000.$2,491,000,000. We cannot assure you that we will meet our schedule for construction completion or that we will meet our budgeted costs, either individually, or in the aggregate. You should carefully review Item 1A. “Risk Factors” for a discussion of the risks associated with development activity and our discussion under Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” (including the factors identified under “Forward-Looking Statements”) for further discussion of development activity.
The following table presents a summary of the Development Communities. We hold
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of
apartment
homes | | Projected total
capitalized cost (1)
($ millions) | | Construction
start | | Initial projected or actual occupancy | | Estimated
completion | | Estimated
stabilized operations (2) |
| 1. | | Avalon Amityville
Amityville, NY | 338 | | | $ | 134 | | | Q2 2021 | | Q3 2023 | | Q2 2024 | | Q4 2024 |
| 2. | | Avalon Bothell Commons I
Bothell, WA | 467 | | | 236 | | | Q2 2021 | | Q3 2023 | | Q2 2024 | | Q1 2025 |
| 3. | | Avalon Westminster Promenade
Westminster, CO | 312 | | | 112 | | | Q3 2021 | | Q2 2024 | | Q3 2024 | | Q2 2025 |
| 4. | | Avalon West Dublin
Dublin, CA | 499 | | | 267 | | | Q3 2021 | | Q4 2023 | | Q4 2024 | | Q2 2025 |
| 5. | | Avalon Montville
Montville, NJ | 349 | | | 127 | | | Q4 2021 | | Q4 2023 | | Q3 2024 | | Q4 2024 |
| 6. | | Avalon Redmond Campus (3)
Redmond, WA | 214 | | | 89 | | | Q4 2021 | | Q1 2024 | | Q2 2024 | | Q4 2024 |
| 7. | | Avalon Governor's Park
Denver, CO | 304 | | | 135 | | | Q1 2022 | | Q3 2024 | | Q4 2024 | | Q2 2025 |
| 8. | | Avalon West Windsor (4)
West Windsor, NJ | 535 | | | 201 | | | Q2 2022 | | Q2 2025 | | Q3 2026 | | Q1 2027 |
| 9. | | Avalon Durham (5)
Durham, NC | 336 | | | 125 | | | Q2 2022 | | Q2 2024 | | Q3 2024 | | Q2 2025 |
| 10. | | Avalon Annapolis
Annapolis, MD | 508 | | | 200 | | | Q3 2022 | | Q3 2024 | | Q3 2025 | | Q2 2026 |
| 11. | | Kanso Milford
Milford, MA | 162 | | | 65 | | | Q4 2022 | | Q1 2024 | | Q3 2024 | | Q1 2025 |
| 12. | | Avalon Lake Norman (5)
Mooresville, NC | 345 | | | 101 | | | Q1 2023 | | Q1 2025 | | Q1 2026 | | Q3 2026 |
| 13. | | Avalon Hunt Valley West
Hunt Valley, MD | 322 | | | 109 | | | Q2 2023 | | Q1 2025 | | Q1 2026 | | Q3 2026 |
| 14. | | Avalon South Miami (4)
South Miami, FL | 290 | | | 186 | | | Q3 2023 | | Q3 2025 | | Q1 2026 | | Q3 2026 |
| 15. | | Avalon Princeton Shopping Center
Princeton, NJ | 200 | | | 82 | | | Q3 2023 | | Q1 2025 | | Q2 2025 | | Q4 2025 |
| 16. | | Avalon Wayne
Wayne, NJ | 473 | | | 174 | | | Q4 2023 | | Q2 2025 | | Q2 2026 | | Q4 2026 |
| 17. | | Avalon Parsippany
Parsippany, NJ | 410 | | | 148 | | | Q4 2023 | | Q3 2025 | | Q2 2026 | | Q3 2026 |
| | | Total | 6,064 | | | $ | 2,491 | | | | | | | | | |
(1)Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
(2)Stabilized operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
(3)Avalon Redmond Campus is a fee simple ownership interest in thesedensification of the existing eaves Redmond Campus wholly-owned community, replacing 48 existing older apartment homes that were demolished.
(4)Development Communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 square feet) and Avalon South Miami (32,000 square feet).
(5)Communities being developed through our Developer Funding Program (“DFP”). The DFP utilizes third-party multifamily developers to source and construct communities (directly or through a wholly-owned subsidiary) unless otherwise noted in the table.which we own and operate.
|
| | | | | | | | | | | | | | | | |
| | Number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Construction start | | Initial actual/ projected occupancy (2) | | Estimated completion | | Estimated stabilization (3) |
| 1. | | AVA NoMa Washington, D.C. | 438 |
| | $ | 147 |
| | Q2 2015 | | Q1 2017 | | Q1 2018 | | Q3 2018 |
| 2. | | Avalon Brooklyn Bay (4)
Brooklyn, NY | 180 |
| | 90 |
| | Q3 2015 | | Q3 2017 | | Q1 2018 | | Q2 2018 |
| 3. | | Avalon Maplewood (5) Maplewood, NJ | 235 |
| | 66 |
| | Q4 2015 | | Q4 2017 | | Q3 2018 | | Q1 2019 |
| 4. | | AVA Wheaton Wheaton, MD | 319 |
| | 77 |
| | Q4 2015 | | Q3 2017 | | Q2 2018 | | Q4 2018 |
| 5. | | Avalon Dogpatch
San Francisco, CA | 326 |
| | 203 |
| | Q4 2015 | | Q3 2017 | | Q3 2018 | | Q1 2019 |
| 6. | | Avalon Somers Somers, NY | 152 |
| | 45 |
| | Q2 2016 | | Q2 2017 | | Q1 2018 | | Q2 2018 |
| 7. | | AVA North Point (6) Cambridge, MA | 265 |
| | 114 |
| | Q2 2016 | | Q1 2018 | | Q4 2018 | | Q2 2019 |
| 8. | | Avalon Boonton Boonton, NJ | 350 |
| | 91 |
| | Q3 2016 | | Q2 2019 | | Q1 2020 | | Q3 2020 |
| 9. | | 11 West 61st Street (7) New York, NY | 172 |
| | 604 |
| | Q4 2016 | | Q2 2019 | | Q4 2019 | | Q2 2020 |
| 10. | | Avalon Belltown Towers (7) Seattle, WA | 275 |
| | 147 |
| | Q4 2016 | | Q3 2019 | | Q4 2019 | | Q2 2020 |
| 11. | | Avalon Public Market Emeryville, CA | 289 |
| | 149 |
| | Q4 2016 | | Q3 2018 | | Q1 2019 | | Q3 2019 |
| 12. | | Avalon Teaneck Teaneck, NJ | 248 |
| | 73 |
| | Q4 2016 | | Q2 2019 | | Q1 2020 | | Q3 2020 |
| 13. | | AVA Hollywood (7) Hollywood, CA | 695 |
| | 365 |
| | Q4 2016 | | Q2 2019 | | Q2 2020 | | Q4 2020 |
| 14. | | AVA Esterra Park Redmond, WA | 323 |
| | 91 |
| | Q2 2017 | | Q4 2018 | | Q3 2019 | | Q1 2020 |
| 15. | | Avalon at the Hingham Shipyard II Hingham, MA | 190 |
| | 64 |
| | Q2 2017 | | Q4 2018 | | Q2 2019 | | Q4 2019 |
| 16. | | Avalon Piscataway Piscataway, NJ | 360 |
| | 89 |
| | Q2 2017 | | Q3 2018 | | Q2 2019 | | Q4 2019 |
| 17 | | Avalon Sudbury Sudbury, MA | 250 |
| | 85 |
| | Q3 2017 | | Q2 2018 | | Q1 2019 | | Q3 2019 |
| 18. | | Avalon Towson Towson, MD | 371 |
| | 114 |
| | Q4 2017 | | Q1 2020 | | Q4 2020 | | Q2 2021 |
| 19. | | Avalon Yonkers Yonkers, NY | 590 |
| | 188 |
| | Q4 2017 | | Q4 2019 | | Q2 2021 | | Q3 2021 |
| 20. | | Avalon Walnut Creek II Walnut Creek, CA | 200 |
| | 93 |
| | Q4 2017 | | Q3 2019 | | Q1 2020 | | Q2 2020 |
| 21. | | Avalon North Creek Bothell, WA | 316 |
| | 84 |
| | Q4 2017 | | Q2 2019 | | Q1 2020 | | Q3 2020 |
| | | Total | 6,544 |
| | $ | 2,979 |
| | | | | | | | |
| |
(1) | Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees. Projected total capitalized cost for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount unless otherwise noted. |
| |
(2) | Initial projected occupancy dates are estimates. There can be no assurance that we will pursue to completion any or all of these proposed developments. |
| |
(3) | Stabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
|
| |
(4) | We are developing this project with a private development partner. Projected total capitalized cost as presented is for the rental portion of the development on floors 3 through 19, which we will own, with the partner owning the for-sale condominium portion on floors 20 through 30 of the development. We are providing a construction loan to the development partner, expected to be $48,800,000 which together with the partner's contributed equity is expected to fund the condominium portion of the project. A more detailed description of Avalon Brooklyn Bay can be found in Note 5, “Investments in Real Estate Entities,” of the Consolidated Financial Statements set forth in Item 8 of this report. |
| |
(5) | In February 2017, a fire occurred at Avalon Maplewood. See "Insurance and Risk of Uninsured Losses" for further discussion. |
| |
(6) | We are developing this project within an unconsolidated joint venture that was formed in July 2016, in which we own a 55.0% interest. The information above represents the total cost for the venture. |
| |
(7) | Developments containing at least 10,000 square feet of retail space include 11 West 61st Street (67,000 square feet), Avalon Belltown Towers (11,000 square feet) and AVA Hollywood (19,000 square feet). |
During the year ended December 31, 2017, the Company2023, we completed the development of the following wholly-owned communities:
|
| | | | | | | | | | | | | | | | | |
| | Number of
apartment
homes | | Total capitalized cost (1)
($ millions) | | Approximate rentable area (sq. ft.) (2) | | Total capitalized cost per sq. ft. | | Quarter of completion |
| 1. | | Avalon Willoughby Square/AVA DoBro Brooklyn, NY | 826 |
| | $ | 456 |
| | 607,579 |
| | $ | 751 |
| | Q1 2017 |
| 2. | | Avalon Huntington Beach (2) Huntington Beach, CA | 378 |
| | 120 |
| | 331,160 |
| | $ | 362 |
| | Q1 2017 |
| 3. | | Avalon Laurel Laurel, MD | 344 |
| | 72 |
| | 378,688 |
| | $ | 190 |
| | Q1 2017 |
| 4. | | Avalon Esterra Park (2) Redmond, WA | 482 |
| | 138 |
| | 457,481 |
| | $ | 302 |
| | Q2 2017 |
| 5. | | Avalon Quincy Quincy, MA | 395 |
| | 93 |
| | 372,683 |
| | $ | 250 |
| | Q2 2017 |
| 6. | | Avalon Princeton Princeton, NJ | 280 |
| | 95 |
| | 287,386 |
| | $ | 331 |
| | Q2 2017 |
| 7. | | Avalon Hunt Valley Hunt Valley, MD | 332 |
| | 74 |
| | 320,968 |
| | $ | 231 |
| | Q2 2017 |
| 8. | | Avalon Chino Hills Chino Hills, CA | 331 |
| | 97 |
| | 327,890 |
| | $ | 296 |
| | Q3 2017 |
| 9. | | Avalon North Station
Boston, MA | 503 |
| | 271 |
| | 408,714 |
| | $ | 663 |
| | Q4 2017 |
| 10. | | Avalon West Hollywood (2) West Hollywood, CA | 294 |
| | 154 |
| | 314,165 |
| | $ | 490 |
| | Q4 2017 |
| 11. | | Avalon Newcastle Commons I (2)
Newcastle, WA | 378 |
| | 123 |
| | 401,604 |
| | $ | 306 |
| | Q4 2017 |
| 12. | | Avalon Great Neck Great Neck, NY | 191 |
| | 81 |
| | 203,004 |
| | $ | 399 |
| | Q4 2017 |
| 13. | | Avalon Rockville Centre II Rockville Centre, NY | 165 |
| | 59 |
| | 148,041 |
| | $ | 399 |
| | Q4 2017 |
| 14. | | Avalon Easton Easton, MA | 290 |
| | 64 |
| | 347,144 |
| | $ | 184 |
| | Q4 2017 |
| | | Total | 5,189 |
| | $ | 1,897 |
| | | | |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of
apartment
homes | | Total capitalized
cost (1)
($ millions) | | Approximate rentable area
(sq. ft.) | | Total capitalized cost per sq. ft. | | Quarter of completion |
| 1. | | Avalon Harrison (2)
Harrison, NY | 143 | | | $ | 94 | | | 171,036 | | | $ | 550 | | | Q2 2023 |
| 2. | | Avalon Brighton
Boston, MA | 180 | | | 90 | | | 167,230 | | | $ | 538 | | | Q2 2023 |
| 3. | | Avalon Somerville Station
Somerville, NJ | 374 | | | 121 | | | 368,396 | | | $ | 328 | | | Q3 2023 |
| 4. | | Avalon North Andover
North Andover, MA | 221 | | | 77 | | | 216,545 | | | $ | 356 | | | Q3 2023 |
| 5. | | Avalon Merrick Park (3)
Miami, FL | 254 | | | 104 | | | 218,742 | | | $ | 475 | | | Q3 2023 |
| 6. | | Avalon Princeton Circle
Princeton, NJ | 221 | | | 89 | | | 253,462 | | | $ | 351 | | | Q4 2023 |
| | Total | 1,393 | | | $ | 575 | | | | | | | |
| |
(1) | Total capitalized cost is as of December 31, 2017. We generally anticipate incurring additional costs associated with these communities that are customary for new developments. |
| |
(2) | Approximate rentable area includes retail space. Developments containing at least 10,000 square feet of retail space include Avalon Huntington Beach (10,000 square feet), Avalon Esterra Park (17,000 square feet), Avalon West Hollywood (29,000 square feet) and Avalon Newcastle Commons I (15,000 square feet). |
(1)Total capitalized cost is as of December 31, 2023. We generally anticipate incurring additional costs associated with these communities that are customary for new developments.
Redevelopment(2)Avalon Harrison contains 27,000 square feet of commercial space.
(3)Community was developed through our DFP.
Unconsolidated Development Communities
As of December 31, 2017,2023, we had ninean indirect interest in the following Unconsolidated Development Communities.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Unconsolidated
Development Community | | Company
ownership percentage | # of apartment homes | | Projected total
capitalized cost (1)
($ millions) | | Construction
start | | Initial occupancy | | Estimated
completion | | Estimated stabilized operations (4) |
| 1. | | AVA Arts District (2)(3)
Los Angeles, CA | | 25.0 | % | 475 | | $ | 291 | | | Q3 2020 | | Q3 2023 | | Q1 2024 | | Q4 2024 |
_____________________________
(1)Projected total capitalized cost includes all capitalized costs projected to be incurred to develop the respective Unconsolidated Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions. Projected total capitalized cost is the total projected joint venture amount.
(2)AVA Arts District is expected to contain 56,000 square feet of commercial space.
(3)As of December 31, 2023, we had contributed an equity investment in AVA Arts District of $32,738. The remaining development costs are primarily expected to be funded by the venture's variable rate construction loan. The venture had drawn $135,983 of the $167,147 maximum borrowing capacity of the construction loan as of December 31, 2023. While we guarantee the construction loan on behalf of the venture, any amounts payable under the guarantee are obligations of the venture partners in proportion to ownership interest.
(4)Stabilized operations is defined as the earlier of either (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
Unconsolidated Operating Communities
As of December 31, 2023, we had investments in the following unconsolidated real estate entities accounted for under the equity method of accounting, excluding development joint ventures. See Note 5, “Investments,” of the Consolidated Financial Statements included elsewhere in this report. For joint ventures holding operating apartment communities under redevelopment. as of December 31, 2023, detail of the real estate and associated indebtedness underlying our unconsolidated investments is presented in the following table (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Debt (1) |
| Unconsolidated Real Estate Investments | Company
Ownership
Percentage | | # of
Apartment
Homes | | Total
Capitalized
Cost | | Principal Amount | | Type | | Interest
Rate | | Maturity
Date |
| NYTA MF Investors LLC | | | | | | | | | | | | | |
| 1. Avalon Bowery Place I—New York, NY | | | 206 | | $ | 215,923 | | | $ | 93,800 | | | Fixed | | 4.01 | % | | Jan 2029 |
| 2. Avalon Bowery Place II—New York, NY | | | 90 | | 91,368 | | | 39,639 | | | Fixed | | 4.01 | % | | Jan 2029 |
| 3. Avalon Morningside—New York, NY (2) | | | 295 | | 212,444 | | | 111,295 | | | Fixed | | 3.55 | % | | Jan 2029/May 2046 |
| 4. Avalon West Chelsea—New York, NY (3) | | | 305 | | 129,225 | | | 66,000 | | | Fixed | | 4.01 | % | | Jan 2029 |
| 5. AVA High Line—New York, NY (3) | | | 405 | | 122,463 | | | 84,000 | | | Fixed | | 4.01 | % | | Jan 2029 |
| Total NYTA MF Investors LLC | 20.0 | % | | 1,301 | | | 771,423 | | | 394,734 | | | | | 3.88 | % | | |
| | | | | | | | | | | | | |
| Other Operating Joint Ventures | | | | | | | | | | | | | |
| 1. MVP I, LLC - Avalon at Mission Bay II - San Francisco, CA | 25.0 | % | | 313 | | | 129,681 | | | 103,000 | | | Fixed | | 3.24 | % | | Jul 2025 |
| 2. Brandywine Apartments of Maryland, LLC - Brandywine - Washington, D.C. | 28.7 | % | | 305 | | | 20,093 | | | 19,062 | | | Fixed | | 3.40 | % | | Jun 2028 |
3. Avalon Alderwood MF Member, LLC -
Avalon Alderwood Place - Lynnwood, WA | 50.0 | % | | 328 | | | 111,159 | | | — | | | N/A | | N/A | | N/A |
| Total Other Joint Ventures | | | 946 | | | 260,933 | | | 122,062 | | | | | 3.26 | % | | |
| | | | | | | | | | | | | |
| Total Unconsolidated Real Estate Investments (4) | | | 2,247 | | | $ | 1,032,356 | | | $ | 516,796 | | | | | 3.73 | % | | |
(1)We expecthave not guaranteed the debt of these unconsolidated investees and bear no responsibility for the repayment unless otherwise disclosed.
(2)Borrowing on this community is comprised of two mortgage loans. The interest rate is the weighted average interest rate as of December 31, 2023.
(3)Borrowing on this dual-branded community is comprised of a single mortgage loan. This dual-branded community is subject to a leasehold interest which is not included in the total capitalized costcost.
(4)In addition to redevelop these communities to be $269,000,000, excluding costs incurred prior to redevelopment. leasehold assets, there were net other assets of $30,792 as of December 31, 2023 associated with our unconsolidated real estate investments which are primarily cash and cash equivalents.
We have found that the cost to redevelophad an existing apartment community is more difficult to budget and estimate than the cost to develop a new community. Accordingly, we expect that actual costs may vary from our budget by a wider range than for a new Development Community. We cannot assure you that we will meet our schedule for reconstruction completion or for attaining restabilized operations, or that we will meet our budgeted costs, either individually orequity interest of 28.6% in the aggregate. We anticipate maintaining or increasingArchstone Multifamily Partners AC LP (the “U.S. Fund”) and because we achieved a threshold return for the fund, during the years ended December 31, 2023 and 2022, we recognized income of $1,519,000 and $4,690,000, respectively, for our current levelpromoted interest, which is included in income from unconsolidated investments on the accompanying Consolidated Statements of redevelopment activity related toComprehensive Income. The U.S. Fund sold its final three communities in our current operating portfolio. You should carefully review Item 1A. “Risk Factors” for a discussion2022 and has completed its dissolution in 2023.
The following presents a summary of these Redevelopment Communities:
|
| | | | | | | | | | | | | | | |
| | | | | Number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Reconstruction start | | Estimated reconstruction completion | | Estimated restabilized operations (2) |
| 1. | | Avalon on the Alameda San Jose, CA | | 305 |
| | $ | 10 |
| | Q1 2017 | | Q1 2018 | | Q3 2018 |
| 2. | | AVA Toluca Hills Los Angeles, CA | | 1,151 |
| | 79 |
| | Q1 2017 | | Q1 2019 | | Q3 2019 |
| 3. | | Avalon Ballston Square Arlington, VA | | 714 |
| | 25 |
| | Q4 2017 | | Q1 2019 | | Q3 2019 |
| 4. | | Avalon Prudential Center II Boston, MA | | 266 |
| | 19 |
| | Q1 2017 | | Q3 2019 | | Q1 2020 |
| 5. | | Avalon Midtown West New York, NY | | 550 |
| | 30 |
| | Q1 2017 | | Q2 2019 | | Q4 2019 |
| 6. | | Avalon Willow
Mamaroneck, NY | | 227 |
| | 13 |
| | Q2 2017 | | Q1 2018 | | Q3 2018 |
| 7. | | Avalon at Edgewater II (3)
Edgewater, NJ | | 240 |
| | 60 |
| | Q2 2017 | | Q1 2019 | | Q3 2019 |
| 8. | | Avalon at Florham Park
Florham Park, NJ | | 270 |
| | 13 |
| | Q3 2017 | | Q3 2018 | | Q1 2019 |
| 9. | | AVA Van Ness Washington, D.C. | | 269 |
| | 20 |
| | Q3 2017 | | Q1 2019 | | Q3 2019 |
| | | Total | | 3,992 |
| | $ | 269 |
| | | | | | |
| |
(1) | Projected total capitalized cost does not include capitalized costs incurred prior to redevelopment. |
| |
(2) | Restabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of redevelopment. |
| |
(3) | Redevelopment Communities includes the reconstruction of the building destroyed in the Edgewater casualty loss. Due to the nature of this reconstruction, the 240 apartment homes that we expect the new building to contain upon completion are not included in the apartment home count presented elsewhere in this Form 10-K, and will be included upon completion. |
Development Rights
At December 31, 2017,2023, we had $68,364,000$199,062,000 in acquisition and related capitalized costs for direct interests in eight land parcels we own, and $45,819,000own. In addition, we had $53,122,000 in capitalized costs (including legal fees, design fees and related overhead costs) related to (i) 19 Development Rights for which we control the land parcel, typically through a conditional agreement or option to purchase or lease the land.land, as well as (ii) costs incurred for three Development Rights that we expect to construct as additional phases of our existing stabilized operating communities on land we own. Collectively, the land held for development and associated costs for deferred development rights relate to 2930 Development Rights for which we expect to develop new apartment communities in the future. The cumulative capitalized costs for land held for development as of December 31, 2017 includes $48,446,000 in original land acquisition costs. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately. We estimate that the successful completion of all of these communities would ultimately add approximately 9,49610,801 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own.
For 23 Development Rights, we control the land through a conditional agreement or option to purchase or lease the parcel. While we generally prefer to hold Development Rights through conditional agreements or options to acquire land, for four Development Rights we either currently own the land, have an ownership interest in a joint venture that owns the land or have executed a long term land lease for the parcel of land on which a community would be built if we proceeded with development. In addition, two Development Rights are additional development phases of existing stabilized operating communities we own and will be constructed on land currently associated with those operating communities. During the next 12 months we expect to commence construction of apartment communities on the four Development Rights for which we currently own the land, with a carrying basis of $68,364,000.
The properties comprising the Development Rights are in different stages of the due diligence and regulatory approval process. The decisions as to which of the Development Rights to invest in, if any, or to continue to pursue once an investment in a Development Right is made, are business judgments that we make after we perform financial, demographic and other analyses. In the event that we do not proceed with a Development Right, we generally would not recover any of the capitalized costs incurred in the pursuit of those communities, unless we were to recover amounts in connection with the sale of land; however, we cannot guarantee a recovery. Pre-development costs incurred in the pursuit of Development Rights, for which future development is not yet considered probable, are expensed as incurred. In addition, if the status of a Development Right changes, making future development no longer probable, any unrecoverable capitalized pre-development costs are charged to expense. During 2017,2023, we incurred a charge of $2,736,000$33,479,000 for expensed transaction, development and other pursuit costs, net of recoveries, which include development pursuits that were not yet probable of future development at the time incurred, or for pursuits that we determined were no longer probable of being developed. The amount for 2023 includes write-offs of $27,455,000 related to seven Development Rights that we determined are no longer probable.
You should carefully review Item 1A. “Risk Factors,” for a discussion of the risks associated with Development Rights.
The following presents a summary of the Development Rights:
|
| | | | | | | | | | |
| Market | | Number of rights | | Estimated number of homes | | Projected total capitalized cost ($ millions) (1) |
| | | | | | | |
| New England | | 6 |
| | 1,380 |
| | $ | 512 |
|
| Metro NY/NJ | | 11 |
| | 3,998 |
| | 1,559 |
|
| Mid-Atlantic | | 3 |
| | 1,058 |
| | 299 |
|
| Pacific Northwest | | 1 |
| | 272 |
| | 80 |
|
| Northern California | | 5 |
| | 1,507 |
| | 762 |
|
| Southern California | | 3 |
| | 1,281 |
| | 576 |
|
| Total | | 29 |
| | 9,496 |
| | $ | 3,788 |
|
| |
(1) | Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees. |
Land Acquisitions
We select land for development and follow established procedures that we believe minimize both the cost and the risks of development. During 20172023, we acquired the following land parcels for six Development Rights, as shown in the table below, for an aggregate investment of $83,738,000. For all of the parcels, construction has either started or is expected to start within the next six months.$80,870,000.
| | | | | | Estimated number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Date acquired | | | | Estimated
number of
apartment
homes | | Projected total
capitalized
cost (1)
($ millions) | | Date
acquired |
| 1. | | Avalon at the Hingham Shipyard II Hingham, MA | 190 |
| | $ | 64 |
| | January 2017 | 1. | | Avalon Quincy Adams
Quincy, MA | 288 | | | $ | | $ | 117 | | | April 2023 | | April 2023 |
| 2. | | Avalon North Creek Bothell, WA | 316 |
| | 84 |
| | March 2017 | 2. | | Avalon Princeton Shopping Center (2)
Princeton, NJ | 200 | | | 82 | | 82 | | | June 2023 | | June 2023 |
| 3. | | Avalon Saugus Saugus, WA | 280 |
| | 94 |
| | May 2017 | 3. | | Avalon Wayne (2)
Wayne, NJ | 473 | | | 174 | | 174 | | | September 2023 | | September 2023 |
| 4. | | Avalon Sudbury Sudbury, MA | 250 |
| | 85 |
| | June 2017 | 4. | | Avalon Oakridge I
Durham, NC | 459 | | | 148 | | 148 | | | October 2023 | | October 2023 |
| 5. | | Avalon Yonkers Yonkers, NY | 590 |
| | 188 |
| | August 2017 | 5. | | Avalon Parsippany (2)
Parsippany, NJ | 410 | | | 148 | | 148 | | | October 2023 | | October 2023 |
| 6. | | Avalon Harbor East Baltimore, MD | 387 |
| | 133 |
| | October 2017 | 6. | | Avalon Carmel
Charlotte, NC | 360 | | | 126 | | 126 | | | December 2023 | | December 2023 |
| | | Total | 2,013 |
| | $ | 648 |
| | | | | Total | 2,190 | | | $ | | $ | 795 | | | | | |
| |
(1) | (1)Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land and related acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, net of projected proceeds for any planned sales of associated outparcels and other real estate. |
Other Land and Real Estate Assets
We own land parcels with a carrying value of $13,640,000, which we do not currently plan to develop. These parcels consist of both ancillary parcels acquired in connection with Development Rights that we had not planned to develop the respective community, determined in accordance with GAAP, including land and land parcels we acquiredrelated acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for developmentfirst generation commercialtenants such as tenant improvements and now intend to sell. During 2017, we recognized an impairment chargeleasing commissions, net of $9,350,000projected proceeds for oneany planned sales of associated outparcels and other real estate.
(2)Construction on this land parcel that we did not plan to develop and sold in July 2017. We believe that the current carrying value for all other land parcels is such that there is no indicationcommenced during 2023.
Acquisition & Disposition Activity
We buy and sell assets when they do not meetbased on our long-term investment strategy orcriteria and target portfolio allocation. We also dispose of assets when capital and real estate markets allow us to realize a portion of the value created over our ownership periods, of ownership, and we generally redeploy the proceeds from those sales to develop, redevelop and acquire communities. Pending such redeployment, we will generally use the proceeds from the sale of these communities to reduce amounts outstanding under our Credit Facility or Commercial Paper Program or retain the cash proceeds on our balance sheet until it is redeployed into acquisition, development or redevelopment activity. On occasion,At times, we will set aside the proceeds from the sale of communities into a cash escrow account to facilitate a tax deferred,tax-deferred, like-kind exchange transaction. From January 1, 20172023 to January 31, 2018,2024, (i) we acquired three wholly-owned communities containing 1,131 apartment homes for an aggregate purchase price of $277,200,000 and (ii) we sold our interest in sixfour wholly-owned communities, containing 1,624987 apartment homes. Thehomes, with an aggregate gross sales price for these assets was $475,500,000.of $446,000,000.
Insurance and Risk of Uninsured Losses
We maintain commercial general liability insurance and property insurance with respect to all of our communities.communities, with insurance policies issued by a combination of third party insurers as well as a wholly-owned captive insurance company. These policies, along with other insurance policies we maintain, have policy specifications, insured and self-insured limits, exclusions and deductibles that we consider commercially reasonable. We utilize a wholly-owned captive insurance company to insure certain types and amounts of risks, which include property damage and resulting business interruption losses, general liability insurance and other construction related liability risks. The captive is utilized to insure other limited levels of risk, which may be in part reinsured by third party insurance. There are, however, certain types of losses (including, but not limited to, losses arising from nuclear liability, pandemic or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in management’s view, economically impractical. You should carefully review the discussion under Part I, Item 1A. “Risk Factors” of this Form 10-K for a discussion of risks associated with an uninsured property or casualty loss.
Our communities are insured for certain property damage and business interruption losses through a combination of community specific insurance policies and/or a master property insurance program which covers the majority of our communities. This master property program provides a $400,000,000 limit for any single occurrence and annually in the aggregate, subject to certain sub-limits and exclusions. Under the master property program, we are subject to various deductibles per occurrence, as well as additional self-insured retentions. In addition to our potential liability for the various policy self-insured retentions and deductibles, our captive insurance company is directly responsible for 100% of the first $25,000,000 of losses (per occurrence) and an additional $5,000,000 of losses (per occurrence) incurred by the master property insurance policy. Our master property insurance program includes coverage for losses resulting from customary perils, including but not limited to wildfires and windstorms. Limits, deductibles, self-insured retentions and coverages may increase or decrease annually during the insurance renewal process, which occurs on different dates throughout the calendar year.
Many of our West Coast communities are located inwithin the general vicinity of active earthquake faults. Many of our communities are near, and thus susceptible to, the major fault lines in California, including the San Andreas Fault, the Hayward Fault or other geological faults that are known or unknown. We cannot assure you that an earthquake would not cause damage or losses greater than our current insured levels. We procure property damage and resulting business interruption insurance coverage with a loss limit of $175,000,000 for any single occurrence and in the annual aggregate for losses resulting from earthquakes.earthquakes, subject to deductibles and self-insured retentions. However, for any losses resulting from earthquakes at communities located in California or Washington, the loss limit is $150,000,000$200,000,000 for any single occurrence and in the annual aggregate, subject to deductibles and self-insured retentions. A portion of coverage is included in the aforementioned self-insurance limits underwritten through the captive.
Our Southeast Florida communities could be impacted by significant storm events like hurricanes. We include coverage for losses resultingarising from earthquakes. The deductible applicable tothese types of weather events within our master property insurance program. We cannot assure you that a significant storm event would not cause damage or losses resulting from earthquakes occurring in California is five percent of thegreater than our current insured value of each damaged building subject to a minimum of $100,000 and a maximum of $25,000,000 per loss. Limits, deductibles, self-insured retentions and coverages may increase or decrease annually during the insurance renewal process which occurs on different dates throughout the calendar year.levels.
Our communities are insured for certain property damage and business interruption losses through a combination of community specific insurance policies and/or a master property insurance program which covers the majority of our communities. This master property program provides a $400,000,000 limit for any single occurrence, subject to certain sublimits and exclusions. Under the master property program, we are subject to a $100,000 deductible per occurrence, as well as additional self-insured retention for the next $350,000 of loss, per occurrence, until the aggregate incurred self-insured retention exceeds $1,500,000 for the policy year.
Our communitiesconstruction sites are insured for third-party liability losses through a combination of community specific insurance policies and/or coverage provided under a master commercial general liability and umbrella/excess insurance program. The master commercial general liability and umbrella/excess insurance policies cover the majority of our communities and construction sites and are subject to certain coverage limitations and exclusions, and they require a self-insured retention of $500,000 per occurrence.
We also maintain certain casualty policies (general liability, umbrella/excess and workers compensation) for construction related risks which have various exclusions and deductibles that, in management’s view,we believe are commercially reasonable. Certain projects are insured through our master insurance policies while others are insured through project-specific insurance policies. The limits vary by project and may be subject to deductibles up to $1,500,000 per occurrence.
We utilize a wholly-owned captive insurance company to insure certain types and amounts of risks, which includes property damage and resulting business interruption losses, general liability insurance and other construction related liability risks. In addition to our potential liability for the various policyAfter applicable self-insured retentions and deductibles,borne by us, our captive insurance company is directly responsible for (i) 25% of the first $50,000,000$2,000,000 of losses (per occurrence) incurredcovered by the master property insurance policy and (ii) covered liability claims arising out of our commercial general liability policy, subject to a $2,000,000 per occurrence loss limit. The captive is utilized to insure other limited levelsinsurance policy.
Just as with office buildings, transportation systems and government buildings, there have been reports that apartment communities could become targets of terrorism. Our communities are insured for terrorism related losses through the Terrorism Risk Insurance Program Reauthorization Act (“TRIPRA”) program. This coverage extends to most of our casualty exposures (subject to deductibles and insured limits) and certain property insurance policies. We have also purchased private-market insurance for property damage due to terrorism with limits of $600,000,000 per occurrence and in the annual aggregate that includes certain coverages (not covered under TRIPRA) such as domestic-based terrorism. This insurance, often referred to as “non-certified” terrorism insurance, is subject to deductibles, limits and exclusions.
An additional consideration for insurance coverage and potential uninsured losses is mold growth or other environmental contamination. Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities. For further discussion of the risks and our related prevention and remediation activities, please refer to the discussion under Part I, Item 1A. “Risk Factors - We may incur costs due to environmental contamination or non-compliance” elsewhere in this report. We cannot provide assurance that we will have coverage under our existing policies for property damage or liability to third parties arising as a result of exposure to mold or a claim of exposure to mold at one of our communities.
We also carry crime policies (also commonly referredmaintain other insurance programs that provide coverage for events including but not limited to as a fidelity policy or employee dishonesty, policy)loss of data, and limited cyber liability insurance. The crimeassociated with management of certain employee benefit plans. These policies protect us, upare subject to $30,000,000 per occurrence (subject to sublimitsmaximum loss limits and exclusions), from employee theft of money, securitiesinclude coverage limitations or property. The limited cyber liability insurance is part of our professional liability coverage and has limits of $15,000,000 per occurrence and in the annual aggregate. The cyber liability coverage protectsexclusion that may preclude us from certain claims arising out of data breach, wrongful acts, data privacy issues and media liability.fully recovering.
The amount or types of insurance we maintain may not be sufficient to cover all losses.losses and we may change our policy limits, coverages, and self-insured retentions or deductibles at any time.
Maplewood Casualty Loss
In February 2017, a fire occurred at our Avalon Maplewood Development Community, located in Maplewood, NJ ("Maplewood"), which was under construction and not yet occupied. We believe that liabilities to third parties resulting from the fire will not be material and will, in any event, be substantially covered by insurance subject to a deductible. The Company has commenced reconstructionTable of the damaged and destroyed portions of the community. In 2017, we reached a final insurance settlement for the property damage and lost income for the Maplewood casualty loss of $19,696,000, after self-insurance and deductibles, of which $3,495,000 was recognized as business interruption insurance proceeds.Contents
Edgewater Casualty Loss
In January 2015, a fire occurred at our Avalon at Edgewater apartment community located in Edgewater, NJ (“Edgewater”). Edgewater consisted of two residential buildings. One building, containing 240 apartment homes, was destroyed. The second building, containing 168 apartment homes, suffered minimal damage and has been repaired. In January 2016, we reached a final settlement with our property and casualty insurers regarding the property damage and lost income related to the Edgewater casualty loss, for which we received aggregate insurance proceeds of $73,150,000, after self-insurance and deductibles. We received $44,142,000 of these recoveries in 2015, and the remaining $29,008,000 in 2016, of which $8,702,000 was recognized as an additional net casualty gain and $20,306,000 as business interruption insurance proceeds.
In 2017, we commenced the reconstruction of the destroyed building, which we expect to complete in 2019.
To date, a number of lawsuits on behalf of former residents have been filed against us, including three class actions, approximately 20 individual actions, and subrogation actions by insurers who provided renters insurance to our residents. Having incurred applicable deductibles, we currently believe that all of our remaining liability to third parties will not be material and will in any event be substantially covered by our insurance policies. However, we can give no assurances in this regard and continue to evaluate this matter. See Item 3. " Legal Proceedings," below.
ITEM 3. LEGAL PROCEEDINGS
As discussed immediately above,disclosed in January 2015, a fire occurred at the Company's Avalon at Edgewater apartment community in Edgewater, NJ. The Company believes that the fire was caused by sparks from a torch used during repairs being performed by a Company employee who was not a licensed plumber. The Company has since revised its maintenance policies to require that non-flame tools be used for plumbing repairs where possible or, where not possible inside the building envelope, that a qualified third party vendor perform the work in accordance with the Company's policies.
The Company has established protocols for processing claims from third parties who suffered losses as a resultNote 7, “Commitments and Contingencies” of the fire, and many third parties have contacted the Company's insurance carrier and settled their claims. Through the dateConsolidated Financial Statements in Item 8 of this Form 10-K, of the 229 occupied apartments destroyedreport, we are engaged in the fire, the residents of approximately 95 units have settled claims with the Company's insurer through this claims process.
Three class action lawsuits have been filed against the Company on behalf of occupants of the destroyed building and consolidated in the United States District Court for the District of New Jersey. The Company has agreed with class counsel to the terms of a settlement which provides a claims process (with agreed upon protocols for instructing the adjuster as to how to evaluate claims) and, if needed, an arbitration process to determine damage amounts to be paid to individual claimants covered by the class settlement. In July 2017 the District Court granted final approval of the class action settlement and all claims have been submitted to the independent claims adjuster. A total of 66 units (consisting of residents who did not previously settle their claims and who did not opt out of the class settlement) are included in the class action settlement and bound by its terms. However, only 44 units submitted claims. The independent claims adjuster is currently reviewing the claims submitted, which total approximately $6,900,000. To date, this claims adjuster has issued awards of behalf of three units and it is expected that the remaining awards should be determined and issued within the next two months. A fourth class action, being heard in the same federal court, was filed against the Company on behalf of residents of the second Edgewater building that suffered minimal damage. In addition to the class action lawsuits described above, 19 lawsuits representing approximately 143 individual plaintiffs filed in the Superior Court of New Jersey Bergen County - Law Division were previously scheduled for trial on January 2, 2018. In advance of this date, the Company was able to resolve all of these claims in principle which included approximately 50 units. The Company previously resolved litigated claims with another 10 units. There is currently one remaining lawsuit which was recently filed in the Superior Court of New Jersey Bergen County - Law Division on behalf of one apartment unit. The Company believes it has meritorious defenses to the extent of damages claimed in that suit. There are also seven subrogation lawsuits that have been filed against the Company by insurers of Edgewater residents who obtained renters insurance; it is the Company's position that in the majority of the applicable leases the residents waived subrogation rights. One of these lawsuits has been dismissed on that basis, one is pending in the Superior Court of New Jersey, Bergen County - Law Division, one has been amicably resolved in principlecertain legal proceedings, and the disclosure set forth in Note 7, “Commitments and Contingencies” relating to legal and other four have been consolidated and are currently pending in the United States District Court for the District of New Jersey. The District Court denied the Company's motions seeking dismissal on this basis. The Company will reassess the viability of this defense after conducting additional discovery.contingencies is incorporated herein by reference.
Having settled many third party claims through the insurance claims process, the Company currently believes that any potential remaining liability to third parties (including any potential liability to third parties determined in accordance with the class settlement described above) will not be material to the Company and will in any event be substantially covered by the Company's insurance policies. However, the Company can give no assurances in this regard and continues to evaluate this matter.
The Company is involved in various other claims and/or administrative proceedings unrelated to the Edgewater casualty loss that arise in the ordinary course of its business. While no assurances can be given, the Company does not currently believe that any of these other outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the NYSE under the ticker symbol AVB. The following table sets forth the quarterly high and low sales prices per share of our common stock for the years 2017 and 2016, as reported by the NYSE. On January 31, 20182024 there were 496694 holders of record of an aggregate of 138,095,504142,025,313 shares of our outstanding common stock. The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing agency, but does include each such broker or clearing agency as one record holder.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2017 | | 2016 |
| | | Sales Price | | Dividends declared | | Sales Price | | Dividends declared |
| | | High | | Low | | High | | Low | |
| Quarter ended March 31 | | $ | 188.00 |
| | $ | 169.50 |
| | $ | 1.42 |
| | $ | 190.49 |
| | $ | 160.66 |
| | $ | 1.35 |
|
| Quarter ended June 30 | | $ | 199.52 |
| | $ | 182.01 |
| | $ | 1.42 |
| | $ | 192.29 |
| | $ | 166.59 |
| | $ | 1.35 |
|
| Quarter ended September 30 | | $ | 196.13 |
| | $ | 176.66 |
| | $ | 1.42 |
| | $ | 188.00 |
| | $ | 168.57 |
| | $ | 1.35 |
|
| Quarter ended December 31 | | $ | 188.91 |
| | $ | 175.18 |
| | $ | 1.42 |
| | $ | 177.77 |
| | $ | 158.32 |
| | $ | 1.35 |
|
At present, we expect to continue our policy of paying regular quarterly cash dividends. However, the form, timing and/or amount of dividend distributions will be declared at the discretion of the Board of Directors and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the Board of Directors may consider relevant. The Board of Directors may modify our dividend policy from time to time.
In January 2018,2024, we announced that our Board of Directors declared a dividend on our common stock for the first quarter of 20182024 of $1.47$1.70 per share, a 3.5%3.0% increase over the previousCompany's prior quarterly dividend of $1.65 per share of $1.42.share. The dividend will be payable on April 16, 201815, 2024 to all common stockholders of record as of March 29, 2018.28, 2024.
Issuer Purchases of Equity Securities
|
| | | | | | | | | | | | | | |
| Period | | (a) Total Number of Shares Purchased(1) | | (b) Average Price Paid per Share | | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | (d) Maximum Dollar Amount that May Yet be Purchased Under the Plans or Programs (in thousands) (2) |
| October 1 - October 31, 2017 | | 52 |
| | $ | 178.42 |
| | — |
| | $ | 200,000 |
|
| November 1 - November 30, 2017 | | — |
| | $ | — |
| | — |
| | $ | 200,000 |
|
| December 1 - December 31, 2017 | | 102 |
| | $ | 182.22 |
| | — |
| | $ | 200,000 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | (a)
Total Number
of Shares
Purchased (1) | | (b)
Average
Price Paid
Per Share | | (c)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs | | (d)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet
be Purchased Under
the Plans or Programs
(in thousands) (2) |
| October 1 - October 31, 2023 | | 28 | | | $ | 169.88 | | | — | | | $ | 314,237 | |
| November 1 - November 30, 2023 | | — | | | $ | — | | | — | | | $ | 314,237 | |
| December 1 - December 31, 2023 | | 427 | | | $ | 177.94 | | | — | | | $ | 314,237 | |
| Total | | 455 | | | $ | 177.44 | | | — | | | |
(1)Consists of (i) shares surrendered to the Company in connection with exercise of stock options as payment of exercise price, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to shares of common stock and (ii) activity under the Stock Repurchase Program, if any, as indicated under Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs.
| |
(1) | Reflects shares surrendered to the Company in connection with exercise of stock options as payment of exercise price, as well as for taxes associated with the vesting of restricted share grants. |
| |
(2) | As disclosed in our Form 10-Q for the quarter ended March 31, 2008, represents amounts outstanding under the Company's $500,000,000 Stock Repurchase Program. There is no scheduled expiration date to this program. |
(2)The Board of Directors approved the Stock Repurchase Program in July 2020, under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000. Purchases of common stock under the Stock Repurchase Program may be exercised from time to time in the Company’s discretion and in such amounts as market conditions warrant. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice.
Information regarding securities authorized for issuance under equity compensation plans is included in the section entitled Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA[RESERVED]
The following table provides historical consolidated financial, operating and other data for the Company. You should read the table with our Consolidated Financial Statements and the Notes included in this report (dollars in thousands, except per share data).
|
| | | | | | | | | | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 | | 12/31/14 | | 12/31/13 |
| Operating data: | |
| | |
| | |
| | |
| | |
|
| Total revenue | $ | 2,158,628 |
| | $ | 2,045,255 |
| | $ | 1,856,028 |
| | $ | 1,685,061 |
| | $ | 1,462,921 |
|
| Gain on sale of communities | $ | 252,599 |
| | $ | 374,623 |
| | $ | 115,625 |
| | $ | 84,925 |
| | $ | — |
|
| (Loss) gain on other real estate transactions | $ | (10,907 | ) | | $ | 10,224 |
| | $ | 9,647 |
| | $ | 490 |
| | $ | 240 |
|
| Income from continuing operations | $ | 876,660 |
| | $ | 1,033,708 |
| | $ | 741,733 |
| | $ | 659,148 |
| | $ | 57,827 |
|
| Income from discontinued operations | $ | — |
| | $ | — |
| | $ | — |
| | $ | 38,179 |
| | $ | 294,944 |
|
| Net income | $ | 876,660 |
| | $ | 1,033,708 |
| | $ | 741,733 |
| | $ | 697,327 |
| | $ | 352,771 |
|
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
| | $ | 353,141 |
|
| | | | | | | | | | |
| Per Common Share and Share Information: | | | | | | | | | |
| Earnings per common share—basic: | | | | | | | | | |
| Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) | $ | 6.36 |
| | $ | 7.53 |
| | $ | 5.54 |
| | $ | 4.93 |
| | $ | 0.46 |
|
| Discontinued operations attributable to common stockholders | — |
| | — |
| | — |
| | 0.29 |
| | 2.32 |
|
| Net income attributable to common stockholders | $ | 6.36 |
| | $ | 7.53 |
| | $ | 5.54 |
| | $ | 5.22 |
| | $ | 2.78 |
|
| Weighted average shares outstanding—basic (1) | 137,523,771 |
| | 136,928,251 |
| | 133,565,711 |
| | 130,586,718 |
| | 126,855,754 |
|
| | | | | | | | | | |
| Earnings per common share—diluted: | | | | | | | | | |
| Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) | $ | 6.35 |
| | $ | 7.52 |
| | $ | 5.51 |
| | $ | 4.92 |
| | $ | 0.46 |
|
| Discontinued operations attributable to common stockholders | — |
| | — |
| | — |
| | 0.29 |
| | 2.32 |
|
| Net income attributable to common stockholders | $ | 6.35 |
| | $ | 7.52 |
| | $ | 5.51 |
| | $ | 5.21 |
| | $ | 2.78 |
|
| Weighted average shares outstanding—diluted | 138,066,686 |
| | 137,461,637 |
| | 134,593,177 |
| | 131,237,502 |
| | 127,265,903 |
|
| | | | | | | | | | |
| Cash dividends declared | $ | 5.68 |
| | $ | 5.40 |
| | $ | 5.00 |
| | $ | 4.64 |
| | $ | 4.28 |
|
| | | | | | | | | | |
| Other Information: | |
| | |
| | |
| | |
| | |
|
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
| | $ | 353,141 |
|
| Depreciation—continuing operations | 584,150 |
| | 531,434 |
| | 477,923 |
| | 442,682 |
| | 560,215 |
|
| Depreciation—discontinued operations | — |
| | — |
| | — |
| | — |
| | 13,500 |
|
| Interest expense, net—continuing operations (2) | 225,133 |
| | 194,585 |
| | 148,879 |
| | 181,030 |
| | 238,323 |
|
| Interest expense, net—discontinued operations (2) | — |
| | — |
| | — |
| | — |
| | — |
|
| Income tax expense | 141 |
| | 305 |
| | 1,483 |
| | 9,368 |
| | — |
|
| EBITDA (3) | $ | 1,686,345 |
| | $ | 1,760,326 |
|
| $ | 1,370,323 |
|
| $ | 1,316,647 |
|
| $ | 1,165,179 |
|
| | | | | | | | | | |
| Funds from Operations (4) | $ | 1,167,218 |
| | $ | 1,135,762 |
| | $ | 1,083,085 |
| | $ | 951,035 |
| | $ | 642,814 |
|
| Core Funds from Operations (4) | $ | 1,189,976 |
| | $ | 1,125,341 |
| | $ | 1,016,035 |
| | $ | 890,081 |
| | $ | 792,888 |
|
| Number of Current Communities (5) | 267 |
| | 258 |
| | 259 |
| | 251 |
| | 244 |
|
| Number of apartment homes | 77,614 |
| | 74,538 |
| | 75,584 |
| | 73,963 |
| | 72,811 |
|
| | | | | | | | | | |
| Balance Sheet Information: | |
| | |
| | |
| | |
| | |
|
| Real estate, before accumulated depreciation | $ | 21,935,936 |
| | $ | 20,776,626 |
| | $ | 19,268,099 |
| | $ | 17,849,316 |
| | $ | 16,800,321 |
|
| Total assets | $ | 18,414,821 |
| | $ | 17,867,271 |
| | $ | 16,931,305 |
| | $ | 16,140,578 |
| | $ | 15,292,922 |
|
| Notes payable and unsecured credit facilities, net | $ | 7,329,470 |
| | $ | 7,030,880 |
| | $ | 6,456,948 |
| | $ | 6,489,707 |
| | $ | 6,110,083 |
|
| | | | | | | | | | |
| Cash Flow Information: | |
| | |
| | |
| | |
| | |
|
| Net cash flows provided by operating activities (6) | $ | 1,256,257 |
| | $ | 1,160,272 |
| | $ | 1,074,667 |
| | $ | 891,355 |
| | $ | 760,571 |
|
| Net cash flows used in investing activities (6) | $ | (965,381 | ) | | $ | (1,032,352 | ) | | $ | (1,199,517 | ) | | $ | (816,760 | ) | | $ | (1,159,938 | ) |
| Net cash flows (used in) provided by financing activities (6) | $ | (418,947 | ) | | $ | (303,271 | ) | | $ | 25,093 |
| | $ | 150,571 |
| | $ | (2,004,179 | ) |
| |
(1) | Amounts do not include unvested restricted shares included in the calculation of Earnings per Share. Please refer to Note 1, “Organization, Basis of Presentation and Significant Accounting Policies—Earnings per Common Share,” of the Consolidated Financial Statements set forth in Item 8 of this report for a discussion of the calculation of Earnings per Share. |
| |
(2) | Interest expense, net includes any gain or loss incurred from the extinguishment of debt. |
| |
(3) | EBITDA is defined as net income before interest income and expense, income taxes, depreciation and amortization from both continuing and discontinued operations. Under this definition, EBITDA includes gains on sale of assets and gain on sale of partnership interests. Management generally considers EBITDA to be an appropriate supplemental measure to net income of our operating performance because it helps investors to understand our ability to incur and service debt and to make capital expenditures. EBITDA should not be considered as an alternative to net income (as determined in accordance with GAAP), as an indicator of our operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. Our calculation of EBITDA may not be comparable to EBITDA as calculated by other companies. |
| |
(4) | Refer to “Reconciliation of Non-GAAP Financial Measures” below. |
| |
(5) | Current Communities consist of all communities other than those which are still under construction and for which a certificate or certificates of occupancy for the entire community have not been received. |
| |
(6) | Amounts for 2013 through 2016 reflect the retrospective adjustments to the Consolidated Statements of Cash Flows discussed in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies—Change in Accounting Principle," of the Consolidated Financial Statements set forth in Item 8 of this report. |
Funds from Operations, or “FFO,” and FFO adjusted for non-core items, or “Core FFO,” as defined below, are generally considered by management to be appropriate supplemental measures of our operating and financial performance. In calculating FFO, we exclude gains or losses related to dispositions of previously depreciated property and exclude real estate depreciation, which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates. FFO can help one compare the operating performance of a real estate company between periods or as compared to different companies. By further adjusting for items that are not considered part of our core business operations, Core FFO allows one to compare the core operating performance of the Company year over year. We believe that in order to understand our operating results, FFO and Core FFO should be examined with net income as presented in the Consolidated Statements of Comprehensive Income included elsewhere in this report.
Consistent with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts® (“NAREIT”), we calculate FFO as net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for:
gains or losses on sales of previously depreciated operating communities;
cumulative effect of change in accounting principle;
impairment write-downs of depreciable real estate assets;
write-downs of investments in affiliates due to a decrease in the value of depreciable real estate assets held by those affiliates;
depreciation of real estate assets; and
adjustments for unconsolidated partnerships and joint ventures.
We calculate Core FFO as FFO, adjusted for:
joint venture gains, costs, and promoted interests;
casualty and impairment losses or gains, net;
gains or losses from early extinguishment of consolidated borrowings;
abandoned pursuits;
business interruption insurance proceeds and the related lost NOI that is covered by the business interruption insurance proceeds;
property and casualty insurance proceeds and legal settlements;
gains or losses on sales of assets not subject to depreciation;
hedge ineffectiveness;
severance related costs;
expensed acquisition costs related to business acquisitions that occurred prior to the adoption of ASU 2017-01 as of October 1, 2016, as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” of the Consolidated Financial Statements set forth in Item 8 of this report; and
other non-core items.
FFO and Core FFO do not represent net income in accordance with GAAP, and therefore should not be considered an alternative to net income, which remains the primary measure, as an indication of our performance. In addition, FFO and Core FFO as calculated by other REITs may not be comparable to our calculations of FFO and Core FFO.
FFO and Core FFO also do not represent cash generated from operating activities in accordance with GAAP, and therefore should not be considered an alternative to net cash flows from operating activities, as determined by GAAP, as a measure of liquidity. Additionally, it is not necessarily indicative of cash available to fund cash needs. A presentation of GAAP based cash flow metrics is provided in “Cash Flow Information” in the table above.
The following is a reconciliation of net income attributable to common stockholders to FFO attributable to common stockholders and to Core FFO attributable to common stockholders (dollars in thousands, except per share data).
|
| | | | | | | | | | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 | | 12/31/14 | | 12/31/13 |
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
| | $ | 353,141 |
|
| Depreciation—real estate assets, including discontinued operations and joint venture adjustments | 582,907 |
| | 538,606 |
| | 486,019 |
| | 449,769 |
| | 582,325 |
|
| Distributions to noncontrolling interests, including discontinued operations | 42 |
| | 41 |
| | 38 |
| | 35 |
| | 32 |
|
| Gain on sale of unconsolidated entities holding previously depreciated real estate assets | (40,053 | ) | | (58,069 | ) | | (33,580 | ) | | (73,674 | ) | | (14,453 | ) |
| Gain on sale of previously depreciated real estate assets (1) | (252,599 | ) | | (374,623 | ) | | (115,625 | ) | | (108,662 | ) | | (278,231 | ) |
| Casualty and impairment (recovery) loss, net on real estate (2) (7) | — |
| | (4,195 | ) | | 4,195 |
| | — |
| | — |
|
| FFO attributable to common stockholders | $ | 1,167,218 |
| | $ | 1,135,762 |
| | $ | 1,083,085 |
| | $ | 951,035 |
| | $ | 642,814 |
|
| | | | | | | | | | |
| Adjusting items: |
|
| |
|
| |
|
| |
|
| |
|
|
| Joint venture losses (gains) (3) | 950 |
| | 6,031 |
| | (9,059 | ) | | (5,194 | ) | | 35,554 |
|
| Joint venture promote (4) | (26,742 | ) | | (7,985 | ) | | (21,969 | ) | | (58,128 | ) | | — |
|
| Impairment loss on real estate (5) (7) | 9,350 |
| | 10,500 |
| | 800 |
| | — |
| | — |
|
| Casualty (gain) loss, net on real estate (6) (7) | (3,100 | ) | | (10,239 | ) | | (15,538 | ) | | — |
| | — |
|
| Business interruption insurance proceeds (8) | (3,495 | ) | | (20,565 | ) | | (1,509 | ) | | (2,494 | ) | | (299 | ) |
| Lost NOI from casualty losses covered by business interruption insurance (9) | 7,904 |
| | 7,366 |
| | 7,862 |
| | — |
| | — |
|
| Loss (gain) on extinguishment of consolidated debt | 25,472 |
| | 7,075 |
| | (26,736 | ) | | 412 |
| | 14,921 |
|
| Hedge ineffectiveness | (753 | ) | | — |
| | — |
| | — |
| | — |
|
| Severance related costs | 87 |
| | 852 |
| | 1,999 |
| | 815 |
| | 3,580 |
|
| Development pursuit and other write-offs | 1,406 |
| | 3,662 |
| | 1,838 |
| | 2,564 |
| | 1,506 |
|
| Loss (gain) on sale of other real estate transactions | 10,907 |
| | (10,224 | ) | | (9,647 | ) | | (490 | ) | | (240 | ) |
| Acquisition costs (10) | 92 |
| | 3,523 |
| | 3,806 |
| | (7,682 | ) | | 44,052 |
|
| Legal settlements | 680 |
| | (417 | ) | | — |
| | — |
| | — |
|
| Income taxes (11) | — |
| | — |
| | 1,103 |
| | 9,243 |
| | — |
|
| Loss on interest rate protection agreement | — |
| | — |
| | — |
| | — |
| | 51,000 |
|
| Core FFO attributable to common stockholders | $ | 1,189,976 |
| | $ | 1,125,341 |
| | $ | 1,016,035 |
| | $ | 890,081 |
| | $ | 792,888 |
|
| | | | | | | | | | |
| Weighted average common shares outstanding - diluted | 138,066,686 |
| | 137,461,637 |
| | 134,593,177 |
| | 131,237,502 |
| | 127,265,903 |
|
| | | | | | | | | | |
| EPS per common share - diluted | $ | 6.35 |
| | $ | 7.52 |
| | $ | 5.51 |
| | $ | 5.21 |
| | $ | 2.78 |
|
| FFO per common share - diluted | $ | 8.45 |
| | $ | 8.26 |
| | $ | 8.05 |
| | $ | 7.25 |
| | $ | 5.05 |
|
| Core FFO per common share - diluted | $ | 8.62 |
| | $ | 8.19 |
| | $ | 7.55 |
| | $ | 6.78 |
| | $ | 6.23 |
|
| |
(1) | Amount for 2014 excludes a gain of $14,132, representing our joint venture partners' portion of the gain on sale from a Fund I community which we consolidated for financial reporting purposes. |
| |
(2) | During 2015, we recognized an impairment on depreciable real estate of $4,195 from the severe winter storms that occurred in our Northeast markets. During 2016, we received insurance proceeds, net of additional costs incurred, of $5,732 related to the winter storms, and recognized $4,195 of this recovery as an offset to the loss recognized in the prior year period. The balance of the net insurance proceeds received in 2016 of $1,537 is recognized as a casualty gain and is included in the reconciliation of FFO to Core FFO. |
| |
(3) | Amounts for 2017 and 2016 are primarily composed of (i) our proportionate share of yield maintenance charges incurred for the early repayment of debt associated with joint venture disposition activity, (ii) the write-off of asset management fee intangibles primarily associated with the disposition of communities in the U.S. Fund, and (iii) our proportionate share of operating results for joint ventures formed with Equity Residential as part of the Archstone Acquisition. Amounts for 2014 and 2015 are primarily composed of our proportionate share of gains and operating results for joint ventures formed with Equity Residential as part of the Archstone Acquisition. Amount for 2013 includes Archstone Acquisition related costs. |
| |
(4) | Amounts for 2017 and 2016 are composed of the recognition of our promoted interest in Fund II. Amount for 2015 is primarily composed of amounts received related to the modification of the joint venture agreement for the entity that owns Avalon at Mission Bay II to eliminate our promoted interest in future distributions. Amount for 2014 relates to our promoted interests from the sale of Avalon Chrystie Place. |
| |
(5) | Amounts include impairment charges relating to ancillary land parcels. |
| |
(6) | Amount for 2017 includes $19,481 for the Maplewood casualty loss, partially offset by $17,143 of property damage insurance proceeds, and $5,438 in legal settlement proceeds relating to construction defects at a community acquired as part of the Archstone Acquisition. Amount for 2016 includes $8,702 in property damage insurance proceeds for the Edgewater casualty loss, and $1,537 in insurance proceeds in excess of the total recognized loss related to severe winter storms in our Northeast markets that occurred in 2015. Amount for 2015 includes $44,142 of Edgewater insurance proceeds received partially offset by $28,604 for the write-off of real estate and related costs. |
| |
(7) | The aggregate impact of (i) casualty and impairment (recovery) loss, net on real estate, (ii) impairment loss on real estate and (iii) casualty (gain) loss, net on real estate for 2017 is a loss of $6,250, and for 2016 and 2015 are gains of $3,935 and $10,542, respectively. |
| |
(8) | Amount for 2017 is composed of business interruption insurance proceeds resulting from the final insurance settlement of the Maplewood casualty loss. Amount for 2016 is primarily composed of business interruption insurance proceeds resulting from the final insurance settlement of the Edgewater casualty loss. |
| |
(9) | Amounts for 2017, 2016 and 2015 primarily relate to lost NOI resulting from the Edgewater casualty loss, for which we received $20,306 in business interruption insurance proceeds in the first quarter of 2016. Amount for 2017 also includes amounts related to the Maplewood casualty loss, for which we received $3,495 in business interruption insurance proceeds in the third quarter of 2017. |
| |
(10) | Amount for 2014 is primarily composed of receipts related to communities acquired as part of the Archstone Acquisition for periods prior to our ownership, which are primarily comprised of property tax and mortgage insurance refunds. Amount for 2013 primarily consists of costs related to the Archstone Acquisition. |
| |
(11) | Amounts for 2015 and 2014 are composed of income taxes on income that was earned in taxable REIT subsidiaries and that is not considered to be a component of primary operations. |
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide an understanding of our business, financial condition and results of operations. This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report. This report, including the following MD&A, contains forward-looking statements regarding future events or trends that should be read in conjunction with the factors described under “Forward-Looking Statements” included in this report. Actual results or developments could differ materially from those projected in such statements as a result of the factors described under “Forward-Looking Statements” as well as the risk factors described in Part I, Item 1A. “Risk Factors” of this report.
Capitalized terms used without definition have the meanings provided elsewhere in this Form 10-K.
Executive Overview
Business Description
Our strategic vision is to be the leading apartment company in select U.S. markets, providing a range of distinctive living experiences that customers value. We pursue this vision by targeting what we believe are among the best markets and submarkets, leveraging our strategic capabilities in market research and consumer insight and being disciplined in our capital allocation and balance sheet management. Our communities are predominately upscale and generally command among the highest rents in their markets. However, we also pursue the ownership and operation of apartment communities that target a variety of customer segments and price points, consistent with our goal of offering a broad range of products and services. We regularly evaluate the allocation of our investments by the amount of invested capital and by product type within our individual markets.
We develop, redevelop, acquire, own and operate multifamily apartment communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. We focus on leading metropolitan areas that we believe are characterized by growing employment in high wage sectors of the economy, higher cost of home ownership and a diverse and vibrant quality of life. We believe these market characteristics offer the opportunity for superior risk-adjusted returns over the long-term on apartment community investments relative to other markets that do not have these characteristics. We believe that the Denver, Colorado, and Southeast Florida markets share these characteristics, and we are pursuing opportunities to invest in these markets through acquisitions and developments, having acquired one operating community in each of these markets in 2017. We seek to create long-term shareholder value by accessing capital on cost effective terms; deploying that capital to develop, redevelop and acquire apartment communities in our selected markets; operating apartment communities; and selling communities when they no longer meet our long-term investment strategy or when pricing is attractive.
2023 Financial Highlights
ForNet income attributable to common stockholders for the year ended December 31, 2017, net income attributable to common stockholders2023 was $876,921,000,$928,825,000, a decrease of $157,081,000,$207,950,000, or 15.2%18.3%, from the prior year. The decrease iswas primarily attributable to a decreasedecreases in real estate sales and related gains, coupled with increases in depreciation, loss on extinguishment of debt and interest expense, and a net casualty and impairment loss in the current year compared to a gain in the prior year. These amounts were partially offset by an increase in NOI from newly developed, acquiredcommunities over the prior year.
Same Store NOI attributable to our apartment rental operations, including parking and existing operating communities.
Forother ancillary residential revenue (“Residential”), for the year ended December 31, 2017, Established Communities NOI increased by $27,191,000,2023 was $1,732,422,000, an increase of $100,738,000, or 2.5%6.2%, over the prior year. The increase was driven bydue to an increase in Same Store Residential rental revenue of 2.5%$149,495,000, or 6.3%, partially offset by an increase in Same Store Residential property operating expenses of 2.5%$48,752,000, or 6.6%, over 2016.2022.
During 2017,2023, we raised approximately $2,320,132,000$1,363,299,000 of gross capital through the sale of wholly-owned real estate, the issuance of unsecured notes sale of common shares under CEP IV and the sale of real estate. This amount does not include proceeds from joint venture dispositions and secured debt associated with the refinancing of existing secured indebtedness. The funds raised from the sale of real estate consistsettlement of the proceeds from the sale of six operating communities, three undeveloped land parcels and other real estate.outstanding forward contracts entered into in April 2022 (the "Equity Forward"). We believe that our current capital structure will continue to provide financial flexibility to access capital on attractive terms.
We believe our portfolio management activity through dispositions, development activityand acquisitions will continue to create long-term value. During 2017, we completed the construction of 142023, we:
•sold four wholly-owned communities containing an aggregate of 5,189987 apartment homes and 71,00027,000 square feet of retailcommercial space for $446,000,000;
•completed the construction of six wholly-owned communities containing an aggregate of 1,393 apartment homes and 29,000 square feet of commercial space for an aggregate total capitalized cost of $1,897,000,000. We also $575,000,000;
•started the construction of eightsix wholly-owned communities containing anwhich in the aggregate of 2,600are expected to contain 2,040 apartment homes when completed, which are expected to be completed for an estimated total capitalized cost of $808,000,000. In addition, during 2017 we completed the redevelopment of seven$800,000,000; and
•acquired three wholly-owned communities containing an aggregate of 2,0721,131 apartment homes for a total investment of $99,000,000, excluding costs incurred prior to the redevelopment.
During the year ended December 31, 2017, we sold six wholly-owned operating communities, containing an aggregate of 1,624 apartment homes, for an aggregate sales price of $475,500,000. We also sold other ancillary real estate including undeveloped land parcels and 421-a tax certificates representing the right to qualify for certain property tax exemptions in New York City, for an aggregate sales price $39,154,000. We recorded an aggregate gain in accordance with GAAP of $252,845,000 associated with our real estate disposition activity.
During the year ended December 31, 2017, we acquired three communities containing an aggregate of 1,062 apartment homes and 27,000 square feet of retail space for an aggregate purchase price of $365,750,000.$277,200,000, which included the assumption of a $63,041,000 fixed rate mortgage loan.
During 2023, we i) issued $400,000,000 principal amount of fixed rate unsecured notes, ii) assumed a $63,041,000 fixed rate mortgage note in conjunction with the acquisition of Avalon West Plano, iii) repaid $600,000,000 principal amount of our fixed rate unsecured notes and iv) repaid the $150,000,000 variable rate unsecured term loan (the “Term Loan”).
We believe that our balance sheet strength, as measured by our current level of indebtedness, our current ability to service interest and other fixed charges, and our current moderate use of financial encumbrances (such as secured financing), provide us with adequate access to liquidity from the capital markets. We expect to be able to meet our reasonably foreseeable liquidity needs, as they arise, through a combination of one or more of the following sources: existing cash on hand; operating cash flows; borrowings under our Credit Facility;Facility and Commercial Paper Program; secured debt; the issuance of corporate securities (which could include unsecured debt, preferred equity and/or common equity); the sale of apartment communities; or through the formation of joint ventures. See the discussion under "Liquidity“Liquidity and Capital Resources."”
Communities Overview
As of December 31, 20172023 we owned or held a direct or indirect ownership interest in 288299 apartment communities containing 84,15890,669 apartment homes in 12 states and the District of Columbia, of which 2118 communities were under development anddevelopment. We have an indirect interest in nine of the 299 apartment communities were under redevelopment. Of these communities, 12which were owned by entities that were not consolidated for financial reporting purposes, including six owned by the U.S. Fund, three owned by the AC JV and one that is being developed within a joint venture. In addition, we held a direct or indirect ownership interest in Development Rights to develop an additional 29 wholly-owned30 communities that, if developed as expected, will contain an estimated 9,49610,801 apartment homes.
Our real estate investments consist primarily of Current Communities, Development Communitiescommunities, Unconsolidated Development communities and Development Rights. Our Current Communities are further distinguishedclassified as Established Communities,Same Store communities, Other Stabilized Communities, Lease-Up Communities,communities, Redevelopment Communitiescommunities and Unconsolidated Communities.communities.
Established CommunitiesSame Store communities are generally consolidated communities that were owned and had stabilized occupancy as of the beginning of the prior year, allowing for a meaningful comparison of operating results between years. Other Stabilized Communitiescommunities are generally all other completed consolidated communities that have stabilized occupancy at the beginning of the current year or were acquired during the current year. Lease-Up Communities are consolidatedRedevelopment communities where construction has been complete for less than one year and stabilized occupancy has not been achieved. Redevelopment Communities are consolidated communities where substantial redevelopment is in progress or is plannedprobable to begin during the current year. Unconsolidated Communitiescommunities are communities thatin which we have an indirect ownership interest in through our investment interest in an unconsolidated joint venture. A more detailed description of our reportable segments and other related operating information can be found in Note 8, “Segment Reporting,” of our Consolidated Financial Statements.
Although each of these categories is important to our business, we generally evaluate overall operating, industry and market trends based on the operating results of Established Communities,Same Store communities, for which a detailed discussion can be found in “Results of Operations” as part of our discussion of overall operating results. We evaluate our current and future cash needs and future operating potential based on acquisition, disposition, development, redevelopment and financing activities within Other Stabilized, Redevelopment and Development Communities.communities. Discussions related to current and future cash needs and financing activities can be found under "Liquidity“Liquidity and Capital Resources."”
NOI of our current operating communities is one of the financial measures that we use to evaluate the performance of our communities. NOI is affected by the demand and supply dynamics within our markets, our rental rates and occupancy levels and our ability to control operating costs. Our overall financial performance is also impacted by the general availability and cost of capital and the performance of newly developed, redeveloped and acquired apartment communities.
Results of Operations
Our year-over-year operating performance is primarily affected by both overall and individual geographic market conditions and apartment fundamentals and is reflected in changes in NOI of our Established Communities;Same Store NOI; NOI derived from acquisitions, development completions and development completions; theunder construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity. See also Part I, Item 1A, “Risk Factors.” Discussion of our operating results for 2022 and comparison to 2021 can be found in Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K filed with the SEC on February 24, 2023. A comparison of our operating results for 2017, 20162023 and 20152022 follows (dollars in thousands):
.
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the year ended | | 2017 vs. 2016 | | 2016 vs. 2015 |
| | 2017 | | 2016 | | 2015 | | $ Change | | % Change | | $ Change | | % Change |
| Revenue: | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Rental and other income | $ | 2,154,481 |
| | $ | 2,039,656 |
| | $ | 1,846,081 |
| | $ | 114,825 |
| | 5.6 | % | | $ | 193,575 |
| | 10.5 | % |
| Management, development and other fees | 4,147 |
| | 5,599 |
| | 9,947 |
| | (1,452 | ) | | (25.9 | )% | | (4,348 | ) | | (43.7 | )% |
| Total revenue | 2,158,628 |
| | 2,045,255 |
| | 1,856,028 |
| | 113,373 |
| | 5.5 | % | | 189,227 |
| | 10.2 | % |
| | | | | | | | | | | | | | |
| Expenses: | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Direct property operating expenses, excluding property taxes | 428,451 |
| | 406,577 |
| | 377,317 |
| | 21,874 |
| | 5.4 | % | | 29,260 |
| | 7.8 | % |
| Property taxes | 221,375 |
| | 204,837 |
| | 193,499 |
| | 16,538 |
| | 8.1 | % | | 11,338 |
| | 5.9 | % |
| Total community operating expenses | 649,826 |
| | 611,414 |
| | 570,816 |
| | 38,412 |
| | 6.3 | % | | 40,598 |
| | 7.1 | % |
| | | | | | | | | | | | | | |
| Corporate-level property management and other indirect operating expenses | 69,559 |
| | 67,038 |
| | 67,060 |
| | 2,521 |
| | 3.8 | % | | (22 | ) | | — | % |
| Investments and investment management expense | 5,936 |
| | 4,822 |
| | 4,370 |
| | 1,114 |
| | 23.1 | % | | 452 |
| | 10.3 | % |
| Expensed acquisition, development and other pursuit costs, net of recoveries | 2,736 |
| | 9,922 |
| | 6,822 |
| | (7,186 | ) | | (72.4 | )% | | 3,100 |
| | 45.4 | % |
| Interest expense, net | 199,661 |
| | 187,510 |
| | 175,615 |
| | 12,151 |
| | 6.5 | % | | 11,895 |
| | 6.8 | % |
| Loss (gain) on extinguishment of debt, net | 25,472 |
| | 7,075 |
| | (26,736 | ) | | 18,397 |
| | 260.0 | % | | 33,811 |
| | N/A (1) |
|
| Depreciation expense | 584,150 |
| | 531,434 |
| | 477,923 |
| | 52,716 |
| | 9.9 | % | | 53,511 |
| | 11.2 | % |
| General and administrative expense | 50,673 |
| | 45,771 |
| | 42,774 |
| | 4,902 |
| | 10.7 | % | | 2,997 |
| | 7.0 | % |
| Casualty and impairment loss (gain), net | 6,250 |
| | (3,935 | ) | | (10,542 | ) | | 10,185 |
| | N/A (1) |
| | 6,607 |
| | (62.7 | )% |
| Total other expenses | 944,437 |
| | 849,637 |
| | 737,286 |
| | 94,800 |
| | 11.2 | % | | 112,351 |
| | 15.2 | % |
| | | | | | | | | | | | | | |
| Equity in income of unconsolidated real estate entities | 70,744 |
| | 64,962 |
| | 70,018 |
| | 5,782 |
| | 8.9 | % | | (5,056 | ) | | (7.2 | )% |
| Gain on sale of communities | 252,599 |
| | 374,623 |
| | 115,625 |
| | (122,024 | ) | | (32.6 | )% | | 258,998 |
| | 224.0 | % |
| (Loss) gain on other real estate transactions | (10,907 | ) | | 10,224 |
| | 9,647 |
| | (21,131 | ) | | N/A (1) |
| | 577 |
| | 6.0 | % |
| Income before income taxes | 876,801 |
| | 1,034,013 |
| | 743,216 |
| | (157,212 | ) | | (15.2 | )% | | 290,797 |
| | 39.1 | % |
| Income tax expense | 141 |
| | 305 |
| | 1,483 |
| | (164 | ) | | (53.8 | )% | | (1,178 | ) | | (79.4 | )% |
| Net income | 876,660 |
| | 1,033,708 |
| | 741,733 |
| | (157,048 | ) | | (15.2 | )% | | 291,975 |
| | 39.4 | % |
| | | | | | | | | | | | | | |
| Net loss attributable to noncontrolling interests | 261 |
| | 294 |
| | 305 |
| | (33 | ) | | (11.2 | )% | | (11 | ) | | (3.6 | )% |
| | | | | | | | | | | | | | |
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
| | $ | (157,081 | ) | | (15.2 | )% | | $ | 291,964 |
| | 39.3 | % |
| |
(1) | Percent change is not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | |
| For the year ended December 31, | | December 31, 2023 vs. 2022 |
| | 2023 | | 2022 | | $ Change | | % Change |
| Revenue: | | | | | | | |
| Rental and other income | $ | 2,760,187 | | | $ | 2,587,113 | | | $ | 173,074 | | | 6.7 | % |
| Management, development and other fees | 7,722 | | | 6,333 | | | 1,389 | | | 21.9 | % |
| Total revenue | 2,767,909 | | | 2,593,446 | | | 174,463 | | | 6.7 | % |
| | | | | | | |
| Expenses: | | | | | | | |
| Direct property operating expenses, excluding property taxes | 551,905 | | | 509,529 | | | 42,376 | | | 8.3 | % |
| Property taxes | 306,794 | | | 288,960 | | | 17,834 | | | 6.2 | % |
| Total community operating expenses | 858,699 | | | 798,489 | | | 60,210 | | | 7.5 | % |
| | | | | | | |
| Property management and other indirect operating expenses | (129,433) | | | (120,625) | | | (8,808) | | | (7.3) | % |
| Expensed transaction, development and other pursuit costs, net of recoveries | (33,479) | | | (16,565) | | | (16,914) | | | (102.1) | % |
| Interest expense, net | (205,992) | | | (230,074) | | | 24,082 | | | 10.5 | % |
| Loss on extinguishment of debt, net | (150) | | | (1,646) | | | 1,496 | | | 90.9 | % |
| Depreciation expense | (816,965) | | | (814,978) | | | (1,987) | | | (0.2) | % |
| General and administrative expense | (76,534) | | | (74,064) | | | (2,470) | | | (3.3) | % |
| Casualty loss | (9,118) | | | — | | | (9,118) | | | (100.0) | % |
| Income from unconsolidated investments | 13,454 | | | 53,394 | | | (39,940) | | | (74.8) | % |
| Gain on sale of communities | 287,424 | | | 555,558 | | | (268,134) | | | (48.3) | % |
| Other real estate activity | 174 | | | 5,127 | | | (4,953) | | | (96.6) | % |
| Income before income taxes | 938,591 | | | 1,151,084 | | | (212,493) | | | (18.5) | % |
| Income tax expense | (10,153) | | | (14,646) | | | 4,493 | | | 30.7 | % |
| Net income | 928,438 | | | 1,136,438 | | | (208,000) | | | (18.3) | % |
| | | | | | | |
| Net loss attributable to noncontrolling interests | 387 | | | 337 | | | 50 | | | 14.8 | % |
| | | | | | | |
| Net income attributable to common stockholders | $ | 928,825 | | | $ | 1,136,775 | | | $ | (207,950) | | | (18.3) | % |
Net income attributable to common stockholders decreased $157,081,000,$207,950,000, or 15.2%18.3%, to $876,921,000$928,825,000 in 20172023 from 2016,2022, primarily due to a decreasedecreases in real estate sales and related gains coupled within the current year, partially offset by increases in depreciation,NOI from communities in the current year.
NOI. We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and interestadministrative expense, and a netincome from unconsolidated investments, depreciation expense, income tax expense, casualty and impairment loss, in the current year compared to a gain in the prior year. These amounts were partially offset by an increase in NOI from newly developed, acquired and existing operating communities. Net income attributable to common stockholders increased $291,964,000, or 39.3%, to $1,034,002,000 in 2016 from 2015, primarily due to an increase in NOI from newly developed, acquired and existing operatingon sale of communities, and an increase inother real estate salesactivity and related gains. These amounts were partially offset by increases in depreciation and interest expense, and a loss on extinguishment of debt in the current year coupled with a gain on extinguishment of debt in the prior year.
net operating income from real estate assets sold or held for sale. Management considers NOI is considered by management to be an important and appropriate supplemental performance measure to net income because it helps both investors and management to understand the core operations of a community or communities prior to the allocation of any corporate-level property management overhead or financing-related costs. NOI reflects the operating performance of a community and allows for an easier comparison of the operating performance of individual assets or groups of assets. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impact to overhead as a result of acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets. We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed acquisition, development and other pursuit costs, net of recoveries, interest expense, net, loss (gain) on extinguishment of debt, net, general and administrative expense, equity in income of unconsolidated real estate entities, depreciation expense, corporate income tax expense, casualty and impairment loss (gain), net, gain on sale of communities, loss (gain) on other real estate transactions and net operating income from real estate assets sold or held for sale.
NOI does not represent cash generated from operating activities in accordance with GAAP, and NOI should not be considered an alternative to net income as an indication of our performance. NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue. Reconciliations of NOI and Residential NOI for the years ended December 31, 2017, 20162023 and 20152022 to net income for each year are as follows (dollars in thousands):
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Net income | $ | 876,660 |
| | $ | 1,033,708 |
| | $ | 741,733 |
|
| Indirect operating expenses, net of corporate income | 65,398 |
| | 61,403 |
| | 56,973 |
|
| Investments and investment management expense | 5,936 |
| | 4,822 |
| | 4,370 |
|
| Expensed acquisition, development and other pursuit costs, net of recoveries | 2,736 |
| | 9,922 |
| | 6,822 |
|
| Interest expense, net | 199,661 |
| | 187,510 |
| | 175,615 |
|
| Loss on extinguishment of debt, net | 25,472 |
| | 7,075 |
| | (26,736 | ) |
| General and administrative expense | 50,673 |
| | 45,771 |
| | 42,774 |
|
| Equity in income of unconsolidated real estate entities | (70,744 | ) | | (64,962 | ) | | (70,018 | ) |
| Depreciation expense | 584,150 |
| | 531,434 |
| | 477,923 |
|
| Income tax expense | 141 |
| | 305 |
| | 1,483 |
|
| Casualty and impairment loss (gain), net | 6,250 |
| | (3,935 | ) | | (10,542 | ) |
| Gain on sale of real estate assets | (252,599 | ) | | (374,623 | ) | | (115,625 | ) |
| Loss (gain) on other real estate transactions | 10,907 |
| | (10,224 | ) | | (9,647 | ) |
| Net operating income from real estate assets sold or held for sale | (14,573 | ) | | (44,263 | ) | | (59,383 | ) |
| Net operating income | $ | 1,490,068 |
| | $ | 1,383,943 |
|
| $ | 1,215,742 |
|
| | | | | | | | | | | |
| | For the year ended December 31, |
| | 2023 | | 2022 |
| Net income | $ | 928,438 | | | $ | 1,136,438 | |
| Property management and other indirect operating expenses, net of corporate income | 121,704 | | | 114,200 | |
| Expensed transaction, development and other pursuit costs, net of recoveries | 33,479 | | | 16,565 | |
| Interest expense, net | 205,992 | | | 230,074 | |
| Loss on extinguishment of debt, net | 150 | | | 1,646 | |
| General and administrative expense | 76,534 | | | 74,064 | |
| Income from unconsolidated investments | (13,454) | | | (53,394) | |
| Depreciation expense | 816,965 | | | 814,978 | |
| Income tax expense | 10,153 | | | 14,646 | |
| Casualty loss | 9,118 | | | — | |
| Gain on sale of communities | (287,424) | | | (555,558) | |
| Other real estate activity | (174) | | | (5,127) | |
| Net operating income from real estate assets sold or held for sale | (14,733) | | | (46,678) | |
| NOI | 1,886,748 | | | 1,741,854 | |
| | | |
| Commercial NOI (1) | (33,911) | | | (35,652) | |
| Residential NOI | $ | 1,852,837 | | | $ | 1,706,202 | |
_________________________
(1)Represents results attributable to the commercial and other non-residential operations at our communities (“Commercial”).
The Residential NOI increaseschanges for both 2017 and 2016,2023 as compared to the prior years, consist2022 consists of changes in the following categories (dollars in thousands):
|
| | | | | | | |
| | Full Year |
| | 2017 | | 2016 |
| Established Communities | $ | 27,191 |
| | $ | 48,569 |
|
| Other Stabilized Communities (1) | 41,664 |
| | 58,555 |
|
| Development and Redevelopment Communities (2) | 37,270 |
| | 61,077 |
|
| Total | $ | 106,125 |
| | $ | 168,201 |
|
| | | | | |
| (1)NOI forFor the year ended |
| December 31, 2016 includes $20,306 in business interruption insurance proceeds related to the Edgewater casualty loss. |
| 2023 |
(2)Same Store | NOI for the year ended December 31, 2017 includes $3,495 in business interruption insurance proceeds related to the Maplewood casualty loss.$ | 100,738 | |
| Other Stabilized | 25,235 | |
| Development / Redevelopment | 20,662 | |
| Total | $ | 146,635 | |
The increase in our Established Communities'Same Store Residential NOI in 2017 and 20162023 is due to increasedan increase in Residential rental rates,revenue of $149,495,000, or 6.3%, partially offset by increased operating expenses. Thean increase in 2016 isResidential property operating expenses of $48,752,000, or 6.6%, over 2022.
Increases in inflation can result in an increase in our operating costs both at our communities and at the corporate level. Substantially all of our apartment leases are for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases. Short-term leases generally reduce our risk from the adverse effect of inflation, although these leases also partially offset by decreasedpermit residents to leave at the end of their lease term. In addition, inflation could cause our construction costs and cost of other capitalized expenditures to increase, impacting the expected economic occupancy.return of, and expected operating results for, current and planned development activity.
Rental and other income increased $173,074,000, or 6.7%, in both 2017 and 20162023 compared to the prior years due to additional rental income generated from newly developed, acquired and existing operating communities and an increase in rental rates at our Established Communities. The changes between years are also impacted by business interruption insurance proceeds receivedyear primarily due to the final settlement of the Edgewater and Maplewood casualty losses, as described above.increased rental revenue from our Same Store communities, discussed below.
Consolidated Communities—TheCommunities —The weighted average number of occupied apartment homes for consolidated communities increased to 70,08177,667 apartment homes for 2017, as2023, compared to 67,84977,319 homes for 2016 and 64,211 homes for 2015.2022. The weighted average monthly rental revenue per occupied apartment home increased to $2,556$2,955 for 2017 as2023 compared to $2,476$2,784 in 2016 and $2,3882022.
Same Store Communities — The following table presents the change in 2015.
Established Communities—RentalSame Store Residential rental revenue, increased $38,648,000, or 2.5%, to $1,574,395,000 for 2017 from $1,535,747,000 inincluding the prior year. The increase is due to an increase inattribution of the change between average rental rates of 2.4% to $2,511revenue per apartmentoccupied home and an increaseEconomic Occupancy for the year ended December 31, 2023 (dollars in economic occupancythousands).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential rental revenue | | Average monthly rental revenue per occupied home | | Economic Occupancy (1) |
| | | | $ Change | % Change | | | | | % Change | | | | % Change |
| For the year ended December 31, |
| 2023 | | 2022 | | 2023 to 2022 | | 2023 to 2022 | | 2023 | | 2022 | | 2023 to 2022 | | 2023 | | 2022 | | 2023 to 2022 |
| New England | $ | 366,070 | | | $ | 340,566 | | | $ | 25,504 | | | 7.5 | % | | $ | 3,303 | | | $ | 3,053 | | | 8.2 | % | | 96.4 | % | | 97.1 | % | | (0.7) | % |
| Metro NY/NJ | 523,854 | | | 489,336 | | | 34,518 | | | 7.1 | % | | 3,571 | | | 3,321 | | | 7.5 | % | | 95.8 | % | | 96.2 | % | | (0.4) | % |
| Mid-Atlantic | 366,888 | | | 345,618 | | | 21,270 | | | 6.2 | % | | 2,412 | | | 2,276 | | | 6.0 | % | | 95.3 | % | | 95.1 | % | | 0.2 | % |
| Southeast Florida | 73,733 | | | 67,269 | | | 6,464 | | | 9.6 | % | | 2,903 | | | 2,666 | | | 8.9 | % | | 96.8 | % | | 96.1 | % | | 0.7 | % |
| Denver, CO | 28,209 | | | 26,845 | | | 1,364 | | | 5.1 | % | | 2,259 | | | 2,150 | | | 5.1 | % | | 95.8 | % | | 95.8 | % | | — | % |
| Pacific Northwest | 167,292 | | | 160,194 | | | 7,098 | | | 4.4 | % | | 2,676 | | | 2,558 | | | 4.6 | % | | 95.2 | % | | 95.4 | % | | (0.2) | % |
| Northern California | 420,879 | | | 400,685 | | | 20,194 | | | 5.0 | % | | 3,013 | | | 2,870 | | | 5.0 | % | | 95.9 | % | | 95.9 | % | | — | % |
| Southern California | 544,414 | | | 513,136 | | | 31,278 | | | 6.1 | % | | 2,738 | | | 2,570 | | | 6.5 | % | | 95.9 | % | | 96.3 | % | | (0.4) | % |
| Other Expansion Regions | 22,933 | | | 21,127 | | | 1,806 | | | 8.5 | % | | 2,169 | | | 2,003 | | | 8.3 | % | | 95.2 | % | | 95.0 | % | | 0.2 | % |
| Total Same Store | $ | 2,514,272 | | | $ | 2,364,776 | | | $ | 149,496 | | | 6.3 | % | | $ | 2,926 | | | $ | 2,745 | | | 6.6 | % | | 95.8 | % | | 96.1 | % | | (0.3) | % |
(1) Economic occupancy takes into account the fact that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue. Economic occupancyOccupancy is defined as gross potential revenue less vacancy loss, as a percentage of gross potential revenue. Gross potential revenue is determined by valuing occupied homes at leasedcontract rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant units at current market rents. Economic Occupancy considers that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue.
We experienced increasesThe following table details the increase in Same Store Residential rental revenue by component for the year ended December 31, 2023, compared to the prior year:
| | | | | |
| For the year ended |
| December 31, 2023 |
| Residential rental revenue | |
| Lease rates | 5.4 | % |
| Concessions and other discounts | 0.4 | % |
| Economic Occupancy | (0.3) | % |
| Other rental revenue | 0.9 | % |
| Uncollectible lease revenue (excluding rent relief) | 1.2 | % |
| Rent relief | (1.3) | % |
| Total Residential rental revenue | 6.3 | % |
The increase for Same Store Residential rental revenue for all of our Established Communities' regions in 2017the year ended December 31, 2023, as compared to the prior year as discussedwas not significantly impacted by uncollectible lease revenue, inclusive of amounts received from government rent relief programs. Same Store uncollectible lease revenue decreased for the year ended December 31, 2023 by $4,172,000, resulting in more detail below.
The Metro New York/New Jersey region accounted for approximately 23.0% of the Established Community rental revenue for 2017 and experienced a rental revenue increase of 2.1% for 2017 over the prior year. Average rental rates increased 2.0% to $3,038 per apartment home, and economic occupancy increased 0.1% to 95.8% for 2017 as compared to 2016. We expect operating conditions in the Metro New York/New Jersey region to remain bifurcated between New York City and surrounding suburban submarkets in 2018. We believe elevated levels of new apartment deliveries in New York City are limiting our ability to increase rental rates, while surrounding suburban submarkets are more insulated from this new competition.
The Southern California region accounted for approximately 21.5% of the Established Community rental revenue for 2017 and experienced a rental revenue increase of 3.9% for 2017 over the prior year. Average rental rates increased 4.1% to $2,214 per apartment home, and were partially offset by a 0.2% decrease in economic occupancy to 95.3% for 2017 as compared to 2016. We expect an increase in new apartment deliveries in Southern California in 2018 but believe strengthening job and income growth will continue to support a favorable operating environment.
The Northern California region accounted for approximately 21.4% of the Established Community rental revenue for 2017 and experienced a rental revenue increase of 1.6% for 2017 over the prior year. Average rental rates increased 1.1% to $2,839 per apartment home, and economic occupancy increased 0.5% to 95.7% for 2017 as compared to 2016. We expect operating conditions to remain challenged in the Northern California region in 2018 due to slower job growth and an increase in competition from new apartment deliveries.
The New England region accounted for approximately 14.8% of the Established Community rental revenue for 2017 and experienced a rental revenue increase of 2.4% for 2017 over the prior year. Average rental rates increased 2.3% to $2,420 per apartment home, and economic occupancy increased 0.1% to 95.6% for 2017 as compared to 2016. We expect the operating environment in New England in 2018 to be more favorable in the suburban submarkets than in the urban submarkets due to higher levels of new apartment deliveries in the urban submarkets.
The Mid-Atlantic region accounted for approximately 14.0% of the Established Community rental revenue for 2017 and experienced a rental revenue increase of 1.8% for 2017 over the prior year. Average rental rates increased 1.9% to $2,153 per apartment home, and were partially offset by a 0.1% decrease in economic occupancySame Store Residential rental revenue. However, uncollectible lease revenue was impacted by a decrease in government rent relief of $31,766,000 for the year ended December 31, 2023 from the prior year. Adjusting to 95.2% for 2017remove the impact of rent relief, uncollectible lease revenue as compareda percentage of Same Store Residential rental revenue decreased to 2016. We believe elevated levels of new apartment deliveries2.4% in the Mid-Atlantic region will limit our abilityyear ended December 31, 2023 from 3.7% in the year ended December 31, 2022.
We use concessions periodically as a means to increase rental rates in select submarkets in 2018.
The Pacific Northwest region accountedleasing velocity, providing our new and existing residents an upfront incentive to enter into a new lease, or extend an existing lease. During 2023, concessions granted for approximately 5.3% of the Established Community rental revenue for 2017 and experienced a rental revenue increase of 5.4% for 2017our Same Store communities increased over the prior year. Average rental rates increased 5.2%year by $5,341,000 to $2,228 per apartment home, and economic occupancy increased 0.2%$17,040,000. We amortize concessions on a straight-line basis over the life of the respective leases (generally one year), reducing the income recognized over the lease term. For the year ended December 31, 2023, amortized concessions decreased by $7,219,000 contributing to 95.2% for 2017 as compared to 2016. We expect strong job and income growththe increase in 2018 in the Pacific Northwest region will continue to support a favorable operating environment.
Management, development and other fees decreased $1,452,000 or 25.9%, and $4,348,000, or 43.7%, in 2017 and 2016, respectively,revenue as compared to the prior years.year. The decreasesremaining net unamortized balance of Same Store residential concessions as of December 31, 2023 and 2022 was $8,480,000 and $6,229,000, respectively.
Management, development and other fees increased $1,389,000, or 21.9%, in 2017 and 2016 were2023, compared to the prior year, primarily due to lower property and asset management fees earned as a result of dispositions from Fund II and the U.S. Fund. The decrease in 2016 was also due to asset management and disposition fees earnedfor third-party back-office, financial administrative support services in the priorcurrent year, not present in 2016 from the Residual JV.partially offset by reduced third-party development fees.
Direct property operating expenses, excluding property taxes, increased $21,874,000,$42,376,000, or 5.4%, and $29,260,000, or 7.8%8.3%, in 2017 and 2016, respectively, as2023 compared to the prior years. The increases in 2017 and 2016 wereyear, primarily due to the addition of newly developed and acquired apartment communities.communities as well as increased Residential operating expenses at our Same Store communities as discussed below.
For Established Communities,Same Store Residential direct property operating expenses, excluding property taxes, increased $6,067,000,$35,681,000, or 2.0%, and $7,256,000, or 2.5%7.6%, in 2017 and 2016, respectively, as2023 compared to the prior years. The increase in 2017 wasyear, primarily due to increased compensation expense,utilities, maintenance costs, bad debt associated with resident expense reimbursements and turnoverlegal and maintenanceeviction costs as restrictions on managing delinquent accounts eased or expired, partially offset by decreased property insurance costs. The increase in 2016 was primarily due to increased bad debt expense, compensation and community repairs and maintenance costs, partially offset by decreased utility costs and a decrease in snow removalon-site payroll costs resulting from technology and other costs related to the severe winter storms in our Northeast markets that occurred during the first quarter of 2015.centralization initiatives.
Property taxes increased $16,538,000,$17,834,000, or 8.1%, and $11,338,000, or 5.9%6.2%, in 2017 and 2016, respectively, as2023 compared to the prior years. The increases in 2017 and 2016 wereyear, primarily due to the addition of newly developed and acquired apartment communities increased assessments acrossand increases for our Same Store Residential portfolio, as well as successful appeals and reductions of supplementalpartially offset by decreased property taxes in the prior years in excess of those recognized in the then current year.from dispositions.
For Established Communities,Same Store Residential property taxes increased $5,300,000,$13,071,000, or 3.5%, and $6,616,000, or 4.4%4.9%, in 2017 and 2016, respectively, as2023 compared to the prior years. The increase in 2017 wasyear, primarily due to increased assessments inacross the current year periods, as well asportfolio, successful appeals in the prior year periodsand the expiration of property tax incentive programs primarily at certain of our properties in New York City. The expiration of property tax incentive programs represents $6,810,000 or 52% of the Company's West Coast markets. The4.9% increase in 2016 was primarily due to increased assessments as well as appeals and supplemental tax reversals in 2015 in excess of those recognized in 2016. For communities in California, property tax changes are determined bytaxes for the change in the California Consumer Price Index, with increases limited by law (Proposition 13). Massachusetts also has laws in place to limit property tax increases. We evaluate property tax increases internally and also engage third-party consultants to assist in our evaluations. We appeal property tax increases when appropriate.year ended December 31, 2023.
Corporate-level propertyProperty management and other indirect operating expensesincreased $2,521,000 $8,808,000, or 7.3%, or 3.8%, in 2017 asfor the year ended December 31, 2023 compared to the prior year. The increase in 2017 wasyear, primarily due to increased costs related to initiatives to improve future efficiency in services for residents and prospects and investments in technology as well as increased compensation related costs in the current year, partially offset by severance costs in the prior year not present in current year.costs.
Investments and investment management expense increased by $1,114,000, or 23.1%, and $452,000, or 10.3%, in 2017 and 2016, respectively, as compared to the prior years. The increases in 2017 and 2016 were primarily due to increases in compensation expense.
Expensed acquisition,transaction, development and other pursuit costs, net of recoveries primarily reflect abandoned pursuit costs as well as acquisition costs related to business acquisitions that occurred prior to the adoption of ASU 2017-01 as of October 1, 2016. Subsequent to the adoption of ASU 2017-01, we expect that acquisitions of individual operating communities will generally be viewed as asset acquisitions, and result in acquisition costs being capitalized instead of expensed. Abandoned pursuit costs include costs incurred for write downs and abandonment of Development Rights, development pursuits not yet considered probable for development, as well as the abandonment of Development Rights and costs related to abandoned acquisition and disposition pursuits. Thesepursuits, offset by any recoveries of costs can be volatile, particularly inincurred. In periods of increased acquisition pursuit activity, periods of economic downturn or when there is limited access to capital, these costs can be volatile and the costs may vary significantly from periodyear to period. These aggregateyear. In addition, the timing for potential recoveries will not always align with the timing for expensing an abandoned pursuit. Expensed transaction, development and other pursuit costs, decreased $7,186,000, or 72.4%,net of recoveries, increased $16,914,000 in 2017, and increased $3,100,000, or 45.4%, in 2016, as2023 compared to the prior years.year. The decrease in 2017 was due to a decrease in acquisition costsamount for 2023 includes write-offs of $27,455,000 related to communities acquired during the prior year periodsseven Development Rights that were expensed prior to the adoptionwe determined are no longer probable. The amount for 2022 includes write-offs of ASU 2017-01, decreased development pursuit costs, as well as the non-cash write-off of asset management fee intangibles associated with the disposition of communities in the U.S. Fund in the prior year period in excess of amounts recognized in the current year period. The increase in 2016 was primarily due to costs$10,073,000 related to five operating communities acquired in 2016, as well as the non-cash write-off of asset management fee intangibles associated with the disposition of communities in the U.S. Fund.three development opportunities that we determined are no longer probable.
Interest expense, net increased $12,151,000, decreased $24,082,000, or 6.5%, and $11,895,000, or 6.8%10.5%, in 2017 and 2016, respectively, as2023 compared to the prior years.year. This category includes interest costs offset by capitalized interest pertaining to development and redevelopment activity, amortization of premium/discount on debt, interest income and interest income.any mark-to-market impact from derivatives not in qualifying hedge relationships. The increasedecrease in 20172023 was primarily due to a decrease in amounts of interest capitalized, as well as an increase in outstanding unsecured indebtedness. The increase in 2016 was due to an increase in outstanding unsecured indebtedness, as well as an increase in variable interest rates.
Loss (gain) on the extinguishment of debt, net reflectsprepayment penalties, the write-off of unamortized deferred financing costs and premiums from our debt repurchase and retirement activity, or payments to acquire our outstanding debt at amounts above or below the carrying basis of the debt acquired. The loss of $25,472,000 for 2017 was primarilyincome due to prepayment penalties of $33,515,000higher cash amounts invested and the non-cash write-off of deferred financing costs of $1,450,000 associatedhigher interest rates coupled with the repayment of $556,313,000 aggregate principal amount of fixed rate mortgage notes secured by 12 wholly-owned operating communities in advance of their May 2019 maturity dates. This wasincreased capitalized interest, partially offset by a gain of $10,839,000, primarily composed of the write-off of unamortized premiumincrease in rates on the repayment of $670,590,000 principal amount of fixed rate mortgage notes secured by 11 wholly-owned operating communities in advance of their November 2017 maturity dates. The loss of $7,075,000 for 2016 was primarily due to the prepayment penalty associated with the early repayment of $250,000,000 principal amount of 5.70% coupon unsecured notes and the non-cash write-off of deferred financing costs for the variable rate debt secured by Avalon Walnut Creek.indebtedness.
Depreciation expense increased $52,716,000,$1,987,000, or 9.9%, and $53,511,000, or 11.2%0.2%, in 2017 and 2016, respectively, as2023 compared to the prior years. The increases in 2017 and 2016 wereyear, primarily due to the addition of newly developed and acquired apartment communities.communities, partially offset by dispositions.
General and administrative expense (“G&A”) increased $4,902,000,$2,470,000, or 10.7%, and $2,997,000, or 7.0%3.3%, in 2017 and 2016, respectively,2023 as compared to the prior years. The increaseyear, primarily due to proceeds from legal settlements we received in 2017the prior year, partially offset by a decrease in executive transition compensation in the current year.
Casualty loss for the year ended December 31, 2023 of $9,118,000 was primarily due to an increasedamages to certain of our communities in compensation related expenses, professional fees,our Northeast and sales and use tax expense. The increase in 2016 was primarily due to an increase in legal and consulting fees, as well as increased charitable contributions over the prior year.
Casualty and impairment loss (gain), net for 2017 consists of a $9,350,000 impairment charge recognized for a land parcel we had acquired for development in 2004 and sold in July 2017, and the net impact of the Maplewood casualty loss, net of associated insurance receivables, of $2,338,000, partially offset by $5,438,000 of legal settlement proceeds relating to construction defects at a community acquired as part of the Archstone Acquisition. The gain for 2016 consists of $8,702,000 of property damage insurance proceeds from the final insurance settlement for the Edgewater casualty loss and $5,732,000 in net third-party insurance proceedsCalifornia regions related to severe winter storms that occurredweather and other casualty events.
Income from unconsolidated investments decreased $39,940,000 in 2015 in our Northeast markets. These amounts were partially offset by $10,500,000 of aggregate impairment charges recognized for ancillary land parcels.
Equity in income of unconsolidated real estate entities increased $5,782,000, or 8.9%, and decreased $5,056,000, or 7.2%, in 2017 and 2016, respectively, as2023 compared to the prior years. The increase in 2017 wasyear, primarily due to the recognition of income for the Company's promoted interest, partially offset by decreasedprior year gains onfrom the sale of the final three communities in various ventures in the current year,U.S. Fund and decreased NOI from the ventures due to disposition activity in 2016 and 2017. The decrease in 2016 was primarily due to decreased NOI from the ventures due to disposition activity in 2015 and 2016, as well as amounts received in 2015 for Avalon
at Mission Bay II, related to a modification of the joint venture agreement to eliminate our promoted interest, for future distributions, partially offset by increasedcoupled with unrealized gains from dispositions in 2016.on property technology investments.
Gain on sale of communities decreased in 2017 and increased 2016 as2023 compared to the prior years.year. The amount of gain realized in a given period depends on many factors, including the number of communities sold, the size and carrying value of the communities sold and the market conditions in the local area. The gaingains of $252,599,000$287,424,000 and $555,558,000 in 2017 was2023 and 2022, respectively, were primarily due to the sale of sixfour and nine wholly-owned operating communities in 2023 and 2022, respectively.
Income tax expense of $10,153,000 and $14,646,000 for the gain of $374,623,000 in 2016years ended December 31, 2023 and 2022, respectively, was primarily related to dispositions at The Park Loggia.
Non-GAAP Financial Measures — Reconciliation of FFO and Core FFO
FFO and FFO adjusted for non-core items, or “Core FFO,” as defined below, are generally considered by management to be appropriate supplemental measures of our operating and financial performance.
Consistent with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts® (“Nareit”), we calculate Funds from Operations Attributable to Common Stockholders (“FFO”) as net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for:
•gains or losses on sales of previously depreciated operating communities;
•cumulative effect of a change in accounting principle;
•impairment write-downs of depreciable real estate assets;
•write-downs of investments in affiliates due to a decrease in the salevalue of seven wholly-owned operating communities.
(Loss) gain on otherdepreciable real estate transactions decreasedassets held by those affiliates;
•depreciation of real estate assets; and
•similar adjustments for unconsolidated partnerships and joint ventures, including those from a change in 2017control.
FFO can help with the comparison of the operating and increased 2016financial performance of a real estate company between periods or as compared to different companies because the prior years. The lossadjustments such as (i) gains or losses on sales of $10,907,000previously depreciated property or (ii) real estate depreciation may impact comparability as the amount and timing of these or similar items can vary among owners of identical assets in 2017 was primarily composedsimilar condition based on historical cost accounting and useful life estimates. By further adjusting for items that we do not consider part of our core business operations, Core FFO can help with the non-cash write-offcomparison of prepaid rentour core operating performance year over year. We believe that, in order to understand our operating results, FFO and Core FFO should be considered in conjunction with net income as presented in the Consolidated Statements of Comprehensive Income included elsewhere in this report.
We calculate Core FFO as FFO, adjusted for:
•joint venture gains (if not adjusted through FFO), non-core costs and promoted interests from partnerships;
•casualty and impairment losses or gains, net on non-depreciable real estate or other investments;
•gains or losses from early extinguishment of consolidated borrowings;
•expensed transaction, development and other pursuit costs, net of recoveries;
•third-party business interruption insurance proceeds and the related lost NOI that is covered by the expected third party business interruption insurance proceeds;
•property and casualty insurance proceeds and legal settlements and costs;
•gains or losses on sales of assets not subject to depreciation and other investment gains or losses;
•advocacy contributions, representing payments to promote our business interests;
•hedge ineffectiveness or gains or losses from derivatives not designated as hedges for accounting purposes;
•changes to expected credit losses associated with the purchaselending commitments under the SIP;
•severance related costs;
•executive transition compensation costs;
•net for-sale condominium activity, including gains, marketing, operating and administrative costs and imputed carry cost; and
•income taxes.
FFO and Core FFO do not represent net income in accordance with GAAP, and therefore should not be considered an alternative to net income, which remains the primary measure, as an indication of land previouslyour performance. In addition, FFO and Core FFO as calculated by other REITs may not be comparable to our calculations of FFO and Core FFO.
The following is a reconciliation of net income attributable to common stockholders to FFO attributable to common stockholders and to Core FFO attributable to common stockholders for the years ended December 31, 2023 and 2022 (dollars in thousands, except per share amounts).
| | | | | | | | | | | |
| | For the year ended December 31, |
| | 2023 | | 2022 |
| Net income attributable to common stockholders | $ | 928,825 | | | $ | 1,136,775 | |
| Depreciation - real estate assets, including joint venture adjustments | 811,717 | | | 810,611 | |
| Distributions to noncontrolling interests | 25 | | | 48 | |
| Gain on sale of unconsolidated entities holding previously depreciated real estate | — | | | (38,144) | |
| Gain on sale of previously depreciated real estate | (287,424) | | | (555,558) | |
| Casualty loss on real estate | 9,118 | | | — | |
| FFO attributable to common stockholders | $ | 1,462,261 | | | $ | 1,353,732 | |
| | | |
| Adjusting items: | | | |
| Unconsolidated entity gains, net (1) | (4,161) | | | (8,355) | |
| Joint venture promote (2) | (1,519) | | | (4,690) | |
| Structured Investment Program loan reserve (3) | 1,186 | | | 1,632 | |
| Loss on extinguishment of consolidated debt | 150 | | | 1,646 | |
| Hedge accounting activity | 566 | | | (229) | |
| Advocacy contributions | 1,625 | | | 634 | |
| Executive transition compensation costs | 1,244 | | | 1,631 | |
| Severance related costs | 2,625 | | | 1,097 | |
| Expensed transaction, development and other pursuit costs, net of recoveries (4) | 30,583 | | | 13,288 | |
| Other real estate activity | (174) | | | (5,127) | |
| For-sale condominium imputed carry cost (5) | 602 | | | 2,306 | |
| Legal settlements and costs (6) | 457 | | | (2,212) | |
| Income tax expense (7) | 10,153 | | | 14,646 | |
| Core FFO attributable to common stockholders | $ | 1,505,598 | | | $ | 1,369,999 | |
| | | |
| Weighted average common shares outstanding - diluted | 141,643,788 | | 139,975,087 |
| | | |
| Earnings per common share - diluted | $ | 6.56 | | | $ | 8.12 | |
| FFO per common share - diluted | $ | 10.32 | | | $ | 9.67 | |
| Core FFO per common share - diluted | $ | 10.63 | | | $ | 9.79 | |
(1) Amounts consist primarily of net unrealized gains on technology investments.
(2) Amounts are for our recognition of our promoted interest in the U.S. Fund.
(3) Amounts are the expected credit losses associated with our lending commitments primarily under a ground lease.our SIP. The gaintiming and amount of $10,224,000 in 2016 was primarily composedactual losses that will be incurred, if any, is to be determined.
(4) Amount for 2023 includes write-offs of the gain on the land$27,455 for seven Development Rights that we sold to an unconsolidated joint venture.
Income tax expense decreased by $164,000and$1,178,000 in 2017 and 2016, respectively, as compared to the prior years. The decrease in 2016 was primarily due to the timingdetermined are no longer probable. Amount for 2022 includes write-offs of federal income tax expense amounts$10,073 related to dispositionsthree development opportunities that we determined are no longer probable. Amounts for 2023 and 2022 also include $3,128 and $3,215, respectively, for additional expensed pursuit costs.
(5) Represents the imputed carry cost of for-sale residential condominiums at The Park Loggia. We compute this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by our directweighted average unsecured debt effective interest rate.
(6) In 2022, we received $6,000 of legal settlement proceeds, of which $3,684 is adjusted for Core FFO.
(7) Amounts are primarily for the recognition of taxes associated with The Park Loggia dispositions.
FFO and indirect interestsCore FFO also do not represent cash generated from operating activities in certain real estate assets acquired in the Archstone Acquisition, which were owned throughaccordance with GAAP, and therefore should not be considered an alternative to net cash flows from operating activities, as determined by GAAP, as a taxable REIT subsidiary.measure of liquidity. Additionally, it is not necessarily indicative of cash available to fund cash needs.
Liquidity and Capital Resources
We employ a disciplined approach to our liquidity and capital management. When we source capital, we take into account both our view of the most cost effectivecost-effective alternative then available and our desire to maintain a balance sheet that provides us with flexibility. Our principal short-termfocus on near-term and intermediate-term liquidity needs areis to ensure we have adequate capital to fund:
•development and redevelopment activity in which we are currently engaged;engaged or in which we plan to engage;
•the minimum dividend payments on our common stock required to maintain our REIT qualification under the Code;
debt service•regularly scheduled principal and interest payments and principal payments either at maturity or opportunistically before maturity; and
•normal recurring operating expenses and corporate overhead expenses.expenses; and
•investment in our operating platform, including strategic investments.
Factors affecting our liquidity and capital resources are our cash flows from operations, financing activities and investing activities (including dispositions) as well as general economic and market conditions. Operating cash flow has historically beenCash flows from operations are determined by: operating activities and factors including but not limited to (i) the number of apartment homes currently owned, (ii) rental rates, (iii) occupancy levels, (iv) uncollectible lease revenue levels or interruptions in collections caused by market conditions and (iv)(v) operating expenses with respect to apartment homes. The timing and type of capital markets activity in which we engage as well as our plans for development, redevelopment, acquisition and disposition activity, areis affected by changes in the capital markets environment, such as changes in interest rates or the availability of cost-effective capital. Our plans for development, redevelopment, non-routine capital expenditure, acquisition and disposition activity are affected by market conditions and capital availability. We regularlyfrequently review our liquidity needs, especially in periods with volatile market conditions, as well as the adequacy of cash flows from operations and other expected liquidity sources to meet these needs.
We had cash, and cash equivalents and restricted cash of $201,906,000$530,960,000 at December 31, 2017,2023, a decrease of $128,071,000$203,285,000 from $329,977,000$734,245,000 at December 31, 2016.2022. The following discussion relates to changes in cash, and cash equivalents and restricted cash due to operating, investing and financing activities, which are presentedactivities.
A presentation of GAAP based cash flow metrics is as follows (unaudited, dollars in our Consolidated Statements of Cash Flows included elsewhere in this report.thousands):
| | | | | | | | | | | |
| | For the year ended December 31, |
| | 2023 | | 2022 |
| Net cash provided by operating activities | $ | 1,560,029 | | | $ | 1,421,932 | |
| Net cash used in investing activities | $ | (928,955) | | | $ | (560,419) | |
| Net cash used in financing activities | $ | (834,359) | | | $ | (671,056) | |
Operating Activities—
•Net cash provided by operating activities increased primarily due to $1,256,257,000increases in 2017 from $1,160,272,000 in 2016. The change was driven primarily by increased NOI from existing, acquired and newly developed communities.NOI.
Investing Activities—•Net cash used in investing activities totaled $965,381,000 in 2017. The net cash used was primarily due to:
to (i) investment of $979,947,000$901,847,000 in the development and redevelopment of communities;
communities, (ii) acquisition of three operatingwholly-owned communities for $215,889,000 and land for an operating community previously encumbered by a ground lease for $462,317,000; and
(iii) capital expenditures of $73,990,000$197,274,000 for our operatingwholly-owned communities and non-real estate assets.
These amounts arewere partially offset by:
by net proceeds from dispositionsthe disposition of $503,039,000;four operating communities and the sale of for-sale residential condominiums of $467,096,000.
net distributions from unconsolidated real estate entities of $64,812,000.
Financing Activities—•Net cash used in financing activities totaled $418,947,000 in 2017. The net cash used was primarily due to:
the repayment of secured notes in the amount of $1,313,025,000;
to (i) payment of cash dividends in the amount of $772,657,000; and
$922,657,000, (ii) the repayment of the $300 million$600,000,000 fixed rate unsecured notes and (iii) the repayment of the $150,000,000 Term Loan.
These amounts arewere partially offset by:
by (i) the settlement of the Equity Forward for $491,912,000 and (ii) proceeds from the issuance of unsecured notes and borrowing under the $250 million Term Loan in the aggregate amount of $1,696,826,000;
the issuance of secured notes in the amount of $206,800,000; and$399,756,000.
the issuance
Variable Rate Unsecured Credit Facility
The $2,250,000,000 Credit Facility matures in September 2026. The interest rate that would be applicable to borrowings under the Credit Facility is 6.13% at January 31, 2024 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.805% per annum, which consists of a 0.10% SOFR adjustment plus 0.705% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.63% to SOFR plus 1.38% based upon the rating of our unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the facility, which can vary from 0.095% to 0.295% based upon the rating of our unsecured senior notes. The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases by meeting or missing targets related to environmental sustainability, specifically greenhouse gas emission reductions, with the adjustment determined annually. The first determination under the sustainability-linked pricing component occurred in July 2023, resulting in reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.
The availability on the Credit Facility as of January 31, 2024 is as follows (dollars in thousands):
| | | | | |
| January 31, 2024 |
| |
| Credit Facility commitment | $2,250,000 |
| Credit Facility outstanding | — |
| Commercial paper outstanding | (20,000) |
| Letters of credit outstanding (1) | (1,914) |
| Total Credit Facility available | $ | 2,228,086 | |
(1)In addition, we had $58,616 outstanding in additional letters of credit unrelated to the Credit Facility as of January 31, 2024.
Commercial Paper Program
We have a $1,500,000,000 revolving variable rateCommercial Paper Program with the maximum aggregate face or principal amount outstanding at any one time not to exceed $500,000,000. Under the terms of the Commercial Paper Program, we may issue, from time to time, unsecured credit facilitycommercial paper notes with a syndicatevarying maturities of banks (the "Credit Facility") which matures in April 2020. We may extend the maturity for upless than one year. The Commercial Paper Program is backstopped by our commitment to nine months, provided we are not in default and upon payment of a $1,500,000 extension fee. The Credit Facility bears interest at varying levels based on the London Interbank Offered Rate ("LIBOR"), rating levels achieved on our unsecured notes and on a maturity schedule selected by us. The current stated pricing is LIBOR plus 0.825% per annum (2.40% at January 31, 2018 assuming a one monthmaintain available borrowing rate). The annual facility fee is 0.125% (or approximately $1,875,000 annually based on the $1,500,000,000 facility size and based on our current credit rating).
We had $163,000,000capacity under the Credit Facility and had $46,165,000 outstanding in letters of credit that reduced our borrowing capacity asan amount equal to actual borrowings under the Commercial Paper Program. As of January 31, 2018.2024, we had $20,000,000 outstanding under the Commercial Paper Program at a weighted average contractual interest rate of 5.45%.
Financial Covenants
We are subject to financial and other covenants contained in the Credit Facility the Term Loan and the indentureindentures under which our unsecured notes were issued. The principal financial covenants include the following:
•limitations on the amount of total and secured debt in relation to our overall capital structure;
•limitations on the amount of our unsecured debt relative to the undepreciated basis of real estate assets that are not encumbered by property-specific financing; and
•minimum levels of debt service coverage.
We were in compliance with these covenants at December 31, 2017.2023.
In addition, some of our secured borrowings may include yield maintenance, defeasance, or prepayment penalty provisions, which would result in us incurring an additional charge in the event of a full or partial prepayment of outstanding principal before the scheduled maturity. These provisions in our secured borrowings are generally consistent with other similar types of debt instruments issued during the same time period in which our borrowings were secured.
Continuous Equity Offering Program
In December 2015, we commenced a fourthUnder our continuous equity program (“CEP IV”(the “CEP”) under which, we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time. Actual sales will depend on a variety of factors to be determined, including market conditions, the trading price of our common stock and our determinations of the appropriate sources of funding. In conjunction with CEP IV, wefunding sources. We engaged sales agents for the CEP who will receive compensation of up to 2.0%1.5% of the gross sales price for shares sold. CEP IV also allows us to enter into forward sale agreements up to $1,000,000,000 in aggregate sales price of our common stock. We expect that, if entered into, we will physically settle each forward sale agreement on one or more dates prior to the maturity date of that particular forward sale agreement, in which case we will expectand to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward agreement multiplied by the relevant forward sale price. However, we may also elect to cash settle or net share settle a forward sale agreement. In connection with each forward sale agreement, we will pay the relevant forward seller, in the form of a reduced initial forward sale price, a commission of up to 2.0%1.5% of the sales prices of all borrowed shares of common stock sold. In 2017,During 2023 and through January 31, 2024, we sold 568,424 shares at an averagedid not have any sales price of $188.39 per share, for net proceeds of $105,478,000.under this program. As of January 31, 2018,2024, we had $892,915,000 of shares$705,961,000 remaining authorized for issuance under this program and no forward sales agreements outstanding.program.
Forward Equity Offering
In addition to the CEP, during the year ended December 31, 2023, we settled the Equity Forward issuing 2,000,000 shares of common stock, net of offering fees and discounts, for $491,912,000 or $245.96 per share.
Stock Repurchase Program
We have a stock repurchase program under which we may acquire shares of our common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the “Stock Repurchase Program”). Purchases of common stock under the Stock Repurchase Program may be exercised at our discretion with the timing and number of shares repurchased depending on a variety of factors including price, corporate and regulatory requirements and other corporate liquidity requirements and priorities. The Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice. During the year ended December 31, 2023, we repurchased 11,800 shares of common stock at an average price of $161.96 per share. From January 1, 2024 through January 31, 2024, we had no repurchases of shares under this program. As of January 31, 2024, we had $314,237,000 remaining authorized for purchase under this program.
Interest Rate Swap Agreements
The following derivative activity occurred during the year ended December 31, 2023:
•In 2017, we entered into $300,000,000 of forward interest rate swap agreements executed to reduceconnection with the impact of variability in interest rates on a portionissuance of our expected debt issuance activity$400,000,000 unsecured notes in 2018, which are outstanding as of December 31, 2017. At maturity of the outstanding swap agreements,2023 maturing in 2033, we expect to cash settle the contracts and either pay or receive cash for the then current fair value. Assuming that we issue the debt as expected, the hedging impact from these positions will then be recognized over the life of the issued debt as a yield adjustment.
In addition, during 2017, we settled an aggregate of $800,000,000 of forward interest rate swap agreements, receiving net aggregate payments of $391,000, which consisted of the following activity:
in conjunction with the refinancing of three secured borrowings in May 2017, in April 2017, we settled $185,100,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability of the secured notes, making a payment of $2,326,000;
in conjunction with our May 2017 unsecured note issuance, we settled $400,000,000terminated $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the forecasted issuance of unsecured notes, receiving payments of $8,331,000 which will be recognized over the life of the unsecured notes makingas a paymentreduction in the effective interest rate. All of $1,361,000; andthe positions settled were forward interest rate swaps that we had entered into during 2023.
in conjunction with our June 2017 unsecured note issuance,•In addition, we settled $214,900,000entered into $200,000,000 of forward interest rate swap agreements designated asto reduce the impact of variability in interest rates on a portion of our anticipated future debt issuance activity in 2024. We expect to cash flow hedges ofsettle the interest rate variability onswaps and either pay or receive cash for the forecasted issuance of the unsecured notes, receiving a payment of $4,078,000.then current fair value.
Future Financing and Capital Needs—Debt Maturities and Material Obligations
One of our principal long-term liquidity needs is the repayment of long-term debt at maturity. For both our unsecured and secured notes, a portion of the principal of these notes may be repaid prior to maturity. Early retirement of our unsecured or secured notes could result in gains or losses on extinguishment. If we do not have funds on hand sufficient to repay our indebtedness as it becomes due, it will be necessary for us to refinance or otherwise provide liquidity to satisfy the debt at maturity. This refinancing may be accomplished by uncollateralized private or public debt offerings, equity issuances, additional debt financing that is secured by mortgages on individual communities or groups of communities or borrowings under our Credit Facility or Commercial Paper Program. In addition, to the extent we have amounts outstanding under the Commercial Paper Program, we are obligated to repay the short-term indebtedness at maturity through either current cash on hand or by incurring other indebtedness, including by way of borrowing under our Credit Facility. Although we believe we will have the capacity to meet our currently anticipated liquidity needs, we cannot assure you that capital from additional debt financing or debt or equity offerings will be available or, if available, that they will be on terms we consider satisfactory.
The following debt activity occurred during 2017:
In February 2017, we entered into a $250,000,000 variable rate unsecured term loan (the "$250 million Term Loan"), of which $100,000,000 matures in February 2022 with stated pricing of LIBOR plus 0.90%, and $150,000,000 matures in February 2024 with stated pricing of LIBOR plus 1.50%. In April 2017, we drew the $250,000,000 available under the $250 million Term Loan.
In May 2017, we repaid $670,590,000 aggregate principal amount of 6.26% fixed rate secured notes secured by 11 communities, representing the majority of the Fannie Mae pool 2 secured indebtedness assumed as part of the Archstone Acquisition, which had a contractual maturity date of November 2017 but opened for prepayment at par on April 30, 2017. In conjunction with the repayment, we recognized a gain of $10,839,000, primarily composed of the write-off of unamortized premium. We refinanced the secured borrowings for three of these communities for an aggregate principal amount of $185,100,000, with a contractual fixed interest rate of 3.61% and maturity dates of June 2027.
In May 2017, we issued $400,000,000 principal amount of unsecured notes in a public offering under our existing shelf registration statement for net proceeds of approximately $396,016,000. The notes mature in May 2027 and were issued at a 3.35% interest rate.
In June 2017, we issued $300,000,000 principal amount of unsecured notes in a public offering under our existing shelf registration statement for net proceeds of approximately $297,372,000. The notes mature in July 2047 and were issued at a 4.15% interest rate.
In June 2017, we repaid $556,313,000 aggregate principal amount of 5.86% fixed rate secured notes secured by 12 wholly-owned operating communities, representing the remaining debt in the Freddie Mac cross-collateralized pool financing originated in 2009, in advance of their May 2019 maturity date. In conjunction with the repayment, we recognized a charge of $34,965,000, consisting of prepayment penalties of $33,515,000 and the non-cash write-off of deferred financing costs of $1,450,000.
In October 2017, we refinanced the secured borrowing of Archstone Lexington for a principal balance of $21,700,000, with a variable interest rate of LIBOR plus 1.35% and maturity date of October 2020.
In November 2017, we issued $300,000,000 principal amount of floating rate unsecured notes in a public offering under our existing shelf registration statement for net proceeds of approximately $298,800,000. The notes mature in January 2021 and were issued at three month LIBOR plus 0.43%.
In November 2017, we issued $450,000,000 principal amount of unsecured notes in a public offering under our existing shelf registration statement for net proceeds of approximately $445,271,000. The notes mature in January 2028 and were issued at a 3.20% coupon.
In November 2017, we repaid our $300,000,000 variable rate unsecured term loan (the "$300 million Term Loan") entered into in March 2014. In conjunction with the repayment, we recognized a charge of $1,367,000 for the non-cash write-off of deferred financing costs.
The following table details our consolidated debt obligations, including the effective interest rate and contractual maturity dates, and principal payments for periodic amortization and maturities for the next five years, excluding our Credit Facility and Commercial Paper Program and amounts outstanding related to communities classified as held for sale, for debt outstanding at December 31, 20172023 and 20162022 (dollars in thousands). We are not directly or indirectly (as borrower or guarantor) obligated in any material respect to pay principal or interest on the indebtedness of any unconsolidated entities in which we have an equity or other interest.interest, other than as disclosed related to the AVA Arts District construction loan (see “Unconsolidated Investments” for further discussion of the construction loan).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Effective
interest
rate (1) | | Principal
maturity
date | | Balance Outstanding (2) | | Scheduled Maturities |
| Debt | | | | 12/31/2022 | | 12/31/2023 | | 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter |
| Tax-exempt bonds | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Variable rate | | | | | | | | | | | | | | | | | | | | |
| Avalon Acton | | 4.91 | % | | Jul-2040 | (3) | $ | 45,000 | | | $ | 45,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 45,000 | |
| Avalon Clinton North | | 5.56 | % | | Nov-2038 | (3)(5) | 147,000 | | | 126,400 | | | — | | | — | | | — | | | 700 | | | 2,800 | | | 122,900 | |
| Avalon Clinton South | | 5.56 | % | | Nov-2038 | (3)(5) | 121,500 | | | 104,500 | | | — | | | — | | | — | | | 600 | | | 2,300 | | | 101,600 | |
| Avalon Midtown West | | 5.51 | % | | May-2029 | (3) | 82,700 | | | 76,600 | | | 6,800 | | | 7,300 | | | 8,100 | | | 8,800 | | | 9,600 | | | 36,000 | |
| Avalon San Bruno I | | 5.45 | % | | Dec-2037 | (3) | 60,950 | | | 57,650 | | | 2,200 | | | 2,400 | | | 2,600 | | | 2,800 | | | 3,000 | | | 44,650 | |
| | | | | | 457,150 | | | 410,150 | | | 9,000 | | | 9,700 | | | 10,700 | | | 12,900 | | | 17,700 | | | 350,150 | |
| Conventional loans | | | | | | | | | | | | | | | | | | | | |
| Fixed rate | | | | | | | | | | | | | | | | | | | | |
| $250 million unsecured notes | | — | % | | Mar-2023 | (4) | 250,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| $350 million unsecured notes | | — | % | | Dec-2023 | (4) | 350,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| $300 million unsecured notes | | 3.66 | % | | Nov-2024 | | 300,000 | | | 300,000 | | | 300,000 | | | — | | | — | | | — | | | — | | | — | |
| $525 million unsecured notes | | 3.55 | % | | Jun-2025 | | 525,000 | | | 525,000 | | | — | | | 525,000 | | | — | | | — | | | — | | | — | |
| $300 million unsecured notes | | 3.62 | % | | Nov-2025 | | 300,000 | | | 300,000 | | | — | | | 300,000 | | | — | | | — | | | — | | | — | |
| $475 million unsecured notes | | 3.35 | % | | May-2026 | | 475,000 | | | 475,000 | | | — | | | — | | | 475,000 | | | — | | | — | | | — | |
| $300 million unsecured notes | | 3.01 | % | | Oct-2026 | | 300,000 | | | 300,000 | | | — | | | — | | | 300,000 | | | — | | | — | | | — | |
| $350 million unsecured notes | | 3.95 | % | | Oct-2046 | | 350,000 | | | 350,000 | | | — | | | — | | | — | | | — | | | — | | | 350,000 | |
| $400 million unsecured notes | | 3.50 | % | | May-2027 | | 400,000 | | | 400,000 | | | — | | | — | | | — | | | 400,000 | | | — | | | — | |
| $300 million unsecured notes | | 4.09 | % | | Jul-2047 | | 300,000 | | | 300,000 | | | — | | | — | | | — | | | — | | | — | | | 300,000 | |
| $450 million unsecured notes | | 3.32 | % | | Jan-2028 | | 450,000 | | | 450,000 | | | — | | | — | | | — | | | — | | | 450,000 | | | — | |
| $300 million unsecured notes | | 3.97 | % | | Apr-2048 | | 300,000 | | | 300,000 | | | — | | | — | | | — | | | — | | | — | | | 300,000 | |
| $450 million unsecured notes | | 3.66 | % | | Jun-2029 | | 450,000 | | | 450,000 | | | — | | | — | | | — | | | — | | | — | | | 450,000 | |
| $700 million unsecured notes | | 2.69 | % | | Mar-2030 | | 700,000 | | | 700,000 | | | — | | | — | | | — | | | — | | | — | | | 700,000 | |
| $600 million unsecured notes | | 2.65 | % | | Jan-2031 | | 600,000 | | | 600,000 | | | — | | | — | | | — | | | — | | | — | | | 600,000 | |
| $700 million unsecured notes | | 2.16 | % | | Jan-2032 | | 700,000 | | | 700,000 | | | — | | | — | | | — | | | — | | | — | | | 700,000 | |
| $400 million unsecured notes | | 2.03 | % | | Dec-2028 | | 400,000 | | | 400,000 | | | — | | | — | | | — | | | — | | | 400,000 | | | — | |
| $350 million unsecured notes | | 4.38 | % | | Feb-2033 | | 350,000 | | | 350,000 | | | — | | | — | | | — | | | — | | | — | | | 350,000 | |
| $400 million unsecured notes | | 5.19 | % | | Dec-2033 | | — | | | 400,000 | | | — | | | — | | | — | | | — | | | — | | | 400,000 | |
| Avalon Walnut Creek | | 4.00 | % | | Jul-2066 | | 4,327 | | | 4,501 | | | — | | | — | | | — | | | — | | | — | | | 4,501 | |
| eaves Los Feliz | | 3.68 | % | | Jun-2027 | | 41,400 | | | 41,400 | | | — | | | — | | | — | | | 41,400 | | | — | | | — | |
| eaves Woodland Hills | | 3.67 | % | | Jun-2027 | | 111,500 | | | 111,500 | | | — | | | — | | | — | | | 111,500 | | | — | | | — | |
| Avalon Russett | | 3.77 | % | | Jun-2027 | | 32,200 | | | 32,200 | | | — | | | — | | | — | | | 32,200 | | | — | | | — | |
| Avalon San Bruno III | | 2.38 | % | | Mar-2027 | | 51,000 | | | 51,000 | | | — | | | — | | | — | | | 51,000 | | | — | | | — | |
| Avalon Cerritos | | 3.35 | % | | Aug-2029 | | 30,250 | | | 30,250 | | | — | | | — | | | — | | | — | | | — | | | 30,250 | |
| Avalon West Plano | | 5.97 | % | | May-2029 | | — | | | 63,041 | | | 593 | | | 1,065 | | | 1,111 | | | 1,159 | | | 1,202 | | | 57,911 | |
| | | | | | 7,770,677 | | | 7,633,892 | | | 300,593 | | | 826,065 | | | 776,111 | | | 637,259 | | | 851,202 | | | 4,242,662 | |
| | | | | | | | | | | | | | | | | | | | |
| Variable rate | | | | | | | | | | | | | | | | | | | | |
| Term Loan - $150 million | | — | % | | Feb-2024 | (5) | 150,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | |
| Total indebtedness - excluding Credit Facility and Commercial Paper | | $ | 8,377,827 | | | $ | 8,044,042 | | | $ | 309,593 | | | $ | 835,765 | | | $ | 786,811 | | | $ | 650,159 | | | $ | 868,902 | | | $ | 4,592,812 | |
(1)Rates are as of December 31, 2023 and include credit enhancement fees, facility fees, trustees’ fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees.
(2)Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $43,848 and $47,695 as of December 31, 2023 and 2022, respectively, deferred financing costs and debt discount associated
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | All-In
interest
rate (1) | | Principal
maturity
date | | Balance Outstanding | | Scheduled Maturities |
| Community | | | | 12/31/2016 | | 12/31/2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | Thereafter |
| Tax-exempt bonds (2) | | | | | | | | | | | | | | | | | | | | |
| Fixed rate | | | | | | | | | | | | | | | | | | | | |
| Avalon Oaks West | | 7.55 | % | | Apr-2043 | (3) | $ | 15,420 |
| | $ | 15,213 |
| | $ | 241 |
| | $ | 257 |
| | $ | 275 |
| | $ | 293 |
| | $ | 313 |
| | $ | 13,834 |
|
| Avalon at Chestnut Hill | | 6.16 | % | | Oct-2047 | | 38,564 |
| | 38,097 |
| | 536 |
| | 566 |
| | 596 |
| | 629 |
| | 663 |
| | 35,107 |
|
| Avalon Westbury | | 3.81 | % | | Nov-2036 | (4) | 62,200 |
| | 62,200 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 62,200 |
|
| | | | | | | 116,184 |
| | 115,510 |
| | 777 |
| | 823 |
| | 871 |
| | 922 |
| | 976 |
| | 111,141 |
|
| | | | | | | | | | | | | | | | | | | | | |
| Variable rate | | | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Avalon Mountain View | | 1.42 | % | | Feb-2017 | (5) | 17,300 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Eaves Mission Viejo | | 2.35 | % | | Jun-2025 | (6) | 7,635 |
| | 7,635 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 7,635 |
|
| AVA Nob Hill | | 2.30 | % | | Jun-2025 | (6) | 20,800 |
| | 20,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 20,800 |
|
| Avalon Campbell | | 2.63 | % | | Jun-2025 | (6) | 38,800 |
| | 38,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 38,800 |
|
| Eaves Pacifica | | 2.66 | % | | Jun-2025 | (6) | 17,600 |
| | 17,600 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 17,600 |
|
| Avalon Bowery Place I | | 4.19 | % | | Nov-2037 | (6) | 93,800 |
| | 93,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 93,800 |
|
| Avalon Acton | | 3.24 | % | | Jul-2040 | (6) | 45,000 |
| | 45,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 45,000 |
|
| Avalon Morningside Park | | 2.25 | % | | May-2046 | (4) | 100,000 |
| | 100,000 |
| | — |
| | — |
| | — |
| | 345 |
| | 405 |
| | 99,250 |
|
| Avalon Clinton North | | 3.40 | % | | Nov-2038 | (6) | 147,000 |
| | 147,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 147,000 |
|
| Avalon Clinton South | | 3.40 | % | | Nov-2038 | (6) | 121,500 |
| | 121,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 121,500 |
|
| Avalon Midtown West | | 3.31 | % | | May-2029 | (6) | 100,500 |
| | 100,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 100,500 |
|
| Avalon San Bruno I | | 3.29 | % | | Dec-2037 | (6) | 64,450 |
| | 64,450 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 64,450 |
|
| Avalon Calabasas | | 2.86 | % | | Apr-2028 | (6) | 44,410 |
| | 44,410 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 44,410 |
|
| | | | | | | 818,795 |
| | 801,495 |
| | — |
| | — |
| | — |
| | 345 |
| | 405 |
| | 800,745 |
|
| Conventional loans (2) | | | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Fixed rate | | | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| $250 million unsecured notes | | 6.19 | % | | Mar-2020 |
| 250,000 |
| | 250,000 |
| | — |
| | — |
| | 250,000 |
| | — |
| | — |
| | — |
|
| $250 million unsecured notes | | 4.04 | % | | Jan-2021 |
| 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | 250,000 |
| | — |
| | — |
|
| $450 million unsecured notes | | 4.30 | % | | Sep-2022 |
| 450,000 |
| | 450,000 |
| | — |
| | — |
| | — |
| | — |
| | 450,000 |
| | — |
|
| $250 million unsecured notes | | 3.00 | % | | Mar-2023 |
| 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 250,000 |
|
| $400 million unsecured notes | | 3.78 | % | | Oct-2020 |
| 400,000 |
| | 400,000 |
| | — |
| | — |
| | 400,000 |
| | — |
| | — |
| | — |
|
| $350 million unsecured notes | | 4.30 | % | | Dec-2023 |
| 350,000 |
| | 350,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 350,000 |
|
| $300 million unsecured notes | | 3.66 | % | | Nov-2024 |
| 300,000 |
| | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
|
| $525 million unsecured notes | | 3.55 | % | | Jun-2025 |
| 525,000 |
| | 525,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 525,000 |
|
| $300 million unsecured notes | | 3.62 | % | | Nov-2025 |
| 300,000 |
| | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
|
| $475 million unsecured notes | | 3.35 | % | | May-2026 |
| 475,000 |
| | 475,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 475,000 |
|
| $300 million unsecured notes | | 3.01 | % | | Oct-2026 |
| 300,000 |
| | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
|
| $350 million unsecured notes | | 3.95 | % | | Oct-2046 |
| 350,000 |
| | 350,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 350,000 |
|
| $400 million unsecured notes | | 3.50 | % | | May-2027 |
| — |
| | 400,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 400,000 |
|
| $300 million unsecured notes | | 4.09 | % | | Jul-2047 |
| — |
| | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
|
| $450 million unsecured notes | | 3.32 | % | | Jan-2028 |
| — |
| | 450,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 450,000 |
|
| Avalon Orchards | | 7.80 | % | | Jul-2033 |
| 16,075 |
| | 15,579 |
| | 577 |
| | 619 |
| | 663 |
| | 710 |
| | 760 |
| | 12,250 |
|
| Avalon Walnut Creek | | 4.00 | % | | Jul-2066 |
| 3,420 |
| | 3,557 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,557 |
|
| Avalon Mission Oaks | | 6.04 | % | | May-2019 | (7) | 19,545 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Stratford | | 6.02 | % | | May-2019 | (7) | 38,221 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| AVA Belltown | | 6.00 | % | | May-2019 | (7) | 60,766 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Encino | | 6.06 | % | | May-2019 | (7) | 33,882 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Run East | | 5.95 | % | | May-2019 | (7) | 36,305 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Wilshire | | 6.18 | % | | May-2019 | (7) | 61,268 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon at Foxhall | | 6.06 | % | | May-2019 | (7) | 54,583 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon at Gallery Place | | 6.06 | % | | May-2019 | (7) | 42,410 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon at Traville | | 5.91 | % | | May-2019 | (7) | 71,871 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Bellevue | | 5.92 | % | | May-2019 | (7) | 24,695 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon on the Alameda | | 5.91 | % | | May-2019 | (7) | 49,930 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon at Mission Bay I | | 5.90 | % | | May-2019 | (7) | 67,772 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| AVA Pasadena | | 4.06 | % | | Jun-2018 |
| 11,287 |
| | 11,073 |
| | 11,073 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon La Jolla Colony | | 3.36 | % | | Nov-2017 | (7) | 26,682 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Eaves Old Town Pasadena | | 3.36 | % | | Nov-2017 | (7) | 14,120 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
(3)Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement.
(4)During 2023, we repaid this borrowing at its scheduled maturity date. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | All-In
interest
rate (1) | | Principal
maturity
date | | Balance Outstanding | | Scheduled Maturities |
| Community | | | | 12/31/2016 | | 12/31/2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | Thereafter |
| Eaves Thousand Oaks | | 3.36 | % | | Nov-2017 | (7) | 26,392 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Archstone Lexington | | 3.36 | % | | Nov-2017 | (7)(8) | 21,601 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Eaves Los Feliz | | 3.36 | % | | Nov-2017 | (7)(8) | 41,302 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Oak Creek | | 3.36 | % | | Nov-2017 | (7) | 69,696 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Del Mar Station | | 3.36 | % | | Nov-2017 | (7) | 70,854 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Courthouse Place | | 3.36 | % | | Nov-2017 | (7) | 118,112 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Pasadena | | 3.36 | % | | Nov-2017 | (7) | 25,805 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Eaves West Valley | | 3.36 | % | | Nov-2017 | (7) | 146,696 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Eaves Woodland Hills | | 3.36 | % | | Nov-2017 | (7)(8) | 98,732 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Russett | | 3.36 | % | | Nov-2017 | (7)(8) | 32,199 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Eaves Los Feliz | | 3.68 | % | | Jun-2027 | (8) | — |
| | 41,400 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 41,400 |
|
| Eaves Woodland Hills | | 3.67 | % | | Jun-2027 | (8) | — |
| | 111,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 111,500 |
|
| Avalon Russett | | 3.77 | % | | Jun-2027 | (8) | — |
| | 32,200 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 32,200 |
|
| Avalon San Bruno II | | 3.85 | % | | Apr-2021 |
| 30,001 |
| | 29,533 |
| | 534 |
| | 564 |
| | 591 |
| | 27,844 |
| | — |
| | — |
|
| Avalon Westbury | | 4.88 | % | | Nov-2036 | (4) | 17,745 |
| | 16,450 |
| | 1,358 |
| | 1,426 |
| | 1,499 |
| | 1,574 |
| | 1,654 |
| | 8,939 |
|
| Avalon San Bruno III | | 3.18 | % | | Jun-2020 |
| 54,408 |
| | 53,315 |
| | 1,226 |
| | 1,264 |
| | 50,825 |
| | — |
| | — |
| | — |
|
| Avalon Andover | | 3.29 | % | | Apr-2018 |
| 13,844 |
| | 13,498 |
| | 13,498 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Natick | | 3.14 | % | | Apr-2019 |
| 14,170 |
| | 13,831 |
| | 349 |
| | 13,482 |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Hoboken | | 3.55 | % | | Dec-2020 |
| 67,904 |
| | 67,904 |
| | — |
| | — |
| | 67,904 |
| | — |
| | — |
| | — |
|
| Avalon Columbia Pike | | 3.24 | % | | Nov-2019 |
| 70,019 |
| | 68,637 |
| | 1,553 |
| | 67,084 |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | 5,752,312 |
| | 5,828,477 |
| | 30,168 |
| | 84,439 |
| | 771,482 |
| | 280,128 |
| | 452,414 |
| | 4,209,846 |
|
| | | | | | | | | | | | | | | | | | | | | |
| Variable rate | | | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Avalon Calabasas | | 2.42 | % | | Aug-2018 | (6) | 53,570 |
| | 52,092 |
| | 52,092 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Avalon Natick | | 3.46 | % | | Apr-2019 | (6) | 35,897 |
| | 35,039 |
| | 884 |
| | 34,155 |
| | — |
| | — |
| | — |
| | — |
|
| Archstone Lexington | | 3.21 | % | | Oct-2020 | (8) | — |
| | 21,700 |
| | — |
| | — |
| | 21,700 |
| | — |
| | — |
| | — |
|
| Term Loan - $300 million | | 2.78 | % | | Mar-2021 |
| 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Term Loan - $100 million | | 2.44 | % | | Feb-2022 |
| — |
| | 100,000 |
| | — |
| | — |
| | — |
| | — |
| | 100,000 |
| | — |
|
| Term Loan - $150 million | | 2.98 | % | | Feb-2024 |
| — |
| | 150,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 150,000 |
|
| $300 million unsecured notes | | 2.03 | % | | Jan-2021 |
| — |
| | 300,000 |
| | — |
| | — |
| | — |
| | 300,000 |
| | — |
| | — |
|
| | | | | | | 389,467 |
| | 658,831 |
| | 52,976 |
| | 34,155 |
| | 21,700 |
| | 300,000 |
| | 100,000 |
| | 150,000 |
|
| | | | | | | | | | | | | | | | | | | | | |
| Total indebtedness - excluding Credit Facility | | $ | 7,076,758 |
| | $ | 7,404,313 |
| | $ | 83,921 |
| | $ | 119,417 |
| | $ | 794,053 |
| | $ | 581,395 |
| | $ | 553,795 |
| | $ | 5,271,732 |
|
| |
(1) | Includes credit enhancement fees, facility fees, trustees’ fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees. |
| |
(2) | Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $47,236 and $36,698 as of December 31, 2017 and 2016, respectively, deferred financing costs and debt discount associated with secured notes of $27,607 as of December 31, 2017, and deferred financing costs net of premium of $9,180 as of December 31, 2016, as reflected on our Consolidated Balance Sheets included elsewhere in this report. |
| |
(3) | In February 2018, we repaid this borrowing in advance of its scheduled maturity date, incurring a prepayment penalty of $152. |
| |
(4) | Maturity date reflects the contractual maturity of the underlying bond. There is also an associated earlier credit enhancement maturity date. |
| |
(5) | In February 2017, we repaid this borrowing at par at its scheduled maturity date. |
| |
(6) | Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement. |
| |
(7) | During 2017, we repaid this borrowing in advance of its scheduled maturity date. |
| |
(8) | During 2017, we repaid a borrowing secured by this community and subsequently refinanced the secured borrowing. |
(5)During 2023, we repaid some or all amounts outstanding of this borrowing in advance of its scheduled maturity date.
In addition to consolidated debt, we have scheduled contractual obligations associated with (i) ground leases for land underlying current operating or development communities and commercial and parking facilities and (ii) office leases for our corporate headquarters and regional offices of $15,333,000 for 2024, $15,633,000 for 2025 and $348,404,000 thereafter.
Future Financing and Capital Needs—Portfolio and Capital Markets Activity
We invest in various real estate and real estate related investments, which include (i) the acquisition, development and redevelopment of communities both wholly-owned and through the formation of joint ventures, (ii) other indirect investments in real estate through the SIP, all as discussed further below and (iii) investments in other real estate-related ventures through direct and indirect investments in property technology and environmentally focused companies and investment management funds.
In 2018,2024, we expect to continue to meet our liquidity needs from one or more of a variety of internal and external sources, includingwhich may include (i) real estate dispositions, (ii) cash balances on hand as well as cash generated from our operating activities, (iii) borrowing capacity under ourthe Credit Facility, (iv) borrowings under the Commercial Paper Program and (iv)(v) secured and unsecured debt financings. Additional sources of liquidity in 20182024 may include the issuance of common and preferred equity.equity, including the issuance of shares of our common stock under the CEP. Our ability to obtain additional financing will depend on a variety of factors, such as market conditions, the general availability of credit, the overall availability of credit to the real estate industry, our credit ratings and credit capacity, as well as the perception of lenders regarding our long or short-term financial prospects.
Before beginning new construction or reconstruction activity, including activity related to communities owned by unconsolidated joint ventures, we intendplan to plan adequate financingsource sufficient capital to complete these 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 pre-development costs that were capitalized and/or forego reconstruction activity. In such instances, we will not realize the increased revenues and earnings that we expected from such Development Rights or reconstruction activity and significant losses could be incurred.
From time to time, we use joint ventures to hold or develop individual real estate assets. We generally employ joint ventures primarily to mitigate asset concentration or market risk and secondarily as a source of liquidity. We may also use joint ventures related to mixed-use land development opportunities and new markets where our partners bring development and operational expertise and/or experience to the venture. Each joint venture or partnership agreement has been individually negotiated, and our ability to operate and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture or partnership agreement. We cannot assure you that we will achieve our objectives through joint ventures.
In addition, we may invest, through mezzanine loans or preferred equity investments, in multifamily development projects being undertaken by third parties. In these cases, we do not expect to acquire the underlying real estate but rather to earn a return on our investment (through interest or fixed rate preferred equity returns) and a return of the invested capital generally following completion of construction either on or before a set due date.
In evaluating our allocation of capital within our markets, we sell assets that do not meet our long-term investment criteria or when capital and real estate markets allow us to realize a portion of the value created over our ownership periods and redeploy the proceeds from those sales to develop and redevelop communities. Because the proceeds from the sale of communities may not be immediately redeployed into revenue generatingrevenue-generating assets that we develop, redevelop or acquire, the immediate effect of a sale of a community for a gain is to increase net income, but reduce future total revenues, total expenses and NOI until such time as the proceeds have been redeployed into revenue generating assets. We believe that the temporary absence of future cash flows from communities sold will not have a material impact on our ability to fund future liquidity and capital resource needs.
Unconsolidated Real Estate Investments and Off-Balance Sheet Arrangements
Unconsolidated Investments
Fund II was established to engageWe invest in aconsolidated real estate acquisition programentities, unconsolidated investments in real estate ventures and direct and indirect investments in property technology and environmentally focused companies through a discretionary investment fund. We believe this investment format provides the following attributes: (i) third-party joint venture equity as an additional sourcemanagement funds.
Fund II has six institutional investors, including us. One of our wholly-owned subsidiaries is the general partner of Fund II and we have an equity investment of $2,576,000 (net of distributions), representing a 31.3% combined general partner and limited partner equity interest. Upon achievement of a threshold return, we have a right to incentive distributions for our promoted interest representing the first 40.0% of further Fund II distributions, which are in addition to our share of the remaining 60.0% of distributions. Fund II served as the exclusive vehicle for acquiring apartment communities from its formation in 2008 through the close of its investment period in August 2011. In 2017, Fund II sold its final apartment communities. We expect to complete the dissolution of Fund II in 2018.Consolidated Investments
During 2017, Fund II sold its final three communities containing 1,366 apartment homes for an aggregate sales price of $272,050,000. Our share of the gain was $26,322,000, and in addition we recognized income for our promoted interest of $26,742,000. In conjunction with the disposition of these communities, Fund II repaid the remaining $127,179,000 of secured indebtedness at par in advance of the scheduled maturity dates.
The U.S. Fund has six institutional investors, including us. We are the general partner of the U.S. Fund and, excluding costs incurred in excess of our equity in the underlying net assets of the U.S. Fund, we have an equity investment of $39,896,000 (net of distributions), representing a 28.6% combined equity interest. The U.S. Fund was formed in July 2011 and is fully invested. The U.S. Fund has a term that expires in July 2023, assuming the exercise of two, one-year extension options.
During 2017, the U.S. Fund sold one community containing 192 apartment homes for a sales price of $107,000,000. Our share of the gain was $13,788,000. In conjunction with the disposition of this community, the U.S. Fund repaid $32,542,000 of related secured indebtedness in advance of the scheduled maturity date, which resulted in charges for prepayment penalties and write-offs of deferred financing costs, of which our portion was $406,000.
The AC JV has four institutional investors, including us. Excluding costs incurred in excess of our equity in the underlying net assets of the AC JV, we have an equity investment of $49,492,000 (net of distributions), representing a 20.0% equity interest. The AC JV was formed in 2011.
During 2016, we entered into a joint venture to develop, own, and operate AVA North Point, an apartment community located in Cambridge, MA, which is currently under construction and expected to contain 265 apartment homes upon completion. We own a 55.0% interest in the venture, and the venture partner owns the remaining 45.0% interest. AVA North Point is the third phase of a master planned development, the other phases of which are owned through the AC JV. During 2016, we provided the partners of the AC JV the opportunity to acquire the AVA North Point land parcel we owned as required in the ROFO provisions for the AC JV. After certain partners of the AC JV declined to participate, we entered into the new joint venture and sold the land parcel to the venture in exchange for a cash payment and a capital account credit, and we are overseeing the development in exchange for a developer fee. Upon sale of the land parcel, we recognized a gain of $10,621,000. The construction of AVA North Point is expected to be completed during 2018 and, as of December 31, 2017, excluding costs incurred in excess of our equity in the underlying net assets of AVA North Point, we have an equity investment of $36,370,000.
During 2015, we entered into a joint venture agreement to purchase land and pursue entitlements and pre-development activity for a mixed-use development project in Sudbury, MA, including multifamily apartment homes, retail, senior housing and age-restricted housing. We have a 60.0% ownership interest in the venture. During 2017, we and our joint venture partner each acquired our respective portions of the real estate held by the venture, with our portion consisting of a parcel of land acquired for an investment of $19,200,000. Along with our joint venture partner, we retain continuing involvement with the venture to fund the completion of the planned infrastructure and site work. At December 31, 2017, we recorded an obligation of $4,340,000, representing our share of costs for the venture to complete this work.
As part of the Archstone Acquisition we entered into a limited liability company agreement with Equity Residential, through which we assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements (the “Legacy JV”). We have a 40.0% interest in the Legacy JV. During the yearsyear ended December 31, 2017, 2016 and 2015, the Legacy JV redeemed certain of the preferred interests and paid accrued dividends, of which our portion was $2,000,000, $1,960,000 and $14,410,000, respectively. At December 31, 2017, the remaining preferred interests had an aggregate liquidation value of $37,579,000, our share of which is included in accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets presented elsewhere in this report.
As of December 31, 2017,2023, we had investments inacquired the following unconsolidated real estate accounted for under the equity method of accounting excluding development joint ventures and Fund II, which sold its final apartment communitycommunities (dollars in 2017. Refer tothousands). See Note 5, “Investments, in Real Estate Entities,” of the Consolidated Financial Statements included elsewhere in this report for further discussion.
| | | | | | | | | | | | | | | | | | | | |
| Community name | | Location | | Apartment
homes | | Purchase price |
| Avalon Frisco at Main | | Frisco, TX | | 360 | | | $ | 83,100 | |
| Avalon Mooresville | | Mooresville, NC | | 203 | | | 52,100 | |
| Avalon West Plano | | Carrollton, TX | | 568 | | | 142,000 | |
| Total acquisitions | | | | 1,131 | | | $ | 277,200 | |
During the year ended December 31, 2023, we sold four wholly-owned communities containing an aggregate of 987 apartment homes (dollars in thousands). See Note 6, “Real Estate Disposition Activities,” of the Consolidated Financial Statements included elsewhere in this report for further discussion.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Community name | | Location | | Period
of sale | | Apartment
homes | | Gross
sales price | | Gain on disposition | | Commercial square feet |
| eaves Daly City | | Daly City, CA | | Q2 2023 | | 195 | | | $ | 67,000 | | | $ | 54,618 | | | — | |
| Avalon at Newton Highlands | | Newton, MA | | Q2 2023 | | 294 | | | 170,000 | | | 132,723 | | | — | |
| Avalon Columbia Pike | | Arlington, VA | | Q3 2023 | | 269 | | | 105,000 | | | 22,345 | | | 27,000 | |
| Avalon Mamaroneck | | Mamaroneck, NY | | Q4 2023 | | 229 | | | 104,000 | | | 77,901 | | | — | |
| Total asset sales | | | | | | 987 | | | $ | 446,000 | | | $ | 287,587 | | | 27,000 | |
Unconsolidated Investments
During the year ended December 31, 2023, we had the following investment activity related to our unconsolidated real estate and property technology and environmentally focused investments. See Note 5, “Investments,” of the Consolidated Financial Statements included elsewhere in this report for further discussion.
•We had an equity interest of 28.6% in the U.S. Fund and because we achieved a threshold return for the fund, during the year ended December 31, 2023, we recognized income of $1,519,000 for the final amount of promoted interest, which includes informationis reported as a component of income from unconsolidated investments on the aggregateaccompanying Consolidated Statements of Comprehensive Income. During 2023, we completed the dissolution of the U.S. Fund.
•Arts District Joint Venture was formed to develop, own, and operate AVA Arts District, an apartment community located in Los Angeles, CA, which is currently under construction and expected to contain 475 apartment homes and 56,000 square feet of commercial space when completed. We have a 25% ownership interest in the venture. As of December 31, 2023, excluding costs incurred in excess of equity in the underlying net assets liabilities andof the venture, we have an equity as well as operating results, and our proportionate shareinvestment of their operating results. For ventures holding operating apartment communities$32,738,000 in the venture. The remaining development costs are primarily expected to be funded by the venture's variable rate construction loan. The venture has drawn $135,983,000 of $167,147,000 maximum borrowing capacity of the construction loan as of December 31, 2017, detail2023. While we guarantee the construction loan on behalf of the real estateventure, any amounts payable under the guarantee are obligations of the venture partners in proportion to ownership interest.
•We invested $10,748,000 in various property technology and associated funding underlying ourenvironmentally focused companies directly and indirectly through investment management funds during the year ended December 31, 2023. As of December 31, 2023, we have $73,892,000 of remaining equity commitments to contribute to these investment management funds, with the timing and amount for these commitments to be fulfilled dependent on if, and when, investment opportunities are identified by the respective funds. During the year ended December 31, 2023, we recognized income and unrealized gains of $4,161,000 related to these investments, included as a component of income from unconsolidated investments is presentedon the Consolidated Statements of Comprehensive Income.
Structured Investment Program
During the year ended December 31, 2023, we entered into four additional commitments under the SIP, agreeing to provide an aggregate investment of up to $99,210,000 in multifamily development projects. As of January 31, 2024, we had seven commitments to fund up to $191,585,000 in the following table (dollars in thousands).
|
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Debt (2) |
| Unconsolidated Real Estate Investments | Company Ownership Percentage | | # of Apartment Homes | | Total Capitalized Cost (1) | | Principal Amount | | Type | | Interest Rate (3) | | Maturity Date |
| | | | | | | | | | | | | | |
| U.S. Fund | |
| | |
| | |
| | |
| | | | |
| | |
| 1. Avalon Studio 4121—Studio City, CA | |
| | 149 |
| | $ | 57,078 |
| | $ | 28,920 |
| | Fixed | | 3.34 | % | | Nov 2022 |
| 2. Avalon Marina Bay—Marina del Rey, CA (4) | |
| | 205 |
| | 77,186 |
| | 51,300 |
| | Fixed | | 1.56 | % | | Dec 2020 |
| 3. Avalon Venice on Rose—Venice, CA | |
| | 70 |
| | 57,297 |
| | 29,035 |
| | Fixed | | 3.28 | % | | Jun 2020 |
| 4. Avalon Station 250—Dedham, MA | |
| | 285 |
| | 96,896 |
| | 56,259 |
| | Fixed | | 3.73 | % | | Sep 2022 |
| 5. Avalon Grosvenor Tower—Bethesda, MD | |
| | 237 |
| | 80,051 |
| | 43,605 |
| | Fixed | | 3.74 | % | | Sep 2022 |
| 6. Avalon Kirkland at Carillon—Kirkland, WA | |
| | 131 |
| | 60,730 |
| | 28,350 |
| | Fixed | | 3.75 | % | | Feb 2019 |
| Total U.S. Fund | 28.6 | % | | 1,077 |
| | $ | 429,238 |
| | $ | 237,469 |
| | | | 3.16 | % | | |
| | | | | | | | | | | | | | |
| AC JV | |
| | |
| | |
| | |
| | | | |
| | |
| 1. Avalon North Point—Cambridge, MA (5) | |
| | 426 |
| | $ | 188,122 |
| | $ | 111,653 |
| | Fixed | | 6.00 | % | | Aug 2021 |
| 2. Avalon Woodland Park—Herndon, VA (5) | |
| | 392 |
| | 86,336 |
| | 50,647 |
| | Fixed | | 6.00 | % | | Aug 2021 |
| 3. Avalon North Point Lofts — Cambridge, MA | | | 103 |
| | 26,805 |
| | — |
| | N/A | | N/A |
| | N/A |
| Total AC JV | 20.0 | % | | 921 |
| | $ | 301,263 |
| | $ | 162,300 |
| | | | 6.00 | % | | |
| | | | | | | | | | | | | | |
| Other Operating Joint Ventures | |
| | |
| | |
| | |
| | | | |
| | |
| 1. MVP I, LLC | 25.0 | % | | 313 |
| | $ | 125,228 |
| | $ | 103,000 |
| | Fixed | | 3.24 | % | | Jul 2025 |
| 2. Brandywine Apartments of Maryland, LLC | 28.7 | % | | 305 |
| | 19,382 |
| | 22,760 |
| | Fixed | | 3.40 | % | | Jun 2028 |
| Total Other Joint Ventures | |
| | 618 |
| | $ | 144,610 |
| | $ | 125,760 |
| | | | 3.27 | % | | |
| | | | | | | | | | | | | | |
| Total Unconsolidated Investments | |
| | 2,616 |
| | $ | 875,111 |
| | $ | 525,529 |
| | | | 4.06 | % | | |
| |
(1) | Represents total capitalized cost as of December 31, 2017. |
| |
(2) | We have not guaranteed the debt of unconsolidated investees and bear no responsibility for the repayment. |
| |
(3) | Represents weighted average rate on outstanding debt as of December 31, 2017. |
| |
(4) | Borrowing on this community is a variable rate loan which has been converted to a fixed rate borrowing with an interest rate swap. |
| |
(5) | Borrowing is comprised of loans made by the equity investors in the venture in proportion to their equity interests. |
Off-Balance Sheet Arrangements
In addition toaggregate under the SIP. As of January 31, 2024, our investment interests in consolidatedcommitments had a weighted average rate of return of 11.5% and unconsolidated real estate entities,have initial maturity dates between September 2025 and December 2027. As of January 31, 2024, we have certain off-balance sheet arrangements with the entities in which we invest. Additional discussionhad funded $101,982,000 of these entities can be found incommitments. See Note 5, “Investments, in Real Estate Entities,” of ourthe Consolidated Financial Statements included elsewhere in this report.
We have not guaranteed the debtYou should carefully review Part I, Item 1A. “Risk Factors” of our unconsolidated real estate entities, as referenced in the table above, nor do we have any obligation to fund this debt should the unconsolidated real estate entities be unable to do so. In the future, in the event the unconsolidated real estate entities were unable to meet their obligations underForm 10-K for a loan, we cannot predict at this time whether we would provide any voluntary support, or take any other action, as any such action would depend on a variety of factors, including the amount of support required and the possibility that such support could enhance the returndiscussion of the unconsolidated real estate entities and/orrisks associated with our returns by providing time for performance to improve.investment activity.
There are no other material lines of credit, side agreements, financial guarantees or any other derivative financial instruments related to or between our unconsolidated real estate entities and us. In evaluating our capital structure and overall leverage, management takes into consideration our proportionate share of the indebtedness of unconsolidated entities in which we have an interest.
Contractual Obligations
Scheduled contractual obligations required for the next five years and thereafter are as follows as of December 31, 2017 (dollars in thousands):
|
| | | | | | | | | | | | | | | | | | | |
| | Payments due by period |
| | Total | | Less than 1 Year | | 1-3 Years | | 3-5 Years | | More than 5 Years |
| Debt Obligations | $ | 7,404,313 |
| | $ | 83,921 |
| | $ | 913,470 |
| | $ | 1,135,190 |
| | $ | 5,271,732 |
|
| Interest on Debt Obligations | 2,812,359 |
| | 246,686 |
| | 487,966 |
| | 387,332 |
| | 1,690,375 |
|
| Operating Lease Obligations (1) | 1,153,923 |
| | 21,051 |
| | 39,845 |
| | 40,219 |
| | 1,052,808 |
|
| Capital Lease Obligations (1) (2) | 49,363 |
| | 1,073 |
| | 2,152 |
| | 2,162 |
| | 43,976 |
|
| | $ | 11,419,958 |
| | $ | 352,731 |
| | $ | 1,443,433 |
| | $ | 1,564,903 |
| | $ | 8,058,891 |
|
| |
(1) | Includes land leases expiring between October 2026 and March 2142. Amounts do not include any adjustment for purchase options available under the land leases. |
| |
(2) | Aggregate capital lease payments include $25,961 in interest costs. |
Inflation and Deflation
Substantially all of our apartment leases are for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases. Short-term leases generally minimize our risk from the adverse effect of inflation, although these leases generally permit residents to leave at the end of the lease term and therefore expose us to the effect of a decline in market rents. Similarly, in a deflationary rent environment, we may be exposed to declining rents more quickly under these shorter-term leases.
Forward-Looking Statements
This Form 10-K contains “forward-looking statements” as that term is defined underwithin the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act
of 1995. You can identify forward-looking statements by our use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “project,” “plan,” “may,” “shall,” “will”“will,” "pursue" and other similar expressions in this Form 10-K, that predict or indicate future events and trends and that do not report historical matters. These statements include, among other things, statements regarding our intent, belief or expectations with respect to:
•our potential development, redevelopment, acquisition or disposition of communities;
•the timing and cost of completion of apartment communities under construction, reconstruction, development or redevelopment;
•the timing of lease-up, occupancy and stabilization of apartment communities;
•the pursuit of land on which we are considering future development;
•the anticipated operating performance of our communities;
•cost, yield, revenue, NOI and earnings estimates;
•the impact of landlord-tenant laws and rent regulations;
•our expansion into new regions;
•our declaration or payment of dividends;
•our joint venture and discretionary fund activities;
•our policies regarding investments, indebtedness, acquisitions, dispositions, financings and other matters;
•our qualification as a REIT under the Internal Revenue Code;
•the real estate markets in Metro New York/New Jersey, Northern and Southern California, Denver, Colorado, Southeast Florida, Dallas and Austin, Texas and Charlotte and Raleigh-Durham, North Carolina, and markets in selected states in the Mid-Atlantic, New England Metro New York/New Jersey and Pacific Northwest regions of the United States and in general;
•the availability of debt and equity financing;
•interest rates;
•general economic conditions, including the potential impacts from current economic conditions;conditions, including rising interest rates and general price inflation;
•trends affecting our financial condition or results of operations;
•regulatory changes that may affect us; and
•the impact of legal proceedings relating to the Edgewater casualty loss and related matters, including liability to third parties resulting therefrom.proceedings.
We cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect our current expectations of the approximate outcomes of the matters discussed. We do not undertake a duty to update these forward-looking statements, and therefore they may not represent our estimates and assumptions after the date of this report. You should
not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by these forward-looking statements. You should carefully review the discussion under Item 1A. “Risk Factors” in this report for further discussion of risks associated with forward-looking statements.
Some of the factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following:
•we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals;
•we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses;
•construction costs of a community may exceed our original estimates;
•we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in our expected rental revenues;
•occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control;
•financing may not be available on favorable terms or at all, and our cash flows from operations and access to cost effectivecost-effective capital may be insufficient for the development of our pipeline, which could limit our pursuit of opportunities;
•the impact of new landlord-tenant laws and rent regulations may be greater than we expect;
•an outbreak of disease or other public health event may affect the multifamily industry and general economy, including from measures taken by businesses and the government and the preferences of consumers and businesses for living and working arrangements both during and after such an event;
•our cash flows may be insufficient to meet required payments of principal and interest, and we may be unable to refinance existing indebtedness or the terms of such refinancing may not be as favorable as the terms of existing indebtedness;
•we may be unsuccessful in our management of the U.S. Fund, the AC JV orjoint ventures and the REIT vehicles that are used with each respectivecertain joint venture;ventures;
we•laws and regulations implementing rent control or rent stabilization, or otherwise limiting our ability to increase rents, charge fees or evict tenants, may be unsuccessful in managing changes inimpact our portfolio composition; andrevenue or increase our costs;
•our expectations, estimates and assumptions as of the date of this filing regarding the outcome of investigations and/or legal proceedings resulting from the Edgewater casualty loss, are subject to change.change;
•the possibility that we may choose to pay dividends in our stock instead of cash, which may result in stockholders having to pay taxes with respect to such dividends in excess of the cash received, if any; and
•investments made under the SIP in either mezzanine debt or preferred equity of third-party multifamily development may not be repaid as expected or the development may not be completed on schedule, which could require us to engage in litigation, foreclosure actions, and/or first party project completion to recover our investment, which may not be recovered in full or at all in such event.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or a different presentation of our financial statements. Below is a discussion of the accounting policies that we consider critical to an understanding of our financial condition and operating results that may require complex or significant judgment in their application or require estimates about matters which are inherently uncertain. A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” of our Consolidated Financial Statements.
Principles of Consolidation
We may enter into various joint venture agreements with unrelated third parties to hold or develop real estate assets. We must determine for each of these ventures whether to consolidate the entity or account for our investment under the equity or cost basis of accounting.
We determine whether to consolidate certain entities based on our rights and obligations under the joint venture agreements, applying the applicable accounting guidance. For investment interests that we do not consolidate, we evaluate the guidance to determine the accounting framework to apply. The application of the rules in evaluating the accounting treatment for each joint venture is complex and requires substantial management judgment. Therefore, we believe the decision to choose an appropriate accounting framework is a critical accounting estimate.
If we were to consolidate the joint ventures that we accounted for using the equity method at December 31, 2017, our assets would have increased by $571,578,000 and our liabilities would have increased by $534,355,000. We would be required to consolidate those joint ventures currently not consolidated for financial reporting purposes if the facts and circumstances changed, including but not limited to the following reasons, none of which are currently expected to occur:
For entities not considered to be variable interest entities, the nature of the entity changed such that it would be considered a variable interest entity and we were considered the primary beneficiary.
For entities in which we do not hold a controlling voting and/or variable interest, the contractual arrangement changed resulting in our investment interest being either a controlling voting and/or variable interest.
We evaluate our accounting for investments on a regular basis including when a significant change in the design of an entity occurs.
Cost Capitalization
We capitalize costs during the development of assets. Capitalization begins when we determine that development of a future asset is probable and continues until the asset, or a portion of the asset, is delivered and is ready for its intended use. For redevelopment efforts, we capitalize costs either (i) in advance of taking apartment homes out of service when significant renovation of the common area has begun and continue until the redevelopment is completed, or (ii) when an apartment home is taken out of service for redevelopment and continue until the redevelopment is completed and the apartment home is available for a new resident. Rental income and operating expenses incurred during the initial lease-up or post-redevelopment lease-up period are fully recognized in earnings as they accrue. We defer external costs associated with originating new leases, recognizing the impact
During the development and redevelopment efforts we capitalize all direct costs and indirect costs which have been incurred as a result of the development and redevelopment activities. These costs include interest and related loan fees, property taxes as well as other direct and indirect costs. Interest is capitalized for any project-specific financing, as well as for general corporate financing to the extent of our aggregate investment in the projects. Indirect project costs, which include personnel and office and administrative costs that are clearly associated with our development and redevelopment efforts, are also capitalized. Capitalized indirect costs associated with our development and redevelopment activities are comprised primarily of compensation related costs for associates dedicated to our development and redevelopment efforts and total $47,063,000, $45,201,000$50,996,000 and $43,943,000$50,039,000 for 2017, 20162023 and 2015,2022, respectively. The estimation of the direct and indirect costs to capitalize as part of our development and redevelopment activities requires judgment and, as such, we believe cost capitalization to be a critical accounting estimate.
There may be a change in our operating expenses in the event that there are changes in accounting guidance governing capitalization or changes to our levels of development or redevelopment activity. If changes in the accounting guidance limit our ability to capitalize costs or if we reduce our development and redevelopment activities without a corresponding decrease in indirect project costs, there may be an increase in our operating expenses. For example, if in 2017 our development activities decreased by 10%, and there were no corresponding decrease in our indirect project costs, our costs charged to expense would have increased by $4,706,000.
We capitalize pre-development costs incurred in pursuit of Development Rights. These costs include legal fees, design fees and related overhead costs. Future development of these pursuits is dependent upon various factors, including zoning and regulatory approval, rental market conditions, construction costs and availability of capital. Pre-development costs incurred for pursuits for which future development is not yet considered probable are expensed as incurred. In addition, if the status of a Development Right changes, making future development no longer probable, any capitalized pre-development costs are written off with a charge to expense.
Due to the subjectivity in determining whether a pursuit will result in the development of an apartment community, and therefore should be capitalized, the accounting for pursuit costs is a critical accounting estimate. If we had determined that 10%As of ourDecember 31, 2023, capitalized pursuit costs were associated with Development Rights that were no longer probable of occurring, net income for the year ended December 31, 2017 would have decreased by $4,582,000.totaled $53,122,000.
Abandoned Pursuit Costs & Asset Impairment
We evaluate our direct and indirect investments in real estate and other long-lived assets for impairment when potential indicators of impairment exist. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we assess its recoverability by comparing the carrying amount of the property to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. We assess land held for development for impairment if our intent changes with respect to the development of the land. We evaluate our unconsolidated investments for impairment, considering both the carrying value of the investment, estimated to be the expected proceeds that it would receive if the entity were dissolved and the net assets were liquidated, as well as our proportionate share of any impairment of assets held by unconsolidated investments.
The assessment of impairment can involve subjectivity in determining if indicators are present and in estimating the future undiscounted cash flows or the fair value of an asset. Estimates of the undiscounted cash flows are sensitive to significant assumptions including future rental revenues, operating expenses, and our intent and ability to hold the related asset, which could be impacted by our expectations about the future.
We expense costs related to abandoned pursuits, which include the abandonment of Development Rights and costs related to development pursuits not yet considered probable for development, as well as costs incurred in pursuing the acquisition or disposition pursuits.of assets for which such acquisition and disposition activity did not occur, of which we expensed $33,479,000, $16,565,000 and $2,192,000 of these costs during the years ended December 31, 2023, 2022 and 2021, respectively. These costs are included in expensed transaction, development and other pursuit costs, net of recoveries on the accompanying Consolidated Statements of Comprehensive Income. These costs can vary greatly, and the costs incurred in any given period may be significantly different in future years.
Our focus on value creation through real estate development presents an impairment risk in the event of a future deterioration of the real estate and/or capital markets or a decision by us to reduce or cease development. We cannot predict the occurrence of future events that may cause an impairment assessment to be performed, or the likelihood of any future impairment charges, if any. You should also review Item 1A. “Risk Factors” in this Form 10-K.
We are a Maryland corporation that has elected to be treated, for U.S. federal income tax purposes, as a REIT. We elected to be taxed as a REIT under the Code for the year ended December 31, 1994 and have not revoked such election. A REIT is a corporate entity which holds real estate interests and must meet a number
Our qualification as a REIT requires management to exercise significant judgment and consideration with respect to operational matters and accounting treatment. Therefore, we believe our REIT status is a critical accounting estimate.
Acquisition of Investments in Real Estate
The adoption of ASU 2017-01, as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” of the Consolidated Financial Statements set forth in Item 8 of this report, has impacted our accounting framework for the acquisition of investments in real estate. Prior to adoption of ASU 2017-01 on October 1, 2016, we accounted for acquisitions of investments in real estate in accordance with the authoritative guidance for the initial measurement, which required the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree to be recognized at fair value. Typical assets and liabilities acquired include land, buildings, furniture, fixtures and equipment and identified intangible assets and liabilities, consisting of the value of above or below market leases and in-place leases. In making estimates of fair values for purposes of allocating purchase price, we utilized various sources, including our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed. We expensed all costs incurred related to acquisitions of operating communities. Subsequent to adoption of ASU 2017-01, we assess each acquisition of an operating community to determine if it meets the definition of a business or if it qualifies as an asset acquisition. We expect that acquisitions of individual operating communities will generally be viewed as asset acquisitions, and result in the capitalization of acquisition costs, and the allocation of purchase price to the assets acquired and liabilities assumed based on the relative fair value of the respective assets and liabilities.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks from our financial instruments primarily from changes in market interest rates. WeOur financial instruments do not have exposureexpose us to any other significant market risk.risk from foreign currency exchange rates or commodity or equity prices. We monitor interest rate risk as an integral part of our overall risk management, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on our results of operations. Our operating results are affected by changes in interest rates, primarily in short-term LIBORSOFR and the SIFMA index as a result of borrowings under our Credit Facility and Commercial Paper Program, outstanding bonds and unsecured notes with variable interest rates. In addition, the fair value of our fixed rate unsecured and secured notes are impacted by changes in market interest rates. The effect of interest rate fluctuations on our results of operations historically has been small relative to other factors affecting operating results, such as rental rates and occupancy.
We currently use interest rate protection agreements (consistingin the form of interest rate swap and interest rate cap agreements)agreements for our risk management objectives, as well as for compliance with the requirements of certain lenders, and not for trading or speculative purposes. In addition, we may use interest rate swap agreements for our risk management objectives. During 2017,the year ended December 31, 2023, in connection with the issuance of our $400,000,000 unsecured notes in December 2023 maturing in 2033, we entered into $300,000,000terminated $250,000,000 of forward interest rate swap agreements to reducedesignated as cash flow hedges of the impact of variability in interest rates on a portion of our expected debt issuance activity in 2018. During 2017, we settled an aggregate of $800,000,000 of forward interest rate swap agreementsvariability on the issuance of unsecured notes, receiving payments of $8,331,000 which will be recognized over the life of the unsecured notes as a reduction in conjunction with the refinancing of three secured borrowings in May 2017, as well as our May 2017 and June 2017 unsecured note issuances. effective interest rate.
In addition, we have interest rate caps that serve to effectively limit the amount of interest rate expense we would incur on aour outstanding floating rate borrowing.borrowings. Further discussion of the financial instruments impacted and our exposure is presented below.
As of December 31, 20172023 and 2016,2022, we had $1,460,326,000$410,150,000 and $1,208,262,000,$607,150,000, respectively, in variable rate debt outstanding, with no amounts outstanding under our Credit Facility.Facility or Commercial Paper Program. If interest rates on the variable rate debt had been 100 basis points higher throughout 20172023 and 2016,2022, our annual interest costsincurred would have increased by approximately $14,867,000$5,428,000 and $12,901,000,$6,850,000, respectively, based on balances outstanding during the applicable years.
Because the counterparties providing the interest rate cap and swap agreements are major financial institutions which have an A or better credit rating by the Standard & Poor's Ratings Group or equivalent, we do not believe there is exposure at this time to a default by a counterparty provider.
In addition, changes in interest rates affect the fair value of our fixed rate debt, computed using quoted market prices for our unsecured notes or a discounted cash flow model for our secured notes, considering our current market yields, which impacts the fair value of our aggregate indebtedness. Debt securities and notes payable (including amounts outstanding under our Credit Facility) with an aggregate principal amount outstandingAs of $7,404,313,000 at December 31, 20172023, we had outstanding debt of $8,044,042,000 with an estimated aggregate fair value of $7,296,455,000$7,360,944,000 at December 31, 2017.2023. Contractual fixed rate debt represented $6,025,384,000$7,011,605,000 of the fair value at December 31, 2017.2023. If interest rates had been 100 basis points higher as of December 31, 2017,2023, the fair value of this fixed rate debt would have decreased by approximately $479,977,000.$449,065,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item 8 is included as a separate section of this Annual Report on Form 10-K. See Item 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
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(a) | Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. We continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. |
(a)Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. We continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
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(b) | Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2017. |
(b)Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.
Our internal control over financial reporting as of December 31, 20172023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein.
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(c) | Changes in Internal Control Over Financial Reporting. During 2017, the Company implemented a new construction and development management system that improves the efficiency and effectiveness of the Company’s operational and financial accounting processes for construction and development related activity. Consistent with any process change that we implement, the design of the internal controls has and will continue to be evaluated for effectiveness as part of our overall assessment of the effectiveness of our disclosure controls and procedures. We expect that the implementation of this system will improve our internal controls over financial reporting as related to construction and development related operational and financial accounting functions. |
(c)There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to above that occurred during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.During the three months ended December 31, 2023, none of the Company's directors or officers (as defined in Rule 16a-1(f) of
the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 pertaining to directors and executive officers of the Company and the Company's Code of Conduct is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange CommissionSEC within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders scheduled to be held on May 23, 2018.16, 2024.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 pertaining to executive compensation is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange CommissionSEC within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders scheduled to be held on May 23, 2018.16, 2024.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 pertaining to security ownership of management and certain beneficial owners of the Company's common stock is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange CommissionSEC within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders scheduled to be held on May 23, 2018,16, 2024, to the extent not set forth below.
The Company maintains the Second Amended and Restated 2009 Equity Incentive Plan (the “2009 Plan”“Plan”) and the 1996 Non-Qualified Employee Stock Purchase Plan (the “ESPP”), pursuant to which common stock or other equity awards may be issued or granted to eligible persons.
The following table gives information about equity awards under the 2009 Plan the Company's prior 1994 Stock Option and Incentive Plan (the “1994 Plan”) under which awards were previously made, and the ESPP as of December 31, 2017:2023:
| | | | (a) | | (b) | | (c) | | (a) | | (b) | | (c) |
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | Plan category | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights | | Weighted-average
exercise price of
outstanding options,
warrants and rights | | Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a)) |
| Equity compensation plans approved by security holders (1) | 682,104 |
| (2) | $ | 122.91 |
| (3) | 7,994,292 |
|
| Equity compensation plans not approved by security holders (4) | — |
| | N/A |
| | 681,284 |
|
| Total | 682,104 |
| | $ | 122.91 |
| (3) | 8,675,576 |
|
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(1) | Consists of the 2009 Plan and the 1994 Plan. |
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(2) | Includes 20,813 deferred units granted under the 2009 Plan and the 1994 Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis. Also includes the maximum number of shares that may be issued upon settlement of outstanding Performance Awards awarded to officers and maturing on December 31, 2017, 2018 and 2019. Does not include 367,561 shares of restricted stock that are outstanding and that are already reflected in the Company's outstanding shares. |
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(3) | Excludes performance awards and deferred units granted under the 2009 Plan and the 1994 Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis. |
(1) Consists of the Plan.
(2) Includes 81,224 deferred restricted stock units granted under the Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis. Also includes the maximum number of shares that may be issued upon settlement of outstanding Performance Awards awarded to officers and maturing on December 31, 2023, 2024 and 2025. Does not include 173,291 shares of restricted stock that are outstanding and that are already reflected in the Company's outstanding shares.
(3) Excludes performance awards and deferred units granted under the Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis.
(4) Consists of the ESPP.
The ESPP, which was adopted by the Board of Directors on October 29, 1996, has not been approved by our shareholders. A further description of the ESPP appears in Note 9, “Stock-Based Compensation Plans,” of the Consolidated Financial Statements set forth in Item 8 of this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 pertaining to certain relationships and related transactions is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange CommissionSEC within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders to be held on May 23, 2018.16, 2024.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 pertaining to the fees paid to and services provided by the Company's principal accountant is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange CommissionSEC within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders to be held on May 23, 2018.16, 2024. Our independent public accounting firm is Ernst & Young LLP, Tysons, Virginia, PCAOB Auditor ID 42.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
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15(a)(1)Financial Statements | |
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15(a)(1)Financial Statements
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| Index to Financial Statements | |
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| Consolidated Financial Statements and Financial Statement Schedule: | |
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| |
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| |
| |
| |
| |
| |
| |
| |
| |
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15(a)(2)Financial Statement Schedule | |
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| All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. | |
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15(a)(3)Exhibits | |
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15(a)(3)Exhibits
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ITEM 16. FORM 10-K SUMMARY
Not Applicable.
INDEX TO EXHIBITS
| | | | | | | | | | | | | | |
| Exhibit No. | | | | Description |
| | | | |
Exhibit No.3(i).1 | | — | | Description |
| | | | |
3(i).1 | | — | | |
| 3(i).2 | | — | | |
| 3(i).3 | | — | | |
| 3(i).4 | | — | | |
| 3(i).5 | | | | Composite restatement of Articles of Amendment and Restatement of Articles of Incorporation of the Company, dated as of June 4, 1998, as amended by the Articles of Amendment, dated as of October 2, 1998, the Articles of Amendment, dated as of May 22, 2013, and the Articles of Amendment, dated as of May 14, 2020. (Incorporated by reference to Exhibit 3(i).5 to Form 10-Q of the Company filed November 3, 2023.) |
| 3(ii).1 | | — | | |
3(ii).2 | | — | |
|
3(ii).34.1 | | — | | |
4.1 | | — | | |
| 4.2 | | — | | |
4.3 | | — | | |
4.4 | | — | | |
4.54.3 | | — | | |
4.64.4 | | __ | | __ | |
4.74.5 | | — | | —
|
| 4.6 | | — | |
|
| 4.7 | | — | | |
| 4.8 | | — | | |
| 4.9 | | — | | |
4.84.10 | | — | | — | |
4.9 | | — | | |
4.10 | | — | | |
| | | | | | | | | | | | | | |
| 4.11 | | — | | | |
10.1 | | — | | |
10.24.12 | | — | | — | |
10.34.13 | | — | | — | |
10.44.14 | | — | | — | |
10.5+10.1+ | | — | | — | |
10.6+ | | — | | |
10.7+ | | — | | |
10.8+ | | — | | |
10.9+ | | — | | |
10.10+ | | — | | |
10.11+ | | — | | |
10.12+ | | — | | |
10.13+ | | — | | |
10.14+ | | — | | |
10.15+10.2+ | | — | | — | |
10.16+ | | — | | |
10.17+10.3+ | | — | | |
10.18+10.4+ | | — | | |
|
| | | | |
10.19+ | | — | | |
10.20+10.5+ | | — | | |
10.21+10.6+ | | — | | |
10.22+10.7+ | | — | | — | |
| 10.8+ | | — | | |
10.23+10.9+ | | — | | — | |
10.24+10.10+ | | — | | — | |
10.2510.11 | | — | | FourthSixth Amended and Restated Revolving Loan Agreement, dated as of January 14, 2016,September 27, 2022, among the Company, as Borrower, Bank of America, N.A., as administrative agent, an issuing bank and a bank, JPMorgan Chase Bank, N.A., as an issuing bank, a bank and a syndication agent, Wells Fargo Bank, N.A., as an issuing bank, a bank and a syndication agent, J.P. Morganthe co-documentation agents named therein, JPMorgan Chase Bank, N.A., BofA Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated,Inc., and Wells Fargo Securities, LLC as joint bookrunners and joint lead arrangers, and a syndicate ofthe other financial institutions, serving as banks.bank parties signatory thereto. (Incorporated by reference to Exhibit 1.110.1 to Form 8-K/A8-K of the Company filed January 15, 2016.September 29, 2022.) |
10.26+10.12+ | | — | | |
10.27+10.13+ | | — | | |
| 10.28+ | | | | | | | | | | | | | |
| 10.14+ | | — | | — | |
10.2910.15 | | — | | — | |
10.3010.16 | | — | | — | |
|
| 10.17 | | — | | |
10.31 | | — | | |
10.3210.18 | | — | | — | |
10.3310.19+ | | — | | — | |
10.34 | | — | | Term Loan Agreement,and Benjamin W. Schall, dated March 31, 2014, among the Company, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent and a bank, PNC Bank, National Association, as Syndication Agent and a bank, and a syndicate of other financial institutions, serving as banks.December 4, 2020 (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed April 2, 2014.December 10, 2020.) |
10.3510.20+ | | — | | — | |
| 10.21+ | | — | | |
| 10.22+ | | — | | |
12.121.1 | | — | | |
21.1 | | — | | |
| 23.1 | | — | | |
| 31.1 | | — | | |
| 31.2 | | — | | |
| 32 | | — | | |
10197 | | — | | — |
| 101 | | — | | XBRL (Extensible Business Reporting Language). The followingFinancial materials from AvalonBay Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2017,2023 formatted in XBRL:Inline XBRL (Extensible Business Reporting Language) including: (i) consolidated balance sheets,the Consolidated Balance Sheets, (ii) consolidated statementsthe Consolidated Statements of comprehensive income,Comprehensive Income, (iii) consolidated statementsthe Consolidated Statements of equity,Equity, (iv) consolidated statementsthe Consolidated Statements of cash flowsCash Flows and (v) notesNotes to consolidated financial statements.the Consolidated Financial Statements. (Filed herewith.) |
| 104 | | — | | Cover Page Interactive Data File (embedded within the Inline XBRL document). (Filed herewith.) |
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+ | Management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(a)(3) of Form 10-K. |
+ Management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(a)(3) of Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | | | | |
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| | | | |
| | AvalonBay Communities, Inc. |
Date: February 23, 20182024 | | By: | | /s/ TIMOTHY J. NAUGHTONBENJAMIN W. SCHALL |
| | | | Timothy J. Naughton,Benjamin W. Schall, Director, Chairman, Chief Executive Officer and President
(Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | | | | | | | |
| | | | |
| | | | |
Date: February 23, 20182024 | | By: | | By: | /s/ TIMOTHY J. NAUGHTONBENJAMIN W. SCHALL |
| | | | Timothy J. Naughton,Benjamin W. Schall, Director, Chairman, Chief Executive Officer and President (Principal
(Principal Executive Officer) |
Date: February 23, 20182024 | | By: | | /s/ KEVIN P. O’SHEA |
| | | | Kevin P. O’Shea, Chief Financial Officer
(Principal Financial Officer) |
Date: February 23, 20182024 | | By: | | /s/ KERI A. SHEA |
| | | | Keri A. Shea, Senior Vice President—Finance & Treasurer
(Principal Accounting Officer)
|
Date: February 23, 20182024 | | By: | | /s/ GLYN F. AEPPEL |
| | | | Glyn F. Aeppel, Director |
Date: February 23, 20182024 | | By: | | By: | /s/ TERRY S. BROWN |
| | | | Terry S. Brown, Director |
Date: February 23, 20182024 | | By: | | By: | /s/ ALAN B. BUCKELEW |
| | | | Alan B. Buckelew, Director |
Date: February 23, 2018 | | By: | | /s/ RONALD L. HAVNER, JR. |
| | | | Ronald L. Havner, Jr., Director |
Date: February 23, 20182024 | | By: | | /s/ STEPHEN P. HILLS |
| | | | Stephen P. Hills, Director |
Date: February 23, 20182024 | | By: | | By:/s/ CHRISTOPHER B. HOWARD |
| | | | Christopher B. Howard, Director |
| Date: February 23, 2024 | | By: | | /s/ RICHARD J. LIEB |
| | | | Richard J. Lieb, Director |
Date: February 23, 20182024 | | By: | | By: | /s/ PETER S. RUMMELLNNENNA LYNCH |
| | | | Peter S. Rummell,Nnenna Lynch, Director |
Date: February 23, 20182024 | | By: | | By: | /s/ H. JAY SARLESCHARLES E. MUELLER, JR. |
| | | | H. Jay Sarles,Charles E. Mueller, Jr., Director |
Date: February 23, 20182024 | | By: | | By:/s/ TIMOTHY J. NAUGHTON |
| | | | Timothy J. Naughton, Director (Chairman of the Board of Directors) |
| Date: February 23, 2024 | | By: | | /s/ SUSAN SWANEZY |
| | | | Susan Swanezy, Director |
Date: February 23, 20182024 | | By: | | /s/ W. EDWARD WALTER |
| | | | W. Edward Walter, Director |
Report
To the Stockholders and the Board of Directors of AvalonBay Communities, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AvalonBay Communities, Inc. (the Company) as of December 31, 2017 and 2016, and the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 23, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2002.
Tysons, Virginia
February 23, 2018
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AvalonBay Communities, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AvalonBay Communities, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.
| | | | | |
| Valuation of Deferred Development Costs and Land Held for Development |
| Description of the Matter | As of December 31, 2023, the Company’s deferred development costs and land held for development totaled $53.1 million and $199.1 million, respectively. The Company expensed costs related to development pursuits not yet considered probable for development and the abandonment of Development Rights in the amount of $33.5 million during the year ended December 31, 2023. As discussed in Footnote 1 of the consolidated financial statements, the Company capitalizes costs associated with its development activities when future development is probable to the basis of land held, or if the Company has either not yet acquired the land or if the project is subject to a leasehold interest, the costs are capitalized as deferred development costs. Future development is dependent upon various factors, including zoning and regulatory approvals, rental market conditions, construction costs and the availability of capital.
Auditing the valuation of deferred development costs and land held for development involved a high degree of subjectivity as management’s assessment of the probability that future development will occur was highly judgmental and subject to the various factors affecting future development discussed above. The Company’s assessment of probability of future development included an analysis of the likelihood of factors outside their control that could prevent the development from occurring and factors that could cause the Company to decide not to pursue or complete the development. |
How We
Addressed
the Matter
in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to assess the valuation of deferred development costs and land held for development. For example, we tested controls over the Company’s pursuit monitoring process and management’s review of the probability assessment related to future development.
Our procedures included, among others, evaluating the Company’s determination that the future development is probable. We performed procedures to test the accuracy and completeness of the information included in the Company’s qualitative analysis by agreeing data to underlying agreements, communications, minutes of management’s quarterly development meetings, and third-party evidence, where available. We further assessed the likelihood of the Company’s ability to obtain zoning and regulatory approvals for developments by considering, among other things, the Company’s prior experience with other development projects and the current status of the future projects for which pursuit or development rights costs were capitalized or land was held for development. We also met with executives who lead the Company’s development team to further understand the probability of future development.
|
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2002.
Tysons, Virginia
February 23, 2024
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AvalonBay Communities, Inc.
Opinion on Internal Control overOver Financial Reporting
We have audited AvalonBay Communities, Inc.’s internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, AvalonBay Communities, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20172023 and 2016, and2022, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017,2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 23, 20182024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Tysons, Virginia
February 23, 20182024
AVALONBAY COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
| | | | | | | | | | | |
| | December 31, 2023 | | December 31, 2022 |
| ASSETS | | | |
| Real estate: | | | |
| Land and improvements | $ | 4,720,331 | | | $ | 4,640,971 | |
| Buildings and improvements | 19,438,195 | | | 18,804,510 | |
| Furniture, fixtures and equipment | 1,303,959 | | | 1,174,135 | |
| 25,462,485 | | | 24,619,616 | |
| Less accumulated depreciation | (7,557,614) | | | (6,878,556) | |
| Net operating real estate | 17,904,871 | | | 17,741,060 | |
| Construction in progress, including land | 1,268,915 | | | 1,072,543 | |
| Land held for development | 199,062 | | | 179,204 | |
| Real estate assets held for sale, net | — | | | — | |
| Total real estate, net | 19,372,848 | | | 18,992,807 | |
| | | |
| Cash and cash equivalents | 397,890 | | | 613,189 | |
| Restricted cash | 133,070 | | | 121,056 | |
| Unconsolidated investments | 220,145 | | | 212,084 | |
| Deferred development costs | 53,122 | | | 58,489 | |
| Prepaid expenses and other assets | 366,465 | | | 316,808 | |
| Right of use lease assets | 134,674 | | | 143,331 | |
| Total assets | $ | 20,678,214 | | | $ | 20,457,764 | |
| | | |
| LIABILITIES AND EQUITY | | | |
| Unsecured notes, net | $ | 7,256,152 | | | $ | 7,602,305 | |
| Variable rate unsecured credit facility and commercial paper, net | — | | | — | |
| Mortgage notes payable, net | 725,670 | | | 713,740 | |
| Dividends payable | 238,072 | | | 226,022 | |
| Payables for construction | 87,703 | | | 72,802 | |
| Accrued expenses and other liabilities | 310,868 | | | 306,186 | |
| Lease liabilities | 153,232 | | | 162,671 | |
| Accrued interest payable | 57,911 | | | 54,100 | |
| Resident security deposits | 63,815 | | | 63,700 | |
| Total liabilities | 8,893,423 | | | 9,201,526 | |
| | | |
| Commitments and contingencies | | | |
| | | |
| Redeemable noncontrolling interests | 1,473 | | 2,685 |
| | | |
| Equity: | | | |
| Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at December 31, 2023 and December 31, 2022; zero shares issued and outstanding at December 31, 2023 and December 31, 2022 | — | | | — | |
| Common stock, $0.01 par value; 280,000,000 shares authorized at December 31, 2023 and December 31, 2022; 142,025,456 and 139,916,864 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | 1,420 | | | 1,400 | |
| Additional paid-in capital | 11,287,549 | | | 10,765,431 | |
| Accumulated earnings less dividends | 478,156 | | | 485,221 | |
| Accumulated other comprehensive income | 16,116 | | | 1,424 | |
| Total stockholders' equity | 11,783,241 | | | 11,253,476 | |
| Noncontrolling interests | 77 | | | 77 | |
| Total equity | 11,783,318 | | | 11,253,553 | |
| Total liabilities and equity | $ | 20,678,214 | | | $ | 20,457,764 | |
|
| | | | | | | |
| | 12/31/17 | | 12/31/16 |
| ASSETS | |
| | |
|
| Real estate: | |
| | |
|
| Land and improvements | $ | 4,237,318 |
| | $ | 3,941,250 |
|
| Buildings and improvements | 15,708,666 |
| | 14,314,981 |
|
| Furniture, fixtures and equipment | 615,288 |
| | 532,994 |
|
| | 20,561,272 |
| | 18,789,225 |
|
| Less accumulated depreciation | (4,218,379 | ) | | (3,743,632 | ) |
| Net operating real estate | 16,342,893 |
| | 15,045,593 |
|
| Construction in progress, including land | 1,306,300 |
| | 1,882,262 |
|
| Land held for development | 68,364 |
| | 84,293 |
|
| Real estate assets held for sale, net | — |
| | 20,846 |
|
| Total real estate, net | 17,717,557 |
| | 17,032,994 |
|
| | | | |
| Cash and cash equivalents | 67,088 |
| | 214,994 |
|
| Cash in escrow | 134,818 |
| | 114,983 |
|
| Resident security deposits | 32,686 |
| | 32,071 |
|
| Investments in unconsolidated real estate entities | 163,475 |
| | 175,116 |
|
| Deferred development costs | 45,819 |
| | 40,179 |
|
| Prepaid expenses and other assets | 253,378 |
| | 256,934 |
|
| Total assets | $ | 18,414,821 |
| | $ | 17,867,271 |
|
| | | | |
| LIABILITIES AND EQUITY | |
| | |
|
| Unsecured notes, net | $ | 5,852,764 |
| | $ | 4,463,302 |
|
| Variable rate unsecured credit facility | — |
| | — |
|
| Mortgage notes payable, net | 1,476,706 |
| | 2,567,578 |
|
| Dividends payable | 196,094 |
| | 185,397 |
|
| Payables for construction | 85,377 |
| | 100,998 |
|
| Accrued expenses and other liabilities | 308,189 |
| | 274,676 |
|
| Accrued interest payable | 43,116 |
| | 38,307 |
|
| Resident security deposits | 58,473 |
| | 57,023 |
|
| Liabilities related to real estate assets held for sale | — |
| | 808 |
|
| Total liabilities | 8,020,719 |
| | 7,688,089 |
|
| | | | |
| Commitments and contingencies |
|
| |
|
|
| | | | |
| Redeemable noncontrolling interests | 6,056 |
| | 7,766 |
|
| | | | |
| Equity: | |
| | |
|
| Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at December 31, 2017 and 2016; zero shares issued and outstanding at December 31, 2017 and 2016 | — |
| | — |
|
| Common stock, $0.01 par value; 280,000,000 shares authorized at December 31, 2017 and 2016; 138,094,154 and 137,330,904 shares issued and outstanding at December 31, 2017 and 2016, respectively | 1,381 |
| | 1,373 |
|
| Additional paid-in capital | 10,235,475 |
| | 10,105,654 |
|
| Accumulated earnings less dividends | 188,609 |
| | 94,899 |
|
| Accumulated other comprehensive loss | (37,419 | ) | | (30,510 | ) |
| Total equity | 10,388,046 |
| | 10,171,416 |
|
| Total liabilities and equity | $ | 18,414,821 |
| | $ | 17,867,271 |
|
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | | |
| | For the year ended December 31, |
| | 2023 | | 2022 | | 2021 |
| Revenue: | | | | | |
| Rental and other income | $ | 2,760,187 | | | $ | 2,587,113 | | | $ | 2,291,766 | |
| Management, development and other fees | 7,722 | | | 6,333 | | | 3,084 | |
| Total revenue | 2,767,909 | | | 2,593,446 | | | 2,294,850 | |
| | | | | |
| Expenses: | | | | | |
| Operating expenses, excluding property taxes | 681,338 | | | 630,154 | | | 570,853 | |
| Property taxes | 306,794 | | | 288,960 | | | 283,089 | |
| Expensed transaction, development and other pursuit costs, net of recoveries | 33,479 | | | 16,565 | | | 3,231 | |
| Interest expense, net | 205,992 | | | 230,074 | | | 220,415 | |
| Loss on extinguishment of debt, net | 150 | | | 1,646 | | | 17,787 | |
| Depreciation expense | 816,965 | | | 814,978 | | | 758,596 | |
| General and administrative expense | 76,534 | | | 74,064 | | | 69,611 | |
| Casualty loss | 9,118 | | | — | | | 3,119 | |
| Total expenses | 2,130,370 | | | 2,056,441 | | | 1,926,701 | |
| | | | | |
| Income from unconsolidated investments | 13,454 | | | 53,394 | | | 38,585 | |
| Gain on sale of communities | 287,424 | | | 555,558 | | | 602,235 | |
| Other real estate activity | 174 | | | 5,127 | | | 1,120 | |
| | | | | |
| Income before income taxes | 938,591 | | | 1,151,084 | | | 1,010,089 | |
| Income tax expense | (10,153) | | | (14,646) | | | (5,733) | |
| | | | | |
| Net income | 928,438 | | | 1,136,438 | | | 1,004,356 | |
| Net loss (income) attributable to noncontrolling interests | 387 | | | 337 | | | (57) | |
| | | | | |
| Net income attributable to common stockholders | $ | 928,825 | | | $ | 1,136,775 | | | $ | 1,004,299 | |
| | | | | |
| Other comprehensive income: | | | | | |
| Gain on cash flow hedges | 13,332 | | | 23,647 | | | 993 | |
| Cash flow hedge losses reclassified to earnings | 1,360 | | | 3,883 | | | 13,151 | |
| Comprehensive income | $ | 943,517 | | | $ | 1,164,305 | | | $ | 1,018,443 | |
| | | | | |
| Earnings per common share - basic: | | | | | |
| Net income attributable to common stockholders | $ | 6.56 | | | $ | 8.13 | | | $ | 7.19 | |
| | | | | |
| Earnings per common share - diluted: | | | | | |
| Net income attributable to common stockholders | $ | 6.56 | | | $ | 8.12 | | | $ | 7.19 | |
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Revenue: | |
| | |
| | |
|
| Rental and other income | $ | 2,154,481 |
| | $ | 2,039,656 |
| | $ | 1,846,081 |
|
| Management, development and other fees | 4,147 |
| | 5,599 |
| | 9,947 |
|
| Total revenue | 2,158,628 |
| | 2,045,255 |
| | 1,856,028 |
|
| | | | | | |
| Expenses: | |
| | |
| | |
|
| Operating expenses, excluding property taxes | 503,946 |
| | 478,437 |
| | 448,747 |
|
| Property taxes | 221,375 |
| | 204,837 |
| | 193,499 |
|
| Interest expense, net | 199,661 |
| | 187,510 |
| | 175,615 |
|
| Loss (gain) on extinguishment of debt, net | 25,472 |
| | 7,075 |
| | (26,736 | ) |
| Depreciation expense | 584,150 |
| | 531,434 |
| | 477,923 |
|
| General and administrative expense | 50,673 |
| | 45,771 |
| | 42,774 |
|
| Expensed acquisition, development and other pursuit costs, net of recoveries | 2,736 |
| | 9,922 |
| | 6,822 |
|
| Casualty and impairment loss (gain), net | 6,250 |
| | (3,935 | ) | | (10,542 | ) |
| Total expenses | 1,594,263 |
| | 1,461,051 |
| | 1,308,102 |
|
| | | | | | |
| Income before equity in income of unconsolidated real estate entities, gain on sale of communities, (loss) gain on other real estate transactions, and income taxes | 564,365 |
| | 584,204 |
| | 547,926 |
|
| | | | | | |
| Equity in income of unconsolidated real estate entities | 70,744 |
| | 64,962 |
| | 70,018 |
|
| Gain on sale of communities | 252,599 |
| | 374,623 |
| | 115,625 |
|
| (Loss) gain on other real estate transactions | (10,907 | ) | | 10,224 |
| | 9,647 |
|
| | | | | | |
| Income before income taxes | 876,801 |
| | 1,034,013 |
| | 743,216 |
|
| Income tax expense | 141 |
| | 305 |
| | 1,483 |
|
| | | | | | |
| Net income | 876,660 |
| | 1,033,708 |
| | 741,733 |
|
| Net loss attributable to noncontrolling interests | 261 |
| | 294 |
| | 305 |
|
| | | | | | |
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
|
| | | | | | |
| Other comprehensive income (loss): | |
| | |
| | |
|
| (Loss) income on cash flow hedges | (13,979 | ) | | (5,556 | ) | | 5,354 |
|
| Cash flow hedge losses reclassified to earnings | 7,070 |
| | 6,433 |
| | 5,774 |
|
| Comprehensive income | $ | 870,012 |
| | $ | 1,034,879 |
| | $ | 753,166 |
|
| | | | | | |
| Earnings per common share—basic: | |
| | |
| | |
|
| Net income attributable to common stockholders | $ | 6.36 |
| | $ | 7.53 |
| | $ | 5.54 |
|
| | | | | | |
| Earnings per common share—diluted: | |
| | |
| | |
|
| Net income attributable to common stockholders | $ | 6.35 |
| | $ | 7.52 |
| | $ | 5.51 |
|
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Shares issued | | | | | | Additional
paid-in
capital | | Accumulated
earnings
less
dividends | | Accumulated
other
comprehensive
(loss) income | | Total
AvalonBay
stockholders'
equity | | | | |
| | Preferred
stock | | Common
stock | | Preferred
stock | | Common
stock | | | | | | Noncontrolling
interests | | Total
equity |
| Balance at December 31, 2020 | — | | | 139,526,671 | | | $ | — | | | $ | 1,395 | | | $ | 10,664,416 | | | $ | 126,022 | | | $ | (40,250) | | | $ | 10,751,583 | | | $ | 591 | | | $ | 10,752,174 | |
| Net income attributable to common stockholders | — | | | — | | | — | | | — | | | — | | | 1,004,299 | | | — | | | 1,004,299 | | | — | | | 1,004,299 | |
| Gain on cash flow hedges, net | — | | | — | | | — | | | — | | | — | | | — | | | 993 | | | 993 | | | — | | | 993 | |
| Cash flow hedge losses reclassified to earnings | — | | | — | | | — | | | — | | | — | | | — | | | 13,151 | | | 13,151 | | | — | | | 13,151 | |
| Noncontrolling interest activity | — | | | — | | | — | | | — | | | — | | | (1,022) | | | — | | | (1,022) | | | (25) | | | (1,047) | |
| Dividends declared to common stockholders ($6.36 per share) | — | | | — | | | — | | | — | | | — | | | (889,405) | | | — | | | (889,405) | | | — | | | (889,405) | |
| Issuance of common stock, net of withholdings | — | | | 225,255 | | | — | | | 3 | | | 18,047 | | | 927 | | | — | | | 18,977 | | | — | | | 18,977 | |
| Stock-based compensation expense | — | | | — | | | — | | | — | | | 33,951 | | | — | | | — | | | 33,951 | | | — | | | 33,951 | |
| Balance at December 31, 2021 | — | | | 139,751,926 | | | — | | | 1,398 | | | 10,716,414 | | | 240,821 | | | (26,106) | | | 10,932,527 | | | 566 | | | 10,933,093 | |
| Net income attributable to common stockholders | — | | | — | | | — | | | — | | | — | | | 1,136,775 | | | — | | | 1,136,775 | | | — | | | 1,136,775 | |
| Gain on cash flow hedges, net | — | | | — | | | — | | | — | | | — | | | — | | | 23,647 | | | 23,647 | | | — | | | 23,647 | |
| Cash flow hedge losses reclassified to earnings | — | | | — | | | — | | | — | | | — | | | — | | | 3,883 | | | 3,883 | | | — | | | 3,883 | |
| Noncontrolling interest activity | — | | | — | | | — | | | — | | | — | | | (105) | | | — | | | (105) | | | (489) | | | (594) | |
| Dividends declared to common stockholders ($6.36 per share) | — | | | — | | | — | | | — | | | — | | | (890,809) | | | — | | | (890,809) | | | — | | | (890,809) | |
| Issuance of common stock, net of withholdings | — | | | 164,938 | | | — | | | 2 | | | 4,577 | | | (1,461) | | | — | | | 3,118 | | | — | | | 3,118 | |
| Stock-based compensation expense | — | | | — | | | — | | | — | | | 44,440 | | | — | | | — | | | 44,440 | | | — | | | 44,440 | |
| Balance at December 31, 2022 | — | | | 139,916,864 | | | — | | | 1,400 | | | 10,765,431 | | | 485,221 | | | 1,424 | | | 11,253,476 | | | 77 | | | 11,253,553 | |
| Net income attributable to common stockholders | — | | | — | | | — | | | — | | | — | | | 928,825 | | | — | | | 928,825 | | | — | | | 928,825 | |
| Gain on cash flow hedges, net | — | | | — | | | — | | | — | | | — | | | — | | | 13,332 | | | 13,332 | | | — | | | 13,332 | |
| Cash flow hedge losses reclassified to earnings | — | | | — | | | — | | | — | | | — | | | — | | | 1,360 | | | 1,360 | | | — | | | 1,360 | |
| Noncontrolling interest activity | — | | | — | | | — | | | — | | | — | | | (1,217) | | | — | | | (1,217) | | | — | | | (1,217) | |
| Dividends declared to common stockholders ($6.60 per share) | — | | | — | | | — | | | — | | | — | | | (935,305) | | | — | | | (935,305) | | | — | | | (935,305) | |
| Issuance of common stock, net of withholdings | — | | | 2,120,392 | | | — | | | 20 | | | 485,029 | | | 1,635 | | | — | | | 486,684 | | | — | | | 486,684 | |
| Repurchase of common stock, including repurchase costs | — | | | (11,800) | | | — | | | — | | | (908) | | | (1,003) | | | — | | | (1,911) | | | — | | | (1,911) | |
| Stock-based compensation expense | — | | | — | | | — | | | — | | | 37,997 | | | — | | | — | | | 37,997 | | | — | | | 37,997 | |
| Balance at December 31, 2023 | — | | | 142,025,456 | | | $ | — | | | $ | 1,420 | | | $ | 11,287,549 | | | $ | 478,156 | | | $ | 16,116 | | | $ | 11,783,241 | | | $ | 77 | | | $ | 11,783,318 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Shares issued | | | | | | Additional paid-in capital | | Accumulated earnings less dividends | | Accumulated other comprehensive loss | | Total AvalonBay stockholders' equity | | | | |
| | Preferred stock | | Common stock | | Preferred stock | | Common stock | | | | | | Noncontrolling interests | | Total equity |
| Balance at December 31, 2014 | — |
| | 132,050,382 |
| | $ | — |
| | $ | 1,320 |
| | $ | 9,354,685 |
| | $ | (267,085 | ) | | $ | (42,515 | ) | | $ | 9,046,405 |
| | $ | — |
| | $ | 9,046,405 |
|
| Net income attributable to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | 742,038 |
| | — |
| | 742,038 |
| | — |
| | 742,038 |
|
| Income on cash flow hedges | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 5,354 |
| | 5,354 |
| | — |
| | 5,354 |
|
| Cash flow hedge losses reclassified to earnings | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 5,774 |
| | 5,774 |
| | — |
| | 5,774 |
|
| Change in redemption value and acquisition of noncontrolling interest | — |
| | — |
| | — |
| | — |
| | (1,088 | ) | | 2,053 |
| | — |
| | 965 |
| | — |
| | 965 |
|
| Dividends declared to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | (673,670 | ) | | — |
| | (673,670 | ) | | — |
| | (673,670 | ) |
| Issuance of common stock, net of withholdings | — |
| | 4,951,649 |
| | — |
| | 50 |
| | 688,677 |
| | (1,325 | ) | | — |
| | 687,402 |
| | — |
| | 687,402 |
|
| Amortization of deferred compensation | — |
| | — |
| | — |
| | — |
| | 26,258 |
| | — |
| | — |
| | 26,258 |
| | — |
| | 26,258 |
|
| Balance at December 31, 2015 | — |
| | 137,002,031 |
| | — |
| | 1,370 |
| | 10,068,532 |
| | (197,989 | ) | | (31,387 | ) | | 9,840,526 |
| | — |
| | 9,840,526 |
|
| Net income attributable to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | 1,034,002 |
| | — |
| | 1,034,002 |
| | — |
| | 1,034,002 |
|
| Loss on cash flow hedges | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (5,556 | ) | | (5,556 | ) | | — |
| | (5,556 | ) |
| Cash flow hedge losses reclassified to earnings | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 6,433 |
| | 6,433 |
| | — |
| | 6,433 |
|
| Change in redemption value and acquisition of noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | 1,489 |
| | — |
| | 1,489 |
| | — |
| | 1,489 |
|
| Dividends declared to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | (741,313 | ) | | — |
| | (741,313 | ) | | — |
| | (741,313 | ) |
| Issuance of common stock, net of withholdings | — |
| | 328,873 |
| | — |
| | 3 |
| | 11,982 |
| | (1,290 | ) | | — |
| | 10,695 |
| | — |
| | 10,695 |
|
| Amortization of deferred compensation | — |
| | — |
| | — |
| | — |
| | 25,140 |
| | — |
| | — |
| | 25,140 |
| | — |
| | 25,140 |
|
| Balance at December 31, 2016 | — |
| | 137,330,904 |
| | — |
| | 1,373 |
| | 10,105,654 |
| | 94,899 |
| | (30,510 | ) | | 10,171,416 |
| | — |
| | 10,171,416 |
|
| Net income attributable to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | 876,921 |
| | — |
| | 876,921 |
| | — |
| | 876,921 |
|
| Loss on cash flow hedges | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (13,979 | ) | | (13,979 | ) | | — |
| | (13,979 | ) |
| Cash flow hedge losses reclassified to earnings | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 7,070 |
| | 7,070 |
| | — |
| | 7,070 |
|
| Change in redemption value and acquisition of noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | 2,026 |
| | — |
| | 2,026 |
| | — |
| | 2,026 |
|
| Dividends declared to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | (783,912 | ) | | — |
| | (783,912 | ) | | — |
| | (783,912 | ) |
| Issuance of common stock, net of withholdings | — |
| | 763,250 |
| | — |
| | 8 |
| | 101,621 |
| | (1,325 | ) | | — |
| | 100,304 |
| | — |
| | 100,304 |
|
| Amortization of deferred compensation | — |
| | — |
| | — |
| | — |
| | 28,200 |
| | — |
| | — |
| | 28,200 |
| | — |
| | 28,200 |
|
| Balance at December 31, 2017 | — |
| | 138,094,154 |
| | $ | — |
| | $ | 1,381 |
| | $ | 10,235,475 |
| | $ | 188,609 |
| | $ | (37,419 | ) | | $ | 10,388,046 |
| | $ | — |
| | $ | 10,388,046 |
|
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| | | | | | | | | | | | | | | | | |
| | For the year ended December 31, |
| | 2023 | | 2022 | | 2021 |
| Cash flows from operating activities: | | | | | |
| Net income | $ | 928,438 | | | $ | 1,136,438 | | | $ | 1,004,356 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation expense | 816,965 | | | 814,978 | | | 758,596 | |
| Amortization of deferred financing costs and debt discount | 12,732 | | | 11,218 | | | 10,143 | |
| Loss on extinguishment of debt, net | 150 | | | 1,646 | | | 17,787 | |
| Amortization of stock-based compensation | 27,142 | | | 33,864 | | | 25,505 | |
| Equity in loss (income) of, and return on, unconsolidated investments and noncontrolling interests, net of eliminations | 5,332 | | | 5,255 | | | (108) | |
| Casualty loss | 4,622 | | | — | | | 1,723 | |
| Abandonment of development pursuits | 33,479 | | | 5,599 | | | 685 | |
| Unrealized gain on terminated cash flow hedges | — | | | — | | | (2,654) | |
| Cash flow hedge losses reclassified to earnings | 1,360 | | | 3,883 | | | 7,887 | |
| Gain on sale of real estate assets | (287,987) | | | (600,958) | | | (630,747) | |
| Increase (decrease) in prepaid expenses and other assets | 5,777 | | | (7,167) | | | 5,505 | |
| Increase in accrued expenses, other liabilities and accrued interest payable | 12,019 | | | 17,176 | | | 4,492 | |
| Net cash provided by operating activities | 1,560,029 | | | 1,421,932 | | | 1,203,170 | |
| | | | | |
| Cash flows from investing activities: | | | | | |
| Development/redevelopment of real estate assets including land acquisitions and deferred development costs | (901,847) | | | (921,203) | | | (654,861) | |
| Acquisition of real estate assets | (215,889) | | | (536,838) | | | (771,692) | |
| Capital expenditures - existing real estate assets | (178,312) | | | (160,313) | | | (142,688) | |
| Capital expenditures - non-real estate assets | (18,962) | | | (14,392) | | | (10,547) | |
| Increase (decrease) in payables for construction | 14,901 | | | 9,080 | | | (29,887) | |
| Proceeds from sale of real estate and for-sale condominiums, net of selling costs | 467,096 | | | 1,051,383 | | | 974,762 | |
| Note receivable lending | (82,802) | | | (29,352) | | | (1,210) | |
| Note receivable payments | 253 | | | 4,021 | | | 2,435 | |
| Distributions from unconsolidated entities | 5,468 | | | 51,464 | | | 63,171 | |
| Unconsolidated investments | (18,861) | | | (14,269) | | | (53,536) | |
| Net cash used in investing activities | (928,955) | | | (560,419) | | | (624,053) | |
| | | | | |
| Cash flows from financing activities: | | | | | |
| Issuance of common stock, net | 496,706 | | | 20,020 | | | 31,874 | |
| Repurchase of common stock, net | (1,911) | | | — | | | — | |
| Dividends paid | (922,657) | | | (889,607) | | | (888,344) | |
| Repayments of mortgage notes payable, including prepayment penalties | (47,000) | | | (43,332) | | | (109,562) | |
| Issuance of unsecured notes | 399,756 | | | 348,565 | | | 1,098,643 | |
| Repayment of unsecured notes | (750,000) | | | (100,000) | | | (462,147) | |
| Payment of deferred financing costs | (3,964) | | | (14,301) | | | (8,864) | |
| Receipt for termination of forward interest rate swaps | 8,331 | | | 26,869 | | | 4,751 | |
| Payments related to tax withholding for share-based compensation | (10,639) | | | (16,989) | | | (13,463) | |
| Noncontrolling interests, joint venture and preferred equity transactions | (2,981) | | | (2,281) | | | (1,749) | |
| Net cash used in financing activities | (834,359) | | | (671,056) | | | (348,861) | |
| | | | | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (203,285) | | | 190,457 | | | 230,256 | |
| | | | | |
| Cash, cash equivalents and restricted cash, beginning of year | 734,245 | | | 543,788 | | | 313,532 | |
| Cash, cash equivalents and restricted cash, end of year | $ | 530,960 | | | $ | 734,245 | | | $ | 543,788 | |
| | | | | |
| Cash paid during the year for interest, net of amount capitalized | $ | 187,523 | | | $ | 212,241 | | | $ | 203,773 | |
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Cash flows from operating activities: | |
| | |
| | |
|
| Net income | $ | 876,660 |
| | $ | 1,033,708 |
| | $ | 741,733 |
|
| Adjustments to reconcile net income to cash provided by operating activities: | |
| | |
| | |
|
| Depreciation expense | 584,150 |
| | 531,434 |
| | 477,923 |
|
| Amortization of deferred financing costs | 7,657 |
| | 7,661 |
| | 6,871 |
|
| Amortization of debt premium | (5,915 | ) | | (18,866 | ) | | (24,261 | ) |
| Loss (gain) on extinguishment of debt, net | 25,472 |
| | 7,075 |
| | (26,736 | ) |
| Amortization of stock-based compensation | 17,920 |
| | 15,082 |
| | 15,321 |
|
| Equity in (income) loss of, and return on, unconsolidated real estate entities and noncontrolling interests, net of eliminations | (19,798 | ) | | 8,870 |
| | 12,225 |
|
| Casualty and impairment loss (gain), net | 8,568 |
| | (3,935 | ) | | (17,303 | ) |
| Abandonment of development pursuits | 388 |
| | 1,743 |
| | — |
|
| Cash flow hedge losses reclassified to earnings | 7,070 |
| | 6,433 |
| | 5,774 |
|
| Gain on sale of real estate assets | (281,745 | ) | | (442,916 | ) | | (158,852 | ) |
| Decrease (increase) in resident security deposits, prepaid expenses and other assets | 3,076 |
| | (5,403 | ) | | 12,783 |
|
| Increase in accrued expenses, other liabilities and accrued interest payable | 32,754 |
| | 19,386 |
| | 29,189 |
|
| Net cash provided by operating activities | 1,256,257 |
| | 1,160,272 |
| | 1,074,667 |
|
| | | | | | |
| Cash flows from investing activities: | |
| | |
| | �� |
|
| Development/redevelopment of real estate assets including land acquisitions and deferred development costs | (979,947 | ) | | (1,201,026 | ) | | (1,569,326 | ) |
| Acquisition of real estate assets, including partnership interest | (462,317 | ) | | (393,316 | ) | | — |
|
| Capital expenditures - existing real estate assets | (65,181 | ) | | (66,971 | ) | | (48,170 | ) |
| Capital expenditures - non-real estate assets | (8,809 | ) | | (5,881 | ) | | (7,695 | ) |
| Proceeds from sale of real estate, net of selling costs | 503,039 |
| | 532,717 |
| | 282,163 |
|
| Insurance proceeds for property damage claims | 16,233 |
| | 17,196 |
| | 44,142 |
|
| Mortgage note receivable lending | (17,590 | ) | | (19,115 | ) | | — |
|
| (Decrease) increase in payables for construction | (15,621 | ) | | 2,196 |
| | (3,230 | ) |
| Distributions from unconsolidated real estate entities | 89,305 |
| | 111,598 |
| | 109,181 |
|
| Investments in unconsolidated real estate entities | (24,493 | ) | | (9,750 | ) | | (6,582 | ) |
| Net cash used in investing activities | (965,381 | ) | | (1,032,352 | ) | | (1,199,517 | ) |
| | | | | | |
| Cash flows from financing activities: | | | |
| | |
|
| Issuance of common stock, net | 111,093 |
| | 15,526 |
| | 690,184 |
|
| Dividends paid | (772,657 | ) | | (726,749 | ) | | (655,248 | ) |
| Issuance of mortgage notes payable | 206,800 |
| | — |
| | — |
|
| Repayments of mortgage notes payable, including prepayment penalties | (1,313,025 | ) | | (168,076 | ) | | (853,604 | ) |
| Issuance of unsecured notes | 1,696,826 |
| | 1,122,488 |
| | 873,088 |
|
| Repayment of unsecured notes, including prepayment penalties | (300,000 | ) | | (504,403 | ) | | — |
|
| Payment of deferred financing costs | (17,552 | ) | | (16,240 | ) | | (7,343 | ) |
| Redemption of noncontrolling interest and units for cash by minority partners | — |
| | — |
| | (1,088 | ) |
| Payment of capital lease obligation | (18,951 | ) | | — |
| | — |
|
| Receipts (payments) for termination of forward interest rate swaps | 391 |
| | (14,847 | ) | | — |
|
| Payments related to tax withholding for share-based compensation | (10,450 | ) | | (8,562 | ) | | (6,076 | ) |
| Distributions to DownREIT partnership unitholders | (42 | ) | | (41 | ) | | (38 | ) |
| Contributions from joint venture and profit-sharing partners | 1,038 |
| | — |
| | — |
|
| Distributions to joint venture and profit-sharing partners | (418 | ) | | (407 | ) | | (372 | ) |
| Preferred interest obligation redemption and dividends | (2,000 | ) | | (1,960 | ) | | (14,410 | ) |
| Net cash (used in) provided by financing activities | (418,947 | ) | | (303,271 | ) | | 25,093 |
|
| | | | | | |
| Net decrease in cash and cash equivalents | (128,071 | ) | | (175,351 | ) | | (99,757 | ) |
| | | | | | |
| Cash and cash equivalents and restricted cash, beginning of year | 329,977 |
| | 505,328 |
| | 605,085 |
|
| Cash and cash equivalents and restricted cash, end of year | $ | 201,906 |
| | $ | 329,977 |
| | $ | 505,328 |
|
| | | | | | |
| Cash paid during the year for interest, net of amount capitalized | $ | 207,842 |
| | $ | 194,059 |
| | $ | 188,782 |
|
See accompanying notes to Consolidated Financial Statements.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported with the Consolidated Statements of Cash Flows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | December 31, 2023 | | December 31, 2022 | | December 31, 2021 |
| Cash and cash equivalents | | $ | 397,890 | | | $ | 613,189 | | | $ | 420,251 | |
| Restricted cash | | 133,070 | | | 121,056 | | | 123,537 | |
| Cash, cash equivalents and restricted cash reported in the Consolidated Statements of Cash Flows | | $ | 530,960 | | | $ | 734,245 | | | $ | 543,788 | |
|
| | | | | | | | | | | | |
| | | For the year ended |
| | | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Cash and cash equivalents | | $ | 67,088 |
| | $ | 214,994 |
| | $ | 400,507 |
|
| Cash in escrow | | 134,818 |
| | 114,983 |
| | 104,821 |
|
| Cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows | | $ | 201,906 |
| | $ | 329,977 |
| | $ | 505,328 |
|
Supplemental disclosures of non-cash investing and financing activities:
During the year ended December 31, 2017:2023:
•As described in Note 4, “Equity,” 201,824the Company issued 153,162 shares of common stock as part of the Company's stock-based compensation plans, of which 60,016 shares related to the conversion of performance awards to shares of common stock, and the remaining 93,146 shares valued at $16,552,000 were issued in connection with new stock grants; 3,454 shares valued at $619,000 were issued through the Company’s dividend reinvestment plan; 62,937 shares valued at $10,639,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 2,119 forfeited restricted shares with an aggregate value of $413,000.
•Common stock dividends declared but not paid totaled $236,133,000.
•The Company recorded (i) an increase to prepaid expenses and other assets of $5,001,000 and a corresponding adjustment to accumulated other comprehensive income; and (ii) reclassified $1,360,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company's derivative and hedging activity.
•The Company assumed a $63,041,000 fixed rate mortgage loan in conjunction with the acquisition of Avalon West Plano.
During the year ended December 31, 2022:
•The Company issued 140,528 shares of common stock as part of the Company's stock based compensation plans, of which 128,48254,053 shares related to the conversion of performance awards to restricted shares of common stock, and the remaining 73,34286,475 shares valued at $13,171,000$20,056,000 were issued in connection with new stock grants; 3,0582,810 shares valued at $558,000$593,000 were issued through the Company’s dividend reinvestment plan; 60,31972,783 shares valued at $10,542,000$16,989,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 3,3883,701 forfeited restricted shares with an aggregate value of $588,000 previously issued in connection with employee compensation were canceled upon forfeiture.$791,000.
•Common stock dividends declared but not paid totaled $196,094,000.$224,222,000.
•The Company recorded a decreasean increase of $65,000$105,000 in redeemable noncontrolling interest with a corresponding increasedecrease to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units. For further discussion of the nature and valuation of these items, see Note 11, “Fair Value.”
•The Company recorded a decrease in prepaid expenses and other assets of $12,114,000 and an increase in other liabilities of $1,171,000, and a corresponding adjustment to other comprehensive income, and reclassified $7,070,000$3,883,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company’sCompany's derivative and hedge accountinghedging activity.
As discussed in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," the Company recognized a non-cash charge of $16,361,000 to write-off the net book value of the fixed assets destroyed by the fire that occurred in February 2017 at the Company's Avalon Maplewood Development Community ("Maplewood").
During the year ended December 31, 2016:2021:
•The Company issued 197,018155,836 shares of common stock as part of the Company's stock based compensation plans, of which 115,61856,545 shares related to the conversion of performance awards to restricted shares of common stock, and the remaining 81,40099,291 shares valued at $13,217,000$17,757,000 were issued in connection with new stock grants; 44,3272,844 shares valued at $3,894,000 were issued in conjunction with the conversion of deferred stock awards; 2,396 shares valued at $424,000$566,000 were issued through the Company’s dividend reinvestment plan; 53,45375,780 shares valued at $8,356,000$13,463,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 4,2624,109 forfeited restricted shares with an aggregate value of $694,000 previously issued in connection with employee compensation were canceled upon forfeiture.$804,000.
•Common stock dividends declared but not paid totaled $185,397,000.$224,012,000.
•The Company recorded a decreasean increase of $1,489,000$1,022,000 in redeemable noncontrolling interest with a corresponding increasedecrease to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.
•The Company recorded (i) an increase into prepaid expenses and other assets of $3,204,000 and a corresponding gainadjustment to accumulated other comprehensive income of $12,085,000,loss and (ii) reclassified $6,433,000$7,887,000 and $5,264,000 of cash flow hedge losses from other comprehensive income to interest expense, net, and loss on extinguishment of debt, net, respectively, to record the impact of the Company’sCompany's derivative and hedge accountinghedging activity.
The Company assumed fixed rate indebtedness with a principal amount of $67,904,000 in conjunction with the acquisition of Avalon Hoboken.
The Company assumed fixed rate indebtedness with a principal amount of $70,507,000 in conjunction with the acquisition of Avalon Columbia Pike.
The Company completed the construction of and sold an affordable restricted apartment building, containing 77 apartment homes, which is adjacent to a completed Development Community. The Company received a mortgage note in the amount of $18,643,000 as consideration for the sale, which is secured by the underlying real estate.
During the year ended December 31, 2015:
The Company issued 157,779 shares of common stock as part of the Company's stock based compensation plan, of which 95,826 shares related to the conversion of performance awards to restricted shares, and the remaining 61,953 shares valued at $10,720,000 were issued in connection with new stock grants; 46,589 shares valued at $3,552,000 were issued in conjunction with the conversion of deferred stock awards; 2,142 shares valued at $372,000 were issued through the Company’s dividend reinvestment plan; 45,090 shares valued at $5,979,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 1,529 restricted shares with an aggregate value of $726,000 previously issued in connection with employee compensation were canceled upon forfeiture.
Common stock dividends declared but not paid totaled $171,257,000.
The Company recorded a decrease of $2,053,000 in redeemable noncontrolling interest with a corresponding increase to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.
The Company recorded an increase in prepaid expenses and other assets and a corresponding gain to other comprehensive income of $5,354,000 and reclassified $5,774,000 of deferred cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company’s derivative and hedge accounting activity.
The Company recognized a charge of $26,039,000 to write off the net book value of the fixed assets destroyed by the fire that occurred in 2015 at Avalon at Edgewater (“Edgewater”) and winter storm damage at several of the Company's communities in its Northeast markets.
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and Significant Accounting Policies
Organization and Basis of Presentation
AvalonBay Communities, Inc. (the “Company,” which term, unless the context otherwise requires, refers to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). The Company focuses on the development, redevelopment, acquisition, ownershipdevelops, redevelops, acquires, owns and operation ofoperates multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California.California, as well as in the Company's expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado.
At December 31, 2017,2023, the Company owned or held a direct or indirect ownership interest in 267299 operating apartment communities containing 77,61490,669 apartment homes in 12 states and the District of Columbia, of which nine18 communities containing 3,752 apartment homes were under redevelopment. In addition, the Company owned or held a direct or indirect ownership interest in 21 communities under development that are expected to contain an aggregate of 6,544 apartment homes (unaudited) when completed.development. The Company also owned or held a direct or indirect ownership interest in land or rights to land inon which the Company expects to develop an additional 2930 communities that, if developed as expected, will contain an estimated 9,49610,801 apartment homes (unaudited).
Capitalized terms used without definition have meanings provided elsewhere in this Form 10-K.
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, certain joint venture partnerships, subsidiary partnerships structured as DownREITs and any variable interest entities that qualify for consolidation. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company accounts for joint venture entities and subsidiary partnerships in accordance with the consolidation guidance. The Company evaluates the partnership of each joint venture entity and determines first whether to follow the variable interest entity (“VIE”) or the voting interest entity (“VOE”) model. Once the appropriate consolidation model is identified, thefor each joint venture entity. The Company then evaluates whether it should consolidate the venture. Under the VIE model, the Company consolidates an investment when it has control to direct the activities of the venture and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company's maximum exposure for its VIEs is limited to its investments in the respective VIEs. Under the VOE model, the Company consolidates an investment when 1)(i) it controls the investment through ownership of a majority voting interest if the investment is not a limited partnership or 2)(ii) it controls the investment through its ability to remove the other partners in the investment, at its discretion, when the investment is a limited partnership.
The Company generally uses the equity method of accounting for its investment in joint ventures, under all other potential scenarios, including wherewhen the Company holds a noncontrolling limited partner interest in a joint venture. Any investment in excess of the Company's cost basis at acquisition or formation of an equity method venture, will be recorded as a component of the Company's investment in the joint venture and recognized over the life of the underlying fixed assets of the venture as a reduction to its equity in income from the venture. Investments in which the Company has little or no influence are accounted for using the cost method.
Revenue and Gain Recognition
Rental income related to the Company’s residential and retail leases is recognized on an accrual basis when due from residents and/or retail tenants, as required by the accounting guidance applicable to leases, which provides guidance on classification and recognition. In accordancemeasurement alternative with the Company's standard residential lease terms, rental payments are generally due on a monthly basis. Any cash concessions given at the inceptioncarrying amount of the lease are amortized over the approximate lifeinvestment adjusted to fair value when there is an observable transaction indicating a change in fair value.
The Company will adopt ASU 2014-09, Revenue from Contracts with Customers and ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets, as of January 1, 2018 using the modified retrospective approach, applying the provisions of the new standards to contracts that are not completed as of the date of adoption. Under the new standards, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. The majority of the Company’s revenue is derived from residential and retail rental income and other lease income, which are scoped out from this standard and included in the current lease accounting framework, and will be accounted for under ASU 2016-02, Leases, discussed under Recently Issued and Adopted Accounting Standardsbelow. Revenue streams that are in the scope of the new standards include:
Management fees - The Company has investment interests in real estate joint ventures, some of which the Company manages (i) the venture, (ii) the associated operating communities owned by those ventures and/or (iii) the development or redevelopment of those operating communities. For these activities, the Company receives asset management, property management, development and/or redevelopment fee revenue. The performance obligation is the management of the venture, community or other defined task such as the development or redevelopment of the community. While the individual activities that comprise the performance obligation of the management fees can vary day to day, the nature of the overall performance obligation to provide management service is the same and considered by the Company to be a series of services that have the same pattern of transfer to the customer and the same method to measure progress toward satisfaction of the performance obligation. The Company recognizes revenue for management fees as earned on a monthly basis and has concluded this is appropriate under the new standard.
Non-recurring rental and non-rental related income - The Company recognizes revenue for rental related income not included as a components of a lease, such as reservation and application fees, as well as for non-rental related income, as earned, and has concluded this is appropriate under the new standard.
Gains or losses on sales of real estate - The Company accounts for the sale of real estate assets and any related gain recognition in accordance with the accounting guidance applicable to sales of real estate, which establishes standards for recognition of profit on all real estate sales transactions, other than retail land sales. The Company recognizes the sale, and associated gain or loss from the disposition, provided that the earnings process is complete and the Company does not have significant continuing involvement. Subsequent to the adoption of the new standard, a gain or loss is recognized when the criteria for an asset to be derecognized are met, which include when (i) a contract exists and (ii) the buyer obtained control of the nonfinancial asset that was sold. As a result, the Company may recognize a gain on a real estate disposition transaction that previously did not qualify as a sale or for full profit recognition due to the timing of the transfer of control or certain forms of continuing involvement. In addition, subsequent to the adoption of the new standard, a gain or loss recognized on the sale of a nonfinancial asset to an unconsolidated entity will be recognized at 100%, and not the Company’s proportionate ownership percentage.
Due to the nature and timing of the Company’s identified revenue streams and existing open contracts as of December 31, 2017, the Company does not anticipate the adoption of the new standards will have a material impact on its financial position or results of operations.
Real Estate
Operating real estate assets are stated at cost and consist of land and improvements, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Significant expenditures which improve or extend the life of an existing asset and that will benefit the Company for periods greater than a year, are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The Company generally expenses purchases of personal property made for replacement purposes.
Project costs related to the development, construction and redevelopment of real estate projects (including interest and related loan fees, property taxes and other direct costs) are capitalized as a cost of the project. Indirect project costs that relate to several projects are capitalized and allocated to the projects to which they relate. Indirect costs not clearly related to development, construction and redevelopment activity are expensed as incurred. For development, capitalization (i) begins when the Company has determined that development of the future asset is probable, (ii) can be suspended if there is no current development activity underway, but future development is still probable and (iii) ends when the asset, or a portion of an asset, is delivered and is ready for its intended use, or the Company's intended use changes such that capitalization is no longer appropriate.
For land parcels acquired for development improved with operating real estate, for which the Company intends to pursue development, the Company generally manages the current improvements until such time as all tenant obligations have been satisfied or eliminated through negotiation, and construction of new apartment communities is ready to begin. Revenue from incidental operations received from the current improvements on land parcels in excess of any incremental costs are recorded as a reduction of total capitalized costs of the respective Development Right and not as part of net income. Incidental operating costs in excess of incidental operating income are expensed in the period incurred.
For redevelopment efforts, the Company capitalizes costs either (i) in advance of taking homes out of service when significant renovation of the common area has begun until the redevelopment is completed, or (ii) when an apartment home is taken out of service for redevelopment until the redevelopment is completed and the apartment home is available for a new resident. Rental income and operating costs incurred during the initial lease-up or post-redevelopment lease-up period are recognized in earnings as incurred. earnings.
The Company defers external costs associated with originating new leases, recognizing the impact of these costs in earnings over the term of the lease.
The adoption of ASU 2017-01 on October 1, 2016, impacted the Company's accounting frameworkaccounts for thereal estate acquisitions as either an asset acquisition of operating communities. Prior to adoption, the acquisition of an operating community was viewed as an acquisition ofor a business andcombination. Under either model, the Company identifiedidentifies and recorded each asset acquired and liability assumed in such transaction at its estimateddetermines the fair value atof any assets acquired, liabilities assumed and any noncontrolling interest in the date of acquisition, and expensed all costs incurred related to acquisitions of operating communities. Subsequent to adoption of ASU 2017-01 on October 1, 2016, the Company assesses each acquisition of an operating community to determine if it meets the definition of a business or if it qualifies as an asset acquisition.acquiree. The Company generally views acquisitions of individual operating communities as asset acquisitions, andwhich results in the capitalization of acquisition costs and the allocation of purchase price to the assets acquired and liabilities assumed, based on the relative fair value of the respective assets and liabilities.
Typical assets acquired and liabilities assumed include land, building, furniture, fixtures and equipment, debt and identified intangible assets and liabilities, consisting of the value of above or below market leases and in-place leases. The Company utilizes various sources to determine fair value, including its own analysis of recently acquired and existing comparable properties in its portfolio and other market data. The purchase price allocation to tangible assets such as land and improvements, buildings and improvements, and furniture, fixtures and equipment, and the in-place lease intangible assets, is as reflected in real estate assets and depreciated over their estimated useful lives. Any purchase price allocation to intangible assets, other than in-place lease intangibles, is included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets and amortized over the term of the acquired intangible asset. The Company values land based on a market approach, looking to recent sales of similar properties, adjusting for differences due to location, the state of entitlement as well as the shape and size of the parcel. Improvements to land are valued using a replacement cost approach and consider the structures and amenities included for the communities. The approach applied industry standard replacement costs adjusted for geographic specific considerationscommunities and is reduced by estimated depreciation. The value for furniture, fixtures and equipment is also determined based on a replacement cost approach, considering costs for both items in the apartment homes as well as common areas and wasis adjusted for estimated depreciation. The fair value of buildings acquired is estimated using the replacement cost approach, assuming the buildings were vacant at acquisition. The replacement cost approach considers the composition of structures acquired, adjusted for an estimate of depreciation. The estimate of depreciation is made consideringwhich considers industry standard information depreciation curves for the identified asset classes and estimated useful life of the acquired property. The value of the acquired lease-related intangibles consideredconsiders the estimated cost of leasing the apartment homes as if the acquired building(s) were vacant, as well as the value of the current leases relative to market-rate leases. The in-place lease value is determined using an average total lease-up time, the number of apartment homes and net revenues generated during the lease-up time. The lease-up period for an apartment community is assumed to be 12 months to achieve stabilized occupancy. Net revenues use market rent considering actual leasing and industry rental rate data. The value of current leases relative to a market-rate lease is based on market rents obtained for market comparables, and considered a market derived discount rate.comparables. Given the heterogeneous nature of multifamily real estate, the fair values for the land, debt, real estate assets and in-place leases incorporatedincorporate significant unobservable inputs and therefore are considered to be Level 3 prices within the fair value hierarchy. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed.
Depreciation is generally calculated on buildings and improvements usinga straight-line basis over the straight-line method over their estimated useful lives of the assets, which for buildings and related improvements range from seven years to 30 years. Furniture,years and for furniture, fixtures and equipment are generally depreciated using the straight-line method over their estimated useful lives, which range from three years (primarily computer-related equipment) to seven years.
Income Taxes
The Company elected to be treated as a REIT for U.S. federal income tax purposes for its tax year ended December 31, 1994 and has not revoked such election. A REIT is a corporate entity which holds real estate interests and can deduct from its federally taxable income qualifying dividends it pays if it meets a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. Therefore, as a REIT, the Company generally will not be subject to corporate level federal income tax on its taxable income if it annually distributes 100% of its taxable income to its stockholders.
The states in which the Company operates have similar tax provisions which recognize the Company as a REIT for state income tax purposes. Management believes that all such conditions for the exemption from income taxes on ordinary income have been or will be met for the periods presented. Accordingly, no provision for federal and state income taxes has been made. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal corporate income taxes at regular corporate rates and may not be able to qualify as a corporate REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income and in certain other instances.
The Company did not incur any charges or receive refunds of excise taxes related to the years ended December 31, 2017, 2016 and 2015.
In addition, taxableTaxable income from non-REIT activities performed through taxable REIT subsidiaries (“TRS”) is subject to federal, state and local income taxes. The Company incurredrecognized income tax expense, primarily due to dispositions at The Park Loggia, of $141,000, $305,000$10,153,000, $14,646,000 and $1,483,000$5,733,000 in 2017, 20162023, 2022 and 2015, respectively, associated primarily with activities transacted through a TRS.2021, respectively. As of December 31, 20172023 and 2016,2022, the Company did not have any unrecognized tax benefits.positions. The Company does not believe that there will be any material changes in its unrecognized tax positions over the next 12 months. The Company is subject to examination by the respective taxing authorities for the tax years 20142020 through 2016.2022.
On December 22, 2017, H.R. 1, the Tax Cuts and Jobs Act (the “TCJA”), was enacted. The TCJA makes major changes to the Code, including lowering the statutory U.S. federal income tax rate from 35% to 21% effective January 1, 2018. The Company has completed its assessment of the Act and does not believe it will have a material impact on its financial position or results of operations.
The following reconciles net income attributable to common stockholders to taxable net income for the years ended December 31, 2017, 2016 and 2015 (unaudited, dollars in thousands):
|
| | | | | | | | | | | |
| | 2017 Estimate | | 2016 Actual | | 2015 Actual |
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
|
| GAAP gain on sale of communities (in excess of) less than tax gain | (85,873 | ) | | (195,029 | ) | | (20,900 | ) |
| Depreciation/amortization timing differences on real estate | 11,868 |
| | (947 | ) | | (24,657 | ) |
| Amortization of debt/mark to market interest | (17,430 | ) | | (18,985 | ) | | (64,676 | ) |
| Tax compensation expense less than (in excess of) GAAP | (3,828 | ) | | 9,821 |
| | (1,244 | ) |
| Casualty and impairment (gain) loss, net | 6,250 |
| | (657 | ) | | (10,542 | ) |
| Other adjustments | (40,381 | ) | | 11,533 |
| | (12,829 | ) |
| Taxable net income | $ | 747,527 |
| | $ | 839,738 |
| | $ | 607,190 |
|
The following summarizes the tax components of the Company's common dividends declared for the years ended December 31, 2017, 20162023, 2022 and 20152021 (unaudited):
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | 2021 |
| Ordinary income | 83 | % | | 82 | % | | 55 | % |
| 20% capital gain | 11 | % | | 15 | % | | 26 | % |
| Unrecaptured §1250 gain | 6 | % | | 3 | % | | 19 | % |
| Total | 100 | % | | 100 | % | | 100 | % |
|
| | | | | | | | |
| | 2017 | | 2016 | | 2015 |
| Ordinary income | 75 | % | | 68 | % | | 83 | % |
| 20% capital gain | 18 | % | | 26 | % | | 12 | % |
| Unrecaptured §1250 gain | 7 | % | | 6 | % | | 5 | % |
Deferred Financing Costs
Deferred financing costs include fees and other expenditures necessary to obtain debt financing and are amortized on a straight-line basis, which approximates the effective interest method, over the shorter of the loan term of the loan or the related credit enhancement facility, if applicable. Unamortized financing costs are charged to earnings when debt is retired before the maturity date. Accumulated amortization of deferred financing costs related tofor unsecured notes was $16,984,000$34,494,000 and $14,008,000$29,815,000 as of December 31, 20172023 and 2016,2022, respectively, and related to mortgage notes payable was $4,991,000$2,262,000 and $10,562,000$2,040,000 as of December 31, 20172023 and 2016,2022, respectively. Deferred financing costs, except for costs associated with line-of-credit arrangements, are presented as a direct deduction from the related debt liability. Accumulated amortization of deferred financing costs related tofor the Company's Credit Facility was $8,299,000$14,490,000 and $6,490,000$11,222,000 as of December 31, 20172023 and 2016,2022, respectively, and deferred financing costs net of accumulated amortization was included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.
Cash, Cash Equivalents and Restricted Cash in Escrow
Cash and cash equivalents includeincludes all cash and liquid investments with an original maturity of three months or less from the date acquired. Cash in escrowRestricted cash includes principal reserve funds that are restricted for the repayment of specified secured financing.financing, amounts the Company has designated for planned 1031 exchange activity and resident security deposits. The majority of the Company's cash, cash equivalents and restricted cash in escrow are held at major commercial banks.
Interest Rate Contracts
The Company utilizes derivative financial instruments to manage interest rate risk. See Note 11, “Fair Value,” for further discussion of derivative financial instruments.
Comprehensive Income
Comprehensive income, as reflected on the Consolidated Statements of Comprehensive Income, is defined as all changes in equity during each period except for those resulting from investments by or distributions to shareholders. Accumulated other comprehensive loss,income (loss), as reflected on the Consolidated Statements of Equity, reflects the effective portion of the cumulative changes in the fair value of derivatives in qualifying cash flow hedge relationships.
Earnings per Common Share
Basic earnings per common share is computed by dividing net income attributable to common stockholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share (“EPS”).common share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per common share on a diluted basis. Diluted earnings per common share was computed using the treasury stock method for performance awards, options and participating securities. The Company's earnings per common share are determined as follows (dollars in thousands, except per share data):
| | | | | | | | | | | | | | | | | |
| | For the year ended December 31, |
| | 2023 | | 2022 | | 2021 |
| Basic and diluted shares outstanding | | | | | |
| Weighted average common shares—basic | 141,307,186 | | | 139,634,294 | | | 139,389,433 | |
| Weighted average DownREIT units outstanding | 3,503 | | | 7,500 | | | 7,500 | |
| Effect of dilutive securities | 333,099 | | | 333,293 | | | 320,466 | |
| Weighted average common shares—diluted | 141,643,788 | | | 139,975,087 | | | 139,717,399 | |
| | | | | |
| Calculation of Earnings per Common Share—basic | | | | | |
| Net income attributable to common stockholders | $ | 928,825 | | | $ | 1,136,775 | | | $ | 1,004,299 | |
| Net income allocated to unvested restricted shares | (1,663) | | | (2,091) | | | (2,100) | |
| Net income attributable to common stockholders—basic | $ | 927,162 | | | $ | 1,134,684 | | | $ | 1,002,199 | |
| | | | | |
| Weighted average common shares—basic | 141,307,186 | | | 139,634,294 | | | 139,389,433 | |
| | | | | |
| Earnings per common share—basic | $ | 6.56 | | | $ | 8.13 | | | $ | 7.19 | |
| | | | | |
| Calculation of Earnings per Common Share—diluted | | | | | |
| Net income attributable to common stockholders | $ | 928,825 | | | $ | 1,136,775 | | | $ | 1,004,299 | |
| Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations | 25 | | | 48 | | | 48 | |
| Net income attributable to common stockholders—diluted | $ | 928,850 | | | $ | 1,136,823 | | | $ | 1,004,347 | |
| | | | | |
| Weighted average common shares—diluted | 141,643,788 | | | 139,975,087 | | | 139,717,399 | |
| | | | | |
| Earnings per common share—diluted | $ | 6.56 | | | $ | 8.12 | | | $ | 7.19 | |
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Basic and diluted shares outstanding | |
| | |
| | |
|
| Weighted average common shares—basic | 137,523,771 |
| | 136,928,251 |
| | 133,565,711 |
|
| Weighted average DownREIT units outstanding | 7,500 |
| | 7,500 |
| | 7,500 |
|
| Effect of dilutive securities | 535,415 |
| | 525,886 |
| | 1,019,966 |
|
| Weighted average common shares—diluted | 138,066,686 |
| | 137,461,637 |
| | 134,593,177 |
|
| | | | | | |
| Calculation of Earnings per Share—basic | |
| | |
| | |
|
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
|
| Net income allocated to unvested restricted shares | (2,463 | ) | | (2,610 | ) | | (1,774 | ) |
| Net income attributable to common stockholders, adjusted | $ | 874,458 |
| | $ | 1,031,392 |
| | $ | 740,264 |
|
| | | | | | |
| Weighted average common shares—basic | 137,523,771 |
| | 136,928,251 |
| | 133,565,711 |
|
| | | | | | |
| Earnings per common share—basic | $ | 6.36 |
| | $ | 7.53 |
| | $ | 5.54 |
|
| | | | | | |
| Calculation of Earnings per Share—diluted | |
| | |
| | |
|
| Net income attributable to common stockholders | $ | 876,921 |
| | $ | 1,034,002 |
| | $ | 742,038 |
|
| Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations | 42 |
| | 41 |
| | 38 |
|
| Adjusted net income attributable to common stockholders | $ | 876,963 |
| | $ | 1,034,043 |
| | $ | 742,076 |
|
| | | | | | |
| Weighted average common shares—diluted | 138,066,686 |
| | 137,461,637 |
| | 134,593,177 |
|
| | | | | | |
| Earnings per common share—diluted | $ | 6.35 |
| | $ | 7.52 |
| | $ | 5.51 |
|
| | | | | | |
| Dividends per common share | $ | 5.68 |
| | $ | 5.40 |
| | $ | 5.00 |
|
Certain options to purchase shares of common stock in the amounts of 303,784 and 291,881 were outstanding as of December 31, 2023 and 2022, respectively, but were not included in the computation of diluted earnings per common share because such options were anti-dilutive for the period. All options to purchase shares of common stock outstanding as of December 31, 2017, 2016 and 20152021 are included in the computation of diluted earnings per common share.
As discussed under "Recently Issued
Expensed Transaction, Development and Adopted Accounting Standards," as of January 1, 2017, the Company adopted the provisions of ASU 2016-09 using the modified retrospective approach to recognize forfeitures as they occur. Prior to the adoption of this standard, the Company was required to estimate the forfeiture of stock options and recognized compensation cost net of the estimated forfeitures. The estimated forfeitures included in compensation cost were adjusted to reflect actual forfeitures at the end of the vesting period. This change in accounting principle had no impact on the Company's financial position and no adjustment to retained earnings or the Company's diluted shares outstanding, as prescribed under the modified retrospective approach. Refer to "Change in Accounting Principle" for discussion of the impact to the accompanying Consolidated Statements of Cash Flows.
AbandonedOther Pursuit Costs and Impairment of Long-Lived Assets
The Company capitalizes pre-development costs incurred in pursuitassociated with its development activities to the basis of new development opportunities for which the Company currently believesland held when future development is probable (“Development Rights”)., or if the Company has either not yet acquired the land or if the project is subject to a leasehold interest, the costs are capitalized as deferred development costs. Future development of these Development Rights is dependent upon various factors, including zoning and regulatory approval, rental market conditions, construction costs and the availability of capital. Initial pre-development costsCosts incurred for pursuits for which future development is not yet considered probable are expensed as incurred. In addition, if the status ofCompany determines a Development Right changes, making future development by the Companyis no longer probable, the Company recognizes any capitalized pre-development costs are expensed.necessary expense to write down its basis in the Development Right. The Company expensed costs related to development pursuits not yet considered probable for development and the abandonment of Development Rights, as well as costs incurred in pursuing the acquisition or disposition of assets for which such acquisition and disposition activity did not occur, in the amounts of $2,370,000, $4,183,000$33,479,000, $16,565,000 and $3,016,000$2,192,000 during the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. These costs are included in expensed acquisition,transaction, development and other pursuit costs, net of recoveries on the accompanying Consolidated Statements of Comprehensive Income. Abandoned pursuitThe amount for 2023 includes write-offs of $27,455,000 related to seven Development Rights that the Company determined are no longer probable. The amount for 2022 includes write-offs of $10,073,000 related to three development opportunities that the Company determined are no longer probable. These costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.
Casualty and Impairment of Long-Lived Assets
The Company evaluates its real estate and other long-lived assets for impairment when potential indicators of impairment exist. Such assets are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property or long-livedan asset may not be recoverable, the Company assesses its recoverability by comparing the carrying amount of the property or long-lived asset to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Company recognizes an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property or long-lived asset. Based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, the Company did not recognize any material impairment losses for wholly-owned operating real estate assets, and did not record any impairment losses other than those related to the impairment on land held for investment and casualty gains and losses from property damage as discussed below.
The Company assesses its portfolio of land held for both development and investment for impairment if the intent of the Company changes with respect to either the development of, or the expected holding period for, the land.losses. During the year ended December 31, 2017,2023, the Company recognized an impairmenta charge of $9,350,000$9,118,000 for the property and casualty damages across certain communities in its Northeast and California regions related to a land parcel the Company had acquired for development in 2004severe weather and sold during 2017. During the year ended December 31, 2016, the Company recognized $10,500,000 of aggregate impairment charges related to three ancillary land parcels for which the Company has either sold or intends to sell. These charges were determinedother casualty events, reported as the excess of the Company's carrying basis over the expected sales price for each parcel, and is included in casualty and impairment loss (gain), net on the accompanying Consolidated Statements of Comprehensive Income. The Company did not recognize any material impairment charges on its investment in land duringDuring the year ended December 31, 2015.2021, the Company recognized a charge of $3,119,000 related to damage across several communities in our East Coast markets from severe storms and a fire at an operating community, reported as casualty loss on the accompanying Consolidated Statements of Comprehensive Income.
The Company evaluates its unconsolidated investments for other than temporary impairment, considering both the extent and amount by whichwhether the carrying value of the investment exceeds the fair value, and the Company’s intent and ability to hold the investment to recover its carrying value. The Company also evaluates its proportionate share of any impairment of assets held by unconsolidated investments. There were noThe Company did not recognize any other than temporary impairment losses recognized by any of the Company's investments in unconsolidated real estate entities during the years ended December 31, 2017, 20162023, 2022 or 2015.2021.
Casualty Gains and Losses
In February 2017, a fire occurred at the Company's Avalon Maplewood Development Community, located in Maplewood, NJ, which was under construction and not yet occupied. The Company has commenced reconstruction of the damaged and destroyed portions of the community. See Note 7, “Commitments and Contingencies,” for additional discussion of the related casualty loss.
During the year ended December 31, 2017, the Company recorded a casualty loss of $19,481,000 composed of a charge of $16,361,000 to write-off the net book value of the fixed assets destroyed in the Maplewood casualty loss and $3,120,000 for demolition and additional incident expenses. The casualty loss was partially offset by $17,143,000 of expected third-party property damage insurance proceeds. The net casualty loss of $2,338,000 for the year ended December 31, 2017 is included in casualty and impairment loss (gain), net on the accompanying Consolidated Statements of Comprehensive Income. During the year ended December 31, 2017, the Company reached a final insurance settlement for the property damage and lost income for the Maplewood casualty loss of $19,696,000, after self-insurance and deductibles, of which the Company recognized $3,495,000 as business interruption insurance proceeds.
In January 2015, a fire occurred at the Company's Avalon at Edgewater apartment community located in Edgewater, NJ. Edgewater consisted of two residential buildings. One building, containing 240 apartment homes, was destroyed. The second building, containing 168 apartment homes, suffered minimal damage and has been repaired. See Note 7, “Commitments and Contingencies,” for discussion of the related legal matters.
During the year ended December 31, 2016, the Company reached a final insurance settlement for the Company's property damage and lost income for the Edgewater casualty loss, for which it received aggregate insurance proceeds for Edgewater of $73,150,000, after self-insurance and deductibles, as discussed below.
During the year ended December 31, 2015, the Company received $44,142,000 in insurance proceeds, which were partially offset by casualty charges of $21,844,000 to write off the net book value of the building destroyed by the fire at Edgewater, and $6,760,000 to record demolition and additional incident expenses, resulting in a net casualty gain of $15,538,000. During the year ended December 31, 2016, the Company received the final $29,008,000 of insurance proceeds, of which $8,702,000 was recognized as an additional net casualty gain and $20,306,000 as business interruption insurance proceeds. The Company reported the net casualty gains from each of the respective years as casualty and impairment loss (gain), net on the accompanying Consolidated Statements of Comprehensive Income, and reported the business interruption insurance proceeds as a component of rental and other income on the accompanying Consolidated Statements of Comprehensive Income.
During the year ended December 31, 2015, several of the Company's communities in its Northeast markets incurred property and casualty damages from severe winter storms, for which the Company recorded an impairment due to a casualty loss of $4,195,000. During the year ended December 31, 2016, the Company recorded a net casualty gain related to the 2015 severe winter storms of $5,732,000, which is comprised of $8,493,000 in third-party insurance proceeds received, partially offset by incremental costs of $2,761,000. These amounts are included in casualty and impairment loss (gain), net on the accompanying Consolidated Statements of Comprehensive Income.
A casualty loss may also result in lost operating income from one or more communities that is covered by the Company’s business interruption insurance policies. The Company recognizes income for amounts received under its business interruption insurance policies as a component of rental and other income in the Consolidated Statements of Comprehensive Income. Revenue is recognized upon resolution of all contingencies related to the receipt, typically upon written confirmation by the insurer or receipt of the actual proceeds. The Company recognized $3,498,000, $20,564,000 and $1,509,000 in income related business interruption insurance proceeds for the years ended December 31, 2017, 2016 and 2015, respectively.
Assets Held for Sale and Discontinued Operations
The Company presents the assets and liabilities of any communities which have been sold, or otherwise qualify as held for sale, separately in the accompanying Consolidated Balance Sheets. In addition, the results of operations for those assets that meet the definition of discontinued operations are presented as such in the accompanying Consolidated Statements of Comprehensive Income. Real estate assets held for sale are measured at the lower of the carrying amount or the fair value less the cost to sell. Both the real estate assets and corresponding liabilities are presented separately in the accompanying Consolidated Balance Sheets. Upon the classification of an asset as held for sale, no further depreciation is recorded. Disposals representing a strategic shift in operations (e.g., a disposal of a major geographic area, a major line of business or a major equity method investment) will beare presented as discontinued operations, and for those assets qualifying for classification as discontinued operations, the specific components of net income presented as discontinued operations include net operating income, depreciation expense and interest expense, net. For periods prior to the asset qualifying for discontinued operations, the Company reclassifies the results of operations to discontinued operations. In addition, the net gain or loss (including any impairment loss) on the eventual disposal of assets held for sale will be presented as discontinued operations when recognized. A change in presentation for held for sale or discontinued operations has no impact on the Company's financial condition or results of operations. The Company combines the operating, investing and financing portions of cash flows attributable to discontinued operations with the respective cash flows from continuing operations on the accompanying Consolidated Statements of Cash Flows. The Company had no real estate assets that qualified as held for sale presentation at December 31, 2017.2023.
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests are comprised
Derivative Instruments and Hedging Activities
The Company enters into interest rate swap and interest rate cap agreements (collectively, “Hedging Derivatives”) for interest rate risk management purposes and in conjunction with certain variable rate secured debt to satisfy lender requirements. The Company does not enter into Hedging Derivative transactionsDerivatives for trading or other speculative purposes. The Company assesses the effectiveness of qualifying cash flow and fair value hedges, both at inception and on an on-goingongoing basis. Hedge ineffectiveness is reported as a component of general and administrative expenses. The fair values of Hedging Derivatives that are in an asset position are recorded in prepaid expenses and other assets. The fair valuevalues of Hedging Derivatives that are in a liability position are included in accrued expenses and other liabilities. The Company does not present or disclose the fair value of Hedging Derivatives on a net basis. Fair value changes for derivatives that are not in qualifying hedge relationships are reported as a component of interest expense, net. For the Hedging Derivative positionsDerivatives that the Company has determined qualify as effective cash flow hedges, the Company has recorded the effective portion of cumulative changes in the fair value of Hedging Derivatives in accumulated other comprehensive income (loss).income. Amounts recorded in accumulated other comprehensive income (loss) will be reclassified into earnings in the periods in which
earnings are affected by the hedged cash flow. The effective portion of the change in fair value of the Hedging Derivatives that the Company has determined qualifiedqualify as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding debt being hedged.hedged item. Receipts or payments associated with the gains and losses on the Company’s cash flow hedges are presented as a component of cash flows from financing activities in the period the hedges are terminated and the payments for the Company’s derivatives that are not qualifying for hedging relationships are presented as a component of cash flows from operating activities. See Note 11, “Fair Value,” for further discussion of derivative financial instruments.
Use of Estimates
The preparation of financial statements in conformity with GAAPaccounting principles generally accepted in the United States ("GAAP") requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to amounts in prior years' financial statements and notes to the financial statements to conform to current year presentations as a result of changes in held for sale classification, disposition activity, segment classification and dispositionclassification of for-sale condominium inventory and activity.
Leases
The Company is party to leases as both a lessor and a lessee, primarily as follows:
•lessor of residential and commercial space within its apartment communities; and
•lessee under (i) ground leases for land underlying current operating or development communities and certain commercial and parking facilities and (ii) office leases for its corporate headquarters and regional offices.
Lessee Considerations
The Company assesses whether a contract is or contains a lease based on whether the contract conveys the right to control the use of an identified asset, including specified portions of larger assets, for a period of time in exchange for consideration.
The Company’s leases include both fixed and variable lease payments that are based on an index or rate such as the consumer price index (CPI) or percentage rents based on total sales. Variable lease payments are generally not included in the lease liability, but recognized as variable lease expense in the period in which they are incurred.
For leases that have options to extend the term or terminate the lease early, the Company only factored the impact of such options into the lease term if the option was considered reasonably certain to be exercised. The Company determined the discount rate associated with its ground and office leases on a lease-by-lease basis using the Company’s actual borrowing rates as well as indicative market pricing for longer term rates and taking into consideration the remaining term of the lease agreements. For leases that are 12 months or less, the Company elected the practical expedient to recognize the lease payments on a straight line basis.
Lessor Considerations
The Company's residential and commercial leases at its apartment communities are operating leases. For leases that include rent concessions and/or fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease, which, for residential leases, is generally one year. Some of the Company’s commercial leases have renewal options which the Company will only include in the lease term if, at the commencement of the lease, it is reasonably certain that the lessee will exercise this option.
For the Company’s leases, which are comprised of a lease component and common area maintenance as a non-lease component, the Company determined that (i) the leases are operating leases, (ii) the lease component is the predominant component and (iii) all components of its operating leases share the same timing and pattern of transfer.
Revenue and Gain Recognition
Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue for the transfer of goods and services to customers for consideration that the Company expects to receive. The majority of the Company’s revenue is derived from residential and commercial rental and other lease income, which are accounted for as discussed above, under “Leases”. The Company's revenue streams that are not accounted for under ASC 842, Leases, include:
•Management fees - The Company has investment interests in real estate joint ventures, for which the Company may manage (i) the venture, (ii) the associated operating communities owned by the ventures and/or (iii) the construction, development or redevelopment of those communities. For these activities, the Company receives asset management, property management, development and/or redevelopment fee revenue. The performance obligation is the management of the venture, community or other defined task such as the development or redevelopment of the community. While the individual activities that comprise the performance obligation of the management fees can vary day to day, the nature of the overall performance obligation to provide management service is the same and considered by the Company to be a series of services that have the same pattern of transfer to the customer and the same method to measure progress toward satisfaction of the performance obligation. The Company also provides various third party back-office, financial administrative support services. The Company recognizes revenue for fees as earned.
•Non-lease related revenue - The Company recognizes revenue for items not considered to be components of a lease as earned.
•Gains or losses on sales of real estate - The Company accounts for the sale of real estate and any related gain recognition in accordance with the accounting guidance applicable to sales of real estate, which establishes standards for recognition of profit on all real estate sales transactions, other than commercial land sales. The Company recognizes the sale, and associated gain or loss from the disposition when the criteria for the sale of an asset have been met, which include when (i) a contract exists and (ii) the buyer obtained control of the nonfinancial asset that was sold.
The following table details the Company’s revenue disaggregated by reportable operating segment, further discussed in Note 8, “Segment Reporting,” for the years ended December 31, 2023, 2022 and 2021. The segments are classified based on the individual community's status at December 31, 2023 for the years ended December 31, 2023 and 2022, and at December 31, 2022 for the year ended December 31, 2021. Segment information for total revenue excludes real estate assets that were sold from January 1, 2021 through December 31, 2023, or otherwise qualify as held for sale as of December 31, 2023, as described in Note 6, “Real Estate Disposition Activities.” (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Same Store | | Other
Stabilized
Communities | | Development/
Redevelopment
Communities | | Non-
allocated (1) | | Total |
| For the year ended December 31, 2023 | | | | | | | | | | |
| Management, development and other fees and other ancillary items | | $ | — | | | $ | — | | | $ | — | | | $ | 7,722 | | | $ | 7,722 | |
| Non-lease related revenue (2) | | 10,656 | | | 5,296 | | | 282 | | | — | | | 16,234 | |
| Total non-lease revenue (3) | | 10,656 | | | 5,296 | | | 282 | | | 7,722 | | | 23,956 | |
| | | | | | | | | | |
| Lease income (4) | | 2,531,978 | | | 129,508 | | | 61,270 | | | — | | | 2,722,756 | |
| | | | | | | | | | |
| Total revenue | | $ | 2,542,634 | | | $ | 134,804 | | | $ | 61,552 | | | $ | 7,722 | | | $ | 2,746,712 | |
| | | | | | | | | | |
| For the year ended December 31, 2022 | | | | | | | | | | |
| Management, development and other fees and other ancillary items | | $ | — | | | $ | — | | | $ | — | | | $ | 6,333 | | | $ | 6,333 | |
| Non-lease related revenue (2) | | 11,048 | | | 2,990 | | | 165 | | | — | | | 14,203 | |
| Total non-lease revenue (3) | | 11,048 | | | 2,990 | | | 165 | | | 6,333 | | | 20,536 | |
| | | | | | | | | | |
| Lease income (4) | | 2,383,244 | | | 90,315 | | | 29,569 | | | — | | | 2,503,128 | |
| | | | | | | | | | |
| Total revenue | | $ | 2,394,292 | | | $ | 93,305 | | | $ | 29,734 | | | $ | 6,333 | | | $ | 2,523,664 | |
| | | | | | | | | | |
| For the year ended December 31, 2021 | | | | | | | | | | |
| Management, development and other fees and other ancillary items | | $ | — | | | $ | — | | | $ | — | | | $ | 3,084 | | | $ | 3,084 | |
| Non-lease related revenue (2) | | 7,368 | | | 1,879 | | | 256 | | | — | | | 9,503 | |
| Total non-lease revenue (3) | | 7,368 | | | 1,879 | | | 256 | | | 3,084 | | | 12,587 | |
| | | | | | | | | | |
| Lease income (4) | | 1,988,348 | | | 119,780 | | | 42,629 | | | — | | | 2,150,757 | |
| | | | | | | | | | |
| Total revenue | | $ | 1,995,716 | | | $ | 121,659 | | | $ | 42,885 | | | $ | 3,084 | | | $ | 2,163,344 | |
(1)Represents third-party property management, developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment.
(2)Amounts include revenue streams related to leasing activities that are not considered components of a lease, and revenue streams not related to leasing activities including, but not limited to, application fees, renters insurance fees and vendor revenue sharing.
(3)Represents revenue accounted for under ASC 606.
(4)Represents residential and commercial rental and other lease income, accounted for under ASC 842.
Due to the nature and timing of the Company’s identified revenue streams, there were no material amounts of outstanding or unsatisfied performance obligations as of December 31, 2023.
Uncollectible Lease Revenue Reserves
The Company assesses the collectability of its lease revenue and receivables on an ongoing basis by (i) assessing the probability of receiving all lease amounts due on a lease-by-lease basis, (ii) reserving all amounts for those leases where collection of substantially all of the remaining lease payments is not probable and (iii) subsequently, will only recognize revenue to the extent cash is received. If the Company determines that collection of the remaining lease payments becomes probable at a future date, the Company will recognize the cumulative revenue that would have been recorded under the original lease agreement.
In addition to the specific reserves recognized under ASC 842, the Company also evaluates its lease receivables for collectability at a portfolio level under ASC 450, Contingencies – Loss Contingencies. The Company recognizes a reserve under ASC 450 when the uncollectible revenue is probable and reasonably estimable. The Company applies this reserve to the population of the Company’s revenue and receivables not specifically addressed as part of the specific ASC 842 reserve.
The Company recorded an aggregate offset to income for uncollectible lease revenue, net of amounts received from government rent relief programs, for its residential and commercial portfolios of $57,906,000, $49,147,000 and $52,075,000 for the years ended December 31, 2023, 2022 and 2021, respectively, under ASC 842 and ASC 450.
Recently Issued and Adopted Accounting Standards
In August 2017,November 2023, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU 2017-12, Derivatives and Hedging (Topic 815): TargetedAccounting Standards Update (“ASU”) 2023-07, Segment Reporting - Improvements to AccountingReportable Segment Disclosures, which requires reportable segments disclosures of significant segment expenses provided to the chief operating decision maker (“CODM”). The standard does not change the definition of a segment, the method for Hedging Activities. This ASU expands hedge accountingdetermining segments, or the criteria for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This update also simplifies the application of hedge accounting guidance and eases the administrative burden of hedge documentation requirements and assessing hedge effectiveness.aggregating operating segments into reportable segments. The guidancenew standard will be effective in the first quarter of 2019, allows for early adoption, and will be applied prospectively at adoption.fiscal years beginning after December 15, 2023. The Company will adoptis assessing the guidance as of January 1, 2018standard and does not believe it willexpect the standard to have a material effect on the Company’s financial position or results of operations.
In February 2017,December 2023, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This ASU2023-09, Improvements to Income Tax Disclosures, which requires (i) clarifies the scopea tabular rate reconciliation of the nonfinancial asset guidancereported income tax expense (benefit) from continuing operations into specific categories, (ii) separate disclosure for any reconciling items within certain categories above a quantitative threshold, (iii) disclosure of income taxes paid disaggregated by federal, state and the derecognitionmaterial jurisdictions and (iv) disclosure of certain businessesincome tax expense from continuing operations disaggregated by federal and nonprofit activities, (ii) eliminates the exception in the financial asset guidance for transfers of investments (including equity method investments) in real estate entities and supersedes the guidance in the Exchanges of a Nonfinancial Asset for a Noncontrolling Ownership Interest and (iii) provides guidance on the accounting of partial sales of nonfinancial assets and contributions of nonfinancial assets to a joint venture or other noncontrolled investee.state. The new standard allows for either a retrospective or modified retrospective approach. The guidance will be effective in the first quarter of 2018 and allows for early adoption.fiscal years beginning after December 15, 2024. The Company will adoptis assessing the new standard as of January 1, 2018 usingand does not expect the modified retrospective approach, applying the provisionsstandard to open contracts as of the date of adoption. See "Revenue and Gain Recognition" above for additional discussion of the impact of adopting the guidance.
In November 2016, the FASB issued ASU 2016-18-Statement of Cash Flows (Topic 230): Restricted Cash, which requires statements of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard requires a retrospective approach. The guidance will be effective in the first quarter of 2018 and allows for early adoption. The Company adopted the guidance as of October 1, 2017 and it did not have a material effect on the Company’s financial position or results of operations. See discussion
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, proceeds from the settlement of insurance claims, distributions received from equity method investees and separately identifiable cash flows and application of the predominance principle. The new standard requires a retrospective approach. The guidance will be effective in the first quarter of 2018 and allows for early adoption. The Company adopted this guidance as of January 1, 2017. The new standard did not have a material effect on the Company's Consolidated Statements of Cash Flows.
In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of share-based payment transactions, including income tax consequences, classification of awards as equity or liability, statement of cash flows classification and policy election options for forfeitures. The Company adopted this guidance as of January 1, 2017 which did not have a material effect on the Company's financial position, results of operations or earnings per share as discussed in "Earnings per Common Share." Upon adoption of the standard, the Company elected to account for forfeitures when they occur instead of estimating the forfeitures. See discussion of the impact to the Company's Consolidated Statements of Cash Flows under "Change in Accounting Principle."
In February 2016, the FASB issued ASU 2016-02, Leases, amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The guidance will be effective in the first quarter of 2019 and allows for early adoption. The new standard requires a modified retrospective transition approach for all leases existing at the date of initial application, with an option to use certain transition relief. ASU 2016-02 provides for transition relief, which includes not electing to (i) reassess whether any expired or existing contract is a lease or contains a lease, (ii) reassess the lease classification of any expired or existing leases and (iii) expense any capitalized initial direct costs for any existing leases. The Company anticipates adoption of the standard to have a material impact on its financial position resulting from the recognition of the right to use asset and corresponding lease obligation for its long-term ground leases, currently accounted for as operating leases. The Company will continue to assess the impact of the new standard.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers and in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers-Deferral of the Effective Date, which defers the effective date of the new revenue recognition standard until the first quarter of 2018. Subsequently, the FASB has issued multiple ASUs clarifying ASU 2014-09 and ASU 2015-14. Under the new standard, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue is generally recognized net of allowances and any taxes collected from customers and subsequently remitted to governmental authorities. The majority of the Company's revenue is derived from rental income, which is scoped out from this standard and will be accounted for under ASU 2016-02, Leases, discussed above. The Company's other revenue streams, which are being evaluated under this ASU, include but are not limited to management fees, non-recurring rental and non-rental related income, and gains and losses from real estate dispositions. The Company will adopt the new standard as of January 1, 2018 using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. See "Revenue and Gain Recognition" above for additional discussion of the impact of adopting the guidance.
Change in Accounting Principle
As of January 1, 2017, the Company adopted ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, as discussed under "Recently Issued and Adopted Accounting Standards." The guidance requires payments related to tax withholding for share-based compensation to be presented separately as a financing activity on the Consolidated Statements of Cash Flows, and was adopted retrospectively. The prior period amounts that have been impacted by the new guidance and retrospectively adjusted include (i) an increase in accrued expenses, other liability and accrued interest payable (cash provided by operating activities) and (ii) payments related to tax withholding for share-based compensation (cash used in financing activities), located on the Consolidated Statements of Cash Flows.
As of October 1, 2017, the Company adopted ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash, as discussed under "Recently Issued and Adopted Accounting Standards." The guidance requires statements of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents, and was adopted retrospectively. The prior period amounts that have been impacted by the new guidance and retrospectively adjusted include (i) an increase in cash in operating escrows (cash provided by operating activities), (ii) an increase in cash in deposit escrows (cash provided by investing activities) and (iii) repayments of mortgage notes payable, including prepayment penalties (cash used in financing activities), located on the Consolidated Statements of Cash Flows.
The following tables present the impact of the two changes in accounting principle to the Consolidated Statement of Cash Flows for the years ended December 31, 2016 and 2015 (dollars in thousands):
|
| | | | | | | | | | | | | | | |
| | 12/31/2016 (as previously reported) | | Impact of ASU 2016-09 | | Impact of ASU 2016-18 | | 12/31/2016 (as adjusted and currently reported) |
| | | | |
| Net cash provided by operating activities | 1,143,484 |
| | 8,562 |
| | 8,226 |
| | 1,160,272 |
|
| Net cash used in investing activities | (1,037,352 | ) | | — |
| | 5,000 |
| | (1,032,352 | ) |
| Net cash used in financing activities | (291,645 | ) | | (8,562 | ) | | (3,064 | ) | | (303,271 | ) |
| | | | | | | | |
| Net decrease in cash, cash equivalents | (185,513 | ) | | — |
| | 185,513 |
| | — |
|
| Net decrease in cash, cash equivalents and restricted cash | — |
| | — |
| | (175,351 | ) | | (175,351 | ) |
| | | | | | | | |
| Cash, cash equivalents, beginning of period | 400,507 |
| | — |
| | (400,507 | ) | | — |
|
| Cash, cash equivalents and restricted cash, beginning of period | — |
| | — |
| | 505,328 |
| | 505,328 |
|
| Cash, cash equivalents, end of period | $ | 214,994 |
| | — |
| | — |
| | — |
|
| Cash, cash equivalents and restricted cash, end of period | | | $ | — |
| | $ | 114,983 |
| | $ | 329,977 |
|
|
| | | | | | | | | | | | | | | |
| | 12/31/2015 (as previously reported) | | Impact of ASU 2016-09 | | Impact of ASU 2016-18 | | 12/31/2015 (as adjusted and currently reported) |
| | | | |
| Net cash provided by operating activities | 1,056,754 |
| | 6,076 |
| | 11,837 |
| | 1,074,667 |
|
| Net cash used in investing activities | (1,199,517 | ) | | — |
| | — |
| | (1,199,517 | ) |
| Net cash provided by (used in) financing activities | 33,810 |
| | (6,076 | ) | | (2,641 | ) | | 25,093 |
|
| | | | | | | | |
| Net decrease in cash, cash equivalents | (108,953 | ) | | — |
| | 108,953 |
| | — |
|
| Net decrease in cash, cash equivalents and restricted cash | — |
| | — |
| | (99,757 | ) | | (99,757 | ) |
| | | | | | | | |
| Cash, cash equivalents, beginning of period | 509,460 |
| | — |
| | (509,460 | ) | | — |
|
| Cash, cash equivalents and restricted cash, beginning of period | — |
| | — |
| | 605,085 |
| | 605,085 |
|
| Cash, cash equivalents, end of period | $ | 400,507 |
| | — |
| | — |
| | — |
|
| Cash, cash equivalents and restricted cash, end of period | | | $ | — |
| | $ | 104,821 |
| | $ | 505,328 |
|
2. Interest Capitalized
The Company capitalizes interest during the development and redevelopment of real estate assets. Capitalized interest associated with the Company's development or redevelopment activities totaled $64,420,000, $78,872,000$47,133,000, $34,854,000 and $79,834,000$32,687,000 for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively.
3. Mortgage Notes Payable, Unsecured Notes and Credit FacilityDebt
The Company's mortgagedebt, which consists of unsecured notes, payable, unsecured notes,the variable rate unsecured term loansloan (the “Term Loans”Loan”), mortgage notes payable, the Credit Facility and Credit Facility,the Commercial Paper Program, each as defined below, as of December 31, 20172023 and 2016 are2022 is summarized below. The following amounts and discussion do not include the mortgage notes related to the communities classified as held for sale, if any, as of December 31, 20172023 and 2016,2022, as shown onin the accompanying Consolidated Balance Sheets (dollars in thousands) (see Note 6, “Real Estate Disposition Activities”). The weighted average interest rates in the following table for secured and unsecured notes include costs of financing such as credit enhancement fees, trustees' fees, the impact of interest rate hedges and mark-to-market adjustments.
|
| | | | | | | |
| | 12/31/17 | | 12/31/16 |
| Fixed rate unsecured notes (1) | $ | 5,350,000 |
| | $ | 4,200,000 |
|
| Variable rate unsecured notes (1) | 300,000 |
| | — |
|
| Term Loans (1) | 250,000 |
| | 300,000 |
|
| Fixed rate mortgage notes payable—conventional and tax-exempt (2) | 593,987 |
| | 1,668,496 |
|
| Variable rate mortgage notes payable—conventional and tax-exempt (2) | 910,326 |
| | 908,262 |
|
| Total mortgage notes payable and unsecured notes and Term Loans | 7,404,313 |
| | 7,076,758 |
|
| Credit Facility | — |
| | — |
|
| Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility | $ | 7,404,313 |
| | $ | 7,076,758 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2023 | | December 31, 2022 |
| Fixed rate unsecured notes | $ | 7,300,000 | | | 3.3 | % | | $ | 7,500,000 | | | 3.3 | % |
| Term Loan | — | | | — | % | | 150,000 | | | 5.4 | % |
| Fixed rate mortgage notes payable—conventional and tax-exempt | 333,892 | | | 3.9 | % | | 270,677 | | | 3.4 | % |
| Variable rate mortgage notes payable—conventional and tax-exempt | 410,150 | | | 5.5 | % | | 457,150 | | | 5.3 | % |
| Total mortgage notes payable and unsecured notes and Term Loan | 8,044,042 | | | 3.5 | % | | 8,377,827 | | | 3.4 | % |
| Credit Facility | — | | | — | % | | — | | | — | % |
| Commercial paper | — | | | — | % | | — | | | — | % |
| Total principal outstanding | 8,044,042 | | | 3.5 | % | | 8,377,827 | | | 3.4 | % |
| Less deferred financing costs and debt discount (1) | (62,220) | | | | | (61,782) | | | |
| Total | $ | 7,981,822 | | | | | $ | 8,316,045 | | | |
| |
(1) | Balances at December 31, 2017 and 2016 exclude $10,850 and $8,930, respectively, of debt discount, and $36,386 and $27,768, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Consolidated Balance Sheets. |
| |
(2) | Balances at December 31, 2017 and 2016 exclude $16,351 of debt discount and $1,866 of debt premium, respectively, and $11,256 and $11,046, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the accompanying Consolidated Balance Sheets. |
(1) Excludes deferred financing costs and debt discount associated with the Credit Facility and Commercial Paper Program which are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.
The following debt activityCompany has a $2,250,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the “Credit Facility”) which matures in September 2026. The interest rate that would be applicable to borrowings under the Credit Facility was 6.19% at December 31, 2023 and was composed of (i) the Secured Overnight Financing Rate (“SOFR”), applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.805% per annum, which consisted of a 0.10% SOFR adjustment plus 0.705% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.63% to SOFR plus 1.38% based upon the rating of the Company's unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the facility, which can vary from 0.095% to 0.295% based upon the rating of the Company's unsecured senior notes. The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases by meeting or missing targets related to environmental sustainability, specifically greenhouse gas emission reductions, with the adjustment determined annually. The first determination under the sustainability-linked pricing component occurred duringin July 2023, resulting in reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.
The availability on the Company's Credit Facility as of December 31, 2023 and 2022, respectively, was as follows (dollars in thousands):
| | | | | | | | | | | |
| | December 31, 2023 | | December 31, 2022 |
| | | |
| Credit Facility commitment | $ | 2,250,000 | | | $ | 2,250,000 | |
| Credit Facility outstanding | — | | | — | |
| Commercial paper outstanding | — | | | — | |
| Letters of credit outstanding (1) | (1,914) | | (1,914) |
| Total Credit Facility available | $ | 2,248,086 | | | $ | 2,248,086 | |
(1) In addition, the Company had $58,116 and $48,740 outstanding in additional letters of credit unrelated to the Credit Facility as of December 31, 2023 and 2022, respectively.
The Company has an unsecured commercial paper note program (the “Commercial Paper Program”) with the maximum aggregate face or principal amount outstanding at any one time not to exceed $500,000,000. Under the terms of the Commercial Paper Program, the Company may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year. The Commercial Paper Program is backstopped by the Company's commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program.
During the year ended December 31, 2017:2023:
•In February 2017,March 2023, the Company repaid $17,300,000$250,000,000 principal amount of variable rate debt secured by Avalon Mountain Viewits 2.85% unsecured notes at par at its scheduled maturity date.maturity.
•In February 2017, the Company entered into a $250,000,000 variable rate unsecured term loan (the "$250 million Term Loan"), of which $100,000,000 matures in February 2022 with stated pricing of LIBOR plus 0.90%, and $150,000,000 matures in February 2024 with stated pricing of LIBOR plus 1.50%. In April 2017, the Company borrowed the $250,000,000 available under the $250 million Term Loan.
In May 2017,September 2023, the Company repaid $670,590,000 aggregateits $150,000,000 Term Loan at par in advance of its February 2024 scheduled maturity.
•In September 2023, the Company utilized $37,600,000 of restricted cash held in a principal amount of 6.26% fixed rate secured notes secured by 11 communities, representing the majorityreserve fund to repay a portion of the Fannie Mae pool 2outstanding secured variable rate indebtedness assumed as part of the Archstone Acquisition, which had a contractual maturity date of November 2017 but opened for prepayment at par on April 30, 2017. Avalon Clinton North and Avalon Clinton South.
•In October 2023, in conjunction with the repayment,acquisition of Avalon West Plano, the Company recognizedassumed a gain of $10,839,000, primarily composed of the write-off of unamortized premium. The Company refinanced the secured borrowings for three of these communities for an aggregate principal amount of $185,100,000,$63,041,000 fixed rate mortgage loan, with a contractual fixed interest rate of 3.61%4.18% and maturity datesan effective interest rate of June 2027.5.97%, maturing in May 2029.
•In May 2017,December 2023, the Company issued $400,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for proceeds net proceedsof underwriting fees of approximately $396,016,000.$397,156,000, before considering the impact of other offering costs. The notes mature in May 2027December 2033 and were issued at a 3.35%5.30% interest rate.rate, resulting in a 5.19% effective rate including the impact of issuance costs and hedging activity.
•In June 2017,December 2023, the Company issued $300,000,000repaid $350,000,000 principal amount of its 4.20% unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $297,372,000. The notes mature in July 2047 and were issued at a 4.15% interest rate.par at maturity.
In June 2017, the Company repaid $556,313,000 aggregate principal amount of 5.86% fixed rate secured notes secured by 12 wholly-owned operating communities, representing the remaining debt in the Company's Freddie Mac cross-collateralized pool financing originated in 2009, in advance of their May 2019 maturity date. In conjunction with the repayment, the Company recognized a charge of $34,965,000, consisting of prepayment penalties of $33,515,000 and the non-cash write-off of deferred financing costs of $1,450,000.
In October 2017, the Company refinanced the secured borrowing for Archstone Lexington for a principal balance of $21,700,000, with a variable interest rate of LIBOR plus 1.35% and maturity date of October 2020.
In November 2017, the Company issued $300,000,000 principal amount of floating rate unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $298,800,000. The notes mature in January 2021 and were issued at three month LIBOR plus 0.43%.
In November 2017, the Company issued $450,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $445,271,000. The notes mature in January 2028 and were issued at a 3.20% coupon.
In November 2017, the Company repaid its $300,000,000 variable rate unsecured term loan (the "$300 million Term Loan") entered into in March 2014. In conjunction with the repayment, the Company recognized a charge of $1,367,000 for the non-cash write-off of deferred financing costs.
At December 31, 2017, the Company has a $1,500,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the "Credit Facility") which matures in April 2020. The Company may extend the maturity for up to nine months, provided the Company is not in default and upon payment of a $1,500,000 extension fee. The Credit Facility bears interest at varying levels based on the London Interbank Offered Rate (“LIBOR”), rating levels achieved on the Company's unsecured notes and on a maturity schedule selected by the Company. The current stated pricing is LIBOR plus 0.825% per annum (2.39% at December 31, 2017), assuming a one month borrowing rate. The annual facility fee is 0.125% (or approximately $1,875,000 annually based on the $1,500,000,000 facility size and based on the Company's current credit rating).
The Company had no borrowings outstanding under the Credit Facility and had $47,315,000 and $46,711,000 outstanding in letters of credit that reduced the borrowing capacity as of December 31, 2017 and 2016, respectively.
In the aggregate, secured notes payable mature at various dates from April 2018March 2027 through July 2066, and are secured by certain apartment communities (with a net carrying value of $2,293,583,000,$1,284,650,000, excluding communities classified as held for sale, as of December 31, 2017)2023).
As of December 31, 2017, the Company has guaranteed a $100,000,000 secured note payable held by a wholly-owned subsidiary; such secured note payable is consolidated for financial reporting purposes. The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 4.0% and 4.4% at December 31, 2017 and 2016, respectively. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax exempt), the Term Loans and its Credit Facility, including the effect of certain financing related fees, was 3.0% and 2.3% at December 31, 2017 and 2016, respectively.
Scheduled payments and maturities of mortgagesecured notes payable and unsecured notes outstanding at December 31, 2017 are2023 were as follows (dollars in thousands):
| | | Year | Secured notes payments | | Secured notes maturities | | Unsecured notes maturities | | Stated interest rate of unsecured notes | Year | | Secured notes
principal payments
and maturities | | Unsecured notes maturities | | Stated interest rate of
unsecured notes |
| 2018 | 7,258 |
| | 76,663 |
| | — |
| | N/A |
|
| 2019 | 4,696 |
| | 114,721 |
| | — |
| | N/A |
|
| 2020 | 3,624 |
| | 140,429 |
| | 250,000 |
| | 6.100 | % |
| | | | | | 400,000 |
| | 3.625 | % |
| 2021 | 3,551 |
| | 27,844 |
| | 250,000 |
| | 3.950 | % |
| | | | | | 300,000 |
| | LIBOR + 0.43% |
|
| 2022 | 3,795 |
| | — |
| | 450,000 |
| | 2.950 | % |
| | | | | | 100,000 |
| | LIBOR + .90% |
|
| 2023 | 4,040 |
| | — |
| | 350,000 |
| | 4.200 | % |
| | | | | | 250,000 |
| | 2.850 | % |
| 2024 | 4,310 |
| | — |
| | 300,000 |
| | 3.500 | % | 2024 | | $ | 9,593 | | | $ | | $ | 300,000 | | | 3.50 | | 3.50 | % |
| | | | | | 150,000 |
| | LIBOR + 1.50% |
|
| 2025 | 4,585 |
| | 84,835 |
| | 525,000 |
| | 3.450 | % | 2025 | | 10,765 | | | 525,000 | | 525,000 | | | 3.45 | | 3.45 | % |
| | | | | | 300,000 |
| | 3.500 | % |
| | | | 300,000 | | | | | | 300,000 | | | 3.50 | % |
| 2026 | 4,894 |
| | — |
| | 475,000 |
| | 2.950 | % | 2026 | | 11,811 | | | 475,000 | | 475,000 | | | 2.95 | | 2.95 | % |
| | | | | | 300,000 |
| | 2.900 | % |
| | | | 300,000 | | | | | | 300,000 | | | 2.90 | % |
| 2027 | 3,083 |
| | 185,100 |
| | 400,000 |
| | 3.350 | % | 2027 | | 250,159 | | | 400,000 | | 400,000 | | | 3.35 | | 3.35 | % |
| 2028 | | 2028 | | 18,902 | | | 450,000 | | | 3.20 | % |
| | | | 400,000 | | | | | | 400,000 | | | 1.90 | % |
| 2029 | | 2029 | | 132,661 | | | 450,000 | | | 3.30 | % |
| 2030 | | 2030 | | 9,100 | | | 700,000 | | | 2.30 | % |
| 2031 | | 2031 | | 9,700 | | | 600,000 | | | 2.45 | % |
| 2032 | | 2032 | | 10,400 | | | 700,000 | | | 2.05 | % |
| 2033 | | 2033 | | 12,000 | | | 350,000 | | | 5.00 | % |
| | | | 400,000 | | | | | | 400,000 | | | 5.30 | % |
| Thereafter | 148,468 |
| | 682,417 |
| | 350,000 |
| | 3.900 | % | Thereafter | | 268,951 | | | 350,000 | | 350,000 | | | 3.90 | | 3.90 | % |
| | | | | | 300,000 |
| | 4.150 | % |
| | | | | | 450,000 |
| | 3.200 | % |
| | $ | 192,304 |
| | $ | 1,312,009 |
| | $ | 5,900,000 |
| | |
|
| | | | 300,000 | | | | | | 300,000 | | | 4.15 | % |
| | | | 300,000 | | | | | | 300,000 | | | 4.35 | % |
| | $ | | | | $ | 744,042 | | | $ | 7,300,000 | | | |
The Company's unsecured notes are redeemable at the Company's option, in whole or in part, generally at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted at a rate equal to the yield on U.S. Treasury securities with a comparable maturity plus a spread between 2010 and 4530 basis points depending on the specific series of unsecured notes, plus accrued and unpaid interest to the redemption date.
The indentureCompany is subject to financial covenants contained in the Credit Facility and the indentures under which the Company's unsecured notes were issued,issued. The principal financial covenants include the Company's Credit Facility agreement and the Company's Term Loan agreement contain following:
•limitations on the amount of total and secured debt in relation to the Company can incur orCompany's overall capital structure;
•limitations on the amount of the Company's unsecured debt relative to the undepreciated basis of real estate assets that can be used to secure other financing transactions,are not encumbered by property-specific financing; and other customary financial and other covenants, with which the
•minimum levels of debt service coverage.
The Company was in compliance with these covenants at December 31, 2017.2023.
4. Equity
As of December 31, 20172023 and 2016,2022, the Company's charter had authorized for issuance a total of 280,000,000 shares of common stock and 50,000,000 shares of preferred stock.
During the year ended December 31, 2017,2023, the Company:
| |
i. | issued 42,123i.issued 5,773 shares of common stock in connection with stock options exercised; ii.issued 3,454 shares of common stock through the Company's dividend reinvestment plan; iii.issued 153,162 shares of common stock in connection with stock options exercised; |
| |
ii. | issued 3,058 common shares through the Company's dividend reinvestment plan; |
| |
iii. | issued 201,824 common shares in connection with restricted stock grants and the conversion of performance awards to restricted shares; |
| |
iv. | issued 568,424 shares under CEP IV as discussed below; |
| |
v. | withheld 60,319 common shares to satisfy employees' tax withholding and other liabilities; |
| |
vi. | issued 11,528 shares through the Employee Stock Purchase Plan; and |
| |
vii. | canceled 3,388 shares of restricted stock upon forfeiture. |
Any deferred compensation related to the Company’s stock option, restricted stock grants and the conversion of performance award grants duringawards to shares of common stock;
iv.issued 2,000,000 shares of common stock in the settlement of the forward contracts, as discussed below;
v.issued 23,059 shares of common stock through the Employee Stock Purchase Plan;
vi.withheld 62,937 shares of common stock to satisfy employees' tax withholding and other liabilities;
vii.canceled 2,119 shares of restricted common stock upon forfeiture; and
viii.repurchased 11,800 shares of common stock through the Stock Repurchase Program (as defined below).
Deferred compensation granted under the Company's Second Amended and Restated 2009 Equity Incentive Plan (the “Plan”) for the year ended December 31, 2017 is2023 does not reflected onimpact the accompanyingCompany's Consolidated Balance Sheet as of December 31, 2017, and will not be reflectedFinancial Statements until recognized as compensation cost.
In December 2015, theThe Company commencedhas a fourth continuous equity program (“CEP IV”(the “CEP”) under which the Company may sell (and/or enter into forward sale agreements for)for the sale of) up to $1,000,000,000 of its common stock from time to time. Actual sales will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company's common stock and determinations by the CompanyCompany's determinations of the appropriate sources of funding for the Company. In conjunction with CEP IV, thesources. The Company engaged sales agents for the CEP who will receive compensation of up to 2.0%1.5% of the gross sales price for shares sold. The Company expects that, if entered into, it will physically settle each forward sale agreement on one or more dates specified by the Company on or prior to the maturity date of that particular forward sale agreement, in which case the Company will expect to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward agreement multiplied by the relevant forward sale price. However, the Company may also elect to cash settle or net share settle a forward sale agreement. In connection with each forward sale agreement, the Company will pay the relevant forward seller, in the form of a reduced initial forward sale price, a commission of up to 2.0%1.5% of the sales prices of all borrowed shares of common stock sold. As ofDuring the years ended December 31, 2017, there are2023 and 2022, the Company had no outstanding forward sales agreements. In 2017,under this program. During the year ended December 31, 2021, the Company sold 568,424122,343 shares of common stock at an average sales price of $188.39$226.15 per share, for net proceeds of $105,478,000.$27,253,000 under this program. In addition, during the year ended December 31, 2022, the Company settled the outstanding forward contracts entered into in December 2021 under this program, selling 68,577 shares of common stock for $229.34 per share and net proceeds of $15,727,000. As of December 31, 2017,2023, the Company had $892,915,000 of shares$705,961,000 remaining authorized for issuance under the CEP.
In addition to the CEP, during the year ended December 31, 2023, the Company settled the outstanding forward contracts entered into in April 2022 (the “Equity Forward”), issuing 2,000,000 shares of common stock, net of offering fees and discounts, for $491,912,000 or $245.96 per share.
The Company has a stock repurchase program under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the “Stock Repurchase Program”). Purchases of common stock under the Stock Repurchase Program may be exercised at the Company’s discretion with the timing and number of shares repurchased depending on a variety of factors including price, corporate and regulatory requirements and other corporate liquidity requirements and priorities. The Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice. During the year ended December 31, 2023, the Company repurchased 11,800 shares of common stock at an average price of $161.96 per share. During the years ended December 31, 2022 and 2021, the Company had no repurchases of shares under this program. As of December 31, 2023, the Company had $314,237,000 remaining authorized for purchase under this program.
5. Investments in Real Estate Entities
Investments in UnconsolidatedConsolidated Real Estate Entities
Details regarding communities acquired in 2023, 2022 and 2021, are summarized in the following table (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Community name | | Location | | Number of communities | | Apartment
homes | | Purchase price | | Commercial square feet |
| Avalon Frisco at Main | | Frisco, TX | | 1 | | | 360 | | | $ | 83,100 | | | — | |
| Avalon Mooresville | | Mooresville, NC | | 1 | | | 203 | | | 52,100 | | | — | |
| Avalon West Plano (1) | | Carrollton, TX | | 1 | | | 568 | | | 142,000 | | | — | |
| Total 2023 acquisitions | | | | 3 | | | 1,131 | | | $ | 277,200 | | | — | |
| | | | | | | | | | |
| Total 2022 acquisitions | | | | 4 | | | 1,313 | | | $ | 536,200 | | | 16,000 | |
| | | | | | | | | | |
| Total 2021 acquisitions | | | | 7 | | | 1,932 | | | $ | 724,500 | | | 90,000 | |
(1) In conjunction with the acquisition of Avalon West Plano, the Company assumed a $63,041 fixed rate mortgage loan, with a contractual interest rate of 4.18%, maturing in May 2029.
The Company accounted for these purchases as asset acquisitions and recorded the acquired assets and assumed liabilities, including identifiable intangibles, at their relative fair values based on the purchase price and acquisition costs incurred.
Structured Investment Program
The Company operates a Structured Investment Program (the “SIP”), an investment platform through which the Company provides mezzanine loans or preferred equity to third-party multifamily developers. During the year ended December 31, 2023, the Company entered into four additional commitments, agreeing to provide an aggregate investment of up to $99,210,000 in multifamily development projects. As of December 31, 2023, the Company had seven commitments to fund up to $191,585,000 in the aggregate. The Company's investment commitments have a weighted average rate of return of 11.5% and have initial maturity dates between September 2025 and December 2027. At December 31, 2023, the Company had funded $96,461,000 of these commitments.
The Company evaluates each SIP commitment to determine the classification as a loan or an investment in a real estate development project. As of December 31, 2023, all of the SIP commitments are classified as loans. The Company includes amounts outstanding under the SIP as a component of prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The Company evaluates the credit risk for each commitment on an ongoing basis, estimating the reserve for credit losses using relevant available information from internal and external sources. Market-based historical credit loss data provides the basis for the estimation of expected credit losses, with adjustments, if necessary, for differences in current commitment-specific risk characteristics, such as the amount of equity capital provided by a borrower, nature of the real estate being developed or other factors.
For the seven existing commitments, interest is recognized as earned as interest income, and interest income and any change in the expected credit loss are included as a component of income from unconsolidated investments, on the accompanying Consolidated Statements of Comprehensive Income.
Unconsolidated Investments
The Company accounts for its investments in unconsolidated real estate entities under the equity method of accounting or under the measurement alternative, as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” under Principles of Consolidation.Consolidation. As of December 31, 2023, the Company had investments in five unconsolidated entities with real estate entities holdings, with ownership interest percentages ranging from 20.0% to 50.0%, coupled with other unconsolidated investments including property technology and environmentally focused companies and investment management funds. For one of the investments which owns an apartment community that is under development and in which the Company has an investment of 25.0%, the Company has guaranteed a construction loan on behalf of the venture, which had an outstanding balance of $135,983,000 as of December 31, 2023. Any amounts under the guarantee of this construction loan are obligations of the venture partners in proportion to their ownership interest. The significant accounting policies of the Company's unconsolidated real estate entitiesinvestments are consistent with those of the Company in all material respects.
As Certain of December 31, 2017, the Company hadthese investments are subject to various buy‑sell provisions or other rights which are customary in the following real estate entities:
AvalonBay Value Added Fund II, L.P. (“Fund II”)—In September 2008, thejoint venture agreements. The Company formed Fund II, a private, discretionary real estate investment vehicle which acquired and operates communitiesits partners in these entities may initiate these provisions to either sell the Company's markets. Fund II served asinterest or acquire the exclusive vehicle through whichinterest from the Company's partner. The Company acquired investment interests in apartmentis responsible for the day-to-day operations of the unconsolidated communities below and is the management agent subject to certain exceptions, through the closeterms of its investment period in August 2011. During 2017, Fund II sold its final threemanagement agreements for all communities and the Company expects to complete the dissolutionexcept for Brandywine Apartments of Fund II in 2018. Fund II has six institutional investors, including the Company. One ofMaryland, LLC, which is managed by a third party.
The following presents the Company's wholly owned subsidiaries is the general partner of Fund II and at December 31, 2017, and the Company has an equity investment of $2,576,000 (net of distributions), representing a 31.3% combined general partner and limited partner equity interest.
During 2017, Fund II sold its final three communities containing an aggregate of 1,366 apartment homes:
Eaves Gaithersburg, locatedactivities in Gaithersburg, MD, for $117,000,000,
Briarwood Apartments, located in Owings Mills, MD, for $64,750,000, and
Avalon Watchung, located in Watchung, NJ, for $90,300,000.
The Company's proportionate share of the gain in accordance with GAAPunconsolidated investments for the three dispositions was $26,322,000. In conjunction with the disposition of these communities during 2017, Fund II repaid the remaining $127,179,000 of related secured indebtedness at par in advance of the scheduled maturity dates.
The Company has an equity interest of 31.3% in Fund II, and upon achievement of a threshold return the Company has a right to incentive distributions for its promoted interest based on current returns earned by Fund II which currently represents 40.0% of further Fund II distributions, which is in addition to its proportionate share of the remaining 60.0% of distributions. During the yearyears ended December 31, 2017, the Company recognized income2023, 2022 and 2021:
Archstone Multifamily Partners AC LP (the “U.S. Fund”)—The U.S. Fund was formed in July 2011 and is fully invested. The U.S. Fund has a term that expires in July 2023, assuming the exercise of two, one-year extension options. The U.S. Fund has six institutional investors, including the Company. The Company is the general partner of the U.S. Fund and, at December 31, 2017 excluding costs incurred in excess of equity in the underlying net assets of the U.S. Fund, the Company has an equity investment of $39,896,000 (net of distributions), representing a 28.6% combined general partner and limited partner equity interest. The Company acquired its interest in the U.S. Fund as part of the Archstone Acquisition.
Acquisition in 2013 (as defined in Note 5, “Investments in Real Estate Entities,” of the Consolidated Financial Statements in Item 8 in the Company's Form 10-K filed February 22, 2019). The Company was the general partner of the U.S. Fund and had a 28.6% combined general partner and limited partner equity interest. During 2017,2022, the U.S. Fund sold Eaves Sunnyvale, located in Sunnyvale, CA, containing 192 apartment homes for $107,000,000. Theits final three communities and the Company's proportionate share of the gaingains in accordance with GAAP was $13,788,000.$38,144,000. In conjunction with the dispositionachieving a threshold return under provisions of this community, the U.S. Fund, repaid $32,542,000the Company received incentive distributions for its promoted interest. During the years ended December 31, 2023 and 2022, the Company recognized income of related secured indebtedness in advance of$1,519,000 and $4,690,000, respectively, for its scheduled maturity date. This resulted in a charge for a prepayment penalty and the write-off of deferred financing costs, of which the Company’s portion was $406,000,promoted interest, which is reported as a reduction of equityincluded in income offrom unconsolidated real estate entitiesinvestments on the accompanying Consolidated Statements of Comprehensive Income.
Subsidiaries During 2023, the Company completed the dissolution of the U.S. Fund have six loans secured by individual assets with aggregate amounts outstanding of $237,469,000, with maturity dates that vary from February 2019 to November 2022. The mortgage loans are payable by the subsidiaries of the U.S. Fund with operating cash flow or disposition proceeds from the underlying real estate. The Company has not guaranteed the debt of the U.S. Fund, nor does the Company have any obligation to fund this debt should the U.S. Fund be unable to do so.Fund.
Archstone Multifamily Partners AC JV LP (the “AC JV”)—The AC JV is a joint venture that was formed in 2011 and has four institutional investors, including the Company. Excluding costs incurred in excess of equity in the underlying net assets of the AC JV, at December 31, 2017 the Company has an equity investment of $49,492,000 (net of distributions), representinghad a 20.0% equity interest. The Company acquired its interest in the AC JV, and acquired its interest as part of the Archstone Acquisition.
The AC JV partnership agreement contains provisions that require the Company to provide a right of first offer (“ROFO”) toAcquisition in 2013. During 2021, the AC JV in connection with additional opportunities to acquire or develop additional interests in multifamily real estate assets within a specified geographic radiussold its final two communities and the Company's proportionate share of the existing assets, generally one mile or less. The ROFO restriction expiresgains in 2019.
As of December 31, 2017, subsidiariesaccordance with GAAP was $23,305,000. During 2022, the Company completed the dissolution of the AC JV have eight unsecured loans outstanding in the aggregate of $162,300,000 which mature in August 2021, and which were made by the equity investors in the venture, including the Company, in proportion to the investors' respective equity ownership interest. The unsecured loans are payable by the subsidiaries of the AC JV with operating cash flow from the venture. The Company has not guaranteed the debt of the AC JV, nor does the Company have any obligation to fund this debt should the AC JV be unable to do so.JV.
MVP I, LLC—In December 2004, the Company entered into a joint venture agreement with an unrelated third-party for the development of Avalon at Mission Bay II. Construction of Avalon at Mission Bay II, a 313 apartment-home community located in San Francisco, California, was completed in December 2006. The Company holds a 25.0% equity interest in the venture. The Company is responsible for the day-to-day operations of the community and is the management agent subject to the terms of a management agreement. The Company has not guaranteed the debt of MVP I, LLC, nor does the Company have any obligation to fund this debt should MVP I, LLC be unable to do so.
During 2015, the Company received $20,680,000 from the joint venture partner associated with MVP I, LLC, upon agreement with the partner to modify the joint venture agreement to eliminate the Company's promoted interest from associated distributions for future return calculations. Before this modification to the joint venture agreement, the Company had the right to 45.0% of distributions after achievement of a threshold return, which was achieved in 2015, up to the date the joint venture agreement was modified during 2015. Subsequent to the modification, earnings and distributions are based on the Company's 25.0% equity interest in the venture.
Brandywine Apartments of Maryland, LLC (“Brandywine”)—Brandywine owns a 305 apartment home community located in Washington, D.C. The community is managed by a third party. Brandywine is comprised of five members who hold various interests in the joint venture. The Company holds a 28.7% equity interest in Brandywine.
Brandywine has an outstanding $22,760,000 fixed rate mortgage loan that is payable by the venture. The Company has not guaranteed the debt of Brandywine, nor does the Company have any obligation to fund this debt should Brandywine be unable to do so.
Residual JV—Through subsidiaries, the Company and Equity Residential entered into three limited liability company agreements (collectively, the “Residual JV”) through which the Company and Equity Residential acquired (i) certain assets of Archstone that the Company and Equity Residential have substantially divested (the “Residual Assets”), and (ii) various liabilities of Archstone that the Company and Equity Residential agreed to assume in conjunction with the Archstone Acquisition (the “Residual Liabilities”). The Residual Assets included a 20.0% interest in Lake Mendota Investments, LLC and Subsidiaries (“SWIB”), a joint venture which disposed the last of its communities in 2015, as well as various licenses, insurance policies, contracts, office leases and other miscellaneous assets.
The Residual Liabilities include most existing or future litigation and claims related to Archstone’s operations for periods before the close of the Archstone Acquisition, except for (i) claims that principally relate to the physical condition of the assets acquired directly by the Company or Equity Residential, which generally remain the sole responsibility of the Company or Equity Residential, as applicable, and (ii) certain tax and other litigation between Archstone and various equity holders in Archstone related to periods before the close of the Archstone Acquisition, and claims which may arise due to changes in the capital structure of Archstone that occurred prior to closing, for which the seller has agreed to indemnify the Company and Equity Residential. The Company and Equity Residential jointly control the Residual JV and the Company holds a 40.0% economic interest in the Residual JV.
Legacy JV—As part of the Archstone Acquisition the Company entered into a limited liability company agreement with Equity Residential, through which it assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements (the “Legacy JV”). The Company has a 40.0% interest in the Legacy JV. During the years ended December 31, 2017, 20162023, 2022 and 2015,2021, the Legacy JV redeemed certain of the preferred interests and paid accrued dividends, offor which the Company's portion was $2,000,000, $1,960,000Company contributed $940,000, $860,000 and $14,410,000,$1,340,000, respectively. At December 31, 2017,2023, the remaining preferred interests had an aggregate liquidation value of $37,579,000,$34,124,000, the Company's 40.0% share of which iswas included in accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.
Sudbury Development,NYTA MF Investors LLC (“NYC Joint Venture”)—During 2015,2018, the Company contributed five wholly-owned communities containing an aggregate of 1,301 apartment homes and 58,000 square feet of commercial space, located in New York City, NY, to a newly formed joint venture with the intent to own and operate the communities. The Company retained a 20.0% equity interest in the venture with the partners sharing in returns in accordance with their ownership interests. NYC Joint Venture has outstanding $394,734,000 fixed rate mortgage loans that are payable by the venture. The Company has not guaranteed the debt of NYC Joint Venture, nor does the Company have any obligation to fund this debt should NYC Joint Venture be unable to do so. At December 31, 2023, the Company has an equity investment of $55,695,000 (net of distributions).
MVP I, LLC—During 2004, the Company entered into a joint venture agreement with an unrelated third-party to purchase landdevelop Avalon at Mission Bay II, an apartment community located in San Francisco, CA, which completed construction during 2006 and pursue entitlements and pre-development activity for a mixed-use development project in Sudbury, MA, including multifamilycontains 313 apartment homes, retail, senior housing and age-restricted housing.homes. The Company has a 60.0% ownership25.0% equity interest in the venture. MVP I, LLC has an outstanding $103,000,000 fixed rate mortgage loan that is payable by the venture. The venture is considered a VIE, thoughCompany has not guaranteed the debt of MVP I, LLC, nor does the Company have any obligation to fund this debt should MVP I, LLC be unable to do so. The Company has fully recovered its basis as of December 31, 2023.
Brandywine Apartments of Maryland, LLC (“Brandywine”)— The Company acquired its interest in Brandywine as part of the Archstone Acquisition. Brandywine owns a 305 apartment home community located in Washington, D.C. Brandywine is not considered to be the primary beneficiary because the Company and its third party partner share controlcomprised of five members who hold various interests in the joint venture, as approval from both partieswith the Company having a 28.7% equity interest in Brandywine. Brandywine had an outstanding $19,062,000 fixed rate mortgage loan that is required for all significant aspects of the venture's activities including, but not limited to, changes in the ownership or capital structure of the partnership, acquisitions or dispositions by the venture and decisions about the pre-development and related activities to be performedpayable by the venture. DuringThe Company has not guaranteed the year ended December 31, 2017,debt of Brandywine, nor does the Company and its venture partner each acquired their respective portion of the real estate held by the venture, with the Company's portion consisting of a parcel of land acquired for an investment of $19,200,000. The Company and its venture partner retained continuing involvement with the venturehave any obligation to fund the completion of the planned infrastructure and site work.this debt should Brandywine be unable to do so. At December 31, 2017,2023, the Company has recordedhad an obligationequity investment of $4,340,000, representing the Company's share$14,602,000 (net of costs for the venture to complete this work.
distributions) in Brandywine.
North Point II JV, LPAvalon Alderwood MF Member, LLC—During 2016,2019, the Company entered into a joint venture to develop, own, and operate AVA North Point,Avalon Alderwood Place, an apartment community located in Cambridge, MA,Lynnwood, WA, which is currently undercompleted construction during 2022 and expected to contain 265contains 328 apartment homes upon completion.homes. The Company ownshas a 55.0%50.0% interest in the venture and, as of December 31, 2023, the venture partner owns the remaining 45.0% interest.Company has a total equity investment of $53,638,000. The venture is considered to be a VIE, though the Company is not considered to be the primary beneficiary because the Company andit shares control with its third party partner share control of the venture.venture partner. The Company and its venture partner share decision making authority for all significant aspects of the venture's activities including, but not limited to, changes in the ownership or capital structure, the original capital budget and any changes to the budget to construct AVA North Point and the future operating budget for the community upon completion. AVA North Point is the third phase of a master planned development, the other phases of which are owned through the AC JV. budget.
Arts District Joint Venture—During 2016, the Company provided the partners of the AC JV the opportunity to acquire the AVA North Point land parcel owned by the Company as required in the ROFO provisions for the AC JV. After certain partners of the AC JV declined to participate,2020, the Company entered into the newa joint venture to develop, own, and soldoperate AVA Arts District, an apartment community located in Los Angeles, CA, which is currently under construction and expected to contain 475 apartment homes (unaudited) and 56,000 square feet (unaudited) of commercial space when completed. As of
December 31, 2023, the land parcel toCompany has a 25.0% interest in the venture, in exchange for a cash payment and a capital account credit, and is overseeing the development in exchange for a developer fee. Upon sale of the land parcel, the Company recognized a gain of $10,621,000 during the year ended December 31, 2016, included in (loss) gain on other real estate transactions on the accompanying Consolidated Statements of Comprehensive Income. At December 31, 2017, excluding costs incurred in excess of equity in the underlying net assets of North Point II JV, LP, the Companyventure, has an equity investment of $36,370,000.
$32,738,000. The following is a combined summaryremaining development costs are primarily expected to be funded by the venture's variable rate construction loan. The venture has drawn $135,983,000 of $167,147,000 maximum borrowing capacity of the financial positionconstruction loan as of December 31, 2023. While the Company guarantees the construction loan on behalf of the entities accounted for usingventure, any amounts payable under the equity method asguarantee are obligations of the dates presented, excluding amounts associatedventure partners in proportion to ownership interest. The venture is an unconsolidated VIE as the Company is not the primary beneficiary due to shared control and decision making with development joint ventures, the Residual JVits venture partner. The Company and Legacy JV (dollars in thousands):
|
| | | | | | | |
| | 12/31/17 | | 12/31/16 |
| Assets: | |
| | |
|
| Real estate, net | $ | 695,077 |
| | $ | 954,493 |
|
| Other assets | 39,976 |
| | 49,519 |
|
| Total assets | $ | 735,053 |
| | $ | 1,004,012 |
|
| Liabilities and partners' capital: | |
| | |
|
| Mortgage notes payable, net and credit facility | $ | 523,815 |
| | $ | 689,573 |
|
| Other liabilities | 10,540 |
| | 16,537 |
|
| Partners' capital | 200,698 |
| | 297,902 |
|
| Total liabilities and partners' capital | $ | 735,053 |
| | $ | 1,004,012 |
|
The following is a combined summaryits venture partner share decision making authority for all significant aspects of the operating results of the entities accounted for using the equity method, for the years presented, excluding amounts associated with development joint ventures, Avalon Clarendon, the Residual JV and Legacy JV (dollars in thousands):
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Rental and other income | $ | 101,615 |
| | $ | 131,901 |
| | $ | 173,578 |
|
| Operating and other expenses | (38,566 | ) | | (50,945 | ) | | (67,962 | ) |
| Gain on sale of communities | 136,333 |
| | 196,749 |
| | 98,899 |
|
| Interest expense, net (1) | (27,104 | ) | | (45,886 | ) | | (45,517 | ) |
| Depreciation expense | (25,914 | ) | | (34,471 | ) | | (45,324 | ) |
| Net income | $ | 146,364 |
| | $ | 197,348 |
| | $ | 113,674 |
|
| |
(1) | Amounts for the years ended December 31, 2017, 2016 and 2015 includes charges for prepayment penalties and write-offs of deferred financing costs of $1,591, $12,659 and $4,481, respectively. |
In conjunction with the formation of Fund II and AVA North Point, and the acquisition of the U.S. Fund, AC JV and Brandywine, the Company incurred costs in excess of its equityventure's activities including, but not limited to, changes in the underlying net assetsownership, changes to the development plan or budget, and major operating decisions including annual business plans.
Property Technology and Environmental Investments—The Company has invested $46,926,000 in various property technology and environmentally focused companies directly and indirectly through investment management funds. The Company’s interest in each individual investment represents less than 10% of the respective investments. These costs represent $35,402,000 and $38,015,000 atventure's equity interests. In addition, as of December 31, 20172023, the Company has $73,892,000 in outstanding equity commitments, with the timing and 2016, respectively, ofamount for these commitments to be fulfilled dependent on if, and when, investment opportunities are identified by the respective investment balances. These amounts are being amortized overfunds. During the livesyears ended December 31, 2023, 2022 and 2021, the Company recognized income and unrealized gains of the underlying assets$4,161,000, $8,315,000 and $15,908,000, respectively, related to these investments, which was reported as a component of equity in income offrom unconsolidated real estate entitiesinvestments on the accompanying Consolidated Statements of Comprehensive Income.
The following is a summary of the Company's equity in income of unconsolidated real estate entities for the years presented (dollars in thousands):
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Fund I (1) | $ | — |
| | $ | 87 |
| | $ | 871 |
|
| Fund II (2) | 53,961 |
| | 49,882 |
| | 32,211 |
|
| U.S. Fund (3) | 14,773 |
| | 15,635 |
| | 2,052 |
|
| AC JV | 1,388 |
| | 1,445 |
| | 511 |
|
| MVP I, LLC (4) | 1,833 |
| | 1,627 |
| | 22,453 |
|
| Brandywine | 106 |
| | 10 |
| | (1,474 | ) |
| CVP I, LLC (5) | — |
| | 9 |
| | 1,812 |
|
| Residual JV | (1,223 | ) | | (1,374 | ) | | 11,582 |
|
| Avalon Clarendon (6) | — |
| | (2,359 | ) | | — |
|
| North Point II JV, LP | (122 | ) | | — |
| | — |
|
| Sudbury Development, LLC | 28 |
| | — |
| | — |
|
| Total | $ | 70,744 |
| | $ | 64,962 |
| | $ | 70,018 |
|
| |
(1) | The Company's equity in income for this entity represents its residual profits from the sale of the community, or liquidation of the venture. |
| |
(2) | Equity in income for the years ended December 31, 2017, 2016 and 2015 includes the Company's proportionate share of the gain on the sale of Fund II assets of $26,322, $41,501, and $29,726 respectively. In addition, equity in income for the years ended December 31, 2017 and 2016 include $26,742 and $7,985, respectively, relating to the Company's recognition of its promoted interest.
|
| |
(3) | Equity in income for the years ended December 31, 2017 and 2016 include the Company's proportionate share of the gain on the sale of U.S. Fund assets of $13,788 and $16,568, respectively. |
| |
(4) | Equity in income for the year ended December 31, 2015 includes $21,340 relating to the Company's recognition of its promoted interest, of which $20,680 was from the joint venture partner upon agreement to modify the joint venture agreement to eliminate the Company's promoted interest from associated distribution for future return calculations. |
| |
(5) | Equity in income for the year ended December 31, 2015 includes $1,289 relating to the Company's recognition of its promoted interest. |
| |
(6) | In 2016, the Company and its venture partner established separate legal ownership of Avalon Clarendon, after which the Company reported the operating results of Avalon Clarendon as part of its consolidated operations. |
Investments in Consolidated Real Estate Entities
During the year ended December 31, 2017, the Company acquired three consolidated communities:
The Lodge Denver West, located in Lakewood, CO, contains 252 apartment homes and was acquired for a purchase price of $76,750,000.
Avalon Dunn Loring, located in Vienna, VA, contains 440 apartment homes and 27,000 square feet of retail space and was acquired for a purchase price of $151,000,000.
850 Boca, located in Boca Raton, FL, contains 370 apartment homes and was acquired for a purchase price of $138,000,000.
The Company accounted for these as asset acquisitions and recorded the acquired assets and assumed liabilities, including identifiable intangibles, at their relative fair values based on the purchase price and acquisition costs incurred.
Expensed transaction costs associated with the acquisitions made by the Company in 2016 and 2015, all of which were accounted for as business combinations prior to the adoption of ASU 2017-01 on October 1, 2016, totaled $5,139,000 and $3,806,000, respectively. These amounts are reported as a component of expensed acquisition, development and other pursuit costs, net of recoveries on the accompanying Consolidated Statements of Comprehensive Income. To the extent the Company received amounts related to acquired communities for periods prior to their acquisition, the Company reported these receipts, net with expensed acquisition costs.
On February 27, 2013, pursuant to an asset purchase agreement dated November 26, 2012, the Company, together with Equity Residential, acquired, directly or indirectly, all of the assets owned by Archstone Enterprise LP (“Archstone,” which has since changed its name to Jupiter Enterprise LP), including all of the ownership interests in joint ventures and other entities owned by Archstone, and assumed Archstone’s liabilities, both known and unknown, with certain limited exceptions. Under the terms of the
purchase agreement, the Company acquired approximately 40.0% of Archstone's assets and liabilities and Equity Residential acquired approximately 60.0% of Archstone’s assets and liabilities (the “Archstone Acquisition”).
In conjunction with the development of Avalon Brooklyn Bay, the Company entered into a joint venture agreement to construct a mixed-use building that will contain rental apartments, for-sale residential condominium units and related common elements. The Company owns a 70.0% interest in the venture and will have all of the rights and obligations associated with the rental apartments, and the venture partner owns the remaining 30.0% interest and will have all of the rights and obligations associated with the for-sale residential condominium units. The Company is responsible for the development and construction of the structure, and is providing a loan to the venture partner for the venture partner's share of costs. As of December 31, 2017, the Company has a receivable from the venture partner in the form of a variable rate mortgage note, secured by the for-sale residential condominium units under construction in the amount of $44,831,000 for outstanding principal and interest, reported as a component of prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The Company recognizes interest income on the accrual basis. The loan will be repaid by the venture partner with the proceeds the partner receives from the sales of the residential condominium units which are expected to occur during 2018. The venture is considered a VIE, and the Company consolidates its interest in the rental apartments and common areas, which are included in total real estate, net on the accompanying Consolidated Balance Sheets.
6. Real Estate Disposition Activities
During 2017, the Company sold six wholly-owned operating communities, containing an aggregate of 1,624 apartment homes for an aggregate sales price of $475,500,000 and an aggregate gain of $251,163,000. In addition during 2017, the Company sold other real estate, including three undeveloped land parcels, one of which the Company recorded an impairment during 2017 as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” for an aggregate sales price of $39,154,000, resulting in an aggregate gain of $1,682,000.
Details regarding the real estate sales, which resulted in a gain in accordance with GAAP of $287,424,000, excluding for-sale residential condominiums at The Park Loggia, are summarized in the following table (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Community name | | Location | | Period of sale | | Apartment
homes | | Gross
sales price | | Net cash
proceeds | | Commercial square feet |
| eaves Daly City | | Daly City, CA | | Q2 2023 | | 195 | | | $ | 67,000 | | | $ | 66,646 | | | — | |
| Avalon at Newton Highlands | | Newton, MA | | Q2 2023 | | 294 | | | 170,000 | | | 167,665 | | | — | |
| Avalon Columbia Pike | | Arlington, VA | | Q3 2023 | | 269 | | | 105,000 | | | 103,032 | | | 27,000 | |
| Avalon Mamaroneck | | Mamaroneck, NY | | Q4 2023 | | 229 | | | 104,000 | | | 102,230 | | | — | |
| Other real estate | | multiple | | 2023 | | N/A | | — | | | 636 | | | — | |
| | | | | | | | | | | | |
| Total of 2023 asset sales | | | | | | 987 | | | $ | 446,000 | | | $ | 440,209 | | | 27,000 | |
| | | | | | | | | | | | |
| Total of 2022 asset sales | | | | | | 2,062 | | | $ | 953,135 | | | $ | 934,117 | | | — | |
| | | | | | | | | | | | |
| Total of 2021 asset sales | | | | | | 2,404 | | | $ | 875,058 | | | $ | 850,230 | | | 30,000 | |
|
| | | | | | | | | | | | | | | | | | | |
| Community Name | | Location | | Period of sale | | Apartment homes | | Debt | | Gross sales price | | Net cash proceeds |
| Avalon Pines (1) | | Coram, NY | | Q117 | | 450 |
| | $ | — |
| | $ | 140,000 |
| | $ | 138,689 |
|
| AVA University District | | Seattle, WA | | Q217 | | 283 |
| | — |
| | 112,500 |
| | 108,511 |
|
| Avalon Danbury | | Danbury, CT | | Q317 | | 234 |
| | — |
| | 52,000 |
| | 51,000 |
|
| Avalon Run East | | Lawrenceville, NJ | | Q417 | | 312 |
| | — |
| | 87,500 |
| | 85,033 |
|
| Avalon Huntington | | Shelton, CT | | Q417 | | 99 |
| | — |
| | 33,000 |
| | 32,173 |
|
| Avalon Milford | | Milford, CT | | Q417 | | 246 |
| | — |
| | 50,500 |
| | 49,161 |
|
| Other real estate dispositions (2) | | multiple | | Q1-Q417 | | N/A |
| | — |
| | 39,154 |
| | 38,472 |
|
| | | | | | | | | | | | | |
| Total of 2017 asset sales | | | | | | 1,624 |
| | $ | — |
| | $ | 514,654 |
| | $ | 503,039 |
|
| | | | | | | | | | | | | |
| Total of 2016 asset sales | | | | | | 2,051 |
| | $ | — |
| | $ | 564,028 |
| | $ | 532,717 |
|
| | | | | | | | | | | | | |
| Total of 2015 asset sales | | | | | | 851 |
| | $ | — |
| | $ | 289,320 |
| | $ | 282,163 |
|
| |
(1) | Includes the sale of the adjacent golf course. |
| |
(2) | Primarily composed of the sale of two undeveloped land parcels, located in Newcastle, WA, that are adjacent to a completed Development Community, 421-a tax certificates representing the right to qualify for certain property tax exemptions in New York City and one undeveloped land parcel, located in Vienna, VA. |
As of December 31, 2017,2023, the Company had no real estate assets that qualified as held for sale.
The Park Loggia
The Park Loggia, located in New York, NY, contains 172 for-sale residential condominiums and 66,000 square feet of commercial space. The Company sold six, 40 and 53 residential condominiums at The Park Loggia, for gross proceeds of $25,387,000, $126,848,000 and $135,458,000 resulting in a loss in accordance with GAAP of $73,000 and gain in accordance with GAAP of $2,217,000 and $3,110,000 during the years ended December 31, 2023, 2022 and 2021, respectively. The Company incurred $389,000, $2,129,000 and $4,087,000 during the years ended December 31, 2023, 2022 and 2021, respectively, in marketing, operating and administrative costs. All amounts are included in other real estate activity on the accompanying Consolidated Statements of Comprehensive Income. As of December 31, 2023, there were two residential condominiums remaining to be sold. As of December 31, 2023 and 2022, the unsold for-sale residential condominiums at The Park Loggia had an aggregate carrying value of $6,603,000 and $32,532,000, respectively, presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.
7. Commitments and Contingencies
Employment Agreements and Arrangements
At December 31, 2017,2023, the Company does not have anyhas an employment agreementsagreement with executive officers.Benjamin W. Schall, who joined the Company on January 25, 2021 as President and a member of the Board of Directors, and was appointed to the additional role of Chief Executive Officer effective January 3, 2022. The employment agreement expires on January 25, 2024, although provisions relating to equity awards granted during the term of the employment agreement continue to apply with respect to those awards.
The standard restricted stock, option and optionperformance award agreements used by the Company in its compensation program provide that upon an employee's termination without cause or the employee's Retirement (as defined in the agreement), (i) all outstanding stock options and restricted shares of stock held by the employee will vest, and the employee will have up to 12 months or until the fifth anniversary of the grant date, if later, or until the option expiration date, if earlier, to exercise any options then held.held and (ii) a pro rata share (based on the portion of the performance period that has been completed) of performance awards that have completed at least one year of their performance period shall vest, with settlement to occur at the end of the performance period in accordance with achievement thereunder. Under the agreements, Retirement generally means a termination of employment and other business relationships, other than for cause, after attainment of age 50, provided certain conditions are met, including that (i) the employee has worked for the Company for at least 10 years, (ii) the employee's age at Retirement plus years of employment with the Company equals at least 70 and (iii) the employee provides at least six months written notice of his intent to retire,retire.
If a sale event (as defined) of the Company occurs, all outstanding multiyear performance awards will vest at their target value and (iv) the employee enters into a one year non-compete and employee non-solicitation agreement.
are settled. The Company also has an Officer Severance Program (the “Program”). Under the Program, in the event an officer who is not otherwise covered by a severance arrangement is terminated (other than for cause), or chooses to terminate his or her employment for good reason (as defined), in either case in connection with or within 1824 months following a sale event (as defined) of the Company, such officer will generally receive a cash lump sum payment equal to a multiple of the officer's covered compensation (base salary plus annual cash bonus). The multiple is one timestime for vice presidents and senior vice presidents, two times for executive vice presidents and three times for the chief executive officer. The officer's restricted stock, options and optionsperformance awards would also vest. Costs related to the Program are deferred and recognized over the requisite service period when considered by management to be probable and estimable.
Legal Contingencies
The Company recognizes a loss associated with contingent legal matters when the loss is probable and estimable.
In 2022 and early 2023, the Company was named as a defendant in cases brought by private litigants alleging antitrust violations by RealPage, Inc. and owners and/or operators of multifamily housing which utilize revenue management systems provided by RealPage, Inc. The Company engaged with the plaintiffs' counsel to explain why it believed that these cases were without merit as they pertained to the Company. Following these discussions, the plaintiffs filed a notice of voluntary dismissal in July 2023, which resulted in the Company being dismissed without prejudice from these cases. Subsequently, on November 1, 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc. and 14 owners and/or operators of multifamily housing in the District of Columbia, including the Company, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data. The Company intends to vigorously defend against this lawsuit. Given the early stage of the District of Columbia’s lawsuit, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuit.
The Company is involved in various other claims and/or administrative proceedings that arise in the ordinary course of its business. While no assurances can be given, the Company does not currently believe that any of these other outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.
In addition, the Company accounts for recoveries from legal matters as a reduction in the legal and related costs incurred associated with the matter, with recoveries in excess of these costs reported as a gain or, where appropriate, a reduction in the net cost basis of a community to which the suit related. During the yearsyear ended December 31, 2017 and 2016,2022, the Company recognized $6,118,000 and $417,000$6,000,000 in legal recoveries.settlement proceeds related to a construction defect at a community, reported as a component of general and administrative expense on the accompanying Consolidated Statements of Comprehensive Income. There were no material receipts during the yearyears ended December 31, 2015, excluding amounts for the Residual JV. Amounts recognized during the year ended December 31, 2017 include $5,438,000 in legal settlement proceeds relating to construction defects at a community acquired as part2023 and 2021.
Maplewood Casualty Loss
In February 2017, a fire occurred at the Company's Avalon Maplewood Development Community, located in Maplewood, NJ, which was under construction and not yet occupied. The Company believes that liabilities to third parties resulting from the fire will not be material and will, in any event, be substantially covered by insurance subject to a deductible. The Company has commenced reconstruction of the damaged and destroyed portions of the community. See Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," for further discussion of the casualty gains and losses associated with the Maplewood casualty loss.
Edgewater Casualty Loss
In conjunction with legal matters associated with the Edgewater casualty loss, the Company has established protocols for processing claims from third parties who suffered losses as a result of the fire, and many third parties have contacted the Company's insurance carrier and settled their claims. See Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," for further discussion of the casualty gains and losses associated with the Edgewater casualty loss.
Three class action lawsuits have been filed against the Company on behalf of occupants of the destroyed building and consolidated in the United States District Court for the District of New Jersey. The Company has agreed with class counsel to the terms of a settlement which provides a claims process (with agreed upon protocols for instructing the adjuster as to how to evaluate claims) and, if needed, an arbitration process to determine damage amounts to be paid to individual claimants covered by the class settlement. In July 2017 the District Court granted final approval of the settlement and all claims have been submitted to the independent claims adjuster. A total of 66 units (consisting of residents who did not previously settle their claims and who did not opt out of the class settlement) are included in the class action settlement and bound by its terms. However, only 44 units submitted claims. The independent claims adjuster is currently reviewing the claims submitted, which total approximately $6,900,000. To date, this claims adjuster has issued awards of behalf of three units and it is expected that the remaining awards should be determined and
issued within the next two months. A fourth class action, being heard in the same federal court, was filed against the Company on behalf of residents of the second Edgewater building that suffered minimal damage. In addition to the class action lawsuits described above, 18 of the 19 lawsuits representing approximately 143 individual plaintiffs filed in the Superior Court of New Jersey Bergen County - Law Division were previously scheduled for trial on January 2, 2018. In advance of this date, the Company was able to resolve all of these claims in principle which included approximately 50 units. The Company previously resolved litigated claims with another 10 units. There is currently one remaining lawsuit which was recently filed in the Superior Court of New Jersey Bergen County - Law Division on behalf of one apartment unit. The Company believes it has meritorious defenses to the extent of damages claimed in that suit. There are also seven subrogation lawsuits that have been filed against the Company by insurers of Edgewater residents who obtained renters insurance; it is the Company's position that in the majority of the applicable leases the residents waived subrogation rights. One of these lawsuits has been dismissed on that basis, one is pending in the Superior Court of New Jersey, Bergen County - Law Division, one has been amicably resolved in principle and the other four have been consolidated and are currently pending in the United States District Court for the District of New Jersey. The District Court denied the Company's motions seeking dismissal on this basis. The Company will reassess the viability of this defense after conducting additional discovery.
Having settled many third party claims through the insurance claims process, the Company currently believes that any potential remaining liability to third parties (including any potential liability to third parties determined in accordance with the class settlement described above) will not be material to the Company and will in any event be substantially covered by the Company's insurance policies. However, the Company can give no assurances in this regard and continues to evaluate this matter.
The Company is involved in various other claims and/or administrative proceedings unrelated to the Edgewater casualty loss that arise in the ordinary course of its business. While no assurances can be given, the Company does not currently believe that any of these other outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.
Lease Obligations
The Company owns 13seven apartment communities one under development and two commercial properties, located on land subject to landground leases expiring between October 2026July 2046 and March 2142.April 2106. The Company has purchase options for all ground leases expiring prior to 2062. The ground leases for 13six of the seven apartment communities of which two represent dual-branded communities with one underlying land lease, and the two commercial properties, are accounted for as operating leases, recognizingwith rental expense recognized on a straight-line basis over the lease term. These leases have varying escalation terms, primarily based on variables determined at future dates such as changes in the Consumer Price Index, and five of these leases have purchase options exercisable through 2095. The Company incurred costs of $23,431,000, $23,343,000 and $21,295,000 in the years ended December 31, 2017, 2016 and 2015, respectively, related to operating leases. One apartment community is located on land subject to a land lease which is accounted for as a capital lease and has the option for the Company to purchase the land at some point during the lease term which expires in 2046. In addition, the Company is party to a lease for a portion of the parking garage adjacent to a lease-up community, accounted for as a capital lease and subject to the Company's real estate accounting policies discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies.” The Company has a total lease obligation of $20,118,000 reported as a component of accrued expenses and other liabilities. In addition, the Company is party to 1415 leases for its corporate and regional offices with varying terms through 2031, all of which are accounted for as operating leases.
During the year endedAs of December 31, 2017,2023 and 2022, the Company acquired the land encumbered by the groundhad total operating lease for Avalon Morningside Park for $95,000,000, recognizing a non-cash write-offassets of prepaid rent$106,146,000 and $114,977,000, respectively, and lease obligations of $11,153,000 associated with the ground lease termination,$133,220,000 and $142,602,000, respectively, reported as a componentcomponents of (loss) gain on other real estate transactionsright of use lease assets and lease liabilities, respectively, on the accompanying Consolidated StatementsBalance Sheets. The Company incurred costs of Comprehensive Income. Also during$16,342,000, $15,667,000 and $15,458,000 for the yearyears ended December 31, 2017,2023, 2022 and 2021, respectively, related to operating leases.
The Company has one apartment community located on land subject to a ground lease and four leases for portions of parking garages adjacent to apartment communities, that are finance leases. As of December 31, 2023 and 2022, the Company exercised its purchase option under a capitalhad total finance lease acquiringassets of $28,528,000 and $28,354,000, respectively, and total finance lease obligations of $20,012,000 and $20,069,000, respectively, reported as components of right of use lease assets and lease liabilities on the land encumbered byaccompanying Consolidated Balance Sheets.
The following table details the weighted average remaining lease term and discount rates for the Company’s ground and office leases:
| | | | | |
| Weighted-average remaining lease term - finance leases | 22 years |
| Weighted-average remaining lease term - operating leases (1) | 40 years |
| Weighted-average discount rate - finance leases | 4.63 | % |
| Weighted-average discount rate - operating leases (1) | 4.66 | % |
(1) Excludes two leases that have been executed but for Avalon at Assembly Row and AVA Somerville for $17,285,000.which the Company has not yet taken control.
The following table details the future minimum lease payments underof the Company's current leases as of December 31, 2023 (dollars in thousands):
| | | | | | | | | | | | | | |
| | Operating Leases (1) | | Financing Leases |
| 2024 | | $ | 14,246 | | | $ | 1,087 | |
| 2025 | | 14,544 | | 1,089 |
| 2026 | | 14,552 | | 1,092 |
| 2027 | | 13,884 | | 1,094 |
| 2028 | | 12,839 | | 1,096 |
| Thereafter | | 268,085 | | 35,762 |
| Total | | 338,150 | | | 41,220 | |
| Less discount for time value | | (204,930) | | | (21,208) | |
| Lease liability | | $ | 133,220 | | | $ | 20,012 | |
(1) Includes two leases that have been executed but for which the Company has not yet taken control.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Payments due by period |
| | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | Thereafter |
| Operating Lease Obligations | $ | 21,051 |
| | $ | 21,064 |
| | $ | 18,781 |
| | $ | 20,162 |
| | $ | 20,057 |
| | $ | 1,052,808 |
|
| Capital Lease Obligations (1) (2) | 1,073 |
| | 1,075 |
| | 1,077 |
| | 1,080 |
| | 1,082 |
| | 43,976 |
|
| | $ | 22,124 |
| | $ | 22,139 |
| | $ | 19,858 |
| | $ | 21,242 |
| | $ | 21,139 |
| | $ | 1,096,784 |
|
| |
(1) | Aggregate capital lease payments include $25,961 in interest costs, with the timing of certain lease payments for capital land leases determined by completion of the construction of the associated apartment community. |
| |
(2) | Capital lease assets of $19,737 and $39,015 as of December 31, 2017 and 2016, respectively, are included as a component of land and improvements or building and improvements on the accompanying Consolidated Balance Sheets. |
8. Segment Reporting
The Company's reportable operating segments include Established Communities,Same Store, Other Stabilized Communities and Development/Redevelopment Communities.Redevelopment. Annually as of January 1, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change.
Established Communities (also known as •Same Store Communities) are is composed ofconsolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the respective prior year. The Established Communities forFor the year ended December 31, 2017, are2023, Same Store communities that are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2016,2022, are not conducting or planningare not probable to conduct substantial redevelopment activities and are not held for sale as of December 31, 2023 or plannedprobable for disposition to unrelated third parties within the currentfiscal year. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 95%90% physical occupancy or (ii) the one-yearone year anniversary of completion of development or redevelopment.
•Other Stabilized Communities includes all other consolidatedis composed of completed communities that have stabilized occupancy, as defined above. Other Stabilized Communities do not include communities that are conducting or planning to conduct substantial redevelopment activities within the current year.
Development/Redevelopment Communities consists of consolidated communities that the Company owns and that are under construction and have not received a certificate of occupancy for the entire community, and where substantial redevelopment is in progress or is planned to begin during the current year and communities under lease-upSame Store but that had not reached stabilized occupancy, as defined above, as of January 1, 2017.2023, or which were acquired during the years ended December 31, 2023 or 2022. Other Stabilized excludes communities that are conducting or are probable to conduct substantial redevelopment activities within the fiscal year.
•Development/Redevelopment is composed of (i) consolidated communities that are either currently under construction, or were under construction during the fiscal year, which may be partially or fully complete and operating, (ii) consolidated communities where substantial redevelopment is in progress or is probable to begin during the fiscal year and (iii) communities that have been complete for less than one year and did not have stabilized occupancy, as defined above, as of January 1, 2023.
In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment.
The Company's segment disclosures present the measure(s) used by the chief operating decision makerCODM for purposes of assessing each segment's performance. The Company's chief operating decision makerCODM is comprised of several members of its executive management team who use net operating income (“NOI”) as the primary financial measure for Established CommunitiesSame Store communities and Other Stabilized Communities.communities. NOI is defined by the Company as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed acquisition,transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss (gain) on extinguishment of debt, net, general and administrative expense, equity in income offrom unconsolidated real estate entities,investments, depreciation expense, corporate income tax expense, casualty and impairment loss, (gain), net, gain on sale of communities, loss (gain) on other real estate transactionsactivity, and net operating income from real estate assets sold or held for sale. The CODM evaluates the Company's financial performance on a consolidated residential and commercial basis. The commercial results attributable to the non-apartment components of the Company's mixed-use communities and other nonresidential operations represent 1.8%, 2.0% and 1.7% of total NOI for the years ended December 31, 2023, 2022 and 2021, respectively. Although the Company considers NOI a useful measure of a community's or communities' operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP. NOI excludes a number of income and expense categories as detailed in the reconciliation of NOI to net income.
A reconciliation of NOI to net income for years ended December 31, 2017, 20162023, 2022 and 20152021 is as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | For the year ended December 31, |
| | 2023 | | 2022 | | 2021 |
| Net income | $ | 928,438 | | | $ | 1,136,438 | | | $ | 1,004,356 | |
| Property management and other indirect operating expenses, net of corporate income | 121,704 | | | 114,200 | | | 98,665 | |
| Expensed transaction, development and other pursuit costs, net of recoveries | 33,479 | | | 16,565 | | | 3,231 | |
| Interest expense, net | 205,992 | | | 230,074 | | | 220,415 | |
| Loss on extinguishment of debt, net | 150 | | | 1,646 | | | 17,787 | |
| General and administrative expense | 76,534 | | | 74,064 | | | 69,611 | |
| Income from unconsolidated investments | (13,454) | | | (53,394) | | | (38,585) | |
| Depreciation expense | 816,965 | | | 814,978 | | | 758,596 | |
| Income tax expense | 10,153 | | | 14,646 | | | 5,733 | |
| Casualty loss | 9,118 | | | — | | | 3,119 | |
| Gain on sale of communities | (287,424) | | | (555,558) | | | (602,235) | |
| Other real estate activity | (174) | | | (5,127) | | | (1,120) | |
| Net operating income from real estate assets sold or held for sale | (14,733) | | | (46,678) | | | (82,698) | |
| Net operating income | $ | 1,886,748 | | | $ | 1,741,854 | | | $ | 1,456,875 | |
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Net income | $ | 876,660 |
| | $ | 1,033,708 |
| | $ | 741,733 |
|
| Indirect operating expenses, net of corporate income | 65,398 |
| | 61,403 |
| | 56,973 |
|
| Investments and investment management expense | 5,936 |
| | 4,822 |
| | 4,370 |
|
| Expensed acquisition, development and other pursuit costs, net of recoveries | 2,736 |
| | 9,922 |
| | 6,822 |
|
| Interest expense, net | 199,661 |
| | 187,510 |
| | 175,615 |
|
| Loss (gain) on extinguishment of debt, net | 25,472 |
| | 7,075 |
| | (26,736 | ) |
| General and administrative expense | 50,673 |
| | 45,771 |
| | 42,774 |
|
| Equity in income of unconsolidated real estate entities | (70,744 | ) | | (64,962 | ) | | (70,018 | ) |
| Depreciation expense | 584,150 |
| | 531,434 |
| | 477,923 |
|
| Income tax expense | 141 |
| | 305 |
| | 1,483 |
|
| Casualty and impairment loss (gain), net | 6,250 |
| | (3,935 | ) | | (10,542 | ) |
| Gain on sale of communities | (252,599 | ) | | (374,623 | ) | | (115,625 | ) |
| Loss (gain) on other real estate transactions | 10,907 |
| | (10,224 | ) | | (9,647 | ) |
| Net operating income from real estate assets sold or held for sale | (14,573 | ) | | (44,263 | ) | | (59,383 | ) |
| Net operating income | $ | 1,490,068 |
| | $ | 1,383,943 |
| | $ | 1,215,742 |
|
The following is a summary of NOI from real estate assets sold or held for sale for the periods presented (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| For the year ended December 31, |
| 2023 | | 2022 | | 2021 |
| | | | | |
| Rental income from real estate assets sold or held for sale | $ | 21,197 | | | $ | 69,782 | | | $ | 131,506 | |
| Operating expenses from real estate assets sold or held for sale | (6,464) | | | (23,104) | | | (48,808) | |
| Net operating income from real estate assets sold or held for sale | $ | 14,733 | | | $ | 46,678 | | | $ | 82,698 | |
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/2017 | | 12/31/2016 | | 12/31/2015 |
| | | | | | |
| Rental income from real estate assets sold or held for sale | $ | 23,457 |
| | $ | 70,273 |
| | $ | 96,297 |
|
| Operating expenses from real estate assets sold or held for sale | (8,884 | ) | | (26,010 | ) | | (36,914 | ) |
| Net operating income from real estate assets sold or held for sale | $ | 14,573 |
| | $ | 44,263 |
| | $ | 59,383 |
|
The primary performance measure for communities under development or redevelopment depends on the stage of completion. While under development, management monitors actual construction costs against budgeted costs as well as lease-up pace and rent levels compared to budget.
The following table provides details of the Company's segment information as of the dates specified (dollars in thousands). The segments are classified based on the individual community's status at the beginning of the given calendar year. Therefore, each year the composition of communities within each business segment is adjusted. Accordingly, the amounts between years are not directly comparable. Segment informationDecember 31, 2023 for total revenue and NOI the years ended December 31, 2017, 20162023 and 20152022 and at December 31, 2022, for the year ended December 31, 2021. Segment information for the years ended December 31, 2023, 2022 and 2021 has been adjusted to exclude the real estate assets that were sold from January 1, 20152021 through December 31, 2017,2023, or otherwise qualify as held for sale as of December 31, 2017,2023, as described in Note 6, “Real Estate Disposition Activities.” Segment information for
| | | | | | | | | | | | | | | | | |
| | Total
revenue | | NOI | | Gross
real estate (1) |
| For the year ended December 31, 2023 | | | | | |
| Same Store | | | | | |
| New England | $ | 366,777 | | | $ | 244,700 | | | $ | 2,925,841 | |
| Metro NY/NJ | 529,684 | | | 362,599 | | | 4,417,603 | |
| Mid-Atlantic | 369,027 | | | 255,741 | | | 3,439,654 | |
| Southeast Florida | 76,301 | | | 50,315 | | | 801,617 | |
| Denver, CO | 28,209 | | | 20,020 | | | 322,419 | |
| Pacific Northwest | 171,740 | | | 121,783 | | | 1,546,038 | |
| Northern California | 425,165 | | | 303,526 | | | 3,789,965 | |
| Southern California | 551,743 | | | 380,262 | | | 4,816,245 | |
| Other Expansion Regions | 23,988 | | | 16,166 | | | 328,082 | |
| Total Same Store (2) | 2,542,634 | | | 1,755,112 | | | 22,387,464 | |
| | | | | |
| Other Stabilized | 134,804 | | | 92,808 | | | 1,799,035 | |
| Development / Redevelopment | 61,552 | | | 38,828 | | | 2,408,450 | |
| Land Held for Development | N/A | | N/A | | 199,062 | |
| Non-allocated (3) | 7,722 | | | N/A | | 136,451 | |
| Total | $ | 2,746,712 | | | $ | 1,886,748 | | | $ | 26,930,462 | |
| | | | | |
| For the year ended December 31, 2022 | | | | | |
| Same Store | | | | | |
| New England | $ | 341,769 | | | $ | 226,987 | | | $ | 2,893,843 | |
| Metro NY/NJ | 495,107 | | | 342,511 | | | 4,401,146 | |
| Mid-Atlantic | 348,096 | | | 238,970 | | | 3,396,654 | |
| Southeast Florida | 69,685 | | | 44,696 | | | 798,437 | |
| Denver, CO | 26,848 | | | 19,652 | | | 321,685 | |
| Pacific Northwest | 165,186 | | | 117,211 | | | 1,534,208 | |
| Northern California | 405,184 | | | 288,772 | | | 3,765,490 | |
| Southern California | 520,483 | | | 361,809 | | | 4,762,736 | |
| Other Expansion Regions | 21,934 | | | 15,098 | | | 323,573 | |
| Total Same Store (2) | 2,394,292 | | | 1,655,706 | | | 22,197,772 | |
| | | | | |
| Other Stabilized | 93,305 | | | 67,462 | | | 1,515,963 | |
| Development / Redevelopment | 29,734 | | | 18,686 | | | 1,574,649 | |
| Land Held for Development | N/A | | N/A | | 179,204 | |
| Non-allocated (3) | 6,333 | | | N/A | | 122,886 | |
| Total | $ | 2,523,664 | | | $ | 1,741,854 | | | $ | 25,590,474 | |
| | | | | |
| For the year ended December 31, 2021 | | | | | |
| Same Store | | | | | |
| New England | $ | 295,505 | | | $ | 189,571 | | | $ | 2,771,067 | |
| Metro NY/NJ | 407,621 | | | 279,078 | | | 4,025,983 | |
| Mid-Atlantic | 302,652 | | | 203,502 | | | 3,068,575 | |
| Southeast Florida | 31,703 | | | 19,689 | | | 395,999 | |
| Denver, CO | 23,742 | | | 16,451 | | | 320,435 | |
| Pacific Northwest | 126,513 | | | 85,980 | | | 1,288,975 | |
| Northern California | 366,215 | | | 258,756 | | | 3,605,284 | |
| Southern California | 441,765 | | | 303,336 | | | 4,264,695 | |
| Total Same Store (2)(4) | 1,995,716 | | | 1,356,363 | | | 19,741,013 | |
| | | | | |
| Other Stabilized | 121,659 | | | 75,422 | | | 2,413,391 | |
| Development / Redevelopment | 42,885 | | | 25,090 | | | 1,580,653 | |
| Land Held for Development | N/A | | N/A | | 147,546 | |
| Non-allocated (3) | 3,084 | | | N/A | | 257,536 | |
| Total | $ | 2,163,344 | | | $ | 1,456,875 | | | $ | 24,140,139 | |
(1) Does not include gross real estate as of December 31, 2017, 2016 and 2015 has not been adjusted to exclude real estate assets that wereeither sold or otherwise qualifiedclassified as held for sale subsequent to their respective balance sheet dates.
December 31, 2022 and 2021 of $280,889 and $760,990, respectively.
|
| | | | | | | | | | | | | | |
| | Total revenue | | NOI | | % NOI change from prior year | | Gross real estate (1) |
| For the year ended December 31, 2017 | |
| | |
| | |
| | |
|
| Established | |
| | |
| | |
| | |
|
| New England | $ | 233,091 |
| | $ | 150,253 |
| | 2.1 | % | | $ | 1,852,676 |
|
| Metro NY/NJ | 362,273 |
| | 247,720 |
| | 2.1 | % | | 3,069,690 |
|
| Mid-Atlantic | 221,064 |
| | 153,750 |
| | 1.5 | % | | 2,056,066 |
|
| Pacific Northwest | 84,189 |
| | 61,527 |
| | 6.3 | % | | 738,532 |
|
| Northern California | 336,767 |
| | 257,673 |
| | 1.6 | % | | 2,830,963 |
|
| Southern California | 337,876 |
| | 241,549 |
| | 3.9 | % | | 3,017,836 |
|
| Total Established (2) | 1,575,260 |
| | 1,112,472 |
| | 2.5 | % | | 13,565,763 |
|
| | | | | | | | |
| Other Stabilized | 278,868 |
| | 196,733 |
| | N/A |
| | 3,189,393 |
|
| Development / Redevelopment (3) | 276,896 |
| | 180,863 |
| | N/A |
| | 5,015,094 |
|
| Land Held for Future Development | N/A |
| | N/A |
| | N/A |
| | 68,364 |
|
| Non-allocated (4) | 4,147 |
| | N/A |
| | N/A |
| | 97,322 |
|
| Total | $ | 2,135,171 |
| | $ | 1,490,068 |
| | 7.7 | % | | $ | 21,935,936 |
|
| | | | | | | | |
| For the year ended December 31, 2016 | |
| | |
| | |
| | |
|
| Established | |
| | |
| | |
| | |
|
| New England | $ | 226,727 |
| | $ | 145,671 |
| | 4.8 | % | | $ | 1,888,524 |
|
| Metro NY/NJ | 359,373 |
| | 245,654 |
| | 1.2 | % | | 3,212,220 |
|
| Mid-Atlantic | 233,711 |
| | 162,243 |
| | 1.3 | % | | 2,339,395 |
|
| Pacific Northwest | 72,475 |
| | 52,434 |
| | 7.4 | % | | 737,289 |
|
| Northern California | 319,121 |
| | 244,458 |
| | 7.0 | % | | 2,661,258 |
|
| Southern California | 291,567 |
| | 207,537 |
| | 9.1 | % | | 2,672,691 |
|
| Total Established (2) | 1,502,974 |
| | 1,057,997 |
| | 4.8 | % | | 13,511,377 |
|
| | | | | | | | |
| Other Stabilized (5) | 232,977 |
| | 165,130 |
| | N/A |
| | 2,330,503 |
|
| Development / Redevelopment | 233,432 |
| | 160,816 |
| | N/A |
| | 4,755,315 |
|
| Land Held for Future Development | N/A |
| | N/A |
| | N/A |
| | 84,293 |
|
| Non-allocated (4) | 5,599 |
| | N/A |
| | N/A |
| | 74,292 |
|
| Total | $ | 1,974,982 |
| | $ | 1,383,943 |
| | 13.8 | % | | $ | 20,755,780 |
|
| | | | | | | | |
| For the year ended December 31, 2015 | |
| | |
| | |
| | |
|
| Established | |
| | |
| | |
| | |
|
| New England | $ | 170,287 |
| | $ | 107,189 |
| | 3.0 | % | | $ | 1,460,746 |
|
| Metro NY/NJ | 342,768 |
| | 244,280 |
| | 3.6 | % | | 3,152,361 |
|
| Mid-Atlantic | 209,012 |
| | 145,497 |
| | 0.2 | % | | 2,177,823 |
|
| Pacific Northwest | 67,900 |
| | 48,833 |
| | 8.5 | % | | 721,040 |
|
| Northern California | 273,432 |
| | 210,226 |
| | 11.9 | % | | 2,414,184 |
|
| Southern California | 252,530 |
| | 173,919 |
| | 9.4 | % | | 2,465,432 |
|
| Total Established (2) | 1,315,929 |
| | 929,944 |
| | 6.0 | % | | 12,391,586 |
|
| | | | | | | | |
| Other Stabilized | 211,633 |
| | 140,167 |
| | N/A |
| | 2,040,269 |
|
| Development / Redevelopment | 222,222 |
| | 145,631 |
| | N/A |
| | 4,238,967 |
|
| Land Held for Future Development | N/A |
| | N/A |
| | N/A |
| | 484,377 |
|
| Non-allocated (4) | 9,947 |
| | N/A |
| | N/A |
| | 73,372 |
|
| Total | $ | 1,759,731 |
| | $ | 1,215,742 |
| | 13.0 | % | | $ | 19,228,571 |
|
| |
(1) | Does not include gross real estate assets held for sale of $20,846 and $39,528 as of December 31, 2016 and 2015,(2) Gross real estate for the Company's Same Store includes capitalized additions of approximately $188,507, $209,607 and $158,991 in 2023, 2022 and 2021, respectively. |
| |
(2) | Gross real estate for the Company's Established Communities includes capitalized additions of approximately $78,241, $85,676 and $74,982 in 2017, 2016 and 2015, respectively. |
| |
(3) | Total revenue and NOI for the year ended December 31, 2017 includes $3,495 in business interruption insurance proceeds related to the Maplewood casualty loss. |
| |
(4) | Revenue represents third-party management, accounting, and developer fees and miscellaneous income which are not allocated to a reportable segment. |
| |
(5) | Total revenue and NOI for the year ended December 31, 2016 includes $20,306 in business interruption insurance proceeds related to the Edgewater casualty loss. |
(3) Revenue represents third-party property management, developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment. Gross real estate includes the for-sale residential condominiums at The Park Loggia, as discussed in Note 6, “Real Estate Disposition Activities.”
(4) Communities in Same Store Other Expansion Regions were included in Other Stabilized for the year ended December 31, 2021.
9. Stock-Based Compensation Plans
The Company's Second Amended and Restated 2009 Equity Incentive Plan (the “2009 Plan”) includes an authorization to issue shares of the Company's common stock, par value $0.01 per share. At December 31, 2017,2023, the Company has 7,994,292had 5,424,356 shares remaining available to issue under the 2009 Plan, exclusive of shares that may be issued to satisfy currently outstanding awards such as stock options or performance awards. In addition, any awards that were outstanding under the Company's 1994 Stock Option and Incentive Plan (the “1994 Plan”) on May 21, 2009, the date the Company adopted the 2009 Plan, that are subsequently forfeited, canceled, surrendered or terminated (other than by exercise) will become available for awards under the 2009 Plan. The 2009 Plan provides for various types of equity awards to associates, officers, non-employee directors and other key personnel of the Company and its subsidiaries. The typessubsidiaries in the form of awards that may be granted under the 2009 Plan include restricted stock, restricted stock units, stock options that qualify as incentive stock options (“ISOs”) under Section 422 of the Code, non-qualified stock options, stock appreciation rights and performance awards, among others. The 2009 PlanNo grants of stock options and other awards will expire onbe made after May 15, 2027.
Information with respect to2027, and no grants of incentive stock options granted under the 2009 and 1994 Plans is as follows:will be made after February 16, 2027.
|
| | | | | | | | | | | | | |
| | 2009 Plan shares | | Weighted average exercise price per share | | 1994 Plan shares | | Weighted average exercise price per share |
| Options Outstanding, December 31, 2014 | 340,062 |
| | $ | 122.67 |
| | 272,402 |
| | $ | 104.96 |
|
| Exercised | (90,884 | ) | | 124.01 |
| | (190,207 | ) | | 105.70 |
|
| Granted | — |
| | — |
| | — |
| | — |
|
| Forfeited | — |
| | — |
| | — |
| | — |
|
| Options Outstanding, December 31, 2015 | 249,178 |
| | $ | 122.17 |
| | 82,195 |
| | $ | 103.27 |
|
| Exercised | (71,845 | ) | | 117.04 |
| | (59,654 | ) | | 112.85 |
|
| Granted | — |
| | — |
| | — |
| | — |
|
| Forfeited | — |
| | — |
| | — |
| | — |
|
| Options Outstanding, December 31, 2016 | 177,333 |
| | $ | 124.25 |
| | 22,541 |
| | $ | 77.91 |
|
| Exercised | (27,360 | ) | | 110.47 |
| | (14,763 | ) | | 93.35 |
|
| Granted | — |
| | — |
| | — |
| | — |
|
| Forfeited | — |
| | — |
| | — |
| | — |
|
| Options Outstanding, December 31, 2017 (1) | 149,973 |
| | $ | 126.77 |
| | 7,778 |
| | $ | 48.60 |
|
| Options Exercisable: | |
| | |
| | |
| | |
|
| December 31, 2015 | 188,081 |
| | $ | 119.98 |
| | 82,195 |
| | $ | 103.27 |
|
| December 31, 2016 | 177,333 |
| | $ | 124.25 |
| | 22,541 |
| | $ | 77.91 |
|
| December 31, 2017 | 149,973 |
| | $ | 126.77 |
| | 7,778 |
| | $ | 48.60 |
|
| |
(1) | All options outstanding are exercisable as of December 31, 2017.
|
The following summarizes the exercise prices and contractual lives of options outstanding as of December 31, 2017:
|
| | | | | | | |
2009 Plan Number of Options | | Range—Exercise Price | | Weighted Average Remaining Contractual Term (in years) |
| 5,158 | | $70.00 | - | | $79.99 | | 2.1 |
| 15,762 | | $110.00 | - | | $119.99 | | 3.1 |
| 29,862 | | $120.00 | - | | $129.99 | | 5.2 |
| 99,191 | | $130.00 | - | | $139.99 | | 4.6 |
| 149,973 | | | | | | | |
|
| | | | | | | |
1994 Plan Number of Options | | Range—Exercise Price | | Weighted Average Remaining Contractual Term (in years) |
| 7,778 | | $40.00 | - | | $49.99 | | 1.1 |
Options outstanding and exercisable under the 2009 and 1994 Plans at December 31, 2017 had an intrinsic value of $7,745,000 and $1,010,000, respectively. Options exercisable under the 2009 and 1994 Plans had a weighted average contractual life of 4.6 years and 1.1 years, respectively. The intrinsic value of options exercised during 2017, 2016 and 2015 was $3,592,000, $9,187,000 and $18,080,000, respectively. There were no stock options granted in 2017, 2016 and 2015.
The Company has aCompany's share-based compensation framework under which share-based compensation granted is composed ofincludes annual restricted stock awards for which one thirdand multi-year performance awards (the “Performance Awards”). The annual restricted stock vests over a three-year period at one-third per year. For annual restricted stock awards, in lieu of restricted stock, an officer may elect to receive up to 100% of the award value, in increments of 25%, in the form of stock options, which vests annually over a three year period, and multi-year long term incentive performanceconsistent with the restricted stock awards. Under the Company's multi-year long term incentive compensation framework,Annually, the Company grants a target number of performance awards, with the ultimate award determined by the total shareholder return of the Company's common stock and/or operating performance metrics, measured in each case over a measurementperformance period of up to three years. Performance awards granted in 2017 or earlier areunits earned in the form of time-vesting restricted stock followingat the end of the three-year performancemeasurement period provided that the predetermined goals have been achieved. Under the single-year long term incentive framework, awards are grantedsettled in the formfully vested shares of time-vesting restricted stock. For both thecommon stock and a payment of a cash amount representing accrued dividends on earned performance awards and time-vesting restricted stock, the recipient may elect to receive up to 25% of the award value in the form ofawards. The Company granted supplemental stock options for which one third ofin February 2021, that have a ten-year term and cliff vested on March 1, 2023. The options were granted at an exercise price that equaled the award vests annually over a three year period.closing stock price on the grant date with recipients having 12 months to exercise the option if terminated without cause, and will have until the expiration date to exercise the options if they retire.
In general, performance awards are forfeited if the employee's employment terminates for any reason prior to the measurement date. However, for performance awards with performance periods beginning on or after January 1, 2015,For Performance Awards, after the first year of the performance period, if thean employee's employment terminates on account of death, disability, retirement, or termination without cause, at a time when the employee meets the age and service requirements for retirement, the employee shall vest in a pro rata portion of the award (basedemployee's target grant will be pro-rated based on the employee's service time during the performance period), with such vested portion toperiod. The final payout is based on actual performance, at which time the units will be earned and converted into shares at the endand a payment of the performance perioda cash amount for accrued dividends based on actual achievementperformance. For other terminating events, performance awards are generally forfeited.
Information with respect to stock options granted under the performance award.Plan is as follows:
| | | | | | | | | | | |
| | Options | | Weighted average
exercise price
per option |
| Options Outstanding, December 31, 2020 | 12,506 | | | $ | 129.35 | |
| Granted (1) | 294,115 | | | 180.32 | |
| Exercised | (2,759) | | | 124.34 | |
| Forfeited | (4,713) | | | 180.32 | |
| Options Outstanding, December 31, 2021 | 299,149 | | | $ | 178.71 | |
| Granted (2) | 9,793 | | | 236.14 | |
| Exercised | (8,670) | | | 135.78 | |
| Forfeited | (6,459) | | | 180.32 | |
| Options Outstanding, December 31, 2022 | 293,813 | | | $ | 181.85 | |
| Granted (2) | 15,744 | | | 177.83 | |
| Exercised | (5,773) | | | 163.56 | |
| Forfeited | — | | | — | |
| Options Outstanding, December 31, 2023 | 303,784 | | | $ | 181.99 | |
| Options Exercisable: | | | |
| December 31, 2021 | 9,747 | | | $ | 130.77 | |
| December 31, 2022 | 6,533 | | | $ | 165.51 | |
| December 31, 2023 | 279,894 | | | $ | 180.97 | |
(1)Includes 4,847 options from recipient elections to receive a portion of earned restricted stock awards in the form of stock options.
(2)All options are from recipient elections to receive a portion of earned restricted stock awards in the form of stock options.
The Company used the Black-Scholes Option Pricing model to determine the grant date fair value of options. The assumptions used are as follows:
| | | | | | | | |
| | 2023 |
| Dividend yield | | 4.0 | % |
| Estimated volatility | | 29.2 | % |
| Risk free rate | | 4.09 | % |
| Expected life of options | | 5 years |
| Estimated fair value | | $37.54 |
The following summarizes the exercise prices and contractual lives of options outstanding as of December 31, 2023:
| | | | | | | | | | | | | | | | | | | | |
The Plan
Number of Options | | Range—Exercise Price | Weighted Average
Remaining Contractual Term
(in years) |
| 293,991 | | $177.00 | - | $186.99 | | 7.3 |
| 9,793 | | $236.00 | - | $245.99 | | 8.1 |
| 303,784 | | | | | | |
Options outstanding at December 31, 2023 had an intrinsic value of $2,068,000. Options exercisable had an intrinsic value of $1,909,000 and had a weighted average contractual life of 7.2 years. The intrinsic value of options exercised under the Plan during 2023, 2022 and 2021 was $113,000, $602,000 and $186,000, respectively.
Information with respect to performance awards granted is as follows:
| | | | | Performance awards | | Weighted average grant date fair value per award |
| Outstanding at December 31, 2014 | | 239,902 |
| | $ | 95.20 |
|
| | Performance awards | | | | Performance awards | | Weighted average grant date fair value per award |
| Outstanding at December 31, 2020 | |
| Granted (1) | | 85,636 |
| | 148.49 |
|
| Change in awards based on performance (2) | | 14,697 |
| | 78.50 |
|
| Converted to restricted stock | | (95,826 | ) | | 78.50 |
|
| Forfeited | | (6,143 | ) | | 110.34 |
|
| Outstanding at December 31, 2015 | | 238,266 |
| | $ | 119.65 |
|
| Outstanding at December 31, 2021 | |
| Granted (3) | | 94,054 |
| | 141.92 |
|
| Change in awards based on performance (2) | | 36,091 |
| | 101.52 |
|
| Converted to restricted stock | | (115,618 | ) | | 94.67 |
|
| Converted to shares of common stock | |
| Forfeited | | (1,630 | ) | | 141.98 |
|
| Outstanding at December 31, 2016 | | 251,163 |
| | $ | 136.74 |
|
| Outstanding at December 31, 2022 | |
| Granted (4) | | 81,708 |
| | 176.59 |
|
| Change in awards based on performance (2) | | 49,323 |
| | 119.26 |
|
| Converted to restricted stock | | (128,482 | ) | | 118.75 |
|
| Converted to shares of common stock | |
| Forfeited | | (1,942 | ) | | 159.39 |
|
| Outstanding at December 31, 2017 | | 251,770 |
| | $ | 155.25 |
|
| Outstanding at December 31, 2023 | |
| |
(1) | The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 55,162 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 30,474 performance awards. |
| |
(2) | Represents the change in the number of performance awards earned based on performance achievement for the performance period. |
| |
(3) | The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 61,039 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 33,015 performance awards. |
| |
(4) | The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 49,374 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 32,334 performance awards. |
(1) The shares of common stock earned was based on the total shareholder return metrics for the Company’s common stock for 69,064 performance awards and financial metrics related to operating performance, net asset value and leverage metrics of the Company for 68,969 performance awards.
(2) Represents the change in the number of performance awards earned based on performance achievement.
(3) The shares of common stock that may be earned is based on the total shareholder return metrics for the Company’s common stock for 39,972 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 32,811 performance awards.
(4) The shares of common stock that may be earned is based on the total shareholder return metrics for the Company’s common stock for 49,611 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 40,604 performance awards.
The Company used a Monte Carlo model to assess the compensation cost associated with the portion of the performance awards granted for which achievement will be determined by using total shareholder return measures. The assumptions used are as follows:
| | | | | 2017 | | 2016 | | 2015 |
| | 2023 | | | | 2023 | | 2022 | | 2021 |
| Dividend yield | | 3.2% | | 3.3% | | 3.0% | Dividend yield | | 3.7% | | 2.7% | | 3.5% |
| Estimated volatility over the life of the plan (1) | | 15.3% - 19.7% | | 15.2% - 22.8% | | 12.0% - 17.3% | Estimated volatility over the life of the plan (1) | | 22.9% - 26.1% | | 16.1% - 36.8% | | 22.0% - 49.0% |
| Risk free rate | | 0.69% - 1.61% | | 0.44% - 0.88% | | 0.07% - 1.09% | Risk free rate | | 4.35% - 4.61% | | 0.72% - 1.68% | | 0.06% - 0.38% |
| Estimated performance award value based on total shareholder return measure | | $175.86 | | $131.24 | | $139.18 | Estimated performance award value based on total shareholder return measure | | $206.97 | | $271.98 | | $213.16 |
(1) Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.
| |
(1) | Estimated volatility of the life of the plan is using 50% historical volatility and 50% implied volatility. |
For the portion of the performance awards granted for which achievement iswill be determined by using financial metrics, the compensation cost was based on a weightedan average grant date value of $179.07, $161.66$177.83, $233.94 and $166.23,$178.38, for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively, and the Company's estimate of corporate achievement for the financial metrics.
Information with respect to restricted stock granted is as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Restricted stock shares | | Weighted average grant date fair value per share | | Restricted stock shares converted from performance awards |
| Outstanding at December 31, 2020 | | 131,724 | | | $ | 203.28 | | | 146,319 | |
| Granted | | 99,291 | | | 178.84 | | | — | |
| Vested | | (69,840) | | | 192.32 | | | (71,692) | |
| Forfeited | | (4,109) | | | 195.77 | | | — | |
| Outstanding at December 31, 2021 | | 157,066 | | | $ | 192.90 | | | 74,627 | |
| Granted | | 86,475 | | | 231.93 | | | — | |
| Vested | | (78,212) | | | 197.51 | | | (48,171) | |
| Forfeited | | (3,615) | | | 218.19 | | | (86) | |
| Outstanding at December 31, 2022 | | 161,714 | | | $ | 210.97 | | | 26,370 | |
| Granted | | 93,146 | | | 177.70 | | | — | |
| Vested | | (79,450) | | | 207.93 | | | (26,370) | |
| Forfeited | | (2,119) | | | 194.78 | | | — | |
| Outstanding at December 31, 2023 | | 173,291 | | | $ | 194.68 | | | — | |
|
| | | | | | | | | | |
| | | Restricted stock shares | | Restricted stock shares weighted average grant date fair value per share | | Restricted stock shares converted from performance awards |
| Outstanding at December 31, 2014 | | 179,307 |
| | $ | 129.06 |
| | 10,933 |
|
| Granted - restricted stock shares | | 61,953 |
| | 173.04 |
| | 95,826 |
|
| Vested - restricted stock shares | | (91,847 | ) | | 130.75 |
| | (8,412 | ) |
| Forfeited | | (1,529 | ) | | 151.86 |
| | — |
|
| Outstanding at December 31, 2015 | | 147,884 |
| | $ | 146.21 |
| | 98,347 |
|
| Granted - restricted stock shares | | 81,400 |
| | 162.38 |
| | 115,618 |
|
| Vested - restricted stock shares | | (88,712 | ) | | 141.38 |
| | (36,872 | ) |
| Forfeited | | (3,867 | ) | | 162.43 |
| | (395 | ) |
| Outstanding at December 31, 2016 | | 136,705 |
| | $ | 158.51 |
| | 176,698 |
|
| Granted - restricted stock shares | | 73,342 |
| | 179.58 |
| | 128,482 |
|
| Vested - restricted stock shares | | (73,683 | ) | | 153.86 |
| | (70,595 | ) |
| Forfeited | | (2,731 | ) | | 173.42 |
| | (657 | ) |
| Outstanding at December 31, 2017 | | 133,633 |
| | $ | 172.33 |
| | 233,928 |
|
Total employee stock-based compensation cost recognized in income was $17,085,000, $14,666,000$27,417,000, $34,131,000 and $14,703,000$25,100,000 for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively, and total capitalized stock-based compensation cost was $9,474,000, $9,266,000$10,906,000, $10,431,000 and $9,667,000$9,472,000 for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. At December 31, 2017,2023, there was a total unrecognized compensation cost of $26,305,000$28,204,000 for unvested restricted stock, stock options and performance awards, which does not include forfeitures, and is expected to be recognized over a weighted average period of 3.61.8 years.
As of January 1, 2017 the Company adopted the provisions of ASU 2016-09, electing to account for forfeitures as they occur. Prior to the adoption of ASU 2016-09, the Company was required to estimate the forfeiture of stock options and recognized compensation cost net of the estimated forfeitures. The estimated forfeitures Forfeitures are included in compensation cost were adjusted to reflect actual forfeitures at the end of the vesting period. The actual forfeiture rate for the year ended December 31, 2017 was 0.7%. The application of estimated forfeitures did not materially impact compensation expense for the years ended December 31, 2016 and 2015.as they occur.
Employee Stock Purchase Plan
In October 1996, the Company adopted the 1996 Non-Qualified Employee Stock Purchase Plan (as amended, the “ESPP”). Initially, 1,000,000 shares of common stock were reserved for issuance, under this plan. Thereand as of December 31, 2023, there are currently 681,284569,016 shares remaining available for issuance under the ESPP. Full-time employeesEmployees of the Company generally are eligible to participate in the ESPP if, as of the last day of the applicable electionpurchase period, they have been employed by the Company for at least one month. All other employees of the Company are eligible to participate provided that, as of the applicable election period, they have been employed by the Company for 12 months.calendar month. Under the ESPP, eligible employees are permitted tocan acquire shares of the Company's common stock through payroll deductions, subject to maximum purchase limitations, during two purchase periods. The first purchase period begins January 1 and ends June 10, and the second purchase period begins July 1 and ends December 10. The purchase price for common stock purchased under the plan is 85% of the lesser of the fair market value of the Company's common stock on the first day of the applicable purchase period or the last day of the applicable purchase period. The offering dates, purchase dates and duration of purchase periods may be changed if the change is announced prior to the beginning of the affected date or purchase period. The Company issued 11,528, 11,34823,059, 20,837 and 10,66721,362 shares and recognized compensation expense of $418,000, $289,000$911,000, $564,000 and $321,000$1,609,000 under the ESPP for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. The Company accounts for transactions under the ESPP using the fair value method prescribed by accounting guidance applicable to entities that use employee share purchase plans.
10. Related Party Arrangements
Unconsolidated Entities
The Company manages unconsolidated real estate entities and may provide other real estate related services to third parties, for which it receives asset management, property management, construction, development and redevelopment fee revenue. From these entities, the Company earned fees of $4,147,000, $5,599,000$7,722,000, $6,333,000 and $9,947,000 in$3,084,000 for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. These fees are recognized on an accrual basis when earned in accordance with the accounting guidance applicable to revenue recognition, and are included in management, development and other fees on the accompanying Consolidated Statements of Comprehensive Income. In addition, the Company hashad outstanding receivables associated with its property and construction management roleroles of $2,449,000$7,946,000 and $5,239,000$2,855,000 as of December 31, 20172023 and 2016,2022, respectively.
Director Compensation
Directors of the Company who are also employees receive no additional compensation for their services as a director. Following each annual meeting of stockholders, non-employee directors receive (i) a number of shares of restricted stock (or deferred stock units) having a value of $135,000$175,000 and (ii) a cash payment of $80,000,$100,000, payable in equal quarterly installments of $20,000.
$25,000. The number of shares of restricted stock (or deferred stock units) is calculated based on the closing price on the day of the award. Non-employee directors may elect to receive all or a portion of cash payments in the form of deferred stock units. Additionally, the non-Executive Chairman receives an additional annual fee of $250,000 payable in equal quarterly installments of $62,500, the Lead Independent Director receives in the aggregate an additional annual fee of $30,000$35,000 payable in equal quarterly installments of $7,500,$8,750, the non-employee directorsdirector serving as the chairperson of the Audit or Compensation Committees receiveCommittee receives an additional cash compensationannual fee of $20,000$30,000 per year payable in equal quarterly installments of $5,000,$7,500, the non-employee director serving as the chairperson of the Compensation Committee receives an additional annual fee of $25,000 per year payable in equal quarterly installments of $6,250 and the Nominating, Governance and Corporate GovernanceResponsibility and Investment and Finance Committee chairpersons receive an additional annual fee of $15,000$20,000 payable in equal quarterly installments of $3,750.$5,000.
The Company recorded non-employee director compensation expense relating to restricted stock grants and deferred stock awardsunits in the amount of $1,524,000, $1,216,000$2,446,000, $2,228,000 and $1,135,000$1,981,000 for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively, as a component of general and administrative expense. Deferred compensation relating to these restricted stock grants and deferred stock awardsunits to non-employee directors was $525,000, $531,000$799,000, $794,000 and $488,000$696,000 on December 31, 2017, 20162023, 2022 and 2015, respectively.2021, respectively, reported as a component of prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.
11. Fair Value
Financial Instruments Carried at Fair Value
Derivative Financial Instruments
Currently, theThe Company uses interest rate swap and interest rate cap agreementsHedging Derivatives to manage its interest rate risk. These instruments are carried at fair value in the Company's financial statements. In adjusting the fair value of its derivative contracts for the effect of counterparty nonperformance risk, the Company has considered the impact of its net position with a given counterparty, as well as any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. The Company minimizes its credit risk on these transactions by dealing with major, creditworthy financial institutions which have an A or better credit rating by the Standard & Poor's Ratings Group. As part of its on-going control procedures, the CompanyGroup or equivalent, and monitors the credit ratings of counterparties and the exposure of the Company to any single entity, thus reducing credit risk concentration.entity. The Company believes the likelihood of realizing losses from counterparty nonperformance is remote. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, such as interest rate, term to maturity and volatility, the credit valuation adjustments associated with its derivatives use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of December 31, 2017,which the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined it isconcluded are not significant. As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy.
The Company recognized a gain of $753,000 for hedge ineffectiveness for the year ended December 31, 2017, included as a component of interest expense, net on the accompanying Consolidated Statements of Comprehensive Income. Hedge ineffectiveness did not have a material impact on earnings of the Company for any prior period.
The following table summarizes the consolidated derivative positions at December 31, 20172023 (dollars in thousands):
| | | | | Non-designated Hedges Interest Rate Caps | | Cash Flow Hedges Interest Rate Caps | | Cash Flow
Hedges Interest Rate Swaps |
| | Non-designated Hedges | | | | Non-designated Hedges | | Cash Flow Hedges |
| | Interest Rate Caps | | | | Interest Rate Caps | | Interest Rate Swaps |
| Notional balance | | $ | 689,059 |
| | $ | 35,039 |
| | $ | 300,000 |
|
| Weighted average interest rate (1) | | 3.3 | % | | 3.5 | % | | N/A |
| Weighted average interest rate (1) | | 5.5 | % | | N/A |
| Weighted average swapped/capped interest rate | | 6.5 | % | | 5.9 | % | | 2.4 | % |
| Weighted average capped/swapped interest rate | | Weighted average capped/swapped interest rate | | 6.5 | % | | 3.1 | % |
| Earliest maturity date | | August 2018 |
| | April 2019 |
| | May 2018 |
| Earliest maturity date | | January 2024 | | February 2024 |
| Latest maturity date | | September 2022 |
| | April 2019 |
| | May 2018 |
| Latest maturity date | | January 2027 | | June 2024 |
| |
(1) | For interest rate caps, represents the weighted average interest rate on the hedged debt. |
(1) For debt hedged by interest rate caps, represents the weighted average interest rate on the hedged debt prior to any impact of the associated interest rate caps.
The following derivative activity occurred during the year ended December 31, 2023:
•In 2017,connection with the issuance of the Company's $400,000,000 unsecured notes in December 2023 maturing in 2033, the Company entered into $300,000,000terminated $250,000,000 of forward interest rate swap agreements executeddesignated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving payments of $8,331,000 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate. All of the positions settled by the Company were forward interest rate swaps that the Company had entered into during 2023. The Company has deferred these gains in accumulated other comprehensive income on the accompanying Consolidated Balance Sheets, and is recognizing the impact as a component of interest expense, net, over the term of the respective hedged debt.
•In addition, the Company entered into $200,000,000 of forward interest rate swap agreements to reduce the impact of variability in interest rates on a portion of the Company's expectedanticipated future debt issuance activity in 2018. As2024. The
Company expects to cash settle the contractsswaps and either pay or receive cash for the then current fair value. Assuming that the Company issues the debt as expected, the hedging impact from these positions will then be recognized over the life of the issued debt as a yield adjustment.
In addition, during 2017, the Company settled an aggregate of $800,000,000 of forward interest rate swap agreements, receiving net aggregate payments of $391,000. which consisted of the following activity:
in conjunction with the refinancing of three secured borrowings in May 2017, in April 2017, the Company settled $185,100,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability of the secured notes, making a payment of $2,326,000;
in conjunction with the Company's May 2017 unsecured note issuance, the Company settled $400,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the forecasted issuance of the unsecured notes, making a payment of $1,361,000; and
in conjunction with the Company's June 2017 unsecured note issuance, the Company settled $214,900,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the forecasted issuance of the unsecured notes, receiving a payment of $4,078,000.
The Company has deferred $376,000, the effective portion of the fair value change of these swaps, in accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets, and will recognize the impact as a component of interest expense, net, over the 10 year period of interest payments hedged.
The Company had seven derivatives designated as cash flow hedges and 14certain derivatives not designated as hedges at December 31, 2017. Fair value changes for derivatives not in qualifying hedge relationships forduring the years ended December 31, 20172023, 2022 and 2016,2021, for which fair value changes during each of the respective years were not material. During 2017, the Company deferred $13,979,000 of losses for cash
Cash flow hedges reported as a component of other comprehensive income (loss).
The following table summarizes the deferredhedge losses reclassified from accumulated other comprehensive income as a component of interest expense, net (dollars in thousands):into earnings were $1,360,000, $3,883,000 and $13,151,000 for the year ended December 31, 2023, 2022 and 2021, respectively.
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/17 | | 12/31/16 | | 12/31/15 |
| Cash flow hedge losses reclassified to earnings | $ | 7,070 |
| | $ | 6,433 |
| | $ | 5,774 |
|
The Company anticipates reclassifying approximately $7,012,000$582,000 of net hedging losses from accumulated other comprehensive lossincome into earnings within the next 12 months toas an offset the variability of cash flows ofto the hedged item during this period. The Company did not have any derivatives designated as fair value hedges as of December 31, 2017 and 2016.
Redeemable Noncontrolling Interests
The Company provided redemption options (the “Puts”) that allow joint venture partners ofDuring the year ended December 31, 2023, 7,500 DownREIT units were redeemed for cash by the Company to requirein conjunction with the Company to purchase their interests in the investmentsale of Avalon at a guaranteed minimum amount related to three ventures. The Puts are payable in cash. The Company determines the fair value of the Puts based on unobservable inputs considering the assumptions that market participants would make in pricing the obligations, applying a guaranteed rate of return to the joint venture partners' net capital contribution balances as of period end. Given the significance of the unobservable inputs, the valuations are classified in Level 3 of the fair value hierarchy.
The Company issued units of limited partnership interest in DownREITs which provide the DownREIT limited partners the ability to present all or some of their units for redemption for cash as determined by the partnership agreement.Newton Highlands. Under the DownREIT agreements,agreement, for each limited partnership unit, the limited partner iswas entitled to receive cash in the amount equal to the fair value of the Company's common stock on or about the date of redemption. In lieu of cash redemption, the Company may elect to exchange such units for an equal number of shares of the Company's common stock. The limited partnership units in the DownREITs areDownREIT were valued using the market price of the Company's common stock, a Level 1 price under the fair value hierarchy.
Equity Securities
The Company has direct equity investments in property technology and environmentally focused companies. These investments are accounted for using the measurement alternative and are valued at the market price of observable transactions.
Financial Instruments Not Carried at Fair Value
Cash, and Cash Equivalents and Restricted Cash
Cash, and cash equivalent and restricted cash balances are held with various financial institutions within principal protected accounts.accounts designed to preserve principal. The Company monitors credit ratings of these financial institutions and the concentration of cash, and cash equivalent and restricted cash balances with any one financial institution and believes the likelihood of realizing material losses related to cash, and cash equivalent and restricted cash balances is remote. Cash, cash equivalent and restricted cash equivalents are carried at their face amounts, which reasonably approximate their fair values and are Level 1 within the fair value hierarchy.
Other Financial Instruments
Rents and other receivables and prepaids,prepaid expenses, accounts and construction payable and accrued expenses and other liabilities are carried at their face amounts, which reasonably approximate their fair values. The Company determined that its notes receivables approximate fair value, because interest rates, yields and other terms are consistent with interest rates, yields and other terms currently available for similar instruments and are considered to be a Level 2 price within the fair value hierarchy.
Indebtedness
The Company values its fixed rate unsecured notes using quoted market prices, a Level 1 price within the fair value hierarchy. The Company values its mortgage notes payable, variable rate unsecured notes, including the Term Loan, and any outstanding amounts under the Credit Facility and Term LoanCommercial Paper Program using a discounted cash flow analysis
on the expected cash flows of each instrument. This analysis reflects the contractual terms of the instrument, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The process also considers credit valuation adjustments to appropriately reflect the Company’sCompany's nonperformance risk. The Company has concluded that the value of its mortgage notes payable, variable rate unsecured notes, Term Loan and any outstanding amounts outstanding under itsthe Credit Facility and Term LoanCommercial Paper Program are Level 2 prices as the majority of the inputs used to value its positions fall within Level 2 of the fair value hierarchy.
Financial Instruments Measured/Disclosed at Fair Value on a Recurring Basis
The following table summarizestables summarize the classification between the three levels of the fair value hierarchy of the Company's financial instruments measured/disclosed at fair value on a recurring basis (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Description | Total Fair
Value | | Quoted Prices
in Active
Markets for
Identical Assets
(Level 1) | | Significant
Other
Observable
Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2023 | | | | | | | | | | | | | | | | | | | | |
| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investments | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Notes Receivable, net | $ | 118,127 | | | $ | — | | | $ | 118,127 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| Non Designated Hedges | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Caps | 85 | | | — | | | 85 | | | — | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Swaps - Assets | 5,163 | | | — | | | 5,163 | | | — | | | | | | | | | | | | | | | | | | | | | |
| Total Assets | $ | 123,375 | | | $ | — | | | $ | 123,375 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Swaps - Liabilities | $ | 162 | | | $ | — | | | $ | 162 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| Indebtedness | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed rate unsecured notes | 6,716,631 | | | 6,716,631 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | |
| Mortgage notes payable and Commercial Paper Program | 644,313 | | | — | | | 644,313 | | | — | | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | $ | 7,361,106 | | | $ | 6,716,631 | | | $ | 644,475 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 | | | | | | | | | | | | | | | | | | | | |
| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investments | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Notes Receivable, net | $ | 28,860 | | | $ | — | | | $ | 28,860 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| Non Designated Hedges | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Caps | 455 | | | — | | | 455 | | | — | | | | | | | | | | | | | | | | | | | | | |
| Total Assets | $ | 29,315 | | | $ | — | | | $ | 29,315 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DownREIT units | $ | 1,211 | | | $ | 1,211 | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| Indebtedness | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed rate unsecured notes | 6,653,681 | | | 6,653,681 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | |
Mortgage notes payable, Commercial Paper Program and variable rate unsecured note | 768,984 | | | — | | | 768,984 | | | — | | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | $ | 7,423,876 | | | $ | 6,654,892 | | | $ | 768,984 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
| Description | Total Fair Value | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
| | 12/31/2017 |
| Non Designated Hedges | | | | | | | |
| Interest Rate Caps | $ | 2 |
| | $ | — |
| | $ | 2 |
| | $ | — |
|
| Cash Flow Hedges | | | | | | | |
| Interest Rate Swaps - Assets | 2,270 |
| | — |
| | 2,270 |
| | — |
|
| Interest Rate Swaps - Liabilities | (1,171 | ) | | — |
| | (1,171 | ) | | — |
|
| Puts | (3,245 | ) | | — |
| | — |
| | (3,245 | ) |
| DownREIT units | (1,338 | ) | | (1,338 | ) | | — |
| | — |
|
| Indebtedness | | | | | | | |
| Unsecured notes | (5,446,604 | ) | | (5,446,604 | ) | | — |
| | — |
|
| Secured notes payable and unsecured term loans | (1,849,851 | ) | | — |
| | (1,849,851 | ) | | — |
|
| Total | $ | (7,299,937 | ) | | $ | (5,447,942 | ) | | $ | (1,848,750 | ) | | $ | (3,245 | ) |
| | | | | | | | |
| | 12/31/2016 |
| Non Designated Hedges | | | | |
|
| | |
| Interest Rate Caps | $ | 79 |
| | $ | — |
| | $ | 79 |
| | $ | — |
|
| Cash Flow Hedges | | | | | | | |
| Interest Rate Caps | 2 |
| | — |
| | 2 |
| | — |
|
| Interest Rate Swaps | 14,775 |
| | — |
| | 14,775 |
| | — |
|
| Puts | (6,002 | ) | | — |
| | — |
| | (6,002 | ) |
| DownREIT units | (1,329 | ) | | (1,329 | ) | | — |
| | — |
|
| Indebtedness | | | | | | | |
| Unsecured notes | (4,218,627 | ) | | (4,218,627 | ) | | — |
| | — |
|
| Secured notes payable and unsecured term loans | (2,744,462 | ) | | — |
| | (2,744,462 | ) | | — |
|
| Total | $ | (6,955,564 | ) | | $ | (4,219,956 | ) | | $ | (2,729,606 | ) | | $ | (6,002 | ) |
12. Quarterly Financial Information
The following summary represents the unaudited quarterly results of operations for the years ended December 31, 2017 and 2016 (dollars in thousands, except per share data):
|
| | | | | | | | | | | | | | | |
| | For the three months ended (1) |
| | 3/31/17 | | 6/30/17 | | 9/30/17 | | 12/31/17 |
| Total revenue | $ | 522,326 |
| | $ | 530,512 |
| | $ | 550,500 |
| | $ | 555,292 |
|
| Net income | $ | 235,781 |
| | $ | 165,194 |
| | $ | 238,199 |
| | $ | 237,486 |
|
| Net income attributable to common stockholders | $ | 235,875 |
| | $ | 165,225 |
| | $ | 238,248 |
| | $ | 237,573 |
|
| Net income per common share - basic | $ | 1.72 |
| | $ | 1.20 |
| | $ | 1.73 |
| | $ | 1.72 |
|
| Net income per common share - diluted | $ | 1.72 |
| | $ | 1.20 |
| | $ | 1.72 |
| | $ | 1.72 |
|
|
| | | | | | | | | | | | | | | |
| | For the three months ended (1) |
| | 3/31/16 | | 6/30/16 | | 9/30/16 | | 12/31/16 |
| Total revenue | $ | 508,498 |
| | $ | 502,307 |
| | $ | 516,211 |
| | $ | 518,240 |
|
| Net income | $ | 237,877 |
| | $ | 197,319 |
| | $ | 356,329 |
| | $ | 242,183 |
|
| Net income attributable to common stockholders | $ | 237,931 |
| | $ | 197,444 |
| | $ | 356,392 |
| | $ | 242,235 |
|
| Net income per common share - basic | $ | 1.73 |
| | $ | 1.44 |
| | $ | 2.60 |
| | $ | 1.76 |
|
| Net income per common share - diluted | $ | 1.73 |
| | $ | 1.44 |
| | $ | 2.59 |
| | $ | 1.76 |
|
| |
(1) | Amounts may not equal full year results due to rounding. |
13. Subsequent Events
The Company has evaluated subsequent events, through the date on which this Form 10-K was filed, the date on which these financial statements were issued, and identified thedid not identify any items below for discussion.
In January and February 2018, the Company acquired four parcels of land for development for an aggregate investment of $76,758,000.
In February 2018, the Company repaid $15,174,000 of 6.60% fixed rate debt secured by Avalon Oaks West in advance of its maturity date, incurring a prepayment penalty of $152,000.
disclosure.
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| SAME STORE | | | | | | | | | | | | | | | | | | | | | | | | |
| NEW ENGLAND | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon at Lexington | | Lexington, MA | | 198 | | | $ | 2,124 | | | $ | 12,561 | | | $ | 16,103 | | | $ | 2,124 | | | $ | 28,664 | | | $ | 30,788 | | | $ | 21,263 | | | $ | 9,525 | | | $ | 8,586 | | | $ | — | | | 1994 |
| eaves Wilmington | | Wilmington, MA | | 204 | | | 2,129 | | | 17,563 | | | 10,350 | | | 2,129 | | | 27,913 | | | 30,042 | | | 20,505 | | | 9,537 | | | 9,960 | | | — | | | 1999 |
| eaves Quincy | | Quincy, MA | | 245 | | | 1,743 | | | 14,662 | | | 16,934 | | | 1,743 | | | 31,596 | | | 33,339 | | | 22,326 | | | 11,013 | | | 11,327 | | | — | | | 1986/1995 |
| eaves Wilmington West | | Wilmington, MA | | 120 | | | 3,318 | | | 13,465 | | | 5,145 | | | 3,318 | | | 18,610 | | | 21,928 | | | 12,654 | | | 9,274 | | | 9,360 | | | — | | | 2002 |
| Avalon at The Pinehills | | Plymouth, MA | | 192 | | | 6,876 | | | 30,313 | | | 9,652 | | | 6,876 | | | 39,965 | | | 46,841 | | | 21,752 | | | 25,089 | | | 25,832 | | | — | | | 2004 |
| eaves Peabody | | Peabody, MA | | 286 | | | 4,645 | | | 18,919 | | | 17,202 | | | 4,645 | | | 36,121 | | | 40,766 | | | 22,253 | | | 18,513 | | | 19,726 | | | — | | | 1962/2004 |
| Avalon at Bedford Center | | Bedford, MA | | 139 | | | 4,258 | | | 20,551 | | | 6,060 | | | 4,258 | | | 26,611 | | | 30,869 | | | 17,272 | | | 13,597 | | | 14,919 | | | — | | | 2006 |
| Avalon at Chestnut Hill | | Chestnut Hill, MA | | 204 | | | 14,572 | | | 45,868 | | | 15,868 | | | 14,572 | | | 61,736 | | | 76,308 | | | 33,909 | | | 42,399 | | | 43,505 | | | — | | | 2007 |
| Avalon at Lexington Hills | | Lexington, MA | | 387 | | | 8,691 | | | 78,502 | | | 18,246 | | | 8,691 | | | 96,748 | | | 105,439 | | | 56,017 | | | 49,422 | | | 53,457 | | | — | | | 2008 |
| Avalon Acton | | Acton, MA | | 380 | | | 13,124 | | | 48,630 | | | 13,026 | | | 13,124 | | | 61,656 | | | 74,780 | | | 32,568 | | | 42,212 | | | 44,469 | | | 45,000 | | | 2008 |
| Avalon at the Hingham Shipyard | | Hingham, MA | | 235 | | | 12,218 | | | 41,516 | | | 14,550 | | | 12,218 | | | 56,066 | | | 68,284 | | | 31,342 | | | 36,942 | | | 39,025 | | | — | | | 2009 |
| Avalon Acton II | | Acton, MA | | 86 | | | 1,723 | | | 29,375 | | | — | | | 1,723 | | | 29,375 | | | 31,098 | | | 3,506 | | | 27,592 | | | 28,638 | | | — | | | 2021 |
| Avalon Northborough | | Northborough, MA | | 382 | | | 8,144 | | | 52,178 | | | 9,474 | | | 8,144 | | | 61,652 | | | 69,796 | | | 29,937 | | | 39,859 | | | 41,103 | | | — | | | 2009 |
| Avalon Exeter (1) | | Boston, MA | | 187 | | | — | | | 109,978 | | | 3,501 | | | — | | | 113,479 | | | 113,479 | | | 37,241 | | | 76,238 | | | 78,840 | | | — | | | 2014 |
| Avalon Natick | | Natick, MA | | 407 | | | 15,645 | | | 64,845 | | | 4,822 | | | 15,645 | | | 69,667 | | | 85,312 | | | 25,323 | | | 59,989 | | | 61,683 | | | — | | | 2013 |
| Avalon at Assembly Row (2) | | Somerville, MA | | 195 | | | 8,599 | | | 52,454 | | | 8,815 | | | 8,599 | | | 61,269 | | | 69,868 | | | 21,508 | | | 48,360 | | | 48,141 | | | — | | | 2015 |
| AVA Somerville (2) | | Somerville, MA | | 250 | | | 10,944 | | | 56,457 | | | 7,899 | | | 10,944 | | | 64,356 | | | 75,300 | | | 22,806 | | | 52,494 | | | 53,785 | | | — | | | 2015 |
| AVA Back Bay | | Boston, MA | | 271 | | | 9,034 | | | 36,536 | | | 53,129 | | | 9,034 | | | 89,665 | | | 98,699 | | | 53,387 | | | 45,312 | | | 48,193 | | | — | | | 1968/1998 |
| Avalon Prudential Center II | | Boston, MA | | 266 | | | 8,776 | | | 35,479 | | | 65,718 | | | 8,776 | | | 101,197 | | | 109,973 | | | 54,744 | | | 55,229 | | | 58,882 | | | — | | | 1968/1998 |
| Avalon Prudential Center I | | Boston, MA | | 243 | | | 8,002 | | | 32,349 | | | 57,378 | | | 8,002 | | | 89,727 | | | 97,729 | | | 47,794 | | | 49,935 | | | 53,395 | | | — | | | 1968/1998 |
| eaves Burlington | | Burlington, MA | | 203 | | | 7,714 | | | 32,499 | | | 10,087 | | | 7,714 | | | 42,586 | | | 50,300 | | | 16,673 | | | 33,627 | | | 35,005 | | | — | | | 1988/2012 |
| AVA Theater District | | Boston, MA | | 398 | | | 17,072 | | | 163,622 | | | 978 | | | 17,072 | | | 164,600 | | | 181,672 | | | 47,828 | | | 133,844 | | | 139,145 | | | — | | | 2015 |
| Avalon Burlington | | Burlington, MA | | 312 | | | 15,600 | | | 60,649 | | | 20,068 | | | 15,600 | | | 80,717 | | | 96,317 | | | 30,573 | | | 65,744 | | | 67,529 | | | — | | | 1989/2013 |
| Avalon Marlborough | | Marlborough, MA | | 350 | | | 15,367 | | | 60,338 | | | 3,153 | | | 15,367 | | | 63,491 | | | 78,858 | | | 19,027 | | | 59,831 | | | 60,938 | | | — | | | 2015 |
| Avalon North Station | | Boston, MA | | 503 | | | 22,796 | | | 247,270 | | | 966 | | | 22,796 | | | 248,236 | | | 271,032 | | | 58,323 | | | 212,709 | | | 221,269 | | | — | | | 2017 |
| Avalon Framingham | | Framingham, MA | | 180 | | | 9,315 | | | 34,604 | | | 620 | | | 9,315 | | | 35,224 | | | 44,539 | | | 10,319 | | | 34,220 | | | 35,348 | | | — | | | 2015 |
| Avalon Quincy | | Quincy, MA | | 395 | | | 14,694 | | | 79,655 | | | 1,287 | | | 14,694 | | | 80,942 | | | 95,636 | | | 20,519 | | | 75,117 | | | 77,107 | | | — | | | 2017 |
| Avalon Easton | | Easton, MA | | 290 | | | 3,170 | | | 60,785 | | | 1,674 | | | 3,170 | | | 62,459 | | | 65,629 | | | 14,815 | | | 50,814 | | | 51,690 | | | — | | | 2017 |
| Avalon at the Hingham Shipyard II | | Hingham, MA | | 190 | | | 8,998 | | | 55,366 | | | 971 | | | 8,998 | | | 56,337 | | | 65,335 | | | 11,244 | | | 54,091 | | | 55,416 | | | — | | | 2019 |
| Avalon Sudbury | | Sudbury, MA | | 250 | | | 20,278 | | | 66,509 | | | 1,033 | | | 20,278 | | | 67,542 | | | 87,820 | | | 14,066 | | | 73,754 | | | 75,492 | | | — | | | 2019 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| ESTABLISHED COMMUNITIES | | | | | | | | | | | | | | | | | | | | | | | | |
| NEW ENGLAND | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Boston, MA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon at Lexington | | Lexington, MA | | 198 |
| | $ | 2,124 |
| | $ | 12,567 |
| | $ | 10,093 |
| | $ | 2,124 |
| | $ | 22,660 |
| | $ | 24,784 |
| | $ | 14,080 |
| | $ | 10,704 |
| | $ | 11,290 |
| | $ | — |
| | 1994 |
| Avalon Oaks | | Wilmington, MA | | 204 |
| | 2,129 |
| | 17,567 |
| | 5,488 |
| | 2,129 |
| | 23,055 |
| | 25,184 |
| | 13,755 |
| | 11,429 |
| | 12,153 |
| | — |
| | 1999 |
| Eaves Quincy | | Quincy, MA | | 245 |
| | 1,743 |
| | 14,662 |
| | 10,184 |
| | 1,743 |
| | 24,846 |
| | 26,589 |
| | 14,456 |
| | 12,133 |
| | 12,799 |
| | — |
| | 1986/1995 |
| Avalon Oaks West | | Wilmington, MA | | 120 |
| | 3,318 |
| | 13,465 |
| | 1,224 |
| | 3,318 |
| | 14,689 |
| | 18,007 |
| | 8,054 |
| | 9,953 |
| | 10,442 |
| | 15,213 |
| | 2002 |
| Avalon Orchards | | Marlborough, MA | | 156 |
| | 2,983 |
| | 17,970 |
| | 2,702 |
| | 2,983 |
| | 20,672 |
| | 23,655 |
| | 11,463 |
| | 12,192 |
| | 12,865 |
| | 15,579 |
| | 2002 |
| Avalon at Newton Highlands | | Newton, MA | | 294 |
| | 11,039 |
| | 45,547 |
| | 5,196 |
| | 11,039 |
| | 50,743 |
| | 61,782 |
| | 25,369 |
| | 36,413 |
| | 37,670 |
| | — |
| | 2003 |
| Avalon at The Pinehills | | Plymouth, MA | | 192 |
| | 6,876 |
| | 30,401 |
| | 721 |
| | 6,876 |
| | 31,122 |
| | 37,998 |
| | 11,155 |
| | 26,843 |
| | 27,716 |
| | — |
| | 2004 |
| Eaves Peabody | | Peabody, MA | | 286 |
| | 4,645 |
| | 18,919 |
| | 13,420 |
| | 4,645 |
| | 32,339 |
| | 36,984 |
| | 13,190 |
| | 23,794 |
| | 24,329 |
| | — |
| | 1962/2004 |
| Avalon at Bedford Center | | Bedford, MA | | 139 |
| | 4,258 |
| | 20,551 |
| | 1,457 |
| | 4,258 |
| | 22,008 |
| | 26,266 |
| | 8,923 |
| | 17,343 |
| | 17,570 |
| | — |
| | 2006 |
| Avalon at Lexington Hills | | Lexington, MA | | 387 |
| | 8,691 |
| | 79,121 |
| | 4,158 |
| | 8,691 |
| | 83,279 |
| | 91,970 |
| | 28,415 |
| | 63,555 |
| | 66,241 |
| | — |
| | 2008 |
| Avalon Acton | | Acton, MA | | 380 |
| | 13,124 |
| | 48,695 |
| | 3,504 |
| | 13,124 |
| | 52,199 |
| | 65,323 |
| | 17,459 |
| | 47,864 |
| | 49,275 |
| | 45,000 |
| | 2008 |
| Avalon at the Hingham Shipyard | | Hingham, MA | | 235 |
| | 12,218 |
| | 41,656 |
| | 2,412 |
| | 12,218 |
| | 44,068 |
| | 56,286 |
| | 13,882 |
| | 42,404 |
| | 43,641 |
| | — |
| | 2009 |
| Avalon Sharon | | Sharon, MA | | 156 |
| | 4,719 |
| | 25,478 |
| | 892 |
| | 4,719 |
| | 26,370 |
| | 31,089 |
| | 8,759 |
| | 22,330 |
| | 22,960 |
| | — |
| | 2008 |
| Avalon Northborough | | Northborough, MA | | 382 |
| | 8,144 |
| | 52,184 |
| | 1,691 |
| | 8,144 |
| | 53,875 |
| | 62,019 |
| | 14,899 |
| | 47,120 |
| | 48,460 |
| | — |
| | 2009 |
| Avalon Blue Hills | | Randolph, MA | | 276 |
| | 11,110 |
| | 34,580 |
| | 1,549 |
| | 11,110 |
| | 36,129 |
| | 47,239 |
| | 10,781 |
| | 36,458 |
| | 37,314 |
| | — |
| | 2009 |
| Avalon Cohasset | | Cohasset, MA | | 220 |
| | 8,802 |
| | 46,166 |
| | 259 |
| | 8,802 |
| | 46,425 |
| | 55,227 |
| | 9,890 |
| | 45,337 |
| | 46,935 |
| | — |
| | 2012 |
| Avalon Andover | | Andover, MA | | 115 |
| | 4,276 |
| | 21,871 |
| | 210 |
| | 4,276 |
| | 22,081 |
| | 26,357 |
| | 4,527 |
| | 21,830 |
| | 22,625 |
| | 13,498 |
| | 2012 |
| Avalon Exeter (1) | | Boston, MA | | 187 |
| | 16,313 |
| | 110,028 |
| | 214 |
| | 16,313 |
| | 110,242 |
| | 126,555 |
| | 13,672 |
| | 112,883 |
| | 116,744 |
| | — |
| | 2014 |
| Avalon Natick | | Natick, MA | | 407 |
| | 15,645 |
| | 64,845 |
| | 34 |
| | 15,645 |
| | 64,879 |
| | 80,524 |
| | 10,430 |
| | 70,094 |
| | 72,419 |
| | 48,870 |
| | 2013 |
| Avalon at Assembly Row | | Somerville, MA | | 195 |
| | 8,599 |
| | 52,494 |
| | 26 |
| | 8,599 |
| | 52,520 |
| | 61,119 |
| | 6,780 |
| | 54,339 |
| | 56,030 |
| | — |
| | 2015 |
| AVA Somerville | | Somerville, MA | | 250 |
| | 10,945 |
| | 56,470 |
| | 12 |
| | 10,945 |
| | 56,482 |
| | 67,427 |
| | 6,208 |
| | 61,219 |
| | 63,066 |
| | — |
| | 2015 |
| Avalon Prudential Center I (2) | | Boston, MA | | 243 |
| | 8,002 |
| | 32,370 |
| | 38,384 |
| | 8,002 |
| | 70,754 |
| | 78,756 |
| | 28,947 |
| | 49,809 |
| | 47,586 |
| | — |
| | 1968/1998 |
| Eaves Burlington | | Burlington, MA | | 203 |
| | 7,714 |
| | 32,499 |
| | 6,512 |
| | 7,714 |
| | 39,011 |
| | 46,725 |
| | 6,538 |
| | 40,187 |
| | 41,107 |
| | — |
| | 1988/2012 |
| Avalon Canton at Blue Hills | | Canton, MA | | 196 |
| | 6,562 |
| | 33,956 |
| | 132 |
| | 6,562 |
| | 34,088 |
| | 40,650 |
| | 4,503 |
| | 36,147 |
| | 37,391 |
| | — |
| | 2014 |
| Avalon Burlington (2) | | Burlington, MA | | 312 |
| | 15,600 |
| | 58,499 |
| | 18,176 |
| | 15,600 |
| | 76,675 |
| | 92,275 |
| | 13,196 |
| | 79,079 |
| | 81,135 |
| | — |
| | 1989/2013 |
| Eaves North Quincy | | Quincy, MA | | 224 |
| | 11,940 |
| | 39,400 |
| | 3,544 |
| | 11,940 |
| | 42,944 |
| | 54,884 |
| | 9,297 |
| | 45,587 |
| | 46,492 |
| | — |
| | 1977/2013 |
| Avalon at Center Place (1) | | Providence, RI | | 225 |
| | — |
| | 26,816 |
| | 13,271 |
| | — |
| | 40,087 |
| | 40,087 |
| | 24,342 |
| | 15,745 |
| | 15,575 |
| | — |
| | 1991/1997 |
| Total Boston, MA | | 6,427 |
| | $ | 211,519 |
| | $ | 1,048,777 |
| | $ | 145,465 |
| | $ | 211,519 |
| | $ | 1,194,242 |
| | $ | 1,405,761 |
| | $ | 352,970 |
| | $ | 1,052,791 |
| | $ | 1,081,830 |
| | $ | 138,160 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| Avalon Saugus | | Saugus, MA | | 280 | | | $ | 17,809 | | | $ | 72,196 | | | $ | 1,519 | | | $ | 17,809 | | | $ | 73,715 | | | $ | 91,524 | | | $ | 13,075 | | | $ | 78,449 | | | $ | 81,490 | | | $ | — | | | 2019 |
| Avalon Norwood | | Norwood, MA | | 198 | | | 9,478 | | | 51,215 | | | 830 | | | 9,478 | | | 52,045 | | | 61,523 | | | 8,580 | | | 52,943 | | | 55,163 | | | — | | | 2020 |
| Avalon Marlborough II | | Marlborough, MA | | 123 | | | 5,523 | | | 36,367 | | | 63 | | | 5,523 | | | 36,430 | | | 41,953 | | | 4,610 | | | 37,343 | | | 38,727 | | | — | | | 2020 |
| Avalon Easton II | | Easton, MA | | 44 | | | 570 | | | 14,090 | | | — | | | 570 | | | 14,090 | | | 14,660 | | | 1,154 | | | 13,506 | | | 13,974 | | | — | | | 2021 |
| AVA North Point | | Cambridge, MA | | 265 | | | 31,263 | | | 81,196 | | | 2,918 | | | 31,263 | | | 84,114 | | | 115,377 | | | 16,019 | | | 99,358 | | | 102,594 | | | — | | | 2018/2019 |
| Avalon Bear Hill | | Waltham, MA | | 324 | | | 27,350 | | | 93,977 | | | 31,975 | | | 27,350 | | | 125,952 | | | 153,302 | | | 51,236 | | | 102,066 | | | 105,728 | | | — | | | 1999/2013 |
| Avalon Wilton on River Rd | | Wilton, CT | | 102 | | | 2,116 | | | 14,664 | | | 8,311 | | | 2,116 | | | 22,975 | | | 25,091 | | | 17,406 | | | 7,685 | | | 7,957 | | | — | | | 1997 |
| Avalon New Canaan | | New Canaan, CT | | 104 | | | 4,834 | | | 22,990 | | | 7,025 | | | 4,834 | | | 30,015 | | | 34,849 | | | 20,407 | | | 14,442 | | | 15,576 | | | — | | | 2002 |
| Avalon Darien | | Darien, CT | | 189 | | | 6,926 | | | 34,558 | | | 9,816 | | | 6,926 | | | 44,374 | | | 51,300 | | | 28,383 | | | 22,917 | | | 24,498 | | | — | | | 2004 |
| TOTAL NEW ENGLAND | | 9,577 | | | $ | 385,438 | | | $ | 2,094,751 | | | $ | 457,166 | | | $ | 385,438 | | | $ | 2,551,917 | | | $ | 2,937,355 | | | $ | 992,364 | | | $ | 1,944,991 | | | $ | 2,017,472 | | | $ | 45,000 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| METRO NY/NJ | | | | | | | | | | | | | | | | | | | | | | | | | | |
| New York City, NY | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Riverview (3) | | Long Island City, NY | | 372 | | | $ | — | | | $ | 94,061 | | | $ | 16,257 | | | $ | — | | | $ | 110,318 | | | $ | 110,318 | | | $ | 79,750 | | | $ | 30,568 | | | $ | 32,981 | | | $ | — | | | 2002 |
| Avalon Riverview North (3) | | Long Island City, NY | | 602 | | | — | | | 165,932 | | | 19,104 | | | — | | | 185,036 | | | 185,036 | | | 98,183 | | | 86,853 | | | 91,224 | | | — | | | 2008 |
| AVA Fort Greene | | Brooklyn, NY | | 631 | | | 83,038 | | | 216,802 | | | 11,298 | | | 83,038 | | | 228,100 | | | 311,138 | | | 106,100 | | | 205,038 | | | 212,356 | | | — | | | 2010 |
| AVA DoBro | | Brooklyn, NY | | 500 | | | 76,127 | | | 206,762 | | | 1,177 | | | 76,127 | | | 207,939 | | | 284,066 | | | 56,879 | | | 227,187 | | | 233,948 | | | — | | | 2017 |
| Avalon Willoughby Square | | Brooklyn, NY | | 326 | | | 49,635 | | | 134,840 | | | 1,056 | | | 49,635 | | | 135,896 | | | 185,531 | | | 35,122 | | | 150,409 | | | 155,056 | | | — | | | 2017 |
| Avalon Brooklyn Bay | | Brooklyn, NY | | 180 | | | 9,690 | | | 84,361 | | | 651 | | | 9,690 | | | 85,012 | | | 94,702 | | | 19,809 | | | 74,893 | | | 77,480 | | | — | | | 2018 |
| Avalon Midtown West | | New York, NY | | 550 | | | 154,730 | | | 180,253 | | | 53,204 | | | 154,730 | | | 233,457 | | | 388,187 | | | 86,980 | | | 301,207 | | | 306,317 | | | 76,600 | | | 1998/2013 |
| Avalon Clinton North | | New York, NY | | 339 | | | 84,069 | | | 105,821 | | | 16,843 | | | 84,069 | | | 122,664 | | | 206,733 | | | 48,156 | | | 158,577 | | | 161,998 | | | 126,400 | | | 2008/2013 |
| Avalon Clinton South | | New York, NY | | 288 | | | 71,421 | | | 89,851 | | | 10,527 | | | 71,421 | | | 100,378 | | | 171,799 | | | 40,507 | | | 131,292 | | | 133,537 | | | 104,500 | | | 2007/2013 |
| Total New York City, NY | | 3,788 | | | $ | 528,710 | | | $ | 1,278,683 | | | $ | 130,117 | | | $ | 528,710 | | | $ | 1,408,800 | | | $ | 1,937,510 | | | $ | 571,486 | | | $ | 1,366,024 | | | $ | 1,404,897 | | | $ | 307,500 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| New York - Suburban | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Commons | | Smithtown, NY | | 312 | | | $ | 4,679 | | | $ | 27,811 | | | $ | 14,400 | | | $ | 4,679 | | | $ | 42,211 | | | $ | 46,890 | | | $ | 32,309 | | | $ | 14,581 | | | $ | 16,263 | | | $ | — | | | 1997 |
| Avalon Melville | | Melville, NY | | 494 | | | 9,228 | | | 50,059 | | | 25,486 | | | 9,228 | | | 75,545 | | | 84,773 | | | 54,955 | | | 29,818 | | | 31,352 | | | — | | | 1997 |
| Avalon White Plains | | White Plains, NY | | 407 | | | 15,391 | | | 137,312 | | | 3,294 | | | 15,391 | | | 140,606 | | | 155,997 | | | 70,419 | | | 85,578 | | | 90,111 | | | — | | | 2009 |
| Avalon Rockville Centre I | | Rockville Centre, NY | | 349 | | | 32,212 | | | 78,806 | | | 7,508 | | | 32,212 | | | 86,314 | | | 118,526 | | | 38,463 | | | 80,063 | | | 83,041 | | | — | | | 2012 |
| Avalon Garden City | | Garden City, NY | | 204 | | | 18,205 | | | 49,301 | | | 2,054 | | | 18,205 | | | 51,355 | | | 69,560 | | | 20,281 | | | 49,279 | | | 50,691 | | | — | | | 2013 |
| Avalon Huntington Station | | Huntington Station, NY | | 303 | | | 21,899 | | | 58,429 | | | 2,514 | | | 21,899 | | | 60,943 | | | 82,842 | | | 19,870 | | | 62,972 | | | 64,277 | | | — | | | 2014 |
| Avalon Great Neck | | Great Neck, NY | | 191 | | | 14,777 | | | 65,412 | | | 496 | | | 14,777 | | | 65,908 | | | 80,685 | | | 16,352 | | | 64,333 | | | 66,230 | | | — | | | 2017 |
| Avalon Rockville Centre II | | Rockville Centre, NY | | 165 | | | 7,534 | | | 50,981 | | | 635 | | | 7,534 | | | 51,616 | | | 59,150 | | | 12,392 | | | 46,758 | | | 47,759 | | | — | | | 2017 |
| Avalon Somers | | Somers, NY | | 152 | | | 5,608 | | | 40,591 | | | 24 | | | 5,608 | | | 40,615 | | | 46,223 | | | 9,644 | | | 36,579 | | | 37,893 | | | — | | | 2018 |
| Avalon Yonkers | | Yonkers, NY | | 590 | | | 28,267 | | | 172,681 | | | 57 | | | 28,267 | | | 172,738 | | | 201,005 | | | 22,948 | | | 178,057 | | | 198,438 | | | — | | | 2021 |
| Avalon Westbury | | Westbury, NY | | 396 | | | 69,620 | | | 43,736 | | | 19,688 | | | 69,620 | | | 63,424 | | | 133,044 | | | 31,659 | | | 101,385 | | | 100,559 | | | — | | | 2006/2013 |
| Total New York - Suburban | | 3,563 | | | $ | 227,420 | | | $ | 775,119 | | | $ | 76,156 | | | $ | 227,420 | | | $ | 851,275 | | | $ | 1,078,695 | | | $ | 329,292 | | | $ | 749,403 | | | $ | 786,614 | | | $ | — | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| Fairfield-New Haven, CT | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eaves Stamford | | Stamford, CT | | 238 |
| | $ | 5,956 |
| | $ | 23,993 |
| | $ | 13,117 |
| | $ | 5,956 |
| | $ | 37,110 |
| | $ | 43,066 |
| | $ | 24,215 |
| | $ | 18,851 |
| | $ | 20,058 |
| | $ | — |
| | 1991 |
| Avalon Wilton on River Rd | | Wilton, CT | | 102 |
| | 2,116 |
| | 14,664 |
| | 6,422 |
| | 2,116 |
| | 21,086 |
| | 23,202 |
| | 12,077 |
| | 11,125 |
| | 11,314 |
| | — |
| | 1997 |
| Avalon New Canaan | | New Canaan, CT | | 104 |
| | 4,834 |
| | 22,990 |
| | 2,163 |
| | 4,834 |
| | 25,153 |
| | 29,987 |
| | 13,192 |
| | 16,795 |
| | 17,589 |
| | — |
| | 2002 |
| AVA Stamford | | Stamford, CT | | 306 |
| | 13,819 |
| | 56,499 |
| | 5,887 |
| | 13,819 |
| | 62,386 |
| | 76,205 |
| | 32,700 |
| | 43,505 |
| | 45,461 |
| | — |
| | 2002/2002 |
| Avalon Darien | | Darien, CT | | 189 |
| | 6,926 |
| | 34,558 |
| | 2,734 |
| | 6,926 |
| | 37,292 |
| | 44,218 |
| | 18,089 |
| | 26,129 |
| | 27,188 |
| | — |
| | 2004 |
| Avalon Norwalk | | Norwalk, CT | | 311 |
| | 11,320 |
| | 62,904 |
| | 887 |
| | 11,320 |
| | 63,791 |
| | 75,111 |
| | 16,187 |
| | 58,924 |
| | 60,986 |
| | — |
| | 2011 |
| Avalon Wilton on Danbury Rd | | Wilton, CT | | 100 |
| | 6,604 |
| | 23,758 |
| | 150 |
| | 6,604 |
| | 23,908 |
| | 30,512 |
| | 5,573 |
| | 24,939 |
| | 25,681 |
| | — |
| | 2011 |
| Avalon Shelton | | Shelton, CT | | 250 |
| | 7,749 |
| | 40,264 |
| | 88 |
| | 7,749 |
| | 40,352 |
| | 48,101 |
| | 6,697 |
| | 41,404 |
| | 42,826 |
| | — |
| | 2013 |
| Avalon East Norwalk | | Norwalk, CT | | 240 |
| | 10,395 |
| | 36,245 |
| | 119 |
| | 10,395 |
| | 36,364 |
| | 46,759 |
| | 5,670 |
| | 41,089 |
| | 42,317 |
| | — |
| | 2013 |
| Avalon Stratford | | Stratford, CT | | 130 |
| | 2,564 |
| | 27,157 |
| | 33 |
| | 2,564 |
| | 27,190 |
| | 29,754 |
| | 3,274 |
| | 26,480 |
| | 27,424 |
| | — |
| | 2014 |
| Total Fairfield-New Haven, CT | | 1,970 |
| | $ | 72,283 |
| | $ | 343,032 |
| | $ | 31,600 |
| | $ | 72,283 |
| | $ | 374,632 |
| | $ | 446,915 |
| | $ | 137,674 |
| | $ | 309,241 |
| | $ | 320,844 |
| | $ | — |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL NEW ENGLAND | | 8,397 |
| | $ | 283,802 |
| | $ | 1,391,809 |
| | $ | 177,065 |
| | $ | 283,802 |
| | $ | 1,568,874 |
| | $ | 1,852,676 |
| | $ | 490,644 |
| | $ | 1,362,032 |
| | $ | 1,402,674 |
| | $ | 138,160 |
| | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| METRO NY/NJ | | | | | | | | | | | | | | | | | | | | | | | | | | |
| New York City, NY | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Riverview (1) | | Long Island City, NY | | 372 |
| | $ | — |
| | $ | 94,061 |
| | $ | 9,867 |
| | $ | — |
| | $ | 103,928 |
| | $ | 103,928 |
| | $ | 52,510 |
| | $ | 51,418 |
| | $ | 54,912 |
| | $ | — |
| | 2002 |
| Avalon Bowery Place I | | New York, NY | | 206 |
| | 18,575 |
| | 75,009 |
| | 2,890 |
| | 18,575 |
| | 77,899 |
| | 96,474 |
| | 30,174 |
| | 66,300 |
| | 68,882 |
| | 93,800 |
| | 2006 |
| Avalon Bowery Place II | | New York, NY | | 90 |
| | 9,106 |
| | 47,199 |
| | 3,811 |
| | 9,106 |
| | 51,010 |
| | 60,116 |
| | 17,750 |
| | 42,366 |
| | 44,607 |
| | — |
| | 2007 |
| Avalon Morningside Park (3) | | New York, NY | | 295 |
| | 95,465 |
| | 114,233 |
| | 1,580 |
| | 95,465 |
| | 115,813 |
| | 211,278 |
| | 36,625 |
| | 174,653 |
| | 83,027 |
| | 100,000 |
| | 2009 |
| Avalon Fort Greene | | Brooklyn, NY | | 631 |
| | 83,038 |
| | 216,802 |
| | 2,052 |
| | 83,038 |
| | 218,854 |
| | 301,892 |
| | 57,941 |
| | 243,951 |
| | 251,213 |
| | — |
| | 2010 |
| Avalon West Chelsea (1) (4) | | New York, NY | | 305 |
| | — |
| | 119,882 |
| | 243 |
| | — |
| | 120,125 |
| | 120,125 |
| | 13,643 |
| | 106,482 |
| | 102,820 |
| | — |
| | 2015 |
| AVA High Line (1) (4) | | New York, NY | | 405 |
| | — |
| | 159,187 |
| | 33 |
| | — |
| | 159,220 |
| | 159,220 |
| | 20,451 |
| | 138,769 |
| | 152,127 |
| | — |
| | 2015 |
| Avalon Clinton North (2) | | New York, NY | | 339 |
| | 84,069 |
| | 105,821 |
| | 11,529 |
| | 84,069 |
| | 117,350 |
| | 201,419 |
| | 23,412 |
| | 178,007 |
| | 180,740 |
| | 147,000 |
| | 2008/2013 |
| Avalon Clinton South | | New York, NY | | 288 |
| | 71,421 |
| | 89,851 |
| | 6,181 |
| | 71,421 |
| | 96,032 |
| | 167,453 |
| | 20,089 |
| | 147,364 |
| | 150,330 |
| | 121,500 |
| | 2007/2013 |
| Total New York City, NY | | 2,931 |
| | $ | 361,674 |
| | $ | 1,022,045 |
| | $ | 38,186 |
| | $ | 361,674 |
| | $ | 1,060,231 |
| | $ | 1,421,905 |
| | $ | 272,595 |
| | $ | 1,149,310 |
| | $ | 1,088,658 |
| | $ | 462,300 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| New York - Suburban | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Commons | | Smithtown, NY | | 312 |
| | $ | 4,679 |
| | $ | 28,286 |
| | $ | 6,335 |
| | $ | 4,679 |
| | $ | 34,621 |
| | $ | 39,300 |
| | $ | 22,581 |
| | $ | 16,719 |
| | $ | 17,712 |
| | $ | — |
| | 1997 |
| Avalon Green I | | Elmsford, NY | | 105 |
| | 1,820 |
| | 10,525 |
| | 7,522 |
| | 1,820 |
| | 18,047 |
| | 19,867 |
| | 9,870 |
| | 9,997 |
| | 10,633 |
| | — |
| | 1995 |
| Avalon Court | | Melville, NY | | 494 |
| | 9,228 |
| | 50,063 |
| | 6,681 |
| | 9,228 |
| | 56,744 |
| | 65,972 |
| | 35,091 |
| | 30,881 |
| | 32,294 |
| | — |
| | 1997 |
| The Avalon | | Bronxville, NY | | 110 |
| | 2,889 |
| | 28,324 |
| | 8,661 |
| | 2,889 |
| | 36,985 |
| | 39,874 |
| | 19,772 |
| | 20,102 |
| | 21,064 |
| | — |
| | 1999 |
| Avalon at Glen Cove (1) | | Glen Cove, NY | | 256 |
| | 7,871 |
| | 59,969 |
| | 4,245 |
| | 7,871 |
| | 64,214 |
| | 72,085 |
| | 28,810 |
| | 43,275 |
| | 44,881 |
| | — |
| | 2004 |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| New Jersey | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Cove | | Jersey City, NJ | | 504 | | | $ | 8,760 | | | $ | 82,422 | | | $ | 33,937 | | | $ | 8,760 | | | $ | 116,359 | | | $ | 125,119 | | | $ | 91,946 | | | $ | 33,173 | | | $ | 37,018 | | | $ | — | | | 1997 |
| eaves West Windsor (2) | | West Windsor, NJ | | 512 | | | 5,585 | | | 21,752 | | | 35,761 | | | 5,585 | | | 57,513 | | | 63,098 | | | 38,599 | | | 24,499 | | | 25,852 | | | — | | | 1988/1993 |
| Avalon at Edgewater I | | Edgewater, NJ | | 168 | | | 5,982 | | | 24,389 | | | 11,248 | | | 5,982 | | | 35,637 | | | 41,619 | | | 24,235 | | | 17,384 | | | 18,548 | | | — | | | 2002 |
| Avalon at Florham Park | | Florham Park, NJ | | 270 | | | 6,647 | | | 34,906 | | | 17,845 | | | 6,647 | | | 52,751 | | | 59,398 | | | 36,218 | | | 23,180 | | | 24,941 | | | — | | | 2001 |
| Avalon North Bergen | | North Bergen, NJ | | 164 | | | 8,984 | | | 30,994 | | | 1,493 | | | 8,984 | | | 32,487 | | | 41,471 | | | 13,173 | | | 28,298 | | | 29,364 | | | — | | | 2012 |
| Avalon at Wesmont Station I | | Wood-Ridge, NJ | | 266 | | | 14,682 | | | 41,610 | | | 4,354 | | | 14,682 | | | 45,964 | | | 60,646 | | | 18,513 | | | 42,133 | | | 43,071 | | | — | | | 2012 |
| Avalon Hackensack at Riverside | | Hackensack, NJ | | 226 | | | 9,939 | | | 44,619 | | | 2,329 | | | 9,939 | | | 46,948 | | | 56,887 | | | 17,376 | | | 39,511 | | | 41,169 | | | — | | | 2013 |
| Avalon at Wesmont Station II | | Wood-Ridge, NJ | | 140 | | | 6,502 | | | 16,851 | | | 856 | | | 6,502 | | | 17,707 | | | 24,209 | | | 6,685 | | | 17,524 | | | 18,010 | | | — | | | 2013 |
| Avalon Bloomingdale | | Bloomingdale, NJ | | 174 | | | 3,006 | | | 27,801 | | | 1,116 | | | 3,006 | | | 28,917 | | | 31,923 | | | 10,191 | | | 21,732 | | | 22,524 | | | — | | | 2014 |
| Avalon Wharton | | Wharton, NJ | | 247 | | | 2,273 | | | 48,609 | | | 1,700 | | | 2,273 | | | 50,309 | | | 52,582 | | | 15,948 | | | 36,634 | | | 38,379 | | | — | | | 2015 |
| Avalon Bloomfield Station (1) | | Bloomfield, NJ | | 224 | | | 10,701 | | | 36,430 | | | 2,195 | | | 10,701 | | | 38,625 | | | 49,326 | | | 11,365 | | | 37,961 | | | 38,182 | | | — | | | 2015 |
| Avalon Roseland | | Roseland, NJ | | 136 | | | 11,288 | | | 34,868 | | | 892 | | | 11,288 | | | 35,760 | | | 47,048 | | | 10,767 | | | 36,281 | | | 37,228 | | | — | | | 2015 |
| Avalon Princeton | | Princeton, NJ | | 280 | | | 26,461 | | | 68,003 | | | 1,639 | | | 26,461 | | | 69,642 | | | 96,103 | | | 18,272 | | | 77,831 | | | 79,743 | | | — | | | 2017 |
| Avalon Union | | Union, NJ | | 202 | | | 11,695 | | | 36,315 | | | 1,392 | | | 11,695 | | | 37,707 | | | 49,402 | | | 10,483 | | | 38,919 | | | 39,551 | | | — | | | 2016 |
| Avalon Hoboken | | Hoboken, NJ | | 217 | | | 37,237 | | | 90,278 | | | 7,624 | | | 37,237 | | | 97,902 | | | 135,139 | | | 32,649 | | | 102,490 | | | 105,557 | | | — | | | 2008/2016 |
| Avalon Maplewood | | Maplewood, NJ | | 235 | | | 15,179 | | | 49,425 | | | 2,630 | | | 15,179 | | | 52,055 | | | 67,234 | | | 13,085 | | | 54,149 | | | 55,666 | | | — | | | 2018 |
| Avalon Boonton | | Boonton, NJ | | 350 | | | 3,595 | | | 89,407 | | | 1,379 | | | 3,595 | | | 90,786 | | | 94,381 | | | 16,042 | | | 78,339 | | | 81,519 | | | — | | | 2019 |
| Avalon Teaneck | | Teaneck, NJ | | 248 | | | 12,588 | | | 60,257 | | | 89 | | | 12,588 | | | 60,346 | | | 72,934 | | | 10,161 | | | 62,773 | | | 65,193 | | | — | | | 2020 |
| Avalon Piscataway | | Piscataway, NJ | | 360 | | | 14,329 | | | 75,897 | | | 628 | | | 14,329 | | | 76,525 | | | 90,854 | | | 15,443 | | | 75,411 | | | 78,417 | | | — | | | 2019 |
| Avalon Old Bridge | | Old Bridge, NJ | | 252 | | | 6,895 | | | 64,907 | | | 647 | | | 6,895 | | | 65,554 | | | 72,449 | | | 7,955 | | | 64,494 | | | 67,152 | | | — | | | 2021 |
| Avalon at Edgewater II | | Edgewater, NJ | | 240 | | | 8,605 | | | 60,809 | | | 162 | | | 8,605 | | | 60,971 | | | 69,576 | | | 13,723 | | | 55,853 | | | 58,059 | | | — | | | 2018 |
| Total New Jersey | | 5,415 | | | $ | 230,933 | | | $ | 1,040,549 | | | $ | 129,916 | | | $ | 230,933 | | | $ | 1,170,465 | | | $ | 1,401,398 | | | $ | 432,829 | | | $ | 968,569 | | | $ | 1,005,143 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL METRO NY/NJ | | 12,766 | | | $ | 987,063 | | | $ | 3,094,351 | | | $ | 336,189 | | | $ | 987,063 | | | $ | 3,430,540 | | | $ | 4,417,603 | | | $ | 1,333,607 | | | $ | 3,083,996 | | | $ | 3,196,654 | | | $ | 307,500 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| MID-ATLANTIC | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Washington Metro/Baltimore, MD | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon at Foxhall (2) | | Washington, D.C. | | 308 | | | $ | 6,848 | | | $ | 27,614 | | | $ | 26,947 | | | $ | 6,848 | | | $ | 54,561 | | | $ | 61,409 | | | $ | 43,286 | | | $ | 18,123 | | | $ | 15,542 | | | $ | — | | | 1982/1994 |
| Avalon at Gallery Place | | Washington, D.C. | | 203 | | | 8,800 | | | 39,658 | | | 6,850 | | | 8,800 | | | 46,508 | | | 55,308 | | | 31,375 | | | 23,933 | | | 24,523 | | | — | | | 2003 |
| AVA H Street | | Washington, D.C. | | 138 | | | 7,425 | | | 25,282 | | | 759 | | | 7,425 | | | 26,041 | | | 33,466 | | | 10,132 | | | 23,334 | | | 23,824 | | | — | | | 2013 |
| Avalon The Albemarle | | Washington, D.C. | | 234 | | | 25,140 | | | 52,459 | | | 11,231 | | | 25,140 | | | 63,690 | | | 88,830 | | | 27,955 | | | 60,875 | | | 62,715 | | | — | | | 1966/2013 |
| eaves Tunlaw Gardens | | Washington, D.C. | | 166 | | | 16,430 | | | 22,902 | | | 2,964 | | | 16,430 | | | 25,866 | | | 42,296 | | | 11,065 | | | 31,231 | | | 32,043 | | | — | | | 1944/2013 |
| The Statesman | | Washington, D.C. | | 281 | | | 38,140 | | | 35,352 | | | 7,359 | | | 38,140 | | | 42,711 | | | 80,851 | | | 18,980 | | | 61,871 | | | 62,825 | | | — | | | 1961/2013 |
| eaves Glover Park | | Washington, D.C. | | 120 | | | 9,580 | | | 26,532 | | | 2,912 | | | 9,580 | | | 29,444 | | | 39,024 | | | 12,826 | | | 26,198 | | | 27,160 | | | — | | | 1953/2013 |
| AVA Van Ness (2) | | Washington, D.C. | | 269 | | | 22,890 | | | 58,691 | | | 25,666 | | | 22,890 | | | 84,357 | | | 107,247 | | | 30,746 | | | 76,501 | | | 78,188 | | | — | | | 1978/2013 |
| Avalon First and M | | Washington, D.C. | | 469 | | | 43,700 | | | 153,950 | | | 6,092 | | | 43,700 | | | 160,042 | | | 203,742 | | | 61,290 | | | 142,452 | | | 147,209 | | | — | | | 2012/2013 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| Avalon Glen Cove North (1) | | Glen Cove, NY | | 111 |
| | 2,577 |
| | 37,336 |
| | 531 |
| | 2,577 |
| | 37,867 |
| | 40,444 |
| | 13,875 |
| | 26,569 |
| | 27,768 |
| | — |
| | 2007 |
| Avalon White Plains | | White Plains, NY | | 407 |
| | 15,391 |
| | 137,353 |
| | 996 |
| | 15,391 |
| | 138,349 |
| | 153,740 |
| | 41,499 |
| | 112,241 |
| | 116,188 |
| | — |
| | 2009 |
| Avalon Rockville Centre I | | Rockville Centre, NY | | 349 |
| | 32,212 |
| | 78,806 |
| | 1,013 |
| | 32,212 |
| | 79,819 |
| | 112,031 |
| | 17,284 |
| | 94,747 |
| | 97,195 |
| | — |
| | 2012 |
| Avalon Green II | | Elmsford, NY | | 444 |
| | 27,765 |
| | 77,560 |
| | 223 |
| | 27,765 |
| | 77,783 |
| | 105,548 |
| | 15,714 |
| | 89,834 |
| | 92,537 |
| | — |
| | 2012 |
| Avalon Garden City | | Garden City, NY | | 204 |
| | 18,205 |
| | 49,326 |
| | 416 |
| | 18,205 |
| | 49,742 |
| | 67,947 |
| | 9,436 |
| | 58,511 |
| | 60,173 |
| | — |
| | 2013 |
| Avalon Ossining | | Ossining, NY | | 168 |
| | 6,392 |
| | 30,313 |
| | — |
| | 6,392 |
| | 30,313 |
| | 36,705 |
| | 4,078 |
| | 32,627 |
| | 33,734 |
| | — |
| | 2014 |
| Avalon Huntington Station | | Huntington Station, NY | | 303 |
| | 21,898 |
| | 58,457 |
| | — |
| | 21,898 |
| | 58,457 |
| | 80,355 |
| | 7,224 |
| | 73,131 |
| | 75,462 |
| | — |
| | 2014 |
| Avalon Westbury | | Westbury, NY | | 396 |
| | 69,620 |
| | 43,781 |
| | 10,941 |
| | 69,620 |
| | 54,722 |
| | 124,342 |
| | 15,286 |
| | 109,056 |
| | 110,752 |
| | 78,650 |
| | 2006/2013 |
| Total New York - Suburban | | 3,659 |
| | $ | 220,547 |
| | $ | 690,099 |
| | $ | 47,564 |
| | $ | 220,547 |
| | $ | 737,663 |
| | $ | 958,210 |
| | $ | 240,520 |
| | $ | 717,690 |
| | $ | 740,393 |
| | $ | 78,650 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| New Jersey | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Cove | | Jersey City, NJ | | 504 |
| | $ | 8,760 |
| | $ | 82,422 |
| | $ | 22,967 |
| | $ | 8,760 |
| | $ | 105,389 |
| | $ | 114,149 |
| | $ | 64,885 |
| | $ | 49,264 |
| | $ | 51,954 |
| | $ | — |
| | 1997 |
| Eaves Lawrenceville (2) | | Lawrenceville, NJ | | 632 |
| | 14,650 |
| | 60,486 |
| | 11,899 |
| | 14,650 |
| | 72,385 |
| | 87,035 |
| | 32,099 |
| | 54,936 |
| | 57,334 |
| | — |
| | 1994 |
| Avalon Princeton Junction | | West Windsor, NJ | | 512 |
| | 5,585 |
| | 22,382 |
| | 21,675 |
| | 5,585 |
| | 44,057 |
| | 49,642 |
| | 26,010 |
| | 23,632 |
| | 24,587 |
| | — |
| | 1988/1993 |
| Avalon Tinton Falls | | Tinton Falls, NJ | | 216 |
| | 7,939 |
| | 33,170 |
| | 520 |
| | 7,939 |
| | 33,690 |
| | 41,629 |
| | 11,225 |
| | 30,404 |
| | 31,528 |
| | — |
| | 2008 |
| Avalon West Long Branch | | West Long Branch, NJ | | 180 |
| | 2,721 |
| | 22,925 |
| | 136 |
| | 2,721 |
| | 23,061 |
| | 25,782 |
| | 6,054 |
| | 19,728 |
| | 20,549 |
| | — |
| | 2011 |
| Avalon North Bergen | | North Bergen, NJ | | 164 |
| | 8,984 |
| | 30,994 |
| | 949 |
| | 8,984 |
| | 31,943 |
| | 40,927 |
| | 6,495 |
| | 34,432 |
| | 35,686 |
| | — |
| | 2012 |
| Avalon at Wesmont Station I | | Wood-Ridge, NJ | | 266 |
| | 14,682 |
| | 41,635 |
| | 1,101 |
| | 14,682 |
| | 42,736 |
| | 57,418 |
| | 8,365 |
| | 49,053 |
| | 49,991 |
| | — |
| | 2012 |
| Avalon Hackensack at Riverside (1) | | Hackensack, NJ | | 226 |
| | — |
| | 44,619 |
| | 128 |
| | — |
| | 44,747 |
| | 44,747 |
| | 7,140 |
| | 37,607 |
| | 39,099 |
| | — |
| | 2013 |
| Avalon Somerset | | Somerset, NJ | | 384 |
| | 18,241 |
| | 58,338 |
| | 226 |
| | 18,241 |
| | 58,564 |
| | 76,805 |
| | 9,817 |
| | 66,988 |
| | 69,023 |
| | — |
| | 2013 |
| Avalon at Wesmont Station II | | Wood-Ridge, NJ | | 140 |
| | 6,502 |
| | 16,865 |
| | — |
| | 6,502 |
| | 16,865 |
| | 23,367 |
| | 2,865 |
| | 20,502 |
| | 21,131 |
| | — |
| | 2013 |
| Avalon Bloomingdale | | Bloomingdale, NJ | | 174 |
| | 3,006 |
| | 27,801 |
| | 71 |
| | 3,006 |
| | 27,872 |
| | 30,878 |
| | 4,119 |
| | 26,759 |
| | 27,635 |
| | — |
| | 2014 |
| Avalon Wharton | | Wharton, NJ | | 247 |
| | 2,273 |
| | 48,609 |
| | 98 |
| | 2,273 |
| | 48,707 |
| | 50,980 |
| | 5,167 |
| | 45,813 |
| | 47,455 |
| | — |
| | 2015 |
| Avalon Roseland | | Roseland, NJ | | 136 |
| | 11,288 |
| | 34,928 |
| | — |
| | 11,288 |
| | 34,928 |
| | 46,216 |
| | 3,260 |
| | 42,956 |
| | 44,078 |
| | — |
| | 2015 |
| Total New Jersey | | | | 3,781 |
| | $ | 104,631 |
| | $ | 525,174 |
| | $ | 59,770 |
| | $ | 104,631 |
| | $ | 584,944 |
| | $ | 689,575 |
| | $ | 187,501 |
| | $ | 502,074 |
| | $ | 520,050 |
| | $ | — |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL METRO NY/NJ | | 10,371 |
| | $ | 686,852 |
| | $ | 2,237,318 |
| | $ | 145,520 |
| | $ | 686,852 |
| | $ | 2,382,838 |
| | $ | 3,069,690 |
| | $ | 700,616 |
| | $ | 2,369,074 |
| | $ | 2,349,101 |
| | $ | 540,950 |
| | |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| AVA NoMa | | Washington, D.C. | | 438 | | | $ | 25,246 | | | $ | 114,933 | | | $ | 1,743 | | | $ | 25,246 | | | $ | 116,676 | | | $ | 141,922 | | | $ | 30,359 | | | $ | 111,563 | | | $ | 114,529 | | | $ | — | | | 2018 |
| eaves Washingtonian Center | | North Potomac, MD | | 288 | | | 4,047 | | | 18,553 | | | 8,215 | | | 4,047 | | | 26,768 | | | 30,815 | | | 21,923 | | | 8,892 | | | 9,067 | | | — | | | 1996 |
| eaves Columbia Town Center | | Columbia, MD | | 392 | | | 8,802 | | | 35,536 | | | 16,343 | | | 8,802 | | | 51,879 | | | 60,681 | | | 31,903 | | | 28,778 | | | 29,195 | | | — | | | 1986/1993 |
| Avalon at Grosvenor Station | | Bethesda, MD | | 497 | | | 29,159 | | | 52,993 | | | 9,860 | | | 29,159 | | | 62,853 | | | 92,012 | | | 41,697 | | | 50,315 | | | 51,889 | | | — | | | 2004 |
| Avalon at Traville | | Rockville, MD | | 520 | | | 14,365 | | | 55,398 | | | 10,537 | | | 14,365 | | | 65,935 | | | 80,300 | | | 44,203 | | | 36,097 | | | 37,487 | | | — | | | 2004 |
| AVA Wheaton | | Wheaton, MD | | 319 | | | 6,494 | | | 69,027 | | | 260 | | | 6,494 | | | 69,287 | | | 75,781 | | | 16,799 | | | 58,982 | | | 61,221 | | | — | | | 2018 |
| Kanso Twinbrook | | Rockville, MD | | 238 | | | 9,151 | | | 56,959 | | | 40 | | | 9,151 | | | 56,999 | | | 66,150 | | | 6,327 | | | 59,823 | | | 61,961 | | | — | | | 2021 |
| Avalon Hunt Valley | | Hunt Valley, MD | | 332 | | | 10,872 | | | 62,992 | | | 375 | | | 10,872 | | | 63,367 | | | 74,239 | | | 16,338 | | | 57,901 | | | 59,931 | | | — | | | 2017 |
| Avalon Laurel | | Laurel, MD | | 344 | | | 10,130 | | | 61,685 | | | 846 | | | 10,130 | | | 62,531 | | | 72,661 | | | 16,461 | | | 56,200 | | | 57,779 | | | — | | | 2017 |
| Avalon Towson | | Towson, MD | | 371 | | | 12,906 | | | 98,307 | | | — | | | 12,906 | | | 98,307 | | | 111,213 | | | 13,522 | | | 97,691 | | | 101,657 | | | — | | | 2020 |
| Avalon Fairway Hills - Meadows | | Columbia, MD | | 192 | | | 2,323 | | | 9,297 | | | 8,188 | | | 2,323 | | | 17,485 | | | 19,808 | | | 12,333 | | | 7,475 | | | 5,417 | | | — | | | 1987/1996 |
| Avalon Fairway Hills - Woods | | Columbia, MD | | 336 | | | 3,958 | | | 15,839 | | | 16,459 | | | 3,958 | | | 32,298 | | | 36,256 | | | 21,534 | | | 14,722 | | | 14,319 | | | — | | | 1987/1996 |
| Avalon Arundel Crossing II | | Linthicum Heights, MD | | 310 | | | 12,208 | | | 69,888 | | | 3,430 | | | 12,208 | | | 73,318 | | | 85,526 | | | 18,674 | | | 66,852 | | | 69,269 | | | — | | | 2018/2018 |
| Kanso Silver Spring | | Silver Spring, MD | | 151 | | | 3,471 | | | 41,393 | | | 2,297 | | | 3,471 | | | 43,690 | | | 47,161 | | | 8,238 | | | 38,923 | | | 39,652 | | | — | | | 2009/2019 |
| Avalon Arundel Crossing | | Linthicum Heights, MD | | 384 | | | 9,933 | | | 108,911 | | | 2,876 | | | 9,933 | | | 111,787 | | | 121,720 | | | 15,854 | | | 105,866 | | | 110,693 | | | — | | | 2020/2021 |
| Avalon Russett | | Laurel, MD | | 238 | | | 10,200 | | | 47,524 | | | 7,073 | | | 10,200 | | | 54,597 | | | 64,797 | | | 23,028 | | | 41,769 | | | 42,887 | | | 32,200 | | | 1999/2013 |
| eaves Fair Lakes | | Fairfax, VA | | 420 | | | 6,096 | | | 24,400 | | | 15,934 | | | 6,096 | | | 40,334 | | | 46,430 | | | 31,119 | | | 15,311 | | | 16,504 | | | — | | | 1989/1996 |
| eaves Fairfax City | | Fairfax, VA | | 141 | | | 2,152 | | | 8,907 | | | 5,885 | | | 2,152 | | | 14,792 | | | 16,944 | | | 11,084 | | | 5,860 | | | 6,278 | | | — | | | 1988/1997 |
| Avalon Tysons Corner (2) | | Tysons Corner, VA | | 558 | | | 13,851 | | | 43,397 | | | 18,581 | | | 13,851 | | | 61,978 | | | 75,829 | | | 46,096 | | | 29,733 | | | 30,382 | | | — | | | 1996 |
| Avalon at Arlington Square | | Arlington, VA | | 842 | | | 22,041 | | | 90,296 | | | 38,686 | | | 22,041 | | | 128,982 | | | 151,023 | | | 80,299 | | | 70,724 | | | 71,717 | | | — | | | 2001 |
| eaves Fairfax Towers | | Falls Church, VA | | 415 | | | 17,889 | | | 74,727 | | | 16,757 | | | 17,889 | | | 91,484 | | | 109,373 | | | 39,370 | | | 70,003 | | | 73,482 | | | — | | | 1978/2011 |
| Avalon Mosaic | | Fairfax, VA | | 531 | | | 33,490 | | | 75,801 | | | 2,652 | | | 33,490 | | | 78,453 | | | 111,943 | | | 26,670 | | | 85,273 | | | 85,707 | | | — | | | 2014 |
| Avalon Potomac Yard | | Alexandria, VA | | 323 | | | 24,225 | | | 81,982 | | | 4,294 | | | 24,225 | | | 86,276 | | | 110,501 | | | 28,224 | | | 82,277 | | | 84,838 | | | — | | | 2014/2016 |
| Avalon Clarendon | | Arlington, VA | | 300 | | | 22,573 | | | 95,355 | | | 10,816 | | | 22,573 | | | 106,171 | | | 128,744 | | | 34,207 | | | 94,537 | | | 98,098 | | | — | | | 2002/2016 |
| Avalon Dunn Loring | | Vienna, VA | | 440 | | | 29,377 | | | 115,465 | | | 7,358 | | | 29,377 | | | 122,823 | | | 152,200 | | | 35,634 | | | 116,566 | | | 120,242 | | | — | | | 2012/2017 |
| eaves Tysons Corner | | Vienna, VA | | 217 | | | 16,030 | | | 45,420 | | | 4,547 | | | 16,030 | | | 49,967 | | | 65,997 | | | 22,594 | | | 43,403 | | | 44,851 | | | — | | | 1980/2013 |
| Avalon Courthouse Place | | Arlington, VA | | 564 | | | 56,550 | | | 178,032 | | | 19,825 | | | 56,550 | | | 197,857 | | | 254,407 | | | 78,761 | | | 175,646 | | | 180,786 | | | — | | | 1999/2013 |
| Avalon Arlington North (2) | | Arlington, VA | | 228 | | | 21,600 | | | 59,076 | | | 10,018 | | | 21,600 | | | 69,094 | | | 90,694 | | | 23,957 | | | 66,737 | | | 65,465 | | | — | | | 2014 |
| Avalon Reston Landing | | Reston, VA | | 400 | | | 26,710 | | | 83,084 | | | 16,036 | | | 26,710 | | | 99,120 | | | 125,830 | | | 44,233 | | | 81,597 | | | 84,726 | | | — | | | 2000/2013 |
| Avalon Falls Church | | Falls Church, VA | | 384 | | | 39,544 | | | 66,160 | | | 820 | | | 39,544 | | | 66,980 | | | 106,524 | | | 20,315 | | | 86,209 | | | 87,780 | | | — | | | 2016 |
| TOTAL MID-ATLANTIC | | 13,301 | | | $ | 684,346 | | | $ | 2,403,777 | | | $ | 351,531 | | | $ | 684,346 | | | $ | 2,755,308 | | | $ | 3,439,654 | | | $ | 1,109,411 | | | $ | 2,330,243 | | | $ | 2,391,838 | | | $ | 32,200 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| DENVER, CO | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Denver West | | Lakewood, CO | | 252 | | | $ | 8,047 | | | $ | 67,861 | | | $ | 3,367 | | | $ | 8,047 | | | $ | 71,228 | | | $ | 79,275 | | | $ | 19,434 | | | $ | 59,841 | | | $ | 61,852 | | | $ | — | | | 2016/2017 |
| Avalon Meadows at Castle Rock | | Castle Rock, CO | | 240 | | | 8,527 | | | 64,565 | | | 1,548 | | | 8,527 | | | 66,113 | | | 74,640 | | | 16,269 | | | 58,371 | | | 61,241 | | | — | | | 2018/2018 |
| Avalon Red Rocks | | Littleton, CO | | 256 | | | 4,461 | | | 70,103 | | | 1,745 | | | 4,461 | | | 71,848 | | | 76,309 | | | 17,954 | | | 58,355 | | | 61,311 | | | — | | | 2018/2018 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| MID-ATLANTIC | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Washington Metro/Baltimore, MD | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon at Foxhall | | Washington, D.C. | | 308 |
| | $ | 6,848 |
| | $ | 27,614 |
| | $ | 15,456 |
| | $ | 6,848 |
| | $ | 43,070 |
| | $ | 49,918 |
| | $ | 29,439 |
| | $ | 20,479 |
| | $ | 20,360 |
| | $ | — |
| | 1982/1994 |
| Avalon at Gallery Place | | Washington, D.C. | | 203 |
| | 8,800 |
| | 39,658 |
| | 2,167 |
| | 8,800 |
| | 41,825 |
| | 50,625 |
| | 21,005 |
| | 29,620 |
| | 31,047 |
| | — |
| | 2003 |
| AVA H Street | | Washington, D.C. | | 138 |
| | 7,425 |
| | 25,282 |
| | 44 |
| | 7,425 |
| | 25,326 |
| | 32,751 |
| | 4,717 |
| | 28,034 |
| | 28,998 |
| | — |
| | 2013 |
| Avalon The Albemarle | | Washington, D.C. | | 231 |
| | 25,140 |
| | 52,459 |
| | 6,592 |
| | 25,140 |
| | 59,051 |
| | 84,191 |
| | 12,774 |
| | 71,417 |
| | 72,134 |
| | — |
| | 1966/2013 |
| Eaves Tunlaw Gardens | | Washington, D.C. | | 166 |
| | 16,430 |
| | 22,902 |
| | 2,344 |
| | 16,430 |
| | 25,246 |
| | 41,676 |
| | 5,727 |
| | 35,949 |
| | 36,751 |
| | — |
| | 1944/2013 |
| The Statesman | | Washington, D.C. | | 281 |
| | 38,140 |
| | 35,352 |
| | 4,111 |
| | 38,140 |
| | 39,463 |
| | 77,603 |
| | 9,916 |
| | 67,687 |
| | 68,834 |
| | — |
| | 1961/2013 |
| Eaves Glover Park | | Washington, D.C. | | 120 |
| | 9,580 |
| | 26,532 |
| | 2,408 |
| | 9,580 |
| | 28,940 |
| | 38,520 |
| | 6,575 |
| | 31,945 |
| | 32,944 |
| | — |
| | 1953/2013 |
| Avalon First and M | | Washington, D.C. | | 469 |
| | 43,700 |
| | 153,950 |
| | 3,195 |
| | 43,700 |
| | 157,145 |
| | 200,845 |
| | 28,554 |
| | 172,291 |
| | 177,621 |
| | — |
| | 2012/2013 |
| Avalon at Fairway Hills | | Columbia, MD | | 720 |
| | 8,603 |
| | 34,432 |
| | 16,302 |
| | 8,603 |
| | 50,734 |
| | 59,337 |
| | 33,393 |
| | 25,944 |
| | 27,384 |
| | — |
| | 1987/1996 |
| Eaves Washingtonian Center | | North Potomac, MD | | 288 |
| | 4,047 |
| | 18,553 |
| | 2,784 |
| | 4,047 |
| | 21,337 |
| | 25,384 |
| | 14,268 |
| | 11,116 |
| | 11,258 |
| | — |
| | 1996 |
| Eaves Columbia Town Center | | Columbia, MD | | 392 |
| | 8,802 |
| | 35,536 |
| | 12,155 |
| | 8,802 |
| | 47,691 |
| | 56,493 |
| | 20,971 |
| | 35,522 |
| | 36,814 |
| | — |
| | 1986/1993 |
| Avalon at Grosvenor Station | | Bethesda, MD | | 497 |
| | 29,159 |
| | 52,993 |
| | 2,642 |
| | 29,159 |
| | 55,635 |
| | 84,794 |
| | 27,043 |
| | 57,751 |
| | 59,405 |
| | — |
| | 2004 |
| Avalon at Traville | | Rockville, MD | | 520 |
| | 14,365 |
| | 55,398 |
| | 4,155 |
| | 14,365 |
| | 59,553 |
| | 73,918 |
| | 27,917 |
| | 46,001 |
| | 48,065 |
| | — |
| | 2004 |
| Avalon Russett | | Laurel, MD | | 238 |
| | 10,200 |
| | 47,524 |
| | 3,220 |
| | 10,200 |
| | 50,744 |
| | 60,944 |
| | 11,037 |
| | 49,907 |
| | 51,425 |
| | 32,200 |
| | 1999/2013 |
| Eaves Fair Lakes | | Fairfax, VA | | 420 |
| | 6,096 |
| | 24,400 |
| | 8,904 |
| | 6,096 |
| | 33,304 |
| | 39,400 |
| | 21,265 |
| | 18,135 |
| | 18,986 |
| | — |
| | 1989/1996 |
| AVA Ballston | | Arlington, VA | | 344 |
| | 7,291 |
| | 29,177 |
| | 16,302 |
| | 7,291 |
| | 45,479 |
| | 52,770 |
| | 29,144 |
| | 23,626 |
| | 25,196 |
| | — |
| | 1990 |
| Avalon Tysons Corner | | Tysons Corner, VA | | 558 |
| | 13,851 |
| | 43,397 |
| | 12,788 |
| | 13,851 |
| | 56,185 |
| | 70,036 |
| | 32,826 |
| | 37,210 |
| | 38,956 |
| | — |
| | 1996 |
| Avalon Park Crest | | Tysons Corner, VA | | 354 |
| | 13,554 |
| | 63,526 |
| | 274 |
| | 13,554 |
| | 63,800 |
| | 77,354 |
| | 11,932 |
| | 65,422 |
| | 67,595 |
| | — |
| | 2013 |
| Eaves Fairfax Towers (2) | | Falls Church, VA | | 415 |
| | 17,889 |
| | 74,727 |
| | 4,446 |
| | 17,889 |
| | 79,173 |
| | 97,062 |
| | 18,433 |
| | 78,629 |
| | 79,263 |
| | — |
| | 1978/2011 |
| Avalon Mosaic | | Fairfax, VA | | 531 |
| | 33,490 |
| | 75,802 |
| | — |
| | 33,490 |
| | 75,802 |
| | 109,292 |
| | 10,461 |
| | 98,831 |
| | 101,637 |
| | — |
| | 2014 |
| Avalon Ballston Place | | Arlington, VA | | 383 |
| | 38,490 |
| | 123,645 |
| | 5,049 |
| | 38,490 |
| | 128,694 |
| | 167,184 |
| | 24,830 |
| | 142,354 |
| | 146,479 |
| | — |
| | 2001/2013 |
| Eaves Tysons Corner | | Vienna, VA | | 217 |
| | 16,030 |
| | 45,420 |
| | 2,967 |
| | 16,030 |
| | 48,387 |
| | 64,417 |
| | 11,140 |
| | 53,277 |
| | 54,923 |
| | — |
| | 1980/2013 |
| Avalon Courthouse Place | | Arlington, VA | | 564 |
| | 56,550 |
| | 178,032 |
| | 10,254 |
| | 56,550 |
| | 188,286 |
| | 244,836 |
| | 37,860 |
| | 206,976 |
| | 213,114 |
| | — |
| | 1999/2013 |
| Avalon Arlington North | | Arlington, VA | | 228 |
| | 21,600 |
| | 59,076 |
| | 34 |
| | 21,600 |
| | 59,110 |
| | 80,710 |
| | 7,797 |
| | 72,913 |
| | 74,995 |
| | — |
| | 2014 |
| Avalon Reston Landing | | Reston, VA | | 400 |
| | 26,710 |
| | 83,084 |
| | 6,212 |
| | 26,710 |
| | 89,296 |
| | 116,006 |
| | 20,027 |
| | 95,979 |
| | 98,438 |
| | — |
| | 2000/2013 |
| TOTAL MID-ATLANTIC | | 8,985 |
| | $ | 482,790 |
| | $ | 1,428,471 |
| | $ | 144,805 |
| | $ | 482,790 |
| | $ | 1,573,276 |
| | $ | 2,056,066 |
| | $ | 479,051 |
| | $ | 1,577,015 |
| | $ | 1,622,622 |
| | $ | 32,200 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| Avalon Southlands | | Aurora, CO | | 338 | | | $ | 5,101 | | | $ | 85,184 | | | $ | 1,910 | | | $ | 5,101 | | | $ | 87,094 | | | $ | 92,195 | | | $ | 20,839 | | | $ | 71,356 | | | $ | 75,302 | | | $ | — | | | 2018/2019 |
| TOTAL DENVER, CO | | 1,086 | | | $ | 26,136 | | | $ | 287,713 | | | $ | 8,570 | | | $ | 26,136 | | | $ | 296,283 | | | $ | 322,419 | | | $ | 74,496 | | | $ | 247,923 | | | $ | 259,706 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| SOUTHEAST FLORIDA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon 850 Boca | | Boca Raton, FL | | 370 | | | $ | 21,430 | | | $ | 114,626 | | | $ | 5,499 | | | $ | 21,430 | | | $ | 120,125 | | | $ | 141,555 | | | $ | 31,301 | | | $ | 110,254 | | | $ | 113,769 | | | $ | — | | | 2017/2017 |
| Avalon Doral | | Doral, FL | | 350 | | | 23,392 | | | 92,949 | | | — | | | 23,392 | | | 92,949 | | | 116,341 | | | 10,744 | | | 105,597 | | | 108,861 | | | — | | | 2020 |
| Avalon West Palm Beach | | West Palm Beach, FL | | 290 | | | 9,597 | | | 91,411 | | | 5,703 | | | 9,597 | | | 97,114 | | | 106,711 | | | 22,694 | | | 84,017 | | | 87,164 | | | — | | | 2018/2018 |
| Avalon Bonterra | | Hialeah, FL | | 314 | | | 16,655 | | | 71,180 | | | 3,608 | | | 16,655 | | | 74,788 | | | 91,443 | | | 17,723 | | | 73,720 | | | 76,764 | | | — | | | 2018/2019 |
| Avalon Toscana | | Margate, FL | | 240 | | | 9,213 | | | 49,936 | | | 2,457 | | | 9,213 | | | 52,393 | | | 61,606 | | | 10,587 | | | 51,019 | | | 52,600 | | | — | | | 2016/2019 |
| Avalon Fort Lauderdale | | Fort Lauderdale, FL | | 243 | | | 20,029 | | | 122,394 | | | 6,895 | | | 20,029 | | | 129,289 | | | 149,318 | | | 13,760 | | | 135,558 | | | 140,432 | | | — | | | 2020/2021 |
| Avalon Miramar | | Miramar, FL | | 380 | | | 17,959 | | | 110,895 | | | 5,789 | | | 17,959 | | | 116,684 | | | 134,643 | | | 15,283 | | | 119,360 | | | 123,611 | | | — | | | 2018/2021 |
| TOTAL SOUTHEAST FLORIDA | | 2,187 | | | $ | 118,275 | | | $ | 653,391 | | | $ | 29,951 | | | $ | 118,275 | | | $ | 683,342 | | | $ | 801,617 | | | $ | 122,092 | | | $ | 679,525 | | | $ | 703,201 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| PACIFIC NORTHWEST | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Seattle, WA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon at Bear Creek | | Redmond, WA | | 264 | | | $ | 6,786 | | | $ | 27,641 | | | $ | 9,169 | | | $ | 6,786 | | | $ | 36,810 | | | $ | 43,596 | | | $ | 29,552 | | | $ | 14,044 | | | $ | 14,558 | | | $ | — | | | 1998/1998 |
| Avalon Bellevue | | Bellevue, WA | | 201 | | | 6,664 | | | 24,119 | | | 7,705 | | | 6,664 | | | 31,824 | | | 38,488 | | | 22,409 | | | 16,079 | | | 16,052 | | | — | | | 2001 |
| eaves RockMeadow | | Bothell, WA | | 206 | | | 4,777 | | | 19,765 | | | 6,227 | | | 4,777 | | | 25,992 | | | 30,769 | | | 19,364 | | | 11,405 | | | 10,508 | | | — | | | 2000/2000 |
| Avalon ParcSquare | | Redmond, WA | | 124 | | | 3,789 | | | 15,139 | | | 4,654 | | | 3,789 | | | 19,793 | | | 23,582 | | | 15,326 | | | 8,256 | | | 8,973 | | | — | | | 2000/2000 |
| AVA Belltown | | Seattle, WA | | 100 | | | 5,644 | | | 12,733 | | | 2,570 | | | 5,644 | | | 15,303 | | | 20,947 | | | 11,216 | | | 9,731 | | | 10,189 | | | — | | | 2001 |
| Avalon Meydenbauer | | Bellevue, WA | | 368 | | | 12,697 | | | 77,450 | | | 7,778 | | | 12,697 | | | 85,228 | | | 97,925 | | | 45,089 | | | 52,836 | | | 54,763 | | | — | | | 2008 |
| Avalon Towers Bellevue (3) | | Bellevue, WA | | 397 | | | — | | | 123,029 | | | 7,100 | | | — | | | 130,129 | | | 130,129 | | | 58,466 | | | 71,663 | | | 74,217 | | | — | | | 2011 |
| AVA Queen Anne | | Seattle, WA | | 203 | | | 12,081 | | | 41,618 | | | 1,922 | | | 12,081 | | | 43,540 | | | 55,621 | | | 18,196 | | | 37,425 | | | 38,701 | | | — | | | 2012 |
| AVA Ballard | | Seattle, WA | | 265 | | | 16,460 | | | 46,926 | | | 2,527 | | | 16,460 | | | 49,453 | | | 65,913 | | | 18,907 | | | 47,006 | | | 48,245 | | | — | | | 2013 |
| Avalon Alderwood I | | Lynnwood, WA | | 367 | | | 12,294 | | | 55,627 | | | 977 | | | 12,294 | | | 56,604 | | | 68,898 | | | 18,398 | | | 50,500 | | | 51,868 | | | — | | | 2015 |
| AVA Capitol Hill | | Seattle, WA | | 249 | | | 20,613 | | | 59,986 | | | 1,417 | | | 20,613 | | | 61,403 | | | 82,016 | | | 18,187 | | | 63,829 | | | 65,807 | | | — | | | 2016 |
| Avalon Esterra Park | | Redmond, WA | | 482 | | | 23,178 | | | 112,986 | | | 1,603 | | | 23,178 | | | 114,589 | | | 137,767 | | | 30,391 | | | 107,376 | | | 111,314 | | | — | | | 2017 |
| Avalon Alderwood II | | Redmond, WA | | 124 | | | 5,072 | | | 21,418 | | | 132 | | | 5,072 | | | 21,550 | | | 26,622 | | | 5,631 | | | 20,991 | | | 21,612 | | | — | | | 2016 |
| Avalon Newcastle Commons I | | Newcastle, WA | | 378 | | | 9,649 | | | 111,600 | | | 1,377 | | | 9,649 | | | 112,977 | | | 122,626 | | | 26,105 | | | 96,521 | | | 100,143 | | | — | | | 2017 |
| Avalon Belltown Towers | | Seattle, WA | | 274 | | | 24,638 | | | 121,064 | | | 1,359 | | | 24,638 | | | 122,423 | | | 147,061 | | | 21,564 | | | 125,497 | | | 130,407 | | | — | | | 2019 |
| AVA Esterra Park | | Redmond, WA | | 323 | | | 16,405 | | | 74,568 | | | 13 | | | 16,405 | | | 74,581 | | | 90,986 | | | 14,291 | | | 76,695 | | | 79,748 | | | — | | | 2019 |
| Avalon Newcastle Commons II | | Newcastle, WA | | 293 | | | 6,982 | | | 99,824 | | | 151 | | | 6,982 | | | 99,975 | | | 106,957 | | | 10,540 | | | 96,417 | | | 100,273 | | | — | | | 2021 |
| Avalon North Creek | | Bothell, WA | | 316 | | | 13,498 | | | 69,015 | | | — | | | 13,498 | | | 69,015 | | | 82,513 | | | 11,989 | | | 70,524 | | | 73,315 | | | — | | | 2020 |
| eaves Redmond Campus | | Redmond, WA | | 374 | | | 15,665 | | | 80,985 | | | 33,073 | | | 15,665 | | | 114,058 | | | 129,723 | | | 46,910 | | | 82,813 | | | 86,856 | | | — | | | 1991/2013 |
| Archstone Redmond Lakeview | | Redmond, WA | | 166 | | | 10,250 | | | 26,842 | | | 6,807 | | | 10,250 | | | 33,649 | | | 43,899 | | | 15,980 | | | 27,919 | | | 28,921 | | | — | | | 1987/2013 |
| TOTAL PACIFIC NORTHWEST | | 5,474 | | | $ | 227,142 | | | $ | 1,222,335 | | | $ | 96,561 | | | $ | 227,142 | | | $ | 1,318,896 | | | $ | 1,546,038 | | | $ | 458,511 | | | $ | 1,087,527 | | | $ | 1,126,470 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| PACIFIC NORTHWEST | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Seattle, WA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Redmond Place | | Redmond, WA | | 222 |
| | $ | 4,558 |
| | $ | 18,368 |
| | $ | 10,501 |
| | $ | 4,558 |
| | $ | 28,869 |
| | $ | 33,427 |
| | $ | 17,567 |
| | $ | 15,860 |
| | $ | 16,642 |
| | $ | — |
| | 1991/1997 |
| Avalon at Bear Creek | | Redmond, WA | | 264 |
| | 6,786 |
| | 27,641 |
| | 4,893 |
| | 6,786 |
| | 32,534 |
| | 39,320 |
| | 21,197 |
| | 18,123 |
| | 18,645 |
| | — |
| | 1998/1998 |
| Avalon Bellevue | | Bellevue, WA | | 201 |
| | 6,664 |
| | 24,119 |
| | 2,110 |
| | 6,664 |
| | 26,229 |
| | 32,893 |
| | 15,292 |
| | 17,601 |
| | 18,441 |
| | — |
| | 2001 |
| Avalon RockMeadow | | Bothell, WA | | 206 |
| | 4,777 |
| | 19,765 |
| | 2,930 |
| | 4,777 |
| | 22,695 |
| | 27,472 |
| | 13,423 |
| | 14,049 |
| | 14,457 |
| | — |
| | 2000/2000 |
| Avalon ParcSquare | | Redmond, WA | | 124 |
| | 3,789 |
| | 15,139 |
| | 3,286 |
| | 3,789 |
| | 18,425 |
| | 22,214 |
| | 10,718 |
| | 11,496 |
| | 12,060 |
| | — |
| | 2000/2000 |
| AVA Belltown | | Seattle, WA | | 100 |
| | 5,644 |
| | 12,733 |
| | 1,253 |
| | 5,644 |
| | 13,986 |
| | 19,630 |
| | 7,940 |
| | 11,690 |
| | 12,003 |
| | — |
| | 2001 |
| Avalon Meydenbauer | | Bellevue, WA | | 368 |
| | 12,697 |
| | 77,450 |
| | 1,366 |
| | 12,697 |
| | 78,816 |
| | 91,513 |
| | 26,487 |
| | 65,026 |
| | 67,686 |
| | — |
| | 2008 |
| Avalon Towers Bellevue (1) | | Bellevue, WA | | 397 |
| | — |
| | 123,029 |
| | 1,341 |
| | — |
| | 124,370 |
| | 124,370 |
| | 32,339 |
| | 92,031 |
| | 95,998 |
| | — |
| | 2011 |
| AVA Queen Anne | | Seattle, WA | | 203 |
| | 12,081 |
| | 41,618 |
| | 431 |
| | 12,081 |
| | 42,049 |
| | 54,130 |
| | 9,060 |
| | 45,070 |
| | 46,642 |
| | — |
| | 2012 |
| AVA Ballard | | Seattle, WA | | 265 |
| | 16,460 |
| | 46,926 |
| | 1,002 |
| | 16,460 |
| | 47,928 |
| | 64,388 |
| | 8,335 |
| | 56,053 |
| | 57,893 |
| | — |
| | 2013 |
| Avalon Alderwood I | | Lynnwood, WA | | 367 |
| | 12,294 |
| | 55,626 |
| | — |
| | 12,294 |
| | 55,626 |
| | 67,920 |
| | 6,553 |
| | 61,367 |
| | 63,391 |
| | — |
| | 2015 |
| Eaves Redmond Campus (2) | | Redmond, WA | | 422 |
| | 22,580 |
| | 88,001 |
| | 10,267 |
| | 22,580 |
| | 98,268 |
| | 120,848 |
| | 21,097 |
| | 99,751 |
| | 99,157 |
| | — |
| | 1991/2013 |
| Archstone Redmond Lakeview | | Redmond, WA | | 166 |
| | 10,250 |
| | 26,842 |
| | 3,315 |
| | 10,250 |
| | 30,157 |
| | 40,407 |
| | 6,852 |
| | 33,555 |
| | 34,398 |
| | — |
| | 1987/2013 |
| TOTAL PACIFIC NORTHWEST | | 3,305 |
| | $ | 118,580 |
| | $ | 577,257 |
| | $ | 42,695 |
| | $ | 118,580 |
| | $ | 619,952 |
| | $ | 738,532 |
| | $ | 196,860 |
| | $ | 541,672 |
| | $ | 557,413 |
| | $ | — |
| | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NORTHERN CALIFORNIA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| San Jose, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Campbell | | Campbell, CA | | 348 |
| | $ | 11,830 |
| | $ | 47,828 |
| | $ | 13,561 |
| | $ | 11,830 |
| | $ | 61,389 |
| | $ | 73,219 |
| | $ | 35,368 |
| | $ | 37,851 |
| | $ | 39,955 |
| | $ | 38,800 |
| | 1995 |
| Eaves San Jose | | San Jose, CA | | 440 |
| | 12,920 |
| | 53,047 |
| | 18,931 |
| | 12,920 |
| | 71,978 |
| | 84,898 |
| | 36,145 |
| | 48,753 |
| | 51,143 |
| | — |
| | 1985/1996 |
| Avalon Mountain View | | Mountain View, CA | | 248 |
| | 9,755 |
| | 39,393 |
| | 10,321 |
| | 9,755 |
| | 49,714 |
| | 59,469 |
| | 30,458 |
| | 29,011 |
| | 30,562 |
| | — |
| | 1986 |
| Eaves Creekside | | Mountain View, CA | | 296 |
| | 6,546 |
| | 26,263 |
| | 21,316 |
| | 6,546 |
| | 47,579 |
| | 54,125 |
| | 25,798 |
| | 28,327 |
| | 29,992 |
| | — |
| | 1962/1997 |
| Avalon at Cahill Park | | San Jose, CA | | 218 |
| | 4,765 |
| | 47,600 |
| | 2,020 |
| | 4,765 |
| | 49,620 |
| | 54,385 |
| | 26,084 |
| | 28,301 |
| | 29,836 |
| | — |
| | 2002 |
| Avalon Morrison Park | | San Jose, CA | | 250 |
| | 13,837 |
| | 64,534 |
| | 72 |
| | 13,837 |
| | 64,606 |
| | 78,443 |
| | 8,779 |
| | 69,664 |
| | 72,002 |
| | — |
| | 2014 |
| Avalon Willow Glen | | San Jose, CA | | 412 |
| | 46,060 |
| | 81,957 |
| | 4,707 |
| | 46,060 |
| | 86,664 |
| | 132,724 |
| | 19,887 |
| | 112,837 |
| | 115,648 |
| | — |
| | 2002/2013 |
| Eaves West Valley | | San Jose, CA | | 873 |
| | 90,890 |
| | 132,040 |
| | 10,251 |
| | 90,890 |
| | 142,291 |
| | 233,181 |
| | 31,153 |
| | 202,028 |
| | 205,771 |
| | — |
| | 1970/2013 |
| Eaves Mountain View at Middlefield | | Mountain View, CA | | 402 |
| | 64,070 |
| | 69,018 |
| | 5,498 |
| | 64,070 |
| | 74,516 |
| | 138,586 |
| | 17,838 |
| | 120,748 |
| | 123,403 |
| | — |
| | 1969/2013 |
| Total San Jose, CA | | | | 3,487 |
| | $ | 260,673 |
| | $ | 561,680 |
| | $ | 86,677 |
| | $ | 260,673 |
| | $ | 648,357 |
| | $ | 909,030 |
| | $ | 231,510 |
| | $ | 677,520 |
| | $ | 698,312 |
| | $ | 38,800 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oakland - East Bay, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Fremont | | Fremont, CA | | 308 |
| | $ | 10,746 |
| | $ | 43,399 |
| | $ | 6,656 |
| | $ | 10,746 |
| | $ | 50,055 |
| | $ | 60,801 |
| | $ | 33,523 |
| | $ | 27,278 |
| | $ | 28,098 |
| | $ | — |
| | 1992/1994 |
| Eaves Dublin | | Dublin, CA | | 204 |
| | 5,276 |
| | 19,642 |
| | 12,366 |
| | 5,276 |
| | 32,008 |
| | 37,284 |
| | $ | 17,814 |
| | 19,470 |
| | 20,653 |
| | — |
| | 1989/1997 |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| NORTHERN CALIFORNIA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| San Jose, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Campbell | | Campbell, CA | | 348 | | | $ | 11,830 | | | $ | 47,828 | | | $ | 15,636 | | | $ | 11,830 | | | $ | 63,464 | | | $ | 75,294 | | | $ | 48,448 | | | $ | 26,846 | | | $ | 28,834 | | | $ | — | | | 1995 |
| eaves San Jose | | San Jose, CA | | 442 | | | 12,920 | | | 53,047 | | | 20,565 | | | 12,920 | | | 73,612 | | | 86,532 | | | 50,866 | | | 35,666 | | | 38,016 | | | — | | | 1985/1996 |
| Avalon on the Alameda | | San Jose, CA | | 307 | | | 6,119 | | | 50,217 | | | 14,862 | | | 6,119 | | | 65,079 | | | 71,198 | | | 48,958 | | | 22,240 | | | 24,383 | | | — | | | 1999 |
| Avalon Silicon Valley | | Sunnyvale, CA | | 712 | | | 20,713 | | | 99,573 | | | 39,340 | | | 20,713 | | | 138,913 | | | 159,626 | | | 100,513 | | | 59,113 | | | 62,187 | | | — | | | 1998 |
| Avalon Mountain View | | Mountain View, CA | | 248 | | | 9,755 | | | 39,387 | | | 13,323 | | | 9,755 | | | 52,710 | | | 62,465 | | | 41,707 | | | 20,758 | | | 22,553 | | | — | | | 1986 |
| eaves Creekside | | Mountain View, CA | | 300 | | | 6,546 | | | 26,263 | | | 23,236 | | | 6,546 | | | 49,499 | | | 56,045 | | | 35,902 | | | 20,143 | | | 21,595 | | | — | | | 1962/1997 |
| Avalon at Cahill Park | | San Jose, CA | | 218 | | | 4,765 | | | 47,600 | | | 5,035 | | | 4,765 | | | 52,635 | | | 57,400 | | | 37,552 | | | 19,848 | | | 21,594 | | | — | | | 2002 |
| Avalon Towers on the Peninsula | | Mountain View, CA | | 211 | | | 9,560 | | | 56,136 | | | 15,744 | | | 9,560 | | | 71,880 | | | 81,440 | | | 46,823 | | | 34,617 | | | 36,518 | | | — | | | 2002 |
| Avalon Morrison Park | | San Jose, CA | | 250 | | | 13,837 | | | 64,521 | | | 1,763 | | | 13,837 | | | 66,284 | | | 80,121 | | | 22,822 | | | 57,299 | | | 59,228 | | | — | | | 2014 |
| Avalon Willow Glen | | San Jose, CA | | 412 | | | 46,060 | | | 81,957 | | | 8,667 | | | 46,060 | | | 90,624 | | | 136,684 | | | 41,133 | | | 95,551 | | | 98,445 | | | — | | | 2002/2013 |
| eaves West Valley | | San Jose, CA | | 873 | | | 90,890 | | | 132,040 | | | 17,080 | | | 90,890 | | | 149,120 | | | 240,010 | | | 65,540 | | | 174,470 | | | 179,233 | | | — | | | 1970/2013 |
| eaves Mountain View at Middlefield | | Mountain View, CA | | 402 | | | 64,070 | | | 69,018 | | | 18,536 | | | 64,070 | | | 87,554 | | | 151,624 | | | 41,619 | | | 110,005 | | | 113,785 | | | — | | | 1969/2013 |
| Total San Jose, CA | | | | 4,723 | | | $ | 297,065 | | | $ | 767,587 | | | $ | 193,787 | | | $ | 297,065 | | | $ | 961,374 | | | $ | 1,258,439 | | | $ | 581,883 | | | $ | 676,556 | | | $ | 706,371 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oakland - East Bay, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Fremont (2) | | Fremont, CA | | 308 | | | $ | 10,746 | | | $ | 43,399 | | | $ | 31,654 | | | $ | 10,746 | | | $ | 75,053 | | | $ | 85,799 | | | $ | 46,363 | | | $ | 39,436 | | | $ | 40,798 | | | $ | — | | | 1992/1994 |
| eaves Dublin (2) | | Dublin, CA | | 204 | | | 5,276 | | | 19,642 | | | 13,991 | | | 5,276 | | | 33,633 | | | 38,909 | | | 24,315 | | | 14,594 | | | 14,722 | | | — | | | 1989/1997 |
| eaves Pleasanton (2) | | Pleasanton, CA | | 456 | | | 11,610 | | | 46,552 | | | 48,872 | | | 11,610 | | | 95,424 | | | 107,034 | | | 54,990 | | | 52,044 | | | 52,344 | | | — | | | 1988/1994 |
| eaves Union City | | Union City, CA | | 208 | | | 4,249 | | | 16,820 | | | 5,299 | | | 4,249 | | | 22,119 | | | 26,368 | | | 18,465 | | | 7,903 | | | 8,337 | | | — | | | 1973/1996 |
| eaves Fremont | | Fremont, CA | | 237 | | | 6,581 | | | 26,583 | | | 13,046 | | | 6,581 | | | 39,629 | | | 46,210 | | | 30,582 | | | 15,628 | | | 16,761 | | | — | | | 1985/1994 |
| Avalon Union City | | Union City, CA | | 439 | | | 14,732 | | | 104,024 | | | 6,787 | | | 14,732 | | | 110,811 | | | 125,543 | | | 53,676 | | | 71,867 | | | 75,293 | | | — | | | 2009 |
| Avalon Walnut Creek (3) | | Walnut Creek, CA | | 422 | | | — | | | 148,846 | | | 7,250 | | | — | | | 156,096 | | | 156,096 | | | 71,711 | | | 84,385 | | | 89,055 | | | 4,501 | | | 2010 |
| Avalon Dublin Station | | Dublin, CA | | 253 | | | 7,772 | | | 72,142 | | | 1,543 | | | 7,772 | | | 73,685 | | | 81,457 | | | 25,232 | | | 56,225 | | | 58,455 | | | — | | | 2014 |
| Avalon Dublin Station II | | Dublin, CA | | 252 | | | 7,762 | | | 76,587 | | | 631 | | | 7,762 | | | 77,218 | | | 84,980 | | | 21,099 | | | 63,881 | | | 66,244 | | | — | | | 2016 |
| Avalon Public Market (1) | | Emeryville, CA | | 289 | | | 27,394 | | | 145,592 | | | 260 | | | 27,394 | | | 145,852 | | | 173,246 | | | 22,366 | | | 150,880 | | | 155,467 | | | — | | | 2020 |
| Avalon Walnut Creek II (3) | | Walnut Creek, CA | | 200 | | | — | | | 112,759 | | | 315 | | | — | | | 113,074 | | | 113,074 | | | 14,289 | | | 98,785 | | | 103,064 | | | — | | | 2020 |
| eaves Walnut Creek | | Walnut Creek, CA | | 510 | | | 30,320 | | | 82,375 | | | 18,289 | | | 30,320 | | | 100,664 | | | 130,984 | | | 41,605 | | | 89,379 | | | 92,829 | | | — | | | 1987/2013 |
| Avalon Walnut Ridge I | | Walnut Creek, CA | | 106 | | | 9,860 | | | 19,850 | | | 5,999 | | | 9,860 | | | 25,849 | | | 35,709 | | | 10,517 | | | 25,192 | | | 26,048 | | | — | | | 2000/2013 |
| Avalon Walnut Ridge II | | Walnut Creek, CA | | 360 | | | 27,190 | | | 57,041 | | | 14,257 | | | 27,190 | | | 71,298 | | | 98,488 | | | 30,247 | | | 68,241 | | | 70,626 | | | — | | | 1989/2013 |
| Avalon Berkeley | | Berkeley, CA | | 94 | | | 4,500 | | | 28,689 | | | 145 | | | 4,500 | | | 28,834 | | | 33,334 | | | 9,409 | | | 23,925 | | | 24,850 | | | — | | | 2014 |
| Total Oakland - East Bay, CA | | 4,338 | | | $ | 167,992 | | | $ | 1,000,901 | | | $ | 168,338 | | | $ | 167,992 | | | $ | 1,169,239 | | | $ | 1,337,231 | | | $ | 474,866 | | | $ | 862,365 | | | $ | 894,893 | | | $ | 4,501 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| San Francisco, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVA Nob Hill | | San Francisco, CA | | 185 | | | $ | 5,403 | | | $ | 21,567 | | | $ | 11,273 | | | $ | 5,403 | | | $ | 32,840 | | | $ | 38,243 | | | $ | 24,511 | | | $ | 13,732 | | | $ | 14,850 | | | $ | — | | | 1990/1995 |
| eaves Foster City | | Foster City, CA | | 288 | | | 7,852 | | | 31,445 | | | 15,824 | | | 7,852 | | | 47,269 | | | 55,121 | | | 35,545 | | | 19,576 | | | 19,642 | | | — | | | 1973/1994 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| Eaves Pleasanton | | Pleasanton, CA | | 456 |
| | 11,610 |
| | 46,552 |
| | 21,755 |
| | 11,610 |
| | 68,307 |
| | 79,917 |
| | 40,146 |
| | 39,771 |
| | 41,764 |
| | — |
| | 1988/1994 |
| Eaves Union City | | Union City, CA | | 208 |
| | 4,249 |
| | 16,820 |
| | 3,312 |
| | 4,249 |
| | 20,132 |
| | 24,381 |
| | 13,659 |
| | 10,722 |
| | 11,342 |
| | — |
| | 1973/1996 |
| Eaves Fremont | | Fremont, CA | | 235 |
| | 6,581 |
| | 26,583 |
| | 9,992 |
| | 6,581 |
| | 36,575 |
| | 43,156 |
| | 22,733 |
| | 20,423 |
| | 21,385 |
| | — |
| | 1985/1994 |
| Avalon Union City | | Union City, CA | | 439 |
| | 14,732 |
| | 104,024 |
| | 982 |
| | 14,732 |
| | 105,006 |
| | 119,738 |
| | 30,647 |
| | 89,091 |
| | 92,395 |
| | — |
| | 2009 |
| Avalon Walnut Creek (1) | | Walnut Creek, CA | | 422 |
| | — |
| | 148,370 |
| | 3,245 |
| | — |
| | 151,615 |
| | 151,615 |
| | 39,014 |
| | 112,601 |
| | 115,817 |
| | 3,557 |
| | 2010 |
| Avalon Dublin Station | | Dublin, CA | | 253 |
| | 7,772 |
| | 72,142 |
| | 599 |
| | 7,772 |
| | 72,741 |
| | 80,513 |
| | 9,650 |
| | 70,863 |
| | 72,802 |
| | — |
| | 2014 |
| Eaves Walnut Creek (2) | | Walnut Creek, CA | | 510 |
| | 30,320 |
| | 82,375 |
| | 16,828 |
| | 30,320 |
| | 99,203 |
| | 129,523 |
| | 19,294 |
| | 110,229 |
| | 111,534 |
| | — |
| | 1987/2013 |
| Avalon Walnut Ridge II | | Walnut Creek, CA | | 360 |
| | 27,190 |
| | 57,041 |
| | 5,864 |
| | 27,190 |
| | 62,905 |
| | 90,095 |
| | 13,372 |
| | 76,723 |
| | 76,821 |
| | — |
| | 1989/2013 |
| Avalon Berkeley | | Berkeley, CA | | 94 |
| | 4,500 |
| | 28,622 |
| | — |
| | 4,500 |
| | 28,622 |
| | 33,122 |
| | 3,523 |
| | 29,599 |
| | 30,607 |
| | — |
| | 2014 |
| Total Oakland - East Bay, CA | | 3,489 |
| | $ | 122,976 |
| | $ | 645,570 |
| | $ | 81,599 |
| | $ | 122,976 |
| | $ | 727,169 |
| | $ | 850,145 |
| | $ | 243,375 |
| | $ | 606,770 |
| | $ | 623,218 |
| | $ | 3,557 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| San Francisco, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eaves Daly City | | Daly City, CA | | 195 |
| | $ | 4,230 |
| | $ | 9,659 |
| | $ | 19,858 |
| | $ | 4,230 |
| | $ | 29,517 |
| | $ | 33,747 |
| | $ | 17,704 |
| | $ | 16,043 |
| | $ | 16,173 |
| | $ | — |
| | 1972/1997 |
| AVA Nob Hill | | San Francisco, CA | | 185 |
| | 5,403 |
| | 21,567 |
| | 7,597 |
| | 5,403 |
| | 29,164 |
| | 34,567 |
| | 17,103 |
| | 17,464 |
| | 17,980 |
| | 20,800 |
| | 1990/1995 |
| Eaves San Rafael | | San Rafael, CA | | 254 |
| | 5,982 |
| | 16,885 |
| | 24,752 |
| | 5,982 |
| | 41,637 |
| | 47,619 |
| | 22,224 |
| | 25,395 |
| | 26,689 |
| | — |
| | 1973/1996 |
| Eaves Foster City | | Foster City, CA | | 288 |
| | 7,852 |
| | 31,445 |
| | 11,629 |
| | 7,852 |
| | 43,074 |
| | 50,926 |
| | 25,622 |
| | 25,304 |
| | 26,440 |
| | — |
| | 1973/1994 |
| Eaves Pacifica | | Pacifica, CA | | 220 |
| | 6,125 |
| | 24,796 |
| | 3,116 |
| | 6,125 |
| | 27,912 |
| | 34,037 |
| | 18,647 |
| | 15,390 |
| | 16,175 |
| | 17,600 |
| | 1971/1995 |
| Avalon Sunset Towers | | San Francisco, CA | | 243 |
| | 3,561 |
| | 21,321 |
| | 16,129 |
| | 3,561 |
| | 37,450 |
| | 41,011 |
| | 19,817 |
| | 21,194 |
| | 21,819 |
| | — |
| | 1961/1996 |
| Eaves Diamond Heights | | San Francisco, CA | | 154 |
| | 4,726 |
| | 19,130 |
| | 6,189 |
| | 4,726 |
| | 25,319 |
| | 30,045 |
| | 15,390 |
| | 14,655 |
| | 15,313 |
| | — |
| | 1972/1994 |
| Avalon at Mission Bay I | | San Francisco, CA | | 250 |
| | 14,029 |
| | 78,452 |
| | 3,759 |
| | 14,029 |
| | 82,211 |
| | 96,240 |
| | 41,915 |
| | 54,325 |
| | 56,826 |
| | — |
| | 2003 |
| Avalon at Mission Bay III | | San Francisco, CA | | 260 |
| | 28,687 |
| | 119,156 |
| | 447 |
| | 28,687 |
| | 119,603 |
| | 148,290 |
| | 35,003 |
| | 113,287 |
| | 117,091 |
| | — |
| | 2009 |
| Avalon Ocean Avenue | | San Francisco, CA | | 173 |
| | 5,544 |
| | 50,906 |
| | 1,877 |
| | 5,544 |
| | 52,783 |
| | 58,327 |
| | 10,581 |
| | 47,746 |
| | 49,580 |
| | — |
| | 2012 |
| AVA 55 Ninth | | San Francisco, CA | | 273 |
| | 20,267 |
| | 97,321 |
| | 1,258 |
| | 20,267 |
| | 98,579 |
| | 118,846 |
| | 13,135 |
| | 105,711 |
| | 109,414 |
| | — |
| | 2014 |
| Avalon Hayes Valley | | San Francisco, CA | | 182 |
| | 12,595 |
| | 81,232 |
| | — |
| | 12,595 |
| | 81,232 |
| | 93,827 |
| | 7,855 |
| | 85,972 |
| | 88,745 |
| | — |
| | 2015 |
| Avalon San Bruno I | | San Bruno, CA | | 300 |
| | 40,780 |
| | 68,684 |
| | 4,974 |
| | 40,780 |
| | 73,658 |
| | 114,438 |
| | 15,334 |
| | 99,104 |
| | 100,274 |
| | 64,450 |
| | 2004/2013 |
| Avalon San Bruno II | | San Bruno, CA | | 185 |
| | 23,787 |
| | 44,934 |
| | 1,906 |
| | 23,787 |
| | 46,840 |
| | 70,627 |
| | 9,205 |
| | 61,422 |
| | 62,879 |
| | 29,533 |
| | 2007/2013 |
| Avalon San Bruno III | | San Bruno, CA | | 187 |
| | 33,303 |
| | 62,910 |
| | 3,028 |
| | 33,303 |
| | 65,938 |
| | 99,241 |
| | 12,956 |
| | 86,285 |
| | 88,243 |
| | 53,315 |
| | 2010/2013 |
| Total San Francisco, CA | | | | 3,349 |
| | $ | 216,871 |
| | $ | 748,398 |
| | $ | 106,519 |
| | $ | 216,871 |
| | $ | 854,917 |
| | $ | 1,071,788 |
| | $ | 282,491 |
| | $ | 789,297 |
| | $ | 813,641 |
| | $ | 185,698 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL NORTHERN CALIFORNIA | | 10,325 |
| | $ | 600,520 |
| | $ | 1,955,648 |
| | $ | 274,795 |
| | $ | 600,520 |
| | $ | 2,230,443 |
| | $ | 2,830,963 |
| | $ | 757,376 |
| | $ | 2,073,587 |
| | $ | 2,135,171 |
| | $ | 228,055 |
| | |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| eaves Pacifica | | Pacifica, CA | | 220 | | | $ | 6,125 | | | $ | 24,792 | | | $ | 5,573 | | | $ | 6,125 | | | $ | 30,365 | | | $ | 36,490 | | | $ | 25,442 | | | $ | 11,048 | | | $ | 11,745 | | | $ | — | | | 1971/1995 |
| Avalon Sunset Towers | | San Francisco, CA | | 243 | | | 3,561 | | | 21,313 | | | 17,599 | | | 3,561 | | | 38,912 | | | 42,473 | | | 28,331 | | | 14,142 | | | 15,240 | | | — | | | 1961/1996 |
| Avalon at Mission Bay I | | San Francisco, CA | | 250 | | | 14,029 | | | 78,452 | | | 10,330 | | | 14,029 | | | 88,782 | | | 102,811 | | | 63,094 | | | 39,717 | | | 42,935 | | | — | | | 2003 |
| Avalon at Mission Bay III | | San Francisco, CA | | 260 | | | 28,687 | | | 119,156 | | | 1,675 | | | 28,687 | | | 120,831 | | | 149,518 | | | 59,154 | | | 90,364 | | | 94,137 | | | — | | | 2009 |
| Avalon Ocean Avenue | | San Francisco, CA | | 173 | | | 5,544 | | | 50,906 | | | 3,259 | | | 5,544 | | | 54,165 | | | 59,709 | | | 21,932 | | | 37,777 | | | 39,333 | | | — | | | 2012 |
| AVA 55 Ninth | | San Francisco, CA | | 273 | | | 20,267 | | | 97,321 | | | 1,710 | | | 20,267 | | | 99,031 | | | 119,298 | | | 33,915 | | | 85,383 | | | 88,357 | | | — | | | 2014 |
| Avalon Hayes Valley | | San Francisco, CA | | 182 | | | 12,595 | | | 81,228 | | | 1,259 | | | 12,595 | | | 82,487 | | | 95,082 | | | 25,213 | | | 69,869 | | | 72,131 | | | — | | | 2015 |
| Avalon Dogpatch | | San Francisco, CA | | 326 | | | 23,523 | | | 180,698 | | | 421 | | | 23,523 | | | 181,119 | | | 204,642 | | | 40,228 | | | 164,414 | | | 170,374 | | | — | | | 2018 |
| Avalon San Bruno I | | San Bruno, CA | | 300 | | | 40,780 | | | 68,684 | | | 8,945 | | | 40,780 | | | 77,629 | | | 118,409 | | | 34,287 | | | 84,122 | | | 86,649 | | | 57,650 | | | 2004/2013 |
| Avalon San Bruno II | | San Bruno, CA | | 185 | | | 23,787 | | | 44,934 | | | 3,840 | | | 23,787 | | | 48,774 | | | 72,561 | | | 19,334 | | | 53,227 | | | 54,746 | | | — | | | 2007/2013 |
| Avalon San Bruno III | | San Bruno, CA | | 187 | | | 33,303 | | | 62,910 | | | 3,725 | | | 33,303 | | | 66,635 | | | 99,938 | | | 26,514 | | | 73,424 | | | 75,442 | | | 51,000 | | | 2010/2013 |
| Total San Francisco, CA | | 3,072 | | | $ | 225,456 | | | $ | 883,406 | | | $ | 85,433 | | | $ | 225,456 | | | $ | 968,839 | | | $ | 1,194,295 | | | $ | 437,500 | | | $ | 756,795 | | | $ | 785,581 | | | $ | 108,650 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL NORTHERN CALIFORNIA | | 12,133 | | | $ | 690,513 | | | $ | 2,651,894 | | | $ | 447,558 | | | $ | 690,513 | | | $ | 3,099,452 | | | $ | 3,789,965 | | | $ | 1,494,249 | | | $ | 2,295,716 | | | $ | 2,386,845 | | | $ | 113,151 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| SOUTHERN CALIFORNIA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Los Angeles, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVA Burbank | | Burbank, CA | | 750 | | | $ | 22,483 | | | $ | 28,093 | | | $ | 54,756 | | | $ | 22,483 | | | $ | 82,849 | | | $ | 105,332 | | | $ | 58,108 | | | $ | 47,224 | | | $ | 49,720 | | | $ | — | | | 1961/1997 |
| Avalon Woodland Hills (2) | | Woodland Hills, CA | | 663 | | | 23,828 | | | 40,342 | | | 86,225 | | | 23,828 | | | 126,567 | | | 150,395 | | | 67,704 | | | 82,691 | | | 81,679 | | | — | | | 1989/1997 |
| eaves Warner Center | | Woodland Hills, CA | | 228 | | | 7,045 | | | 12,980 | | | 14,216 | | | 7,045 | | | 27,196 | | | 34,241 | | | 22,014 | | | 12,227 | | | 12,597 | | | — | | | 1979/1998 |
| Avalon Glendale (3) | | Glendale, CA | | 223 | | | — | | | 42,564 | | | 3,993 | | | — | | | 46,557 | | | 46,557 | | | 31,921 | | | 14,636 | | | 15,619 | | | — | | | 2003 |
| Avalon Burbank | | Burbank, CA | | 401 | | | 14,053 | | | 56,820 | | | 28,892 | | | 14,053 | | | 85,712 | | | 99,765 | | | 55,436 | | | 44,329 | | | 46,283 | | | — | | | 1988/2002 |
| Avalon Camarillo | | Camarillo, CA | | 249 | | | 8,446 | | | 40,269 | | | 4,428 | | | 8,446 | | | 44,697 | | | 53,143 | | | 26,671 | | | 26,472 | | | 27,509 | | | — | | | 2006 |
| Avalon Wilshire | | Los Angeles, CA | | 123 | | | 5,459 | | | 41,182 | | | 7,326 | | | 5,459 | | | 48,508 | | | 53,967 | | | 27,843 | | | 26,124 | | | 27,803 | | | — | | | 2007 |
| Avalon Encino | | Encino, CA | | 132 | | | 12,789 | | | 49,073 | | | 3,804 | | | 12,789 | | | 52,877 | | | 65,666 | | | 26,824 | | | 38,842 | | | 39,700 | | | — | | | 2008 |
| Avalon Warner Place | | Canoga Park, CA | | 210 | | | 7,920 | | | 44,837 | | | 3,794 | | | 7,920 | | | 48,631 | | | 56,551 | | | 25,319 | | | 31,232 | | | 32,291 | | | — | | | 2008 |
| AVA Little Tokyo | | Los Angeles, CA | | 280 | | | 14,734 | | | 93,977 | | | 2,394 | | | 14,734 | | | 96,371 | | | 111,105 | | | 31,206 | | | 79,899 | | | 82,725 | | | — | | | 2015 |
| eaves Phillips Ranch | | Pomona, CA | | 503 | | | 9,796 | | | 41,740 | | | 13,163 | | | 9,796 | | | 54,903 | | | 64,699 | | | 23,162 | | | 41,537 | | | 39,164 | | | — | | | 1989/2011 |
| eaves San Dimas | | San Dimas, CA | | 102 | | | 1,916 | | | 7,819 | | | 2,631 | | | 1,916 | | | 10,450 | | | 12,366 | | | 4,906 | | | 7,460 | | | 7,586 | | | — | | | 1978/2011 |
| eaves San Dimas Canyon | | San Dimas, CA | | 156 | | | 2,953 | | | 12,397 | | | 2,286 | | | 2,953 | | | 14,683 | | | 17,636 | | | 6,719 | | | 10,917 | | | 11,072 | | | — | | | 1981/2011 |
| AVA Pasadena | | Pasadena, CA | | 84 | | | 8,400 | | | 11,547 | | | 6,358 | | | 8,400 | | | 17,905 | | | 26,305 | | | 7,067 | | | 19,238 | | | 19,805 | | | — | | | 1973/2012 |
| eaves Cerritos | | Artesia, CA | | 151 | | | 8,305 | | | 21,195 | | | 3,023 | | | 8,305 | | | 24,218 | | | 32,523 | | | 9,423 | | | 23,100 | | | 23,387 | | | — | | | 1973/2012 |
| Avalon Playa Vista | | Los Angeles, CA | | 309 | | | 30,900 | | | 71,959 | | | 9,549 | | | 30,900 | | | 81,508 | | | 112,408 | | | 34,723 | | | 77,685 | | | 80,665 | | | — | | | 2006/2012 |
| Avalon San Dimas | | San Dimas, CA | | 156 | | | 9,141 | | | 30,726 | | | 552 | | | 9,141 | | | 31,278 | | | 40,419 | | | 10,414 | | | 30,005 | | | 30,885 | | | — | | | 2014 |
| Avalon Glendora | | Glendora, CA | | 281 | | | 18,311 | | | 64,303 | | | 1,052 | | | 18,311 | | | 65,355 | | | 83,666 | | | 19,211 | | | 64,455 | | | 66,283 | | | — | | | 2016 |
| Avalon West Hollywood | | West Hollywood, CA | | 294 | | | 35,214 | | | 119,105 | | | 1,859 | | | 35,214 | | | 120,964 | | | 156,178 | | | 29,788 | | | 126,390 | | | 130,476 | | | — | | | 2017 |
| AVA Hollywood at La Pietra Place | | Hollywood, CA | | 695 | | | 99,309 | | | 272,596 | | | 2,010 | | | 99,309 | | | 274,606 | | | 373,915 | | | 37,712 | | | 336,203 | | | 346,636 | | | — | | | 2021 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| SOUTHERN CALIFORNIA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Los Angeles, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVA Burbank | | Burbank, CA | | 748 |
| | $ | 22,483 |
| | $ | 28,104 |
| | $ | 48,565 |
| | $ | 22,483 |
| | $ | 76,669 |
| | $ | 99,152 |
| | $ | 40,761 |
| | $ | 58,391 |
| | $ | 60,868 |
| | $ | — |
| | 1961/1997 |
| Avalon Woodland Hills | | Woodland Hills, CA | | 663 |
| | 23,828 |
| | 40,372 |
| | 49,385 |
| | 23,828 |
| | 89,757 |
| | 113,585 |
| | 45,441 |
| | 68,144 |
| | 70,434 |
| | — |
| | 1989/1997 |
| Eaves Warner Center | | Woodland Hills, CA | | 227 |
| | 7,045 |
| | 12,986 |
| | 9,609 |
| | 7,045 |
| | 22,595 |
| | 29,640 |
| | 15,855 |
| | 13,785 |
| | 14,591 |
| | — |
| | 1979/1998 |
| Avalon Glendale (1) | | Glendale, CA | | 223 |
| | — |
| | 42,564 |
| | 2,070 |
| | — |
| | 44,634 |
| | 44,634 |
| | 21,703 |
| | 22,931 |
| | 24,122 |
| | — |
| | 2003 |
| Avalon Burbank | | Burbank, CA | | 400 |
| | 14,053 |
| | 56,827 |
| | 24,724 |
| | 14,053 |
| | 81,551 |
| | 95,604 |
| | 37,558 |
| | 58,046 |
| | 60,327 |
| | — |
| | 1988/2002 |
| Avalon Camarillo | | Camarillo, CA | | 249 |
| | 8,446 |
| | 40,290 |
| | 908 |
| | 8,446 |
| | 41,198 |
| | 49,644 |
| | 16,389 |
| | 33,255 |
| | 34,405 |
| | — |
| | 2006 |
| Avalon Wilshire | | Los Angeles, CA | | 123 |
| | 5,459 |
| | 41,182 |
| | 1,206 |
| | 5,459 |
| | 42,388 |
| | 47,847 |
| | 15,562 |
| | 32,285 |
| | 33,601 |
| | — |
| | 2007 |
| Avalon Encino | | Encino, CA | | 131 |
| | 12,789 |
| | 49,073 |
| | 1,091 |
| | 12,789 |
| | 50,164 |
| | 62,953 |
| | 15,966 |
| | 46,987 |
| | 48,412 |
| | — |
| | 2008 |
| Avalon Warner Place | | Canoga Park, CA | | 210 |
| | 7,920 |
| | 44,845 |
| | 589 |
| | 7,920 |
| | 45,434 |
| | 53,354 |
| | 15,109 |
| | 38,245 |
| | 39,727 |
| | — |
| | 2008 |
| AVA Little Tokyo | | Los Angeles, CA | | 280 |
| | 14,734 |
| | 93,985 |
| | 462 |
| | 14,734 |
| | 94,447 |
| | 109,181 |
| | 10,574 |
| | 98,607 |
| | 101,914 |
| | — |
| | 2015 |
| Eaves Phillips Ranch | | Pomona, CA | | 501 |
| | 9,796 |
| | 41,740 |
| | 1,964 |
| | 9,796 |
| | 43,704 |
| | 53,500 |
| | 10,314 |
| | 43,186 |
| | 44,058 |
| | — |
| | 1989/2011 |
| Eaves San Dimas | | San Dimas, CA | | 102 |
| | 1,916 |
| | 7,819 |
| | 1,389 |
| | 1,916 |
| | 9,208 |
| | 11,124 |
| | 2,202 |
| | 8,922 |
| | 9,214 |
| | — |
| | 1978/2011 |
| Eaves San Dimas Canyon | | San Dimas, CA | | 156 |
| | 2,953 |
| | 12,428 |
| | 736 |
| | 2,953 |
| | 13,164 |
| | 16,117 |
| | 3,145 |
| | 12,972 |
| | 13,289 |
| | — |
| | 1981/2011 |
| AVA Pasadena | | Pasadena, CA | | 84 |
| | 8,400 |
| | 11,547 |
| | 5,522 |
| | 8,400 |
| | 17,069 |
| | 25,469 |
| | 3,214 |
| | 22,255 |
| | 22,879 |
| | 11,073 |
| | 1973/2012 |
| Eaves Cerritos | | Artesia, CA | | 151 |
| | 8,305 |
| | 21,195 |
| | 1,474 |
| | 8,305 |
| | 22,669 |
| | 30,974 |
| | 4,391 |
| | 26,583 |
| | 27,343 |
| | — |
| | 1973/2012 |
| Avalon Playa Vista | | Los Angeles, CA | | 309 |
| | 30,900 |
| | 72,008 |
| | 2,428 |
| | 30,900 |
| | 74,436 |
| | 105,336 |
| | 14,228 |
| | 91,108 |
| | 93,776 |
| | — |
| | 2006/2012 |
| Avalon San Dimas | | San Dimas, CA | | 156 |
| | 9,141 |
| | 30,727 |
| | — |
| | 9,141 |
| | 30,727 |
| | 39,868 |
| | 3,778 |
| | 36,090 |
| | 37,250 |
| | — |
| | 2014 |
| Avalon Mission Oaks | | Camarillo, CA | | 160 |
| | 9,600 |
| | 35,842 |
| | 3,002 |
| | 9,600 |
| | 38,844 |
| | 48,444 |
| | 5,595 |
| | 42,849 |
| | 44,281 |
| | — |
| | 2014 |
| Avalon Simi Valley | | Simi Valley, CA | | 500 |
| | 42,020 |
| | 73,361 |
| | 4,940 |
| | 42,020 |
| | 78,301 |
| | 120,321 |
| | 17,394 |
| | 102,927 |
| | 105,475 |
| | — |
| | 2007/2013 |
| Avalon Studio City | | Studio City, CA | | 276 |
| | 15,756 |
| | 78,178 |
| | 5,778 |
| | 15,756 |
| | 83,956 |
| | 99,712 |
| | 17,139 |
| | 82,573 |
| | 84,242 |
| | — |
| | 2002/2013 |
| Avalon Calabasas | | Calabasas, CA | | 600 |
| | 42,720 |
| | 107,642 |
| | 9,921 |
| | 42,720 |
| | 117,563 |
| | 160,283 |
| | 27,970 |
| | 132,313 |
| | 136,511 |
| | 96,502 |
| | 1988/2013 |
| Avalon Oak Creek | | Agoura Hills, CA | | 336 |
| | 43,540 |
| | 79,974 |
| | 5,842 |
| | 43,540 |
| | 85,816 |
| | 129,356 |
| | 21,276 |
| | 108,080 |
| | 111,280 |
| | — |
| | 2004/2013 |
| Avalon Del Mar Station | | Pasadena, CA | | 347 |
| | 20,560 |
| | 106,556 |
| | 3,731 |
| | 20,560 |
| | 110,287 |
| | 130,847 |
| | 20,717 |
| | 110,130 |
| | 113,568 |
| | — |
| | 2006/2013 |
| Eaves Thousand Oaks | | Thousand Oaks, CA | | 154 |
| | 13,950 |
| | 20,211 |
| | 2,546 |
| | 13,950 |
| | 22,757 |
| | 36,707 |
| | 6,158 |
| | 30,549 |
| | 31,486 |
| | — |
| | 1992/2013 |
| Eaves Los Feliz (2) | | Los Angeles, CA | | 263 |
| | 18,940 |
| | 43,661 |
| | 4,556 |
| | 18,940 |
| | 48,217 |
| | 67,157 |
| | 10,545 |
| | 56,612 |
| | 57,563 |
| | 41,400 |
| | 1989/2013 |
| Eaves Woodland Hills | | Woodland Hills, CA | | 883 |
| | 68,940 |
| | 90,549 |
| | 11,203 |
| | 68,940 |
| | 101,752 |
| | 170,692 |
| | 25,353 |
| | 145,339 |
| | 148,867 |
| | 111,500 |
| | 1971/2013 |
| Avalon Thousand Oaks Plaza | | Thousand Oaks, CA | | 148 |
| | 12,810 |
| | 22,581 |
| | 2,300 |
| | 12,810 |
| | 24,881 |
| | 37,691 |
| | 6,132 |
| | 31,559 |
| | 32,257 |
| | — |
| | 2002/2013 |
| Total Los Angeles, CA | | | | 8,380 |
| | $ | 477,004 |
| | $ | 1,306,247 |
| | $ | 205,941 |
| | $ | 477,004 |
| | $ | 1,512,188 |
| | $ | 1,989,192 |
| | $ | 434,469 |
| | $ | 1,554,723 |
| | $ | 1,601,740 |
| | $ | 260,475 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Orange County, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVA Newport | | Costa Mesa, CA | | 145 |
| | $ | 1,975 |
| | $ | 3,814 |
| | $ | 9,840 |
| | $ | 1,975 |
| | $ | 13,654 |
| | $ | 15,629 |
| | $ | 6,995 |
| | $ | 8,634 |
| | $ | 9,130 |
| | $ | — |
| | 1956/1996 |
| Eaves Mission Viejo | | Mission Viejo, CA | | 166 |
| | 2,517 |
| | 9,257 |
| | 3,580 |
| | 2,517 |
| | 12,837 |
| | 15,354 |
| | 8,660 |
| | 6,694 |
| | 7,145 |
| | 7,635 |
| | 1984/1996 |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| Avalon Monrovia | | Monrovia, CA | | 154 | | | $ | 12,125 | | | $ | 56,233 | | | $ | 195 | | | $ | 12,125 | | | $ | 56,428 | | | $ | 68,553 | | | $ | 5,649 | | | $ | 62,904 | | | $ | 65,150 | | | $ | — | | | 2021 |
| Avalon Mission Oaks | | Camarillo, CA | | 160 | | | 9,600 | | | 37,566 | | | 2,502 | | | 9,600 | | | 40,068 | | | 49,668 | | | 14,377 | | | 35,291 | | | 36,101 | | | — | | | 2014 |
| Avalon Chino Hills | | Chino Hills, CA | | 331 | | | 16,617 | | | 79,829 | | | 1,099 | | | 16,617 | | | 80,928 | | | 97,545 | | | 19,785 | | | 77,760 | | | 80,473 | | | — | | | 2017 |
| AVA North Hollywood | | North Hollywood, CA | | 156 | | | 18,408 | | | 52,280 | | | 2,320 | | | 18,408 | | | 54,600 | | | 73,008 | | | 16,375 | | | 56,633 | | | 58,572 | | | — | | | 2015/2016 |
| Avalon Cerritos | | Cerritos, CA | | 132 | | | 8,869 | | | 51,452 | | | 1,030 | | | 8,869 | | | 52,482 | | | 61,351 | | | 10,562 | | | 50,789 | | | 52,867 | | | 30,250 | | | 2017/2019 |
| Avalon Simi Valley | | Simi Valley, CA | | 500 | | | 42,020 | | | 73,345 | | | 13,151 | | | 42,020 | | | 86,496 | | | 128,516 | | | 36,353 | | | 92,163 | | | 94,588 | | | — | | | 2007/2013 |
| AVA Studio City II | | Studio City, CA | | 101 | | | 4,626 | | | 22,941 | | | 8,188 | | | 4,626 | | | 31,129 | | | 35,755 | | | 12,385 | | | 23,370 | | | 24,296 | | | — | | | 1991/2013 |
| Avalon Studio City | | Studio City, CA | | 276 | | | 15,756 | | | 78,166 | | | 19,782 | | | 15,756 | | | 97,948 | | | 113,704 | | | 40,965 | | | 72,739 | | | 76,417 | | | — | | | 2002/2013 |
| Avalon Calabasas | | Calabasas, CA | | 600 | | | 42,720 | | | 107,368 | | | 28,616 | | | 42,720 | | | 135,984 | | | 178,704 | | | 67,697 | | | 111,007 | | | 115,715 | | | — | | | 1988/2013 |
| Avalon Oak Creek | | Agoura Hills, CA | | 336 | | | 43,540 | | | 79,827 | | | 12,286 | | | 43,540 | | | 92,113 | | | 135,653 | | | 45,131 | | | 90,522 | | | 92,637 | | | — | | | 2004/2013 |
| Avalon Santa Monica on Main | | Santa Monica, CA | | 133 | | | 32,000 | | | 60,705 | | | 16,377 | | | 32,000 | | | 77,082 | | | 109,082 | | | 30,005 | | | 79,077 | | | 81,034 | | | — | | | 2007/2013 |
| eaves Old Town Pasadena | | Pasadena, CA | | 96 | | | 9,110 | | | 15,371 | | | 7,555 | | | 9,110 | | | 22,926 | | | 32,036 | | | 9,317 | | | 22,719 | | | 23,292 | | | — | | | 1972/2013 |
| eaves Thousand Oaks | | Thousand Oaks, CA | | 158 | | | 13,950 | | | 20,052 | | | 7,148 | | | 13,950 | | | 27,200 | | | 41,150 | | | 14,258 | | | 26,892 | | | 27,613 | | | — | | | 1992/2013 |
| eaves Los Feliz | | Los Angeles, CA | | 263 | | | 18,940 | | | 43,661 | | | 14,420 | | | 18,940 | | | 58,081 | | | 77,021 | | | 24,175 | | | 52,846 | | | 54,878 | | | 41,400 | | | 1989/2013 |
| AVA Toluca Hills | | Los Angeles, CA | | 1,151 | | | 86,450 | | | 161,078 | | | 95,036 | | | 86,450 | | | 256,114 | | | 342,564 | | | 94,367 | | | 248,197 | | | 253,476 | | | — | | | 1973/2013 |
| eaves Woodland Hills | | Woodland Hills, CA | | 888 | | | 68,940 | | | 90,507 | | | 26,038 | | | 68,940 | | | 116,545 | | | 185,485 | | | 54,334 | | | 131,151 | | | 134,282 | | | 111,500 | | | 1971/2013 |
| Avalon Thousand Oaks Plaza | | Thousand Oaks, CA | | 148 | | | 12,810 | | | 22,515 | | | 4,401 | | | 12,810 | | | 26,916 | | | 39,726 | | | 12,276 | | | 27,450 | | | 27,659 | | | — | | | 2002/2013 |
| Avalon Pasadena | | Pasadena, CA | | 120 | | | 10,240 | | | 31,558 | | | 7,000 | | | 10,240 | | | 38,558 | | | 48,798 | | | 15,345 | | | 33,453 | | | 34,559 | | | — | | | 2004/2013 |
| AVA Studio City I | | Studio City, CA | | 450 | | | 17,658 | | | 90,562 | | | 37,807 | | | 17,658 | | | 128,369 | | | 146,027 | | | 49,319 | | | 96,708 | | | 101,202 | | | — | | | 1987/2013 |
| Total Los Angeles, CA | | 12,143 | | | $ | 825,381 | | | $ | 2,278,540 | | | $ | 557,262 | | | $ | 825,381 | | | $ | 2,835,802 | | | $ | 3,661,183 | | | $ | 1,128,846 | | | $ | 2,532,337 | | | $ | 2,606,696 | | | $ | 183,150 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Orange County, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVA Newport | | Costa Mesa, CA | | 145 | | | $ | 1,975 | | | $ | 3,814 | | | $ | 10,806 | | | $ | 1,975 | | | $ | 14,620 | | | $ | 16,595 | | | $ | 9,899 | | | $ | 6,696 | | | $ | 6,734 | | | $ | — | | | 1956/1996 |
| eaves Mission Viejo | | Mission Viejo, CA | | 166 | | | 2,517 | | | 9,245 | | | 6,229 | | | 2,517 | | | 15,474 | | | 17,991 | | | 12,243 | | | 5,748 | | | 5,573 | | | — | | | 1984/1996 |
| eaves South Coast | | Costa Mesa, CA | | 258 | | | 4,709 | | | 16,063 | | | 15,495 | | | 4,709 | | | 31,558 | | | 36,267 | | | 23,224 | | | 13,043 | | | 13,049 | | | — | | | 1973/1996 |
| eaves Santa Margarita | | Rancho Santa Margarita, CA | | 302 | | | 4,607 | | | 16,902 | | | 14,958 | | | 4,607 | | | 31,860 | | | 36,467 | | | 22,841 | | | 13,626 | | | 13,657 | | | — | | | 1990/1997 |
| eaves Huntington Beach | | Huntington Beach, CA | | 304 | | | 4,871 | | | 19,731 | | | 13,091 | | | 4,871 | | | 32,822 | | | 37,693 | | | 27,339 | | | 10,354 | | | 11,122 | | | — | | | 1971/1997 |
| Avalon Irvine I | | Irvine, CA | | 279 | | | 9,911 | | | 67,520 | | | 7,686 | | | 9,911 | | | 75,206 | | | 85,117 | | | 35,582 | | | 49,535 | | | 50,566 | | | — | | | 2010 |
| Avalon Irvine II | | Irvine, CA | | 179 | | | 4,358 | | | 40,905 | | | 1,654 | | | 4,358 | | | 42,559 | | | 46,917 | | | 16,074 | | | 30,843 | | | 32,044 | | | — | | | 2013 |
| eaves Lake Forest | | Lake Forest, CA | | 225 | | | 5,199 | | | 21,117 | | | 7,790 | | | 5,199 | | | 28,907 | | | 34,106 | | | 12,905 | | | 21,201 | | | 21,661 | | | — | | | 1975/2011 |
| Avalon Baker Ranch | | Lake Forest, CA | | 430 | | | 31,689 | | | 98,004 | | | 987 | | | 31,689 | | | 98,991 | | | 130,680 | | | 30,569 | | | 100,111 | | | 103,234 | | | — | | | 2015 |
| Avalon Irvine III | | Irvine, CA | | 156 | | | 11,607 | | | 43,973 | | | 386 | | | 11,607 | | | 44,359 | | | 55,966 | | | 12,412 | | | 43,554 | | | 44,965 | | | — | | | 2016 |
| eaves Seal Beach | | Seal Beach, CA | | 549 | | | 46,790 | | | 99,999 | | | 38,750 | | | 46,790 | | | 138,749 | | | 185,539 | | | 52,068 | | | 133,471 | | | 137,902 | | | — | | | 1971/2013 |
| Avalon Huntington Beach | | Huntington Beach, CA | | 378 | | | 13,055 | | | 105,981 | | | 1,248 | | | 13,055 | | | 107,229 | | | 120,284 | | | 28,127 | | | 92,157 | | | 95,733 | | | — | | | 2017 |
| Total Orange County, CA | | 3,371 | | | $ | 141,288 | | | $ | 543,254 | | | $ | 119,080 | | | $ | 141,288 | | | $ | 662,334 | | | $ | 803,622 | | | $ | 283,283 | | | $ | 520,339 | | | $ | 536,240 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| Eaves South Coast | | Costa Mesa, CA | | 258 |
| | 4,709 |
| | 16,063 |
| | 13,442 |
| | 4,709 |
| | 29,505 |
| | 34,214 |
| | 16,883 |
| | 17,331 |
| | 17,829 |
| | — |
| | 1973/1996 |
| Eaves Santa Margarita | | Rancho Santa Margarita, CA | | 301 |
| | 4,607 |
| | 16,911 |
| | 10,917 |
| | 4,607 |
| | 27,828 |
| | 32,435 |
| | 15,849 |
| | 16,586 |
| | 17,224 |
| | — |
| | 1990/1997 |
| Eaves Huntington Beach | | Huntington Beach, CA | | 304 |
| | 4,871 |
| | 19,745 |
| | 10,267 |
| | 4,871 |
| | 30,012 |
| | 34,883 |
| | 19,912 |
| | 14,971 |
| | 15,964 |
| | — |
| | 1971/1997 |
| Avalon Anaheim Stadium | | Anaheim, CA | | 251 |
| | 27,874 |
| | 69,156 |
| | 1,608 |
| | 27,874 |
| | 70,764 |
| | 98,638 |
| | 21,751 |
| | 76,887 |
| | 78,955 |
| | — |
| | 2009 |
| Avalon Irvine I | | Irvine, CA | | 279 |
| | 9,911 |
| | 67,520 |
| | 776 |
| | 9,911 |
| | 68,296 |
| | 78,207 |
| | 19,629 |
| | 58,578 |
| | 60,694 |
| | — |
| | 2010 |
| Avalon Irvine II | | Irvine, CA | | 179 |
| | 4,358 |
| | 40,912 |
| | — |
| | 4,358 |
| | 40,912 |
| | 45,270 |
| | 7,217 |
| | 38,053 |
| | 39,535 |
| | — |
| | 2013 |
| Eaves Lake Forest | | Lake Forest, CA | | 225 |
| | 5,199 |
| | 21,134 |
| | 3,248 |
| | 5,199 |
| | 24,382 |
| | 29,581 |
| | 5,614 |
| | 23,967 |
| | 23,870 |
| | — |
| | 1975/2011 |
| Avalon Baker Ranch | | Lake Forest, CA | | 430 |
| | 31,689 |
| | 98,411 |
| | — |
| | 31,689 |
| | 98,411 |
| | 130,100 |
| | 9,406 |
| | 120,694 |
| | 124,442 |
| | — |
| | 2015 |
| Eaves Seal Beach (2) | | Seal Beach, CA | | 549 |
| | 46,790 |
| | 99,999 |
| | 5,640 |
| | 46,790 |
| | 105,639 |
| | 152,429 |
| | 22,914 |
| | 129,515 |
| | 132,659 |
| | — |
| | 1971/2013 |
| Total Orange County, CA | | 3,087 |
| | $ | 144,500 |
| | $ | 462,922 |
| | $ | 59,318 |
| | $ | 144,500 |
| | $ | 522,240 |
| | $ | 666,740 |
| | $ | 154,830 |
| | $ | 511,910 |
| | $ | 527,447 |
| | $ | 7,635 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| San Diego, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVA Pacific Beach | | San Diego, CA | | 564 |
| | $ | 9,922 |
| | $ | 40,580 |
| | $ | 40,849 |
| | $ | 9,922 |
| | $ | 81,429 |
| | $ | 91,351 |
| | $ | 41,108 |
| | $ | 50,243 |
| | $ | 53,224 |
| | $ | — |
| | 1969/1997 |
| Eaves Mission Ridge | | San Diego, CA | | 200 |
| | 2,710 |
| | 10,924 |
| | 12,128 |
| | 2,710 |
| | 23,052 |
| | 25,762 |
| | 14,637 |
| | 11,125 |
| | 11,696 |
| | — |
| | 1960/1997 |
| AVA Cortez Hill (1) | | San Diego, CA | | 299 |
| | 2,768 |
| | 20,134 |
| | 23,567 |
| | 2,768 |
| | 43,701 |
| | 46,469 |
| | 23,459 |
| | 23,010 |
| | 24,543 |
| | — |
| | 1973/1998 |
| Avalon Fashion Valley | | San Diego, CA | | 161 |
| | 19,627 |
| | 44,972 |
| | 696 |
| | 19,627 |
| | 45,668 |
| | 65,295 |
| | 14,567 |
| | 50,728 |
| | 52,186 |
| | — |
| | 2008 |
| Eaves Rancho Penasquitos | | San Diego, CA | | 250 |
| | 6,692 |
| | 27,143 |
| | 3,242 |
| | 6,692 |
| | 30,385 |
| | 37,077 |
| | 6,960 |
| | 30,117 |
| | 30,727 |
| | — |
| | 1986/2011 |
| Avalon Vista | | Vista, CA | | 221 |
| | 12,689 |
| | 43,327 |
| | — |
| | 12,689 |
| | 43,327 |
| | 56,016 |
| | 4,125 |
| | 51,891 |
| | 53,512 |
| | — |
| | 2015 |
| Eaves La Mesa | | La Mesa, CA | | 168 |
| | 9,490 |
| | 28,482 |
| | 1,962 |
| | 9,490 |
| | 30,444 |
| | 39,934 |
| | 7,189 |
| | 32,745 |
| | 33,840 |
| | — |
| | 1989/2013 |
| Total San Diego, CA | | | | 1,863 |
| | $ | 63,898 |
| | $ | 215,562 |
| | $ | 82,444 |
| | $ | 63,898 |
| | $ | 298,006 |
| | $ | 361,904 |
| | $ | 112,045 |
| | $ | 249,859 |
| | $ | 259,728 |
| | $ | — |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL SOUTHERN CALIFORNIA | | 13,330 |
| | $ | 685,402 |
| | $ | 1,984,731 |
| | $ | 347,703 |
| | $ | 685,402 |
| | $ | 2,332,434 |
| | $ | 3,017,836 |
| | $ | 701,344 |
| | $ | 2,316,492 |
| | $ | 2,388,915 |
| | $ | 268,110 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL ESTABLISHED COMMUNITIES | | 54,713 |
| | $ | 2,857,946 |
| | $ | 9,575,234 |
| | $ | 1,132,583 |
| | $ | 2,857,946 |
| | $ | 10,707,817 |
| | $ | 13,565,763 |
| | $ | 3,325,891 |
| | $ | 10,239,872 |
| | $ | 10,455,896 |
| | $ | 1,207,475 |
| | |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| San Diego, CA | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVA Pacific Beach | | San Diego, CA | | 564 | | | $ | 9,922 | | | $ | 40,580 | | | $ | 44,172 | | | $ | 9,922 | | | $ | 84,752 | | | $ | 94,674 | | | $ | 58,896 | | | $ | 35,778 | | | $ | 38,380 | | | $ | — | | | 1969/1997 |
| eaves Mission Ridge | | San Diego, CA | | 200 | | | 2,710 | | | 10,924 | | | 15,906 | | | 2,710 | | | 26,830 | | | 29,540 | | | 20,756 | | | 8,784 | | | 8,229 | | | — | | | 1960/1997 |
| eaves San Marcos | | San Marcos, CA | | 184 | | | 3,277 | | | 13,385 | | | 7,260 | | | 3,277 | | | 20,645 | | | 23,922 | | | 8,165 | | | 15,757 | | | 16,014 | | | — | | | 1988/2011 |
| eaves Rancho Penasquitos | | San Diego, CA | | 250 | | | 6,692 | | | 27,143 | | | 12,493 | | | 6,692 | | | 39,636 | | | 46,328 | | | 17,133 | | | 29,195 | | | 29,449 | | | — | | | 1986/2011 |
| Avalon Vista | | Vista, CA | | 221 | | | 12,689 | | | 43,328 | | | 977 | | | 12,689 | | | 44,305 | | | 56,994 | | | 13,955 | | | 43,039 | | | 44,449 | | | — | | | 2015 |
| eaves La Mesa | | La Mesa, CA | | 168 | | | 9,490 | | | 28,482 | | | 4,849 | | | 9,490 | | | 33,331 | | | 42,821 | | | 16,369 | | | 26,452 | | | 27,526 | | | — | | | 1989/2013 |
| Avalon La Jolla Colony | | San Diego, CA | | 180 | | | 16,760 | | | 27,694 | | | 12,707 | | | 16,760 | | | 40,401 | | | 57,161 | | | 17,641 | | | 39,520 | | | 40,944 | | | — | | | 1987/2013 |
| Total San Diego, CA | | 1,767 | | | $ | 61,540 | | | $ | 191,536 | | | $ | 98,364 | | | $ | 61,540 | | | $ | 289,900 | | | $ | 351,440 | | | $ | 152,915 | | | $ | 198,525 | | | $ | 204,991 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL SOUTHERN CALIFORNIA | | 17,281 | | | $ | 1,028,209 | | | $ | 3,013,330 | | | $ | 774,706 | | | $ | 1,028,209 | | | $ | 3,788,036 | | | $ | 4,816,245 | | | $ | 1,565,044 | | | $ | 3,251,201 | | | $ | 3,347,927 | | | $ | 183,150 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| OTHER EXPANSION REGIONS | | | | | | | | | | | | | | | | | | | | | | | | |
| North Carolina | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon South End | | Charlotte, NC | | 265 | | | $ | 13,723 | | | $ | 87,978 | | | $ | 5,176 | | | $ | 13,723 | | | $ | 93,154 | | | $ | 106,877 | | | $ | 10,916 | | | $ | 95,961 | | | $ | 97,335 | | | $ | — | | | 2020/2021 |
| AVA South End | | Charlotte, NC | | 164 | | | 9,367 | | | 44,623 | | | 2,133 | | | 9,367 | | | 46,756 | | | 56,123 | | | 4,756 | | | 51,367 | | | 51,675 | | | — | | | 2013/2021 |
| Avalon Hawk (1) | | Charlotte, NC | | 71 | | | 2,564 | | | 44,056 | | | 227 | | | 2,564 | | | 44,283 | | | 46,847 | | | 3,729 | | | 43,118 | | | 44,649 | | | — | | | 2021/2021 |
| Total North Carolina | | 500 | | | $ | 25,654 | | | $ | 176,657 | | | $ | 7,536 | | | $ | 25,654 | | | $ | 184,193 | | | $ | 209,847 | | | $ | 19,401 | | | $ | 190,446 | | | $ | 193,659 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Texas | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Lakeside | | Flower Mound, TX | | 425 | | | $ | 15,073 | | | $ | 98,057 | | | $ | 5,105 | | | $ | 15,073 | | | $ | 103,162 | | | $ | 118,235 | | | $ | 14,595 | | | $ | 103,640 | | | $ | 107,962 | | | $ | — | | | 2015/2021 |
| Total Texas | | 425 | | | $ | 15,073 | | | $ | 98,057 | | | $ | 5,105 | | | $ | 15,073 | | | $ | 103,162 | | | $ | 118,235 | | | $ | 14,595 | | | $ | 103,640 | | | $ | 107,962 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL EXPANSION REGIONS | | 925 | | | $ | 40,727 | | | $ | 274,714 | | | $ | 12,641 | | | $ | 40,727 | | | $ | 287,355 | | | $ | 328,082 | | | $ | 33,996 | | | $ | 294,086 | | | $ | 301,621 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL SAME STORE | | 74,730 | | | $ | 4,187,849 | | | $ | 15,696,256 | | | $ | 2,514,873 | | | $ | 4,187,849 | | | $ | 18,211,129 | | | $ | 22,398,978 | | | $ | 7,183,770 | | | $ | 15,215,208 | | | $ | 15,731,734 | | | $ | 681,001 | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| OTHER STABILIZED | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Silicon Valley | | Sunnyvale, CA | | 710 |
| | $ | 20,713 |
| | $ | 99,573 |
| | $ | 34,963 |
| | $ | 20,713 |
| | $ | 134,536 |
| | $ | 155,249 |
| | $ | 71,577 |
| | $ | 83,672 |
| | $ | 85,041 |
| | $ | — |
| | 1998 |
| Avalon Towers on the Peninsula | | Mountain View, CA | | 211 |
| | 9,560 |
| | 56,136 |
| | 14,467 |
| | 9,560 |
| | 70,603 |
| | 80,163 |
| | 31,563 |
| | 48,600 |
| | 45,523 |
| | — |
| | 2002 |
| Eaves San Marcos | | San Marcos, CA | | 184 |
| | 3,277 |
| | 13,385 |
| | 4,557 |
| | 3,277 |
| | 17,942 |
| | 21,219 |
| | 3,641 |
| | 17,578 |
| | 18,302 |
| | — |
| | 1988/2011 |
| Avalon Glendora | | Glendora, CA | | 280 |
| | 18,311 |
| | 64,759 |
| | 100 |
| | 18,311 |
| | 64,859 |
| | 83,170 |
| | 4,974 |
| | 78,196 |
| | 80,358 |
| | — |
| | 2016 |
| Avalon Irvine III | | Irvine, CA | | 156 |
| | 11,607 |
| | 43,977 |
| | — |
| | 11,607 |
| | 43,977 |
| | 55,584 |
| | 2,842 |
| | 52,742 |
| | 54,232 |
| | — |
| | 2016 |
| Avalon Dublin Station II | | Dublin, CA | | 252 |
| | 7,762 |
| | 76,584 |
| | 26 |
| | 7,762 |
| | 76,610 |
| | 84,372 |
| | 4,821 |
| | 79,551 |
| | 82,106 |
| | — |
| | 2016 |
| AVA North Hollywood | | North Hollywood, CA | | 156 |
| | 18,408 |
| | 49,940 |
| | 4,089 |
| | 18,408 |
| | 54,029 |
| | 72,437 |
| | 3,810 |
| | 68,627 |
| | 70,816 |
| | — |
| | 2015/2016 |
| AVA Studio City II | | Studio City, CA | | 101 |
| | 4,626 |
| | 22,954 |
| | 5,487 |
| | 4,626 |
| | 28,441 |
| | 33,067 |
| | 5,160 |
| | 27,907 |
| | 24,848 |
| | — |
| | 1991/2013 |
| Avalon Santa Monica on Main | | Santa Monica, CA | | 133 |
| | 32,000 |
| | 60,770 |
| | 13,179 |
| | 32,000 |
| | 73,949 |
| | 105,949 |
| | 13,764 |
| | 92,185 |
| | 94,217 |
| | — |
| | 2007/2013 |
| Avalon La Jolla Colony | | San Diego, CA | | 180 |
| | 16,760 |
| | 27,694 |
| | 12,052 |
| | 16,760 |
| | 39,746 |
| | 56,506 |
| | 7,968 |
| | 48,538 |
| | 50,383 |
| | — |
| | 1987/2013 |
| Eaves Old Town Pasadena | | Pasadena, CA | | 96 |
| | 9,110 |
| | 15,371 |
| | 6,778 |
| | 9,110 |
| | 22,149 |
| | 31,259 |
| | 4,085 |
| | 27,174 |
| | 22,644 |
| | — |
| | 1972/2013 |
| Avalon Walnut Ridge I | | Walnut Creek, CA | | 106 |
| | 9,860 |
| | 19,850 |
| | 5,268 |
| | 9,860 |
| | 25,118 |
| | 34,978 |
| | 4,802 |
| | 30,176 |
| | 30,921 |
| | — |
| | 2000/2013 |
| Avalon Pasadena | | Pasadena, CA | | 120 |
| | 10,240 |
| | 31,558 |
| | 6,679 |
| | 10,240 |
| | 38,237 |
| | 48,477 |
| | 7,273 |
| | 41,204 |
| | 42,580 |
| | — |
| | 2004/2013 |
| AVA Studio City I | | Studio City, CA | | 450 |
| | 17,658 |
| | 90,715 |
| | 32,819 |
| | 17,658 |
| | 123,534 |
| | 141,192 |
| | 20,681 |
| | 120,511 |
| | 116,321 |
| | — |
| | 1987/2013 |
| The Lodge Denver West | | Lakewood, CO | | 252 |
| | 8,047 |
| | 63,586 |
| | 5,284 |
| | 8,047 |
| | 68,870 |
| | 76,917 |
| | 1,966 |
| | 74,951 |
| | N/A |
| | — |
| | 2016/2017 |
| 850 Boca | | Boca Raton, FL | | 370 |
| | 21,430 |
| | 108,585 |
| | 8,717 |
| | 21,430 |
| | 117,302 |
| | 138,732 |
| | 333 |
| | 138,399 |
| | N/A |
| | — |
| | 2017/2017 |
| Avalon at Chestnut Hill | | Chestnut Hill, MA | | 204 |
| | 14,572 |
| | 45,911 |
| | 10,260 |
| | 14,572 |
| | 56,171 |
| | 70,743 |
| | 19,293 |
| | 51,450 |
| | 45,640 |
| | 38,097 |
| | 2007 |
| AVA Back Bay | | Boston, MA | | 271 |
| | 9,034 |
| | 36,540 |
| | 47,327 |
| | 9,034 |
| | 83,867 |
| | 92,901 |
| | 34,038 |
| | 58,863 |
| | 60,700 |
| | — |
| | 1968/1998 |
| AVA Theater District | | Boston, MA | | 398 |
| | 17,070 |
| | 163,580 |
| | 40 |
| | 17,070 |
| | 163,620 |
| | 180,690 |
| | 13,499 |
| | 167,191 |
| | 172,387 |
| | — |
| | 2015 |
| Avalon Marlborough | | Marlborough, MA | | 350 |
| | 15,317 |
| | 60,397 |
| | 11 |
| | 15,317 |
| | 60,408 |
| | 75,725 |
| | 5,353 |
| | 70,372 |
| | 72,339 |
| | — |
| | 2015 |
| Avalon Framingham | | Framingham, MA | | 180 |
| | 9,315 |
| | 34,632 |
| | — |
| | 9,315 |
| | 34,632 |
| | 43,947 |
| | 2,731 |
| | 41,216 |
| | 42,395 |
| | — |
| | 2015 |
| Avalon Bear Hill | | Waltham, MA | | 324 |
| | 27,350 |
| | 94,168 |
| | 28,764 |
| | 27,350 |
| | 122,932 |
| | 150,282 |
| | 23,723 |
| | 126,559 |
| | 131,023 |
| | — |
| | 1999/2013 |
| Avalon at Edgewater | | Edgewater, NJ | | 168 |
| | 5,982 |
| | 24,389 |
| | 9,182 |
| | 5,982 |
| | 33,571 |
| | 39,553 |
| | 15,351 |
| | 24,202 |
| | 21,123 |
| | — |
| | 2002 |
| Avalon Bloomfield Station | | Bloomfield, NJ | | 224 |
| | 10,701 |
| | 39,927 |
| | — |
| | 10,701 |
| | 39,927 |
| | 50,628 |
| | 3,594 |
| | 47,034 |
| | 48,031 |
| | — |
| | 2015 |
| Avalon Union | | Union, NJ | | 202 |
| | 11,695 |
| | 36,282 |
| | — |
| | 11,695 |
| | 36,282 |
| | 47,977 |
| | 2,519 |
| | 45,458 |
| | 46,615 |
| | — |
| | 2016 |
| Avalon Hoboken | | Hoboken, NJ | | 217 |
| | 37,237 |
| | 87,220 |
| | 8,327 |
| | 37,237 |
| | 95,547 |
| | 132,784 |
| | 11,390 |
| | 121,394 |
| | 124,435 |
| | 67,904 |
| | 2008/2016 |
| Avalon Towers | | Long Beach, NY | | 109 |
| | 3,118 |
| | 11,973 |
| | 24,372 |
| | 3,118 |
| | 36,345 |
| | 39,463 |
| | 16,198 |
| | 23,265 |
| | 21,775 |
| | — |
| | 1990/1995 |
| Avalon Riverview North (1) | | Long Island City, NY | | 602 |
| | — |
| | 165,966 |
| | 14,176 |
| | — |
| | 180,142 |
| | 180,142 |
| | 59,765 |
| | 120,377 |
| | 122,418 |
| | — |
| | 2008 |
| AVA DoBro | | Brooklyn, NY | | 500 |
| | 77,416 |
| | 203,827 |
| | — |
| | 77,416 |
| | 203,827 |
| | 281,243 |
| | 10,586 |
| | 270,657 |
| | 294,503 |
| | — |
| | 2017 |
| Avalon Green III | | Elmsford, NY | | 68 |
| | 4,985 |
| | 17,300 |
| | — |
| | 4,985 |
| | 17,300 |
| | 22,285 |
| | 1,248 |
| | 21,037 |
| | 21,585 |
| | — |
| | 2016 |
| Archstone Lexington | | Flower Mound, TX | | 222 |
| | 4,540 |
| | 25,946 |
| | 2,073 |
| | 4,540 |
| | 28,019 |
| | 32,559 |
| | 6,883 |
| | 25,676 |
| | 26,669 |
| | 21,700 |
| | 2000/2013 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| OTHER STABILIZED | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Brea Place | | Brea, CA | | 653 | | | $ | 72,925 | | | $ | 220,062 | | | $ | 36 | | | $ | 72,925 | | | $ | 220,098 | | | $ | 293,023 | | | $ | 17,267 | | | $ | 275,756 | | | $ | 282,419 | | | $ | — | | | 2022 |
| AVA RiNo | | Denver, CO | | 246 | | | 15,152 | | | 71,666 | | | — | | | 15,152 | | | 71,666 | | | 86,818 | | | 5,460 | | | 81,358 | | | 84,033 | | | — | | | 2022 |
| Avalon Flatirons | | Lafayette, CO | | 207 | | | 7,390 | | | 87,130 | | | 1,399 | | | 7,390 | | | 88,529 | | | 95,919 | | | 8,030 | | | 87,889 | | | 91,038 | | | — | | | 2020/2022 |
| Avalon Miramar Park Place | | Miramar, FL | | 650 | | | 50,919 | | | 230,931 | | | 15,110 | | | 50,919 | | | 246,041 | | | 296,960 | | | 29,089 | | | 267,871 | | | 277,761 | | | — | | | 2022/2022 |
| Avalon Woburn | | Woburn, MA | | 350 | | | 21,576 | | | 97,844 | | | 787 | | | 21,576 | | | 98,631 | | | 120,207 | | | 8,238 | | | 111,969 | | | 115,430 | | | — | | | 2022 |
| Avalon 555 President | | Baltimore, MD | | 400 | | | 13,168 | | | 121,333 | | | 45 | | | 13,168 | | | 121,378 | | | 134,546 | | | 15,749 | | | 118,797 | | | 125,018 | | | — | | | 2021 |
| Avalon Foundry Row | | Owings Mill, MD | | 437 | | | 11,132 | | | 86,261 | | | — | | | 11,132 | | | 86,261 | | | 97,393 | | | 8,529 | | | 88,864 | | | 91,611 | | | — | | | 2022 |
| Avalon Highland Creek | | Charlotte, NC | | 260 | | | 4,586 | | | 71,200 | | | 1,822 | | | 4,586 | | | 73,022 | | | 77,608 | | | 5,715 | | | 71,893 | | | 75,672 | | | — | | | 2022/2022 |
| Avalon Mooresville | | Mooresville, NC | | 203 | | | 3,770 | | | 47,565 | | | 958 | | | 3,770 | | | 48,523 | | | 52,293 | | | 856 | | | 51,437 | | | — | | | — | | | 2017/2023 |
| Avalon Addison | | Addison, TX | | 196 | | | 11,174 | | | 57,809 | | | 1,237 | | | 11,174 | | | 59,046 | | | 70,220 | | | 4,958 | | | 65,262 | | | 67,180 | | | — | | | 1995/2022 |
| Avalon Frisco at Main | | Frisco, TX | | 360 | | | 11,919 | | | 68,210 | | | 3,301 | | | 11,919 | | | 71,511 | | | 83,430 | | | 3,066 | | | 80,364 | | | — | | | — | | | 2013/2023 |
| Avalon West Plano | | Carrollton, TX | | 568 | | | 14,100 | | | 115,399 | | | 7,880 | | | 14,100 | | | 123,279 | | | 137,379 | | | 4,503 | | | 132,876 | | | — | | | 63,041 | | | 2016/2023 |
| AVA Ballston | | Arlington, VA | | 344 | | | 7,291 | | | 29,177 | | | 28,545 | | | 7,291 | | | 57,722 | | | 65,013 | | | 39,188 | | | 25,825 | | | 27,056 | | | — | | | 1990 |
| AVA Ballston Square | | Arlington, VA | | 714 | | | 71,640 | | | 215,937 | | | 60,475 | | | 71,640 | | | 276,412 | | | 348,052 | | | 104,173 | | | 243,879 | | | 243,726 | | | — | | | 1992/2013 |
| The Park Loggia Commercial | | New York, NY | | N/A | | 77,393 | | | 76,410 | | | 10,233 | | | 77,393 | | | 86,643 | | | 164,036 | | | 12,836 | | | 151,200 | | | 152,293 | | | — | | | 2019 |
| TOTAL OTHER STABILIZED | | 5,588 | | | $ | 394,135 | | | $ | 1,596,934 | | | $ | 131,828 | | | $ | 394,135 | | | $ | 1,728,762 | | | $ | 2,122,897 | | | $ | 267,657 | | | $ | 1,855,240 | | | $ | 1,633,237 | | | $ | 63,041 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL CURRENT COMMUNITIES (4) | | 80,318 | | | $ | 4,581,984 | | | $ | 17,293,190 | | | $ | 2,646,701 | | | $ | 4,581,984 | | | $ | 19,939,891 | | | $ | 24,521,875 | | | $ | 7,451,427 | | | $ | 17,070,448 | | | $ | 17,364,971 | | | $ | 744,042 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| DEVELOPMENT (4) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon West Dublin | | Dublin, CA | | 499 | | | $ | 9,003 | | | $ | 53,197 | | | $ | 177,920 | | | $ | 9,003 | | | $ | 231,117 | | | $ | 240,120 | | | $ | 280 | | | $ | 239,840 | | | $ | 157,784 | | | $ | — | | | N/A |
| Avalon Westminster Promenade | | Westminster, CO | | 312 | | | — | | | — | | | 91,833 | | | — | | | 91,833 | | | 91,833 | | | — | | | 91,833 | | | 48,830 | | | — | | | N/A |
| Avalon Governor's Park | | Denver, CO | | 304 | | | — | | | — | | | 106,898 | | | — | | | 106,898 | | | 106,898 | | | — | | | 106,898 | | | 44,987 | | | — | | | N/A |
| Avalon Merrick Park | | Miami, FL | | 254 | | | 18,029 | | | 77,160 | | | — | | | 18,029 | | | 77,160 | | | 95,189 | | | 1,738 | | | 93,451 | | | 85,052 | | | — | | | 2023 |
| Avalon South Miami | | South Miami, FL | | 290 | | | — | | | — | | | 43,909 | | | — | | | 43,909 | | | 43,909 | | | — | | | 43,909 | | | — | | | — | | | N/A |
| Avalon North Andover | | North Andover, MA | | 221 | | | 13,612 | | | 61,895 | | | — | | | 13,612 | | | 61,895 | | | 75,507 | | | 2,190 | | | 73,317 | | | 59,448 | | | — | | | 2023 |
| Avalon Brighton | | Boston, MA | | 180 | | | 11,157 | | | 76,931 | | | 315 | | | 11,157 | | | 77,246 | | | 88,403 | | | 2,048 | | | 86,355 | | | 76,197 | | | — | | | 2023 |
| Kanso Milford | | Milford, MA | | 162 | | | — | | | — | | | 38,557 | | | — | | | 38,557 | | | 38,557 | | | — | | | 38,557 | | | 15,540 | | | — | | | N/A |
| Avalon Annapolis | | Annapolis, MD | | 508 | | | — | | | — | | | 115,599 | | | — | | | 115,599 | | | 115,599 | | | — | | | 115,599 | | | 66,119 | | | — | | | N/A |
| Avalon Hunt Valley West | | Hunt Valley, MD | | 322 | | | — | | | — | | | 29,616 | | | — | | | 29,616 | | | 29,616 | | | — | | | 29,616 | | | — | | | — | | | N/A |
| Avalon Durham | | Durham, NC | | 336 | | | — | | | — | | | 80,784 | | | — | | | 80,784 | | | 80,784 | | | — | | | 80,784 | | | 33,214 | | | — | | | N/A |
| Avalon Lake Norman | | Mooresville, NC | | 345 | | | — | | | — | | | 20,233 | | | — | | | 20,233 | | | 20,233 | | | — | | | 20,233 | | | — | | | — | | | N/A |
| Avalon Montville | | Montville, NJ | | 349 | | | 1,915 | | | 26,884 | | | 82,146 | | | 1,915 | | | 109,030 | | | 110,945 | | | 87 | | | 110,858 | | | 49,944 | | | — | | | N/A |
| Avalon Somerville Station (1) | | Somerville, NJ | | 374 | | | 16,663 | | | 97,348 | | | 321 | | | 16,663 | | | 97,669 | | | 114,332 | | | 4,455 | | | 109,877 | | | 98,470 | | | — | | | 2023 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| Archstone Toscano | | Houston, TX | | 474 |
| | 15,607 |
| | 72,889 |
| | — |
| | 15,607 |
| | 72,889 |
| | 88,496 |
| | 11,044 |
| | 77,452 |
| | 79,819 |
| | — |
| | 2014 |
| Memorial Heights Villages | | Houston, TX | | 318 |
| | 9,607 |
| | 48,448 |
| | — |
| | 9,607 |
| | 48,448 |
| | 58,055 |
| | 10,516 |
| | 47,539 |
| | 48,508 |
| | — |
| | 2014 |
| Eaves Fairfax City | | Fairfax, VA | | 141 |
| | 2,152 |
| | 8,907 |
| | 5,475 |
| | 2,152 |
| | 14,382 |
| | 16,534 |
| | 8,176 |
| | 8,358 |
| | 8,773 |
| | — |
| | 1988/1997 |
| Avalon at Arlington Square | | Arlington, VA | | 842 |
| | 22,041 |
| | 90,296 |
| | 31,555 |
| | 22,041 |
| | 121,851 |
| | 143,892 |
| | 54,059 |
| | 89,833 |
| | 87,446 |
| | — |
| | 2001 |
| Avalon Potomac Yard | | Alexandria, VA | | 323 |
| | 24,225 |
| | 77,137 |
| | 7,648 |
| | 24,225 |
| | 84,785 |
| | 109,010 |
| | 8,659 |
| | 100,351 |
| | 103,333 |
| | — |
| | 2014/2016 |
| Avalon Clarendon | | Arlington, VA | | 300 |
| | 22,573 |
| | 91,001 |
| | 8,521 |
| | 22,573 |
| | 99,522 |
| | 122,095 |
| | 8,530 |
| | 113,565 |
| | 117,845 |
| | — |
| | 2002/2016 |
| Avalon Columbia Pike | | Arlington, VA | | 269 |
| | 18,830 |
| | 78,395 |
| | 6,460 |
| | 18,830 |
| | 84,855 |
| | 103,685 |
| | 5,993 |
| | 97,692 |
| | 100,352 |
| | 68,637 |
| | 2009/2016 |
| Avalon Dunn Loring | | Vienna, VA | | 440 |
| | 29,377 |
| | 107,775 |
| | 14,301 |
| | 29,377 |
| | 122,076 |
| | 151,453 |
| | 3,972 |
| | 147,481 |
| | N/A |
| | — |
| | 2012/2017 |
| Avalon Falls Church | | Falls Church, VA | | 384 |
| | 39,544 |
| | 66,160 |
| | — |
| | 39,544 |
| | 66,160 |
| | 105,704 |
| | 5,899 |
| | 99,805 |
| | 102,279 |
| | — |
| | 2016 |
| Oakwood Arlington | | Arlington, VA | | 184 |
| | 18,850 |
| | 38,545 |
| | 3,052 |
| | 18,850 |
| | 41,597 |
| | 60,447 |
| | 8,608 |
| | 51,839 |
| | 53,139 |
| | — |
| | 1987/2013 |
| AVA Capitol Hill | | Seattle, WA | | 249 |
| | 20,613 |
| | 60,014 |
| | — |
| | 20,613 |
| | 60,014 |
| | 80,627 |
| | 4,194 |
| | 76,433 |
| | 78,906 |
| | — |
| | 2016 |
| Avalon Alderwood II | | Redmond, WA | | 124 |
| | 5,072 |
| | 21,369 |
| | — |
| | 5,072 |
| | 21,369 |
| | 26,441 |
| | 1,104 |
| | 25,337 |
| | 26,115 |
| | — |
| | 2016 |
| TOTAL OTHER STABILIZED | | 11,844 |
| | $ | 696,192 |
| | $ | 2,654,431 |
| | $ | 376,009 |
| | $ | 696,192 |
| | $ | 3,030,440 |
| | $ | 3,726,632 |
| | $ | 546,185 |
| | $ | 3,180,447 |
| | $ | 2,876,445 |
| | $ | 196,338 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LEASE-UP | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon West Hollywood | | West Hollywood, CA | | 294 |
| | $ | 35,187 |
| | $ | 115,385 |
| | $ | — |
| | $ | 35,187 |
| | $ | 115,385 |
| | $ | 150,572 |
| | $ | 1,697 |
| | $ | 148,875 |
| | $ | 130,173 |
| | $ | — |
| | 2017 |
| Avalon Chino Hills | | Chino Hills, CA | | 331 |
| | 16,615 |
| | 81,753 |
| | — |
| | 16,615 |
| | 81,753 |
| | 98,368 |
| | 2,127 |
| | 96,241 |
| | 87,406 |
| | — |
| | 2017 |
| Avalon Huntington Beach | | Huntington Beach, CA | | 378 |
| | 13,055 |
| | 105,719 |
| | 222 |
| | 13,055 |
| | 105,941 |
| | 118,996 |
| | 4,995 |
| | 114,001 |
| | 115,269 |
| | — |
| | 2017 |
| Avalon North Station | | Boston, MA | | 503 |
| | 22,788 |
| | 245,234 |
| | 306 |
| | 22,788 |
| | 245,540 |
| | 268,328 |
| | 5,918 |
| | 262,410 |
| | 249,022 |
| | — |
| | 2017 |
| Avalon Quincy | | Quincy, MA | | 395 |
| | 14,674 |
| | 78,151 |
| | — |
| | 14,674 |
| | 78,151 |
| | 92,825 |
| | 2,972 |
| | 89,853 |
| | 84,132 |
| | — |
| | 2017 |
| Avalon Easton | | Easton, MA | | 290 |
| | 3,151 |
| | 59,245 |
| | — |
| | 3,151 |
| | 59,245 |
| | 62,396 |
| | 840 |
| | 61,556 |
| | 29,074 |
| | — |
| | 2017 |
| Avalon Hunt Valley | | Hunt Valley, MD | | 332 |
| | 10,842 |
| | 62,596 |
| | — |
| | 10,842 |
| | 62,596 |
| | 73,438 |
| | 2,144 |
| | 71,294 |
| | 67,019 |
| | — |
| | 2017 |
| Avalon Laurel | | Laurel, MD | | 344 |
| | 10,122 |
| | 61,803 |
| | — |
| | 10,122 |
| | 61,803 |
| | 71,925 |
| | 2,919 |
| | 69,006 |
| | 69,532 |
| | — |
| | 2017 |
| Avalon Princeton | | Princeton, NJ | | 280 |
| | 26,459 |
| | 68,175 |
| | 303 |
| | 26,459 |
| | 68,478 |
| | 94,937 |
| | 2,363 |
| | 92,574 |
| | 88,360 |
| | — |
| | 2017 |
| Avalon Willoughby Square | | Brooklyn, NY | | 326 |
| | 50,475 |
| | 132,892 |
| | — |
| | 50,475 |
| | 132,892 |
| | 183,367 |
| | 6,901 |
| | 176,466 |
| | 153,310 |
| | — |
| | 2017 |
| Avalon Great Neck | | Great Neck, NY | | 191 |
| | 14,776 |
| | 64,459 |
| | — |
| | 14,776 |
| | 64,459 |
| | 79,235 |
| | 931 |
| | 78,304 |
| | 55,671 |
| | — |
| | 2017 |
| Avalon Rockville Centre II | | Rockville Centre, NY | | 165 |
| | 7,534 |
| | 49,115 |
| | — |
| | 7,534 |
| | 49,115 |
| | 56,649 |
| | 267 |
| | 56,382 |
| | 26,796 |
| | — |
| | 2017 |
| Avalon Esterra Park | | Redmond, WA | | 482 |
| | 22,668 |
| | 112,441 |
| | 305 |
| | 22,668 |
| | 112,746 |
| | 135,414 |
| | 4,963 |
| | 130,451 |
| | 127,986 |
| | — |
| | 2017 |
| Avalon Newcastle Commons I | | Newcastle, WA | | 378 |
| | 9,622 |
| | 109,453 |
| | — |
| | 9,622 |
| | 109,453 |
| | 119,075 |
| | 1,889 |
| | 117,186 |
| | 92,267 |
| | — |
| | 2017 |
| TOTAL LEASE-UP | | 4,689 |
| | $ | 257,968 |
| | $ | 1,346,421 |
| | $ | 1,136 |
| | $ | 257,968 |
| | $ | 1,347,557 |
| | $ | 1,605,525 |
| | $ | 40,926 |
| | $ | 1,564,599 |
| | $ | 1,376,017 |
| | $ | — |
| | |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2023 | | 2022 | | 2023 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and Improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion /
Acquisition |
| Avalon West Windsor | | West Windsor, NJ | | 535 | | | $ | — | | | $ | — | | | $ | 50,414 | | | $ | — | | | $ | 50,414 | | | $ | 50,414 | | | $ | — | | | $ | 50,414 | | | $ | 30,097 | | | $ | — | | | N/A |
| Avalon Princeton Shopping Center | | Princeton, NJ | | 200 | | | — | | | — | | | 25,615 | | | — | | | 25,615 | | | 25,615 | | | — | | | 25,615 | | | — | | | — | | | N/A |
| Avalon Wayne | | Wayne, NJ | | 473 | | | — | | | — | | | 23,811 | | | — | | | 23,811 | | | 23,811 | | | — | | | 23,811 | | | — | | | — | | | N/A |
| Avalon Parsippany | | Parsippany, NJ | | 410 | | | — | | | — | | | 17,012 | | | — | | | 17,012 | | | 17,012 | | | — | | | 17,012 | | | — | | | — | | | N/A |
| Avalon Princeton Circle | | Princeton, NJ | | 221 | | | 11,705 | | | 73,366 | | | 55 | | | 11,705 | | | 73,421 | | | 85,126 | | | 644 | | | 84,482 | | | 42,622 | | | — | | | 2023 |
| Avalon Harrison | | Harrison, NY | | 143 | | | 14,374 | | | 75,589 | | | 198 | | | 14,374 | | | 75,787 | | | 90,161 | | | 4,529 | | | 85,632 | | | 80,864 | | | — | | | 2023 |
| Avalon Harbor Isle | | Island Park, NY | | 172 | | | 16,486 | | | 75,196 | | | — | | | 16,486 | | | 75,196 | | | 91,682 | | | 3,868 | | | 87,814 | | | 89,662 | | | — | | | 2022 |
| Avalon Amityville | | Amityville, NY | | 338 | | | 10,035 | | | 50,071 | | | 62,910 | | | 10,035 | | | 112,981 | | | 123,016 | | | 441 | | | 122,575 | | | 81,899 | | | — | | | N/A |
| Avalon Bothell Commons | | Bothell, WA | | 467 | | | 5,996 | | | 46,907 | | | 164,309 | | | 5,996 | | | 211,216 | | | 217,212 | | | 430 | | | 216,782 | | | 126,331 | | | — | | | N/A |
| Avalon Redmond Campus | | Redmond, WA | | 214 | | | — | | | — | | | 81,535 | | | — | | | 81,535 | | | 81,535 | | | 4 | | | 81,531 | | | 43,599 | | | — | | | N/A |
| TOTAL DEVELOPMENT | | | | 7,629 | | | $ | 128,975 | | | $ | 714,544 | | | $ | 1,213,990 | | | $ | 128,975 | | | $ | 1,928,534 | | | $ | 2,057,509 | | | $ | 20,714 | | | $ | 2,036,795 | | | $ | 1,230,659 | | | $ | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Land Held for Development | | | | N/A | | $ | 199,062 | | | $ | — | | | $ | — | | | $ | 199,062 | | | $ | — | | | $ | 199,062 | | | $ | — | | | $ | 199,062 | | | $ | 179,204 | | | $ | — | | | |
| Corporate Overhead | | | | N/A | | 9,372 | | | 11,414 | | | 131,230 | | | 9,372 | | | 142,644 | | | 152,016 | | | 85,473 | | | 66,543 | | | 60,902 | | | 7,300,000 | | | |
| 2023 Disposed Communities | | | | N/A | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 157,071 | | | — | | | |
| TOTAL | | | | 87,947 | | | $ | 4,919,393 | | | $ | 18,019,148 | | | $ | 3,991,921 | | | $ | 4,919,393 | | | $ | 22,011,069 | | | $ | 26,930,462 | | | $ | 7,557,614 | | | $ | 19,372,848 | | | $ | 18,992,807 | | | $ | 8,044,042 | | (5) |
(1) Some or all of the land or associated parking structure for this community is subject to a finance lease.
(2) This community was under redevelopment for some or all of 2023, with the redevelopment activities not expected to materially impact community operations, and therefore this community is included in the Same Store portfolio and not classified as a Redevelopment Community.
(3) Some or all of the land for this community is subject to an operating lease.
(4) Current and Development Communities excludes Unconsolidated Communities and Unconsolidated Development Communities.
(5) Balance outstanding represents total amount due at maturity, and excludes deferred financing costs and debt discount associated with the unsecured and secured notes of $43,848 and $18,372, respectively.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| REDEVELOPMENT | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon on the Alameda | | San Jose, CA | | 305 |
| | $ | 6,119 |
| | $ | 50,225 |
| | $ | 10,087 |
| | $ | 6,119 |
| | $ | 60,312 |
| | $ | 66,431 |
| | $ | 33,696 |
| | $ | 32,735 |
| | $ | 27,497 |
| | $ | — |
| | 1999 |
| AVA Toluca Hills | | Los Angeles, CA | | 1,151 |
| | 86,450 |
| | 161,256 |
| | 37,513 |
| | 86,450 |
| | 198,769 |
| | 285,219 |
| | 39,361 |
| | 245,858 |
| | 227,814 |
| | — |
| | 1973/2013 |
| AVA Van Ness | | Washington, D.C. | | 269 |
| | 22,890 |
| | 58,691 |
| | 9,030 |
| | 22,890 |
| | 67,721 |
| | 90,611 |
| | 13,443 |
| | 77,168 |
| | 74,556 |
| | — |
| | 1978/2013 |
| Avalon Prudential Center II | | Boston, MA | | 266 |
| | 8,776 |
| | 35,496 |
| | 52,864 |
| | 8,776 |
| | 88,360 |
| | 97,136 |
| | 32,748 |
| | 64,388 |
| | 59,218 |
| | — |
| | 1968/1998 |
| Avalon at Florham Park | | Florham Park, NJ | | 270 |
| | 6,647 |
| | 34,906 |
| | 7,083 |
| | 6,647 |
| | 41,989 |
| | 48,636 |
| | 22,468 |
| | 26,168 |
| | 23,830 |
| | — |
| | 2001 |
| Avalon at Edgewater II (5) | | Edgewater, NJ | | 240 |
| | — |
| | 299 |
| | 37,003 |
| | — |
| | 37,302 |
| | 37,302 |
| | — |
| | 37,302 |
| | N/A |
| | — |
| | N/A |
| Avalon Willow | | Mamaroneck, NY | | 227 |
| | 6,207 |
| | 40,791 |
| | 9,010 |
| | 6,207 |
| | 49,801 |
| | 56,008 |
| | 26,424 |
| | 29,584 |
| | 24,153 |
| | — |
| | 2000 |
| Avalon Midtown West | | New York, NY | | 550 |
| | 154,730 |
| | 180,253 |
| | 23,290 |
| | 154,730 |
| | 203,543 |
| | 358,273 |
| | 41,452 |
| | 316,821 |
| | 313,096 |
| | 100,500 |
| | 1998/2013 |
| Avalon Ballston Square | | Arlington, VA | | 714 |
| | 71,640 |
| | 215,937 |
| | 16,378 |
| | 71,640 |
| | 232,315 |
| | 303,955 |
| | 47,256 |
| | 256,699 |
| | 262,722 |
| | — |
| | 1992/2013 |
| TOTAL REDEVLOPMENT | | 3,992 |
| | $ | 363,459 |
| | $ | 777,854 |
| | $ | 202,258 |
| | $ | 363,459 |
| | $ | 980,112 |
| | $ | 1,343,571 |
| | $ | 256,848 |
| | $ | 1,086,723 |
| | $ | 1,012,886 |
| | $ | 100,500 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL CURRENT COMMUNITIES (6) | | 75,238 |
| | $ | 4,175,565 |
| | $ | 14,353,940 |
| | $ | 1,711,986 |
| | $ | 4,175,565 |
| | $ | 16,065,926 |
| | $ | 20,241,491 |
| | $ | 4,169,850 |
| | $ | 16,071,641 |
| | $ | 15,721,244 |
| | $ | 1,504,313 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DEVELOPMENT (7) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Avalon Dogpatch | | San Francisco, CA | | 326 |
| | $ | 9,494 |
| | $ | 73,702 |
| | $ | 99,991 |
| | $ | 9,494 |
| | $ | 173,693 |
| | $ | 183,187 |
| | $ | 621 |
| | $ | 182,566 |
| | $ | 108,565 |
| | $ | — |
| | N/A |
| Avalon Public Market | | Emeryville, CA | | 289 |
| | — |
| | 83 |
| | 55,789 |
| | — |
| | 55,872 |
| | 55,872 |
| | — |
| | 55,872 |
| | 29,698 |
| | — |
| | N/A |
| AVA Hollywood | | Hollywood, CA | | 695 |
| | — |
| | 275 |
| | 168,732 |
| | — |
| | 169,007 |
| | 169,007 |
| | — |
| | 169,007 |
| | 123,267 |
| | — |
| | N/A |
| Avalon Walnut Creek II (1) | | Walnut Creek, CA | | 200 |
| | — |
| | — |
| | 8,812 |
| | — |
| | 8,812 |
| | 8,812 |
| | — |
| | 8,812 |
| | N/A |
| | — |
| | N/A |
| AVA NoMa | | Washington, D.C. | | 438 |
| | 18,831 |
| | 91,621 |
| | 27,007 |
| | 18,831 |
| | 118,628 |
| | 137,459 |
| | 1,592 |
| | 135,867 |
| | 109,200 |
| | — |
| | N/A |
| Avalon at the Hingham Shipyard II | | Hingham, MA | | 190 |
| | — |
| | — |
| | 23,792 |
| | — |
| | 23,792 |
| | 23,792 |
| | — |
| | 23,792 |
| | N/A |
| | — |
| | N/A |
| Avalon Sudbury | | Sudbury, MA | | 250 |
| | — |
| | — |
| | 33,595 |
| | — |
| | 33,595 |
| | 33,595 |
| | — |
| | 33,595 |
| | N/A |
| | — |
| | N/A |
| AVA Wheaton | | Wheaton, MD | | 319 |
| | 2,624 |
| | 29,826 |
| | 38,017 |
| | 2,624 |
| | 67,843 |
| | 70,467 |
| | 279 |
| | 70,188 |
| | 35,361 |
| | — |
| | N/A |
| Avalon Towson | | Towson, MD | | 371 |
| | — |
| | — |
| | 3,985 |
| | — |
| | 3,985 |
| | 3,985 |
| | — |
| | 3,985 |
| | N/A |
| | — |
| | N/A |
| Avalon Maplewood | | Maplewood, NJ | | 235 |
| | 3,230 |
| | 13,019 |
| | 45,009 |
| | 3,230 |
| | 58,028 |
| | 61,258 |
| | 56 |
| | 61,202 |
| | 48,453 |
| | — |
| | N/A |
| Avalon Boonton | | Boonton, NJ | | 350 |
| | — |
| | 124 |
| | 29,830 |
| | — |
| | 29,954 |
| | 29,954 |
| | — |
| | 29,954 |
| | 8,292 |
| | — |
| | N/A |
| Avalon Teaneck | | Teaneck, NJ | | 248 |
| | — |
| | 42 |
| | 18,567 |
| | — |
| | 18,609 |
| | 18,609 |
| | — |
| | 18,609 |
| | 14,034 |
| | — |
| | N/A |
| Avalon Piscataway | | Piscataway, NJ | | 360 |
| | — |
| | 248 |
| | 28,055 |
| | — |
| | 28,303 |
| | 28,303 |
| | — |
| | 28,303 |
| | N/A |
| | — |
| | N/A |
| Avalon Brooklyn Bay | | Brooklyn, NY | | 180 |
| | 8,830 |
| | 76,690 |
| | 5,004 |
| | 8,830 |
| | 81,694 |
| | 90,524 |
| | 781 |
| | 89,743 |
| | 58,833 |
| | — |
| | N/A |
| Avalon Somers | | Somers, NY | | 152 |
| | 4,704 |
| | 33,404 |
| | 4,046 |
| | 4,704 |
| | 37,450 |
| | 42,154 |
| | 370 |
| | 41,784 |
| | 16,586 |
| | — |
| | N/A |
| 11 West 61st Street | | New York, NY | | 172 |
| | — |
| | 339 |
| | 440,373 |
| | — |
| | 440,712 |
| | 440,712 |
| | — |
| | 440,712 |
| | 348,821 |
| | — |
| | N/A |
| Avalon Yonkers | | Yonkers, NY | | 590 |
| | — |
| | — |
| | 23,300 |
| | — |
| | 23,300 |
| | 23,300 |
| | — |
| | 23,300 |
| | N/A |
| | — |
| | N/A |
| Avalon Belltown Towers | | Seattle, WA | | 275 |
| | — |
| | 55 |
| | 50,581 |
| | — |
| | 50,636 |
| | 50,636 |
| | — |
| | 50,636 |
| | 29,386 |
| | — |
| | N/A |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20172023
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2017 | | 2016 | | 2017 | | |
| | | | | | | Initial Cost | | | | Total Cost | | | | | | | | | | | | |
| Community | | City and state | | # of homes | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Costs
Subsequent to
Acquisition /
Construction | | Land and improvements | | Building /
Construction in
Progress &
Improvements | | Total | | Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Total Cost,
Net of
Accumulated
Depreciation | | Encumbrances | | Year of
Completion/
Acquisition |
| AVA Esterra Park | | Redmond, WA | | 323 |
| | — |
| | 123 |
| | 36,925 |
| | — |
| | 37,048 |
| | 37,048 |
| | — |
| | 37,048 |
| | N/A |
| | — |
| | N/A |
| Avalon North Creek | | Bothell, WA | | 316 |
| | — |
| | — |
| | 15,432 |
| | — |
| | 15,432 |
| | 15,432 |
| | — |
| | 15,432 |
| | N/A |
| | — |
| | N/A |
| TOTAL DEVELOPMENT | | 6,279 |
| | $ | 47,713 |
| | $ | 319,551 |
| | $ | 1,156,842 |
| | $ | 47,713 |
| | $ | 1,476,393 |
| | $ | 1,524,106 |
| | $ | 3,699 |
| | $ | 1,520,407 |
| | $ | 930,496 |
| | $ | — |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Land Held for Development | | | | N/A |
| | $ | 68,364 |
| | $ | — |
| | $ | — |
| | $ | 68,364 |
| | $ | — |
| | $ | 68,364 |
| | $ | — |
| | $ | 68,364 |
| | $ | 84,293 |
| | $ | — |
| |
|
| Corporate Overhead | | | | N/A |
| | 14,040 |
| | 10,746 |
| | 77,189 |
| | 14,040 |
| | 87,935 |
| | 101,975 |
| | 44,830 |
| | 57,145 |
| | 53,309 |
| | 5,900,000 |
| |
|
| 2017 Disposed Communities | | | | N/A |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 243,652 |
| | — |
| | |
| TOTAL | | | | 81,517 |
| | $ | 4,305,682 |
| | $ | 14,684,237 |
| | $ | 2,946,017 |
| | $ | 4,305,682 |
| | $ | 17,630,254 |
| | $ | 21,935,936 |
| | $ | 4,218,379 |
| | $ | 17,717,557 |
| | $ | 17,032,994 |
| | $ | 7,404,313 |
| | |
| |
(1) | Some or all of the land for this community is subject to a land lease. |
| |
(2) | This community was under redevelopment for some or all of 2017, with the redevelopment effort primarily focused on the exterior and/or common area, with no expected material impact on community operations. This community is therefore included in the Established Community portfolio and not classified as a Redevelopment Community. |
| |
(3) | In 2017, the Company acquired the land encumbered by a ground lease for this community. |
| |
(4) | In 2017, the Company completed final construction cost allocations between these dual-branded communities. |
| |
(5) | Represents the reconstruction of the building destroyed in the Edgewater casualty loss. Due to the nature of this reconstruction, the 240 apartment homes that the Company expects the new building to contain upon completion are not included in the apartment home count presented elsewhere in this Form 10-K, and will be included upon completion. Similar to a Development Community, the land for Edgewater is included in Costs Subsequent to Acquisition /Construction. |
| |
(6) | Current Communities excludes Unconsolidated Communities. |
| |
(7) | Development Communities excludes AVA North Point, which is being developed within an unconsolidated joint venture. |
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2017
(Dollars in thousands)
Amounts include real estate assets held for sale.
Depreciation of AvalonBay Communities, Inc. building, improvements, upgrades and furniture, fixtures and equipment (FF&E) is calculated over the following useful lives, on a straight line basis:
Building—30 years
Improvements, upgrades and FF&E—not to exceed 7 years
The aggregate cost of total real estate for federal income tax purposes was approximately $21,271,424$25,437,272 at December 31, 2017.2023.
The changes in total real estate assets for the years ended December 31, 2017, 20162023, 2022 and 20152021 are as follows:
| | | | | | | | | | | | | | | | | |
| | December 31, 2023 | | December 31, 2022 | | December 31, 2021 |
| Balance, beginning of period | $ | 25,871,363 | | | $ | 24,927,305 | | | $ | 23,962,222 | |
| Acquisitions, construction costs and improvements | 1,338,187 | | | 1,599,311 | | | 1,588,314 | |
| Dispositions, including casualty losses, and other activity | (279,088) | | | (655,253) | | | (623,231) | |
| Balance, end of period | $ | 26,930,462 | | | $ | 25,871,363 | | | $ | 24,927,305 | |
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/2017 | | 12/31/2016 | | 12/31/2015 |
| Balance, beginning of period | $ | 20,776,626 |
| | $ | 19,268,099 |
| | $ | 17,849,316 |
|
| Acquisitions, construction costs and improvements | 1,526,516 |
| | 1,788,515 |
| | 1,667,989 |
|
| Dispositions, including casualty losses and impairment loss on planned dispositions | (367,206 | ) | | (279,988 | ) | | (249,206 | ) |
| Balance, end of period | $ | 21,935,936 |
| | $ | 20,776,626 |
| | $ | 19,268,099 |
|
The changes in accumulated depreciation for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, are as follows:
| | | | | | | | | | | | | | | | | |
| | December 31, 2023 | | December 31, 2022 | | December 31, 2021 |
| Balance, beginning of period | $ | 6,878,556 | | | $ | 6,217,721 | | | $ | 5,728,440 | |
| Depreciation | 816,965 | | | 814,978 | | | 758,596 | |
| Dispositions, including casualty losses | (137,907) | | | (154,143) | | | (269,315) | |
| Balance, end of period | $ | 7,557,614 | | | $ | 6,878,556 | | | $ | 6,217,721 | |
|
| | | | | | | | | | | |
| | For the year ended |
| | 12/31/2017 | | 12/31/2016 | | 12/31/2015 |
| Balance, beginning of period | $ | 3,743,632 |
| | $ | 3,325,790 |
| | $ | 2,913,576 |
|
| Depreciation, including discontinued operations | 584,150 |
| | 531,434 |
| | 477,923 |
|
| Dispositions, including casualty losses | (109,403 | ) | | (113,592 | ) | | (65,709 | ) |
| Balance, end of period | $ | 4,218,379 |
| | $ | 3,743,632 |
| | $ | 3,325,790 |
|