SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)~~

~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~September~~June 30, ~~2017~~2023

For the transition period from ______ to ______

Commission file ~~number~~number: 1-12672

AVALONBAY COMMUNITIES, INC.

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 ~~ninety (90)~~90 days.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~(Section~~(§ 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).

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.

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☐

AVALONBAY COMMUNITIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

See accompanying notes to Condensed Consolidated Financial Statements.

AVALONBAY COMMUNITIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per share data)

See accompanying notes to Condensed Consolidated Financial Statements.

AVALONBAY COMMUNITIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)


	For the six months ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	514,582	$	400,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	405,289		401,088
Amortization of deferred financing costs and debt discount	6,352		5,337
Amortization of stock-based compensation	15,115		17,681
Equity in loss (income) of, and return on, unconsolidated investments and noncontrolling interests, net of eliminations	622		(1)
Casualty loss	2,407		—
Abandonment of development pursuits	4,253		738
Cash flow hedge losses reclassified to earnings	708		2,026
Gain on sale of real estate assets	(188,078)		(150,753)
Decrease in resident security deposits, prepaid expenses and other assets	(28,456)		(31,336)
Increase (decrease) in accrued expenses, other liabilities and accrued interest payable	9,785		(5,374)
Net cash provided by operating activities	742,579		640,048

Cash flows from investing activities:
Development/redevelopment of real estate assets including land acquisitions and deferred development costs	(453,139)		(414,107)
Acquisition of real estate assets	—		(165,117)
Capital expenditures - existing real estate assets	(73,746)		(64,356)
Capital expenditures - non-real estate assets	(8,106)		(5,665)
Increase (decrease) in payables for construction	16,159		(5,024)
Proceeds from sale of real estate and for-sale condominiums, net of selling costs	252,904		305,842
Note receivable lending	(27,108)		(6,055)
Note receivable payments	230		4,021
Distributions from unconsolidated entities	3,859		2,000
Unconsolidated investments	(8,930)		(8,047)
Net cash used in investing activities	(297,877)		(356,508)

Cash flows from financing activities:
Issuance of common stock, net	494,959		2,010
Repurchase of common stock, net	(1,911)		—
Dividends paid	(454,323)		(445,226)
Repayments of mortgage notes payable, including prepayment penalties	(7,401)		(6,427)
Repayment of unsecured notes	(250,000)		(100,000)
Payment of deferred financing costs	(662)		(421)
Redemption of noncontrolling interest and units for cash by minority partners	(1,355)		—
Payments to noncontrolling interest	—		(29)
Payments related to tax withholding for share-based compensation	(10,509)		(16,379)
Distributions to DownREIT partnership unitholders	(25)		(24)
Distributions to joint venture and profit-sharing partners	(202)		(181)
Preferred interest obligation redemption and dividends	(520)		(460)
Net cash used in financing activities	(231,949)		(567,137)

Net increase (decrease) in cash, cash equivalents and cash in escrow	212,753		(283,597)

Cash, cash equivalents and cash in escrow, beginning of period	734,245		543,788
Cash, cash equivalents and cash in escrow, end of period	$	946,998	$	260,191

Cash paid during the period for interest, net of amount capitalized	$	94,241	$	106,443

See accompanying notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

The following table provides a reconciliation of cash, cash equivalents and cash in escrow reported in the Condensed Consolidated Statements of Cash Flows (dollars in thousands):

Supplemental disclosures of non-cash investing and financing activities:

During the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023:

•As described in Note 4, "Equity," ~~201,314~~the Company issued 152,708 shares of common stock ~~were issued~~ as part of the Company's stock-based compensation plans, of which ~~128,482~~60,016 shares related to the conversion of performance awards to ~~restricted~~ shares of common stock, and the remaining ~~72,832~~92,692 shares valued at ~~$13,079,000~~$16,472,000 were issued in connection with new stock grants; ~~2,466~~1,703 shares valued at ~~$452,000~~$293,000 were issued through the Company's dividend reinvestment plan; ~~60,165~~62,215 shares valued at ~~$10,514,000~~$10,509,000 were withheld to satisfy employees' tax withholding and other liabilities; and ~~3,045~~566 restricted shares with an aggregate value of ~~$528,000~~$108,000 previously issued in connection with employee compensation were canceled upon forfeiture.

•Common stock dividends declared but not paid totaled ~~$196,079,000.~~$235,206,000.

•The Company recorded (i) an increase to prepaid expenses and other assets of ~~$458,000~~$8,486,000 and a corresponding adjustment to accumulated other comprehensive income; and (ii) reclassified $708,000 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.

During the six months ended June 30, 2022:

•The Company issued 135,860 shares of common stock as part of the Company's stock-based compensation plans, of which 54,053 shares related to the conversion of performance awards to shares of common stock, and the remaining 81,807 shares valued at $19,236,000 were issued in connection with new stock grants; 1,211 shares valued at $298,000 were issued through the Company's dividend reinvestment plan; 69,834 shares valued at $16,389,000 were withheld to satisfy employees' tax withholding and other liabilities; and 2,878 restricted shares with an aggregate value of $610,000 previously issued in connection with employee compensation were canceled upon forfeiture.

•Common stock dividends declared but not paid totaled $223,215,000.

•The Company recorded a decrease of $125,000 in redeemable noncontrolling interest with a corresponding ~~decrease~~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. ~~For further discussion of the nature and valuation of these items, see Note 10, "Fair Value."~~

•The Company recorded (i) an increase into prepaid expenses and other assets of ~~$1,422,000 and an increase in accrued expenses and other liabilities of $1,998,000,~~$17,914,000 and a corresponding adjustment to accumulated other comprehensive income and (ii) reclassified ~~$5,301,000~~$2,026,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company's derivative and ~~hedge accounting~~hedging activity.

~~As discussed in Note 5, "Investments in Real Estate Entities," the Company recognized a non-cash charge~~

Table 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"), concurrently recording a receivable for the net third-party insurance recovery, of which the Company has a receivable of $2,965,000 for the remaining portion of expected property damage insurance proceeds not received during the nine months ended September 30, 2017.Contents

~~During the nine months ended September 30, 2016:~~

The Company issued 196,491 shares of common stock as part of the Company's stock-based compensation plans, of which 115,618 shares related to the conversion of performance awards to restricted shares, and the remaining 80,873 shares valued at $13,129,000 were issued in connection with new stock grants; 44,327 shares valued at $3,894,000 were issued in conjunction with the conversion of deferred stock awards; 1,689 shares valued at $304,000 were issued through the Company's dividend reinvestment plan; 53,214 shares valued at $8,316,000 were withheld to satisfy employees' tax withholding and other liabilities; and 3,848 restricted shares with an aggregate value of $627,000 previously issued in connection with employee compensation were canceled upon forfeiture.

~~Common stock dividends declared but not paid totaled $185,384,000.~~

The Company recorded an increase of $529,000 in redeemable noncontrolling interest with a corresponding decrease 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 a decrease in prepaid expenses and other assets of $2,689,000 and an increase in accrued expenses and other liabilities of $53,591,000, and a corresponding loss to other comprehensive income of $56,280,000, and reclassified $4,682,000 of 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 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.~~

AVALONBAY COMMUNITIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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, ownership and operation of 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 ~~September~~June 30, ~~2017,~~2023, the Company owned or held a direct or indirect ownership interest in ~~263~~294 operating apartment communities containing ~~76,076~~88,659 apartment homes in 1112 states and the District of Columbia, of which ~~ten~~18 communities ~~containing 3,343 apartment homes~~ were under ~~redevelopment. In addition, the Company owned or held a direct or indirect ownership interest in 23 communities~~development and one was under ~~development that are expected to contain an aggregate of 6,888 apartment homes when completed.~~redevelopment. The Company also owned or held a direct or indirect ownership interest in land or rights to land on which the Company expects to develop an additional 2543 communities that, if developed as expected, will contain an estimated ~~8,392~~14,993 apartment homes.

The interim unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company's ~~2016~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 are not necessarily indicative of the operating results for the full year. Management believes the disclosures are adequate to ensure the information presented is not misleading. In the opinion of management, all adjustments and eliminations, consisting only of normal, recurring adjustments necessary for a fair presentation of the financial statements for the interim periods, have been included.

Capitalized terms used without definition have meanings provided elsewhere in this Form 10-Q.

Cash, Cash Equivalents and Cash in Escrow

Cash and cash equivalents includes all cash and liquid investments with an original maturity of three months or less from the date acquired. Cash in escrow includes principal reserve funds that are restricted for the repayment of specified secured financing and amounts the Company has designated for planned 1031 exchange activity. The majority of the Company's cash, cash equivalents and cash in escrow are held at major commercial banks.

Earnings per Common Share

Basic earnings per 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"). Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company's earnings per common share are determined as follows (dollars in thousands, except per share data):

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	For the three months ended						For the nine months ended							For the three months ended June 30,				For the six months ended June 30,
	9/30/2017			9/30/2016			9/30/2017			9/30/2016				2023		2022		2023		2022
Basic and diluted shares outstanding													Basic and diluted shares outstanding
Weighted average common shares - basic	137,715,192			136,997,756			137,457,293			136,901,164			Weighted average common shares - basic	141,779,951		139,630,291		140,773,339		139,595,098
Weighted average DownREIT units outstanding	7,500			7,500			7,500			7,500			Weighted average DownREIT units outstanding	6,511		7,500		7,005		7,500
Effect of dilutive securities	584,354			499,798			541,399			533,642			Effect of dilutive securities	337,655		296,687		293,620		352,682
Weighted average common shares - diluted	138,307,046			137,505,054			138,006,192			137,442,306			Weighted average common shares - diluted	142,124,117		139,934,478		141,073,964		139,955,280

Calculation of Earnings per Share - basic													Calculation of Earnings per Share - basic
Net income attributable to common stockholders	$	238,248		$	356,392		$	639,348		$	791,767		Net income attributable to common stockholders	$	367,923	$	138,691	$	514,825	$	400,735
Net income allocated to unvested restricted shares	(672		)	(872		)	(1,794		)	(2,036		)	Net income allocated to unvested restricted shares	(645)		(247)		(919)		(756)
Net income attributable to common stockholders, adjusted	$	237,576		$	355,520		$	637,554		$	789,731
Net income attributable to common stockholders - basic													Net income attributable to common stockholders - basic	$	367,278	$	138,444	$	513,906	$	399,979

Weighted average common shares - basic	137,715,192			136,997,756			137,457,293			136,901,164			Weighted average common shares - basic	141,779,951		139,630,291		140,773,339		139,595,098

Earnings per common share - basic	$	1.73		$	2.60		$	4.64		$	5.77		Earnings per common share - basic	$	2.59	$	0.99	$	3.65	$	2.87

Calculation of Earnings per Share - diluted													Calculation of Earnings per Share - diluted
Net income attributable to common stockholders	$	238,248		$	356,392		$	639,348		$	791,767		Net income attributable to common stockholders	$	367,923	$	138,691	$	514,825	$	400,735
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships	11			10			32			30
Adjusted net income attributable to common stockholders	$	238,259		$	356,402		$	639,380		$	791,797
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations													Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations	13		12		25		24
Net income attributable to common stockholders - diluted													Net income attributable to common stockholders - diluted	$	367,936	$	138,703	$	514,850	$	400,759

Weighted average common shares - diluted	138,307,046			137,505,054			138,006,192			137,442,306			Weighted average common shares - diluted	142,124,117		139,934,478		141,073,964		139,955,280

Earnings per common share - diluted	$	1.72		$	2.59		$	4.63		$	5.76		Earnings per common share - diluted	$	2.59	$	0.99	$	3.65	$	2.86

~~All~~Certain options to purchase shares of common stock in the amounts of 303,784 and 8,222 were outstanding as of ~~September~~June 30, ~~2017~~2023 and ~~2016 are~~2022, respectively, but were not included in the computation of diluted earnings per ~~share.~~share because such options were anti-dilutive for the period.

As discussed under "Recently Issued 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 an immaterial effect 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 Condensed Consolidated Statements of Cash Flows.

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 transactions~~Derivatives 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-going~~ongoing 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 ~~value~~values 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 positions~~Derivatives 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 qualified~~qualify as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding ~~debt being hedged.~~hedged item. See Note ~~10, "Fair~~11, “Fair Value,"” for further discussion of derivative financial instruments.

Legal and Other Contingencies

~~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 5, "Investments in Real Estate Entities," for further discussion of the casualty gains and losses associated with the Maplewood casualty loss.

~~Edgewater Casualty Loss~~

In January 2015, a fire occurred at the Company's Avalon at Edgewater apartment community located in Edgewater, New Jersey ("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.

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 Part II, Item 1, "Legal Proceedings," for further discussion of the lawsuits 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 were submitted to the independent claims adjuster by September 11, 2017. 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 42 units submitted claims. The independent claims adjuster is currently reviewing the claims submitted, which total approximately $6,800,000, and it is expected that awards should be 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 have been filed and are currently pending in the Superior Court of New Jersey Bergen County - Law Division. All of these state court cases, except for one that was recently filed, have been consolidated by the court. All of these plaintiffs, except for two, formally opted out of the class action settlement described above and have decided to continue their individual actions. The Company believes that it has meritorious defenses to the extent of damages claimed in all of the suits. The 18 consolidated lawsuits currently have a trial date of January 2, 2018. There are also six 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 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. See Note 5, "Investments in Real Estate Entities," and Part II, Item 1, "Legal Proceedings," for further discussion of the casualty gains and losses and lawsuits associated with the Edgewater casualty loss.

~~Other Matters~~

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. The Company recognizes a loss associated with contingent legal matters when the loss is probable and estimable. 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.

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Acquisitions of Investments in Real Estate

The Company accounts for ~~acquisitions of investments in~~ real estate ~~in accordance with the authoritative guidance for the initial measurement, which~~acquisitions by first ~~requires that the Company determine~~determining if the real estate investment is the acquisition of an asset or a business combination. Under either model, the Company ~~must identify~~identifies and ~~determine~~determines the fair value of any assets acquired, liabilities assumed and any noncontrolling interest in the acquiree. Typical assets acquired and liabilities ~~acquired~~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. ~~In making estimates of fair values for purposes of allocating purchase price, the~~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. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed. For a business combination, the Company records the assets acquired and liabilities assumed based on the fair value of each respective item. For an asset acquisition, the ~~allocation of the~~ purchase price is allocated based on the relative fair value of the net assets. The Company expenses all applicable acquisition costs for a business combination and capitalizes all applicable acquisition costs for an asset acquisition. ~~Subsequent to the adoption of ASU 2017-01 on October 1, 2016, the~~The Company expects that acquisitions of individual operating communities will generally be ~~viewed as~~ asset acquisitions.

Use of Estimates

The preparation of financial statements in conformity with 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 ~~disposition~~classification of for-sale condominium inventory and activity.

~~Recently Issued Accounting Standards~~Income Taxes

~~In August 2017,~~During the ~~FASB issued ASU 2017-12, Derivatives~~six months ended June 30, 2023 and ~~Hedging (Topic 815): Targeted Improvements~~2022, the Company recognized income tax expense of $3,343,000 and $2,312,000, respectively, primarily related to Accounting for Hedging Activities. This ASU expands hedge accounting 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. The ~~guidance will be effective in the first quarter of 2019, allows for early adoption, and will be applied prospectively at adoption.~~ Park Loggia.

Leases

The Company is ~~assessing whether the new standard will have~~party to leases as both a ~~material effect on~~lessor and a lessee, primarily as follows:

•lessor of residential and commercial space within its ~~financial position~~apartment communities; and

•lessee under (i) ground leases for land underlying current operating or ~~results of operations.~~development communities and certain commercial and parking facilities and (ii) office leases for its corporate headquarters and regional offices.

In February 2017, 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 ASU clarifies the scope of the nonfinancial asset guidance and the derecognition of all businesses and nonprofit activities (except those related to conveyances of oil and gas mineral rights or contracts with customers). In addition, the amendments eliminate 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. The amendments also provide guidance on the accounting of partial sales of nonfinancial assets and contributions of nonfinancial assets to a joint venture or other noncontrolled investee. 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. The Company is assessing whether the new standard will have a material effect on its financial position or results of operations.Lessee Considerations

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 Condensed 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. Upon adoption of the standard, the Company elected to account for forfeitures when they occur instead of estimating the forfeitures.

The Company ~~adopted this guidance as of January 1, 2017, using the modified retrospective approach. The new standard did not have~~assesses whether a ~~material effect on the Company's financial position, results of operations or earnings per share as discussed in "Earnings per Common Share."~~

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~~based on whether 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 ofcontract 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 ~~corresponding~~variable lease ~~obligation for its long-term ground~~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 that are not based on an index or rate are not included in the measurement of the lease liability, but will be recognized as variable lease expense in the period in which they are incurred.

For leases ~~currently accounted for as operating leases. The~~that have options to extend the term or terminate the lease early, the Company ~~will continue to assess~~only factored the impact of such options into the ~~new standard.~~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 has elected the practical expedient to not assess these leases under Accounting Standards Codification ("ASC") 842, Leases, and recognize the lease payments on a straight line basis.

~~In May 2014,~~

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Lessor Considerations

The Company has determined that the ~~FASB issued ASU 2014-09,~~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 ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue for the transfer of goods and ~~in August 2015,~~services to customers for consideration that 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 remittedCompany expects to ~~governmental authorities.~~receive. The majority of the ~~Company's~~Company’s revenue is derived from residential and commercial rental and other lease income, which ~~is scoped out from this standard and will be~~are accounted for as discussed above, under "Leases". The Company's revenue streams that are not accounted for under ~~ASU 2016-02,~~ASC 842, Leases, include (i) management, development and other fees, (ii) non-lease related revenue and (iii) gains or losses on the sale of real estate.

The following table details the Company’s revenue disaggregated by reportable operating segment, further discussed ~~above. The Company's~~in Note 8, “Segment Reporting,” for the three and six months ended June 30, 2023 and 2022. Segment information for total revenue excludes real estate assets that were sold from January 1, 2022 through June 30, 2023, or otherwise qualify as held for sale as of June 30, 2023, as described in Note 6, "Real Estate Disposition Activities" (dollars in thousands):


	Same Store		Other Stabilized		Development/ Redevelopment		Non- allocated (1)		Total
For the three months ended June 30, 2023
Management, development and other fees and other ancillary items	$	—	$	—	$	—	$	2,712	$	2,712
Non-lease related revenue (2)	2,639		1,258		79		—		3,976
Total non-lease revenue (3)	2,639		1,258		79		2,712		6,688

Lease income (4)	634,251		30,982		12,950		—		678,183

Total revenue	$	636,890	$	32,240	$	13,029	$	2,712	$	684,871

For the three months ended June 30, 2022
Management, development and other fees and other ancillary items	$	—	$	—	$	—	$	904	$	904
Non-lease related revenue (2)	2,767		556		32		—		3,355
Total non-lease revenue (3)	2,767		556		32		904		4,259

Lease income (4)	597,061		18,522		6,514		—		622,097

Total revenue	$	599,828	$	19,078	$	6,546	$	904	$	626,356

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	Same Store		Other Stabilized		Development/ Redevelopment		Non- allocated (1)		Total
For the six months ended June 30, 2023
Management, development and other fees and other ancillary items	$	—	$	—	$	—	$	3,778	$	3,778
Non-lease related revenue (2)	5,211		2,400		115		—		7,726
Total non-lease revenue (3)	5,211		2,400		115		3,778		11,504

Lease income (4)	1,256,430		61,572		23,414		—		1,341,416

Total revenue	$	1,261,641	$	63,972	$	23,529	$	3,778	$	1,352,920

For the six months ended June 30, 2022
Management, development and other fees and other ancillary items	$	—	$	—	$	—	$	1,656	$	1,656
Non-lease related revenue (2)	5,020		966		45		—		6,031
Total non-lease revenue (3)	5,020		966		45		1,656		7,687

Lease income (4)	1,165,899		33,325		12,552		—		1,211,776

Total revenue	$	1,170,919	$	34,291	$	12,597	$	1,656	$	1,219,463

__________________________________

(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 ~~which~~related to leasing activities that are ~~being evaluated under this ASU, include~~not considered components of a lease, and revenue streams not related to leasing activities including, but ~~are~~ not limited to, ~~management~~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, ~~from residents determined not~~accounted for under ASC 842.

Due to ~~be within~~ the ~~scope~~nature and timing of ~~ASU 2016-02 and gains and losses from real estate dispositions.~~ the Company’s identified revenue streams, there were no material amounts of outstanding or unsatisfied performance obligations as of June 30, 2023.

Uncollectible Lease Revenue Reserves

The Company ~~will continue to assess~~assesses the ~~impact~~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 ~~new standard~~remaining lease payments is not probable and (iii) subsequently, will ~~adopt it as of January 1, 2018 using~~only recognize revenue to the ~~modified retrospective approach.~~

~~Change in Accounting Principle~~

~~As of January 1, 2017,~~extent cash is received. If the Company ~~adopted ASU 2016-09, Compensation-Stock Compensation: Improvements~~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 ~~Employee Share-Based Payment Accounting,~~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 ~~discussed above. The guidance requires payments related to tax withholding for share-based compensation to be presented separately as a financing activity on~~part of the ~~Condensed Consolidated Statements of Cash Flows, and was adopted retrospectively.~~specific ASC 842 reserve.

The ~~impact~~Company recorded an aggregate offset to income for uncollectible lease revenue, net of ~~the change in accounting principle~~amounts received from government rent relief programs, for its residential and commercial portfolios of $13,333,000 and $7,061,000 for the ~~nine~~three months ended ~~September~~June 30, ~~2016 on~~2023 and 2022, respectively, and $30,304,000 and $20,660,000 for the accompanying Condensed Consolidated Statements of Cash Flows is (i) an increase in the increased accrued expenses, other liabilities and accrued interest payable of $7,659,000, and (ii) an associated increase in net cash provided by operating activities, as well as (iii) an increase in payments related to tax withholding for share-based compensation of $7,659,000, and (iv) an associated increase in net cash used in financing activities. For the ninesix months ended ~~September~~June 30, ~~2017, payments related to tax withholding for share-based compensation were $10,460,000.~~2023 and 2022, respectively, under ASC 842 and ASC 450.

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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 ~~$16,223,000~~$11,606,000 and ~~$19,889,000~~$8,193,000 for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$51,323,000~~$22,624,000 and ~~$60,522,000~~$15,293,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

3. ~~Mortgage Notes Payable, Unsecured Notes and Credit Facility~~Debt

The Company's ~~mortgage~~debt, which consists of unsecured notes, ~~payable, unsecured notes,~~the variable rate unsecured term ~~loans ("Term Loans"~~loan (the "Term Loan"), mortgage notes payable, the Credit Facility and ~~Credit Facility,~~the Commercial Paper Program, each as defined below, as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 are 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 ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, as shown in the accompanying Condensed 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.

9/30/2017 12/31/2016

Fixed rate unsecured notes (1) $ 4,900,000
$ 4,200,000
Term Loans (1) 550,000
300,000
Fixed rate mortgage notes payable - conventional and tax-exempt (2) 617,285
1,668,496
Variable rate mortgage notes payable - conventional and tax-exempt (2) 889,158
908,262
Total mortgage notes payable, unsecured notes and Term Loans 6,956,443
7,076,758
Credit Facility 242,000
—
Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility $ 7,198,443
$ 7,076,758


	June 30, 2023				December 31, 2022

Fixed rate unsecured notes	$	7,250,000	3.3	%	$	7,500,000	3.3	%
Term Loan	150,000		6.2	%	150,000		5.4	%
Fixed rate mortgage notes payable - conventional and tax-exempt	270,677		3.4	%	270,677		3.4	%
Variable rate mortgage notes payable - conventional and tax-exempt	449,750		5.6	%	457,150		5.3	%
Total mortgage notes payable and unsecured notes and Term Loan	8,120,427		3.5	%	8,377,827		3.4	%
Credit Facility	—		—	%	—		—	%
Commercial paper	—		—	%	—		—	%
Total principal outstanding	8,120,427		3.5	%	8,377,827		3.4	%
Less deferred financing costs and debt discount (1)	(57,728)				(61,782)
Total	$	8,062,699			$	8,316,045


~~(1)~~	Balances at September 30, 2017 and December 31, 2016 exclude $9,392 and $8,930, respectively, of debt discount, and $33,517 and $27,768, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Condensed Consolidated Balance Sheets.


~~(2)~~	Balances at September 30, 2017 and December 31, 2016 exclude $16,280 of debt discount and $1,866 of debt premium, respectively, and $11,224 and $11,046, respectively, of deferred financing costs, as reflected in mortgage notes payable on the accompanying Condensed Consolidated Balance Sheets.

~~The following debt activity occurred during the nine months ended September 30, 2017:~~

~~In February 2017, the Company repaid $17,300,000 of variable rate debt secured by Avalon Mountain View at par at its scheduled maturity date.~~

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, the Company 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, the Company recognized 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, with a contractual fixed interest rate of 3.61% and maturity dates of June 2027.

In May 2017, the Company issued $400,000,000 principal amount of unsecured notes in a public offering under its 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, the Company issued $300,000,000 principal amount of 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.

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(1)Excludes deferred financing costs ~~of $1,450,000.~~and debt discount associated with the Credit Facility and the Commercial Paper Program which are included in prepaid expenses and other assets on the accompanying Condensed Consolidated Balance Sheets.

~~At September 30, 2017, the~~The Company has a ~~$1,500,000,000~~$2,250,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the "Credit Facility") which matures in ~~April 2020.~~September 2026. The ~~Company may extend~~interest rate that would be applicable to borrowings under the ~~maturity for up~~Credit Facility was 5.92% at June 30, 2023 and was composed of (i) the Secured Overnight Financing Rate ("SOFR") plus (ii) the current borrowing spread to ~~nine months, provided the Company is not in default and upon payment~~SOFR of 0.825% per annum, which consisted of a ~~$1,500,000 extension fee.~~0.10% SOFR adjustment plus 0.725% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.65% to SOFR plus 1.40% based upon the rating of the Company's unsecured and unsubordinated long-term indebtedness. There is also an annual facility commitment fee of 0.125% of the borrowing capacity under the facility, which can vary from 0.10% to 0.30% based upon the rating of the Company's unsecured and unsubordinated long-term indebtedness. The Credit Facility ~~bears~~contains a sustainability-linked pricing component which provides for interest ~~at varying levels based on~~rate margin and commitment fee reductions or increases by meeting or missing targets related to environmental sustainability, specifically greenhouse gas emission reductions, with the ~~London Interbank Offered Rate ("LIBOR"), rating levels achieved~~adjustment determined annually beginning in July 2023.

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The availability on the Company's ~~unsecured notes~~Credit Facility as of June 30, 2023 and ~~on a maturity schedule selected by~~December 31, 2022, respectively, was as follows (dollars in thousands):


	June 30, 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. The current stated pricing is LIBOR plus 0.825% per annum (2.06% at September 30, 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 ~~$242,000,000~~$51,832 and $48,740 outstanding ~~under~~in additional letters of credit unrelated to the Credit Facility as of ~~September~~June 30, ~~2017~~2023 and ~~no borrowings~~December 31, 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. The Commercial Paper Program is backstopped by the Company's commitment to maintain available borrowing capacity under the Credit Facility asin an amount equal to actual borrowings under the Commercial Paper Program.

During the six months ended June 30, 2023, the Company repaid $250,000,000 principal amount of ~~December 31, 2016. The Company had $44,282,000 and $46,711,000 outstanding in letters of credit that reduced the borrowing capacity as of September 30, 2017 and December 31, 2016, respectively.~~its 2.85% unsecured notes at its maturity.

In the aggregate, secured notes payable mature at various dates from ~~November 2017~~March 2027 through July 2066, and are secured by certain apartment communities (with a net carrying value of ~~$2,204,341,000,~~$1,166,698,000, excluding communities classified as held for sale, as of ~~September~~June 30, ~~2017)~~2023). As of September 30, 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 September 30, 2017 and December 31, 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 2.6% and 2.3% at September 30, 2017 and December 31, 2016, respectively.

Scheduled payments and maturities of secured notes payable and unsecured notes outstanding at ~~September~~June 30, ~~2017 are~~2023 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 and Term Loan maturities			Stated interest rate of unsecured notes and Term Loan
2017	2,223		21,601		(1)	—		N/A
2018	7,258		76,667			—		N/A
2019	4,696		114,723			—		N/A
2020	3,624		118,729			250,000		6.100	%
						400,000		3.625	%
2021	3,551		27,844			250,000		3.950	%
						300,000		LIBOR + 1.450%
2022	3,795		—			450,000		2.950	%
						100,000		LIBOR + 0.90%
2023	4,040		—			350,000		4.200	%	2023	$	900	$	350,000		4.200	%
						250,000		2.850	%
2024	4,310		—			300,000		3.500	%	2024	9,100		300,000			3.500	%
						150,000		LIBOR + 1.50%					150,000		(1)	SOFR + 0.95%
2025	4,585		84,835			525,000		3.450	%	2025	9,700		525,000			3.450	%
						300,000		3.500	%				300,000			3.500	%
2026	4,894		—			475,000		2.950	%	2026	10,600		475,000			2.950	%
						300,000		2.900	%				300,000			2.900	%
2027										2027	249,000		400,000			3.350	%
2028										2028	17,600		450,000			3.200	%
													400,000			1.900	%
2029										2029	74,750		450,000			3.300	%
2030										2030	9,000		700,000			2.300	%
2031										2031	9,600		600,000			2.450	%
2032										2032	10,300		700,000			2.050	%
Thereafter	213,751		805,317			350,000		3.900	%	Thereafter	319,877		350,000			5.000	%
						400,000		3.350	%				350,000			3.900	%
						300,000		4.150	%				300,000			4.150	%
	$	256,727	$	1,249,716		$	5,450,000						300,000			4.350	%
											$	720,427	$	7,400,000

(1) The borrowing spread to SOFR of 0.95% per annum, consists of a 0.10% SOFR adjustment plus 0.85% per annum.

The Company was in compliance at ~~September~~June 30, ~~2017~~2023 with customary ~~financial and other~~ covenants under the Credit Facility and the Commercial Paper Program, the Term ~~Loans~~Loan and the indentures under which the Company's ~~fixed rate~~ unsecured ~~notes.~~notes were issued.

The following summarizes the changes in equity for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and 2022 (dollars in thousands):

As of ~~September~~June 30, ~~2017~~2023 and December 31, ~~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 for issuance.~~stock.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, the Company:

~~canceled~~ ~~3,045~~ ~~common shares of restricted stock upon forfeiture.~~

~~Any deferred compensation related to~~i.issued 5,773 shares of common stock in connection with stock options exercised;

ii.issued 1,703 shares of common stock through the Company's dividend reinvestment plan;

iii.issued 152,708 shares of common stock ~~option,~~in connection with restricted stock grants and the conversion of performance ~~award grants during~~awards to shares of common stock;

iv.issued 2,000,000 shares of common stock in the ~~nine~~settlement of the forward contracts, as discussed below;

v.issued 12,288 shares of common stock through the Employee Stock Purchase Plan;

vi.withheld 62,215 shares of common stock to satisfy employees' tax withholding and other liabilities;

vii.canceled 566 shares of restricted common stock upon forfeiture; and

viii.repurchased 11,800 common shares through the Stock Repurchase Program (as defined below).

Deferred compensation granted under the Company's Second Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan") for the six months ended ~~September~~June 30, ~~2017 is~~2023 does not ~~reflected on~~impact the ~~accompanying~~Company's Condensed Consolidated ~~Balance Sheet as of September 30, 2017, and will not be reflected~~Financial Statements until recognized as compensation cost.

~~In December 2015, the~~The Company ~~commenced~~has a ~~fourth~~ continuous equity program ("~~CEP IV"~~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 Company of the appropriate sources of funding for the Company. In conjunction with CEP IV, the Company engaged sales agents who will receive compensation of up to 2.0% 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% of the sales prices of all borrowed shares of common stock sold. As of September 30, 2017, there are no outstanding forward sales agreements. During the ~~nine~~three and six months ended ~~September~~June 30, ~~2017, the Company sold 568,424 shares at an average sales price of $188.39 per share, for net proceeds of $105,478,000. As of September 30, 2017,~~2023, the Company had ~~$892,915,000~~no sales under this program. As of ~~shares~~June 30, 2023, the Company had $705,961,000 remaining authorized for issuance under the CEP.

In addition to the CEP, during the three months ended June 30, 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"). During the three and six months ended June 30, 2023, the Company repurchased 4,800 and 11,800 shares of common stock, respectively, at an average price of $162.93 per share and $161.96 per share, respectively. As of June 30, 2023, the Company had $314,237,000 remaining authorized for purchase under this program.

5. Investments ~~in Real Estate Entities~~

~~Investment in~~ Unconsolidated ~~Real Estate Entities~~Investments

As of ~~September~~June 30, ~~2017,~~2023, the Company had investments in five unconsolidated entities with real estate entities holdings, with ownership interest percentages ranging from 20.0% to ~~31.3%~~50.0%, ~~excluding development joint ventures~~coupled with other unconsolidated investments including property technology and ~~joint ventures formed with Equity Residential as part~~environmentally focused companies and investment management funds. For one of the ~~Archstone acquisition.~~investments which is under development of 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 $111,662,000 as of June 30, 2023. Any amounts under the guarantee of this construction loan are obligations of the venture partners in proportion to their ownership interest. The Company accounts for its ~~investments in~~ unconsolidated ~~real estate entities~~investments under the equity method of ~~accounting.~~accounting or under the measurement alternative with the carrying amount of the investment adjusted to fair value when there is an observable transaction for the same or similar investment of the same issuer indicating a change in fair value. The significant accounting policies of the Company's unconsolidated ~~real estate entities~~investments are consistent with those of the Company in all material respects.

~~During the nine months ended September 30, 2017, AvalonBay Value Added Fund II, L.P. ("Fund II") sold its final three communities:~~

~~In conjunction with the disposition~~ Certain of these ~~communities during~~investments are subject to various buy‑sell provisions or other rights which are customary in real estate joint venture agreements. The Company and its partners in these entities may initiate these provisions to either sell the ~~nine months ended September 30, 2017, Fund II repaid~~Company's interest or acquire the ~~remaining $127,179,000 of secured indebtedness at par in advance of its scheduled maturity date.~~interest from the Company's partner.

The Company also has an equity interest of ~~31.3%~~28.6% in ~~Fund II,~~the Archstone Multifamily Partners AC LP (the "U.S. Fund") and upon achievement of a threshold return, which has been met, the Company has a right to incentive distributions for its promoted interest based on the ~~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.~~U.S. Fund. During the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2023, the Company recognized income of ~~$19,977,000 and $26,742,000, respectively,~~$1,072,000 for its promoted interest which is ~~reported as a component of equity~~included in income ~~(loss) of~~from unconsolidated ~~real estate entities~~investments on the accompanying Condensed Consolidated Statements of Comprehensive Income.

During the nine months ended September 30, 2017, Archstone Multifamily Partners AC LP (the "U.S. Fund") sold Eaves Sunnyvale, located in Sunnyvale, CA, containing 192 apartment homes, for $107,000,000. The ~~Company's share of the gain was $13,788,000. In conjunction with the disposition of this community, during the nine months ended September 30, 2017, the~~ U.S. Fund ~~repaid $32,542,000~~sold its final three communities in 2022 and is in the process of secured indebtedness in advance of 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, which is reported as a reduction of equity in income (loss) of unconsolidated real estate entities on the accompanying Condensed Consolidated Statements of Comprehensive Income.being dissolved.

Structured Investment Program

The ~~following is a combined summary of the financial position of the entities accounted for using the equity method discussed above as of the dates presented (dollars in thousands):~~

9/30/2017 12/31/2016
(unaudited) (unaudited)
Assets:

Real estate, net $ 699,440
$ 954,493
Other assets 46,168
49,519
Total assets $ 745,608
$ 1,004,012

Liabilities and partners' capital:

Mortgage notes payable, net and credit facility $ 525,170
$ 689,573
Other liabilities 13,446
16,537
Partners' capital 206,992
297,902
Total liabilities and partners' capital $ 745,608
$ 1,004,012

~~The following is a combined summary of the operating results of the entities accounted for using the equity method discussed above for the periods presented (dollars in thousands):~~

~~In conjunction with the formation of Fund II and North Point II JV, LP ("AVA North Point"~~Company has its Structured Investment Program (the “SIP”), and the acquisition of the U.S. Fund, Multifamily Partners AC JV LP (the "AC JV") and Brandywine Apartments of Maryland, LLC ("Brandywine"), the Company incurred costs in excess of its equity in the underlying net assets of the respective investments. These costs represent $35,752,000 and $38,015,000 at September 30, 2017 and December 31, 2016, respectively, of the Company's respective investment balances. These amounts are being amortized over the lives of the underlying assets as a component of equity (loss) in income of unconsolidated entities on the accompanying Condensed Consolidated Statements of Comprehensive Income.

~~During the nine months ended September 30, 2017, the Company acquired a parcel of land for~~ an investment ~~of $19,200,000 from Sudbury Development, LLC (“Sudbury”), a joint venture in~~platform through which the Company ~~has a 60.0% ownership interest. The Company has a continuing involvement with Sudbury, formed~~provides mezzanine loans or preferred equity to ~~pursue entitlements and conduct pre-development activity for a mixed-used development project, while~~third-party multifamily developers in the ~~venture completes the planned infrastructure and site work.~~

~~Investments in Consolidated Real Estate Entities~~

~~In September 2017,~~Company's existing markets. As of June 30, 2023, the Company ~~acquired two consolidated communities:~~had commitments to fund three mezzanine loans of up to $92,375,000 in the aggregate. The mezzanine loans have a weighted average rate of return of 9.8% and mature at various dates on or before June 2026. At June 30, 2023, the Company had funded $55,869,000 of these commitments.

~~Avalon Dunn Loring, located in Vienna, VA, contains~~ ~~440~~ ~~apartment homes and~~ ~~27,000~~ ~~square feet of retail space was acquired for~~ ~~$151,000,000~~.

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. The Company used third party pricing or internal models for the values of the land, a valuation model for the values of the buildings and debt, and an internal modelevaluates each SIP commitment to determine the ~~fair values of the remaining~~classification as a loan or an investment in a real estate ~~assets and in-place leases. Given the heterogeneous nature~~development project. As of multifamily real estate, the fair values for the land, debt, real estate assets and in-place leases incorporated significant unobservable inputs and therefore are considered to be Level 3 prices within the fair value hierarchy.

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 haveJune 30, 2023, 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.SIP commitments are classified as loans. The Company ~~is responsible for~~includes amounts outstanding under 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 September 30, 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 $41,485,000 for outstanding principal and interest, reportedSIP as a component of prepaid expenses and other assets on the accompanying Condensed Consolidated Balance Sheets. The Company ~~recognizes~~evaluates the credit risk for each loan 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 loan-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 three existing loans, 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 ~~accrual basis. The loan will be repaid by the venture partner with the proceeds the partner receives from the sales~~accompanying Condensed Consolidated Statements of ~~the~~Comprehensive Income.

~~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.~~

Expensed ~~Acquisition,~~Transaction, Development and Other Pursuit Costs ~~and Impairment of Long-Lived Assets~~

The Company capitalizes ~~pre-development~~ costs ~~incurred in pursuit of new~~associated with its development ~~opportunities for which the Company currently believes~~activities when future development is probable ("Development Rights"). 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 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 costs~~Costs incurred for pursuits for which future development is not yet considered probable are expensed as incurred. In addition, if the ~~status of~~Company determines a Development Right ~~changes, making future development by the Company~~is 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 ~~$789,000~~$1,261,000 and ~~$2,170,000~~$2,364,000 for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$2,087,000~~$4,253,000 and ~~$3,522,000~~$3,351,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. These costs are included in expensed ~~acquisition,~~transaction, development and other pursuit costs, net of recoveries on the accompanying Condensed Consolidated Statements of Comprehensive Income. ~~Abandoned pursuit~~These costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.

Impairment of Long-Lived Assets and Casualty Loss

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-lived~~an 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 three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, the Company did not recognize any material impairment losses. For the six months ended June 30, 2023, the Company recognized a charge of $5,051,000 for the property and casualty damages across certain communities in its Northeast and California regions related to severe weather, reported as casualty loss on the accompanying Condensed Consolidated Statements of Comprehensive Income.

The Company evaluates its for-sale condominium inventory for potential indicators of impairment, considering whether the fair value of the individual for-sale condominium units exceeds the carrying value of those units. For-sale condominium inventory is stated at the lower of cost or fair value. The Company determines the fair value of its for-sale condominium inventory as the estimated sales price less direct costs to sell. For the three and six months ended June 30, 2023 and 2022, the Company did not recognize any impairment losses ~~for wholly-owned operating real estate assets.~~on its for-sale condominium inventory.

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. ~~During~~For the ~~nine~~three and six months ended ~~September~~June 30, ~~2017,~~2023 and 2022, the Company recognized an impairment charge of $9,350,000 relating to a land parcel which the Company had acquired for development in 2004, which was sold during the three months ended September 30, 2017. During the nine months ended September 30, 2016, the Company recognized $10,500,000 of aggregatedid not recognize any impairment charges ~~related to three ancillary land parcels. These charges were determined as the excess of the Company's carrying basis over the expected sales price for each parcel, and these charges are included~~on its investment in ~~casualty and impairment (gain) loss, net on the accompanying Condensed Consolidated Statements of Comprehensive Income.~~land.

The Company evaluates its unconsolidated investments for other than temporary impairment, considering both the extent and amount by which 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 no other than temporary impairment losses recognized byfor any of the Company's unconsolidated investments ~~in unconsolidated real estate entities during~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022.

~~Casualty Gains and Losses~~

During the nine months ended September 30, 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 an accrual for demolition and additional incident expenses of $3,120,000. 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 nine months ended September 30, 2017 is included in casualty and impairment (gain) loss, net on the accompanying Condensed Consolidated Statements of Comprehensive Income. See discussion in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies, Legal and Other Contingencies," for further discussion of the Maplewood casualty loss.

During the three months ended September 30, 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 this amount, $7,076,000 and $13,268,000 were received during the three and nine months ended September 30, 2017, respectively. As part of the settlement, the Company recognized $3,495,000 as business interruption insurance proceeds, which is recorded as a component of rental and other income on the accompanying Condensed Consolidated Statements of Comprehensive Income.

During the nine months ended September 30, 2016, the Company reached a final insurance settlement for the property damage and lost income for the Edgewater casualty loss. In 2015 and 2016, the Company received aggregate insurance proceeds for Edgewater of $73,150,000, after self-insurance and deductibles. During the nine months ended September 30, 2016, the Company received the final $29,008,000 of insurance proceeds, of which $8,702,000 was recognized as casualty and impairment (gain) loss, net on the accompanying Condensed Consolidated Statements of Comprehensive Income, and $20,306,000 as business interruption insurance proceeds, which is recorded as a component of rental and other income on the accompanying Condensed Consolidated Statements of Comprehensive Income. See discussion in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies, Legal and Other Contingencies," and Part II, Item 1, "Legal Proceedings," for further discussion of the Edgewater casualty loss.

During the nine months ended September 30, 2016, the Company recorded a net casualty gain of $5,732,000 related to the severe winter storms that occurred in the Company’s Northeast markets in 2015, 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 (gain) loss, net on the accompanying Condensed Consolidated Statements of Comprehensive Income.

6. Real Estate Disposition Activities

The following real estate sales occurred during the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023 (dollars in thousands):

In January 2017, the Company sold two undeveloped land parcels, located in Newcastle, WA, that are adjacent to one of the Company's Development Communities, and 421-a tax certificates, representing the right to qualify for certain property tax exemptions in New York City, for an aggregate sales price of $22,286,000. The Company's gain


Community name	Location	Period of sale	Apartment homes	Gross sales price		Gain on disposition (1)
eaves Daly City	Daly City, CA	Q223	195	$	67,000	$	54,618
Avalon at Newton Highlands	Newton, MA	Q223	294	$	170,000	$	132,723

(1) Gain on ~~the dispositions was $366,000, reported in (loss) gain on sale of other real estate on the accompanying Condensed Consolidated Statements of Comprehensive Income.~~

InAt June ~~2017,~~30, 2023, the Company had one real estate asset that qualified as held for sale.

The Park Loggia, located in New York, NY, contains 172 for-sale residential condominiums and 66,000 square feet of commercial space. During the three and six months ended June 30, 2023, the Company sold ~~AVA University District, located~~three and four residential condominiums at The Park Loggia for gross proceeds of $15,435,000 and $19,342,000, respectively, resulting in ~~Seattle, WA, containing 283 homes,~~a gain in accordance with GAAP of $382,000 and $410,000, respectively. During the three and six months ended June 30, 2022, the Company sold 13 and 28 residential condominiums at The Park Loggia for ~~$112,500,000.~~gross proceeds of $41,002,000 and $81,338,000, respectively, resulting in a gain in accordance with GAAP of $467,000 and $1,469,000, respectively. The ~~Company's gain on~~Company incurred marketing, operating and administrative costs of $97,000 and $538,000 for the ~~disposition was $42,596,000, reported~~three months ended June 30, 2023 and 2022, respectively, and $299,000 and $1,304,000 for the six months ended June 30, 2023 and 2022, respectively. All amounts are included in ~~gain on sale of communities~~other real estate activity on the accompanying Condensed Consolidated Statements of Comprehensive Income.

~~In July 2017, the Company sold an undeveloped land parcel, located in Vienna, VA, for~~ ~~$15,500,000. The Company recognized a loss on the disposition~~ As of ~~$120,000, reported in (loss) gain on sale of other real estate on the accompanying Condensed Consolidated Statements of Comprehensive Income.~~

~~In September 2017, the Company sold Avalon Danbury, located in Danbury, CT, containing~~ ~~234~~ ~~homes, for~~ ~~$52,000,000~~. The Company's gain on the disposition was $27,829,000, reported in gain on sale of communities on the accompanying Condensed Consolidated Statements of Comprehensive Income. The sale of Avalon Danbury is expectedJune 30, 2023, there were five residential condominiums remaining to be ~~part~~sold. As of ~~a tax deferred exchange under which~~June 30, 2023 and December 31, 2022, the ~~Company has restricted the cash proceeds~~unsold for-sale residential condominiums at The Park Loggia had an aggregate carrying value of $15,336,000 and $32,532,000, respectively, presented in ~~an escrow account, classified as cash in escrow~~prepaid expenses and other assets on the accompanying Condensed Consolidated Balance ~~Sheet.~~

7. Commitments and Contingencies

The Company owns seven apartment communities and two commercial properties, located on land subject to ground leases expiring between July 2046 and April 2106. The Company has purchase options for all ground leases expiring prior to 2062. The ground leases for six of the seven apartment communities and the two commercial properties are operating leases, with rental expense recognized on a straight-line basis over the lease term. In addition, the Company is party to 13 leases for its corporate and regional offices with varying terms through 2031, all of which are operating leases.

As of June 30, ~~2017,~~2023 and December 31, 2022, the Company had total operating lease assets of $107,765,000 and $114,977,000, respectively, and lease obligations of $134,916,000 and $142,602,000, respectively, reported as components of right of use lease assets and lease liabilities, respectively, on the accompanying Condensed Consolidated Balance Sheets. The Company incurred costs of $4,081,000 and $3,964,000 for the three months ended June 30, 2023 and 2022, respectively, and $8,086,000 and $7,670,000 for the six months ended June 30, 2023 and 2022, 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 ~~qualified~~are finance leases. As of June 30, 2023 and December 31, 2022, the Company had total finance lease assets of $28,415,000 and $28,354,000, respectively, and total finance lease obligations of $20,041,000 and $20,069,000, respectively, reported as ~~held for sale.~~components of right of use lease assets and lease liabilities on the accompanying Condensed 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.

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 maker ("CODM") for ~~purposes of~~ assessing each segment's performance. The Company's ~~chief operating decision maker~~CODM is comprised of several members of its executive management team who use net operating income ("NOI") as the primary financial measure for ~~Established Communities~~Same 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 on extinguishment of debt, net, general and administrative expense, ~~equity in (income) loss of~~income from unconsolidated ~~real estate entities,~~ investments,depreciation expense, ~~corporate~~ income tax (benefit) expense, casualty ~~and impairment~~ loss, ~~(gain), net, (loss)~~ gain on sale of communities, other real estate ~~assets~~activity 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% and 1.7% of total NOI for the three months ended June 30, 2023 and 2022, respectively, and 1.8% and 1.9% for the six months ended June 30, 2023 and 2022, 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 the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 is as follows (dollars in thousands):

For the three months ended For the nine months ended
9/30/2017 9/30/2016 9/30/2017 9/30/2016
Net income $ 238,199
$ 356,329
$ 639,174
$ 791,525
Indirect operating expenses, net of corporate income 15,752
14,946
48,472
46,960
Investments and investment management expense 1,501
1,205
4,277
3,545
Expensed acquisition, development and other pursuit costs, net of recoveries 789
3,804
2,087
8,702
Interest expense, net 47,741
47,871
147,138
137,862
Loss on extinguishment of debt, net —
—
24,162
2,461
General and administrative expense 11,655
11,928
38,808
35,343
Equity in (income) loss of unconsolidated real estate entities (52,568 ) 342
(70,386 ) (54,779 )
Depreciation expense 144,990
131,729
427,050
391,414
Income tax expense 24
22
102
95
Casualty and impairment loss (gain), net —
—
11,688
(3,935 )
Gain on sale of real estate (27,618 ) (212,941 ) (160,000 ) (295,503 )
Net operating income from real estate assets sold or held for sale (1,874 ) (10,039 ) (9,633 ) (33,175 )
Net operating income $ 378,591
$ 345,196
$ 1,102,939
$ 1,030,515

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 three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Rental income from real estate assets sold or held for sale	$	5,989	$	18,203	$	12,649	$	39,023
Operating expenses from real estate assets sold or held for sale	(2,012)		(5,951)		(3,868)		(13,502)
Net operating income from real estate assets sold or held for sale	$	3,977	$	12,252	$	8,781	$	25,521

For the three months ended For the nine months ended
9/30/2017 9/30/2016 9/30/2017 9/30/2016
Rental income from real estate assets sold or held for sale $ 3,044
$ 16,388
$ 15,582
$ 53,582
Operating expenses from real estate assets sold or held for sale (1,170 ) (6,349 ) (5,949 ) (20,407 )
Net operating income from real estate assets sold or held for sale $ 1,874
$ 10,039
$ 9,633
$ 33,175

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.January 1, 2023. Segment information ~~for total revenue and NOI~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 has been adjusted to exclude the real estate assets that were sold from January 1, ~~2016~~2022 through ~~September~~June 30, ~~2017,~~2023, or otherwise qualify as held for sale as of ~~September~~June 30, ~~2017,~~2023, as described in Note 6, "Real Estate Disposition Activities." ~~Segment information for~~


	For the three months ended				For the six months ended
	Total revenue		NOI		Total revenue		NOI		Gross real estate (1)
For the period ended June 30, 2023
Same Store
New England	$	91,269	$	61,570	$	180,732	$	120,976	$	2,906,134
Metro NY/NJ	133,790		91,850		266,285		183,903		4,477,824
Mid-Atlantic	92,494		63,849		182,367		127,015		3,417,578
Southeast Florida	18,809		12,342		38,119		25,274		800,150
Denver, CO	7,036		4,821		13,882		9,765		321,900
Pacific Northwest	43,128		30,601		85,789		61,030		1,538,635
Northern California	106,960		76,678		212,104		151,466		3,777,499
Southern California	137,441		94,965		270,540		185,947		4,784,990
Other Expansion Regions	5,963		4,027		11,823		8,103		327,216
Total Same Store	636,890		440,703		1,261,641		873,479		22,351,926

Other Stabilized	32,240		22,319		63,972		44,667		1,522,042
Development / Redevelopment	13,029		7,998		23,529		14,235		1,973,380
Land Held for Development	N/A		N/A		N/A		N/A		195,115
Non-allocated (2)	2,712		N/A		3,778		N/A		131,121

Total	$	684,871	$	471,020	$	1,352,920	$	932,381	$	26,173,584

For the period ended June 30, 2022
Same Store
New England	$	84,243	$	56,444	$	164,414	$	108,137	$	2,873,720
Metro NY/NJ	123,855		85,874		242,497		167,369		4,443,758
Mid-Atlantic	86,609		59,453		169,988		116,712		3,378,869
Southeast Florida	17,034		10,799		33,493		21,281		794,486
Denver, CO	6,663		4,900		12,978		9,627		321,043
Pacific Northwest	41,189		29,594		80,040		57,071		1,528,734
Northern California	100,888		72,166		197,993		140,919		3,738,969
Southern California	133,920		95,471		258,890		181,918		4,729,905
Other Expansion Regions	5,427		3,763		10,626		7,366		322,069
Total Same Store	599,828		418,464		1,170,919		810,400		22,131,553

Other Stabilized	19,078		13,326		34,291		24,063		1,129,359
Development / Redevelopment	6,546		3,895		12,597		7,943		1,125,990
Land Held for Development	N/A		N/A		N/A		N/A		194,458
Non-allocated (2)	904		N/A		1,656		N/A		116,678

Total	$	626,356	$	435,685	$	1,219,463	$	842,406	$	24,698,038

(1)Does not include gross real estate assets held for sale of $106,098 as of ~~September~~June 30, ~~2017~~2023 and ~~2016 has not been adjusted to exclude~~gross real estate ~~assets that were~~either sold or ~~otherwise qualified~~classified as held for sale subsequent to ~~the respective balance sheet dates.~~June 30, 2022 of $462,673.

(2)Revenue represents third-party property management, developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment.

For the three months ended For the nine months ended
Total
revenue NOI % NOI change from prior year Total
revenue NOI % NOI change from prior year Gross real estate (1)
For the period ended September 30, 2017

Established

New England $ 58,941
$ 38,055
3.0 % $ 174,348
$ 111,931
2.6 % $ 1,846,937
Metro NY/NJ 91,699
61,932
1.6 % 271,262
184,434
2.0 % 2,969,873
Mid-Atlantic 56,321
38,782
1.8 % 168,098
116,272
1.8 % 2,069,486
Pacific Northwest 21,528
15,687
5.1 % 62,773
45,519
5.4 % 734,407
Northern California 84,634
64,557
1.3 % 251,985
192,861
1.9 % 2,824,608
Southern California 85,226
60,024
2.3 % 252,229
180,383
4.3 % 3,013,215
Total Established 398,349
279,037
2.1 % 1,180,695
831,400
2.7 % 13,458,526

Other Stabilized (2) 71,150
49,177
N/A
208,729
146,242
N/A
3,086,022
Development / Redevelopment 76,964
50,377
N/A
195,041
125,297
N/A
4,766,894
Land Held for Development N/A
N/A
N/A
N/A
N/A
N/A
85,863
Non-allocated (3) 993
N/A
N/A
3,290
N/A
N/A
95,621

Total $ 547,456
$ 378,591
9.7 % $ 1,587,755
$ 1,102,939
7.0 % $ 21,492,926

For the period ended September 30, 2016

Established

New England $ 59,321
$ 37,657
0.6 % $ 174,731
$ 111,497
5.9 % $ 1,845,679
Metro NY/NJ 91,181
61,905
1.2 % 268,781
183,155
1.8 % 3,206,696
Mid-Atlantic 58,928
40,029
0.4 % 174,922
120,623
1.4 % 2,335,116
Pacific Northwest 18,627
13,541
12.1 % 54,085
39,165
8.1 % 736,377
Northern California 80,783
61,560
5.9 % 238,867
182,658
8.0 % 2,657,020
Southern California 73,570
52,527
11.1 % 217,686
155,242
10.3 % 2,667,875
Total Established 382,410
267,219
4.4 % 1,129,072
792,340
4.4 % 13,448,763

Other Stabilized (4) 52,971
34,653
N/A
175,186
125,027
N/A
2,325,539
Development / Redevelopment 63,122
43,324
N/A
164,865
113,148
N/A
3,994,361
Land Held for Development N/A
N/A
N/A
N/A
N/A
N/A
519,626
Non-allocated (3) 1,320
N/A
N/A
4,310
N/A
N/A
74,374

Total $ 499,823
$ 345,196
20.2 % $ 1,473,433
$ 1,030,515
37.3 % $ 20,362,663

8. 9. Stock-Based Compensation Plans

As part of its ~~long term~~long-term compensation plans, the Company has granted stock options, performance awards and restricted ~~stock. Detail~~stock under the 2009 Plan. Details of the outstanding awards and activity isunder the 2009 Plan for the six months ended June 30, 2023 are presented below.

~~Information with respect~~Stock Options:


	Options	Weighted average exercise price per option
Options Outstanding at December 31, 2022	293,813	$	181.85
Granted (1)	15,744	177.83
Exercised	(5,773)	163.56
Forfeited	—	—
Options Outstanding at June 30, 2023	303,784	$	181.99
Options Exercisable at June 30, 2023	279,894	$	180.97

(1)Grants are from recipient elections to receive a portion of earned restricted stock ~~options granted under~~awards in the form of stock options.


	Performance awards	Weighted average grant date fair value per award (1)
Outstanding at December 31, 2022	279,067	$	225.46
Granted (2)	89,977	193.88
Change in awards based on performance (3)	(31,345)	241.49
Converted to shares of common stock	(60,016)	238.71
Forfeited	(2,719)	212.05
Outstanding at June 30, 2023	274,964	$	210.54

(1)Weighted average grant date fair value per award includes the impact of post grant modifications.

(2)The shares of common stock that may be earned is based on the total shareholder return metrics for the Company's ~~1994 Stock Option and Incentive Plan (the "1994 Plan") and its Second Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan")~~common stock for ~~the nine months ended September 30, 2017, is as follows:~~

2009 Plan
shares

Weighted average
exercise price
per share

1994 Plan
shares

Weighted average
exercise price
per share
Options Outstanding, December 31, 2016 177,333
$ 124.25
22,541
$ 77.91
Exercised (27,360 ) 110.47
(13,763 ) 96.61
Forfeited —
—
—
—
Options Outstanding, September 30, 2017 (1) 149,973
$ 126.77
8,778
$ 48.60

~~Information with respect to~~49,480 performance awards ~~granted is as follows:~~and financial metrics related to operating performance and leverage metrics of the Company for 40,497 performance awards.

Performance awards Weighted average grant date fair value per award
Outstanding at December 31, 2016 251,163
$ 136.74
  Granted (1) 81,708
176.59
  Change in awards based on performance (2) 49,323
119.26
  Converted to restricted stock (128,482 ) 118.75
  Forfeited (1,942 ) 159.39
Outstanding at September 30, 2017 251,770
$ 155.25

(3)Represents the change in the number of performance awards earned based on performance achievement.

The Company used a Monte Carlo model to assess the compensation cost associated with the portion of the performance awards granted ~~in 2017~~ for which achievement will be determined by using total shareholder return measures. ~~The~~For the awards granted in 2023, the assumptions used are as follows:


		2023
Dividend yield		~~2017~~3.7%
~~Dividend yield~~	~~3.2%~~
Estimated volatility over the life of the plan (1)	~~15.3%~~22.9% - ~~19.7%~~26.1%
Risk free rate		~~0.69%~~4.35% - ~~1.61%~~4.61%
Estimated performance award value based on total shareholder return measure		$~~175.86~~206.97

__________________________________

(1)Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.

For the portion of the performance awards granted in ~~2017,~~2023 for which achievement will be determined by using financial metrics, the compensation cost was based on ~~the~~an average grant date ~~fair~~ value of ~~$179.07,~~$177.85, 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 Restricted stock shares weighted average grant date fair value per share Restricted stock shares converted from performance awards
Outstanding at December 31, 2016 136,705
$ 158.51
176,698
  Granted - restricted stock shares 72,832
179.58
128,482
  Vested - restricted stock shares (72,345 ) 153.35
(70,595 )
  Forfeited (2,388 ) 173.29
(657 )
Outstanding at September 30, 2017 134,804
$ 172.39
233,928
Restricted Stock:


	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, 2022	161,714	$	210.97	26,370
Granted	92,692	177.70		—
Vested	(76,870)	208.78		(26,370)
Forfeited	(566)	190.09		—
Outstanding at June 30, 2023	176,970	$	194.57	—

Total employee stock-based compensation cost recognized in income was ~~$13,245,000~~$15,192,000 and ~~$11,555,000~~$17,751,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and total capitalized stock-based compensation cost was ~~$7,644,000~~$6,483,000 and ~~$7,790,000~~$5,614,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. At ~~September~~June 30, ~~2017,~~2023, there was a total unrecognized compensation cost of ~~$31,278,000~~$44,587,000 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 ~~3.7~~2.1 years. Forfeitures are included in compensation cost as they occur.

9. 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 ~~$993,000~~$2,712,000 and ~~$1,320,000 during~~$904,000 for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$3,290,000~~$3,778,000 and ~~$4,310,000~~$1,656,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, 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 Condensed Consolidated Statements of Comprehensive Income. In addition, the Company ~~has~~had outstanding receivables associated with its property and construction management ~~role~~roles of ~~$2,663,000~~$3,387,000 and ~~$5,239,000~~$2,855,000 as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively.

Director Compensation

The Company recorded non-employee director compensation expense relating to restricted stock grants and deferred stock ~~awards~~units in the amount of ~~$368,000~~$631,000 and ~~$260,000 in~~$575,000 for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$1,127,000~~$1,246,000 and ~~$877,000 in~~$1,090,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, as a component of general and administrative expense. Deferred compensation relating to these restricted stock grants and deferred stock ~~awards~~units to non-employee directors was ~~$782,000~~$1,766,000 and ~~$531,000~~$794,000 on ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016, respectively.~~2022, respectively, reported as a component of prepaid expenses and other assets on the accompanying Condensed Consolidated Balance Sheets.

~~10.~~ 11. Fair Value

Financial Instruments Carried at Fair Value

Derivative Financial Instruments

~~Currently, the~~The Company uses ~~interest rate swap and interest rate cap agreements~~Hedging 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 Company~~Group, 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 ~~September~~June 30, ~~2017,~~2023, 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 is 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~~

Table of $753,000 for hedge ineffectiveness for the nine months ended September 30, 2017, included as a component of interest expense, net on the Condensed Consolidated Statements of Comprehensive Income. Hedge ineffectiveness did not have a material impact on earnings of the Company for any prior period.Contents

The following table summarizes the consolidated derivative positions at ~~September~~June 30, ~~2017~~2023 (dollars in thousands):


	Non-designated Hedges Interest Rate Caps			Cash Flow Hedges Interest Rate Caps			Cash Flow Hedges Interest Rate Swaps				Non-designated Hedges			Cash Flow Hedges
											Interest Rate Caps			Interest Rate Swaps
Notional balance	$	690,053		$	35,256		$	300,000		Notional balance	$	402,670		$	250,000
Weighted average interest rate (1)	2.7		%	3.6		%	N/A			Weighted average interest rate (1)	5.6		%	N/A
Weighted average swapped/capped interest rate	6.1		%	5.9		%	2.4		%
Weighted average capped/swapped interest rate										Weighted average capped/swapped interest rate	6.1		%	3.1		%
Earliest maturity date	Jan 2018			Apr 2019			May 2018			Earliest maturity date	January 2024			December 2023
Latest maturity date	Sep 2022			Apr 2019			May 2018			Latest maturity date	November 2026			February 2024

(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.


~~(1)~~	~~For interest rate caps, represents the weighted average interest rate on the hedged debt.~~

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, the Company entered into $50,000,000 and ~~$300,000,000,~~$250,000,000, respectively, of new forward interest rate swap agreements ~~executed~~ to reduce the impact of variability in interest rates on a portion of the Company's ~~expected~~anticipated future debt issuance activity in ~~2018. As of September 30, 2017, the Company has $300,000,000 in aggregate outstanding forward interest rate swap agreements. At maturity of the remaining outstanding swap agreements, the~~2023 and 2024. The Company expects to cash settle the ~~contracts~~swaps 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.

As described in this paragraph, during the nine months ended September 30, 2017, the Company settled an aggregate of $800,000,000 of forward interest rate swap agreements, receiving net aggregate payments of $391,000. 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. 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 Condensed Consolidated Balance Sheets, and will recognize the impact as a component of interest expense, net, over the 10 year period of interest payments hedged.

~~Excluding derivatives executed to hedge secured debt on communities classified as held for sale, the Company~~ had ~~seven derivatives designated as cash flow hedges and 14~~five derivatives not designated as hedges at ~~September~~June 30, ~~2017. Fair~~2023 for which the fair value changes ~~for derivatives not in qualifying hedge relationships~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 were not material. ~~During the nine months ended September 30, 2017, the Company deferred $15,654,000 of losses for cash~~

Cash flow ~~hedges reported as a component of other comprehensive loss.~~

~~The following table summarizes the deferred~~hedge losses reclassified from accumulated other comprehensive income ~~as a component of interest expense, net (dollars in thousands):~~into earnings were $354,000 and $1,013,000 for the three months ended June 30, 2023 and 2022, respectively, and $708,000 and $2,026,000 for the six months ended June 30, 2023 and 2022, respectively.

For the three months ended For the nine months ended
9/30/2017 9/30/2016 9/30/2017 9/30/2016

Cash flow hedge losses reclassified to earnings $ 1,767
$ 1,748
$ 5,301
$ 4,682

The Company anticipates reclassifying approximately ~~$7,012,000~~$1,415,000 of net hedging losses from accumulated other comprehensive ~~loss~~income into earnings within the next 12 months toas an offset ~~the variability of cash flows of~~to the hedged item during this period. ~~The Company did not have any derivatives designated as fair value hedges as of September 30, 2017 and 2016.~~

Redeemable Noncontrolling Interests

~~The Company provided redemption options (the "Puts") that allow joint venture partners~~During the three and six months ended June 30, 2023, 7,500 DownREIT units were redeemed with cash in conjunction with the sale of ~~the Company to require the Company to purchase their interests in the investment~~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 is 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~~DownREIT are 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, a Level 2 price under the fair value hierarchy.

Financial Instruments Not Carried at Fair Value

Cash and Cash Equivalents

Cash and cash equivalent 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 balances with any one financial institution and believes the likelihood of realizing material losses related to cash and cash equivalent balances is remote. Cash and cash equivalents are carried at their face amounts, which reasonably approximate their fair values and are Level 1 within the fair value hierarchy.

Table of Contents

Other Financial Instruments

Rents and other receivables and 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 Loans~~Commercial 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'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 ~~its~~the Credit Facility and ~~Term Loans~~Commercial 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 tables 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):


	June 30, 2023
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)

Assets
Investments
Equity Securities	$	28,926	$	—	$	28,926	$	—
Notes Receivable, net	59,071		—		59,071		—
Non Designated Hedges
Interest Rate Caps	264		—		264		—
Interest Rate Swaps - Assets	8,486		—		8,486		—
Total Assets	$	96,747	$	—	$	96,747	$	—

Liabilities
Indebtedness
Fixed rate unsecured notes	$	6,474,043	$	6,474,043	$	—	$	—
Mortgage notes payable, Commercial Paper Program and variable rate unsecured notes	763,708		—		763,708		—
Total Liabilities	$	7,237,751	$	6,474,043	$	763,708	$	—

Table of Contents

Description Total Fair Value
Quoted Prices
in Active
Markets for Identical Asset
(Level 1)

Significant
Other
Observable Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)

9/30/2017
Non-Designated Hedges
Interest Rate Caps $ 14
$ —
$ 14
$ —
Cash Flow Hedges
Interest Rate Swaps - Assets 1,422
—
1,422
—
Interest Rate Swaps - Liabilities (1,998 ) —
(1,998 ) —
Puts (5,928 ) —
—
(5,928 )
DownREIT units (1,338 ) (1,338 ) —
—
Indebtedness
Unsecured notes (4,999,985 ) (4,999,985 ) —
—
Secured notes payable and unsecured term loan (2,098,870 ) —
(2,098,870 ) —
Total $ (7,106,683 ) $ (5,001,323 ) $ (2,099,432 ) $ (5,928 )


	December 31, 2022
Description	Total Fair Value		Quoted Prices in Active Markets for Identical Asset (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Assets
Investments
Equity Securities	$	27,027	$	—	$	27,027	$	—
Notes Receivable, net	28,860		—		28,860		—
Non Designated Hedges
Interest Rate Caps	455		—		455		—
Total Assets	$	56,342	—		56,342		—

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 notes	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 Asset
(Level 1)

Significant
Other
Observable Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)

12/31/2016
Non-Designated Hedges
Interest Rate Caps $ 79
$ —
$ 79
$ —
Cash Flow Hedges
Interest Rate Caps 2
—
2
—
Interest Rate Swaps - Assets 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 loan (2,744,462 ) —
(2,744,462 ) —
Total $ (6,955,564 ) $ (4,219,956 ) $ (2,729,606 ) $ (6,002 )

~~11.~~ 12. Subsequent Events

The Company has evaluated subsequent events through the date on which this Form 10-Q was filed, the date on which these financial statements were issued, and identified the items below for discussion.

In ~~October 2017,~~July 2023, the ~~Company:~~

~~obtained a variable rate secured note in the amount~~

Table of ~~$21,700,000 that matures in October 2020, in association with the refinancing of an existing $21,601,000 fixed rate secured note that was scheduled to mature in November 2017; and~~Contents

~~sold Avalon Run East, a wholly-owned operating community located in Lawrenceville, NJ, containing 312 apartment homes, for a sale price of $87,500,000.~~


~~ITEM 2.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. 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 Condensed Consolidated Financial Statements and the accompanying Notes to Condensed 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 our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 (the "Form 10-K"). and in Part II, Item 1A. "Risk Factors" in this report.

Capitalized terms used without definition have the meanings provided elsewhere in this Form 10-Q.

Executive Overview

Business Description

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 that we believe are characterized by growing employment in high wage sectors of the economy, ~~lower housing affordability~~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. 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. We~~ seek to create long-term shareholder value by accessing ~~capital on~~ cost effective ~~terms;~~capital; deploying that capital to develop, redevelop and acquire apartment communities in our ~~selected~~ markets; leveraging our strong operating organization, our culture, our scale and our competencies in technology and data science, to operate apartment communities; and selling communities when they no longer meet our long-term investment strategy or when pricing is attractive.

Our strategic vision is to be the leading apartment company in select USU.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~~with 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 market allocation of our investments by ~~the amount~~current market value and share of ~~invested capital~~total revenue and ~~by product type within our individual markets.~~NOI, as well as relative asset value and submarket positioning.

~~Third~~Second Quarter ~~2017~~2023 Operating Highlights

•Net income attributable to common stockholders for the three months ended ~~September~~June 30, ~~2017~~2023 was ~~$238,248,000, a decrease~~$367,923,000, an increase of ~~$118,144,000,~~$229,232,000, or ~~33.2%~~165.3%, ~~as compared to~~from the prior year period. The ~~decrease~~increase is primarily ~~due~~attributable to ~~a decrease~~increases in ~~gains on the sale of consolidated real estate and an increase in depreciation, partially offset by an increase in joint venture~~ real estate sales and related gains ~~including our promoted interest,~~and NOI from communities over the prior year period.

~~Established Communities~~•Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential revenue ("Residential"), for the three months ended ~~September~~June 30, ~~2017~~2023 was ~~$279,037,000,~~$435,057,000, an increase of ~~$5,741,000,~~$22,207,000, or ~~2.1%~~5.4%, over the prior year period. ~~This~~The increase over the prior year period was ~~driven by~~due to an increase in Residential rental revenue of ~~2.2%~~$37,080,000, or 6.3%, partially offset by an increase in Residential property operating expenses of ~~2.4% compared to the prior year period.~~$14,769,000, or 8.2%.

~~During the three months ended September~~Second Quarter 2023 Development Highlights

At June 30, ~~2017, we completed the construction of one community, containing 331 apartment homes for an aggregate total capitalized cost of $96,600,000. At September 30, 2017,~~2023, we owned or held a direct or indirect interest ~~in 23~~in:

•17 wholly-owned communities under construction, which are expected to contain ~~6,888~~5,761 apartment homes with a projected total capitalized cost of ~~$3,247,000,000, including the~~$2,293,000,000, and one unconsolidated community under construction, which is expected to contain 475 apartment homes with a projected total ~~projected~~ capitalized cost ~~for one community being developed within an unconsolidated joint venture in which we own a 55.0% interest. In addition, as~~ of ~~September 30, 2017, we held a direct or indirect ownership interest in land~~$288,000,000.

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•Land or rights to land on which we expect to develop an additional 2543 apartment communities that, if developed as expected, will contain ~~8,392~~14,993 apartment homes and will be developed for an aggregate projected total capitalized cost of ~~$3,206,000,000.~~$6,795,000,000.

Second Quarter 2023 Real Estate Transaction Highlights

During the three months ended ~~September~~June 30, ~~2017,~~2023, we sold two wholly-owned communities containing 489 apartment homes for $237,000,000 for a gain in accordance with GAAP of $187,341,000.

In addition, in July 2023, we sold Avalon ~~Danbury, a wholly-owned operating community~~Columbia Pike, located in ~~Danbury, CT, containing 234 apartment homes.~~Arlington, VA. Avalon ~~Danbury was sold for $52,000,000 and our gain on the disposition was $27,829,000.~~

~~In September 2017, we acquired two wholly-owned operating communities:~~

~~The Lodge Denver West, located in Lakewood, CO,~~Columbia Pike contains ~~252 apartment homes and was acquired for a purchase price of $76,750,000. The acquisition marked our entry in to the Denver metropolitan area.~~

~~Avalon Dunn Loring, located in Vienna, VA, contains 440~~269 apartment homes and 27,000 square feet of ~~retail~~commercial space and was ~~acquired~~sold for ~~$151,000,000.~~$105,000,000.

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; 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 and Capital Resources".

Communities Overview

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 communities~~Current Communities are further ~~distinguished~~classified as ~~Established Communities,~~Same Store communities, Other Stabilized ~~Communities, Lease-Up Communities,~~communities, Redevelopment ~~Communities~~communities 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 period. For the ~~nine~~six month periods ended ~~September~~June 30, ~~2017~~2023 and ~~2016, the Established Communities are~~2022, Same Store communities ~~that~~ are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, ~~2016,~~2022, are not conducting or ~~planning~~are not probable to conduct substantial redevelopment activities and are not held for sale as of June 30, 2023 or ~~planned~~probable for disposition to unrelated third parties within the current year. 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 other~~is composed of completed consolidated communities that we own and that are not Same Store but which have stabilized occupancy, as defined above, as of ~~the beginning of the current calendar year.~~January 1, 2023, or which were acquired subsequent to January 1, 2022. Other Stabilized ~~Communities do not include~~excludes communities that are conducting or ~~planning~~are probable to conduct 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~~ ~~are~~is composed of consolidated communities where substantial redevelopment is in progress or is ~~planned~~probable to begin during the current year. 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 ~~have~~be below 90% during, or as a ~~material impact on the operations~~result 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 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~~less than one year and that did not have stabilized occupancy as of ~~occupancy for the entire community have not been received.~~January 1, 2023. 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.

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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 ~~September~~June 30, ~~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	42	12,995
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	17,277
Other Expansion Regions	4	925
Total Same Store	253	74,955

Other Stabilized:
New England	1	350
Metro NY/NJ	—	—
Mid-Atlantic	4	1,450
Southeast Florida	1	650
Denver, CO	2	453
Pacific Northwest	—	—
Northern California	—	—
Southern California	1	653
Other Expansion Regions	2	456
Total Other Stabilized	11	4,012

Redevelopment	1	714

Unconsolidated	8	2,247

Total Current	273	81,928

Development	20	6,256

Unconsolidated Development	1	475

Total Communities	294	88,659

Development Rights	43	14,993

Number of
communities

Number of
apartment homes

Current Communities

Established Communities:

New England 37
8,397
Metro NY/NJ 35
10,371
Mid-Atlantic 26
9,126
Pacific Northwest 13
3,305
Northern California 35
10,321
Southern California 45
13,330
Total Established 191
54,850

Other Stabilized Communities:

New England 7
1,868
Metro NY/NJ 9
2,402
Mid-Atlantic 8
3,456
Pacific Northwest 2
373
Northern California 4
1,279
Southern California 9
1,755
Non Core 4
1,266
Total Other Stabilized 43
12,399

Lease-Up Communities 8
2,868

Redevelopment Communities (1) 10
3,343

Unconsolidated Communities 11
2,616

Total Current Communities 263
76,076

Development Communities (2) 23
6,888

Total Communities 286
82,964

Development Rights 25
8,392

~~_________________________~~

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~~(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.~~

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; the~~under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity. A comparison of our operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 is as follows (unaudited, dollars in thousands):.


	For the three months ended											For the nine months ended											For the three months ended June 30,				June 30, 2023 vs. 2022				For the six months ended June 30,				June 30, 2023 vs. 2022
	9/30/2017			9/30/2016			$ Change			% Change		9/30/2017		9/30/2016			$ Change			% Change			2023		2022		$ Change		% Change		2023		2022		$ Change		% Change

Revenue:																						Revenue:
Rental and other income	$	549,507		$	514,891		$	34,616		6.7	%	$	1,600,047	$	1,522,705		$	77,342		5.1	%	Rental and other income	$	688,148	$	643,655	$	44,493	6.9	%	$	1,361,791	$	1,256,830	$	104,961	8.4	%
Management, development and other fees	993			1,320			(327		)	(24.8	)%	3,290		4,310			(1,020		)	(23.7	)%	Management, development and other fees	2,712		904		1,808		200.0	%	3,778		1,656		2,122		128.1	%
Total revenue	550,500			516,211			34,289			6.6	%	1,603,337		1,527,015			76,322			5.0	%	Total revenue	690,860		644,559		46,301		7.2	%	1,365,569		1,258,486		107,083		8.5	%

Expenses:																						Expenses:
Direct property operating expenses, excluding property taxes	111,330			107,298			4,032			3.8	%	323,263		305,423			17,840			5.8	%	Direct property operating expenses, excluding property taxes	138,163		124,848		13,315		10.7	%	271,144		247,309		23,835		9.6	%
Property taxes	57,698			52,338			5,360			10.2	%	164,195		153,512			10,683			7.0	%	Property taxes	74,987		70,865		4,122		5.8	%	149,483		141,603		7,880		5.6	%
Total community operating expenses	169,028			159,636			9,392			5.9	%	487,458		458,935			28,523			6.2	%	Total community operating expenses	213,150		195,713		17,437		8.9	%	420,627		388,912		31,715		8.2	%

Corporate-level property management and other indirect operating expenses	16,759			16,286			473			2.9	%	51,779		51,350			429			0.8	%	Corporate-level property management and other indirect operating expenses	(31,685)		(31,541)		(144)		0.5	%	(63,536)		(60,392)		(3,144)		5.2	%
Investments and investment management expense	1,501			1,205			296			24.6	%	4,277		3,545			732			20.6	%
Expensed acquisition, development and other pursuit costs, net of recoveries	789			3,804			(3,015		)	(79.3	)%	2,087		8,702			(6,615		)	(76.0	)%
Expensed transaction, development and other pursuit costs, net of recoveries																						Expensed transaction, development and other pursuit costs, net of recoveries	(1,261)		(2,364)		1,103		(46.7)	%	(4,253)		(3,351)		(902)		26.9	%
Interest expense, net	47,741			47,871			(130		)	(0.3	)%	147,138		137,862			9,276			6.7	%	Interest expense, net	(51,585)		(58,797)		7,212		(12.3)	%	(108,406)		(115,323)		6,917		(6.0)	%
Loss on extinguishment of debt, net	—			—			—			—	%	24,162		2,461			21,701			881.8	%
Depreciation expense	144,990			131,729			13,261			10.1	%	427,050		391,414			35,636			9.1	%	Depreciation expense	(200,546)		(199,302)		(1,244)		0.6	%	(405,289)		(401,088)		(4,201)		1.0	%
General and administrative expense	11,655			11,928			(273		)	(2.3	)%	38,808		35,343			3,465			9.8	%	General and administrative expense	(17,676)		(21,291)		3,615		(17.0)	%	(38,076)		(38,712)		636		(1.6)	%
Casualty and impairment loss (gain), net	—			—			—			—	%	11,688		(3,935		)	15,623			N/A (1)
Total other expenses	223,435			212,823			10,612			5.0	%	706,989		626,742			80,247			12.8	%

Equity in income (loss) of unconsolidated real estate entities	52,568			(342		)	52,910			N/A (1)		70,386		54,779			15,607			28.5	%
Casualty loss																						Casualty loss	—		—		—		—	%	(5,051)		—		(5,051)		(100.0)	%
Income from unconsolidated investments																						Income from unconsolidated investments	4,970		2,480		2,490		100.4	%	9,815		2,797		7,018		250.9	%
Gain on sale of communities	27,738			202,163			(174,425		)	(86.3	)%	159,754		284,582			(124,828		)	(43.9	)%	Gain on sale of communities	187,322		404		186,918		N/A (1)		187,309		149,204		38,105		25.5	%
(Loss) gain on sale of other real estate	(120		)	10,778			(10,898		)	N/A (1)		246		10,921			(10,675		)	(97.7	)%
Other real estate activity																						Other real estate activity	341		(28)		369		N/A (1)		470		245		225		91.8	%
Income before income taxes	238,223			356,351			(118,128		)	(33.1	)%	639,276		791,620			(152,344		)	(19.2	)%	Income before income taxes	367,590		138,407		229,183		165.6	%	517,925		402,954		114,971		28.5	%
Income tax expense	24			22			2			9.1	%	102		95			7			7.4	%
Income tax benefit (expense)																						Income tax benefit (expense)	217		159		58		36.5	%	(3,343)		(2,312)		(1,031)		44.6	%
Net income	238,199			356,329			(118,130		)	(33.2	)%	639,174		791,525			(152,351		)	(19.2	)%	Net income	367,807		138,566		229,241		165.4	%	514,582		400,642		113,940		28.4	%

Net loss attributable to noncontrolling interests	49			63			(14		)	(22.2	)%	174		242			(68		)	(28.1	)%	Net loss attributable to noncontrolling interests	116		125		(9)		(7.2)	%	243		93		150		161.3	%

Net income attributable to common stockholders	$	238,248		$	356,392		$	(118,144	)	(33.2	)%	$	639,348	$	791,767		$	(152,419	)	(19.3	)%	Net income attributable to common stockholders	$	367,923	$	138,691	$	229,232	165.3	%	$	514,825	$	400,735	$	114,090	28.5	%

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~~(1)~~	~~Percent change is not meaningful.~~

(1)Percent change is not meaningful.

Net income attributable to common stockholders ~~decreased $118,144,000,~~ increased $229,232,000, or ~~33.2%~~165.3%, to ~~$238,248,000~~$367,923,000 and $114,090,000, or 28.5%, to $514,825,000 for the three and six months ended ~~September~~June 30, ~~2017 and $152,419,000, or 19.3%, to $639,348,000 for the nine months ended September 30, 2017~~2023, respectively, as compared to the ~~respective~~ prior year ~~periods. The decreases for the three and nine months ended September 30, 2017 are~~periods, primarily due to ~~decreases in gains on the sale of consolidated real estate and~~ increases in ~~depreciation, partially offset by increases in NOI, joint venture~~ real estate sales and related gains ~~including our promoted interest,~~and NOI from communities over the prior year periods. The decrease for the nine months ended September 30, 2017 is also due to an increase in debt extinguishment losses and a casualty and impairment loss in the current year period as compared to a gain in the prior year period.

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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 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,~~transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, ~~equity in~~ income ~~(loss) of~~from unconsolidated ~~real estate entities,~~ investments,depreciation expense, ~~corporate~~ income tax (benefit) expense, casualty ~~and impairment~~ loss, ~~(gain), net, (loss)~~ gain on sale of communities, other real estate ~~assets~~activity 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 three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 to net income for each period are as follows (unaudited, dollars in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022

Net income	$	367,807	$	138,566	$	514,582	$	400,642
Property management and other indirect operating expenses, net of corporate income	28,972		30,632		59,756		58,745
Expensed transaction, development and other pursuit costs, net of recoveries	1,261		2,364		4,253		3,351
Interest expense, net	51,585		58,797		108,406		115,323
General and administrative expense	17,676		21,291		38,076		38,712
Income from unconsolidated investments	(4,970)		(2,480)		(9,815)		(2,797)
Depreciation expense	200,546		199,302		405,289		401,088
Income tax (benefit) expense	(217)		(159)		3,343		2,312
Casualty loss	—		—		5,051		—
Gain on sale of communities	(187,322)		(404)		(187,309)		(149,204)
Other real estate activity	(341)		28		(470)		(245)
Net operating income from real estate assets sold or held for sale	(3,977)		(12,252)		(8,781)		(25,521)
NOI	471,020		435,685		932,381		842,406

Commercial NOI (1)	(8,529)		(7,545)		(17,094)		(15,693)
Residential NOI	$	462,491	$	428,140	$	915,287	$	826,713

For the three months ended For the nine months ended
9/30/2017 9/30/2016 9/30/2017 9/30/2016

Net income $ 238,199
$ 356,329
$ 639,174
$ 791,525
Indirect operating expenses, net of corporate income 15,752
14,946
48,472
46,960
Investments and investment management expense 1,501
1,205
4,277
3,545
Expensed acquisition, development and other pursuit costs, net of recoveries 789
3,804
2,087
8,702
Interest expense, net 47,741
47,871
147,138
137,862
Loss on extinguishment of debt, net —
—
24,162
2,461
General and administrative expense 11,655
11,928
38,808
35,343
Equity in (income) loss of unconsolidated real estate entities (52,568 ) 342
(70,386 ) (54,779 )
Depreciation expense 144,990
131,729
427,050
391,414
Income tax expense 24
22
102
95
Casualty and impairment loss (gain), net —
—
11,688
(3,935 )
Gain on sale of real estate assets (27,618 ) (212,941 ) (160,000 ) (295,503 )
Net operating income from real estate assets sold or held for sale (1,874 ) (10,039 ) (9,633 ) (33,175 )
Net operating income $ 378,591
$ 345,196
$ 1,102,939
$ 1,030,515
_________________________

(1)Represents results attributable to the commercial and other non-residential operations at our communities ("Commercial").

The Residential NOI changes for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023 as compared to the ~~prior year periods,~~three and six months ended June 30, 2022 consist of changes in the following categories (unaudited, dollars in thousands):


	For the three months ended June 30,		For the six months ended June 30,
	2023		2023

Same Store	$	22,207	$	63,200
Other Stabilized	8,083		18,978
Development / Redevelopment	4,061		6,396
Total	$	34,351	$	88,574

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For the three months ended For the nine months ended
9/30/2017 9/30/2017

Established Communities $ 5,741
$ 21,744
Other Stabilized Communities (1) 7,047
35,750
Development and Redevelopment Communities (2) 20,607
14,930
Total $ 33,395
$ 72,424
The increase in our Same Store Residential NOI for the three and six months ended June 30, 2023 is due to an increase in Residential rental revenue of $37,080,000, or 6.3%, and $90,737,000 or 7.8%, respectively, partially offset by an increase in Residential property operating expenses of $14,769,000, or 8.2%, and $27,547,000, or 7.7%, over the three and six months ended June 30, 2023, respectively.

~~____________________________~~


~~(1)~~	~~NOI for the nine months ended September 30, 2016 includes $20,306 in business interruption insurance proceeds related to the Edgewater casualty loss.~~


~~(2)~~	~~NOI for the three and nine months ended September 30, 2017 includes $3,495 in business interruption insurance proceeds related to the Maplewood casualty loss.~~

Rental and other income increased in$44,493,000, or 6.9%, and $104,961,000, or 8.4%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, respectively, compared to the prior year periods, primarily due to ~~additional~~the increased rental ~~income generated~~revenue from ~~newly developed, acquired and existing operating~~our stabilized wholly-owned communities, ~~and an increase in rental rates at our Established Communities,~~ discussed below.

Consolidated Communities — The weighted average number of occupied apartment homes for consolidated communities increased to ~~69,284~~77,507 apartment homes for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~67,628~~77,225 homes for the prior year period. The weighted average monthly rental revenue per occupied apartment home increased to ~~$2,557~~$2,922 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$2,464~~$2,709 in the prior year period.

~~Established Communities — Rental~~The following table presents the change in Same Store Residential rental revenue, ~~increased $30,208,000, or 2.6%,~~including the attribution of the change between average rental revenue per occupied home and Economic Occupancy (as defined below) for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to the prior year period due to an increase~~2023 (unaudited, dollars in ~~average rental rates of 2.5% to $2,503 per apartment home and an increase in economic occupancy of 0.1% to 95.5%~~thousands).


	Residential rental revenue										Average rental revenue per occupied home							Economic Occupancy (1)
					$ Change			% Change							% Change					% Change
	For the six months ended June 30,
	2023		2022			2023 to 2022			2023 to 2022		2023		2022			2023 to 2022		2023		2022		2023 to 2022
New England	$	180,559	$	164,074		$	16,485		10.0	%	$	3,256	$	2,938		10.8	%	96.5	%	97.3	%	(0.8)	%
Metro NY/NJ	263,316		239,186			24,130			10.1	%	3,522		3,184			10.6	%	95.9	%	96.4	%	(0.5)	%
Mid-Atlantic	181,394		168,763			12,631			7.5	%	2,380		2,217			7.4	%	95.5	%	95.4	%	0.1	%
Southeast Florida	36,792		32,288			4,504			13.9	%	2,897		2,567			12.9	%	96.8	%	95.8	%	1.0	%
Denver, CO	13,881		12,975			906			7.0	%	2,228		2,074			7.4	%	95.6	%	96.0	%	(0.4)	%
Pacific Northwest	83,400		77,586			5,814			7.5	%	2,667		2,464			8.2	%	95.2	%	95.9	%	(0.7)	%
Northern California	209,996		195,945			14,051			7.2	%	2,995		2,802			6.9	%	96.3	%	96.0	%	0.3	%
Southern California	266,631		255,605			11,026			4.3	%	2,677		2,556			4.7	%	96.1	%	96.5	%	(0.4)	%
Other Expansion Regions	11,417		10,227			1,190			11.6	%	2,160		1,943			11.2	%	95.2	%	94.8	%	0.4	%
Total Same Store	$	1,247,386	$	1,156,649		$	90,737		7.8	%	$	2,889	$	2,672		8.1	%	96.0	%	96.3	%	(0.3)	%

(1) Economic ~~occupancy takes into account the fact~~Occupancy considers that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue. Economic ~~occupancy~~Occupancy 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 leased rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant units at current market rents.

The ~~Metro New York/New Jersey region accounted for approximately 23.0% of Established Community~~following table details the increase in Same Store Residential rental revenue by component, for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017, and experienced an increase in rental revenue of 2.3%~~2023, compared to the prior year ~~period. Average~~periods (unaudited):


	For the three months ended June 30,		For the six months ended June 30,
	2023		2023
Residential rental revenue
Lease rates	6.4	%	7.1	%
Concessions and other discounts	0.5	%	0.9	%
Economic Occupancy	(0.4)	%	(0.3)	%
Other rental revenue	0.9	%	0.9	%
Uncollectible lease revenue (excluding rent relief)	1.1	%	1.3	%
Rent relief	(2.2)	%	(2.1)	%
Total Residential rental revenue	6.3	%	7.8	%

Table of Contents

The increase for Same Store Residential rental ~~rates increased 2.3% to $3,035 per apartment home, and economic occupancy remained consistent at 95.7%~~revenue for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017,~~2023, compared to the prior year ~~period. We expect operating conditions~~periods, was impacted by uncollectible lease revenue, net of amounts received from government rent relief programs. Same Store uncollectible lease revenue increased for the three months ended June 30, 2023 by $6,609,000 and increased for the six months ended June 30, 2023 by $9,442,000. The increase in uncollectible lease revenue was due to a decrease in government rent relief of $13,242,000 and $24,377,000 for the three and six months ended June 30, 2023, respectively, from the prior year periods. Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of Same Store Residential rental revenue decreased to 2.3% in the ~~Metro New York/New Jersey region~~three months ended June 30, 2023 from 3.6% in the three months ended June 30, 2022. Adjusting to ~~remain bifurcated between New York City and surrounding suburban submarkets. Elevated levels~~remove the impact 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 Northern California region accounted for approximately 21.3%~~rent relief, uncollectible lease revenue as a percentage of ~~Established Community~~Same Store Residential rental revenue decreased to 2.6% in the six months ended June 30, 2023 from 4.1% in the six months ended June 30, 2022.

In 2022 and early 2023, we were named as a defendant in cases alleging antitrust violations by RealPage, Inc. and owners and/or operators of multifamily housing which utilize revenue management systems provided by RealPage, Inc. We engaged with the plaintiffs' counsel to explain why we believe that these cases are without merit as they pertain to us. Following these discussions, the plaintiffs filed a notice of voluntary dismissal in July 2023, which resulted in us being dismissed without prejudice from these cases. We are not currently a defendant of any other cases with similar allegations.

Management, development and other fees increased $1,808,000, or 200.0%, and $2,122,000, or 128.1%, for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017, and experienced an increase in rental revenue of 1.5%~~2023, respectively, compared to the prior year period. Average rental rates increased 1.0% to $2,834 per apartment home, and economic occupancy increased 0.5% to 95.7% for the nine months ended September 30, 2017, compared to the prior year period. We expect operating conditions to remain challenged in the Northern California region due to slowing job growth and an increase in competition from new apartment deliveries.

The Southern California region accounted for approximately 21.4% of Established Community rental revenue for the nine months ended September 30, 2017, and experienced an increase in rental revenue of 3.9% compared to the prior year period. Average rental rates increased 4.1% to $2,203 per apartment home, and were partially offset by a 0.2% decrease in economic occupancy to 95.4% for the nine months ended September 30, 2017, compared to the prior year period. We believe stable job and income growth, combined with a modest level of new apartment deliveries, will continue to support a favorable operating environment in the Southern California region.

The New England region accounted for approximately 14.8% of Established Community rental revenue for the nine months ended September 30, 2017, and experienced an increase in rental revenue of 2.7% compared to the prior year period. Average rental rates increased 2.4% to $2,411 per apartment home, and economic occupancy increased 0.3% to 95.7% for the nine months ended September 30, 2017, compared to the prior year period. We expect the operating environment 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 14.2% of Established Community rental revenue for the nine months ended September 30, 2017, and experienced an increase in rental revenue of 1.9% compared to the prior year period. Average rental rates increased 2.0% to $2,151 per apartment home, and were partially offset by a 0.1% decrease in economic occupancy to 95.1% for the nine months ended September 30, 2017, compared to the prior year period. Operating conditions in the Mid-Atlantic region are improving, but we believe elevated levels of new apartment deliveries will continue to affect our ability to increase rental rates in select submarkets.

The Pacific Northwest region accounted for approximately 5.3% of Established Community rental revenue for the nine months ended September 30, 2017, and experienced an increase in rental revenue of 5.4% compared to the prior year period. Average rental rates increased 5.1% to $2,212 per apartment home, and economic occupancy increased 0.3% to 95.3% for the nine months ended September 30, 2017, compared to the prior year period. We expect strong job and income growth in the Pacific Northwest region will continue to produce healthy apartment demand.

~~Management, development and other fees~~ decreased $327,000, or 24.8%, and $1,020,000, or 23.7%, for the three and nine months ended September 30, 2017, respectively, as compared to the prior year periods. The decreases for the three and nine months ended September 30, 2017 areperiods, primarily due to ~~lower property~~development fees for work performed on previously disposed land adjacent to one of our Development Communities and ~~asset management fees earned as~~revenue from a ~~result of dispositions from Fund II and~~third-party servicing agreement we entered into for our centralized service center to provide comprehensive back-office, financial administrative support services in the ~~U.S. Fund.~~current year periods.

Direct property operating expenses, excluding property taxes, increased ~~$4,032,000,~~$13,315,000, or ~~3.8%~~10.7%, and ~~$17,840,000,~~$23,835,000 or ~~5.8%~~9.6%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, respectively, compared to the prior year ~~periods. The increases for the three and nine months ended September 30, 2017 are~~periods, primarily due to the addition of newly developed apartment communities as well as increased operating expenses at our Same Store communities as discussed below.

Same Store Residential direct property operating expenses, excluding property taxes, represents substantially all of total Same Store direct operating expenses, excluding property taxes, for the three and ~~acquired apartment communities.~~

~~For Established Communities,~~six months ended June 30, 2023. Same Store Residential direct property operating expenses, excluding property taxes, increased ~~$545,000,~~$11,466,000, or ~~0.7%~~9.9%, and ~~$5,056,000,~~$21,274,000, or ~~2.2%~~9.3%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, respectively, compared to the prior year ~~periods. The increase for the three months ended September 30, 2017 is~~periods, primarily due to increased utilities, maintenance costs, bad debt associated with resident expense reimbursements and ~~compensation expense, partially offset by decreased turnover, maintenance~~legal and ~~utility costs. The increase for the nine months ended September 30, 2017 is primarily due to increased compensation expense, bad debt and turnover and maintenance~~eviction costs ~~partially offset by decreased property insurance costs.~~as restrictions on managing delinquent accounts are eased or expire.

Property taxes increased ~~$5,360,000,~~$4,122,000, or ~~10.2%~~5.8%, and ~~$10,683,000,~~$7,880,000, or ~~7.0%~~5.6%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, respectively, compared to the prior year ~~periods. The increases for the three and nine months ended September 30, 2017 are~~periods, primarily due to the addition of newly developed ~~and acquired~~ apartment communities, ~~coupled with~~ increased assessments ~~across~~for our ~~portfolio.~~stabilized portfolio and the expiration of property tax incentive programs primarily at certain of our properties in New York City, partially offset by decreased property taxes from dispositions.

~~For Established Communities,~~Same Store Residential property taxes represents substantially all of total Same Store property taxes for the three and six months ended June 30, 2023. Same Store Residential property taxes increased ~~$2,293,000,~~$3,303,000, or ~~6.0%~~5.1%, and ~~$3,330,000,~~$6,273,000, or ~~2.9%~~4.8%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, respectively, compared to the prior year ~~periods. The increases for the three and nine months ended September 30, 2017 are primarily~~periods, due to increased assessments ~~as well as~~across the portfolio, successful appeals in the respective prior year periods ~~in excess~~and the expiration of ~~the current year periods. For communities in California,~~ property tax ~~changes are determined by the change~~incentive programs primarily at certain of our properties 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.New York City.

Corporate-level property management and other indirect operating expenses increased ~~$473,000,~~$3,144,000, or ~~2.9%, and $429,000, or 0.8%~~5.2%, for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017, respectively,~~2023 compared to the prior year ~~periods. The increases for the three and nine months ended September 30, 2017 are~~period, 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 periods, partially offset by severance costs in the prior year period not present in current year period.~~costs.

~~Investments and investment management expense~~ ~~increased by $296,000 or 24.6% and $732,000 or 20.6% due primarily 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. During the three months ended September 30, 2017, we acquired two operating communities, both of which were accounted for as asset acquisitions. Abandoned pursuit costs include costs incurred for development pursuits not yet considered probable for development, as well as ~~the~~write downs and abandonment of Development Rights and ~~disposition pursuits, and also includes~~ costs related to abandoned acquisition ~~pursuits. These~~and disposition pursuits, offset by any recoveries of costs ~~can be volatile, particularly in~~incurred. 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 ~~period~~year to ~~period. These~~year. 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, net of recoveries, decreased ~~$3,015,000, or 79.3%,~~$1,103,000 and ~~$6,615,000, or 76.0%,~~increased $902,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, respectively, compared to the prior year periods. ~~The decreases for the three and nine months ended September~~

30 ~~2017 are primarily due to acquisition costs related to communities acquired during the prior year periods that were expensed prior to the adoption~~

Table of ASU 2017-01. The decrease for the nine months ended September 30, 2017, is also due to 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.Contents

Interest expense, netdecreased ~~$130,000,~~$7,212,000, or ~~0.3%~~12.3%, and ~~increased $9,276,000,~~$6,917,000, or ~~6.7%~~6.0%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, respectively, compared to the prior year periods. 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 decrease for the three and six months ended ~~September~~June 30, ~~2017~~2023 is primarily due ~~to a decrease in amounts of secured debt outstanding. The increase for the nine months ended September 30, 2017 is due to~~ an increase in ~~outstanding indebtedness, as well as a decrease~~interest income from an increase in both cash amounts ~~of interest capitalized.~~

~~Loss on extinguishment of debt, net~~ reflects prepayment penalties, the write-off of unamortized deferred financing costs and premiums from our debt repurchase and retirement activity, and payments to acquire our outstanding debt at amounts above or below the carrying basis of the debt acquired, excluding costs related to debt secured by assets sold or held for sale. The loss of $24,162,000 for the nine months ended September 30, 2017 was due to prepayment penalties of $33,515,000invested and the non-cash write-off of deferred financing costs of $1,450,000 associated 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 wasreturn on investments and capitalized interest, partially offset by ~~a gain of $10,839,000, primarily composed of~~ the ~~write-off of unamortized premium~~increase in variable rates on ~~the repayment of $670,590,000 principal amount of fixed rate mortgage notes~~unsecured and secured ~~by 11 wholly-owned operating communities in advance of their November 2017 maturity dates.~~indebtedness.

Depreciation expense increased ~~$13,261,000,~~$1,244,000, or ~~10.1%~~0.6%, and ~~$35,636,000,~~$4,201,000, or ~~9.1%~~1.0%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, respectively, compared to the prior year periods, primarily due to the addition of newly developed ~~and acquired~~ apartment ~~communities.~~communities, partially offset by dispositions.

General and administrative expense ~~("G&A")~~ decreased ~~$273,000,~~$3,615,000, or ~~2.3%, and increased $3,465,000, or 9.8%~~17.0%, for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2023, as compared to the prior year period, primarily due to a decrease in compensation related expenses including expenses related to executive transition compensation costs in the current year period.

Casualty loss of $5,051,000 for the six months ended June 30, 2023 is due to charges recognized for the damages across certain of our communities in our Northeast and California regions related to severe weather.

Income from unconsolidated investments increased $2,490,000 and $7,018,000 for the three and six months ended June 30, 2023, respectively, compared to the prior year ~~periods. The decrease for the three months ended September 30, 2017 is~~periods, primarily due to ~~decreased legal~~unrealized gains on property technology investments recognized in the current year periods and ~~professional fees, partially offset by~~the recognition of $1,072,000 for our promoted interest associated with the achievement of a threshold return with the U.S. Fund in the current year periods.

Gain on sale of communities increased ~~compensation related expenses. The increase for the nine months ended September 30, 2017 is primarily due to an increase in compensation related expenses, legal~~$186,918,000 and ~~professional fees, and sales and use tax expense.~~

~~Casualty and impairment loss (gain), net~~ ~~for the nine months ended September 30, 2017~~consists of an impairment charge recognized for a land parcel we had acquired for development and sold in July 2017, as well as the Maplewood casualty loss, which was partially offset by expected insurance proceeds, a portion of which were received during the three and nine months ended September 30, 2017. Casualty and impairment (gain) loss, net$38,105,000 for the three and ~~nine~~six months ended ~~September~~June 30, 2016, consists of net third-party insurance proceeds related to severe winter storms that occurred in 2015 in our Northeast markets, partially offset by impairment charges recognized for ancillary land parcels. For the nine months ended September 30, 2016, casualty and impairment (gain) loss, net also includes property damage insurance proceeds from the final insurance settlement for the Edgewater casualty loss.

~~Equity in income (loss) of unconsolidated real estate entities~~ ~~increased $52,910,000 and $15,607,000 for the three and nine months ended September 30, 2017,~~2023, respectively, compared to the prior year periods. The increases for the three and nine months ended September 30, 2017 are primarily due to gains on the sale of communities in various ventures in the current year year periods, as well as recognition of income for the Company's promoted interest, partially offset by decreased NOI from the ventures due to disposition activity in 2016 and 2017.

~~Gain on sale of communities~~ ~~decreased for the three and nine months ended September 30, 2017~~ compared to the prior year periods. 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.

~~Gain on sale~~ The gains of ~~other real estate~~ ~~decreased~~$187,322,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 compared~~2023 were primarily due to the ~~prior year periods.~~sale of two wholly-owned communities. The ~~gains~~gain of ~~$10,778,000 and $10,921,000~~$149,204,000 for the six months ended June 30, 2022 was primarily due to the sale of three wholly-owned communities.

Income tax benefit (expense) for the six months ended June 30, 2023 and ~~nine ended September 30, 2016 are~~2022 is an expense of $3,343,000 and $2,312,000, respectively, primarily ~~composed of the gain on the land we sold~~related to ~~an unconsolidated joint venture.~~The Park Loggia.

~~Reconciliation of~~ 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"~~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 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

•similar adjustments for unconsolidated partnerships and joint ~~ventures.~~ventures, including those from a change in control.

FFO ~~and FFO adjusted for non-core items, or "Core FFO," as defined below, are generally considered by management to be appropriate supplemental measures~~can help with the comparison of ~~our~~the operating and financial ~~performance. In calculating FFO, we exclude~~performance of a real estate company between periods or as compared to different companies because the adjustments such as (i) excluding gains or losses ~~related to dispositions~~on sales of previously depreciated property ~~and exclude~~or (ii) real estate depreciation ~~which~~may impact comparability as the amount and timing of these or similar items 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~~we do not ~~considered~~consider part of our core business operations, Core FFO ~~allows one to compare~~can help with the comparison of our core operating performance ~~of the Company between periods.~~year over year. We believe that, in order to understand our operating results, FFO and Core FFO should be ~~examined~~considered in conjunction with net income as presented in ~~our~~the Condensed Consolidated ~~Financial~~ Statements of Comprehensive Income included elsewhere in this report.

Table of Contents

We calculate Core FFO as FFO, adjusted for:

•joint venture gains (if not adjusted through FFO), non-core costs and promoted ~~interests;~~interests from partnerships;

•casualty and impairment losses or gains, ~~net;~~net on non-depreciable real estate or other investments;

•gains or losses from early extinguishment of consolidated borrowings;

~~abandoned pursuits;~~•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;~~settlement activity;

•gains or losses on sales of assets not subject to ~~depreciation;~~depreciation and other investment gains or losses;

•advocacy contributions, representing payments to promote our business interests;

•hedge ~~ineffectiveness;~~ineffectiveness or gains or losses from derivatives not designated as hedges for accounting purposes;

•expected credit losses associated with the lending commitments under the SIP;

•severance related costs;

~~expensed acquisition~~•executive transition compensation costs;

•net for-sale condominium activity, including gains, marketing, operating and administrative costs ~~related to business acquisitions that occurred prior to the adoption of ASU 2017-01 as of October 1, 2016;~~ and imputed carry cost; and

~~other non-core items.~~•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 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.

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 (unaudited, dollars in thousands, except per share amounts):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022

Net income attributable to common stockholders	$	367,923	$	138,691	$	514,825	$	400,735
Depreciation - real estate assets, including joint venture adjustments	199,197		198,493		402,477		399,145
Distributions to noncontrolling interests	13		12		25		24
Loss (gain) on sale of previously depreciated real estate	(187,322)		(404)		(187,309)		(149,204)
Casualty loss on real estate	—		—		5,051		—
FFO attributable to common stockholders	379,811		336,792		735,069		650,700

Adjusting items:
Unconsolidated entity gains, net (1)	(1,795)		(2,040)		(4,851)		(2,295)
Joint venture promote (2)	(1,072)		—		(1,072)		—
Structured Investment Program loan reserve (3)	(105)		1,608		(124)		1,608
Hedge accounting activity	(37)		297		191		(432)
Advocacy contributions	200		384		200		534
Executive transition compensation costs	297		407		644		809
Severance related costs	327		24		1,500		65
Expensed transaction, development and other pursuit costs, net of recoveries	797		1,839		3,248		1,998
Other real estate activity	(341)		28		(470)		(245)
For-sale condominium imputed carry cost (4)	169		716		424		1,635
Legal settlements	148		129		50		259
Income tax (benefit) expense (5)	(217)		(159)		3,343		2,312
Core FFO attributable to common stockholders	$	378,182	$	340,025	$	738,152	$	656,948

Weighted average common shares outstanding - diluted	142,124,117		139,934,478		141,073,964		139,955,280

EPS per common share - diluted	$	2.59	$	0.99	$	3.65	$	2.86
FFO per common share - diluted	$	2.67	$	2.41	$	5.21	$	4.65
Core FFO per common share - diluted	$	2.66	$	2.43	$	5.23	$	4.69

For the three months ended For the nine months ended
9/30/2017 9/30/2016 9/30/2017 9/30/2016

Net income attributable to common stockholders $ 238,248
$ 356,392
$ 639,348
$ 791,767
Depreciation - real estate assets, including joint venture adjustments 144,409
135,275
426,494
397,834
Distributions to noncontrolling interests 11
10
32
30
Gain on sale of unconsolidated entities holding previously depreciated real estate (31,413 ) —
(40,110 ) (53,172 )
Gain on sale of previously depreciated real estate (27,738 ) (202,163 ) (159,754 ) (284,582 )
Casualty and impairment (recovery) loss, net on real estate (1)(6) —
—
—
(4,195 )
FFO attributable to common stockholders 323,517
289,514
866,010
847,682

Adjusting items:
Joint venture losses (2) 430
195
811
5,763
Joint venture promote (3) (19,977 ) —
(26,742 ) (3,447 )
Impairment loss on real estate (4)(6) —
—
9,350
10,500
Casualty loss (gain), net on real estate (5)(6) —
—
2,338
(10,239 )
Business interruption insurance proceeds (7) (3,495 ) (78 ) (3,495 ) (20,422 )
Lost NOI from casualty losses covered by business interruption insurance (8) 2,375
1,877
6,242
5,580
Loss on extinguishment of consolidated debt —
—
24,162
2,461
Hedge ineffectiveness —
—
(753 ) —
Severance related costs 18
346
153
907
Development pursuit and other write-offs 339
2,998
1,174
3,769
Loss (gain) on sale of other real estate 120
(10,778 ) (246 ) (10,921 )
Acquisition costs —
635
—
2,564
Legal settlements 7
—
91
—
Core FFO attributable to common stockholders $ 303,334
$ 284,709
$ 879,095
$ 834,197

Weighted average common shares outstanding - diluted 138,307,046
137,505,054
138,006,192
137,442,306

EPS per common share - diluted $ 1.72
$ 2.59
$ 4.63
$ 5.76
FFO per common share - diluted $ 2.34
$ 2.11
$ 6.28
$ 6.17
Core FFO per common share - diluted $ 2.19
$ 2.07
$ 6.37
$ 6.07

Table of Contents

_________________________

(1)Amounts consist primarily of net unrealized gains on technology investments.

~~(1)~~

During the nine months ended September 30, 2016, we received insurance proceeds, net of additional costs incurred, of $5,732 related to the severe winter storms that occurred in our Northeast markets in 2015. For the nine months ended September 30, 2016, we recognized $4,195 of this recovery as an offset to the impairment on depreciable real estate of $4,195 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.

~~(2)~~

Amounts for the three and nine months ended September 30, 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.


~~(3)~~	~~Amounts are composed of our recognition of our promoted interest in Fund II.~~


~~(4)~~	Amount for the nine months ended September 30, 2017 includes an impairment charge for a land parcel we had acquired for development and sold in July 2017. Amount for the nine months ended September 30, 2016 includes impairment charges relating to ancillary land parcels.

~~(5)~~

Amount for the nine months ended September 30, 2017 includes $19,481 for the Maplewood casualty loss, partially offset by $17,143 of expected property damage insurance proceeds, a portion of which was received during the period. Amount for the nine months ended September 30, 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.

(2)Amount is for our recognition of our promoted interest in the U.S. Fund.


~~(6)~~	The aggregate impact of (i) casualty and impairment (recovery) loss, net on real estate, (ii) impairment loss on real estate and (iii) casualty loss (gain), net on real estate, is a loss of $11,688 for the nine months ended September 30, 2017 and a gain of $3,935 for the nine months ended September 30, 2016.


~~(7)~~	Amounts for the three and nine months ended September 30, 2017 are composed of business interruption insurance proceeds resulting from the final insurance settlement of the Maplewood casualty loss. Amount for the nine months ended September 30, 2016 is primarily composed of business interruption insurance proceeds resulting from the final insurance settlement of the Edgewater casualty loss.

~~(8)~~

Amounts 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. Amounts for the three and nine months ended September 30, 2017 also include amounts related to the Maplewood casualty loss in Q1 2017, for which the Company recognized $3,495 in business interruption insurance proceeds in Q3 2017.

(3)Amounts are the expected credit losses associated with the lending commitments under our SIP. The timing and amount of actual losses that will be incurred, if any, is to be determined.

(4)Represents the imputed carry cost of for-sale residential condominiums at The Park Loggia. We computed this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by our weighted average unsecured debt rate.

(5)Amounts are primarily for the recognition of taxes associated with The Park Loggia.

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 as follows (unaudited, dollars in thousands) and a discussion of "Liquidity and Capital Resources" can be found later in this report:~~

For the three months ended For the nine months ended
9/30/2017 9/30/2016 9/30/2017 9/30/2016
Net cash provided by operating activities (1) $ 355,213
$ 307,549
$ 917,573
$ 860,727
Net cash used in investing activities $ (309,617 ) $ (154,100 ) $ (676,231 ) $ (866,591 )
Net cash used in financing activities (1) $ (63,031 ) $ (269,856 ) $ (420,294 ) $ (328,744 )

~~_________________________~~


~~(1)~~	2016 amounts reflect certain reclassifications as a result of the retrospective adjustment of the presentation of payments related to tax withholding for share-based compensation. Refer to Note 1, "Organization, Basis of Presentation and Significant Accounting Policies, Change in Accounting Principle," of the Condensed Consolidated Financial Statements included elsewhere in this report.

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 effective alternative ~~then~~ available and our desire to maintain a balance sheet that provides us with flexibility. Our principal ~~short-term~~focus on near-term and intermediate-term liquidity ~~needs are~~is 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 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 been~~Cash flows from operations are determined ~~by:~~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, are~~is 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 ~~regularly~~frequently 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 ~~unrestricted~~ cash, cash equivalents and cash ~~equivalents~~in escrow of ~~$36,042,000~~$946,998,000 at ~~September~~June 30, ~~2017, a decrease~~2023, an increase of ~~$178,952,000~~$212,753,000 from ~~$214,994,000~~$734,245,000 at December 31, ~~2016. As presented in our Condensed Consolidated Statements of Cash Flows included elsewhere in this report, the~~2022. The following discussion relates to changes in cash, cash equivalents and cash in escrow due to operating, investing and financing activities.

~~Operating Activities —~~ A presentation of GAAP based cash flow metrics is as follows (unaudited, dollars in thousands):


	For the six months ended June 30,
	2023		2022
Net cash provided by operating activities	$	742,579	$	640,048
Net cash used in investing activities	$	(297,877)	$	(356,508)
Net cash used in financing activities	$	(231,949)	$	(567,137)

•Net cash provided by operating activities increased primarily due to $917,573,000 for the nine months ended September 30, 2017 from $860,727,000 for the nine months ended September 30, 2016. The change was driven primarily by increased NOI from existing, acquired and newly developed communities.increases in NOI.

~~Investing Activities —~~ •Net cash used in investing activities ~~totaled $676,231,000 for the nine months ended September 30, 2017. The net cash used~~ was primarily due ~~to:~~

to (i) investment of ~~$743,275,000~~$453,139,000 in the development and redevelopment of ~~communities;~~

~~acquisition~~communities and (ii) capital expenditures of $81,852,000 for our wholly-owned communities and non-real estate assets. These amounts were partially offset by net proceeds from the disposition of two operating communities ~~for $228,011,000;~~ and the sale of for-sale residential condominiums of $252,904,000.

~~capital expenditures~~

Table of ~~$47,117,000 for our operating communities and non-real estate assets.~~Contents

~~These amounts are partially offset by:~~

~~proceeds from dispositions, net of amounts held in escrow related to a planned tax deferred exchange, of $285,063,000; and~~

~~net distributions from unconsolidated real estate entities of $74,745,000.~~

~~Financing Activities —~~ •Net cash used in financing activities ~~totaled $420,294,000 for the nine months ended September 30, 2017. The net cash used~~ was primarily due ~~to:~~

~~the repayment of secured notes in the amount of $1,287,636,000; and~~

to (i) payment of cash dividends in the amount of ~~$576,685,000.~~

$454,323,000 and (ii) the repayment of the $250,000,000 fixed rate unsecured notes. These amounts ~~are~~were partially offset ~~by:~~by the settlement of the Equity Forward for $491,912,000.

~~proceeds from the issuance of unsecured notes and borrowing under the $250 million Term Loan in the aggregate amount of $948,616,000;~~

~~borrowings under the Credit Facility of $242,000,000;~~

~~the issuance of secured notes in the amount of $185,100,000; and~~

~~the issuance of common stock in the amount of $110,117,000, primarily through CEP IV.~~

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 6.12% at July 31, 2023 and is composed of (i) SOFR 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 and unsubordinated long-term indebtedness. 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 and unsubordinated long-term indebtedness. 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, until the next determination that is expected to occur in the third quarter of 2024, due to our achievement of sustainability targets.

The availability on the Credit Facility as of July 31, 2023 is as follows (dollars in thousands):


	July 31, 2023

Credit Facility commitment	$	2,250,000
Credit Facility outstanding	—
Commercial paper outstanding	—
Letters of credit outstanding (1)	(1,914)
Total Credit Facility available	$	2,248,086

(1)In addition, we had $52,682 outstanding in additional letters of credit unrelated to the Credit Facility as of July 31, 2023.

Commercial Paper Program

We have a ~~$1,500,000,000 revolving variable rate unsecured credit facility~~Commercial Paper Program with ~~a syndicate of banks (the "Credit Facility") which matures in April 2020. We may extend~~ the ~~maturity for up~~maximum aggregate face or principal amount outstanding at any one time not to ~~nine months, provided we are not in default and upon payment of a $1,500,000 extension fee.~~exceed $500,000,000. The ~~Credit Facility bears interest at varying levels based on the London Interbank Offered Rate ("LIBOR"), rating levels achieved on~~Commercial Paper Program is backstopped by our ~~unsecured notes and on a maturity schedule selected by us. The current stated pricing is LIBOR plus 0.825% per annum (2.07% at October 31, 2017), assuming a one month~~commitment to maintain 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 borrowings of $434,000,000 outstanding~~capacity under the Credit Facility ~~and had $44,937,000~~in an amount equal to actual borrowings under the Commercial Paper Program. As of July 31, 2023, we did not have any amounts outstanding ~~in letters of credit that reduced our borrowing capacity as of October 31, 2017.~~under the Commercial Paper Program.

Financial Covenants

We are subject to financial ~~and other~~ covenants contained in the Credit Facility ~~the Term Loans~~ and the ~~indenture~~Commercial Paper Program, Term Loan and the indentures 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 ~~September~~June 30, ~~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.

Table of Contents

Continuous Equity Offering Program

~~In December 2015, we commenced a fourth continuous equity program ("~~Under the CEP, ~~IV") under which~~ we may sell (and/or enter into forward sale agreements ~~for)~~for the sale of) up to $1,000,000,000 of our common stock from time to time. ~~Actual~~During the three and six months ended June 30, 2023 and through July 31, 2023, we did not have any sales will depend on a variety of factors to be determined, including market conditions, the trading price of our common stock and determinations of the appropriate sources of funding. In conjunction with CEP IV, we engaged sales agents who will receive compensation of up to 2.0% of the gross sales price for shares sold. 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 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, 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% of the sales prices of all borrowed shares of common stock sold.under this program. As of ~~October~~July 31, 2017, there are no outstanding forward sales agreements. During the nine months ended September 30, 2017, we sold 568,424 shares at an average sales price of $188.39 per share, for net proceeds of $105,478,000. As of October 31, 2017,2023, we had ~~$892,915,000 of shares~~$705,961,000 remaining authorized for issuance under this program.

Forward Equity Offering

In addition to the CEP, during the three months ended June 30, 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

Under the Stock Repurchase Program, we may acquire shares of our common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000. During the three and six months ended June 30, 2023, we repurchased 4,800 and 11,800 shares of common stock, respectively, at an average price of $162.93 per share and $161.96 per share, respectively. In July 2023 through July 31, 2023, we had no repurchases of shares under this program. As of July 31, 2023, we had $314,237,000 remaining authorized for purchase under this program.

Interest Rate Swap Agreements

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we entered into $50,000,000 and ~~$300,000,000,~~$250,000,000, respectively, of new forward interest rate swap agreements ~~executed~~ to reduce the impact of variability in interest rates on a portion of our ~~expected~~anticipated future debt issuance activity in ~~2018.~~

As described in this paragraph, during the nine months ended September 30, 2017, we settled an aggregate of $800,000,000 of forward interest rate swap agreements, receiving net aggregate payments of $391,000. 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 $400,000,000 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. In conjunction with our June 2017 unsecured note issuance, we 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 $4,078,000.

~~As of September 30, 2017, we have $300,000,000 in aggregate outstanding forward interest rate swap agreements. At maturity of the remaining outstanding swap agreements, we~~2023 and 2024. We expect to cash settle the ~~contracts~~swaps 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.

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~~During the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~

~~In February 2017,~~2023, we repaid ~~$17,300,000 of variable rate debt secured by Avalon Mountain View at par at its scheduled maturity date.~~

~~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 balance.

~~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~~our 2.85% 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.~~upon maturity.

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 Company's Freddie Mac cross-collateralized pool financing originated in 2009, in advance of their May 2019 maturity dates. 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.

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 ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 (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 - Development Communities" for further discussion of the construction loan).

Table of Contents

All-In
interest
rate (1) Principal
maturity
date Balance Outstanding Scheduled Maturities
Community 12/31/2016 9/30/2017 2017 2018 2019 2020 2021 Thereafter
Tax-exempt bonds (2)

Fixed rate

Avalon Oaks West 7.55 % Apr-2043
$ 15,420
$ 15,270
$ 58
$ 241
$ 257
$ 275
$ 293
$ 14,146
Avalon at Chestnut Hill 6.16 % Oct-2047
38,564
38,227
130
536
566
596
629
35,770
Avalon Westbury 3.81 % Nov-2036 (3) 62,200
62,200
—
—
—
—
—
62,200

116,184
115,697
188
777
823
871
922
112,116

Variable rate

Avalon Mountain View 1.42 % Feb-2017 (4) 17,300
—
—
—
—
—
—
—
Eaves Mission Viejo 1.97 % Jun-2025 (5) 7,635
7,635
—
—
—
—
—
7,635
AVA Nob Hill 1.98 % Jun-2025 (5) 20,800
20,800
—
—
—
—
—
20,800
Avalon Campbell 2.30 % Jun-2025 (5) 38,800
38,800
—
—
—
—
—
38,800
Eaves Pacifica 2.32 % Jun-2025 (5) 17,600
17,600
—
—
—
—
—
17,600
Avalon Bowery Place I 3.78 % Nov-2037 (5) 93,800
93,800
—
—
—
—
—
93,800
Avalon Acton 2.59 % Jul-2040 (5) 45,000
45,000
—
—
—
—
—
45,000
Avalon Morningside Park 2.10 % May-2046 (3) 100,000
100,000
—
—
—
—
345
99,655
Avalon Clinton North 2.63 % Nov-2038 (5) 147,000
147,000
—
—
—
—
—
147,000
Avalon Clinton South 2.63 % Nov-2038 (5) 121,500
121,500
—
—
—
—
—
121,500
Avalon Midtown West 2.54 % May-2029 (5) 100,500
100,500
—
—
—
—
—
100,500
Avalon San Bruno I 2.52 % Dec-2037 (5) 64,450
64,450
—
—
—
—
—
64,450
Avalon Calabasas 2.47 % Apr-2028 (5) 44,410
44,410
—
—
—
—
—
44,410
818,795
801,495
—
—
—
—
345
801,150
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
Avalon Orchards 7.80 % Jul-2033
16,075
15,717
138
577
619
663
710
13,010
Avalon Walnut Creek 4.00 % Jul-2066
3,420
3,557
—
—
—
—
—
3,557
Avalon Mission Oaks 6.04 % May-2019 (6) 19,545
—
—
—
—
—
—
—
Avalon Stratford 6.02 % May-2019 (6) 38,221
—
—
—
—
—
—
—
AVA Belltown 6.00 % May-2019 (6) 60,766
—
—
—
—
—
—
—
Avalon Encino 6.06 % May-2019 (6) 33,882
—
—
—
—
—
—
—
Avalon Run East 5.95 % May-2019 (6) 36,305
—
—
—
—
—
—
—
Avalon Wilshire 6.18 % May-2019 (6) 61,268
—
—
—
—
—
—
—
Avalon at Foxhall 6.06 % May-2019 (6) 54,583
—
—
—
—
—
—
—
Avalon at Gallery Place 6.06 % May-2019 (6) 42,410
—
—
—
—
—
—
—
Avalon at Traville 5.91 % May-2019 (6) 71,871
—
—
—
—
—
—
—
Avalon Bellevue 5.92 % May-2019 (6) 24,695
—
—
—
—
—
—
—
Avalon on the Alameda 5.91 % May-2019 (6) 49,930
—
—
—
—
—
—
—
Avalon at Mission Bay I 5.90 % May-2019 (6) 67,772
—
—
—
—
—
—
—
AVA Pasadena 4.06 % Jun-2018
11,287
11,128
54
11,074
—
—
—
—
Avalon La Jolla Colony 3.36 % Nov-2017 (6) 26,682
—
—
—
—
—
—
—
Eaves Old Town Pasadena 3.36 % Nov-2017 (6) 14,120
—
—
—
—
—
—
—
Eaves Thousand Oaks 3.36 % Nov-2017 (6) 26,392
—
—
—
—
—
—
—

Archstone Lexington 3.36 % Nov-2017 (7) 21,601
21,601
21,601
—
—
—
—
—
Eaves Los Feliz 3.36 % Nov-2017 (6) 41,302
—
—
—
—
—
—
—
Avalon Oak Creek 3.36 % Nov-2017 (6) 69,696
—
—
—
—
—
—
—
Avalon Del Mar Station 3.36 % Nov-2017 (6) 70,854
—
—
—
—
—
—
—
Avalon Courthouse Place 3.36 % Nov-2017 (6) 118,112
—
—
—
—
—
—
—
Avalon Pasadena 3.36 % Nov-2017 (6) 25,805
—
—
—
—
—
—
—
Eaves West Valley 3.36 % Nov-2017 (6) 146,696
—
—
—
—
—
—
—
Eaves Woodland Hills 3.36 % Nov-2017 (6) 98,732
—
—
—
—
—
—
—
Avalon Russett 3.36 % Nov-2017 (6) 32,199
—
—
—
—
—
—
—
Eaves Los Feliz 3.68 % Jun-2027 (8) —
41,400
—
—
—
—
—
41,400
Eaves Woodland Hills 3.66 % Jun-2027 (8) —
111,500
—
—
—
—
—
111,500
Avalon Russett 3.62 % Jun-2027 (8) —
32,200
—
—
—
—
—
32,200
Avalon San Bruno II 3.85 % Apr-2021
30,001
29,663
130
534
564
591
27,844
—
Avalon Westbury 4.88 % Nov-2036 (3) 17,745
16,780
329
1,358
1,426
1,499
1,574
10,594
Avalon San Bruno III 3.18 % Jun-2020
54,408
53,617
302
1,226
1,264
50,825
—
—
Avalon Andover 3.29 % Apr-2018
13,844
13,585
88
13,497
—
—
—
—
Avalon Natick 3.14 % Apr-2019
14,170
13,917
86
349
13,482
—
—
—
Avalon Hoboken 3.55 % Dec-2020
67,904
67,904
—
—
—
67,904
—
—
Avalon Columbia Pike 3.24 % Nov-2019
70,019
69,019
381
1,553
67,085
—
—
—

5,752,312
5,401,588
23,109
30,168
84,440
771,482
280,128
4,212,261

Variable rate

Avalon Calabasas 2.41 % Aug-2018 (5) 53,570
52,407
311
52,096
—
—
—
—
Avalon Natick 3.56 % Apr-2019 (5) 35,897
35,256
216
884
34,156
—
—
—
Term Loan - $300 million 2.78 % Mar-2021
300,000
300,000
—
—
—
—
300,000
—
Term Loan - $100 million 2.33 % Feb-2022
—
100,000
—
—
—
—
—
100,000
Term Loan - $150 million 2.87 % Feb-2024
—
150,000
—
—
—
—
—
150,000

389,467
637,663
527
52,980
34,156
—
300,000
250,000

Total indebtedness - excluding Credit Facility
$ 7,076,758
$ 6,956,443
$ 23,824
$ 83,925
$ 119,419
$ 772,353
$ 581,395
$ 5,375,527


	All-In interest rate (1)		Principal maturity date		Balance Outstanding (2)				Scheduled Maturities
					12/31/2022		6/30/2023		2023		2024		2025		2026		2027		Thereafter
Tax-exempt bonds
Variable rate
Avalon Acton	5.05	%	Jul-2040	(3)	$	45,000	$	45,000	$	—	$	—	$	—	$	—	$	—	$	45,000
Avalon Clinton North	5.70	%	Nov-2038	(3)	147,000		147,000		—		—		—		—		700		146,300
Avalon Clinton South	5.70	%	Nov-2038	(3)	121,500		121,500		—		—		—		—		600		120,900
Avalon Midtown West	5.65	%	May-2029	(3)	82,700		76,600		—		6,800		7,300		8,100		8,800		45,600
Avalon San Bruno I	5.59	%	Dec-2037	(3)	60,950		59,650		900		2,300		2,400		2,500		2,800		48,750
					457,150		449,750		900		9,100		9,700		10,600		12,900		406,550
Conventional loans
Fixed rate
$250 million unsecured notes	—	%	Mar-2023	(4)	250,000		—		—		—		—		—		—		—
$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		—		—		—		—		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
Avalon Walnut Creek	4.00	%	Jul-2066		4,327		4,327		—		—		—		—		—		4,327
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
					7,770,677		7,520,677		350,000		300,000		825,000		775,000		636,100		4,634,577

Variable rate
Term Loan - $150 million	6.16	%	Feb-2024		150,000		150,000		—		150,000		—		—		—		—

Total indebtedness - excluding Credit Facility and Commercial Paper					$	8,377,827	$	8,120,427	$	350,900	$	459,100	$	834,700	$	785,600	$	649,000	$	5,041,127

_________________________

(1)Rates are as of June 30, 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.


~~(1)~~	Rates are given as of September 30, 2017. 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 $42,909 and $36,698 as of September 30, 2017 and December 31, 2016, respectively, and deferred financing costs and debt discount associated with secured notes of $27,504 as of September 30, 2017, and deferred financing costs net of premium of $9,180 as of December 31, 2016, as reflected on our Condensed Consolidated Balance Sheets included elsewhere in this report.


~~(3)~~	~~Maturity date reflects the contractual maturity of the underlying bond. There is also an associated earlier credit enhancement maturity date.~~


~~(4)~~	~~In February 2017, we repaid this borrowing at par at its scheduled maturity date.~~


~~(5)~~	~~Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement.~~


~~(6)~~	~~During the nine months ended September 30, 2017, we repaid this borrowing in advance of its scheduled maturity date.~~


~~(7)~~	~~In October 2017, we obtained a variable rate secured note in the amount of $21,700,000 that matures in October 2020, in association with the refinancing of this borrowing.~~


~~(8)~~	~~In May 2017, we repaid a borrowing secured by this community and subsequently refinanced the secured borrowing.~~

(2)Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $44,307 and $47,695 as of June 30, 2023 and December 31, 2022, respectively, and deferred financing costs and debt discount associated with secured notes of $13,421 and $14,087 as of June 30, 2023 and December 31, 2022, respectively, as reflected on our Condensed Consolidated Balance Sheets included elsewhere in this report.

(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.

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. As of June 30, 2023, other than as discussed in this Form 10-Q, there have been no other material changes in our scheduled contractual obligations as disclosed in our Form 10-K.

Table of Contents

Future Financing and Capital Needs — Portfolio and Capital Markets Activity

~~During~~We invest in various real estate and real estate related investments, which include (i) the ~~remainder~~acquisition, development and redevelopment of ~~2017,~~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 2023, we expect to continue to meet our liquidity needs from one or more of a variety of internal and external sources, which may include (i) real estate dispositions, (ii) cash balances on hand as well as cash generated from our operating activities, (iii) borrowing capacity under ~~our~~the Credit Facility, (iv) borrowings under the Commercial Paper Program and ~~(iv)~~(v) secured and unsecured debt financings. Additional sources of liquidity in ~~2017~~2023 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 ~~intend~~plan to ~~plan adequate financing~~source 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~~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 other 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 ~~the past business cycle~~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 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.

Table of Contents

Unconsolidated Real Estate Investments and Off-Balance Sheet Arrangements

Unconsolidated Investments - Operating Communities

~~Fund II was established to engage~~As of June 30, 2023, we had investments in athe following unconsolidated real estate ~~acquisition program through a discretionary investment fund. We believe~~entities accounted for under the equity method of accounting, excluding development joint ventures. See Note 5, "Investments," of the Condensed Consolidated Financial Statements included elsewhere in this ~~investment format provides~~report. For joint ventures holding operating apartment communities as of June 30, 2023, detail of the real estate and associated indebtedness underlying our unconsolidated investments is presented in the following ~~attributes: (i) third-party joint venture equity~~table (dollars in thousands).


	Company ownership percentage		# of apartment homes	Total capitalized cost		Debt (1)
						Principal Amount			Interest rate		Maturity date
Unconsolidated Real Estate Investments								Type

NYTA MF Investors, LLC
1. Avalon Bowery Place I - New York, NY			206	$	214,791	$	93,800	Fixed	4.01	%	Jan 2029
2. Avalon Bowery Place II - New York, NY			90	91,326		39,639		Fixed	4.01	%	Jan 2029
3. Avalon Morningside - New York, NY (2)			295	211,763		111,530		Fixed	3.55	%	Jan 2029/May 2046
4. Avalon West Chelsea - New York, NY (3)			305	129,086		66,000		Fixed	4.01	%	Jan 2029
5. AVA High Line - New York, NY (3)			405	122,256		84,000		Fixed	4.01	%	Jan 2029
Total NYTA MF Investors, LLC	20.0	%	1,301	769,222		394,969			3.88	%

Other Operating Joint Ventures
1. MVP I, LLC - Avalon at Mission Bay II - San Francisco, CA	25.0	%	313	129,466		103,000		Fixed	3.24	%	Jul 2025
2. Brandywine Apartments of Maryland, LLC - Brandywine - Washington, D.C.	28.7	%	305	19,670		19,399		Fixed	3.40	%	Jun 2028
3. Avalon Alderwood MF Member, LLC - Avalon Alderwood Place - Lynnwood, WA	50.0	%	328	108,786		—		N/A	N/A		N/A
Total Other Joint Ventures			946	257,922		122,399			3.27	%

Total Unconsolidated Real Estate Investments (4)			2,247	$	1,027,144	$	517,368		3.73	%

_____________________________

(1)We have 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 ~~an additional source~~ of ~~financing~~June 30, 2023.

(3)Borrowing on this dual-branded community is comprised of a single mortgage loan. This dual-branded community is subject to ~~expand and diversify our portfolio; (ii) additional sources of income~~a leasehold interest which is not included in the ~~form~~total capitalized cost.

(4)In addition to leasehold assets, there were net other assets of ~~property management~~$37,641 as of June 30, 2023 associated with our unconsolidated real estate investments which are primarily cash and asset management fees and, potentially, incentive distributions if the performance exceeds certain thresholds; and (iii) additional visibility into the transactions occurring in multifamily assets that helps us with other investment decisions related to our wholly-owned portfolio.cash equivalents.

~~Fund II has six institutional investors, including us. One of our wholly-owned subsidiaries is the general partner of Fund II and we~~We have an equity ~~investment~~interest of ~~$2,657,000 (net of distributions), representing a 31.3% combined general partner~~28.6% in the U.S. Fund and ~~limited partner equity interest. Upon~~upon achievement of a threshold return, we have a right to incentive distributions for our promoted interest based on the ~~current~~ returns earned by ~~Fund II, which currently represents~~ 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. Fund II has a term that expires in August 2020, assuming the exercise of two, one-year extension options. In September 2017, Fund II sold its final apartment community.

U.S. Fund. During the ~~nine~~three months ended ~~September~~June 30, ~~2017,~~2023, we recognized income of $1,072,000 for our promoted interest included in income from unconsolidated investments on the accompanying Condensed Consolidated Statements of Comprehensive Income. The U.S. Fund II sold its final three communities ~~containing 1,366 apartment homes for~~in 2022 and is in the process of being dissolved.

Table of Contents

Unconsolidated Investments - Development Communities

The following table presents a ~~sales price of $272,050,000. Our share~~summary of the ~~gain was $26,322,000,~~Unconsolidated Development Communities.

Unconsolidated
Development Community

Company
ownership percentage

# of apartment homes

Projected total
capitalized cost (1)
($ millions)

Construction
start

Initial projected
occupancy

Estimated
completion

AVA Arts District (2)(3)
Los Angeles, CA

25.0

475

288

Q3 2020

Q3 2023

Q4 2023

_____________________________

(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 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~~loan fees, permits, professional fees and ~~excluding~~other regulatory fees, as well as costs incurred ~~in excess~~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 ~~our equity in the underlying net assets~~commercial space.

(3)As of ~~the U.S. Fund,~~June 30, 2023, we ~~have~~had contributed an equity investment in AVA Arts District of ~~$40,788,000 (net of distributions), representing a 28.6% combined equity interest.~~$31,776. The ~~U.S. Fund was formed in July 2011 and is fully invested.~~remaining development costs are primarily expected to be funded by the venture's variable rate construction loan. The ~~U.S. Fund has a term that expires in July 2023, assuming the exercise of two, one-year extension options.~~

~~During the nine months ended September 30, 2017, the U.S. Fund sold one community containing 192 apartment homes for a sales price of $107,000,000. Our share~~venture had drawn $111,662 of the gain was $13,788,000. In conjunction with the disposition of this community, the U.S. Fund repaid $32,542,000 of secured indebtedness in advance of its scheduled maturity date. This resulted in a charge for a prepayment penalty and the write-off 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~~$167,147 maximum borrowing capacity of the ~~AC JV,~~construction loan as of June 30, 2023. While we ~~have an equity investment~~guarantee the construction loan on behalf of ~~$49,936,000 (net of distributions), representing a 20.0% equity interest. The AC JV was formed in 2011.~~

~~As of September 30, 2017, we had investments in unconsolidated real estate accounted for~~the venture, any amounts under the equity method of accounting shown in the following table, excluding development joint ventures and Fund II, which sold its final apartment community in September 2017. Refer to Note 5, "Investments in Real Estate Entities,"guarantee are obligations of the ~~Condensed Consolidated Financial Statements included elsewhere~~venture partners in ~~this report, which includes information on the aggregate assets, liabilities and equity, as well as operating results, and our proportionate share~~proportion to ownership interest.

Table of their operating results. For ventures holding operating apartment communities as of September 30, 2017, detail of the real estate and associated funding underlying our unconsolidated investments is presented in the following table (dollars in thousands).Contents

Company
ownership percentage
# of Apartment homes Total capitalized cost (1) Debt (2)
Interest rate (3) Maturity date
Unconsolidated Real Estate Investments Amount Type

U.S. Fund

1. Avalon Studio 4121 - Studio City, CA
149
$ 57,073
$ 29,073
Fixed 3.34 % Nov 2022
2. Avalon Marina Bay - Marina del Rey, CA (4)
205
77,149
51,300
Fixed 1.56 % Dec 2020
3. Avalon Venice on Rose - Venice, CA
70
57,241
29,269
Fixed 3.28 % Jun 2020
4. Avalon Station 250 - Dedham, MA
285
96,662
56,653
Fixed 3.73 % Sep 2022
5. Avalon Grosvenor Tower - Bethesda, MD
237
79,973
43,911
Fixed 3.74 % Sep 2022
6. Avalon Kirkland at Carillon - Kirkland, WA
131
60,725
28,555
Fixed 3.75 % Feb 2019
Total U.S. Fund 28.6 % 1,077
428,823
238,761
3.17 %

AC JV

1. Avalon North Point - Cambridge, MA (5)
426
187,539
111,653
Fixed 6.00 % Aug 2021
2. Avalon Woodland Park - Herndon, VA (5)
392
85,924
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
300,268
162,300
6.00 %

Other Operating Joint Ventures

1. MVP I, LLC 25.0 % 313
125,204
103,000
Fixed 3.24 % Jul 2025
2. Brandywine Apartments of Maryland, LLC 28.7 % 305
19,328
22,899
Fixed 3.40 % Jun 2028
Total Other Joint Ventures 618
144,532
125,899
3.27 %

Total Unconsolidated Investments 2,616
$ 873,623
$ 526,960
4.06 %

~~_____________________________~~


~~(1)~~	~~Represents total capitalized cost as of September 30, 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 September 30, 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 four mortgage loans made by the equity investors in the venture in proportion to their equity interests.~~

~~Off-Balance Sheet Arrangements~~

In addition to our investment interests in consolidated and unconsolidated real estate entities, we have certain off-balance sheet arrangements with the entities in which we invest. Additional discussion of these entities can be found in Note 5, "Investments in Real Estate Entities," of our Condensed Consolidated Financial Statements included elsewhere in this report.

We have not guaranteed the debt 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 under 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 return of the unconsolidated real estate entities and/or our returns by providing time for performance to improve.

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~~

We currently have contractual obligations consisting primarily of long-term debt obligations and lease obligations for certain land parcels and regional and administrative office space. As of September 30, 2017, other than as discussed in this Form 10-Q, there have been no other material changes in our scheduled contractual obligations as disclosed in our Form 10-K.

Development Communities

As of ~~September~~June 30, ~~2017,~~2023, we owned or held a direct ~~or indirect~~ interest in 2317 Development Communities under construction. We expect these Development Communities, when completed, to add a total of ~~6,888~~5,761 apartment homes and 29,000 square feet of commercial space to our portfolio for a total capitalized cost, including land acquisition costs, of approximately ~~$3,247,000,000, including the total projected capitalized cost for one community being developed within an unconsolidated joint venture in which we own a 55.0% interest.~~$2,293,000,000. 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" of our Form 10-K for a discussion of the risks associated with development activity.~~

The following table presents a summary of the Development Communities. ~~We hold a fee simple ownership interest in these communities (directly or through a wholly-owned subsidiary) unless otherwise noted in the table.~~

Number of

apartment

homes

Projected total

capitalized cost (1)

($ millions)

Construction

start

Initial projected occupancy (2)

Estimated

completion

Estimated

stabilized operations (3)

Number of
apartment
homes

Projected total
capitalized cost (1)
($ millions)

Construction
start

Initial projected
or actual occupancy

Estimated
completion

Estimated
stabilized operations
(2)

Avalon West Hollywood (4)

West Hollywood, CA

294

153.6

Q2 2014

Q1 2017

Q4 2017

Q1 2018

Avalon Somerville Station
Somerville, NJ

374

123

Q4 2020

Q2 2022

Q3 2023

Q4 2023

Avalon North Station
Boston, MA

503

271.5

Q3 2014

Q4 2016

Q4 2017

Q3 2018

Avalon North Andover
North Andover, MA

221

Q2 2021

Q4 2022

Q3 2023

Q4 2023

AVA NoMa

Washington, D.C.

438

148.3

Q2 2015

Q1 2017

Q1 2018

Q3 2018

Avalon Merrick Park (3)
Miami, FL

254

103

Q2 2021

Q2 2023

Q3 2023

Q2 2024

Avalon Great Neck

Great Neck, NY

191

80.7

Q2 2015

Q2 2017

Q4 2017

Q2 2018

Avalon Amityville
Amityville, NY

338

135

Q2 2021

Q3 2023

Q2 2024

Q4 2024

Avalon Brooklyn Bay (5)
Brooklyn, NY

180

89.7

Q3 2015

Q3 2017

Q1 2018

Q3 2018

Avalon Bothell Commons I
Bothell, WA

467

236

Q2 2021

Q3 2023

Q3 2024

Q2 2025

Avalon Newcastle Commons I (4)
Newcastle, WA

378

122.8

Q3 2015

Q4 2016

Q4 2017

Q3 2018

Avalon Westminster Promenade
Westminster, CO

312

110

Q3 2021

Q1 2024

Q2 2024

Q1 2025

Avalon Maplewood (6)

Maplewood, NJ

235

65.4

Q4 2015

Q4 2017

Q3 2018

Q1 2019

Avalon West Dublin

Dublin, CA

499

270

Q3 2021

Q4 2023

Q4 2024

Q2 2025

Avalon Rockville Centre II

Rockville Centre, NY

165

57.8

Q4 2015

Q4 2017

Q3 2018

Avalon Princeton Circle

Princeton, NJ

221

Q4 2021

Q2 2023

Q1 2024

Q3 2024

AVA Wheaton

Wheaton, MD

319

75.6

Q4 2015

Q3 2017

Q2 2018

Q4 2018

Avalon Montville

Montville, NJ

349

127

Q4 2021

Q4 2023

Q3 2024

Q4 2024

10.

Avalon Dogpatch
San Francisco, CA

326

203.4

Q4 2015

Q3 2017

Q3 2018

Q1 2019

10.

Avalon Redmond Campus (4)

Redmond, WA

214

Q4 2021

Q4 2023

Q2 2024

Q4 2024

11.

Avalon Easton

Easton, MA

290

64.0

Q1 2016

Q1 2017

Q1 2018

Q3 2018

11.

Avalon Governor's Park

Denver, CO

304

135

Q1 2022

Q2 2024

Q3 2024

Q2 2025

12.

Avalon Somers

Somers, NY

152

45.1

Q2 2016

Q2 2017

Q1 2018

Q3 2018

12.

Avalon West Windsor (5)

West Windsor, NJ

535

201

Q2 2022

Q2 2025

Q3 2026

Q1 2027

13.

AVA North Point (7)

Cambridge, MA

265

113.9

Q2 2016

Q1 2018

Q4 2018

Q2 2019

13.

Avalon Durham (3)

Durham, NC

336

125

Q2 2022

Q2 2024

Q3 2024

Q2 2025

14.

Avalon Boonton

Boonton, NJ

350

91.2

Q3 2016

Q2 2019

Q1 2020

Q3 2020

14.

Avalon Annapolis

Annapolis, MD

508

202

Q3 2022

Q3 2024

Q3 2025

Q2 2026

15.

11 West 61st Street (4)

New York, NY

172

603.7

Q4 2016

Q2 2019

Q4 2019

Q2 2020

15.

Kanso Milford

Milford, MA

162

Q4 2022

Q1 2024

Q3 2024

Q1 2025

16.

Avalon Belltown Towers (4)

Seattle, WA

275

146.9

Q4 2016

Q3 2019

Q4 2019

Q2 2020

16.

Avalon Lake Norman (3)

Mooresville, NC

345

101

Q1 2023

Q4 2024

Q4 2025

Q2 2026

Avalon Public Market

Emeryville, CA

289

148.6

Q4 2016

Q3 2018

Q1 2019

Q3 2019

18.

Avalon Teaneck

Teaneck, NJ

248

70.4

Q4 2016

Q4 2018

Q2 2019

Q4 2019

19.

AVA Hollywood (4)

Hollywood, CA

695

365.1

Q4 2016

Q2 2019

Q2 2020

Q4 2020

20.

AVA Esterra Park

Redmond, WA

323

90.9

Q2 2017

Q4 2018

Q3 2019

Q1 2020

21.

Avalon at the Hingham Shipyard II

Hingham, MA

190

64.2

Q2 2017

Q4 2018

Q2 2019

Q4 2019

22.

Avalon Piscataway

Piscataway, NJ

360

89.2

Q2 2017

Q3 2018

Q2 2019

Q4 2019

23.

Avalon Sudbury
Sudbury, MA

250

85.0

Q3 2017

Q2 2018

Q1 2019

Q3 2019

17.

Avalon Hunt Valley West

Hunt Valley, MD

322

109

Q2 2023

Q1 2025

Q1 2026

Q3 2026

Total

6,888

3,247.0

Total

5,761

2,293

(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.

~~(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.


~~(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)~~	Development communities containing at least 10,000 square feet of retail space include Avalon West Hollywood (32,000 square feet), Avalon Newcastle Commons I (15,000 square feet), 11 West 61st Street (67,000 square feet), Avalon Belltown Towers (11,000 square feet) and AVA Hollywood (19,000 square feet).

(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.

~~(5)~~

We are developing this project with a private development partner. We will own the rental portion of the development on floors 3 through19 and the partner will own the for-sale condominium portion of the development on floors 20 through 30. The information above represents only our portion of the project. 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.


~~(6)~~	In February 2017, a fire occurred at Maplewood. See Note 1, "Organization, Basis and Presentation and Significant Accounting Policies - Legal and Other Contingencies," and Note 5, "Investments in Real Estate Entities - Casualty Gains and Losses," in the accompanying Condensed Consolidated Financial Statements for additional discussions related to the Maplewood casualty loss.


~~(7)~~	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 projected total capitalized cost above represents the total cost for the venture.

(3)Communities being developed through our Developer Funding Program. We use the DFP to accelerate wholly-owned development in our expansion regions, by utilizing third-party multifamily developers to source and construct communities which we own and operate.

(4)Avalon Redmond Campus is a densification of the existing eaves Redmond Campus wholly-owned community, replacing 48 existing older apartment homes that were demolished.

(5)Development Communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 square feet).

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During the three months ended ~~September~~June 30, ~~2017,~~2023, we completed the development of the following wholly-owned communities:

Number of
apartment
homes
Total capitalized
cost (1)
($ millions)

Approximate rentable area
(sq. ft.)
Total capitalized cost per sq. ft.
1.
Avalon Chino Hills
Chino Hills, CA
331
$ 96.6
327,890
$ 295


		Number of apartment homes	Total capitalized cost (1) ($ millions)		Approximate rentable area (sq. ft.)	Total capitalized cost per sq. ft.
1.	Avalon Harrison (2) Harrison, NY	143	$	94	171,036	$	550
2.	Avalon Brighton Boston, MA	180	90		167,230	$	538
	Total	323	$	184


~~(1)~~	(1)Total ~~capitalized cost is as of September 30, 2017. We generally anticipate incurring additional costs associated with these communities that are customary for new developments.~~

~~We anticipate commencing the construction of four apartment communities during the balance of 2017, which, if completed as expected, will contain 1,495 apartment homes and be constructed for a total~~ capitalized cost is as of ~~$471,600,000.~~

~~Redevelopment Communities~~

~~As of September~~June 30, ~~2017, there were ten communities under active redevelopment.~~2023. We ~~expect the total capitalized cost to redevelop~~generally anticipate incurring additional costs associated with these communities ~~to be $213,200,000, excluding costs incurred prior to redevelopment. We have found~~ that ~~the cost to redevelop an existing apartment community is more difficult to budget and estimate than the cost to develop a~~are customary for 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 or in the aggregate. We anticipate maintaining or increasing our current leveldevelopments.

(2)Avalon Harrison contains 27,000 square feet of redevelopment activity related to communities in our current operating portfolio for the remainder of 2017. You should carefully review Item 1A. "Risk Factors" of our Form 10-K for a discussion of the risks associated with redevelopment activity.commercial space.

~~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
$ 10.2
Q1 2017 Q1 2018 Q3 2018
2.
Toluca Hills Apartments by Avalon
Los Angeles, CA
1,151
40.0
Q1 2017 Q1 2020 Q3 2020
3.
Avalon at Chestnut Hill
Chestnut Hill, MA
204
9.2
Q1 2017 Q4 2017 Q2 2018
4.
Avalon Prudential Center II
Boston, MA
266
18.7
Q1 2017 Q3 2019 Q1 2020
5.
Avalon Midtown West
New York, NY
550
30.0
Q1 2017 Q2 2019 Q4 2019
6.
Avalon Willow
Mamaroneck, NY
227
13.1
Q2 2017 Q1 2018 Q3 2018
7.
Avalon at Edgewater II (3)
Edgewater, NJ
240
60.0
Q2 2017 Q1 2019 Q3 2019
8.
AVA Studio City II
Studio City, CA
101
5.8
Q2 2017 Q4 2017 Q2 2018
9.
Avalon at Florham Park
Florham Park, NJ
270
12.9
Q3 2017 Q3 2018 Q1 2019
10.
AVA Van Ness
Washington, D.C.
269
13.3
Q3 2017 Q1 2019 Q3 2019
Total 3,583
$ 213.2


~~(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-Q, and will be included upon completion.

Development Rights

At ~~September~~June 30, ~~2017,~~2023, we had ~~$85,863,000~~$195,115,000 in acquisition and related capitalized costs for direct interests in eight land parcels we ~~own, and $48,546,000~~own. In addition, we had $71,421,000 in capitalized costs (including legal fees, design fees and related overhead costs) related to (i) 31 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 four 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 2543 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 September 30, 2017 includes $62,246,000 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 ~~8,392~~14,993 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own.

For 18 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 five 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 five of the Development Rights for which we currently own the land, with a carrying basis of $85,863,000.

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~~For the ~~nine~~three and six months ended ~~September~~June 30, ~~2017,~~2023, we incurred a charge of ~~approximately $2,087,000~~$1,261,000 and $4,253,000, respectively, 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 ~~would not likely be~~were no longer probable of being developed.

Structured Investment Program

In July 2023, we entered into an additional mezzanine loan commitment, agreeing to fund up to $20,900,000 of a multifamily development project in North Carolina. As of July 31, 2023, we had commitments to fund four mezzanine loans of up to $113,275,000 in the aggregate under the SIP in our existing markets. As of July 31, 2023, the mezzanine loans have a weighted average rate of return of 10.4% and mature at various dates on or before July 2027. As of July 31, 2023, we had funded $63,553,000 of these commitments. See Note 5, "Investments," of the Condensed Consolidated Financial Statements included elsewhere in this report.

You should carefully review Part I, Item 1A. "Risk Factors" of our Form 10-K, as well as the discussion under Part II, Item 1A. "Risk Factors" in this report, for a discussion of the risks associated with ~~Development Rights.~~our investment activity.

Supplemental U.S. Federal Income Tax Considerations

The following ~~presents a summary~~discussion supplements and updates the disclosures under “Certain U.S. Federal Income Tax Considerations and Consequences of ~~the Development Rights as of September 30, 2017:~~

Market Number of rights
Estimated
number of homes

Projected total
capitalized cost ($ millions) (1)

New England 4
908
$ 336
Metro NY/NJ 11
4,434
1,643
Mid-Atlantic 3
996
312
Pacific Northwest 2
588
158
Northern California 4
991
512
Southern California 1
475
245
Total 25
8,392
$ 3,206


~~(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.

~~Other Land and Real Estate Assets~~

We own land parcels with a carrying value of $13,636,000, on which we do not currently plan to develop and operate an apartment community. These parcels consist of both ancillary parcels acquired in connection with Development Rights that we had not planned to develop and land parcels which we acquired for development and now intend to sell. During the nine months ended September 30, 2017, we recognized an impairment charge of $9,350,000 for one 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 indication of impaired value, or further need to record a charge for impairmentYour Investment” in the ~~case of assets previously impaired. However, we may be subject to~~prospectus dated February 25, 2021 (the “Base Prospectus”) contained in our Registration Statement on Form S-3 filed with the recognition of further charges for impairment in the event that there are indicators of such impairment and we determine that the carrying value of the assets is greater than the current fair value, less costs to dispose.

~~Insurance and Risk of Uninsured Losses~~

We maintain commercial general liability insurance and property insurance with respect to all of our communities. 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. In addition,SEC on February 25, 2021 (the “Registration Statement”), as described further below, we self-insure a portion of our exposure for commercial general liability and property losses through a wholly-owned captive insurance company. There are, however, certain types of losses (such as losses arising from nuclear liability 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 reviewsupplemented by the discussion under ~~Item 1A. “Risk Factors” of our~~the heading “Supplemental U.S. Federal Income Tax Considerations” in the Company’s Annual Report on Form 10-K for ~~a discussion~~the year ended December 31, 2022, as filed with the SEC on February 24, 2023.

Table of ~~risks associated with an uninsured property~~Contents

The second paragraph under the heading “—U.S. Taxation of Non-U.S. Stockholders-Distributions Attributable to Sale or ~~liability loss.~~

~~Many~~Exchange of ~~our West Coast communities are located~~Real Property” in the ~~general vicinity of active earthquake faults. Many of our communities are near,~~Base Prospectus is hereby deleted and ~~thus susceptible~~replaced with the following:

Subject to the ~~major fault lines in California,~~following paragraph, we will be required to withhold and remit to the IRS 21% (or the then applicable highest corporate rate of U.S. federal income tax) of any distributions to non-U.S. stockholders attributable to gain from our sale or exchange of U.S. real property interests. Under long-standing regulations, we also may be required to withhold on any distributions to non-U.S. stockholders that we designate as capital gain dividends, including any distributions that could have been designated as capital gain dividends. Amounts so withheld are creditable against the ~~San Andreas Fault, the Hayward Fault~~non-U.S. stockholder’s U.S. federal income tax liability. A non-U.S. stockholder who receives distributions attributable to gain from a sale 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~~exchange by us of U.S. real property damage and resulting business interruption insurance coverage with limits of $175,000,000 for any single occurrence and in the annual aggregate for losses resulting from earthquakes. However for communities located in California or Washington, the limit is $150,000,000 for any single occurrence and in the annual aggregate for losses resulting from earthquakes. The deductible applicableinterests will be required to ~~losses resulting from earthquakes occurring in California is five percent of the insured value of each damaged building subject to~~file a ~~minimum of $100,000 and a maximum of $25,000,000 per loss.~~

Our communities are insured for property damage and business interruption losses through a combination of community specific insurance policies and/or coverage provided under a master property insurance policy covering the majority of our communities. The master policy provides a $400,000,000 limit for any single occurrence, subject to certain sublimits and exclusions. Under the master policy we are subject to a $100,000 deductible per occurrence, as well as additional self-insured retentionU.S. federal income tax return for the ~~next $350,000 of loss, per occurrence, until the aggregate incurred self-insured retention exceeds $1,500,000 for the policy~~taxable year.

Our communities 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 policies. The master commercial general liability and umbrella/excess insurance policies cover the majority of our communities and are subject to certain coverage limitations and exclusions, and include a self-insured retention of $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 policy self-insured retentions and deductibles, our captive insurance company is directly responsible for (i) 25% of the first $50,000,000 of losses (per occurrence) incurred 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.

Just as with office buildings, transportation systems and government buildings, there have been reports that apartment communities could become targets of terrorism. In January 2015, the President signed the Terrorism Risk Insurance Program Reauthorization Act (“TRIPRA”) which extended a program that is designed to make terrorism insurance available through a federal back-stop program. Certain communities are insured for terrorism related losses through this federal program. 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. Our general liability policy provides terrorism coverage through TRIPRA (subject to deductibles and insured limits) for liability to third parties that result from terrorist acts at our communities.

~~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 effects 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-Q contains "forward-looking statements" as that term is defined under 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-Q, 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 markets;

•our declaration or payment of ~~distributions;~~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;

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•the impact of a pandemic or other public health event on our business, results of operations and financial condition; 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 Part I, Item 1A. "Risk Factors" of our Form 10-K and Part II, Item 1A. "Risk Factors" in this report, for afurther 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~~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 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 ~~Fund II, the U.S. Fund, the AC JV or~~joint ventures and the REIT vehicles that are used with ~~each respective~~certain 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 in~~impact our ~~portfolio composition; and~~revenue 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

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•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. Our critical accounting policies consist ~~primarily~~ of the following: (i) ~~principles of consolidation, (ii)~~ cost capitalization ~~(iii)~~and (ii) abandoned pursuit costs and asset ~~impairment, (iv) REIT status and (v) acquisition of investments in real estate.~~impairment. Our critical accounting policies and estimates have not changed materially from the discussion of our significant accounting policies found in ~~Management's~~Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations" in our Form 10-K.

Table of Contents


~~ITEM 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our exposures to market risk ~~since~~as disclosed in Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.


~~ITEM 4.~~	~~CONTROL AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES


~~(a)~~	~~Evaluation of disclosure controls and procedures.~~

(a)Evaluation of disclosure controls and procedures.

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 as of ~~September~~June 30, ~~2017.~~2023. 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 Securities Exchange Act of 1934 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.


~~(b)~~	(b)Changes in ~~internal controls over financial reporting.~~

During the first quarter of 2017, the Company commenced the implementation of a new construction and development management system that will improve the efficiency and effectiveness of the Company’s operational and financial accounting processes for construction and development related activity. This implementation is expected to continue through the end of 2017. 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.~~reporting.

None.


~~PART II.~~	~~OTHER INFORMATION~~

PART II.OTHER INFORMATION


~~ITEM 1.~~	ITEM 1. LEGAL PROCEEDINGS

As discussed in this Form 10-Q in Note 1, "Organization, Basis and Presentation and Significant Accounting Policies - Legal and Other Contingencies," to the accompanying Condensed Consolidated Financial Statements, 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 AvalonBay policies.

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. Through the date of this Form 10-Q, of the 229 occupied apartments destroyed in the fire, the residents of approximately 105 units have settled claims with the Company's insurer. Due to the final approval of the class settlement (referenced below), this claims process has been suspended.

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 42 units submitted claims. The independent claims adjuster is currently reviewing the claims submitted, which total approximately $6,800,000, and it is expected that awards should be 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 have been filed in the Superior Court of New Jersey Bergen County - Law Division and are currently pending. All of these state court cases, except for one that was recently filed, have been consolidated by the court. All of these plaintiffs, except for two, formally opted out of the class action settlement described above and have decided to continue their individual actions. The Company believes that it has meritorious defenses to the extent of damages claimed in all of the suits. The 18 consolidated lawsuits currently have a trial date of January 2, 2018. There are also six 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 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.

The Company is involved in various ~~other claims and/or administrative~~legal proceedings ~~unrelated to the Edgewater casualty loss~~ that arise in the ordinary course of its business. While ~~no assurances can~~the resolutions of these matters cannot be ~~given,~~predicted with certainty, 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 1A.~~	~~RISK FACTORS~~

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors ~~which~~that could materially affect our business, financial condition or future results discussed in our Annual Report on Form 10-K for the year ended December 31, 2022 in Part I, Item 1A. "Risk Factors." The risks described in our Form 10-K are not the only risks that could affect the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results in the future. There have been no material changes to our risk factors since December 31, ~~2016.~~2022.

Table of Contents


~~ITEM 2.~~	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) None.

(b) Not applicable.

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)
July 1 - July 31, 2017 48
$ 187.84
—
$ 200,000
August 1 - August 31, 2017 1,046
$ 191.08
—
$ 200,000
September 1 - September 30, 2017 52
$ 187.73
—
$ 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)
April 1- April 30, 2023	5,363	$	163.47	4,800	$	314,237
May 1- May 31, 2023	959	$	179.63	—	$	314,237
June 1- June 30, 2023	—	$	—	—	$	314,237
Total	6,322	$	165.92	4,800


~~(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.

(1)Consists of shares surrendered to the Company in connection with exercise of stock options as payment of exercise price and activity under the Stock Repurchase Program, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to shares of common stock.

(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 2020 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 2020 Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice.


~~ITEM 3.~~	~~DEFAULTS UPON SENIOR SECURITIES~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~None.~~During the three months ended June 30, 2023, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) 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).

Table of Contents

ITEM 6. EXHIBITS

Exhibit No.

Description

3(i).1

—

Articles of Amendment and Restatement of Articles of Incorporation of the Company, dated as of June 4, 1998. (Incorporated by reference to Exhibit 3(i).1 to Form 10-K of the Company filed March 1, 2007.)

3(i).2

—

Articles of Amendment, dated as of October 2, 1998. (Incorporated by reference to Exhibit 3(i).2 to Form 10-K of the Company filed March 1, 2007.)

3(i).3

—

Articles of Amendment, dated as of May 22, 2013. (Incorporated by reference to Exhibit 3(i).3 to Form 8-K of the Company filed May 22, 2013.)

~~3(ii).1~~3(i).4

—

Articles of Amendment, dated as of May 14, 2020. (Incorporated by reference to Exhibit 3(i).4 to Form 8-K of the Company filed May 15, 2020.)

3(ii).1

—

Amended and Restated Bylaws of the Company, as adopted by the Board of Directors on November 12, ~~2015.~~2015, and as further amended on February 16, 2017, November 9, 2017, and May 6, 2019. (Incorporated by reference to Exhibit 3(ii).1 to Form ~~10-K~~10-Q of the Company filed ~~February 26, 2016.~~August 6, 2019.)

3(ii).2

—

Fourth Amendment to the Amended and Restated Bylaws of the Company, as adopted by the Board of Directors on ~~February 16, 2017.~~November 10, 2022. (Incorporated by reference to Exhibit ~~3.2 to Form 8-K of the Company filed February 21, 2017.)~~

~~4.1~~

—

Indenture for Senior Debt Securities, dated as of January 16, 1998, between the Company and State Street Bank and Trust Company, as Trustee. (Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.)

~~4.2~~

—

First Supplemental Indenture, dated as of January 20, 1998, between the Company and State Street Bank and Trust Company, as Trustee. (Incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.)

~~4.3~~

—

Second Supplemental Indenture, dated as of July 7, 1998, between the Company and State Street Bank and Trust Company, as Trustee. (Incorporated by reference to Exhibit 4.3 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.)

~~4.4~~

—

Amended and Restated Third Supplemental Indenture, dated as of July 10, 2000, between the Company and State Street Bank and Trust Company, as Trustee. (Incorporated by reference to Exhibit 4.4 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.)

~~4.5~~

—

Fourth Supplemental Indenture, dated as of September 18, 2006, between the Company and U.S. Bank National Association, as Trustee. (Incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.)

~~4.6~~

—

~~Fifth Supplemental Indenture, dated as of November 21, 2014, between the Company and the Bank of New York Mellon, as Trustee. (Incorporated by reference to Exhibit 4.1~~3.1 to Form 8-K of the Company filed November ~~21, 2014.~~10, 2022.)

~~4.7~~31.1

—

Dividend Reinvestment and Stock Purchase Plan of the Company. (Incorporated by reference to the prospectus contained in the Registration Statement on Form S-3 of the Company (File No. 333-87063), filed September 14, 1999.)

~~4.8~~

—

Amendment to the Company's Dividend Reinvestment and Stock Purchase Plan filed December 17, 1999. (Incorporated by reference to the Prospectus Supplement filed pursuant to Rule 424(b)(2) of the Securities Act of 1933 on December 17, 1999.)

~~4.9~~

—

Amendment to the Company's Dividend Reinvestment and Stock Purchase Plan filed March 26, 2004. (Incorporated by reference to the Prospectus Supplement filed pursuant to Rule 424(b)(3) of the Securities Act of 1933 on March 26, 2004.)

~~4.10~~

—

Amendment to the Company's Dividend Reinvestment and Stock Purchase Plan filed May 15, 2006. (Incorporated by reference to the Prospectus Supplement filed pursuant to Rule 424(b)(3) of the Securities Act of 1933 on May 15, 2006.)

~~12.1~~

—

~~Statements re: Computation of Ratios. (Filed herewith.)~~



~~31.1~~	—	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). (Filed herewith.)
31.2			—	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). (Filed herewith.)
32			—	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). (Furnished herewith.)
101			—	~~XBRL (Extensible Business Reporting Language).~~ The following financial materials from AvalonBay Communities, Inc.'s Quarterly Report on Form 10-Q for the period ended ~~September~~June 30, ~~2017,~~2023 formatted in ~~XBRL:~~Inline XBRL (Extensible Business Reporting Language) includes: (i) ~~condensed consolidated balance sheets,~~the Condensed Consolidated Balance Sheets, (ii) ~~condensed consolidated statements~~the Condensed Consolidated Statements of ~~comprehensive income,~~Comprehensive Income, (iii) ~~condensed consolidated statements~~the Condensed Consolidated Statements of ~~cash flows~~Cash Flows and (iv) ~~notes~~Notes to ~~condensed consolidated financial statements.~~the Condensed Consolidated Financial Statements. (Filed herewith.)
104			—	Cover Page Interactive Data File (embedded within the Inline XBRL document). (Filed herewith.)

Table of Contents

SIGNATURES

Pursuant to the requirements 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.



	AVALONBAY COMMUNITIES, INC.


Date:	~~November 3, 2017~~August 4, 2023	/s/ ~~Timothy J. Naughton~~Benjamin W. Schall
		~~Timothy J. Naughton~~Benjamin W. Schall
		~~Chairman,~~ Chief Executive Officer and President
		(Principal Executive Officer)

Date:	~~November 3, 2017~~August 4, 2023	/s/ Kevin P. O'Shea
		Kevin P. O'Shea
		Chief Financial Officer
		(Principal Financial Officer)



		PAGE
PART I - FINANCIAL INFORMATION

ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF ~~SEPTEMBER 30, 2017~~JUNE 3 0 , 2023 (UNAUDITED) AND DECEMBER 31, ~~2016~~2022	1

	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE AND ~~NINE~~ SIX MONTHS ENDED ~~SEPTEMBER 30, 2017~~J UNE 3 0 , 2023 AND ~~2016~~2022	2

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE ~~NINE~~ SIX MONTHS ENDED ~~SEPTEMBER 30, 2017~~JUNE 3 0 , 2023 AND ~~2016~~2022	3

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	5

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		24

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		5045

ITEM 4. CONTROLS AND PROCEDURES		5045

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS		5045

ITEM 1A. RISK FACTORS		5145

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		5246

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		5246

ITEM 4. MINE SAFETY DISCLOSURES		5246

ITEM 5. OTHER INFORMATION		5246

ITEM 6. EXHIBITS		5347

SIGNATURES		5548


	9/30/2017			12/31/2016				June 30, 2023		December 31, 2022
	(unaudited)							(unaudited)
ASSETS							ASSETS
Real estate:							Real estate:
Land and improvements	$	4,074,105		$	3,941,250		Land and improvements	$	4,647,879	$	4,640,971
Buildings and improvements	15,180,825			14,314,981			Buildings and improvements	18,906,003		18,804,510
Furniture, fixtures and equipment	592,776			532,994			Furniture, fixtures and equipment	1,221,610		1,174,135
	19,847,706			18,789,225				24,775,492		24,619,616
Less accumulated depreciation	(4,079,946		)	(3,743,632		)	Less accumulated depreciation	(7,193,053)		(6,878,556)
Net operating real estate	15,767,760			15,045,593			Net operating real estate	17,582,439		17,741,060
Construction in progress, including land	1,559,357			1,882,262			Construction in progress, including land	1,202,977		1,072,543
Land held for development	85,863			84,293			Land held for development	195,115		179,204
Real estate assets held for sale, net	33,173			20,846			Real estate assets held for sale, net	81,047		—
Total real estate, net	17,446,153			17,032,994			Total real estate, net	19,061,578		18,992,807

Cash and cash equivalents	36,042			214,994			Cash and cash equivalents	769,622		613,189
Cash in escrow	181,069			114,983			Cash in escrow	177,376		121,056
Resident security deposits	33,477			32,071			Resident security deposits	39,027		36,815
Investments in unconsolidated real estate entities	155,428			175,116
Unconsolidated investments							Unconsolidated investments	216,533		212,084
Deferred development costs	48,546			40,179			Deferred development costs	71,421		58,489
Prepaid expenses and other assets	277,122			256,934			Prepaid expenses and other assets	334,460		279,993
Right of use lease assets							Right of use lease assets	136,180		143,331
Total assets	$	18,177,837		$	17,867,271		Total assets	$	20,806,197	$	20,457,764

LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Unsecured notes, net	$	5,407,091		$	4,463,302		Unsecured notes, net	$	7,355,693	$	7,602,305
Variable rate unsecured credit facility	242,000			—
Variable rate unsecured credit facility and commercial paper							Variable rate unsecured credit facility and commercial paper	—		—
Mortgage notes payable, net	1,478,939			2,567,578			Mortgage notes payable, net	707,006		713,740
Dividends payable	196,079			185,397			Dividends payable	237,147		226,022
Payables for construction	84,338			100,998			Payables for construction	88,961		72,802
Accrued expenses and other liabilities	310,633			274,676			Accrued expenses and other liabilities	319,271		306,186
Lease liabilities							Lease liabilities	154,957		162,671
Accrued interest payable	56,837			38,307			Accrued interest payable	61,014		54,100
Resident security deposits	58,768			57,023			Resident security deposits	65,070		63,700
Liabilities related to real estate assets held for sale	600			808
Total liabilities	7,835,285			7,688,089			Total liabilities	8,989,119		9,201,526

Commitments and contingencies							Commitments and contingencies

Redeemable noncontrolling interests	8,739			7,766			Redeemable noncontrolling interests	1,513		2,685

Equity:							Equity:
Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at September 30, 2017 and December 31, 2016; zero shares issued and outstanding at September 30, 2017 and December 31, 2016	—			—
Common stock, $0.01 par value; 280,000,000 shares authorized at September 30, 2017 and December 31, 2016; 138,086,893 and 137,330,904 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	1,381			1,373
Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at June 30, 2023 and December 31, 2022; zero shares issued and outstanding at June 30, 2023 and December 31, 2022							Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at June 30, 2023 and December 31, 2022; zero shares issued and outstanding at June 30, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value; 280,000,000 shares authorized at June 30, 2023 and December 31, 2022; 142,014,755 and 139,916,864 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively							Common stock, $0.01 par value; 280,000,000 shares authorized at June 30, 2023 and December 31, 2022; 142,014,755 and 139,916,864 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	1,420		1,400
Additional paid-in capital	10,228,648			10,105,654			Additional paid-in capital	11,269,159		10,765,431
Accumulated earnings less dividends	144,647			94,899			Accumulated earnings less dividends	534,291		485,221
Accumulated other comprehensive loss	(40,863		)	(30,510		)
Accumulated other comprehensive income							Accumulated other comprehensive income	10,618		1,424
Total stockholders' equity							Total stockholders' equity	11,815,488		11,253,476
Noncontrolling interests							Noncontrolling interests	77		77
Total equity	10,333,813			10,171,416			Total equity	11,815,565		11,253,553
Total liabilities and equity	$	18,177,837		$	17,867,271		Total liabilities and equity	$	20,806,197	$	20,457,764



	For the nine months ended
	9/30/2017			9/30/2016
Cash flows from operating activities:
Net income	$	639,174		$	791,525
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation expense	427,050			391,414
Amortization of deferred financing costs	5,729			5,664
Amortization of debt premium	(6,254		)	(14,146		)
Loss on extinguishment of debt, net	24,162			2,461
Amortization of stock-based compensation	13,979			12,103
Equity in (income) loss of, and return on, unconsolidated real estate entities and noncontrolling interests, net of eliminations	(21,627		)	11,756
Casualty and impairment loss (gain), net	8,568			(3,935		)
Abandonment of development pursuits	388			1,598
Cash flow hedge losses reclassified to earnings	5,301			4,682
Gain on sale of real estate assets	(200,110		)	(348,675		)
Increase in cash in operating escrows	(16,205		)	(4,563		)
Increase in resident security deposits, prepaid expenses and other assets	(27,384		)	(16,127		)
Increase in accrued expenses, other liabilities and accrued interest payable	64,802			26,970
Net cash provided by operating activities	917,573			860,727

Cash flows from investing activities:
Development/redevelopment of real estate assets including land acquisitions and deferred development costs	(743,275		)	(869,342		)
Acquisition of real estate assets, including partnership interest	(228,011		)	(393,916		)
Capital expenditures - existing real estate assets	(41,809		)	(43,020		)
Capital expenditures - non-real estate assets	(5,308		)	(5,513		)
Proceeds from sale of real estate, net of selling costs	336,542			404,731
Increase in cash in deposit escrows	(51,479		)	(59,263		)
Insurance proceeds for property damage claims	13,268			17,196
Mortgage note receivable lending	(14,244		)	(11,074		)
(Decrease) increase in payables for construction	(16,660		)	1,311
Distributions from unconsolidated real estate entities	89,305			94,748
Investments in unconsolidated real estate entities	(14,560		)	(2,449		)
Net cash used in investing activities	(676,231		)	(866,591		)

Cash flows from financing activities:
Issuance of common stock, net	110,117			14,147
Dividends paid	(576,685		)	(541,485		)
Net borrowings under unsecured credit facility	242,000			170,000
Issuance of mortgage notes payable	185,100			—
Repayment of unsecured notes, including prepayment penalties	—			(250,000		)
Repayments of mortgage notes payable, including prepayment penalties	(1,287,636		)	(161,095		)
Issuance of unsecured notes	948,616			474,838
Payment of deferred financing costs	(11,743		)	(10,910		)
Payment of capital lease obligation	(18,683		)	—
Receipts (payments) for termination of forward interest rate swaps	391			(14,847		)
Payments related to tax withholding for share-based compensation	(10,460		)	(7,659		)
Distributions to DownREIT partnership unitholders	(32		)	(30		)
Contributions from joint venture and profit-sharing partners	1,038			—
Distributions to joint venture and profit-sharing partners	(317		)	(303		)
Preferred interest obligation redemption and dividends	(2,000		)	(1,400		)
Net cash used in financing activities	(420,294		)	(328,744		)

Net decrease in cash and cash equivalents	(178,952		)	(334,608		)

Cash and cash equivalents, beginning of period	214,994			400,507
Cash and cash equivalents, end of period	$	36,042		$	65,899

Cash paid during the period for interest, net of amount capitalized	$	124,585		$	137,720


	Common stock		Additional paid-in capital		Accumulated earnings less dividends		Accumulated other comprehensive income (loss)		Total stockholder's equity		Noncontrolling interests		Total equity

Balance at December 31, 2022	$	1,400	$	10,765,431	$	485,221	$	1,424	$	11,253,476	$	77	$	11,253,553
Net income attributable to common stockholders	—		—		146,902		—		146,902		—		146,902
Loss on cash flow hedges, net	—		—		—		(340)		(340)		—		(340)
Cash flow hedge losses reclassified to earnings	—		—		—		354		354		—		354
Change in redemption value of redeemable noncontrolling interest	—		—		(286)		—		(286)		—		(286)
Dividends declared to common stockholders ($1.65 per share)	—		—		(230,958)		—		(230,958)		—		(230,958)
Issuance of common stock, net of withholdings	1		(11,554)		1,590		—		(9,963)		—		(9,963)
Repurchase of common stock, including repurchase costs	—		(539)		(590)		—		(1,129)		—		(1,129)
Amortization of deferred compensation	—		11,123		—		—		11,123		—		11,123
Balance at March 31, 2023	$	1,401	$	10,764,461	$	401,879	$	1,438	$	11,169,179	$	77	$	11,169,256
Net income attributable to common stockholders	—		—		367,923		—		367,923		—		367,923
Gain on cash flow hedges, net	—		—		—		8,826		8,826		—		8,826
Cash flow hedge losses reclassified to earnings	—		—		—		354		354		—		354
Change in redemption value of redeemable noncontrolling interest	—		—		(367)		—		(367)		—		(367)
Dividends declared to common stockholders ($1.65 per share)	—		—		(234,774)		—		(234,774)		—		(234,774)
Issuance of common stock, net of withholdings	19		494,643		43		—		494,705		—		494,705
Repurchase of common stock, including repurchase costs	—		(369)		(413)		—		(782)		—		(782)
Amortization of deferred compensation	—		10,424		—		—		10,424		—		10,424
Balance at June 30, 2023	$	1,420	$	11,269,159	$	534,291	$	10,618	$	11,815,488	$	77	$	11,815,565



	Common stock		Additional paid-in capital		Accumulated earnings less dividends			Accumulated other comprehensive loss			Total equity

Balance at December 31, 2016	$	1,373	$	10,105,654	$	94,899		$	(30,510	)	$	10,171,416
Net income attributable to common stockholders	—		—		639,348			—			639,348
Loss on cash flow hedges, net	—		—		—			(15,654		)	(15,654		)
Cash flow hedge loss reclassified to earnings	—		—		—			5,301			5,301
Change in redemption value of redeemable noncontrolling interest	—		—		(458		)	—			(458		)
Dividends declared to common stockholders	—		—		(587,819		)	—			(587,819		)
Issuance of common stock, net of withholdings	8		100,625		(1,323		)	—			99,310
Amortization of deferred compensation	—		22,369		—			—			22,369
Balance at September 30, 2017	$	1,381	$	10,228,648	$	144,647		$	(40,863	)	$	10,333,813


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	June 30, 2023		June 30, 2022
Cash and cash equivalents	$	769,622	$	152,522
Cash in escrow	177,376		107,669
Cash, cash equivalents and cash in escrow reported in the Condensed Consolidated Statements of Cash Flows	$	946,998	$	260,191



	9/30/2017		12/31/2016

Fixed rate unsecured notes (1)	$	4,900,000	$	4,200,000
Term Loans (1)	550,000		300,000
Fixed rate mortgage notes payable - conventional and tax-exempt (2)	617,285		1,668,496
Variable rate mortgage notes payable - conventional and tax-exempt (2)	889,158		908,262
Total mortgage notes payable, unsecured notes and Term Loans	6,956,443		7,076,758
Credit Facility	242,000		—
Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility	$	7,198,443	$	7,076,758


~~(1)~~	~~See Note 11, "Subsequent Events," for further discussion.~~


i.	~~issued 41,123 shares of common stock in connection with stock options exercised;~~


~~ii.~~	~~issued 2,466 common shares through the Company's dividend reinvestment plan;~~


~~iii.~~	~~issued 201,314 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 60,165 common shares to satisfy employees' tax withholding and other liabilities;~~


~~vi.~~	~~issued 5,872 common shares through the Employee Stock Purchase Plan; and~~


~~vii.~~	~~canceled~~ ~~3,045~~ ~~common shares of restricted stock upon forfeiture.~~


~~(1)~~	~~Does not include gross real estate assets held for sale of $53,723 and $135,054 as of September 30, 2017 and 2016, respectively.~~


~~(2)~~	~~Total revenue and NOI for the three and nine months ended September 30, 2017 includes $3,495 in business interruption insurance proceeds related to the Maplewood casualty loss.~~


~~(3)~~	~~Revenue represents third-party management, asset management and developer fees and miscellaneous income which are not allocated to a reportable segment.~~


~~(4)~~	~~Total revenue and NOI for the nine months ended September 30, 2016 includes $20,306 in business interruption insurance proceeds related to the Edgewater casualty loss.~~



	2009 Plan shares		Weighted average exercise price per share		1994 Plan shares		Weighted average exercise price per share
Options Outstanding, December 31, 2016	177,333		$	124.25	22,541		$	77.91
Exercised	(27,360	)	110.47		(13,763	)	96.61
Forfeited	—		—		—		—
Options Outstanding, September 30, 2017 (1)	149,973		$	126.77	8,778		$	48.60


~~(1)~~	~~All options outstanding are exercisable as of September 30, 2017.~~



	Performance awards		Weighted average grant date fair value per award
Outstanding at December 31, 2016	251,163		$	136.74
Granted (1)	81,708		176.59
Change in awards based on performance (2)	49,323		119.26
Converted to restricted stock	(128,482	)	118.75
Forfeited	(1,942	)	159.39
Outstanding at September 30, 2017	251,770		$	155.25


~~(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 49,374 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 32,334 performance awards.


~~(2)~~	~~Represents the change in the number of performance awards earned based on actual performance achievement for the performance period.~~


~~(1)~~	~~Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.~~



	All-In interest rate (1)		Principal maturity date		Balance Outstanding				Scheduled Maturities
Community	All-In interest rate (1)		Principal maturity date		12/31/2016		9/30/2017		2017		2018		2019		2020		2021		Thereafter
Tax-exempt bonds (2)
Fixed rate
Avalon Oaks West	7.55	%	Apr-2043		$	15,420	$	15,270	$	58	$	241	$	257	$	275	$	293	$	14,146
Avalon at Chestnut Hill	6.16	%	Oct-2047		38,564		38,227		130		536		566		596		629		35,770
Avalon Westbury	3.81	%	Nov-2036	(3)	62,200		62,200		—		—		—		—		—		62,200
					116,184		115,697		188		777		823		871		922		112,116

Variable rate
Avalon Mountain View	1.42	%	Feb-2017	(4)	17,300		—		—		—		—		—		—		—
Eaves Mission Viejo	1.97	%	Jun-2025	(5)	7,635		7,635		—		—		—		—		—		7,635
AVA Nob Hill	1.98	%	Jun-2025	(5)	20,800		20,800		—		—		—		—		—		20,800
Avalon Campbell	2.30	%	Jun-2025	(5)	38,800		38,800		—		—		—		—		—		38,800
Eaves Pacifica	2.32	%	Jun-2025	(5)	17,600		17,600		—		—		—		—		—		17,600
Avalon Bowery Place I	3.78	%	Nov-2037	(5)	93,800		93,800		—		—		—		—		—		93,800
Avalon Acton	2.59	%	Jul-2040	(5)	45,000		45,000		—		—		—		—		—		45,000
Avalon Morningside Park	2.10	%	May-2046	(3)	100,000		100,000		—		—		—		—		345		99,655
Avalon Clinton North	2.63	%	Nov-2038	(5)	147,000		147,000		—		—		—		—		—		147,000
Avalon Clinton South	2.63	%	Nov-2038	(5)	121,500		121,500		—		—		—		—		—		121,500
Avalon Midtown West	2.54	%	May-2029	(5)	100,500		100,500		—		—		—		—		—		100,500
Avalon San Bruno I	2.52	%	Dec-2037	(5)	64,450		64,450		—		—		—		—		—		64,450
Avalon Calabasas	2.47	%	Apr-2028	(5)	44,410		44,410		—		—		—		—		—		44,410
					818,795		801,495		—		—		—		—		345		801,150
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
Avalon Orchards	7.80	%	Jul-2033		16,075		15,717		138		577		619		663		710		13,010
Avalon Walnut Creek	4.00	%	Jul-2066		3,420		3,557		—		—		—		—		—		3,557
Avalon Mission Oaks	6.04	%	May-2019	(6)	19,545		—		—		—		—		—		—		—
Avalon Stratford	6.02	%	May-2019	(6)	38,221		—		—		—		—		—		—		—
AVA Belltown	6.00	%	May-2019	(6)	60,766		—		—		—		—		—		—		—
Avalon Encino	6.06	%	May-2019	(6)	33,882		—		—		—		—		—		—		—
Avalon Run East	5.95	%	May-2019	(6)	36,305		—		—		—		—		—		—		—
Avalon Wilshire	6.18	%	May-2019	(6)	61,268		—		—		—		—		—		—		—
Avalon at Foxhall	6.06	%	May-2019	(6)	54,583		—		—		—		—		—		—		—
Avalon at Gallery Place	6.06	%	May-2019	(6)	42,410		—		—		—		—		—		—		—
Avalon at Traville	5.91	%	May-2019	(6)	71,871		—		—		—		—		—		—		—
Avalon Bellevue	5.92	%	May-2019	(6)	24,695		—		—		—		—		—		—		—
Avalon on the Alameda	5.91	%	May-2019	(6)	49,930		—		—		—		—		—		—		—
Avalon at Mission Bay I	5.90	%	May-2019	(6)	67,772		—		—		—		—		—		—		—
AVA Pasadena	4.06	%	Jun-2018		11,287		11,128		54		11,074		—		—		—		—
Avalon La Jolla Colony	3.36	%	Nov-2017	(6)	26,682		—		—		—		—		—		—		—
Eaves Old Town Pasadena	3.36	%	Nov-2017	(6)	14,120		—		—		—		—		—		—		—
Eaves Thousand Oaks	3.36	%	Nov-2017	(6)	26,392		—		—		—		—		—		—		—



Archstone Lexington	3.36	%	Nov-2017	(7)	21,601		21,601		21,601		—		—		—		—		—
Eaves Los Feliz	3.36	%	Nov-2017	(6)	41,302		—		—		—		—		—		—		—
Avalon Oak Creek	3.36	%	Nov-2017	(6)	69,696		—		—		—		—		—		—		—
Avalon Del Mar Station	3.36	%	Nov-2017	(6)	70,854		—		—		—		—		—		—		—
Avalon Courthouse Place	3.36	%	Nov-2017	(6)	118,112		—		—		—		—		—		—		—
Avalon Pasadena	3.36	%	Nov-2017	(6)	25,805		—		—		—		—		—		—		—
Eaves West Valley	3.36	%	Nov-2017	(6)	146,696		—		—		—		—		—		—		—
Eaves Woodland Hills	3.36	%	Nov-2017	(6)	98,732		—		—		—		—		—		—		—
Avalon Russett	3.36	%	Nov-2017	(6)	32,199		—		—		—		—		—		—		—
Eaves Los Feliz	3.68	%	Jun-2027	(8)	—		41,400		—		—		—		—		—		41,400
Eaves Woodland Hills	3.66	%	Jun-2027	(8)	—		111,500		—		—		—		—		—		111,500
Avalon Russett	3.62	%	Jun-2027	(8)	—		32,200		—		—		—		—		—		32,200
Avalon San Bruno II	3.85	%	Apr-2021		30,001		29,663		130		534		564		591		27,844		—
Avalon Westbury	4.88	%	Nov-2036	(3)	17,745		16,780		329		1,358		1,426		1,499		1,574		10,594
Avalon San Bruno III	3.18	%	Jun-2020		54,408		53,617		302		1,226		1,264		50,825		—		—
Avalon Andover	3.29	%	Apr-2018		13,844		13,585		88		13,497		—		—		—		—
Avalon Natick	3.14	%	Apr-2019		14,170		13,917		86		349		13,482		—		—		—
Avalon Hoboken	3.55	%	Dec-2020		67,904		67,904		—		—		—		67,904		—		—
Avalon Columbia Pike	3.24	%	Nov-2019		70,019		69,019		381		1,553		67,085		—		—		—
					5,752,312		5,401,588		23,109		30,168		84,440		771,482		280,128		4,212,261

Variable rate
Avalon Calabasas	2.41	%	Aug-2018	(5)	53,570		52,407		311		52,096		—		—		—		—
Avalon Natick	3.56	%	Apr-2019	(5)	35,897		35,256		216		884		34,156		—		—		—
Term Loan - $300 million	2.78	%	Mar-2021		300,000		300,000		—		—		—		—		300,000		—
Term Loan - $100 million	2.33	%	Feb-2022		—		100,000		—		—		—		—		—		100,000
Term Loan - $150 million	2.87	%	Feb-2024		—		150,000		—		—		—		—		—		150,000
					389,467		637,663		527		52,980		34,156		—		300,000		250,000

Total indebtedness - excluding Credit Facility					$	7,076,758	$	6,956,443	$	23,824	$	83,925	$	119,419	$	772,353	$	581,395	$	5,375,527



	Company ownership percentage		# of Apartment homes	Total capitalized cost (1)		Debt (2)
									Interest rate (3)		Maturity date
Unconsolidated Real Estate Investments						Amount		Type	Interest rate (3)		Maturity date

U.S. Fund
1. Avalon Studio 4121 - Studio City, CA			149	$	57,073	$	29,073	Fixed	3.34	%	Nov 2022
2. Avalon Marina Bay - Marina del Rey, CA (4)			205	77,149		51,300		Fixed	1.56	%	Dec 2020
3. Avalon Venice on Rose - Venice, CA			70	57,241		29,269		Fixed	3.28	%	Jun 2020
4. Avalon Station 250 - Dedham, MA			285	96,662		56,653		Fixed	3.73	%	Sep 2022
5. Avalon Grosvenor Tower - Bethesda, MD			237	79,973		43,911		Fixed	3.74	%	Sep 2022
6. Avalon Kirkland at Carillon - Kirkland, WA			131	60,725		28,555		Fixed	3.75	%	Feb 2019
Total U.S. Fund	28.6	%	1,077	428,823		238,761			3.17	%

AC JV
1. Avalon North Point - Cambridge, MA (5)			426	187,539		111,653		Fixed	6.00	%	Aug 2021
2. Avalon Woodland Park - Herndon, VA (5)			392	85,924		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	300,268		162,300			6.00	%

Other Operating Joint Ventures
1. MVP I, LLC	25.0	%	313	125,204		103,000		Fixed	3.24	%	Jul 2025
2. Brandywine Apartments of Maryland, LLC	28.7	%	305	19,328		22,899		Fixed	3.40	%	Jun 2028
Total Other Joint Ventures			618	144,532		125,899			3.27	%

Total Unconsolidated Investments			2,616	$	873,623	$	526,960		4.06	%



		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	$	10.2	Q1 2017	Q1 2018	Q3 2018
2.	Toluca Hills Apartments by Avalon Los Angeles, CA	1,151	40.0		Q1 2017	Q1 2020	Q3 2020
3.	Avalon at Chestnut Hill Chestnut Hill, MA	204	9.2		Q1 2017	Q4 2017	Q2 2018
4.	Avalon Prudential Center II Boston, MA	266	18.7		Q1 2017	Q3 2019	Q1 2020
5.	Avalon Midtown West New York, NY	550	30.0		Q1 2017	Q2 2019	Q4 2019
6.	Avalon Willow Mamaroneck, NY	227	13.1		Q2 2017	Q1 2018	Q3 2018
7.	Avalon at Edgewater II (3) Edgewater, NJ	240	60.0		Q2 2017	Q1 2019	Q3 2019
8.	AVA Studio City II Studio City, CA	101	5.8		Q2 2017	Q4 2017	Q2 2018
9.	Avalon at Florham Park Florham Park, NJ	270	12.9		Q3 2017	Q3 2018	Q1 2019
10.	AVA Van Ness Washington, D.C.	269	13.3		Q3 2017	Q1 2019	Q3 2019
	Total	3,583	$	213.2



Market	Number of rights	Estimated number of homes	Projected total capitalized cost ($ millions) (1)

New England	4	908	$	336
Metro NY/NJ	11	4,434	1,643
Mid-Atlantic	3	996	312
Pacific Northwest	2	588	158
Northern California	4	991	512
Southern California	1	475	245
Total	25	8,392	$	3,206