1
Exhibit 99.1
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
AVALONBAY COMMUNITIES, INC.
PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
The following unaudited Pro Forma Condensed Balance Sheet of AvalonBay
Communities, Inc. (the "Company") as of June 30, 1998 gives effect to (i) the
acquisition and sale of apartment communities and land that have been
consummated since June 30, 1998 and the acquisition of other apartment
communities that the Company expects to consummate in the near future; (ii) the
investment by the Company in a participating mortgage note; (iii) the July 1998
sale of Fixed Rate Unsecured Senior Notes; and (iv) repayment of amounts
outstanding under the Company's Variable Rate Unsecured Credit Facility (the "
Unsecured Credit Facility").
The unaudited Pro Forma Condensed Balance Sheet is presented for informational
purposes only and is not necessarily indicative of what the actual condensed
financial position of the Company would have been as of June 30, 1998, nor does
it purport to represent the future condensed financial position of the Company.
This information should be read in conjunction with the unaudited condensed
financial statements and other financial information contained in the Company's
Quarterly Report on Form 10-Q for the six months ended June 30, 1998, including
the notes thereto.
2
AVALONBAY COMMUNITIES, INC.
PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
(Dollars in thousands)
At June 30, 1998 (Unaudited)
---------------------------------------------------------------------------------
Pro Forma Adjustments
-----------------------------------------------------
Acquired Disposed Probable Priors Debt Pro Forma
Historical Communities Communities Acquisitions Offering Consolidated
---------- ----------- ----------- ------------ ----------- ------------
ASSETS
Real estate, net $3,655,967 $145,074 $(56,515) $37,450 $ - $3,781,976
Cash, cash equivalents and cash in escrow 21,752 - - - - 21,752
Other assets 87,466 23,874 (283) - 2,184 113,241
---------- -------- -------- ------- ------ ----------
TOTAL ASSETS $3,765,185 $168,948 $(56,798) $37,450 $2,184 $3,916,969
========== ======== ======== ======= ====== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes and unsecured credit facility $1,331,059 $167,184 $(56,490) $37,450 $2,184 $1,481,387
Payables for construction 32,848 - - - - 32,848
Accrued expenses and other liabilities 115,973 1,764 (459) - - 117,278
---------- -------- -------- ------- ------ ----------
TOTAL LIABILITIES 1,479,880 168,948 (56,949) 37,450 2,184 1,631,513
Minority interest of unitholders in
consolidated operating partnerships 32,323 - - - - 32,323
Stockholders' equity:
Preferred stock 143 - - - - 143
Common stock 636 - - - - 636
Additional paid-in capital 2,317,749 - - - - 2,317,749
Deferred compensation (6,221) - - - - (6,221)
Dividends in excess of accumulated
earnings (59,325) - 151 - - (59,174)
---------- -------- -------- ------- ------ ----------
TOTAL STOCKHOLDERS' EQUITY 2,252,982 - 151 - - 2,253,133
---------- -------- -------- ------- ------ ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,765,185 $168,948 $(56,798) $37,450 $2,184 $3,916,969
========== ======== ======== ======= ====== ==========
See accompanying notes.
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AVALONBAY COMMUNITIES, INC.
NOTES TO PRO FORMA CONDENSED
BALANCE SHEET
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
The pro forma adjustments for the Acquired Communities, Disposed
Communities and Probable Acquisitions reflect the communities and land
acquired (Prudential Center Apartments, Avalon Corners land, Avalon Fox
Mill land and Avalon Court North land) or disposed (Aspen Meadows,
Village Park of Troy and Arbor Park) by the Company subsequent to June
30, 1998, acquisitions that the Company expects to consummate in the
near future (Hanover Hall) and the investment by the Company in a
participating mortgage note secured by Fairlane Woods. The adjustments
for Prior Debt Offering reflects the sale of $250 million in Fixed Rate
Unsecured Senior Notes during July 1998, and the subsequent repayment
of amounts outstanding under the Company's Unsecured Credit Facility.
2. ACQUIRED COMMUNITIES ADJUSTMENTS
(i) total acquisition costs of $145,074 ($130,050 related to the
Prudential Center Apartments, $6,220 related to Avalon Corners
land, $2,804 related to Avalon Fox Mill land, $6,000 related
to Avalon Court North land);
(ii) the assumption of net liabilities totaling $1,890, and draws
on the Company's Unsecured Credit Facility totaling $167,184;
and
(iii) the investment of $24,000 in a participating mortgage note
secured by Fairlane Woods.
3. DISPOSED COMMUNITIES ADJUSTMENTS
(i) total net real estate disposed of $56,515 ($12,300 related to
Aspen Meadows, $31,815 related to Village Park of Troy and
$12,400 related to Arbor Park);
(ii) the transfer of net liabilities of $176 in connection with the
sale of the communities;
(iii) the repayment of $56,490 on the Company's Unsecured Credit
Facility from the estimated sales proceeds; and
(iv) the recognition of a net gain totaling $151 from the sale of
the communities.
4. PROBABLE ACQUISITIONS ADJUSTMENTS
(i) total acquisition costs of $37,450 related to Hanover Hall;
and
(ii) draws on the Company's Unsecured Credit Facility totaling
$37,450.
5. PRIOR DEBT OFFERING ADJUSTMENTS
Reflects the sale of $250,000 of Fixed Rate Unsecured Senior Notes in
July 1998 at a net price of $247,816, after deduction of transaction
costs. The Company used all of the proceeds to pay down amounts
outstanding under its Unsecured Credit Facility.
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AVALONBAY COMMUNITIES, INC.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The following unaudited Pro Forma Condensed Statements of Operations of
AvalonBay Communities, Inc. (the "Company") for the six months ended June 30,
1998 and for the year ended December 31, 1997 gives effect to (i) the June 1998
merger of Avalon Properties, Inc. with and into the Company (the "Merger"); (ii)
the acquisition and sale of apartment communities and land that have been
consummated since December 31, 1996 and the acquisition of other apartment
communities that the Company expects to consummate in the near future; (iii) the
investment by the Company in a participating mortgage note; (iv) the sale of
Common Stock, Preferred Stock and Fixed Rate Unsecured Senior Notes since
December 31, 1996; and (v) repayment of amounts outstanding under the Company's
Variable Rate Unsecured Credit Facility (the "Unsecured Credit Facility").
The unaudited Pro Forma Condensed Statements of Operations are presented for
informational purposes only and are not necessarily indicative of what the
actual condensed operations of the Company would have been assuming the
aforementioned transactions had been consummated as of the beginning of the
respective periods, nor does it purport to represent the results of operations
for future periods. This information should be read in conjunction with the
unaudited condensed financial statements and other financial information
contained in the Company's Quarterly Report on Form 10-Q for the six months
ended June 30, 1998, including the notes thereto.
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AVALONBAY COMMUNITIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
(Dollars in thousands, except per share data)
For the six months ended June 30, 1998
---------------------------------------------------------------------------------
Pro Forma Adjustments
-----------------------------------------------------
Acquired Disposed Probable Prior Pro Forma
Historical Communities Communities Acquisitions Offerings Consolidated
---------- ----------- ----------- ------------ ----------- ------------
Total revenue $116,230 $106,187 $(1,429) $2,390 $ - $223,378
Expenses:
Operating expenses 30,705 31,572 (628) 750 - 62,399
Property taxes 9,394 9,089 (106) 204 - 18,581
Interest expense 17,363 19,853 (874) 1,217 (571) 36,988
Depreciation and amortization 24,503 27,204 (264) 533 - 51,976
General and administrative 2,946 2,558 - - - 5,504
Provision for unrecoverable deferred
development costs 400 433 - - - 833
-------- -------- ------- ------ ------ --------
Total expenses 85,311 90,709 (1,872) 2,704 (571) 176,281
-------- -------- ------- ------ ------ --------
Equity in income of unconsolidated joint
ventures 238 1,112 - - - 1,350
Interest income 468 1,571 - - - 2,039
Minority interest (404) (583) - - - (987)
-------- -------- ------- ------ ------ --------
Net income 31,221 17,578 443 (314) 571 49,499
Dividends attributable to preferred stock (8,523) (8,190) - - 1,174 (15,539)
-------- -------- ------- ------ ------ --------
Net income available to common stockholders $ 22,698 $ 9,388 $ 443 $ (314) $1,745 $ 33,960
======== ======== ======= ====== ====== ========
Per common share:
Net income - basic $ .68 $ .53
======== ========
Net income - diluted $ .66 $ .52
======== ========
See accompanying notes.
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AVALONBAY COMMUNITIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(Dollars in thousands, except per share data)
For the year ended December 31, 1997
---------------------------------------------------------------------------------
Pro Forma Adjustments
-----------------------------------------------------
Acquired Disposed Probable Prior Pro Forma
Historical Communities Communities Acquisitions Offerings Consolidated
---------- ----------- ----------- ------------ ----------- ------------
Total revenue $125,827 $268,321 $(706) $ 4,576 $ - $398,018
Expenses:
Operating expenses 29,016 73,945 (139) 1,712 - 104,534
Property taxes 9,467 23,644 (64) 416 - 33,463
Interest expense 14,113 74,589 (307) 2,547 (29,408) 61,534
Depreciation and amortization 27,009 71,921 (112) 1,066 - 99,884
General and administrative 6,308 5,093 - - - 11,401
Provision for unrecoverable deferred
development costs 710 650 - - - 1,360
-------- -------- ----- ------- -------- --------
Total expenses 86,623 249,842 (622) 5,741 (29,408) 312,176
-------- -------- ----- ------- -------- --------
Equity in income of unconsolidated joint
ventures - 5,689 - - - 5,689
Interest income 207 3,554 - - - 3,761
Minority interest (470) (1,140) - - - (1,610)
-------- -------- ----- ------- -------- --------
Net income 38,941 26,582 (84) (1,165) 29,408 93,682
Dividends attributable to preferred stock (7,480) (19,772) - - (3,827) (31,079)
-------- -------- ----- ------- -------- --------
Net income available to common stockholders $ 31,461 $ 6,810 $ (84) $(1,165) $ 25,581 $ 62,603
======== ======== ===== ======= ======== ========
Per common share:
Net income - basic $ 1.40 $ .98
======== ========
Net income - diluted $ 1.40 $ .97
======== ========
See accompanying notes.
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AVALONBAY COMMUNITIES, INC.
NOTES TO PRO FORMA CONDENSED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. BASIS OF PRESENTATION
The pro forma adjustments for the Acquired Communities, Disposed
Communities and Probable Acquisitions assumes that the Merger, all
communities and land acquired or disposed by the Company subsequent to
December 31, 1996, acquisitions that the Company expects to consummate
in the near future and the investment by the Company in a participating
mortgage note had occurred as of January 1, 1997. The adjustments for
Prior Offerings assumes the sale of all Common Stock, Preferred Stock
and Fixed Rate Unsecured Senior Notes (and the related repayment of
amounts outstanding under the Company's Unsecured Credit Facility)
subsequent to December 31, 1996 had occurred as of January 1, 1997.
2. ACQUIRED COMMUNITIES ADJUSTMENTS
(i) the historical operating revenues and expenses of the
communities acquired;
(ii) the additional interest expense on debt at weighted average
interest rates ranging from 6.5% to 6.8%, incurred for the
acquisitions and interest expense on assumed debt;
(iii) the depreciation expense based on the new accounting basis of
the rental properties based on a 30 year useful life; and
(iv) the historical general and administrative expenses, provision
for unrecoverable deferred development costs, equity in income
of unconsolidated joint ventures, interest income and minority
interest of Avalon Properties, Inc.
3. DISPOSED COMMUNITIES ADJUSTMENTS
(i) the elimination of historical operating revenues and expenses
of the communities sold;
(ii) the reduction of interest expense from the repayment of debt
using the net proceeds; and
(iii) the elimination of historical depreciation expense of the
communities sold.
4. PROBABLE ACQUISITIONS ADJUSTMENTS
(i) the historical operating revenues and expenses of the
communities anticipated to be acquired;
(ii) the additional interest expense on debt at weighted average
interest rates ranging from 6.5% to 6.8%, incurred for the
acquisitions; and
(iii) the depreciation expense based on the new accounting basis of
the rental properties based on a 30 year useful life.
5. PRIOR OFFERINGS ADJUSTMENTS
Adjustments reflect the reduction in interest expense and additional
preferred dividends associated with the paydown of amounts outstanding
under the Company's Unsecured Credit Facility with the proceeds from
the sale of Common Stock and Preferred Stock, and the change in
interest expense associated with the sale of Fixed Rate Unsecured
Senior Notes subsequent to December 31, 1996.
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6. EARNINGS PER SHARE
Based upon the following table of pro forma shares of common stock
outstanding and common stock equivalents on a weighted average basis
during the six months ended June 30, 1998 and for the year ended
December 31, 1997.
For the For the
six months year ended
ended June 30 December 31
1998 1997
Weighted average Common Shares outstanding - basic 64,089,106 63,958,400
Weighted average Common Shares outstanding - diluted 64,791,092 64,515,021