Difficulty of selling apartment communities could limit liquidity and financial flexibility.
Federal tax laws may limit our ability to earn a gain on the sale of a community (unless we own it through a subsidiary which will incur a taxable gain upon sale) if we are found to have held, acquired or developed the community primarily with the intent to resell the community, and this limitation may affect our ability to sell communities without adversely affecting returns to our stockholders. In addition, real estate in our markets can at times be difficult to sell quickly at prices we find acceptable. These potential difficulties in selling real estate in our markets may limit our ability to change or reduce the apartment communities in our portfolio promptly in response to changes in economic or other conditions.
Acquisitions may not yield anticipated results.
Our business strategy includes acquiring as well as developing communities. Our acquisition activities and their success may be exposed to the following risks:
an acquired property may fail to perform as we expected in analyzing our investment; and
our estimate of the costs of repositioning or redeveloping an acquired property may prove inaccurate.
Failure to succeed in new markets, or with new brands and community formats, or in activities other than the development, ownership and operation of residential rental communities may have adverse consequences.
We may from time to time commence development activity or make acquisitions outside of our existing market areas if appropriate opportunities arise. Our historical experience in our existing markets in developing, owning and operating rental communities does not ensure that we will be able to operate successfully in new markets, should we choose to enter them. We may be exposed to a variety of risks if we choose to enter new markets, including an inability to accurately evaluate local apartment market conditions; an inability to obtain land for development or to identify appropriate acquisition opportunities; an inability to hire and retain key personnel; and lack of familiarity with local governmental and permitting procedures.
Although we are primarily in the multifamily business, we also own and lease ancillary retail space when a retail component represents the best use of the space, as is often the case with large urban in-fill developments. We also may engage or have an interest in for-sale activity. We may be unsuccessful in owning and leasing retail space at our communities or in developing real estate with the intent to sell, which could have an adverse effect on our results of operations.
Land we hold with no current intent to develop may be subject to future impairment charges.
We own parcels of land that we do not currently intend to develop. As discussed in Item 2. "Communities—“Communities—Other Land and Real Estate Assets"Assets,” in the event that the fair market value of a parcel changes such that we determine that the carrying basis of the parcel reflected in our financial statements is greater than the parcel's then current fair value, less costs to dispose, we would be subject to an impairment charge, which would reduce our net income.
We are exposed to various risks from our real estate activity through joint ventures.
Instead of acquiring or developing apartment communities directly, at times we invest as a partner or a co-venturer. Joint venture investments (including investments through partnerships or limited liability companies) involve risks, including the possibility that our partner might become insolvent or otherwise refuse to make capital contributions when due; that we may be responsible to our partner for indemnifiable losses; that our partner might at any time have business goals that are inconsistent with ours; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. Frequently, we and our partner may each have the right to trigger a buy-sell arrangement that could cause us to sell our interest, or acquire our partner's interest, at a time when we otherwise would not have initiated such a transaction.
our subsidiaries that are the general partners of the Fundsventures are generally liable, under partnership law, for the debts and obligations of the respective Funds,ventures, subject to certain exculpation and indemnification rights pursuant to the terms of the partnership agreement of the Funds;ventures;
investors in the Fundsventures holding a majority of the partnership interests may remove us as the general partner without cause, in the case of Fund I and Fund II, subject to our right to receive compensation for an additional period of management fees after such removal and our right to acquire one of the properties then held by such Funds;ventures;
while we have broad discretion to manage the Funds,ventures, the investors or an advisory committee comprised of representatives of the investors must approve certain matters, and as a result we may be unable to cause the Fundsventures to implement certain decisions that we consider beneficial; and
we may be liable and/or our status as a REIT may be jeopardized if either the Funds,ventures, or the REIT entities associated with the Funds and/or the U.S. Fund and/or AC JV,ventures, fail to comply with various tax or other regulatory matters.
The governance provisions of our joint ventures with Equity Residential could adversely affect our flexibility in dealing with such joint venture assets and liabilities.
In connection with the Archstone Acquisition, we created joint ventures with Equity Residential that manage or have an interest in certain of the acquired assets and liabilities. These structures involve participation in the ventures by Equity Residential whose interests and rights may not be the same as ours. Joint ownership of an investment in real estate involves risks not associated with direct ownership of real estate, including the risk that Equity Residential may at any time have economic or other business interests or goals which become inconsistent with our business interests or goals, including inconsistent goals relating to the sale of properties held in the joint ventures or the timing of the termination and liquidation of the joint ventures. Under the form for the joint venture arrangements, neither we nor Equity Residential expect to individually have the sole power to control the ventures, and an impasse could occur, which could adversely affect the applicable joint venture and decrease potential returns to us and our investors.
We rely on information technology in our operations, and any breach, interruption or security failure of that technology could have a negative impact on our business, results of operations, financial condition and/or reputation.
Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber attacks.
We collect and hold personally identifiable information of our residents and prospective residents in connection with our leasing and property management activities, and we collect and hold personally identifiable information of our associates in connection with their employment. In addition, we engage third party service providers that may have access to such personally identifiable information in connection with providing necessary information technology and security and other business services to us.
We address potential breaches or disclosure of this confidential personally identifiable information by implementing a variety of security measures intended to protect the confidentiality and security of this information including (among others) engaging reputable, recognized firms to help us design and maintain our information technology and data security systems, including testing and verification of their proper and secure operations on a periodic basis. We also maintain cyber risk insurance to coverprovide some coverage for certain risks arising out of data and network breaches.
However, there can be no assurance that we will be able to prevent unauthorized access to this information. Any failure in or breach of our operational or information security systems, or those of our third party service providers, as a result of cyber attacks or information security breaches could result in a wide range of potentially serious harm to our business operations and financial prospects, including (among others) disruption of our business and operations, disclosure or misuse of confidential or proprietary information (including personal information of our residents and/or associates), damage to our reputation, and/or potentially significant legal and/or financial liabilities and penalties.
We are exposed to risks that are either uninsurable, not economically insurable or in excess of our insurance coverage, including risks from natural disasters such as earthquakes and severe weather.discussed below.
Earthquake risk. As further described in Item 2. "Communities—“Communities—Insurance and Risk of Uninsured Losses"Losses,” many of our West Coast communities are located in the general vicinity of active earthquake faults. We cannot assure you that an earthquake would not cause damage or losses greater than insured levels. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected community, as well as anticipated future revenue from that community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. Any such loss could materially and adversely affect our business and our financial condition and results of operations.
Insurance coverage for earthquakes can be costly and in limited supply. As a result, we may experience shortages in desired coverage levels if market conditions are such that insurance is not available or the cost of insurance makes it, in management's view, economically impractical.
Severe or inclement weather risk. Particularly in New England and the Metro New York/New Jersey area, we are exposed to risks associated with inclement or severe weather, including hurricanes, severe winter storms and coastal flooding. Severe or inclement weather may result in increased costs, such as losses and costs resulting from repair of water and wind damage, removal of snow and ice, and, in the case of our development communities, delays in construction that result in increased construction costs and delays in realizing rental revenues from a community. In addition, severe or inclement weather could increase the need for maintenance of our communities.
Where we have a geographic concentration of exposures, a single catastrophe that affects a region, such as an earthquake that affects the West Coast or a hurricane or severe winter storm that affects the Mid-Atlantic, Metro New York/New Jersey or New England regions, may have a significant negative effect on our financial condition and results of operations.
Climate change risk. To the extent that significant changes in the climate occur in areas where our communities are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including significant property damage to or destruction of our communities, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our existing properties and our new development properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our net income.
Terrorism risk. We have significant investments in large metropolitan markets, such as the Metro New York/New Jersey and Washington, D.C. markets, that have in the past been or may in the future be the target of actual or threatened terrorist attacks. Future terrorist attacks in these markets could directly or indirectly damage our communities, both physically and financially, or cause losses that exceed our insurance coverage and that could have a material adverse effect on our business, financial condition and results of operations.
A significant uninsured property or liability loss could have a material adverse effect on our financial condition and results of operations.
In addition to the earthquake insurance discussed above, we carry commercial general liability insurance, property insurance and terrorism insurance with respect to our communities on terms and in amounts we consider commercially reasonable. There are, however, certain types of losses (such as losses arising from acts of war) that 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. If an uninsured property loss or a property loss in excess of insured limits were to occur, we could lose our capital invested in a community, as well as the anticipated future revenues from such community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. If an uninsured liability to a third party were to occur, we would incur the cost of defense and settlement with, or court ordered damages to, that third party. A significant uninsured property or liability loss could materially and adversely affect our business and our financial condition and results of operations.
We may incur costs due to environmental contamination or non-compliance.
Under various federal, state and local environmental and public health laws, regulations and ordinances, we may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at our properties (including in some cases natural substances such as methane and radon gas) and may be held liable under these laws or common law to a governmental entity or to third parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the contamination. These damages and costs may be substantial and may exceed any insurance coverage we have for such events. The presence of these substances, or the failure to properly remediate the contamination, may adversely affect our ability to borrow against, develop, sell or rent the affected property. In addition, some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination.
The development, construction and operation of our communities are subject to regulations and permitting under various federal, state and local laws, regulations and ordinances, which regulate matters including wetlands protection, storm water runoff and wastewater discharge. These laws and regulations may impose restrictions on the manner in which our communities may be developed, and noncompliance with these laws and regulations may subject us to fines and penalties. We do not currently anticipate that we will incur any material liabilities as a result of noncompliance with these laws.
Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos containing materials ("ACMs"(“ACMs”) when such materials are in poor condition or in the event of renovation or demolition of a building. These laws and the common law may impose liability for release of ACMs and may allow third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs. We are not aware that any ACMs were used in the construction of the communities we developed. ACMs were, however, used in the construction of a number of the communities that we have acquired. We implement an operations and maintenance program at each of the communities at which ACMs are detected. We do not currently anticipate that we will incur any material liabilities as a result of the presence of ACMs at our communities.
We are aware that some of our communities have lead paint and have implemented an operations and maintenance program at each of those communities. We do not currently anticipate that we will incur any material liabilities as a result of the presence of lead paint at our communities.
Environmental agencies and third parties may assert claims for remediation or personal injury based on the alleged actual or potential intrusion into buildings of chemical vapors from soils or groundwater underlying or in the vicinity of those buildings or on nearby properties. We currently do not anticipate that we will incur any material liabilities as a result of vapor intrusion at our communities.
All of our stabilized operating communities, and all of the communities that we are currently developing, have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or ground watergroundwater sampling. These assessments, together with subsurface assessments conducted on some properties, have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. In connection with our ownership, operation and development of communities, from time to time we undertake substantial remedial action in response to the presence of subsurface or other contaminants, including contaminants in soil, groundwater and soil vapor beneath or affecting our buildings. In some cases, an indemnity exists upon which we may be able to rely if environmental liability arises from the contamination or remediation costs exceed estimates. There can be no assurance, however, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that environmental liability arises.
Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Although the occurrence of mold at multifamily and other structures, and the need to remediate such mold, is not a new phenomenon, there has been increased awareness in recent years that certain molds may in some instances lead to adverse health effects, including allergic or other reactions. To help limit mold growth, we educate residents about the importance of adequate ventilation and request or require that they notify us when they see mold or excessive moisture. We have established procedures for promptly addressing and remediating mold or excessive moisture from apartment homes when we become aware of its presence regardless of whether we or the resident believe a health risk is presented. However, we cannot provide assurance that mold or excessive moisture will be detected and remediated in a timely manner. If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities that may exceed any applicable insurance coverage.
Additionally, we have occasionally been involved in developing, managing, leasing and operating various properties for third parties. Consequently, we may be considered to have been an operator of such properties and, therefore, potentially liable for removal or remediation costs or other potential costs which relate to the release or presence of hazardous or toxic substances or petroleum products at such properties. We are not aware of any material environmental liabilities with respect to properties managed or developed by us or our predecessors for such third parties.
We cannot assure you that:
the environmental assessments described above have identified all potential environmental liabilities;
no prior owner created any material environmental condition not known to us or the consultants who prepared the assessments;
no environmental liabilities have developed since the environmental assessments were prepared;
the condition of land or operations in the vicinity of our communities, such as the presence of underground storage tanks, will not affect the environmental condition of our communities;
future uses or conditions, including, without limitation, changes in applicable environmental laws and regulations, will not result in the imposition of environmental liability; and
no environmental liabilities will arise at communities that we have sold for which we may have liability.
Our success depends on key personnel whose continued service is not guaranteed.
Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. Our executive officers make important capital allocation decisions or recommendations to our Board of Directors from among the opportunities identified by our regional offices. There is substantial competition for qualified personnel in the real estate industry, and the loss of several of our key personnel could adversely affect the Company.
Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to stockholders.
If we fail to qualify as a REIT for federal income tax purposes, we will be subject to federal income tax on our taxable income at regular corporate rates (subject to any applicable alternative minimum tax). In addition, unless we are entitled to relief under applicable statutory provisions, we would be ineligible to make an election for treatment as a REIT for the four taxable years following the year in which we lose our qualification. The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of funds available for distribution to our stockholders. Furthermore, we would no longer be required to make distributions to our stockholders. Thus, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital, and would adversely affect the value of our common stock.
We believe that we are organized and qualified as a REIT, and we intend to operate in a manner that will allow us to continue to qualify as a REIT. However, we cannot assure you that we are qualified as a REIT, or that we will remain qualified in the future. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. In addition, future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT for federal income tax purposes or the federal income tax consequences of this qualification.
Even if we qualify as a REIT, we will be subject to certain federal, state and local taxes on our income and property and on taxable income that we do not distribute to our shareholders. In addition, we may through our taxable REIT subsidiaries hold certain assets and engage in certain activities that a REIT could not engage in directly. We also use taxable REIT subsidiaries to hold certain assets that we believe would be subject to the 100% prohibited transaction tax if sold at a gain outside of a taxable REIT subsidiary. Our taxable REIT subsidiaries are subject to U.S. tax as regular corporations. The Archstone Acquisition increased the amount of assets held through our taxable REIT subsidiaries.
Legislative or regulatory action related to federal income tax laws could adversely affect our stockholders and/or our business.
In recent years, numerous legislative, judicial and administrative changes have been made to the federal income tax laws applicable to investments in REITs and similar entities. Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. In addition, according to publicly released statements, a top legislative priority of the Trump administration and the current Congress may be significant reform of the Code, including significant changes to taxation of business entities and the deductibility of interest expense. There is a substantial lack of clarity around the likelihood, timing and details of any such tax reform and the impact of any potential tax reform on our business and on the price of our common stock. We cannot assure you that changes to tax laws and regulations will not have an adverse effect on an investment in our common stock.
The ability of our stockholders to control our policies and effect a change of control of our company is limited by certain provisions of our charter and bylaws and by Maryland law.
There are provisions in our charter and bylaws that may discourage a third party from making a proposal to acquire us, even if some of our stockholders might consider the proposal to be in their best interests. These provisions include the following:
Our charter authorizes our Board of Directors to issue up to 50,000,000 shares of preferred stock without stockholder approval and to establish the preferences and rights, including voting rights, of any series of preferred stock issued. The Board of Directors may issue preferred stock without stockholder approval, which could allow the Board to issue one or more classes or series of preferred stock that could discourage or delay a tender offer or a change in control.
To maintain our qualification as a REIT for federal income tax purposes, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by or for five or fewer individuals at any time during the last half of any taxable year. To maintain this qualification, and/or to address other concerns about concentrations of ownership of our stock, our charter generally prohibits ownership (directly, indirectly by virtue of the attribution provisions of the Code, or beneficially as defined in Section 13 of the Securities Exchange Act) by any single stockholder of more than 9.8% of the issued and outstanding shares of any class or series of our stock. In general, under our charter, pension plans and mutual funds may directly and beneficially own up to 15% of the outstanding shares of any class or series of stock. Under our charter, our Board of Directors may in its sole discretion waive or modify the ownership limit for one or more persons, but is not required to do so even if such waiver would not affect our qualification as a REIT. These ownership limits may prevent or delay a change in control and, as a result, could adversely affect our stockholders' ability to realize a premium for their shares of common stock.
As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law. Maryland law imposes restrictions on some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, which may delay or prevent offers to acquire us or increase the difficulty of completing any offers, even if they are in our stockholders' best interests. In addition, other provisions of the Maryland General Corporation Law permit the Board of Directors to make elections and to take actions without stockholder approval (such as classifying our Board such that the entire Board is not up for re-election annually) that, if made or taken, could have the effect of discouraging or delaying a change in control.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. COMMUNITIES
Our real estate investments consist primarily of current operating apartment communities, communities in various stages of development ("(“Development Communities"Communities”) and Development Rights (as defined below). Our current operating communities are further distinguished as Established Communities, Other Stabilized Communities, Lease-Up Communities, and Redevelopment Communities and exclude communities owned by the Residual JV.Unconsolidated 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.
The following is a description of each category:
Current Communities are categorized as Established, Other Stabilized, Lease-Up, Redevelopment or RedevelopmentUnconsolidated according to the following attributes:
Established Communities (also known as Same Store Communities) are consolidated communities where a comparison of operating results from the prior year period to the current year period is meaningful, as these communities were owned and had stabilized occupancy as of the beginning of the respective prior year period. The Company generally establishes the classification of communities as of the beginning of the calendar year; however, in 2014, effective April 1, 2014, the Company updated its classification of communities primarily to include communities acquired as part of the Archstone Acquisition in the results of operations of our Established Community portfolio for the balance of the year. The Established Communities for the year ended December 31, 20142016 are communities that are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2013,2015, are not conducting or planning to conduct substantial redevelopment activities, and are not held for sale or planned for disposition within the current year period. Any discussion of results of operations for the Established Communities for the year ended December 31, 2014 excludes communities acquired as part of the Archstone Acquisition. The Established Communities as of December 31, 2014, as updated effective April 1, 2014, are communities that are consolidated for financial reporting purposes, had stabilized occupancy as of April 1, 2013, are not conducting or planning to conduct substantial redevelopment activities, and are not held for sale or planned for disposition within the current year period. Established Communities as of December 31, 2014 include most of the stabilized operating communities acquired as part of the Archstone Acquisition.year. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.
Other Stabilized Communities includesare all other completed consolidated communities that we own or have a direct or indirect ownership interest in, and that have stabilized occupancy, as defined above. Other Stabilized Communities do not include communities that are conducting or planning to conduct substantial redevelopment activities within the current year. Other Stabilized Communities for the year ended December 31, 2014 include the stabilized operating communities acquired as part of the Archstone Acquisition.
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 consolidated communities where substantial redevelopment is in progress or is planned to begin during the current year. Redevelopment is considered substantial when 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 is expected to have a material impact on the operations of the community, including occupancy levels and future rental rates.
Unconsolidated Communities are communities that we have an indirect ownership interest in through our investment interest in an unconsolidated joint venture.
Development Communities are communities that are under construction and for which a certificate or certificates of occupancy for the entire community have not been received. These communities may be partially complete and operating.
Development Rights are development opportunities in the early phase of the development process for whichwhere we either have an option to acquire land or enter into a leasehold interest, for whichwhere we are the buyer under a long-term conditional contract to purchase land, where we control the land through a ground lease or own land to develop a new community, or where we are the designated developer in a public-private partnership. We capitalize related pre-development costs incurred in pursuit of new developments for which we currently believe future development is probable.
We currently lease our corporate headquarters located in Arlington, Virginia, as well as our other regional and administrative offices under operating leases.
As of December 31, 2014,2016, communities that we owned or held a direct or indirect interest in excluding indirect interests associated with the Residual JV, were classified as follows:
| | | Number of communities | | Number of apartment homes | Number of communities | | Number of apartment homes |
Current Communities | |
| | |
| |
| | |
|
| | | | | | |
Established Communities (1): | |
| | |
| |
Established Communities: | | |
| | |
|
New England | 33 |
| | 7,379 |
| 40 |
| | 9,009 |
|
Metro NY/NJ (2) | 33 |
| | 11,611 |
| 35 |
| | 11,084 |
|
Mid-Atlantic | 22 |
| | 7,108 |
| 27 |
| | 9,575 |
|
Pacific Northwest | 13 |
| | 3,179 |
| 13 |
| | 3,221 |
|
Northern California | 29 |
| | 8,519 |
| 33 |
| | 9,987 |
|
Southern California | 42 |
| | 11,639 |
| 43 |
| | 12,032 |
|
Total Established | 172 |
| | 49,435 |
| 191 |
| | 54,908 |
|
| | | | | | |
Other Stabilized Communities: | |
| | |
| |
| | |
|
New England | 12 |
| | 3,306 |
| 4 |
| | 1,032 |
|
Metro NY/NJ | 9 |
| | 2,557 |
| 8 |
| | 2,024 |
|
Mid-Atlantic | 12 |
| | 4,599 |
| 5 |
| | 1,607 |
|
Pacific Northwest | 2 |
| | 396 |
| 1 |
| | 367 |
|
Northern California | 7 |
| | 1,765 |
| 5 |
| | 1,455 |
|
Southern California | 12 |
| | 4,640 |
| 10 |
| | 3,419 |
|
Non-Core | 2 |
| | 474 |
| 3 |
| | 1,014 |
|
Total Other Stabilized | 56 |
| | 17,737 |
| 36 |
| | 10,918 |
|
| | | | | | |
Lease-Up Communities | 15 |
| | 3,853 |
| 12 |
| | 2,867 |
|
| | | | | | |
Redevelopment Communities | 8 |
| | 2,938 |
| 4 |
| | 1,671 |
|
| | | | | | |
Unconsolidated Communities | | 15 |
| | 4,174 |
|
| | | | |
Total Current Communities | 251 |
| | 73,963 |
| 258 |
| | 74,538 |
|
| | | | | | |
Development Communities | 26 |
| | 8,524 |
| |
Development Communities (1) | | 27 |
| | 9,129 |
|
| | | | |
Total Communities | | 285 |
| | 83,667 |
|
| | | | | | |
Development Rights | 37 |
| | 10,384 |
| 25 |
| | 8,487 |
|
____________________________ | |
(1) | Reflects the community classification effective April 1, 2014, which includes most stabilized communities acquired as part of the Archstone Acquisition in our Established Communities portfolio. |
| |
(2) | Metro NY/NJ EstablishedDevelopment Communities includes 240AVA North Point, expected to contain 265 apartment homes, which were destroyed and are uninhabitable asis being developed within a result of the fire at Avalon at Edgewater in January 2015.joint venture. |
Our holdings under each of the above categories are discussed on the following pages.
We generally establish the composition of our Established Communities portfolio annually. Determined as of January 1 of each of the respective years, the Established Communities portfolioportfolios for the years ended December 31, 2016, 2015 and 2014 2013 and 2012, had 23, 19 and 11 communities added, respectively, and six, seven and 17 communities removed, respectively. The Company removes a community from its Established Communities portfolio for the upcoming year (and then generally maintains that designation) if the Company believes that planned activity for a community for the upcoming year will result in that community's expected operations not being comparable to the prior year period. The Company believes that a community's expected operations will not be comparable to the prior year period when it intends either (i) to undertake a significant capital renovation of the community, such that the Company would consider the community to be classifiedwere as a Redevelopment Community; or (ii) to dispose of a community through a sale or other disposition transaction. For the years ended December 31, 2014, 2013 and 2012, the Company removed four, five and 10 communities, respectively, from its Established Communities portfolio due to a reclassification to the Redevelopment Community portfolio on account of then current or expected redevelopment, and removed two, two and seven communities, respectively, from its Established Communities portfolio due to the planned disposition of the communities.follows:
|
| | |
| Number of communities |
Established Communities as of December 31, 2013 | 115 |
|
Communities added | 67 |
|
Communities removed (1): | |
Redevelopment Communities | (8 | ) |
Disposed Communities | (2 | ) |
Established Communities as of December 31, 2014 | 172 |
|
Communities added | 13 |
|
Communities removed (1): | |
Redevelopment Communities | (4 | ) |
Disposed Communities | (3 | ) |
Other Stabilized (2) | (1 | ) |
Established Communities as of December 31, 2015 | 177 |
|
Communities added | 25 |
|
Communities removed (1): | |
Redevelopment Communities | (3 | ) |
Disposed Communities | (6 | ) |
Communities with multiple phases combined | (2 | ) |
Established Communities as of December 31, 2016 | 191 |
|
| |
(1) | We remove a community from our Established Communities portfolio for the upcoming year (and then generally maintain that designation) if we believe that planned activity for a community for the upcoming year will result in that community's expected operations not being comparable to the prior year period. We believe that a community's expected operations will not be comparable to the prior year period when we intend either (i) to undertake a significant capital renovation of the community, such that we would consider the community to be classified as a Redevelopment Community; or (ii) to dispose of a community through a sale or other disposition transaction. |
| |
(2) | Avalon at Edgewater was moved from the Established Communities portfolio to the Other Stabilized portfolio as a result of the fire that occurred in January 2015. |
Effective April 1, 2014, the Company updated its operating segments primarily to include communities acquired as part of the Archstone Acquisition in the results of operations of our Established Community portfolio for the balance of the year. The Established Communities portfolio as of December 31, 2014 added 43 stabilized communities to the Established Communities portfolio, primarily those acquired as part of the Archstone Acquisition, and removed one community from our Established Communities portfolio effective January 1, 2014, due to a reclassification to the Redevelopment Community portfolio.
Current Communities
Our Current Communities include garden-style apartment communities consisting of multi-story buildings in landscaped settings, as well as mid and high rise apartment communities in urban settings. As of January 31, 2015,2017, our Current Communities consisted of 142 garden-style (of which 16 are mixed communities and/or include town homes), 21 high-rise and 89 mid-rise apartment communities.the following:
|
| | | | | |
| Number of communities | | Number of apartment homes |
Garden-style (1) | 135 |
| | 41,147 |
|
Mid-rise | 100 |
| | 26,968 |
|
High-rise | 24 |
| | 6,923 |
|
Total Current Communities | 259 |
| | 75,038 |
|
| |
(1) | Includes 16 communities with 5,186 apartment homes that include town homes. |
Our communities generally offer a variety of quality amenities and features, which may include:
fully-equipped kitchens;
lofts and vaulted ceilings;
walk-in closets;
fireplaces;
patios/decks; and
modern appliances.
Other features at various communities may include:
swimming pools;
fitness centers;
tennis courts; and
wi-fi lounges.
As described in Item 1. "Business,"“Business,” we operate under three core brands Avalon, AVA and Eaves by Avalon. Our core “"Avalon"Avalon” brand focuses on upscale apartment living and high end amenities and services. “"AVA"AVA” targets customers in high energy, transit-served urban neighborhoods and generally feature smaller apartments, many of which are designed for roommate living with an emphasis on modern design and a technology focus. “"Eaves by Avalon"Avalon” is targeted to the cost conscious, "value"“value” segment in suburban areas. We believe that these brands allow us to further penetrate our existing markets by targeting our market by consumer preference and attitude as well as by location and price.
We also have an extensive and ongoing maintenance program to continually maintain and enhance our communities and apartment homes. The aesthetic appeal of our communities and a service-oriented property management team, focused on the specific needs of residents, enhances market appeal to discriminating residents. We believe our mission of Enhancing the Lives of our ResidentsCreating a Better Way To Live helps us achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses.
Our Current Communities excluding indirect interests associated with the Residual JV, are located in the following geographic markets:
|
| | | | | | | | | | | | | | | | | |
| Number of communities at | | Number of apartment homes at | | Percentage of total apartment homes at |
| 1/31/2016 | | 1/31/2017 | | 1/31/2016 | | 1/31/2017 | | 1/31/2016 | | 1/31/2017 |
New England | 53 |
| | 50 |
| | 12,528 |
| | 11,783 |
| | 16.6 | % | | 15.7 | % |
Boston, MA | 39 |
| | 37 |
| | 9,639 |
| | 9,234 |
| | 12.8 | % | | 12.3 | % |
Fairfield-New Haven, CT | 14 |
| | 13 |
| | 2,889 |
| | 2,549 |
| | 3.8 | % | | 3.4 | % |
| | | | | | | | | | | |
Metro NY/NJ | 49 |
| | 49 |
| | 14,843 |
| | 14,604 |
| | 19.7 | % | | 19.4 | % |
New York City, NY | 12 |
| | 12 |
| | 4,292 |
| | 4,583 |
| | 5.7 | % | | 6.1 | % |
New York Suburban | 17 |
| | 17 |
| | 4,949 |
| | 4,513 |
| | 6.6 | % | | 6.0 | % |
New Jersey | 20 |
| | 20 |
| | 5,602 |
| | 5,508 |
| | 7.4 | % | | 7.3 | % |
| | | | | | | | | | | |
Mid-Atlantic | 36 |
| | 39 |
| | 13,308 |
| | 14,374 |
| | 17.6 | % | | 19.2 | % |
Washington Metro/Baltimore, MD | 36 |
| | 39 |
| | 13,308 |
| | 14,374 |
| | 17.6 | % | | 19.2 | % |
| | | | | | | | | | | |
Pacific Northwest | 17 |
| | 17 |
| | 4,225 |
| | 4,092 |
| | 5.6 | % | | 5.5 | % |
Seattle, WA | 17 |
| | 17 |
| | 4,225 |
| | 4,092 |
| | 5.6 | % | | 5.5 | % |
| | | | | | | | | | | |
Northern California | 41 |
| | 42 |
| | 12,158 |
| | 12,410 |
| | 16.0 | % | | 16.5 | % |
San Jose, CA | 14 |
| | 13 |
| | 5,158 |
| | 4,905 |
| | 6.8 | % | | 6.5 | % |
Oakland-East Bay, CA | 11 |
| | 13 |
| | 3,338 |
| | 3,843 |
| | 4.4 | % | | 5.1 | % |
San Francisco, CA | 16 |
| | 16 |
| | 3,662 |
| | 3,662 |
| | 4.8 | % | | 4.9 | % |
| | | | | | | | | | | |
Southern California | 58 |
| | 59 |
| | 17,473 |
| | 16,761 |
| | 23.2 | % | | 22.3 | % |
Los Angeles, CA | 36 |
| | 38 |
| | 10,855 |
| | 11,291 |
| | 14.5 | % | | 15.0 | % |
Orange County, CA | 12 |
| | 12 |
| | 3,715 |
| | 3,243 |
| | 4.9 | % | | 4.3 | % |
San Diego, CA | 10 |
| | 9 |
| | 2,903 |
| | 2,227 |
| | 3.8 | % | | 3.0 | % |
| | | | | | | | | | | |
Non-Core | 3 |
| | 3 |
| | 1,014 |
| | 1,014 |
| | 1.3 | % | | 1.4 | % |
| | | | | | | | | | | |
| 257 |
| | 259 |
| | 75,549 |
| | 75,038 |
| | 100.0 | % | | 100.0 | % |
|
| | | | | | | | | | | | | | | | | |
| Number of communities at | | Number of apartment homes at | | Percentage of total apartment homes at |
| 1/31/2014 | | 1/31/2015 | | 1/31/2014 | | 1/31/2015 | | 1/31/2014 | | 1/31/2015 |
New England | 49 |
| | 50 |
| | 11,868 |
| | 11,444 |
| | 16.3 | % | | 15.4 | % |
Boston, MA | 34 |
| | 36 |
| | 8,518 |
| | 8,555 |
| | 11.7 | % | | 11.5 | % |
Fairfield County, CT | 15 |
| | 14 |
| | 3,350 |
| | 2,889 |
| | 4.6 | % | | 3.9 | % |
| | | | | | | | | | | |
Metro NY/NJ | 45 |
| | 47 |
| | 14,676 |
| | 15,258 |
| | 20.1 | % | | 20.6 | % |
New York City, NY | 10 |
| | 10 |
| | 3,581 |
| | 3,582 |
| | 4.9 | % | | 4.8 | % |
New York Suburban | 17 |
| | 19 |
| | 5,039 |
| | 5,554 |
| | 6.9 | % | | 7.5 | % |
New Jersey (1) | 18 |
| | 18 |
| | 6,056 |
| | 6,122 |
| | 8.3 | % | | 8.3 | % |
| | | | | | | | | | | |
Mid-Atlantic | 37 |
| | 37 |
| | 13,118 |
| | 13,308 |
| | 18.0 | % | | 17.9 | % |
Washington Metro | 37 |
| | 37 |
| | 13,118 |
| | 13,308 |
| | 18.0 | % | | 17.9 | % |
| | | | | | | | | | | |
Pacific Northwest | 16 |
| | 16 |
| | 3,794 |
| | 3,858 |
| | 5.2 | % | | 5.2 | % |
Seattle, WA | 16 |
| | 16 |
| | 3,794 |
| | 3,858 |
| | 5.2 | % | | 5.2 | % |
| | | | | | | | | | | |
Northern California | 37 |
| | 41 |
| | 11,104 |
| | 11,974 |
| | 15.3 | % | | 16.1 | % |
Oakland-East Bay, CA | 10 |
| | 12 |
| | 3,244 |
| | 3,591 |
| | 4.5 | % | | 4.8 | % |
San Francisco, CA | 14 |
| | 15 |
| | 3,207 |
| | 3,480 |
| | 4.4 | % | | 4.7 | % |
San Jose, CA | 13 |
| | 14 |
| | 4,653 |
| | 4,903 |
| | 6.4 | % | | 6.6 | % |
| | | | | | | | | | | |
Southern California | 57 |
| | 57 |
| | 17,221 |
| | 17,132 |
| | 23.7 | % | | 23.1 | % |
Los Angeles, CA | 34 |
| | 35 |
| | 10,344 |
| | 10,575 |
| | 14.3 | % | | 14.3 | % |
Orange County, CA | 13 |
| | 12 |
| | 3,745 |
| | 3,425 |
| | 5.1 | % | | 4.6 | % |
San Diego, CA | 10 |
| | 10 |
| | 3,132 |
| | 3,132 |
| | 4.3 | % | | 4.2 | % |
| | | | | | | | | | | |
Non-Core | 3 |
| | 4 |
| | 1,030 |
| | 1,266 |
| | 1.4 | % | | 1.7 | % |
| | | | | | | | | | | |
| 244 |
| | 252 |
| | 72,811 |
| | 74,240 |
| | 100.0 | % | | 100.0 | % |
____________________________ | |
(1) | New Jersey Current Communities includes 240 apartment homes which were destroyed and are uninhabitable as a result of the fire at Avalon at Edgewater in January 2015. |
We manage and operate substantially all of our Current Communities. During the year ended December 31, 2014,2016, we completed construction of 4,1211,715 apartment homes in 17eight communities and sold 3,234twelve operating communities containing an aggregate of 4,026 apartment homes in 12 communities.homes. The average age of our Current Communities, on a weighted average basis according to number of apartment homes, is 19.519.3 years. When adjusted to reflect redevelopment activity, as if redevelopment were a new construction completion date, the weighted average age of our Current Communities is 13.112.5 years.
Of the Current Communities, as of January 31, 2015,2017, we owned (directly or through wholly-owned subsidiaries):
242 operating communities, including 226 with a full fee simple, or absolute, ownership interest in 225 operating communities, 12 of whichand 16 that are on land subject to a land lease, four of which are dual-branded communities with each pair of dual-branded communities being governed by a single land lease. The leases expiringexpire in October 2026, November 2028, May 2041, July 2046, December 2061, September 2065, November 2067, December 2086, April 2095, May 2105, September 2105, April 2106, November 2106 and March 2142;
a general partnership interest and an indirect limited partnership interest in Fund I, Fund II, the U.S. Fund and the AC JV. Subsidiaries of Fund II own a fee simple interest in 10three operating communities, subsidiaries of the U.S. Fund own a fee simple interest in nineseven operating communities, of which one is subject to a land lease, and subsidiaries of the AC JV own a fee simple interest in three operating communities;
a general partnership interest in one partnership structured as a "DownREIT,"“DownREIT,” as described more fully below, that owns one community; and
a membership interest in fourthree limited liability companies, that each hold a fee simple interest in an operating community.
For some communities, a land lease is used to support tax advantaged structures that ultimately allow us to purchase the land upon lease expiration. We have options to purchase the underlying land for certain of the land leases for which we have an absolute ownership interest that expire in October 2026, November 2028, May 2041, July 2046, December 2086 and April 2095.
We also hold, directly or through wholly-owned subsidiaries, the full fee simple ownership interest in 2425 of the 2627 Development CommunitiesCommunities. One Development Community is being developed within a joint venture and one Development Community is being developed with a leasehold interest in twoprivate development partner and we will own the multifamily rental portion of the Development Communities with the land leases expiring in December 2086 and November 2106. The land lease expiring in 2086 provides an option for the Company to purchase the land at some point during the lease term.development.
In our partnership structured as a DownREIT, one of our wholly-owned subsidiaries is the general partner, and there are limited partners whose interest in the partnership is represented by units of limited partnership interest. Limited partners are entitled to receive an initial distribution before any distribution is made to the general partner. Under the partnership agreement for the DownREIT, the distributions per unit paid to the holders of units of limited partnership interests are equal to our current common stock dividend amount. The holders of units of limited partnership interest have the right to present all or some of their units for redemption for a cash amount as determined by the partnership agreement and based on the fair value of our common stock. In lieu of a cash redemption by the partnership, we may elect to acquire any unit presented for redemption for one share of our common stock or for such cash amount. As of January 31, 2015,2017, there were 7,500 DownREIT partnership units outstanding. The DownREIT partnership is consolidated for financial reporting purposes.
Profile of Current, Development and Unconsolidated Communities (1) (13)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
CURRENT COMMUNITIES | | | | |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
NEW ENGLAND | | | | |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Boston, MA | | | | |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Avalon at Lexington | | Lexington, MA | | 198 |
| | 230,956 |
| | 1994 | | 1,166 |
| | 88.9 | % | | 93.8 | % |
| 95.1 | % |
| $ | 2,213 |
| | $ | 1.90 |
|
| $ | 23,922 |
|
Avalon Oaks | | Wilmington, MA | | 204 |
| | 229,932 |
| | 1999 | | 1,127 |
| | 90.1 | % | | 92.4 | % |
| 95.9 | % |
| 1,608 |
| | 1.43 |
|
| 22,843 |
|
Eaves Quincy | | Quincy, MA | | 245 |
| | 224,538 |
| | 1986/1995 | | 916 |
| | 96.3 | % | | 94.6 | % |
| 96.5 | % |
| 1,674 |
| | 1.83 |
|
| 25,688 |
|
Avalon Essex | | Peabody, MA | | 154 |
| | 198,478 |
| | 2000 | | 1,289 |
| | 95.5 | % | | 95.9 | % |
| 96.3 | % |
| 1,933 |
| | 1.50 |
|
| 23,325 |
|
Avalon Oaks West | | Wilmington, MA | | 120 |
| | 133,376 |
| | 2002 | | 1,111 |
| | 95.0 | % | | 95.8 | % |
| 96.1 | % |
| 1,628 |
| | 1.47 |
|
| 17,531 |
|
Avalon Orchards | | Marlborough, MA | | 156 |
| | 175,832 |
| | 2002 | | 1,127 |
| | 92.3 | % | | 95.3 | % |
| 96.6 | % |
| 1,713 |
| | 1.52 |
|
| 22,963 |
|
Avalon at Newton Highlands (10) | | Newton, MA | | 294 |
| | 341,717 |
| | 2003 | | 1,162 |
| | 96.9 | % | | 96.4 | % |
| 96.2 | % |
| 2,611 |
| | 2.25 |
|
| 60,052 |
|
Avalon at The Pinehills | | Plymouth, MA | | 192 |
| | 255,240 |
| | 2004 | | 1,329 |
| | 92.7 | % | | 95.3 | % |
| 97.0 | % |
| 2,084 |
| | 1.57 |
|
| 37,460 |
|
Eaves Peabody | | Peabody, MA | | 286 |
| | 250,624 |
| | 1962/2004 | | 876 |
| | 96.9 | % | | 95.8 | % |
| 96.0 | % |
| 1,538 |
| | 1.76 |
|
| 35,671 |
|
Avalon at Bedford Center | | Bedford, MA | | 139 |
| | 159,914 |
| | 2006 | | 1,150 |
| | 96.4 | % | | 97.4 | % |
| 96.4 | % |
| 2,113 |
| | 1.84 |
|
| 25,143 |
|
Avalon Chestnut Hill | | Chestnut Hill, MA | | 204 |
| | 270,956 |
| | 2007 | | 1,328 |
| | 98.0 | % | | 97.2 | % |
| 96.6 | % |
| 3,056 |
| | 2.30 |
|
| 62,382 |
|
Avalon Shrewsbury | | Shrewsbury, MA | | 251 |
| | 272,805 |
| | 2007 | | 1,087 |
| | 95.2 | % | | 94.4 | % |
| 96.1 | % |
| 1,598 |
| | 1.47 |
|
| 36,517 |
|
Avalon at Lexington Hills | | Lexington, MA | | 387 |
| | 484,216 |
| | 2008 | | 1,251 |
| | 93.0 | % | | 95.9 | % |
| 95.8 | % |
| 2,452 |
| | 1.96 |
|
| 88,956 |
|
Avalon Acton | | Acton, MA | | 380 |
| | 375,074 |
| | 2008 | | 987 |
| | 94.5 | % | | 95.0 | % |
| 96.7 | % |
| 1,636 |
| | 1.66 |
|
| 63,305 |
|
Avalon Sharon | | Sharon, MA | | 156 |
| | 175,389 |
| | 2008 | | 1,124 |
| | 99.4 | % | | 94.9 | % |
| 97.3 | % |
| 1,937 |
| | 1.72 |
|
| 30,510 |
|
Avalon at Center Place (12) | | Providence, RI | | 225 |
| | 222,835 |
| | 1991/1997 | | 990 |
| | 96.9 | % | | 95.2 | % |
| 96.1 | % |
| 2,679 |
| | 2.70 |
|
| 37,046 |
|
Avalon at Hingham Shipyard | | Hingham, MA | | 235 |
| | 290,790 |
| | 2009 | | 1,237 |
| | 94.0 | % | | 94.1 | % |
| 95.3 | % |
| 2,469 |
| | 2.00 |
|
| 54,282 |
|
Avalon Northborough | | Northborough, MA | | 382 |
| | 454,033 |
| | 2009 | | 1,189 |
| | 96.6 | % | | 94.2 | % |
| 94.5 | % |
| 1,778 |
| | 1.50 |
|
| 60,614 |
|
Avalon Blue Hills | | Randolph, MA | | 276 |
| | 269,990 |
| | 2009 | | 978 |
| | 96.4 | % | | 95.3 | % |
| 94.7 | % |
| 1,563 |
| | 1.60 |
|
| 45,926 |
|
Avalon Cohasset | | Cohasset, MA | | 220 |
| | 293,272 |
| | 2012 | | 1,333 |
| | 93.2 | % | | 93.0 | % |
| 94.2 | % |
| 2,097 |
| | 1.57 |
|
| 55,051 |
|
Avalon Andover | | Andover, MA | | 115 |
| | 132,918 |
| | 2012 | | 1,156 |
| | 92.1 | % | | 92.8 | % |
| 94.4 | % |
| 1,926 |
| | 1.67 |
|
| 26,179 |
|
Eaves Burlington | | Burlington, MA | | 203 |
| | 198,233 |
| | 1988/2012 | | 977 |
| | 96.6 | % | | 95.9 | % | (2) | 96.4 | % |
| 1,619 |
| | 1.66 |
|
| 45,330 |
|
AVA Back Bay | | Boston, MA | | 271 |
| | 246,774 |
| | 1968/1998 | | 911 |
| | 88.9 | % | | 93.2 | % |
| 95.4 | % |
| 3,343 |
| | 3.67 |
| (2) | 81,938 |
|
Avalon at Prudential Center II | | Boston, MA | | 266 |
| | 243,315 |
| | 1968/1998 | | 915 |
| | 94.4 | % | | 95.0 | % |
| 94.9 | % |
| 3,475 |
| | 3.80 |
|
| 76,055 |
|
Avalon at Prudential Center I | | Boston, MA | | 243 |
| | 242,410 |
| | 1968/1998 | | 998 |
| | 94.2 | % | | 95.4 | % |
| 94.7 | % |
| 3,694 |
| | 3.70 |
|
| 60,145 |
|
Avalon Burlington | | Burlington, MA | | 312 |
| | 315,545 |
| | 1989/2013 | | 1,011 |
| | 97.1 | % | | 93.2 | % |
| 91.8 | % | (3) | 1,824 |
| | 1.80 |
|
| 81,743 |
|
Avalon Bear Hill | | Waltham, MA | | 324 |
| | 391,394 |
| | 1999/2013 | | 1,208 |
| | 96.0 | % | | 94.2 | % |
| 93.4 | % | (3) | 2,529 |
| | 2.09 |
|
| 129,459 |
|
Eaves North Quincy | | Quincy, MA | | 224 |
| | 157,908 |
| | 1977/2013 | | 705 |
| | 95.1 | % | | 96.3 | % |
| 95.1 | % | (3) | 1,792 |
| | 2.54 |
|
| 53,831 |
|
Avalon Natick | | Natick, MA | | 407 |
| | 362,744 |
| | 2013 | | 891 |
| | 96.3 | % | | 96.5 | % |
| 46.1 | % | (3) | 1,908 |
| | 2.14 |
|
| 80,230 |
|
Avalon Canton at Blue Hills | | Canton, MA | | 196 |
| | 235,465 |
| | 2014 | | 1,201 |
| | 98.0 | % | | 58.8 | % | (3) | N/A |
| (3) | 1,847 |
| | 1.54 |
| (3) | 39,753 |
|
Avalon Exeter (12) | | Andover, MA | | 187 |
| | 200,641 |
| | 2014 | | 1,073 |
| | 74.7 | % | | 28.0 | % | (3) | N/A |
| (3) | 5,611 |
| | 5.23 |
| (3) | 124,430 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Fairfield-New Haven, CT | | | | | | | | | | | | | | | | | | | | | | |
Eaves Trumbull | | Trumbull, CT | | 340 |
| | 379,382 |
| | 1997 | | 1,116 |
| | 95.0 | % | | 95.6 | % |
| 96.0 | % |
| 1,786 |
| | 1.60 |
|
| 39,211 |
|
Eaves Stamford | | Stamford, CT | | 238 |
| | 222,165 |
| | 1991 | | 933 |
| | 92.0 | % | | 94.3 | % |
| 96.1 | % | (2) | 2,177 |
| | 2.33 |
|
| 42,697 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
Avalon Wilton I | | Wilton, CT | | 102 |
| | 158,259 |
| | 1997 | | 1,552 |
| | 99.0 | % | | 96.0 | % |
| 95.5 | % |
| 3,330 |
| | 2.15 |
|
| 22,621 |
|
Avalon on Stamford Harbor | | Stamford, CT | | 323 |
| | 322,461 |
| | 2003 | | 998 |
| | 96.0 | % | | 96.1 | % |
| 95.7 | % |
| 2,575 |
| | 2.58 |
|
| 64,497 |
|
Avalon New Canaan | | New Canaan, CT | | 104 |
| | 132,080 |
| | 2002 | | 1,270 |
| | 90.4 | % | | 92.8 | % |
| 93.7 | % |
| 3,287 |
| | 2.59 |
|
| 25,878 |
|
AVA Stamford | | Stamford, CT | | 306 |
| | 315,380 |
| | 2002/2002 | | 1,031 |
| | 96.4 | % | | 95.5 | % |
| 95.5 | % |
| 2,344 |
| | 2.27 |
|
| 74,920 |
|
Avalon Danbury | | Danbury, CT | | 234 |
| | 235,320 |
| | 2005 | | 1,006 |
| | 96.6 | % | | 96.4 | % |
| 95.9 | % |
| 1,720 |
| | 1.71 |
|
| 36,241 |
|
Avalon Darien | | Darien, CT | | 189 |
| | 242,675 |
| | 2004 | | 1,284 |
| | 96.3 | % | | 94.7 | % |
| 95.8 | % |
| 2,841 |
| | 2.21 |
|
| 43,274 |
|
Avalon Milford I | | Milford, CT | | 246 |
| | 217,077 |
| | 2004 | | 882 |
| | 97.2 | % | | 95.5 | % |
| 96.0 | % |
| 1,605 |
| | 1.82 |
|
| 32,170 |
|
Avalon Huntington | | Shelton, CT | | 99 |
| | 139,869 |
| | 2008 | | 1,413 |
| | 96.9 | % | | 96.7 | % |
| 97.3 | % |
| 2,306 |
| | 1.63 |
|
| 25,406 |
|
Avalon Norwalk | | Norwalk, CT | | 311 |
| | 310,629 |
| | 2011 | | 999 |
| | 95.5 | % | | 96.3 | % |
| 96.7 | % |
| 2,065 |
| | 2.07 |
|
| 74,255 |
|
Avalon Wilton II | | Wilton, CT | | 100 |
| | 128,716 |
| | 2011 | | 1,287 |
| | 98.0 | % | | 96.6 | % |
| 95.6 | % |
| 2,430 |
| | 1.89 |
|
| 30,368 |
|
Avalon Shelton III | | Shelton, CT | | 250 |
| | 249,190 |
| | 2013 | | 997 |
| | 93.6 | % | | 94.5 | % |
| 41.8 | % | (3) | 1,702 |
| | 1.71 |
|
| 48,719 |
|
Avalon East Norwalk | | Norwalk, CT | | 240 |
| | 223,698 |
| | 2013 | | 932 |
| | 96.7 | % | | 94.5 | % |
| 32.8 | % | (3) | 1,938 |
| | 2.08 |
|
| 46,520 |
|
Avalon at Stratford | | Stratford, CT | | 130 |
| | 148,136 |
| | 2014 | | 1,140 |
| | 95.3 | % | | 48.6 | % | (3) | N/A |
| (3) | 1,797 |
| | 1.58 |
| (3) | 29,448 |
|
| | | | | | | | | | | | | | | | | | | | | | |
METRO NY/NJ | | | | | | | | | | | | | | | | | | | | | | |
New York Suburban, NY | | | | | | | | | | | | | | | | | | | | | | |
Avalon Commons | | Smithtown, NY | | 312 |
| | 377,240 |
| | 1997 | | 1,209 |
| | 95.2 | % | | 96.5 | % |
| 96.6 | % |
| 2,446 |
| | 2.02 |
|
| 38,625 |
|
Eaves Nanuet | | Nanuet, NY | | 504 |
| | 608,842 |
| | 1998 | | 1,208 |
| | 96.8 | % | | 96.9 | % |
| 96.9 | % |
| 2,283 |
| | 1.89 |
|
| 57,991 |
|
Avalon Green | | Elmsford, NY | | 105 |
| | 113,538 |
| | 1995 | | 1,081 |
| | 94.2 | % | | 95.2 | % | (2) | 95.5 | % |
| 2,478 |
| | 2.29 |
| (2) | 14,020 |
|
Avalon Towers | | Long Beach, NY | | 109 |
| | 124,611 |
| | 1990/1995 | | 1,143 |
| | 96.3 | % | | 96.5 | % | (2) | 95.7 | % |
| 3,719 |
| | 3.25 |
| (2) | 25,351 |
|
Avalon Willow | | Mamaroneck, NY | | 227 |
| | 216,289 |
| | 2000 | | 953 |
| | 96.5 | % | | 95.6 | % |
| 96.0 | % |
| 2,534 |
| | 2.66 |
|
| 48,421 |
|
Avalon Court | | Melville, NY | | 494 |
| | 596,874 |
| | 1997 | | 1,208 |
| | 95.9 | % | | 96.3 | % |
| 96.2 | % |
| 2,785 |
| | 2.31 |
|
| 62,199 |
|
The Avalon | | Bronxville, NY | | 110 |
| | 118,952 |
| | 1999 | | 1,081 |
| | 94.5 | % | | 93.6 | % |
| 93.2 | % | (2) | 4,519 |
| | 4.18 |
|
| 39,206 |
|
Avalon at Glen Cove (12) | | Glen Cove, NY | | 256 |
| | 261,425 |
| | 2004 | | 1,021 |
| | 94.9 | % | | 96.2 | % |
| 96.9 | % |
| 2,672 |
| | 2.62 |
|
| 68,937 |
|
Avalon Pines | | Coram, NY | | 450 |
| | 545,989 |
| | 2005 | | 1,213 |
| | 95.6 | % | | 96.9 | % |
| 96.8 | % |
| 2,226 |
| | 1.83 |
|
| 72,252 |
|
Avalon Glen Cove North (12) | | Glen Cove, NY | | 111 |
| | 100,754 |
| | 2007 | | 908 |
| | 93.7 | % | | 96.1 | % |
| 96.5 | % |
| 2,546 |
| | 2.80 |
|
| 40,145 |
|
Avalon White Plains | | White Plains, NY | | 407 |
| | 372,406 |
| | 2009 | | 915 |
| | 95.8 | % | | 95.6 | % |
| 96.2 | % |
| 3,019 |
| | 3.30 |
|
| 152,790 |
|
Avalon Charles Pond | | Coram, NY | | 200 |
| | 208,532 |
| | 2009 | | 1,043 |
| | 95.0 | % | | 96.6 | % |
| 96.6 | % |
| 1,958 |
| | 1.88 |
|
| 48,403 |
|
Avalon Rockville Centre | | Rockville Centre, NY | | 349 |
| | 349,048 |
| | 2012 | | 1,000 |
| | 96.8 | % | | 96.4 | % |
| 96.7 | % |
| 2,966 |
| | 2.97 |
|
| 111,019 |
|
Avalon Green II | | Elmsford, NY | | 444 |
| | 533,544 |
| | 2012 | | 1,202 |
| | 96.4 | % | | 94.8 | % |
| 95.9 | % |
| 2,684 |
| | 2.23 |
|
| 105,325 |
|
Avalon Garden City | | Garden City, NY | | 204 |
| | 288,443 |
| | 2013 | | 1,414 |
| | 95.6 | % | | 97.2 | % |
| 95.4 | % | (3) | 3,680 |
| | 2.60 |
|
| 67,577 |
|
Avalon Westbury | | Westbury, NY | | 396 |
| | 401,496 |
| | 2006/2013 | | 1,014 |
| | 95.7 | % | | 96.5 | % |
| 96.6 | % | (3) | 2,719 |
| | 2.68 |
|
| 120,811 |
|
Avalon Ossining | | Ossining, NY | | 168 |
| | 184,137 |
| | 2014 | | 1,096 |
| | 97.6 | % | | 61.5 | % | (3) | N/A |
| (3) | 2,388 |
| | 2.18 |
| (3) | 36,484 |
|
Avalon Huntington Station | | Huntington Station, NY | | 303 |
| | 364,602 |
| | 2014 | | 1,203 |
| | 90.7 | % | | 40.9 | % | (3) | N/A |
| (3) | 2,393 |
| | 1.99 |
| (3) | 79,415 |
|
| | | | | | | | | | | | | | | | | | | | | | |
New Jersey | | | | | | | | | | | | | | | | | | | | | | |
Avalon Cove | | Jersey City, NJ | | 504 |
| | 574,339 |
| | 1997 | | 1,140 |
| | 96.4 | % | | 96.5 | % |
| 96.1 | % |
| 3,419 |
| | 3.00 |
|
| 112,242 |
|
Avalon Run (9) | | Lawrenceville, NJ | | 632 |
| | 707,592 |
| | 1994 | | 1,120 |
| | 95.9 | % | | 95.3 | % |
| 96.1 | % |
| 1,597 |
| | 1.43 |
|
| 80,662 |
|
Avalon Princeton Junction | | West Windsor, NJ | | 512 |
| | 486,069 |
| | 1988/1993 | | 949 |
| | 96.7 | % | | 95.9 | % |
| 96.7 | % |
| 1,719 |
| | 1.81 |
|
| 48,758 |
|
Avalon at Edgewater (15) | | Edgewater, NJ | | 408 |
| | 428,792 |
| | 2002 | | 1,051 |
| | 97.5 | % | | 96.4 | % |
| 96.5 | % |
| 2,725 |
| | 2.59 |
|
| 79,070 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
Avalon at Florham Park | | Florham Park, NJ | | 270 |
| | 330,410 |
| | 2001 | | 1,224 |
| | 94.4 | % | | 96.0 | % |
| 96.7 | % |
| 2,895 |
| | 2.37 |
|
| 43,732 |
|
Avalon at Freehold | | Freehold, NJ | | 296 |
| | 317,356 |
| | 2002 | | 1,072 |
| | 94.9 | % | | 95.8 | % |
| 96.7 | % |
| 1,904 |
| | 1.78 |
|
| 35,533 |
|
Avalon Run East | | Lawrenceville, NJ | | 312 |
| | 341,320 |
| | 2005 | | 1,094 |
| | 96.8 | % | | 96.0 | % |
| 96.5 | % |
| 1,945 |
| | 1.78 |
|
| 53,051 |
|
Avalon Lyndhurst | | Lyndhurst, NJ | | 328 |
| | 330,408 |
| | 2007 | | 1,007 |
| | 95.7 | % | | 96.9 | % |
| 96.2 | % |
| 2,274 |
| | 2.26 |
|
| 79,078 |
|
Avalon at Tinton Falls | | Tinton Falls, NJ | | 216 |
| | 237,747 |
| | 2008 | | 1,101 |
| | 96.3 | % | | 95.7 | % |
| 96.4 | % |
| 1,908 |
| | 1.73 |
|
| 41,208 |
|
Avalon at West Long Branch | | West Long Branch, NJ | | 180 |
| | 193,511 |
| | 2011 | | 1,075 |
| | 96.7 | % | | 95.9 | % |
| 96.8 | % |
| 2,051 |
| | 1.91 |
|
| 25,661 |
|
Avalon North Bergen | | North Bergen, NJ | | 164 |
| | 146,170 |
| | 2012 | | 891 |
| | 95.7 | % | | 97.5 | % |
| 97.0 | % |
| 2,212 |
| | 2.48 |
|
| 40,513 |
|
Avalon at Wesmont Station | | Wood-Ridge, NJ | | 266 |
| | 242,637 |
| | 2012 | | 912 |
| | 96.2 | % | | 96.7 | % |
| 95.9 | % |
| 2,093 |
| | 2.29 |
|
| 57,192 |
|
Avalon Hackensack at Riverside (12) | | Hackensack, NJ | | 226 |
| | 228,393 |
| | 2013 | | 1,011 |
| | 96.4 | % | | 96.8 | % |
| 49.3 | % | (3) | 2,401 |
| | 2.38 |
|
| 44,530 |
|
Avalon Somerset | | Somerset, NJ | | 384 |
| | 390,365 |
| | 2013 | | 1,017 |
| | 95.6 | % | | 95.5 | % |
| 51.9 | % | (3) | 1,911 |
| | 1.88 |
|
| 76,567 |
|
Avalon at Wesmont Station II | | Wood-Ridge, NJ | | 140 |
| | 146,799 |
| | 2013 | | 1,049 |
| | 95.7 | % | | 97.2 | % |
| 65.8 | % | (3) | 1,992 |
| | 1.90 |
|
| 23,364 |
|
Avalon Bloomingdale | | Bloomingdale, NJ | | 174 |
| | 176,542 |
| | 2014 | | 1,015 |
| | 96.0 | % | | 90.8 | % | (3) | 27.2 | % | (3) | 1,948 |
| | 1.92 |
| (3) | 30,726 |
|
| | | | | | | | | | | | | | | | | | | | | | |
New York, NY | | | | | | | | | | | | | | | | | | | | | | |
Avalon Riverview I (12) | | Long Island City, NY | | 372 |
| | 332,991 |
| | 2002 | | 895 |
| | 97.8 | % | | 97.6 | % |
| 96.8 | % |
| 3,534 |
| | 3.95 |
|
| 98,955 |
|
Avalon Bowery Place | | New York, NY | | 206 |
| | 152,725 |
| | 2006 | | 741 |
| | 94.2 | % | | 96.9 | % |
| 96.7 | % |
| 5,306 |
| | 7.16 |
|
| 95,576 |
|
Avalon Riverview North (12) | | Long Island City, NY | | 602 |
| | 477,665 |
| | 2008 | | 793 |
| | 97.3 | % | | 97.2 | % |
| 96.6 | % |
| 3,367 |
| | 4.24 |
|
| 167,212 |
|
Avalon Bowery Place II | | New York, NY | | 90 |
| | 73,596 |
| | 2007 | | 818 |
| | 96.7 | % | | 96.9 | % |
| 96.5 | % |
| 4,969 |
| | 6.08 |
|
| 57,938 |
|
Avalon Morningside Park (12) | | New York, NY | | 295 |
| | 245,320 |
| | 2009 | | 832 |
| | 95.6 | % | | 96.5 | % |
| 96.2 | % |
| 3,655 |
| | 4.40 |
|
| 115,197 |
|
Avalon Fort Greene | | Brooklyn, NY | | 631 |
| | 498,651 |
| | 2010 | | 790 |
| | 94.8 | % | | 97.0 | % |
| 96.0 | % |
| 3,241 |
| | 4.10 |
|
| 302,124 |
|
Avalon Midtown West | | New York, NY | | 550 |
| | 393,480 |
| | 1998/2013 | | 715 |
| | 95.5 | % | | 95.2 | % |
| 93.4 | % | (3) | 3,985 |
| | 5.57 |
|
| 346,995 |
|
Avalon Clinton North | | New York, NY | | 339 |
| | 222,862 |
| | 2008/2013 | | 657 |
| | 93.8 | % | | 94.0 | % |
| 94.6 | % | (3) | 3,265 |
| | 4.97 |
|
| 196,242 |
|
Avalon Clinton South | | New York, NY | | 288 |
| | 196,798 |
| | 2007/2013 | | 683 |
| | 93.8 | % | | 94.3 | % |
| 93.7 | % | (3) | 3,298 |
| | 4.83 |
|
| 166,447 |
|
| | | | | | | | | | | | | | | | | | | | | | |
MID-ATLANTIC | | | | | | | | | | | | | | | | | | | | | | |
Washington Metro | | | | | | | | | | | | | | | | | | | | | | |
Avalon at Foxhall | | Washington, DC | | 308 |
| | 297,875 |
| | 1982/1994 | | 967 |
| | 92.8 | % | | 92.4 | % |
| 94.6 | % |
| 2,708 |
| | 2.80 |
|
| 46,133 |
|
Avalon at Gallery Place | | Washington, DC | | 203 |
| | 184,157 |
| | 2003 | | 907 |
| | 96.0 | % | | 95.7 | % |
| 96.1 | % |
| 2,901 |
| | 3.20 |
|
| 50,015 |
|
Avalon at Fairway Hills (9) | | Columbia, MD | | 720 |
| | 724,027 |
| | 1987/1996 | | 1,006 |
| | 94.6 | % | | 95.4 | % |
| 95.9 | % | (2) | 1,552 |
| | 1.54 |
|
| 59,071 |
|
Eaves Washingtonian Center I | | North Potomac, MD | | 192 |
| | 191,280 |
| | 1996 | | 996 |
| | 93.7 | % | | 96.9 | % |
| 97.0 | % |
| 1,549 |
| | 1.55 |
|
| 14,944 |
|
Eaves Washingtonian Center II | | North Potomac, MD | | 96 |
| | 99,386 |
| | 1998 | | 1,035 |
| | 94.8 | % | | 95.7 | % |
| 96.7 | % |
| 1,709 |
| | 1.65 |
|
| 8,465 |
|
Eaves Columbia Town Center | | Columbia, MD | | 392 |
| | 395,860 |
| | 1986/1993 | | 1,010 |
| | 97.2 | % | | 96.5 | % |
| 96.1 | % |
| 1,558 |
| | 1.54 |
|
| 55,767 |
|
Avalon at Grosvenor Station | | Bethesda, MD | | 497 |
| | 476,687 |
| | 2004 | | 959 |
| | 96.6 | % | | 95.4 | % |
| 95.2 | % |
| 1,956 |
| | 2.04 |
|
| 84,162 |
|
Avalon at Traville | | Rockville, MD | | 520 |
| | 574,825 |
| | 2004 | | 1,105 |
| | 95.8 | % | | 96.2 | % |
| 96.8 | % |
| 1,928 |
| | 1.74 |
|
| 70,626 |
|
Avalon Russett | | Laurel, MD | | 238 |
| | 274,663 |
| | 1999/2013 | | 1,154 |
| | 97.5 | % | | 96.6 | % |
| 95.1 | % | (3) | 1,808 |
| | 1.57 |
|
| 60,383 |
|
Eaves Fair Lakes | | Fairfax, VA | | 420 |
| | 355,228 |
| | 1989/1996 | | 846 |
| | 95.9 | % | | 96.7 | % |
| 96.4 | % |
| 1,571 |
| | 1.86 |
|
| 38,742 |
|
AVA Ballston | | Arlington, VA | | 344 |
| | 294,271 |
| | 1990 | | 855 |
| | 93.0 | % | | 94.4 | % |
| 95.3 | % |
| 2,183 |
| | 2.55 |
|
| 52,585 |
|
Eaves Fairfax City | | Fairfax, VA | | 141 |
| | 148,282 |
| | 1988/1997 | | 1,052 |
| | 86.5 | % | | 96.4 | % |
| 96.1 | % |
| 1,693 |
| | 1.61 |
|
| 16,449 |
|
Avalon Tysons Corner | | Tysons Corner, VA | | 558 |
| | 613,426 |
| | 1996 | | 1,099 |
| | 93.2 | % | | 94.4 | % | (2) | 95.8 | % |
| 2,037 |
| | 1.85 |
|
| 69,354 |
|
Avalon at Arlington Square | | Arlington, VA | | 842 |
| | 895,781 |
| | 2001 | | 1,064 |
| | 95.5 | % | | 95.3 | % | (2) | 95.4 | % |
| 2,096 |
| | 1.97 |
| (2) | 115,155 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
Avalon Park Crest | | Tysons Corner, VA | | 354 |
| | 288,231 |
| | 2013 | | 814 |
| | 93.8 | % | | 96.3 | % |
| 83.7 | % | (3) | 2,085 |
| | 2.56 |
|
| 77,081 |
|
Eaves Fairfax Towers | | Falls Church, VA | | 415 |
| | 336,051 |
| | 1978/2011 | | 810 |
| | 96.6 | % | | 96.4 | % |
| 96.4 | % |
| 1,741 |
| | 2.15 |
|
| 94,334 |
|
AVA H Street | | Washington, DC | | 138 |
| | 95,594 |
| | 2013 | | 693 |
| | 94.2 | % | | 95.5 | % |
| 72.2 | % | (3) | 2,185 |
| | 3.15 |
|
| 32,707 |
|
Avalon First and M | | Washington, DC | | 469 |
| | 410,812 |
| | 2012/2013 | | 876 |
| | 95.3 | % | | 93.1 | % |
| 80.6 | % | (3) | 2,779 |
| | 3.17 |
|
| 200,061 |
|
Avalon The Albemarle | | Washington, DC | | 228 |
| | 254,591 |
| | 1966/2013 | | 1,117 |
| | 93.4 | % | | 95.6 | % |
| 96.9 | % | (3) | 2,642 |
| | 2.37 |
|
| 81,316 |
|
Eaves Tunlaw Gardens | | Washington, DC | | 166 |
| | 113,512 |
| | 1944/2013 | | 684 |
| | 96.4 | % | | 96.8 | % |
| 96.3 | % | (3) | 1,763 |
| | 2.58 |
|
| 41,357 |
|
The Statesman | | Washington, DC | | 281 |
| | 190,420 |
| | 1961/2013 | | 678 |
| | 90.7 | % | | 94.0 | % |
| 96.1 | % | (3) | 1,967 |
| | 2.90 |
|
| 76,945 |
|
Eaves Glover Park | | Washington, DC | | 120 |
| | 104,162 |
| | 1953/2013 | | 868 |
| | 95.8 | % | | 95.2 | % |
| 96.6 | % | (3) | 2,258 |
| | 2.60 |
|
| 38,066 |
|
AVA Van Ness | | Washington, DC | | 269 |
| | 225,592 |
| | 1978/2013 | | 839 |
| | 95.9 | % | | 94.3 | % |
| 94.2 | % | (3) | 2,121 |
| | 2.53 |
|
| 85,036 |
|
Avalon Ballston Place | | Arlington, VA | | 383 |
| | 333,225 |
| | 2001/2013 | | 870 |
| | 95.8 | % | | 94.9 | % |
| 95.3 | % | (3) | 2,482 |
| | 2.85 |
|
| 165,903 |
|
Eaves Tysons Corner | | Vienna, VA | | 217 |
| | 209,940 |
| | 1980/2013 | | 967 |
| | 96.3 | % | | 96.4 | % |
| 96.8 | % | (3) | 1,786 |
| | 1.85 |
|
| 64,004 |
|
Avalon Ballston Square | | Arlington, VA | | 714 |
| | 626,170 |
| | 1992/2013 | | 877 |
| | 96.2 | % | | 96.0 | % |
| 94.8 | % | (3) | 2,334 |
| | 2.66 |
|
| 297,777 |
|
Avalon Courthouse Place | | Arlington, VA | | 564 |
| | 478,896 |
| | 1999/2013 | | 849 |
| | 95.2 | % | | 94.6 | % |
| 94.9 | % | (3) | 2,404 |
| | 2.83 |
|
| 242,713 |
|
Avalon Reston Landing | | Reston, VA | | 400 |
| | 398,192 |
| | 2000/2013 | | 995 |
| | 96.8 | % | | 96.4 | % |
| 96.5 | % | (3) | 1,792 |
| | 1.80 |
|
| 114,148 |
|
Oakwood Arlington (14) | | Arlington, VA | | 184 |
| | 154,376 |
| | 1987/2013 | | 839 |
| | N/A |
| | N/A |
|
| N/A |
| (3) | N/A |
| | N/A |
|
| 59,251 |
|
Avalon Mosaic | | Merrifield, VA | | 531 |
| | 458,198 |
| | 2014 | | 863 |
| | 88.5 | % | | 52.0 | % | (3) | 6.5 | % | (3) | 2,030 |
| | 2.35 |
| (3) | 108,564 |
|
Avalon Arlington North | | Arlington, VA | | 228 |
| | 268,618 |
| | 2014 | | 1,178 |
| | 97.8 | % | | 55.3 | % | (3) | 0.6 | % | (3) | 2,769 |
| | 2.35 |
| (3) | 80,363 |
|
| | | | | | | | | | | | | | | | | | | | | | |
PACIFIC NORTHWEST | | | | | | | | | | | | | | | | | | | | | | |
Seattle, WA | | | | | | | | | | | | | | | | | | | | | | |
Avalon Redmond Place | | Redmond, WA | | 222 |
| | 211,450 |
| | 1991/1997 | | 952 |
| | 98.2 | % | | 95.8 | % |
| 95.4 | % |
| 1,683 |
| | 1.77 |
|
| 32,805 |
|
Avalon at Bear Creek | | Redmond, WA | | 264 |
| | 288,250 |
| | 1998/1998 | | 1,092 |
| | 95.8 | % | | 95.1 | % |
| 95.6 | % |
| 1,681 |
| | 1.54 |
|
| 37,854 |
|
Avalon Bellevue | | Bellevue, WA | | 201 |
| | 165,504 |
| | 2001 | | 823 |
| | 94.0 | % | | 94.9 | % |
| 95.6 | % |
| 1,857 |
| | 2.26 |
|
| 32,468 |
|
Avalon RockMeadow | | Bothell, WA | | 206 |
| | 243,958 |
| | 2000/2000 | | 1,184 |
| | 96.6 | % | | 95.4 | % |
| 95.5 | % |
| 1,497 |
| | 1.26 |
|
| 26,443 |
|
Avalon ParcSquare | | Redmond, WA | | 124 |
| | 127,251 |
| | 2000/2000 | | 1,026 |
| | 94.4 | % | | 94.8 | % |
| 95.9 | % |
| 1,852 |
| | 1.80 |
|
| 21,558 |
|
Avalon Brandemoor | | Lynnwood, WA | | 424 |
| | 453,602 |
| | 2001/2001 | | 1,070 |
| | 94.3 | % | | 94.8 | % |
| 95.9 | % |
| 1,389 |
| | 1.30 |
|
| 46,943 |
|
AVA Belltown | | Seattle, WA | | 100 |
| | 82,418 |
| | 2001 | | 824 |
| | 96.0 | % | | 95.5 | % |
| 96.1 | % |
| 2,019 |
| | 2.45 |
|
| 19,207 |
|
Avalon Meydenbauer | | Bellevue, WA | | 368 |
| | 331,945 |
| | 2008 | | 902 |
| | 97.3 | % | | 96.3 | % |
| 96.5 | % |
| 1,980 |
| | 2.19 |
|
| 91,084 |
|
Avalon Towers Bellevue (12) | | Bellevue, WA | | 397 |
| | 331,366 |
| | 2011 | | 835 |
| | 99.2 | % | | 95.4 | % |
| 95.3 | % |
| 2,317 |
| | 2.78 |
|
| 123,841 |
|
AVA Queen Anne | | Seattle, WA | | 203 |
| | 164,644 |
| | 2012 | | 811 |
| | 96.0 | % | | 95.4 | % |
| 95.6 | % |
| 2,109 |
| | 2.60 |
|
| 54,046 |
|
Avalon Brandemoor II | | Lynnwood, WA | | 82 |
| | 93,320 |
| | 2011 | | 1,138 |
| | 98.8 | % | | 94.2 | % |
| 96.3 | % |
| 1,603 |
| | 1.41 |
|
| 13,998 |
|
AVA Ballard | | Seattle, WA | | 265 |
| | 190,043 |
| | 2013 | | 717 |
| | 97.3 | % | | 96.2 | % |
| 47.9 | % | (3) | 1,808 |
| | 2.52 |
|
| 63,351 |
|
Eaves Redmond Campus | | Redmond, WA | | 422 |
| | 429,190 |
| | 1991/2013 | | 1,017 |
| | 94.5 | % | | 94.4 | % |
| 94.4 | % | (3) | 1,844 |
| | 1.81 |
|
| 115,829 |
|
Archstone Redmond Lakeview | | Redmond, WA | | 166 |
| | 141,000 |
| | 1987/2013 | | 849 |
| | 90.4 | % | | 95.9 | % |
| 96.0 | % | (3) | 1,543 |
| | 1.82 |
|
| 38,923 |
|
AVA University District | | Seattle, WA | | 283 |
| | 201,389 |
| | 2014 | | 712 |
| | 95.7 | % | | 67.3 | % | (3) | 22.6 | % | (3) | 2,133 |
| | 3.00 |
| (3) | 73,454 |
|
| | | | | | | | | | | | | | | | | | | | | | |
NORTHERN CALIFORNIA | | | | | | | | | | | | | | | | | | | | | | |
Oakland-East Bay, CA | | | | | | | | | | | | | | | | | | | | | | |
Avalon Fremont | | Fremont, CA | | 308 |
| | 316,052 |
| | 1992/1994 | | 1,026 |
| | 97.7 | % | | 96.9 | % |
| 96.3 | % |
| 2,218 |
| | 2.16 |
|
| 59,204 |
|
Eaves Dublin | | Dublin, CA | | 204 |
| | 179,004 |
| | 1989/1997 | | 877 |
| | 94.0 | % | | 96.0 | % | (2) | 96.4 | % |
| 1,998 |
| | 2.28 |
| (2) | 34,085 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
Eaves Pleasanton | | Pleasanton, CA | | 456 |
| | 366,062 |
| | 1988/1994 | | 803 |
| | 94.5 | % | | 96.2 | % |
| 96.5 | % |
| 1,960 |
| | 2.44 |
|
| 79,416 |
|
Eaves Union City | | Union City, CA | | 208 |
| | 150,225 |
| | 1973/1996 | | 722 |
| | 97.1 | % | | 96.4 | % |
| 96.4 | % |
| 1,715 |
| | 2.37 |
|
| 23,901 |
|
Eaves Fremont | | Fremont, CA | | 235 |
| | 191,935 |
| | 1985/1994 | | 817 |
| | 96.6 | % | | 96.1 | % |
| 96.4 | % |
| 2,055 |
| | 2.52 |
|
| 42,894 |
|
Avalon Union City | | Union City, CA | | 439 |
| | 429,800 |
| | 2009 | | 979 |
| | 96.8 | % | | 96.4 | % |
| 96.7 | % |
| 1,986 |
| | 2.03 |
|
| 119,051 |
|
Avalon Walnut Creek (12) | | Walnut Creek, CA | | 418 |
| | 410,218 |
| | 2010 | | 981 |
| | 97.6 | % | | 96.3 | % |
| 95.8 | % |
| 2,532 |
| | 2.58 |
|
| 147,549 |
|
Eaves Walnut Creek | | Walnut Creek, CA | | 510 |
| | 380,542 |
| | 1987/2013 | | 746 |
| | 94.5 | % | | 96.3 | % |
| 95.7 | % | (3) | 1,712 |
| | 2.29 |
|
| 118,292 |
|
Avalon Walnut Ridge I | | Walnut Creek, CA | | 106 |
| | 80,942 |
| | 2000/2013 | | 764 |
| | 95.3 | % | | 96.9 | % |
| 95.0 | % | (3) | 1,986 |
| | 2.60 |
|
| 30,588 |
|
Avalon Walnut Ridge II | | Walnut Creek, CA | | 360 |
| | 251,901 |
| | 1989/2013 | | 700 |
| | 94.7 | % | | 96.5 | % |
| 94.7 | % | (3) | 1,778 |
| | 2.54 |
|
| 87,530 |
|
Avalon Berkeley | | Berkeley, CA | | 94 |
| | 78,858 |
| | 2014 | | 839 |
| | 93.6 | % | | 66.3 | % | (3) | N/A |
| (3) | 2,625 |
| | 3.13 |
| (3) | 33,146 |
|
Avalon Dublin Station | | Dublin, CA | | 253 |
| | 247,430 |
| | 2014 | | 978 |
| | 82.0 | % | | 63.8 | % | (3) | 0.8 | % | (3) | 2,369 |
| | 2.42 |
| (3) | 78,797 |
|
| | | | | | | | | | | | | | | | | | | | | | |
San Francisco, CA | | | | | | | | | | | | | | | | | | | | | | |
Eaves Daly City | | Daly City, CA | | 195 |
| | 141,411 |
| | 1972/1997 | | 725 |
| | 95.9 | % | | 96.9 | % |
| 96.0 | % |
| 2,100 |
| | 2.90 |
|
| 32,551 |
|
AVA Nob Hill | | San Francisco, CA | | 185 |
| | 108,962 |
| | 1990/1995 | | 589 |
| | 96.2 | % | | 95.7 | % |
| 97.0 | % |
| 2,689 |
| | 4.57 |
|
| 33,858 |
|
Eaves San Rafael | | San Rafael, CA | | 254 |
| | 221,780 |
| | 1973/1996 | | 873 |
| | 97.6 | % | | 97.1 | % |
| 97.4 | % |
| 2,099 |
| | 2.40 |
|
| 47,064 |
|
Eaves Foster City | | Foster City, CA | | 288 |
| | 222,364 |
| | 1973/1994 | | 772 |
| | 96.2 | % | | 96.5 | % |
| 95.2 | % |
| 2,248 |
| | 2.91 |
|
| 50,504 |
|
Eaves Pacifica | | Pacifica, CA | | 220 |
| | 186,800 |
| | 1971/1995 | | 849 |
| | 98.2 | % | | 97.6 | % |
| 96.9 | % |
| 2,053 |
| | 2.42 |
|
| 33,462 |
|
Avalon Sunset Towers | | San Francisco, CA | | 243 |
| | 171,836 |
| | 1961/1996 | | 707 |
| | 96.7 | % | | 95.4 | % |
| 95.2 | % |
| 2,571 |
| | 3.64 |
|
| 39,776 |
|
Eaves Diamond Heights | | San Francisco, CA | | 154 |
| | 123,047 |
| | 1972/1994 | | 799 |
| | 98.1 | % | | 96.7 | % |
| 96.7 | % |
| 2,480 |
| | 3.10 |
|
| 29,646 |
|
Avalon at Mission Bay North | | San Francisco, CA | | 250 |
| | 241,788 |
| | 2003 | | 967 |
| | 97.2 | % | | 96.6 | % |
| 96.1 | % |
| 4,120 |
| | 4.26 |
|
| 94,963 |
|
Avalon at Mission Bay III | | San Francisco, CA | | 260 |
| | 261,169 |
| | 2009 | | 1,004 |
| | 96.9 | % | | 96.2 | % |
| 96.2 | % |
| 4,127 |
| | 4.11 |
|
| 147,917 |
|
Avalon Ocean Avenue | | San Francisco, CA | | 173 |
| | 161,083 |
| | 2012 | | 931 |
| | 94.8 | % | | 96.1 | % |
| 96.5 | % |
| 3,265 |
| | 3.51 |
|
| 58,167 |
|
Avalon San Bruno | | San Bruno, CA | | 300 |
| | 267,171 |
| | 2004/2013 | | 891 |
| | 97.3 | % | | 96.1 | % |
| 94.9 | % | (3) | 2,471 |
| | 2.78 |
|
| 112,355 |
|
Avalon San Bruno II | | San Bruno, CA | | 185 |
| | 156,583 |
| | 2007/2013 | | 846 |
| | 96.2 | % | | 96.6 | % |
| 95.8 | % | (3) | 2,394 |
| | 2.83 |
|
| 70,389 |
|
Avalon San Bruno III | | San Bruno, CA | | 187 |
| | 232,147 |
| | 2010/2013 | | 1,241 |
| | 97.3 | % | | 96.1 | % |
| 95.6 | % | (3) | 3,389 |
| | 2.73 |
|
| 98,562 |
|
AVA 55 Ninth | | San Francisco, CA | | 273 |
| | 236,907 |
| | 2014 | | 868 |
| | 96.3 | % | | 56.3 | % | (3) | N/A |
| (3) | 3,620 |
| | 4.17 |
| (3) | 116,558 |
|
| | | | | | | | | | | | | | | | | | | | | | |
San Jose, CA | | | | | | | | | | | | | | | | | | | | | | |
Avalon Campbell | | Campbell, CA | | 348 |
| | 326,796 |
| | 1995 | | 939 |
| | 96.0 | % | | 95.3 | % |
| 95.2 | % | (2) | 2,316 |
| | 2.47 |
|
| 73,089 |
|
Eaves San Jose | | San Jose, CA | | 440 |
| | 387,420 |
| | 1985/1996 | | 881 |
| | 97.5 | % | | 96.4 | % |
| 96.5 | % |
| 2,098 |
| | 2.38 |
|
| 84,777 |
|
Avalon on the Alameda | | San Jose, CA | | 305 |
| | 299,762 |
| | 1999 | | 983 |
| | 96.7 | % | | 96.0 | % |
| 96.5 | % |
| 2,535 |
| | 2.58 |
|
| 57,988 |
|
Avalon Silicon Valley | | Sunnyvale, CA | | 710 |
| | 653,929 |
| | 1998 | | 921 |
| | 96.5 | % | | 96.0 | % | (2) | 96.2 | % |
| 2,503 |
| | 2.72 |
| (2) | 125,273 |
|
Avalon Mountain View | | Mountain View, CA | | 248 |
| | 211,525 |
| | 1986 | | 853 |
| | 96.4 | % | | 96.3 | % |
| 96.0 | % |
| 2,714 |
| | 3.18 |
|
| 58,659 |
|
Eaves Creekside | | Mountain View, CA | | 294 |
| | 215,680 |
| | 1962/1997 | | 734 |
| | 96.9 | % | | 95.2 | % | (2) | 95.9 | % | (2) | 2,211 |
| | 3.01 |
| (2) | 53,793 |
|
Avalon at Cahill Park | | San Jose, CA | | 218 |
| | 218,177 |
| | 2002 | | 1,001 |
| | 96.3 | % | | 96.2 | % |
| 96.2 | % |
| 2,581 |
| | 2.58 |
|
| 53,798 |
|
Avalon Towers on the Peninsula | | Mountain View, CA | | 211 |
| | 218,392 |
| | 2002 | | 1,035 |
| | 97.6 | % | | 96.8 | % |
| 96.0 | % |
| 3,520 |
| | 3.40 |
|
| 66,799 |
|
Avalon Willow Glen | | San Jose, CA | | 412 |
| | 382,147 |
| | 2002/2013 | | 928 |
| | 95.9 | % | | 95.2 | % |
| 95.0 | % | (3) | 2,276 |
| | 2.45 |
|
| 132,051 |
|
Eaves West Valley | | San Jose, CA | | 789 |
| | 504,813 |
| | 1970/2013 | | 640 |
| | 97.1 | % | | 96.6 | % |
| 95.0 | % | (3) | 1,738 |
| | 2.72 |
|
| 211,537 |
|
Eaves Mountain View at Middlefield | | Mountain View, CA | | 402 |
| | 261,600 |
| | 1969/2013 | | 651 |
| | 97.5 | % | | 96.1 | % |
| 96.0 | % | (3) | 2,253 |
| | 3.46 |
|
| 137,935 |
|
Eaves West Valley II | | San Jose, CA | | 84 |
| | 71,136 |
| | 2013 | | 847 |
| | 98.8 | % | | 93.1 | % |
| 26.2 | % | (3) | 2,215 |
| | 2.62 |
|
| 18,411 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
Avalon Morrison Park | | San Jose, CA | | 250 |
| | 277,710 |
| | 2014 | | 1,111 |
| | 95.2 | % | | 66.8 | % | (3) | 4.0 | % | (3) | 2,741 |
| | 2.47 |
| (3) | 78,174 |
|
| | | | | | | | | | | | | | | | | | | | | | |
SOUTHERN CALIFORNIA | | | | | | | | | | | | | | | | | | | | | | |
Orange County, CA | | | | | | | | | | | | | | | | | | | | | | |
AVA Newport | | Costa Mesa, CA | | 145 |
| | 122,415 |
| | 1956/1996 | | 844 |
| | 95.9 | % | | 93.3 | % |
| 96.0 | % |
| 2,043 |
| | 2.42 |
|
| 15,591 |
|
Avalon Mission Viejo | | Mission Viejo, CA | | 166 |
| | 124,550 |
| | 1984/1996 | | 750 |
| | 96.4 | % | | 96.1 | % |
| 95.9 | % |
| 1,433 |
| | 1.91 |
|
| 14,557 |
|
Eaves South Coast | | Costa Mesa, CA | | 258 |
| | 207,672 |
| | 1973/1996 | | 805 |
| | 95.7 | % | | 95.8 | % |
| 95.4 | % |
| 1,699 |
| | 2.11 |
|
| 33,544 |
|
Eaves Santa Margarita | | Rancho Santa Margarita, CA | | 301 |
| | 229,593 |
| | 1990/1997 | | 763 |
| | 95.7 | % | | 95.3 | % |
| 96.2 | % |
| 1,587 |
| | 2.08 |
|
| 31,765 |
|
Eaves Huntington Beach | | Huntington Beach, CA | | 304 |
| | 268,000 |
| | 1971/1997 | | 882 |
| | 95.0 | % | | 95.9 | % |
| 96.0 | % |
| 1,706 |
| | 1.94 |
|
| 34,146 |
|
Avalon Anaheim Stadium | | Anaheim, CA | | 251 |
| | 302,480 |
| | 2009 | | 1,205 |
| | 98.8 | % | | 95.7 | % |
| 96.1 | % |
| 2,346 |
| | 1.95 |
|
| 97,675 |
|
Avalon Irvine | | Irvine, CA | | 279 |
| | 243,157 |
| | 2010 | | 872 |
| | 94.2 | % | | 95.9 | % |
| 95.0 | % |
| 1,919 |
| | 2.20 |
|
| 77,504 |
|
Eaves Lake Forest | | Lake Forest, CA | | 225 |
| | 215,319 |
| | 1975/2011 | | 957 |
| | 98.2 | % | | 94.8 | % |
| 96.4 | % |
| 1,608 |
| | 1.68 |
|
| 28,447 |
|
Avalon Irvine II | | Irvine, CA | | 179 |
| | 160,844 |
| | 2013 | | 899 |
| | 95.5 | % | | 94.6 | % |
| 76.1 | % | (3) | 2,029 |
| | 2.26 |
|
| 45,264 |
|
Eaves Seal Beach | | Seal Beach, CA | | 549 |
| | 388,244 |
| | 1971/2013 | | 707 |
| | 95.1 | % | | 95.8 | % |
| 94.7 | % | (3) | 1,848 |
| | 2.61 |
|
| 151,424 |
|
| | | | | | | | | | | | | | | | | | | | | | |
San Diego, CA | | | | | | | | | | | | | | | | | | | | | | |
AVA Pacific Beach | | San Diego, CA | | 564 |
| | 402,285 |
| | 1969/1997 | | 713 |
| | 90.7 | % | | 95.7 | % | (2) | 96.5 | % |
| 1,615 |
| | 2.26 |
| (2) | 81,429 |
|
Eaves Mission Ridge | | San Diego, CA | | 200 |
| | 207,700 |
| | 1960/1997 | | 1,039 |
| | 95.5 | % | | 96.0 | % |
| 96.3 | % |
| 1,834 |
| | 1.77 |
|
| 24,897 |
|
AVA Cortez Hill (12) | | San Diego, CA | | 299 |
| | 230,395 |
| | 1973/1998 | | 771 |
| | 95.3 | % | | 95.6 | % |
| 95.8 | % |
| 1,795 |
| | 2.33 |
|
| 46,366 |
|
Avalon Fashion Valley | | San Diego, CA | | 161 |
| | 183,802 |
| | 2008 | | 1,142 |
| | 95.6 | % | | 95.3 | % |
| 96.8 | % |
| 2,216 |
| | 1.94 |
|
| 64,889 |
|
Eaves San Marcos | | San Marcos, CA | | 184 |
| | 161,352 |
| | 1988/2011 | | 877 |
| | 97.3 | % | | 96.6 | % |
| 96.2 | % |
| 1,627 |
| | 1.86 |
|
| 17,522 |
|
Eaves Rancho Penasquitos | | San Diego, CA | | 250 |
| | 191,256 |
| | 1986/2011 | | 765 |
| | 95.2 | % | | 95.4 | % |
| 96.2 | % |
| 1,561 |
| | 2.04 |
|
| 35,669 |
|
Avalon La Jolla Colony | | San Diego, CA | | 180 |
| | 137,036 |
| | 1987/2013 | | 761 |
| | 92.2 | % | | 96.6 | % |
| 97.0 | % | (3) | 1,707 |
| | 2.24 |
|
| 46,553 |
|
Eaves La Mesa | | La Mesa, CA | | 168 |
| | 139,428 |
| | 1989/2013 | | 830 |
| | 93.5 | % | | 95.5 | % |
| 95.8 | % | (3) | 1,586 |
| | 1.91 |
|
| 39,307 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Los Angeles, CA | | | | | | | | | | | | | | | | | | | | | | |
AVA Burbank | | Burbank, CA | | 748 |
| | 530,160 |
| | 1961/1997 | | 709 |
| | 95.3 | % | | 96.0 | % | (2) | 95.1 | % | (2) | 1,723 |
| | 2.43 |
| (2) | 98,663 |
|
Avalon Woodland Hills | | Woodland Hills, CA | | 663 |
| | 594,396 |
| | 1989/1997 | | 897 |
| | 95.9 | % | | 96.4 | % |
| 96.7 | % |
| 1,795 |
| | 2.00 |
|
| 111,146 |
|
Eaves Warner Center | | Woodland Hills, CA | | 227 |
| | 191,443 |
| | 1979/1998 | | 843 |
| | 96.0 | % | | 96.8 | % |
| 97.4 | % |
| 1,727 |
| | 2.05 |
|
| 29,335 |
|
Avalon at Glendale (12) | | Glendale, CA | | 223 |
| | 241,714 |
| | 2003 | | 1,084 |
| | 96.8 | % | | 97.1 | % |
| 95.6 | % |
| 2,452 |
| | 2.26 |
|
| 43,719 |
|
Avalon Burbank | | Burbank, CA | | 400 |
| | 360,587 |
| | 1988/2002 | | 901 |
| | 96.5 | % | | 96.8 | % |
| 96.3 | % |
| 2,378 |
| | 2.64 |
|
| 94,722 |
|
Avalon Camarillo | | Camarillo , CA | | 249 |
| | 233,273 |
| | 2006 | | 937 |
| | 97.2 | % | | 96.8 | % |
| 96.1 | % |
| 1,792 |
| | 1.91 |
|
| 48,878 |
|
Avalon Wilshire | | Los Angeles, CA | | 123 |
| | 125,093 |
| | 2007 | | 1,017 |
| | 95.1 | % | | 96.9 | % |
| 95.1 | % |
| 2,961 |
| | 2.91 |
|
| 47,686 |
|
Avalon Encino | | Encino, CA | | 131 |
| | 131,220 |
| | 2008 | | 1,002 |
| | 99.2 | % | | 96.9 | % |
| 97.7 | % |
| 2,765 |
| | 2.76 |
|
| 62,257 |
|
Avalon Warner Place | | Canoga Park, CA | | 210 |
| | 186,402 |
| | 2008 | | 888 |
| | 96.2 | % | | 96.8 | % |
| 97.0 | % |
| 1,778 |
| | 2.00 |
|
| 52,951 |
|
Eaves Phillips Ranch | | Pomona, CA | | 501 |
| | 498,036 |
| | 1989/2011 | | 994 |
| | 94.6 | % | | 96.2 | % |
| 96.6 | % |
| 1,588 |
| | 1.60 |
|
| 51,782 |
|
Eaves San Dimas | | San Dimas, CA | | 102 |
| | 94,200 |
| | 1978/2011 | | 924 |
| | 95.1 | % | | 97.2 | % | (3) | 97.2 | % |
| 1,404 |
| | 1.52 |
| (3) | 10,254 |
|
Eaves San Dimas Canyon | | San Dimas, CA | | 156 |
| | 144,669 |
| | 1981/2011 | | 927 |
| | 95.5 | % | | 96.6 | % |
| 97.1 | % |
| 1,517 |
| | 1.64 |
|
| 15,572 |
|
AVA Pasadena | | Pasadena, CA | | 84 |
| | 70,648 |
| | 1973/2012 | | 841 |
| | 98.8 | % | | 94.1 | % | (2) | 87.8 | % | (2) | 2,045 |
| | 2.43 |
| (2) | 25,335 |
|
Eaves Cerritos | | Artesia, CA | | 151 |
| | 106,961 |
| | 1973/2012 | | 708 |
| | 96.7 | % | | 97.3 | % |
| 95.2 | % |
| 1,503 |
| | 2.12 |
|
| 30,892 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
Avalon Del Rey | | Los Angeles, CA | | 309 |
| | 283,183 |
| | 2006/2012 | | 916 |
| | 94.2 | % | | 96.3 | % |
| 96.8 | % |
| 2,204 |
| | 2.40 |
|
| 103,562 |
|
Avalon Simi Valley | | Simi Valley, CA | | 500 |
| | 430,218 |
| | 2007/2013 | | 860 |
| | 95.0 | % | | 96.0 | % |
| 96.4 | % | (3) | 1,705 |
| | 1.98 |
|
| 119,792 |
|
Avalon Studio City II | | Studio City, CA | | 101 |
| | 83,936 |
| | 1991/2013 | | 831 |
| | 91.1 | % | | 94.9 | % |
| 94.0 | % | (3) | 2,004 |
| | 2.41 |
|
| 28,790 |
|
Avalon Studio City III | | Studio City, CA | | 276 |
| | 263,512 |
| | 2002/2013 | | 955 |
| | 93.5 | % | | 93.7 | % |
| 94.4 | % | (3) | 2,373 |
| | 2.49 |
|
| 97,352 |
|
Avalon Calabasas | | Calabasas, CA | | 600 |
| | 506,522 |
| | 1988/2013 | | 844 |
| | 96.3 | % | | 95.9 | % |
| 95.5 | % | (3) | 1,826 |
| | 2.16 |
|
| 157,011 |
|
Avalon Oak Creek | | Agoura Hills, CA | | 336 |
| | 364,176 |
| | 2004/2013 | | 1,084 |
| | 97.0 | % | | 96.3 | % |
| 94.8 | % | (3) | 2,294 |
| | 2.12 |
|
| 127,791 |
|
Avalon Santa Monica on Main | | Santa Monica, CA | | 133 |
| | 122,460 |
| | 2007/2013 | | 921 |
| | 93.2 | % | | 95.9 | % | (2) | 93.8 | % | (3) | 4,127 |
| | 4.48 |
| (2) | 96,129 |
|
Avalon Del Mar Station | | Pasadena, CA | | 347 |
| | 338,390 |
| | 2006/2013 | | 975 |
| | 95.4 | % | | 95.6 | % |
| 94.3 | % | (3) | 2,286 |
| | 2.34 |
|
| 130,393 |
|
Eaves Old Town Pasadena | | Pasadena, CA | | 96 |
| | 66,420 |
| | 1972/2013 | | 692 |
| | 99.0 | % | | 96.9 | % |
| 96.4 | % | (3) | 1,771 |
| | 2.56 |
|
| 25,669 |
|
Eaves Thousand Oaks | | Thousand Oaks, CA | | 154 |
| | 134,388 |
| | 1992/2013 | | 873 |
| | 99.4 | % | | 96.9 | % |
| 95.7 | % | (3) | 1,927 |
| | 2.21 |
|
| 36,214 |
|
Eaves Los Feliz | | Los Angeles, CA | | 263 |
| | 201,830 |
| | 1989/2013 | | 767 |
| | 94.7 | % | | 95.6 | % |
| 96.0 | % | (3) | 1,789 |
| | 2.33 |
|
| 65,761 |
|
Oakwood Toluca Hills (14) | | Los Angeles, CA | | 1,151 |
| | 578,668 |
| | 1973/2013 | | 503 |
| | N/A |
| | N/A |
|
| N/A |
| (3) | N/A |
| | N/A |
|
| 256,639 |
|
Eaves Woodland Hills | | Woodland Hills, CA | | 883 |
| | 578,668 |
| | 1971/2013 | | 655 |
| | 96.9 | % | | 97.0 | % |
| 95.8 | % | (3) | 1,411 |
| | 2.15 |
|
| 168,503 |
|
Avalon Thousand Oaks Plaza | | Thousand Oaks, CA | | 148 |
| | 140,464 |
| | 2002/2013 | | 949 |
| | 94.6 | % | | 95.8 | % |
| 96.5 | % | (3) | 2,019 |
| | 2.13 |
|
| 37,198 |
|
Avalon Pasadena | | Pasadena, CA | | 120 |
| | 102,516 |
| | 2004/2013 | | 854 |
| | 98.3 | % | | 96.1 | % |
| 95.1 | % | (3) | 2,435 |
| | 2.85 |
|
| 43,606 |
|
Avalon Studio City | | Studio City, CA | | 450 |
| | 331,324 |
| | 1987/2013 | | 736 |
| | 96.0 | % | | 96.5 | % |
| 94.9 | % | (3) | 1,849 |
| | 2.51 |
|
| 112,467 |
|
Avalon San Dimas | | San Dimas, CA | | 156 |
| | 159,937 |
| | 2014 | | 1,025 |
| | 95.5 | % | | 47.7 | % |
| N/A |
| (3) | 1,794 |
| | 1.75 |
|
| 39,585 |
|
Avalon Mission Oaks | | Camarillo, CA | | 160 |
| | 157,200 |
| | 2014 | | 983 |
| | 95.0 | % | | 100.0 | % | (3) | N/A |
| (3) | 1,872 |
| | 1.91 |
| (3) | 47,000 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Non-Core | | | | | | | | | | | | | | | | | | | | | | |
Archstone Lexington | | Flower Mound, TX | | 222 |
| | 218,309 |
| | 2000/2013 | | 983 |
| | 94.1 | % | | 95.9 | % |
| 96.3 | % | (3) | 1,320 |
| | 1.34 |
|
| 32,309 |
|
Archstone Toscano | | Houston, TX | | 474 |
| | 460,983 |
| | 2014 | | 973 |
| | 84.3 | % | | 72.1 | % | (3) | 37.9 | % | (3) | 1,702 |
| | 1.75 |
| (3) | 87,766 |
|
Memorial Heights Villages | | Houston, TX | | 318 |
| | 305,055 |
| | 2014 | | 959 |
| | 77.6 | % | | 35.4 | % | (3) | — | % | (3) | 1,703 |
| | 1.78 |
| (3) | 51,771 |
|
| | | | | | | | | | | | | | | | | | | | | | |
DEVELOPMENT COMMUNITIES | | | | | | | | | | | | | | | | | | | | | | |
Avalon West Chelsea/AVA High Line (12) | | New York, NY | | 710 |
| | 497,880 |
| | N/A | | 701 |
| | 82.4 | % | | 47.8 | % | (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 272,585 |
|
Avalon North Station | | Boston, MA | | 503 |
| | 403,610 |
| | N/A | | 802 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 46,268 |
|
Avalon at Assembly Row/AVA Somerville (12) | | Somerville, MA | | 445 |
| | 382,117 |
| | N/A | | 859 |
| | 51.5 | % | | 29.5 | % | (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 129,251 |
|
Avalon Framingham | | Framingham, MA | | 180 |
| | 211,275 |
| | N/A | | 1,174 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 18,335 |
|
Avalon West Hollywood | | West Hollywood, CA | | 294 |
| | 290,701 |
| | N/A | | 989 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 58,128 |
|
Avalon Dublin Station II | | Dublin, CA | | 252 |
| | 243,851 |
| | N/A | | 968 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 43,422 |
|
Avalon Wharton | | Wharton, NJ | | 247 |
| | 245,531 |
| | N/A | | 994 |
| | 39.8 | % | | 18.3 | % | (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 48,647 |
|
Avalon Green III | | New York, NY | | 68 |
| | 77,669 |
| | N/A | | 1,142 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 1,447 |
|
AVA Little Tokyo | | Los Angeles, CA | | 280 |
| | 285,220 |
| | N/A | | 1,019 |
| | 46.4 | % | | 18.9 | % | (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 105,827 |
|
AVA Theater District | | Boston, MA | | 398 |
| | 329,146 |
| | N/A | | 827 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 133,082 |
|
Avalon Marlborough | | Boston, MA | | 350 |
| | 417,553 |
| | N/A | | 1,193 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 46,903 |
|
Avalon Vista | | Vista, CA | | 221 |
| | 222,814 |
| | N/A | | 1,008 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 36,630 |
|
Avalon Bloomfield Station | | Bloomfield, NJ | | 224 |
| | 211,102 |
| | N/A | | 942 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 29,680 |
|
Avalon Willoughby Square/AVA DoBro | | Brooklyn, NY | | 826 |
| | 239,284 |
| | N/A | | 290 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 266,318 |
|
Avalon Alderwood I | | Lynnwood, WA | | 367 |
| | 352,238 |
| | N/A | | 960 |
| | 64.2 | % | | 30.1 | % | (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 66,106 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Approx. rentable area (Sq. Ft.) | | Year of completion/ acquisition | | Average size (Sq. Ft.) | | Physical occupancy at 12/31/14 | | Average economic occupancy | | Average rental rate | | Financial reporting cost (5) |
| | City and state | | Number of homes | | | | | | 2014 | | 2013 | | $ per Apt (4) | | $ per Sq. Ft. | |
AVA Capitol Hill | | Seattle, WA | | 249 |
| | 175,707 |
| | N/A | | 706 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 39,870 |
|
Avalon Esterra Park | | Redmond, WA | | 482 |
| | 440,863 |
| | N/A | | 915 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 33,523 |
|
Avalon Hayes Valley | | San Francisco, CA | | 182 |
| | 135,082 |
| | N/A | | 742 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 79,572 |
|
Avalon Baker Ranch | | Lake Forest, CA | | 430 |
| | 425,497 |
| | N/A | | 990 |
| | 10.1 | % | | 5.7 | % | (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 110,802 |
|
Avalon Irvine III | | Irvine, CA | | 156 |
| | 151,363 |
| | N/A | | 970 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 26,303 |
|
Avalon Huntington Beach | | Huntington Beach, CA | | 378 |
| | 322,107 |
| | N/A | | 852 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 40,739 |
|
Avalon Glendora | | Glendora, CA | | 280 |
| | 264,753 |
| | N/A | | 946 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 52,146 |
|
Avalon Falls Church | | Falls Church, VA | | 384 |
| | 396,498 |
| | N/A | | 1,033 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 69,631 |
|
Avalon Roseland | | Roaseland, NJ | | 136 |
| | 192,530 |
| | N/A | | 1,416 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 33,143 |
|
Avalon Princeton | | Princeton, NJ | | 280 |
| | 287,078 |
| | N/A | | 1,025 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 35,456 |
|
Avalon Union | | Union, NJ | | 202 |
| | 230,638 |
| | N/A | | 1,142 |
| | N/A |
| | N/A |
| (3) | N/A |
| (3) | N/A |
| | N/A |
| (3) | 12,717 |
|
| | | | | | | | | | | | | | | | | | | | | | |
UNCONSOLIDATED COMMUNITIES (13) | | | | | | | | | | | | | | | | | | | | | | |
Avalon at Mission Bay North II (11) | | San Francisco, CA | | 313 |
| | 291,655 |
| | 2006 | | 932 |
| | 95.2 | % | | 96.1 | % |
| 96.5 | % |
| 4,025 |
| | 4.32 |
|
| N/A |
|
Eaves Tustin (6) | | Tustin, CA | | 628 |
| | 511,992 |
| | 1972/2010 | | 815 |
| | 96.8 | % | | 96.3 | % |
| 96.0 | % |
| 1,536 |
| | 1.88 |
|
| N/A |
|
Eaves Los Alisos (6) | | Lake Forest, CA | | 140 |
| | 126,480 |
| | 1978/2010 | | 903 |
| | 97.9 | % | | 96.9 | % |
| 97.4 | % |
| 1,530 |
| | 1.69 |
|
| N/A |
|
Eaves Carlsbad (6) | | Carlsbad, CA | | 450 |
| | 340,371 |
| | 1985/2011 | | 756 |
| | 94.2 | % | | 96.2 | % |
| 96.4 | % |
| 1,499 |
| | 1.98 |
|
| N/A |
|
Eaves Rancho San Diego (6) | | El Cajon, CA | | 676 |
| | 587,500 |
| | 1986/2011 | | 869 |
| | 95.7 | % | | 95.9 | % |
| 95.7 | % |
| 1,527 |
| | 1.76 |
|
| N/A |
|
Briarwood Apartments (6) | | Owings Mills, MD | | 348 |
| | 340,868 |
| | 1999/2010 | | 980 |
| | 94.5 | % | | 96.6 | % |
| 96.2 | % |
| 1,310 |
| | 1.34 |
|
| N/A |
|
Eaves Gaithersburg (6) | | Gaithersburg, MD | | 684 |
| | 658,846 |
| | 1974/2010 | | 963 |
| | 95.8 | % | | 96.4 | % |
| 96.4 | % |
| 1,351 |
| | 1.40 |
|
| N/A |
|
Eaves Rockville (6) | | Rockville, MD | | 210 |
| | 403,912 |
| | 1970/2011 | | 1,923 |
| | 96.7 | % | | 96.6 | % |
| 96.9 | % |
| 2,213 |
| | 1.15 |
|
| N/A |
|
Eaves Plainsboro (6) | | Plainsboro, NJ | | 776 |
| | 553,320 |
| | 1973/2010 | | 713 |
| | 95.6 | % | | 95.4 | % |
| 96.4 | % |
| 1,287 |
| | 1.81 |
|
| N/A |
|
Captain Parker Arms (6) | | Lexington, MA | | 94 |
| | 88,680 |
| | 1965/2011 | | 943 |
| | 95.7 | % | | 93.8 | % |
| 95.8 | % |
| 2,189 |
| | 2.32 |
|
| N/A |
|
Avalon Watchung (6) | | Watchung, NJ | | 334 |
| | 336,586 |
| | 2003/2012 | | 1,008 |
| | 94.6 | % | | 96.2 | % |
| 96.3 | % |
| 1,991 |
| | 1.98 |
|
| N/A |
|
Avalon North Point (8) | | Cambridge, MA | | 426 |
| | 383,537 |
| | 2008/2013 | | 900 |
| | 96.0 | % | | 92.0 | % |
| 94.0 | % |
| 3,310 |
| | 3.68 |
|
| N/A |
|
Avalon Station 250 (7) | | Dedham, MA | | 285 |
| | 305,862 |
| | 2011/2013 | | 1,073 |
| | 96.1 | % | | 94.7 | % |
| 94.9 | % |
| 2,092 |
| | 1.95 |
|
| N/A |
|
Avalon North Point Lofts (8) | | Cambridge, MA | | 103 |
| | 46,506 |
| | 2014 | | 452 |
| | 82.4 | % | | 33.9 | % | (3) | N/A |
| (3) | 1,975 |
| | 4.37 |
| (3) | N/A |
|
Avalon Kips Bay (7) | | New York, NY | | 209 |
| | 152,865 |
| | 1998/2013 | | 731 |
| | 93.8 | % | | 95.4 | % |
| 93.3 | % |
| 4,651 |
| | 6.36 |
|
| N/A |
|
Brandywine (11) | | Washington, DC | | 305 |
| | 308,050 |
| | 1954/2013 | | 1,010 |
| | N/A |
| | 92.4 | % |
| 92.0 | % |
| 2,418 |
| | 2.39 |
|
| N/A |
|
Avalon Woodland Park (8) | | Herndon, VA | | 392 |
| | 393,112 |
| | 2000/2013 | | 1,003 |
| | 95.4 | % | | 95.6 | % |
| 95.0 | % |
| 1,654 |
| | 1.65 |
|
| N/A |
|
Avalon Grosvenor Tower (7) | | North Bethesda, MD | | 237 |
| | 230,439 |
| | 1987/2013 | | 972 |
| | 95.3 | % | | 94.6 | % |
| 94.1 | % |
| 2,017 |
| | 2.07 |
|
| N/A |
|
Eaves Sunnyvale (7) | | Sunnyvale, CA | | 192 |
| | 204,060 |
| | 1991/2013 | | 1,063 |
| | 96.9 | % | | 96.7 | % |
| 95.7 | % |
| 2,704 |
| | 2.54 |
|
| N/A |
|
Archstone Boca Town Center (7) | | Boca Raton, FL | | 252 |
| | 268,200 |
| | 1988/2013 | | 1,064 |
| | 93.3 | % | | 94.5 | % |
| 95.1 | % |
| 1,592 |
| | 1.50 |
|
| N/A |
|
Avalon Kirkland at Carillon (7) | | Kirkland, WA | | 131 |
| | 176,160 |
| | 1990/2013 | | 1,345 |
| | 98.5 | % | | 94.4 | % |
| 95.6 | % |
| 2,580 |
| | 1.92 |
|
| N/A |
|
Avalon Studio 4041 (7) | | Studio City, CA | | 149 |
| | 120,354 |
| | 2009/2013 | | 808 |
| | 97.3 | % | | 96.0 | % |
| 94.9 | % |
| 2,213 |
| | 2.74 |
|
| N/A |
|
Avalon Marina Bay (7)(12) | | Marina del Rey, CA | | 205 |
| | 177,945 |
| | 1968/2013 | | 868 |
| | 99.0 | % | | 80.3 | % |
| 65.4 | % |
| 2,299 |
| | 2.65 |
|
| N/A |
|
Avalon Venice on Rose (7) | | Venice, CA | | 70 |
| | 84,508 |
| | 2012/2013 | | 1,207 |
| | 92.9 | % | | 95.6 | % |
| 93.3 | % |
| 4,895 |
| | 4.05 |
|
| N/A |
|
____________________________
| |
1. | We own a fee simple interest in the communities listed, excepted as noted below. |
| |
2. | Represents a community that was under redevelopment during the year, which could result in lower average economic occupancy and average rental rate per square foot for the year. |
| |
3. | Represents a community that is under construction at the respective year end or that completed development or was purchased during the year, which could result in lower average economic occupancy and average rental rate per square foot for the year. |
| |
4. | Represents the averages per occupied apartment home. |
| |
5. | Dollars in thousands. Costs are presented in accordance with GAAP. For current Development Communities, cost represents total costs incurred through December 31, 2014 without reduction for deprecation. Financial reporting costs are excluded for unconsolidated communities, see Note 6, "Investments in Real Estate Entities." |
| |
6. | We own a 31.3% combined general partnership and indirect limited partner equity interest in this community. |
| |
7. | We own a 28.6% combined general partnership and indirect limited partner equity interest in this community. |
| |
8. | We own a 20.0% combined general partnership and indirect limited partner equity interest in this community. |
| |
9. | We own a general partnership interest in a partnership that owns a fee simple interest in this community. |
| |
10. | We own a general partnership interest in a partnership structured as a DownREIT that owns this community. |
| |
11. | We own a membership interest in a limited liability company that holds a fee simple interest in this community. |
| |
12. | Community is located on land subject to a land lease. |
| |
13. | Does not include our indirect interest in the joint venture formed with Equity Residential (as defined in this Form 10-K). |
| |
14. | Community is master leased to a third party manager. |
| |
15. | Includes 240 apartment homes which were destroyed and are uninhabitable as a result of the fire at Avalon at Edgewater in January 2015. |
Development Communities
As of December 31, 2014,2016, we had 26owned or held a direct or indirect interest in 27 Development Communities under construction. We expect these Development Communities, when completed, to add a total of 8,5249,129 apartment homes to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $3,011,000,000. In addition, the land for two Development Communities that we control under long-term land lease agreements is subject to future minimum rental amounts of approximately $7,704,000 in 2015 in the aggregate.$4,045,000,000. We cannot assure you that we will meet our schedule for construction completion or that we will meet our budgeted costs, either individually, or in the aggregate. You should carefully review Item 1A. "Risk Factors"“Risk Factors” for a discussion of the risks associated with development activity and our discussion under Item 7. "Management's“Management's Discussion and Analysis of Financial Condition and Results of Operations"Operations” (including the factors identified under "Forward-Looking Statements"“Forward-Looking Statements”) for further discussion of development activity.
The following table presents a summary of the Development Communities. We hold a direct or indirect fee simple ownership interest in these communities (directly or through a wholly-owned subsidiary) unless otherwise noted in the table.
| | | | Number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Construction start | | Initial projected occupancy (2) | | Estimated completion | | Estimated stabilization (3) | | Number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Construction start | | Initial actual/ projected occupancy (2) | | Estimated completion | | Estimated stabilization (3) |
1. | | Avalon West Chelsea/AVA High Line (4) New York, NY | 710 |
| | $ | 276.1 |
| | Q4 2011 | | Q4 2013 | | Q1 2015 | | Q3 2015 | | Avalon Willoughby Square/AVA DoBro Brooklyn, NY | 826 |
| | $ | 456.3 |
| | Q3 2013 | | Q4 2015 | | Q1 2017 | | Q3 2017 |
2. | | Avalon Assembly Row/AVA Somerville (4) Somerville, MA | 445 |
| | 122.1 |
| | Q2 2012 | | Q2 2014 | | Q1 2015 | | Q3 2015 | | Avalon Huntington Beach (4) Huntington Beach, CA | 378 |
| | 120.3 |
| | Q2 2014 | | Q1 2016 | | Q1 2017 | | Q3 2017 |
3. | | Avalon Alderwood I Lynnwood, WA | 367 |
| | 68.4 |
| | Q2 2013 | | Q2 2014 | | Q1 2015 | | Q3 2015 | | Avalon West Hollywood (4) West Hollywood, CA | 294 |
| | 153.6 |
| | Q2 2014 | | Q1 2017 | | Q4 2017 | | Q2 2018 |
4. | | AVA Little Tokyo Los Angeles, CA | 280 |
| | 109.8 |
| | Q4 2012 | | Q3 2014 | | Q2 2015 | | Q4 2015 | | Avalon North Station Boston, MA | 503 |
| | 271.2 |
| | Q3 2014 | | Q4 2016 | | Q1 2018 | | Q3 2018 |
5. | | Avalon Wharton Wharton, NJ | 247 |
| | 53.9 |
| | Q4 2012 | | Q3 2014 | | Q2 2015 | | Q4 2015 | | Avalon Esterra Park (4) Redmond, WA | 482 |
| | 137.8 |
| | Q3 2014 | | Q1 2016 | | Q2 2017 | | Q4 2017 |
6. | | Avalon Baker Ranch Lake Forest, CA | 430 |
| | 132.9 |
| | Q4 2013 | | Q4 2014 | | Q4 2015 | | Q2 2016 | | Avalon Princeton Princeton, NJ | 280 |
| | 95.5 |
| | Q4 2014 | | Q3 2016 | | Q3 2017 | | Q1 2018 |
7. | | Avalon Hayes Valley San Francisco, CA | 182 |
| | 90.2 |
| | Q3 2013 | | Q1 2015 | | Q3 2015 | | Q1 2016 | | Avalon Hunt Valley Hunt Valley, MD | 332 |
| | 74.0 |
| | Q1 2015 | | Q3 2016 | | Q3 2017 | | Q1 2018 |
8. | | Avalon Roseland Roseland, NJ | 136 |
| | 46.2 |
| | Q1 2014 | | Q1 2015 | | Q3 2015 | | Q1 2016 | | AVA NoMa Washington, D.C. | 438 |
| | 148.3 |
| | Q2 2015 | | Q2 2017 | | Q1 2018 | | Q3 2018 |
9. | | Avalon Falls Church Falls Church, VA | 384 |
| | 109.8 |
| | Q1 2014 | | Q1 2015 | | Q1 2016 | | Q3 2016 | | Avalon Quincy Quincy, MA | 395 |
| | 95.3 |
| | Q2 2015 | | Q2 2016 | | Q3 2017 | | Q1 2018 |
10. | | Avalon Vista Vista, CA | 221 |
| | 58.3 |
| | Q4 2013 | | Q2 2015 | | Q4 2015 | | Q2 2016 | | Avalon Great Neck Great Neck, NY | 191 |
| | 78.9 |
| | Q2 2015 | | Q2 2017 | | Q3 2017 | | Q1 2018 |
11. | | Avalon Marlborough Marlborough, MA | 350 |
| | 77.1 |
| | Q1 2014 | | Q2 2015 | | Q2 2016 | | Q4 2016 | | Avalon Laurel Laurel, MD | 344 |
| | 72.4 |
| | Q2 2015 | | Q2 2016 | | Q2 2017 | | Q4 2017 |
12. | | AVA Theater District Boston, MA | 398 |
| | 175.7 |
| | Q1 2013 | | Q2 2015 | | Q4 2015 | | Q2 2016 | | Avalon Sheepshead Bay (5) Brooklyn, NY | 180 |
| | 86.4 |
| | Q3 2015 | | Q3 2017 | | Q4 2017 | | Q2 2018 |
13. | | Avalon Willoughby Square/AVA DoBro Brooklyn, NY | 826 |
| | 444.9 |
| | Q3 2013 | | Q3 2015 | | Q4 2016 | | Q2 2017 | | Avalon Newcastle Commons I (4) Newcastle, WA | 378 |
| | 116.3 |
| | Q3 2015 | | Q4 2016 | | Q4 2017 | | Q2 2018 |
14. | | Avalon Bloomfield Station Bloomfield, NJ | 224 |
| | 53.4 |
| | Q4 2013 | | Q2 2015 | | Q4 2015 | | Q2 2016 | | Avalon Chino Hills Chino Hills, CA | 331 |
| | 96.6 |
| | Q3 2015 | | Q4 2016 | | Q4 2017 | | Q1 2018 |
15. | | Avalon Glendora Glendora, CA | 280 |
| | 82.5 |
| | Q4 2013 | | Q2 2015 | | Q1 2016 | | Q3 2016 | | Avalon Maplewood (6) Maplewood, NJ | 235 |
| | 65.4 |
| | Q4 2015 | | Q2 2017 | | Q4 2017 | | Q2 2018 |
16. | | AVA Capitol Hill Seattle, WA | 249 |
| | 81.4 |
| | Q1 2014 | | Q4 2015 | | Q2 2016 | | Q4 2016 | | Avalon Rockville Centre II Rockville Centre, NY | 165 |
| | 57.8 |
| | Q4 2015 | | Q3 2017 | | Q4 2017 | | Q2 2018 |
17 | | Avalon Irvine III Irvine, CA | 156 |
| | 55.0 |
| | Q2 2014 | | Q4 2015 | | Q1 2016 | | Q3 2016 | | AVA Wheaton Wheaton, MD | 319 |
| | 75.6 |
| | Q4 2015 | | Q3 2017 | | Q2 2018 | | Q4 2018 |
18. | | Avalon Dublin Station II Dublin, CA | 252 |
| | 83.7 |
| | Q2 2014 | | Q4 2015 | | Q2 2016 | | Q4 2016 | | Avalon Dogpatch San Francisco, CA | 326 |
| | 203.4 |
| | Q4 2015 | | Q4 2017 | | Q3 2018 | | Q1 2019 |
19. | | Avalon Huntington Beach Huntington Beach, CA | 378 |
| | 120.3 |
| | Q2 2014 | | Q3 2016 | | Q2 2017 | | Q4 2017 | | Avalon Easton Easton, MA | 290 |
| | 64.0 |
| | Q1 2016 | | Q2 2017 | | Q1 2018 | | Q3 2018 |
20. | | Avalon West Hollywood West Hollywood, CA | 294 |
| | 162.4 |
| | Q2 2014 | | Q3 2016 | | Q2 2017 | | Q4 2017 | | Avalon Somers Somers, NY | 152 |
| | 45.1 |
| | Q2 2016 | | Q3 2017 | | Q1 2018 | | Q3 2018 |
21. | | Avalon Framingham Framingham, MA | 180 |
| | 43.9 |
| | Q3 2014 | | Q3 2015 | | Q2 2016 | | Q4 2016 | | AVA North Point (7) Cambridge, MA | 265 |
| | 113.9 |
| | Q2 2016 | | Q1 2018 | | Q4 2018 | | Q2 2019 |
22. | | Avalon Esterra Park Redmond, WA | 482 |
| | 137.8 |
| | Q3 2014 | | Q2 2016 | | Q2 2017 | | Q4 2017 | | Avalon Boonton Boonton, NJ | 350 |
| | 91.2 |
| | Q3 2016 | | Q2 2019 | | Q1 2020 | | Q3 2020 |
23. | | Avalon North Station Boston, MA | 503 |
| | 256.9 |
| | Q3 2014 | | Q4 2016 | | Q4 2017 | | Q2 2018 | | 11 West 61st Street (4) New York, NY | 172 |
| | 603.7 |
| | Q4 2016 | | Q2 2019 | | Q4 2019 | | Q2 2020 |
24. | | Avalon Green III Elmsford, NY | 68 |
| | 22.1 |
| | Q4 2014 | | Q4 2015 | | Q2 2016 | | Q4 2016 | | Avalon Belltown Towers (4) Seattle, WA | 275 |
| | 146.9 |
| | Q4 2016 | | Q3 2019 | | Q4 2019 | | Q2 2020 |
25. | | Avalon Union Union, NJ | 202 |
| | 50.7 |
| | Q4 2014 | | Q2 2016 | | Q4 2016 | | Q1 2017 | | Avalon Public Market Emeryville, CA | 285 |
| | 139.6 |
| | Q4 2016 | | Q3 2018 | | Q1 2019 | | Q3 2019 |
26. | | Avalon Princeton Princeton, NJ | 280 |
| | 95.5 |
| | Q4 2014 | | Q3 2016 | | Q2 2017 | | Q4 2017 | | Avalon Teaneck Teaneck, NJ | 248 |
| | 70.4 |
| | Q4 2016 | | Q4 2018 | | Q2 2019 | | Q4 2019 |
27. | | | AVA Hollywood (4) Hollywood, CA | 695 |
| | 365.1 |
| | Q4 2016 | | Q2 2019 | | Q2 2020 | | Q4 2020 |
| | Total | 8,524 |
| | $ | 3,011.0 |
| | | Total | 9,129 |
| | $ | 4,045.0 |
| |
| |
(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) | Future initialInitial 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-yearone-year anniversary of completion of development. |
| |
(4) | Development community subjectDevelopments containing at least 10,000 square feet of retail space include Avalon Huntington Beach (10,000 square feet), Avalon West Hollywood (32,000 square feet), Avalon Esterra Park (17,000 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). |
| |
(5) | We are developing this project with a private development partner. We will own the rental portion of the development on floors 3 through 19 and the partner will own the for-sale condominium portion on floors 20 through 30 of the development. The information above represents only our portion of the project. We are providing a construction loan to a ground lease.the development partner, expected to be $48,800,000 which together with the partner's contributed equity is expected to fund the condominium portion of the project. A more detailed description of Avalon Sheepshead Bay can be found in Note 5, “Investments in Real Estate Entities,” of the Consolidated Financial Statements set forth in Item 8 of this report. |
| |
(6) | In February 2017, a fire occurred at at Avalon Maplewood. See "Insurance and Risk of Uninsured Losses" for further discussion. |
| |
(7) | We are developing this project within a joint venture that was formed in July 2016, in which we own a 55.0% interest. The information above represents the total cost for the venture. |
During the year ended December 31, 2014,2016, the Company completed the development of the following communities:
|
| | | | | | | | | | | | | | | | | |
| Number of apartment homes | | Total capitalized cost (1) ($ millions) | | Approximate rentable area (sq. ft.) | | Total capitalized cost per sq. ft. | | Quarter of completion |
1. | | Archstone Toscano Houston, TX | 474 |
| | $ | 87.5 |
| | 460,983 |
| | $ | 190 |
| | Q1 2014 |
2. | | Avalon Bloomingdale Bloomingdale, NJ | 174 |
| | 31.5 |
| | 176,542 |
| | $ | 178 |
| | Q1 2014 |
3. | | AVA University District Seattle, WA | 283 |
| | 75.2 |
| | 201,389 |
| | $ | 373 |
| | Q2 2014 |
4. | | Avalon Morrison Park San Jose, CA | 250 |
| | 79.1 |
| | 277,710 |
| | $ | 285 |
| | Q2 2014 |
5. | | Avalon Ossining Ossining, NY | 168 |
| | 36.8 |
| | 184,137 |
| | $ | 200 |
| | Q2 2014 |
6. | | Avalon Arlington North Arlington, VA | 228 |
| | 82.0 |
| | 268,618 |
| | $ | 305 |
| | Q3 2014 |
7. | | Avalon Dublin Station Dublin, CA | 253 |
| | 77.7 |
| | 247,430 |
| | $ | 314 |
| | Q3 2014 |
8. | | AVA 55 Ninth San Francisco, CA | 273 |
| | 121.0 |
| | 236,907 |
| | $ | 511 |
| | Q3 2014 |
9. | | Avalon Canton at Blue Hills Canton, MA | 196 |
| | 40.9 |
| | 235,465 |
| | $ | 174 |
| | Q3 2014 |
10. | | Memorial Heights Villages Houston, TX | 318 |
| | 52.7 |
| | 305,055 |
| | $ | 173 |
| | Q3 2014 |
11. | | Avalon Berkeley Berkeley, CA | 94 |
| | 33.7 |
| | 78,858 |
| | $ | 427 |
| | Q3 2014 |
12. | | Avalon at Stratford Stratford, CT | 130 |
| | 29.7 |
| | 148,136 |
| | $ | 200 |
| | Q3 2014 |
13. | | Avalon North Point Lofts (2) Cambridge, MA | 103 |
| | 28.0 |
| | 46,506 |
| | $ | 602 |
| | Q3 2014 |
14. | | Avalon Exeter Boston, MA | 187 |
| | 126.6 |
| | 200,641 |
| | $ | 631 |
| | Q4 2014 |
15. | | Avalon Mosaic Fairfax, VA | 531 |
| | 110.6 |
| | 458,198 |
| | $ | 241 |
| | Q4 2014 |
16. | | Avalon Huntington Station Huntington Station, NY | 303 |
| | 81.2 |
| | 364,602 |
| | $ | 223 |
| | Q4 2014 |
17. | | Avalon San Dimas San Dimas, CA | 156 |
| | 40.1 |
| | 159,937 |
| | $ | 251 |
| | Q4 2014 |
| | Total | 4,121 |
| | $ | 1,134.3 |
| | | | |
| | |
|
| | | | | | | | | | | | | | | | | |
| Number of apartment homes | | Total capitalized cost (1) ($ millions) | | Approximate rentable area (sq. ft.) | | Total capitalized cost per sq. ft. | | Quarter of completion |
1. | | Avalon Falls Church Falls Church, VA | 384 |
| | $ | 106.3 |
| | 396,536 |
| | $ | 268 |
| | Q1 2016 |
2. | | Avalon Glendora Glendora, CA | 280 |
| | 83.5 |
| | 266,226 |
| | $ | 314 |
| | Q1 2016 |
3. | | Avalon Green III Elmsford, NY | 68 |
| | 22.3 |
| | 77,722 |
| | $ | 287 |
| | Q1 2016 |
4. | | AVA Capitol Hill (2) Seattle, WA | 249 |
| | 81.5 |
| | 191,488 |
| | $ | 426 |
| | Q2 2016 |
5. | | Avalon Irvine III Irvine, CA | 156 |
| | 55.7 |
| | 151,363 |
| | $ | 368 |
| | Q2 2016 |
6. | | Avalon Union Union, NJ | 202 |
| | 50.3 |
| | 230,418 |
| | $ | 218 |
| | Q2 2016 |
7. | | Avalon Dublin Station II Dublin, CA | 252 |
| | 84.6 |
| | 243,809 |
| | $ | 347 |
| | Q3 2016 |
8. | | Avalon Alderwood II Lynnwood, WA | 124 |
| | 26.6 |
| | 119,926 |
| | $ | 222 |
| | Q3 2016 |
| | Total | 1,715 |
| | $ | 510.8 |
| | | | |
| | |
| |
(1) | Total capitalized cost is as of December 31, 2014. The Company2016. We generally anticipatesanticipate incurring additional costs associated with these communities that are customary for new developments. |
| |
(2) | The Company has a 20.0% ownership interest in this community through the AC JV.Approximate rentable area includes 16,000 square feet of retail space. |
Redevelopment Communities
As of December 31, 2014,2016, there were eightfour communities under redevelopment. We expect the total capitalized cost to redevelop these communities to be $131,700,000,$80,700,000, excluding costs incurred prior to redevelopment. We have found that the cost to redevelop an existing apartment community is more difficult to budget and estimate than the cost to develop a new community. Accordingly, we expect that actual costs may vary from our budget by a wider range than for a new development community. We cannot assure you that we will meet our schedule for reconstruction completion or for attaining restabilized operations, or that we will meet our budgeted costs, either individually or in the aggregate. We anticipate maintaining or increasing our current level of redevelopment activity related to communities in our current operating portfolio. You should carefully review Item 1A. "Risk Factors"“Risk Factors” for a discussion of the risks associated with redevelopment activity.
The following presents a summary of these Redevelopment Communities:
| | | | Number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Reconstruction start | | Estimated reconstruction completion | | Estimated restabilized operations (2) | | Number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Reconstruction start | | Estimated reconstruction completion | | Estimated restabilized operations (2) |
1. | | AVA Back Bay Boston, MA | | 271 |
| | $ | 21.0 |
| | Q1 2013 | | Q1 2015 | | Q3 2015 | | Avalon at Arlington Square Arlington, VA | | 842 |
| | $ | 32.8 |
| | Q4 2014 | | Q3 2017 | | Q1 2018 |
2. | | AVA Pacific Beach San Diego, CA | | 564 |
| | 23.6 |
| | Q1 2014 | | Q1 2016 | | Q3 2016 | | AVA Studio City I Studio City, CA | | 450 |
| | 28.3 |
| | Q1 2016 | | Q2 2017 | | Q4 2017 |
3. | | Eaves Dublin Dublin, CA | | 204 |
| | 9.2 |
| | Q2 2014 | | Q2 2015 | | Q4 2015 | | Avalon Towers on the Peninsula Mountain View, CA | | 211 |
| | 13.5 |
| | Q2 2016 | | Q1 2017 | | Q3 2017 |
4. | | Avalon Green Elmsford, NY | | 105 |
| | 6.5 |
| | Q4 2014 | | Q4 2015 | | Q2 2016 | | Avalon at Edgewater Edgewater, NJ | | 168 |
| | 6.1 |
| | Q3 2016 | | Q1 2017 | | Q3 2017 |
5. | | Avalon Santa Monica on Main Santa Monica, CA | | 133 |
| | 10.0 |
| | Q4 2014 | | Q4 2015 | | Q2 2016 | |
6. | | Avalon Towers Long Beach, NY | | 109 |
| | 10.2 |
| | Q4 2014 | | Q4 2015 | | Q2 2016 | |
7. | | Avalon Silicon Valley Sunnyvale, CA | | 710 |
| | 29.9 |
| | Q4 2014 | | Q1 2017 | | Q3 2017 | |
8. | | Avalon at Arlington Square Arlington, VA | | 842 |
| | 21.3 |
| | Q4 2014 | | Q2 2016 | | Q4 2016 | |
| | Total | | 2,938 |
| | $ | 131.7 |
| | | Total | | 1,671 |
| | $ | 80.7 |
| |
| |
(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. |
Development Rights
At December 31, 2014,2016, we had $180,516,000$84,293,000 in acquisition and related capitalized costs for direct interests in land parcels we own, and $67,029,000$40,179,000 in capitalized costs (including legal fees, design fees and related overhead costs) related to Development Rights for which we control the land parcel, typically through ana conditional agreement or option to purchase or lease the land.land, as well as land associated with the building destroyed in the Edgewater (as defined below) casualty loss not considered a Development Right. Collectively, the land held for development and associated costs for deferred development rights relate to 3725 Development Rights for which we expect to develop new apartment communities in the future. The cumulative capitalized costs for land held for development as of December 31, 20142016 includes $144,099,000$63,082,000 in original land acquisition costs. The original land acquisition cost per home, after consideration of planned sales of associated outparcels and other real estate, ranged from $24,000 per home in ConnecticutWashington to $74,000$51,000 per home in New York.Virginia. 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 10,3848,487 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own.
For 2418 Development Rights, we control the land through ana 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 the 13five remaining 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.
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 capitalized pre-development costs are charged to expense. During 2014,2016, we incurred a charge of approximately $3,964,000$4,183,000 for development pursuits that were not yet probable of future development at the time incurred, or for pursuits that we determined would not likely be developed.
You should carefully review Item 1A. "Risk“Risk Factors,"” for a discussion of the risks associated with Development Rights.
The following presents a summary of thesethe Development Rights:
|
| | | | | | | | | | |
Location | | Number of rights | | Estimated number of homes | | Projected total capitalized cost ($ millions) (1) |
| | | | | | |
Boston, MA | | 3 |
| | 974 |
| | $ | 240 |
|
Fairfield-New Haven, CT | | 1 |
| | 160 |
| | 40 |
|
New York City | | 2 |
| | 429 |
| | 401 |
|
New York Suburban | | 4 |
| | 598 |
| | 219 |
|
New Jersey | | 13 |
| | 3,918 |
| | 963 |
|
Baltimore, MD | | 1 |
| | 332 |
| | 73 |
|
Washington, DC Metro | | 6 |
| | 1,929 |
| | 509 |
|
Seattle, WA | | 3 |
| | 772 |
| | 201 |
|
Oakland-East Bay, CA | | 2 |
| | 615 |
| | 282 |
|
San Francisco, CA | | 1 |
| | 326 |
| | 168 |
|
Riverside-San Bernardino, CA | | 1 |
| | 331 |
| | 91 |
|
Total | | 37 |
| | 10,384 |
| | $ | 3,187 |
|
|
| | | | | | | | | | |
Market | | Number of rights | | Estimated number of homes | | Projected total capitalized cost ($ millions) (1) |
| | | | | | |
New England | | 6 |
| | 1,409 |
| | $ | 481 |
|
Metro NY/NJ | | 9 |
| | 4,065 |
| | 1,396 |
|
Mid-Atlantic | | 2 |
| | 723 |
| | 217 |
|
Pacific Northwest | | 3 |
| | 911 |
| | 238 |
|
Northern California | | 4 |
| | 904 |
| | 458 |
|
Southern California | | 1 |
| | 475 |
| | 238 |
|
Total | | 25 |
| | 8,487 |
| | $ | 3,028 |
|
| |
(1) | Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees. |
Land Acquisitions
We select land for development and follow established procedures that we believe minimize both the cost and the risks of development. During 20142016 we acquired land parcels for 12eight Development Rights, as shown in the table below, for an aggregate investment of approximately $139,685,000.$101,372,000. For all of the parcels, construction has either started or is expected to start within the next 12 months.
| | | | | Estimated number of apartment homes | | Projected total capitalized cost(1) ($ millions) | | Date acquired | | | Estimated number of apartment homes | | Projected total capitalized cost (1) ($ millions) | | Date acquired |
1. | | Avalon Rockville Centre II Rockville Centre, NY | 112 |
| | $ | 42.3 |
| | January 2014 | | Avalon Easton Easton, MA | 290 |
| | $ | 64.0 |
| | March 2016 |
2. | | Avalon Princeton Princeton, NJ | 280 |
| | 95.5 |
| | February 2014 | | Avalon Boonton Boonton, NJ | 350 |
| | 91.2 |
| | April 2016 |
3. | | Avalon Sheepshead Bay (2) Brooklyn, NY | 167 |
| | 65.9 |
| | April 2014 | | Avalon Belltown Towers Seattle, WA | 275 |
| | 146.9 |
| | April 2016 |
4. | | Avalon Esterra Park Redmond, WA | 482 |
| | 137.8 |
| | June 2014 | | Avalon Somers Somers, NY | 152 |
| | 45.1 |
| | June 2016 |
5. | | Avalon Chino Hills Chino Hills, CA | 331 |
| | 90.9 |
| | July 2014 | | Avalon Public Market Emeryville, CA | 285 |
| | 139.6 |
| | November 2016 |
6. | | Avalon Glendora (3) Glendora, CA | 24 |
| | 7.4 |
| | July 2014 | | Avalon Teaneck Teaneck, NJ | 248 |
| | 70.4 |
| | December 2016 |
7. | | Avalon Framingham Framingham, MA | 180 |
| | 43.9 |
| | August 2014 | | Avalon Esterra Park Phase II Redmond, WA | 323 |
| | 89.6 |
| | December 2016 |
8. | | Avalon Laurel Laurel, MD | 344 |
| | 68.8 |
| | September 2014 | | Avalon Piscataway Piscataway, NJ | 360 |
| | 89.9 |
| | December 2016 |
9. | | Avalon Hunt Valley Baltimore, MD | 332 |
| | 73.0 |
| | December 2014 | |
10. | | Avalon Great Neck Great Neck, NY | 191 |
| | 79.1 |
| | December 2014 | |
11. | | Avalon Union Union, NJ | 202 |
| | 50.7 |
| | December 2014 | |
12. | | Avalon Alderwood II Lynnwood, WA | 124 |
| | 26.1 |
| | December 2014 | |
| | Total | 2,769 |
| | $ | 781.4 |
| | | | Total | 2,283 |
| | $ | 736.7 |
| | |
| |
(1) | Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land and related acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees. |
| |
(2) | Land was acquired through a joint venture in which the Company owns a 70.0% interest. |
| |
(3) | In 2014, we acquired this additional parcelfees, net of landprojected proceeds for the developmentany planned sales of Avalon Glendora, expected to have a total of 280 apartment homes for a projected total capitalized cost of $82.5 million.associated outparcels and other real estate. |
In January 2015, we acquired land for $325,000,000 associated with three Development Rights located in New York, NY and Bellevue, WA. If developed as expected, the development rights related to this land will contain 910 apartment homes for a projected total capital cost of $509,717,000.
Other Land and Real Estate Assets
We own land parcels with a carrying value of approximately $20,941,000,$46,958,000, which we do not currently plan to develop.develop, of which $20,846,000 was under contract to be sold as of December 31, 2016 and was disposed of in January 2017. These parcels consist of (i) land that we originally planned to develop and (ii)both ancillary parcels acquired in connection with Development Rights that we had not planned to develop.develop and land parcels we acquired for development and now intend to sell. During 2016, we recognized an aggregate impairment charge of $10,500,000 relating to three ancillary land parcels which we either sold during the year or intend to sell as of the date of this report. We believe that the current carrying value for all of theseother land parcels is such that there is no indication of impaired value, or further need to record a charge for impairment in the case of assets previously impaired. However, we may be subject to the recognition of further charges for impairment in the event that there are future 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.
Disposition Activity
We (i) sell assets when they do not meet our long-term investment strategy or when capital and real estate markets allow us to realize a portion of the value created over the past business cycle and (ii)generally redeploy the proceeds from those sales to develop, redevelop and acquire communities. Pending such redeployment, we will generally use the proceeds from the sale of these communities to reduce amounts outstanding under our Credit Facility or retain the cash proceeds on our balance sheet until it is redeployed into acquisition, development or redevelopment activity. On occasion, we will set aside the proceeds from the sale of communities into a cash escrow account to facilitate a tax deferred, like-kind exchange transaction. From January 1, 20142016 to January 31, 2015,2017, we sold our interest in fiveseven wholly-owned communities, containing 1,6602,051 apartment homes. The aggregate gross sales price for these assets was $411,700,000.$522,850,000.
Insurance and Risk of Uninsured Losses
We carrymaintain commercial general liability insurance and property insurance with respect to all of our communities. These policies, andalong with other insurance policies we carry,maintain, have policy specifications, insured and self-insured limits, exclusions and deductibles that we consider commercially reasonable. 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 review the discussion under Item 1A. “Risk Factors” of this Form 10-K for a discussion of risks associated with an uninsured property or liability loss.
Many of our West Coast communities are located in the general vicinity of active earthquake faults. Many of our communities are near, and thus susceptible to, the major fault lines in California, including the San Andreas Fault, and the Hayward Fault.Fault or other geological faults that are known or unknown. We cannot assure you that an earthquake would not cause damage or losses greater than our current insured levels. We have in placeprocure property damage and resulting business interruption insurance coverage with respect to communities located in California and Washington,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 of coverage. Earthquake coverage outside of California and Washington is subject to a $175,000,000 limit for eachany single occurrence and in the aggregate. Inannual aggregate for losses resulting from earthquakes. The deductible applicable to losses resulting from earthquakes occurring in California the deductible for each occurrence is five percent of the insured value of each damaged building withsubject to a minimum of $100,000 and a maximum of $25,000,000 per loss.
Our earthquakecommunities are insured for property damage and business interruption losses through a combination of community specific insurance outsidepolicies and/or coverage provided under a master property insurance policy covering the majority of Californiaour 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, except thatas well as additional self-insured retention for the next $350,000 of loss, per occurrence, outside California will be treated as an additional self-insured retention until the totalaggregate incurred self-insured retention exceeds $1,500,000. We self-insure$1,500,000 for the policy year.
Our communities are insured for third-party liability losses through a portioncombination 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 primarycommunities and are subject to certain coverage limitations and exclusions, and require a self-insured retention of $250,000 per occurrence.
We utilize a wholly-owned captive insurance company to insure certain risks, which includes property damage and resulting business interruption losses and other construction related liability risks. The captive is directly responsible for 12% of the losses incurred by the master property insurance which includespolicy, on a per occurrence basis, in excess of any applicable deductibles up to the earthquake risks.first $50,000,000 of loss.
Just as with office buildings, transportation systems and government buildings, there have been reports that apartment communities could become targets of terrorism. In December 2007, Congress passedJanuary 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. Congress reauthorized TRIPRA in January 2015Certain communities are insured for six years.terrorism related losses through this federal program. We have also purchased private-market insurance for property damage due to terrorism up to $400,000,000 including insurance forwith limits of $600,000,000 per occurrence and in the annual aggregate that includes certain terrorist acts, notcoverages (not covered under TRIPRA,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.
An additional consideration for insurance coverage and potential uninsured losses is mold growth.growth or other environmental contamination. Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities. For further discussion of the risks and the Company’sour related prevention and remediation activities, please refer to the discussion under Item 1A. “Risk Factors - We may incur costs due to environmental contamination or non-compliance” elsewhere in this report. We cannot provide assurance that we will have coverage under our existing policies for property damage or liability to third parties arising as a result of exposure to mold or a claim of exposure to mold at one of our communities.
We also carry crime policies (also commonly referred to as a fidelity policy or employee dishonesty policy) thatand limited cyber liability insurance. The crime policies protect the Company,us, up to $30,000,000 per occurrence (subject to sublimits and exclusions), from employee theft of money, securities or property. ThisThe limited cyber liability insurance is part of our professional liability coverage and has limits of $15,000,000 per occurrence and in the annual aggregate. The cyber liability coverage protects us from certain claims arising out of data breach, wrongful acts, data privacy issues and media liability.
The amount of insurance we maintain may not be sufficient to cover losses that may be in excess of the policy limits.losses.
Edgewater
Maplewood Casualty Loss
In January 2015February 2017, a fire occurred at our Avalon at Edgewater apartment communityMaplewood Development Community, located in Edgewater, New Jersey ("Edgewater"). Edgewater consisted of two residential buildings. One building,Maplewood, NJ, which contained 240 apartment homes, was destroyedunder construction and is uninhabitable. The second building, which contains 168 apartment homes, has been reoccupied and we currently believe it only suffered minimal damage.not yet occupied. We are currently assessing our direct losses resulting from the fire, which could vary based on costs and time to rebuild the portion of the Development Community that was destroyed and/or damaged, as well as our potential liability to third parties who may have incurred damages on account of the fire. To date, a number of lawsuits on behalf of former residents have been filed against us, including three purported class actions. While we currently believe that our direct losses and any potential liability to third parties will be substantially covered by our insurance policies, including coverage for the replacement cost of the building, third party claims and business interruption loss, subject to deductibles as well as a self-insured portion of the property insurance for which we are obligated for 12% of the first $50,000,000 in losses, we can give no assurances in this regard and continue to evaluate this matter.
Edgewater Casualty Loss
As of December 31, 2014, Edgewatertwo residential buildings. One building, containing 240 apartment homes, was encumbereddestroyed. The second building, containing 168 apartment homes, suffered minimal damage and has been repaired. In January 2016, we reached a final settlement with a fixed-rate secured mortgage note with an effective interest rate of 5.95%,our property and an outstanding principal balance of $75,012,000, due in May 2019 (the “Edgewater Mortgage”). The Edgewater Mortgage stipulates that incasualty insurers regarding the event of a casualty loss such as the Edgewater fire, the lender has absolute discretion to determine the disposition of the insurance proceeds,property damage and can compel us (i) to direct the insurance proceeds to be used for the restoration of Edgewater, or (ii) to apply the insurance proceeds to repay the outstanding loan balance, at par. As of the date of this Form 10-K, we are complying with all lender requirements, and are working with the lender to resolve open issueslost income related to the Edgewater Mortgage.casualty loss, for which we received aggregate insurance proceeds of $73,150,000, after self-insurance and deductibles. We received $44,142,000 of these recoveries in 2015, and the remaining $29,008,000 in 2016, of which $8,702,000 was recognized as an additional net casualty gain and $20,306,000 as business interruption insurance proceeds.
To date, a number of lawsuits on behalf of former residents have been filed against us, including five purported class actions, 21 individual actions and other subrogation actions by insurers who provided renters insurance to our residents. Having incurred applicable deductibles, we currently believe that all of our remaining liability to third parties will not be material and will in any event be substantially covered by our insurance policies. However, we can give no assurances in this regard and continue to evaluate this matter.
ITEM 3. LEGAL PROCEEDINGS
As discussed immediately above, in January 2015, a fire occurred at the Company's Avalon at Edgewater apartment community in Edgewater, NJ. The Company is awarebelieves 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 includingwho 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-K, of the 229 occupied apartments destroyed in the fire, the residents suffered significant property damage and other losses, such as relocation costs, associatedof approximately 97 units have settled claims with the fire, butCompany's insurer, and claims from an additional approximate 34 units are being evaluated by the Company is not aware of any persons who suffered major personal injury. To date, a number ofCompany's insurer.
Three class action lawsuits have been filed against the Company on behalf of Edgewater residents, includingoccupants of the following three purported class actions: DeMarcodestroyed building and Bayer et al v. AvalonBay Communities Inc. et al and Gutierrez v. AvalonBay Communities, Inc. et al, each filedconsolidated in the United States District Court for the District of New Jersey;Jersey. The Company has agreed with class counsel to the terms of a proposed settlement which would provide a claims process (with agreed upon protocols for instructing the adjuster as to how to evaluate claims) and, Loposkyif needed, an arbitration process to determine damage amounts to be paid to individual claimants covered by the class settlement. On December 9, 2016, class counsel re-filed with the court a motion for preliminary approval of this class settlement, and Kemp et al v. AvalonBay Communities, Inc. et al the Company did not oppose such motion. The Company cannot predict when or if the court will approve the settlement. 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. Recently, a fifth class action lawsuit was filed against the Company seeking to certify a class on behalf of both buildings and other third parties. The Company removed this action to the same federal court as the other four and is currently seeking to consolidate it with the fourth class action lawsuit (referenced above). In addition to the class action lawsuits described above, 21 lawsuits representing approximately 150 individual plaintiffs have been filed in the Superior Court of New Jersey Bergen County - Law Division. WhileDivision and 20 of these lawsuits are currently pending. Most of the state court cases have been consolidated by the court and the Company expects all of them to be consolidated shortly. The Company believes that it has meritorious defenses to the extent of damages claimed in all of the suits. There are also five 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 and the other four are currently pending in the United States District Court for the District of New Jersey. The District Court recently denied the Company's motion to dismiss which was filed in one of these lawsuits and the Company is currently seeking reconsideration of that decision as well as certification to appeal.
Having settled many third party claims through the insurance claims process, the Company currently believes that subject to applicable deductibles, all of itsany potential remaining liability to third parties resulting from(including any potential liability to third parties determined in accordance with the fireclass settlement described above, if approved) will not be material to the Company and will in any event be substantially covered by itsthe Company's insurance policies,policies. However, the Company can give no assurances in this regard and continues to evaluate this matter.
The Company is involved in various other claims and/or administrative proceedings unrelated to the Edgewater casualty loss that arise in the ordinary course of ourits business. While no assurances can be given, the Company does not currently believe that any of these other outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the NYSE under the ticker symbol AVB. The following table sets forth the quarterly high and low sales prices per share of our common stock for the years 20142016 and 2013,2015, as reported by the NYSE. On January 30, 201531, 2017 there were 547484 holders of record of an aggregate of 132,049,857137,330,988 shares of our outstanding common stock. The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing agency, but does include each such broker or clearing agency as one record holder.
| | | | 2014 | | 2013 | | 2016 | | 2015 |
| | Sales Price | | Dividends declared | | Sales Price | | Dividends declared | | Sales Price | | Dividends declared | | Sales Price | | Dividends declared |
| | High | | Low | | High | | Low | | | High | | Low | | High | | Low | |
Quarter ended March 31 | | $ | 132.17 |
| | $ | 114.16 |
| | $ | 1.16 |
| | $ | 139.15 |
| | $ | 124.02 |
| | $ | 1.07 |
| | $ | 190.49 |
| | $ | 160.66 |
| | $ | 1.35 |
| | $ | 181.69 |
| | $ | 163.81 |
| | $ | 1.25 |
|
Quarter ended June 30 | | $ | 144.51 |
| | $ | 130.04 |
| | $ | 1.16 |
| | $ | 141.46 |
| | $ | 127.97 |
| | $ | 1.07 |
| | $ | 192.29 |
| | $ | 166.59 |
| | $ | 1.35 |
| | $ | 176.43 |
| | $ | 158.72 |
| | $ | 1.25 |
|
Quarter ended September 30 | | $ | 157.16 |
| | $ | 139.27 |
| | $ | 1.16 |
| | $ | 141.04 |
| | $ | 122.36 |
| | $ | 1.07 |
| | $ | 188.00 |
| | $ | 168.57 |
| | $ | 1.35 |
| | $ | 180.24 |
| | $ | 158.97 |
| | $ | 1.25 |
|
Quarter ended December 31 | | $ | 170.14 |
| | $ | 141.00 |
| | $ | 1.16 |
| | $ | 134.25 |
| | $ | 116.86 |
| | $ | 1.07 |
| | $ | 177.77 |
| | $ | 158.32 |
| | $ | 1.35 |
| | $ | 186.89 |
| | $ | 168.83 |
| | $ | 1.25 |
|
At present, we expect to continue our policy of paying regular quarterly cash dividends. However, the form, timing and/or amount of dividend distributions will be declared at the discretion of the Board of Directors and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors as the Board of Directors may consider relevant. The Board of Directors may modify our dividend policy from time to time.
In January 2015,February 2017, we announced that our Board of Directors declared a dividend on our common stock for the first quarter of 20152017 of $1.25$1.42 per share, a 7.8%5.2% increase over the previous quarterly dividend per share of $1.16.$1.35. The dividend will be payable on April 15, 201517, 2017 to all common stockholders of record as of March 31, 2015.2017.
Issuer Purchases of Equity Securities
|
| | | | | | | | | | | | | |
Period | | (a) Total Number of Shares Purchased(1) | | (b) Average Price Paid per Share | | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | (d) Maximum Dollar Amount that May Yet be Purchased Under the Plans or Programs (in thousands) (2) |
October 1 - October 31, 2014 | | — |
| | $ | — |
| | — | | $ | 200,000 |
|
November 1 - November 30, 2014 | | 649 |
| | $ | 156.93 |
| | — | | $ | 200,000 |
|
December 1 - December 31, 2014 | | 891 |
| | $ | 162.24 |
| | — | | $ | 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 Dollar Amount that May Yet be Purchased Under the Plans or Programs (in thousands) (2) |
October 1 - October 31, 2016 | | 137 |
| | $ | 165.63 |
| | — |
| | $ | 200,000 |
|
November 1 - November 30, 2016 | | — |
| | $ | — |
| | — |
| | $ | 200,000 |
|
December 1 - December 31, 2016 | | 102 |
| | $ | 168.77 |
| | — |
| | $ | 200,000 |
|
| |
(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. |
Information regarding securities authorized for issuance under equity compensation plans is included in the section entitled "SecurityItem 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters"Matters” in this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA
The following table provides historical consolidated financial, operating and other data for the Company. You should read the table with our Consolidated Financial Statements and the Notes included in this report (dollars in thousands, except per share information)data).
|
| | | | | | | | | | | | | | | | | | | |
| For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | | 12/31/11 | | 12/31/10 |
Revenue: | |
| | |
| | |
| | |
| | |
|
Rental and other income | $ | 1,674,011 |
| | $ | 1,451,419 |
| | $ | 990,370 |
| | $ | 890,431 |
| | $ | 800,689 |
|
Management, development and other fees | 11,050 |
| | 11,502 |
| | 10,257 |
| | 9,656 |
| | 7,354 |
|
Total revenue | 1,685,061 |
| | 1,462,921 |
| | 1,000,627 |
| | 900,087 |
| | 808,043 |
|
| | | | | | | | | |
Expenses: | |
| | |
| | |
| | |
| | |
|
Operating expenses, excluding property taxes | 410,672 |
| | 352,245 |
| | 259,350 |
| | 246,872 |
| | 235,168 |
|
Property taxes | 178,634 |
| | 158,774 |
| | 97,555 |
| | 88,964 |
| | 84,319 |
|
Interest expense, net | 180,618 |
| | 172,402 |
| | 136,920 |
| | 167,814 |
| | 169,997 |
|
Loss on extinguishment of debt, net | 412 |
| | 14,921 |
| | 1,179 |
| | 1,940 |
| | — |
|
Loss on interest rate contract | — |
| | 51,000 |
| | — |
| | — |
| | — |
|
Depreciation expense | 442,682 |
| | 560,215 |
| | 243,680 |
| | 226,728 |
| | 208,662 |
|
General and administrative expense | 41,425 |
| | 39,573 |
| | 34,101 |
| | 29,371 |
| | 27,081 |
|
Expensed acquisition, development and other pursuit costs, net of recoveries | (3,717 | ) | | 45,050 |
| | 11,350 |
| | 2,967 |
| | 2,741 |
|
Casualty and impairment loss | — |
| | — |
| | 1,449 |
| | 14,052 |
| | — |
|
Total expenses | 1,250,726 |
| | 1,394,180 |
| | 785,584 |
| | 778,708 |
| | 727,968 |
|
| | | | | | | | | |
Equity in (loss) income of unconsolidated entities | 148,766 |
| | (11,154 | ) | | 20,914 |
| | 5,120 |
| | 762 |
|
Gain on sale of land | 490 |
| | 240 |
| | 280 |
| | 13,716 |
| | — |
|
Gain on sale of communities | 84,925 |
| | — |
| | — |
| | — |
| | — |
|
Gain on acquisition of unconsolidated entity | — |
| | — |
| | 14,194 |
| | — |
| | — |
|
| | | | | | | | | |
Income from continuing operations before taxes | 668,516 |
| | 57,827 |
| | 250,431 |
| | 140,215 |
| | 80,837 |
|
Income tax expense | 9,368 |
| | — |
| | — |
| | — |
| | (235 | ) |
| | | | | | | | | |
Income from continuing operations | 659,148 |
| | 57,827 |
| | 250,431 |
| | 140,215 |
| | 81,072 |
|
| | | | | | | | | |
Discontinued operations: | |
| | |
| | |
| | |
| | |
|
Income from discontinued operations | 310 |
| | 16,713 |
| | 26,820 |
| | 20,065 |
| | 18,933 |
|
Gain on sale of discontinued operations | 37,869 |
| | 278,231 |
| | 146,311 |
| | 281,090 |
| | 74,074 |
|
Total discontinued operations | 38,179 |
| | 294,944 |
| | 173,131 |
| | 301,155 |
| | 93,007 |
|
| | | | | | | | | |
Net income | 697,327 |
| | 352,771 |
| | 423,562 |
| | 441,370 |
| | 174,079 |
|
Net (income) loss attributable to noncontrolling interests | (13,760 | ) | | 370 |
| | 307 |
| | 252 |
| | 1,252 |
|
|
|
| |
|
| |
|
| |
|
| |
|
|
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
|
| $ | 423,869 |
|
| $ | 441,622 |
|
| $ | 175,331 |
|
| | | | | | | | | |
Per Common Share and Share Information: | |
| | |
| | |
| | |
| | |
|
| | | | | | | | | |
Earnings per common share—basic: | |
| | |
| | |
| | |
| | |
|
Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) | $ | 4.93 |
| | $ | 0.46 |
| | $ | 2.57 |
| | $ | 1.55 |
| | $ | 0.97 |
|
Discontinued operations attributable to common stockholders | 0.29 |
| | 2.32 |
| | 1.77 |
| | 3.34 |
| | 1.11 |
|
Net income attributable to common stockholders | $ | 5.22 |
| | $ | 2.78 |
| | $ | 4.34 |
| | $ | 4.89 |
| | $ | 2.08 |
|
Weighted average shares outstanding—basic (1) | 130,586,718 |
| | 126,855,754 |
| | 97,416,401 |
| | 89,922,465 |
| | 83,859,936 |
|
| | | | | | | | | |
Earnings per common share—diluted: | |
| | |
| | |
| | |
| | |
|
Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) | $ | 4.92 |
| | $ | 0.46 |
| | $ | 2.55 |
| | $ | 1.55 |
| | $ | 0.97 |
|
Discontinued operations attributable to common stockholders | 0.29 |
| | 2.32 |
| | 1.77 |
| | 3.32 |
| | 1.10 |
|
Net income attributable to common stockholders | $ | 5.21 |
| | $ | 2.78 |
| | $ | 4.32 |
| | $ | 4.87 |
| | $ | 2.07 |
|
Weighted average shares outstanding—diluted | 131,237,502 |
| | 127,265,903 |
| | 98,025,152 |
| | 90,777,462 |
| | 84,632,869 |
|
Cash dividends declared | $ | 4.64 |
| | $ | 4.28 |
| | $ | 3.88 |
| | $ | 3.57 |
| | $ | 3.57 |
|
|
| | | | | | | | | | | | | | | | | | | |
| For the year ended |
| 12/31/16 | | 12/31/15 | | 12/31/14 | | 12/31/13 | | 12/31/12 |
Operating data: | |
| | |
| | |
| | |
| | |
|
Total revenue | $ | 2,045,255 |
| | $ | 1,856,028 |
| | $ | 1,685,061 |
| | $ | 1,462,921 |
| | $ | 1,000,627 |
|
Gain on sale of real estate | $ | 384,847 |
| | $ | 125,272 |
| | $ | 85,415 |
| | $ | 240 |
| | $ | 280 |
|
Income from continuing operations | $ | 1,033,708 |
| | $ | 741,733 |
| | $ | 659,148 |
| | $ | 57,827 |
| | $ | 250,431 |
|
Total discontinued operations | $ | — |
| | $ | — |
| | $ | 38,179 |
| | $ | 294,944 |
| | $ | 173,131 |
|
Net income | $ | 1,033,708 |
| | $ | 741,733 |
| | $ | 697,327 |
| | $ | 352,771 |
| | $ | 423,562 |
|
Net income attributable to common stockholders | $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
|
| | | | | | | | | |
Per Common Share and Share Information: | | | | | | | | | |
Earnings per common share—basic: | | | | | | | | | |
Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) | $ | 7.53 |
| | $ | 5.54 |
| | $ | 4.93 |
| | $ | 0.46 |
| | $ | 2.57 |
|
Discontinued operations attributable to common stockholders | — |
| | — |
| | 0.29 |
| | 2.32 |
| | 1.77 |
|
Net income attributable to common stockholders | $ | 7.53 |
| | $ | 5.54 |
| | $ | 5.22 |
| | $ | 2.78 |
| | $ | 4.34 |
|
Weighted average shares outstanding—basic (1) | 136,928,251 |
| | 133,565,711 |
| | 130,586,718 |
| | 126,855,754 |
| | 97,416,401 |
|
| | | | | | | | | |
Earnings per common share—diluted: | | | | | | | | | |
Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) | $ | 7.52 |
| | $ | 5.51 |
| | $ | 4.92 |
| | $ | 0.46 |
| | $ | 2.55 |
|
Discontinued operations attributable to common stockholders | — |
| | — |
| | 0.29 |
| | 2.32 |
| | 1.77 |
|
Net income attributable to common stockholders | $ | 7.52 |
| | $ | 5.51 |
| | $ | 5.21 |
| | $ | 2.78 |
| | $ | 4.32 |
|
Weighted average shares outstanding—diluted | 137,461,637 |
| | 134,593,177 |
| | 131,237,502 |
| | 127,265,903 |
| | 98,025,152 |
|
| | | | | | | | | |
Cash dividends declared | $ | 5.40 |
| | $ | 5.00 |
| | $ | 4.64 |
| | $ | 4.28 |
| | $ | 3.88 |
|
| | | | | | | | | |
Other Information: | |
| | |
| | |
| | |
| | |
|
Net income attributable to common stockholders | $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
|
Depreciation—continuing operations | 531,434 |
| | 477,923 |
| | 442,682 |
| | 560,215 |
| | 243,680 |
|
Depreciation—discontinued operations | — |
| | — |
| | — |
| | 13,500 |
| | 16,414 |
|
Interest expense, net—continuing operations (2) | 194,585 |
| | 148,879 |
| | 181,030 |
| | 238,323 |
| | 138,099 |
|
Interest expense, net—discontinued operations (2) | — |
| | — |
| | — |
| | — |
| | 735 |
|
Income tax expense | 305 |
| | 1,483 |
| | 9,368 |
| | — |
| | — |
|
EBITDA (3) | $ | 1,760,326 |
| | $ | 1,370,323 |
|
| $ | 1,316,647 |
|
| $ | 1,165,179 |
|
| $ | 822,797 |
|
| | | | | | | | | |
Funds from Operations (4) | $ | 1,135,762 |
| | $ | 1,083,085 |
| | $ | 951,035 |
| | $ | 642,814 |
| | $ | 521,047 |
|
Core Funds from Operations (4) | $ | 1,125,341 |
| | $ | 1,016,035 |
| | $ | 890,081 |
| | $ | 792,888 |
| | $ | 532,490 |
|
Number of Current Communities (5) | 258 |
| | 259 |
| | 251 |
| | 244 |
| | 180 |
|
Number of apartment homes | 74,538 |
| | 75,584 |
| | 73,963 |
| | 72,811 |
| | 52,792 |
|
| | | | | | | | | |
Balance Sheet Information: | |
| | |
| | |
| | |
| | |
|
Real estate, before accumulated depreciation | $ | 20,776,626 |
| | $ | 19,268,099 |
| | $ | 17,849,316 |
| | $ | 16,800,321 |
| | $ | 10,071,342 |
|
Total assets | $ | 17,867,271 |
| | $ | 16,931,305 |
| | $ | 16,140,578 |
| | $ | 15,292,922 |
| | $ | 11,128,662 |
|
Notes payable and unsecured credit facilities, net | $ | 7,030,880 |
| | $ | 6,456,948 |
| | $ | 6,489,707 |
| | $ | 6,110,083 |
| | $ | 3,819,617 |
|
| | | | | | | | | |
Cash Flow Information: | |
| | |
| | |
| | |
| | |
|
Net cash flows provided by operating activities | $ | 1,143,484 |
| | $ | 1,056,754 |
| | $ | 886,641 |
| | $ | 724,315 |
| | $ | 540,819 |
|
Net cash flows used in investing activities | $ | (1,037,352 | ) | | $ | (1,199,517 | ) | | $ | (816,760 | ) | | $ | (1,181,174 | ) | | $ | (623,386 | ) |
Net cash flows (used in) provided by financing activities | $ | (291,645 | ) | | $ | 33,810 |
| | $ | 158,224 |
| | $ | (1,995,404 | ) | | $ | 2,199,332 |
|
| |
(1) | Amounts do not include unvested restricted shares included in the calculation of Earnings per Share. Please refer to Note 1, "Organization and“Organization, Basis of Presentation—Presentation and Significant Accounting Policies—Earnings per Common Share,"” of the Consolidated Financial Statements set forth in Item 8 of this report for a discussion of the calculation of Earnings per Share. |
|
| | | | | | | | | | | | | | | | | | | |
| For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | | 12/31/11 | | 12/31/10 |
Other Information: | |
| | |
| | |
| | |
| | |
|
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
| | $ | 441,622 |
| | $ | 175,331 |
|
Depreciation—continuing operations | 442,682 |
| | 560,215 |
| | 243,680 |
| | 226,728 |
| | 208,662 |
|
Depreciation—discontinued operations | — |
| | 13,500 |
| | 16,414 |
| | 23,541 |
| | 24,280 |
|
Interest expense, net—continuing operations (1) | 181,030 |
| | 238,323 |
| | 138,099 |
| | 169,754 |
| | 169,997 |
|
Interest expense, net—discontinued operations (1) | — |
| | — |
| | 735 |
| | 8,688 |
| | 5,212 |
|
Income tax expense | 9,368 |
| | — |
| | — |
| | — |
| | (235 | ) |
EBITDA (2) | $ | 1,316,647 |
| | $ | 1,165,179 |
| | $ | 822,797 |
| | $ | 870,333 |
| | $ | 583,247 |
|
| | | | | | | | | |
Funds from Operations (3) | $ | 951,035 |
| | $ | 642,814 |
| | $ | 521,047 |
| | $ | 414,482 |
| | $ | 338,353 |
|
Number of Current Communities (4) | 251 |
| | 244 |
| | 180 |
| | 181 |
| | 172 |
|
Number of apartment homes | 73,963 |
| | 72,811 |
| | 52,792 |
| | 53,294 |
| | 51,245 |
|
| | | | | | | | | |
Balance Sheet Information: | |
| | |
| | |
| | |
| | |
|
Real estate, before accumulated depreciation | $ | 17,849,316 |
| | $ | 16,800,321 |
| | $ | 10,049,484 |
| | $ | 9,288,496 |
| | $ | 8,661,211 |
|
Total assets | $ | 16,176,723 |
| | $ | 15,328,143 |
| | $ | 11,160,078 |
| | $ | 8,482,390 |
| | $ | 7,821,488 |
|
Notes payable and unsecured credit facilities | $ | 6,525,852 |
| | $ | 6,145,391 |
| | $ | 3,851,033 |
| | $ | 3,632,296 |
| | $ | 4,067,657 |
|
| | | | | | | | | |
Cash Flow Information: | |
| | |
| | |
| | |
| | |
|
Net cash flows provided by operating activities | $ | 886,641 |
| | $ | 724,315 |
| | $ | 540,819 |
| | $ | 429,354 |
| | $ | 332,106 |
|
Net cash flows used in investing activities | $ | (816,760 | ) | | $ | (1,181,174 | ) | | $ | (623,386 | ) | | $ | (443,141 | ) | | $ | (298,936 | ) |
Net cash flows (used in) provided by financing activities | $ | 158,224 |
| | $ | (1,995,404 | ) | | $ | 2,199,332 |
| | $ | 326,233 |
| | $ | 167,565 |
|
Notes to Selected Financial Data
| |
(1)(2) | Interest expense, net includes any lossgain or gainloss incurred from the extinguishment of debt. |
| |
(2)(3) | EBITDA is defined as net income before interest income and expense, income taxes, depreciation and amortization from both continuing and discontinued operations. Under this definition, EBITDA includes gains on sale of assets and gain on sale of partnership interests. Management generally considers EBITDA to be an appropriate supplemental measure to net income of our operating performance because it helps investors to understand our ability to incur and service debt and to make capital expenditures. EBITDA should not be considered as an alternative to net income (as determined in accordance with GAAP), as an indicator of our operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. Our calculation of EBITDA may not be comparable to EBITDA as calculated by other companies. |
| |
(3)(4) | We generally consider Funds from Operations, or "FFO," as defined below,Refer to be an appropriate supplemental measure“Reconciliation of our operating and financial performance because, by excluding gains or losses related to dispositions of previously depreciated property and excluding real estate depreciation, which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates, FFO can help one compare the operating performance of a real estate company between periods or as compared to different companies. We believe that in order to understand our operating results, FFO should be examined with net income as presented in the Consolidated Statements of Comprehensive Income included elsewhere in this report.Non-GAAP Financial Measures” below. |
| |
(5) | Current Communities consist of all communities other than those which are still under construction and for which a certificate or certificates of occupancy for the entire community have not been received. |
Reconciliation of Non-GAAP Financial Measures
Funds from Operations, or “FFO,” and FFO adjusted for non-core items, or “Core FFO,” as defined below, are generally considered by management to be appropriate supplemental measures of our operating and financial performance. In calculating FFO, we exclude gains or losses related to dispositions of previously depreciated property and exclude real estate depreciation, which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates. FFO can help one compare the operating performance of a real estate company between periods or as compared to different companies. By further adjusting for items that are not considered part of our core business operations, Core FFO allows one to compare the core operating performance of the Company year over year. We believe that in order to understand our operating results, FFO and Core FFO should be examined with net income as presented in the Consolidated Statements of Comprehensive Income included elsewhere in this report.
Consistent with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts® ("NAREIT"(“NAREIT”), we calculate FFO as net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for:
gains or losses on sales of previously depreciated operating communities;
extraordinary gains or losses (as defined by GAAP);
cumulative effect of change in accounting principle;
impairment write-downs of depreciable real estate assets;
write-downs of investments in affiliates due to a decrease in the value of depreciable real estate assets held by those affiliates;
depreciation of real estate assets; and
adjustments for unconsolidated partnerships and joint ventures.
We calculate Core FFO doesas FFO, adjusted for:
joint venture gains, costs, and promoted interests;
casualty and impairment losses or gains, net;
gains or losses from early extinguishment of consolidated borrowings;
business interruption and property and casualty insurance proceeds and legal settlements;
gains or losses on sales of assets not subject to depreciation;
expensed acquisition costs related to business acquisitions that occurred prior to the adoption of ASU 2017-01 as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” of the Consolidated Financial Statements set forth in Item 8 of this report;
abandoned pursuits;
severance related costs; and
other non-core items.
FFO and Core FFO do not represent net income in accordance with GAAP, and therefore it 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 calculationcalculations of FFO and Core FFO.
FFO and Core FFO also doesdo not represent cash generated from operating activities in accordance with GAAP, and therefore should not be considered an alternative to net cash flows from operating activities, as determined by GAAP, as a measure of liquidity. Additionally, it is not necessarily indicative of cash available to fund cash needs. A presentation of GAAP based cash flow metrics is provided in "Cash“Cash Flow Information"Information” in the table on the previous page.above.
The following is a reconciliation of net income attributable to common stockholders to FFO attributable to common stockholders and to Core FFO attributable to common stockholders (dollars in thousands, except per share data).
| | | For the year ended | For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | | 12/31/11 | | 12/31/10 | 12/31/16 | | 12/31/15 | | 12/31/14 | | 12/31/13 | | 12/31/12 |
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
| | $ | 441,622 |
| | $ | 175,331 |
| $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
|
Depreciation—real estate assets, including discontinued operations and joint venture adjustments | 449,769 |
| | 582,325 |
| | 265,627 |
| | 256,986 |
| | 237,041 |
| 538,606 |
| | 486,019 |
| | 449,769 |
| | 582,325 |
| | 265,627 |
|
Distributions to noncontrolling interests, including discontinued operations | 35 |
| | 32 |
| | 28 |
| | 27 |
| | 55 |
| 41 |
| | 38 |
| | 35 |
| | 32 |
| | 28 |
|
Gain on sale of unconsolidated entities holding previously depreciated real estate assets | (73,674 | ) | | (14,453 | ) | | (7,972 | ) | | (3,063 | ) | | — |
| (58,069 | ) | | (33,580 | ) | | (73,674 | ) | | (14,453 | ) | | (7,972 | ) |
Gain on sale of previously depreciated real estate assets (1) | (108,662 | ) | | (278,231 | ) | | (146,311 | ) | | (281,090 | ) | | (74,074 | ) | (374,623 | ) | | (115,625 | ) | | (108,662 | ) | | (278,231 | ) | | (146,311 | ) |
Gain on acquisition of unconsolidated real estate entity | — |
| | — |
| | (14,194 | ) | | — |
| | — |
| — |
| | — |
| | — |
| | — |
| | (14,194 | ) |
Casualty and impairment (recovery) loss, net on real estate (2) (6) | | (4,195 | ) | | 4,195 |
| | — |
| | — |
| | — |
|
FFO attributable to common stockholders | $ | 951,035 |
| | $ | 642,814 |
| | $ | 521,047 |
| | $ | 414,482 |
| | $ | 338,353 |
| $ | 1,135,762 |
| | $ | 1,083,085 |
| | $ | 951,035 |
| | $ | 642,814 |
| | $ | 521,047 |
|
| | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding—diluted | 131,237,502 |
| | 127,265,903 |
| | 98,025,152 |
| | 90,777,462 |
| | 84,632,869 |
| |
FFO per common share—diluted | $ | 7.25 |
| | $ | 5.05 |
| | $ | 5.32 |
| | $ | 4.57 |
| | $ | 4.00 |
| |
Adjusting items: | |
|
| |
|
| |
|
| |
|
| |
|
|
Joint venture losses (gains) (3) | | 6,031 |
| | (9,059 | ) | | (5,194 | ) | | 35,554 |
| | (940 | ) |
Impairment loss on real estate (4) (6) | | 10,500 |
| | 800 |
| | — |
| | — |
| | — |
|
Casualty (gain) loss, net on real estate (5) (6) | | (10,239 | ) | | (15,538 | ) | | — |
| | — |
| | 3,321 |
|
Business interruption insurance proceeds (7) | | (20,565 | ) | | (1,509 | ) | | (2,494 | ) | | (299 | ) | | — |
|
Lost NOI from casualty losses covered by business interruption insurance (8) | | 7,366 |
| | 7,862 |
| | — |
| | — |
| | — |
|
Loss (gain) on extinguishment of consolidated debt | | 7,075 |
| | (26,736 | ) | | 412 |
| | 14,921 |
| | 2,070 |
|
Acquisition costs (9) | | 3,523 |
| | 3,806 |
| | (7,682 | ) | | 44,052 |
| | 9,965 |
|
Severance related costs | | 852 |
| | 1,999 |
| | 815 |
| | 3,580 |
| | 587 |
|
Development pursuit and other write-offs | | 3,662 |
| | 1,838 |
| | 2,564 |
| | 1,506 |
| | — |
|
Joint venture promote (10) | | (7,985 | ) | | (21,969 | ) | | (58,128 | ) | | — |
| | (4,055 | ) |
Gain on sale of other real estate | | (10,224 | ) | | (9,647 | ) | | (490 | ) | | (240 | ) | | (280 | ) |
Legal settlements | | (417 | ) | | — |
| | — |
| | — |
| | 775 |
|
Income taxes (11) | | — |
| | 1,103 |
| | 9,243 |
| | — |
| | — |
|
Loss on interest rate protection agreement | | — |
| | — |
| | — |
| | 51,000 |
| | — |
|
Core FFO attributable to common stockholders | | $ | 1,125,341 |
| | $ | 1,016,035 |
| | $ | 890,081 |
| | $ | 792,888 |
| | $ | 532,490 |
|
| | | | | | | | | | |
Weighted average common shares outstanding - diluted | | 137,461,637 |
| | 134,593,177 |
| | 131,237,502 |
| | 127,265,903 |
| | 98,025,152 |
|
| | | | | | | | | | |
EPS per common share - diluted | | $ | 7.52 |
| | $ | 5.51 |
| | $ | 5.21 |
| | $ | 2.78 |
| | $ | 4.32 |
|
FFO per common share - diluted | | $ | 8.26 |
| | $ | 8.05 |
| | $ | 7.25 |
| | $ | 5.05 |
| | $ | 5.32 |
|
Core FFO per common share - diluted | | $ | 8.19 |
| | $ | 7.55 |
| | $ | 6.78 |
| | $ | 6.23 |
| | $ | 5.43 |
|
| |
(1) | Amount for 2014 excludes a gain of $14,132, representing our joint venture partners' portion of the gain on sale from a Fund I community which we consolidated for financial reporting purposes. |
| |
(2) | During 2015, we recognized an impairment on depreciable real estate of $4,195 from the severe winter storms that occurred in our Northeast markets. During 2016, we received insurance proceeds, net of additional costs incurred, of $5,732 related to the winter storms, and recognized $4,195 of this recovery as an offset to the loss recognized in the prior year period. The balance of the net insurance proceeds received in 2016 of $1,537 is recognized as a casualty gain and is included in the reconciliation of FFO to Core FFO. |
| |
(3) | Amount for 2016 is primarily composed of our proportionate share of yield maintenance charges incurred for the early repayment of debt associated with joint venture disposition activity and the write-off of asset management fee intangibles primarily associated with the disposition of communities in the U.S. Fund. Amounts for 2014 and 2015 are primarily composed of the Company's proportionate share |
of gains and operating results for joint ventures formed with Equity Residential as part of the Archstone Acquisition. Amount for 2013 includes Archstone Acquisition related costs.
| |
(4) | Current CommunitiesAmounts include impairment charges relating to ancillary land parcels. |
| |
(5) | Amount for 2016 includes $8,702 in property damage insurance proceeds for the Edgewater casualty loss, and $1,537 in insurance proceeds in excess of the total recognized loss related to severe winter storms in our Northeast markets that occurred in 2015. Amount for 2015 includes $44,142 of Edgewater insurance proceeds received partially offset by $28,604 for the write-off of real estate and related costs. Amount for 2012 includes losses incurred related to Superstorm Sandy, and the write-off of certain costs related to a commercial tenant. |
| |
(6) | The aggregate impact of (i) casualty and impairment (recovery) loss, net on real estate, (ii) impairment loss on real estate and (iii) casualty (gain) loss, net on real estate for 2016 and 2015 are gains of $3,935 and $10,542, respectively. |
| |
(7) | Amount for 2016 is primarily composed of business interruption insurance proceeds resulting from the final insurance settlement of the Edgewater casualty loss. |
| |
(8) | Amounts 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. |
| |
(9) | Amount for 2014 is primarily composed of receipts related to communities acquired as part of the Archstone Acquisition for periods prior to the Company’s ownership, which are primarily comprised of property tax and mortgage insurance refunds. Amounts for 2012 and 2013 primarily consist of all communities other than those which are still under construction andcosts related to the Archstone Acquisition. |
| |
(10) | Amount for which a certificate or certificates of occupancy2016 is for the entire community haverecognition of our promoted interest in Fund II. Amount for 2015 is primarily composed of amounts received related to the modification of the joint venture agreement for the entity that owns Avalon at Mission Bay II to eliminate our promoted interest in future distributions. Amount for 2014 relates to our promoted interests from the sale of Avalon Chrystie Place, and the amount for 2012 relates to our promoted interests from the acquisition of our joint venture partner's interest in Avalon Del Rey. |
| |
(11) | Amounts for 2015 and 2014 are composed of income taxes on income that was earned in taxable REIT subsidiaries and that is not been receivedconsidered to be a component of primary operations. |
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations ("(“MD&A"&A”) is intended to help provide an understanding of our business, financial condition and results of operations. This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report. This report, including the following MD&A, contains forward-looking statements regarding future events or trends that should be read in conjunction with the factors described under "Forward-Looking Statements"“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"“Forward-Looking Statements” as well as the risk factors described in Item 1A. "Risk Factors"“Risk Factors” of this report.
Capitalized terms used without definition have the meanings provided elsewhere in this Form 10-K.
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. We believe that apartment communities are an attractive long-term investment opportunity compared to other real estate investments, because a broad potential resident base should help reduce demand volatility over a real estate cycle, and shorter lease terms allow for a better ability to take advantage of inflationary environments. We focus on leading metropolitan areas that we believe are characterized by growing employment in high wage sectors of the economy, lower housing affordability and a diverse and vibrant quality of life. We believe these market characteristics offer the opportunity for superior risk-adjusted returns on apartment community investmentinvestments relative to other markets.markets that do not have these characteristics. We seek to create long-term shareholder value by accessing capital on cost effective terms; deploying that capital to develop, redevelop and acquire apartment communities in our selected markets; operating apartment communities; and selling communities when they no longer meet our long-term investment strategy or when pricing is attractive.
Our strategystrategic vision is to be leadersthe leading apartment company in select US markets, providing a range of distinctive living experiences that customers value. We pursue this vision by targeting what we believe are among the best markets and submarkets, leveraging our strategic capabilities in market research and consumer insight and being disciplined in our capital allocation delivering a range of multifamily offerings tailored to serve the needs of the most attractive customer segments in the best-performing submarkets of the United States.and balance sheet management. Our communities are predominately upscale and generally command among the highest rents in their markets. However, we also pursue the ownership and operation of apartment communities that target a variety of customer segments and price points, consistent with our goal of offering a broad range of products and services. We regularly evaluate the allocation of our investments by the amount of invested capital and by product type within our individual markets.
Financial Highlights
For the year ended December 31, 2014,2016, net income attributable to common stockholders was $683,567,000,$1,034,002,000, an increase of $330,426,000,$291,964,000, or 93.6%39.3%, over the prior year. The increase is primarily attributable to an increase in income from unconsolidated real estate entities resulting from the gains on sales of communities in various ventures, including the Company’s promoted interests, increased NOI from newly developed, acquired and acquiredexisting operating communities lossesand an increase in real estate sales and related gains. These amounts were partially offset by increases in depreciation and interest expense and a loss on an interest rate contractextinguishment of debt in the current year, coupled with a gain on extinguishment of debt in the prior year not present in 2014, a decrease in expensed acquisition costs related to the Archstone Acquisition, and a decrease in depreciation expense related to in-place leases acquired as part of the Archstone Acquisition.year.
For the year ended December 31, 2014,2016, Established Communities NOI increased by $22,961,000,$49,606,000, or 3.5%4.8%, over the prior year. The increase was driven by an increase in rental revenue of 3.9%4.3%, partially offset by an increase in operating expenses of 4.9%3.1% over 2013. For purposes of the discussion in the MD&A, our Established Communities include those communities which we owned and had stabilized occupancy as of January 1, 2013, and therefore does not include communities acquired as part of the Archstone Acquisition.2015.
During 2014,2016, we raised approximately $1,154,220,000$1,668,474,000 of gross capital through the issuance of common equity and unsecured notes borrowing onand the Term Loan and asset sales,sale of real estate, exclusive of proceeds from the disposition of joint ventures.ventures and secured debt assumed in conjunction with acquisitions. The funds raised from asset salesthe sale of real estate consist of the proceeds from the sale of fourseven operating communities, one land parcel and one parcel of land for gross sales proceeds of $304,250,000. In addition, in January 2015 we sold one community, Avalon on Stamford Harbor, located in Stamford, CT, for $115,500,000.ancillary real estate. We believe that our current capital structure will continue to provide financial flexibility to access capital on attractive terms.
We believe our development activity will continue to create long-term value. We increased development activity during 2014 from the prior year in anticipation of continued favorable economic conditions and apartment fundamentals. During 2014,2016, we completed the developmentconstruction of 17eight communities containing an aggregate of 1,715 apartment homes for an aggregate total capitalized cost of $1,134,300,000.$510,800,000. We also started the developmentconstruction of 14nine communities containing an aggregate of 2,732 apartment homes, which are expected to be completed for an estimated total capitalized cost of $1,342,800,000.$1,588,600,000, including our share of the total capitalized cost for one community being developed within a joint venture in which we own a 55.0% interest. In addition, during 20142016 we completed the redevelopment of five10 communities containing an aggregate of 2,739 apartment homes for a total investment of $53,000,000,$115,900,000, excluding costs incurred prior to the redevelopment.
TableDuring the year ended December 31, 2016, we sold seven wholly-owned operating communities, containing an aggregate of Contents2,051 apartment homes, for an aggregate sales price of $522,850,000, resulting in an aggregate gain in accordance with GAAP of $370,301,000. We also sold other real estate, primarily composed of one land parcel which was sold to a joint venture in which we own a 55.0% interest, and ancillary real estate, for an aggregate sales price $41,178,000, resulting in an aggregate gain in accordance with GAAP of $10,224,000.
During the year ended December 31, 2016, we acquired five communities containing an aggregate of 1,265 apartment homes and 40,000 square feet of retail space for an aggregate purchase price of $532,350,000. One community, Avalon Clarendon, was a mixed-use development originally acquired through a joint venture. We established separate legal ownership of the residential and retail, office and public parking components of the venture with our venture partner, and as a result consolidated Avalon Clarendon, reporting the operating results of the community as part of our consolidated operations beginning in October 2016. In conjunction with the acquisition of Avalon Hoboken, we assumed a fixed rate secured mortgage note with a principal balance of $67,904,000 and a contractual interest rate of 4.18% maturing in December 2020. In conjunction with the acquisition of Avalon Columbia Pike, we assumed a fixed rate secured mortgage note with a principal balance of $70,507,000 and a contractual interest rate of 3.38% maturing in November 2019.
We believe that our balance sheet strength, as measured by our current level of indebtedness, our current ability to service interest and other fixed charges, and our current moderate use of financial encumbrances (such as secured financing) provide us with adequate access to liquidity from the capital markets and financial flexibility.markets. We expect to be able to meet our reasonably foreseeable liquidity needs, as they arise, through a combination of one or more of the following sources: existing cash on hand; operating cash flows; borrowings under our Credit Facility and Term Loan;Facility; secured debt; the issuance of corporate securities (which could include unsecured debt, preferred equity and/or common equity, including common equity issued pursuant to the Forward)equity); the sale of apartment communities; or through the formation of joint ventures. See the discussion under Liquidity and Capital Resources.
During the year ended December 31, 2014, we acquired Avalon Mission Oaks, located in Camarillo, CA. Avalon Mission Oaks contains 160 apartment homes and was acquired for a purchase price of $47,000,000.
During the year ended December 31, 2014, we sold four communities, containing an aggregate of 1,337 apartment homes for an aggregate gross sales price of $296,200,000 and an aggregate gain in accordance with GAAP of $106,138,000. During 2014, we also sold a land parcel in Huntington Station, NY for $8,050,000, resulting in a gain in accordance with GAAP of $490,000.
During the year ended December 31, 2014, three of the Company's joint ventures, excluding the Residual JV, sold operating communities.
CVP I, LLC, the entity that owned Avalon Chrystie Place, located in New York, NY containing 361 apartment homes and approximately 71,000 square feet of retail space, sold the community for $365,000,000. We own a 20.0% interest in the entity, and our share of the gain in accordance with GAAP for the disposition was $50,478,000. In addition, we received $58,128,000 for our promoted interest in CVP I, LLC.
Fund I sold its final four communities, containing an aggregate of 724 homes for an aggregate gross sales price of $125,000,000. Our share of the aggregate total gain in accordance with GAAP was $3,317,000.
Fund II sold two communities containing an aggregate of 711 apartment homes for an aggregate sales price of $166,950,000. Our share of the total gain in accordance with GAAP was $21,624,000.
In conjunction with the disposition of these communities, the respective ventures repaid $224,178,000 of related secured indebtedness in advance of the scheduled maturity dates. This resulted in charges for prepayment penalties and a write off of deferred financing costs, of which the Company’s portion was approximately $2,339,000, and was reported as a reduction of equity in income of unconsolidated real estate entities.
Edgewater Casualty Loss
As discussed under Item 2. "Communities — Insurance and Risk of Uninsured Losses — Edgewater Casualty Loss," in January 2015 a fire occurred at Edgewater. The Company is currently assessing its direct losses resulting from the fire, which could vary based on costs and time to rebuild, as well its liability to third parties who incurred damages on account of the fire.
Communities Overview
As of December 31, 2014, excluding indirect interests associated with the Residual JV,2016 we owned or held a direct or indirect ownership interest in 277285 apartment communities containing 82,48783,667 apartment homes in 1110 states and the District of Columbia, of which 2627 communities were under constructiondevelopment and eightfour communities were under reconstruction.redevelopment. Of these communities, 2416 were owned by entities that were not consolidated for financial reporting purposes, including 10three owned by subsidiaries of Fund II, and nineseven owned by the U.S. Fund.Fund, three owned by the AC JV and one that is being developed within a joint venture. In addition, we ownedheld a direct or indirect ownership interest in Development Rights to develop an additional 3725 wholly-owned communities that, if developed as expected, will contain an estimated 10,3848,487 apartment homes.
Our real estate investments consist primarily of current operating apartment communities,Current Communities, Development Communities and Development Rights. Our current operating communitiesCurrent Communities are further distinguished as Established Communities, Other Stabilized Communities, Lease-Up Communities, Redevelopment Communities and RedevelopmentUnconsolidated Communities.
Established Communities are generally operatingconsolidated communities that are consolidated for financial reporting purposes and were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year, which allows the performanceallowing for a meaningful comparison of these communities to be comparedoperating results between years. Other Stabilized Communities are generally all other completed consolidated operating communities that have stabilized occupancy and operating expenses during the current year, but had not achieved stabilization as of the beginning of the prior year. Lease-Up Communities consist ofare consolidated communities where construction ishas been complete but stabilizationfor less than one year and stabilized occupancy has not been achieved. Redevelopment Communities consist ofare consolidated communities where substantial redevelopment is in progress or is planned to begin during the current year. Unconsolidated Communities are communities that we have an indirect ownership interest in through our investment interest in an unconsolidated joint venture. A more detailed description of our reportable segments and other related operating information can be found in Note 9, "Segment8, “Segment Reporting,"” of our Consolidated Financial Statements.
Although each of these categories is important to our business, we generally evaluate overall operating, industry and market trends based on the operating results of Established Communities, for which a detailed discussion can be found in "Results“Results of Operations"Operations” as part of our discussion of overall operating results. We evaluate our current and future cash needs and future operating potential based on acquisition, disposition, development, redevelopment and financing activities within Other Stabilized, Redevelopment and Development Communities. Discussions related to current and future cash needs and financing activities can be found in "Liquidityunder Liquidity and Capital Resources."
NOI of our current operating communities is one of the financial measures that we use to evaluate community performance. NOI is affected by the demand and supply dynamics within our markets, our rental rates and occupancy levels and our ability to control operating costs. Our overall financial performance is also impacted by the general availability and cost of capital and the performance of newly developed, redeveloped and acquired apartment communities.
Results of Operations
Our year-over-year operating performance is primarily affected by both overall and individual geographic market conditions and apartment fundamentals and is reflected in changes in NOI of our Established Communities; NOI derived from acquisitions and development completions; the loss of NOI related to disposed communities; and capital market and financing activity. A comparison of our operating results for 2014, 20132016, 2015 and 20122014 follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | For the year ended | | 2016 vs. 2015 | | 2015 vs. 2014 |
| 2014 | | 2013 | | $ Change | | % Change | | 2013 | | 2012 | | $ Change | | % Change | 2016 | | 2015 | | 2014 | | $ Change | | % Change | | $ Change | | % Change |
Revenue: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
Rental and other income | $ | 1,674,011 |
| | $ | 1,451,419 |
| | $ | 222,592 |
| | 15.3 | % | | $ | 1,451,419 |
| | $ | 990,370 |
| | $ | 461,049 |
| | 46.6 | % | $ | 2,039,656 |
| | $ | 1,846,081 |
| | $ | 1,674,011 |
| | $ | 193,575 |
| | 10.5 | % | | $ | 172,070 |
| | 10.3 | % |
Management, development and other fees | 11,050 |
| | 11,502 |
| | $ | (452 | ) | | (3.9 | )% | | 11,502 |
| | 10,257 |
| | 1,245 |
| | 12.1 | % | 5,599 |
| | 9,947 |
| | 11,050 |
| | (4,348 | ) | | (43.7 | )% | | (1,103 | ) | | (10.0 | )% |
Total revenue | 1,685,061 |
| | 1,462,921 |
| | 222,140 |
| | 15.2 | % | | 1,462,921 |
| | 1,000,627 |
| | 462,294 |
| | 46.2 | % | 2,045,255 |
| | 1,856,028 |
| | 1,685,061 |
| | 189,227 |
| | 10.2 | % | | 170,967 |
| | 10.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
Direct property operating expenses, excluding property taxes | 345,846 |
| | 295,150 |
| | 50,696 |
| | 17.2 | % | | 295,150 |
| | 211,086 |
| | 84,064 |
| | 39.8 | % | 406,577 |
| | 377,317 |
| | 345,846 |
| | 29,260 |
| | 7.8 | % | | 31,471 |
| | 9.1 | % |
Property taxes | 178,634 |
| | 158,774 |
| | 19,860 |
| | 12.5 | % | | 158,774 |
| | 97,555 |
| | 61,219 |
| | 62.8 | % | 204,837 |
| | 193,499 |
| | 178,634 |
| | 11,338 |
| | 5.9 | % | | 14,865 |
| | 8.3 | % |
Total community operating expenses | 524,480 |
| | 453,924 |
| | 70,556 |
| | 15.5 | % | | 453,924 |
| | 308,641 |
| | 145,283 |
| | 47.1 | % | 611,414 |
| | 570,816 |
| | 524,480 |
| | 40,598 |
| | 7.1 | % | | 46,336 |
| | 8.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Corporate-level property management and other indirect operating expenses | 60,341 |
| | 53,105 |
| | 7,236 |
| | 13.6 | % | | 53,105 |
| | 42,193 |
| | 10,912 |
| | 25.9 | % | 67,038 |
| | 67,060 |
| | 60,341 |
| | (22 | ) | | — | % | | 6,719 |
| | 11.1 | % |
Investments and investment management expense | 4,485 |
| | 3,990 |
| | 495 |
| | 12.4 | % | | 3,990 |
| | 6,071 |
| | (2,081 | ) | | (34.3 | )% | 4,822 |
| | 4,370 |
| | 4,485 |
| | 452 |
| | 10.3 | % | | (115 | ) | | (2.6 | )% |
Expensed acquisition, development and other pursuit costs, net of recoveries | (3,717 | ) | | 45,050 |
| | (48,767 | ) | | N/A (1) |
| | 45,050 |
| | 11,350 |
| | 33,700 |
| | 296.9 | % | 9,922 |
| | 6,822 |
| | (3,717 | ) | | 3,100 |
| | 45.4 | % | | 10,539 |
| | N/A (1) |
|
Interest expense, net | 180,618 |
| | 172,402 |
| | 8,216 |
| | 4.8 | % | | 172,402 |
| | 136,920 |
| | 35,482 |
| | 25.9 | % | 187,510 |
| | 175,615 |
| | 180,618 |
| | 11,895 |
| | 6.8 | % | | (5,003 | ) | | (2.8 | )% |
Loss on extinguishment of debt, net | 412 |
| | 14,921 |
| | (14,509 | ) | | (97.2 | )% | | 14,921 |
| | 1,179 |
| | 13,742 |
| | 1,165.6 | % | |
Loss on interest rate contract | — |
| | 51,000 |
| | (51,000 | ) | | (100.0 | )% | | 51,000 |
| | — |
| | 51,000 |
| | 100.0 | % | |
Loss (gain) on extinguishment of debt, net | | 7,075 |
| | (26,736 | ) | | 412 |
| | 33,811 |
| | (126.5 | )% | | (27,148 | ) | | N/A (1) |
|
Depreciation expense | 442,682 |
| | 560,215 |
| | (117,533 | ) | | (21.0 | )% | | 560,215 |
| | 243,680 |
| | 316,535 |
| | 129.9 | % | 531,434 |
| | 477,923 |
| | 442,682 |
| | 53,511 |
| | 11.2 | % | | 35,241 |
| | 8.0 | % |
General and administrative expense | 41,425 |
| | 39,573 |
| | 1,852 |
| | 4.7 | % | | 39,573 |
| | 34,101 |
| | 5,472 |
| | 16.0 | % | 45,771 |
| | 42,774 |
| | 41,425 |
| | 2,997 |
| | 7.0 | % | | 1,349 |
| | 3.3 | % |
Casualty and impairment loss | — |
| | — |
| | — |
| | — | % | | — |
| | 1,449 |
| | (1,449 | ) | | (100.0 | )% | |
Casualty and impairment (gain) loss, net | | (3,935 | ) | | (10,542 | ) | | — |
| | 6,607 |
| | (62.7 | )% | | (10,542 | ) | | 100.0 | % |
Total other expenses | 726,246 |
| | 940,256 |
| | (214,010 | ) | | (22.8 | )% | | 940,256 |
| | 476,943 |
| | 463,313 |
| | 97.1 | % | 849,637 |
| | 737,286 |
| | 726,246 |
| | 112,351 |
| | 15.2 | % | | 11,040 |
| | 1.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Equity in income (loss) of unconsolidated entities | 148,766 |
| | (11,154 | ) | | 159,920 |
| | N/A (1) |
| | (11,154 | ) | | 20,914 |
| | (32,068 | ) | | N/A (1) |
| |
Gain on sale of land | 490 |
| | 240 |
| | 250 |
| | 104.2 | % | | 240 |
| | 280 |
| | (40 | ) | | (14.3 | )% | |
Equity in income of unconsolidated real estate entities | | 64,962 |
| | 70,018 |
| | 148,766 |
| | (5,056 | ) | | (7.2 | )% | | (78,748 | ) | | (52.9 | )% |
Gain on sale of communities | 84,925 |
| | — |
| | 84,925 |
| | 100.0 | % | | — |
| | — |
| | — |
| | — | % | 374,623 |
| | 115,625 |
| | 84,925 |
| | 258,998 |
| | 224.0 | % | | 30,700 |
| | 36.1 | % |
Gain on acquisition of unconsolidated real estate entity | — |
| | — |
| | — |
| | — | % | | — |
| | 14,194 |
| | (14,194 | ) | | (100.0 | )% | |
Gain on sale of other real estate | | 10,224 |
| | 9,647 |
| | 490 |
| | 577 |
| | 6.0 | % | | 9,157 |
| | 1,868.8 | % |
Income from continuing operations before taxes | 668,516 |
| | 57,827 |
| | 610,689 |
| | 1,056.1 | % | | 57,827 |
| | 250,431 |
| | (192,604 | ) | | (76.9 | )% | 1,034,013 |
| | 743,216 |
| | 668,516 |
| | 290,797 |
| | 39.1 | % | | 74,700 |
| | 11.2 | % |
Income tax expense | 9,368 |
| | — |
| | 9,368 |
| | 100.0 | % | | — |
| | — |
| | — |
| | — | % | 305 |
| | 1,483 |
| | 9,368 |
| | (1,178 | ) | | (79.4 | )% | | (7,885 | ) | | (84.2 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | 659,148 |
| | 57,827 |
| | 601,321 |
| | 1,039.9 | % | | 57,827 |
| | 250,431 |
| | (192,604 | ) | | (76.9 | )% | 1,033,708 |
| | 741,733 |
| | 659,148 |
| | 291,975 |
| | 39.4 | % | | 82,585 |
| | 12.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Discontinued operations: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
Income from discontinued operations | 310 |
| | 16,713 |
| | (16,403 | ) | | (98.1 | )% | | 16,713 |
| | 26,820 |
| | (10,107 | ) | | (37.7 | )% | — |
| | — |
| | 310 |
| | — |
| | — | % | | (310 | ) | | (100.0 | )% |
Gain on sale of communities | 37,869 |
| | 278,231 |
| | (240,362 | ) | | (86.4 | )% | | 278,231 |
| | 146,311 |
| | 131,920 |
| | 90.2 | % | |
Gain on sale of discontinued operations | | — |
| | — |
| | 37,869 |
| | — |
| | — | % | | (37,869 | ) | | (100.0 | )% |
Total discontinued operations | 38,179 |
| | 294,944 |
| | (256,765 | ) | | (87.1 | )% | | 294,944 |
| | 173,131 |
| | 121,813 |
| | 70.4 | % | — |
| | — |
| | 38,179 |
| | — |
| | — | % | | (38,179 | ) | | (100.0 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | 697,327 |
| | 352,771 |
| | 344,556 |
| | 97.7 | % | | 352,771 |
| | 423,562 |
| | (70,791 | ) | | (16.7 | )% | 1,033,708 |
| | 741,733 |
| | 697,327 |
| | 291,975 |
| | 39.4 | % | | 44,406 |
| | 6.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net (income) loss attributable to noncontrolling interests | (13,760 | ) | | 370 |
| | (14,130 | ) | | N/A (1) |
| | 370 |
| | 307 |
| | 63 |
| | 20.5 | % | |
Net loss (income) attributable to noncontrolling interests | | 294 |
| | 305 |
| | (13,760 | ) | | (11 | ) | | (3.6 | )% | | 14,065 |
| | N/A (1) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
| | $ | 330,426 |
| | 93.6 | % | | $ | 353,141 |
| | $ | 423,869 |
| | $ | (70,728 | ) | | (16.7 | )% | $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
| | $ | 291,964 |
| | 39.3 | % | | $ | 58,471 |
| | 8.6 | % |
| |
(1) | PercentagePercent change is not meaningful. |
Net income attributable to common stockholders increased $330,426,000,$291,964,000, or 93.6%39.3%, to $683,567,000$1,034,002,000 in 2016 primarily due to an increase in NOI from newly developed, acquired and existing operating communities and an increase in real estate sales and related gains. These amounts were partially offset by increases in depreciation and interest expense, and a loss on extinguishment of debt in the current year coupled with a gain on extinguishment of debt in the prior year. Net income attributable to common stockholders increased $58,471,000, or 8.6%, to $742,038,000 in 2015 from 2014 primarily due to an increase in income from unconsolidated real estate entities resulting from the gains on sales of communities in various ventures, including the Company’s promoted interests, increased NOI from newly developed and acquiredexisting operating communities, losses on an interest rate contract inand gains from net insurance recoveries and the prior year not present in 2014,extinguishment of debt, partially offset by a decrease in expensed acquisition costs related to the Archstone Acquisition and a decreaseequity in depreciation expense related to in-place leases acquired as partincome of the Archstone Acquisition. Net income attributable to common stockholders decreased $70,728,000, or 16.7%, in 2013 from 2012 primarily due to an increase in depreciation expense and expensed transaction costs associated with the Archstone Acquisition, coupled with the recognition of losses on an interest rate contract. The decrease was partially offset by an increase in NOI from communities acquired in the Archstone Acquisition and our existing and newly developed communities in 2013, as well as an increase in gain on sale of communities as compared to the prior year.unconsolidated real estate entities.
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 easyeasier 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 impactsimpact 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(including property taxes,taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed acquisition, development and other pursuit costs, net of recoveries, interest expense, gain (loss)net, loss (gain) on extinguishment of debt, net, general and administrative expense, joint ventureequity in income (loss),of unconsolidated real estate entities, depreciation expense, corporate income tax expense, casualty and impairment (gain) loss, impairment loss on land holdings,net, gain on sale of real estate assets, gain on sale of discontinued operations, income from discontinued operations and net operating income from real estate assets sold or held for sale, not classified as discontinued operations.
NOI does not represent cash generated from operating activities in accordance with GAAP. Therefore,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. Reconciliations of NOI for the years ended December 31, 2014, 20132016, 2015 and 20122014 to net income for each year are as follows (dollars in thousands):
| | | For the year ended | For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | 12/31/16 | | 12/31/15 | | 12/31/14 |
Net income | $ | 697,327 |
| | $ | 352,771 |
| | $ | 423,562 |
| $ | 1,033,708 |
| | $ | 741,733 |
| | $ | 697,327 |
|
Indirect operating expenses, net of corporate income | 49,055 |
| | 41,554 |
| | 31,911 |
| 61,403 |
| | 56,973 |
| | 49,055 |
|
Investments and investment management expense | 4,485 |
| | 3,990 |
| | 6,071 |
| 4,822 |
| | 4,370 |
| | 4,485 |
|
Expensed acquisition, development and other pursuit costs, net of recoveries | (3,717 | ) | | 45,050 |
| | 11,350 |
| 9,922 |
| | 6,822 |
| | (3,717 | ) |
Interest expense, net (1) | 180,618 |
| | 172,402 |
| | 136,920 |
| 187,510 |
| | 175,615 |
| | 180,618 |
|
Loss on extinguishment of debt, net | 412 |
| | 14,921 |
| | 1,179 |
| |
Loss on interest rate contract | — |
| | 51,000 |
| | — |
| |
Loss (gain) on extinguishment of debt, net | | 7,075 |
| | (26,736 | ) | | 412 |
|
General and administrative expense | 41,425 |
| | 39,573 |
| | 34,101 |
| 45,771 |
| | 42,774 |
| | 41,425 |
|
Equity in (income) loss of unconsolidated real estate entities | (148,766 | ) | | 11,154 |
| | (20,914 | ) | |
Equity in income of unconsolidated real estate entities | | (64,962 | ) | | (70,018 | ) | | (148,766 | ) |
Depreciation expense (1) | 442,682 |
| | 560,215 |
| | 243,680 |
| 531,434 |
| | 477,923 |
| | 442,682 |
|
Income tax expense | 9,368 |
| | — |
| | — |
| 305 |
| | 1,483 |
| | 9,368 |
|
Casualty and impairment loss | — |
| | — |
| | 1,449 |
| |
Gain on acquisition of unconsolidated real estate entity | — |
| | — |
| | (14,194 | ) | |
Casualty and impairment (gain) loss, net | | (3,935 | ) | | (10,542 | ) | | — |
|
Gain on sale of real estate assets | (85,415 | ) | | (240 | ) | | (280 | ) | (384,847 | ) | | (125,272 | ) | | (85,415 | ) |
Gain on sale of discontinued operations | (37,869 | ) | | (278,231 | ) | | (146,311 | ) | — |
| | — |
| | (37,869 | ) |
Income from discontinued operations | (310 | ) | | (16,713 | ) | | (26,820 | ) | — |
| | — |
| | (310 | ) |
Net operating income from real estate assets sold or held for sale, not classified as discontinued operations | (15,199 | ) | | (19,448 | ) | | (13,776 | ) | |
Net operating income from real estate assets sold or held for sale, not classified as discontinued operations (2) | | (17,509 | ) | | (34,133 | ) | | (49,708 | ) |
Net operating income | $ | 1,134,096 |
| | $ | 977,998 |
|
| $ | 667,928 |
| $ | 1,410,697 |
| | $ | 1,240,992 |
|
| $ | 1,099,587 |
|
| |
(1) | Includes amounts associated with assets sold or held for sale, not classified as discontinued operations. |
| |
(2) | Represents NOI from real estate assets sold or held for sale as of December 31, 2016 that are not classified as discontinued operations. |
The NOI increases for both 20142016 and 2013,2015, as compared to the prior year, consist of changes in the following categories (dollars in thousands):
| | | Full Year | Full Year |
| 2014 | | 2013 | 2016 | | 2015 |
Established Communities | $ | 22,961 |
| | $ | 26,417 |
| $ | 49,606 |
| | $ | 52,763 |
|
Other Stabilized Communities(1) | 74,307 |
| | 248,545 |
| 59,022 |
| | 28,199 |
|
Development and Redevelopment Communities | 58,830 |
| | 35,108 |
| 61,077 |
| | 60,443 |
|
Total | $ | 156,098 |
| | $ | 310,070 |
| $ | 169,705 |
| | $ | 141,405 |
|
| |
(1) | NOI for the year ended December 31, 2016 includes $20,306 in business interruption insurance proceeds related to the Edgewater casualty loss. |
The increase in our Established Communities' NOI in 20142016 and 2015 is due to increased rental rates, partially offset by decreased economic occupancy and increased operating expenses. The increase in 2013 is due to increased rental rates and increased economic occupancy, partially offset by increased operating expenses.
Rental and other income increased in both 20142016 and 2013 as2015 compared to the prior years due to additional rental income generated from newly developed, acquired and acquiredexisting operating communities including those acquired in the Archstone Acquisition in 2013, and an increase in rental rates and economic occupancy, in 2013, at our Established Communities. The increase for 2016 is also due to business interruption insurance proceeds received due to the final settlement of the Edgewater casualty loss.
Overall Portfolio—
Consolidated Communities—The weighted average number of occupied apartment homes for consolidated communities increased to 61,68667,849 apartment homes for 2014,2016, as compared to 57,24064,211 homes for 20132015 and 43,41161,686 homes for 2012.2014. The weighted average monthly revenue per occupied apartment home increased to $2,254$2,476 for 20142016 as compared to $2,171$2,388 in 20132015 and $2,017$2,254 in 2012.2014.
Established Communities—Rental revenue increased $36,096,000,$64,206,000, or 3.9%4.3%, to $963,917,000$1,541,034,000 for 20142016 from $927,821,000$1,476,828,000 in the prior year. The increase is due to an increase in average rental rates of 4.0%4.4% to $2,273$2,450 per apartment home, partially offset by a decrease in economic occupancy of 0.1% to 96.0%95.5%. Rental revenue increased $34,749,000,$66,136,000, or 4.3%5.0%, for 2013,2015, as compared to the prior year. Economic occupancy takes into account the fact that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue. Economic 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.
We experienced increases in rental revenue for all of our Established CommunitiesCommunities' regions except the Mid-Atlantic, in 20142016 as compared to the prior year, as discussed in more detail below.
The Metro New York/New Jersey region which accounted for approximately 33.0%24.5% of the Established Community rental revenue for 2014,2016 and experienced an increase ina rental revenue increase of 3.4%2.9% for 20142016 over the prior year. Average rental rates increased 2.8% to $2,972 per apartment home, and economic occupancy increased 0.1% to 95.7% for 2016 as compared to 2013, as a result of an increase in average rental rates to $2,680 per apartment home. Economic occupancy remained consistent at 96.4% for 2014 as compared to 2013. Apartment demand in the Metro New York/New Jersey region is being driven by job growth across a diverse group of industries including healthcare, professional business services, technology, retail, hospitality and education. We expect to see continued growth in the Metro New York/New Jersey region in 2015. While New York City is beginning to seeabsorbing a larger pipeline of new apartment deliveries, but suburban markets surrounding the city are more insulated from this new competition.competition, and we expect to see continued growth over the prior year in the Metro New York/New Jersey region in 2017.
The New EnglandNorthern California region accounted for approximately 18.6%20.7% of the Established Community rental revenue for 20142016 and experienced a rental revenue increase of 2.5%6.7% for 2016 over the prior year. Average rental rates increased 2.9%6.9% to $2,189$2,795 per apartment home, and were partially offset by a 0.4%0.2% decrease in economic occupancy to 95.3%95.2% for 20142016 as compared to 2013. Accelerating employment2015. We expect slower job growth and elevated levels of new apartment deliveries will temper growth in 2017 relative to prior years.
The Southern California region accounted for approximately 18.9% of the medical, educationEstablished Community rental revenue for 2016 and technology fields is supportingexperienced a rental revenue increase of 6.3% for 2016 over the prior year. Average rental rates increased 6.5% to $2,111 per apartment demandhome, and were partially offset by a 0.2% decrease in economic occupancy to 95.6% for 2016 as compared to 2015. Southern California has seen steady job growth and limited new apartment supply, which we expect will continue to support favorable operating results in 2017.
The New England region accounted for approximately 15.5% of the Established Community rental revenue for 2016 and experienced a rental revenue increase of 3.4% for 2016 over the prior year. Average rental rates increased 3.6% to $2,314 per apartment home, and were partially offset by a 0.2% decrease in economic occupancy to 95.6% for 2016 as compared to 2015. Stable job growth in the Boston metro area.area is expected to support apartment demand in 2017. The Fairfield market continues to experience moderate economic growth due to the area’s greater exposure to the financial services sector, which has experienced slower job growth during this recovery than other industries.
The Northern CaliforniaMid-Atlantic region accounted for approximately 18.1%15.2% of the Established Community rental revenue for 20142016 and experienced a rental revenue increase of 7.7%1.7% for 2016 over the prior year. Average rental rates increased 7.6%2.0% to $2,524 per apartment home, and economic occupancy increased 0.1% to 96.3% for 2014 as compared to 2013. While new apartment supply may slow revenue growth in future periods, we expect the strength in the technology industry to continue to fuel demand for apartment homes in 2015.
The Southern California region accounted for approximately 14.5% of the Established Community rental revenue for 2014 and experienced a rental revenue increase of 4.6% over the prior year. Average rental rates increased 4.7% to $1,873$2,134 per apartment home, and were partially offset by a 0.1%0.3% decrease in economic occupancy to 96.2%95.3% for 20142016 as compared to 2013. Southern California has seen steady job growth and limited2015. Although new apartment supply which we expect will continueremain elevated, accelerating job growth is expected to support favorable operating resultsmodest growth in 2015.2017.
The Mid-Atlantic region, which represented approximately 10.2% of the Established Community rental revenue during 2014, experienced a decrease in rental revenue of 0.5% as compared to 2013. Average rental rates decreased by 0.2% to $1,969 per apartment home, and economic occupancy decreased 0.3% to 95.5% for 2014 as compared to 2013. A combination of elevated levels of new apartment deliveries and job growth slightly below the expected national average are expected to challenge the region’s apartment fundamentals for 2015.
The Pacific Northwest region accounted for approximately 5.6%5.2% of the Established Community rental revenue for 20142016 and experienced a rental revenue increase of 5.9%6.3% for 2016 over the prior year. Average rental rates increased 6.2% to $1,824,$2,168 per apartment home, and were partially offset by a decrease in economic occupancy of 0.3%increased 0.1% to 95.4%94.9% for 20142016 as compared to 2013. The region’s on-line retail, technology and manufacturing sectors2015. We believe healthy job growth will continue to support growthfavorable operating results in the economy and apartment fundamentals. Rental revenue growth may be tempered in 2015 by the delivery of new apartment homes, particularly in the urban core of Seattle.2017.
Management, development and other fees decreased $452,000$4,348,000 or 3.9%43.7%, and $1,103,000, or 10.0%, in 20142016 and increased $1,245,000, or 12.1%, in 2013,2015, respectively, as compared to the prior years. The decrease in 20142016 was primarily due to lower property and asset management fees earned as a result of dispositions from Fund II and the U.S. Fund, as well as asset management and disposition fees earned in the prior year not present in 2016 from the Residual JV. The decrease in 2015 was primarily due to lower property and asset management fees earned as a result of dispositions from Fund I and Fund II, partially offset by increased property and asset managementan increase in disposition fees in 2015 related to the Archstone Acquisition and related private real estate investment management funds (the U.S. Fund andsale of communities owned within the AC JV). The increase in 2013 was primarily due to increased property and asset management fees related to the Archstone Acquisition and related private real estate investment management funds (the U.S. Fund and the AC JV), partially offset by lower property and asset management fees earned as a result of dispositions from Fund I and Fund II.Residual JV.
Direct property operating expenses, excluding property taxes increased $50,696,000,$29,260,000, or 17.2%7.8%, and $84,064,000,$31,471,000, or 39.8%9.1%, in 20142016 and 2013,2015, respectively, as compared to the prior years. The increases in 20142016 and 20132015 were primarily due to the addition of newly developed and acquired apartment homes, includingcommunities. The increase for 2016 was partially offset by a decrease in snow removal and other costs related to the communities acquired as partsevere winter storms in our Northeast markets that occurred during the first quarter of 2015, which contributed to the Archstone Acquisitionincrease in February 2013.the prior year.
For Established Communities, direct property operating expenses, excluding property taxes, increased $7,475,000,$7,256,000, or 4.0%2.5%, and $4,374,000,$8,207,000, or 2.6%3.1%, in 20142016 and 2013,2015, respectively, as compared to the prior years. The increase in 2016 was primarily due to increased bad debt expense, compensation and community repairs and maintenance costs, partially offset by decreased utility costs and a decrease in snow removal and other costs related to the severe winter storms in our Northeast markets that occurred during the first quarter of 2015. The increase in 2015 was primarily due to increased repairs and maintenance costs, payroll and benefit costs, and insurance costs, as well as snow removal and other costs related to the severe winter storms in our Northeast markets during the first quarter of 2015.
Property taxes increased $11,338,000, or 5.9%, and $14,865,000, or 8.3%, in 2016 and 2015, respectively, as compared to the prior years. The increases in 20142016 and 2013 were primarily due to increased repairs and maintenance, utilities and payroll costs.
Property taxes increased $19,860,000, or 12.5%, and $61,219,000, or 62.8%, in 2014 and 2013, respectively, as compared to the prior years. The increases in 2014 and 20132015 were primarily due to the net impact of the communities acquired in the Archstone Acquisition as well as the addition of newly developed and acquired apartment communities, coupled with increased tax rates and assessments across our portfolio. The increaseportfolio and successful appeals and reductions of supplemental taxes in 2014 was partially offset by reductionsthe respective prior years in expected supplemental billings related to communities acquired as partexcess of those recognized in the Archstone Acquisition.then current year.
For Established Communities, property taxes increased $6,206,000,$6,616,000, or 6.7%4.4%, and $4,282,000,$3,829,000, or 5.4%2.8%, in 20142016 and 2013,2015, respectively, as compared to the prior years. The increase in 20142016 was primarily due to higher rates andincreased assessments as well as refunds receivedappeals and supplemental tax reversals in the prior year in excess of those recognized in the current year period.year. The increase in 20132015 was primarily due to higher rates and assessments, partially offset by higher successful appeals and refunds receivedreductions of supplemental taxes in 2013, as compared2014 in excess of those in 2015, related primarily to the prior year.our West Coast markets. For communities in California, property tax changes are determined by the change in the California Consumer Price Index, with increases limited by law (Proposition 13). Massachusetts also has laws thatin 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.
Corporate-level property management and other indirect operating expenses decreased $22,000 in 2016, and increased $7,236,000,$6,719,000, or 13.6%, and $10,912,000, or 25.9%11.1%, in 2014 and 2013, respectively,2015, as compared to the prior years. The increase in 20142015 was primarily due to an increase in compensation related costs coupled with increased activities related to re-branding and corporate initiatives, as well as increases associated with the Archstone Acquisition. The increase in 2013 was primarily due to increased compensation related costs, as well as the increase in corporate-level personnel and expenses associated with the Archstone Acquisition.including certain employee separation costs.
Investments and investment management costs increased $495,000, or 12.4%, in 2014 and decreased by $2,081,000, or 34.3%, in 2013 as compared to the prior years. The increase in 2014 was primarily due to increases in compensation costs, partially offset by a decline in our investment fund management activity. The decrease in 2013 was primarily due to reductions in compensation costs related to the relative decrease in our investment fund management activity.
Expensed acquisition, development and other pursuit costs, net of recoveries primarily reflect the costs incurred related to our asset investment activity, abandoned pursuit costs, which include costs incurred for development pursuits not yet considered probable for development, as well as the abandonment of Development Rights, acquisition pursuits and disposition pursuits, offset by any recoveries associated with acquisitions for periods prior to our ownership. These costs can be volatile, particularly in periods of increased acquisition activity, periods of economic downturn or when there is limited access to capital, and the costs may vary significantly from period to period. These costs decreased $48,767,000,increased $3,100,000, or 45.4%, and $10,539,000 in 20142016 and increased $33,700,000, or 296.9%, in 2013,2015, respectively, as compared to the prior years,years. The decreaseincrease in 20142016 was primarily due to costs related to five operating communities acquired in 2016, as well as the non-cash write-off of asset management fee intangibles associated with the disposition of communities in the U.S. Fund. The increase in 2015 was primarily due to receipts in 2014 related to communities acquired as part of the Archstone Acquisition for periods prior to the Company’sour ownership, which are primarily comprised of property tax and mortgage insurance refunds. The increase in 2013 over the prior year is due primarily torefunds, as well as increased costs associated with the Archstone Acquisition.acquisition of real estate and abandonment of pursuits, as compared to the prior year.
Interest expense, net increased $8,216,000,$11,895,000, or 4.8%6.8%, and $35,482,000,decreased $5,003,000, or 25.9%2.8%, in 20142016 and 2013,2015, respectively, as compared to the prior years. This category includes interest costs offset by capitalized interest pertaining to development and redevelopment activity, amortization of the mark to market adjustmentpremium/discount on debt, assumed as part of the Archstone Acquisition, and interest income. The increase in 20142016 was due to an increase in outstanding unsecured indebtedness from net issuance activity in 2015 and 2016, as well as an increase in variable interest rates. The decrease in 2015 was primarily due to the repayment of secured indebtedness in 2015 and increased unsecured debt outstanding,capitalized interest as a result of our increased development activity, partially offset by an increase in capitalized interest related to our increased development activity. The increase in 2013 was primarily due to net interest costs on debt assumed inoutstanding unsecured indebtedness resulting from the Archstone Acquisition, partially offset by increased capitalized interest related to our increased development activity.issuance of $875,000,000 aggregate principal amount during 2015.
Loss (gain) on the extinguishment of debt, net reflects prepayment penalties, the expensingwrite-off of unamortized deferred financing costs and premiums from our debt repurchase and retirement activity, or payments to acquire our outstanding debt at amounts above or below the carrying basis of the debt acquired, excluding costs related to debt secured by assets sold or held for sale.
Loss on interest rate contract reflects the The loss recorded by the Company relatedof $7,075,000 for 2016 was primarily due to the forward interestprepayment penalty associated with the early repayment of $250,000,000 principal amount of 5.70% coupon unsecured notes and the non-cash write-off of deferred financing costs for the variable rate protection agreement that matured in May 2013. Based on changes indebt secured by Avalon Walnut Creek. The gain of $26,736,000 for 2015 was primarily due to the Company's capital markets outlook in 2013,write-off of unamortized mark to market adjustments, net of unamortized deferred financing costs and any applicable related prepayment penalties associated with the Company did not issueearly repayment of certain debt assumed as part of the anticipated debt for which the interest rate protection agreement was transacted.Archstone Acquisition.
Depreciation expense decreased $117,533,000,increased $53,511,000, or 21.0%11.2%, and $35,241,000, or 8.0%, in 20142016 and increased $316,535,000, or 129.9%, in 2013,2015, respectively, as compared to the prior years. The decreaseincreases in 2014 was2016 and 2015 were primarily due to the impactaddition of amortization for lease intangibles in 2013 not present in 2014, from communities acquired as part of the Archstone Acquisition.newly developed apartment communities. The increase in 20132016 was primarilyalso due to additional depreciation expense from the Archstone Acquisition, consisting largelyaddition of the depreciation of in-place lease intangibles, which were depreciated over a six month period.newly acquired apartment communities.
General and administrative expense ("(“G&A"&A”) increased $1,852,000,$2,997,000, or 4.7%7.0%, and $5,472,000,$1,349,000, or 16.0%3.3%, in 20142016 and 2013,2015, respectively, as compared to the prior years. The increase in 20142016 was primarily due to an increase in compensation expense, partially offset by legal recoveries in 2014 not present inand consulting fees, as well as increased charitable contributions over the prior year. The increase in 2013 over 20122015 was primarily due to increasedlegal settlement proceeds received in 2014 not present in 2015, partially offset by a decrease in compensation costs,expense, including costs relatedseverance, in 2015 as compared to the Archstone Acquisition.prior year.
Casualty and impairment (gain) loss, net for 20122016 consists of property damage insurance proceeds from the losses wefinal insurance settlement for the Edgewater casualty loss and 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. Casualty and impairment (gain) loss, net for 2015 consists of Edgewater insurance proceeds received, partially offset by (i) incident and demolition expenses and the write-off of the net book value of the fixed assets destroyed in the fire at Edgewater, (ii) property and casualty damages incurred associated with Superstorm Sandy.across several communities in our Northeast markets related to severe winter storms, and (iii) an impairment charge recognized for a parcel of land sold during 2015.
Equity in income (loss) of unconsolidated real estate entities increased by $159,920,000,decreased $5,056,000, or 7.2%, and $78,748,000, or 52.9%, in 20142016 and decreased $32,068,000, in 2013,2015, respectively, as compared to the prior years. The increasedecrease in 20142016 was primarily due to decreased NOI from the ventures due to disposition activity in 2015 and 2016, as well as amounts received in 2015 for Avalon at Mission Bay II, discussed below, partially offset by increased gains from dispositions in 2016. The decrease in 2015 was primarily due to both gains on, and our promoted interests from, the sale of communities in various ventures, including Avalon Chrystie Place, in 2014 in excess of gains on dispositions in 2015. The decrease in 2015 was partially offset by amounts received related to the modification of the joint venture agreement for the entity that owns Avalon at Mission Bay II to eliminate our promoted interest in future distributions, as well as the settlement of outstanding legal claims and net gains on the sales of communities in various ventures, including the Company's promoted interests, coupled with certain expensed transaction costs associated with the Archstone Acquisition that were incurred in 2013 through the unconsolidated joint venture entities owned with Equity Residential that were not present in 2014. The decrease in 2013 is primarily due to costs of approximately $39,543,000 associated with the Archstone Acquisition that were incurred through the unconsolidated joint venture entities owned with Equity Residential during the year.ventures.
Gain on sale of land increased in 2014 and decreased 2013 as compared to the prior years, due to changes in volume and associated gains on the sale of land parcels.
Gain on sale of communities increased in 2014 over 2013, due to our implementation of new accounting guidance under ASU 2014-08 effective January 1, 2014, which impacted where we report income from operations as well as gains or losses from the disposition of operating communities. Gain on disposition for communities classified as held for sale subsequent to the adoption of the guidance is presented as part of this line item. For communities classified as held for sale prior to our adoption of ASU 2014-08, gain on sale is presented as gain on sale of discontinued operations.
Gain on acquisition of unconsolidated real estate entity for 2012 represents the amount by which the fair value of our prior ownership interest in the joint venture that owned Avalon Del Rey exceeded our carrying value.
Income tax expense for 2014 consists of federal income tax expense related to dispositions of the Company's direct2016 and indirect interests in certain real estate assets acquired in the Archstone Acquisition, which were owned through a taxable REIT subsidiary.
Income from discontinued operations represents the net income generated by real estate sold and qualifying as discontinued operations during the period from January 1, 2012 through December 31, 2014. Income from discontinued operations decreased in 2014 and 2013, as compared to the prior years. The decrease in 2014 was due to the change in accounting guidance for discontinued operations under ASU 2014-08, with individual community dispositions no longer classified as such. The decrease in 2013 was due to changes in the number of communities sold, the size and carrying value of those communities and the market conditions in the local area as compared to the prior year. See Note 7, "Real Estate Disposition Activities," to our Consolidated Financial Statements.
Gain on sale of discontinued operations decreased in 2014 and increased in 2013,2015 as compared to the prior years. 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. Prior to our adoption of ASU 2014-08 as of January 1, 2014, gain on sale of communities was presented in gain on sale of discontinued operations. The gain of $374,623,000 in 2016 was primarily due to gains on the sale of seven wholly-owned operating communities, and the gain of $115,625,000 in 2015 was due to gains on the sale of three wholly-owned operating communities.
Gain on sale of other real estate increased in 2016 and 2015 as compared to the prior years. The gain of $10,224,000 in 2016 was primarily composed of the gain on the land we sold to an unconsolidated joint venture. The gain of $9,647,000 in 2015 was a result of the gain on sale of air rights, representing the right to increase density for future residential development, and two undeveloped land parcels.
Income tax expense decreased by $1,178,000 in 2016andby $7,885,000 in 2015, as compared to the prior years. The decreases in 2016 and 2015 were primarily due to the timing of federal income tax expense amounts related to dispositions of our direct and indirect interests in certain real estate assets acquired in the Archstone Acquisition, which were owned through a taxable REIT subsidiary.
Income from discontinued operations represents the net income generated by real estate sold and qualifying as discontinued operations during the period from January 1, 2014 through December 31, 2016. Income from discontinued operations decreased in 2015, as compared to the prior year due to the change in accounting guidance for discontinued operations as discussed above.
Gain on sale of discontinued operations decreased in 2015 as compared to the prior year. After our adoption of ASU 2014-08 as of January 1, 2014, gain on sale of communities is presented asseparately from gain on sale of communities.discontinued operations.
Net (income) loss attributable to noncontrolling interests resulted in an allocation of income of $13,760,000 in 2014, and an allocation of loss of $370,000 and $307,000 in 2013 and 2012, respectively. The amount for 2014 includes our joint venture partners' 84.8% interest in the gain on the sale of a Fund I community that was consolidated for financial reporting purposes, in the amount of $14,132,000.
Liquidity and Capital Resources
We believeemploy 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 liquidity needs are to fund:
development and redevelopment activity in which we are currently engaged;
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.
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 determined by: (i) the number of apartment homes currently owned, (ii) rental rates, (iii) occupancy levels and (iv) 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 affected by changes in the capital markets environment, such as changes in interest rates or the availability of cost-effective capital. We regularly review our liquidity needs, the adequacy of cash flows from operations and other expected liquidity sources to meet these needs.
In 2015, we expect to meet our liquidity needs from a variety of internal and external sources, which may include the physical settlement of the Forward, real estate dispositions, cash balances on hand, borrowing capacity under our Credit Facility and/or the Term Loan, secured and unsecured debt financings, and other public or private sources of liquidity including the issuance of common and preferred equity, as well as cash generated from our operating activities. 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. Capital raising activities in 2014 included asset sales, the Term Loan entered into in March, the issuance of common stock under CEP III (as defined below), and the issuance of unsecured notes in November.
UnrestrictedWe had unrestricted cash and cash equivalents totaled $509,460,000of $214,994,000 at December 31, 2014, an increase2016, a decrease of $228,105,000$185,513,000 from $281,355,000$400,507,000 at December 31, 2013.2015. The following discussion relates to changes in cash due to operating, investing and financing activities, which are presented in our Consolidated Statements of Cash Flows included elsewhere in this report.
Operating Activities—Net cash provided by operating activities increased to $886,641,000$1,143,484,000 in 20142016 from $724,315,000$1,056,754,000 in 2013.2015. The increasechange was driven primarily by increased NOI from existing and newly developed and acquired communities a decrease in acquisition costs, and the timingreceipt of payments of corporate obligations.business interruption insurance proceeds.
Investing Activities—Net cash used in investing activities totaled $1,037,352,000 in 2016. The net cash used was primarily due to:
investment of $816,760,000 in 2014 is related to investments in assets primarily through development and redevelopment, partially offset by proceeds received for dispositions and distributions from unconsolidated joint ventures. In 2014, we invested $1,341,657,000 in the following areas:
we invested $1,241,832,000$1,201,026,000 in the development and redevelopment of communities;
we had acquisition of five operating communities for $393,316,000, which includes the assumption of outstanding secured indebtedness with a par value of $138,411,000; and
capital expenditures of $52,825,000$72,852,000 for our operating communities and non-real estate assets; andassets.
we acquired one operating community for $47,000,000.
We received proceeds from dispositions of $297,466,000, and distributions from unconsolidated joint ventures in the amount of $203,945,000, associated primarily with the disposition of communities from CVP I, LLC, Fund I and Fund II.
Financing Activities—Net cash provided by financing activities totaled $158,224,000 in 2014. The net cash provided is due to:
issuance of $300,000,000 principal amount of unsecured notes;
issuance of common stock in the amount of $295,465,000 through CEP III;
borrowing $250,000,000 under the Term Loan; and
secured borrowings of $53,000,000.
These amounts are partially offset by:
proceeds from dispositions of $532,717,000; and
net distributions from unconsolidated real estate entities of $101,848,000.
Financing Activities—Net cash used in financing activities totaled $291,645,000 in 2016. The net cash used was primarily due to:
payment of cash dividends in the amount of $593,643,000;$726,749,000;
repayment of unsecured notes in the amount of $150,000,000;$504,403,000; and
repayment of secured notes in the amount of $32,859,000.$165,012,000.
These amounts are partially offset by proceeds from the issuance of unsecured notes in the aggregate amount of $1,122,488,000.
Variable Rate Unsecured Credit Facility
The Company has a $1,300,000,000 revolving variable rate unsecured credit facility
In January 2016, we extended the maturity of the Credit Facility from April 2017 to April 2020, and amended other provisions in the Credit Facility. In addition, pursuant to an option available under the terms of the Credit Facility, with athe approval of the syndicate of bankslenders, we increased the aggregate facility size from $1,300,000,000 to $1,500,000,000 (the "Credit Facility"“Credit Facility Increase”) which matures in April 2017.. We may further extend the maturityterm for up to one year throughnine months, provided we are not in default and upon payment of a $1,500,000 extension fee. In connection with the exercise of two, six month extension options for an aggregate fee of $1,950,000.Credit Facility Increase, the applicable margin over reference rates used to determine the applicable interest rates on our borrowings from time to time decreased. The Credit Facility bears interest at varying levels based on the London Interbank Offered Rate ("LIBOR"(“LIBOR”), rating levels achieved on our unsecured notes and on a maturity schedule selected by us. The current stated pricing is LIBOR plus 1.05% (1.22%0.825% per annum (1.60% at January 31, 20152017 assuming a one month borrowing rate). The stated spread over LIBOR can vary from LIBOR plus 0.80% to LIBOR plus 1.55% based on our credit ratings. In addition, a competitive bid option is available for borrowings up to 65% of the Credit Facility amount, which allows banks that are part of the lender consortium to bid to make loans at a rate that is lower than the stated rate if market conditions allow. In connection with the Credit Facility Increase, the annual facility fee iswas also amended to lower the fee to 0.125% from 0.15% (or, resulting in a fee of approximately $1,950,000$1,875,000 annually based on the $1,300,000,000$1,500,000,000 facility size and based on our current credit rating).rating.
We did not have anyhad no borrowings outstanding under the Credit Facility and had $47,963,000$45,321,000 outstanding in letters of credit that reduced our borrowing capacity as of January 31, 2015.2017.
Financial Covenants
We are subject to financial and other covenants contained in the Credit Facility, the Term Loan and the indenture under which our unsecured notes were issued. The principal financial covenants include the following:
limitations on the amount of total and secured debt in relation to our overall capital structure;
limitations on the amount of our unsecured debt relative to the undepreciated basis of real estate assets that are not encumbered by property-specific financing; and
minimum levels of debt service coverage.
We were in compliance with these covenants at December 31, 2014.2016.
In addition, our secured borrowings may include yield maintenance, defeasance, or prepayment penalty provisions, which would result in us incurring an additional charge in the event of a full or partial prepayment of outstanding principal before the scheduled maturity. These provisions in our secured borrowings are generally consistent with other similar types of debt instruments issued during the same time period in which our borrowings were secured.
Continuous Equity Offering Program
In August 2012,December 2015, we commenced a thirdfourth continuous equity program ("(“CEP III"IV”), under which we are authorized by our Board of Directors tomay sell up to $750,000,000 of shares$1,000,000,000 of our common stock from time to time duringtime. Actual sales will depend on a 36-month period.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 IIIIV, we have engaged sales agents who will receive compensation of approximately 1.5%up to 2.0% of the gross sales price for shares sold. During the year ended December 31, 2014, we sold 2,069,538 shares at an averageCEP IV also allows us to enter into forward sale agreements up to $1,000,000,000 in aggregate sales price of $144.95 perour common stock. We expect that 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 for net proceedssettle a forward sale agreement. In connection with each forward sale agreement, we will pay the relevant forward seller, in the form of $295,465,000.a reduced initial forward sale price, commission of up to 2.0% of the sales prices of all borrowed shares of common stock sold. As of December 31, 2016, we had no sales under the program and had not entered into any forward sale agreements. As of January 31, 2015,2017, we had $346,304,000$1,000,000,000 of shares remaining authorized for issuance under this program.
Forward Equity ContractInterest Rate Swap Agreements
On September 9, 2014, based on a market closing price of $155.83 per share on that date,
During 2015 and 2016, we entered into $1,200,000,000 of forward interest rate swap agreements to reduce the impact of variability in interest rates on a portion of our expected debt issuance activity in 2016 and 2017. During 2016, we settled $400,000,000 of forward contract to sell 4,500,000 sharesinterest rate swap agreements in conjunction with the May 2016 unsecured notes issuance, making a payment of common stock for an initial forward price of $151.74 per share, net of offering fees and discounts (the "Forward"). The sales price and proceeds achieved will be determined on the date or dates of settlement, with adjustments during the term$14,847,000. At maturity of the contract for our dividends as well as for a dailyremaining outstanding forward interest factor that varies with changes inrate swap agreements, we expect to cash settle the Fed Funds rate. We generally have the ability to determine the date(s)contracts and method of settlement, subject to certain conditions and the right of the Forward counterparty to accelerate settlement under certain circumstances. Settlement may be (i) physical sale of shares of our common stock for cash, (ii) net cash settlement, whereby we will either pay or receive cash for the difference betweenthen current fair value. Assuming that we issue the Forward price anddebt as expected, the weighted average market price for our common stock atimpact from settling these positions will then be recognized over the time of settlement, or (iii) net share settlement, whereby we will either receive or issue shares of our common stock, with the number of shares issued or received determined by the difference between the Forward price and the weighted average market price for its common stock at the time of settlement. The Forward price and the weighted average market price would in both cases by determined under the applicable termslife of the Forward. Under either of the net settlement provisions, we will pay to the counterparty either cash or shares of common stock when the weighted average market price of our common stock at the time of settlement exceeds the Forward, and will receive either cash or issue shares of common stock to the extent that the weighted average market price of our common stock at the time of settlement is less than the price under the Forward. Settlement of the Forward will occur on one or more dates not later than September 8, 2015.issued debt as a yield adjustment.
Future Financing and Capital Needs—Debt Maturities
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 Term Loan.Facility. Although we believe we will have the capacity to meet our currently anticipated liquidity needs, we cannot assure you that 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 2014:2016:
In March 2014, we entered into a $300,000,000 variable rate unsecured term loan that matures in March 2021 (the “Term Loan”). At December 31, 2014, we had drawn $250,000,000 of the available $300,000,000, with the option to draw the additional $50,000,000 until March 2015.
In April 2014, in conjunction with certain requirements associated with the development of an apartment community, we entered into a $53,000,000 secured mortgage loan maturing in 2019, with an option to extend the maturity to 2024. The mortgage is comprised of a $15,000,000 fixed rate note with an interest rate of 2.99% and a $38,000,000 variable rate note at LIBOR plus 2.00%.
Pursuant to its scheduled maturity in April 2014, we repaid $150,000,000 principal amount of unsecured notes with a stated coupon of 5.375%.
In June 2014,January 2016, in conjunction with the disposition of an operating community,Eaves Trumbull, Avalon Stratford was substituted as collateral for the outstanding fixed rate mortgage note secured by Eaves Trumbull.
In January 2016, in conjunction with the acquisition of Avalon Hoboken, we repaidassumed a fixed rate secured mortgage loan in the amountnote with a principal balance of $10,427,000 with an$67,904,000 and a contractual interest rate of 6.19%4.18% maturing in December 2020.
In February 2016, we repaid the $16,212,000 fixed rate mortgage note secured by Archstone Lexington, with an effective interest rate of 3.32% at par and without penalty in advance of its November 2015March 2016 maturity date. Upon repayment, Archstone Lexington was substituted as collateral for the outstanding fixed rate mortgage note secured by Avalon Walnut Ridge I.
In accordance with the requirements of the master credit agreement governing this and certain other secured borrowings,April 2016, we repaid an additional $5,914,000$134,500,000 of variable rate debt secured by Avalon Walnut Creek at par in advance of its March 2046 maturity date, recognizing a non-cash charge of $2,461,000 for the write-off of deferred financing costs.
In May 2016, we issued $475,000,000 principal amount of secured borrowingsunsecured notes in a public offering under our existing shelf registration statement for eight other operating communities. We incurrednet proceeds of approximately $471,751,000. The notes mature in May 2026 and were issued at a charge for early debt extinguishment of $412,000.2.95% coupon rate.
In August 2016, Avalon Wilshire, Avalon Mission Oaks and Avalon Encino were substituted as collateral for the outstanding fixed rate mortgage notes secured by Eaves Nanuet, Avalon Shrewsbury and Avalon at Freehold, respectively.
In September 2016, we repaid $250,000,000 principal amount of our 5.75% coupon unsecured notes at its scheduled maturity.
In September 2016, in conjunction with the acquisition of Avalon Columbia Pike, we assumed a fixed rate secured mortgage note with a principal balance of $70,507,000 and a contractual interest rate of 3.38% maturing in November 2014,2019.
In October 2016, we issued $300,000,000 principal amount of unsecured notes in a public offering under itsour existing shelf registration statement for net proceeds of approximately $295,803,000.$297,117,000. The notes mature in November 2024October 2026 and were issued at a stated2.90% coupon interest rate.
In October 2016, we issued $350,000,000 principal amount of 3.50%.unsecured notes in a public offering under our existing shelf registration statement for net proceeds of approximately $345,520,000. The notes mature in October 2046 and were issued at a 3.90% coupon interest rate.
In November 2016, we repaid $250,000,000 principal amount of our 5.70% coupon unsecured notes in advance of its March 2017 scheduled maturity, recognizing a charge of $4,614,000, consisting of a prepayment penalty of $4,403,000 and the write-off of deferred financing costs of $211,000.
The following table details our consolidated debt maturities for the next five years, excluding our Credit Facility and amounts outstanding related to communities classified as held for sale, for debt outstanding at December 31, 20142016 and 2015 (dollars in thousands) as compared to the amounts of debt outstanding as of at December 31, 2013.. 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.
| | | | All-In interest rate (1) | | Principal maturity date | | Balance Outstanding | | Scheduled Maturities | | All-In interest rate (1) | | Principal maturity date | | Balance Outstanding | | Scheduled Maturities |
Community | | 12/31/2013 | | 12/31/2014 | | 2015 | | 2016 | | 2017 | | 2018 | | 2019 | | Thereafter | | 12/31/2015 | | 12/31/2016 | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | Thereafter |
Tax-exempt bonds (4)(2) | | |
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Fixed rate | | |
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| | |
| | |
| | |
| | |
| | |
| | |
| | | | | | | | | | | | | | | | | | |
Eaves Washingtonian Center I | | 7.84 | % | | May-2027 | | $ | 8,401 |
| | $ | 8,011 |
| | $ | 419 |
| | $ | 449 |
| | $ | 482 |
| | $ | 517 |
| | $ | 554 |
| | $ | 5,590 |
| |
Avalon Oaks | | 7.50 | % | | Feb-2041 | | 16,094 |
| | 15,887 |
| | 222 |
| | 238 |
| | 255 |
| | 276 |
| | 293 |
| | 14,603 |
| |
Avalon Oaks West | | 7.54 | % | | Apr-2043 | | 16,032 |
| | 15,847 |
| | 198 |
| | 211 |
| | 225 |
| | 241 |
| | 257 |
| | 14,715 |
| | 7.55 | % | | Apr-2043 | | 15,649 |
| | 15,420 |
| | 225 |
| | 241 |
| | 257 |
| | 275 |
| | 293 |
| | 14,129 |
|
Avalon at Chestnut Hill | | 6.15 | % | | Oct-2047 | | 39,979 |
| | 39,545 |
| | 457 |
| | 482 |
| | 509 |
| | 536 |
| | 566 |
| | 36,995 |
| | 6.16 | % | | Oct-2047 | | 39,088 |
| | 38,564 |
| | 509 |
| | 536 |
| | 566 |
| | 596 |
| | 629 |
| | 35,728 |
|
Avalon Westbury | | 4.13 | % | | Nov-2036 | (5) | 62,200 |
| | 62,200 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 62,200 |
| | 3.81 | % | | Nov-2036 | (3) | 62,200 |
| | 62,200 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 62,200 |
|
| | |
| | | | 142,706 |
| | 141,490 |
| | 1,296 |
| | 1,380 |
| | 1,471 |
| | 1,570 |
| | 1,670 |
| | 134,103 |
| | | | 116,937 |
| | 116,184 |
| | 734 |
| | 777 |
| | 823 |
| | 871 |
| | 922 |
| | 112,057 |
|
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Variable rate (2) | | |
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Variable rate (4) | | | | | |
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Avalon at Mountain View | | 0.78 | % | | Feb-2017 | | 18,300 |
| | 18,100 |
| (3) | — |
| | — |
| | 18,100 |
| | — |
| | — |
| | — |
| | 1.47 | % | | Feb-2017 | (5)(6) | 17,700 |
| | 17,300 |
| | 17,300 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon at Mission Viejo | | 1.21 | % | | Jun-2025 | | 7,635 |
| | 7,635 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 7,635 |
| |
Eaves Mission Viejo | | | 1.78 | % | | Jun-2025 | (6) | 7,635 |
| | 7,635 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 7,635 |
|
AVA Nob Hill | | 1.14 | % | | Jun-2025 | | 20,800 |
| | 20,800 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 20,800 |
| | 1.65 | % | | Jun-2025 | (6) | 20,800 |
| | 20,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 20,800 |
|
Avalon Campbell | | 1.47 | % | | Jun-2025 | | 38,800 |
| | 38,800 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 38,800 |
| | 1.98 | % | | Jun-2025 | (6) | 38,800 |
| | 38,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 38,800 |
|
Eaves Pacifica | | 1.49 | % | | Jun-2025 | | 17,600 |
| | 17,600 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 17,600 |
| | 2.00 | % | | Jun-2025 | (6) | 17,600 |
| | 17,600 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 17,600 |
|
Avalon Bowery Place I | | 3.01 | % | | Nov-2037 | | 93,800 |
| | 93,800 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 93,800 |
| | 3.58 | % | | Nov-2037 | (6) | 93,800 |
| | 93,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 93,800 |
|
Avalon Acton | | 1.51 | % | | Jul-2040 | | 45,000 |
| | 45,000 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 45,000 |
| | 2.40 | % | | Jul-2040 | (6) | 45,000 |
| | 45,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 45,000 |
|
Avalon Walnut Creek | | 1.36 | % | | Mar-2046 | (5) | 116,000 |
| | 116,000 |
| (6) | — |
| | — |
| | — |
| | — |
| | — |
| | 116,000 |
| | 1.50 | % | | Mar-2046 | (7) | 116,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Walnut Creek | | 1.36 | % | | Mar-2046 | (5) | 10,000 |
| | 10,000 |
| (6) | — |
| | — |
| | — |
| | — |
| | — |
| | 10,000 |
| | 1.50 | % | | Mar-2046 | (7) | 10,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Morningside Park | | 1.60 | % | | May-2046 | (5) | 100,000 |
| | 100,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 100,000 |
| | 1.85 | % | | May-2046 | (3) | 100,000 |
| | 100,000 |
| | — |
| | — |
| | — |
| | — |
| | 345 |
| | 99,655 |
|
Avalon Clinton North | | 1.72 | % | | Nov-2038 | | 147,000 |
| | 147,000 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 147,000 |
| | 2.41 | % | | Nov-2038 | (6) | 147,000 |
| | 147,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 147,000 |
|
Avalon Clinton South | | 1.72 | % | | Nov-2038 | | 121,500 |
| | 121,500 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 121,500 |
| | 2.41 | % | | Nov-2038 | (6) | 121,500 |
| | 121,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 121,500 |
|
Avalon Midtown West | | 1.63 | % | | May-2029 | | 100,500 |
| | 100,500 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 100,500 |
| | 2.32 | % | | May-2029 | (6) | 100,500 |
| | 100,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 100,500 |
|
Avalon San Bruno | | 1.61 | % | | Dec-2037 | | 64,450 |
| | 64,450 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | 64,450 |
| |
Avalon San Bruno I | | | 2.30 | % | | Dec-2037 | (6) | 64,450 |
| | 64,450 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 64,450 |
|
Avalon Calabasas | | 1.71 | % | | Apr-2028 | | 44,410 |
| | 44,410 |
| (3) | — |
| | — |
| | — |
| | 128 |
| | 403 |
| | 43,879 |
| | 2.22 | % | | Apr-2028 | (6) | 44,410 |
| | 44,410 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 44,410 |
|
| | | | 945,795 |
| | 945,595 |
| | — |
| | — |
| | 18,100 |
| | 128 |
| | 403 |
| | 926,964 |
| | | | 945,195 |
| | 818,795 |
| | 17,300 |
| | — |
| | — |
| | — |
| | 345 |
| | 801,150 |
|
Conventional loans (4) | | |
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Conventional loans (2) | | | | | |
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Fixed rate | | |
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$150 Million unsecured notes | | — | % | | Apr-2014 | | 150,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
$250 Million unsecured notes | | 5.89 | % | | Sep-2016 | | 250,000 |
| | 250,000 |
| | — |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | 5.89 | % | | Sep-2016 | (8) | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
$250 Million unsecured notes | | 5.82 | % | | Mar-2017 | | 250,000 |
| | 250,000 |
| | — |
| | — |
| | 250,000 |
| | — |
| | — |
| | — |
| | 5.82 | % | | Mar-2017 | (9) | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
$250 Million unsecured notes | | 6.19 | % | | Mar-2020 | | 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 250,000 |
| | 6.19 | % | | Mar-2020 | | 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | 250,000 |
| | — |
| | — |
|
$250 Million unsecured notes | | 4.04 | % | | Jan-2021 | | 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 250,000 |
| | 4.04 | % | | Jan-2021 | | 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | 250,000 |
| | — |
|
$450 Million unsecured notes | | 4.30 | % | | Sep-2022 | | 450,000 |
| | 450,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 450,000 |
| | 4.30 | % | | Sep-2022 | | 450,000 |
| | 450,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 450,000 |
|
$250 Million unsecured notes | | 3.00 | % | | Mar-2023 | | 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 250,000 |
| | 3.00 | % | | Mar-2023 | | 250,000 |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 250,000 |
|
$400 Million unsecured notes | | 3.78 | % | | Oct-2020 | | 400,000 |
| | 400,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 400,000 |
| | 3.78 | % | | Oct-2020 | | 400,000 |
| | 400,000 |
| | — |
| | — |
| | — |
| | 400,000 |
| | — |
| | — |
|
$350 Million unsecured notes | | 4.30 | % | | Dec-2023 | | 350,000 |
| | 350,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 350,000 |
| | 4.30 | % | | Dec-2023 | | 350,000 |
| | 350,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 350,000 |
|
$300 Million unsecured notes | | 3.66 | % | | Nov-2024 | | — |
| | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
| | 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 |
|
$300 Million unsecured notes | | | 3.01 | % | | Oct-2026 | | — |
| | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
|
$350 Million unsecured notes | | | 3.95 | % | | Oct-2046 | | — |
| | 350,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 350,000 |
|
Avalon Orchards | | 7.79 | % | | Jul-2033 | | 17,530 |
| | 17,091 |
| | 470 |
| | 503 |
| | 539 |
| | 577 |
| | 619 |
| | 14,383 |
| | 7.80 | % | | Jul-2033 | | 16,621 |
| | 16,075 |
| | 539 |
| | 577 |
| | 619 |
| | 663 |
| | 710 |
| | 12,967 |
|
Avalon Darien | | 6.22 | % | | Dec-2015 | | 48,484 |
| | 47,700 |
| (7) | 47,700 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
AVA Stamford | | 6.13 | % | | Dec-2015 | | 58,385 |
| | 57,423 |
| (7) | 57,423 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Avalon Walnut Creek | | 4.30 | % | | Jul-2066 | | 3,042 |
| | 3,042 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,042 |
| | 4.00 | % | | Jul-2066 | | 3,289 |
| | 3,420 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,420 |
|
Avalon Shrewsbury | | 5.92 | % | | May-2019 | | 20,464 |
| | 20,174 |
| | 307 |
| | 323 |
| | 346 |
| | 367 |
| | 18,831 |
| | — |
| |
Eaves Trumbull | | 5.93 | % | | May-2019 | | 40,018 |
| | 39,452 |
| | 601 |
| | 631 |
| | 676 |
| | 717 |
| | 36,827 |
| | — |
| |
Avalon on Stamford Harbor | | 5.93 | % | | May-2019 | | 63,624 |
| | 62,724 |
| (9) | 955 |
| | 1,003 |
| | 1,075 |
| | 1,140 |
| | 58,551 |
| | — |
| |
Avalon Freehold | | 5.95 | % | | May-2019 | | 35,475 |
| | 34,973 |
| | 532 |
| | 559 |
| | 599 |
| | 636 |
| | 32,647 |
| | — |
| |
Avalon Mission Oaks | | | 6.04 | % | | May-2019 | (10) | 19,867 |
| | 19,545 |
| | 347 |
| | 367 |
| | 18,831 |
| | — |
| | — |
| | — |
|
Avalon Stratford | | | 6.02 | % | | May-2019 | (11) | 38,852 |
| | 38,221 |
| | 676 |
| | 717 |
| | 36,828 |
| | — |
| | — |
| | — |
|
AVA Belltown | | | 6.00 | % | | May-2019 | | 61,769 |
| | 60,766 |
| | 1,075 |
| | 1,140 |
| | 58,551 |
| | — |
| | — |
| | — |
|
Avalon Encino | | | 6.06 | % | | May-2019 | (10) | 34,441 |
| | 33,882 |
| | 599 |
| | 636 |
| | 32,647 |
| | — |
| | — |
| | — |
|
Avalon Run East | | 5.95 | % | | May-2019 | | 38,013 |
| | 37,475 |
| | 571 |
| | 599 |
| | 642 |
| | 681 |
| | 34,982 |
| | — |
| | 5.95 | % | | May-2019 | | 36,904 |
| | 36,305 |
| | 642 |
| | 681 |
| | 34,982 |
| | — |
| | — |
| | — |
|
Eaves Nanuet | | 6.06 | % | | May-2019 | | 64,149 |
| | 63,242 |
| | 963 |
| | 1,011 |
| | 1,083 |
| | 1,150 |
| | 59,035 |
| | — |
| |
Avalon at Edgewater (10) | | 5.95 | % | | May-2019 | | 76,088 |
| | 75,012 |
| | 1,142 |
| | 1,199 |
| | 1,285 |
| | 1,363 |
| | 70,023 |
| | — |
| |
Avalon Foxhall | | 6.06 | % | | May-2019 | | 57,150 |
| | 56,341 |
| | 858 |
| | 901 |
| | 965 |
| | 1,024 |
| | 52,593 |
| | — |
| |
Avalon Wilshire | | | 6.18 | % | | May-2019 | (10) | 62,279 |
| | 61,268 |
| | 1,083 |
| | 1,150 |
| | 59,035 |
| | — |
| | — |
| | — |
|
Avalon at Foxhall | | | 6.06 | % | | May-2019 | | 55,484 |
| | 54,583 |
| | 965 |
| | 1,024 |
| | 52,594 |
| | — |
| | — |
| | — |
|
Avalon at Gallery Place | | 6.06 | % | | May-2019 | | 44,405 |
| | 43,776 |
| | 667 |
| | 700 |
| | 750 |
| | 796 |
| | 40,863 |
| | — |
| | 6.06 | % | | May-2019 | | 43,110 |
| | 42,410 |
| | 750 |
| | 796 |
| | 40,864 |
| | — |
| | — |
| | — |
|
Avalon at Traville | | 5.91 | % | | May-2019 | | 75,251 |
| | 74,186 |
| | 1,130 |
| | 1,186 |
| | 1,271 |
| | 1,348 |
| | 69,251 |
| | — |
| | 5.91 | % | | May-2019 | | 73,057 |
| | 71,871 |
| | 1,271 |
| | 1,348 |
| | 69,252 |
| | — |
| | — |
| | — |
|
Avalon Bellevue | | 5.92 | % | | May-2019 | | 25,856 |
| | 25,491 |
| | 388 |
| | 408 |
| | 437 |
| | 463 |
| | 23,795 |
| | — |
| | 5.92 | % | | May-2019 | | 25,103 |
| | 24,695 |
| | 437 |
| | 463 |
| | 23,795 |
| | — |
| | — |
| | — |
|
Avalon on The Alameda | | 5.91 | % | | May-2019 | | 52,278 |
| | 51,539 |
| | 785 |
| | 824 |
| | 883 |
| | 937 |
| | 48,110 |
| | — |
| |
Avalon at Mission Bay North | | 5.90 | % | | May-2019 | | 70,959 |
| | 69,955 |
| | 1,065 |
| | 1,118 |
| | 1,198 |
| | 1,272 |
| | 65,302 |
| | — |
| |
Avalon on the Alameda | | | 5.91 | % | | May-2019 | | 50,754 |
| | 49,930 |
| | 883 |
| | 937 |
| | 48,110 |
| | — |
| | — |
| | — |
|
Avalon at Mission Bay I | | | 5.90 | % | | May-2019 | | 68,890 |
| | 67,772 |
| | 1,198 |
| | 1,272 |
| | 65,302 |
| | — |
| | — |
| | — |
|
AVA Pasadena | | 4.05 | % | | Jun-2018 | | 11,869 |
| | 11,683 |
| | 195 |
| | 202 |
| | 213 |
| | 11,073 |
| | — |
| | — |
| | 4.06 | % | | Jun-2018 | | 11,489 |
| | 11,287 |
| | 213 |
| | 11,074 |
| | — |
| | — |
| | — |
| | — |
|
Avalon La Jolla Colony | | | 3.36 | % | | Nov-2017 | (12) | 27,176 |
| | 26,682 |
| | 26,682 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | Eaves Seal Beach | | 3.12 | % | | Nov-2015 | | 86,167 |
| | 85,122 |
| (8) | 85,122 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Oakwood Toluca Hills | | 3.12 | % | | Nov-2015 | | 167,595 |
| | 165,561 |
| (8) | 165,561 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Eaves Mountain View at Middlefield | | 3.12 | % | | Nov-2015 | | 72,374 |
| | 71,496 |
| (8) | 71,496 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Eaves Tunlaw Gardens | | 3.12 | % | | Nov-2015 | | 28,844 |
| | 28,494 |
| (8) | 28,494 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Eaves Glover Park | | 3.12 | % | | Nov-2015 | | 23,858 |
| | 23,569 |
| (8) | 23,569 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Oakwood Arlington | | 3.12 | % | | Nov-2015 | | 42,703 |
| | 42,185 |
| (8) | 42,185 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Eaves North Quincy | | 3.12 | % | | Nov-2015 | | 37,212 |
| | 36,761 |
| (8) | 36,761 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Avalon Thousand Oaks Plaza | | 3.12 | % | | Nov-2015 | | 28,742 |
| | 28,394 |
| (8) | 28,394 |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Avalon La Jolla Colony | | 3.36 | % | | Nov-2017 | | 27,176 |
| | 27,176 |
| | — |
| | — |
| | 27,176 |
| | — |
| | — |
| | — |
| |
Eaves Old Town Pasadena | | 3.36 | % | | Nov-2017 | | 15,669 |
| | 15,669 |
| | — |
| | — |
| | 15,669 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 15,669 |
| | 14,120 |
| | 14,120 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Eaves Thousand Oaks | | 3.36 | % | | Nov-2017 | | 27,411 |
| | 27,411 |
| | — |
| | — |
| | 27,411 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 27,411 |
| | 26,392 |
| | 26,392 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Archstone Lexington | | | 3.36 | % | | Nov-2017 | (12) | — |
| | 21,601 |
| | 21,601 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Walnut Ridge I | | 3.36 | % | | Nov-2017 | | 20,754 |
| | 20,754 |
| | — |
| | — |
| | 20,754 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 20,754 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Eaves Los Feliz | | 3.36 | % | | Nov-2017 | | 43,258 |
| | 43,258 |
| | — |
| | — |
| | 43,258 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 43,258 |
| | 41,302 |
| | 41,302 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Oak Creek | | 3.36 | % | | Nov-2017 | | 85,288 |
| | 85,288 |
| | — |
| | — |
| | 85,288 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 85,288 |
| | 69,696 |
| | 69,696 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Del Mar Station | | 3.36 | % | | Nov-2017 | | 76,471 |
| | 76,471 |
| | — |
| | — |
| | 76,471 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 76,471 |
| | 70,854 |
| | 70,854 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Courthouse Place | | 3.36 | % | | Nov-2017 | | 140,332 |
| | 140,332 |
| | — |
| | — |
| | 140,332 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 140,332 |
| | 118,112 |
| | 118,112 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Pasadena | | 3.34 | % | | Nov-2017 | | 28,079 |
| | 28,079 |
| | — |
| | — |
| | 28,079 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 28,079 |
| | 25,805 |
| | 25,805 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Eaves West Valley | | 3.36 | % | | Nov-2017 | | 83,087 |
| | 83,087 |
| | — |
| | — |
| | 83,087 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 83,087 |
| | 146,696 |
| | 146,696 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Eaves Woodland Hills | | 3.36 | % | | Nov-2017 | | 104,694 |
| | 104,694 |
| | — |
| | — |
| | 104,694 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 104,694 |
| | 98,732 |
| | 98,732 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Russett | | 3.36 | % | | Nov-2017 | | 39,972 |
| | 39,972 |
| | — |
| | — |
| | 39,972 |
| | — |
| | — |
| | — |
| | 3.36 | % | | Nov-2017 | (12) | 39,972 |
| | 32,199 |
| | 32,199 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon First & M | | 5.56 | % | | May-2053 | | 142,061 |
| | 140,964 |
| | 954 |
| | 987 |
| | 1,067 |
| | 1,129 |
| | 1,195 |
| | 135,632 |
| |
Avalon San Bruno II | | 3.85 | % | | Apr-2021 | | 31,398 |
| | 30,968 |
| | 454 |
| | 475 |
| | 506 |
| | 534 |
| | 564 |
| | 28,435 |
| | 3.85 | % | | Apr-2021 | | 30,514 |
| | 30,001 |
| | 468 |
| | 534 |
| | 564 |
| | 591 |
| | 27,844 |
| | — |
|
Avalon Westbury | | 4.13 | % | | Nov-2036 | (5) | 21,260 |
| | 20,145 |
| | 1,172 |
| | 1,231 |
| | 1,293 |
| | 1,358 |
| | 1,426 |
| | 13,665 |
| | 4.88 | % | | Nov-2036 | (3) | 18,975 |
| | 17,745 |
| | 1,293 |
| | 1,358 |
| | 1,426 |
| | 1,499 |
| | 1,574 |
| | 10,595 |
|
Archstone Lexington | | 3.32 | % | | Mar-2016 | | 16,780 |
| | 16,525 |
| | 270 |
| | 16,255 |
| | — |
| | — |
| | — |
| | — |
| | 3.32 | % | | Mar-2016 | (13) | 16,255 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon San Bruno III | | 4.87 | % | | Jun-2020 | | 56,210 |
| | 56,210 |
| | 561 |
| | 1,147 |
| | 1,188 |
| | 1,226 |
| | 1,264 |
| | 50,824 |
| | 3.17 | % | | Jun-2020 | | 55,650 |
| | 54,408 |
| | 1,093 |
| | 1,226 |
| | 1,264 |
| | 50,825 |
| | — |
| | — |
|
Avalon Andover | | 3.28 | % | | Apr-2018 | | 14,821 |
| | 14,505 |
| | 325 |
| | 336 |
| | 346 |
| | 13,498 |
| | — |
| | — |
| | 3.28 | % | | Apr-2018 | | 14,179 |
| | 13,844 |
| | 347 |
| | 13,497 |
| | — |
| | — |
| | — |
| | — |
|
Avalon Natick | | 3.13 | % | | Apr-2019 | | — |
| | 14,818 |
| | 319 |
| | 329 |
| | 339 |
| | 349 |
| | 13,482 |
| | — |
| | 3.14 | % | | Apr-2019 | | 14,499 |
| | 14,170 |
| | 339 |
| | 349 |
| | 13,482 |
| | — |
| | — |
| | — |
|
Avalon Hoboken | | | 3.55 | % | | Dec-2020 | (14) | — |
| | 67,904 |
| | — |
| | — |
| | — |
| | 67,904 |
| | — |
| | — |
|
Avalon Columbia Pike | | | 3.24 | % | | Nov-2019 | (14) | — |
| | 70,019 |
| | 1,505 |
| | 1,557 |
| | 66,957 |
| | — |
| | — |
| | — |
|
| | |
| | | | 4,865,256 |
| | 5,009,187 |
| | 601,389 |
| | 281,927 |
| | 958,892 |
| | 41,638 |
| | 629,360 |
| | 2,495,981 |
| | | | 5,019,172 |
| | 5,752,312 |
| | 707,914 |
| | 40,703 |
| | 625,103 |
| | 771,482 |
| | 280,128 |
| | 3,326,982 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Variable rate (2) | | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Variable rate (4) | | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Avalon Walnut Creek | | 1.70 | % | | Mar-2046 | (5) | 8,500 |
| | 8,500 |
| (6) | — |
| | — |
| | — |
| | — |
| | — |
| | 8,500 |
| | 1.88 | % | | Mar-2046 | (7) | 8,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Avalon Calabasas | | 2.41 | % | | Aug-2018 | | 57,314 |
| | 55,827 |
| (3) | 1,084 |
| | 1,152 |
| | 1,225 |
| | 52,366 |
| | — |
| | — |
| | 2.41 | % | | Aug-2018 | (6) | 54,756 |
| | 53,570 |
| | 1,225 |
| | 52,345 |
| | — |
| | — |
| | — |
| | — |
|
Avalon Natick | | 2.44 | % | | Apr-2019 | | — |
| | 37,539 |
| (3) | 809 |
| | 833 |
| | 858 |
| | 884 |
| | 34,155 |
| | — |
| | 2.69 | % | | Apr-2019 | (6) | 36,731 |
| | 35,897 |
| | 857 |
| | 884 |
| | 34,156 |
| | — |
| | — |
| | — |
|
Term Loan | | 1.77 | % | | Mar-2021 | | — |
| | 250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 250,000 |
| | 2.14 | % | | Mar-2021 | | 300,000 |
| | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
| | — |
|
| | |
| | | | 65,814 |
| | 351,866 |
| | 1,893 |
| | 1,985 |
| | 2,083 |
| | 53,250 |
| | 34,155 |
| | 258,500 |
| | | | 399,987 |
| | 389,467 |
| | 2,082 |
| | 53,229 |
| | 34,156 |
| | — |
| | 300,000 |
| | — |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total indebtedness - excluding Credit Facility | | |
| | | | $ | 6,019,571 |
| | $ | 6,448,138 |
| | $ | 604,578 |
| | $ | 285,292 |
| | $ | 980,546 |
| | $ | 96,586 |
| | $ | 665,588 |
| | $ | 3,815,548 |
| | | | $ | 6,481,291 |
| | $ | 7,076,758 |
| | $ | 728,030 |
| | $ | 94,709 |
| | $ | 660,082 |
| | $ | 772,353 |
| | $ | 581,395 |
| | $ | 4,240,189 |
|
| |
(1) | Includes credit enhancement fees, facility fees, trustees'trustees’ fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees. |
| |
(2) | Variable rates are given as of December 31, 2014. |
| |
(3) | Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement. |
| |
(4) | Balances outstanding represent total amounts due at maturity, and are net of $6,735 ofexclude deferred financing costs and debt discount and $5,291 of debt discount and basis adjustments associated withfor the hedged unsecured notes of $36,698 and $29,326 as of December 31, 20142016 and December 31, 2013,2015, respectively, and $84,449 and $120,071deferred financing costs net of premium associated with secured notes of $9,180 as of December 31, 20142016, and premium associated with secured notes net of deferred financing costs of $4,983 as of December 31, 2013, respectively,2015, as reflected on our Consolidated Balance Sheets included elsewhere in this report. |
| |
(5)(3) | Maturity date reflects the contractual maturity of the underlying bond. There is also an associated earlier credit enhancement maturity date. |
| |
(6)(4) | Variable rates are given as of December 31, 2016. |
| |
(5) | In July 2013February 2017, we remarketed the bonds and converted them torepaid this borrowing at its scheduled maturity date. |
| |
(6) | Financed by variable rate debt, but interest rate is capped through July 2018.an interest rate protection agreement. |
| |
(7) | Borrowing isIn April 2016, we repaid this borrowing at par in advance of its scheduled to mature in December 2015, and contractually includes an automatic one-year extension of the loan through December 2016.maturity date. |
| |
(8) | Outstanding principal balance was reduced in June 2014 in conjunction with the prepayment of a secured mortgage note under the master credit agreement.In September 2016, we repaid this borrowing pursuant to its scheduled maturity date. |
| |
(9) | This community was soldIn November 2016, we repaid this borrowing in January 2015, at which time we substituted another operating community as collateral for the borrowing.advance of its scheduled maturity date. |
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(10) | In August 2016, Avalon Mission Oaks, Avalon Encino and Avalon Wilshire, were substituted as collateral for the outstanding borrowings secured by Avalon Shrewsbury, Avalon at Freehold and Eaves Nanuet, respectively. |
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(11) | In January 2015,2016, Avalon Stratford was substituted as collateral for the outstanding borrowing secured by Eaves Trumbull. |
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(12) | In February 2016, Archstone Lexington was substituted as collateral for the outstanding borrowing secured by Avalon Walnut Ridge I, and the aggregate principal balance from the secured borrowing was reallocated between the communities serving as collateral. |
| |
(13) | In February 2016, we experienced a firerepaid this borrowing at Edgewater. Aspar in advance of its maturity date, subsequently substituting the operating community as collateral for another borrowing as discussed in note (12). |
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(14) | This borrowing was assumed in conjunction with the acquisition of the date of this Form 10-K there has been no changerespective operating community in the terms and conditions of the financing secured by Edgewater, and we are complying with all lender requirements. The mortgage note stipulates that in the event of a casualty loss such as the Edgewater fire, the lender has absolute discretion to determine the disposition of the insurance proceeds, and can compel us (i) to direct the insurance proceeds to be used for the restoration of Edgewater, or (ii) to apply the insurance proceeds to repay the outstanding loan balance, at par. We are currently working with the lender to resolve open issues related to this matter.2016. |
Future Financing and Capital Needs—Portfolio and OtherCapital Markets Activity
As
In 2017, we expect to meet our liquidity needs from a variety of December 31, 2014, we had 26 wholly-owned communities under constructioninternal and eight wholly-owned communities under reconstruction. Substantially all of the capital expenditures necessary to complete the communities currently under construction and reconstruction and fund development costs related to pursuing Development Rights will be funded from:
external sources, including (i) real estate dispositions, (ii) cash balances on hand as well as cash generated from our $1,300,000,000 Credit Facility;
the remaining $50,000,000operating activities, (iii) borrowing capacity under our Term Loan;
cash currently on hand, investedCredit Facility and (iv) secured and unsecured debt financings. Additional sources of liquidity in highly liquid overnight money market funds and repurchase agreements, and short-term investment vehicles;
retained operating cash;
the net proceeds from sales of existing communities;
2017 may include the issuance of debtcommon and preferred equity. 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 equity securities, including through the Forward; and/orshort-term financial prospects.
private equity funding, including joint venture activity.
Before plannedbeginning new construction or reconstruction activity, including activity related to communities owned by unconsolidated joint ventures, begins, or the construction of a Development Right begins, we intend to arrangeplan adequate financing to complete these undertakings, although we cannot assure you that we will be able to obtain such financing. In the event that financing cannot be obtained, we may have to abandon Development Rights, write off associated pre-development costs that were capitalized and/or forego reconstruction activity. In such instances, we will not realize the increased revenues and earnings that we expected from such Development Rights or reconstruction activity and significant losses could be incurred.
From time to time we use joint ventures to hold or develop individual real estate assets. We generally employ joint ventures primarily to mitigate asset concentration or market risk and secondarily as a source of liquidity. We may also use joint ventures related to mixed-use land development opportunities where our partners bring development and operational expertise 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 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 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. However, weNOI 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 minimalmaterial impact on our ability to fund future liquidity and capital resource needs.
Unconsolidated Real Estate Investments and Off-Balance Sheet Arrangements
Unconsolidated Investments
Fund I,
Fund II and the U.S. Fund (collectively the “Funds”) werewas established to engage in a real estate acquisition programsprogram through a discretionary investment funds.fund. We believe this investment format provides the following attributes: (i) third-party joint venture equity as an additional source of financing to expand and diversify our portfolio; (ii) additional sources of income in the form of property management and asset management fees and, potentially, incentive distributions if the performance of the Funds exceeds certain thresholds; and (iii) additional visibility into the transactions occurring in multi-familymultifamily assets that helps us with other investment decisions related to our wholly-owned portfolio.
Fund I has nine institutional investors, including us. One of our wholly-owned subsidiaries is the general partner of Fund I, has a 15.2% combined general partner and limited partner equity interest, and has fully recovered its basis as of December 31, 2014, with any additional liquidation proceeds to be recognized in earnings as received. Fund I was our principal vehicle for acquiring apartment communities from its formation in March 2005 through the close of its investment period in March 2008. Fund I has a term that expires in March 2015. In 2014, Fund I sold its final four apartment communities.
Fund II has six institutional investors, including us. One of our wholly-owned subsidiaries is the general partner of Fund II and, excluding costs incurred in excess of our equity in the underlying net assets of Fund II, we have an equity investment of $92,162,000$19,737,000 (net of distributions), representing a 31.3% combined general partner and limited partner equity interest. Upon achievement of a threshold return, we have a right to incentive distributions for our promoted interest representing the first 20.0% of further Fund II distributions, which are in addition to our share of the remaining 80.0% of distributions. During 2016, we recognized income of $7,985,000 for our promoted interest. 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.
During 2016, Fund II sold three communities containing an aggregate of 1,514 apartment homes for an aggregate sales price of $382,950,000. Our share of the total gain in accordance with GAAP was $41,501,000. In conjunction with the disposition of these communities, Fund II repaid $156,248,000 of related secured indebtedness in advance of the scheduled maturity dates, which resulted in charges for prepayment penalties and write-offs of deferred financing costs, of which our portion was $1,768,000.
The U.S. Fund has six institutional investors, including us. We are the general partner of the U.S. Fund and, excluding costs incurred in excess of our equity in the underlying net assets of the U.S. Fund, we have an equity investment of $88,220,000$49,693,000 (net of distributions), representing a 28.6% combined equity interest. The U.S. Fund was formed in July 2011 and is fully invested. The U.S. Fund has a term that expires in July 2023, assuming the exercise of two, one-year extension options. We acquired our interest in
During 2016, the U.S. Fund as partsold two communities containing an aggregate of 461 apartment homes for an aggregate sales price of $229,300,000. Our share of the Archstone Acquisition.
total gain in accordance with GAAP was $16,568,000. In addition, as partconjunction with the disposition of these communities, the U.S. Fund repaid $94,822,000 of related secured indebtedness in advance of the Archstone Acquisition, we acquired an interestscheduled maturity dates, which resulted in thecharges for prepayment penalties and write-offs of deferred financing costs, of which our portion was $2,003,000.
The AC JV which has four institutional investors, including us. Excluding costs incurred in excess of our equity in the underlying net assets of the AC JV, we have an equity investment of $69,633,000$50,674,000 (net of distributions), representing a 20.0% equity interest. The AC JV was formed in 2011.
During 2016, we entered into a joint venture to develop, own, and operate AVA North Point, an apartment community located in Cambridge, MA, which is currently under construction and expected to contain 265 apartment homes upon completion. We own a 55.0% interest in the venture, and the venture partner owns the remaining 45.0% interest. AVA North Point is the third phase of a master planned development, the other phases of which are owned through the AC JV. During 2016, we provided the partners of the AC JV the opportunity to acquire the AVA North Point land parcel we owned as required in the ROFO provisions for the AC JV. After certain partners of the AC JV declined to participate, we entered into the new joint venture and sold the land parcel to the venture in exchange for a cash payment and a capital account credit, and we are overseeing the development in exchange for a developer fee. Upon sale of the land parcel, we recognized a gain of $10,621,000.
In May 2016, we entered into a joint venture agreement to facilitate the acquisition of Avalon Clarendon, located in Arlington, VA. Avalon Clarendon is part of a mixed-use development containing residential, retail, office and public parking. We contributed $120,300,000 to the venture for our share of the purchase price. We had shared control of the overall venture, but had all of the rights and obligations associated with the residential component of Avalon Clarendon, containing 300 apartment homes. The joint venture partner had all of the rights and obligations associated with the retail, office and public parking components of the mixed-use development. During September 2016, we established separate legal ownership of the residential and retail, office and public parking components of the venture with our venture partner, and we retained all of the rights and obligations associated with the residential component. After this legal separation, beginning October 2016, we began reporting the operating results of Avalon Clarendon as part of our consolidated operations. In conjunction with the consolidation of Avalon Clarendon, we recorded the consolidated assets at fair value, resulting in a gain of $4,322,000 for the difference between the fair value of Avalon Clarendon and our equity interest at the date of consolidation of $115,848,000, primarily attributable to depreciation recognized during the period the community was owned in the joint venture.
As part of the Archstone Acquisition we entered into a limited liability company agreement with Equity Residential, through which we assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements (the “Legacy JV”). We have a 40.0% interest in the Legacy JV. During the years ended December 31, 2016, 2015 and 2014, the Legacy JV redeemed certain of the preferred interests and paid accrued dividends, of which our portion was $1,960,000, $14,410,000 and $6,300,000, respectively. At December 31, 2016, the remaining preferred interests had an aggregate liquidation value of $39,921,000, our share of which is included in accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets presented elsewhere in this report.
As of December 31, 2014,2016, we had investments in the following unconsolidated real estate accounted for under the equity method of accounting.accounting excluding development joint ventures. Refer to Note 6,5, “Investments in Real Estate Entities,” of the Consolidated Financial Statements locatedincluded elsewhere in this report, which includes information on the aggregate assets, liabilities and equity, as well as operating results, and our proportionate share of their operating results. DetailFor ventures holding operating apartment communities as of December 31, 2016, detail of the real estate and associated funding underlying our unconsolidated investments is presented in the following table (dollars in thousands).
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| | | | | | | | | | | | | | | | | | | | |
| | | | | | | Debt (2) |
Unconsolidated Real Estate Investments | Company Ownership Percentage | | # of Apartment Homes | | Total Capitalized Cost (1) | | Principal Amount | | Type | | Interest Rate (3) | | Maturity Date |
| | | | | | | | | | | | | |
Fund II | |
| | |
| | |
| | |
| | | | |
| | |
1. Briarwood Apartments—Owings Mills, MD | |
| | 348 |
| | $ | 45,765 |
| | $ | 26,318 |
| | Fixed | | 3.64 | % | | Nov 2017 |
2. Eaves Gaithersburg—Gaithersburg, MD (4) | |
| | 684 |
| | 102,638 |
| | 63,200 |
| | Fixed | | 5.42 | % | | Jan 2018 |
3. Eaves Tustin—Tustin, CA | |
| | 628 |
| | 100,837 |
| | 59,100 |
| | Fixed | | 3.81 | % | | Oct 2017 |
4. Eaves Los Alisos—Lake Forest, CA | |
| | 140 |
| | 27,466 |
| | — |
| | N/A | | N/A |
| | N/A |
5. Eaves Plainsboro—Plainsboro, NJ (5) | |
| | 776 |
| | 91,862 |
| | 9,412 |
| | Fixed | | 5.04 | % | | Jan 2016 |
6. Eaves Carlsbad—Carlsbad, CA | |
| | 450 |
| | 80,943 |
| | 46,141 |
| | Fixed | | 4.68 | % | | Feb 2018 |
7. Eaves Rockville—Rockville, MD | |
| | 210 |
| | 51,608 |
| | 30,277 |
| | Fixed | | 4.26 | % | | Aug 2019 |
8. Captain Parker Arms - Lexington, MA | |
| | 94 |
| | 22,181 |
| | 13,500 |
| | Fixed | | 3.90 | % | | Sep 2019 |
9. Eaves Rancho San Diego—San Diego, CA | |
| | 676 |
| | 127,847 |
| | 69,913 |
| | Fixed | | 3.45 | % | | Nov 2018 |
10. Avalon Watchung—Watchung, NJ | |
| | 334 |
| | 66,425 |
| | 40,950 |
| | Fixed | | 3.37 | % | | Apr 2019 |
Total Fund II | 31.3 | % | | 4,340 |
| | $ | 717,572 |
| | $ | 358,811 |
| | | | 4.15 | % | | |
| | | | | | | | | | | �� | | |
U.S. Fund | |
| | |
| | |
| | |
| | | | |
| | |
1. Eaves Sunnyvale—Sunnyvale, CA (4) | |
| | 192 |
| | $ | 67,031 |
| | $ | 33,806 |
| | Fixed | | 5.33 | % | | Nov 2019 |
2. Avalon Studio 4041—Studio City, CA | |
| | 149 |
| | 56,774 |
| | 30,150 |
| | Fixed | | 3.34 | % | | Nov 2022 |
3. Marina Bay—Marina del Rey, CA | |
| | 205 |
| | 76,986 |
| | — |
| | N/A | | N/A |
| | N/A |
4. Avalon Venice on Rose—Venice, CA | |
| | 70 |
| | 56,405 |
| | 31,114 |
| | Fixed | | 3.31 | % | | Jun 2020 |
5. Archstone Boca Town Center—Boca Raton, FL (6) | |
| | 252 |
| | 46,251 |
| | 27,706 |
| | Fixed/Variable | | 3.54 | % | | Feb 2019 |
6. Avalon Station 250—Dedham, MA | |
| | 285 |
| | 95,111 |
| | 59,733 |
| | Fixed | | 3.73 | % | | Sep 2022 |
7. Avalon Grosvenor Tower—Bethesda, MD | |
| | 237 |
| | 79,088 |
| | 46,294 |
| | Fixed | | 3.74 | % | | Sep 2022 |
8. Avalon Kips Bay—New York, NY | |
| | 209 |
| | 134,470 |
| | 68,920 |
| | Fixed | | 4.25 | % | | Jan 2019 |
9. Avalon Kirkland at Carillon—Kirkland, WA | |
| | 131 |
| | 50,023 |
| | 30,157 |
| | Fixed | | 3.75 | % | | Feb 2019 |
Total U.S. Fund | 28.6 | % | | 1,730 |
| | $ | 662,139 |
| | $ | 327,880 |
| | | | 3.92 | % | | |
| | | | | | | | | | | | | |
AC JV | |
| | |
| | |
| | |
| | | | |
| | |
1. Archstone North Point—Cambridge, MA (7) | |
| | 426 |
| | $ | 186,668 |
| | $ | 111,653 |
| | Fixed | | 6.00 | % | | Aug 2021 |
2. Archstone Woodland Park—Herndon, VA (7) | |
| | 392 |
| | 85,324 |
| | 50,647 |
| | Fixed | | 6.00 | % | | Aug 2021 |
3. Avalon North Points Lofts — Cambridge, MA (8) | | | 103 |
| | 26,503 |
| | — |
| | N/A | | N/A |
| | N/A |
Total AC JV | 20.0 | % | | 921 |
| | $ | 298,495 |
| | $ | 162,300 |
| | | | 6.00 | % | | |
| | | | | | | | | | | | | |
Residual JV (9) | |
| | |
| | |
| | |
| | | | |
| | |
1. SWIB | |
| | 1,410 |
| | $ | 261,740 |
| | $ | 148,866 |
| | Fixed/Variable | | 2.32 | % | | Dec 2015 (10) |
Total Residual JV | 8.0 | % | | 1,410 |
| | $ | 261,740 |
| | $ | 148,866 |
| | | | 2.32 | % | | |
| | | | | | | | | | | | | |
Other Operating Joint Ventures | |
| | |
| | |
| | |
| | | | |
| | |
1. MVP I, LLC | 25.0 | % | | 313 |
| | $ | 124,344 |
| | $ | 105,000 |
| | Variable (11) | | 2.65 | % | | Dec 2015 |
2. Brandywine Apartments of Maryland, LLC | 28.7 | % | | 305 |
| | 17,802 |
| | 24,346 |
| | Fixed | | 3.40 | % | | Jun 2028 |
Total Other Joint Ventures | |
| | 618 |
| | $ | 142,146 |
| | $ | 129,346 |
| | | | 2.79 | % | | |
| | | | | | | | | | | | | |
Total Unconsolidated Investments | |
| | 9,019 |
| | $ | 2,082,092 |
| | $ | 1,127,203 |
| | | | 3.95 | % | | |
|
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | Debt (2) |
Unconsolidated Real Estate Investments | Company Ownership Percentage | | # of Apartment Homes | | Total Capitalized Cost (1) | | Principal Amount | | Type | | Interest Rate (3) | | Maturity Date |
| | | | | | | | | | | | | |
Fund II | |
| | |
| | |
| | |
| | | | |
| | |
1. Briarwood Apartments - Owings Mills, MD | |
| | 348 |
| | $ | 46,079 |
| | $ | 25,239 |
| | Fixed | | 3.64 | % | | Nov 2017 |
2. Eaves Gaithersburg - Gaithersburg, MD (4) | |
| | 684 |
| | 103,180 |
| | 63,200 |
| | Fixed | | 5.42 | % | | Jan 2018 |
3. Avalon Watchung - Watchung, NJ | |
| | 334 |
| | 66,687 |
| | 39,569 |
| | Fixed | | 3.37 | % | | Apr 2019 |
Total Fund II | 31.3 | % | | 1,366 |
| | $ | 215,946 |
| | $ | 128,008 |
| | | | 4.44 | % | | |
| | | | | | | | | | | | | |
U.S. Fund | |
| | |
| | |
| | |
| | | | |
| | |
1. Eaves Sunnyvale—Sunnyvale, CA (4) | |
| | 192 |
| | $ | 67,285 |
| | $ | 32,839 |
| | Fixed | | 5.33 | % | | Nov 2019 |
2. Avalon Studio 4121—Studio City, CA | |
| | 149 |
| | 56,911 |
| | 29,474 |
| | Fixed | | 3.34 | % | | Nov 2022 |
3. Avalon Marina Bay—Marina del Rey, CA (5) | |
| | 205 |
| | 77,146 |
| | 51,300 |
| | Fixed | | 1.56 | % | | Dec 2020 |
4. Avalon Venice on Rose—Venice, CA | |
| | 70 |
| | 57,236 |
| | 29,734 |
| | Fixed | | 3.28 | % | | Jun 2020 |
5. Avalon Station 250—Dedham, MA | |
| | 285 |
| | 96,310 |
| | 57,433 |
| | Fixed | | 3.73 | % | | Sep 2022 |
6. Avalon Grosvenor Tower—Bethesda, MD | |
| | 237 |
| | 79,748 |
| | 44,514 |
| | Fixed | | 3.74 | % | | Sep 2022 |
7. Avalon Kirkland at Carillon—Kirkland, WA | |
| | 131 |
| | 60,747 |
| | 28,961 |
| | Fixed | | 3.75 | % | | Feb 2019 |
Total U.S. Fund | 28.6 | % | | 1,269 |
| | $ | 495,383 |
| | $ | 274,255 |
| | | | 3.43 | % | | |
| | | | | | | | | | | | | |
AC JV | |
| | |
| | |
| | |
| | | | |
| | |
1. Avalon North Point—Cambridge, MA (6) | |
| | 426 |
| | $ | 187,272 |
| | $ | 111,653 |
| | Fixed | | 6.00 | % | | Aug 2021 |
2. Avalon Woodland Park—Herndon, VA (6) | |
| | 392 |
| | 85,689 |
| | 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 |
| | $ | 299,766 |
| | $ | 162,300 |
| | | | 6.00 | % | | |
| | | | | | | | | | | | | |
Other Operating Joint Ventures | |
| | |
| | |
| | |
| | | | |
| | |
1. MVP I, LLC | 25.0 | % | | 313 |
| | $ | 124,931 |
| | $ | 103,000 |
| | Fixed | | 3.24 | % | | Jul 2025 |
2. Brandywine Apartments of Maryland, LLC | 28.7 | % | | 305 |
| | 18,966 |
| | 23,307 |
| | Fixed | | 3.40 | % | | Jun 2028 |
Total Other Joint Ventures | |
| | 618 |
| | $ | 143,897 |
| | $ | 126,307 |
| | | | 3.27 | % | | |
| | | | | | | | | | | | | |
Total Unconsolidated Investments | |
| | 4,174 |
| | $ | 1,154,992 |
| | $ | 690,870 |
| | | | 4.19 | % | | |
| |
(1) | Represents total capitalized cost as of December 31, 2014.2016. |
| |
(2) | We have not guaranteed the debt of unconsolidated investees and bear no responsibility for the repayment. |
| |
(3) | Represents weighted average rate on outstanding debt as of December 31, 2014.2016. |
| |
(4) | Borrowing on this community is comprised of two mortgage loans. |
| |
(5) | Fund II repaid an outstanding mortgage loan secured by this community at par during 2014. |
| |
(6) | The debt secured byBorrowing on this community is a variable rate note, ofloan which $24,868 has been converted to an effectivea fixed rate borrowing with an interest rate swap. |
| |
(7)(6) | Borrowing is comprised of four mortgage loans made by the equity investors in the venture in proportion to their equity interests. |
| |
(8) | Development of this community was completed during 2014. |
| |
(9) | Our ownership interest of 8.0% is determined by our 40.0% ownership interest in the Residual JV entity with Equity Residential, which owns a 20.0% interest in SWIB. |
| |
(10) | Maturity date represents the earliest of the maturity dates on the two loans and four draws on the credit facility relating to the four communities owned by SWIB, as defined below. Maturity dates range from December 2015 to December 2029. |
| |
(11) | In December 2014 the interest rate converted from fixed to variable through the December 2015 maturity. |
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 6, "Investments5, “Investments in Real Estate Entities,"” of our Consolidated Financial Statements locatedincluded elsewhere in this report.
As of December 31, 2014, subsidiaries of Fund II have 10 loans secured by individual assets with aggregate amounts outstanding of $358,811,000 with varying maturity dates (and, in some cases, dates after which the loans can be prepaid without penalty), ranging from January 2016 to September 2019. The mortgage loans are payable by the subsidiaries of Fund II with operating cash flow or disposition proceeds from the underlying real estate.
We have not guaranteed the debt of Fund II,our unconsolidated real estate entities, as referenced in the table above, nor do we have any obligation to fund this debt should Fund IIthe unconsolidated real estate entities be unable to do so.
In addition,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 partany 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 formation ofunconsolidated real estate entities and/or our returns by providing time for performance to improve.
With respect to Fund II, we have provided to one of the limited partners a guarantee. The guarantee provides that if, upon final liquidation of Fund II, the total amount of all distributions to that partner during the life of Fund II (whether from operating cash flow or property sales) does not equal a minimum of the total capital contributions made by that partner, then we will pay the partner an amount equal to the shortfall, but in no event more than 10% of the total capital contributions made by the partner (maximum of approximately $8,910,000 as of December 31, 2014). As of December 31, 2014, the expected realizable value of the real estate assets owned by Fund II is considered adequate to cover the guaranteed distribution amount to that partner under the expected Fund II liquidation scenario. The estimated fair value of, and our obligation under, this guarantee, both at inception and as of December 31, 2014, was not significant and therefore we have not recorded any obligation for this guarantee as of December 31, 2014.
Eacheach individual mortgage loan of Fund II was made to a special purpose, single asset subsidiary of Fund II. Each mortgage loan provides that it is the obligation of the respective subsidiary only, except under exceptional circumstances (such as fraud or misapplication of funds) in which case Fund II could also have obligations with respect to the mortgage loan. In no event do the mortgage loans provide for recourse against investors in Fund II, including against us or our wholly-owned subsidiaries that invest in Fund II. A default by Fund II or a Fund II subsidiary on any loan to it would not constitute a default under any of our loans or any loans of our other non-Fund subsidiaries or affiliates. If Fund II or a subsidiary of Fund II were unable to meet its obligations under a loan, the value of our investment in Fund II would likely decline and we might also be more likely to be obligated under the guarantee we provided to Fund II partners as described above.decline. If a Fund II subsidiary or Fund II were unable to meet its obligations under a loan, we and/or the other investors might evaluate whether it was in our respective interests to voluntarily support Fund II through additional equity contributions and/or take other actions to avoid a default under a loan or the consequences of a default (such as foreclosure of a Fund II asset).
In the future, in the event Fund II was unable to meet its 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 Fund II and/or our returns by providing time for performance to improve.
As of December 31, 2014, subsidiaries of the U.S. Fund have nine loans secured by individual assets with aggregate amounts outstanding of $327,880,000 with varying maturity dates, ranging from January 2019 to November 2022. The mortgage loans are payable by the subsidiaries of the U.S. Fund with operating cash flow or disposition proceeds from the underlying real estate. We have not guaranteed the debt of the U.S. Fund, nor do we have any obligation to fund this debt should the U.S. Fund be unable to do so.
As of December 31, 2014, subsidiaries of the AC JV have eight unsecured loans outstanding in the aggregate amount of $162,300,000 which mature in August 2021, and which were made by the investors in the venture, including us, in proportion to the investors' respective equity ownership interest. The unsecured loans are payable by the subsidiaries of the AC JV with operating cash flow from the venture. We have not guaranteed the debt of the AC JV, nor do we have any obligation to fund this debt should the AC JV be unable to do so.
MVP I, LLC, the entity that owns Avalon at Mission Bay North II, has a loan secured by the underlying real estate assets of the community for $105,000,000. In December 2014, the loan converted from fixed rate to a variable rate, interest-only note bearing interest at LIBOR plus 2.50%, maturing in December 2015. We have not guaranteed the debt of MVP I, LLC, nor do we have any obligation to fund this debt should MVP I, LLC be unable to do so.
In January 2015, we received $20,700,000 from the joint venture partner associated with MVP I, LLC upon agreement to modify the joint venture agreement to eliminate our promoted interest for future return calculations and associated distributions. Prospectively, earnings and distributions will be based on the Company's 25.0% equity interest in the venture.
As of December 31, 2014, Brandywine has an outstanding $24,346,000 fixed rate mortgage loan that is payable by Brandywine. We have not guaranteed the debt of Brandywine, nor do we have any obligation to fund this debt should Brandywine be unable to do so.
As of December 31, 2014, SWIB, the joint venture for which we have an 8.0% indirect interest in through the Residual JV, has two loans and four draws on a credit facility secured by individual assets with aggregate amounts outstanding of $148,866,000 with varying maturity dates, ranging from December 2015 to December 2029. We have not guaranteed the debt of SWIB, nor do we have any obligation to fund this debt should SWIB be unable to do so.
There are no other material lines of credit, side agreements, financial guarantees or any other derivative financial instruments related to or between our unconsolidated real estate entities and us. In evaluating our capital structure and overall leverage, management takes into consideration our proportionate share of the indebtedness of unconsolidated entities in which we have an interest.
Contractual Obligations
Scheduled contractual obligations required for the next five years and thereafter are as follows as of December 31, 20142016 (dollars in thousands):
| | | Payments due by period | Payments due by period |
| Total | | Less than 1 Year | | 1-3 Years | | 3-5 Years | | More than 5 Years | Total | | Less than 1 Year | | 1-3 Years | | 3-5 Years | | More than 5 Years |
Debt Obligations | $ | 6,448,138 |
| | $ | 604,578 |
| | $ | 1,265,838 |
| | $ | 762,174 |
| | $ | 3,815,548 |
| $ | 7,076,758 |
| | $ | 728,030 |
| | $ | 754,791 |
| | $ | 1,353,748 |
| | $ | 4,240,189 |
|
Interest on Debt Obligations | 1,932,230 |
| | 269,081 |
| | 459,352 |
| | 319,925 |
| | 883,872 |
| 1,879,345 |
| | 252,880 |
| | 417,256 |
| | 301,904 |
| | 907,305 |
|
Capital Lease Obligations (1) (2) | 62,599 |
| | 1,885 |
| | 19,931 |
| | 1,696 |
| | 39,087 |
| 68,237 |
| | 18,874 |
| | 2,148 |
| | 2,157 |
| | 45,058 |
|
Operating Lease Obligations (1) | 1,332,711 |
| | 20,337 |
| | 41,464 |
| | 43,056 |
| | 1,227,854 |
| 1,314,593 |
| | 22,818 |
| | 46,797 |
| | 41,021 |
| | 1,203,957 |
|
| $ | 9,775,678 |
| | $ | 895,881 |
| | $ | 1,786,585 |
| | $ | 1,126,851 |
| | $ | 5,966,361 |
| $ | 10,338,933 |
| | $ | 1,022,602 |
| | $ | 1,220,992 |
| | $ | 1,698,830 |
| | $ | 6,396,509 |
|
| |
(1) | Includes land leases expiring between October 2026 and March 2142. Amounts do not include any adjustment for purchase options available under the land leases. |
| |
(2) | Aggregate capital lease payments include $28,318$27,374 in interest costs. |
Inflation and Deflation
Substantially all of our apartment leases are for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases. Short-term leases generally minimize our risk from the adverse effect of inflation, although these leases generally permit residents to leave at the end of the lease term and therefore expose us to the effect of a decline in market rents. Similarly, in a deflationary rent environment, we may be exposed to declining rents more quickly under these shorter-term leases.
Federal Income Tax Law Changes and Updates
The following discussion updates the disclosures under “Federal Income Tax Considerations and Consequences of Your Investment” in the prospectus dated February 19, 2015 contained in our Registration Statement on Form S-3 filed with the SEC on February 19, 2015.
The discussion in the last sentence under “Federal Income Tax Considerations and Consequences of Your Investment-Other U.S. Federal Income Tax Withholding and Reporting Requirements” on page 61 is replaced with the following sentence: ‘‘Withholding under this legislation will apply after December 31, 2018 with respect to the gross proceeds of a disposition of property that can produce U.S. source interest or dividends and currently applies with respect to other withholdable payments.’’
The discussion under “Federal Income Tax Considerations and Consequences of Your Investment-Taxation of AvalonBay as a REIT-Ownership of Partnership Interests by a REIT” on page 47 is supplemented by inserting the paragraph below at the end of that subsection:
Under the Code, a partnership that is not treated as a corporation under the publicly traded partnership rules generally is not subject to U.S. federal income tax; instead, each partner is allocated its distributive share of the partnership’s items of income, gain, loss, deduction and credit and is required to take such items into account in determining the partner’s income. However, a recent law change enacted under the Bipartisan Budget Act of 2015, effective for taxable years beginning after December 31, 2017, requires the partnership to pay the hypothetical increase in partner-level taxes (including interest and penalties) resulting from an adjustment of partnership tax items on audit or in other tax proceedings, unless the partnership elects an alternative method under which the taxes resulting from the adjustment (and interest and penalties) are assessed at the partner level. Many uncertainties remain as to the application of these rules, including the application of the alternative method to partners that are REITs, and the impact they will have on us. However, it is possible, that partnerships in which we invest may be subject to U.S. federal income tax, interest and penalties in the event of a U.S. federal income tax audit as a result of these law changes.
Recent legislation modifies several of the REIT rules discussed in the prospectus. The “Protecting Americans from Tax Hikes Act of 2015” (the “Act”) was enacted on December 18, 2015 and contains several provisions pertaining to REIT qualification and taxation. Some of these implicate certain tax-related disclosure contained in the prospectus and are briefly summarized below:
For taxable years beginning after December 31, 2015, the Act expands the exclusion of certain hedging income from the REIT gross income tests to include income from hedges of previously acquired hedges that a REIT entered to manage risk associated with liabilities or property that have been extinguished or disposed.
For taxable years beginning before January 1, 2018, no more than 25% of the value of our assets may consist of stock or securities of one or more taxable REIT subsidiaries. For taxable years beginning after December 31, 2017, the Act reduces this limit to 20%. At this time, the securities we own in our taxable REIT subsidiaries do not, in the aggregate, exceed 20% of the total value of our assets.
For taxable years beginning after December 31, 2015, for purposes of the REIT asset tests, the Act provides that debt instruments issued by publicly offered REITs will constitute “real estate assets.” However, unless such a debt instrument is secured by a mortgage or otherwise would have qualified as a real estate asset under prior law, (i) interest income and gain from such a debt instrument is not qualifying income for purposes of the 75% gross income test and (ii) all such debt instruments may represent no more than 25% of the value of our total assets.
For taxable years beginning after December 31, 2015, certain obligations secured by a mortgage on both real property and personal property will be treated as a qualifying real estate asset and give rise to qualifying income for purposes of the 75% gross income test if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property.
A 100% excise tax is imposed on “redetermined TRS service income,” which is income of a taxable REIT subsidiary attributable to services provided to, or on behalf of its associated REIT and which would otherwise be increased on distribution, apportionment, or allocation under Section 482 of the Code.
For distributions made in taxable years beginning after December 31, 2014, the preferential dividend rules no longer to apply to us.
Additional exceptions to the rules under the Foreign Investment in Real Property Act (“FIRPTA”) were introduced for non-U.S. persons that constitute “qualified shareholders” (within the meaning of Section 897(k)(3) of the Code) or “qualified foreign pension funds” (within the meaning of Section 897(l)(2) of the Code).
After February 16, 2016, the FIRPTA withholding rate under Section 1445 of the Code for dispositions of U.S. real property interests is increased from 10% to 15%.
The Act increases from 5% to 10% the maximum stock ownership of the REIT that a non-U.S. shareholder may hold to avail itself of the FIRPTA exception for shares regularly traded on an established securities market.
For assets we acquired from a C corporation in a carry-over basis transaction, the Act, in conjunction with recently promulgated Treasury Regulations, reduces the recognition period during which we could be subject to corporate tax on any built-in gains recognized on the sale of such assets from 10 years to 5 years.
Forward-Looking Statements
This Form 10-K contains "forward-looking statements"“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"“believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “project,” “plan,” “may,” “shall,” “will” and other similar expressions in this Form 10-K, that predict or indicate future events and trends and that do not report historical matters. These statements include, among other things, statements regarding our intent, belief or expectations with respect to:
our potential development, redevelopment, acquisition or disposition of communities;
the timing and cost of completion of apartment communities under construction, reconstruction, development or redevelopment;
the timing of lease-up, occupancy and stabilization of apartment communities;
the pursuit of land on which we are considering future development;
the anticipated operating performance of our communities;
cost, yield, revenue, NOI and earnings estimates;
our declaration or payment of distributions;
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 Northern and Southern California 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; and
trends affecting our financial condition or results of operations.operations; and
the impact of legal proceedings relating to the Edgewater casualty loss and related matters, including liability to third parties resulting therefrom.
We cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect our current expectations of the approximate outcomes of the matters discussed. We do not undertake a duty to update these forward-looking statements, and therefore they may not represent our estimates and assumptions after the date of this report. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by these forward-looking statements. You should carefully review the discussion under Item 1A. "Risk Factors"“Risk Factors” in this report for further discussion of risks associated with forward-looking statements.
Some of the factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following:
our preliminary expectations and assumptions as of the date of this filing regarding insurance coverage, lender payoff and refinancing requirements and potential uninsured loss amounts resulting from the Edgewater fire, as well as the ultimate cost and timing of replacing the Edgewater building and achieving stabilized occupancy, are subject to change and could materially affect our current expectations regarding the impact of the fire on our financial condition and results of operations;
the expected proceeds from settlement of the Forward are subject to adjustment for changes in the Fed Funds rate and the amount of dividends we pay on our common stock, and our receipt of settlement proceeds assumes that we will settle the Forward by physical delivery;
we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals;
we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses;
construction costs of a community may exceed our original estimates;
we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in our expected rental revenues;
occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control;
financing may not be available on favorable terms or at all, and our cash flows from operations and access to cost effective capital may be insufficient for the development of our pipeline which could limit our pursuit of opportunities;
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 I, Fund II, the U.S. Fund, the AC JV or the REIT vehicles that are used with each of them; andrespective joint venture;
we may be unsuccessful in managing changes in our portfolio composition.composition; and
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.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or a different presentation of our financial statements. Below is a discussion of the accounting policies that we consider critical to an understanding of our financial condition and operating results that may require complex or significant judgment in their application or require estimates about matters which are inherently uncertain. A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 1, "Organization and“Organization, Basis of Presentation" and Significant Accounting Policies,” of our Consolidated Financial Statements.
Principles of Consolidation
We may enter into various joint venture agreements with unrelated third parties to hold or develop real estate assets. We must determine for each of these ventures whether to consolidate the entity or account for our investment under the equity or cost basis of accounting.
We determine whether to consolidate certain entities based on our rights and obligations under the joint venture agreements, applying the applicable accounting guidance. For investment interests that we do not consolidate, we evaluate the guidance to determine the accounting framework to apply. The application of the rules in evaluating the accounting treatment for each joint venture is complex and requires substantial management judgment. Therefore, we believe the decision to choose an appropriate accounting framework is a critical accounting estimate.
If we were to consolidate the joint ventures that we accounted for using the equity method, excluding joint venture entities the company formed with Equity Residential as part of the Archstone Acquisition,Residual JV, at December 31, 2014,2016, our assets would have increased by $1,391,602,000$827,020,000 and our liabilities would have increased by $1,005,012,000.$706,110,000. We would be required to consolidate those joint ventures currently not consolidated for financial reporting purposes if the facts and circumstances changed, including but not limited to the following reasons, none of which are currently expected to occur:
For entities not considered to be variable interest entities, the nature of the entity changed such that it would be considered a variable interest entity and we were considered the primary beneficiary.
For entities in which we do not hold a controlling voting and/or variable interest, the contractual arrangement changed resulting in our investment interest being either a controlling voting and/or variable interest.
We evaluate our accounting for investments on a regular basis including when a significant change in the design of an entity occurs.
Cost Capitalization
We capitalize costs during the development of assets. Capitalization begins when we determine that development of a future asset is probable and continues until the asset, or a portion of the asset, is delivered and is ready for its intended use. For redevelopment efforts, we capitalize costs either (i) in advance of taking apartment homes out of service when significant renovation of the common area has begun and continue until the redevelopment is completed, or (ii) when an apartment home is taken out of service for redevelopment and continue until the redevelopment is completed and the apartment home is available for a new resident. Rental income and operating expenses incurred during the initial lease-up or post-redevelopment lease-up period are fully recognized in earnings as they accrue. We defer external costs associated with originating new leases, recognizing the impact of these costs in earnings over the term of the leaselease.
During the development and redevelopment efforts we capitalize all direct costs and indirect costs which have been incurred as a result of the development and redevelopment activities. These costs include interest and related loan fees, property taxes as well as other direct and indirect costs. Interest is capitalized for any project-specific financing, as well as for general corporate financing to the extent of our aggregate investment in the projects. Indirect project costs, which include personnel and office and administrative costs that are clearly associated with our development and redevelopment efforts, are also capitalized. Capitalized indirect costs associated with our development and redevelopment activities are comprised primarily of compensation related costs for associates dedicated to our development and redevelopment efforts and total $45,201,000, $43,943,000 and $37,433,000 $38,128,000for 2016, 2015 and $26,513,000 for 2014, 2013 and 2012, respectively. The estimation of the direct and indirect costs to capitalize as part of our development and redevelopment activities requires judgment and, as such, we believe cost capitalization to be a critical accounting estimate.
There may be a change in our operating expenses in the event that there are changes in accounting guidance governing capitalization or changes to our levels of development or redevelopment activity. If changes in the accounting guidance limit our ability to capitalize costs or if we reduce our development and redevelopment activities without a corresponding decrease in indirect project costs, there may be an increase in our operating expenses. For example, if in 20142016 our development activities decreased by 10%, and there were no corresponding decrease in our indirect project costs, our costs charged to expense would have increased by $3,743,000.$4,520,000.
We capitalize pre-development costs incurred in pursuit of Development Rights. These costs include legal fees, design fees and related overhead costs. Future development of these pursuits is dependent upon various factors, including zoning and regulatory approval, rental market conditions, construction costs and availability of capital. Pre-development costs incurred for pursuits for which future development is not yet considered probable are expensed as incurred. In addition, if the status of a Development Right changes, making future development no longer probable, any capitalized pre-development costs are written off with a charge to expense.
Due to the subjectivity in determining whether a pursuit will result in the development of an apartment community, and therefore should be capitalized, the accounting for pursuit costs is a critical accounting estimate. If we had determined that 10% of our capitalized pursuit costs were associated with Development Rights that were no longer probable of occurring, net income for the year ended December 31, 20142016 would have decreased by $6,703,000.$4,018,000.
Abandoned Pursuit Costs & Asset Impairment
We evaluate our real estate and other long-lived assets for impairment when potential indicators of impairment exist. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we assess its recoverability by comparing the carrying amount of the property to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. We assess land held for development for impairment if our intent changes with respect to the development of the land. We evaluate our unconsolidated investments for impairment, considering both the carrying value of the investment, estimated to be the expected proceeds that it would receive if the entity were dissolved and the net assets were liquidated, as well as our proportionate share of any impairment of assets held by unconsolidated investments.
We expense costs related to abandoned pursuits, which include the abandonment of Development Rights and disposition pursuits. These costs can vary greatly, and the costs incurred in any given period may be significantly different in future years.
Our focus on value creation through real estate development presents an impairment risk in the event of a future deterioration of the real estate and/or capital markets or a decision by us to reduce or cease development. We cannot predict the occurrence of future events that may cause an impairment assessment to be performed, or the likelihood of any future impairment charges, if any. You should also review Item 1A. “Risk Factors” in this Form 10-K.
REIT Status
We are a Maryland corporation that has elected to be treated, for federal income tax purposes, as a REIT. We elected to be taxed as a REIT under the Internal Revenue Code for the year ended December 31, 1994 and have not revoked such election. A corporate REIT is a legal entity which holds real estate interests and must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. As a REIT, we generally will not be subject to corporate level federal income tax on taxable income if we distribute 100% of our taxable income to our stockholders over time periods allowed under the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to federal and state income taxes at regular corporate rates (subject to any applicable alternative minimum tax) and may not be able to elect to qualify as a REIT for four subsequent taxable years. For example, if we failed to qualify as a REIT in 2014,2016, our net income would have decreased by approximately $274,794,000.$415,669,000.
Our qualification as a REIT requires management to exercise significant judgment and consideration with respect to operational matters and accounting treatment. Therefore, we believe our REIT status is a critical accounting estimate.
Acquisition of Investments in Real Estate
We account
The adoption of ASU 2017-01, as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” of the Consolidated Financial Statements set forth in Item 8 of this report, has impacted our accounting framework for ourthe acquisition of investments in real estate. Prior to adoption of ASU 2017-01 on October 1, 2016, we accounted for acquisitions of investments in real estate in accordance with the authoritative guidance for the initial measurement, which requiresrequired the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree to be recognized at fair value. Typical assets and liabilities acquired include land, building,buildings, furniture, fixtures and equipment and identified intangible assets and liabilities, consisting of the value of above-belowabove or below market leases and in-place leases. In making estimates of fair values for purposes of allocating purchase price, we utilizeutilized various sources, including our own analysis of recently acquired and existing comparable properties in our portfolio and other market data.
Table Consideration for acquisitions is typically in the form of Contentscash unless otherwise disclosed. We expensed all costs incurred related to acquisitions of operating communities. Subsequent to adoption of ASU 2017-01, we assess each acquisition of an operating community to determine if it meets the definition of a business or if it qualifies as an asset acquisition. We expect that acquisitions of individual operating communities will generally be viewed as asset acquisitions, and result in the capitalization of acquisition costs, and the allocation of purchase price to the assets acquired and liabilities assumed based on the relative fair value of the respective assets and liabilities.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks from our financial instruments primarily from changes in market interest rates. We do not have exposure to any other significant market risk. We monitor interest rate risk as an integral part of our overall risk management, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on our results of operations. Our operating results are affected by changes in interest rates, primarily in short-term LIBOR and the SIFMA index as a result of borrowings under our Credit Facility and outstanding bonds and unsecured notes with variable interest rates. In addition, the fair value of our fixed rate unsecured and secured notes are impacted by changes in market interest rates. The effect of interest rate fluctuations on our results of operations historically has been small relative to other factors affecting operating results, such as rental rates and occupancy.
We currently use interest rate protection agreements (consisting of interest rate swap and interest rate cap agreements) for our risk management objectives, as well as for compliance with the requirements of certain lenders, and not for trading or speculative purposes. During 2015 and 2016, we entered into $1,200,000,000 of forward interest rate swap agreements to reduce the impact of variability in interest rates on a portion of our expected debt issuance activity in 2016 and 2017. In May 2016, we settled $400,000,000 of the aggregate outstanding swaps in conjunction with our May 2016 unsecured note issuance. In addition, we have interest rate caps that serve to effectively limit the amount of interest rate expense we would incur on a floating rate borrowing. Further discussion of the financial instruments impacted and our exposure is presented below.
As of December 31, 20142016 and 2013,2015, we had $1,297,461,000$1,208,262,000 and $1,011,609,000,$1,345,182,000, respectively, in variable rate debt outstanding, with no amounts outstanding under our Credit Facility. If interest rates on the variable rate debt had been 100 basis points higher throughout 20142016 and 2013,2015, our annual interest costs would have increased by approximately $13,035,000$12,901,000 and $9,680,000,$14,492,000, respectively, based on balances outstanding during the applicable years. In 2013, in conjunction with the Archstone Acquisition, we assumed approximately $2,034,482,000 secured fixed and floating rate indebtedness, which impacted the Company's overall exposure to interest rate risk. In May 2013, a $215,000,000 forward interest rate protection agreement matured, resulting in a payment to the counterparty of $51,000,000, the fair value at time of settlement.
Because the counterparties providing the interest rate cap and swap agreements are major financial institutions which have an A or better credit rating by the Standard & Poor's Ratings Group, and the current valuation of the position is a net liability for us, we do not believe there is exposure at this time to a default by a counterparty provider.
In addition, changes in interest rates affect the fair value of our fixed rate debt, computed using quoted market prices for our unsecured notes or a discounted cash flow model for our secured notes, considering our current market yields, which impacts the fair value of our aggregate indebtedness. Debt securities and notes payable (including amounts outstanding under our Credit Facility) with an aggregate carrying valueprincipal amount outstanding of $6,448,138,000$7,076,758,000 at December 31, 20142016 had an estimated aggregate fair value of $6,558,022,000$6,963,089,000 at December 31, 2014.2016. Contractual fixed rate debt represented $5,443,736,000$5,926,025,000 of the fair value at December 31, 2014.2016. If interest rates had been 100 basis points higher as of December 31, 2014,2016, the fair value of this fixed rate debt would have decreased by approximately $365,417,000.$334,076,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item 8 is included as a separate section of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
| |
(a) | Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. We continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. |
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(b) | Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20142016 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2014.2016. |
Our internal control over financial reporting as of December 31, 20142016 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein.
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(c) | Changes in Internal Control Over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the fourth quarter of the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. |
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 pertaining to directors and executive officers of the Company and the Company's Code of Conduct is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders scheduled to be held on May 21, 2015.18, 2017.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 pertaining to executive compensation is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders scheduled to be held on May 21, 2015.18, 2017.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 pertaining to security ownership of management and certain beneficial owners of the Company's common stock is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders scheduled to be held on May 21, 2015,18, 2017, to the extent not set forth below.
The Company maintains the 2009 Stock Option and Incentive Plan (the "2009 Plan"“2009 Plan”) and the 1996 Non-Qualified Employee Stock Purchase Plan (the "ESPP"“ESPP”), pursuant to which common stock or other equity awards may be issued or granted to eligible persons.
The following table gives information about equity awards under the 2009 Plan, the Company's prior 1994 Stock Option and Incentive Plan (the "1994 Plan"“1994 Plan”) under which awards were previously made, and the ESPP as of December 31, 2014:2016:
| | | (a) | | (b) | | (c) | (a) | | (b) | | (c) |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Equity compensation plans approved by security holders (1) | 1,204,107 |
| (2) | $ | 114.79 |
| (3) | 1,673,193 |
| 717,741 |
| (2) | $ | 119.03 |
| (3) | 878,622 |
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Equity compensation plans not approved by security holders (4) | — |
| | N/A |
| | 714,827 |
| — |
| | N/A |
| | 692,812 |
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Total | 1,204,107 |
| | $ | 114.79 |
| (3) | 2,388,020 |
| 717,741 |
| | $ | 119.03 |
| (3) | 1,571,434 |
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(1) | Consists of the 2009 Plan and the 1994 Plan. |
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(2) | Includes 93,74915,541 deferred units granted under the 2009 Plan and the 1994 Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis. Also includes the maximum number of shares that may be issued upon settlement of outstanding Performance Awards awarded to officers and maturing on December 31, 2014, 20152016, 2017 and 2016.2018. Does not include 190,240313,403 shares of restricted stock that are outstanding and that are already reflected in the Company's outstanding shares. |
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(3) | Excludes performance awards and deferred units granted under the 2009 Plan and the 1994 Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis. |
The ESPP, which was adopted by the Board of DirectorsDirectors on October 29, 1996, has not been approved by our shareholders. A further description of the ESPP appears in Note 10, "Stock-Based9, “Stock-Based Compensation Plans,"” of ourthe Consolidated Financial Statements includedset forth in Item 8 of this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 pertaining to certain relationships and related transactions is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders to be held on May 21, 2015.18, 2017.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 pertaining to the fees paid to and services provided by the Company's principal accountant is incorporated herein by reference to the Company's Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Form 10-K with respect to the Annual Meeting of Stockholders to be held on May 21, 2015.18, 2017.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE
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15(a)(1) Financial Statements | |
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Index to Financial Statements | |
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Consolidated Financial Statements and Financial Statement Schedule: | |
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15(a)(2) Financial Statement Schedule | |
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All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. | |
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15(a)(3) Exhibits | |
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ITEM 16. FORM 10-K SUMMARY
69
Not Applicable.
INDEX TO EXHIBITS
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Exhibit No. | | | | Description |
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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) 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 on May 22, 2013.) |
3(ii).1 | | — | | Amended and Restated Bylaws of the Company, as adopted by the Board of Directors on May 21, 2009.November 12, 2015. (Incorporated by reference to Exhibit 3(ii).13(i).3 to Form 10-Q10-K of the Company filed November 2, 2012.on February 26, 2016.) |
3(ii).2 | | — | | Amendment to Amended and Restated Bylaws of AvalonBay Communities, Inc., dated February 10, 2010. (Incorporated by reference to Exhibit 3(ii).2 to Form 10-Q of the Company, filed November 2, 2012.) |
3(ii).3 | | — | | Amendment to Amended and Restated Bylawsas adopted by the Board of AvalonBay Communities, Inc., dated September 19, 2012.Directors on February 16, 2017. (Incorporated by reference to Exhibit 3.2 to Form 8-K of the Company filed September 20, 2012.on 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 to Form 8-K of the Company filed on November 21, 2014.) |
4.7 | | — | | Dividend Reinvestment and Stock Purchase Plan of the Company. (Incorporated by reference to Exhibit 8.1 to 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 on 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.) |
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4.9 | | — | | Amendment to the Company's Dividend Reinvestment and Stock Purchase Plan filed on 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 on 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.) |
10.1 | | — | | Amended and Restated Limited Partnership Agreement of AvalonBay Value Added Fund, L.P., dated as of March 16, 2005. (Incorporated by reference to Exhibit 10.2 to Form 10-K of the Company filed February 23, 2011.) |
10.2 | | | | |
10.1 | | — | | Master Cross-Collateralization Agreement, dated as of April 24, 2009, between Deutsche Bank Berkshire Mortgage, Inc., parties identified on Exhibit A-Schedule 1 attached thereto, and Shady Grove Financing, LLC. (Incorporated by reference to Exhibit 10.2 to Form 10-Q of the Company filed August 10, 2009.) |
10.310.2 | | — | | Master Substitution Agreement, dated April 23, 2009, between Deutsche Bank Berkshire Mortgage, Inc., AvalonBay Traville, LLC and the entities identified on Schedule B attached thereto. (Incorporated by reference to Exhibit 10.3 to Form 10-Q of the Company filed August 10, 2009.) |
10.410.3 | | — | | Form of Multifamily Note, dated April 24, 2009. (Used in connection with the properties identified on Exhibit B to the Master Cross-Collateralization Agreement dated April 24, 2009.) (Incorporated by reference to Exhibit 10.4 to Form 10-Q of the Company filed August 10, 2009.) |
10.510.4 | | — | | Form of Guaranty, dated April 24, 2009. (Used in connection with the properties identified on Exhibit B to the Master Cross-Collateralization Agreement dated April 24, 2009.) (Incorporated by reference to Exhibit 10.5 to Form 10-Q of the Company filed August 10, 2009.) |
10.6+10.5+ | | — | | Endorsement Split Dollar Agreements and Amendments thereto with Messrs. Naughton Sargeant, and Horey. (Incorporated by reference to Exhibit 10.8 to Form 10-K of the Company filed February 23, 2011.) |
10.7+10.6+ | | — | | Form of Amendment to Endorsement Split Dollar Agreement with Messrs. Naughton Sargeant, and Horey. (Incorporated by reference to Exhibit 10.4 to Form 10-K of the Company filed March 2, 2009.) |
10.8+ | | — | | Employment Agreement between the Company and Timothy J. Naughton, dated as of December 16, 2011. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed December 21, 2011.) |
10.9+ | | — | | Employment Agreement between the Company and Leo S. Horey dated as of December 16, 2011. (Incorporated by reference to Exhibit 10.3 to Form 8-K of the Company filed December 21, 2011.) |
10.10+10.7+ | | — | | AvalonBay Communities, Inc. Amended and Restated 2009 Stock Option and Incentive Plan. (Incorporated by reference to Exhibit 10.199.1 to Form 8-K of the Company filed May 28, 2009.February 16, 2016.) |
10.11+ | | __ | | Amendment to the AvalonBay Communities, Inc. 2009 Stock Option and Incentive Plan approved by the Board of Directors on May 21, 2014 following a stockholder vote. (Filed herewith.) |
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10.12+10.8+ | | — | | Form of Incentive Stock Option Agreement (2009 Stock Option and Incentive Plan). (Incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-8 of the Company filed May 22, 2009.) |
10.13+10.9+ | | — | | Form of Non-Qualified Stock Option Agreement (2009 Stock Option and Incentive Plan). (Incorporated by reference to Exhibit 10.2 to Registration Statement on Form S-8 of the Company filed May 22, 2009.) |
10.14+10.10+ | | — | | Form of Stock Grant and Restricted Stock Agreement (2009 Stock Option and Incentive Plan). (Incorporated by reference to Exhibit 10.3 to Registration Statement on Form S-8 of the Company filed May 22, 2009.) |
10.15+10.11+ | | — | | Form of Stock Grant and Restricted Stock Agreement adopted February 11, 2016 (2009 Stock Option and Incentive Plan). (Incorporated by reference to Exhibit 99.3 to Form 8-K of the Company filed February 16, 2016.) |
10.12+ | | — | | Form of Director Restricted Stock Agreement (2009 Stock Option and Incentive Plan). (Incorporated by reference to Exhibit 10.4 to Registration Statement on Form S-8 of the Company filed May 22, 2009.) |
10.16+10.13+ | | — | | Form of Director Restricted Unit Agreement (2009 Stock Option and Incentive Plan). (Incorporated by reference to Exhibit 10.5 to Registration Statement on Form S-8 of the Company filed May 22, 2009.) |
10.17+10.14+ | | — | | 1996 Non-Qualified Employee Stock Purchase Plan, dated June 26, 1997, as amended and restated. (Incorporated by reference to Exhibit 99.1 to Post-effective Amendment No. 1 to Registration Statement on Form S-8 of the Company (File No. 333-16837), filed June 26, 1997.) |
10.18+ | | — | | 1996 Non-Qualified Employee Stock Purchase Plan—Plan Information Statement dated June 26, 1997. (Incorporated by reference to Exhibit 99.2 to Registration Statement on Form S-8 of the Company (File No. 333-16837), filed November 26, 1996.) |
10.19+ | | — | | Form of Indemnity Agreement between the Company and its Directors. (Filed herewith.(Incorporated by reference to Exhibit 10.19 to Form 10-K of the Company filed February 19, 2015.)
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10.20+10.15+ | | — | | The Company's Officer Severance Plan, as amended and restated on November 9, 2011.February 11, 2016. (Incorporated by reference to Exhibit 10.199.2 to Form 8-K of the Company filed November 15, 2011.February 16, 2016.) |
10.21+10.16+ | | — | | AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated in full on December 8, 2004. (Incorporated by reference to Exhibit 10.21 to Form 10-K of the Company filed March 2, 2009.) |
10.22+10.17+ | | — | | Amendment dated February 9, 2006, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Incorporated by reference to Exhibit 10.23 to Form 10-K of the Company filed February 22, 2013.) |
10.23+10.18+ | | — | | Amendment, dated December 6, 2006, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Incorporated by reference to Exhibit 10.24 to Form 10-K of the Company filed February 22, 2013.) |
10.24+ |
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10.19+ | | — | | Amendment, dated September 20, 2007, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Incorporated by reference to Exhibit 10.25 to Form 10-K of the Company filed February 22, 2013.) |
10.25+10.20+ | | — | | Form of AvalonBay Communities, Inc. Non-Qualified Stock Option Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Incorporated by reference to Exhibit 10.26 to Form 10-K of the Company filed February 22, 2013.) |
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10.26+10.21+ | | — | | Form of AvalonBay Communities, Inc. Incentive Stock Option Agreement (1994 Stock Incentive Plan, as Amended and Restated.)Restated). (Incorporated by reference to Exhibit 10.27 to Form 10-K of the Company filed February 22, 2013.) |
10.27+10.22+ | | — | | Form of AvalonBay Communities, Inc. Employee Stock Grant and Restricted Stock Agreement (1994 Stock Incentive Plan, as Amended and Restated.)Restated). (Incorporated by reference to Exhibit 10.33 to Form 10-K of the Company filed March 2, 2009.) |
10.28+10.23+ | | — | | Form of AvalonBay Communities, Inc. Director Restricted Unit Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Incorporated by reference to Exhibit 10.29 to Form 10-K of the Company filed February 22, 2013.) |
10.29+10.24+ | | — | | Form of AvalonBay Communities, Inc. Director Restricted Stock Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Incorporated by reference to Exhibit 10.30 to Form 10-K of the Company filed February 22, 2013.) |
10.3110.25 | | — | | ThirdFourth Amended and Restated Revolving Loan Agreement, dated as of September 29, 2011, withJanuary 14, 2016, among the Company, as Borrower, Bank of America, N.A., as administrative agent, swing lender,an issuing bank and a bank, JPMorgan Chase Bank, N.A., as an issuing bank, a bank and asa syndication agent, Deutsche Bank Trust Company Americas, Morgan Stanley Bank and Wells Fargo Bank, N.A., each as an issuing bank, a bank and as documentationa syndication agent, Barclays Bank PLC as a bankJ.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and as co-documentation agent, UBSWells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers, and a co-documentation agent, The Banksyndicate of New York Mellon, BBVA Compass Bank, PNC Bank, National Association, and Suntrust Bank, eachother financial institutions, serving as a bank and as a managing agent, Branch Banking and Trust Company, Bank of Tokyo Mitsubishi UFJ, Ltd., and Citizens Bank, each as a bank and as a co-agent, and the other bank parties signatory theretobanks. (Incorporated by reference to Exhibit 10.11.1 to Form 10-Q8-K/A of the Company filed November 7, 2011.on January 15, 2016.) |
10.32 | | — | | Amendment No. 1 to Third Amended and Restated Revolving Loan Agreement, dated as of December 20, 2012, among the Company, as Borrower, the banks signatory thereto, each as a Bank, and Bank of America, N.A., as Administrative Agent. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company, filed December 21, 2012.) |
10.33+10.26+ | | — | | Rules and Procedures for Non-Employee Directors' Deferred Compensation Program, as adopted on November 20, 2006, as amended on December 11, 2008, February 10, 2010 and November 10, 2010. (Incorporated by reference to Exhibit 10.49 to Form 10-K of the Company filed February 23, 2011.) |
10.34+10.27+ | | — | | Amended and Restated AvalonBay Communities, Inc. Deferred Compensation Plan, effective as of January 1, 2011. (Incorporated by reference to Exhibit 10.1 to Form 10-Q of the Company filed August 6, 2010.) |
10.3510.28+ | | — | | Asset Purchase Agreement, dated November 26, 2012, byFirst Amendment to Amended and amongRestated AvalonBay Communities, Inc., Equity Residential and its operating partnership, ERP Operating Partnership, LP, Lehman Brothers Holdings, Inc., and Archstone Enterprise LP. (Incorporated by reference to Exhibit 2.1 to Form 8-K Deferred Compensation Plan, effective as of the Company filed November 26, 2012.7, 2011. (Filed herewith.) |
10.36+10.29+ | | — | | Retirement Agreement between the CompanySecond Amendment to Amended and Thomas J. Sargeant datedRestated AvalonBay Communities, Inc. Deferred Compensation Plan, effective as of May 20, 2014.November 15, 2012. (Filed herewith.) |
10.37+10.30+ | | — | | Form of AvalonBay Communities, Inc. Award Terms of Performance-Based Restricted Stock Units. (Incorporated by reference to Exhibit 10.1 to Form 10-Q filed May 10, 2013.) |
10.3810.31+ | | — | | Shareholders Agreement, dated February 27, 2013, by and among the Company, Archstone Enterprise LP and Lehman Brothers HoldingsForm of AvalonBay Communities, Inc. Award Terms of Performance-Based Restricted Stock Units. (Incorporated by Referencereference to Exhibit 10.210.1 to Form 10-Q filed May 4, 2015.) |
10.32+ | | — | | Form of AvalonBay Communities, Inc. Award Terms of Performance-Based Restricted Stock Units, approved February 11, 2016. (Incorporated by reference to Exhibit 99.4 to Form 8-K of the Company filed March 5, 2013.February 16, 2016.) |
10.3910.33 | | — | | Archstone Residual JV, LLC Limited Liability Company Agreement. (Incorporated by reference to Exhibit 10.3 to Form 8-K of the Company filed March 5, 2013.) |
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10.4010.34 | | — | | Archstone Parallel Residual JV, LLC Limited Liability Company Agreement. (Incorporated by reference to Exhibit 10.4 to Form 8-K of the Company filed March 5, 2013.) |
10.41 |
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10.35 | | — | | Archstone Parallel Residual JV 2, LLC Limited Liability Company Agreement. (Incorporated by reference to Exhibit 10.5 to Form 8-K of the Company filed March 5, 2013.) |
10.4210.36 | | — | | Legacy Holdings JV, LLC Limited Liability Company Agreement. (Incorporated by reference to Exhibit 10.6 to Form 8-K of the Company filed March 5, 2013.) |
10.4310.37 | | — | | Master Credit Facility Agreement, dated February 27, 2013, by and among Federal National Mortgage Association and the parties named therein. (Incorporated by reference to Exhibit 10.7 to Form 8-K of the Company filed March 5, 2013.) |
10.4410.38 | | ---— | | Term Loan Agreement, dated March 31, 2014, among the Company, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent and a bank, PNC Bank, National Association, as Syndication Agent and a bank, and a syndicate of other financial institutions, serving as banks. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed April 2, 2014.) |
12.1 | | — | | Statements re: Computation of Ratios. (Filed herewith.) |
21.1 | | — | | Schedule of Subsidiaries of the Company. (Filed herewith.) |
23.1 | | — | | Consent of Ernst & Young LLP. (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 materials from AvalonBay Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014,2016, formatted in XBRL: (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of cash flows, (iv) consolidated changes in stockholders' equity, and (v) notes to consolidated financial statements. |
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+ | Management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(a)(3) of Form 10-K. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | AvalonBay Communities, Inc. |
Date: February 18, 201524, 2017 | | By: | | /s/ TIMOTHY J. NAUGHTON |
| | | | Timothy J. Naughton, Director, Chairman, Chief Executive Officer and President (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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Date: February 18, 201524, 2017 | | By: | | /s/ TIMOTHY J. NAUGHTON |
| | | | Timothy J. Naughton, Director, Chairman, Chief Executive Officer and President (Principal Executive Officer) |
Date: February 18, 201524, 2017 | | By: | | /s/ KEVIN P. O’SHEA |
| | | | Kevin P. O’Shea, Chief Financial Officer (Principal Financial Officer) |
Date: February 18, 201524, 2017 | | By: | | /s/ KERI A. SHEA |
| | | | Keri A. Shea, Senior Vice President—Finance & Treasurer (Principal Accounting Officer) |
Date: February 18, 201524, 2017 | | By: | | /s/ GLYN F. AEPPEL |
| | | | Glyn F. Aeppel, Director |
Date: February 18, 201524, 2017 | | By: | | /s/ TERRY S. BROWN |
| | | | Terry S. Brown, Director |
Date: February 18, 201524, 2017 | | By: | | /s/ ALAN B. BUCKELEW |
| | | | Alan B. Buckelew, Director |
Date: February 18, 2015 | | By: | | /s/ BRUCE A. CHOATE |
| | | | Bruce A. Choate, Director |
Date: February 18, 201524, 2017 | | By: | | /s/ RONALD L. HAVNER, JR. |
| | | | Ronald L. Havner, Jr., Director |
Date: February 18, 201524, 2017 | | By: | | /s/ JOHNRICHARD J. HEALY, JR.LIEB |
| | | | JohnRichard J. Healy, Jr.,Lieb, Director |
Date: February 18, 201524, 2017 | | By: | | /s/ LANCE R. PRIMIS |
| | | | Lance R. Primis, Director |
Date: February 18, 201524, 2017 | | By: | | /s/ PETER S. RUMMELL |
| | | | Peter S. Rummell, Director |
Date: February 18, 201524, 2017 | | By: | | /s/ H. JAY SARLES |
| | | | H. Jay Sarles, Director |
Date: February 18, 201524, 2017 | | By: | | /s/ SUSAN SWANEZY |
| | | | Susan Swanezy, Director |
Date: February 24, 2017 | | By: | | /s/ W. EDWARD WALTER |
| | | | W. Edward Walter, Director |
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of AvalonBay Communities, Inc.:
We have audited the accompanying consolidated balance sheets of AvalonBay Communities, Inc. as of December 31, 20142016 and 2013,2015, and the related consolidated statements of comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2014.2016. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AvalonBay Communities, Inc. at December 31, 20142016 and 2013,2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014,2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, the Company changed its method for reporting discontinued operations effective January 1, 2014.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AvalonBay Communities, Inc.’s internal control over financial reporting as of December 31, 2014,2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 19, 201524, 2017 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
McLean, Virginia
February 19, 201524, 2017
Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting
The Board of Directors and Stockholders of AvalonBay Communities, Inc.:
We have audited AvalonBay Communities, Inc.’s internal control over financial reporting as of December 31, 2014,2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). AvalonBay Communities, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, AvalonBay Communities, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014,2016, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of AvalonBay Communities, Inc. as of December 31, 20142016 and 2013,2015, and the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 20142016 of AvalonBay Communities, Inc. and our report dated February 19, 201524, 2017 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
McLean, Virginia
February 19, 201524, 2017
AVALONBAY COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
| | | 12/31/14 | | 12/31/13 | 12/31/16 | | 12/31/15 |
ASSETS | |
| | |
| |
| | |
|
Real estate: | |
| | |
| |
| | |
|
Land and improvements | $ | 3,465,650 |
| | $ | 3,251,780 |
| $ | 3,941,250 |
| | $ | 3,636,761 |
|
Buildings and improvements | 12,317,304 |
| | 11,007,775 |
| 14,314,981 |
| | 13,056,292 |
|
Furniture, fixtures and equipment | 404,103 |
| | 338,813 |
| 532,994 |
| | 458,224 |
|
| 16,187,057 |
| | 14,598,368 |
| 18,789,225 |
| | 17,151,277 |
|
Less accumulated depreciation | (2,891,254 | ) | | (2,455,790 | ) | (3,743,632 | ) | | (3,303,751 | ) |
Net operating real estate | 13,295,803 |
| | 12,142,578 |
| 15,045,593 |
| | 13,847,526 |
|
Construction in progress, including land | 1,417,246 |
| | 1,582,876 |
| 1,882,262 |
| | 1,592,917 |
|
Land held for development | 180,516 |
| | 300,364 |
| 84,293 |
| | 484,377 |
|
Operating real estate assets held for sale, net | 42,175 |
| | 258,391 |
| |
Real estate assets held for sale, net | | 20,846 |
| | 17,489 |
|
Total real estate, net | 14,935,740 |
| | 14,284,209 |
| 17,032,994 |
| | 15,942,309 |
|
| | | | | | |
Cash and cash equivalents | 509,460 |
| | 281,355 |
| 214,994 |
| | 400,507 |
|
Cash in escrow | 95,625 |
| | 98,564 |
| 114,983 |
| | 104,821 |
|
Resident security deposits | 29,617 |
| | 26,672 |
| 32,071 |
| | 30,077 |
|
Investments in unconsolidated real estate entities | 298,315 |
| | 367,866 |
| 175,116 |
| | 216,919 |
|
Deferred financing costs, net | 39,728 |
| | 40,460 |
| |
Deferred development costs | 67,029 |
| | 31,592 |
| 40,179 |
| | 37,577 |
|
Prepaid expenses and other assets | 201,209 |
| | 197,425 |
| 256,934 |
| | 199,095 |
|
Total assets | $ | 16,176,723 |
| | $ | 15,328,143 |
| $ | 17,867,271 |
| | $ | 16,931,305 |
|
| | | | | | |
LIABILITIES AND EQUITY | |
| | |
| |
| | |
|
Unsecured notes, net | $ | 2,993,265 |
| | $ | 2,594,709 |
| $ | 4,463,302 |
| | $ | 3,845,674 |
|
Variable rate unsecured credit facility | — |
| | — |
| — |
| | — |
|
Mortgage notes payable | 3,532,587 |
| | 3,539,642 |
| |
Mortgage notes payable, net | | 2,567,578 |
| | 2,611,274 |
|
Dividends payable | 153,207 |
| | 138,476 |
| 185,397 |
| | 171,257 |
|
Payables for construction | 101,946 |
| | 94,632 |
| 100,998 |
| | 98,802 |
|
Accrued expenses and other liabilities | 244,821 |
| | 240,337 |
| 274,676 |
| | 260,005 |
|
Accrued interest payable | 41,318 |
| | 42,854 |
| 38,307 |
| | 40,085 |
|
Resident security deposits | 49,502 |
| | 44,594 |
| 57,023 |
| | 53,132 |
|
Liabilities related to real estate assets held for sale | 907 |
| | 15,852 |
| 808 |
| | 553 |
|
Total liabilities | 7,117,553 |
| | 6,711,096 |
| 7,688,089 |
| | 7,080,782 |
|
| | | | | | |
Commitments and contingencies | |
|
| |
|
|
| | | | |
Redeemable noncontrolling interests | 12,765 |
| | 17,320 |
| 7,766 |
| | 9,997 |
|
| | | | | | |
Equity: | |
| | |
| |
| | |
|
Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at December 31, 2014 and 2013; zero shares issued and outstanding at December 31, 2014 and 2013 | — |
| | — |
| |
Common stock, $0.01 par value; 280,000,000 shares authorized at December 31, 2014 and 2013; 132,050,382 and 129,416,695 shares issued and outstanding at December 31, 2014 and 2013, respectively | 1,320 |
| | 1,294 |
| |
Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at December 31, 2016 and 2015; zero shares issued and outstanding at December 31, 2016 and 2015 | | — |
| | — |
|
Common stock, $0.01 par value; 280,000,000 shares authorized at December 31, 2016 and 2015; 137,330,904 and 137,002,031 shares issued and outstanding at December 31, 2016 and 2015, respectively | | 1,373 |
| | 1,370 |
|
Additional paid-in capital | 9,354,685 |
| | 8,988,723 |
| 10,105,654 |
| | 10,068,532 |
|
Accumulated earnings less dividends | (267,085 | ) | | (345,254 | ) | 94,899 |
| | (197,989 | ) |
Accumulated other comprehensive loss | (42,515 | ) | | (48,631 | ) | (30,510 | ) | | (31,387 | ) |
Total stockholders' equity | 9,046,405 |
| | 8,596,132 |
| |
Noncontrolling interest | — |
| | 3,595 |
| |
Total equity | 9,046,405 |
| | 8,599,727 |
| 10,171,416 |
| | 9,840,526 |
|
Total liabilities and equity | $ | 16,176,723 |
| | $ | 15,328,143 |
| $ | 17,867,271 |
| | $ | 16,931,305 |
|
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per share data)
| | | For the year ended | For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | 12/31/16 | | 12/31/15 | | 12/31/14 |
Revenue: | |
| | |
| | |
| |
| | |
| | |
|
Rental and other income | $ | 1,674,011 |
| | $ | 1,451,419 |
| | $ | 990,370 |
| $ | 2,039,656 |
| | $ | 1,846,081 |
| | $ | 1,674,011 |
|
Management, development and other fees | 11,050 |
| | 11,502 |
| | 10,257 |
| 5,599 |
| | 9,947 |
| | 11,050 |
|
Total revenue | 1,685,061 |
| | 1,462,921 |
| | 1,000,627 |
| 2,045,255 |
| | 1,856,028 |
| | 1,685,061 |
|
| | | | | | | | | | |
Expenses: | |
| | |
| | |
| |
| | |
| | |
|
Operating expenses, excluding property taxes | 410,672 |
| | 352,245 |
| | 259,350 |
| 478,437 |
| | 448,747 |
| | 410,672 |
|
Property taxes | 178,634 |
| | 158,774 |
| | 97,555 |
| 204,837 |
| | 193,499 |
| | 178,634 |
|
Interest expense, net | 180,618 |
| | 172,402 |
| | 136,920 |
| 187,510 |
| | 175,615 |
| | 180,618 |
|
Loss on extinguishment of debt, net | 412 |
| | 14,921 |
| | 1,179 |
| |
Loss on interest rate contract | — |
| | 51,000 |
| | — |
| |
Loss (gain) on extinguishment of debt, net | | 7,075 |
| | (26,736 | ) | | 412 |
|
Depreciation expense | 442,682 |
| | 560,215 |
| | 243,680 |
| 531,434 |
| | 477,923 |
| | 442,682 |
|
General and administrative expense | 41,425 |
| | 39,573 |
| | 34,101 |
| 45,771 |
| | 42,774 |
| | 41,425 |
|
Expensed acquisition, development and other pursuit costs, net of recoveries | (3,717 | ) | | 45,050 |
| | 11,350 |
| 9,922 |
| | 6,822 |
| | (3,717 | ) |
Casualty and impairment loss | — |
| | — |
| | 1,449 |
| |
Casualty and impairment (gain) loss, net | | (3,935 | ) | | (10,542 | ) | | — |
|
Total expenses | 1,250,726 |
| | 1,394,180 |
| | 785,584 |
| 1,461,051 |
| | 1,308,102 |
| | 1,250,726 |
|
| | | | | | | | | | |
Equity in income (loss) of unconsolidated entities | 148,766 |
| | (11,154 | ) | | 20,914 |
| |
Gain on sale of land | 490 |
| | 240 |
| | 280 |
| |
Income from continuing operations before equity in income of unconsolidated real estate entities, gain on sale of communities and other real estate, and taxes | | 584,204 |
| | 547,926 |
| | 434,335 |
|
| | | | | | |
Equity in income of unconsolidated real estate entities | | 64,962 |
| | 70,018 |
| | 148,766 |
|
Gain on sale of communities | 84,925 |
| | — |
| | — |
| 374,623 |
| | 115,625 |
| | 84,925 |
|
Gain on acquisition of unconsolidated entity | — |
| | — |
| | 14,194 |
| |
Gain on sale of other real estate | | 10,224 |
| | 9,647 |
| | 490 |
|
| | | | | | | | | | |
Income from continuing operations before taxes | 668,516 |
| | 57,827 |
| | 250,431 |
| 1,034,013 |
| | 743,216 |
| | 668,516 |
|
Income tax expense | 9,368 |
| | — |
| | — |
| 305 |
| | 1,483 |
| | 9,368 |
|
| | | | | | | | | | |
Income from continuing operations | 659,148 |
| | 57,827 |
| | 250,431 |
| 1,033,708 |
| | 741,733 |
| | 659,148 |
|
| | | | | | | | | | |
Discontinued operations: | |
| | |
| | |
| |
| | |
| | |
|
Income from discontinued operations | 310 |
| | 16,713 |
| | 26,820 |
| — |
| | — |
| | 310 |
|
Gain on sale of real estate assets | 37,869 |
| | 278,231 |
| | 146,311 |
| |
Gain on sale of discontinued operations | | — |
| | — |
| | 37,869 |
|
Total discontinued operations | 38,179 |
| | 294,944 |
| | 173,131 |
| — |
| | — |
| | 38,179 |
|
| | | | | | | | | | |
Net income | 697,327 |
| | 352,771 |
| | 423,562 |
| 1,033,708 |
| | 741,733 |
| | 697,327 |
|
Net (income) loss attributable to noncontrolling interests | (13,760 | ) | | 370 |
| | 307 |
| |
Net loss (income) attributable to noncontrolling interests | | 294 |
| | 305 |
| | (13,760 | ) |
| | | | | | | | | | |
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
| $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
|
| | | | | | | | | | |
Other comprehensive income: | |
| | |
| | |
| |
| | |
| | |
|
Unrealized loss on cash flow hedges | (121 | ) | | — |
| | (22,876 | ) | |
(Loss) income on cash flow hedges | | (5,556 | ) | | 5,354 |
| | (121 | ) |
Cash flow hedge losses reclassified to earnings | 6,237 |
| | 59,376 |
| | 1,889 |
| 6,433 |
| | 5,774 |
| | 6,237 |
|
Comprehensive income | $ | 689,683 |
| | $ | 412,517 |
| | $ | 402,882 |
| $ | 1,034,879 |
| | $ | 753,166 |
| | $ | 689,683 |
|
| | | | | | | | | | |
Earnings per common share—basic: | |
| | |
| | |
| |
| | |
| | |
|
Income from continuing operations attributable to common stockholders | $ | 4.93 |
| | $ | 0.46 |
| | $ | 2.57 |
| $ | 7.53 |
| | $ | 5.54 |
| | $ | 4.93 |
|
Discontinued operations attributable to common stockholders | 0.29 |
| | 2.32 |
| | 1.77 |
| — |
| | — |
| | 0.29 |
|
Net income attributable to common stockholders | $ | 5.22 |
| | $ | 2.78 |
| | $ | 4.34 |
| $ | 7.53 |
| | $ | 5.54 |
| | $ | 5.22 |
|
| | | | | | | | | | |
Earnings per common share—diluted: | |
| | |
| | |
| |
| | |
| | |
|
Income from continuing operations attributable to common stockholders | $ | 4.92 |
| | $ | 0.46 |
| | $ | 2.55 |
| $ | 7.52 |
| | $ | 5.51 |
| | $ | 4.92 |
|
Discontinued operations attributable to common stockholders | 0.29 |
| | 2.32 |
| | 1.77 |
| — |
| | — |
| | 0.29 |
|
Net income attributable to common stockholders | $ | 5.21 |
| | $ | 2.78 |
| | $ | 4.32 |
| $ | 7.52 |
| | $ | 5.51 |
| | $ | 5.21 |
|
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands)
| | | Shares issued | | | | | | Additional paid-in capital | | Accumulated earnings less dividends | | Accumulated other comprehensive loss | | Total AvalonBay stockholders' equity | | | | | Shares issued | | | | | | Additional paid-in capital | | Accumulated earnings less dividends | | Accumulated other comprehensive loss | | Total AvalonBay stockholders' equity | | | | |
| Preferred stock | | Common stock | | Preferred stock | | Common stock | | Noncontrolling interests | | Total equity | Preferred stock | | Common stock | | Preferred stock | | Common stock | | Noncontrolling interests | | Total equity |
Balance at December 31, 2011 | — |
| | 95,175,677 |
| | $ | — |
| | $ | 952 |
| | $ | 4,652,457 |
| | $ | (171,648 | ) | | $ | (87,020 | ) | | $ | 4,394,741 |
| | $ | 7,151 |
| | $ | 4,401,892 |
| |
Net income attributable to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | 423,869 |
| | — |
| | 423,869 |
| | — |
| | 423,869 |
| |
Unrealized loss on cash flow hedges | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (22,876 | ) | | (22,876 | ) | | — |
| | (22,876 | ) | |
Cash flow hedge losses reclassified to earnings | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,889 |
| | 1,889 |
| | — |
| | 1,889 |
| |
Change in redemption value of redeemable noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | (375 | ) | | — |
| | (375 | ) | | — |
| | (375 | ) | |
Noncontrolling interest consolidation and income allocation | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (3,573 | ) | | (3,573 | ) | |
Dividends declared to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | (391,906 | ) | | — |
| | (391,906 | ) | | — |
| | (391,906 | ) | |
Issuance of common stock, net of withholdings | — |
| | 19,227,795 |
| | — |
| | 192 |
| | 2,416,852 |
| | (2,269 | ) | | — |
| | 2,414,775 |
| | — |
| | 2,414,775 |
| |
Amortization of deferred compensation | — |
| | — |
| | — |
| | — |
| | 17,098 |
| | — |
| | — |
| | 17,098 |
| | — |
| | 17,098 |
| |
Balance at December 31, 2012 | — |
| | 114,403,472 |
| | — |
| | 1,144 |
| | 7,086,407 |
| | (142,329 | ) | | (108,007 | ) | | 6,837,215 |
| | 3,578 |
| | 6,840,793 |
| |
Net income attributable to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | 353,141 |
| | — |
| | 353,141 |
| | — |
| | 353,141 |
| |
Cash flow hedge losses reclassified to earnings | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 59,376 |
| | 59,376 |
| | — |
| | 59,376 |
| |
Change in redemption value of redeemable noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | (1,246 | ) | | — |
| | (1,246 | ) | | — |
| | (1,246 | ) | |
Noncontrolling interest consolidation and income allocation | — |
| | — |
| | — |
| | — |
| | 1,515 |
| | — |
| | — |
| | 1,515 |
| | 17 |
| | 1,532 |
| |
Dividends declared to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | (553,829 | ) | | — |
| | (553,829 | ) | | — |
| | (553,829 | ) | |
Issuance of common stock, net of withholdings | — |
| | 15,013,223 |
| | — |
| | 150 |
| | 1,873,792 |
| | (991 | ) | | — |
| | 1,872,951 |
| | — |
| | 1,872,951 |
| |
Amortization of deferred compensation | — |
| | — |
| | — |
| | — |
| | 27,009 |
| | — |
| | — |
| | 27,009 |
| | — |
| | 27,009 |
| |
Balance at December 31, 2013 | — |
| | 129,416,695 |
| | — |
| | 1,294 |
| | 8,988,723 |
| | (345,254 | ) | | (48,631 | ) | | 8,596,132 |
| | 3,595 |
| | 8,599,727 |
| — |
| | 129,416,695 |
| | $ | — |
| | $ | 1,294 |
| | $ | 8,988,723 |
| | $ | (345,254 | ) | | $ | (48,631 | ) | | $ | 8,596,132 |
| | $ | 3,595 |
| | $ | 8,599,727 |
|
Net income attributable to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | 683,567 |
| | — |
| | 683,567 |
| | — |
| | 683,567 |
| — |
| | — |
| | — |
| | — |
| | — |
| | 683,567 |
| | — |
| | 683,567 |
| | — |
| | 683,567 |
|
Unrealized loss on cash flow hedges | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (121 | ) | | (121 | ) | | — |
| | (121 | ) | |
Loss on cash flow hedges | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (121 | ) | | (121 | ) | | — |
| | (121 | ) |
Cash flow hedge losses reclassified to earnings | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 6,237 |
| | 6,237 |
| | — |
| | 6,237 |
| — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 6,237 |
| | 6,237 |
| | — |
| | 6,237 |
|
Change in redemption value of noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | 3,709 |
| | — |
| | 3,709 |
| | — |
| | 3,709 |
| — |
| | — |
| | — |
| | — |
| | — |
| | 3,709 |
| | — |
| | 3,709 |
| | — |
| | 3,709 |
|
Noncontrolling interests income allocation | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 14,221 |
| | 14,221 |
| — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 14,221 |
| | 14,221 |
|
Noncontrolling interests derecognition | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (17,816 | ) | | (17,816 | ) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (17,816 | ) | | (17,816 | ) |
Dividends declared to common stockholders | — |
| | — |
| | — |
| | — |
| | — |
| | (608,709 | ) | | — |
| | (608,709 | ) | | — |
| | (608,709 | ) | — |
| | — |
| | — |
| | — |
| | — |
| | (608,709 | ) | | — |
| | (608,709 | ) | | — |
| | (608,709 | ) |
Issuance of common stock, net of withholdings | — |
| | 2,633,687 |
| | — |
| | 26 |
| | 339,186 |
| | (398 | ) | | — |
| | 338,814 |
| | — |
| | 338,814 |
| — |
| | 2,633,687 |
| | — |
| | 26 |
| | 339,186 |
| | (398 | ) | | — |
| | 338,814 |
| | — |
| | 338,814 |
|
Amortization of deferred compensation | — |
| | — |
| | — |
| | — |
| | 26,776 |
| | — |
| | — |
| | 26,776 |
| | — |
| | 26,776 |
| — |
| | — |
| | — |
| | — |
| | 26,776 |
| | — |
| | — |
| | 26,776 |
| | — |
| | 26,776 |
|
Balance at December 31, 2014 | — |
| | 132,050,382 |
| | $ | — |
| | $ | 1,320 |
| | $ | 9,354,685 |
| | $ | (267,085 | ) | | $ | (42,515 | ) | | $ | 9,046,405 |
| | $ | — |
| | $ | 9,046,405 |
| — |
| | 132,050,382 |
| | — |
| | 1,320 |
| | 9,354,685 |
| | (267,085 | ) | | (42,515 | ) | | 9,046,405 |
| | — |
| | 9,046,405 |
|
Net income attributable to common stockholders | | — |
| | — |
| | — |
| | — |
| | — |
| | 742,038 |
| | — |
| | 742,038 |
| | — |
| | 742,038 |
|
Income on cash flow hedges | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 5,354 |
| | 5,354 |
| | — |
| | 5,354 |
|
Cash flow hedge losses reclassified to earnings | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 5,774 |
| | 5,774 |
| | — |
| | 5,774 |
|
Change in redemption value and acquisition of noncontrolling interest | | — |
| | — |
| | — |
| | — |
| | (1,088 | ) | | 2,053 |
| | — |
| | 965 |
| | — |
| | 965 |
|
Dividends declared to common stockholders | | — |
| | — |
| | — |
| | — |
| | — |
| | (673,670 | ) | | — |
| | (673,670 | ) | | — |
| | (673,670 | ) |
Issuance of common stock, net of withholdings | | — |
| | 4,951,649 |
| | — |
| | 50 |
| | 688,677 |
| | (1,325 | ) | | — |
| | 687,402 |
| | — |
| | 687,402 |
|
Amortization of deferred compensation | | — |
| | — |
| | — |
| | — |
| | 26,258 |
| | — |
| | — |
| | 26,258 |
| | — |
| | 26,258 |
|
Balance at December 31, 2015 | | — |
| | 137,002,031 |
| | — |
| | 1,370 |
| | 10,068,532 |
| | (197,989 | ) | | (31,387 | ) | | 9,840,526 |
| | — |
| | 9,840,526 |
|
Net income attributable to common stockholders | | — |
| | — |
| | — |
| | — |
| | — |
| | 1,034,002 |
| | — |
| | 1,034,002 |
| | — |
| | 1,034,002 |
|
Loss on cash flow hedges | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (5,556 | ) | | (5,556 | ) | | — |
| | (5,556 | ) |
Cash flow hedge losses reclassified to earnings | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 6,433 |
| | 6,433 |
| | — |
| | 6,433 |
|
Change in redemption value and acquisition of noncontrolling interest | | — |
| | — |
| | — |
| | — |
| | — |
| | 1,489 |
| | — |
| | 1,489 |
| | — |
| | 1,489 |
|
Dividends declared to common stockholders | | — |
| | — |
| | — |
| | — |
| | — |
| | (741,313 | ) | | — |
| | (741,313 | ) | | — |
| | (741,313 | ) |
Issuance of common stock, net of withholdings | | — |
| | 328,873 |
| | — |
| | 3 |
| | 11,982 |
| | (1,290 | ) | | — |
| | 10,695 |
| | — |
| | 10,695 |
|
Amortization of deferred compensation | | — |
| | — |
| | — |
| | — |
| | 25,140 |
| | — |
| | — |
| | 25,140 |
| | — |
| | 25,140 |
|
Balance at December 31, 2016 | | — |
| | 137,330,904 |
| | $ | — |
| | $ | 1,373 |
| | $ | 10,105,654 |
| | $ | 94,899 |
| | $ | (30,510 | ) | | $ | 10,171,416 |
| | $ | — |
| | $ | 10,171,416 |
|
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| | | For the year ended | For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | 12/31/16 | | 12/31/15 | | 12/31/14 |
Cash flows from operating activities: | |
| | |
| | |
| |
| | |
| | |
|
Net income | $ | 697,327 |
| | $ | 352,771 |
| | $ | 423,562 |
| $ | 1,033,708 |
| | $ | 741,733 |
| | $ | 697,327 |
|
Adjustments to reconcile net income to cash provided by operating activities: | |
| | |
| | |
| |
| | |
| | |
|
Depreciation expense | 442,682 |
| | 560,215 |
| | 243,680 |
| 531,434 |
| | 477,923 |
| | 442,682 |
|
Depreciation expense from discontinued operations | — |
| | 13,500 |
| | 16,414 |
| |
Amortization of deferred financing costs | 6,383 |
| | 6,803 |
| | 6,427 |
| 7,661 |
| | 6,871 |
| | 6,383 |
|
Amortization of debt (premium) discount | (34,961 | ) | | (29,750 | ) | | — |
| |
Amortization of debt premium | | (18,866 | ) | | (24,261 | ) | | (34,961 | ) |
Loss (gain) on extinguishment of debt, net | | 7,075 |
| | (26,736 | ) | | 412 |
|
Amortization of stock-based compensation | 13,927 |
| | 15,160 |
| | 8,707 |
| 15,082 |
| | 15,321 |
| | 13,927 |
|
Equity in loss (income) of, and return on, unconsolidated entities and noncontrolling interests, net of eliminations | 4,906 |
| | 33,125 |
| | (12,103 | ) | |
Equity in and return on, unconsolidated real estate entities and noncontrolling interests, net of eliminations | | 8,870 |
| | 12,225 |
| | 4,906 |
|
Casualty and impairment (gain) loss, net | | (3,935 | ) | | (17,303 | ) | | — |
|
Abandonment of development pursuits | | 1,743 |
| | — |
| | 1,455 |
|
Cash flow hedge losses reclassified to earnings | 6,237 |
| | 59,376 |
| | 1,889 |
| 6,433 |
| | 5,774 |
| | 6,237 |
|
Casualty loss and impairment of real estate assets | — |
| | — |
| | 1,449 |
| |
Abandonment of development pursuits | 1,455 |
| | — |
| | — |
| |
Loss on extinguishment of debt, net | 412 |
| | 14,921 |
| | 1,781 |
| |
Gain on sale of real estate assets | (255,300 | ) | | (278,471 | ) | | (146,591 | ) | (442,916 | ) | | (158,852 | ) | | (255,300 | ) |
Gain on acquisition of unconsolidated entity | — |
| | — |
| | (14,194 | ) | |
Decrease (increase) in cash in operating escrows | 55 |
| | (28,960 | ) | | 6,543 |
| |
(Increase) decrease in cash in operating escrows | | (8,226 | ) | | (11,837 | ) | | 55 |
|
(Increase) decrease in resident security deposits, prepaid expenses and other assets | (3,441 | ) | | (5,372 | ) | | 7,992 |
| (5,403 | ) | | 12,783 |
| | (3,441 | ) |
Decrease (increase) in accrued expenses, other liabilities and accrued interest payable | 6,959 |
| | 10,997 |
| | (4,737 | ) | |
Increase in accrued expenses, other liabilities and accrued interest payable | | 10,824 |
| | 23,113 |
| | 6,959 |
|
Net cash provided by operating activities | 886,641 |
| | 724,315 |
| | 540,819 |
| 1,143,484 |
| | 1,056,754 |
| | 886,641 |
|
| | | | | | | | | | |
Cash flows from investing activities: | |
| | |
| | |
| |
| | |
| | |
|
Development/redevelopment of real estate assets including land acquisitions and deferred development costs | (1,241,832 | ) | | (1,285,715 | ) | | (755,363 | ) | (1,201,026 | ) | | (1,569,326 | ) | | (1,241,832 | ) |
Acquisition of real estate assets, including partnership interest | (47,000 | ) | | (839,469 | ) | | (155,755 | ) | (393,316 | ) | | — |
| | (47,000 | ) |
Capital expenditures—existing real estate assets | (46,902 | ) | | (24,415 | ) | | (23,452 | ) | |
Capital expenditures—non-real estate assets | (5,923 | ) | | (2,200 | ) | | (3,076 | ) | |
Proceeds from sale of communities, net of selling costs | 297,466 |
| | 919,682 |
| | 274,018 |
| |
Mortgage note receivable repayment | 21,748 |
| | — |
| | — |
| |
Increase in payables for construction | 7,400 |
| | 34,779 |
| | 16,832 |
| |
Decrease in cash in construction escrows | — |
| | — |
| | 16,824 |
| |
Capital expenditures - existing real estate assets | | (66,971 | ) | | (48,170 | ) | | (46,902 | ) |
Capital expenditures - non-real estate assets | | (5,881 | ) | | (7,695 | ) | | (5,923 | ) |
Proceeds from sale of real estate, net of selling costs | | 532,717 |
| | 282,163 |
| | 297,466 |
|
Increase in cash in deposit escrows | | (5,000 | ) | | — |
| | — |
|
Insurance proceeds for property damage claims | | 17,196 |
| | 44,142 |
| | — |
|
Mortgage note receivable lending | | (19,115 | ) | | — |
| | — |
|
Mortgage note receivable payment | | — |
| | — |
| | 21,748 |
|
Increase (decrease) in payables for construction | | 2,196 |
| | (3,230 | ) | | 7,400 |
|
Distributions from unconsolidated real estate entities | 203,945 |
| | 42,955 |
| | 26,700 |
| 111,598 |
| | 109,181 |
| | 203,945 |
|
Investments in unconsolidated real estate entities | (5,662 | ) | | (26,791 | ) | | (20,114 | ) | (9,750 | ) | | (6,582 | ) | | (5,662 | ) |
Net cash used in investing activities | (816,760 | ) | | (1,181,174 | ) | | (623,386 | ) | (1,037,352 | ) | | (1,199,517 | ) | | (816,760 | ) |
| | | | | | | | | | |
Cash flows from financing activities: | | | |
| | |
| | | |
| | |
|
Issuance of common stock | 346,134 |
| | 4,703 |
| | 2,430,190 |
| |
Issuance of common stock, net | | 15,526 |
| | 690,184 |
| | 346,134 |
|
Dividends paid | (593,643 | ) | | (526,050 | ) | | (365,572 | ) | (726,749 | ) | | (655,248 | ) | | (593,643 | ) |
Issuance of mortgage notes payable | 53,000 |
| | 84,928 |
| | — |
| — |
| | — |
| | 53,000 |
|
Repayments of mortgage notes payable, including prepayment penalties | (32,859 | ) | | (2,110,347 | ) | | (110,013 | ) | (165,012 | ) | | (850,963 | ) | | (32,859 | ) |
Issuance of unsecured notes | 550,000 |
| | 750,000 |
| | 700,000 |
| 1,122,488 |
| | 873,088 |
| | 550,000 |
|
Settlement of interest rate contract | — |
| | (51,000 | ) | | (54,930 | ) | |
Repayment of unsecured notes | (150,000 | ) | | (100,000 | ) | | (381,001 | ) | |
Payment of deferred financing costs and issuance discounts | (7,820 | ) | | (10,100 | ) | | (15,664 | ) | |
Redemption of units for cash by minority partners | — |
| | (1,965 | ) | | — |
| |
Acquisition of joint venture partner equity interest | — |
| | — |
| | (3,350 | ) | |
Repayment of unsecured notes, including prepayment penalties | | (504,403 | ) | | — |
| | (150,000 | ) |
Payment of deferred financing costs | | (16,240 | ) | | (7,343 | ) | | (7,820 | ) |
Redemption of noncontrolling interest and units for cash by minority partners | | — |
| | (1,088 | ) | | — |
|
Payment for termination of forward interest rate swaps | | (14,847 | ) | | — |
| | — |
|
Distributions to DownREIT partnership unitholders | (26 | ) | | (32 | ) | | (29 | ) | (41 | ) | | (38 | ) | | (26 | ) |
Distributions to joint venture and profit-sharing partners | (262 | ) | | (317 | ) | | (299 | ) | (407 | ) | | (372 | ) | | (262 | ) |
Redemption of preferred interest obligation | (6,300 | ) | | (35,224 | ) | | — |
| |
Net cash provided by (used in) financing activities | 158,224 |
| | (1,995,404 | ) | | 2,199,332 |
| |
Preferred interest obligation redemption and dividends | | (1,960 | ) | | (14,410 | ) | | (6,300 | ) |
Net cash (used in) provided by financing activities | | (291,645 | ) | | 33,810 |
| | 158,224 |
|
| | | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | 228,105 |
| | (2,452,263 | ) | | 2,116,765 |
| |
Net (decrease) increase in cash and cash equivalents | | (185,513 | ) | | (108,953 | ) | | 228,105 |
|
| | | | | | | | | | |
Cash and cash equivalents, beginning of year | 281,355 |
| | 2,733,618 |
| | 616,853 |
| 400,507 |
| | 509,460 |
| | 281,355 |
|
Cash and cash equivalents, end of year | $ | 509,460 |
| | $ | 281,355 |
| | $ | 2,733,618 |
| $ | 214,994 |
| | $ | 400,507 |
| | $ | 509,460 |
|
| | | | | | |
Cash paid during the year for interest, net of amount capitalized | $ | 191,966 |
| | $ | 179,325 |
| | $ | 119,268 |
| $ | 194,059 |
| | $ | 188,782 |
| | $ | 191,966 |
|
See accompanying notes to Consolidated Financial Statements.
Supplemental disclosures of non-cash investing and financing activities:
During the year ended December 31, 2016:
As described in Note 4, “Equity,” 197,018 shares of common stock were issued 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 81,400 shares valued at $13,217,000 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; 2,396 shares valued at $424,000 were issued through the Company’s dividend reinvestment plan; 53,453 shares valued at $8,356,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 4,262 restricted shares with an aggregate value of $694,000 previously issued in connection with employee compensation were canceled upon forfeiture.
Common stock dividends declared but not paid totaled $185,397,000.
The Company recorded a decrease of $1,489,000 in redeemable noncontrolling interest with a corresponding increase to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units. For further discussion of the nature and valuation of these items, see Note 11, “Fair Value.”
The Company recorded an increase in prepaid expenses and other assets and a corresponding gain to other comprehensive income of $12,085,000, and reclassified $6,433,000 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.
The Company completed the construction of and sold an affordable restricted apartment building, containing 77 apartment homes, which is adjacent to one of the Company's Development Communities. The Company received a mortgage note in the amount of $18,643,000 as consideration for the sale, which is secured by the underlying real estate. See Note 6, “Real Estate Disposition Activities,” for further discussion.
During the year ended December 31, 2015:
The Company issued 157,779 shares of common stock as part of the Company's stock based compensation plans, of which 95,826 shares related to the conversion of performance awards to restricted shares, and the remaining 61,953 shares valued at $10,720,000 were issued in connection with new stock grants; 46,589 shares valued at $3,552,000 were issued in conjunction with the conversion of deferred stock awards; 2,142 shares valued at $372,000 were issued through the Company’s dividend reinvestment plan; 45,090 shares valued at $5,979,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 1,529 restricted shares with an aggregate value of $726,000 previously issued in connection with employee compensation were canceled upon forfeiture.
Common stock dividends declared but not paid totaled $171,257,000.
The Company recorded a decrease of $2,053,000 in redeemable noncontrolling interest with a corresponding increase to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.
The Company recorded an increase in prepaid expenses and other assets and a corresponding gain to other comprehensive income of $5,354,000, and reclassified $5,774,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company’s derivative and hedge accounting activity.
The Company recognized a charge of $26,039,000 to write off the net book value of the fixed assets destroyed by the fire that occurred in 2015 at Avalon at Edgewater (“Edgewater”) and winter storm damage.
The Company recognized a capital lease associated with a parking garage adjacent to a Development Community, recording a capital lease obligation of $3,299,000 in accrued expenses and other liabilities, with a corresponding asset to buildings and improvements.
During the year ended December 31, 2014:
As described in Note 4, “Equity,”
The Company issued 115,163 shares of common stock were issued as part of the Company's stock based compensation plan, of which 16,209 shares related to the conversion of restricted stock unitsperformance awards to restricted shares, and the remaining 98,954 shares valued at $12,799,000 were issued in connection with new stock grants; 2,434 shares valued at $335,000 were issued through the Company’s dividend reinvestment plan; 55,523 shares valued at $4,746,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 7,970 restricted shares as well as restricted stock units with an aggregate value of $2,938,000 previously issued in connection with employee compensation were canceled upon forfeiture.
Common stock dividends declared but not paid totaled $153,207,000.
The Company recorded a decrease of $3,709,000 in redeemable noncontrolling interest with a corresponding increase to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units. For further discussion of the nature and valuation of these items, see Note 12, “Fair Value.”
The Company recorded a decrease in prepaid expenses and other assets and a corresponding loss to other comprehensive income of $121,000 and reclassified $6,237,000 of deferred cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company’s derivative and hedge accounting activity.
The Company derecognized $17,816,000 in noncontrolling interest in conjunction with the deconsolidation of aan AvalonBay Value Added Fund, IL.P. (“Fund I”) subsidiary.
During the year ended December 31, 2013:
The Company issued 14,889,706 shares of common stock valued at $1,875,210,000 as partial consideration for the Archstone Acquisition (as defined in this Form 10-K); 123,977 shares of common stock valued at $16,019,000 were issued in connection with stock grants; 2,002 shares valued at $269,000 were issued through the Company's dividend reinvestment plan; 48,310 shares valued at $6,127,000 were withheld to satisfy employees' tax withholding and other liabilities; and 7,653 shares and certain options valued at $1,105,000 previously issued in connection with employee compensation were cancelled upon forfeiture. In addition, the Company granted 215,230 options for common stock at a value of $5,768,000.
The Company reclassified $5,892,000 of deferred cash flow hedge losses from other comprehensive income to interest expense, net, and $53,484,000 to loss on interest rate contract, to record the impact of the Company's derivative and hedge accounting activity.
Common stock dividends declared but not paid totaled $138,476,000.
The Company recorded $13,262,000 in redeemable noncontrolling interests associated with consolidated joint ventures acquired as part of the Archstone Acquisition. The Company also recorded an increase of $1,246,000 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 assumed secured indebtedness with a principal amount of $3,512,202,000 in conjunction with the Archstone Acquisition. The Company also assumed an obligation related to outstanding preferred interests of approximately $67,500,000, included in accrued expenses and other liabilities.
During the year ended December 31, 2012:
The Company issued 96,592 shares of common stock valued at $12,883,000 in connection with stock grants, 2,331 shares valued at $321,000 were issued through the Company's dividend reinvestment plan, 121,351 shares valued at $15,543,000 were withheld to satisfy employees' tax withholding and other liabilities and 7,558 shares and options valued at $393,000 previously issued in connection with employee compensation were cancelled upon forfeiture. In addition, the Company granted 115,303 options for common stock at a value of $3,357,000.
The Company recorded an increase to other liabilities and a corresponding loss to other comprehensive income of $22,876,000; reclassified $1,889,000 of deferred cash flow hedge losses from other comprehensive income to interest expense, net and recorded a decrease to prepaid expenses and other assets of $11,000, with a corresponding offset to the basis of unsecured notes, net to record the impact of the Company's hedge accounting activity.
Common stock dividends declared but not paid totaled $110,966,000.
The Company recorded an increase of $375,000 in redeemable noncontrolling interests with a corresponding decrease to accumulated earnings less dividends to adjust the redemption value associated with the put option held by a joint venture partner and DownREIT partnership units.
The Company assumed a 4.61% fixed rate mortgage loan with an outstanding balance of $11,958,000 in conjunction with the acquisition of The Mark Pasadena.
See accompanying notes to Consolidated Financial Statements.
AVALONBAY COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and Significant Accounting Policies
Organization and Basis of Presentation
Organization
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 (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.
At December 31, 2014,2016, the Company owned or held a direct or indirect ownership interest in 251258 operating apartment communities containing 73,96374,538 apartment homes in 1110 states and the District of Columbia, of which eightfour communities containing 2,9381,671 apartment homes were under reconstruction.redevelopment. In addition, the Company owned or held a direct or indirect ownership interest in 2627 communities under constructiondevelopment that are expected to contain an aggregate of 8,5249,129 apartment homes when completed. The Company also owned or held a direct or indirect ownership interest in land or rights to land in which the Company expects to develop an additional 3725 communities that, if developed as expected, will contain an estimated 10,3848,487 apartment homes.homes (unaudited).
Capitalized terms used without definition have meanings provided elsewhere in this Form 10-K.
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, certain joint venture partnerships, subsidiary partnerships structured as DownREITs and any variable interest entities that qualifiedqualify for consolidation. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company accounts for joint venture entities and subsidiary partnerships that are not variable interest entities in accordance with the guidance applicable to limited partnerships or similar entities.consolidation guidance. The Company evaluates the partnership of each joint venture entity and determines first whether control overto follow the partnership lies withvariable interest entity (“VIE”) or the general partner or, whenvoting interest entity (“VOE”) model. Once the limited partners have certain rights, withappropriate consolidation model is identified, the limited partners. TheCompany then evaluates whether it should consolidate the venture. Under the VIE model, the Company consolidates an investment when both (i)it has control to direct the activities of the venture and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the VOE model, the Company consolidates an investment when 1) it controls the investment through ownership of a majority voting interest if the investment is not a limited partnership or 2) it controls the general partner and (ii) the limited partner interests do not overcome the Company's presumption of control by having either substantive participating rights, theinvestment through its ability to remove the Company asother partners in the general partner orinvestment, at its discretion, when the ability to dissolve theinvestment is a limited partnership.
The Company generally uses the equity method of accounting for its investment in joint ventures, under all other potential scenarios, including where (i) the Company holds a general partner interest but the presumption of control by the Company is overcome by the limited partner interests as described in the preceding paragraph or (ii) the Company holds a noncontrolling limited partner interest in a joint venture. Any investment in excess of the Company's cost basis at acquisition or formation of an equity method venture, will be recorded as a component of the Company's investment in the joint venture and recognized over the life of the underlying fixed assets of the venture as a reduction to its equity in income from the venture. Investments in which the Company has little or no influence are accounted for using the cost method.
Revenue and Gain Recognition
Rental income related to leases is recognized on an accrual basis when due from residents as required by the accounting guidance applicable to leases, which provides guidance on classification and recognition. In accordance with the Company's standard lease terms, rental payments are generally due on a monthly basis. Any cash concessions given at the inception of the lease are amortized over the approximate life of the lease, which is generally one year. The Company records a charge to income for outstanding receivables greater than 90 days past due as a component of operating expenses, excluding property taxes on the accompanying Consolidated Statements of Comprehensive Income.
The Company accounts for the sale of real estate assets and any related gain recognition in accordance with the accounting guidance applicable to sales of real estate, which establishes standards for recognition of profit on all real estate sales transactions, other than retail land sales. The Company recognizes the sale, and associated gain or loss from the disposition, provided that the earnings process is complete and the Company isdoes not obligated to performhave significant activities after the sale.continuing involvement.
Real Estate
Operating real estate assets are stated at cost and consist of land and improvements, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Significant expenditures which improve or extend the life of an existing asset and that will benefit the Company for periods greater than a year, are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.
Improvements and upgrades are generally capitalized only if the item exceeds $15,000, extends the useful life of the asset and is not related to making an apartment home ready for the next resident. Purchases of personal property, such as computers and furniture, are generally capitalized only if the item is a new addition and exceeds $2,500. The Company generally expenses purchases of personal property made for replacement purposes.
Project costs related to the development, construction and redevelopment of real estate projects (including interest and related loan fees, property taxes and other direct costs) are capitalized as a cost of the project. Indirect project costs that relate to several projects are capitalized and allocated to the projects to which they relate. Indirect costs not clearly related to development, construction and redevelopment activity are expensed as incurred. For development, capitalization (i) begins when the Company has determined that development of the future asset is probable, (ii) can be suspended if there is no current development activity underway, but future development is still probable and (iii) ends when the asset, or a portion of an asset, is delivered and is ready for its intended use, or the Company's intended use changes such that capitalization is no longer appropriate.
For land parcels improved with operating real estate, for which the Company intends to pursue development, the Company generally manages the current improvements until such time as all tenant obligations have been satisfied or eliminated through negotiation, and construction of new apartment communities is ready to begin. Revenue from incidental operations received from the current improvements on land parcels in excess of any incremental costs are recorded as a reduction of total capitalized costs of the respective Development Right and not as part of net income.
For redevelopment efforts, the Company capitalizes costs either (i) in advance of taking homes out of service when significant renovation of the common area has begun until the redevelopment is completed, or (ii) when an apartment home is taken out of service for redevelopment until the redevelopment is completed and the apartment home is available for a new resident. Rental income and operating costs incurred during the initial lease-up or post-redevelopment lease-up period are recognized in earnings as incurred. The Company defers external costs associated with originating new leases, recognizing the impact of these costs in earnings over the term of the lease.
The Company acquired as a Development Right one land parcel partially improved with office buildings, industrial space and other commercial and residential ventures occupied by unrelated third parties. Asadoption of December 31, 2014,ASU 2017-01 is expected to impact the Company is actively pursuing developmentCompany's accounting framework for the acquisition of this parcel. For the land parcel for which the Company intendsoperating communities. Prior to pursue development, the Company will manage the current improvements until such time as all tenant obligations have been satisfied or eliminated through negotiation, and constructionadoption of new apartment communities is ready to begin. Revenue from incidental operations received from the current improvementsASU 2017-01 on these land parcels in excess of any incremental costs are being recorded as a reduction of total capitalized costs of the Development Right and not as part of net income.
In connection withOctober 1, 2016, the acquisition of an operating community was viewed as an acquisition of a business, and the Company identifiesidentified and recordsrecorded each asset acquired and liability assumed in such transaction at its estimated fair value at the date of acquisition. The purchase price allocationsallocation to tangible assets, such as land and improvements, buildings and improvements, and furniture, fixtures and equipment, and the in-place lease intangible assets, arewas reflected in real estate assets and depreciated over their estimated useful lives. Any purchase price allocation to intangible assets, other than in-place lease intangibles, iswas included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets and amortized over the term of the acquired intangible asset. The Company expensesexpensed all costs incurred related to acquisitions of operating communities. The Company valuesvalued land based on a market approach, looking to recent sales of similar properties, adjusting for differences due to location, the state of entitlement as well as the shape and size of the parcel. Improvements to land arewere valued using a replacement cost approach and consider the structures and amenities included for the communities. The approach appliesapplied industry standard replacement costs adjusted for geographic specific considerations and reduced by estimated depreciation. The value for furniture, fixtures and equipment iswas also determined based on a replacement cost approach, considering costs for both items in the apartment homes as well as common areas and iswas adjusted for estimated depreciation. The fair value of buildings acquired iswas estimated using the replacement cost approach, assuming the buildings were vacant at acquisition. The replacement cost approach considersconsidered the composition of structures acquired, adjusted for an estimate of depreciation. The estimate of depreciation iswas made considering industry standard information, and depreciation curves for the identified asset classes.classes and estimated useful life of the acquired property. The value of the acquired lease-related intangibles considersconsidered the estimated cost of leasing the apartment homes as if the acquired building(s) were vacant, as well as the value of the current leases relative to market-rate leases. The in-place lease value iswas determined using an average total lease-up time, the number of apartment homes and net revenues generated during the lease-up time. The lease-up period for an apartment community iswas assumed to be 12 months to achieve stabilized occupancy. Net revenues useused market rent considering actual leasing and industry rental rate data. The value of current leases relative to a market-rate lease iswas based on market rents obtained for market comparables, and considered a market derived discount rate. Given the significance of unobservable inputs used in the value of real estate assets acquired, it classifiesthe Company classified them as Level 3 prices in the fair value hierarchy. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed.
Subsequent to adoption of ASU 2017-01, the Company assesses each acquisition of an operating community to determine if it meets the definition of a business or if it qualifies as an asset acquisition. The Company expects that acquisitions of individual operating communities will generally be viewed as asset acquisitions, and result in the capitalization of acquisition costs, and the allocation of purchase price to the assets acquired and liabilities assumed, based on the relative fair value of the respective assets and liabilities.
Depreciation is calculated on buildings and improvements using the straight-line method over their estimated useful lives, which range from seven to 30 years. Furniture, fixtures and equipment are generally depreciated using the straight-line method over their estimated useful lives, which range from three years (primarily computer-related equipment) to seven years.
Income Taxes
As of December 31, 20142016 and 2013,2015, the Company did not have any unrecognized tax benefits. The Company does not believe that there will be any material changes in its unrecognized tax positions over the next 12 months. The Company is subject to examination by the respective taxing authorities for the tax years 20112013 through 2013.2015.
The Company elected to be taxed as a REIT under the Code for its tax year ended December 31, 1994 and has not revoked such election. A corporate REIT is a legal entity which holds real estate interests and can deduct from its federally taxable income
qualifying dividends it pays if it meets a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. Therefore, as a REIT the Company generally will not be subject to corporate level federal income tax on taxable income if it distributes 100% of its taxable income over the time period allowed under the Code to its stockholders. The states in which the Company operates have similar tax provisions which recognize the Company as a REIT for state income tax purposes. Management believes that all such conditions for the avoidance ofexemption from income taxes on ordinary income have been or will be met for the periods presented. Accordingly, no provision for federal and state income taxes has been made. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. The Company did not incur any charges or receive refunds of excise taxes related to the years ended December 31, 2014, 20132016, 2015 and 2012.2014. In addition, taxable income from non-REIT activities performed through taxable REIT subsidiaries ("TRS"(“TRS”) is subject to federal, state and local income taxes. The Company incurred income tax expense of $305,000, $1,483,000 and $9,368,000 in 2016, 2015 and 2014, respectively, associated primarily with disposition activities transacted through a TRS. See Note 6, "Investments in Real Estate Entities" and Note 7, "Real Estate Disposition Activities," for further discussion. No taxes were incurred during 2013 or 2012.
The following reconciles net income attributable to common stockholders to taxable net income for the years ended December 31, 2016, 2015 and 2014 2013 and 2012 (dollars(unaudited, dollars in thousands):
| | | 2014 Estimate | | 2013 Actual | | 2012 Actual | 2016 Estimate | | 2015 Actual | | 2014 Actual |
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
| $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
|
GAAP gain on sale of communities (in excess of) less than tax gain | 17,688 |
| | 29,388 |
| | 37,525 |
| (204,767 | ) | | (20,900 | ) | | 22,127 |
|
Depreciation/amortization timing differences on real estate | 42,195 |
| | 180,293 |
| | 9,572 |
| (10,183 | ) | | (24,657 | ) | | (10,735 | ) |
Deductible acquisition costs | (7,681 | ) | | (26,427 | ) | | — |
| |
Amortization of debt/mark to market interest | (38,202 | ) | | (31,965 | ) | | — |
| (19,763 | ) | | (64,676 | ) | | (38,202 | ) |
Tax compensation expense less than (in excess of) GAAP | (6,789 | ) | | 12,886 |
| | (26,314 | ) | 5,592 |
| | (1,244 | ) | | (5,252 | ) |
Casualty and impairment loss | — |
| | — |
| | 1,449 |
| |
Casualty and impairment (gain) loss, net | | (3,935 | ) | | (10,542 | ) | | — |
|
Other adjustments | (39,726 | ) | | 1,018 |
| | (9,034 | ) | (10 | ) | | (12,829 | ) | | 14,323 |
|
Taxable net income | $ | 651,052 |
| | $ | 518,334 |
| | $ | 437,067 |
| $ | 800,936 |
| | $ | 607,190 |
| | $ | 665,828 |
|
The following summarizes the tax components of the Company's common dividends declared for the years ended December 31, 2016, 2015 and 2014 2013 and 2012:(unaudited):
| | | 2014 | | 2013 | | 2012 | 2016 | | 2015 | | 2014 |
Ordinary income | 62 | % | | 42 | % | | 47 | % | 68 | % | | 83 | % | | 62 | % |
20% capital gain (15% for 2012) | 29 | % | | 40 | % | | 33 | % | |
20% capital gain | | 26 | % | | 12 | % | | 29 | % |
Unrecaptured §1250 gain | 9 | % | | 18 | % | | 20 | % | 6 | % | | 5 | % | | 9 | % |
Deferred Financing Costs
Deferred financing costs include fees and other expenditures necessary to obtain debt financing and are amortized on a straight-line basis, which approximates the effective interest method, over the shorter of the term of the loan or the related credit enhancement facility, if applicable. Unamortized financing costs are charged to earnings when debt is retired before the maturity date. Accumulated amortization of deferred financing costs related to unsecured notes was $24,444,000$14,008,000 and $11,995,000 as of December 31, 20142016 and $19,719,0002015, respectively, and related to mortgage notes payable was $10,562,000 and $12,315,000 as of December 31, 2013.2016 and 2015, respectively. Deferred financing costs, except for costs associated with line-of-credit arrangements, are presented as a direct deduction from the related debt liability. Accumulated amortization of deferred financing costs related to the Company's Credit Facility was $6,490,000 and $4,967,000 as of December 31, 2016 and 2015, respectively, and was included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.
Cash, Cash Equivalents and Cash in Escrow
Cash and cash equivalents include 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. The majority of the Company's cash, cash equivalents and cash in escrow are held at major commercial banks.
Comprehensive Income
Comprehensive income, as reflected on the Consolidated Statements of Comprehensive Income, is defined as all changes in equity during each period except for those resulting from investments by or distributions to shareholders. Accumulated other comprehensive loss, as reflected on the Consolidated Statements of Equity, reflects the effective portion of the cumulative changes in the fair value of derivatives in qualifying cash flow hedge relationships.
Earnings per Common Share
Basic earnings per 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"(“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):
| | | For the year ended | For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | 12/31/16 | | 12/31/15 | | 12/31/14 |
Basic and diluted shares outstanding | |
| | |
| | |
| |
| | |
| | |
|
Weighted average common shares—basic | 130,586,718 |
| | 126,855,754 |
| | 97,416,401 |
| 136,928,251 |
| | 133,565,711 |
| | 130,586,718 |
|
Weighted average DownREIT units outstanding | 7,500 |
| | 7,500 |
| | 7,500 |
| 7,500 |
| | 7,500 |
| | 7,500 |
|
Effect of dilutive securities | 643,284 |
| | 402,649 |
| | 601,251 |
| 525,886 |
| | 1,019,966 |
| | 643,284 |
|
Weighted average common shares—diluted | 131,237,502 |
| | 127,265,903 |
| | 98,025,152 |
| 137,461,637 |
| | 134,593,177 |
| | 131,237,502 |
|
| | | | | | | | | | |
Calculation of Earnings per Share—basic | |
| | |
| | |
| |
| | |
| | |
|
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
| $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
|
Net income allocated to unvested restricted shares | (1,523 | ) | | (563 | ) | | (1,264 | ) | (2,610 | ) | | (1,774 | ) | | (1,523 | ) |
Net income attributable to common stockholders, adjusted | $ | 682,044 |
| | $ | 352,578 |
| | $ | 422,605 |
| $ | 1,031,392 |
| | $ | 740,264 |
| | $ | 682,044 |
|
| | | | | | | | | | |
Weighted average common shares—basic | 130,586,718 |
| | 126,855,754 |
| | 97,416,401 |
| 136,928,251 |
| | 133,565,711 |
| | 130,586,718 |
|
| | | | | | | | | | |
Earnings per common share—basic | $ | 5.22 |
| | $ | 2.78 |
| | $ | 4.34 |
| $ | 7.53 |
| | $ | 5.54 |
| | $ | 5.22 |
|
| | | | | | | | | | |
Calculation of Earnings per Share—diluted | |
| | |
| | |
| |
| | |
| | |
|
Net income attributable to common stockholders | $ | 683,567 |
| | $ | 353,141 |
| | $ | 423,869 |
| $ | 1,034,002 |
| | $ | 742,038 |
| | $ | 683,567 |
|
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations | 35 |
| | 32 |
| | 28 |
| 41 |
| | 38 |
| | 35 |
|
Adjusted net income attributable to common stockholders | $ | 683,602 |
| | $ | 353,173 |
| | $ | 423,897 |
| $ | 1,034,043 |
| | $ | 742,076 |
| | $ | 683,602 |
|
| | | | | | | | | | |
Weighted average common shares—diluted | 131,237,502 |
| | 127,265,903 |
| | 98,025,152 |
| 137,461,637 |
| | 134,593,177 |
| | 131,237,502 |
|
| | | | | | | | | | |
Earnings per common share—diluted | $ | 5.21 |
| | $ | 2.78 |
| | $ | 4.32 |
| $ | 7.52 |
| | $ | 5.51 |
| | $ | 5.21 |
|
| | | | | | | | | | |
Dividends per common share | $ | 4.64 |
| | $ | 4.28 |
| | $ | 3.88 |
| $ | 5.40 |
| | $ | 5.00 |
| | $ | 4.64 |
|
Certain options to purchase shares of common stock in the amount of 605,899 and 396,346 were outstanding as of December 31, 2013 and 2012, respectively, but were not included in the computation of diluted earnings per share because such options were anti-dilutive for the period.
All options to purchase shares of common stock outstanding as of December 31, 2016, 2015 and 2014 are included in the computation of diluted earnings per share.
The Company is required to estimate the forfeiture of stock options and recognize compensation cost net of the estimated forfeitures. The estimated forfeitures included in compensation cost are adjusted to reflect actual forfeitures at the end of the vesting period. The forfeiture rate at December 31, 20142016 was 1.4%0.8% and is based on the average forfeiture activity over a period equal to the estimated life of the stock options. The application of estimated forfeitures did not materially impact compensation expense for the years ended December 31, 2014, 20132016, 2015 and 2012.2014. As discussed under "Recently Issued and Adopted Accounting Standards," the Company will adopt the provision of ASU 2016-09 and recognize forfeitures as they occur beginning in 2017.
Abandoned Pursuit Costs and 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 may not be recoverable, the Company
assesses its recoverability by comparing the carrying amount of the property to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Company recognizes an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. Based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2014, 2013 and 2012, the Company did not recognize any impairment losses for wholly-owned operating real estate assets.
The Company capitalizes pre-development costs incurred in pursuit of new development opportunities for which the Company currently believes future development is probable ("(“Development Rights"Rights”). 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 incurred for pursuits for which future development is not yet considered probable are expensed as incurred. In addition, if the status of a Development Right changes, making future development by the Company no longer probable, any capitalized pre-development costs are written off with a charge to expense.expensed. The Company expensed costs related to the abandonment of Development Rights, as well as costs incurred in pursuing the acquisition of assets or costs incurred pursuing the disposition of assets for which such acquisition and disposition activity did not occur, in the amounts of $3,964,000, $998,000$4,183,000, $3,016,000 and $1,757,000$3,964,000 during the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively. These costs are included in expensed acquisition, development and other pursuit costs, net of recoveries on the accompanying Consolidated Statements of Comprehensive Income. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.
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 asset may not be recoverable, the Company assesses its recoverability by comparing the carrying amount of the property or long-lived asset to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Company recognizes an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property or long-lived asset. Based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2016, 2015 and 2014, the Company did not recognize any impairment losses for wholly-owned operating real estate assets, and did not record any impairment losses other than those related to the impairment on land held for investment and casualty gains and losses from property damage in 2016 and 2015 discussed below.
The Company assesses its portfolio of land held for both development and investment for impairment if the intent of the Company changes with respect to either the development of, or the expected holdholding period for, the land. During the year ended December 31, 2016, the Company recognized $10,500,000 of aggregate impairment charges related to three ancillary land parcels for which the Company has either sold or intends to sell. These charges were determined as the excess of the Company's carrying basis over the expected sales price for each parcel, and is included in casualty and impairment (gain) loss, net on the accompanying Consolidated Statements of Comprehensive Income. The Company did not recognize any material impairment charges foron its investment in land holdings in 2014, 2013 or 2012.during the years ended December 31, 2015 and 2014.
The Company also 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 by any of the Company's investments in unconsolidated real estate entities during the years ended December 31, 2014, 20132016, 2015 or 2012.2014.
Casualty Gains and Losses
In January 2015, a fire occurred at the Company's Avalon at Edgewater apartment community located in Edgewater, NJ. Edgewater consisted of two residential buildings. One building, containing 240 apartment homes, was destroyed. The second building, containing 168 apartment homes, suffered minimal damage and has been repaired. See Note 7, “Commitments and Contingencies,” for discussion of the related legal matters.
During the year ended December 31, 20122016, the Company incurred damages relatedreached a final insurance settlement for the Company's property damage and lost income for the Edgewater casualty loss, for which it received aggregate insurance proceeds for Edgewater of $73,150,000, after self-insurance and deductibles, as discussed below.
During the year ended December 31, 2015, the Company received $44,142,000 in insurance proceeds, which were partially offset by casualty charges of $21,844,000 to Superstorm Sandywrite off the net book value of the building destroyed by the fire at certainEdgewater, and $6,760,000 to record demolition and additional incident expenses, resulting in a net casualty gain of its communities$15,538,000. During the year ended December 31, 2016, the Company received the final $29,008,000 of insurance proceeds, of which $8,702,000 was recognized as an additional net casualty gain and $20,306,000 as business interruption insurance proceeds. The Company reported the net casualty gains from each of the respective years as casualty and impairment (gain) loss, net on the East Coast,accompanying Consolidated Statements of Comprehensive Income, and recognizedreported the business interruption insurance proceeds as a chargecomponent of $1,449,000 for the casualty loss associated with this damagerental and other income on the accompanying Consolidated Statements of Comprehensive Income.
During the year ended December 31, 2015, several of the Company's communities in its Northeast markets incurred property and casualty damages from severe winter storms, for which the Company recorded an impairment due to a casualty loss of $4,195,000. During the year ended December 31, 2016, the Company recorded a net casualty gain related to the 2015 severe winter storms of $5,732,000, which is comprised of $8,493,000 in third-party insurance proceeds received, partially offset by incremental costs of $2,761,000. These amounts are included in casualty and impairment (gain) loss, net on the accompanying Consolidated Statements of Comprehensive Income.
The Company did not incur a casualty loss in 2014 or 2013. 2014.
A casualty loss may also result in lost operating income from one or more communities that is covered by the Company’s business interruption insurance policies. The Company recognizes income for amounts received under its business interruption insurance policies as a component of rental and other income in the Consolidated Statements of Comprehensive Income. Revenue is recognized upon resolution of all contingencies related to the receipt, typically upon written confirmation by the insurer or receipt of the actual proceeds. The Company recognized $2,494,000$20,564,000, of which $20,306,000 was related to the Edgewater casualty loss, $1,509,000 and $299,000$2,494,000 in income related business interruption insurance proceeds for the years ended December 31, 2016, 2015 and 2014, and 2013, respectively. There were no business interruption insurance proceeds received in 2012.
See Note 14, "Subsequent Events," for discussion of the fire at Avalon at Edgewater.
Assets Held for Sale and Discontinued Operations
The Company presents the assets and liabilities of any communities which have been sold, or otherwise qualify as held for sale, separately in the Consolidated Balance Sheets. In addition, the results of operations for those assets that meet the definition of discontinued operations are presented as such in the Company'saccompanying Consolidated Statements of Comprehensive Income. Held for sale and discontinued operations classifications are provided in both the current and prior periods presented. Real estate assets held for sale are measured at the lower of the carrying amount or the fair value less the cost to sell. Both the real estate assets and corresponding liabilities are presented separately in the accompanying Consolidated Balance Sheets. Subsequent toUpon the classification of an asset as held for sale, no further depreciation is recorded. ForSubsequent to the adoption of ASU 2014-08 on January 1, 2014, as discussed under "Recently Issued and Adopted Accounting Standards," disposals representing a strategic shift in operations (e.g., a disposal of a major geographic area, a major line of business or a major equity method investment) will be presented as discontinued operations, and for those assets qualifying for classification as discontinued operations, the specific components of net income presented as discontinued operations include net operating income, depreciation expense and interest expense, net. For periods prior to the asset qualifying for discontinued operations, the Company reclassifies the results of operations to discontinued operations. In addition, the net gain or loss (including any impairment loss) on the eventual disposal of assets held for sale will be presented as discontinued operations when recognized. A change in presentation for held for sale or discontinued operations will not have any impact on the Company's financial condition or results of operations. The Company combines the operating, investing and financing portions of cash flows attributable to discontinued operations with the respective cash flows from continuing operations on the accompanying Consolidated Statements of Cash Flows. The Company hadone operating communityhad two ancillary land parcels that qualified foras held for sale presentation at December 31, 2014.2016.
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests are comprised of potential future obligations of the Company, which allow the investors holding the noncontrolling interest to require the Company to purchase their interest. The Company classifies obligations under the redeemable noncontrolling interests at fair value, with a corresponding offset for changes in the fair value recorded in accumulated earnings less dividends. Reductions in fair value are recorded only to the extent that the Company has previously recorded increases in fair value above the redeemable noncontrolling interest's initial basis. The redeemable noncontrolling interests are presented outside of permanent equity as settlement in shares of the Company's common stock, shares, where permitted, may not be within the Company's control. The nature and valuation of the Company's redeemable noncontrolling interests are discussed further in Note 12, "Fair11, “Fair Value."”
Derivative Instruments and Hedging Activities
The Company enters into interest rate swap and interest rate cap agreements (collectively, "Hedging Derivatives"“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 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 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 of Hedging Derivatives that are in a liability position are included in accrued expenses and other liabilities. Other thanThe Company does not present or disclose the $51,000,000 lossfair value of Hedging Derivatives on interest rate contract recorded during 2013, faira 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 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 the Hedging Derivatives in other comprehensive income.income (loss). Amounts recorded in 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 as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding debt being hedged. See Note 12, "Fair11, “Fair Value,"” for further discussion of derivative financial instruments.
Noncontrolling Interests
Noncontrolling interests represent our joint venture partners' claims on consolidated investments where the Company owns less than a 100% interest. The Company records these interests at their initial fair value, adjusting the basis prospectively for the joint venture partners' share of the respective consolidated investments' results of operations and applicable changes in ownership.
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' notes to financial statements to conform to current year presentations as a result of discontinued operations and changes in held for sale classification as described in Note 7, “Real Estate Disposition Activities.”and disposition activity.
Recently Issued and Adopted Accounting Standards
In January 2017, the FASB issued ASU 2017-01-Business Combinations (Topic 805): Clarifying the Definition of a Business, which changes the definition of a business to assist in determining when a set of transferred assets is a business. The guidance states that if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the transaction is an asset acquisition and not a business combination. If the fair value of the gross assets acquired is not concentrated into a single asset or group of similar assets, the acquired assets are viewed as a business combination only if they include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. The guidance will be effective in the first quarter of 2018 and allows for early adoption of transactions that have not been reported in financial statements that have been issued or made available for issuance. The Company adopted the guidance as of October 1, 2016 and did not acquire any businesses during the fourth quarter of 2016. The adoption of the standard did not have a material effect on the Company’s financial position or results of operations.
In November 2016, the FASB issued ASU 2016-18-Statement of Cash Flows (Topic 230): Restricted Cash, which requires statements of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard requires a retrospective approach. The guidance will be effective in the first quarter of 2018 and allows for early adoption. The Company is assessing whether the new standard will have a material effect on its financial position or results of operations.
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 will adopt the new standard effective January 1, 2017, and does not anticipate that the new standard will have a material effect on its financial position or results of operations.
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 will elect to account for forfeitures when they occur instead of estimating the forfeitures. The Company will adopt this guidance effective January 1, 2017, using the modified retrospective approach. The Company does not anticipate that the new standard to have a material effect on its financial position or results of operations.
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, or entered into after, the date of initial application, with an option to use certain transition relief.
ASU 2016-02 provides for transition relief, which includes not electing to (i) reassess whether any expired or existing contract is a lease or contains a lease, (ii) reassess the lease classification of any expired or existing leases and (iii) expense any capitalized initial direct costs for any existing leases. The Company anticipates adoption of the standard to have a material impact on its financial position and results of operations resulting from the recognition of the right to use asset and corresponding lease obligation for its long-term ground leases, currently accounted for as operating leases. The Company will continue to assess the impact of the new standard.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to assess an entity’s ability to continue as a going concern. The standard was effective in the fourth quarter of 2016 for the Company. The standard did not have a material effect on the Company’s financial position or results of operations.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers and in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers-Deferral of the Effective Date, which defers the effective date of the new revenue recognition standard until the first quarter of 2018. Subsequently, the FASB has issued multiple ASUs clarifying ASU 2014-09 and ASU 2015-14.
Under the new standard, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue is generally recognized net of allowances and any taxes collected from customers and subsequently remitted to governmental authorities. The majority of the Company’s revenue is derived from rental income, which is scoped out from this standard and will be accounted for under ASU 2016-02, Leases, discussed above. The Company's other revenue streams, which are being evaluated under this ASU, include but are not limited to management fees, other income from residents determined not to be within the scope of ASU 2016-02 and gains and losses from real estate dispositions. The Company will continue to assess the impact of the new standard and anticipates adoption as of January 1, 2018 using the modified retrospective approach.
In April 2014, the Financial Accounting Standards BoardFASB issued Accounting Standards Update ("FASB") (ASU)ASU 2014-08, guidance updating the accounting and reporting for discontinued operations. Under the recently issued guidance,operations, under which only disposals representing a strategic shift in operations (e.g., a disposal of a major geographic area, a major line of business or a major equity method investment) will be presented as discontinued operations. Additionally, the finalThe standard also requires expanded disclosures about dispositions that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations, as well as disposals of a significant part of an entity that does not qualify for discontinued operations reporting. The final standard iswas effective in the first quarter of 2015 and allows for early adoption. Thethe Company adopted the guidance as of January 1, 2014, as discussed in Note 7, “Real Estate Disposition Activities.”2014.
In May 2014, the FASB issued a revenue recognition standard that will result in companies recognizing revenue from contracts when control for the service or product that is the subject of the contract is transferred from the seller to the buyer. The Company will be required to apply the new standard in the first quarter of 2017 and is assessing whether the new standard will have a material effect on its financial position or results of operations.
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 $69,961,000, $66,838,000$78,872,000, $79,834,000 and $49,556,000$69,961,000 for years ended December 31, 2016, 2015 and 2014, 2013 and 2012, respectively.
3. Mortgage Notes Payable, Unsecured Notes and Credit Facility
The Company's mortgage notes payable, unsecured notes, Term Loanvariable rate unsecured term loan (the “Term Loan”) and Credit Facility, both as defined below, as of December 31, 20142016 and December 31, 20132015 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 December 31, 20142016 and December 31, 2013,2015, as shown in the Consolidated Balance Sheets (dollars in thousands) (see Note 7, "Real6, “Real Estate Disposition Activities"Activities”).
| | | 12/31/14 | | 12/31/13 | 12/31/16 | | 12/31/15 |
Fixed rate unsecured notes (1) | $ | 2,750,000 |
| | $ | 2,600,000 |
| $ | 4,200,000 |
| | $ | 3,575,000 |
|
Term Loan | 250,000 |
| | — |
| 300,000 |
| | 300,000 |
|
Fixed rate mortgage notes payable—conventional and tax-exempt (2) | 2,400,677 |
| | 2,407,962 |
| 1,668,496 |
| | 1,561,109 |
|
Variable rate mortgage notes payable—conventional and tax-exempt(2) | 1,047,461 |
| | 1,011,609 |
| 908,262 |
| | 1,045,182 |
|
Total notes payable and unsecured notes | 6,448,138 |
| | 6,019,571 |
| |
Total mortgage notes payable and unsecured notes | | 7,076,758 |
| | 6,481,291 |
|
Credit Facility | — |
| | — |
| — |
| | — |
|
Total mortgage notes payable, unsecured notes and Credit Facility | $ | 6,448,138 |
| | $ | 6,019,571 |
| $ | 7,076,758 |
| | $ | 6,481,291 |
|
| |
(1) | Balances at December 31, 20142016 and December 31, 20132015 exclude $6,735$8,930 and $5,291,$7,601, respectively, of debt discount, and $27,768 and $21,725, respectively, of deferred financing costs, as reflected in unsecured notes, net on the Company'saccompanying Consolidated Balance Sheets. |
| |
(2) | Balances at December 31, 20142016 and December 31, 20132015 exclude $84,449$1,866 and $120,071,$19,686, respectively, of debt premium, and $11,046 and $14,703, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the Company'saccompanying Consolidated Balance Sheets. |
The following debt activity occurred during the year ended December 31, 2014:2016:
In March 2014, the Company entered into a $300,000,000 variable rate unsecured term loan that matures in March 2021 (the “Term Loan”). At December 31, 2014, the Company had drawn $250,000,000 of the available $300,000,000, with the option to draw the additional $50,000,000 until March 2015.
In April 2014, in conjunction with certain requirements associated with the development of an apartment community, the Company entered into a $53,000,000 secured mortgage loan maturing in 2019, with an option to extend the maturity to 2024. The mortgage is comprised of a $15,000,000 fixed rate note with an interest rate of 2.99% and a $38,000,000 variable rate note at the London Interbank Offered Rate ("LIBOR") plus 2.00%.
Pursuant to its scheduled maturity in April 2014, the Company repaid $150,000,000 principal amount of unsecured notes with a stated coupon of 5.375%.
In June 2014,January 2016, in conjunction with the disposition of an operating community,Eaves Trumbull, Avalon Stratford was substituted as collateral for the outstanding fixed rate mortgage note secured by Eaves Trumbull.
In January 2016, in conjunction with the acquisition of Avalon Hoboken, the Company repaidassumed a fixed rate secured mortgage loan in the amountnote with a principal balance of $10,427,000 with an$67,904,000 and a contractual interest rate of 6.19%4.18% maturing in December 2020.
In February 2016, the Company repaid the $16,212,000 fixed rate mortgage note secured by Archstone Lexington, with an effective interest rate of 3.32% at par and without penalty in advance of its November 2015March 2016 maturity date. Upon repayment, Archstone Lexington was substituted as collateral for the outstanding fixed rate mortgage note secured by Avalon Walnut Ridge I.
In accordance with the requirements of the master credit agreement governing this and certain other secured borrowings,April 2016, the Company repaid an additional $5,914,000$134,500,000 of variable rate debt secured by Avalon Walnut Creek at par in advance of its March 2046 maturity date, recognizing a non-cash charge of $2,461,000 for the write-off of deferred financing costs.
In May 2016, the Company issued $475,000,000 principal amount of secured borrowingsunsecured notes in a public offering under its existing shelf registration statement for eight other operating communities.net proceeds of approximately $471,751,000. The Company incurrednotes mature in May 2026 and were issued at a charge for early debt extinguishment of $412,000.2.95% coupon rate.
In August 2016, Avalon Wilshire, Avalon Mission Oaks and Avalon Encino were substituted as collateral for the outstanding fixed rate mortgage notes secured by Eaves Nanuet, Avalon Shrewsbury and Avalon at Freehold, respectively.
In September 2016, the Company repaid $250,000,000 principal amount of its 5.75% coupon unsecured notes at its scheduled maturity.
In September 2016, in conjunction with the acquisition of Avalon Columbia Pike, the Company assumed a fixed rate secured mortgage note with a principal balance of $70,507,000 and a contractual interest rate of 3.38% maturing in November 2014,2019.
In October 2016, 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 $295,803,000.$297,117,000. The notes mature in November 2024October 2026 and were issued at a stated2.90% coupon interest rate.
In October 2016, the Company issued $350,000,000 principal amount of 3.50%.unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $345,520,000. The notes mature in October 2046 and were issued at a 3.90% coupon interest rate.
The
In November 2016, the Company hasrepaid $250,000,000 principal amount of its 5.70% coupon unsecured notes in advance of its March 2017 scheduled maturity, recognizing a $1,300,000,000charge of $4,614,000, consisting of a prepayment penalty of $4,403,000 and the write-off of deferred financing costs of $211,000.
In January 2016, the Company extended the maturity of its revolving variable rate unsecured credit facility (the “Credit Facility”) from April 2017 to April 2020, and amended other provisions in the Credit Facility. In addition, pursuant to an option available under the terms of the Credit Facility, with athe approval of the syndicate of bankslenders, the Company increased the aggregate facility size from $1,300,000,000 to $1,500,000,000 (the "Credit Facility"“Credit Facility Increase”) which matures in April 2017.. The Company has the option tomay further extend the maturity byterm for up to one year under two, six monthnine months, provided the Company is not in default and upon payment of a $1,500,000 extension options for an aggregate fee of $1,950,000.fee. In connection with the Credit Facility Increase, the applicable margin over reference rates used to determine the applicable interest rates on the Company's borrowings from time to time decreased. The Credit Facility bears interest at varying levels based on LIBOR,the London Interbank Offered Rate (“LIBOR”), rating levels achieved on the Company's unsecured notes and on a maturity schedule selected by the Company. The current stated pricing is LIBOR plus 1.05% (1.22%0.825% per annum (1.60% at December 31, 2014)2016), assuming a one month borrowing rate. The stated spread over LIBOR can vary from LIBOR plus 0.80% to LIBOR plus 1.55% based on the Company's credit ratings. In addition, a competitive bid option is available for borrowings up to 65% of the Credit Facility amount, which allows banks that are part of the lender consortium to bid to make loans at a rate that is lower than the stated rate if market conditions allow. In connection with the Credit Facility Increase, the annual facility fee iswas also amended to lower the fee to 0.125% from 0.15%, resulting in a fee of approximately $1,950,000$1,875,000 annually based on the $1,300,000,000$1,500,000,000 facility size and based on the Company's current credit rating.
The Company had no borrowings outstanding under the Credit Facility and had $49,407,000$46,711,000 and $65,018,000$43,049,000 outstanding in letters of credit that reduced the borrowing capacity as of December 31, 20142016 and December 31, 2013,2015, respectively.
In the aggregate, secured notes payable mature at various dates from November 2015February 2017 through July 2066, and are secured by certain apartment communities (with a net carrying value of $4,413,855,000,$3,460,572,000, excluding communities classified as held for sale, as of December 31, 2014)2016).
As of December 31, 2014,2016, the Company has guaranteed approximately $257,917,000 ofa $100,000,000 mortgage notesnote payable held by a wholly-owned subsidiaries; allsubsidiary; such mortgage notesnote payable areis consolidated for financial reporting purposes. The weighted average interest rate of the Company's fixed rate mortgage notes payable (conventional and tax-exempt) was 4.5%4.4% and 4.6% at both December 31, 20142016 and December 31, 2013.2015, respectively. The weighted average interest rate of the Company's variable rate mortgage notes payable (conventional and tax exempt), the Term Loan and its Credit Facility, including the effect of certain financing related fees, was 2.3% and 1.8% at both December 31, 20142016 and December 31, 2013.2015, respectively.
Scheduled payments and maturities of mortgage notes payable and unsecured notes outstanding at December 31, 20142016 are as follows (dollars in thousands):
| | Year | Secured notes payments | | Secured notes maturities | | Unsecured notes maturities | | Stated interest rate of unsecured notes | Secured notes payments | | Secured notes maturities | | Unsecured notes maturities | | Stated interest rate of unsecured notes |
| | | | | | | | |
2015 | $ | 17,873 |
| | $ | 586,705 |
| | $ | — |
| | — | % | |
| | | | | | | | |
2016 | 19,037 |
| | 16,255 |
| | 250,000 |
| | 5.750 | % | |
| | | | | | | | |
2017 | 20,255 |
| | 710,291 |
| | 250,000 |
| | 5.700 | % | $ | 18,539 |
| | $ | 709,491 |
| | $ | — |
| | N/A |
|
| | | | | | | | |
2018 | 19,649 |
| | 76,937 |
| | — |
| | — | % | 17,793 |
| | 76,916 |
| | — |
| | N/A |
|
| | | | | | | | |
2019 | 7,141 |
| | 658,447 |
| | — |
| | — | % | 4,696 |
| | 655,386 |
| | — |
| | N/A |
|
| | | | | | | | |
2020 | 6,209 |
| | 50,824 |
| | 250,000 |
| | 6.100 | % | 3,624 |
| | 118,729 |
| | 250,000 |
| | 6.100 | % |
| | | | | 400,000 |
| | 3.625 | % | |
| | | | | | | | | | | | 400,000 |
| | 3.625 | % |
2021 | 5,984 |
| | 27,844 |
| | 250,000 |
| | 3.950 | % | 3,551 |
| | 27,844 |
| | 250,000 |
| | 3.950 | % |
| |
| | |
| | 250,000 |
| | LIBOR + 1.450% |
| |
| | |
| | 300,000 |
| | LIBOR + 1.450% |
|
| | | | | | | | |
2022 | 6,351 |
| | — |
| | 450,000 |
| | 2.950 | % | 3,795 |
| | — |
| | 450,000 |
| | 2.950 | % |
| | | | | | | | |
2023 | 6,742 |
| | — |
| | 350,000 |
| | 4.200 | % | 4,040 |
| | — |
| | 350,000 |
| | 4.200 | % |
| | | | | 250,000 |
| | 2.850 | % | | | | | 250,000 |
| | 2.850 | % |
2024 | | 4,310 |
| | — |
| | 300,000 |
| | 3.500 | % |
2025 | | 4,585 |
| | 84,835 |
| | 525,000 |
| | 3.450 | % |
| | | | | | | | | | | | 300,000 |
| | 3.500 | % |
2024 | 4,858 |
| | — |
| | 300,000 |
| | 3.500 | % | |
2026 | | 4,859 |
| | — |
| | 475,000 |
| | 2.950 | % |
| | | | | | | |
|
| |
|
| | 300,000 |
| | 2.900 | % |
Thereafter | — |
| | 1,206,736 |
| | — |
| | — | % | 213,685 |
| | 620,080 |
| | 350,000 |
| | 3.900 | % |
| | | | | | | | $ | 283,477 |
| | $ | 2,293,281 |
| | $ | 4,500,000 |
| | |
|
| $ | 114,099 |
| | $ | 3,334,039 |
| | $ | 3,000,000 |
| | |
| |
The Company's unsecured notes are redeemable at ourthe Company's option, in whole or in part, generally at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted at a rate equal to the yield on U.S. Treasury securities with a comparable maturity plus a spread between 2520 and 45 basis points depending on the specific series of unsecured notes, plus accrued and unpaid interest to the redemption date. The indenture under which the Company's unsecured notes were issued, containsthe Company's Credit Facility agreement and the Company's Term Loan agreement contain limitations on the amount of debt the Company can incur or the amount of assets that can be used to secure other financing transactions, and other customary financial and other covenants, with which the Company was in compliance at December 31, 2014.
4. Equity
As of December 31, 20142016 and 2013,2015, the Company's charter had authorized for issuance a total of 280,000,000 shares of common stock and 50,000,000 shares of preferred stock.
During the year ended December 31, 2014,2016, the Company:
| |
(i)i. | issued 2,069,538 common shares through public offerings under CEP III, discussed below; |
| |
(ii) | issued 500,197131,499 shares of common stock in connection with stock options exercised; |
| |
(iii)ii. | issued 2,4342,396 common shares through the Company's dividend reinvestment plan; |
| |
(iv)iii. | issued 115,163197,018 common shares in connection with restricted stock grants and the conversion of restricted stock unitsperformance awards to restricted shares; |
| |
(v)iv. | issued 44,327 common shares in conjunction with the conversion of deferred stock awards; |
| |
v. | withheld 55,52353,453 common shares to satisfy employees' tax withholding and other liabilities; |
| |
(vi)vi. | canceled 7,970issued 11,348 shares of restricted stock upon forfeiture;through the Employee Stock Purchase Plan; and |
| |
(vii)vii. | issued 9,848canceled 4,262 shares through the Employee Stock Purchase Plan.of restricted stock upon forfeiture. |
Any deferred compensation related to the Company’s stock option, and restricted stock and performance award grants during the year ended December 31, 20142016 is not reflected on the Company’s Consolidated Balance Sheet as of December 31, 2014,2016, and will not be reflected until earnedrecognized as compensation cost.
In August 2012,December 2015, the Company commenced a thirdfourth continuous equity program ("(“CEP III"IV”), under which the Company is authorized by its Board of Directors tomay sell up to $750,000,000 of shares$1,000,000,000 of its common stock from time to time during a 36-month period.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 III,IV, the Company engaged sales agents who will receive compensation of approximately 1.5%up to 2.0% of the gross sales price for shares sold. During the year ended December 31, 2014,CEP IV also allows the Company sold 2,069,538 shares at an averageto enter into forward sale agreements up to $1,000,000,000 in aggregate sales price of $144.95 per share, for net proceeds of $295,465,000. As of December 31, 2014, the Company had $346,304,000 of shares remaining authorized for issuance under this program.
On September 9, 2014, based on a market closing price of $155.83 per share on that date, the Company entered into a forward contract to sell 4,500,000 shares of common stock for an initial forward price of $151.74 per share, net of offering fees and discounts (the "Forward"). The sales price and proceeds achieved by the Company will be determined on the date or dates of settlement, with adjustments during the term of the contract for the Company’s dividends as well as for a daily interest factor that varies with changes in the Fed Funds rate. The Company generally has the ability to determine the date(s) and method of settlement, subject to certain conditions and the right of the Forward counterparty to accelerate settlement under certain circumstances. Settlement may be (i) physical sale of shares of our common stock for cash, (ii) net cash settlement, whereby the Company will either pay or receive the difference between the forward contract price and the weighted average market price for its common stock at the time of settlement, or (iii) net share settlement, whereby the Company will either receive or issue shares of its common stock, with the number of shares issued or received determined by the difference between the Forward price and the weighted average market price for its common stock at the time of settlement. The Forward price and the weighted average market price would in both cases by determined under the applicable terms of the Forward. Under either of the net settlement provisions, the Company will pay to the counterparty either cash or shares of its common stock when the weighted average market price of its common stock at the time of settlement exceeds the Forward price, andstock. The Company will receive either cash or issue shares of its common stock to the extent that the weighted average market price of its common stock at the time of settlement is less than the price under the Forward. Settlement of the Forward will occurphysically settle each forward sale agreement on one or more dates not later than September 8, 2015. The Company accounts for the Forward as equity. Before the issuance of shares of the Company’s common stock, if any, upon physical or net share settlement of the Forward,specified by the Company expectson or prior to the maturity date of that particular forward sale agreement, in which case the shares issuable uponCompany will expect to receive aggregate net cash proceeds at settlement of the Forward will be reflected in its diluted earnings per share calculations using the treasury stock method. Under this method,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, commission of up to 2.0% of the Company’s common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any,sales prices of the number ofall borrowed shares of common stock that would be issued upon full physical settlement of the Forward over the number of shares of common stock that could be purchased bysold. In 2016, the Company inhad no sales under the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjustedprogram and did not enter into any forward sale price at the end of the reporting period). If and when the Company physically or net share settles the Forward, the delivery of shares of our common stock would result in an increase in the number of shares outstanding and dilution to our earnings per share.
5.Archstone Acquisition
On February 27, 2013, pursuant to an asset purchase agreement (the “Purchase Agreement”) dated November 26, 2012, by and among the Company, Equity Residential and its operating partnership, ERP Operating Limited Partnership (together, “Equity Residential”), Lehman Brothers Holdings, Inc. (“Lehman,” which term is sometimes used in this report to refer to Lehman Brothers Holdings, Inc., and/or its relevant subsidiary or subsidiaries), and Archstone Enterprise LP (“Archstone,” which has since changed its name to Jupiter Enterprise LP), the Company, together with Equity Residential, acquired, directly or indirectly, all of Archstone’s assets, including all of the ownership interests in joint ventures and other entities owned by Archstone, and assumed Archstone’s liabilities, both known and unknown, with certain limited exceptions.
Under the terms of the Purchase Agreement, the Company acquired approximately 40.0% of Archstone's assets and liabilities and Equity Residential acquired approximately 60.0% of Archstone’s assets and liabilities (the “Archstone Acquisition”). The Company accounted for the acquisition as a business combination and recorded the purchase price to acquired tangible assets consisting primarily of direct and indirect interests in land and related improvements, buildings and improvements and construction in progress and identified intangible assets and liabilities, consisting primarily of the value of above and below market leases, the value of in-places leases and acquired management fees, at their fair values. The following table summarizes the Company's final purchase price allocation:
|
| | | |
| Acquisition Date Fair Value |
| (dollars in thousands) |
Land and land improvements | $ | 1,745,520 |
|
Buildings and improvements | 3,711,853 |
|
FF&E | 52,290 |
|
Construction-in-progress, including land and land held for development (1) | 401,747 |
|
In-place lease intangibles | 182,467 |
|
Other assets | 109,717 |
|
Total consolidated assets | 6,203,594 |
|
Interest in unconsolidated real estate entities | 276,954 |
|
Total assets | 6,480,548 |
|
| |
Fair value of assumed mortgage notes payable | 3,732,980 |
|
Liability for preferred obligations | 67,493 |
|
Other liabilities | 31,984 |
|
Noncontrolling interest | 13,262 |
|
Net assets acquired | 2,634,829 |
|
Common shares issued | 1,875,210 |
|
Cash consideration | $ | 759,619 |
|
| |
(1) | Includes amounts for in-place leases for development communities. |
During the year ended December 31, 2013, the Company recognized $83,594,000 in acquisition related expenses associated with the Archstone Acquisition, with $39,543,000 reported as a component of equity in income (loss) of unconsolidated entities, and the balance in expensed acquisition, development and other pursuit costs, net of recoveries, on the accompanying Consolidated Statements of Comprehensive Income.
Consideration
Pursuant to the Purchase Agreement and separate arrangements between the Company and Equity Residential governing the allocation of liabilities assumed under the Purchase Agreement, the Company's portion of consideration under the Purchase Agreement consisted of the following:
the issuance of 14,889,706 shares of the Company's common stock, valued at $1,875,210,000 as of the market's close on the closing date, February 27, 2013;
cash payment of approximately $760,000,000;
the assumption of consolidated indebtedness with a fair value of approximately $3,732,980,000, as of February 27, 2013, consisting of $3,512,202,000 principal amount of consolidated indebtedness and $220,777,000 representing the amount by which fair value of the aforementioned debt exceeds the principal face value, $70,479,000 of which excess related to debt the Company repaid concurrent with the Archstone Acquisition;
the acquisition with Equity Residential of interests in entities that have preferred units outstanding, some of which may be presented for redemption from time to time. The Company's 40% share of the fair value of the collective obligations, including accrued dividends on these outstanding Archstone preferred units as of February 27, 2013, was approximately $67,500,000; and
the assumption with Equity Residential of all other liabilities, known or unknown, of Archstone, other than certain excluded liabilities. The Company shares 40% of the responsibility for these liabilities.
The following table presents information for assets acquired in the Archstone Acquisition that is included in the Company's Consolidated Statement of Comprehensive Income from the closing date of the acquisition, February 27, 2013, through December 31, 2013 (in thousands).
|
| | | |
| For the period including February 28, 2013 through December 31, 2013 |
Revenues | $ | 353,427 |
|
Loss attributable to common shareholders (1) | $ | (105,589 | ) |
| |
(1) | Amounts exclude acquisition costs for the Archstone Acquisition. |
Pro Forma Information
The following table presents the Company's supplemental consolidated pro forma information as if the acquisition had occurred on January 1, 2012 (in thousands, except per share amounts):
|
| | | | | | | |
| For the year ended December 31, 2013 | | For the year ended December 31, 2012 |
Revenues | $ | 1,534,868 |
| | $ | 1,411,504 |
|
Income from continuing operations | $ | 348,160 |
| | $ | 158,738 |
|
Earnings per common share—diluted (from continuing operations) | $ | 2.67 |
| | $ | 1.22 |
|
The pro forma consolidated results are prepared for informational purposes only, and are based on assumptions and estimates considered appropriate by the Company's management. However, they are not necessarily indicative of what the Company's consolidated financial condition or results of operations actually would have been assuming the Archstone Acquisition had occurred on January 1, 2012, nor do they purport to represent the consolidated financial position or results of operations for future periods.
6. Investments in Real Estate Entities
Investments in Unconsolidated Real Estate Entities
The Company accounts for its investments in unconsolidated real estate entities under the equity method of accounting, except as otherwise noted below, as discussed in Note 1, "Organization and“Organization, Basis of Presentation" and Significant Accounting Policies,” under Principles of Consolidation. The significant accounting policies of the Company's unconsolidated real estate entities are consistent with those of the Company in all material respects.
As of December 31, 2014,2016, the Company had investments in the following real estate entities:
AvalonBay Value Added Fund, LP ("Fund I")—In March 2005, the Company formed Fund I, a private, discretionary real estate investment vehicle, which acquired and operated communities in the Company's markets. Fund I served as the principal vehicle through which the Company acquired investments in apartment communities, subject to certain exceptions, until March 2008. Fund I has a term that expires in March 2015, after having exercised two one-year extension options. During 2014, Fund I sold its final four apartment communities. Fund I has nine institutional investors, including the Company. A significant portion of the investments made in Fund I by its investors were made through AvalonBay Value Added Fund, Inc., a Maryland corporation that qualifies as a REIT under the Code (the "Fund I REIT"). A wholly-owned subsidiary of the Company is the general partner of Fund I, has a 15.2% combined general partner and limited partner equity interest, and
has fully recovered its basis as of December 31, 2014, with any additional liquidation proceeds to be recognized in earnings as received. During the period which Fund I was invested in apartment communities, the Company received asset management fees, property management fees and redevelopment fees.
During 2014, Fund I sold its final four communities:
Weymouth Place, located in Weymouth, MA, for $25,750,000;
South Hills Apartments, located in West Covina, CA, for $21,800,000;
The Springs, located in Corona, CA, for $43,200,000; and
Avalon Rutherford Station, located in East Rutherford, NJ, for $34,250,000.
The Company's proportionate share of the gain in accordance with GAAP recognized on the sale of these four communities was $3,317,000.
The net assets and results of operations of The Springs were consolidated for financial reporting purposes. As a result, 100% of the gain recognized of $16,656,000 is included in gain on sale of communities in the Consolidated Statements of Comprehensive Income, and the Company's joint venture partners' 84.8% interest in this gain of $14,132,000 is reported as a component of net (income) loss attributable to noncontrolling interests. Concurrent with the disposition of The Springs, Fund I repaid its obligation to the Company under a fixed rate secured mortgage loan in the amount of $21,748,000 with an interest rate of 6.06% in advance of its October 2014 maturity date. Upon repayment the Company deconsolidated the net assets of The Springs.
In conjunction with the disposition of these communities, Fund I repaid $43,771,000 of related secured indebtedness in advance of the scheduled maturity dates. This resulted in a charge for a prepayment penalty, of which the Company’s portion was $328,000 and was reported as a reduction of equity in income (loss) of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income.
AvalonBay Value Added Fund II, LP ("L.P. (“Fund II"II”)—In September 2008, the Company formed Fund II, a private, discretionary real estate investment vehicle which acquired and operates communities in the Company's markets. Fund II served as the exclusive vehicle through which the Company acquired investment interests in apartment communities, subject to certain exceptions, through the close of its investment period in August 2011. Fund II has six institutional investors, including the Company. One of the Company's wholly owned subsidiaries is the general partner of Fund II and at December 31, 2014,2016, excluding costs incurred in excess of equity in the underlying net assets of Fund II, the Company has an equity investment of $92,162,000$19,737,000 (net of distributions), representing a 31.3% combined general partner and limited partner equity interest.
During 2014,2016, Fund II sold two communities:three communities containing an aggregate of 1,514 apartment homes:
Avalon Fair Oaks,
Eaves Rancho San Diego, located in Fairfax, VA,El Cajon, CA, for $108,200,000 and$158,000,000,
Avalon Bellevue Park,Eaves Tustin, located in Bellevue, WA,Tustin, CA, for $58,750,000.$163,550,000, and
Eaves Rockville, located in Rockville, MD, for $61,400,000.
The Company's proportionate share of the gain in accordance with GAAP for the twothree dispositions was $21,624,000.
$41,501,000. In conjunction with the disposition of these communities, Fund II repaid $63,407,000$156,248,000 of related secured indebtedness in advance of the scheduled maturity dates. This resulted in charges for prepayment penalties and write-offs of deferred financing costs, of which the Company’s portion was $1,364,000$1,768,000 and was reported as a reduction of equity in income (loss) of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income. In addition, during 2014,
The Company has an equity interest of 31.3% in Fund II, repaid an outstanding mortgage note at parand upon achievement of a threshold return the Company has a right to incentive distributions for its promoted interest representing the first 20.0% of further Fund II distributions, which are in addition to its share of the amountremaining 80.0% of $42,023,000.distributions. During the year ended December 31, 2016, the Company recognized income of $7,985,000 for its promoted interest, which is reported as a component of equity in income of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income.
Subsidiaries of Fund II have 10four loans secured by individual assets with aggregate amounts outstanding of $358,811,000,$128,008,000, with maturity dates that vary from January 2016November 2017 to SeptemberApril 2019. The mortgage loans are payable by the subsidiaries of Fund II from operating cash flow or disposition proceeds from the underlying real estate. The Company has not guaranteed repayment of this debt, nor does the Company have any obligation to fund this debt should Fund II be unable to do so.
In addition, as part of the formation of Fund II, the Company provided to one of the limited partners a guarantee. The guarantee provides that if, upon final liquidation of Fund II, the total amount of all distributions to that partner during the life of Fund II (whether from operating cash flow or property sales) does not equal a minimum of the total capital contributions made by that partner, then the Company will pay the partner an amount equal to the shortfall, but in no event more than 10% of the total capital contributions made by the partner (maximum of approximately $8,910,000 as of December 31, 2014). Under the expected Fund II liquidation scenario, as of December 31, 2014 the expected realizable value of the real estate assets owned by Fund II is considered adequate to avoid payment under such guarantee to that partner. The estimated
fair value of, and the Company's obligation under, this guarantee, both at inception and as of December 31, 2014, was not significant and therefore the Company has not recorded any obligation for this guarantee as of December 31, 2014.
Archstone Multifamily Partners AC LP (the "U.S. Fund"“U.S. Fund”)—The U.S. Fund was formed in July 2011 and is fully invested. The U.S. Fund has a term that expires in July 2023, assuming the exercise of two, one-year extension options. The U.S. Fund has six institutional investors, including the Company. The Company is the general partner of the U.S. Fund and, at December 31, 20142016 excluding costs incurred in excess of equity in the underlying net assets of the U.S. Fund, the Company has an equity investment of $88,220,000$49,693,000 (net of distributions), representing a 28.6% combined general partner and limited partner equity interest. The Company acquired its interest in the U.S. Fund as part of the Archstone Acquisition.
During 2016, the U.S. Fund sold two communities containing an aggregate of 461 apartment homes:
Archstone Boca Town Center, located in Boca Raton, FL, for $56,300,000, and
Avalon Kips Bay, located in New York, NY, for $173,000,000.
The Company's proportionate share of the gain in accordance with GAAP for the two dispositions was $16,568,000. In conjunction with the disposition of these communities, the U.S. Fund repaid $94,822,000 of related secured indebtedness in advance of the scheduled maturity dates. This resulted in charges for prepayment penalties and write-offs of deferred financing costs, of which the Company’s portion was $2,003,000 and was reported as a reduction of equity in income of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income.
Subsidiaries of the U.S. Fund have nineeight loans secured by individual assets with aggregate amounts outstanding in the aggregate of $327,880,000$274,255,000, with varying maturity dates rangingthat vary from JanuaryFebruary 2019 to November 2022. The mortgage loans are payable by the subsidiaries of the U.S. Fund with operating cash flow or disposition proceeds from the underlying real estate. The Company has not guaranteed the debt of the U.S. Fund, nor does the Company have any obligation to fund this debt should the U.S. Fund be unable to do so.
Multifamily Partners AC JV LP (the "AC JV"“AC JV”)—The AC JV is a joint venture that was formed in 2011 and has four institutional investors, including the Company. Excluding costs incurred in excess of equity in the underlying net assets of the AC JV, at December 31, 20142016 the Company has an equity investment of $69,633,000$50,674,000 (net of distributions), representing a 20.0% equity interest. The Company acquired its interest in the AC JV as part of the Archstone Acquisition.
The AC JV partnership agreement contains provisions that require the Company to provide a right of first offer ("ROFO"(“ROFO”) to the AC JV in connection with additional opportunities to acquire or develop additional interests in multifamily real estate assets within a specified geographic radius of the existing assets, generally one mile or less. During the year ended December 31, 2013, the Company provided the AC JV with the opportunity to acquire a parcel of land owned by the Company as required in the right of first offer provisions for the joint venture. The AC JV exercised its right to acquire the land parcel for development and during the year ended December 31, 2014, completed construction of an additional apartment community located in Cambridge, MA, containing 103 apartment homes. The Company sold the parcel of land to the AC JV in exchange for a cash payment and a capital account credit, and it supervised the development in exchange for a developer fee. The Company owns one additional land parcel for the development of 301 apartment homes, classified as a Development Right in Cambridge, MA, acquired as part of the Archstone Acquisition, that is subject to ROFO restrictions. The ROFO restriction expires in 2019.
As of December 31, 2014,2016, subsidiaries of the AC JV have eight unsecured loans outstanding in the aggregate of $162,300,000 which mature in August 2021, and which were made by the investors in the venture, including the Company, in proportion to the investors' respective equity ownership interest. The unsecured loans are payable by the subsidiaries of the AC JV with operating cash flow from the venture. The Company has not guaranteed the debt of the AC JV, nor does the Company have any obligation to fund this debt should the AC JV be unable to do so.
CVP I, LLC—In February 2004, the Company entered into a joint venture agreement with an unrelated third-party for the development of Avalon Chrystie Place, a 361 apartment home community located in New York, New York, for which construction was completed in 2005. The Company holds a 20.0% equity interest in the venture (with a right to 50.0% of distributions after achievement of a threshold return, which was achieved in 2013 and 2014). The Company is the managing member of CVP I, LLC, however, property management services at the community were performed by an unrelated third party.
During the year ended December 31, 2014, CVP I, LLC sold Avalon Chrystie Place for $365,000,000. The Company's share of the gain in accordance with GAAP for the disposition was $50,478,000. In addition, the Company earned $58,128,000 for its promoted interest in CVP I, LLC, reported in equity in income (loss) of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income.
In conjunction with the disposition of Chrystie Place, CVP I, LLC repaid $117,000,000 of related secured indebtedness in advance of the scheduled maturity date. This resulted in a charge for a prepayment penalty and a write off of deferred financing costs, of which the Company’s portion was $647,000 and was reported as a reduction of equity in income (loss) of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income.
MVP I, LLC—In December 2004, the Company entered into a joint venture agreement with an unrelated third-party for the development of Avalon at Mission Bay North II. Construction of Avalon at Mission Bay North II, a 313 apartment-home community located in San Francisco, California, was completed in December 2006. The Company holds a 25.0% equity interest in the venture (with a right to 45.0% of distributions after achievement of a threshold return, which was achieved in 2014 and 2013). See Note 14, "Subsequent Events," for further discussion of the Company's promoted interest.venture. The
Company is responsible for the day-to-day operations of the community and is the management agent subject to the terms of a management agreement. In December 2007,
During 2015, the Company received $20,680,000 from the joint venture partner associated with MVP I, LLC, executed a fixed rate conventional loan which is secured byupon agreement with the underlying real estate assets ofpartner to modify the community,joint venture agreement to eliminate the Company's promoted interest from associated distributions for $105,000,000. In December 2014,future return calculations. Before this modification to the loan converted to a variable rate, interest-only loan through the final maturity in December 2015, bearing interest at LIBOR plus 2.50%. The Company has not guaranteed the debt of MVP I, LLC, nor doesjoint venture agreement, the Company have any obligationhad the right to fund this debt should MVP I, LLC be unable45.0% of distributions after achievement of a threshold return, which was achieved in 2015, up to do so.the date the joint venture agreement was modified, as well as in 2014. Subsequent to the modification, earnings and distributions are based on the Company's 25.0% equity interest in the venture.
Brandywine Apartments of Maryland, LLC ("Brandywine"(“Brandywine”)—Brandywine owns a 305 apartment home community located in Washington, DC.D.C. The community is managed by a third party. Brandywine is comprised of five members who hold various interests in the joint venture. In conjunction with the Archstone Acquisition, theThe Company acquired a 26.1% equity interest in the venture, and subsequently purchased an additional 2.6% interest, and as of December 31, 2014, holds a 28.7% equity interest in the venture.Brandywine.
Brandywine has an outstanding $24,346,000$23,307,000 fixed rate mortgage loan that is payable by the venture. The Company has not guaranteed the debt of Brandywine, nor does the Company have any obligation to fund this debt should Brandywine be unable to do so.
Arna Valley View LP—In connection with the municipal approval process to develop a consolidated community, the Company entered into a limited partnership in February 1999 to develop, finance, own and operate Arna Valley View, a 101 apartment-home community in Arlington, Virginia. During the year ended December 31, 2014, the limited partnership that owned Arna Valley View sold the apartment community. In conjunction with the sale of Arna Valley View, the Company received amounts due for its residual ownership interest of approximately $2,406,000, reported as a component of equity in income (loss) of unconsolidated entities on its Consolidated Statements of Comprehensive Income. In conjunction with the disposition of the community, the venture repaid $8,934,000 of related secured indebtedness in advance of the scheduled maturity date.
Residual JV—Through subsidiaries, the Company and Equity Residential entered into three limited liability company agreements (collectively, the “Residual JV”) through which the Company and Equity Residential acquired (i) certain assets of Archstone that the Company and Equity Residential plan to divest (to third parties or to the Company or Equity Residential) over timehave substantially divested (the “Residual Assets”), and (ii) various liabilities of Archstone that the Company and Equity Residential agreed to assume in conjunction with the Archstone Acquisition (the “Residual Liabilities”). The Residual Assets currently includeincluded a 20.0% interest in Lake Mendota Investments, LLC and Subsidiaries ("SWIB"(“SWIB”), a joint venture which currently owns and manages four apartmentdisposed the last of its communities with 1,410 apartment homes in the United States, which is secured by outstanding borrowings in the amount of $148,866,000 with varying maturity dates, ranging from December 2015, to December 2029; two land parcels; andas well as various licenses, insurance policies, contracts, office leases and other miscellaneous assets.
The Residual Liabilities include most existing or future litigation and claims related to Archstone’s operations for periods before the close of the Archstone Acquisition, except for (i) claims that principally relate to the physical condition of the assets acquired directly by the Company or Equity Residential, which generally remain the sole responsibility of the Company or Equity Residential, as applicable, and (ii) certain tax and other litigation between Archstone and various equity holders in Archstone related to periods before the close of the Archstone Acquisition, and claims which may arise due to changes in the capital structure of Archstone that occurred prior to closing, for which Lehmanthe seller has agreed to indemnify the Company and Equity Residential. The Company and Equity Residential jointly control the Residual JV and the Company holds a 40.0% economic interest in the assets and liabilitiesResidual JV.
Legacy JV—As part of the Residual JV.Archstone Acquisition the Company entered into a limited liability company agreement with Equity Residential, through which it assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements (the “Legacy JV”). The Company has not guaranteeda 40.0% interest in the debtLegacy JV. During the years ended December 31, 2016, 2015 and 2014, the Legacy JV redeemed certain of SWIB, nor doesthe preferred interests and paid accrued dividends, of which the Company's portion was $1,960,000, $14,410,000 and $6,300,000, respectively. At December 31, 2016, the remaining preferred interests had an aggregate liquidation value of $39,921,000, the Company's share of which is included in accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.
Sudbury Development, LLC—During 2015, the Company have any obligationentered into a joint venture agreement to fund this debt should SWIBpurchase land and pursue entitlements and pre-development activity for a mixed-use development project in Sudbury, MA, including multifamily apartment homes, retail, senior housing and age-restricted housing. The Company has a 60.0% ownership interest in the venture. The venture is considered a VIE, though the Company is not considered to be unablethe primary beneficiary because the Company and its third party partner share control of the joint venture as approval from both parties is required for all significant aspects of the venture's activities including, but not limited to, do so.changes in the ownership or capital structure of the partnership, acquisitions or dispositions by the venture and decisions about the pre-development and related activities to be performed by the venture. At December 31, 2016, the Company has an equity investment of $6,680,000 in the venture, representing the Company's share of land acquisition and pre-development costs, net of distributions of proceeds from land sales by the venture.
During 2014, SWIB sold two communities
Avalon Clarendon—In May 2016, the Company entered into a joint venture agreement to facilitate the acquisition of Avalon Clarendon, located in Arlington, VA. Avalon Clarendon is part of a mixed-use development containing 492 apartment homes,residential, retail, office and public parking. The Company contributed $120,300,000 to the venture for an aggregate sales price of $76,250,000. Thethe Company's proportionate share of the gain in accordancepurchase price. The Company had shared control of the overall venture with GAAP forits partner, but had all of the two dispositions was $779,000.rights and obligations associated with the residential component of Avalon Clarendon, containing 300 apartment homes. The joint venture partner had all of the rights and obligations associated with the retail, office and public parking components of the mixed-use development. In September 2016, the Company and its venture partner established separate legal ownership of the residential and retail, office and public parking components of the venture, and the Company retained all of the rights and obligations associated with the residential component. After this legal separation, the Company began reporting the operating results of Avalon Clarendon as part of its consolidated operations. In conjunction with the dispositionconsolidation of these communities, SWIB repaid $38,155,000Avalon Clarendon, the Company recorded the consolidated assets at fair value applying the framework discussed below under “Investments in Consolidated Real Estate Entities” for valuation, resulting in a gain of related indebtedness on its credit facility in advance$4,322,000 for the difference between the fair value of the scheduled maturity dates.
As of December 31, 2014, the Residual JV completed the disposition of substantially all of its direct and indirect interests in German multifamily real estate assetsAvalon Clarendon and the associated property management company.Company's equity interest at the date of consolidation of $115,848,000, primarily attributable to depreciation recognized during the period the community was owned in the joint venture. The Company’s proportionate share of income from the Residual JV (including from gains from dispositions) from its interests in German multifamily real estate assets, which were owned through a TRS, was $8,510,000 for the year ended December 31, 2014, recordedCompany has included this gain as a component of equitygain on sale of communities on the accompanying Consolidated Statements of Comprehensive Income.
North Point II JV, LP—During 2016, the Company entered into a joint venture to develop, own, and operate AVA North Point, an apartment community located in income (loss)Cambridge, MA, which is currently under construction and expected to contain 265 apartment homes upon completion. The Company owns a 55.0% interest in the venture, and the venture partner owns the remaining 45.0% interest. The venture is considered to be a VIE, though the Company is not considered to be the primary beneficiary because the Company and its third party partner share control of unconsolidatedthe venture. The Company and its venture partner share decision making authority for all significant aspects of the venture's activities including, but not limited to, changes in the ownership or capital structure, the original capital budget and any changes to the budget to construct AVA North Point and the future operating budget for the community upon completion. AVA North Point is the third phase of a master planned development, the other phases of which are owned through the AC JV. During 2016, the Company provided the partners of the AC JV the opportunity to acquire the AVA North Point land parcel owned by the Company as required in the ROFO provisions for the AC JV. After certain partners of the AC JV declined to participate, the Company entered into the new joint venture and sold the land parcel to the venture in exchange for a cash payment and a capital account credit, and is overseeing the development in exchange for a developer fee. Upon sale of the land parcel, the Company recognized a gain of $10,621,000, included in gain on sale of other real estate entities inon the accompanying Consolidated Statements of Comprehensive Income. The Company incurred income taxes related to these dispositions. The Company received proceeds of $53,052,000 during the year endedAt December 31, 2014 from2016, excluding costs incurred in excess of equity in the Residualunderlying net assets of North Point II JV, for its proportionate shareLP, the Company has an equity investment of the proceeds from operations and the dispositions of the venture's interest in German multifamily real estate assets.$12,398,000.
The following is a combined summary of the financial position of the entities accounted for using the equity method as of the dates presented, excluding amounts associated with development joint ventures, the Residual JV and Legacy JV (dollars in thousands):
| | | 12/31/14 | | 12/31/13 | 12/31/16 | | 12/31/15 |
Assets: | |
| | |
| |
| | |
|
Real estate, net | $ | 1,617,627 |
| | $ | 1,905,005 |
| $ | 954,493 |
| | $ | 1,392,833 |
|
Other assets | 72,290 |
| | 164,183 |
| 49,519 |
| | 57,044 |
|
Total assets | $ | 1,689,917 |
| | $ | 2,069,188 |
| $ | 1,004,012 |
| | $ | 1,449,877 |
|
Liabilities and partners' capital: | |
| | |
| |
| | |
|
Mortgage notes payable and credit facility | $ | 980,128 |
| | $ | 1,251,067 |
| |
Mortgage notes payable, net and credit facility | | $ | 689,573 |
| | $ | 947,205 |
|
Other liabilities | 24,884 |
| | 32,257 |
| 16,537 |
| | 20,471 |
|
Partners' capital | 684,905 |
| | 785,864 |
| 297,902 |
| | 482,201 |
|
Total liabilities and partners' capital | $ | 1,689,917 |
| | $ | 2,069,188 |
| $ | 1,004,012 |
| | $ | 1,449,877 |
|
The following is a combined summary of the operating results of the entities accounted for using the equity method, for the years presented, excluding amounts associated with development joint ventures, Avalon Clarendon, the Residual JV and Legacy JV (dollars in thousands):
| | | For the year ended | For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | 12/31/16 | | 12/31/15 | | 12/31/14 |
Rental and other income | $ | 198,939 |
| | $ | 212,994 |
| | $ | 172,076 |
| $ | 131,901 |
| | $ | 173,578 |
| | $ | 198,939 |
|
Operating and other expenses | (80,301 | ) | | (86,434 | ) | | (73,955 | ) | (50,945 | ) | | (67,962 | ) | | (80,301 | ) |
Gain on sale of real estate (1) | 333,221 |
| | 96,152 |
| | 106,195 |
| |
Gain on sale of communities | | 196,749 |
| | 98,899 |
| | 333,221 |
|
Interest expense, net(1) | (61,458 | ) | | (61,404 | ) | | (53,904 | ) | (45,886 | ) | | (45,517 | ) | | (61,458 | ) |
Depreciation expense | (52,116 | ) | | (61,002 | ) | | (47,748 | ) | (34,471 | ) | | (45,324 | ) | | (52,116 | ) |
Net income | $ | 338,285 |
| | $ | 100,306 |
| | $ | 102,664 |
| $ | 197,348 |
| | $ | 113,674 |
| | $ | 338,285 |
|
| |
(1) | AmountAmounts for the yearyears ended December 31, 20122016, 2015 and 2014 includes $44,700charges for prepayment penalties and write-offs of gain recognized by the joint venture associated with the Company's acquisitiondeferred financing costs of Avalon Del Rey from its joint venture partner.$12,659, $4,481 and $10,528, respectively. |
In conjunction with the formation of Fund III and AVA North Point, and the acquisition of the U.S. Fund, II,AC JV and Brandywine, the Company incurred costs in excess of its equity in the underlying net assets of the respective investments. These costs represent $3,880,000$38,015,000 and $40,978,000 at December 31, 20142016 and $5,439,000 at December 31, 20132015, respectively, of the respective investment balances. These amounts are being amortized over the lives of the underlying assets as a component of equity in income of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income.
The following is a summary of the Company's equity in income (loss) of unconsolidated real estate entities for the years presented (dollars in thousands):
| | | For the year ended | For the year ended |
| 12/31/14 | | 12/31/13 | | 12/31/12 | 12/31/16 | | 12/31/15 | | 12/31/14 |
Fund I (1) | $ | 475 |
| | $ | 10,924 |
| | $ | 7,041 |
| $ | 87 |
| | $ | 871 |
| | $ | 475 |
|
Fund II (2) | 24,808 |
| | 6,206 |
| | 2,130 |
| 49,882 |
| | 32,211 |
| | 24,808 |
|
U.S. Fund (3) | 342 |
| | (661 | ) | | — |
| 15,635 |
| | 2,052 |
| | 342 |
|
AC JV (3) | 1,579 |
| | 2,569 |
| | — |
| 1,445 |
| | 511 |
| | 1,579 |
|
CVP I, LLC (4) | 113,127 |
| | 5,783 |
| | 5,394 |
| |
MVP I, LLC (5) | 1,651 |
| | 1,137 |
| | 493 |
| |
Brandywine (3) | 828 |
| | 661 |
| | — |
| |
Arna Valley View LP (6) | 2,406 |
| | — |
| | — |
| |
Residual JV (3) (7) | 3,547 |
| | (38,332 | ) | | — |
| |
Avalon Del Rey, LLC (8) | — |
| | 181 |
| | 4,000 |
| |
MVP I, LLC (4) | | 1,627 |
| | 22,453 |
| | 1,651 |
|
Brandywine | | 10 |
| | (1,474 | ) | | 828 |
|
CVP I, LLC (5) | | 9 |
| | 1,812 |
| | 113,127 |
|
Residual JV | | (1,374 | ) | | 11,582 |
| | 3,547 |
|
Avalon Clarendon (6) | | (2,359 | ) | | — |
| | — |
|
Arna Valley View LP (1) | | — |
| | — |
| | 2,406 |
|
Juanita Village (6)(1) | 3 |
| | 378 |
| | 1,856 |
| — |
| | — |
| | 3 |
|
Total | $ | 148,766 |
| | $ | (11,154 | ) | | $ | 20,914 |
| $ | 64,962 |
| | $ | 70,018 |
| | $ | 148,766 |
|
| |
(1) | The Company's equity in income for this entity represents its residual profits from the sale of the community, or liquidation of the venture. |
| |
(2) | Equity in income for the years ended December 31, 2014, 20132016, 2015 and 2012 includes the Company's proportionate share of the gain on the sale of Fund I assets of $944, $11,484 and $7,971, respectively. |
| |
(2) | Equity in income for the years ended December 31, 2014 and 2013 includes the Company's proportionate share of the gain on the sale of Fund II assets of $41,501, $29,726, and $21,624 and $2,790, respectively. In addition, equity in income for the year ended December 31, 2016 includes $7,985 relating to the Company's recognition of its promoted interest. |
| |
(3) | TheEquity in income for the year ended December 31, 2016 includes the Company's joint venture partner's interest was acquired in conjunction withproportionate share of the Archstone Acquisition.gain on the sale of U.S. Fund assets of $16,568. |
| |
(4) | Equity in income for the years ended December 31, 2015 and 2014 2013includes $21,340 and 2012$930, respectively, relating to the Company's recognition of its promoted interest. For 2015, $20,680 was from the joint venture partner upon agreement to modify the joint venture agreement to eliminate the Company's promoted interest from associated distribution for future return calculations. |
| |
(5) | Equity in income for the years ended December 31, 2015 and 2014 includes $61,218, $5,527$1,289 and $5,260,$61,218, respectively, relating to the Company's recognition of its promoted interest. Amount for 2014 also includes $50,478 related to the disposition of Avalon Chrystie Place. |
| |
(5)(6) | Equity in income forIn September 2016, the years ended December 31, 2014Company and 2013 includes $930 and $516 relating toits venture partner established separate legal ownership of Avalon Clarendon, after which the Company's recognitionCompany reported the operating results of Avalon Clarendon as part of its promoted interest.consolidated operations. |
| |
(6) | The Company's equity in income for this entity represents its residual profits from the sale of the community. |
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(7) | Equity in income from this entity for 2013 includes certain expensed Archstone Acquisition costs borne by the venture. |
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(8) | During 2012, the Company purchased its joint venture partner's interest in this venture. |
Investments in Consolidated Real Estate Entities
In
During the year ended December 2014,31, 2016, in addition to Avalon Clarendon discussed above, the Company acquired four consolidated communities:
Avalon Mission Oaks,Hoboken, located in Camarillo, CA. Avalon Mission OaksHoboken, NJ, contains 160217 apartment homes and was acquired for a purchase price of $47,000,000. The$129,700,000. In conjunction with the acquisition, the Company assumed a fixed rate secured mortgage note with a principal balance of $67,904,000 and a contractual interest rate of 4.18% maturing in December 2020.
Avalon Potomac Yard, located in Alexandria, VA, contains 323 apartment homes and was acquired for a purchase price of $108,250,000.
Avalon Columbia Pike, located in Arlington, VA, contains 269 apartment homes and was acquired for a purchase price of $102,000,000. In conjunction with the acquisition, the Company assumed a fixed rate secured mortgage note with a principal balance of $70,507,000 and a contractual interest rate of 3.38% maturing in November 2019.
Studio 77, located in North Hollywood, CA, contains 156 apartment homes and was acquired for a purchase price of $72,100,000.
Details regarding the real estate sales are summarized in the following table (dollars in thousands):
The following is a summary of income from discontinued operations for the periods presented (dollars in thousands):
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 as ofat the beginning of the given calendar year. Therefore, each year the composition of communities within each business segment is adjusted. Accordingly, the amounts between years are not directly comparable. Segment information for total revenue and NOI the years ended December 31, 2014, 20132016, 2015 and 20122014 have been adjusted forto exclude the real estate assets that were sold from January 1, 20122014 through December 31, 2014,2016, or otherwise qualify as held for sale and/or discontinued operations as of December 31, 2014,2016, as described in Note 7, "Real6, “Real Estate Disposition Activities."” Segment information for gross real estate as of December 31, 2015 and 2014 has not been adjusted to exclude real estate assets that were sold or otherwise qualified as held for sale subsequent to December 31, 2015.
Information with respect to stock options granted under the 2009 and 1994 Plans is as follows: