UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20142016
Commission file number 1-12672
AVALONBAY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 77-0404318
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Ballston Tower
671 N. Glebe Rd, Suite 800
Arlington, Virginia  22203
(Address of principal executive offices, including zip code)
 
(703) 329-6300
(Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:
(Title of each class) (Name of each exchange on which registered)
Common Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    
Yes  ý    No  o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    
Yes  o    No  ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes  ý    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    
Yes  ý    No  o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    oý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ý
 
Accelerated filer o
 
Non-accelerated filer o
 (Do not check if a
smaller reporting company)
 
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    
Yes  o    No  ý
The aggregate market value of the registrant's Common Stock, par value $.01 per share, held by nonaffiliates of the registrant, as of June 30, 20142016 was $18,601,181,331.$24,703,191,114.
The number of shares of the registrant's Common Stock, par value $.01 per share, outstanding as of January 30, 201531, 2017 was 132,049,857.137,330,988.
Documents Incorporated by Reference
Portions of AvalonBay Communities, Inc.'s Proxy Statement for the 20152017 annual meeting of stockholders, a definitive copy of which will be filed with the SEC within 120 days after the year end of the year covered by this Form 10-K, are incorporated by reference herein as portions of Part III of this Form 10-K.

Table of Contents

TABLE OF CONTENTS
    PAGE
PART I
ITEM 1.
 
BUSINESS
 
1
     
ITEM 1A.
 
RISK FACTORS
 
8
     
ITEM 1B.
 
UNRESOLVED STAFF COMMENTS
 
17
     
ITEM 2.
 
COMMUNITIES
 
1718
     
ITEM 3.
 
LEGAL PROCEEDINGS
 
3829
     
ITEM 4.
 
MINE SAFETY DISCLOSURES
 
3829
     
PART II
     
ITEM 5.
 
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
3930
     
ITEM 6.
 
SELECTED FINANCIAL DATA
 
4031
     
ITEM 7.
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
4335
     
ITEM 7A.
 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
6557
     
ITEM 8.
 
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
6557
     
ITEM 9.
 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
6557
     
ITEM 9A.
 
CONTROLS AND PROCEDURES
 
6557
     
ITEM 9B.
 
OTHER INFORMATION
 
6658
     
PART III
     
ITEM 10.
 
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
6759
     
ITEM 11.
 
EXECUTIVE COMPENSATION
 
6759
     
ITEM 12.
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
6759
     
ITEM 13.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
6860
     
ITEM 14.
 
PRINCIPAL ACCOUNTING FEES AND SERVICES
 
6860
     
PART IV
     
ITEM 15.
 
EXHIBITS, FINANCIAL STATEMENT SCHEDULE
 
6961
ITEM 16.
FORM 10-K SUMMARY
61
     
SIGNATURES
 
7566

Table of Contents

PART I

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Our actual results could differ materially from those set forth in each forward-looking statement. Certain factors that might cause such a difference are discussed in this report, including in the section entitled "Forward-Looking Statements"“Forward-Looking Statements” included in this Form 10-K. You should also review Item 1A. "Risk Factors"“Risk Factors” for a discussion of various risks that could adversely affect us.

ITEM 1.    BUSINESS

General

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. We develop, redevelop, acquire, own and operate multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. We focus on leading metropolitan areas in these regions 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 investments relative to other markets.markets that do not have these characteristics.

At January 31, 2015,2017, we owned or held a direct or indirect ownership interest in:
252
259 operating apartment communities containing 74,24075,038 apartment homes in 1110 states and the District of Columbia, of which 228244 communities containing 66,63170,864 apartment homes were consolidated for financial reporting purposes, twofive communities containing 6181,539 apartment homes were held by joint ventures in which we hold an ownership interest, and 2210 communities containing 6,9912,635 apartment homes were owned by the Funds (as defined below). 12Four of the consolidated communities containing 3,9981,671 apartment homes were under redevelopment, as discussed below;
26 wholly-owned
27 communities under constructiondevelopment, one of which is being developed through a joint venture, that are expected to contain an aggregate of 7,9248,629 apartment homes when completed; and

rights to develop an additional 3725 communities that, if developed in the manner expected, will contain an estimated 10,3848,487 apartment homes; andhomes.
an indirect interest in the Residual JV (as defined in this Form 10-K) which owns direct and indirect interests in assets acquired as part of the Archstone Acquisition (as defined in this Form 10-K), including two land parcels and an indirect interest in a joint venture which owns four apartment communities with 1,410 apartment homes in the United States.
Any discussion of apartment communities and homes as of December 31, 2014 and January 31, 2015 includes 240 apartment homes which were destroyed and are uninhabitable as a result of the fire at Avalon at Edgewater in January 2015.
We generally obtain ownership in an apartment community by developing a new community on either vacant land or land with improvements that we intend to raze, or by acquiring an existing community. In selecting sites for development or acquisition, we favor locations that are near expanding employment centers and convenient to transportation, recreation areas, entertainment, shopping and dining.

Our consolidated real estate investments consist of the following reportable segments: Established Communities, Other Stabilized Communities and Development/Redevelopment Communities.

Established Communities are generally operating communities that were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year such that year-over-year comparisons are meaningful. Other Stabilized Communities are generally all other operating communities that have stabilized occupancy and operating expenses during the current year, but that were not owned or had not achieved stabilization as of the beginning of the prior year such that year-over-year comparisons are not meaningful, as well as communities that are planned for disposition during the current year. Development/Redevelopment Communities consist of communities that are under construction, communities where substantial redevelopment is in progress or is planned to begin during the current year and communities under lease-up. A more detailed description of these segments and other related information can be found in Note 9, "Segment8, “Segment Reporting,"” of the Consolidated Financial Statements set forth in Item 8 of this report.


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Our principal financial goal is to increase long-term stockholdershareholder value through the development, redevelopment, acquisition, operation and, when appropriate, disposition of apartment communities in our markets. To help meet this goal, we regularly (i) monitor our investment allocation by geographic market and product type, (ii) develop, redevelop and acquire an interestinterests in apartment communities in our selected markets, (iii) selectively sell apartment communities that no longer meet our long-term strategy or when opportunities are presented to realize a portion of the value created through our investment and redeploy the proceeds from those sales and (iv) endeavor to maintain a capital structure that is aligned with our business risks with a view to maintaining continuous access to cost-effective capital. We pursue our development, investment and operating activities with the purpose of Creating a Better Way to Live. Our strategystrategic vision is to be leadersthe leading apartment company in multifamilyselect 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 tailoredand balance sheet management. In addition to serve the needs of the most attractive customer segmentsour in-house development and construction capabilities, we supplement our growth through our in-house redevelopment and acquisition platforms. We believe that our organizational structure, which includes dedicated development and operational teams in the best-performing U.S. submarkets. A substantial majorityeach of our current communitiesregions, and strong culture are upscale, which generally command among the highest rents in their markets. However, we also pursue the ownershipkey differentiators and operation of apartment communities that target a variety of customer segmentsprovide us with access to highly talented, dedicated and price points, consistent with our goal of offering a broad range of products and services.capable associates.

We operate our apartment communities under three core brands Avalon, AVA and Eaves by Avalon. We believe that this branding differentiation allows us to target our product offerings to multiple customer groups and submarkets within our existing geographic footprint. The "Avalon"Avalon brand is our core offering, focusing on upscale apartment living and high end amenities and services in urban and suburban markets. Our "AVA"AVA brand is designed for people who want to live in or near urban neighborhoods and in close proximity to public transportation, services, shopping and night-life. AVA apartments are generally smaller, many engineered for roommate living and feature modern design and a technology focus. Our Eaves by Avalon brand is designed for renters who seek good quality apartment living, often in a suburban setting, with practical amenities and services at a more modest price point.

During the three years ended December 31, 2014,2016, we acquired six apartment communities and disposed of 16 apartment communities, excluding activity for the Funds (as defined below), we acquired 59 apartment communities, of which 54 were acquired as part of the Archstone Acquisition (as defined in this Form 10-K). In addition, in 2013 in conjunction with the Archstone Acquisition, excluding the Residual JV, we acquired interests in three unconsolidated joint ventures, as well as the Residual JV, as discussed below, which as of December 31, 2014 own an aggregate of 13 apartment communities. During the three years ended December 31, 2014,2016, we disposed of 16 apartment communities, six of which were acquired in the Archstone Acquisition, and completed the development of 3738 apartment communities and the redevelopment of 2219 apartment communities. During

On February 27, 2013, pursuant to an asset purchase agreement dated November 26, 2012, we also purchased ourthe Company, together with Equity Residential, acquired, directly or indirectly, all of the assets owned by Archstone Enterprise LP (“Archstone,” which has since changed its name to Jupiter Enterprise LP), including all of the ownership interests in joint venture partner's interest in one operating community, obtaining a 100% ownership interest in that apartment community. In addition, we sold one wholly-owned community in 2015 throughventures and other entities owned by Archstone, and assumed Archstone’s liabilities, both known and unknown, with certain limited exceptions. Under the date this Form 10-K was filed.terms of the purchase agreement, the Company acquired approximately 40.0% of Archstone's assets and liabilities and Equity Residential acquired approximately 60.0% of Archstone’s assets and liabilities (the “Archstone Acquisition”).

In March 2005, we formed AvalonBay Value Added Fund, L.P. ("(“Fund I"I”), a private, discretionary real estate investment vehicle, which we managemanaged and in which we ownowned a 15.2% interest. Fund I acquired communities with the objective of either redeveloping or repositioning them, or taking advantage of market cycle timing and improved operating performance. From its inception in March 2005 through the close of its investment period in 2008, Fund I acquired 20 communities. During the three years ended December 31, 2014,2016, we realized our pro rata share of the gain from the sale of the last of the 17four communities owned by Fund I. During 2014, Fund I disposed of the last of its final four communities. Fund I has a term that expirescommunities in March2014, and was dissolved in April 2015.

In September 2008, we formed AvalonBay Value Added Fund II, L.P. ("(“Fund II"II”), a second institutional discretionary real estate investment fund which we manage and in which we own a 31.3% interest. In 2012, Fund II acquired its final operating community. From the commencement of Fund II through the close of its investment period, Fund II acquired 13 operating communities. As of December 31, 2016, Fund II owns three communities containing 1,366 apartment homes. During the three years ended December 31, 2014,2016, we realized our pro rata share of the gain from the sale of threenine communities owned by Fund II.
In conjunction with the Archstone Acquisition, excluding the Residual JV, we acquired interests in three additional joint ventures,
Archstone Multifamily Partners AC LP (the "U.S. Fund"“U.S. Fund”), Archstone Multifamily Partners AC JV LP (the "AC JV") and Brandywine Apartments of Maryland, LLC ("Brandywine").
The U.S. Fund was formed in July 2011 and is fully invested. TheAs of December 31, 2016, the U.S. Fund owns nineseven communities containing 1,7301,269 apartment homes, one of which includes a marina containing 229 boat slips. ThroughIn conjunction with the Archstone Acquisition, through subsidiaries, we acquired and own the general partner of the fundU.S. Fund and hold a 28.6% interest in the fund.U.S. Fund. During the three years ended December 31, 2016, we realized our pro rata share of the gain from the sale of two communities owned by the U.S. Fund.
The

Archstone Multifamily Partners AC JV LP (the “AC JV”) is a joint venture in which we acquired Archstone's 20.0% ownership interest. The AC JV was formed in 2011 and as of December 31, 2016, owns three operating apartment communities containing 921 apartment homes, one of which completed development in 2014. The AC JV partnership agreement contains provisions that require us 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. The ROFO restriction expires in 2019.

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Brandywine owns a 305 apartment home community located in Washington, DC, which 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, we acquired a 26.1% equity interest in the venture, and subsequently purchased an additional 2.6% interest, and as of December 31, 2014, hold a 28.7% equity interest in the venture.
A more detailed description of Fund I, Fund II, and the U.S. Fund and(collectively, the “Funds”), the AC JV (collectively, the "Funds"), Brandywineand other joint ventures and the related investment activity can be found in the discussion in Note 6, "Investments5, “Investments in Real Estate Entities,"” of the Consolidated Financial Statements in Item 8 of this report and in Item 7. "Management's“Management's Discussion and Analysis of Financial Condition and Results of Operations."”

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 of the last of its communities with 1,410 apartment homes in the United States; two land parcels; and2015, 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 liabilities of the Residual JV.
Including sales by unconsolidated entities and entities in which we held a residual profits interest, and excluding the sale of indirect interests associated with the Residual JV, during 2014
During 2016, we sold 12 operating communities including sales by unconsolidated entities and recognized a gain in accordance with U.S. generally accepted accounting principles ("GAAP"(“GAAP”) of $181,557,000. We also$428,370,000. In addition, we sold other real estate primarily composed of ancillary real estate and recognized incomea gain in accordance with GAAP of $60,534,000 representing our promoted interests in certain of the unconsolidated ventures disposed of in 2014.$10,224,000.

A further discussion of our development, redevelopment, disposition, acquisition, property management and related strategies follows.

Development Strategy.    We select land for development and follow established procedures that we believe minimize both the cost and the risks of development. As one of the largest developers of multifamily rental apartment communities in our selected markets, we identify development opportunities through local market presence and access to local market information achieved through our regional offices. In addition to our principal executive office in Arlington, Virginia, we also maintain regional offices, administrative offices or specialty offices, including offices that are in or near the following cities:

Bellevue, Washington;
Boston, Massachusetts;
Fairfield, Connecticut;
Irvine, California;
Iselin, New Jersey;
Long Island, New York;
Los Angeles, California;
New York, New York;
Newport Beach,San Diego, California;
San Francisco, California;
San Jose, California;
Seattle, Washington;
Fairfield, Connecticut; and
Virginia Beach, Virginia; andVirginia.
Woodbridge, New Jersey.

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After selecting a target site, we usually negotiate for the right to acquire the site either through an option or a long-term conditional contract. Options and long-term conditional contracts generally allow us to acquire the target site shortly before the start of construction, which reduces development-related risks and preserves capital. However, as a result of competitive market conditions for land suitable for development, we have sometimes acquired and held land prior to construction for extended periods while entitlements are obtained, or acquired land zoned for uses other than residential with the potential for rezoning. For further discussion of our Development Rights, refer to Item 2. "Communities"“Communities” in this report.

We generally act as our own general contractor and construction manager, except for certain mid-rise and high-rise apartment communities, where we may elect to use third-party general contractors as construction managers. We generally perform these functions directly (although we may use a wholly-owned subsidiary) both for ourselves and for the joint ventures and partnerships of which we are a member or a partner. We believe direct involvement in construction enables us to achieve higher construction quality, greater control over construction schedules and cost savings. Our development, property management and construction teams monitor construction progress to ensure quality workmanship and a smooth and timely transition into the leasing and operating phase.

During periods where competition for development land is more intense, we may acquire improved land with existing commercial uses and rezone the site for multifamily residential use. During the period that we hold these buildings for future development, any rent received in excess of expenses from these operations, which we consider to be incidental, is accounted for as a reduction in our investment in the development pursuit and not as net income. Any expenses relating to these operations, in excess of any rents received, are accounted for as a reduction in net income. We have also participated, and may in the future participate, in master planned or other large multi-use developments where we commit to build infrastructure (such as roads) to be used by other participants or commit to act as construction manager or general contractor in building structures or spaces for third parties (such as unimproved ground floor retail space, municipal garages or parks). Costs we incur in connection with these activities may be accounted for as additional invested capital in the community or we may earn fee income for providing these services. Particularly with large scale, urban in-fill developments, we may engage in significant environmental remediation efforts to prepare a site for construction.

Throughout this report, the term "development"“development” is used to refer to the entire property development cycle, including pursuit of zoning approvals, procurement of architectural and engineering designs and the construction process. References to "construction"“construction” refer to the actual construction of the property, which is only one element of the development cycle.

Redevelopment Strategy.    When we undertake the redevelopment of a community, our goal is to renovate and/or rebuild an existing community so that our total investment is generally below replacement cost and the community is well positioned in the market to achieve attractive returns on our capital. We have dedicated redevelopment teams and procedures that are intended to control both the cost and risks of redevelopment. Our redevelopment teams, which include redevelopment, construction and property management personnel, monitor redevelopment progress. We believe we achieve significant cost savings by actingundertaking the redevelopment primarily through an occupied turn strategy, in which we continue to operate the community as we install improvements, working to minimize any impact on our own general contractor. More importantly, this helps to ensure quality design and workmanship and a smooth and timely transition into the lease-up and restabilization phases.current residents.

Throughout this report, the term "redevelopment"“redevelopment” is used to refer to the entire redevelopment cycle, including planning and procurement of architectural and engineering designs, budgeting and actual renovation work. The actual renovation work is referred to as "reconstruction,"“reconstruction,” which is only one element of the redevelopment cycle.

Disposition Strategy.    We sell assets that no longer meet our long-term strategy or when market conditions are favorable, and we redeploy the proceeds from those sales to develop, redevelop and acquire communities and to rebalance our portfolio across or within geographic regions. This also allows us to realize a portion of the value created through our investments and provides additional liquidity. We are then able to redeploy the net proceeds from our dispositions in lieu of raising that amount of capital externally. When we decide to sell a community, we generally solicit competing bids from unrelated parties for these individual assets and consider the sales price of each proposal.


As part of the Archstone Acquisition, we acquired, and still own, 14 assets that werehad previously been contributed by third parties on a tax-deferred basis to an Archstone partnership in which the third parties received ownership interests. To protect the tax-deferred nature of the contribution, the third parties are entitled to cash payments if we trigger tax obligations to the third parties by selling, or repayingfailing to maintain sufficient levels of secured financing on, the contributed assets. AsOur tax protection payment obligations with respect to these assets expire at different times and in some cases don’t expire until the death of December 31, 2014,a third party who contributed ownership interests to the Archstone partnership. After review and investigation of Archstone’s tax and accounting records, we estimate that, had we sold or taken other triggering actions in 2016 with respect to all 14 assets, the aggregate amount of the tax protection payments that would behave been triggered bywould have been approximately $54,600,000. At the sale of all 14 contributed assets is estimatedpresent time, we do not intend to take actions that would cause us to be approximately $44,000,000.required to make tax protection payments with respect to any of these assets.

Acquisition Strategy.    Our core competencies in development and redevelopment discussed above allow us to be selective in the acquisitions we target. Acquisitions allow us to achieve rapid penetration into markets in which we desire an increased presence. Acquisitions (and dispositions) also help us achieve our desired product mix or rebalance our portfolio. Portfolio growth also allows for fixed general and administrative costs to be a smaller percentage of overall community Net Operating Income ("NOI"(“NOI”).

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Wediscretionary real estate investments funds, which placed certain limitations on our ability to acquire new communities during their investments periods, we are not presently pursuing the formation of a new discretionary real estate investment fund, preferring at this time to maintain flexibility in shaping our portfolio of wholly-owned assets through acquisitions and dispositions.

Property Management Strategy.    We seek to increase operating income through innovative, proactive property management that will result in higher revenue from communities while constraining operating expenses. Our principal strategies to maximize revenue include:

focusing on resident satisfaction;
staggering lease terms such that lease expirations are better matched to traffic patterns;
balancing high occupancy with premium pricing and increasing rents as market conditions permit; and
employing revenue management software to optimize the pricing and term of leases.

Constraining growth in operating expenses is another way in which we seek to increase earnings growth. Growth in our portfolio and the resulting increase in revenue allows for fixed operating costs to be spread over a larger volume of revenue, thereby increasing operating margins. We constrain growth in operating expenses in a variety of ways, which include, but are not limited to, the following:

we use purchase order controls, acquiring goods and services from pre-approved vendors;
we use national negotiated contracts and also purchase supplies in bulk where possible;
we bid third-party contracts on a volume basis;
we strive to retain residents through high levels of service in order to eliminate the cost of preparing an apartment home for a new resident and to reduce marketing and vacant apartment utility costs;
we perform turnover work in-house or hire third parties, generally considering the most cost effective approach as well as expertise needed to perform the work;
we undertake preventive maintenance regularly to maximize resident safety and satisfaction, as well as to maximize property and equipment life;
we have established a customer care center, centralizing and improving the efficiency and consistency in the application of Company policies for many of the administrative tasks associated with owning and operating apartment communities; and
we aggressively pursue real estate tax appeals.

On-site property management teams receive bonuses based largely upon the revenue, expense, NOI and customer service metrics produced at their respective communities. We use and continuously seek ways to improve technology applications to help manage our communities, believing that the accurate collection of financial and resident data will enable us to maximize revenue and control costs through careful leasing decisions, maintenance decisions and financial management.

We generally manage the operation and leasing activity of our communities directly (although we may use a wholly-owned subsidiary) both for ourselves and the joint ventures and partnerships of which we are a member or a partner. From time to time we may engage a third party to manage leasing and/or maintenance activity at one or more of our communities.


From time to time we also pursue or arrange ancillary services for our residents to provide additional revenue sources or increase resident satisfaction. As a REIT, we generally cannot provide direct services to our residents that are not customarily provided by a landlord, nor can we directly share in the income of a third party that provides such services. However, we can provide such non-customary services to residents or share in the revenue or income from such services if we do so through a "taxable“taxable REIT subsidiary,"” which is a subsidiary that is treated as a "C corporation"“C corporation” subject to federal income taxes. See "Tax Matters"“Tax Matters” below.

Financing Strategy.    We maintain a capital structure that provides financial flexibility to ensure we can select cost effective capital market options that are well matched to our business risks. We estimate that our short-term liquidity needs will be met from cash on hand, borrowings under our $1,300,000,000$1,500,000,000 revolving variable rate unsecured credit facility (the "Credit Facility"“Credit Facility”), sales of current operating communities and/or issuance of additional debt or equity securities. A determination to engage in an equity or debt offering depends on a variety of factors such as general market and economic conditions, our short and long-term liquidity needs, the relative costs of debt and equity capital and growth opportunities. A summary of debt and equity activity for the last three years is reflected on our Consolidated Statement of Cash Flows of the Consolidated Financial Statements set forth in Item 8 of this report.

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We have entered into, and may continue in the future to enter into, joint ventures (including limited liability companies or partnerships) through which we would own an indirect economic interest of less than 100% of the community or communities owned directly by such joint ventures. Our decision to either hold an apartment community in fee simple or to have an indirect interest in the community through a joint venture is based on a variety of factors and considerations, including: (i) the economic and tax terms required by a seller of land or of a community; (ii) our desire to diversify our portfolio of communities by market, submarket and product type; (iii) our desire at times to preserve our capital resources to maintain liquidity or balance sheet strength; and (iv) our projection, in some circumstances, that we will achieve higher returns on our invested capital or reduce our risk if a joint venture vehicle is used. Investments in joint ventures are not limited to a specified percentage of our assets. Each joint venture agreement is individually negotiated, and our ability to operate and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement.

In addition, from time to time, we may offer shares of our equity securities, debt securities or options to purchase stock in exchange for property. We may also acquire properties in exchange for properties we currently own.

Other Strategies and Activities.    While we emphasize equity real estate investments in rental apartment communities, we have the ability to invest in other types of real estate, mortgages (including participating or convertible mortgages), securities of other REITs or real estate operating companies, or securities of technology companies that relate to our real estate operations or of companies that provide services to us or our residents, in each case consistent with our qualification as a REIT. In addition, we own and lease retail space at our communities when either (i) the highest and best use of the space is for retail (e.g., street level in an urban area); (ii) we believe the retail space will enhance the attractiveness of the community to residents or; (iii) some component of retail space is required to obtain entitlements to build apartment homes. As of December 31, 2014,2016, we had a total of 625,798693,410 square feet of rentable retail space, excluding retail space within communities currently under construction.development. Gross rental revenue provided by leased retail space in 20142016 was $17,894,000 (1.1%$21,390,000 (1.0% of total revenue). We may also develop a property in conjunction with another real estate company that will own and operate the retail componentor for-sale residential components of a mixed-use building or project that we help develop. If we secure a development right and believe that its best use, in whole or in part, is to develop the real estate with the intent to sell rather than hold the asset, we may, through a taxable REIT subsidiary, develop real estate for sale. Any investment in securities of other entities, and any development of real estate for sale, is subject to the percentage of ownership limitations, gross income tests, and other limitations that must be observed for REIT qualification.

We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers and do not intend to do so. At all times we intend to make investments in a manner so as to qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code of 1986, as amended or the Code(the “Code”) (or the Treasury Regulations thereunder), our Board of Directors determines that it is no longer in our best interest to qualify as a REIT.

Tax Matters

We filed an election with our 1994 federal income tax return to be taxed as a REIT under the Code and intend to maintain our qualification as a REIT in the future. As a qualified REIT, with limited exceptions, such as those described under "Property“Property Management Strategy"Strategy” above, we will not be taxed under federal and certain state income tax laws at the corporate level on our taxable net income to the extent taxable net income is distributed to our stockholders. We expect to make sufficient distributions to avoid income tax at the corporate level. While we believe that we are organized and qualified as a REIT and we intend to operate in a manner that will allow us to continue to qualify as a REIT, there can be no assurance that we will be successful in this regard. Qualification as a REIT involves the application of highly technical and complex provisions of the Code for which there are limited

judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control.

Competition

We face competition from other real estate investors, including insurance companies, pension and investment funds, partnerships and investment companies and other REITs, to acquire and develop apartment communities and acquire land for future development. As an owner and operator of apartment communities, we also face competition for prospective residents from other operators whose communities may be perceived to offer a better location or better amenities or whose rent may be perceived as a better value given the quality, location and amenities that the resident seeks. We also compete against condominiums and single-family homes that are for sale or rent. Although we often compete against large, sophisticated developers and operators for development opportunities and for prospective residents, real estate developers and operators of any size can provide effective competition for both real estate assets and potential residents.

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Environmental and Related Matters

As a current or prior owner, operator and developer of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances and also could be liable to third parties resulting from environmental contamination or noncompliance at our communities. For some development communities we undertake extensive environmental remediation to prepare the site for construction, which could be a significant portion of our total construction cost. Environmental remediation efforts could expose us to possible liabilities for accidents or improper handling of contaminated materials during construction. These and other risks related to environmental matters are described in more detail in Item 1A. "Risk“Risk Factors."”

We believe that more government regulation of energy use, along with a greater focus on environmental protection, may, over time, have a significant impact on urban growth patterns. If changes in zoning to encourage greater density and proximity to mass transit do occur, such changes could benefit multifamily housing and those companies with a competency in high-density development. However, there can be no assurance as to whether or when such changes in regulations or zoning will occur or, if they do occur, whether the multifamily industry or the Company will benefit from such changes.

Other Information

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may call the SEC at 1-202-551-8090 for further information on the operation of the Public Reference Room. Our SEC filings are also available to the public from the SEC's website at www.sec.gov.

We maintain a website at www.avalonbay.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to the Securities Exchange Act of 1934 are available free of charge in the "Investor Relations"“Investor Relations” section of our website as soon as reasonably practicable after the reports are filed with or furnished to the SEC. In addition, the charters of our Board's Nominating and Corporate Governance Committee, Audit Committee and Compensation Committee, as well as our Director Independence Standards, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Policy Regarding Shareholder Rights Agreements, Policy Regarding Shareholder Approval of Future Severance Agreements, Executive Stock Ownership Guidelines, Policy on Political Contributions and Government Relations, and Policy on Recoupment, of Incentive Compensation, are available free of charge in that section of our website or by writing to AvalonBay Communities, Inc., Ballston Tower, Suite 800, 671 N. Glebe Rd., Arlington, Virginia 22203, Attention: Chief Financial Officer. To the extent required by the rules of the SEC and the NYSE, we will disclose amendments and waivers relating to these documents in the same place on our website.

We were incorporated under the laws of the State of California in 1978. In 1995, we reincorporated in the State of Maryland and have been focused on the ownership and operation of apartment communities since that time. As of January 31, 2015,2017, we had 3,0063,071 employees.

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ITEM 1A.    RISK FACTORS

Our operations involve various risks that could have adverse consequences, including those described below. This Item 1A. includes forward-looking statements. You should refer to our discussion of the qualifications and limitations on forward-looking statements in this Form 10-K.

Development, redevelopment, construction and constructionoperating risks could affect our profitability.

We intend to continue to develop and redevelop apartment home communities. These activities can include long planning and entitlement timelines and can involve complex and costly activities, including significant environmental remediation or construction work in high-density urban areas. These activities may be exposed to the following risks:

we may abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring those opportunities;
occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;
we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities;
we may incur costs that exceed our original estimates due to increased material, labor or other costs;
we may be unable to complete construction and lease-up of a community on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;
we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a community, which may cause us to delay or abandon an opportunity;
we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and
we may incur liability if our communities are not constructed and operated in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements. Noncompliance could result in imposition of fines, an award of damages to private litigants, and a requirement that we undertake structural modifications to remedy the noncompliance.

We estimate construction costs based on market conditions at the time we prepare our budgets, and our projections include changes that we anticipate but cannot predict with certainty. Construction costs may increase, particularly for labor and certain materials and, for some of our Development Communities and Development Rights (as defined below), the total construction costs may be higher than the original budget. Total capitalized cost includes all capitalized costs incurred and projected to be incurred to develop or redevelop a community, determined in accordance with GAAP, including:

land and/or property acquisition costs;
fees paid to secure air rights and/or tax abatements;
construction or reconstruction costs;
costs of environmental remediation;
real estate taxes;
capitalized interest and insurance;
loan fees;
permits;
professional fees;

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allocated development or redevelopment overhead; and
other regulatory fees.

Costs to redevelop communities that have been acquired have, in some cases, exceeded our original estimates and similar increases in costs may be experienced in the future. We cannot assure you that market rents in effect at the time new development or redevelopment communities complete lease-up will be sufficient to fully offset the effects of any increased construction or reconstruction costs.


The construction and maintenance of our communities includes a risk of major casualty events that could materially damage our property and the property of others and pose the risk of personal injury. While we carry insurance for such risks in amounts we deem reasonable, we cannot assure that such insurance will be adequate, and when we have incurred and in the future may incur such casualties we are subject to losses on account of deductibles and self-insured amounts in any event. Such casualties may also expose us in the future to higher insurance premiums, greater construction or operating costs (either voluntarily assumed by us or as a result of new local regulations), and risks to our reputation among prospective residents or municipalities from which we may seek approvals in the future, all of which could have a material adverse effect on our business and our financial condition and results of operations.

Unfavorable changes in market and economic conditions could adversely affect occupancy, rental rates, operating expenses, and the overall market value of our assets, including joint ventures and investments in the Funds.

Local conditions in our markets significantly affect occupancy, rental rates and the operating performance of our communities. The risks that may adversely affect conditions in those markets include the following:
plant closings,
corporate restructurings and/or layoffs, industry slowdowns and other factors that adversely affect the local economy;
an oversupply of, or a reduced demand for, apartment homes;
a decline in household formation or employment or lack of employment growth;
the inability or unwillingness of residents to pay rent increases;
rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and
economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.

Changes in applicable laws, or noncompliance with applicable laws, could adversely affect our operations or expose us to liability.

We must develop, construct and operate our communities in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, landlord tenant laws and other laws generally applicable to business operations. Noncompliance with laws could expose us to liability.

Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements and the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) rent control or rent stabilization laws or other residential landlord/tenant laws, or (iii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.

We have seen a recent increase in municipalities considering or being urged by advocacy groups to consider rent control or rent stabilization laws and regulations or take other actions which could limit our ability to raise rents based solely on market conditions. Depending on the nature of such laws or regulations and the number of our communities that become subject to any such restriction on rent increases, our revenues and net income could be adversely affected. For example, in 2016 in Mountain View, California, the voters passed a referendum that would limit rent increases on existing tenants (but not on new move-ins) in communities built before 1995. We have three communities with a total of 946 apartment homes that would be subject to the new law, although the implementation of the Mountain View ordinance is currently stayed in connection with a lawsuit challenging the ordinance filed by the California Apartment Association.

Short-term leases expose us to the effects of declining market rents.

Substantially all of our apartment leases are for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.

Competition could limit our ability to lease apartment homes or increase or maintain rents.

Our apartment communities compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing in a particular area could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.

Attractive investment opportunities may not be available, which could adversely affect our profitability.

We expect that other real estate investors, including insurance companies, pension funds, other REITs and other well-capitalized investors, will compete with us to acquire existing properties and to develop new properties. This competition could increase prices for properties of the type we would likely pursue and adversely affect our profitability.profitability for new investments.

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Capital and credit market conditions may adversely affect our access to various sources of capital and/or the cost of capital, which could impact our business activities, dividends, earnings, and common stock price, among other things.

In periods when the capital and credit markets experience significant volatility, the amounts, sources and cost of capital available to us may be adversely affected. We primarily use external financing to fund construction and to refinance indebtedness as it matures. If sufficient sources of external financing are not available to us on cost effective terms, we could be forced to limit our development and redevelopment activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets, reducing our cash dividend or paying out less than 100% of our taxable income. To the extent that we are able and/or choose to access capital at a higher cost than we have experienced in recent years (reflected in higher interest rates for debt financing or a lower stock price for equity financing) our earnings per share and cash flows could be adversely affected. In addition, the price of our common stock may fluctuate significantly and/or decline in a high interest rate or volatile economic environment. We believe that the lenders under our Credit Facility will fulfill their lending obligations thereunder, but if economic conditions deteriorate, there can be no assurance that the ability of those lenders to fulfill their obligations would not be adversely impacted.

Insufficient cash flow could affect our debt financing and create refinancing risk.

We are subject to the risks associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. In this regard, we note that in order for us to continue to qualify as a REIT, we are required to annually distribute dividends generally equal to at least 90% of our REIT taxable income, computed without regard to the dividends paid deduction and ourexcluding any net capital gain. This requirement limits the amount of our cash flow available to meet required principal and interest payments. The principal outstanding balance on a portion of our debt will not be fully amortized prior to its maturity. Although we may be able to repay our debt by using our cash flows, we cannot assure you that we will have sufficient cash flows available to make all required principal payments. Therefore, we may need to refinance at least a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that a refinancing will not be done on as favorable terms; either of these outcomes could have a material adverse effect on our financial condition and results of operations.

Rising interest rates could increase interest costs and could affect the market price of our common stock.

We currently have, and may in the future incur, contractual variable interest rate debt. In addition, we regularly seek access to both fixed and variable rate debt financing to repay maturing debt and to finance our development and redevelopment activity. Accordingly, if interest rates increase, our interest costs will also rise, unless we have made arrangements that hedge the risk of rising interest rates. In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock.

Bond financing and zoning compliance requirements could limit our income, restrict the use of communities and cause favorable financing to become unavailable.

We have financed some of our apartment communities with obligations issued by local government agencies because the interest paid to the holders of this debt is generally exempt from federal income taxes and, therefore, the interest rate is generally more favorable to us. These obligations are commonly referred to as "tax-exempt bonds"“tax-exempt bonds” and generally must be secured by mortgages on our communities. As a condition to obtaining tax-exempt financing, or on occasion as a condition to obtaining favorable zoning in some jurisdictions, we will commit to make some of the apartments in a community available to households whose income does not exceed certain thresholds (e.g., 50% or 80% of area median income), or who meet other qualifying tests. As of December 31, 2014,2016, approximately 6.0%5.8% of our apartment homes at current operating communities were under income limitations such as these. These commitments, which may run without expiration or may expire after a period of time (such as 15 or 20 years), may limit our ability to raise rents and, in consequence, can also adversely affect the value of the communities subject to these restrictions.
In addition, some of our tax-exempt bond financing documents require us to obtain a guarantee from a financial institution of payment of the principal of, and interest on, the bonds. The guarantee may take the form of a letter of credit, surety bond, guarantee agreement or other additional collateral. If the financial institution defaults in its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur under the applicable tax-exempt bonds and the community could be foreclosed upon if we do not redeem the bonds.

Risks related to indebtedness.

We have a Credit Facility with a syndicate of commercial banks. Our organizational documents do not limit the amount or percentage of indebtedness that may be incurred. Accordingly, subject to compliance with outstanding debt covenants, we could incur more debt, resulting in an increased risk of default on our obligations and an increase in debt service requirements that could adversely affect our financial condition and results of operations.

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The mortgages on those of our properties that are subject to secured debt, our Credit Facility and the indenture under which a substantial portion of our debt was issued contain customary restrictions, requirements and other limitations, as well as certain financial and operating covenants including maintenance of certain financial ratios. Maintaining compliance with these restrictions could limit our flexibility. A default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could severely affect our liquidity and increase our financing costs. Refer to Item 7. "Management's“Management's Discussion and Analysis of Financial Condition and Results of Operations"Operations” for further discussion.

The mortgages on those of our properties subject to secured debt generally include provisions which stipulate a prepayment penalty or payment that we will be obligated to pay in the event that we elect to repay the mortgage note prior to the earlier of (i) the stated maturity of the note, or (ii) the date at which the mortgage note is prepayable without such penalty or payment. If we elect to repay some or all of the outstanding principal balance for our mortgage notes, we may incur prepayment penalties or payments under these provisions which could adversely affect our results of operations.

Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity and access to capital markets.

There are two major debt rating agencies that routinely evaluate and rate our debt. Their ratings are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality, amount of real estate under development, and sustainability of cash flow and earnings, among other factors. If market conditions change, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity and access to capital markets.

Debt financing may not be available and equity issuances could be dilutive to our stockholders.

Our ability to execute our business strategy depends on our access to an appropriate blend of debt and equity financing. Debt financing may not be available in sufficient amounts or on favorable terms. If we issue additional equity securities, the interests of existing stockholders could be diluted.

Failure to generate sufficient revenue or other liquidity needs could limit cash flow available for distributions to stockholders.

A decrease in rental revenue, or liquidity needs such as the repayment of indebtedness or funding of our development activities, could have an adverse effect on our ability to pay distributions to our stockholders. Significant expenditures associated with each community such as debt service payments, if any, real estate taxes, insurance and maintenance costs are generally not reduced when circumstances cause a reduction in income from a community.

The form, timing and/or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.

The form, timing and/or amount of dividend distributions will be declared at the discretion of the Board of Directors and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the Board of Directors may consider relevant. The Board of Directors may modify our dividend policy from time to time.


We may choose to pay dividends in our own stock, in which case stockholders may be required to pay tax in excess of the cash they receive.

We may distribute taxable dividends that are payable in part in our stock, as we did in the fourth quarter of 2008. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of the cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, the trading price of our stock would experience downward pressure if a significant number of our stockholders sell shares of our stock in order to pay taxes owed on dividends.

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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.
We are currently implementing two new brands of communities that target various customer preferences. We cannot assure that these brands will be successful or that our costs in developing and implementing these brands will result in incremental revenue and earnings.
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.

We are exposed to risks associated with investment in and management of discretionary real estate investment funds and joint ventures.

We formed Fund I and Fund II, in which we have an equity interest of 15.2% and 31.3%, and as part of the Archstone Acquisition we acquired equity interests in the U.S. Fund and the AC JV of 28.6% and 20.0%, respectively, which, through wholly-owned subsidiaries, we manage as the general partner and managing member and in which at December 31, 2014 we have an aggregate equity investment, excluding costs incurred in excess of our equity in the underlying net assets of each respective fund, of approximately $250,024,000, net of distributions to us.member. The investment periods for Fund I, Fund II and the U.S. Fund are over,over. The Funds and Fund I has a term that expires in March 2015. The Fundsjoint ventures (collectively, the "ventures") present risks, including the following:

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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.

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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.

14

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.

15

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.


16

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.

17

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 England33
 7,379
40
 9,009
Metro NY/NJ (2)33
 11,611
35
 11,084
Mid-Atlantic22
 7,108
27
 9,575
Pacific Northwest13
 3,179
13
 3,221
Northern California29
 8,519
33
 9,987
Southern California42
 11,639
43
 12,032
Total Established172
 49,435
191
 54,908
      
Other Stabilized Communities: 
  
 
  
New England12
 3,306
4
 1,032
Metro NY/NJ9
 2,557
8
 2,024
Mid-Atlantic12
 4,599
5
 1,607
Pacific Northwest2
 396
1
 367
Northern California7
 1,765
5
 1,455
Southern California12
 4,640
10
 3,419
Non-Core2
 474
3
 1,014
Total Other Stabilized56
 17,737
36
 10,918
      
Lease-Up Communities15
 3,853
12
 2,867
      
Redevelopment Communities8
 2,938
4
 1,671
      
Unconsolidated Communities15
 4,174
   
Total Current Communities251
 73,963
258
 74,538
      
Development Communities26
 8,524
Development Communities (1)27
 9,129
   
Total Communities285
 83,667
      
Development Rights37
 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:

18
Number of
communities
Established Communities as of December 31, 2013115
   Communities added67
   Communities removed (1):
        Redevelopment Communities(8)
        Disposed Communities(2)
Established Communities as of December 31, 2014172
   Communities added13
   Communities removed (1):
        Redevelopment Communities(4)
        Disposed Communities(3)
        Other Stabilized (2)(1)
Established Communities as of December 31, 2015177
   Communities added25
   Communities removed (1):
        Redevelopment Communities(3)
        Disposed Communities(6)
        Communities with multiple phases combined(2)
Established Communities as of December 31, 2016191

(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.
Table of Contents

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-rise100
 26,968
   High-rise24
 6,923
Total Current Communities259
 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:

19
 
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 England53
 50
 12,528
 11,783
 16.6% 15.7%
Boston, MA39
 37
 9,639
 9,234
 12.8% 12.3%
Fairfield-New Haven, CT14
 13
 2,889
 2,549
 3.8% 3.4%
            
Metro NY/NJ49
 49
 14,843
 14,604
 19.7% 19.4%
New York City, NY12
 12
 4,292
 4,583
 5.7% 6.1%
New York Suburban17
 17
 4,949
 4,513
 6.6% 6.0%
New Jersey20
 20
 5,602
 5,508
 7.4% 7.3%
            
Mid-Atlantic36
 39
 13,308
 14,374
 17.6% 19.2%
Washington Metro/Baltimore, MD36
 39
 13,308
 14,374
 17.6% 19.2%
            
Pacific Northwest17
 17
 4,225
 4,092
 5.6% 5.5%
Seattle, WA17
 17
 4,225
 4,092
 5.6% 5.5%
            
Northern California41
 42
 12,158
 12,410
 16.0% 16.5%
San Jose, CA14
 13
 5,158
 4,905
 6.8% 6.5%
Oakland-East Bay, CA11
 13
 3,338
 3,843
 4.4% 5.1%
San Francisco, CA16
 16
 3,662
 3,662
 4.8% 4.9%
            
Southern California58
 59
 17,473
 16,761
 23.2% 22.3%
Los Angeles, CA36
 38
 10,855
 11,291
 14.5% 15.0%
Orange County, CA12
 12
 3,715
 3,243
 4.9% 4.3%
San Diego, CA10
 9
 2,903
 2,227
 3.8% 3.0%
            
Non-Core3
 3
 1,014
 1,014
 1.3% 1.4%
            
 257
 259
 75,549
 75,038
 100.0% 100.0%
Table of Contents


 
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 England49
 50
 11,868
 11,444
 16.3% 15.4%
Boston, MA34
 36
 8,518
 8,555
 11.7% 11.5%
Fairfield County, CT15
 14
 3,350
 2,889
 4.6% 3.9%
            
Metro NY/NJ45
 47
 14,676
 15,258
 20.1% 20.6%
New York City, NY10
 10
 3,581
 3,582
 4.9% 4.8%
New York Suburban17
 19
 5,039
 5,554
 6.9% 7.5%
New Jersey (1)18
 18
 6,056
 6,122
 8.3% 8.3%
            
Mid-Atlantic37
 37
 13,118
 13,308
 18.0% 17.9%
Washington Metro37
 37
 13,118
 13,308
 18.0% 17.9%
            
Pacific Northwest16
 16
 3,794
 3,858
 5.2% 5.2%
Seattle, WA16
 16
 3,794
 3,858
 5.2% 5.2%
            
Northern California37
 41
 11,104
 11,974
 15.3% 16.1%
Oakland-East Bay, CA10
 12
 3,244
 3,591
 4.5% 4.8%
San Francisco, CA14
 15
 3,207
 3,480
 4.4% 4.7%
San Jose, CA13
 14
 4,653
 4,903
 6.4% 6.6%
            
Southern California57
 57
 17,221
 17,132
 23.7% 23.1%
Los Angeles, CA34
 35
 10,344
 10,575
 14.3% 14.3%
Orange County, CA13
 12
 3,745
 3,425
 5.1% 4.6%
San Diego, CA10
 10
 3,132
 3,132
 4.3% 4.2%
            
Non-Core3
 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.

20

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.


21

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

22

      
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

23

      
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

24

      
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

25

      
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

26

      
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

27

      
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

28

      
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.

29

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.

30

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.


31

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
 Total8,524
 $3,011.0
  Total9,129
 $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.

32

(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
  Total4,121
 $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
  Total1,715
 $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.

33

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.

34
Table In addition, two Development Rights are additional development phases of Contentsexisting stabilized operating communities we own, and will be constructed on land currently associated with those operating communities. During the next 12 months we expect to commence construction of apartment communities on three of the Development Rights for which we currently own the land, with a carrying basis of $49,584,000.


The properties comprising the Development Rights are in different stages of the due diligence and regulatory approval process. The decisions as to which of the Development Rights to invest in, if any, or to continue to pursue once an investment in a Development Right is made, are business judgments that we make after we perform financial, demographic and other analyses. In the event that we do not proceed with a Development Right, we generally would not recover any of the capitalized costs incurred in the pursuit of those communities, unless we were to recover amounts in connection with the sale of land; however, we cannot guarantee a recovery. Pre-development costs incurred in the pursuit of Development Rights, for which future development is not yet considered probable, are expensed as incurred. In addition, if the status of a Development Right changes, making future development no longer probable, any 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.

35

  
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
 Total2,769
 $781.4
   Total2,283
 $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.

36

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

37

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.

38

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.


39

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 fees11,050
 11,502
 10,257
 9,656
 7,354
Total revenue1,685,061
 1,462,921
 1,000,627
 900,087
 808,043
          
Expenses: 
  
  
  
  
Operating expenses, excluding property taxes410,672
 352,245
 259,350
 246,872
 235,168
Property taxes178,634
 158,774
 97,555
 88,964
 84,319
Interest expense, net180,618
 172,402
 136,920
 167,814
 169,997
Loss on extinguishment of debt, net412
 14,921
 1,179
 1,940
 —
Loss on interest rate contract—
 51,000
 —
 —
 —
Depreciation expense442,682
 560,215
 243,680
 226,728
 208,662
General and administrative expense41,425
 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 expenses1,250,726
 1,394,180
 785,584
 778,708
 727,968
          
Equity in (loss) income of unconsolidated entities148,766
 (11,154) 20,914
 5,120
 762
Gain on sale of land490
 240
 280
 13,716
 —
Gain on sale of communities84,925
 —
 —
 —
 —
Gain on acquisition of unconsolidated entity—
 —
 14,194
 —
 —
          
Income from continuing operations before taxes668,516
 57,827
 250,431
 140,215
 80,837
Income tax expense9,368
 —
 —
 —
 (235)
          
Income from continuing operations659,148
 57,827
 250,431
 140,215
 81,072
          
Discontinued operations: 
  
  
  
  
Income from discontinued operations310
 16,713
 26,820
 20,065
 18,933
Gain on sale of discontinued operations37,869
 278,231
 146,311
 281,090
 74,074
Total discontinued operations38,179
 294,944
 173,131
 301,155
 93,007
          
Net income697,327
 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 stockholders0.29
 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 stockholders0.29
 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—diluted131,237,502
 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—diluted137,461,637
 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 operations531,434
 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 expense305
 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 homes74,538
 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.

40

 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 operations442,682
 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 expense9,368
 —
 —
 —
 (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 homes73,963
 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;

41

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 endedFor the year ended
12/31/14 12/31/13 12/31/12 12/31/11 12/31/1012/31/16 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 adjustments449,769
 582,325
 265,627
 256,986
 237,041
538,606
 486,019
 449,769
 582,325
 265,627
Distributions to noncontrolling interests, including discontinued operations35
 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—diluted131,237,502
 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 debt7,075
 (26,736) 412
 14,921
 2,070
Acquisition costs (9)3,523
 3,806
 (7,682) 44,052
 9,965
Severance related costs852
 1,999
 815
 3,580
 587
Development pursuit and other write-offs3,662
 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 - diluted137,461,637
 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.


42

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.

43
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.

44

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.

45

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 % Change2016 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 fees11,050
 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 revenue1,685,061
 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 taxes345,846
 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 taxes178,634
 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 expenses524,480
 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 expenses60,341
 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 expense4,485
 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, net180,618
 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, net412
 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, net7,075
 (26,736) 412
 33,811
 (126.5)% (27,148) N/A (1)
Depreciation expense442,682
 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 expense41,425
 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 expenses726,246
 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 entities148,766
 (11,154) 159,920
 N/A (1)
 (11,154) 20,914
 (32,068) N/A (1)
Gain on sale of land490
 240
 250
 104.2 % 240
 280
 (40) (14.3)%
Equity in income of unconsolidated real estate entities64,962
 70,018
 148,766
 (5,056) (7.2)% (78,748) (52.9)%
Gain on sale of communities84,925
 —
 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 estate10,224
 9,647
 490
 577
 6.0 % 9,157
 1,868.8 %
Income from continuing operations before taxes668,516
 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 expense9,368
 —
 9,368
 100.0 % —
 —
 —
 — %305
 1,483
 9,368
 (1,178) (79.4)% (7,885) (84.2)%
                            
Income from continuing operations659,148
 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 operations310
 16,713
 (16,403) (98.1)% 16,713
 26,820
 (10,107) (37.7)%—
 —
 310
 —
 — % (310) (100.0)%
Gain on sale of communities37,869
 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 operations38,179
 294,944
 (256,765) (87.1)% 294,944
 173,131
 121,813
 70.4 %—
 —
 38,179
 —
 — % (38,179) (100.0)%
                            
Net income697,327
 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 interests294
 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.


46

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 endedFor the year ended
12/31/14 12/31/13 12/31/1212/31/16 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 income49,055
 41,554
 31,911
61,403
 56,973
 49,055
Investments and investment management expense4,485
 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, net412
 14,921
 1,179
Loss on interest rate contract—
 51,000
 —
Loss (gain) on extinguishment of debt, net7,075
 (26,736) 412
General and administrative expense41,425
 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 expense9,368
 —
 —
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.

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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 YearFull Year
2014 20132016 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 Communities58,830
 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.

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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.

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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.

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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.

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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.

52

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.

53

 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)  
    
  
  
  
  
  
  
  
                    
Fixed rate  
    
  
  
  
  
  
  
  
                  
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
                                    
Variable rate (2)  
    
  
  
  
  
  
  
  
Variable rate (4)    
  
  
  
  
  
  
  
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)  
    
  
  
  
  
  
  
  
Conventional loans (2)    
  
  
  
  
  
  
  
Fixed rate  
    
  
  
  
  
  
  
  
    
  
  
  
  
  
  
  
$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
 —
 —
 —
 —
 —

54
Table of Contents

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.

55

(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.
(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.
(11)In January 2015,2016, Avalon Stratford was substituted as collateral for the outstanding borrowing secured by Eaves Trumbull.
(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).
(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.

56

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).

57

       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 II31.3% 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. Fund28.6% 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 JV20.0% 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 JV8.0% 1,410
 $261,740
 $148,866
   2.32%  
              
Other Operating Joint Ventures 
  
  
  
    
  
1. MVP I, LLC25.0% 313
 $124,344
 $105,000
 Variable (11) 2.65% Dec 2015
2. Brandywine Apartments of Maryland, LLC28.7% 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 II31.3% 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. Fund28.6% 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 JV20.0% 921
 $299,766
 $162,300
   6.00%  
              
Other Operating Joint Ventures 
  
  
  
    
  
1. MVP I, LLC25.0% 313
 $124,931
 $103,000
 Fixed 3.24% Jul 2025
2. Brandywine Apartments of Maryland, LLC28.7% 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.

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(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.

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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 periodPayments 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 Obligations1,932,230
 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.


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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;

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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.

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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.

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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.

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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.


(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.

65

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.

(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.


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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
Equity compensation plans not approved by security holders (4)—
 N/A
 714,827
—
 N/A
 692,812
Total1,204,107
 $114.79
(3)2,388,020
717,741
 $119.03
(3)1,571,434


(1)Consists of the 2009 Plan and the 1994 Plan.
(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.
(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.
(4)Consists of the ESPP.

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.

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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.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULE

15(a)(1) Financial Statements
 
  
Index to Financial Statements 
  
Consolidated Financial Statements and Financial Statement Schedule: 
  
Reports of Independent Registered Public Accounting Firm
F-1
  
Consolidated Balance Sheets as of December 31, 20142016 and 20132015
F-3
  
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 20132016, 2015 and 20122014
F-4
  
Consolidated Statements of Equity for the years ended December 31, 2014, 20132016, 2015 and 20122014
F-5
  
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 20132016, 2015 and 20122014
F-6
  
Notes to Consolidated Financial Statements
F-9
  
15(a)(2) Financial Statement Schedule
 
  
Schedule III—Real Estate and Accumulated Depreciation
F-37F-41
  
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. 
  
15(a)(3) Exhibits
 
  
The exhibits listed on the accompanying Index to Exhibits are filed as a part of this report.


ITEM 16.    FORM 10-K SUMMARY
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Not Applicable.


INDEX TO EXHIBITS
Exhibit No.Description
3(i).1 — Articles of Amendment and Restatement of Articles of Incorporation of the Company, dated as of June 4, 1998. (Incorporated by reference to Exhibit 3(i) 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.)

70

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.)

71

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.)

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+
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.)

72

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.)

73

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
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.


+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.


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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.

     
  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.

     
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, 2015By:/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, 2017By:/s/ SUSAN SWANEZY
Susan Swanezy, Director
Date: February 24, 2017 By: /s/ W. EDWARD WALTER
    W. Edward Walter, Director

75

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


F-1

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


F-2

AVALONBAY COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

12/31/14 12/31/1312/31/16 12/31/15
ASSETS 
  
 
  
Real estate: 
  
 
  
Land and improvements$3,465,650
 $3,251,780
$3,941,250
 $3,636,761
Buildings and improvements12,317,304
 11,007,775
14,314,981
 13,056,292
Furniture, fixtures and equipment404,103
 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 estate13,295,803
 12,142,578
15,045,593
 13,847,526
Construction in progress, including land1,417,246
 1,582,876
1,882,262
 1,592,917
Land held for development180,516
 300,364
84,293
 484,377
Operating real estate assets held for sale, net42,175
 258,391
Real estate assets held for sale, net20,846
 17,489
Total real estate, net14,935,740
 14,284,209
17,032,994
 15,942,309
      
Cash and cash equivalents509,460
 281,355
214,994
 400,507
Cash in escrow95,625
 98,564
114,983
 104,821
Resident security deposits29,617
 26,672
32,071
 30,077
Investments in unconsolidated real estate entities298,315
 367,866
175,116
 216,919
Deferred financing costs, net39,728
 40,460
Deferred development costs67,029
 31,592
40,179
 37,577
Prepaid expenses and other assets201,209
 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 payable3,532,587
 3,539,642
Mortgage notes payable, net2,567,578
 2,611,274
Dividends payable153,207
 138,476
185,397
 171,257
Payables for construction101,946
 94,632
100,998
 98,802
Accrued expenses and other liabilities244,821
 240,337
274,676
 260,005
Accrued interest payable41,318
 42,854
38,307
 40,085
Resident security deposits49,502
 44,594
57,023
 53,132
Liabilities related to real estate assets held for sale907
 15,852
808
 553
Total liabilities7,117,553
 6,711,096
7,688,089
 7,080,782
      
Commitments and contingencies

 

   
Redeemable noncontrolling interests12,765
 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, respectively1,320
 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, respectively1,373
 1,370
Additional paid-in capital9,354,685
 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' equity9,046,405
 8,596,132
Noncontrolling interest—
 3,595
Total equity9,046,405
 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.

F-3

AVALONBAY COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per share data)
For the year endedFor the year ended
12/31/14 12/31/13 12/31/1212/31/16 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 fees11,050
 11,502
 10,257
5,599
 9,947
 11,050
Total revenue1,685,061
 1,462,921
 1,000,627
2,045,255
 1,856,028
 1,685,061
          
Expenses: 
  
  
 
  
  
Operating expenses, excluding property taxes410,672
 352,245
 259,350
478,437
 448,747
 410,672
Property taxes178,634
 158,774
 97,555
204,837
 193,499
 178,634
Interest expense, net180,618
 172,402
 136,920
187,510
 175,615
 180,618
Loss on extinguishment of debt, net412
 14,921
 1,179
Loss on interest rate contract—
 51,000
 —
Loss (gain) on extinguishment of debt, net7,075
 (26,736) 412
Depreciation expense442,682
 560,215
 243,680
531,434
 477,923
 442,682
General and administrative expense41,425
 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 expenses1,250,726
 1,394,180
 785,584
1,461,051
 1,308,102
 1,250,726
          
Equity in income (loss) of unconsolidated entities148,766
 (11,154) 20,914
Gain on sale of land490
 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 taxes584,204
 547,926
 434,335
     
Equity in income of unconsolidated real estate entities64,962
 70,018
 148,766
Gain on sale of communities84,925
 —
 —
374,623
 115,625
 84,925
Gain on acquisition of unconsolidated entity—
 —
 14,194
Gain on sale of other real estate10,224
 9,647
 490
          
Income from continuing operations before taxes668,516
 57,827
 250,431
1,034,013
 743,216
 668,516
Income tax expense9,368
 —
 —
305
 1,483
 9,368
          
Income from continuing operations659,148
 57,827
 250,431
1,033,708
 741,733
 659,148
          
Discontinued operations: 
  
  
 
  
  
Income from discontinued operations310
 16,713
 26,820
—
 —
 310
Gain on sale of real estate assets37,869
 278,231
 146,311
Gain on sale of discontinued operations—
 —
 37,869
Total discontinued operations38,179
 294,944
 173,131
—
 —
 38,179
          
Net income697,327
 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 interests294
 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 earnings6,237
 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 stockholders0.29
 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 stockholders0.29
 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.

F-4

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.

F-5

AVALONBAY COMMUNITIES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

For the year endedFor the year ended
12/31/14 12/31/13 12/31/1212/31/16 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 expense442,682
 560,215
 243,680
531,434
 477,923
 442,682
Depreciation expense from discontinued operations—
 13,500
 16,414
Amortization of deferred financing costs6,383
 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, net7,075
 (26,736) 412
Amortization of stock-based compensation13,927
 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 eliminations4,906
 33,125
 (12,103)
Equity in and return on, unconsolidated real estate entities and noncontrolling interests, net of eliminations8,870
 12,225
 4,906
Casualty and impairment (gain) loss, net(3,935) (17,303) —
Abandonment of development pursuits1,743
 —
 1,455
Cash flow hedge losses reclassified to earnings6,237
 59,376
 1,889
6,433
 5,774
 6,237
Casualty loss and impairment of real estate assets—
 —
 1,449
Abandonment of development pursuits1,455
 —
 —
Loss on extinguishment of debt, net412
 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 escrows55
 (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 payable6,959
 10,997
 (4,737)
Increase in accrued expenses, other liabilities and accrued interest payable10,824
 23,113
 6,959
Net cash provided by operating activities886,641
 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 costs297,466
 919,682
 274,018
Mortgage note receivable repayment21,748
 —
 —
Increase in payables for construction7,400
 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 costs532,717
 282,163
 297,466
Increase in cash in deposit escrows(5,000) —
 —
Insurance proceeds for property damage claims17,196
 44,142
 —
Mortgage note receivable lending(19,115) —
 —
Mortgage note receivable payment—
 —
 21,748
Increase (decrease) in payables for construction2,196
 (3,230) 7,400
Distributions from unconsolidated real estate entities203,945
 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 stock346,134
 4,703
 2,430,190
Issuance of common stock, net15,526
 690,184
 346,134
Dividends paid(593,643) (526,050) (365,572)(726,749) (655,248) (593,643)
Issuance of mortgage notes payable53,000
 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 notes550,000
 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 activities158,224
 (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 equivalents228,105
 (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 year281,355
 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.

F-6

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.

F-7

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.


F-8

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.

F-9

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

F-10

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 Actual2016 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 gain17,688
 29,388
 37,525
(204,767) (20,900) 22,127
Depreciation/amortization timing differences on real estate42,195
 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 20122016 2015 2014
Ordinary income62% 42% 47%68% 83% 62%
20% capital gain (15% for 2012)29% 40% 33%
20% capital gain26% 12% 29%
Unrecaptured §1250 gain9% 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.

F-11

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 endedFor the year ended
12/31/14 12/31/13 12/31/1212/31/16 12/31/15 12/31/14
Basic and diluted shares outstanding 
  
  
 
  
  
Weighted average common shares—basic130,586,718
 126,855,754
 97,416,401
136,928,251
 133,565,711
 130,586,718
Weighted average DownREIT units outstanding7,500
 7,500
 7,500
7,500
 7,500
 7,500
Effect of dilutive securities643,284
 402,649
 601,251
525,886
 1,019,966
 643,284
Weighted average common shares—diluted131,237,502
 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—basic130,586,718
 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 operations35
 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—diluted131,237,502
 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

F-12

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

F-13

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.

F-14

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 12/31/1312/31/16 12/31/15
Fixed rate unsecured notes (1)$2,750,000
 $2,600,000
$4,200,000
 $3,575,000
Term Loan250,000
 —
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 notes6,448,138
 6,019,571
Total mortgage notes payable and unsecured notes7,076,758
 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.

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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
 $—
 —%
       
201619,037
 16,255
 250,000
 5.750%
       
201720,255
 710,291
 250,000
 5.700%$18,539
 $709,491
 $—
 N/A
       
201819,649
 76,937
 —
 —%17,793
 76,916
 —
 N/A
       
20197,141
 658,447
 —
 —%4,696
 655,386
 —
 N/A
       
20206,209
 50,824
 250,000
 6.100%3,624
 118,729
 250,000
 6.100%
    400,000
 3.625%
           400,000
 3.625%
20215,984
 27,844
 250,000
 3.950%3,551
 27,844
 250,000
 3.950%
 
  
 250,000
 LIBOR + 1.450%
 
  
 300,000
 LIBOR + 1.450%
       
20226,351
 —
 450,000
 2.950%3,795
 —
 450,000
 2.950%
       
20236,742
 —
 350,000
 4.200%4,040
 —
 350,000
 4.200%

    250,000
 2.850%    250,000
 2.850%
20244,310
 —
 300,000
 3.500%
20254,585
 84,835
 525,000
 3.450%
           300,000
 3.500%
20244,858
 —
 300,000
 3.500%
20264,859
 —
 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.

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Table of Contents2016.


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.

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Table of Contentsagreements.


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 improvements3,711,853
FF&E52,290
Construction-in-progress, including land and land held for development (1)401,747
In-place lease intangibles182,467
Other assets109,717
Total consolidated assets6,203,594
Interest in unconsolidated real estate entities276,954
Total assets6,480,548
  
Fair value of assumed mortgage notes payable3,732,980
Liability for preferred obligations67,493
Other liabilities31,984
Noncontrolling interest13,262
Net assets acquired2,634,829
Common shares issued1,875,210
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;

F-18

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

F-19

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

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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

F-21

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.

F-22

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 12/31/1312/31/16 12/31/15
Assets: 
  
 
  
Real estate, net$1,617,627
 $1,905,005
$954,493
 $1,392,833
Other assets72,290
 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 liabilities24,884
 32,257
16,537
 20,471
Partners' capital684,905
 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 endedFor the year ended
12/31/14 12/31/13 12/31/1212/31/16 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 communities196,749
 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 endedFor the year ended
12/31/14 12/31/13 12/31/1212/31/16 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
Brandywine10
 (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

F-23

(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.
(7)Equity in income from this entity for 2013 includes certain expensed Archstone Acquisition costs borne by the venture.
(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.



These acquisitions occurred prior to the adoption of ASU 2017-01 as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” and therefore the Company accounted for this acquisitionthese acquisitions as a business combinationcombinations and recorded the acquired assets and assumed liabilities, including identifiable intangibles, at their fair values. The Company looked toused third party pricing or internal models for the values of the land, a valuation model for the values of the buildings and debt, and an internal model to determine the fair values of the remaining real estate assets and in-place leases. Given the heterogeneous nature of multifamily real estate, the fair values for the land, debt, real estate assets and in-place leases incorporated significant unobservable inputs and therefore are considered to be Level 3 prices within the fair value hierarchy.
The Company expenses
Expensed transaction costs associated with the acquisitions made by the Company in 2016 and 2015, all of which were accounted for as business combinations, totaled $5,139,000 and $3,806,000, respectively. These amounts are reported as a component of expensed acquisition, activity as they are incurred.development and other pursuit costs on the accompanying Consolidated Statements of Comprehensive Income. To the extent the Company receivesreceived amounts related to acquired communities for periods prior to their acquisition, the Company reportsreported these receipts, net with expensed acquisition costs. In 2014, the Company received amounts related to communities acquired in the Archstone Acquisition, for periods prior to the Company’s ownership, in excess of acquisition costs incurred, resulting in a net recovery of $7,681,000. These amounts are primarily comprised of property tax and mortgage insurance refunds. Expensed transaction costs associated

On February 27, 2013, pursuant to an asset purchase agreement dated November 26, 2012, the Company, together with Equity Residential, acquired, directly or indirectly, all of the assets owned by Archstone Enterprise LP (“Archstone,” which has since changed its name to Jupiter Enterprise LP), including all of the ownership interests in joint ventures and other entities owned by Archstone, and assumed Archstone’s liabilities, both known and unknown, with certain limited exceptions. Under the terms of the purchase agreement, the Company acquired approximately 40.0% of Archstone's assets and liabilities and Equity Residential acquired approximately 60.0% of Archstone’s assets and liabilities (the “Archstone Acquisition”).

In conjunction with the acquisitions made by the Company in 2013 and 2012, including those for the Archstone Acquisition, totaled $44,052,000 and $9,593,000, respectively. These amounts are reported as a componentdevelopment of expensed acquisition, development and other pursuit costs on the accompanying Consolidated Statements of Comprehensive Income.
During the year ended December 31, 2014,Avalon Sheepshead Bay, the Company entered into a joint venture agreement to acquire a land parcel and construct a mixed usemixed-use building that will contain rental apartments, for-sale residential condominium units and related common elements. The Company will ownowns a 70%70.0% interest in the venture and will have all of the rights and obligations associated with the rental apartments, and the venture partner will ownowns the remaining 30%30.0% interest and will have all of the rights and obligations associated with the for-sale residential condominium units. The Company will share responsibilityis responsible for the development and oversee construction of the structure. Upon formation ofstructure, and is providing a loan to the venture partner for the Company and its venture partner made capital contributions, with costs incurred subsequent to the initial contributions to be funded through a loan provided by the Company.partner's share of costs. As of December 31, 2014,2016, the Company's aggregate investmentCompany has a receivable from the venture partner in the venture is $11,161,000 and is reported asform of a component of land held for development onvariable rate mortgage note, secured by the Consolidated Balance Sheets. The Company had provided funding for the venture partner’s share of costsfor-sale residential condominium units in the amount of $5,354,000$27,241,000 for outstanding principal and interest, reported as a component of prepaid expenses and other assets on the Consolidated Balance Sheets, recognizingSheets. The Company recognizes interest income as earned as a component of interest expense, net on the Consolidated Statements of Comprehensive Income.accrual basis. The loan provided towill be repaid by the venture partner will be repaid with the proceeds receivedthe partner receives from the salesales of the residential condominium units.units which are expected to occur during 2017 and 2018. The venture is considered a variable interest entity,VIE, and the Company will consolidateconsolidates its interest in the rental apartments and common areas, and account for the for-sale component of the venture as an unconsolidated investment.areas.

F-24

7.6. Real Estate Disposition Activities

During 2014,2016, the Company sold fourseven wholly-owned operating communities, containing an aggregate of 1,3372,051 apartment homes for an aggregate gross sales price of $296,200,000$522,850,000 and an aggregate pre-tax gain in accordance with GAAP of $106,138,000. One of the communities sold in 2014 was owned through a TRS, resulting in the Company incurring income taxes related to this disposition.$370,301,000. In addition during 2014,2016, the Company sold aother real estate, including one land parcel which was sold to a joint venture in Huntington Station, NYwhich we own a 55.0% interest, and ancillary real estate, for $8,050,000,an aggregate sales price of $41,178,000, resulting in aan aggregate gain in accordance with GAAP of $490,000.$10,224,000.

Details regarding the real estate sales are summarized in the following table (dollars in thousands):

Community NameLocation 
Period
of sale
 
Apartment
homes
 Debt 
Gross
sales price
 
Net
proceeds
Avalon ValleyDanbury, CT Q114 268
 $—
 $53,325
 $52,147
Oakwood PhiladelphiaPhiladelphia, PA Q214 80
 16,341
(1)28,875
 10,932
Avalon DanversDanvers, MA Q214 433
 —
 108,500
 107,231
Archstone Memorial HeightsHouston, TX Q414 556
 —
 105,500
 103,182
Huntington Station LandHuntington Station, NY Q414 —
 —
 8,050
 7,633
            
Total of 2014 asset sales    1,337
 $16,341
 $304,250
 $281,125
            
Total of 2013 asset sales (2)    3,299
 $—
 $932,800
 $919,442
            
Total of 2012 asset sales    1,578
 $—
 $280,550
 $274,018
Community Name Location 
Period
of sale
 
Apartment
homes
 Debt 
Gross
sales price
 
Net cash
proceeds (1)
Eaves Trumbull Trumbull, CT Q116 340
 $—
 $70,250
 $68,665
Avalon Essex Peabody, MA Q216 154
 —
 45,100
 44,085
Eaves Nanuet Nanuet, NY Q316 504
 —
 147,000
 145,722
Avalon Shrewsbury Shrewsbury, MA Q316 251
 —
 60,500
 59,263
Avalon at Freehold Freehold, NJ Q316 296
 —
 68,000
 66,320
Avalon Brandemoor I & II Lynnwood, WA Q416 506
 —
 132,000
 128,021
Other real estate dispositions (2) multiple Q1-Q416 N/A
 —
 41,178
 20,641
             
Total of 2016 asset sales     2,051
 $—
 $564,028
 $532,717
             
Total of 2015 asset sales     851
 $—
 $289,320
 $282,163
             
Total of 2014 asset sales     1,337
 $16,341
 $304,250
 $281,125

(1)Amount includes $10,427 principal amount secured by Oakwood Philadelphia and $5,914 principal amountNet cash proceeds does not include the sale of secured borrowings repaid byan affordable restricted apartment building adjacent to one of the CompanyCompany's Development Communities, for eight other operating communities,which consideration was received in the aggregateform of which is included in determining net proceeds.a mortgage note, discussed below.

(2)TotalPrimarily composed of 2013 assetthe sales excludes the disposition of development rights locatedland to AVA North Point discussed in Hingham, MANote 5, “Investments in Real Estate Entities” and Brooklyn, NY, for total net proceeds of $1,313.ancillary real estate discussed in note (1).

During 2016, the year ended December 31, 2014, Fund ICompany 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 Springs, which was consolidatedCompany received consideration for financial reporting purposes,the sale in the form of a mortgage note, recording $18,643,000 to reflect the net present value of the note, determined based on the estimated contractual cash flows and a discount rate commensurate with the nature of the note. The note is secured by the underlying real estate, and is reported as discussed in Note 6, "Investments in Real Estate Entities."a component of prepaid expenses and other assets on the Consolidated Balance Sheets. The Company expects to receive $16,891,000 during 2017, with the balance of the note to be received over a period of up to 35 years.

As of December 31, 2014,2016, the Company hadone community two ancillary land parcels that qualified as held for sale.
The results of operations for Oakwood Philadelphia, Avalon Danvers and Archstone Memorial Heights are included in income from continuing operations on the accompanying Consolidated Statements of Comprehensive Income.

The operations for any real estate assets sold from January 1, 20122014 through December 31, 2014 (which includes Avalon Valley)2016 and which were classified as held for sale and discontinued operations as of and for periods prior to December 31, 2013, and thus not subject to the new guidance for discontinued operations presentation and disclosure, as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” have been presented as income from discontinued operations in the accompanying Consolidated Statements of Comprehensive Income. Accordingly, certain reclassifications have been made to prior years to reflectThe operations for any real estate assets sold from January 1, 2014 through December 31, 2016 that were not classified as held for sale or discontinued operations consistent with current year presentation.as of and for periods prior to December 31, 2013, are included in income from continuing operations on the accompanying Consolidated Statements of Comprehensive Income.

The following is a summary of income from discontinued operations for the periods presented (dollars in thousands):
 For the year ended
 12/31/14 12/31/13 12/31/12
Rental income$579
 $42,874
 $63,406
Operating and other expenses(269) (12,661) (19,437)
Interest expense, net—
 —
 (133)
Loss on extinguishment of debt—
 —
 (602)
Depreciation expense—
 (13,500) (16,414)
Income (loss) from discontinued operations$310
 $16,713
 $26,820
 For the year ended
 12/31/16 12/31/15 12/31/14
Rental income$—
 $—
 $579
Operating and other expenses—
 —
 (269)
Income from discontinued operations$—
 $—
 $310

F-25

8.7. Commitments and Contingencies

Employment Agreements and Arrangements
As of December 31, 2014, the
The Company hashad employment agreements with two executive officers which expireexpired on December 31, 2015. Under2015, in accordance with their terms. At December 31, 2016, the Company does not have any employment agreements if the Company terminates thewith executive without cause the executive will be entitled to a multiple of his covered compensation, which is defined as base salary plus annual cash bonus. For one of the executives, the multiple is two times (three if the termination is in connection with a sale of the Company) and for the other executive the multiple is one time (two if the termination is in connection with a sale of the Company). The employment agreements generally provide that it would be considered a termination without cause if the executive's title or role is reduced except as permitted by the agreement. The agreements provide, as do the standard restricted stock and option agreements used by the Company for its compensation programs, that upon a termination without cause the executive's restricted stock and options will vest.officers.

The standard restricted stock and option agreements used by the Company in its compensation program provide that upon an employee's termination without cause or the employee's Retirement (as defined in the agreement), all outstanding stock options and restricted shares of stock held by the employee will vest, and the employee will have up to 12 months to exercise any options then held. Under the agreements, Retirement generally means a termination of employment and other business relationships, other than for cause, after attainment of age 50, provided that (i) the employee has worked for the Company for at least 10 years, (ii) the employee's age at Retirement plus years of employment with the Company equals at least 70, (iii) the employee provides at least six months written notice of his intent to retire, and (iv) the employee enters into a one year non-compete and employee non-solicitation agreement.

The Company also has an Officer Severance Program (the "Program"“Program”), which applies only in connection with a sale of the Company for the benefit of those officers of the Company who do not have employment agreements. Under the Program, in the event an officer who is not otherwise covered by a severance arrangement is terminated (other than for cause), or the officer chooses to terminate his or her employment for good reason (as defined), in either case within 18 months following a sale event (as defined) of the Company, such officer will generally receive a cash lump sum payment equal to a multiple of the officer's covered compensation (base salary plus annual cash bonus). The multiple is one times for vice presidents and senior vice presidents, and two times for executive vice presidents. The officer's restricted stock and options would also vest. Costs related to the Company's employment agreements and the Program are deferred and recognized over the requisite service period when considered by management to be probable and estimable.

Legal Contingencies

The Company accounts for recoveries from legal matters as a reduction in the legal and related costs incurred associated with the matter, with recoveries in excess of these costs reported as a gain or, where appropriate, a reduction in the basis of a community to which the suit related. During the years ended December 31, 20142016 and 2012,2014, the Company received $1,933,000$417,000 and $775,000, respectively,$1,933,000 in legal recoveries. There were no material receipts during the year ended December 31, 2013.2015, excluding amounts for the Residual JV.
See Note 14, "Subsequent Events,"
In conjunction with legal matters associated with the Edgewater casualty loss, the Company has established protocols for processing claims from third parties who suffered losses as a discussionresult of the fire, and many third parties have contacted the Company's insurance carrier and settled their claims.

Three class action lawsuits have been filed against the Company on behalf of occupants of the destroyed building and consolidated in the United States District Court for the District of New Jersey. The Company has agreed with class counsel to the terms of a proposed settlement which would provide a claims process (with agreed upon protocols for instructing the adjuster as to how to evaluate claims) and, if needed, an arbitration process to determine damage amounts to be paid to individual claimants covered by the class settlement. On December 9, 2016, class counsel re-filed with the court a motion for preliminary approval of this class settlement, and 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 firebuilding that occurredsuffered 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 January 2015the Superior Court of New Jersey Bergen County - Law Division and related20 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 contingencies. In addition, the Company is subjectcurrently 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 any potential remaining liability to third parties (including any potential liability to third parties determined in accordance with the class settlement described above, if approved) will not be material to the Company and will in any event be substantially covered by the Company's insurance policies. However, the Company can give no assurances in this regard and continues to evaluate this matter.

The Company is involved in various other legalclaims and/or administrative proceedings and claimsunrelated to the Edgewater casualty loss that arise in the ordinary course of its business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur andWhile no assurances can be reasonably estimated,given, the estimated amount of the loss is recorded in the financial statements. While the resolutionCompany does not currently believe that any of these other outstanding litigation matters, cannot be predicted with certainty, management currently believesindividually or in the final outcome of such mattersaggregate, will not have a material adverse effect on theits financial positioncondition or results of operations of the Company. In instances where the Company has a gain contingency associated with legal proceedings, the Company records a gain in the financial statements, to the extent of a loss recovery, when it is deemed probable to occur, can be reasonably estimated and is considered to be collectible.operations.

Lease Obligations

The Company owns 1216 apartment communities two communities under development and two commercial properties which are located on land subject to land leases expiring between October 2026 and March 2142,2142. The leases for 13 apartment communities, of which 14two represent dual-branded communities with one underlying land lease, and the two commercial properties, are accounted for as operating leases recognizing rental expense on a straight-line basis over the lease term. These leases have varying escalation terms, and fourfive of these leases have purchase options exercisable through 2095. The Company incurred costs of $21,664,000, $17,996,000$23,343,000, $21,295,000 and $17,604,000$21,664,000 in the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively, related to operating leases. One Development Community and oneThree apartment community that completed construction during 2014communities are located on land subject to a land lease which are accounted for as capital leases, of which two represent dual-branded communities with one underlying capital land lease. In addition, the Company is party to a lease for a portion of the parking garage adjacent to a lease-up community, accounted for as a capital lease. The Company has a total lease obligation of $34,268,000$37,458,000 reported as a component of accrued expenses and other liabilities. Each of these land leases accounted for as capital leases have options for the Company to purchase the land at some point during the lease terms which expire in 2046 and 2086.

F-26
Table In addition, the Company is party to 13 leases for its corporate and regional offices with varying terms through 2027, all of Contentswhich are accounted for as operating leases.


The following table details the future minimum lease payments under the Company's current leases (dollars in thousands):

Payments due by periodPayments due by period
2015 2016 2017 2018 2019 Thereafter2017 2018 2019 2020 2021 Thereafter
Operating Lease Obligations$20,337
 $20,933
 $20,531
 $22,339
 $20,717
 $1,227,854
$22,818
 $23,348
 $23,449
 $21,245
 $19,776
 $1,203,957
Capital Lease Obligations (1) (2)1,885
 19,083
 848
 848
 848
 39,087
18,874
 1,073
 1,075
 1,077
 1,080
 45,058
$22,222
 $40,016
 $21,379
 $23,187
 $21,565
 $1,266,941
$41,692
 $24,421
 $24,524
 $22,322
 $20,856
 $1,249,015

(1)Aggregate capital lease payments include $28,318$27,374 in interest costs.costs, with the timing of certain lease payments for capital land leases determined by completion of the construction of the associated apartment community.
(2)At December 31, 2014, capitalCapital lease assets of $31,784$39,015 and $39,019 as of December 31, 2016 and 2015, respectively, are included as a component of land and improvements or building and improvements on the accompanying Consolidated Balance Sheets.


9.8. Segment Reporting

The Company's reportable operating segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. Annually as of January 1,st, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change. 

Established Communities (also known as Same Store Communities) are consolidated communities where a comparison of operating results from the prior year to the current year period is meaningful, as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year period.year. The Established Communities for the year ended December 31, 2014,2016, 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.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 includes all other consolidated completed communities that have stabilized occupancy, as defined above. Other Stabilized Communities do not include communities that are conducting or planning to conduct substantial redevelopment activities within the current year. Other Stabilized Communities for the year ended December 31, 2014 include the stabilized operating communities acquired as part of the Archstone Acquisition.

Development/Redevelopment Communities consists of consolidated communities that are under construction and have not received a certificate of occupancy for the entire community, and where substantial redevelopment is in progress or is planned to begin during the current year and communities under lease-up that had not reached stabilized occupancy, as defined above, as of January 1, 2014.2016.

In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment.

The Company's segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing each segment's performance. The Company's chief operating decision maker is comprised of several members of its executive management team who use net operating income ("NOI"(“NOI”) as the primary financial measure for Established Communities and Other Stabilized Communities. NOI is defined by the Company as total property revenue less direct property operating expenses.expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed acquisition, development and other pursuit costs, net of recoveries, interest expense, net, loss (gain) on extinguishment of debt, net, general and administrative expense, equity in income of unconsolidated real estate entities, depreciation expense, corporate income tax expense, casualty and impairment (gain) loss, 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. Although the Company considers NOI a useful measure of a community's or communities' operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP. NOI excludes a number of income and expense categories as detailed in the reconciliation of NOI to net income.


A reconciliation of NOI to net income for years ended December 31, 2014, 20132016, 2015 and 20122014 is as follows (dollars in thousands):

F-27

For the year endedFor the year ended
12/31/14 12/31/13 12/31/1212/31/16 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 income49,055
 41,554
 31,911
61,403
 56,973
 49,055
Investments and investment management expense4,485
 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, net412
 14,921
 1,179
Loss on interest rate contract—
 51,000
 —
Loss (gain) on extinguishment of debt, net7,075
 (26,736) 412
General and administrative expense41,425
 39,573
 34,101
45,771
 42,774
 41,425
Equity in loss (income) of unconsolidated 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 expense9,368
 —
 —
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 following is a summary of NOI from real estate assets sold or held for sale, not classified as discontinued operations, for the periods presented (dollars in thousands):

For the year endedFor the year ended
12/31/2014 12/31/2013 12/31/201212/31/2016 12/31/2015 12/31/2014
          
Rental income from real estate assets sold or held for sale, not classified as discontinued operations$24,389
 $30,867
 $21,463
$28,430
 $55,674
 $80,704
Operating expenses real estate assets sold or held for sale, not classified as discontinued operations(9,190) (11,419) (7,687)
Operating expenses from real estate assets sold or held for sale, not classified as discontinued operations(10,921) (21,541) (30,996)
Net operating income from real estate assets sold or held for sale, not classified as discontinued operations$15,199
 $19,448
 $13,776
$17,509
 $34,133
 $49,708

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.


F-28

Total
revenue
 NOI 
% NOI change
from prior year
 
Gross
real estate (1)
Total
revenue
 NOI 
% NOI change
from prior year
 
Gross
real estate (1)
For the year ended December 31, 2014 (2) 
  
  
  
For the year ended December 31, 2016 
  
  
  
Established 
  
  
  
 
  
  
  
New England$179,116
 $113,905
 0.8 % $1,373,065
$239,201
 $153,669
 4.9 % $1,888,524
Metro NY/NJ318,710
 223,591
 3.1 % 2,379,178
379,151
 258,950
 1.4 % 3,212,220
Mid-Atlantic98,590
 69,498
 (2.5)% 647,374
233,711
 162,243
 1.3 % 2,339,395
Pacific Northwest54,230
 37,637
 7.0 % 500,247
79,684
 57,494
 6.5 % 737,289
Northern California174,527
 132,899
 8.2 % 1,402,444
319,121
 244,458
 7.0 % 2,661,258
Southern California139,841
 95,626
 5.2 % 1,225,328
291,567
 207,537
 9.1 % 2,672,691
Total Established (3)965,014
 673,156
 3.5 % 7,527,636
Total Established (2)1,542,435
 1,084,351
 4.8 % 13,511,377
       
Other Stabilized (3)235,360
 165,530
 N/A
 2,330,503
Development / Redevelopment233,431
 160,816
 N/A
 4,755,315
Land Held for Future DevelopmentN/A
 N/A
 N/A
 84,293
Non-allocated (4)5,599
 N/A
 N/A
 74,292
Total$2,016,825
 $1,410,697
 13.7 % $20,755,780
       
For the year ended December 31, 2015 
  
  
  
Established 
  
  
  
New England$182,366
 $114,717
 2.7 % $1,460,746
Metro NY/NJ361,902
 256,907
 3.4 % 3,152,361
Mid-Atlantic209,013
 145,497
 0.2 % 2,177,823
Pacific Northwest67,900
 48,833
 8.5 % 721,040
Northern California273,432
 210,226
 11.9 % 2,414,184
Southern California252,530
 173,919
 9.4 % 2,465,432
Total Established (2)1,347,143
 950,099
 5.9 % 12,391,586
              
Other Stabilized497,756
 343,061
 N/A
 6,062,844
221,042
 145,263
 N/A
 2,040,269
Development / Redevelopment186,852
 117,879
 N/A
 3,972,180
222,222
 145,630
 N/A
 4,238,967
Land Held for Future DevelopmentN/A
 N/A
 N/A
 180,516
N/A
 N/A
 N/A
 484,377
Non-allocated (4)11,050
 N/A
 N/A
 41,643
9,947
 N/A
 N/A
 73,372
Total$1,660,672
 $1,134,096
 16.0 % $17,784,819
$1,800,354
 $1,240,992
 12.9 % $19,228,571
              
For the year ended December 31, 2013 
  
  
  
For the year ended December 31, 2014 (5) 
  
  
  
Established 
  
  
  
 
  
  
  
New England$159,670
 $103,679
 2.3 % $1,227,582
$164,181
 $104,674
 0.8 % $1,333,854
Metro NY/NJ249,742
 172,912
 4.4 % 1,921,307
285,641
 203,522
 3.3 % 2,251,697
Mid-Atlantic100,548
 71,851
 0.1 % 633,598
98,590
 69,498
 (2.5)% 647,374
Pacific Northwest46,564
 31,283
 5.3 % 444,825
46,041
 32,012
 6.8 % 500,247
Northern California141,038
 106,745
 11.7 % 1,233,851
174,527
 132,899
 8.2 % 1,402,444
Southern California119,024
 81,182
 5.1 % 1,058,883
139,841
 95,626
 5.2 % 1,225,328
Total Established (3)816,586
 567,652
 4.9 % 6,520,046
Total Established (2)908,821
 638,231
 3.6 % 7,360,944
              
Other Stabilized486,780
 330,998
 N/A
 6,626,884
497,634
 343,477
 N/A
 6,057,783
Development / Redevelopment117,186
 79,348
 N/A
 3,024,035
186,852
 117,879
 N/A
 3,972,180
Land Held for Future DevelopmentN/A
 N/A
 N/A
 300,364
N/A
 N/A
 N/A
 180,516
Non-allocated (4)11,502
 N/A
 N/A
 10,279
11,050
 N/A
 N/A
 32,444
Total$1,432,054
 $977,998
 46.4 % $16,481,608
$1,604,357
 $1,099,587
 16.5 % $17,603,867
       
For the year ended December 31, 2012 
  
  
  
Established 
  
  
  
New England$145,629
 $94,481
 5.1 % $1,115,098
Metro NY/NJ213,360
 148,441
 7.4 % 1,760,429
Mid-Atlantic103,784
 75,313
 3.2 % 591,669
Pacific Northwest32,942
 23,433
 15.0 % 306,289
Northern California112,875
 83,091
 14.1 % 1,015,947
Southern California99,302
 68,880
 7.0 % 947,723
Total Established (3)707,892
 493,639
 7.6 % 5,737,155
       
Other Stabilized131,248
 84,504
 N/A
 1,284,666
Development / Redevelopment129,767
 89,785
 N/A
 2,032,277
Land Held for Future DevelopmentN/A
 N/A
 N/A
 316,037
Non-allocated (4)10,257
 N/A
 N/A
 73,724
Total$979,164
 $667,928
 14.6 % $9,443,859

(1)Does not include gross real estate assets held for sale of $64,497, $318,713$20,846, $39,528 and $627,483$245,449 as of December 31, 2014, 20132016, 2015 and 2012,2014, respectively.

F-29

(2)Gross real estate for the Company's Established Communities includes capitalized additions of approximately $85,676, $74,982 and $52,635 in 2016, 2015 and 2014, respectively.
(3)Total revenue and NOI for the year ended December 31, 2016 includes $20,306 in business interruption insurance proceeds related to the Edgewater casualty loss.
(4)Revenue represents third-party management, accounting, and developer fees and miscellaneous income which are not allocated to a reportable segment.
(5)Results for the year ended December 31, 2014 reflect the operating segments determined as of January 1, 2014, which include stabilized communities acquired as part of the Archstone Acquisition in the Other Stabilized segment.
(3)Gross real estate for the Company's Established Communities includes capitalized additions of approximately $52,635, $33,553 and $25,448 in 2014, 2013 and 2012, respectively.
(4)Revenue represents third-party management, accounting, and developer fees and miscellaneous income which are not allocated to a reportable segment.

10.9. Stock-Based Compensation Plans

The Company has a stock incentive plan, theCompany's 2009 Stock Option and Incentive Plan (the "2009 Plan"“2009 Plan”). The 2009 Plan includes an authorization to issue shares of the Company's common stock, par value $0.01 per share. At December 31, 2014,2016, the Company has 1,673,193878,622 shares remaining available to issue under the 2009 Plan, exclusive of shares that may be issued to satisfy currently outstanding awards such as stock options or performance awards. In addition, any awards that were outstanding under the Company's1994 Stock Option and Incentive Plan (the "1994 Plan"“1994 Plan”) on May 21, 2009, the date the Company adopted the 2009 Plan, that are subsequently forfeited, canceled, surrendered or terminated (other than by exercise) will become available for awards under the 2009 Plan. The 2009 Plan provides for various types of equity awards to associates, officers, non-employee directors and other key personnel of the Company and its subsidiaries. The types of awards that may be granted under the 2009 Plan include restricted and deferred stock, stock options that qualify as incentive stock options ("ISOs"(“ISOs”) under Section 422 of the Code, non-qualified stock options, and stock appreciation rights.rights and performance awards, among others. The 2009 Plan will expire on May 21, 2019.

Information with respect to stock options granted under the 2009 and 1994 Plans is as follows:

2009 Plan
shares
 
Weighted
average
exercise price
per share
 
1994 Plan
shares
 
Weighted
average
exercise price
per share
2009 Plan
shares
 
Weighted
average
exercise price
per share
 
1994 Plan
shares
 
Weighted
average
exercise price
per share
Options Outstanding, December 31, 2011247,403
 $98.42
 1,112,959
 $94.10
Exercised(43,265) 85.09
 (364,519) 68.21
Granted115,303
 133.16
 —
 —
Forfeited(11,887) 115.15
 (28,610) 139.58
Options Outstanding, December 31, 2012307,554
 $112.67
 719,830
 $105.40
Exercised(19,949) 84.43
 (24,292) 79.42
Granted215,230
 129.03
 —
 —
Forfeited(1,267) 131.56
 (4,012) 127.56
Options Outstanding, December 31, 2013501,568
 $120.77
 691,526
 $106.19
501,568
 $120.77
 691,526
 $106.19
Exercised(157,454) 116.40
 (342,743) 99.03
(157,454) 116.40
 (342,743) 99.03
Granted—
 —
 —
 —
—
 —
 —
 —
Forfeited(4,052) 131.05
 (76,381) 142.66
(4,052) 131.05
 (76,381) 142.66
Options Outstanding, December 31, 2014340,062
 $122.67
 272,402
 $104.96
340,062
 $122.67
 272,402
 $104.96
Exercised(90,884) 124.01
 (190,207) 105.70
Granted—
 —
 —
 —
Forfeited—
 —
 —
 —
Options Outstanding, December 31, 2015249,178
 $122.17
 82,195
 $103.27
Exercised(71,845) 117.04
 (59,654) 112.85
Granted—
 —
 —
 —
Forfeited—
 —
 —
 —
Options Outstanding, December 31, 2016 (1)177,333
 $124.25
 22,541
 $77.91
Options Exercisable: 
  
  
  
 
  
  
  
December 31, 201274,618
 $97.46
 719,830
 $105.40
December 31, 2013184,167
 $107.18
 691,526
 $106.19
December 31, 2014185,227
 $116.71
 272,402
 $104.96
185,227
 $116.71
 272,402
 $104.96
December 31, 2015188,081
 $119.98
 82,195
 $103.27
December 31, 2016177,333
 $124.25
 22,541
 $77.91

(1)
All options are exercisable as of December 31, 2016.

The following summarizes the exercise prices and contractual lives of options outstanding as of December 31, 2014:2016:
2009 Plan
Number of Options
 Range—Exercise Price 
Weighted Average
Remaining Contractual Term
(in years)
32,821 $70.00- $79.99 5.1
51,808 110.00- 119.99 6.1
63,961 120.00- 129.99 8.2
189,973 130.00- 139.99 7.6
1,499 140.00- 149.99 7.5
340,062       

F-30


1994 Plan
Number of Options
 Range—Exercise Price 
Weighted Average
Remaining Contractual Term
(in years)
43,806 $40.00- $49.99 4.1
92 60.00- 69.99 0.1
730 70.00- 79.99 0.5
66,101 80.00- 89.99 3.1
52,720 90.00- 99.99 1.1
108,953 140.00- 149.99 2.1
272,402       
2009 Plan
Number of Options
 Range—Exercise Price 
Weighted Average
Remaining Contractual Term
(in years)
10,607 $70.00- $79.99 3.1
32,445 $110.00- $119.99 4.1
29,862 $120.00- $129.99 6.2
104,419 $130.00- $139.99 5.6
177,333       


1994 Plan
Number of Options
 Range—Exercise Price 
Weighted Average
Remaining Contractual Term
(in years)
9,854 $40.00- $49.99 2.1
9,506 $80.00- $89.99 1.1
3,181 $140.00- $149.99 0.1
22,541       

Options outstanding under the 2009 and 1994 Plans at December 31, 2014 had an intrinsic value of $13,849,000 and $15,915,000, respectively. Options exercisable under the 2009 and 1994 Plans at December 31, 20142016 had an intrinsic value of $8,647,000$9,380,000 and $15,915,000,$2,237,000, respectively. Options exercisable under the 2009 and 1994 Plans had a weighted average contractual life of 7.35.4 years and 2.51.4 years, respectively. The intrinsic value of options exercised during 2016, 2015 and 2014 2013was $9,187,000, $18,080,000 and 2012 was $20,028,000, $2,395,000 and $26,746,000, respectively.

The cost related to stock-based employee compensation for employee stock options included in the determination of net income is based on estimated forfeitures for the given year. Estimated forfeitures are adjusted to reflect actual forfeitures at the end of the vesting period. The following table summarizes the weighted average fair value of employee stock options for 2013 and 2012 and the associated assumptions used to calculate the value. There were no stock options granted in 2016, 2015 and 2014.

  2013 2012
Weighted average fair value per share $26.78
 $29.11
Life of options (in years) 5.0
 5.0
Dividend yield 3.7% 3.5%
Volatility 34.00% 35.00%
Risk-free interest rate 0.91% 0.87%
During 2013, theThe Company adoptedhas a revised compensation framework under which share-based compensation will beis granted, composed of annual awards and multiyear long term incentive performance awards. Annual awards will include restricted stock awards for which one third of the award will vestvests annually over a three year period, following the measurement period. Under the multiyearand multi-year long term incentive component ofperformance awards. Under the revisedCompany's multi-year long term incentive compensation framework, the Company will grantgrants a target number of restricted stock units,performance awards, with the ultimate award determined by the total shareholder return of the Company's common stock and/or operating performance metrics, measured in each case over a measurement period of up to three years. The share-based compensationperformance awards are earned will be in the form of restricted stock, or upon election of the recipient, up to 25% in the form of stock options, for which one third of the award will vestvests annually over aan additional three year period following the measurement period.completion of the performance cycle.
The Company granted 131,980 restricted stock units net of forfeitures, with an estimated aggregate compensation cost of $15,522,000, as part of its stock-based compensation plan during
In general, performance awards are forfeited if the year ended December 31, 2014. The amount of restricted stock ultimately earned is based on the total shareholder return metrics relatedemployee's employment terminates for any reason prior to the Company’s common stockmeasurement date. However, for 58,206 restricted stock units and financial metrics related to operating performance and leverage metricsawards with performance periods beginning on or after January 1, 2015, after the first year of the Companyperformance period, if the employee's employment terminates on account of death, disability, retirement, or termination without cause at a time when the employee meets the age and service requirements for 73,774 restricted stock units. Forretirement, the employee shall vest in a pro rata portion of the grant for whichaward (based on the award is determined byemployee's service time during the total shareholder returnperformance period), with such vested portion to be earned and converted into shares at the end of the Company’s common stock,performance period based on actual achievement under the performance award.

Information with respect to performance awards granted is as follows:

  Performance awards Weighted average grant date fair value per award
Outstanding at December 31, 2013 189,765
 $70.00
  Granted (1) 136,276
 117.43
  Change in awards based on performance (2) (46,790) 74.37
  Converted to restricted stock (16,209) 74.37
  Forfeited (23,140) 76.22
Outstanding at December 31, 2014 239,902
 $95.20
  Granted (3) 85,636
 148.49
  Change in awards based on performance (2) 14,697
 78.50
  Converted to restricted stock (95,826) 78.50
  Forfeited (6,143) 110.34
Outstanding at December 31, 2015 238,266
 $119.65
  Granted (4) 94,054
 141.92
  Change in awards based on performance (2) 36,091
 101.52
  Converted to restricted stock (115,618) 94.67
  Forfeited (1,630) 141.98
Outstanding at December 31, 2016 251,163
 $136.74

(1)The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 60,391 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 75,885 performance awards.
(2)Represents the change in the number of performance awards earned based on performance achievement.
(3)The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 55,162 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 30,474 performance awards.
(4)The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 61,039 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 33,015 performance awards.

The Company used a Monte Carlo model to assess the compensation cost associated with the restricted stock units.  The estimated compensation cost was derived using the following assumptions: baseline share value of $128.97; dividend yield of approximately 3.6%; estimated volatility figures ranging from 17.6% to 18.6% over the lifeportion of the plan for the Companyperformance awards determined by using 50% historical volatility and 50% implied volatility; and risk free rates over the life of the plan ranging from 0.04% to 0.72%; resulting in an average estimated fair value per restricted stock unit of $103.20. total shareholder return measures. The assumptions used are as follows:

  2016 2015 2014
Dividend yield 3.3% 3.0% 3.6%
Estimated volatility over the life of the plan (1) 15.2% - 22.8% 12.0% - 17.3% 17.6% - 18.6%
Risk free rate 0.44% - 0.88% 0.07% - 1.09% 0.04% - 0.72%
Estimated performance award value based on total shareholder return measure $131.24 $139.18 $103.20

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

For the portion of the grantperformance awards granted for which the awardachievement is determined by using financial metrics, the estimated compensation cost was based on the baseline sharea weighted average grant date value of $161.66, $166.23 and $128.97, for the years ended December 31, 2016, 2015 and 2014, respectively, and the Company's estimate of corporate achievement for the financial metrics.
During the year ended December 31, 2014, the Company also issued 115,163 shares of restricted stock, of which 16,209 shares related to the conversion of restricted stock units to restricted shares, and the remaining 98,954 shares were new grants
Information with a fair value of $12,799,000. The compensation cost was based on the share price at the grant date.

F-31

At December 31, 2014 and 2013, the Company had 190,240 and 182,083, respectively, outstanding unvested restricted shares granted under restricted stock awards. Restricted stock vesting during the year ended December 31, 2014 totaled 99,036 shares, of which 5,073 shares related to the conversion of restricted stock units and 93,963 shares relatedrespect to restricted stock awards, which had fair values at the grant date ranging from $74.20 to $163.39 per share. The total fair value of shares vested under restricted stock awards was $11,352,000, $14,832,000 and $36,337,000 for the years ended December 31, 2014, 2013 and 2012, respectively.granted is as follows:

  Restricted stock shares Restricted stock shares weighted average grant date fair value per share Restricted stock shares converted from performance awards
Outstanding at December 31, 2013 182,083
 $124.35
 —
  Granted - restricted stock shares 98,954
 129.35
 16,209
  Vested - restricted stock shares (93,963) 120.81
 (5,073)
  Forfeited (7,767) 128.62
 (203)
Outstanding at December 31, 2014 179,307
 $129.06
 10,933
  Granted - restricted stock shares 61,953
 173.04
 95,826
  Vested - restricted stock shares (91,847) 130.75
 (8,412)
  Forfeited (1,529) 151.86
 —
Outstanding at December 31, 2015 147,884
 $146.21
 98,347
  Granted - restricted stock shares 81,400
 162.38
 115,618
  Vested - restricted stock shares (88,712) 141.38
 (36,872)
  Forfeited (3,867) 162.43
 (395)
Outstanding at December 31, 2016 136,705
 $158.51
 176,698

Total employee stock-based compensation cost recognized in income was $13,314,000, $17,775,000$14,666,000, $14,703,000 and $9,961,000$13,314,000 for the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively, and total capitalized stock-based compensation cost was $5,457,000, $8,379,000$9,266,000, $9,667,000 and $5,140,000$5,457,000 for the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively. At December 31, 2014,2016, there was a total unrecognized compensation cost of $1,058,000 for unvested stock options and $19,559,000$24,421,000 for unvested restricted stock and restricted stock units,performance awards, which does not include estimated forfeitures. The unrecognized compensation cost for unvested stock optionsforfeitures, and restricted stock and restricted stock units is expected to be recognized over a weighted average period of 1.1 and 3.6 years, respectively.3.5 years.


The Company estimates the forfeiture of stock options and recognizes 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%. 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 Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” 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.

Employee Stock Purchase Plan

In October 1996, the Company adopted the 1996 Non-Qualified Employee Stock Purchase Plan (as amended, the "ESPP"“ESPP”). Initially 1,000,000 shares of common stock were reserved for issuance under this plan. There are currently 714,827692,812 shares remaining available for issuance under the ESPP. Full-time employees of the Company generally are eligible to participate in the ESPP if, as of the last day of the applicable election period, they have been employed by the Company for at least one month. All other employees of the Company are eligible to participate provided that, as of the applicable election period, they have been employed by the Company for 12 months. Under the ESPP, eligible employees are permitted to acquire shares of the Company's common stock through payroll deductions, subject to maximum purchase limitations. During 2013, the purchase period was a period of seven months beginning April 1 and ending October 30. The Company modified the ESPP beginning in 2014, establishing two purchase periods of approximately six months each.periods. The first purchase period begins January 1 and ends June 10, and the second purchase period begins July 1 and ends December 10. The purchase price for common stock purchased under the plan is 85% of the lesser of the fair market value of the Company's common stock on the first day of the applicable purchase period or the last day of the applicable purchase period. The offering dates, purchase dates and duration of purchase periods may be changed if the change is announced prior to the beginning of the affected date or purchase period. The Company issued 9,848, 9,26011,348, 10,667 and 6,2609,848 shares and recognized compensation expense of $407,000, $174,000$289,000, $321,000 and $127,000$407,000 under the ESPP for the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively. The Company accounts for transactions under the ESPP using the fair value method prescribed by accounting guidance applicable to entities that use employee share purchase plans.

11.10. Related Party Arrangements

Unconsolidated Entities

The Company manages unconsolidated real estate entities for which it receives asset management, property management, development and redevelopment fee revenue. From these entities, the Company receivedearned fees of $11,050,000, $11,502,000$5,599,000, $9,947,000 and $10,257,000$11,050,000 in the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively. These fees are recognized on an accrual basis when earned in accordance with the accounting guidance applicable to revenue recognition, and are included in management, development and other fees on the accompanying Consolidated Statements of Comprehensive Income. In addition, the Company has outstanding receivables associated with its property and construction management role of $6,868,000$5,239,000 and $7,004,000$3,832,000 as of December 31, 20142016 and 2013,2015, respectively.

Director Compensation

Directors of the Company who are also employees receive no additional compensation for their services as a director. Following each annual meeting of stockholders, non-employee directors receive (i) a number of shares of restricted stock (or deferred stock awards) having a value of $125,000$130,000 and (ii) a cash payment of $60,000,$70,000, payable in quarterly installments of $15,000.$17,500. The number of shares of restricted stock (or deferred stock awards) is calculated based on the closing price on the day of the award. Non-employee directors may elect to receive all or a portion of cash payments in the form of a deferred stock award. In addition, beginning in May 2014, the Lead Independent Director receivesDirectors receive in the aggregate an additional annual fee of $25,000 payable in equal quarterly installments of $6,250, and non-employee directors serving as the chairperson of the Audit, Compensation and Nominating Committees receive additional cash compensation of $10,000 per year payable in quarterly installments of $2,500.

F-32

The Company recorded non-employee director compensation expense relating to restricted stock grants and deferred stock awards in the amount of $1,049,000, $992,000$1,216,000, $1,135,000 and $880,000$1,049,000 for the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively, as a component of general and administrative expense. Deferred compensation relating to these restricted stock grants and deferred stock awards to non-employee directors was $452,000, $417,000$531,000, $488,000 and $364,000$452,000 on December 31, 2016, 2015 and 2014, 2013 and 2012, respectively. During the year ended December 31, 2016, the Company issued 44,327 shares in conjunction with the conversion of deferred stock awards.


12.11. Fair Value

Financial Instruments Carried at Fair Value

Derivative Financial Instruments

Currently, the Company uses interest rate swap and interest rate cap agreements to manage its interest rate risk. These instruments are carried at fair value in the Company's financial statements. In adjusting the fair value of its derivative contracts for the effect of counterparty nonperformance risk, the Company has considered the impact of its net position with a given counterparty, as well as any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. The Company minimizes its credit risk on these transactions by dealing with major, creditworthy financial institutions which have an A or better credit rating by the Standard & Poor's Ratings Group. As part of its on-going control procedures, the Company monitors the credit ratings of counterparties and the exposure of the Company to any single entity, thus reducing credit risk concentration. The Company believes the likelihood of realizing losses from counterparty nonperformance is remote. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, such as interest rate, term to maturity and volatility, the credit valuation adjustments associated with its derivatives use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of December 31, 2014,2016, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined it is not significant. As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy.

Hedge ineffectiveness did not have a material impact on earnings of the Company for 20142016 or any prior period, and the Company does not anticipate that it will have a material effect in the future.

The following table summarizes the consolidated Hedging Derivativesderivative positions at December 31, 2014, excluding derivatives executed to hedge debt on communities classified as held for sale2016 (dollars in thousands):

 
Non-designated
Hedges
 
Cash Flow
Hedges
 
Non-designated
Hedges
Interest Rate Caps
 
Cash Flow
Hedges
Interest Rate Caps
 
Cash Flow
Hedges
Interest Rate Swaps
Notional balance $605,515
 $170,909
 $715,820
 $35,898
 $800,000
Weighted average interest rate (1) 1.7% 2.5% 2.5% 2.7% N/A
Weighted average capped interest rate 6.0% 5.1%
Weighted average swapped/capped interest rate 6.2% 5.9% 2.3%
Earliest maturity date February 2016
 April 2015
 February 2017
 April 2019
 November 2017
Latest maturity date August 2018
 April 2019
 November 2021
 April 2019
 November 2017

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

In 2016 and 2015, the Company entered into $1,200,000,000 of forward interest rate swap agreements executed to reduce the impact of variability in interest rates on a portion of the Company's expected debt issuance activity in 2016 and 2017. In May 2016, the Company settled $400,000,000 of the aggregate outstanding swaps, as discussed below. For the remaining outstanding swaps, at maturity of the agreements, the Company expects to cash settle the contracts and either pay or receive cash for the then current fair value. Assuming that the Company issues the debt as expected, the impact from settling these positions will then be recognized over the life of the issued debt as a yield adjustment.

In May 2016, in conjunction with the Company's May 2016 unsecured note issuance, the Company settled $400,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the forecasted issuance of the unsecured notes, making a payment of $14,847,000. The Company has deferred the effective portion of the fair value change of these swaps in accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets, and will recognize the impact as a component of interest expense, net, over the life of the unsecured notes.

Excluding derivatives executed to hedge secured debt on communities classified as held for sale, the Company had four11 derivatives designated as a cash flow hedgeshedge and 1215 derivatives not designated as hedges at December 31, 2014.2016. Fair value changes for derivatives not in qualifying hedge relationships for the years ended December 31, 20142016 and 2012,2015, were not material. ExcludingDuring 2016, the forward interest rate protection agreement discussed further below, fair value changesCompany deferred $5,556,000 of losses for derivatives not in qualifying hedge relationships for the year ended December 31, 2013 were not material. To adjust the Hedging Derivatives in qualifying cash flow hedges to their fair value and recognize the impactreported as a component of hedge accounting, the Company recorded a decrease to accumulated other comprehensive loss of $6,116,000 and $5,892,000 duringincome (loss).


The following table summarizes the years ended December 31, 2014 and 2013, respectively, and recorded an increase to accumulated other comprehensive loss of $20,987,000 during the year ended December 31, 2012. During the year ended December 31, 2013, the Company reclassified $59,376,000 of deferred losses reclassified from accumulated other comprehensive loss with $51,000,000 recognized as loss on interest rate contract as discussed below, and the balance recordedincome as a component of interest expense, net. net (dollars in thousands):

 For the year ended
 12/31/16 12/31/15 12/31/14
Cash flow hedge losses reclassified to earnings$6,433
 $5,774
 $6,237

The Company anticipates reclassifying approximately $5,493,000$6,975,000 of hedging losses from accumulated other comprehensive loss into earnings within the next 12 months to offset the variability of cash flows of the hedged item during this period. The Company did not have any derivatives designated as fair value hedges as of December 31, 20142016 and 2013.2015.

F-33

In 2013, the Company was party to a $215,000,000 forward interest rate protection agreement, which was entered into in 2011 to reduce the impact of variability in interest rates on a portion of its expected debt issuance activity in 2013. The Company settled this position at its maturity in May 2013 with a payment to the counterparty of $51,000,000, the fair value at the time of settlement. Based on changes in the Company's capital requirements for 2013, the Company deemed it was probable that it would not issue the anticipated debt for which the interest rate protection agreement was transacted. During the year ended December 31, 2013, the Company recognized a loss of $51,000,000 for the forward interest rate protection agreement in loss on interest rate contract on the accompanying Consolidated Statements of Comprehensive Income.
Redeemable Noncontrolling Interests

The Company provided redemption options (the "Puts"“Puts”) that allow joint venture partners of the Company to require the Company to purchase their interests in the investment at a guaranteed minimum amount related to three ventures. The Puts are payable in cash. The Company determines the fair value of the Puts based on unobservable inputs considering the assumptions that market participants would make in pricing the obligations, applying a guaranteed rate of return to the joint venture partners' net capital contribution balances as of period end. Given the significance of the unobservable inputs, the valuations are classified in Level 3 of the fair value hierarchy.

The Company issued units of limited partnership interest in DownREITs which provide the DownREIT limited partners the ability to present all or some of their units for redemption for cash as determined by the partnership agreement. Under the DownREIT agreements, for each limited partnership unit, the limited partner is entitled to receive cash in the amount equal to the fair value of the Company's common stock on or about the date of redemption. In lieu of cash redemption, the Company may elect to exchange such units for an equal number of shares of the Company's common stock. The limited partnership units in the DownREITs are valued using the market price of the Company's common stock, a Level 1 price under the fair value hierarchy.

Financial Instruments Not Carried at Fair Value

Cash and Cash Equivalents

Cash and cash equivalent balances are held with various financial institutions, within principal protected accounts. The Company monitors credit ratings of these financial institutions and the concentration of cash and cash equivalent balances with any one financial institution and believes the likelihood of realizing material losses related to cash and cash equivalent balances is remote. Cash and cash equivalents are carried at their face amounts, which reasonably approximate their fair values and are Level 1 within the fair value hierarchy.

Other Financial Instruments

Rents receivable,and other receivables and prepaids, accounts and construction payable and accrued expenses and other liabilities are carried at their face amounts, which reasonably approximate their fair values.

The Company values its unsecured notes using quoted market prices, a Level 1 price within the fair value hierarchy. The Company values its notes payable and outstanding amounts under the Credit Facility and Term Loan using a discounted cash flow analysis on the expected cash flows of each instrument. This analysis reflects the contractual terms of the instrument, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The process also considers credit valuation adjustments to appropriately reflect the Company’s nonperformance risk. The Company has concluded that the value of its notes payable and amounts outstanding under its Credit Facility and Term Loan are Level 2 prices as the majority of the inputs used to value its positions fall within Level 2 of the fair value hierarchy.


Financial Instruments Measured/Disclosed at Fair Value on a Recurring Basis

The following table summarizes the classification between the three levels of the fair value hierarchy of the Company's financial instruments measured/disclosed at fair value on a recurring basis (dollars in thousands):

F-34

Description
Total Fair
Value
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Total Fair
Value
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
12/31/201412/31/2016
Non Designated Hedges              
Interest Rate Caps$50
 $—
 $50
 $—
$79
 $—
 $79
 $—
Cash Flow Hedges              
Interest Rate Caps58
 —
 58
 —
2
 —
 2
 —
Put(s)(11,104) —
 —
 (11,104)
Interest Rate Swaps14,775
 —
 14,775
 —
Puts(6,002) —
 —
 (6,002)
DownREIT units(1,226) (1,226) —
 —
(1,329) (1,329) —
 —
Indebtedness(6,558,022) (2,874,147) (3,683,875) —
       
Unsecured notes(4,218,627) (4,218,627) —
 —
Mortgage notes payable and Term Loan(2,744,462) —
 (2,744,462) —
Total$(6,570,244) $(2,875,373) $(3,683,767) $(11,104)$(6,955,564) $(4,219,956) $(2,729,606) $(6,002)
              
12/31/201312/31/2015
Non Designated Hedges    

      

  
Interest Rate Caps$106
 $—
 $106
 $—
$26
 $—
 $26
 $—
Put(s)(15,998) —
 —
 (15,998)
Cash Flow Hedges       
Interest Rate Caps5
 —
 5
 —
Interest Rate Swaps5,422
 —
 5,422
 —
Puts(8,181) —
 —
 (8,181)
DownREIT units(887) (887) —
 —
(1,381) (1,381) —
 —
Indebtedness(6,294,848) (2,657,143) (3,637,705) —
       
Unsecured notes(3,668,417) (3,668,417) —
 —
Mortgage notes payable and Term Loan(2,700,341) —
 (2,700,341) —
Total$(6,311,627) $(2,658,030) $(3,637,599) $(15,998)$(6,372,867) $(3,669,798) $(2,694,888) $(8,181)

13.12. Quarterly Financial Information

The following summary represents the unaudited quarterly results of operations for the years ended December 31, 20142016 and 20132015 (dollars in thousands, except per share amounts)data):
 For the three months ended (1)
 3/31/14 6/30/14 9/30/14 12/31/14
Total revenue$400,075
 $413,806
 $430,525
 $440,656
Income from continuing operations$103,420
 $172,197
 $241,001
 $142,530
Total discontinued operations$38,179
 $—
 $—
 $—
Net income attributable to common stockholders$141,739
 $158,086
 $241,100
 $142,642
Net income per common share—basic$1.09
 $1.22
 $1.83
 $1.08
Net income per common share—diluted$1.09
 $1.21
 $1.83
 $1.08
 For the three months ended (1)
 3/31/16 6/30/16 9/30/16 12/31/16
Total revenue$508,498
 $502,307
 $516,211
 $518,240
Net income$237,877
 $197,319
 $356,329
 $242,183
Net income attributable to common stockholders$237,931
 $197,444
 $356,392
 $242,235
Net income per common share - basic$1.73
 $1.44
 $2.60
 $1.76
Net income per common share - diluted$1.73
 $1.44
 $2.59
 $1.76

 For the three months ended (1)
 3/31/13 6/30/13 9/30/13 12/31/13
Total revenue$301,356
 $378,207
 $389,189
 $394,169
Income (loss) from continuing operations$(14,767) $334
 $(15,949) $88,209
Total discontinued operations$90,237
 $35,763
 $5,063
 $163,881
Net income (loss) attributable to common stockholders$75,427
 $36,218
 $(10,715) $252,212
Net income (loss) per common share—basic$0.63
 $0.28
 $(0.08) $1.95
Net income (loss) per common share—diluted$0.63
 $0.28
 $(0.08) $1.95
 For the three months ended (1)
 3/31/15 6/30/15 9/30/15 12/31/15
Total revenue$442,367
 $457,459
 $475,360
 $480,840
Net income$208,053
 $172,253
 $206,076
 $155,352
Net income attributable to common stockholders$208,144
 $172,324
 $206,142
 $155,428
Net income per common share - basic$1.57
 $1.30
 $1.54
 $1.13
Net income per common share - diluted$1.56
 $1.29
 $1.53
 $1.13

(1)Amounts may not equal full year results due to rounding.

F-35

14.13. Subsequent Events

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

In January 2015:
2017, the Company entered into an agreement to sell an operating community containing 450 apartment homes and net real estate of $51,342,000 as of December 31, 2016, resulting in the community qualifying as held for sale. The Company expects to complete the sale in the first quarter of 2017.

In January 2017, the Company sold Avalon on Stamford Harbor,two undeveloped land parcels located in Stamford, CT. Avalon on Stamford Harbor contains 323 homes andNewcastle, WA that are adjacent to one of the Company's Development Communities for $20,500,000.

In February 2017, a working marina containing 74 boat slips and was sold for $115,500,000.
The Company 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.
A fire occurred at the Company's 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 the Company currently believes it only suffered minimal damage.not yet occupied. The Company is currently assessing its 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 its 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 the Company, including three purported class actions. While the Company currently believes that its direct losses and itsany potential liability to third parties will be substantially covered by its 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 the Company is obligated for 12% of the first $50,000,000 in losses, the Company can give no assurances in this regard and continues to evaluate this matter. As of December 31, 2014, Edgewater was encumbered with a fixed-rate secured mortgage note with an effective interest rate of 5.95%, and an outstanding principal balance of $75,012,000, due in May 2019 (the “Edgewater Mortgage”). The Edgewater Mortgage 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

In February 2017, the Company (i) to direct the insurance proceeds to be used for the restorationrepaid $17,300,000 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, the Company is complying with all lender requirements and continues to work with the lender to resolve open issues related to the Edgewater Mortgage.
The Company received $20,700,000 from the joint venture partner associated with MVP I, LLC, the entity that ownsvariable rate debt secured by Avalon at Mission Bay North II, upon agreement with the partner to modify the joint venture agreement to eliminate the Company's 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.Mountain View at its scheduled maturity date.

F-36F-40
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20142016
(Dollars in thousands)



   2016 2015 2016 
   Initial Cost   Total Cost               Initial Cost   Total Cost            
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
 City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
ESTABLISHED COMMUNITIESESTABLISHED COMMUNITIES                       
NEW ENGLAND                                          
Boston, MA                                          
Avalon at Lexington Lexington, MA $2,124
 $12,599
 $9,199
 $2,124
 $21,798
 $23,922
 $11,484
 $12,438
 $—
 1994 Lexington, MA 198
 $2,124
 $12,567
 $9,801
 $2,124
 $22,368
 $24,492
 $13,202
 $11,290
 $11,703
 $—
 1994
Avalon Oaks Wilmington, MA 2,129
 18,676
 2,038
 2,129
 20,714
 22,843
 11,094
 11,749
 15,887
 1999 Wilmington, MA 204
 2,129
 17,567
 5,259
 2,129
 22,826
 24,955
 12,802
 12,153
 12,771
 —
 1999
Eaves Quincy Quincy, MA 1,743
 14,662
 9,283
 1,743
 23,945
 25,688
 11,805
 13,883
 —
 1986/1995 Quincy, MA 245
 1,743
 14,662
 9,937
 1,743
 24,599
 26,342
 13,543
 12,799
 13,449
 —
 1986/1995
Avalon Essex Peabody, MA 5,184
 16,320
 1,821
 5,184
 18,141
 23,325
 9,289
 14,036
 —
 2000
Avalon Oaks West Wilmington, MA 3,318
 13,467
 746
 3,318
 14,213
 17,531
 6,376
 11,155
 15,847
 2002 Wilmington, MA 120
 3,318
 13,465
 1,140
 3,318
 14,605
 17,923
 7,481
 10,442
 10,687
 15,420
 2002
Avalon Orchards Marlborough, MA 2,983
 18,037
 1,943
 2,983
 19,980
 22,963
 8,902
 14,061
 17,091
 2002 Marlborough, MA 156
 2,983
 17,970
 2,520
 2,983
 20,490
 23,473
 10,608
 12,865
 13,431
 16,075
 2002
Avalon at Newton Highlands Newton, MA 11,039
 45,590
 3,423
 11,039
 49,013
 60,052
 19,353
 40,699
 —
 2003 Newton, MA 294
 11,039
 45,547
 4,411
 11,039
 49,958
 60,997
 23,327
 37,670
 39,040
 —
 2003
Avalon at The Pinehills Plymouth, MA 6,876
 30,401
 183
 6,876
 30,584
 37,460
 7,836
 29,624
 —
 2004 Plymouth, MA 192
 6,876
 30,401
 456
 6,876
 30,857
 37,733
 10,017
 27,716
 28,679
 —
 2004
Eaves Peabody Peabody, MA 4,645
 19,007
 12,019
 4,645
 31,026
 35,671
 9,746
 25,925
 —
 1962/2004 Peabody, MA 286
 4,645
 18,919
 12,758
 4,645
 31,677
 36,322
 11,993
 24,329
 25,110
 —
 1962/2004
Avalon at Bedford Center Bedford, MA 4,258
 20,569
 316
 4,258
 20,885
 25,143
 6,630
 18,513
 —
 2006 Bedford, MA 139
 4,258
 20,551
 877
 4,258
 21,428
 25,686
 8,116
 17,570
 17,921
 —
 2006
Avalon Chestnut Hill Chestnut Hill, MA 14,572
 45,911
 1,899
 14,572
 47,810
 62,382
 13,588
 48,794
 39,545
 2007
Avalon Shrewsbury Shrewsbury, MA 5,152
 30,608
 757
 5,152
 31,365
 36,517
 9,062
 27,455
 20,174
 2007
Avalon at Chestnut Hill Chestnut Hill, MA 204
 14,572
 45,911
 2,522
 14,572
 48,433
 63,005
 17,365
 45,640
 47,031
 38,564
 2007
Avalon at Lexington Hills Lexington, MA 8,691
 79,153
 1,112
 8,691
 80,265
 88,956
 19,446
 69,510
 —
 2008 Lexington, MA 387
 8,691
 79,121
 3,574
 8,691
 82,695
 91,386
 25,145
 66,241
 67,206
 —
 2008
Avalon Acton Acton, MA 13,124
 49,905
 276
 13,124
 50,181
 63,305
 12,089
 51,216
 45,000
 2008 Acton, MA 380
 13,124
 48,695
 3,055
 13,124
 51,750
 64,874
 15,599
 49,275
 50,588
 45,000
 2008
Avalon at the Hingham Shipyard Hingham, MA 235
 12,218
 41,656
 1,879
 12,218
 43,535
 55,753
 12,112
 43,641
 44,029
 —
 2009
Avalon Sharon Sharon, MA 4,719
 25,522
 269
 4,719
 25,791
 30,510
 6,030
 24,480
 —
 2008 Sharon, MA 156
 4,719
 25,478
 613
 4,719
 26,091
 30,810
 7,850
 22,960
 23,674
 —
 2008
Avalon at Center Place Providence, RI —
 26,816
 10,230
 —
 37,046
 37,046
 19,919
 17,127
 —
 1991/1997
Avalon at Hingham Shipyard Hingham, MA 12,218
 41,725
 339
 12,218
 42,064
 54,282
 9,089
 45,193
 —
 2009
Avalon Northborough Northborough, MA 8,144
 52,454
 16
 8,144
 52,470
 60,614
 9,170
 51,444
 —
 2009 Northborough, MA 382
 8,144
 52,343
 946
 8,144
 53,289
 61,433
 12,973
 48,460
 49,624
 —
 2009
Avalon Blue Hills Randolph, MA 11,110
 34,736
 80
 11,110
 34,816
 45,926
 6,856
 39,070
 —
 2009 Randolph, MA 276
 11,110
 34,580
 1,068
 11,110
 35,648
 46,758
 9,444
 37,314
 38,309
 —
 2009
Avalon Cohasset Cohasset, MA 8,802
 46,233
 16
 8,802
 46,249
 55,051
 4,910
 50,141
 —
 2012 Cohasset, MA 220
 8,802
 46,166
 187
 8,802
 46,353
 55,155
 8,220
 46,935
 48,512
 —
 2012
Avalon Andover Andover, MA 4,276
 21,903
 —
 4,276
 21,903
 26,179
 2,114
 24,065
 14,505
 2012 Andover, MA 115
 4,276
 21,871
 180
 4,276
 22,051
 26,327
 3,702
 22,625
 23,291
 13,844
 2012
Avalon Natick Natick, MA 407
 15,645
 64,845
 19
 15,645
 64,864
 80,509
 8,090
 72,419
 74,738
 50,067
 2013
Avalon at Assembly Row (1) Somerville, MA 195
 8,537
 52,378
 —
 8,537
 52,378
 60,915
 4,885
 56,030
 53,757
 —
 2015
Avalon Prudential Center II (2) Boston, MA 266
 8,776
 35,496
 44,920
 8,776
 80,416
 89,192
 29,974
 59,218
 56,806
 —
 1968/1998
Avalon Prudential Center I (2) Boston, MA 243
 8,002
 32,370
 33,896
 8,002
 66,266
 74,268
 26,682
 47,586
 46,823
 —
 1968/1998
Eaves Burlington Burlington, MA 7,714
 32,536
 5,080
 7,714
 37,616
 45,330
 2,383
 42,947
 —
 1988/2012 Burlington, MA 203
 7,714
 32,499
 5,968
 7,714
 38,467
 46,181
 5,074
 41,107
 41,700
 —
 1988/2012
AVA Back Bay Boston, MA 9,034
 36,540
 36,364
 9,034
 72,904
 81,938
 26,205
 55,733
 —
 1968/1998
Avalon at Prudential Center II Boston, MA 8,776
 35,496
 31,783
 8,776
 67,279
 76,055
 25,100
 50,955
 —
 1968/1998
Avalon at Prudential Center I Boston, MA 8,002
 32,370
 19,773
 8,002
 52,143
 60,145
 22,772
 37,373
 —
 1968/1998
Avalon Burlington Burlington, MA 15,600
 59,200
 6,943
 15,600
 66,143
 81,743
 5,334
 76,409
 —
 1989/2013
Avalon Bear Hill Waltham, MA 27,350
 96,999
 5,110
 27,350
 102,109
 129,459
 11,304
 118,155
 —
 1999/2013
Avalon Canton at Blue Hills Canton, MA 196
 6,562
 33,956
 133
 6,562
 34,089
 40,651
 3,260
 37,391
 38,543
 —
 2014
Avalon Burlington (2) Burlington, MA 312
 15,600
 58,499
 17,434
 15,600
 75,933
 91,533
 10,398
 81,135
 81,080
 —
 1989/2013
Eaves North Quincy Quincy, MA 11,940
 39,400
 2,491
 11,940
 41,891
 53,831
 4,784
 49,047
 36,761
 1977/2013 Quincy, MA 224
 11,940
 39,400
 2,913
 11,940
 42,313
 54,253
 7,761
 46,492
 47,901
 —
 1977/2013
Avalon Natick Natick, MA 15,645
 64,585
 —
 15,645
 64,585
 80,230
 3,476
 76,754
 52,357
 2013
Avalon Canton at Blue Hills Canton, MA 6,562
 33,191
 —
 6,562
 33,191
 39,753
 769
 38,984
 —
 2014
Avalon Exeter Andover, MA 16,304
 108,126
 —
 16,304
 108,126
 124,430
 1,842
 122,588
 —
 2014
Avalon at Center Place (1) Providence, RI 225
 —
 26,816
 11,511
 —
 38,327
 38,327
 22,752
 15,575
 16,005
 —
 1991/1997
Total Boston, MATotal Boston, MA 6,460
 $207,547
 $963,729
 $177,977
 $207,547
 $1,141,706
 $1,349,253
 $342,375
 $1,006,878
 $1,022,408
 $178,970
 
                                          
Fairfield-New Haven, CT                   

F-37F-41
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


    Initial Cost   Total Cost          
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
Eaves Trumbull Trumbull, CT 4,414
 31,268
 3,529
 4,414
 34,797
 39,211
 20,696
 18,515
 39,452
 1997
Eaves Stamford Stamford, CT 5,956
 23,993
 12,748
 5,956
 36,741
 42,697
 20,049
 22,648
 —
 1991
Avalon Wilton I Wilton, CT 2,116
 14,664
 5,841
 2,116
 20,505
 22,621
 9,855
 12,766
 —
 1997
Avalon on Stamford Harbor Stamford, CT 10,836
 51,883
 1,778
 10,836
 53,661
 64,497
 22,322
 42,175
 62,724
 2003
Avalon New Canaan New Canaan, CT 4,834
 19,485
 1,559
 4,834
 21,044
 25,878
 8,672
 17,206
 —
 2002
AVA Stamford Stamford, CT 13,819
 56,499
 4,602
 13,819
 61,101
 74,920
 25,069
 49,851
 57,423
 2002/2002
Avalon Danbury Danbury, CT 4,933
 30,638
 670
 4,933
 31,308
 36,241
 10,352
 25,889
 —
 2005
Avalon Darien Darien, CT 6,926
 34,659
 1,689
 6,926
 36,348
 43,274
 13,817
 29,457
 47,700
 2004
Avalon Milford I Milford, CT 8,746
 22,699
 725
 8,746
 23,424
 32,170
 8,493
 23,677
 —
 2004
Avalon Huntington Shelton, CT 5,277
 20,029
 100
 5,277
 20,129
 25,406
 4,406
 21,000
 —
 2008
Avalon Norwalk Norwalk, CT 11,320
 62,910
 25
 11,320
 62,935
 74,255
 9,372
 64,883
 —
 2011
Avalon Wilton II Wilton, CT 6,604
 23,758
 6
 6,604
 23,764
 30,368
 2,997
 27,371
 —
 2011
Avalon Shelton III Shelton, CT 7,853
 40,866
 —
 7,853
 40,866
 48,719
 2,279
 46,440
 —
 2013
Avalon East Norwalk Norwalk, CT 10,394
 36,126
 —
 10,394
 36,126
 46,520
 1,645
 44,875
 —
 2013
Avalon at Stratford Stratford, CT 2,564
 26,884
 —
 2,564
 26,884
 29,448
 341
 29,107
 —
 2014
TOTAL NEW ENGLAND   $368,626
 $1,699,098
 $196,781
 $368,626
 $1,895,879
 $2,264,505
 $479,122
 $1,785,383
 $464,466
  
                       
METRO NY/NJ                      
New York Suburban, NY                      
Avalon Commons Smithtown, NY $4,679
 $28,286
 $5,660
 $4,679
 $33,946
 $38,625
 $18,664
 $19,961
 $—
 1997
Eaves Nanuet Nanuet, NY 8,428
 45,660
 3,903
 8,428
 49,563
 57,991
 28,325
 29,666
 63,242
 1998
Avalon Green Elmsford, NY 1,820
 10,525
 1,675
 1,820
 12,200
 14,020
 8,031
 5,989
 —
 1995
Avalon Towers Long Beach, NY 3,118
 11,973
 10,260
 3,118
 22,233
 25,351
 11,437
 13,914
 —
 1990/1995
Avalon Willow Mamaroneck, NY 6,207
 40,791
 1,423
 6,207
 42,214
 48,421
 21,846
 26,575
 —
 2000
Avalon Court Melville, NY 9,228
 50,063
 2,908
 9,228
 52,971
 62,199
 28,734
 33,465
 —
 1997
The Avalon Bronxville, NY 2,889
 28,324
 7,993
 2,889
 36,317
 39,206
 15,882
 23,324
 —
 1999
Avalon at Glen Cove Glen Cove, NY 7,871
 59,969
 1,097
 7,871
 61,066
 68,937
 21,970
 46,967
 —
 2004
Avalon Pines Coram, NY 8,700
 62,931
 621
 8,700
 63,552
 72,252
 20,828
 51,424
 —
 2005
Avalon Glen Cove North Glen Cove, NY 2,577
 37,336
 232
 2,577
 37,568
 40,145
 10,016
 30,129
 —
 2007
Avalon White Plains White Plains, NY 15,391
 137,353
 46
 15,391
 137,399
 152,790
 27,434
 125,356
 —
 2009
Avalon Charles Pond Coram, NY 14,715
 33,640
 48
 14,715
 33,688
 48,403
 6,824
 41,579
 —
 2009
Avalon Rockville Centre Rockville Centre, NY 32,212
 78,807
 —
 32,212
 78,807
 111,019
 8,480
 102,539
 —
 2012
Avalon Green II Elmsford, NY 27,765
 77,560
 —
 27,765
 77,560
 105,325
 7,330
 97,995
 —
 2012
Avalon Garden City Garden City, NY 18,205
 49,372
 —
 18,205
 49,372
 67,577
 3,999
 63,578
 —
 2013
Avalon Westbury Westbury, NY 69,620
 43,781
 7,410
 69,620
 51,191
 120,811
 8,720
 112,091
 82,345
 2006/2013
      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
Fairfield-New Haven, CT                          
Eaves Stamford Stamford, CT 238
 $5,956
 $23,993
 $12,946
 $5,956
 $36,939
 $42,895
 $22,837
 $20,058
 $21,302
 $—
 1991
Avalon Wilton on River Rd Wilton, CT 102
 2,116
 14,664
 5,873
 2,116
 20,537
 22,653
 11,339
 11,314
 12,020
 —
 1997
Avalon New Canaan New Canaan, CT 104
 4,834
 22,990
 1,943
 4,834
 24,933
 29,767
 12,178
 17,589
 18,345
 —
 2002
AVA Stamford Stamford, CT 306
 13,819
 56,499
 5,263
 13,819
 61,762
 75,581
 30,120
 45,461
 47,552
 —
 2002/2002
Avalon Danbury Danbury, CT 234
 4,933
 30,638
 1,004
 4,933
 31,642
 36,575
 12,630
 23,945
 24,890
 —
 2005
Avalon Darien Darien, CT 189
 6,926
 34,558
 2,345
 6,926
 36,903
 43,829
 16,641
 27,188
 28,363
 —
 2004
Avalon Milford Milford, CT 246
 8,746
 22,699
 1,296
 8,746
 23,995
 32,741
 10,260
 22,481
 23,102
 —
 2004
Avalon Norwalk Norwalk, CT 311
 11,320
 62,904
 666
 11,320
 63,570
 74,890
 13,904
 60,986
 63,064
 —
 2011
Avalon Huntington Shelton, CT 99
 5,277
 20,029
 242
 5,277
 20,271
 25,548
 5,808
 19,740
 20,311
 —
 2008
Avalon Wilton on Danbury Rd Wilton, CT 100
 6,604
 23,758
 29
 6,604
 23,787
 30,391
 4,710
 25,681
 26,514
 —
 2011
Avalon Shelton Shelton, CT 250
 7,749
 40,264
 26
 7,749
 40,290
 48,039
 5,213
 42,826
 44,286
 —
 2013
Avalon East Norwalk Norwalk, CT 240
 10,395
 36,246
 —
 10,395
 36,246
 46,641
 4,324
 42,317
 43,660
 —
 2013
Avalon Stratford Stratford, CT 130
 2,564
 27,157
 —
 2,564
 27,157
 29,721
 2,297
 27,424
 28,351
 38,221
 2014
Total Fairfield-New Haven, CT 2,549
 $91,239
 $416,399
 $31,633
 $91,239
 $448,032
 $539,271
 $152,261
 $387,010
 $401,760
 $38,221
  
                         
TOTAL NEW ENGLAND 9,009
 $298,786
 $1,380,128
 $209,610
 $298,786
 $1,589,738
 $1,888,524
 $494,636
 $1,393,888
 $1,424,168
 $217,191
  

F-38
METRO NY/NJ                          
New York City, NY                          
Avalon Riverview (1) Long Island City, NY 372
 $—
 $94,061
 $9,718
 $—
 $103,779
 $103,779
 $48,867
 $54,912
 $55,494
 $—
 2002
Avalon Bowery Place I New York, NY 206
 18,575
 75,009
 2,717
 18,575
 77,726
 96,301
 27,419
 68,882
 71,256
 93,800
 2006
Avalon Bowery Place II New York, NY 90
 9,106
 47,199
 3,649
 9,106
 50,848
 59,954
 15,347
 44,607
 45,979
 —
 2007
Avalon Morningside Park (1) New York, NY 295
 —
 114,233
 1,465
 —
 115,698
 115,698
 32,671
 83,027
 86,539
 100,000
 2009
Avalon Fort Greene Brooklyn, NY 631
 83,038
 216,802
 1,742
 83,038
 218,544
 301,582
 50,369
 251,213
 258,047
 —
 2010
AVA High Line (1) New York, NY 405
 —
 155,989
 16
 —
 156,005
 156,005
 3,878
 152,127
 152,111
 —
 2015
Avalon Midtown West New York, NY 550
 154,730
 180,253
 13,608
 154,730
 193,861
 348,591
 35,495
 313,096
 318,046
 100,500
 1998/2013
Avalon Clinton North (2) New York, NY 339
 84,069
 105,821
 10,390
 84,069
 116,211
 200,280
 19,540
 180,740
 181,136
 147,000
 2008/2013
Avalon Clinton South New York, NY 288
 71,421
 89,851
 5,957
 71,421
 95,808
 167,229
 16,899
 150,330
 152,700
 121,500
 2007/2013
Total New York City, NY 3,176
 $420,939
 $1,079,218
 $49,262
 $420,939
 $1,128,480
 $1,549,419
 $250,485
 $1,298,934
 $1,321,308
 $562,800
  
                           
New York - Suburban                          
Avalon Commons Smithtown, NY 312
 $4,679
 $28,286
 $6,012
 $4,679
 $34,298
 $38,977
 $21,265
 $17,712
 $18,817
 $—
 1997
Avalon Willow Mamaroneck, NY 227
 6,207
 40,791
 2,023
 6,207
 42,814
 49,021
 24,868
 24,153
 25,379
 —
 2000

F-42
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


    Initial Cost   Total Cost          
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
Avalon Ossining Ossining, NY 6,385
 30,099
 —
 6,385
 30,099
 36,484
 762
 35,722
 —
 2014
Avalon Huntington Station Huntington Station, NY 21,870
 57,545
 —
 21,870
 57,545
 79,415
 844
 78,571
 —
 2014
                       
New Jersey                      
Avalon Cove Jersey City, NJ 8,760
 82,422
 21,060
 8,760
 103,482
 112,242
 54,057
 58,185
 —
 1997
Avalon Run Lawrenceville, NJ 14,650
 60,486
 5,526
 14,650
 66,012
 80,662
 23,905
 56,757
 —
 1994
Avalon Princeton Junction West Windsor, NJ 5,585
 22,382
 20,791
 5,585
 43,173
 48,758
 21,392
 27,366
 —
 1988/1993
Avalon at Edgewater (1) Edgewater, NJ 14,528
 60,240
 4,302
 14,528
 64,542
 79,070
 28,885
 50,185
 75,012
 2002
Avalon at Florham Park Florham Park, NJ 6,647
 34,906
 2,179
 6,647
 37,085
 43,732
 18,009
 25,723
 —
 2001
Avalon at Freehold Freehold, NJ 4,119
 30,514
 900
 4,119
 31,414
 35,533
 13,959
 21,574
 34,973
 2002
Avalon Run East Lawrenceville, NJ 6,766
 45,366
 919
 6,766
 46,285
 53,051
 16,286
 36,765
 37,475
 2005
Avalon Lyndhurst Lyndhurst, NJ 18,620
 59,879
 579
 18,620
 60,458
 79,078
 16,676
 62,402
 —
 2007
Avalon at Tinton Falls Tinton Falls, NJ 7,939
 33,173
 96
 7,939
 33,269
 41,208
 7,755
 33,453
 —
 2008
Avalon at West Long Branch West Long Branch, NJ 2,721
 22,940
 —
 2,721
 22,940
 25,661
 3,479
 22,182
 —
 2011
Avalon North Bergen North Bergen, NJ 8,984
 31,015
 514
 8,984
 31,529
 40,513
 2,819
 37,694
 —
 2012
Avalon at Wesmont Station Wood-Ridge, NJ 14,682
 41,635
 875
 14,682
 42,510
 57,192
 3,860
 53,332
 —
 2012
Avalon Hackensack at Riverside Hackensack, NJ —
 44,530
 —
 —
 44,530
 44,530
 2,312
 42,218
 —
 2013
Avalon Somerset Somerset, NJ 18,241
 58,326
 —
 18,241
 58,326
 76,567
 3,366
 73,201
 —
 2013
Avalon at Wesmont Station II Wood-Ridge, NJ 6,502
 16,862
 —
 6,502
 16,862
 23,364
 992
 22,372
 —
 2013
Avalon Bloomingdale Bloomingdale, NJ 3,005
 27,721
 —
 3,005
 27,721
 30,726
 1,098
 29,628
 —
 2014
                       
New York, NY                      
Avalon Riverview I Long Island City, NY —
 94,061
 4,894
 —
 98,955
 98,955
 41,548
 57,407
 —
 2002
Avalon Bowery Place New York, NY 18,575
 75,009
 1,992
 18,575
 77,001
 95,576
 22,047
 73,529
 93,800
 2006
Avalon Riverview North Long Island City, NY —
 164,808
 2,404
 —
 167,212
 167,212
 41,970
 125,242
 —
 2008
Avalon Bowery Place II New York, NY 9,106
 47,199
 1,633
 9,106
 48,832
 57,938
 11,904
 46,034
 —
 2007
Avalon Morningside Park New York, NY —
 114,327
 870
 —
 115,197
 115,197
 24,642
 90,555
 100,000
 2009
Avalon Fort Greene Brooklyn, NY 83,038
 218,444
 642
 83,038
 219,086
 302,124
 35,170
 266,954
 —
 2010
Avalon Midtown West New York, NY 154,730
 180,253
 12,012
 154,730
 192,265
 346,995
 23,002
 323,993
 100,500
 1998/2013
Avalon Clinton North New York, NY 84,069
 105,821
 6,352
 84,069
 112,173
 196,242
 12,558
 183,684
 147,000
 2008/2013
Avalon Clinton South New York, NY 71,421
 89,851
 5,175
 71,421
 95,026
 166,447
 10,732
 155,715
 121,500
 2007/2013
TOTAL METRO NY/NJ   $824,368
 $2,646,185
 $136,991
 $824,368
 $2,783,176
 $3,607,544
 $692,549
 $2,914,995
 $855,847
  
                       
MID-ATLANTIC                      
Washington Metro                      
      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
Avalon Court Melville, NY 494
 9,228
 50,063
 5,747
 9,228
 55,810
 65,038
 32,744
 32,294
 31,696
 —
 1997
The Avalon Bronxville, NY 110
 2,889
 28,324
 8,318
 2,889
 36,642
 39,531
 18,467
 21,064
 22,038
 —
 1999
Avalon at Glen Cove (1) Glen Cove, NY 256
 7,871
 59,969
 3,392
 7,871
 63,361
 71,232
 26,351
 44,881
 45,197
 —
 2004
Avalon Pines Coram, NY 450
 8,700
 62,931
 1,401
 8,700
 64,332
 73,032
 25,211
 47,821
 49,598
 —
 2005
Avalon Glen Cove North (1) Glen Cove, NY 111
 2,577
 37,336
 434
 2,577
 37,770
 40,347
 12,579
 27,768
 28,990
 —
 2007
Avalon White Plains White Plains, NY 407
 15,391
 137,353
 369
 15,391
 137,722
 153,113
 36,925
 116,188
 120,690
 —
 2009
Avalon Rockville Centre I Rockville Centre, NY 349
 32,212
 78,806
 334
 32,212
 79,140
 111,352
 14,157
 97,195
 99,724
 —
 2012
Avalon Green II Elmsford, NY 444
 27,765
 77,560
 116
 27,765
 77,676
 105,441
 12,904
 92,537
 95,210
 —
 2012
Avalon Garden City Garden City, NY 204
 18,205
 49,332
 236
 18,205
 49,568
 67,773
 7,600
 60,173
 61,775
 —
 2013
Avalon Ossining Ossining, NY 168
 6,392
 30,313
 —
 6,392
 30,313
 36,705
 2,971
 33,734
 34,811
 —
 2014
Avalon Westbury Westbury, NY 396
 69,620
 43,781
 10,246
 69,620
 54,027
 123,647
 12,895
 110,752
 112,699
 79,945
 2006/2013
Total New York - Suburban 3,928
 $211,736
 $724,845
 $38,628
 $211,736
 $763,473
 $975,209
 $248,937
 $726,272
 $746,624
 $79,945
  
                           
New Jersey                          
Avalon Cove Jersey City, NJ 504
 $8,760
 $82,422
 $21,979
 $8,760
 $104,401
 $113,161
 $61,207
 $51,954
 $54,651
 $—
 1997
Eaves Lawrenceville (2) Lawrenceville, NJ 632
 14,650
 60,486
 11,430
 14,650
 71,916
 86,566
 29,232
 57,334
 56,391
 —
 1994
Avalon Princeton Junction West Windsor, NJ 512
 5,585
 22,382
 21,115
 5,585
 43,497
 49,082
 24,495
 24,587
 25,952
 —
 1988/1993
Avalon at Florham Park Florham Park, NJ 270
 6,647
 34,906
 3,190
 6,647
 38,096
 44,743
 20,913
 23,830
 24,668
 —
 2001
Avalon Run East Lawrenceville, NJ 312
 6,766
 45,359
 1,400
 6,766
 46,759
 53,525
 19,560
 33,965
 35,330
 36,305
 2005
Avalon Tinton Falls Tinton Falls, NJ 216
 7,939
 33,170
 489
 7,939
 33,659
 41,598
 10,070
 31,528
 32,576
 —
 2008
Avalon West Long Branch West Long Branch, NJ 180
 2,721
 22,925
 99
 2,721
 23,024
 25,745
 5,196
 20,549
 21,382
 —
 2011
Avalon North Bergen North Bergen, NJ 164
 8,984
 30,994
 919
 8,984
 31,913
 40,897
 5,211
 35,686
 36,900
 —
 2012
Avalon at Wesmont Station I Wood-Ridge, NJ 266
 14,682
 41,635
 486
 14,682
 42,121
 56,803
 6,812
 49,991
 51,632
 —
 2012
Avalon Hackensack at Riverside (1) Hackensack, NJ 226
 —
 44,619
 —
 —
 44,619
 44,619
 5,520
 39,099
 40,722
 —
 2013
Avalon Somerset Somerset, NJ 384
 18,241
 58,338
 101
 18,241
 58,439
 76,680
 7,657
 69,023
 71,074
 —
 2013
Avalon at Wesmont Station II Wood-Ridge, NJ 140
 6,502
 16,863
 —
 6,502
 16,863
 23,365
 2,234
 21,131
 21,762
 —
 2013
Avalon Bloomingdale Bloomingdale, NJ 174
 3,006
 27,802
 —
 3,006
 27,802
 30,808
 3,173
 27,635
 28,670
 —
 2014
Total New Jersey   3,980
 $104,483
 $521,901
 $61,208
 $104,483
 $583,109
 $687,592
 $201,280
 $486,312
 $501,710
 $36,305
  
                           
TOTAL METRO NY/NJ 11,084
 $737,158
 $2,325,964
 $149,098
 $737,158
 $2,475,062
 $3,212,220
 $700,702
 $2,511,518
 $2,569,642
 $679,050
  

F-39F-43
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


   2016 2015 2016 
   Initial Cost   Total Cost               Initial Cost   Total Cost            
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
 City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
MID-ATLANTIC                       
Washington Metro/Baltimore, MDWashington Metro/Baltimore, MD                       
Avalon at Foxhall Washington, DC $6,848
 $27,614
 $11,671
 $6,848
 $39,285
 $46,133
 $24,950
 $21,183
 $56,341
 1982/1994 Washington, D.C. 308
 $6,848
 $27,614
 $13,649
 $6,848
 $41,263
 $48,111
 $27,751
 $20,360
 $20,663
 $54,583
 1982/1994
Avalon at Gallery Place Washington, DC 8,800
 39,658
 1,557
 8,800
 41,215
 50,015
 16,412
 33,603
 43,776
 2003 Washington, D.C. 203
 8,800
 39,658
 2,069
 8,800
 41,727
 50,527
 19,480
 31,047
 32,483
 42,410
 2003
AVA H Street Washington, D.C. 138
 7,425
 25,282
 25
 7,425
 25,307
 32,732
 3,734
 28,998
 29,952
 —
 2013
Avalon The Albemarle Washington, D.C. 228
 25,140
 52,459
 5,243
 25,140
 57,702
 82,842
 10,708
 72,134
 73,386
 —
 1966/2013
Eaves Tunlaw Gardens Washington, D.C. 166
 16,430
 22,902
 2,275
 16,430
 25,177
 41,607
 4,856
 36,751
 37,426
 —
 1944/2013
The Statesman Washington, D.C. 281
 38,140
 35,352
 3,857
 38,140
 39,209
 77,349
 8,515
 68,834
 70,058
 —
 1961/2013
Eaves Glover Park Washington, D.C. 120
 9,580
 26,532
 2,317
 9,580
 28,849
 38,429
 5,485
 32,944
 33,836
 —
 1953/2013
AVA Van Ness Washington, D.C. 269
 22,890
 58,691
 4,127
 22,890
 62,818
 85,708
 11,152
 74,556
 76,255
 —
 1978/2013
Avalon First and M Washington, D.C. 469
 43,700
 153,950
 3,048
 43,700
 156,998
 200,698
 23,077
 177,621
 182,659
 —
 2012/2013
Avalon at Fairway Hills Columbia, MD 8,603
 34,432
 16,036
 8,603
 50,468
 59,071
 28,397
 30,674
 —
 1987/1996 Columbia, MD 720
 8,603
 34,432
 16,129
 8,603
 50,561
 59,164
 31,780
 27,384
 29,017
 —
 1987/1996
Eaves Washingtonian Center I North Potomac, MD 2,608
 11,707
 629
 2,608
 12,336
 14,944
 7,913
 7,031
 8,011
 1996
Eaves Washingtonian Center II North Potomac, MD 1,439
 6,846
 180
 1,439
 7,026
 8,465
 3,970
 4,495
 —
 1998
Eaves Washingtonian Center North Potomac, MD 288
 4,047
 18,553
 1,985
 4,047
 20,538
 24,585
 13,327
 11,258
 11,103
 —
 1996
Eaves Columbia Town Center Columbia, MD 8,802
 35,536
 11,429
 8,802
 46,965
 55,767
 16,273
 39,494
 —
 1986/1993 Columbia, MD 392
 8,802
 35,536
 11,861
 8,802
 47,397
 56,199
 19,385
 36,814
 38,093
 —
 1986/1993
Avalon at Grosvenor Station Bethesda, MD 29,159
 53,001
 2,002
 29,159
 55,003
 84,162
 21,020
 63,142
 —
 2004 Bethesda, MD 497
 29,159
 52,993
 2,276
 29,159
 55,269
 84,428
 25,023
 59,405
 61,283
 —
 2004
Avalon at Traville Rockville, MD 14,365
 55,398
 863
 14,365
 56,261
 70,626
 21,385
 49,241
 74,186
 2004 Rockville, MD 520
 14,365
 55,398
 3,901
 14,365
 59,299
 73,664
 25,599
 48,065
 49,262
 71,871
 2004
Avalon Russett Laurel, MD 10,200
 47,524
 2,659
 10,200
 50,183
 60,383
 5,547
 54,836
 39,972
 1999/2013 Laurel, MD 238
 10,200
 47,524
 2,883
 10,200
 50,407
 60,607
 9,182
 51,425
 53,187
 32,199
 1999/2013
Eaves Fair Lakes Fairfax, VA 6,096
 24,400
 8,246
 6,096
 32,646
 38,742
 17,777
 20,965
 —
 1989/1996 Fairfax, VA 420
 6,096
 24,400
 8,564
 6,096
 32,964
 39,060
 20,074
 18,986
 19,927
 —
 1989/1996
AVA Ballston Arlington, VA 7,291
 29,177
 16,117
 7,291
 45,294
 52,585
 24,294
 28,291
 —
 1990 Arlington, VA 344
 7,291
 29,177
 16,272
 7,291
 45,449
 52,740
 27,544
 25,196
 26,623
 —
 1990
Eaves Fairfax City Fairfax, VA 2,152
 8,907
 5,390
 2,152
 14,297
 16,449
 6,624
 9,825
 —
 1988/1997 Fairfax, VA 141
 2,152
 8,907
 5,390
 2,152
 14,297
 16,449
 7,676
 8,773
 9,292
 —
 1988/1997
Avalon Tysons Corner Tysons Corner, VA 13,851
 43,397
 12,106
 13,851
 55,503
 69,354
 26,784
 42,570
 —
 1996 Tysons Corner, VA 558
 13,851
 43,397
 12,527
 13,851
 55,924
 69,775
 30,819
 38,956
 40,926
 —
 1996
Avalon at Arlington Square Arlington, VA 22,041
 90,296
 2,818
 22,041
 93,114
 115,155
 42,880
 72,275
 —
 2001
Avalon Park Crest Tysons Corner, VA 13,554
 63,527
 —
 13,554
 63,527
 77,081
 4,886
 72,195
 —
 2013 Tysons Corner, VA 354
 13,554
 63,526
 83
 13,554
 63,609
 77,163
 9,568
 67,595
 69,885
 —
 2013
Eaves Fairfax Towers Falls Church, VA 17,889
 74,727
 1,718
 17,889
 76,445
 94,334
 9,782
 84,552
 —
 1978/2011 Falls Church, VA 415
 17,889
 74,727
 2,156
 17,889
 76,883
 94,772
 15,509
 79,263
 81,868
 —
 1978/2011
AVA H Street Washington, DC 7,425
 25,282
 —
 7,425
 25,282
 32,707
 1,782
 30,925
 —
 2013
Avalon First and M Washington, DC 43,700
 153,950
 2,411
 43,700
 156,361
 200,061
 12,255
 187,806
 140,964
 2012/2013
Avalon The Albemarle Washington, DC 25,140
 52,459
 3,717
 25,140
 56,176
 81,316
 6,980
 74,336
 —
 1966/2013
Eaves Tunlaw Gardens Washington, DC 16,430
 22,902
 2,025
 16,430
 24,927
 41,357
 3,162
 38,195
 28,494
 1944/2013
The Statesman Washington, DC 38,140
 35,352
 3,453
 38,140
 38,805
 76,945
 5,815
 71,130
 —
 1961/2013
Eaves Glover Park Washington, DC 9,580
 26,532
 1,954
 9,580
 28,486
 38,066
 3,385
 34,681
 23,569
 1953/2013
AVA Van Ness Washington, DC 22,890
 58,691
 3,455
 22,890
 62,146
 85,036
 6,844
 78,192
 —
 1978/2013
Avalon Ballston Place Arlington, VA 38,490
 123,645
 3,768
 38,490
 127,413
 165,903
 11,532
 154,371
 —
 2001/2013 Arlington, VA 383
 38,490
 123,645
 4,640
 38,490
 128,285
 166,775
 20,296
 146,479
 150,147
 —
 2001/2013
Eaves Tysons Corner Vienna, VA 16,030
 45,420
 2,554
 16,030
 47,974
 64,004
 5,509
 58,495
 —
 1980/2013 Vienna, VA 217
 16,030
 45,420
 2,710
 16,030
 48,130
 64,160
 9,237
 54,923
 56,669
 —
 1980/2013
Avalon Ballston Square Arlington, VA 71,640
 215,937
 10,200
 71,640
 226,137
 297,777
 23,372
 274,405
 —
 1992/2013 Arlington, VA 714
 71,640
 215,937
 14,112
 71,640
 230,049
 301,689
 38,967
 262,722
 268,502
 —
 1992/2013
Avalon Courthouse Place Arlington, VA 56,550
 178,032
 8,131
 56,550
 186,163
 242,713
 18,921
 223,792
 140,332
 1999/2013 Arlington, VA 564
 56,550
 178,032
 9,924
 56,550
 187,956
 244,506
 31,392
 213,114
 218,300
 118,112
 1999/2013
Avalon Arlington North Arlington, VA 228
 21,600
 59,077
 —
 21,600
 59,077
 80,677
 5,682
 74,995
 77,076
 —
 2014
Avalon Reston Landing Reston, VA 26,710
 83,084
 4,354
 26,710
 87,438
 114,148
 9,863
 104,285
 —
 2000/2013 Reston, VA 400
 26,710
 83,084
 5,185
 26,710
 88,269
 114,979
 16,541
 98,438
 101,004
 —
 2000/2013
Oakwood Arlington Arlington, VA 18,850
 38,545
 1,856
 18,850
 40,401
 59,251
 4,324
 54,927
 42,185
 1987/2013
Avalon Mosaic Merrifield, VA 33,483
 75,081
 —
 33,483
 75,081
 108,564
 2,108
 106,456
 —
 2014
Avalon Arlington North Arlington, VA 21,600
 58,763
 —
 21,600
 58,763
 80,363
 1,468
 78,895
 —
 2014
TOTAL MID-ATLANTIC $620,356
 $1,839,822
 $141,299
 $620,356
 $1,981,121
 $2,601,477
 $396,214
 $2,205,263
 $597,830
 TOTAL MID-ATLANTIC 9,575
 $545,982
 $1,636,205
 $157,208
 $545,982
 $1,793,413
 $2,339,395
 $472,359
 $1,867,036
 $1,918,882
 $319,175
 
                                          
PACIFIC NORTHWEST                   
Seattle, WA                   

F-40F-44
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


    Initial Cost   Total Cost          
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
Avalon Redmond Place Redmond, WA $4,558
 $18,368
 $9,879
 $4,558
 $28,247
 $32,805
 $14,541
 $18,264
 $—
 1991/1997
Avalon at Bear Creek Redmond, WA 6,786
 27,641
 3,427
 6,786
 31,068
 37,854
 17,457
 20,397
 —
 1998/1998
Avalon Bellevue Bellevue, WA 6,664
 24,119
 1,685
 6,664
 25,804
 32,468
 12,245
 20,223
 25,491
 2001
Avalon RockMeadow Bothell, WA 4,777
 19,765
 1,901
 4,777
 21,666
 26,443
 10,695
 15,748
 —
 2000/2000
Avalon ParcSquare Redmond, WA 3,789
 15,139
 2,630
 3,789
 17,769
 21,558
 8,587
 12,971
 —
 2000/2000
Avalon Brandemoor Lynnwood, WA 8,608
 36,679
 1,656
 8,608
 38,335
 46,943
 18,143
 28,800
 —
 2001/2001
AVA Belltown Seattle, WA 5,644
 12,733
 830
 5,644
 13,563
 19,207
 6,330
 12,877
 —
 2001
Avalon Meydenbauer Bellevue, WA 12,697
 77,451
 936
 12,697
 78,387
 91,084
 18,053
 73,031
 —
 2008
Avalon Towers Bellevue Bellevue, WA —
 123,030
 811
 —
 123,841
 123,841
 19,003
 104,838
 —
 2011
AVA Queen Anne Seattle, WA 12,081
 41,618
 347
 12,081
 41,965
 54,046
 4,357
 49,689
 —
 2012
Avalon Brandemoor II Lynnwood, WA 2,655
 11,343
 —
 2,655
 11,343
 13,998
 1,435
 12,563
 —
 2011
AVA Ballard Seattle, WA 16,460
 46,885
 6
 16,460
 46,891
 63,351
 2,811
 60,540
 —
 2013
Eaves Redmond Campus Redmond, WA 22,580
 88,001
 5,248
 22,580
 93,249
 115,829
 10,158
 105,671
 —
 1991/2013
Archstone Redmond Lakeview Redmond, WA 10,250
 26,842
 1,831
 10,250
 28,673
 38,923
 3,302
 35,621
 —
 1987/2013
AVA University District Seattle, WA 12,594
 60,566
 294
 12,594
 60,860
 73,454
 2,087
 71,367
 —
 2014
TOTAL PACIFIC NORTHWEST   $130,143
 $630,180
 $31,481
 $130,143
 $661,661
 $791,804
 $149,204
 $642,600
 $25,491
 
                       
NORTHERN CALIFORNIA                      
Oakland-East Bay, CA                      
Avalon Fremont Fremont, CA $10,746
 $43,399
 $5,059
 $10,746
 $48,458
 $59,204
 $28,083
 $31,121
 $—
 1992/1994
Eaves Dublin Dublin, CA 5,276
 19,642
 9,167
 5,276
 28,809
 34,085
 14,183
 19,902
 —
 1989/1997
Eaves Pleasanton Pleasanton, CA 11,610
 46,552
 21,254
 11,610
 67,806
 79,416
 33,374
 46,042
 —
 1988/1994
Eaves Union City Union City, CA 4,249
 16,820
 2,832
 4,249
 19,652
 23,901
 11,402
 12,499
 —
 1973/1996
Eaves Fremont Fremont, CA 6,581
 26,583
 9,730
 6,581
 36,313
 42,894
 19,198
 23,696
 —
 1985/1994
Avalon Union City Union City, CA 14,732
 104,025
 294
 14,732
 104,319
 119,051
 19,722
 99,329
 —
 2009
Avalon Walnut Creek Walnut Creek, CA —
 145,906
 1,643
 —
 147,549
 147,549
 22,354
 125,195
 137,542
 2010
Eaves Walnut Creek Walnut Creek, CA 30,320
 82,375
 5,597
 30,320
 87,972
 118,292
 9,646
 108,646
 —
 1987/2013
Avalon Walnut Ridge I Walnut Creek, CA 9,860
 19,850
 878
 9,860
 20,728
 30,588
 2,159
 28,429
 20,754
 2000/2013
Avalon Walnut Ridge II Walnut Creek, CA 27,190
 57,041
 3,299
 27,190
 60,340
 87,530
 6,990
 80,540
 —
 1989/2013
Avalon Berkeley Berkeley, CA 4,500
 28,646
 —
 4,500
 28,646
 33,146
 467
 32,679
 —
 2014
Avalon Dublin Station Dublin, CA 7,771
 71,026
 —
 7,771
 71,026
 78,797
 1,782
 77,015
 —
 2014
                       
San Francisco, CA                      
Eaves Daly City Daly City, CA 4,230
 9,659
 18,662
 4,230
 28,321
 32,551
 14,804
 17,747
 —
 1972/1997
AVA Nob Hill San Francisco, CA 5,403
 21,567
 6,888
 5,403
 28,455
 33,858
 14,033
 19,825
 20,800
 1990/1995
      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
PACIFIC NORTHWEST                          
Seattle, WA                          
Avalon Redmond Place Redmond, WA 222
 $4,558
 $18,368
 $10,260
 $4,558
 $28,628
 $33,186
 $16,544
 $16,642
 $17,646
 $—
 1991/1997
Avalon at Bear Creek Redmond, WA 264
 6,786
 27,641
 4,187
 6,786
 31,828
 38,614
 19,969
 18,645
 19,290
 —
 1998/1998
Avalon Bellevue Bellevue, WA 201
 6,664
 24,119
 1,920
 6,664
 26,039
 32,703
 14,262
 18,441
 19,258
 24,695
 2001
Avalon RockMeadow Bothell, WA 206
 4,777
 19,765
 2,392
 4,777
 22,157
 26,934
 12,477
 14,457
 15,191
 —
 2000/2000
Avalon ParcSquare Redmond, WA 124
 3,789
 15,139
 3,150
 3,789
 18,289
 22,078
 10,018
 12,060
 12,292
 —
 2000/2000
AVA Belltown Seattle, WA 100
 5,644
 12,733
 1,013
 5,644
 13,746
 19,390
 7,387
 12,003
 12,409
 60,766
 2001
Avalon Meydenbauer Bellevue, WA 368
 12,697
 77,450
 1,271
 12,697
 78,721
 91,418
 23,732
 67,686
 70,408
 —
 2008
Avalon Towers Bellevue (1) Bellevue, WA 397
 —
 123,029
 925
 —
 123,954
 123,954
 27,956
 95,998
 100,369
 —
 2011
AVA Queen Anne Seattle, WA 203
 12,081
 41,618
 431
 12,081
 42,049
 54,130
 7,488
 46,642
 48,129
 —
 2012
AVA Ballard Seattle, WA 265
 16,460
 46,926
 985
 16,460
 47,911
 64,371
 6,478
 57,893
 59,684
 —
 2013
AVA University District Seattle, WA 283
 12,594
 60,845
 480
 12,594
 61,325
 73,919
 6,634
 67,285
 69,274
 —
 2014
Eaves Redmond Campus Redmond, WA 422
 22,580
 88,001
 5,994
 22,580
 93,995
 116,575
 17,418
 99,157
 102,525
 —
 1991/2013
Archstone Redmond Lakeview Redmond, WA 166
 10,250
 26,842
 2,925
 10,250
 29,767
 40,017
 5,619
 34,398
 34,617
 —
 1987/2013
TOTAL PACIFIC NORTHWEST 3,221
 $118,880
 $582,476
 $35,933
 $118,880
 $618,409
 $737,289
 $175,982
 $561,307
 $581,092
 $85,461
  

F-41
NORTHERN CALIFORNIA                          
San Jose, CA                          
Avalon Campbell Campbell, CA 348
 $11,830
 $47,828
 $13,459
 $11,830
 $61,287
 $73,117
 $33,162
 $39,955
 $42,162
 $38,800
 1995
Eaves San Jose San Jose, CA 440
 12,920
 53,047
 18,869
 12,920
 71,916
 84,836
 33,693
 51,143
 53,631
 —
 1985/1996
Avalon on the Alameda San Jose, CA 305
 6,119
 50,225
 2,873
 6,119
 53,098
 59,217
 31,720
 27,497
 28,335
 49,930
 1999
Avalon Mountain View Mountain View, CA 248
 9,755
 39,393
 10,219
 9,755
 49,612
 59,367
 28,805
 30,562
 31,930
 17,300
 1986
Eaves Creekside Mountain View, CA 296
 6,546
 26,263
 21,312
 6,546
 47,575
 54,121
 24,129
 29,992
 31,691
 —
 1962/1997
Avalon at Cahill Park San Jose, CA 218
 4,765
 47,600
 1,775
 4,765
 49,375
 54,140
 24,304
 29,836
 31,284
 —
 2002
Avalon Morrison Park San Jose, CA 250
 13,837
 64,534
 60
 13,837
 64,594
 78,431
 6,429
 72,002
 74,236
 —
 2014
Avalon Willow Glen San Jose, CA 412
 46,060
 81,957
 4,137
 46,060
 86,094
 132,154
 16,506
 115,648
 118,974
 —
 2002/2013
Eaves West Valley San Jose, CA 873
 90,890
 132,040
 8,581
 90,890
 140,621
 231,511
 25,740
 205,771
 209,788
 146,696
 1970/2013
Eaves Mountain View at Middlefield Mountain View, CA 402
 64,070
 69,018
 5,316
 64,070
 74,334
 138,404
 15,001
 123,403
 126,006
 —
 1969/2013
Total San Jose, CA   3,792
 $266,792
 $611,905
 $86,601
 $266,792
 $698,506
 $965,298
 $239,489
 $725,809
 $748,037
 $252,726
  
                           
Oakland - East Bay, CA                          
Avalon Fremont Fremont, CA 308
 $10,746
 $43,399
 $5,668
 $10,746
 $49,067
 $59,813
 $31,715
 $28,098
 $29,516
 $—
 1992/1994

F-45
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


    Initial Cost   Total Cost          
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
Eaves San Rafael San Rafael, CA 5,982
 16,885
 24,197
 5,982
 41,082
 47,064
 17,997
 29,067
 —
 1973/1996
Eaves Foster City Foster City, CA 7,852
 31,445
 11,207
 7,852
 42,652
 50,504
 21,206
 29,298
 —
 1973/1994
Eaves Pacifica Pacifica, CA 6,125
 24,796
 2,541
 6,125
 27,337
 33,462
 15,595
 17,867
 17,600
 1971/1995
Avalon Sunset Towers San Francisco, CA 3,561
 21,321
 14,894
 3,561
 36,215
 39,776
 16,136
 23,640
 —
 1961/1996
Eaves Diamond Heights San Francisco, CA 4,726
 19,130
 5,790
 4,726
 24,920
 29,646
 12,976
 16,670
 —
 1972/1994
Avalon at Mission Bay North San Francisco, CA 14,029
 78,452
 2,482
 14,029
 80,934
 94,963
 33,067
 61,896
 69,955
 2003
Avalon at Mission Bay III San Francisco, CA 28,687
 119,156
 74
 28,687
 119,230
 147,917
 22,702
 125,215
 —
 2009
Avalon Ocean Avenue San Francisco, CA 5,544
 50,883
 1,740
 5,544
 52,623
 58,167
 4,827
 53,340
 —
 2012
Avalon San Bruno San Bruno, CA 40,780
 68,684
 2,891
 40,780
 71,575
 112,355
 7,423
 104,932
 64,450
 2004/2013
Avalon San Bruno II San Bruno, CA 23,787
 44,934
 1,668
 23,787
 46,602
 70,389
 4,527
 65,862
 30,968
 2007/2013
Avalon San Bruno III San Bruno, CA 33,303
 62,910
 2,349
 33,303
 65,259
 98,562
 6,340
 92,222
 56,210
 2010/2013
AVA 55 Ninth San Francisco, CA 20,267
 96,291
 —
 20,267
 96,291
 116,558
 2,022
 114,536
 —
 2014
                       
San Jose, CA                      
Avalon Campbell Campbell, CA 11,830
 47,828
 13,431
 11,830
 61,259
 73,089
 28,671
 44,418
 38,800
 1995
Eaves San Jose San Jose, CA 12,920
 53,047
 18,810
 12,920
 71,857
 84,777
 28,688
 56,089
 —
 1985/1996
Avalon on the Alameda San Jose, CA 6,119
 50,225
 1,644
 6,119
 51,869
 57,988
 28,035
 29,953
 51,539
 1999
Avalon Silicon Valley Sunnyvale, CA 20,713
 99,573
 4,987
 20,713
 104,560
 125,273
 59,276
 65,997
 —
 1998
Avalon Mountain View Mountain View, CA 9,755
 39,393
 9,511
 9,755
 48,904
 58,659
 25,542
 33,117
 18,100
 1986
Eaves Creekside Mountain View, CA 6,546
 26,263
 20,984
 6,546
 47,247
 53,793
 20,739
 33,054
 —
 1962/1997
Avalon at Cahill Park San Jose, CA 4,765
 47,600
 1,433
 4,765
 49,033
 53,798
 20,749
 33,049
 —
 2002
Avalon Towers on the Peninsula Mountain View, CA 9,560
 56,136
 1,103
 9,560
 57,239
 66,799
 25,115
 41,684
 —
 2002
Avalon Willow Glen San Jose, CA 46,060
 81,957
 4,034
 46,060
 85,991
 132,051
 9,780
 122,271
 —
 2002/2013
Eaves West Valley San Jose, CA 90,890
 113,628
 7,019
 90,890
 120,647
 211,537
 14,646
 196,891
 83,087
 1970/2013
Eaves Mountain View at Middlefield Mountain View, CA 64,070
 69,018
 4,847
 64,070
 73,865
 137,935
 9,416
 128,519
 71,496
 1969/2013
Eaves West Valley II San Jose, CA —
 18,411
 —
 —
 18,411
 18,411
 735
 17,676
 —
 2013
Avalon Morrison Park San Jose, CA 13,837
 64,337
 —
 13,837
 64,337
 78,174
 1,756
 76,418
 —
 2014
TOTAL NORTHERN CALIFORNIA   $634,176
 $2,095,394
 $242,939
 $634,176
 $2,338,333
 $2,972,509
 $636,163
 $2,336,346
 $681,301
  
                       
SOUTHERN CALIFORNIA                      
Orange County, CA                      
AVA Newport Costa Mesa, CA $1,975
 $3,814
 $9,802
 $1,975
 $13,616
 $15,591
 $5,491
 $10,100
 $—
 1956/1996
Avalon Mission Viejo Mission Viejo, CA 2,517
 9,257
 2,783
 2,517
 12,040
 14,557
 7,157
 7,400
 7,635
 1984/1996
Eaves South Coast Costa Mesa, CA 4,709
 16,063
 12,772
 4,709
 28,835
 33,544
 13,887
 19,657
 —
 1973/1996
      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
Eaves Pleasanton Pleasanton, CA 456
 11,610
 46,552
 21,507
 11,610
 68,059
 79,669
 37,905
 41,764
 43,952
 —
 1988/1994
Eaves Union City Union City, CA 208
 4,249
 16,820
 3,166
 4,249
 19,986
 24,235
 12,893
 11,342
 11,834
 —
 1973/1996
Eaves Fremont Fremont, CA 235
 6,581
 26,583
 9,797
 6,581
 36,380
 42,961
 21,576
 21,385
 22,507
 —
 1985/1994
Avalon Union City Union City, CA 439
 14,732
 104,024
 759
 14,732
 104,783
 119,515
 27,120
 92,395
 96,048
 —
 2009
Avalon Walnut Creek (1) Walnut Creek, CA 418
 —
 146,097
 2,815
 —
 148,912
 148,912
 33,095
 115,817
 120,512
 3,420
 2010
Eaves Walnut Creek (2) Walnut Creek, CA 510
 30,320
 82,375
 14,605
 30,320
 96,980
 127,300
 15,766
 111,534
 111,669
 —
 1987/2013
Avalon Walnut Ridge II Walnut Creek, CA 360
 27,190
 57,041
 3,801
 27,190
 60,842
 88,032
 11,211
 76,821
 78,524
 —
 1989/2013
Avalon Berkeley Berkeley, CA 94
 4,500
 28,611
 —
 4,500
 28,611
 33,111
 2,504
 30,607
 31,446
 —
 2014
Total Oakland - East Bay, CA 3,028
 $109,928
 $551,502
 $62,118
 $109,928
 $613,620
 $723,548
 $193,785
 $529,763
 $546,008
 $3,420
  
                           
San Francisco, CA                          
Eaves Daly City Daly City, CA 195
 $4,230
 $9,659
 $19,017
 $4,230
 $28,676
 $32,906
 $16,733
 $16,173
 $16,838
 $—
 1972/1997
AVA Nob Hill San Francisco, CA 185
 5,403
 21,567
 7,067
 5,403
 28,634
 34,037
 16,057
 17,980
 18,861
 20,800
 1990/1995
Eaves San Rafael San Rafael, CA 254
 5,982
 16,885
 24,604
 5,982
 41,489
 47,471
 20,782
 26,689
 27,899
 —
 1973/1996
Eaves Foster City Foster City, CA 288
 7,852
 31,445
 11,296
 7,852
 42,741
 50,593
 24,153
 26,440
 27,811
 —
 1973/1994
Eaves Pacifica Pacifica, CA 220
 6,125
 24,796
 2,873
 6,125
 27,669
 33,794
 17,619
 16,175
 17,057
 17,600
 1971/1995
Avalon Sunset Towers San Francisco, CA 243
 3,561
 21,321
 15,463
 3,561
 36,784
 40,345
 18,526
 21,819
 22,583
 —
 1961/1996
Eaves Diamond Heights San Francisco, CA 154
 4,726
 19,130
 6,031
 4,726
 25,161
 29,887
 14,574
 15,313
 15,928
 —
 1972/1994
Avalon at Mission Bay I San Francisco, CA 250
 14,029
 78,452
 3,302
 14,029
 81,754
 95,783
 38,957
 56,826
 59,334
 67,772
 2003
Avalon at Mission Bay III San Francisco, CA 260
 28,687
 119,156
 300
 28,687
 119,456
 148,143
 31,052
 117,091
 120,981
 —
 2009
Avalon Ocean Avenue San Francisco, CA 173
 5,544
 50,906
 1,783
 5,544
 52,689
 58,233
 8,653
 49,580
 51,446
 —
 2012
AVA 55 Ninth San Francisco, CA 273
 20,267
 97,321
 1,235
 20,267
 98,556
 118,823
 9,409
 109,414
 112,904
 —
 2014
Avalon San Bruno I San Bruno, CA 300
 40,780
 68,684
 3,464
 40,780
 72,148
 112,928
 12,654
 100,274
 102,464
 64,450
 2004/2013
Avalon San Bruno II San Bruno, CA 185
 23,787
 44,934
 1,792
 23,787
 46,726
 70,513
 7,634
 62,879
 64,310
 30,001
 2007/2013
Avalon San Bruno III San Bruno, CA 187
 33,303
 62,910
 2,743
 33,303
 65,653
 98,956
 10,713
 88,243
 90,108
 54,408
 2010/2013
Total San Francisco, CA   3,167
 $204,276
 $667,166
 $100,970
 $204,276
 $768,136
 $972,412
 $247,516
 $724,896
 $748,524
 $255,031
  
                           
TOTAL NORTHERN CALIFORNIA 9,987
 $580,996
 $1,830,573
 $249,689
 $580,996
 $2,080,262
 $2,661,258
 $680,790
 $1,980,468
 $2,042,569
 $511,177
  

F-42
SOUTHERN CALIFORNIA                          
Los Angeles, CA                          
AVA Burbank Burbank, CA 748
 $22,483
 $28,104
 $48,244
 $22,483
 $76,348
 $98,831
 $37,963
 $60,868
 $63,710
 $—
 1961/1997
Avalon Woodland Hills Woodland Hills, CA 663
 23,828
 40,372
 48,635
 23,828
 89,007
 112,835
 42,401
 70,434
 72,111
 —
 1989/1997
Eaves Warner Center Woodland Hills, CA 227
 7,045
 12,986
 9,555
 7,045
 22,541
 29,586
 14,995
 14,591
 15,589
 —
 1979/1998

F-46
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


    Initial Cost   Total Cost          
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
Eaves Santa Margarita Rancho Santa Margarita, CA 4,607
 16,911
 10,247
 4,607
 27,158
 31,765
 12,753
 19,012
 —
 1990/1997
Eaves Huntington Beach Huntington Beach, CA 4,871
 19,745
 9,530
 4,871
 29,275
 34,146
 16,657
 17,489
 —
 1971/1997
Avalon Anaheim Stadium Anaheim, CA 27,874
 69,156
 645
 27,874
 69,801
 97,675
 14,359
 83,316
 —
 2009
Avalon Irvine Irvine, CA 9,911
 67,524
 69
 9,911
 67,593
 77,504
 12,521
 64,983
 —
 2010
Eaves Lake Forest Lake Forest, CA 5,199
 21,134
 2,114
 5,199
 23,248
 28,447
 3,006
 25,441
 —
 1975/2011
Avalon Irvine II Irvine, CA 4,358
 40,906
 —
 4,358
 40,906
 45,264
 2,753
 42,511
 —
 2013
Eaves Seal Beach Seal Beach, CA 46,790
 99,999
 4,635
 46,790
 104,634
 151,424
 11,178
 140,246
 85,122
 1971/2013
                       
San Diego, CA                      
AVA Pacific Beach San Diego, CA 9,922
 40,580
 30,927
 9,922
 71,507
 81,429
 32,316
 49,113
 —
 1969/1997
Eaves Mission Ridge San Diego, CA 2,710
 10,924
 11,263
 2,710
 22,187
 24,897
 12,213
 12,684
 —
 1960/1997
AVA Cortez Hill San Diego, CA 2,768
 20,134
 23,464
 2,768
 43,598
 46,366
 18,853
 27,513
 —
 1973/1998
Avalon Fashion Valley San Diego, CA 19,627
 44,972
 290
 19,627
 45,262
 64,889
 9,860
 55,029
 —
 2008
Eaves San Marcos San Marcos, CA 3,277
 13,385
 860
 3,277
 14,245
 17,522
 1,869
 15,653
 —
 1988/2011
Eaves Rancho Penasquitos San Diego, CA 6,692
 27,143
 1,834
 6,692
 28,977
 35,669
 3,697
 31,972
 —
 1986/2011
Avalon La Jolla Colony San Diego, CA 16,760
 27,694
 2,099
 16,760
 29,793
 46,553
 3,665
 42,888
 27,176
 1987/2013
Eaves La Mesa La Mesa, CA 9,490
 28,482
 1,335
 9,490
 29,817
 39,307
 3,230
 36,077
 —
 1989/2013
                       
Los Angeles, CA                      
AVA Burbank Burbank, CA 22,483
 28,104
 48,076
 22,483
 76,180
 98,663
 32,069
 66,594
 —
 1961/1997
Avalon Woodland Hills Woodland Hills, CA 23,828
 40,372
 46,946
 23,828
 87,318
 111,146
 36,446
 74,700
 —
 1989/1997
Eaves Warner Center Woodland Hills, CA 7,045
 12,986
 9,304
 7,045
 22,290
 29,335
 13,017
 16,318
 —
 1979/1998
Avalon at Glendale Glendale, CA —
 42,564
 1,155
 —
 43,719
 43,719
 16,923
 26,796
 —
 2003
Avalon Burbank Burbank, CA 14,053
 56,827
 23,842
 14,053
 80,669
 94,722
 29,268
 65,454
 —
 1988/2002
Avalon Camarillo Camarillo , CA 8,446
 40,290
 142
 8,446
 40,432
 48,878
 12,232
 36,646
 —
 2006
Avalon Wilshire Los Angeles, CA 5,459
 41,182
 1,045
 5,459
 42,227
 47,686
 11,268
 36,418
 —
 2007
Avalon Encino Encino, CA 12,789
 49,073
 395
 12,789
 49,468
 62,257
 10,812
 51,445
 —
 2008
Avalon Warner Place Canoga Park, CA 7,920
 44,848
 183
 7,920
 45,031
 52,951
 10,522
 42,429
 —
 2008
Eaves Phillips Ranch Pomona, CA 9,796
 41,740
 246
 9,796
 41,986
 51,782
 5,516
 46,266
 —
 1989/2011
Eaves San Dimas San Dimas, CA 1,916
 7,819
 519
 1,916
 8,338
 10,254
 1,089
 9,165
 —
 1978/2011
Eaves San Dimas Canyon San Dimas, CA 2,953
 12,428
 191
 2,953
 12,619
 15,572
 1,663
 13,909
 —
 1981/2011
AVA Pasadena Pasadena, CA 8,400
 11,547
 5,388
 8,400
 16,935
 25,335
 1,319
 24,016
 11,683
 1973/2012
Eaves Cerritos Artesia, CA 8,305
 21,195
 1,392
 8,305
 22,587
 30,892
 1,991
 28,901
 —
 1973/2012
Avalon Del Rey Los Angeles, CA 30,900
 72,008
 654
 30,900
 72,662
 103,562
 5,978
 97,584
 —
 2006/2012
      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
Avalon Glendale (1) Glendale, CA 223
 —
 42,564
 1,620
 —
 44,184
 44,184
 20,062
 24,122
 25,401
 —
 2003
Avalon Burbank Burbank, CA 400
 14,053
 56,827
 24,294
 14,053
 81,121
 95,174
 34,847
 60,327
 62,757
 —
 1988/2002
Avalon Camarillo Camarillo, CA 249
 8,446
 40,290
 628
 8,446
 40,918
 49,364
 14,959
 34,405
 35,571
 —
 2006
Avalon Wilshire Los Angeles, CA 123
 5,459
 41,182
 1,176
 5,459
 42,358
 47,817
 14,216
 33,601
 34,959
 61,268
 2007
Avalon Encino Encino, CA 131
 12,789
 49,073
 803
 12,789
 49,876
 62,665
 14,253
 48,412
 49,863
 33,882
 2008
Avalon Warner Place Canoga Park, CA 210
 7,920
 44,845
 535
 7,920
 45,380
 53,300
 13,573
 39,727
 40,914
 —
 2008
Eaves Phillips Ranch Pomona, CA 501
 9,796
 41,740
 1,141
 9,796
 42,881
 52,677
 8,619
 44,058
 44,927
 —
 1989/2011
Eaves San Dimas San Dimas, CA 102
 1,916
 7,819
 1,265
 1,916
 9,084
 11,000
 1,786
 9,214
 9,381
 —
 1978/2011
Eaves San Dimas Canyon San Dimas, CA 156
 2,953
 12,428
 529
 2,953
 12,957
 15,910
 2,621
 13,289
 13,568
 —
 1981/2011
AVA Pasadena Pasadena, CA 84
 8,400
 11,547
 5,513
 8,400
 17,060
 25,460
 2,581
 22,879
 23,511
 11,287
 1973/2012
Eaves Cerritos Artesia, CA 151
 8,305
 21,195
 1,431
 8,305
 22,626
 30,931
 3,588
 27,343
 28,143
 —
 1973/2012
Avalon Playa Vista Los Angeles, CA 309
 30,900
 72,008
 2,303
 30,900
 74,311
 105,211
 11,435
 93,776
 96,612
 —
 2006/2012
Avalon San Dimas San Dimas, CA 156
 9,141
 30,727
 —
 9,141
 30,727
 39,868
 2,618
 37,250
 38,391
 —
 2014
Avalon Mission Oaks Camarillo, CA 160
 9,600
 35,842
 2,943
 9,600
 38,785
 48,385
 4,104
 44,281
 44,423
 19,545
 2014
Avalon Simi Valley Simi Valley, CA 500
 42,020
 73,361
 4,705
 42,020
 78,066
 120,086
 14,611
 105,475
 108,062
 —
 2007/2013
AVA Studio City II Studio City, CA 101
 4,626
 22,954
 1,502
 4,626
 24,456
 29,082
 4,234
 24,848
 25,449
 —
 1991/2013
Avalon Studio City Studio City, CA 276
 15,756
 78,178
 4,501
 15,756
 82,679
 98,435
 14,193
 84,242
 86,237
 —
 2002/2013
Avalon Calabasas Calabasas, CA 600
 42,720
 107,642
 9,215
 42,720
 116,857
 159,577
 23,066
 136,511
 140,486
 97,980
 1988/2013
Avalon Oak Creek Agoura Hills, CA 336
 43,540
 79,974
 5,314
 43,540
 85,288
 128,828
 17,548
 111,280
 114,645
 69,696
 2004/2013
Avalon Del Mar Station Pasadena, CA 347
 20,560
 106,556
 3,459
 20,560
 110,015
 130,575
 17,007
 113,568
 117,160
 70,854
 2006/2013
Eaves Old Town Pasadena Pasadena, CA 96
 9,110
 15,371
 1,510
 9,110
 16,881
 25,991
 3,347
 22,644
 23,171
 14,120
 1972/2013
Eaves Thousand Oaks Thousand Oaks, CA 154
 13,950
 20,211
 2,468
 13,950
 22,679
 36,629
 5,143
 31,486
 32,148
 26,392
 1992/2013
Eaves Los Feliz Los Angeles, CA 263
 18,940
 43,661
 3,772
 18,940
 47,433
 66,373
 8,810
 57,563
 58,938
 41,302
 1989/2013
Eaves Woodland Hills Woodland Hills, CA 883
 68,940
 90,549
 10,439
 68,940
 100,988
 169,928
 21,061
 148,867
 151,841
 98,732
 1971/2013
Avalon Thousand Oaks Plaza Thousand Oaks, CA 148
 12,810
 22,581
 2,006
 12,810
 24,587
 37,397
 5,140
 32,257
 33,092
 —
 2002/2013
Total Los Angeles, CA   8,297
 $476,006
 $1,250,587
 $199,506
 $476,006
 $1,450,093
 $1,926,099
 $378,781
 $1,547,318
 $1,591,060
 $545,058
  
                           
Orange County, CA                          
AVA Newport Costa Mesa, CA 145
 $1,975
 $3,814
 $9,838
 $1,975
 $13,652
 $15,627
 $6,497
 $9,130
 $9,592
 $—
 1956/1996
Eaves Mission Viejo Mission Viejo, CA 166
 2,517
 9,257
 3,520
 2,517
 12,777
 15,294
 8,149
 7,145
 7,676
 7,635
 1984/1996
Eaves South Coast Costa Mesa, CA 258
 4,709
 16,063
 12,933
 4,709
 28,996
 33,705
 15,876
 17,829
 18,770
 —
 1973/1996
Eaves Santa Margarita Rancho Santa Margarita, CA 301
 4,607
 16,911
 10,526
 4,607
 27,437
 32,044
 14,820
 17,224
 18,166
 —
 1990/1997
Eaves Huntington Beach Huntington Beach, CA 304
 4,871
 19,745
 10,172
 4,871
 29,917
 34,788
 18,824
 15,964
 16,503
 —
 1971/1997

F-43F-47
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


    Initial Cost   Total Cost          
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
Avalon Simi Valley Simi Valley, CA 42,020
 73,361
 4,411
 42,020
 77,772
 119,792
 9,158
 110,634
 —
 2007/2013
Avalon Studio City II Studio City, CA 4,626
 22,954
 1,210
 4,626
 24,164
 28,790
 2,484
 26,306
 —
 1991/2013
Avalon Studio City III Studio City, CA 15,756
 78,178
 3,418
 15,756
 81,596
 97,352
 8,428
 88,924
 —
 2002/2013
Avalon Calabasas Calabasas, CA 42,720
 107,642
 6,649
 42,720
 114,291
 157,011
 13,810
 143,201
 100,237
 1988/2013
Avalon Oak Creek Agoura Hills, CA 43,540
 79,974
 4,277
 43,540
 84,251
 127,791
 10,304
 117,487
 85,288
 2004/2013
Avalon Santa Monica on Main Santa Monica, CA 32,000
 60,770
 3,359
 32,000
 64,129
 96,129
 6,720
 89,409
 —
 2007/2013
Avalon Del Mar Station Pasadena, CA 20,560
 106,556
 3,277
 20,560
 109,833
 130,393
 9,650
 120,743
 76,471
 2006/2013
Eaves Old Town Pasadena Pasadena, CA 9,110
 15,371
 1,188
 9,110
 16,559
 25,669
 2,053
 23,616
 15,669
 1972/2013
Eaves Thousand Oaks Thousand Oaks, CA 13,950
 20,211
 2,053
 13,950
 22,264
 36,214
 3,208
 33,006
 27,411
 1992/2013
Eaves Los Feliz Los Angeles, CA 18,940
 43,661
 3,160
 18,940
 46,821
 65,761
 5,463
 60,298
 43,258
 1989/2013
Oakwood Toluca Hills Los Angeles, CA 85,450
 161,256
 9,933
 85,450
 171,189
 256,639
 20,490
 236,149
 165,561
 1973/2013
Eaves Woodland Hills Woodland Hills, CA 68,940
 90,549
 9,014
 68,940
 99,563
 168,503
 13,226
 155,277
 104,694
 1971/2013
Avalon Thousand Oaks Plaza Thousand Oaks, CA 12,810
 22,581
 1,807
 12,810
 24,388
 37,198
 3,226
 33,972
 28,394
 2002/2013
Avalon Pasadena Pasadena, CA 10,240
 31,558
 1,808
 10,240
 33,366
 43,606
 3,503
 40,103
 28,079
 2004/2013
Avalon Studio City Studio City, CA 17,658
 90,715
 4,094
 17,658
 94,809
 112,467
 9,702
 102,765
 —
 1987/2013
Avalon San Dimas San Dimas, CA 9,140
 30,445
 —
 9,140
 30,445
 39,585
 313
 39,272
 —
 2014
Avalon Mission Oaks Camarillo, CA 9,600
 34,540
 2,860
 9,600
 37,400
 47,000
 93
 46,907
 —
 2014
TOTAL SOUTHERN CALIFORNIA   $805,410
 $2,171,128
 $326,665
 $805,410
 $2,497,793
 $3,303,203
 $497,409
 $2,805,794
 $806,678
  
                       
Non-Core                      
Archstone Lexington Flower Mound, TX $4,540
 $25,946
 $1,823
 $4,540
 $27,769
 $32,309
 $3,551
 $28,758
 $16,525
 2000/2013
Archstone Toscano Houston, TX 15,607
 72,154
 5
 15,607
 72,159
 87,766
 3,324
 84,442
 —
 2014
Memorial Heights Villages Houston, TX 9,607
 42,164
 —
 9,607
 42,164
 51,771
 724
 51,047
 —
 2014
TOTAL NON-CORE   $29,754
 $140,264
 $1,828
 $29,754
 $142,092
 $171,846
 $7,599
 $164,247
 $16,525
  
                       
TOTAL CURRENT COMMUNITIES   $3,412,833
 $11,222,071
 $1,077,984
 $3,412,833
 $12,300,055
 $15,712,888
 $2,858,260
 $12,854,628
 $3,448,138
  
                       
DEVELOPMENT COMMUNITIES                      
Avalon West Chelsea/AVA High Line New York, NY $—
 $260,762
 $11,823
 $—
 $272,585
 $272,585
 $4,302
 $268,283
 $—
 N/A
Avalon North Station Boston, MA —
 —
 46,268
 —
 46,268
 46,268
 —
 46,268
 —
 N/A
Avalon at Assembly Row/AVA Somerville Somerville, MA 15,239
 80,685
 33,327
 15,239
 114,012
 129,251
 1,095
 128,156
 —
 N/A
Avalon Framingham Framingham, MA —
 —
 18,335
 —
 18,335
 18,335
 —
 18,335
 —
 N/A
Avalon West Hollywood West Hollywood, CA —
 233
 57,895
 —
 58,128
 58,128
 —
 58,128
 —
 N/A
Avalon Dublin Station II Dublin, CA —
 84
 43,338
 —
 43,422
 43,422
 —
 43,422
 —
 N/A
Avalon Wharton Wharton, NJ 874
 20,455
 27,318
 874
 47,773
 48,647
 116
 48,531
 —
 N/A
      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
Avalon Anaheim Stadium Anaheim, CA 251
 27,874
 69,156
 1,255
 27,874
 70,411
 98,285
 19,330
 78,955
 80,804
 —
 2009
Avalon Irvine I Irvine, CA 279
 9,911
 67,520
 586
 9,911
 68,106
 78,017
 17,323
 60,694
 62,562
 —
 2010
Avalon Irvine II Irvine, CA 179
 4,358
 40,906
 —
 4,358
 40,906
 45,264
 5,729
 39,535
 41,023
 —
 2013
Eaves Lake Forest Lake Forest, CA 225
 5,199
 21,134
 2,272
 5,199
 23,406
 28,605
 4,735
 23,870
 24,598
 —
 1975/2011
Eaves Seal Beach Seal Beach, CA 549
 46,790
 99,999
 4,847
 46,790
 104,846
 151,636
 18,977
 132,659
 136,470
 —
 1971/2013
Total Orange County, CA 2,657
 $112,811
 $364,505
 $55,949
 $112,811
 $420,454
 $533,265
 $130,260
 $403,005
 $416,164
 $7,635
  
                           
San Diego, CA                          
Eaves Mission Ridge San Diego, CA 200
 $2,710
 $10,924
 $11,846
 $2,710
 $22,770
 $25,480
 $13,784
 $11,696
 $12,004
 $—
 1960/1997
AVA Cortez Hill (1) San Diego, CA 299
 2,768
 20,134
 23,568
 2,768
 43,702
 46,470
 21,927
 24,543
 26,003
 —
 1973/1998
Avalon Fashion Valley San Diego, CA 161
 19,627
 44,972
 598
 19,627
 45,570
 65,197
 13,011
 52,186
 53,513
 —
 2008
Eaves Rancho Penasquitos San Diego, CA 250
 6,692
 27,143
 2,679
 6,692
 29,822
 36,514
 5,787
 30,727
 31,147
 —
 1986/2011
Eaves La Mesa La Mesa, CA 168
 9,490
 28,482
 1,694
 9,490
 30,176
 39,666
 5,826
 33,840
 34,813
 —
 1989/2013
Total San Diego, CA   1,078
 $41,287
 $131,655
 $40,385
 $41,287
 $172,040
 $213,327
 $60,335
 $152,992
 $157,480
 $—
  
                           
TOTAL SOUTHERN CALIFORNIA 12,032
 $630,104
 $1,746,747
 $295,840
 $630,104
 $2,042,587
 $2,672,691
 $569,376
 $2,103,315
 $2,164,704
 $552,693
  
                           
TOTAL ESTABLISHED COMMUNITIES 54,908
 $2,911,906
 $9,502,093
 $1,097,378
 $2,911,906
 $10,599,471
 $13,511,377
 $3,093,845
 $10,417,532
 $10,701,057
 $2,364,747
  

F-44F-48
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


    Initial Cost   Total Cost          
Community
City and state
Land and improvements
Building /
Construction in
Progress &
Improvements

Costs
Subsequent to
Acquisition /
Construction

Land
Building /
Construction in
Progress &
Improvements

Total
Accumulated
Depreciation

Total Cost,
Net of
Accumulated
Depreciation

Encumbrances
Year of
Completion/
Acquisition
Avalon Green III New York, NY —
 4
 1,443
 —
 1,447
 1,447
 —
 1,447
 —
 N/A
AVA Little Tokyo Los Angeles, CA 5,479
 35,923
 64,425
 5,479
 100,348
 105,827
 423
 105,404
 —
 N/A
AVA Theater District Boston, MA —
 315
 132,767
 —
 133,082
 133,082
 —
 133,082
 —
 N/A
Avalon Marlborough Boston, MA —
 95
 46,808
 —
 46,903
 46,903
 —
 46,903
 —
 N/A
Avalon Vista Vista, CA —
 292
 36,338
 —
 36,630
 36,630
 —
 36,630
 —
 N/A
Avalon Bloomfield Station Bloomfield, NJ —
 56
 29,624
 —
 29,680
 29,680
 —
 29,680
 —
 N/A
Avalon Willoughby Square/AVA DoBro Brooklyn, NY —
 80
 266,238
 —
 266,318
 266,318
 —
 266,318
 —
 N/A
Avalon Alderwood I Lynnwood, WA 7,033
 32,783
 26,290
 7,033
 59,073
 66,106
 492
 65,614
 —
 N/A
AVA Capitol Hill Seattle, WA —
 —
 39,870
 —
 39,870
 39,870
 —
 39,870
 —
 N/A
Avalon Esterra Park Redmond, WA —
 8
 33,515
 —
 33,523
 33,523
 —
 33,523
 —
 N/A
Avalon Hayes Valley San Francisco, CA —
 887
 78,685
 —
 79,572
 79,572
 —
 79,572
 —
 N/A
Avalon Baker Ranch Lake Forest, CA 3,684
 12,815
 94,303
 3,684
 107,118
 110,802
 54
 110,748
 —
 N/A
Avalon Irvine III Irvine, CA —
 50
 26,253
 —
 26,303
 26,303
 —
 26,303
 —
 N/A
Avalon Huntington Beach Huntington Beach, CA —
 78
 40,661
 —
 40,739
 40,739
 —
 40,739
 —
 N/A
Avalon Glendora Glendora, CA —
 55
 52,091
 —
 52,146
 52,146
 —
 52,146
 —
 N/A
Avalon Falls Church Falls Church, VA —
 240
 69,391
 —
 69,631
 69,631
 —
 69,631
 —
 N/A
Avalon Roseland Roseland, NJ —
 372
 32,771
 —
 33,143
 33,143
 —
 33,143
 —
 N/A
Avalon Princeton Princeton, NJ —
 70
 35,386
 —
 35,456
 35,456
 —
 35,456
 —
 N/A
Avalon Union Union, NJ —
 —
 12,717
 —
 12,717
 12,717
 —
 12,717
 —
 N/A
TOTAL DEVELOPMENT COMMUNITIES   $32,309
 $446,342
 $1,357,880
 $32,309
 $1,804,222
 $1,836,531
 $6,482
 $1,830,049
 $—
 
                       
Land Held for Development   $180,516
 $—
 $—
 $180,516
 $—
 $180,516
 $—
 $180,516
 $—
  
Corporate Overhead   31,344
 31,699
 56,338
 31,344
 88,037
 119,381
 48,834
 70,547
 3,000,000
  
TOTAL   $3,657,002
 $11,700,112
 $2,492,202
 $3,657,002
 $14,192,314
 $17,849,316
 $2,913,576
 $14,935,740
 $6,448,138
  

(1)Includes 240 apartment homes which were destroyed and are uninhabitable as a result of the fire at Avalon at Edgewater in January 2015.

      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
OTHER STABILIZED                          
Eaves Dublin Dublin, CA 204
 $5,276
 $19,642
 $12,363
 $5,276
 $32,005
 $37,281
 $16,628
 $20,653
 $21,831
 $—
 1989/1997
AVA Pacific Beach San Diego, CA 564
 9,922
 40,580
 40,819
 9,922
 81,399
 91,321
 38,097
 53,224
 55,522
 —
 1969/1997
Avalon Silicon Valley Sunnyvale, CA 710
 20,713
 99,573
 31,536
 20,713
 131,109
 151,822
 66,781
 85,041
 68,714
 —
 1998
AVA Little Tokyo Los Angeles, CA 280
 14,734
 93,985
 318
 14,734
 94,303
 109,037
 7,123
 101,914
 104,796
 —
 2015
Eaves San Marcos San Marcos, CA 184
 3,277
 13,385
 4,601
 3,277
 17,986
 21,263
 2,961
 18,302
 15,267
 —
 1988/2011
Avalon Dublin Station Dublin, CA 253
 7,772
 72,067
 —
 7,772
 72,067
 79,839
 7,037
 72,802
 74,302
 —
 2014
Avalon Hayes Valley San Francisco, CA 182
 12,594
 81,104
 —
 12,594
 81,104
 93,698
 4,953
 88,745
 90,402
 —
 2015
Avalon Vista Vista, CA 221
 12,686
 43,409
 —
 12,686
 43,409
 56,095
 2,583
 53,512
 54,459
 —
 2015
Avalon Baker Ranch Lake Forest, CA 430
 31,687
 98,499
 —
 31,687
 98,499
 130,186
 5,744
 124,442
 126,925
 —
 2015
Studio 77 North Hollywood, CA 156
 18,408
 49,485
 4,069
 18,408
 53,554
 71,962
 1,146
 70,816
 N/A
 —
 2015/2016
Avalon Santa Monica on Main Santa Monica, CA 133
 32,000
 60,770
 12,677
 32,000
 73,447
 105,447
 11,230
 94,217
 95,038
 —
 2007/2013
Avalon La Jolla Colony San Diego, CA 180
 16,760
 27,694
 12,222
 16,760
 39,916
 56,676
 6,293
 50,383
 43,289
 26,682
 1987/2013
Avalon Walnut Ridge I Walnut Creek, CA 106
 9,860
 19,850
 5,038
 9,860
 24,888
 34,748
 3,827
 30,921
 29,351
 —
 2000/2013
Toluca Hills Apartments by Avalon Los Angeles, CA 1,151
 86,450
 161,256
 13,106
 86,450
 174,362
 260,812
 32,998
 227,814
 231,169
 —
 1973/2013
Avalon Pasadena Pasadena, CA 120
 10,240
 31,558
 6,683
 10,240
 38,241
 48,481
 5,901
 42,580
 39,890
 25,805
 2004/2013
Avalon Exeter (1) Boston, MA 187
 16,313
 110,028
 147
 16,313
 110,175
 126,488
 9,744
 116,744
 120,677
 —
 2014
AVA Somerville (1) Somerville, MA 250
 10,865
 56,324
 19
 10,865
 56,343
 67,208
 4,142
 63,066
 68,918
 —
 2015
AVA Back Bay Boston, MA 271
 9,034
 36,540
 46,284
 9,034
 82,824
 91,858
 31,158
 60,700
 56,462
 —
 1968/1998
Avalon Bear Hill Waltham, MA 324
 27,350
 94,168
 28,646
 27,350
 122,814
 150,164
 19,141
 131,023
 127,367
 —
 1999/2013
Avalon Wharton Wharton, NJ 247
 2,273
 48,608
 —
 2,273
 48,608
 50,881
 3,426
 47,455
 49,079
 —
 2015
Avalon Roseland Roseland, NJ 136
 11,281
 34,814
 —
 11,281
 34,814
 46,095
 2,017
 44,078
 45,016
 —
 2015
Avalon Hoboken Hoboken, NJ 217
 37,237
 86,508
 8,660
 37,237
 95,168
 132,405
 7,970
 124,435
 N/A
 67,904
 2008/2016
Avalon Green I Elmsford, NY 105
 1,820
 10,525
 7,516
 1,820
 18,041
 19,861
 9,228
 10,633
 10,711
 —
 1995
Avalon Towers Long Beach, NY 109
 3,118
 11,973
 20,790
 3,118
 32,763
 35,881
 14,106
 21,775
 22,465
 —
 1990/1995
Avalon Riverview North (1) Long Island City, NY 602
 —
 166,099
 9,907
 —
 176,006
 176,006
 53,588
 122,418
 121,052
 —
 2008
Avalon West Chelsea (1) New York, NY 305
 —
 123,066
 31
 —
 123,097
 123,097
 20,277
 102,820
 109,020
 —
 2015
Avalon Huntington Station Huntington Station, NY 303
 21,896
 58,660
 —
 21,896
 58,660
 80,556
 5,094
 75,462
 77,534
 —
 2014
Archstone Lexington Flower Mound, TX 222
 4,540
 25,946
 1,937
 4,540
 27,883
 32,423
 5,754
 26,669
 27,706
 21,601
 2000/2013
Archstone Toscano Houston, TX 474
 15,607
 72,473
 —
 15,607
 72,473
 88,080
 8,261
 79,819
 82,155
 —
 2014
Memorial Heights Villages Houston, TX 318
 9,607
 44,587
 —
 9,607
 44,587
 54,194
 5,686
 48,508
 50,311
 —
 2014
Avalon Mosaic Fairfax, VA 531
 33,490
 75,802
 —
 33,490
 75,802
 109,292
 7,655
 101,637
 104,300
 —
 2014


F-45F-49
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 20142016
(Dollars in thousands)


      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
Avalon Potomac Yard Alexandria, VA 323
 24,225
 76,633
 7,849
 24,225
 84,482
 108,707
 5,374
 103,333
 N/A
 —
 2014/2016
Avalon Clarendon Arlington, VA 300
 22,573
 89,431
 8,744
 22,573
 98,175
 120,748
 2,903
 117,845
 N/A
 —
 2002/2016
Avalon Columbia Pike Arlington, VA 269
 18,830
 76,429
 6,904
 18,830
 83,333
 102,163
 1,811
 100,352
 N/A
 70,019
 2009/2016
Oakwood Arlington Arlington, VA 184
 18,850
 38,545
 2,861
 18,850
 41,406
 60,256
 7,117
 53,139
 53,844
 —
 1987/2013
Avalon Alderwood I Lynnwood, WA 367
 12,294
 55,612
 —
 12,294
 55,612
 67,906
 4,515
 63,391
 65,247
 —
 2015
TOTAL OTHER STABILIZED 10,918
 $593,582
 $2,305,628
 $293,727
 $593,582
 $2,599,355
 $3,192,937
 $442,269
 $2,750,668
 $2,242,819
 $212,011
  
                           
LEASE-UP                          
Avalon Glendora Glendora, CA 280
 $18,311
 $64,649
 $—
 $18,311
 $64,649
 $82,960
 $2,602
 $80,358
 $81,730
 $—
 2016
Avalon Irvine III Irvine, CA 156
 11,607
 43,872
 —
 11,607
 43,872
 55,479
 1,247
 54,232
 52,308
 —
 2016
Avalon Dublin Station II Dublin, CA 252
 7,762
 76,421
 —
 7,762
 76,421
 84,183
 2,077
 82,106
 80,691
 —
 2016
AVA Theater District Boston, MA 398
 17,024
 163,055
 —
 17,024
 163,055
 180,079
 7,692
 172,387
 175,257
 —
 2015
Avalon Marlborough Marlborough, MA 350
 15,315
 60,153
 —
 15,315
 60,153
 75,468
 3,129
 72,339
 73,460
 —
 2015
Avalon Framingham Framingham, MA 180
 9,309
 34,554
 —
 9,309
 34,554
 43,863
 1,468
 42,395
 43,101
 —
 2015
Avalon Bloomfield Station Bloomfield, NJ 224
 10,701
 39,429
 —
 10,701
 39,429
 50,130
 2,099
 48,031
 49,968
 —
 2015
Avalon Union Union, NJ 202
 11,695
 36,014
 —
 11,695
 36,014
 47,709
 1,094
 46,615
 39,456
 —
 2016
Avalon Green III Elmsford, NY 68
 4,985
 17,237
 —
 4,985
 17,237
 22,222
 637
 21,585
 21,103
 —
 2016
Avalon Falls Church Falls Church, VA 384
 39,544
 66,202
 —
 39,544
 66,202
 105,746
 3,467
 102,279
 103,438
 —
 2016
AVA Capitol Hill Seattle, WA 249
 20,613
 60,276
 —
 20,613
 60,276
 80,889
 1,983
 78,906
 79,008
 —
 2016
Avalon Alderwood II Redmond, WA 124
 5,072
 21,390
 —
 5,072
 21,390
 26,462
 347
 26,115
 14,264
 —
 2016
TOTAL LEASE-UP 2,867
 $171,938
 $683,252
 $—
 $171,938
 $683,252
 $855,190
 $27,842
 $827,348
 $813,784
 $—
  
REDEVELOPMENT                          
Avalon Towers on the Peninsula Mountain View, CA 211
 $9,560
 $56,136
 $8,886
 $9,560
 $65,022
 $74,582
 $29,059
 $45,523
 $39,705
 $—
 2002
AVA Studio City I Studio City, CA 450
 17,658
 90,715
 24,339
 17,658
 115,054
 132,712
 16,391
 116,321
 100,198
 —
 1987/2013
Avalon at Edgewater (3) Edgewater, NJ 168
 5,982
 24,389
 4,681
 5,982
 29,070
 35,052
 13,929
 21,123
 27,453
 —
 2002
Avalon at Arlington Square Arlington, VA 842
 22,041
 90,296
 25,065
 22,041
 115,361
 137,402
 49,956
 87,446
 84,234
 —
 2001
TOTAL REDEVLOPMENT 1,671
 $55,241
 $261,536
 $62,971
 $55,241
 $324,507
 $379,748
 $109,335
 $270,413
 $251,590
 $—
  
                           
TOTAL CURRENT COMMUNITIES 70,364
 $3,732,667
 $12,752,509
 $1,454,076
 $3,732,667
 $14,206,585
 $17,939,252
 $3,673,291
 $14,265,961
 $14,009,250
 $2,576,758
  
                           
                           
                           
                           

F-50
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2016
(Dollars in thousands)


      2016 2015 2016  
      Initial Cost   Total Cost            
Community City and state # of homes Land and improvements Building /
Construction in
Progress &
Improvements		 Costs
Subsequent to
Acquisition /
Construction		 Land and improvements Building /
Construction in
Progress &
Improvements		 Total Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Total Cost,
Net of
Accumulated
Depreciation		 Encumbrances Year of
Completion/
Acquisition
DEVELOPMENT (4)                          
Avalon West Hollywood West Hollywood, CA 294
 $—
 $1,438
 $128,735
 $—
 $130,173
 $130,173
 $—
 $130,173
 $81,067
 $—
 N/A
Avalon Chino Hills Chino Hills, CA 331
 2,108
 15,878
 69,487
 2,108
 85,365
 87,473
 67
 87,406
 24,639
 —
 N/A
Avalon Dogpatch San Francisco, CA 326
 —
 362
 108,203
 —
 108,565
 108,565
 —
 108,565
 62,306
 —
 N/A
Avalon Public Market Emeryville, CA 285
 —
 83
 29,615
 —
 29,698
 29,698
 —
 29,698
 N/A
 —
 N/A
AVA Hollywood Hollywood, CA 695
 —
 181
 123,086
 —
 123,267
 123,267
 —
 123,267
 N/A
 —
 N/A
Avalon Huntington Beach Huntington Beach, CA 378
 10,560
 86,201
 19,701
 10,560
 105,902
 116,462
 1,193
 115,269
 88,629
 —
 N/A
AVA NoMa Washington, D.C. 438
 —
 987
 108,213
 —
 109,200
 109,200
 —
 109,200
 47,794
 —
 N/A
Avalon North Station Boston, MA 503
 1,633
 19,710
 227,728
 1,633
 247,438
 249,071
 49
 249,022
 142,911
 —
 N/A
Avalon Quincy Quincy, MA 395
 8,586
 46,296
 29,740
 8,586
 76,036
 84,622
 490
 84,132
 34,498
 —
 N/A
Avalon Easton Easton, MA 290
 —
 137
 28,937
 —
 29,074
 29,074
 —
 29,074
 N/A
 —
 N/A
AVA Wheaton Wheaton, MD 319
 —
 307
 35,054
 —
 35,361
 35,361
 —
 35,361
 18,295
 —
 N/A
Avalon Hunt Valley Hunt Valley, MD 332
 4,773
 28,466
 33,969
 4,773
 62,435
 67,208
 189
 67,019
 29,230
 —
 N/A
Avalon Laurel Laurel, MD 344
 7,766
 48,128
 14,381
 7,766
 62,509
 70,275
 743
 69,532
 31,008
 —
 N/A
Avalon Princeton Princeton, NJ 280
 7,832
 21,418
 59,298
 7,832
 80,716
 88,548
 188
 88,360
 50,071
 —
 N/A
Avalon Maplewood Maplewood, NJ 235
 —
 620
 47,833
 —
 48,453
 48,453
 —
 48,453
 19,180
 —
 N/A
Avalon Boonton Boonton, NJ 350
 —
 124
 8,168
 —
 8,292
 8,292
 —
 8,292
 N/A
 —
 N/A
Avalon Teaneck Teaneck, NJ 248
 —
 —
 14,034
 —
 14,034
 14,034
 —
 14,034
 N/A
 —
 N/A
Avalon Willoughby Square/AVA DoBro Brooklyn, NY 826
 114,499
 294,247
 44,940
 114,499
 339,187
 453,686
 5,873
 447,813
 408,812
 —
 N/A
Avalon Great Neck Great Neck, NY 191
 —
 424
 55,247
 —
 55,671
 55,671
 —
 55,671
 26,237
 —
 N/A
Avalon Sheepshead Bay Brooklyn, NY 180
 —
 327
 58,506
 —
 58,833
 58,833
 —
 58,833
 20,394
 —
 N/A
Avalon Rockville Centre II Rockville Centre, NY 165
 —
 249
 26,547
 —
 26,796
 26,796
 —
 26,796
 11,302
 —
 N/A
Avalon Somers Somers, NY 152
 —
 38
 16,548
 —
 16,586
 16,586
 —
 16,586
 N/A
 —
 N/A
11 West 61st Street New York, NY 172
 —
 —
 348,821
 —
 348,821
 348,821
 —
 348,821
 N/A
 —
 N/A
Avalon Esterra Park Redmond, WA 482
 14,034
 69,247
 45,866
 14,034
 115,113
 129,147
 1,161
 127,986
 84,428
 —
 N/A
Avalon Newcastle Commons I Newcastle, WA 378
 1,054
 12,210
 79,057
 1,054
 91,267
 92,321
 54
 92,267
 27,140
 —
 N/A
Avalon Belltown Towers Seattle, WA 275
 —
 50
 29,336
 —
 29,386
 29,386
 —
 29,386
 N/A
 —
 N/A
TOTAL DEVELOPMENT 8,864
 $172,845
 $647,128
 $1,791,050
 $172,845
 $2,438,178
 $2,611,023
 $10,007
 $2,601,016
 $1,207,941
 $—
  
                           
Land Held for Development   N/A $84,293
 $—
 $—
 $84,293
 $—
 $84,293
 $—
 $84,293
 $484,377
 $—
 
Corporate Overhead   N/A 56,584
 8,553
 76,921
 56,584
 85,474
 142,058
 60,334
 81,724
 77,940
 4,500,000
 
2016 Disposed Communities   N/A —
 —
 —
 —
 —
 —
 —
 —
 162,801
 —
  
TOTAL   79,228
 $4,046,389
 $13,408,190
 $3,322,047
 $4,046,389
 $16,730,237
 $20,776,626
 $3,743,632
 $17,032,994
 $15,942,309
 $7,076,758
  

F-51
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2016
(Dollars in thousands)


(1)Some or all of the land for this community is subject to a land lease.
(2)This community was under redevelopment for some or all of 2016, with the redevelopment effort primarily focused on the exterior and/or common area, with no expected material impact on community operations. This community is therefore included in the Established Community portfolio and not classified as a Redevelopment Community.
(3)The Total Cost, Net of Accumulated Depreciation as of December 31, 2015 includes the land, but excludes the net book value, of fixed assets destroyed by the Edgewater casualty loss.
(4)Development Communities excludes AVA North Point, which is being developed within an unconsolidated joint venture.


F-52
Table of Contents
AVALONBAY COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2016
(Dollars in thousands)


Amounts include real estate assets held for sale.

Depreciation of AvalonBay Communities, Inc. building, improvements, upgrades and furniture, fixtures and equipment (FF&E) is calculated over the following useful lives, on a straight line basis:

Building—30 years

Improvements, upgrades and FF&E—not to exceed 7 years

The aggregate cost of total real estate for federal income tax purposes was approximately $17,561,706$20,223,213 at December 31, 2014.2016.

The changes in total real estate assets for the years ended December 31, 2014, 20132016, 2015 and 20122014 are as follows:

For the year endedFor the year ended
12/31/2014 12/31/2013 12/31/201212/31/2016 12/31/2015 12/31/2014
Balance, beginning of period$16,800,321
 $10,071,342
 $9,288,496
$19,268,099
 $17,849,316
 $16,800,321
Acquisitions, construction costs and improvements1,311,003
 7,157,639
 934,935
1,788,515
 1,667,989
 1,311,003
Dispositions, including impairment loss on planned dispositions(262,008) (428,660) (152,089)
Dispositions, including casualty losses and impairment loss on planned dispositions(279,988) (249,206) (262,008)
Balance, end of period$17,849,316
 $16,800,321
 $10,071,342
$20,776,626
 $19,268,099
 $17,849,316

The changes in accumulated depreciation for the years ended December 31, 2014, 20132016, 2015 and 2012,2014, are as follows:

For the year endedFor the year ended
12/31/2014 12/31/2013 12/31/201212/31/2016 12/31/2015 12/31/2014
Balance, beginning of period$2,516,112
 $2,056,222
 $1,863,466
$3,325,790
 $2,913,576
 $2,516,112
Depreciation, including discontinued operations442,682
 573,715
 260,094
531,434
 477,923
 442,682
Dispositions(45,218) (113,825) (67,338)
Dispositions, including casualty losses(113,592) (65,709) (45,218)
Balance, end of period$2,913,576
 $2,516,112
 $2,056,222
$3,743,632
 $3,325,790
 $2,913,576


F-46F-53