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UNITED STATESFiscal Yearfiscal year ended December 31, 20122014Maryland 77-0404318 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 77-0404318(IRS Employer
Identification No.)Ballston Tower671 N. Glebe Rd, Suite 800Arlington, Virginia 22203(Address of principal executive offices)(703) 329-6300(Registrant's telephone number, including area code)
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| Common Stock, par value $.01 per share | New York Stock Exchange | ||||
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | |||
$18,601,181,331. 132,049,857.29, 201230, 2014 was $13,575,349,301.31, 201330, 2015 was 114,405,582.DOCUMENTS INCORPORATED BY REFERENCE20132015 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.
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. 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 In September 2008, we formed AvalonBay Value Added Fund II, L.P. ("Fund 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 $181,557,000. We also recognized income of $60,534,000 representing our promoted interests in certain of the unconsolidated ventures disposed of in 2014. 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. 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"). dispositions. From time to time we may engage a third party to manage leasing and/or maintenance activity at one or more of our communities. See "Tax Matters" below. qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code of 1986, as amended, or the Code (or the Treasury Tax Matters 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 Development, redevelopment and construction risks could affect our profitability. including significant environmental remediation or construction work in high-density urban areas. These activities may be exposed to the following risks: Competition could limit our ability to lease apartment homes or increase or maintain rents. Bond financing and zoning compliance requirements could limit our income, restrict the use of communities and cause favorable financing to become unavailable. Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity and access to capital markets. 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. . 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. 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. 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 subsidiaries. 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. Current Communities Established Communities: New England Metro NY/NJ Mid-Atlantic Pacific Northwest Northern California Southern California Total Established Other Stabilized Communities: New England Metro NY/NJ Mid-Atlantic Pacific Northwest Northern California Southern California Total Other Stabilized Lease-Up Communities Redevelopment Communities(1) Total Current Communities Development Communities Development Rights ____________________________ Acquisition, and removed one community from our Established Communities portfolio effective January 1, 2014, due to a reclassification to the Redevelopment Community portfolio. As of January 31, Our Current Communities, excluding indirect interests associated with the Residual JV, are located in the following geographic CURRENT COMMUNITIES NEW ENGLAND Boston, MA Avalon at Lexington Avalon Oaks Eaves Quincy Avalon Essex Avalon at Prudential Center Avalon Oaks West Avalon Orchards Avalon at Newton Highlands(8) Avalon at The Pinehills Eaves Peabody Avalon at Bedford Center Avalon Chestnut Hill Avalon Shrewsbury Avalon Danvers Avalon at Lexington Hills Avalon Acton Avalon Sharon Avalon at Center Place(10) Avalon at Hingham Shipyard Avalon Northborough Avalon Blue Hills Avalon Northborough II Avalon at Pinehills II Avalon Cohasset Avalon Andover Eaves Burlington Fairfield-New Haven, CT Eaves Trumbull Avalon Glen Avalon Wilton I Avalon Valley Avalon on Stamford Harbor Avalon New Canaan(9) CURRENT COMMUNITIES Avalon at Greyrock Place Avalon Danbury Avalon Darien Avalon Milford I Avalon Huntington Avalon Norwalk Avalon Wilton II METRO NY/NJ Long Island, NY Avalon Commons Avalon Towers Avalon Court Avalon at Glen Cove(10) Avalon Pines Avalon at Glen Cove North(10) Avalon Charles Pond Avalon Rockville Centre Northern New Jersey Avalon Cove Avalon at Edgewater Avalon at Florham Park Avalon Lyndhurst Avalon North Bergen Avalon at Wesmont Station I Central New Jersey Avalon Run(7) Avalon Princeton Junction Avalon at Freehold Avalon Run East II Avalon at Tinton Falls Avalon West Long Branch CURRENT COMMUNITIES New York, NY Eaves Nanuet Avalon Green Avalon Willow The Avalon Avalon Riverview I(10) Avalon Bowery Place I Avalon Riverview North(10) Avalon on the Sound East(10) Avalon Bowery Place II Avalon White Plains Avalon Morningside Park(10) Avalon Fort Greene Avalon Green II MID-ATLANTIC Baltimore, MD Avalon at Fairway Hills(7) Eaves Columbia Town Center Washington, DC Avalon at Foxhall Avalon at Gallery Place Avalon at Decoverly Eaves Washingtonian Center I Eaves Washingtonian Center II Avalon at Grosvenor Station Avalon at Traville Eaves Fair Lakes AVA Ballston Eaves Fairfax City Avalon Crescent Avalon at Arlington Square Fairfax Towers CURRENT COMMUNITIES PACIFIC NORTHWEST Seattle, WA Avalon Redmond Place Avalon at Bear Creek Avalon Bellevue Avalon RockMeadow Avalon ParcSquare Avalon Brandemoor AVA Belltown Avalon Meydenbauer Avalon Towers Bellevue(10) AVA Queen Anne Avalon Brandemoor II NORTHERN CALIFORNIA Oakland-East Bay, CA Avalon Fremont Eaves Dublin Eaves Pleasanton Eaves Union City Eaves Fremont Avalon at Dublin Station Avalon Union City Avalon Walnut Creek(10) San Francisco, CA Eaves Daly City AVA Nob Hill Eaves San Rafael Eaves Foster City Avalon Pacifica Avalon Sunset Towers Eaves Diamond Heights Avalon at Mission Bay North Avalon at Mission Bay III Avalon Ocean Avenue CURRENT COMMUNITIES San Jose, CA Avalon Campbell Eaves San Jose Avalon on the Alameda Avalon Rosewalk Avalon Silicon Valley Avalon Mountain View(9) Avalon at Creekside Avalon at Cahill Park Avalon Towers on the Peninsula SOUTHERN CALIFORNIA Orange County, CA AVA Newport Avalon Mission Viejo Eaves South Coast Eaves Santa Margarita Eaves Huntington Beach Avalon Anaheim Stadium Avalon Irvine The Springs(6) Eaves Lake Forest San Diego, CA Avalon at Mission Bay Eaves Mission Ridge AVA Cortez Hill(10) Avalon Fashion Valley Eaves San Marcos Eaves Rancho Penasquitos CURRENT COMMUNITIES Los Angeles, CA Avalon at Media Center Avalon Woodland Hills Eaves Warner Center Avalon at Glendale(10) Avalon Burbank Avalon Camarillo Avalon Wilshire Avalon Encino Avalon Warner Place Eaves Phillips Ranch Eaves San Dimas Eaves San Dimas Canyon The Mark Pasadena Eaves Cerritos Avalon Del Rey Avalon Park Crest Avalon Garden City Avalon Exeter(10) Avalon Irvine II AVA Ballard Avalon Shelton III Avalon Hackensack(10) AVA H Street Avalon West Chelsea/AVA High Line(10) Avalon Natick Avalon Somerset Avalon Mosaic Avalon/AVA Assembly Row(10) Avalon East Norwalk CURRENT COMMUNITIES AVA University District Avalon Dublin Station II Avalon Morrison Park AVA 55 Ninth Avalon Bloomingdale Avalon at Wesmont Station II Avalon Wharton Avalon Ossining AVA Little Tokyo Avalon at Mission Bay Avalon Chrystie Place I(9) Avalon Sunset(6) Civic Center(6) Avalon Yerba Buena(6)(12) South Hills Apartments(6) Middlesex Crossing(6) Weymouth Place(6) Avalon Cedar Place(6) Avalon Centerpoint(6) Avalon at Rutherford Station(6) Avalon Crystal Hill(6) Avalon Fair Oaks(11) Avalon Bellevue Park(11) Eaves Tustin(11) Eaves Los Alisos(11) Eaves Carlsbad(11) Eaves Rancho San Diego(11) CURRENT COMMUNITIES Avalon Rothbury(11)(12) Briarwood Apartments(11) Eaves Gaithersburg(11) Eaves Rockville(11) Fox Run Apartments(11) Captain Parker Arms(11) Avalon Watchung(11) Development Rights own. Boston, MA Fairfield-New Haven, CT New York, NY(2) New Jersey Long Island, NY Washington, DC Metro Seattle, WA Oakland-East Bay, CA San Francisco, CA Los Angeles, CA San Diego, CA Total Land Acquisitions Other Land and Real Estate Assets in the event that there are indicators of such impairment and we determine that the carrying value of the assets is greater than the current fair value, less costs to dispose. $411,700,000. earthquake risks. subject to deductibles, limits and exclusions. Our general liability policy provides terrorism coverage through TRIPRA This amount may not be sufficient to cover losses that may be in excess of the policy limits. Quarter ended March 31 Quarter ended June 30 Quarter ended September 30 Quarter ended December 31 31, 2015. October 1 - October 31, 2012 November 1 - November 30, 2012 December 1 - December 31, 2012 Revenue: Rental and other income Management, development and other fees Total revenue Expenses: Operating expenses, excluding property taxes Property taxes Interest expense, net (Gain) loss on extinguishment of debt, net Depreciation expense General and administrative expense Casualty and impairment loss Total expenses Equity in income of unconsolidated entities Gain on sale of land Gain on acquisition of unconsolidated entity Income from continuing operations Discontinued operations: Income from discontinued operations Gain on sale of communities Total discontinued operations Net income Net loss attributable to noncontrolling interests Net income attributable to the Company Dividends attributable to preferred stock Net income attributable to common stockholders 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) Discontinued operations attributable to common stockholders Net income attributable to common stockholders Weighted average shares outstanding—basic(1) Earnings per common share—diluted: Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) Discontinued operations attributable to common stockholders Net income attributable to common stockholders Weighted average shares outstanding—diluted(2) Cash dividends declared(3) Other Information: Net income attributable to the Company Depreciation—continuing operations Depreciation—discontinued operations Interest expense, net—continuing operations(1) Interest expense, net—discontinued operations(1) EBITDA(2) Funds from Operations(3) Number of Current Communities(4) Number of apartment homes Balance Sheet Information: Real estate, before accumulated depreciation Total assets Notes payable and unsecured credit facilities Cash Flow Information: Net cash flows provided by operating activities Net cash flows used in investing activities Net cash flows (used in) provided by financing activities Net income attributable to the Company Dividends attributable to preferred stock Depreciation—real estate assets, including discontinued operations and joint venture adjustments Distributions to noncontrolling interests, including discontinued operations Gain on sale of unconsolidated entities holding previously depreciated real estate assets Write-down of investment in unconsolidated real estate entities Gain on sale of previously depreciated real estate assets Gain on acquisition of unconsolidated real estate entity Funds from Operations attributable to common stockholders Weighted average shares outstanding—diluted FFO per common share—diluted attractive. Financial Highlights expenses of 4.9% 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. fire. Revenue: Rental and other income Management, development and other fees Total revenue Expenses: Direct property operating expenses, excluding property taxes Property taxes Total community operating expenses Corporate-level property management and other indirect operating expenses Investments and investment management expense Expensed acquisition, development and other pursuit costs Interest expense, net Loss on extinguishment of debt, net Depreciation expense General and administrative expense Casualty and impairment loss Gain on sale of land Gain on acquisition of unconsolidated real estate entity Total other expenses Equity in income of unconsolidated entities Income from continuing operations Discontinued operations: Income from discontinued operations Gain on sale of communities Total discontinued operations Net income Net loss attributable to noncontrolling interests Net income attributable to common stockholders 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 impacts to overhead as a result of acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets. We define NOI as total property revenue less direct property operating expenses, including property taxes, and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed acquisition, development and other pursuit costs, net interest expense, gain (loss) on extinguishment of debt, general and administrative expense, joint venture income (loss), depreciation expense, casualty loss, impairment loss on land holdings, gain on sale of real estate assets, income from discontinued operations and net operating income from real estate assets sold or held for sale, not classified as discontinued operations. Net income Indirect operating expenses, net of corporate income Investments and investment management expense Expensed acquisition, development and other pursuit costs Interest expense, net Loss on extinguishment of debt, net General and administrative expense Equity in income of unconsolidated entities Depreciation expense Casualty and impairment loss Gain on sale of real estate assets (Income) loss from discontinued operations Gain on acquisition of unconsolidated real estate entity Net operating income Established Communities Other Stabilized Communities Development and Redevelopment Communities Total average monthly revenue per occupied apartment home increased to 2012. is beginning to see a larger pipeline of new apartment deliveries, but suburban markets surrounding the city are more insulated from this new competition. during this recovery than other industries. Southern California region accounted for approximately 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. new apartment homes, particularly in the urban core of Seattle. evaluations. We appeal property tax increases when appropriate. the carrying basis of the debt acquired, excluding costs related to debt secured by assets sold or held for unsecured notes in November. obligations. proceeds assets; and $32,859,000. 2015. 2014. later than September 8, 2015. stated coupon of 5.375%. 3.50%. Tax-exempt bonds Fixed rate Eaves Washingtonian Center I Avalon Oaks Avalon Oaks West Avalon at Chestnut Hill Avalon Morningside Park Variable rate(2) Avalon at Mountain View Avalon at Mission Viejo AVA Nob Hill Avalon Campbell Avalon Pacifica Avalon Bowery Place I Avalon Bowery Place II Avalon Acton Avalon Walnut Creek Avalon Walnut Creek Avalon Morningside Park Conventional loans(4) Fixed rate $250 Million unsecured notes $250 Million unsecured notes $100 Million unsecured notes $150 Million unsecured notes $250 Million unsecured notes $250 Million unsecured notes $250 Million unsecured notes $250 Million unsecured notes $450 Million unsecured notes $250 Million unsecured notes Avalon at Tysons West Avalon Orchards Avalon at Arlington Square Avalon Crescent Avalon at Silicon Valley Avalon Darien Avalon Greyrock Place Avalon Walnut Creek Avalon Shrewsbury Eaves Trumbull Avalon at Stamford Harbor Avalon Freehold Avalon Run East Eaves Nanuet Avalon at Edgewater Avalon at Foxhall Avalon at Gallery Place Avalon at Traville Avalon Bellevue Avalon on the Alameda Avalon at Mission Bay North Fairfax Towers Eaves Phillips Ranch The Mark Pasadena Variable rate(2)(4) Avalon at Bedford Center Avalon Walnut Creek $250 Million unsecured notes Total indebtedness—excluding unsecured credit facility $69,633,000 (net of distributions), representing a 20.0% equity interest. The AC JV was formed in 2011. Detail of the real estate and associated funding underlying our unconsolidated investments is presented in the following Fund I 1. Avalon Sunset—Los Angeles, CA 2. Avalon at Civic Center—Norwalk, CA 3. Avalon at Yerba Buena—San Francisco, CA(4) 4. The Springs—Corona, CA(5) 5. Avalon Cedar Place—Columbia, MD 6. Avalon Centerpoint—Baltimore, MD(6) 7. Middlesex Crossing—Billerica, MA 8. Avalon Crystal Hill—Ponoma, NY 9. Avalon Rutherford Station—East Rutherford, NJ 10. South Hills Apartments—West Covina, CA 11. Weymouth Place—Weymouth, MA Total Fund I Fund II 1. Avalon Bellevue Park—Bellevue, WA 2. Avalon Fair Oaks—Fairfax, VA 3. Avalon Rothbury—Gaithersburg, MD(4) 4. Briarwood Apartments—Owings Mills, MD 5. Eaves Gaithersburg—Gaithersburg, MD(7) 6. Eaves Tustin—Tustin, CA 7. Eaves Los Alisos—Lake Forest, CA 8. Fox Run Apartments—Plainsboro, NJ(7) 9. Eaves Carlsbad—Carlsbad, CA 10. Eaves Rockville—Rockville, MD 11. Captain Parker Arms—Lexington, MA 12. Eaves Rancho San Diego—San Diego , CA 13. Avalon Watchung—Watchung, NJ Total Fund II Other Operating Joint Ventures 1. Avalon Chrystie Place I—New York, NY(8) 2. Avalon at Mission Bay North II—San Francisco, CA(8) Total Other Joint Ventures Total Unconsolidated Investments than 10% of the total capital contributions made by the partner (maximum of approximately $8,910,000 as of December 31, do so. Debt Obligations Interest on Debt Obligations Capital Lease Obligations(1) Operating Lease Obligations(1) Asset Purchase Commitment(2) Total Inflation and Deflation 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" 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: Principles of Consolidation We defer costs associated with originating new leases, recognizing the impact of these costs in earnings over the term of the lease 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 $3,743,000. $6,703,000. We future years. $274,794,000. settlement. $365,417,000. 21, 2015. 21, 2015. Employee Stock Purchase Plan (the "ESPP"), pursuant to which common stock or other equity awards may be issued or granted to eligible persons. Equity compensation plans approved by security holders(1) Equity compensation plans not approved by security holders(4) Total The ESPP, which was adopted by the Board of 21, 2015. 21, 2015. Index to Financial Statements Consolidated Financial Statements and Financial Statement Schedule: 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. ASSETS Real estate: Land Buildings and improvements Furniture, fixtures and equipment Less accumulated depreciation Net operating real estate Construction in progress, including land Land held for development Operating real estate assets held for sale, net Total real estate, net Cash and cash equivalents Cash in escrow Resident security deposits Investments in unconsolidated real estate entities Deferred financing costs, net Deferred development costs Prepaid expenses and other assets Total assets LIABILITIES AND EQUITY Unsecured notes, net Variable rate unsecured credit facility Mortgage notes payable Dividends payable Payables for construction Accrued expenses and other liabilities Accrued interest payable Resident security deposits Liabilities related to real estate assets held for sale Total liabilities Redeemable noncontrolling interests Equity: Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at both December 31, 2012 and December 31, 2011; zero shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively Common stock, $0.01 par value; 140,000,000 shares authorized at both December 31, 2012 and December 31, 2011; 114,403,472 and 95,175,677 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively Additional paid-in capital Accumulated earnings less dividends Accumulated other comprehensive loss Total equity Noncontrolling interest Total equity Total liabilities and equity Revenue: Rental and other income Management, development and other fees Total revenue Expenses: Operating expenses, excluding property taxes Property taxes Interest expense, net Loss on extinguishment of debt, net Depreciation expense General and administrative expense Casualty and impairment loss Total expenses Equity in income of unconsolidated entities Gain on sale of land Gain on acquisition of unconsolidated entity Income from continuing operations Discontinued operations: Income from discontinued operations Gain on sale of real estate assets Total discontinued operations Net income Net loss attributable to noncontrolling interests Net income attributable to common stockholders Other comprehensive income: Unrealized loss on cash flow hedges Cash flow hedge losses reclassified to earnings Comprehensive income Earnings per common share—basic: Income from continuing operations attributable to common stockholders Discontinued operations attributable to common stockholders Net income attributable to common stockholders Earnings per common share—diluted: Income from continuing operations attributable to common stockholders Discontinued operations attributable to common stockholders Net income attributable to common stockholders Balance at December 31, 2009 Net income attributable to common stockholders Unrealized loss on cash flow hedges Change in redemption value of redeemable noncontrolling interest Noncontrolling interest consolidation and income allocation Dividends declared to common stockholders Issuance of common stock, net of withholdings Amortization of deferred compensation Balance at December 31, 2010 Net income attributable to common stockholders Unrealized loss on cash flow hedges Change in redemption value of redeemable noncontrolling interest Noncontrolling interest consolidation and income allocation Dividends declared to common stockholders Issuance of common stock, net of withholdings Amortization of deferred compensation Balance at December 31, 2011 Net income attributable to common stockholders Unrealized loss on cash flow hedges Cash flow hedge losses reclassified to earnings Change in redemption value of redeemable noncontrolling interest Noncontrolling interest consolidation and income allocation Dividends declared to common stockholders Issuance of common stock, net of withholdings Amortization of deferred compensation Balance at December 31, 2012 Cash flows from operating activities: Net income Adjustments to reconcile net income to cash provided by operating activities: Depreciation expense Depreciation expense from discontinued operations Amortization of deferred financing costs and debt premium/discount Amortization of stock-based compensation Cash flow hedge losses reclassified to earnings Equity in (income) loss of, and return on, unconsolidated entities and noncontrolling interests, net of eliminations Loss on extinguishment of debt, net Casualty loss and impairment of real estate assets Gain on sale of real estate assets Gain on acquisition of unconsolidated entity Expensed acquisition costs (Increase) decrease in cash in operating escrows Increase in resident security deposits, prepaid expenses and other assets (Decrease) increase in accrued expenses, other liabilities and accrued interest payable Net cash provided by operating activities Cash flows from investing activities: Development/redevelopment of real estate assets including land acquisitions and deferred development costs Acquisition of real estate assets, including partnership interest Capital expenditures—existing real estate assets Capital expenditures—non-real estate assets Proceeds from exchange/sale of real estate, net of selling costs Increase (decrease) in payables for construction Decrease in cash in construction escrows Acquisition of mortgage note Decrease (increase) in investments in unconsolidated real estate entities Net cash used in investing activities Cash flows from financing activities: Issuance of common stock Dividends paid Repayments of mortgage notes payable Issuance of unsecured notes Settlement of interest rate contract Repayment of unsecured notes Payment of deferred financing costs and issuance discounts Redemption of units for cash by minority partners Acquisition of joint venture partner equity interest Distributions to DownREIT partnership unitholders Distributions to joint venture and profit-sharing partners Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Cash paid during the year for interest, net of amount capitalized California. 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 defers costs associated with originating new leases, recognizing the impact of these costs in earnings over the term of the lease. In connection with the acquisition of an operating community, the Company identifies and records each asset acquired and liability assumed in such transaction at its estimated fair value at the date of acquisition. The purchase price allocations to tangible assets, such as land, buildings and improvements, and furniture, fixtures and equipment, and the in-place lease intangible assets, are reflected in real estate assets and depreciated over their estimated useful lives. Any purchase price allocation to intangible assets, acquisitions of operating communities. The Company values land based on a market approach, looking to recent sales of similar properties, adjusting for differences due to location, the state of entitlement as well as the shape and size of the parcel. Improvements to land are valued using a replacement cost approach and consider the structures and amenities included for the communities. The approach applies industry standard replacement costs adjusted for geographic specific considerations, and reduced by estimated depreciation. The value for furniture, fixtures and equipment is also determined based on a replacement cost approach, considering costs for both items in the apartment homes as well as common areas and is adjusted for estimated depreciation. The fair value of buildings acquired is estimated using the replacement cost approach, assuming the buildings were vacant at acquisition. The replacement cost approach considers the composition of structures acquired, adjusted for an estimate of depreciation. The estimate of depreciation is made considering industry standard information and depreciation curves for the identified asset classes. The value of the acquired lease-related intangibles considers the estimated cost of leasing the apartment homes as if the acquired building(s) were vacant, as well as the value of the current leases relative to market-rate leases. The in-place lease value is determined using an average total lease-up time, the number of apartment homes and net revenues generated during the lease-up time. The lease-up period for an apartment community is assumed to be 12 months to achieve stabilized occupancy. Net revenues use market rent considering actual leasing and industry rental rate data. The value of current leases relative to a market-rate lease is based on market rents obtained for market comparables, and considered a market derived discount rate. Given the significance of unobservable inputs used in the value of real estate assets acquired, it classifies them as Level 3 prices in the fair value hierarchy. 2013. The following reconciles net income attributable to common stockholders to taxable net income for the years ended December 31, Net income attributable to common stockholders GAAP gain on sale of communities (in excess of) less than tax gain Depreciation/amortization timing differences on real estate Tax compensation expense less than (in excess of) GAAP Impairment loss Other adjustments Taxable net income Ordinary income 15% capital gain Unrecaptured §1250 gain 2013. Comprehensive Income calculating earnings per share on a diluted basis. The Company's earnings per common share are determined as Basic and diluted shares outstanding Weighted average common shares—basic Weighted average DownREIT units outstanding Effect of dilutive securities Weighted average common shares—diluted Calculation of Earnings per Share—basic Net income attributable to common stockholders Net income allocated to unvested restricted shares Net income attributable to common stockholders, adjusted Weighted average common shares—basic Earnings per common share—basic Calculation of Earnings per Share—diluted Net income attributable to common stockholders Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations Adjusted net income attributable to common stockholders Weighted average common shares—diluted Earnings per common share—diluted Dividends per common share 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 The Company also evaluates its unconsolidated investments for other than temporary impairment, considering both of the fire at Avalon at Edgewater. 2014. Derivative Instruments and Hedging Activities See Note 12, "Fair Value," for further discussion of derivative financial instruments. presentations as a result of discontinued operations and changes in held for sale classification as described in Note 7, “Real Estate Disposition Activities.” respectively. December 31, Fixed rate unsecured notes(1) Variable rate unsecured notes(1) Fixed rate mortgage notes payable—conventional and tax-exempt(2) Variable rate mortgage notes payable—conventional and tax-exempt Total notes payable and unsecured notes Credit Facility Total mortgage notes payable, unsecured notes and Credit Facility The following debt activity occurred during the year ended December 31, rating. Scheduled payments and maturities of mortgage notes payable and unsecured notes outstanding at December 31, 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Thereafter 2014. $295,465,000. As of December 31, 2014, the Company had $346,304,000 of shares remaining authorized for issuance under this program. fees. $34,250,000. II repaid an outstanding mortgage note at par in the amount of $42,023,000. Assets: Real estate, net Other assets Total assets Liabilities and partners' capital: Mortgage notes payable and credit facility Other liabilities Partners' capital Total liabilities and partners' capital Rental and other income Operating and other expenses Gain on sale of communities(1) Interest expense, net Depreciation expense Net income (loss) In conjunction with the formation of Fund I and Fund II, The following is a summary of the Company's equity in income (loss) of unconsolidated entities for the years presented (dollars in thousands): Avalon Del Rey, LLC(1) CVP I, LLC(2) MVP I, LLC AvalonBay Value Added Fund, L.P.(3) AvalonBay Value Added Fund II, L.P. Juanita Village(4) Total $47,000,000. The Company accounted for $490,000. South Clark (Land) Waterford Avalon Arlington Heights Avalon Wildreed Avalon HighGrove Total of all 2012 asset sales Total of all 2011 asset sales Total of all 2010 asset sales Rental income Operating and other expenses Interest expense, net Loss on extinguishment of debt Depreciation expense Income (loss) from discontinued operations Employment Agreements and Arrangements where appropriate, a reduction in the basis of a community to which the suit related. During the years ended December 31, 2014 and 2012, the Company received $1,933,000 and $775,000, respectively, in legal recoveries. There were no material receipts during the year ended December 31, lawsuits and contingencies. In addition, the Company is subject to various other legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur and can be reasonably estimated, the estimated amount of the loss is recorded in the financial statements. While the resolution of these other matters cannot be predicted with certainty, management currently believes the final outcome of such matters will not have a material adverse effect on the financial position 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. expire in 2046 and 2086. Operating Lease Obligations Capital Lease Obligations(1) 2014. A reconciliation of NOI to net income for years ended December 31, Net income Indirect operating expenses, net of corporate income Investments and investment management expense Expensed acquisition, development and other pursuit costs Interest expense, net (Gain) loss on extinguishment of debt, net General and administrative expense Equity in income of unconsolidated entities Depreciation expense Casualty and impairment loss Gain on sale of real estate assets Income from discontinued operations Gain on acquisition of unconsolidated real estate entity Net operating income otherwise qualify as held for sale and/or discontinued operations as of December 31, For the period ended December 31, 2012 Established New England Metro NY/NJ Mid-Atlantic Pacific Northwest Northern California Southern California Total Established(2) Other Stabilized Development / Redevelopment Land Held for Future Development Non-allocated(3) Total For the period ended December 31, 2011 Established New England Metro NY/NJ Mid-Atlantic Pacific Northwest Northern California Southern California Total Established(2) Other Stabilized Development / Redevelopment Land Held for Future Development Non-allocated(3) Total For the period ended December 31, 2010 Established New England Metro NY/NJ Mid-Atlantic Pacific Northwest Northern California Southern California Total Established(2) Other Stabilized Development / Redevelopment Land Held for Future Development Non-allocated(3) Total Options Outstanding, December 31, 2009 Exercised Granted Forfeited Options Outstanding, December 31, 2010 Exercised Granted Forfeited Options Outstanding, December 31, 2011 Exercised Granted Forfeited Options Outstanding, December 31, 2012 Options Exercisable: December 31, 2010 December 31, 2011 December 31, 2012 The following summarizes the exercise prices and contractual lives of options outstanding as of December 31, Weighted average fair value per share Life of options (in years) Dividend yield Volatility Risk-free interest rate 2014, 2013 and 2012. Notional balance Weighted average interest rate(1) Weighted average capped interest rate Earliest maturity date Latest maturity date Excluding derivatives executed to hedge secured debt on communities classified as held for sale, the Company had hedges to their fair value and recognize the impact of hedge accounting, the Company recorded 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. values and are Level 1 within the fair value hierarchy. The Company values its unsecured notes using quoted market prices, a Level 1 price within the fair value hierarchy. The Company values its Interest Rate Caps Interest Rate Swaps Put DownREIT units Indebtedness Total 12-31-2011 Interest Rate Caps Interest Rate Swaps Put DownREIT units Indebtedness Total Table of Contents Total revenue(1) Income from continuing operations(1) Total discontinued operations(1) Net income attributable to common stockholders Net income per common share—basic Net income per common share—diluted Total revenue(1) Income (loss) from continuing operations(1) Total discontinued operations(1) Net income attributable to common stockholders Net income per common share—basic Net income per common share—diluted 2014 Avalon Fremont Eaves Dublin Avalon Campbell Eaves Daly City AVA Nob Hill Eaves San Jose Eaves San Rafael Eaves Pleasanton AVA Newport Avalon at Media Center Avalon Mission Viejo Eaves South Coast Avalon at Mission Bay Eaves Mission Ridge Eaves Union City Avalon on the Alameda Eaves Foster City Avalon Rosewalk Avalon Pacifica Avalon Sunset Towers Avalon Silicon Valley Avalon Woodland Hills Avalon Mountain View 2014 Eaves Santa Margarita Eaves Diamond Heights Eaves Fremont Avalon at Creekside Eaves Warner Center Eaves Huntington Beach AVA Cortez Hill Avalon at Cahill Park Avalon Towers on the Peninsula Avalon at Mission Bay North Avalon at Glendale Avalon Burbank Avalon Camarillo Avalon Wilshire Avalon at Dublin Station Avalon Encino Avalon Warner Place Avalon Fashion Valley Avalon Anaheim Stadium Avalon Union City Avalon Irvine Avalon at Mission Bay III Avalon Walnut Creek Avalon Ocean Avenue Eaves Phillips Ranch Eaves San Dimas 2014 Eaves San Dimas Canyon Eaves San Marcos Eaves Rancho Penasquitos Eaves Lake Forest The Mark Pasadena Eaves Cerritos Avalon Del Rey The Springs Eaves Trumbull Avalon Glen Avalon Wilton 1 Avalon Valley Avalon on Stamford Harbor Avalon New Canaan Avalon at Greyrock Place Avalon Danbury Avalon Darien Avalon Milford I Avalon Norwalk Avalon Huntington Avalon Wilton II Avalon at Foxhall Avalon at Gallery Place Avalon at Lexington Avalon Oaks 2014 Eaves Quincy Avalon Essex Avalon at Prudential Center Avalon Oaks West Avalon Orchards Avalon at Newton Highlands Avalon at The Pinehills Eaves Peabody Avalon at Bedford Center Avalon Chestnut Hill Avalon Shrewsbury Avalon Danvers Avalon at Lexington Hills Avalon Acton Avalon at Hingham Shipyard Avalon Sharon Avalon Northborough Avalon Blue Hills Avalon Northborough II Avalon at the Pinehills II Avalon Cohasset Avalon Andover 2014 Eaves Burlington Avalon at Fairway Hills Avalon at Decoverly Eaves Washingtonian Center I Eaves Washingtonian Center II Eaves Columbia Town Center Avalon at Grosvenor Station Avalon at Traville Avalon Cove Avalon Run Avalon Princeton Junction Avalon at Edgewater Avalon at Florham Park Avalon at Freehold Avalon Run East Avalon Lyndhurst Avalon at Tinton Falls Avalon at West Long Branch Avalon North Bergen Avalon at Wesmont Station I Avalon Commons Eaves Nanuet Avalon Green 2014 Avalon Towers Avalon Willow Avalon Court The Avalon Avalon Riverview I Avalon at Glen Cove Avalon Pines Avalon Bowery Place I Avalon Glen Cove North Avalon Riverview North Avalon on the Sound East Avalon Bowery Place II Avalon White Plains Avalon Morningside Park Avalon Charles Pond Avalon Fort Greene Avalon Rockville Centre Avalon Green Phase II Avalon at Center Place Eaves Fair Lakes AVA Ballston Eaves Fairfax City Avalon Crescent Avalon at Arlington Square 2014 Fairfax Towers Avalon Redmond Place Avalon at Bear Creek Avalon Bellevue Avalon RockMeadow Avalon ParcSquare Avalon Brandemoor AVA Belltown Avalon Meydenbauer Avalon Towers Bellevue AVA Queen Anne Avalon Brandemoor Phase II 2014 Development Communities Avalon Garden City Avalon Park Crest Avalon Somerset Avalon Irvine II AVA H Street Avalon Natick Avalon Ballard Avalon Exeter Avalon Shelton III Avalon Hackensack at Riverside West Chelsea/AVA High Line Avalon Mosaic Avalon East Norwalk Avalon Dublin Station II Avalon at Assembly Row/AVA Somerville AVA University District Avalon Bloomingdale Avalon at Wesmont Station II Avalon Morrison Park AVA 55 Ninth Avalon Ossining AVA Little Tokyo Avalon Wharton Land Held for Development Corporate Overhead 2014 2014. Balance, beginning of period Acquisitions, construction costs and improvements Dispositions, including impairment loss on planned dispositions Balance, end of period Balance, beginning of period Depreciation, including discontinued operations Dispositions Balance, end of periodPAGE PART IITEM 1.BUSINESS1
RISK FACTORS
ITEM 2.
COMMUNITIES
26
LEGAL PROCEEDINGS
PART II
ITEM 9b.
OTHER INFORMATION
76PART III
ITEM 11.
EXECUTIVE COMPENSATION
77
PART IV
SIGNATURES
1a.,1A. "Risk Factors,"Factors" for a discussion of various risks that could adversely affect us."Company,"“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"(“REIT”) for federal income tax purposes. We engage in the development, redevelopment, acquisition, ownershipdevelop, redevelop, acquire, own and operation ofoperate multifamily communities primarily in high barrier to entry markets of the United States. These barriers to entry generally include a difficult and lengthy entitlement process with local jurisdictions and dense urban or suburban areas where zoned and entitled land is in limited supply. Our markets are currently located in the following regions of the United States: New England, the New York/New Jersey Metrometro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. We focus on leading metropolitan areas in these markets becauseregions that we believe that, overare characterized by growing employment in high wage sectors of the long-term, a limited new supply of apartment homes andeconomy, lower housing affordability inand a diverse and vibrant quality of life. We believe these markets will result in higher growth in cash flowsmarket characteristics offer the opportunity for superior risk-adjusted returns on apartment community investments relative to other markets.2013,2015, we owned or held a direct or indirect ownership interest in:•17852,42774,240 apartment homes in nine11 states and the District of Columbia, of which 155228 communities containing 45,05666,631 apartment homes were consolidated for financial reporting purposes, two communities containing 674618 apartment homes were held by joint ventures in which we hold an ownership interest, and 2122 communities containing 6,6976,991 apartment homes were owned by the Funds (as defined below). Five12 of the consolidated communities containing 1,7873,998 apartment homes were under redevelopment, as discussed below;•236,5997,924 apartment homes when completed; and•3437 communities that, if developed in the manner expected, will contain an estimated 9,60210,384 apartment homes. The Company has entered into a material agreement to purchasehomes; andreal estate assets that will significantly change our property holdings and capital structure. See "Business—Archstone Acquisition." The closingacquired as part of the acquisition is expected to occur during the first quarter of 2013 after the filing ofArchstone Acquisition (as defined in this Form 10-K.8,9, "Segment Reporting," of the Consolidated Financial Statements set forth in Item 8 of this report.apartmentsapartment 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 interest in apartment communities in high barrier to entryour selected markets, with growing or high potential for demand and high for-sale housing costs, (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. Our strategy is to be leaders in multifamily market research, consumer insight and capital allocation, delivering a range of multifamily offerings tailored to serve the needs of the most attractive customer segments in the best-performing U.S. submarkets. A substantial majority of our current communities are upscale, which 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.2012,2014, excluding activity for the Funds (as defined below), we acquired four59 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. In addition, during this periodDuring the three years ended December 31, 2014, we disposed of 16 apartment communities, six of which were acquired in the Archstone Acquisition, and completed the development of 37 apartment communities and the redevelopment of 22 apartment communities. During 2012, we also purchased our joint venture partner's interest in one operating community, obtaining a 100% ownership interest in that apartment community. During the same three-year period, excluding dispositions in which we retained an ownership interest, we disposed of 10 apartment communities and completed the development of 18 apartment communities and the redevelopment of 23 apartment communities. In addition, we sold one wholly-owned community in 20112015 through the date this Form 10-K was filed.exchanged a portfolio of three communities and a parcel of land we owned for a portfolio of six communities and $26,000,000 in cash. During this period, we also realized our pro rata share of the gain from the sale of eight communities owned byformed AvalonBay Value Added Fund, L.P. ("Fund I"), an institutionala private, discretionary real estate investment fundvehicle, which we manage and in which we own 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 March 2008, Fund I acquired 20 communities. In addition,During the three years ended December 31, 2014, we realized our pro rata share of the gain from the sale of the last of the 17 communities owned by Fund I. During 2014, Fund I sold one communitydisposed of its final four communities. Fund I has a term that expires in 2013 through the date this Form 10-K was filed.community, which was an active acquisition candidate as of August 2011, the end of the investment period for Fund II.community. From the commencement of Fund II through the close of theits investment period, Fund II acquired 13 operating communities. During the three years ended December 31, 2014, we realized our pro rata share of the gain from the sale of three communities owned by Fund II soldII.2013 throughWashington, DC, which is managed by a third party. Brandywine is comprised of five members who hold various interests in the date this Form 10-K was filed. 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.and Fund II, the U.S. Fund and the AC JV (collectively, the "Funds"), Brandywine and the related investment activity can be found in the discussion in Note 6, "Investments in Real Estate Entities," of the Consolidated Financial Statements in Item 8 of this report and in Item 7,7. "Management's Discussion and Analysis of Financial Condition and Results of Operations."20122014 we sold 12 real estate assets, consisting of 11 operating communities and one land parcel, and recognized a gain in accordance with U.S. generally accepted accounting principles ("GAAP") of $156,420,000.high barrier to entryour selected markets, of the United States, 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:•••••••••Shelton,••a dedicated group of associatesredevelopment 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 acting as 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.thirddiscretionary real estate investment fund, preferring at this time to maintain flexibility in shaping our portfolio of wholly-owned assets through acquisitions and disposition, although we may acquire investments in existing fund structures in connection with the Archstone Acquisition. Any fund acquired is not expected to limit our ability to acquire investments for our own account.•strong focus••••••••depending uponconsidering the least costly alternative;•andas well as to maximize property and equipment life; and•net operating income ("NOI")NOI 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."taxable "taxable REIT subsidiary," which is a subsidiary that is treated as a "C corporation" subject to federal income taxes.2012,2014, we had a total of 458,693625,798 square feet of rentable retail space, excluding retail space within communities currently under construction. Gross rental revenue provided by leased retail space in 20122014 was $8,806,000 (0.8%$17,894,000 (1.1% of total revenue). We may also develop a property in conjunction with another real estate company that will own and operate the retail component of a mixed-use building 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.Regulations)Regulations thereunder), our Board of Directors determines that it is no longer in our best interest to qualify as a REIT.Archstone Acquisition In November 2012, we entered into agreements with (i) Equity Residential and its operating partnership, ERP Operating Partnership LP ("Equity Residential"), (ii) Lehman Brothers Holdings, Inc., ("Lehman"), and (iii) Archstone Enterprise LP ("Archstone"), pursuant to which AvalonBay and Equity Residential will acquire, directly or indirectly, all of the assets, liabilities and ownership interests in joint ventures or other entities owned by Archstone. Under the terms of the agreements, we will acquire approximately 40% of Archstone's assets and liabilities and Equity Residential will acquire approximately 60% of Archstone's assets and liabilities ("Archstone Acquisition"). The transaction is expected to close during the first quarter of 2013. As disclosed in November 2012, we expect to purchase the following as part of the Archstone Acquisition, which is subject to adjustment up until the transaction closes:•66 apartment communities that are expected to be consolidated for financial reporting purposes, containing 22,222 apartment homes, of which six communities are under construction and are expected to contain 1,666 apartment homes upon completion•Three parcels of land, which are expected to be wholly owned, and if developed as anticipated, are expected to contain a total of 968 apartment homes;•Interests in joint ventures the assets of which consist primarily of real estate, for which our ownership percentage is expected to be up to 40%, and that are not expected to be consolidated for financial reporting purposes. The Company expects to provide the following consideration for the Archstone Acquisition:•the issuance of 14,889,706 shares of its common stock to Lehman or its designees;•cash payment of $669,000,000 to Lehman or its designees;•the assumption of approximately $3,700,000,000 principal amount of consolidated indebtedness;•the acquisition with Equity Residential of interests in entities that have preferred units outstanding that may be presented for redemption from time to time. The Company's 40% share of the liquidation value of and accrued dividends on these outstanding Archstone preferred units as of January 31, 2013 was $132,200,000; and•the assumption with Equity Residential of all other liabilities, known or unknown, of Archstone, other than certain excluded liabilities. The Company will share in 40% of the cost of these liabilities. Equity Residential and we are jointly and severally liable for most obligations to Lehman related to the Archstone Acquisition. If we and Equity Residential fail to close Archstone Acquisition by March 26, 2013, then Equity Residential and we could be liable for payment of a termination fee of $800,000,000. The closing of the transaction is also subject to customary closing conditions, which do not include our and Equity Residential's ability to obtain the necessary financing or lender consents for the transaction. Unless otherwise stated, all amounts and disclosures included in this Form 10-K do not include any impact from the anticipated closing of the Archstone Acquisition.Internal Revenue Code of 1986, as amended, ("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 Management Strategy" above, we will not be taxed under federal and certain state income tax laws at the corporate level on our taxable net income to the extent 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.1a.,1A. "Risk Factors.""Investors""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 Agreement,Agreements, Policy Regarding Shareholder Approval of Future Severance Agreements, Executive Stock Ownership Guidelines, and Policy foron 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.2013,2015, we had 2,1783,006 employees.1a.1A. RISK FACTORS1a.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.We may fail to consummate the Archstone Acquisition or may not consummate it on the terms described in this report. We expect to consummate the Archstone Acquisition during the first quarter of 2013, assuming that all of the conditions in the related asset purchase agreement (the "Purchase Agreement") are satisfied or waived. The consummation of the Archstone Acquisition, however, is subject to certain closing conditions, including conditions that must be met by Equity Residential and which are beyond our control, and there can be no assurance that such conditions will be satisfied on the anticipated schedule or at all. In addition, under certain circumstances, we or Lehman may terminate the Purchase Agreement. As a result, there can be no assurance that the Archstone Acquisition will be consummated in its entirety in accordance with the anticipated timing or at all. In addition, if the Archstone Acquisition does not occur we will not recover our costs and expenses incurred in connection with the transaction and we may be liable for all or a portion of the $800,000,000 termination fee, if payable.We and/or Equity Residential may fail to perform under the Purchase Agreement or may not perform on the terms prescribed. We don't believe that we could meet, or that Equity Residential could meet, the obligations, as buyer, set forth in the Purchase Agreement without the timely performance of the other. Thus, we and Equity Residential are each dependent upon the performance of the other to meet the buyer's obligations under the Purchase Agreement. A default by either party under the Purchase Agreement could give rise to adverse consequences to the breaching party pursuant to certain arrangements between us and Equity Residential. Under our arrangements with Equity Residential, if the termination of the Purchase Agreement is solely a result of a breach by either us or Equity Residential then the breaching party shall be solely responsible for, and shall indemnify the non-breaching party against, the fees and expenses, including the termination fee of up to $800,000,000, payable to Lehman resulting from a failure to consummate the acquisition, and any out-of-pocket expenses incurred by such non-breaching party in connection with enforcing its rights against the breaching party.Our business and the market price of our common stock may be adversely affected if the Archstone Acquisition is not completed. The Archstone Acquisition is subject to customary closing conditions. If the Archstone Acquisition is not completed, we could be subject to a number of risks that may adversely affect our business and the market price of our common stock, including:•the market price of our common stock may decline to the extent that the current market price reflects an assumption that the Archstone Acquisition will be completed;•we must pay certain costs related to the Archstone Acquisition, such as legal and accounting fees and expenses, regardless of whether the Archstone Acquisition is consummated;•we would not realize the benefits we expect to realize from consummating the Archstone Acquisition; and•we, together with Equity Residential, may be liable for a termination fee of up to $800,000,000.We will incur substantial expenses and payments even if the Archstone Acquisition is not completed. We have incurred substantial legal, accounting, financial advisory and other costs and our management has devoted considerable time and effort in connection with the Archstone Acquisition. If the Archstone Acquisition is not completed, we will bear certain fees and expenses associated with the Archstone Acquisition without realizing the benefits of the Archstone Acquisition. The fees and expenses may be significant and could have an adverse impact on our operating results. For instance, if Lehman terminates the Purchase Agreement due to a breach by us or a failure by us to satisfy a condition precedent to Lehman's obligation to close the Archstone Acquisition, we would be obligated to pay to Lehman a termination fee of up to $800,000,000.We intend to assume indebtedness in connection with the Archstone Acquisition, which may have an adverse effect on our financial condition and results of operations, and our ability to make distributions to our stockholders. We intend to assume $3,700,000,000 principal amount of consolidated indebtedness in connection with the Archstone Acquisition, which will increase our leverage and the ratio of our net debt to our earnings before interest, tax, depreciation and amortization. We expect to repay contemporaneously with the closing up to $1,700,000,000 principal amount of assumed indebtedness from the Archstone Acquisition. However, there can be no assurance that we will be able to reduce or refinance, over time, to the extent we anticipate, the indebtedness we are assuming. Therefore, the increase in indebtedness we will incur at closing of the Archstone Acquisition could have adverse consequences on our business, such as:•requiring us to use a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, development projects and other general corporate purposes such as dividends;•limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes;•limiting our ability to compete with other companies that are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;•restricting us from making other strategic acquisitions, developing additional properties or exploiting other business opportunities;•restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our and our subsidiaries' existing and future indebtedness;•exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our or our subsidiaries' debt instruments that could have an adverse effect on our business, financial condition and operating results;•increasing our vulnerability to a downturn in general economic conditions; and•limiting our ability to react to changing market conditions in our industry. In addition to our debt service obligations, our operations may require substantial investments on a continuing basis. Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non-capital expenditures necessary to maintain the condition of our operating assets and properties, as well as to provide capacity for the growth of our business, depends on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and financial, business, competitive, legal and other factors.The intended benefits of the Archstone Acquisition may not be realized, which could have a negative impact on the market price of our common stock after the Archstone Acquisition. The Archstone Acquisition poses risks for our ongoing operations, including that:•our senior management's attention may be diverted from the management of daily operations to the integration of the Archstone Acquisition, including management of assets located outside of our core markets pending disposition, which may disrupt management of our existing business and our relationships with our customers;•we may bear costs and expenses associated with any undisclosed or potential liabilities;•the Archstone Acquisition may not perform as well as we anticipate; and•unforeseen difficulties may arise in integrating the Archstone Acquisition into our portfolio. Also, we expect to acquire assets and assume liabilities in connection with the Archstone Acquisition on an "as is" basis with only limited representations from Lehman surviving after the closing of the Archstone Acquisition, which limits our recourse against the seller for breaches of representations after closing, which in turn may expose us to unexpected material losses or expenses after the closing. In addition, our diligence investigations with respect to the assets comprising the Archstone Acquisition, has been more limited than would be the case if we were acquiring individual apartment communities or land parcels, which may also expose us to unexpected material losses or expenses after the closing. As a result of the foregoing, we cannot assure you that the Archstone Acquisition will be accretive to us in the near term or at all. Furthermore, if we fail to realize the intended benefits of the Archstone Acquisition, the market price of our common stock could decline to the extent that the market price reflects those anticipated benefits.The Archstone Acquisition will significantly increase the size of our real estate portfolio and related personnel and operating and financial needs, and we may not be successful in integrating the Archstone Acquisition into our business. The Archstone Acquisition involves a variety of risks, including potential difficulties in integrating the portfolio, diversions of our management resources, differing levels of management and internal control effectiveness at the acquired entities and other unanticipated problems and liabilities. Any of these risks could adversely affect our financial results and reduce or delay our ability to obtain the expected benefits of the Archstone Acquisition. In addition, the increased need for financial resources that will result from the Archstone Acquisition, as well as the diversion of our management resources, may affect our existing development, redevelopment and acquisition portfolios and development rights pipeline. As a result, there may be unexpected delays in the timing of our activities relating to our existing real estate portfolios and development rights pipeline, and we may encounter unexpected costs or we may not succeed in obtaining the expected benefits of our currently expected real estate development, redevelopment and acquisition activities. These issues could also increase our capital requirements, which may require us to issue potentially dilutive equity securities and incur additional debt.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 expect to create joint ventures with Equity Residential to manage certain of the acquired assets and liabilities. These structures involveparticipation in the investment 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 expected form for the joint venture arrangements, neither we nor Equity Residential expect to have the power to control the ventures, and an impasse could occur, which would adversely affect the applicable joint venture and decrease potential returns to us and our investors.We expect to assume substantially all liabilities related to the Archstone Acquisition, and may be responsible for liabilities that were not known when we entered into the Purchase Agreement. Under the Purchase Agreement, we and Equity Residential will assume substantially all liabilities related to the Archstone portfolio, whether or not they were known by us and Equity Residential at the time we entered into the Purchase Agreement, and we have agreed to indemnify Lehman with respect to these liabilities. Under the Purchase Agreement, we would be solely liable for these obligations if Equity Residential were to default on its obligation to share these indemnification obligations with us. As a result, we could become liable for liabilities that are not currently known to us, and the amount of these liabilities could have an adverse effect on our business, financial condition and results of operations.We intend to dispose of certain assets acquired in connection with the Archstone Acquisition, but we may be unable to achieve the expected proceeds of these acquisitions or may be unable to dispose of these assets at all. We intend to dispose of certain assets acquired in connection with the Archstone Acquisition, including assets held in our joint ventures with Equity Residential, but we cannot predict whether we will be able to sell any of the properties on favorable terms and conditions, if at all, or the length of time over which we expect to sell any of the assets. We may be unable to sell some of the properties, which may adversely affect our liquidity, or we may have to sell properties at depressed prices, which could adversely affect our results of operations and financial condition. Our joint ventures with Equity Residential will own, among other assets, investments in apartment communities in Germany, and we will acquire from Archstone interests in U.S. markets that we are not currently in, including Florida, Georgia and Texas. Our efforts to manage, position and/or dispose of these investments may distract management and we may not achieve the intended results.Future sales or issuances of our common stock may cause the market price of our common stock to decline. In connection with the Archstone Acquisition, we will issue shares of our common stock under the Purchase Agreement, and we will be required to register the resale of such shares of common stock under the Securities Act. The sale of substantial amounts of our common stock, whether directly by us or in the secondary market, the perception that such sales could occur or the availability for future sale of shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock, could adversely affect the market price of our common stock and our ability to raise capital through future offerings of equity or equity-related securities.••••••••••••••••••••••••2012,2014, approximately 6.47%6.0% 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.Banka syndicate of America, N.A., as administrative agent, swing lender, issuing bank and a bank, JPMorgan Chase Bank, N.A., as a bank and as syndication agent, Deutsche Bank Trust Company Americas, Morgan Stanley Bank and Wells Fargo Bank, N.A., each as a bank and as documentation agent, Barclays Bank PLC as a bank and as co-documentation agent, UBS AG, Stamford Branch, as a co-documentation agent, Goldman Sachs Bank USA, The Bank of New York Mellon, Compass Bank, PNC Bank, National Association, and Suntrust Bank, each as a bank and as a managing agent, Branch Banking and Trust Company, Bank of Tokyo Mitsubishi UFJ, Ltd., and Capital One, N.A., each as a bank and as a co-agent, and the other bank parties signatory thereto.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., "Management's Discussion and Analysis of Financial Condition and Results of Operations,"Operations" for further discussion.TheseTheir 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.We could be negatively impacted by the condition of Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac are a major source of secured financing to the multifamily industry and we have used Fannie Mae and Freddie Mac for a portion of our financing needs. In February 2011, the Obama administration released a report calling for the winding down of the role that Fannie Mae and Freddie Mac play in the mortgage market. A final decision by the government to eliminate Fannie Mae or Freddie Mac or reduce their acquisitions or guarantees of multifamily community loans may adversely affect interest rates, capital availability, and the value of multifamily 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.Risks involved inWe are exposed to various risks from our real estate activity through joint ventures.whichthat 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, whichthat 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.RisksWe are exposed to risks associated with an investment in and management of discretionary real estate investment funds.$129,059,000,$250,024,000, net of distributions to us at December 31, 2012.us. The investment periodperiods for both Funds is over. TheseFund I, Fund II and the U.S. Fund are over, and Fund I has a term that expires in March 2015. The Funds present risks, including the following:••nine monthsperiod of management fees after such removal and our right to acquire one of the properties then held by thesuch Funds;• the Funds and make investment decisions on behalf of the Funds, 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 Funds to implement certain decisions that we consider beneficial; and•REITs through which a number of investors have invested inREIT entities associated with the Funds and which we manage,and/or the U.S. Fund and/or AC JV, fail to comply with various tax or other regulatory matters.RiskThe governance provisions of earthquake damage.our joint ventures with Equity Residential could adversely affect our flexibility in dealing with such joint venture assets and liabilities, "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.due toand in limited industry capacity.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.TableSevere 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 Contentswater 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.We may incur costs and increased expenses to repair property damage resulting from inclement weather. Particularly in New England and the Metro New York/New Jersey area, we are exposed to risks associated with inclement winter weather, including increased costs for the removal of snow and ice, repair of water and wind damage from storms, as well as from delays in construction. In addition, inclement weather could increase the need for maintenance and repair of our communities.suchthese substances, or the failure to properly remediate the contamination, may adversely affect our ability to borrow against, develop, sell or rent the affected property.SuchThese laws and regulations may impose restrictions on the manner in which our communities may be developed, and noncompliance with suchthese 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.••••••Breachesdirectly through ourdirectly. We also use taxable REIT subsidiaries or TRSs, and willto hold certain assets that we believe would be subject to federal income tax at regular corporate rates on the income of those subsidiaries. In addition, the Archstone Acquisition presents a risk to our qualification as a REIT. Although we intend to structure our ownership and operations of the assets and entities acquired in connection with the Archstone Acquisition, including our interest in joint ventures with Equity Residential, in a way that would allow us to continue to qualify as a REIT for federal income tax purposes, no assurances can be given that we will be successful. As a result of the Archstone Acquisition and our ownership interests in the joint ventures with Equity Residential, we expect to acquire interests in certain assets and earn certain items of income that are not, or may not be, qualifying assets or income for purposes of the REIT asset and income tests. Although we do not expect that the amounts of such non-qualifying assets and income will jeopardize our REIT status, our review of the Archstone Acquisition is on-going, and we may discover additional non-qualifying assets or income. We may not have the immediate right to change the terms of pre-existing arrangements that generate non-qualifying items or may have to incur significant penalties to terminate such arrangements. To maintain our REIT qualification we may be required to hold significant assets acquired in connection with the Archstone Acquisition and some or all of our interests in the joint ventures with Equity Residential through our TRSs. We also may hold certain Archstone Acquisition assets through our TRSs to avoid the risk of incurring the 100% prohibited transaction tax on any such assets that we sellif sold at a gain.gain outside of a taxable REIT subsidiary. Our domestic TRSstaxable REIT subsidiaries are subject to U.S. tax as regular corporations. Among the assets included in theThe Archstone Acquisition are subsidiaries intended to qualify as REITs. Toincreased the extent we hold such subsidiaries outsideamount of assets held through our TRSs, ourtaxable REIT qualification could depend in part on such subsidiaries' compliance with the REIT requirements before our purchase. The assets of one of our joint ventures with Equity Residential are expected to include interests in a partnership controlled by Equity Residential. As a result of our ownership interest in that joint venture, for purposes of our compliance with the REIT requirements we will be treated as owning our proportionate share of the assets of the Equity Residential partnership in which the joint venture has an interest. Although we expect Equity Residential to operate that partnership in compliance with the REIT requirements, because we do not expect to control the Equity Residential partnership in which the joint venture has an interest we cannot assure you that it will be operated in compliance with the REIT requirements, and failure to do so could potentially jeopardize our REIT status.Our Board of Directors modified this ownership limit with respect to the common stock we expect to issue to Lehman for the Archstone Acquisition. 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.1b.1B. UNRESOLVED STAFF COMMENTSCommunities. Communities, and exclude communities owned by the Residual JV. 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.•and operating expenses as of the beginning of the 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. ForThe Established Communities for the year ended December 31, 2012, the Established Communities2014 are communities that are consolidated for financial reporting purposes, had stabilized occupancy and operating expenses as of January 1, 2011,2013, are not conducting or planning to conduct substantial redevelopment activities, and are not held for sale or planned for disposition within the current year.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. 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.•••For communities that we wholly own, redevelopmentRedevelopment 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 capitalized costpre-redevelopment basis and is expected to have a material impact on the community's operations of the community, including occupancy levels and future rental rates. The occupancy levels of Redevelopment Communities may also be impacted to the extent we take multiple apartment homes out of service for an extended period of time. The definition of substantial redevelopment may differ for communities owned through a joint venture arrangement or by one of the Funds. has not been received for the entire community.community have not been received. These communities may be partially complete and operating.or where we control the land through a ground lease or own land to develop a new community.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.2012,2014, communities that we owned or held a direct or indirect interest in, excluding indirect interests associated with the Residual JV, were classified as follows. The information presented in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013. Number of
communities Number of
apartment homes 28 7,066 22 7,784 11 4,748 8 1,908 18 5,220 16 4,899 103 31,625 12 2,251 14 4,360 10 3,809 4 902 9 2,490 21 5,537 70 19,349 3 779 4 1,039 180 52,792 23 6,599 34 9,602
follows:(1)In addition to the four communities indicated, the Company commenced the redevelopment of two communities with an aggregate of 1,468 apartment homes during 2012, for which at December 31, 2012 the redevelopment activity is focused on the common areas and is not impacting community operations, including occupancy or rental revenue. These communities are therefore included in the Established Community portfolio. Current Communities Established Communities (1): New England 33 7,379 Metro NY/NJ (2) 33 11,611 Mid-Atlantic 22 7,108 Pacific Northwest 13 3,179 Northern California 29 8,519 Southern California 42 11,639 Total Established 172 49,435 Other Stabilized Communities: New England 12 3,306 Metro NY/NJ 9 2,557 Mid-Atlantic 12 4,599 Pacific Northwest 2 396 Northern California 7 1,765 Southern California 12 4,640 Non-Core 2 474 Total Other Stabilized 56 17,737 Lease-Up Communities 15 3,853 Redevelopment Communities 8 2,938 Total Current Communities 251 73,963 Development Communities 26 8,524 Development Rights 37 10,384 (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 Established Communities includes 240 apartment homes which were destroyed and are uninhabitable as a result of the fire at Avalon at Edgewater in January 2015. 2011the Company removed four, five and 2010, there were 11, 1410 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 15removed two, two and seven communities, respectively, from its Established Communities portfolio due to the planned disposition of the communities.respectively43 stabilized communities to the Established Communities portfolio, and 17 communities removed in 2012, and seven communities removed in 2011 and 2010, from our Established Communities portfolio. We anticipate that we will reset the composition of our Established Community portfolio effective both January 1, 2014 and April 1, 2014. The expected reset of the Established Community portfolio on April 1, 2014 will occur as a result of the large number of stabilized communities we expect to acquire in the first quarter of 2013primarily those acquired as part of the Archstone Acquisition.2013,2015, our current communitiesCurrent Communities consisted of 119142 garden-style (of which 16 are mixed communities and/or include town homes), 2221 high-rise and 3789 mid-rise apartment communities.••••••••••1,1. "Business," we operate under three core brandsAvalon, AVA andEaves by Avalon. Our coreAvalon"Avalon" brand focuses on upscale apartment living and high end amenities and services."AVA" targets customers in high energy, transit-served urban neighborhoods and generally featuresfeature smaller apartments, many of which are designed for roommate living with an emphasis on modern design and a technology focus."Eaves by Avalon" is targeted to the cost conscious, "value" segment in suburban areas. We believe that these brands allow us to further penetrate our existing markets by targeting our market by consumer preference and attitude as well as by location and price.markets. The information presented in this table may materially change as a resultmarkets:(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. 2012,2014, we completed construction of 1,9344,121 apartment homes in eight17 communities and sold 1,5783,234 apartment homes in four12 communities. The average age of our Current Communities, on a weighted average basis according to number of apartment homes, is 17.819.5 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 10.513.1 years.2013,2015, we owned:•151225 operating communities, ten12 of which are on land subject to land leases expiring in October 2026, November 2028, December 2034,May 2041, July 2046, December 2061, September 2065, November 2067, April 2095, May 2105, September 2105, April 2105, May 21052106 and March 2142;•both Fund I, Fund II, the U.S. Fund and Fund II.the AC JV. Subsidiaries of Fund I own a fee simple interest in ten operating communities, and subsidiaries of Fund II own a fee simple interest in 1210 operating communities, subsidiaries of the U.S. Fund own a fee simple interest in nine operating communities, and subsidiaries of the AC JV own a fee simple interest in three operating communities;••December 2034 and April 2095.1924 of the 2326 Development Communities and a leasehold interest in fourtwo of the Development Communities with the land leases expiring in May 2041, July 2046, December 2086 and November 2106. Two of the fourThe land leases (thoselease expiring in 2046 and 2086) provide options2086 provides an option for the Company to purchase the land at some point during the lease term.2013,2015, there were 7,500 DownREIT partnership units outstanding. The DownREIT partnership is consolidated for financial reporting purposes.Communities(1)Communities (1) (13)
rentable area
(Sq. Ft.)
completion/
acquisition
size
(Sq. Ft.)
occupancy
at
12/31/12
reporting
cost(5) Average economic occupancy Average rental rate
of homes
Apt(4)
Sq. Ft. City and state 2014 2013 Lexington, MA 198 230,072 16.1 1994 1,162 93.9 % 96.1 %(2) 96.3 % 1,944 1.61 23,624 Lexington, MA 198 230,956 1994 1,166 88.9 % 93.8 % 95.1 % $ 2,213 $ 1.90 $ 23,922 Wilmington, MA 204 229,752 22.5 1999 1,126 96.1 % 96.5 % 96.4 % 1,615 1.38 22,387 Wilmington, MA 204 229,932 1999 1,127 90.1 % 92.4 % 95.9 % 1,608 1.43 22,843 Quincy, MA 245 224,538 8.0 1986/1996 916 93.9 % 96.8 % 94.5 %(2) 1,524 1.61 25,485 Quincy, MA 245 224,538 1986/1995 916 96.3 % 94.6 % 96.5 % 1,674 1.83 25,688 Peabody, MA 154 198,478 11.1 2000 1,289 92.9 % 97.0 % 97.1 % 1,762 1.33 23,113 Peabody, MA 154 198,478 2000 1,289 95.5 % 95.9 % 96.3 % 1,933 1.50 23,325 Boston, MA 780 732,393 1.0 1968/1998 939 91.3 % 95.1 %(2) 95.8 % 2,494 2.53 182,614 Wilmington, MA 120 133,376 27.0 2002 1,111 95.0 % 96.3 % 96.4 % 1,551 1.34 17,331 Wilmington, MA 120 133,376 2002 1,111 95.0 % 95.8 % 96.1 % 1,628 1.47 17,531 Marlborough, MA 156 175,399 23.0 2002 1,124 94.9 % 97.1 % 96.7 % 1,612 1.39 22,574 Marlborough, MA 156 175,832 2002 1,127 92.3 % 95.3 % 96.6 % 1,713 1.52 22,963 Newton, MA 294 341,717 8.1 2003 1,162 93.2 % 94.7 % 95.0 % 2,370 1.93 59,167 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 Plymouth, MA 101 151,712 6.0 2004 1,502 95.0 % 96.5 % 95.8 % 2,006 1.29 20,025 Plymouth, MA 192 255,240 2004 1,329 92.7 % 95.3 % 97.0 % 2,084 1.57 37,460 Peabody, MA 286 250,624 18.0 2004 876 95.1 % 96.3 % 97.2 % 1,433 1.57 35,295 Peabody, MA 286 250,624 1962/2004 876 96.9 % 95.8 % 96.0 % 1,538 1.76 35,671 Bedford, MA 139 159,912 38.0 2005 1,150 95.0 % 95.5 % 96.4 % 1,959 1.63 24,966 Bedford, MA 139 159,914 2006 1,150 96.4 % 97.4 % 96.4 % 2,113 1.84 25,143 Chestnut Hill, MA 204 270,956 5.0 2007 1,328 93.6 % 94.9 % 95.6 % 2,717 1.94 61,123 Chestnut Hill, MA 204 270,956 2007 1,328 98.0 % 97.2 % 96.6 % 3,056 2.30 62,382 Shrewsbury, MA 251 273,098 25.5 2007 1,088 93.6 % 95.8 % 96.1 % 1,523 1.34 35,963 Shrewsbury, MA 251 272,805 2007 1,087 95.2 % 94.4 % 96.1 % 1,598 1.47 36,517 Danvers, MA 433 492,222 75.0 2006 1,137 92.8 % 95.5 % 96.1 % 1,637 1.37 84,357 Lexington, MA 387 483,878 23.0 2007 1,250 94.1 % 96.0 % 95.9 % 2,243 1.72 88,038 Lexington, MA 387 484,216 2008 1,251 93.0 % 95.9 % 95.8 % 2,452 1.96 88,956 Acton, MA 380 374,787 50.3 2007 986 93.7 % 96.7 % 96.6 % 1,518 1.49 63,129 Acton, MA 380 375,074 2008 987 94.5 % 95.0 % 96.7 % 1,636 1.66 63,305 Sharon, MA 156 175,389 27.0 2007 1,124 93.6 % 96.4 % 96.1 % 1,786 1.53 30,272 Sharon, MA 156 175,389 2008 1,124 99.4 % 94.9 % 97.3 % 1,937 1.72 30,510 Providence, RI 225 222,835 1.2 1991/1997 990 90.2 % 96.1 %(2) 96.0 % 2,298 2.23 36,994 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 Hingham, MA 235 290,951 13.0 2009 1,238 91.5 % 94.4 % 94.8 % 2,261 1.72 53,836 Hingham, MA 235 290,790 2009 1,237 94.0 % 94.1 % 95.3 % 2,469 2.00 54,282 Northborough, MA 163 182,757 14.0 2009 1,121 93.9 % 96.6 % 96.7 % 1,616 1.39 25,684 Northborough, MA 382 454,033 2009 1,189 96.6 % 94.2 % 94.5 % 1,778 1.50 60,614 Randolph, MA 276 269,675 2.9 2009 977 93.5 % 96.2 % 96.1 % 1,510 1.49 45,846 Randolph, MA 276 269,990 2009 978 96.4 % 95.3 % 94.7 % 1,563 1.60 45,926 Northborough, MA 219 271,031 17.7 2010 1,238 92.7 % 96.1 % 95.5 % 1,765 1.37 34,914 Plymouth, MA 91 103,519 4.5 2011 1,138 86.8 % 95.5 % 47.6 %(3) 1,724 1.45 17,362 Cohasset, MA 220 293,272 62.0 2012 1,333 92.3 % 70.8 %(3) 13.0 %(3) 1,905 1.01 (3) 54,855 Cohasset, MA 220 293,272 2012 1,333 93.2 % 93.0 % 94.2 % 2,097 1.57 55,051 Andover, MA 115 132,918 9.1 2012 1,156 87.8 % 63.1 %(3) N/A 1,905 1.04 (3) 25,936 Andover, MA 115 132,918 2012 1,156 92.1 % 92.8 % 94.4 % 1,926 1.67 26,179 Burlington, MA 203 194,180 14.8 1988/2012 957 96.1 % 96.1 %(3) N/A 1,504 1.57 (3) 40,250 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 Trumbull, CT 340 379,062 37.0 1997 1,115 93.8 % 96.0 % 96.7 % 1,746 1.50 38,262 Trumbull, CT 340 379,382 1997 1,116 95.0 % 95.6 % 96.0 % 1,786 1.60 39,211 Stamford, CT 238 222,165 4.1 1991 933 90.8 % 96.2 % 97.0 % 1,965 2.02 33,792 Wilton, CT 102 158,259 12.0 1997 1,552 97.1 % 94.9 %(2) 95.3 % 2,944 1.80 22,352 Danbury, CT 268 299,923 17.1 1999 1,119 93.3 % 96.1 % 96.9 % 1,667 1.43 26,617 Stamford, CT 323 322,461 12.1 2003 998 92.3 % 95.5 % 95.7 % 2,529 2.42 63,531 New Canaan, CT 104 132,080 9.1 2002 1,270 95.2 % 94.5 % 94.7 % 3,169 2.36 24,596 Eaves Stamford Stamford, CT 238 222,165 1991 933 92.0 % 94.3 % 96.1 % (2) 2,177 2.33 42,697 Profile of Current, Development and Unconsolidated Communities(1)
rentable area
(Sq. Ft.)
completion/
acquisition
size
(Sq. Ft.)
occupancy
at
12/31/12
reporting
cost(5)
of homes
Apt(4)
Sq. Ft. Stamford, CT 306 315,380 3.0 2002 1,031 94.1 % 96.3 % 96.6 % 2,277 2.13 71,340 Danbury, CT 234 235,320 35.0 2005 1,006 91.9 % 96.1 % 97.2 % 1,675 1.60 35,978 Darien, CT 189 242,675 30.0 2004 1,284 93.7 % 95.8 % 96.4 % 2,755 2.06 42,508 Milford, CT 246 217,077 22.0 2004 882 93.9 % 95.7 % 97.5 % 1,562 1.69 31,874 Shelton, CT 99 139,869 7.1 2008 1,413 88.9 % 96.0 % 96.1 % 2,286 1.55 25,384 Norwalk, CT 311 310,629 4.4 2011 999 92.6 % 95.6 % 86.5 %(3) 2,114 2.02 74,230 Wilton, CT 100 129,466 6.0 2011 1,295 91.0 % 93.1 % 43.8 %(3) 2,125 1.53 30,331 Smithtown, NY 312 377,143 20.6 1997 1,209 90.1 % 97.3 % 96.1 %(2) 2,249 1.81 38,626 Long Beach, NY 109 124,611 1.3 1990/1995 1,143 87.2 % 96.4 % 96.3 % 3,255 2.74 21,953 Melville, NY 494 596,874 35.4 1997/2000 1,208 95.3 % 96.2 % 95.4 % 2,617 2.08 61,790 Glen Cove, NY 256 261,425 4.0 2004 1,021 95.3 % 96.6 % 96.8 % 2,506 2.37 68,368 Coram, NY 450 545,989 52.0 2005/2006 1,213 94.2 % 96.0 % 96.3 % 2,103 1.66 71,787 Glen Cove, NY 111 100,754 1.3 2007 908 93.7 % 97.0 % 96.1 % 2,325 2.49 39,996 Coram, NY 200 208,532 41.0 2009 1,043 91.5 % 95.8 % 96.4 % 1,878 1.73 48,361 Rockville Centre, NY 349 349,048 7.0 2012 1,000 98.0 % 81.2 %(3) 27.7 %(3) 2,759 2.24 (3) 110,279 Jersey City, NJ 504 574,339 11.0 1997 1,140 93.5 % 96.0 %(2) 95.5 %(2) 3,049 2.57 111,576 Edgewater, NJ 408 428,792 7.1 2002 1,051 92.4 % 96.7 % 96.7 % 2,512 2.31 77,736 Florham Park, NJ 270 330,410 41.9 2001 1,224 91.5 % 96.7 % 96.5 % 2,725 2.15 42,721 Lyndhurst, NJ 328 330,408 5.8 2006 1,007 91.5 % 96.1 % 96.3 % 2,211 2.11 78,941 North Bergen, NJ 164 146,170 2.2 2012 891 95.7 % 62.7 %(3) N/A 2,078 1.46 (3) 39,902 Wood-Ridge, NJ 266 242,637 4.9 2012 912 97.7 % 48.4 %(3) N/A 2,005 1.06 (3) 56,533 Lawrenceville, NJ 632 707,592 36.0 1994/1996 1,120 92.2 % 96.1 % 95.7 % 1,555 1.33 77,371 West Windsor, NJ 512 486,069 64.0 1988 949 93.6 % 96.6 % 93.8 %(2) 1,577 1.61 48,552 Freehold, NJ 296 317,356 42.3 2002 1,072 95.9 % 97.5 % 96.2 % 1,834 1.67 34,963 Lawrenceville, NJ 312 341,320 70.0 2003 1,094 91.0 % 96.6 % 96.1 % 1,887 1.67 52,704 Tinton Falls, NJ 216 237,747 35.0 2007 1,101 94.0 % 96.8 % 95.8 % 1,823 1.60 41,115 West Long
Branch, NJ 180 193,511 4.8 2011 1,075 94.4 % 98.0 % 88.0 %(3) 1,815 1.66 25,660 Average economic occupancy Average rental rate City and state 2014 2013 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 Profile of Current, Development and Unconsolidated Communities(1)
rentable area
(Sq. Ft.)
completion/
acquisition
size
(Sq. Ft.)
occupancy
at
12/31/12
reporting
cost(5)
of homes
Apt(4)
Sq. Ft. Nanuet, NY 504 608,842 54.0 1998 1,208 94.0 % 97.2 % 96.4 % 2,155 1.74 56,666 Elmsford, NY 105 113,538 16.9 1995 1,081 95.2 % 97.5 % 95.7 % 2,364 2.13 13,715 Mamaroneck, NY 227 216,161 4.0 2000 952 93.4 % 96.4 % 95.8 % 2,317 2.34 48,186 Bronxville, NY 110 118,952 1.5 1999 1,081 89.1 % 96.0 %(2) 94.5 % 3,896 3.46 34,393 Long Island City, NY 372 332,991 1.0 2002 895 90.6 % 96.4 % 96.2 % 3,342 3.60 96,387 New York, NY 206 152,725 1.1 2006 741 95.6 % 97.0 % 97.1 % 4,613 6.03 96,184 Long Island City, NY 602 477,665 1.8 2007 793 92.2 % 96.3 % 96.0 % 3,110 3.78 167,690 New Rochelle, NY 588 561,981 2.0 2007 956 93.2 % 96.3 % 95.8 % 2,393 2.41 187,239 New York, NY 90 73,596 1.1 2007 818 93.3 % 96.9 % 97.2 % 4,411 5.23 56,964 White Plains, NY 407 372,406 3.2 2009 915 92.6 % 96.5 % 96.0 % 2,834 2.99 152,755 New York, NY 295 245,320 0.8 2009 832 92.9 % 95.7 % 95.9 % 3,287 3.78 115,102 Brooklyn, NY 631 498,651 1.0 2010 790 94.8 % 96.0 % 95.4 % 2,974 3.61 302,043 Elmsford, NY 444 533,539 68.5 2012 1,202 94.4 % 55.0 %(3) 9.2 %(3) 2,478 1.13 (3) 102,874 Columbia, MD 720 724,027 44.0 1987/1996 1,006 92.1 % 95.6 %(2) 95.3 % 1,487 1.41 (2) 53,528 Columbia, MD 392 395,860 22.7 1986 1,010 90.8 % 95.8 % 96.0 % 1,518 1.44 55,713 Washington, DC 308 297,875 2.7 1982 967 92.2 % 93.7 % 94.7 % 2,615 2.53 45,527 Washington, DC 203 184,157 0.5 2003 907 92.6 % 96.3 % 96.3 % 2,824 3.00 49,079 Rockville, MD 564 551,006 46.0 1991/1995/
2007 977 91.5 % 95.5 % 95.0 %(2) 1,625 1.59 70,243 Gaithersburg, MD 192 191,280 5.7 1996 996 95.8 % 96.4 % 97.5 % 1,517 1.47 14,785 Gaithersburg, MD 96 99,386 3.5 1998 1,035 90.6 % 94.5 % 93.9 % 1,724 1.57 8,388 North Bethesda, MD 497 476,585 9.9 2004 959 91.5 % 96.2 % 95.2 % 1,959 1.96 83,090 North Potomac, MD 520 573,717 47.9 2004 1,103 90.8 % 96.9 % 96.3 % 1,903 1.67 70,337 Fairfax, VA 420 355,228 24.2 1989/1996 846 90.5 % 96.8 % 96.8 % 1,519 1.74 38,157 Arlington, VA 344 294,271 4.1 1990 855 93.0 % 92.8 %(2) 95.3 %(2) 2,084 2.26 51,694 Fairfax, VA 141 148,282 4.0 1988/1997 1,052 92.9 % 95.6 %(2) 97.2 % 1,720 1.56 15,686 McLean, VA 558 613,426 19.1 1996 1,099 92.5 % 96.2 % 95.8 % 2,058 1.80 58,405 Arlington, VA 842 895,781 18.9 2001 1,064 93.1 % 95.7 % 94.8 % 2,102 1.89 114,739 Falls Church, VA 415 336,051 17.0 1978/2011 810 89.2 % 96.8 % 94.3 %(3) 1,714 2.05 92,709 Average economic occupancy Average rental rate City and state 2014 2013 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 Profile of Current, Development and Unconsolidated Communities(1)
rentable area
(Sq. Ft.)
completion/
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size
(Sq. Ft.)
occupancy
at
12/31/12
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cost(5)
of homes
Apt(4)
Sq. Ft. Redmond, WA 222 211,450 8.4 1991/1997 952 94.6 % 96.2 % 95.8 % 1,445 1.46 32,377 Redmond, WA 264 288,250 22.2 1998 1,092 93.6 % 95.5 % 95.1 % 1,457 1.27 37,556 Bellevue, WA 200 163,801 1.7 2001 819 94.0 % 96.5 % 95.0 % 1,635 1.93 31,915 Bothell, WA 206 243,958 11.2 2000 1,184 92.7 % 96.2 % 94.5 % 1,361 1.11 26,000 Redmond, WA 124 127,251 2.0 2000 1,026 90.3 % 96.3 % 96.1 % 1,646 1.54 21,109 Lynwood, WA 424 453,602 22.6 2001 1,070 92.5 % 96.1 % 94.5 % 1,222 1.10 46,846 Seattle, WA 100 82,418 0.7 2001 824 90.0 % 97.2 % 95.5 % 1,801 2.12 19,244 Bellevue, WA 368 331,945 3.6 2008 902 92.4 % 96.8 % 94.8 % 1,726 1.85 91,242 Bellevue, WA 397 331,366 1.5 2011 835 92.9 % 95.4 % 83.2 %(3) 2,000 2.29 123,238 Seattle, WA 203 164,644 1.0 2012 811 92.1 % 69.0 %(3) 8.5 %(3) 1,930 1.64 (3) 53,664 Lynwood, WA 82 93,320 3.8 2011 1,138 92.7 % 94.0 % 61.6 %(3) 1,515 1.25 13,998 Fremont, CA 308 316,052 22.3 1994 1,026 94.5 % 96.8 % 96.6 % 1,864 1.76 58,910 Dublin, CA 204 179,004 13.0 1989/1997 877 89.7 % 95.8 % 96.1 % 1,716 1.87 29,329 Pleasanton, CA 456 366,062 14.7 1988/1994 803 94.5 % 95.3 % 92.8 %(2) 1,649 1.96 79,423 Union City, CA 208 150,225 8.5 1973/1996 722 92.8 % 97.1 % 96.6 % 1,361 1.83 23,786 Fremont, CA 235 191,935 13.5 1985/1994 817 94.0 % 96.1 % 97.1 % 1,672 1.97 42,893 Dublin, CA 305 299,335 4.4 2006 981 91.5 % 96.4 % 95.3 % 1,958 1.92 84,510 Union City, CA 439 429,892 6.0 2009 979 92.9 % 96.3 % 96.2 % 1,725 1.70 118,874 Walnut Creek, CA 418 410,141 5.3 2010 981 90.9 % 95.8 % 91.5 %(3) 2,117 2.07 146,251 Daly City, CA 195 141,411 7.0 1972/1997 725 95.4 % 97.0 % 97.2 % 1,776 2.38 32,436 San Francisco, CA 185 108,962 1.4 1990/1995 589 93.0 % 97.2 % 96.5 %(2) 2,284 3.77 33,828 San Rafael, CA 254 221,780 21.9 1973/1996 873 92.5 % 96.4 % 88.6 %(2) 1,759 1.94 46,508 Foster City, CA 288 222,364 11.0 1973/1994 772 94.1 % 91.9 %(2) 96.4 %(2) 1,847 2.20 50,454 Pacifica, CA 220 186,800 21.9 1971/1995 849 93.2 % 96.3 % 96.6 % 1,747 1.98 33,037 San Francisco, CA 243 171,836 16.0 1961/1996 707 93.4 % 96.1 %(2) 95.6 %(2) 2,173 2.95 39,430 San Francisco, CA 154 123,047 3.0 1972/1994 799 94.8 % 96.1 % 97.0 % 2,170 2.61 29,601 San Francisco, CA 250 241,788 1.4 2003 967 94.4 % 96.7 % 96.1 % 3,658 3.66 94,365 San Francisco, CA 260 261,169 1.5 2009 1,004 91.9 % 96.3 % 95.0 % 3,696 3.54 147,870 San Francisco, CA 173 161,083 1.9 2012 931 97.7 % 47.5 %(3) N/A 3,016 1.54 (3) 57,839 Average economic occupancy Average rental rate City and state 2014 2013 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 Profile of Current, Development and Unconsolidated Communities(1)
rentable area
(Sq. Ft.)
completion/
acquisition
size
(Sq. Ft.)
occupancy
at
12/31/12
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of homes
Apt(4)
Sq. Ft. Campbell, CA 348 326,796 10.8 1995 939 91.4 % 95.7 %(2) 96.5 % 1,909 1.94 61,555 San Jose, CA 440 387,420 17.6 1985/1996 881 90.7 % 93.8 %(2) 95.5 %(2) 1,703 1.81 (2) 81,684 San Jose, CA 305 299,762 8.9 1999 983 92.1 % 96.2 % 96.2 % 2,195 2.15 57,894 San Jose, CA 456 448,512 16.6 1997/1999 984 93.6 % 95.6 % 95.5 % 1,857 1.80 80,937 Sunnyvale, CA 710 653,929 13.6 1997/1998 921 93.2 % 95.2 % 95.5 % 2,207 2.28 125,023 Mountain View, CA 248 211,552 10.5 1986 853 91.5 % 96.3 % 96.2 % 2,359 2.66 58,651 Mountain View, CA 294 215,680 15.0 1962/1997 734 92.2 % 96.5 % 97.1 % 1,801 2.37 43,779 San Jose, CA 218 218,177 3.8 2002 1,001 93.6 % 95.8 % 95.9 % 2,238 2.14 52,994 Mountain View, CA 211 218,392 1.9 2002 1,035 97.2 % 95.2 % 96.1 % 3,086 2.84 66,504 Costa Mesa, CA 145 122,415 6.6 1956/1996 844 91.7 % 94.9 %(2) 96.6 % 1,747 1.96 15,116 Mission Viejo, CA 166 124,500 7.8 1984/1996 750 94.0 % 96.6 % 97.1 % 1,287 1.66 14,212 Costa Mesa, CA 258 207,672 8.9 1973/1996 805 93.8 % 95.7 % 93.6 %(2) 1,523 1.81 33,514 Rancho Santa Margarita, CA 301 229,593 20.0 1990/1997 763 91.4 % 94.4 %(2) 96.3 % 1,396 1.73 (2) 31,493 Huntington Beach, CA 304 268,000 9.7 1971/1997 882 94.1 % 96.3 % 95.5 % 1,547 1.69 34,017 Anaheim, CA 251 302,480 3.5 2009 1,205 92.0 % 95.4 % 96.2 % 2,233 1.77 97,526 Irvine, CA 279 243,157 4.5 2010 872 90.7 % 95.1 % 95.5 % 1,760 1.92 77,440 Corona, CA 320 241,440 13.3 1987/2006 755 93.8 % 96.9 % 97.1 % 1,070 1.37 30,025 Lake Forest, CA 225 215,319 8.2 1975/2011 957 92.9 % 95.5 % 95.5 %(3) 1,467 1.46 26,334 San Diego, CA 564 402,285 12.9 1969/1997 713 92.4 % 96.2 % 96.3 % 1,456 1.96 68,097 San Diego, CA 200 207,700 4.0 1960/1997 1,039 92.0 % 95.9 % 95.9 % 1,713 1.58 24,513 San Diego, CA 299 230,395 1.2 1973/1998 771 91.3 % 92.3 %(2) 95.3 %(2) 1,596 1.91 44,461 San Diego, CA 161 183,802 1.8 2008 1,142 86.3 % 94.2 % 94.5 % 2,380 1.77 64,767 San Marcos, CA 184 161,352 10.8 1988/2011 877 97.3 % 96.6 % 95.2 %(3) 2,381 1.62 16,662 San Diego, CA 250 191,256 10.2 1986/2011 765 95.6 % 94.4 % 94.1 %(3) 2,382 1.75 33,835 Average economic occupancy Average rental rate City and state 2014 2013 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 Profile of Current, Development and Unconsolidated Communities(1)
rentable area
(Sq. Ft.)
completion/
acquisition
size
(Sq. Ft.)
occupancy
at
12/31/12
reporting
cost(5)
of homes
Apt(4)
Sq. Ft. Burbank, CA 748 530,084 14.7 1961/1997 709 93.2 % 97.2 %(2) 95.7 % 1,464 2.01 79,481 Woodland Hills, CA 663 594,396 18.2 1989/1997 897 95.2 % 96.7 % 95.8 % 1,648 1.78 110,888 Woodland Hills, CA 227 191,443 6.8 1979/1998 843 94.7 % 97.4 % 96.7 % 1,554 1.79 29,081 Burbank, CA 223 241,714 5.1 2003 1,084 96.0 % 96.8 % 96.2 % 2,278 2.03 41,929 Burbank, CA 400 360,587 6.9 1988/2002 901 94.3 % 96.1 % 95.2 % 2,195 2.34 94,642 Camarillo, CA 249 233,302 9.6 2006 937 92.8 % 96.3 % 96.9 % 1,640 1.69 48,786 Los Angeles, CA 123 125,093 1.7 2007 1,017 90.2 % 96.2 % 94.7 % 2,633 2.49 47,264 Los Angeles, CA 131 131,220 2.0 2008 1,002 96.2 % 97.4 % 97.8 % 2,580 2.51 62,218 Canoga Park, CA 210 186,402 3.3 2007 888 93.8 % 96.6 % 96.4 % 1,666 1.81 52,880 Pomona, CA 501 498,036 32.2 1989/2011 994 93.8 % 96.4 % 94.4 %(3) 1,470 1.42 51,536 San Dimas, CA 102 94,200 5.1 1978/2011 924 97.1 % 96.6 % 97.1 %(3) 1,316 1.38 9,736 San Dimas, CA 156 144,669 7.9 1981/2011 927 93.6 % 96.6 % 96.3 %(3) 1,397 1.45 15,382 Pasadena, CA 84 70,648 1.2 1973/2012 841 94.0 % 97.9 %(3) N/A 1,755 2.04 (3) 19,947 Artesia, CA 151 106,889 3.4 1973/2012 708 92.7 % 93.7 %(3) N/A 1,387 1.84 (3) 29,500 Del Rey, CA 309 283,183 4.5 2006/2012 916 93.2 % 95.1 %(3) 95.9 % 2,733 2.89 (3) 103,007
DEVELOPMENT COMMUNITIES
Tysons Corner, VA 354 288,160 2.8 N/A 814 57.1 % 29.4 %(3) N/A 2,036 1.33 (3) 75,880 Garden City, NY 204 287,669 11.3 N/A 1,410 90.2 % 28.8 %(3) N/A 3,420 0.75 (3) 64,924 Boston, MA 187 199,910 0.3 N/A 1,069 N/A N/A N/A N/A N/A 46,779 Irvine, CA 179 163,218 2.8 N/A 912 15.6 % 8.3 %(3) N/A 2,012 1.10 (3) 42,851 Seattle, WA 265 189,849 1.4 N/A 716 N/A N/A N/A N/A N/A 55,026 Shelton, CT 251 250,282 4.3 N/A 997 N/A N/A N/A N/A N/A 32,026 Hackensack, NJ 226 228,260 4.2 N/A 1,010 N/A N/A N/A N/A N/A 27,101 Washington, DC 138 94,798 0.7 N/A 687 11.6 % 4.7 %(3) N/A 2,216 1.82 (3) 30,173 New York, NY 715 496,749 1.5 N/A 695 N/A N/A N/A N/A N/A 88,735 Natick, MA 407 369,827 6.5 N/A 909 N/A N/A N/A N/A N/A 54,808 Somerset, NJ 384 389,392 11.6 N/A 1,014 23.2 % 6.6 %(3) N/A 2,683 0.42 (3) 53,161 Tysons Corner, VA 531 457,191 4.8 N/A 861 N/A N/A N/A N/A N/A 59,928 Somerville, MA 448 385,728 4.5 N/A 861 N/A N/A N/A N/A N/A 38,506 Norwalk, CT 240 228,000 37.0 N/A 950 N/A N/A N/A N/A N/A 15,890 Average economic occupancy Average rental rate City and state 2014 2013 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 Profile of Current, Development and Unconsolidated Communities(1)
rentable area
(Sq. Ft.)
completion/
acquisition
size
(Sq. Ft.)
occupancy
at
12/31/12
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cost(5)
of homes
Apt(4)
Sq. Ft. Seattle, WA 283 200,364 1.3 N/A 708 N/A N/A N/A N/A N/A 29,461 Dublin, CA 255 249,390 3.3 N/A 978 N/A N/A N/A N/A N/A 37,730 San Jose, CA 250 277,000 4.4 N/A 1,108 N/A N/A N/A N/A N/A 31,450 San Francisco, CA 273 236,691 0.8 N/A 867 N/A N/A N/A N/A N/A 39,750 Bloomingdale, NJ 174 178,872 11.6 N/A 1,028 N/A N/A N/A N/A N/A 6,963 Wood-Ridge, NJ 140 147,140 2.7 N/A 1,051 N/A N/A N/A N/A N/A 13,276 Wharton, NJ 248 246,814 8.0 N/A 995 N/A N/A N/A N/A N/A 1,925 Ossining, NY 168 179,316 23.0 N/A 1,067 N/A N/A N/A N/A N/A 7,901 Los Angeles, CA 401 282,917 2.7 N/A 706 N/A N/A N/A N/A N/A 27,546
UNCONSOLIDATED COMMUNITIES
North II(9) San Francisco, CA 313 291,556 1.5 2006 931 94.6 % 96.3 % 95.5 % 3,519 3.64 N/A New York, NY 361 266,940 1.3 2005 739 #N/A 95.7 % 95.9 % 4,503 5.83 N/A Los Angeles, CA 82 72,604 0.8 1987/2005 885 95.1 % 96.1 % 96.0 % 1,944 2.11 N/A Norwalk, CA 192 173,568 8.5 1987/2005 904 92.2 % 95.7 % 94.9 % 1,614 1.71 N/A San Francisco, CA 160 125,866 0.9 2000/2006 787 92.5 % 96.6 % 96.4 % 3,280 4.03 N/A West Covina, CA 85 104,600 5.3 1966/2007 1,231 96.5 % 96.4 % 96.5 % 1,784 1.40 N/A Billerica, MA 252 188,915 13.0 2007 750 95.2 % 97.2 % 97.2 % 1,368 1.77 N/A Weymouth, MA 211 154,957 7.7 1971/2007 734 91.9 % 97.3 % 97.4 % 1,280 1.69 N/A Columbia, MD 156 150,376 17.0 1972/2006 964 91.0 % 96.4 % 96.1 % 1,337 1.34 N/A Baltimore, MD 392 312,356 6.9 2005/2007 797 95.5 % 96.6 % 96.8 % 924 1.12 N/A East Rutherford, NJ 108 112,709 1.5 2005/2007 1,044 92.6 % 95.9 % 95.8 % 2,357 2.17 N/A Pomona, NY 169 215,386 12.1 2001/2007 1,274 93.5 % 96.8 % 96.2 % 2,091 1.59 N/A Fairfax, VA 491 373,843 13.5 1987/2009 761 92.5 % 97.0 % 96.4 % 1,489 1.90 N/A Bellevue, WA 220 165,948 1.8 1994/2009 754 93.6 % 95.7 % 94.6 % 1,406 1.78 N/A Tustin, CA 628 512,022 23.5 1968/2010 815 94.7 % 95.1 % 96.0 % 1,405 1.64 N/A Lake Forest, CA 140 126,480 9.1 1978/2010 903 95.7 % 95.6 % 96.1 % 1,380 1.46 N/A San Diego, CA 449 339,152 29.0 1985/2011 755 96.0 % 96.3 % 93.4 %(3) 1,324 1.69 N/A San Diego, CA 676 587,500 29.3 1985/2011 869 92.8 % 95.9 % 95.4 %(3) 1,403 1.55 N/A Average economic occupancy Average rental rate City and state 2014 2013 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 Profile of Current, Development and Unconsolidated Communities(1)
rentable area
(Sq. Ft.)
completion/
acquisition
size
(Sq. Ft.)
occupancy
at
12/31/12
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cost(5)
of homes
Apt(4)
Sq. Ft. Gaithersburg, MD 205 228,114 11.8 2006/2010 1,113 93.2 % 95.0 % 95.8 % 1,527 1.30 N/A Owings Mills, MD 348 340,868 16.0 1999/2010 980 92.5 % 96.1 % 95.6 % 1,253 1.23 N/A Gaithersburg, MD 684 658,856 39.9 1974/2010 963 94.7 % 95.4 % 94.2 % 1,292 1.28 N/A Rockville, MD 210 403,912 14.5 1970/2011 1,923 91.9 % 90.2 % 95.4 % 2,099 0.98 N/A Plainsboro, NJ 776 553,320 46.4 1973/2010 713 93.2 % 96.6 % 95.3 % 1,145 1.55 N/A Lexington, MA 94 88,680 9.0 1965/2011 943 94.7 % 96.0 % 98.4 % 1,943 1.98 N/A Watchung, NJ 334 336,586 24.7 2003/2012 1,008 94.9 % 96.2 %(3) N/A 1,868 1.78 (3) N/A Average economic occupancy Average rental rate City and state 2014 2013 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. 1.We own a fee simple interest in the communities listed, excepted as noted below. The information presented in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013.2.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 12/31/12, 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 average rental revenue 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, 2012. Financial reporting costs are excluded for unconsolidated communities, see Note 5, "Investments in Real Estate Entities."6.We own a 15.2% combined general partnership and indirect limited partner equity interest in this community.7.We own a general partnership interest in a partnership that owns a fee simple interest in this community.8.We own a general partnership interest in a partnership structured as a DownREIT that owns this community.9.We own a membership interest in a limited liability company that holds a fee simple interest in this community.10.Community is located on land subject to a land lease.11.We own a 31.3% combined general partnership and indirect limited partner equity interest in this community.12.The Funds sold these communities in 2013.2. 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. 2012,2014, we had 2326 Development Communities under construction. We expect these Development Communities, when completed, to add a total of 6,5998,524 apartment homes to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $1,832,900,000.$3,011,000,000. In addition, the land for fourtwo Development Communities that we control under long-term land lease agreements areis subject to future minimum rental amounts of approximately $9,302,000 per year$7,704,000 in 2015 in the aggregate. We cannot assure you that we will meet our schedule for construction completion or that we will meet our budgeted costs, either individually, or in the aggregate. You should carefully review Item 1a.,1A. "Risk Factors,"Factors" for a discussion of the risks associated with development activity and our discussion under Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations,"Operations" (including the factors identified under "Forward-Looking Statements") for further discussion of development activity.except where noted. The information presented in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occurunless otherwise noted in the first quarter of 2013.table. Number of
apartment
homes Total projected
capitalized
cost(1)
($ millions) Construction
start Initial projected
occupancy(2) Estimated
completion Estimated
stabilization(3)1. Avalon Garden City 204 $ 68.7 Q2 2011 Q2 2012 Q1 2013 Q2 2013 Garden City, NY 2. Avalon Park Crest 354 77.6 Q4 2010 Q3 2012 Q2 2013 Q4 2013 Tysons Corner, VA 3. Avalon Somerset 384 78.5 Q4 2011 Q3 2012 Q4 2013 Q2 2014 Somerset, NJ 4. Avalon Irvine II 179 46.2 Q3 2011 Q4 2012 Q2 2013 Q4 2013 Irvine, CA 5. AVA H Street 138 33.7 Q4 2011 Q4 2012 Q2 2013 Q4 2013 Washington, D.C. 6. Avalon Natick 407 82.9 Q4 2011 Q1 2013 Q2 2014 Q4 2014 Natick, MA 7. AVA Ballard 265 68.8 Q3 2011 Q1 2013 Q3 2013 Q1 2014 Seattle, WA 8. Avalon Exeter(4) 187 114.0 Q2 2011 Q3 2013 Q1 2014 Q3 2014 Boston, MA 9. Avalon Shelton III 250 47.9 Q3 2011 Q1 2013 Q3 2013 Q1 2014 Shelton, CT 10. Avalon Hackensack(4) 226 47.2 Q3 2011 Q2 2013 Q4 2013 Q2 2014 Hackensack, NJ 11. Avalon West Chelsea/AVA High Line(4) 715 276.1 Q4 2011 Q4 2013 Q1 2015 Q3 2015 New York, NY 12. Avalon Mosaic 531 120.9 Q1 2012 Q4 2013 Q3 2014 Q1 2015 Tysons Corner, VA 13. Avalon East Norwalk 240 45.5 Q2 2012 Q2 2013 Q1 2014 Q3 2014 Norwalk, CT 14. Avalon Dublin Station II 255 73.0 Q2 2012 Q4 2013 Q2 2014 Q4 2014 Dublin, CA 15. Avalon/AVA Assembly Row(4) 448 113.5 Q2 2012 Q4 2013 Q3 2014 Q1 2015 Somerville, MA 16. AVA University District 283 76.7 Q2 2012 Q1 2014 Q3 2014 Q1 2015 Seattle, WA 17. Avalon at Wesmont Station II 140 24.8 Q3 2012 Q2 2013 Q4 2013 Q2 2014 Wood-Ridge, NJ 18. Avalon Bloomingdale 174 31.1 Q3 2012 Q3 2013 Q1 2014 Q3 2014 Bloomingdale, NJ 19. Avalon Morrison Park 250 79.7 Q3 2012 Q1 2014 Q3 2014 Q1 2015 San Jose, CA 20. AVA 55 Ninth 273 123.3 Q3 2012 Q2 2014 Q4 2014 Q2 2015 San Francisco, CA 21. Avalon Ossining 168 37.4 Q4 2012 Q2 2014 Q3 2014 Q1 2015 Ossining, NY 22. AVA Little Tokyo 280 109.8 Q4 2012 Q3 2014 Q2 2015 Q4 2015 Los Angeles, CA Initial projected occupancy (2) 1. 710 $ 276.1 Q4 2011 Q4 2013 Q1 2015 Q3 2015 2. 445 122.1 Q2 2012 Q2 2014 Q1 2015 Q3 2015 3. 367 68.4 Q2 2013 Q2 2014 Q1 2015 Q3 2015 4. 280 109.8 Q4 2012 Q3 2014 Q2 2015 Q4 2015 5. 247 53.9 Q4 2012 Q3 2014 Q2 2015 Q4 2015 6. 430 132.9 Q4 2013 Q4 2014 Q4 2015 Q2 2016 7. 182 90.2 Q3 2013 Q1 2015 Q3 2015 Q1 2016 8. 136 46.2 Q1 2014 Q1 2015 Q3 2015 Q1 2016 9. 384 109.8 Q1 2014 Q1 2015 Q1 2016 Q3 2016 10. 221 58.3 Q4 2013 Q2 2015 Q4 2015 Q2 2016 11. 350 77.1 Q1 2014 Q2 2015 Q2 2016 Q4 2016 12. 398 175.7 Q1 2013 Q2 2015 Q4 2015 Q2 2016 13. 826 444.9 Q3 2013 Q3 2015 Q4 2016 Q2 2017 14. 224 53.4 Q4 2013 Q2 2015 Q4 2015 Q2 2016 15. 280 82.5 Q4 2013 Q2 2015 Q1 2016 Q3 2016 16. 249 81.4 Q1 2014 Q4 2015 Q2 2016 Q4 2016 17 156 55.0 Q2 2014 Q4 2015 Q1 2016 Q3 2016 18. 252 83.7 Q2 2014 Q4 2015 Q2 2016 Q4 2016 19. 378 120.3 Q2 2014 Q3 2016 Q2 2017 Q4 2017 20. 294 162.4 Q2 2014 Q3 2016 Q2 2017 Q4 2017 21. 180 43.9 Q3 2014 Q3 2015 Q2 2016 Q4 2016 22. 482 137.8 Q3 2014 Q2 2016 Q2 2017 Q4 2017 23. 503 256.9 Q3 2014 Q4 2016 Q4 2017 Q2 2018 24. 68 22.1 Q4 2014 Q4 2015 Q2 2016 Q4 2016 25. 202 50.7 Q4 2014 Q2 2016 Q4 2016 Q1 2017 26. 280 95.5 Q4 2014 Q3 2016 Q2 2017 Q4 2017 Total 8,524 $ 3,011.0 (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 initial occupancy dates are estimates. There can be no assurance that we will pursue to completion any or all of these proposed developments. Number of
apartment
homes Total projected
capitalized
cost(1)
($ millions) Construction
start Initial projected
occupancy(2) Estimated
completion Estimated
stabilization(3)23. Avalon Wharton 248 55.6 Q4 2012 Q1 2015 Q3 2015 Q1 2016 Wharton, NJ Total 6,599 $ 1,832.9 (3) Stabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of development. (4) Development community subject to a ground lease. (1)Total projected 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 or land lease costs through construction completion, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees. 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. Number of
apartment
homes
($ millions) Total capitalized cost per sq. ft. Quarter of completion 1. 474 $ 87.5 460,983 $ 190 Q1 2014 2. 174 31.5 176,542 $ 178 Q1 2014 3. 283 75.2 201,389 $ 373 Q2 2014 4. 250 79.1 277,710 $ 285 Q2 2014 5. 168 36.8 184,137 $ 200 Q2 2014 6. 228 82.0 268,618 $ 305 Q3 2014 7. 253 77.7 247,430 $ 314 Q3 2014 8. 273 121.0 236,907 $ 511 Q3 2014 9. 196 40.9 235,465 $ 174 Q3 2014 10. 318 52.7 305,055 $ 173 Q3 2014 11. 94 33.7 78,858 $ 427 Q3 2014 12. 130 29.7 148,136 $ 200 Q3 2014 13. 103 28.0 46,506 $ 602 Q3 2014 14. 187 126.6 200,641 $ 631 Q4 2014 15. 531 110.6 458,198 $ 241 Q4 2014 16. 303 81.2 364,602 $ 223 Q4 2014 17. 156 40.1 159,937 $ 251 Q4 2014 Total 4,121 $ 1,134.3 (1) Total capitalized cost is as of December 31, 2014. The Company generally anticipates 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. (2)Future projected initial occupancy dates are estimates. There can be no assurance that we will pursue to completion any or all(3)Stabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of development.(4)Development Community subject to a long-term ground lease.2012, we had five consolidated2014, there were eight communities under redevelopment. We expect the total capitalized cost to redevelop these communities to be $59,800,000,$131,700,000, 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, for redevelopment communities 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 continuingmaintaining or increasing our current level of redevelopment activity related to communities in our current operating portfolio. You should carefully review Item 1a.,1A. "Risk Factors,"Factors" for a discussion of the risks associated with redevelopment activity.Communities. The information presented in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013.Communities: 1. 271 $ 21.0 Q1 2013 Q1 2015 Q3 2015 2. 564 23.6 Q1 2014 Q1 2016 Q3 2016 3. 204 9.2 Q2 2014 Q2 2015 Q4 2015 4. 105 6.5 Q4 2014 Q4 2015 Q2 2016 5. 133 10.0 Q4 2014 Q4 2015 Q2 2016 6. 109 10.2 Q4 2014 Q4 2015 Q2 2016 7. 710 29.9 Q4 2014 Q1 2017 Q3 2017 8. 842 21.3 Q4 2014 Q2 2016 Q4 2016 Total 2,938 $ 131.7 (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. Number of
apartment
homes Total projected
capitalized cost(1)
($ millions) Reconstruction
Start Estimated
reconstruction
completion Estimated
restabilized
operations(2)1. Eaves San Jose 440 $ 14.9 Q4 2011 Q2 2013 Q3 2013 San Jose, CA 2. Eaves Fairfax City 141 4.9 Q2 2012 Q1 2013 Q2 2013 Fairfax, VA 3. The Avalon 110 8.3 Q3 2012 Q3 2013 Q4 2013 Bronxville, NY 4. Avalon at Media Center(3) 748 19.3 Q4 2012 Q4 2014 Q1 2015 Burbank, CA 5. Avalon Campbell 348 12.4 Q4 2012 Q2 2014 Q3 2014 Campbell, CA Total 1,787 $ 59.8 (1)Total projected capitalized cost includes all capitalized costs projected to be or actually incurred to redevelop the respective Redevelopment Community, including land acquisition costs, constructioncosts, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated redevelopment overhead and other regulatory fees, all as determined in accordance with GAAP.(2)Restabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of redevelopment.(3)The scope of work completed during 2012 did not impact occupancy or rental income; therefore, this community is included in the Established Community portfolio.2012,2014, we had $316,037,000$180,516,000 in acquisition and related capitalized costs for land parcels we own, and $24,665,000$67,029,000 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 an option to purchase or lease the land. Collectively, the land held for development and associated costs for deferred development rights relate to 3437 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, 20122014 includes $244,015,000$144,099,000 in original land acquisition costs. The original land acquisition cost per home ranged from $9,000$24,000 per home in Connecticut to $149,000$74,000 per home in New York City.York. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately. We estimate that the successful completion of all of these communities would ultimately add approximately 9,60210,384 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own of the same brand group.2124 Development Rights, we control the land through an option to purchase or lease the parcel. While we generally prefer to hold Development Rights through options to acquire land, for the 13 remaining Development Rights we either currently own 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.regardingas to which of the initial selection ofDevelopment Rights to invest in, if any, or to continue to pursue once an investment in a Development Right and whether or not to continue to invest 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. Initial developmentPre-development costs incurred for pursuitsin 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 2012,2014, we incurred a charge of approximately $1,757,000$3,964,000 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.Section 1a.,Item 1A. "Risk Factors," for a discussion of the risks associated with Development Rights.TableThe following presents a summary of Contents The information presented in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013.Location Number of rights 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 (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. Number
of rights Estimated
number
of homes Total projected
capitalized
cost
($ millions)(1) 6 1,766 $ 604 2 290 66 2 1,237 515 10 2,593 566 2 483 151 4 1,200 287 3 749 182 1 250 85 1 182 85 2 631 225 1 221 55 34 9,602 $ 2,821 (1)Total projected 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)Includes development rights in Westchester County and Rockland County, NY.2012,2014 we acquired land parcels for nine12 Development Rights, including the final land parcels related to our purchase commitment for Avalon Willoughby Square, as shown in the table below, for an aggregate purchase priceinvestment of approximately $100,564,000. For eight$139,685,000. 1. 112 $ 42.3 January 2014 2. 280 95.5 February 2014 3. 167 65.9 April 2014 4. 482 137.8 June 2014 5. 331 90.9 July 2014 6. 24 7.4 July 2014 7. 180 43.9 August 2014 8. 344 68.8 September 2014 9. 332 73.0 December 2014 10. 191 79.1 December 2014 11. 202 50.7 December 2014 12. 124 26.1 December 2014 Total 2,769 $ 781.4 (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 parcel of land for the development of Avalon Glendora, expected to have a total of 280 apartment homes for a projected total capitalized cost of $82.5 million. nine parcels construction has either started ordevelopment rights related to this land will start within the next 12 months. The information presented in this table may materially change ascontain 910 apartment homes for a resultprojected total capital cost of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013. Estimated
number of
apartment
homes Total projected
capitalized
cost(1)
($ millions) Date
acquired1. Avalon Willoughby Square 823 $ 421.4 April/September 2012(2) Brooklyn, NY 2. AVA 55 Ninth 273 123.3 June 2012 San Francisco, CA 3. Avalon at Wesmont Station Phase II 140 24.8 July 2012 Wood-Ridge, NJ 4. AVA Stuart Street 400 175.9 July 2012 Boston, MA 5. Avalon Vista 221 54.9 August 2012 Vista, CA 6. Avalon Canton 196 40.1 November 2012 Canton, MA 7. Avalon Alderwood I 367 68.3 December 2012 Lynwood, WA 8. Avalon Alderwood II 124 24.2 December 2012 Lynwood, WA 9. Avalon Ossining 168 37.4 December 2012 Ossining, NY Total 2,712 $ 970.3
$509,717,000.(1)Total projected 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)Represents the final parcels purchased under our long term purchase commitment.$23,964,000 that$20,941,000, which we do not currently plan to develop. These parcels consist of (i) land that we (i) originally planned to develop and (ii) ancillary parcels acquired in connection with Development Rights that we had not planned to develop. The current carrying value of these land parcels reflects impairment charges of $9,057,000 incurred in prior periods. We believe that the current carrying value for all of these 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 impairmentRecent 20122014 to January 31, 2013,2015, we sold our interest in fourfive wholly-owned communities, containing 1,5781,660 apartment homes. The aggregate gross sales price for these assets was $268,250,000.management'smanagement’s view, economically impractical. You should carefully review the discussion under Item 1a., "Risk Factors,"1A. “Risk Factors” of this Form 10-K for a discussion of risks associated with an uninsured property or liability loss.$75,000,000$150,000,000 of coverage. Earthquake coverage outside of California and Washington is subject to a $100,000,000$175,000,000 limit for each occurrence and in the aggregate. In California the deductible for each occurrence is five percent of the insured value of each damaged building.building with a maximum of $25,000,000 per loss. Our earthquake insurance outside of California provides for a $100,000 deductible per occurrence except that the next $350,000 of loss per occurrence outside California will be treated as an additional self-insured retention until the total incurred self-insured retention exceeds $1,400,000. In May 2012, we renewed$1,500,000. We self-insure a portion of our primary property insurance policy, with no material change in coverage. In August 2012, we renewed our general liability and workers compensation insurance policies with no material change in coverage. In October 2012, Superstorm Sandy impacted several apartment communities inwhich includes the Company's Mid-Atlantic and Northeast portfolios. The Company recognized a casualty loss of $1,449,000 for losses incurred related to Superstorm Sandy. As of the date of this filing, the Company does not expect to recognize significant additional costs related to the damage from Superstorm Sandy.("TRIPRA"(“TRIPRA”) which is designed to make terrorism insurance available through a federal back-stop program until 2014. In connection with this legislation, weprogram. Congress reauthorized TRIPRA in January 2015 for six years. We have also purchased insurance for property damage due to terrorism up to $250,000,000. Additionally, we have purchased$400,000,000 including insurance for certain terrorist acts, not covered under TRIPRA, such as domestic-based terrorism. This insurance, often referred to as "non-certified"“non-certified” terrorism insurance, is coverage (subject to deductibles and insured limits) for liability to third parties that result from terrorist acts at our communities.Company'sCompany’s related prevention and remediation activities, please refer to the discussion under Item 1a., "Risk Factors—1A. “Risk Factors - We may incur costs due to environmental contamination or non-compliance,"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.$5,000,000$30,000,000 per occurrence, from employee theft of money, securities or property.ApplicableApplicable.20122014 and 2011,2013, as reported by the NYSE. On January 31, 201330, 2015 there were 738547 holders of record of an aggregate of 114,405,582132,049,857 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. 2012 2011 Sales Price Sales Price 2014 2013 Dividends
declared Dividends
declared Sales Price Sales Price High Low High Low High Low High Low $ 141.69 $ 123.71 $ 0.9700 $ 121.65 $ 108.21 $ 0.8925 $ 132.17 $ 114.16 $ 1.16 $ 139.15 $ 124.02 $ 1.07 $ 148.54 $ 134.51 $ 0.9700 $ 133.81 $ 117.59 $ 0.8925 $ 144.51 $ 130.04 $ 1.16 $ 141.46 $ 127.97 $ 1.07 $ 151.11 $ 134.03 $ 0.9700 $ 139.89 $ 113.27 $ 0.8925 $ 157.16 $ 139.27 $ 1.16 $ 141.04 $ 122.36 $ 1.07 $ 139.70 $ 126.12 $ 0.9700 $ 136.37 $ 107.58 $ 0.8925 $ 170.14 $ 141.00 $ 1.16 $ 134.25 $ 116.86 $ 1.07 2013,2015, we announced that our Board of Directors declared a dividend on our common stock for the first quarter of 20132015 of $1.07$1.25 per share, a 10.3%7.8% increase over the previous quarterly dividend per share of $0.97.$1.16. The dividend will be payable on April 15, 20132015 to all common stockholders of record as of March 28, 2013.Period 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 (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) 399 $ 130.35 — $ 200,000 — — — $ 200,000 — — — $ 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.(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. For the year ended 12/31/14 12/31/13 12/31/12 12/31/11 12/31/10 Revenue: Rental and other income $ 1,674,011 $ 1,451,419 $ 990,370 $ 890,431 $ 800,689 Management, development and other fees 11,050 11,502 10,257 9,656 7,354 Total revenue 1,685,061 1,462,921 1,000,627 900,087 808,043 Expenses: Operating expenses, excluding property taxes 410,672 352,245 259,350 246,872 235,168 Property taxes 178,634 158,774 97,555 88,964 84,319 Interest expense, net 180,618 172,402 136,920 167,814 169,997 Loss on extinguishment of debt, net 412 14,921 1,179 1,940 — Loss on interest rate contract — 51,000 — — — Depreciation expense 442,682 560,215 243,680 226,728 208,662 General and administrative expense 41,425 39,573 34,101 29,371 27,081 Expensed acquisition, development and other pursuit costs, net of recoveries (3,717 ) 45,050 11,350 2,967 2,741 Casualty and impairment loss — — 1,449 14,052 — Total expenses 1,250,726 1,394,180 785,584 778,708 727,968 Equity in (loss) income of unconsolidated entities 148,766 (11,154 ) 20,914 5,120 762 Gain on sale of land 490 240 280 13,716 — Gain on sale of communities 84,925 — — — — Gain on acquisition of unconsolidated entity — — 14,194 — — Income from continuing operations before taxes 668,516 57,827 250,431 140,215 80,837 Income tax expense 9,368 — — — (235 ) Income from continuing operations 659,148 57,827 250,431 140,215 81,072 Discontinued operations: Income from discontinued operations 310 16,713 26,820 20,065 18,933 Gain on sale of discontinued operations 37,869 278,231 146,311 281,090 74,074 Total discontinued operations 38,179 294,944 173,131 301,155 93,007 Net income 697,327 352,771 423,562 441,370 174,079 Net (income) loss attributable to noncontrolling interests (13,760 ) 370 307 252 1,252 Net income attributable to common stockholders $ 683,567 $ 353,141 $ 423,869 $ 441,622 $ 175,331 Per Common Share and Share Information: Earnings per common share—basic: Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) $ 4.93 $ 0.46 $ 2.57 $ 1.55 $ 0.97 Discontinued operations attributable to common stockholders 0.29 2.32 1.77 3.34 1.11 Net income attributable to common stockholders $ 5.22 $ 2.78 $ 4.34 $ 4.89 $ 2.08 Weighted average shares outstanding—basic (1) 130,586,718 126,855,754 97,416,401 89,922,465 83,859,936 Earnings per common share—diluted: Income from continuing operations attributable to common stockholders (net of dividends attributable to preferred stock) $ 4.92 $ 0.46 $ 2.55 $ 1.55 $ 0.97 Discontinued operations attributable to common stockholders 0.29 2.32 1.77 3.32 1.10 Net income attributable to common stockholders $ 5.21 $ 2.78 $ 4.32 $ 4.87 $ 2.07 Weighted average shares outstanding—diluted 131,237,502 127,265,903 98,025,152 90,777,462 84,632,869 Cash dividends declared $ 4.64 $ 4.28 $ 3.88 $ 3.57 $ 3.57 (1) Amounts do not include unvested restricted shares included in the calculation of Earnings per Share. Please refer to Note 1, "Organization and Basis of Presentation—Earnings per Common Share," of the Consolidated Financial Statements set forth in Item 8 of this report for a discussion of the calculation of Earnings per Share. For the year ended 12-31-12 12-31-11 12-31-10 12-31-09 12-31-08 $ 1,028,403 $ 926,431 $ 835,466 $ 790,620 $ 756,565 10,257 9,656 7,354 7,328 6,568 1,038,660 936,087 842,820 797,948 763,133 278,481 257,718 246,257 237,841 226,417 101,136 92,568 87,864 78,383 69,075 136,920 167,814 169,997 145,090 110,250 1,179 1,940 — 25,910 (1,839 ) 256,026 239,060 220,563 197,084 172,203 34,101 29,371 26,846 28,748 42,781 1,449 14,052 — 21,152 57,899 809,292 802,523 751,527 734,208 676,786 20,914 5,120 762 1,441 4,566 280 13,716 — 4,830 — 14,194 — — — — 264,756 152,400 92,055 70,011 90,913 12,495 7,880 7,950 20,376 34,932 146,311 281,090 74,074 63,887 284,901 158,806 288,970 82,024 84,263 319,833 423,562 441,370 174,079 154,274 410,746 307 252 1,252 1,373 741 423,869 441,622 175,331 155,647 411,487 — — — — (10,454 ) $ 423,869 $ 441,622 $ 175,331 $ 155,647 $ 401,033 $ 2.71 $ 1.69 $ 1.10 $ 0.89 $ 1.05 1.63 3.20 0.98 1.05 4.16 $ 4.34 $ 4.89 $ 2.08 $ 1.94 $ 5.21 97,416,401 89,922,465 83,859,936 79,951,348 76,783,515 $ 2.70 $ 1.69 $ 1.10 $ 0.89 $ 1.05 1.62 3.18 0.97 1.04 4.12 $ 4.32 $ 4.87 $ 2.07 $ 1.93 $ 5.17 98,025,152 90,777,462 84,632,869 80,599,657 77,578,852 $ 3.88 $ 3.57 $ 3.57 $ 3.57 $ 3.57 (1)Amounts do not include unvested restricted shares included in the calculation of Earnings per Share. Please refer to Note 1, "Organization and Basis of Presentation—Earnings per Common Share" of the Consolidated Financial Statements set forth in Item 8 of this report for a discussion of the calculation of Earnings per Share.(2)Weighted average common shares outstanding—diluted for 2008 includes the impact of approximately 2.6 million common shares issued under the special dividend declared on December 17, 2008.(3)Does not include the special dividend of $1.8075 per share, which was declared on December 17, 2008, and paid in the form of shares of the Company's common stock. For the year ended 12/31/14 12/31/13 12/31/12 12/31/11 12/31/10 Other Information: Net income attributable to common stockholders $ 683,567 $ 353,141 $ 423,869 $ 441,622 $ 175,331 Depreciation—continuing operations 442,682 560,215 243,680 226,728 208,662 Depreciation—discontinued operations — 13,500 16,414 23,541 24,280 Interest expense, net—continuing operations (1) 181,030 238,323 138,099 169,754 169,997 Interest expense, net—discontinued operations (1) — — 735 8,688 5,212 Income tax expense 9,368 — — — (235 ) EBITDA (2) $ 1,316,647 $ 1,165,179 $ 822,797 $ 870,333 $ 583,247 Funds from Operations (3) $ 951,035 $ 642,814 $ 521,047 $ 414,482 $ 338,353 Number of Current Communities (4) 251 244 180 181 172 Number of apartment homes 73,963 72,811 52,792 53,294 51,245 Balance Sheet Information: Real estate, before accumulated depreciation $ 17,849,316 $ 16,800,321 $ 10,049,484 $ 9,288,496 $ 8,661,211 Total assets $ 16,176,723 $ 15,328,143 $ 11,160,078 $ 8,482,390 $ 7,821,488 Notes payable and unsecured credit facilities $ 6,525,852 $ 6,145,391 $ 3,851,033 $ 3,632,296 $ 4,067,657 Cash Flow Information: Net cash flows provided by operating activities $ 886,641 $ 724,315 $ 540,819 $ 429,354 $ 332,106 Net cash flows used in investing activities $ (816,760 ) $ (1,181,174 ) $ (623,386 ) $ (443,141 ) $ (298,936 ) Net cash flows (used in) provided by financing activities $ 158,224 $ (1,995,404 ) $ 2,199,332 $ 326,233 $ 167,565 The information presented in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013. For the year ended 12-31-12 12-31-11 12-31-10 12-31-09 12-31-08 $ 423,869 $ 441,622 $ 175,331 $ 155,647 $ 411,487 256,026 239,060 220,563 197,084 172,203 4,068 11,209 12,379 21,202 27,249 138,099 169,754 169,997 171,000 108,411 735 8,688 5,212 5,914 7,957 $ 822,797 $ 870,333 $ 583,482 $ 550,847 $ 727,307 $ 521,047 $ 414,482 $ 338,353 $ 315,841 $ 315,947 180 181 172 165 164 52,792 53,294 51,245 47,926 45,728 $ 10,049,484 $ 9,288,496 $ 8,661,211 $ 8,360,091 $ 8,002,487 $ 11,160,078 $ 8,482,390 $ 7,821,488 $ 7,457,605 $ 7,174,353 $ 3,851,033 $ 3,632,296 $ 4,067,657 $ 3,974,872 $ 3,674,457 $ 540,819 $ 429,391 $ 332,106 $ 376,581 $ 386,084 $ (623,386 ) $ (443,141 ) $ (298,936 ) $ (333,559 ) $ (266,309 ) $ 2,199,332 $ 326,233 $ 167,565 $ (4,285 ) $ (75,111 ) (1)Interest expense, net includes any loss or gain incurred from the extinguishment of debt.(2)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)We generally consider Funds from Operations, or "FFO," as defined below, to be an appropriate supplemental measure 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.(1) Interest expense, net includes any loss or gain incurred from the extinguishment of debt. (2) 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) We generally consider Funds from Operations, or "FFO," as defined below, to be an appropriate supplemental measure 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. ••••••• For the year ended 12-31-12 12-31-11 12-31-10 12-31-09 12-31-08 For the year ended $ 423,869 $ 441,622 $ 175,331 $ 155,647 $ 411,487 — — — — (10,454 ) 12/31/14 12/31/13 12/31/12 12/31/11 12/31/10 Net income attributable to common stockholders $ 683,567 $ 353,141 $ 423,869 $ 441,622 $ 175,331 265,627 256,986 237,041 221,415 203,082 449,769 582,325 265,627 256,986 237,041 28 27 55 66 216 35 32 28 27 55 (7,972 ) (3,063 ) — — (3,483 ) (73,674 ) (14,453 ) (7,972 ) (3,063 ) — — — — 2,600 — (146,311 ) (281,090 ) (74,074 ) (63,887 ) (284,901 ) Gain on sale of previously depreciated real estate assets (1) (108,662 ) (278,231 ) (146,311 ) (281,090 ) (74,074 ) (14,194 ) — — — — — — (14,194 ) — — $ 521,047 $ 414,482 $ 338,353 $ 315,841 $ 315,947 FFO attributable to common stockholders $ 951,035 $ 642,814 $ 521,047 $ 414,482 $ 338,353 98,025,152 90,777,462 84,632,869 80,599,657 77,578,852 131,237,502 127,265,903 98,025,152 90,777,462 84,632,869 $ 5.32 $ 4.57 $ 4.00 $ 3.92 $ 4.07 $ 7.25 $ 5.05 $ 5.32 $ 4.57 $ 4.00 (4)Current Communities consist of all communities other than those which are still under construction and have not received a certificate of occupancy.(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. (4) 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 In addition, our actualActual results or developments could differ materially from those projected in such forward-looking statements as a result of the factors discusseddescribed under "Forward-Looking Statements" as well as the risk factors described in Item 1a,1A. "Risk Factors,"Factors" of this report.definitionsdefinition have the meaning asmeanings provided elsewhere in this Form 10-K. As discussed under Item 1., "Business," we executed the Purchase Agreement under which we expect todirectown and indirect interests in certain operating and development communities from Archstone. We expect this transaction will close in the first quarter of 2013. The impact of the Archstone Acquisition is expected to significantly change the scope of our business and as a result our 2012 results of operations may not necessarily be representative of our future results of operations. Unless otherwise stated, all disclosures and discussion in this Form 10-K do not include the expected effects of the Archstone Acquisition.Business Description We are primarily engaged in developing, acquiring, owning and operatingoperate multifamily apartment communities primarily in high barrier to entry markets ofNew England, the United States.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. However, throughoutcycle, 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 real estate cycle,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 market fundamentals, and therefore operating cash flows, are affected by overall economic conditions.community investment relative to other markets. 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 high barrier to entryour selected markets; operating apartment communities; and selling communities when pricing is attractive or when they no longer meet our long-term investment strategy. Barriers to entry in our markets generally include a difficult and lengthy entitlement process with local jurisdictions and dense urbanstrategy or suburban areas where zoned and entitled landwhen pricing is in limited supply.a leaderleaders in multifamily market research consumer insight, and 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. Our communities are predominately upscale whichand generally command among the highest rents in their markets. WeHowever, 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 markets. Our current markets include New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and the Northern and Southern California regions of the United States.2012,2014, net income attributable to common stockholders was $423,869,000 compared$683,567,000, an increase of $330,426,000, or 93.6%, over the prior year. The increase is primarily attributable to $441,622,000 for 2011, a decrease of 4.0%. The decrease was due primarily to decreasedan increase in income from unconsolidated real estate entities resulting from the gains on salesales of communities in 2012 as compared to 2011various ventures, including the Company’s promoted interests, increased NOI from newly developed and acquired communities, losses on an interest rate contract in the prior year not present in 2014, a decrease in expensed acquisition costs forrelated to the expected Archstone Acquisition, offset partially by an increaseand a decrease in net operating income ("NOI") from both Established and newly stabilized communities. Apartment fundamentals improved throughout 2012depreciation expense related to in-place leases acquired as compared to 2011, driven by a combinationpart of a decline in the home ownership rate, modest employment growth and limited supply of new multifamily rental product. FullArchstone Acquisition.2012ended December 31, 2014, Established Communities NOI increased 7.6%by $22,961,000, or 3.5%, over the prior year across all of our markets as a result ofyear. The increase was driven by an increase in rental revenue of 3.9%, partially offset partially by an increase in operating expenses.2012,2014, we raised approximately $3,370,000,000$1,154,220,000 of gross capital through the issuance of common equity and unsecured notes, borrowing on the Term Loan and asset sales. Proceeds were used to prefund our expected portionsales, exclusive of proceeds from the disposition of joint ventures. The funds raised from asset sales consist of the acquisitionproceeds from the sale of Archstone, to fund current investment activitiesfour communities and to repay higher cost secured and unsecured debt both at or prior to their stated maturity.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. We believe that our current capital structure will continue to provide financial flexibility to access capital on attractive terms. The funds raised from dispositions consist of the proceeds from the sale of four communities and one land parcel for a gross sales price of $280,550,000.20122014 from the prior year in anticipation of continued favorable economic conditions and apartment fundamentals. During 2012,2014, we completed the development of eight17 communities for an aggregate total capitalized cost of $513,100,000.$1,134,300,000. We also started the development of twelve14 communities, which are expected to be completed for an estimated total capitalized cost of $891,300,000.$1,342,800,000. In addition, during 20122014 we completed the redevelopment of elevenfive communities for a total investment of $105,900,000,$53,000,000, excluding costs incurred prior to the redevelopment.limitedmoderate use of financial encumbrances (such as secured financing) provides flexibility in ourprovide us with adequate access to liquidity from the capital raising activities.markets and financial flexibility. We expect to be able to meet our reasonably foreseeable liquidity needs, fromas they arise, through a combination of one or more of the following sources: operating cash flows; borrowings under our Credit Facility and Term Loan; secured debt; the issuance of corporate securities (which could include unsecured debt, and/or common and preferred equity and/or secured debt, as well as from disposition proceeds, joint venture investments or from retained cash. These sources will provide adequate accesscommon equity, including common equity issued pursuant to the capital necessary to fund our developmentForward); the sale of apartment communities; or through the formation of joint ventures. See the discussion under Liquidity and redevelopment activities during 2013. WithCapital Resources.completion of the investment period for Fund II in 2011,year ended December 31, 2014, we became active again in acquiring wholly-owned apartment communities, directly purchasing the following four apartment communities during 2012, one of which occurred through a purchase of our joint venture partner's interest.•The Mark Pasadena,acquired Avalon Mission Oaks, located in Pasadena, CA, whichCamarillo, CA. Avalon Mission Oaks contains 84160 apartment homes and was acquired for a purchase price of $19,400,000. In conjunction$47,000,000.this acquisition,GAAP of $106,138,000. During 2014, we assumedalso sold a land parcel in Huntington Station, NY for $8,050,000, resulting in a gain in accordance with GAAP of $490,000.existing 4.61% fixed-rate mortgage loan with an outstanding principal amountyear ended December 31, 2014, three of $11,958,000 which matures in June 2018 and is secured by the community.•Eaves Cerritos,Company's joint ventures, excluding the Residual JV, sold operating communities.Artesia, CA, which contains 151New York, NY containing 361 apartment homes was acquiredand approximately 71,000 square feet of retail space, sold the community for $365,000,000. We own a purchase price of $29,500,000.•Eaves Burlington, located in Burlington MA, which contains 203 homes, was acquired for a purchase price of $40,250,000.•The Company acquired Avalon Del Rey, a 309 apartment home community which was owned by a joint venture in which we held a 30% ownership interest. As part of this transaction, theventure repaid the $43,606,000 variable rate note secured by the community. We paid approximately $67,200,000 for the joint venture partner's 70%20.0% interest as well as contributing our proportionate share of the note repayment to the venture. Upon the acquisition of Avalon Del Rey, we consolidated the community. We established Fund I and Fund II to engage in acquisition programs through discretionary investment funds. We believe this investment format provides the following attributes: (i) it enables us to access third-party joint venture equity as an additional source of financing to expand and diversify our portfolio; (ii) it provides us with additional sources of income in the form of property managemententity, and asset management fees and, potentially, incentive distributions if the performance of the Funds exceeds certain thresholds; and (iii) it gives us greater visibility into the transactions occurring in multifamily assets, which 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 and, excluding costs incurred in excess of our equity in the underlying net assets of Fund I, we have made an equity investment of approximately $21,100,000 in Fund I (net of distributions and excluding the purchase by us of a mortgage note secured by a Fund I community), representing a 15.15% combined general partner and limited partner equity interest. Fund I was our principal vehicle for acquiring apartment communities from its formation in 2005 through the close of its investment period in March 2008. Fund I has a term that expires in March 2013, plus two one-year extension options. During 2012, Fund I sold six communities:•Avalon Lakeside, a 204 apartment home community in Chicago, IL, for $20,500,000;•Avalon at Poplar Creek, a 196 apartment home community in Chicago, IL, for $27,200,000;•Avalon Lombard, a 256 apartment home community in Chicago, IL, for $35,450,000;•Avalon Paseo Place, a 134 apartment home community in Fremont, CA, for $30,900,000;•Avalon Skyway, a 348 apartment home community in San Jose, CA, for $90,900,000; and•Avalon at Aberdeen Station, a 290 apartment home community in Aberdeen, NJ, for $66,250,000. Our proportionate share of the gain fromin accordance with GAAP for the saledisposition was $50,478,000. In addition, we received $58,128,000 for our promoted interest in CVP I, LLC.these724 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.$7,971,000. $21,624,000.Fund Ithe respective ventures repaid $89,142,000$224,178,000 of the related secured indebtedness in advance of the scheduled maturity dates, incurringdates. This resulted in charges for prepayment penalties and a write off of deferred financing costs, of which ourthe Company’s portion was approximately $530,000,$2,339,000, and was reported as a reduction of Equityequity in income of unconsolidated real estate entities. In addition,2013, Fund I sold AvalonJanuary 2015 a fire occurred at Yerba Buena, located in San Francisco, CA. Avalon at Yerba Buena contains 160 apartment homesEdgewater. The Company is currently assessing its direct losses resulting from the fire, which could vary based on costs and 32,000 square feet of retail space and was sold for $103,000,000. 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 made an equity investment of $107,938,000 (net of distributions), representing a 31.3% combined general partner and limited partner equity interest. Fund II served as the exclusive vehicle through which we acquired investment interests in apartment communities from its formation in 2008 through the close of its investment period in August 2011. During the year ended December 31, 2012, a subsidiary of Fund II acquired Avalon Watchung, a 334 apartment home community located in Watchung, NJ, for $63,000,000. This was the final acquisition for Fund II. In 2013, Fund II sold Avalon Rothbury, a 205 apartment home community located in Gaithersburg, MD, for $39,600,000. We are not presently pursuing the formation of a new, third fund, preferring at this time to maintain flexibility in shaping our portfoliorebuild, as well its liability to third parties who incurred damages on account of wholly-owned assets through acquisitions and dispositions. However, we may acquire investments in existing fund structures in connection with the Archstone Acquisition, but these funds are not expected to limit our ability to acquire investments for our own account.2012,2014, excluding indirect interests associated with the Residual JV, we owned or held a direct or indirect ownership interest in 203277 apartment communities containing 59,39182,487 apartment homes in nine11 states and the District of Columbia, of which 2326 communities were under construction and fiveeight communities were under reconstruction. Of these communities, 2624 were owned by entities that were not consolidated for financial reporting purposes, including 1110 owned by subsidiaries of Fund III and 13nine owned by subsidiaries of Fund II.the U.S. Fund. In addition, we owned a direct or indirect ownership interest in Development Rights to develop an additional 3437 wholly-owned communities that, if developed in the manneras expected, will contain an estimated 9,60210,384 apartment homes. and the markets in which they are located to be compared between years. Other Stabilized Communities are generally all other 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 of communities where construction is complete but stabilization has not been achieved. Redevelopment Communities consist of communities where substantial redevelopment is in progress or is planned to begin during the current year. A more detailed description of our reportable segments and other related operating information can be found in Note 8,9, "Segment Reporting," of our Consolidated Financial Statements.these segments of our businesscurrent and future cash needs and financing activities can be found in "Liquidity and Capital Resources."2012, 20112014, 2013 and 20102012 follows (dollars in thousands): 2012 2011 $ Change % Change 2011 2010 $ Change % Change 2014 2013 $ Change % Change 2013 2012 $ Change % Change $ 1,028,403 $ 926,431 $ 101,972 11.0 % $ 926,431 $ 835,466 $ 90,965 10.9 % $ 1,674,011 $ 1,451,419 $ 222,592 15.3 % $ 1,451,419 $ 990,370 $ 461,049 46.6 % 10,257 9,656 601 6.2 % 9,656 7,354 2,302 31.3 % 11,050 11,502 $ (452 ) (3.9 )% 11,502 10,257 1,245 12.1 % 1,038,660 936,087 102,573 11.0 % 936,087 842,820 93,267 11.1 % 1,685,061 1,462,921 222,140 15.2 % 1,462,921 1,000,627 462,294 46.2 % 218,867 209,412 9,455 4.5 % 209,412 202,405 7,007 3.5 % 345,846 295,150 50,696 17.2 % 295,150 211,086 84,064 39.8 % 101,136 92,568 8,568 9.3 % 92,568 87,864 4,704 5.4 % 178,634 158,774 19,860 12.5 % 158,774 97,555 61,219 62.8 % 320,003 301,980 18,023 6.0 % 301,980 290,269 11,711 4.0 % 524,480 453,924 70,556 15.5 % 453,924 308,641 145,283 47.1 % 42,193 40,213 1,980 4.9 % 40,213 37,287 2,926 7.8 % 60,341 53,105 7,236 13.6 % 53,105 42,193 10,912 25.9 % 6,071 5,126 945 18.4 % 5,126 3,824 1,302 34.0 % 4,485 3,990 495 12.4 % 3,990 6,071 (2,081 ) (34.3 )% 11,350 2,967 8,383 282.5 % 2,967 2,741 226 8.2 % 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 % 136,920 167,814 (30,894 ) (18.4 )% 167,814 169,997 (2,183 ) (1.3 )% 180,618 172,402 8,216 4.8 % 172,402 136,920 35,482 25.9 % 1,179 1,940 (761 ) (39.2 )% 1,940 — 1,940 N/A 412 14,921 (14,509 ) (97.2 )% 14,921 1,179 13,742 1,165.6 % Loss on interest rate contract — 51,000 (51,000 ) (100.0 )% 51,000 — 51,000 100.0 % 256,026 239,060 16,966 7.1 % 239,060 220,563 18,497 8.4 % 442,682 560,215 (117,533 ) (21.0 )% 560,215 243,680 316,535 129.9 % 34,101 29,371 4,730 16.1 % 29,371 26,846 2,525 9.4 % 41,425 39,573 1,852 4.7 % 39,573 34,101 5,472 16.0 % 1,449 14,052 (12,603 ) (89.7 )% 14,052 — 14,052 N/A — — — — % — 1,449 (1,449 ) (100.0 )% (280 ) (13,716 ) 13,436 (98.0 )% (13,716 ) — (13,716 ) N/A (14,194 ) — (14,194 ) 100.0 % — — — 0.0 % 474,815 486,827 (12,012 ) (2.5 )% 486,827 461,258 25,569 5.5 % 726,246 940,256 (214,010 ) (22.8 )% 940,256 476,943 463,313 97.1 % 20,914 5,120 15,794 308.5 % 5,120 762 4,358 571.9 % Equity in income (loss) of unconsolidated entities 148,766 (11,154 ) 159,920 N/A (1) (11,154 ) 20,914 (32,068 ) N/A (1) Gain on sale of land 490 240 250 104.2 % 240 280 (40 ) (14.3 )% Gain on sale of communities 84,925 — 84,925 100.0 % — — — — % — — — — % — 14,194 (14,194 ) (100.0 )% Income from continuing operations before taxes 668,516 57,827 610,689 1,056.1 % 57,827 250,431 (192,604 ) (76.9 )% Income tax expense 9,368 — 9,368 100.0 % — — — — %
264,756
152,400
112,356
73.7
%
152,400
92,055
60,345
65.6
%659,148 57,827 601,321 1,039.9 % 57,827 250,431 (192,604 ) (76.9 )% 12,495 7,880 4,615 58.6 % 7,880 7,950 (70 ) (0.9 )% 310 16,713 (16,403 ) (98.1 )% 16,713 26,820 (10,107 ) (37.7 )% 146,311 281,090 (134,779 ) (47.9 )% 281,090 74,074 207,016 279.5 % 37,869 278,231 (240,362 ) (86.4 )% 278,231 146,311 131,920 90.2 % 158,806 288,970 (130,164 ) (45.0 )% 288,970 82,024 206,946 252.3 % 38,179 294,944 (256,765 ) (87.1 )% 294,944 173,131 121,813 70.4 %
423,562
441,370
(17,808
)
(4.0
)%
441,370
174,079
267,291
153.5
%697,327 352,771 344,556 97.7 % 352,771 423,562 (70,791 ) (16.7 )% 307 252 55 21.8 % 252 1,252 (1,000 ) (79.9 )% Net (income) loss attributable to noncontrolling interests (13,760 ) 370 (14,130 ) N/A (1) 370 307 63 20.5 % $ 423,869 $ 441,622 $ (17,753 ) (4.0 )% $ 441,622 $ 175,331 $ 266,291 151.9 % $ 683,567 $ 353,141 $ 330,426 93.6 % $ 353,141 $ 423,869 $ (70,728 ) (16.7 )% (1) Percentage change is not meaningful. decreased $17,753,000,increased $330,426,000, or 4.0%93.6%, to $423,869,000$683,567,000 in 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 acquired communities, losses on an interest rate contract 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. Net income attributable to common stockholders decreased $70,728,000, or 16.7%, in 2013 from 2012 primarily due to aan 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, offset partially by increased year. in 2012 over 2011. Net income attributable to common stockholders increased $266,291,000, or 151.9% in 2011 over 2010 due primarily to an increase in gain on sale of communities and increased NOI in 2011 over 2010.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 easytaxes.necessarily indicative of cash available to fund cash needs. Reconciliations of NOI for the years ended December 31, 2012, 20112014, 2013 and 20102012 to net income for each year are as follows (dollars in thousands): For the year ended 12/31/14 12/31/13 12/31/12 Net income $ 697,327 $ 352,771 $ 423,562 Indirect operating expenses, net of corporate income 49,055 41,554 31,911 Investments and investment management expense 4,485 3,990 6,071 Expensed acquisition, development and other pursuit costs, net of recoveries (3,717 ) 45,050 11,350 Interest expense, net (1) 180,618 172,402 136,920 Loss on extinguishment of debt, net 412 14,921 1,179 Loss on interest rate contract — 51,000 — General and administrative expense 41,425 39,573 34,101 Equity in (income) loss of unconsolidated real estate entities (148,766 ) 11,154 (20,914 ) Depreciation expense (1) 442,682 560,215 243,680 Income tax expense 9,368 — — Casualty and impairment loss — — 1,449 Gain on acquisition of unconsolidated real estate entity — — (14,194 ) Gain on sale of real estate assets (85,415 ) (240 ) (280 ) Gain on sale of discontinued operations (37,869 ) (278,231 ) (146,311 ) Income from discontinued operations (310 ) (16,713 ) (26,820 ) 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 $ 1,134,096 $ 977,998 $ 667,928 (1) Includes amounts associated with assets sold or held for sale, not classified as discontinued operations. For the year ended 12-31-12 12-31-11 12-31-10 $ 423,562 $ 441,370 $ 174,079 31,911 30,550 30,246 6,071 5,126 3,824 11,350 2,967 2,741 136,920 167,814 169,997 1,179 1,940 — 34,101 29,371 26,846 (20,914 ) (5,120 ) (762 ) 256,026 239,060 220,563 1,449 14,052 — (146,591 ) (294,806 ) (74,074 ) (12,495 ) (7,880 ) (7,950 ) (14,194 ) — — $ 708,375 $ 624,444 $ 545,510 20122014 and 2011,2013, as compared to the prior year, period, consist of changes in the following categories (dollars in thousands):Full Year Full Year
2012 Full Year
2011 2014 2013 $ 37,567 $ 34,652 $ 22,961 $ 26,417 17,394 21,581 74,307 248,545 28,970 22,701 58,830 35,108 $ 83,931 $ 78,934 $ 156,098 $ 310,070 increase for Established Communities in 20122014 is due to a combination of increased rental revenues,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. During 2012, we experienced sequential annual increases in rental rates over 2011, while maintaining occupancy of at least 95% in all markets, offset partially by an increase in operating expenses.20122014 and 20112013 as compared to the prior years due to additional rental income generated from newly developed and acquired communities, including those acquired in the Archstone Acquisition in 2013, and increasesan increase in rental rates and economic occupancy, in 2013, at our Established Communities.43,41161,686 apartment homes for 20122014, as compared to 42,61357,240 homes for 20112013 and 40,48943,411 homes for 2010.2012. The increase in 2012 over 2011 is due to homes available from newly developed and acquired communities, offset partially by communities sold during 2012 and 2011. The weighted$2,017$2,254 for 20122014 as compared to $1,911$2,171 in 20112013 and $1,823$2,017 in 2010.$41,698,000,$36,096,000, or 5.8%3.9%, to $963,917,000 for 2014 from $927,821,000 in the prior year. The increase is due to an increase in average rental rates of 4.0% to $2,273 per apartment home, partially offset by a decrease in economic occupancy of 0.1% to 96.0%. Rental revenue increased $34,749,000, or 4.3%, for 2012 and increased $33,335,000 or 5.1%, for 20112013, as compared to the respective prior years. For 2012, the weighted average monthly revenue per occupied apartment home increased 5.6% to $2,092 compared to $1,981 in 2011 coupled with an increase in economic occupancy of 0.2% to 96.1%.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.20122014 as compared to the prior year, as discussed in more detail below.30.1%33.0% of the Established Community rental revenue for 2012,2014, experienced an increase in rental revenue of 5.5%3.4% for 20122014 as compared to 2011. Average2013, as a result of an increase in average rental rates increased 5.2% to $2,548 over 2011 and economic$2,680 per apartment home. Economic occupancy increased 0.3% toremained consistent at 96.4% for 20122014 as compared to 2011. While there has not been significant job growth2013. Apartment demand in the financial services sector of 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 technology sector continues to support the improvementMetro New York/New Jersey region in apartment fundamentals in2015. New York City and Northern New Jersey.22.0%18.6% of the Established Community rental revenue for 20122014 and experienced a rental revenue increase of 4.2%2.5% over the prior year. Average rental rates increased 4.6%2.9% to $2,073,$2,189 per apartment home, and were partially offset partially by a 0.4% decrease in economic occupancy of 0.4% to 95.7%95.3% for 20122014 as compared to 2011. The New England region's2013. Accelerating employment growth is driven by a renewed expansion in employment for the technology sector, primarily in the medical, education and technology fields is supporting apartment demand in the Boston metro area. The Fairfield market continues to experience moderate economic growth due to the area’s greater Boston area, offset somewhat by weakness inexposure to the financial services sector, impacting the Fairfield-New Haven area. We expect continued but moderating revenuewhich has experienced slower job growth with the increasing affordability of home ownership and future supply from new development impacting the longer term outlook.17.0%18.1% of the Established Community rental revenue for 20122014 and experienced a rental revenue increase of 10.1%7.7% over the prior year. Average rental rates increased 10.0%7.6% to $2,151,$2,524 per apartment home, and economic occupancy increased 0.1% to 96.1%96.3% for 20122014 as compared to 2011. The growth in rental revenue is driven by the strength of Northern California's technology sector, which we expect will continue in 2013. An increase in development activity and futureWhile new apartment supply may slow revenue growth in future periods. The Mid-Atlantic region, which represented approximately 13.6%periods, we expect the strength in the technology industry to continue to fuel demand for apartment homes in 2015. Mid-Atlantic region is facing challenges resulting from additional supply due to new development and the uncertainty surrounding federal spending. We expect these factors will result in revenue growth at a slower pace relative to our other markets during 2013.13.0%14.5% of the Established Community rental revenue for 20122014 and experienced a rental revenue increase of 4.9%4.6% over the prior year. Average rental rates increased 4.5%4.7% to $1,753,$1,873 per apartment home, and were partially offset by a 0.1% decrease in economic occupancy increased 0.4% to 96.3%96.2% for 20122014 as compared to 2011. The improvement in the2013. Southern California market is driven by above averagehas seen steady job growth and limited new apartment supply, andwhich we expect this trend will continue intoto support favorable operating results in 2015.4.3%5.6% of the Established Community rental revenue for 20122014 and experienced a rental revenue increase of 9.6%5.9% over the prior year. Average rental rates increased 8.3%6.2% to $1,493,$1,824, and were partially offset by a decrease in economic occupancy increased by 1.3%of 0.3% to 96.3%95.4% for 20122014 as compared to 2011.2013. The Pacific Northwest'sregion’s on-line retail, technology and manufacturing sectors continue to support job creationgrowth in the economy and apartment fundamentals. Consistent with several of our other markets, new development and resulting additional supply may moderateRental revenue growth may be tempered in future periods.Table2015 by the delivery of Contentsincreased $601,000,decreased $452,000 or 6.2%3.9%, in 2012 over 20112014 and $2,302,000,increased $1,245,000, or 31.3%12.1%, in 2011 over 2010.2013, as compared to the prior years. The increasesdecrease in both years were2014 was primarily due primarily to increasedlower property and asset management fees earned as a result of dispositions from Fund I and Fund II, partially offset by 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). 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 II over the prior years.I and Fund II.$9,455,000,$50,696,000, or 4.5%17.2%, and $84,064,000, or 39.8%, in 20122014 and increased $7,007,000, or 3.5% for 20112013, respectively, as compared to the prior years,years. The increases in 2014 and 2013 were primarily due to the addition of recentlynewly developed and acquired apartment homes.homes, including the communities acquired as part of the Archstone Acquisition in February 2013.decreased $475,000,increased $7,475,000, or 0.3% for 20124.0%, and decreased $2,514,000$4,374,000, or 1.6% for 20112.6%, in 2014 and 2013, respectively, as compared to the prior years. The decreasesincreases in 20122014 and 2011 from the respective prior years2013 were primarily due to a decreaseincreased repairs and maintenance, utilities and payroll costs.utilities from milder temperatures2014 and more favorable negotiated rates2013, respectively, as compared to the prior years. The increases in 2014 and 2013 were primarily due to the net impact of the communities acquired in the Archstone Acquisition as well as decreased bad debt expense.Property taxes increased $8,568,000, or 9.3% and $4,704,000, or 5.4% in 2012 and 2011, respectively, over the prior years due to the addition of newly developed apartment communities, coupled with increased tax rates and redeveloped apartment homes and overall higher assessments. Property tax increases are also impactedassessments across our portfolio. The increase in 2014 was partially offset by reductions in expected supplemental billings related to communities acquired as part of the size and timing of successful tax appeals.Archstone Acquisition.by $4,581,000,$6,206,000, or 6.5%6.7%, and decreased $631,000,$4,282,000, or 0.9%5.4%, for 2012in 2014 and 2011,2013, respectively, as compared to the prior year.years. The increase in 2012 over 2011 is2014 was primarily due to appeals and settlements recognized in 2011 not present in 2012 coupled with increases inhigher rates and assessments, throughout our regions.as well as refunds received in the prior year in excess of the current year period. The decreaseincrease in 2011 from 2010 is2013 was primarily due to the appeals and settlements recognized in 2011 not present in 2010, offset partially by increasedhigher rates and assessments, across all ofpartially offset by higher successful appeals and refunds received in 2013, as compared to the prior year. 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 that limit property tax increases. We evaluate property tax increases internally and also engage third-party consultants to assist in our regions.by $1,980,000,$7,236,000, or 4.9%13.6%, and $2,926,000,$10,912,000, or 7.8%25.9%, in 20122014 and 2011,2013, respectively, overas compared to the prior years. The increasesincrease in 20122014 was primarily due to an increase in compensation related costs, coupled with increased activities related to re-branding and 2011 from the prior years are due primarily tocorporate initiatives, as well as increases in costs associated with our introductionthe Archstone Acquisition. The increase in 2013 was primarily due to increased compensation related costs, as well as the increase in corporate-level personnel and implementation of our AVA and Eaves by Avalon brands, and increases in compensation costs.expenses associated with the Archstone Acquisition.$945,000,$2,081,000, or 18.4% and $1,302,000, or 34.0%34.3%, in 2012 and 2011, respectively, over2013 as compared to the prior yearsyears. The increase in 2014 was primarily due primarily to increases in compensation costs.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.for acquisitions of operating real estate andrelated 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.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, in 2014 and increased $8,383,000$33,700,000, or 282.5%296.9%, in 20122013, as compared to the prior years, The decrease in 2014 was primarily due to 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. The increase in 2013 over 2011the prior year is due primarily to costs associated with the Archstone Acquisition.decreased $30,894,000,increased $8,216,000, or 18.4%4.8%, and decreased $2,183,000,$35,482,000, or 1.3%25.9%, in 20122014 and 2011,2013, respectively, as compared to the prior years. This category includes interest costs offset by capitalized interest pertaining to development activity, amortization of the mark to market adjustment on debt assumed as part of the Archstone Acquisition, and interest income. The decreasesincrease in 2012 and 2011 from the prior years are2014 was primarily due primarily to decreases in the averageincreased unsecured debt outstanding, indebtedness and lower average effective interest rates coupled with increases in the amount of capitalized interest. The increasespartially offset by an increase in capitalized interest over the respective prior years were driven primarily by therelated to our increased development activity. The increase in 2013 was primarily due to net interest costs on debt assumed in the Archstone Acquisition, partially offset by increased capitalized interest related to our increased development activity and development pursuits. The year-over-year decrease in interest expense, net, in 2012 from 2011 was offset somewhat by interest income associated with escrow accounts for certain tax exempt secured borrowings recognized in 2011 that were not present in 2012.activity. the impact from prepayment penalties, the expensing of deferred financing costs from our debt repurchase and retirement activity, or payments to acquire our outstanding debt at amounts above or belowsale, which is included in discontinued operations, below. During 2012, we recognized a non-cash charge forsale.write off of deferred financing feesloss recorded by the Company related to the early retirement of a secured note. In 2011 we incurred chargesforward interest rate protection agreement that matured in May 2013. Based on changes in the Company's capital markets outlook in 2013, the Company did not issue the anticipated debt for a prepayment penaltywhich the interest rate protection agreement was transacted.the write off of deferred financing fees related to the early retirement of a secured note, with no comparable activityincreased $316,535,000, or 129.9%, in 2010.Depreciation expense increased in 2012 and 2011 primarily due to the net increase in assets from the completion of development and redevelopment activities and acquisition activity, offset by a reduction in depreciation expense from assets sold during 2012, 2011and 2010.General and administrative expense ("G&A") increased $4,730,000, or 16.1% in 2012 and $2,525,000, or 9.4% in 20112013, as compared to the prior years. The increasesdecrease in both periods are attributable2014 was primarily due to the impact of amortization for lease intangibles in 2013 not present in 2014, from communities acquired as part of the Archstone Acquisition. The increase in 2013 was primarily due to additional depreciation expense from the Archstone Acquisition, consisting largely of the depreciation of in-place lease intangibles, which were depreciated over a six month period.expense and professional fees.costs, including costs related to the Archstone Acquisition. Amounts for 2011 are composedwrite downprior years. The increase in 2014 was primarily due to gains on the sales of two land parcels and an other than temporary impairment of an investmentcommunities 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.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. decreased in 2012 and increased in 20112014 and decreased 2013 as compared to the prior years, due to thechanges in volume and associated gains on the sale of land parcelsparcels.each2014 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 respective years.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.Equity inIncome tax expense for 2014 consists of federal income of unconsolidated entities increased $15,794,000, or 308.5% in 2012 and $4,358,000, or 571.9% in 2011 as comparedtax expense related to prior years. The increase in 2012 is due primarily to the recognition of income from our promoted interest for Avalon Del Rey and an increase in our proportionate share of gains from Fund I disposition activity over the prior year periods. The increase in 2011 is due to the recognition of our proportionate sharedispositions of the gain on saleCompany's direct and indirect interests in certain real estate assets acquired in the Archstone Acquisition, which were owned through a taxable REIT subsidiary.communitiesreal estate sold orand qualifying as discontinued operations during the period from January 1, 20102012 through December 31, 2012. This income increased for 20122014. Income from discontinued operations decreased in 2014 and decreased for 2011 due to changes in the number of communities sold in each year2013, as compared to the prior year period. See Note 6, "Real Estate Disposition Activities," to our Consolidated Financial Statements.Gain on sale of communities decreasedyears. The decrease in 2012 and increased in 2011 as compared2014 was due to the prior yearschange 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 a changechanges in the volume of community disposition activity and associated gains as compared to the prior year. The amount of gain realized upon disposition of a community depends on many factors, including 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.income to us from thean allocation of losses to the noncontrolling interestsincome of $13,760,000 in 2014, and an allocation of loss of $370,000 and $307,000 in 2013 and 2012, and $252,000respectively. The amount for 2014 includes our joint venture partners' 84.8% interest in 2011. The decrease in loss allocated in 2011 relative to 2010 is due primarily to improved operating resultsthe gain on the sale of thea Fund I community we consolidate. The conversion and redemptionthat was consolidated for financial reporting purposes, in the amount of limited partnership units in 2011 and 2010 also contributed to the decrease in 2011 from 2010, thereby reducing outside ownership interest and the allocation of net losses to outside ownership interests.$14,132,000.•the cash consideration due and any costs associated with the expected Archstone Acquisition as discussed in this Form 10-K, or any additional liquidity needs associated with the expected Archstone Acquisition;•••prior tobefore maturity; and• We continued to have cost effective access to the capital markets during the year ended December 31, 2012. Net proceeds of approximately $3,100,458,000 were provided by capital markets activity in 2012. Capital raising activities included public equity and debt, including amounts issued in an underwritten public offering of common stock in December 2012, the issuance of unsecured notes in September and December 2012 and the issuance of common stock during 2012 under CEP II and CEP III, discussed below. 2013,2015, we expect to meet all of our liquidity needs from a variety of internal and external sources, includingwhich may include the physical settlement of the Forward, real estate dispositions, cash balances on hand, asset salesborrowing capacity under our Credit Facility and/or the Term Loan, secured and unsecured debt financings, and other public or private sources of liquidity as discussed below,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. At December 31, 2012, we have unrestricted cashCapital 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 cash equivalentsthe issuance of $2,733,618,000 available to fund the Archstone Acquisition, to fund current liquidity needs as well as to fund development and acquisition related activities.$2,733,618,000$509,460,000 at December 31, 2012,2014, an increase of $2,116,765,000$228,105,000 from $616,853,000$281,355,000 at December 31, 2011.2013. 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.$540,819,000$886,641,000 in 20122014 from $429,354,000$724,315,000 in 2011.2013. The increase was driven primarily by increased cash flowsNOI from community operationsexisting and newly developed communities, a decrease in 2012 as compared to 2011acquisition costs, and the timing of generalpayments of corporate expenditures.$623,386,000$816,760,000 in 20122014 is related to investments in assets primarily through development redevelopment, and acquisitions,redevelopment, partially offset byof $274,018,000received for dispositions and distributions from the sale of real estate.unconsolidated joint ventures. In total,2014, we invested $937,946,000 during 2012$1,341,657,000 in the following areas:•Weapproximately $755,363,000$1,241,832,000 in the development and redevelopment of communities;•We invested $155,755,000 in the acquisition of four apartment communities, acquisition costs associated with these acquisitions, and costs related to the expected Archstone Acquisition; and•We$26,528,000$52,825,000 for real estateour operating communities and non-real estate assets.$2,199,332,000$158,224,000 in 2012.2014. The net cash provided is due to $2,430,190,000 received from the to:primarily throughin the underwritten common equity offering we executed in November 2012,amount of $295,465,000 through CEP IIIII; CEP III, and stock option exercises, andproceeds from our $450,000,000 and $250,000,000 unsecured notes offerings. These proceeds were offset partially by $365,572,000amount of dividends paid, $593,643,000;$381,001,000, the $150,000,000; andmortgagesecured notes payablein the amount of $110,013,000, and the settlement of an interest rate contract for $54,930,000. In September 2011, we entered into$750,000,000$1,300,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the "Credit Facility"). In December 2012, pursuant to an option available under the terms of the Credit Facility, with the approval of the lending syndicate we expanded the aggregate facility size to $1,300,000,000, extended the maturity of the credit facility from September 2015 to which matures in April 2017, and amended other sections of the Credit Facility (the "Facility Increase").2017. We may further extend the termmaturity for up to one year through the exercise of two, additional six month periods (for a total extension options for an aggregate fee of one year), provided we are not in default and upon payment of a $975,000 extension fee for each extension option. In connection with the Facility Increase, the applicable margin over reference rates used to determine the applicable interest rates on our borrowings from time to time decreased.$1,950,000. The Credit Facility now bears interest at varying levels based on the London Interbank Offered Rate ("LIBOR"), rating levels achieved on our unsecured notes and on a maturity schedule selected by us. The current stated pricing is LIBOR plus 1.05% per annum (1.25% on(1.22% at January 31, 2013)2015 assuming a one month borrowing rate). The stated spread over LIBOR can vary from LIBOR plus 0.95% to LIBOR plus 1.725% 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 Facility Increase, the annual facility fee was also amended to lower the fee from 0.175% tois 0.15% (approximately(or approximately $1,950,000 annually based on the $1,300,000,000 facility size and based on our current credit rating).$42,575,000$47,963,000 outstanding in letters of credit that reduced our borrowing capacity as of January 31, 2013.•••2012. In November 2010, we commenced our second continuous equity program ("CEP II"), under which we were authorized to sell up to $500,000,000 of our common stock from time to time during a 36-month period. In conjunction with CEP II, we engaged sales agents who received compensation of approximately 1.5% of the gross sales price for shares sold. For the year ended December 31, 2012 we sold 1,435,215 shares under CEP II at an average sales price of $140.41 per share, for aggregate net proceeds of $198,489,000. From program inception in November 2010 through completion in July 2012, we sold 3,925,980 shares at an average price of $127.36 per share, for aggregate net proceeds of $492,490,000.oura third continuous equity program ("CEP III"), under which we mayare authorized by our Board of Directors to sell up to $750,000,000 of shares of our common stock from time to time during a 36-month period. In conjunction with CEP III we have engaged sales agents who receive compensation of approximately 1.5% of the gross sales price for shares sold. From program inception throughDuring the year ended December 31, 2012,2014, we sold 729,9912,069,538 shares at an average sales price of $142.09,$144.95 per share, for net proceeds of $102,168,000.Underwritten Public Offering$295,465,000. As of Common Stock In December 2012,January 31, 2015, we issued 16,675,000had $346,304,000 of shares remaining authorized for issuance under this program.$130.00 per share. Net proceedsthe time of approximately $2,102,718,000 are expected to be used to repay a portionsettlement, 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 terms of the debtForward. Under either of the net settlement provisions, we expectwill pay to assume in connection with the Archstone Acquisition,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 fund the cash consideration due in connection withextent that the Archstone Acquisition, to fundweighted average market price of our common stock at the fees, costs and expenses related theretotime of settlement is less than the price under the Forward. Settlement of the Forward will occur on one or if the acquisition doesmore dates not occur, for general corporate purposes.and Derivative Maturitiesthe time that such debt matures.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.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 by equity offerings.Term Loan. 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. We are also party$215,000,000 forward$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 swap agreement, which was executed to reduce the impact of variability in interest rates on2.99% and a portion of our expected debt issuance activity in 2013. In 2013, based on changes in our capital markets outlook for the year, coupled with our current liquidity position, it is now uncertain as to whether we will issue the anticipated debt for which this interest$38,000,000 variable rate protection agreement was transacted. We expect to settle this positionnote at or priorLIBOR plus 2.00%.May 2013 for the fair value at the time of settlement. At the point thatApril 2014, we deem theanticipated debt issuance probable of not occurring, we will record a charge for the reversal of therepaid $150,000,000 principal amount recorded within accumulated other comprehensive income for the forward interest swap agreement. If we do issue the debt as previously anticipated, then the amounts recorded within accumulated other comprehensive income will be recognized as interest expense over the term of the debt. As of January 31, 2013 we had recorded a liability related to the value of this contract of $49,675,000 In conjunction with our issuance of unsecured notes in September 2012, discussed below, we cash settled a liability associated with a second $215,000,000 forward interest rate swap contract to which we were a party in September 2012 for $54,930,000.addition to the proceeds received from the common equity offering we completed in December 2012 and from the CEP II and CEP III offerings during 2012 and the forward interest rate swap agreement discussed above, the following financing activity occurred during 2012:•In January 2012, we repaid $179,400,000 principal amount of 5.5% unsecured notes pursuant to their scheduled maturity.•In February 2012, in conjunction with the acquisition of a community, we assumed the existing 4.61% mortgage note in the amount of $11,958,000 that matures in June 2018, and is secured by the community.•Also in February 2012, we repaid a variable rate secured mortgage note in the amount of $48,500,000 in advance of its November 2039 scheduled maturity date. In conjunction with the early retirement we incurred a non-cash charge of $1,179,000 for the write off of deferred financing fees which was recognized as a loss on extinguishment of debt on the Consolidated Statements of Comprehensive Income.•In May 2012, we repaid a variable rate secured mortgage note in the amount of $14,566,000 in accordance with its scheduled maturity date.•Also in May 2012,2014, in conjunction with the disposition of an operating community, we repaid a variablefixed rate secured mortgage noteloan in the amount of $33,100,000$10,427,000 with an interest rate of 6.19% in advance of its scheduledNovember 2015 maturity date. In accordance with the requirements of the master credit agreement governing this and certain other secured borrowings, we repaid an additional $5,914,000 principal amount of secured borrowings for eight other operating communities. We incurred a charge for early debt extinguishment of $602,000 for a prepayment penalty and the write off of deferred financing fees associated with the early repayment of this note included in income from discontinued operations on the accompanying Consolidated Statements of Comprehensive Income.•September 2012,November 2014, we issued $450,000,000$300,000,000 principal amount of unsecured notes in a public offering under ourits existing shelf registration statement.statement for net proceeds of approximately $295,803,000. The notes mature in September 2022November 2024 and were issued at a 2.95% interest rate. The notes have an effective interest ratestated coupon of approximately 4.30%, including the effect of the interest rate hedge discussed above and offering costs.•In November 2012, we repaid $201,601,000 principal amount of 6.125% unsecured notes pursuant to their scheduled maturity.•In December 2012, we issued $250,000,000 principal amount of unsecured notes in a public offering under our existing shelf registration statement. The notes mature in March 2023 and were issued at a 2.85% interest rate. The notes have an effective interest rate of 3.00%, including the effect of offering costs.20122014 (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 ofon the indebtedness of any unconsolidated entities in which we have anyan equity or other interest. The information presented in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013. Balance Outstanding Scheduled maturities All-In
interest
rate(1) Principal
maturity
date 12-31-11 12-31-12 2013 2014 2015 2016 2017 Thereafter 7.81 % May-2027 $ 9,103 $ 8,764 $ 364 $ 390 $ 419 $ 449 $ 482 $ 6,660 7.49 % Feb-2041 16,468 16,288 195 209 223 240 257 15,164 7.54 % Apr-2043 16,367 16,205 173 185 198 211 225 15,213 6.15 % Oct-2047 40,781 40,390 411 434 457 482 509 38,097 4.62 % May-2046 100,000 — (6) — — — — — — 182,719 81,647 1,143 1,218 1,297 1,382 1,473 75,134 1.03 % Feb-2017 18,300 18,300 (3) — — — — 18,300 — 1.29 % Jun-2025 7,635 7,635 (3) — — — — — 7,635 1.21 % Jun-2025 20,800 20,800 (3) — — — — — 20,800 1.55 % Jun-2025 38,800 38,800 (3) — — — — — 38,800 1.56 % Jun-2025 17,600 17,600 (3) — — — — — 17,600 3.08 % Nov-2037 93,800 93,800 — — — — — 93,800 — Nov-2039 48,500 — (5) — — — — — — 1.65 % Jul-2040 45,000 45,000 (3) — — — — — 45,000 2.50 % Mar-2046 116,000 116,000 — — — — — 116,000 2.46 % Mar-2046 10,000 10,000 — — — — — 10,000 4.62 % May-2046 — 100,000 (6) — — — — — 100,000 416,435 467,935 — — — — 18,300 449,635 — Jan-2012 104,400 — (7) — — — — — — — Nov-2012 201,601 — (7) — — — — — — 5.11 % Mar-2013 100,000 100,000 100,000 — — — ��� — 5.52 % Apr-2014 150,000 150,000 — 150,000 — — — — 5.89 % Sep-2016 250,000 250,000 — — — 250,000 — — 5.82 % Mar-2017 250,000 250,000 — — — — 250,000 — 6.19 % Mar-2020 250,000 250,000 — — — — — 250,000 4.04 % Jan-2021 250,000 250,000 — — — — — 250,000 4.30 % Sep-2022 — 450,000 — — — — — 450,000 3.00 % Mar-2023 — 250,000 — — — — — 250,000 5.55 % Jul-2028 5,668 5,465 216 229 242 255 271 4,252 7.78 % Jul-2033 18,321 17,939 412 441 472 506 542 15,566 4.81 % Apr-2013 170,125 170,125 170,125 — — — — — 5.59 % May-2015 110,600 110,600 — — 110,600 — — — 5.74 % Jul-2015 150,000 150,000 — — 150,000 — — — 6.22 % Nov-2015 49,907 49,221 742 789 47,690 — — — 6.12 % Nov-2015 60,133 59,292 907 962 57,423 — — — 4.00 % Jul-2066 2,500 2,500 — — — — — 2,500 5.92 % May-2019 20,991 20,737 273 289 307 323 346 19,199 5.93 % May-2019 41,048 40,552 533 566 601 631 676 37,545 5.92 % May-2019 65,261 64,472 847 900 955 1,003 1,075 59,692 5.94 % May-2019 36,388 35,948 473 502 532 559 599 33,283 5.94 % May-2019 38,991 38,519 506 538 571 599 642 35,663 6.06 % May-2019 65,800 65,004 855 907 963 1,011 1,083 60,185 5.94 % May-2019 78,046 77,103 1,016 1,076 1,142 1,199 1,285 71,385 6.05 % May-2019 58,620 57,912 763 808 858 901 965 53,617 6.05 % May-2019 45,547 44,997 592 628 667 700 750 41,660 5.91 % May-2019 77,187 76,254 1,003 1,065 1,130 1,186 1,271 70,599 5.91 % May-2019 26,522 26,201 344 366 388 408 437 24,258 5.90 % May-2019 53,624 52,975 696 740 785 824 883 49,047 5.90 % May-2019 72,785 71,905 946 1,004 1,065 1,118 1,198 66,574 5.01 % Aug-2015 43,426 42,459 1,019 1,070 40,370 — — — 5.75 % Jun-2013 54,574 53,348 53,348 — — — — — 4.77 % Jun-2018 — 11,958 89 186 195 202 213 11,073 2,902,065 3,295,486 335,705 163,066 416,956 261,425 262,236 1,856,098 — May-2012 14,806 — (7) — — — — — — 2.54 % Mar-2046 9,000 9,000 — — — — — 9,000 — Jan-2012 75,000 — (7) — — — — — — 98,806 9,000 — — — — — 9,000 $ 3,600,025 $ 3,854,068 $ 336,848 $ 164,284 $ 418,253 $ 262,807 $ 282,009 $ 2,389,867 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 Tax-exempt bonds (4) 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 Avalon at Chestnut Hill 6.15 % Oct-2047 39,979 39,545 457 482 509 536 566 36,995 Avalon Westbury 4.13 % Nov-2036 (5) 62,200 62,200 — — — — — 62,200 142,706 141,490 1,296 1,380 1,471 1,570 1,670 134,103 Variable rate (2) Avalon at Mountain View 0.78 % Feb-2017 18,300 18,100 (3) — — 18,100 — — — Avalon at Mission Viejo 1.21 % Jun-2025 7,635 7,635 (3) — — — — — 7,635 AVA Nob Hill 1.14 % Jun-2025 20,800 20,800 (3) — — — — — 20,800 Avalon Campbell 1.47 % Jun-2025 38,800 38,800 (3) — — — — — 38,800 Eaves Pacifica 1.49 % Jun-2025 17,600 17,600 (3) — — — — — 17,600 Avalon Bowery Place I 3.01 % Nov-2037 93,800 93,800 (3) — — — — — 93,800 Avalon Acton 1.51 % Jul-2040 45,000 45,000 (3) — — — — — 45,000 Avalon Walnut Creek 1.36 % Mar-2046 (5) 116,000 116,000 (6) — — — — — 116,000 Avalon Walnut Creek 1.36 % Mar-2046 (5) 10,000 10,000 (6) — — — — — 10,000 Avalon Morningside Park 1.60 % May-2046 (5) 100,000 100,000 — — — — — 100,000 Avalon Clinton North 1.72 % Nov-2038 147,000 147,000 (3) — — — — — 147,000 Avalon Clinton South 1.72 % Nov-2038 121,500 121,500 (3) — — — — — 121,500 Avalon Midtown West 1.63 % May-2029 100,500 100,500 (3) — — — — — 100,500 Avalon San Bruno 1.61 % Dec-2037 64,450 64,450 (3) — — — — — 64,450 Avalon Calabasas 1.71 % Apr-2028 44,410 44,410 (3) — — — 128 403 43,879 945,795 945,595 — — 18,100 128 403 926,964 Conventional loans (4) Fixed rate $150 Million unsecured notes — % Apr-2014 150,000 — — — — — — — $250 Million unsecured notes 5.89 % Sep-2016 250,000 250,000 — 250,000 — — — — $250 Million unsecured notes 5.82 % Mar-2017 250,000 250,000 — — 250,000 — — — $250 Million unsecured notes 6.19 % Mar-2020 250,000 250,000 — — — — — 250,000 $250 Million unsecured notes 4.04 % Jan-2021 250,000 250,000 — — — — — 250,000 $450 Million unsecured notes 4.30 % Sep-2022 450,000 450,000 — — — — — 450,000 $250 Million unsecured notes 3.00 % Mar-2023 250,000 250,000 — — — — — 250,000 $400 Million unsecured notes 3.78 % Oct-2020 400,000 400,000 — — — — — 400,000 $350 Million unsecured notes 4.30 % Dec-2023 350,000 350,000 — — — — — 350,000 $300 Million unsecured notes 3.66 % Nov-2024 — 300,000 — — — — — 300,000 Avalon Orchards 7.79 % Jul-2033 17,530 17,091 470 503 539 577 619 14,383 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 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 Run East 5.95 % May-2019 38,013 37,475 571 599 642 681 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 at Gallery Place 6.06 % May-2019 44,405 43,776 667 700 750 796 40,863 — Avalon at Traville 5.91 % May-2019 75,251 74,186 1,130 1,186 1,271 1,348 69,251 — Avalon Bellevue 5.92 % May-2019 25,856 25,491 388 408 437 463 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 — AVA Pasadena 4.05 % Jun-2018 11,869 11,683 195 202 213 11,073 — — (1)Includes credit enhancement fees, facility fees, trustees' fees, the impact of interest rate hedges, offering costs and other fees.(2)Variable rates are given as of December 31, 2012.(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 $4,202 of debt discount and $1,791 of debt discount and basis adjustments associated with the hedged unsecured notes as of December 31, 2012 and December 31, 2011, respectively, and $1,167 and $962 premium associated with secured notes as of December 31, 2012 and December 31, 2011, respectively, as reflected on our Consolidated Balance Sheets included elsewhere in this report.(5)In February 2012, we elected to repay this mortgage note at par in advance of its maturity date.(6)In July 2012 we remarketed the bonds converting them to a variable rate through July 2017.(7)Borrowing was repaid in accordance with its scheduled maturity.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 — — — Eaves Thousand Oaks 3.36 % Nov-2017 27,411 27,411 — — 27,411 — — — Avalon Walnut Ridge I 3.36 % Nov-2017 20,754 20,754 — — 20,754 — — — Eaves Los Feliz 3.36 % Nov-2017 43,258 43,258 — — 43,258 — — — Avalon Oak Creek 3.36 % Nov-2017 85,288 85,288 — — 85,288 — — — Avalon Del Mar Station 3.36 % Nov-2017 76,471 76,471 — — 76,471 — — — Avalon Courthouse Place 3.36 % Nov-2017 140,332 140,332 — — 140,332 — — — Avalon Pasadena 3.34 % Nov-2017 28,079 28,079 — — 28,079 — — — Eaves West Valley 3.36 % Nov-2017 83,087 83,087 — — 83,087 — — — Eaves Woodland Hills 3.36 % Nov-2017 104,694 104,694 — — 104,694 — — — Avalon Russett 3.36 % Nov-2017 39,972 39,972 — — 39,972 — — — 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 Avalon Westbury 4.13 % Nov-2036 (5) 21,260 20,145 1,172 1,231 1,293 1,358 1,426 13,665 Archstone Lexington 3.32 % Mar-2016 16,780 16,525 270 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 Avalon Andover 3.28 % Apr-2018 14,821 14,505 325 336 346 13,498 — — Avalon Natick 3.13 % Apr-2019 — 14,818 319 329 339 349 13,482 — 4,865,256 5,009,187 601,389 281,927 958,892 41,638 629,360 2,495,981 Variable rate (2) Avalon Walnut Creek 1.70 % Mar-2046 (5) 8,500 8,500 (6) — — — — — 8,500 Avalon Calabasas 2.41 % Aug-2018 57,314 55,827 (3) 1,084 1,152 1,225 52,366 — — Avalon Natick 2.44 % Apr-2019 — 37,539 (3) 809 833 858 884 34,155 — Term Loan 1.77 % Mar-2021 — 250,000 — — — — — 250,000 65,814 351,866 1,893 1,985 2,083 53,250 34,155 258,500 Total indebtedness - excluding Credit Facility $ 6,019,571 $ 6,448,138 $ 604,578 $ 285,292 $ 980,546 $ 96,586 $ 665,588 $ 3,815,548 (1) Includes credit enhancement fees, facility fees, trustees' fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees. (2) 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 of debt discount and $5,291 of debt discount and basis adjustments associated with the hedged unsecured notes as of December 31, 2014 and December 31, 2013, respectively, and $84,449 and $120,071 of premium associated with secured notes as of December 31, 2014 and December 31, 2013, respectively, as reflected on our Consolidated Balance Sheets included elsewhere in this report. (5) Maturity date reflects the contractual maturity of the underlying bond. There is also an associated earlier credit enhancement maturity date. (6) In July 2013 we remarketed the bonds and converted them to variable rate through July 2018. (7) Borrowing is scheduled to mature in December 2015, and contractually includes an automatic one-year extension of the loan through December 2016. (8) Outstanding principal balance was reduced in June 2014 in conjunction with the prepayment of a secured mortgage note under the master credit agreement. (9) This community was sold in January 2015, at which time we substituted another operating community as collateral for the borrowing. (10) In January 2015, we experienced a fire at Edgewater. As of the date of this Form 10-K there has been no change 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. As discussed in this Form 10-K, we have entered into a Purchase Agreement to acquire certain of Archstone's net assets. See discussion under "Contractual Obligations."2012,2014, we had 2326 wholly-owned communities under construction for which a total estimated cost of $983,079,000 remained to be invested. We also had fiveand eight wholly-owned communities under reconstruction, for which a total estimated cost of $43,090,000 remained to be invested.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:•Facility until it expires in 2017;••••securities;securities, including through the Forward; and/or• reconstruction activity related to communities owned by the Funds,unconsolidated joint ventures begins, or the construction of a Development Right begins, we intend to arrange 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. specific 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.2012,2014, we had investments in the following unconsolidated real estate entities with ownership interest percentages ranging from 15.2% to 31.3%. We accountaccounted for these investments in unconsolidated real estate entities under the equity method of accounting. Refer to Note 5 "Investments6, “Investments in Real Estate Entities"Entities,” of the Consolidated Financial Statements located 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.table. The information presentedtable (dollars in this table may materially change as a result of the expected Archstone Acquisition which we anticipate will occur in the first quarter of 2013. Debt Company
Ownership
Percentage # of
Apartment
Homes Total
Capitalized
Cost(1) Amount(2) Type Interest
Rate(3) Maturity
Date 82 $ 20,939 $ 12,750 Fixed 5.41 % Mar 2014 192 42,814 27,001 Fixed 5.38 % Aug 2013 160 66,871 41,500 Fixed 5.88 % Mar 2014 320 30,025 23,172 Fixed 6.06 % Oct 2014 156 24,526 12,000 Fixed 5.68 % Feb 2015 392 80,278 45,000 Fixed 5.74 % Dec 2014 252 38,553 24,100 Fixed 5.49 % Dec 2014 169 38,888 24,500 Fixed 5.43 % Dec 2014 108 36,849 19,115 Fixed 6.13 % Sep 2016 85 24,872 11,761 Fixed 5.92 % Oct 2014 211 25,359 13,455 Fixed 5.12 % Mar 2015 15.2 % 2,127 $ 429,974 $ 254,354 5.7 % 220 $ 33,993 $ 21,515 Fixed 5.52 % Jun 2019 491 72,321 42,600 Fixed 5.26 % May 2017 205 31,592 18,750 Variable 2.82 % Jun 2017 348 45,585 26,850 Fixed 3.64 % Nov 2017 684 102,235 63,200 Fixed 5.42 % Jan 2018 628 100,450 59,100 Fixed 3.81 % Oct 2017 140 27,442 — N/A N/A N/A 776 87,799 53,143 Fixed 4.56 % Nov 2014 449 79,068 46,141 Fixed 4.68 % Feb 2018 210 51,300 31,448 Fixed 4.26 % Aug 2019 94 21,880 13,500 Fixed 3.90 % Sep 2019 676 126,030 72,881 Fixed 3.45 % Nov 2018 334 65,927 40,950 Fixed 3.37 % Apr 2019 31.3 % 5,255 $ 845,622 $ 490,078 4.3 % 20.0 % 361 $ 137,212 $ 117,000 Variable 1.53 % Nov 2036 25.0 % 313 124,251 105,000 Fixed 6.02 % Dec 2015 674 $ 261,463 $ 222,000 3.7 % 8,056 $ 1,537,059 $ 966,432 4.5 % (1)Represents total capitalized cost as of December 31, 2012.(2)We have not guaranteed the debt of unconsolidated investees and bear no responsibility for the repayment.(3)Totals represent weighted average rate on outstanding debt as of December 31, 2012.(4)This community was sold in January 2013.(5)Beginning in the third quarter of 2010, the Company consolidated the net assets and results of operations of The Springs. Debt (2) Unconsolidated Real Estate Investments Principal Amount Type Fund II 1. Briarwood Apartments—Owings Mills, MD 348 $ 45,765 $ 26,318 Fixed 3.64 % Nov 2017 2. Eaves Gaithersburg—Gaithersburg, MD (4) 684 102,638 63,200 Fixed 5.42 % Jan 2018 3. Eaves Tustin—Tustin, CA 628 100,837 59,100 Fixed 3.81 % Oct 2017 4. Eaves Los Alisos—Lake Forest, CA 140 27,466 — N/A N/A N/A 5. Eaves Plainsboro—Plainsboro, NJ (5) 776 91,862 9,412 Fixed 5.04 % Jan 2016 6. Eaves Carlsbad—Carlsbad, CA 450 80,943 46,141 Fixed 4.68 % Feb 2018 7. Eaves Rockville—Rockville, MD 210 51,608 30,277 Fixed 4.26 % Aug 2019 8. Captain Parker Arms - Lexington, MA 94 22,181 13,500 Fixed 3.90 % Sep 2019 9. Eaves Rancho San Diego—San Diego, CA 676 127,847 69,913 Fixed 3.45 % Nov 2018 10. Avalon Watchung—Watchung, NJ 334 66,425 40,950 Fixed 3.37 % Apr 2019 Total Fund II 31.3 % 4,340 $ 717,572 $ 358,811 4.15 % �� U.S. Fund 1. Eaves Sunnyvale—Sunnyvale, CA (4) 192 $ 67,031 $ 33,806 Fixed 5.33 % Nov 2019 2. Avalon Studio 4041—Studio City, CA 149 56,774 30,150 Fixed 3.34 % Nov 2022 3. Marina Bay—Marina del Rey, CA 205 76,986 — N/A N/A N/A 4. Avalon Venice on Rose—Venice, CA 70 56,405 31,114 Fixed 3.31 % Jun 2020 5. Archstone Boca Town Center—Boca Raton, FL (6) 252 46,251 27,706 Fixed/Variable 3.54 % Feb 2019 6. Avalon Station 250—Dedham, MA 285 95,111 59,733 Fixed 3.73 % Sep 2022 7. Avalon Grosvenor Tower—Bethesda, MD 237 79,088 46,294 Fixed 3.74 % Sep 2022 8. Avalon Kips Bay—New York, NY 209 134,470 68,920 Fixed 4.25 % Jan 2019 9. Avalon Kirkland at Carillon—Kirkland, WA 131 50,023 30,157 Fixed 3.75 % Feb 2019 Total U.S. Fund 28.6 % 1,730 $ 662,139 $ 327,880 3.92 % AC JV 1. Archstone North Point—Cambridge, MA (7) 426 $ 186,668 $ 111,653 Fixed 6.00 % Aug 2021 2. Archstone Woodland Park—Herndon, VA (7) 392 85,324 50,647 Fixed 6.00 % Aug 2021 3. Avalon North Points Lofts — Cambridge, MA (8) 103 26,503 — N/A N/A N/A Total AC JV 20.0 % 921 $ 298,495 $ 162,300 6.00 % Residual JV (9) 1. SWIB 1,410 $ 261,740 $ 148,866 Fixed/Variable 2.32 % Dec 2015 (10) Total Residual JV 8.0 % 1,410 $ 261,740 $ 148,866 2.32 % Other Operating Joint Ventures 1. MVP I, LLC 25.0 % 313 $ 124,344 $ 105,000 Variable (11) 2.65 % Dec 2015 2. Brandywine Apartments of Maryland, LLC 28.7 % 305 17,802 24,346 Fixed 3.40 % Jun 2028 Total Other Joint Ventures 618 $ 142,146 $ 129,346 2.79 % Total Unconsolidated Investments 9,019 $ 2,082,092 $ 1,127,203 3.95 % (6)(1) Represents total capitalized cost as of December 31, 2014. (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. (4) Borrowing on this community is comprised of two mortgage loans. (7)Borrowing on this community is comprised of two mortgage loans.(8)After the venture makes certain threshold distributions to the third-party partner, the Company generally receives 50% of all further distributions.(5) Fund II repaid an outstanding mortgage loan secured by this community at par during 2014. (6) The debt secured by this community is a variable rate note, of which $24,868 has been converted to an effective fixed rate borrowing with an interest rate swap. (7) 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. 5,6, "Investments in Real Estate Entities," of our Consolidated Financial Statements located elsewhere in this report.•CVP I, LLC has outstanding tax-exempt, variable rate bonds maturing in November 2036 in the amount$117,000,000, which have permanent credit enhancement. We agreed to guarantee, under limited circumstances, the repayment to the credit enhancer of any advances it may make in fulfillment of CVP I, LLC's repayment obligations under the bonds. We also guaranteed to the credit enhancer that CVP I, LLC would obtain a final certificate of occupancy for the project (Chrystie Place in New York City), which was obtained in December 2012, satisfying the conditions of the guarantee.•Subsidiaries31, 2014, subsidiaries of Fund III have 1310 loans secured by individual assets with aggregate amounts outstanding in the aggregate of $254,354,000, including $23,172,000 for the mortgage note of a Fund I subsidiary that we purchased during 2010. Fund I subsidiary loans have$358,811,000 with varying maturity dates (or(and, in some cases, dates after which the loans can be prepaid without penalty), ranging from August 2013 to September 2016. These mortgage loans are secured by the underlying real estate. The mortgage loans are payable by the subsidiaries of Fund I with operating cash flow or disposition proceeds from the underlying real estate. We have not guaranteed the debt of Fund I, nor do we have any obligation to fund this debt should Fund I be unable to do so.In addition, as part of the formation of Fund I, we provided to one of the limited partners a guarantee. The guarantee provides that if, upon final liquidation of Fund I, the total amount of all distributions to that partner during the life of Fund I (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 $7,500,000 as of December 31, 2012). As of December 31, 2012, the expected realizable value of the real estate assets owned by Fund I is considered adequate to cover such potential payment to that partner under the expected Fund I liquidation scenario. The estimated fair value of, and our obligation under this guarantee, both at inception and as of December 31, 2012 was not significant and therefore we have not recorded any obligation for this guarantee as of December 31, 2012.•As of December 31, 2012, subsidiaries of Fund II have 14 loans secured by individual assets with amounts outstanding in the aggregate of $490,078,000 with varying maturity dates (or dates after which the loans can be prepaid without penalty), ranging from November 2014January 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, nor do we have any obligation to fund this debt should Fund II be unable to do so.2012)2014). As of December 31, 2012,2014, the expected realizable value of the real estate assets owned by Fund II is considered adequate to cover such potential paymentthe 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, 20122014, was not significant and therefore we have not recorded any obligation for this guarantee as of December 31, 2012.• Fund I or Fund II was made to a special purpose, single asset subsidiary of the Funds.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 the respective 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 the Funds,Fund II, including against us or our wholly-owned subsidiaries that invest in the Funds.Fund II. A default by a 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"non-Fund subsidiaries or affiliates. If a Fund subsidiaryII or a subsidiary of Fund II were unable to meet its obligations under a loan, the value of our investment in that Fund II would likely decline and we might also be more likely to be obligated under the guarantee we provided to one of the Fund II partners in each Fund as described above. If a Fund II subsidiary or a 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 the 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).either of the Funds wereFund II was unable to meet theirits 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 either of the FundsFund II and/or our returns by providing time for performance to improve.•TheIn December 2014, the loan isconverted from fixed rate to a fixedvariable rate, interest-only note bearing interest at 6.02%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.•July 2012, one of our wholly owned subsidiaries acquired Avalon Del Rey, a 309 apartment home community which was owned by aJanuary 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.heldhave an 8.0% indirect interest in through the Residual JV, has two loans and four draws on a 30% ownership interest. As part of this transaction, the venture repaid the $43,606,000 variable rate notecredit 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 community. We paid approximately $67,200,000debt of SWIB, nor do we have any obligation to purchase our joint venture partner's 70% interest as well as paying the venture our proportionate share of the note repayment.•In 2007 we entered into a non-cancelable commitment (the "Commitment")fund this debt should SWIB be unable to acquire parcels of land in Brooklyn, New York for an aggregate purchase price of approximately $111,000,000. During 2012 we purchased the remaining outstanding parcels for $27,709,000 satisfying our purchase obligation. In November 2012, we entered into agreements with (i) Equity Residential and its operating partnership, ERP Operating Partnership LP ("Equity Residential"), (ii) Lehman Brothers Holdings, Inc., ("Lehman"), and (iii) Archstone Enterprise LP ("Archstone"), pursuant to which AvalonBay and Equity Residential will acquire, directly or indirectly, all of the assets and entities owned by and all of the liabilities of Archstone. Under the terms of the agreements, we will acquire approximately 40% of Archstone's assets and liabilities and Equity Residential will acquire approximately 60% of Archstone's assets and liabilities ("Archstone Acquisition"). The transaction is expected to close during the first quarter of 2013. As disclosed in November 2012, we expect to purchase the following as part of the Archstone Acquisition, which is subject to adjustment up until the transaction closes:•66 apartment communities that are expected to be consolidated for financial reporting purposes, containing 22,222 apartment homes, of which six communities are under construction and are expected to contain 1,666 apartment homes upon completion;•Three parcels of land, which are expected to be wholly owned, and if developed as anticipated, are expected to contain a total of 968 apartment homes;•Interests in joint ventures the assets of which consist primarily of real estate, for which our ownership percentage is expected to be up to 40%, and that are not expected to be consolidated for financial reporting purposes. The Company expects to provide the following consideration for the Archstone Acquisition:•the issuance of 14,889,706 shares of its common stock to Lehman or its designees;•cash payment of $669,000,000 to Lehman or its designees;•the assumption of approximately $3,700,000,000 principal amount of consolidated indebtedness;•the acquisition with Equity Residential of interests in entities that have preferred units outstanding that may be presented for redemption from time to time. The Company's 40% share of the liquidation value of and accrued dividends on these outstanding Archstone preferred units is approximately $132,200,000 at January 31, 2013; and•the assumption with Equity Residential of all other liabilities, known or unknown, of Archstone, other than certain excluded liabilities. The Company will share in 40% of the cost of these liabilities. Equity Residential and we are jointly and severally liable for most obligations to Lehman related to the Archstone Acquisition. If we and Equity Residential fail to close the Archstone Acquisition by March 26, 2013, then Equity Residential and we could be liable for payment of a termination fee of $800,000,000. The closing of the transaction is also subject to customary closing conditions, which do not include our and Equity Residential's ability to obtain the necessary financing or lender consents for the transaction. Unless otherwise stated, all amounts and disclosures included in this Form 10-K do not include any impact from the anticipated closing of the Archstone Acquisition. There have not been any other material changes outside of the ordinary course of business to our contractual obligations during 2012. Scheduled contractual obligations required for the next five years and thereafter are as follows as of December 31, 20122014 (dollars in thousands): Payments due by period Total 1-3 Years 3-5 Years Debt Obligations $ 6,448,138 $ 604,578 $ 1,265,838 $ 762,174 $ 3,815,548 Interest on Debt Obligations 1,932,230 269,081 459,352 319,925 883,872 Capital Lease Obligations (1) (2) 62,599 1,885 19,931 1,696 39,087 Operating Lease Obligations (1) 1,332,711 20,337 41,464 43,056 1,227,854 $ 9,775,678 $ 895,881 $ 1,786,585 $ 1,126,851 $ 5,966,361 Payments due by period Total Less than 1
Year 1-3 Years 3-5 Years More than 5
Years $ 3,854,068 $ 336,848 $ 582,537 $ 544,816 $ 2,389,867 1,072,220 159,273 290,355 221,136 401,456 70,489 2,427 4,621 20,075 43,366 1,269,071 17,996 36,833 35,850 1,178,392 669,000 669,000 — — — $ 6,934,848 $ 1,185,544 $ 914,346 $ 821,877 $ 4,013,081 (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 in interest costs. (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)Represents our obligation for cash payment pursuant to the expected Archstone Acquisition. We expect to pay additional non-cash considerations as described in this report.•communities including completion of the expected Archstone Acquisition;•••••••••••••the current economic conditions; and• In addition, these forward-looking statements represent our estimates and assumptions only as of the date of this report. 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. In addition to the factors referred to below, youYou should carefully review the discussion under Item 1a.,1A. "Risk Factors," and the other disclosures elsewhereFactors" in this documentreport for further discussion of additional risks and uncertainties associated with our business and these forward-looking statements.••••••••respective Fund;of them; and• In addition, any forward-looking statements or forecasts relating to the business, prospects, operating statistics or financial results that relate to or may be expected to result from the Archstone Acquisition are based on expectations, forecasts and assumptions that are inherently speculative and are subject to substantial risks and uncertainties, many of which we cannot predict with accuracy and some of which we may not have anticipated. As a result, the actual operating statistics and financial results that relate to or may be expected to result from the Archstone Acquisition may differ materially from the Company's forecasts. Risks, uncertainties and other factors related to the Archstone Acquisition that might cause such differences include, among other things, the following: the Archstone Acquisition may not close at the time or on the terms that we currently expect; assumptions concerning the availability and/or terms of financing, including among other things obtaining lender consents to the assumption of indebtedness related to the Archstone Acquisition may not be realized; obtaining joint venture partner consents to the assumption of partnership interest related to the Archstone Acquisitions may not be realized; we may not be able to integrate the assets and operations acquired in the Archstone Acquisition in a manner consistent with our assumptions and/or we may fail to achieve expected efficiencies and synergies; we may encounter liabilities related to the Archstone Acquisition for which we may be responsible that were unknown to us at the time we agreed to the Archstone Acquisition or at the time of this report; and our assumptions concerning risks relating to our lack of control of joint ventures and our ability to successfully dispose of certain assets may not be realized.Presentation"Presentation," of our Consolidated Financial Statements.2012,2014, our assets would have increased by $1,280,984,000$1,391,602,000 and our liabilities would have increased by $963,664,000.$1,005,012,000. 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:•if we were considered the primary beneficiary.•assets beginningassets. 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.project specificproject-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 $37,433,000, $38,128,000 and $26,513,000 $23,984,000,for 2014, 2013 and $21,475,000 for 2012, 2011, and 2010, 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.20122014 our development activities decreased by 10%, and there were no corresponding decrease in our indirect project costs, our operating expensescosts charged to expense would have increased by $2,651,000.20122014 would have decreased by $2,467,000. 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, 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. Based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2012, 2011 and 2010, we did not record any impairment losses for wholly-owned operating real estate assets. expensed costs related to abandoned pursuits, which includes the abandonment of Development Rights and disposition pursuits, in the amounts of $1,757,000 in 2012, $1,957,000 in 2011 and $2,741,000 in 2010. These costs are included in operating expenses, excluding property taxes on the accompanying Consolidated Statements of Operations and Other Comprehensive Income. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future years. We also assess land held for development for impairment if our intent changes with respect to the development of the land. We did not recognize any impairment charges for land holdings in 2012 or 2010. During 2011, we concluded that we would pursue the sale of two land parcels and, as a result, that the carrying bases of the two land parcels were not fully recoverable. As a result, we recognized an aggregate charge of $12,097,000 for the impairment of these land parcels. We had previously recognized an impairment loss of $9,952,000 in 2008 when we determined that we no longer intended to pursue development of the assets. Our change in intent to pursue disposition of these assets rather than holding for investment triggered the determination that a further impairment of the basis for the land parcels existed. We looked to a combination of internal models and third-party pricing estimates to determine the fair values for these impaired land parcels. Considering our knowledge of multifamily residential development, the fair values of parcels zoned for multifamily development were generated using an internal model. Land parcels zoned for other purposes were valued using third-party estimatesof fair value. For the internally generated fair values, we used a discounted cash flow analysis on the expected cash flows for a multifamily rental community. The cash flow analysis incorporated assumptions that market participants would make, including applying discount factors to the estimated future cash flows of the underlying asset, as well as potential disposition proceeds. The third-party values incorporated the use of estimated rates of return, investment time horizons and sales prices for land parcels considered to be market comparables, adjusted for known differences in critical areas including the existing entitlements (such as zoning and state of infrastructure readiness). Both valuation methods included significant other unobservable inputs and are therefore classified as Level 3 prices in the fair value hierarchy. We also 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. During 2011, we concluded that becausemarket for for-sale housing development had not improved as expected,abandonment of Development Rights and disposition pursuits. These costs can vary greatly, and the investmentcosts incurred in an unconsolidated joint venture was impaired and that impairment was other than temporary. As a result, we recognized a charge of $1,955,000 for the impairment of the investmentany given period may be significantly different in the unconsolidated joint venture. There were no impairment losses recognized by any of our investments in unconsolidated entities during 2012 or 2010.1a., "Risk Factors" of1A. “Risk Factors” in this Form 10-K.2012,2014, our net income would have decreased by approximately $170,400,000.7a.7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We currently use interest rate protection agreements (consistinginterest rate swapDecember 31, 2014 and interest rate cap agreements) for our risk management objectives, as well as for compliance with the requirements of certain lenders,2013, we had $1,297,461,000 and not for trading or speculative purposes. In the second quarter of 2011, we entered into forward starting interest rate swap agreements to mitigate the impact of future interest rate changes on our expected issuance of debt in future periods. In addition, we have interest rate caps and interest rate swaps that serve to either convert floating rate borrowings to fixed rate borrowings, or 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. We had $476,935,000 and $548,341,000$1,011,609,000, respectively, in variable rate debt outstanding, including fixed rate debt effectively swapped to variable rates through swap agreements, as of 2012 and 2011, respectively.with no amounts outstanding under our Credit Facility. If interest rates on the variable rate debt had been 100 basis points higher throughout 20122014 and 2011,2013, our annual interest costs would have increased by approximately $3,969,000$13,035,000 and $6,534,000,$9,680,000, respectively, based on balances outstanding during the applicable years. As of December 31, 2011 In 2013, in conjunction with the Archstone Acquisition, we had entered intoassumed approximately $2,034,482,000 secured fixed and floating rate indebtedness, which impacted the Company's overall exposure to interest rate swap agreementsrisk. In May 2013, a $215,000,000 forward interest rate protection agreement matured, resulting in a payment to hedgethe counterparty of $51,000,000, the fair value exposure for approximately $75,000,000at time of our fixed rate unsecured notes with no similar positions at December 31, 2012. Had the fixed interest rate swap agreements used to hedge fair value exposure not been in place during 2011, our annual interest costs would have been approximately $1,765,000 higher, based on balances outstanding in 2011.(excluding(including amounts outstanding under our Credit Facility) with an aggregate carrying value of $3,854,068,000$6,448,138,000 at December 31, 20122014 had an estimated aggregate fair value of $4,077,397,000$6,558,022,000 at December 31, 2012.2014. Contractual fixed rate debt represented $3,377,133,000 of the carrying value and $3,685,629,000$5,443,736,000 of the fair value at December 31, 2012.2014. If interest rates had been 100 basis points higher as of December 31, 2012,2014, the fair value of this fixed rate debt would have decreased by approximately $175,930,000.9a.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, 2014 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. (a)Evaluation(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, 2012 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, 2012.20122014 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.(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. 9b.9B. OTHER INFORMATION22, 2013.22, 2013.22, 2013,21, 2015, to the extent not set forth below.2012:2014: (a) (b) (c) Plan category Equity compensation plans approved by security holders (1) 1,204,107 (2) $ 114.79 (3) 1,673,193 Equity compensation plans not approved by security holders (4) — N/A 714,827 Total 1,204,107 $ 114.79 (3) 2,388,020 (a) (b) (c) 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)) 1,108,481 (2) 107.58 (3) 3,121,508 — n/a 733,935 1,108,481 107.58 (3) 3,855,443 (1)Consists of the 2009 Plan.(2)Includes 81,097 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, but does not include 202,218 shares of restricted stock that are outstanding and that are already reflected in the Company's outstanding shares.(3)Excludes 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.(1) Consists of the 2009 Plan. (2) (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. Table of ContentsDirectorsDirectors on October 29, 1996, has not been approved by our shareholders. A further description of the ESPP appears in Note 9,10, "Stock-Based Compensation Plans," of our Consolidated Financial Statements included in this report.22, 2013.22, 2013. F-1 F-3 F-4 F-5 F-615(a)(2)Financial Statement Schedule F-4415(a)(3)Exhibits 3(i).1 3(i).1— Articles of Amendment and Restatement of Articles of Incorporation of the Company, dated as of June 4, 1998. (Incorporated by reference to Exhibit 3(i) .1 to Form 10-K of the Company filed March 1, 2007.)3(i)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).33(ii
—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. (Incorporated by reference to Exhibit 3(ii).1 to formForm 10-Q of the Company filed November 2, 2012.)3(ii)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(ii).3—
—Amendment to Amended and Restated Bylaws of AvalonBay Communities, Inc., dated September 19, 2012. (Incorporated by reference to Exhibit 3.2 to Form 8-K of the Company filed September 20, 2012.)
4.14.1
——
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.)
4.24.2
——
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.)
4.34.3
——
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.)
4.44.4
——
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.)
4.54.5
——
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.)
4.64.6
__—
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.)
4.84.7
——
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.)4.8��—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.) 4.94.10 — 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.)
10.110.1
——Amended and Restated Distribution Agreement, dated August 6, 2003, among the Company and the Agents, including Administrative Procedures, relating to the MTNs. (Incorporated by reference to Exhibit 10.1 to Form 10-K of the Company filed March 2, 2009.)10.2—
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.)
10.210.3
——
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.)
10.310.4
——
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.)
10.410.5
——
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.)
10.510.6
——
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+10.7+
——
Endorsement Split Dollar Agreements and Amendments thereto with Messrs. Blair, Naughton, Sargeant, and Horey. (Incorporated by reference to Exhibit 10.8 to Form 10-K of the Company filed February 23, 2011.)
10.7+10.8+
——
Form of Amendment to Endorsement Split Dollar Agreement with Messrs. Blair, Naughton, Sargeant, and Horey. (Incorporated by reference to Exhibit 10.4 to Form 10-K of the Company filed March 2, 2009.)
10.8+10.9+
——
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+10.10+
——Employment Agreement between the Company and Thomas J. Sargeant dated as of December 16, 2011. (Incorporated by reference to Exhibit 10.2 to Form 8-K of the Company filed December 21, 2011.)10.11+—
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+10.12+
——
AvalonBay Communities, Inc. 2009 Stock Option and Incentive Plan. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed May 28, 2009.)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.) 10.13+10.12+ — 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+10.14+
——
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+10.15+
——
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+10.16+
——
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+10.17+
——
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+10.18+
——
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+10.19+
——
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+10.20+
——(Incorporated by reference to Exhibit 10.2 to Form 10-Q of the Company filed November 7, 2011.(Filed herewith.)
10.20+10.21+
——
The Company's Officer Severance Plan, as amended and restated on November 9, 2011. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed November 15, 2011.)
10.21+10.22+
——
AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated in full on December 8, 20042004. (Incorporated by reference to Exhibit 10.21 to Form 10-K of the Company filed March 2, 2009.)
10.22+10.23+
——
Amendment dated February 9, 2006, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Refiled herewith.(Incorporated by reference to Exhibit 10.23 to Form 10-K of the Company filed February 22, 2013.)
10.23+10.24+
——
Amendment, dated December 6, 2006, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Refiled herewith.(Incorporated by reference to Exhibit 10.24 to Form 10-K of the Company filed February 22, 2013.)
10.24+10.25+
——
Amendment, dated September 19,20, 2007, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Refiled herewith.(Incorporated by reference to Exhibit 10.25 to Form 10-K of the Company filed February 22, 2013.)
10.25+10.26+
——
Form of AvalonBay Communities, Inc. Non-Qualified Stock Option Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Refiled herewith.(Incorporated by reference to Exhibit 10.26 to Form 10-K of the Company filed February 22, 2013.)10.27+—10.26+ — Form of AvalonBay Communities, Inc. Incentive Stock Option Agreement (1994 Stock Incentive Plan, as Amended and Restated.) (Refiled herewith.(Incorporated by reference to Exhibit 10.27 to Form 10-K of the Company filed February 22, 2013.)10.28+10.27+ — Form of AvalonBay Communities, Inc. Employee Stock Grant and Restricted Stock Agreement (1994 Stock Incentive Plan, as Amended and Restated.) (Incorporated by reference to Exhibit 10.33 ofto Form 10-K of the Company filed March 2, 2009.)
10.28+10.29+
——
Form of AvalonBay Communities, Inc. Director Restricted Unit Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Refiled herewith.(Incorporated by reference to Exhibit 10.29 to Form 10-K of the Company filed February 22, 2013.)
10.29+10.30+
——
Form of AvalonBay Communities, Inc. Director Restricted Stock Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Refiled herewith.(Incorporated by reference to Exhibit 10.30 to Form 10-K of the Company filed February 22, 2013.)
10.3110.31
——
Third Amended and Restated Revolving Loan Agreement, dated as of September 29, 2011, with Bank of America, N.A., as administrative agent, swing lender, issuing bank and a bank, JPMorgan Chase Bank, N.A., as a bank and as syndication agent, Deutsche Bank Trust Company Americas, Morgan Stanley Bank and Wells Fargo Bank, N.A., each as a bank and as documentation agent, Barclays Bank PLC as a bank and as co-documentation agent, UBS Securities LLC as a co-documentation agent, The Bank of New York Mellon, BBVA Compass Bank, PNC Bank, National Association, and Suntrust Bank, each 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 thereto (Incorporated by reference to Exhibit 10.1 to Form 10-Q of the Company filed November 7, 2011.)
10.3210.32
——
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+10.33 +
——
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+10.34+
——
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.)
10.3510.35
——
Asset Purchase Agreement, dated November 26, 2012, by and among 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 of the Company filed November 26, 2012.)
10.36+10.37+
——
Retirement Agreement between the Company and Thomas J. Sargeant dated as of May 20, 2014. (Filed herewith.)10.37+ — Form of AvalonBay Communities, Inc. 2008 Performance Plan DeferredAward Terms of Performance-Based Restricted Stock AwardUnits. (Incorporated by reference to Exhibit 10.1 to Form 10-Q filed May 10, 2013.)10.38 — Shareholders Agreement, dated February 27, 2013, by and among the Company, Archstone Enterprise LP and Lehman Brothers Holdings Inc. (Incorporated by Reference to Exhibit 10.2 to Form 8-K of the Company filed March 5, 2013.) 10.39 — 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.) 10.40 — 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 — 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.) 10.42 — 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.) 10.43 — 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.) 10.44 --- 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 May 22, 2008).April 2, 2014.)
12.112.1
——
Statements re: Computation of Ratios. (Filed herewith.)
21.121.1
——
Schedule of Subsidiaries of the Company. (Filed herewith.)
23.123.1
——
Consent of Ernst & Young LLP. (Filed herewith.)
31.131.1
——
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.)
3232
——
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). (Furnished herewith.)
101101
——
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, 2012,2014, 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.*As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.+ 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. AvalonBay Communities, Inc.
Date: February 22, 201318, 2015
By:
/s/ TIMOTHY J. NAUGHTONTimothy J. Naughton, Director, Chairman, Chief Executive
Officer and President (Principal Executive Officer)Date: February 22, 201318, 2015 By: /s/ BRYCE BLAIRBryce Blair, Chairman of the Board and DirectorDate: February 22, 2013By:
/s/ TIMOTHY J. NAUGHTONTimothy J. Naughton, Director, Chairman, Chief Executive Officer and
President (Principal Executive Officer)
Date: February 22, 201318, 2015
By:
/s/ THOMAS J. SARGEANTThomas J. Sargeant,KEVIN P. O’SHEAKevin P. O’Shea, Chief Financial Officer
(Principal Financial Officer)
Date: February 22, 201318, 2015
By:
/s/ KERI A. SHEA
Date: February 22, 201318, 2015
By:
/s/ GLYN F. AEPPELGlyn F. Aeppel, Director Date: February 18, 2015 By: /s/ TERRY S. BROWN Terry S. Brown, Director Date: February 18, 2015 By: /s/ ALAN B. BUCKELEW Alan B. Buckelew, Director
Date: February 22, 201318, 2015
By:
/s/ BRUCE A. CHOATEBruce A. Choate, Director
Date: February 22, 201318, 2015
By:
/s/ RONALD L. HAVNER, JR.Ronald L. Havner, Jr., Director Date: February 18, 2015 By: /s/ JOHN J. HEALY, JR. John J. Healy, Jr., Director
Date: February 22, 201318, 2015
By:
/s/ LANCE R. PRIMISLance R. Primis, Director
Date: February 22, 201318, 2015
By:
/s/ PETER S. RUMMELLPeter S. Rummell, Director
Date: February 22, 201318, 2015
By:
/s/ H. JAY SARLESH. Jay Sarles, Director
Date: February 22, 201318, 2015
By:
/s/ W. EDWARD WALTERW. Edward Walter, Director
AvalonBay Communities, Inc.:20122014 and 2011,2013, 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, 2012.2014. 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.20122014 and 2011,2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 20122014, 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.'s’s internal control over financial reporting as of December 31, 2012,2014, 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 22, 201319, 2015 expressed an unqualified opinion thereon.22, 201319, 2015
AvalonBay Communities, Inc.:'s’s internal control over financial reporting as of December 31, 2012,2014, based on criteria established in Internal Control—IntegratedControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). AvalonBay Communities, Inc.'s’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'sManagement’s Report on Internal Control over Financial Reporting in Item 9a.9A. Our responsibility is to express an opinion on the company'scompany’s internal control over financial reporting based on our audit.company'scompany’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'scompany’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'scompany’s assets that could have a material effect on the financial statements.2012,2014, based on the COSO criteria.20122014 and 2011,2013, and the related consolidated statements of comprehensive income, stockholders'stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 20122014 of AvalonBay Communities, Inc. and our report dated February 22, 201319, 2015 expressed an unqualified opinion thereon.22, 201319, 2015 12-31-12 12-31-11 12/31/14 12/31/13 $ 1,440,590 $ 1,312,538 Land and improvements $ 3,465,650 $ 3,251,780 7,185,853 6,574,297 12,317,304 11,007,775 255,733 223,161 404,103 338,813 16,187,057 14,598,368 8,882,176 8,109,996 (2,034,364 ) (1,780,309 ) (2,891,254 ) (2,455,790 ) 6,847,812 6,329,687 13,295,803 12,142,578 802,883 597,303 1,417,246 1,582,876 316,037 325,918 180,516 300,364 48,388 172,122 42,175 258,391 Total real estate, net 14,935,740 14,284,209 8,015,120 7,425,030 2,733,618 616,853 509,460 281,355 50,033 73,400 95,625 98,564 24,748 23,597 29,617 26,672 129,352 144,561 298,315 367,866 38,700 33,653 39,728 40,460 24,665 24,770 67,029 31,592 143,842 140,526 201,209 197,425 $ 11,160,078 $ 8,482,390 $ 16,176,723 $ 15,328,143 $ 1,945,798 $ 1,629,210 $ 2,993,265 $ 2,594,709 — — — — 1,905,235 1,969,986 3,532,587 3,539,642 110,966 84,953 153,207 138,476 53,677 36,845 101,946 94,632 224,194 245,520 244,821 240,337 33,056 34,210 41,318 42,854 38,626 35,968 49,502 44,594 706 36,743 907 15,852 4,312,258 4,073,435 7,117,553 6,711,096 7,027 7,063 12,765 17,320 — — 1,144 952 Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at December 31, 2014 and 2013; zero shares issued and outstanding at December 31, 2014 and 2013 — — Common stock, $0.01 par value; 280,000,000 shares authorized at December 31, 2014 and 2013; 132,050,382 and 129,416,695 shares issued and outstanding at December 31, 2014 and 2013, respectively 1,320 1,294 7,086,407 4,652,457 9,354,685 8,988,723 (142,329 ) (171,648 ) (267,085 ) (345,254 ) (108,007 ) (87,020 ) (42,515 ) (48,631 ) Total stockholders' equity 9,046,405 8,596,132 Noncontrolling interest — 3,595 6,837,215 4,394,741 9,046,405 8,599,727 3,578 7,151 6,840,793 4,401,892 $ 11,160,078 $ 8,482,390 $ 16,176,723 $ 15,328,143 For the year ended For the year ended 12-31-12 12-31-11 12-31-10 12/31/14 12/31/13 12/31/12 $ 1,028,403 $ 926,431 $ 835,466 $ 1,674,011 $ 1,451,419 $ 990,370 10,257 9,656 7,354 11,050 11,502 10,257 1,038,660 936,087 842,820 1,685,061 1,462,921 1,000,627 278,481 257,718 246,257 410,672 352,245 259,350 101,136 92,568 87,864 178,634 158,774 97,555 136,920 167,814 169,997 180,618 172,402 136,920 1,179 1,940 — 412 14,921 1,179 Loss on interest rate contract — 51,000 — 256,026 239,060 220,563 442,682 560,215 243,680 34,101 29,371 26,846 41,425 39,573 34,101 Expensed acquisition, development and other pursuit costs, net of recoveries (3,717 ) 45,050 11,350 1,449 14,052 — — — 1,449 809,292 802,523 751,527 1,250,726 1,394,180 785,584 20,914 5,120 762 Equity in income (loss) of unconsolidated entities 148,766 (11,154 ) 20,914 280 13,716 — 490 240 280 Gain on sale of communities 84,925 — — 14,194 — — — — 14,194 Income from continuing operations before taxes 668,516 57,827 250,431 Income tax expense 9,368 — — 264,756 152,400 92,055 659,148 57,827 250,431 12,495 7,880 7,950 310 16,713 26,820 146,311 281,090 74,074 37,869 278,231 146,311 158,806 288,970 82,024 38,179 294,944 173,131 423,562 441,370 174,079 697,327 352,771 423,562 307 252 1,252 Net (income) loss attributable to noncontrolling interests (13,760 ) 370 307 $ 423,869 $ 441,622 $ 175,331 $ 683,567 $ 353,141 $ 423,869 (22,876 ) (85,845 ) (108 ) (121 ) — (22,876 ) 1,889 — — 6,237 59,376 1,889 $ 402,882 $ 355,777 $ 175,223 $ 689,683 $ 412,517 $ 402,882 $ 2.71 $ 1.69 $ 1.10 $ 4.93 $ 0.46 $ 2.57 1.63 3.20 0.98 0.29 2.32 1.77 $ 4.34 $ 4.89 $ 2.08 $ 5.22 $ 2.78 $ 4.34 $ 2.70 $ 1.69 $ 1.10 $ 4.92 $ 0.46 $ 2.55 1.62 3.18 0.97 0.29 2.32 1.77 $ 4.32 $ 4.87 $ 2.07 $ 5.21 $ 2.78 $ 4.32 STOCKHOLDERS' EQUITY Shares issued Accumulated
earnings
less
dividends Accumulated
other
comprehensive
loss Total
AvalonBay
stockholders'
equity Shares issued Preferred
stock Common
stock Preferred
stock Common
stock Additional
paid-in
capital Noncontrolling
interests Total
equity — 81,528,957 $ — $ 815 $ 3,200,367 $ (149,988 ) $ (1,067 ) $ 3,050,127 $ — $ 3,050,127
—
—
—
—
—
175,331
—
175,331
928
176,259 — — — — — — (108 ) (108 ) — (108 ) — — — — — (5,573 ) — (5,573 ) — (5,573 ) — — — — — — — — 4,045 4,045 — — — — — (302,518 ) — (302,518 ) — (302,518 ) — 4,370,123 — 44 380,924 5 — 380,973 — 380,973 — — — — 12,386 — — 12,386 — 12,386
—
85,899,080
—
859
3,593,677
(282,743
)
(1,175
)
3,310,618
4,973
3,315,591
—
—
—
—
—
441,622
—
441,622
(1,172
)
440,450 — — — — — — (85,845 ) (85,845 ) — (85,845 ) — — — — — (2,607 ) — (2,607 ) — (2,607 ) — — — — — — — — 3,350 3,350 — — — — — (326,813 ) — (326,813 ) — (326,813 ) — 9,276,597 — 93 1,036,316 (1,107 ) — 1,035,302 — 1,035,302 — — — — 22,464 — — 22,464 — 22,464
—
95,175,677
—
952
4,652,457
(171,648
)
(87,020
)
4,394,741
7,151
4,401,892 — 95,175,677 $ — $ 952 $ 7,151 $ 4,401,892
—
—
—
—
—
423,869
—
423,869
—
423,869 — — — — — 423,869 — 423,869 — 423,869 — — — — — — (22,876 ) (22,876 ) — (22,876 ) — — — — — — (22,876 ) (22,876 ) — (22,876 ) — — — — — — 1,889 1,889 — 1,889 — — — — — — 1,889 1,889 — 1,889 — — — — — (375 ) — (375 ) — (375 ) — — — — — (375 ) — (375 ) — (375 ) — — — — — — — — (3,573 ) (3,573 ) — — — — — — — — (3,573 ) (3,573 ) — — — — — (391,906 ) — (391,906 ) — (391,906 ) — — — — — (391,906 ) — (391,906 ) — (391,906 ) — 19,227,795 — 192 2,416,852 (2,269 ) — 2,414,775 — 2,414,775 — 19,227,795 — 192 2,416,852 (2,269 ) — 2,414,775 — 2,414,775 — — — — 17,098 — — 17,098 — 17,098 — — — — 17,098 — — 17,098 — 17,098 — 114,403,472 $ — $ 1,144 $ 7,086,407 $ (142,329 ) $ (108,007 ) $ 6,837,215 $ 3,578 $ 6,840,793 — 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 — 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 Unrealized loss on cash flow hedges — — — — — — (121 ) (121 ) — (121 ) Cash flow hedge losses reclassified to earnings — — — — — — 6,237 6,237 — 6,237 Change in redemption value of noncontrolling interest — — — — — 3,709 — 3,709 — 3,709 Noncontrolling interests income allocation — — — — — — — — 14,221 14,221 Noncontrolling interests derecognition — — — — — — — — (17,816 ) (17,816 ) Dividends declared to common stockholders — — — — — (608,709 ) — (608,709 ) — (608,709 ) Issuance of common stock, net of withholdings — 2,633,687 — 26 339,186 (398 ) — 338,814 — 338,814 Amortization of deferred compensation — — — — 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 For the year ended For the year ended 12-31-12 12-31-11 12-31-10 12/31/14 12/31/13 12/31/12 $ 423,562 $ 441,370 $ 174,079 $ 697,327 $ 352,771 $ 423,562 256,026 239,060 220,563 442,682 560,215 243,680 4,068 11,209 12,379 — 13,500 16,414 6,427 5,834 7,723 Amortization of deferred financing costs 6,383 6,803 6,427 Amortization of debt (premium) discount (34,961 ) (29,750 ) — 8,707 7,244 5,938 13,927 15,160 8,707 Equity in loss (income) of, and return on, unconsolidated entities and noncontrolling interests, net of eliminations 4,906 33,125 (12,103 ) 1,889 — — 6,237 59,376 1,889 (12,103 ) 2,246 1,852 Casualty loss and impairment of real estate assets — — 1,449 Abandonment of development pursuits 1,455 — — 1,781 5,820 — 412 14,921 1,781 1,449 14,052 — (146,591 ) (294,806 ) (74,074 ) (255,300 ) (278,471 ) (146,591 ) (14,194 ) — — — — (14,194 ) 9,593 1,010 — 6,543 (7,702 ) (4,996 ) (1,601 ) (5,028 ) (15,234 ) (4,737 ) 9,045 3,876 Decrease (increase) in cash in operating escrows 55 (28,960 ) 6,543 (Increase) decrease in resident security deposits, prepaid expenses and other assets (3,441 ) (5,372 ) 7,992 Decrease (increase) in accrued expenses, other liabilities and accrued interest payable 6,959 10,997 (4,737 ) 540,819 429,354 332,106 886,641 724,315 540,819 (755,363 ) (640,778 ) (429,853 ) (1,241,832 ) (1,285,715 ) (755,363 ) (155,755 ) (46,275 ) — (47,000 ) (839,469 ) (155,755 ) (23,452 ) (41,851 ) (16,772 ) (46,902 ) (24,415 ) (23,452 ) (3,076 ) (8,281 ) (420 ) (5,923 ) (2,200 ) (3,076 ) 274,018 310,228 194,009 16,832 2,342 (15,190 ) Proceeds from sale of communities, net of selling costs 297,466 919,682 274,018 Mortgage note receivable repayment 21,748 — — Increase in payables for construction 7,400 34,779 16,832 16,824 14,109 42,329 — — 16,824 — (1,701 ) (24,000 ) 6,586 (30,934 ) (49,039 ) Distributions from unconsolidated real estate entities 203,945 42,955 26,700 Investments in unconsolidated real estate entities (5,662 ) (26,791 ) (20,114 ) (623,386 ) (443,141 ) (298,936 ) (816,760 ) (1,181,174 ) (623,386 ) 2,430,190 1,049,835 381,365 346,134 4,703 2,430,190 (365,572 ) (318,231 ) (298,090 ) (593,643 ) (526,050 ) (365,572 ) (110,013 ) (200,166 ) (69,327 ) Issuance of mortgage notes payable 53,000 84,928 — Repayments of mortgage notes payable, including prepayment penalties (32,859 ) (2,110,347 ) (110,013 ) 700,000 — 250,000 550,000 750,000 700,000 (54,930 ) — — — (51,000 ) (54,930 ) (381,001 ) (189,900 ) (89,576 ) (150,000 ) (100,000 ) (381,001 ) (15,664 ) (5,996 ) (6,524 ) (7,820 ) (10,100 ) (15,664 ) — (25 ) — — (1,965 ) — (3,350 ) (9,070 ) — — — (3,350 ) (29 ) (20 ) (61 ) (26 ) (32 ) (29 ) (299 ) (194 ) (222 ) (262 ) (317 ) (299 ) Redemption of preferred interest obligation (6,300 ) (35,224 ) — Net cash provided by (used in) financing activities 158,224 (1,995,404 ) 2,199,332 2,199,332 326,233 167,565 Net increase (decrease) in cash and cash equivalents 228,105 (2,452,263 ) 2,116,765 2,116,765 312,446 200,735 616,853 304,407 103,672 281,355 2,733,618 616,853 $ 2,733,618 $ 616,853 $ 304,407 $ 509,460 $ 281,355 $ 2,733,618 $ 119,268 $ 156,898 $ 157,014 $ 191,966 $ 179,325 $ 119,268 CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)• were issued 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.••• For further discussion of the nature and valuation of these items, see Note 10, "Fair Value."• During the year ended December 31, 2011:•511,817 shares of common stock valued at $64,747,000 were issued in connection with stock grants, 3,343 shares valued at $403,000 were issued through the Company's dividend reinvestment plan, 129,762 shares valued at $14,891,000 were withheld to satisfy employees' tax withholding and other liabilities and 505 shares valued at $35,000 were forfeited, for a net value of $50,224,000. In addition, the Company granted 144,827 options for common stock at a value of $4,258,000.•7,500 units of limited partnership, valued at $365,000, were presented for redemption to the DownREIT partnerships that issued such units and were acquired by the Company in exchange for an equal number of shares of the Company's stock.•The Company recorded an increase to other liabilities and a corresponding loss to other comprehensive income of $85,845,000; and recorded a decrease to prepaid expenses and other assets of $1,498,000, with a corresponding offset to the basis of unsecured notes, net to record the impact of the Company's hedge accounting activity.•Common dividends declared but not paid totaled $84,953,000.•The Company recorded an increase of $2,607,000 in redeemable noncontrolling interests 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 repaid all amounts due under a $93,440,000 variable rate, tax-exempt bond financing using the proceeds which were held in escrow.CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)•The Company assumed a 4.75% fixed rate mortgage loan with an outstanding balance of $44,044,000 in conjunction with the acquisition of Fairfax Towers.•As part of an asset exchange in April 2011, the Company assumed a $55,400,000 fixed rate mortgage loan with a 5.24% fixed rate and relinquished a $55,800,000 mortgage loan with a 5.86% fixed rate.•The Company entered into a ground lease that is considered a capital lease associated with a Development Community, recording a capital lease obligation of $14,500,000 in accrued expenses and other liabilities with a corresponding offset to construction in progress.•The Company entered into a ground lease that is considered a capital lease associated with a Development Right, recording a capital lease obligation of $17,285,000 in accrued expenses and other liabilities with a corresponding offset to land.•The Company recorded an increase in noncontrolling interest of $3,350,000 associated with the consolidation of a development joint venture. During the year ended December 31, 2010:•102,984 shares of common stock valued at $7,777,000 were issued in connection with stock grants; 5,687 shares valued at $525,000 were issued through the Company's dividend reinvestment plan; 48,882 shares valued at $4,203,000 were withheld to satisfy employees' tax withholding and other liabilities; 1,300 shares valued at $39,000 were forfeited; 25 shares valued at $3,000 were issued in exchange for DownREIT partnership units and 61,055 shares valued at $3,322,000 were issued to two former members of the Company's Board of Directors in fulfillment of deferred stock awards, for a net value of $7,385,000. In addition, the Company granted 126,484 options for common stock at a value of $2,460,000.•The Company recorded a decrease to prepaid expenses and other assets and a corresponding decrease to other comprehensive income of $108,000 and recorded an increase of $1,737,000 to prepaid expenses and other assets with a corresponding offset to unsecured notes, net, to record the impact of the Company's hedge accounting activity.•Common dividends declared but not paid totaled $76,676,000.•The Company recorded an increase of $5,573,000 in redeemable noncontrolling interests 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 recognized $4,045,000 in noncontrolling interests in conjunction with the consolidation of a Fund I subsidiary."Company,"“Company,” which term, unless the context otherwise requires, refers to AvalonBay Communities, Inc. together with its consolidated subsidiaries), is a Maryland corporation that has elected to be taxedtreated as a real estate investment trust ("REIT"(“REIT”) for federal income tax purposes under the Code.Internal Revenue Code of 1986 (the “Code”). The Company focuses on the development, redevelopment, acquisition, ownership and operation of apartmentmultifamily communities primarily in high barrier to entry markets of the United States. These markets are located in the New England, Metrothe New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California regions of the country.2012,2014, the Company owned or held a direct or indirect ownership interest in 180251 operating apartment communities containing 52,79273,963 apartment homes in nine11 states and the District of Columbia, of which fiveeight communities containing 1,7872,938 apartment homes were under reconstruction. In addition, the Company owned or held a direct or indirect ownership interest in 2326 communities under construction that are expected to contain an aggregate of 6,5998,524 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 3437 communities that, if developed as expected, will contain an estimated 9,60210,384 apartment homes.the meaning asmeanings provided elsewhere in this Form 10-K. where 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 andor (ii) where the Company holds a noncontrolling limited partner interest in a joint venture. Investments in which the Company has little or no influence are accounted for using the cost method.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)theany 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 is not obligated to perform significant activities after the sale.Rights fourRight one land parcelsparcel partially improved with office buildings, industrial space and other commercial and residential ventures occupied by unrelated third parties. As of December 31, 2012,2014, the Company is actively pursuing development of three of these parcels.this parcel. For the land parcel for which the Company either does not have active development activity or does not intend to pursue development, rental revenue and incremental costs from the incidental operations are recognized as a part of net income. For those land parcels for which the Company intends 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 construction of new apartment communities is ready to begin. Revenue from incidental operations received from the current improvements 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.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)such asother than in-place leases,lease intangibles, is included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets and amortized over the average remaining lease term of the acquired leases. The fair value of acquired in-place leases is determined based on the estimated cost to replace such leases, including foregone rents during an assumed re-lease period, as well as the impact on projected cash flow of acquired leases with leased rents above or below current market rents.intangible asset. The Company expenses all costs incurred related to acquisitions.thirty30 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.2012,2014 and 2013, 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 20092011 through 2011.theits 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 of 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 received a net refund of $235,000 for federal excise taxes in 2010, recorded as a reduction of general and administrative expense in the Consolidated Statements of Comprehensive Income. The Company did not incur any charges or receive refunds of excise taxes related to 2011 orthe years ended December 31, 2014, 2013 and 2012. In addition, taxable income from non-REIT activities performed through taxable REIT subsidiaries ("TRS") is subject to federal, state and local income taxes, although notaxes. The Company incurred income tax expense of $9,368,000 in 2014 associated 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.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)2012, 20112014, 2013 and 20102012 (dollars in thousands), (unaudited): 2012
Estimate 2011
Actual 2010
Actual 2014 Estimate 2013 Actual 2012 Actual $ 423,869$ 441,622 $ 175,331 $ 683,567 $ 353,141 $ 423,869 37,575 (84,152 ) 3,812 17,688 29,388 37,525 15,012 9,192 8,266 42,195 180,293 9,572 Deductible acquisition costs (7,681 ) (26,427 ) — Amortization of debt/mark to market interest (38,202 ) (31,965 ) — (19,218 ) (43,145 ) (12,202 ) (6,789 ) 12,886 (26,314 ) 1,449 14,052 — Casualty and impairment loss — — 1,449 (3,202 ) 183 12,628 (39,726 ) 1,018 (9,034 ) $ 455,485$ 337,752 $ 187,835 $ 651,052 $ 518,334 $ 437,067 2012, 20112014, 2013 and 2010 (unaudited):2012: 2012 2011 2010 2014 2013 2012 47 % 34 % 74 % 62 % 42 % 47 % 33 % 47 % 11 % 20% capital gain (15% for 2012) 29 % 40 % 33 % 20 % 19 % 15 % 9 % 18 % 20 % $20,773,000 at$24,444,000 as of December 31, 20122014 and $17,574,000 at$19,719,000 as of December 31, 2011.construction financing proceedsprincipal reserve funds that are restricted for use in the constructionrepayment of a specific community.specified secured financing. The majority of the Company's cash, cash equivalents and cash in escrowsescrow are held at major commercial banks.Interest Rate Contracts The Company utilizes derivative financial instruments to manage interest rate risk. As of December 31, 2012, the Company had approximately $410,200,000 in variable rate debt and forecasted debt issuance subject to cash flow hedges. As of December 31, 2011, there was approximately $640,006,000 in variable rate debt and forecasted debt issuance subject to cash flow hedges andAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)$75,000,000 of fixed rate debt subject to fair value hedges. Excluding debt on communities classified as held for sale, the Company did not apply hedge accounting for an additional $46,735,000 and $79,835,000 in variable rate debt which is subject to interest rate caps as of December 31, 2012 and December 31, 2011, respectively. See Note 10, "Fair Value," for further discussion of derivative financial instruments.Stockholders' Equity, reflects the effective portion of the cumulative changes in the fair value of derivatives in qualifying cash flow hedge relationships.EPS.earnings per share ("EPS"). Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered whenAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)follows: For the year ended 12-31-12 12-31-11 12-31-10 For the year ended (Dollars in thousands) 12/31/14 12/31/13 12/31/12
97,416,401
89,922,465
83,859,936 130,586,718 126,855,754 97,416,401 7,500 8,322 15,321 7,500 7,500 7,500 601,251 846,675 757,612 643,284 402,649 601,251 98,025,152 90,777,462 84,632,869 131,237,502 127,265,903 98,025,152
$
423,869
$
441,622
$
175,331 $ 683,567 $ 353,141 $ 423,869 (1,264 ) (1,631 ) (498 ) (1,523 ) (563 ) (1,264 ) $ 422,605 $ 439,991 $ 174,833 $ 682,044 $ 352,578 $ 422,605 97,416,401 89,922,465 83,859,936 130,586,718 126,855,754 97,416,401 $ 4.34 $ 4.89 $ 2.08 $ 5.22 $ 2.78 $ 4.34
$
423,869
$
441,622
$
175,331 $ 683,567 $ 353,141 $ 423,869 28 27 55 35 32 28
$
423,897
$
441,649
$
175,386 $ 683,602 $ 353,173 $ 423,897
98,025,152
90,777,462
84,632,869 131,237,502 127,265,903 98,025,152
$
4.32
$
4.87
$
2.07 $ 5.21 $ 2.78 $ 4.32
$
3.88
$
3.57
$
3.57 $ 4.64 $ 4.28 $ 3.88 amountsamount of 396,346605,899 and 457,419396,346 were outstanding atas of December 31, 20122013 and 2011,2012, 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, 2014 are anti-dilutive.Casualty Loss, included in the computation of diluted earnings per share. and Impairment of Long-Lived Assets During the three months ended December 31, 2012 the Company incurred damages related to Superstorm Sandy at certain of its communities on the East Coast. The Company recognized a charge of $1,449,000 for the three months and year ended December 31, 2012 for the casualty loss associated with this damage on the accompanying Consolidated Statements of Comprehensive Income.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)2012, 20112014, 2013 and 2010,2012, the Company did not recordrecognize any impairment losses for wholly-owned operating real estate assets.probable.probable ("Development 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. The Company expensed costs related to abandoned pursuits, which includes 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 pursuits,activity did not occur, in the amounts of $3,964,000, $998,000 and $1,757,000 induring the years ended December 31, 2014, 2013 and 2012, $1,957,000 in 2011 and $2,741,000 in 2010.respectively. These costs are included in operating expenses, excluding property taxesexpensed 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.assesses landevaluates its real estate and other long-lived assets for impairment if the intent of the Company changes with respect to either the development of, or the expected hold period for, the land. The Company did not recognize any impairment charges for land holdings in 20122014, 2013 or 2010. During 2011, the Company concluded that the carrying basis of two land parcels were not fully recoverable when the Company decided to pursue the sale of these assets. As a result, the Company recognized an aggregate charge of $12,097,000 for the impairment of these land parcels. The impairment recognized in 2011 was primarily attributable to one of the land parcels, which the Company sold in 2012, as discussed in Note 6, "Real Estate Disposition Activities." The Company had previously recognized an impairment loss of $9,952,000 in 2008 when the Company determined that it no longer intended to pursue development of these two land parcels. At that time, the Company had the intent and ability to hold the assets for the foreseeable future. The Company looked to a combination of internal models and third-party pricing estimates to determine the fair values for these impaired land parcels. Considering the Company's knowledge of multifamily residential development, the fair values of parcels zoned for multifamily development were generated using an internal model. Land parcels zoned for other purposes were valued using third-party estimates of fair value. For the internally generated fair values, the Company used a discounted cash flow analysis on the expected cash flows for a multifamily rental community. The cash flow analysis incorporated assumptions that market participants would make, including applying discount factors to the estimated future cash flows of the underlying asset, as well as potential disposition proceeds. The third-party values incorporated the use of estimated rates of return, investment time horizons and sales prices for land parcels considered to be market comparables, adjusted for known differences in critical areas including the existing entitlements (such as zoning and2012.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)state of infrastructure readiness). Both valuation methods included significant other unobservable inputs and are therefore classified as Level 3 prices in the fair value hierarchy.itsthe extent and amount by which the carrying value of the investment estimated asexceeds the expected proceeds that it would receive if the entity were dissolvedfair value, and the net assets were liquidated, as well asCompany’s intent and ability to hold the Company'sinvestment 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 entities during the years ended December 31, 2012 and2014, 2013 or 2012.2010. During 2011,2012 the Company incurred damages related to Superstorm Sandy at certain of its communities on the East Coast, and recognized a charge of $1,955,000$1,449,000 for the impairmentcasualty loss associated with this damage on the accompanying Consolidated Statements of Comprehensive Income. The Company did not incur a casualty loss in 2014 or 2013. 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 investmentbusiness interruption insurance policies as a component of rental and other income in an unconsolidated joint venture. 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 and $299,000 in income related business interruption insurance proceeds for the years ended December 31, 2014 and 2013, respectively. There were no business interruption insurance proceeds received in 2012.in Note 5, "Investments in Real Estate Entities."&and Discontinued Operationshad hadone operating community that qualified for held for sale presentation at December 31, 2012.10,12, "Fair Value."AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued) the "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 derivativeHedging Derivative transactions for trading or other speculative purposes. The Company assesses both at inception and on an on-going basis, the effectiveness of qualifying cash flow and fair value hedges.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 the Hedging Derivatives that are in an asset position are recorded in prepaid expenses and other assets. The fair value of the Hedging Derivatives that are in a liability position are included in accrued expenses and other liabilities. FairOther than the $51,000,000 loss on interest rate contract recorded during 2013, fair value changes for derivatives that are not in qualifying hedge relationships are reported as a component of general and administrative expenses.interest expense, net. For the derivativeHedging 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 accumulated other comprehensive loss.income. Amounts recorded in accumulated other comprehensive lossincome will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow. The Company discontinues the application of cash flow hedge accounting in the event that a hedged forecasted transaction is no longer probable of occurring. The Company will continue to defer any hedging gains or losses recognized up to the point that cash flow hedge accounting was discontinued, and recognize those amounts in earnings over the life of that hedged forecasted transaction, if the hedged forecasted transaction does occur as originally anticipated. In the event that a hedged forecasted transaction becomes probable of not occurring, the Company will reclassify hedging gains or losses from accumulated other comprehensive income into earnings. 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.
ReclassificationsAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)1. Organization and Basis of Presentation (Continued)Reclassificationspresentations.May 2011,April 2014, the FASBFinancial Accounting Standards Board issued Accounting Standards Update ("FASB") (ASU) 2014-08, guidance updating the accounting and reporting for discontinued operations. Under the recently issued guidance, on fair value measurementonly 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 final standard requires expanded disclosures about dispositions that will provide financial statement users with more information about the assets, liabilities, income and disclosure requirements. This guidance clarified the rules regarding the applicationexpenses of the highest and best use concept, fair value measurementdiscontinued operations, as well as disposals of a significant part of an instrument classifiedentity that does not qualify for discontinued operations reporting. The final standard is effective in equitythe first quarter of 2015 and quantitative disclosure about unobservable inputs used in Level 3 prices. In addition, this guidance changes the principles applicable to the fair value measurement of instruments managed within a portfolio, application of premiums and discounts in a fair value measurement and additional disclosures about fair value.allows for early adoption. The Company adopted the guidance with noas of January 1, 2014, as discussed in Note 7, “Real Estate Disposition Activities.”impacteffect on the Company'sits financial position or results of operations In February 2013, the FASB issued guidance on reclassifications outoperations.$33,863,000 for 2011 and $33,393,000 for 2010.20122014 and December 31, 20112013 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 ofAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. Notes Payable, Unsecured Notes and Credit Facility (Continued)20122014 and 2011,December 31, 2013, as shown in the Consolidated Balance Sheets (dollars in thousands) (see Note 6,7, "Real Estate Disposition Activities"). 12/31/14 12/31/13 Fixed rate unsecured notes (1) $ 2,750,000 $ 2,600,000 Term Loan 250,000 — Fixed rate mortgage notes payable—conventional and tax-exempt (2) 2,400,677 2,407,962 Variable rate mortgage notes payable—conventional and tax-exempt 1,047,461 1,011,609 Total notes payable and unsecured notes 6,448,138 6,019,571 Credit Facility — — Total mortgage notes payable, unsecured notes and Credit Facility $ 6,448,138 $ 6,019,571 (1) Balances at December 31, 2014 and December 31, 2013 exclude $6,735 and $5,291, respectively, of debt discount as reflected in unsecured notes, net on the Company's Consolidated Balance Sheets. 12-31-12 12-31-11 $ 1,950,000 $ 1,556,001 — 75,000 1,427,133 1,528,783 476,935 440,241 3,854,068 3,600,025 — — $ 3,854,068 $ 3,600,025 (2) Balances at December 31, 2014 and December 31, 2013 exclude $84,449 and $120,071, respectively, of debt premium as reflected in mortgage notes payable on the Company's Consolidated Balance Sheets. (1)Balances at December 31, 2012 and December 31, 2011 exclude $4,202 and $1,802 of debt discount, and $0 and $11, respectively for basis adjustments, as reflected in unsecured notes, net on the Company's Consolidated Balance Sheets.(2)Balances at December 31, 2012 and December 31, 2011 exclude $1,167 and $962 of debt premium as reflected in mortgage notes payable on the Company's Consolidated Balance Sheets.2012:•January 2012,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.$179,400,000$150,000,000 principal amount of its 5.5% unsecured notes pursuant to their scheduled maturity.•February 2012, in conjunction with the acquisition of a community, the Company assumed the existing 4.61% mortgage note in the amount of $11,958,000 that matures in June 2018, and is secured by the community.•Also in February 2012, the Company repaid a variable rate secured mortgage note in the amount of $48,500,000 in advance of its November 2039 scheduled maturity date. In conjunction with the early retirement the Company incurred a non-cash charge of $1,179,000 for the write off of deferred financing fees which was recognized as a loss on extinguishment of debt.•In May 2012, the Company repaid a variable rate secured mortgage note in the amount of $14,566,000 in accordance with its scheduled maturity date.•Also in May 2012,2014, in conjunction with the disposition of an operating community, the Company repaid a variablefixed rate secured mortgage noteloan in the amount of $33,100,000$10,427,000 with an interest rate of 6.19% in advance of its scheduledNovember 2015 maturity date. In accordance with the requirements of the master credit agreement governing this and certain other secured borrowings, the Company repaid an additional $5,914,000 principal amount of secured borrowings for eight other operating communities. The Company incurred a charge for early debt extinguishment of $602,000 for a prepayment penalty and the write-off of deferred financing fees associated with the early repayment of this note which is included in income from discontinued operations on the accompanying Consolidated Statements of Comprehensive Income.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. Notes Payable, Unsecured Notes and Credit Facility (Continued)•September 2012,November 2014, the Company issued $450,000,000$300,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement.statement for net proceeds of approximately $295,803,000. The notes mature in September 2022November 2024 and were issued at a 2.95% rate. stated coupon of 3.50%.notes have an effective interest rate of approximately 4.30%, including the effect of an interest rate hedge and offering costs.•In November 2012, the Company repaid $201,601,000 principal amount of its 6.125% unsecured notes pursuant to their scheduled maturity.•In December 2012, the Company issued $250,000,000 principal amount of unsecured notes inhas a public offering under its existing shelf registration statement. The notes mature in March 2023 and were issued at a 2.85% rate. The notes have an effective interest rate of approximately 3.00%, including the effect of offering costs. In September 2011, the Company entered into a $750,000,000$1,300,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the "Credit Facility"). In December 2012, pursuant which matures in April 2017. The Company has the option to an option available under the terms of the Credit Facility, with the approval of the syndicate of lenders, the Company increased the aggregate facility size by $550,000,000 to $1,300,000,000, extendedextend the maturity of the Credit Facility from September 2015 to April 2017, and amended other sections of the Credit Facility (the "Facility Increase"). The Company may further extend the term forby up to one year under two, additional six month periods (for a total extension options for an aggregate fee of one year), provided we are not in default and upon payment of a $975,000 extension fee for each extension option. In connection with the Facility Increase, the applicable margin over reference rates used to determine the applicable interest rates on our borrowings from time to time decreased.$1,950,000. The Credit Facility bears interest at varying levels based on the London Interbank Offered Rate ("LIBOR"),LIBOR, rating levels achieved on ourthe unsecured notes and on a maturity schedule selected by us.the Company. The current stated pricing is LIBOR plus 1.05% per annum (1.25% on(1.22% at December 31, 2012).2014), assuming a one month borrowing rate. The stated spread over LIBOR can vary from LIBOR plus 0.95% to LIBOR plus 1.725% 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 Facility Increase, the annual facility fee was also amended to lower the fee from 0.175% to 0.15% (approximatelyis approximately $1,950,000 annually based on the $1,300,000,000 facility size and based on ourthe Company's current credit rating).$44,883,000$49,407,000 and $52,659,000$65,018,000 outstanding in letters of credit that reduced the borrowing capacity as of December 31, 20122014 and December 31, 2011,2013, respectively.April 2013November 2015 through July 2066, and are secured by certain apartment communities and improved land parcels (with a net carrying value of $1,513,526,000$4,413,855,000, excluding communities classified as held for sale, as of December 31, 2012)2014).2012,2014, the Company has guaranteed approximately $245,787,000$257,917,000 of mortgage notes payable held by wholly-owned subsidiaries; all such mortgage notes payable are consolidated for financial reporting purposes. The weighted average interest rate of the Company's fixed rate mortgage notes payable (conventional and tax-exempt) was 5.8% and 5.7%4.5% at both December 31, 20122014 and December 31, 2011, respectively.2013. 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 2.7% and 2.3%1.8% at both December 31, 20122014 and December 31, 2011, respectively.2013.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. Notes Payable, Unsecured Notes and Credit Facility (Continued)20122014 are as follows (dollars in thousands): Secured
notes
payments(1) Secured
notes
maturities Unsecured
notes
maturities Stated
interest rate
of unsecured
notes $ 13,375 $ 223,473 $ 100,000 4.950 % 14,284 — 150,000 5.375 % 12,170 406,083 — — 12,807 — 250,000 5.750 % 13,709 18,300 250,000 5.700 % 14,330 11,073 — — 2,597 610,813 — — 2,768 — 250,000 6.100 % 2,952 — 250,000 3.950 % 3,147 — 450,000 2.950 % 83,552 458,635 250,000 2.850 % $ 175,691 $ 1,728,377 $ 1,950,000 (1)Secured note payments are comprised of the principal pay downs for amortizing mortgage notes.Year 2015 $ 17,873 $ 586,705 $ — — % 2016 19,037 16,255 250,000 5.750 % 2017 20,255 710,291 250,000 5.700 % 2018 19,649 76,937 — — % 2019 7,141 658,447 — — % 2020 6,209 50,824 250,000 6.100 % 400,000 3.625 % 2021 5,984 27,844 250,000 3.950 % 250,000 LIBOR + 1.450% 2022 6,351 — 450,000 2.950 % 2023 6,742 — 350,000 4.200 % 250,000 2.850 % 2024 4,858 — 300,000 3.500 % Thereafter — 1,206,736 — — % $ 114,099 $ 3,334,039 $ 3,000,000 note,notes, plus accrued and unpaid interest to the redemption date. The indenture under which the Company's unsecured notes were issued contains 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, 2012.Stockholders' Equity20122014 and 2011,2013, the Company's charter had authorized for issuance a total of 140,000,000280,000,000 shares of common stock and 50,000,000 shares of preferred stock.2012,2014, the Company:(i)issued 18,840,206 shares of common stock through underwritten public offerings and public offerings under CEP II and CEP III;(ii)issued 407,784 shares of common stock in connection with stock options exercised;(iii)issued 2,331 common shares through the Company's dividend reinvestment plan;(iv)issued 96,592 common shares in connection with stock grants;(i) issued 2,069,538 common shares through public offerings under CEP III, discussed below; (ii) issued 500,197 shares of common stock in connection with stock options exercised; (iii) issued 2,434 common shares through the Company's dividend reinvestment plan; (iv) issued 115,163 common shares in connection with stock grants and the conversion of restricted stock units to restricted shares; (v) withheld 55,523 common shares to satisfy employees' tax withholding and other liabilities; (vi) canceled 7,970 shares of restricted stock upon forfeiture; and (vii) issued 9,848 shares through the Employee Stock Purchase Plan. AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. Stockholders' Equity (Continued)(v)withheld 121,351 common shares to satisfy employees' tax withholding and other liabilities;(vi)cancelled 4,027 shares of restricted common stock upon forfeiture; and(vii)issued 6,260 shares through the Employee Stock Purchase Plan. In addition, the Company granted 115,303 options for common stock to employees. Any deferred compensation related to the Company'sCompany’s stock option and restricted stock grants during 2012the year ended December 31, 2014 is not reflected on the Company'sCompany’s Consolidated Balance Sheet as of December 31, 2012,2014, and will not be reflected until earned as compensation cost. In December 2012, the Company issued 16,675,000 shares of common stock at $130.00 per share. Net proceeds of approximately $2,102,718,000 are to prefund the expected Archstone Acquisition and related matters, discussed further in Note 7. "Commitments and Contingencies". In November 2010, the Company commenced a second continuous equity program ("CEP II"), under which the Company was authorized to sell up to $500,000,000 of its common stock from time to time during a 36-month period. During the year ended December 31, 2012, the Company completed the sale of common stock authorized under CEP II, selling 1,435,215 shares at an average sales price of $140.41 per share, for aggregate net proceeds of $198,489,000. From program inception in November 2010 through completion in 2012, the Company issued 3,925,980 common shares at an average price of $127.36 per share for net proceeds of $492,490,000.2012,2014, the Company sold 729,9912,069,538 shares at an average sales price of $142.09$144.95 per share, for net proceeds of $102,168,000. (dollars in thousands) Land and land improvements $ 1,745,520 Buildings and improvements 3,711,853 FF&E 52,290 Construction-in-progress, including land and land held for development (1) 401,747 In-place lease intangibles 182,467 Other assets 109,717 Total consolidated assets 6,203,594 Interest in unconsolidated real estate entities 276,954 Total assets 6,480,548 Fair value of assumed mortgage notes payable 3,732,980 Liability for preferred obligations 67,493 Other liabilities 31,984 Noncontrolling interest 13,262 Net assets acquired 2,634,829 Common shares issued 1,875,210 Cash consideration $ 759,619 (1) Includes amounts for in-place leases for development communities. Revenues $ 353,427 Loss attributable to common shareholders (1) $ (105,589 ) (1) Amounts exclude acquisition costs for the Archstone Acquisition. 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 2012,2014, the Company had investments in the following real estate entities:•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% equity interest (with a right to 50% of distributions after achievement of a threshold return, which was achieved in 2011 and 2012). The Company is the managingAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. Investments in Real Estate Entities (Continued)member of CVP I, LLC, however, property management services at the community are performed by an unrelated third party.As of December 31, 2012, CVP I, LLC has outstanding tax-exempt, variable rate bonds maturing in November 2036 in the amount of $117,000,000 which have permanent credit enhancement. The Company guaranteed to the credit enhancer that CVP I, LLC will obtain a final certificate of occupancy for the project, which was received in 2012, satisfying the Company's obligations under the guarantee. The Company also agreed to guarantee, under limited circumstances, the repayment to the credit enhancer of any advances it may make in fulfillment of CVP I, LLC's repayment obligations under the bonds. Our 80% partner in this venture agreed that it will reimburse us its pro rata share of any amounts paid relative to the outstanding guaranteed obligation. The estimated fair value of and our obligation under the outstanding guarantee, both at inception and as of December 31, 2012, was not significant. As a result the Company has not recorded any obligation associated with the guarantee at December 31, 2012.•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% equity interest in the venture. The Company is responsible for the day-to-day operations of the community and is the management agent subject to the terms of a management agreement. In December 2007, MVP I, LLC executed a fixed-rate conventional loan, which is secured by the underlying real estate assets of the community, for $105,000,000. The loan is an interest-only note bearing interest at 6.02%, maturing in December 2015. The Company has not guaranteed the debt of MVP I, LLC, nor does the Company have any obligation to fund this debt should MVP I, LLC be unable to do so.•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. This community has affordable rents for 100% of apartment homes related to the tax-exempt bond financing and tax credits used to finance construction of the community. A subsidiary of the Company is the general partner of the partnership with a 0.01% ownership interest. The Company manages the community and is subject to a management agreement. As of December 31, 2012, Arna Valley View has $5,678,000 of variable rate, tax-exempt bonds outstanding, which mature in June 2032. In addition, Arna Valley View has $5,963,000 of 4% fixed rate county bonds outstanding that mature in December 2030. Arna Valley View's debt is neither guaranteed by, nor recourse, to the Company. Due to the Company's limited ownership in this venture and the terms of the management agreement regarding the rights of the limited partners, it is accounted for using the cost method.•Aria at Hathorne Hill, LLC—In the second quarter of 2007, a wholly-owned taxable REIT subsidiary of the Company entered into an LLC agreement with a joint venture partner to develop 64 for-sale town homes with a projected total capitalized cost of $23,621,000 in Danvers, Massachusetts on an out parcel adjacent to our Avalon Danvers rental apartment community. Approximately 30% of the homes have been built and sold. The out parcel was zoned for for-sale activity, and was contributed to the LLC by a subsidiary of the Company in exchange forAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. Investments in Real Estate Entities (Continued)a 50% ownership interest. During 2011, the Company concluded that because the market for for-sale housing development had not improved as expected, its investment in the venture was impaired and that impairment was other than temporary. As a result, the Company recognized a charge of $1,955,000 for the impairment of the investment in the unconsolidated joint venture, which holds nondepreciable real estate assets. In December 2011, the Company acquired the note that the venture had with a third party lender for $1,700,000.•ILP ("Fund I")—In March 2005, the Company formed Fund I, a private, discretionary real estate investment vehicle, which acquired and operatesoperated 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 2013, plus2015, 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, and, excluding costs incurred in excess of our equity in the underlying net assets of Fund I, has an equity investment of $21,121,000 in Fund I and the Fund I REIT, net of distributions and excluding the purchase by the Company of a mortgage note secured by a Fund I community, representing a 15.2% combined general partner and limited partner equity interest. Theinterest, andreceivesreceived asset management fees, property management fees and redevelopment fees, as well as a promoted interest if certain thresholds are met.2012,2014, Fund I sold sixits final four communities:•Avalon Lakeside, located in Chicago, IL, for $20,500,000;•Avalon at Poplar Creek, located in Chicago, IL, for $27,200,000;•Avalon Lombard, located in Chicago, IL, for $35,450,000;•Avalon PaseoFremont,Weymouth, MA, for $25,750,000;$30,900,000;•Avalon Skyway,$21,800,000;San Jose,Corona, CA, for $90,000,000;$43,200,000; and•at AberdeenRutherford Station, located in Aberdeen,East Rutherford, NJ, for $66,250,000sixfour communities was $7,971,000.Subsidiaries$3,317,000.Fund I have 13 loans secured by individual assets (includingoperations of The Springs were consolidated for financial reporting purposes. As a mortgage owned byresult, 100% of the Company) with amounts outstandinggain recognized of $16,656,000 is included in gain on sale of communities in the aggregateConsolidated Statements of $254,354,000. Fund I subsidiary loans have varying maturity dates (or dates after which the loans can be prepaid without penalty), ranging from August 2013 to September 2016. These mortgage loans are secured by the underlying real estate. The mortgage loans are payable by the subsidiaries of Fund I with operating cash flow or disposition proceeds from the underlying real estate. The Company has not guaranteed the debt of Fund I, nor does the Company have any obligation to fund this debt should Fund I be unable to do so.In addition, as part of the formation of Fund I, the Company provided to one of the limited partners a guarantee. The guarantee provides that if, upon final liquidation of Fund I, the total amount of all distributions to that partner during the life of Fund I (whether from operatingAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. Investments in Real Estate Entities (Continued)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 $7,500,000 as of December 31, 2012). Under the expected Fund I liquidation scenario, as of December 31, 2012, the expected realizable value of the real estate assets owned by Fund I is considered adequate to avoid payment under such guarantee to that partner. The estimated fair value 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 under this guarantee, both at inception and as of December 31, 2012, was not significant and thereforeto the Company has not recorded any obligationunder 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.this guaranteea prepayment penalty, of which the Company’s portion was $328,000 and was reported as a reduction of December 31, 2012.• our equity in the underlying net assets of Fund II, the Company has made an equity investment of $107,938,000$92,162,000 (net of distributions), representing a 31.3% combined general partner and limited partner equity interest.the year ended December 31, 2012, a subsidiary of2014, Fund II acquired sold two communities:Watchung, a 334 apartment home communityFair Oaks, located in Watchung, NJ,Fairfax, VA, for $63,000,000.$108,200,000 andfinal acquisition foraccompanying Consolidated Statements of Comprehensive Income. In addition, during 2014, Fund II.1410 loans secured by individual assets with aggregate amounts outstanding in the aggregate of $490,078,000,$358,811,000, with maturity dates that vary from November 2014January 2016 to September 2019. The mortgage loans are payable by the subsidiaries of Fund II withfrom 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.2012)2014). Under the expected Fund II liquidation scenario, as of December 31, 2012,2014 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 estimated2012,2014, was not significant and therefore the Company has not recorded any obligation for this guarantee as of December 31, 2012.2014.AVALONBAY COMMUNITIES, INC.—Brandywine owns a 305 apartment home community located in Washington, DC. 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, the 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.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Arna Valley View LP5.—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.Real Estate Entities (Continued)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; and 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 Lehman 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. The Company has not guaranteed the debt of SWIB, nor does the Company have any obligation to fund this debt should SWIB be unable to do so. 12-31-12 12-31-11 (unaudited) (unaudited) 12/31/14 12/31/13 $ 1,337,084 $ 1,583,397 $ 1,617,627 $ 1,905,005 73,252 70,233 72,290 164,183 $ 1,410,336 $ 1,653,630 $ 1,689,917 $ 2,069,188 $ 943,259 $ 1,074,429 $ 980,128 $ 1,251,067 20,405 27,335 24,884 32,257 446,672 551,866 684,905 785,864 $ 1,410,336 $ 1,653,630 $ 1,689,917 $ 2,069,188 For the year ended 12/31/14 12/31/13 12/31/12 Rental and other income $ 198,939 $ 212,994 $ 172,076 Operating and other expenses (80,301 ) (86,434 ) (73,955 ) Gain on sale of real estate (1) 333,221 96,152 106,195 Interest expense, net (61,458 ) (61,404 ) (53,904 ) Depreciation expense (52,116 ) (61,002 ) (47,748 ) Net income $ 338,285 $ 100,306 $ 102,664 (1) Amount for the year ended December 31, 2012 includes $44,700 of gain recognized by the joint venture associated with the Company's acquisition of Avalon Del Rey from its joint venture partner. For the year ended
(unaudited) 12-31-12 12-31-11 12-31-10 $ 172,076 $ 160,066 $ 114,755 (73,955 ) (71,926 ) (56,322 ) 106,195 22,246 — (53,904 ) (50,530 ) (40,050 ) (47,748 ) (47,920 ) (36,631 ) $ 102,664 $ 11,936 $ (18,248 ) (1)Amount for the year ended December 31, 2012 includes $44,700 of gain recognized by the joint venture associated with the Company's acquisition of Avalon Del Rey from its joint venture partner. as well as the acquisition and development of certain other investments in unconsolidated entities, the Company incurred costs in excess of its equity in the underlying net assets of the respective investments. These costs represent $7,342,000$3,880,000 at December 31, 20122014 and $9,167,000$5,439,000 at December 31, 20112013 of the respective investment balances.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. Investments in Real Estate Entities (Continued) For the year ended
(unaudited) 12-31-12 12-31-11 12-31-10 $ 4,000 $ 102 $ 1 5,394 4,493 4,368 493 (626 ) (881 ) 7,041 2,204 (1,653 ) 2,130 (1,053 ) (1,073 ) 1,856 — — $ 20,914 $ 5,120 $ 762 For the year ended 12/31/14 12/31/13 12/31/12 Fund I (1) $ 475 $ 10,924 $ 7,041 Fund II (2) 24,808 6,206 2,130 U.S. Fund (3) 342 (661 ) — AC JV (3) 1,579 2,569 — 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 Juanita Village (6) 3 378 1,856 Total $ 148,766 $ (11,154 ) $ 20,914 (1)During 2012, the Company purchased its joint venture partner's interest in this venture.(2)Equity in income from this entity for 2012, 2011, and 2010 includes $2,865, $2,815, and $2,839, respectively, relating to the Company's recognition of its promoted interest.(3)Equity in income for 2012 and 2011 includes the Company's proportionate share of the gain on the sale of Fund I assets of $7,971 and $3,063, respectively.(4)The Company's equity in income for this entity represents its residual profits interest from the sale of the community.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. Investments in Real Estate Entities (Continued)(1) Equity in income for the years ended December 31, 2014, 2013 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 $21,624 and $2,790, respectively. (3) The Company's joint venture partner's interest was acquired in conjunction with the Archstone Acquisition. (4) Equity in income for the years ended December 31, 2014, 2013 and 2012 includes $61,218, $5,527 and $5,260, 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) Equity in income for the years ended December 31, 2014 and 2013 includes $930 and $516 relating to the Company's recognition of its promoted interest. (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. February 2012,December 2014, the Company acquired The Mark Pasadena,Avalon Mission Oaks, located in Pasadena,Camarillo, CA. The Mark PasadenaAvalon Mission Oaks contains 84160 apartment homes and was acquired for a purchase price of $19,400,000. In conjunction with this acquisition, the Company assumed the existing 4.61% fixed-rate mortgage loan with an outstanding principal amount of $11,958,000 which matures in June 2018 and is secured by the community. In June 2012, the Company acquired Eaves Cerritos, located in Artesia, CA. Eaves Cerritos contains 151 apartment homes and was acquired for a purchase price of $29,500,000. In July 2012, the Company acquired Avalon Del Rey, a 309 apartment home community which was owned by a joint venture in which the Company held a 30% ownership interest. As part of this transaction, the venture repaid the $43,606,000 variable rate note secured by the community. The Company paid approximately $67,200,000 for its joint venture partner's 70% interest as well as contributing its proportionate share of the note repayment to the venture. Upon the acquisition of Avalon Del Rey, the Company consolidated the community, recognized income from its promoted interest of $4,055,000 included in equity in income of unconsolidated equities, and a gain of $14,194,000, as gain on acquisition of unconsolidated entity in the Consolidated Statements of Comprehensive Income. The gain recognized reflects the amount by which the fair value of the Company's previously owned investment interest exceeded its carrying value. In December 2012, the Company acquired Eaves Burlington, located in Burlington, MA. Eaves Burlington contains 203 apartment homes and was acquired for a purchase price of $40,250,000.each of these acquisitionsthis acquisition as a business combination and recorded the acquired assets and assumed liabilities, including identifiable intangibles, based onat their fair values. The Company looked to third party pricing or internal models for the values of the land, and an internal model to determine the fair values of the real estate assets in place leases and mortgage loan.in-place leases. Given the heterogeneous nature of multifamily real estate, the fair values for the land, real estate assets and in placein-place leases incorporated significant unobservable inputs and therefore are considered to be Level 3 prices within the fair value hierarchy. For the Mark Pasadena, the Company used a discounted cash flow analysis to value the mortgage note, considering the contractual terms of the instrument and observable market-based inputs. The fair value of the mortgage loan is considered a Level 2 price as the majority of the inputs used fall within Level 2 of the fair value hierarchy.it isthey are incurred. To the extent the Company receives amounts related to acquired communities for periods prior to their acquisition, the Company reports 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 with the acquisitions made by the Company in 2013 and 2012, as well as costs associated withincluding those for the Archstone Acquisition, totaled $44,052,000 and $9,593,000, respectively. These amounts are reported as a component of Operating expenses, excluding property taxesexpensed acquisition, development and other pursuit costs on the accompanying Consolidated Statements of Comprehensive Income. Acquisition costs in 2011 and 2010 were not significant. In 2010,purchasedentered into a non-recourse mortgage note secured byjoint venture to acquire a Fund I operating community, on an arms length basis. Upon acquisitionland parcel and construct a mixed use building that will contain rental apartments, for-sale residential condominium units and related common elements. The Company will own a 70% interest in the venture and have all of the note,rights and obligations associated with the Company determined that it had controlrental apartments, and the venture partner will own the remaining 30% interest and have all of the Fund I subsidiary, as a resultrights and obligations associated with the for-sale condominium units. The Company will share responsibility for the development and oversee construction of its collective equity and debt investments, the relationship betweenstructure. Upon formation of the venture, the Company and Fund I,its venture partner made capital contributions, with costs incurred subsequent to the initial contributions to be funded through a loan provided by the Company. As of December 31, 2014, the Company's aggregate investment in the venture is $11,161,000 and is reported as a component of land held for development on the Consolidated Balance Sheets. The Company had provided funding for the venture partner’s share of costs in the amount of $5,354,000 reported as a component of prepaid expenses and other assets on the Consolidated Balance Sheets, recognizing interest income as earned as a component of interest expense, net on the Consolidated Statements of Comprehensive Income. The loan provided to the venture partner will be repaid with the proceeds received from the sale of the residential condominium units. The venture is considered a variable interest entity, and the natureCompany will consolidate its interest in the rental apartments and common areas, and account for the for-sale component of the Company's operations being more similar to those of the Fund I subsidiary than those of Fund I. Therefore, the Company consolidates the results of operations and net assets of the Fund I subsidiary.venture as an unconsolidated investment.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)6. Real Estate Disposition Activities2012,2014, the Company sold four communities: Waterford, located in Oakland, CA; Avalon Arlington Heights, located in Chicago, IL; and Avalon Wildreed and Avalon Highgrove, both located in Everett, WA. Thesewholly-owned communities, containing a totalan aggregate of 1,5781,337 apartment homes were sold for an aggregate gross sales price of $268,250,000. The dispositions resulted in$296,200,000 and an aggregate pre-tax gain in accordance with GAAP of $145,271,000. The$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. In addition, during 2014, the Company sold one unimproveda land parcel in Chicago, IL,Huntington Station, NY for $12,300,000,$8,050,000, resulting in an aggregatea gain in accordance with GAAP of $280,000. The Company recorded impairment charges of approximately $16,363,000 related to this land parcels in prior years when it was determined that the site would not be developed. Location Period
of sale Apartment
homes Debt Gross
sales price Net proceeds Chicago, IL Q212 N/A (1) $ — $ 12,300 $ 10,849 Oakland, CA Q212 544 — 86,500 84,488 Chicago, IL Q212 409 — 87,250 86,888 Everett, WA Q412 234 — 35,000 33,994 Everett, WA Q412 391 — 59,500 57,799 1,578 $ — $ 280,550 $ 274,018 1,038 $ — $ 292,965 $ 287,358 1,007 $ — $ 198,600 $ 194,009 Community Name Location Debt Avalon Valley Danbury, CT Q114 268 $ — $ 53,325 $ 52,147 Oakwood Philadelphia Philadelphia, PA Q214 80 16,341 (1) 28,875 10,932 Avalon Danvers Danvers, MA Q214 433 — 108,500 107,231 Archstone Memorial Heights Houston, TX Q414 556 — 105,500 103,182 Huntington Station Land Huntington 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 (1)Disposition of an unimproved land parcel.(1) Amount includes $10,427 principal amount secured by Oakwood Philadelphia and $5,914 principal amount of secured borrowings repaid by the Company for eight other operating communities, the aggregate of which is included in determining net proceeds. (2) Total of 2013 asset sales excludes the disposition of development rights located in Hingham, MA and Brooklyn, NY, for total net proceeds of $1,313. 2012,2014, the Company hadone community that qualified as held for sale.20102012 through December 31, 20122014 (which includes Avalon Valley) and the real estate assets that qualifiedwhich were classified as discontinued operations and held for sale and discontinued operations as of and for periods prior to December 31, 20122013, 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 reflect discontinued operations consistent with current year presentation. For the year ended For the year ended 12-31-12 12-31-11 12-31-10 12/31/14 12/31/13 12/31/12 $ 25,373 $ 53,290 $ 56,705 $ 579 $ 42,874 $ 63,406 (8,075 ) (25,513 ) (31,164 ) (269 ) (12,661 ) (19,437 ) (133 ) (4,808 ) (5,212 ) — — (133 ) (602 ) (3,880 ) — — — (602 ) (4,068 ) (11,209 ) (12,379 ) — (13,500 ) (16,414 ) $ 12,495 $ 7,880 $ 7,950 $ 310 $ 16,713 $ 26,820 AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)7. Commitments and ContingenciesThe Archstone Acquisition In November 2012, the Company entered into agreements with (i) Equity Residential and its operating partnership, ERP Operating Partnership LP ("Equity Residential"), (ii) Lehman Brothers Holdings, Inc., ("Lehman"), and (iii) Archstone Enterprise LP ("Archstone"), pursuant to which AvalonBay and Equity Residential will acquire, directly or indirectly, all of the assets and entities owned by, and all of the liabilities of, Archstone. Under the terms of the agreements, the Company will acquire approximately 40% of Archstone's asset and liabilities and Equity Residential will acquire approximately 60% of Archstone's assets and liabilities ("Archstone Acquisition"). The transaction is expected to close during the first quarter of 2013. The Company expects to purchase the following as part of the Archstone Acquisition:•66 apartment communities that are expected to be consolidated for financial reporting purposes, containing 22,222 apartment homes, of which six communities are under construction and are expected to contain 1,666 apartment homes upon completion•Three parcels of land, which are expected to be wholly owned, and if developed as anticipated, are expected to contain a total of 968 apartment homes;•Interests in joint ventures, the assets of which consist primarily of real estate, for which the Company's ownership percentage is expected to be up to 40%, and that are not expected to be consolidated for financial reporting purposes. The Company expects to provide the following consideration for the Archstone Acquisition:•the issuance of 14,889,706 shares of its common stock to Lehman or its designees;•cash payment of $669,000,000 to Lehman or its designees;•the assumption of approximately $3,700,000,000 principal amount of consolidated indebtedness;•the acquisition with Equity Residential of interests in entities that have preferred units outstanding that may be presented for redemption from time to time. The Company's 40% share of the liquidation value of and accrued dividends on these outstanding Archstone preferred units is approximately $132,200,000 at December 31, 2012; and•the assumption with Equity Residential of all other liabilities, known or unknown, of Archstone, other than certain excluded liabilities. The Company will share in 40% of the cost of these liabilities. Equity Residential and the Company are jointly and severally liable for most obligations to Lehman related to the Archstone Acquisition. If the Company and Equity Residential fail to close Archstone Acquisition by March 26, 2013, then Equity Residential and the Company could be liable for payment of a termination fee of $800,000,000. The closing of the transaction is also subject to customary closing conditions, which do not include the Company and Equity Residential's ability to obtain the necessary financing or lender consents for the transaction. Unless otherwise stated, all amounts and disclosures included in this Form 10-K do not include any impact from the anticipated closing of the Archstone Acquisition. The final assets acquired and consideration paid related to the Archstone Acquisition is subject to adjustment.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)7. Commitments and Contingencies (Continued)2012,2014, the Company has employment agreements with threetwo executive officers which expire on December 31, 2015. Under the employment agreements, if the Company terminates the 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 twoone of the executives, the multiple is two times (three if the termination is in connection with a sale of the Company) and for one of the executivesother 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.presidents and the CFO, and three times for the CEO.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.Construction and Development Contingencies In 2007 the Company entered into a commitment to acquire parcels of land in Brooklyn, New York for an aggregate purchase price of approximately $111,000,000, subject to escalations based on the timing of the acquisitions. During 2012 the Company purchased the remaining parcels under the commitment for $27,709,000, satisfying its obligation under the commitment.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)7. Commitments and Contingencies (Continued)2011, the Company recognized receipt of settlement proceeds of $1,303,000, related to environmental contamination matters pursued by the Company, reported as2013.reduction in the consolidated capitalized basisdiscussion of the Edgewater fire that occurred in January 2015 and related communities.1112 apartment communities, fourtwo communities under constructiondevelopment and two commercial properties, which are located on land subject to land leases expiring between October 2026 and March 2142. Of these leases2142, of which 14 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 four of these leases have purchase options exercisable through 2095. The Company incurred costs of $17,604,000, $16,887,000,$21,664,000, $17,996,000 and $35,356,000$17,604,000 in the years ended December 31, 2012, 20112014, 2013 and 2010,2012, respectively, related to operating leases. In addition, the Company hasOne Development Community and one apartment community and two Development Communitiesthat completed construction during 2014 are located on land subject to a land lease, which are accounted for as capital leases, with a lease obligation of $36,005,000$34,268,000 reported as a component of accrued expenses and other liabilities. Each of these leases have purchase options exercisable through 2046. In addition,for the Company leases certain office space,to purchase the land at some point during the lease terms which are accounted for as operating leases. Payments due by period Payments due by period 2013 2014 2015 2016 2017 Thereafter 2015 2016 2017 2018 2019 Thereafter $ 17,996 $ 18,443 $ 18,390 $ 18,182 $ 17,668 $ 1,178,392 $ 20,337 $ 20,933 $ 20,531 $ 22,339 $ 20,717 $ 1,227,854 $ 2,427 $ 2,667 $ 1,954 $ 19,154 $ 921 $ 43,366 Capital Lease Obligations (1) (2) 1,885 19,083 848 848 848 39,087 $ 22,222 $ 40,016 $ 21,379 $ 23,187 $ 21,565 $ 1,266,941 $ 20,423 $ 21,110 $ 20,344 $ 37,336 $ 18,589 $ 1,221,758 (1)Aggregate capital lease payments include $35,728 in interest costs.(1) Aggregate capital lease payments include $28,318 in interest costs. (2) At December 31, 2014, capital lease assets of $31,784 are included as a component of land and improvements on the accompanying Consolidated Balance Sheets. 8. 9. Segment Reportingareinclude Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. Annually as of January 1st, the Company determines which of its communities fall into each of these categories and generally maintains that classification unless disposition or redevelopment plans regarding a community change, throughout the year for the purpose of reporting segment operations.operations, unless disposition or redevelopment plans regarding a community change. AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8. Segment Reporting (Continued)•year. Foryear period. The Established Communities for the year 2012, the Established Communitiesended December 31, 2014, are communities that are consolidated for financial reporting purposes, had stabilized occupancy and operating expenses as of January 1, 2011,2013, are not conducting or planning to conduct substantial redevelopment activities and are not held for sale or planned for disposition within the current year.year period. 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.••final certificate of occupancy communities wherefor the Company owns a majority interestentire 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, 2012.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8. Segment Reporting (Continued)2012, 20112014, 2013 and 20102012 is as follows (dollars in thousands): For the year ended For the year ended 12-31-12 12-31-11 12-31-10 12/31/14 12/31/13 12/31/12 $ 423,562 $ 441,370 $ 174,079 $ 697,327 $ 352,771 $ 423,562 31,911 30,550 30,246 49,055 41,554 31,911 6,071 5,126 3,824 4,485 3,990 6,071 11,350 2,967 2,741 136,920 167,814 169,997 1,179 1,940 — Expensed acquisition, development and other pursuit costs, net of recoveries (3,717 ) 45,050 11,350 Interest expense, net (1) 180,618 172,402 136,920 Loss on extinguishment of debt, net 412 14,921 1,179 Loss on interest rate contract — 51,000 — 34,101 29,371 26,846 41,425 39,573 34,101 (20,914 ) (5,120 ) (762 ) 256,026 239,060 220,563 Equity in loss (income) of unconsolidated entities (148,766 ) 11,154 (20,914 ) Depreciation expense (1) 442,682 560,215 243,680 Income tax expense 9,368 — — 1,449 14,052 — — — 1,449 Gain on acquisition of unconsolidated real estate entity — — (14,194 ) (146,591 ) (294,806 ) (74,074 ) (85,415 ) (240 ) (280 ) Gain on sale of discontinued operations (37,869 ) (278,231 ) (146,311 ) (12,495 ) (7,880 ) (7,950 ) (310 ) (16,713 ) (26,820 ) �� (14,194 ) — — Net operating income from real estate assets sold or held for sale, not classified as discontinued operations (15,199 ) (19,448 ) (13,776 ) $ 708,375 $ 624,444 $ 545,510 $ 1,134,096 $ 977,998 $ 667,928 (1) Includes amounts associated with assets sold or held for sale, not classified as discontinued operations. For the year ended 12/31/2014 12/31/2013 12/31/2012 Rental income from real estate assets sold or held for sale, not classified as discontinued operations $ 24,389 $ 30,867 $ 21,463 Operating expenses real estate assets sold or held for sale, not classified as discontinued operations (9,190 ) (11,419 ) (7,687 ) Net operating income from real estate assets sold or held for sale, not classified as discontinued operations $ 15,199 $ 19,448 $ 13,776 2012, 20112014, 2013 and 20102012 have been adjusted for the real estate assets that were sold from January 1, 20102012 through December 31, 2012,2014, orAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8. Segment Reporting (Continued)2012,2014, as described in Note 6,7, "Real Estate Disposition Activities." Total
revenue NOI % NOI change
from prior year Gross
real estate(1) $ 168,260 $ 109,301 4.9 % $ 1,289,604 229,624 160,026 7.3 % 1,947,668 103,784 75,313 6.9 % 591,669 32,942 23,433 15.0 % 306,289 129,493 94,915 14.0 % 1,181,395 99,302 68,880 7.0 % 947,743 763,405 531,868 7.6 % 6,264,368 135,231 86,722 n/a 1,314,690 129,767 89,785 n/a 2,032,277 n/a n/a n/a 316,037 10,257 n/a n/a 73,724 $ 1,038,660 $ 708,375 14.2 % $ 10,001,096 $ 169,939 $ 109,048 9.6 % $ 1,302,368 195,652 131,605 6.6 % 1,534,923 102,834 74,756 6.6 % 603,345 30,057 20,374 6.0 % 301,662 95,209 68,173 10.9 % 869,254 75,120 50,391 9.8 % 697,705 668,811 454,347 8.3 % 5,309,257 137,779 89,949 n/a 1,567,875 119,841 80,148 n/a 1,752,006 n/a n/a n/a 325,918 9,656 n/a n/a 78,161 $ 936,087 $ 624,444 14.5 % $ 9,033,217 $ 143,564 $ 89,712 (0.3 )% $ 1,109,016 181,639 121,033 (1.5 )% 1,386,850 91,927 65,737 1.0 % 545,190 19,045 12,426 (10.7 )% 176,940 111,474 76,362 (6.4 )% 1,056,111 58,888 37,703 (6.7 )% 470,162 606,537 402,973 (2.6 )% 4,744,269 122,403 74,609 n/a 1,580,910 106,526 67,928 n/a 1,670,398 n/a n/a n/a 184,150 7,354 n/a n/a 82,806 $ 842,820 $ 545,510 4.6 % $ 8,262,533 (1)Does not include gross real estate assets held for sale of $70,246, $255,274 and $398,679 as of December 31, 2012, December 31, 2011 and December 31, 2010 respectively.(2)Gross real estate for the Company's established communities includes capitalized additions of approximately $25,448, $34,359 and $38,670 in 2012, 2011 and 2010, respectively.(3)Revenue represents third-party management, accounting, and developer fees and miscellaneous income which are not allocated to a reportable segment. NOI For the year ended December 31, 2014 (2) Established New England $ 179,116 $ 113,905 0.8 % $ 1,373,065 Metro NY/NJ 318,710 223,591 3.1 % 2,379,178 Mid-Atlantic 98,590 69,498 (2.5 )% 647,374 Pacific Northwest 54,230 37,637 7.0 % 500,247 Northern California 174,527 132,899 8.2 % 1,402,444 Southern California 139,841 95,626 5.2 % 1,225,328 Total Established (3) 965,014 673,156 3.5 % 7,527,636 Other Stabilized 497,756 343,061 N/A 6,062,844 Development / Redevelopment 186,852 117,879 N/A 3,972,180 Land Held for Future Development N/A N/A N/A 180,516 Non-allocated (4) 11,050 N/A N/A 41,643 Total $ 1,660,672 $ 1,134,096 16.0 % $ 17,784,819 For the year ended December 31, 2013 Established New England $ 159,670 $ 103,679 2.3 % $ 1,227,582 Metro NY/NJ 249,742 172,912 4.4 % 1,921,307 Mid-Atlantic 100,548 71,851 0.1 % 633,598 Pacific Northwest 46,564 31,283 5.3 % 444,825 Northern California 141,038 106,745 11.7 % 1,233,851 Southern California 119,024 81,182 5.1 % 1,058,883 Total Established (3) 816,586 567,652 4.9 % 6,520,046 Other Stabilized 486,780 330,998 N/A 6,626,884 Development / Redevelopment 117,186 79,348 N/A 3,024,035 Land Held for Future Development N/A N/A N/A 300,364 Non-allocated (4) 11,502 N/A N/A 10,279 Total $ 1,432,054 $ 977,998 46.4 % $ 16,481,608 For the year ended December 31, 2012 Established New England $ 145,629 $ 94,481 5.1 % $ 1,115,098 Metro NY/NJ 213,360 148,441 7.4 % 1,760,429 Mid-Atlantic 103,784 75,313 3.2 % 591,669 Pacific Northwest 32,942 23,433 15.0 % 306,289 Northern California 112,875 83,091 14.1 % 1,015,947 Southern California 99,302 68,880 7.0 % 947,723 Total Established (3) 707,892 493,639 7.6 % 5,737,155 Other Stabilized 131,248 84,504 N/A 1,284,666 Development / Redevelopment 129,767 89,785 N/A 2,032,277 Land Held for Future Development N/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 and $627,483 as of December 31, 2014, 2013 and 2012, respectively. (2) 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. AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)9. Stock-Based Compensation Plansup to 4,199,822 shares of the Company's common stock, par value $0.01 per share, (2,930,000 newly authorizedshare. At December 31, 2014, the Company has 1,673,193 shares plus 1,269,822 shares that wereremaining available for grant as of May 21, 2009 under the Company's 1994 Stock Option and Incentive Plan (the "1994 Plan")), pursuant to awardsissue under the 2009 Plan.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 1994Company's1994 Stock Option and Incentive Plan (the "1994 Plan") on May 21, 2009, the date the Company adopted the 2009 Plan, that are subsequently forfeited, canceled, surrendered or terminated (other than by exercise) will become available for awards under the 2009 Plan. The 2009 Plan provides for various types of equity awards to associates, officers, non-employee directors and other key personnel of the Company and its subsidiaries. The 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") under Section 422 of the Code, non-qualified stock options and stock appreciation rights. The 2009 Plan will expire on May 21, 2019. 2009 Plan
shares Weighted
average
exercise price
per share 1994 Plan
shares Weighted
average
exercise price
per share — $ — 2,836,254 $ 80.76 Options Outstanding, December 31, 2011 247,403 $ 98.42 1,112,959 $ 94.10 — — (729,381 ) 57.87 (43,265 ) 85.09 (364,519 ) 68.21 126,484 74.20 — — 115,303 133.16 — — — — (34,656 ) 100.02 (11,887 ) 115.15 (28,610 ) 139.58 126,484 $ 74.20 2,072,217 $ 88.50 Options Outstanding, December 31, 2012 307,554 $ 112.67 719,830 $ 105.40 (23,908 ) 75.75 (930,391 ) 82.43 (19,949 ) 84.43 (24,292 ) 79.42 144,827 115.83 — — 215,230 129.03 — — — — (28,867 ) 68.29 (1,267 ) 131.56 (4,012 ) 127.56 247,403 $ 98.42 1,112,959 $ 94.10 Options Outstanding, December 31, 2013 501,568 $ 120.77 691,526 $ 106.19 (43,265 ) 85.09 (364,519 ) 68.21 (157,454 ) 116.40 (342,743 ) 99.03 115,303 133.16 — — — — — — (11,887 ) 115.15 (28,610 ) 139.58 (4,052 ) 131.05 (76,381 ) 142.66 307,554 $ 112.67 719,830 $ 105.40 Options Outstanding, December 31, 2014 340,062 $ 122.67 272,402 $ 104.96
3,417
$
74.20
1,730,978
$
93.60 30,771 $ 81.54 1,012,304 $ 98.62 74,618 $ 97.46 719,830 $ 105.40 74,618 $ 97.46 719,830 $ 105.40 December 31, 2013 184,167 $ 107.18 691,526 $ 106.19 December 31, 2014 185,227 $ 116.71 272,402 $ 104.96 AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)9. Stock-Based Compensation Plans (Continued)2012:2009 Plan
Number of Options Range—Exercise Price Weighted Average
Remaining Contractual Term
(in years) 69,287 $70.00 - 79.99 7.1 127,930 110.00 - 119.99 8.1 108,838 130.00 - 139.99 9.1 1,499 140.00 - 149.99 9.5 307,554 Range—Exercise Price 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 1994 Plan
Number of Options Range—Exercise Price Weighted Average
Remaining Contractual Term
(in years) 1,424 $30.00 - 39.99 0.1 94,898 40.00 - 49.99 3.5 41,556 60.00 - 69.99 2.1 730 70.00 - 79.99 2.5 107,833 80.00 - 89.99 5.1 187,380 90.00 - 99.99 3.1 286,009 140.00 - 149.99 4.1 719,830 Range—Exercise Price 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 20122014 had an intrinsic value of $7,049,000$13,849,000 and $21,730,000,$15,915,000, respectively. Options exercisable under the 2009 and 1994 Plans at December 31, 20122014 had an intrinsic value of $2,845,000$8,647,000 and $21,730,000,$15,915,000, respectively. Options exercisable under the 2009 and 1994 Plans had a weighted average contractual life of 8.37.3 years and 4.12.5 years, respectively. The intrinsic value of options exercised during 2014, 2013 and 2012 2011was $20,028,000, $2,395,000 and 2010 was $26,746,000, $46,126,000 and $30,811,000, respectively.the periods shown2013 and 2012 and the associated assumptions used to calculate the value:value. There were no stock options granted in 2014. 2012 2011 2010 2013 2012 $ 29.11 $ 29.40 $ 19.45 $ 26.78 $ 29.11 5.0 7.0 7.0 5.0 5.0 3.5 % 4.0 % 5.5 % 3.7 % 3.5 % 35.00 % 35.00 % 43.00 % 34.00 % 35.00 % 0.87 % 3.04 % 3.15 % 0.91 % 0.87 % At December 31, 2012 and 2011,had 202,218adopted a revised compensation framework under which share-based compensation will be granted, composed of annual awards and 431,320, respectively, outstanding unvested shares granted undermultiyear long term incentive performance awards. Annual awards will include restricted stock awards. awards for which one third of the award will vest annually over a three year period following the measurement period. Under the multiyear long term incentive component of the revised framework, the Company will grant a target number of restricted stock units, 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 compensation 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 vest annually over a three year period following the measurement period.issued 96,592 sharesgranted 131,980 restricted stock units net of restrictedTableforfeitures, with an estimated aggregate compensation cost of ContentsAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)9. Stock-Based Compensation Plans (Continued)stock valued at $12,883,000$15,522,000, as part of its stock-based compensation plan during the year ended December 31, 2012.2014. The amount of restricted stock ultimately earned is based on the total shareholder return metrics related to the Company’s common stock for 58,206 restricted stock units and financial metrics related to operating performance and leverage metrics of the Company for 73,774 restricted stock units. For the portion of the grant for which the award is determined by the total shareholder return of the Company’s common stock, 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 life of the plan for the Company 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. For the portion of the grant for which the award is determined by financial metrics, the estimated compensation cost was based on the baseline share value of $128.97 and the Company's estimate of corporate achievement for the financial metrics.20122014 totaled 318,72699,036 shares, of which 5,073 shares related to the conversion of restricted stock units and 93,963 shares related to restricted stock awards, which had fair values at the grant date ranging from $48.60$74.20 to $149.05$163.39 per share. The total fair value of shares vested under restricted stock awards was $36,337,000, $35,029,000$11,352,000, $14,832,000 and $9,805,000$36,337,000 for the years ended December 31, 2014, 2013 and 2012, 2011 and 2010, respectively.$9,961,000, $9,721,000$13,314,000, $17,775,000 and $9,906,000$9,961,000 for the years ended December 31, 2012, 20112014, 2013 and 2010,2012, respectively, and total capitalized stock-based compensation cost was $5,140,000, $5,284,000$5,457,000, $8,379,000 and $5,117,000$5,140,000 for the years ended December 31, 2012, 20112014, 2013 and 2010,2012, respectively. At December 31, 2012,2014, there was a total of $2,230,000 and $6,705,000 in unrecognized compensation cost of $1,058,000 for unvested stock options and $19,559,000 for unvested restricted stock respectively,and restricted stock units, which does not include estimated forfeitures. The unrecognized compensation cost for unvested stock options and restricted stock and restricted stock units is expected to be recognized over a weighted average period of 1.731.1 and 2.333.6 years, respectively.20122014 was 1.5%1.4%. The application of estimated forfeitures did not materially impact compensation expense for the years ended December 31, 2012, 2011 or 2010.733,935714,827 shares remaining available for issuance under the plan.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. TheDuring 2013, the purchase period iswas a period of seven months beginning each April 1 and ending each October 30. The Company modified the ESPP beginning in 2014, establishing two purchase periods of approximately six months each. 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 6,260, 6,9729,848, 9,260 and 8,1376,260 shares and recognized compensation expense of $127,000, $216,000$407,000, $174,000 and $272,000$127,000 under the ESPP for the years ended December 31, 2012, 20112014, 2013 and 2010,2012, 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.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)10. Fair Value Thereportsuses interest rate cap agreements to manage its interest rate swap and interest rate cap agreementsrisk. 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 minimizingreducing credit risk concentration. The Company believes the likelihood of realizing losses from counterparty non-performancenonperformance 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, 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, 2012,2014, 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.2012,2014, excluding derivatives executed to hedge debt on communities classified as held for sale (dollars in thousands): Notional balance $ 605,515 $ 170,909 Weighted average interest rate (1) 1.7 % 2.5 % Weighted average capped interest rate 6.0 % 5.1 % Earliest maturity date February 2016 April 2015 Latest maturity date August 2018 April 2019 (1) Represents the weighted average interest rate on the hedged debt. Non-designated
Hedges Cash Flow
Hedges Cash Flow
Hedges Interest
Rate Caps Interest
Rate Caps Interest
Rate Swaps $ 39,347 $ 179,851 $ 215,000 1.1 % 2.4 % 4.6 % 7.4 % 5.3 % N/A Mar-14 Jul-13 May-13 Sep-17 Jun-15 May-13 (1)For interest rate caps, this represents the weighted average interest rate on the debt.fivefour derivatives designated as cash flow hedges and three12 derivatives not designated as hedges at December 31, 2012. In connection with2014. Fair value changes for derivatives not in qualifying hedge relationships for the Company's Septemberyears ended December 31, 2014 and 2012, unsecured note issuance,were not material. Excluding the Company settled a forward starting interest rate swapprotection agreement designated as a cash flow hedge of the interest rate variability on the forecasted issuance of the unsecured notes, making a payment of $54,930,000, which amount was included in accumulated other comprehensive loss on the Consolidated Balance Sheets and is being recognized as a component of interest expense, net, over the life of the unsecured notes. Fairdiscussed further below, fair value changes for derivatives not in qualifying hedge relationships for the year ended December 31, 2012,2013 were not material. To adjust the Hedging Derivatives in qualifying cash flowAVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)10. Fair Value (Continued)an increase ina decrease to accumulated other comprehensive loss of $22,876,000, $85,845,000$6,116,000 and $108,000$5,892,000 during the years ended December 31, 2012, 20112014 and 2010, respectively. The2013, 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 $1,889,000$59,376,000 of deferred losses from accumulated other comprehensive loss into earnings forwith $51,000,000 recognized as loss on interest rate contract as discussed below, and the year ended December 31, 2012.balance recorded as a component of interest expense, net. The Company anticipates reclassifying approximately $5,493,000 of hedging losses from accumulated other comprehensive loss into earnings within the next twelve12 months to offset the variability of cash flows of the hedged itemsitem during this period. The Company had twodid not have any derivatives designated as fair value hedges as of December 31, 2014 and 2013.which matured prior to December 31, 2012.reduce the impact of variability in interest rates on a portion of its expected debt issuance activity in 2013. The Company recordedsettled this position at its maturity in May 2013 with a decrease inpayment to the counterparty of $51,000,000, the fair value at the time of these fair value hedges of $1,498,000settlement. 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, 2011.a redemption optionoptions (the "Put""Puts") that allows aallow joint venture partnerpartners of the Company to require the Company to purchase its interesttheir interests in the investment at a guaranteed minimum amount beginning in June 2022, or earlier if the operating community underlying the joint venture is sold.related to three ventures. The Put isPuts are payable in cash and has a price determined by a guaranteed return on the joint venture partner's net capital contributions over the term of the partnership.cash. The Company determines the fair value of the PutPuts based on unobservable inputs considering the assumptions that market participants would make in pricing the obligation,obligations, applying the contractuala guaranteed rate of return to the joint venture partner'spartners' net capital contribution balancebalances as of period end. Given the significance of the unobservable inputs, the valuation isvaluations are classified in Level 3 of the fair value hierarchy.interestsinterest 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 agreement,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 DownREITDownREITs are valued using the market price of the Company's common stock, a Level 1 price under the fair value hierarchy.with cash balances held inwithin principal protected accounts and any cash equivalents held in the form of short term investments that do not expose the Company to principal loss.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.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)10. Fair Value (Continued)mortgage 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'sCompany’s nonperformance risk. The Company has concluded that the value of its mortgage 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.measured and/or measured/disclosed at fair value on a recurring basis (dollars in thousands): Total Fair
Value Quoted Prices
in Active
Markets for
Identical Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) 12-31-2012 $ 19 $ — $ 19 $ — (53,484 ) — (53,484 ) — (5,574 ) — — (5,574 ) (1,017 ) (1,017 ) — — (4,077,397 ) (2,102,927 ) (1,974,470 ) — $ (4,137,453 ) $ (2,103,944 ) $ (2,027,935 ) $ (5,574 ) $ 114 — 114 — (85,456 ) — (85,456 ) — (5,648 ) — — (5,648 ) (980 ) (980 ) — — (3,838,360 ) (1,761,823 ) (2,076,537 ) — $ (3,930,330 ) (1,762,803 ) (2,161,879 ) (5,648 ) 11. Related Party ArrangementsUnconsolidated 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 received fees of $10,257,000, $9,656,000 and $7,354,000 in the years ended December 31, 2012, 2011 and 2010, respectively. These fees are included in management, development and other fees on the accompanying Consolidated Statements of Comprehensive Income. In addition, the Company hasDescription 12/31/2014 Non Designated Hedges Interest Rate Caps $ 50 $ — $ 50 $ — Cash Flow Hedges Interest Rate Caps 58 — 58 — Put(s) (11,104 ) — — (11,104 ) DownREIT units (1,226 ) (1,226 ) — — Indebtedness (6,558,022 ) (2,874,147 ) (3,683,875 ) — Total $ (6,570,244 ) $ (2,875,373 ) $ (3,683,767 ) $ (11,104 ) 12/31/2013 Non Designated Hedges Interest Rate Caps $ 106 $ — $ 106 $ — Put(s) (15,998 ) — — (15,998 ) DownREIT units (887 ) (887 ) — — Indebtedness (6,294,848 ) (2,657,143 ) (3,637,705 ) — Total $ (6,311,627 ) $ (2,658,030 ) $ (3,637,599 ) $ (15,998 ) AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. Related Party Arrangements (Continued)outstanding receivables associated with its management role of $3,484,000 and $4,294,000 as of December 31, 2012 and 2011, 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 and (ii) a cash payment of $60,000, payable in quarterly installments of $15,000. 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, the Lead Independent Director receives an annual fee of $30,000 payable in equal quarterly installments of $7,500. The Company recorded non-employee director compensation expense relating to restricted stock grants and deferred stock awards in the amount of $880,000, $778,000, and $802,000 for the years ended December 31, 2012, 2011 and 2010, respectively, as a component of general and administrative expense. Deferred compensation relating to these restricted stock grants and deferred stock awards was $364,000 and $370,000 on December 31, 2012 and December 31, 2011, respectively.12. Quarterly Financial Information20122014 and 2011:2013 (dollars in thousands) (unaudited)thousands, except per share amounts): For the three months ended(2) 3-31-12 6-30-12 9-30-12 12-31-12 For the three months ended (1) $ 246,032 $ 254,172 $ 267,151 $ 271,303 $ 53,674 $ 58,409 $ 84,432 $ 68,237 $ 3,935 $ 98,412 $ 2,315 $ 54,147 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 $ — $ — $ — $ 57,758 $ 156,909 $ 86,844 $ 122,356 $ 141,739 $ 158,086 $ 241,100 $ 142,642 $ 0.61 $ 1.64 $ 0.89 $ 1.19 $ 1.09 $ 1.22 $ 1.83 $ 1.08 $ 0.60 $ 1.63 $ 0.89 $ 1.19 $ 1.09 $ 1.21 $ 1.83 $ 1.08 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 (1) Amounts may not equal full year results due to rounding. For the three months ended(2) 3-31-11 6-30-11 9-30-11 12-31-11 $ 222,495 $ 231,218 $ 239,568 $ 243,089 $ 28,579 $ 33,229 $ 42,410 $ 48,278 $ 1,958 $ 9,963 $ 2,267 $ 274,687 $ 30,341 $ 43,373 $ 44,824 $ 323,085 $ 0.35 $ 0.50 $ 0.49 $ 3.40 $ 0.35 $ 0.49 $ 0.49 $ 3.38 (1)Amounts may not equal previously reported results due to reclassification between income from continuing operations and income from discontinued operations.(2)Amounts may not equal full year results due to rounding.AVALONBAY COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)13. Subsequent Events2013, Fund I2015:one community, Avalon Yerba Buena,on Stamford Harbor, located in San Francisco, CA.Stamford, CT. Avalon Yerba Buenaon Stamford Harbor contains 160 apartment323 homes 32,000 square feet of retail space,and a working marina containing 74 boat slips and was sold for $103,000,000. Also in January 2013, Fund II sold one community Avalon Rothbury,$115,500,000.Gaithersburg, MD. Avalon Rothbury contains 205New 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.soldencumbered 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 the Company (i) to direct the insurance proceeds to be used for $39,600,000.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, the Company is complying with all lender requirements and continues to work with the lender to resolve open issues related to the Edgewater Mortgage.2012 Initial Cost Total Cost City and state Land 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 Fremont, CA $ 10,746 $ 43,399 $ 4,765 $ 10,746 $ 48,164 $ 58,910 $ 24,409 $ 34,501 $ — 1994 Dublin, CA 5,276 19,642 4,411 5,276 24,053 29,329 12,263 17,066 — 1989/1997 Campbell, CA 11,830 47,828 1,897 11,830 49,725 61,555 24,454 37,101 38,800 1995 Daly City, CA 4,230 9,659 18,547 4,230 28,206 32,436 12,710 19,726 — 1972/1997 San Francisco, CA 5,403 21,567 6,858 5,403 28,425 33,828 12,017 21,811 20,800 1990/1995 San Jose, CA 12,920 53,047 15,717 12,920 68,764 81,684 23,666 58,018 — 1985/1996 San Rafael, CA 5,982 16,885 23,641 5,982 40,526 46,508 15,298 31,210 — 1973/1996 Pleasanton, CA 11,610 46,552 21,261 11,610 67,813 79,423 28,556 50,867 — 1988/1994 Costa Mesa, CA 1,975 3,814 9,327 1,975 13,141 15,116 4,474 10,642 — 1956/1996 Burbank, CA 22,483 28,104 28,894 22,483 56,998 79,481 27,007 52,474 — 1961/1997 Mission Viejo, CA 2,517 9,257 2,438 2,517 11,695 14,212 6,368 7,844 7,635 1984/1996 Costa Mesa, CA 4,709 16,063 12,742 4,709 28,805 33,514 11,822 21,692 — 1973/1996 San Diego, CA 9,922 40,580 17,595 9,922 58,175 68,097 28,026 40,071 — 1969/1997 San Diego, CA 2,710 10,924 10,879 2,710 21,803 24,513 10,696 13,817 — 1960/1997 Union City, CA 4,249 16,820 2,717 4,249 19,537 23,786 9,870 13,916 — 1973/1996 San Jose, CA 6,119 50,225 1,550 6,119 51,775 57,894 24,355 33,539 52,975 1999 Foster City, CA 7,852 31,445 11,157 7,852 42,602 50,454 18,142 32,312 — 1973/1994 San Jose, CA 15,814 62,007 3,116 15,814 65,123 80,937 32,066 48,871 — 1997/1999 Pacifica, CA 6,125 24,796 2,116 6,125 26,912 33,037 13,625 19,412 17,600 1971/1995 San Francisco, CA 3,561 21,321 14,548 3,561 35,869 39,430 13,746 25,684 — 1961/1996 Sunnyvale, CA 20,713 99,573 4,737 20,713 104,310 125,023 51,965 73,058 150,000 1997 Woodland Hills, CA 23,828 40,372 46,688 23,828 87,060 110,888 30,308 80,580 — 1989/1997 Mountain View, CA 9,755 39,393 9,503 9,755 48,896 58,651 22,257 36,394 18,300 1986 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 Avalon Oaks Wilmington, MA 2,129 18,676 2,038 2,129 20,714 22,843 11,094 11,749 15,887 1999 Eaves Quincy Quincy, MA 1,743 14,662 9,283 1,743 23,945 25,688 11,805 13,883 — 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 Avalon Orchards Marlborough, MA 2,983 18,037 1,943 2,983 19,980 22,963 8,902 14,061 17,091 2002 Avalon at Newton Highlands Newton, MA 11,039 45,590 3,423 11,039 49,013 60,052 19,353 40,699 — 2003 Avalon at The Pinehills Plymouth, MA 6,876 30,401 183 6,876 30,584 37,460 7,836 29,624 — 2004 Eaves Peabody Peabody, MA 4,645 19,007 12,019 4,645 31,026 35,671 9,746 25,925 — 1962/2004 Avalon at Bedford Center Bedford, MA 4,258 20,569 316 4,258 20,885 25,143 6,630 18,513 — 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 Lexington Hills Lexington, MA 8,691 79,153 1,112 8,691 80,265 88,956 19,446 69,510 — 2008 Avalon Acton Acton, MA 13,124 49,905 276 13,124 50,181 63,305 12,089 51,216 45,000 2008 Avalon Sharon Sharon, MA 4,719 25,522 269 4,719 25,791 30,510 6,030 24,480 — 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 Avalon Blue Hills Randolph, MA 11,110 34,736 80 11,110 34,816 45,926 6,856 39,070 — 2009 Avalon Cohasset Cohasset, MA 8,802 46,233 16 8,802 46,249 55,051 4,910 50,141 — 2012 Avalon Andover Andover, MA 4,276 21,903 — 4,276 21,903 26,179 2,114 24,065 14,505 2012 Eaves Burlington Burlington, MA 7,714 32,536 5,080 7,714 37,616 45,330 2,383 42,947 — 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 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 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 Fairfield-New Haven, CT 2012 Initial Cost Total Cost City and state Land 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 Rancho Santa Margarita, CA 4,607 16,911 9,975 4,607 26,886 31,493 10,669 20,824 — 1990/1997 San Francisco, CA 4,726 19,130 5,745 4,726 24,875 29,601 11,330 18,271 — 1972/1994 Fremont, CA 6,581 26,583 9,729 6,581 36,312 42,893 16,702 26,191 — 1985/1994 Mountain View, CA 6,546 26,263 10,970 6,546 37,233 43,779 18,068 25,711 — 1962/1997 Woodland Hills, CA 7,045 12,986 9,050 7,045 22,036 29,081 11,338 17,743 — 1979/1998 Huntington Beach, CA 4,871 19,745 9,401 4,871 29,146 34,017 14,337 19,680 — 1971/1997 San Diego, CA 2,768 20,134 21,559 2,768 41,693 44,461 15,814 28,647 — 1973/1998 San Jose, CA 4,765 47,600 629 4,765 48,229 52,994 17,458 35,536 — 2002 Mountain View, CA 9,560 56,136 808 9,560 56,944 66,504 21,185 45,319 — 2002 San Francisco, CA 14,029 78,452 1,884 14,029 80,336 94,365 27,409 66,956 71,905 2003 Burbank, CA — 41,434 495 — 41,929 41,929 13,580 28,349 — 2003 Burbank, CA 14,053 56,827 23,762 14,053 80,589 94,642 23,588 71,054 — 1988/2002 Camarillo, CA 8,446 40,290 50 8,446 40,340 48,786 9,532 39,254 — 2006 Los Angeles, CA 5,459 41,182 623 5,459 41,805 47,264 8,268 38,996 — 2007 Dublin, CA 10,058 74,297 155 10,058 74,452 84,510 12,663 71,847 — 2006 Los Angeles, CA 12,789 49,073 356 12,789 49,429 62,218 7,266 54,952 — 2008 Canoga Park, CA 7,920 44,855 105 7,920 44,960 52,880 7,279 45,601 — 2007 San Diego, CA 19,627 44,972 168 19,627 45,140 64,767 6,607 58,160 — 2008 Anaheim, CA 27,874 69,156 496 27,874 69,652 97,526 9,302 88,224 — 2009 Union City, CA 14,732 104,025 117 14,732 104,142 118,874 12,384 106,490 — 2009 Irvine, CA 9,911 67,524 5 9,911 67,529 77,440 7,693 69,747 — 2010 San Francisco, CA 28,687 119,156 27 28,687 119,183 147,870 14,241 133,629 — 2009 Walnut Creek, CA — 145,681 570 — 146,251 146,251 11,853 134,398 137,500 2010 San Francisco, CA 5,537 50,589 1,713 5,537 52,302 57,839 1,012 56,827 — 2012 Pomona, CA 9,796 41,740 — 9,796 41,740 51,536 2,543 48,993 53,348 1989/2011 San Dimas, CA 1,916 7,820 — 1,916 7,820 9,736 481 9,255 — 1978/2011 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 2012 Initial Cost Total Cost City and state Land 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 San Dimas, CA 2,953 12,429 — 2,953 12,429 15,382 759 14,623 — 1981/2011 San Marcos, CA 3,277 13,385 — 3,277 13,385 16,662 826 15,836 — 1988/2011 San Diego, CA 6,692 27,143 — 6,692 27,143 33,835 1,639 32,196 — 1986/2011 Lake Forest, CA 5,199 21,135 — 5,199 21,135 26,334 1,285 25,049 — 1976/ 2011 Pasadena, CA 8,400 11,547 — 8,400 11,547 19,947 347 19,600 11,958 1973/2012 Artesia, CA 8,305 21,195 — 8,305 21,195 29,500 400 29,100 — 1973/2012 Del Rey, CA 30,900 72,008 99 30,900 72,107 103,007 1,038 101,969 — 2006 Corona, CA 5,724 23,433 868 5,724 24,301 30,025 2,121 27,904 — 1987/2006 Trumbull, CT 4,414 31,268 2,580 4,414 33,848 38,262 18,191 20,071 40,552 1997 Stamford, CT 5,956 23,993 3,843 5,956 27,836 33,792 17,491 16,301 — 1991 Wilton, CT 2,116 14,664 5,572 2,116 20,236 22,352 8,372 13,980 — 1997 Danbury, CT 2,277 23,561 779 2,277 24,340 26,617 11,417 15,200 — 1999 Stamford, CT 10,836 51,989 706 10,836 52,695 63,531 19,150 44,381 64,472 2003 New Canaan, CT 4,834 19,485 277 4,834 19,762 24,596 7,282 17,314 — 2002 Stamford, CT 13,819 56,499 1,022 13,819 57,521 71,340 20,659 50,681 59,292 2002 Danbury, CT 4,933 30,638 407 4,933 31,045 35,978 8,175 27,803 — 2005 Darien, CT 6,926 34,659 923 6,926 35,582 42,508 11,126 31,382 49,221 2004 Milford, CT 8,746 22,699 429 8,746 23,128 31,874 6,850 25,024 — 2004 Norwalk, CT 11,320 62,910 — 11,320 62,910 74,230 4,912 69,318 — 2011 Shelton, CT 5,277 20,029 78 5,277 20,107 25,384 2,945 22,439 — 2008 Wilton, CT 6,604 23,727 — 6,604 23,727 30,331 1,290 29,041 — 2011 Washington, DC 6,848 27,614 11,065 6,848 38,679 45,527 22,151 23,376 57,912 1982 Washington, DC 8,800 39,658 621 8,800 40,279 49,079 13,753 35,326 44,997 2003 Lexington, MA 2,124 12,599 8,901 2,124 21,500 23,624 9,740 13,884 — 1994 Wilmington, MA 2,129 18,676 1,582 2,129 20,258 22,387 9,470 12,917 16,288 1999 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 2012 Initial Cost Total Cost City and state Land 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 Quincy, MA 1,743 14,662 9,080 1,743 23,742 25,485 10,082 15,403 — 1986/1996 Peabody, MA 5,184 16,320 1,609 5,184 17,929 23,113 7,823 15,290 — 2000 Boston, MA 25,812 104,399 52,403 25,812 156,802 182,614 62,991 119,623 — 1968/1998 Wilmington, MA 3,318 13,467 546 3,318 14,013 17,331 5,351 11,980 16,205 2002 Marlborough, MA 2,983 18,037 1,554 2,983 19,591 22,574 7,242 15,332 17,939 2002 Newton, MA 11,039 45,590 2,538 11,039 48,128 59,167 15,517 43,650 — 2003 Plymouth, MA 3,623 16,291 111 3,623 16,402 20,025 4,890 15,135 — 2004 Peabody, MA 4,645 19,007 11,643 4,645 30,650 35,295 7,529 27,766 — 2004 Bedford, MA 4,258 20,569 139 4,258 20,708 24,966 5,221 19,745 — 2005 Chestnut Hill, MA 14,572 45,911 640 14,572 46,551 61,123 10,236 50,887 40,390 2007 Shrewsbury, MA 5,152 30,608 203 5,152 30,811 35,963 6,858 29,105 20,737 2007 Danvers, MA 7,010 76,904 443 7,010 77,347 84,357 14,342 70,015 — 2006 Lexington, MA 8,691 79,153 194 8,691 79,347 88,038 13,740 74,298 — 2007 Acton, MA 13,124 49,935 70 13,124 50,005 63,129 8,461 54,668 45,000 2007 Hingham, MA 12,218 41,591 27 12,218 41,618 53,836 6,040 47,796 — 2009 Sharon, MA 4,719 25,522 31 4,719 25,553 30,272 4,138 26,134 — 2007 Northborough, MA 3,362 22,322 — 3,362 22,322 25,684 2,760 22,924 — 2009 Randolph, MA 11,110 34,736 — 11,110 34,736 45,846 4,324 41,522 — 2009 Northborough, MA 4,782 30,132 — 4,782 30,132 34,914 2,625 32,289 — 2010 Plymouth, MA 3,253 14,109 — 3,253 14,109 17,362 820 16,542 — 2011 Cohasset, MA 8,780 46,075 — 8,780 46,075 54,855 1,599 53,256 — 2012 Andover, MA 4,271 21,665 — 4,271 21,665 25,936 492 25,444 — 2012 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 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 Avalon at Fairway Hills Columbia, MD 8,603 34,432 16,036 8,603 50,468 59,071 28,397 30,674 — 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 Columbia Town Center Columbia, MD 8,802 35,536 11,429 8,802 46,965 55,767 16,273 39,494 — 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 Avalon at Traville Rockville, MD 14,365 55,398 863 14,365 56,261 70,626 21,385 49,241 74,186 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 Eaves Fair Lakes Fairfax, VA 6,096 24,400 8,246 6,096 32,646 38,742 17,777 20,965 — 1989/1996 AVA Ballston Arlington, VA 7,291 29,177 16,117 7,291 45,294 52,585 24,294 28,291 — 1990 Eaves Fairfax City Fairfax, VA 2,152 8,907 5,390 2,152 14,297 16,449 6,624 9,825 — 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 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 Eaves Fairfax Towers Falls Church, VA 17,889 74,727 1,718 17,889 76,445 94,334 9,782 84,552 — 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 Eaves Tysons Corner Vienna, VA 16,030 45,420 2,554 16,030 47,974 64,004 5,509 58,495 — 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 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 Avalon Reston Landing Reston, VA 26,710 83,084 4,354 26,710 87,438 114,148 9,863 104,285 — 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 PACIFIC NORTHWEST Seattle, WA 2012 Initial Cost Total Cost City and state Land 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 Burlington, MA 7,989 32,261 — 7,989 32,261 40,250 60 40,190 — 1988/2012 Columbia, MD 8,603 34,432 10,493 8,603 44,925 53,528 25,036 28,492 — 1987/1996 Rockville, MD 11,865 49,686 8,692 11,865 58,378 70,243 21,856 48,387 — 1991/1995/2007 Gaithersburg, MD 2,608 11,707 470 2,608 12,177 14,785 7,031 7,754 8,764 1996 Gaithersburg, MD 1,439 6,846 103 1,439 6,949 8,388 3,496 4,892 — 1998 Columbia, MD 8,802 35,536 11,375 8,802 46,911 55,713 13,030 42,683 — 1986 North Bethesda, MD 29,159 53,001 930 29,159 53,931 83,090 17,172 65,918 — 2004 North Potomac, MD 14,365 55,398 574 14,365 55,972 70,337 17,640 52,697 76,254 2004 Jersey City, NJ 8,760 82,574 20,242 8,760 102,816 111,576 46,825 64,751 — 1997 Lawrenceville, NJ 14,650 60,486 2,235 14,650 62,721 77,371 19,253 58,118 — 1994/1996 West Windsor, NJ 5,585 22,394 20,573 5,585 42,967 48,552 18,341 30,211 — 1988 Edgewater, NJ 14,528 60,240 2,968 14,528 63,208 77,736 24,107 53,629 77,103 2002 Florham Park, NJ 6,647 34,906 1,168 6,647 36,074 42,721 15,259 27,462 — 2001 Freehold, NJ 4,119 30,514 330 4,119 30,844 34,963 11,833 23,130 35,948 2002 Lawrenceville, NJ 6,766 45,366 572 6,766 45,938 52,704 13,146 39,558 38,519 2003 Lyndhurst, NJ 18,620 59,879 442 18,620 60,321 78,941 12,488 66,453 — 2006 Tinton Falls, NJ 7,939 33,176 — 7,939 33,176 41,115 5,342 35,773 — 2007 West Long Branch, NJ 2,721 22,939 — 2,721 22,939 25,660 1,771 23,889 — 2011 North Bergon, NJ 8,984 30,885 33 8,984 30,918 39,902 550 39,352 — 2012 Wood-Ridge, NJ 15,265 41,268 — 15,265 41,268 56,533 814 55,719 — 2012 Smithtown, NY 4,679 28,286 5,661 4,679 33,947 38,626 16,032 22,594 — 1997 Nanuet, NY 8,428 45,660 2,578 8,428 48,238 56,666 24,689 31,977 65,004 1998 Elmsford, NY 1,820 10,525 1,370 1,820 11,895 13,715 7,120 6,595 — 1995 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 2012 Initial Cost Total Cost City and state Land 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 Long Beach, NY 3,118 12,709 6,126 3,118 18,835 21,953 10,151 11,802 — 1990/1995 Mamaroneck, NY 6,207 40,791 1,188 6,207 41,979 48,186 18,925 29,261 — 2000 Melville, NY 9,228 50,063 2,499 9,228 52,562 61,790 24,874 36,916 — 1997/2000 Bronxville, NY 2,889 28,324 3,180 2,889 31,504 34,393 13,335 21,058 — 1999 Long Island City, NY — 94,113 2,274 — 96,387 96,387 34,611 61,776 — 2002 Glen Cove, NY 7,871 59,969 528 7,871 60,497 68,368 17,814 50,554 — 2004 Coram, NY 8,700 62,931 156 8,700 63,087 71,787 16,609 55,178 — 2005/2006 New York, NY 18,575 75,009 2,600 18,575 77,609 96,184 16,837 79,347 93,800 2006 Glen Cove, NY 2,577 37,336 83 2,577 37,419 39,996 7,404 32,592 — 2007 Long Island City, NY — 166,651 1,039 — 167,690 167,690 30,395 137,295 — 2007 New Rochelle, NY 5,735 180,911 593 5,735 181,504 187,239 32,938 154,301 — 2007 New York, NY 9,106 47,180 678 9,106 47,858 56,964 8,404 48,560 — 2007 White Plains, NY 15,391 137,353 11 15,391 137,364 152,755 17,752 135,003 — 2009 New York, NY — 114,327 775 — 115,102 115,102 16,440 98,662 100,000 2009 Coram, NY 14,715 33,640 6 14,715 33,646 48,361 4,392 43,969 — 2009 Brooklyn, NY 83,038 218,444 561 83,038 219,005 302,043 19,716 282,327 — 2010 Rockville Centre, NY 32,285 77,994 — 32,285 77,994 110,279 2,797 107,482 — 2012 Elmsford, NY 27,672 75,202 — 27,672 75,202 102,874 1,802 101,072 — 2012 Providence, RI — 26,816 10,178 — 36,994 36,994 16,987 20,007 — 1991/1997 Fairfax, VA 6,096 24,400 7,661 6,096 32,061 38,157 15,482 22,675 — 1989/1996 Arlington, VA 7,291 29,177 15,226 7,291 44,403 51,694 20,830 30,864 — 1990 Fairfax, VA 2,152 8,907 4,627 2,152 13,534 15,686 5,498 10,188 — 1988/1997 McLean, VA 13,851 43,397 1,157 13,851 44,554 58,405 23,606 34,799 110,600 1996 Arlington, VA 22,041 90,296 2,402 22,041 92,698 114,739 36,374 78,365 170,125 2001 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 2012 Initial Cost Total Cost City and state Land 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 Falls Church, VA 17,889 74,734 86 17,889 74,820 92,709 4,386 88,323 42,459 1978/2011 Redmond, WA 4,558 18,368 9,451 4,558 27,819 32,377 12,535 19,842 — 1991/1997 Redmond, WA 6,786 27,641 3,129 6,786 30,770 37,556 14,935 22,621 — 1998 Bellevue, WA 6,664 24,119 1,132 6,664 25,251 31,915 10,323 21,592 26,201 2001 Bothell, WA 4,777 19,765 1,458 4,777 21,223 26,000 8,916 17,084 — 2000 Redmond, WA 3,789 15,139 2,181 3,789 17,320 21,109 7,256 13,853 — 2000 Lynwood, WA 8,608 36,679 1,559 8,608 38,238 46,846 15,202 31,644 — 2001 Seattle, WA 5,644 12,733 867 5,644 13,600 19,244 5,241 14,003 — 2001 Bellevue, WA 12,697 77,451 1,094 12,697 78,545 91,242 12,564 78,678 — 2008 Bellevue, WA — 123,010 228 — 123,238 123,238 10,146 113,092 — 2011 Seattle, WA 12,081 41,583 — 12,081 41,583 53,664 1,295 52,369 — 2012 Lynwood, WA 2,655 11,343 — 2,655 11,343 13,998 614 13,384 — 2011 $ 1,394,717 $ 6,686,252 $ 680,021 $ 1,394,717 $ 7,366,273 $ 8,760,990 $ 2,015,449 $ 6,745,541 $ 1,898,603 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 2012 Initial Cost Total Cost City and state Land 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 Garden City, NY $ 13,084 $ 36,346 $ 15,494 $ 13,084 $ 51,840 $ 64,924 $ 459 $ 64,465 — N/A Tysons Corner, VA 7,615 36,405 31,860 7,615 68,265 75,880 327 75,553 — N/A Somerset, NJ 3,371 11,710 38,080 3,371 49,790 53,161 75 53,086 — N/A Irvine, CA 587 6,060 36,204 587 42,264 42,851 17 42,834 — N/A Washington, DC — 859 29,314 — 30,173 30,173 — 30,173 — N/A Natick, MA — 134 54,674 — 54,808 54,808 — 54,808 — N/A Seattle, WA — 971 54,055 — 55,026 55,026 — 55,026 — N/A Boston, MA — 212 46,567 — 46,779 46,779 — 46,779 — N/A Shelton, CT — 130 31,896 — 32,026 32,026 — 32,026 — N/A Hackensack, NJ — 299 26,802 — 27,101 27,101 — 27,101 — N/A New York, NY — 106 88,629 — 88,735 88,735 — 88,735 — N/A Tysons Corner, VA — 1 59,927 — 59,928 59,928 — 59,928 — N/A Norwalk, CT — 59 15,831 — 15,890 15,890 — 15,890 — N/A Dublin, CA — 86 37,644 — 37,730 37,730 — 37,730 — N/A Somerville, MA — — 38,506 — 38,506 38,506 — 38,506 — N/A Seattle, WA — — 29,461 — 29,461 29,461 — 29,461 — N/A Bloomingdale, NJ — 6 6,957 — 6,963 6,963 — 6,963 — N/A Wood-Ridge, NJ — 209 13,067 — 13,276 13,276 — 13,276 — N/A San Jose, CA — 21 31,429 — 31,450 31,450 — 31,450 — N/A San Francisco, CA — 225 39,525 — 39,750 39,750 — 39,750 — N/A Ossining, NY — — 7,901 — 7,901 7,901 — 7,901 — N/A Los Angeles, CA — 149 27,397 — 27,546 27,546 — 27,546 — N/A Wharton, NJ — — 1,925 — 1,925 1,925 — 1,925 — N/A $ 24,657 $ 93,988 $ 763,145 $ 24,657 $ 857,133 $ 881,790 $ 878 $ 880,912 $ 0
316,037
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—
316,037
—
316,037
—
316,037
5,465 33,081 25,130 54,314 33,081 79,444 112,525 39,895 72,630 1,950,000 $ 1,768,492 $ 6,805,370 $ 1,497,480 $ 1,768,492 $ 8,302,850 $ 10,071,342 $ 2,056,222 $ 8,015,120 $ 3,854,068 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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 (1) This community is a Fund asset which the Company consolidated beginning in 2011.2012 Initial Cost Total Cost Community City and state Land and improvements Land Total Encumbrances 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. $9,901,570$17,561,706 at December 31, 2012.2012, 20112014, 2013 and 20102012 are as follows: Years ended December 31, For the year ended 2012 2011 2010 12/31/2014 12/31/2013 12/31/2012 $ 9,288,496 $ 8,661,211 $ 8,360,091 $ 16,800,321 $ 10,071,342 $ 9,288,496 934,935 864,439 475,211 1,311,003 7,157,639 934,935 (152,089 ) (237,154 ) (174,091 ) (262,008 ) (428,660 ) (152,089 ) $ 10,071,342 $ 9,288,496 $ 8,661,211 $ 17,849,316 $ 16,800,321 $ 10,071,342 2012, 20112014, 2013 and 2010,2012, are as follows: Years ended December 31, For the year ended 2012 2011 2010 12/31/2014 12/31/2013 12/31/2012 $ 1,863,466 $ 1,705,567 $ 1,526,604 $ 2,516,112 $ 2,056,222 $ 1,863,466 260,094 250,269 232,942 442,682 573,715 260,094 (67,338 ) (92,370 ) (53,979 ) (45,218 ) (113,825 ) (67,338 ) $ 2,056,222 $ 1,863,466 $ 1,705,567 $ 2,913,576 $ 2,516,112 $ 2,056,222