AvalonBay Communities Announces $332 Million of Washington, D.C. Area Dispositions

  AvalonBay Communities Announces $332 Million of Washington, D.C. Area

Business Wire

ARLINGTON, Va. -- March 21, 2013

AvalonBay Communities, Inc. (NYSE: AVB) announced today the disposition of two
communities in March 2013. The Company sold Avalon Decoverly, a 564 apartment
home community located in Rockville, Maryland, and Crystal House, an 828
apartment home community located in Arlington, Virginia. Crystal House was
acquired by the Company as part of its acquisition of certain assets and
assumption of certain liabilities of Archstone Enterprise LP (now known as
Jupiter Enterprise LP) on February 27, 2013 (the “Archstone Transaction”).

Financial information regarding these sales is set forth in the following
table ($ in millions):

Avalon Decoverly       $ 135
Crystal House           197
Total                  $ 332

These two communities were sold at a weighted average initial year market
capitalization rate of 5.2%. The sale of Crystal House represents the
Company’s interest in the leasehold improvements on the site. The proceeds
from these sales will be used for general corporate purposes.

Definitions and Notes

Initial Year Market Capitalization Rate is defined by the Company as Projected
NOI of a single community for the first 12 months of operations (assuming no
repositioning), less estimates for non-routine allowance of approximately $200
to $300 per apartment, divided by the gross sales price for the community. The
gross sales price is adjusted for transaction costs and deferred maintenance
in determining the Initial Year Market Capitalization Rate for acquisitions.
Projected NOI, as referred to above, represents management’s estimate of
projected rental revenue minus projected operating expenses before interest,
income taxes (if any), depreciation, amortization and extraordinary items. For
this purpose, management’s projection of operating expenses for the community
includes a management fee of 3.0% to 3.5%. The Initial Year Market
Capitalization Rate, which may be determined in a different manner by others,
is a measure frequently used in the real estate industry when determining the
appropriate purchase price for a property or estimating the value for the
property. Buyers may assign different Initial Year Market Capitalization Rates
to different communities when determining the appropriate value because they
(i) may project different rates of change in operating expenses, including
capital expenditure estimates and (ii) may project different rates of change
in future rental revenue due to different estimates for changes in rent and
occupancy levels. The weighted average Initial Year Market Capitalization Rate
is weighted based on the gross sales price of each community (for
dispositions) and on the expected total investment in each community (for

Projected NOI, as used within this release in calculating the Initial Year
Market Cap Rate for dispositions, represents management’s estimate, as of the
date of the buyer’s valuation, of projected stabilized rental revenue minus
projected stabilized operating expenses. In calculating the Initial Year
Market Cap Rate, Projected NOI for dispositions is calculated for the first
twelve months following the date of the buyer’s valuation. Projected
stabilized rental revenue represents management’s estimate of projected gross
potential minus projected stabilized economic vacancy and adjusted for
projected stabilized concessions plus projected stabilized other rental
revenue. Projected stabilized operating expenses do not include interest,
income taxes (if any), depreciation or amortization, or any allocation of
corporate-level property management overhead or general and administrative
costs. Projected gross potential for dispositions is based on leased rents for
occupied homes and management’s best estimate of rental levels for homes which
are currently unleased, as well as those homes which will become available for
lease during the twelve month forward period used to develop Projected NOI.

About AvalonBay Communities

As of March 1, 2013, including the effect of the Archstone Transaction that
occurred on February 27, 2013, the Company owned or held an interest in 273
apartment communities containing 81,970 apartment homes in twelve states and
the District of Columbia, of which 28 communities were under construction and
five communities were under reconstruction. AvalonBay is in the business of
developing, redeveloping, acquiring, and managing apartment communities in
high barrier-to-entry markets of the United States. More information on
AvalonBay, an S&P 500 listed company, may be found on AvalonBay's website at

       Copyright © 2013 AvalonBay Communities, Inc. All Rights Reserved


AvalonBay Communities, Inc.
Jason Reilley
Investor Relations
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