0000915912-23-000012.txt : 20230801 0000915912-23-000012.hdr.sgml : 20230801 20230801071129 ACCESSION NUMBER: 0000915912-23-000012 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20230731 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20230801 DATE AS OF CHANGE: 20230801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVALONBAY COMMUNITIES INC CENTRAL INDEX KEY: 0000915912 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 770404318 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12672 FILM NUMBER: 231129633 BUSINESS ADDRESS: STREET 1: 4040 WILSON BOULEVARD STREET 2: STE 1000 CITY: ARLINGTON STATE: VA ZIP: 22203 BUSINESS PHONE: 7033296300 MAIL ADDRESS: STREET 1: 4040 WILSON BOULEVARD STREET 2: STE 1000 CITY: ARLINGTON STATE: VA ZIP: 22203 FORMER COMPANY: FORMER CONFORMED NAME: AVALON BAY COMMUNITIES INC DATE OF NAME CHANGE: 19980618 FORMER COMPANY: FORMER CONFORMED NAME: BAY APARTMENT COMMUNITIES INC DATE OF NAME CHANGE: 19931208 8-K 1 avb-20230731.htm 8-K avb-20230731
0000915912false00009159122023-07-312023-07-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
Date of Report (Date of earliest event reported):  July 31, 2023
  
AVALONBAY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
 
  
Maryland1-12672 77-0404318 
(State or other jurisdiction of(Commission (I.R.S. Employer  
incorporation or organization)File Number) Identification No.) 
 
4040 Wilson Blvd., Suite 1000
Arlington, Virginia 22203
(Address of principal executive offices)(Zip code)
 
(703) 329-6300
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareAVBNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
                    
    Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o




Item 2.02.  Results of Operations and Financial Condition.
 
On July 31, 2023, AvalonBay Communities, Inc. issued a press release announcing its second quarter 2023 operating results. That release referred to certain attachments with supplemental information that were available on the Company's website. The full text of the press release, including the supplemental information and attachments referred to within the release, are furnished as Exhibit 99.1 and Exhibit 99.2 hereto.
 
Item 9.01.  Financial Statements and Exhibits.
 
(d)  Exhibits.
 
99.1
Press Release of AvalonBay Communities, Inc. dated July 31, 2023, including attachments.
  
99.2
Supplemental discussion of second quarter 2023 operating results dated July 31, 2023, including attachments.
104Cover Page Interactive Data File (embedded within the Inline XBRL document). (Filed herewith.)
 
 
 
[Remainder of page left blank intentionally]



SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be filed on its behalf by the undersigned hereunto duly authorized.
 
 
 AVALONBAY COMMUNITIES, INC.
   
   
Dated: July 31, 2023By:/s/ Kevin P. O’Shea 
  Kevin P. O’Shea
  Chief Financial Officer




Exhibit Index
 


EX-99.1 2 q22023ex-991.htm EX-99.1 Document

Exhibit 99.1
avbpressreleaseheader1a19.jpgFor Immediate News Release
July 31, 2023

AVALONBAY COMMUNITIES, INC.
ANNOUNCES SECOND QUARTER 2023 OPERATING RESULTS
AND THIRD QUARTER AND FULL YEAR 2023 FINANCIAL OUTLOOK




(Arlington, VA) AvalonBay Communities, Inc. (NYSE: AVB) (the “Company”) reported Earnings per Share – diluted (“EPS”), Funds from Operations attributable to common stockholders - diluted (“FFO”) per share and Core FFO per share (as defined in this release) for the three and six months ended June 30, 2023 and 2022 as detailed below.
 Q2
2023
Q2 2022%
Change
EPS$2.59 $0.99 161.6 %
FFO per share (1)$2.67 $2.41 10.8 %
Core FFO per share (1)$2.66 $2.43 9.5 %
YTD
2023
YTD 2022%
Change
EPS$3.65 $2.86 27.6 %
FFO per share (1)$5.21 $4.65 12.0 %
Core FFO per share (1)$5.23 $4.69 11.5 %
(1) For additional detail on reconciling items between net income attributable to common stockholders, FFO and Core FFO, see Definitions and Reconciliations, table 3.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the three months ended June 30, 2023 to its results for the prior year period:
Q2 2023 Results Compared to Q2 2022
Per Share
EPSFFOCore FFO
Q2 2022 per share reported results$0.99 $2.41 $2.43 
Same Store Residential NOI (1)0.16 0.16 0.16 
Development and Other Stabilized Residential NOI0.05 0.05 0.05 
Commercial NOI0.01 0.01 0.01 
Overhead and other 0.03 0.03 0.03 
Capital markets and transaction activity (0.01)(0.01)(0.03)
Unconsolidated investment income and management fees0.02 0.02 0.01 
Gain on sale of real estate and depreciation expense1.34 — — 
Q2 2023 per share reported results$2.59 $2.67 $2.66 
(1) Consists of increases of $0.27 in revenue and $0.11 in operating expenses.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the three months ended June 30, 2023 to its April 2023 outlook:
Q2 2023 Results Compared to April 2023 Outlook
Per Share
EPSFFOCore FFO
Projected per share (1)$2.53 $2.57 $2.59 
Same Store Residential revenue (2)0.05 0.05 0.05 
Development and Other Stabilized Residential NOI0.01 0.01 0.01 
Capital markets and transaction activity 0.01 0.01 — 
Unconsolidated investment income and management fees0.01 0.01 0.01 
Income taxes0.02 0.02 — 
Gain on sale of real estate and depreciation expense(0.04)— — 
Q2 2023 per share reported results$2.59 $2.67 $2.66 
(1) The mid-point of the Company's April 2023 outlook.
(2) Includes $0.03 of favorable uncollectible lease revenue.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the six months ended June 30, 2023 to its results for the prior year period:
YTD 2023 Results Compared to YTD 2022
Per Share
EPSFFOCore FFO
YTD 2022 per share reported results$2.86 $4.65 $4.69 
Same Store Residential NOI (1)0.45 0.45 0.45 
Development and Other Stabilized Residential NOI0.11 0.11 0.11 
Commercial NOI0.01 0.01 0.01 
Overhead and other (0.02)(0.02)(0.01)
Capital markets and transaction activity (0.01)(0.03)(0.04)
Unconsolidated investment income and management fees0.05 0.05 0.02 
Income taxes(0.01)(0.01)— 
Gain on sale of real estate and depreciation expense0.21 — — 
YTD 2023 per share reported results$3.65 $5.21 $5.23 
(1) Consists of increases of $0.65 in revenue and $0.20 in operating expenses.
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
1


Same Store Operating Results for the Three Months Ended June 30, 2023 Compared to the Prior Year Period

Same Store total revenue increased $37,062,000, or 6.2%, to $636,890,000. Same Store Residential rental revenue increased $37,080,000, or 6.3%, to $629,883,000, as detailed in the following table:

Same Store Residential Rental Revenue Change
Q2 2023 Compared to Q2 2022
Lease rates6.4 %
Concessions and other discounts0.5 %
Economic occupancy(0.4)%
Other rental revenue0.9 %
Uncollectible lease revenue (excluding rent relief) (1)1.1 %
Rent relief (2)(2.2)%
Residential rental revenue6.3 %
(1) Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of total Residential rental revenue decreased to 2.3% in Q2 2023 from 3.6% in Q2 2022. See Definitions and Reconciliations, table 11 for further detail of uncollectible lease revenue for the Company’s Same Store portfolio.
(2) The Company recognized $2,441,000 and $15,683,000 from government rent relief programs during Q2 2023 and Q2 2022, respectively.

Same Store Residential operating expenses increased $14,769,000, or 8.2%, to $195,251,000 and Same Store Residential NOI increased $22,207,000, or 5.4%, to $435,057,000.

The following table presents percentage changes in Same Store Residential rental revenue, operating expenses and NOI for the three months ended June 30, 2023 compared to the three months ended June 30, 2022:

Q2 2023 Compared to Q2 2022
Same Store Residential
Rental Revenue
(1)
Opex
(2)
% of
Q2 2023 NOI
 NOI
New England8.7 %6.8 %9.5 %14.2 %
Metro NY/NJ8.6 %10.4 %7.7 %20.9 %
Mid-Atlantic6.9 %5.5 %7.5 %14.6 %
Southeast FL10.8 %3.7 %14.8 %2.7 %
Denver, CO5.6 %25.6 %(1.6)%1.1 %
Pacific NW4.6 %7.9 %3.4 %6.8 %
N. California5.8 %5.5 %5.9 %17.4 %
S. California2.3 %10.5 %(1.0)%21.4 %
Other Expansion Regions9.6 %16.4 %6.9 %0.9 %
   Total6.3 %8.2 %5.4 %100.0 %
(1) See full release for additional detail.
(2) See full release for discussion of variances.

Same Store Operating Results for the Six Months Ended June 30, 2023 Compared to the Prior Year Period

Same Store total revenue increased $90,722,000, or 7.7%, to $1,261,641,000. Same Store Residential rental revenue increased $90,737,000, or 7.8%, to $1,247,386,000, as detailed in the following table:

Same Store Residential Rental Revenue Change
YTD 2023 Compared to YTD 2022
Lease rates7.1 %
Concessions and other discounts0.9 %
Economic occupancy(0.3)%
Other rental revenue0.9 %
Uncollectible lease revenue (excluding rent relief) (1)1.3 %
Rent relief (2)(2.1)%
Residential rental revenue7.8 %
(1) Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of total Residential rental revenue decreased to 2.6% in YTD 2023 from 4.1% in YTD 2022. See Definitions and Reconciliations, table 11 for further detail of uncollectible lease revenue for the Company’s Same Store portfolio.
(2) The Company recognized $5,474,000 and $29,851,000 from government rent relief programs during YTD 2023 and YTD 2022, respectively.

Same Store Residential operating expenses increased $27,547,000, or 7.7%, to $386,292,000 and Same Store Residential NOI increased $63,200,000, or 7.9%, to $861,996,000.

The following table presents percentage changes in Same Store Residential rental revenue, operating expenses and NOI for the six months ended June 30, 2023 compared to the six months ended June 30, 2022:

YTD 2023 Compared to YTD 2022
Same Store Residential
Rental Revenue
(1)
Opex
(2)
% of YTD
2023 NOI
 NOI
New England10.0 %6.2 %12.1 %14.0 %
Metro NY/NJ10.1 %9.7 %10.2 %21.0 %
Mid-Atlantic7.5 %3.9 %9.1 %14.7 %
Southeast FL13.9 %5.2 %19.1 %2.8 %
Denver, CO7.0 %22.8 %1.4 %1.1 %
Pacific NW7.5 %7.8 %7.3 %6.9 %
N. California7.2 %6.3 %7.5 %17.4 %
S. California4.3 %9.9 %2.0 %21.2 %
Other Expansion Regions11.6 %14.0 %10.9 %0.9 %
   Total7.8 %7.7 %7.9 %100.0 %
(1) See full release for additional detail.
(2) See full release for discussion of variances.


Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
2


Development Activity

Consolidated Development Communities

During the three months ended June 30, 2023, the Company completed the development of two communities:

Avalon Harrison, located in Harrison, NY; and
Avalon Brighton, located in Boston, MA.

These communities contain an aggregate of 323 apartment homes and 27,000 square feet of commercial space and were developed for an aggregate Total Capital Cost of $184,000,000.

During the three months ended June 30, 2023, the Company started the development of Avalon Hunt Valley West, located in Hunt Valley, MD. Avalon Hunt Valley West is expected to contain 322 apartment homes when completed and be developed for an estimated Total Capital Cost of $109,000,000.

At June 30, 2023, the Company had 17 consolidated Development communities under construction that are expected to contain 5,761 apartment homes and 29,000 square feet of commercial space. Estimated Total Capital Cost at completion for these Development communities is $2,293,000,000.

Disposition Activity

Consolidated Apartment Communities

During the three months ended June 30, 2023, the Company sold two wholly-owned communities:

eaves Daly City, located in Daly City, CA; and
Avalon at Newton Highlands, located in Newton, MA.

In aggregate, these communities contain 489 apartment homes and were sold for $237,000,000 and a weighted average Initial Market Cap Rate of 4.5%, resulting in a gain in accordance with GAAP of $187,341,000 and an Economic Gain of $123,278,000.

In July 2023, the Company sold Avalon Columbia Pike, located in Arlington, VA. Avalon Columbia Pike contains 269 apartments homes and 27,000 square feet of commercial space and was sold for $105,000,000.

Structured Investment Program (the "SIP") Activity

In July 2023, the Company entered into an additional mezzanine loan commitment, agreeing to fund up to $20,900,000 of a multifamily development project in North Carolina. As of the date of this release, the Company had commitments to fund four mezzanine loans for the development of multifamily projects in the Company's markets, up to $113,275,000 in the aggregate. At the date of this release, the commitments had a weighted average rate of return of 10.4% and mature at various dates on or before July 2027. As of June 30, 2023, the Company had funded $55,869,000 of these commitments.

Liquidity and Capital Markets

As of June 30, 2023, the Company did not have any borrowings outstanding under its $2,250,000,000 unsecured revolving credit facility (the "Credit Facility") or its $500,000,000 unsecured commercial paper note program. The commercial paper program is backstopped by the Company's commitment to maintain available borrowing capacity under its Credit Facility in an amount equal to actual borrowings under the program.

In addition, at June 30, 2023, the Company had $769,622,000 in unrestricted cash and cash equivalents and $177,376,000 in cash in escrow, which is composed of principal reserve funds for secured borrowing arrangements as well as proceeds from a disposition held in escrow for subsequent tax deferred exchange activity.

The Company’s annualized Net Debt-to-Core EBITDAre (as defined in this release) for the second quarter of 2023 was 4.1 times and Unencumbered NOI (as defined in this release) for the six months ended June 30, 2023 was 95%.

During the six months ended June 30, 2023, the Company repaid $250,000,000 principal amount of its 2.85% unsecured notes at its maturity.

During the three months ended June 30, 2023, the Company settled the outstanding equity forward contracts entered into in April 2022 (the "Equity Forward"), issuing 2,000,000 shares of common stock for $491,912,000, or $245.96 per share, net of offering fees and discounts.

Stock Repurchase Program

Under the Company's stock repurchase program, during the six months ended June 30, 2023, the Company repurchased 11,800 shares of its common stock at an average price of $161.96 per share.
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
3


Legal Update

In 2022 and early 2023, the Company was named as a defendant in cases alleging antitrust violations by RealPage, Inc. and owners and/or operators of multifamily housing which utilize revenue management systems provided by RealPage, Inc. The complaints allege a conspiracy to artificially inflate rental rates for multifamily residential real estate above competitive levels. The Company recently engaged with the plaintiffs’ counsel to explain why it believes these cases are without merit as they pertain to the Company. Following these discussions, the plaintiffs filed a notice of voluntary dismissal in July 2023, which resulted in the Company being dismissed without prejudice from these cases.

Third Quarter and Full Year 2023 Financial Outlook

For its third quarter and full year 2023 financial outlook, the Company expects the following:
Projected EPS, Projected FFO and Projected Core FFO Outlook (1)
 Q3 2023Full Year 2023
 LowHighLowHigh
Projected EPS $1.22 $1.32 $6.83 $7.03 
Projected FFO per share $2.50 $2.60 $10.37 $10.57 
Projected Core FFO per share$2.55 $2.65 $10.46 $10.66 
(1) See Definitions and Reconciliations, table 9, for reconciliations of Projected FFO per share and Projected Core FFO per share to Projected EPS.
Full Year Financial Outlook
Full Year 2023
vs. Full Year 2022
LowHigh
Same Store:
Residential revenue change5.5%6.5%
Residential Opex change6.0%7.0%
Residential NOI change5.25%6.75%

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the second quarter 2023 to the mid-point of its third quarter 2023 financial outlook:

Q2 2023 Results Compared to Q3 2023 Outlook
Per Share
EPSFFOCore FFO
Q2 2023 per share reported results $2.59 $2.67 $2.66 
Same Store Residential revenue0.03 0.03 0.03 
Same Store Residential Opex(0.07)(0.07)(0.07)
Development and Other Stabilized Residential NOI0.01 0.01 0.01 
Overhead and other(0.04)(0.04)(0.01)
Capital markets and transaction activity(0.03)(0.03)(0.02)
Unconsolidated investment income and management fees(0.02)(0.02)— 
Gain on sale of real estate and depreciation expense(1.20)— — 
Projected per share - Q3 2023 outlook (1)$1.27 $2.55 $2.60 
(1) Represents the mid-point of the Company's outlook.

The following table compares the mid-point of the Company’s July 2023 outlook for EPS, FFO per share and Core FFO per share for the full year 2023 to its April 2023 financial outlook:

July 2023 Full Year Outlook Compared
to April 2023 Full Year Outlook
Per Share
EPSFFOCore FFO
Projected per share - April 2023 outlook (1)$5.89 $10.30 $10.41 
Same Store Residential revenue0.17 0.17 0.17 
Same Store Residential Opex(0.03)(0.03)(0.03)
Development and Other Stabilized Residential NOI0.02 0.02 0.02 
Overhead and other(0.07)(0.07)(0.03)
Capital markets and transaction activity0.01 0.01 0.01 
Unconsolidated investment income and management fees0.03 0.03 0.01 
Income tax expense0.04 0.04 — 
Gain on sale of real estate and depreciation expense0.87 — — 
Projected per share - July 2023 outlook (1)$6.93 $10.47 $10.56 
(1) Represents the mid-point of the Company's outlook.

Other Matters

The Company will hold a conference call on August 1, 2023 at 1:00 PM ET to review and answer questions about this release, its second quarter 2023 results, the Attachments (described below) and related matters. To participate on the call, dial 877-407-9716.

To hear a replay of the call, which will be available from August 1, 2023 at 4:00 PM ET to September 1, 2023, dial 844-512-2921 and use replay passcode: 13734360. A webcast of the conference call will also be available at https://investors.avalonbay.com, and an online playback of
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
4


the webcast will be available for at least seven days following the call.

The Company produces Earnings Release Attachments (the "Attachments") that provide detailed information regarding operating, development, redevelopment, disposition and acquisition activity. These Attachments are considered a part of this earnings release and are available in full with this earnings release via the Company's website at https://investors.avalonbay.com. To receive future press releases via e-mail, please submit a request through https://investors.avalonbay.com/email_notification.

In addition to the Attachments, the Company is providing a teleconference presentation that will be available on the Company's website at https://investors.avalonbay.com subsequent to this release and before the market opens on August 1, 2023.

About AvalonBay Communities, Inc.

As of June 30, 2023, the Company owned or held a direct or indirect ownership interest in 294 apartment communities containing 88,659 apartment homes in 12 states and the District of Columbia, of which 18 communities were under development and one community was under redevelopment. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in the Company's expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado. More information may be found on the Company’s website at https://www.avalonbay.com. For additional information, please contact Jason Reilley, Vice President of Investor Relations, at 703-317-4681.

Forward-Looking Statements

This release, including its Attachments, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which you can identify by the Company’s use of words such as “expects,” “plans,” “estimates,” “anticipates,” “projects,” “intends,” “believes,” “outlook,” "may," "shall," "will," "pursue" and similar expressions that predict or indicate future events and trends and that do not report historical matters, are based on the Company’s expectations, forecasts and assumptions at the time of this release, which may not be realized and involve
risks and uncertainties that cannot be predicted accurately or that might not be anticipated. These could cause actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Risks and uncertainties that might cause such differences include the following: we may abandon development or redevelopment opportunities for which we have already incurred costs; adverse capital and credit market conditions, including rising interest rates, may affect our access to various sources of capital and/or cost of capital, which may affect our business activities, earnings and common stock price, among other things; changes in local employment conditions, demand for apartment homes, supply of competitive housing products, landlord-tenant laws, including the adoption of rent control regulations, and other economic or regulatory conditions may result in lower than expected occupancy and/or rental rates and adversely affect the profitability of our communities; delays in completing development, redevelopment and/or lease-up, and general price inflation, may result in increased financing and construction costs and may delay and/or reduce the profitability of a community; debt and/or equity financing for development, redevelopment or acquisitions of communities may not be available or may not be available on favorable terms; we may be unable to obtain, or experience delays in obtaining, necessary governmental permits and authorizations; expenses may result in communities that we develop or redevelop failing to achieve expected profitability; our assumptions concerning risks relating to joint ventures and our ability to successfully dispose of certain assets may not be realized; investments made under the SIP in either mezzanine debt or preferred equity of third-party multifamily development may not be repaid as expected; our assumptions and expectations in our financial outlook may prove to be too optimistic; litigation costs and consequences may exceed our expectations; and risks related to an outbreak of disease or other public health event may affect the multifamily industry and general economy, including from measures taken by businesses and the government and the preferences of consumers and businesses for living and working arrangements both during and after such an event. Additional discussions of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements appear in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 under the heading “Risk Factors” and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Forward-
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
5


Looking Statements” and in subsequent quarterly reports on Form 10-Q.

The Company does not undertake a duty to update forward-looking statements, including its expected 2023 operating results and other financial data forecasts contained in this release. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release.

Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
6


Definitions and Reconciliations

Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined, reconciled and further explained on Attachment 13, Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms. Attachment 13 is included in the full earnings release available at the Company’s website at https://investors.avalonbay.com. This wire distribution includes only the following definitions and reconciliations.

Average Monthly Rental Revenue per Occupied Home is calculated by the Company as Residential rental revenue in accordance with GAAP, divided by the weighted average number of occupied apartment homes.

Commercial represents results attributable to the non-apartment components of the Company's mixed-use communities and other non-residential operations.

Development is composed of consolidated communities that are either currently under construction, or were under construction and were completed during the current year. These communities may be partially or fully complete and operating.

EBITDA, EBITDAre and Core EBITDAre are considered by management to be supplemental measures of our financial performance. EBITDA is defined by the Company as net income or loss computed in accordance with GAAP before interest expense, income taxes, depreciation and amortization. EBITDAre is calculated by the Company in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”), as EBITDA plus or minus losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property, with adjustments to reflect the Company's share of EBITDAre of unconsolidated entities. Core EBITDAre is the Company’s EBITDAre as adjusted for non-core items outlined in the table below. By further adjusting for items that are not considered part of the Company’s core business operations, Core EBITDAre can help one compare the core operating and financial performance of the Company between periods. A reconciliation of EBITDA, EBITDAre and Core EBITDAre to net income is as follows (dollars in thousands):

TABLE 1
Q2
2023
Net income$367,807 
Interest expense and loss on extinguishment of debt59,883 
Income tax benefit(217)
Depreciation expense200,546 
EBITDA$628,019 
  
Gain on sale of communities(187,322)
Unconsolidated entity EBITDAre adjustments (1)2,809 
EBITDAre$443,506 
 
Unconsolidated entity gains, net(1,795)
Joint venture promote(1,072)
Structured Investment Program loan reserve(105)
Advocacy contributions 200 
Hedge accounting activity(37)
Executive transition compensation costs297 
Severance related costs327 
Expensed transaction, development and other pursuit costs, net of recoveries797 
Other real estate activity(341)
Legal settlements148 
Core EBITDAre$441,925 
(1) Includes joint venture interest, taxes, depreciation, gain on dispositions of depreciated real estate and impairment losses, if applicable, included in net income.

Economic Gain is calculated by the Company as the gain on sale in accordance with GAAP, less accumulated depreciation through the date of sale and any other adjustments that may be required under GAAP accounting. Management generally considers Economic Gain to be an appropriate supplemental measure to gain on sale in accordance with GAAP because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold community.
7



The Economic Gain for disposed communities is based on their respective final settlement statements. A reconciliation of the aggregate Economic Gain to the aggregate gain on sale in accordance with GAAP for the wholly-owned communities disposed of during the three and six months ended June 30, 2023 is as follows (dollars in thousands):

TABLE 2
Q2 2023YTD 2023
GAAP Gain$187,341 $187,341 
Accumulated Depreciation and Other(64,063)(64,063)
Economic Gain$123,278 $123,278 

Economic Occupancy is defined as total possible Residential revenue less vacancy loss as a percentage of total possible Residential revenue. Total possible Residential revenue (also known as “gross potential”) is determined by valuing occupied units at contract rates and vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant apartments at their Market Rents, 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.

FFO and Core FFO are generally considered by management to be appropriate supplemental measures of our operating and financial performance. FFO is calculated by the Company in accordance with the definition adopted by Nareit. FFO is calculated by the Company as Net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for gains or losses on sales of previously depreciated operating communities, cumulative effect of a change in accounting principle, impairment write-downs of depreciable real estate assets, write-downs of investments in affiliates which are driven by a decrease in the value of depreciable real estate assets held by the affiliate and depreciation of real estate assets, including adjustments for unconsolidated partnerships and joint ventures. FFO can help one compare the operating and financial performance of a real estate company between periods or as compared to different companies because adjustments such as (i) gains or losses on sales of previously depreciated property or (ii) real estate depreciation may impact comparability between companies as the amount and timing of these or similar items can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates. Core FFO is the Company's FFO as adjusted for non-core items outlined in the table below. By further adjusting for items that are not considered by us to be part of our core business operations, Core FFO can help with the comparison of core operating performance of the Company between periods. A reconciliation of Net income attributable to common stockholders to FFO and to Core FFO is as follows (dollars in thousands):

8



TABLE 3
Q2Q2YTDYTD
2023202220232022
Net income attributable to common stockholders$367,923 $138,691 $514,825 $400,735 
Depreciation - real estate assets, including joint venture adjustments199,197 198,493 402,477 399,145 
Distributions to noncontrolling interests13 12 25 24 
Gain on sale of previously depreciated real estate(187,322)(404)(187,309)(149,204)
Casualty loss on real estate— — 5,051 — 
FFO attributable to common stockholders 379,811 336,792 735,069 650,700 
Adjusting items:
Unconsolidated entity gains, net (1)(1,795)(2,040)(4,851)(2,295)
Joint venture promote (2)(1,072)— (1,072)— 
Structured Investment Program loan reserve (3)(105)1,608 (124)1,608 
Hedge accounting activity(37)297 191 (432)
Advocacy contributions 200 384 200 534 
Executive transition compensation costs297 407 644 809 
Severance related costs327 24 1,500 65 
Expensed transaction, development and other pursuit costs, net of recoveries797 1,839 3,248 1,998 
Other real estate activity(341)28 (470)(245)
For-sale condominium imputed carry cost (4)169 716 424 1,635 
Legal settlements148 129 50 259 
Income tax (benefit) expense (5)(217)(159)3,343 2,312 
Core FFO attributable to common stockholders $378,182 $340,025 $738,152 $656,948 
Average shares outstanding - diluted142,124,117 139,934,478 141,073,964 139,955,280 
Earnings per share - diluted $2.59 $0.99 $3.65 $2.86 
FFO per common share - diluted $2.67 $2.41 $5.21 $4.65 
Core FFO per common share - diluted $2.66 $2.43 $5.23 $4.69 
(1) Amounts consist primarily of net unrealized gains on technology investments.
(2) Amount for 2023 is for the Company's recognition of its promoted interest in the U.S. Fund.
(3) Amounts are the expected credit losses associated with the Company's lending commitments under its SIP. The timing and amount of any actual losses that will be incurred, if any, is to be determined.
(4) Represents the imputed carry cost of the for-sale residential condominiums at The Park Loggia. The Company computes this adjustment by multiplying the Total Capital Cost of completed and unsold for-sale residential condominiums by the Company's weighted average unsecured debt effective interest rate.
(5) Amounts are primarily for the recognition of taxes associated with The Park Loggia.

Interest Coverage is calculated by the Company as Core EBITDAre divided by interest expense. Interest Coverage is presented by the Company because it provides rating agencies and investors an additional means of comparing our ability to service debt obligations to that of other companies. A calculation of Interest Coverage for the three months ended June 30, 2023 is as follows (dollars in thousands):

TABLE 4
  
Core EBITDAre (1)$441,925 
Interest expense (2)$59,883 
Interest Coverage 7.4 times
(1) For additional detail, see Definitions and Reconciliations, table 1.
(2) Excludes the impact of hedge accounting activity.
9



Market Cap 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 $300 - $500 per apartment home, divided by the gross sales price for the community. 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 and amortization. For this purpose, management’s projection of operating expenses for the community includes a management fee of 2.25%. The Market Cap 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 a property. Buyers may assign different Market Cap Rates to different communities when determining the appropriate value because they (i) may project different rates of change in operating expenses and 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 Market Cap Rate is weighted based on the gross sales price of each community.

Market Rents as reported by the Company are based on the current market rates set by the Company based on its experience in renting apartments and publicly available market data. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Net Debt-to-Core EBITDAre is calculated by the Company as total debt (secured and unsecured notes, and the Company's Credit Facility and commercial paper program) that is consolidated for financial reporting purposes, less consolidated cash and cash in escrow, divided by annualized second quarter 2023 Core EBITDAre. A calculation of Net Debt-to-Core EBITDAre is as follows (dollars in thousands):

TABLE 5
Total debt principal (1)$8,120,427 
Cash and cash in escrow(946,998)
Net debt$7,173,429 
 
Core EBITDAre (2)$441,925 
Core EBITDAre, annualized$1,767,700 
Net Debt-to-Core EBITDAre4.1 times
(1) Balance at June 30, 2023 excludes $44,307 of debt discount and deferred financing costs as reflected in unsecured notes, net, and $13,421 of debt discount and deferred financing costs as reflected in notes payable, net, on the Condensed Consolidated Balance Sheets.
(2) For additional detail, see Definitions and Reconciliations, table 1.

NOI is defined by the Company 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, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, depreciation expense, income tax (benefit) expense, casualty loss, gain on sale of communities, other real estate activity and net operating income from real estate assets sold or held for sale. The Company considers NOI to be an important and appropriate supplemental performance measure to Net Income of operating performance of a community or communities 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 property management overhead or financing-related costs. NOI reflects the operating performance of a community, and allows for an easier 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 impact 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 groups of assets.

Residential NOI represents results attributable to the Company's apartment rental operations, including parking and other ancillary Residential revenue. A reconciliation of Residential NOI to Net Income, as well as a breakdown of Residential NOI by operating segment, is as follows (dollars in thousands):








10



TABLE 6
Q2Q2Q1Q4YTDYTD
202320222023202220232022
Net income$367,807 $138,566 $146,775 $241,164 $514,582 $400,642 
Property management and other indirect operating expenses, net of corporate income28,972 30,632 30,784 26,081 59,756 58,745 
Expensed transaction, development and other pursuit costs, net of recoveries1,261 2,364 2,992 6,700 4,253 3,351 
Interest expense, net51,585 58,797 56,821 57,461 108,406 115,323 
General and administrative expense17,676 21,291 20,400 20,741 38,076 38,712 
Income from unconsolidated investments(4,970)(2,480)(4,845)(6,820)(9,815)(2,797)
Depreciation expense200,546 199,302 204,743 207,232 405,289 401,088 
Income tax (benefit) expense(217)(159)3,560 6,683 3,343 2,312 
Casualty loss— — 5,051 — 5,051 — 
(Gain) loss on sale of communities(187,322)(404)13 (88,065)(187,309)(149,204)
Other real estate activity(341)28 (129)(4,563)(470)(245)
NOI from real estate assets sold or held for sale(3,977)(12,252)(4,804)(5,443)(8,781)(25,521)
NOI471,020 435,685 461,361 461,171 932,381 842,406 
Commercial NOI(8,529)(7,545)(8,565)(9,158)(17,094)(15,693)
Residential NOI $462,491 $428,140 $452,796 $452,013 $915,287 $826,713 
Residential NOI
Same Store:   
    New England$61,567 $56,207 $59,241 $59,677 $120,808 $107,791 
    Metro NY/NJ90,765 84,314 90,656 92,489 181,421 164,578 
    Mid-Atlantic63,437 59,032 62,950 62,304 126,387 115,875 
    Southeast FL11,984 10,438 12,172 11,359 24,156 20,288 
    Denver, CO4,821 4,900 4,945 5,121 9,766 9,627 
    Pacific NW29,657 28,694 29,411 28,929 59,068 55,045 
    N. California75,767 71,526 74,123 73,386 149,890 139,389 
    S. California93,195 94,124 89,507 89,178 182,702 179,172 
    Other Expansion Regions3,864 3,615 3,934 3,853 7,798 7,031 
        Total Same Store435,057 412,850 426,939 426,296 861,996 798,796 
Other Stabilized19,701 11,618 19,765 20,237 39,466 20,488 
Development/Redevelopment7,733 3,672 6,092 5,480 13,825 7,429 
Residential NOI $462,491 $428,140 $452,796 $452,013 $915,287 $826,713 

NOI as reported by the Company does not include the operating results from assets sold or classified as held for sale. A reconciliation of NOI from communities sold or classified as held for sale is as follows (dollars in thousands):

TABLE 7
Q2Q2Q1Q4YTDYTD
202320222023202220232022
Revenue from real estate assets sold or held for sale$5,989 $18,203 $6,660 $7,804 $12,649 $39,023 
Operating expenses from real estate assets sold or held for sale(2,012)(5,951)(1,856)(2,361)(3,868)(13,502)
NOI from real estate assets sold or held for sale$3,977 $12,252 $4,804 $5,443 $8,781 $25,521 
 
Commercial NOI is composed of the following components (in thousands):






11





TABLE 8
Q2Q2Q1Q4YTDYTD
202320222023202220232022
Commercial Revenue$10,175 $9,070 $10,244 $10,769 $20,419 $18,879 
Commercial Operating Expenses(1,646)(1,525)(1,679)(1,611)(3,325)(3,186)
Commercial NOI$8,529 $7,545 $8,565 $9,158 $17,094 $15,693 

Other Stabilized is composed of completed consolidated communities that the Company owns, which have Stabilized Operations as of January 1, 2023, or which were acquired subsequent to January 1, 2022. Other Stabilized excludes communities that are conducting or are probable to conduct substantial redevelopment activities.

Projected FFO and Projected Core FFO, as provided within this release in the Company’s outlook, are calculated on a basis consistent with historical FFO and Core FFO, and are therefore considered to be appropriate supplemental measures to projected Net Income from projected operating performance. A reconciliation of the ranges provided for Projected FFO per share (diluted) for the third quarter and full year 2023 to the ranges provided for projected EPS (diluted) and corresponding reconciliation of the ranges for Projected FFO per share to the ranges for Projected Core FFO per share are as follows:

TABLE 9
Low
Range
High
Range
Projected EPS (diluted) - Q3 2023$1.22 $1.32 
Depreciation (real estate related)1.43 1.43 
Gain on sale of communities(0.15)(0.15)
Projected FFO per share (diluted) - Q3 20232.50 2.60 
Expensed transaction, development and other pursuit costs, net of recoveries0.04 0.04 
Structured Investment Program loan reserve0.01 0.01 
Projected Core FFO per share (diluted) - Q3 2023$2.55 $2.65 
Projected EPS (diluted) - Full Year 2023$6.83 $7.03 
Depreciation (real estate related)5.71 5.71 
Gain on sale of communities(2.21)(2.21)
Casualty loss0.04 0.04 
Projected FFO per share (diluted) - Full Year 202310.37 10.57 
Joint venture promote and unconsolidated entity gains, net(0.04)(0.04)
Structured Investment Program loan reserve0.01 0.01 
Executive transition compensation costs0.01 0.01 
Severance related costs0.01 0.01 
Expensed transaction, development and other pursuit costs, net of recoveries0.07 0.07 
Income tax expense and other real estate activity0.02 0.02 
Other0.01 0.01 
Projected Core FFO per share (diluted) - Full Year 2023$10.46 $10.66 












12



Projected NOI, as used within this release for certain Development communities and in calculating the Market Cap Rate for dispositions, represents management’s estimate, as of the date of this release (or as of the date of the buyer’s valuation in the case of dispositions), of projected stabilized rental revenue minus projected stabilized operating expenses. For Development communities, Projected NOI is calculated based on the first twelve months of Stabilized Operations following the completion of construction. In calculating the 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. In addition, projected stabilized operating expenses for Development communities do not include property management fee expense. Projected gross potential for Development communities and dispositions is generally 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. The weighted average Projected NOI as a percentage of Total Capital Cost is weighted based on the Company’s share of the Total Capital Cost of each community, based on its percentage ownership.

Management believes that Projected NOI of the Development communities, on an aggregated weighted average basis, assists investors in understanding management's estimate of the likely impact on operations of the Development communities when the assets are complete and achieve stabilized occupancy (before allocation of any corporate-level property management overhead, general and administrative costs or interest expense). However, in this release the Company has not given a projection of NOI on a company-wide basis. Given the different dates and fiscal years for which NOI is projected for these communities, the projected allocation of corporate-level property management overhead, general and administrative costs and interest expense to communities under development is complex, impractical to develop, and may not be meaningful. Projected NOI of these communities is not a projection of the Company's overall financial performance or cash flow. There can be no assurance that the communities under development will achieve the Projected NOI as described in this release.

Redevelopment is composed of consolidated communities where substantial redevelopment is in progress or is probable to begin during the current year. Redevelopment is considered substantial when (i) capital invested during the reconstruction effort is expected to exceed the lesser of $5,000,000 or 10% of the community’s pre-redevelopment basis and (ii) physical occupancy is below or is expected to be below 90% during or as a result of the redevelopment activity. Redevelopment includes one community containing 714 apartment homes that is currently under active redevelopment as of June 30, 2023.

Residential represents results attributable to the Company's apartment rental operations, including parking and other ancillary Residential revenue.

Residential Rental Revenue with Concessions on a Cash Basis is considered by the Company to be a supplemental measure to Residential rental revenue in conformity with GAAP to help investors evaluate the impact of both current and historical concessions on GAAP-based Residential rental revenue and to more readily enable comparisons to revenue as reported by other companies. In addition, Residential Rental Revenue with Concessions on a Cash Basis allows an investor to understand the historical trend in cash concessions.

A reconciliation of Same Store Residential rental revenue in conformity with GAAP to Residential Rental Revenue with Concessions on a Cash Basis is as follows (dollars in thousands):

TABLE 10
Q2Q2Q1YTDYTD
20232022202320232022
Residential rental revenue (GAAP basis)$629,883 $592,803$617,503$1,247,386 $1,156,649
Residential concessions amortized3,268 6,0943,1096,377 15,620
Residential concessions granted(2,767)(2,006)(3,581)(6,348)(4,563)
Residential Rental Revenue with Concessions on a Cash Basis$630,384 $596,891$617,031$1,247,415 $1,167,706
Q2 2023
vs. Q2 2022
Q2 2023
vs. Q1 2023
YTD 2023
vs.
YTD 2022
% change -- GAAP revenue 6.3 %2.0 %7.8 %
% change -- cash revenue 5.6 %2.2 %6.8 %

13



Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had Stabilized Operations, as defined below, as of the beginning of the respective prior year period. Therefore, for 2023 operating results, Same Store is composed of consolidated communities that have Stabilized Operations as of January 1, 2022, are not conducting or are not probable to conduct substantial redevelopment activities and are not held for sale or probable for disposition within the current year.

Stabilized Operations/Restabilized Operations is defined as the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.

Total Capital Cost includes all capitalized costs projected to be or actually incurred to develop the respective Development or Redevelopment community, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees and a contingency estimate, offset by proceeds from the sale of any associated land or improvements, all as determined in accordance with GAAP. Total Capital Cost also includes costs incurred related to first generation commercial tenants, such as tenant improvements and leasing commissions. For Redevelopment communities, Total Capital Cost excludes costs incurred prior to the start of redevelopment when indicated. With respect to communities where development or redevelopment was completed in a prior period or the current period, Total Capital Cost reflects the actual cost incurred, plus any contingency estimate made by management. Total Capital Cost for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount. For joint ventures not in construction, Total Capital Cost is equal to gross real estate cost.

Uncollectible lease revenue and government rent relief

The following table provides uncollectible Residential lease revenue as a percentage of total Residential rental revenue in the aggregate and excluding amounts recognized from government rent relief programs in each respective period. Government rent relief reduces the amount of uncollectible Residential lease revenue. The Company expects the amount of rent relief recognized to continue to decline in 2023 absent additional funding from the Federal government.

TABLE 11
Same Store Uncollectible Residential Lease Revenue
Q2Q2Q1Q4
2023202220232022
TotalExcluding Rent ReliefTotalExcluding Rent ReliefTotalExcluding Rent ReliefTotalExcluding Rent Relief
    New England0.6 %1.1 %0.4 %2.0 %0.9 %1.4 %1.2 %1.7 %
    Metro NY/NJ2.3 %3.1 %2.7 %3.6 %2.4 %3.5 %2.6 %3.6 %
    Mid-Atlantic1.9 %2.3 %2.0 %2.6 %2.6 %2.7 %2.3 %2.7 %
    Southeast FL2.6 %3.1 %2.0 %3.5 %2.3 %3.0 %2.6 %3.3 %
    Denver, CO1.0 %1.0 %0.6 %1.5 %1.4 %1.7 %0.6 %1.6 %
    Pacific NW0.8 %1.0 %0.1 %0.6 %0.9 %1.2 %0.7 %1.2 %
    N. California1.2 %1.3 %0.7 %2.8 %1.7 %1.9 %1.8 %2.2 %
    S. California3.4 %3.5 %(0.6)%6.8 %4.9 %5.2 %5.6 %5.9 %
 Other Expansion Regions0.3 %0.3 %0.6 %0.6 %0.6 %0.6 %0.8 %0.8 %
        Total Same Store1.9 %2.3 %1.0 %3.6 %2.5 %3.0 %2.7 %3.3 %

Unconsolidated Development is composed of communities that are either currently under construction, or were under construction and were completed during the current year, in which we have an indirect ownership interest through our investment interest in an unconsolidated joint venture. These communities may be partially or fully complete and operating.

Unencumbered NOI as calculated by the Company represents NOI generated by real estate assets unencumbered by outstanding secured notes payable as of June 30, 2023 as a percentage of total NOI generated by real estate assets. The Company believes that current and prospective unsecured creditors of the Company view Unencumbered NOI as one indication of the borrowing capacity of the Company. Therefore, when reviewed together with the Company’s Interest Coverage, EBITDA and cash flow from operations, the Company believes that investors and creditors view Unencumbered NOI as a useful supplemental measure for determining the financial flexibility of an entity. A calculation of Unencumbered NOI for the six months ended June 30, 2023 is as follows (dollars in thousands):

14



TABLE 12
YTD 2023
NOI
Residential NOI:
Same Store$861,996 
Other Stabilized39,466 
Development/Redevelopment13,825 
Total Residential NOI915,287 
Commercial NOI17,094 
NOI from real estate assets sold or held for sale8,781 
Total NOI generated by real estate assets941,162 
Less NOI on encumbered assets(44,805)
NOI on unencumbered assets$896,357 
Unencumbered NOI95 %
15

EX-99.2 3 q22023ex-992.htm EX-99.2 Document

Exhibit 99.2
avbpressreleaseheader1a19.jpg
For Immediate News Release
July 31, 2023

AVALONBAY COMMUNITIES, INC.
ANNOUNCES SECOND QUARTER 2023 OPERATING RESULTS
AND THIRD QUARTER AND FULL YEAR 2023 FINANCIAL OUTLOOK
(Arlington, VA) AvalonBay Communities, Inc. (NYSE: AVB) (the “Company”) reported Earnings per Share – diluted (“EPS”), Funds from Operations attributable to common stockholders - diluted (“FFO”) per share and Core FFO per share (as defined in this release) for the three and six months ended June 30, 2023 and 2022 as detailed below.
 Q2
2023
Q2 2022%
Change
EPS$2.59 $0.99 161.6 %
FFO per share (1)$2.67 $2.41 10.8 %
Core FFO per share (1)$2.66 $2.43 9.5 %
YTD
2023
YTD 2022%
Change
EPS$3.65 $2.86 27.6 %
FFO per share (1)$5.21 $4.65 12.0 %
Core FFO per share (1)$5.23 $4.69 11.5 %
(1) For additional detail on reconciling items between net income attributable to common stockholders, FFO and Core FFO, see Attachment 13, table 3.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the three months ended June 30, 2023 to its results for the prior year period:
Q2 2023 Results Compared to Q2 2022
Per Share
EPSFFOCore FFO
Q2 2022 per share reported results$0.99 $2.41 $2.43 
Same Store Residential NOI (1)0.16 0.16 0.16 
Development and Other Stabilized Residential NOI0.05 0.05 0.05 
Commercial NOI0.01 0.01 0.01 
Overhead and other 0.03 0.03 0.03 
Capital markets and transaction activity (0.01)(0.01)(0.03)
Unconsolidated investment income and management fees0.02 0.02 0.01 
Gain on sale of real estate and depreciation expense1.34 — — 
Q2 2023 per share reported results$2.59 $2.67 $2.66 
(1) Consists of increases of $0.27 in revenue and $0.11 in operating expenses.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the three months ended June 30, 2023 to its April 2023 outlook:
Q2 2023 Results Compared to April 2023 Outlook
Per Share
EPSFFOCore FFO
Projected per share (1)$2.53 $2.57 $2.59 
Same Store Residential revenue (2)0.05 0.05 0.05 
Development and Other Stabilized Residential NOI0.01 0.01 0.01 
Capital markets and transaction activity 0.01 0.01 — 
Unconsolidated investment income and management fees0.01 0.01 0.01 
Income taxes0.02 0.02 — 
Gain on sale of real estate and depreciation expense(0.04)— — 
Q2 2023 per share reported results$2.59 $2.67 $2.66 
(1) The mid-point of the Company's April 2023 outlook.
(2) Includes $0.03 of favorable uncollectible lease revenue.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the six months ended June 30, 2023 to its results for the prior year period:
YTD 2023 Results Compared to YTD 2022
Per Share
EPSFFOCore FFO
YTD 2022 per share reported results$2.86 $4.65 $4.69 
Same Store Residential NOI (1)0.45 0.45 0.45 
Development and Other Stabilized Residential NOI0.11 0.11 0.11 
Commercial NOI0.01 0.01 0.01 
Overhead and other (0.02)(0.02)(0.01)
Capital markets and transaction activity (0.01)(0.03)(0.04)
Unconsolidated investment income and management fees0.05 0.05 0.02 
Income taxes(0.01)(0.01)— 
Gain on sale of real estate and depreciation expense0.21 — — 
YTD 2023 per share reported results$3.65 $5.21 $5.23 
(1) Consists of increases of $0.65 in revenue and $0.20 in operating expenses.
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
1



Same Store Operating Results for the Three Months Ended June 30, 2023 Compared to the Prior Year Period

Same Store total revenue increased $37,062,000, or 6.2%, to $636,890,000. Same Store Residential rental revenue increased $37,080,000, or 6.3%, to $629,883,000, as detailed in the following table:

Same Store Residential Rental Revenue Change
Q2 2023 Compared to Q2 2022
Lease rates6.4 %
Concessions and other discounts0.5 %
Economic occupancy(0.4)%
Other rental revenue0.9 %
Uncollectible lease revenue (excluding rent relief) (1)1.1 %
Rent relief (2)(2.2)%
Residential rental revenue6.3 %
(1) Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of total Residential rental revenue decreased to 2.3% in Q2 2023 from 3.6% in Q2 2022. See Attachment 13, table 11 for further detail of uncollectible lease revenue for the Company’s Same Store portfolio.
(2) The Company recognized $2,441,000 and $15,683,000 from government rent relief programs during Q2 2023 and Q2 2022, respectively.

Same Store Residential operating expenses increased $14,769,000, or 8.2%, to $195,251,000 and Same Store Residential NOI increased $22,207,000, or 5.4%, to $435,057,000.

The following table presents percentage changes in Same Store Residential rental revenue, operating expenses and NOI for the three months ended June 30, 2023 compared to the three months ended June 30, 2022:

Q2 2023 Compared to Q2 2022
Same Store Residential
Rental Revenue
(1)
Opex
(2)
% of
Q2 2023 NOI
 NOI
New England8.7 %6.8 %9.5 %14.2 %
Metro NY/NJ8.6 %10.4 %7.7 %20.9 %
Mid-Atlantic6.9 %5.5 %7.5 %14.6 %
Southeast FL10.8 %3.7 %14.8 %2.7 %
Denver, CO5.6 %25.6 %(1.6)%1.1 %
Pacific NW4.6 %7.9 %3.4 %6.8 %
N. California5.8 %5.5 %5.9 %17.4 %
S. California2.3 %10.5 %(1.0)%21.4 %
Other Expansion Regions9.6 %16.4 %6.9 %0.9 %
   Total6.3 %8.2 %5.4 %100.0 %
(1) See Attachment 4, Quarterly Residential Rental Revenue and Occupancy Changes, for additional detail.
(2) See Attachment 7, Residential Operating Expenses ("Opex"), for discussion of variances.

Same Store Operating Results for the Six Months Ended June 30, 2023 Compared to the Prior Year Period

Same Store total revenue increased $90,722,000, or 7.7%, to $1,261,641,000. Same Store Residential rental revenue increased $90,737,000, or 7.8%, to $1,247,386,000, as detailed in the following table:

Same Store Residential Rental Revenue Change
YTD 2023 Compared to YTD 2022
Lease rates7.1 %
Concessions and other discounts0.9 %
Economic occupancy(0.3)%
Other rental revenue0.9 %
Uncollectible lease revenue (excluding rent relief) (1)1.3 %
Rent relief (2)(2.1)%
Residential rental revenue7.8 %
(1) Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of total Residential rental revenue decreased to 2.6% in YTD 2023 from 4.1% in YTD 2022. See Attachment 13, table 11 for further detail of uncollectible lease revenue for the Company’s Same Store portfolio.
(2) The Company recognized $5,474,000 and $29,851,000 from government rent relief programs during YTD 2023 and YTD 2022, respectively.

Same Store Residential operating expenses increased $27,547,000, or 7.7%, to $386,292,000 and Same Store Residential NOI increased $63,200,000, or 7.9%, to $861,996,000.

The following table presents percentage changes in Same Store Residential rental revenue, operating expenses and NOI for the six months ended June 30, 2023 compared to the six months ended June 30, 2022:

YTD 2023 Compared to YTD 2022
Same Store Residential
Rental Revenue
(1)
Opex
(2)
% of YTD
2023 NOI
 NOI
New England10.0 %6.2 %12.1 %14.0 %
Metro NY/NJ10.1 %9.7 %10.2 %21.0 %
Mid-Atlantic7.5 %3.9 %9.1 %14.7 %
Southeast FL13.9 %5.2 %19.1 %2.8 %
Denver, CO7.0 %22.8 %1.4 %1.1 %
Pacific NW7.5 %7.8 %7.3 %6.9 %
N. California7.2 %6.3 %7.5 %17.4 %
S. California4.3 %9.9 %2.0 %21.2 %
Other Expansion Regions11.6 %14.0 %10.9 %0.9 %
   Total7.8 %7.7 %7.9 %100.0 %
(1) See Attachment 6, Year to Date Residential Rental Revenue and Occupancy Changes, for additional detail.
(2) See Attachment 7, Residential Opex, for discussion of variances.


Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
2



Development Activity

Consolidated Development Communities

During the three months ended June 30, 2023, the Company completed the development of two communities:

Avalon Harrison, located in Harrison, NY; and
Avalon Brighton, located in Boston, MA.

These communities contain an aggregate of 323 apartment homes and 27,000 square feet of commercial space and were developed for an aggregate Total Capital Cost of $184,000,000.

During the three months ended June 30, 2023, the Company started the development of Avalon Hunt Valley West, located in Hunt Valley, MD. Avalon Hunt Valley West is expected to contain 322 apartment homes when completed and be developed for an estimated Total Capital Cost of $109,000,000.

At June 30, 2023, the Company had 17 consolidated Development communities under construction that are expected to contain 5,761 apartment homes and 29,000 square feet of commercial space. Estimated Total Capital Cost at completion for these Development communities is $2,293,000,000.

Disposition Activity

Consolidated Apartment Communities

During the three months ended June 30, 2023, the Company sold two wholly-owned communities:

eaves Daly City, located in Daly City, CA; and
Avalon at Newton Highlands, located in Newton, MA.

In aggregate, these communities contain 489 apartment homes and were sold for $237,000,000 and a weighted average Initial Market Cap Rate of 4.5%, resulting in a gain in accordance with GAAP of $187,341,000 and an Economic Gain of $123,278,000.

In July 2023, the Company sold Avalon Columbia Pike, located in Arlington, VA. Avalon Columbia Pike contains 269 apartments homes and 27,000 square feet of commercial space and was sold for $105,000,000.

Structured Investment Program (the "SIP") Activity

In July 2023, the Company entered into an additional mezzanine loan commitment, agreeing to fund up to $20,900,000 of a multifamily development project in North Carolina. As of the date of this release, the Company had commitments to fund four mezzanine loans for the development of multifamily projects in the Company's markets, up to $113,275,000 in the aggregate. At the date of this release, the commitments had a weighted average rate of return of 10.4% and mature at various dates on or before July 2027. As of June 30, 2023, the Company had funded $55,869,000 of these commitments.

Liquidity and Capital Markets

As of June 30, 2023, the Company did not have any borrowings outstanding under its $2,250,000,000 unsecured revolving credit facility (the "Credit Facility") or its $500,000,000 unsecured commercial paper note program. The commercial paper program is backstopped by the Company's commitment to maintain available borrowing capacity under its Credit Facility in an amount equal to actual borrowings under the program.

In addition, at June 30, 2023, the Company had $769,622,000 in unrestricted cash and cash equivalents and $177,376,000 in cash in escrow, which is composed of principal reserve funds for secured borrowing arrangements as well as proceeds from a disposition held in escrow for subsequent tax deferred exchange activity.

The Company’s annualized Net Debt-to-Core EBITDAre (as defined in this release) for the second quarter of 2023 was 4.1 times and Unencumbered NOI (as defined in this release) for the six months ended June 30, 2023 was 95%.

During the six months ended June 30, 2023, the Company repaid $250,000,000 principal amount of its 2.85% unsecured notes at its maturity.

During the three months ended June 30, 2023, the Company settled the outstanding equity forward contracts entered into in April 2022 (the "Equity Forward"), issuing 2,000,000 shares of common stock for $491,912,000, or $245.96 per share, net of offering fees and discounts.

Stock Repurchase Program

Under the Company's stock repurchase program, during the six months ended June 30, 2023, the Company repurchased 11,800 shares of its common stock at an average price of $161.96 per share.
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
3



Legal Update

In 2022 and early 2023, the Company was named as a defendant in cases alleging antitrust violations by RealPage, Inc. and owners and/or operators of multifamily housing which utilize revenue management systems provided by RealPage, Inc. The complaints allege a conspiracy to artificially inflate rental rates for multifamily residential real estate above competitive levels. The Company recently engaged with the plaintiffs’ counsel to explain why it believes these cases are without merit as they pertain to the Company. Following these discussions, the plaintiffs filed a notice of voluntary dismissal in July 2023, which resulted in the Company being dismissed without prejudice from these cases.

Third Quarter and Full Year 2023 Financial Outlook

For its third quarter and full year 2023 financial outlook, the Company expects the following:
Projected EPS, Projected FFO and Projected Core FFO Outlook (1)
 Q3 2023Full Year 2023
 LowHighLowHigh
Projected EPS $1.22 $1.32 $6.83 $7.03 
Projected FFO per share $2.50 $2.60 $10.37 $10.57 
Projected Core FFO per share$2.55 $2.65 $10.46 $10.66 
(1) See Attachment 13, table 9, for reconciliations of Projected FFO per share and Projected Core FFO per share to Projected EPS.
Full Year Financial Outlook
Full Year 2023
vs. Full Year 2022
LowHigh
Same Store:
Residential revenue change5.5%6.5%
Residential Opex change6.0%7.0%
Residential NOI change5.25%6.75%

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the second quarter 2023 to the mid-point of its third quarter 2023 financial outlook:

Q2 2023 Results Compared to Q3 2023 Outlook
Per Share
EPSFFOCore FFO
Q2 2023 per share reported results $2.59 $2.67 $2.66 
Same Store Residential revenue0.03 0.03 0.03 
Same Store Residential Opex(0.07)(0.07)(0.07)
Development and Other Stabilized Residential NOI0.01 0.01 0.01 
Overhead and other(0.04)(0.04)(0.01)
Capital markets and transaction activity(0.03)(0.03)(0.02)
Unconsolidated investment income and management fees(0.02)(0.02)— 
Gain on sale of real estate and depreciation expense(1.20)— — 
Projected per share - Q3 2023 outlook (1)$1.27 $2.55 $2.60 
(1) Represents the mid-point of the Company's outlook.

The following table compares the mid-point of the Company’s July 2023 outlook for EPS, FFO per share and Core FFO per share for the full year 2023 to its April 2023 financial outlook:

July 2023 Full Year Outlook Compared
to April 2023 Full Year Outlook
Per Share
EPSFFOCore FFO
Projected per share - April 2023 outlook (1)$5.89 $10.30 $10.41 
Same Store Residential revenue0.17 0.17 0.17 
Same Store Residential Opex(0.03)(0.03)(0.03)
Development and Other Stabilized Residential NOI0.02 0.02 0.02 
Overhead and other(0.07)(0.07)(0.03)
Capital markets and transaction activity0.01 0.01 0.01 
Unconsolidated investment income and management fees0.03 0.03 0.01 
Income tax expense0.04 0.04 — 
Gain on sale of real estate and depreciation expense0.87 — — 
Projected per share - July 2023 outlook (1)$6.93 $10.47 $10.56 
(1) Represents the mid-point of the Company's outlook.

Other Matters

The Company will hold a conference call on August 1, 2023 at 1:00 PM ET to review and answer questions about this release, its second quarter 2023 results, the Attachments (described below) and related matters. To participate on the call, dial 877-407-9716.

To hear a replay of the call, which will be available from August 1, 2023 at 4:00 PM ET to September 1, 2023, dial 844-512-2921 and use replay passcode: 13734360. A webcast of the conference call will also be available at https://investors.avalonbay.com, and an online playback of
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
4



the webcast will be available for at least seven days following the call.

The Company produces Earnings Release Attachments (the "Attachments") that provide detailed information regarding operating, development, redevelopment, disposition and acquisition activity. These Attachments are considered a part of this earnings release and are available in full with this earnings release via the Company's website at https://investors.avalonbay.com. To receive future press releases via e-mail, please submit a request through https://investors.avalonbay.com/email_notification.

In addition to the Attachments, the Company is providing a teleconference presentation that will be available on the Company's website at https://investors.avalonbay.com subsequent to this release and before the market opens on August 1, 2023.

About AvalonBay Communities, Inc.

As of June 30, 2023, the Company owned or held a direct or indirect ownership interest in 294 apartment communities containing 88,659 apartment homes in 12 states and the District of Columbia, of which 18 communities were under development and one community was under redevelopment. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in the Company's expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado. More information may be found on the Company’s website at https://www.avalonbay.com. For additional information, please contact Jason Reilley, Vice President of Investor Relations, at 703-317-4681.

Forward-Looking Statements

This release, including its Attachments, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which you can identify by the Company’s use of words such as “expects,” “plans,” “estimates,” “anticipates,” “projects,” “intends,” “believes,” “outlook,” "may," "shall," "will," "pursue" and similar expressions that predict or indicate future events and trends and that do not report historical matters, are based on the Company’s expectations, forecasts and assumptions at the time of this release, which may not be realized and involve
risks and uncertainties that cannot be predicted accurately or that might not be anticipated. These could cause actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Risks and uncertainties that might cause such differences include the following: we may abandon development or redevelopment opportunities for which we have already incurred costs; adverse capital and credit market conditions, including rising interest rates, may affect our access to various sources of capital and/or cost of capital, which may affect our business activities, earnings and common stock price, among other things; changes in local employment conditions, demand for apartment homes, supply of competitive housing products, landlord-tenant laws, including the adoption of rent control regulations, and other economic or regulatory conditions may result in lower than expected occupancy and/or rental rates and adversely affect the profitability of our communities; delays in completing development, redevelopment and/or lease-up, and general price inflation, may result in increased financing and construction costs and may delay and/or reduce the profitability of a community; debt and/or equity financing for development, redevelopment or acquisitions of communities may not be available or may not be available on favorable terms; we may be unable to obtain, or experience delays in obtaining, necessary governmental permits and authorizations; expenses may result in communities that we develop or redevelop failing to achieve expected profitability; our assumptions concerning risks relating to joint ventures and our ability to successfully dispose of certain assets may not be realized; investments made under the SIP in either mezzanine debt or preferred equity of third-party multifamily development may not be repaid as expected; our assumptions and expectations in our financial outlook may prove to be too optimistic; litigation costs and consequences may exceed our expectations; and risks related to an outbreak of disease or other public health event may affect the multifamily industry and general economy, including from measures taken by businesses and the government and the preferences of consumers and businesses for living and working arrangements both during and after such an event. Additional discussions of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements appear in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 under the heading “Risk Factors” and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Forward-
Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
5



Looking Statements” and in subsequent quarterly reports on Form 10-Q.

The Company does not undertake a duty to update forward-looking statements, including its expected 2023 operating results and other financial data forecasts contained in this release. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release.
 
Definitions and Reconciliations

Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined, reconciled and further explained on Attachment 13, Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms. Attachment 13 is included in the full earnings release available at the Company’s website at https://investors.avalonbay.com.

Copyright © 2023 AvalonBay Communities, Inc. All Rights Reserved
6



er-q2x2023.jpg
7




 SECOND QUARTER 2023
 
Supplemental Operating and Financial Data
 
Table of Contents
 
Company Profile  
Condensed Consolidated Operating Information..........................................................................................................Attachment 1
Condensed Consolidated Balance Sheets....................................................................................................................Attachment 2
Sequential Operating Information.................................................................................................................................Attachment 3
  
Market Profile - Same Store  
Quarterly Residential Rental Revenue and Occupancy Changes................................................................................Attachment 4
Sequential Quarterly Residential Rental Revenue and Occupancy Changes..............................................................Attachment 5
Year to Date Residential Rental Revenue and Occupancy Changes...........................................................................Attachment 6
Residential Operating Expenses ("Opex")....................................................................................................................Attachment 7
  
Development, Joint Venture and Debt Profile  
Expensed Community Maintenance Costs and Capitalized Community Expenditures................................................Attachment 8
Development Communities...........................................................................................................................................Attachment 9
Unconsolidated Real Estate Investments.....................................................................................................................Attachment 10
Debt Structure and Select Debt Metrics........................................................................................................................Attachment 11
Financial Outlook
2023 Financial Outlook.................................................................................................................................................Attachment 12
Definitions and Reconciliations  
Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms...................................................Attachment 13

 
The following is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The projections and estimates contained in the following attachments, including but not limited to Attachments 9, 10, 12 and 13 contain forward-looking statements that involve risks and uncertainties, and actual results may differ materially from those projected in such statements. Risks associated with the Company's development, redevelopment, construction, and lease-up activities which could impact the forward-looking statements are discussed in the paragraph titled "Forward-Looking Statements" in the release that accompanies, and should be read in conjunction with, these attachments. These and other risks are also described in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the Company's Quarterly Reports on Form 10-Q for subsequent quarters, and could cause actual results to differ materially from such projections and estimates.
8



Attachment 1
AvalonBay Communities, Inc.
Condensed Consolidated Operating Information (1)
June 30, 2023
(Dollars in thousands except per share data)
(unaudited)
Q2Q2YTDYTD
20232022% Change20232022% Change
Revenue:   
Rental and other income$688,148 $643,655 6.9 %$1,361,791 $1,256,830 8.4 %
Management, development and other fees2,712 904 200.0 %3,778 1,656 128.1 %
Total690,860 644,559 7.2 %1,365,569 1,258,486 8.5 %
Operating expenses:
Direct property operating expenses, excluding property taxes138,163 124,848 10.7 %271,144 247,309 9.6 %
Property taxes74,987 70,865 5.8 %149,483 141,603 5.6 %
Total community operating expenses213,150 195,713 8.9 %420,627 388,912 8.2 %
Property management and other indirect operating expenses(31,685)(31,541)0.5 %(63,536)(60,392)5.2 %
Expensed transaction, development and other pursuit costs, net of recoveries(1,261)(2,364)(46.7)%(4,253)(3,351)26.9 %
Interest expense, net (2)(51,585)(58,797)(12.3)%(108,406)(115,323)(6.0)%
Depreciation expense(200,546)(199,302)0.6 %(405,289)(401,088)1.0 %
General and administrative expense(17,676)(21,291)(17.0)%(38,076)(38,712)(1.6)%
Casualty loss— — — %(5,051)— (100.0)%
Income from unconsolidated investments4,970 2,480 100.4 %9,815 2,797 250.9 %
Gain on sale of communities187,322 404 N/A187,309 149,204 25.5 %
Other real estate activity341 (28)N/A470 245 91.8 %
Income before income taxes367,590 138,407 165.6 %517,925 402,954 28.5 %
Income tax benefit (expense)217 159 36.5 %(3,343)(2,312)44.6 %
Net income367,807 138,566 165.4 %514,582 400,642 28.4 %
Net loss attributable to noncontrolling interests 116 125 (7.2)%243 93 161.3 %
Net income attributable to common stockholders$367,923 $138,691 165.3 %$514,825 $400,735 28.5 %
Net income attributable to common stockholders per common share - basic$2.59 $0.99 161.6 %$3.65 $2.87 27.2 %
Net income attributable to common stockholders per common share - diluted$2.59 $0.99 161.6 %$3.65 $2.86 27.6 %
FFO$379,811 $336,792 12.8 %$735,069 $650,700 13.0 %
Per common share - diluted$2.67 $2.41 10.8 %$5.21 $4.65 12.0 %
Core FFO$378,182 $340,025 11.2 %$738,152 $656,948 12.4 %
Per common share - diluted$2.66 $2.43 9.5 %$5.23 $4.69 11.5 %
Dividends declared - common$234,773 $222,772 5.4 %$466,211 $445,526 4.6 %
Per common share$1.65 $1.59 3.8 %$3.30 $3.18 3.8 %
Average shares and participating securities outstanding - basic142,028,911 139,879,013 1.5 %141,025,084 139,858,967 0.8 %
Average shares outstanding - diluted142,124,117 139,934,478 1.6 %141,073,964 139,955,280 0.8 %
Total outstanding common shares and operating partnership units142,014,755 139,837,396 1.6 %142,014,755 139,837,396 1.6 %
(1)For detail of non-Core items which are included in this attachment, see in Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms, table 3.
(2)Amounts include $8,261 and $13,413 of interest income on cash and cash in escrow for the three and six months ended June 30, 2023, respectively, and $123 and $101 of interest income on cash and cash in escrow for the three and six months ended June 30, 2022, respectively.
9



Attachment 2
 
AvalonBay Communities, Inc.
Condensed Consolidated Balance Sheets
June 30, 2023
(Dollars in thousands)
(unaudited)
 
 June 30,December 31,
 20232022
Real estate$24,775,492 $24,619,616 
Less accumulated depreciation(7,193,053)(6,878,556)
Net operating real estate17,582,439 17,741,060 
Construction in progress, including land1,202,977 1,072,543 
Land held for development195,115 179,204 
Real estate assets held for sale, net81,047 — 
Total real estate, net19,061,578 18,992,807 
Cash and cash equivalents769,622 613,189 
Cash in escrow (1)177,376 121,056 
Resident security deposits39,027 36,815 
Unconsolidated investments216,533 212,084 
Other assets542,061 481,813 
Total assets$20,806,197 $20,457,764 
Unsecured notes, net$7,355,693 $7,602,305 
Unsecured credit facility and commercial paper— — 
Notes payable, net707,006 713,740 
Resident security deposits65,070 63,700 
Other liabilities861,350 821,781 
Total liabilities8,989,119 9,201,526 
Redeemable noncontrolling interests1,513 2,685 
Equity11,815,565 11,253,553 
Total liabilities and equity$20,806,197 $20,457,764 

(1)
Amount at June 30, 2023 includes $57,848 related to proceeds from a disposition held in escrow for subsequent tax deferred exchange activity.

10



Attachment 3
AvalonBay Communities, Inc.
Sequential Operating Information (1)
June 30, 2023
(Dollars in thousands, except per home data)
(unaudited)
Total Apartment
Homes
Quarter Ended
June 30, 2023
Quarter Ended
March 31, 2023
Quarter Ended
December 31, 2022
Residential Rental Revenue (2)  
Same Store74,955 $629,883 $617,503 $610,878 
Other Stabilized (3)3,743 27,833 27,401 26,620 
Development/Redevelopment (4)6,970 12,733 10,326 8,858 
Commercial Rental Revenue (2)N/A10,175 10,244 10,769 
     Total Rental Revenue85,668 $680,624 $665,474 $657,125 
Residential Operating Expense
Same Store$195,251