NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization, Basis of Presentation and Significant Accounting Policies
Organization and Basis of Presentation
AvalonBay Communities, Inc. (the "Company," which term, unless the context otherwise requires, refers to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust ("REIT") for federal income tax purposes under the Internal Revenue Code of 1986 (the "Code"). The Company focuses on the development, redevelopment, acquisition, ownership and operation of multifamily communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, Southeast Florida, Denver, Colorado, the Pacific Northwest, and Northern and Southern California. The Company is pursuing opportunities in new expansion markets of Dallas and Austin, Texas, and Charlotte and Raleigh-Durham, North Carolina.
At June 30, 2021, the Company owned or held a direct or indirect ownership interest in 272 operating apartment communities containing 80,958 apartment homes in 11 states and the District of Columbia. In addition, the Company owned or held a direct or indirect ownership interest in 16 communities under development that are expected to contain an aggregate of 4,791 apartment homes when completed, as well as The Park Loggia, which contains 172 for-sale residential condominiums, of which 96 have been sold as of June 30, 2021, and 66,000 square feet of commercial space, of which 87% has been leased as of June 30, 2021. The Company also owned or held a direct or indirect ownership interest in land or rights to land on which the Company expects to develop an additional 23 communities that, if developed as expected, will contain an estimated 7,802 apartment homes.
The interim unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company's 2020 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the operating results for the full year. Management believes the disclosures are adequate to ensure the information presented is not misleading. In the opinion of management, all adjustments and eliminations, consisting only of normal, recurring adjustments necessary for a fair presentation of the financial statements for the interim periods, have been included.
Capitalized terms used without definition have meanings provided elsewhere in this Form 10-Q.
Earnings per Common Share
Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share ("EPS"). Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company's earnings per common share are determined as follows (dollars in thousands, except per share data):
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|
For the three months ended
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|
For the six months ended
|
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|
6/30/2021
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|
6/30/2020
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|
6/30/2021
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|
6/30/2020
|
|
Basic and diluted shares outstanding
|
|
|
|
|
|
|
|
|
Weighted average common shares - basic
|
139,373,963
|
|
|
140,450,744
|
|
|
139,332,575
|
|
|
140,413,857
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|
|
Weighted average DownREIT units outstanding
|
7,500
|
|
|
7,500
|
|
|
7,500
|
|
|
7,500
|
|
|
Effect of dilutive securities
|
269,176
|
|
|
279,916
|
|
|
261,451
|
|
|
330,974
|
|
|
Weighted average common shares - diluted
|
139,650,639
|
|
|
140,738,160
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|
|
139,601,526
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|
|
140,752,331
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Calculation of Earnings per Share - basic
|
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|
Net income attributable to common stockholders
|
$
|
447,953
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|
|
$
|
170,828
|
|
|
$
|
590,176
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|
|
$
|
338,799
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|
|
Net income allocated to unvested restricted shares
|
(902)
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|
|
(390)
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|
(1,267)
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|
|
(817)
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|
|
Net income attributable to common stockholders, adjusted
|
$
|
447,051
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|
|
$
|
170,438
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|
|
$
|
588,909
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|
|
$
|
337,982
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - basic
|
139,373,963
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|
|
140,450,744
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|
|
139,332,575
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|
|
140,413,857
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|
|
|
|
|
|
|
|
|
|
|
Earnings per common share - basic
|
$
|
3.21
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|
|
$
|
1.21
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|
|
$
|
4.23
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|
|
$
|
2.41
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|
|
|
|
|
|
|
|
Calculation of Earnings per Share - diluted
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|
|
|
|
|
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|
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Net income attributable to common stockholders
|
$
|
447,953
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|
|
$
|
170,828
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|
|
$
|
590,176
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|
|
$
|
338,799
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|
|
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships
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12
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|
|
12
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|
|
24
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|
|
24
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|
|
Adjusted net income attributable to common stockholders
|
$
|
447,965
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|
|
$
|
170,840
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|
|
$
|
590,200
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|
|
$
|
338,823
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - diluted
|
139,650,639
|
|
|
140,738,160
|
|
|
139,601,526
|
|
|
140,752,331
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share - diluted
|
$
|
3.21
|
|
|
$
|
1.21
|
|
|
$
|
4.23
|
|
|
$
|
2.41
|
|
Certain options to purchase shares of common stock in the amount of 292,544 were outstanding as of June 30, 2021, 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 June 30, 2020 are included in the computation of diluted earnings per share.
Derivative Instruments and Hedging Activities
The Company enters into interest rate swap and interest rate cap agreements (collectively, "Hedging Derivatives") for interest rate risk management purposes and in conjunction with certain variable rate secured debt to satisfy lender requirements. The Company does not enter into Hedging Derivative transactions for trading or other speculative purposes. The Company assesses the effectiveness of qualifying cash flow and fair value hedges, both at inception and on an on-going basis. Hedge ineffectiveness is reported as a component of interest expense, net. The fair values of Hedging Derivatives that are in an asset position are recorded in prepaid expenses and other assets. The fair value of Hedging Derivatives that are in a liability position are included in accrued expenses and other liabilities. The Company does not present or disclose the fair value of Hedging Derivatives on a net basis. Fair value changes for derivatives that are not in qualifying hedge relationships are reported as a component of interest expense, net. For the Hedging Derivative positions that the Company has determined qualify as effective cash flow hedges, the Company has recorded the cumulative changes in the fair value of Hedging Derivatives in other comprehensive loss. Amounts recorded in accumulated other comprehensive loss will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow. The effective portion of the change in fair value of the Hedging Derivatives that the Company has determined qualified as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding debt being hedged. See Note 11, “Fair Value,” for further discussion of derivative financial instruments.
Legal and Other Contingencies
The Company is involved in various claims and/or administrative proceedings that arise in the ordinary course of its business. While no assurances can be given, the Company does not currently believe that any of these outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to amounts in prior years' notes to financial statements to conform to current year presentations as a result of changes in held for sale classification, disposition activity and segment classification.
For-Sale Condominium Inventory
The Company presents for-sale condominium inventory at historical cost and evaluates the condominiums for impairment when potential indicators exist, as further discussed in Note 6, "Real Estate Disposition Activities."
Leases
The Company is party to leases as both a lessor and a lessee, primarily as follows:
•lessor of residential and commercial space within its apartment communities; and
•lessee under (i) ground leases for land underlying current operating or development communities and certain commercial and parking facilities and (ii) office leases for its corporate headquarters and regional offices.
Lessee Considerations
The Company assesses whether a contract is or contains a lease based on whether the contract conveys the right to control the use of an identified asset, including specified portions of larger assets, for a period of time in exchange for consideration. The Company’s leases include both fixed and variable lease payments, which are based on an index or rate such as the consumer price index (CPI) or percentage rents based on total sales. Lease payments included in the lease liability include only fixed lease payments including fixed amounts that depend on an index or rate. For leases that have options to extend the term or terminate the lease early, the Company only factored the impact of such options into the lease term if the option was considered reasonably certain to be exercised. The Company determined the discount rate associated with its ground and office leases on a lease by lease basis using the Company’s actual borrowing rates as well as indicative market pricing for longer term rates and taking into consideration the remaining term of each of the lease agreements.
Lessor Considerations
The Company evaluates leases in which it is the lessor, which are composed of residential and commercial leases at its apartment communities, and determined these leases to be operating leases. For lease agreements that provide for rent concessions and/or scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease, which, for residential leases, is generally one year. Some of the Company’s commercial leases have fixed-price renewal options, and the lessee may be able to exercise its renewal option at an amount less than the fair value of the rent at such time. The Company only includes renewal options in the lease term if, at the commencement of the lease, it is reasonably certain that the lessee will exercise this option.
Additionally, for the Company’s residential and commercial leases, which are comprised of the lease component and common area maintenance as a non-lease component, the Company determined that (i) the leases are operating leases, (ii) the lease component is the predominant component and (iii) that all components of its operating leases share the same timing and pattern of transfer.
Revenue and Gain Recognition
Revenue from contracts with customers is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration that the Company expects to be entitled to for those goods and services. The majority of the Company’s revenue is derived from residential and commercial rental income and other lease income, which are accounted for under ASC 842, Leases, discussed above. The Company's revenue streams that are not accounted for under ASC 842 include (i) management fees, (ii) rental and non-rental related income and (iii) gains or losses on the sale of real estate.
The following table provides details of the Company’s revenue streams disaggregated by the Company’s reportable operating segments, further discussed in Note 8, “Segment Reporting,” for the three and six months ended June 30, 2021 and 2020. Segment information for total revenue has been adjusted to exclude the real estate assets that were sold from January 1, 2020 through June 30, 2021, or otherwise qualify as held for sale as of June 30, 2021, as described in Note 6, "Real Estate Disposition Activities" (dollars in thousands):
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|
|
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|
|
For the three months ended
|
|
|
|
Same Store
|
|
Other
Stabilized
|
|
Development/
Redevelopment
|
|
Non-
allocated (1)
|
|
Total
|
|
For the period ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
Management, development and other fees and other ancillary items
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
808
|
|
|
$
|
808
|
|
|
Rental and non-rental related income (2)
|
|
1,922
|
|
|
395
|
|
|
186
|
|
|
—
|
|
|
2,503
|
|
|
Total non-lease revenue (3)
|
|
1,922
|
|
|
395
|
|
|
186
|
|
|
808
|
|
|
3,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease income (4)
|
|
498,719
|
|
|
29,104
|
|
|
22,890
|
|
|
—
|
|
|
550,713
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|
|
Business interruption insurance proceeds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
500,641
|
|
|
$
|
29,499
|
|
|
$
|
23,076
|
|
|
$
|
808
|
|
|
$
|
554,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Management, development and other fees and other ancillary items
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
299
|
|
|
$
|
299
|
|
|
Rental and non-rental related income (2)
|
|
1,848
|
|
|
482
|
|
|
78
|
|
|
—
|
|
|
2,408
|
|
|
Total non-lease revenue (3)
|
|
1,848
|
|
|
482
|
|
|
78
|
|
|
299
|
|
|
2,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease income (4)
|
|
520,753
|
|
|
24,160
|
|
|
7,290
|
|
|
—
|
|
|
552,203
|
|
|
Business interruption insurance proceeds
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
522,697
|
|
|
$
|
24,642
|
|
|
$
|
7,368
|
|
|
$
|
299
|
|
|
$
|
555,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended
|
|
|
|
Same Store
|
|
Other
Stabilized
|
|
Development/
Redevelopment
|
|
Non-
allocated (1)
|
|
Total
|
|
For the period ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
Management, development and other fees and other ancillary items
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,685
|
|
|
$
|
1,685
|
|
|
Rental and non-rental related income (2)
|
|
3,571
|
|
|
821
|
|
|
327
|
|
|
—
|
|
|
4,719
|
|
|
Total non-lease revenue (3)
|
|
3,571
|
|
|
821
|
|
|
327
|
|
|
1,685
|
|
|
6,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease income (4)
|
|
993,569
|
|
|
55,443
|
|
|
40,156
|
|
|
—
|
|
|
1,089,168
|
|
|
Business interruption insurance proceeds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
997,140
|
|
|
$
|
56,264
|
|
|
$
|
40,483
|
|
|
$
|
1,685
|
|
|
$
|
1,095,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Management, development and other fees and other ancillary items
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
690
|
|
|
$
|
690
|
|
|
Rental and non-rental related income (2)
|
|
3,462
|
|
|
1,073
|
|
|
137
|
|
|
—
|
|
|
4,672
|
|
|
Total non-lease revenue (3)
|
|
3,462
|
|
|
1,073
|
|
|
137
|
|
|
690
|
|
|
5,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease income (4)
|
|
1,065,425
|
|
|
48,600
|
|
|
14,044
|
|
|
—
|
|
|
1,128,069
|
|
|
Business interruption insurance proceeds
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
1,068,983
|
|
|
$
|
49,673
|
|
|
$
|
14,181
|
|
|
$
|
690
|
|
|
$
|
1,133,527
|
|
__________________________________
(1)Revenue represents third-party management, asset management and developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment.
(2)Amounts include revenue streams related to leasing activities that are not considered components of a lease, including but not limited to, apartment hold fees and application fees, as well as revenue streams not related to leasing activities, including but not limited to, vendor revenue sharing, building advertising, vending and dry cleaning revenue.
(3)Represents all revenue accounted for under ASC 606.
(4)Amounts include all revenue streams derived from residential and commercial rental income and other lease income, which are accounted for under ASC 842.
Due to the nature and timing of the Company’s identified revenue streams, there are no material amounts of outstanding or unsatisfied performance obligations as of June 30, 2021.
Lease Revenue Reserves
The Company assesses the collectability of its lease revenue and receivables on an on-going basis. Under ASC 842, Lease Accounting, the Company assesses the probability of receiving all remaining lease amounts due on a lease by lease basis, reserving for revenue and the related receivables for those leases where collection of substantially all of the remaining lease payments is not probable. Subsequently, the Company will only recognize revenue to the extent cash is received. If the Company determines that collection of the remaining lease payments becomes probable at a future date, the Company will recognize the cumulative revenue that would have been recorded under the original lease agreement.
In addition to the specific reserves recognized under ASC 842, the Company also evaluates its lease receivables for collectability at a portfolio level under ASC 450, Contingencies – Loss Contingencies. The Company recognizes a reserve under ASC 450 when the uncollectible revenue is probable and reasonably estimable. The Company applies this reserve to the population of the Company’s revenue and receivables not specifically addressed as part of the specific ASC 842 reserve.
COVID-19 Pandemic
In March 2020, the World Health Organization designated COVID-19 as a pandemic. While the Company has taken various actions in response to the COVID-19 pandemic, the ultimate impact on its consolidated results of operations, cash flows, financial condition and liquidity will depend on (i) the duration and severity of the pandemic, (ii) the effectiveness of vaccines and the rate of vaccinations, (iii) the duration and nature of governmental responses to contain the spread of the disease and assist consumers and businesses, (iv) consumer and business responses to the pandemic, including preferences for where and how to live and work, and (v) how quickly and to what extent normal economic and operating conditions can resume. Because of this uncertainty, any estimate of the expected impact of the COVID-19 pandemic on results of operations, cash flows, financial condition, or liquidity for periods beyond the six months ended June 30, 2021 is uncertain.
As of June 30, 2021, the Company assessed the collectibility of the outstanding lease income receivables as a result of the impact of the COVID-19 pandemic on its residential and commercial lease portfolios. The Company recorded an aggregate offset to income for uncollectible lease revenue for its residential and commercial portfolios of $15,065,000 and $20,099,000 for the three months ended June 30, 2021 and 2020, respectively, and $33,710,000 and $24,279,000 for six months ended June 30, 2021 and 2020, respectively, under ASC 842 and ASC 450.
2. Interest Capitalized
The Company capitalizes interest during the development and redevelopment of real estate assets. Capitalized interest associated with the Company's development or redevelopment activities totaled $8,362,000 and $11,019,000 for the three months ended June 30, 2021 and 2020, respectively, and $17,161,000 and $22,517,000 for the six months ended June 30, 2021 and 2020, respectively.
3. Mortgage Notes Payable, Unsecured Notes, Term Loans and Credit Facility
The Company's mortgage notes payable, unsecured notes, variable rate unsecured term loans (the "Term Loans") and Credit Facility, as defined below, as of June 30, 2021 and December 31, 2020 are summarized below. The following amounts and discussion do not include the mortgage notes related to the communities classified as held for sale, if any, as of June 30, 2021 and December 31, 2020, as shown in the accompanying Condensed Consolidated Balance Sheets (dollars in thousands) (see Note 6, "Real Estate Disposition Activities").
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2021
|
|
12/31/2020
|
|
|
|
|
|
|
Fixed rate unsecured notes (1)
|
$
|
6,500,000
|
|
|
$
|
6,500,000
|
|
|
Term Loans (1)
|
250,000
|
|
|
250,000
|
|
|
Fixed rate mortgage notes payable - conventional and tax-exempt (2)
|
380,030
|
|
|
408,964
|
|
|
Variable rate mortgage notes payable - conventional and tax-exempt (2)
|
465,050
|
|
|
470,850
|
|
|
Total mortgage notes payable and unsecured notes and Term Loans
|
7,595,080
|
|
|
7,629,814
|
|
|
Credit Facility
|
—
|
|
|
—
|
|
|
Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility
|
$
|
7,595,080
|
|
|
$
|
7,629,814
|
|
_____________________________________
(1)Balances at June 30, 2021 and December 31, 2020 exclude $9,577 and $10,380, respectively, of debt discount, and $34,910 and $37,615, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Condensed Consolidated Balance Sheets.
(2)Balances at June 30, 2021 and December 31, 2020 exclude $14,083 and $14,478, respectively, of debt discount, and $2,877 and $3,004, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the accompanying Condensed Consolidated Balance Sheets.
The following debt activity occurred during the six months ended June 30, 2021:
•In January 2021, the Company repaid $27,795,000 principal amount of 5.37% fixed rate debt secured by Avalon San Bruno II at par in advance of its April 2021 maturity date.
At June 30, 2021, the Company has a $1,750,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the “Credit Facility”) which matures in February 2024. The Credit Facility bears interest at varying levels based on (i) the London Interbank Offered Rate (“LIBOR”) applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.) and (ii) the rating levels issued for our unsecured notes. The current stated pricing for drawn borrowings is LIBOR plus 0.775% per annum (0.88% at June 30, 2021), assuming a one month borrowing rate. The annual facility fee for the Credit Facility remained 0.125%, resulting in a fee of $2,188,000 annually based on the $1,750,000,000 facility size and based on the Company's current credit rating.
The Company had no borrowings outstanding under the Credit Facility and had $2,599,000 and $2,900,000 outstanding in letters of credit that reduced the borrowing capacity as of June 30, 2021 and December 31, 2020, respectively. In addition, the Company had $36,682,000 and $32,079,000 outstanding in additional letters of credit unrelated to the Credit Facility as of June 30, 2021 and December 31, 2020, respectively.
In the aggregate, secured notes payable mature at various dates from March 2027 through July 2066, and are secured by certain apartment communities (with a net carrying value of $1,373,062,000, excluding communities classified as held for sale, as of June 30, 2021).
The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 3.8% at both June 30, 2021 and December 31, 2020. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax-exempt), including the effect of certain financing related fees, was 1.6% and 1.7% at June 30, 2021 and December 31, 2020, respectively.
Scheduled payments and maturities of secured notes payable and unsecured notes outstanding at June 30, 2021 are as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Secured notes
principal payments
|
|
Secured notes maturities
|
|
Unsecured notes and Term Loans maturities
|
|
Stated interest rate of unsecured notes and Term Loans
|
|
2021
|
|
$
|
2,414
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
2022
|
|
9,918
|
|
|
—
|
|
|
450,000
|
|
|
2.950
|
%
|
|
|
|
|
|
|
|
100,000
|
|
|
LIBOR + 0.90%
|
|
2023
|
|
10,739
|
|
|
—
|
|
|
350,000
|
|
|
4.200
|
%
|
|
|
|
|
|
|
|
250,000
|
|
|
2.850
|
%
|
|
2024
|
|
11,677
|
|
|
—
|
|
|
300,000
|
|
|
3.500
|
%
|
|
|
|
|
|
|
|
150,000
|
|
|
LIBOR + 0.85%
|
|
2025
|
|
12,408
|
|
|
—
|
|
|
525,000
|
|
|
3.450
|
%
|
|
|
|
|
|
|
|
300,000
|
|
|
3.500
|
%
|
|
2026
|
|
13,445
|
|
|
—
|
|
|
475,000
|
|
|
2.950
|
%
|
|
|
|
|
|
|
|
300,000
|
|
|
2.900
|
%
|
|
2027
|
|
15,880
|
|
|
236,100
|
|
|
400,000
|
|
|
3.350
|
%
|
|
2028
|
|
20,707
|
|
|
—
|
|
|
450,000
|
|
|
3.200
|
%
|
|
2029
|
|
11,742
|
|
|
66,250
|
|
|
450,000
|
|
|
3.300
|
%
|
|
2030
|
|
12,384
|
|
|
—
|
|
|
700,000
|
|
|
2.300
|
%
|
|
Thereafter
|
|
176,078
|
|
|
245,338
|
|
|
600,000
|
|
|
2.450
|
%
|
|
|
|
|
|
|
|
350,000
|
|
|
3.900
|
%
|
|
|
|
|
|
|
|
300,000
|
|
|
4.150
|
%
|
|
|
|
|
|
|
|
300,000
|
|
|
4.350
|
%
|
|
|
|
$
|
297,392
|
|
|
$
|
547,688
|
|
|
$
|
6,750,000
|
|
|
|
The Company was in compliance at June 30, 2021 with customary financial covenants under the Credit Facility, the Term Loans and the Company's fixed rate unsecured notes.
4. Equity
The following summarizes the changes in equity for the six months ended June 30, 2021 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
Additional
paid-in
capital
|
|
Accumulated
earnings
less
dividends
|
|
Accumulated
other
comprehensive
loss
|
|
Total stockholder's equity
|
|
Noncontrolling interests
|
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020
|
$
|
1,395
|
|
|
$
|
10,664,416
|
|
|
$
|
126,022
|
|
|
$
|
(40,250)
|
|
|
$
|
10,751,583
|
|
|
$
|
591
|
|
|
$
|
10,752,174
|
|
|
Net income attributable to common stockholders
|
—
|
|
|
—
|
|
|
142,223
|
|
|
—
|
|
|
142,223
|
|
|
—
|
|
|
142,223
|
|
|
Cash flow hedge losses reclassified to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
2,367
|
|
|
2,367
|
|
|
—
|
|
|
2,367
|
|
|
Change in redemption value of redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
(273)
|
|
|
—
|
|
|
(273)
|
|
|
—
|
|
|
(273)
|
|
|
Noncontrolling interest distribution and income allocation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16)
|
|
|
(16)
|
|
|
Dividends declared to common stockholders ($1.59 per share)
|
—
|
|
|
—
|
|
|
(221,779)
|
|
|
—
|
|
|
(221,779)
|
|
|
—
|
|
|
(221,779)
|
|
|
Issuance of common stock, net of withholdings
|
1
|
|
|
(14,037)
|
|
|
958
|
|
|
—
|
|
|
(13,078)
|
|
|
—
|
|
|
(13,078)
|
|
|
Amortization of deferred compensation
|
—
|
|
|
7,286
|
|
|
—
|
|
|
—
|
|
|
7,286
|
|
|
—
|
|
|
7,286
|
|
|
Balance at March 31, 2021
|
$
|
1,396
|
|
|
$
|
10,657,665
|
|
|
$
|
47,151
|
|
|
$
|
(37,883)
|
|
|
$
|
10,668,329
|
|
|
$
|
575
|
|
|
$
|
10,668,904
|
|
|
Net income attributable to common stockholders
|
—
|
|
|
—
|
|
|
447,953
|
|
|
—
|
|
|
447,953
|
|
|
—
|
|
|
447,953
|
|
|
Loss on cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(822)
|
|
|
(822)
|
|
|
—
|
|
|
(822)
|
|
|
Cash flow hedge losses reclassified to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
2,366
|
|
|
2,366
|
|
|
—
|
|
|
2,366
|
|
|
Change in redemption value of redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
(255)
|
|
|
—
|
|
|
(255)
|
|
|
—
|
|
|
(255)
|
|
|
Noncontrolling interest distribution and income allocation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
(7)
|
|
|
Dividends declared to common stockholders ($1.59 per share)
|
—
|
|
|
—
|
|
|
(222,451)
|
|
|
—
|
|
|
(222,451)
|
|
|
—
|
|
|
(222,451)
|
|
|
Issuance of common stock, net of withholdings
|
—
|
|
|
2,496
|
|
|
—
|
|
|
—
|
|
|
2,496
|
|
|
—
|
|
|
2,496
|
|
|
Amortization of deferred compensation
|
—
|
|
|
10,403
|
|
|
—
|
|
|
—
|
|
|
10,403
|
|
|
—
|
|
|
10,403
|
|
|
Balance at June 30, 2021
|
$
|
1,396
|
|
|
$
|
10,670,564
|
|
|
$
|
272,398
|
|
|
$
|
(36,339)
|
|
|
$
|
10,908,019
|
|
|
$
|
568
|
|
|
$
|
10,908,587
|
|
The following summarizes the changes in equity for the six months ended June 30, 2020 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
Additional
paid-in
capital
|
|
Accumulated
earnings
less
dividends
|
|
Accumulated
other
comprehensive
loss
|
|
Total stockholder's equity
|
|
Noncontrolling interests
|
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
$
|
1,406
|
|
|
$
|
10,736,733
|
|
|
$
|
282,913
|
|
|
$
|
(31,503)
|
|
|
$
|
10,989,549
|
|
|
$
|
649
|
|
|
$
|
10,990,198
|
|
|
Net income attributable to common stockholders
|
—
|
|
|
—
|
|
|
167,971
|
|
|
—
|
|
|
167,971
|
|
|
—
|
|
|
167,971
|
|
|
Loss on cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,603)
|
|
|
(17,603)
|
|
|
—
|
|
|
(17,603)
|
|
|
Cash flow hedge losses reclassified to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
1,949
|
|
|
1,949
|
|
|
—
|
|
|
1,949
|
|
|
Change in redemption value of redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
471
|
|
|
—
|
|
|
471
|
|
|
—
|
|
|
471
|
|
|
Noncontrolling interests income allocation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35)
|
|
|
(35)
|
|
|
Dividends declared to common stockholders ($1.59 per share)
|
—
|
|
|
—
|
|
|
(224,083)
|
|
|
—
|
|
|
(224,083)
|
|
|
—
|
|
|
(224,083)
|
|
|
Issuance of common stock, net of withholdings
|
1
|
|
|
(12,492)
|
|
|
(1,616)
|
|
|
—
|
|
|
(14,107)
|
|
|
—
|
|
|
(14,107)
|
|
|
Amortization of deferred compensation
|
—
|
|
|
7,781
|
|
|
—
|
|
|
—
|
|
|
7,781
|
|
|
—
|
|
|
7,781
|
|
|
Balance at March 31, 2020
|
$
|
1,407
|
|
|
$
|
10,732,022
|
|
|
$
|
225,656
|
|
|
$
|
(47,157)
|
|
|
$
|
10,911,928
|
|
|
$
|
614
|
|
|
$
|
10,912,542
|
|
|
Net income attributable to common stockholders
|
—
|
|
|
—
|
|
|
170,828
|
|
|
—
|
|
|
170,828
|
|
|
—
|
|
|
170,828
|
|
|
Loss on cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,461)
|
|
|
(1,461)
|
|
|
—
|
|
|
(1,461)
|
|
|
Cash flow hedge losses reclassified to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
2,301
|
|
|
2,301
|
|
|
—
|
|
|
2,301
|
|
|
Change in redemption value of redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
(146)
|
|
|
—
|
|
|
(146)
|
|
|
—
|
|
|
(146)
|
|
|
Noncontrolling interests income allocation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
Dividends declared to common stockholders ($1.59 per share)
|
—
|
|
|
—
|
|
|
(224,172)
|
|
|
—
|
|
|
(224,172)
|
|
|
—
|
|
|
(224,172)
|
|
|
Issuance of common stock, net of withholdings
|
—
|
|
|
1,050
|
|
|
138
|
|
|
—
|
|
|
1,188
|
|
|
—
|
|
|
1,188
|
|
|
Amortization of deferred compensation
|
—
|
|
|
9,724
|
|
|
—
|
|
|
—
|
|
|
9,724
|
|
|
—
|
|
|
9,724
|
|
|
Balance at June 30, 2020
|
$
|
1,407
|
|
|
$
|
10,742,796
|
|
|
$
|
172,304
|
|
|
$
|
(46,317)
|
|
|
$
|
10,870,190
|
|
|
$
|
615
|
|
|
$
|
10,870,805
|
|
As of June 30, 2021 and December 31, 2020, the Company's charter had authorized for issuance a total of 280,000,000 shares of common stock and 50,000,000 shares of preferred stock.
During the six months ended June 30, 2021, the Company:
i.issued 2,126 shares of common stock in connection with stock options exercised;
ii.issued 1,561 common shares through the Company's dividend reinvestment plan;
iii.issued 151,186 common shares in connection with restricted stock grants and the conversion of performance awards to restricted shares;
iv.withheld 74,726 common shares to satisfy employees' tax withholding and other liabilities;
v.issued 12,145 common shares through the Employee Stock Purchase Plan; and
vi.canceled 709 common shares of restricted stock upon forfeiture.
Any deferred compensation related to the Company's stock option, restricted stock and performance award grants as of June 30, 2021 is not reflected on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2021, and will not be reflected until recognized as compensation cost.
In July 2020, the Company’s Board of Directors voted to terminate the Company’s prior $500,000,000 Stock Repurchase Program (the "Amended 2005 Stock Repurchase Program") and approved a new stock repurchase program under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the "2020 Stock Repurchase Program"). Purchases of common stock under the 2020 Stock Repurchase Program may be exercised from time to time in the Company’s discretion and in such amounts as market conditions warrant. The timing and actual number of shares repurchased will depend on a variety of factors, including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The 2020 Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice. During the six months ended June 30, 2021, the Company had no repurchases of shares under this program. As of June 30, 2021, the Company had $316,148,000 remaining authorized for purchase under this program.
In May 2019, the Company commenced a fifth continuous equity program ("CEP V") under which the Company may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of its common stock from time to time. Actual sales will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company's common stock and determinations by the Company of the appropriate sources of funding for the Company. In conjunction with CEP V, the Company engaged sales agents who will receive compensation of up to 1.5% of the gross sales price for shares sold. The Company expects that, if entered into, it will physically settle each forward sale agreement on one or more dates specified by the Company on or prior to the maturity date of that particular forward sale agreement, in which case the Company will expect to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward agreement multiplied by the relevant forward sale price. However, the Company may also elect to cash settle or net share settle a forward sale agreement. In connection with each forward sale agreement, the Company will pay the relevant forward seller, in the form of a reduced initial forward sale price, a commission of up to 1.5% of the sales prices of all borrowed shares of common stock sold. During the six months ended June 30, 2021, the Company had no sales under the program. As of June 30, 2021, the Company had $752,878,000 remaining authorized for issuance under CEP V.
5. Investments in Real Estate Entities
Investments in Unconsolidated Real Estate Entities
As of June 30, 2021, the Company had investments in eight unconsolidated real estate entities with ownership interest percentages ranging from 20.0% to 50.0% and other unconsolidated investments. The Company accounts for its investments in unconsolidated real estate entities under the equity method of accounting. The significant accounting policies of the Company's unconsolidated real estate entities are consistent with those of the Company in all material respects.
During the three and six months ended June 30, 2021, Archstone Multifamily Partners AC JV LP (the "AC JV") sold its final two communities, Avalon North Point and Avalon North Point Lofts, located in Cambridge, MA, containing an aggregate of 529 apartment homes, for $325,000,000. The Company's share of the gain was $23,305,000. In conjunction with the disposition of Avalon North Point, the AC JV repaid a $111,653,000 loan to the equity investors in the venture at par.
The following is a combined summary of the financial position of the entities accounted for using the equity method discussed above as of the dates presented, including development joint ventures started and unconsolidated communities sold during the respective periods (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2021
|
|
12/31/2020
|
|
|
(unaudited)
|
|
|
|
Assets:
|
|
|
|
|
Real estate, net
|
$
|
1,147,860
|
|
|
$
|
1,249,730
|
|
|
Other assets
|
473,193
|
|
|
255,606
|
|
|
Total assets
|
$
|
1,621,053
|
|
|
$
|
1,505,336
|
|
|
|
|
|
|
|
Liabilities and partners' capital:
|
|
|
|
|
Mortgage notes payable, net (1)
|
$
|
637,676
|
|
|
$
|
751,257
|
|
|
Other liabilities
|
169,258
|
|
|
163,808
|
|
|
Partners' capital
|
814,119
|
|
|
590,271
|
|
|
Total liabilities and partners' capital
|
$
|
1,621,053
|
|
|
$
|
1,505,336
|
|
_________________________________
(1) The Company has not guaranteed the outstanding debt, nor does the Company have any obligation to fund this debt should the unconsolidated entity be unable to do so.
The following is a combined summary of the operating results of the entities accounted for using the equity method discussed above for the periods presented (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
For the six months ended
|
|
|
6/30/2021
|
|
6/30/2020
|
|
6/30/2021
|
|
6/30/2020
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Rental and other income (1)
|
$
|
41,809
|
|
|
$
|
30,427
|
|
|
$
|
66,744
|
|
|
$
|
63,499
|
|
|
Operating and other expenses
|
(12,126)
|
|
|
(11,732)
|
|
|
(24,293)
|
|
|
(23,912)
|
|
|
Gain on sale of communities
|
164,317
|
|
|
40
|
|
|
164,317
|
|
|
40
|
|
|
Interest expense, net
|
(7,582)
|
|
|
(8,053)
|
|
|
(15,250)
|
|
|
(16,109)
|
|
|
Depreciation expense
|
(7,441)
|
|
|
(8,713)
|
|
|
(15,919)
|
|
|
(17,402)
|
|
|
Net income
|
$
|
178,977
|
|
|
$
|
1,969
|
|
|
$
|
175,599
|
|
|
$
|
6,116
|
|
|
|
|
|
|
|
|
|
|
|
Company's share of net income from investments in unconsolidated entities
|
$
|
27,087
|
|
|
$
|
1,041
|
|
|
$
|
27,149
|
|
|
$
|
2,746
|
|
|
Amortization of excess investment and other
|
(528)
|
|
|
(529)
|
|
|
(1,057)
|
|
|
(1,059)
|
|
|
Income from investments in unconsolidated entities
|
$
|
26,559
|
|
|
$
|
512
|
|
|
$
|
26,092
|
|
|
$
|
1,687
|
|
_________________________________
(1) Includes unrealized gains on property technology investments during the three and six months ended June 30, 2021.
Investments in Consolidated Real Estate Entities
During the six months ended June 30, 2021, the Company acquired Avalon Arundel Crossing East, located in Linthicum Heights, MD, which contains 384 apartment homes and was acquired for a purchase price of $119,000,000. The Company accounted for this purchase as an asset acquisition and recorded the acquired assets and assumed liabilities, including identifiable intangibles, at their relative fair values based on the purchase price and acquisition costs incurred. The Company used third party pricing or internal models for the value of the land, a valuation model for the value of the building, and an internal model to determine the fair value of the remaining real estate assets and in-place leases. Given the heterogeneous nature of multifamily real estate, the fair values for the land, debt, real estate assets and in-place leases incorporated significant unobservable inputs and therefore are considered to be Level 3 prices within the fair value hierarchy.
Expensed Transaction, Development and Other Pursuit Costs
The Company capitalizes pre-development costs incurred in pursuit of new development opportunities for which the Company currently believes future development is probable ("Development Rights"). 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 non-recoverable capitalized pre-development costs are expensed. The Company expensed costs related to development pursuits not yet considered probable for development and the abandonment of Development Rights, as well as costs incurred in pursuing the acquisition or disposition of assets for which such acquisition and disposition activity did not occur. The amounts for the three and six months ended June 30, 2021 and 2020, were $1,653,000 and $1,483,000 and $388,000 and $3,722,000, respectively. These costs are included in expensed transaction, development and other pursuit costs, net of recoveries on the accompanying Condensed 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.
Casualty and Impairment of Long-Lived Assets
In the Company's evaluation of its real estate portfolio for impairment, as discussed below, it considered the impact of the COVID-19 pandemic and did not identify any indicators of impairment as a result.
The Company evaluates its real estate and other long-lived assets for impairment when potential indicators of impairment exist. Such assets are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property or long-lived asset may not be recoverable, the Company assesses its recoverability by comparing the carrying amount of the property or long-lived asset to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Company recognizes an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property or long-lived asset. Based on periodic tests of recoverability of long-lived assets, the Company did not recognize any impairment losses for the three and six months ended June 30, 2021 and 2020, other than those related to casualty losses from property damage. During the three and six months ended June 30, 2021, the Company recognized a casualty loss of $1,177,000 for the property and casualty damages resulting from a fire at an operating community, reported as casualty and impairment loss on the accompanying Condensed Consolidated Statements of Comprehensive Income
The Company evaluates its for-sale condominium inventory for potential indicators of impairment, considering whether the fair value of the individual for-sale condominium units exceeds the carrying value of those units. For-sale condominium inventory is stated at cost, unless the carrying amount of the inventory is not recoverable when compared to the fair value of each unit. The Company determines the fair value of its for-sale condominium inventory as the estimated sales price less direct costs to sell. For the three and six months ended June 30, 2021 and 2020, the Company did not recognize any impairment losses on its for-sale condominium inventory.
The Company assesses its portfolio of land held for both development and investment for impairment if the intent of the Company changes with respect to either the development of, or the expected holding period for, the land. During the three and six months ended June 30, 2021 and 2020, the Company did not recognize any impairment charges on its investment in land.
The Company evaluates its unconsolidated investments for other than temporary impairment, considering both the extent and amount by which the carrying value of the investment exceeds the fair value, and the Company's intent and ability to hold the investment to recover its carrying value. The Company also evaluates its proportionate share of any impairment of assets held by unconsolidated investments. There were no other than temporary impairment losses recognized for any of the Company's investments in unconsolidated real estate entities during the three and six months ended June 30, 2021 and 2020.
6. Real Estate Disposition Activities
The following real estate sales occurred during the six months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Community Name
|
|
Location
|
|
Period of sale
|
|
Apartment homes
|
|
Gross sales price
|
|
Gain on Disposition (1)
|
|
eaves Stamford
|
|
Stamford, CT
|
|
Q121
|
|
238
|
|
$
|
72,000
|
|
|
$
|
53,775
|
|
|
Avalon Norwalk
|
|
Norwalk, CT
|
|
Q221
|
|
311
|
|
$
|
103,000
|
|
|
$
|
48,912
|
|
|
AVA Cortez Hill
|
|
San Diego, CA
|
|
Q221
|
|
299
|
|
$
|
96,500
|
|
|
$
|
75,716
|
|
|
Avalon Redmond Place
|
|
Redmond, WA
|
|
Q221
|
|
222
|
|
$
|
97,700
|
|
|
$
|
72,929
|
|
|
Avalon Bronxville
|
|
Bronxville, NY
|
|
Q221
|
|
110
|
|
$
|
89,000
|
|
|
$
|
71,773
|
|
|
Avalon Glen Cove & Avalon Glen Cove North
|
|
Glen Cove, NY
|
|
Q221
|
|
367
|
|
$
|
126,000
|
|
|
$
|
65,242
|
|
_________________________________
(1) Gain on disposition was reported in gain on sale of communities on the accompanying Condensed Consolidated Statements of Comprehensive Income.
At June 30, 2021, the Company had no real estate assets that qualified as held for sale.
The Park Loggia
The Park Loggia, located in New York, NY, contains 172 for-sale residential condominiums and 66,000 square feet of commercial space. During the three and six months ended June 30, 2021, the Company sold 16 and 26 residential condominiums at The Park Loggia, for gross proceeds of $38,392,000 and $53,001,000, respectively, resulting in a gain in accordance with GAAP of $575,000 and $706,000, respectively. As of June 30, 2021, there were 76 residential condominiums remaining to be sold. The Company incurred $1,222,000 and $1,196,000 during the three months ended June 30, 2021 and 2020, respectively, and $2,266,000 and $2,639,000 during the six months ended June 30, 2021 and 2020, respectively, in marketing, operating and administrative costs. All amounts are included in net for-sale condominium activity, on the accompanying Condensed Consolidated Statements of Comprehensive Income. As of June 30, 2021 and December 31, 2020, the unsold for-sale residential condominiums at The Park Loggia have an aggregate carrying value of $220,022,000 and $267,219,000, respectively, presented as for-sale condominium inventory on the accompanying Condensed Consolidated Balance Sheets.
7. Commitments and Contingencies
Lease Obligations
The Company owns nine apartment communities and two commercial properties, located on land subject to ground leases expiring between May 2041 and March 2142. The Company has purchase options for all ground leases expiring prior to 2060. The ground leases for eight of the nine apartment communities and the rest of the ground leases are operating leases, with rental expense recognized on a straight-line basis over the lease term. In addition, the Company is party to 13 leases for its corporate and regional offices with varying terms through 2031, all of which are operating leases.
As of June 30, 2021 and December 31, 2020, the Company has total operating lease assets of $129,064,000 and $133,581,000, respectively, and lease obligations of $157,305,000 and $161,313,000, respectively, reported as components of right of use lease assets and lease liabilities, respectively, on the accompanying Condensed Consolidated Balance Sheets. The Company incurred costs of $3,896,000 and $4,240,000 for the three months ended June 30, 2021 and 2020, respectively, and $7,723,000 and $8,157,000 for the six months ended June 30, 2021 and 2020, respectively, related to operating leases.
The Company has one apartment community located on land subject to a ground lease and three leases for portions of parking garages, adjacent to apartment communities, that are finance leases. As of June 30, 2021 and December 31, 2020, the Company has total finance lease assets of $25,371,000 and $21,685,000, respectively, and total finance lease obligations of $20,143,000 and $20,166,000, respectively, reported as components of right of use lease assets and lease liabilities, respectively, on the accompanying Condensed Consolidated Balance Sheets.
8. Segment Reporting
The Company's reportable operating segments include Same Store, Other Stabilized, and Development/Redevelopment. Annually as of January 1, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change. In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment.
The Company's segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing each segment's performance. The Company's chief operating decision maker ("CODM") is comprised of several members of its executive management team who use net operating income ("NOI") as the primary financial measure for Same Store communities and Other Stabilized communities. 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, (gain) loss on extinguishment of debt, net, general and administrative expense, income from investments in unconsolidated entities, depreciation expense, corporate income tax (benefit) expense, casualty and impairment (gain) loss, net, gain on sale of communities, (gain) loss on other real estate transactions, net, net for-sale condominium activity and net operating income from real estate assets sold or held for sale. The CODM evaluates the Company's financial performance on a consolidated residential and commercial basis, as the Company's commercial results attributable to the non-apartment components of the Company's mixed-use communities and other nonresidential operations represents 1.5% and 0.5% of total NOI for the three months ended June 30, 2021 and 2020, respectively, and 1.5% and 1.1% for the six months ended June 30, 2021 and 2020, respectively. Although the Company considers NOI a useful measure of a community's or communities' operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP. NOI excludes a number of income and expense categories as detailed in the reconciliation of NOI to net income.
A reconciliation of NOI to net income for the three and six months ended June 30, 2021 and 2020 is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
For the six months ended
|
|
|
6/30/2021
|
|
6/30/2020
|
6/30/2021
|
|
6/30/2020
|
|
Net income
|
$
|
447,977
|
|
|
$
|
170,869
|
|
$
|
590,211
|
|
|
$
|
338,875
|
|
|
Indirect operating expenses, net of corporate income
|
24,318
|
|
|
23,407
|
|
48,788
|
|
|
46,206
|
|
|
Expensed transaction, development and other pursuit costs, net of recoveries
|
1,653
|
|
|
388
|
|
1,483
|
|
|
3,722
|
|
|
Interest expense, net
|
56,104
|
|
|
53,399
|
|
108,717
|
|
|
109,313
|
|
|
Loss (gain) on extinguishment of debt, net
|
—
|
|
|
268
|
|
(122)
|
|
|
9,438
|
|
|
General and administrative expense
|
18,465
|
|
|
15,573
|
|
35,817
|
|
|
32,893
|
|
|
Income from investments in unconsolidated entities
|
(26,559)
|
|
|
(512)
|
|
(26,092)
|
|
|
(1,687)
|
|
|
Depreciation expense
|
184,472
|
|
|
176,249
|
|
367,769
|
|
|
354,160
|
|
|
Income tax expense (benefit)
|
10
|
|
|
(1,133)
|
|
(745)
|
|
|
(1,042)
|
|
|
Casualty and impairment loss
|
1,177
|
|
|
—
|
|
1,177
|
|
|
—
|
|
|
Gain on sale of communities
|
(334,569)
|
|
|
(35,295)
|
|
(388,296)
|
|
|
(59,731)
|
|
|
Gain on other real estate transactions, net
|
(32)
|
|
|
(156)
|
|
(459)
|
|
|
(199)
|
|
|
Net for-sale condominium activity
|
647
|
|
|
(1,348)
|
|
1,560
|
|
|
(4,808)
|
|
|
Net operating income from real estate assets sold or held for sale
|
(4,749)
|
|
|
(13,581)
|
|
(10,549)
|
|
|
(28,572)
|
|
|
Net operating income
|
$
|
368,914
|
|
|
$
|
388,128
|
|
$
|
729,259
|
|
|
$
|
798,568
|
|
The following is a summary of NOI from real estate assets sold or held for sale for the periods presented (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
For the six months ended
|
|
|
6/30/2021
|
|
6/30/2020
|
|
6/30/2021
|
|
6/30/2020
|
|
Rental income from real estate assets sold or held for sale
|
$
|
7,719
|
|
|
$
|
21,399
|
|
|
$
|
17,307
|
|
|
$
|
44,529
|
|
|
Operating expenses from real estate assets sold or held for sale
|
(2,970)
|
|
|
(7,818)
|
|
|
(6,758)
|
|
|
(15,957)
|
|
|
Net operating income from real estate assets sold or held for sale
|
$
|
4,749
|
|
|
$
|
13,581
|
|
|
$
|
10,549
|
|
|
$
|
28,572
|
|
The primary performance measure for communities under development or redevelopment depends on the stage of completion. While under development, management monitors actual construction costs against budgeted costs as well as lease-up pace and rent levels compared to budget.
The following table provides details of the Company's segment information as of the dates specified (dollars in thousands). The segments are classified based on the individual community's status at January 1, 2021. Segment information for the three and six months ended June 30, 2021 and 2020 has been adjusted to exclude the real estate assets that were sold from January 1, 2020 through June 30, 2021, or otherwise qualify as held for sale as of June 30, 2021, as described in Note 6, "Real Estate Disposition Activities."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
For the six months ended
|
|
|
|
|
Total
revenue
|
|
NOI
|
|
Total
revenue
|
|
NOI
|
|
Gross real estate (1)
|
|
For the period ended June 30, 2021
|
|
|
|
|
|
|
|
Same Store
|
|
|
|
|
|
|
|
|
|
|
New England
|
$
|
74,259
|
|
|
$
|
47,895
|
|
|
$
|
147,577
|
|
|
$
|
94,163
|
|
|
$
|
2,772,638
|
|
|
Metro NY/NJ
|
105,355
|
|
|
70,944
|
|
|
210,304
|
|
|
142,584
|
|
|
4,114,155
|
|
|
Mid-Atlantic
|
82,232
|
|
|
54,823
|
|
|
163,460
|
|
|
110,083
|
|
|
3,485,698
|
|
|
Southeast Florida
|
7,706
|
|
|
4,557
|
|
|
14,948
|
|
|
8,746
|
|
|
395,009
|
|
|
Denver, CO
|
5,853
|
|
|
3,935
|
|
|
11,505
|
|
|
7,954
|
|
|
319,994
|
|
|
Pacific Northwest
|
26,935
|
|
|
18,298
|
|
|
53,548
|
|
|
36,192
|
|
|
1,054,701
|
|
|
Northern California
|
89,591
|
|
|
63,506
|
|
|
179,997
|
|
|
127,569
|
|
|
3,450,054
|
|
|
Southern California
|
108,710
|
|
|
73,364
|
|
|
215,801
|
|
|
145,899
|
|
|
4,373,247
|
|
|
Total Same Store
|
500,641
|
|
|
337,322
|
|
|
997,140
|
|
|
673,190
|
|
|
19,965,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Stabilized
|
29,499
|
|
|
19,123
|
|
|
56,264
|
|
|
36,049
|
|
|
1,338,844
|
|
|
Development / Redevelopment
|
23,076
|
|
|
12,469
|
|
|
40,483
|
|
|
20,020
|
|
|
2,324,779
|
|
|
Land Held for Development
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
100,106
|
|
|
Non-allocated (2)
|
808
|
|
|
N/A
|
|
1,685
|
|
|
N/A
|
|
322,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
554,024
|
|
|
$
|
368,914
|
|
|
$
|
1,095,572
|
|
|
$
|
729,259
|
|
|
$
|
24,051,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period ended June 30, 2020
|
|
|
|
|
|
|
|
Same Store
|
|
|
|
|
|
|
|
|
|
|
New England
|
$
|
77,240
|
|
|
$
|
52,030
|
|
|
$
|
156,085
|
|
|
$
|
104,299
|
|
|
$
|
2,751,535
|
|
|
Metro NY/NJ
|
106,452
|
|
|
73,858
|
|
|
219,266
|
|
|
153,511
|
|
|
4,097,021
|
|
|
Mid-Atlantic
|
84,634
|
|
|
59,217
|
|
|
172,954
|
|
|
122,975
|
|
|
3,462,890
|
|
|
Southeast Florida
|
7,364
|
|
|
4,298
|
|
|
14,868
|
|
|
8,423
|
|
|
393,329
|
|
|
Denver, CO
|
5,166
|
|
|
3,326
|
|
|
10,335
|
|
|
6,666
|
|
|
318,833
|
|
|
Pacific Northwest
|
28,105
|
|
|
19,932
|
|
|
57,263
|
|
|
41,065
|
|
|
1,049,913
|
|
|
Northern California
|
103,867
|
|
|
79,384
|
|
|
210,744
|
|
|
161,263
|
|
|
3,427,805
|
|
|
Southern California
|
109,869
|
|
|
76,433
|
|
|
227,468
|
|
|
160,671
|
|
|
4,345,382
|
|
|
Total Same Store
|
522,697
|
|
|
368,478
|
|
|
1,068,983
|
|
|
758,873
|
|
|
19,846,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Stabilized
|
24,642
|
|
|
16,055
|
|
|
49,673
|
|
|
32,552
|
|
|
1,209,541
|
|
|
Development / Redevelopment
|
7,368
|
|
|
3,595
|
|
|
14,181
|
|
|
7,143
|
|
|
1,614,237
|
|
|
Land Held for Development
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
39,829
|
|
|
Non-allocated (2)
|
299
|
|
|
N/A
|
|
690
|
|
|
N/A
|
|
407,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
555,006
|
|
|
$
|
388,128
|
|
|
$
|
1,133,527
|
|
|
$
|
798,568
|
|
|
$
|
23,117,676
|
|
__________________________________
(1)Does not include gross real estate assets held for sale or classified as held for sale subsequent to June 30, 2020 of $672,125.
(2)Revenue represents third-party management, accounting, and developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment. Gross real estate includes the for-sale residential condominiums at The Park Loggia, as discussed in Note 6, "Real Estate Disposition Activities."
9. Stock-Based Compensation Plans
As part of its long-term compensation plans, the Company has granted stock options, performance awards and restricted stock. Details of the outstanding awards and activity are presented below.
Information with respect to stock options granted under the Company's Second Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan") for the three and six months ended June 30, 2021, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Plan
shares
|
|
Weighted average
exercise price
per share
|
|
Options Outstanding, December 31, 2020
|
|
12,506
|
|
|
$
|
129.35
|
|
|
Exercised
|
|
(2,126)
|
|
|
121.78
|
|
|
Granted (1)
|
|
294,115
|
|
|
180.32
|
|
|
Forfeited
|
|
(1,571)
|
|
|
180.32
|
|
|
Options Outstanding, June 30, 2021
|
|
302,924
|
|
|
$
|
178.63
|
|
|
Options Exercisable, June 30, 2021
|
|
10,380
|
|
|
$
|
130.90
|
|
__________________________________
(1)Includes 4,847 options resulting from recipient elections to receive a portion of earned restricted stock awards in the form of stock options.
The Company granted stock options in 2021 with the exercise price equal to the closing stock price on the date of grant. The stock options awarded in 2021 will cliff vest in two years on March 1, 2023 and they have a ten-year term. The Company used the Black-Scholes Option Pricing model to determine the grant date fair value of options. The assumptions used are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
Dividend yield
|
|
3.5%
|
|
Estimated volatility
|
|
27.1%
|
|
Risk free rate
|
|
0.81%
|
|
Expected life of options
|
|
5 years
|
|
Estimated fair value
|
|
$28.64
|
Information with respect to performance awards granted is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance awards
|
|
Weighted average grant date fair value per award
|
|
Outstanding at December 31, 2020
|
|
241,921
|
|
|
$
|
195.13
|
|
|
Granted (1)
|
|
138,033
|
|
|
191.12
|
|
|
Change in awards based on performance (2)
|
|
(37,469)
|
|
|
156.00
|
|
|
Converted to common shares
|
|
(56,545)
|
|
|
156.00
|
|
|
Forfeited
|
|
(240)
|
|
|
208.35
|
|
|
Outstanding at June 30, 2021
|
|
285,700
|
|
|
$
|
206.06
|
|
__________________________________
(1)The amount of common shares that ultimately may be earned is based on the total shareholder return metrics related to the Company's common stock for 69,064 performance awards and financial metrics related to operating performance, net asset value and leverage metrics of the Company for 68,969 performance awards.
(2)Represents the change in the number of performance awards earned based on performance achievement for the performance period.
The Company used a Monte Carlo model to assess the compensation cost associated with the portion of the performance awards granted in 2021 for which achievement will be determined by using total shareholder return measures. The assumptions used are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
Dividend yield
|
|
3.5%
|
|
Estimated volatility over the life of the plan (1)
|
|
22.0% - 49.0%
|
|
Risk free rate
|
|
0.06% - 0.38%
|
|
Estimated performance award value based on total shareholder return measure
|
|
$213.16
|
__________________________________
(1)Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.
For the portion of the performance awards granted in 2021 for which achievement will be determined by using financial metrics, the compensation cost was based on a weighted average grant date value of $178.38, and the Company's estimate of corporate achievement for the financial metrics.
Information with respect to restricted stock granted is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock shares
|
|
Restricted stock shares weighted average grant date fair value per share
|
|
Restricted stock shares converted from performance awards
|
|
Outstanding at December 31, 2020
|
|
131,724
|
|
|
$
|
203.28
|
|
|
146,319
|
|
|
Granted - restricted stock shares
|
|
94,641
|
|
|
176.32
|
|
|
—
|
|
|
Vested - restricted stock shares
|
|
(66,038)
|
|
|
192.17
|
|
|
(71,535)
|
|
|
Forfeited
|
|
(709)
|
|
|
197.01
|
|
|
—
|
|
|
Outstanding at June 30, 2021
|
|
159,618
|
|
|
$
|
191.92
|
|
|
74,784
|
|
Total employee stock-based compensation cost recognized in income was $12,897,000 and $11,624,000 for the six months ended June 30, 2021 and 2020, respectively, and total capitalized stock-based compensation cost was $4,599,000 and $6,174,000 for the six months ended June 30, 2021 and 2020, respectively. At June 30, 2021, there was a total unrecognized compensation cost of $57,078,000 for unvested restricted stock, stock options and performance awards, which does not include forfeitures, and is expected to be recognized over a weighted average period of 2.1 years. Forfeitures are included in compensation cost as they occur.
10. Related Party Arrangements
Unconsolidated Entities
The Company manages unconsolidated real estate entities for which it receives asset management, property management, development and redevelopment fee revenue. From these entities, the Company earned fees of $808,000 and $926,000 for the three months ended June 30, 2021 and 2020, respectively, and $1,685,000 and $1,933,000 for the six months ended June 30, 2021 and 2020, respectively. In addition, the Company had outstanding receivables associated with its property and construction management roles of $3,199,000 and $5,408,000 as of June 30, 2021 and December 31, 2020, respectively.
Director Compensation
The Company recorded non-employee director compensation expense relating to restricted stock grants and deferred stock units in the amount of $476,000 and $446,000 in the three months ended June 30, 2021 and 2020, respectively, and $941,000 and $901,000 in the six months ended June 30, 2021 and 2020, respectively, as a component of general and administrative expense. Deferred compensation relating to these restricted stock grants and deferred stock units to non-employee directors was $1,543,000 and $614,000 on June 30, 2021 and December 31, 2020, respectively, reported as a component of prepaid expenses and other assets on the accompanying Condensed Consolidated Balance Sheets.
11. Fair Value
Financial Instruments Carried at Fair Value
Derivative Financial Instruments
The Company uses interest rate swap and interest rate cap agreements to manage its interest rate risk. These instruments are carried at fair value in the Company's financial statements. In adjusting the fair value of its derivative contracts for the effect of counterparty nonperformance risk, the Company has considered the impact of its net position with a given counterparty, as well as any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. The Company minimizes its credit risk on these transactions by dealing with major, creditworthy financial institutions which have an A or better credit rating by the Standard & Poor's Ratings Group. As part of its on-going control procedures, the Company monitors the credit ratings of counterparties and the exposure of the Company to any single entity, thus reducing credit risk concentration. The Company believes the likelihood of realizing losses from counterparty nonperformance is remote. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, such as interest rate, term to maturity and volatility, the credit valuation adjustments associated with its derivatives use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of June 30, 2021, 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.
The following table summarizes the consolidated derivative positions at June 30, 2021 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Non-designated Hedges
|
Cash Flow Hedges
|
|
|
Interest Rate Caps
|
Interest Rate Swaps
|
|
Notional balance
|
$
|
410,950
|
$
|
150,000
|
|
Weighted average interest rate (1)
|
1.6
|
%
|
N/A
|
|
Weighted average swapped/capped interest rate
|
6.1
|
%
|
1.5
|
%
|
|
Earliest maturity date
|
July 2021
|
September 2021
|
|
Latest maturity date
|
February 2026
|
September 2021
|
____________________________________
(1)For debt hedged by interest rate caps, represents the weighted average interest rate on the hedged debt prior to any impact of the associated interest rate caps.
During the six months ended June 30, 2021, the Company terminated $150,000,000 of forward interest rate swap agreements for which hedge accounting was ceased in 2020, receiving a payment of $6,962,000. The Company recognized $2,894,000 of these proceeds as a gain in 2020, and $2,654,000 of these proceeds as a gain during the six months ended June 30, 2021 included in interest expense, net on the accompanying Condensed Consolidated Statements of Comprehensive Income.
In addition, during the three and six months ended June 30, 2021, the Company entered into $150,000,000 of new forward interest rate swap agreements executed to reduce the impact of variability in interest rates on a portion of the Company's expected debt issuance activity in 2021.
The Company is party to five derivatives not designated as hedges at June 30, 2021 for which the fair value changes for the three and six months ended June 30, 2021 and 2020 were not material.
The following table summarizes the deferred losses reclassified from accumulated other comprehensive loss as a component of interest expense, net (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
For the six months ended
|
|
|
6/30/2021
|
|
6/30/2020
|
|
6/30/2021
|
|
6/30/2020
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedge losses reclassified to earnings
|
$
|
2,366
|
|
|
$
|
2,301
|
|
|
$
|
4,733
|
|
|
$
|
4,250
|
|
The Company anticipates reclassifying approximately $9,467,000 of net hedging losses from accumulated other comprehensive loss into earnings within the next 12 months as an offset to the hedged item during this period.
Redeemable Noncontrolling Interests
The Company issued units of limited partnership interest in a DownREIT which provides 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, 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 DownREIT are valued using the market price of the Company's common stock, a Level 1 price under the fair value hierarchy.
Financial Instruments Not Carried at Fair Value
Cash and Cash Equivalents
Cash and cash equivalent balances are held with various financial institutions within accounts designed to preserve principal. The Company monitors credit ratings of these financial institutions and the concentration of cash and cash equivalent balances with any one financial institution and believes the likelihood of realizing material losses related to cash and cash equivalent balances is remote. Cash and cash equivalents are carried at their face amounts, which reasonably approximate their fair values and are Level 1 within the fair value hierarchy.
Other Financial Instruments
Rents and other receivables and prepaid expenses, accounts and construction payable and accrued expenses and other liabilities are carried at their face amounts, which reasonably approximate their fair values.
Indebtedness
The Company values its fixed rate unsecured notes using quoted market prices, a Level 1 price within the fair value hierarchy. The Company values its mortgage notes payable, variable rate unsecured notes, Term Loans and outstanding amounts under the Credit Facility using a discounted cash flow analysis on the expected cash flows of each instrument. This analysis reflects the contractual terms of the instrument, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The process also considers credit valuation adjustments to appropriately reflect the Company's nonperformance risk. The Company has concluded that the value of its mortgage notes payable, variable rate unsecured notes, Term Loans and outstanding amounts under the Credit Facility are Level 2 prices as the majority of the inputs used to value its positions fall within Level 2 of the fair value hierarchy.
Financial Instruments Measured/Disclosed at Fair Value on a Recurring Basis
The following tables summarize the classification between the three levels of the fair value hierarchy of the Company's financial instruments measured/disclosed at fair value on a recurring basis (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2021
|
|
Description
|
|
Total Fair Value
|
|
Quoted Prices
in Active
Markets for Identical Asset
(Level 1)
|
|
Significant
Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
|
|
|
|
|
Non Designated Hedges
|
|
|
|
|
|
|
|
|
|
Interest Rate Caps
|
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
97
|
|
|
$
|
—
|
|
|
Interest Rate Swaps - Assets
|
|
88
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
Interest Rate Swaps - Liabilities
|
|
(910)
|
|
|
—
|
|
|
(910)
|
|
|
—
|
|
|
DownREIT units
|
|
(1,565)
|
|
|
(1,565)
|
|
|
—
|
|
|
—
|
|
|
Indebtedness
|
|
|
|
|
|
|
|
|
|
Fixed rate unsecured notes
|
|
(7,061,205)
|
|
|
(7,061,205)
|
|
|
—
|
|
|
—
|
|
|
Mortgage notes payable, variable rate unsecured notes
and Term Loans
|
|
(1,007,522)
|
|
|
—
|
|
|
(1,007,522)
|
|
|
—
|
|
|
Total
|
|
$
|
(8,071,017)
|
|
|
$
|
(7,062,770)
|
|
|
$
|
(1,008,247)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2020
|
|
Description
|
|
Total Fair Value
|
|
Quoted Prices
in Active
Markets for Identical Asset
(Level 1)
|
|
Significant
Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
|
|
|
|
|
Non Designated Hedges
|
|
|
|
|
|
|
|
|
|
Interest Rate Caps
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
Interest Rate Swaps - Assets
|
|
4,308
|
|
|
—
|
|
|
4,308
|
|
|
—
|
|
|
DownREIT units
|
|
(1,203)
|
|
|
(1,203)
|
|
|
—
|
|
|
—
|
|
|
Indebtedness
|
|
|
|
|
|
|
|
|
|
Fixed rate unsecured notes
|
|
(7,271,799)
|
|
|
(7,271,799)
|
|
|
—
|
|
|
—
|
|
|
Mortgage notes payable, variable rate unsecured notes
and Term Loans
|
|
(1,043,976)
|
|
|
—
|
|
|
(1,043,976)
|
|
|
—
|
|
|
Total
|
|
$
|
(8,312,664)
|
|
|
$
|
(7,273,002)
|
|
|
$
|
(1,039,662)
|
|
|
$
|
—
|
|
12. Subsequent Events
The Company has evaluated subsequent events through the date on which this Form 10-Q was filed, the date on which these financial statements were issued, and did not identify any items for disclosure.