QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 77-0404318 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Page | ||||
|
||||
PART I FINANCIAL INFORMATION
|
||||
|
||||
Item 1. Condensed Consolidated Financial Statements
|
||||
|
||||
1 | ||||
|
||||
2 | ||||
|
||||
3-4 | ||||
|
||||
5-25 | ||||
|
||||
26-51 | ||||
|
||||
52 | ||||
|
||||
52 | ||||
|
||||
PART II OTHER INFORMATION
|
||||
|
||||
52-53 | ||||
|
||||
53 | ||||
|
||||
53 | ||||
|
||||
54 | ||||
|
||||
54 | ||||
|
||||
54 | ||||
|
||||
54-56 | ||||
|
||||
57 |
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share data)
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
$
220,067
$
209,612
$
438,278
$
412,146
2,077
1,579
3,545
3,217
222,144
211,191
441,823
415,363
68,368
61,145
133,527
120,898
20,731
19,018
42,474
38,015
37,385
29,598
66,631
57,258
53,737
47,648
106,377
93,589
5,390
9,383
12,637
17,503
20,302
20,302
205,913
166,792
381,948
327,263
492
3,800
3,949
3,833
16,723
48,199
63,824
91,933
5,101
9,921
74,139
74,139
79,240
84,060
16,723
127,439
63,824
175,993
951
(105
)
1,275
(210
)
17,674
127,334
65,099
175,783
(2,175
)
(4,350
)
$
17,674
$
125,159
$
65,099
$
171,433
421
774
797
538
$
18,095
$
125,933
$
65,896
$
171,971
$
0.22
$
0.60
$
0.82
$
1.14
1.03
1.09
$
0.22
$
1.63
$
0.82
$
2.23
$
0.22
$
0.59
$
0.82
$
1.13
1.02
1.08
$
0.22
$
1.61
$
0.82
$
2.21
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the six months ended
6-30-09
6-30-08
$
63,824
$
175,993
106,377
93,589
4,553
3,598
2,650
3,638
6,936
(4,288
)
(3,246
)
20,302
(1,062
)
(74,139
)
(775
)
(8,120
)
(5,843
)
(16,145
)
3,957
(42,946
)
189,728
139,125
(311,577
)
(419,079
)
(1,708
)
(1,659
)
(383
)
(2,280
)
148,660
(9,100
)
(15,895
)
47,413
89,402
(702
)
(1,900
)
(276,057
)
(202,751
)
1,114
3,470
(42,159
)
(139,928
)
(138,620
)
(124,000
)
(514,500
)
741,140
525,297
(27,774
)
(47,295
)
330,000
(206,173
)
(60,000
)
(7,727
)
(5,294
)
(202
)
(39
)
(114
)
(96
)
236,411
50,689
150,082
(12,937
)
65,706
20,284
$
215,788
$
7,347
$
57,402
$
53,609
As described in Note 4, Stockholders Equity, 2,624,641 shares of common stock valued
at $139,058 were issued as part of the special dividend declared in the fourth quarter of
2008, 169,851 shares of common stock valued at $8,360 were issued in connection with stock
grants, 5,623 shares valued at $307 were issued through the Companys dividend reinvestment
plan, 30,612 shares valued at $1,327 were withheld to satisfy employees tax withholding
and other liabilities and 1,031 shares valued at $147 were forfeited, for a net value of
$146,251. In addition, the Company granted 344,801 options for common stock at a value of
$2,252.
The Company recorded a decrease to other liabilities and a corresponding increase to
other comprehensive income of $797 to record the impact of the Companys hedge accounting
activity (as described in Note 5, Derivative Instruments and Hedging Activities).
Common dividends declared but not paid totaled $71,346.
The Company recorded a decrease of $2,827 in redeemable noncontrolling interests with a
corresponding increase to accumulated earnings less dividends to adjust the redemption
value associated with the put options held by joint venture partners and DownREIT
partnership units. For further discussion of the nature and valuation of these items, see
Note 11, Fair Value.
In May 2009, the Company obtained $93,440 in variable
rate tax-exempt bond financing
related to a Development Right, the proceeds of which will be held in escrow until
requisitioned for construction funding. This loan provides an option for the Company to
request an additional construction loan of up to $83,560 subject to the lenders
discretion.
129,513 shares of common stock valued at $11,567 were issued in connection with stock
grants, 2,070 shares valued at $181 were issued through the Companys dividend reinvestment
plan, 24,407 shares valued at $1,357 were issued to members of the Board of Directors in
fulfillment of a deferred stock award, 1,101 shares valued at $109 were forfeited and
37,992 shares valued at $3,481 were withheld to satisfy employees tax withholding and
other liabilities, for a net value of $9,515. In addition, the Company granted 401,212
options for common stock, net of forfeitures, at a value of $3,976.
The Company recorded an increase to other comprehensive income of $538 to record the
impact of the Companys hedge accounting activity.
Common and preferred dividends declared but not paid totaled $70,916.
The Company recorded a decrease of $4,065 in redeemable noncontrolling interests with a
corresponding increase to accumulated earnings less dividends to adjust the redemption
value associated with the put options held by joint venture partners and DownREIT
partnership units.
(Unaudited)
(Dollars in thousands, except per share data)
The Company completed the redevelopment of two communities: Essex Place, located in
Peabody, Massachusetts and Avalon Mountain View, located in Mountain View, California.
These two communities contain an aggregate of 534 apartment homes and were redeveloped for
a total capitalized cost of approximately $18,600, excluding costs incurred prior to
redevelopment.
The Company commenced the redevelopment of two communities: Avalon Pleasanton, located
in Pleasanton, California and Avalon Watch, located in West Windsor, New Jersey. These two
communities contain an aggregate of 968 apartment homes and will be redeveloped for an
estimated total capitalized cost of $38,300, excluding costs incurred prior to
redevelopment.
The Company completed a 5.86% fixed rate, pooled secured financing transaction for
aggregate borrowing of $741,140. The financing consists of fourteen separate mortgage
loans each with a 10-year term. Each loan provides for payment of interest only during the
first and second years of the loan term, with payment of principal and interest (based on a
30 year amortization schedule) thereafter and the remaining principal amount and any unpaid
interest due at maturity on the tenth anniversary.
The Company announced the second and final closing of AvalonBay Value Added Fund II, LP
(Fund II). In this closing, a new institutional investor was admitted and the Company
reduced its net investment and equity interest, resulting in total equity commitments to
Fund II increasing by $67,000.
Fund II acquired one community, see Note 6, Investments in Real Estate Entities.
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
79,662,223
76,753,951
79,210,349
76,714,437
15,888
64,019
17,648
64,019
364,183
760,647
670,290
706,267
80,042,294
77,578,617
79,898,287
77,484,723
$
17,674
$
125,159
$
65,099
$
171,433
(56
)
(406
)
(206
)
(575
)
$
17,618
$
124,753
$
64,893
$
170,858
79,662,223
76,753,951
79,210,349
76,714,437
$
0.22
$
1.63
$
0.82
$
2.23
$
17,674
$
125,159
$
65,099
$
171,433
14
57
39
114
$
17,688
$
125,216
$
65,138
$
171,547
80,042,294
77,578,617
79,898,287
77,484,723
$
0.22
$
1.61
$
0.82
$
2.21
6-30-09
12-31-08
$
1,571,190
$
1,672,965
224,400
330,000
1,635,410
901,181
718,888
646,311
4,149,888
3,550,457
124,000
$
4,149,888
$
3,674,457
(1)
Balances at June 30, 2009 and December 31, 2008 include $1,950 and $2,035
of debt discount, respectively.
In January 2009, the Company made a cash tender offer for any and all of its 7.5%
medium-term notes due in August 2009 and December 2010. The Company purchased $37,438
principal amount of its $150,000, 7.5% medium-term notes due in August 2009 at par. In
addition, the Company purchased $64,423 principal amount of its $200,000, 7.5% medium-term
notes due December 2010 at 98% of par, for approximately $63,135, representing a yield to
maturity of 8.66%. The Company recorded a gain of approximately $1,062 net of the write-off
of related deferred financing costs during the first quarter of 2009 in conjunction with
the purchase of the medium-term notes due December 2010 as a reduction in interest expense,
net. All of the notes purchased in the tender offer were cancelled. The Company had
previously acquired and cancelled an aggregate of $10,000 of the 7.5% medium-term notes due
in August 2009.
In April 2009, the Company completed a 5.86% fixed rate, pooled secured financing
transaction for aggregate borrowing of $741,140. The financing consists of fourteen
separate mortgage loans each with a 10-year term. Each loan provides for payment of
interest only during the first and second years of the loan term, with payment of principal
and interest (based on a 30 year amortization schedule) thereafter and the remaining
principal amount and any unpaid interest due at maturity on the tenth anniversary.
In April 2009, the Company repaid the $4,143 principal, 8.08% fixed rate loan secured by
a real estate asset formerly classified as a Development Right in Alexandria, Virginia
pursuant to its scheduled maturity.
In May 2009, the Company repaid $19,470 in variable rate debt secured by Avalon at
Flanders Hill, located in Westborough, Massachusetts.
In May 2009, the Company repaid $105,600 in unsecured debt, representing the first
tranche of its $330,000 unsecured variable rate term loan, pursuant to its scheduled
maturity.
In May 2009, the Company obtained $93,440 in variable rate tax exempt bond financing
related to a Development Right, the proceeds of which will be held in escrow until
requisitioned for construction funding. This loan provides an option for the Company to
request an additional construction loan of up to $83,560 subject to the lenders
discretion.
Stated
Unsecured
interest rate
Secured notes
Secured notes
notes
of unsecured
Year
payments
(1)
maturities
maturities
notes
$
3,295
$
34,230
$
102,562
7.500
%
6,097
29,388
135,577
7.500
%
112,200
1.570
%(2)
12,087
36,599
300,000
6.625
%
50,000
6.625
%
112,200
1.570
%(2)
14,560
120,601
250,000
6.125
%
235,000
5.500
%
14,656
318,370
100,000
4.950
%
15,537
33,100
150,000
5.375
%
14,481
365,072
15,342
250,000
5.750
%
16,260
18,300
17,234
369,114
899,976
$
498,663
$
1,855,636
$
1,797,539
(1)
Secured note payments are comprised of the principal pay downs for amortizing mortgage
notes.
(2)
The stated interest rate for variable-rate unsecured notes is the rate as of June 30, 2009.
Accumulated
Accumulated
Additional
earnings
other
Total
Common
paid-in
less
comprehensive
stockholders
stock
capital
dividends
loss
equity
$
771
$
2,940,499
$
(22,223
)
$
(2,932
)
$
2,916,115
65,099
65,099
797
797
2,827
2,827
(142,631
)
(142,631
)
28
137,975
1,203
139,206
9,296
9,296
$
799
$
3,087,770
$
(95,725
)
$
(2,135
)
$
2,990,709
(i)
issued 42,950 shares of common stock in connection with stock options exercised;
(ii)
issued 2,624,641 shares in connection with the dividend declared in December 2008;
(iii)
issued 5,623 shares through the Companys dividend reinvestment plan;
(iv)
issued 169,851 common shares in connection with stock grants;
(v)
withheld 30,612 shares to satisfy employees tax withholding and other liabilities; and
(vi)
had 1,031 shares of restricted stock forfeited.
Non-designated
Hedges
Cash Flow Hedges
Interest
Interest
Interest
Rate Caps
Rate Caps
Rate Swaps
$
149,847
$
15,994
$
44,199
1.7
%
1.9
%
6.5
%
7.0
%
6.0
%
n/a
Dec-09
Jun-12
Jun-10
Mar-14
Jun-12
Jun-10
$
404
$
35
$
(1,890
)
(1)
For interest rate caps, this represents the weighted average interest rate on the debt.
a 20% limited liability company membership interest (with a right to 50% of
distributions after achievement of a threshold return, which was achieved in the first
quarter of 2009) in the limited liability company that owns the Avalon Chrystie Place
community;
a 25% limited liability company membership interest (with a right to 45% of
distributions after achievement of a threshold return) in the limited liability company
that owns the Avalon at Mission Bay North II community;
a 30% limited liability company membership interest (with a right to 45% or the residual
distribution after the joint venture partners receive both a return of their initial
investment and an achievement of a threshold return on that investment) in the limited
liability company that owns the Avalon Del Rey community;
a 50% limited liability company membership interest (with a right to 95% of
distributions until the Company receives a return of our invested capital and a threshold
return thereon) in the limited liability company that is developing for-sale town homes
adjacent to the Companys Avalon Danvers community;
a 15.2% combined general partner and indirect limited partner equity interest in the
Fund (with the opportunity to receive as much as 20% of the Funds distributions in excess
of return of capital, as an additional distribution, based on the achievement of certain
threshold returns), which owns the following 19 communities: Avalon at Redondo Beach,
Avalon Lakeside, Avalon Columbia, Avalon Sunset, Avalon at Poplar Creek, Avalon at Civic
Center, Avalon Paseo Place, Avalon Yerba Buena, Avalon at Aberdeen Station, The Springs,
Avalon Lombard, Avalon Cedar Place, Avalon Crystal Hill, Middlesex Crossing, Avalon
Centerpoint, Skyway Terrace, Avalon Rutherford Station, South Hills
Apartments and Weymouth Place; and
a 31% combined general partner and indirect limited partner equity interest in Fund II
(with the opportunity to receive as much as 20% of Fund IIs distributions in excess of
return of capital, as an additional distribution, based on the achievement of certain
threshold returns). During the three months ended June 30, 2009, Fund II acquired Verona
Apartments located in Bellevue, WA for $33,100. Verona Apartments is a mid-rise style community
containing 220 apartment homes.
6-30-09
12-31-08
(unaudited)
(unaudited)
$
1,016,573
$
995,680
11,369
12,384
$
1,027,942
$
1,008,064
$
731,446
$
705,332
18,775
17,578
277,721
285,154
$
1,027,942
$
1,008,064
For the three months ended
(unaudited)
For the six months ended
(unaudited)
6-30-09
6-30-08
6-30-09
6-30-08
$
26,613
$
26,845
$
51,769
$
53,464
(13,727
)
(10,679
)
(25,583
)
(21,787
)
25,417
25,417
(9,279
)
(9,526
)
(18,181
)
(19,641
)
(8,222
)
(7,848
)
(16,028
)
(15,879
)
$
(4,615
)
$
24,209
$
(8,023
)
$
21,574
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
$
$
10,625
$
$
22,640
(3,276
)
(7,090
)
(546
)
(1,076
)
(1,702
)
(4,553
)
$
$
5,101
$
$
9,921
Established Communities (also known as Same Store Communities)
are 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 occupancy and operating
expenses as of the beginning of the prior year. For the year 2009, the Established
Communities are communities that are consolidated for financial reporting purposes,
had stabilized occupancy and operating expenses as of January 1, 2008, are not
conducting or planning to conduct substantial redevelopment activities and are not
held for sale or planned for disposition within the current year. A community is
considered to have
stabilized occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii)
the one-year anniversary of completion of development or redevelopment.
Other Stabilized Communities
includes all other completed communities that have
stabilized occupancy, as defined above. Other Stabilized Communities does not include
communities that are conducting or planning to conduct substantial redevelopment
activities within the current year.
Development/Redevelopment Communities
consists of communities that are under
construction and have not received a final certificate of occupancy, communities where
the company owns a majority interest and where substantial redevelopment is in
progress or is planned to begin during the current year and communities under lease-up
that had not reached stabilized occupancy, as defined above, as of January 1, 2009.
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
$
16,723
$
127,439
$
63,824
$
175,993
7,362
8,893
15,936
17,350
907
1,195
1,822
2,414
2,281
1,829
3,375
2,329
37,385
29,598
66,631
57,258
5,390
9,383
12,637
17,503
(492
)
(3,800
)
(3,949
)
(3,833
)
53,737
47,648
106,377
93,589
20,302
20,302
(74,139
)
(74,139
)
(5,101
)
(9,921
)
$
143,595
$
142,945
$
286,955
$
278,543
For the three months ended
For the six months ended
Total
% NOI change
Gross
Total
% NOI change
Gross
revenue
NOI
from prior year
real estate (1)
revenue
NOI
from prior year
real estate (1)
$
32,680
$
20,575
(8.3
)%
$
916,941
$
65,257
$
40,993
(5.6
)%
$
916,941
42,072
29,199
(3.5
)%
1,164,447
84,269
57,270
(3.8
)%
1,164,447
32,814
20,533
(3.8
)%
823,222
65,621
41,219
(2.2
)%
823,222
7,172
4,959
(6.8
)%
238,554
14,554
10,173
(3.3
)%
238,554
26,065
18,939
(5.1
)%
893,734
53,057
39,237
(1.7
)%
893,734
15,776
10,906
(8.6
)%
426,653
31,891
22,252
(7.1
)%
426,653
156,579
105,111
(5.5
)%
4,463,551
314,649
211,144
(3.8
)%
4,463,551
33,628
21,543
n/a
1,480,954
66,564
42,715
n/a
1,480,954
29,860
16,941
n/a
2,039,259
57,065
33,096
n/a
2,039,259
n/a
n/a
n/a
225,634
n/a
n/a
n/a
225,634
2,077
n/a
n/a
71,044
3,545
n/a
n/a
71,044
$
222,144
$
143,595
0.5
%
$
8,280,442
$
441,823
$
286,955
3.0
%
$
8,280,442
$
31,939
$
21,233
5.5
%
$
821,922
$
63,374
$
41,130
3.4
%
$
821,922
36,197
25,265
2.8
%
929,972
71,901
49,531
2.2
%
929,972
31,231
20,250
6.8
%
761,892
61,870
39,874
5.3
%
761,892
5,359
3,904
8.9
%
174,544
10,683
7,727
10.0
%
174,544
31,718
23,592
9.6
%
1,037,118
63,181
47,189
10.3
%
1,037,118
15,351
11,063
0.8
%
375,561
30,741
22,169
1.3
%
375,561
151,795
105,307
5.6
%
4,101,009
301,750
207,620
5.0
%
4,101,009
27,888
18,357
n/a
1,010,672
55,030
36,044
n/a
1,010,672
29,929
19,281
n/a
2,123,734
55,366
34,879
n/a
2,123,734
n/a
n/a
n/a
310,296
n/a
n/a
n/a
310,296
1,579
n/a
n/a
47,638
3,217
n/a
n/a
47,638
$
211,191
$
142,945
13.7
%
$
7,593,349
$
415,363
$
278,543
12.7
%
$
7,593,349
(1)
Does not include gross real estate assets held for sale of $0 and $263,768 as of June
30, 2009 and 2008, respectively.
(2)
Revenue represents third-party management, accounting and developer fees and
miscellaneous income which are not allocated to a reportable segment.
Weighted
average
1994 Plan
exercise price
shares
per share
2,623,135
$
83.49
(42,950
)
34.05
344,801
48.60
(13,365
)
103.86
2,911,621
$
79.99
2,187,979
$
80.97
Puts The Company provided redemption options (the Puts) that allow two of our joint
venture partners to require the Company to purchase their interests in the investments at
the future fair market value. One Put is payable in cash or, at the Companys option,
common shares of the Company, and the second is payable in cash. The Company determines the
fair value of the Puts based on unobservable inputs considering the assumptions that market
participants would make in pricing the obligations, including applying discount factors to
the estimated future cash flows of the asset underlying the associated joint venture, which
in the case of the Puts is the NOI from an apartment community, as well as potential
disposition proceeds utilizing market capitalization rates, to derive the fair value of the
position. Given the significance of the unobservable inputs, the valuations are classified
in Level 3 of the fair value hierarchy. At December 31, 2008, the Puts aggregate fair
value was $9,057. At June 30, 2009, the aggregate fair value of the Puts was $5,273.
DownREIT units The Company issued units of limited partnership interest in DownREITs
which provide the DownREIT limited partners the ability to present all or some of their
units for redemption for a cash amount as determined by the applicable partnership
agreement. Under the DownREIT
agreements, for each limited partnership unit, the limited partner is entitled to receive
cash in the amount equal to the fair value of the Companys 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 in the Companys common stock. The limited partnership
units in DownREITs are valued using the market price of the Companys common stock, a Level
1 price under the fair value hierarchy. At December 31, 2008, the fair value of the DownREIT
units was $1,177. At June 30, 2009, the fair value of the DownREIT units was $859.
Net income attributable to common stockholders for the quarter ended June 30, 2009 was
$17,674,000, as compared to $125,159,000 for the quarter ended June 30, 2008, a decrease of
85.9%. The decrease is attributable primarily to gains on assets sold during 2008 not
present in 2009, coupled with charges for an impairment of land parcels which we no longer
intend to develop, the abandonment of development pursuits and an associated severance
charge recognized in the second quarter of 2009.
The results for the quarter ended June 30, 2009 reflect the current recessionary
environment. Our Established Community portfolio (as defined later in this report)
experienced a 5.5% decrease in net operating income (NOI) over the comparable period of
2008, driven by a 2.8% decrease in rental revenue and an increase in operating expenses of
3.4%. The rental revenue decline over the comparable period in 2008, attributable
primarily to downward pressure on rental rates and increased job losses, was largely
consistent with our expectations.
a new institutional investor made an equity commitment of $75,000,000;
an existing institutional investor increased its commitment by $17,000,000, based on
terms of its existing commitment; and
we decreased our commitment by $25,000,000, based on terms of our existing commitment,
decreasing our equity interest to approximately 31%.
Established Communities (also known as Same Store Communities)
are
consolidated communities where a comparison of operating results from
the prior year to the current year is meaningful, as these communities
were owned and had stabilized occupancy and operating expenses as of the
beginning of the prior year. For the period ended June 30, 2009, the
Established Communities are communities that are consolidated for
financial reporting purposes, had stabilized occupancy and operating
expenses as of January 1, 2008, are not conducting or planning to
conduct substantial redevelopment activities and are not held for sale
or planned for disposition within the current year. A community is
considered to have stabilized occupancy at the earlier of (i) attainment
of 95% physical occupancy or (ii) the one-year anniversary of completion
of development or redevelopment.
Other Stabilized Communities
are all other completed communities that
we own or have a direct or indirect ownership interest in, and that have
stabilized occupancy, as defined above. Other Stabilized Communities do
not include communities that are conducting or planning to conduct
substantial redevelopment activities within the current year.
Lease-Up Communities
are communities where construction has been
complete for less than one year and where physical occupancy has not
reached 95%.
Redevelopment Communities
are communities where the Company owns a
majority interest and where substantial redevelopment is in progress or
is planned to begin during the current year. Redevelopment is
considered substantial when capital invested during the reconstruction
effort is expected to exceed either $5,000,000 or 10% of the communitys
pre-development basis.
Number of
Number of
communities
apartment homes
24
5,807
19
6,307
17
6,683
8
1,943
16
4,624
12
3,679
96
29,043
11
3,171
9
2,534
8
2,138
3
653
14
3,645
8
1,426
53
13,567
6
1,289
7
2,577
162
46,476
12
4,035
26
6,688
For the three months ended
For the six months ended
6-30-09
6-30-08
$ Change
% Change
6-30-09
6-30-08
$ Change
% Change
$
220,067
$
209,612
$
10,455
5.0
%
$
438,278
$
412,146
$
26,132
6.3
%
2,077
1,579
498
31.5
%
3,545
3,217
328
10.2
%
222,144
211,191
10,953
5.2
%
441,823
415,363
26,460
6.4
%
55,546
47,650
7,896
16.6
%
108,652
95,587
13,065
13.7
%
20,731
19,018
1,713
9.0
%
42,474
38,015
4,459
11.7
%
76,277
66,668
9,609
14.4
%
151,126
133,602
17,524
13.1
%
9,634
10,471
(837
)
(8.0
%)
19,678
20,568
(890
)
(4.3
%)
907
1,195
(288
)
(24.1
%)
1,822
2,414
(592
)
(24.5
%)
2,281
1,829
452
24.7
%
3,375
2,329
1,046
44.9
%
37,385
29,598
7,787
26.3
%
66,631
57,258
9,373
16.4
%
53,737
47,648
6,089
12.8
%
106,377
93,589
12,788
13.7
%
5,390
9,383
(3,993
)
(42.6
%)
12,637
17,503
(4,866
)
(27.8
%)
20,302
20,302
N/A
20,302
20,302
N/A
129,636
100,124
29,512
29.5
%
230,822
193,661
37,161
19.2
%
492
3,800
(3,308
)
(87.1
%)
3,949
3,833
116
3.0
%
16,723
48,199
(31,476
)
(65.3
%)
63,824
91,933
(28,109
)
(30.6
%)
5,101
(5,101
)
(100.0
%)
9,921
(9,921
)
(100.0
%)
74,139
(74,139
)
(100.0
%)
74,139
(74,139
)
(100.0
%)
79,240
(79,240
)
(100.0
%)
84,060
(84,060
)
(100.0
%)
16,723
127,439
(110,716
)
(86.9
%)
63,824
175,993
(112,169
)
(63.7
%)
951
(105
)
1,056
N/A
1,275
(210
)
1,485
N/A
17,674
127,334
(109,660
)
(86.1
%)
65,099
175,783
(110,684
)
(63.0
%)
(2,175
)
2,175
(100.0
%)
(4,350
)
4,350
(100.0
%)
$
17,674
$
125,159
$
(107,485
)
(85.9
%)
$
65,099
$
171,433
$
(106,334
)
(62.0
%)
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
$
16,723
$
127,439
$
63,824
$
175,993
7,362
8,893
15,936
17,350
907
1,195
1,822
2,414
2,281
1,829
3,375
2,329
37,385
29,598
66,631
57,258
5,390
9,383
12,637
17,503
(492
)
(3,800
)
(3,949
)
(3,833
)
53,737
47,648
106,377
93,589
20,302
20,302
(74,139
)
(74,139
)
(5,101
)
(9,921
)
$
143,595
$
142,945
$
286,955
$
278,543
For the three months ended
For the six months ended
6-30-09
6-30-09
$
(6,128
)
$
(8,380
)
4,517
13,612
2,261
3,180
$
650
$
8,412
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
$
156,457
$
160,938
$
314,430
$
320,008
2,182
1,647
4,354
3,283
(2,231
)
(2,178
)
(4,061
)
(3,467
)
$
156,408
$
160,407
$
314,723
$
319,824
(2.8
%)
(1.7
%)
(2.5
%)
(1.6
%)
gains or losses on sales of previously depreciated operating communities;
extraordinary gains or losses (as defined by GAAP);
depreciation of real estate assets; and
adjustments for unconsolidated partnerships and joint ventures.
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
$
17,674
$
127,334
$
65,099
$
175,783
(2,175
)
(4,350
)
54,126
50,258
107,651
100,044
14
57
39
114
(3,483
)
(3,483
)
(74,139
)
(74,139
)
$
71,814
$
97,852
$
172,789
$
193,969
80,042,294
77,578,617
79,898,287
77,484,723
$
0.22
$
1.61
$
0.82
$
2.21
$
0.90
$
1.26
$
2.16
$
2.50
For the three months ended
For the six months ended
6-30-09
6-30-08
6-30-09
6-30-08
$
98,907
$
119,548
$
189,728
$
139,125
$
(146,376
)
$
(45,806
)
$
(276,057
)
$
(202,751
)
$
172,922
$
(335,833
)
$
236,411
$
50,689
development and redevelopment activity in which we are currently engaged;
the minimum dividend payments on our common stock required to maintain our REIT
qualification under the Internal Revenue Code of 1986;
debt service and maturity payments;
normal recurring operating expenses;
DownREIT partnership unit distributions; and
capital calls for the Fund and Fund II, as required.
We had capital expenditures of $2,091,000 for real estate and non-real estate assets.
We invested approximately $311,577,000 in the development of communities.
limitations on the amount of total and secured debt in relation to our overall capital
structure;
limitation on the amount of our unsecured debt relative to the undepreciated basis of
real estate assets that are not encumbered by property-specific financing; and
minimum levels of debt service coverage.
In April 2009, we entered into a loan facility with Deutsche Bank Berkshire Mortgage,
Inc. on behalf of Freddie Mac. Under this facility, we completed a 5.86% fixed-rate
secured financing for $741,140,000 pursuant to fourteen separate ten-year mortgage loans,
each secured by one of our current communities. Each of the loans provides for payments of
interest only during the first two years of the loan term, with payments of principal and
interest (based on a 30 year amortization schedule) thereafter and the remaining principal
amount and any unpaid interest due at maturity on the tenth anniversary. In each case the
borrower under the loan is one of our subsidiaries or affiliates that owns the community.
The loans are generally non-recourse to us and the borrowers. Each of the notes evidencing
the loans is coterminous and subject to (i) a Master Cross-Collateralization Agreement,
which provides for cross-collateralization of all of the loans and a cross-default and
acceleration of all of the loans if there is an event of default under one
of the loans and (ii) a Master Substitution Agreement, which provides for the substitution
of collateral under certain circumstances;
we obtained $93,440,000 in variable rate tax exempt bond financing related to a
Development Right, the proceeds of which will be held in escrow until requisitioned for
construction funding. This loan provides an option for us to request an additional
construction loan of up to $83,560,000 subject to the lenders discretion;
we repaid $4,143,000 in 8.08% fixed rate debt secured by a real estate asset formerly
classified as a Development Right in Alexandria, VA in April 2009;
we redeemed $37,438,000 principal amount of our $150,000,000, 7.5% unsecured notes that
mature in August 2009 for par and cancelled the notes upon purchase;
we redeemed $64,423,000 principal amount of our $200,000,000, 7.5% unsecured notes that
mature in December 2010 for $63,135,000 with the discount below par recorded as a gain
reflected as a reduction in interest expense and cancelled the notes upon purchase;
we repaid $105,600,000 in unsecured debt, representing the first tranche of our
$330,000,000 unsecured variable rate term loan; and
we repaid $19,470,000 in variable rate debt secured by Avalon at Flanders Hill, located
in Westborough, Massachussets.
All-In
Principal
interest
maturity
Balance outstanding
Scheduled maturities
Community
rate (1)
date
12-31-08
6-30-09
2009
2010
2011
2012
2013
Thereafter
6.46
%
Mar-2012
$
14,680
$
14,326
$
365
$
766
$
816
$
12,379
$
$
5.17
%
Jul-2024
9,780
9,780
9,780
6.94
%
Feb-2025
11,665
11,449
223
466
495
526
559
9,180
6.49
%
Jun-2025
30,914
30,406
(2)
30,406
6.51
%
Jun-2025
14,023
13,793
(2)
13,793
7.79
%
May-2027
9,988
9,854
140
295
316
339
364
8,400
7.49
%
Jul-2041
16,940
16,868
75
157
168
180
193
16,095
7.54
%
Apr-2043
16,795
16,729
67
142
152
162
173
16,033
6.15
%
Oct-2047
41,834
41,670
168
349
368
388
409
39,988
166,619
164,875
1,038
2,175
2,315
13,974
1,698
143,675
1.97
%
Oct-2010
30,142
29,772
384
29,388
1.09
%
Jul-2014
33,100
33,100
(4)
33,100
1.14
%
Feb-2017
18,300
18,300
(4)
18,300
1.40
%
Jun-2025
7,635
7,635
(4)
7,635
1.31
%
Jun-2025
20,800
20,800
(4)
20,800
1.89
%
Jun-2025
7,886
8,394
(2)
8,394
1.91
%
Jun-2025
3,577
3,807
(2)
3,807
1.32
%
Nov-2037
93,800
93,800
93,800
1.75
%
Nov-2039
48,500
48,500
(5)
48,500
1.76
%
Jul-2040
45,000
45,000
(5)
45,000
2.08
%
Nov-2040
100,000
100,000
(5)
100,000
0.27
%
May-2012
93,440
(5)
93,440
3.04
%
Mar-2046
116,000
116,000
(5)
116,000
2.95
%
Mar-2046
10,000
10,000
(5)
10,000
534,740
628,548
384
29,388
93,440
505,336
7.63
%
Aug-2009
140,000
102,562
(7)
102,562
7.67
%
Dec-2010
200,000
135,577
(8)
135,577
6.79
%
Sep-2011
300,000
300,000
300,000
6.31
%
Sep-2011
50,000
50,000
50,000
5.74
%
Jan-2012
235,000
235,000
(9)
235,000
6.26
%
Nov-2012
250,000
250,000
250,000
5.11
%
Mar-2013
100,000
100,000
100,000
5.52
%
Apr-2014
150,000
150,000
150,000
5.89
%
Sep-2016
250,000
250,000
250,000
7.25
%
Oct-2011
7,801
7,691
113
239
7,339
5.55
%
Jul-2028
6,218
6,132
87
183
193
204
216
5,249
Apr-2009
4,175
7.77
%
Jul-2033
19,322
19,169
158
333
357
382
409
17,530
4.81
%
Apr-2013
170,125
170,125
170,125
5.07
%
Apr-2013
94,572
94,572
94,572
5.59
%
May-2015
110,600
110,600
110,600
5.73
%
Jul-2015
150,000
150,000
150,000
6.22
%
Nov-2015
51,749
51,461
315
660
702
746
793
48,245
6.12
%
Nov-2015
62,400
62,045
387
811
861
914
971
58,101
6.10
%
Dec-2013
55,100
55,100
693
734
53,673
4.00
%
Jul-2066
2,500
2,500
2,500
5.90
%
May-2019
21,130
183
285
301
20,361
5.91
%
May-2019
41,321
357
557
589
39,818
5.91
%
May-2019
65,695
568
885
937
63,305
5.92
%
May-2019
36,630
317
493
522
35,298
5.92
%
May-2019
39,250
339
529
560
37,822
6.02
%
May-2019
66,237
572
892
945
63,828
6.05
%
May-2019
78,565
679
1,058
1,120
75,708
6.01
%
May-2019
59,010
510
795
841
56,864
6.01
%
May-2019
45,850
396
618
654
44,182
5.90
%
May-2019
77,700
672
1,047
1,108
74,873
5.90
%
May-2019
26,698
231
360
381
25,726
5.89
%
May-2019
53,980
467
727
770
52,016
5.89
%
May-2019
73,269
633
987
1,045
70,604
5.89
%
May-2019
55,805
482
752
796
53,775
2,409,562
3,043,674
103,622
137,803
366,551
497,965
431,328
1,506,405
May-2009
19,735
2.34
%
Dec-2009
34,945
34,230
(4)
34,230
2.24
%
Mar-2011
31,530
30,990
(4)
561
1,169
29,260
1.88
%
May-2012
16,361
16,121
(4)
252
527
560
14,782
3.39
%
Mar-2046
9,000
9,000
(5)
9,000
0.00
%
May-2009
105,600
1.95
%
Jan-2010
112,200
112,200
112,200
1.81
%
Jan-2011
112,200
112,200
112,200
441,571
314,741
35,043
113,896
142,020
14,782
9,000
$
3,552,492
$
4,151,838
$
140,087
$283,262
$
510,886
$
620,161
$
433,026
$
2,164,416
(1)
Includes credit enhancement fees, facility fees, trustees fees and other fees.
(2)
Financed by variable rate, tax-exempt debt, but the interest rate on a portion of this debt
is effectively fixed at June 30, 2009 and December 31, 2008 through a swap agreement. The
portion of the debt fixed through a swap agreement decreases (and therefore the variable
portion of the debt increases) monthly as payments are made to a principal reserve fund.
(3)
Variable rates are given as of June 30, 2009.
(4)
Financed by variable rate debt, but interest rate is capped through an interest rate
protection agreement.
(5)
Represents full amount of the debt as of June 30, 2009. Actual amounts drawn on the debt as
of June 30, 2009 are $45,811 for Bowery Place II, $44,536 for Avalon Acton, $88,115 for
Morningside Park, $35,345 for Walnut Creek, and $0 for West Chelsea.
(6)
Balances outstanding represent total amounts due at maturity,
and are not net of $1,950 of
debt discount as of June 30, 2009 and $2,035 of debt discount as of December 31, 2008, as
reflected in unsecured notes on our Condensed Consolidated Balance Sheets included elsewhere
in this report.
(7)
In April 2008, we redeemed $10,000 aggregate principal amount of our $150,000, 7.5% unsecured
notes due in August 2009. In January 2009, we redeemed $37,438 principal amount of our
$150,000, 7.5% unsecured notes due August 2009.
(8)
In January 2009, we redeemed $64,423 principal amount of our $200,000, 7.5% unsecured notes
due December 2010.
(9)
In November 2008, we redeemed $15,000 aggregate principal amount of our $250,000, 5.5%
unsecured notes due January 2012.
cash currently on hand, including cash in construction escrows, invested in highly liquid
overnight money market funds and repurchase agreements, and short-term investment vehicles;
the remaining capacity under our $1,000,000,000 Credit Facility;
retained operating cash;
the net proceeds from sales of existing communities;
the issuance of debt or equity securities; and/or
private equity funding, including joint venture activity.
CVP I, LLC has outstanding tax-exempt, variable rate bonds maturing in November 2036 in
the amount of $117,000,000, which have permanent credit enhancement. We have agreed to
guarantee, under limited circumstances, the repayment to the credit enhancer of any
advances it may make in fulfillment of CVP I, LLCs repayment obligations under the bonds
.
We have also guaranteed to the credit enhancer that CVP I, LLC will obtain a final
certificate of occupancy for the project (Chrystie Place in New York City), which is
expected in 2010. Our 80% partner in this venture has agreed that it will reimburse us its
pro rata share of any amounts paid relative to these guaranteed obligations. The estimated
fair value of, and our obligation under these guarantees, both at inception and as of June
30, 2009 were not significant. As a result we have not recorded any obligation associated
with these guarantees at June 30, 2009.
The Fund has 22 loans secured by individual assets with amounts outstanding in the
aggregate of $436,556,000, with varying maturity dates (or dates after which the loans can
be prepaid), ranging from October 2011 to September 2016. These mortgage loans are secured
by the underlying real estate. The Fund also has $3,000,000 outstanding under a credit
facility as of June 30, 2009, that matures in December 2009. The mortgage loans and the
credit facility are payable by the Fund with operating cash flow or disposition proceeds
from the underlying real estate, and the credit facility is secured by capital commitments.
We have not guaranteed the debt of the Fund, nor do we have any obligation to fund this
debt should the Fund be unable to do so.
In addition, as part of the formation of the Fund, we have provided to one of the limited
partners a guarantee. The guarantee provides that if, upon final liquidation of the Fund,
the total amount of all distributions to that partner during the life of the Fund (whether
from operating cash flow or property sales) does not equal a minimum of the total capital
contributions made by that partner, then we will pay the partner an amount equal to the
shortfall, but in no event more than 10% of the total capital contributions made by the
partner (maximum of approximately $7,192,000 as of June 30, 2009). As of June 30, 2009, the
expected realizable value of the real estate assets owned by the Fund is considered adequate
to cover such potential payment to that partner under the expected Fund liquidation
scenario. The estimated fair value of, and our obligation under this guarantee, both at
inception and as of June 30, 2009 was not significant and therefore we have not recorded any
obligation for this guarantee as of June 30, 2009.
Fund II has one loan secured by an asset in the amount of $21,515,000 with a maturity of
June 2019. This loan is payable by Fund II.
In addition, as part of the formation of Fund II, we have provided to one of the limited
partners a guarantee. The guarantee provides that if, upon final liquidation of Fund II,
the total amount of all distributions to that partner during the life of the Fund (whether
from operating cash flow or property sales) does not equal a minimum of the total capital
contributions made by that partner, then we will pay the partner an amount equal to the
shortfall, but in no event more than 10% of the total capital contributions made by the
partner
(maximum of approximately $412,500 as of June 30, 2009). As of June 30, 2009, the
expected realizable value of the real estate assets owned by Fund II is considered adequate
to cover such potential payment to that partner under the expected Fund II liquidation
scenario. The estimated fair value of, and our obligation under this guarantee, both at
inception and as of June 30, 2009 was not significant and therefore we have not recorded any
obligation for this guarantee as of June 30, 2009.
MVP I, LLC, the entity that owns Avalon at Mission Bay North II, has a loan secured by
the underlying real estate assets of the community for $105,000,000. The loan is a
fixed rate, interest-only note bearing interest at 6.02%, maturing in December 2015. We
have not guaranteed the debt of MVP I, LLC, nor do we have any obligation to fund this debt
should MVP I, LLC be unable to do so.
Avalon Del Rey Apartments, LLC has a loan secured by the underlying real estate assets
of the community for $46,366,000 maturing in April 2016. The
variable rate loan had an
interest rate of 3.66% at June 30, 2009. We have not guaranteed the debt of Avalon Del Rey
Apartments, LLC, nor do we have any obligation to fund this debt should Avalon Del Rey
Apartments, LLC be unable to do so.
Aria at Hathorne Hill, LLC is a joint venture in which we have a non-managing member
interest. The LLC is developing for-sale town homes in Danvers, Massachusetts. The LLC
has three separate variable rate loans with aggregate borrowings of $4,124,000 and a
weighted average interest rate of 2.93% at June 30, 2009. We have not guaranteed the debt
of Aria at Hathorne, nor do we have any obligation to fund this debt should Aria at
Hathorne be unable to do so.
PHVP I, LLC, a consolidated joint venture in which we hold a 99.0% controlling interest,
is constructing a public garage adjacent to our Walnut Creek development. As part of the
construction management services we provide to PHVP I, LLC for the construction of the
public garage, we have provided a construction completion guarantee to the related lender
in order to fulfill their standard financing requirements related to the garage
construction financing. Our obligations under this guarantee terminate upon (i) the
issuance of a certificate of substantial completion and (ii) completion of a list of lender
requirements. The certificate of substantial completion was issued on July 11, 2008 and
the completion of the lenders requirements list is nearing completion. We expect
termination of the guarantee in 2009.
In 2007 we entered into a non-cancelable commitment (the Commitment) to acquire
parcels of land in Brooklyn, New York for an aggregate purchase price of approximately
$111,000,000. Under the terms of the Commitment, we are closing on the various parcels
over a period determined by the sellers ability to execute unrelated purchase transactions
and achieve deferral of gains for the land sold under this Commitment. However, under no
circumstances will the Commitment extend beyond 2011, at which time either we or the seller
can compel execution of the remaining transactions. At June 30, 2009, we have an
outstanding commitment to purchase the remaining land for approximately $62,500,000.
Total
Number of
capitalized
apartment
cost (1)
Construction
Initial
Estimated
Estimated
homes
($ millions)
start
occupancy (2)
completion
stabilization (3)
1.
407
$
153.0
Q2 2007
Q3 2008
Q4 2009
Q2 2010
2.
251
102.3
Q2 2007
Q4 2008
Q3 2009
Q1 2010
3.
439
120.9
Q3 2007
Q1 2009
Q4 2009
Q2 2010
4.
260
150.0
Q4 2007
Q2 2009
Q4 2009
Q2 2010
5.
279
77.4
Q4 2007
Q2 2009
Q1 2010
Q3 2010
6.
631
306.8
Q4 2007
Q4 2009
Q1 2011
Q3 2011
7.
200
47.8
Q1 2008
Q1 2009
Q3 2009
Q1 2010
8.
276
46.6
Q2 2008
Q1 2009
Q4 2009
Q2 2010
9.
422
151.7
Q3 2008
Q3 2010
Q1 2011
Q3 2011
10.
311
86.4
Q3 2008
Q3 2010
Q2 2011
Q4 2011
11.
163
27.4
Q4 2008
Q2 2009
Q4 2009
Q2 2010
12.
396
126.1
Q4 2008
Q2 2010
Q2 2011
Q4 2011
4,035
$
1,396.4
(1)
Total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees. Total capitalized cost for communities identified as having joint venture ownership, either during construction or upon construction
completion, represents the total projected joint venture contribution amount.
(2)
Future initial occupancy dates are estimates. There can be no assurance that we will pursue to completion any or all of these proposed developments.
(3)
Stabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
(4)
This community is being financed in part by third party, tax-exempt debt.
Total cost
Number of
($ millions)
Estimated
Estimated
apartment
Pre-redevelopment
Total capitalized
Reconstruction
reconstruction
restabilized
homes
cost
cost (1)
start
completion
operations (2)
1.
663
$
72.1
$
110.6
Q4 2007
Q3 2010
Q1 2011
2.
154
25.3
30.6
Q4 2007
Q4 2010
Q2 2011
3.
176
9.4
14.2
Q2 2008
Q3 2009
Q1 2010
4.
216
36.4
42.6
Q2 2008
Q3 2009
Q1 2010
5.
400
71.0
94.4
Q3 2008
Q3 2010
Q1 2011
6.
456
63.0
80.9
Q2 2009
Q4 2011
Q2 2012
7.
512
30.2
50.6
Q2 2009
Q1 2012
Q3 2012
2,577
$
307.4
$
423.9
(1)
Total capitalized cost includes all capitalized costs projected to be or actually incurred
to develop the respective 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, all as determined
in accordance with GAAP.
(2)
Restabilized operations is defined as the earlier of (i) attainment of 95% or greater
physical occupancy or (ii) the one-year anniversary of completion of redevelopment.
Total
Estimated
capitalized
number
cost
Location
of homes
($ millions) (1)
1.
210
$
78
2.
219
43
3.
288
77
4.
180
34
5.
92
20
6.
406
92
7.
204
58
8.
82
18
9.
173
65
10.
100
30
11.
156
43
12.
139
51
13.
691
307
14.
251
66
15.
249
54
16.
405
126
17.
200
38
18.
164
47
19.
861
443
20.
180
97
21.
240
62
22.
130
22
23.
343
57
24.
338
87
25.
272
81
26.
115
26
6,688
$
2,122
(1)
Total capitalized cost includes all capitalized costs incurred to date (if any) and projected
to be incurred to develop the respective community, determined in accordance with GAAP,
including land acquisition costs, construction costs, real estate taxes, capitalized interest
and loan fees, permits, professional fees, allocated development overhead and other regulatory
fees.
our potential development, redevelopment, acquisition or disposition of communities;
the timing and cost of completion of apartment communities under construction,
reconstruction, development or redevelopment;
the timing of lease-up, occupancy and stabilization of apartment communities;
the pursuit of land on which we are considering future development;
the anticipated operating performance of our communities;
cost, yield, revenue, NOI and earnings estimates;
our declaration or payment of distributions;
our joint venture and discretionary fund activities;
our policies regarding investments, indebtedness, acquisitions, dispositions,
financings and other matters;
our qualification as a REIT under the Internal Revenue Code;
the real estate markets in Northern and Southern California and markets in
selected states in the Mid-Atlantic, Midwest, New England, Metro NY/NJ and Pacific
Northwest regions of the United States and in general;
the availability of debt and equity financing;
interest rates;
general economic conditions including the recent economic downturn; and
trends affecting our financial condition or results of operations.
we may fail to secure development opportunities due to an inability to reach
agreements with third parties to obtain land at attractive prices or to obtain
desired zoning and other local approvals;
we may abandon or defer development opportunities for a number of reasons,
including changes in local market conditions which make development less desirable,
increases in costs of development, increases in the cost of capital or lack of
capital availability, resulting in losses;
construction costs of a community may exceed our original estimates;
we may not complete construction and lease-up of communities under development
or redevelopment on schedule, resulting in increased interest costs and
construction costs and a decrease in our expected rental revenues;
occupancy rates and market rents may be adversely affected by competition and
local economic and market conditions which are beyond our control;
financing may not be available on favorable terms or at all, and our cash flows
from operations and access to cost effective capital may be insufficient for the
development of our pipeline which could limit our pursuit of opportunities;
our cash flows may be insufficient to meet required payments of principal and
interest, and we may be unable to refinance existing indebtedness or the terms of
such refinancing may not be as favorable as the terms of existing indebtedness;
we may be unsuccessful in our management of the Fund, Fund II or the REIT
vehicles that are used with each respective investment fund; and
we may be unsuccessful in managing changes in our portfolio composition.
For entities not considered to be variable interest entities under FIN 46(R), the nature
of the entity changed such that it would be considered a variable interest entity and if we
were considered the primary beneficiary.
For entities in which we do not hold a controlling voting and/or variable interest, the
contractual arrangement changed resulting in our investment interest being either a
controlling voting and/or variable interest.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our exposures to market
risk since December 31, 2008.
Item 4.
Controls and Procedures
(a)
Evaluation of disclosure controls and procedures.
The Company carried out an evaluation under the supervision and with the
participation of the Companys management, including the Companys Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures
as of June 30, 2009. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Companys
disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in the reports it
files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Securities and
Exchange Commissions rules and forms.
We continue to review and document our disclosure controls and procedures,
including our internal controls and procedures for financial reporting,
and may from time to time make changes aimed at enhancing their
effectiveness and to ensure that our systems evolve with our business.
(b)
Changes in internal controls over financial reporting.
None.
Item 1.
Legal Proceedings
We are currently involved in litigation alleging that communities constructed by us
violate the accessibility requirements of the Fair Housing Act (FHA) and the
Americans with Disabilities Act. The Equal Rights Center filed a complaint against
us on September 23, 2005 in the U.S. District Court, District of Maryland with
respect to 100 properties. The lawsuit seeks monetary damages as well as
injunctive relief, such as modifications to assets. On August 13, 2008 the U.S.
Attorneys Office for the Southern District of New York filed a civil lawsuit
against the Company and the joint venture (CVP I, LLC) in which it has an interest
that owns Avalon Chrystie Place. The lawsuit alleges that Avalon Chrystie Place
was not designed and constructed in accordance with the accessibility requirements
of the FHA. The Company designed and constructed Avalon Chrystie Place with a view
to compliance with New York Citys Local Law 58, which for more than 20 years has
been New York Citys code regulating the accessible design and construction of
apartments. The Company intends to vigorously defend against these actions. We
cannot predict or determine the outcome of these matters, nor is it reasonably
possible to estimate the amount of loss, if any, that would be associated with an
adverse decision or settlement.
On August 1, 2008, we filed a lawsuit in the Superior Court of the State of
Washington in the County of King (
Avalon DownREIT V, L.P., v Grand-Glacier, LLC et
al)
relating to our assertion that the homeowners association in which our former
Avalon Wynhaven community is a part systematically overcharged us for various
shared costs. We recently sold this property and agreed to indemnify the buyer for
annual association fees to the extent they exceed an amount that we each agreed was
reasonable. The defendants have
filed a cross-claim against Avalon DownREIT V, L.P. seeking foreclosure of the
property and satisfaction of all amounts alleged to be due. We intend to
vigorously pursue our claim and defend against the counter claim. We cannot
predict the likely terms of a final judgment or settlement.
In addition to the matters described above, we are involved in various other claims
and/or
administrative proceedings that arise in the ordinary course of our business. While
no assurances can be given, we do not believe that any of these other outstanding
litigation matters, individually or in the aggregate, will have a material adverse
effect on our operations.
Item 1a.
Risk Factors
In addition to the other information set forth in this report, you should carefully
consider the risk factors which could materially affect our business, financial
condition or future results discussed in the Form 10-K in Part I, Item 1a. Risk
Factors. The risks described in our Form 10-K are not the only risks that could
affect the Company. Additional risks and uncertainties not currently known to us
or that we currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operating results in the future. There have
been no material changes to our risk factors since December 31, 2008.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Issuer Purchases of Equity Securities
(d)
Maximum Dollar
(c)
Amount that May
(a)
Total Number of
Yet be Purchased
Total Number
(b)
Shares Purchased
Under the Plans or
of Shares
Average Price
as Part of Publicly
Programs
Purchased
Paid per
Announced Plans
(in thousands)
(1)
Share
or Programs
(2)
966
$
42.48
$
200,000
372
$
51.28
$
200,000
31
$
42.42
$
200,000
(1)
Reflects shares surrendered to the Company in connection with vesting
of restricted stock or exercise of stock options as payment of taxes or as
payment of exercise price.
(2)
As disclosed in our Form 10-Q for the quarter ended March
31, 2008, represents amounts outstanding under the Companys $500,000,000
Stock Repurchase Program. There is no scheduled expiration date to this
program.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Submission of Matters to a Vote of Security Holders
The Company held its 2009 Annual Meeting of Stockholders on May 21, 2009. The
stockholders voted to elect Bryce Blair, Bruce A. Choate, John J. Healy, Jr.,
Gilbert M. Meyer, Timothy J. Naughton, Peter S. Rummell, Lance R. Primis, H. Jay
Sarles and W. Edward Walter to serve as directors of the Company until the 2010
Annual Meeting of Stockholders and until their respective successors are duly
elected and qualified.
69,097,751 votes were cast for and 1,395,319 votes were withheld from the election
of Mr. Blair.
69,437,236 votes were cast for and 1,055,834 votes were withheld from the election
of Mr. Choate.
69,436,750 votes were cast for and 1,056,320 votes were withheld from the election
of Mr. Healy.
69,936,011 votes were cast for and 530,060 votes were withheld from the election of
Mr. Meyer.
69,976,786 votes were cast for and 516,284 votes were withheld from the election of
Mr. Naughton.
69,430,119 votes were cast for and 1,062,951 votes were withheld from the election
of Mr. Primis.
70,034,478 votes were cast for and 458,592 votes were withheld from the election of
Mr. Rummell.
69,984,887 votes were cast for and 508,184 votes were withheld from the election of
Mr. Sarles.
70,073,564 votes were cast for and 419,506 votes were withheld from the election of
Mr. Walter.
Stockholders voted to approve the AvalonBay Communities, Inc. 2009 Stock Option and
Incentive Plan. 63,271,452 votes were cast in favor of approving the Plan,
3,450,877 votes were cast against, and 185,172 abstained. There were 3,585,569
broker non-votes on this matter.
Stockholders ratified the selection of Ernst & Young LLP as the Companys
independent auditors for 2009. 69,601,422 votes were cast in favor of ratifying
the selection of Ernst & Young LLP, 856,375 votes were cast against, and 35,271
abstained.
Item 5.
Other Information
None.
Item 6.
Exhibits
Exhibit No.
Description
Articles of Amendment and Restatement of Articles of
Incorporation of AvalonBay Communities (the
Company), dated as of June 4, 1998. (Incorporated
by reference to Exhibit 3(i).1 to Form 10-K of the
Company filed on March 1, 2007.)
Articles of Amendment, dated as of October 2, 1998.
(Incorporated by reference to Exhibit 3(i).2 to Form
10-K of the Company filed on March 1, 2007.)
Amended and Restated Bylaws of the Company, as
adopted by the Board of Directors on May 21, 2009.
(Incorporated by reference to Exhibit 3.2 to Form 8-K
of the Company filed on May 28, 2009.)
Indenture for Senior Debt Securities, dated as of
January 16, 1998, between the Company and State
Street Bank and Trust Company, as Trustee.
(Incorporated by reference to Exhibit 4.1 to
Registration Statement on form S-3 of the Company
(File No. 333-139839), filed January 8, 2007.)
First Supplemental Indenture, dated as of January 20,
1998, between the Company and the State Street Bank
and Trust Company as Trustee. (Incorporated by
reference to Exhibit 4.2 to Registration Statement on
Form S-3 of the Company (File No. 333-139839), filed
January 8, 2007.)
Second Supplemental Indenture, dated as of July 7,
1998, between the Company and State Street Bank and
Trust Company as Trustee. (Incorporated by reference
to Exhibit 4.3 to Registration Statement on Form S-3
of the Company (File No. 333-139839), filed January
8, 2007.)
Amended and Restated Third Supplemental Indenture,
dated as of July 10, 2000 between the Company and
State Street Bank and Trust Company as Trustee.
(Incorporated by reference to Exhibit 4.4 to
Registration Statement on Form S-3 of the Company
(File No. 333-139839), filed January 8, 2007.)
Fourth Supplemental Indenture, dated as of September
18, 2006 between the Company and U.S. Bank National
Association as Trustee. (Incorporated by reference
to Exhibit 4.5 to Registration Statement on Form S-3
of the Company (File No. 333-139839), filed January
8, 2007.)
Dividend Reinvestment and Stock Purchase Plan of the
Company. (Incorporated by reference to Exhibit 8.1 to
Registration Statement on Form S-3 of the Company
(File No. 333-87063), filed September 14, 1999.)
Amendment to the Companys Dividend Reinvestment and
Stock Purchase Plan filed on December 17, 1999.
(Incorporated by reference to the Prospectus
Supplement filed pursuant to Rule 424(b)(2) of the
Securities Act of 1933 on December 17, 1999.)
Amendment to the Companys Dividend Reinvestment and
Stock Purchase Plan filed on March 26, 2004.
(Incorporated by reference to the Prospectus
Supplement filed pursuant to Rule 424(b)(3) of the
Securities Act of 1933 on March 26, 2004.)
Amendment to the Companys Dividend Reinvestment and
Stock Purchase Plan filed on May 15, 2006.
(Incorporated by references to the Prospectus
Supplement filed pursuant to Rule 424(b)(3) of the
Securities Act of 1933 on May 15, 2006.)
Exhibit No.
Description
AvalonBay Communities, Inc. 2009 Stock Option and Incentive Plan.
(Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed on May 28, 2009.)
Master Cross-Collateralization Agreement, dated as of April 24, 2009, between Deutsche
Bank Berkshire Mortgage, Inc., parties identified on Exhibit A-Schedule 1 attached thereto and
incorporated herein by reference., and Shady Grove Financing, LLC. (Filed herewith.)
Master Substitution Agreement, dated April 23, 2009, between Deutsche Bank
Berkshire Mortgage, Inc., AvalonBay Traville, LLC and the entities identified on
Schedule B attached thereto and incorporated therein by reference. (Filed herewith.)
Form of MultiFamily Note, dated April 24, 2009. (Used in connection with
the properties identified on Exhibit B to the Master Cross-Collateralization Agreement dated
April 23, 2009.) (Filed herewith.)
Form of Guaranty, dated April 24, 2009. (Used in connection with the properties
identified on Exhibit B to the Master Cross-Collateralization Agreement dated April 23, 2009.)
(Filed herewith.)
Form of Incentive Stock Option Agreement. (Incorporated by
reference to Exhibit 10.1 to Registration Statement on Form
S-8 of the Company filed on May 22, 2009.)
Form of Non-Qualified Stock Option Agreement. (Incorporated
by reference to Exhibit 10.2 to Registration Statement on
Form S-8 of the Company filed on May 22, 2009.)
Form of Stock Grant and Restricted Stock Agreement.
(Incorporated by reference to Exhibit 10.3 to Registration
Statement on Form S-8 of the Company filed on May 22,
2009.)
Form of Director Restricted Stock Agreement. (Incorporated
by reference to Exhibit 10.4 to Registration Statement on
Form S-8 of the Company filed on May 22, 2009.)
Form of Director Restricted Unit Agreement. (Incorporated
by reference to Exhibit 10.5 to Registration Statement on
Form S-8 of the Company filed on May 22, 2009.)
Statements re: Computation of Ratios. (Filed herewith.)
Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (Chief Executive Officer). (Filed herewith.)
Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (Chief Financial Officer). (Filed herewith.)
Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (Chief Executive Officer and Chief Financial
Officer). (Furnished herewith.)
XBRL (Extensible Business Reporting Language). The following materials from AvalonBay Communities, Inc.s Quarterly Report on
Form 10-Q for the period ended June 30, 2009, formatted in XBRL: (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations,
(iii) condensed consolidated statements of cash flows and (iv) notes
to condensed consolidated financial statements.*
Date: August 10, 2009
/s/ Bryce Blair
Bryce Blair
Chief Executive Officer
(Principal Executive Officer)
Date: August 10, 2009
/s/ Thomas J. Sargeant
Thomas J. Sargeant
Chief Financial Officer
(Principal Financial Officer)
A. | Lender has agreed to make a loan to each of those parties identified on Exhibit A Schedule 2 attached hereto (each referred to individually as a Borrower and all referred to collectively as the Borrowers ) (each a Loan and collectively, the Loans ) in the original principal amounts set forth on Exhibit A Schedule 2 attached hereto. | |
B. | Included among the Loans is a Loan to the Traville Borrower, as more fully set forth on Exhibit A Schedule 2 (the Traville Loan ). | |
C. | Each Loan (other than the Traville Loan) is secured by a Multifamily Mortgage/Deed of Trust/Deed to Secure Debt, Assignment of Rents and Security Agreement (the Security Instruments ), and the Traville Loan is guaranteed by AvalonBay Traville, LLC, a Maryland limited liability company (the IDOT Grantor ) pursuant to a Guaranty (the IDOT Guaranty ), which IDOT Guaranty is secured by a Multifamily Indemnity Deed of Trust, Assignment of Rents and Security Agreement (the IDOT ) (the Security Instruments and the IDOT are each a Mortgage and collectively, the Mortgages ). The Mortgages encumber the real property identified in Exhibit B attached hereto and other property included within the definition of Mortgaged Property in the applicable Mortgage. | |
D. | Each Grantor is an affiliate of the other Grantors and will receive a direct and material benefit from the Loans to the Borrowers. Lender is willing to make a Loan to each Borrower only if each Grantor agrees to pay all of the Indebtedness of the Borrowers with respect to the Borrowers Loans as set forth in this Agreement. | |
E. | Each Grantor is executing this Agreement to evidence its agreement (a) to pay as and when due all of the Indebtedness of the Borrowers under the Borrowers Loan Documents and (b) to bear joint and several liability for the Indebtedness of all Borrowers as set forth in this Agreement. | |
F. | Each Grantor (except Gardens Financing, LLC) executing a Mortgage further agrees that its obligations under this Agreement shall be secured by such Mortgage under the terms hereof. The obligations of Gardens Financing, LLC hereunder shall not be secured by the Mortgage securing the Loan to Gardens Financing, LLC (the Avalon Gardens Mortgage ) |
Page 1
Page 2
i. | that the Loans be treated as if they were a single, integrated indebtedness of the Grantors, and | ||
ii. | that the Total Property secure to Lender the payment and performance of all of the Grantors Total Indebtedness. |
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
Page 11
Page 12
BORROWER/GRANTOR:
ALAMEDA FINANCING, L.P. , a Delaware limited partnership |
||||
By: | California Multiple Financing, Inc., a | |||
Maryland corporation, its general partner | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance | ||||
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public |
BORROWER/GRANTOR:
MISSION BAY NORTH FINANCING, L.P. , a Delaware limited partnership |
||||
By: | California Multiple Financing, Inc., a Maryland | |||
corporation, its general partner | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance | ||||
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
BORROWER/GRANTOR: | ||||||||||
|
||||||||||
WITNESS: |
GATES FINANCING, LLC
, a Delaware limited
liability company |
|||||||||
|
||||||||||
/s/ Debra G. Cruzan | By: | AvalonBay Communities, Inc., a Maryland | ||||||||
Print Name: Debra G. Cruzan | corporation, its sole member | |||||||||
|
||||||||||
/s/ Robert Rosevear
|
By: | /s/ Joanne M. Lockridge | ||||||||
Print Name: Robert Rosevear
|
Joanne M. Lockridge | |||||||||
|
Senior Vice PresidentFinance |
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
BORROWER/GRANTOR: | |||||||||||
|
|||||||||||
WITNESS: |
HARBOR FINANCING, LLC
, a Delaware
limited liability company |
||||||||||
|
|||||||||||
/s/ Debra G. Cruzan | By: | AvalonBay Communities, Inc., a Maryland | |||||||||
Print Name: Debra G. Cruzan | Corporation, its sole member | ||||||||||
/s/ Robert Rosevear
|
By: | /s/ Joanne M. Lockridge | |||||||||
Print Name: Robert Rosevear
|
Joanne M. Lockridge | ||||||||||
|
Senior Vice President-Finance |
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
BORROWER/GRANTOR:
4100 MASSACHUSETTS AVENUE ASSOCIATES, L.P. , a District of Columbia limited partnership |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its general partner | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
BORROWER/GRANTOR: | ||||||
|
||||||
AVALONBAY COMMUNITIES, INC. , a | ||||||
Maryland corporation | ||||||
|
||||||
|
By: | /s/ Joanne M. Lockridge | (SEAL) | |||
|
Joanne M. Lockridge | |||||
|
Senior Vice President-Finance |
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
IDOT GRANTOR:
AVALONBAY TRAVILLE, LLC , a Maryland limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | (SEAL) | ||
Joanne M. Lockridge | ||||
Senior Vice President Finance | ||||
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public
My Commission Expires: April 30, 2009 |
TRAVILLE BORROWER:
SHADY GROVE ROAD FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Traville, LLC, a Maryland | |||
limited liability company, its sole member | ||||
By: | AvalonBay Communities, Inc., a | |||
Maryland corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | (SEAL) | ||
Joanne M. Lockridge | ||||
Senior Vice President Finance | ||||
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public
My Commission Expires: April 30, 2009 |
BORROWER/GRANTOR:
EDGEWATER FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public
My Commission Expires: April 30, 2009 |
BORROWER/GRANTOR:
FREEHOLD FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public
My Commission Expires: April 30, 2009 |
BORROWER/GRANTOR:
RUN EAST II FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
|
||
STATE OF CONNECTICUT
|
) | |
|
) ss: | |
COUNTY OF FAIRFIELD
|
) |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
My Commission Expires: April 30, 2009 |
BORROWER/GRANTOR:
BELLEVUE FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public
My Commission Expires: April 30, 2009 |
BORROWER/GRANTOR:
AVALONBAY SHREWSBURY, INC. , a Maryland corporation |
||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
BORROWER/GRANTOR:
WOBURN FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
BORROWER/GRANTOR:
GARDENS FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice PresidentFinance | ||||
|
||
STATE OF CONNECTICUT
|
) | |
COUNTY OF FAIRFIELD
|
) ss: |
/s/ Beth Meryl Deitz | ||||
Beth Meryl Deitz | ||||
Notary Public | ||||
LENDER:
DEUTSCHE BANK BERKSHIRE MORTGAGE, INC. , a Delaware corporation |
||||
By: | /s/ Steven B. Wendel | (SEAL) | ||
Name: | Steven B. Wendel | |||
Title: | Officer | |||
By: | /s/ Denis G. Leger | (SEAL) | ||
Name: | Denis G. Leger | |||
Title: | Officer | |||
/s/ George Eugene Moore | ||||
George Eugene Moore | ||||
Notary Public | ||||
Loan Number | Borrower | Loan Amount | ||||||
968714285 |
Alameda Financing, L.P.
|
$ | 53,980,000.00 | |||||
968714293 |
Mission Bay North Financing, L.P.
|
$ | 73,269,000.00 | |||||
968714307 |
Gates Financing, LLC
|
$ | 41,321,000.00 | |||||
968714315 |
Harbor Financing, LLC
|
$ | 65,695,000.00 | |||||
968714404 |
4100 Massachusetts Avenue Associates, L.P.
|
$ | 59,010,000.00 | |||||
968714331 |
AvalonBay Communities, Inc.
|
$ | 45,850,000.00 | |||||
968714331 |
AvalonBay Shrewsbury, Inc.
|
$ | 21,130,000.00 | |||||
968714323 |
Woburn Financing, LLC
|
$ | 55,805,000.00 | |||||
968714390 |
Shady Grove Road Financing, LLC
|
$ | 77,700,000.00 | |||||
968714358 |
Edgewater Financing, LLC
|
$ | 78,565,000.00 | |||||
968714420 |
Freehold Financing, LLC
|
$ | 36,630,000.00 | |||||
968714366 |
Run East II Financing, LLC
|
$ | 39,250,000.00 | |||||
968714374 |
Gardens Financing, LLC
|
$ | 66,237,000.00 | |||||
968714412 |
Bellevue Financing, LLC
|
$ | 26,698,000.00 |
Page 3
Borrower | Property Name | County and State | ||
Alameda Financing, L.P.
|
Avalon on the Alameda | San Jose, CA | ||
|
||||
Mission Bay North
Financing, L.P.
|
Avalon at Mission Bay
North |
San Francisco, CA | ||
|
||||
Gates Financing, LLC
|
Avalon Gates | Stamford, CT | ||
|
||||
Harbor Financing, LLC
|
Avalon on Stamford Harbor | Trumbull, CT | ||
|
||||
4100 Massachusetts Avenue
Associates, L.P.
|
Avalon at Foxhall | Washington, DC | ||
|
||||
AvalonBay Communities,
Inc.
|
Avalon at Gallery Place | Washington, DC | ||
|
||||
AvalonBay Shrewsbury, Inc.
|
Avalon Shrewsbury | Shrewsbury, MA | ||
|
||||
Woburn Financing, LLC
|
Avalon Woburn | Woburn, MA | ||
|
||||
Shady Grove Road
Financing, LLC |
Avalon at Traville | Rockville, MD | ||
|
||||
Edgewater Financing, LLC
|
Avalon at Edgewater | Edgewater, NJ | ||
|
||||
Freehold Financing, LLC
|
Avalon at Freehold | Freehold, NJ | ||
|
||||
Run East II Financing, LLC
|
Avalon Run East II | Lawrenceville, NJ | ||
|
||||
Gardens Financing, LLC
|
Avalon Gardens | Nanuet, NY | ||
|
||||
Bellevue Financing, LLC
|
Avalon Bellevue | Bellevue, WA |
Page 4
1. | Definitions. With respect to each Loan, terms used in this Agreement and not defined herein have the meanings given to those terms (i) in the Security Instrument initially securing such Loan until such time, if ever, that a Substitute Security Instrument is delivered with respect to such Loan; and thereafter (ii) in the then-effective Substitute Security Instrument. As used herein, a Substitution means the substitution of another multifamily residential rental project (the Substitute Property ) for either an Original Property or a previously substituted Substitute Property (as applicable, the To-Be-Released Property ), as security for a Loan, all in accordance with the terms and conditions of this Agreement. |
2. | Substitution Requirements. Not more than seven (7) times in the aggregate during the period that any of the Loans remain outstanding (the Substitution Number ), Lender will consent to a Substitution upon the Borrowers satisfaction, as determined by Lender in its sole, but reasonable, discretion based on Lenders then-current underwriting standards, of all of the requirements set forth below. |
(a) | The Borrower proposing to effect the Substitution must deliver to Lender a written request for Lenders approval of the proposed Substitution, such written request (the Substitution Request ) to be delivered to Lender not less than sixty (60) days prior to the proposed effective date of the requested Substitution. The Borrowers Substitution Request must specifically identify the Loan to which the Substitution Request relates and the To-Be-Released Property, and must include all of the items set forth in subsections 2(i)(i) through (vii) below. The sixty (60) day period will not be calculated until Lender receives the requirements of this subsection and subsection 2(i) in full. Upon Borrowers written request, Lender will confirm in writing that Borrower has delivered all required items pursuant to this Section 2(a) and the date on which the sixty (60) day period commenced to run. The Borrowers Substitution Request must be accompanied by a non-refundable review fee in the amount of $10,000. The Borrower may rescind its request for a Substitution by written notice to Lender at any time prior to implementation of the Substitution, as set forth in Section 4 below, but will not receive a refund of the review fee. | ||
(b) | Lender will not consider Borrowers Substitution Request if an Event of Default under any Loan Document has occurred and is continuing or if an event or condition that, with the giving of notice or the passage of time, or both, could constitute such an Event of Default exists. | ||
(c) | As the Substitution rights under this Agreement are personal to the Original Borrowers, the IDOT Guarantor and to New Borrowers described herein, (i) all Borrowers must continue to be owned directly or indirectly 100% by an entity controlled by AvalonBay (or any successors to such entities permitted pursuant to Section 21(c) of the Security Instrument), and (ii) an entity controlled by AvalonBay (or a successor to such entity pursuant to Section 21(c) of the Security Instrument) must own, directly or indirectly, not less than a 51% managing interest in all Borrowers and must be the sole party controlling (directly or indirectly) the day to day management of the Borrower and operation of each Original Property and each Substitute Property. | ||
(d) | The aggregate LTV, at the time of the Substitution, of (i) the Substitute Property, as determined by Lender using Lenders then-standard underwriting procedures, including an evaluation of market condition, and (ii) all remaining Original Properties as the same may have been previously substituted in accordance with the terms hereof (collectively, the New Pool ), may not exceed seventy percent (70%). As used herein, LTV means, the ratio, expressed as a percentage, of (1) the aggregate outstanding principal balance of the Loans attributable to the properties comprising the New Pool, to (2) the value of the properties comprising the New Pool, as determined by Lender using Lenders then-standard underwriting procedures. In the event the Substitute Property fails to satisfy this requirement, Lender reserves the right, in its sole discretion, to accept the Substitute Property and require additional credit enhancement, including but not limited to additional guaranties, in such amounts as shall be determined by Lender using Lenders then-standard underwriting procedures. | ||
(e) | The aggregate DCR, at the time of the Substitution, of the New Pool, may not be less than 1.25:1.00, assuming the Loans are amortizing on a 30-year basis. As |
-2-
used herein, the term DCR means, the ratio, expressed as a percentage, of (A) the aggregate annual net operating income ( NOI ) from the operations of the properties comprising the New Pool, calculated on an annual basis based upon December 31 operating statements of such properties, using Lenders standard underwriting procedures, to (B) the aggregate annual principal and interest payable on the Loans attributable to the properties comprising the New Pool. In the event the Substitute Property fails to satisfy this requirement, Lender reserves the right, in its sole discretion, to accept the Substitute Property and require additional credit enhancement, including but not limited to, additional guaranties, in such amounts as shall be determined by Lender using Lenders then-standard underwriting procedures. | |||
Notwithstanding the foregoing, not more than once in any twelve (12) month period in connection with a Substitution under this Agreement, a proposed Transfer of a Mortgaged Property (as such terms are defined in each Security Instrument) under Section 21(f) of the applicable Security Instrument or a release under Section 14 of the Cross Collateralization Agreement, a Borrower may request that Lender calculate the DCR for purposes of the foregoing requirements using an updated NOI, under Lenders standard underwriting procedures, provided that such Borrower (1) notifies Lender of such request and provides Lender with the applicable operating statements not less than ninety (90) days prior to the proposed Substitution, (2) pays to Lender a fee equal to the greater of (x) $1,800 per property in the New Pool or (y) $25,000 and (3) pays to Loan Servicer an aggregate fee equal to $7,500. | |||
(f) | Lender will not consider a Substitution Request for a Substitution for which the effective date of such Substitution will occur earlier than twelve months after the date of the Note evidencing the Loan to which the Substitution relates. The Substitution must be completed no later than twelve (12) months prior to the Scheduled Maturity Date set forth in the Note evidencing the Loan to which the Substitution relates. | ||
(g) | [Intentionally Deleted.] | ||
(h) | The Substitute Property must be the same type of property as the To-Be-Released Property ( i.e. , a seniors housing property must be replaced with another seniors housing property and a multifamily property must be replaced with another multifamily property) | ||
(i) | Lender must have received, and in its sole discretion approved the following, all meeting Lenders then current requirements for such items: |
(i) | a detailed description of the Substitute Property, including historical and year-to-date operating statements, | ||
(ii) | a appraisal of the Substitute Property prepared by a member of the Appraisal Institute (Borrower acknowledges that Lender is not bound by any value set forth in such appraisal); provided, however, that Lender will not require an appraisal of the To-Be-Released Property, | ||
(iii) | a Phase I environmental report on the Substitute Property, and, if, required by the Phase I environmental report, a Phase II environmental report, | ||
(iv) | an engineering report on the Substitute Property (unless waived in writing by Lender), |
-3-
(v) | a current ALTA/ACSM urban land survey of the Substitute Property, | ||
(vi) | a commitment for a mortgagees title insurance policy to insure the first lien mortgage to be secured by and encumber the Substitute Property, in the form (including endorsements) required by Lender, and containing only such exceptions as are acceptable to Lender; provided, however, that Lender will not require Borrower to provide date down endorsements with respect to the other properties comprising the New Pool if no Supplemental Mortgage (as defined in the Security Instruments) is being granted at such time on any of the properties comprising the New Pool, and | ||
(vii) | such other reports, certificates, and documents with respect to the Substitute Property as Lender at any time may require in its sole discretion. |
(j) | The physical condition, market condition, and other aspects of the Substitute Property must be acceptable to Lender in Lenders sole, but reasonable, discretion based on Lenders then-standard underwriting requirements. Lender will not require an evaluation of the geographic diversity of the New Pool in connection with the Substitution, however, market factors and conditions will be evaluated in Lenders sole, but reasonable, discretion. | ||
(k) | Borrower must pay to Lender all of Lenders and Loan Servicers attorneys fees (including imputed fees of Lenders salaried attorneys) and all other out of pocket third party costs incurred by Lender in connection with the Substitution, including, but not limited to, all costs of engineering reports, appraisals and environmental reports, all title insurance charges and all recordation charges. | ||
(l) | [ Intentionally Deleted. ] | ||
(m) | [ Intentionally Deleted. ] | ||
(n) | Notwithstanding Borrowers right, as set forth above to seven (7) Substitutions, at any time, the unpaid principal balance of the Loans secured by the Substitute Properties must not exceed $370,570,000. |
3. | Implementation of Substitution Approval. If Lender consents to a Substitution in accordance with Section 2 of this Agreement, the Borrowers must comply with the requirements set forth below with respect to such Substitution. |
(a) | Upon closing of the Substitution, the Borrower that requested the Substitution must pay (i) a Substitution approval fee to Lender equal to (0.15%) of the unpaid principal balance of the Loan to which the Substitution relates, but not to exceed $100,000 per Substitution and (ii) a Substitution approval fee to Loan Servicer equal to 0.15% of the unpaid principal balance of the Loan to which the Substitution relates, but not to exceed $100,000 per Substitution. The review fee paid pursuant to Section 2(a) will be credited to the Substitution approval fee set forth in clause (i) of the immediately preceding sentence. | ||
(b) | The Borrower that requested the Substitution must execute and deliver to Lender the following documents, all of which must be acceptable in form and substance to Lender in its sole, but reasonable, discretion: |
(i) | an amendment to the Note, or an amended and restated note, signed by the Borrower and acknowledged by the Guarantor, to change the reference to |
-4-
Mortgaged Property to the Substitute Property, to change the reference to Security Instrument to the Substitute Security Instrument (described below), to change the governing law to the law of the jurisdiction in which the Substitute Property is located, and to incorporate any changes to the Note necessitated by reason of the change in the governing law or by changes in the form of the Substitute Security Instrument; provided, however, any amended and restated note will include the document modifications contained in Exhibit A to the Note (other than property-specific modifications); | |||
(ii) | an amendment to the Security Instrument or a new security instrument (the Substitute Security Instrument) encumbering the Substitute Property, in the then-current Freddie Mac form of Security Instrument for the jurisdiction in which the Substitute Property is located, and including all of the document modifications contained in Exhibit B to the Security Instrument (other than property-specific modifications) and such additional property-specific modifications, as Lender may require, recorded among the appropriate land records for the Substitute Property; | ||
(iii) | a new Repair Agreement and/or Repair Escrow Agreement, as applicable, with respect to the Substitute Property, in the then-current Freddie Mac form of Repair Agreement and/or Repair Escrow Agreement including all of the document modifications contained in the document modifications exhibit forming part of any Repair Agreement or Repair Escrow Agreement pertaining to the Mortgaged Property (other than property-specific modifications); | ||
(iv) | a new Replacement Reserve Agreement with respect to the Substitute Property, in the then-current Freddie Mac form of Replacement Reserve Agreement and including all of the document modifications contained in the document modifications exhibit forming part of the Replacement Reserve Agreement pertaining to the Mortgaged Property (other than property-specific modifications); | ||
(v) | new Uniform Commercial Code financing statements properly filed and recorded to perfect Lenders security interest in the Substitute Property to the extent that such security interests may be perfected by filing or recording financing statements; | ||
(vi) | an amendment to the Cross-Collateralization Agreement substituting the Substitute Property for the To-Be-Released Property and cross-defaulting and cross-collateralizing the Substitute Property with such other Loans and properties as well as any other documentation that Lender may reasonably require in connection with the Cross-Collateralization Agreement; | ||
(vii) | opinion for Borrower and Guarantor, if applicable, in substantially the same form delivered in connection with the origination of the Loan; | ||
(viii) | such additional documentation as Lender in its sole discretion may require to grant to Lender a perfected first lien and security interest in the Substitute Property and to otherwise implement the Substitution; and | ||
(ix) | if requested by Lender, a ratification and confirmation of the continued obligation of each Guarantor. |
-5-
(c) | At the option of the Borrower, immediately prior to the Substitution, another entity meeting the ownership requirements set forth in Section 2 (c) above (such entity being a New Borrower ), may assume the obligations of the Borrower under the Note for the Loan to which the Substitution relates, pursuant to an endorsement to the Note prepared by Lender and executed and delivered by the New Borrower. The New Borrower will then execute, deliver, record, and file the documents referred to in subsection 3(b). | ||
(d) | The Borrowers must cause to be delivered to Lender a mortgagees title insurance policy, dated the date of the recording of the Substitute Security Instrument, in accordance with the commitment for title insurance referred to in subsection 2(i). | ||
(e) | Any New Borrower must sign, and all other Borrowers must execute an update to the Substitution Schedule prepared by Lender. The Substitution Schedule will be updated to reflect the Substitution and will include, among other information required, Lenders underwritten LTV and DCR for the Substitute Property. | ||
(f) | Upon completion of the Substitution, at the expense of the Borrowers, the To-Be-Released Property will be released from the lien of the Security Instrument and the Cross-Collateralization Agreement; provided that any document effecting such release must expressly provide that the Indebtedness has not been paid in full and that the recording of the release is not intended to create any presumption to the contrary. | ||
(g) | If Lender consents to the Substitution pursuant to Section 2 of this Agreement, but the Borrower that requested the Substitution is unable to effect a contemporaneous Substitution of the Substitute Property for the To-Be-Released Property, such Borrower will have the following option, subject to the conditions set forth below: |
(i) | Borrower must provide Lender with thirty (30) days prior written notice that Borrower intends to complete the Substitution subsequent to the release of the Mortgaged Property ( Release ). | ||
(ii) | Borrower must deliver to Lender an unconditional, irrevocable letter of credit ( Letter of Credit ) in form and content, from an issuer and accompanied by an opinion of counsel to the Letter of Credit issuer, all acceptable to Lender, for a term of not less than twelve (12) months, in an amount determined by Lender in Lenders discretion. | ||
(iii) | Borrower must continue to make monthly payments under the applicable Note in accordance with the terms of the Note until the Substitution has been completed, and thereafter under the terms of the Note, as amended or amended and restated pursuant to Section 3(b)(i) above. | ||
(iv) | Borrower must complete the Substitution within six (6) months after the Release. If Borrower completes the Substitution prior to the end of the 6-month period, Lender will return the Letter of Credit to the Borrower. | ||
(v) | If Borrower does not complete the Substitution within the 6-month period, or if an Event of Default occurs and is continuing, Lender will provide written notice to Borrower of its intent to draw on the Letter of Credit, and, if Borrower does not deposit with Lender cash in an amount equal to the face amount of the Letter of Credit to be so drawn by Lender (the Substitute Cash ) within five (5) business days after such notice from Lender, Lender shall have the right to thereafter draw on the Letter of |
-6-
Credit and apply the proceeds to the Indebtedness and Borrower must pay any prepayment premium due and payable as a result of such application. If Borrower does deposit the Substitute Cash with Lender in accordance with the foregoing provisions, (y) Lender shall have the right to apply the Substitute Cash to the Indebtedness and Borrower must pay any prepayment premium due and payable as a result of such application and (z) Lender shall promptly return the original Letter of Credit to the Borrower. No portion of the Letter of Credit proceeds or Substitute Cash may be used by Borrower to satisfy the prepayment premium. If Lender draws on the Letter of Credit or receives Substitute Cash in lieu thereof, under the circumstances set forth in this Section, it will be deemed to be a Release of a Property pursuant to Section 14 of the Cross-Collateralization Agreement. | |||
(vi) | At any time, (A) no more than two (2) Loans secured by Letters of Credit under this Section may be outstanding, (B) the aggregate unpaid principal balance of all Loans secured by Letters of Credit under this Section must be less than fifty percent (50%) of the aggregate unpaid principal balance of all Loans then outstanding, and (C) the number of Loans secured by Letters of Credit under this Section must be less than fifty percent (50%) of the aggregate number of Loans then subject to the Cross-Collateralization Agreement. | ||
(vii) | Except as set forth in this Section, Substitutions made pursuant to this Section are subject to all other requirements for Substitutions set forth in this Agreement. |
4. | Notices. All notices under this Agreement must be in writing and must be given in the manner provided in the Security Instruments. | |
5. | Successors and Assigns. The Borrowers rights under this Agreement may not be assigned, except that a New Borrower must become a Borrower as provided in this Agreement. This Agreement shall be binding upon and shall inure to the benefit of Lender and Lenders successors and assigns. | |
6. | Governing Law; Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. The Borrowers irrevocably submit to the jurisdiction of any federal or state court (without intending to limit any right on the part of Lender or any successor to Lender to remove a matter to a particular court) sitting in the Commonwealth of Virginia, over any suit, action or proceeding arising out of or relating to this Agreement. The Borrowers hereby submit to the in personam jurisdiction of each such court in any matter involving this Agreement. Each Borrower irrevocably waives, to the fullest extent permitted under applicable law, any objections it may now or hereafter have to the venue of any suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. Each Borrower acknowledges that it has received material and substantial consideration for the right to effect Substitutions under this Agreement and that the foregoing venue provisions of this Section 6 are integral to Lenders entering into and performance of this Agreement. | |
7. | Course of Dealing. No course of dealing among the parties to this Agreement must operate as a waiver of any rights of any party under this Agreement. | |
8. | WAIVER OF TRIAL BY JURY . EACH BORROWER AND LENDER (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT THAT IS |
-7-
TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. | ||
9. | Entire Agreement. This Agreement, together with the Note, Mortgage and Loan Documents relating to each Loan, contain the entire agreement among the parties as to the rights granted and the obligations assumed in this Agreement. To the extent that this Agreement conflicts with the terms of the other Loan Documents, this Agreement shall govern and control. | |
10. | Counterparts . This Agreement may be executed in multiple counterparts, each of which shall constitute an original document and all of which together shall constitute one agreement. |
-8-
ORIGINAL BORROWER:
ALAMEDA FINANCING, L.P. , a Delaware limited partnership |
||||
By: | California Multiple Financing, Inc., a Maryland | |||
corporation, its general partner | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
MISSION BAY NORTH FINANCING, L.P. , a Delaware limited partnership |
||||
By: | California Multiple Financing, Inc., a Maryland | |||
corporation, its general partner | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
GATES FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
HARBOR FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
4100 MASSACHUSETTS AVENUE ASSOCIATES, L.P. , a District of Columbia limited partnership |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its general partner | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
AVALONBAY COMMUNITIES, INC. , a Maryland corporation |
||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL IDOT GUARANTOR:
AVALONBAY TRAVILLE, LLC , a Maryland limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance | ||||
ORIGINAL BORROWER:
SHADY GROVE ROAD FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Traville, LLC, a Maryland limited | |||
liability company, its sole member | ||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
GARDENS FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
EDGEWATER FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
FREEHOLD FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
RUN EAST II FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
BELLEVUE FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
AVALONBAY SHREWSBURY, INC. , a Maryland corporation |
||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
ORIGINAL BORROWER:
WOBURN FINANCING, LLC , a Delaware limited liability company |
||||
By: | AvalonBay Communities, Inc., a Maryland | |||
corporation, its sole member | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance |
LENDER:
DEUTSCHE BANK BERKSHIRE MORTGAGE, INC. , a Delaware corporation |
||||
By: | /s/ Steven B. Wendel | |||
Steven B. Wendel | ||||
Officer | ||||
By: | /s/ Denis G. Leger | |||
Denis G. Leger | ||||
Officer | ||||
US $[Loan Amount] | Effective Date: As of April 24, 2009 |
(a) | As used in this Note: | ||
Base Recourse means a portion of the Indebtedness equal to zero percent (0%) of the original principal balance of this Note. | |||
Business Day means any day other than a Saturday, a Sunday or any other day on which Lender or the national banking associations are not open for business. | |||
Default Rate means an annual interest rate equal to four (4) percentage points above the Fixed Interest Rate. However, at no time will the Default Rate exceed the Maximum Interest Rate. | |||
Fixed Interest Rate means the annual interest rate of five and eighty-six hundredths percent (5.86%). | |||
Installment Due Date means, for any monthly installment of interest only or principal and interest, the date on which such monthly installment is due and payable pursuant to Section 3 of this Note. The First Installment Due Date under this Note is June 1, 2009. | |||
Lender means the holder from time to time of this Note. | |||
Loan means the loan evidenced by this Note. | |||
Maturity Date means the earlier of (i) May 1, 2019 (the Scheduled Maturity Date ), and (ii) the date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy under any Loan Document. | |||
Maximum Interest Rate means the rate of interest that results in the maximum amount of interest allowed by applicable law. | |||
Prepayment Premium Period means the period during which, if a prepayment of principal occurs, a prepayment premium will be payable by Borrower to |
PAGE 1
Lender. The Prepayment Premium Period is the period from and including the date of this Note until but not including the first day of the Window Period. | |||
Security Instrument means the multifamily mortgage, deed to secure debt or deed of trust effective as of the effective date of this Note, from Borrower to or for the benefit of Lender and securing this Note. | |||
Treasury Security means the 3.750% U.S. Treasury Security due November 15, 2018. | |||
Window Period means the three (3) consecutive calendar month period prior to the Scheduled Maturity Date. | |||
Yield Maintenance Period means the period from and including the date of this Note until but not including November 1, 2018. |
(d) | (i) | Beginning on the First Installment Due Date, and continuing until and including the monthly installment due on May 1, 2011, accrued interest only shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of each monthly installment of interest only payable pursuant to this |
PAGE 2
Subsection 3(d)(i) on an Installment Due Date shall vary, and shall equal $[ ] multiplied by the number of days in the month prior to the Installment Due Date. |
(ii) | Beginning on June 1, 2011, and continuing until and including the monthly installment due on the Maturity Date, principal and accrued interest shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of principal and interest payable pursuant to this Subsection 3(d)(ii) on an Installment Due Date shall be and ___/100 Dollars ($ ). |
PAGE 3
PAGE 4
(i) | the performance of all of Borrowers obligations under Section 18 of the Security Instrument (relating to environmental matters); | ||
(ii) | the costs of any audit under Section 14(g) of the Security Instrument; and | ||
(iii) | any costs and expenses incurred by Lender in connection with the collection of any amount for which Borrower is personally liable under this Section 9, including Attorneys Fees and Costs and the costs of conducting any independent audit of Borrowers books and records to determine the amount for which Borrower has personal liability. |
PAGE 5
(i) | Borrowers ownership of any property or operation of any business not permitted by Section 33 of the Security Instrument; | ||
(ii) | a Transfer (including, but not limited to, a lien or encumbrance) that is an Event of Default under Section 21 of the Security Instrument, other than a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company; or | ||
(iii) | fraud or written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender. |
PAGE 6
(i) | For any prepayment made during the Yield Maintenance Period, the prepayment premium shall be whichever is the greater of subsections (A) and (B) below: |
(A) | 1.0% of the amount of principal being prepaid; or | ||
(B) | the product obtained by multiplying: |
(1) | the amount of principal being prepaid or accelerated, | ||
by | |||
(2) | the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment Rate, | ||
by | |||
(3) | the Present Value Factor. |
For purposes of subsection (B), the following definitions shall apply: | |||
Monthly Note Rate: one-twelfth (1/12) of the Fixed Interest Rate, expressed as a decimal calculated to five digits. | |||
Prepayment Date: in the case of a voluntary prepayment, the date on which the prepayment is made; in the case of the application by Lender of collateral or security to a portion of the principal balance, the date of such application. | |||
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate, as of the close of the trading session which is 5 Business Days before the Prepayment Date, on the Treasury Security, as reported in The Wall Street Journal , expressed as a decimal calculated to five digits. In the event that no yield is published on the applicable date for the Treasury Security, Lender, in its discretion, shall select the non-callable Treasury Security maturing in the same year as the Treasury Security with the lowest yield published in The Wall Street Journal as of the applicable date. If the publication of such yield rates in The Wall Street Journal is discontinued for any reason, Lender shall select a security with a comparable rate and |
PAGE 7
term to the Treasury Security. The selection of an alternate security pursuant to this Section shall be made in Lenders discretion. |
Present Value Factor: the factor that discounts to present value the costs resulting to Lender from the difference in interest rates during the months remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate as the discount rate, with monthly compounding, expressed numerically as follows: |
n = the number of months remaining in Yield Maintenance Period; provided, however, if a prepayment occurs on an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month in which such prepayment occurs and if such prepayment occurs on a Business Day other than an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month immediately following the date of such prepayment. | |||
ARR = Assumed Reinvestment Rate |
(ii) | For any prepayment made after the expiration of the Yield Maintenance Period but during the remainder of the Prepayment Premium Period, the prepayment premium shall be 1.0% of the amount of principal being prepaid. |
PAGE 8
PAGE 9
þ
|
Exhibit A | Modifications to Multifamily Note |
PAGE 10
[Borrower] | ||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance | ||||
Borrowers Social Security/Employer ID Number | ||||
PAGE 11
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE
CORPORATION, WITHOUT RECOURSE. DEUTSCHE BANK BERKSHIRE MORTGAGE, INC. , a Delaware corporation |
||||
By: | ||||
Name: | ||||
Title: | ||||
By: | ||||
Name: | ||||
Title: | ||||
PAGE 12
1. | [Intentionally omitted.] | |
2. | [Intentionally omitted.] | |
3. | [Intentionally omitted.] | |
4. | Section 7(a) is modified by inserting (other than the payment of principal due on the Maturity Date) after the word Note. | |
5. | [Intentionally omitted.] | |
6. | Section 9(c) is modified by inserting (including any costs and expenses incurred by Lender in collecting any amounts for which Borrower is personally liable under this Section 9) before the words as a result in the introductory language. | |
7. | Section 9(c)(iii) is modified by | |
inserting (including with respect to the payment of the costs of audits) after Section 14(g); | ||
and | ||
by inserting and such failure continues beyond the notice and cure period provided for in Section 14(g) of the Security Instrument after the word reports and before the period at the end of the Section. | ||
8. | Section 9(c) is modified by replacing the first sentence of Section 9(c)(iv) with the following: |
Borrower fails to apply Rents to pay when due in accordance with the terms of the Security Instrument the amount of any item below marked Deferred; provided however that if no item is marked Deferred (excluding any of such Deferred items for which Borrower has deposited funds in escrow with Lender, to the extent of such deposited funds), this Section 9(c)(iv) shall be of no force or effect. However, Borrower will not be personally liable for any failure described in this subsection (iv) if (1) Borrower is unable to apply such Rents to any item below marked Deferred as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding; or (2) Borrower has, within the applicable calendar year during which such Rents became available to Borrower, paid and is current with respect to all operating expenses of the Mortgaged Property and amounts due and payable in respect of the Indebtedness for such calendar year. |
and |
PAGE A-1
by adding in Section 9(c)(iv) the words or that are otherwise provided for in recorded covenants affecting the Land after the words Mortgaged Property in the following provision: | ||
[Deferred] assessments or other charges (that could become a lien on the Mortgaged Property) | ||
and | ||
by adding new Section 9(c)(v) as follows: |
9. | Section 9(d)(i) is modified by adding the following proviso at the end of the Section: | |
provided, that, notwithstanding anything to the contrary set forth in this Note or in Section 18 of the Security Instrument, Lender agrees that Borrowers obligations under this subsection (d) shall be limited to the assets of Borrower; and Lender further agrees that Lender shall not seek to recover any deficiency from any natural persons who are (i) general or limited partners, members, managers, principals, officers, directors or shareholders in Borrower; or (ii) general or limited partners, members, managers, principals, officers, directors or shareholders of any entity general partner, member or manager of Borrower. | ||
10. | Sections 9(d)(ii) and (iii) are deleted in their entirety. | |
11. | Section 9(f)(iii) is modified by (i) deleting the phrase or written material misrepresentation and (ii) adding the following phrase immediately before the period: | |
, provided that, notwithstanding anything to the contrary set forth in any cross-collateralization agreement to which this Note may be subject (if any), the Borrowers liability under this Section 9(f)(iii) shall not exceed the Indebtedness evidenced by (and defined in) this Note. | ||
12. | Section 9 is modified by adding a new Section 9(h): | |
(h) To the extent Borrower has personal liability under this Note or any of the other Loan Documents, such personal liability shall be limited to the assets of Borrower; and Lender further agrees that Lender shall not seek to recover any deficiency from any natural persons who are (i) general or limited partners, members, managers, principals, officers, directors or shareholders in Borrower; or (ii) general or limited partners, members, managers, principals, officers, directors or shareholders of any entity general partner, member or manager of Borrower; provided, however, the foregoing shall not affect the obligations of any guarantor under any guaranty or indemnity executed on or after the date hereof in connection with the Loan | ||
13. | [Intentionally omitted.] | |
14. | Section 13 is modified by inserting , except as otherwise set forth in this Note or the other Loan Documents before the period. |
PAGE A-2
15. | Section 19(b) is modified by replacing the words Transfer under the terms of the Security Instrument that requires Lenders consent with the words Section 21(f) Transfer. | |
16. | Section 20 is modified by: | |
changing may to shall in the first sentence; | ||
inserting exclusive before the second jurisdiction in the second sentence; | ||
inserting and Lender after Borrower in third sentence; and | ||
deleting the last sentence and replacing it with Nothing in this Section 20 is intended to limit Lenders right to remove a matter to federal court within the Property Jurisdiction.. | ||
17. | Section 1(a) is amended to delete the definition of Security Instrument in its entirety and replace it with the following: | |
Security Instrument means, collectively, the multifamily mortgage, deed to secure debt or deed of trust effective as of the effective date of this Note, from Borrower to or for the benefit of Lender, together with all of the other Mortgages (as defined in that certain Master Cross-Collateralization Agreement dated as of the date of this Note, by and among the Lender, the Borrower and the other entities identified as Borrower on Exhibit A attached thereto), each of which is securing this Note. |
PAGE A-3
(i) | the full and prompt payment when due, whether at the Maturity Date or earlier, by reason of acceleration or otherwise, and at all times thereafter, of each of the following: |
(A) | a portion of the Indebtedness equal to zero percent (0%) of the original principal balance of the Note (the Base Guaranty ); and | ||
(B) | in addition to the Base Guaranty, all other amounts for which Borrower is personally liable under Sections 9(c), 9(d) and 9(f) of the Note; and | ||
(C) | all costs and expenses, including reasonable Attorneys Fees and Costs incurred by Lender in enforcing its rights under this Guaranty; and |
(ii) | the full and prompt payment and performance when due of all of Borrowers obligations under Sections 18 and 51 of the Security Instrument. |
PAGE 1
(i) | Borrower voluntarily files for bankruptcy protection under the United States Bankruptcy Code; or | ||
(ii) | Borrower voluntarily becomes subject to any reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights; or | ||
(iii) | an order of relief is entered against Borrower pursuant to the United States Bankruptcy Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined in by a Related Party . |
(i) | Borrower or Guarantor; and | ||
(ii) | any person or entity that holds, directly or indirectly, any ownership interest in or right to manage Borrower or Guarantor, including without limitation, any shareholder, member or partner of Borrower or Guarantor; and | ||
(iii) | any person or entity in which any ownership interest (direct or indirect) or right to manage is held by Borrower, Guarantor or any partner, shareholder or member of, or any other person or entity holding an interest in, Borrower or Guarantor; and | ||
(iv) | any other creditor of Borrower that is related by blood, marriage or adoption to Borrower, Guarantor or any partner, shareholder or |
PAGE 2
member of, or any other person or entity holding an interest in, Borrower or Guarantor. |
PAGE 3
PAGE 4
PAGE 5
(i) | any defense (which defense, if Guarantor had not given this waiver, Guarantor might otherwise have) to a judgment against Guarantor by reason of a nonjudicial foreclosure; | ||
(ii) | any and all benefits under |
(A) | California Code of Civil Procedure Section 580a (which Section, if Guarantor had not given this waiver, would otherwise limit Guarantors liability after a nonjudicial foreclosure sale to the difference between the obligations of Guarantor under this Guaranty and the fair market value of the property or interests sold at such nonjudicial foreclosure sale), | ||
(B) | California Code of Civil Procedure Sections 580b and 580d (which Sections, if Guarantor had not given this waiver, would otherwise limit Lenders right to recover a deficiency judgment with respect to purchase money obligations and after a nonjudicial foreclosure sale, respectively), and | ||
(C) | California Code of Civil Procedure Section 726 (which Section, if Guarantor had not given this waiver, among other things, would otherwise require Lender to exhaust all of its security before a personal judgment could be obtained for a deficiency). |
PAGE 6
þ
|
Exhibit A | Modifications to Guaranty |
PAGE 7
AVALONBAY COMMUNITIES, INC.
, a
Maryland corporation |
||||
By: | /s/ Joanne M. Lockridge | |||
Joanne M. Lockridge | ||||
Senior Vice President-Finance | ||||
State of
|
|
|||||
County of
|
|
|||||
On
|
|
before me, |
,
|
|||
DATE
|
NAME, TITLE OF OFFICER E.G., JANE DOE, NOTARY PUBLIC | |||||
personally appeared
|
,
|
|||||
NAME(S) OF SIGNER(S) |
Signature of Notary] | ||||
PAGE 8
Name:
Address: |
AvalonBay Communities, Inc.
2900 Eisenhower Avenue, Suite 300 Alexandria, Virginia 22314 |
PAGE 9
1. | Section 2(a)(i)(B) is restated in its entirety as follows: |
(B) | in addition to the Base Guaranty, all other amounts for which Borrower is personally liable under Sections 9(c), and 9(f) of the Note; and |
2. | Section 2(a)(ii) is deleted in its entirety. | |
3. | Section 3 is deleted in its entirety. | |
4. | Section 4 is modified by inserting a period after the words Security Instrument the first time they appear in Section, and deleting the remainder of the Section. | |
5. | Section 6 is modified by inserting , except as set forth herein and in the other Loan Documents after by Lender in the first sentence. | |
6. | Section 6(e) is modified by inserting , except as set forth herein and in the other Loan Documents before the semi-colon. | |
7. | [Intentionally omitted.] | |
8. | Section 7(d) is modified by inserting but expressly excluding Section 9 of the Note or any other provision of the Loan Documents that impacts Section 9 of the Note before the semi-colon. | |
9. | Section 11 is modified by inserting and Lender actually refunds the same after the words sums to Borrower in the first sentence. | |
10. | Section 12 is deleted in its entirety and replaced with the following: |
12. | Financial Statements. Guarantor, annually upon written request by Lender, shall deliver to Lender Guarantors annual financial statements. In addition, following an Event of Default, Guarantor shall provide to Lender such additional financial statements as Lender may reasonably require. |
11. | Section 16 is modified by: | |
changing may to shall in the first sentence; | ||
inserting exclusive before jurisdiction the last time it appears in the first sentence; | ||
inserting and Lender after Guarantor in second sentence; and | ||
and | ||
deleting the last sentence and replacing it with Nothing in this Section 16 is intended to limit Lenders right to remove a matter to federal court within the Property Jurisdiction.. |
PAGE A-1
12. | Section 17 is modified by adding the following to the end of the Section: | |
Guarantor will maintain its interest in Borrower during the term of the Loan as provided in the Security Instrument. In addition, until the Indebtedness is paid in full, Guarantor shall maintain its existence as a Maryland corporation in good standing, exercising each extension of the term of its existence as necessary to do so. |
13. | A new Section 21 is added, reading as follows: | |
21. The obligations of Guarantor shall not be impaired or in any way limited by (i) any action taken by Lender to enforce its rights under or realize upon collateral for any of the Loans as defined in the Master Cross-Collateralization Agreement dated the same date as this Guaranty among Lender and the Borrowers identified therein (the Cross-Collateralization Agreement), (ii) the fact that Lender may be seeking to realize upon some but not all of the collateral for the Loans as defined in the Cross-Collateralization Agreement, or (iii) the exercise or not, concurrently, consecutively or otherwise, of any of the rights or remedies available to Lender under the Cross-Collateralization Agreement or applicable law. |
PAGE A-2
Six Months | Year | Year | Year | Year | Year | |||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||
June 30,
2009 |
December 31,
2008 (1) |
December 31,
2007 (1) |
December 31,
2006 (1) |
December 31,
2005 (1) |
December 31,
2004 (1) |
|||||||||||||||||||
Income from continuing operations before gain on sale
of communities and cumulative effect of change in
accounting principle
|
$ | 65,099 | $ | 114,378 | $ | 231,184 | $ | 148,942 | $ | 84,802 | $ | 45,969 | ||||||||||||
|
||||||||||||||||||||||||
(Plus):
|
||||||||||||||||||||||||
Net (loss) income attributable to noncontrolling
interests
|
(1,275 | ) | (741 | ) | 1,585 | 573 | 1,481 | 150 | ||||||||||||||||
Amortization of capitalized interest (2)
|
6,648 | 12,428 | 9,941 | 7,503 | 5,957 | 5,114 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Earnings before fixed charges
|
$ | 70,472 | $ | 126,065 | $ | 242,710 | $ | 157,018 | $ | 92,240 | $ | 51,233 | ||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
(Plus) Fixed charges:
|
||||||||||||||||||||||||
Portion of rents representative
of the interest factor
|
$ | 420 | $ | 855 | $ | 722 | $ | 518 | $ | 354 | $ | 323 | ||||||||||||
Interest expense
|
66,631 | 114,878 | 94,540 | 106,271 | 122,787 | 127,123 | ||||||||||||||||||
Interest capitalized
|
26,045 | 74,621 | 73,118 | 46,388 | 25,284 | 20,566 | ||||||||||||||||||
Preferred dividend
|
| 10,454 | 8,700 | 8,700 | 8,700 | 8,700 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total fixed charges (3)
|
$ | 93,096 | $ | 200,808 | $ | 177,080 | $ | 161,877 | $ | 157,125 | $ | 156,712 | ||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
(Less):
|
||||||||||||||||||||||||
Interest capitalized
|
26,045 | 74,621 | 73,118 | 46,388 | 25,284 | 20,566 | ||||||||||||||||||
Preferred dividend
|
| 10,454 | 8,700 | 8,700 | 8,700 | 8,700 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Earnings (4)
|
$ | 137,523 | $ | 241,798 | $ | 337,972 | $ | 263,807 | $ | 215,381 | $ | 178,679 | ||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Ratio (4 divided by 3)
|
1.48 | 1.20 | 1.91 | 1.63 | 1.37 | 1.14 | ||||||||||||||||||
|
Six Months | Year | Year | Year | Year | Year | |||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||
June 30,
2009 |
December 31,
2008 (1) |
December 31,
2007 (1) |
December 31,
2006 (1) |
December 31,
2005 (1) |
December 31,
2004 (1) |
|||||||||||||||||||
Income from continuing operations before gain on sale
of communities and cumulative effect of change in
accounting principle
|
$ | 65,099 | $ | 114,378 | $ | 231,184 | $ | 148,942 | $ | 84,802 | $ | 45,969 | ||||||||||||
|
||||||||||||||||||||||||
(Plus):
|
||||||||||||||||||||||||
Net (loss) income attributable to noncontrolling
interests
|
(1,275 | ) | (741 | ) | 1,585 | 573 | 1,481 | 150 | ||||||||||||||||
Amortization of capitalized interest (2)
|
6,648 | 12,428 | 9,941 | 7,503 | 5,957 | 5,114 | ||||||||||||||||||
|
||||||||||||||||||||||||
Earnings before fixed charges
|
$ | 70,472 | $ | 126,065 | $ | 242,710 | $ | 157,018 | $ | 92,240 | $ | 51,233 | ||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
(Plus) Fixed charges:
|
||||||||||||||||||||||||
Portion of rents representative
of the interest factor
|
$ | 420 | $ | 855 | $ | 722 | $ | 518 | $ | 354 | $ | 323 | ||||||||||||
Interest expense
|
66,631 | 114,878 | 94,540 | 106,271 | 122,787 | 127,123 | ||||||||||||||||||
Interest capitalized
|
26,045 | 74,621 | 73,118 | 46,388 | 25,284 | 20,566 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total fixed charges (3)
|
$ | 93,096 | $ | 190,354 | $ | 168,380 | $ | 153,177 | $ | 148,425 | $ | 148,012 | ||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
(Less):
|
||||||||||||||||||||||||
Interest capitalized
|
26,045 | 74,621 | 73,118 | 46,388 | 25,284 | 20,566 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Earnings (4)
|
$ | 137,523 | $ | 241,798 | $ | 337,972 | $ | 263,807 | $ | 215,381 | $ | 178,679 | ||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Ratio (4 divided by 3)
|
1.48 | 1.27 | 2.01 | 1.72 | 1.45 | 1.21 | ||||||||||||||||||
|
(1) | The results of operations for 2004 through 2008 have been adjusted to reflect discontinued operations for properties sold or held for sale as of June 30, 2009. | |
(2) | Represents an estimate of capitalized interest costs based on the Companys established depreciation policy and an analysis of interest costs capitalized since 1998 (the year in which AvalonBay was formed). |
1. | I have reviewed this quarterly report on Form 10-Q of AvalonBay Communities, Inc.; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Bryce Blair | ||||
Bryce Blair | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of AvalonBay Communities, Inc.; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Thomas J. Sargeant | ||||
Thomas J. Sargeant | ||||
Chief Financial Officer |
Date: August 10, 2009 | /s/ Bryce Blair | |||
Bryce Blair | ||||
Chief Executive Officer | ||||
/s/ Thomas J. Sargeant | ||||
Thomas J. Sargeant | ||||
Chief Financial Officer | ||||