AvalonBay Communities, Inc. (NYSE: AVB) (the “Company”) reported
today that Net Income Attributable to Common Stockholders for the
three months ended September 30, 2022 was $494,747,000. This
resulted in an increase in Earnings per Share – diluted (“EPS”) for
the three months ended September 30, 2022 of 530.4% to $3.53 from
$0.56 for the prior year period, primarily attributable to an
increase in gain on sale of real estate and an increase in Same
Store Residential NOI, as detailed in the table below.
Funds from Operations attributable to common stockholders -
diluted (“FFO”) per share for the three months ended September 30,
2022 increased 25.5% to $2.46 from $1.96 for the prior year period.
Core FFO per share (as defined in this release) for the three
months ended September 30, 2022 increased 21.4% to $2.50 from $2.06
for the prior year period.
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the three months
ended September 30, 2022 to its results for the prior year
period:
Q3 2022 Results Compared to Q3
2021
Per Share (1)
EPS
FFO
Core FFO
Q3 2021 per share reported results
$
0.56
$
1.96
$
2.06
Same Store Residential NOI (2)
0.35
0.35
0.35
Development and Other Stabilized
Residential NOI
0.14
0.14
0.14
Commercial NOI
0.03
0.03
0.03
Overhead and other
(0.06
)
(0.06
)
(0.04
)
Capital markets and transaction
activity
0.06
0.06
(0.06
)
Unconsolidated investment income
—
—
0.02
Income taxes
(0.02
)
(0.02
)
—
Gain on sale of real estate and
depreciation expense
2.47
—
—
Q3 2022 per share reported results
$
3.53
$
2.46
$
2.50
(1) For additional detail on reconciling
items between net income attributable to common stockholders, FFO
and Core FFO, see Definitions and Reconciliations, table 3.
(2) Consists of increases of $0.43 in
revenue and $0.08 in operating expenses.
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the three months
ended September 30, 2022 to its July 2022 outlook:
Q3 2022 Results Compared to
July 2022 Outlook
Per Share
EPS
FFO
Core FFO
Projected per share (1)
$
3.53
$
2.54
$
2.52
Same Store Residential NOI (2)
(0.03
)
(0.03
)
(0.03
)
Development and Other Stabilized
Residential NOI
—
—
—
Commercial NOI
0.01
0.01
0.01
Overhead and other
(0.05
)
(0.05
)
(0.01
)
Capital markets and transaction
activity
(0.01
)
(0.01
)
—
Unconsolidated investment income and
other
0.04
0.04
0.01
Income taxes
(0.04
)
(0.04
)
—
Gain on sale of real estate and
depreciation expense
0.08
—
—
Q3 2022 per share reported results
$
3.53
$
2.46
$
2.50
(1) The mid-point of the Company's July
2022 outlook.
(2) Consists of $0.01 for revenue and
$0.02 for operating expenses.
For the nine months ended September 30, 2022, EPS increased
33.6% to $6.40 from $4.79 for the prior year period, FFO per share
increased 21.3% to $7.11 from $5.86 for the prior year period, and
Core FFO per share increased 20.0% to $7.19 from $5.99 for the
prior year period.
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the nine months ended
September 30, 2022 to its results for the prior year period:
YTD 2022 Results Compared to
YTD 2021
Per Share (1)
EPS
FFO
Core FFO
YTD 2021 per share reported results
$
4.79
$
5.86
$
5.99
Same Store Residential NOI (2)
1.00
1.00
1.00
Development and Other Stabilized
Residential NOI
0.49
0.49
0.49
Commercial NOI
0.07
0.07
0.07
Overhead and other
(0.17
)
(0.17
)
(0.15
)
Capital markets and transaction
activity
(0.10
)
(0.10
)
(0.24
)
Unconsolidated investment income
0.01
0.01
0.03
Income taxes
(0.05
)
(0.05
)
—
Gain on sale of real estate and
depreciation expense
0.36
—
—
YTD 2022 per share reported results
$
6.40
$
7.11
$
7.19
(1) For additional detail on reconciling
items between net income attributable to common stockholders, FFO
and Core FFO, see Definitions and Reconciliations, table 3.
(2) Consists of increases of $1.19 in
revenue and $0.19 in operating expenses.
Same Store Operating Results for the Three Months Ended
September 30, 2022 Compared to the Prior Year Period
Same Store total revenue increased $61,001,000, or 11.9%, to
$574,782,000. Same Store Residential rental revenue increased
$60,008,000, or 11.8%, to $567,890,000, as detailed in the
following table:
Same Store Residential Rental
Revenue Change
Q3 2022 Compared to Q3
2021
Residential rental revenue
Lease rates
9.5 %
Concessions and other discounts
2.4 %
Economic occupancy
(0.2) %
Other rental revenue
0.9 %
Uncollectible lease revenue (excluding
rent relief) (1)
0.6 %
Rent relief (2)
(1.4) %
Total Residential rental revenue
11.8 %
(1) Adjusting to remove the impact of rent
relief, uncollectible lease revenue as a percentage of total
Residential rental revenue decreased to 2.90% in Q3 2022 from 3.84%
in Q3 2021.
(2) The Company recognized $5,673,000 and
$12,663,000 from government rent relief programs during Q3 2022 and
Q3 2021, respectively.
Same Store Residential operating expenses increased $10,990,000,
or 6.5%, to $179,907,000 and Same Store Residential NOI increased
$48,991,000, or 14.4%, to $388,397,000.
The following table presents percentage changes in Same Store
Residential rental revenue, operating expenses and NOI for the
three months ended September 30, 2022 compared to the three months
ended September 30, 2021:
Q3 2022 Compared to Q3
2021
Same Store Residential
Rental Revenue
(1)
Opex
(2)
% of Q3 2022
NOI
Rental Revenue cash basis
(3)
NOI
New England
14.2 %
2.7 %
21.0 %
15.1 %
13.1 %
Metro NY/NJ
14.5 %
11.1 %
16.2 %
20.8 %
14.0 %
Mid-Atlantic
8.8 %
6.7 %
9.9 %
14.4 %
8.6 %
Southeast FL
18.5 %
5.2 %
26.8 %
1.6 %
17.2 %
Denver, CO
13.5 %
(3.5) %
22.3 %
1.3 %
13.6 %
Pacific NW
17.9 %
8.4 %
22.5 %
6.5 %
14.4 %
N. California
10.7 %
5.0 %
13.1 %
18.7 %
7.1 %
S. California
8.5 %
6.4 %
9.4 %
21.6 %
7.7 %
Total
11.8 %
6.5 %
14.4 %
100.0 %
10.5 %
(1) See full release for additional
detail.
(2) See full release for discussion of
variances.
(3) The change in Residential Rental
Revenue with Concessions on a Cash Basis.
Same Store Operating Results for the Nine Months Ended
September 30, 2022 Compared to the Prior Year Period
Same Store total revenue increased $169,167,000, or 11.3%, to
$1,671,920,000. Same Store Residential rental revenue increased
$165,244,000, or 11.1%, to $1,652,297,000, as detailed in the
following table:
Same Store Residential Rental
Revenue Change
YTD 2022 Compared to YTD
2021
Residential rental revenue
Lease rates
7.3 %
Concessions and other discounts
2.0 %
Economic occupancy
0.2 %
Other rental revenue
0.9 %
Uncollectible lease revenue (excluding
rent relief) (1)
(0.5) %
Rent relief (2)
1.2 %
Total Residential rental revenue
11.1 %
(1) Adjusting to remove the impact of rent
relief, uncollectible lease revenue as a percentage of total
Residential rental revenue increased to 3.56% in YTD 2022 from
3.42% in YTD 2021.
(2) The Company recognized $33,718,000 and
$16,371,000 from government rent relief programs YTD 2022 and YTD
2021, respectively.
Same Store Residential operating expenses increased $25,987,000,
or 5.3%, to $513,869,000 and Same Store Residential NOI increased
$139,367,000, or 13.9%, to $1,139,668,000.
The following table presents percentage changes in Same Store
Residential rental revenue, operating expenses and NOI for the nine
months ended September 30, 2022 compared to the nine months ended
September 30, 2021:
YTD 2022 Compared to YTD
2021
Same Store Residential
Rental Revenue
(1)
Opex
(2)
% of
YTD 2022 NOI
Rental Revenue cash basis
(3)
NOI
New England
12.2 %
5.1 %
16.3 %
14.7 %
13.5 %
Metro NY/NJ
11.8 %
8.1 %
13.6 %
20.5 %
13.2 %
Mid-Atlantic
7.1 %
4.6 %
8.3 %
14.5 %
7.5 %
Southeast FL
22.0 %
3.5 %
34.6 %
1.6 %
20.7 %
Denver, CO
13.1 %
(4.9) %
21.4 %
1.3 %
12.3 %
Pacific NW
15.6 %
3.4 %
21.7 %
6.5 %
14.1 %
N. California
7.9 %
4.2 %
9.4 %
18.6 %
6.7 %
S. California
13.2 %
5.5 %
16.8 %
22.3 %
12.3 %
Total
11.1 %
5.3 %
13.9 %
100.0 %
11.1 %
(1) See full release for additional
detail.
(2) See full release for discussion of
variances.
(3) The change in Residential Rental
Revenue with Concessions on a Cash Basis.
Development Activity
Consolidated Development
Communities
During the three months ended September 30, 2022, the Company
started the construction of Avalon Annapolis, located in Annapolis,
MD. Avalon Annapolis is expected to contain 508 apartment homes
when completed and be developed for an estimated Total Capital Cost
of $202,000,000.
During the nine months ended September 30, 2022, the Company
completed the development of four communities containing an
aggregate of 1,686 apartment homes for an aggregate Total Capital
Cost of $598,000,000.
At September 30, 2022, the Company had 17 consolidated
Development communities under construction that are expected to
contain 5,427 apartment homes and 56,000 square feet of commercial
space. Estimated Total Capital Cost at completion for these
Development communities is $2,277,000,000.
Unconsolidated Development
Communities
At September 30, 2022, the Company had one Unconsolidated
Development community under construction that is expected to
contain 475 apartment homes and 56,000 square feet of commercial
space.
Disposition Activity
Consolidated Apartment
Communities
During the three months ended September 30, 2022, the Company
sold five wholly-owned communities:
- Avalon Green I, Avalon Green II and Avalon Green III, located
in Elmsford, NY;
- Avalon Del Mar Station, located in Pasadena, CA; and
- Avalon Sharon, located in Sharon, MA.
In aggregate, these communities contain 1,120 apartment homes
and were sold for $543,950,000 and a weighted average Initial
Market Cap Rate of 4.1%, resulting in a gain in accordance with
GAAP of $317,962,000 and an Economic Gain of $218,881,000.
During the nine months ended September 30, 2022, the Company
sold eight wholly-owned communities containing an aggregate of
1,708 apartment homes. These assets were sold for $778,950,000 and
a weighted average initial Market Cap Rate of 4.0%, resulting in a
gain in accordance with GAAP of $466,670,000 and an Economic Gain
of $338,685,000.
During the three and nine months ended September 30, 2022, the
Company sold 10 and 38, respectively, of the 172 residential
condominiums at The Park Loggia, located in New York, NY, for gross
proceeds of $38,991,000 and $120,328,000, respectively. As of
September 30, 2022, the Company has sold 161 of the 172 residential
condominiums for aggregate gross proceeds of $472,158,000.
The Company utilized a portion of the aggregate disposition
proceeds received to acquire the wholly-owned communities discussed
below during the nine months ended September 30, 2022.
Unconsolidated Real Estate
Investments
During the three months ended September 30, 2022, Archstone
Multifamily Partners AC LP (the "U.S. Fund"), a private
discretionary real estate investment vehicle in which the Company
holds an equity interest of 28.6%, sold its final three
communities, Avalon Grosvenor Tower, Avalon Studio 4121 and Avalon
Station 250. These communities contain an aggregate of 671
apartment homes and were sold for $313,500,000. With the
disposition of these communities, the Company recognized $4,690,000
in joint venture income associated with its promoted interest in
the U.S. Fund.
Acquisition Activity
During the three months ended September 30, 2022, the Company
acquired Avalon Miramar Park Place, a wholly-owned community,
located in Miramar, FL, containing 650 apartment homes for a
purchase price of $295,000,000.
During the nine months ended September 30, 2022, the Company
acquired three wholly-owned communities containing 1,053 apartment
homes and 16,000 square feet of commercial space for a total
purchase price of $459,500,000.
In October 2022, the Company acquired Avalon Highland Creek, a
wholly-owned community, located in Charlotte, NC, containing 260
apartment homes for a purchase price of $76,700,000.
Structured Investment Program Activity
During the nine months ended September 30, 2022, the Company
entered into the first commitments under its Structured Investment
Program, through which the Company will provide mezzanine loans or
preferred equity to third party multifamily developers. The initial
commitments are for three mezzanine loans of up to $92,375,000 in
the aggregate, including a $12,800,000 loan commitment entered into
during the three months ended September 30, 2022. These commitments
are to fund multifamily development projects in the Company's
existing markets. At September 30, 2022, the commitments had a
weighted average interest rate of 9.2% and the Company had funded
$15,514,000 of these commitments.
Liquidity and Capital Markets
In March 2022, the Company established an unsecured commercial
paper note program, which allows the Company to issue, from time to
time, unsecured commercial paper notes with varying maturities of
less than one year up to a maximum amount outstanding at any one
time of $500,000,000. The program is backstopped by the Company's
commitment to maintain available borrowing capacity under its
Credit Facility in an amount equal to actual borrowings under the
program. The Company had $49,985,000 outstanding under its
commercial paper program as of September 30, 2022.
In September 2022, the Company amended and restated its
unsecured revolving credit facility (the "Credit Facility") to (i)
increase its borrowing capacity from $1,750,000,000 to
$2,250,000,000, (ii) extend the term of the Credit Facility from
February 2024 to September 2026, with two six-month extension
options available to the Company for a fee, (iii) amend certain
provisions, notably to reduce the capitalization rate used to
derive certain financial covenants from 6.0% to 5.75% and (iv)
transition the benchmark rate from the London Interbank Offered
Rate ("LIBOR") to the Secured Overnight Financing Rate
("SOFR").
The Company's cost of borrowing under the Credit Facility is
composed of (i) SOFR, (ii) its current borrowing spread to SOFR of
0.825% per annum, which consists of a 0.10% SOFR adjustment plus
0.725% per annum, (iii) potential sustainability rate and facility
fee adjustments that can range from (0.025)% to 0.025% in the
aggregate and (iv) an annual facility fee of 0.125%. The borrowing
spread to SOFR and the annual facility fee can vary and are
determined by the ratings of our unsecured and unsubordinated
long-term indebtedness. The sustainability rate and facility fee
adjustments can vary and are determined by achievement under
certain established environmental, social and governance metrics,
with the initial adjustment date effective in July 2023 and
recalculation annually thereafter. Prior to the amended and
restated Credit Facility, the Company's cost of borrowing was
comprised of LIBOR plus 0.775% and an annual facility fee at 0.125%
both as determined by the Company's credit ratings.
As of September 30, 2022, the Company did not have any
borrowings outstanding under the Credit Facility, and after taking
into account its commercial paper program and letters of credit,
the Company had $2,193,101,000 available under the Credit
Facility.
In addition, at September 30, 2022, the Company had $487,126,000
in unrestricted cash and cash in escrow.
The Company’s annualized Net Debt-to-Core EBITDAre (as defined
in this release) for the third quarter of 2022 was 4.6 times and
Unencumbered NOI (as defined in this release) for the nine months
ended September 30, 2022 was 95%.
During the three months ended September 30, 2022, the Company
repaid $35,276,000 principal amount secured fixed rate debt with an
effective rate of 6.16% in advance of the October 2047 maturity
date, recognizing a loss on debt extinguishment of $1,399,000
composed of prepayment penalties and the non-cash write off of
unamortized deferred financing costs.
During the nine months ended September 30, 2022, in addition to
the debt activity discussed above, the Company repaid $100,000,000
principal amount of its variable rate unsecured term loan at its
maturity. The variable rate unsecured term loan was indexed to
LIBOR plus 0.90% and entered into in February 2017.
During the nine months ended September 30, 2022, in connection
with an underwritten offering of shares, the Company entered into
forward contracts to sell 2,000,000 shares of common stock by the
end of 2023 for approximate proceeds of $494,200,000 net of
offering fees and discounts and based on the initial forward price.
The proceeds that the Company expects to receive on the date or
dates of settlement are subject to certain customary adjustments
during the term of the forward contract for the Company's dividends
and a daily interest charge.
In October 2022, the Company settled the outstanding forward
contracts entered into in December 2021 under its current
continuous equity program, selling 68,577 shares of common stock
for $229.34 per share, for net proceeds of $15,727,000.
Fourth Quarter and Full Year 2022 Financial Outlook
For its fourth quarter and full year 2022 financial outlook, the
Company expects the following:
Projected EPS, Projected FFO and
Projected Core FFO Outlook (1)
Q4 2022
Full Year 2022
Low
High
Low
High
Projected EPS
$ 1.70
—
$ 1.80
$ 8.10
—
$ 8.20
Projected FFO per share
$ 2.52
—
$ 2.62
$ 9.62
—
$ 9.72
Projected Core FFO per share
$ 2.55
—
$ 2.65
$ 9.74
—
$ 9.84
(1) See Definitions and Reconciliations,
table 9, for reconciliations of Projected FFO per share and
Projected Core FFO per share to Projected EPS.
Full Year Financial
Outlook
Full Year 2022
vs. Full Year 2021
Low
High
Same Store:
Residential rental revenue change
10.8%
—
11.2%
Residential Opex change
5.5%
—
6.0%
Residential NOI change
13.0%
—
13.8%
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the third quarter
2022 to its fourth quarter 2022 financial outlook:
Q3 2022 Results Compared to Q4
2022 Outlook
Per Share
EPS
FFO
Core FFO
Q3 2022 per share reported results
$
3.53
$
2.46
$
2.50
Same Store Residential revenue
0.04
0.04
0.04
Same Store Residential Opex
0.07
0.07
0.07
Development and Other Stabilized
Residential NOI
0.02
0.02
0.02
Commercial NOI
(0.02
)
(0.02
)
(0.02
)
Capital markets and transaction
activity
0.01
0.01
—
Overhead and other
(0.01
)
(0.01
)
(0.01
)
Gain on sale of real estate and
depreciation expense
(1.89
)
—
—
Projected per share - Q4 2022 outlook
(1)
$
1.75
$
2.57
$
2.60
(1) Represents the mid-point of the
Company's outlook.
The following table compares the Company’s October 2022 outlook
for EPS, FFO per share and Core FFO per share to its July 2022
financial outlook for the full year 2022:
October 2022 Full Year Outlook
Compared
to July 2022 Full Year
Outlook
Per Share
EPS
FFO
Core FFO
Projected per share - July 2022 outlook
(1)
$
7.63
$
9.84
$
9.86
Same Store Residential revenue
(0.04)
(0.04)
(0.04)
Same Store Residential Opex
(0.03)
(0.03)
(0.03)
Development and Other Stabilized
Residential NOI
(0.01)
(0.01)
(0.01)
Commercial NOI
0.02
0.02
0.02
Capital markets and transaction
activity
(0.03)
(0.03)
(0.01)
Overhead and other
(0.08)
(0.08)
—
Gain on sale of real estate and
depreciation expense
0.69
—
—
Projected per share - October 2022 outlook
(1)
$
8.15
$
9.67
$
9.79
(1) Represents the mid-point of the
Company's outlook.
Other Matters
The Company will hold a conference call on November 4, 2022 at
11:00 AM ET to review and answer questions about this release, its
third quarter 2022 results, the Attachments (described below) and
related matters. To participate on the call, dial 877-407-9716.
To hear a replay of the call, which will be available from
November 4, 2022 at 2:00 PM ET to December 4, 2022, dial
844-512-2921 and use replay passcode: 13733776. A webcast of the
conference call will also be available at
http://www.avalonbay.com/earnings, and an online playback of the
webcast will be available for at least seven days following the
call.
The Company produces Earnings Release Attachments (the
"Attachments") that provide detailed information regarding
operating, development, redevelopment, disposition and acquisition
activity. These Attachments are considered a part of this earnings
release and are available in full with this earnings release via
the Company's website at http://www.avalonbay.com/earnings. To
receive future press releases via e-mail, please submit a request
through http://investors.avalonbay.com/email_notification.
In addition to the Attachments, the Company is providing a
teleconference presentation that will be available on the Company's
website at http://www.avalonbay.com/earnings subsequent to this
release and before the market opens on November 4, 2022.
About AvalonBay Communities, Inc.
As of September 30, 2022, the Company owned or held a direct or
indirect ownership interest in 293 apartment communities containing
88,405 apartment homes in 12 states and the District of Columbia,
of which 18 communities were under development and one community
was under redevelopment. The Company is an equity REIT in the
business of developing, redeveloping, acquiring and managing
apartment communities in leading metropolitan areas in New England,
the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific
Northwest, and Northern and Southern California, as well as in the
Company's expansion markets of Raleigh-Durham and Charlotte, North
Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver,
Colorado. More information may be found on the Company’s website at
http://www.avalonbay.com. For
additional information, please contact Jason Reilley, Vice
President of Investor Relations, at 703-317-4681.
Forward-Looking Statements
This release, including its Attachments, contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements, which you can identify by the Company’s use of words
such as “expects,” “plans,” “estimates,” “anticipates,” “projects,”
“intends,” “believes,” “outlook,” "may," "shall," "will," "pursue"
and similar expressions that predict or indicate future events and
trends and that do not report historical matters, are based on the
Company’s expectations, forecasts and assumptions at the time of
this release, which may not be realized and involve risks and
uncertainties that cannot be predicted accurately or that might not
be anticipated. These could cause actual results, performance or
achievements to differ materially from the anticipated future
results, performance or achievements expressed or implied by the
forward-looking statements. Risks and uncertainties that might
cause such differences include the following: risks related to the
COVID-19 pandemic, including the effect, among other factors, on
the multifamily industry and the general economy of measures taken
by businesses and the government, such as governmental limitations
on the ability of multifamily owners to evict residents who are
delinquent in the payment of their rent, the preferences of
consumers and businesses for living and working arrangements, and
federal efforts at economic stimulus; we may abandon development or
redevelopment opportunities for which we have already incurred
costs; adverse capital and credit market conditions, including
rising interest rates, may affect our access to various sources of
capital and/or cost of capital, which may affect our business
activities, earnings and common stock price, among other things;
changes in local employment conditions, demand for apartment homes,
supply of competitive housing products, landlord-tenant laws,
including the adoption of new rent control regulations, and other
economic or regulatory conditions may result in lower than expected
occupancy and/or rental rates and adversely affect the
profitability of our communities; delays in completing development,
redevelopment and/or lease-up, and general price inflation, may
result in increased financing and construction costs and may delay
and/or reduce the profitability of a community; debt and/or equity
financing for development, redevelopment or acquisitions of
communities may not be available or may not be available on
favorable terms; we may be unable to obtain, or experience delays
in obtaining, necessary governmental permits and authorizations;
expenses may result in communities that we develop or redevelop
failing to achieve expected profitability; our assumptions
concerning risks relating to joint ventures and our ability to
successfully dispose of certain assets may not be realized;
investments made under the Structured Investment Program in either
mezzanine debt or preferred equity of third-party multifamily
development may not be repaid as expected; our assumptions and
expectations in our financial outlook may prove to be too
optimistic; and the timing and net proceeds of condominium sales at
The Park Loggia may not equal our current expectations. Additional
discussions of risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by the
forward-looking statements appear in the Company’s filings with the
Securities and Exchange Commission, including the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2021
under the heading “Risk Factors” and under the heading
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Forward-Looking Statements” and in
subsequent quarterly reports on Form 10-Q.
The Company does not undertake a duty to update forward-looking
statements, including its expected 2022 operating results and other
financial data forecasts contained in this release. The Company
may, in its discretion, provide information in future public
announcements regarding its outlook that may be of interest to the
investment community. The format and extent of future outlooks may
be different from the format and extent of the information
contained in this release.
Definitions and Reconciliations
Non-GAAP financial measures and other capitalized terms, as used
in this earnings release, are defined, reconciled and further
explained on Attachment 12, Definitions and Reconciliations of
Non-GAAP Financial Measures and Other Terms. Attachment 12 is
included in the full earnings release available at the Company’s
website at http://www.avalonbay.com/earnings. This wire
distribution includes only the following definitions and
reconciliations.
Average Rental Revenue per Occupied
Home is calculated by the Company as Residential rental
revenue in accordance with GAAP, divided by the weighted average
number of occupied apartment homes.
Commercial represents results
attributable to the non-apartment components of the Company's
mixed-use communities and other non-residential operations.
Development is composed of
consolidated communities that are either currently under
construction, or were under construction and were completed during
the current year. These communities may be partially or fully
complete and operating.
EBITDA, EBITDAre and Core EBITDAre
are considered by management to be supplemental measures of our
financial performance. EBITDA is defined by the Company as net
income or loss attributable to the Company computed in accordance
with GAAP before interest expense, income taxes, depreciation and
amortization. EBITDAre is calculated by the Company in accordance
with the definition adopted by the Board of Governors of the
National Association of Real Estate Investment Trusts (“Nareit”),
as EBITDA plus or minus losses and gains on the disposition of
depreciated property, plus impairment write-downs of depreciated
property, with adjustments to reflect the Company's share of
EBITDAre of unconsolidated entities. Core EBITDAre is the Company’s
EBITDAre as adjusted for non-core items outlined in the table
below. By further adjusting for items that are not considered part
of the Company’s core business operations, Core EBITDAre can help
one compare the core operating and financial performance of the
Company between periods. A reconciliation of EBITDA, EBITDAre and
Core EBITDAre to net income is as follows (dollars in
thousands):
TABLE 1
Q3
2022
Net income
$
494,632
Interest expense and loss on
extinguishment of debt
59,558
Income tax expense
5,651
Depreciation expense
206,658
EBITDA
$
766,499
Gain on sale of communities
(318,289
)
Unconsolidated entity EBITDAre adjustments
(1)
(35,072
)
EBITDAre
$
413,138
Unconsolidated entity losses, net
307
Joint venture promote
(4,690
)
Structured Investment Program loan
reserve
45
Gain on interest rate contract
(64
)
Executive transition compensation
costs
411
Severance related costs
574
Expensed transaction, development and
other pursuit costs, net of recoveries
5,783
Gain on for-sale condominiums
(644
)
For-sale condominium marketing, operating
and administrative costs
340
Gain on other real estate transactions,
net
(15
)
Legal settlements
(3,677
)
Core EBITDAre
$
411,508
(1) Includes joint venture interest,
taxes, depreciation, gain on dispositions of depreciated real
estate and impairment losses, if applicable, included in net
income.
Economic Gain is calculated by the
Company as the gain on sale in accordance with GAAP, less
accumulated depreciation through the date of sale and any other
adjustments that may be required under GAAP accounting. Management
generally considers Economic Gain to be an appropriate supplemental
measure to gain on sale in accordance with GAAP because it helps
investors to understand the relationship between the cash proceeds
from a sale and the cash invested in the sold community. The
Economic Gain for disposed communities is based on their respective
final settlement statements. A reconciliation of the aggregate
Economic Gain to the aggregate gain on sale in accordance with GAAP
for the wholly-owned communities disposed of during the three and
nine months ended September 30, 2022 is as follows (dollars in
thousands):
TABLE 2
Q3 2022
YTD 2022
GAAP Gain
$
317,962
$
466,670
Accumulated Depreciation and Other
(99,081
)
(127,985
)
Economic Gain
$
218,881
$
338,685
Economic Occupancy is defined as
total possible Residential revenue less vacancy loss as a
percentage of total possible Residential revenue. Total possible
Residential revenue (also known as “gross potential”) is determined
by valuing occupied units at contract rates and vacant units at
Market Rents. Vacancy loss is determined by valuing vacant units at
current Market Rents. By measuring vacant apartments at their
Market Rents, Economic Occupancy takes into account the fact that
apartment homes of different sizes and locations within a community
have different economic impacts on a community’s gross revenue.
FFO and Core FFO are considered by
management to be supplemental measures of our operating and
financial performance. FFO is calculated by the Company in
accordance with the definition adopted by Nareit. FFO is calculated
by the Company as Net income or loss attributable to common
stockholders computed in accordance with GAAP, adjusted for gains
or losses on sales of previously depreciated operating communities,
cumulative effect of a change in accounting principle, impairment
write-downs of depreciable real estate assets, write-downs of
investments in affiliates which are driven by a decrease in the
value of depreciable real estate assets held by the affiliate and
depreciation of real estate assets, including adjustments for
unconsolidated partnerships and joint ventures. By excluding gains
or losses related to dispositions of previously depreciated
operating communities and excluding real estate depreciation (which
can vary among owners of identical assets in similar condition
based on historical cost accounting and useful life estimates), FFO
can help one compare the operating and financial performance of a
company’s real estate between periods or as compared to different
companies. Core FFO is the Company's FFO as adjusted for non-core
items outlined in the table below. By further adjusting for items
that are not considered by us to be part of our core business
operations, Core FFO can help one compare the core operating and
financial performance of the Company between periods. A
reconciliation of Net income attributable to common stockholders to
FFO and to Core FFO is as follows (dollars in thousands):
TABLE 3
Q3
Q3
YTD
YTD
2022
2021
2022
2021
Net income attributable to common
stockholders
$
494,747
$
78,914
$
895,482
$
669,090
Depreciation - real estate assets,
including joint venture adjustments
205,489
192,435
604,634
558,006
Distributions to noncontrolling
interests
12
12
36
36
Gain on sale of unconsolidated entities
holding previously depreciated real estate
(38,062
)
—
(38,062
)
(23,305
)
Gain on sale of previously depreciated
real estate
(318,289
)
(58
)
(467,493
)
(388,354
)
Casualty and impairment loss on real
estate
—
1,940
—
3,117
FFO attributable to common
stockholders
343,897
273,243
994,597
818,590
Adjusting items:
Unconsolidated entity losses (gains), net
(1)
307
(6,924
)
(1,988
)
(9,056
)
Joint venture promote (2)
(4,690
)
—
(4,690
)
—
Structured Investment Program loan reserve
(3)
45
—
1,653
—
Loss on extinguishment of consolidated
debt
1,646
17,890
1,646
17,768
Gain on interest rate contract
(64
)
—
(496
)
(2,654
)
Advocacy contributions
—
—
534
—
Executive transition compensation
costs
411
411
1,220
2,599
Severance related costs
574
284
639
386
Expensed transaction, development and
other pursuit costs, net of recoveries (4)
5,783
273
7,781
575
Gain on for-sale condominiums (5)
(644
)
(1,345
)
(2,113
)
(2,051
)
For-sale condominium marketing, operating
and administrative costs (5)
340
1,187
1,644
3,453
For-sale condominium imputed carry cost
(6)
400
1,648
2,035
5,779
Gain on other real estate transactions,
net
(15
)
(1,543
)
(95
)
(2,002
)
Legal settlements
(3,677
)
22
(3,418
)
1,100
Income tax expense (7)
5,651
2,179
7,963
1,434
Core FFO attributable to common
stockholders
$
349,964
$
287,325
$
1,006,912
$
835,921
Average shares outstanding - diluted
139,981,959
139,737,725
139,964,172
139,645,069
Earnings per share - diluted
$
3.53
$
0.56
$
6.40
$
4.79
FFO per common share - diluted
$
2.46
$
1.96
$
7.11
$
5.86
Core FFO per common share - diluted
$
2.50
$
2.06
$
7.19
$
5.99
(1) Amounts for the nine months ended
September 30, 2022 include unrealized gains of $1,948 on property
technology investments. Amounts for the three and nine months ended
September 30, 2021 include unrealized gains of $6,924 and $10,094,
respectively, on property technology investments. The amount for
the nine months ended September 30, 2021 is partially offset by the
write-off of asset management fee intangibles associated with the
disposition of the final two Archstone Multifamily Partners AC JV
LP communities.
(2) Amount for 2022 is for the Company's
recognition of its promoted interest in the U.S. Fund.
(3) Amounts represent the change in
expected credit losses associated with the Company's lending
commitments under its Structured Investment Program. The timing and
amount of any actual losses that will be incurred, if any, is to be
determined.
(4) Amounts for 2022 include the write-off
of $5,335 for a development opportunity in the Pacific Northwest
that the Company determined is no longer probable.
(5) Aggregate impact of (i) Gain on
for-sale condominiums and (ii) For-sale condominium marketing,
operating and administrative costs, is a net gain of $304 for Q3
2022 and $469 for YTD 2022 and a net gain of $158 for Q3 2021 and
net expense of $1,402 for YTD 2021, respectively.
(6) Represents the imputed carry cost of
the for-sale residential condominiums at The Park Loggia. The
Company computes this adjustment by multiplying the Total Capital
Cost of completed and unsold for-sale residential condominiums by
the Company's weighted average unsecured debt effective interest
rate.
(7) Amounts are for the recognition of
taxes primarily associated with The Park Loggia.
Interest Coverage is calculated by
the Company as Core EBITDAre divided by interest expense. Interest
Coverage is presented by the Company because it provides rating
agencies and investors an additional means of comparing our ability
to service debt obligations to that of other companies. A
calculation of Interest Coverage for the three months ended
September 30, 2022 is as follows (dollars in thousands):
TABLE 4
Core EBITDAre (1)
$
411,508
Interest expense (2)
$
59,558
Interest Coverage
6.9 times
(1) For additional detail, see Definitions
and Reconciliations, table 1.
(2) Excludes the impact of gain on
interest rate contract.
Market Cap Rate is defined by the
Company as Projected NOI of a single community for the first 12
months of operations (assuming no repositioning), less estimates
for non-routine allowance of approximately $300 - $500 per
apartment home, divided by the gross sales price for the community.
Projected NOI, as referred to above, represents management’s
estimate of projected rental revenue minus projected operating
expenses before interest, income taxes (if any), depreciation and
amortization. For this purpose, management’s projection of
operating expenses for the community includes a management fee of
2.25%. The Market Cap Rate, which may be determined in a different
manner by others, is a measure frequently used in the real estate
industry when determining the appropriate purchase price for a
property or estimating the value for a property. Buyers may assign
different Market Cap Rates to different communities when
determining the appropriate value because they (i) may project
different rates of change in operating expenses and capital
expenditure estimates and (ii) may project different rates of
change in future rental revenue due to different estimates for
changes in rent and occupancy levels. The weighted average Market
Cap Rate is weighted based on the gross sales price of each
community.
Market Rents as reported by the
Company are based on the current market rates set by the Company
based on its experience in renting apartments and publicly
available market data. Market Rents for a period are based on the
average Market Rents during that period and do not reflect any
impact for cash concessions.
Net Debt-to-Core EBITDAre is
calculated by the Company as total debt (secured and unsecured
notes, and the Company's Credit Facility and commercial paper
program) that is consolidated for financial reporting purposes,
less consolidated cash and cash in escrow, divided by annualized
third quarter 2022 Core EBITDAre. A calculation of Net Debt-to-Core
EBITDAre is as follows (dollars in thousands):
TABLE 5
Total debt principal (1)
$
8,078,012
Cash and cash in escrow
(487,126
)
Net debt
$
7,590,886
Core EBITDAre (2)
$
411,508
Core EBITDAre, annualized
$
1,646,032
Net Debt-to-Core EBITDAre
4.6 times
(1) Balance at September 30, 2022 excludes
$8,784 of debt discount and $36,851 of deferred financing costs as
reflected in unsecured notes, net, and $12,696 of debt discount and
$1,722 of deferred financing costs as reflected in notes payable on
the Condensed Consolidated Balance Sheets.
(2) For additional detail, see Definitions
and Reconciliations, table 1.
NOI is defined by the Company as
total property revenue less direct property operating expenses
(including property taxes), and excluding corporate-level income
(including management, development and other fees), corporate-level
property management and other indirect operating expenses, expensed
transaction, development and other pursuit costs, net of
recoveries, interest expense, net, loss on extinguishment of debt,
net, general and administrative expense, income from investments in
unconsolidated entities, depreciation expense, income tax expense
(benefit), casualty and impairment loss, gain on sale of
communities, gain on other real estate transactions, net, net
for-sale condominium activity and net operating income from real
estate assets sold or held for sale. The Company considers NOI to
be an important and appropriate supplemental performance measure to
Net Income of operating performance of a community or communities
because it helps both investors and management to understand the
core operations of a community or communities prior to the
allocation of any corporate-level property management overhead or
financing-related costs. NOI reflects the operating performance of
a community, and allows for an easier comparison of the operating
performance of individual assets or groups of assets. In addition,
because prospective buyers of real estate have different financing
and overhead structures, with varying marginal impact to overhead
as a result of acquiring real estate, NOI is considered by many in
the real estate industry to be a useful measure for determining the
value of a real estate asset or groups of assets.
Residential NOI represents results attributable to the Company's
apartment rental operations, including parking and other ancillary
Residential revenue. A reconciliation of Residential NOI to Net
Income, as well as a breakdown of Residential NOI by operating
segment, is as follows (dollars in thousands):
TABLE 6
Q3
Q3
Q2
Q1
Q4
YTD
YTD
2022
2021
2022
2022
2021
2022
2021
Net income
$
494,632
$
78,847
$
138,566
$
262,076
$
335,298
$
895,274
$
669,058
Property management and other indirect
operating expenses, net of corporate income
29,374
25,322
30,632
28,113
24,555
88,119
74,110
Expensed transaction, development and
other pursuit costs, net of recoveries
6,514
417
2,364
987
1,331
9,865
1,900
Interest expense, net
57,290
55,987
58,797
56,526
55,711
172,613
164,704
Loss on extinguishment of debt, net
1,646
17,890
—
—
19
1,646
17,768
General and administrative expense
14,611
17,313
21,291
17,421
16,481
53,323
53,130
Income from investments in unconsolidated
entities
(43,777
)
(6,867
)
(2,480
)
(317
)
(5,626
)
(46,574
)
(32,959
)
Depreciation expense
206,658
193,791
199,302
201,786
197,036
607,746
561,560
Income tax expense (benefit)
5,651
2,179
(159
)
2,471
4,299
7,963
1,434
Casualty and impairment loss
—
1,940
—
—
2
—
3,117
Gain on sale of communities
(318,289
)
(58
)
(404
)
(148,800
)
(213,881
)
(467,493
)
(388,354
)
Gain on other real estate transactions,
net
(15
)
(1,543
)
(43
)
(37
)
(95
)
(95
)
(2,002
)
Net for-sale condominium activity
(304
)
(158
)
71
(236
)
(425
)
(469
)
1,402
NOI from real estate assets sold or held
for sale
(4,839
)
(13,147
)
(7,811
)
(9,197
)
(12,192
)
(21,847
)
(48,913
)
NOI
449,152
371,913
440,126
410,793
402,513
1,300,071
1,075,955
Commercial NOI
(11,005
)
(6,672
)
(7,673
)
(8,224
)
(7,945
)
(26,902
)
(17,381
)
Residential NOI
$
438,147
$
365,241
$
432,453
$
402,569
$
394,568
$
1,273,169
$
1,058,574
Residential NOI
Same Store:
New England
$
58,675
$
48,497
$
56,523
$
51,901
$
51,816
$
167,099
$
143,710
Metro NY/NJ
80,865
69,582
78,483
74,707
74,329
234,055
206,118
Mid-Atlantic
55,903
50,889
55,767
53,946
53,727
165,616
152,912
Southeast FL
6,359
5,015
6,161
5,965
5,904
18,485
13,738
Denver, CO
4,904
4,011
4,900
4,727
4,486
14,531
11,965
Pacific NW
25,325
20,672
25,212
23,122
21,598
73,659
60,536
N. California
72,440
64,040
71,439
67,807
67,052
211,686
193,458
S. California
83,926
76,700
89,070
81,541
81,237
254,537
217,864
Total Same Store
388,397
339,406
387,555
363,716
360,149
1,139,668
1,000,301
Other Stabilized
33,432
18,784
30,973
26,846
25,081
91,251
43,310
Development/Redevelopment
16,318
7,051
13,925
12,007
9,338
42,250
14,963
Residential NOI
$
438,147
$
365,241
$
432,453
$
402,569
$
394,568
$
1,273,169
$
1,058,574
NOI as reported by the Company does not include the operating
results from assets sold or classified as held for sale. A
reconciliation of NOI from communities sold or classified as held
for sale is as follows (dollars in thousands):
TABLE 7
Q3
Q3
Q2
Q1
Q4
YTD
YTD
2022
2021
2022
2022
2021
2022
2021
Revenue from real estate assets sold or
held for sale
$
7,315
$
21,636
$
11,956
$
14,838
$
19,694
$
34,110
$
79,989
Operating expenses from real estate assets
sold or held for sale
(2,476
)
(8,489
)
(4,145
)
(5,641
)
(7,502
)
(12,263
)
(31,076
)
NOI from real estate assets sold or held
for sale
$
4,839
$
13,147
$
7,811
$
9,197
$
12,192
$
21,847
$
48,913
Commercial NOI is composed of the following components (in
thousands):
TABLE 8
Q3
Q3
Q2
Q1
Q4
YTD
YTD
2022
2021
2022
2022
2021
2022
2021
Commercial Revenue
$
12,577
$
8,174
$
9,235
$
9,924
$
9,284
$
31,736
$
21,730
Commercial Operating Expenses
(1,572
)
(1,502
)
(1,562
)
(1,700
)
(1,339
)
(4,834
)
(4,349
)
Commercial NOI
$
11,005
$
6,672
$
7,673
$
8,224
$
7,945
$
26,902
$
17,381
Other Stabilized is composed of
completed consolidated communities that the Company owns, which
have Stabilized Operations as of January 1, 2022, or which were
acquired subsequent to January 1, 2021. Other Stabilized excludes
communities that are conducting or are probable to conduct
substantial redevelopment activities.
Projected FFO and Projected Core
FFO, as provided within this release in the Company’s
outlook, are calculated on a basis consistent with historical FFO
and Core FFO, and are therefore considered to be appropriate
supplemental measures to projected Net Income from projected
operating performance. A reconciliation of the ranges provided for
Projected FFO per share (diluted) for the fourth quarter and full
year 2022 to the ranges provided for projected EPS (diluted) and
corresponding reconciliation of the ranges for Projected FFO per
share to the ranges for Projected Core FFO per share are as
follows:
TABLE 9
Low
Range
High
Range
Projected EPS (diluted) - Q4 2022
$
1.70
$
1.80
Depreciation (real estate related)
1.42
1.42
Gain on sale of communities
(0.60
)
(0.60
)
Projected FFO per share (diluted) - Q4
2022
2.52
2.62
Expensed transaction, development and
other pursuit costs, net of recoveries
0.01
0.01
Income tax expense
0.02
0.02
Projected Core FFO per share (diluted) -
Q4 2022
$
2.55
$
2.65
Projected EPS (diluted) - Full Year
2022
$
8.10
$
8.20
Depreciation (real estate related)
5.74
5.74
Gain on sale of communities
(4.22
)
(4.22
)
Projected FFO per share (diluted) - Full
Year 2022
9.62
9.72
Joint venture promote and unconsolidated
entity gains, net
(0.05
)
(0.05
)
Expensed transaction, development and
other pursuit costs, net of recoveries
0.06
0.06
Executive transition compensation
costs
0.01
0.01
Legal settlements
(0.02
)
(0.02
)
Structured Investment Program loan
reserve
0.01
0.01
Income tax expense
0.07
0.07
Adjustments related to residential
for-sale condominiums at The Park Loggia (1)
0.01
0.01
Loss on extinguishment of consolidated
debt
0.01
0.01
Other
0.02
0.02
Projected Core FFO per share (diluted) -
Full Year 2022
$
9.74
$
9.84
(1) The Park Loggia adjustments relate to
the following for the for-sale condominiums: operating expenses
incurred, GAAP gain after taxes and cost of sales, and imputed
carry costs on unsold homes.
Projected NOI, as used within this
release for certain Development communities and in calculating the
Market Cap Rate for dispositions, represents management’s estimate,
as of the date of this release (or as of the date of the buyer’s
valuation in the case of dispositions), of projected stabilized
rental revenue minus projected stabilized operating expenses. For
Development communities, Projected NOI is calculated based on the
first twelve months of Stabilized Operations following the
completion of construction. In calculating the Market Cap Rate,
Projected NOI for dispositions is calculated for the first twelve
months following the date of the buyer’s valuation. Projected
stabilized rental revenue represents management’s estimate of
projected gross potential minus projected stabilized economic
vacancy and adjusted for projected stabilized concessions plus
projected stabilized other rental revenue. Projected stabilized
operating expenses do not include interest, income taxes (if any),
depreciation or amortization, or any allocation of corporate-level
property management overhead or general and administrative costs.
In addition, projected stabilized operating expenses for
Development communities do not include property management fee
expense. Projected gross potential for Development communities and
dispositions is generally based on leased rents for occupied homes
and management’s best estimate of rental levels for homes which are
currently unleased, as well as those homes which will become
available for lease during the twelve month forward period used to
develop Projected NOI. The weighted average Projected NOI as a
percentage of Total Capital Cost ("Weighted Average Initial
Projected Stabilized Yield") is weighted based on the Company’s
share of the Total Capital Cost of each community, based on its
percentage ownership.
Management believes that Projected NOI of the Development
communities, on an aggregated weighted average basis, assists
investors in understanding management's estimate of the likely
impact on operations of the Development communities when the assets
are complete and achieve stabilized occupancy (before allocation of
any corporate-level property management overhead, general and
administrative costs or interest expense). However, in this release
the Company has not given a projection of NOI on a company-wide
basis. Given the different dates and fiscal years for which NOI is
projected for these communities, the projected allocation of
corporate-level property management overhead, general and
administrative costs and interest expense to communities under
development is complex, impractical to develop, and may not be
meaningful. Projected NOI of these communities is not a projection
of the Company's overall financial performance or cash flow. There
can be no assurance that the communities under development will
achieve the Projected NOI as described in this release.
Redevelopment is composed of
consolidated communities where substantial redevelopment is in
progress or is probable to begin during the current year.
Redevelopment is considered substantial when (i) capital invested
during the reconstruction effort is expected to exceed the lesser
of $5,000,000 or 10% of the community’s pre-redevelopment basis and
(ii) physical occupancy is below or is expected to be below 90%
during or as a result of the redevelopment activity. Redevelopment
includes one community containing 714 apartment homes that is
currently under active redevelopment as of September 30, 2022.
Residential represents results
attributable to the Company's apartment rental operations,
including parking and other ancillary Residential revenue.
Residential Rental Revenue with
Concessions on a Cash Basis is considered by the Company to
be a supplemental measure to Residential rental revenue in
conformity with GAAP to help investors evaluate the impact of both
current and historical concessions on GAAP-based Residential rental
revenue and to more readily enable comparisons to revenue as
reported by other companies. In addition, Residential Rental
Revenue with Concessions on a Cash Basis allows an investor to
understand the historical trend in cash concessions.
A reconciliation of Same Store Residential rental revenue in
conformity with GAAP to Residential Rental Revenue with Concessions
on a Cash Basis is as follows (dollars in thousands):
TABLE 10
Q3
Q3
Q2
YTD
YTD
2022
2021
2022
2022
2021
Residential rental revenue (GAAP
basis)
$
567,890
$
507,881
$
555,528
$
1,652,297
$
1,487,053
Residential concessions amortized
2,883
15,385
5,175
16,294
47,026
Residential concessions granted
(1,932
)
(8,344
)
(1,667
)
(5,926
)
(37,702
)
Residential Rental Revenue with
Concessions on a Cash Basis
$
568,841
$
514,922
$
559,036
$
1,662,665
$
1,496,377
Q3 2022
Q3 2022
YTD 2022
vs. Q3 2021
vs. Q2 2022
vs. YTD 2021
% change -- GAAP revenue
11.8
%
2.2
%
11.1
%
% change -- cash revenue
10.5
%
1.8
%
11.1
%
Same Store is composed of
consolidated communities where a comparison of operating results
from the prior year to the current year is meaningful as these
communities were owned and had Stabilized Operations, as defined
below, as of the beginning of the respective prior year period.
Therefore, for 2022 operating results, Same Store is composed of
consolidated communities that have Stabilized Operations as of
January 1, 2021, are not conducting or are not probable to conduct
substantial redevelopment activities and are not held for sale or
probable for disposition within the current year.
Stabilized Operations/Restabilized
Operations is defined as the earlier of (i) attainment of
90% physical occupancy or (ii) the one-year anniversary of
completion of development or redevelopment.
Total Capital Cost includes all
capitalized costs projected to be or actually incurred to develop
the respective Development or Redevelopment community, including
land acquisition costs, construction costs, real estate taxes,
capitalized interest and loan fees, permits, professional fees,
allocated development overhead and other regulatory fees, offset by
proceeds from the sale of any associated land or improvements, all
as determined in accordance with GAAP. Total Capital Cost also
includes costs incurred related to first generation commercial
tenants, such as tenant improvements and leasing commissions. For
Redevelopment communities, Total Capital Cost excludes costs
incurred prior to the start of redevelopment when indicated. With
respect to communities where development or redevelopment was
completed in a prior or the current period, Total Capital Cost
reflects the actual cost incurred, plus any contingency estimate
made by management. Total Capital Cost for communities identified
as having joint venture ownership, either during construction or
upon construction completion, represents the total projected joint
venture contribution amount. For joint ventures not in
construction, Total Capital Cost is equal to gross real estate
cost.
Unconsolidated Development is
composed of communities that are either currently under
construction, or were under construction and were completed during
the current year, in which we have an indirect ownership interest
through our investment interest in an unconsolidated joint venture.
These communities may be partially or fully complete and
operating.
Unencumbered NOI as calculated by
the Company represents NOI generated by real estate assets
unencumbered by outstanding secured notes payable as of September
30, 2022 as a percentage of total NOI generated by real estate
assets. The Company believes that current and prospective unsecured
creditors of the Company view Unencumbered NOI as one indication of
the borrowing capacity of the Company. Therefore, when reviewed
together with the Company’s Interest Coverage, EBITDA and cash flow
from operations, the Company believes that investors and creditors
view Unencumbered NOI as a useful supplemental measure for
determining the financial flexibility of an entity. A calculation
of Unencumbered NOI for the nine months ended September 30, 2022 is
as follows (dollars in thousands):
TABLE 11
Year to Date 2022
NOI
Residential NOI:
Same Store
$
1,139,668
Other Stabilized
91,251
Development/Redevelopment
42,250
Total Residential NOI
1,273,169
Commercial NOI
26,902
NOI from real estate assets sold or held
for sale
21,847
Total NOI generated by real estate
assets
1,321,918
Less NOI on encumbered assets
(62,831
)
NOI on unencumbered assets
$
1,259,087
Unencumbered NOI
95
%
Copyright © 2022 AvalonBay Communities, Inc. All Rights
Reserved
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version on businesswire.com: https://www.businesswire.com/news/home/20221102006159/en/
For additional information, please contact Jason Reilley, Vice
President of Investor Relations, at 703-317-4681
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