AvalonBay Communities, Inc. (NYSE: AVB) (the “Company”) reported
today that Net Income Attributable to Common Stockholders for the
three months ended December 31, 2021 was $335,209,000. This
resulted in a decrease in Earnings per Share – diluted (“EPS”) for
the three months ended December 31, 2021 of 1.6% to $2.40 from
$2.44 for the prior year period, primarily attributable to a
decrease in gain on sale of real estate and an increase in
depreciation expense, as detailed in the table below.
Funds from Operations attributable to common stockholders -
diluted (“FFO”) per share for the three months ended December 31,
2021 increased 17.6% to $2.27 from $1.93 for the prior year period.
Core FFO per share (as defined in this release) for the three
months ended December 31, 2021 increased 12.4% to $2.27 from $2.02
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 December 31, 2021 to its results for the prior year
period:
Q4 2021 Results Compared to Q4
2020
Per Share (1)
EPS
FFO
Core FFO
Q4 2020 per share reported results
$
2.44
$
1.93
$
2.02
Same Store Residential NOI (2)
0.17
0.17
0.17
Development and Other Stabilized
Residential NOI
0.13
0.13
0.13
Commercial NOI
0.06
0.06
0.06
Overhead and other
0.05
0.05
(0.04
)
Capital markets and transaction
activity
(0.06
)
(0.06
)
(0.06
)
Unconsolidated investment income
0.04
0.04
(0.01
)
Income taxes
(0.05
)
(0.05
)
—
Gain on sale of real estate and
depreciation expense
(0.38
)
—
—
Q4 2021 per share reported results
$
2.40
$
2.27
$
2.27
(1) For additional detail on reconciling
items between EPS, FFO and Core FFO, see Definitions and
Reconciliations, table 2.
(2) Consists of a $0.17 increase in
Residential revenue.
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the three months
ended December 31, 2021 to its October 2021 outlook:
Q4 2021 Results Compared to
October 2021 Outlook
Per Share
EPS
FFO
Core FFO
Projected per share - October 2021 outlook
(1)
$
2.30
$
2.22
$
2.24
Same Store Residential NOI
0.01
0.01
0.01
Development and Other Stabilized
Residential NOI
0.01
0.01
0.01
Commercial NOI
0.01
0.01
0.01
Capital markets and transaction
activity
0.01
0.01
—
Unconsolidated investment income and
other
0.04
0.04
—
Income taxes
(0.03
)
(0.03
)
—
Gain on sale of real estate and
depreciation expense
0.05
—
—
Q4 2021 per share reported results
$
2.40
$
2.27
$
2.27
(1) The mid-point of the Company's October
2021 outlook.
For the year ended December 31, 2021, EPS increased 22.1% to
$7.19 from $5.89 for the prior year, FFO per share decreased 3.8%
to $8.13 from $8.45 for the prior year, and Core FFO per share
decreased 4.9% to $8.26 from $8.69 for the prior year.
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the year ended
December 31, 2021 to its results for the prior year:
Full Year 2021 Results
Compared to Full Year 2020
Per Share (1)
EPS
FFO
Core FFO
2020 per share reported results
$
5.89
$
8.45
$
8.69
Same Store Residential NOI (2)
(0.47
)
(0.47
)
(0.47
)
Development and Other Stabilized
Residential NOI
0.35
0.35
0.35
Commercial NOI
0.09
0.09
0.09
Overhead and other
—
—
(0.11
)
Capital markets and transaction
activity
(0.31
)
(0.31
)
(0.26
)
Unconsolidated investment income
0.08
0.08
(0.03
)
Income taxes
(0.06
)
(0.06
)
—
Gain on sale of real estate and
depreciation expense
1.62
—
—
2021 per share reported results
$
7.19
$
8.13
$
8.26
(1) For additional detail on reconciling
items between EPS, FFO and Core FFO, see Definitions and
Reconciliations, table 2.
(2) Consists of a $0.32 decrease in
Residential revenue and $0.14 increase in Residential operating
expenses.
Same Store Operating Results for the Three Months Ended
December 31, 2021 Compared to the Prior Year Period
Same Store total revenue increased $30,373,000, or 6.1%, to
$529,467,000. Residential revenue increased $23,803,000, or 4.8%,
to $523,219,000, which includes a favorable reduction of
uncollectible lease revenue of $6,501,000. Same Store Residential
rental revenue increased 4.7%, as detailed in the following
table:
Same Store Residential Rental
Revenue Change
Q4 2021 Compared to Q4
2020
Residential rental revenue
Lease rates
1.9
%
Concessions and other discounts
(0.3
) %
Economic occupancy
1.7
%
Other rental revenue
0.1
%
Uncollectible lease revenue (1)
1.3
%
Total Residential rental revenue
4.7
%
(1) Uncollectible lease revenue decreased
to 1.58% from 2.89% of total Residential rental revenue in the
prior year period.
Same Store Residential operating expenses increased $759,000, or
0.5%, to $161,036,000 and Same Store Residential NOI increased
$23,044,000, or 6.8%, to $362,183,000.
The following table presents percentage changes in Same Store
Residential rental revenue, Residential operating expenses and
Residential NOI for the three months ended December 31, 2021
compared to the three months ended December 31, 2020:
Q4 2021 Compared to Q4
2020
Same Store Residential
Rental Revenue (1)
Opex (2)
% of Q4 2021 NOI
Rental Revenue cash basis
(3)
NOI
New England
5.3
%
3.1
%
6.7
%
14.1
%
9.2
%
Metro NY/NJ
4.7
%
1.0
%
6.4
%
20.9
%
11.2
%
Mid-Atlantic
3.4
%
1.8
%
4.2
%
16.2
%
5.4
%
Southeast FL
17.3
%
(20.0
) %
48.9
%
1.6
%
19.2
%
Denver, CO
11.4
%
(7.8
) %
20.8
%
1.2
%
8.6
%
Pacific NW
4.4
%
(0.3
) %
7.0
%
5.2
%
7.3
%
No. California
(1.9
) %
(2.5
) %
(1.6
) %
17.9
%
4.1
%
So. California
10.0
%
1.9
%
13.9
%
22.9
%
9.9
%
Total
4.7
%
0.5
%
6.8
%
100.0
%
8.3
%
(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 Year Ended December 31,
2021 Compared to the Prior Year
Same Store total revenue decreased $36,010,000, or 1.7%, to
$2,046,173,000. Residential revenue decreased $45,983,000, or 2.2%,
to $2,024,861,000, partially offset by a favorable reduction of
uncollectible lease revenue of $2,227,000. Same Store Residential
rental revenue decreased 2.2%, as detailed in the following
table:
Same Store Residential Rental
Revenue Change
Full Year 2021 Compared to
Full Year 2020
Residential rental revenue
Lease rates
(2.0
) %
Concessions and other discounts
(1.8
) %
Economic occupancy
1.4
%
Other rental revenue
0.1
%
Uncollectible lease revenue (1)
0.1
%
Total Residential rental revenue
(2.2
) %
(1) Uncollectible lease revenue decreased
to 2.16% from 2.21% of total Residential rental revenue in the
prior year period.
Same Store Residential operating expenses increased $20,300,000,
or 3.2%, to $654,579,000 and Same Store Residential NOI decreased
$66,283,000, or 4.6%, to $1,370,282,000.
The following table presents percentage changes in Same Store
Residential rental revenue, Residential operating expenses and
Residential NOI for the year ended December 31, 2021 compared to
the year ended December 31, 2020:
Full Year 2021 Compared to
Full Year 2020
Same Store Residential
Rental Revenue (1)
Opex (2)
% of 2021 NOI
Rental Revenue cash basis
(3)
NOI
New England
(1.0
) %
4.1
%
(3.6
) %
14.1
%
0.4
%
Metro NY/NJ
(0.8
) %
3.1
%
(2.6
) %
20.8
%
1.6
%
Mid-Atlantic
(2.1
) %
4.7
%
(5.1
) %
16.4
%
(0.8
) %
Southeast FL
8.8
%
(10.5
) %
25.2
%
1.4
%
11.1
%
Denver, CO
11.5
%
(2.8
) %
19.2
%
1.2
%
10.9
%
Pacific NW
(2.6
) %
4.1
%
(5.7
) %
5.2
%
(0.7
) %
No. California
(10.0
) %
2.7
%
(14.4
) %
18.6
%
(6.0
) %
So. California
1.3
%
3.4
%
0.3
%
22.3
%
2.8
%
Total
(2.2
) %
3.2
%
(4.6
) %
100.0
%
(0.1
) %
(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.
Same Store Collections Update
The following table provides an update for Same Store
Residential revenue collections for Q2 2020 through Q4 2021 as of
each respective quarter end, as well as through January 31, 2022
for the periods presented. Collected Residential revenue is the
portion of apartment base rent charged to residents and other
rentable items, such as parking and storage rent, along with pet
and other fees in accordance with residential leases, that has been
collected, including $28,286,000 of aggregate rent relief payments,
of which $14,549,000 was received during the three months ended
December 31, 2021 ("Collected Residential Revenue"), and excludes
transactional and other fees.
Same Store Collections
(1)
Collected Residential
Revenue
At quarter end (2)
At January 31, 2022
(3)(4)
Q2 2020
95.4
%
98.5
%
Q3 2020
95.1
%
98.2
%
Q4 2020
94.7
%
98.1
%
Q1 2021
94.7
%
98.3
%
Q2 2021
95.0
%
98.8
%
Q3 2021
95.8
%
98.8
%
Q4 2021
95.6
%
97.0
%
(1) Collections are for the Company’s 2021
Same Store communities and exclude commercial revenue, which was
1.0%, of the Company's 2021 Same Store total revenue.
(2) The Collected Residential Revenue
percentage as of the last day in the respective quarter.
(3) The percentage of Collected
Residential Revenue as of January 31, 2022.
(4) Collected Residential Revenue for
January 2022 at January 31, 2022 was 93.0%, which is 94.9% of the
AVB Residential Benchmark.
For further discussion of collection rates and limitations on
use of this data, see "Same Store Collections," in Definitions and
Reconciliations.
Development Activity
During the three months ended December 31, 2021, the Company
completed the development of Avalon Easton II, located in Easton,
MA. Avalon Easton II was constructed as a second phase of the
Avalon Easton operating community, and contains 44 apartment homes
and was constructed for a Total Capital Cost of $15,000,000.
During the three months ended December 31, 2021, the Company
started the construction of three communities:
- Avalon Princeton Circle, located in Princeton, NJ;
- Avalon Montville, located in Montville, NJ; and
- Avalon Redmond Campus, located in Redmond, WA.
Avalon Redmond Campus is a densification of the Company's
existing eaves Redmond Campus operating community, where 48
existing older apartment homes were demolished and will be replaced
by a new Avalon branded 214 apartment home community. In the
aggregate, these communities will contain 785 apartment homes when
completed and will be developed for an estimated Total Capital Cost
of $291,000,000.
During 2021, the Company:
- completed the development of nine communities containing an
aggregate of 2,752 apartment homes and 29,000 square feet of
commercial space for an aggregate Total Capital Cost of
$1,070,000,000; and
- commenced the development of 10 communities, which in the
aggregate will contain 3,010 apartments homes when completed and
will be developed for an estimated Total Capital Cost of
$1,246,000,000.
At December 31, 2021, the Company had 17 consolidated
Development communities under construction that are expected to
contain 5,386 apartment homes and 40,000 square feet of commercial
space. Estimated Total Capital Cost at completion for these
Development communities is $2,140,000,000.
At December 31, 2021, the Company had two Unconsolidated
Development communities under construction that in the aggregate
are expected to contain 803 apartment homes and 56,000 square feet
of commercial space.
The projected Total Capital Cost of Development Rights at
December 31, 2021 was $3.3 billion.
Acquisition Activity
During the three months ended December 31, 2021, the Company
acquired the following three communities in its expansion
markets:
- Avalon Fort Lauderdale, located in Fort Lauderdale, FL,
containing 243 apartment homes and 49,000 square feet of commercial
space that is 100% leased to Whole Foods Market, for a purchase
price of $150,000,000;
- Avalon Miramar, located in Miramar, FL, containing 380
apartment homes for a purchase price of $133,000,000; and
- Hawk, located in Charlotte, NC, containing 71 apartment homes
for a purchase price of $48,500,000. Hawk is the final community
acquired in a three community portfolio in Charlotte, NC.
During the year ended December 31, 2021, the Company acquired
seven wholly-owned communities containing 1,932 apartment homes and
90,000 square feet of commercial space for a total purchase price
of $724,500,000 and a weighted average Market Cap Rate of 3.8%.
Four of these communities marked the Company's entrance into the
Dallas, Texas and Charlotte, North Carolina metropolitan
regions.
On February 1, 2022, the Company acquired Avalon Flatirons, a
wholly-owned operating community, located in Lafayette, Colorado,
containing 207 apartment homes and 16,000 square feet of commercial
space, for a purchase price of $95,000,000.
Disposition Activity
During the three months ended December 31, 2021, the Company
sold two wholly-owned operating communities:
- eaves Lawrenceville, located in Lawrenceville, NJ; and
- Avalon at Center Place, located in Providence, RI.
In aggregate, these communities contain 857 apartment homes and
20,000 square feet of commercial space and were sold for
$283,000,000 and a weighted average Market Cap Rate of 3.4%,
resulting in a gain in accordance with GAAP of $216,188,000 and an
Economic Gain of $140,017,000.
During the year ended December 31, 2021, the Company sold nine
wholly-owned operating communities containing 2,404 apartment homes
and 30,000 square feet of commercial space. These assets were sold
for $867,200,000 and a weighted average Market Cap Rate of 3.7%,
resulting in a gain in accordance with GAAP of $602,151,000 and an
Economic Gain of $344,609,000.
During the three months and year ended December 31, 2021, the
Company sold 10 and 53, respectively, of the 172 residential
condominiums at The Park Loggia, located in New York, NY, for gross
proceeds of $28,180,000 and $135,458,000, respectively. As of
December 31, 2021, 123 of the 172 residential condominiums have
been sold for aggregate gross proceeds of $351,830,000 and 87% of
the 66,000 square feet of commercial space has been leased. In
addition, subsequent to quarter end and through the date of this
release, the Company sold nine residential condominiums for gross
proceeds of $24,528,000, reducing inventory to be sold to 40
condominiums.
Liquidity and Capital Markets
At December 31, 2021, the Company did not have any borrowings
outstanding under its $1,750,000,000 unsecured credit facility and
had $543,788,000 in unrestricted cash and cash in escrow.
The Company’s annualized Net Debt-to-Core EBITDAre (as defined
in this release) for the fourth quarter of 2021 was 5.1 times and
Unencumbered NOI (as defined in this release) for full year 2021
was 95%.
During the three months ended December 31, 2021, the Company had
the following debt activity:
- The Company repaid $73,060,000 principal amount of fixed rate
debt with a weighted average interest rate of 3.79% secured by
Avalon Westbury at par in advance of its November 2036 maturity
date.
- The Company issued $400,000,000 principal amount of unsecured
notes in a public offering under its existing shelf registration
statement for net proceeds before offering costs of $396,976,000.
The notes mature in December 2028 and were issued with a 1.90%
coupon. The effective interest rate of the notes is 2.04%,
including the impact of offering costs. The notes were issued under
the Company's green bond framework, and the Company has allocated
or will allocate the net proceeds, in whole or in part, to one or
more new or existing eligible green projects.
During the year ended December 31, 2021, in addition to the debt
activity discussed above, the Company had the following debt
activity:
- The Company repaid $27,795,000 principal amount of 5.37% fixed
rate debt in advance of its April 2021 maturity date.
- The Company repaid $450,000,000 principal amount of its 2.95%
unsecured notes in advance of the September 2022 maturity
date.
- The Company issued $700,000,000 principal amount of unsecured
notes in a public offering under its existing shelf registration
statement and the green bond framework for net proceeds before
offering costs of $694,617,000. The notes mature in January 2032
and were issued with a 2.05% coupon and 2.16% effective interest
rate.
During the three months and year ended December 31, 2021, under
its current continuous equity program, the Company (i) sold 101,343
and 122,343 shares of common stock, respectively, at a weighted
average sales price of $225.85 and $226.15 per share, respectively,
for net proceeds of $22,545,000 and $27,253,000, respectively, and
(ii) entered into a forward contract to sell 68,577 shares of
common stock before 2023 for approximate proceeds of
$16,000,000.
First Quarter and Full Year 2022 Financial Outlook
The following presents a summary of the Company's financial
outlook for 2022, further details for which are provided in the
full release.
For its first quarter and full year 2022 financial outlook, the
Company expects the following:
Projected EPS, Projected FFO and
Projected Core FFO Outlook (1)
Q1 2022
Full Year 2022
Low
High
Low
High
Projected EPS
$
1.73
—
$
1.85
$
6.56
—
$
7.06
Projected FFO per share
$
2.11
—
$
2.23
$
9.28
—
$
9.78
Projected Core FFO per share
$
2.14
—
$
2.26
$
9.30
—
$
9.80
(1) See Definitions and Reconciliations,
table 8, for reconciliations of Projected FFO per share and
Projected Core FFO per share to Projected EPS.
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the full year 2021 to
its 2022 full year financial outlook:
Full Year 2022 Outlook
Comparison to Full Year 2021
Results
Per Share
EPS
FFO
Core FFO
2021 per share reported results
$
7.19
$
8.13
$
8.26
Same Store Residential revenue
1.21
1.21
1.21
Same Store Residential Opex
(0.22
)
(0.22
)
(0.22
)
Development and Other Stabilized
Residential NOI
0.44
0.44
0.44
Commercial NOI
0.03
0.03
0.03
Capital markets and transaction
activity
0.05
0.05
(0.08
)
Overhead and other
(0.11
)
(0.11
)
(0.09
)
Gain on sale of real estate, depreciation
expense and casualty and impairment loss
(1.78
)
—
—
Projected per share - 2022 outlook (1)
$
6.81
$
9.53
$
9.55
(1) Represents the mid-point of the
Company's February 2022 outlook.
The following table compares the Company’s actual results for
EPS, FFO per share and Core FFO per share for the fourth quarter of
2021 to its first quarter 2022 financial outlook:
Q4 2021 Results Compared to Q1
2022 Outlook
Per Share
EPS
FFO
Core FFO
Q4 2021 per share reported results
$
2.40
$
2.27
$
2.27
Same Store Residential revenue
0.02
0.02
0.02
Same Store Residential Opex
(0.06
)
(0.06
)
(0.06
)
Development and Other Stabilized
Residential NOI
0.02
0.02
0.02
Commercial NOI
(0.01
)
(0.01
)
(0.01
)
Capital markets and transaction
activity
(0.03
)
(0.03
)
(0.02
)
Overhead and other
(0.04
)
(0.04
)
(0.02
)
Gain on sale of real estate and
depreciation expense
(0.51
)
—
—
Projected per share - Q1 2022 outlook
(1)
$
1.79
$
2.17
$
2.20
(1) Represents the mid-point of the
Company's February 2022 outlook.
First Quarter Conference Schedule
Management is scheduled to present at Citi's Global Property CEO
Conference from March 6 - 9, 2022. During this conference,
management may discuss the Company's current operating environment;
operating trends; development, redevelopment, disposition and
acquisition activity; financial outlook; portfolio strategy and
other business and financial matters affecting the Company. Details
on how to access a webcast of the Company's presentation will be
available in advance of the conference event on the Company's
website at http:// www.avalonbay.com/events.
Other Matters
The Company will hold a conference call on February 3, 2022 at
1:00 PM ET to review and answer questions about this release, its
fourth quarter 2021 results and 2022 outlook, the Attachments
(described below) and related matters. To participate on the call,
dial 888-204-4368 and use conference id: 2633813.
To hear a replay of the call, which will be available from
February 3, 2022 at 6:00 PM ET to February 10, 2022 at 6:00 PM ET,
dial 888-203-1112 and use conference id: 2633813. 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 February 3, 2022.
About AvalonBay Communities, Inc.
As of December 31, 2021, the Company owned or held a direct or
indirect ownership interest in 297 apartment communities containing
87,992 apartment homes in 12 states and the District of Columbia,
of which 19 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” and similar expressions that do
not relate to 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 to differ
materially from those expressed or implied by the forward-looking
statements. Risks and uncertainties that might cause such
differences include those related to the COVID-19 pandemic,
including the effect on the multifamily industry and the general
economy of measures taken by businesses and the government,
including measures to relieve economic distress, such as
governmental limitations on the ability of multifamily owners to
evict residents who are delinquent in the payment of their rent 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 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 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 our lack of control of joint ventures and our ability to
successfully dispose of certain assets may not be realized; our
assumptions and expectations in our financial outlook may prove to
be too optimistic; and the timing and net proceeds of condominium
sales 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, 2020
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 14, Definitions and Reconciliations of
Non-GAAP Financial Measures and Other Terms. Attachment 14 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.
AVB Residential Benchmark
represents the average monthly revenue collections as a percentage
of amounts billed for the referenced day of the month for the
period from April 2019 to March 2020.
Average Rental Rates are 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.
Development Rights are development
opportunities in the early phase of the development process for
which the Company either has an option to acquire land or enter
into a leasehold interest, for which the Company is the buyer under
a long-term conditional contract to purchase land, where the
Company controls the land through a ground lease or owns land to
develop a new community, or where the Company is the designated
developer in a public-private partnership. The Company capitalizes
related pre-development costs incurred in pursuit of new
developments for which the Company currently believes future
development is probable.
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 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
Q4
2021
Net income
$
335,298
Interest expense and loss on
extinguishment of debt
55,911
Income tax expense
4,299
Depreciation expense
197,036
EBITDA
$
592,544
Gain on sale of communities
(213,881
)
Unconsolidated entity EBITDAre adjustments
(1)
2,983
EBITDAre
$
381,646
Unconsolidated entity gains, net
(5,814
)
Casualty and impairment loss
2
Advocacy contributions
59
Executive transition compensation
costs
411
Severance related costs
(73
)
Development pursuit write-offs and
expensed transaction costs, net of recoveries
788
Gain on for-sale condominiums
(1,059
)
For-sale condominium marketing, operating
and administrative costs
634
Gain on other real estate transactions,
net
(95
)
Legal settlements
39
Core EBITDAre
$
376,538
(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 operating communities disposed of during the
year ended December 31, 2021 is presented elsewhere in the full
release.
Economic Occupancy (“Ec Occ”) 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 2
Q4
Q4
Full Year
Full Year
2021
2020
2021
2020
Net income attributable to common
stockholders
$
335,209
$
341,128
$
1,004,299
$
827,630
Depreciation - real estate assets,
including joint venture adjustments
195,749
176,840
753,755
704,331
Distributions to noncontrolling
interests
12
12
48
48
Gain on sale of unconsolidated entities
holding previously depreciated real estate
—
—
(23,305
)
(5,157
)
Gain on sale of previously depreciated
real estate
(213,881
)
(249,106
)
(602,235
)
(340,444
)
Casualty and impairment loss on real
estate
2
—
3,119
—
FFO attributable to common
stockholders
317,091
268,874
1,135,681
1,186,408
Adjusting items:
Unconsolidated entity (gains) losses, net
(1)
(5,814
)
289
(14,870
)
375
Business interruption insurance
proceeds
—
—
—
(385
)
Lost NOI from casualty losses covered by
business interruption insurance
—
—
—
48
Loss on extinguishment of consolidated
debt
19
—
17,787
9,333
Gain on interest rate contract
—
(2,894
)
(2,654
)
(2,894
)
Advocacy contributions
59
5,484
59
8,558
Executive transition compensation
costs
411
—
3,010
—
Severance related costs
(73
)
27
313
2,142
Development pursuit write-offs and
expensed transaction costs, net of recoveries (2)
788
7,907
1,363
11,443
Gain on for-sale condominiums (3)
(1,059
)
(39
)
(3,110
)
(8,213
)
For-sale condominium marketing, operating
and administrative costs (3)
634
1,650
4,087
5,662
For-sale condominium imputed carry cost
(4)
1,252
2,304
7,031
11,317
Gain on other real estate transactions,
net
(95
)
(112
)
(2,097
)
(440
)
Legal settlements
39
455
1,139
490
Income tax expense (benefit) (5)
4,299
(2,178
)
5,733
(3,247
)
Core FFO attributable to common
stockholders
$
317,551
$
281,767
$
1,153,472
$
1,220,597
Average shares outstanding - diluted
139,928,816
139,632,368
139,717,399
140,435,195
Earnings per share - diluted
$
2.40
$
2.44
$
7.19
$
5.89
FFO per common share - diluted
$
2.27
$
1.93
$
8.13
$
8.45
Core FFO per common share - diluted
$
2.27
$
2.02
$
8.26
$
8.69
(1) Amounts for the three months and year
ended December 31, 2021 include net unrealized gains on technology
investments of $5,814 and $15,908, respectively. The amount for the
year ended December 31, 2021 is partially offset by the write-off
of asset management fee intangibles associated with the disposition
of the final two AC JV communities.
(2) Amounts for 2020 include the write-off
of $7,264 for a development opportunity in New York City that had a
projected Total Capital Cost of $688,000.
(3) Aggregate impact of (i) Gain on
for-sale condominiums and (ii) For-sale condominium marketing,
operating and administrative costs, is a net gain of $425 for Q4
2021 and net expense of $977 for full year 2021 and a net expense
of $1,611 for Q4 2020 and net gain of $2,551 for full year 2020,
respectively.
(4) Represents the imputed carry cost of
the for-sale residential condominiums at The Park Loggia. The
Company computes this adjustment by multiplying the Total Capital
Cost of completed and unsold for-sale residential condominiums by
the Company's weighted average unsecured debt effective interest
rate.
(5) Amounts are related to activity
generated in the Company's taxable REIT subsidiaries ("TRS") and
are comprised primarily of tax expense for condominium sales at The
Park Loggia and other ancillary real estate for the three months
and year ended December 31, 2021. The benefits for the three months
and year ended December 31, 2020 related to tax losses as well as
provisions of the Coronavirus Aid, Relief, and Economic Security
Act (the “CARES” Act).
Interest Coverage is calculated by
the Company as Core EBITDAre, divided by the sum of interest
expense, net, and preferred dividends, if applicable. 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
December 31, 2021 is as follows (dollars in thousands):
TABLE 3
Core EBITDAre (1)
$
376,538
Interest expense
$
55,892
Interest Coverage
6.7 times
(1) For additional detail, see Definitions
and Reconciliations, table 1.
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. Trends in Market Rents for a region as
reported by others could vary. 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 variable rate unsecured credit facility)
that is consolidated for financial reporting purposes, less
consolidated cash and cash in escrow, divided by annualized fourth
quarter 2021 Core EBITDAre. A calculation of Net Debt-to-Core
EBITDAre is as follows (dollars in thousands):
TABLE 4
Total debt principal (1)
$
8,170,431
Cash and cash in escrow
(543,788
)
Net debt
$
7,626,643
Core EBITDAre (2)
$
376,538
Core EBITDAre, annualized
$
1,506,152
Net Debt-to-Core EBITDAre
5.1 times
(1) Balance at December 31, 2021 excludes
$10,033 of debt discount and $40,573 of deferred financing costs as
reflected in unsecured notes, net, and $13,528 of debt discount and
$2,750 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 (gain) on extinguishment of
debt, net, general and administrative expense, income from
investments in unconsolidated entities, depreciation expense,
corporate 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 5
Q4
Q4
Q3
Q2
Q1
Full Year
Full Year
2021
2020
2021
2021
2021
2021
2020
Net income
$
335,298
$
341,114
$
78,847
$
447,977
$
142,234
$
1,004,356
$
827,706
Property management and other indirect
operating expenses, net of corporate income
24,555
27,400
25,322
24,318
24,470
98,665
97,443
Expensed transaction, development and
other pursuit costs, net of recoveries
1,331
8,110
417
1,653
(170
)
3,231
12,399
Interest expense, net
55,711
51,589
55,987
56,104
52,613
220,415
214,151
Loss (gain) on extinguishment of debt,
net
19
—
17,890
—
(122
)
17,787
9,333
General and administrative expense
16,481
13,465
17,313
18,465
17,352
69,611
60,343
(Income) loss from investments in
unconsolidated entities
(5,626
)
348
(6,867
)
(26,559
)
467
(38,585
)
(6,422
)
Depreciation expense
197,036
177,823
193,791
184,472
183,297
758,596
707,331
Income tax expense (benefit)
4,299
(2,178
)
2,179
10
(755
)
5,733
(3,247
)
Casualty and impairment loss
2
—
1,940
1,177
—
3,119
—
Gain on sale of communities
(213,881
)
(249,106
)
(58
)
(334,569
)
(53,727
)
(602,235
)
(340,444
)
Gain on other real estate transactions,
net
(95
)
(112
)
(1,543
)
(32
)
(427
)
(2,097
)
(440
)
Net for-sale condominium activity
(425
)
1,611
(158
)
647
913
977
(2,551
)
NOI from real estate assets sold or held
for sale
(2,801
)
(14,965
)
(4,064
)
(8,494
)
(9,536
)
(24,895
)
(67,418
)
NOI
411,904
355,099
380,996
365,169
356,609
1,514,678
1,508,184
Commercial NOI
(8,045
)
393
(6,769
)
(5,620
)
(5,311
)
(25,745
)
(12,559
)
Residential NOI
$
403,859
$
355,492
$
374,227
$
359,549
$
351,298
$
1,488,933
$
1,495,625
Residential NOI
Same Store:
New England
$
50,994
$
47,813
$
47,916
$
47,678
$
46,278
$
192,866
$
200,157
Metro NY/NJ
75,738
71,201
70,850
69,407
69,489
285,483
293,097
Mid-Atlantic
58,593
56,245
55,410
55,227
55,831
225,061
237,072
Southeast FL
5,904
3,966
5,015
4,545
4,178
19,642
15,683
Denver, CO
4,486
3,712
4,011
3,935
4,019
16,451
13,795
Pacific NW
18,733
17,506
17,929
17,714
17,183
71,559
75,894
No. California
64,848
65,901
62,566
62,854
63,558
253,826
296,357
So. California
82,887
72,795
78,362
72,491
71,654
305,394
304,510
Total Same Store
362,183
339,139
342,059
333,851
332,190
1,370,282
1,436,565
Other Stabilized
21,127
12,053
15,396
14,367
12,583
63,474
48,190
Development/Redevelopment
20,549
4,300
16,772
11,331
6,525
55,177
10,870
Residential NOI
$
403,859
$
355,492
$
374,227
$
359,549
$
351,298
$
1,488,933
$
1,495,625
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 6
Q4
Q4
Q3
Q2
Q1
Full Year
Full Year
2021
2020
2021
2021
2021
2021
2020
Revenue from real estate assets sold or
held for sale
$
5,102
$
24,451
$
7,145
$
14,463
$
16,146
$
42,857
$
109,371
Operating expenses from real estate assets
sold or held for sale
(2,301
)
(9,486
)
(3,081
)
(5,969
)
(6,610
)
(17,962
)
(41,953
)
NOI from real estate assets sold or held
for sale
$
2,801
$
14,965
$
4,064
$
8,494
$
9,536
$
24,895
$
67,418
Commercial NOI is composed of the following components (in
thousands):
TABLE 7
Q4
Q4
Q3
Q2
Q1
Full Year
Full Year
2021
2020
2021
2021
2021
2021
2020
Commercial Revenue
$
9,396
$
894
$
8,283
$
7,046
$
6,754
$
31,479
$
17,748
Commercial Operating Expenses
(1,351
)
(1,287
)
(1,514
)
(1,426
)
(1,443
)
(5,734
)
(5,189
)
Commercial NOI
$
8,045
$
(393
)
$
6,769
$
5,620
$
5,311
$
25,745
$
12,559
Other Stabilized is composed of
completed consolidated communities that the Company owns, which
have Stabilized Operations as of January 1, 2021, or which were
acquired subsequent to January 1, 2020. 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 2021 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 8
Low Range
High Range
Projected EPS (diluted) - Q1 2022
$
1.73
$
1.85
Depreciation (real estate related)
1.42
1.42
Gain on sale of communities
(1.04
)
(1.04
)
Projected FFO per share (diluted) - Q1
2022
2.11
2.23
Non-core transaction activity
0.02
0.02
Income tax expense and executive
transition compensation costs
0.01
0.01
Projected Core FFO per share (diluted) -
Q1 2022
$
2.14
$
2.26
Projected EPS (diluted) - Full Year
2022
$
6.56
$
7.06
Depreciation (real estate related)
5.68
5.68
Gain on sale of communities
(2.96
)
(2.96
)
Projected FFO per share (diluted) - Full
Year 2022
9.28
9.78
Adjustments related to residential
for-sale condominiums at The Park Loggia (1)
(0.01
)
(0.01
)
Non-core transaction activity
(0.01
)
(0.01
)
Development pursuit write-offs and
expensed transaction costs, net of recoveries
0.01
0.01
Executive transition compensation
costs
0.01
0.01
Income tax expense
0.02
0.02
Projected Core FFO per share (diluted) -
Full Year 2022
$
9.30
$
9.80
(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 344 apartment homes that is
currently under active redevelopment as of December 31, 2021.
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 9
Q4
Q4
Q3
Full Year
Full Year
2021
2020
2021
2021
2020
Residential rental revenue (GAAP
basis)
$
522,880
$
499,212
$
512,457
$
2,023,412
$
2,069,055
Residential concessions amortized
11,830
10,558
15,298
58,299
20,109
Residential concessions granted
(4,450
)
(20,081
)
(8,472
)
(42,237
)
(48,446
)
Residential Rental Revenue with
Concessions on a Cash Basis
$
530,260
$
489,689
$
519,283
$
2,039,474
$
2,040,718
Q4 2021
Q4 2021
Full year 2021
vs. Q4 2020
vs. Q3 2021
vs. full year 2020
% change -- GAAP revenue
4.7
%
2.0
%
(2.2
) %
% change -- cash revenue
8.3
%
2.1
%
(0.1
) %
Same Store is composed of
consolidated communities in the markets where the Company has a
significant presence and 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 2021 operating results, Same Store is composed of
consolidated communities that have Stabilized Operations as of
January 1, 2020, 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.
Same Store Collections are the
collection rates based on individual resident and commercial tenant
activity as reflected in the Company’s property management systems,
and are presented to provide information about collections trends
during the COVID-19 pandemic. Prior to the COVID-19 pandemic, the
collections information provided was not routinely produced for
internal use by senior management or publicly disclosed by the
Company, and is a result of analysis that is not subject to
internal controls over financial reporting. This information is not
prepared in accordance with GAAP, does not reflect GAAP revenue or
cash flow metrics, may be subject to adjustment in preparing GAAP
revenue and cash flow metrics at the end of the three months and
year ended December 31, 2021. Additionally, this information should
not be interpreted as predicting the Company’s financial
performance, results of operations or liquidity for any period.
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 December
31, 2021 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 year ended December 31, 2021 is as
follows (dollars in thousands):
TABLE 10
Full Year 2021
NOI
Residential NOI:
Same Store
$
1,370,282
Other Stabilized
63,474
Development/Redevelopment
55,177
Total Residential NOI
1,488,933
Commercial NOI
25,745
NOI from real estate assets sold or held
for sale
24,895
Total NOI generated by real estate
assets
1,539,573
Less NOI on encumbered assets
(78,827
)
NOI on unencumbered assets
$
1,460,746
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/20220201006246/en/
Jason Reilley Vice President of Investor Relations
703-317-4681
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