10-KPeriod: FY2001

AVALONBAY COMMUNITIES INC Annual Report, Year Ended Dec 31, 2001

Filed March 26, 2002For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) is a REIT focused on owning and operating upscale apartment communities in high barrier-to-entry markets across the United States. As of December 31, 2001, the company owned or had an interest in 126 operating apartment communities with 37,228 apartment homes, in addition to 15 communities under construction and rights to develop 30 more. The company's strategy centers on developing, owning, and operating high-quality communities in desirable locations, aiming for consistent earnings growth through effective property management, premium pricing balanced with high occupancy, and prudent cost control. AvalonBay actively manages its portfolio by selectively selling underperforming assets and reinvesting proceeds into development and redevelopment projects, particularly in markets with strong demand and limited new supply. The company maintained a conservative capital structure with a debt-to-total market capitalization of 37.1% as of year-end 2001.

Key Highlights

  • 1AvalonBay owns and operates 126 apartment communities with 37,228 apartment homes as of December 31, 2001, with a strategic focus on high barrier-to-entry markets.
  • 2The company has 15 communities under construction representing 3,963 apartment homes and development rights for an additional 30 communities totaling 8,918 homes.
  • 3AvalonBay's business strategy emphasizes the development, ownership, and operation of upscale apartment communities in supply-constrained markets to drive long-term stockholder value.
  • 4The company actively manages its portfolio, including selling seven communities in 2001 for approximately $239 million to redeploy capital into development and redevelopment projects.
  • 5As of December 31, 2001, AvalonBay had a debt-to-total market capitalization of 37.1%, indicating a conservative financial structure.
  • 6Rental income for the year ended December 31, 2001, was $637.4 million, showing growth driven by increased rental revenue per occupied apartment home and a growing portfolio.
  • 7The company continued its policy of paying regular quarterly cash dividends, reflecting a commitment to returning value to shareholders.

Frequently Asked Questions

AvalonBay's core strategy is to develop, own, and operate upscale apartment communities in high barrier-to-entry markets. They focus on locations with limited new supply and strong demand, aiming to increase cash flows and stockholder value through effective property management, premium pricing, and efficient operations.

AvalonBay actively manages its portfolio by selectively selling communities that do not meet its long-term investment criteria to redeploy capital into development and redevelopment projects. They also focus on enhancing revenue through strong resident satisfaction, optimizing occupancy, and strategic rent increases, while controlling operating expenses through efficient management practices.

As of December 31, 2001, AvalonBay maintained a conservative capital structure with a debt-to-total market capitalization of 37.1%. The company also has a $500 million unsecured credit facility, of which $414 million was available for borrowing as of March 1, 2002, providing significant liquidity.

Key risks include the potential abandonment or deferral of development opportunities due to market changes or financing issues, cost overruns during construction and redevelopment, delays in completion and lease-up, lower-than-expected occupancy rates and rental income, and difficulties in obtaining necessary permits and authorizations. These risks could adversely affect the company's ability to achieve projected returns and its financial condition.