10-K/APeriod: FY2002

AVALONBAY COMMUNITIES INC Annual Report (Amendment), Year Ended Dec 31, 2002

Filed July 23, 2003For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) filed this Form 10-K/A on July 23, 2003, to amend its 2002 annual report. The primary reason for the amendment was to update financial statements in accordance with SFAS No. 144, which pertains to the impairment or disposal of long-lived assets. This resulted in reclassifying certain communities as discontinued operations, though it did not impact net income or funds from operations (FFO). The company operates as a REIT, focusing on upscale apartment communities in high barrier-to-entry markets across the US. For the fiscal year ended December 31, 2002, AVB experienced a decline in net income available to common stockholders due to fewer gains on asset sales compared to the previous year, alongside weakened market conditions in several key submarkets, leading to reduced net operating income. Despite these challenges, the company continued its development and redevelopment activities, though it anticipated a decrease in such activities for 2003, alongside an increase in asset dispositions to optimize its portfolio and enhance liquidity. The company maintained a conservative capital structure, with debt-to-total market capitalization at 46.1% as of year-end 2002.

Key Highlights

  • 1Amendments made to 2002 Form 10-K to comply with SFAS No. 144, reclassifying certain communities as discontinued operations.
  • 2Company operates as a REIT focused on high-quality apartment communities in high barrier-to-entry markets.
  • 3Net income available to common stockholders decreased by 28.1% in 2002 compared to 2001, primarily due to lower gains from property sales and weaker market conditions impacting net operating income.
  • 4Anticipates a decrease in acquisition and development activity in 2003, with an increase in disposition activity.
  • 5Maintains a conservative capital structure with a debt-to-total market capitalization of 46.1% at year-end 2002.
  • 6Portfolio as of February 1, 2003, included 137 operating communities with 40,179 apartment homes, 12 communities under construction, and rights to develop 38 additional communities.
  • 7Divestiture strategy aims to redeploy proceeds to fund development and redevelopment, and to enhance liquidity.

Frequently Asked Questions

AvalonBay is filing an amended 10-K to update its financial statements for the years ended December 31, 2002, 2001, and 2000, to comply with Statement of Financial Accounting Standards (SFAS) No. 144, 'Accounting for the Impairment or Disposal of Long-Lived Assets.' This required reclassifying certain communities as discontinued operations, although this change did not affect net income or funds from operations (FFO).

In 2002, net income available to common stockholders decreased by 28.1% compared to 2001. This decline was primarily due to lower gains from the sale of communities and weakened market conditions in several key submarkets, which led to a decrease in net operating income. Additionally, interest and depreciation expenses increased.

AvalonBay's strategy is to focus on high barrier-to-entry markets. The company plans to decrease acquisition and development activity in 2003 compared to prior years and to increase disposition activity. The proceeds from these sales are intended to be redeployed into new development and redevelopment projects and to enhance overall liquidity.

AvalonBay maintains a conservative capital structure. As of December 31, 2002, its debt-to-total market capitalization was 46.1%. The company utilizes a $500 million unsecured credit facility and has issued senior unsecured debt. Liquidity is primarily sourced from cash flows from operations, asset dispositions, and borrowings under its credit facility.