8-KMaterial AgreementsExhibits & Filings

AVALONBAY COMMUNITIES INC 8-K Report, Material Agreement (Mar 22, 2005)

Filed March 22, 2005For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) announced the formation of the AvalonBay Valued Added Fund, L.P. (the "Fund") on March 16, 2005. This private institutional investment fund has total capital commitments of $330 million, with AVB contributing $50 million and eight institutional investors providing the remainder. The Fund utilizes an UPREIT structure and has an investment capacity of approximately $940 million, primarily through mortgage financing. The Fund's strategy is to acquire and operate multifamily apartment communities, aiming to create value through redevelopment and enhanced operations in markets where AVB already has a presence. The Fund has an eight-year term with an option for two additional years, and capital calls are limited until March 2008. AVB is restricted from forming similar funds or acquiring apartment communities outside the Fund, with certain exceptions. The filing details the distribution waterfall for profits and AvalonBay's entitlement to management and performance fees.

Key Highlights

  • 1Formation of AvalonBay Valued Added Fund, L.P. with $330 million in capital commitments.
  • 2AvalonBay Communities, Inc. contributed $50 million to the Fund.
  • 3The Fund has an investment capacity of approximately $940 million, utilizing leverage.
  • 4UPREIT structure employed for the Fund's formation.
  • 5Fund strategy focuses on acquiring and operating multifamily apartment communities for value creation through redevelopment and operations.
  • 6AvalonBay is restricted from forming competing funds or acquiring properties outside the Fund during the investment period, subject to exceptions.
  • 7Detailed distribution waterfall for profits and performance-based fees for AvalonBay are outlined.

Frequently Asked Questions

The AvalonBay Valued Added Fund, L.P. is a private institutional investment fund with $330 million in capital commitments. Its purpose is to acquire and operate multifamily apartment communities, primarily in markets where AvalonBay already operates, with the goal of increasing value through redevelopment and improved operations.

AvalonBay Communities, Inc. committed $50 million to the Fund.

The Fund has an investment capacity of approximately $940 million. It will primarily use mortgage financing and may utilize a line of credit secured by investors' capital commitments for interim financing. The Fund's indebtedness is generally limited to a 65% loan-to-value ratio.

Yes, AvalonBay is restricted from forming new investment funds with similar objectives or acquiring apartment communities outside of this Fund until March 16, 2008 (or when 80% of capital commitments are invested/committed). However, there are exceptions for significant individual or portfolio acquisitions, tax-deferred transactions, pre-construction properties, and acquisitions deemed inappropriate for the Fund by the General Partner.