8-KMaterial AgreementsFinancial EventsOther Events+1

AVALONBAY COMMUNITIES INC 8-K Report, Material Agreement (Apr 14, 2009)

Filed April 14, 2009For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) filed an 8-K on April 14, 2009, reporting two significant events. The first, on April 9, 2009, involved a material definitive agreement and the creation of a direct financial obligation. The company entered into a commitment with Deutsche Bank Berkshire Mortgage, Inc. to obtain fourteen individual mortgage loans totaling $741,140,000, secured by various apartment communities across multiple states. These loans feature a fixed interest rate of 5.86% for ten years, with interest-only payments for the first two years followed by principal and interest payments, and a balloon payment at maturity. The proceeds are intended to pay down existing credit facilities, retire debt, and support working capital for development activities. The second key event, announced on April 8, 2009, was the second and final closing of AvalonBay Value Added Fund II, L.P. This private investment vehicle, which includes commitments from institutional investors and the company, was initially formed on August 26, 2008. The closing of this fund is a positive indicator of continued investor confidence and the company's ability to attract capital, particularly during a challenging economic period.

Key Highlights

  • 1Secured $741.14 million in new mortgage financing through fourteen individual loans on April 9, 2009.
  • 2The new loans have a fixed interest rate of 5.86% for a ten-year term.
  • 3Loan terms include interest-only payments for the first two years, with principal and interest payments thereafter.
  • 4Funds from these loans are earmarked for paying down existing credit facilities, retiring debt, and supporting working capital for development.
  • 5Announced the second and final closing of AvalonBay Value Added Fund II, L.P. on April 8, 2009.
  • 6The Fund II attracted commitments from institutional investors and AvalonBay itself.
  • 7These actions indicate efforts to strengthen the balance sheet and secure long-term financing during a volatile market.

Frequently Asked Questions

AVB secured a total of $741,140,000 through fourteen individual mortgage loans.

The loans have a fixed interest rate of 5.86% per annum for ten years. They include interest-only payments for the first two years, followed by principal and interest payments amortized over 30 years, with the remaining balance due at maturity on the tenth anniversary. Prepayment penalties apply for most of the loan term.

The company expects to use the funds to pay down amounts outstanding under its unsecured credit facility, retire unsecured debt securities and other maturing debt, and support working capital needs for ongoing development and redevelopment activities.

The successful second and final closing of Fund II indicates continued investor confidence in AvalonBay's strategy and its ability to attract capital, even in a challenging economic environment. This fund is a private investment vehicle with commitments from institutional investors and the company.