8-KOther EventsExhibits & Filings

AVALONBAY COMMUNITIES INC 8-K Report, Corporate Update (May 24, 2013)

Filed May 24, 2013For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) filed an 8-K on May 24, 2013, reporting on a significant secondary offering of its common stock. On May 22, 2013, a selling stockholder, Jupiter Enterprise LP (an affiliate of Lehman Brothers Holdings Inc.), entered into an underwriting agreement with Goldman, Sachs & Co. to sell 7,870,000 shares of AVB's common stock at a public price of $137.00 per share. This offering represents a substantial reduction in the selling stockholder's stake in AVB, decreasing their ownership to 5.4% post-offering. Importantly, AVB itself is not selling any shares and will not receive any proceeds from this transaction. The total number of outstanding shares will remain unchanged. While AVB will cover certain expenses for the selling stockholder, it avoids diluting existing shareholders and can be seen as a positive step in resolving a legacy holding from the Archstone acquisition.

Key Highlights

  • 1Jupiter Enterprise LP (affiliate of Lehman Brothers Holdings Inc.) is selling 7,870,000 shares of AVB common stock.
  • 2The offering price is set at $137.00 per share.
  • 3AvalonBay Communities, Inc. (AVB) is not selling any shares and will not receive any proceeds from the offering.
  • 4The total number of outstanding shares of AVB common stock will not change as a result of this sale.
  • 5The selling stockholder's ownership stake in AVB will be reduced to 5.4% after the sale.
  • 6This secondary offering is part of the aftermath of AVB's acquisition of a portion of the Archstone portfolio in February 2013.
  • 7Goldman, Sachs & Co. is acting as the sole underwriter for the offering.

Frequently Asked Questions

No, this offering will not dilute your ownership. AvalonBay Communities, Inc. is not issuing any new shares, and the total number of outstanding shares will remain the same. The shares being sold are from an existing large shareholder (Jupiter Enterprise LP).

No, AvalonBay Communities, Inc. will not receive any proceeds from the sale of these shares. The proceeds will go directly to the selling stockholder, Jupiter Enterprise LP.

Jupiter Enterprise LP is an affiliate of Lehman Brothers Holdings Inc. and acquired these shares in connection with AvalonBay's February 2013 acquisition of a portion of the Archstone apartment community portfolio. This sale likely represents a move to monetize that holding and reduce their overall exposure to AVB.

A significant reduction in ownership by a large shareholder generally reduces their influence over the company's strategic decisions. It also indicates that a substantial block of shares previously held by an affiliate of a distressed entity (Lehman Brothers) is now being distributed into the public market, potentially leading to more typical institutional ownership.