AvalonBay Communities Announces 4Q'04 Disposition Activity; Announces Date for 2005 Financial Outlook Release.

ALEXANDRIA, Va. -- AvalonBay Communities, Inc. (NYSE/PCX:AVB) announced today both the sale of Avalon at Fairway Glen and the expected sale of Avalon at Ballston - Vermont and Quincy. Avalon at Fairway Glen was sold on December 14, 2004, and the Company expects to close on the sale of Avalon at Ballston - Vermont and Quincy by year-end. These communities are expected to be sold for an aggregate gross sales price of $141.5 million resulting in an estimated gain in accordance with Generally Accepted Accounting Principles ("GAAP") of $87.7 million and an Economic Gain of approximately $82.0 million. The weighted average Initial Year Market Capitalization Rate on the sale of these communities is expected to be 4.3%, and the weighted average Unleveraged Internal Rate of Return ("Unleveraged IRR") is expected to be approximately 20.2% on the capital invested during the period of ownership.

Avalon at Fairway Glen, a 144 apartment home community located in San Jose, California, was originally constructed by the Company in 1986 and was sold for a gross sales price of approximately $21.0 million. The sale of Avalon at Fairway Glen is consistent with the Company's previously stated intention to reduce its exposure to the Santa Clara County market.

Avalon at Ballston - Vermont and Quincy, located in the Ballston corridor of Arlington, Virginia, contains an aggregate of 454 apartment homes. Avalon at Ballston - Vermont and Quincy, was originally constructed in 1987 and 1989, respectively, and was acquired by the Company in 1997 for an aggregate purchase price of $46.7 million, or $102,860 per apartment home. The Company expects to sell the communities to a condominium converter for an aggregate gross sales price of approximately $120.5 million, or $265,420 per apartment home.

Estimated financial information regarding the sales of these communities is set forth in the following table ($ in millions):

Estimated
                                  Net
               Gross           Proceeds
               Sales           After Debt  GAAP  Depreciation Economic
               Price    Debt   Repayment   Gain   and Other     Gain
              -------- ------ ----------- ------ ------------ --------

Avalon at
 Fairway Glen $  21.0  $ 9.6  $     10.9  $ 5.7  $       4.3  $  10.0
Avalon at
 Ballston -
 Vermont &
 Quincy         120.5      -       120.2   82.0        (10.0)    72.0
              -------- ------ ----------- ------ ------------ --------

Total         $ 141.5  $ 9.6  $    131.1  $87.7  $      (5.7) $  82.0
              ======== ====== =========== ====== ============ ========

The estimated aggregate net proceeds of approximately $131.1 million will be used to repay the Company's unsecured credit facility, fund current development or redevelopment communities and/or redeem debt securities.

2005 Financial Outlook

The Company anticipates issuing its 2005 financial outlook on Tuesday, December 21, 2004 following the market close. The release will be available on the Company's website at http://www.avalonbay.com/outlook and through e-mail distribution. To receive future press releases via e-mail, please register through the Investor Relations section of the website at http://www.avalonbay.com/Template.cfm?Section=Subscribe.

Definitions and Notes

GAAP Gain represents the estimated gain on sale in accordance with GAAP based on the final settlement statement for Avalon at Fairway Glen and based on preliminary settlement statements for Avalon at Ballston - Vermont and Quincy.

Economic Gain is calculated as the gain on sale in accordance with GAAP, less accumulated depreciation through the date of sale, adjusted for any other non-cash adjustments that may be required under GAAP accounting. Management generally considers the Economic Gain to be an appropriate supplemental measure to the GAAP Gain on Sale because it helps investors understand the relationship between the cash proceeds from a sale and the cash invested in the community. The Economic Gain is estimated based on the final settlement statement for Avalon at Fairway Glen and on preliminary settlement statements for Avalon at Ballston - Vermont and Quincy.

Initial Year Market Capitalization Rate, as determined within this release related to Disposed Communities, is defined as Projected NOI of a single community for the first 12 months following the date of the buyer's valuation, less estimates for non-routine allowance of approximately $250 per apartment home, divided by the actual or estimated gross sales price for the community. Projected NOI, as referred to above, represents management's estimate, as of the date or expected date of disposition, of projected rental revenue minus projected operating expenses before interest, income taxes (if any), depreciation, amortization and extraordinary items. For this purpose, management's projection of operating expenses for the community includes a management fee of 3.0% to 3.5%. The Initial Year Market Capitalization Rate, which may be determined in a different manner by others, is a measure frequently used in the real estate industry when determining the appropriate purchase price for a property or estimating the value for the property. Buyers may assign different Initial Year Market Capitalization Rates to different communities when determining the appropriate value because they (i) may project different rates of change in operating expenses, including capital expenditure estimates and (ii) may project different rates of change in future rental revenue due to different estimates for changes in rent and occupancy levels. The weighted average Initial Year Market Capitalization Rate is weighted based on the actual or estimated gross sales price of each community.

Unleveraged IRR on sold communities refers to the Internal Rate of Return calculated by the Company considering the timing and amounts of (i) total revenue during the period owned by the Company and (ii) the gross sales price net of selling costs, offset by (iii) the undepreciated capital cost of the communities at the time of sale and (iv) total direct operating expenses during the period owned by the Company. Each of the items (i), (ii), (iii) and (iv) are calculated in accordance with GAAP.

The calculation of Unleveraged IRR does not include an adjustment for the Company's general and administrative expense, interest expense, or corporate-level property management and other indirect operating expenses. Therefore, Unleveraged IRR is not a substitute for net income as a measure of the Company's performance. Management believes that the Unleveraged IRR achieved during the period a community is owned by the Company is useful because it is one indication of the gross value created by the Company's acquisition, development or redevelopment, management and sale of the community, before the impact of indirect expenses and Company overhead. The Unleveraged IRR achieved on the communities as cited in this release should not be viewed as an indication of the gross value created with respect to other communities owned by the Company, and the Company does not represent that it will achieve similar Unleveraged IRRs upon the disposition of other communities. The weighted average Unleveraged IRR is weighted based on the actual or estimated gross sales price.

About AvalonBay Communities, Inc.

AvalonBay Communities, Inc. is headquartered in Alexandria, Virginia, and following the completion of the sales described in this release, the Company will own or hold an ownership interest in 145 apartment communities containing 42,271 apartment homes in ten states and the District of Columbia, of which thirteen communities are under construction and two communities are under reconstruction. AvalonBay is in the business of developing, redeveloping, acquiring and managing apartment communities in high barrier-to-entry markets of the United States. More information on AvalonBay may be found on AvalonBay's Web Site at http://www.avalonbay.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by the Company's use of words such as "expects," "plans," "estimates," "projects," "intends," "believes" and similar expressions that do not relate to historical matters. Actual results may differ materially from those expressed or implied by the forward-looking statements as a result of risks and uncertainties, including possible changes in the timing and closing of planned dispositions under agreement and other matters detailed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements." The Company does not undertake a duty to update forward-looking statements.

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