AvalonBay Communities Announces Second Quarter 2005 Disposition Activity.ALEXANDRIA, Va. -- AvalonBay Communities AvalonBay Communities, Inc. (NYSE: AVB) is an Alexandria, Virginia-based public real estate investment trust. The company specializes in acquiring, developing, redeveloping and managing high-quality apartment communities in high barrier-to-entry markets, such as the Northeast, , Inc. (NYSE/PCX:AVB AVB Allgemeine Versicherungsbedingungen AVB Armin Van Buuren (musician) AVB Atrioventricular Block AVB Association Vaincre le Bègaiement AVB Acappella Vocal Band (men's Christian a cappella group) ) announced today the disposition of Avalon Lake, a 135 apartment home community located in Danbury, Connecticut “Danbury” redirects here. For other uses, see Danbury (disambiguation). Danbury is a city in Fairfield County, Connecticut, United States. It has an estimated population as of July 1, 2005 of 78,736. , and the disposition of two land parcels. The land parcels are located in Seattle, Washington  This page is protected from moves until disputes have been resolved on the .The reason for its protection is listed on the protection policy page. and in the Oakland-East Bay area. As a result of the land sales, the Company expects to recognize gains on the sale of land in accordance with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") of approximately $4.6 million in the second quarter of 2005. The gains on the sale of land were not included in the Company's financial outlook for either the second quarter or full year 2005. Financial information regarding the sale of Avalon Lake and the land parcels is set forth in the following table ($ in millions):
Depreciation Economic
Sales Price Net Proceeds GAAP Gain and Other Gain
--------- --------- --------- --------- ---------
Avalon Lake $ 37.7 $ 37.0 $ 22.6 $ (2.8) $ 19.8
Land Parcels 23.0 22.7 4.6 (3.0) 1.6
--------- --------- --------- --------- ---------
TOTAL $ 60.7 $ 59.7 $ 27.2 $ (5.8) $ 21.4
========= ========= ========= ========= =========
The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $59.7 million from these sales were used to repay a portion of amounts outstanding on the Company's unsecured credit facility. Avalon Lake, which was completed by the Company in 1999, was sold on June 1, 2005 at an initial year market capitalization rate Market capitalization rate Expected return on a security. The market-consensus estimate of the appropriate discount rate for a firm's cash flow. of 4.0%, a Gross Unleveraged Internal Rate of Return ("Unleveraged IRR IRR In currencies, this is the abbreviation for the Iranian Rial. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ") of 22.0% and an Economic Gain on Total Capital Cost of 115.6%. The buyer plans to continue operating the asset as a rental community. Year-to-date the Company has sold three communities and two land parcels for an aggregate gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. price of approximately $140.0 million. The Company sold these three communities, excluding the land parcels, at a weighted average market capitalization Weighted Average Market Capitalization A stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. rate of 3.9%, an Unleveraged IRR of 20.0% and an Economic Gain on Total Capital Cost of 127.4%. The Company has an additional community in the Washington, DC area that is currently under contract for sale and is expected to close in the beginning of July 2005. The buyer intends to convert the community to condominiums. Definitions and Notes GAAP Gain represents the gain on sale in accordance with GAAP. The GAAP Gain is estimated based on the final settlement statement. Economic Gain is calculated as the gain on sale in accordance with GAAP, less accumulated depreciation accumulated depreciation The total amount of depreciation that has been recorded for an asset since its date of acquisition. For example, a computer with a 5-year estimated life that was purchased for $2,000 would have accumulated depreciation of $800 [( through the date of sale and any other non-cash adjustments that may be required under GAAP accounting. The Economic Gain on the sale of land reflects an impairment loss on one of the parcels that was recognized in the fourth quarter of 2002. Management generally considers Economic Gain to be an appropriate supplemental measure to gain on sale in accordance with GAAP because it helps investors understand the relationship between the cash proceeds from a sale and the cash invested in the sold community. The Economic Gain is estimated based on the final settlement statement. Total Capital Cost reflects actual capital costs incurred to develop or acquire a community, including acquisition costs, construction costs, real estate taxes, capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, all as determined in accordance with GAAP. Initial Year Market Capitalization Rate is defined by the Company as Projected NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics 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 to $300 per apartment, divided by the gross sales price for the community. Projected NOI, as referred to above, represents management's estimate of projected rental revenue minus projected operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 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%. 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 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 our 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. About AvalonBay Communities, Inc. AvalonBay Communities, Inc., headquartered in Alexandria, Virginia Alexandria is an independent city in the Commonwealth of Virginia. As of the 2000 census, the city had a total population of 128,284. Located along the Western bank of the Potomac River, Alexandria is approximately 6 miles (9.6 kilometers) south of downtown Washington, DC. , currently owns or holds an ownership interest in 147 apartment communities containing 42,715 apartment homes in ten states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , of which eleven communities are under construction and three 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2004 under the heading "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations - Forward-Looking Statements." The Company does not undertake a duty to update forward-looking statements. Copyright (C) 2005 AvalonBay Communities, Inc. All Rights Reserved |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion