Bay Apartment Communities Acquires 7.4 Acres on The Alameda in Downtown San Jose; Plans to Build 305-Apartment Home Community and Retail Development.

SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 14, 1997--Bay Apartment Communities (NYSE/PSE:BYA) said it has acquired a 7.44 acre site on The Alameda, a main thoroughfare and entry point into downtown San Jose.

The company plans to build a development comprised of 305 apartment homes and approximately 15,000 square feet of retail space.

The site is currently vacant, but previously housed the Falstaff brewery. Bay paid a total of $4,925,000 for the site. Bay is also under contract to purchase a 1.43-acre parcel adjacent to this site for $1.5 million. This parcel will be acquired prior to commencement of construction and create an assemblage of 8.87 acres, with approximately 500 feet of frontage on the historic Alameda.

Bay plans to initiate construction of the project, which will be known as Paseo Alameda, during the second quarter of 1997. Bay said it expects the project to be completed during the first quarter of 1999 and reach stabilized occupancy by the end of the second quarter of 1999.

"This will be one of the most exciting and dynamic apartment home communities in the San Jose area," said Gilbert M. Meyer, chairman and president of Bay. "Paseo Alameda will offer a unique urban living experience on a major arterial adjacent to downtown San Jose. The Alameda is a street with great historical significance to the community and includes numerous mansions. It also has excellent freeway access and is located in the center of Silicon Valley in close proximity to the San Jose Arena, San Jose International Airport, Santa Clara University, San Jose State University, as well as major centers of employment and retail activity."

Bay said that the total cost of the community, including land acquisition and development, will be approximately $44.4 million. The company said it expects to earn an approximately 9.8 percent unleveraged return on the community in the first calendar year following stabilized occupancy.

The community will feature three and four-story residential buildings over a parking structure, as well as 18 live/work style units built over the retail space. It will include 28 units with three bedrooms and three bathrooms; 164 with two bedrooms and two bathrooms and 113 with one bedroom and one bathroom. Resident amenities will include a health club, community building, leasing facility and well landscaped courtyards.

"The retail space at Paseo Alameda will be comprised of high quality food service and other neighborhood businesses which will offer a high level of convenience for residents," said Max L. Gardner, Bay's executive vice president and chief operating officer. "The location and amenities at the community will provide a downtown living experience unique to San Jose," he added.

"Bay's track record based on nearly two decades of developing and reconstructing high quality apartment communities in Santa Clara County was helpful in getting final permit approval for this community," said Daniel T. Murphy, director of apartment development for the company. "We worked very closely with local residents and governmental bodies to assemble this project which we believe will have a highly positive impact on the downtown San Jose area," he continued.

Bay Apartment Communities is a fully integrated multifamily real estate company focused on the acquisition, development, construction, reconstruction and management of high quality apartment communities. The company owns 35 apartment communities containing 8,978 apartment homes. The company's portfolio consists of 31 apartment home communities in the San Francisco Bay Area and Northern California, three in Orange County and one in San Diego. Including Paseo Alameda, Bay currently has three communities comprising 1,325 apartment homes under development in Northern California.

CONTACT: Bay Apartment Communities, San Jose

Gilbert M. Meyer, Max L. Gardner or Jeffrey B. Van Horn

408/983-1500