Bay Apartment Communities Completes $89.4 Million Long-Term Refinancing; Fixes Interest Rate at 6.48 Percent for First 15 Years.

SAN JOSE, Calif.--(BUSINESS WIRE)--June 30, 1995--Bay Apartment Communities (NYSE:BYA) said it has sold $89.4 million in new and restructured fixed rate, tax-exempt bonds, financing five of its apartment home communities in Northern California. These bonds replace $89.4 million of currently outstanding variable rate debt.

The bonds, which are rate AAA and A1+ by Standard & Poor's, have maturities ranging between 28 and 30 years and have a fully amortizing payment schedule over that period. The Federal National Mortgage Association (FNMA) has provided credit enhancements for the full term of the financing.

Bay has fixed the all-in interest rate on all of the $89.4 million at approximately 6.48 percent for the first 15 years of the financing. This interest rate includes amortization of all loan costs and financing fees.

"Our strategy is to finance approximately one-third of the company's assets with long-term, low cost, fixed rate tax-exempt financing at all-in interest rates below seven percent," said Gilbert M. Meyer, chairman and chief executive officer.

"With this financing, Bay will have fixed the interest rate on a total of $176.8 million, or approximately 78.6 percent of its outstanding debt on a pro forma basis at March 31, 1995. The average maturity of Bay's total, tax-exempt debt will now be approximately 23 years, with the interest rate fixed on average for about 12 years. The weighted average interest rate on all of this debt during this period will be approximately 6.18 percent.

"Our use of fixed rate, tax-exempt bond financing gives us a very stable, inexpensive source of capital as we expand in the future," he continued. "As income from our apartment portfolio continues to grow, positive financial leverage provided from tax-exempt financing will significantly enhance returns to shareholders."

Meyer said, "Under terms of the transaction, Bay will immediately pay off approximately $33.0 million in variable rate tax-exempt debt on existing communities. This variable rate financing has a current average interest rate of approximately 5.39 percent."

The remaining $56.4 million in proceeds will be used to pay off short term, variable rate construction and acquisition loans on two communities currently under construction or reconstruction. The variable debt being retired carries a weighted average interest rate of approximately 8.85 percent. FNMA will release the $56.4 million after Bay has completed construction and achieved stabilized occupancy at Canyon Creek, a new 348 apartment home community in Campbell, California, and at Kimberly Woods, a 220 apartment home community in Pacifica, California. Construction of these communities is scheduled for completion in October, 1995 and the spring of 1996 respectively, with stabilized occupancy at the two communities expected shortly thereafter.

Bay Apartment Communities is a fully integrated, multi-family real estate investment trust focused on the acquisition, construction, reconstruction and management of high quality apartment communities in the San Francisco Bay Area and Northern California. The company owns 22 apartment communities totaling approximately 5,500 apartment homes. -0-

                   Bay Apartment Communities, Inc.
                      Proforma Debt Structure
                       As of March 31, 1995
                           (unaudited)

                                                 Wtd Avg
                         Outstanding   Wtd Avg   Remaining  Wtd Avg
                Debt      Balance    Fixed Debt  Debt Term  Interest
             Percentage  (millions)  Term (yrs)    (yrs)      Rate

Pre-Release of $56.4 Million Takeout Funds (1)
Fixed Rate Debt

March 1994 FGIC
 Bond Financing            $87.4         9          17        5.88%
June 1995 FNMA
 Bond Financing             33.0        15          29        6.48%(2)
Total Fixed
 Rate Debt      61.8%      120.4        11          20        6.04%

Variable Rate Debt

Credit Facility             50.0        na         2.5        8.40%
Construction Debt           42.0        na         1.5        8.78%
Payoff Debt
 - Asset Sale              (17.5)       na         2.5        8.40%
Total Variable
 Rate Debt      38.2%       74.5        na         1.9        8.62%
Total Debt     100.0%     $194.9        na          13        7.03%

                                                 Wtd Avg
                         Outstanding   Wtd Avg   Remaining  Wtd Avg
                Debt      Balance    Fixed Debt  Debt Term  Interest
             Percentage  (millions)  Term (yrs)    (yrs)      Rate

Post-Release of $56.4 Million Takeout Funds (3)
Fixed Rate Debt

March 1994 FGIC
 Bond Financing            $87.4         9          17        5.88%
June 1995 FNMA
 Bond Financing             89.4        15          29        6.48%(2)
Total Fixed
 Rate Debt      78.6%      176.8        12          23        6.18%

Variable Rate Debt

Credit Facility             50.0        na         2.5        8.40%
Construction Debt           42.0        na         1.5        8.78%
Buildout of Construction
 Projects                   30.0        na         1.5        9.09%
Payoff Debt
 - Asset Sale              (17.5)       na         2.5        8.40%
Payoff Debt with
 Bond Proceeds (4)         (56.4)       na         2.1        8.85%
Total Variable
 Rate Debt      21.4%       48.1        na         1.5        8.64%
Total Debt     100.0%     $224.9        na          18        6.71%

Notes:

(1) The proforma debt structure before release of the $56.4 million
    takeout funds shows Bay's debt outstanding at March 31, 1995 plus
    $10.7 million of additional debt which Bay assumed in the
    Rivershore Apartments purchase on April 28, 1995 and included in
    the June, 1995 bond refinance less $17.5 million of debt Bay paid
    off on June 13, 1995 with the Larkspur Woods Apartment sale.

(2)  The 6.48% represents an all-in financing cost including
     amortization of deferred financing costs.  All other interest
     rates are presented net of deferred financing amortization.

(3)  The proforma debt structure after release of the $56.4 million
     takeout funds again shows Bay's debt structure as described in
     footnote (1) but plus $30.0 million of additional debt required to
     complete construction of the Kimberly Woods, Canyon Creek and
     Carriage Square apartment communities and less the $56.4 million
     bond financing related debt paydown.

(4)  The $56.4 million portion of the June, 1995 bond financing
     remains in trust for the benefit of FNMA.  To gain release of
     these funds, FNMA requires that Bay complete the Canyon Creek and
     Kimberly Woods apartment construction and stabilize the occupancy
     at each community.

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Note to Editors: Bay Area Communities will hold a conference call for the investment community at 8:30 a.m. Pacific Daylight Time on Friday, July 7, 1995 to discuss this financing and other recent developments. Participants should call 415/837-3000. The confirmation number for the conference call is 240953.

CONTACT: Bay Apartment Communities, San Jose

Gilbert M. Meyer, 408/983-1500 REPEATS: New York 212-575-8822 or 800-221-2462; Boston 617-330-5311 or

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