Bay Apartment Communities Makes Initial Entry into San Diego Market with Acquisition of Rancho Penasquitos Racquet Club.

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 14, 1997--Bay Apartment Communities (NYSE/PSE Symbol: BYA), a multifamily real estate company, has acquired its first community in San Diego, the Rancho Penasquitos Racquet Club Apartments, Bay's primary market is the San Francisco Bay Area and Northern California, although the company made its initial entry into Orange County with three acquisitions several months ago.

The newly-acquired 176-apartment home community is located just west of Interstate 15 at Rancho Penasquitos Boulevard. Bay paid approximately $10.8 million in cash for the 14-year-old community and will spend approximately $2 million for a major repositioning program at the community.

Bay plans to repair the community's roofs, repair, waterproof and repaint stucco exteriors, construct approximately 100 enclosed carports, renovate the leasing office and upgrade landscaping and site drainage.

In addition, the company will add air conditioning units and upgrade the bathroom lighting in all apartments, install new kitchen appliances in about half the apartments and install washers and dryers in the approximately one-third of the community's apartments that do not currently have them.

The community contains 80 apartment homes with two bedrooms and two bathrooms, 48 with two bedrooms and one bathroom and 48 with one bedroom and one bathroom. Resident amenities include a swimming pool, spa, tennis, racquetball and volley ball courts, a children's play area, leasing office and laundry facilities. The community has a trailing return on cost of approximately 8.2 percent.

"Rancho Penasquitos is a great acquisition for Bay and an excellent way of initiating the company's entry into the San Diego market," said Gilbert M. Meyer, chairman and chief executive officer.

"This transaction is typical of our strategy of acquiring well-located, in-fill communities and then adding value through our proven reconstruction, leasing and management skills," he continued.

"The community is in a well-established and highly desirable region of San Diego and located near major transportation arteries and retail centers," noted Geoffrey L. Baker, vice president and chief development and acquisition officer. "We were able to acquire this community for approximately 65 percent of replacement cost. After we substantially refurbish and improve this apartment community, our total investment will be less than 80 percent of its replacement cost," he continued.

In August, 1996, Bay made its initial entry into Southern California with acquisitions in Orange County, where it now owns three communities.

"In San Diego, we are seeing stabilizing and increasing occupancy and rents fueled by a resurgent economy similar to what is occurring in Orange County. We believe this is an opportune time to carefully explore the market," said Max Gardner, executive vice president and chief operating officer.

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. With this transaction, 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.

CONTACT: Bay Apartment Communities

Gilbert M. Meyer, 408/983-1500

Max L. Gardner, 408/983-1500

Jeffrey B. Van Horn, 408/983-1500