investor teleconference presentationpresentation, see attachment 13 to the earnings release. this...

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First Quarter 2015 April 28, 2015

INVESTOR TELECONFERENCE

PRESENTATION

AVALON ALDERWOOD

Lynnwood, WA

EAVES CREEKSIDE

Mountain View, CA

AVA HIGH LINE

New York, NY

2

See Appendix for information about

Forward-Looking Statements and definitions

of non-GAAP financial measures and other terms.

3

PARTICIPANTS

TIM NAUGHTON CHAIRMAN & CHIEF EXECUTIVE OFFICER

KEVIN O’SHEA CHIEF FINANCIAL OFFICER

MATT BIRENBAUM CHIEF INVESTMENT OFFICER

SEAN BRESLIN CHIEF OPERATING OFFICER

4

1Q 2015 RESULTS

Core FFO per Share Growth 7.4%

Same-Store Rental Revenue Growth | Including Redevelopment 4.3% | 4.4%

Development Completions | Initial Projected Stabilized Yield $ 450 M | 6.1%

Development Starts | Development Rights Additions, Net $ 100 M | $ 220 M

REVIEW OF FIRST QUARTER RESULTS

Source: Company reports.

(1) Net of 1Q 2015 abandoned pursuits.

(1)

5

RENT CHANGE WELL ABOVE LAST YEAR’S PACE


Same-store same-unit rent change represents the weighted average like-term new move-in and renewal rent change for Established Communities as of January 1, 2015.

(1) 2015 data as of April 24th, 2015.

1.6

%

2.6

%

3.1

%

3.6

%

5.1

%

5.2

% 5.9

%

6.0

%

-

2%

4%

6%

8%

JANUARY FEBRUARY MARCH APRIL

MONTHLY SAME-STORE SAME-UNIT RENT CHANGE

2014 2015

(1)

(1%)

3%

7%

1Q 2Q 3Q 4Q 1Q

2014 2015

QUARTERLY SAME-STORE SAME-UNIT RENT CHANGE

NEW MOVE-IN RENEWAL

6

-

3%

6%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2011 2012 2013 2014 15

EFFECTIVE RENT GROWTH AVB MARKETS 2011 – 1Q 2015

-

1

2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2011 2012 2013 2014

MIL

LIO

NS

U.S. HOUSEHOLD FORMATIONS TRAILING 4-QUARTER TOTAL

2011 – 2014

APARTMENT FUNDAMENTALS REMAIN FAVORABLE…

Source: U.S. Bureau of Labor Statistics (Establishment & Household Survey), U.S. Census Bureau, Axiometrics.

-

200

400


2011 2012 2013 2014 15

TH

OU

SA

ND

S

U.S. MULTIFAMILY STARTS SEASONALLY ADJUSTED ANNUALIZED RATE

3-MONTH MOVING AVERAGE 2011 – 1Q 2015

6%

8%

10%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2011 2012 2013 2014

U.S. RENTAL VACANCY RATE 2011 - 2014

-

1%

2%

3%


2011 2012 2013 2014 15

U.S. JOB GROWTH 2011 – 1Q 2015

-

1%

2%

3%


2011 2012 2013 2014 15

U.S. JOB GROWTH 25 – 34 YEAR OLDS

2011 – 1Q 2015

1 2

3 4

5 6

7

…AND ARE PROJECTED TO EVEN OUT ACROSS

REGIONS

Source: AVB Market Research Group.

-

1%

2%

3%

4%

5%

AN

NU

ALIZ

ED

PROJECTED JOB & SUPPLY GROWTH 4Q 2014 – 4Q 2016

4.8%

3.8%

4.4%

2.1%

6.9%

8.3%

4.3%

-

3%

6%

9%

-

1%

2%

3%

4%

5%

AN

NU

ALIZ

ED

JOB, SUPPLY & RENTAL REVENUE GROWTH 4Q 2010 – 4Q 2014

JOB GROWTH NEW APARTMENT SUPPLY AS A % OF TOTAL

APARTMENT INVENTORY

ANNUALIZED AVERAGE AVB SAME-STORE RENTAL

REVENUE GROWTH (RIGHT AXIS)

8

MARKET LEADERSHIP ROTATES OVER TIME

Source: Axiometrics, AVB Market Research Group.

(500)

(250)

-

250

500

1999 2001 2003 2005 2007 2009 2011 2013

EFFECTIVE RENT GROWTH RELATIVE YEAR-OVER-YEAR PERFORMANCE,

BASIS-POINT DIFFERENTIAL FROM OVERALL AVERAGE

AVB EAST COAST MARKETS AVB WEST COAST MARKETS

9

EVOLUTION OF AVB PORTFOLIO


Reflects wholly-owned consolidated communities only.

% OF CONSOLIDATED AVB NOI

New England 12.8%

Metro NY/NJ 25.3%

Mid-Atlantic 16.2%

Pacific Northwest 5.2%

Northern California

20.9%

Southern California

19.6%

1Q 2015

New England 18.9%

Metro NY/NJ 30.8%

Mid-Atlantic 12.3%


Northern California

19.8%

Southern California

14.5%

4Q 2012

New England 3.0%

Metro NY/NJ 17.3%

Mid-Atlantic 21.2%


Northern California

23.7%

Southern California

29.2%

ARCHSTONE ACQUISITION & ORGANIC GROWTH

10

SOUTHERN CALIFORNIA GAINING MOMENTUM


3.9

%

4.1

%

4.6

%

5.9

%

6.2

%

-

2%

4%

6%

8%

1Q 2Q 3Q 4Q 1Q

2014 2015

SOUTHERN CALIFORNIA SAME-STORE YEAR-OVER-YEAR RENTAL REVENUE GROWTH

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SOUTHERN CALIFORNIA PORTFOLIO IN 2012 VS TODAY


Reflects wholly-owned consolidated communities only.

ADDITIONS SINCE 2012

CURRENT DEVELOPMENT

AVALONBAY IN 2012

4Q 2012 PORTFOLIO 1Q 2015 PORTFOLIO

SOUTHERN CALIFORNIA PORTFOLIO 4Q 2012 1Q 2015

COMMUNITIES 29 51

APARTMENT HOMES 7,864 15,094

% OF CONSOLIDATED NOI 14.5% 19.6%

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AVA Little Tokyo Los Angeles, CA

AVA Burbank Burbank, CA

Avalon Irvine Irvine, CA

Avalon Burbank Burbank, CA

Avalon Baker Ranch Lake Forest, CA

AVA Pasadena Pasadena, CA

Avalon West Hollywood West Hollywood, CA

Avalon Studio City Studio City, CA

Avalon Woodland Hills Woodland Hills, CA

SOUTHERN CALIFORNIA PORTFOLIO AT A GLANCE

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OPERATING EFFICIENCIES ENABLED BY INCREASED

SCALE AND ENHANCED CAPABILITIES

Source: Company reports, SNL Financial.

(1) Operating Overhead includes Property management and other indirect operating expenses and General and Administrative expenses.

(2) Represents same-store NOI divided by same-store Revenues per SNL Financial. The Multifamily Sector Weighted Average includes AEC, AIV, CPT, EQR, ESS, HME, MAA, PPS, and

UDR and is weighted based on Total Market Capitalization per SNL Financial as of December 31, 2014.

(3) Includes Redevelopment activity.

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%

7%

-

4%

8%

12%

16%

2007 2015 PROJECTED

OPERATING OVERHEAD AS A % OF TOTAL NOI

68

%

70

%

64%

68%

72%

2007 2015 PROJECTED

AVB SAME-STORE OPERATING MARGINS

(3)

(2)

2014 MULTIFAMILY SECTOR

WEIGHTED AVERAGE ≈ 66%

(1)

(3)

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TECHNOLOGY INVESTMENTS: IMPROVING EFFICIENCY

AND ENHANCING CUSTOMER EXPERIENCE


AvalonCommunities.com as a share of total leads u 290 basis-points year-over-year, to 26% of all leads

Internet advertising spend d 28% year-over-year

PROSPECT PORTAL RESIDENT PORTAL

≈ 90% of rent payments are received via the portal, up from 80% in 2013

≈ 50% of service requests are received via the portal, up from 30% in 2013

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Bad debt collections

Bringing other 3rd party services in-house

CUSTOMER CARE CENTER IS A COMPETITIVE

ADVANTAGE


Launched in 2007

Virginia Beach, VA

≈ 225 associates

165 Customer Service associates

60 Accounting / Other associates

Services Provided

Customer Service

Community-level accounting

Cash Management & Accounts Payable

Payroll

Increased consistency and control

-

20%

40%

-

1

2

2012 2013 2014 PROJECTED 2015

$ M

ILLIO

NS

BRINGING BAD DEBT COLLECTIONS IN-HOUSE

NET SAVINGS

% OF BAD DEBT COLLECTED IN-HOUSE (RIGHT AXIS)

ABOUT THE CCC FUTURE OPPORTUNITIES AT THE CCC

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FIVE COMMUNITIES UNDER CONSTRUCTION AND IN LEASE-UP

TOTALING ≈ $455M EXCEEDING EXPECTATIONS

Source: Company reports. Data as of March 31, 2015.

CURRENT LEASE-UP METRICSCURRENT

PROJECTION

ORIGINAL

PROJECTION

Weighted Average Rent per Home $ 2,635 $ 2,420 $ 215 | 8.9%

Weighted Average Initial Projected Stabilized Yield 6.9% 6.3% 60 bps

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DEVELOPMENT PIPELINE REMAINS MATCH-FUNDED


(1) Assumes physical settlement and settlement proceeds based on $151.74 per share. Actual physical settlement proceeds will vary based on adjustment for Fed Funds rate and dividends paid.

(2) Projected Cash From Operations, Net assumes $250 million of free cash flow over the next 12 months.

$ 3.6 B

SPENT-TO-DATE

PROJECTED CASH FROM OPERATIONS, NET

CASH AND CASH IN ESCROW

EQUITY FORWARD

-

1

2

3

4

TOTAL PROJECTED CAPITAL COST SOURCES

$ B

ILL

ION

S

DEVELOPMENT ACTIVITY UNDERWAY AND NON-STABILZIED COMPLETIONS VERSUS AVAILABLE CAPITAL SOURCES AS OF MARCH 31, 2015

(1)

(2)

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PROJECTED NET DEBT-TO-ADJUSTED EBITDA CALCULATION

$ IN MILLIONS

1Q 2015 EBITDA as adjusted, annualized 1,057$ A

Less: Net Operating Income from non-stabilized

Development, annualized (38) B

Total 1,019$ C = A - B

Total Development Underway

(including non-stabilized Development) 3,566$ D

Weighted Average Projected NOI

as a % of Total Capital Cost 6.3% E

Total 225$ F = D x E

PROJECTED EBITDA AS ADJUSTED

UPON STABILIZATION1,243$ G = C + F

1Q 2015 Net debt 6,196$ H

Remaining to fund - I

PROJECTED NET DEBT 6,196$ J = H + 1

PROJECTED NET DEBT-TO-ADJUSTED

EBITDA5.0x K = J / G

STABILIZING DEVELOPMENT EXPECTED TO ENHANCE

CASH FLOW GROWTH AND CREDIT METRICS


(1) See footnote 3 on Attachment 7 of the Company’s First Quarter 2015 Earnings Supplemental.

5.9x

5.0x

4.0x

4.5x

5.0x

5.5x

6.0x

AS REPORTED (1Q 2015)

PROJECTED

NET DEBT-TO-ADJUSTED EBITDA

(1)

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FORWARD-LOOKING STATEMENTS

This presentation dated April 28, 2015 contains forward-looking statements, which are indicated

by the use of words such as “expects,” “projects,” “forecast,” “outlook,” “estimate” and other words

that do not relate to historical matters. Actual results may differ materially. For information

concerning risks and other factors that could cause such difference, see “Forward Looking

Statement” in AvalonBay’s earnings release dated April 27, 2015. For definitions and additional

information concerning certain defined terms and non-GAAP financial information included in this

presentation, see Attachment 13 to the earnings release.

This presentation is provided in connection with AvalonBay’s first quarter 2015 earnings

conference call on April 28, 2015. This presentation is intended to accompany the earnings

release, and should be read in conjunction with the earnings release. AvalonBay does not intend

to update any of these documents, which speak only as of their respective dates.

The earnings release is available on AvalonBay’s website at www.avalonbay.com/earnings

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ADDITIONAL DEFINITIONS & RECONCILIATIONS OF

NON-GAAP FINANCIAL MEASURES AND OTHER

TERMS A reconciliation of 2007 NOI to Net Income is as follows (dollars in thousands):

Slide 13 Operating Overhead as a % of Total NOI

Net income 358,160$

Indirect operating expenses, net of corporate income 31,285

Investments and investment management 11,737

Interest income -

Interest expense, net 97,545

General and administrative expense 28,494

Joint venture income and minority interest (57,584)

Depreciation expense 179,549

Gain on sale of real estate assets (107,032)

NOI from operations 542,154$

Net Income to NOI 2007

investor teleconference presentationpresentation, see attachment 13 to the earnings release. this...

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