AvalonBay Communities exchanges portfolio of three of its apartment communities for portfolio of six UDR apartment communities and US$26M in cash

Michelle Rivera

Michelle Rivera

Apr 6, 2011 – Business Wire

ARLINGTON, Virginia , April 6, 2011 (press release) – AvalonBay Communities, Inc. (NYSE:AVB - News) (the “Company”) announced today it has completed an exchange of assets with UDR, Inc. (“UDR”). The transaction includes exchanging a portfolio of three existing AVB apartment communities for a portfolio of six UDR apartment communities and $26 million in cash. The AVB portfolio includes two properties and a small land parcel located in metropolitan Boston and one property located in San Francisco for an exchange value of $263 million. The UDR portfolio is located in Southern California (metropolitan Los Angeles, Orange County and San Diego) and has an exchange value of $237 million.

As part of the transaction, the Company will assume a $55.4 million fixed-rate mortgage with a 5.24% interest rate and a maturity date of June 2013. In exchange, the Company will relinquish a $55.8 million mortgage loan with a fixed rate of 5.86% that matures in May 2019. Excluding one-time transaction costs, the Company expects the asset exchange will be modestly accretive to FFO per share in 2011.

The transaction has been structured as a Like Kind 1031 Exchange. The net reportable tax gain for AVB is $24 million and consists of the difference in value between the AVB and UDR assets and the difference in the amount of debt relinquished versus assumed.

Commenting on the transaction, Bryce Blair, Chairman and CEO, said “This transaction is consistent with our portfolio allocation goals. We are re-allocating capital from markets where we have a large portfolio of higher price point assets into a currently under-allocated region with assets that offer multiple price points. In this specific case, we are exchanging assets in Boston and San Francisco, where we have robust development pipelines, into Southern California at a time when the region’s fundamentals are in the early stage of a recovery.”

About AvalonBay Communities, Inc.

As of December 31, 2010, AvalonBay Communities, Inc. owned or held a direct or indirect ownership interest in 186 apartment communities containing 54,579 apartment homes in ten states and the District of Columbia, of which 14 communities were under construction and nine communities were under reconstruction. AvalonBay is an equity REIT 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, an S&P 500 listed company, may be found on AvalonBay's website at http://www.avalonbay.com.

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