AvalonBay Communities Announces Third Quarter Disposition Activity

Financial information regarding the sale of Avalon Fremont II,Avalon WildWood and Avalon Crossing is set forth in the followingtable:
(All amounts in $millions)

Sales Net GAAP Depreciation Economic
Date Sold Price Proceeds Gain and Other Gain
--------- ------- --------- ------ ------------ --------

Avalon
Fremont II Sep 2005 $39.5 $38.9 $20.9 $1.1 $22.0
Avalon
WildWood Sep 2005 44.5 43.3 14.1 (3.8) 10.3
Avalon
Crossing Jul 2005 44.5 44.0 33.5 (3.5) 30.0
------------- --------- ------- --------- ------ ------------ --------
Total $128.5 $126.2 $68.5 $(6.2) $62.3
============= ========= ======= ========= ====== ============ ========

The net proceeds of $128.5 million from these sales were used torepay a portion of amounts outstanding on the Company's unsecuredcredit facility.

Avalon Fremont II was acquired in connection with the Company'sinitial public offering in 1994, and Avalon WildWood was acquired in2001. Avalon Crossing was developed and completed by the Company in1996. All three communities were sold to buyers that plan to resellthe apartments as condominiums at a weighted average initial yearmarket capitalization rate of 3.5%, a weighted average GrossUnleveraged Internal Rate of Return ("Unleveraged IRR") of 16.4% andan Economic Gain on Total Capital Cost of 97.6%.

Year-to-date the Company has sold six communities and two landparcels for an aggregate gross sales price of approximately $268.5million. The Company sold these six communities, excluding the landparcels, at a weighted average market capitalization rate of 3.7%, aweighted average Unleveraged IRR of 18.0% and an Economic Gain onTotal Capital Cost of 110.8%.

Definitions and Notes

GAAP Gain represents the gain on sale in accordance with GAAP. TheGAAP Gain is estimated based on the final settlement statement.

Economic Gain is calculated as the gain on sale in accordance withGAAP, less accumulated depreciation through the date of sale and anyother non-cash adjustments that may be required under GAAP accounting.Management generally considers Economic Gain to be an appropriatesupplemental measure to gain on sale in accordance with GAAP becauseit helps investors understand the relationship between the cashproceeds from a sale and the cash invested in the sold community. TheEconomic Gain is estimated based on the final settlement statement.

Total Capital Cost reflects actual capital costs incurred todevelop or acquire a community, including acquisition costs,construction costs, real estate taxes, capitalized interest and loanfees, permits, professional fees, allocated development overhead andother regulatory fees, all as determined in accordance with GAAP.

Initial Year Market Capitalization Rate is defined by the Companyas Projected NOI of a single community for the first 12 monthsfollowing the date of the buyer's valuation, less estimates fornon-routine allowance of approximately $200 to $300 per apartment,divided by the gross sales price for the community. Projected NOI, asreferred to above, represents management's estimate of projectedrental revenue minus projected operating expenses before interest,income taxes (if any), depreciation, amortization and extraordinaryitems. For this purpose, management's projection of operating expensesfor the community includes a management fee of 3.0% to 3.25%. TheInitial Year Market Capitalization Rate, which may be determined in adifferent manner by others, is a measure frequently used in the realestate industry when determining the appropriate purchase price for aproperty or estimating the value for the property. Buyers may assigndifferent Initial Year Market Capitalization Rates to differentcommunities when determining the appropriate value because they (i)may project different rates of change in operating expenses, includingcapital expenditure estimates and (ii) may project different rates ofchange in future rental revenue due to different estimates for changesin rent and occupancy levels. The weighted average Initial Year MarketCapitalization Rate is weighted based on the gross sales price of eachcommunity.

Unleveraged IRR on sold communities refers to the Internal Rate ofReturn calculated by the Company considering the timing and amounts of(i) total revenue during the period owned by the Company and (ii) thegross sales price net of selling costs, offset by (iii) theundepreciated capital cost of the communities at the time of sale and(iv) total direct operating expenses during the period owned by theCompany. Each of the items (i), (ii), (iii) and (iv) are calculated inaccordance with GAAP.

The calculation of Unleveraged IRR does not include an adjustmentfor the Company's general and administrative expense, interestexpense, or corporate-level property management and other indirectoperating expenses. Therefore, Unleveraged IRR is not a substitute fornet income as a measure of our performance. Management believes thatthe Unleveraged IRR achieved during the period a community is owned bythe Company is useful because it is one indication of the gross valuecreated by the Company's acquisition, development or redevelopment,management and sale of the community, before the impact of indirectexpenses and Company overhead. The Unleveraged IRR achieved on thecommunities as cited in this release should not be viewed as anindication of the gross value created with respect to othercommunities owned by the Company, and the Company does not representthat it will achieve similar Unleveraged IRRs upon the disposition ofother communities. The weighted average Unleveraged IRR for soldcommunities is weighted based on all cash flows over the holdingperiod for each respective community, including net sales proceeds.

About AvalonBay Communities, Inc.

AvalonBay Communities, Inc., headquartered in Alexandria,Virginia, currently owns or holds an ownership interest in 148apartment communities containing 42,762 apartment homes in ten statesand the District of Columbia, of which eleven communities are underconstruction and four communities are under reconstruction. AvalonBayis in the business of developing, redeveloping, acquiring, andmanaging apartment communities in high barrier-to-entry markets of theUnited States. More information on AvalonBay may be found onAvalonBay's Web site at http://www.avalonbay.com.

Copyright (C) 2005 AvalonBay Communities, Inc. All Rights Reserved