<SUBMISSION>
<ACCESSION-NUMBER>0001104659-01-500839
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20010331
<FILING-DATE>20010515
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>AVALONBAY COMMUNITIES INC
<CIK>0000915912
<ASSIGNED-SIC>6798
<IRS-NUMBER>770404318
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-12672
<FILM-NUMBER>1640465
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2900 EISENHOWER AVENUE
<STREET2>SUITE 300
<CITY>ALEXANDRIA
<STATE>VA
<ZIP>22314
<PHONE>7033296300
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2900 EISENHOWER AVENUE
<STREET2>STE 300
<CITY>ALEXANDRIA
<STATE>VA
<ZIP>22314
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>AVALON BAY COMMUNITIES INC
<DATE-CHANGED>19980618
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BAY APARTMENT COMMUNITIES INC
<DATE-CHANGED>19931208
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>j0631_10q.htm
<TEXT>

<HTML>

<head>
<TITLE>Prepared by MerrillDirect</TITLE>
</head>

<body link=blue vlink=purple>

<div>




<hr size=3 width="100%" noshade color=black align=right>






<hr size=2 width="100%" noshade color=black align=right>



<p align=center><b><font size=2>UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION</font></b></p>

<p align=center><b><font size=2>Washington, D.C. 20549</font></b></p>

<p align=center><b><font size=2>FORM 10&ndash;Q</font></b></p>

<p align=center><font size=2>QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d)<br>
OF THE SECURITIES EXCHANGE ACT OF 1934</font></p>

<p align=center><font size=2>For the quarterly period ended March 31,
2001</font></p>

<p align=center><font size=2>Commission file number 1&ndash;12672</font></p>

<p align=center><b><font size=2>AVALONBAY COMMUNITIES,
INC.<br>
</font></b><i><font size=1>(Exact name of registrant as
specified in its charter)<br>
</font></i></p>




<hr size=2 width="25%" noshade color=black align=center>



<div align=center>


<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td  align=center width=481 valign=top>&nbsp;</td>
  <td  align=center width=481 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width=481 valign=top><b><font size=2>Maryland</font></b></td>
  <td  align=right width=481 valign=top><b><font size=2>77-0404318</font></b></td>
 </tr>
 <tr>
  <td width=481 valign=top><i><font size=1>(State or other jurisdiction of incorporation or
  organization)</font></i></td>
  <td  align=right width=481 valign=top><i><font size=1>(I.R.S. Employer
  Identification No.)</font></i></td>
 </tr>
</TABLE>


</div>

<p align=center><font size=3 face=Times>&nbsp;</font></p>

<div align=center>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="100%" valign=top><b><font size=2>2900 Eisenhower Avenue, Suite 300</font></b></td>
 </tr>
 <tr>
  <td  align=center width="100%" valign=top><b><font size=2>Alexandria, Virginia&nbsp;
  22314</font></b></td>
 </tr>
 <tr>
  <td  align=center width="100%" valign=top><i><font   size=1>(Address of principal
  executive offices, including zip code)<br><br></font></i></td>
 </tr>
 <tr>
  <td  align=center width="100%" valign=top><b><font size=2>(703) 329-6300</font></b></td>
 </tr>
 <tr>
  <td  align=center width="100%" valign=top><i><font   size=1>(Registrant&#146;s
  telephone number, including area code)</font></i></td>
 </tr>
 <tr>
  <td  align=center width="100%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="100%" valign=top><i><font   size=1>(Former name, if
  changed since last report)</font></i></td>
 </tr>
</TABLE>

</div>

<p align=center><i><font size=1><br>
</font></i></p>




<hr size=2 width="25%" noshade color=black align=center>



<p><font size=3 face=Times>&nbsp;</font></p>

<p><font size=2>Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve (12) months (or for
such shorter period that the reg&#173;istrant was required to file such reports),
and (2) has been subject to such filing requirements for the past ninety (90)
days.</font></p>

<p align=center><font size=2>Yes</font><font size=2 face=Wingdings>x</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No</font><font size=2 face=Wingdings>&#168;</font></p>

<p align=center><u><font size=2>APPLICABLE ONLY TO CORPORATE ISSUERS</font></u></p>

<p><font size=2>Indicate the number of shares outstanding of
each of the issuer&#146;s classes of common stock as of the latest practicable date:</font></p>

<p align=center><font size=2>67,823,381 shares outstanding as of May
1, 2001</font></p>


<div align=right><b><font size=2>

<hr size=2 width="100%" noshade color=black align=right>

</font></b></div>


<div align=right><b><font size=2>

<hr size=3 width="100%" noshade color=black align=right>

</font></b></div>

<PAGE>


<p align=center><b><font size=2>AVALONBAY COMMUNITIES, INC.</font></b></p>

<p align=center><b><font size=2>FORM
10-Q<br>
INDEX</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="100%" colspan=2 valign=bottom><b><font size=2><a
  href="#Part_I__FINANCIAL_INFORMATION"   title="Click to goto Part I &#150; FINANCIAL INFORMATION">PART I - FINANCIAL
  INFORMATION</a></font></b></td>
 </tr>
 <tr>
  <td  align=center width="100%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=bottom><font size=2>Item
  1.</font></td>
  <td width="92%" valign=bottom><font size=2><a
  href="#Item_1__Financial_Statements"   title="Click to goto Item 1. Financial Statements">Condensed Consolidated
  Financial Statements</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=bottom>&nbsp;</td>
  <td width="92%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top><font size=2><a
  href="#CONDENSED_CONSOLIDATED_BALANCE_SHEETS"   title="Click to goto CONDENSED CONSOLIDATED BALANCE SHEETS">Condensed
  Consolidated Balance Sheets as of March 31, 2001 (unaudited) and December 31,
  2000 (audited)</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top><font size=2><a
  href="#CONDENSED_CONSOLIDATED_STATEMENTS_OF_OPE"   title="Click to goto CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS">Condensed
  Consolidated Statements of Operations and Comprehensive Income (unaudited)
  for the three month ended March 31, 2001 and 2000 respectively</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top><font size=2><a
  href="#CONDENSED_CONSOLIDATED_STATEMENTS_OF_CAS"   title="Click to goto CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS">Condensed
  Consolidated Statements of Cash Flows (unaudited) for the three months ended
  March 31, 2001 and 2000</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top><font size=2><a
  href="#NOTES_TO_CONDENSED_CONSOLIDATED_FINANCIA"   title="Click to goto NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS">Notes
  to Condensed Consolidated Financial Statements (unaudited</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  2.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#ITEM_2__MANAGMENTS_DISCUSSION_AND_ANALYS"   title="Click to goto ITEM 2.&#9;MANAGMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS">Management&#146;s
  Discussion and Analysis of Financial Condition and Results of Operations</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  3.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#Item_3__Quantitative_and_Qualitative_Dis"   title="Click to goto Item 3.&#9;&#9;Quantitative and Qualitative Disclosures About Market Risk">Quantitative
  and Qualitative Disclosures About Market Risk</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="100%" colspan=2 valign=top><b><font size=2><a href="#Part_II__OTHER_INFORMATION"   title="Click to goto Part II.&#9;OTHER INFORMATION">PART II - OTHER
  INFORMATION</a></font></b></td>
 </tr>
 <tr>
  <td width="100%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  1.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#Item_1__Legal_Proceedings"   title="Click to goto Item 1.&#9;&#9;Legal Proceedings">Legal Proceedings</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  2.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#Item_2__Changes_in_Securities"   title="Click to goto Item 2.&#9;&#9;Changes in Securities">Changes in
  Securities</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  3.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#Item_3__Defaults_Upon_Senior_Securities"   title="Click to goto Item 3.&#9;&#9;Defaults Upon Senior Securities">Defaults
  Upon Senior Securities</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  4.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#Item_4__Submission_of_Matters_to_a_Vote_"   title="Click to goto Item 4.&#9;&#9;Submission of Matters to a Vote of Security Holders">Submission
  of Matters to a Vote of Security Holders</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  5.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#Item_5__Other_Information"   title="Click to goto Item 5.&#9;&#9;Other Information">Other Information</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item
  6.</font></td>
  <td width="92%" valign=top><font size=2><a
  href="#Item_6__Exhibits_and_Reports_on_Form_8K"   title="Click to goto Item 6.&#9;&#9;Exhibits and Reports on Form 8-K">Exhibits
  and Reports on Form 8-K</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top>&nbsp;</td>
  <td width="92%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="100%" colspan=2 valign=top><font size=2><a   href="#SIGNATURES" title="Click to goto SIGNATURES">Signatures</a></font></td>
 </tr>
</TABLE>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

<PAGE>


<p><a name="Part_I__FINANCIAL_INFORMATION"><font size=2>Part I &#150; FINANCIAL
INFORMATION</font></a><font size=2><br>
<a name="Item_1__Financial_Statements">Item 1. Financial Statements</a></font></p>

<p align=center><font size=2>AVALONBAY COMMUNITIES, INC.<br>
<a name="CONDENSED_CONSOLIDATED_BALANCE_SHEETS">CONDENSED CONSOLIDATED BALANCE
SHEETS</a><br>
(Dollars in thousands, except share data)</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-01<br>
  (unaudited)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>12-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>ASSETS</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Real estate:</font></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Land</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$800,046</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$742,863</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Buildings and improvements</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>3,210,694</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>3,047,560</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Furniture, fixtures and equipment</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>100,725</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>98,880</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom><font   size=2>4,111,465</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>3,889,303</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less accumulated depreciation</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(346,554)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(316,045)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net operating real estate</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>3,764,911</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>3,573,258</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction in progress (including
  land)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>302,587</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>418,583</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Communities held for sale, net</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>185,493</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>208,118</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total real estate, net</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>4,252,991</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>4,199,959</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Cash and cash
  equivalents</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>57,651</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>57,234</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Cash in escrow</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>7,694</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>16,733</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Resident security
  deposits</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>19,094</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>18,281</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Investments in
  unconsolidated real estate joint ventures</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>12,257</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>12,215</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Deferred financing
  costs, net</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>14,660</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>15,265</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Deferred development
  costs</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>19,105</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>16,359</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Participating mortgage
  notes</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>21,483</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>21,483</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Prepaid expenses and
  other assets</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>39,842</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>39,696</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$4,444,777</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$4,397,225</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>LIABILITIES AND
  STOCKHOLDERS' EQUITY</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Unsecured notes</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$1,335,000</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$1,335,000</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Variable rate
  unsecured credit facility</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Mortgage notes payable</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>437,144</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>394,924</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Dividends payable</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>53,198</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>47,572</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Payables for
  construction</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>23,418</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>19,997</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Accrued expenses and
  other liabilities</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>52,175</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>46,771</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Accrued interest
  payable</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>20,659</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>32,829</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Resident security
  deposits</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>29,512</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>28,138</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,951,106</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,905,231</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Minority interest of
  unitholders in consolidated partnerships</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>49,393</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>49,501</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Stockholders' equity:</font></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred stock, $.01 par value;
  $25 liquidation value; 50,000,000 shares authorized at both March 31, 2001
  and December 31, 2000; 18,322,700 shares outstanding at</font><font   size=2>&nbsp;</font><font size=2>both
  March 31, 2001 and December 31, 2000</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>183</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>183</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, $.01 par value;
  140,000,000 shares authorized at both March 31, 2001 and December 31, 2000;
  67,589,166 and 67,191,542 shares both issued and outstanding at March 31,
  2001 and December 31, 2000, respectively</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>676</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>672</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>2,509,993</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>2,493,033</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred compensation</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(9,037)</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(3,550)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends in excess of accumulated
  earnings</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(49,444)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(47,845)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive
  income</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(8,093)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>2,444,278</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>2,442,493</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and
  stockholders' equity</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$4,444,777</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$4,397,225</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>


<p align=center><font size=2>See
accompanying notes to condensed consolidated financial statements.</font></p>


<PAGE>


<p align=center><font size=2>AVALONBAY COMMUNITIES, INC.<br>
<a name="CONDENSED_CONSOLIDATED_STATEMENTS_OF_OPE">CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS</a><br>
AND OTHER COMPREHENSIVE INCOME<br>
(Unaudited)<br>
(Dollars in thousands, except per share data)</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><font   size=2>For
  the three months ended</font>
<hr size=2 width="98%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Revenue:</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; Rental income</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$155,329</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$134,785</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp; Management fees</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>331</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>248</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; Other income</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>97</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>55</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>155,757</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>135,088</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Expenses:</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; Operating expenses, excluding property
  taxes</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>39,800</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>33,338</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp; Property taxes</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>12,798</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>11,230</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; Interest expense</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>23,124</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>20,067</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp; Depreciation expense</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>31,129</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>29,419</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; General and administrative</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>3,805</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>2,947</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total expenses</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>110,656</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>97,001</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Equity in income of
  unconsolidated joint ventures</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>106</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>694</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Interest income</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,816</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,020</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Minority interest of
  unitholders in consolidated partnerships</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(325)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(539)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Income before gain on
  sale of communities</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>46,698</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>39,262</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Gain on sale of communities</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>4,901</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>7,910</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Net income</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>51,599</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>47,172</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Dividends attributable
  to preferred stock</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(9,945)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(9,945)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Net income available
  to common stockholders</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$41,654</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$37,227</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Other comprehensive
  income:</font></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Unrealized loss on
  derivative instruments</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(8,093)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Other comprehensive
  income</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(8,093)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Comprehensive income</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$33,561</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$37,227</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Per common share:</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp; Net Income - basic</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$0.62</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$0.57</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; Net Income - diluted</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$0.61</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$0.56</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>


<p align=center><font size=2>See accompanying notes
to condensed consolidated financial statements.</font></p>


<PAGE>


<p align=center><font size=2>AVALONBAY COMMUNITIES, INC.<br>
<a name="CONDENSED_CONSOLIDATED_STATEMENTS_OF_CAS">CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS</a><br>
(Unaudited)<br>
(Dollars in thousands)</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><font   size=2>For
  the three months ended</font>
<hr size=2 width="98%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Cash flows from
  operating activities:</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$51,599</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$47,172</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Adjustments to reconcile net income to cash provided</font><font   size=2>&nbsp;</font><font size=2>by
  operating activities:</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation
  expense</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>31,129</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>29,419</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of
  Deferred Financing costs</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>760</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>722</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of
  deferred compensation</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>434</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,248</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in
  investments in unconsolidated</font><font size=2>&nbsp;real estate joint ventures</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(42)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(69)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income allocated
  to minority interest in consolidated partnerships</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>325</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>539</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of
  communities</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(4,901)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(7,910)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in cash
  in operating escrows</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(17)</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(667)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in
  resident security deposits, accrued interest receivable on participating
  mortgage notes, prepaid expenses and other assets</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(3,705)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(3,518)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in
  accrued expenses, other liabilities and accrued</font><font size=2>&nbsp;</font><font size=2>interest
  payable</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(11,515)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(5,907)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided
  by operating activities</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>64,067</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>61,029</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Cash flows used in
  investing activities:</font></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase and development of real
  estate</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(101,919)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(73,114)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of communities,
  net of selling costs</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>22,677</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>29,325</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in construction
  payables</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>3,421</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(1,729)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in cash in investing
  escrows</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>9,056</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in
  investing activities</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(66,765)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(45,518)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Cash flows from
  financing activities:</font></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of common stock</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>9,037</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>3,974</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(47,572)</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(44,139)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net borrowings under unsecured
  credit facilities</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>26,400</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of secured notes payable</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>51,169</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>--</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of notes payable</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(8,949)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(877)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment of deferred financing costs</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(155)</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>--</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Distributions to minority partners</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(415)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>(414)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided
  by (used in) financing activities</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>3,115</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(15,056)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase in
  cash and cash equivalents</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>417</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>455</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Cash and cash
  equivalents, beginning of period</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>57,234</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>7,621</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Cash and cash
  equivalents, end of period</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$57,651</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$8,076</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Cash paid during
  period for interest, net of amount capitalized</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$35,294</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$31,801</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>


<p align=center><font size=2>See accompanying notes to condensed consolidated
financial statements.</font></p>


<PAGE>


<p><font size=2>&nbsp;</font></p>

<p><font size=2>Supplemental disclosures of non-cash investing and
financing activities (dollars in thousands):</font></p>

<p><font size=2>During the three months ended March 31, 2001, 762 units
of limited partnership, valued at $36, were presented for redemption to the DownREIT
partnership that issued such units and were acquired by the Company in exchange
for an equal number of shares of the Company&#146;s common stock.&nbsp; During the three months ended March 31,
2000, 7,048 units of limited partnership, valued at $277, were presented for
redemption to the DownREIT partnership that issued such units and were acquired
by the Company in exchange for an equal number of shares of the Company&#146;s
common stock.</font></p>

<p><font size=2>Common and preferred dividends declared but not paid as
of March 31, 2001 and 2000 totaled $53,198 and $46,887, respectively.</font></p>

<p><font size=2>During the three months ended March 31,
2001, the Company issued 172,077 shares of restricted stock valued at
$7,907.&nbsp; During the three months ended
March 31, 2000, the Company issued 93,816 shares of restricted stock valued at
$3,166.</font></p>

<PAGE>


<p align=center><b><font size=2>AVALONBAY COMMUNITIES, INC.<br>
<a name="NOTES_TO_CONDENSED_CONSOLIDATED_FINANCIA">NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS</a><br>
(Unaudited)</font></b><font size=2><br>
<b>(Dollars in thousands, except per share data)</b></font></p>

<p><font size=2>1.&nbsp; <u>Organization
and Significant Accounting Policies</u></font></p>

<p><i><font size=2>Organization
and Recent Developments</font></i></p>

<p><font size=2>AvalonBay Communities, Inc. (the &#147;Company,&#148; which term,
unless the context otherwise requires, refers to AvalonBay Communities, Inc.
together with its subsidiaries) </font><font size=2>is
a Maryland corporation that has elected to be taxed as a real estate investment
trust (&#147;REIT&#148;) under the Internal Revenue Code of 1986, as amended. The Company
focuses on the ownership and operation of upscale apartment communities in high
barrier-to-entry markets of the United States. These markets include Northern
and Southern California and selected markets in the Mid-Atlantic, Northeast,
Midwest and Pacific Northwest regions of the country.</font></p>

<p><font size=2>At March 31, 2001, the Company </font><font size=2>owned
or held a direct or indirect ownership interest in 126 operating apartment
communities containing 38,080 apartment homes in twelve states and the District
of Columbia, of which four communities containing 2,211 apartment homes were
under reconstruction.&nbsp; The Company also
owned thirteen communities with 3,692 apartment homes under construction and
rights to develop an additional 34 communities that, if developed as expected,
will contain an estimated 9,639 apartment homes.</font></p>

<p><font size=2>During
the three months ended March 31, 2001:</font></p>

<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="3%" valign=top><font size=2>&#149;</font></td>
  <td width="90%" valign=top><font size=2>The Company completed the development of
  Avalon Estates, a 162 apartment home community located in the Boston,
  Massachusetts area.</font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="3%" valign=top><font size=2>&#149;</font></td>
  <td width="90%" valign=top><font size=2>The Company acquired three communities
  containing a total of 995 apartment homes for an acquisition price of
  approximately $129,300, pursuant to a forward purchase contract agreed to in
  1997 with an unaffiliated third party.</font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="3%" valign=top><font size=2>&#149;</font></td>
  <td width="90%" valign=top><font size=2>The Company sold the 226 apartment home
  Crossbrook community located in the San Francisco, California area for net
  proceeds of approximately $14,500.</font></td>
 </tr>
</TABLE>

<p><font size=2>The
interim unaudited financial statements have been prepared in accordance with
generally accepted accounting principles (&#147;GAAP&#148;) for interim financial
information and in conjunction with the rules and regulations of the Securities
and Exchange Commission.&nbsp; Certain
information and footnote disclosures normally included in financial statements
required by GAAP have been condensed or omitted pursuant to such rules and
regulations.&nbsp; These unaudited financial
statements should be read in conjunction with the financial statements and
notes included in the Company&#146;s Annual Report on Form 10-K for the year ended
December 31, 2000.&nbsp; The results of
operations for the three months ended March 31, 2001 are not necessarily
indicative of the operating results for the full year. Management believes the
disclosures are adequate to make the information presented not misleading.&nbsp; In the opinion of Management, all
adjustments and eliminations, consisting only of normal, recurring adjustments
necessary for a fair presentation of the financial statements for the interim
periods, have been included.</font></p>

<p><i><font size=2>Principles
of Consolidation</font></i></p>

<p><font size=2>The accompanying condensed consolidated
financial statements include the accounts of the Company and its wholly-owned
partnerships and certain joint venture partnerships in addition to subsidiary
partnerships structured as DownREITs.&nbsp;
All significant intercompany balances and transactions have been
eliminated in consolidation.<PAGE></font></p>

<p><font size=2>In each of the partnerships structured as
DownREITs, either the Company or one of the Company&#146;s wholly-owned subsidiaries
is the general partner, and there are one or more limited partners whose
interest in the partnership is represented by units of limited partnership
interest.&nbsp; For each DownREIT
partnership, limited partners are entitled to receive distributions before any
distribution is made to the general partner.&nbsp;
Although the partnership agreements for each of the DownREITs are
different, generally the distributions per unit paid to the holders of units of
limited partnership interests approximate the Company&#146;s current common stock
dividend per share.&nbsp; Each DownREIT partnership
has been structured so that it is unlikely the limited partners will be
entitled to a distribution greater than the initial distribution provided for
in the partnership agreement.&nbsp; The
holders of units of limited partnership interest have the right to present each
unit of limited partnership interest for redemption for cash equal to the fair
market value of a share of the Company&#146;s common stock on the date of
redemption.&nbsp; In lieu of a cash
redemption of a limited partner&#146;s unit, the Company may elect to acquire any
unit presented for redemption for one share of common stock.</font></p>

<p><i><font size=2>Revenue
Recognition</font></i></p>

<p><font size=2>Rental income related to leases is
recognized when due from residents.&nbsp; In
accordance with the Company&#146;s standard lease terms, rental payments are
generally due on a monthly basis.</font></p>

<p><i><font size=2>Real
Estate</font></i></p>

<p><font size=2>Significant expenditures which improve or extend the life
of an asset are capitalized. The operating real estate assets are stated at
cost and consist of land, buildings and improvements, furniture, fixtures and
equipment, and other costs incurred during their development, redevelopment and
acquisition.&nbsp; </font><font size=2>Expenditures
for maintenance and repairs are charged to operations as incurred.</font></p>

<p><font size=2>The capitalization of costs during the
development of assets (including interest and related loan fees, property taxes
and other direct and indirect costs) begins when active development commences
and ends when the asset is delivered and a final certificate of occupancy is
issued.&nbsp; Cost capitalization during
redevelopment of apartment homes (including interest and related loan fees,
property taxes and other direct and indirect costs) begins when an apartment
home is taken out-of-service for redevelopment and ends when the apartment home
redevelopment is completed and the apartment home is placed in-service. The
accompanying condensed consolidated financial statements include a charge to
expense for unrecoverable deferred development costs related to pre-development
communities that are unlikely to be developed.</font></p>

<p><font size=2>Depreciation is calculated on buildings and improvements
using the straight-line method over their estimated useful lives, which range
from seven to thirty years. Furniture, fixtures and equipment are generally
depreciated using the straight-line method over their estimated useful lives,
which range from three years (primarily computer related equipment) to seven
years.</font></p>

<p><font size=2>Lease terms for apartment homes are generally one year or
less.&nbsp; Rental income and operating costs
incurred during the initial lease&ndash;up or post-redevelopment lease-up
period are fully recognized as they accrue.</font></p>

<p><i><font size=2>Earnings per Common Share</font></i></p>

<p><font size=2>In accordance with the provisions of
Statement of Financial Accounting Standards (&#147;SFAS&#148;) No. 128, &#147;Earnings per
Share&#148;, basic earnings per share for the quarters ended March 31, 2001 and 2000
is computed by dividing earnings available to common shares (net income less
preferred stock dividends) by the weighted average number of shares outstanding
during the period.&nbsp; Other potentially
dilutive common shares, and the related impact to earnings, are considered when
calculating earnings per share on a diluted basis.<PAGE></font></p>

<p><font size=2>The Company&#146;s earnings per common share
are determined as follows:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><font   size=2>Three
  months ended</font>
<hr size=2 width="98%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><u><font size=2>Basic
  and Diluted shares outstanding</font></u></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Weighted average
  common shares - basic</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>67,214,940</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>65,719,178</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Weighted average
  DownREIT units outstanding</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>670,808</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>969,300</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Effect of dilutive
  securities</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,379,999</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>489,010</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Weighted average
  common shares and DownREIT units - diluted</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>69,265,747</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>67,177,488</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><u><font size=2>Calculation
  of Earnings per Share - Basic</font></u></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Net income available
  to common stockholders</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$41,654</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$37,227</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Weighted average
  common shares - basic</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>67,214,940</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>65,719,178</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Earnings per common
  share - basic</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$0.62</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$0.57</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><u><font size=2>Calculation
  of Earnings per Share - Diluted</font></u></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Net income available
  to common stockholders</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$41,654</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$37,227</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Add: Minority interest
  of DownREIT unitholders in consolidated partnerships</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>391</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>509</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Adjusted net income
  available to common stockholders</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$42,045</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$37,736</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Weighted average
  common shares and DownREIT units - diluted</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>69,265,747</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>67,177,488</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Earnings per common
  share - diluted</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$0.61</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$0.56</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>

<p><font size=2>Certain options to purchase shares of common stock in the
amounts of 14,500 and 2,214,497 were outstanding during the three months ended
March 31, 2001 and 2000, respectively, but were not included in the computation
of diluted earnings per share because the options&#146; exercise prices were greater
than the average market price of the common shares for the period.</font></p>

<p><i><font size=2>Executive
Separation Costs</font></i></p>

<p><font size=2>In February 2001, the Company announced certain
management changes including the departure of a senior executive who became
entitled to severance benefits in accordance with the terms of his employment
agreement with the Company.&nbsp; The Company
recorded a charge of approximately $2,500 in the first quarter of 2001 related
to the expected costs associated with this separation.</font></p>

<p><i><font size=2>Use of
Estimates</font></i></p>

<p><font size=2>The preparation of financial statements in conformity
with GAAP requires management to make certain estimates and assumptions.&nbsp; These estimates and assumptions affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of the financial statements and the reported
amounts of revenue and expenses during the reporting periods.&nbsp; Actual results could differ from those
estimates.</font></p>

<p><i><font size=2>Recently
Issued Accounting Standards</font></i></p>

<p><font size=2>In December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin (&#147;SAB&#148;) No. 101, &#147;Revenue
Recognition in Financial Statements.&#148;&nbsp;
SAB No. 101 provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements.&nbsp; The Company adopted SAB No. 101 effective
with the March 31, 2000 reporting period, as required, and the adoption did not
have a material effect on the Company&#146;s consolidated financial statements.</font></p>

<PAGE>


<p><i><font size=2>Reclassifications</font></i></p>

<p><font size=2>Certain reclassifications have been made to amounts in
prior years' financial statements to conform with current year presentations.</font></p>

<p><font size=2>2.&nbsp; <u>Interest
Capitalized</u></font></p>

<p><font size=2>Capitalized interest associated with communities under
development or redevelopment totaled $5,597 and $3,494 for the three months
ended March 31, 2001 and 2000, respectively.</font></p>

<p><font size=2>3.&nbsp; <u>Notes
Payable, Unsecured Notes and Credit Facility</u></font></p>

<p><font size=2>The Company&#146;s notes payable, unsecured
notes and credit facility are summarized as follows:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>12-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Fixed rate unsecured
  notes</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$1,335,000</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$1,335,000</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Fixed rate mortgage
  notes payable (conventional and tax-exempt)</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>335,548</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>326,964</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Variable rate mortgage
  notes payable (tax-exempt)</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>67,960</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>67,960</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; Total mortgage notes payable and
  unsecured notes</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,738,508</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>1,729,924</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Variable rate short
  term note</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>33,636</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>--</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Variable rate
  unsecured credit facility</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp; Total mortgage notes payable, unsecured
  notes and unsecured credit facility</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$1,772,144</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$1,729,924</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>

<p><font size=2><br>
Mortgage notes payable are collateralized by certain apartment communities and
mature at various dates from May 2001 through December 2036.&nbsp; The weighted average interest rate of the
Company&#146;s variable rate notes was 5.0% at March 31, 2001. The weighted average
interest rate of the Company&#146;s fixed rate mortgage notes (conventional and
tax-exempt) was 6.7% at March 31, 2001.</font></p>

<p><font size=2>The maturity schedule for the Company&#146;s
unsecured notes is as follows:</font></p>

<dir><dir><dir>
<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td  align=center width=123 valign=bottom><font   size=2>Year of<br>
  maturity</font>
<hr size=2 width="95%" noshade color=black align=center></td>
  <td  align=center width=123 valign=bottom><font   size=2>Principal</font>
<hr size=2 width="95%" noshade color=black align=center></td>
  <td  align=center width=123 valign=bottom><font   size=2>Interest rate</font>
<hr size=2 width="95%" noshade color=black align=center></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=center width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2002</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$100,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>7.375%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2003</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$50,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.250%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=123 valign=top bgcolor="#cceeff"><font   size=2>$100,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.500%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2004</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$125,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.580%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2005</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$100,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.625%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$50,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.500%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2006</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$150,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.800%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2007</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$110,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.875%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2008</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$50,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>6.625%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>&nbsp;$150,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>8.250%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2009</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$150,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>7.500%</font></td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
  <td  align=right width=123 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=123 valign=top bgcolor="#cceeff"><font   size=2>2010</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>$200,000</font></td>
  <td  align=right width=123 valign=bottom bgcolor="#cceeff"><font   size=2>7.500%</font></td>
 </tr>
</TABLE>
</dir></dir></dir>

<p><font size=2>The Company&#146;s unsecured notes contain a number of
financial and other covenants with which the Company must comply, including,
but not limited to, limits on the aggregate amount of total and secured
indebtedness the Company may have on a consolidated basis and limits on the
Company&#146;s required debt service payments.<PAGE></font></p>

<p><font size=2>The Company has a $600,000 variable rate unsecured credit
facility (the &#147;unsecured credit facility&#148; or &#147;existing facility&#148;) with Morgan
Guaranty Trust Company of New York, Union Bank of Switzerland and Fleet
National Bank serving as co-agents for a syndicate of commercial banks.&nbsp; The unsecured credit facility bears interest
at a spread over the London Interbank Offered Rate (&#147;LIBOR&#148;) based on rating
levels achieved on the Company&#146;s unsecured notes and on a maturity selected by
the Company.&nbsp; The current stated pricing
is LIBOR plus 0.6% per annum (5.7% at March 31, 2001).&nbsp; In addition, the unsecured credit facility
includes a competitive bid option (which allows banks that are part of the
lender consortium to bid to make loans to the Company at a rate that is lower
than the stated rate provided by the unsecured credit facility) for up to
$400,000.&nbsp; The Company is subject to
certain customary covenants under the unsecured credit facility, including, but
not limited to, maintaining certain maximum leverage ratios, a minimum fixed
charges coverage ratio, minimum unencumbered assets and equity levels and
restrictions on paying dividends in amounts that exceed 95% of the Company&#146;s
Funds from Operations, as defined therein.&nbsp;
The existing facility matures in July 2001 and the Company is currently
in the process of negotiating a new facility which it believes will be in place
prior to the maturity date of the existing facility.&nbsp; In addition, the Company expects the new facility will have
substantially the same terms and conditions as the existing facility.</font></p>

<p><font size=2>4.&nbsp; <u>Stockholders&#146; Equity</u></font></p>

<p><font size=2>The following summarizes the changes in
stockholders&#146; equity for the three months ended March 31, 2001:</font></p>

<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width="26%" valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=top><font   size=1><br><br>
  Preferred<br>
  Stock</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=top><font   size=1><br><br>
  Common<br>
  Stock</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=top><font   size=1><br>
  Additional<br>
  paid-in<br>
  capital</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=top><font   size=1><br><br>
  Deferred<br>
  compensation</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=top><font   size=1>Accumulated<br>
  other<br>
  comprehensive<br>
  income</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=top><font   size=1>Dividends in<br>
  excess of<br>
  accumulated<br>
  earnings</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=top><font   size=1><br><br>
  Stockholders'<br>
  equity</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="26%" valign=bottom bgcolor="#cceeff"><font size=1>Stockholders'
  equity, December 31, 2000</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$183</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$672</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$2,493,033</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$(3,550)</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$(47,845)</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$2,442,493</font></td>
 </tr>
 <tr>
  <td width="26%" valign=top><font size=1>Net
  income</font></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top><font   size=1>51,599</font></td>
  <td  align=right width="10%" valign=top><font   size=1>51,599</font></td>
 </tr>
 <tr>
  <td width="26%" valign=top bgcolor="#cceeff"><font size=1>Other
  comprehensive income</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>(8,093)</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>(8,093)</font></td>
 </tr>
 <tr>
  <td width="26%" valign=top><font size=1>Dividends
  declared to common and preferred stockholders</font></td>
  <td  align=right width="10%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="10%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="10%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="10%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="10%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="10%" valign=bottom><font   size=1>(53,198)</font></td>
  <td  align=right width="10%" valign=bottom><font   size=1>(53,198)</font></td>
 </tr>
 <tr>
  <td width="26%" valign=top bgcolor="#cceeff"><font size=1>Issuance
  of Common Stock</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>4</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>16,960</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>(5,921)</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>11,043</font></td>
 </tr>
 <tr>
  <td width="26%" valign=top><font size=1>Amortization
  of deferred compensation</font></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top><font   size=1>434</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top><font   size=1>434</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="26%" valign=top bgcolor="#cceeff"><font size=1>Stockholders'
  equity, March 31, 2001</font></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$183</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$676</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$2,509,993</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$(9,037)</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$(8,093)</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$(49,444)</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=top bgcolor="#cceeff"><font   size=1>$2,444,278</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>

<p><font size=2>During the three months ended March 31, 2001, the Company
issued 92,523 shares of common stock in connection with stock options
exercised, 132,262 shares through the Company&#146;s Dividend Reinvestment and Stock
Purchase Plan, 762 shares to acquire DownREIT partnership units from a third
party, and 172,077 shares in connection with restricted stock grants to
employees.</font></p>

<p><font size=2>5.&nbsp;
<u>Derivative Instruments and Hedging Activities</u></font></p>

<p><font size=2>In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, &quot;Accounting for Derivative Instruments and Hedging Activities.&#148;&nbsp; SFAS No. 133, as amended by SFAS No. 137,
&#147;Accounting for Derivative Instruments and Hedging Activities &#150; Deferral of the
Effective Date of SFAS No. 133,&#148; and SFAS No. 138, &#147;Accounting for Certain
Instruments and Certain Hedging Activities, an amendment of Statement 133,&#148; was
adopted by the Company on January 1, 2001.&nbsp;
SFAS No. 133, as amended, establishes accounting and reporting standards
requiring that every derivative instrument be recorded on the balance sheet as
either an asset or liability measured at its fair value.&nbsp; SFAS No. 133 also requires that a change in
the derivative&#146;s fair value be recognized currently in earnings unless specific
hedge accounting criteria are met.&nbsp; For
fair value hedge transactions, changes in the fair value of the derivative
instrument and changes in the fair value of the hedged item due to the risk
being hedged are recorded through the income statement.&nbsp; For cash flow hedge transactions, changes in
the fair value of the derivative instrument are reported in other comprehensive
income.&nbsp; The ineffective portion of all
hedges is recognized in current period earnings. Derivatives which are not part
of a hedge relationship are recorded at fair value through earnings.<PAGE></font></p>

<p><font size=2>The Company has historically used interest rate swap
agreements (the &#147;Swap Agreements&#148;) to reduce the impact of interest rate
fluctuations on its variable rate tax-exempt bonds.&nbsp; The Swap Agreements are not held for trading or other speculative
purposes.&nbsp; The Company has not entered
into any interest rate hedge agreements or treasury locks for its conventional
unsecured debt.&nbsp; As of March 31, 2001,
the effect of these Swap Agreements is to fix $168,202 of the Company&#146;s
tax-exempt debt at an average interest rate of 6.1% with an average maturity of
five years.&nbsp; By using derivative
financial instruments to hedge exposures to changes in interest rates, the
Company exposes itself to credit risk and market risk.</font></p>

<p><font size=2>The credit risk is the risk of a counterparty not
performing under the terms of the contract.&nbsp;
The counterparties to these contracts are major financial institutions
with AAA credit ratings by the Standard &amp; Poor&#146;s Ratings Group.&nbsp; The Company monitors the credit ratings of
counterparties and the amount of the Company&#146;s debt subject to swap agreements
with any one party.&nbsp; Therefore, the
Company believes the likelihood of realizing material losses from counterparty
nonperformance is remote.</font></p>

<p><font size=2>Market risk is the adverse effect of the value of
financial instruments that results from a change in interest rates.&nbsp; The market risk associated with
interest-rate contracts is managed by the establishment and monitoring of
parameters that limit the types and degree of market risk that may be
undertaken.&nbsp; These risks are managed by
the Company&#146;s Chief Financial Officer and Vice President of Finance.</font></p>

<p><font size=2>The Company has determined that its Swap Agreements
qualify as effective cash-flow hedges under SFAS No. 133.&nbsp; When entering into hedging transactions, the
Company documents the relationships between hedging instruments and hedged
items, as well as the risk management objective and strategy.&nbsp; The Company assesses, both at inception and
on an on-going basis, the effectiveness of all hedges in offsetting cash flows
of hedged items. In accordance with SFAS No. 133, the Company records all
changes in the fair value of the Swap Agreements in other comprehensive
income.&nbsp; Amounts recorded in other
comprehensive income will be reclassified into earnings in the period in which
earnings are affected by the hedged cash flows.&nbsp; In all situations where hedge accounting is discontinued, the
derivative will be carried at fair value with changes in its fair value
recognized in income. Upon the termination of a hedging relationship, the
amount in other comprehensive income will be amortized over the remaining life
of the hedged cash flows.</font></p>

<p><font size=2>At January 1, 2001, in accordance with the transition
provisions of SFAS No. 133, the Company recorded a cumulative effect adjustment
of $6,412 to other comprehensive income to recognize at fair value all of the derivatives
that are designated as cash flow hedging instruments.&nbsp; At March 31, 2001, the Company recorded an additional unrealized
loss of $1,681 to other comprehensive income to adjust the Swap Agreements to
their fair value. Hedge ineffectiveness for the three months ended March 31,
2001 did not have a material impact on earnings and the Company does not
anticipate that the losses being reclassified to earnings during the next
twelve months will be material.&nbsp; The Swap
Agreements are included in accrued expenses and other liabilities on the
accompanying condensed consolidated balance sheets.&nbsp; Also, a swap liability of approximately $500 was transferred to
an unrelated third party as a result of the sale of a community during the
quarter.</font></p>

<p><font size=2>6.&nbsp; <u>Investments
in Unconsolidated Real Estate Joint Ventures</u></font></p>

<p><font size=2>The Company accounts for investments in
unconsolidated real estate entities in accordance with Accounting Principles
Board (&#147;APB&#148;) Opinion No. 18, &#147;The Equity Method of Accounting for Investments
in Common Stock.&#148;&nbsp; The Company applies
the equity method of accounting to an investment in an entity if it has the
ability to significantly influence that entity.&nbsp; All other unconsolidated real estate investments are recorded
under the cost method of accounting.<PAGE></font></p>

<p><font size=2>At March &nbsp;31, 2001, the Company&#146;s investments in unconsolidated real estate
joint ventures consisted of:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a 50% limited liability company
membership interest in a limited liability company that owns the Falkland Chase
community;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a 49% general partnership
interest in a partnership that owns the Avalon Run community;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a 50% limited liability
company membership interest in a limited liability company that owns the Avalon
Grove community; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a 25% limited liability
company membership interest in a limited liability company that owns the Avalon
Terrace community.</font></p>
</dir>

<p><font size=2>The following is a combined summary of
the financial position of these joint ventures as of the dates presented:</font></p>

<dir>
<table border=0 cellspacing=0 cellpadding=0 width="93%">
 <tr>
  <td  align=center width="63%" valign=bottom>&nbsp;</td>
  <td  align=center width="36%" colspan=2 valign=bottom><font   size=2>(Unaudited)</font>
<hr size=2 width="98%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td  align=center width="63%" valign=bottom>&nbsp;</td>
  <td  align=center width="18%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="18%" valign=bottom><font   size=2>12-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>Assets:</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" valign=top><font size=2>Real
  estate, net</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$136,879</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$132,832</font></td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>Other
  assets</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>9,689</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>10,400</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="63%" valign=top><font size=2>&nbsp;&nbsp; Total assets</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$146,568</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$143,232</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>Liabilities
  and partners' equity:</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" valign=top><font size=2>Mortgage
  notes payable</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$47,195</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$48,400</font></td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>Other
  liabilities</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>7,839</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>8,656</font></td>
 </tr>
 <tr>
  <td width="63%" valign=top><font size=2>Partners'
  equity</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>91,534</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="18%" valign=bottom><font   size=2>86,176</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp; Total liabilities and partners' equity</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>$146,568</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>$143,232</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>
</dir>

<p><font size=2>The following is a combined summary of
the operating results of these joint ventures for the periods presented:</font></p>

<dir>
<table border=0 cellspacing=0 cellpadding=0 width="93%">
 <tr>
  <td  align=center width="63%" valign=bottom>&nbsp;</td>
  <td  align=center width="36%" colspan=2 valign=bottom><font   size=2>Three months ended<br>
  (unaudited)</font>
<hr size=2 width="98%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="63%" valign=top>&nbsp;</td>
  <td  align=center width="18%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="18%" valign=bottom><font   size=2>3-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="63%" valign=top>&nbsp;</td>
  <td  align=right width="18%" valign=bottom>&nbsp;</td>
  <td  align=right width="18%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>Rental income</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>$5,860</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>$5,263</font></td>
 </tr>
 <tr>
  <td width="63%" valign=top><font size=2>Other income</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>15</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>--</font></td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>Operating and other expenses</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>(1,641)</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>(1,381)</font></td>
 </tr>
 <tr>
  <td width="63%" valign=top><font size=2>Mortgage interest expense</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>(202)</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>(238)</font></td>
 </tr>
 <tr>
  <td width="63%" valign=top bgcolor="#cceeff"><font size=2>Depreciation expense</font></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>(758)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="18%" valign=bottom bgcolor="#cceeff"><font   size=2>(777)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="63%" valign=top><font size=2>&nbsp;&nbsp; </font><font size=2>Net income</font></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$3,274</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="18%" valign=bottom><font   size=2>$2,867</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>
</dir>

<p><font size=2>The Company also holds a 25% limited
liability company membership interest in Avalon on the Sound, which is
presented on a consolidated basis in the financial statements in accordance
with GAAP.</font></p>

<p><font size=2>7.&nbsp;&nbsp;
<u>Communities Held for Sale</u></font></p>

<p><font size=2>The Company has a policy of disposing of
assets that are not consistent with its long-term strategic direction.&nbsp; In connection with this strategy, the
Company solicits competing bids from unrelated parties for individual assets,
and considers the sales price and tax ramifications of each proposal.&nbsp; In connection with this policy, the Company
sold one community during the three months ended March 31, 2001 and one community
during the three months ended March 31, 2000.<PAGE></font></p>

<p><font size=2>Management intends to market additional
communities for sale.&nbsp; However, there
can be no assurance that such assets will be sold, or that we will sell the
assets on financially advantageous terms.&nbsp;
The assets targeted for sale include land, buildings and improvements
and furniture, fixtures and equipment, and are recorded at the lower of cost or
fair value less estimated selling costs.&nbsp;
The Company has not determined a need to recognize a write-down in this
real estate to arrive at net realizable value, although there can be no
assurance that the Company can sell these assets for amounts that equal or
exceed its estimates of net realizable value. At March 31, 2001, total real
estate, net of accumulated depreciation, held for sale totaled $185,493.&nbsp; Certain individual assets are secured by
mortgage indebtedness which may be assumed by the purchaser or repaid by the
Company from the net sales proceeds.</font></p>

<p><font size=2>The Company&#146;s Condensed Consolidated
Statements of Operations and Comprehensive Income include net income of the
communities held for sale at March 31, 2001 of $4,044 and $2,839 for the three
months ended March 31, 2001 and 2000, respectively.</font></p>

<p><font size=2>8.&nbsp;
<u>Segment Reporting</u></font></p>

<p><font size=2>The Company&#146;s reportable operating
segments include Stable Communities, Developed Communities and Redeveloped
Communities:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stable Communities are communities that have attained
stabilized occupancy levels and operating costs since the beginning of the
prior calendar year or were acquired as stabilized after the beginning of the
previous calendar year and remained stabilized throughout the end of the
current calendar year.&nbsp; Stable
Communities do not include communities where planned redevelopment or
development activities have not yet commenced.&nbsp;
The primary financial measure for this business segment is Net Operating
Income (&#147;NOI&#148;), which represents total revenue less operating expenses and
property taxes.<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Developed Communities are
communities which completed development and attained stabilized occupancy and
expense levels during the prior calendar year of presentation.&nbsp; The primary financial measure for this
business segment is Operating Yield (defined as NOI divided by total
capitalized costs).<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redeveloped Communities are
communities that completed redevelopment and attained stabilized occupancy and
expense levels during the prior calendar year of presentation.&nbsp; The primary financial measure for this
business segment is Operating Yield.</font></p>
</dir>

<p><font size=2>Other communities owned by the Company
which are not included in the above segments are communities that were under
development, redevelopment or lease-up at any point in time during the
applicable calendar year.&nbsp; The primary
performance measure for these assets depends on the stage of development or
redevelopment of the community.&nbsp; While
under development or redevelopment, Management monitors actual construction
costs against budgeted costs as well as economic occupancy. While under
lease-up, the primary performance measures for these assets are projected
Operating Yield as defined above, lease-up pace compared to budget and rent
levels compared to budget.</font></p>

<p><font size=2>Net Operating Income for each community
is generally equal to that community&#146;s contribution to Funds from Operations
(&#147;FFO&#148;), except that interest expense related to indebtedness secured by an
individual community and depreciation on non-real estate assets are not
included in the community&#146;s NOI although such expenses decrease the Company&#146;s
consolidated net income and FFO.</font></p>

<p><font size=2>The segments are classified based on the
individual community&#146;s status as of the beginning of the given calendar
year.&nbsp; Therefore, each year the
composition of communities within each business segment is adjusted.&nbsp; Accordingly, the amounts between years are
not directly comparable.</font></p>

<p><font size=2>The accounting policies applicable to the
operating segments described above are the same as those described in the
summary of significant accounting policies.</font></p>

<PAGE>


<p>&nbsp;</p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="34%" valign=bottom>&nbsp;</td>
  <td  align=center width="13%" valign=bottom><font   size=2>Stable</font><font size=2><br></font><font size=2>Communities</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="13%" valign=bottom><font   size=2>Developed</font><font size=2><br></font><font size=2>Communities</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="13%" valign=bottom><font   size=2>Redeveloped</font><font size=2><br></font><font size=2>Communities</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="13%" valign=bottom><font   size=2>Other</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="13%" valign=bottom><font   size=2>Total</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><u><font size=2>For the three
  months ended 3/31/01</font></u></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>Segment Results</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total
  revenue</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$105,743</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$19,705</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$9,436</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$20,415</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$155,299</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net
  Operating Income</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$78,858</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$14,841</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$6,300</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$12,882</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$112,881</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross
  real estate</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$2,717,372</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$542,561</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$293,196</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$980,309</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$4,533,438</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating
  Yield</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>11.6%</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>10.9%</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>8.6%</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>Non-allocated operations</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total
  revenue</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$458</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$458</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net
  Operating Income</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$325</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$325</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross
  real estate</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$85,615</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$85,615</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>Total, AvalonBay</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total
  revenue</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$105,743</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$19,705</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$9,436</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$20,873</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$155,757</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net
  Operating Income</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$78,858</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$14,841</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$6,300</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$13,207</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$113,206</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross
  real estate</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$2,717,372</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$542,561</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$293,196</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$1,065,924</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$4,619,053</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><u><font size=2>For the three months
  ended 3/31/00</font></u></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>Segment Results</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total
  revenue</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$75,276</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$23,866</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$8,757</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$26,805</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$134,704</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net
  Operating Income</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$54,893</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$17,936</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$5,755</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$18,002</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$96,586</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross
  real estate</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$2,146,801</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$655,564</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$292,655</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$912,691</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$4,007,711</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating
  Yield</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>10.2%</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>10.9%</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>7.9%</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>Non-allocated operations</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total
  revenue</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$384</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$384</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net
  Operating Income</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$306</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$306</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross
  real estate</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$--</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$307,550</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$307,550</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>Total, AvalonBay</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
  <td  align=right width="13%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total
  revenue</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$75,276</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$23,866</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$8,757</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$27,189</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$135,088</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net
  Operating Income</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$54,893</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$17,936</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$5,755</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$18,308</font></td>
  <td  align=right width="13%" valign=bottom><font   size=2>$96,892</font></td>
 </tr>
 <tr>
  <td width="34%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross
  real estate</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$2,146,801</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$655,564</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$292,655</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$1,220,241</font></td>
  <td  align=right width="13%" valign=bottom bgcolor="#cceeff"><font   size=2>$4,315,261</font></td>
 </tr>
</TABLE>

<p><font size=2>Operating expenses as reflected on the
Condensed Consolidated Statements of Operations and Comprehensive Income
include $10,047 and $6,372 for the three months ended March 31, 2001 and 2000,
respectively, of property management overhead costs that are not allocated to
individual communities.&nbsp; These costs are
not reflected in NOI as shown in the above tables.&nbsp; The amount reflected for &#147;Communities held for sale&#148; on the
Condensed Consolidated Balance Sheets is net of $19,507 and $19,965 of
accumulated depreciation as of&nbsp; March
31, 2001 and December 31, 2000, respectively.<PAGE></font></p>

<p><font size=2>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>
Subsequent Events</u></font></p>

<p><font size=2>On May 11, 2001, the Company published
and mailed notice that it will redeem all 4,455,000 outstanding shares of its
9.00% Series F Cumulative Redeemable Preferred Stock (the &#147;Series F Preferred
Stock&#148;) on June 11, 2001 at a price of $25.00 per share, plus $0.1625 in
accrued and unpaid dividends to the redemption date, for an aggregate
redemption price of $25.1625 per share of Series F Preferred Stock.<PAGE></font></p>

<p><a name="ITEM_2__MANAGMENTS_DISCUSSION_AND_ANALYS"><b><font size=2>ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MANAGMENT&#146;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</font></b></a></p>

<p><u><font size=2>Forward-Looking
Statements</font></u></p>

<p><font size=2>This Form 10-Q, including the footnotes
to the Company&#146;s condensed consolidated financial statements, contains
&#147;forward-looking statements&#148; as that term is defined under the Private
Securities Litigation Reform Act of 1995.&nbsp;
You can identify forward-looking statements by our use of the words
&#147;believe,&#148; &#147;expect,&#148; &#147;anticipate,&#148; &#147;intend,&#148; &#147;estimate,&#148; &#147;assume,&#148; and other
similar expressions in this Form 10-Q, that predict or indicate future events
and trends or that do not relate to historical matters.&nbsp; In addition, information concerning the
following are forward-looking statements:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the timing and cost of completion of
apartment communities under construction, reconstruction, development or
redevelopment;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the timing of lease-up and
occupancy of apartment communities;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the pursuit of land on which
we are considering future development;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; cost, yield and earnings
estimates; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the development of management
information systems by companies in which we have an investment and our
implementation and use of those systems.</font></p>
</dir>

<p><font size=2>We cannot assure the future results or
outcome of the matters described in these statements; rather, these statements
merely reflect our current expectations of the approximate outcomes of the
matters discussed. You should not rely on forward-looking statements because
they involve known and unknown risks, uncertainties and other factors, some of
which are beyond our control.&nbsp; These
risks, uncertainties and other factors may cause our actual results,
performance or achievements to differ materially from the anticipated future
results, performance or achievements expressed or implied by these
forward-looking statements.&nbsp; Some of the
factors that could cause our actual results, performance or achievements to
differ materially from those expressed or implied by these forward-looking
statements include, but are not limited to, the following:</font></p>

<dir>
<table border=0 cellspacing=0 cellpadding=0 width="93%">
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>we
  may fail to secure development opportunities due to an inability to reach
  agreements with third parties or to obtain desired zoning and other local
  approvals;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>we
  may abandon development opportunities for a number of reasons, including
  changes in local market conditions which make development less desirable,
  increases in costs of development and increases in the cost of capital;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>we
  may be unsuccessful in managing our current growth in the number of apartment
  communities and the related growth of our business operations both internally
  and by companies in which we have an investment;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>construction
  costs of a community may exceed our original estimates;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>we
  may not complete construction and lease-up of communities under development
  or redevelopment on schedule, resulting in increased interest expense,
  construction costs and reduced rental revenues;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>occupancy
  rates and market rents may be adversely affected by local economic and market
  conditions which are beyond our control;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>financing
  may not be available on favorable terms or at all, and our cash flow from
  operations and access to cost effective capital may be insufficient for the
  development of our pipeline and could limit our pursuit of opportunities;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>our
  previous or possible future expansion into new geographic market areas may
  not produce financial results that are consistent with our historical
  performance;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>our
  cash flow may be insufficient to meet required payments of principal and
  interest, and we may be unable to refinance existing indebtedness or the
  terms of such refinancing may not be as favorable as the terms of existing
  indebtedness; and</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>software
  applications and ancillary services being developed by companies in which we
  have invested may be unsuccessful in achieving their business plans or
  unsuccessful in obtaining additional funding, which could lead to a partial
  or complete loss of the investment in these companies.</font></td>
 </tr>
</TABLE>
</dir>

<PAGE>


<dir>
<p>&nbsp;</p>
</dir>

<p><font size=2>You should read our unaudited condensed
consolidated financial statements and notes included in this report and the
audited financial statements for the year ended December 31, 2000 and the notes
included in our annual report on Form 10-K in conjunction with the following
discussion.&nbsp; These forward-looking
statements represent our estimates and assumptions only as of the date of this
report.&nbsp; We do not undertake to update
these forward-looking statements, and you should not rely upon them after the
date of this report.</font></p>

<p><u><font size=2>Business Description and Community Information</font></u></p>

<p><font size=2>AvalonBay
is a Maryland corporation that has elected to be treated as a real estate
investment trust, or REIT, for federal income tax purposes.&nbsp; We focus on the ownership and operation of
upscale apartment communities (which generally command among the highest rents
in their submarkets) in high barrier-to-entry markets of the United States.&nbsp; This is because we believe that the limited
new supply of upscale apartment homes in these markets helps achieve more
predictable growth in cash flows. These barriers-to-entry generally include a
difficult and lengthy entitlement process with local jurisdictions and dense
in-fill locations where zoned and entitled land is in limited supply.&nbsp; These markets are located in Northern and
Southern California and selected states in the Mid-Atlantic, Northeast, Midwest
and Pacific Northwest regions of the United States.</font></p>

<p><font size=2>We
are a fully-integrated real estate organization with in-house expertise in the
following areas:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; development and redevelopment;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; construction and
reconstruction;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; leasing and management;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; acquisition and disposition;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; financing;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; marketing; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; information technologies.</font></p>
</dir>

<p><font size=2>With
our expertise and in-house capabilities, we believe we are well-positioned to
continue to pursue opportunities to develop and acquire upscale apartment homes
in our target markets. Our ability to pursue attractive opportunities, however,
may be constrained by capital market conditions that limit the availability of
cost effective capital to finance these activities.&nbsp; Recently, we have limited our acquisition activity as compared to
prior years due to these capital constraints, and we expect to direct most of
our invested capital to new developments and redevelopments, rather than
acquisitions, for the foreseeable future.&nbsp;
See &#147;Liquidity and Capital Resources&#148; and &#147;Future Financing and Capital
Needs.&#148;</font></p>

<p><font size=2>We
believe apartment communities present an attractive investment opportunity
compared to other real estate investments because a broad potential resident
base results in relatively stable demand during all phases of a real estate
cycle.&nbsp; We intend to pursue appropriate
new investments, including both new developments and acquisitions of
communities, subject to the availability of cost-effective capital.&nbsp; We intend to pursue these investments in
markets where constraints to new supply exist and where new household formations
have out-paced multifamily permit activity in recent years.</font></p>

<p><font size=2>Our
real estate investments as of May 1, 2001 consist primarily of current
operating apartment communities, communities in various stages of development,
and land or land options held for development.&nbsp;
The following is a description of each category:<br><br></font></p>

<dir>
<p><u><font size=2>Current Communities</font></u><font size=2>
are categorized as Established, Other Stabilized, Lease-Up, or Redevelopment
according to the following:</font></p>
</dir>

<PAGE>


<dir>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <i>Established Communities</i> (also known as
Same Store Communities) are communities where a comparison of operating results
from the prior year to the current year is meaningful, as these communities
were owned and had stabilized operating costs as of the beginning of the prior
year.&nbsp; We determine which of our
communities fall into the Established Communities category annually on January
1<sup>st</sup> of each year and maintain that classification throughout the
year.&nbsp; For the year 2001, the
Established Communities were communities that had stabilized operating costs as
of January 1, 2000.</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <i>Other
Stabilized Communities</i> are all other completed communities that have
stabilized occupancy and are not conducting or planning redevelopment
activities.&nbsp; We consider a community to
have stabilized occupancy at the earlier of (i) attainment of 95% occupancy or
(ii) the one-year anniversary of completion of development or
redevelopment.&nbsp; For the year 2001, Other
Stabilized Communities therefore include communities that were either acquired
or achieved stabilization after January 1, 2000 and that were not conducting or
planning to start redevelopment activities within the current year.</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <i>Lease-Up
Communities</i> are communities where construction has been complete for
less than one year and where occupancy has not reached 95%.</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <i>Redevelopment
Communities </i>are communities where substantial redevelopment is in
progress or is planned to take place during the current year.&nbsp; Redevelopment is considered substantial when
capital invested during the reconstruction effort exceeds the lesser of $5
million or 10% of the community&#146;s acquisition cost.</font></p>
</dir>

<dir>
<p><u><font size=2>Development
Communities</font></u><font size=2> are communities that
are under construction and for which a final certificate of occupancy has not
been received.&nbsp; These communities may be
partially complete and operating.</font></p>
</dir>

<dir>
<p><u><font size=2>Development
Rights</font></u><font size=2> are development
opportunities in the early phase of the development process for which we have
an option to acquire land, for which we are the buyer under a long-term
conditional contract to purchase land or where we own land to develop a new
community.&nbsp; We capitalize all related
pre-development costs incurred in pursuit of these new developments.<PAGE></font></p>
</dir>

<p><font size=2>As
of March 31, 2001, our communities were classified as follows:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="69%" valign=bottom>&nbsp;</td>
  <td  align=center width="15%" valign=bottom><font   size=2>Number
  of</font><font size=2><br></font><font size=2>communities</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="15%" valign=bottom><font   size=2>Number
  of</font><font size=2><br></font><font size=2>apartment homes</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="69%" valign=top>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><u><font size=2>Current
  Communities</font></u></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Established
  Communities:</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Northern California</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>27</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>7,851</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp; Southern
  California</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>11</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>3,112</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Mid-Atlantic</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>18</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>5,297</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;
  Northeast</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>20</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>5,416</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Midwest</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>6</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>1,591</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp; Pacific
  Northwest</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>2</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>486</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Total Estabilshed</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>84</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>23,753</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Stabilized
  Communities:</font></td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;
&nbsp;&nbsp;&nbsp;Northern California</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>3</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>1,038</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Southern
  California</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>5</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>1,663</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;
  Mid-Atlantic</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>2</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>615</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Northeast</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>15</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>4,620</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp; Midwest</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>3</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>1,033</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pacific
  Northwest</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>10</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="15%" valign=bottom><font   size=2>3,147</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Total Other Stabilized</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>38</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>12,116</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease-Up Communities</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>--</font></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="69%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redevelopment
  Communities</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>4</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="15%" valign=bottom><font   size=2>2,211</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Current Communities</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>126</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>38,080</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="69%" valign=top><u><font size=2>Development
  Communities</font></u></td>
  <td  align=right width="15%" valign=bottom><font   size=2>13</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="15%" valign=bottom><font   size=2>3,692</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="69%" valign=top bgcolor="#cceeff"><u><font size=2>Development
  Rights</font></u></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>34</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>9,639</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>

<p><font size=2>There
were no changes to our community portfolios during the month of April.&nbsp; Of the Current Communities as of May 1,
2001, we owned:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a fee simple, or absolute, ownership
interest in 102 operating communities, one of which is on land subject to a 149
year land lease;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a general partnership interest
in four partnerships that each own a fee simple interest in an operating
community;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a general partnership interest
in four partnerships structured as &#147;DownREITs,&#148; as described more fully below,
that own an aggregate of 18 communities;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a 100% interest in a senior
participating mortgage note secured by one community, which allows us to share
in part of the rental income or resale proceeds of the community; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a membership interest in a
limited liability company that holds a fee simple interest in one Redevelopment
Community.<PAGE></font></p>
</dir>

<p><font size=2>We
also hold a fee simple ownership interest in twelve of the Development
Communities and a membership interest in a limited liability company that holds
a fee simple interest in one Development Community.</font></p>

<p><font size=2>In
each of the four partnerships structured as DownREITs, either AvalonBay or one
of our wholly-owned subsidiaries is the general partner, and there are one or
more limited partners whose interest in the partnership is represented by units
of limited partnership interest.&nbsp; For
each DownREIT partnership, limited partners are entitled to receive
distributions before any distribution is made to the general partner.&nbsp; Although the partnership agreements for each
of the DownREITs are different, generally the distributions per unit paid to
the holders of units of limited partnership interests approximate the current AvalonBay
common stock dividend amount.&nbsp; Each
DownREIT partnership has been structured so that it is unlikely the limited
partners will be entitled to a distribution greater than the initial
distribution provided for in the partnership agreement.&nbsp; The holders of units of limited partnership
interest have the right to present each unit of limited partnership interest
for redemption for cash equal to the fair market value of a share of AvalonBay
common stock on the date of redemption.&nbsp;
In lieu of cash, we may elect to acquire any unit presented for
redemption for one share of our common stock.&nbsp;
As of March 31, 2001, there were 671,083 units outstanding.&nbsp; The DownREIT partnerships are consolidated
for financial reporting purposes.</font></p>

<p><font size=2>At March 31, 2001, we had positioned our
portfolio of Stabilized Communities, excluding communities owned by
unconsolidated joint ventures, to an average physical occupancy level of
97.0%.&nbsp; Our strategy is to maximize
total rental revenue through management of rental rates and occupancy levels.
Our strategy of maximizing total rental revenue could lead to lower occupancy
levels.&nbsp; Given the current high
occupancy level of our portfolio, we believe that any rental revenue and net
income gains from our Established Communities would be achieved primarily
through higher rental rates and the lower average operating costs per apartment
home that result from economies of scale due to national and regional growth of
our portfolio.</font></p>

<p><font size=2>We
elected to be taxed as a REIT for federal income tax purposes for the year
ended December 31, 1994 and we have not revoked that election.&nbsp; We were incorporated under the laws of the
State of California in 1978, and we were reincorporated in the State of
Maryland in July 1995.&nbsp; Our principal
executive offices are located at 2900 Eisenhower Avenue, Suite 300, Alexandria,
Virginia, 22314, and our telephone number at that location is (703)
329-6300.&nbsp; We also maintain regional
offices and administrative or specialty offices in or near the following
cities:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; San Jose, California;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Wilton, Connecticut;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Boston, Massachusetts;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chicago, Illinois;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Iselin, New Jersey;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minneapolis, Minnesota;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Newport Beach, California;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; New York, New York; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Seattle, Washington.</font></p>
</dir>

<p><u><font size=2>Recent Developments</font></u></p>

<p><i><font size=2>Sales of Existing Communities. </font></i><font size=2>We
seek to increase our geographical concentration in selected high
barrier-to-entry markets where we believe we can:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; apply sufficient market and management presence to enhance
revenue growth;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; reduce operating expenses; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; leverage management talent.<PAGE></font></p>
</dir>

<p><font size=2>To effect this increased concentration,
we are selling assets in certain submarkets and intend to redeploy the proceeds
from those sales to develop and redevelop communities currently under
construction or reconstruction.&nbsp; Pending
such redeployment, we will generally use the proceeds from the sale of these
communities to reduce amounts outstanding under our variable rate unsecured
credit facility.&nbsp; On occasion, we will
set aside the proceeds from the sale of communities into a cash escrow account
to facilitate a like-kind exchange transaction.&nbsp; Accordingly, we sold one community containing 226 apartment homes
in connection with our capital redeployment strategy during the three months
ended March 31, 2001.&nbsp; Net proceeds from
this sale totaled approximately $14,500,000.&nbsp;
We intend to dispose of additional assets as described more fully under
&#147;Future Financing and Capital Needs.&#148;</font></p>

<p><i><font size=2>Development, Redevelopment and
Acquisition Activities. </font></i><font size=2>&nbsp;During the three months ended March 31, 2001,
we completed the development of one community, Avalon Estates, for a total
investment of $20,500,000.&nbsp; This
community, which is located in Hull, Massachusetts, contains 162 apartment
homes.</font></p>

<p><font size=2>We
also acquired three communities in the Seattle, Washington area (Avalon
Wynhaven, Avalon Brandemoor, and Avalon WildWood) for a total acquisition price
of $129,300,000.&nbsp; These communities,
which contain an aggregate of 995 apartment homes, were purchased pursuant to a
forward purchase contract agreed to in 1997 with an unaffiliated party.</font></p>

<p><font size=2>The development and redevelopment of
communities involves risks that the investment will fail to perform in
accordance with expectations.&nbsp; See
&#147;Risks of Development and Redevelopment&#148; for our discussion of these and other
risks inherent in developing or redeveloping communities.</font></p>

<p><font size=2>In February 2001, we announced the
departure of a senior executive.&nbsp; As a
result of this departure, we recorded a charge of approximately $2,500,000
during the first quarter of 2001.<PAGE></font></p>

<p><u><font size=2>Results
of Operations and Funds From Operations</font></u></p>

<p><font size=2>A comparison of our operating results for
the three months ended March 31, 2001 and March 31, 2000 follows (dollars in
thousands):</font></p>

<p><font size=2>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="56%" valign=bottom>&nbsp;</td>
  <td  align=center width="43%" colspan=4 valign=bottom><font   size=2>For
  the three months ended</font>
<hr size=2 width="98%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td  align=center width="56%" valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font   size=2>3-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font   size=2>$
  Change</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font   size=2>%
  Change</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>Revenue:</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Rental income</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>$155,329</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>$134,785</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>$20,544</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>15.2%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management fees</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>331</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>248</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>83</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>33.5%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>97</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>55</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>42</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>76.4%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>155,757</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>135,088</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>20,669</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>15.3%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>Expenses:</font></td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating expenses, excluding
  property taxes</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>39,800</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>33,338</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>6,462</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>19.4%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;Property taxes</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>12,798</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>11,230</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>1,568</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>14.0%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating
  expenses</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>52,598</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>44,568</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>8,030</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>18.0%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>Net Operating Income</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>103,159</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>90,520</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>12,639</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>14.0%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>23,124</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>20,067</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>3,057</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>15.2%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation expense</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>31,129</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>29,419</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>1,710</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>5.8%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>3,805</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>2,947</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>858</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>29.1%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>58,058</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>52,433</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>5,625</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>10.7%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity in income of unconsolidated
  joint ventures</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>106</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>694</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(588)</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>-84.7%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>1,816</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>1,020</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>796</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>78.0%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minority interest of unitholders in
  consolidated partnerships</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(325)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(539)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>214</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>-39.7%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before gain on sale of
  communities</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>46,698</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>39,262</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>7,436</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>18.9%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of communities</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>4,901</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>7,910</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(3,009)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>-38.0%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>51,599</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>47,172</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>4,427</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>9.4%</font></td>
 </tr>
 <tr>
  <td width="56%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred dividends</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(9,945)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(9,945)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font   size=2>0.0%</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="56%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income available to common
  stockholders</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>$41,654</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>$37,227</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>$4,427</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>11.9%</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>

<p><i><font size=2>Net income available to common stockholders </font></i><font size=2>increased
$4,427,000 (11.9%) to $41,654,000 for the three months ended March 31, 2001
compared to $37,227,000 for the preceding year.&nbsp; Excluding separation costs and gain on sale of communities, net
income available to common stockholders increased by $9,929,000 for the three
months ended March 31, 2001 compared to the same period of the preceding
year.&nbsp; The increase in net income, as
adjusted, for the three months ended March 31, 2001 is primarily attributable
to additional operating income from newly developed and redeveloped communities
as well as growth in operating income from Established Communities.</font></p>

<p><font size=2>As discussed in &#147;Recent Developments &#150;
Sales of Existing Communities&#148; and &#147;Future Financing and Capital Needs,&#148; we
funded a portion of our development and redevelopment activities through the
sale of assets which do not meet our long-term strategic objectives.&nbsp; The short-term effect of a sale of a
community is that net operating income will be negatively impacted because that
community&#146;s contribution to net operating income has been eliminated and the
development or redevelopment community in which the proceeds from the sale are
being invested is not yet complete.&nbsp;
Interest expense will also decrease as the proceeds from the sale of
communities are initially used to repay amounts outstanding on our unsecured
credit facility.&nbsp; The historical effect
of this strategy has been that net operating income attributable to newly
developed and redeveloped communities is higher than net operating income of
assets identified for sale.<PAGE></font></p>

<p><font size=2>The increase in net operating income of
$12,639,000 for the three months ended March 31, 2001 as compared to 2000 is
attributable to:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; an increase of $7,837,000 related to
communities where development activities, redevelopment activities or
acquisitions were completed subsequent to January 1, 2000;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; an increase of $9,551,000
related to Established Communities;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a decrease of $2,649,000
related to communities sold subsequent to January 1, 2000;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; an increase of $393,000 related
to all other communities; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a decrease of $2,493,000
related to separation costs.</font></p>
</dir>

<p><font size=2>Depreciation expense is
impacted by the timing of asset sales, acquisitions and completion of
development or redevelopment activities.&nbsp;
Gain on sale of communities is impacted by the number of assets sold in
a given period, the carrying value of those assets, and the local market
conditions in which the individual assets are located.</font></p>

<p><i><font size=2>Rental income </font></i><font size=2>increased
($20,544,000 or 15.2%) primarily due to an increase in the weighted average
monthly rental income per occupied apartment home and an increase in the
weighted average number of occupied apartment homes.</font></p>

<dir>
<p><font size=2>Overall Portfolio - The
weighted average number of occupied apartment homes increased to 34,217
apartment homes for the three months ended March 31, 2001 from 33,746 apartment
homes for the three months ended March 31, 2000 primarily as a result of
development, redevelopment and acquisition of new communities offset by the
sale of communities during 2000.&nbsp; For
the three months ended March 31, 2001, the weighted average monthly revenue per
occupied apartment home increased $183 (13.8%) to $1,511 compared to $1,328 for
the same period of the preceding year, which is primarily attributable to
increased rental rates from Established Communities. In addition, the
development of new apartment communities with higher average rents and the sale
of communities with lower average rents favorably impacted average revenue per
home.&nbsp; These newly developed apartment
communities were funded in part from the proceeds of communities sold in
markets where rental rates are lower.</font></p>
</dir>

<dir>
<p><font size=2>Established Communities
- Rental revenue increases of $11,149,000 (11.8%) are due to market conditions
that allowed for higher average rents partially offset by lower economic
occupancy levels.&nbsp; For the three months
ended March 31, 2001, weighted average monthly revenue per occupied apartment
home increased $169 (12.4%) to $1,531 compared to $1,362 for the same period of
the preceding year.&nbsp; The average
economic occupancy decreased from 97.5% for the three months ended March 31,
2000 to 96.9% for the three months ended March 31, 2001.</font></p>
</dir>

<p><i><font size=2>Management fees</font></i><font size=2> in</font><font size=2>creased ($83,000 or
33.5%) primarily due to receipt of fees pursuant to joint venture arrangements.</font></p>

<p><i><font size=2>Operating expenses, excluding property taxes</font></i><font size=2>
increased&nbsp; ($6,462,000 or 19.4%)
primarily due to the addition of newly developed, redeveloped and acquired
apartment homes and separation costs of $2,493,000 due to the departure of a
senior executive.&nbsp; Maintenance,
insurance and other costs associated with Development and Redevelopment
Communities are expensed as communities move from the initial construction and
lease-up phase to the stabilized operating phase.</font></p>

<dir>
<p><font size=2>Established Communities
- Operating expenses, excluding property taxes increased $1,309,000 (7.7%) to
$18,380,000 for the three months ended March 31, 2001 compared to $17,071,000
for the same period of the preceding year.&nbsp;
The increase is primarily the result of higher utilities, insurance,
maintenance and redecorating costs.</font></p>
</dir>

<dir>
<p><font size=2>For the three months
ended March 31, economic occupancy decreased in the Northern California region
(which accounts for approximately 38.5% of current Established Community rental
revenue) from 97.9% in 2000 to 96.7% in 2001 primarily due to softening in
certain Northern California sub-markets. We have observed increased volatility
in certain Northern California sub-markets over the past two years. Market
rental rates increased substantially in 2000, and we believe some reductions in
market rental rates will occur in 2001 as market conditions reset to more
sustainable levels of growth.</font></p>
</dir>

<i><PAGE>
</i>

<dir>
<p>&nbsp;</p>
</dir>

<p><i><font size=2>Property taxes</font></i><font size=2>
increased&nbsp; ($1,568,000 or 14.0%)
primarily due to the addition of newly developed, redeveloped or acquired
apartment homes, partially offset by the sale of communities.&nbsp; Property taxes on Development and
Redevelopment Communities are expensed as communities move from the initial
construction and lease-up phase to the stabilized operating phase.</font></p>

<dir>
<p><font size=2>Established Communities
- Property taxes increased $306,000 (3.7%) to $8,505,000 for the three months
ended March 31, 2001 compared to $8,199,000 for the same period of the
preceding year.&nbsp; The increase is
primarily due to higher assessments throughout all regions.</font></p>
</dir>

<p><i><font size=2>Interest expense</font></i><font size=2>
increased ($3,057,000 or 15.2%) primarily due to the issuance of $350,000,000
of unsecured notes during the second half of 2000.&nbsp; This reflects our strategy to mitigate the risk of floating rate
debt by repaying floating rate debt under the unsecured credit facility (with
relatively lower current interest rates) with longer dated fixed rate unsecured
debt that has a higher current interest rate.</font></p>

<p><i><font size=2>Depreciation expense </font></i><font size=2>increased
($1,710,000 or 5.8%) due to the addition of newly developed, redeveloped and
acquired apartment homes, partially offset by the sale of communities.</font></p>

<p><i><font size=2>General and administrative </font></i><font size=2>increased
($858,000 or 29.1%) primarily due to an increase in consulting fees as well as
compensation expense for a senior officer whose salary was expensed in the
current period but capitalized a year ago while he served the company in a
different capacity.</font></p>

<p><i><font size=2>Equity in income of unconsolidated joint ventures</font></i><font size=2>
decreased ($588,000 or 84.7%). The decrease is primarily attributable to a
valuation allowance of $310,000 recorded for an investment in a technology
company accounted for under the cost method, as well as our pro rata share of
losses from a technology investment accounted for under the equity method.</font></p>

<p><i><font size=2>Interest income</font></i><font size=2>
increased (796,000 or 78.0%) due to an increase in average cash balances
invested.</font></p>

<p><i><font size=2>Gain on sale of communities</font></i><font size=2>
of $4,901,000 for the three months ended March 31, 2001 was attributable to the
sale of one community.</font></p>

<p><b><i><font size=2>Funds from Operations</font></i></b></p>

<p><font size=2>We
consider Funds from Operations, or FFO, to be an appropriate measure of our
operating performance because it helps investors understand our ability to
incur and service debt and to make capital expenditures.&nbsp; We believe that to understand our operating
results, FFO should be examined with net income as presented in the Condensed
Consolidated Statements of Operations and Other Comprehensive Income included
elsewhere in this report.&nbsp; FFO is
determined based on a definition adopted by the Board of Governors of the
National Association of Real Estate Investment Trusts</font><font size=2 face=Symbol>&#226;</font><font size=2> (NAREIT), and is
defined as:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; net income or loss computed in
accordance with generally accepted accounting principles (GAAP), except that
excluded from net income or loss are gains or losses on sales of property and
extraordinary (as defined by GAAP) gains or losses on debt restructuring;</font></p>
</dir>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; plus depreciation of real estate
assets; and</font></p>
</dir>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; after adjustments for unconsolidated
partnerships and joint ventures.</font></p>
</dir>

<p><font size=2>FFO
does not represent cash generated from operating activities in accordance with
GAAP. Therefore it should not be considered an alternative to net income as an
indication of our performance.&nbsp; FFO
should also not be considered an alternative to net cash flows from operating
activities as determined by GAAP as a measure of liquidity. Additionally, it is
not necessarily indicative of cash available to fund cash needs.&nbsp; Further, FFO as calculated by other REITs
may not be comparable to our calculation of FFO.<PAGE></font></p>

<p><font size=2>For the three months ended March 31, 2001, FFO increased
to $67,699,000 from $58,614,000 for the comparable period of the preceding
year.&nbsp; This increase is primarily due </font><font size=2>to
the completion of new development and redevelopment communities as well as
growth in earnings from Established Communities.</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="75%" valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><font   size=2>For
  the three months ended</font><font size=2><br></font><font size=2>(Dollars in thousands)</font>
<hr size=2 width="98%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-01</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>3-31-00</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Net income</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$51,599</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$47,172</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Preferred dividends</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(9,945)</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(9,945)</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Depreciation - real
  estate assets</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>30,294</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>28,594</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Joint venture
  adjustments</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>261</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>194</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>Minority interest
  expense</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>391</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>509</font></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>Gain on sale of
  communities</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(4,901)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>(7,910)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Funds from Operations</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$67,699</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$58,614</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating
  activities</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$64,067</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$(61,029)</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing
  activities</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$(66,765)</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>$(45,518)</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="75%" valign=top><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in)
  financing activities</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$3,115</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$(15,056)</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>

<p><u><font size=2>Capitalization
of Fixed Assets and Community Improvements</font></u></p>

<p><font size=2>Our
policy with respect to capital expenditures is generally to capitalize only
non-recurring expenditures.&nbsp; We
capitalize improvements and upgrades only if the item:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; exceeds $15,000;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; extends the useful life of the
asset; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; is not related to making an
apartment home ready for the next resident.</font></p>
</dir>

<p><font size=2>Under
this policy, virtually all capitalized costs are non-recurring, as recurring
make-ready costs are expensed as incurred. Recurring make-ready costs include
the following:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; carpet and appliance replacements;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; floor coverings;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; interior painting; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; other redecorating costs.</font></p>
</dir>

<p><font size=2>We
capitalize purchases of personal property, such as computers and furniture,
only if the item is a new addition and the item exceeds $2,500.&nbsp; We generally expense purchases of personal
property made for replacement purposes.&nbsp;
The application of these policies for the three months ended March 31,
2001 resulted in non-revenue generating capitalized expenditures for Stabilized
Communities of approximately $16 per apartment home.&nbsp; For Stabilized Communities, we charged $275 per apartment home to
maintenance expense for the three months ended March 31, 2001, including carpet
and appliance replacements.&nbsp; We
anticipate that capitalized costs per apartment home will gradually increase as
the average age of our communities increases.<u><PAGE></u></font></p>

<p><u><font size=2>Liquidity and Capital
Resources</font></u></p>

<p><i><font size=2>Liquidity.</font></i><b><font size=2>&nbsp; </font></b><font size=2>The primary source of
liquidity is our cash flows from operations.&nbsp;
Operating cash flows have historically been determined by:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the number of apartment homes;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; rental rates;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; occupancy levels; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; our expenses with respect to
these apartment homes.</font></p>
</dir>

<p><font size=2>The timing, source and amount of cash
flows provided by financing activities and used in investing activities are
sensitive to the capital markets environment, particularly to changes in
interest rates that are charged to us as changes in interest rates affect our
decision as to whether to issue debt securities, borrow money and invest in
real estate.&nbsp; Thus, changes in the
capital markets environment affect our plans for the undertaking of
construction and development as well as acquisition activity.</font></p>

<p><font size=2>Cash
and cash equivalents increased $417,000 to $57,651,000 for the three months
ended March 31, 2001 compared to an increase in cash and cash equivalents of
$455,000 to $8,076,000 for the three months ended March 31, 2000.</font></p>

<dir>
<p><font size=2>Net cash provided by
operating activities totaled $64,067,000 for the three months ended March 31,
2001, an increase of $3,038,000 provided over the same period of 2000. The increase
was primarily attributable to additional operating income from newly developed
and redeveloped communities as well as growth in operating income from
Established Communities.</font></p>
</dir>

<dir>
<p><font size=2>Net cash used in
investing activities totaled $66,765,000 for the three months ended March 31,
2001, an increase of $21,247,000 used over the same period of 2000.&nbsp; This increase in expenditures reflects an
increase in development, redevelopment and acquisition activity offset by a
decrease in proceeds from the sale of communities.</font></p>
</dir>

<dir>
<p><font size=2>Net
cash provided by financing activities totaled $3,115,000 for the three months
ended March 31, 2001, an increase of $18,171,000 over the same period of
2000.&nbsp; The increase is primarily due to
the issuance of secured notes payable offset by a decrease in the borrowings
under our credit facility.</font></p>
</dir>

<p><font size=2>We regularly review our short and
long-term liquidity needs and the adequacy of Funds from Operations, as defined
above, and other expected liquidity sources to meet these needs.&nbsp; We believe our principal short&ndash;term
liquidity needs are to fund:</font></p>

<dir>
<table border=0 cellspacing=0 cellpadding=0 width="93%">
 <tr>
  <td width="6%" valign=top><font size=2>&#149;</font></td>
  <td width="93%" valign=top><font size=2>normal recurring
  operating expenses;</font></td>
 </tr>
 <tr>
  <td width="6%" valign=top><font size=2>&#149;</font></td>
  <td width="93%" valign=top><font size=2>debt service payments;</font></td>
 </tr>
 <tr>
  <td width="6%" valign=top><font size=2>&#149;</font></td>
  <td width="93%" valign=top><font size=2>the distributions
  required with respect to preferred stock;</font></td>
 </tr>
 <tr>
  <td width="6%" valign=top><font size=2>&#149;</font></td>
  <td width="93%" valign=top><font size=2>the minimum dividend
  payments required to maintain our REIT qualification under the Internal
  Revenue Code of 1986; and</font></td>
 </tr>
 <tr>
  <td width="6%" valign=top><font size=2>&#149;</font></td>
  <td width="93%" valign=top><font size=2>development and
  redevelopment activity in which we are currently engaged.</font></td>
 </tr>
</TABLE>
</dir>

<p><font size=2>We anticipate that we can fully satisfy
these needs from a combination of cash flows provided by operating activities
and capacity under the unsecured credit facility.<PAGE></font></p>

<p><font size=2>We believe our principal long-term
liquidity needs are the reduction of medium and long-term debt.&nbsp; We anticipate that no significant portion of
the principal of any indebtedness will be repaid prior to maturity.&nbsp; If we do not have funds on hand sufficient
to repay our indebtedness, it will be necessary for us to refinance this
debt.&nbsp; This refinancing may be
accomplished through additional debt financing, which may be collateralized by
mortgages on individual communities or groups of communities, by
uncollateralized private or public debt offerings or by additional equity
offerings.&nbsp; We also anticipate having
significant retained cash flow in each year so that when a debt obligation
matures, some or all of each maturity can be satisfied from this retained
cash.&nbsp; Although we believe we will have
the capacity to meet our long-term liquidity needs, we cannot assure you that
additional debt financing or debt or equity offerings will be available or, if
available, that they will be on terms we consider satisfactory.</font></p>

<p><i><font size=2>Capital Resources.</font></i><font size=2>
We intend to match the long-term nature of our real estate assets with
long-term cost effective capital to the extent permitted by prevailing market
conditions.&nbsp; We follow a focused
strategy to help facilitate uninterrupted access to capital.&nbsp; This strategy includes:</font></p>

<dir>
<table border=0 cellspacing=0 cellpadding=0 width="93%">
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>hiring,
  training and retaining associates with a strong resident service focus, which
  should lead to higher rents, lower turnover and reduced operating costs;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>managing,
  acquiring and developing upscale communities in dense locations where the
  availability of zoned and entitled land is limited to provide consistent,
  sustained earnings growth;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>operating
  in markets with growing demand, as measured by household formation and job
  growth, and high barriers-to-entry.&nbsp;
  We believe these characteristics generally combine to provide a
  favorable demand-supply balance, which we believe will create a favorable
  environment for future rental rate growth while protecting existing and new
  communities from new supply.&nbsp; We
  expect this strategy to result in a high level of quality to the revenue
  stream;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>maintaining
  a conservative capital structure, largely comprised of equity, and with
  modest, cost-effective leverage. We generally avoid secured debt except in
  order to obtain low cost, tax-exempt debt.&nbsp;
  We believe that such a structure should promote an environment whereby
  current credit ratings levels can be maintained;</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>following
  accounting practices that provide a high level of quality to reported
  earnings; and</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top><font size=2>&#149;</font></td>
  <td width="95%" valign=top><font size=2>providing
  timely, accurate and detailed disclosures to the investment community.</font></td>
 </tr>
</TABLE>
</dir>

<p><font size=2>We believe these strategies provide a
disciplined approach to capital access to help position AvalonBay to fund
portfolio growth.</font></p>

<p><font size=2>Capital markets conditions over the past
several years have limited our access to cost-effective capital.&nbsp; See &#147;Future Financing and Capital Needs&#148; for
a discussion of our response to the current capital markets environment.<u><PAGE></u></font></p>

<p><u><font size=2>Variable Rate Unsecured
Facility</font></u></p>

<p><font size=2>Our unsecured revolving credit facility
is furnished by a consortium of banks and provides $600,000,000 in short-term
credit.&nbsp; We pay these banks an annual
facility fee of $900,000 in equal quarterly installments. The unsecured credit facility bears interest at varying levels tied to the London
Interbank Offered Rate (LIBOR) based on ratings levels achieved on our
unsecured notes and on a maturity selected by us.&nbsp; The current stated pricing is LIBOR plus 0.60% per annum.&nbsp; A competitive bid option is available
for borrowings of up to $400,000,000.&nbsp;
This option allows banks that are part of the lender consortium to bid
to provide us loans at a rate that is lower than the stated pricing provided by
the unsecured credit facility.&nbsp; The
competitive bid option may result in lower pricing if market conditions
allow.&nbsp; Pricing under the competitive
bid option resulted in average pricing of LIBOR plus 0.50% for balances most
recently placed under the competitive bid option.&nbsp; At May 1, 2001, $42,000,000 was outstanding, $82,203,000 was used
to provide letters of credit and $475,797,000 was available for borrowing under
the unsecured credit facility. &nbsp;The unsecured credit facility matures in July
2001, and the company is currently in the process of negotiating a new facility
which it believes will be in place prior to the maturity date of the existing
facility.&nbsp; In addition, the Company
expects the new facility will have substantially the same terms and conditions
as the existing facility. &nbsp;We
intend to use borrowings under the unsecured credit facility for:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; capital expenditures;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; construction, development,
reconstruction and redevelopment costs;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; acquisitions;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; credit enhancement for
tax-exempt bonds; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; working capital purposes.</font></p>
</dir>

<p><u><font size=2>Interest Rate Protection
Agreements</font></u></p>

<p><font size=2>We are not a party to any long-term interest
rate agreements, other than interest rate protection and swap agreements on
approximately $168 million of our variable rate tax-exempt indebtedness.&nbsp; We intend, however, to evaluate the need for
long-term interest rate protection agreements as interest rate market
conditions dictate, and we have engaged a consultant to assist in managing our
interest rate risks and exposure.</font></p>

<p><u><font size=2>Future Financing and
Capital Needs</font></u></p>

<p><font size=2>As of March 31, 2001, we had 14 new
communities under construction either by us or by an unaffiliated third parties
with whom we have entered into forward purchase commitments.&nbsp; As of March 31, 2001, a total estimated cost
of $455,642,000 remained to be invested in these communities.&nbsp; In addition, we had four other communities
under reconstruction, for which an estimated $30,690,000 remained to be
invested as of March 31, 2001.</font></p>

<p><font size=2>Substantially all of the capital
expenditures necessary to complete the communities currently under construction
and reconstruction will be funded from:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the remaining capacity under our
current $600,000,000 unsecured credit facility and an anticipated substitute
facility;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the net proceeds from sales of
existing communities;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; retained operating cash;
and/or<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the issuance of debt or equity
securities.</font></p>
</dir>

<p><font size=2>We expect to continue to fund deferred
development costs related to future developments from retained operating cash
and borrowings under the unsecured credit facility.&nbsp; We believe these sources of capital will be adequate to take the
proposed communities to the point in the development cycle where construction
can begin.<PAGE></font></p>

<p><font size=2>We have observed and been impacted by a
reduction in the availability of cost effective capital since the third quarter
of 1998.&nbsp; While the capital market
environment has improved, we cannot assure you that cost effective capital will
be available to meet future expenditures required to begin planned
reconstruction activity or the construction of the Development Rights.&nbsp; Before planned reconstruction activity or
the construction of a Development Right begins, we intend to arrange adequate
financing to complete these undertakings, although we cannot assure you that we
will be able to obtain such financing.&nbsp;
In the event that financing cannot be obtained, we may have to abandon
Development Rights, writeoff associated pursuit costs and/or forego
reconstruction activity.&nbsp;&nbsp; In such
instances, we will not realize the increased revenues and earnings that we
expected from such pursuits, and the related write-off of costs will increase
current period expenses.</font></p>

<p><font size=2>Our liquidity could be adversely impacted
by expanding development activities and/or reduced capital (as compared to
prior years) available from asset sales.&nbsp;
To meet the balance of our liquidity needs under such conditions, we
would need to arrange additional capacity under our existing unsecured credit
facility, sell additional existing communities and/or issue additional debt or
equity securities.&nbsp; While we believe we
have the financial position to expand our short-term credit capacity and
support our capital markets activity, we cannot assure you that we will be
successful in completing these arrangements, sales or offerings.&nbsp; The failure to complete these transactions
on a cost-effective basis could have a material adverse impact on our operating
results and financial condition, including the abandonment of deferred
development costs and a resultant charge to earnings.</font></p>

<p><font size=2>To increase our concentration of
communities in selected high barrier-to-entry markets, we are selling assets
which do not meet our long-term strategic objectives and redeploying the
proceeds.&nbsp; Under our disposition
program, we solicit competing bids from unrelated parties for these individual
assets and consider the sales price and tax ramifications of each
proposal.&nbsp;&nbsp; We intend to actively seek buyers
for communities held for sale.&nbsp; However,
we cannot assure you that these assets can be sold on terms that we consider
satisfactory.</font></p>

<p><font size=2>The assets that we have identified for
disposition include land, buildings and improvements and furniture, fixtures and
equipment.&nbsp; Total real estate, net of
accumulated depreciation, of all communities identified for sale at March 31,
2001 totaled $185,493,000.&nbsp; Certain
individual assets are secured by mortgage indebtedness which may be assumed by
the purchaser or repaid from our net sales proceeds.&nbsp; Our Consolidated Statements of Operations and Other Comprehensive
Income include net income from these communities of $4,044,000 and $2,839,000
for the three months ended March 31, 2001 and 2000, respectively.</font></p>

<p><font size=2>Because the proceeds from the sale of
communities are used initially to reduce borrowings under our unsecured credit
facility, the immediate effect of a sale of a community is to have a negative
effect on earnings.&nbsp; This is because the
yield on a community that is sold exceeds the interest rate on the borrowings
that are repaid from such net proceeds.&nbsp;
Therefore, changes in the number and timing of dispositions, and the
redeployment of the resulting net proceeds, may have a material and adverse
effect on our earnings.</font></p>

<p><font size=2>We are a member of Constellation Real
Technologies LLC, an entity formed by a number of real estate investment trusts
and real estate operating companies for the purpose of investing in
multi-sector real estate technology opportunities. Our capital commitment to
Constellation Real Technologies is $4.0 million. Although we have made no
capital contributions to date, we expect to contribute approximately $910,000
by the end of May 2001.</font></p>

<u><PAGE>
</u>

<p>&nbsp;</p>

<p><u><font size=2>Debt Maturities</font></u></p>

<p><font size=2>The table on the following page details
debt maturities for the next five years, excluding the unsecured credit
facility:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="20%" valign=bottom>&nbsp;</td>
  <td  align=center width="79%" colspan=10 valign=bottom><b><font   size=1>(Dollars in thousands)</font></b></td>
 </tr>
 <tr>
  <td  align=center width="20%" rowspan=2 valign=bottom><b><font   size=1>Community</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="11%" rowspan=2 valign=bottom><b><font   size=1>All-In<br>
  interest<br>
  rate</font></b><b><sup><font size=1>(1)</font></sup></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="8%" rowspan=2 valign=bottom><b><font   size=1>Principal<br>
  Maturity date</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="17%" colspan=2 valign=bottom><b><font   size=1>Balance Outstanding</font></b><div align=center><b><font   size=1><hr size=2 width="98%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="42%" colspan=6 valign=bottom><b><font   size=1>Scheduled Maturities</font></b><div align=center><b><font   size=1><hr size=2 width="98%" noshade color=black align=center></font></b></div></td>
 </tr>
 <tr>
  <td  align=center width="8%" valign=bottom><b><font   size=1>12-31-00</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="8%" valign=bottom><b><font   size=1>3-31-01</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="6%" valign=bottom><b><font   size=1>2001</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="6%" valign=bottom><b><font   size=1>2002</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="7%" valign=bottom><b><font   size=1>2003</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="6%" valign=bottom><b><font   size=1>2004</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="7%" valign=bottom><b><font   size=1>2005</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="7%" valign=bottom><b><font   size=1>Thereafter</font></b><div align=center><b><font   size=1><hr size=2 width="95%" noshade color=black align=center></font></b></div></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><b><font size=1>Tax-Exempt Bonds</font></b></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="20%" valign=top><b><i><font size=1>&nbsp;&nbsp; Fixed Rate</font></i></b></td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Foxchase I</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>5.88%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Nov-2007</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>$16,800</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>$16,800</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>$--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>$--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>$--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>$--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>$--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>$16,800</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Foxchase II</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>5.88%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Nov-2007</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>9,600</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>9,600</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>9,600</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fairway Glen</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>5.88%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Nov-2007</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>9,580</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>9,580</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>9,580</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CountryBrook</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>7.87%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Mar-2012</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>18,934</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>18,847</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>270</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>386</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>417</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>451</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>488</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>16,835</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Waterford</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>5.88%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Aug-2014</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>33,100</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>33,100</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>33,100</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Mountain View</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>5.88%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Mar-2017</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>18,300</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>18,300</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>18,300</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Dulles</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>7.04%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Jul-2024</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>12,360</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>12,360</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>12,360</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Symphony Glen</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>7.00%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jul-2024</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>9,780</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>9,780</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>9,780</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon View</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>7.55%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Aug-2024</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>18,465</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>18,380</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>265</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>373</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>397</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>425</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>455</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>16,465</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Lexington</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.56%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Feb-2025</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>14,347</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>14,279</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>203</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>288</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>307</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>326</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>347</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>12,808</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Oaks</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>7.45%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Feb-2041</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>17,533</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>71</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>90</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>97</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>104</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>111</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>17,060</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Nob Hill</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>5.80%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jun-2025</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>20,013</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>19,947</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>202</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>288</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>308</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>331</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>355</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>18,463</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Mission Viejo</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>5.50%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Jun-2025</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>7,354</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>7,330</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>74</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>105</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>112</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>121</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>129</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>6,789</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Campbell</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.48%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jun-2025</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>36,981</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>36,836</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>449</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>637</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>684</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>733</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>786</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>33,547</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Pacifica</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>6.48%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Jun-2025</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>16,775</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>16,709</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>204</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>289</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>310</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>332</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>356</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>15,218</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crossbrook</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.48%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jun-2025</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>8,156</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>--(2)</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Knoll</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>6.95%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Jun-2026</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>13,393</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>13,344</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>151</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>214</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>230</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>246</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>263</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>12,240</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Landing</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.85%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jun-2026</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>6,626</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>6,601</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>76</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>108</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>116</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>124</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>132</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>6,045</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Fields</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>7.05%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>May-2027</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>11,609</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>11,572</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>120</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>169</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>180</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>193</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>207</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>10,703</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon West</font></td>
  <td  align=right width="11%" valign=top><font   size=1>7.73%</font></td>
  <td  align=right width="8%" valign=top><font   size=1>Dec-2036</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>8,579</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="8%" valign=bottom><font   size=1>8,565</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>43</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>61</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>65</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>70</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>75</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>8,251</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>290,752</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>299,463</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>2,128</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>3,008</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>3,223</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>3,456</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>3,704</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>283,944</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><b><i><font size=1>&nbsp;&nbsp; Variable Rate</font></i></b></td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Devonshire</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Dec-2025</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>27,305</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>27,305</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>27,305</font></td>
 </tr>
 <tr height=19>
  <td width="20%" height=19 valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Fairway Hills I</font></td>
  <td  align=right width="11%" height=19 valign=bottom>&nbsp;</td>
  <td  align=right width="8%" height=19 valign=bottom><font   size=1>Jun-2026</font></td>
  <td  align=right width="8%" height=19 valign=bottom><font   size=1>11,500</font></td>
  <td  align=right width="8%" height=19 valign=bottom><font   size=1>11,500</font></td>
  <td  align=right width="6%" height=19 valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" height=19 valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" height=19 valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" height=19 valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" height=19 valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" height=19 valign=bottom><font   size=1>11,500</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Laguna Niguel</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Mar-2009</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>10,400</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>10,400</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>10,400</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Greenbriar</font></td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=top><font   size=1>May-2026</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>18,755</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="8%" valign=bottom><font   size=1>18,755</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>18,755</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>67,960</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>67,960</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>67,960</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><b><font size=1>Conventional Loans:</font></b></td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><b><i><font size=1>&nbsp;&nbsp;
  Fixed Rate</font></i></b></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100 Million unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>7.375%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Sep-2002</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50 Million unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>6.25%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Jan-2003</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>50,000</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>50,000</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>50,000</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100 Million unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.50%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jul-2003</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $125 Million medium-term notes</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>6.58%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Feb-2004</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>125,000</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>125,000</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>125,000</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100 Million unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.625%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jan-2005</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>100,000</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50 Million unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>6.50%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Jan-2005</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>50,000</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>50,000</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>50,000</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $150 Million unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.80%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jul-2006</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>150,000</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>150,000</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>150,000</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $110 Million&nbsp; unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>6.875%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Dec-2007</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>110,000</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>110,000</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>110,000</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50 Million unsecured notes</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>6.625%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Jan-2008</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>50,000</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>50,000</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>50,000</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $150 Million medium-term notes</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>8.25%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Jul-2008</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>150,000</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>150,000</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>150,000</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $150 Million medium-term notes</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>7.50%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>Aug-2009</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>150,000</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>150,000</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>150,000</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200 Million medium-term notes</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>7.50%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>Dec-2010</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>200,000</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>200,000</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>200,000</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Redmond Place</font></td>
  <td  align=right width="11%" valign=bottom><font   size=1>7.31%</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>May-2001</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>11,042</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>10,982</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>10,982</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon at Pruneyard</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=1>7.25%</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>May-2004</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>12,870</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>12,870</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>12,870</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon Walk II</font></td>
  <td  align=right width="11%" valign=top><font   size=1>8.93%</font></td>
  <td  align=right width="8%" valign=top><font   size=1>Aug-2004</font></td>
  <td  align=right width="8%" valign=bottom><font   size=1>12,300</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="8%" valign=bottom><font   size=1>12,233</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>197</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>288</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>315</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>11,433</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>1,371,212</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>1,371,085</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>11,179</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>100,288</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>150,315</font></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>149,303</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>150,000</font></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>810,000</font></td>
 </tr>
 <tr>
  <td width="20%" valign=top><b><i><font size=1>&nbsp;&nbsp; Variable Rate</font></i></b></td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="20%" valign=top bgcolor="#cceeff"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Avalon on the Sound</font></td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff"><font   size=1>7.45%</font></td>
  <td  align=right width="8%" valign=top bgcolor="#cceeff"><font   size=1>2002</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff"><font   size=1>33,636</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>&nbsp;</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>33,636</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom bgcolor="#cceeff"><font   size=1>--</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="20%" valign=top><b><font size=1>Total indebtedness -
  excluding unsecured credit facility</font></b></td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom><font   size=1>$1,729,924</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="8%" valign=bottom><font   size=1>$1,772,144</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>$13,307</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>$136,932</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>$153,538</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="6%" valign=bottom><font   size=1>$152,759</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>$153,704</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="7%" valign=bottom><font   size=1>$1,161,904</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="20%" valign=top>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="6%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
  <td  align=right width="7%" valign=bottom>&nbsp;</td>
 </tr>
</TABLE>





<hr size=2 width="25%" noshade color=black align=left>




<p><sup><font size=1>(1)</font></sup><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font size=1>Includes credit enhancement fees, facility fees,
trustees, etc.</font><font size=1><br>
</font><sup><font size=1>(2)</font></sup><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font size=1>The remaining loan balance was repaid in
connection with the disposition of the property during 2001.</font></p>


<p><u><font size=2>Announced
Redemption of Preferred Stock</font></u></p>

<p><font size=2>On May 11, 2001, the
Company published and mailed notice that it will redeem all 4,455,000
outstanding shares of its 9.00% Series F Cumulative Redeemable Preferred Stock
(the &quot;Series F Preferred Stock&quot;) on June 11, 2001 at a price of
$25.00 per share, plus $0.1625 in accrued and unpaid dividends to the
redemption date, for an aggregate redemption price of $25.1625 per share of
Series F Preferred Stock. The aggregate redemption price for the Series F
Preferred Stock does not exceed the aggregate amount of sale proceeds of other
capital stock issued since the date of issuance of the Series F Preferred
Stock. The Company expects that to the extent cash balances on June 11, 2001
are less than the aggregate redemption price of the Series F Preferred Stock
the Company will increase its borrowings under its unsecured credit
facility.&quot;</font></p>

<p><u><font size=2>Inflation</font></u></p>

<p><font size=2>Substantially all of our leases are for a
term of one year or less.&nbsp; This may
enable us to realize increased rents upon renewal of existing leases or the
beginning of new leases. Short&ndash;term leases generally minimize our risk
from the adverse effects of inflation, although these leases generally permit
residents to leave at the end of the lease term without penalty.&nbsp; We believe that short-term leases, combined
with relatively consistent demand, results in rents and cash flow which provide
an attractive inflation hedge.</font></p>

<PAGE>


<p><u><font size=2>Natural Disasters</font></u></p>

<p><font size=2>Many of our West Coast communities are located
in the general vicinity of active earthquake faults.&nbsp; In July 1998, we obtained a seismic risk analysis from an
engineering firm which estimated the probable maximum
loss (PML) for each of the 60 West Coast communities that we owned at that time
and for each of the five West Coast communities under development at that
time.&nbsp; To establish a PML, the engineers
define a severe earthquake event for the applicable geographic area.&nbsp; The PML is the building damage and business
interruption loss that is estimated to have only a 10% probability of being
exceeded in a fifty year period in the event of such an earthquake.&nbsp; Because a significant number of our
communities are located in the San Francisco Bay Area, the engineers' analysis
assumed an earthquake on the Hayward Fault with a Richter Scale magnitude of
7.1.&nbsp; Based on this earthquake scenario,
the engineers determined the PML at that time to be $113 million for the 60
West Coast communities that we owned at that time and the five West Coast
communities then under development.&nbsp; The
actual aggregate PML could be higher or lower as a result of variations in soil
classifications and structural vulnerabilities.&nbsp; For each community, the engineers' analysis calculated an
individual PML as a percentage of the community's replacement cost and
projected revenues.&nbsp; We cannot assure
you that:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; an
earthquake would not cause damage or losses greater than the PML assessments
indicate;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; future PML levels will not be
higher than the current PML levels described above for our communities located
on the West Coast; or<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; acquisitions or developments
after July 1998 will not have PML assessments indicating the possibility of
greater damage or losses than currently indicated.</font></p>
</dir>

<p><font size=2>In November 2000, we renewed our earthquake insurance,
both for physical damage and lost revenue, with respect to all communities we
owned at that time and all of the communities then under development.&nbsp; For any single occurrence, we have in place
with respect to communities located in California $75 million of coverage with
a five percent deductible.&nbsp; The five
percent deductible is subject to a minimum of $100,000 per occurrence.&nbsp; Earthquake coverage outside of California is
subject to a $200 million limit and a $25,000 deductible per occurrence.&nbsp; In addition, our general liability and
property insurance program provides coverage for public liability and fire
damage.&nbsp; In the event an uninsured
disaster or a loss in excess of insured limits were to occur, we could lose our
capital invested in the affected community, as well as anticipated future
revenue from that community. We would also continue to be obligated to repay
any mortgage indebtedness or other obligations related to the community.&nbsp; Any such loss could materially and adversely
affect our business and our financial condition and results of operations.</font></p>

<p><u><font size=2>Development Communities</font></u></p>

<p><font size=2>As
of March 31, 2001, we had 13 Development Communities under construction.&nbsp; We expect these Development Communities,
when completed, to add a total of 3,692 apartment homes to our portfolio for a
total capitalized cost, including land acquisition costs, of approximately
$737.6 million.&nbsp; Statements regarding
the future development or performance of the Development Communities are
forward-looking statements.&nbsp; We cannot
assure you that:</font></p>

<dir>
<p><font size=2>&#149;</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; we will complete the Development Communities;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; our
budgeted costs or estimates of occupancy rates will be realized;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; our
schedule of leasing start dates or construction completion dates will be
achieved; or<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; future
developments will realize returns comparable to our past developments.</font></p>
</dir>

<p><font size=2>You
should carefully review the discussion under &#147;Risks of Development and
Redevelopment&#148; below.</font></p>

<p><font size=2>We
hold a fee simple ownership interest in 12 of the Development Communities and a
membership interest in a limited liability company that holds a fee simple
interest in one Development Community.&nbsp;
The following table presents a summary of the Development Communities:</font></p>

<p><font size=2>&nbsp;</font></p>

<PAGE>


<p align=center><font size=2>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="28%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom><font   size=2>Number
  of</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>Budgeted</font></td>
  <td  align=center width="11%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom><font   size=2>Estimated</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>Estimated</font></td>
 </tr>
 <tr>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="28%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom><font   size=2>apartment</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>cost&nbsp; (1)</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>Construction</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>Initial</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>completion</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>stabilization</font></td>
 </tr>
 <tr>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="28%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom><font   size=2>homes</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font   size=2>($
  millions)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font   size=2>start</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font   size=2>occupancy
  (2)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font   size=2>date</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font   size=2>date
  (3)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td  align=right width="3%" valign=top>&nbsp;</td>
  <td  align=right width="28%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>1.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Florham Park</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Florham Park, NJ</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>270</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$41.0</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  1999</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1&nbsp; 2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2001</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;2.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Edgewater</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Edgewater, NJ</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>408</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$75.6</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  1999</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2002</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;3.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon Bellevue</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Bellevue, WA</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>202</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$29.9</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  1999</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2001</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;4.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Arlington
  Square I</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Arlington, VA</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>510</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$69.9</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  1999</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2002</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;5.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon on the Sound <i>(4)</i></font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>New Rochelle, NY</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>412</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$92.1</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  1999</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2002</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;6.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Freehold</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Freehold, NJ</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>296</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$33.1</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2002</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;7.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon Harbor</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Stamford, CT</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>323</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$60.7</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2003</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;8.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon Belltown</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Seattle, WA</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>100</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$19.2</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2002</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;9.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon Towers on the
  Peninsula</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Mountain View, CA</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>211</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$65.9</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2002</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>10.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Cahill Park</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>San Jose, CA</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>218</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$50.5</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2003</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>11.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon Riverview I</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Long Island City, NY</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>372</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$102.5</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2003</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>12.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Mission Bay
  North</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>San Francisco, CA</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>250</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$79.5</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2003</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2003</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff"><font size=2>13.</font></td>
  <td width="28%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon Oaks West</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><i><font size=2>Wilmington, MA</font></i></td>
  <td  align=right width="11%" valign=bottom><font   size=2>120</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$17.7</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=top><font   size=2>Q1
  2001</font></td>
  <td  align=right width="11%" valign=top><font   size=2>Q1
  2002</font></td>
  <td  align=right width="11%" valign=top><font   size=2>Q2
  2002</font></td>
  <td  align=right width="11%" valign=top><font   size=2>Q4
  2002</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="28%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="28%" valign=top><font size=2>Total</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>3,692</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom><font   size=2>$737.6</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=top>&nbsp;</td>
 </tr>
</TABLE>

<p><font size=3 face=Times>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></p>




<hr size=2 width="25%" noshade color=black align=left>




<p><font size=2>(1)&nbsp; Total budgeted cost includes all capitalized
costs projected to be incurred to develop the respective Development Community,
including land acquisition costs, construction costs, real estate taxes,
capitalized interest and loan fees, permits, professional fees, allocated
development overhead and other regulatory fees determined in accordance with
generally accepted accounting principles.</font></p>



<p><font size=2>(2)&nbsp; Future initial occupancy dates are
estimates.</font></p>



<p><font size=2>(3)&nbsp; Stabilized operations is defined as the
first full quarter of 95% or greater occupancy after completion of
construction.</font></p>



<p><font size=2>(4)&nbsp; This community will be developed under a
joint venture structure and the joint venture entity (a limited liability
company) has obtained third-party debt financing.&nbsp; Our equity funding of the total budgeted costs is expected to be
$13.3 million.</font></p>


<p align=center><font size=2>&nbsp;</font></p>

<p><u><font size=2>Redevelopment
Communities</font></u></p>

<p><font size=2>As
of March 31, 2001 we had four communities under redevelopment.&nbsp; We expect the total budgeted cost to
complete these Redevelopment Communities, including the cost of acquisition and
redevelopment, to be approximately $324.6 million, of which approximately $73.5
million is the additional capital invested or expected to be invested above the
original purchase cost.&nbsp; Statements
regarding the future redevelopment or performance of the Redevelopment
Communities are forward-looking statements.&nbsp;
We have found that the cost to redevelop an existing apartment community
is more difficult to budget than the cost to develop a new community.&nbsp; Accordingly, we expect that actual costs may
vary over a wider range than for a new development community.&nbsp; We cannot assure you that we will meet our
schedules for redevelopment completion, or that we will meet our budgeted
costs, either individually or in the aggregate.&nbsp; See the discussion under &#147;Risks of Development and Redevelopment&#148;
below.</font></p>

<PAGE>


<p><font size=2>The following presents a
summary of Redevelopment Communities:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="4%" valign=bottom>&nbsp;</td>
  <td  align=center width="20%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="4%" valign=bottom>&nbsp;</td>
  <td  align=center width="20%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom>&nbsp;</td>
  <td  align=center width="25%" colspan=2 valign=bottom><font   size=2>Budgeted
  Cost</font></td>
  <td  align=center width="12%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="4%" valign=bottom>&nbsp;</td>
  <td  align=center width="20%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=bottom><font   size=2><br>
  Number of</font></td>
  <td  align=center width="25%" colspan=2 valign=bottom><font   size=2>($
  millions)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" valign=top><font   size=2><br>
  Estimated</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td  align=right width="20%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=top><font   size=2>apartment</font></td>
  <td  align=center width="12%" valign=bottom><font   size=2>Acquisition</font></td>
  <td  align=center width="12%" valign=bottom><font   size=2>Total</font></td>
  <td  align=center width="12%" valign=bottom><font   size=2>Reconstruction</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>Reconstruction</font></td>
  <td  align=center width="11%" valign=bottom><font   size=2>restabilized</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td  align=right width="20%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" valign=top><font   size=2>homes</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>cost</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>cost
  (1)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="12%" valign=bottom><font   size=2>start</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font   size=2>completion
  (2)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font   size=2>operations
  (3)</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td  align=right width="20%" valign=bottom>&nbsp;</td>
  <td width="12%" valign=top>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="4%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;1.</font></td>
  <td width="20%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Cortez Hill</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td width="20%" valign=top><i><font size=2>San Diego, CA</font></i></td>
  <td  align=right width="12%" valign=bottom><font   size=2>294</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$24.4</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$33.8</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>Q1
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2001</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q3
  2001</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;2.</font></td>
  <td width="20%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Media Center</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td width="20%" valign=top><i><font size=2>Burbank, CA</font></i></td>
  <td  align=right width="12%" valign=bottom><font   size=2>748</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$55.3</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$75.3</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>Q1
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q1
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2002</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;3.</font></td>
  <td width="20%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon at Prudential
  Center</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td width="20%" valign=top><i><font size=2>Boston, MA</font></i></td>
  <td  align=right width="12%" valign=bottom><font   size=2>781</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$133.9</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$154.5</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>Q4
  2000</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q4
  2002</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>Q2
  2003</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top bgcolor="#cceeff"><font size=2>&nbsp;4.</font></td>
  <td width="20%" valign=bottom bgcolor="#cceeff"><font size=2>Avalon Terrace</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td width="20%" valign=top><i><font size=2>Stamford, CT</font></i></td>
  <td  align=right width="12%" valign=bottom><font   size=2>388</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$37.5</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$61.0</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=top><font   size=2>Q4
  2000</font></td>
  <td  align=right width="11%" valign=top><font   size=2>Q3
  2002</font></td>
  <td  align=right width="11%" valign=top><font   size=2>Q1
  2003</font></td>
 </tr>
 <tr>
  <td width="4%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="20%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=top bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="4%" valign=top>&nbsp;</td>
  <td width="20%" valign=top><i><font size=2>Total</font></i></td>
  <td  align=right width="12%" valign=bottom><font   size=2>2,211</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$251.1</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom><font   size=2>$324.6</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="12%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=top>&nbsp;</td>
 </tr>
</TABLE>





<hr size=2 width="25%" noshade color=black align=left>




<p><font size=2>(1)&nbsp; Total budgeted cost includes all capitalized
costs projected to be incurred to redevelop the respective Redevelopment
Community,</font><font size=2>including costs to
acquire the community, reconstruction costs, real estate taxes, capitalized
interest and loan fees, permits,</font><font size=2>professional
fees, allocated redevelopment overhead and other regulatory fees determined in
accordance with GAAP.</font></p>



<p><font size=2>(2)&nbsp; Reconstruction completion dates are
estimates.</font></p>



<p><font size=2>(3)&nbsp; Restabilized operations is defined as the
first full quarter of 95% or greater occupancy after completion of
reconstruction.</font></p>


<p><u><font size=2>Development Rights</font></u></p>

<p><font size=2>As
of March 31, 2001, we are considering the development of 34 new apartment
communities.&nbsp; These Development Rights
range from land owned or under contract for which design and architectural planning
has just begun to land under contract or owned by us with completed site plans
and drawings where construction can begin almost immediately. We estimate that
the successful completion of all of these communities would ultimately add
9,639 upscale apartment homes to our portfolio.&nbsp; At March 31, 2001, the cumulative capitalized costs incurred in
pursuit of the 34 Development Rights, including the cost of land acquired in
connection with eight of the Development Rights, was approximately $90.1
million, of which $68.8 million was land.&nbsp;
Substantially all of these apartment homes will offer features like
those offered by the communities we currently own.</font></p>

<p><font size=2>We
generally hold Development Rights through options to acquire land.&nbsp; The properties comprising the Development
Rights are in different stages of the due diligence and regulatory approval
process.&nbsp; The decisions as to which of
the Development Rights to pursue, if any, or to continue to pursue once an
investment in a Development Right is made are business judgments that we make
after we perform financial, demographic and other analysis. Finally, we
currently intend to limit the percentage of debt used to finance new
developments in order to maintain our general historical practice with respect
to the proportion of debt in our capital structure.&nbsp; Therefore, other financing alternatives may be required to
finance the development of those Development Rights scheduled to start
construction after April 1, 2001.&nbsp;
Although the development of any particular Development Right cannot be
assured, we believe that the Development Rights, in the aggregate, present
attractive potential opportunities for future development and growth of our
FFO.</font></p>

<p><font size=2>Statements
regarding the future development of the Development Rights are forward-looking
statements. We cannot assure you that:</font></p>

<PAGE>


<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; we will succeed in obtaining zoning and other necessary
governmental approvals or the financing required to develop these communities,
or that we will decide to develop any particular community; or</font></p>
</dir>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; if we undertake construction of any
particular community, that we will complete construction at the total budgeted
cost assumed in the financial projections below.</font></p>
</dir>

<PAGE>


<p><font size=2>The following presents a
summary of the 34 Development Rights we are currently pursuing:</font></p>

<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td  align=center width=60 valign=bottom>&nbsp;</td>
  <td  align=center width=500 valign=bottom>&nbsp;</td>
  <td  align=center width=120 valign=top>&nbsp;</td>
  <td  align=center width=150 valign=bottom>&nbsp;</td>
  <td  align=center width=153 valign=bottom><font   size=2>Total</font></td>
 </tr>
 <tr>
  <td  align=center width=60 valign=bottom>&nbsp;</td>
  <td  align=center width=500 valign=bottom>&nbsp;</td>
  <td  align=center width=120 valign=top>&nbsp;</td>
  <td  align=center width=150 valign=bottom><font   size=2>Estimated</font></td>
  <td  align=center width=153 valign=bottom><font   size=2>budgeted</font></td>
 </tr>
 <tr>
  <td  align=center width=60 valign=bottom>&nbsp;</td>
  <td  align=center width=500 valign=bottom>&nbsp;</td>
  <td  align=center width=120 valign=top>&nbsp;</td>
  <td  align=center width=150 valign=bottom><font   size=2>number</font></td>
  <td  align=center width=153 valign=bottom><font   size=2>costs</font></td>
 </tr>
 <tr>
  <td  align=center width=60 valign=bottom>&nbsp;</td>
  <td  align=center width=500 valign=bottom><font   size=2>Location</font>
<hr size=2 width="95%" noshade color=black align=center></td>
  <td  align=center width=120 valign=top>&nbsp;</td>
  <td  align=center width=150 valign=bottom><font   size=2>of
  homes</font>
<hr size=2 width="95%" noshade color=black align=center></td>
  <td  align=center width=153 valign=bottom><font   size=2>($
  millions)</font>
<hr size=2 width="95%" noshade color=black align=center></td>
 </tr>
 <tr>
  <td width=60 valign=top>&nbsp;</td>
  <td  align=center width=500 valign=bottom>&nbsp;</td>
  <td  align=center width=120 valign=top>&nbsp;</td>
  <td  align=center width=150 valign=bottom>&nbsp;</td>
  <td  align=center width=153 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>1.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Washington, D.C.</font></td>
  <td  align=right width=120 valign=bottom bgcolor="#cceeff"><font   size=2>(1)</font></td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>209</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>$43</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>2.</font></td>
  <td width=500 valign=bottom><font size=2>Lawrence, NJ</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>312</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>43</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>3.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Weymouth, MA</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>304</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>38</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>4.</font></td>
  <td width=500 valign=bottom><font size=2>New Canaan, CT</font></td>
  <td  align=right width=120 valign=bottom><font   size=2>(1)
  (2)</font></td>
  <td  align=right width=150 valign=bottom><font   size=2>104</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>29</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>5.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Marlborough, MA</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>156</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>21</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>6.</font></td>
  <td width=500 valign=bottom><font size=2>Seattle, WA</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>154</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>50</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>7.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Westborough, MA</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>280</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>35</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>8.</font></td>
  <td width=500 valign=bottom><font size=2>Darien, CT</font></td>
  <td  align=right width=120 valign=bottom><font   size=2>(1)</font></td>
  <td  align=right width=150 valign=bottom><font   size=2>189</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>38</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>9.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>North Bethesda, MD</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>386</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>46</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>10.</font></td>
  <td width=500 valign=bottom><font size=2>Arlington II, VA</font></td>
  <td  align=right width=120 valign=bottom><font   size=2>(1)</font></td>
  <td  align=right width=150 valign=bottom><font   size=2>332</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>43</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>11.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Wilton, CT</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>113</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>23</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>12.</font></td>
  <td width=500 valign=bottom><font size=2>Andover, MA</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>140</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>21</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>13.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Newton, MA</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>294</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>54</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>14.</font></td>
  <td width=500 valign=bottom><font size=2>Oakland, CA</font></td>
  <td  align=right width=120 valign=bottom><font   size=2>(1)</font></td>
  <td  align=right width=150 valign=bottom><font   size=2>176</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>36</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>15.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Danbury, CT</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>244</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>29</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>16.</font></td>
  <td width=500 valign=bottom><font size=2>Los Angeles, CA</font></td>
  <td  align=right width=120 valign=bottom><font   size=2>(1)</font></td>
  <td  align=right width=150 valign=bottom><font   size=2>309</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>59</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>17.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Glendale, CA</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>223</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>49</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>18.</font></td>
  <td width=500 valign=bottom><font size=2>San Francisco, CA</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>303</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>106</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>19.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Washington, D.C.</font></td>
  <td  align=right width=120 valign=bottom bgcolor="#cceeff"><font   size=2>(1)</font></td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>144</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>30</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>20.</font></td>
  <td width=500 valign=bottom><font size=2>Orange, CT</font></td>
  <td  align=right width=120 valign=bottom><font   size=2>(1)</font></td>
  <td  align=right width=150 valign=bottom><font   size=2>168</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>20</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>21.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Hingham, MA</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>270</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>44</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>22.</font></td>
  <td width=500 valign=bottom><font size=2>Bellevue, WA</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>330</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>61</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>23.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Coram, NY</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>450</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>65</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>24.</font></td>
  <td width=500 valign=bottom><font size=2>North Potomac, MD</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>520</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>61</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>25.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Bedford, MA</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>128</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>18</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>26.</font></td>
  <td width=500 valign=bottom><font size=2>Cohasset, MA</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>240</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>38</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>27.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>New Rochelle, NY Phase
  II and III</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>588</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>137</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>28.</font></td>
  <td width=500 valign=bottom><font size=2>Stratford, CT</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>160</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>18</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>29.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Milford, CT</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>310</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>38</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>30.</font></td>
  <td width=500 valign=bottom><font size=2>Long Island City, NY
  Phase II and III</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>539</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>162</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>31.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Greenburgh, NY Phase
  II and III</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>766</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>139</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>32.</font></td>
  <td width=500 valign=bottom><font size=2>Florham Park, NJ</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>230</font></td>
  <td  align=right width=153 valign=bottom><font   size=2>46</font></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff"><font size=2>33.</font></td>
  <td width=500 valign=bottom bgcolor="#cceeff"><font size=2>Hopewell, NJ Phase I</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>280</font></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>40</font></td>
 </tr>
 <tr>
  <td width=60 valign=top><font size=2>34.</font></td>
  <td width=500 valign=top><font size=2>Hopewell, NJ Phase II</font></td>
  <td  align=right width=120 valign=top>&nbsp;</td>
  <td  align=right width=150 valign=bottom><font   size=2>288</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width=153 valign=bottom><font   size=2>43</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width=60 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width=500 valign=top bgcolor="#cceeff"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Totals</font></td>
  <td  align=right width=120 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width=150 valign=bottom bgcolor="#cceeff"><font   size=2>9,639</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width=153 valign=bottom bgcolor="#cceeff"><font   size=2>$1,723</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>
</TABLE>





<hr size=2 width="25%" noshade color=black align=left>




<p><font size=2>(1)&nbsp; Company owns land, but construction has not
yet begun.</font></p>



<p><font size=2>(2)&nbsp; The land is currently owned by Town Close
Associates Limited Partnership in which we are a majority partner.&nbsp; It is currently anticipated that the land
seller will retain a minority limited partner interest.</font></p>


<i><PAGE>
</i>

<p><u><font size=2>Risks of Development and
Redevelopment</font></u></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
intend to continue to pursue the development and redevelopment of apartment
home communities.&nbsp; Our development and
redevelopment activities may be exposed to the following industry risks:</font></p>

<dir>
<p><font size=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; we may abandon opportunities we have
already begun to explore based on further review of, or changes in, financial,
demographic, environmental or other factors;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; we may encounter liquidity
constraints, including the unavailability of financing on favorable terms for
the development or redevelopment of a community;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; we
may be unable to obtain, or we may experience delays in obtaining, all
necessary zoning, land-use, building, occupancy, and other required
governmental permits and authorizations;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; we
may incur construction or reconstruction costs for a community that exceed our
original estimates due to increased materials, labor or other expenses, which
could make completion or redevelopment of the community uneconomical;<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; occupancy
rates and rents at a newly completed or redeveloped community may fluctuate
depending on a number of factors, including market and general economic
conditions, and may not be sufficient to make the community profitable; and<br>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; we may be unable to complete
construction and lease-up on schedule, resulting in increased debt service
expense and construction costs.</font></p>
</dir>

<p><font size=2>The occurrence of any of the events described above could
adversely affect our ability to achieve our projected yields on communities
under development or redevelopment and could affect our payment of
distributions to our stockholders.</font></p>

<p><font size=2>Construction costs
are projected by us based on market conditions prevailing in the community&#146;s
market at the time our budgets are prepared and reflect changes to those market
conditions that we anticipated at that time.&nbsp;
Although we attempt to anticipate changes in market conditions, we
cannot predict with certainty what those changes will be.&nbsp; Construction costs have been increasing and,
for some of our Development Communities, the total construction costs have been
or are expected to be higher than the original budget.&nbsp; Total budgeted cost includes all capitalized
costs projected to be incurred to develop the respective Development or
Redevelopment Community, including:</font></p>

<dir><dir>
<p><font size=3 face=Times>&#149;</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; land and/or property acquisition costs;</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; construction
costs or reconstruction costs;</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; real estate
taxes;</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; capitalized
interest;</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; loan fees;</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; permits;</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; professional
fees;</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; allocated
development or redevelopment overhead; and</font><font size=2><br>
</font>&#149;<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; other
regulatory fees determined in accordance with generally accepted accounting
principles.</font></p>
</dir></dir>

<p><font size=2>We believe that, in
the aggregate, we will still achieve our projected yield (i.e., return on invested
capital) for those communities experiencing costs in excess of the original
budget because of increases in prevailing market rents.&nbsp; We believe that we could experience similar
increases in construction costs and market rents with respect to other development
communities resulting in total construction costs that exceed original
budgets.&nbsp; Likewise, costs to redevelop
communities that have been acquired have, in some cases, exceeded our original
estimates and similar increases in costs may be experienced in the future.&nbsp; We cannot assure that market rents in effect
at the time new development communities or redeveloped communities complete
lease-up will be sufficient to fully offset the effects of any increased construction
or reconstruction costs.</font></p>

<PAGE>


<p><u><font size=2 face=Times>Capitalized Interest</font></u></p>

<p><font size=2 face=Times>In accordance with generally
accepted accounting principles, we capitalize interest expense during
construction or reconstruction until a building obtains a certificate of
occupancy.&nbsp; Thereafter, the interest
allocated to that completed apartment home within the community is
expensed.&nbsp; Capitalized interest totaled
$5,597,000 and $3,494,000 for the three months ended March 31, 2001 and 2000,
respectively.</font></p>

<PAGE>


<p><a name="Item_3__Quantitative_and_Qualitative_Dis"><font size=2>Item 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></a><font size=2>Quantitative and</font><font size=2> Qualitative Disclosures About Market Risk</font>
</p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There
have been no material changes to our exposures to market risk since December
31, 2000.</font></p>

<p><a name="Part_II__OTHER_INFORMATION"><b><font size=2>Part II.</font></b></a><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>OTHER
INFORMATION</b></font></p>

<p><a name="Item_1__Legal_Proceedings"><font size=2>Item
1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Proceedings</font></a></p>

<dir><dir>
<p><font size=2>We are involved in certain ordinary routine litigation
incidental to the conduct of our business.&nbsp;
In addition, as reported in the Company&#146;s Form 10-K for the year ended
December 31, 1999,&nbsp; we are </font><font size=2>currently
involved in litigation with York Hunter Construction, Inc., and National Union
Fire Insurance Company. While the outcome of
such litigation cannot be predicted with certainty, we do not expect any
current litigation, including the litigation with York Hunter and National
Union,&nbsp; to have a material effect on our
business or financial condition.</font></p>
</dir></dir>

<p><a name="Item_2__Changes_in_Securities"><font size=2>Item 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes
in Securities</font></a></p>

<dir><dir>
<p><font size=2>During
the three months ended March 31, 2001, the Company issued 762 shares of common
stock in exchange for units of limited partnership held by a limited partner of
Bay Countrybrook, L.P., a DownREIT partnership subsidiary of the Company.&nbsp; These shares were issued in reliance on an
exemption from registration under Section 4(2) of the Securities Act of 1933.
The Company is relying on the exemption based upon factual representations
received from the limited partner who received these shares.</font></p>
</dir></dir>

<p><a name="Item_3__Defaults_Upon_Senior_Securities"><font size=2>Item 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Defaults
Upon Senior Securities</font></a></p>

<dir><dir>
<p><font size=2>None</font></p>
</dir></dir>

<p><a name="Item_4__Submission_of_Matters_to_a_Vote_"><font size=2>Item 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Submission
of Matters to a Vote of Security Holders</font></a></p>

<dir><dir>
<p><font size=2>None</font></p>
</dir></dir>

<p><a name="Item_5__Other_Information"><font size=2>Item
5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Information</font></a></p>

<dir><dir>
<p><font size=2>At the Company&#146;s 2001 Annual Meeting of Stockholders,
held on May 8, 2001, stockholders approved all three proposals set forth in the
Company&#146;s proxy statement for such meeting.&nbsp;
Specifically, stockholders:</font></p>
</dir></dir>

<dir><dir>
<p><font size=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; elected
the nine nominees who were presented for election as directors;</font></p>
</dir></dir>

<dir><dir>
<p><font size=2>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; approved
an amendment to the Company&#146;s 1994 Stock Incentive Plan, as amended and
restated; and</font></p>
</dir></dir>

<dir><dir>
<p><font size=2>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; approved
a stockholder proposal relating to the Company&#146;s shareholder rights agreement.</font></p>
</dir></dir>

<PAGE>


<dir><dir>
<p><font size=2>Each matter put forth for a vote of stockholders received
the affirmative vote of stockholders holding more than a majority of all
outstanding shares of common stock.</font></p>
</dir></dir>

<p><a name="Item_6__Exhibits_and_Reports_on_Form_8K"><font size=2>Item 6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits
and Reports on Form 8-K</font></a></p>

<dir><dir>
<p><font size=2>(<b>a)&nbsp; Exhibits</b></font></p>
</dir></dir>

<p><u><font size=2>Exhibit
No.</font></u><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Description</u></font></p>

<p><font size=2>3(i).1&nbsp;&nbsp; &#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Articles of Amendment and Restatement of
Articles of Incorporation of AvalonBay Communities (the &#147;Company&#148;), dated as of
June 4, 1998. (Incorporated by reference to Exhibit 3(i).1 to Form 10-Q of the
Company filed August 14, 1998.)</font></p>

<p><font size=2>3(i).2 &nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Articles of Amendment, dated as of
October 2, 1998. (Incorporated by reference to Exhibit 3.1(ii) to Form 8-K of
the Company filed on October 6, 1998.)</font></p>

<p><font size=2>3(i).3&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Articles Supplementary, dated as of
October 13, 1998, relating to the 8.70% Series H Cumulative Redeemable
Preferred Stock. (Incorporated by reference to Exhibit 1 to Form 8-A of the
Company filed October 14, 1998.)</font></p>

<p><font size=2>3(ii).1  &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bylaws of the Company, as amended
and restated, dated as of July 24, 1998. (Incorporated by reference to Exhibit
3(ii).1 to Form 10-Q of the Company filed August 14, 1998.)</font></p>

<p><font size=2>3(ii).2&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment to Bylaws of the Company,
dated February 10, 1999.&nbsp; (Incorporated
by reference to Exhibit 3(ii).2 to Form 10-K of the Company filed March 31,
1999.)</font></p>

<p><font size=2>3(ii).3&nbsp; &#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment to Bylaws of the Company,
dated May 5, 1999.&nbsp;&nbsp; (Incorporated by
reference to Exhibit 3(ii).3 to Form 10-Q of the Company filed on August 16,
1999.)</font></p>

<p><font size=2>4.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Indenture of Avalon Properties,
Inc. (hereinafter referred to as &#147;Avalon Properties&#148;) dated as of September 18,
1995. (Incorporated by reference to Form 8-K of Avalon Properties dated
September 18, 1995.)</font></p>

<p><font size=2>4.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Supplemental Indenture of
Avalon Properties dated as of September 18, 1995. (Incorporated by reference to
Avalon Properties&#146; Current Report on Form 8-K dated September 18, 1995.)</font></p>

<p><font size=2>4.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Supplemental Indenture of
Avalon Properties dated as of December 16, 1997. (Incorporated by reference to
Avalon Properties&#146; Current Report on Form 8-K filed January 26, 1998.)</font></p>

<p><font size=2>4.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Third Supplemental Indenture of
Avalon Properties dated as of January 22, 1998. (Incorporated by reference to
Avalon Properties&#146; Current Report on Form 8-K filed on January 26, 1998.)</font></p>

<PAGE>


<p><font size=2>4.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Indenture, dated as of January 16,
1998, between the Company and State Street Bank and Trust Company, as Trustee.
(Incorporated by reference to Exhibit 4.1 to Form 8-K of the Company filed on
January 21, 1998.)</font></p>

<p><font size=2>4.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Supplemental Indenture, dated
as of January 20, 1998, between the Company and the Trustee. (Incorporated by
reference to Exhibit 4.2 to Form 8-K of the Company filed on January 21, 1998.)</font></p>

<p><font size=2>4.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Supplemental Indenture,
dated as of July 7, 1998, between the Company and the Trustee. (Incorporated by
reference to Exhibit 4.2 to Form 8-K of the Company filed on July 9, 1998.)</font></p>

<p><font size=2>4.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Third Supplemental Indenture, dated
as of December 21, 1998 between the Company and the Trustee, including forms of
Floating Rate Note and Fixed Rate Note (Incorporated by reference to Exhibit
4.4 to Form 8-K filed on December 21, 1998.)</font></p>

<p><font size=2>4.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amended and Restated Third Supplemental
Indenture, dated as of July 10, 2000 between the Company and the Trustee,
including forms of Floating Rate Note and Fixed Rate Note.&nbsp; (Incorporated by reference to Exhibit 4.4 to
the Company&#146;s Current Report on Form 8-K filed on July 11, 2000.)</font></p>

<p><font size=2>4.10&nbsp;&nbsp;&nbsp;&nbsp; &#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend Reinvestment and Stock Purchase
Plan of the Company filed on September 14, 1999.&nbsp; (Incorporated by reference to Form S-3 of the Company, File No.
333-87063.)</font></p>

<p><font size=2>4.11&nbsp;&nbsp;&nbsp;&nbsp; &#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment to the Company&#146;s Dividend
Reinvestment and Stock Purchase Plan filed on December 17, 1999.&nbsp; (Incorporated by reference to the Prospectus
Supplement filed pursuant to Rule 424(b)(2) of the Securities Act of 1933 on
December 17, 1999.)</font></p>

<p><font size=2>4.12 &nbsp;&nbsp;&nbsp; &#151;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Rights Agreement, dated
as of March 9, 1998 (the &#147;Rights Agreement&#148;), between the Company and First
Union National Bank (as successor to American Stock Transfer and Trust Company)
as Rights Agent (including the form of Rights Certificate as Exhibit B).
(Incorporated by reference to Exhibit 4.1 to Form 8-A of the Company filed
March 11, 1998.)</font></p>

<p><font size=2>4.13&nbsp;&nbsp;&nbsp;&nbsp; &#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment No. 1 to the Rights Agreement,
dated as of February 28, 2000, between the Company and the Rights Agent.&nbsp; (Incorporated by reference to Exhibit 4.2 of
Form 8-A/A of the Company filed February 28, 2000.)</font></p>

<p><font size=2>12.1 &nbsp;&nbsp;&nbsp; &#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  Statements re: Computation of Ratios.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>(b) Reports
on Form 8-K</b></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; None</font></p>

<PAGE>


<p align=center><a name=SIGNATURES><b><font size=2>SIGNATURES</font></b></a></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.</font></p>

<p align=center><b><font size=2>AVALONBAY COMMUNITIES, INC.</font></b></p>

<p><font size=2>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="9%" valign=top><font size=2>Date:</font></td>
  <td width="47%" valign=top><font size=2>May 14, 2001<br><br></font></td>
  <td width="43%" valign=top><font size=2>/s/ Bryce Blair</font>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="9%" valign=top>&nbsp;</td>
  <td width="47%" valign=top>&nbsp;</td>
  <td  align=right width="43%" valign=top><dir><dir><font size=2>Bryce
  Blair</font></dir></dir></td>
 </tr>
 <tr>
  <td width="9%" valign=top>&nbsp;</td>
  <td width="47%" valign=top>&nbsp;</td>
  <td  align=right width="43%" valign=top><font size=2>President
  and Chief Executive Officer</font></td>
 </tr>
 <tr>
  <td width="9%" valign=top>&nbsp;</td>
  <td width="47%" valign=top>&nbsp;</td>
  <td  align=right width="43%" valign=top>&nbsp;</td>
 </tr>
 <tr height=14>
  <td width="9%" height=14 valign=top><font size=2>Date:</font></td>
  <td width="47%" height=14 valign=top><font size=2>May 14, 2001<br><br></font></td>
  <td width="43%" height=14 valign=top><font size=2>/s/ Thomas J Sargeant</font>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="9%" valign=top>&nbsp;</td>
  <td width="47%" valign=top>&nbsp;</td>
  <td  align=right width="43%" valign=top><font size=2>Thomas
  J. Sargeant</font></td>
 </tr>
 <tr>
  <td width="9%" valign=top>&nbsp;</td>
  <td width="47%" valign=top>&nbsp;</td>
  <td  align=right width="43%" valign=top><font size=2>Executive
  Vice President,</font></td>
 </tr>
 <tr>
  <td width="9%" valign=top>&nbsp;</td>
  <td width="47%" valign=top>&nbsp;</td>
  <td  align=right width="43%" valign=top><font size=2>Chief
  Financial Officer and Treasurer</font></td>
 </tr>
</TABLE>

<p align=right><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

</div>

</body>

</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>2
<FILENAME>j0631_exh121.htm
<TEXT>

<HTML>

<head>
<TITLE>Prepared by MerrillDirect</TITLE>
</head>

<body>

<div>


<p><b><font size=2 color=black>&nbsp;Exhibit
12.1 </font></b></p>



<p><font size=2 color=black>&nbsp;</font></p>



<p align=center><b><font size=2 color=black>AVALONBAY
COMMUNITIES, INC. <br>
&nbsp;RATIOS OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS</font></b></p>


<p><font size=2>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Three Months</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
 </tr>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
 </tr>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>March 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
 </tr>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>2001</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>2000</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>1999</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>1998</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>1997</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>1996</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;Net Operating Income</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$51,599</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$210,604</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$172,276</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$123,535</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$64,916</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$51,651</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;(Less) Nonrecurring item:</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2>Gain on sale</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(4,901)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(40,779)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(47,093)</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>$(25,270)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(677)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(7,850)</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2>Non-recurring charges</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>16,782</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;(Plus) Extraordinary item:</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Unamortized
  loan fee write-off</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$-</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$-</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$-</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>$245</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$1,183</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$2,356</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top><font size=2 color=black>&nbsp;(Plus) Fixed charges:</font></td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Portion of
  rents representative</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="10%" colspan=2 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="23%" valign=top bgcolor="#cceeff"><font size=2 color=black>of the
  interest factor</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$123</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$461</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$526</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$293</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$172</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$150</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Interest
  expense</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>23,124</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>83,609</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>74,699</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>54,650</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>16,977</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>9,545</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Interest
  capitalized</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>5,597</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>18,328</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>21,888</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>14,724</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>9,024</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>12,883</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Debt cost
  amortization</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>760</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>2,924</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>2,624</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>2,068</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>700</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>1,842</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Preferred
  dividend</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>9,945</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>39,779</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>39,779</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>28,132</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>19,656</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>10,422</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="10%" colspan=2 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="23%" valign=top bgcolor="#cceeff"><font size=2 color=black>Total
  fixed charges (1)</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$39,549</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$145,101</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$139,516</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$99,867</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$46,529</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$34,842</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;(Less):</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Interest
  capitalized</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$5,597</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$18,328</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$21,888</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>$14,724</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$9,024</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$12,883</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Preferred
  dividend</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>9,945</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>39,779</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>39,779</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>28,132</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>19,656</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>10,422</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;Adjusted earnings (2)</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$70,705</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$256,819</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$219,814</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$155,521</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$83,271</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$57,694</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;Ratio (2 divided by 1)</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>1.79</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>1.77</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>1.58</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>1.56</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>1.79</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>1.66</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>

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  <td width=122></td>
  <td width=121></td>
  <td width=122></td>
  <td width=121></td>
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</TABLE>

<p><font size=2>&nbsp;</font></p>

<PAGE>


<p align=center><b><font size=2 color=black>AVALONBAY COMMUNITIES, INC.<br>
RATIOS OF EARNINGS TO FIXED CHARGES</font></b></p>

<p><font size=2>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Three Months</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>Year</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Year</font></td>
 </tr>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>Ended</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>Ended</font></td>
 </tr>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>March 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>December 31,</font></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>December 31,</font></td>
 </tr>
 <tr>
  <td  align=center width="34%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>2001</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>2000</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>1999</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>1998</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="11%" valign=bottom><font size=2 color=black>1997</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=center width="10%" valign=bottom><font size=2 color=black>1996</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;Net Operating Income</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$51,599</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$210,604</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$172,276</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$123,535</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$64,916</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$51,651</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;(Less) Nonrecurring item:</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Gain on
  sale</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(4,901)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(40,779)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(47,093)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(25,270)</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>$(677)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$(7,850)</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Non-recurring
  charges</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>16,782</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>-</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;(Plus) Extraordinary item:</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Unamortized
  loan fee write-off</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$-</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$-</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$-</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$245</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>$1,183</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$2,356</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top><font size=2 color=black>&nbsp;(Plus) Fixed charges:</font></td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Portion of
  rents representative</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="10%" colspan=2 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="23%" valign=top bgcolor="#cceeff"><font size=2 color=black>of the
  interest factor</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$123</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$461</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$526</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$293</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$172</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$150</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Interest
  expense</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>23,124</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>83,609</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>74,699</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>54,650</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>16,977</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>9,545</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Interest
  capitalized</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>5,597</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>18,328</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>21,888</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>14,724</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>9,024</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>12,883</font></td>
 </tr>
 <tr>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top><font size=2 color=black>Debt cost
  amortization</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>760</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>2,924</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>2,624</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>2,068</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>700</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>1,842</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="10%" colspan=2 valign=top>&nbsp;</td>
  <td width="23%" valign=top><font size=2 color=black>Total
  fixed charges (1)</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$29,604</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$105,322</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$99,737</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$71,735</font></td>
  <td  align=right width="11%" valign=bottom><font size=2 color=black>$26,873</font></td>
  <td  align=right width="10%" valign=bottom><font size=2 color=black>$24,420</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top><font size=2 color=black>&nbsp;(Less):</font></td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="26%" colspan=2 valign=top bgcolor="#cceeff"><font size=2 color=black>Interest
  capitalized</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$5,597</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$18,328</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$21,888</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$14,724</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$9,024</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$12,883</font></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;Adjusted earnings (2)</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$70,705</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$256,819</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$219,814</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$155,521</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$83,271</font>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>$57,694</font>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="11%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="34%" colspan=3 valign=top bgcolor="#cceeff"><font size=2 color=black>&nbsp;Ratio (2 divided by 1)</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>2.39</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>2.44</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>2.20</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>2.17</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>3.10</font>
<hr size=3 width="95%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font size=2 color=black>2.36</font>
<hr size=3 width="95%" noshade color=black align=right></td>
 </tr>

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