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Organization, Basis of Presentation and Significant Accounting Policies | 6 Months Ended
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Jun. 30, 2014
Accounting Policies [Abstract] |
Organization, Basis of Presentation and Significant Accounting Policies | Organization, Basis of Presentation and Significant Accounting Policies Organization and Basis of Presentation AvalonBay Communities, Inc. (the “Company,” which term, unless the context otherwise requires, refers to AvalonBay Communities, Inc. together with its consolidated subsidiaries), is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986 (the “Code”). The Company focuses on the development, acquisition, ownership and operation of apartment communities primarily in high barrier to entry markets of the United States. The Company’s primary markets are located in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest and the Northern and Southern California regions of the United States. At June 30, 2014, the Company owned or held a direct or indirect ownership interest in 243 operating apartment communities containing 72,767 apartment homes in 11 states and the District of Columbia, of which six communities containing 2,094 apartment homes were under reconstruction. In addition, the Company owned or held a direct or indirect ownership interest in 32 communities under construction that are expected to contain an aggregate of 9,581 apartment homes when completed. The Company also owned or held a direct or indirect ownership interest in land or rights to land on which the Company expects to develop an additional 40 communities that, if developed as expected, will contain an estimated 11,350 apartment homes. The interim unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s 2013 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the operating results for the full year. Management believes the disclosures are adequate to ensure the information presented is not misleading. 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. Capitalized terms used without definition have the meaning as provided elsewhere in this Form 10-Q. Earnings per Common Share Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share (“EPS”). Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company’s earnings per common share are determined as follows (dollars in thousands, except per share data):
| For the three months ended |  | For the six months ended
| 6/30/2014 |  | 6/30/2013 |  | 6/30/2014 |  | 6/30/2013
Basic and diluted shares outstanding |  |  |  |  |  |  |  |  |
Weighted average common shares - basic | 129,856,335 |  |  | 129,179,471 |  |  | 129,574,118 |  |  | 124,456,232 |
Weighted average DownREIT units outstanding | 7,500 |  |  | 7,500 |  |  | 7,500 |  |  | 7,500 |
Effect of dilutive securities | 384,486 |  |  | 408,428 |  |  | 356,614 |  |  | 415,931 |
Weighted average common shares - diluted | 130,248,321 |  |  | 129,595,399 |  |  | 129,938,232 |  |  | 124,879,663 |
Calculation of Earnings per Share - basic |  |  |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 158,086 |  |  | $ | 36,218 |  |  | $ | 299,825 |  |  | $ | 111,648 |
Net income allocated to unvested restricted shares | (254 | ) |  | (59 | ) |  | (487 | ) |  | (193 | )
Net income attributable to common stockholders, adjusted | $ | 157,832 |  |  | $ | 36,159 |  |  | $ | 299,338 |  |  | $ | 111,455 |
Weighted average common shares - basic | 129,856,335 |  |  | 129,179,471 |  |  | 129,574,118 |  |  | 124,456,232 |
Earnings per common share - basic | $ | 1.22 |  |  | $ | 0.28 |  |  | $ | 2.31 |  |  | $ | 0.90 |
Calculation of Earnings per Share - diluted |  |  |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 158,086 |  |  | $ | 36,218 |  |  | $ | 299,825 |  |  | $ | 111,648 |
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations | 9 |  |  | 8 |  |  | 17 |  |  | 16 |
Adjusted net income available to common stockholders | $ | 158,095 |  |  | $ | 36,226 |  |  | $ | 299,842 |  |  | $ | 111,664 |
Weighted average common shares - diluted | 130,248,321 |  |  | 129,595,399 |  |  | 129,938,232 |  |  | 124,879,663 |
Earnings per common share - diluted | $ | 1.21 |  |  | $ | 0.28 |  |  | $ | 2.31 |  |  | $ | 0.89 |
Certain options to purchase shares of common stock in the amounts of 243,326 and 606,318 were outstanding at June 30, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per share because such options were anti-dilutive for the respective quarters. The Company is required to estimate the forfeiture of stock options and recognize compensation cost net of the estimated forfeitures. The estimated forfeitures included in compensation cost are adjusted to reflect actual forfeitures at the end of the vesting period. The forfeiture rate at June 30, 2014 is based on the average forfeiture activity over a period equal to the estimated life of the stock options, and was 1.1%. The application of estimated forfeitures did not materially impact compensation expense for the three and six months ended June 30, 2014 or 2013. Derivative Instruments and Hedging Activities The Company enters into interest rate swap and interest rate cap agreements (collectively, “Hedging Derivatives”) for interest rate risk management purposes and in conjunction with certain variable rate secured debt to satisfy lender requirements. The Company does not enter into Hedging Derivatives transactions for trading or other speculative purposes. The Company assesses both at inception, and on an on-going basis, the effectiveness of qualifying cash flow and fair value hedges. Hedge ineffectiveness is reported as a component of general and administrative expenses. The fair values of Hedging Derivatives that are in an asset position are recorded in prepaid expenses and other assets. The fair value of Hedging Derivatives that are in a liability position are included in accrued expenses and other liabilities. Fair value changes for derivatives that are not in qualifying hedge relationships are reported as a component of interest expense, net. For Hedging Derivatives that the Company has determined qualify as effective cash flow hedges, the Company has recorded the effective portion of cumulative changes in the fair value of Hedging Derivatives in other comprehensive income. Amounts recorded in other comprehensive income will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow. The effective portion of the change in fair value of Hedging Derivatives that the Company has determined qualified as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding debt being hedged. Legal and Other Contingencies The Company is involved in various claims and/or administrative proceedings that arise in the ordinary course of the Company’s business. While no assurances can be given, the Company does not believe that any of these outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position or results of operations. Acquisitions of Investments in Real Estate The Company accounts for acquisitions of investments in real estate in accordance with the authoritative guidance for the initial measurement, which requires the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree to be recognized at fair value. Typical assets and liabilities acquired include land, building, furniture, fixtures, and equipment, and identified intangible assets and liabilities, consisting of the value of above or below market leases and in-place leases. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes various sources, including its own analysis of recently acquired and existing comparable properties in its portfolio and other market data. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. 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. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to amounts in prior years’ financial statements to conform to current year presentations as a result of discontinued operations and changes in held for sale classification as described in Note 7, “Real Estate Disposition Activities.” Recently Adopted Accounting Standards In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-08, guidance updating the accounting and reporting for discontinued operations. Under the recently issued guidance, only disposals representing a strategic shift in operations (e.g., a disposal of a major geographic area, a major line of business or a major equity method investment) will be presented as discontinued operations. Additionally, the final standard requires expanded disclosures about dispositions that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations, as well as disposals of a significant part of an entity that does not qualify for discontinued operations reporting. The final standard is effective in the first quarter of 2015 and allows for early adoption. The Company adopted the guidance as of January 1, 2014, as discussed in Note 7, “Real Estate Disposition Activities.” In May 2014, the Financial Accounting Standards Board issued a revenue recognition standard that will result in companies recognizing revenue from contracts when control for the service or product that is the subject of the contract is transferred from the seller to the buyer. The Company will be required to apply the new standard in the first quarter of 2017 and is assessing whether the new standard will have a material effect on its financial position or results of operations.

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- Definition The entire disclosure for the general note to the financial statements for the reporting entity which may include, descriptions of the basis of presentation, business description, significant accounting policies, consolidations, reclassifications, new pronouncements not yet adopted and changes in accounting principles. + References No definition available. + Details
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