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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______
Commission File Number: 1-12672
AVALONBAY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)

Maryland |  | 77-0404318
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

4040 Wilson Blvd., Suite 1000
Arlington, Virginia 22203
(Address of principal executive offices) (Zip Code)
(703) 329-6300
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.01 per share |  | AVB |  | New York Stock Exchange

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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

| Large accelerated filer | ☒ |  | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ |  | Smaller reporting company | ☐ |
|  |  |  | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:
142,185,893 shares of common stock, par value $0.01 per share, were outstanding as of April 30, 2024.

Table of Contents
AVALONBAY COMMUNITIES, INC.
FORM 10-Q
INDEX

| PAGE
PART I - FINANCIAL INFORMATION |
ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
| CONDENSED CONSOLIDATED BALANCE SHEETS AS OF M ARCH 3 1, 202 4 (UNAUDITED) AND DECEMBER 31, 20 23 | 1
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 3 1, 202 4 AND 20 23 | 2
| CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023 | 3
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 3 1, 202 4 AND 202 3 | 4
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 23
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 42
ITEM 4. CONTROLS AND PROCEDURES | 42
PART II - OTHER INFORMATION |
ITEM 1. LEGAL PROCEEDINGS | 42
ITEM 1A. RISK FACTORS | 42
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 43
ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 43
ITEM 4. MINE SAFETY DISCLOSURES | 43
ITEM 5. OTHER INFORMATION | 43
ITEM 6. EXHIBITS | 44
SIGNATURES | 45

Table of Contents
AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

| March 31, 2024 |  | December 31, 2023
| (unaudited) |  |
ASSETS |  |  |
Real estate: |  |  |
Land and improvements | $ | 4,742,140 |  |  | $ | 4,720,331 |
Buildings and improvements | 19,643,649 |  |  | 19,438,195 |
Furniture, fixtures and equipment | 1,275,563 |  |  | 1,238,330 |
| 25,661,352 |  |  | 25,396,856 |
Less accumulated depreciation | (7,720,513) |  |  | (7,521,962) |
Net operating real estate | 17,940,839 |  |  | 17,874,894 |
Construction in progress, including land | 1,210,773 |  |  | 1,268,915 |
Land held for development | 211,546 |  |  | 199,062 |
Real estate assets held for sale, net | 9,629 |  |  | — |
Total real estate, net | 19,372,787 |  |  | 19,342,871 |
Cash and cash equivalents | 287,892 |  |  | 397,890 |
Restricted cash | 135,658 |  |  | 133,070 |
Unconsolidated investments | 220,384 |  |  | 220,145 |
Deferred development costs | 54,038 |  |  | 53,122 |
Prepaid expenses and other assets | 437,664 |  |  | 396,442 |
Right of use lease assets | 132,474 |  |  | 134,674 |
Total assets | $ | 20,640,897 |  |  | $ | 20,678,214 |
LIABILITIES AND EQUITY |  |  |
Unsecured notes, net | $ | 7,257,806 |  |  | $ | 7,256,152 |
Variable rate unsecured credit facility and commercial paper, net | — |  |  | — |
Mortgage notes payable, net | 725,465 |  |  | 725,670 |
Dividends payable | 243,604 |  |  | 238,072 |
Payables for construction | 87,167 |  |  | 87,703 |
Accrued expenses and other liabilities | 323,819 |  |  | 310,868 |
Lease liabilities | 150,926 |  |  | 153,232 |
Accrued interest payable | 71,966 |  |  | 57,911 |
Resident security deposits | 64,437 |  |  | 63,815 |
Total liabilities | 8,925,190 |  |  | 8,893,423 |
Commitments and contingencies |  |  |
Redeemable noncontrolling interests | 1,473 |  |  | 1,473 |
Equity: |  |  |
Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at March 31, 2024 and December 31, 2023; zero shares issued and outstanding at March 31, 2024 and December 31, 2023 | — |  |  | — |
Common stock, $0.01 par value; 280,000,000 shares authorized at March 31, 2024 and December 31, 2023; 142,184,758 and 142,025,456 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 1,422 |  |  | 1,420 |
Additional paid-in capital | 11,279,840 |  |  | 11,287,626 |
Accumulated earnings less dividends | 409,371 |  |  | 478,156 |
Accumulated other comprehensive income | 23,601 |  |  | 16,116 |
Total equity | 11,714,234 |  |  | 11,783,318 |
Total liabilities and equity | $ | 20,640,897 |  |  | $ | 20,678,214 |

See accompanying notes to Condensed Consolidated Financial Statements.
1

Table of Contents
AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(Dollars in thousands, except per share data)

| For the three months ended March 31,
| 2024 |  | 2023
Revenue: |  |  |
Rental and other income | $ | 711,064 |  |  | $ | 673,642 |
Management, development and other fees | 1,795 |  |  | 1,066 |
Total revenue | 712,859 |  |  | 674,708 |
Expenses: |  |  |
Operating expenses, excluding property taxes | 175,916 |  |  | 164,832 |
Property taxes | 79,780 |  |  | 74,495 |
Expensed transaction, development and other pursuit costs, net of recoveries | 4,245 |  |  | 2,992 |
Interest expense, net | 54,766 |  |  | 56,821 |
Depreciation expense | 212,269 |  |  | 204,743 |
General and administrative expense | 20,331 |  |  | 20,400 |
Casualty and impairment loss | 2,935 |  |  | 5,051 |
Total expenses | 550,242 |  |  | 529,334 |
Income from unconsolidated investments | 10,847 |  |  | 4,845 |
Other real estate activity | 71 |  |  | 116 |
Income before income taxes | 173,535 |  |  | 150,335 |
Income tax benefit (expense) | 22 |  |  | (3,560) |
Net income | 173,557 |  |  | 146,775 |
Net (income) loss attributable to noncontrolling interests | (108) |  |  | 127 |
Net income attributable to common stockholders | $ | 173,449 |  |  | $ | 146,902 |
Other comprehensive income: |  |  |
Gain (loss) on cash flow hedges | 7,339 |  |  | (340) |
Cash flow hedge losses reclassified to earnings | 146 |  |  | 354 |
Comprehensive income | $ | 180,934 |  |  | $ | 146,916 |
Earnings per common share - basic: |  |  |
Net income attributable to common stockholders | $ | 1.22 |  |  | $ | 1.05 |
Earnings per common share - diluted: |  |  |
Net income attributable to common stockholders | $ | 1.22 |  |  | $ | 1.05 |

See accompanying notes to Condensed Consolidated Financial Statements.
2

Table of Contents
AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(Dollars in thousands)

| Common stock |  | Additional paid-in capital |  | Accumulated earnings less dividends |  | Accumulated other comprehensive income (loss) |  | Total equity
Balance at December 31, 2023 | $ | 1,420 |  |  | $ | 11,287,626 |  |  | $ | 478,156 |  |  | $ | 16,116 |  |  | $ | 11,783,318 |
Net income attributable to common stockholders | — |  |  | — |  |  | 173,449 |  |  | — |  |  | 173,449 |
Gain on cash flow hedges, net | — |  |  | — |  |  | — |  |  | 7,339 |  |  | 7,339 |
Cash flow hedge losses reclassified to earnings | — |  |  | — |  |  | — |  |  | 146 |  |  | 146 |
Dividends declared to common stockholders ($1.70 per share) | — |  |  | — |  |  | (242,701) |  |  | — |  |  | (242,701) |
Issuance of common stock, net of withholdings | 2 |  |  | (16,226) |  |  | 467 |  |  | — |  |  | (15,757) |
Amortization of deferred compensation | — |  |  | 8,440 |  |  | — |  |  | — |  |  | 8,440 |
Balance at March 31, 2024 | $ | 1,422 |  |  | $ | 11,279,840 |  |  | $ | 409,371 |  |  | $ | 23,601 |  |  | $ | 11,714,234 |

| Common stock |  | Additional paid-in capital |  | Accumulated earnings less dividends |  | Accumulated other comprehensive income (loss) |  | Total equity
Balance at December 31, 2022 | $ | 1,400 |  |  | $ | 10,765,508 |  |  | $ | 485,221 |  |  | $ | 1,424 |  |  | $ | 11,253,553 |
Net income attributable to common stockholders | — |  |  | — |  |  | 146,902 |  |  | — |  |  | 146,902 |
Loss on cash flow hedges, net | — |  |  | — |  |  | — |  |  | (340) |  |  | (340) |
Cash flow hedge losses reclassified to earnings | — |  |  | — |  |  | — |  |  | 354 |  |  | 354 |
Noncontrolling interest activity | — |  |  | — |  |  | (286) |  |  | — |  |  | (286) |
Dividends declared to common stockholders ($1.65 per share) | — |  |  | — |  |  | (230,958) |  |  | — |  |  | (230,958) |
Issuance of common stock, net of withholdings | 1 |  |  | (11,554) |  |  | 1,590 |  |  | — |  |  | (9,963) |
Repurchase of common stock, including repurchase costs | — |  |  | (539) |  |  | (590) |  |  | — |  |  | (1,129) |
Amortization of deferred compensation | — |  |  | 11,123 |  |  | — |  |  | — |  |  | 11,123 |
Balance at March 31, 2023 | $ | 1,401 |  |  | $ | 10,764,538 |  |  | $ | 401,879 |  |  | $ | 1,438 |  |  | $ | 11,169,256 |

See accompanying notes to Condensed Consolidated Financial Statements.
3

Table of Contents
AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollars in thousands)

| For the three months ended March 31,
| 2024 |  | 2023
Cash flows from operating activities: |  |  |
Net income | $ | 173,557 |  |  | $ | 146,775 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation expense | 212,269 |  |  | 204,743 |
Amortization of deferred financing costs and debt discount | 3,283 |  |  | 3,231 |
Amortization of stock-based compensation | 5,870 |  |  | 7,921 |
Equity in income of, and return on, unconsolidated investments and noncontrolling interests, net of eliminations | (5,742) |  |  | (1,457) |
Impairment loss | 1,415 |  |  | 2,407 |
Abandonment of development pursuits | 4,245 |  |  | 2,992 |
Cash flow hedge losses reclassified to earnings | 146 |  |  | 354 |
Gain (loss) on sale of real estate assets | 62 |  |  | (318) |
Decrease in prepaid expenses and other assets | (3,753) |  |  | (1,439) |
Increase in accrued expenses, other liabilities and accrued interest payable | 21,553 |  |  | 30,909 |
Net cash provided by operating activities | 412,905 |  |  | 396,118 |
Cash flows from investing activities: |  |  |
Development/redevelopment of real estate assets including land acquisitions and deferred development costs | (207,568) |  |  | (229,361) |
Capital expenditures - existing real estate assets | (37,490) |  |  | (31,281) |
Capital expenditures - non-real estate assets | (1,200) |  |  | (3,201) |
(Decrease) increase in payables for construction | (536) |  |  | 12,176 |
Proceeds from sale of real estate and for-sale condominiums, net of selling costs | 3,865 |  |  | 3,964 |
Note receivable lending | (20,861) |  |  | (14,034) |
Note receivable payments | 57 |  |  | — |
Unconsolidated investments | (2,085) |  |  | (5,602) |
Net cash used in investing activities | (265,818) |  |  | (267,339) |
Cash flows from financing activities: |  |  |
Issuance of common stock, net | 365 |  |  | 135 |
Repurchase of common stock, net | — |  |  | (1,129) |
Dividends paid | (237,005) |  |  | (223,465) |
Repayments of mortgage notes payable, including prepayment penalties | (800) |  |  | (899) |
Repayment of unsecured notes | — |  |  | (250,000) |
Payment of deferred financing costs | (218) |  |  | (662) |
Payments related to tax withholding for share-based compensation | (16,291) |  |  | (10,310) |
Noncontrolling interests, joint venture and preferred equity transactions | (548) |  |  | (630) |
Net cash used in financing activities | (254,497) |  |  | (486,960) |
Net decrease in cash, cash equivalents and restricted cash | (107,410) |  |  | (358,181) |
Cash, cash equivalents and restricted cash, beginning of period | 530,960 |  |  | 734,245 |
Cash, cash equivalents and restricted cash, end of period | $ | 423,550 |  |  | $ | 376,064 |
Cash paid during the period for interest, net of amount capitalized | $ | 37,242 |  |  | $ | 33,814 |

See accompanying notes to Condensed Consolidated Financial Statements.
4

Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Statements of Cash Flows (dollars in thousands):

|  | March 31, 2024 |  | March 31, 2023
Cash and cash equivalents |  | $ | 287,892 |  |  | $ | 254,466 |
Restricted cash |  | 135,658 |  |  | 121,598 |
Cash, cash equivalents and restricted cash reported in the Condensed Consolidated Statements of Cash Flows |  | $ | 423,550 |  |  | $ | 376,064 |

Supplemental disclosures of non-cash investing and financing activities:
During the three months ended March 31, 2024:
•As described in Note 4, "Equity," the Company issued 248,420 shares of common stock as part of the Company's stock-based compensation plans, of which 146,725 shares related to the conversion of performance awards to shares of common stock, and the remaining 101,695 shares valued at $17,505,000 were issued in connection with new stock grants; 939 shares valued at $169,000 were issued through the Company's dividend reinvestment plan; 91,446 shares valued at $16,291,000 were withheld to satisfy employees' tax withholding and other liabilities; and 1,753 forfeited restricted shares with an aggregate value of $336,000.
•Common stock dividends declared but not paid totaled $242,116,000.
•The Company recorded (i) an increase to prepaid expenses and other assets of $7,339,000 and a corresponding adjustment to accumulated other comprehensive income; and (ii) reclassified $146,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company's derivative and hedging activity.
During the three months ended March 31, 2023:
•The Company issued 151,053 shares of common stock as part of the Company's stock-based compensation plans, of which 60,016 shares related to the conversion of performance awards to shares of common stock, and the remaining 91,037 shares valued at $16,182,000 were issued in connection with new stock grants; 847 shares valued at $144,000 were issued through the Company's dividend reinvestment plan; 60,693 shares valued at $10,242,000 were withheld to satisfy employees' tax withholding and other liabilities; and 147 forfeited restricted shares with an aggregate value of $29,000.
•Common stock dividends declared but not paid totaled $231,438,000.
•The Company recorded an increase of $286,000 in redeemable noncontrolling interest with a corresponding decrease to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.
•The Company recorded (i) an increase to accrued expenses and other liabilities of $650,000, an increase to prepaid expenses and other assets of $310,000 and a corresponding adjustment of $340,000 to accumulated other comprehensive income; and (ii) reclassified $354,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company's derivative and hedging activity.
5

Table of Contents
AVALONBAY COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. 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 subsidiaries) is a Maryland corporation that has elected to be treated as a real estate investment trust ("REIT") for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"). The Company develops, redevelops, acquires, owns and operates multifamily communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in the Company's expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado.
At March 31, 2024, the Company owned or held a direct or indirect ownership interest in 299 operating apartment communities containing 90,673 apartment homes in 12 states and the District of Columbia, of which 17 communities were under development. 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 32 communities that, if developed as expected, will contain an estimated 11,167 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 Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three months ended March 31, 2024 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 meanings provided elsewhere in this Form 10-Q.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents includes all cash and liquid investments with an original maturity of three months or less from the date acquired. Restricted cash includes principal reserve funds that are restricted for the repayment of specified secured financing, amounts the Company has designated for planned 1031 exchange activity and resident security deposits. The majority of the Company's cash, cash equivalents and restricted cash are held at major commercial banks.
Earnings per Common Share
Basic earnings per common 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 common share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per common share on a diluted basis. Diluted earnings per common share was computed using the treasury stock method for performance awards, options and participating securities. The Company's earnings per common share are determined as follows (dollars in thousands, except per share data):
6

Table of Contents

| For the three months ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
Basic and diluted shares outstanding |  |  |  |  |  |  |
Weighted average common shares - basic | 141,902,066 |  |  | 139,766,727 |  |  |  |  |
Weighted average DownREIT units outstanding | — |  |  | 7,500 |  |  |  |  |
Effect of dilutive securities | 320,689 |  |  | 249,583 |  |  |  |  |
Weighted average common shares - diluted | 142,222,755 |  |  | 140,023,810 |  |  |  |  |
Calculation of Earnings per Common Share - basic |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 173,449 |  |  | $ | 146,902 |  |  |  |  |
Net income allocated to unvested restricted shares | (338) |  |  | (267) |  |  |  |  |
Net income attributable to common stockholders - basic | $ | 173,111 |  |  | $ | 146,635 |  |  |  |  |
Weighted average common shares - basic | 141,902,066 |  |  | 139,766,727 |  |  |  |  |
Earnings per common share - basic | $ | 1.22 |  |  | $ | 1.05 |  |  |  |  |
Calculation of Earnings per Common Share - diluted |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 173,449 |  |  | $ | 146,902 |  |  |  |  |
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations | — |  |  | 12 |  |  |  |  |
Net income attributable to common stockholders - diluted | $ | 173,449 |  |  | $ | 146,914 |  |  |  |  |
Weighted average common shares - diluted | 142,222,755 |  |  | 140,023,810 |  |  |  |  |
Earnings per common share - diluted | $ | 1.22 |  |  | $ | 1.05 |  |  |  |  |

Certain options to purchase shares of common stock in the amounts of 309,339 and 307,625 were outstanding as of March 31, 2024 and 2023, respectively, but were not included in the computation of diluted earnings per common share because such options were anti-dilutive for the period.
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 for trading or other speculative purposes. The Company assesses the effectiveness of qualifying cash flow and fair value hedges, both at inception and on an ongoing basis. The fair values of Hedging Derivatives that are in an asset position are recorded in prepaid expenses and other assets. The fair values 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 the Hedging Derivatives that qualify as effective cash flow hedges, the Company has recorded the cumulative changes in the fair value of Hedging Derivatives in accumulated other comprehensive income. Amounts recorded in accumulated 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 the Hedging Derivatives that qualify as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding hedged item. Receipts or payments associated with the gains and losses on the Company’s cash flow hedges are presented as a component of cash flows from financing activities in the period the hedges are terminated and the payments for the Company’s derivatives that are not qualifying for hedging relationships are presented as a component of cash flows from operating activities. See Note 11, “Fair Value,” for further discussion of derivative financial instruments.
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Acquisitions of Investments in Real Estate
The Company accounts for real estate acquisitions as either an asset acquisition or a business combination. Under either model, the Company identifies and determines the fair value of any assets acquired, liabilities assumed and any noncontrolling interest in the acquiree. Typical assets acquired and liabilities assumed include land, building, furniture, fixtures and equipment, debt and identified intangible assets and liabilities, consisting of the value of above or below market leases and in-place leases. The Company utilizes various sources to determine fair value, including its own analysis of recently acquired and existing comparable properties in its portfolio and other market data. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed. For a business combination, the Company records the assets acquired and liabilities assumed based on the fair value of each respective item. For an asset acquisition, the purchase price is allocated based on the relative fair value of the net assets. The Company expenses all applicable acquisition costs for a business combination and capitalizes all applicable acquisition costs for an asset acquisition. The Company expects that acquisitions of individual operating communities will generally be asset acquisitions.
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 and notes to the financial statements to conform to current year presentations as a result of changes in held for sale classification, disposition activity and segment classification.
Income Taxes
The Company recognized income tax benefit of $22,000 and income tax expense of $3,560,000 for the three months ended March 31, 2024 and 2023, respectively. The income tax expense for the three months ended March 31, 2023 is primarily related to The Park Loggia.
Leases
The Company is party to leases as both a lessor and a lessee, primarily as follows:
•lessor of residential and commercial space within its apartment communities; and
•lessee under (i) ground leases for land underlying current operating or development communities and certain commercial and parking facilities and (ii) office leases for its corporate headquarters and regional offices.
Lessee Considerations
The Company assesses whether a contract is or contains a lease based on whether the contract conveys the right to control the use of an identified asset, including specified portions of larger assets, for a period of time in exchange for consideration.
The Company’s leases include both fixed and variable lease payments that are based on an index or rate such as the consumer price index (CPI) or percentage rents based on total sales. Variable lease payments are generally not included in the lease liability, but recognized as variable lease expense in the period in which they are incurred.
For leases that have options to extend the term or terminate the lease early, the Company only factored the impact of such options into the lease term if the option was considered reasonably certain to be exercised. The Company determined the discount rate associated with its ground and office leases on a lease-by-lease basis using the Company’s actual borrowing rates as well as indicative market pricing for longer term rates and taking into consideration the remaining term of the lease agreements. For leases that are 12 months or less, the Company elected the practical expedient to recognize the lease payments on a straight line basis.
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Lessor Considerations
The Company's residential and commercial leases at its apartment communities are operating leases. For leases that include rent concessions and/or fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease, which, for residential leases, is generally one year. Some of the Company’s commercial leases have renewal options which the Company will only include in the lease term if, at the commencement of the lease, it is reasonably certain that the lessee will exercise this option.
For the Company’s leases, which are comprised of a lease component and common area maintenance as a non-lease component, the Company determined that (i) the leases are operating leases, (ii) the lease component is the predominant component and (iii) all components of its operating leases share the same timing and pattern of transfer.
Revenue and Gain Recognition
Under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, the Company recognizes revenue for the transfer of goods and services to customers for consideration that the Company expects to receive. The majority of the Company’s revenue is derived from residential and commercial rental and other lease income, which are accounted for as discussed above, under "Leases". The Company's revenue streams that are not accounted for under ASC 842, Leases, include (i) management, development and other fees, (ii) non-lease related revenue and (iii) gains or losses on the sale of real estate.
The following table details the Company’s revenue disaggregated by reportable operating segment, further discussed in Note 8, “Segment Reporting,” for the three months ended March 31, 2024 and 2023. Segment information for total revenue excludes real estate assets that were sold from January 1, 2023 through March 31, 2024, or otherwise qualify as held for sale as of March 31, 2024, as described in Note 6, "Real Estate Disposition Activities" (dollars in thousands):

|  | Same Store |  | Other Stabilized |  | Development/ Redevelopment |  | Non- allocated (1) |  | Total
For the three months ended March 31, 2024 |  |  |  |  |  |  |  |  |  |
Management, development and other fees and other ancillary items |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,795 |  |  | $ | 1,795 |
Non-lease related revenue (2) |  | 2,439 |  |  | 1,300 |  |  | 101 |  |  | — |  |  | 3,840 |
Total non-lease revenue (3) |  | 2,439 |  |  | 1,300 |  |  | 101 |  |  | 1,795 |  |  | 5,635 |
Lease income (4) |  | 674,806 |  |  | 23,768 |  |  | 7,960 |  |  | — |  |  | 706,534 |
Total revenue |  | $ | 677,245 |  |  | $ | 25,068 |  |  | $ | 8,061 |  |  | $ | 1,795 |  |  | $ | 712,169 |
For the three months ended March 31, 2023 |  |  |  |  |  |  |  |  |  |
Management, development and other fees and other ancillary items |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,066 |  |  | $ | 1,066 |
Non-lease related revenue (2) |  | 2,693 |  |  | 1,032 |  |  | 1 |  |  | — |  |  | 3,726 |
Total non-lease revenue (3) |  | 2,693 |  |  | 1,032 |  |  | 1 |  |  | 1,066 |  |  | 4,792 |
Lease income (4) |  | 646,547 |  |  | 13,657 |  |  | 3 |  |  | — |  |  | 660,207 |
Total revenue |  | $ | 649,240 |  |  | $ | 14,689 |  |  | $ | 4 |  |  | $ | 1,066 |  |  | $ | 664,999 |

__________________________________
(1)Represents third-party property management, developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment.
(2)Amounts include revenue streams related to leasing activities that are not considered components of a lease, and revenue streams not related to leasing activities including, but not limited to, application fees, renters insurance fees and vendor revenue sharing.
(3)Represents revenue accounted for under ASC 606.
(4)Represents residential and commercial rental and other lease income, accounted for under ASC 842.
Due to the nature and timing of the Company’s identified revenue streams, there were no material amounts of outstanding or unsatisfied performance obligations as of March 31, 2024.
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Uncollectible Lease Revenue Reserves
The Company assesses the collectability of its lease revenue and receivables on an ongoing basis by (i) assessing the probability of receiving all lease amounts due on a lease-by-lease basis, (ii) reserving all amounts for those leases where collection of substantially all of the remaining lease payments is not probable and (iii) subsequently, will only recognize revenue to the extent cash is received. If the Company determines that collection of the remaining lease payments becomes probable at a future date, the Company will recognize the cumulative revenue that would have been recorded under the original lease agreement.
In addition to the specific reserves recognized under ASC 842, the Company also evaluates its lease receivables for collectability at a portfolio level under ASC 450, Contingencies – Loss Contingencies. The Company recognizes a reserve under ASC 450 when the uncollectible revenue is probable and reasonably estimable. The Company applies this reserve to the population of the Company’s revenue and receivables not specifically addressed as part of the specific ASC 842 reserve.
The Company recorded an aggregate offset to income for uncollectible lease revenue, net of amounts received from government rent relief programs, for its residential and commercial portfolios of $11,482,000 and $16,971,000 for the three months ended March 31, 2024 and 2023, respectively, under ASC 842 and ASC 450.
Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which requires reportable segments disclosures of significant segment expenses provided to the chief operating decision maker (“CODM”) and will be effective for fiscal years beginning after December 15, 2023. The Company is assessing the standard and does not expect the standard to have a material effect on the Company’s financial position or results of operations.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires (i) a tabular rate reconciliation of the reported income tax expense (benefit) from continuing operations into specific categories, (ii) separate disclosure for any reconciling items within certain categories above a quantitative threshold, (iii) disclosure of income taxes paid disaggregated by federal, state and material jurisdictions and (iv) disclosure of income tax expense from continuing operations disaggregated by federal and state. The new standard will be effective for fiscal years beginning after December 15, 2024. The Company is assessing the standard and does not expect the standard to have a material effect on the Company’s financial position or results of operations.
2. Interest Capitalized
The Company capitalizes interest during the development and redevelopment of real estate assets. Capitalized interest associated with the Company's development or redevelopment activities totaled $11,591,000 and $11,018,000 for the three months ended March 31, 2024 and 2023, respectively.
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3. Debt
The Company's debt, which consists of unsecured notes, mortgage notes payable, the Credit Facility and the Commercial Paper Program, each as defined below, as of March 31, 2024 and December 31, 2023 is summarized below. The following amounts and discussion do not include the mortgage notes related to the communities classified as held for sale, if any, as of March 31, 2024 and December 31, 2023, as shown in the accompanying Condensed Consolidated Balance Sheets (dollars in thousands) (see Note 6, "Real Estate Disposition Activities"). The weighted average interest rates in the following table for secured and unsecured notes include costs of financing such as credit enhancement fees, trustees' fees, the impact of interest rate hedges and mark-to-market adjustments.

| March 31, 2024 |  | December 31, 2023
Fixed rate unsecured notes | $ | 7,300,000 |  |  | 3.3 | % |  | $ | 7,300,000 |  |  | 3.3 | %
Fixed rate mortgage notes payable - conventional and tax-exempt | 333,892 |  |  | 3.9 | % |  | 333,892 |  |  | 3.9 | %
Variable rate mortgage notes payable - conventional and tax-exempt | 409,350 |  |  | 5.2 | % |  | 410,150 |  |  | 5.5 | %
Total mortgage notes payable and unsecured notes | 8,043,242 |  |  | 3.4 | % |  | 8,044,042 |  |  | 3.5 | %
Credit Facility | — |  |  | — | % |  | — |  |  | — | %
Commercial paper | — |  |  | — | % |  | — |  |  | — | %
Total principal outstanding | 8,043,242 |  |  | 3.4 | % |  | 8,044,042 |  |  | 3.5 | %
Less deferred financing costs and debt discount (1) | (59,971) |  |  |  |  | (62,220) |  |  |
Total | $ | 7,983,271 |  |  |  |  | $ | 7,981,822 |  |  |

_____________________________________
(1)Excludes deferred financing costs and debt discount associated with the Credit Facility and Commercial Paper Program which are included in prepaid expenses and other assets on the accompanying Condensed Consolidated Balance Sheets.
The Company has a $2,250,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the "Credit Facility") which matures in September 2026. The interest rate that would be applicable to borrowings under the Credit Facility was 6.15% at March 31, 2024 and was composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.805% per annum, which consisted of a 0.10% SOFR adjustment plus 0.705% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.63% to SOFR plus 1.38% based upon the rating of the Company's unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the facility, which can vary from 0.095% to 0.295% based upon the rating of the Company's unsecured senior notes. The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases by meeting or missing targets related to environmental sustainability, specifically greenhouse gas emission reductions, with the adjustment determined annually. The first determination under the sustainability-linked pricing component occurred in July 2023, resulting in reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.
The availability on the Company's Credit Facility as of March 31, 2024 and December 31, 2023, respectively, was as follows (dollars in thousands):

| March 31, 2024 |  | December 31, 2023
Credit Facility commitment | $ | 2,250,000 |  |  | $ | 2,250,000 |
Credit Facility outstanding | — |  |  | — |
Commercial paper outstanding | — |  |  | — |
Letters of credit outstanding (1) | (1,914) |  |  | (1,914) |
Total Credit Facility available | $ | 2,248,086 |  |  | $ | 2,248,086 |

_____________________________________
(1)In addition, the Company had $68,770 and $58,116 outstanding in additional letters of credit unrelated to the Credit Facility as of March 31, 2024 and December 31, 2023, respectively.
The Company has an unsecured commercial paper note program (the “Commercial Paper Program”) with the maximum aggregate face or principal amount outstanding at any one time not to exceed $500,000,000. Under the terms of the Commercial Paper Program, the Company may issue, from time to time, unsecured commercial paper notes with varying maturities of less
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than one year. The Commercial Paper Program is backstopped by the Company's commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program.
In the aggregate, secured notes payable mature at various dates from March 2027 through July 2066, and are secured by certain apartment communities (with a net carrying value of $1,271,040,000, excluding communities classified as held for sale, as of March 31, 2024).
Scheduled payments and maturities of secured notes payable and unsecured notes outstanding at March 31, 2024 were as follows (dollars in thousands):

Year |  | Secured notes principal payments and maturities |  | Unsecured notes maturities |  | Stated interest rate of unsecured notes
2024 |  | $ | 8,793 |  |  | $ | 300,000 |  |  | 3.50 | %
2025 |  | 10,765 |  |  | 525,000 |  |  | 3.45 | %
|  |  |  | 300,000 |  |  | 3.50 | %
2026 |  | 11,811 |  |  | 475,000 |  |  | 2.95 | %
|  |  |  | 300,000 |  |  | 2.90 | %
2027 |  | 250,159 |  |  | 400,000 |  |  | 3.35 | %
2028 |  | 18,902 |  |  | 450,000 |  |  | 3.20 | %
|  |  |  | 400,000 |  |  | 1.90 | %
2029 |  | 132,661 |  |  | 450,000 |  |  | 3.30 | %
2030 |  | 9,100 |  |  | 700,000 |  |  | 2.30 | %
2031 |  | 9,700 |  |  | 600,000 |  |  | 2.45 | %
2032 |  | 10,400 |  |  | 700,000 |  |  | 2.05 | %
2033 |  | 12,000 |  |  | 350,000 |  |  | 5.00 | %
|  |  |  | 400,000 |  |  | 5.30 | %
Thereafter |  | 268,951 |  |  | 350,000 |  |  | 3.90 | %
|  |  |  | 300,000 |  |  | 4.15 | %
|  |  |  | 300,000 |  |  | 4.35 | %
|  | $ | 743,242 |  |  | $ | 7,300,000 |  |  |

The Company was in compliance at March 31, 2024 with customary covenants under the Credit Facility and the indentures under which the unsecured notes were issued.
4. Equity
As of March 31, 2024 and December 31, 2023, the Company's charter had authorized for issuance a total of 280,000,000 shares of common stock and 50,000,000 shares of preferred stock.
During the three months ended March 31, 2024, the Company:
i.issued 3,142 shares of common stock in connection with stock options exercised;
ii.issued 939 shares of common stock through the Company's dividend reinvestment plan;
iii.issued 248,420 shares of common stock in connection with restricted stock grants and the conversion of performance awards to shares of common stock;
iv.withheld 91,446 shares of common stock to satisfy employees' tax withholding and other liabilities; and
v.canceled 1,753 shares of restricted common stock upon forfeiture.
Deferred compensation granted under the Company's Second Amended and Restated 2009 Equity Incentive Plan (the "Plan") does not impact the Company's Condensed Consolidated Financial Statements until recognized as compensation cost.
The Company has a continuous equity program (the "CEP") under which the Company may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of its common stock from time to time. During the three months ended March 31, 2024 and 2023, the Company had no sales under this program. As of March 31, 2024, the Company had $705,961,000 remaining authorized for issuance under the CEP.
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The Company has a stock repurchase program under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the "Stock Repurchase Program"). During the three months ended March 31, 2024, the Company had no repurchases of shares under this program. As of March 31, 2024, the Company had $314,237,000 remaining authorized for purchase under this program. During the three months ended March 31, 2023, the Company repurchased 7,000 shares of common stock at an average price of $161.29 per share.
5. Investments
Structured Investment Program
The Company operates a Structured Investment Program (the “SIP”), an investment platform through which the Company provides mezzanine loans or preferred equity to third-party multifamily developers. As of March 31, 2024, the Company had seven commitments to fund up to $191,585,000 in the aggregate. The Company's investment commitments have a weighted average rate of return of 11.5% and a weighted average initial maturity date of December 2026. At March 31, 2024, the Company had funded $117,321,000 of these commitments. The Company recognized interest income of $3,176,000 and $872,000 from its SIP for the three months ended March 31, 2024 and 2023, respectively. Interest income and any change in the expected credit loss are included as a component of income from unconsolidated investments, on the accompanying Condensed Consolidated Statements of Comprehensive Income.
The Company evaluates each SIP commitment to determine the classification as a loan or an investment in a real estate development project. As of March 31, 2024, all of the SIP commitments are classified as loans. The Company includes amounts outstanding under the SIP as a component of prepaid expenses and other assets on the accompanying Condensed Consolidated Balance Sheets. The Company evaluates the credit risk for each commitment on an ongoing basis, estimating the reserve for credit losses using relevant available information from internal and external sources. Market-based historical credit loss data provides the basis for the estimation of expected credit losses, with adjustments, if necessary, for differences in current commitment-specific risk characteristics, such as the amount of equity capital provided by a borrower, nature of the real estate being developed or other factors.
Unconsolidated Investments
As of March 31, 2024, the Company had investments in five unconsolidated entities with real estate entities holdings, with ownership interest percentages ranging from 20.0% to 50.0%, coupled with other unconsolidated investments including property technology and environmentally focused companies and investment management funds. For the Arts District joint venture, which owns an apartment community that completed development during the three months ended March 31, 2024 and in which the Company has an ownership interest of 25.0%, the Company has provided the lender a payment guarantee for 30% of the venture's construction loan maximum borrowing capacity, on behalf of the venture. At March 31, 2024, the construction loan had an outstanding balance of $142,348,000 and maximum borrowing capacity of $167,147,000. Any amounts payable under the 30% construction loan guarantee by the Company are obligations of the venture partners in proportion to their ownership interest, and in the event the Company is obligated to perform under its construction loan guarantee, its joint venture partner is obligated to reimburse the Company for 75% of amounts paid. The Company accounts for its unconsolidated investments under the equity method of accounting or under the measurement alternative with the carrying amount of the investment adjusted to fair value when there is an observable transaction for the same or similar investment of the same issuer indicating a change in fair value. The significant accounting policies of the Company's unconsolidated investments are consistent with those of the Company in all material respects. Certain of these investments are subject to various buy‑sell provisions or other rights which are customary in real estate joint venture agreements. The Company and its partners in these entities may initiate these provisions to either sell the Company's interest or acquire the interest from the Company's partner.
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Expensed Transaction, Development and Other Pursuit Costs
The Company capitalizes costs associated with its development activities to the basis of land held when future development is probable ("Development Rights"), or if the Company has either not yet acquired the land or if the project is subject to a leasehold interest, the costs are capitalized as deferred development costs. Future development of these Development Rights is dependent upon various factors, including zoning and regulatory approval, rental market conditions, construction costs and the availability of capital. Costs incurred for pursuits for which future development is not yet considered probable are expensed as incurred. If the Company determines a Development Right is no longer probable, the Company recognizes any necessary expense to write down its basis in the Development Right. The Company assesses its portfolio of land held for development as well as for investment for impairment if the intent of the Company changes with respect to either the development of, or the expected holding period for, the land. The Company expensed costs related to development pursuits not yet considered probable for development and other development related activity, in the amounts of $4,245,000 and $2,992,000 for the three months ended March 31, 2024 and 2023, respectively. These costs are included in expensed transaction, development and other pursuit costs, net of recoveries on the accompanying Condensed Consolidated Statements of Comprehensive Income. These costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.
Casualty and Impairment of Long-Lived Assets
The Company evaluates its real estate and other long-lived assets for impairment when potential indicators of impairment exist. Such assets are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of an asset may not be recoverable, the Company assesses its recoverability by comparing the carrying amount of the asset to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Company recognizes an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset. Based on periodic tests of recoverability of long-lived assets, for the three months ended March 31, 2024 and 2023, the Company did not recognize any material impairment losses. For the three months ended March 31, 2024 and 2023, the Company recognized charges of $2,935,000 and $5,051,000, respectively, for the property and casualty damage to certain of the Company's communities, reported as casualty and impairment loss on the accompanying Condensed Consolidated Statements of Comprehensive Income. The charge for the three months ended March 31, 2024, relates to damage at communities in California from extensive rainfall and a fire at a community in New Jersey. The charge for the three months ended March 31, 2023, relates to damage to certain communities in the Northeast and California regions from severe weather.
The Company evaluates its unconsolidated investments for other than temporary impairment, considering both whether the carrying value of the investment exceeds the fair value, and the Company's intent and ability to hold the investment to recover its carrying value. The Company also evaluates its proportionate share of any impairment of assets held by unconsolidated investments. The Company did not recognize any other than temporary impairment losses during the three months ended March 31, 2024 and 2023.
6. Real Estate Disposition Activities
At March 31, 2024, the Company had one real estate asset that qualified as held for sale.
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7. Commitments and Contingencies
Legal Contingencies
The Company recognizes a loss associated with contingent legal matters when the loss is probable and estimable.
In 2022 and early 2023, the Company was named as a defendant in cases brought by private litigants alleging antitrust violations by RealPage, Inc. and owners and/or operators of multifamily housing which utilize revenue management systems provided by RealPage, Inc. The Company engaged with the plaintiffs' counsel to explain why it believed that these cases were without merit as they pertained to the Company. Following these discussions, the plaintiffs filed a notice of voluntary dismissal in July 2023, which resulted in the Company being dismissed without prejudice from these cases. Subsequently, on November 1, 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc. and 14 owners and/or operators of multifamily housing in the District of Columbia, including the Company, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data. The Company intends to vigorously defend against this lawsuit. Given the early stage of the District of Columbia’s lawsuit, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuit.
The Company is involved in various other claims and/or administrative proceedings that arise in the ordinary course of its business. While no assurances can be given, the Company does not currently believe that any of these other outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.
Lease Obligations
The Company owns seven apartment communities and two commercial properties located on land subject to ground leases expiring between July 2046 and April 2106. The Company has purchase options for all ground leases expiring prior to 2062. The ground leases for six of the seven apartment communities and the two commercial properties are operating leases, with rental expense recognized on a straight-line basis over the lease term. In addition, the Company is party to 14 leases for its corporate and regional offices with varying terms through 2031, all of which are operating leases.
As of March 31, 2024 and December 31, 2023, the Company had total operating lease assets of $104,053,000 and $106,146,000, respectively, and lease obligations of $130,929,000 and $133,220,000, respectively, reported as components of right of use lease assets and lease liabilities, respectively, on the accompanying Condensed Consolidated Balance Sheets. The Company incurred costs of $4,171,000 and $4,005,000 for the three months ended March 31, 2024 and 2023, respectively, related to operating leases.
The Company has one apartment community located on land subject to a ground lease and four leases for portions of parking garages adjacent to apartment communities that are finance leases. As of March 31, 2024 and December 31, 2023, the Company had total finance lease assets of $28,421,000 and $28,528,000, respectively, and total finance lease obligations of $19,997,000 and $20,012,000, respectively, reported as components of right of use lease assets and lease liabilities on the accompanying Condensed Consolidated Balance Sheets.
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8. Segment Reporting
The Company's reportable operating segments include Same Store, Other Stabilized and Development/Redevelopment. Annually as of January 1, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change. In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment.
The Company's segment disclosures present the measure(s) used by the CODM for assessing each segment's performance. The Company's CODM is comprised of several members of its executive management team who use net operating income ("NOI") as the primary financial measure for Same Store communities and Other Stabilized communities. NOI is defined by the Company as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), property management and other indirect operating expenses, net of corporate income, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, depreciation expense, income tax expense, casualty and impairment loss, gain on sale of communities, other real estate activity and net operating income from real estate assets sold or held for sale. The CODM evaluates the Company's financial performance on a consolidated residential and commercial basis. The commercial results attributable to the non-apartment components of the Company's mixed-use communities and other nonresidential operations represent 1.7% and 1.8% of total NOI for the three months ended March 31, 2024 and 2023, respectively. Although the Company considers NOI a useful measure of a community's or communities' operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP. NOI excludes a number of income and expense categories as detailed in the reconciliation of NOI to net income and consistent with how the Company's CODM evaluates total NOI.
In conjunction with the Company’s continued centralization of operating activities into a shared services model, the Company changed its presentation for centralized shared service costs to reflect these platform costs in property management and other indirect operating expenses, net of corporate income for all periods presented. Total property management and other indirect operating expenses, net of corporate income for the three months ended March 31, 2023 as presented in the following table includes $3,152,000 of shared services costs for this change.
A reconciliation of NOI to net income for the three months ended March 31, 2024 and 2023 is as follows (dollars in thousands):

| For the three months ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
Net income | $ | 173,557 |  |  | $ | 146,775 |  |  |  |  |
Property management and other indirect operating expenses, net of corporate income | 35,204 |  |  | 33,936 |  |  |  |  |
Expensed transaction, development and other pursuit costs, net of recoveries | 4,245 |  |  | 2,992 |  |  |  |  |
Interest expense, net | 54,766 |  |  | 56,821 |  |  |  |  |
General and administrative expense | 20,331 |  |  | 20,400 |  |  |  |  |
Income from unconsolidated investments | (10,847) |  |  | (4,845) |  |  |  |  |
Depreciation expense | 212,269 |  |  | 204,743 |  |  |  |  |
Income tax (benefit) expense | (22) |  |  | 3,560 |  |  |  |  |
Casualty and impairment loss | 2,935 |  |  | 5,051 |  |  |  |  |
Other real estate activity | (71) |  |  | (116) |  |  |  |  |
Net operating income from real estate assets sold or held for sale | (426) |  |  | (6,950) |  |  |  |  |
Net operating income | $ | 491,941 |  |  | $ | 462,367 |  |  |  |  |

The following is a summary of NOI from real estate assets sold or held for sale for the periods presented (dollars in thousands):

| For the three months ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
Rental income from real estate assets sold or held for sale | $ | 690 |  |  | $ | 9,709 |  |  |  |  |
Operating expenses from real estate assets sold or held for sale | (264) |  |  | (2,759) |  |  |  |  |
Net operating income from real estate assets sold or held for sale | $ | 426 |  |  | $ | 6,950 |  |  |  |  |

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The primary performance measure for communities under development or redevelopment depends on the stage of completion. While under development, management monitors actual construction costs against budgeted costs as well as lease-up pace and rent levels compared to budget.
The following table details the Company's segment information as of the dates specified (dollars in thousands). The segments are classified based on the individual community's status at January 1, 2024. Segment information for the three months ended March 31, 2024 and 2023 has been adjusted to exclude the real estate assets that were sold from January 1, 2023 through March 31, 2024, or otherwise qualify as held for sale as of March 31, 2024, as described in Note 6, "Real Estate Disposition Activities."

| For the three months ended |  |  |  |
| Total revenue |  | NOI |  |  |  |  |  | Gross real estate (1)
For the period ended March 31, 2024 |  |  |  |  |  |
Same Store |  |  |  |  |  |  |  |  |
New England | $ | 96,751 |  |  | $ | 65,446 |  |  |  |  |  |  | $ | 3,051,656 |
Metro NY/NJ | 135,746 |  |  | 93,172 |  |  |  |  |  |  | 4,415,604 |
Mid-Atlantic | 101,839 |  |  | 71,212 |  |  |  |  |  |  | 3,744,801 |
Southeast Florida | 24,439 |  |  | 15,867 |  |  |  |  |  |  | 1,099,114 |
Denver, CO | 10,129 |  |  | 7,398 |  |  |  |  |  |  | 505,411 |
Pacific Northwest | 43,217 |  |  | 30,983 |  |  |  |  |  |  | 1,526,666 |
Northern California | 107,226 |  |  | 76,042 |  |  |  |  |  |  | 3,799,061 |
Southern California | 149,423 |  |  | 105,061 |  |  |  |  |  |  | 5,124,742 |
Other Expansion Regions | 8,475 |  |  | 5,547 |  |  |  |  |  |  | 476,617 |
Total Same Store | 677,245 |  |  | 470,728 |  |  |  |  |  |  | 23,743,672 |
Other Stabilized | 25,068 |  |  | 16,818 |  |  |  |  |  |  | 1,272,905 |
Development / Redevelopment | 8,061 |  |  | 4,395 |  |  |  |  |  |  | 1,785,038 |
Land Held for Development | N/A |  | N/A |  |  |  |  |  | 211,546 |
Non-allocated (2) | 1,795 |  |  | N/A |  |  |  |  |  | 70,510 |
Total | $ | 712,169 |  |  | $ | 491,941 |  |  |  |  |  |  | $ | 27,083,671 |
For the period ended March 31, 2023 |  |  |  |  |  |
Same Store |  |  |  |  |  |  |  |  |
New England | $ | 92,374 |  |  | $ | 61,900 |  |  |  |  |  |  | $ | 3,021,096 |
Metro NY/NJ | 130,153 |  |  | 90,876 |  |  |  |  |  |  | 4,407,248 |
Mid-Atlantic | 98,111 |  |  | 69,697 |  |  |  |  |  |  | 3,702,562 |
Southeast Florida | 24,413 |  |  | 16,273 |  |  |  |  |  |  | 1,093,779 |
Denver, CO | 9,843 |  |  | 7,282 |  |  |  |  |  |  | 504,164 |
Pacific Northwest | 41,955 |  |  | 30,207 |  |  |  |  |  |  | 1,515,510 |
Northern California | 105,145 |  |  | 75,254 |  |  |  |  |  |  | 3,771,728 |
Southern California | 138,928 |  |  | 95,927 |  |  |  |  |  |  | 5,063,271 |
Other Expansion Regions | 8,318 |  |  | 5,562 |  |  |  |  |  |  | 473,286 |
Total Same Store | 649,240 |  |  | 452,978 |  |  |  |  |  |  | 23,552,644 |
Other Stabilized | 14,689 |  |  | 9,679 |  |  |  |  |  |  | 962,630 |
Development / Redevelopment | 4 |  |  | (290) |  |  |  |  |  |  | 1,004,656 |
Land Held for Development | N/A |  | N/A |  |  |  |  |  | 177,889 |
Non-allocated (2) | 1,066 |  |  | N/A |  |  |  |  |  | 69,564 |
Total | $ | 664,999 |  |  | $ | 462,367 |  |  |  |  |  |  | $ | 25,767,383 |

__________________________________
(1)Does not include gross real estate assets held for sale of $20,953 as of March 31, 2024 and gross real estate either sold or classified as held for sale subsequent to March 31, 2023 of $266,346.
(2)Revenue represents third-party property management, developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment.
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9. Stock-Based Compensation Plans
As part of its long-term compensation plans, the Company has granted stock options, performance awards and restricted stock under the Plan. Details of the outstanding awards and activity under the Plan for the three months ended March 31, 2024 are presented below.
Stock Options:

|  | Options |  | Weighted average exercise price per option
Options Outstanding at December 31, 2023 |  | 303,784 |  |  | $ | 181.99 |
Granted (1) |  | 13,759 |  |  | 172.11 |
Exercised |  | (3,142) |  |  | 180.32 |
Forfeited |  | — |  |  | — |
Expired |  | (5,062) |  |  | 180.32 |
Options Outstanding at March 31, 2024 |  | 309,339 |  |  | $ | 181.60 |
Options Exercisable at March 31, 2024 |  | 281,817 |  |  | $ | 181.57 |

__________________________________
(1)All options are from recipient elections to receive a portion of earned restricted stock awards in the form of stock options.
Performance Awards:

|  | Performance awards |  | Weighted average grant date fair value per award
Outstanding at December 31, 2023 |  | 275,202 |  |  | $ | 210.52 |
Granted (1) |  | 87,748 |  |  | 178.68 |
Change in awards based on performance (2) |  | 30,375 |  |  | 216.50 |
Converted to shares of common stock |  | (146,725) |  |  | 201.07 |
Forfeited |  | (1,663) |  |  | 213.27 |
Outstanding at March 31, 2024 |  | 244,937 |  |  | $ | 205.49 |

__________________________________
(1)The shares of common stock that may be earned is based on the total shareholder return metrics for the Company's common stock for 48,264 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 39,484 performance awards.
(2)Represents the change in the number of performance awards earned based on performance achievement.
The Company used a Monte Carlo model to assess the compensation cost associated with the portion of the performance awards granted for which achievement will be determined by using total shareholder return measures. For the awards granted in 2024, the assumptions used are as follows:

|  | 2024
Dividend yield |  | 4.0%
Estimated volatility over the life of the plan (1) |  | 20.5% - 22.8%
Risk free rate |  | 4.39% - 4.59%
Estimated performance award value based on total shareholder return measure |  | $183.72

__________________________________
(1)Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.
For the portion of the performance awards granted in 2024 for which achievement will be determined by using financial metrics, the compensation cost was based on an average grant date value of $172.11.
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Restricted Stock:

|  | Restricted stock shares |  | Weighted average grant date fair value per share
Outstanding at December 31, 2023 |  | 173,291 |  |  | $ | 194.68 |
Granted |  | 101,695 |  |  | 172.13 |
Vested |  | (80,632) |  |  | 193.98 |
Forfeited |  | (1,753) |  |  | 191.88 |
Outstanding at March 31, 2024 |  | 192,601 |  |  | $ | 183.09 |

Total employee stock-based compensation cost recognized in income was $5,910,000 and $8,018,000 for the three months ended March 31, 2024 and 2023, respectively, and total capitalized stock-based compensation cost was $2,570,000 and $3,284,000 for the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, there was a total unrecognized compensation cost of $52,764,000 for unvested restricted stock, stock options and performance awards, which is expected to be recognized over a weighted average period of 2.3 years. Forfeitures are included in compensation cost as they occur.
10. Related Party Arrangements
Unconsolidated Entities
The Company manages unconsolidated real estate entities and provides other real estate related services to third parties, for which it receives asset management, property management, construction, development and redevelopment fee revenue. From these entities, the Company earned fees of $1,795,000 and $1,066,000 for the three months ended March 31, 2024 and 2023, respectively. In addition, the Company had outstanding receivables associated with its property and construction management roles of $9,240,000 and $7,946,000 as of March 31, 2024 and December 31, 2023, respectively.
Director Compensation
The Company recorded non-employee director compensation expense relating to restricted stock grants and deferred stock units in the amount of $596,000 and $615,000 for the three months ended March 31, 2024 and 2023, respectively, as a component of general and administrative expense. Deferred compensation relating to these restricted stock grants and deferred stock units to non-employee directors was $321,000 and $799,000 on March 31, 2024 and December 31, 2023, respectively, reported as a component of prepaid expenses and other assets on the accompanying Condensed Consolidated Balance Sheets.
11. Fair Value
Financial Instruments Carried at Fair Value
Derivative Financial Instruments
The Company uses Hedging Derivatives to manage its interest rate risk. These instruments are carried at fair value in the Company's financial statements. The Company minimizes its credit risk on these transactions by dealing with major, creditworthy financial institutions which have an A or better credit rating by the Standard & Poor's Ratings Group or equivalent, and monitors the credit ratings of counterparties and the exposure of the Company to any single entity. The Company believes the likelihood of realizing losses from counterparty nonperformance is remote. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, such as interest rate, term to maturity and volatility, the credit valuation adjustments associated with its derivatives use Level 3 inputs, such as estimates of current credit spreads, which the Company concluded are not significant. As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy.
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The following table summarizes the consolidated derivative positions at March 31, 2024 (dollars in thousands):

| Non-designated Hedges |  | Cash Flow Hedges |
| Interest Rate Caps |  | Interest Rate Swaps |
Notional balance | $ | 391,846 |  | $ | 250,000 |
Weighted average interest rate (1) | 5.2 | % |  | N/A |
Weighted average capped/swapped interest rate | 6.7 | % |  | 3.2 | % |
Earliest maturity date | February 2026 |  | June 2024 |
Latest maturity date | January 2027 |  | February 2025 |

____________________________________
(1)For debt hedged by interest rate caps, represents the weighted average interest rate on the hedged debt prior to any impact of the associated interest rate caps.
During the three months ended March 31, 2024, the Company entered into $50,000,000 of new forward interest rate swap agreements to reduce the impact of variability in interest rates on a portion of the Company's anticipated future debt issuance activity. As of March 31, 2024, the Company had $250,000,000 in aggregate outstanding pay fixed interest rate swap agreements that were entered into as hedges of changes in interest rates for our anticipated future debt issuance activity. The Company expects to cash settle the swaps and either pay or receive cash for the then current fair value. Assuming that the Company issues the debt as expected, the hedging impact from these positions will then be recognized over the life of the issued debt as a yield adjustment.
The Company had certain derivatives not designated as hedges during the three months ended March 31, 2024 and 2023, for which fair value changes during each of the respective periods were not material.
Cash flow hedge losses reclassified from accumulated other comprehensive income into earnings were $146,000 and $354,000 for the three months ended March 31, 2024 and 2023, respectively.
The Company anticipates reclassifying approximately $582,000 of net hedging losses from accumulated other comprehensive income into earnings within the next 12 months as an offset to the hedged item during this period.
Equity Securities
The Company has direct equity investments in property technology and environmentally focused companies. These investments are accounted for using the measurement alternative and are valued at the market price of observable transactions.
Financial Instruments Not Carried at Fair Value
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalent and restricted cash balances are held with various financial institutions within accounts designed to preserve principal. The Company monitors credit ratings of these financial institutions and the concentration of cash, cash equivalents and restricted cash balances with any one financial institution and believes the likelihood of realizing material losses related to cash, cash equivalent and restricted cash balances is remote. Cash, cash equivalents and restricted cash are carried at their face amounts, which reasonably approximate their fair values and are Level 1 within the fair value hierarchy.
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Other Financial Instruments
Rents and other receivables and prepaid expenses, accounts and construction payable and accrued expenses and other liabilities are carried at their face amounts, which reasonably approximate their fair values. The Company determined that its notes receivables approximate fair value, because interest rates, yields and other terms are consistent with interest rates, yields and other terms currently available for similar instruments and are considered to be a Level 2 price within the fair value hierarchy.
Indebtedness
The Company values its fixed rate unsecured notes using quoted market prices, a Level 1 price within the fair value hierarchy. The Company values its mortgage notes payable and any outstanding amounts under the Credit Facility and Commercial Paper Program using a discounted cash flow analysis on the expected cash flows of each instrument. This analysis reflects the contractual terms of the instrument, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The process also considers credit valuation adjustments to appropriately reflect the Company's nonperformance risk. The Company has concluded that the value of its mortgage notes payable and any outstanding amounts under the Credit Facility and Commercial Paper Program are Level 2 prices as the majority of the inputs used to value its positions fall within Level 2 of the fair value hierarchy.
Financial Instruments Measured/Disclosed at Fair Value on a Recurring Basis
The following tables summarize the classification between the three levels of the fair value hierarchy of the Company's financial instruments measured/disclosed at fair value on a recurring basis (dollars in thousands):

|  | March 31, 2024
Description |  | Total Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets |  |  |  |  |  |  |  |
Investments |  |  |  |  |  |  |  |
Notes Receivable, net |  | $ | 141,239 |  |  | $ | — |  |  | $ | 141,239 |  |  | $ | — |
Non Designated Hedges |  |  |  |  |  |  |  |
Interest Rate Caps |  | 46 |  |  | — |  |  | 46 |  |  | — |
Interest Rate Swaps - Assets |  | 12,340 |  |  | — |  |  | 12,340 |  |  | — |
Total Assets |  | $ | 153,625 |  |  | $ | — |  |  | $ | 153,625 |  |  | $ | — |
Liabilities |  |  |  |  |  |  |  |
Indebtedness |  |  |  |  |  |  |  |
Fixed rate unsecured notes |  | $ | 6,651,672 |  |  | $ | 6,651,672 |  |  | $ | — |  |  | $ | — |
Mortgage notes payable and Commercial Paper Program |  | 654,860 |  |  | — |  |  | 654,860 |  |  | — |
Total Liabilities |  | $ | 7,306,532 |  |  | $ | 6,651,672 |  |  | $ | 654,860 |  |  | $ | — |

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|  | December 31, 2023
Description |  | Total Fair Value |  | Quoted Prices in Active Markets for Identical Asset (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets |  |  |  |  |  |  |  |
Investments |  |  |  |  |  |  |  |
Notes Receivable, net |  | $ | 118,127 |  |  | $ | — |  |  | $ | 118,127 |  |  | $ | — |
Non Designated Hedges |  |  |  |  |  |  |  |
Interest Rate Caps |  | 85 |  |  | — |  |  | 85 |  |  | — |
Interest Rate Swaps - Assets |  | 5,163 |  |  | — |  |  | 5,163 |  |  | — |
Total Assets |  | $ | 123,375 |  |  | $ | — |  |  | $ | 123,375 |  |  | $ | — |
Liabilities |  |  |  |  |  |  |  |
Interest Rate Swaps - Liabilities |  | $ | 162 |  |  | $ | — |  |  | $ | 162 |  |  | $ | — |
Indebtedness |  |  |  |  |  |  |  |
Fixed rate unsecured notes |  | 6,716,631 |  |  | 6,716,631 |  |  | — |  |  | — |
Mortgage notes payable and Commercial Paper Program |  | 644,313 |  |  | — |  |  | 644,313 |  |  | — |
Total Liabilities |  | $ | 7,361,106 |  |  | $ | 6,716,631 |  |  | $ | 644,475 |  |  | $ | — |

12. Subsequent Events
The Company has evaluated subsequent events through the date on which this Form 10-Q was filed, the date on which these financial statements were issued, and identified the items below for discussion.
In April 2024, the Company entered into agreements to sell two wholly-owned communities containing an aggregate of 554 apartment homes and net operating real estate of $188,752,000 as of March 31, 2024, resulting in the communities qualifying as held for sale subsequent to March 31, 2024. The Company expects to complete the sales in the second and third quarter of 2024.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help provide an understanding of our business, financial condition and results of operations. This MD&A should be read in conjunction with our Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements included elsewhere in this report. This report, including the following MD&A, contains forward-looking statements regarding future events or trends that should be read in conjunction with the factors described under "Forward-Looking Statements" included in this report. Actual results or developments could differ materially from those projected in such statements as a result of the factors described under "Forward-Looking Statements" as well as the risk factors described in Part I, Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Form 10-K") and in Part II, Item 1A. "Risk Factors" in this report.
Capitalized terms used without definition have the meanings provided elsewhere in this Form 10-Q.
Executive Overview
Business Description
AvalonBay Communities, Inc. (the “Company,” “we,” “our” and “us” which terms, unless the context otherwise requires, refer to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real
estate investment trust (“REIT”) for federal income tax purposes. We develop, redevelop, acquire, own and operate multifamily apartment communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in our expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado. We focus on leading metropolitan areas that we believe are generally characterized by growing employment in high wage sectors of the economy, higher cost of home ownership and a diverse and vibrant quality of life. We believe these market characteristics have offered, and will continue to offer, the opportunity for superior risk-adjusted returns over the long-term on apartment community investments relative to other markets that do not have these characteristics.
Our principal financial goal is to increase long-term shareholder value through the development, redevelopment, acquisition, ownership, operation and asset management and, when appropriate, disposition of apartment communities in our markets. To help meet this goal, we regularly (i) monitor our investment allocation by geographic market and product type, (ii) develop, redevelop and acquire interests in apartment communities in our selected markets, (iii) efficiently operate our communities to maximize resident satisfaction and shareholder return, (iv) selectively sell apartment communities that no longer meet our long term strategy or when opportunities are presented to realize a portion of the value created through our investment and redeploy the proceeds from those sales and (v) maintain a capital structure that we believe is aligned with our business risks and allows us to maintain continuous access to cost-effective capital. We pursue our development, redevelopment, investment and operating activities with the purpose of “Creating a Better Way to Live.”
First Quarter 2024 Operating Highlights
•Net income attributable to common stockholders for the three months ended March 31, 2024 was $173,449,000, an increase of $26,547,000, or 18.1%, from the prior year period. The increase is primarily attributable to an increase in NOI from communities over the prior year period.
•Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential revenue ("Residential"), for the three months ended March 31, 2024 was $463,741,000, an increase of $16,671,000, or 3.7%, over the prior year period. The increase over the prior year period was due to an increase in Residential revenue of $26,845,000, or 4.2%, partially offset by an increase in Residential property operating expenses of $10,174,000, or 5.2%.
First Quarter 2024 Development Highlights
At March 31, 2024, we owned or held a direct or indirect interest in:
•17 wholly-owned communities under construction, which are expected to contain 6,064 apartment homes with a projected total capitalized cost of $2,500,000,000.
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•Land or rights to land on which we expect to develop an additional 32 apartment communities that, if developed as expected, will contain 11,167 apartment homes.
Communities Overview
Our real estate investments consist primarily of current operating apartment communities ("Current Communities"), consolidated and unconsolidated communities in various stages of development ("Development" communities and "Unconsolidated Development" communities) and Development Rights (as defined below). Our Current Communities are further classified as Same Store communities, Other Stabilized communities, Redevelopment communities and Unconsolidated communities. While we generally establish the classification of communities on an annual basis, we update the classification of communities during the calendar year to the extent that our plans with regard to the disposition or redevelopment of a community change, or if something occurs that materially impacts the operations of a community such as a casualty loss. The following is a description of each category:
Current Communities are categorized as Same Store, Other Stabilized, Redevelopment, or Unconsolidated according to the following attributes:
•Same Store is composed of consolidated 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 occupancy as of the beginning of the prior year period. For the three month periods ended March 31, 2024 and 2023, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2023, are not conducting or are not probable to conduct substantial redevelopment activities and are not held for sale as of March 31, 2024 or probable for disposition to unrelated third parties within the current year. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.
•Other Stabilized is composed of completed consolidated communities that we own and that are not Same Store but which have stabilized occupancy, as defined above, as of January 1, 2024, or which were acquired subsequent to January 1, 2023. Other Stabilized excludes communities that are conducting or are probable to conduct substantial redevelopment activities within the current year, as defined below.
•Redevelopment is composed of consolidated communities where substantial redevelopment occurred or is in progress. Redevelopment is considered substantial when (i) capital invested is expected to exceed the lesser of $5,000,000 or 10% of the community's pre-redevelopment basis and (ii) physical occupancy is below or is expected to be below 90% during, or as a result of, the redevelopment activity.
•Unconsolidated is composed of communities that we have an indirect ownership interest in through our investment interest in an unconsolidated joint venture.
Development is composed of consolidated communities that are either currently under construction, were under construction and were completed during the current year or where construction has been complete for less than one year and that do not have stabilized occupancy. These communities may be partially or fully complete and operating.
Unconsolidated Development is composed of communities that are either currently under construction, or were under construction and were completed during the current year, in which we have an indirect ownership interest through our investment interest in an unconsolidated joint venture. These communities may be partially or fully complete and operating.
Development Rights are development opportunities in the early phase of the development process where we either have an option to acquire land or enter into a leasehold interest, where we are the buyer under a long-term conditional contract to purchase land, where we control the land through a ground lease or own land to develop a new community, or where we are the designated developer in a public-private partnership. We capitalize related pre-development costs incurred in pursuit of new developments for which we currently believe future development is probable.
We currently lease our corporate headquarters located in Arlington, Virginia, as well as our other regional and administrative offices, under operating leases.
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As of March 31, 2024, communities that we owned or held a direct or indirect interest in were classified as follows:

|  | Number of communities |  | Number of apartment homes
Current Communities |  |  |  |
Same Store: |  |  |  |
New England |  | 40 |  |  | 9,927 |
Metro NY/NJ |  | 41 |  |  | 12,766 |
Mid-Atlantic |  | 42 |  |  | 14,482 |
Southeast Florida |  | 8 |  |  | 2,837 |
Denver, CO |  | 6 |  |  | 1,539 |
Pacific Northwest |  | 19 |  |  | 5,374 |
Northern California |  | 40 |  |  | 12,137 |
Southern California |  | 59 |  |  | 17,934 |
Other Expansion Regions |  | 6 |  |  | 1,381 |
Total Same Store |  | 261 |  |  | 78,377 |
Other Stabilized: |  |  |  |
New England |  | 2 |  |  | 401 |
Metro NY/NJ |  | 3 |  |  | 689 |
Mid-Atlantic |  | 1 |  |  | 714 |
Southeast Florida |  | — |  |  | — |
Denver, CO |  | — |  |  | — |
Pacific Northwest |  | 1 |  |  | 100 |
Northern California |  | — |  |  | — |
Southern California |  | — |  |  | — |
Other Expansion Regions |  | 3 |  |  | 1,131 |
Total Other Stabilized |  | 10 |  |  | 3,035 |
Redevelopment |  | — |  |  | — |
Unconsolidated |  | 9 |  |  | 2,722 |
Total Current |  | 280 |  |  | 84,134 |
Development |  | 19 |  |  | 6,539 |
Unconsolidated Development |  | — |  |  | — |
Total Communities |  | 299 |  |  | 90,673 |
Development Rights |  | 32 |  |  | 11,167 |

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Results of Operations
Our results of operations are driven by our operating platform and are primarily affected by both overall and individual geographic market conditions and apartment fundamentals and is reflected in changes in Same Store NOI; NOI derived from acquisitions, development completions and development under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity. A comparison of our operating results for the three months ended March 31, 2024 and 2023 is as follows (unaudited, dollars in thousands).

| For the three months ended March 31, |  | March 31, 2024 vs. 2023 |  |  |  |
| 2024 |  | 2023 |  | $ Change |  | % Change |  |  |  |  |  |  |  |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental and other income | $ | 711,064 |  |  | $ | 673,642 |  |  | $ | 37,422 |  |  | 5.6 | % |  |  |  |  |  |  |  |
Management, development and other fees | 1,795 |  |  | 1,066 |  |  | 729 |  |  | 68.4 | % |  |  |  |  |  |  |  |
Total revenue | 712,859 |  |  | 674,708 |  |  | 38,151 |  |  | 5.7 | % |  |  |  |  |  |  |  |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct property operating expenses, excluding property taxes | 138,911 |  |  | 129,829 |  |  | 9,082 |  |  | 7.0 | % |  |  |  |  |  |  |  |
Property taxes | 79,780 |  |  | 74,495 |  |  | 5,285 |  |  | 7.1 | % |  |  |  |  |  |  |  |
Total community operating expenses | 218,691 |  |  | 204,324 |  |  | 14,367 |  |  | 7.0 | % |  |  |  |  |  |  |  |
Property management and other indirect operating expenses | (37,005) |  |  | (35,003) |  |  | (2,002) |  |  | (5.7) | % |  |  |  |  |  |  |  |
Expensed transaction, development and other pursuit costs, net of recoveries | (4,245) |  |  | (2,992) |  |  | (1,253) |  |  | (41.9) | % |  |  |  |  |  |  |  |
Interest expense, net | (54,766) |  |  | (56,821) |  |  | 2,055 |  |  | 3.6 | % |  |  |  |  |  |  |  |
Depreciation expense | (212,269) |  |  | (204,743) |  |  | (7,526) |  |  | (3.7) | % |  |  |  |  |  |  |  |
General and administrative expense | (20,331) |  |  | (20,400) |  |  | 69 |  |  | 0.3 | % |  |  |  |  |  |  |  |
Casualty and impairment loss | (2,935) |  |  | (5,051) |  |  | 2,116 |  |  | 41.9 | % |  |  |  |  |  |  |  |
Income from unconsolidated investments | 10,847 |  |  | 4,845 |  |  | 6,002 |  |  | 123.9 | % |  |  |  |  |  |  |  |
Other real estate activity | 71 |  |  | 116 |  |  | (45) |  |  | (38.8) | % |  |  |  |  |  |  |  |
Income before income taxes | 173,535 |  |  | 150,335 |  |  | 23,200 |  |  | 15.4 | % |  |  |  |  |  |  |  |
Income tax benefit (expense) | 22 |  |  | (3,560) |  |  | 3,582 |  |  | N/A (1) |  |  |  |  |  |  |  |
Net income | 173,557 |  |  | 146,775 |  |  | 26,782 |  |  | 18.2 | % |  |  |  |  |  |  |  |
Net (income) loss attributable to noncontrolling interests | (108) |  |  | 127 |  |  | (235) |  |  | N/A (1) |  |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 173,449 |  |  | $ | 146,902 |  |  | $ | 26,547 |  |  | 18.1 | % |  |  |  |  |  |  |  |

_________________________
(1)Percent change is not meaningful.
Net income attributable to common stockholders increased $26,547,000, or 18.1%, to $173,449,000 for the three months ended March 31, 2024, as compared to the prior year period, primarily due to increases in NOI from communities over the prior year period.
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NOI. We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), property management and other indirect operating expenses, net of corporate income, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, depreciation expense, income tax expense, casualty and impairment loss, gain on sale of communities, other real estate activity and net operating income from real estate assets sold or held for sale. Management considers NOI to be an important and appropriate supplemental performance measure to net income because it helps both investors and management to understand the core operations of a community or communities prior to the allocation of any corporate-level property management overhead or financing-related costs. NOI reflects the operating performance of a community and allows for an easier comparison of the operating performance of individual assets or groups of assets. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impact to overhead as a result of acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets.
In conjunction with our continued centralization of operating activities into a shared services model, we changed our presentation for centralized shared service costs to reflect these platform costs in property management and other indirect operating expenses, net of corporate income for all periods presented. Total property management and other indirect operating expenses, net of corporate income for the three months ended March 31, 2023 as presented in the following tables includes $3,152,000 of shared services costs for this change.
NOI does not represent cash generated from operating activities in accordance with GAAP, and NOI should not be considered an alternative to net income as an indication of our performance. NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue. Reconciliations of NOI and Residential NOI for the three months ended March 31, 2024 and 2023 to net income for each period are as follows (unaudited, dollars in thousands):

| For the three months ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
Net income | $ | 173,557 |  |  | $ | 146,775 |  |  |  |  |
Property management and other indirect operating expenses, net of corporate income | 35,204 |  |  | 33,936 |  |  |  |  |
Expensed transaction, development and other pursuit costs, net of recoveries | 4,245 |  |  | 2,992 |  |  |  |  |
Interest expense, net | 54,766 |  |  | 56,821 |  |  |  |  |
General and administrative expense | 20,331 |  |  | 20,400 |  |  |  |  |
Income from unconsolidated investments | (10,847) |  |  | (4,845) |  |  |  |  |
Depreciation expense | 212,269 |  |  | 204,743 |  |  |  |  |
Income tax (benefit) expense | (22) |  |  | 3,560 |  |  |  |  |
Casualty and impairment loss | 2,935 |  |  | 5,051 |  |  |  |  |
Other real estate activity | (71) |  |  | (116) |  |  |  |  |
Net operating income from real estate assets sold or held for sale | (426) |  |  | (6,950) |  |  |  |  |
NOI | 491,941 |  |  | 462,367 |  |  |  |  |
Commercial NOI (1) | (8,284) |  |  | (8,553) |  |  |  |  |
Residential NOI | $ | 483,657 |  |  | $ | 453,814 |  |  |  |  |

_________________________
(1)Represents results attributable to the commercial and other non-residential operations at our communities ("Commercial").
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The following presents our Residential NOI and respective changes for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 (unaudited, dollars in thousands):

| For the three months ended March 31, |  |
| 2024 |  | 2023 |  | 2024 to 2023 |  |
Same Store | $ | 463,741 |  |  | $ | 447,070 |  |  | $ | 16,671 |  |  |
Other Stabilized | 15,563 |  |  | 7,034 |  |  | 8,529 |  |  |
Development / Redevelopment | 4,353 |  |  | (290) |  |  | 4,643 |  |  |
Total | $ | 483,657 |  |  | $ | 453,814 |  |  | $ | 29,843 |  |  |

The 3.7% increase in our Same Store Residential NOI for the three months ended March 31, 2024 is due to an increase in Residential revenue of $26,845,000, or 4.2%, partially offset by an increase in Residential property operating expenses of $10,174,000, or 5.2%, over the prior year period.
Rental and other income increased $37,422,000, or 5.6%, for the three months ended March 31, 2024, compared to the prior year period, primarily due to the increased rental revenue from our Same Store communities, discussed below.
Consolidated Communities — The weighted average number of occupied apartment homes for consolidated communities increased to 78,829 apartment homes for the three months ended March 31, 2024, compared to 77,482 homes for the prior year period. The weighted average monthly revenue per occupied apartment home increased to $2,999 for the three months ended March 31, 2024, compared to $2,892 in the prior year period.
Same Store Communities — The following table presents the change in Same Store Residential revenue, including the attribution of the change between average revenue per occupied home and Economic Occupancy (as defined below) for the three months ended March 31, 2024 (unaudited, dollars in thousands).

| For the three months ended March 31,
| 2024 |  | 2023 |  | 2024 to 2023 |  | 2024 to 2023 |  | 2024 |  | 2023 |  | 2024 to 2023 |  | 2024 |  | 2023 |  | 2024 to 2023
| Residential revenue |  | Average monthly revenue per occupied home |  | Economic Occupancy (1)
|  |  |  | $ Change | % Change |  |  |  |  | % Change |  |  | % Change
New England | $ | 96,557 |  |  | $ | 92,173 |  |  | $ | 4,384 |  |  | 4.8 | % |  | $ | 3,374 |  |  | $ | 3,205 |  |  | 5.3 | % |  | 96.1 | % |  | 96.6 | % |  | (0.5) | %
Metro NY/NJ | 133,711 |  |  | 128,605 |  |  | 5,106 |  |  | 4.0 | % |  | 3,647 |  |  | 3,497 |  |  | 4.3 | % |  | 95.7 | % |  | 96.0 | % |  | (0.3) | %
Mid-Atlantic | 101,206 |  |  | 97,766 |  |  | 3,440 |  |  | 3.5 | % |  | 2,445 |  |  | 2,362 |  |  | 3.5 | % |  | 95.3 | % |  | 95.3 | % |  | — | %
Southeast Florida | 23,954 |  |  | 23,545 |  |  | 409 |  |  | 1.7 | % |  | 2,879 |  |  | 2,829 |  |  | 1.8 | % |  | 97.7 | % |  | 97.8 | % |  | (0.1) | %
Denver, CO | 10,066 |  |  | 9,787 |  |  | 279 |  |  | 2.9 | % |  | 2,290 |  |  | 2,216 |  |  | 3.3 | % |  | 95.2 | % |  | 95.6 | % |  | (0.4) | %
Pacific Northwest | 42,023 |  |  | 40,822 |  |  | 1,201 |  |  | 2.9 | % |  | 2,706 |  |  | 2,653 |  |  | 2.0 | % |  | 96.3 | % |  | 95.4 | % |  | 0.9 | %
Northern California | 106,138 |  |  | 104,352 |  |  | 1,786 |  |  | 1.7 | % |  | 3,034 |  |  | 2,974 |  |  | 2.0 | % |  | 96.1 | % |  | 96.4 | % |  | (0.3) | %
Southern California | 147,426 |  |  | 137,187 |  |  | 10,239 |  |  | 7.5 | % |  | 2,850 |  |  | 2,649 |  |  | 7.6 | % |  | 96.1 | % |  | 96.2 | % |  | (0.1) | %
Other Expansion Regions | 8,146 |  |  | 8,145 |  |  | 1 |  |  | — | % |  | 2,079 |  |  | 2,068 |  |  | 0.5 | % |  | 94.6 | % |  | 95.1 | % |  | (0.5) | %
Total Same Store | $ | 669,227 |  |  | $ | 642,382 |  |  | $ | 26,845 |  |  | 4.2 | % |  | $ | 2,967 |  |  | $ | 2,842 |  |  | 4.4 | % |  | 95.9 | % |  | 96.1 | % |  | (0.2) | %

_________________________________
(1) Economic Occupancy is defined as gross potential revenue less vacancy loss, as a percentage of gross potential revenue. Gross potential revenue is determined by valuing occupied homes at contract rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant units at current market rents. Economic Occupancy considers that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue.
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Same Store uncollectible lease revenue decreased for the three months ended March 31, 2024 by $5,519,000. Uncollectible lease revenue was impacted by a decrease in government rent relief of $1,427,000 for the three months ended March 31, 2024, from the prior year period. Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of Same Store Residential revenue decreased to 1.9% in the three months ended March 31, 2024 from 3.0% in the three months ended March 31, 2023.
Direct property operating expenses, excluding property taxes, increased $9,082,000, or 7.0%, for the three months ended March 31, 2024, compared to the prior year period, primarily due to the addition of newly developed apartment communities as well as increased Residential operating expenses at our Same Store communities as discussed below.
Same Store Residential direct property operating expenses, excluding property taxes, increased $6,758,000, or 5.4%, for the three months ended March 31, 2024, compared to the prior year period, primarily due to increased utility costs from our bulk internet offering and trash, as well as maintenance costs.
Property taxes increased $5,285,000, or 7.1%, for the three months ended March 31, 2024, compared to the prior year period, primarily due to the addition of newly developed apartment communities and increases for our Same Store Residential portfolio, partially offset by decreased property taxes from dispositions.
Same Store Residential property taxes increased $3,416,000, or 4.8%, for the three months ended March 31, 2024, compared to the prior year period, due to increased assessments across the portfolio, successful appeals in the prior year period and the expiration of property tax incentive programs primarily at certain of our properties in New York City. The expiration of property tax incentive programs represents $1,476,000 or 43% of the 4.8% increase in property taxes for the three months ended March 31, 2024.
Property management and other indirect operating expenses increased $2,002,000, or 5.7%, for the three months ended March 31, 2024, compared to the prior year period, primarily due to increased costs related to initiatives to improve future efficiency in services for residents and prospects and investments in technology.
Expensed transaction, development and other pursuit costs, net of recoveries primarily reflect costs incurred for write downs and abandonment of Development Rights and development pursuits not yet considered probable for development, as well as costs related to abandoned acquisition and disposition pursuits, offset by any recoveries of costs incurred. In periods of increased acquisition pursuit activity, periods of economic downturn or when there is limited access to capital, these costs can be volatile and may vary significantly from year to year. In addition, the timing for potential recoveries will not always align with the timing for expensing an abandoned pursuit. Expensed transaction, development and other pursuit costs, net of recoveries, was $4,245,000 and $2,992,000 for the three months ended March 31, 2024 and 2023, respectively.
Interest expense, net decreased $2,055,000, or 3.6% for the three months ended March 31, 2024, compared to the prior year period. This category includes interest costs offset by capitalized interest pertaining to development and redevelopment activity, amortization of premium/discount on debt, interest income and any mark-to-market impact from derivatives not in qualifying hedge relationships. The decrease for the three months ended March 31, 2024 is primarily due to a decrease in amounts of unsecured indebtedness from the repayment of the variable rate unsecured term loan in the prior year, as well as an increased capitalized interest, compared to the prior year period.
Depreciation expense increased $7,526,000, or 3.7%, for the three months ended March 31, 2024, compared to the prior year period, primarily due to the addition of newly developed apartment communities.
Casualty and impairment loss for the three months ended March 31, 2024 and 2023 of $2,935,000 and $5,051,000, respectively, for the property and casualty damage to certain of our communities. The charge for the three months ended March 31, 2024 relates to damage at communities in California from extensive rainfall and a fire at a community in New Jersey. The charge for the three months ended March 31, 2023 relates to damage across certain communities in our Northeast and California regions related to severe weather.
Income from unconsolidated investments increased $6,002,000 for the three months ended March 31, 2024, compared to the prior year period, primarily due to unrealized property technology investments gains.
Income tax expense of $3,560,000 for the three months ended March 31, 2023 was primarily related to The Park Loggia.
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Non-GAAP Financial Measures - Reconciliation of FFO and Core FFO
FFO and FFO adjusted for non-core items, or “Core FFO,” as defined below, are generally considered by management to be appropriate supplemental measures of our operating and financial performance.
Consistent with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts® ("Nareit"), we calculate Funds from Operations Attributable to Common Stockholders ("FFO") as net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for:
•gains or losses on sales of previously depreciated operating communities;
•cumulative effect of a change in accounting principle;
•impairment write-downs of depreciable real estate assets;
•write-downs of investments in affiliates due to a decrease in the value of depreciable real estate assets held by those affiliates;
•depreciation of real estate assets; and
•similar adjustments for unconsolidated partnerships and joint ventures, including those from a change in control.
FFO can help with the comparison of the operating and financial performance of a real estate company between periods or as compared to different companies because the adjustments such as (i) gains or losses on sales of previously depreciated property or (ii) real estate depreciation may impact comparability as the amount and timing of these or similar items can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates. By further adjusting for items that we do not consider part of our core business operations, Core FFO can help with the comparison of our core operating performance year over year. We believe that, in order to understand our operating results, FFO and Core FFO should be considered in conjunction with net income as presented in the Condensed Consolidated Statements of Comprehensive Income included elsewhere in this report.
We calculate Core FFO as FFO, adjusted for:
•joint venture gains (if not adjusted through FFO), non-core costs and promoted interests from partnerships;
•casualty and impairment losses or gains, net on non-depreciable real estate or other investments;
•gains or losses from early extinguishment of consolidated borrowings;
•expensed transaction, development and other pursuit costs, net of recoveries;
•third-party business interruption insurance proceeds and the related lost NOI that is covered by the expected third party business interruption insurance proceeds;
•property and casualty insurance proceeds and legal settlements and costs;
•gains or losses on sales of assets not subject to depreciation and other investment gains or losses;
•advocacy contributions, representing payments to promote our business interests;
•hedge ineffectiveness or gains or losses from derivatives not designated as hedges for accounting purposes;
•changes to expected credit losses associated with the lending commitments under the SIP;
•severance related costs;
•executive transition compensation costs;
•net for-sale condominium activity, including gains, marketing, operating and administrative costs and imputed carry cost; and
•income taxes.
FFO and Core FFO do not represent net income in accordance with GAAP, and therefore should not be considered an alternative to net income, which remains the primary measure, as an indication of our performance. In addition, FFO and Core FFO as calculated by other REITs may not be comparable to our calculations of FFO and Core FFO.
The following is a reconciliation of net income attributable to common stockholders to FFO attributable to common stockholders and to Core FFO attributable to common stockholders (unaudited, dollars in thousands, except per share amounts):
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| For the three months ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
Net income attributable to common stockholders | $ | 173,449 |  |  | $ | 146,902 |  |  |  |  |
Depreciation - real estate assets, including joint venture adjustments | 211,347 |  |  | 203,280 |  |  |  |  |
Distributions to noncontrolling interests | — |  |  | 12 |  |  |  |  |
Loss on sale of previously depreciated real estate | 70 |  |  | 13 |  |  |  |  |
Casualty loss and impairment on real estate | 2,935 |  |  | 5,051 |  |  |  |  |
FFO attributable to common stockholders | 387,801 |  |  | 355,258 |  |  |  |  |
Adjusting items: |  |  |  |  |  |  |
Unconsolidated entity gains, net (1) | (8,385) |  |  | (3,056) |  |  |  |  |
Structured Investment Program loan reserve (2) | 58 |  |  | (19) |  |  |  |  |
Hedge accounting activity | 39 |  |  | 228 |  |  |  |  |
Advocacy contributions | 75 |  |  | — |  |  |  |  |
Executive transition compensation costs | 104 |  |  | 347 |  |  |  |  |
Severance related costs | 211 |  |  | 1,173 |  |  |  |  |
Expensed transaction, development and other pursuit costs, net of recoveries | 3,134 |  |  | 2,451 |  |  |  |  |
Other real estate activity | (141) |  |  | (129) |  |  |  |  |
For-sale condominium imputed carry cost (3) | 20 |  |  | 255 |  |  |  |  |
Legal settlements and costs | 864 |  |  | (98) |  |  |  |  |
Income tax (benefit) expense (4) | (22) |  |  | 3,560 |  |  |  |  |
Core FFO attributable to common stockholders | $ | 383,758 |  |  | $ | 359,970 |  |  |  |  |
Weighted average common shares outstanding - diluted | 142,222,755 |  |  | 140,023,810 |  |  |  |  |
Earnings per common share - diluted | $ | 1.22 |  |  | $ | 1.05 |  |  |  |  |
FFO per common share - diluted | $ | 2.73 |  |  | $ | 2.54 |  |  |  |  |
Core FFO per common share - diluted | $ | 2.70 |  |  | $ | 2.57 |  |  |  |  |

_________________________
(1)Amounts consist primarily of net unrealized gains on technology investments.
(2)Reflects changes to expected credit losses associated with our lending commitments primarily under our SIP. The timing and amount of actual losses that will be incurred, if any, is to be determined.
(3)Represents the imputed carry cost of for-sale residential condominiums at The Park Loggia. We compute this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by our weighted average unsecured debt effective interest rate.
(4)Amount for the three months ended March 31, 2023 is primarily for the recognition of taxes associated with The Park Loggia.
FFO and Core FFO also do not represent cash generated from operating activities in accordance with GAAP, and therefore should 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.
Liquidity and Capital Resources
We employ a disciplined approach to our liquidity and capital management. When we source capital, we take into account both our view of the most cost-effective alternative available and our desire to maintain a balance sheet that provides us with flexibility. Our principal focus on near-term and intermediate-term liquidity is to ensure we have adequate capital to fund:
•development and redevelopment activity in which we are currently engaged or in which we plan to engage;
•the minimum dividend payments on our common stock required to maintain our REIT qualification under the Code;
•regularly scheduled principal and interest payments and principal payments either at maturity or opportunistically before maturity;
•normal recurring operating and corporate overhead expenses; and
•investment in our operating platform, including strategic investments.
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Factors affecting our liquidity and capital resources are our cash flows from operations, financing activities and investing activities (including dispositions) as well as general economic and market conditions. Cash flows from operations are determined by operating activities and factors including but not limited to (i) the number of apartment homes currently owned, (ii) rental rates, (iii) occupancy levels, (iv) uncollectible lease revenue levels or interruptions in collections caused by market conditions and (v) operating expenses with respect to apartment homes. The timing and type of capital markets activity in which we engage is affected by changes in the capital markets environment, such as changes in interest rates or the availability of cost-effective capital. Our plans for development, redevelopment, non-routine capital expenditure, acquisition and disposition activity are affected by market conditions and capital availability. We frequently review our liquidity needs, especially in periods with volatile market conditions, as well as the adequacy of cash flows from operations and other expected liquidity sources to meet these needs.
We had cash, cash equivalents and restricted cash of $423,550,000 at March 31, 2024, a decrease of $107,410,000 from $530,960,000 at December 31, 2023. The following discussion relates to changes in cash, cash equivalents and restricted cash due to operating, investing and financing activities.
A presentation of GAAP based cash flow metrics is as follows (unaudited, dollars in thousands):

| For the three months ended March 31,
| 2024 |  | 2023
Net cash provided by operating activities | $ | 412,905 |  |  | $ | 396,118 |
Net cash used in investing activities | $ | (265,818) |  |  | $ | (267,339) |
Net cash used in financing activities | $ | (254,497) |  |  | $ | (486,960) |

•Net cash provided by operating activities increased primarily due to increases in NOI.
•Net cash used in investing activities was primarily due to (i) investment of $207,568,000 in the development and redevelopment of communities and (ii) capital expenditures of $38,690,000 for our wholly-owned communities and non-real estate assets.
•Net cash used in financing activities was primarily due to payment of cash dividends in the amount of $237,005,000.
Variable Rate Unsecured Credit Facility
The $2,250,000,000 Credit Facility matures in September 2026. The interest rate that would be applicable to borrowings under the Credit Facility is 6.15% at April 30, 2024 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.805% per annum, which consists of a 0.10% SOFR adjustment plus 0.705% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.63% to SOFR plus 1.38% based upon the rating of our unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the facility, which can vary from 0.095% to 0.295% based upon the rating of our unsecured senior notes. The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases by meeting or missing targets related to environmental sustainability, specifically greenhouse gas emission reductions, with the adjustment determined annually. The first determination under the sustainability-linked pricing component occurred in July 2023, resulting in reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.
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The availability on the Credit Facility as of April 30, 2024 is as follows (dollars in thousands):

| April 30, 2024
Credit Facility commitment | $ | 2,250,000 |
Credit Facility outstanding | — |
Commercial paper outstanding | (130,000) |
Letters of credit outstanding (1) | (1,914) |
Total Credit Facility available | $ | 2,118,086 |

_____________________________________
(1)In addition, we had $67,010 outstanding in additional letters of credit unrelated to the Credit Facility as of April 30, 2024.
Commercial Paper Program
We have a Commercial Paper Program with the maximum aggregate face or principal amount outstanding at any one time not to exceed $500,000,000. Under the terms of the Commercial Paper Program, we may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year. The Commercial Paper Program is backstopped by our commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. As of April 30, 2024, we had $130,000,000 outstanding under the Commercial Paper Program at a weighted average contractual interest rate of 5.5%.
Financial Covenants
We are subject to financial covenants contained in the Credit Facility and the indentures under which our unsecured notes were issued. The principal financial covenants include the following:
•limitations on the amount of total and secured debt in relation to our overall capital structure;
•limitations on the amount of our unsecured debt relative to the undepreciated basis of real estate assets that are not encumbered by property-specific financing; and
•minimum levels of debt service coverage.
We were in compliance with these covenants at March 31, 2024.
In addition, some of our secured borrowings include yield maintenance, defeasance, or prepayment penalty provisions, which would result in us incurring an additional charge in the event of a full or partial prepayment of outstanding principal before the scheduled maturity. These provisions in our secured borrowings are generally consistent with other similar types of debt instruments issued during the same time period in which our borrowings were secured.
Continuous Equity Offering Program
Under our continuous equity program (the "CEP"), we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time. During the three months ended March 31, 2024 and through April 30, 2024, we did not have any sales under this program. As of April 30, 2024, we had $705,961,000 remaining authorized for issuance under this program.
Stock Repurchase Program
We have a stock repurchase program under which we may acquire shares of our common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the "Stock Repurchase Program"). During the three months ended March 31, 2024 and through April 30, 2024, we had no repurchases of shares under this program. As of April 30, 2024, we had $314,237,000 remaining authorized for purchase under this program.
Interest Rate Swap Agreements
During the three months ended March 31, 2024, we entered into $50,000,000 of new forward interest rate swap agreements to reduce the impact of variability in interest rates on a portion of our anticipated future debt issuance activity. As of March 31, 2024, we had $250,000,000 in aggregate outstanding pay fixed interest rate swap agreements that were entered into as hedges of changes in interest rates for our anticipated future debt issuance activity. We expect to cash settle the swaps and either pay or
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receive cash for the then current fair value. Assuming that we issue the debt as expected, the hedging impact from these positions will then be recognized over the life of the issued debt as a yield adjustment.
Future Financing and Capital Needs — Debt Maturities and Material Obligations
One of our principal long-term liquidity needs is the repayment of long-term debt at maturity. For both our unsecured and secured notes, a portion of the principal of these notes may be repaid prior to maturity. Early retirement of our unsecured or secured notes could result in gains or losses on extinguishment. If we do not have funds on hand sufficient to repay our indebtedness as it becomes due, it will be necessary for us to refinance or otherwise provide liquidity to satisfy the debt at maturity. This refinancing may be accomplished by uncollateralized private or public debt offerings, equity issuances, additional debt financing that is secured by mortgages on individual communities or groups of communities or borrowings under our Credit Facility or Commercial Paper Program. In addition, to the extent we have amounts outstanding under the Commercial Paper Program, we are obligated to repay the short-term indebtedness at maturity through either current cash on hand or by incurring other indebtedness, including by way of borrowing under our Credit Facility. Although we believe we will have the capacity to meet our currently anticipated liquidity needs, we cannot assure you that capital from additional debt financing or debt or equity offerings will be available or, if available, that they will be on terms we consider satisfactory.
The following table details our consolidated debt obligations, including the effective interest rate and contractual maturity dates, and principal payments for periodic amortization and maturities for the next five years, excluding our Credit Facility and Commercial Paper Program and amounts outstanding related to communities classified as held for sale, for debt outstanding at March 31, 2024 and December 31, 2023 (dollars in thousands). We are not directly or indirectly (as borrower or guarantor) obligated in any material respect to pay principal or interest on the indebtedness of any unconsolidated entities in which we have an equity or other interest other than as disclosed related to the AVA Arts District construction loan (see "Unconsolidated Operating Communities" for further discussion of the construction loan).
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|  | Effective interest rate (1) |  | Principal maturity date |  | Balance Outstanding (2) |  | Scheduled Maturities
Debt |  |  |  | 12/31/2023 |  | 3/31/2024 |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | 2028 |  | Thereafter
Tax-exempt bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Variable rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Avalon Acton |  | 4.68 | % |  | Jul-2040 | (3) | $ | 45,000 |  |  | $ | 45,000 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 45,000 |
Avalon Clinton North |  | 5.33 | % |  | Nov-2038 | (3) | 126,400 |  |  | 126,400 |  |  | — |  |  | — |  |  | — |  |  | 700 |  |  | 2,800 |  |  | 122,900 |
Avalon Clinton South |  | 5.33 | % |  | Nov-2038 | (3) | 104,500 |  |  | 104,500 |  |  | — |  |  | — |  |  | — |  |  | 600 |  |  | 2,300 |  |  | 101,600 |
Avalon Midtown West |  | 5.28 | % |  | May-2029 | (3) | 76,600 |  |  | 76,600 |  |  | 6,800 |  |  | 7,300 |  |  | 8,100 |  |  | 8,800 |  |  | 9,600 |  |  | 36,000 |
Avalon San Bruno I |  | 5.22 | % |  | Dec-2037 | (3) | 57,650 |  |  | 56,850 |  |  | 1,400 |  |  | 2,400 |  |  | 2,600 |  |  | 2,800 |  |  | 3,000 |  |  | 44,650 |
|  |  |  |  |  | 410,150 |  |  | 409,350 |  |  | 8,200 |  |  | 9,700 |  |  | 10,700 |  |  | 12,900 |  |  | 17,700 |  |  | 350,150 |
Conventional loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
$300 million unsecured notes |  | 3.66 | % |  | Nov-2024 |  | 300,000 |  |  | 300,000 |  |  | 300,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
$525 million unsecured notes |  | 3.55 | % |  | Jun-2025 |  | 525,000 |  |  | 525,000 |  |  | — |  |  | 525,000 |  |  | — |  |  | — |  |  | — |  |  | — |
$300 million unsecured notes |  | 3.62 | % |  | Nov-2025 |  | 300,000 |  |  | 300,000 |  |  | — |  |  | 300,000 |  |  | — |  |  | — |  |  | — |  |  | — |
$475 million unsecured notes |  | 3.35 | % |  | May-2026 |  | 475,000 |  |  | 475,000 |  |  | — |  |  | — |  |  | 475,000 |  |  | — |  |  | — |  |  | — |
$300 million unsecured notes |  | 3.01 | % |  | Oct-2026 |  | 300,000 |  |  | 300,000 |  |  | — |  |  | — |  |  | 300,000 |  |  | — |  |  | — |  |  | — |
$350 million unsecured notes |  | 3.95 | % |  | Oct-2046 |  | 350,000 |  |  | 350,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 350,000 |
$400 million unsecured notes |  | 3.50 | % |  | May-2027 |  | 400,000 |  |  | 400,000 |  |  | — |  |  | — |  |  | — |  |  | 400,000 |  |  | — |  |  | — |
$300 million unsecured notes |  | 4.09 | % |  | Jul-2047 |  | 300,000 |  |  | 300,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 300,000 |
$450 million unsecured notes |  | 3.32 | % |  | Jan-2028 |  | 450,000 |  |  | 450,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 450,000 |  |  | — |
$300 million unsecured notes |  | 3.97 | % |  | Apr-2048 |  | 300,000 |  |  | 300,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 300,000 |
$450 million unsecured notes |  | 3.66 | % |  | Jun-2029 |  | 450,000 |  |  | 450,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 450,000 |
$700 million unsecured notes |  | 2.69 | % |  | Mar-2030 |  | 700,000 |  |  | 700,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 700,000 |
$600 million unsecured notes |  | 2.65 | % |  | Jan-2031 |  | 600,000 |  |  | 600,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 600,000 |
$700 million unsecured notes |  | 2.16 | % |  | Jan-2032 |  | 700,000 |  |  | 700,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 700,000 |
$400 million unsecured notes |  | 2.03 | % |  | Dec-2028 |  | 400,000 |  |  | 400,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 400,000 |  |  | — |
$350 million unsecured notes |  | 4.38 | % |  | Feb-2033 |  | 350,000 |  |  | 350,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 350,000 |
$400 million unsecured notes |  | 5.19 | % |  | Dec-2033 |  | 400,000 |  |  | 400,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 400,000 |
Avalon Walnut Creek |  | 4.00 | % |  | Jul-2066 |  | 4,501 |  |  | 4,501 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,501 |
eaves Los Feliz |  | 3.68 | % |  | Jun-2027 |  | 41,400 |  |  | 41,400 |  |  | — |  |  | — |  |  | — |  |  | 41,400 |  |  | — |  |  | — |
eaves Woodland Hills |  | 3.67 | % |  | Jun-2027 |  | 111,500 |  |  | 111,500 |  |  | — |  |  | — |  |  | — |  |  | 111,500 |  |  | — |  |  | — |
Avalon Russett |  | 3.77 | % |  | Jun-2027 |  | 32,200 |  |  | 32,200 |  |  | — |  |  | — |  |  | — |  |  | 32,200 |  |  | — |  |  | — |
Avalon San Bruno III |  | 2.38 | % |  | Mar-2027 |  | 51,000 |  |  | 51,000 |  |  | — |  |  | — |  |  | — |  |  | 51,000 |  |  | — |  |  | — |
Avalon Cerritos |  | 3.35 | % |  | Aug-2029 |  | 30,250 |  |  | 30,250 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 30,250 |
Avalon West Plano |  | 5.97 | % |  | May-2029 |  | 63,041 |  |  | 63,041 |  |  | 593 |  |  | 1,065 |  |  | 1,111 |  |  | 1,159 |  |  | 1,202 |  |  | 57,911 |
|  |  |  |  |  | 7,633,892 |  |  | 7,633,892 |  |  | 300,593 |  |  | 826,065 |  |  | 776,111 |  |  | 637,259 |  |  | 851,202 |  |  | 4,242,662 |
Total indebtedness - excluding Credit Facility and Commercial Paper |  |  |  |  |  | $ | 8,044,042 |  |  | $ | 8,043,242 |  |  | $ | 308,793 |  |  | $ | 835,765 |  |  | $ | 786,811 |  |  | $ | 650,159 |  |  | $ | 868,902 |  |  | $ | 4,592,812 |

_________________________
(1)Rates are as of March 31, 2024 and include credit enhancement fees, facility fees, trustees' fees, the impact of interest rate hedges, offering costs, mark-to-market amortization and other fees.
(2)Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $42,194 and $43,848 as of March 31, 2024 and December 31, 2023, respectively, deferred financing costs and debt discount associated with secured notes of $17,777 and $18,372 as of March 31, 2024 and December 31, 2023, respectively, as reflected on our Condensed Consolidated Balance Sheets included elsewhere in this report.
(3)Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement.
In addition to consolidated debt, we have scheduled contractual obligations associated with (i) ground leases for land underlying current operating or development communities and commercial and parking facilities and (ii) office leases for our corporate headquarters and regional offices. As of March 31, 2024, other than as discussed in this Form 10-Q, there have been no other material changes in our scheduled contractual obligations as disclosed in our Form 10-K.
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Future Financing and Capital Needs — Portfolio and Capital Markets Activity
We invest in various real estate and real estate related investments, which include (i) the acquisition, development and redevelopment of communities both wholly-owned and through the formation of joint ventures, (ii) other indirect investments in real estate through the SIP, all as discussed further below and (iii) investments in other real estate-related ventures through direct and indirect investments in property technology and environmentally focused companies and investment management funds.
In 2024, we expect to continue to meet our liquidity needs from one or more of a variety of internal and external sources, which may include (i) real estate dispositions, (ii) cash balances on hand as well as cash generated from our operating activities, (iii) borrowing capacity under the Credit Facility, (iv) borrowings under the Commercial Paper Program and (v) secured and unsecured debt financings. Additional sources of liquidity in 2024 may include the issuance of common and preferred equity, including the issuance of shares of our common stock under the CEP. Our ability to obtain additional financing will depend on a variety of factors, such as market conditions, the general availability of credit, the overall availability of credit to the real estate industry, our credit ratings and credit capacity, as well as the perception of lenders regarding our long or short-term financial prospects.
Before beginning new construction or reconstruction activity, including activity related to communities owned by unconsolidated joint ventures, we plan to source sufficient capital to complete these undertakings, although we cannot assure you that we will be able to obtain such financing. In the event that financing cannot be obtained, we may abandon Development Rights, write-off associated pre-development costs that were capitalized and/or forego reconstruction activity. In such instances, we will not realize the increased revenues and earnings that we expected from such Development Rights or reconstruction activity and significant losses could be incurred.
From time to time we use joint ventures to hold or develop individual real estate assets. We generally employ joint ventures to mitigate asset concentration or market risk and secondarily as a source of liquidity. We may also use joint ventures related to mixed-use land development opportunities and new markets where our partners bring development and operational expertise and/or experience to the venture. Each joint venture or partnership agreement has been individually negotiated, and our ability to operate and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture or partnership agreement. We cannot assure you that we will achieve our objectives through joint ventures.
In addition, we may invest, through mezzanine loans or preferred equity investments, in multifamily development projects being undertaken by third parties. In these cases, we do not expect to acquire the underlying real estate but rather to earn a return on our investment (through interest or fixed rate preferred equity returns) and a return of the invested capital generally following completion of construction either on or before a set due date.
In evaluating our allocation of capital within our markets, we sell assets that do not meet our long-term investment criteria or when capital and real estate markets allow us to realize a portion of the value created over our ownership periods and redeploy the proceeds from those sales to develop, redevelop and acquire communities. Because the proceeds from the sale of communities may not be immediately redeployed into revenue generating assets that we develop, redevelop or acquire, the immediate effect of a sale of a community for a gain is to increase net income, but reduce future total revenues, total expenses and NOI until such time as the proceeds have been redeployed into revenue generating assets. We believe that the temporary absence of future cash flows from communities sold will not have a material impact on our ability to fund future liquidity and capital resource needs.
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Unconsolidated Operating Communities
As of March 31, 2024, we had investments in the following unconsolidated real estate entities accounted for under the equity method of accounting, excluding development joint ventures. See Note 5, "Investments," of the Condensed Consolidated Financial Statements included elsewhere in this report. For joint ventures holding operating apartment communities as of March 31, 2024, detail of the real estate and associated indebtedness underlying our unconsolidated investments is presented in the following table (dollars in thousands).

|  | Company ownership percentage |  | # of apartment homes |  | Total capitalized cost |  | Debt (1)
|  |  |  |  | Principal amount |  |  |  | Interest rate |  | Maturity date
Unconsolidated Real Estate Investments |  |  |  |  |  | Type |  |
NYTA MF Investors, LLC |  |  |  |  |  |  |  |  |  |  |  |  |  |
1. Avalon Bowery Place I - New York, NY |  |  |  | 206 |  | $ | 216,037 |  |  | $ | 93,800 |  |  | Fixed |  | 4.01 | % |  | Jan 2029
2. Avalon Bowery Place II - New York, NY |  |  |  | 90 |  | 91,385 |  |  | 39,639 |  |  | Fixed |  | 4.01 | % |  | Jan 2029
3. Avalon Morningside - New York, NY (2) |  |  |  | 295 |  | 213,589 |  |  | 111,295 |  |  | Fixed |  | 3.55 | % |  | Jan 2029/May 2046
4. Avalon West Chelsea - New York, NY (3) |  |  |  | 305 |  | 129,250 |  |  | 66,000 |  |  | Fixed |  | 4.01 | % |  | Jan 2029
5. AVA High Line - New York, NY (3) |  |  |  | 405 |  | 122,492 |  |  | 84,000 |  |  | Fixed |  | 4.01 | % |  | Jan 2029
Total NYTA MF Investors, LLC |  | 20.0 | % |  | 1,301 |  |  | 772,753 |  |  | 394,734 |  |  |  |  | 3.88 | % |  |
Other Operating Joint Ventures |  |  |  |  |  |  |  |  |  |  |  |  |  |
1. MVP I, LLC - Avalon at Mission Bay II - San Francisco, CA |  | 25.0 | % |  | 313 |  |  | 129,747 |  |  | 103,000 |  |  | Fixed |  | 3.24 | % |  | Jul 2025
2. Brandywine Apartments of Maryland, LLC - Brandywine - Washington, D.C. |  | 28.7 | % |  | 305 |  |  | 20,093 |  |  | 18,890 |  |  | Fixed |  | 3.40 | % |  | Jun 2028
3. Avalon Alderwood MF Member, LLC - Avalon Alderwood Place - Lynnwood, WA |  | 50.0 | % |  | 328 |  |  | 111,209 |  |  | — |  |  | N/A |  | N/A |  | N/A
4. Arts District Joint Venture - AVA Arts District - Los Angeles, CA (4) |  | 25.0 | % |  | 475 |  |  | 286,220 |  |  | 142,348 |  |  | Variable |  | 7.91 | % |  | Aug 2025
Total Other Joint Ventures |  |  |  | 1,421 |  |  | 547,269 |  |  | 264,238 |  |  |  |  | 5.77 | % |  |
Total Unconsolidated Real Estate Investments (5) |  |  |  | 2,722 |  |  | $ | 1,320,022 |  |  | $ | 658,972 |  |  |  |  | 4.64 | % |  |

_____________________________
(1)We have not guaranteed the debt of these unconsolidated investees and bear no responsibility for the repayment other than for the Arts District joint venture as discussed below in note 4.
(2)Borrowing on this community is comprised of two mortgage loans. The interest rate is the weighted average interest rate as of March 31, 2024.
(3)Borrowing on this dual-branded community is comprised of a single mortgage loan. This dual-branded community is subject to a leasehold interest which is not included in the total capitalized cost.
(4)Development of this community was completed during the three months ended March 31, 2024. Remaining development costs related to commitment close-outs, retail improvements and construction true-ups are primarily expected to be funded by the venture's variable rate construction loan. The venture had drawn $142,348 of the $167,147 maximum borrowing capacity of the construction loan as of March 31, 2024. While we guarantee 30% of the maximum borrowing capacity of the construction loan on behalf of the venture, any amounts payable under the guarantee are obligations of the venture partners in proportion to ownership interest, and in the event we are obligated to perform under the construction loan guarantee, the joint venture partner is obligated to reimburse us for 75% of amounts paid. The venture anticipates replacing the construction loan with long-term financing prior to the final maturity of the construction loan.
(5)In addition to leasehold assets, there were net other assets of $34,991 as of March 31, 2024 associated with our unconsolidated real estate investments which are primarily cash and cash equivalents.
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Development Communities
As of March 31, 2024, we owned or held a direct interest in 17 Development Communities under construction. We expect these Development Communities, when completed, to add a total of 6,064 apartment homes and 59,000 square feet of commercial space to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $2,500,000,000. We cannot assure you that we will meet our schedule for construction completion or that we will meet our budgeted costs, either individually, or in the aggregate.
The following table presents a summary of the Development Communities.

| Number of apartment homes |  | Projected total capitalized cost (1) ($ millions) |  | Construction start |  | Initial projected or actual occupancy |  | Estimated completion |  | Estimated stabilized operations (2)
1. |  | Avalon Amityville Amityville, NY | 338 |  |  | $ | 134 |  |  | Q2 2021 |  | Q3 2023 |  | Q2 2024 |  | Q4 2024
2. |  | Avalon Bothell Commons I Bothell, WA | 467 |  |  | 236 |  |  | Q2 2021 |  | Q3 2023 |  | Q3 2024 |  | Q1 2025
3. |  | Avalon Westminster Promenade Westminster, CO | 312 |  |  | 112 |  |  | Q3 2021 |  | Q2 2024 |  | Q3 2024 |  | Q2 2025
4. |  | Avalon West Dublin Dublin, CA | 499 |  |  | 267 |  |  | Q3 2021 |  | Q4 2023 |  | Q4 2024 |  | Q2 2025
5. |  | Avalon Montville Montville, NJ | 349 |  |  | 127 |  |  | Q4 2021 |  | Q4 2023 |  | Q3 2024 |  | Q4 2024
6. |  | Avalon Redmond Campus (3) Redmond, WA | 214 |  |  | 89 |  |  | Q4 2021 |  | Q1 2024 |  | Q2 2024 |  | Q4 2024
7. |  | Avalon Governor's Park Denver, CO | 304 |  |  | 135 |  |  | Q1 2022 |  | Q3 2024 |  | Q4 2024 |  | Q2 2025
8. |  | Avalon West Windsor (4) West Windsor, NJ | 535 |  |  | 211 |  |  | Q2 2022 |  | Q3 2025 |  | Q3 2026 |  | Q1 2027
9. |  | Avalon Durham (5) Durham, NC | 336 |  |  | 125 |  |  | Q2 2022 |  | Q2 2024 |  | Q3 2024 |  | Q2 2025
10. |  | Avalon Annapolis Annapolis, MD | 508 |  |  | 201 |  |  | Q3 2022 |  | Q3 2024 |  | Q3 2025 |  | Q2 2026
11. |  | Kanso Milford Milford, MA | 162 |  |  | 63 |  |  | Q4 2022 |  | Q1 2024 |  | Q3 2024 |  | Q1 2025
12. |  | Avalon Lake Norman (5) Mooresville, NC | 345 |  |  | 101 |  |  | Q1 2023 |  | Q1 2025 |  | Q1 2026 |  | Q3 2026
13. |  | Avalon Hunt Valley West Hunt Valley, MD | 322 |  |  | 109 |  |  | Q2 2023 |  | Q1 2025 |  | Q1 2026 |  | Q3 2026
14. |  | Avalon South Miami (4) South Miami, FL | 290 |  |  | 186 |  |  | Q3 2023 |  | Q3 2025 |  | Q1 2026 |  | Q3 2026
15. |  | Avalon Princeton Shopping Center Princeton, NJ | 200 |  |  | 82 |  |  | Q3 2023 |  | Q1 2025 |  | Q2 2025 |  | Q4 2025
16. |  | Avalon Wayne Wayne, NJ | 473 |  |  | 174 |  |  | Q4 2023 |  | Q2 2025 |  | Q3 2026 |  | Q1 2027
17. |  | Avalon Parsippany Parsippany, NJ | 410 |  |  | 148 |  |  | Q4 2023 |  | Q4 2025 |  | Q4 2026 |  | Q2 2027
|  | Total | 6,064 |  |  | $ | 2,500 |  |  |  |  |  |  |  |  |

_________________________________
(1)Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
(2)Stabilized operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
(3)Avalon Redmond Campus is a densification of the existing eaves Redmond Campus wholly-owned community, replacing 48 existing older apartment homes that were demolished.
(4)Development Communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 square feet) and Avalon South Miami (32,000 square feet).
(5)Communities being developed through our Developer Funding Program ("DFP"). The DFP utilizes third-party multifamily developers to source and construct communities which we own and operate.
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Development Rights
At March 31, 2024, we had $211,546,000 in acquisition and related capitalized costs for direct interests in 10 land parcels we own. In addition, we had $65,236,000 in capitalized costs (including legal fees, design fees and related overhead costs) consisting of $54,038,000 included as deferred development rights and the balance included in our unconsolidated investments, with these amounts related to (i) 19 Development Rights for which we control the land parcel, typically through a conditional agreement or option to purchase or lease the land, as well as (ii) costs incurred for three Development Rights that we expect to construct as additional phases of our existing stabilized operating communities on land we own. Collectively, the land held for development and associated costs for deferred development rights relate to 32 Development Rights for which we expect to develop new apartment communities in the future. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately. We estimate that the successful completion of all of these communities would ultimately add approximately 11,167 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own.
The Development Rights are in different stages of the due diligence and regulatory approval process. The decisions as to which of the Development Rights to invest in, 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 analyses. In the event that we do not proceed with a Development Right, we generally would not recover any of the capitalized costs incurred in the pursuit of those communities, unless we were to recover amounts in connection with the sale of land; however, we cannot guarantee a recovery. Pre-development costs incurred in the pursuit of Development Rights for which future development is not yet considered probable are expensed as incurred. In addition, if the status of a Development Right changes, making future development no longer probable, any unrecoverable capitalized pre-development costs are charged to expense. For the three months ended March 31, 2024, we incurred a charge of $4,245,000 for expensed transaction, development and other pursuit costs, net of recoveries, which include development pursuits that were not yet probable of future development at the time incurred, or for pursuits that we determined were no longer probable of being developed.
Structured Investment Program
As of April 30, 2024, we had seven commitments to fund up to $191,585,000 in the aggregate under the SIP. As of April 30, 2024, our investment commitments had a weighted average rate of return of 11.5% and a weighted average initial maturity date of December 2026. As of April 30, 2024, we had funded $124,665,000 of these commitments. See Note 5, "Investments," of the Condensed Consolidated Financial Statements included elsewhere in this report.
You should carefully review Part I, Item 1A. "Risk Factors" of our Form 10-K, as well as the discussion under Part II, Item 1A. "Risk Factors" in this report, for a discussion of the risks associated with our investment activity.
Forward-Looking Statements
This Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by our use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "project," "plan," "may," "shall," "will," "pursue" and other similar expressions in this Form 10-Q, that predict or indicate future events and trends and that do not report historical matters. These statements include, among other things, statements regarding our intent, belief or expectations with respect to:
•our potential development, redevelopment, acquisition or disposition of communities;
•the timing and cost of completion of apartment communities under construction, reconstruction, development or redevelopment;
•the timing of lease-up, occupancy and stabilization of apartment communities;
•the pursuit of land on which we are considering future development;
•the anticipated operating performance of our communities;
•cost, yield, revenue, NOI and earnings estimates;
•the impact of landlord-tenant laws and rent regulations;
•our expansion into new regions;
•our declaration or payment of dividends;
•our joint venture activities;
•our policies regarding investments, indebtedness, acquisitions, dispositions, financings and other matters;
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•our qualification as a REIT under the Code;
•the real estate markets in regions in which we operate and in general;
•the availability of debt and equity financing;
•interest rates;
•general economic conditions, including the potential impacts from current economic conditions, including rising interest rates and general price inflation;
•trends affecting our financial condition or results of operations;
•regulatory changes that may affect us; and
•the impact of legal proceedings.
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. We do not undertake a duty to update these forward-looking statements, and therefore they may not represent our estimates and assumptions after the date of this report. 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. 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. You should carefully review the discussion under Part I, Item 1A. "Risk Factors" of our Form 10-K and Part II, Item 1A. "Risk Factors" in this report, for further discussion of risks associated with forward-looking statements.
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:
•we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals;
•we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses;
•construction costs of a community may exceed our original estimates;
•we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in our expected rental revenues;
•occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control;
•financing may not be available on favorable terms or at all, and our cash flows from operations and access to cost effective capital may be insufficient for the development of our pipeline, which could limit our pursuit of opportunities;
•the impact of new landlord-tenant laws and rent regulations may be greater than we expect;
•an outbreak of disease or other public health event may affect the multifamily industry and general economy, including from measures taken by businesses and the government and the preferences of consumers and businesses for living and working arrangements both during and after such an event;
•our cash flows 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;
•we may be unsuccessful in our management of joint ventures and the REIT vehicles that are used with certain joint ventures;
•laws and regulations implementing rent control or rent stabilization, or otherwise limiting our ability to increase rents, charge fees or evict tenants, may impact our revenue or increase our costs;
•our expectations, estimates and assumptions as of the date of this filing regarding legal proceedings are subject to change;
•the possibility that we may choose to pay dividends in our stock instead of cash, which may result in stockholders having to pay taxes with respect to such dividends in excess of the cash received, if any; and
•investments made under the SIP in either mezzanine debt or preferred equity of third-party multifamily development may not be repaid as expected or the development may not be completed on schedule, which could require us to engage in litigation, foreclosure actions, and/or first party project completion to recover our investment, which may not be recovered in full or at all in such event.
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or a different presentation of our financial statements. Our critical accounting policies consist of the following: (i) cost capitalization and (ii) abandoned pursuit costs and asset impairment. Our critical accounting policies and estimates have not changed materially from the discussion of our significant accounting policies found in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our exposures to market risk as disclosed in Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES
(a)Evaluation of disclosure controls and procedures.
The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of March 31, 2024. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.
We continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
(b)Changes in internal controls over financial reporting.
There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to above that occurred during the first quarter of 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As disclosed in Note 7, "Commitments and Contingencies" of the Condensed Consolidated Financial Statements in Part I, Item 1 of this report, we are engaged in certain legal proceedings, and the disclosure set forth in Note 7, "Commitments and Contingencies" relating to legal and other contingencies is incorporated herein by reference.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the risk factors that could materially affect our business, financial condition or future results discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 in Part I, Item 1A. "Risk Factors." The risks described in our Form 10-K are not the only risks that could affect the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results in the future. There have been no material changes to our risk factors since December 31, 2023.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) None.
(b) Not applicable.
(c) Issuer Purchases of Equity Securities

Period |  | Total Number of Shares Purchased (1) |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
January 1 - January 31, 2024 |  | 69 |  |  | $ | 183.29 |  |  | — |  |  | $ | 314,237 |
February 1 - February 29, 2024 |  | 4,070 |  |  | $ | 178.30 |  |  | — |  |  | $ | 314,237 |
March 1 - March 31, 2024 |  | 87,307 |  |  | $ | 178.14 |  |  | — |  |  | $ | 314,237 |
Total |  | 91,446 |  |  | $ | 178.15 |  |  | — |  |  |

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(1)Consists of (i) shares surrendered to the Company in connection with exercise of stock options as payment of exercise price, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to shares of common stock and (ii) activity under the Stock Repurchase Program, if any, as indicated under Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs.
(2)The Board of Directors approved the Stock Repurchase Program in July 2020, under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000. Purchases of common stock under the Stock Repurchase Program may be exercised from time to time in the Company’s discretion and in such amounts as market conditions warrant. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
As announced by the Company on February 13, 2024, W. Edward Walter, a director on the Company’s Board of Directors (the “Board”), has decided to retire from the Board at the time of our 2024 Annual Meeting of Stockholders. Promptly following his departure, Mr. Walter will receive shares of common stock of the Company in respect of all of his vested deferred stock units received pursuant to our Directors’ Deferred Compensation Program. On February 28, 2024, Mr. Walter adopted a Rule 10b5-1 trading arrangement (the “10b5-1 Plan”) intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The 10b5-1 Plan is effective from May 29, 2024 until December 31, 2024 and covers the sale of up to 12,177 shares of common stock to be received by Mr. Walter in respect of his deferred stock units (plus any shares of common stock received from dividend equivalents on such units). None of the Company’s other directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K) during the three months ended March 31, 2024.
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ITEM 6. EXHIBITS

Exhibit No. |  |  |  | Description
3(i).1 |  | — |  | Articles of Amendment and Restatement of Articles of Incorporation of the Company, dated as of June 4, 1998. (Incorporated by reference to Exhibit 3(i).1 to Form 10-K of the Company filed March 1, 2007.)
3(i).2 |  | — |  | Articles of Amendment, dated as of October 2, 1998. (Incorporated by reference to Exhibit 3(i).2 to Form 10-K of the Company filed March 1, 2007.)
3(i).3 |  | — |  | Articles of Amendment, dated as of May 22, 2013. (Incorporated by reference to Exhibit 3(i).3 to Form 8-K of the Company filed May 22, 2013.)
3(i).4 |  | — |  | Articles of Amendment, dated as of May 14, 2020. (Incorporated by reference to Exhibit 3(i).4 to Form 8-K of the Company filed May 15, 2020.)
3(i).5 |  | — |  | Composite restatement of Articles of Amendment and Restatement of Articles of Incorporation of the Company, dated as of June 4, 1998, as amended by the Articles of Amendment, dated as of October 2, 1998, the Articles of Amendment, dated as of May 22, 2013, and the Articles of Amendment, dated as of May 14, 2020. (Incorporated by reference to Exhibit 3(i).5 to Form 10-Q of the Company filed November 3, 2023.)
3(ii).1 |  | — |  | Amended and Restated Bylaws of the Company, as adopted by the Board of Directors on October 30, 2023. (Incorporated by reference to Exhibit 3.1 to Form 8-K of the Company filed October 30, 2023.)
4.1 |  | — |  | Indenture for Debt Securities, dated as of February 23, 2024, between the Company and U.S. Bank Trust Company, National Association. (Incorporated by reference to Exhibit 4.8 to Form 10-K of the Company filed February 23, 2024.)
10.1+ |  | — |  | 2024 Amended and Restated Directors Deferred Compensation Program. (Incorporated by reference to Exhibit 10.4 to Form 10-K of the Company filed February 23, 2024.)
10.2+ |  | — |  | Form of Director Restricted Stock Unit Agreement (2024). (Incorporated by reference to Exhibit 10.7 to Form 10-K of the Company filed February 23, 2024.)
31.1 |  | — |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). (Filed herewith.)
31.2 |  | — |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). (Filed herewith.)
32 |  | — |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). (Furnished herewith.)
101 |  | — |  | Financial materials from AvalonBay Communities, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2024 formatted in Inline XBRL (Extensible Business Reporting Language) including: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) Notes to the Condensed Consolidated Financial Statements. (Filed herewith.)
104 |  | — |  | Cover Page Interactive Data File (embedded within the Inline XBRL document). (Filed herewith.)

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+ Management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-Q.
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SIGNATURES
Pursuant to the requirements 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.

| AVALONBAY COMMUNITIES, INC.
Date: | May 3, 2024 | /s/ Benjamin W. Schall
|  | Benjamin W. Schall
|  | Chief Executive Officer and President
|  | (Principal Executive Officer)
Date: | May 3, 2024 | /s/ Kevin P. O'Shea
|  | Kevin P. O'Shea
|  | Chief Financial Officer
|  | (Principal Financial Officer)

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