AVA 55 NINTH San Francisco, CA. AVALON BAKER RANCH Lake Forest, CA. REITWeek AVA HIGH LINE New York, NY

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1 AVA 55 NINTH San Francisco, CA AVALON BAKER RANCH Lake Forest, CA REITWeek AVA HIGH LINE New York, NY

2 See Appendix for information about ForwardLooking Statements and definitions of nongaap financial measures and other terms. Statements related to 2015 Outlook and projections in this presentation do not represent a confirmation of reaffirmation of Outlook and projections previously published. 2

3 AGENDA About AvalonBay Apartment Market Fundamentals Growth Strategy Portfolio Management Capital Management 3

4 AGENDA About AvalonBay Apartment Market Fundamentals Growth Strategy Portfolio Management Capital Management 4

5 About AvalonBay ABOUT AVALONBAY An equity REIT in the business of developing, redeveloping, acquiring, and managing apartment communities in leading metropolitan areas in New England, the New York / New Jersey Metro area, the MidAtlantic, the Pacific Northwest, and Northern and Southern California Own or hold a direct or indirect ownership interest in 279 apartment communities (1) containing 81,606 apartment homes Total Enterprise Value of $29 billion 2014 Total Revenue of $1.7 billion S&P 500 Company 2 nd largest multifamily REIT (2) Source: Company reports, SNL Financial. Data as of March 31, 2015, unless otherwise noted. (1) Includes 25 communities under construction and seven communities under reconstruction. (2) Based on Total Market Capitalization per SNL Financial. AVALON BAKER RANCH LAKE FOREST, CA 5

6 About AvalonBay LONGTERM FOCUS ON ATTRACTIVE COASTAL MARKETS PACIFIC NORTHWEST 5,080 NORTHERN CALIFORNIA 12,410 SOUTHERN CALIFORNIA 19.6% % OF NOI NEW ENGLAND 12.8% METRO NY NJ 25.3% 16,530 13,125 METRO NY NJ NEW ENGLAND SOUTHERN CALIFORNIA 19,171 NORTHERN CALIFORNIA 20.9% MIDATLANTIC 16.2% 14,024 MIDATLANTIC PACIFIC NORTHWEST 5.2% Source: Company reports. Data as of March 31, % of NOI represents each region s % of total NOI for 1Q 2015, including amounts related to communities that have been sold or that are classified as held for sale. Map excludes 1,266 apartment homes in noncore markets. 6

7 COMPLETIONS AS A % OF EXISTING STOCK MEDIAN HOME PRICE $ THOUSDANDS, 2014 MEDIAN HOUSEHOLD INCOME $ THOUSANDS, 2014 About AvalonBay WHICH HAVE STRUCTURAL ADVANTAGES FOR OUR BUSINESS CONSTRAINTS ON NEW SUPPLY HIGHER COST OF HOMEOWNERSHIP HIGHER HOUSEHOLD INCOMES 1.6% % % % AVB MARKETS U.S. TOP 50 METRO AVERAGE AVB MARKETS U.S. AVERAGE AVB MARKETS U.S. AVERAGE Source: REIS, Moody s Analytics. 7

8 About AvalonBay DEEPLY PENETRATING OUR MARKETS WITH A DIVERSIFIED PRODUCT MIX GARDEN / TOWNHOME MIDRISE HIGHRISE AVALON ROSELAND ROSELAND, NJ AVA H STREET WASHINGTON, D.C. AVALON WEST CHELSEA NEW YORK, NY EAVES SEAL BEACH SEAL BEACH, CA AVALON ALDERWOOD LYNNWOOD, WA AVA 55 NINTH SAN FRANCSICO, CA 8

9 About AvalonBay AND A MULTIBRAND PORTFOLIO CONSUMER BRAND KEY MESSAGE Live up. Value Living. Where we want, we live. TARGET Comfort Creatures Value Seekers Young Urban Socials AVERAGE RENT $2,290 $1,735 $2,130 Source: Company reports. Data as of March 31,

10 About AvalonBay SIGNIFICANT GROWTH SINCE DOWNTURN 2010 Total Market Capitalization: $14B 2014 Total Market Capitalization: $28B 100% Apartment Homes: 55K Apartment Homes: 82K 49% Associates: 2,000 Associates: 3,000 50% Development Pipeline: $3.5B Development Pipeline: $6.2B 77% Core FFO / Share: $3.98 Core FFO / Share: $ % Source: Company reports. 10

11 0.8% 5.2% 6.4% 9.0% 10.8% 12.3% About AvalonBay CONTRIBUTING TO LONGTERM OUTPERFORMANCE 15% 10YEAR COMPOUND ANNUAL GROWTH RATE % 5% TOTAL SHAREHOLDER RETURN NET ASSET VALUE PER SHARE DIVIDEND PER SHARE AVALONBAY MULTIFAMILY SECTOR WEIGHTED AVERAGE Source: SNL Financial, Green Street Advisors, LLC. (1) The Multifamily Sector Weighted Average for Total Shareholder Return and Dividend Growth per Share includes AEC, AIV, CPT, EQR, ESS, HME, MAA, PPS and UDR. The Multifamily Sector Weighted Average for Net Asset Value per Share includes AEC, AIV, CPT, EQR, ESS, PPS and UDR. Weighting is based on Total Market Capitalization per SNL Financial. (1) 11

12 3.4% 6.7% 7.4% 8.4% About AvalonBay PRIMARILY AS A RESULT OF OUR CAPITAL ALLOCATION TRACK RECORD 9% ANNUALIZED CORE FFO PER SHARE GROWTH % PROJECTED CORE FFO PER SHARE GROWTH 2015 (1) 6% 6% 3% 3% AVALONBAY MULTIFAMILY SECTOR WEIGHTED AVERAGE AVALONBAY MULTIFAMILY SECTOR WEIGHTED AVERAGE (2) (2) Source: SNL Financial, Company reports. (1) 2015 Projected Core FFO Growth excludes nonroutine items and represents the midpoint of each Company s initial outlook provided in January or February (2) The Multifamily Sector Weighted Average includes AEC, AIV, CPT, EQR, ESS, HME, PPS and UDR and is weighted based on Total Market Capitalization as of December 31, 2014 per SNL Financial. 12

13 About AvalonBay 7.8% DIVIDEND INCREASE IN 2015 CONTINUES A 20+ YEAR TRACK RECORD OF STRONG DIVIDEND GROWTH 300 ANNUAL COMMON DIVIDENDS PAID INDEXED TO 100 IN YEAR CAGR = 5.3% Source: SNL Financial, Company reports. Amounts prior to the merger (AVN & BYA) represent the sum of Avalon Properties and Bay Communities. 13

14 AGENDA About AvalonBay Apartment Market Fundamentals Growth Strategy Portfolio Management Capital Management 14

15 MILLIONS THOUSANDS Apartment Market Fundamentals APARTMENT FUNDAMENTALS REMAIN FAVORABLE 3% U.S. JOB GROWTH Q % U.S. JOB GROWTH YEAR OLDS Q % 2% 1% 1% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q U.S. HOUSEHOLD FORMATIONS TRAILING 4QUARTER TOTAL U.S. MULTIFAMILY STARTS SEASONALLY ADJUSTED ANNUALIZED RATE 3MONTH MOVING AVERAGE Q Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q % U.S. RENTAL VACANCY RATE % EFFECTIVE RENT GROWTH AVB MARKETS Q % 3% 6% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Source: U.S. Bureau of Labor Statistics (Establishment & Household Survey), U.S. Census Bureau, Axiometrics. 15

16 Apartment Market Fundamentals AND ARE PROJECTED TO SUPPORT ABOVE TREND GROWTH IN MOST REGIONS IN % 2015 FULL YEAR SAMESTORE RENTAL REVENUE OUTLOOK (1) 8% 6% HIGHEND 4.5% 4% 2% 3.5% LOWEND (2%) AVALONBAY SAMESTORE NEW ENGLAND METRO NY/NJ MIDATLANTIC PACIFIC NORTHWEST 2015 PROJECTED SAMESTORE RENTAL REVENUE GROWTH RANGE Source: Company reports. Outlook as of January 28, (1) For Established Communities effective January 1, (2) For Established Communities effective January 1, NORTHERN CALIFORNIA SOUTHERN CALIFORNIA 2014 SAMESTORE RENTAL REVENUE GROWTH (2) 16

17 % CHANGE MILLIONS MILLIONS Apartment Market Fundamentals CURRENT CYCLE PROVING TO BE DURABLE AND SIMILAR TO THE 90S (5) U.S. CUMULATIVE JOB CREATION Q1 Q5 Q9 Q13 Q17 Q21 Q25 Q29 Q33 Q U.S. CUMULATIVE MULTIFAMILY STARTS Q1 Q5 Q9 Q13 Q17 Q21 Q25 Q29 Q33 Q37 60% U.S. CUMULATIVE RENT GROWTH 53% 40% 20% 18% 2Q Q 2001 Q1 Q5 Q9 Q13 Q17 Q21 Q25 Q29 Q33 Q37 Source: U.S. Bureau of Labor Statistics, U.S. Census Bureau, REIS. 4Q 2009 CURRENT 17

18 ANNUALIZED ANNUALIZED Apartment Market Fundamentals REGIONAL PERFORMANCE PROJECTED TO EVEN OUT OVER THE NEXT FEW YEARS JOB, SUPPLY & RENTAL REVENUE GROWTH 4Q Q 2014 PROJECTED JOB & SUPPLY GROWTH 4Q Q % 9% 5% 8.3% 4% 6.9% 4% 3% 2% 4.8% 3.8% 4.4% 4.3% 6% 3% 3% 2% 1% 2.1% 1% JOB GROWTH Source: AVB Market Research Group. NEW APARTMENT SUPPLY AS A % OF TOTAL APARTMENT INVENTORY ANNUALIZED AVERAGE AVB SAMESTORE RENTAL REVENUE GROWTH (RIGHT AXIS) 18

19 AGENDA About AvalonBay Apartment Market Fundamentals Growth Strategy Portfolio Management Capital Management 19

20 Growth Strategy MULTIPLE GROWTH PLATFORMS Development Growing the portfolio Acquisitions Dispositions Shaping the portfolio Redevelopment Positioning the portfolio Mergers & Acquisitions Transforming the portfolio 20

21 Growth Strategy PROVEN DEVELOPMENT TRACK RECORD 12% 10.8% 11.1% 10% 8.9% 8% 6% 8.3% 8.0% 8.0% 7.8% 7.7% 7.1% 6.3% 7.9% 7.7% 7.2% 6.3% 5.6% 6.5% 5.7% 5.9% 7.4% 7.3% 7.1% 280 BPS SPREAD 4% 5.2% 4.1% 4.6% 4.7% 5.1% 4.9% 5.4% 5.5% 5.1% 4.9% 4.3% 2% AVERAGE AGE OF 2014 DISPOSITIONS 20 YEARS Source: Company reports. Data as of December 31, DEVELOPMENT COMPLETION YIELD AVB WEIGHTED AVERAGE TRANSACTION CAPITALIZATION (CAP) RATE 21

22 $ THOUSANDS Growth Strategy 2014 DEVELOPMENT ACTIVITY COMPLETED AT A COMPELLING COST BASIS AND DELIVERING HIGHER RENTS VALUE PER HOME (1) MARKET RENT PER HOME New development completed at a cost basis per home that is 25% below the market value per home of our existing 19 yearold portfolio ESTIMATED VALUE CREATION $ 2,500 $ 2,400 and the completions are commanding rents that are 7% higher. $ 2, , $ 2,200 2,270 CURRENT COMMUNITIES ESTIMATED VALUE COST PER HOME OF 2014 DEVELOPMENT COMPLETIONS $ 2,100 CURRENT COMMUNITIES Source: Company reports, Green Street Advisors, LLC. Data as of December 31, (1) Value per Home for Current Communities in derived from Company Net Asset value from Green Street Advisors, LLC. The Estimated Value Creation is based on the Company s standard underwriting assumptions assuming completion at proforma levels DEVELOPMENT COMPLETIONS 22

23 PROJECTED $ BILLIONS % OF TOTAL ENTERPRISE VALUE Growth Strategy DEVELOPMENT WILL CONTINUE TO BE A PRIMARY DRIVER OF GROWTH 4 25% 3 20% 2 % OF ENTERPRISE VALUE TARGET RANGE 15% 10% 1 5% (1) Source: Company reports. Data as of March 31, (1) Assumes Total Enterprise Value as of December 31, DEVELOPMENT VOLUME UNDERWAY AT YEAREND % OF TOTAL ENTERPRISE VALUE (RIGHT AXIS) 23

24 Growth Strategy A $3.3 BILLION SHADOW DEVELOPMENT PIPELINE OF OPPORTUNITY # OF RIGHTS ESTIMATED # OF HOMES PROJECTED TOTAL CAPITAL COST MILLIONS AVALON NEWCASTLE I NEWCASTLE, WA Boston, MA 4 1,114 $ 289 Fairfield New Haven, CT New York City New York Suburban 5 1, New Jersey 11 3, Washington, DC Metro 6 1, Seattle, WA OaklandEast Bay, CA San Francisco, CA AVALON QUINCY QUINCY, MA RiversideSan Bernardino, CA TOTAL 35 9,985 $ 3,309 AVALON DOGPATCH SAN FRANCISCO, CA Source: Company reports. Data as of March 31, AVALON GREAT NECK GREAT NECK, NY 24

25 AGENDA About AvalonBay Apartment Market Fundamentals Growth Strategy Portfolio Management Capital Management 25

26 Portfolio Management HIGHQUALITY PORTFOLIO Average Rental Rate: $2,280 (1) Economic Occupancy: 95.9% (1) Average Age of Portfolio: 19 years AVALON MORRISON PARK SAN JOSE, CA AVALON MOSAIC Source: Company reports. Data as of March 31, FAIRFAX, VA Apartments depicted are model units. (1) For Established Communities as of January 1, AVA LITTLE TOKYO LOS ANGELES, CA AVALON WEST CHELSEA NEW YORK, NY 26

27 Portfolio Management ARCHSTONE ACQUISITION LARGELY ACHIEVED ALLOCATION TARGETS % OF CONSOLIDATED AVB NOI 4Q 2012 ARCHSTONE ACQUISITION & ORGANIC GROWTH New England 3.0% 1Q 2015 Southern California 14.5% New England 18.9% Northern California 19.8% Metro NY/NJ 30.8% MidAtlantic 12.3% Southern California 29.2% Northern California 23.7% Metro NY/NJ 17.3% MidAtlantic 21.2% Southern California 19.6% Northern California 20.9% New England 12.8% Metro NY/NJ 25.3% MidAtlantic 16.2% Pacific Northwest 3.7% Pacific Northwest 5.5% Pacific Northwest 5.2% Source: Company reports. Reflects whollyowned consolidated communities only. 27

28 7% 68% 12% 70% Portfolio Management 16% OPERATING EFFICIENCIES ENABLED BY INCREASED SCALE AND ENHANCED CAPABILITIES OPERATING OVERHEAD AS A % OF TOTAL NOI (1) 72% AVB SAMESTORE OPERATING MARGINS 2014 MULTIFAMILY SECTOR WEIGHTED AVERAGE 66% (2) 12% 8% 68% 4% PROJECTED 64% (3) (3) PROJECTED Source: Company reports, SNL Financial. Data as of March 31, (1) Operating Overhead includes Property management and other indirect operating expenses and General and Administrative expenses. (2) Represents samestore NOI divided by samestore Revenues per SNL Financial. The Multifamily Sector Weighted Average includes AEC, AIV, CPT, EQR, ESS, HME, MAA, PPS, and UDR and is weighted based on Total Market Capitalization per SNL Financial as of December 31, (3) Includes Redevelopment activity. 28

29 Portfolio Management IMPROVING EFFICIENCY AND ENHANCING CUSTOMER EXPERIENCE PROSPECT PORTAL RESIDENT PORTAL AvalonCommunities.com as a share of total leads u 290 basispoints yearoveryear, to 26% of all leads Internet advertising spend d 28% yearoveryear Source: Company reports. Data as of March 31, % of rent payments are received via the portal, up from 80% in % of service requests are received via the portal, up from 30% in

30 $ MILLIONS Portfolio Management CUSTOMER CARE CENTER IS A COMPETITIVE ADVANTAGE ABOUT THE CCC FUTURE OPPORTUNITIES AT THE CCC Launched in 2007 Bad debt collections Virginia Beach, VA 225 associates 165 Customer Service associates 60 Accounting / Other associates 2 BRINGING BAD DEBT COLLECTIONS INHOUSE 40% Services Provided 1 20% Customer Service Communitylevel accounting Cash Management & Accounts Payable Payroll 2012 NET SAVINGS PROJECTED 2015 % OF BAD DEBT COLLECTED INHOUSE (RIGHT AXIS) Increased consistency and control Bringing other 3 rd party services inhouse Source: Company reports. Data as of March 31,

31 AGENDA About AvalonBay Apartment Market Fundamentals Growth Strategy Portfolio Management Capital Management 31

32 Capital Management INTEGRATED CAPITAL MANAGEMENT GUIDING PRINCIPLES Match Fund New Commitments Manage Liquidity and Borrowing Capacity Optimize Sourcing of Capital 32

33 $ BILLIONS Capital Management DEVELOPMENT PIPELINE 100% MATCHFUNDED 4 DEVELOPMENT ACTIVITY UNDERWAY AND NONSTABILZIED COMPLETIONS VERSUS AVAILABLE CAPITAL SOURCES AS OF MARCH 31, 2015 EQUITY FORWARD (1) 3 CASH AND CASH IN ESCROW PROJECTED CASH FROM OPERATIONS, NET (2) 2 $ 3.6 B 1 SPENTTODATE TOTAL PROJECTED CAPITAL COST SOURCES Source: Company reports. Data as of March 31, (1) Assumes physical settlement and settlement proceeds based on $ per share. Actual physical settlement proceeds will vary based on adjustment for Fed Funds rate and dividends paid. (2) Projected Cash From Operations, Net assumes $250 million of free cash flow over the next 12 months. 33

34 Capital Management BALANCE SHEET WELLPOSITIONED TO PURSUE FUTURE INVESTMENT OPPORTUNITIES 71% of NOI is unencumbered TOTAL EQUITY 78% 5.9x Net DebttoAdjusted EBITDA TOTAL DEBT 22% 5.8x Interest Coverage Strong Credit Ratings S&P: A, Stable Outlook Moody s: Baa1, Positive Outlook OTHER 7% UNSECURED FIXED 43% TAXEXEMPT VARIABLE 15% CONVENTIONAL FIXED 35% Source: Company reports. Data as of March 31,

35 $ MILLIONS LEGACY ARCHSTONE DEBT Capital Management DEBT MATURITIES ARE WELL STAGGERED AND GENERALLY LESS THAN CURRENT DIVIDENDS PAID 1,000 ONE OR TWO YEAR EXTENSION OPTION AVAILABLE ANNUAL DIVIDENDS PAID Source: Company reports. Data as of April 30, (1) Based on projected 2015 annual common dividend ($5.00 / Share) and average common shares outstanding diluted, as of March 31, (1) 35

36 FORWARDLOOKING STATEMENTS Some of the factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forwardlooking statements include, but are not limited to, the following: our expectations and assumptions as of the date of this presentation regarding insurance coverage, lender payoff and refinancing requirements, potential uninsured loss amounts, and the outcome of any current or future civil or governmental lawsuits, investigations and/or enforcement proceedings resulting from the Edgewater fire, as well as the ultimate cost and timing of replacing the Edgewater building and achieving stabilized occupancy in the event the Company chooses to rebuild this community, are subject to change and could materially affect our current expectations regarding the impact of the fire on our financial condition and results of operations; the expected proceeds from settlement of the Forward are subject to adjustment for changes in the Fed Funds rate and the amount of dividends we pay on our common stock, and our receipt of settlement proceeds assumes that we will settle the Forward by physical delivery; we may fail to secure development opportunities due to an inability to reach agreements with thirdparties 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 leaseup 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; 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 Fund II, the U.S. Fund, the AC JV or the REIT vehicles that are used with each respective fund; and we may be unsuccessful in managing changes in our portfolio composition. 36

37 DEFINITIONS & RECONCILIATIONS OF NONGAAP FINANCIAL MEASURES AND OTHER TERMS AVB Weighted Average Transaction Cap Rate is the average (weighted by their respective acquisition or sale prices) of the Initial Year Market Capitalization Rates of the Company s acquisitions and dispositions during the year. The Initial Year Market Capitalization Rate is the Company s projected NOI of a single community for the first 12 months of operations (assuming no repositioning) after acquisition or disposition, less estimates for nonroutine allowance of approximately $300 $500 per apartment home, divided by the gross acquisition or sale price for the community. Projected NOI, as referred to in this paragraph represents management s estimate of projected rental revenue minus projected Direct Property Operating Expenses Development Completion Yield represents the NOI or Projected NOI of a development community upon completion and Stabilized Operations expressed as a percentage of the Total Capital Cost of the community. Total Market Capitalization, also referred to as Total Enterprise Value, represents the aggregate of the market value of the Company s common stock, the market value of the Company s operating partnership units outstanding (based on the market value of the Company s common stock), the liquidation preference of the Company s preferred stock and the outstanding principal balance of the Company s debt. Management believes that Leverage can be one useful measure of a real estate operating company s longterm liquidity and balance sheet strength, because it shows an approximate relationship between a company s total debt and the current total market value of its assets based on the current price at which the Company s common stock trades FFO is determined based on a definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ( NAREIT ). FFO is calculated by the Company 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 writedowns of depreciable real estate assets, writedowns of investments in affiliates which are driven by a decrease in the value of depreciable real estate assets held by the affiliate and depreciation of real estate assets, including adjustments for unconsolidated partnerships and joint ventures. Management generally considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses related to dispositions of previously depreciated operating communities and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company s real estate between periods or as compared to different companies. 37

38 DEFINITIONS & RECONCILIATIONS OF NONGAAP FINANCIAL MEASURES AND OTHER TERMS A reconciliation of FFO to Net Income attributable to common stockholders for the years 2014, 2010 and 2004 is as follows (dollars in thousands): Full Year 2014 Full Year 2010 Full Year 2004 Net income attributable to common stockholders $ 683,567 $ 175,331 $ 219,745 Cumulative effect of change in accounting principle (4,547) Dividends attributable to preferred stock (8,700) Depreciation real estate assets, including discontinued operations and joint venture adjustments 449, , ,988 Distributions to noncontrolling interests, including discontinued operations Gain on sale of unconsolidated entities holding previously depreciated real estate assets (73,674) Gain on sale of previously depreciated real estate assets (108,662) (74,074) (121,287) Minority interest, including discontinued operations 3,048 FFO attributable to common stockholders $ 951,035 $ 338,353 $ 246,247 Average shares outstanding diluted 131,237,502 84,632,869 73,354,956 Earnings per share diluted $ 5.21 $ 2.07 $ 3.00 FFO per common share diluted $ 7.25 $ 4.00 $

39 DEFINITIONS & RECONCILIATIONS OF NONGAAP FINANCIAL MEASURES AND OTHER TERMS Core FFO is the Company s FFO as adjusted for the nonroutine items outlined in the following table (dollars in thousands): Full Year 2014 Full Year 2010 Full Year 2004 FFO, actual $ 951,035 $ 338,353 $ 246,247 NonRoutine Items Joint venture gains and costs (63,322) Acquisition costs (7,682) Income Taxes 9,243 Business interruption insurance proceeds (2,494) Compensation plan redesign and Severance related costs 815 (1,550) Early extinguishment of consolidated debt 412 Writeoff of Development Rights and retail assets 2,564 Gains/Losses on land sales (490) (1,138) Federal Excise Tax (235) Legal settlement proceeds, net (927) Severe weather costs 672 Investment management fund transaction costs, net 811 Rent.com/Constellation writedown 700 Prepayment premium on N/P to AVB (1,200) Core FFO $ 890,081 $ 337,124 $ 244,609 Core FFO per common share diluted $ 6.78 $ 3.98 $

40 DEFINITIONS & RECONCILIATIONS OF NONGAAP FINANCIAL MEASURES AND OTHER TERMS Projected FFO as provided within the earnings release in the Company s outlook, is calculated on a basis consistent with historical FFO, and is therefore considered to be an appropriate supplemental measure to project Net Income from projected operating performance. A reconciliation of the ranges provided for projected EPS (diluted) and corresponding reconciliation of the ranges for Projected FFO per share to the ranges for Core FFO per share are as follows: Low range High range Projected EPS (diluted) Full Year 2015 $ 4.65 $ 4.95 Projected depreciation (real estate related) Projected gain on asset sales (0.90) (1.10) Projected FFO per share (diluted) Full Year Non recurring joint venture income and management fees (0.23) (0.25) Edgewater operating losses and casualty losses Income taxes Writeoff of unamortized MTM premium (0.05) (0.07) Other nonroutine items Projected Core FFO per share (diluted) Full Year 2015 $ 7.20 $

41 DEFINITIONS & RECONCILIATIONS OF NONGAAP FINANCIAL MEASURES AND OTHER TERMS Unencumbered NOI as calculated by the Company represents NOI generated by real estate assets unencumbered by either outstanding secured debt or land leases (excluding land leases with purchase options that were put in place for governmental incentives or tax abatements) as a percentage of total NOI generated by real estate assets. The Company believes that current and prospective unsecured creditors of the Company view Unencumbered NOI as one indication of the borrowing capacity of the Company. Therefore, when reviewed together with the Company's Interest Coverage, EBITDA and cash flow from operations, the Company believes that investors and creditors view Unencumbered NOI as a useful supplemental measure for determining the financial flexibility of an entity. A calculation of Unencumbered NOI for the three months ended March 31, 2015 is as follows (dollars in thousands): NOI for Established Communities $ 237,001 NOI for Other Stabilized Communities 34,008 NOI for Development/Redevelopment Communities 26,988 NOI for discontinued operations NOI from real estate assets sold or held for sale, not classified as discontinued operations 836 Total NOI generated by real estate assets $ 298,833 NOI on encumbered assets 86,902 NOI on unencumbered assets $ 211,931 Unencumbered NOI 71% 41 41

42 DEFINITIONS & RECONCILIATIONS OF NONGAAP FINANCIAL MEASURES AND OTHER TERMS Interest Coverage, also referred to as Fixed Charge Coverage, is calculated by the Company as EBITDA, excluding joint venture income or loss, divided by the sum of interest expense, net, and preferred dividends. Interest Coverage is presented by the Company because it provides rating agencies and investors an additional means of comparing our ability to service debt obligations to that of other companies. EBITDA is defined by the Company as net income or loss attributable to the Company before interest income and expense, income taxes, depreciation and amortization. A reconciliation of EBITDA, as adjusted, and a calculation of Interest Coverage for the first quarter of 2015 are as follows (dollars in thousands): Net income attributable to common stockholders $ 208,144 Interest expense, net 45,573 Interest expense (discontinued operations) Income tax expense Depreciation expense 116,853 EBITDA $ 370,570 NOI from discontinued operations and real estate assets sold or held for sale, not classified as discontinued operations 836 Gain on sale of communities 70,936 EBITDA after disposition activity $ 298,798 Joint venture income (34,566) EBITDA, as adjusted $ 264,232 Interest expense, net $ 45,573 Interest Coverage 5.8 times 42 42

43 DEFINITIONS & RECONCILIATIONS OF NONGAAP FINANCIAL MEASURES AND OTHER TERMS Net Debt/Adjusted EBITDA is calculated by the Company as total debt that is consolidated for financial reporting purposes, less consolidated cash and cash in escrow, divided by annualized first quarter 2015 EBITDA, excluding joint venture income or loss (dollars in thousands): Total debt principal (1) $ 6,493,278 Cash and cash in escrow (297,716) Net debt $ 6,195,562 Net income attributable to common stockholders $ 208,144 Interest expense, net 45,573 Income tax expense Depreciation expense 116,853 EBITDA $ 370,570 NOI from discontinued operations and real estate assets sold or held for sale, not classified as discontinued operations 836 Gain on sale of communities 70,936 EBITDA after disposition activity $ 298,798 Joint venture income (34,566) EBITDA, as adjusted $ 264,232 EBITDA, as adjusted, annualized $ 1,056,928 Net DebttoAdjusted EBITDA 5.9 times (1) Balance at March 31, 2015 excludes $6,491of debt discount as reflected in unsecured notes, net, and $75,544 of debt premium as reflected in notes payable, on the Condensed Consolidated Balance Sheets. The debt premium is primarily related to above market interest rates on debt assumed in connection with the Archstone acquisition