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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 September 30, 2021
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 (I.R.S. Employer
incorporation or organization) Identification No.)
 
4040 Wilson Blvd., Suite 1000
Arlington, Virginia 22203
(Address of principal executive offices, including zip code)
(703) 329-6300
(Registrant's telephone number, including area code)  
(Former name, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareAVBNew 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 twelve (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 ninety (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 (Section 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, 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 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:

139,740,922 shares of common stock, par value $0.01 per share, were outstanding as of October 29, 2021.


AVALONBAY COMMUNITIES, INC.
FORM 10-Q
INDEX
 
 PAGE
PART I - FINANCIAL INFORMATION 
  
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
   
 
   
 
   
 
   
 
  
  
  
  
 
  
  
  
  
  
  
  
  






AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
 9/30/202112/31/2020
 (unaudited) 
ASSETS  
Real estate:  
Land and improvements$4,510,361 $4,394,298 
Buildings and improvements17,839,750 17,231,275 
Furniture, fixtures and equipment1,000,756 924,583 
 23,350,867 22,550,156 
Less accumulated depreciation(6,056,727)(5,700,179)
Net operating real estate17,294,140 16,849,977 
Construction in progress, including land787,561 989,765 
Land held for development66,769 110,142 
For-sale condominium inventory171,113 267,219 
Real estate assets held for sale, net46,438 16,678 
Total real estate, net18,366,021 18,233,781 
Cash and cash equivalents322,294 216,976 
Cash in escrow113,556 96,556 
Resident security deposits33,440 30,811 
Investments in unconsolidated real estate entities199,541 202,612 
Deferred development costs55,451 55,427 
Prepaid expenses and other assets236,348 207,715 
Right of use lease assets152,316 155,266 
Total assets$19,478,967 $19,199,144 
LIABILITIES AND EQUITY  
Unsecured notes, net$6,951,637 $6,702,005 
Variable rate unsecured credit facility  
Mortgage notes payable, net827,667 862,332 
Dividends payable224,760 224,897 
Payables for construction57,970 93,609 
Accrued expenses and other liabilities328,082 274,699 
Lease liabilities174,922 181,479 
Accrued interest payable62,176 49,033 
Resident security deposits59,189 55,928 
Liabilities related to real estate assets held for sale1,198 311 
Total liabilities8,687,601 8,444,293 
Commitments and contingencies
Redeemable noncontrolling interests3,136 2,677 
Equity:  
Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at September 30, 2021 and December 31, 2020; zero shares issued and outstanding at September 30, 2021 and December 31, 2020
  
Common stock, $0.01 par value; 280,000,000 shares authorized at September 30, 2021 and December 31, 2020; 139,638,925 and 139,526,671 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
1,396 1,395 
Additional paid-in capital10,684,639 10,664,416 
Accumulated earnings less dividends128,549 126,022 
Accumulated other comprehensive loss(26,924)(40,250)
Total stockholders' equity10,787,660 10,751,583 
Noncontrolling interests570 591 
Total equity10,788,230 10,752,174 
Total liabilities and equity$19,478,967 $19,199,144 
 
See accompanying notes to Condensed Consolidated Financial Statements.
1

AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(Dollars in thousands, except per share data)
 For the three months endedFor the nine months ended
 9/30/20219/30/20209/30/20219/30/2020
Revenue:  
Rental and other income$580,079 $566,387 $1,691,273 $1,742,509 
Management, development and other fees695 1,017 2,380 2,950 
Total revenue580,774 567,404 1,693,653 1,745,459 
Expenses:  
Operating expenses, excluding property taxes148,704 143,909 430,377 406,991 
Property taxes72,332 68,934 212,518 202,973 
Expensed transaction, development and other pursuit costs, net of recoveries417 567 1,900 4,289 
Interest expense, net55,987 53,249 164,704 162,562 
Loss (gain) on extinguishment of debt, net17,890 (105)17,768 9,333 
Depreciation expense193,791 175,348 561,560 529,508 
General and administrative expense17,313 13,985 53,130 46,878 
Casualty and impairment loss1,940  3,117  
Total expenses508,374 455,887 1,445,074 1,362,534 
Income from investments in unconsolidated entities6,867 5,083 32,959 6,770 
Gain on sale of communities58 31,607 388,354 91,338 
Gain on other real estate transactions, net1,543 129 2,002 328 
Net for-sale condominium activity158 (646)(1,402)4,162 
Income before income taxes81,026 147,690 670,492 485,523 
Income tax (expense) benefit(2,179)27 (1,434)1,069 
Net income78,847 147,717 669,058 486,592 
Net loss (income) attributable to noncontrolling interests67 (14)32 (90)
Net income attributable to common stockholders$78,914 $147,703 $669,090 $486,502 
Other comprehensive income (loss):  
Gain (loss) on cash flow hedges 2,010 1,333 1,188 (17,731)
Cash flow hedge losses reclassified to earnings7,405 2,367 12,138 6,617 
Comprehensive income$88,329 $151,403 $682,416 $475,388 
Earnings per common share - basic:  
Net income attributable to common stockholders$0.57 $1.05 $4.79 $3.46 
Earnings per common share - diluted:  
Net income attributable to common stockholders$0.56 $1.05 $4.79 $3.46 

See accompanying notes to Condensed Consolidated Financial Statements.
2

AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollars in thousands)
 For the nine months ended
 9/30/20219/30/2020
Cash flows from operating activities:
Net income$669,058 $486,592 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense561,560 529,508 
Amortization of deferred financing costs5,519 5,617 
Amortization of debt discount1,998 1,321 
Loss on extinguishment of debt, net17,768 9,333 
Amortization of stock-based compensation20,660 17,753 
Equity in loss of, and return on, unconsolidated real estate entities and noncontrolling interests, net of eliminations4,290 5,204 
Real estate casualty loss2,802  
Abandonment of development pursuits685 2,095 
Unrealized gain on terminated cash flow hedges(2,654) 
Cash flow hedge losses reclassified to earnings6,874 6,617 
Gain on sale of real estate assets(413,661)(96,823)
Gain on for-sale condominiums(2,051)(8,174)
Increase in resident security deposits, prepaid expenses and other assets(20,555)(36,332)
Increase in accrued expenses, other liabilities and accrued interest payable59,449 39,363 
Net cash provided by operating activities911,742 962,074 
Cash flows from investing activities:
Development/redevelopment of real estate assets including land acquisitions and deferred development costs(476,307)(562,334)
Acquisition of real estate assets, including partnership interest(392,746) 
Capital expenditures - existing real estate assets(105,621)(76,860)
Capital expenditures - non-real estate assets(4,689)(24,720)
Decrease in payables for construction (35,639)(4,095)
Proceeds from sale of real estate, net of selling costs576,973 186,090 
Proceeds from the sale of for-sale condominiums, net of selling costs98,752 170,604 
Mortgage note receivable lending(118)(260)
Mortgage note receivable payments1,556 3,419 
Distributions from unconsolidated real estate entities62,157 9,877 
Investments in unconsolidated real estate entities(40,071)(23,044)
Net cash used in investing activities(315,753)(321,323)
Cash flows from financing activities:
Issuance of common stock, net7,011 1,599 
Repurchase of common stock, net (137,458)
Dividends paid(666,420)(661,000)
Issuance of mortgage notes payable 51,000 
Repayments of mortgage notes payable, including prepayment penalties(35,688)(125,427)
Issuance of unsecured notes699,167 1,296,581 
Repayment of unsecured notes, including prepayment penalties(462,147)(958,681)
Payment of deferred financing costs(5,281)(11,278)
Receipt (payment) for termination of forward interest rate swaps4,751 (25,135)
Payment to noncontrolling interest(45)(59)
Payments related to tax withholding for share-based compensation(13,409)(14,752)
Distributions to DownREIT partnership unitholders(36)(36)
Distributions to joint venture and profit-sharing partners(234)(319)
Preferred interest obligation redemption and dividends(1,340)(1,000)
Net cash used in financing activities(473,671)(585,965)
Net increase in cash, cash equivalents and cash in escrow122,318 54,786 
Cash, cash equivalents and cash in escrow, beginning of period313,532 127,614 
Cash, cash equivalents and cash in escrow, end of period$435,850 $182,400 
Cash paid during the period for interest, net of amount capitalized$127,575 $133,913 
3

See accompanying notes to Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

The following table provides a reconciliation of cash, cash equivalents and cash in escrow reported in the Condensed Consolidated Statements of Cash Flows (dollars in thousands):
For the nine months ended
9/30/20219/30/2020
Cash and cash equivalents$322,294 $87,530 
Cash in escrow113,556 94,870 
Cash, cash equivalents and cash in escrow reported in the Condensed Consolidated Statements of Cash Flows$435,850 $182,400 

Supplemental disclosures of non-cash investing and financing activities:

During the nine months ended September 30, 2021:

As described in Note 4, "Equity," the Company issued 153,379 shares of common stock as part of the Company's stock-based compensation plans, of which 56,545 shares related to the conversion of performance awards to shares of common stock, and the remaining 96,834 shares valued at $17,187,000 were issued in connection with new stock grants; 2,223 shares valued at $423,000 were issued through the Company's dividend reinvestment plan; 75,542 shares valued at $13,409,000 were withheld to satisfy employees' tax withholding and other liabilities; and 3,077 restricted shares with an aggregate value of $595,000 previously issued in connection with employee compensation were canceled upon forfeiture.

Common stock dividends declared but not paid totaled $223,380,000.

The Company recorded an increase of $789,000 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 an increase to prepaid expenses and other assets of $3,399,000 and a corresponding adjustment to accumulated other comprehensive loss, and reclassified $6,874,000 and $5,264,000 of cash flow hedge losses from other comprehensive income (loss) to interest expense, net, and loss (gain) on extinguishment of debt, net, respectively, to record the impact of the Company's derivative and hedge accounting activity.

During the nine months ended September 30, 2020:

The Company issued 165,426 shares of common stock as part of the Company's stock-based compensation plans, of which 96,317 shares related to the conversion of performance awards to restricted shares of common stock, and the remaining 69,109 shares valued at $15,285,000 were issued in connection with new stock grants; 1,967 shares valued at $339,000 were issued through the Company's dividend reinvestment plan; 73,103 shares valued at $14,752,000 were withheld to satisfy employees' tax withholding and other liabilities; and 7,421 restricted shares with an aggregate value of $1,187,000 previously issued in connection with employee compensation were canceled upon forfeiture.

Common stock dividends declared but not paid totaled $223,391,000.

The Company recorded a decrease of $387,000 in redeemable noncontrolling interest with a corresponding increase 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 an increase in prepaid expenses and other assets of $1,413,000 and a corresponding adjustment to accumulated other comprehensive loss, and reclassified $6,617,000 of cash flow hedge losses from other comprehensive income (loss) to interest expense, net, to record the impact of the Company's derivative and hedge accounting activity.

The Company recorded $46,875,000 of lease liabilities and offsetting right of use lease assets related to the execution of two new office leases.
4

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 focuses on the development, redevelopment, acquisition, ownership and operation of 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 markets of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado.

At September 30, 2021, the Company owned or held a direct or indirect ownership interest in 276 operating apartment communities containing 81,968 apartment homes in 13 states and the District of Columbia. In addition, the Company owned or held a direct or indirect ownership interest in 17 communities under development that are expected to contain an aggregate of 5,448 apartment homes when completed, as well as The Park Loggia, which contains 172 for-sale residential condominiums, of which 113 have been sold as of September 30, 2021, and 66,000 square feet of commercial space, of which 87% has been leased as of September 30, 2021. 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 22 communities that, if developed as expected, will contain an estimated 7,376 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 2020 Annual Report on Form 10-K. The results of operations for the three and nine months ended September 30, 2021 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.

Earnings per Common Share

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share ("EPS"). Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company's earnings per common share are determined as follows (dollars in thousands, except per share data):
5

 For the three months endedFor the nine months ended
 9/30/20219/30/20209/30/20219/30/2020
Basic and diluted shares outstanding  
Weighted average common shares - basic139,386,413 140,271,574 139,338,800 140,366,438 
Weighted average DownREIT units outstanding7,500 7,500 7,500 7,500 
Effect of dilutive securities343,812 324,648 298,769 328,865 
Weighted average common shares - diluted139,737,725 140,603,722 139,645,069 140,702,803 
Calculation of Earnings per Share - basic  
Net income attributable to common stockholders$78,914 $147,703 $669,090 $486,502 
Net income allocated to unvested restricted shares(160)(342)(1,443)(1,158)
Net income attributable to common stockholders, adjusted$78,754 $147,361 $667,647 $485,344 
Weighted average common shares - basic139,386,413 140,271,574 139,338,800 140,366,438 
Earnings per common share - basic$0.57 $1.05 $4.79 $3.46 
Calculation of Earnings per Share - diluted  
Net income attributable to common stockholders$78,914 $147,703 $669,090 $486,502 
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships12 12 36 36 
Adjusted net income attributable to common stockholders$78,926 $147,715 $669,126 $486,538 
Weighted average common shares - diluted139,737,725 140,603,722 139,645,069 140,702,803 
Earnings per common share - diluted$0.56 $1.05 $4.79 $3.46 
 
All options to purchase shares of common stock outstanding as of September 30, 2021 and 2020 are included in the computation of diluted earnings per share.

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 Derivative transactions 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 on-going basis. Hedge ineffectiveness is reported as a component of interest expense, net. The fair values of Hedging Derivatives that are in an asset position are recorded in prepaid expenses and other assets. The fair value of Hedging Derivatives that are in a liability position are included in accrued expenses and other liabilities. The Company does not present or disclose the fair value of Hedging Derivatives on a net basis. Fair value changes for derivatives that are not in qualifying hedge relationships are reported as a component of interest expense, net. For the Hedging Derivative positions that the Company has determined qualify as effective cash flow hedges, the Company has recorded the cumulative changes in the fair value of Hedging Derivatives in accumulated other comprehensive loss. Amounts recorded in accumulated other comprehensive loss 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 the Company has determined qualified as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding debt being hedged. See Note 11, “Fair Value,” for further discussion of derivative financial instruments.

Legal and Other Contingencies

The Company is involved in various 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 outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.

6

Acquisitions of Investments in Real Estate

The Company accounts for acquisitions of investments in real estate in accordance with the authoritative guidance for the initial measurement, which first requires that the Company determine if the real estate investment is the acquisition of an asset or a business combination. Under either model, the Company must identify and determine 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. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes various sources, including its own analysis of recently acquired and existing comparable properties in its portfolio and other market data. 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 allocation of the purchase price is 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 viewed as 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' notes to financial statements to conform to current year presentations as a result of changes in held for sale classification, disposition activity and segment classification.

For-Sale Condominium Inventory

The Company presents for-sale condominium inventory at historical cost and evaluates the condominiums for impairment when potential indicators exist, as further discussed in Note 6, "Real Estate Disposition Activities." 

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, which are based on an index or rate such as the consumer price index (CPI) or percentage rents based on total sales. Lease payments included in the lease liability include only fixed lease payments including fixed amounts that depend on an index or rate. 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 each of the lease agreements.

7

Lessor Considerations

The Company evaluates leases in which it is the lessor, which are composed of residential and commercial leases at its apartment communities, and determined these leases to be operating leases. For lease agreements that provide for rent concessions and/or scheduled 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 fixed-price renewal options, and the lessee may be able to exercise its renewal option at an amount less than the fair value of the rent at such time. The Company only includes renewal options in the lease term if, at the commencement of the lease, it is reasonably certain that the lessee will exercise this option.

Additionally, for the Company’s residential and commercial leases, which are comprised of the 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

Revenue from contracts with customers is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration that the Company expects to be entitled to for those goods and services. The majority of the Company’s revenue is derived from residential and commercial rental income and other lease income, which are accounted for under ASC 842, Leases, discussed above. The Company's revenue streams that are not accounted for under ASC 842 include (i) management fees, (ii) rental and non-rental related income and (iii) gains or losses on the sale of real estate.

The following table provides details of the Company’s revenue streams disaggregated by the Company’s reportable operating segments, further discussed in Note 8, “Segment Reporting,” for the three and nine months ended September 30, 2021 and 2020. Segment information for total revenue has been adjusted to exclude the real estate assets that were sold from January 1, 2020 through September 30, 2021, or otherwise qualify as held for sale as of September 30, 2021, as described in Note 6, "Real Estate Disposition Activities" (dollars in thousands):
 For the three months ended
Same StoreOther
Stabilized
Development/
Redevelopment
Non-
allocated (1)
Total
For the period ended September 30, 2021
Management, development and other fees and other ancillary items$ $ $ $695 $695 
Rental and non-rental related income (2)1,883 369 171  2,423 
Total non-lease revenue (3)1,883 369 171 695 3,118 
Lease income (4)517,914 27,539 28,372  573,825 
Business interruption insurance proceeds      
Total revenue$519,797 $27,908 $28,543 $695 $576,943 
For the period ended September 30, 2020
Management, development and other fees and other ancillary items$ $ $ $419 $419 
Rental and non-rental related income (2)1,965 598 112  2,675 
Total non-lease revenue (3)1,965 598 112 419 3,094 
Lease income (4)511,171 21,718 6,831  539,720 
Business interruption insurance proceeds 282    282 
Total revenue$513,418 $22,316 $6,943 $419 $543,096 

8

 For the nine months ended
Same StoreOther
Stabilized
Development/
Redevelopment
Non-
allocated (1)
Total
For the period ended September 30, 2021
Management, development and other fees and other ancillary items$ $ $ $2,380 $2,380 
Rental and non-rental related income (2)5,469 1,148 483  7,100 
Total non-lease revenue (3)5,469 1,148 483 2,380 9,480 
Lease income (4)1,514,951 75,886 65,060  1,655,897 
Business interruption insurance proceeds      
Total revenue$1,520,420 $77,034 $65,543 $2,380 $1,665,377 
For the period ended September 30, 2020
Management, development and other fees and other ancillary items$ $ $ $1,109 $1,109 
Rental and non-rental related income (2)5,447 1,637 230  7,314 
Total non-lease revenue (3)5,447 1,637 230 1,109 8,423 
Lease income (4)1,580,580 63,325 16,889  1,660,794 
Business interruption insurance proceeds 378    378 
Total revenue$1,586,405 $64,962 $17,119 $1,109 $1,669,595 
__________________________________
(1)Revenue represents third-party management, asset management and 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, including but not limited to, apartment hold fees and application fees, as well as revenue streams not related to leasing activities, including but not limited to, vendor revenue sharing, building advertising, vending and dry cleaning revenue.
(3)Represents all revenue accounted for under ASC 606, Revenue from Contracts with Customers.
(4)Amounts include all revenue streams derived from residential and commercial rental income and other lease income, which are accounted for under ASC 842.

Due to the nature and timing of the Company’s identified revenue streams, there are no material amounts of outstanding or unsatisfied performance obligations as of September 30, 2021.

Lease Revenue Reserves

The Company assesses the collectability of its lease revenue and receivables on an on-going basis. Under ASC 842, Leases, the Company assesses the probability of receiving all remaining lease amounts due on a lease by lease basis, reserving for revenue and the related receivables for those leases where collection of substantially all of the remaining lease payments is not probable. Subsequently, the Company 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.

9

COVID-19 Pandemic

In March 2020, the World Health Organization designated COVID-19 as a pandemic. While the Company has taken various actions in response to the COVID-19 pandemic, the ultimate impact on its consolidated results of operations, cash flows, financial condition and liquidity will depend on, among other factors, (i) the effect on the multifamily industry and the general economy of measures taken by businesses and the government to prevent the spread of the novel coronavirus and relieve economic distress of consumers, such as governmental limitations on the ability of multifamily owners to evict residents who are delinquent in the payment of their rent and (ii) the preferences of consumers and businesses for living and working arrangements both during and after the pandemic.

As of September 30, 2021, the Company assessed the collectibility of the outstanding lease income receivables as a result of the impact of the COVID-19 pandemic on its residential and commercial lease portfolios. The Company recorded an aggregate offset to income for uncollectible lease revenue for its residential and commercial portfolios of $8,586,000 and $18,755,000 for the three months ended September 30, 2021 and 2020, respectively, and $42,295,000 and $43,034,000 for the nine months ended September 30, 2021 and 2020, respectively, under ASC 842 and ASC 450.

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 $7,862,000 and $11,221,000 for the three months ended September 30, 2021 and 2020, respectively, and $25,023,000 and $33,738,000 for the nine months ended September 30, 2021 and 2020, respectively.

3.  Mortgage Notes Payable, Unsecured Notes, Term Loans and Credit Facility

The Company's mortgage notes payable, unsecured notes, variable rate unsecured term loans (the "Term Loans") and Credit Facility, as defined below, as of September 30, 2021 and December 31, 2020 are 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 September 30, 2021 and December 31, 2020, as shown in the accompanying Condensed Consolidated Balance Sheets (dollars in thousands) (see Note 6, "Real Estate Disposition Activities").
 9/30/202112/31/2020
Fixed rate unsecured notes (1)$6,750,000 $6,500,000 
Term Loans (1)250,000 250,000 
Fixed rate mortgage notes payable - conventional and tax-exempt (2)379,636 408,964 
Variable rate mortgage notes payable - conventional and tax-exempt (2)464,650 470,850 
Total mortgage notes payable and unsecured notes and Term Loans7,844,286 7,629,814 
Credit Facility  
Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility$7,844,286 $7,629,814 
_____________________________________
(1)Balances at September 30, 2021 and December 31, 2020 exclude $9,915 and $10,380, respectively, of debt discount, and $38,448 and $37,615, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Condensed Consolidated Balance Sheets.
(2)Balances at September 30, 2021 and December 31, 2020 exclude $13,806 and $14,478, respectively, of debt discount, and $2,813 and $3,004, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the accompanying Condensed Consolidated Balance Sheets.

The following debt activity occurred during the nine months ended September 30, 2021:

In January 2021, the Company repaid $27,795,000 principal amount of 5.37% fixed rate debt secured by Avalon San Bruno II at par in advance of its April 2021 maturity date.

In September 2021, the Company repaid $450,000,000 principal amount of its 2.95% unsecured notes in advance of the September 2022 scheduled maturity, recognizing a loss on debt extinguishment of $17,890,000, composed of a prepayment penalty of $12,147,000, and the non-cash write off of unamortized deferred hedging losses and unamortized deferred financing costs of $5,743,000.
10


In September 2021, the Company issued $700,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for proceeds net of underwriting fees of approximately $694,617,000, before considering the impact of other offering costs. The notes mature in January 2032 and were issued at a 2.050% interest rate. The notes were issued under the Company's green bond framework, and the Company has allocated or will allocate the net proceeds, in whole or in part, to one or more new or existing eligible green projects.

At September 30, 2021, the Company had a $1,750,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the “Credit Facility”) which matures in February 2024. The Credit Facility bears interest at varying levels based on (i) the London Interbank Offered Rate (“LIBOR”) 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.) and (ii) the rating levels issued for our unsecured notes. The current stated pricing for drawn borrowings is LIBOR plus 0.775% per annum (0.86% at September 30, 2021), assuming a one month borrowing rate. The annual facility fee for the Credit Facility remained 0.125%, resulting in a fee of $2,188,000 annually based on the $1,750,000,000 facility size and based on the Company's current credit rating.

The Company had no borrowings outstanding under the Credit Facility and had $2,599,000 and $2,900,000 outstanding in letters of credit that reduced the borrowing capacity as of September 30, 2021 and December 31, 2020, respectively. In addition, the Company had $37,596,000 and $32,079,000 outstanding in additional letters of credit unrelated to the Credit Facility as of September 30, 2021 and December 31, 2020, respectively.

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 $1,365,559,000, excluding communities classified as held for sale, as of September 30, 2021).

The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 3.8% at both September 30, 2021 and December 31, 2020. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax-exempt), including the effect of certain financing related fees, was 1.6% and 1.7% at September 30, 2021 and December 31, 2020, respectively.

Scheduled payments and maturities of secured notes payable and unsecured notes outstanding at September 30, 2021 are as follows (dollars in thousands):
YearSecured notes
principal payments
Secured notes maturitiesUnsecured notes and Term Loans maturitiesStated interest rate of unsecured notes and Term Loans
2021$1,460 $— $— N/A
20229,918 — — N/A
100,000 
LIBOR + 0.90%
202310,739 — 350,000 4.200 %
250,000 2.850 %
202411,677 — 300,000 3.500 %
150,000 
LIBOR + 0.85%
202512,408 — 525,000