ARLINGTON, Va.—AvalonBay Communities announced that it has taken various actions to mitigate the effect on its residents, associates and business from the national emergency that has arisen as a result of the coronavirus pandemic.
AvalonBay is committed to the health and safety of its associates and residents, and the Company began implementing many new protocols based on the Centers for Disease Control (CDC) and other government-mandated guidelines, including establishing social-distancing procedures and other safety and operating measures. At our communities, AvalonBay has made changes to its daily operations that include the following –
- Community office practices have been modified to minimize in-person contact, with resident support being provided through phone and e-mail communications where possible and by leveraging the Company’s digital solutions and centralized Customer Care Center.
- Communities have implemented enhanced cleaning and disinfecting protocols and closed all amenities.
- Maintenance requests are being completed for essential or emergency services only and maintenance associates have been instructed on proper personal protective equipment (PPE) to use when performing work.
- Prospect tours are being completed on a self-guided basis or through virtual channels.
AvalonBay has also adopted certain measures to help mitigate the financial impact arising from the national emergency on its residents that include the following –
- Waiving late fees.
- Providing flexible lease renewal options at no rent increase for leases expiring through June 30, 2020.
- Creating payment plans for residents who are unable to pay their rent because they are impacted by this national emergency.
To support our associates during this difficult time, the Company has elected to adopt new, temporary leave policies and is providing all regular, full- and part-time associates with up to four weeks of emergency paid leave to use in the event they or their families have been materially impacted by the coronavirus.
In addition to these measures, AvalonBay announced the following –
- Total rental revenue for Established Communities for the two months ending February 29, 2020 increased 3.2% over the prior year period.
- Blended Like-Term Effective Rent Change for Established Communities for the two months ending February 29, 2020 was 1.6%, versus 2.6% during the same period last year.
- Through the week ending March 22, 2020, Blended Like-Term Effective Rent Change for Established Communities for March 2020 was 2.3%, versus 2.9% for the month of March 2019.
- Physical occupancy for Established Communities for the week ending March 22, 2020 was 96.1%, versus 95.8% during the same week in March 2019.
- 30- and 60-day Availability for Established Communities was 4.7% and 5.7%, respectively, for the week ending March 22, 2020 versus 5.1% and 6.2%, respectively, during the same week in 2019.
- Due to the inherent uncertainty surrounding the social and economic disruption from this national emergency, the Company believes it is appropriate to withdraw its full-year 2020 outlook, which was included in its February 5, 2020 earnings release, and it does not plan to provide an update to its full-year 2020 outlook until there is further clarity on economic conditions.
Recent Capital Activity and Current Liquidity
- The Company does not have a commercial paper program.
- The Company has drawn $750 million from its $1.75 billion credit facility during this period of elevated uncertainty. The Company’s credit facility matures on February 28, 2024.
- Considering the Company’s (i) existing cash balance of approximately $755 million, which includes the aforementioned $750 million draw from its credit facility, and (ii) remaining borrowing capacity under its $1.75 billion credit facility, the Company has access to approximately $1.8 billion of liquidity as of the date of this press release.
Investment Activity Update
- The Company has not started the construction of any new development communities in 2020, and it will evaluate future starts on an individual basis, based on evolving economic and market conditions. In addition, the Company has begun taking action to substantially reduce redevelopment and other non-essential capex investment.
- As of the end of 2019, the Company had 22 development communities under construction. As of the date of this release, (i) the construction of three of these development communities is substantially complete, (ii) the construction at four of the Company’s remaining 19 development communities has been suspended at the Company’s discretion after considering state and local advisories, and (iii) the construction at the Company’s remaining development communities has been substantially slowed due to the impact of safety precautions on labor availability and inspection constraints. The Company may be required to, or may in its discretion, suspend ongoing construction at one or more of these remaining development communities as a result of either (i) governmental actions or (ii) social or economic conditions arising from this national emergency.
- Based on the Company’s projections as of the date of this press release, which assumes (i) estimated suspension periods for the Company’s current development projects where construction has been halted and other expected delays, and (ii) reduced redevelopment and other non-essential capex investment, the Company currently expects to spend approximately $400 million over the balance of 2020 and approximately $400 million in 2021 on these investment activities. Due to ongoing developments and uncertainties related to the coronavirus, these projections are subject to change, and we do not undertake any obligation to update these projections, as stated later in this press release.
The Company has approximately $68 million of secured debt maturities and amortization remaining in 2020 and approximately $328 million of unsecured and secured debt maturities and amortization in 2021.
As of December 31, 2019, the Company’s Net Debt-to-Core EBITDAre was 4.6x and Unencumbered NOI was 93%, and 248 of its 262 consolidated operating communities, not including development communities, were unencumbered with a mortgage, providing a substantial source of potential additional liquidity through mortgage financing.