AvalonBay Communities, Inc. (NYSE: AVB) (the “Company”) announced today it has commenced a $350 million offering of unsecured notes (the “Notes”) under its existing shelf registration statement.
The Company expects to use a portion of the net proceeds from the sale of the Notes to repay three currently outstanding secured debt financings having an aggregate outstanding balance of approximately $302.0 million owed to Fannie Mae and to incur prepayment penalties of approximately $14.9 million. The indebtedness to be repaid bears interest at a weighted average interest rate of 5.42% and matures between May 2015 and August 2015. The Company expects to use the balance of the net proceeds for general corporate purposes, which may include the acquisition, development and redevelopment of apartment communities and repayment and refinancing of other indebtedness.
The expected prepayment penalty was not included in the Company’s fourth quarter and full year 2013 guidance for earnings and funds from operations ("FFO") provided in October 2013. The prepayment costs will be a charge to earnings in the fourth quarter and are expected to reduce the Company's 2013 earnings per share for the fourth quarter and full year by $0.13 and $0.13, respectively, and the Company’s 2013 FFO per share for the fourth quarter and full year by $0.12 and $0.13, respectively.
The offering is being made pursuant to an automatic shelf registration statement that became effective upon filing with the Securities and Exchange Commission on February 27, 2012. J.P. Morgan Securities LLC, Barclays Capital Inc. and BofA Merrill Lynch are acting as lead representatives of the agents for the Notes offering. A pricing supplement, prospectus supplement and related prospectus will be filed with the Securities and Exchange Commission. The preliminary pricing supplement, prospectus supplement and accompanying base prospectus relating to the offering may be obtained by contacting: J.P. Morgan Securities LLC, collect at 212-834-4533, Barclays Capital Inc., toll free at 1-888-603-5847, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, 222 Broadway, New York, NY 10038, Attn: Prospectus Department, email firstname.lastname@example.org, 1-800-294-1322.This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any offer or sale will be made only by means of a pricing supplement and the related prospectus supplement and prospectus, and, to the extent applicable, a free writing prospectus, which has or will be filed with the Securities and Exchange Commission.