Item 8.01
Other Events.
On November 8, 2017, AvalonBay Communities, Inc. (the Company) priced a public offering (the Offering) of the following debt securities:
·
an aggregate of $450,000,000 principal amount of its 3.20% Medium-Term Notes due 2028 (the 2028 Notes); and
·
an aggregate of $300,000,000 principal amount of its Floating Rate Notes due 2021 (the Floating Rate Notes and, collectively with the 2028 Notes, the Notes).
The Offering was made pursuant to a Pricing Supplement dated November 9, 2017, a Prospectus Supplement dated May 6, 2015 and a Prospectus dated February 19, 2015 relating to the Companys Shelf Registration Statement on Form S-3 (File No. 333-202185). The Terms Agreement, dated November 8, 2017, by and among the Company and Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc., as representatives of the agents named therein, is filed as Exhibit 1.1 to this report.
The Notes were issued under an Indenture between the Company and The Bank of New York Mellon, as trustee, dated as of January 16, 1998, as supplemented by a First Supplemental Indenture dated as of January 20, 1998, a Second Supplemental Indenture dated as of July 7, 1998, an Amended and Restated Third Supplemental Indenture dated as of July 10, 2000, a Fourth Supplemental Indenture dated as of September 18, 2006, and a Fifth Supplemental Indenture dated as of November 21, 2014.
The 2028 Notes bear interest from November 15, 2017, with interest on the Notes payable semi-annually on January 15 and July 15, beginning on January 15, 2018. The 2028 Notes will mature on January 15, 2028.
The Floating Rate Notes bear interest at a rate equal to (a) the three-month U.S. dollar LIBOR rate plus (b) 43 basis points, as determined pursuant to the terms of the Floating Rate Notes, from November 15, 2017, with interest on the Notes payable quarterly on January 15, April 15, July 15 and October 15, beginning on January 15, 2018. The Floating Rate Notes will mature on January 15, 2021.
The Company will use the net proceeds, after estimated issuance costs, of approximately $742,870,500 from the sale of the Notes to reduce indebtedness outstanding under its $1,500,000,000 unsecured revolving credit facility or to prepay some or all of the indebtedness outstanding under its $300,000,000 variable rate unsecured term loan that was originated in 2014, or both, and for general corporate purposes, which may include the acquisition, development and redevelopment of apartment communities and repayment and refinancing of other indebtedness. Pending such uses, the Company may invest the net proceeds from the sale of the Notes in short-term demand deposits, short-term money market funds or investment grade securities or other similar investments. Borrowings under the unsecured revolving credit facility and the term loan were used to fund the acquisition, development and redevelopment of apartment communities, to repay outstanding indebtedness and for general working capital purposes.