AVALONBAY COMMUNITIES INCAVB
AVALONBAY COMMUNITIES INC Debt Disclosure
Debt
The Company's debt, which consists of unsecured notes, the variable rate term loan (the "Term Loan"), mortgage notes payable, the Credit Facility and Commercial Paper, each as defined below, as of December 31, 2025 and 2024 is 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 December 31, 2025 and 2024, as shown in the accompanying Consolidated Balance Sheets (dollars in thousands) (see Note 6, "Real Estate Disposition Activities"). The weighted average interest rates in the following table for secured and unsecured debt include costs of financing including debt issuance costs as well as credit enhancement and trustees' fees, the impact of interest rate hedges and mark-to-market adjustments.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Fixed rate unsecured debt (1) | $ | 7,925,000 | 3.6 | % | $ | 7,400,000 | 3.4 | % | |||||||||||||||
| Fixed rate mortgage notes payable—conventional and tax-exempt | 332,602 | 3.9 | % | 333,479 | 3.9 | % | |||||||||||||||||
| Variable rate mortgage notes payable—conventional and tax-exempt | 390,550 | 4.0 | % | 400,950 | 5.2 | % | |||||||||||||||||
| Total mortgage notes payable, unsecured debt | 8,648,152 | 3.6 | % | 8,134,429 | 3.5 | % | |||||||||||||||||
| Credit Facility | — | — | % | — | — | % | |||||||||||||||||
| Commercial paper | 740,000 | 4.0 | % | — | — | % | |||||||||||||||||
| Total principal outstanding | 9,388,152 | 3.7 | % | 8,134,429 | 3.5 | % | |||||||||||||||||
| Less deferred financing costs and debt discount (2) | (59,600) | (57,180) | |||||||||||||||||||||
| Total | $ | 9,328,552 | $ | 8,077,249 | |||||||||||||||||||
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(1)Includes the $550,000,000 Term Loan that has been swapped to an effective fixed rate of 4.44% using interest rate hedges.
(2)Excludes deferred financing costs associated with the Credit Facility and commercial paper, which are included in Prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.
The availability on the Company's Credit Facility as of December 31, 2025 and 2024 was as follows (dollars in thousands):
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| December 31, 2025 | December 31, 2024 | ||||||||||
| Credit Facility commitment | $ | 2,500,000 | $ | 2,250,000 | |||||||
| Credit Facility outstanding | — | — | |||||||||
| Commercial paper outstanding | (740,000) | — | |||||||||
| Letters of credit outstanding (1) | (864) | (1,714) | |||||||||
| Total Credit Facility available | $ | 1,759,136 | $ | 2,248,286 | |||||||
(1)In addition, the Company had $52,584 and $45,910 outstanding in additional letters of credit unrelated to the Credit Facility as of December 31, 2025 and 2024, respectively.
The following debt activity occurred during the year ended December 31, 2025:
•In April 2025, the Company entered into the Seventh Amended and Restated Revolving Loan Agreement with a syndicate of banks, amending the prior credit facility, dated September 27, 2022. The amended and restated Credit Facility (i) increased the borrowing capacity under the Credit Facility from $2,250,000,000 to $2,500,000,000, and (ii) extended the term from September 2026 to April 2030. The interest rate that would be applicable to borrowings under the Credit Facility was 4.58% at December 31, 2025 and was composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the Credit Facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.705% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.65% to SOFR plus 1.40% based upon the rating of the Company's unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the Credit Facility, which can vary from 0.10% to 0.30% based upon the rating of the Company's unsecured senior notes. The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases related to certain environmental sustainability targets, specifically greenhouse gas emission reductions, with the adjustment determined annually. An annual determination under the sustainability-linked pricing component occurred in July 2025, maintaining reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to the Company's achievement of sustainability targets. On August 1, 2025, the Company amended the Credit Facility to extend the applicability of its sustainability-linked pricing component. All other terms of the Credit Facility, including its maturity date of April 2030, remain unchanged.
•In April 2025, the Company entered into a $450,000,000 Term Loan which matures in April 2029. On August 1, 2025, the Company amended the Term Loan to (i) exercise its full accordion option to increase the amount of its Term Loan by $100,000,000 to $550,000,000 and (ii) extend the applicability of its sustainability-linked pricing component. During the year ended December 31, 2025, the Company drew down the $550,000,000 available under the Term Loan and entered into $550,000,000 notional amount of interest rate swaps to hedge the impact of variability in interest rates on the Term Loan. The swaps are coterminous with the Term Loan, maturing in April 2029. The Term Loan bears interest at varying levels based on (i) the SOFR applicable to the period of borrowing for a particular draw of funds from the facility, which rate is recalculated at the end of each such period if the Term Loan remains outstanding, (ii) a stated spread over SOFR that can vary from SOFR plus 0.70% to SOFR plus 1.60% per annum based upon the rating of the Company’s unsecured and unsubordinated long-term indebtedness and (iii) a sustainability spread adjustment that can range from (0.02)% to 0.02%. The current borrowing spread to SOFR under the Term Loan is 0.78% per annum, inclusive of a sustainability spread adjustment of (0.02)%. Including the impact of these swaps and transaction costs, assuming the Term Loan will be fully drawn until maturity and the Company's current borrowing spread to SOFR, the effective interest rate on borrowings under the Term Loan is fixed at 4.44%.
•In April 2025, the Company increased the capacity of the Commercial Paper Program from $500,000,000 to $1,000,000,000. Under the terms of the Commercial Paper Program, the Company may issue unsecured commercial paper notes with maturities of less than one year. The program is backstopped by the Company's commitment to maintain available borrowing capacity under its unsecured credit facility in an amount equal to actual borrowings under the program.
•In June 2025, the Company repaid $525,000,000 of its 3.45% coupon unsecured notes at par upon maturity.
•In July 2025, the Company issued $400,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for proceeds net of underwriting fees and discounts of approximately $394,888,000, before considering the impact of other offering costs. The notes mature in August 2035 and were issued at a 5.00% coupon. The effective interest rate on the notes is 5.05%, considering the net proceeds and including the impact of offering costs and hedging activity.
•In November 2025, the Company repaid $300,000,000 of its 3.50% coupon unsecured notes at par upon maturity.
•In December 2025, the Company issued $400,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for proceeds net of underwriting fees and discounts of approximately $397,424,000, before considering the impact of other offering costs. The notes mature in December 2030 and were issued at a 4.35% coupon. The effective interest rate on the notes is 4.52%, considering the net proceeds and including the impact of offering costs and hedging activity.
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 $1,208,731,000, excluding communities classified as held for sale, as of December 31, 2025).
Scheduled payments and maturities of secured notes payable and unsecured debt outstanding at December 31, 2025 were as follows (dollars in thousands):
| Year | Secured notes principal payments and maturities | Unsecured debt maturities | Stated interest rate of unsecured debt | |||||||||||||||||
| 2026 | $ | 11,811 | $ | 475,000 | 2.95 | % | ||||||||||||||
| 300,000 | 2.90 | % | ||||||||||||||||||
| 2027 | 248,859 | 400,000 | 3.35 | % | ||||||||||||||||
| 2028 | 13,902 | 450,000 | 3.20 | % | ||||||||||||||||
| 400,000 | 1.90 | % | ||||||||||||||||||
| 2029 | 126,262 | 450,000 | 3.30 | % | ||||||||||||||||
| 550,000 | SOFR + 0.78% | |||||||||||||||||||
| 2030 | 3,300 | 700,000 | 2.30 | % | ||||||||||||||||
| 400,000 | 4.35 | % | ||||||||||||||||||
| 2031 | 3,500 | 600,000 | 2.45 | % | ||||||||||||||||
| 2032 | 4,000 | 700,000 | 2.05 | % | ||||||||||||||||
| 2033 | 5,000 | 350,000 | 5.00 | % | ||||||||||||||||
| 400,000 | 5.30 | % | ||||||||||||||||||
| 2034 | 10,900 | 400,000 | 5.35 | % | ||||||||||||||||
| 2035 | 13,400 | 400,000 | 5.00 | % | ||||||||||||||||
| Thereafter | 282,218 | 350,000 | 3.90 | % | ||||||||||||||||
| 300,000 | 4.15 | % | ||||||||||||||||||
| 300,000 | 4.35 | % | ||||||||||||||||||
| $ | 723,152 | $ | 7,925,000 | |||||||||||||||||
The Company's unsecured notes are redeemable at the Company's option, in whole or in part, generally at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted at a rate equal to the yield on U.S. Treasury securities with a comparable maturity plus a spread between 10 and 30 basis points depending on the specific series of unsecured notes, plus accrued and unpaid interest to the redemption date.
The Company is subject to financial covenants contained in the Credit Facility, the Term Loan and the indentures under which the unsecured notes were issued. The principal financial covenants include the following:
•limitations on the amount of total and secured debt in relation to the Company's overall capital structure;
•limitations on the amount of the Company's unsecured debt relative to the undepreciated basis of real estate assets that are not encumbered by property-specific financing; and
•minimum levels of debt service coverage.
The Company was in compliance with these covenants at December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2017 | Feb 23, 2018 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.