Called Fund II, this capital pool will be used to acquire andoperate multifamily communities in high barrier-to-entry markets inmost of the country; specifically the Northeast, Mid-Atlantic,Midwest and West Coast. Acquisitions will also be made with an eyetowards adding value through redevelopment, improving buildingoperations and targeting markets that are expected to improve.

The fund, which has a term of 10 years, plus two one-yearextension options, is going to be AvalonBay's exclusive vehiclethrough which it will make its acquisitions for a period. Itdefines that period of time as three years from the closing date,or until 90% of its committed capital is invested. AvalonBay'sdevelopment activities, however, will be funded outside of FundII.

In fact, the REIT is scaling back development for the year,Bryce Blair, chairman and CEO, told listeners in the Q2 earningscall. "Originally we expected to start between $900 million and$1.1 billion of new developments," he said, according to atranscript of the call. "And our current estimate is for about $700million of starts. Given the weakening economic environment andvolatile capital markets, we felt it prudent to reduce our planned2008 starts, electing to push some out to 2009."