AvalonBay plans to use the net proceeds of $495 million partly to pay down its $1 billion unsecured variable rate revolving credit facility and partly to repurchase certain outstanding long-term debt securities. The remainder will be used for working capital, capital expenditures and other general corporate purposes--including development and redevelopment of apartment communities.

As it contemplates its development pipeline, AvalonBay is finding that many development deals don't make sense in an environment of rising cap rates. In the past year it has made the decision to write off or impair three development rights. Others, such as Somerset Development's Westmont Station, have moved forward.

Falling rents are also having an impact on the company's financials, particularly in the California markets. There are some cities, however, for which the company has higher expectations, according to comments in its most recent earnings call. Leo Horey, EVP of Operations, for example, said that the most favorable areas in terms of revenue and NOI expectation are Washington, DC and Boston, which will be "negative, but just marginally negative during the second half of the year."

Repayment and refinancing of other debt would be other possible uses for the balance of the proceeds from the offering. Morgan Stanley and J.P. Morgan Securities are lead representatives of the agents for the notes offering. AvalonBay did not return a call to GlobeSt.com in time for publication.