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AvalonBay's Q1 FFO Beats Estimates, Occupancy Rises Y/Y
AVBAvalonBay Communities(AVB) ZACKS·2025-05-01 17:35

Core Viewpoint - AvalonBay Communities (AVB) reported a strong first-quarter 2025 performance with core funds from operations (FFO) per share of 2.83,exceedingexpectationsandshowingayear−over−yearincreaseof4.82.83, exceeding expectations and showing a year-over-year increase of 4.8% [1] Financial Performance - Total revenues for the quarter were 745.9 million, slightly missing the consensus estimate but reflecting a 4.6% increase year-over-year [2] - Same-store residential revenues rose 3% year-over-year to 693.1million,whilesame−storeresidentialoperatingexpensesincreasedby4693.1 million, while same-store residential operating expenses increased by 4% to 214.76 million, resulting in a 2.6% rise in same-store residential NOI to 478.3million[3]−Thesame−storeaveragerevenueperoccupiedhomeincreasedto478.3 million [3] - The same-store average revenue per occupied home increased to 3,032, up 2.9% from 2,946intheprioryear,witheconomicoccupancyat962,946 in the prior year, with economic occupancy at 96%, a rise of 10 basis points year-over-year [4] Development and Acquisitions - As of March 31, 2025, AvalonBay had 19 wholly owned development communities under construction, expected to contain 6,595 apartment homes and 69,000 square feet of commercial space, with a total estimated capital cost of 2.5 billion [5] - In February 2025, AVB entered agreements to acquire eight apartment communities in Texas, acquiring two communities in Austin for 187millionandsixcommunitiesinDallas−FortWorthfor187 million and six communities in Dallas-Fort Worth for 431.5 million [6] Dispositions - During the quarter, AVB sold a community in Wilton, CT, for 65.1million,resultinginaGAAPgainof65.1 million, resulting in a GAAP gain of 56.48 million, marking its exit from the Connecticut market [7] Balance Sheet Position - As of March 31, 2025, AVB had 53.26millioninunrestrictedcashandnoborrowingsunderitsunsecuredrevolvingcreditfacility,withoutstandingborrowingsof53.26 million in unrestricted cash and no borrowings under its unsecured revolving credit facility, with outstanding borrowings of 224.9 million under its commercial paper note program [8] - The annualized net debt-to-core EBITDAre ratio for the January-March period was 4.3 times, with an unencumbered NOI of 95% for the year ended March 31, 2025 [8] 2025 Outlook - AvalonBay reaffirmed its full-year 2025 core FFO per share guidance between 11.14and11.14 and 11.64, with the current consensus estimate at 11.41[9]−Thecompanyexpectssame−storeresidentialrevenuegrowthof2−411.41 [9] - The company expects same-store residential revenue growth of 2-4% and operating expense increases of 3-5.2%, projecting same-store residential NOI expansion of 1.3-3.5% [9] - For Q2 2025, core FFO per share is expected to be in the range of 2.72-2.82,lowerthanthecurrentconsensusestimateof2.82, lower than the current consensus estimate of 2.85 [10] Performance of Other Residential REITs - Equity Residential reported first-quarter 2025 normalized FFO per share of 95 cents, exceeding estimates, while Mid-America Apartment Communities reported core FFO per share of $2.20, surpassing expectations but showing a slight year-over-year decline [11]