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AvalonBay Communities (AVB) Q2 FFO & Revenues Miss Estimates

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AvalonBay Communities, Inc.’s (AVB - Free Report) second-quarter 2020 core funds from operations (FFO) per share of $2.23 edged down 1.8% year over year from the prior-year quarter’s $2.27. The reported figure also missed the Zacks Consensus Estimate of $2.25.

Results reflect uncollectible lease revenues from residential and retail properties as well as decline in economic occupancy.

Total revenues of $576.4 million slipped 0.1% year over year. The revenue figure also missed  the Zacks Consensus Estimate of $587.6 million.

The company also noted about the second-quarter residential revenue collections for established communities, through Jul 28, 2020. The collected residential revenue improved to 97.7% for April compared with the 93.9% at month end, 96.4% for May compared with the 92.8% at month end and 95.5% for June compared with the 93.6% at month end. Moreover, collected residential revenues for July was 93.3% as of Jul 28, 2020.

Quarter in Detail

In the reported quarter, revenues from established communities decreased 3% year over year to $523.5 million. Residential and retail uncollectible lease revenues resulted in this decrease.

Operating expenses for established communities slid 1.1% on a year-over-year basis. Consequently, NOI from established communities dropped 3.7% year on year to $368.2 million.

During the April-June period, the company did not commence or complete any development communities. As of Jun 30, 2020, AvalonBay had 19 development communities under construction (expected to contain 6,198 apartment homes and 64,000 square feet of retail space). The estimated total capital cost at completion for these development communities is $2.34 billion at share.

As of Jun 30, 2020, the projected total capital cost of development rights increased to $4.2 billion from the prior-quarter end’s $4.1 billion.

Balance Sheet Position

As of Jun 30, 2020, AvalonBay did not have any borrowings outstanding under its $1.75-billion unsecured credit facility.The company had $415.7 million in unrestricted cash and cash in escrow as of the same date. In addition, its annualized net debt-to-core EBITDAre for the April-June quarter was 4.9 times and unencumbered NOI was 94%.

Stock-Repurchase Program

The company’s board of directors also approved a new stock-repurchase program, under which it might acquire shares of its common stock up to an aggregate purchase price of $500 million in open market or negotiated transactions.There is no expiration date for this stock-repurchase program.

AvalonBay currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AvalonBay Communities, Inc. Price, Consensus and EPS Surprise

AvalonBay Communities, Inc. Price, Consensus and EPS Surprise

AvalonBay Communities, Inc. price-consensus-eps-surprise-chart | AvalonBay Communities, Inc. Quote

We now look forward to the earnings releases of other REITs like Vornado Realty Trust (VNO - Free Report) , Apartment Investment and Management Company (AIV - Free Report) and Essex Property Trust, Inc. (ESS - Free Report) . All three companies are scheduled to release quarterly numbers on Aug 3.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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