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AvalonBay (AVB) Sees 7.3% Rental Revenue Growth Through February

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AvalonBay Communities, Inc. (AVB - Free Report) witnessed improvements in the occupancy level as well as like-term effective rents through February. This residential REIT also reported a 7.3% increase in same-store residential rental revenues for two months ended Feb 28, 2022 compared with the prior-year period. This is roughly 60 basis points higher than the company’s initial expectation.

In the recently released first-quarter operating update, AvalonBay reported that the economic occupancy for its same-store residential communities improved to 96.4% in February from 96.3% in January. This also marked an increase from 96.2% in the fourth quarter of 2021.

The like-term effective rent change for same-store residential communities improved to 12.7% in February from 12.4% in January. The figure also marked an increase from 11% in the fourth quarter.

Per the operating update, the like-term effective rent change for AVB’s suburban communities improved to 10.8% in February from 10.5% in January and 9.7% in the fourth quarter. In the case of urban communities, the like-term effective rent change improved to 17.5% from 16.9% in January and 14% in the fourth quarter.

Region-wise, Southeast Florida reported a whopping 23.5% like-term effective rent change in February, while the Pacific North West and Metro NY / NJ reported 15.9% and 14.6%, respectively, like-term effective rent change in February.

For the U.S. apartment market, 2021 emerged as a robust one, with renter demand surging significantly. The household formation took place at a faster pace and fueled demand for apartments as well as for other types of housing. Also, renter incomes continued to climb upward.

This favorable trend is expected to have continued in the current year. Particularly, the first quarter, which is typically a slow leasing period in other years, appears to be a solid one this year, with impressive demand for rental units, due to the pandemic that disrupted the seasonal behavior.

Currently, AvalonBay carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of AVB have rallied 7.3%, while its industry grew 0.5% over the past six months.

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Stocks to Consider

Some key picks from the residential REIT sector include American Homes 4 Rent (AMH - Free Report) , Independence Realty Trust, Inc. (IRT - Free Report) and NexPoint Residential Trust, Inc. (NXRT - Free Report) .

American Homes 4 Rent holds a Zacks Rank of 2 (Buy) at present. American Homes 4 Rent’s 2022 revenues are expected to increase 12.1% year over year.

The Zacks Consensus Estimate for AMH’s 2022 FFO per share has been revised 1.3% upward in the past week to $1.57.

The Zacks Consensus Estimate for Independence Realty Trust’s 2022 FFO per share has moved 3.1% north to $1.00 in the past month.

Independence Realty Trust's 2022 revenues are expected to increase 3.7% year over year. Currently, IRT carries a Zacks Rank of 2.

The Zacks Consensus Estimate for NexPoint Residential Trust’s 2022 FFO per share has moved 1.8% north to $3.46 over the past two months.

Currently, NexPoint Residential Trust carries a Zacks Rank of 2. NXRT's long-term growth rate is projected at 8.00%.

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

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