Back to top

Image: Bigstock

AvalonBay Communities (AVB) Q1 FFO In Line, Revenues Miss

Read MoreHide Full Article

AvalonBay Communities, Inc.’s (AVB - Free Report) first-quarter 2022 core funds from operations (FFO) per share of $2.26 matched the Zacks Consensus Estimate.

However, total revenues of $613.9 million lagged the consensus estimate of $615.4 million.

On a year-over-year basis, core FFO per share increased 15.9% and total revenues grew 11.4%.

The first-quarter results reflected a year-over-year increase in same-store residential revenues, partially offset by rising operating expenses.

The collected residential revenues fell to 94.9% as of Mar 31, 2022, from 95.3% reported at the end of Dec 31, 2021.

Quarter in Detail

In the reported quarter, the same-store residential rental revenues on a cash basis increased 8.5% year over year to $540.7 million. Same-store operating expenses rose 4.7% to $169.6 million, while the same-store residential net operating income (NOI) increased 10.3% to $371.1 million.

Same-store average rental rates grew from $2,588 as of Dec 31, 2021, to $2,635 as of Mar 31, 2022. Same-store economic occupancy marginally rose from 96.2% to 96.4% sequentially.

As of Mar 31, 2022, AvalonBay had 16 consolidated development communities under construction (expected to contain 4,903 apartment homes and 39,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.05 billion.

Portfolio Activity

During the first quarter, AVB acquired Avalon Flatirons for $95 million. This is a wholly-owned operating community containing 207 apartment homes and 16,000 square feet of commercial space located in Lafayette, CO.

AvalonBay sold three wholly-owned operating communities containing 588 apartment homes for $235 million in the reported quarter. The properties include Avalon West Long Branch in West Long Branch, NJ, Avalon Ossining in Ossining, NY and Avalon East Norwalk in Norwalk, CT.

Balance Sheet

AVB had $457.4 million of unrestricted cash and cash in escrow as of Mar 31, 2022. As of on the same date, the company did not have any borrowings outstanding under its $1.75-billion unsecured credit facility.

Total debt principal was $8.1 million at the end of the first quarter. Additionally, its annualized net debt-to-core EBITDAre for the January-March period was five times and the unencumbered NOI for 2022 was 95%.

Outlook

For second-quarter 2022, AvalonBay expects core FFO per share to lie in the range of $2.25-$2.37. The Zacks Consensus Estimate for the same is pegged at $2.34.

For 2022, AVB expects core FFO per share between $9.38 and $9.78, with the mid-point at $9.58. The Zacks Consensus Estimate for the same is $9.55. Management expects same-store residential revenues to lie between 8.25% and 9.75%.

AvalonBay Communities currently carries a Zacks Rank #3 (Hold). 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

Performance of Notable REITs

Equity Residential’s (EQR - Free Report) reported first-quarter 2022 normalized FFO per share of 77 cents, missing the Zacks Consensus Estimate of 80 cents. Rental income came in at $653.3 million, lagging the consensus mark of $658.07 million. Nonetheless, on a year-over-year basis, normalized FFO per share improved 13.2%, while rental income climbed 9.3%.

EQR’s normalized FFO grew based on strong lease demand, while same-store revenue witnessed growth driven by strong physical occupancy and improvement in pricing power.

Mid-America Apartment Communities, Inc. (MAA - Free Report) reported first-quarter 2022 core FFO per share of $1.97, surpassing the Zacks Consensus Estimate of $1.92. The reported number increased 20.1% year over year.

The rental and other property revenues came in at $476.1 million, outpacing the Zacks Consensus Estimate of $474.20 million. The reported figure was 12% higher than the previous-year quarter’s $425 million.

MAA’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. The average physical occupancy for the same-store portfolio also increased year over year.

Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported first-quarter 2022 adjusted FFO per share of $2.05, surpassing the Zacks Consensus Estimate of $2.00. The FFO per share also compared favorably with the year-ago quarter’s $1.91.

Rental revenues in the quarter were $615.1 million. Also, rental revenues climbed 28.2% from the prior-year quarter’s $479.8 million.
Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.

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.