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AvalonBay Communities (AVB) Q2 FFO & Revenues Beat, View Up

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AvalonBay Communities, Inc.’s (AVB - Free Report) second-quarter 2022 core funds from operations (FFO) per share of $2.43 surpassed the Zacks Consensus Estimate of $2.35. The figure increased 22.7% on a year-over-year basis.

The second-quarter results reflect a year-over-year increase in same-store residential rental revenues driven by strong, effective lease rate growth and higher rent relief.

Total revenues in the quarter came in at $644.6 million, surpassing the consensus estimate of $632.2 million. The figure climbed 14.7% from the prior-year period.  

Quarter in Detail

In the reported quarter, the same-store residential rental revenues on a cash basis increased 12.9% year over year to $561.7 million. Same-store operating expenses rose 4.8% to $170.5 million, while the same-store residential net operating income (NOI) climbed 17% to $391.6 million from the prior-year period.

Same-store average rental rates rose to $2,760 as of Jun 30, 2022, from $2,631 as of Mar 31, 2022. Same-store economic occupancy marginally increased from 96.3% to 96.4% sequentially.

As of Jun 30, 2022, AvalonBay had 16 consolidated development communities under construction (expected to contain 4,919 apartment homes and 56,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.07 billion.

Portfolio Activity

During the second quarter, AVB acquired Waterford Court for $69.5 million. This is a wholly-owned community containing 196 apartment homes located in Addison, TX.

AvalonBay sold 13 of the 172 residential condominiums at The Park Loggia located in New York, NY, for gross proceeds of $41 million in the reported quarter. As of Jun 30, 2022, it has accomplished the sale of 151 of the 172 residential condominiums for total gross proceeds of $433.17 million. Further, the leasing of the commercial space has been completed.

Subsequent to the quarter end, AVB disposed of three wholly-owned communities located in Elmsford, NY, for $306 million. This included Avalon Green I, Avalon Green II and Avalon Green III, which have a total of 617 apartment homes.

Balance Sheet

AVB had $260.2 million of unrestricted cash and cash in escrow as of Jun 30, 2022. As of the same date, the company did not have any borrowings outstanding under its $1.75 billion unsecured credit facility.

Additionally, its annualized net debt-to-core EBITDAre for the April-June period was 4.9 times and the unencumbered NOI for the six months ended Jun 30, 2022, was 95%.

Raised 2022 Outlook

AvalonBay raised its 2022 outlook.

For third-quarter 2022, it expects core FFO per share to lie in the range of $2.47-$2.57. The Zacks Consensus Estimate for the same is pegged at $2.43.

For 2022, AVB expects core FFO per share between $9.76 and $9.96, up from the earlier guided range of $9.38-$9.78. The Zacks Consensus Estimate for the same is $9.62.

Management expects same-store residential rental revenues to lie between 10.75% and 11.75%, revised upward from 8.25-9.75% projected earlier.

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
 

UDR Inc. (UDR - Free Report) reported second-quarter 2022 FFO as adjusted per share of 57 cents, in line with the Zacks Consensus Estimate. The figure is 16.3% higher than the prior-year quarter’s 49 cents.

UDR’s quarterly results reflect an increase in revenues from rental income that fueled the quarter’s top-line growth. Robust operating trends and strong pricing power were major contributing factors.

Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported second-quarter 2022 adjusted FFO per share of $2.10, surpassing the Zacks Consensus Estimate of $2.06. The reported figure also compared favorably with the year-ago quarter’s $1.93.

ARE witnessed continued healthy leasing activity and rental rate growth during the quarter.

Boston Properties Inc.’s (BXP - Free Report) second-quarter 2022 FFO per share of $1.94 beat the Zacks Consensus Estimate of $1.85. The figure also compared favorably with the year-ago quarter’s $1.72.

BXP’s quarterly results reflect growth in the bottom line. Also, it experienced strong leasing activity 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.