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AvalonBay Communities, Inc. (AVB - Free Report) reported fourth-quarter 2022 core funds from operations (FFO) per share of $2.59, beating the Zacks Consensus Estimate by a cent. The figure also improved by 14.1% year over year from $2.27.
The fourth-quarter results reflect a year-over-year increase in same-store residential rental revenues. The same-store average rental revenue per occupied home reported a rise, though occupancy declined.
This residential REIT announced a 3.8% hike in the quarterly dividend and provided its initial 2023 outlook. AVB expects its core FFO per share growth to be driven by the stabilized portfolio in 2023.
Total revenues in the quarter came in at $669.7 million, almost in line with the Zacks Consensus Estimate of $670 million. However, revenues rose 11.4% year over year.
For the full-year 2022, the core FFO per share came in at $9.79, higher than the prior-year tally of $8.26 but marginally lower than the Zacks Consensus Estimate of $9.80. This was backed by 13.0% growth in total revenues to $2.59 billion.
Quarter in Detail
In the reported quarter, same-store residential rental revenues increased 10.3% year over year to $571.8 million. Same-store residential operating expenses rose 8.2% to $171.6 million. The same-store residential net operating income (NOI) climbed 11.3% to $400.7 million from the prior-year period.
Same-store average rental revenue per occupied home rose to $2,861 in the fourth quarter of 2022 from $2,839 in the third quarter and $2,586 in the year-ago quarter. However, the same-store economic occupancy of 95.9% decreased 10 basis points (bps) sequentially and 30 bps year over year.
As of Dec 31, 2022, AvalonBay had 17 consolidated development communities under construction (expected to contain 5,417 apartment homes and 56,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.26 billion.
Portfolio Activity
In the fourth quarter, AVB acquired Avalon Highland Creek in Charlotte, NC, for $76.7 million. This is a wholly owned community with 260 apartment homes. During the reported quarter, AVB sold Avalon Park Crest, a wholly owned community containing 354 apartment homes, in Tysons Corner, VA, for $145.5 million, resulting in a gain in accordance with GAAP of $88.16 million.
During the quarter, AvalonBay sold two of the 172 residential condominiums at The Park Loggia in New York, NY, for $6.52 million. As of Dec 31, 2022, it concluded the sale of 163 of the 172 residential condominiums for total gross proceeds of $478.7 million.
Balance Sheet
AVB had $613.19 million in unrestricted cash and cash equivalents and $121.06 million in cash in escrow as of Dec 31, 2022. As of the same date, the company did not have any borrowings outstanding under its $2.25 billion unsecured revolving credit facility or its $500 million unsecured commercial paper note program.
Additionally, its annualized net debt-to-core EBITDAre for the October-December period was 4.5 times, and the unencumbered NOI for the year ended Dec 31, 2022 was 95%.
2023 Outlook
For the first quarter of 2023, AvalonBay expects core FFO per share in the range of $2.47-$2.57. The Zacks Consensus Estimate for the same is currently pegged at $2.59.
For 2023, AVB expects core FFO per share between $10.06 and $10.56, indicating a 5.3% increase at the midpoint of $10.31. The Zacks Consensus Estimate for the same presently stands at $10.51.
Management expects same-store residential revenue growth of 4.0-6.0% and an operating expense increase of 5.75-7.25%. Consequently, same-store residential NOI is projected to expand 3.0-5.5%.
Dividend Raise
Concurrent with its fourth-quarter earnings release, AvalonBay increased its first-quarter 2023 dividend to $1.65 per share from the $1.59 paid in the prior quarter. This represented a sequential hike of 3.8%. The new dividend will be paid out on Apr 17 to shareholders on record as of Mar 31, 2023.
AvalonBay Communities currently carries a Zacks Rank #4 (Sell).
Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported a fourth-quarter 2022 core FFO per share of $2.32, surpassing the Zacks Consensus Estimate of $2.28. The reported number improved by 22.1% year over year. Mid-America Apartment Communities’ quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio.
Essex Property Trust Inc. (ESS - Free Report) reported a fourth-quarter 2022 core FFO per share of $3.77, beating the Zacks Consensus Estimate of $3.74. The figure also improved by 16% from the year-ago quarter. Essex Property Trust’s results reflected improving same-property NOI in the quarter.
Upcoming Release
We now look forward to the earnings release of another residential REIT — Equity Residential (EQR - Free Report) . The company is scheduled to release its earnings results today after the closing bell.
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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AvalonBay (AVB) Beats Q4 FFO Estimates, Raises Dividend
AvalonBay Communities, Inc. (AVB - Free Report) reported fourth-quarter 2022 core funds from operations (FFO) per share of $2.59, beating the Zacks Consensus Estimate by a cent. The figure also improved by 14.1% year over year from $2.27.
The fourth-quarter results reflect a year-over-year increase in same-store residential rental revenues. The same-store average rental revenue per occupied home reported a rise, though occupancy declined.
This residential REIT announced a 3.8% hike in the quarterly dividend and provided its initial 2023 outlook. AVB expects its core FFO per share growth to be driven by the stabilized portfolio in 2023.
Total revenues in the quarter came in at $669.7 million, almost in line with the Zacks Consensus Estimate of $670 million. However, revenues rose 11.4% year over year.
For the full-year 2022, the core FFO per share came in at $9.79, higher than the prior-year tally of $8.26 but marginally lower than the Zacks Consensus Estimate of $9.80. This was backed by 13.0% growth in total revenues to $2.59 billion.
Quarter in Detail
In the reported quarter, same-store residential rental revenues increased 10.3% year over year to $571.8 million. Same-store residential operating expenses rose 8.2% to $171.6 million. The same-store residential net operating income (NOI) climbed 11.3% to $400.7 million from the prior-year period.
Same-store average rental revenue per occupied home rose to $2,861 in the fourth quarter of 2022 from $2,839 in the third quarter and $2,586 in the year-ago quarter. However, the same-store economic occupancy of 95.9% decreased 10 basis points (bps) sequentially and 30 bps year over year.
As of Dec 31, 2022, AvalonBay had 17 consolidated development communities under construction (expected to contain 5,417 apartment homes and 56,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.26 billion.
Portfolio Activity
In the fourth quarter, AVB acquired Avalon Highland Creek in Charlotte, NC, for $76.7 million. This is a wholly owned community with 260 apartment homes. During the reported quarter, AVB sold Avalon Park Crest, a wholly owned community containing 354 apartment homes, in Tysons Corner, VA, for $145.5 million, resulting in a gain in accordance with GAAP of $88.16 million.
During the quarter, AvalonBay sold two of the 172 residential condominiums at The Park Loggia in New York, NY, for $6.52 million. As of Dec 31, 2022, it concluded the sale of 163 of the 172 residential condominiums for total gross proceeds of $478.7 million.
Balance Sheet
AVB had $613.19 million in unrestricted cash and cash equivalents and $121.06 million in cash in escrow as of Dec 31, 2022. As of the same date, the company did not have any borrowings outstanding under its $2.25 billion unsecured revolving credit facility or its $500 million unsecured commercial paper note program.
Additionally, its annualized net debt-to-core EBITDAre for the October-December period was 4.5 times, and the unencumbered NOI for the year ended Dec 31, 2022 was 95%.
2023 Outlook
For the first quarter of 2023, AvalonBay expects core FFO per share in the range of $2.47-$2.57. The Zacks Consensus Estimate for the same is currently pegged at $2.59.
For 2023, AVB expects core FFO per share between $10.06 and $10.56, indicating a 5.3% increase at the midpoint of $10.31. The Zacks Consensus Estimate for the same presently stands at $10.51.
Management expects same-store residential revenue growth of 4.0-6.0% and an operating expense increase of 5.75-7.25%. Consequently, same-store residential NOI is projected to expand 3.0-5.5%.
Dividend Raise
Concurrent with its fourth-quarter earnings release, AvalonBay increased its first-quarter 2023 dividend to $1.65 per share from the $1.59 paid in the prior quarter. This represented a sequential hike of 3.8%. The new dividend will be paid out on Apr 17 to shareholders on record as of Mar 31, 2023.
AvalonBay Communities 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-eps-surprise-chart | AvalonBay Communities, Inc. Quote
Performance of Other Residential REITs
Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported a fourth-quarter 2022 core FFO per share of $2.32, surpassing the Zacks Consensus Estimate of $2.28. The reported number improved by 22.1% year over year. Mid-America Apartment Communities’ quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio.
Essex Property Trust Inc. (ESS - Free Report) reported a fourth-quarter 2022 core FFO per share of $3.77, beating the Zacks Consensus Estimate of $3.74. The figure also improved by 16% from the year-ago quarter. Essex Property Trust’s results reflected improving same-property NOI in the quarter.
Upcoming Release
We now look forward to the earnings release of another residential REIT — Equity Residential (EQR - Free Report) . The company is scheduled to release its earnings results today after the closing bell.
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.