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AvalonBay Communities, Inc. (AVB - Free Report) reported second-quarter 2023 core funds from operations (FFO) per share of $2.66, beating the Zacks Consensus Estimate of $2.60. Moreover, the figure climbed 9.5% from the prior-year quarter’s tally.
The quarterly results reflect a year-over-year increase in same-store residential rental revenues, driven by solid lease rate growth. The same-store average rental revenue per occupied home improved sequentially, though occupancy declined. AVB also raised its core FFO per share outlook for 2023.
Total revenues in the quarter came in at $690.9 million, outpacing the Zacks Consensus Estimate of $675.7 million. The figure increased 7.2% on a year-over-year basis.
Quarter in Detail
In the reported quarter, same-store residential rental revenues increased 6.3% year over year to $629.9 million. Same-store residential operating expenses rose 8.2% to $195.3 million. As a result, the same-store residential net operating income (NOI) climbed 5.4% to $435.1 million from the prior-year period.
Same-store average rental revenues per occupied home rose to $2,920 in the second quarter, up from $2,858 at the end of first-quarter 2023. The same-store economic occupancy shrunk 20 basis points sequentially to 95.9%. We projected the same to be 96.3%.
As of Jun 30, 2023, AvalonBay had 17 consolidated development communities under construction (expected to contain 5,761 apartment homes and 29,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.29 billion.
Balance Sheet
AVB had $769.6 million in unrestricted cash and cash equivalents and $177.4 million in cash in escrow as of Jun 30, 2023. 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 April-June period was 4.1 times, and the unencumbered NOI for the six months ended Jun 30, 2023, was 95%.
2023 Outlook Raised
For third-quarter 2023, AvalonBay expects core FFO per share in the range of $2.55-$2.65. The Zacks Consensus Estimate for the same is currently pegged at $2.62, which lies within the guided range.
For the full year, AVB expects core FFO per share between $10.46 and $10.66, up from the prior guided range of $10.21-$10.61. This reflects an increase at the midpoint from $10.41 to $10.56. The Zacks Consensus Estimate for the same presently stands at $10.49, within the projected range.
Mid-America Apartment Communities, Inc. (MAA - Free Report) reported a second-quarter 2023 core FFO per share of $2.28, which surpassed the Zacks Consensus Estimate by a penny. Moreover, the reported figure climbed 12.9% year over year.
This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also revised its outlook for 2023.
UDR Inc. (UDR - Free Report) reported second-quarter 2023 FFO as adjusted per share of 61 cents, missing the Zacks Consensus Estimate by a whisker.
Revenues from rental income of $403.1 million, too, lagged the Zacks Consensus Estimate of $407.5 million.
Quarterly results reflect lower-than-anticipated revenues. A fall in occupancy and higher same-store expenses act as dampeners. Nonetheless, UDR benefited from a rise in blended lease rates and past accretive external growth investments. It also revised its 2023 outlook.
On a year-over-year basis, FFOA per share and revenues from rental income climbed 7% and 9.6%, respectively.
Essex Property Trust Inc. (ESS - Free Report) reported a second-quarter 2023 core FFO per share of $3.77, beating the Zacks Consensus Estimate by a penny. The figure also improved 2.4% from the year-ago quarter.
ESS results reflect favorable same-property revenues. Also, this residential REIT revised its 2023 core FFO guidance following the better-than-anticipated performance in the second 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.
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AvalonBay Communities (AVB) Q2 FFO & Revenues Beat, View Raised
AvalonBay Communities, Inc. (AVB - Free Report) reported second-quarter 2023 core funds from operations (FFO) per share of $2.66, beating the Zacks Consensus Estimate of $2.60. Moreover, the figure climbed 9.5% from the prior-year quarter’s tally.
The quarterly results reflect a year-over-year increase in same-store residential rental revenues, driven by solid lease rate growth. The same-store average rental revenue per occupied home improved sequentially, though occupancy declined. AVB also raised its core FFO per share outlook for 2023.
Total revenues in the quarter came in at $690.9 million, outpacing the Zacks Consensus Estimate of $675.7 million. The figure increased 7.2% on a year-over-year basis.
Quarter in Detail
In the reported quarter, same-store residential rental revenues increased 6.3% year over year to $629.9 million. Same-store residential operating expenses rose 8.2% to $195.3 million. As a result, the same-store residential net operating income (NOI) climbed 5.4% to $435.1 million from the prior-year period.
Same-store average rental revenues per occupied home rose to $2,920 in the second quarter, up from $2,858 at the end of first-quarter 2023. The same-store economic occupancy shrunk 20 basis points sequentially to 95.9%. We projected the same to be 96.3%.
As of Jun 30, 2023, AvalonBay had 17 consolidated development communities under construction (expected to contain 5,761 apartment homes and 29,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.29 billion.
Balance Sheet
AVB had $769.6 million in unrestricted cash and cash equivalents and $177.4 million in cash in escrow as of Jun 30, 2023. 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 April-June period was 4.1 times, and the unencumbered NOI for the six months ended Jun 30, 2023, was 95%.
2023 Outlook Raised
For third-quarter 2023, AvalonBay expects core FFO per share in the range of $2.55-$2.65. The Zacks Consensus Estimate for the same is currently pegged at $2.62, which lies within the guided range.
For the full year, AVB expects core FFO per share between $10.46 and $10.66, up from the prior guided range of $10.21-$10.61. This reflects an increase at the midpoint from $10.41 to $10.56. The Zacks Consensus Estimate for the same presently stands at $10.49, within the projected range.
AvalonBay currently carries a Zacks Rank #2 (Buy). 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) reported a second-quarter 2023 core FFO per share of $2.28, which surpassed the Zacks Consensus Estimate by a penny. Moreover, the reported figure climbed 12.9% year over year.
This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also revised its outlook for 2023.
UDR Inc. (UDR - Free Report) reported second-quarter 2023 FFO as adjusted per share of 61 cents, missing the Zacks Consensus Estimate by a whisker.
Revenues from rental income of $403.1 million, too, lagged the Zacks Consensus Estimate of $407.5 million.
Quarterly results reflect lower-than-anticipated revenues. A fall in occupancy and higher same-store expenses act as dampeners. Nonetheless, UDR benefited from a rise in blended lease rates and past accretive external growth investments. It also revised its 2023 outlook.
On a year-over-year basis, FFOA per share and revenues from rental income climbed 7% and 9.6%, respectively.
Essex Property Trust Inc. (ESS - Free Report) reported a second-quarter 2023 core FFO per share of $3.77, beating the Zacks Consensus Estimate by a penny. The figure also improved 2.4% from the year-ago quarter.
ESS results reflect favorable same-property revenues. Also, this residential REIT revised its 2023 core FFO guidance following the better-than-anticipated performance in the second 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.