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Why Is AvalonBay (AVB) Up 4.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for AvalonBay Communities (AVB - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AvalonBay due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for AvalonBay Communities, Inc. before we dive into how investors and analysts have reacted as of late.
AvalonBay Q2 FFO Beats Estimates, Same-Store Residential NOI Rises
AvalonBay reported a second-quarter 2025 core FFO per share of $2.82, beating the Zacks Consensus Estimate of $2.80. The figure also climbed 1.8% from the prior-year quarter’s tally.
The quarterly performance reflected favorable same-store residential revenue and operating expense performance. AvalonBay has revised its full-year 2025 outlook, reflecting higher same-store NOI, offset by the delayed occupancies’ impact on development NOI.
Total revenues in the quarter came in at $760.2 million, narrowly missing the Zacks Consensus Estimate by 0.2%. However, the figure increased 4.7% on a year-over-year basis.
Quarter in Detail
In the reported quarter, same-store residential revenues increased 3% year over year to $689.1 million. Same-store residential operating expenses rose 3.6% to $211.9 million. As a result, the same-store residential NOI climbed 2.7% to $477.18 million.
Same-store average revenue per occupied home rose to $3,056 in the second quarter, up 2.8% from $2,974 in the year-ago period. Same-store economic occupancy of 96.2% improved 20 basis points (bps) year over year. It is also ahead of our estimate of 96.1%.
However, interest expenses increased 13.5% year over year to $64.8 million. It also exceeded our estimate of $63.0 million.
Portfolio Activity
During the second quarter, the company acquired six communities in the Dallas-Fort Worth metropolitan area, containing 1,844 apartment homes, for a stated purchase price of $431.5 million.
During the reported quarter, AvalonBay sold Avalon Wesmont Station I & II, two wholly-owned communities with 406 apartment homes and 18,000 square feet of commercial space, in Wood-Ridge, NJ, for $$161.5 million, resulting in a gain in accordance with GAAP of $99.6 million.
As of June 30, 2025, AvalonBay had 20 wholly owned development communities under construction (expected to contain 7,299 apartment homes and 69,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.78 billion.
Balance Sheet
AvalonBay had $102.8 million in unrestricted cash and cash equivalents as of June 30, 2025. As of the same date, the company did not have any borrowings outstanding under its credit facility. It had outstanding borrowings of $664.6 million under its unsecured commercial paper note program.
Additionally, its annualized net debt-to-core EBITDAre for the April-June period was 4.4 times, and the unencumbered NOI for the six months ended June 30, 2025, was 95%.
2025 Guidance
For full-year 2025, AvalonBay has revised its core FFO per share in the range of $11.19-$11.59 compared with the initial outlook of $11.14-$11.64. This denotes a projected core FFO per share growth of 3.5% at the midpoint, unchanged from the initial outlook.
AvalonBay expects same-store residential revenue growth of 2.8% at the midpoint of the outlook range, down from 3% guided earlier. Same-store operating expenses are expected to grow 3.1%, down from 4.1% projected earlier. Consequently, same-store residential NOI is projected to expand 2.7%, up from 2.4% initially guided. 2025 NOI from development communities is projected to be $25 million, down from the prior outlook of $30 million.
For the third quarter of 2025, AvalonBay expects core FFO per share in the range of $2.75-$2.85.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, AvalonBay has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, AvalonBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is AvalonBay (AVB) Up 4.5% Since Last Earnings Report?
A month has gone by since the last earnings report for AvalonBay Communities (AVB - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AvalonBay due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for AvalonBay Communities, Inc. before we dive into how investors and analysts have reacted as of late.
AvalonBay Q2 FFO Beats Estimates, Same-Store Residential NOI Rises
AvalonBay reported a second-quarter 2025 core FFO per share of $2.82, beating the Zacks Consensus Estimate of $2.80. The figure also climbed 1.8% from the prior-year quarter’s tally.
The quarterly performance reflected favorable same-store residential revenue and operating expense performance. AvalonBay has revised its full-year 2025 outlook, reflecting higher same-store NOI, offset by the delayed occupancies’ impact on development NOI.
Total revenues in the quarter came in at $760.2 million, narrowly missing the Zacks Consensus Estimate by 0.2%. However, the figure increased 4.7% on a year-over-year basis.
Quarter in Detail
In the reported quarter, same-store residential revenues increased 3% year over year to $689.1 million. Same-store residential operating expenses rose 3.6% to $211.9 million. As a result, the same-store residential NOI climbed 2.7% to $477.18 million.
Same-store average revenue per occupied home rose to $3,056 in the second quarter, up 2.8% from $2,974 in the year-ago period. Same-store economic occupancy of 96.2% improved 20 basis points (bps) year over year. It is also ahead of our estimate of 96.1%.
However, interest expenses increased 13.5% year over year to $64.8 million. It also exceeded our estimate of $63.0 million.
Portfolio Activity
During the second quarter, the company acquired six communities in the Dallas-Fort Worth metropolitan area, containing 1,844 apartment homes, for a stated purchase price of $431.5 million.
During the reported quarter, AvalonBay sold Avalon Wesmont Station I & II, two wholly-owned communities with 406 apartment homes and 18,000 square feet of commercial space, in Wood-Ridge, NJ, for $$161.5 million, resulting in a gain in accordance with GAAP of $99.6 million.
As of June 30, 2025, AvalonBay had 20 wholly owned development communities under construction (expected to contain 7,299 apartment homes and 69,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.78 billion.
Balance Sheet
AvalonBay had $102.8 million in unrestricted cash and cash equivalents as of June 30, 2025. As of the same date, the company did not have any borrowings outstanding under its credit facility. It had outstanding borrowings of $664.6 million under its unsecured commercial paper note program.
Additionally, its annualized net debt-to-core EBITDAre for the April-June period was 4.4 times, and the unencumbered NOI for the six months ended June 30, 2025, was 95%.
2025 Guidance
For full-year 2025, AvalonBay has revised its core FFO per share in the range of $11.19-$11.59 compared with the initial outlook of $11.14-$11.64. This denotes a projected core FFO per share growth of 3.5% at the midpoint, unchanged from the initial outlook.
AvalonBay expects same-store residential revenue growth of 2.8% at the midpoint of the outlook range, down from 3% guided earlier. Same-store operating expenses are expected to grow 3.1%, down from 4.1% projected earlier. Consequently, same-store residential NOI is projected to expand 2.7%, up from 2.4% initially guided. 2025 NOI from development communities is projected to be $25 million, down from the prior outlook of $30 million.
For the third quarter of 2025, AvalonBay expects core FFO per share in the range of $2.75-$2.85.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, AvalonBay has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, AvalonBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.