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AvalonBay Q3 FFO & Revenues Miss Estimates, '25 Outlook Lowered
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Key Takeaways
AvalonBay posted Q3 core FFO of $2.75, missing estimates but slightly above last year's $2.74.
Quarterly revenues rose 4.4% year over year to $766.8 million, also missing consensus expectations.
AVB cut its 2025 FFO and NOI growth outlooks after higher expenses and modest occupancy gains.
AvalonBay Communities (AVB - Free Report) reported third-quarter 2025 core funds from operations (FFO) per share of $2.75, missing the Zacks Consensus Estimate of $2.81. However, the figure increased marginally from the prior-year quarter’s tally of $2.74.
This residential REIT lowered its 2025 core FFO per share, same-store residential revenue and net operating income (NOI) growth outlook following the Q3 core FFO per share and revenue miss. However, a marginal rise in occupancy year over year supported the results to some extent.
Total revenues in the quarter came in at $766.8 million, missing the Zacks Consensus Estimate of $769.9 million. However, the figure increased 4.4% on a year-over-year basis.
AVB’s Q3 in Detail
In the reported quarter, same-store residential revenues increased 2.3% year over year to $685.4 million. Same-store residential operating expenses rose 4.6% to $224.3 million. As a result, the same-store residential NOI climbed 1.1% to $461 million.
Same-store average revenue per occupied home rose to $3,087 in the third quarter, up 2.2% from $3,022 in the year-ago period. Same-store economic occupancy of 95.7% jumped 10 basis points year over year. It is below our estimate of 96.3%.
However, interest expenses increased 17.3% year over year to $65.4 million. It also exceeded our estimate of $63.5 million.
AVB’s Portfolio Activity
During the third quarter, the company acquired three wholly-owned communities, containing 584 apartment homes for a purchase price of approximately $186.95 million. The three communities are located in Charlotte, NC, Coconut Creek, FL, and Redmond, WA.
Additionally, the company acquired its joint venture partner's 50% interest in Avalon Alderwood Place for $71.25 million.
During the reported quarter, AVB sold six wholly-owned communities containing 1,594 apartment homes and 20,000 square feet of commercial space, for $585.08 million.
During the third quarter, the company completed the development of Avalon Annapolis, located in Annapolis, MD. Avalon Annapolis contains 508 apartment homes and was constructed for a total capital cost of $195 million.
As of Sept. 30, 2025, AvalonBay had 21 wholly owned Development communities under construction (expected to contain 7,806 apartment homes and 100,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $3.01 billion.
AVB’s Balance Sheet Position
AVB had $123.3 million in unrestricted cash and cash equivalents as of Sept. 30, 2025. As of the same date, the company did not have any borrowings outstanding under its credit facility. It had outstanding borrowings of nearly $235 million under its unsecured commercial paper program.
Additionally, its annualized net debt-to-core EBITDAre for the July-September period was 4.5 times, and the unencumbered NOI for the nine months ended Sept. 30, 2025 was 95%.
AVB’s 2025 Outlook
For the full-year 2025, AVB has revised its full-year core FFO and same-store outlooks. The company expects core FFO per share to be between $11.15-$11.35 compared with the prior outlook of $11.19-$11.59. This denotes a core FFO per share growth of 2.2% at the midpoint, compared to the prior outlook of 3.5% growth. The Zacks Consensus Estimate presently stands at $11.39, above the projected range.
AVB expects same-store residential revenue growth of 2.5% at the midpoint of the outlook range, down from 2.8% guided earlier. Same-store operating expenses are expected to grow 3.8%, up from 3.1% projected earlier. Consequently, same-store residential NOI is projected to be 2.0%, down from 2.7% guided earlier.
For the fourth quarter of 2025, AvalonBay expects core FFO per share in the range of $2.80-$2.90. This is lower than the Zacks Consensus Estimate, which is currently pegged at $2.91.
AvalonBay currently carries a Zacks Rank #4 (Sell).
AvalonBay Communities, Inc. Price, Consensus and EPS Surprise
Equity Residential (EQR - Free Report) reported third-quarter 2025 normalized FFO per share of $1.02, which met the Zacks Consensus Estimate. The figure improved 4.1% from the year-ago quarter.
EQR’s results reflected a rise in same-store revenues and physical occupancy on a year-over-year basis. The company revised its guidance for 2025 normalized FFO per share.
Upcoming Earnings Release
We now look forward to the earnings release of another residential REIT — Centerspace (CSR - Free Report) — which is slated to report on Nov. 3.
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 Q3 FFO & Revenues Miss Estimates, '25 Outlook Lowered
Key Takeaways
AvalonBay Communities (AVB - Free Report) reported third-quarter 2025 core funds from operations (FFO) per share of $2.75, missing the Zacks Consensus Estimate of $2.81. However, the figure increased marginally from the prior-year quarter’s tally of $2.74.
This residential REIT lowered its 2025 core FFO per share, same-store residential revenue and net operating income (NOI) growth outlook following the Q3 core FFO per share and revenue miss. However, a marginal rise in occupancy year over year supported the results to some extent.
Total revenues in the quarter came in at $766.8 million, missing the Zacks Consensus Estimate of $769.9 million. However, the figure increased 4.4% on a year-over-year basis.
AVB’s Q3 in Detail
In the reported quarter, same-store residential revenues increased 2.3% year over year to $685.4 million. Same-store residential operating expenses rose 4.6% to $224.3 million. As a result, the same-store residential NOI climbed 1.1% to $461 million.
Same-store average revenue per occupied home rose to $3,087 in the third quarter, up 2.2% from $3,022 in the year-ago period. Same-store economic occupancy of 95.7% jumped 10 basis points year over year. It is below our estimate of 96.3%.
However, interest expenses increased 17.3% year over year to $65.4 million. It also exceeded our estimate of $63.5 million.
AVB’s Portfolio Activity
During the third quarter, the company acquired three wholly-owned communities, containing 584 apartment homes for a purchase price of approximately $186.95 million. The three communities are located in Charlotte, NC, Coconut Creek, FL, and Redmond, WA.
Additionally, the company acquired its joint venture partner's 50% interest in Avalon Alderwood Place for $71.25 million.
During the reported quarter, AVB sold six wholly-owned communities containing 1,594 apartment homes and 20,000 square feet of commercial space, for $585.08 million.
During the third quarter, the company completed the development of Avalon Annapolis, located in Annapolis, MD. Avalon Annapolis contains 508 apartment homes and was constructed for a total capital cost of $195 million.
As of Sept. 30, 2025, AvalonBay had 21 wholly owned Development communities under construction (expected to contain 7,806 apartment homes and 100,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $3.01 billion.
AVB’s Balance Sheet Position
AVB had $123.3 million in unrestricted cash and cash equivalents as of Sept. 30, 2025. As of the same date, the company did not have any borrowings outstanding under its credit facility. It had outstanding borrowings of nearly $235 million under its unsecured commercial paper program.
Additionally, its annualized net debt-to-core EBITDAre for the July-September period was 4.5 times, and the unencumbered NOI for the nine months ended Sept. 30, 2025 was 95%.
AVB’s 2025 Outlook
For the full-year 2025, AVB has revised its full-year core FFO and same-store outlooks. The company expects core FFO per share to be between $11.15-$11.35 compared with the prior outlook of $11.19-$11.59. This denotes a core FFO per share growth of 2.2% at the midpoint, compared to the prior outlook of 3.5% growth. The Zacks Consensus Estimate presently stands at $11.39, above the projected range.
AVB expects same-store residential revenue growth of 2.5% at the midpoint of the outlook range, down from 2.8% guided earlier. Same-store operating expenses are expected to grow 3.8%, up from 3.1% projected earlier. Consequently, same-store residential NOI is projected to be 2.0%, down from 2.7% guided earlier.
For the fourth quarter of 2025, AvalonBay expects core FFO per share in the range of $2.80-$2.90. This is lower than the Zacks Consensus Estimate, which is currently pegged at $2.91.
AvalonBay currently carries a Zacks Rank #4 (Sell).
AvalonBay Communities, Inc. Price, Consensus and EPS Surprise
AvalonBay Communities, Inc. price-consensus-eps-surprise-chart | AvalonBay Communities, Inc. Quote
Performance of Another Residential REIT
Equity Residential (EQR - Free Report) reported third-quarter 2025 normalized FFO per share of $1.02, which met the Zacks Consensus Estimate. The figure improved 4.1% from the year-ago quarter.
EQR’s results reflected a rise in same-store revenues and physical occupancy on a year-over-year basis. The company revised its guidance for 2025 normalized FFO per share.
Upcoming Earnings Release
We now look forward to the earnings release of another residential REIT — Centerspace (CSR - Free Report) — which is slated to report on Nov. 3.
The Zacks Consensus Estimate for Centerspace’s third-quarter 2025 FFO per share is pegged at $1.22, which implies a 3.4% year-over-year increase. CSR currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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.