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AvalonBay Updates on Q2 Operations and May Rent Collections

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AvalonBay Communities, Inc. (AVB - Free Report) has announced that through May 31, its billed residential rent collections for the month marked 95% of the company’s average billed residential rent collections rate at month end for the 12-month period ending Mar 31, 2020.

The company also noted that for its established communities, average physical occupancy in May was 94.4%, marginally down from April’s 95.3%. Moreover, like-term lease rent change was 0.2% in May compared with April’s 1.9%, while like-term effective rent change was -3.5% in the month versus the -0.2% reported in April.

In the March-end quarter, revenues from established communities were up 3% year over year to $547.9 million. Results reflected a 2.7% increase in average rental rates and 0.4% growth in economic occupancy.

However, the coronavirus pandemic has been wreaking havoc, resulting in macroeconomic uncertainty and a choppy job-market environment. This is likely to affect demand in the prime leasing season. In addition, the rent-paying capability of tenants is expected to get maimed and affect residential REITs, including AvalonBay, Equity Residential (EQR - Free Report) , Essex Property (ESS - Free Report) , UDR Inc. (UDR - Free Report) and several others, during this period.

Amid this, the company has adopted a number of measures, including offering flexible lease renewal options at no rent hike for leases expiring through Jun 30, 2020, making payment plans for residents, who are unable to pay their rent due to the crisis as well as waiving late fees and some other customary fees associated with apartment rentals. The company’s top line is, therefore, likely to bear the brunt in the near term, with adverse impact on rental rates and occupancy.

Nevertheless, AvalonBay has high-quality assets located in some of the premium markets of the country, which enable the company to generate steady rental revenues. The company’s properties generally command the highest rents in its markets.

AvalonBay is also banking on technology, scale and organizational capabilities to drive innovation and margin expansion in its portfolio. This has become all the more essential in this social-distancing era, as the virus outbreak needed a quick shift to virtual operations for the continuity of normal business operations.

AvalonBay currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of AvalonBay have declined 21.3% over the past year compared with the industry's fall of 11.7%.



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