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AvalonBay Communities (AVB) Issues Q1 Rental Revenue Update

Zacks Equity Research
Companies In The News Are: BA,GCP,GTHX,PSN

In the recently-issued operating update for the first quarter of 2019, AvalonBay Communities, Inc. AVB stated that its total rental revenues for established communities were up 3% for the two-month period ending Feb 28, 2019.

Moreover, the company noted that established communities’ like-term effective rent change for the first two months of this year were 2.3% compared to 1.3% in the comparable period last year.

Notably, established communities for 2019 refer to those consolidated communities, which have stabilized occupancy as of Jan 1, 2018, and are neither executing nor planning any significant redevelopment work. These consolidated communities are not held for sale or planned for disposition in the current year.

In fourth-quarter 2018, revenues from established communities improved 2.7% year over year to $412.5 million, indicating increase in average rental rates. Specifically, average rental rates were up 2.7% year over year, while economic occupancy remained flat at 96.1%. Consequently, NOI from established communities increased 2.7% year over year to around $298.0 million.

This came amidst an encouraging fourth-quarter 2018, when the U.S. apartment market witnessed accelerated rent growth and elevated occupancy level amid robust demand for rental units. Per a study by the real estate technology and analytics firm — RealPage, Inc. RP — the annual pace of apartment rent growth in the United States accelerated and reached 3.3% in the quarter, ahead of the 2.5% recorded in 2017.
No doubt, apartment deliveries are anticipated to remain elevated in the near term and this has emerged as a pressing concern for the residential REITs, including AvalonBay, Equity Residential EQR and Apartment Investment & Management Co. AIV. However, an improving demand also raises hopes.

Particularly, AvalonBay is expected to benefit from its high quality assets in premium locations, favorable demographics, household formation, recovering economy and job-market growth. The company’s fourth-quarter 2018 core funds from operations (FFO) per share of $2.31 marked an improvement of 2.7% from the prior year’s $2.25.

AvalonBay currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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RealPage, Inc. (RP) : Free Stock Analysis Report
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Apartment Investment and Management Company (AIV) : Free Stock Analysis Report
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