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AvalonBay Communities (AVB) Q4 FFO Beats Mark, Revenues Miss

AvalonBay Communities, Inc.’s AVB fourth-quarter 2021 core funds from operations (FFO) per share of $2.27 beat the Zacks Consensus Estimate of $2.24.

Results reflected a year-over-year increase in same-store residential revenues, partially offset by rising expenses.

Total revenues of $601.2 million lagged the Zacks Consensus Estimate of $604.6 million.

On a year-over-year basis, the core FFO per share increased 12.4%, while total revenues increased 8.2% from the year-ago quarter’s level.

For 2021, the core FFO per share came in at $8.26, 5% lower than the prior-year tally of $8.69 but beat the Zacks Consensus Estimate of $8.22. Revenues were marginally down year over year to $2.29 billion.

As of Jan 31, 2022, the collected residential revenues for the fourth quarter decreased to 95.6% from 95.8% as of the end of fourth-quarter 2021. The collected residential revenues for Jan 2022 were 93% as of Jan 31.

Quarter in Detail

In the reported quarter, the total same-store residential rental revenues on a cash basis increased 8.3% year over year. Operating expenses flared up 0.5%, while the same-store residential NOI increased 6.8% to $362.2 million.

As of Dec 31, 2021, AvalonBay had 17 consolidated development communities under construction (expected to contain 5,386 apartment homes and 40,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.14 billion.

In the December quarter, AVB acquired a number of properties in its expansion markets. In Fort Lauderdale, FL, it acquired Avalon Fort Lauderdale for $150 million. In Miramar, FL, AVB acquired Avalon Miramar for $133 million and Hawk in Charlotte, NC, for $48.5 million.

During the fourth quarter, AvalonBay sold two wholly-owned operating communities. The properties include eaves Lawrenceville in Lawrenceville, NJ, and Avalon at Center Place, located in Providence, RI.

Balance Sheet Position

As of Dec 31, 2021, AvalonBay did not have any borrowings outstanding under its $1.75-billion unsecured credit facility.AVB had $543.8 million of unrestricted cash and cash in escrow, as of the same date. In addition, its annualized net debt-to-core EBITDAre for the October-December period was 5.1 times and the unencumbered NOI for 2021 was 95%.

Outlook

For first-quarter 2022, AvalonBay expects core FFO per share in the range of $2.14-$2.26.The Zacks Consensus Estimate of $2.25 falls in this range.

For 2022, AVB expects core FFO per share in the range of $9.30-$9.80. The Zacks Consensus Estimate for the same is $9.39. AvalonBay expects same-store residential revenues to be up 7.25-9.25%, operating expense to flare up 4-5.5% and NOI to increase 8.5-11.5% for the full year.

AvalonBay Communities currently carries a Zacks Rank #3 (Hold). 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 and EPS Surprise
AvalonBay Communities, Inc. Price, Consensus and EPS Surprise

AvalonBay Communities, Inc. price-consensus-eps-surprise-chart | AvalonBay Communities, Inc. Quote

We now look forward to the earnings releases of other residential REITs like Mid-America Apartment Communities, Inc. MAA, scheduled for today after the closing bell, and UDR Inc. UDR, lined up for result announcement on Feb 8, 2022.

Performance of Other Residential REIT

Essex Property Trust Inc. ESS reported fourth-quarter 2021 core FFO per share of $3.25, beating the Zacks Consensus Estimate of $3.23. The figure also improved 7.6% from the year-ago quarter’s $3.02.Results reflect an improving rent growth amid economic recovery.

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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