Core Insights - AvalonBay Communities (AVB) is positioned to benefit from strong renter demand in high barrier-to-entry regions of the U.S. and is leveraging technology for margin expansion [1][4] - The company reported a second-quarter 2025 core FFO per share of $2.82, exceeding estimates and reflecting a 1.8% year-over-year increase [3][9] - AvalonBay's strategic acquisitions and development projects, supported by a healthy balance sheet, are expected to drive long-term growth [1][5][6] Financial Performance - In Q2 2025, AvalonBay's core FFO per share was $2.82, beating the Zacks Consensus Estimate of $2.80, with a 1.8% increase from the previous year [3][9] - The company revised its full-year 2025 outlook, anticipating higher same-store net operating income (NOI) despite the impact of delayed occupancies [3][9] - AvalonBay's total debt was approximately $8.71 billion as of June 30, 2025, with interest expenses rising 13.5% year-over-year to $64.8 million in Q2 2025 [10] Market Position and Strategy - AvalonBay focuses on high-quality assets in top U.S. markets with strong job growth and high homeownership costs, aiming for superior long-term risk-adjusted returns [4] - The company plans to increase its suburban submarket allocation from 73% to 80% and its expansion region allocation from 12% to 25% [5] - Management expects same-store residential revenues to grow between 2.3% and 3.3% year-over-year in 2025 [4] Balance Sheet and Liquidity - As of June 30, 2025, AvalonBay had no borrowings under its $2.25 billion unsecured credit facility and maintained a well-laddered debt maturity schedule with an average maturity of 6.8 years [6][7] - The company’s annualized net debt-to-core EBITDA ratio was 4.4 times, with unencumbered NOI at 95%, allowing for potential secured debt capital access [6][7] Dividend Policy - AvalonBay has consistently paid dividends since going public in 1994, increasing its first-quarter 2025 dividend to $1.75 per share, a 2.9% increase from the previous quarter [8] - The company’s strong operating fundamentals and financial position suggest that the dividend rate is sustainable in the coming years [8] Industry Context - The U.S. apartment market showed resilience in Q2 2025, absorbing over 227,000 units, indicating strong renter demand despite economic uncertainties [11][12] - This positive trend is beneficial for residential REITs like AvalonBay, which are experiencing solid demand for professionally managed apartments [12]

PART I - FINANCIAL INFORMATION [ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flow statements [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheets detail the company's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Dollars in thousands) | ASSETS | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total real estate, net | $20,494,489 | $19,767,062 | | Cash and cash equivalents | $102,825 | $108,576 | | Restricted cash | $192,547 | $158,500 | | Total assets | $21,837,945 | $21,000,737 | | LIABILITIES AND EQUITY | | | | Total liabilities | $9,667,647 | $9,059,645 | | Total stockholders' equity | $11,947,719 | $11,941,092 | | Noncontrolling interests | $222,579 | — | | Total equity | $12,170,298 | $11,941,092 | | Total liabilities and equity | $21,837,945 | $21,000,737 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) The income statements report revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Dollars in thousands, except per share data) | Metric | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $760,195 | $726,041 | $1,506,075 | $1,438,900 | | Total expenses | $599,850 | $545,655 | $1,170,987 | $1,095,897 | | Net income | $269,855 | $254,007 | $506,452 | $427,564 | | Net income attributable to common stockholders | $268,665 | $253,934 | $505,262 | $427,383 | | Earnings per common share - basic | $1.89 | $1.78 | $3.55 | $3.00 | | Earnings per common share - diluted | $1.88 | $1.78 | $3.54 | $3.00 | [Condensed Consolidated Statements of Equity](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20EQUITY) The equity statements show changes in stockholders' equity and noncontrolling interests for the six months ended June 30, 2025 Condensed Consolidated Statements of Equity (Dollars in thousands) | Metric | Balance at December 31, 2024 | Balance at June 30, 2025 | | :--- | :--- | :--- | | Common stock | $1,422 | $1,423 | | Additional paid-in capital | $11,314,116 | $11,323,160 | | Accumulated earnings less dividends | $591,250 | $595,535 | | Accumulated other comprehensive income | $34,304 | $27,601 | | Total stockholder's equity | $11,941,092 | $11,947,719 | | Noncontrolling interests | — | $222,579 | | Total equity | $11,941,092 | $12,170,298 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The cash flow statements summarize cash movements from operating, investing, and financing activities for the first half of 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | Cash Flow Activity | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $793,715 | $792,896 | | Net cash used in investing activities | $(823,210) | $(463,803) | | Net cash provided by (used in) financing activities | $57,791 | $(94,700) | | Net increase in cash, cash equivalents and restricted cash | $28,296 | $234,393 | | Cash, cash equivalents and restricted cash, end of period | $295,372 | $765,353 | - The Company acquired six apartment communities in the Dallas-Fort Worth metropolitan area for **$415,579,000**, comprising a cash payment of **$193,000,000** and the issuance of **1,060,000 DownREIT Units**[20](index=20&type=chunk) - Common stock and DownREIT Unit dividends declared but not paid totaled **$250,874,000** for the six months ended June 30, 2025[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide detailed explanations of the company's accounting policies and financial activities [1. Organization, Basis of Presentation and Significant Accounting Policies](index=8&type=section&id=1.%20Organization%2C%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note describes the company's REIT structure, operational scope, and key accounting policies including segment reporting - AvalonBay Communities, Inc operates as a REIT, developing, redeveloping, acquiring, owning, and operating multifamily communities across various U.S metropolitan areas and expansion regions[22](index=22&type=chunk) - As of June 30, 2025, the Company owned or held interests in **315 apartment communities (97,212 homes)** across 11 states and D.C, with **20 communities under construction** and plans for **28 additional communities (8,854 homes)**[23](index=23&type=chunk) Total Revenue by Segment (Dollars in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Same Store | $695,188 | $675,912 | $1,385,346 | $1,345,694 | | Other Stabilized | $42,537 | $17,415 | $74,859 | $27,839 | | Development/Redevelopment | $9,254 | $1,308 | $16,061 | $1,862 | | Non-allocated | $1,594 | $1,830 | $3,336 | $3,625 | | Total Revenue | $748,573 | $696,465 | $1,479,602 | $1,379,020 | [2. Interest Capitalized](index=13&type=section&id=2.%20Interest%20Capitalized) This note discloses the amount of interest capitalized for development and redevelopment activities Capitalized Interest (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three months ended June 30 | $11,904 | $11,207 | | Six months ended June 30 | $22,383 | $22,798 | [3. Debt](index=13&type=section&id=3.%20Debt) This note details the company's debt structure, including credit facilities, commercial paper, and recent financing activities Debt Summary (Dollars in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fixed rate unsecured notes | $7,325,000 | $7,400,000 | | Fixed rate mortgage notes payable | $332,949 | $333,479 | | Variable rate mortgage notes payable | $392,050 | $400,950 | | Commercial paper | $665,000 | — | | Total principal outstanding | $8,714,999 | $8,134,429 | | Less deferred financing costs and debt discount | $(54,904) | $(57,180) | | Total | $8,660,095 | $8,077,249 | - In April 2025, the Company amended its Credit Facility, increasing borrowing capacity from **$2.25 billion to $2.5 billion** and extending the term to April 2030[53](index=53&type=chunk) - The Commercial Paper Program capacity was increased from **$500 million to $1 billion** in April 2025, with **$665 million outstanding** as of June 30, 2025[54](index=54&type=chunk) - In April 2025, the Company entered into a **$450 million Term Loan** maturing in April 2029 with an effective fixed rate of **4.46%**, and in June 2025, **$525 million** of 3.45% unsecured notes were repaid[58](index=58&type=chunk) [4. Equity](index=15&type=section&id=4.%20Equity) This note provides details on common stock outstanding, equity programs, and share repurchase authorizations - As of June 30, 2025, the Company had **142,381,736 common shares outstanding**[10](index=10&type=chunk)[63](index=63&type=chunk) - The Continuous Equity Program (CEP) has **$623,997,000 remaining authorized** for issuance, with no sales in Q2 2025[62](index=62&type=chunk) - The Stock Repurchase Program has **$314,237,000 remaining authorized** for purchase, with no repurchases in Q2 2025[65](index=65&type=chunk) [5. Investments](index=16&type=section&id=5.%20Investments) This note outlines the company's real estate acquisitions, structured investment program, and unconsolidated entity investments Consolidated Real Estate Acquisitions (Six months ended June 30, 2025) | Community Name | Location | Period | Apartment Homes | Purchase Price (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Avalon Hill Country | Austin, TX | Q1 2025 | 554 | $136,000 | | Avalon Wolf Ranch | Georgetown, TX | Q1 2025 | 303 | $51,000 | | eaves Twin Creeks | Allen, TX | Q2 2025 | 216 | $44,784 | | Avalon Benbrook | Benbrook, TX | Q2 2025 | 301 | $60,194 | | Avalon Castle Hills | Lewisville, TX | Q2 2025 | 276 | $65,491 | | Avalon Frisco | Frisco, TX | Q2 2025 | 330 | $80,419 | | Avalon Frisco North | Frisco, TX | Q2 2025 | 349 | $88,606 | | eaves North Dallas | Dallas, TX | Q2 2025 | 372 | $76,085 | | Total | | | 2,701 | $602,579 | - The Structured Investment Program (SIP) had eight commitments totaling **$211,585,000** as of June 30, 2025, with a weighted average rate of return of **11.6%**[68](index=68&type=chunk) - The Company holds investments in five unconsolidated entities (20%-50% ownership) and other unconsolidated investments, including property technology and sustainability companies[70](index=70&type=chunk) - In June 2025, the Arts District joint venture secured a variable rate loan of up to **$173 million**, for which the Company provides a **25% partial payment guarantee**[71](index=71&type=chunk) [6. Real Estate Disposition Activities](index=19&type=section&id=6.%20Real%20Estate%20Disposition%20Activities) This note summarizes the company's real estate sales and assets classified as held for sale Real Estate Sales (Six months ended June 30, 2025) | Community Name | Location | Period of Sale | Apartment Homes | Gross Sales Price (in thousands) | Gain on Disposition (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Avalon Wilton on River Road | Wilton, CT | Q1 2025 | 102 | $65,100 | $56,476 | | Avalon Wesmont Station I & II | Wood-Ridge, NJ | Q2 2025 | 406 | $161,500 | $99,636 | | Total | | | 508 | $226,600 | $156,112 | - As of June 30, 2025, the Company had **four real estate assets** classified as held for sale[77](index=77&type=chunk) [7. Commitments and Contingencies](index=20&type=section&id=7.%20Commitments%20and%20Contingencies) This note discusses legal proceedings, including antitrust lawsuits, and details operating lease obligations - The Company is a defendant in antitrust lawsuits alleging unlawful use of RealPage, Inc revenue management systems and data sharing[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) Operating Lease Obligations (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total operating lease assets | $123,053 | $126,572 | | Total operating lease obligations | $149,403 | $153,333 | | Operating lease costs (six months) | $7,771 | $8,377 | [8. Segment Reporting](index=21&type=section&id=8.%20Segment%20Reporting) This note defines the company's operating segments and reconciles Net Operating Income (NOI) to net income - The Company's reportable operating segments are Same Store, Other Stabilized, and Development/Redevelopment, with Net Operating Income (NOI) as the primary financial measure[87](index=87&type=chunk)[88](index=88&type=chunk) Net Operating Income (NOI) Reconciliation (Dollars in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $269,855 | $254,007 | $506,452 | $427,564 | | Total NOI | $513,657 | $483,259 | $1,016,699 | $955,012 | | Commercial NOI | $(7,190) | $(8,516) | $(17,092) | $(16,056) | | Residential NOI | $506,467 | $474,743 | $999,607 | $938,956 | Total NOI by Segment (Dollars in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Same Store | $482,088 | $470,369 | $959,991 | $936,069 | | Other Stabilized | $27,285 | $12,581 | $49,393 | $18,642 | | Development/Redevelopment | $4,284 | $309 | $7,315 | $301 | | Total NOI | $513,657 | $483,259 | $1,016,699 | $955,012 | [9. Stock-Based Compensation Plans](index=23&type=section&id=9.%20Stock-Based%20Compensation%20Plans) This note details activity related to stock options, performance awards, and restricted stock plans Stock Options Activity (Six months ended June 30, 2025) | Metric | Options | Weighted Average Exercise Price per Option | | :--- | :--- | :--- | | Options Outstanding at Dec 31, 2024 | 270,862 | $181.84 | | Granted | 9,473 | $221.58 | | Exercised | (8,759) | $180.32 | | Options Outstanding at June 30, 2025 | 271,576 | $183.28 | | Options Exercisable at June 30, 2025 | 249,486 | $182.29 | Performance Awards Activity (Six months ended June 30, 2025) | Metric | Performance Awards | Weighted Average Grant Date Fair Value per Award | | :--- | :--- | :--- | | Outstanding at Dec 31, 2024 | 250,123 | $207.55 | | Granted | 78,681 | $223.02 | | Converted to shares of common stock | (103,332) | $254.95 | | Outstanding at June 30, 2025 | 258,125 | $199.89 | Restricted Stock Activity (Six months ended June 30, 2025) | Metric | Restricted Stock Shares | Weighted Average Grant Date Fair Value per Share | | :--- | :--- | :--- | | Outstanding at Dec 31, 2024 | 182,382 | $182.59 | | Granted | 79,227 | $221.46 | | Vested | (86,121) | $191.64 | | Outstanding at June 30, 2025 | 174,065 | $195.67 | - Total employee stock-based compensation cost recognized in income was **$14,188,000** for the six months ended June 30, 2025, with **$44,605,000** in unrecognized cost[102](index=102&type=chunk) [10. Related Party Arrangements](index=25&type=section&id=10.%20Related%20Party%20Arrangements) This note discloses fees from and receivables due from unconsolidated entities, as well as director compensation expenses Related Party Fees and Receivables (Dollars in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Fees from unconsolidated entities | $1,594 | $1,830 | $3,336 | $3,625 | | Receivables from unconsolidated entities (as of period end) | $4,119 | N/A | $4,119 | $1,680 | Director Compensation Expense (Dollars in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-employee director compensation | $604 | $603 | $1,192 | $1,199 | [11. Fair Value](index=25&type=section&id=11.%20Fair%20Value) This note describes the fair value measurement of financial instruments, including derivative positions like interest rate swaps and caps - The Company uses interest rate swap and cap agreements for risk management, not speculation, with fair values primarily classified as **Level 2**[105](index=105&type=chunk) Derivative Positions (June 30, 2025, Dollars in thousands) | Derivative Type | Notional Balance | Weighted Average Interest Rate | Weighted Average Capped/Swapped Interest Rate | Earliest Maturity Date | Latest Maturity Date | | :--- | :--- | :--- | :--- | :--- | :--- | | Interest Rate Caps | $391,846 | 3.5% | 6.7% | February 2026 | January 2027 | | Interest Rate Swaps | $450,000 | N/A | 3.6% | April 2029 | April 2029 | - During H1 2025, the Company entered into **$450 million** in interest rate swaps to hedge the Term Loan and terminated **$200 million** of swaps, receiving **$4,099,000**[108](index=108&type=chunk)[109](index=109&type=chunk) Fair Value Hierarchy of Financial Instruments (June 30, 2025, Dollars in thousands) | Description | Total Fair Value | Level 1 (Quoted Prices) | Level 2 (Observable Inputs) | Level 3 (Unobservable Inputs) | | :--- | :--- | :--- | :--- | :--- | | Assets: | | | | | | Notes Receivable, net | $252,106 | — | $252,106 | — | | Non-designated Hedges (Interest Rate Caps) | $2 | — | $2 | — | | Non-designated Hedges (Interest Rate Swaps) | $57 | — | $57 | — | | Total Assets | $252,165 | — | $252,165 | — | | Liabilities: | | | | | | Interest Rate Swaps - Liabilities | $3,222 | — | $3,222 | — | | Fixed rate unsecured notes | $6,439,154 | $6,439,154 | — | — | | Mortgage notes payable and Commercial Paper Program | $1,794,450 | — | $1,794,450 | — | | Total Liabilities | $8,236,826 | $6,439,154 | $1,797,672 | — | [12. Subsequent Events](index=28&type=section&id=12.%20Subsequent%20Events) This note details significant events occurring after the balance sheet date, including debt issuance and credit agreement amendments - In July 2025, the Company issued **$400 million** of unsecured notes at a **5.00%** interest rate, maturing in August 2035[117](index=117&type=chunk) - On August 1, 2025, the Term Loan was increased by **$100 million to $550 million**, with an effective interest rate of **4.44%**[117](index=117&type=chunk) - On August 6, 2025, forward contracts related to the September 2024 Equity Offering were amended to extend settlement to no later than December 31, 2026[117](index=117&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=29&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on financial condition, operational results, liquidity, and capital resources for the reporting period [Executive Overview](index=29&type=section&id=Executive%20Overview) This overview highlights the company's REIT business model, key financial results, and recent development and transaction activities - AvalonBay Communities, Inc is a REIT focused on developing, redeveloping, acquiring, owning, and operating apartment communities in leading metropolitan areas[120](index=120&type=chunk) - Net income attributable to common stockholders for Q2 2025 **increased by 5.8% to $268,665,000**, driven by real estate sales gains and increased NOI[124](index=124&type=chunk) - Same Store NOI from residential operations for Q2 2025 **increased by 2.7% to $477,180,000**, due to a **3.0% rise in revenue**[124](index=124&type=chunk) - As of June 30, 2025, the Company had **20 wholly-owned communities under construction** with a projected cost of **$2.78 billion**[123](index=123&type=chunk)[125](index=125&type=chunk) - During Q2 2025, the Company acquired six Dallas-Fort Worth apartment communities for **$415,579,000** and sold two communities for **$161,500,000**[128](index=128&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes net income, Same Store NOI performance, revenue drivers by region, and non-GAAP measures like FFO and Core FFO Net Income Attributable to Common Stockholders (Dollars in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three months ended June 30 | $268,665 | $253,934 | $14,731 | 5.8% | | Six months ended June 30 | $505,262 | $427,383 | $77,879 | 18.2% | Same Store Residential NOI Changes (Dollars in thousands) | Period | 2025 | 2024 | Increase/ (Decrease) | | :--- | :--- | :--- | :--- | | Three months ended June 30 | $477,180 | $464,602 | $12,578 | | Six months ended June 30 | $948,085 | $923,715 | $24,370 | - Same Store Residential revenue **increased by 3.0%** for the six months ended June 30, 2025, while direct property operating expenses **increased by 5.1%**[140](index=140&type=chunk)[146](index=146&type=chunk) Same Store Residential Revenue Drivers (Six months ended June 30) | Region | 2025 Residential Revenue | 2024 Residential Revenue | % Change | 2025 Avg Monthly Revenue per Occupied Home | 2024 Avg Monthly Revenue per Occupied Home | % Change | 2025 Economic Occupancy | 2024 Economic Occupancy | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New England | $188,396 | $183,211 | 2.8% | $3,417 | $3,323 | 2.8% | 96.4% | 96.4% | —% | | Metro NY/NJ | $277,507 | $269,015 | 3.2% | $3,805 | $3,703 | 2.8% | 96.1% | 95.7% | 0.4% | | Mid-Atlantic | $207,614 | $198,425 | 4.6% | $2,565 | $2,456 | 4.4% | 95.8% | 95.6% | 0.2% | | Southeast Florida | $47,996 | $48,031 | (0.1)% | $2,907 | $2,900 | 0.2% | 97.0% | 97.3% | (0.3)% | | Denver, CO | $20,515 | $20,202 | 1.5% | $2,346 | $2,308 | 1.6% | 94.7% | 94.8% | (0.1)% | | Pacific Northwest | $84,861 | $81,475 | 4.2% | $2,872 | $2,748 | 4.5% | 96.4% | 96.7% | (0.3)% | | Northern California | $216,618 | $211,117 | 2.6% | $3,113 | $3,045 | 2.2% | 96.3% | 95.9% | 0.4% | | Southern California | $300,402 | $293,048 | 2.5% | $2,928 | $2,855 | 2.6% | 96.1% | 96.2% | (0.1)% | | Other Expansion Regions | $27,306 | $26,799 | 1.9% | $1,897 | $1,909 | (0.6)% | 95.5% | 93.0% | 2.5% | | Total Same Store | $1,371,215 | $1,331,323 | 3.0% | $3,044 | $2,959 | 2.9% | 96.1% | 96.0% | 0.1% | FFO and Core FFO (Dollars in thousands, except per share amounts) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common stockholders | $268,665 | $253,934 | $505,262 | $427,383 | | FFO | $401,520 | $391,716 | $798,275 | $779,517 | | Core FFO | $403,972 | $394,569 | $807,298 | $778,327 | | FFO per common share - diluted | $2.80 | $2.75 | $5.59 | $5.48 | | Core FFO per common share - diluted | $2.82 | $2.77 | $5.65 | $5.47 | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's liquidity strategy, cash flow activities, credit facilities, and development project pipeline - The Company's liquidity strategy focuses on funding development, dividends, debt payments, and strategic investments through cash flows, financing, and dispositions[171](index=171&type=chunk)[174](index=174&type=chunk) GAAP Cash Flow Metrics (Six months ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $793,715 | $792,896 | | Net cash used in investing activities | $(823,210) | $(463,803) | | Net cash provided by (used in) financing activities | $57,791 | $(94,700) | - Net cash used in investing activities increased significantly due to **$549,366,000 in development**, **$384,495,000 in acquisitions**, and **$110,914,000 in capital expenditures**[175](index=175&type=chunk) - Net cash provided by financing activities was **$57,791,000**, primarily from **$665,000,000 in commercial paper issuance**, offset by **$525,000,000 debt repayment**[175](index=175&type=chunk) Credit Facility Availability (July 31, 2025, Dollars in thousands) | Metric | Amount | | :--- | :--- | | Credit facility commitment | $2,500,000 | | Commercial paper outstanding | $(530,400) | | Letters of credit outstanding | $(864) | | Total Credit facility available | $1,968,736 | - The Company was in compliance with all financial covenants under its Credit Facility, Term Loan, and unsecured notes as of June 30, 2025[179](index=179&type=chunk) Development Communities Summary (June 30, 2025) | Community Name | Number of Apartment Homes | Projected Total Capitalized Cost ($ millions) | Construction Start | Initial Projected or Actual Occupancy | Estimated Completion | Estimated Stabilized Operations | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Avalon West Windsor | 535 | $210 | Q2 2022 | Q3 2025 | Q2 2026 | Q4 2026 | | Avalon Annapolis | 508 | $199 | Q3 2022 | Q3 2024 | Q3 2025 | Q2 2026 | | Avalon Lake Norman | 345 | $101 | Q1 2023 | Q2 2025 | Q2 2026 | Q3 2026 | | Avalon Hunt Valley West | 322 | $106 | Q2 2023 | Q1 2025 | Q4 2025 | Q3 2026 | | Avalon South Miami | 290 | $186 | Q3 2023 | Q3 2025 | Q1 2026 | Q3 2026 | | Avalon Wayne | 473 | $171 | Q4 2023 | Q2 2025 | Q3 2026 | Q1 2027 | | Avalon Parsippany | 410 | $147 | Q4 2023 | Q3 2025 | Q2 2026 | Q4 2026 | | Avalon Pleasanton | 362 | $218 | Q2 2024 | Q3 2025 | Q3 2027 | Q1 2028 | | Avalon Roseland II | 533 | $199 | Q2 2024 | Q4 2025 | Q4 2026 | Q2 2027 | | Avalon Quincy Adams | 288 | $124 | Q2 2024 | Q1 2026 | Q3 2026 | Q2 2027 | | Avalon Tech Ridge I | 444 | $120 | Q3 2024 | Q1 2026 | Q1 2027 | Q3 2027 | | Avalon Carmel | 360 | $123 | Q3 2024 | Q2 2026 | Q3 2026 | Q3 2027 | | Avalon Plano | 155 | $58 | Q3 2024 | Q2 2026 | Q2 2027 | Q4 2027 | | Avalon Oakridge I | 459 | $149 | Q3 2024 | Q4 2026 | Q4 2027 | Q2 2028 | | AVA Brewer's Hill | 418 | $134 | Q4 2024 | Q4 2026 | Q3 2027 | Q1 2028 | | Kanso Hillcrest | 182 | $85 | Q4 2024 | Q1 2027 | Q2 2027 | Q4 2027 | | Avalon Parker | 312 | $122 | Q1 2025 | Q3 2026 | Q2 2027 | Q1 2028 | | Avalon North Palm Beach | 279 | $118 | Q1 2025 | Q1 2027 | Q3 2027 | Q1 2028 | | Avalon Brier Creek | 400 | $127 | Q2 2025 | Q3 2026 | Q3 2027 | Q1 2028 | | Avalon Kendall | 224 | $83 | Q2 2025 | Q1 2027 | Q2 2027 | Q1 2028 | | Total | 7,299 | $2,780 | | | | | - The Company completed the development of Avalon Princeton on Harrison (200 apartment homes) in Q2 2025, with a total capitalized cost of **$79 million**[208](index=208&type=chunk) - As of June 30, 2025, the Company held **$101,066,000 in land parcels** and **$75,993,000 in capitalized deferred development costs** for 28 Development Rights[209](index=209&type=chunk) - Expensed transaction, development, and other pursuit costs were **$7,237,000** for the six months ended June 30, 2025[210](index=210&type=chunk) - As of July 31, 2025, the Structured Investment Program (SIP) had nine commitments totaling **$239,585,000**, with a weighted average rate of return of **11.7%**[211](index=211&type=chunk) [Supplemental U.S. Federal Income Tax Considerations](index=48&type=section&id=Supplemental%20U.S.%20Federal%20Income%20Tax%20Considerations) This section discusses recent legislative changes affecting REIT asset tests and pass-through income deductions - The One Big Beautiful Bill Act, enacted July 4, 2025, relaxed the REIT asset test for taxable REIT subsidiaries from **20% to 25%** of gross assets[215](index=215&type=chunk)[217](index=217&type=chunk) - The OBBB permanently extended the pass-through qualified business income deduction, allowing individuals to deduct **20% of ordinary REIT dividends**[217](index=217&type=chunk) [Forward-Looking Statements](index=48&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains statements about future expectations that are subject to risks and uncertainties - The report contains forward-looking statements regarding future events, trends, and expectations, which are subject to known and unknown risks[216](index=216&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to the company's critical accounting policies since the last annual report - The Company's critical accounting policies include cost capitalization and asset impairment, which have not materially changed from the prior annual report[220](index=220&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=50&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) There have been no material changes to the Company's exposures to market risk since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to market risk exposures since December 31, 2024[222](index=222&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=50&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Disclosure controls and procedures were evaluated and deemed **effective** as of June 30, 2025[223](index=223&type=chunk) - **No material changes** to internal control over financial reporting occurred during Q2 2025[224](index=224&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=50&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section references disclosures on legal contingencies from the financial statement notes - Legal proceedings information is incorporated from Notes 7 and 12 of the financial statements[225](index=225&type=chunk) [ITEM 1A. RISK FACTORS](index=50&type=section&id=ITEM%201A.%20RISK%20FACTORS) The Company refers readers to the risk factors discussed in its Annual Report on Form 10-K, noting no material changes - No material changes to risk factors since December 31, 2024, as disclosed in the Annual Report on Form 10-K[226](index=226&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=51&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the private placement of DownREIT Units and the company's stock repurchase program activity - On April 30, 2025, the Company issued **1,060,000 DownREIT Units** in a private placement as part of acquiring six apartment communities[227](index=227&type=chunk) Issuer Purchases of Equity Securities (Three months ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | May 1 - May 31, 2025 | 802 | $207.57 | | Total | 802 | $207.57 | - As of June 30, 2025, **$314,237,000 remained authorized** for purchase under the Stock Repurchase Program[234](index=234&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=51&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reported no defaults upon senior securities during the period - No defaults upon senior securities[230](index=230&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=51&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Company - Mine safety disclosures are not applicable[231](index=231&type=chunk) [ITEM 5. OTHER INFORMATION](index=51&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section discloses no insider trading plan modifications and details subsequent amendments to credit facilities - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025[232](index=232&type=chunk) - On August 1, 2025, the Credit Facility was amended to extend its sustainability-linked pricing component[233](index=233&type=chunk) - On August 1, 2025, the Term Loan was amended to increase its amount by **$100,000,000 to $550,000,000** and extend its sustainability-linked pricing component[236](index=236&type=chunk) [ITEM 6. EXHIBITS](index=53&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, debt instruments, and certifications - The exhibits include corporate governance documents, debt instruments, and Sarbanes-Oxley Act certifications[238](index=238&type=chunk) - Amendment No 1 to Seventh Amended and Restated Revolving Loan Agreement and Amendment No 1 to Term Loan Agreement were filed herewith[238](index=238&type=chunk) [SIGNATURES](index=55&type=section&id=SIGNATURES) The report is duly signed by the Chief Executive Officer and Chief Financial Officer in accordance with the Securities Exchange Act of 1934 - The report was signed by Benjamin W Schall (CEO and President) and Kevin P O'Shea (CFO) on August 7, 2025[243](index=243&type=chunk)

Group 1 - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] - The earnings season is viewed as an opportunity for medium- and long-term investors due to market overreactions to short-term results and guidance [2] - The article emphasizes the importance of defensive stocks for investors with a medium- to long-term horizon [2] Group 2 - The article does not provide specific financial advice or recommendations, encouraging readers to conduct their own due diligence [4][5]

Core Viewpoint - AvalonBay Communities (NYSE: AVB) has underperformed in the past year, with a loss of 13% in its share price, which has worsened following mixed financial results that raised concerns about a potential decline in apartment rents [1] Financial Performance - The company reported mixed results, which intensified fears regarding the stability of apartment rents [1] Market Sentiment - The recent performance and results have led to increased apprehension among investors about the future of AvalonBay Communities and the broader apartment rental market [1]

Core Viewpoint - AvalonBay Communities reported strong Q2 FY2025 earnings, with Core FFO per share of $2.82, exceeding analyst estimates significantly, indicating robust operational performance despite moderating growth trends [1][5][14] Financial Performance - Core FFO per share increased by 1.8% year-over-year from $2.77 in Q2 2024 to $2.82 in Q2 2025 [2] - GAAP EPS rose to $1.88, a 5.6% increase from $1.78 in Q2 2024 [2] - Residential revenue reached $689.1 million, up 3.0% from $669.1 million in Q2 2024 [2] - Same Store Residential Net Operating Income (NOI) grew by 2.7% to $477.2 million [2][5] Business Overview - AvalonBay specializes in multifamily rental communities in high-demand U.S. metro regions, holding interests in 315 properties with a total of 97,212 apartment homes [3] - The company focuses on high-barrier and expansion markets, targeting areas with strong job growth and high housing costs [3] Operational Strategy - The business model emphasizes in-house development and redevelopment of apartment properties, with a focus on operational efficiency and technology adoption [4] - Recent capital reallocations target expanding regions such as Texas, Florida, and the Carolinas, alongside established coastal markets [4] Development Activities - AvalonBay completed the Avalon Princeton on Harrison project with 200 homes at a total capital cost of $79 million and initiated new projects in Florida and North Carolina totaling 624 homes and $210 million [7] - The company is currently managing 20 wholly owned developments with 7,299 homes and a total cost of $2.78 billion [7] Financial Position - As of Q2 2025, AvalonBay had $102.8 million in unrestricted cash and no borrowings under its $2.5 billion credit facility, indicating strong liquidity [10] - The company issued $400 million in unsecured notes in July 2025 to extend its debt maturity profile [11] Future Outlook - For FY2025, management provided Core FFO per share guidance of $11.19–$11.59, with a midpoint of $11.39, indicating stability [14] - Same Store portfolio growth is expected between 2.3% and 3.3% for revenue, with operating expense growth projected at 2.6%–3.6% [14]

Financial Data and Key Metrics Changes - The second quarter and first half results exceeded initial guidance, with revenue growth driven by higher occupancy and rental revenue [5][6] - Core FFO growth year-to-date was 3.3%, positioning the company towards the top of the sector [8] - Operating expense growth is now forecasted at 3.1%, 100 basis points better than original guidance, leading to higher NOI growth projected at 2.7% for 2025 [6][12] Business Line Data and Key Metrics Changes - Same store NOI growth is projected at 2.7%, reflecting a 30 basis points improvement from initial expectations, driven by reduced expense growth [12] - New development projects started in the first half of the year totaled $610 million, with a revised full-year target of $1.7 billion [8][12] Market Data and Key Metrics Changes - Total market occupancy in established regions is at 94.8%, while the Sunbelt region stands at 89.5% due to elevated standing inventory [9] - Economic occupancy in New York, New Jersey averaged 96.3% during Q2, and Seattle averaged 96.6% with over 3% rent change [17][19] Company Strategy and Development Direction - The company is focused on acquiring $900 million of assets this year, primarily funded by capital from dispositions [7] - Development projects are expected to generate differentiated external growth, with a focus on high-quality projects in attractive long-term markets [7][8] Management's Comments on Operating Environment and Future Outlook - Management noted that job growth expectations for the second half of the year are more muted, but demand remains healthy across most of the portfolio [6] - The company anticipates a continued decline in new supply in established regions, supporting healthy operating fundamentals [6][9] Other Important Information - The company raised $1.3 billion of capital year-to-date at an initial cost of 5%, which is attractive relative to yields on new development projects [8] - The CEO acknowledged the retirement of the VP of Investor Relations, Jason Reilley, after 21 years with the company [10] Q&A Session Summary Question: What is impacting the pace of leasing in Denver communities? - The leasing pace is averaging about 30 homes per month, which is expected for this time of year, but some delays are due to elevated concessions in competitive submarkets [28][30] Question: What gives confidence in achieving the same number of occupied units by year-end? - The company has had good leasing velocity, averaging around 30 units per month, and is optimistic about the performance of new lease-ups in strong markets [32][34] Question: What caused the leveling off in asking rent trends? - Demand has softened due to weaker job growth, with about 100,000 fewer jobs than originally projected impacting rent growth [38][39] Question: Why is bad debt running higher compared to peers? - The company charges for all amounts due under lease terms, including late fees and utilities, which may contribute to higher bad debt figures [40][41] Question: How is the Dallas acquisition performing? - The acquisition is trending as expected, with increased resources being invested in asset management to enhance performance [48][49] Question: What regions are expected to underperform in rent change? - The Mid Atlantic and Southern California are projected to underperform due to weaker job environments and pricing power [54][55] Question: What is the outlook for the pending DC asset sales? - The DC market is challenging for asset sales due to unique local laws, but recent recovery in rent rolls has made the company comfortable with transaction values [84][87]

Financial Data and Key Metrics Changes - The second quarter and first half of the year results exceeded initial guidance, with revenue growth driven by higher occupancy and rental revenue [5][6] - Core FFO growth was reported at 3.3% year to date, positioning the company toward the top of the sector [9] - Operating expenses growth is now forecasted at 3.1%, 100 basis points better than original guidance, leading to higher NOI growth projected at 2.7% for 2025 [6][12] Business Line Data and Key Metrics Changes - Same store NOI growth is projected at 2.7%, which is 30 basis points above initial expectations, driven by a reduction in expense growth [12][13] - New development projects started in the first half of the year totaled $610 million, with a revised target of $1.7 billion for the full year [9][13] Market Data and Key Metrics Changes - Total market occupancy in established regions stands at 94.8%, while the Sunbelt region is at 89.5% due to elevated standing inventory [10] - Economic occupancy in New York, New Jersey averaged 96.3% during Q2, while Seattle achieved 96.6% [19][21] Company Strategy and Development Direction - The company is focused on acquiring $900 million of assets this year, primarily funded by capital from dispositions [8] - Development projects are expected to generate differentiated external growth, with ongoing projects trending above pro forma stabilized yields [7][9] Management's Comments on Operating Environment and Future Outlook - Management noted that job growth expectations for the second half of the year are more muted, but demand remains healthy across most of the portfolio [6] - The company anticipates that new supply in established regions will continue to decline, supporting healthy operating fundamentals [6][10] Other Important Information - The company raised $1.3 billion of capital year to date at an initial cost of 5%, which is attractive relative to yields on new development projects [9] - The CEO acknowledged the retirement of the Head of Investor Relations, Jason Reilly, after 21 years with the company [10][11] Q&A Session Summary Question: What is impacting the pace of leasing in Denver communities? - The leasing pace is averaging about 30 homes per month, which is in line with expectations, but some delays are due to elevated concessions in competitive submarkets [30][32] Question: What gives confidence in achieving the same number of occupied units by year-end? - The company has seen good velocity in leasing, averaging 30 homes per month, and expects to push harder on concessions to maintain occupancy [34][36] Question: What caused the leveling off in asking rent trends? - Demand has softened due to weaker job growth, with about 100,000 fewer jobs than originally projected impacting rent growth [41][42] Question: Why is bad debt running higher compared to peers? - The company charges for all amounts due under lease terms, including late fees and utilities, which may contribute to higher bad debt figures [44][45] Question: How is the Dallas acquisition performing? - The acquisition is trending as expected, with increased resources being allocated to asset management [52][54] Question: What regions are expected to underperform in rent change? - The Mid Atlantic and Southern California are projected to underperform due to weaker job environments and pricing power [58][60] Question: What is the outlook for the DC asset sales? - The DC market is challenging due to unique laws, but the company is comfortable with current pricing and values for the assets [91][94]

Core Insights - AvalonBay Communities (AVB) reported Q2 2025 core funds from operations (FFO) per share of $2.82, exceeding the Zacks Consensus Estimate of $2.80 and reflecting a 1.8% increase year-over-year [1][9] - The company revised its full-year 2025 outlook, indicating higher same-store net operating income (NOI) but lower development NOI due to delayed occupancies [1][10] Financial Performance - Total revenues for the quarter were $760.2 million, slightly missing the Zacks Consensus Estimate by 0.2%, but showing a 4.7% year-over-year increase [2] - Same-store residential revenues rose 3.0% year-over-year to $689.1 million, while same-store operating expenses increased by 3.6% to $211.9 million, resulting in a same-store residential NOI growth of 2.7% to $477.18 million [3][9] - Average revenue per occupied home increased to $3,056, up 2.8% from the previous year, with economic occupancy at 96.2%, a rise of 20 basis points year-over-year [4] Portfolio Activity - In Q2, the company acquired six communities in the Dallas-Fort Worth area for $431.5 million, adding 1,844 apartment homes to its portfolio [5] - AVB sold two communities in Wood-Ridge, NJ, for $161.5 million, realizing a GAAP gain of $99.64 million [5] Balance Sheet Position - As of June 30, 2025, AVB had $102.83 million in unrestricted cash and no borrowings under its credit facility, with outstanding borrowings of $664.64 million under its unsecured commercial paper note program [7] - The annualized net debt-to-core EBITDAre ratio for the April-June period was 4.4 times, with an unencumbered NOI of 95% for the first half of 2025 [7] 2025 Outlook - For full-year 2025, AVB expects core FFO per share between $11.19 and $11.59, indicating a projected growth of 3.5% at the midpoint [10] - Same-store residential revenue growth is expected to be 2.8%, down from the previously guided 3%, while same-store operating expenses are projected to grow 3.1% [11] - For Q3 2025, AVB anticipates core FFO per share in the range of $2.75-$2.85, which is lower than the current Zacks Consensus Estimate of $2.86 [12]

Financial Performance - Core FFO per share growth for Q2 2025 was 18% year-over-year, and 33% for the first half of the year[10] - Same Store Residential revenue growth was 30% year-over-year for both Q2 2025 and the first half of the year[10] - The company raised $13 billion in capital year-to-date at a weighted average initial cost of capital of 50%[9, 10] - The initial outlook projected full year Same Store Residential revenue growth was revised from 30% to 28%, partially due to changes in the composition of the Same Store segment[22, 37] Market Dynamics - Established Regions are expected to be insulated from standing inventory overhang, with new supply expected to decline to historically low levels in 2026[17] - Market occupancy in Established Regions was 948% in June 2025, compared to 895% in Sunbelt Regions[18] - Projected new market rate apartment deliveries in Established Regions for 2026 are expected to be 08% of inventory, compared to 18% in Sunbelt Regions[20] - Expansion Regions are projected to represent approximately 7% of Same Store Residential revenue in 2025, while Established Regions are projected to represent approximately 93%[48] Development Activity - Approximately $3 billion of Development is underway, expected to provide incremental earnings and value creation upon stabilization[9] - Total capital cost for development starts is projected at $17 billion for the full year 2025[22] - Projected NOI from development communities is expected to be $25 million for 2025, a decrease from the initial outlook of $30 million due to delayed occupancies[22] - Projected initial stabilized yields for development communities are trending above underwriting, with a spread of 100-150 bps to the cost of capital[56]

Exhibit 99.2 For Immediate News Release July 30, 2025 AVALONBAY COMMUNITIES, INC. PROVIDES Q2 2025 RESULTS AND UPDATES FULL YEAR 2025 OUTLOOK (Arlington, VA) AvalonBay Communities, Inc. (NYSE: AVB) (the "Company") reported Earnings per Share – diluted ("EPS"), Funds from Operations attributable to common stockholders - diluted ("FFO") per share and Core FFO per share (as defined in this release) for the three and six months ended June 30, 2025 and 2024 as detailed below. | | Q2 2025 | | | Q2 2024 | % Change ...