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]

[Q2 2025 Financial Performance & Highlights](index=1&type=section&id=Q2%202025%20Financial%20Performance%20%26%20Highlights) The company reported strong Q2 2025 financial results, with significant growth in key per share metrics and performance exceeding outlook [Q2 2025 Key Financial Metrics](index=1&type=section&id=Q2%202025%20Key%20Financial%20Metrics) AvalonBay Communities, Inc. reported an increase in key per share metrics for Q2 2025 compared to Q2 2024, with EPS, FFO per share, and Core FFO per share all showing positive growth Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | EPS | $1.88 | $1.78 | 5.6 % | | FFO per share | $2.80 | $2.75 | 1.8 % | | Core FFO per share | $2.82 | $2.77 | 1.8 % | YTD 2025 Key Financial Metrics (vs. YTD 2024) | Metric | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | EPS | $3.54 | $3.00 | 18.0 % | | FFO per share | $5.59 | $5.48 | 2.0 % | | Core FFO per share | $5.65 | $5.47 | 3.3 % | [Q2 2025 Results Compared to Q2 2024](index=1&type=section&id=Q2%202025%20Results%20Compared%20to%20Q2%202024) The company's Q2 2025 per share results saw positive contributions from Same Store Residential NOI and Other Residential and Commercial NOI, partially offset by capital markets activity Q2 2025 Per Share Results vs. Q2 2024 | Per Share | EPS | FFO | Core FFO | | :--- | :--- | :--- | :--- | | Q2 2024 per share reported results | $1.78 | $2.75 | $2.77 | | Same Store Residential NOI (1) | 0.09 | 0.09 | 0.09 | | Other Residential and Commercial NOI | 0.06 | 0.06 | 0.06 | | Overhead & other | (0.03) | (0.03) | (0.03) | | Capital markets activity | (0.05) | (0.07) | (0.07) | | Real estate gains, depreciation expense & other | 0.03 | — | — | | Q2 2025 per share reported results | $1.88 | $2.80 | $2.82 | [Q2 2025 Results Compared to April 2025 Outlook](index=1&type=section&id=Q2%202025%20Results%20Compared%20to%20April%202025%20Outlook) Q2 2025 results exceeded the April 2025 outlook, primarily driven by favorable Same Store Residential NOI, which included a timing-related operating expense benefit Q2 2025 Per Share Results vs. April 2025 Outlook | Per Share | EPS | FFO | Core FFO | | :--- | :--- | :--- | :--- | | Projected per share (1) | $1.83 | $2.74 | $2.77 | | Same Store Residential NOI (2) | 0.07 | 0.07 | 0.07 | | Other Stabilized NOI | (0.01) | (0.01) | (0.01) | | Overhead & other | (0.01) | (0.01) | (0.01) | | Non-core items (3) | 0.01 | 0.01 | — | | Real estate gains, depreciation expense & other | (0.01) | — | — | | Q2 2025 per share reported results | $1.88 | $2.80 | $2.82 | [YTD 2025 Results Compared to YTD 2024](index=1&type=section&id=YTD%202025%20Results%20Compared%20to%20YTD%202024) Year-to-date 2025 results showed significant EPS growth compared to the prior year, largely due to real estate gains and contributions from Same Store and Other Residential NOI, despite impacts from capital markets activity and non-core items YTD 2025 Per Share Results vs. YTD 2024 | Per Share | EPS | FFO | Core FFO | | :--- | :--- | :--- | :--- | | YTD 2024 per share reported results | $3.00 | $5.48 | $5.47 | | Same Store Residential NOI (1) | 0.17 | 0.17 | 0.17 | | Other Residential NOI | 0.16 | 0.16 | 0.16 | | Overhead & other | (0.02) | (0.02) | (0.02) | | Capital markets activity | (0.12) | (0.13) | (0.13) | | Non-core items (2) | (0.07) | (0.07) | — | | Real estate gains, depreciation expense and other | 0.42 | — | — | | YTD 2025 per share reported results | $3.54 | $5.59 | $5.65 | [Operational Activities](index=2&type=section&id=Operational%20Activities) The company engaged in significant operational activities including Same Store growth, new development, strategic dispositions, and acquisitions [Same Store Operating Results](index=2&type=section&id=Same%20Store%20Operating%20Results) Same Store Residential operations demonstrated growth in revenue and NOI for both the three and six months ended June 30, 2025, compared to the prior year periods, despite an increase in operating expenses Q2 2025 Same Store Residential Operating Results (vs. Prior Year Period) | Metric | Q2 2025 ($000s) | % Change | | :--- | :--- | :--- | | Revenue | $689,100 | 3.0 % | | Operating Expenses | $211,920 | 3.6 % | | NOI | $477,180 | 2.7 % | YTD 2025 Same Store Residential Operating Results (vs. Prior Year Period) | Metric | YTD 2025 ($000s) | % Change | | :--- | :--- | :--- | | Revenue | $1,371,215 | 3.0 % | | Operating Expenses | $423,130 | 3.8 % | | NOI | $948,085 | 2.6 % | [Development Activity](index=2&type=section&id=Development%20Activity) The company completed one development project and commenced construction on multiple new apartment communities, including an accelerated second phase of an existing development, significantly increasing its pipeline of apartment homes under construction - Completed Avalon Princeton on Harrison (**200 apartment homes**) in Q2 2025 for a Total Capital Cost of **$79,000,000**[10](index=10&type=chunk) - Started construction of two apartment communities (**624 homes**, estimated **$210,000,000** Total Capital Cost) in Q2 2025[10](index=10&type=chunk) - Accelerated the second phase of Avalon Pleasanton, adding **280 apartment homes** and **$160,000,000** in estimated Total Capital Costs, bringing the total development to **362 homes** and **$218,000,000**[11](index=11&type=chunk) - As of June 30, 2025, **20 wholly-owned Development communities** are under construction, totaling **7,299 apartment homes** and **69,000 sq ft of commercial space**, with an estimated Total Capital Cost of **$2,780,000,000**[13](index=13&type=chunk) [Disposition Activity](index=2&type=section&id=Disposition%20Activity) The company completed significant disposition activity in Q2 and YTD 2025, selling multiple communities for substantial gains - Sold Avalon Wesmont Station I & II (**406 apartment homes**, **18,000 sq ft commercial**) for **$161,500,000** in Q2 2025, resulting in a GAAP gain of **$99,636,000** and an Economic Gain of **$71,648,000**[14](index=14&type=chunk) - Year-to-date 2025, sold three wholly-owned communities (**508 apartment homes**, **18,000 sq ft commercial**) for **$226,600,000**, yielding a GAAP gain of **$155,926,000** and an Economic Gain of **$109,628,000**[15](index=15&type=chunk) [Acquisition Activity](index=2&type=section&id=Acquisition%20Activity) The company expanded its portfolio through acquisitions, notably in the Dallas-Fort Worth area, partially funded by DownREIT Units - Acquired six communities (**1,844 apartment homes**) in Dallas-Fort Worth for **$431,500,000** in Q2 2025, partly funded by **1,060,000 DownREIT Units** valued at **$225 per unit**[16](index=16&type=chunk) - Year-to-date 2025, acquired eight communities (**2,701 apartment homes**) for a total of **$618,500,000**[17](index=17&type=chunk) [Structured Investment Program (SIP) Activity](index=3&type=section&id=Structured%20Investment%20Program%20(SIP)%20Activity) The company made one new SIP commitment in H1 2025 and another in July 2025, focusing on multifamily development projects - No new SIP commitments in Q2 2025. One new SIP commitment of up to **$20,000,000** in Northern California during H1 2025[20](index=20&type=chunk) - In July 2025, committed up to **$28,000,000** to a new multifamily development project in Southeast Florida[21](index=21&type=chunk) [Liquidity and Capital Markets](index=3&type=section&id=Liquidity%20and%20Capital%20Markets) The company maintained strong liquidity and actively managed its debt profile, including repayments, new term loans, expanded credit facilities, and new unsecured notes in July 2025 - Unrestricted cash and cash equivalents totaled **$102,825,000** at June 30, 2025[22](index=22&type=chunk) - No outstanding borrowings under its Credit Facility at June 30, 2025, but **$664,637,000** outstanding under its unsecured commercial paper note program[22](index=22&type=chunk) - Annualized Net Debt-to-Core EBITDAre for Q2 2025 was **4.4 times**; Unencumbered NOI for H1 2025 was **95%**[23](index=23&type=chunk) - Issued **$400,000,000** principal amount of unsecured notes in July 2025 with a **5.00% coupon**, maturing August 2035[24](index=24&type=chunk) - Repaid **$525,000,000** of **3.45% unsecured notes** at maturity in Q2 2025[27](index=27&type=chunk) - Entered into a **$450,000,000 term loan** (SOFR + 0.78%, effective fixed rate **4.46%** after hedging) in Q2 2025[27](index=27&type=chunk) - Amended Credit Facility to increase borrowing capacity to **$2,500,000,000** (from $2,250,000,000) and extend maturity to April 2030 (from September 2026). Increased commercial paper program capacity to **$1,000,000,000** (from $500,000,000)[27](index=27&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) The company provided its financial outlook for Q3 and full year 2025, with updated projections for key metrics and Same Store performance [Q3 and Full Year 2025 Projected Outlook](index=3&type=section&id=Q3%20and%20Full%20Year%202025%20Projected%20Outlook) The company provided its financial outlook for Q3 and the full year 2025, projecting ranges for EPS, FFO per share, and Core FFO per share Q3 and Full Year 2025 Projected Outlook | Metric | Q3 2025 Low | Q3 2025 High | Full Year 2025 Low | Full Year 2025 High | | :--- | :--- | :--- | :--- | :--- | | Projected EPS | $2.41 | $2.51 | $7.75 | $8.15 | | Projected FFO per share | $2.72 | $2.82 | $11.06 | $11.46 | | Projected Core FFO per share | $2.75 | $2.85 | $11.19 | $11.59 | [Full Year 2025 Same Store Outlook](index=3&type=section&id=Full%20Year%202025%20Same%20Store%20Outlook) The full year 2025 outlook for Same Store Residential operations projects positive growth in revenue, operating expenses, and NOI Full Year 2025 Same Store Outlook | Same Store Metric | Full Year 2025 Low | Full Year 2025 High | | :--- | :--- | :--- | | Residential revenue change | 2.3% | 3.3% | | Residential Opex change | 2.6% | 3.6% | | Residential NOI change | 2.0% | 3.4% | [July 2025 Full Year Outlook Compared to February 2025 Outlook](index=4&type=section&id=July%202025%20Full%20Year%20Outlook%20Compared%20to%20February%202025%20Outlook) The July 2025 full year outlook for EPS, FFO, and Core FFO per share was adjusted compared to the February 2025 outlook, primarily due to changes in real estate gains and Same Store Residential revenue and Opex July 2025 Full Year Outlook vs. February 2025 Outlook | Per Share | EPS | FFO | Core FFO | | :--- | :--- | :--- | :--- | | Projected per share - February 2025 outlook (1) | $8.49 | $11.32 | $11.39 | | Same Store Residential revenue | (0.02) | (0.02) | (0.02) | | Same Store Residential Opex | 0.06 | 0.06 | 0.06 | | Commercial NOI | 0.01 | 0.01 | 0.01 | | NOI from new Development | (0.04) | (0.04) | (0.04) | | Capital markets activity | 0.02 | 0.02 | 0.02 | | Overhead and other | (0.03) | (0.03) | (0.03) | | Non-core items (2) | (0.06) | (0.06) | — | | Gain on sale of real estate, depreciation expense, and casualty loss | (0.48) | — | — | | Projected per share - July 2025 outlook (1) | $7.95 | $11.26 | $11.39 | [Corporate Information](index=4&type=section&id=Corporate%20Information) This section provides details on the company's conference call, corporate profile, and forward-looking statements [Conference Call and Attachments](index=4&type=section&id=Conference%20Call%20and%20Attachments) The company announced a conference call to discuss Q2 2025 results and provided details on accessing the call, replay, webcast, and supplemental attachments - Conference call scheduled for July 31, 2025, at **1:00 PM ET**[29](index=29&type=chunk) - Replay available from July 31 to August 31, 2025, via dial-in and webcast[30](index=30&type=chunk) - Detailed operating, development, redevelopment, disposition, and acquisition activity information is available in the 'Attachments' on the company's website[31](index=31&type=chunk) [About AvalonBay Communities, Inc.](index=4&type=section&id=About%20AvalonBay%20Communities%2C%20Inc.) AvalonBay Communities, Inc. is an S&P 500 equity REIT focused on developing, redeveloping, acquiring, and managing apartment communities across key metropolitan areas and expansion regions in the US - AvalonBay Communities, Inc. is an equity REIT and a member of the **S&P 500**[33](index=33&type=chunk) - Operates in New England, NY/NJ Metro, Mid-Atlantic, Pacific Northwest, Northern and Southern California, and expansion regions including Raleigh-Durham, Charlotte, Southeast Florida, Dallas, Austin, and Denver[33](index=33&type=chunk) - As of June 30, 2025, owned or held interests in **315 apartment communities** with **97,212 apartment homes** in **11 states and D.C.**, including **20 under development**[33](index=33&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements regarding future events and trends, which are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations. Investors are advised to review risk factors in SEC filings - Statements use words like 'believe,' 'expect,' 'anticipate,' 'intend,' 'estimate,' 'assume,' 'project,' 'plan,' 'may,' 'shall,' 'will,' 'pursue,' 'outlook' and similar expressions[34](index=34&type=chunk) - Topics include development, acquisition, disposition, timing and cost of completion, operating performance, cost/yield/revenue/NOI/earnings estimates, impact of landlord-tenant laws, expansion, dividends, joint ventures, REIT qualification, real estate markets, financing availability, interest rates, economic conditions, regulatory changes, and legal proceedings[36](index=36&type=chunk) - Actual results may differ materially due to risks such as failure to secure development opportunities, construction cost overruns, delays in lease-up, adverse market conditions, insufficient cash flows, disease outbreaks, inability to refinance debt, joint venture management issues, casualty losses, rent control laws, and SIP investment risks[37](index=37&type=chunk)[38](index=38&type=chunk) [Supplemental Operating and Financial Data](index=8&type=section&id=Supplemental%20Operating%20and%20Financial%20Data) This section provides detailed consolidated operating information, balance sheets, sequential operating data, and market profiles [Condensed Consolidated Operating Information (Attachment 1)](index=9&type=section&id=Condensed%20Consolidated%20Operating%20Information%20(Attachment%201)) The condensed consolidated operating information shows increases in total revenue and net income for both Q2 and YTD 2025 compared to the prior year, alongside growth in FFO and Core FFO. Operating expenses also increased, notably direct property operating expenses and depreciation Condensed Consolidated Operating Information | Metric | Q2 2025 ($000s) | Q2 2024 ($000s) | % Change | YTD 2025 ($000s) | YTD 2024 ($000s) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 760,195 | 726,041 | 4.7 % | 1,506,075 | 1,438,900 | 4.7 % | | Total Community Operating Expenses | 237,224 | 221,256 | 7.2 % | 468,242 | 439,947 | 6.4 % | | Net Income Attributable to Common Stockholders | 268,665 | 253,934 | 5.8 % | 505,262 | 427,383 | 18.2 % | | FFO | 401,520 | 391,716 | 2.5 % | 798,275 | 779,517 | 2.4 % | | Core FFO | 403,972 | 394,569 | 2.4 % | 807,298 | 778,327 | 3.7 % | | Dividends Declared - Common Shares and DownREIT Units | 250,874 | 242,174 | 3.6 % | 500,473 | 484,290 | 3.3 % | - Expensed transaction, development, and other pursuit costs, net of recoveries, increased significantly by **75.9% in Q2 2025** and **27.8% YTD 2025**[47](index=47&type=chunk) - SIP interest income saw substantial growth, increasing by **75.4% in Q2 2025** and **84.5% YTD 2025**[47](index=47&type=chunk) [Condensed Consolidated Balance Sheets (Attachment 2)](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Attachment%202)) The balance sheet as of June 30, 2025, shows an increase in total assets, primarily driven by growth in net operating real estate and construction in progress. Total liabilities also increased, mainly due to unsecured credit facility and commercial paper borrowings Condensed Consolidated Balance Sheets | Asset/Liability | June 30, 2025 ($000s) | December 31, 2024 ($000s) | | :--- | :--- | :--- | | Total Real Estate, Net | 20,494,489 | 19,767,062 | | Construction in Progress, Including Land | 1,399,174 | 1,042,673 | | Real Estate Assets Held for Sale, Net | 334,245 | 6,950 | | Total Assets | 21,837,945 | 21,000,737 | | Unsecured Notes, Net | 7,285,235 | 7,358,784 | | Unsecured Credit Facility and Commercial Paper, Net | 664,637 | — | | Total Liabilities | 9,667,647 | 9,059,645 | | Equity | 12,170,298 | 11,941,092 | [Sequential Operating Information (Attachment 3)](index=11&type=section&id=Sequential%20Operating%20Information%20(Attachment%203)) Sequential operating results show consistent growth in residential revenue and NOI across Same Store, Other Stabilized, and Development/Redevelopment segments from Q4 2024 to Q2 2025. Same Store Economic Occupancy and Average Revenue per Occupied Home also improved Sequential Operating Information | Metric | Q2 2025 ($000s) | Q1 2025 ($000s) | Q4 2024 ($000s) | | :--- | :--- | :--- | :--- | | Same Store Residential Revenue | 689,100 | 682,115 | 679,064 | | Other Stabilized Residential Revenue | 39,759 | 29,086 | 26,578 | | Development/Redevelopment Residential Revenue | 8,946 | 6,465 | 4,784 | | Total NOI | 513,657 | 503,042 | 496,453 | | Same Store Average Revenue per Occupied Home | $3,056 | $3,031 | $3,029 | | Same Store Economic Occupancy | 96.2 % | 96.0 % | 95.7 % | Same Store Like-Term Effective Rent Change | Region | Q1 2025 | Q2 2025 | July 2025 (7) | | :--- | :--- | :--- | :--- | | New England | 2.1 % | 3.4 % | 4.1 % | | Metro NY/NJ | 0.6 % | 2.3 % | 1.9 % | | Mid-Atlantic | 2.9 % | 3.4 % | 3.8 % | | Southeast FL | (0.8)% | (0.3)% | 0.5 % | | Denver, CO | (3.1)% | (2.8)% | (1.3)% | | Pacific NW | 2.4 % | 3.2 % | 3.0 % | | N. California | 2.3 % | 4.0 % | 5.6 % | | S. California | 1.8 % | 2.0 % | 1.9 % | | Other Expansion Regions | (2.0)% | (4.0)% | (2.5)% | | Total | 1.7 % | 2.5 % (6) | 2.9 % (6) | [Market Profile - Same Store](index=12&type=section&id=Market%20Profile%20-%20Same%20Store) This section provides detailed quarterly and year-to-date residential revenue and occupancy changes for Same Store communities by region [Quarterly Residential Revenue and Occupancy Changes (Attachment 4)](index=12&type=section&id=Quarterly%20Residential%20Revenue%20and%20Occupancy%20Changes%20(Attachment%204)) Same Store Residential revenue increased by 3.0% in Q2 2025 compared to Q2 2024, with most regions showing positive revenue growth and stable to improving economic occupancy. Northern Virginia and San Francisco showed strong revenue growth Quarterly Residential Revenue and Occupancy Changes | Region | Apartment Homes | Avg Monthly Revenue Per Occupied Home Q2 25 | % Change (YoY) | Economic Occupancy Q2 25 | % Change (YoY) | Residential Revenue Q2 25 ($000s) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New England | 9,535 | $3,436 | 3.0 % | 96.5 % | (0.2)% | $94,897 | 2.8 % | | Metro NY/NJ | 12,643 | $3,819 | 2.7 % | 96.3 % | 0.5 % | $139,521 | 3.2 % | | Mid-Atlantic | 14,086 | $2,583 | 4.2 % | 95.7 % | 0.0 % | $104,414 | 4.2 % | | Southeast FL | 2,837 | $2,904 | (0.6)% | 96.7 % | (0.2)% | $23,894 | (0.8)% | | Denver, CO | 1,539 | $2,335 | 0.3 % | 94.6 % | 0.3 % | $10,192 | 0.6 % | | Pacific Northwest | 5,109 | $2,883 | 4.2 % | 96.6 % | (0.4)% | $42,696 | 3.8 % | | Northern California | 12,046 | $3,122 | 2.3 % | 96.3 % | 0.5 % | $108,663 | 2.8 % | | Southern California | 17,796 | $2,940 | 2.8 % | 96.2 % | 0.0 % | $151,068 | 2.8 % | | Other Expansion Regions | 2,512 | $1,910 | (0.2)% | 95.6 % | 3.1 % | $13,755 | 2.9 % | | Total Same Store | 78,103 | $3,056 | 2.8 % | 96.2 % | 0.2 % | $689,100 | 3.0 % | [Sequential Quarterly Residential Revenue and Occupancy Changes (Attachment 5)](index=13&type=section&id=Sequential%20Quarterly%20Residential%20Revenue%20and%20Occupancy%20Changes%20(Attachment%205)) Same Store Residential revenue increased by 1.0% in Q2 2025 compared to Q1 2025, with most regions showing sequential growth in average monthly revenue per occupied home and economic occupancy Sequential Quarterly Residential Revenue and Occupancy Changes | Region | Apartment Homes | Avg Monthly Revenue Per Occupied Home Q2 25 | % Change (QoQ) | Economic Occupancy Q2 25 | % Change (QoQ) | Residential Revenue Q2 25 ($000s) | % Change (QoQ) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New England | 9,535 | $3,436 | 1.2 % | 96.5 % | 0.3 % | $94,897 | 1.5 % | | Metro NY/NJ | 12,643 | $3,819 | 0.8 % | 96.3 % | 0.3 % | $139,521 | 1.1 % | | Mid-Atlantic | 14,086 | $2,583 | 1.4 % | 95.7 % | (0.2)% | $104,414 | 1.2 % | | Southeast FL | 2,837 | $2,904 | (0.3)% | 96.7 % | (0.6)% | $23,894 | (0.9)% | | Denver, CO | 1,539 | $2,335 | (1.1)% | 94.6 % | (0.2)% | $10,192 | (1.3)% | | Pacific Northwest | 5,109 | $2,883 | 0.9 % | 96.6 % | 0.4 % | $42,696 | 1.3 % | | Northern California | 12,046 | $3,122 | 0.7 % | 96.3 % | 0.0 % | $108,663 | 0.7 % | | Southern California | 17,796 | $2,940 | 0.9 % | 96.2 % | 0.3 % | $151,068 | 1.2 % | | Other Expansion Regions | 2,512 | $1,910 | 1.3 % | 95.6 % | 0.2 % | $13,755 | 1.5 % | | Total Same Store | 78,103 | $3,056 | 0.8 % | 96.2 % | 0.2 % | $689,100 | 1.0 % | [Year to Date Residential Revenue and Occupancy Changes (Attachment 6)](index=14&type=section&id=Year%20to%20Date%20Residential%20Revenue%20and%20Occupancy%20Changes%20(Attachment%206)) Year-to-date 2025 Same Store Residential revenue increased by 3.0% compared to YTD 2024, with strong performance in the Mid-Atlantic and Pacific Northwest regions Year to Date Residential Revenue and Occupancy Changes | Region | Apartment Homes | Avg Monthly Revenue Per Occupied Home YTD 25 | % Change (YoY) | Economic Occupancy YTD 25 | % Change (YoY) | Residential Revenue YTD 25 ($000s) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New England | 9,535 | $3,417 | 2.8 % | 96.4 % | 0.0 % | $188,396 | 2.8 % | | Metro NY/NJ | 12,643 | $3,805 | 2.8 % | 96.1 % | 0.4 % | $277,507 | 3.2 % | | Mid-Atlantic | 14,086 | $2,565 | 4.4 % | 95.8 % | 0.2 % | $207,614 | 4.6 % | | Southeast FL | 2,837 | $2,907 | 0.2 % | 97.0 % | (0.3)% | $47,996 | (0.1)% | | Denver, CO | 1,539 | $2,346 | 1.6 % | 94.7 % | (0.1)% | $20,515 | 1.5 % | | Pacific Northwest | 5,109 | $2,872 | 4.5 % | 96.4 % | (0.3)% | $84,861 | 4.2 % | | Northern California | 12,046 | $3,113 | 2.2 % | 96.3 % | 0.4 % | $216,618 | 2.6 % | | Southern California | 17,796 | $2,928 | 2.6 % | 96.1 % | (0.1)% | $300,402 | 2.5 % | | Other Expansion Regions | 2,512 | $1,897 | (0.6)% | 95.5 % | 2.5 % | $27,306 | 1.9 % | | Total Same Store | 78,103 | $3,044 | 2.9 % | 96.1 % | 0.1 % | $1,371,215 | 3.0 % | [Residential Operating Expenses ("Opex") - Same Store (Attachment 7)](index=15&type=section&id=Residential%20Operating%20Expenses%20(%22Opex%22)%20-%20Same%20Store%20(Attachment%207)) Same Store Residential Operating Expenses increased by 3.6% in Q2 2025 and 3.8% YTD 2025, primarily driven by higher property taxes, payroll, repairs & maintenance, and utilities, partially offset by a decrease in insurance premiums in Q2 Same Store Residential Operating Expenses | Expense Category | Q2 2025 ($000s) | % Change (YoY) | YTD 2025 ($000s) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Property taxes | 77,201 | 2.3 % | 152,387 | 1.6 % | | Payroll | 39,719 | 5.5 % | 78,973 | 3.1 % | | Repairs & maintenance | 38,641 | 2.7 % | 76,325 | 8.2 % | | Utilities | 25,446 | 6.9 % | 55,119 | 5.4 % | | Office operations | 16,046 | 2.2 % | 31,771 | 1.0 % | | Insurance | 10,033 | (2.2)% | 20,067 | 2.3 % | | Marketing | 4,834 | 20.8 % | 8,488 | 18.8 % | | Total Same Store Residential Operating Expenses | 211,920 | 3.6 % | 423,130 | 3.8 % | - Property taxes increased due to higher assessments and expiration of tax incentive programs, primarily in NYC[67](index=67&type=chunk) - Utilities increased mainly due to the continued implementation of the company's bulk internet offering and higher gas rates[69](index=69&type=chunk) - Marketing expenses rose significantly due to increased internet advertising costs[66](index=66&type=chunk)[70](index=70&type=chunk) [Development, Unconsolidated Real Estate Investments and Debt Profile](index=16&type=section&id=Development%2C%20Unconsolidated%20Real%20Estate%20Investments%20and%20Debt%20Profile) This section details development activities, unconsolidated investments, and the company's debt structure and metrics [Expensed Community Maintenance Costs and Capitalized Community Expenditures (Attachment 8)](index=16&type=section&id=Expensed%20Community%20Maintenance%20Costs%20and%20Capitalized%20Community%20Expenditures%20(Attachment%208)) The company incurred significant capitalized expenditures for acquisitions, construction, redevelopment, and dispositions, alongside regular maintenance costs. Capitalized value for Same Store communities included substantial NOI enhancing and asset preservation investments YTD 2025 Maintenance Expensed Per Home | Category | YTD 2025 Maintenance Expensed Per Home | | :--- | :--- | | Carpet Replacement | $51 | | Other Maintenance | $1,471 | | Total | $1,522 | YTD 2025 Additional Capitalized Value ($000s) | Category | YTD 2025 Additional Capitalized Value ($000s) | | :--- | :--- | | Acquisitions, Construction, Redevelopment & Dispositions | $1,018,208 | | NOI Enhancing | $35,084 | | Asset Preservation | $69,264 | | Total | $1,122,556 | Other Capitalized Costs | Other Capitalized Costs | Q2 2025 ($000s) | Q1 2025 ($000s) | | :--- | :--- | :--- | | Interest | $11,904 | $10,479 | | Overhead | $14,172 | $12,363 | [Development Communities (Attachment 9)](index=17&type=section&id=Development%20Communities%20(Attachment%209)) As of June 30, 2025, the company had 20 development communities under construction, totaling 7,299 apartment homes with a weighted average projected NOI of 6.2% of Total Capital Cost. One community was completed this quarter - **20 communities** under construction, totaling **7,299 apartment homes**, with an estimated Total Capital Cost of **$2,780 million**[77](index=77&type=chunk) - Weighted average projected NOI as a % of Total Capital Cost for communities under construction is **6.2%**[77](index=77&type=chunk) - Avalon Princeton on Harrison (**200 homes**, **$79 million capital cost**) was completed this quarter, with **100% complete** and **70% leased** as of July 21, 2025[77](index=77&type=chunk) [Unconsolidated Operating Communities and Structured Investment Program (Attachment 10)](index=18&type=section&id=Unconsolidated%20Operating%20Communities%20and%20Structured%20Investment%20Program%20(Attachment%2010)) The company holds interests in 9 unconsolidated operating communities, generating significant NOI. The Structured Investment Program (SIP) has 8 commitments totaling over $211 million, with a weighted average return of 11.6% Unconsolidated Operating Communities (100% Ownership) | Venture | Communities | Apartment Homes | Q2 2025 NOI ($000s) | YTD 2025 NOI ($000s) | Debt Principal Amount ($000s) | Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | NYTA MF Investors, LLC | 5 | 1,301 | $9,934 | $19,923 | $394,734 | 3.88 % | | Avalon at Mission Bay II | 1 | 313 | $2,251 | $4,458 | $103,000 | 3.24 % | | Brandywine | 1 | 305 | $1,111 | $2,111 | $18,013 | 3.40 % | | Avalon Alderwood Place | 1 | 328 | $1,980 | $3,671 | — | — % | | AVA Arts District | 1 | 475 | $2,196 | $4,614 | $161,000 | 7.15 % | | Total | 9 | 2,722 | $17,472 | $34,777 | $676,747 | 4.55 % | Structured Investment Program (SIP) | Year of Commitment | Number of Commitments | Commitments ($000s) | Weighted Average Initial Quarter of Maturity | | :--- | :--- | :--- | :--- | | 2022 | 3 | $92,375 | Q2 2026 | | 2023 | 4 | $99,210 | Q3 2027 | | 2024 | — | — | — | | 2025 | 1 | $20,000 | Q1 2028 | | Total | 8 | $211,585 | Q1 2027 | [Debt Structure and Select Debt Metrics (Attachment 11)](index=19&type=section&id=Debt%20Structure%20and%20Select%20Debt%20Metrics%20(Attachment%2011)) The company's debt portfolio is predominantly unsecured fixed-rate notes, with a total debt of $8.7 billion and a weighted average interest rate of 3.6%. Key debt metrics indicate strong financial health and compliance with covenants Debt Composition (June 30, 2025) | Debt Type | Amount ($000s) | Average Interest Rate | | :--- | :--- | :--- | | Secured notes | $724,999 | 3.7 % | | Unsecured notes (Fixed rate) | $7,325,000 | 3.5 % | | Commercial paper | $665,000 | 4.6 % | | Total Debt | $8,714,999 | 3.6 % | Select Debt Metrics (Q2 2025) | Metric | Value | | :--- | :--- | | Net Debt-to-Core EBITDAre | 4.4x | | Interest Coverage | 7.1x | | YTD 2025 Unencumbered NOI | 95% | | Weighted avg years to maturity of total debt | 6.8 | - The company is in compliance with all listed Unsecured Line of Credit Covenants and Unsecured Senior Notes Covenants, demonstrating strong financial stability[90](index=90&type=chunk)[91](index=91&type=chunk) [2025 Financial Outlook (Attachment 12)](index=20&type=section&id=2025%20Financial%20Outlook%20(Attachment%2012)) The July 2025 full year financial outlook projects growth in EPS, FFO, and Core FFO per share compared to 2024, with updated assumptions for Same Store performance, development activity, and capital items Full Year 2025 Projected Outlook (July 2025 Outlook) | Metric | 2024 Actual | 2025 Projected Low | 2025 Projected High | 2025 Midpoint | Change vs. 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | EPS | $7.60 | $7.75 | $8.15 | $7.95 | 4.6% | | FFO per share | $10.98 | $11.06 | $11.46 | $11.26 | 2.6% | | Core FFO per share | $11.01 | $11.19 | $11.59 | $11.39 | 3.5% | Key Assumptions for Full Year 2025 (July 2025 Outlook) | Assumption | Value | | :--- | :--- | | Same Store Residential revenue change | 2.3% - 3.3% | | Same Store Residential Opex change | 2.6% - 3.6% | | Same Store Residential NOI change | 2.0% - 3.4% | | Expected capital cost for Development started in 2025 | $1,700 million | | Development homes completed and delivered in 2025 | 2,180 | | New SIP commitments in 2025 | $75 million | | Projected cash and cash equivalents, 12/31/2025 | $425 million | - The decrease in projected full year Same Store Residential revenue growth compared to the initial outlook is partly due to changes in the composition of the Same Store segment from disposition activity[95](index=95&type=chunk) [Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms (Attachment 13)](index=21&type=section&id=Definitions%20and%20Reconciliations%20of%20Non-GAAP%20Financial%20Measures%20and%20Other%20Terms%20(Attachment%2013)) This section provides definitions and reconciliations for various non-GAAP financial measures and other key terms [Asset Preservation Capex](index=21&type=section&id=Asset%20Preservation%20Capex) Asset Preservation Capex refers to capital expenditures not expected to directly increase revenue or save expenses, but rather to maintain existing assets - Capital expenditures that the Company does not expect will directly result in increased revenue or expense savings[98](index=98&type=chunk) [Average Monthly Revenue per Home](index=21&type=section&id=Average%20Monthly%20Revenue%20per%20Home) Average Monthly Revenue per Home for development communities in lease-up is a projected stabilized rent figure, net of concessions and excluding commercial revenue, based on actual leased rents and market rates - Reflects management's projected stabilized rents net of estimated stabilized concessions, including estimated stabilized other revenue and excluding projected commercial revenue[99](index=99&type=chunk) - Based on actual average leased rents, projected rollover rents, and Market Rents on unleased homes[99](index=99&type=chunk) [Average Monthly Revenue per Occupied Home](index=21&type=section&id=Average%20Monthly%20Revenue%20per%20Occupied%20Home) Average Monthly Revenue per Occupied Home is calculated as GAAP Residential revenue divided by the weighted average number of occupied apartment homes - Calculated as Residential revenue in accordance with GAAP, divided by the weighted average number of occupied apartment homes[100](index=100&type=chunk) [Commercial](index=21&type=section&id=Commercial) Commercial refers to the non-apartment components of the company's mixed-use communities and other non-residential operations - Represents results attributable to the non-apartment components of the Company's mixed-use communities and other non-residential operations[100](index=100&type=chunk) [Debt Covenant Compliance](index=21&type=section&id=Debt%20Covenant%20Compliance) Debt Covenant Compliance ratios are provided to demonstrate adherence to specific covenants in the company's Credit Facility and 1998 Indenture, which are more restrictive than later indentures. These ratios are for compliance purposes only and should not be used for general financial evaluation - Ratios show compliance with selected covenants under the Credit Facility and the 1998 Indenture, which are more restrictive than the 2018 and 2024 Indentures[101](index=101&type=chunk) - These ratios are for compliance purposes only and should not be used to evaluate the company's financial condition or results of operations[102](index=102&type=chunk) [Development](index=21&type=section&id=Development) Development encompasses consolidated communities currently under construction or completed within the current year, which may be partially or fully operational - Composed of consolidated communities that are either currently under construction, or were under construction and were completed during the current year. These communities may be partially or fully complete and operating[103](index=103&type=chunk) [DownREIT Units](index=21&type=section&id=DownREIT%20Units) DownREIT Units represent limited partnership interests in a 'downREIT' partnership, entitling holders to quarterly distributions equivalent to common stock dividends and the right to redeem for cash or common stock after one year - Units representing limited partnership interests in the 'downREIT' partnership that acquired the Dallas-Fort Worth assets[104](index=104&type=chunk) - Entitled to quarterly distributions at the same rate as quarterly dividends on a share of the Company's common stock[104](index=104&type=chunk) - After one year, holders can redeem each unit for a cash amount related to the common stock trading price or, at the Company's election, one share of common stock[104](index=104&type=chunk) [EBITDA, EBITDAre and Core EBITDAre](index=22&type=section&id=EBITDA%2C%20EBITDAre%20and%20Core%20EBITDAre) EBITDA, EBITDAre, and Core EBITDAre are supplemental measures of financial performance. Core EBITDAre further adjusts for non-core items to facilitate comparison of core operating performance between periods - EBITDA is net income before interest expense, income taxes, depreciation, and amortization[105](index=105&type=chunk) - EBITDAre, per Nareit definition, adjusts EBITDA for gains/losses on disposition of depreciated property, impairment write-downs, and unconsolidated entities' EBITDAre[105](index=105&type=chunk) - Core EBITDAre further adjusts EBITDAre for non-core items to compare core operating and financial performance between periods[105](index=105&type=chunk) Q2 2025 EBITDA, EBITDAre, and Core EBITDAre ($000s) | Metric | Amount | | :--- | :--- | | Net income | $269,855 | | EBITDA | $568,080 | | EBITDAre | $473,575 | | Core EBITDAre | $476,538 | [Economic Gain](index=22&type=section&id=Economic%20Gain) Economic Gain is a supplemental measure calculated as GAAP gain on sale less accumulated depreciation and other GAAP adjustments, providing insight into the relationship between cash proceeds and cash invested in sold communities - Calculated as the gain on sale in accordance with GAAP, less accumulated depreciation through the date of sale and any other adjustments required under GAAP accounting[106](index=106&type=chunk) - Helps investors understand the relationship between cash proceeds from a sale and cash invested in the sold community[106](index=106&type=chunk) Economic Gain vs. GAAP Gain on Sale ($000s) | Metric | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Gain on sale in accordance with GAAP | $99,636 | $156,112 | | Accumulated Depreciation and Other | (27,988) | (46,298) | | Economic Gain | $71,648 | $109,814 | [Economic Occupancy](index=22&type=section&id=Economic%20Occupancy) Economic Occupancy measures total possible Residential revenue less vacancy loss as a percentage of total possible Residential revenue, valuing vacant units at Market Rents to reflect their economic impact - Defined as total possible Residential revenue less vacancy loss as a percentage of total possible Residential revenue[106](index=106&type=chunk) - Measures vacant apartments at their Market Rents to account for varying economic impacts of different apartment homes[106](index=106&type=chunk) [FFO and Core FFO](index=23&type=section&id=FFO%20and%20Core%20FFO) FFO and Core FFO are supplemental measures of operating and financial performance, with FFO calculated per Nareit definition and Core FFO further adjusted for non-core items to enhance comparability of core business operations - FFO is calculated as Net income attributable to common stockholders, adjusted for gains/losses on sales of depreciated operating communities, impairment write-downs, and depreciation of real estate assets, including similar adjustments for unconsolidated partnerships[107](index=107&type=chunk) - Core FFO adjusts FFO for non-core items to help compare core operating performance between periods[107](index=107&type=chunk) FFO and Core FFO Reconciliation ($000s) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 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 | [Interest Coverage](index=23&type=section&id=Interest%20Coverage) Interest Coverage is calculated as Core EBITDAre divided by interest expense, serving as a supplemental measure for rating agencies and investors to assess the company's ability to service debt obligations - Calculated as Core EBITDAre divided by interest expense[111](index=111&type=chunk) - Provides an additional means of comparing the company's ability to service debt obligations[111](index=111&type=chunk) Q2 2025 Interest Coverage ($000s) | Metric | Amount | | :--- | :--- | | Core EBITDAre | $476,538 | | Interest expense | $67,026 | | Interest Coverage | 7.1 times | [Like-Term Effective Rent Change](index=24&type=section&id=Like-Term%20Effective%20Rent%20Change) Like-Term Effective Rent Change measures the percentage change in effective rent between two leases of the same term category for the same apartment, distinguishing between new move-in and renewal changes - Represents the percentage change in effective rent between two leases of the same lease term category for the same apartment[113](index=113&type=chunk) - Effective rent is defined as contractual rent less amortized concessions and discounts[113](index=113&type=chunk) - New Move-In Like-Term Effective Rent Change compares rent for a resident moving out to a new resident moving in; Renewal Like-Term Effective Rent Change compares consecutive leases for the same resident[113](index=113&type=chunk) [Market Cap Rate](index=24&type=section&id=Market%20Cap%20Rate) Market Cap Rate is defined as the projected NOI of a single community for the first 12 months of operations, less typical capital expenditure allowance, divided by the gross sales price. It is a measure used in the real estate industry for property valuation - Defined as Projected NOI of a single community for the first 12 months of operations (assuming no repositioning), less an estimate of typical capital expenditure allowance per apartment home, divided by the gross sales price for the community[114](index=114&type=chunk) - Projected NOI for this purpose is management's estimate of projected rental revenue minus projected operating expenses before interest, income taxes, depreciation, and amortization[114](index=114&type=chunk) [Market Rents](index=24&type=section&id=Market%20Rents) Market Rents are based on current market rates set by the company and publicly available data, reflecting average market rents during a period without accounting for cash concessions - Based on the current market rates set by the Company based on its experience in renting apartments and publicly available market data[115](index=115&type=chunk) - For a period, Market Rents are based on the average Market Rents during that period and do not reflect any impact for cash concessions[115](index=115&type=chunk) [Net Debt-to-Core EBITDAre](index=24&type=section&id=Net%20Debt-to-Core%20EBITDAre) Net Debt-to-Core EBITDAre is calculated as total consolidated debt less cash and restricted cash, divided by annualized Core EBITDAre, providing a key leverage metric - Calculated as total debt (secured and unsecured notes, and the Company's Credit Facility and commercial paper program) that is consolidated for financial reporting purposes, less consolidated cash and restricted cash, divided by annualized second quarter 2025 Core EBITDAre[116](index=116&type=chunk) Net Debt-to-Core EBITDAre ($000s) | Metric | Amount | | :--- | :--- | | Total debt principal | $8,714,999 | | Cash and cash equivalents and restricted cash | (257,349) | | Net debt | $8,457,650 | | Core EBITDAre (annualized) | $1,906,152 | | Net Debt-to-Core EBITDAre | 4.4 times | [NOI](index=24&type=section&id=NOI) NOI (Net Operating Income) is a supplemental performance measure representing total property revenue less direct property operating expenses, excluding corporate-level and financing-related costs. It helps in understanding core property operations and valuing real estate assets - Defined as total property revenue less direct property operating expenses (including property taxes), excluding corporate-level income, property management and other indirect operating expenses, expensed transaction costs, interest expense, general and administrative expense, income from unconsolidated investments, depreciation, income tax, casualty loss, gain/loss on sale of communities, other real estate activity, and NOI from real estate assets sold or held for sale[118](index=118&type=chunk) - Considered an important supplemental measure to net income for understanding core operations of a community and for valuing real estate assets[118](index=118&type=chunk) NOI and Residential NOI Reconciliation ($000s) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $269,855 | $254,007 | $506,452 | $427,564 | | 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 | NOI from Real Estate Assets Sold or Held for Sale ($000s) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $11,622 | $29,576 | $26,473 | $59,880 | | Operating expenses | ($3,902) | ($9,892) | ($8,676) | ($19,582) | | NOI | $7,720 | $19,684 | $17,797 | $40,298 | [NOI Enhancing Capex](index=26&type=section&id=NOI%20Enhancing%20Capex) NOI Enhancing Capex refers to capital expenditures expected to directly increase revenue or save expenses, excluding redevelopment-related capital expenditures - Represents capital expenditures that the Company expects will directly result in increased revenue or expense savings, and excludes any capital expenditures for redevelopment[120](index=120&type=chunk) [Other Stabilized](index=26&type=section&id=Other%20Stabilized) Other Stabilized communities are consolidated properties owned by the company with Stabilized Operations as of January 1, 2025, or acquired after January 1, 2024, excluding those undergoing substantial redevelopment - Composed of completed consolidated communities that the Company owns, which have Stabilized Operations as of January 1, 2025, or which were acquired subsequent to January 1, 2024[121](index=121&type=chunk) - Excludes communities that are conducting or are probable to conduct substantial redevelopment activities[121](index=121&type=chunk) [Projected FFO and Projected Core FFO](index=26&type=section&id=Projected%20FFO%20and%20Projected%20Core%20FFO) Projected FFO and Projected Core FFO are forward-looking supplemental measures, consistent with historical calculations, providing an outlook on future operating performance. Reconciliations to Projected EPS are provided for Q3 and Full Year 2025 - Calculated on a basis consistent with historical FFO and Core FFO, considered appropriate supplemental measures to projected net income from projected operating performance[122](index=122&type=chunk) Projected FFO and Core FFO per share (diluted) Reconciliation | Metric | Q3 2025 Low Range | Q3 2025 High Range | Full Year 2025 Low Range | Full Year 2025 High Range | | :--- | :--- | :--- | :--- | :--- | | Projected EPS | $2.41 | $2.51 | $7.75 | $8.15 | | Projected FFO per share | $2.72 | $2.82 | $11.06 | $11.46 | | Projected Core FFO per share | $2.75 | $2.85 | $11.19 | $11.59 | [Projected NOI](index=27&type=section&id=Projected%20NOI) Projected NOI is management's estimate of stabilized rental revenue minus stabilized operating expenses for development communities and dispositions, used to assess likely operational impact and for market cap rate calculations - Represents management's estimate of projected stabilized rental revenue minus projected stabilized operating expenses for Development communities and dispositions[123](index=123&type=chunk) - For Development communities, calculated based on the first twelve months of Stabilized Operations following construction completion[123](index=123&type=chunk) - Assists investors in understanding the likely impact on operations of Development communities when assets are complete and achieve stabilized occupancy[124](index=124&type=chunk) [Redevelopment](index=27&type=section&id=Redevelopment) Redevelopment involves consolidated communities undergoing or likely to undergo substantial reconstruction, defined by significant capital investment and expected occupancy impact - Composed of consolidated communities where substantial redevelopment is in progress or is probable to begin during the current year[125](index=125&type=chunk) - Considered substantial when capital invested is expected to exceed the lesser of **$5,000,000** or **10% of the community's pre-redevelopment basis**, and physical occupancy is expected to be below **90%** during or as a result of the activity[125](index=125&type=chunk) [Residential](index=27&type=section&id=Residential) Residential refers to the company's apartment rental operations, including associated parking and other ancillary revenues - Represents results attributable to the Company's apartment rental operations, including parking and other ancillary Residential revenue[126](index=126&type=chunk) [Residential Revenue with Concessions on a Cash Basis](index=28&type=section&id=Residential%20Revenue%20with%20Concessions%20on%20a%20Cash%20Basis) Residential Revenue with Concessions on a Cash Basis is a supplemental measure to GAAP Residential revenue, helping investors evaluate the impact of concessions and compare revenue trends - Considered a supplemental measure to Residential revenue in conformity with GAAP to help investors evaluate the impact of both current and historical concessions on GAAP-based Residential revenue[127](index=127&type=chunk) - Enables comparisons to revenue as reported by other companies and helps understand historical trends in cash concessions[127](index=127&type=chunk) Same Store Residential Revenue Reconciliation ($000s) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Residential revenue (GAAP basis) | $689,100 | $669,134 | $1,371,215 | $1,331,323 | | Residential concessions amortized | $4,818 | $4,262 | $9,334 | $8,671 | | Residential concessions granted | ($4,018) | ($2,512) | ($8,249) | ($5,824) | | Residential Revenue with Concessions on a Cash Basis | $689,900 | $670,884 | $1,372,300 | $1,334,170 | | % change -- GAAP revenue (Q2 2025 vs. Q2 2024) | 3.0 % | | | | | % change -- cash revenue (Q2 2025 vs. Q2 2024) | 2.8 % | | | | [Same Store](index=28&type=section&id=Same%20Store) Same Store communities are consolidated properties with Stabilized Operations owned since the beginning of the prior year, excluding those undergoing substantial redevelopment or held for sale - Composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had Stabilized Operations as of the beginning of the respective prior year period[128](index=128&type=chunk) - For 2025 operating results, Same Store includes communities with Stabilized Operations as of January 1, 2024, not undergoing substantial redevelopment, and not held for sale or probable for disposition within the current year[128](index=128&type=chunk) [Stabilized Operations](index=28&type=section&id=Stabilized%20Operations) Stabilized Operations are achieved when a community reaches 90% physical occupancy or one year after development/redevelopment completion, whichever comes first - Defined as operations of a community that occur after the earlier of (i) attainment of **90% physical occupancy** or (ii) the one-year anniversary of completion of development or redevelopment[129](index=129&type=chunk) [Total Capital Cost](index=28&type=section&id=Total%20Capital%20Cost) Total Capital Cost includes all capitalized costs projected or incurred for development/redevelopment, such as land, construction, taxes, interest, fees, and contingency, offset by land/improvement sales proceeds - Includes all capitalized costs projected to be or actually incurred to develop the respective Development or Redevelopment community, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees and a contingency estimate, offset by proceeds from the sale of any associated land or improvements, all as determined in accordance with GAAP[130](index=130&type=chunk) - Also includes costs for first-generation commercial tenants (tenant improvements, leasing commissions)[130](index=130&type=chunk) [Uncollectible lease revenue](index=29&type=section&id=Uncollectible%20lease%20revenue) Uncollectible Residential lease revenue as a percentage of total Residential revenue, including rent relief, is provided. The company expects rent relief to decline in 2025 without further government funding - The Company expects the amount of rent relief recognized to continue to decline in 2025 absent funding from various government entities[131](index=131&type=chunk) Same Store Uncollectible Residential Lease Revenue (%) | Region | Q2 2025 | Q2 2024 | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | :--- | :--- | | New England | 0.8 % | 0.6 % | 0.9 % | 0.6 % | | Metro NY/NJ | 1.7 % | 2.0 % | 1.7 % | 1.8 % | | Mid-Atlantic | 1.7 % | 1.9 % | 1.6 % | 1.7 % | | Southeast FL | 1.5 % | 1.7 % | 1.7 % | 2.0 % | | Denver, CO | 1.0 % | 1.0 % | 1.4 % | 1.3 % | | Pacific NW | 0.3 % | 1.4 % | 0.7 % | 0.8 % | | N. California | 1.4 % | 1.3 % | 1.2 % | 1.1 % | | S. California | 1.5 % | 2.2 % | 2.0 % | 2.2 % | | Other Expansion Regions | 2.9 % | 2.4 % | 3.2 % | 3.5 % | | Total Same Store | 1.4 % | 1.7 % | 1.5 % | 1.6 % | | Total Same Store – Excluding Rent Relief | 1.6 % | 1.8 % | 1.7 % | 1.7 % | [Unconsolidated Development](index=29&type=section&id=Unconsolidated%20Development) Unconsolidated Development refers to communities under construction or completed in the current year where the company holds an indirect ownership interest through an unconsolidated joint venture - Composed of communities that are either currently under construction, or were under construction and were completed during the current year, in which we have an indirect ownership interest through our investment interest in an unconsolidated joint venture[133](index=133&type=chunk) [Unencumbered NOI](index=29&type=section&id=Unencumbered%20NOI) Unencumbered NOI represents NOI generated by real estate assets not encumbered by secured notes payable, expressed as a percentage of total NOI. It is a useful supplemental measure for assessing financial flexibility and borrowing capacity - Calculated as NOI generated by real estate assets unencumbered by outstanding secured notes payable as of June 30, 2025, as a percentage of total NOI generated by real estate assets[134](index=134&type=chunk) - Viewed by current and prospective unsecured creditors as one indication of the borrowing capacity of the Company and a useful supplemental measure for determining financial flexibility[134](index=134&type=chunk) YTD 2025 Unencumbered NOI ($000s) | Metric | Amount | | :--- | :--- | | Total Residential NOI | $999,607 | | Commercial NOI | $17,092 | | NOI from real estate assets sold or held for sale | $17,797 | | Total NOI generated by real estate assets | $1,034,496 | | Less NOI on encumbered assets | ($49,803) | | NOI on unencumbered assets | $984,693 | | Unencumbered NOI | 95 % | [Unlevered IRR on sold communities](index=30&type=section&id=Unlevered%20IRR%20on%20sold%20communities) Unlevered IRR on sold communities is an internal rate of return calculated based on total revenue, gross sales price, undepreciated capital cost, and direct operating expenses, excluding general and administrative, interest, or corporate-level property management expenses. It indicates gross value created before indirect expenses - Calculated considering the timing and amounts of total revenue, gross sales price net of selling costs, undepreciated capital cost, and total direct operating expenses during the period owned by the Company[135](index=135&type=chunk) - Excludes general and administrative expense, interest expense, or corporate-level property management and other indirect operating expenses[136](index=136&type=chunk) - Useful as one indication of the gross value created by the Company's acquisition, development or redevelopment, management and sale of a community, before the impact of indirect expenses and Company overhead[136](index=136&type=chunk)

Group 1 - AvalonBay Communities (AVB) reported quarterly funds from operations (FFO) of $2.82 per share, exceeding the Zacks Consensus Estimate of $2.8 per share, and showing an increase from $2.77 per share a year ago, resulting in an FFO surprise of +0.71% [1] - The company posted revenues of $760.2 million for the quarter ended June 2025, which was slightly below the Zacks Consensus Estimate by 0.2%, compared to $726.04 million in the same quarter last year [2] - Over the last four quarters, AvalonBay has surpassed consensus FFO estimates three times, but has only topped consensus revenue estimates once [2] Group 2 - The stock's immediate price movement will largely depend on management's commentary during the earnings call, as AvalonBay shares have declined approximately 7.7% year-to-date, while the S&P 500 has gained 8.3% [3] - The current consensus FFO estimate for the upcoming quarter is $2.86 on revenues of $776.28 million, and for the current fiscal year, it is $11.40 on revenues of $3.06 billion [7] - The Zacks Industry Rank indicates that the REIT and Equity Trust - Residential sector is in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Core Viewpoint - AvalonBay Communities (AVB) is expected to report quarterly earnings of $2.80 per share, reflecting a year-over-year increase of 1.1% and revenues of $761.75 million, which is a 4.9% increase compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate for the quarter has been revised upward by 0.1% over the past 30 days, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [3]. Key Metrics - Analysts estimate 'Revenue - Rental and other income' to be $756.26 million, representing a year-over-year change of +4.4% [5]. - The 'Same Store Economic Occupancy' is projected to reach 96.2%, up from 96.0% a year ago [5]. - The average prediction for 'Depreciation expense' is set at $221.72 million [5]. Market Performance - AvalonBay shares have experienced a return of -2.3% over the past month, contrasting with the Zacks S&P 500 composite's +3.6% change [5]. - With a Zacks Rank 2 (Buy), AVB is anticipated to outperform the overall market in the near future [5].