AvalonBay Communities(AVB) - 2025 Q4 - Annual Results

Financial Performance - Q4 2025 diluted EPS was $1.17, a decrease of 40.9% compared to Q4 2024's $1.98; full year EPS was $7.40, down 2.6% from $7.60 in 2024[4] - Q4 2025 FFO per share increased by 6.5% to $2.80 from $2.63 in Q4 2024; full year FFO per share rose 3.8% to $11.40 from $10.98[4] - Q4 2025 total revenue increased by 3.7% to $767.856 million compared to Q4 2024, with full-year revenue rising 4.4% to $3.040725 billion[59] - Net income attributable to common stockholders decreased by 41.6% to $164.733 million in Q4 2025, with full-year net income down 2.8% to $1.051301 billion[59] - Funds from operations (FFO) for Q4 2025 increased by 6.1% to $397.619 million, while full-year FFO rose 4.0% to $1.627863 billion[59] Revenue and Occupancy - Same Store Residential revenue for Q4 2025 increased by $11.8 million, or 1.8%, to $680.5 million; operating expenses rose by $6.0 million, or 2.9%, to $213.4 million[8] - Same Store average revenue per occupied home increased to $3,079, up 1.7% from $3,028 in the prior year[68] - Economic occupancy for Same Store properties was 95.8%, slightly up from 95.7% in the previous year[68] - The Same Store turnover rate for the current year period was 33.2%, down from 34.7% in the prior year[67] - Economic occupancy for the same store portfolio improved slightly to 95.9% in 2025 from 95.8% in 2024[74] Development and Acquisitions - The Company completed the development of two communities with a total capital cost of $287 million, adding 612 apartment homes and 32,000 square feet of commercial space[10] - During 2025, the Company sold nine communities for $811.7 million, resulting in a net gain of $336.6 million[14] - The Company acquired 12 communities in 2025 for a total purchase price of $841.9 million, including a 50% interest in Avalon Alderwood Place for $71.3 million[19][20] - The company expanded Avalon Pleasanton by adding 280 apartment homes, with the initial 82 homes fully leased in 2025[91] - The total number of communities under construction is 22, with a total of 8,572 homes and a weighted average cost per home of $3,307 million[90] Cash and Debt Management - As of December 31, 2025, the Company had $187.2 million in unrestricted cash and cash equivalents[22] - The Company repurchased 2.7 million shares of common stock for a total of $488.1 million during 2025[28] - Total debt amounts to $9,388.15 million with an average interest rate of 3.7%[100] - The average interest rate on debt as of December 31, 2025, is 4.62%[94] - Unsecured debt, net, increased to $7.879380 billion in 2025 from $7.358784 billion in 2024[63] Future Projections - Projected EPS for Q1 2026 is between $2.35 and $2.45, while the full year 2026 EPS is projected to be between $6.33 and $6.83[35] - Projected FFO per share for Q1 2026 is estimated to be between $2.69 and $2.79, with full year 2026 FFO projected between $10.80 and $11.30[35] - The company projects a decrease in EPS from $7.40 in 2025 to a range of $6.33 to $6.83 in 2026, reflecting an 11.1% decline[107] - The company expects capital expenditures for development started in 2026 to be between $700 million and $900 million[107] - The company anticipates delivering 3,025 development homes in 2026, with 3,175 expected to be occupied[107] Operating Expenses - Direct property operating expenses, excluding property taxes, rose by 8.9% to $158.786 million in Q4 2025, with full-year expenses increasing 8.2% to $623.580 million[59] - General and administrative expenses increased by 23.6% to $21.874 million in Q4 2025, with full-year expenses up 11.6% to $86.679 million[59] - Total same-store residential operating expenses increased by 2.9% in Q4 2025 and 3.8% for the full year, totaling $213,377 in Q4 and $851,659 for the full year[79] - Payroll costs rose by 5.4% in Q4 2025 and 4.1% for the full year, driven by increased employee benefits and average salaries[82] - Repairs and maintenance expenses increased by 13.6% in Q4 2025 and 9.2% for the full year, attributed to higher third-party maintenance labor and deployment of smart access technology[82] Dividends and Shareholder Returns - The Company declared a dividend of $1.78 per share for Q1 2026, a 1.7% increase from the previous dividend of $1.75 per share[32] - The company declared dividends of $247.436 million for Q4 2025, a 2.1% increase from $242.252 million in Q4 2024[59] - The Company emphasizes the importance of maintaining compliance with REIT distribution requirements and taxable income growth in its dividend strategy[33] Market and Economic Conditions - The Company is expanding into new regions including Raleigh-Durham, Charlotte, Southeast Florida, Dallas, Austin, and Denver[44] - The Company anticipates a change in NOI from new development contributing positively to its financial outlook[36] - The weighted average Market Cap Rate is influenced by projected NOI and capital expenditure estimates, which vary among buyers[125] - Economic Gain for disposed communities in 2025 was $104,989, calculated from a GAAP gain on sale of $336,649 after deducting accumulated depreciation of $231,660[118] - Legal settlements and costs for Q4 2025 amounted to $4,563, contributing to the overall financial performance metrics[119]