AvalonBay (AVB) Q2 FFO & Revenues Beat Estimates, View Raised

Core Viewpoint - AvalonBay Communities (AVB) reported strong second-quarter 2024 results, with core funds from operation (FFO) per share of $2.77, exceeding estimates and reflecting a 4.1% year-over-year increase [1][5] Financial Performance - Total revenues for the quarter reached $726 million, surpassing the Zacks Consensus Estimate of $718.5 million, and marking a 5.1% increase year-over-year [1][2] - Same-store total revenues increased by 3.2% year-over-year to $672.9 million, with same-store residential revenues also climbing 3.2% to $666.2 million [2] - Same-store average revenue per occupied home rose to $2,989, up from $2,897 in the prior year [2] Operational Metrics - Same-store residential operating expenses increased by 3.8% to $204.1 million, leading to a same-store residential NOI growth of 3.0% to $462.1 million [2] - The same-store economic occupancy remained stable at 96% [2] Development and Acquisitions - As of June 30, 2024, AvalonBay had 17 consolidated development communities under construction, expected to contain 6,066 apartment homes and 65,000 square feet of commercial space, with an estimated total capital cost of $2.54 billion [2] - In Q2, AVB acquired Avalon at Pier 121 for $62.1 million and sold three communities for $181.7 million [3] Balance Sheet Strength - As of June 30, 2024, AvalonBay had $545.8 million in unrestricted cash and no outstanding borrowings under its credit facilities [4] - The annualized net debt-to-core EBITDAre ratio was 4.2 times, with unencumbered NOI at 95% for the first half of 2024 [4] 2024 Outlook - For Q3 2024, AvalonBay expects core FFO per share between $2.66 and $2.76, with a full-year estimate now between $10.92 and $11.12, indicating a 3.7% increase at the midpoint compared to previous guidance [5] - Same-store residential revenue growth is projected at 3.5% at the midpoint, with operating expenses expected to rise by 4.8% [5] Industry Performance - Other residential REITs, such as UDR Inc., Essex Property Trust Inc., and Equity Residential, also reported positive results and raised their full-year guidance, indicating a healthy demand and modest supply in the sector [7][8]