AvalonBay Q3 FFO & Revenues Surpass Estimates, View Revised

Core Viewpoint - AvalonBay Communities (AVB) reported strong third-quarter 2024 results, with core funds from operation (FFO) per share of $2.74, exceeding estimates and reflecting a 3% year-over-year increase [1][2]. Financial Performance - Total revenues for the quarter reached $734.3 million, surpassing the Zacks Consensus Estimate of $731.7 million, marking a 5.3% increase year-over-year [2]. - Same-store residential revenues increased by 3.1% year-over-year to $671.5 million, while same-store residential operating expenses rose by 5.4% to $214.8 million [3]. - Same-store residential net operating income (NOI) grew by 2.0% to $456.7 million compared to the prior year [3]. Revenue Metrics - The same-store average revenue per occupied home rose to $3,033 in Q3 2024, up from $2,939 in Q3 2023 [4]. - The same-store economic occupancy rate was 95.6%, a slight decrease of 10 basis points year-over-year [4]. Development and Acquisitions - As of September 30, 2024, AvalonBay had 19 wholly-owned development communities under construction, expected to contain 6,855 apartment homes and 56,000 square feet of commercial space, with a total estimated capital cost of $2.68 billion [5]. - During the third quarter, AvalonBay acquired three communities for a total of $212.5 million, including Avalon Perimeter Park, Avalon Cherry Hills, and AVA Balboa Park [6]. Balance Sheet Strength - As of September 30, 2024, AvalonBay had $552.4 million in unrestricted cash and no outstanding borrowings under its credit facilities [7]. - The annualized net debt-to-core EBITDAre ratio for Q3 was 4.2 times, with an unencumbered NOI of 95% for the nine months ended September 30, 2024 [7]. 2024 Outlook - For Q4 2024, AvalonBay expects core FFO per share to be in the range of $2.78 to $2.88, with the Zacks Consensus Estimate at $2.83 [8]. - For the full year, the company revised its core FFO per share guidance to between $10.99 and $11.09, indicating a 3.9% increase at the midpoint compared to previous guidance [9]. - Management anticipates same-store residential revenue growth of 3.5% and operating expenses to increase by 4.5% at the midpoint, with same-store residential NOI growth estimated at 3.0% [10].