AvalonBay Stock Gains 19.2% in Six Months: More Room to Run?

Stock Performance and Financial Results - Shares of AvalonBay Communities (AVB) have gained 19.2% over the past six months, outperforming the industry's 12.8% growth [1] - Third-quarter 2024 core funds from operations (FFO) per share of $2.74 beat the Zacks Consensus Estimate of$2.71, representing a 3% increase from the prior-year quarter [1] - The company raised its 2024 core FFO per share outlook to a range of $10.99-$11.09, indicating a 3.9% increase at the midpoint compared with the previously guided 3.7% [2] Operational Performance and Market Strategy - Same-store residential revenues and average monthly revenue per occupied home increased year-over-year [2] - Same-store residential net operating income (NOI) climbed 2.0% from the prior year period, with average revenue per occupied home rising to $3,033 from$2,939 [5] - AvalonBay focuses on adding properties in leading metropolitan areas with strong demographic growth, particularly among young adults who have a higher propensity to rent [4] - The company has made strategic acquisitions, including four wholly-owned communities with 968 apartment units and 1,700 square feet of commercial space at an aggregate value of $274.6 million in the first nine months of 2024 [6] Development and Portfolio Optimization - AvalonBay started new developments totaling$450 million in the third quarter of 2024, aiming for $1.1 billion of new starts in 2024 [7] - The company is optimizing its portfolio by increasing allocation to suburban submarkets and expansion regions, which is expected to bolster external growth [6] - Ongoing developments are anticipated to deliver meaningful incremental NOI upon completion, fueling FFO and NAV growth [7] Financial Position and Leverage - AvalonBay maintains a healthy balance sheet with a well-laddered debt maturity schedule and a weighted average year-to-maturity of 7 years [9] - The company's annualized net debt-to-core EBITDA ratio was 4.2 times in the third quarter of 2024, with unencumbered NOI at 95$2.92, indicating a 6.18% year-over-year increase [11] - The Zacks Consensus Estimate for Veris Residential's 2024 FFO per share is 57 cents, implying a 7.55% year-over-year rise [12]