Why Is AvalonBay (AVB) Down 1.5% Since Last Earnings Report?

Core Viewpoint - AvalonBay Communities reported a mixed performance in its fourth-quarter earnings, with core FFO per share missing estimates but showing a year-over-year increase. The company faces rising operating expenses and interest costs, while same-store residential revenues and NOI provided some support to the results [2][3][4]. Financial Performance - The fourth-quarter core FFO per share was $2.80, missing the Zacks Consensus Estimate of$2.83, but up 2.2% from the previous year [2]. - Total revenues for the quarter were $740.5 million, slightly below estimates but up 5.1$670.1 million, while same-store residential operating expenses rose by 5.4% to $208.1 million, leading to a same-store residential NOI increase of 2.3$462.1 million [4]. Operational Metrics - The same-store average revenue per occupied home rose to $3,040, up from$3,033 in the previous quarter and $2,944 a year ago [5]. - Economic occupancy was 95.6$49 million and Avalon Lowry in Denver, CO for $136.5 million [7]. - The company sold three communities for a total of$212.5 million, resulting in a GAAP gain of $121.8 million [8]. Balance Sheet - As of December 31, 2024, AvalonBay had$108.6 million in unrestricted cash and $158.5 million in restricted cash, with no outstanding borrowings under its credit facilities [9]. - The annualized net debt-to-core EBITDAre ratio was 4.2 times, and the unencumbered NOI was 95$11.14 and $11.64, reflecting a 3.5% increase at the midpoint from 2024 [11]. - Management anticipates same-store residential revenue growth of 2-4% and operating expense increases of 3-5.2%, with same-store residential NOI projected to expand by 1.3-3.5% [11]. Market Sentiment - Recent estimates for AvalonBay have shown a downward trend, indicating a shift in market sentiment [12][14]. - The company currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the near term [14].