AvalonBay Q3 FFO & Revenues Miss Estimates, '25 Outlook Lowered

Core Insights - AvalonBay Communities (AVB) reported Q3 2025 core funds from operations (FFO) per share of $2.75, missing the Zacks Consensus Estimate of $2.81, but slightly up from $2.74 in the prior year [1][9] - The company lowered its 2025 core FFO per share and same-store residential revenue growth outlook following the Q3 results, despite a marginal year-over-year increase in occupancy [2][11] Financial Performance - Total revenues for Q3 2025 were $766.8 million, missing the Zacks Consensus Estimate of $769.9 million, but representing a 4.4% increase year-over-year [2][9] - Same-store residential revenues rose 2.3% year-over-year to $685.4 million, while same-store operating expenses increased by 4.6% to $224.3 million, resulting in a 1.1% increase in same-store residential NOI to $461 million [3][9] - Interest expenses increased by 17.3% year-over-year to $65.4 million, exceeding estimates [4] Portfolio Activity - During Q3, the company acquired three wholly-owned communities with 584 apartment homes for approximately $186.95 million and a 50% interest in Avalon Alderwood Place for $71.25 million [5] - The company sold six wholly-owned communities containing 1,594 apartment homes for $585.08 million and completed the development of Avalon Annapolis, which has 508 apartment homes at a total capital cost of $195 million [6] Development Pipeline - As of September 30, 2025, AvalonBay had 21 wholly-owned development communities under construction, expected to contain 7,806 apartment homes and 100,000 square feet of commercial space, with an estimated total capital cost of $3.01 billion [7] Balance Sheet Position - As of September 30, 2025, AvalonBay had $123.3 million in unrestricted cash and cash equivalents, with no borrowings under its credit facility and nearly $235 million outstanding under its unsecured commercial paper program [8] 2025 Outlook - For the full year 2025, AvalonBay revised its core FFO per share outlook to a range of $11.15-$11.35, down from the previous range of $11.19-$11.59, indicating a growth of 2.2% at the midpoint [11] - The company expects same-store residential revenue growth of 2.5% and same-store NOI growth of 2.0%, both lower than previous guidance [12]