ZACKS·2025-12-09 15:11Core Insights - AvalonBay Communities (AVB) has lowered its core funds from operations (FFO) per share growth outlook to 2.2% from 3.5% due to various market pressures [1] - The same-store residential net operating income (NOI) growth forecast has been reduced to 2% from 2.7%, attributed to lower revenue growth of 2.5% and higher expense growth of 3.8% [1] Revenue and Market Conditions - The outlook adjustment is driven by lower-than-expected job growth, resulting in revenue moderation in late Q3 2025 and October [2] - Same-store revenues began to moderate in August, with noticeable trends in September and October, influenced by softening occupancy and lower effective rent changes [3] Regional Performance - The Mid-Atlantic and Southern California regions contributed significantly to the reduction in revenue growth expectations, followed by expansion regions [3] Development and Future Prospects - AvalonBay's established regions are expected to benefit from record-low levels of new supply in 2026, with a $3.6 billion development pipeline anticipated to create meaningful value upon stabilization [4] - The company has a strong balance sheet, allowing it to manage a recent $400 million debt offering, $488 million in share repurchases, and $340 million in dispositions set to close in Q1 2026 [5] Overall Outlook - Despite the near-term outlook softening due to slower rent growth and higher expenses, AvalonBay's strong balance sheet and low future supply in key regions provide support for long-term stability [6] - In the past three months, shares of AvalonBay have declined by 7.8%, compared to a 5.9% decline in the industry [6]