AvalonBay Q4 FFO Tops Estimates, Revenues Grow Y/Y, Dividend Raised

Core Insights - AvalonBay Communities (AVB) reported Q4 2025 core funds from operations (FFO) per share of $2.85, exceeding the Zacks Consensus Estimate of $2.84, and reflecting a 1.8% increase from $2.80 in the prior year [1][9] - The company experienced higher same-store net operating income (NOI) and occupancy growth year over year, although higher interest expenses had a negative impact [1][4] - AVB increased its dividend per share by 1.7% to $1.78 [12] Financial Performance - Total revenues for Q4 2025 were $767.9 million, slightly below the Zacks Consensus Estimate of $768.3 million, but up 3.7% year over year [2] - For the full year 2025, core FFO per share was $11.24, a 2.1% increase year over year, aligning with the Zacks Consensus Estimate [2] - Total revenues for the full year 2025 reached $3.04 billion, marking a 4.4% improvement year over year [2] Operational Highlights - Same-store residential revenues rose 1.8% year over year to $680.5 million, while same-store residential operating expenses increased by 2.9% to $213.4 million, resulting in a 1.3% rise in same-store residential NOI to $467.1 million [3] - The same-store average revenue per occupied home increased to $3,079, up 1.7% from $3,028 in the previous year [4] - Same-store economic occupancy improved by 10 basis points year over year to 95.8% [4] Portfolio Activity - In Q4, the company acquired Avalon Townhome Collection Brier Creek in Durham, NC, for $36.5 million, consisting of 93 rental townhomes [5] - In January 2026, AvalonBay sold Avalon Sunset Towers in San Francisco, CA, for $105 million, comprising 243 apartment homes [5] - The company completed the development of two wholly owned communities with 612 apartment units and 32,000 square feet of commercial space at a total construction cost of $287 million [6] Development Pipeline - As of December 31, 2025, AvalonBay had 24 wholly owned development communities under construction, expected to contain 8,572 apartment homes and 69,000 square feet of commercial space, with an estimated total capital cost of $3.31 billion [7] Balance Sheet Position - As of December 31, 2025, AvalonBay had $187.2 million in unrestricted cash and cash equivalents, with no borrowings outstanding under its credit facility, but had nearly $739.6 million in outstanding borrowings under its unsecured commercial paper program [8] 2026 Guidance - For the full year 2026, AvalonBay expects core FFO per share to be between $11.00 and $11.50, indicating a slight increase at the midpoint from the 2025 reported number [11] - Management anticipates same-store residential revenue growth of 0.4%-2.4% and an operating expense increase of 2.7%-4.9%, with same-store residential NOI projected between negative 0.7% and 1.3% [11]