AvalonBay (AVB) Q4 FFO Beats Estimates, Dividend Raised

Core Insights - AvalonBay Communities (AVB) reported a fourth-quarter 2023 core funds from operations (FFO) per share of $2.74, exceeding the Zacks Consensus Estimate of $2.73 and reflecting a 5.8% increase year-over-year [1] - Total revenues for the quarter reached $704.7 million, surpassing the Zacks Consensus Estimate of $701.7 million, and marking a 5.2% year-over-year growth [1] - For the full year 2023, core FFO per share was $10.63, up from $9.79 in the prior year, and total revenues increased by 6.7% to $2.77 billion [1] Quarterly Performance - Same-store residential rental revenues rose 4.5% year-over-year to $636.3 million, while same-store operating expenses increased by 6.2% to $195.9 million, resulting in a same-store residential NOI growth of 3.8% to $440.8 million [2] - The same-store average rental revenue per occupied home increased to $2,967, up from $2,833 in the year-ago quarter, although economic occupancy decreased to 95.6% [2] - As of December 31, 2023, AvalonBay had 17 development communities under construction, expected to contain 6,064 apartment homes, with a total estimated capital cost of $2.49 billion [2] Portfolio Activity - In Q4 2023, AvalonBay acquired two communities: Avalon Mooresville for $52.1 million and Avalon West Plano for $142 million [3] - The company sold Avalon Mamaroneck for $104 million, realizing a GAAP gain of $77.9 million [3] Financial Position - As of December 31, 2023, AvalonBay had $397.9 million in unrestricted cash and no outstanding borrowings under its $2.25 billion unsecured revolving credit facility [4] - The annualized net debt-to-core EBITDAre ratio was 4.2 times, with an unencumbered NOI of 95% for the year ended December 31, 2023 [4] 2024 Outlook - For Q1 2024, AvalonBay expects core FFO per share to be between $2.56 and $2.66, and for the full year, the range is projected between $10.53 and $11.03, indicating a 1.4% increase at the midpoint [5] - Management anticipates same-store residential revenue growth of 1.6-3.6% and operating expense increases of 4.5-6.7%, leading to a projected same-store residential NOI expansion of 0.0-2.5% [5] Dividend Announcement - AvalonBay announced an increase in its first-quarter 2024 dividend to $1.70 per share from $1.65, representing a 3% sequential hike [6] - The new dividend will be paid on April 15, 2024, to shareholders on record as of March 28, 2024 [6]