AvalonBay Communities(AVB) ZACKS·2024-06-03 18:50Core Insights - AvalonBay Communities (AVB) reported stable physical occupancy and an acceleration in like-term effective rent change in May 2024, with lease-up activities exceeding expectations [1][2] - The company anticipates growth in core funds from operations (FFO) per share and same-store residential revenue in 2024, driven by higher effective lease rates and lower uncollectible lease revenue [3] Group 1: Operating Performance - Physical occupancy for same-store residential portfolio was 95.5% in May, unchanged from April, and slightly lower than 95.6% in Q1 2024 [1] - Turnover for same-store residential increased to 41.9% in May from 36.3% in April, but remains below historical averages from 2015-2019 [1] - Like-term effective rent change for same-store residential rose to 3.7% in May from 3.2% in April, and 2% in Q1 2024 [2] Group 2: Regional Performance - Suburban communities saw a like-term effective rent change of 4% in May, up from 3.5% in April, while urban communities increased to 3.2% from 2.6% [2] - Notable regional performers included the Mid-Atlantic with effective rent growth of 6% in May and Pacific NW with 5.2% growth [2] Group 3: Financial Outlook - The company expects core FFO per share growth of 2.6% and same-store residential revenue growth of 3.1% in 2024 [3] - Approximately 3,220, a 10% increase from initial projections [3] - The weighted average projected initial stabilized yield is expected to be 6%, an increase of 40 basis points from initial projections [3] Group 4: Strategic Positioning - AvalonBay is well-positioned to benefit from healthy renter demand in key regions, with a diversified portfolio of suburban and urban assets [4] - The company is focusing on technology and scale to enhance margin expansion and operational efficiency, despite concerns over elevated supply and high interest rates [4] - Over the past three months, shares of AvalonBay have gained 4.1%, outperforming the industry growth of 1.2% [4]