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AvalonBay (AVB) Beats on Q3 FFO & Revenues, Issues Upbeat View

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  • AVB
  • UDR
  • EQR
  • ESS

AvalonBay Communities, Inc.’s AVB third-quarter 2021 core funds from operations (FFO) per share of $2.06 beat the Zacks Consensus Estimate of $1.99.

Results were backed by the better-than-anticipated top-line figure. The company registered a year-over-year increase in same-store revenues on higher occupancy and rent relief collections.

Total revenues of $580.8 million exceeded the Zacks Consensus Estimate of $570.6 million.

On a year-over-year basis, the core FFO per share remained unchanged, while total revenues increased 2.4% from the year-ago quarter.

As of Oct 26, 2021, the collected residential revenues for the third quarter improved to 97.1% from 95.8% as of the end of third-quarter 2021. The collected residential revenues for October 2021 was 92.9% as of Oct 26.

The residential REIT has also issued impressive views for the fourth quarter and the full year.

Quarter in Detail

In the reported quarter, the total same-store residential rental revenues, on a cash basis, increased 4.3% year on year. Operating expenses flared up 3.5%, and consequently, the same-store residential NOI edged down 0.3% to $342.9 million.

As of Sep 30, 2021, AvalonBay had 15 consolidated development communities under construction (expected to contain 4,645 apartment homes and 40,000 square feet of commercial space). The estimated total capital cost at completion for these development communities is $1.86 billion.

In the September-end quarter, the company acquired a number of properties, which marked the company's entry into the Dallas, Texas and Charlotte, North Carolina metropolitan regions. In Flower Mound, TX, it acquired The Nexus Lakeside for around $117 million. In Charlotte, NC, the company acquired Hub South End for $104.35 million and Three 30 Five for $52.65 million.

During the third quarter, the company sold 17 of the 172 residential condominiums at The Park Loggia, in New York, NY, for gross proceeds of $54.3 million.

Balance Sheet Position

As of Sep 30, 2021, AvalonBay Communities did not have any borrowings outstanding under its $1.75-billion unsecured credit facility.The company had $435.9 million in unrestricted cash and cash in escrow, as of the same date. In addition, its annualized net debt-to-core EBITDAre for the July-September period was 5.4 times and unencumbered NOI was 94%.

Outlook

For fourth-quarter 2021, the company projects core FFO per share in the range of $2.19 and $2.29. The Zacks Consensus Estimate for the same is currently pinned at $2.09. For the fourth quarter, the company expects same-store residential revenues to be up 4.5-5.5%, operating expense to flare up 1.25-2.25% and NOI to increase 5.5-7.5%.

For full-year 2021, the company expects core FFO per share in the range of $8.18 and $8.28, which is higher than the Zacks Consensus Estimate of $8.01. For the full year, the company estimates same-store residential revenues to be down 2.3-1.9%, operating expense to shoot up up 3.4-3.8% and NOI to slip 5.1-4.3%.

AvalonBay Communities currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AvalonBay Communities, Inc. Price, Consensus and EPS Surprise

AvalonBay Communities, Inc. Price, Consensus and EPS Surprise
AvalonBay Communities, Inc. Price, Consensus and EPS Surprise

AvalonBay Communities, Inc. price-consensus-eps-surprise-chart | AvalonBay Communities, Inc. Quote

Performance of Other Residential REITs

Equity Residential’s EQR third-quarter 2021 normalized FFO per share of 77 cents outpaced the Zacks Consensus Estimate of 75 cents. Results reflected robust physical occupancy, sustained pricing power improvement and lower bad debt, net due to higher-than-anticipated resident receipts from governmental rent relief programs. It also marked the first time that Equity Residential achieved positive total same store revenue growth, quarter over quarter, since the onset of the global health crisis. The residential REIT also raised its full-year guidance for same-store revenues, NOI and normalized FFO per share.

Essex Property Trust Inc. ESS came up with core FFO per share of $3.12, beating the Zacks Consensus Estimate of $3.10 for the September-end quarter. The figure also surpassed the higher end of the company’s guided range. Results highlighted improving net effective rent growth in the quarter. The residential REIT also raised the full-year 2021 guidance.

UDR Inc. UDR delivered FFO as adjusted per share of 51 cents, in line with the Zacks Consensus Estimate for the July-September quarter. Further, the figure is higher than the prior year’s 50 cents. Driven by the pace of economic recovery, there has been an increase in revenues from rental income, fueling top-line growth. Also, improvement in operating trends as well as strong pricing power and accretive transactions enabled the company to raise the 2021 guidance.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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