AvalonBay Communities, Inc. Announces Participation in the 2024 Citi Global Property CEO Conference, Provides First Quarter 2024 Operating Update, and Publishes Updated Investor Presentation
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Insights
The reported increase in revenue for AvalonBay Communities, Inc. indicates a positive trend, particularly given that it exceeds the company's own expectations set earlier in the year. A higher revenue growth suggests a robust demand for the company's properties, which can be attributed to several factors such as strategic location, quality of service, or broader economic trends. The 45 basis point increase above the forecasted growth is a strong indicator of operational efficiency and market strength.
From a market research perspective, the improvement in economic occupancy year-over-year and the like-term effective rent change provide insight into the company's pricing power and occupancy rates. A closer look at regional performance shows variance, with some areas like the Pacific NW and Mid-Atlantic showing higher rent changes, potentially due to stronger local economies or less housing supply. Conversely, regions like Southern California and New England show more modest increases, which could reflect market saturation or increased competition.
Investors should note the projected outperformance in AvalonBay's revenue, which is primarily attributed to better-than-expected occupancy and lower-than-expected uncollectible lease revenue. This is significant as it implies effective credit management and strong tenant retention strategies. The economic occupancy figures, which reflect the actual revenue-generating capability of the property portfolio, are particularly important as they account for both the physical occupancy and the rent levels that can be achieved in the market.
Additionally, the renewal offers for March and April 2024 being delivered at an average increase of 5.0% indicate the company's confidence in its ability to retain tenants at higher rents, which is a positive sign for revenue sustainability. Investors should consider these figures in the context of the company's long-term portfolio strategy and overall market trends, as they could have implications for future dividend payouts and stock performance.
The data provided by AvalonBay offers a microcosm of the broader real estate market dynamics. Economic occupancy and like-term effective rent change are critical metrics for understanding the health of the residential rental market. The reported increases in these areas suggest a tightening rental market where demand outpaces supply, leading to higher occupancy and the ability to command higher rents. This is consistent with macroeconomic trends of urbanization and housing shortages in certain regions.
It is also important to analyze the different regional trends, as they can be indicative of disparate economic conditions and demographic shifts. For instance, the uptick in the Southeast FL and Denver, CO markets could reflect a growing population and economic expansion in these areas. Conversely, the relatively lower performance in regions like Southern California could be a result of affordability issues or a shift in population dynamics. Such regional insights are valuable for investors considering geographic diversification in their real estate investment portfolios.
The roundtable discussion will be webcast live and can be accessed on the Investor Relations section of the Company’s website at www.avalonbay.com. Following the live event, a replay of the webcast will be available on the Investor Relations section of the Company’s website.
The Company also provided the following Same Store Residential operating information:
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Revenue for the three months ending March 31, 2024 is expected to increase between
3.7% and3.8% over the prior year period. The midpoint of this range is approximately 45 basis points above what the Company’s expectation was for revenue growth for this three-month period when the Company published its outlook for full year 2024 revenue growth on January 31, 2024. This projected outperformance is primarily attributable to better-than-expected occupancy and lower-than-expected uncollectible lease revenue.
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2023 |
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2024 |
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Q4 |
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January |
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Total |
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Like-Term Effective Rent Change |
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2023 |
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2024 |
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Q4 |
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January |
February(1) |
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| New England |
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| Metro NY / NJ |
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| Mid-Atlantic |
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| Southeast FL |
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| Pacific NW |
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Total |
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| New Move-in |
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| Renewal |
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Total |
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(1) Based on preliminary results.
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Renewal Offers for March and April 2024 are being delivered to residents at an average increase of
5.0% over the existing lease.
The Company has posted an updated Investor Presentation to its website. The presentation can be found in the Investor Relations section of www.avalonbay.com.
Definitions
Economic Occupancy is defined as total possible Residential revenue less vacancy loss as a percentage of total possible Residential revenue. Total possible Residential revenue (also known as “gross potential”) is determined by valuing occupied units at contract rates and vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant apartments at their Market Rents, Economic Occupancy takes into account the fact that apartment homes of different sizes and locations within a community have different economic impacts on a community’s gross revenue.
Like-Term Effective Rent Change for an individual apartment home represents the percentage change in effective rent between two leases of the same lease term category for the same apartment. The Company defines effective rent as the contractual rent for an apartment less amortized concessions and discounts. Like-Term Effective Rent Change with respect to multiple apartment homes represents an average. New Move-In Like-Term Effective Rent Change is the change in effective rent between the contractual rent for a resident who moves out of an apartment, and the contractual rent for a resident who moves into the same apartment with the same lease term category. Renewal Like-Term Effective Rent Change is the change in effective rent between two consecutive leases of the same lease term category for the same resident occupying the same apartment.
Market Rents as reported by the Company are based on the current market rates set by the Company based on its experience in renting apartments and publicly available market data. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.
Other Expansion Regions include markets located in
Renewal Offers generally represent initial offers made to market rate apartments with expiring leases for which the residents have not provided notice of their intent to vacate.
Residential represents results attributable to the Company's apartment rental operations, including parking and other ancillary Residential revenue.
Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had Stabilized Operations, as defined below, as of the beginning of the respective prior year period. Therefore, for 2024 operating results, Same Store is composed of consolidated communities that have Stabilized Operations as of January 1, 2023, are not conducting or are not probable to conduct substantial redevelopment activities and are not held for sale or probable for disposition within the current year.
Stabilized Operations is defined as operations of a community that occur after the earlier of (i) attainment of
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which include, but are not limited to, statements related to the Company’s operating performance. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company cautions investors that any such forward-looking statements are based on current beliefs or expectations of future events and on assumptions made by, and information currently available to, management. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “project,” “plan,” “may,” “shall,” “will,” “pursue” and other similar expressions in this press release, that predict or indicate future events and trends and that do not report historical matters. Such forward-looking statements are subject to various risks and uncertainties, including, among others, that occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond the Company’s control and other trends affecting the Company’s financial condition or results of operations. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are described under the sections entitled “Forward-Looking Statements” and “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as such factors may be updated from time to time in the Company’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. The forward-looking statements speak only as of the date of this press release, and the Company expressly disclaims any obligation or undertaking to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except to the extent otherwise required by law.
About AvalonBay Communities, Inc.
As of December 31, 2023, the Company owned or held a direct or indirect ownership interest in 299 apartment communities containing 90,669 apartment homes in 12 states and the
Copyright © 2024 AvalonBay Communities, Inc. All Rights Reserved
View source version on businesswire.com: https://www.businesswire.com/news/home/20240301416687/en/
Jason Reilley
Vice President
Investor Relations
AvalonBay Communities, Inc.
703-317-4681
Source: AvalonBay Communities, Inc.
FAQ
What event will AvalonBay Communities, Inc. participate in?
What is the revenue growth expectation for Q1 2024 compared to the prior year?
What is the average increase for renewal offers in March and April 2024?
Where can the updated Investor Presentation be found?
