Post Earnings Coverage as AvalonBay EPS Increases 69.3%

Upcoming AWS Coverage on Simon Property Group Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 1, 2016 / Active Wall St. announces its post-earnings coverage on AvalonBay Communities, Inc. (NYSE: AVB). The company released its financial results for the third quarter fiscal 2016 on October 25, 2016. The REIT company revenue numbers topped market estimates, yet Funds from Operations (“FFO”) came in below expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of AvalonBay Communities’ competitors within the Real Estate Investment Trusts space, Simon Property Group, Inc. (NYSE: SPG), reported results for the quarter ended September 30, 2016, on October 26, 2016. AWS will be initiating a research report on Simon Property Group in the coming days.

Today, AWS is promoting its earnings coverage on AVB; touching on SPG. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=AVB

http://www.activewallst.com/registration-3/?symbol=SPG

Earnings Reviewed

For the three months ended on September 30, 2016, AvalonBay’s net income attributable to its common stockholders was $356.39 million. This resulted in an increase in earnings per share of 69.3% to $2.59 for Q3 2016 from $1.53 in the prior year’s period.

AvalonBay’s FFO attributable to common stockholders diluted per share increased 4.5% to $2.11 in Q3 2016 from $2.02 for the prior year’s period; however the number missed analysts’ projection of $2.12. Core FFO per share for the reported quarter increased 7.3% to $2.07 from $1.93 for the prior year’s period. The changes in the company’s EPS, FFO per share and Core FFO per share, were attributed to an increase in Net Operating Income (“NOI”) from newly developed and existing operating communities during Q3 2016, over the prior year’s period, partially offset by an increase in the average shares outstanding.

During Q3 2016, the company’s total revenue increased 8.6% to $516.21 million. This increase is primarily due to growth in revenue from development communities and Established Communities. Total revenue also surpassed analysts’ estimates of $513 million.

Operating Results

For Q3 2016, AvalonBay’s Established Communities’ average rental rates increased 3.9%, and were partially offset by a decrease in Economic Occupancy of 0.1%, resulting in an increase in rental revenue of 3.8%. Total revenue for Established Communities increased $13.82 million, or 3.7%, to $389.05 million. Operating expenses for Established Communities increased 2.2%, to $117.48. NOI for Established Communities increased 4.3%, to $271.58 million.

Development Activity

During Q3 2016, AvalonBay completed the development Avalon Dublin Station II, located in Dublin, CA and Avalon Alderwood II, located in Lynnwood, WA. These two communities contain an aggregate of 376 apartment homes and were constructed for an aggregate Total Capital Cost of $111.20 million. The Company started the construction of Avalon Boonton, located in Boonton, NJ. Avalon Boonton will contain 350 apartment homes when completed and will be developed for an estimated Total Capital Cost of $91.20 million.

The Company added one development right which, if developed as expected, will contain 200 apartment homes and will be developed for an estimated Total Capital Cost of $95.00 million. The projected Total Capital Cost of overall development rights decreased to $3.9 billion at September 30, 2016, from $4.0 billion at June 30, 2016.

Acquisition Activity

In September 2016, AvalonBay acquired Avalon Columbia Pike, located in Arlington, VA, which contains 269 apartment homes and 27,000 square feet of retail space, for a purchase price of $102.00 million. The mortgage loan has a 3.38% contractual interest rate and matures in November 2019. Studio 77, located in North Hollywood, CA, contains 156 apartment homes and 11,000 square feet of retail space, and was acquired for a purchase price of $72.10 million.

Disposition Activity

During Q3 2016, AvalonBay sold three wholly-owned communities: Eaves Nanuet, located in Nanuet, NY, Avalon Shrewsbury, located in Shrewsbury, MA and Avalon at Freehold, located in Freehold, NJ. In the aggregate, the three communities contain 1,051 apartment homes and were sold for $275.50 million, resulting in a gain in accordance with GAAP of $197.84 million and an Economic Gain of $140.15 million. These communities generated an Unleveraged IRR of 13.6% over a weighted average investment period of 15.1 years.

In October 2016, the Company sold Avalon Brandemoor I and II, located in Lynnwood, WA. The two wholly-owned communities contain an aggregate of 506 apartment homes and were sold for $132,000,000.

Liquidity and Capital Markets

As of September 30, 2016, AvalonBay had $170.00 million in borrowings outstanding under its $1,500,000,000 unsecured credit facility, and had $232.19 million in unrestricted cash and cash in escrow. The Company’s annualized Net Debt-to-Core EBITDA for Q3 2016 was 5.1 time. During Q3 2016, the Company repaid $250.00 million principal amount of its 5.75% coupon unsecured notes pursuant to its scheduled maturity.

Outlook

For Q4 2016, AvalonBay is projecting FFO to be in the range of $2.06 per share to $2.12 per share and core FFO in the range of $2.08 per share to $2.14 per share. For FY16, the company is expecting FFO to come between $8.23 per share to $8.29 per share and core FFO to be in the band of $8.15 per share to $8.21 per share.

Stock Performance

AvalonBay Communities’ share price finished yesterday’s trading session at $171.18, advancing 2.22%. A total volume of 677.67 thousand shares exchanged hands. The stock is trading at a PE ratio of 29.43 and has a dividend yield of 3.15%. The company’s shares currently have a market cap of $23.44 billion.

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