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AvalonBay Communities Inc AVB

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Morningstar’s Analysis

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Economic Moat




Uncollected Rent Brings Down AvalonBay's Second-Quarter Results

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

While we expected AvalonBay to report a decline in operations in the second quarter, the company's reported decline was slightly worse than we expected. Still, we don't see anything from the quarter that will materially affect our $214 fair value estimate for the no-moat company. Same-store occupancy declined 1.5% sequentially to 94.8%, and rental rates declined 1.7% year over year in the second quarter. As a result, rental revenue fell 2.9% in the quarter. While the company managed to bring down operating expenses 1.1%, the company's same-store net operating income fell 3.7%. While core funds from operations of $2.23 in the second quarter represents only a 1.8% decline year over year, it is a 6.7% sequential decline from the figure reported in the first quarter of 2020.

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Company Profile

Business Description

AvalonBay Communities owns a portfolio of 275 apartment communities with over 74,000 units and is developing 22 additional properties with over 8,600 units. The company focuses on owning large, high-quality properties in major metropolitan areas of New England, New York/New Jersey, Washington D.C., California, and the Pacific Northwest.

Ballston Tower, 671 N. Glebe Road, Suite 800
Arlington, VA, 22203
T +1 703 329-6300
Sector Real Estate
Industry REIT - Residential
Most Recent Earnings Mar 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 3,122