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.