AvalonBay Reports Same-Store NOI Growth Ahead of Expectations

In a major boost to investors’ sentiment, AvalonBay Communities AVB recently provided an update highlighting same-store residential net operating income (NOI) growth ahead of expectations year to date as of June 30, 2025, at 2.6%.

The residential REIT emphasized that its same-store revenue growth for July and August is in line with the guidance updated in the second-quarter earnings release as of July 31, 2025. The growth in same-store revenues for the months under consideration includes actual results for July and management’s expectations for August, as per data on Sept. 3, 2025.

AVB iterated that its transaction activity reflects an increase in its suburban and expansion regions, fulfilling its portfolio allocation objectives. The submarket allocation now comprises 76% suburban mix, up from 73% as per the second-quarter 2025 mid-quarter update. Similarly, the regional allocation to expansion regions has inched up to 13% from 12% initially.

The above update reflects improving demand, aiding same-store revenue growth for the company. It also focuses on AVB’s portfolio diversification efforts to withstand any challenge in turbulent times.

AVB in a Nutshell

AvalonBay is well-positioned to gain from healthy renter demand for its residential properties in the high barrier-to-entry regions of the United States, as favorable demographic trends and rising home ownership costs are likely to keep driving demand.

Moreover, AvalonBay is also making concerted efforts to expand its portfolio in the suburban markets. The company expects its current 76% suburban submarket allocation to achieve the 80% target, while the current 13% expansion region allocation to reach a target of 25%.

However, high rental unit supply, development delays and competition from peers raise concerns for AvalonBay. High interest expenses add to the company’s woes.

In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 5.9% compared with the industry's fall of 4.9%.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are W.P. Carey WPC and Terreno Realty TRNO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for WPC’s 2025 FFO per share has been moved southward over the past month to $4.87.

The consensus estimate for TRNO’s 2025 FFO per share has been revised upward marginally to $2.61 over the past month.

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

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This article originally published on Zacks Investment Research (zacks.com).

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