AvalonBay Q4 FFO Tops Estimates, Revenues Grow Y/Y, Dividend Raised

AvalonBay Communities AVB reported fourth-quarter 2025 core funds from operations (FFO) per share of $2.85, surpassing the Zacks Consensus Estimate of $2.84. The figure increased 1.8% from the prior-year quarter’s tally of $2.80.

Results reflect higher same-store net operating income (NOI) and occupancy growth year over year. Higher interest expenses undermined the performance to an extent. AVB hiked its dividend per share.

Total revenues in the quarter came in at $767.9 million, missing the Zacks Consensus Estimate of $768.3 million marginally. The figure increased 3.7% on a year-over-year basis.

For full-year 2025, the core FFO per share came in at $11.24, up 2.1% year over year. The figure was in line with the Zacks Consensus Estimate. Total revenues for full-year 2025 came in at $3.04 billion, an improvement of 4.4% year over year.

AVB’s Q4 in Detail

In the reported quarter, same-store residential revenues increased 1.8% year over year to $680.5 million. Same-store residential operating expenses rose 2.9% to $213.4 million. As a result, the same-store residential NOI climbed 1.3% to $467.1 million.

Same-store average revenue per occupied home jumped to $3,079 in the fourth quarter, up 1.7% from $3,028 in the year-ago period. Same-store economic occupancy of 95.8% improved 10 basis points year over year. The figure was in line with our estimate of 95.8%.

Interest expenses increased 17.2% year over year to $69.1 million. It also exceeded our estimate of $59.6 million.

AVB’s Portfolio Activity

During the fourth quarter, the company acquired Avalon Townhome Collection Brier Creek in Durham, NC, comprising 93 rental townhomes for a purchase price of $36.5 million.

In January 2026, AvalonBay disposed of Avalon Sunset Towers in San Francisco, CA, comprising 243 apartment homes for $105 million.

During the fourth quarter, the company completed the development of two wholly owned communities with 612 apartment units and 32,000 square feet of commercial space. The total construction cost was $287 million. The REIT started construction of five apartment communities and the expansion of Avalon Tech Ridge 1 in Austin, TX. These will comprise a total of 1,378 apartment units, with an estimated total capital cost of $592 million.

As of Dec. 31, 2025, AvalonBay had 24 wholly owned Development communities under construction (expected to contain 8,572 apartment homes and 69,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $3.31 billion.

AVB’s Balance Sheet Position

AVB had $187.2 million in unrestricted cash and cash equivalents as of Dec. 31, 2025. As of the same date, the company did not have any borrowings outstanding under its credit facility. It had outstanding borrowings of nearly $739.6 million under its unsecured commercial paper program.

Its annualized net debt-to-core EBITDAre for the October-December period was 4.7 times, and the unencumbered NOI for the year ended Dec. 31, 2025 was 95%.

2026 Guidance by AVB

For the full year, AVB expects core FFO per share between $11.00 and $11.50, rising 0.1% at the midpoint from the 2025 reported number. The Zacks Consensus Estimate presently stands at $11.58, above the projected range.

Management expects same-store residential revenue growth of 0.4%-2.4% and an operating expense increase of 2.7%-4.9%. Same-store residential NOI is projected between negative 0.7% and 1.3%.

AVB’s Dividend Raise

Concurrent with its fourth-quarter earnings release, AvalonBay declared its first-quarter 2026 dividend of $1.78 per share, an increase of 1.7% over the prior quarter’s dividend payment. The new dividend will be paid out on April 15 to shareholders on record as of March 31, 2026.

AvalonBay currently carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AvalonBay Communities, Inc. Price, Consensus and EPS Surprise

AvalonBay Communities, Inc. price-consensus-eps-surprise-chart | AvalonBay Communities, Inc. Quote

Performance of Other Residential REITs

Mid-America Apartment Communities MAA reported fourth-quarter 2025 FFO per share of $2.23, which surpassed the Zacks Consensus Estimate of $2.22. The figure remained unchanged from the prior year period.

Results reflected higher occupancy and same-store effective blended lease rate growth year over year. The same-store portfolio’s NOI and average effective rent per unit fell, undermining the performance.

Essex Property Trust Inc. ESS reported fourth-quarter 2025 core FFO per share of $3.98, missing the Zacks Consensus Estimate of $4. This compares favorably to the FFO of $3.92 per share a year ago.

Results reflected favorable growth in same-property NOI and higher occupancy. Higher interest expenses partly acted as a dampener.

Note: Anything related to earnings presented in this write-up represent 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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