AvalonBay 2Q Net Surges on Higher Rents, Raises Full-Year Outlook

Date : 07/25/2012 @ 4:58PM
Source : Dow Jones News
Stock : Avalonbay Communities, Inc. (AVB)
Quote : 160.42  -2.15 (-1.32%) @ 4:02PM
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AvalonBay 2Q Net Surges on Higher Rents, Raises Full-Year Outlook

Avalonbay (NYSE:AVB)
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   By Kristin Jones 

AvalonBay Communities Inc.'s (AVB) second-quarter earnings surged as the multifamily housing real-estate investment trust continued to benefit from higher rents, particularly on the West Coast.

The REIT also raised its full-year outlook, now seeing per-share earnings of $5.11 to $5.25, and funds from operation--a key metric of profitability for REITs--of $5.39 to $5.53 a share. The company had previously seen per-share earnings of $4.90 to $5.20 a share, and FFO of $5.25 to $5.55 a share.

AvalonBay forecast current-quarter earnings of $1 to $1.04 a share. It expects FFO of $1.38 to $1.42 a share. Analysts surveyed by Thomson Reuters recently expected earnings of 85 cents, and FFO of $1.40.

One of the biggest apartment operators in the U.S., AvalonBay has seen its profits surge in recent quarters as a languid housing market continues to make renting attractive, driving up occupancy and rents. In the latest quarter, economic occupancy, the level of total possible revenue remaining after stripping out vacancy loss, was down 0.4%, while the average rental rates grew 6.2%.

Known for developing upscale apartment complexes, the REIT has been shifting its strategy, separating into three brands that include upscale units, moderately priced suburban homes and a segment geared to younger renters in urban areas.

In the latest quarter, Northern California and the Pacific Northwest saw the largest increases in rental revenue, by region.

The REIT reported a profit of $156.8 million, or $1.63 a share, up from $43.2 million, or 49 cents a share, a year earlier. FFO was up at $1.34 a share, from $1.13 a share.

In April, the company forecast per-share earnings of $1.86 to $1.90 a share and FFO of $1.30 to $1.34 a share.

Revenue increased 6.9% to $261.9 million. Analysts polled by Thomson Reuters most recently projected revenue of $257 million.

Shares closed Wednesday at $145.32 and were inactive after hours. Through the close, stock was up 11% so far this year.

Write to Kristin Jones at kristin.jones@dowjones.com

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