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
Subscribe to WSJ: http://online.wsj.com?mod=djnwires