AvalonBay Communities, Inc. AVB reported first-quarter 2026 core funds from operations (FFO) per share of $2.83, beating the Zacks Consensus Estimate of $2.80 by 1.1%.
AVB’s same-store economic occupancy held at 96.1%, underscoring steady demand heading into the peak leasing season. The quarter benefited from incremental development NOI and commercial NOI. However, higher interest expenses undermined the performance to an extent.
Total revenues came in at $770.3 million, up 3.3% year over year and essentially in line with the consensus mark of $770.6 million.
AvalonBay's Same-Store Trends Show Modest Revenue Growth
Same-store residential revenues increased 1.6% year over year to $703.97 million. Same-store residential operating expenses rose 4.7% to $224.04 million, translating into a 0.2% increase in same-store residential NOI to $479.94 million.
Same-store average revenue per occupied home jumped to $3,064 in the first quarter, up 1.5% from $3,020 in the year-ago period. Same-store economic occupancy of 96.1% improved 10 basis points year over year. The figure was ahead of our estimate of 95.9%.
Portfolio churn stayed contained, with turnover at 31.6% for the current-year period versus 32.1% in the prior-year period, supporting leasing efficiency.
Interest expense, net, increased 19.4% to $71.5 million. It marginally exceeded our estimate of $71.1 million.
AVB's Leasing Indicators Point to Improving Momentum
Rent metrics were mixed across markets, but the portfolio showed improving momentum in spring. For the quarter, same store like-term effective rent change was 0.4% in total, with new move-in like-term effective rent change at (2.6%) and renewal like-term effective rent change at 2.9%.
The company’s April snapshot suggested a firmer setup into the peak leasing season, as like-term effective rent change reached 1.9% for activity through April 23. Market-level dispersion remained, but the broader trajectory indicated rent change was accelerating from early-year levels.
AvalonBay's Portfolio Activity Features Disposals and Builds
Portfolio activity was strong in the quarter. AvalonBay sold three wholly owned communities for $340.8 million, producing a GAAP gain of $179.7 million and an Economic Gain of $35.8 million. The dispositions involved 884 apartment homes across San Francisco, White Plains and Washington, D.C.
Development remained a key focus, as the company started construction on Avalon Saddle River and Avalon Somerville Station II, which are expected to include 446 apartment homes for an estimated $188.0 million of total capital cost. AvalonBay also completed Avalon Lake Norman in Mooresville, NC, adding 345 apartment homes built for a $102.0 million total capital cost.
As of March 31, 2026, AvalonBay had 25 wholly owned Development communities under construction (expected to contain 8,673 apartment homes and 69,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $3.39 billion.
AVB’s Liquidity and Leverage Are in Check
AvalonBay ended March with $121.2 million in unrestricted cash and cash equivalents. The company had no borrowings outstanding under its credit facility and carried $769.7 million of borrowings under its unsecured commercial paper program.
Leverage and coverage ratios remained in focus, with annualized net debt-to-core EBITDAre at 4.8 times, interest coverage at 6.5 times and unencumbered NOI at 95%.
AVB repurchased 1.13 million shares at an average price of $175.59 per share for a total consideration of $198.5 million. It had $914.35 million of remaining capacity under its 2026 stock repurchase program as of April 27, with no repurchases reported subsequent to March 31.
AvalonBay's Q2 Outlook
For second-quarter 2026, AVB guided projected core FFO per share in the band of $2.72-$2.82. The Zacks Consensus Estimate for the same is currently pegged at $2.82, which is the higher end of the company’s guided range. The company has reaffirmed its February full-year outlook for FFO and core FFO per share.
AVB’s Zacks Rank
AvalonBay currently carries a Zacks Rank #3 (Hold). 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
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs — UDR Inc. UDR and Mid-America Apartment Communities, Inc. MAA — both of which are slated to report on April 29.
The Zacks Consensus Estimate for UDR’s first-quarter 2026 FFO per share stands at 62 cents, indicating a 1.64% increase year over year. UDR currently has a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for Mid-America Apartment’s first-quarter 2025 FFO per share stands at $2.12, implying a 3.6% decrease year over year. MAA currently has a Zacks Rank #3.
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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