10-QPeriod: Q1 FY2012

AVALONBAY COMMUNITIES INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 4, 2012For Securities:AVB

Summary

AvalonBay Communities Inc. (AVB) reported strong performance for the first quarter of 2012, with net income attributable to common stockholders increasing by 90.4% year-over-year to $57.8 million. This growth was driven by a 10.5% increase in total revenue, primarily from rental income, and a significant decrease in net interest expense due to debt repayments. The company's Net Operating Income (NOI) also saw a healthy increase of 14.9% across its portfolio, with Established Communities showing a 10.2% year-over-year NOI growth, benefiting from higher rental rates and occupancy. The company continues to actively manage its portfolio through development and redevelopment. At the end of the quarter, AVB had 20 communities under construction with a projected cost of $1.58 billion and 10 communities undergoing redevelopment. The company maintained a strong liquidity position with approximately $321 million in unrestricted cash and cash in escrow. While facing some headwinds like increased G&A expenses, AVB appears well-positioned to capitalize on favorable apartment market fundamentals.

Financial Highlights

30 data points
Beta

Revenue

$236.79M

Net Income

$57.76M

24.4% Net Margin

EPS (Diluted)

$0.60

Total Assets

$8.24B

Cash & Equivalents

$248.24M

Free Cash Flow

$105.34M

Financial Statements
Beta
Revenue$236.79M
Operating Expenses$194.53M
Operating Income$167.31M
Net Income$57.76M
EPS (Basic)$0.61
EPS (Diluted)$0.60
Shares Outstanding (Basic)94.86M
Shares Outstanding (Diluted)95.65M

Key Highlights

  • 1Net income attributable to common stockholders rose 90.4% to $57.8 million in Q1 2012 compared to Q1 2011.
  • 2Total revenue increased by 10.5% to $252.45 million, driven by a 10.5% rise in rental and other income.
  • 3Net Operating Income (NOI) grew by 14.9% to $171.74 million, indicating strong operational performance across the portfolio.
  • 4Established Communities' NOI increased by 10.2%, driven by a 6.6% increase in rental revenue from higher rates and occupancy.
  • 5Interest expense, net, decreased by 21.7% to $33.6 million due to debt repayments and increased interest capitalization on development projects.
  • 6The company had approximately $321.1 million in unrestricted cash and cash in escrow at the end of the quarter, providing substantial liquidity.
  • 7AVB has a significant development pipeline with 20 communities under construction, representing an estimated total capitalized cost of $1.58 billion.

Frequently Asked Questions

The primary drivers for the substantial increase in net income were a combination of strong revenue growth, particularly from rental income, and a significant reduction in interest expense. The company also benefited from a substantial increase in Net Operating Income (NOI) from its portfolio of apartment communities.

AvalonBay is actively managing its development pipeline, with 20 communities under construction representing a total projected capitalized cost of approximately $1.58 billion. The company has sufficient liquidity from cash on hand and its credit facility to fund these ongoing development and redevelopment activities.

As of March 31, 2012, AvalonBay reported approximately $321.1 million in unrestricted cash and cash in escrow, indicating a strong liquidity position to meet its short-term needs, including development funding and dividend payments.

While direct property operating expenses saw a modest increase, General and Administrative (G&A) expenses increased by 33.2% compared to the prior year period, primarily due to higher compensation and legal costs. Corporate-level property management and other indirect operating expenses also increased due to costs associated with new brand introductions.