10-QPeriod: Q2 FY2016

AVALONBAY COMMUNITIES INC Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 5, 2016For Securities:AVB

Summary

AvalonBay Communities (AVB) reported a strong second quarter in 2016, with net income attributable to common stockholders increasing by 14.6% year-over-year to $197.4 million. This growth was primarily driven by increased Net Operating Income (NOI) from both new and existing communities, along with significant gains from real estate sales and contributions from unconsolidated real estate entities. The company continues to execute its growth strategy, completing three communities with 607 homes and starting construction on two more, while also advancing a robust development pipeline with 23 communities currently under construction and 30 development rights identified for future expansion. Financially, AVB demonstrated healthy operational performance with Established Communities NOI growing by 5.0%. The company also maintained a strong liquidity position and ended the quarter with $182.3 million in cash and cash equivalents. Management is focused on disciplined capital allocation and balance sheet management to create long-term shareholder value, strategically developing and operating upscale apartment communities in desirable metropolitan areas. The company's proactive approach to financing, including extending its credit facility and issuing new unsecured notes, underscores its commitment to maintaining financial flexibility.

Financial Highlights

33 data points
Beta

Revenue

$502.31M

Net Income

$197.44M

39.3% Net Margin

EPS (Diluted)

$1.44

Total Assets

$17.40B

Cash & Equivalents

$182.31M

Free Cash Flow

$275.40M

Financial Statements
Beta
Revenue$502.31M
Operating Expenses$363.24M
Operating Income$339.62M
Interest Expense$46.58M
Net Income$197.44M
EPS (Basic)$1.44
EPS (Diluted)$1.44
Shares Outstanding (Basic)136.92M
Shares Outstanding (Diluted)137.44M

Key Highlights

  • 1Net income attributable to common stockholders increased by 14.6% to $197.4 million for the three months ended June 30, 2016.
  • 2Established Communities NOI grew by 5.0% to $267.3 million, driven by a 5.0% increase in rental revenue.
  • 3Completed construction of three communities (607 homes) and started construction on two new communities (417 homes).
  • 4As of June 30, 2016, 23 communities were under construction (7,480 homes) with a projected capitalized cost of $2.7 billion.
  • 5Acquired two operating communities for $170.0 million and invested $587.3 million in development and redevelopment.
  • 6Successfully extended and increased its Credit Facility to $1.5 billion, with improved pricing terms.
  • 7Issued $475 million in unsecured notes maturing in May 2026, with a coupon rate of 2.95%.

Frequently Asked Questions

AvalonBay Communities (AVB) develops, redevelops, acquires, owns, and operates multifamily apartment communities, primarily focusing on upscale properties in leading metropolitan areas across New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and California. Their strategy centers on creating long-term shareholder value through cost-effective capital access, strategic deployment of capital into high-potential markets, efficient operations, and disciplined asset disposition when appropriate.

In the second quarter of 2016, AVB reported a significant improvement in performance. Net income attributable to common stockholders rose by 14.6% to $197.4 million. This growth was driven by higher Net Operating Income (NOI) from established and newly developed/acquired communities, along with substantial gains from real estate sales and improved equity in income from unconsolidated real estate entities. Operating expenses also increased, but at a slower pace than revenue.

AVB has a substantial development pipeline. As of June 30, 2016, they had 23 communities under construction totaling 7,480 apartment homes with a projected capitalized cost of approximately $2.7 billion. Furthermore, they held rights to develop an additional 30 apartment communities, which could add an estimated 10,452 apartment homes with a projected capitalized cost of $4.0 billion.

AVB manages its liquidity through a combination of operating cash flows, existing cash reserves, and access to credit facilities and debt markets. For the six months ended June 30, 2016, net cash provided by operating activities increased to $545.5 million. The company also recently extended its Credit Facility to $1.5 billion and issued $475 million in unsecured notes. They maintain compliance with financial covenants and are actively managing their debt maturities.