10-QPeriod: Q2 FY2020

AVALONBAY COMMUNITIES INC Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 5, 2020For Securities:AVB

Summary

AvalonBay Communities Inc. (AVB) reported a modest increase in net income attributable to common stockholders for the second quarter of 2020, up 1.5% year-over-year, driven by gains on real estate dispositions and increased NOI from development and other stabilized communities. However, this was partially offset by a decrease in NOI from established communities, primarily due to higher uncollectible lease revenues attributed to the ongoing COVID-19 pandemic. The company implemented measures to support residents facing financial hardship, including flexible payment options and fee waivers, which contributed to a slight dip in collected residential revenue compared to earlier months in the quarter, though the situation appeared to stabilize by July. Despite the headwinds from the pandemic, AVB demonstrated resilience in its development pipeline, with construction having restarted at all previously suspended projects and most sites returning to normal pace. The company continues to strategically manage its portfolio, evidenced by the sale of an operating community and residential condominiums. Liquidity remains a focus, with a healthy cash position and available credit facility, though the company acknowledges the evolving market conditions and potential impact of the pandemic on future capital availability and development timelines.

Financial Highlights

34 data points
Beta

Revenue

$576.40M

Net Income

$170.83M

29.6% Net Margin

EPS (Diluted)

$1.21

Total Assets

$19.35B

Cash & Equivalents

$322.82M

Free Cash Flow

$287.21M

Financial Statements
Beta
Revenue$576.40M
Operating Expenses$443.98M
Operating Income$388.13M
Interest Expense$53.40M
Net Income$170.83M
EPS (Basic)$1.21
EPS (Diluted)$1.21
Shares Outstanding (Basic)140.45M
Shares Outstanding (Diluted)140.74M

Key Highlights

  • 1Net income attributable to common stockholders increased by 1.5% to $170.8 million in Q2 2020 compared to Q2 2019.
  • 2Established Communities NOI decreased by 3.7% due to a $14.2 million increase in uncollectible lease revenue, largely driven by COVID-19 impacts.
  • 3The company provided rent relief measures to residents affected by the pandemic, including flexible payment plans and fee waivers.
  • 4Construction has resumed at all previously suspended development projects, with most sites returning to normal operational pace.
  • 5The company sold one wholly-owned operating community for $64.9 million and 16 residential condominiums for $61.2 million.
  • 6Cash and cash equivalents, including restricted cash, increased significantly to $415.7 million as of June 30, 2020, up from $127.6 million at year-end 2019.
  • 7AVB maintained compliance with its financial covenants under its credit facility and debt agreements.

Frequently Asked Questions

The primary impact of COVID-19 was an increase in uncollectible lease revenue, which reduced Net Operating Income (NOI) from established communities by 3.7%. The company also implemented rent relief measures for residents facing financial hardship, which included waiving late fees and offering payment plans, impacting collected revenues.

Construction was temporarily suspended at some development projects due to COVID-19 related regulations and safety precautions. However, as of June 30, 2020, construction had restarted at all previously suspended sites, and most other sites had returned to normal operating pace. The company is cautiously evaluating future development starts based on evolving market conditions.

AvalonBay maintained a strong liquidity position, with cash and cash equivalents and restricted cash totaling $415.7 million as of June 30, 2020, an increase of $288.1 million from the end of 2019. The company also has a $1.75 billion revolving credit facility available and had no borrowings outstanding under it as of July 31, 2020.

While the company terminated its previous stock repurchase program in July 2020, it approved a new program allowing for up to $500 million in repurchases. However, as of the filing date, no shares had been repurchased under the new program.