10-QPeriod: Q2 FY2021

AVALONBAY COMMUNITIES INC Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 4, 2021For Securities:AVB

Summary

AvalonBay Communities Inc. (AVB) reported a significant increase in net income attributable to common stockholders for the second quarter of 2021, reaching $447,953,000, a 162.2% rise compared to the prior year period. This surge was primarily driven by substantial gains from real estate dispositions, alongside contributions from development communities, though partially offset by a decrease in Same Store Net Operating Income (NOI). The company's Same Store NOI experienced a 9.2% decline, attributed to a decrease in rental revenues and an increase in operating expenses. However, AVB's strategic focus on developing and acquiring multifamily communities in high-growth urban markets remains a key aspect of its long-term value creation strategy. The company continues to navigate the impacts of the COVID-19 pandemic, implementing measures to support residents while monitoring its effect on rental revenue and collections.

Financial Highlights

34 data points
Beta

Revenue

$561.74M

Net Income

$447.95M

79.7% Net Margin

EPS (Diluted)

$3.21

Total Assets

$19.32B

Cash & Equivalents

$297.04M

Free Cash Flow

$238.48M

Financial Statements
Beta
Revenue$561.74M
Operating Expenses$474.27M
Operating Income$359.77M
Interest Expense$56.10M
Net Income$447.95M
EPS (Basic)$3.21
EPS (Diluted)$3.21
Shares Outstanding (Basic)139.37M
Shares Outstanding (Diluted)139.65M

Key Highlights

  • 1Net income attributable to common stockholders significantly increased by 162.2% to $447.95 million in Q2 2021, largely due to gains on real estate dispositions.
  • 2Same Store Net Operating Income (NOI) decreased by 9.2% ($33.9 million) due to lower rental revenues and higher operating expenses.
  • 3Total revenue for Q2 2021 was $561.7 million, a 2.5% decrease from the prior year period, impacted by lower rental income.
  • 4Direct property operating expenses (excluding property taxes) increased by 9.1% due to new developments and previously deferred maintenance.
  • 5The company sold six operating communities for $512.2 million in Q2 2021, generating a GAAP gain of $334.6 million.
  • 6AVB continues to actively develop its pipeline, with 14 wholly-owned communities under construction, representing 3,988 apartment homes and a projected capitalized cost of $1.55 billion.
  • 7Cash provided by operating activities for the six months ended June 30, 2021, was $568.6 million, a decrease from the prior year, primarily due to lower rental income and uncollectible lease revenue.

Frequently Asked Questions

The substantial increase in net income was primarily driven by significant gains realized from the sale of consolidated and unconsolidated real estate properties, coupled with positive contributions from development communities. This was partially offset by a decrease in Same Store Net Operating Income (NOI).

The decrease in Same Store NOI was due to a 4.7% reduction in rental revenues and a 6.0% increase in residential property operating expenses compared to the prior year's second quarter.

As of June 30, 2021, AvalonBay had 14 wholly-owned communities under construction (3,988 apartment homes) and two unconsolidated communities under construction (803 apartment homes). Additionally, they held development rights for 23 future communities (7,802 apartment homes).

The pandemic has affected rental operations, including revenues and expenses, and rent collections. The company provided flexibility to residents and continues to monitor collection rates. The duration and severity of the pandemic, vaccine effectiveness, and governmental responses remain key factors influencing future impacts.