Price-to-funds from operations multiple AvalonBay Communities’ (AVB) performance in 2Q17 can be best evaluated by looking at its price-to-FFO (funds from operations) multiple. The multiple, widely used for REITs, gives an idea of how much an investor pays for a particular stock per unit of its profit. The multiple, which has the same implications as the price-to-earnings […]
Performance in 2Q17 AvalonBay Communities (AVB) has undertaken several development, redevelopment, and expansion projects to maintain its share in the market. It invested $400 million in new developments during the quarter. REITs such as UDR (UDR), Essex Property Trust (ESS), and Equity Residential (EQR) fund these activities with the help of debt and equity. Therefore, […]
Income generated in 2Q17 AvalonBay Communities (AVB) reported NOI (net operating income) of $367.1 million, compared with $339.6 million in 2Q16. The Northern California region reported the highest NOI of $64.6 million, followed by the New York metropolitan area, which reported NOI of $61.5 million. Development and redevelopment communities reported NOI growth of $40.1 million, […]
Wide geographical diversity AvalonBay Communities (AVB) has its assets well placed in high-demand Class A cities. These cities have soaring job growth, a high barrier to entry for competitors, and proximity to premium infrastructure. REIT peers UDR (UDR), Equity Residential (EQR), and Essex Property Trust (ESS) are repositioning their properties to Class A cities and […]
Demographic shift American demographics are shifting towards Class A cities with high-income growth and demand for residential apartments. These cities offer job prospects and proximity to offices, schools, and other necessities for premium social living. Although these cities also have high barriers to entry, more residential apartment owners are repositioning their properties in these areas. […]
Robust 2Q17 driven by rent growth AvalonBay Communities’ (AVB) total revenue of $530.5 million marginally surpassed Wall Street estimates by 0.3%. However, revenue rose by almost 6% from the year prior. Upbeat top-line growth reflected growth in development communities and stabilized operating communities. Same-store revenue rose 2.5% year-over-year. Including revenue from redeveloped communities, same-store revenue […]
Robust 2Q17 results AvalonBay Communities’ (AVB) top and bottom lines exceeded expectations, backed by higher net operating income growth of 8.1%. Factors affecting profit during 2Q17 Higher occupancy and rent growth in development communities and stabilized operating communities led to upbeat results during the quarter. Higher funds from operations expected for 3Q17 AvalonBay expects […]
Essex Property Trust’s (ESS) performance expectations in 2017 are reflected in analysts’ ratings for its stock. Analysts have given ESS a mean price target of $257.6.
The price-to-FFO (funds from operation) ratio is the most popular method of measuring the relative valuation of real estate investment trusts (or REIT) such as Essex Property Trust.
In order to function as real estate investment trusts (or REIT), companies such as Essex Property Trust (ESS) have to pay almost 90% of their taxable income out as dividends.
Rising optimism among citizens bodes well for REITs such as Essex Property Trust (ESS) AvalonBay Communities (AVB), Equity Residential (EQR), and UDR (UDR).
Real estate investment trusts (or REIT) such as Essex Property Trust (ESS) need to pay at least 90% of their taxable incomes as dividends or share buybacks as a prerequisite for functioning as REITs.
A slow and steady improvement in the job market and rising optimism among consumers about their economic welfare has triggered a spike in the construction sector.
According to President Trump’s proposed budget for fiscal 2018, the administration is expected to slash $6 million from the U.S. Department of Housing and Urban Development budget, decreasing its funding by 13.2% to $40.7 billion.
According to NHAB’s Housing Economics survey, housing starts are expected to rise 6.2% in 2017 and ~6.3% in 2018, backed by respective 9.6% and ~11.8% gains in single-family home sales.
In May 2017, 11 of 23 analysts covering AvalonBay Communities (AVB) stock issued “buy” or “strong buy” ratings. Eleven analysts gave AVB a “hold” rating, and one analyst gave it a “sell” or a “strong sell” rating.
General Growth Properties (GGP) has been paying dividends to its shareholders consistently in every quarter since it raised its dividend 11.1% during 4Q16 to $0.22.
Why dividends matter In order to qualify as equities, REITs like Equity Residential (EQR) are required to pay at least 90% of their taxable income to investors in the form of dividends. REITs fund their dividend payouts from rent paid by the tenants occupying their properties. These secure and continuously flowing funds in the form […]
According to preliminary results released by the University of Michigan in May 2017, the consumer sentiment index gained 3.2% year-over-year for May to date, standing at 97.7%.
In 1Q17, Southern California comprised 25% of Equity Residential’s (EQR) total revenues, 19% of its total revenues came from Washington, D.C., and New York comprised 21% of its total revenues.
According to Freddie Mac, approximately 75.4 million Millennials and 74.9 million Baby Boomers are expected to join the pool of customers for apartment units in 2017.
In 2016, Equity Residential (EQR) completed $1.1 billion in development projects, a record for the company. It expects to complete $900 million in development projects in 2017.
Equity Residential upwardly revised its guidance for its 2016 same-store operating performance, normalized FFO per share, and some of its transactions.
Equity Residential had a total of 98,200 same-store apartment units in 4Q15 compared to 98,400 units in 4Q14. All the units were same-store apartment units.
Equity Residential’s (EQR) FFO (funds from operations) rose to $0.92 per share in 4Q15 compared to $0.87 per share in 4Q14, representing growth of 5.7%.
On a price-to-FFO (price to funds from operations) multiple basis, most major apartment REITs trade in the range of 15.8x–23.2x. EQR is trading at 23.3x.
As more and more people seek apartments, rent has also been rising rapidly. In fact, rent has been rising faster than the overall cost of living in the US.
Many local governments have initiated measures to increase housing affordability. The California Community Redevelopment Law requires developers of redevelopment projects to construct 15% of the houses to be affordable for low- and moderate-income households.
In 2015, new housing starts averaged 1.1 million units, up slightly from 1 million units in 2014. Over the past five years, the housing starts averaged just 876,000 units.
Looking at Camden Property Trust’s (CPT) valuation, we see that CPT shares are trading at a price-to-FFO multiple of 15.3x. The average price-to-FFO multiple for apartment REITs is 19.3x.
Wall Street (SPY) analysts expect Camden Property Trust to post an FFO of $1.19 per share for 4Q15. This translates to a healthy growth of 20.6% over the same previous fiscal period.
Camden Property Trust is set to release its 4Q15 earnings and full-year 2015 earnings on January 29, 2016. The stock was trading at $72.30 on January 15, 2015.
American Campus Communities (ACC), founded by William C. Bayless in 1993, completed an IPO in 2004 and became the first publicly traded student housing REIT on the New York Stock Exchange.
Higher dividend payout by many REITs forces management to go for higher leverage to expand real estate holdings. This results in higher interest outgo, thereby reducing earnings.
American Campus Communities’ (ACC) average occupancy rate has remained at an elevated level for the past few years. It reached its peak at 97.8% in 2011.
MAA’s apartment units are reported in three different business segments, and its number of apartment units has risen from 46,310 in 2010 to 82,316 in 2014.
On October 29, Essex Property Trust’s (ESS) stock closed at $220.44. Currently, the company has a consensus “hold” rating with an average consensus price target of $249.14.
The market reacted negatively to Essex Property Trust’s 3Q15 earnings. Soon after the earnings release, the stock dipped by 3.6% over the previous day’s close.
AvalonBay’s diluted EPS fell by 16.4% in 3Q15 to $1.53 over 3Q14. The fall in EPS was primarily due to the decline in gains on sale of consolidated and joint venture communities.
AvalonBay’s established communities’ occupancy rate fell by 0.4% year-over-year to 95.3% in 3Q15. This is the lowest occupancy level recorded by the company in the last 14 quarters.
On October 26, Equity Residential’s stock closed at $80.94. The company has a consensus “hold” rating with an average consensus price target of $83.32.
