Bloomberg News

AvalonBay FFO Increases as Apartment Demand Prompts Higher Rents

February 01, 2012

Feb. 1 (Bloomberg) -- AvalonBay Communities Inc., the second-largest publicly traded U.S. apartment owner, said funds from operations climbed in the fourth quarter as rising demand allowed the nation’s landlords to increase rents.

FFO, which gauges a property company’s ability to generate cash, rose to $113.4 million, or $1.19 a share, from $86.8 million, or $1.01, a year earlier, the Alexandria, Virginia- based real estate investment trust said in a statement today. Analysts expected FFO of $1.22 a share, the average of 21 estimates in a Bloomberg survey.

Demand for rental apartments has soared in the face of an improving job market that’s prompted college graduates to seek their own housing, according to Alexander Goldfarb, an analyst with Sandler O’Neill & Partners LP in New York. Apartment rents in the U.S. climbed 4.1 percent in the 12 months through December, according to Axiometrics Inc. The Dallas-based research firm projects a 6.7 percent increase in landlords’ rental revenue for the year from 2011.

“The economy is growing slowly, college-age unemployment is about half the national average, there is very little new supply, so apartment landlords have been in a very good spot,” Goldfarb, who has a “hold” rating on AvalonBay, said in an interview before earnings were announced.

Fourth-quarter results were released after the close of regular U.S. trading. AvalonBay shares rose 0.7 percent today to $136.92 in New York. The shares have gained 18.5 percent in the past 12 months, compared with a 14 percent advance in the Bloomberg REIT Apartment Index of 16 companies.

(AvalonBay will hold a conference call tomorrow at 1 p.m. New York time. See AVB US <Equity> EVT <GO>.)

--Editors: Christine Maurus, Daniel Taub

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net.

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net


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