AvalonBay Ends 2024 With Strong Development Pipeline, Growth Prospects
By Andrew Coen February 6, 2025 3:47 pm
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AvalonBay Communities finished 2024 with a strong development pipeline that positions the multifamily owner for further growth.
The Arlington, Va.-based real estate investment trust (REIT) recorded fourth-quarter funds from operations (FFO) of $2.80 per share, a 2.2 percent jump from a year ago, the company announced in its earnings report released Thursday. Its full-year FFO was $11.01 per share, a 3.6 percent increase from 2023.
The REIT’s 2024 yearly performance included raising its development starts to $1.1 billion, an increase of nearly $200 million. The firm also sourced $2 billion of new capital to further fuel the portfolio at an “attractive 5.1 percent initial cost,” AvalonBay CEO Benjamin W. Schall said during Thursday’s fourth-quarter earnings call.
“By the end of this year we expect to have $3.5 billion under construction, which is 50 percent higher than where we are today, setting the stage for a further uplift in earnings growth and value creation in 2026 and 2027,” Schall said. “Our balance sheet is as strong as it’s ever been, which provides the capital to leverage our strategic capabilities to fuel further growth in 2025 and beyond.”
As of year-end 2024, AvalonBay had 17 wholly owned developments under construction expected to yield 6,004 apartment units and 59,000 square feet of commercial space totaling an estimated $2.25 billion, the REIT said in its earnings report.
AvalonBay acquired two residential communities during the fourth quarter with its $49 million purchase of the Avalon Townhomes in Bee Cave, Texas, comprising 126 townhomes, and its $136.5 million purchase of Avalon Lowry in Denver, which consists of 347 apartments.
The fourth quarter also saw AvalonBay sell three assets totaling 463 apartments for $212.5 million, including Avalon New Canaan in New Canaan, Conn.; Avalon Berkeley in Berkeley, Calif.; and AVA Ballard in Seattle.
Kevin O’Shea, chief financial officer at AvalonBay, said the company expects to source $1.85 billion of capital in 2025 with $960 million deriving from unsecured debt and an additional $890 million from selling outstanding forward equity contracts.
Schall said AvalonBay’s suburban properties at the end of 2024 increased to 73 percent of its total portfolio, up from 70 percent a year earlier, and moves the REIT closer to its 80 percent target.
“Our conviction for our suburban coastal portfolio is reinforced by the outlooks for both steady demand and limited new supply in the medium to longer term,” Schall said. “We also believe that our suburban coastal portfolio is well positioned to capture future renter demand and particularly the lifestyle preferences of many aging millennials and downsizing baby boomers.”
Andrew Coen can be reached at acoen@commercialobserver.com
