Shares of AvalonBay Communities AVB were up 2.1% at the close on Feb. 28, after the company announced a first-quarter 2025 operating update on Feb. 27. The update highlights the company witnessing the same-store operating metrics in line with its expectations as provided in its initial 2025 outlook.

Per the operating update, economic occupancy for its same-store residential portfolio was 95.9%, including actuals for January and projections for February as of Feb. 26. This was an improvement from 95.6% in the fourth quarter of 2024. The like-term effective rent change for the same-store residential portfolio was 1.6% from January through Feb. 26, up from 1.1% in the fourth quarter of 2024.

Moreover, per the update, the National Association for Business Economics expects moderation in the U.S. job growth forecast from 1.4% in 2024 to 1% in 2025. However, job growth in key AVB resident sectors, which include finance, professional services and information sectors, is expected to improve from 0.4% in 2024 to 0.7% in 2025.

AVB Boosts Portfolio in Texas Expansion Regions

AvalonBay recently announced that it is under contract to acquire two apartment communities in Austin and agreed to acquire six apartment communities in the Dallas-Fort Worth metropolitan area from BSR Real Estate Investment Trust and its subsidiaries. The move highlights the company’s strategic portfolio expansionary efforts in high-growth regions of Texas to boost its revenues and enhance the portfolio quality.

The Austin asset acquisition worth $187 million is likely to be completed around March 31, 2025, while the Dallas-Fort asset acquisition worth $431.5 million is expected to close in the second quarter of 2025. The eight apartment communities feature 2,700 homes with an average price per home of around $229,000 and a weighted average rent per home of $1,675.

AvalonBay in a Snapshot

AvalonBay focuses on improving portfolio quality by increasing allocation to suburban submarkets and expansion regions, and by making accretive investments in the existing portfolio. The company is poised to benefit from the healthy renter demand for its residential properties in key regions. Its portfolio is well diversified with its same-store portfolio, comprising a decent number of both suburban and urban assets. AVB is also banking on technology and scale to drive margin expansion and operational efficiency. However, elevated supply in certain markets and high interest rates remain concerns for this residential REIT.

Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 22.2% compared with the industry’s growth of 12.7%.

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are SL Green Realty SLG and Welltower WELL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for SL Green Realty’s 2025 FFO per share is pegged at $5.52, which suggests year-over-year growth of 9.7%.

The Zacks Consensus Estimate for Welltower’s 2025 FFO per share stands at $4.88, which indicates an increase of 13% from the year-ago period.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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