3 Questions Investors Should Ask AvalonBay Communities (AVB) - Morgan Stanley

Morgan Stanley analyst Richard Hill reiterated an In-Line rating and $229.00 price target on AvalonBay Communities (NYSE: AVB) after the company reported in-line FFO but decelerating NOI at 2.1% growth as revenue decelerated 70 bps to 2.7% growth.

The slowing growth has the analyst concerned and asking 3 questions:

1) What's driving guide implied FFO of $2.44 in 4Q19?

2) What's the breakdown of rent regulation between CA and NYC?

3) Will expenses remain elevated?

The analyst stated "As of quarter end, the company had 20 Development Communities (excluding The Park at Loggia) under construction at a total capital cost at completion of $2.5bn, which are expected to generate $165mn of stabilized NOI and is nearly 100% match-funded. Importantly, the company is confirming their pursuit of a condominium strategy at the Park at Loggia (formerly known as 15 West 61st Street with sales expected to commence in 1Q20. This, along with the disposition of certain wholly-owned communities, has resulted in the company reducing it's FY EPS by $0.20 to a midpoint of $5.68".

For an analyst ratings summary and ratings history on AvalonBay Communities click here. For more ratings news on AvalonBay Communities click here.

Shares of AvalonBay Communities closed at $216.99 yesterday.

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