AvalonBay Communities Inc

What they do

AvalonBay owns or holds interests in apartment communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, Northern and Southern California, plus expansion regions including Raleigh-Durham, Charlotte, Southeast Florida, Dallas, Austin and Denver. As of January 31, 2026, it owned or had interests in 292 operating apartment communities with 88,768 apartment homes, including 284 consolidated communities with 86,374 homes. It also had 27 wholly-owned development communities under construction or completed and in lease-up, expected to contain 9,692 apartment homes, plus rights to develop an additional 33 communities. It operates under four core brands, including Avalon for upscale apartment living and AVA for transit-served neighborhoods.

Revenue drivers

• Same Store Residential operations — Rental and ancillary residential revenue from stable operating apartment communities; Same Store NOI was $1.86 billion for 2025 and $488.6 million in Q2 2026.
• Development and Redevelopment NOI — NOI from recently completed or in-lease-up development communities; Development and Redevelopment Residential NOI was $13.6 million in Q2 2026, up $9.0 million year over year.
• Other Stabilized Residential NOI — NOI from newly acquired and recently completed communities not yet in Same Store; was $19.5 million in Q2 2026, up $9.3 million year over year.
• Structured Investment Program (SIP) — Mezzanine loans or preferred equity to third-party apartment developers in existing regions; described as a platform to generate additional shareholder value.

Recent performance

For Q2 2026, net income attributable to common stockholders was $155.7 million, down 42.0% from the prior year period, primarily due to lower real estate sale gains and higher expensed transaction, development and pursuit costs related to the proposed merger. EPS was $1.11, FFO per share was $2.73, and Core FFO per share was $2.86, compared with $1.88, $2.80 and $2.82 in Q2 2025. Same Store Residential NOI rose 1.0% to $488.6 million, as residential revenue grew 1.6% and operating expenses rose 2.9%. For the first half of 2026, EPS was $3.43, FFO per share was $5.46, and Core FFO per share was $5.69.

Strategy

The company's stated goal is to increase long-term shareholder value through development, redevelopment, acquisition, ownership, operation and selective disposition of apartment communities in leading metropolitan areas. In 2025 it sold nine wholly-owned communities for $811.7 million, completed four wholly-owned communities for $561.0 million, started construction on eleven wholly-owned communities and two expansions expected to contain 3,888 homes for an estimated $1.64 billion, and acquired 12 wholly-owned communities for $826.0 million. It also raised approximately $2.25 billion of gross capital in 2025 through real estate sales, unsecured notes, settlement of equity forwards and a variable rate term loan. On May 20, 2026, it entered a Merger Agreement with Equity Residential under which each AvalonBay share will convert into 2.793 Equity Residential shares, subject to shareholder approvals and other closing conditions.

Risks

• Development and construction risk — Development and redevelopment activities can face long entitlement timelines, cost overruns, permitting delays, supply chain disruptions including tariffs, and abandoned opportunities that may not recover incurred expenses.
• Merger completion uncertainty — The pending combination with Equity Residential is subject to reciprocal shareholder approvals and other customary closing conditions and is expected to close in the second half of 2026, but may not be completed on that timeline or at all.
• Same Store NOI growth pressure — Q2 2026 Same Store Residential NOI grew only 1.0% and operating expenses rose 2.9%, which can compress margins if revenue growth slows further.
• Interest rate and capital markets exposure — The company has $9.02 billion of long-term debt and relies on access to credit facilities, commercial paper, unsecured notes and equity issuance, with 2025 results affected by increased interest expense and lower interest income.

Outlook

Management raised Same Store outlook and suspended EPS, FFO and Core FFO outlook due to the proposed merger. The merger with Equity Residential is expected to be completed in the second half of 2026, subject to reciprocal shareholder approvals and other customary closing conditions. CEO Benjamin W. Schall said Q2 was strong and exceeded expectations, and that the combination provides the opportunity to create the premier company in rental housing.