Strong Core FFO Growth: AvalonBay Communities reported a core Funds From Operations (FFO) growth of 3.3% year-to-date, with full-year guidance for core FFO per share maintained at $11.39, reflecting year-over-year growth expectations of 3.5%. The updated outlook reflects a better performance in same-store residential Net Operating Income (NOI) growth, now projected at 2.7% for the full year, an improvement of 30 basis points.

Increased Development Starts: The company increased its target for development starts to $1.7 billion for 2025, up from $1.6 billion. Ongoing development projects show strong yields relative to cost of capital, with a yield on cost of 6.2%. The firm still expects significant earnings and value creation from these projects in 2026 and beyond.

Challenges with Occupancy and Rent Growth: Despite overall positive metrics, AvalonBay faces challenges in achieving revenue growth due to a slight decline in lease-up NOI and higher-than-expected bad debt. There has also been a softness in certain markets, particularly in the Mid-Atlantic and Southern California regions, driven by slower job growth and increased use of concessions to maintain occupancy.