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AvalonBay Communities Says Consumer Confidence Remains Healthy, For Now

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Highlights for AvalonBay Communities Q2 earnings include core FFO growth of just under 2% for the quarter and 3.6% year-to-date. Same-store revenue growth in Q2 came in at 3.1% or 3.3%, including redevelopment, with most regions except Seattle crossing the 3% range.

On the firm’s Q2 earnings call, Timothy Naughton, chairman, CEO and president, said that year-to-date same-store revenue growth stands at 3.3%. “Now we completed a $90 million development deal in New Jersey this quarter at an initial yield of 6.5% and $240 million so far this year at an average yield of 6.4%. Meanwhile, we started another $430 million at 3 communities located in the mid-Atlantic, Southern California and Boston markets,” he said.

He also pointed out that the firm raised almost $600 million this past quarter in external capital at an average rate of 3.9% and have raised roughly 2/3 of its projected capital needs for 2019 in the first half of the year.

According to Naughton, the consumer remains in good shape but is also showing signs of moderation, with retail spending decelerating from its healthy pace of the last year and auto and home sales flattening in recent quarters. “Consumer confidence remains at a healthy level for now, supported by a very healthy labor market. Business investment has been relatively healthy so far this year as well, although business confidence has recently declined to a cyclical low as the prospect of trade wars weighs heavily on the psyche of many executives and capital allocators.”


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