AvalonBay's 2013 forecast hit by Archstone acquisition

Wed Jan 30, 2013 6:11pm EST

Jan 30 (Reuters) - Apartment landlord AvalonBay Communities Inc reported a 15 percent rise in a key earnings performance measure in the fourth quarter but warned that costs from the acquisition of some Archstone buildings would hurt its 2013 results.

Arlington, Virginia-based AvalonBay in November said it would buy 40 percent of the apartment buildings owned by Archstone, an apartment company formerly owned by Lehman Brothers.

The real estate investment trust expects 2013 funds from operations, or FFO, to be in the range of $4.11 to $4.47 per share, including costs from the acquisition. Analysts were expecting $6.28 per share, according to Thomson Reuters I/B/E/S.

Funds from operations is an industry measure that usually excludes the effect depreciation has on earnings as well as losses or gains from property sales.

AvalonBay, which owns or holds stakes in 203 apartment towers and complexes containing 59,391 units, said a bulk of the acquisition costs will be felt in the first quarter.

It forecast first-quarter FFO to be a loss of 62 cents to 66 cents per share.

For the fourth quarter, AvalonBay reported FFO of $130.6 million, or $1.27 per share, up from $113.4 million, or $1.19 per share, in the year-ago period. Revenue rose 8 percent to $275.8 million.

FFO for the quarter would have been higher if not for the elevated costs from the Archstone acquisition and superstorm Sandy.

For properties the company has operated more than a year, AvalonBay posted a 6 percent rise in fourth-quarter net operating income, an indicator of how well they are managed. The average rental rate rose 5 percent.

Shares of AvalonBay closed down 1.7 percent at $135.64 on the New York Stock Exchange ahead of the results.