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NEW YORK, Feb 6 (Reuters) - Apartment owner AvalonBay Communities Inc (AVB.N) reported lower-than-expected quarterly funds from operations (FFO) on Wednesday because of a charge related to an expense for abandoned projects.
Fourth-quarter FFO — a performance measure for real estate investment trusts — rose to $89.6 million, or $1.14 per share, from $79.9 million, or $1.05 per share, in the same quarter of last year.
Analysts, on average, were expecting FFO of $1.19 per share, according to Reuters Estimates, while the company had forecast $1.16 to $1.20 per share.
The latest results included an increase of $3.9 million, or 5 cent per share, for abandoned projects.
Apartment owners have been facing significant head winds lately as the crumbling U.S. home market has forced owners to compete for tenants against a glut of condominiums and single-family homes for rent.
However, much of AvalonBay’s properties are located in severely supply-constrained markets, such as Manhattan.
FFO removes the profit-reducing effect that depreciation — a noncash accounting item — has on earnings.
Net income available to stockholders was $129.6 million, or $1.65 per share.
For properties that the company has owned at least a year, net operating income — rental revenue net of property-level expenses — rose 4.9 percent. Net operating income in the Northwest and Northern California rose by double-digits.
Total revenue rose 9.9 percent to $213.0 million, the Alexandria, Virginia-based company said.
“Heading into 2008, we anticipate a weaker economic environment but expect that a falling homeownership rate, favorable demographics and constrained supply will continue to drive positive renter demand in our markets,” Bryce Blair, chairman and chief executive, said in a statement.
Looking ahead, the company forecast 2008 FFO in the range of $4.90 to $5.20 per share, and first-quarter FFO between $1.23 and $1.27.
Analysts expect full-year FFO of $5.03 per share, and first-quarter FFO of $1.21 per share, according to Reuters Estimates. (See www.reutersrealestate.com for the new global service for real estate professionals from Reuters) (Reporting by Ilaina Jonas; editing by Jeffrey Benkoe)