February 6, 2008 / 11:01 PM / 12 years ago

UPDATE 1-AvalonBay 4th-qtr FFO rises, but misses view

(Recasts first sentence, adds analyst forecast, CEO quote, background, outlook)

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)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below