Markets
AVB

AvalonBay (AVB) Sets Foot in Denver With Property Buyout

Residential REIT AvalonBay Communities, Inc.AVB recently forayed into the Denver metropolitan area with the acquisition of a 252-unit apartment home community - The Lodge Denver West - which was completed in 2016. The company acquired this property in Lakewood, CO, for around $76.8 million.

Per AvalonBay's management, "Denver shares many of the best characteristics" which are possessed by the established core markets of the company. In addition, the region has grabbed the attention of well educated workers in knowledge-based industries. This makes the acquisition a strategic fit for AvalonBay which intends to fortify its presence in this region on the back of buyouts and new development activity.

Notably, the Denver metro area has been experiencing solid rent growth, thus AvalonBay's decision to enter this market area will likely prove beneficial. Per The Denver Post news , that cited the Denver Metro Apartment Vacancy and Rent report from the University of Denver's Daniels College of Business and Colorado Economic and Management Associates, average monthly rent for the second quarter increased $36.98 to $1,419.74, leading to a new rental high.

More importantly, while 2,152 new units were added to the market in the quarter, 4,348 apartments were filled. Also, vacancy rate edged down to 5% from 5.7% in the second quarter, reflecting solid demand for rental units amid low unemployment rate.

Overall for AvalonBay, amid favorable demographics and decent demand in its markets, the company is well poised to grow, backed by its solid portfolio of high quality assets in premium locations. The company also has a healthy balance sheet. However, there is presence of elevated supply in a number of its markets. Hence, growth in its stabilized portfolio is likely to remain restricted in the upcoming period. Further, delay in construction activities in the development portfolio is expected to affect the company's lease-up net operating in the near term.

AvalonBay currently has a Zacks Rank #3 (Hold). Shares of the company have gained 5.3% year to date, underperforming the industry 's rally of 7.3%.

Stocks to Consider

Better-ranked stocks in the real estate space include Equity LifeStyle Properties, Inc. ELS , InfraREIT Inc. HIFR and Communications Sales & Leasing, Inc. UNIT , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

While InfraREIT and Communications Sales & Leasing have expected long-term growth rates of 8% and 7.5%, respectively, the expected long-term growth rate for Equity LifeStyle Properties is currently pegged at around 5.1%

Note: All EPS numbers presented in this write up represent funds from operations ("FFO") per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

4 Surprising Tech Stocks to Keep an Eye On

Tech stocks have been a major force behind the market's record highs, but picking the best ones to buy can be tough. There's a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now - before the next wave of innovations really takes off.

See Stocks Now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AvalonBay Communities, Inc. (AVB): Free Stock Analysis Report

Equity Lifestyle Properties, Inc. (ELS): Free Stock Analysis Report

InfraREIT, Inc. (HIFR): Free Stock Analysis Report

Communications Sales & Leasing,Inc. (UNIT): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AVB UNIT ELS

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More