AvalonBay 2025-26: Core FFO $11.25, Turnover 41% Low, $800M Starts
FY25 revenue $3.04B (+4%); op income $914M (-0.2%); NI $1.05B (-3%); EPS $7.39 (-3%). Core FFO $11.25/share (Q3 trim); +2.2% YoY guide. Same-store revenue +2.5% FY25 (Q3 guide). Turnover 41% (lowest in company history). $1.65B development started FY25; $3B+ under construction. FY26 same-store rev +1.4%; new starts $800M / 7 projects / 6.5-7% yield. Dividend raised to $1.78/qtr.
Key takeaways
- Turnover at 41% — lowest in company history. Resident retention demonstrated; below typical multifamily benchmarks. Mid-Lease NPS 34. Reflects portfolio quality + suburban coastal market positioning + community satisfaction.
- $1.65B development started FY25; $3B+ under construction. Projected initial stabilized yield 6.2%. Lease-ups performing better than initial expectations. The development pipeline is the structural external growth lever.
- FY26 development starts restrained to $800M / 7 projects. Average development yield 6.5-7%. Restraint reflects funding cost dynamics + cap rate competition. Selective allocation to highest-yield opportunities.
- Same-store revenue +2.5% FY25 / +1.4% FY26 guide. Soft job growth + DOGE headwinds + macro uncertainty. Operating expense growth 3.8% (130bp above organic) compresses NOI growth.
- Quarterly dividend raised to $1.78/share. Continues annual dividend culture; Board approved at Q4 2025 call.
Business
AvalonBay Communities is a US apartment REIT — owner / developer of multifamily communities concentrated in suburban coastal markets. Single segment (multifamily residential):
- Same-store residential (~80% of revenue). Suburban coastal heavy: New York/New Jersey, New England, Mid-Atlantic, Northern California, Seattle, Southern California. Revenue +2.5% FY25.
- Development pipeline (~10%). 9 projects start FY25 ($1.65B). Stabilized yields 6.2%+. New starts $800M FY26.
- Other rental revenue (~10%). Other charges + parking + amenity fees.
Strategic moves FY25:
- $1.65B development started FY25 (vs $1.7B initial plan)
- $3B+ under construction (year-end)
- Texas market entry continues (Q1 acquisition)
- $900M acquisition target FY25 funded by dispositions
- $1.3B raised at 5.0% capital cost
- Dispositions: D.C. Mid-Atlantic (TOPA challenges)
- Joint venture buyouts ($326M Q2)
- 41% turnover record low
- Mid-Lease NPS 34
- Quarterly dividend raise to $1.78/share
FY25 financial performance
| Metric (FY) | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($B) | 2.59 | 2.77 | 2.91 | 3.04 |
| Revenue YoY | n/a | +7% | +5% | +4% |
| Op income ($M) | 785 | 886 | 916 | 914 |
| Op margin | 30.3% | 32.0% | 31.4% | 30.1% |
| Net income ($B) | 1.14 | 0.93 | 1.08 | 1.05 |
| Diluted EPS ($) | 8.11 | 6.56 | 7.60 | 7.39 |
| Core FFO ($) | n/a | n/a | ~11.00 | 11.25 |
| FCF ($B) | 1.25 | 1.36 | 1.41 | 1.41 |
| Capex ($M) | -175 | -197 | -198 | -265 |
| Total debt ($B) | 8.48 | 8.14 | 8.25 | 9.33 |
| Dividends ($M) | -890 | -923 | -962 | -992 |
| Buyback ($M) | 0 | -2 | 0 | -488 |
The earnings progression: revenue +4% FY25 reflects market softness + DOGE + supply dynamics; op margin 31.4% → 30.1% (-130bp on opex). Core FFO $11.25 (+2.2%) — durable but moderated.
Total debt $9.33B (+13% YoY) reflects $1.65B development funding. Buybacks resumed at $-488M FY25 (vs $0 FY24).
Capital allocation
- Capex: $-265M FY25 (8.7% of revenue, +34% YoY).
- Dividends: $-992M FY25 (+3% YoY); $1.78/quarter. Annual increase.
- Buybacks: $-488M FY25 (resumed; vs $0 FY24).
- Development: $1.65B started FY25; $3B+ under construction.
- Debt: $9.33B (+$1.08B YoY).
- Capital raised: $1.3B at 5.0% cost YTD H1.
FY26 outlook (per Q4 2025 call, 2026-02-05)
| FY26 framework | Detail |
|---|---|
| Revenue growth | +1.4% (modest) |
| Same-store operating expense growth | +3.8% |
| Same-store NOI growth | -2.4% (1.4 - 3.8) |
| New starts | $800M (7 projects) |
| Average development yield | 6.5% to 7% |
| Quarterly dividend | $1.78 (raised) |
| Regional revenue | NY/NJ ~2%; Boston declining; Mid-Atlantic ~1%; N California mid-3%; Seattle modest; S California mid-1%; SE Florida ~1.5%; Denver challenging |
The FY26 guide reflects continued macro caution + soft demand. Development NOI uplift (lease-up of in-progress projects) helps offset same-store NOI compression.
Key risks
- Soft apartment demand. Reduced job growth, macroeconomic uncertainty, government shutdown impact (Q3 highlighted DOGE-related job cuts in DC).
- Operating expense pressure. +3.8% growth (130bp above organic revenue rate). Healthcare + insurance + utility costs.
- Regulatory headwinds. D.C. TOPA law affecting dispositions; New York rent stabilization; CEQA in California slowing development.
- Boston decline. Q4 noted projected occupancy decline in Boston region — multi-quarter regional weakness.
- Tariff impact on development costs. Supply chain + labor cost dynamics for new starts.
- Lease-up performance. Pending development projects ($3B+ under construction) require leasing absorption at projected yields.
Bottom line
AVB FY25 is the steady-state suburban coastal apartment REIT year: core FFO $11.25 (+2.2%), turnover 41% record low, $1.65B development started, $3B+ pipeline, dividend raised to $1.78/quarter. FY26 guide of +1.4% same-store revenue + 3.8% expense + restrained $800M new starts reflects macro caution. Risks are demand softness + expense pressure + regulatory headwinds. Quality apartment REIT compounder mid-cycle in soft macro phase; structural portfolio + balance sheet strengths intact.
Citations
- AvalonBay Communities, Inc. FY25 Form 10-K (filed February 2026, SEC EDGAR).
- AVB Q4 2025 earnings call, 2026-02-05 — turnover 41% record low; Mid-Lease NPS 34; $1.65B development started FY25; FY26 guide (revenue +1.4%, expense +3.8%, $800M starts at 6.5-7% yield); dividend raised $1.78/qtr.
- AVB Q3 2025 earnings call, 2025-10-30 — core FFO guide trimmed to $11.25 (-$0.14); same-store revenue +2.5% guide; $3B under construction; lease-ups performing better than expected.
- AVB Q2 2025 earnings call, 2025-07-31 — H1 core FFO +3.3%; same-store NOI +2.7%; $1.7B development starts FY25; capital raised $1.3B at 5.0%.
- AVB Q1 2025 earnings call, 2025-05-01 — Q1 core FFO +4.8%; Texas acquisition; $3B development pipeline.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).