AvalonBay Raises NOI Outlook Amid Equity Residential Merger
The residential REIT reported second-quarter Core FFO per share of $2.86, a 1.4% increase from the prior year
AvalonBay Communities (AVB) reported a modest increase in core funds from operations for the second quarter, as the residential REIT navigated a pending merger of equals.
The quarter was defined by a shift in financial guidance and capital structure as the company prepares for an all-stock merger with Equity Residential announced on May 21, 2026.
Core FFO per share rose 1.4% year-over-year to $2.86, up from $2.82 in the second quarter of 2025. However, other profitability metrics diverged; FFO per share decreased 2.5% to $2.73, and earnings per share fell 41.0% to $1.11 from $1.88 in the prior-year period.
Operational performance showed signs of acceleration in the company's core portfolio. Same-store residential net operating income increased 1.0% year-over-year to $488.6 million. This represented an acceleration from the 0.2% increase reported in the first quarter of 2026.
Revenue for same-store residential properties rose 1.6% year-over-year to $709.6 million, a rate that held steady compared to the first quarter. The gain in net operating income was supported by a deceleration in costs, as same-store residential operating expenses rose 2.9% year-over-year, down from a 4.7% increase in the previous quarter.
AvalonBay increased its full-year 2026 same-store NOI outlook to a range of 0% to 1.4%, up from its original guidance of -0.7% to 1.3%. The company suspended its specific outlook for EPS, FFO, and Core FFO due to the proposed merger.
The company expanded its development pipeline, with wholly-owned communities under construction increasing to 27, totaling 9,064 homes. The estimated cost of these projects rose to $3.53 billion as of June 30, 2026, from $3.39 billion at the end of March.
In a separate capital action, AvalonBay settled outstanding equity forward contracts during the second quarter and July 2026. The company issued 3,680,000 shares, generating combined proceeds of approximately $809.4 million.