Growth In Large-Cap Coastal Apartment REITs


While there was a considerable amount of handwringing going into 2Q earnings season for the coastal apartment REITs due to worsening concerns regarding the US economy, the results are in and the group achieved a surprisingly good outcome with earnings beats for the quarter and further increases to full year 2022 guidance. To demonstrate the breadth and consistency of the environment, we note that all four of the large-cap coastal apartment companies raised the full year 2022 funds from operations (FFO) guidance with their second quarter earnings reports, and in some cases, marking the second or third earnings raise since the start of the year.[1] The big winner for the 2Q reporting season was AvalonBay Communities (AVB) with a 3.2% increase to guidance at the midpoint of their revised range. AVB’s more optimistic outlook is partially driven by an upward revision to operating result expectations. They increased their same property net operating income (NOI) growth forecast by +325bps to a range of 13.5% to 15.0%. This increase in operating expectations was also industry leading.[2]


(Link to Top 10 Holdings:

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