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AvalonBay Communities, Inc. (AVB)
NYSE - NYSE Delayed Price. Currency in USD
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AVB + AABB Gold-backed eth 2.0 Crypto stock Up 7,000 % this year.
AvalonBay management made a brilliant decision in late February issuing $700 million of 10 year notes at 2.3% to prepay their bonds that were maturing in late 2020 and early 2021. This is now one of the few large apartment REITS in excellent financial shape to weather the current crisis, with over $1.5 billion in liquidity and no major debt maturing until 2022. While Q2 of 2020 will be a bad one for earnings, if you are a long term investor this should be a bargain as conditions improve in late 2020 and 2021.
FYI, I do live in an Avalon building in NYC. Since the Covid 19 hit, the management has reduced the rent by about 1/3 and also gives new renters 2 months free rent. There're still currently 60+ vacant apartments in the building. Most of the Avalon buildings are in major cities and I expect next quarter's result would be much worse. Consider this legal insider information. I did long puts and doubled my money already. Am going to short every bounce from now on.
Outside of metro Washington, DC area AVB has very high risk exposure to outbound migration states: California, New York and New Jersey particularly.
With only 3 properties in Texas and 1 in Florida - the countries fastest growing states - they are at high risk for any sort of downturn.
As an alternative if you must own a REIT, look at SLG
There are still a lot of bad news sitting out there and little good news .
1. people moving away from high cost cities
2. tech company layoffs. 63% of AVB portfolio rentals are occupied by tech workers.
3. further extension of COVID infections will cause more companies to go remote.
4. property price decline
5. non-payment of rents are likely to cause evictions which will also be delayed due to court issues.
Anyone lives in luxury apts? Atleast 14 units were vacated in my building this week and I’ll probably break my lease too.. rather check out now and check back in at a much lower rent in a few months
AvalonBay is a blue-chip apartment REIT that i own in my Retirement Portfolio. It has an A-rated balance sheet, resilient fundamentals, high-quality properties, and a perfect track record of uninterrupted dividend payments.
In 08 this tanked 6months after initial infliction to economy. Covid just hit economy. Wait another 3 months atleast. The health crisis is still unfolding.. when the crisis ends More leases to be broken, rental rate must be cut.. admin expenses will remain and financing costs will increase
AVB is not like most REITS with long leases. Apartments have short leases that can be adjusted for inflation and rising interest rates. Renters are pretty sticky as it is not easy to move. I am sure the REIT ETF's will sell across the board as they get redemmed, but AVB will do better than most. Any REIT with a fixed term lease with 1-2% escalators will get squeezed.
I hope EQR, AVB, UDR stay depressed so that I can load up. These prices won't last. 0% interest rate environment for next 10+ years, where do you think people are parking their money?
Occupancy and rent collection is looking a bit weak. Noticed a number of people still moving out of apartments in NY.. this will get rough.
Don’t expect normalization until July.
In the short term, I expect AVB shares to be volatile as the market reacts to COVID-19 vaccine news and political developments.
However, I see the company as a great long-term investment from current valuation levels.
ER after close today. Do ya feel lucky punk? Well do ya? Going into ER without reducing my position, always like betting red or black at the roulette wheel. This is a long term hold though. In at $133 months ago.
Wow if you were holding this for 6 years since 2014, you would have made 0% return
Buying 200 shares here, at 131...
Apartment Rental Collection losses averaged 6/10s of 1% of rental income in 2018 based on the NAA survey.
In the last recession, rental collections declined 7% in 2008, 0% in 2009 and 2% in 2010 per the NAA survey. That is down over 10% in three years. Avalon Bay is a first rate company, but their income is tied to employment. With 20% unemployed, their will be a major impact on the company. They other risk that may come into play are the covenants in the contractual debt terms which caps debt to equity and income coverage ratios which may come into play. If they restructure the debt, it will come with a higher price.
Buying more shares of AVB today.
Adding to my position in PLD (Warehouse/Flex space Reit,
a industry leader with ownership in advanced logistical,
and high tech firms which provide essential strategic
services to the e commerce space users). Big Box warehouses
have doubled in value in New Jersey and Pennsylvania and Delaware
in last 3 years. Lease rates have seen base rentals increase by 40%
in last 2 years.
I am a buyer at low 140s. High end Residential apartments and buildings will have minimum COVID-19 impact out of all real estate REITs.
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