AvalonBay Communities (AVB) Bank of America 2024 Global Real Estate Conference summary

Operating performance and portfolio trends

• Strong operating momentum with increased guidance for revenue and Core FFO growth in 2024; Q3 trends in line with expectations.

• First half 2024 results exceeded expectations, prompting an increase in full-year projected Core FFO per share and revenue growth outlooks.

• East Coast and suburban markets outperform West Coast and urban areas; 70% of portfolio is suburban coastal, supporting continued strength into 2025.

• Portfolio repositioning underway: targeting shift from 70% to 80% suburban allocation and growing expansion markets from 8% to 25%.

• $500 million in asset sales at a 5.1% cap rate, redeployed into expansion regions for higher growth.

Development and capital allocation

• $2.5 billion under construction, 95% match funded before recent equity raise; development starts for 2024 increased by $200 million to $1.1 billion.

• $800 million equity forward raised to fund 2025 development, locking in favorable capital spreads.

• Construction costs declining 3%-5% in several markets, especially Northeast suburbs, with yields of 6.5%-7%.

• Over $900 million of new development in lease-up and increased projected new development start volume from $870M to $1.05B.

• Expansion regions offer 6% development yields; West Coast development outlook improving.

Operating model transformation and technology

• Operating model transformation targets $80 million incremental NOI, with $37-$38 million expected by end of 2024.

• Transformation driven by technology adoption, labor centralization, and neighborhood-based staffing.

• AI used for lead management and customer interactions; future plans include broader AI deployment for efficiency.

• $30 million of NOI target from resident connectivity services; remaining from labor efficiencies.

• Bulk Wi-Fi deployment expected to be complete by year-end 2024, and smart home technology deployment ramping up.