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AvalonBay reports FFO decline, core FFO gain in Q2

AvalonBay CommunitiesInc. reported a year-over-year decrease in FFO and an increase in coreFFO in the second quarter, and adjusted its full-year 2016 guidance.

FFO attributable to common stockholders fell to $273.6 millionfor the second quarter, or $1.99 per share, from $290.5 million, or $2.18 per share,in the year-ago quarter.

Core FFO attributable to common shareholders came to $278.5 million,or $2.03 per share, compared to $249.5 million, or $1.87, a year earlier.

The S&P Capital IQ consensus FFO-per-share estimate for thesecond quarter was $2.05.

On a per-share basis, FFO fell 8.7% and core FFO rose by 8.6%.

The decrease in FFO per share was primarily the result of a decreasein casualty and impairment gain, net, coupled with a gain on extinguishment of debtin the 2015 second quarter, as compared to a loss on extinguishment of debt in thesecond quarter, the company said.

In releasing its earnings, the company estimated third-quarterFFO-per-share in the range of $2.14 to $2.20 and core FFO-per-share in the rangeof $2.05 to $2.11.

The company also narrowed its full-year 2016 FFO-per-share guidanceto a range of $8.26 to $8.46, from an earlier range, released in February, of $8.12 to $8.52. Finally, the companynarrowed the range of its full-year core FFO-per-share guidance to $8.13 to $8.33,from $8.03 to $8.43.

The S&P Capital IQ consensus FFO-per-share estimates forthe third quarter and full year 2016 are $2.09 and $8.26, respectively.

In May, the company acquired the 300-unit Avalon Clarendon, inArlington, Va., for a purchase price of $120.3 million. The property is part ofa mixed-use development containing residential, retail, office and public parking.To facilitate the acquisition, the company entered into a joint venture under whichit acquired all of the rights and obligations associated with the residential component,while the joint venture partner acquired all of the rights and obligations associatedwith the other components. AvalonBay and the joint venture partner expect to completea vertical subdivision of the property in the third quarter of 2016, at which timethe company will report the operating results of the Avalon Clarendon as part ofits consolidated results of operations.

In the second quarter, the company sold Avalon Essex, a whollyowned 154-unit community in Peabody, Mass, for $45.1 million.

In the second quarter, the company completed the developmentof the AVA Capitol Hill in Seattle, Wash.; the Avalon Irvine III, in Irvine, Calif.;and the Avalon Union, in Union, N.J.The company added five development rights which, if developed as expected,will contain 2,060 units and will be developed for an estimated total capital costof $684 million. The company also acquired three parcels of land for developmentfor an aggregate investment of about $34.6 million.