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AvalonBay Communities (AVB) Timothy J. Naughton on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 28, 2016 1:00 pm ET

Executives

Jason Reilley - Senior Director of Investor Relations

Timothy J. Naughton - Chairman, President & Chief Executive Officer

Sean J. Breslin - Chief Operating Officer

Matthew H. Birenbaum - Chief Investment Officer

Kevin P. O'Shea - Chief Financial Officer

Analysts

Nicholas Joseph - Citigroup Global Markets, Inc. (Broker)

Jana Galan - Bank of America Merrill Lynch

Gaurav Mehta - Cantor Fitzgerald Securities

Austin Wurschmidt - KeyBanc Capital Markets, Inc.

Jeffrey Pehl - Goldman Sachs & Co.

Alexander D. Goldfarb - Sandler O'Neill & Partners LP

Robert Chapman Stevenson - Janney Montgomery Scott LLC

Richard Charles Anderson - Mizuho Securities USA, Inc.

Ivy Lynne Zelman - Zelman Partners LLC

Drew T. Babin - Robert W. Baird & Co., Inc. (Broker)

Omotayo Tejumade Okusanya - Jefferies LLC

Conor Wagner - Green Street Advisors, LLC

Gregory A. Van Winkle - Morgan Stanley & Co. LLC

Wes Golladay - RBC Capital Markets LLC

Operator

Good afternoon, ladies and gentlemen, and welcome to the AvalonBay Communities' First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the remarks by the company, we will conduct a question-and-answer session.

Your host for today's conference call is Mr. Jason Reilley, Senior Director of Investor Relations. Mr. Reilley, you may begin your conference.

Jason Reilley - Senior Director of Investor Relations

Well, thank you, Aaron, and welcome to AvalonBay Communities' first quarter 2016 earnings conference call.

Before we begin, please note that forward-looking statements may be made during this discussion. There are a variety of risks and uncertainties associated with forward-looking statements, and actual results may differ materially. There is a discussion of these risks and uncertainties in yesterday afternoon's press release as well as in the company's Form 10-K and Form 10-Q filed with the SEC.

As usual, this press release does include an attachment with definitions and reconciliations of non-GAAP financial measures and other terms, which may be used in today's discussion. The attachment is also available on our website at www.avalonbay.com/earnings, and we encourage you to refer to this information during the review of our operating results and financial performance.

And with that, I'll turn the call over to Tim Naughton, Chairman and CEO of AvalonBay Communities, for his remarks. Tim?

Timothy J. Naughton - Chairman, President & Chief Executive Officer

Yeah. Thanks, Jason, and welcome to our Q1 call. With me today are Kevin O'Shea, Sean Breslin, and Matt Birenbaum. I will be providing management commentary on the slides that were posted yesterday afternoon and then all of us will be available for Q&A afterwards.

My comments will focus on providing summary of Q1 results, talk about trends in the apartment market and our portfolio and lastly, I'll share some thoughts on capital allocation and portfolio management.

So, starting on slide four, it was a strong quarter, this past quarter, where we achieved core FFO growth of more than 12.5%, fueled by healthy same-store revenue growth of 5.5% and same-store NOI growth of almost 8% as well as contributions coming from our lease-up portfolio from our $2.7 billion development pipeline.

As we mentioned last quarter, external growth from investment activity has contributed roughly 45% of core FFO growth over the last two years and it continues to add meaningfully to FFO growth in 2016. We were active on the portfolio management front as well this past quarter, closing out $240 million in acquisitions and almost $0.5 billion in dispositions.

Turning now to slide five; recent market trends reflect shifting patterns across our footprint. This chart shows year-over-year changes in effective rent for each of our six regions and for the full market, as reported by Axiometrics. A few trends worth noting include, first, effective rent growth on the West Coast continues to outpace the East Coast by about 400 basis points, running around 6% in the West and roughly 2% in the East during the quarter.