REIT - Should You Retain AvalonBay Stock in Your Portfolio Now? | Benzinga
AvalonBay Communities (NYSE: AVB) is well-poised to benefit from the healthy renter demand for its residential properties in the high barrier-to-entry regions of the United States. The company's efforts to leverage technology and scale to drive margin expansion and operational efficiency seem encouraging.
However, the elevated supply of rental units in certain markets is likely to fuel competition and curb pricing power, thereby impeding the rent growth momentum to some extent. A high interest rate adds to its woes.
What's Aiding AVB?
AvalonBay has high-quality assets located in some of the country's premium markets. It focuses on adding properties situated in the leading metropolitan areas where the market is characterized by growing employment in the high-wage sectors of the economy, higher home ownership costs, and a diverse and vibrant quality of life. This offers AvalonBay an edge for generating superior long-term risk-adjusted returns on apartment community investments over the other markets that lack such characteristics.
Its portfolio is well-diversified, with its same-store portfolio comprising a decent number of suburban and urban assets. Moreover, limited single-family home inventory is making the transition from renter to homeowner difficult in its markets, and renting apartment units is a viable option. Hence, with these factors in ...