During first quarter earnings calls, public real estate investment trusts (REITs) highlighted the same trends that benefited the multifamily sector over the past year: limited competition and relative affordability.

AvalonBay, MAA, and Equity Residential were among the public companies to highlight low turnover numbers, in large part due to limited affordable options for renters in the for-sale housing market. Equity Residential reported its lowest quarterly turnover in company history, while AvalonBay and MAA reported record low levels of move-outs associated with buying single-family homes. Just under 13% of MAA’s move-outs were associated with buying a home, while, at AvalonBay properties, just 7% of residents moved out to purchase a home, well below the company’s long-term average of 16% to 17%.

The positive conditions contributed to favorable rent growth conditions for many REITs, with Elme Communities among the public companies reporting effective rent per unit increased in the first quarter.

REITs also benefited from several demographic tailwinds, including employment growth, that contributed to high levels of absorption in the quarter. UDR chairman and CEO Tom Toomey said more than 100,000 newly delivered apartment homes were absorbed in the first quarter, the strongest first quarter in over two decades, a significant positive development for the sector. Several additional demographic developments continue to favor the rental market, including smaller households and delayed marriage and childbearing.

Quarterly Results

AvalonBay grew core funds from operations (FFO) per share by 5.1% on a year-over-year basis to $2.70 in the fiscal first quarter. The REIT also reported positive year-over-year growth in earnings per share and FFO per share in the first quarter. Same-store total revenue increased 4.3% to $677.2 million, while same-store residential revenue grew 4.2% to $669.2 million. The company reported same-store residential net operating income (NOI) increased 3.7% to $463.7 million in the quarter.

At Equity Residential, the company generated FFO per share of $0.87 in the first quarter, a 2.4% increase compared with the first quarter of 2023. Same-store revenue increased 4.1% year- over year, driven by healthy demand and modest supply. The REIT reported same-store NOI grew 5.5% compared with the first quarter of 2023.

Camden Property Trust generated core FFO per share of $1.70 in the first quarter, compared with $1.66 per share in the first quarter of 2023. Same-property revenues grew 0.5% sequentially and 2.5% year over year in the period, while same-property NOI grew 2.3% in the first quarter compared with the first quarter of 2023.

UDR grew FFO per share by 2% to $0.60 in the first quarter. Same-store revenue grew 3.1% year over year, and same-store NOI jumped 1.2% compared with the prior-year period. NOI declined 1.6% on a sequential basis compared with the fourth quarter of 2023.

Essex Property Trust reported core FFO per share by 4.9% year over year and exceeded the midpoint of the company’s guidance by $0.09. The company attributed the growth and outperformance to favorable same property revenue growth. Essex achieved same-property revenue and NOI growth of 3.6% and 3%, respectively, compared with the first quarter of 2023.

MAA generated core FFO per share of $2.22, slightly down from $2.28 per share in the first quarter of 2023. Same-store revenue increased 1.4%, with the average effective rent per unit ticking up 1.5% year over year. Same-store NOI decreased 0.7% on a year-over-year basis.

Elme Communities reported a net loss of $3.6 million in the quarter. Core FFO per share was $0.23, down 4% compared to the prior-year period. NOI ticked up 4% to $37.8 million in the period. Same-store NOI increased 0.3% compared with the first quarter of 2023.

At Veris Residential, core FFO per share increased by $0.02 to $0.14 in the first quarter. Same-store NOI grew 14% on a year-over-year basis and 4% on a sequential basis. The REIT reported a same-store multifamily blended net rental growth rate of 4.6%.

Management Commentary and Outlook

“We expect our suburban coastal footprint to continue to outperform, given steady and improved demand drivers delivering in our markets versus the rest of the country. Given our first quarter outperformance, applications for the second quarter, and improvement in underlying trends, we have increased our full-year guidance. Our portfolio, 71% suburban today and headed toward 80% suburban, faces significantly less new supply than many of our peers.” —Benjamin Schall, president and CEO, AvalonBay

“The durability of the employment picture for our target affluent renter demographic is a continuing bright spot in our business as is the cost of owned housing. Unemployment for the college educated, a very sizable percentage of our residents, remains at around 2%, considerably lower than the overall average, supporting demand. … We also see little competition from owned housing as the high cost of homes, combined with elevated financing costs and rapidly rising insurance, real estate tax, and maintenance costs, combine to make rental housing a very attractive option for many people.” —Mark Parrell, president and CEO, Equity Residential

“The main drivers of apartment demand are population and employment growth, apartment affordability, and positive demographic trends. … Demographic trends continue to be a tailwind supporting demand from high propensity-to-rent groups, including young adults age 35 and under. Apartments should take a larger share of household formations given these demand drivers. 2024 demand should be sufficient in spite of supply concerns to set up accelerating rent growth for 2025 and 2026, assuming the overall economy continues on the current trajectory.” —Richard Campo, chairman and CEO, Camden Property Trust

“Year-to-date employment creation of approximately 800,000 jobs has already exceeded initial full-year economist consensus expectations. [Additionally], more than 100,000 newly delivered apartment homes were absorbed during the first quarter—the strongest first quarter in over two decades. Adding to that, total housing deliveries remained stable, and development starts continued to decline. This bodes well for rent growth. And [finally], renting an apartment is on average 60% more affordable than owning a single-family home in the markets where we operate, a cycle-best level of relative affordability.” —Tom Toomey, chairman and CEO, UDR

“Recent data and Fed commentary have resulted in elevated uncertainty regarding the path of interest rate cuts. With this in mind, we do not anticipate imminent improvement in job growth in high-paying sectors, which is typically the key catalyst to accelerate demand for housing and rent growth. While job growth on the West Coast has remained soft, our steady performance year to date is attributed to two factors: first, limited housing supply, [and] the second positive factor is rental affordability.” —Angela Kleiman, president and CEO, Essex Property Trust

“We continue to believe that our high-growth markets are producing solid demand sufficient to absorb the new supply in a steady manner that will enable continued stable occupancy, strong renewal pricing, strong collections, and overall revenue results that are aligned with the outlook that we provided in our prior guidance. … Our leasing traffic remains strong, and record low resident turnover, favorable net migration trends, and stable employment conditions across our diversified portfolio and markets continue to drive solid demand.” —Eric Bolton, chairman and CEO, MAA

“We see solid trends [on the demand side], and our communities are delivering a stable performance that we would expect from our mid-market strategy. We have seen the expected uptick in activity into the spring leasing season, and market rents for the Washington metro area continues to trend above the U.S. on average.” —Paul McDermott, president and CEO, Elme Communities

“This quarter, the Northeast saw relatively strong rental growth rates of 2%, with New Jersey and Boston outpacing New York. The Jersey City waterfront market, where nearly half of our properties are located, continues to be highly competitive compared to Manhattan and Brooklyn, with Class A rents reflecting approximately 30% and 12% discount to these markets, respectively. This is underscored by move-ins from Manhattan to our portfolio, which continued to exceed 20% in the first quarter.” —Mahbod Nia, CEO, Veris Residential

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