On this page of StockholderLetter.com we present the latest annual shareholder letter from AVALONBAY COMMUNITIES INC — ticker symbol AVB. Reading current and past AVB letters to shareholders can bring important insights into the investment thesis.
2025 ANNUAL REPORT
Dear AvalonBay Shareholders, I want to begin by expressing my deep gratitude to our more than 3,000 associates. Their commitment to our culture anchored in integrity, a spirit of caring, and continuous improvement is evident in the services we provide our residents, in how associates support each other, and in the discipline with which we manage our business every day. I turn rst to our 2025 results, then to our 2026 outlook and the competitive strengths that position AvalonBay for di erentiated growth in the years ahead. 2025: Resilient Operating Results and Investing for Future Growth Our portfolio quality and positioning allowed us to deliver revenue and earnings growth in 2025 toward the top of the sector achieving Same Store Residential Revenue growth of 2.5%, Same Store Residential NOI growth of 1.9%, and Core FFO per share growth of 2.1%. In a year of elevated macroeconomic uncertainty and below average job growth, we were focused on delivering for and retaining our existing customers. With that daily focus, our teams achieved a company record for Net Promoter Scores with residents, which directly contributed to record high resident retention. We also made signi cant investments in future growth via two hallmarks of AvalonBay: our balance sheet strength and our industry-leading Development capabilities. Highlights of our capital sourcing and capital allocation in 2025 included: We sourced $2.5 billion of capital at a 5.0% Weighted Average Initial Cost of Capital.1 We started $1.65 billion of new Development the second-largest start year in our history at projected yields with a meaningful spread to both our cost of capital and underlying market cap rates. - Our regional Development teams surfaced a rich set of opportunities that, in addition to meeting our expected return requirements, will advance our portfolio allocation and product objectives. - Our construction teams drove favorable construction cost outcomes, leveraging our scale and purchasing power, to deliver high quality assets at an attractive investment cost basis. At year end, we had $3.6 billion of Development Underway. We expect this pipeline to generate substantial earnings and value creation in the years ahead. We also chose to repurchase almost $490 million of our stock in 2025, capitalizing on the divergence between public and private market apartment valuations. With this repurchase activity and normal course dividends of $1.0 billion, we returned nearly $1.5 billion to stockholders last year. 2026 and Our Strengths Looking Ahead On February 4, 2026, we published our nancial outlook for 2026, which assumed modest Same Store residential revenue growth of 1.4% and Core FFO per share growth of 0.1%.2 This outlook re ects the continuation of a relatively soft demand environment for apartments, informed by limited 1
new job growth currently projected by economists in 2026. As the year progresses, we expect operating fundamentals in our markets to increasingly bene t from declining new supply. Our Established Regions are particularly well situated with expected deliveries of new supply equivalent to only 80 basis points of stock. On the investment side, we have raised return targets for new Developments given the increase in our cost of capital, and expect to start $800 million of new Development at projected Initial Stabilized Yields of 6.5 7.0% during the year. While we expect growth to be modest this year, we are con dent that our sector fundamentals, strategic capabilities and initiatives, and nancial strength position us to deliver superior growth for shareholders in the years ahead. Let me walk you through what I believe positions AvalonBay well for our next phases of growth. Structural forces support rental housing fundamentals. Forty- ve million American households choose to rent their home in apartments or other rental housing. Adults in the U.S. continue to marry later, resulting in many extending their timespans as renters. In our Established Regions, the cost advantage of renting versus owning a home exceeds $2,000 per month. New apartment supply is at historically low levels and should remain low for the foreseeable future, particularly in our Established Regions given the entitlement and permitting constraints. These are durable, structural tailwinds. Our operational transformation is delivering higher quality service for residents at a lower operational cost. The progress here is real and accelerating. With our scale and long-term ownership orientation, we continue to make signi cant investments via our operating model transformation - to improve the resident experience and drive operational e iciencies. Our investments in technology, including AI, along with our centralized service capabilities, are o ering digital and self-serve functionality that customers expect, in addition to the high-quality service that residents receive from our local teams. Furthermore, we expect to deliver an additional $7 million of Incremental NOI from these operating initiatives this year, approaching ~70% of our long-term target of $80 million of recurring, annual Incremental NOI from these initiatives. Our unique Development platform is expected to generate outsized earnings and value creation. In the past two years, we started $2.7 billion of new Development at projected Initial Stabilized Yields in the low-6% range, well above our initial cost of capital of ~5%. We ended 2025 with $3.6 billion of Development Underway, representing over 10% of our Enterprise Value. We expect an earnings ramp from this pipeline: $47 million of projected Development NOI in 2026, accelerating to $75 million in 2027. These projects are already under construction, substantially match-funded, and conservatively underwritten based on un-trended rents. We expect this vintage of Development to deliver into one of the most favorable supply environments we have seen in years. As we pursue new Development, the competitive environment is in our favor. As merchant builders have pulled back constrained by elevated capital costs we are sourcing better land, better terms, and better anticipated returns. 2
We allocate capital with discipline across the full cycle. Our disciplined approach to capital allocation is a core part of how we create value for shareholders. When yields and basis on Development are attractive, we lean into new Development. When public market valuations diverge from private market pricing, as they did in 2025, we are positioned to also buy back our stock e ectively buying our existing portfolio at an attractive yield. When individual assets no longer meet growth expectations or t our long-term portfolio objectives, we sell and redeploy capital into higherreturning opportunities. Our preeminent balance sheet provides us with the nancial strength and exibility to invest in growth when others cannot. The platform we have built diversi ed, disciplined, and nancially strong positions AvalonBay to perform across cycles and deliver di erentiated growth over the long term. Thank you for your continued support and engagement. Sincerely, Benjamin W. Schall hief xecutive O icer and resident 3
 • shareholder letter icon 4/6/2026 Letter Continued (Full PDF)
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 • stockholder letter icon 3/28/2024 AVB Stockholder Letter
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 • Benford's Law Stocks icon AVB Benford's Law Stock Score = 77


AVB Shareholder/Stockholder Letter Transcript:

2025
ANNUAL REPORT


Dear AvalonBay Shareholders,
I want to begin by expressing my deep gratitude to our more than 3,000 associates. Their commitment
to our culture     anchored in integrity, a spirit of caring, and continuous improvement     is evident in
the services we provide our residents, in how associates support each other, and in the discipline
with which we manage our business every day.
I turn    rst to our 2025 results, then to our 2026 outlook and the competitive strengths that position
AvalonBay for di   erentiated growth in the years ahead.
2025: Resilient Operating Results and Investing for Future Growth
Our portfolio quality and positioning allowed us to deliver revenue and earnings growth in 2025
toward the top of the sector     achieving Same Store Residential Revenue growth of 2.5%, Same Store
Residential NOI growth of 1.9%, and Core FFO per share growth of 2.1%. In a year of elevated
macroeconomic uncertainty and below average job growth, we were focused on delivering for and
retaining our existing customers. With that daily focus, our teams achieved a company record for Net
Promoter Scores with residents, which directly contributed to record high resident retention.
We also made signi   cant investments in future growth via two hallmarks of AvalonBay: our balance
sheet strength and our industry-leading Development capabilities. Highlights of our capital sourcing
and capital allocation in 2025 included:



We sourced $2.5 billion of capital at a 5.0% Weighted Average Initial Cost of Capital.1
We started $1.65 billion of new Development     the second-largest start year in our history    
at projected yields with a meaningful spread to both our cost of capital and underlying market
cap rates.
- Our regional Development teams surfaced a rich set of opportunities that, in addition
to meeting our expected return requirements, will advance our portfolio allocation
and product objectives.
- Our construction teams drove favorable construction cost outcomes, leveraging our
scale and purchasing power, to deliver high quality assets at an attractive investment
cost basis.
At year end, we had $3.6 billion of Development Underway. We expect this pipeline to
generate substantial earnings and value creation in the years ahead.
We also chose to repurchase almost $490 million of our stock in 2025, capitalizing on the
divergence between public and private market apartment valuations. With this repurchase
activity and normal course dividends of $1.0 billion, we returned nearly $1.5 billion to
stockholders last year.
2026 and Our Strengths Looking Ahead
On February 4, 2026, we published our    nancial outlook for 2026, which assumed modest Same
Store residential revenue growth of 1.4% and Core FFO per share growth of 0.1%.2 This outlook
re   ects the continuation of a relatively soft demand environment for apartments, informed by limited
1

new job growth currently projected by economists in 2026. As the year progresses, we expect
operating fundamentals in our markets to increasingly bene   t from declining new supply. Our
Established Regions are particularly well situated with expected deliveries of new supply equivalent
to only 80 basis points of stock.
On the investment side, we have raised return targets for new Developments given the increase in
our cost of capital, and expect to start $800 million of new Development at projected Initial Stabilized
Yields of 6.5   7.0% during the year.
While we expect growth to be modest this year, we are con   dent that our sector fundamentals,
strategic capabilities and initiatives, and    nancial strength position us to deliver superior growth for
shareholders in the years ahead. Let me walk you through what I believe positions AvalonBay well for
our next phases of growth.
Structural forces support rental housing fundamentals. Forty-   ve million American households
choose to rent their home   in apartments or other rental housing. Adults in the U.S. continue to
marry later, resulting in many extending their timespans as renters. In our Established Regions, the
cost advantage of renting versus owning a home exceeds $2,000 per month. New apartment supply
is at historically low levels and should remain low for the foreseeable future, particularly in our
Established Regions given the entitlement and permitting constraints. These are durable, structural
tailwinds.
Our operational transformation is delivering higher quality service for residents at a lower
operational cost. The progress here is real and accelerating. With our scale and long-term
ownership orientation, we continue to make signi   cant investments     via our operating model
transformation - to improve the resident experience and drive operational e   iciencies. Our
investments in technology, including AI, along with our centralized service capabilities, are o   ering
digital and self-serve functionality that customers expect, in addition to the high-quality service that
residents receive from our local teams. Furthermore, we expect to deliver an additional $7 million of
Incremental NOI from these operating initiatives this year, approaching ~70% of our long-term target
of $80 million of recurring, annual Incremental NOI from these initiatives.
Our unique Development platform is expected to generate outsized earnings and value
creation. In the past two years, we started $2.7 billion of new Development at projected Initial
Stabilized Yields in the low-6% range, well above our initial cost of capital of ~5%. We ended 2025
with $3.6 billion of Development Underway, representing over 10% of our Enterprise Value. We
expect an earnings ramp from this pipeline: $47 million of projected Development NOI in 2026,
accelerating to $75 million in 2027. These projects are already under construction, substantially
match-funded, and conservatively underwritten based on un-trended rents. We expect this vintage
of Development to deliver into one of the most favorable supply environments we have seen in years.
As we pursue new Development, the competitive environment is in our favor. As merchant builders
have pulled back   constrained by elevated capital costs   we are sourcing better land, better terms,
and better anticipated returns.
2

We allocate capital with discipline across the full cycle. Our disciplined approach to capital
allocation is a core part of how we create value for shareholders. When yields and basis on
Development are attractive, we lean into new Development. When public market valuations diverge
from private market pricing, as they did in 2025, we are positioned to also buy back our stock    
e   ectively buying our existing portfolio at an attractive yield. When individual assets no longer meet
growth expectations or    t our long-term portfolio objectives, we sell and redeploy capital into higherreturning opportunities. Our preeminent balance sheet provides us with the    nancial strength and
   exibility to invest in growth when others cannot.
The platform we have built   diversi   ed, disciplined, and    nancially strong   positions AvalonBay to
perform across cycles and deliver di   erentiated growth over the long term. Thank you for your
continued support and engagement.
Sincerely,
Benjamin W. Schall
   hief    xecutive O   icer and    resident
3


shareholder letter icon 4/6/2026 Letter Continued (Full PDF)
 

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