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Investing.com - Colliers Securities downgraded AvalonBay Communities (NYSE:AVB) from Buy to Neutral on Thursday, while also reducing its price target to $195.00 from $200.00. The prominent residential REIT, with a market capitalization of $25.67 billion, has seen its stock trading at $181.52.
The downgrade comes as Colliers views the residential real estate investment trust as "fairly valued," noting that AvalonBay currently trades at the second-highest multiple in its peer group at 15.4x compared to the apartment sector average of 14.3x.
Colliers also pointed out that AvalonBay trades at a smaller discount to Net Asset Value (NAV) at 18% versus the apartment sector’s average discount of 21%, further supporting the valuation-based downgrade.
The research firm expressed concern that AvalonBay’s increased exposure to Sunbelt markets could negatively impact short-term earnings, as these regions continue to experience high levels of new property deliveries.
Colliers also noted AvalonBay’s strategic focus on opportunistic acquisitions and prioritization of development projects, which the firm cautioned introduces lease-up risk and longer lead times for revenue generation.
In other recent news, AvalonBay Communities announced the completion of a $400 million senior notes offering, with net proceeds expected to be approximately $396.5 million. The notes, due in 2030, will pay interest semi-annually starting in 2026. Barclays upgraded AvalonBay Communities from Equalweight to Overweight, citing a more favorable growth outlook despite recent challenges. S&P Global Ratings also revised its outlook for AvalonBay to positive, highlighting the company’s strong balance sheet and operating performance. In the third quarter of 2025, AvalonBay reported a 2.3% year-over-year growth in same-store residential revenue and a 1.1% increase in net operating income. Additionally, Conor C. Flynn, CEO of Kimco Realty Corporation, joined AvalonBay’s Board of Directors as an independent director. Meanwhile, RBC Capital lowered its price target for AvalonBay to $197, pointing to weaker leasing performance and a significant late-year guidance cut.
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