AvalonBay And Terra Buy A Redevelopment Project In Doral
Zacks Investment Research | May 22, 2018 11:44PM ET
AvalonBay Communities (NYSE:AVB) , along with Terra, which is a development firm based in Florida, has purchased portions of a redevelopment project in Doral for $33.5 million, as a report by the Bizjournal.
Presently, the property has offices spanning 136,892 square feet and a 4,322-square-feet restaurant. Both of these will be knocked down to build a mixed-use project named Atrium.
The company plans to construct 350 apartments in an eight-storied building. An affiliate of AvalonBay, Avalon Doral LLC has purchased the land, spanning 4.57 acres, for $20 million. Stantic is the architect for this project.
Moreover, the other 5.23 acres were bought by an affiliate of Terra called Doral Atrium Retail Investments for $13.5 million and they plan to construct retail space covering 90,000 square feet. This space will be developed by Beame Architectural Partnership.
Notably, AvalonBay has high-quality assets located in some of the premium markets of the country, which enable it to generate steady rental revenues. In fact, in 2017, the company delivered the seventh consecutive year of above-sector average core FFO per share growth. Going forward, based on the company’s strong fundamentals, we expect the uptrend to continue.
Further, increasing consumer confidence on the back of job growth, rising wages and a healthier balance sheet promise solid prospects for AvalonBay. Additionally, corporate profits are up and business confidence has recovered. Also, demographic growth continues to be strong in the young-adult age cohort, which has a higher propensity to rent.
In fact, a significant change in lifestyle has taken place and life-cycle events are getting delayed. This is leading to an extension of the average age of first-time homeownership. This age cohort has also experienced a considerable part of the net job growth and is helping to increase primary renter demand. Household formation is picking up pace as well.
Nonetheless, the company faces stiff competition from other housing alternatives such as rental apartments, condominiums and single-family homes. Such a competitive landscape limits AvalonBay’s ability to increase rent, thereby restricting its growth momentum.
AvalonBay currently has a Zacks Rank #3 (Hold). Shares of the company have decreased 12.3% in the past six months, underperforming the Zacks Investment Research
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