The real estate industry is experiencing a period of transition, driven by evolving trends that present new opportunities for growth and recovery. So, I present solid stocks AvalonBay Communities, Inc. (AVB), RE/MAX (RMAX), and Equity Residential (EQR), which are well-positioned to capitalize on these trends, benefiting from the increasing demand for modern living and working spaces.
There is a noticeable shift toward modernizing office spaces with wellness-focused amenities, as well as a growing demand for housing catering to senior citizens. These changes reflect a broader shift in supply dynamics, with new housing and office developments leading the way. Additionally, the impact of interest rate cuts by the Federal Reserve is expected to facilitate market activity and increase transaction volumes.
As the market continues to recover, the global real estate market is projected to grow at a CAGR of 2.8%, reaching a market volume of $727.80 trillion by 2029.
Considering these conducive trends, let’s examine the above-mentioned Real Estate stocks in detail.
AvalonBay Communities, Inc. (AVB)
AVB, a leading equity REIT and S&P 500 member, specializes in developing, acquiring, and managing high-quality apartment communities. Catering primarily to urban residents and renters, AvalonBay provides premium living spaces across major U.S. metropolitan areas.
AVB’s revenue has grown at a CAGR of 8.8% over the past three years, and its normalized net income has risen at a CAGR of 24.4% over the same time frame.
On September 20, 2024, AVB, announced a third-quarter cash dividend of $1.70 per share on its common stock, payable on October 15, 2024. It pays an annual dividend of $6.80, which translates to a dividend yield of 2.9% at the prevailing price levels.
On September 5, AVB announced the pricing of an underwritten public offering of 3.2 million shares of common stock. This offering, linked to forward sale agreements, is expected to generate gross proceeds of about $710.4 million.
During the fiscal third quarter that ended September 30, 2024, AVB’s total revenue increased 5.3% year-over-year to $734.31 million. In addition, the company’s net income attributable to common stockholders and core FFO came in at $372.52 million and $2.74, up 116.5% and 3% over the prior-year quarter, respectively.
Analysts expect AVB’s FFO and revenue for the fourth quarter ending December 31, 2024, to increase 3.4% and 5.3% year-over-year to $2.83 and $740.14 million, respectively. It surpassed the Street revenue estimates in each of the trailing four quarters, which is promising.
Over the past year, the stock has gained 40.5% to close the last trading session at $232.21. It soared 24% year-to-date.
AVB’s POWR Ratings reflect its robust outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
AVB has a B grade in Sentiment, and Stability. It is ranked #5 out of 20 stocks in the REITs - Residential industry.
Beyond what we have stated above, we also have given AVB grades for Momentum, Growth, Value, and Quality. Get all the AVB’s ratings here.
RE/MAX Holdings, Inc. (RMAX)
RMAX is a global franchisor in the real estate industry, offering brokerage services under the RE/MAX brand, mortgage solutions through Motto Mortgage, and loan processing with the wemlo software. It also provides the kvCORE platform for managing client relationships and RE/MAX University for professional development of agents and brokers.
RMAX’s revenue has grown at CAGR of 3.31% over the past five years.
On July 9, 2024, BOSSCAT announced a new partnership with RMAX as an approved supplier. This collaboration provides RE/MAX's 75,000 agents across the U.S. and Canada.
In the fiscal third quarter ended September 30, 2024, RMAX’s reported revenue $78.48 million. Its operating income was $15.21 million, compared to a loss of $21 million in the prior year quarter. Moreover, its net income and EPS stood at $3.41 million and $0.05, respectively, compared to a loss of $82.67 million and $3.28, respectively in the prior year quarter.
Street expects ’s revenue and FFO for the quarter ending December 31, 2024, to be $75.06 million and $0.05, respectively. It surpassed the consensus revenue estimates in three of the trailing four quarters.
The stock climbed 24.2% over six months and has returned 34.5% over the past year to close the last trading session at $12.08.
RMAX’s POWR Ratings reflect strong prospects. It has a B for Growth and Value. It is ranked #6 out of 47 stocks in the Real Estate Services industry.
To access RMAX’s Momentum, Stability, Sentiment, and Quality ratings, click here.
Equity Residential (EQR)
EQR is dedicated to developing and managing premium residential properties that foster thriving communities. Focused on affluent, long-term renters, it operates 299 properties with nearly 80,000 apartment units in key U.S. cities like New York, Boston, and San Francisco and is expanding into markets such as Denver, Atlanta, and Austin.
EQR’s revenue has grown at a CAGR of 6.5% over the past three years, and its normalized net income has risen at a CAGR of 36.1% over the same time frame.
On August 7, 2024, EQR announced a $964 million acquisition of 11 apartment properties from the Blackstone Group Inc. (BX), expanding its footprint in growth markets like Atlanta, Dallas/Ft. Worth, and Denver. This strategic move aims to increase the company's income from these high-growth areas.
It pays an annual dividend of $2.70, which translates to a dividend yield of 3.7% at the prevailing price levels.
EQR’s rental income increased 3.4% year-over-year to $748.35 million in the fiscal 2024 third quarter that ended on September 30, 2024. Its net income came in at $148.52 million, while its normalized FFO increased by 2.1% from the year-ago value to $0.98.
Street expects EQR’s revenue for the fiscal fourth quarter (ending December 2024) to increase 3.3% year-over-year to $751.35 million. Its FFO for the same quarter is expected to grow 0.6% from the prior year to $1.01. In addition, it surpassed the consensus FFO estimates in each of the trailing four quarters.
Shares of EQR have gained 36.7% over the past year and 20.2% over the past year to close the last trading session at $73.50.
EQR’s bright prospects are apparent in its POWR Ratings.
It has a B grade for Stability. Within the REITs - Residential industry, it is ranked #10.
Click here to see EQR’s ratings for Growth, Value, Momentum, Sentiment, and Quality.
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AVB shares were unchanged in premarket trading Tuesday. Year-to-date, AVB has gained 27.21%, versus a 27.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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