Hedgeye - SUNDAY NIGHT REIT READ | 10.24.21

Big Week of Earnings: 3Q21 earnings reports start flooding in mid-week this week, and we are keeping a close eye on Best Idea Long AvalonBay AVB which reports results after the close on Wednesday, 10/27. We think the company likely beats the Street which is at Core FFO of $2.01 (Hedgeye at $2.05), but more importantly takes the FY21 range above the current $7.92 to $8.12 range (Hedgeye at $8.18). Residential SSNOI growth will be in the mid-single-digit negative range for FY21, but given the pace of sequential rental rate increases in AVB's key markets is likely to inflect positive for the first time in 5 quarters in 3Q21 (Hedgeye at +1%). We are modeling +14% residential SSNOI and nearly +18% Core FFO growth next year following a terrible 18-month stretch, and along with AMH, EQR, and ESS think AVB is one of the most interesting residential REITs we cover. EQR & ESS also report on 10/26, and EXR takes self-storage out of the gate on 10/27.

BISNOW - TOP-10 Manhattan Office Buildings w/ Largest Available Blocks

66 Hudson Blvd. - 1.14msf block
111 Wall Street - 1.04msf
5 Times Square - 990ksf
80 Pine Street - 870ksf
3 Times Square - 780ksf

Old Wall Journal - Tighter Warehouse Market Adds to Supply Chain Squeeze

CBRE group data showed that U.S. warehouse availability fell to a record low in 3Q21, with the vacancy rate down 70bp sequentially to 3.6%
Absorption exceed new supply by ~41msf in just 3Q21 - for historical context that is a HUGE number. We are just a few years removed from annual supply/demand being roughly in balance at around 200msf-250msf per year
Selected markets are even tighter, notably Los Angeles and Long Beach, where warehouse near the port complex reached just 1% vacancy versus 2.3% a year ago (VERY relevant for REXR)
High quality logistics space has been particularly difficult for shipping and logistics tenants to find near U.S. ports

Figure 1: REITs Position Monitor