Vivmark Touts Integration and Growth in First Quarterly Earnings Call

Oh, it’s good to be the nation’s largest publicly traded apartment owner

Vivmark Residential, the real estate investment trust (REIT) formed earlier this year by the thunderclap merger between AvalonBay Communities and Equity Residential, turned in its first quarterly report card on Thursday.

The results were as hefty as you might expect for a company with more than 184,000 apartments in high-priced markets such as the San Francisco, Washington, D.C., Boston and New York areas and a $4.4 billion development pipeline.

Executives on Thursday’s earnings call credited a better-than-expected integration of Equity Residential and AvalonBay for the results. As a sign of that smoother integration, the REIT said its merger-related costs were running around $725 million, or $25 million below an initial estimate.

“Our primary focus right now is on execution — execution of the underlying business and execution of our integration,” Benjamin Schall, Vivmark’s CEO and president (who held identical positions at AvalonBay), said on the call. “The term I use internally is ‘We need to get the core right.’”

Schall also said that the company planned to scale relatively fast.

“We have defined our vision as Vivmark Residential is going to be the most trusted and best-performing rental housing company in the country,” he said.

Vivmark reported $1.19 billion in revenue for the third quarter, and its net operating income was $800.76 million despite a more than $747 million loss for the quarter. Funds from operations (FFO) — a measure of a REIT’s cash flow — was 8 cents a share, and its core FFO was $1.03 a share.

The results covered Vivmark’s performance following the mid-August closing of the merger, and AvalonBay’s performance alone in the two-plus weeks before that. (AvalonBay was the accounting acquirer under the deal.) Executives on the earnings call stressed that the fourth quarter would be the first complete one for Vivmark — which is headquartered in Arlington, Va., and Chicago — and the best starting benchmark for the company.

Vivmark’s portfolio is basically fully leased: The REIT reported a 95.8 percent occupancy for the quarter, and turnover was a low 12.7 percent. Executives said that rents were up, too, driven by familiar trends. One such trend was that in regions where Vivmark operates, it’s about $1,900 cheaper a month to rent rather than to own, according to the company.

There’s also little new multifamily development in the regions where Vivmark operates. The REIT estimates new deliveries in those areas in 2027 will total about 1.2 percent of existing stock.

Vivmark finished two wholly owned projects during the quarter totaling 761 apartments. It has one underway with 281 more.

Tom Acitelli can be reached at tacitelli@commercialobserver.com.

Source: commercialobserver.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.