New York–AvalonBay Communities Chairman and CEO Bryce Blair affirmed at ReitWeek that he made the decision to step down as CEO for personal reasons.
“First and foremost I just want to clarify that this was absolutely a decision initiated by me. … After 26 years at one company and 10 years as CEO, I just felt it was the right time—the right time for me, the right time for the company, and importantly, the right time for Tim [AvalonBay President Timothy J. Naughton],” said Blair, who was speaking at an AvalonBay company presentation at the National Association of Real Estate Investment Trusts’ (NAREIT) 2011 Investor Forum held in New York.
AvalonBay announced earlier that Blair will retire as CEO at the end of the year. Blair will continue to serve as chairman of the board for AvalonBay through 2012. During 2012, Blair will devote at least half his work time particularly with respect to development and construction activities.
Blair says he will have “additional management responsibilities in a half-time capacity” working “principally in the area of development and construction given the amount of activity we have in that area.”
AvalonBay has earlier revised its corporate results upwards. The company now expects FFO growth on a year-over-year basis for 2011 of more than 19 percent, said Bryce. He said the growth is driven by portfolio performance as well as increased investment and development activities. Same-store revenues increased by 4.6 percent in May, driven largely by an average rate increase of 5.1 percent, said Naughton. “The improvements we’ve seen in apartment fundamentals continued through May,” said Naughton.
Panel Moderator, Andrew McCulloch, who is senior analyst at green Street Advisors Inc., congratulated Blair for AvalonBay’s average total annual return of 16 percent since Blair took over as CEO in 2011. McCulloch said this figure compares with an average annual return of 2 percent for the S&P 500.
Naughton said AvalonBay’s investment strategy remains unchanged. “We do think this is a very good time to put capital to work. We are really active on all fronts.” AvalonBay expects to deliver 400 million new apartments this year. It plans to start redevelopment on $100 million of existing portfolio assets, and $900 million in new development, Naughton said.
Naughton also noted there is additional room for rent increases in AvalonBay properties as residents currently pay about 20 percent of their incomes in rent, compared with a long-term average of 20 to 21 percent. “There is a bit of opportunity there,” he said. As rents continue to be pushed, some of the lower income residents will vacate.
Blair says of the timing, “What better time to do it than from a position of strength, when the industry is strong, which it is, when our company’s competitive position has frankly never been stronger. This is particularly an opportune time.”