Baron Real Estate Fund Exited AvalonBay Communities (AVB) Due to Less Favorable Economics

Baron Funds, an investment management company, released its “Baron Real Estate Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund rose 3.61% (Institutional Shares) in the quarter compared to a 1.46% decline for the MSCI US REIT Index (the REIT Index) and a 6.13% gain for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index). In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Real Estate Fund highlighted stocks such as AvalonBay Communities, Inc. (NYSE:AVB). AvalonBay Communities, Inc. (NYSE:AVB) is an equity REIT that develops, redevelops, acquires, and manages apartment communities. The one-month return of AvalonBay Communities, Inc. (NYSE:AVB) was -8.95%, and its shares lost 12.18% of their value over the last 52 weeks. On August 1, 2025, AvalonBay Communities, Inc. (NYSE:AVB) stock closed at $184.44 per share, with a market capitalization of $26.456 billion.

Baron Real Estate Fund stated the following regarding AvalonBay Communities, Inc. (NYSE:AVB) in its second quarter 2025 investor letter:

“We exited AvalonBay Communities, Inc. (NYSE:AVB) during the second quarter due to less favorable economics for development along with near term dilutive portfolio reshaping and modest growth prospects. We reallocated capital to higher conviction investment ideas.”

Is Avalonbay Communities, Inc. (AVB) the Best REIT Stock to Buy According to Billionaires?

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AvalonBay Communities, Inc. (NYSE:AVB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held AvalonBay Communities, Inc. (NYSE:AVB) at the end of the first quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of AvalonBay Communities, Inc. (NYSE:AVB) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVALONBAY COMMUNITIES, INC. (NYSE:AVB) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered AvalonBay Communities, Inc. (NYSE:AVB) and shared the list of best REIT stocks to buy according to billionaires. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.