UPDATE: Key Banc Downgrades AvalonBay to Underweight, PT at $114

Key Banc downgrades its rating on AvalonBay AVB to Underweight from Hold with a $114 downside price target on concern of valuation reaching premium level, especially in light of possible fundamental weakness in 2012. Key Banc says, "Our downgrade also reflects our expectation of multiple convergence between high and low multiple names. We suspect that several of AVB's “high octane” markets may suffer from difficult rent comps with stable to declining economic demand (i.e., Washington, D.C., New York, Seattle). Additionally, it appears that many of AVB's markets that are considered supply-constrained are in fact seeing fairly robust levels of new supply. This supply could have a particularly negative impact on AVB, to the extent that the Company has the largest development lease-up exposure in the space with fairly aggressive underwriting assumptions." AVB closed at 127.53 per share on Wednesday.