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Equity Residential (EQR - Free Report) reported second-quarter 2024 normalized funds from operations (FFO) per share of 97 cents, which surpassed the Zacks Consensus Estimate of 96 cents. The quarterly rental income of $734.16 million also marginally beat the consensus mark of $734.14 million.
Results reflect decent same-store performances, backed by healthy demand, modest supply and a focus on expense efficiency. The company also raised its 2024 guidance.
On a year-over-year basis, the normalized FFO per share grew 3.2%, with rental income climbing 2.3%.
According to Mark J. Parrell, Equity Residential’s president and CEO, "Our portfolio continues to benefit from steady demand from our well-employed, higher earning renter demographic, elevated single family housing costs and manageable new apartment supply across most of our markets.”
Quarter in Detail
Same-store revenues were up 2.9% year over year, driven by healthy demand and modest supply across most of the company’s markets. Same-store expenses rose 2.7%, with low growth in its primary expense categories. Consequently, the same-store net operating income (NOI) climbed 3% year over year.
The average rental rate rose 2.5% year over year to $3,107 in the quarter ended June. Meanwhile, the physical occupancy increased 50 basis points year over year for the same-store portfolio to 96.4%. Our estimate for the metric was 96%. EQR had a same-store turnover of 11.7% for the second quarter.
Same-store residential revenues were up 3% year over year. The new lease change for its residential same-store properties was up 0.2%, and the renewal rate achieved by EQR was 5% for the second quarter. The blended rate for the quarter was 2.9%, up from 1.6% in the first quarter. The physical occupancy for this portfolio was 96.4%, up 10 basis points sequentially.
During the second quarter of 2024, the company acquired a 160-apartment unit property, located in suburban Boston and completed in 2023, for $62.6 million at an acquisition cap rate of 5.7%. During the same period, EQR sold two properties — one in suburban Washington, D.C. and one in San Francisco — comprising 327 total apartment units for a total of $85.5 million at a weighted average disposition yield of 6.2%. The average age of the properties sold was around 35 years.
Balance Sheet
Equity Residential exited the second quarter of 2024 with cash and cash equivalents of $38.3 million, down from the $44.5 million recorded at the end of the first quarter of 2024.
The net debt to normalized EBITDAre was 3.92X, which decreased from 3.97X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 89.6% in the quarter, similar to the prior quarter.
Guidance
For full-year 2024, Equity Residential raised its outlook for normalized FFO per share from its previous guidance. The company now projects normalized FFO per share in the band of $3.86-$3.92 compared with the previous guided range of $3.80-$3.90. The Zacks Consensus Estimate is currently pegged at $4.00.
The company’s guidance incorporated projections for its same-store revenues in the range of 2.9-3.5%, up from the previously guided range of 2-3%. The rise was driven by better physical occupancy and blended rate. The company lowered the guidance for its same-store expenses range to 2.5-3.5% from 3.5-4.5% guided earlier. It increased the guidance for its same-store NOI range to 3-3.5% from 1.0-2.6% guided earlier.
Equity Residential also revised the guidance for physical occupancy for full-year 2024 to 96.2% from the earlier guidance of 95.9%.
The company expects the third-quarter 2024 blended rate to increase between 2% and 3%, which implies typical seasonal moderation after the prime leasing season.
Upcoming Earnings Releases of Other Residential REITs
We now look forward to the earnings releases of residential REITs like AvalonBay Communities, Inc. (AVB - Free Report) , Essex Property Trust, Inc. (ESS - Free Report) and UDR Inc. (UDR - Free Report) . While AvalonBay is scheduled to report on Jul 31, both UDR and Essex Property Trust are slated for Jul 30.
The Zacks Consensus Estimate for AvalonBay’s second-quarter 2024 FFO per share is pegged at $2.71, which implies a 1.9% year-over-year increase. AVB currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Essex Property Trust’s second-quarter 2024 FFO per share is pegged at $3.85, which suggests 2.1% growth year over year. ESS currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for UDR’s second-quarter 2024 FFO per share stands at 61 cents, similar to the year-ago comparable period. UDR currently has a Zacks Rank #2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Equity Residential (EQR) Q2 FFO Beats Estimates, '24 View Raised
Equity Residential (EQR - Free Report) reported second-quarter 2024 normalized funds from operations (FFO) per share of 97 cents, which surpassed the Zacks Consensus Estimate of 96 cents. The quarterly rental income of $734.16 million also marginally beat the consensus mark of $734.14 million.
Results reflect decent same-store performances, backed by healthy demand, modest supply and a focus on expense efficiency. The company also raised its 2024 guidance.
On a year-over-year basis, the normalized FFO per share grew 3.2%, with rental income climbing 2.3%.
According to Mark J. Parrell, Equity Residential’s president and CEO, "Our portfolio continues to benefit from steady demand from our well-employed, higher earning renter demographic, elevated single family housing costs and manageable new apartment supply across most of our markets.”
Quarter in Detail
Same-store revenues were up 2.9% year over year, driven by healthy demand and modest supply across most of the company’s markets. Same-store expenses rose 2.7%, with low growth in its primary expense categories. Consequently, the same-store net operating income (NOI) climbed 3% year over year.
The average rental rate rose 2.5% year over year to $3,107 in the quarter ended June. Meanwhile, the physical occupancy increased 50 basis points year over year for the same-store portfolio to 96.4%. Our estimate for the metric was 96%. EQR had a same-store turnover of 11.7% for the second quarter.
Same-store residential revenues were up 3% year over year. The new lease change for its residential same-store properties was up 0.2%, and the renewal rate achieved by EQR was 5% for the second quarter. The blended rate for the quarter was 2.9%, up from 1.6% in the first quarter. The physical occupancy for this portfolio was 96.4%, up 10 basis points sequentially.
During the second quarter of 2024, the company acquired a 160-apartment unit property, located in suburban Boston and completed in 2023, for $62.6 million at an acquisition cap rate of 5.7%. During the same period, EQR sold two properties — one in suburban Washington, D.C. and one in San Francisco — comprising 327 total apartment units for a total of $85.5 million at a weighted average disposition yield of 6.2%. The average age of the properties sold was around 35 years.
Balance Sheet
Equity Residential exited the second quarter of 2024 with cash and cash equivalents of $38.3 million, down from the $44.5 million recorded at the end of the first quarter of 2024.
The net debt to normalized EBITDAre was 3.92X, which decreased from 3.97X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 89.6% in the quarter, similar to the prior quarter.
Guidance
For full-year 2024, Equity Residential raised its outlook for normalized FFO per share from its previous guidance. The company now projects normalized FFO per share in the band of $3.86-$3.92 compared with the previous guided range of $3.80-$3.90. The Zacks Consensus Estimate is currently pegged at $4.00.
The company’s guidance incorporated projections for its same-store revenues in the range of 2.9-3.5%, up from the previously guided range of 2-3%. The rise was driven by better physical occupancy and blended rate. The company lowered the guidance for its same-store expenses range to 2.5-3.5% from 3.5-4.5% guided earlier. It increased the guidance for its same-store NOI range to 3-3.5% from 1.0-2.6% guided earlier.
Equity Residential also revised the guidance for physical occupancy for full-year 2024 to 96.2% from the earlier guidance of 95.9%.
The company expects the third-quarter 2024 blended rate to increase between 2% and 3%, which implies typical seasonal moderation after the prime leasing season.
Equity Residential currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Equity Residential Price, Consensus and EPS Surprise
Equity Residential price-consensus-eps-surprise-chart | Equity Residential Quote
Upcoming Earnings Releases of Other Residential REITs
We now look forward to the earnings releases of residential REITs like AvalonBay Communities, Inc. (AVB - Free Report) , Essex Property Trust, Inc. (ESS - Free Report) and UDR Inc. (UDR - Free Report) . While AvalonBay is scheduled to report on Jul 31, both UDR and Essex Property Trust are slated for Jul 30.
The Zacks Consensus Estimate for AvalonBay’s second-quarter 2024 FFO per share is pegged at $2.71, which implies a 1.9% year-over-year increase. AVB currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Essex Property Trust’s second-quarter 2024 FFO per share is pegged at $3.85, which suggests 2.1% growth year over year. ESS currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for UDR’s second-quarter 2024 FFO per share stands at 61 cents, similar to the year-ago comparable period. UDR currently has a Zacks Rank #2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.