Equity Residential’s first-quarter profit declined 32% on higher expenses, as the real estate investment trust reported lower rental rates but an increase in occupancy.
Looking ahead, Equity Residential sees second-quarter funds from operations — a key profitability measure for REITs — of 53 cents to 57 cents a share. Analysts expected 52 cents, according to Thomson Reuters.
Shares rose 8 cents to $44 in after-hours trading. The stock is up about
a third this year.
The country’s largest apartment dwelling developer and manager has an
enviable liquidity position–which it has tapped for larger purchases in
New York City and the District of Columbia. Meanwhile, the company’s
senior management has a solid track record of buying effectively at the
bottom of the cycle, according to BMO Capital Markets.
President and Chief Executive David Neithercut said Wednesday the
company was encouraged by the improving fundamentals seen across all of
its markets. If trends continue, Neithercut said the company sees
sequential same-store revenue growth as soon as the second quarter,
while adding the company’s full-year estimates should reach the upper
end of their targeted ranges.
Equity Residential posted a profit of $57.9 million, or 18 cents a
share, down from $85.4 million, or 28 cents a share, a year earlier. FFO
declined to 49 cents from 57 cents, but would have been 51 cents
excluding acquisition- and unexpected storm-related costs. In February,
it projected 48 cents to 52 cents.
Revenue climbed 1.2% to $488.7 million. Wall Street expected $479
Same-store revenue, which include 117,512 apartment units, dropped 2.9%
on a 3.9% decrease in the average rental rate. Occupancy climbed one
percentage point during the quarter.
The company sold eight properties during the quarter, consisting of
2,011 apartment units, for an aggregate sale price of $145.9 million. It
also acquired six properties, consisting of 1,467 units, for an
aggregate sale price of $639.3 million.