Equity Residential EQR reported third-quarter 2024 normalized funds from operations (FFO) per share of 98 cents, in line with the Zacks Consensus Estimate. On a year-over-year basis, the normalized FFO per share grew 2.1%.
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Results reflect decent same-store performances, backed by healthy demand amid modest supply. The company revised its 2024 guidance.
The quarterly rental income of $748.3 million surpassed the Zacks Consensus Estimate marginally. The same grew by 3.4% year over year.
According to Mark J. Parrell, Equity Residential’s president and CEO, "Our business continues to benefit from high employment levels among our well earning resident base, wage growth across the economy and limited home ownership and rental options in most of our markets, making our well-located apartment properties an appealing choice.”
EQR’s Q3 in Detail
Same-store revenues were up 2.7% year over year, driven by healthy demand and modest supply across most of the company’s markets. Same-store expenses rose 3.2%, with low growth in the primary expense categories. The same-store net operating income (NOI) climbed 2.5% year over year.
The same-store portfolio’s average rental rate rose 2.4% year over year to $3,132 in the quarter ended September. Meanwhile, physical occupancy increased 10 basis points year over year for the same-store portfolio to 96.1%. Our estimate for the metric was 96.2%. EQR had a same-store turnover of 13.3% for the third quarter.
Same-store residential cash revenues were up 2.6% year over year. The new lease change for its residential same-store properties was down 1.2%, and the renewal rate achieved by EQR was 4.6% for the third quarter. The blended rate for the quarter was 2%, down from 2.9% in the second quarter. The weighted average physical occupancy for this portfolio was 96.1%, down 20 basis points sequentially.
During the third quarter of 2024, the company acquired 14 properties, with 4,418 apartment units, for $1.26 billion at a weighted average acquisition cap rate of 5.1%. These assets are located in the company’s expansion markets of Atlanta, Dallas/Ft. Worth and Denver.
EQR’s Balance Sheet
Equity Residential exited the third quarter of 2024 with cash and cash equivalents of $28.6 million, down from the $38.3 million recorded at the end of the second quarter of 2024.
The net debt to normalized EBITDAre was 4.56X, which increased from 3.92X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 89.7% in the quarter, increasing by 10 bps sequentially.
EQR’s 2024 Guidance
For the fourth quarter, EQR expects normalized FFO per share in the band of 98 cents-$1.02. The Zacks Consensus Estimate for the same is pegged at 98 cents.
For full-year 2024, Equity Residential revised its outlook for normalized FFO per share to the band of $3.87-$3.91 from its previous guided band of $3.86-$3.92. The Zacks Consensus Estimate is currently pegged at $3.89, which is within the guided range.
Equity Residential currently carries a Zacks Rank #3 (Hold). 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
We now look forward to the earnings releases of other REITs, such as AvalonBay Communities AVB and Vornado Realty Trust VNO, both of which are slated to report on Nov. 4.
The Zacks Consensus Estimate for AvalonBay’s third-quarter 2024 FFO per share stands at $2.71, indicating a 1.9% increase year over year. AVB currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Vornado Realty Trust’s third-quarter 2024 FFO per share is pegged at 51 cents, implying a 22.7% year-over-year decline. VNO currently carries a Zacks Rank #3.
Note: Anything related to earningspresented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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