Equity Residential Q1 FFO Beats Estimates, Rental Income Rises Y/Y

Equity Residential EQR reported first-quarter 2025 normalized funds from operations (FFO) per share of 95 cents, which outpaced the Zacks Consensus Estimate of 93 cents. The figure also improved 2.2% from the year-ago quarter.

Results reflect a rise in same-store revenues and physical occupancy on a year-over-year basis. The company reaffirmed its guidance for 2025.

Rental income of $760.8 million missed the consensus mark of $766.8 million. Rental income was up 4.1% year over year.

According to Mark J. Parrell, Equity Residential’s president and CEO, “We are encouraged to begin the year with operating performance that exceeded our expectations and that leaves us well positioned going into our primary leasing season. We expect our business to be resilient in the face of heightened economic uncertainty. Demand, supply, and lifestyle preferences all favor our high-quality apartment rental business, and our diversified portfolio and efficient operating platform should maximize performance in any economic climate.”

EQR’s Q1 in Detail

Same-store revenues were up 2.2% year over year, above our estimate of 2%. Same-store expenses flared up 4.1% year over year versus our estimate of 2.2%. Consequently, same-store net operating income (NOI) climbed 1.3% year over year, below our estimate of 1.9%.

The average rental rate increased 2.4% year over year to $3,160 in the quarter ended March. Meanwhile, the same-store portfolio physical occupancy improved by 20 basis points (bps) year over year at 96.5%. Our estimate for the metric was 96.1%.

Same-store residential revenues were up 2.7% year over year, while expenses increased 4%. Same-store residential NOI expanded 2% year over year.

The new lease change for its residential same-store properties was down 2.2%, while the renewal rate achieved by EQR was 4.9% for the first quarter. The blended rate for the quarter was 1.8%. The physical occupancy for this portfolio was 96.5%, improved 40 bps sequentially.

EQR’s Q1 Portfolio Activity

The company sold two properties consisting of 546 apartment units, located in the San Diego and Seattle markets, for approximately $225.6 million. The company also sold one land parcel for a sale price of approximately $4.3 million.

It completed a joint venture development project in each of its New York and Denver markets, consisting of an aggregate of 720 apartment units, for approximately $285.9 million. It also completed one wholly owned development project in its San Francisco market, consisting of 225 apartment units, for approximately $152.6 million.

EQR’s Balance Sheet

Equity Residential exited the first quarter of 2025 with cash and cash equivalents of $39.8 million, down from $62.3 million recorded as of Dec. 31, 2024.

The net debt to normalized EBITDAre was 4.21X, which decreased from 4.38X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 90.5% in the quarter, up from 89.7% in the prior quarter.

2025 Guidance Reaffirmed by EQR

For the second quarter of 2025, the company projects normalized FFO per share in the band of 96 cents to $1.00. The Zacks Consensus Estimate is currently pegged at 99 cents.

For full-year 2025, Equity Residential expects normalized FFO per share in the band of $3.90-$4.00. The Zacks Consensus Estimate is currently pegged at $3.97.

The company’s full-year guidance incorporates projections for same-store revenue growth of 2.25-3.25%, an expense increase of 3.5-4.5%, and an NOI expansion of 1.4-3.0%. Physical occupancy is expected at 96.2%.

Equity Residential currently carries a Zacks Rank #3 (Hold).

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 residential REITs like Camden Property Trust CPT and American Homes 4 Rent AMH, both slated to report on May 1. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The Zacks Consensus Estimate for Camden’s first-quarter 2025 FFO per share stands at $1.68, which indicates 0.6% growth year over year. CPT currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for American Homes’ first-quarter 2025 FFO per share is pegged at 45 cents, which implies a 4.7% year-over-year increase. AMH currently carries a Zacks Rank #3.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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