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Equity Residential (EQR) Q4 FFO and Revenues Beat Estimates

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Equity Residential’s (EQR - Free Report) fourth-quarter 2021 normalized funds from operations (FFO) per share of 82 cents outpaced the Zacks Consensus Estimate of 80 cents. Rental income of $645.1 million also exceeded the consensus mark of $628.6 million.

On a year-over-year basis, normalized FFO per share improved 7.9% while rental income rose 5.2%.

Results are driven by a strong physical occupancy, a substantial improvement in pricing power and an increase in non-Residential revenues.

In the fourth quarter, Equity Residential collected roughly 97% of its expected residential revenues. Further, EQR received governmental rental assistance payments of $16.3 million paid on behalf of residents.

For 2021, Equity Residential recorded normalized FFO per share of $2.99, topping the Zacks Consensus Estimate of $2.96. However, the figure declined 9.2% year over year. Rental income of $2.46 billion slipped 4.2% year over year.

Quarter in Detail

Residential same-store revenues (includes 74,298 apartment units) were up 4.3% year over year to $587.5 million while expenses flared up 1.8% to $192.4 million. As a result, same-store NOI improved 5.6% to $395.2 million year over year.

The average rental rate increased 1.6% year over year to $2,729 during the December quarter, while physical occupancy expanded 240 basis points to 96.6% for the same-store portfolio.

Equity Residential acquired six operating properties, for a total purchase price of $689 million.

EQR sold four operating properties in California and Washington for $695 million.

Balance Sheet

Equity Residential exited fourth-quarter 2021 with cash and cash equivalents of $123.8 million, up from $42.6 million recorded at the end of 2020.

Outlook

For 2022, management projects normalized FFO per share of $3.40-$3.50. This is above the Zacks Consensus Estimate of $3.32.

Equity Residential’s full-year outlook incorporates a same-store revenue rise of 8-10%, an expense rise of 2.5-3.5% and a NOI improvement of 11-13%. Physical occupancy is expected to be 96.5%.

For first-quarter 2022, Equity Residential projects a normalized FFO per share of 76-80 cents. The Zacks Consensus Estimate for the same is currently pinned at 80 cents.

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 and EPS Surprise

Equity Residential price-consensus-eps-surprise-chart | Equity Residential Quote

We now look forward to the earnings releases of other REITs like AvalonBay Communities (AVB - Free Report) , Mid-America Apartment Communities (MAA - Free Report) and Essex Property (ESS - Free Report) scheduled for this week.

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.