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Equity Residential (EQR) Boosts 2023 View on Strong Demand
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Equity Residential (EQR - Free Report) has bolstered its 2023 earnings guidance, citing continued strong demand in its markets, particularly New York, and lower-than-expected delinquency rates, mainly in Southern California.
The revision reflects optimism from the company’s leadership. President and CEO Mark J. Parrell noted limited new apartment supply in most of EQR's markets as well as high prices and the low availability of single-family homes as favorable factors for their outlook.
Equity Residential raised its guidance for the same-store revenue change from the previous range of 4.5%-6% to the new range of 5.5%-6.25%. Its outlook for the same-store net operating income (NOI) change was also elevated from the range of 4.75%-6.25% to the new band of 6%-7%. However, EQR now expects its same-store physical occupancy to be 96.0%, down from its earlier guidance of 96.2%.
Furthermore, EQR lifted its normalized funds from operations (FFO) per share projection to the $3.73-$3.83 band from its previous outlook in the range of $3.70-$3.80. The forecast for FFO per share saw an upward revision to the $3.69-$3.79 range from the earlier guided range of $3.66-$3.76. The revisions in FFO and normalized FFO per share are primarily attributed to a positive impact of 3 cents, mainly from an increase in same-store NOI.
The Zacks Consensus Estimate for Equity Residential’s 2023 normalized FFO per share currently stands at $3.74. This calls for a 6.25% increase year over year.
In the first quarter of 2023, Equity Residential reported a normalized FFO per share of 87 cents, which increased 13% year over year. Results reflected continued healthy demand and lower-than-anticipated bad debt. EQR also noted that it experienced better payment and move-out activity related to delinquent residents than assumed in its February 2023 guidance.
Conclusion
Equity Residential's updated 2023 earnings guidance is a positive indicator for potential investors. This upward revision, spurred by solid demand and decreased delinquency rates, underpins EQR's strong market position.
The company's strategy of focusing on affluent urban areas seems to be yielding results, making it a compelling consideration for investors looking for stable returns in the residential property sector. As EQR navigates the market's dynamics, it will be interesting to see how these projections materialize and contribute to long-term growth and shareholder value.
Shares of this Zacks Rank #3 (Hold) company have dropped 1.5% in the past three months compared with the industry’s fall of 2.4%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Independence Realty Trust (IRT - Free Report) and BRT Apartments Corp. (BRT - Free Report) . While Independence Realty Trust currently carries a Zacks Rank #2 (Buy), BRT Apartments sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Independence Realty Trust’s current-year FFO per share is pegged at $1.16, which calls for a 7.4% increase year over year.
The Zacks Consensus Estimate for BRT Apartments’ 2023 FFO per share has been revised 33.6% north in the past month to $1.55.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Equity Residential (EQR) Boosts 2023 View on Strong Demand
Equity Residential (EQR - Free Report) has bolstered its 2023 earnings guidance, citing continued strong demand in its markets, particularly New York, and lower-than-expected delinquency rates, mainly in Southern California.
The revision reflects optimism from the company’s leadership. President and CEO Mark J. Parrell noted limited new apartment supply in most of EQR's markets as well as high prices and the low availability of single-family homes as favorable factors for their outlook.
Equity Residential raised its guidance for the same-store revenue change from the previous range of 4.5%-6% to the new range of 5.5%-6.25%. Its outlook for the same-store net operating income (NOI) change was also elevated from the range of 4.75%-6.25% to the new band of 6%-7%. However, EQR now expects its same-store physical occupancy to be 96.0%, down from its earlier guidance of 96.2%.
Furthermore, EQR lifted its normalized funds from operations (FFO) per share projection to the $3.73-$3.83 band from its previous outlook in the range of $3.70-$3.80. The forecast for FFO per share saw an upward revision to the $3.69-$3.79 range from the earlier guided range of $3.66-$3.76. The revisions in FFO and normalized FFO per share are primarily attributed to a positive impact of 3 cents, mainly from an increase in same-store NOI.
The Zacks Consensus Estimate for Equity Residential’s 2023 normalized FFO per share currently stands at $3.74. This calls for a 6.25% increase year over year.
In the first quarter of 2023, Equity Residential reported a normalized FFO per share of 87 cents, which increased 13% year over year. Results reflected continued healthy demand and lower-than-anticipated bad debt. EQR also noted that it experienced better payment and move-out activity related to delinquent residents than assumed in its February 2023 guidance.
Conclusion
Equity Residential's updated 2023 earnings guidance is a positive indicator for potential investors. This upward revision, spurred by solid demand and decreased delinquency rates, underpins EQR's strong market position.
The company's strategy of focusing on affluent urban areas seems to be yielding results, making it a compelling consideration for investors looking for stable returns in the residential property sector. As EQR navigates the market's dynamics, it will be interesting to see how these projections materialize and contribute to long-term growth and shareholder value.
Shares of this Zacks Rank #3 (Hold) company have dropped 1.5% in the past three months compared with the industry’s fall of 2.4%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Independence Realty Trust (IRT - Free Report) and BRT Apartments Corp. (BRT - Free Report) . While Independence Realty Trust currently carries a Zacks Rank #2 (Buy), BRT Apartments sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Independence Realty Trust’s current-year FFO per share is pegged at $1.16, which calls for a 7.4% increase year over year.
The Zacks Consensus Estimate for BRT Apartments’ 2023 FFO per share has been revised 33.6% north in the past month to $1.55.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.