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Shares of Equity Residential (EQR - Free Report) witnessed a 4.5% gain in the after-hours trading session on Jan 30 after it reported fourth-quarter 2023 normalized funds from operations (FFO) per share of $1.00, which was in line with the Zacks Consensus Estimate. The rental income of $727.5 million narrowly missed the consensus mark of $727.6 million.
On a year-over-year basis, the normalized FFO per share grew 6.4% from 94 cents, with rental income climbing 4%.
According to Mark J. Parrell, Equity Residential’s president and CEO, “We enter 2024 well-positioned to post solid results on the operations side despite expectations of a slowing economy with continuing high employment levels in our target affluent renter demographic and a manageable apartment supply backdrop in our existing predominantly coastal footprint versus oversupplied Sunbelt markets. We are optimistic that in 2024 we will see a variety of favorable opportunities to deploy capital and have a team and a balance sheet well-prepared to do so.”
For the full-year 2023, the normalized FFO per share came in at $3.78, higher than the prior-year tally of $3.52 and beat the Zacks Consensus Estimate of $3.77. This was backed by 5.1% growth in total revenues to $2.87 billion, in line with the Zacks Consensus Estimate.
Quarter in Detail
Same-store revenues were up 3.9% year over year. Same-store expenses flared up 1.3%, and consequently, same-store net operating income (NOI) climbed 5% year over year.
The average rental rate increased 4% year over year to $3,073 in the quarter ended December. Meanwhile, the physical occupancy remained unchanged at 95.8% for the same-store portfolio. Our estimate for the metric was 95.9%.
Same-store residential revenues were up 4% year over year, while expenses increased 1.1%. Consequently, same-store residential NOI expanded 5.4% year over year.
The new lease change for its residential same-store properties was down 4.5%, while the renewal rate achieved by EQR was 5.1% for the fourth quarter. The blended rate for the quarter was 0.8%. The physical occupancy for this portfolio was 95.8%, down 20 basis points sequentially.
In the fourth quarter, Equity Residential did not acquire any operating property. However, it sold three properties in West Coast markets (San Francisco, Seattle and Los Angeles) comprising 499 apartment units for $184.5 million.
Balance Sheet
Equity Residential exited the fourth quarter of 2023 with cash and cash equivalents of $50.7 million, down from the $53.9 million recorded at the end of 2022.
The net debt to normalized EBITDAre was 4.12X, which decreased from 4.24X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 89.8% in the quarter, which remained unchanged from the prior quarter.
Guidance
For the full-year 2024, Equity Residential projects normalized FFO per share in the band of $3.80-$3.90. The Zacks Consensus Estimate for the same is currently pegged at $3.87.
The company’s full-year guidance incorporates projections for same-store revenue growth of 2.0-3.0%, an expense increase of 3.5-4.5% and an NOI expansion of 1.0-2.6%. Also, physical occupancy is expected at 95.9%.
For the first quarter of 2024, the company projects normalized FFO per share in the band of 88-92 cents. The Zacks Consensus Estimate for the same is currently pegged at 91 cents.
Equity Residential currently carries a Zacks Rank #4 (Sell).
We now look forward to the earnings releases of residential REITs like AvalonBay Communities, Inc. (AVB - Free Report) , Essex Property Trust, Inc. (ESS - Free Report) and Mid-America Apartment Communities, Inc. (MAA - Free Report) .
While AvalonBay Communities are slated to report results today after market close, Essex Property Trust and Mid-America Apartment Communities are scheduled to come up with their results on Feb 6 and Feb 7, respectively.
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.
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Equity Residential (EQR) Q4 FFO Meets, 2024 Guidance Issued
Shares of Equity Residential (EQR - Free Report) witnessed a 4.5% gain in the after-hours trading session on Jan 30 after it reported fourth-quarter 2023 normalized funds from operations (FFO) per share of $1.00, which was in line with the Zacks Consensus Estimate. The rental income of $727.5 million narrowly missed the consensus mark of $727.6 million.
Results reflect healthy same-store revenue performance.
On a year-over-year basis, the normalized FFO per share grew 6.4% from 94 cents, with rental income climbing 4%.
According to Mark J. Parrell, Equity Residential’s president and CEO, “We enter 2024 well-positioned to post solid results on the operations side despite expectations of a slowing economy with continuing high employment levels in our target affluent renter demographic and a manageable apartment supply backdrop in our existing predominantly coastal footprint versus oversupplied Sunbelt markets. We are optimistic that in 2024 we will see a variety of favorable opportunities to deploy capital and have a team and a balance sheet well-prepared to do so.”
For the full-year 2023, the normalized FFO per share came in at $3.78, higher than the prior-year tally of $3.52 and beat the Zacks Consensus Estimate of $3.77. This was backed by 5.1% growth in total revenues to $2.87 billion, in line with the Zacks Consensus Estimate.
Quarter in Detail
Same-store revenues were up 3.9% year over year. Same-store expenses flared up 1.3%, and consequently, same-store net operating income (NOI) climbed 5% year over year.
The average rental rate increased 4% year over year to $3,073 in the quarter ended December. Meanwhile, the physical occupancy remained unchanged at 95.8% for the same-store portfolio. Our estimate for the metric was 95.9%.
Same-store residential revenues were up 4% year over year, while expenses increased 1.1%. Consequently, same-store residential NOI expanded 5.4% year over year.
The new lease change for its residential same-store properties was down 4.5%, while the renewal rate achieved by EQR was 5.1% for the fourth quarter. The blended rate for the quarter was 0.8%. The physical occupancy for this portfolio was 95.8%, down 20 basis points sequentially.
In the fourth quarter, Equity Residential did not acquire any operating property. However, it sold three properties in West Coast markets (San Francisco, Seattle and Los Angeles) comprising 499 apartment units for $184.5 million.
Balance Sheet
Equity Residential exited the fourth quarter of 2023 with cash and cash equivalents of $50.7 million, down from the $53.9 million recorded at the end of 2022.
The net debt to normalized EBITDAre was 4.12X, which decreased from 4.24X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 89.8% in the quarter, which remained unchanged from the prior quarter.
Guidance
For the full-year 2024, Equity Residential projects normalized FFO per share in the band of $3.80-$3.90. The Zacks Consensus Estimate for the same is currently pegged at $3.87.
The company’s full-year guidance incorporates projections for same-store revenue growth of 2.0-3.0%, an expense increase of 3.5-4.5% and an NOI expansion of 1.0-2.6%. Also, physical occupancy is expected at 95.9%.
For the first quarter of 2024, the company projects normalized FFO per share in the band of 88-92 cents. The Zacks Consensus Estimate for the same is currently pegged at 91 cents.
Equity Residential currently carries a Zacks Rank #4 (Sell).
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 residential REITs like AvalonBay Communities, Inc. (AVB - Free Report) , Essex Property Trust, Inc. (ESS - Free Report) and Mid-America Apartment Communities, Inc. (MAA - Free Report) .
While AvalonBay Communities are slated to report results today after market close, Essex Property Trust and Mid-America Apartment Communities are scheduled to come up with their results on Feb 6 and Feb 7, respectively.
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.