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Equity Residential (EQR) Expects to Meet or Top Revenue Projections

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Equity Residential EQR, in its recently-released operating update, noted that it is concluding a strong leasing season, witnessing healthy demand and pricing for the company’s apartment units. Management, therefore, says that its same-store revenue growth is on track to meet or slightly surpass the company’s projections referred in its second-quarter 2021 earnings release.

Particularly, as of Sep 21, 2021, the company saw physical occupancy of 96.9%, up from 96.7% as of the end of August and July, and 96.3% at the end of June.

Renewals have also improved in September, with 62% of the residents renewing by the month compared with 58% by August, 54% by July and 53% by June. Further, the blended rate has increased to 9.7% for September, up from August’s 8.2%, July’s 5.1% and June’s 0.6%.

Essex Property Trust ESS recently issued an operating update for the third quarter. The residential REIT also reaffirmed its third-quarter and full-year 2021 guidance ranges.

Essex Property’s preliminary August update revealed that the same-property cash delinquencies stood at 0.8% for the month compared with July’s 2.2% and the second quarter’s 2.6%, while financial occupancy was 96.4% in August compared with July’s 96.5%. For the preliminary July-to-August period, total same-property revenues increased 2.6% year on year, as against the 3% decrease seen in the second quarter.

Markedly, the U.S. apartment market put up an encouraging show in August, as its performance continued to pick up pace in the month, setting new records for rent growth and occupancy.

Per a report from the real estate technology and analytics firm RealPage, occupancy is at a new all-time record level, reaching 97.1%. In fact, August 2021 marks the first time that occupancy has ever surpassed the 97% level. Robust occupancy is also fuelling rent growth, and effective asking prices for new renters climbed 1.8% in August, in turn, pushing asking prices up 10.3%, year over year. In addition, renters signing renewal leases in August witnessed price increases averaging 5.2%. Rent growth has also been widespread. While the small metros are experiencing robust occupancy, the gateway markets too are seeing a decent increase in effective asking rents.

After living with parents during the onset of the pandemic, young adults are now forming new households, in turn, driving demand for the moderately priced apartments, while a better job-market, particularly for the high-paying employment sectors than in the low-wage positions, is triggering demand for luxury units, per the report.

Equity Residential, with a diversified portfolio, too is likely to have benefited from this improving trend. It has a healthy balance sheet, and is banking on its technology, scale and organizational capabilities to fuel growth.

Currently, Equity Residential carries a Zacks Rank # 2 (Buy). Shares of this residential REIT have gained 36.1% so far in the year compared with its industry’s rally of 33.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Other Key Picks

The Zacks Consensus Estimate for American Homes 4 Rent’s AMH 2021 funds from operations (FFO) per share has moved 3.9% north to $1.33 over the past two months. The company carries a Zacks Rank of 2, currently.

Preferred Apartment Communities, Inc. APTS carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 17.6% upward to $1.00 over the past two months.


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Equity Residential (EQR) : Free Stock Analysis Report

Essex Property Trust, Inc. (ESS) : Free Stock Analysis Report

Preferred Apartment Communities, Inc. (APTS) : Free Stock Analysis Report

American Homes 4 Rent (AMH) : Free Stock Analysis Report

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