Equity Residential (EQR) and luxury-home builder Toll Brothers Inc. (TOL) recently announced a joint venture (JV) to develop a 40-story tower in Manhattan’s Park Avenue. The construction of the 400,000-square-foot building is expected to commence in the first half of 2012.
Within the to-be-constructed tower, the top 18 floors, which consist of condominiums, will be owned by Toll Brothers while the bottom 22 floors, comprising retail and rental apartments, will be operated by Equity Residential.
The recent JV is expected to enhance Equity Residential’s presence in the New York City. The company reported funds from operations (FFO) of $196.6 million or 63 cents per share in the third quarter of 2011 compared with $166.2 million or 55 cents per share in the year-ago quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Based in Chicago, Illinois, Equity Residential is the largest fully integrated publicly traded multi-family real estate investment trust (REIT)in the U.S. The company boasts a portfolio of high-quality assets in some of the most desirable markets across the country, including New York, Boston, Washington D.C., Seattle, San Francisco and Los Angeles.
Equity Residential has a strong balance sheet with plenty of cash and full availability on its line of credit. This enables the company to capitalize on potential acquisition opportunities in order to fuel future growth.
Equity Residential currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
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