Equity Residential (EQR) 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.
Excluding one-time items, FFO in the third quarter stood at $193.1 million or 62 cents per share versus $172.8 million or 57 cents per share in the year-ago quarter. Recurring FFO beat the Zacks Consensus Estimate by a penny.
Total revenue during the quarter was $511.9 million compared with $453.9 million in the year-earlier period. However, reported revenue was below the Zacks Consensus Estimate of $514.0 million.
Same-store quarterly revenues (which include 104,922 apartment units) increased 5.5%. Same-store net operating income (NOI) during the quarter increased 9.0% year over year.
During the quarter, Equity Residential acquired two properties totaling 365 apartment units for $113.0 million, at a weighted average cap rate of 4.7% and a newly constructed, unoccupied asset currently up for lease for $39.5 million. The company also bought a land parcel in Southern California for further development for $5.6 million and entered into a long-term ground lease on a land parcel in New York City for further development. Equity Residential sold 7 consolidated properties during the reported quarter (2261 apartment units) for $210.1 million, at a weighted average cap rate of 7.2%.
Equity Residential did not issue any shares under its share offering program and currently has 10 million shares available for future issuance.
During the quarter, the company entered into a new $1.25 billion unsecured revolving credit agreement with a consortium of 23 financial institutions. The new facility matures in July 2014, and can be extended for another year. This facility replaced the company’s existing facility, which was scheduled to mature in February 2012.
For fourth quarter 2011, recurring FFO is expected in the range of 63 cents to 67 cents per share. For full-year 2011, Equity Residential increased its recurring FFO guidance from $2.40 – $ 2.45 per share to $2.41- $2.45.
We have a Neutral recommendation on Equity Residential, which presently has a Zacks #3 Rank that translates into a short-term Hold rating. One of its competitors, Apartment Investment & Management Co.(AIV) also holds a Zacks #3 Rank.
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