Equity Residential Q2 FFO Meets Estimates, Rental Income Rises Y/Y
Results reflect a rise in same-store revenues and physical occupancy on a year-over-year basis. The company increased its guidance for 2025 normalized FFO per share.
Rental income of $768.8 million slightly missed the consensus mark of $769.3 million. Rental income was up 4.7% year over year.
According to Mark J. Parrell, Equity Residential's president and CEO, 'We are pleased to raise the midpoints for our same store revenue and net operating income guidance. We are seeing sustained demand and a financially resilient customer across all our markets with new supply levels the main determinant of market revenue performance.'
EQR's Q2 in Detail
Same-store revenues were up 2.7% year over year, above our estimate of 1.8%. Same-store expenses flared up 3.7% year over year versus our estimate of 1.7%. Consequently, same-store net operating income (NOI) climbed 2.3% year over year, above our estimate of 1.8%.
The average rental rate increased 2.6% year over year to $3,187 in the quarter ended in June. Meanwhile, the same-store portfolio physical occupancy improved by 20 basis points (bps) year over year at 96.6%. Our estimate for the metric was 96.5%.
Same-store residential revenues were up 2.9% year over year, while expenses increased 3.7%. Same-store residential NOI expanded 2.5% year over year.
The new lease change for its residential same-store properties was down 0.1%, while the renewal rate achieved by EQR was 5.2% for the second quarter. The blended rate for the quarter was 3%. The physical occupancy for this portfolio was 96.6%, improved 10 bps sequentially.
EQR's Portfolio Activity
In the second quarter of 2025, Equity Residential sold one property in Seattle, consisting of 289 apartment units, for $121 million. Moreover, the company acquired a portfolio of eight properties, consisting of 2,064 apartment units, located in suburban Atlanta for an aggregate purchase price of nearly $533.8 million.
In the first half of 2025, it completed one joint venture development project in its New York market, consisting of an aggregate of 450 apartment units, for around $201.2 million. In the same period, the company completed a wholly owned development project in each of its San Francisco and Denver markets, consisting of an aggregate of 495 apartment units, for a total cost of nearly $237.8 million.
EQR's Balance Sheet
Equity Residential exited the second quarter of 2025 with cash and cash equivalents of $31.3 million, down from $39.8 million recorded as of March 31, 2025.
The net debt to normalized EBITDAre was 4.45X, which increased from 4.21X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 90.4% in the quarter, down from 90.5% in the prior quarter.
EQR Raises 2025 Guidance
For the third quarter of 2025, the company projects normalized FFO per share in the band of 99 cents to $1.03. The Zacks Consensus Estimate is currently pegged at $1.00.
For 2025, Equity Residential expects normalized FFO per share in the band of $3.97-$4.03, up from the $3.90-$4.00 range guided earlier. The Zacks Consensus Estimate is currently pegged at $3.97.
The company's full-year guidance incorporates projections for same-store revenue growth of 2.6-3.2%, an expense increase of 3.5-4.0%, and an NOI expansion of 2.2-2.8%. Physical occupancy is expected at 96.4%.
EQR's Zacks Rank
Equity Residential currently carries a Zacks Rank #2 (Buy). 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
Performance of Other Residential REITs
UDR Inc. UDR reported second-quarter 2025 funds from operations as adjusted (FFOA) per share of 64 cents, surpassing the Zacks Consensus Estimate of 62 cents. This also compares favorably with the prior-year quarter's reported figure of 62 cents.
Results reflected year-over-year growth in same-store NOI, led by a higher effective blended lease rate. UDR also raised its 2025 FFOA per share guidance.
Essex Property Trust Inc. ESS reported a second-quarter 2025 core FFO per share of $4.03, beating the Zacks Consensus Estimate of $3.99. The figure also improved 2.3% from the year-ago quarter.
ESS' quarterly results reflected favorable growth in same-property revenues and NOI. However, the same-property operating expenses partly acted as a dampener.
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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