Equity Residential (EQR – Analyst Report), the largest fully integrated publicly traded multi-family real estate investment trust( REIT)in the U.S., has recently acquired Vantage Pointe – a high-rise building in San Diego, California, for $200 million. The property includes 679 apartment units valued at approximately $291,000 per unit and $348 per square foot of rentable apartment space. Vantage Pointe also features 26,425 square feet of retail space and 968 underground parking units.
 
The 40-storeyed building was developed as a condo project in 2009, and includes several amenities such as a clubhouse, rooftop pool and sundeck, fitness center and theater. The property is operated as a rental facility and is currently 22% occupied. Equity Residential has begun a comprehensive marketing and leasing campaign to promote the property and expects a year-three stabilized yield of approximately 7%.
 
The acquisition is a part of the long-term strategy of the company to own high quality assets in some of the best long-term apartment markets in the country. The home ownership cost in most of the markets of Equity Residential is significantly higher than the national average. In addition, financing for new apartment construction has become relatively more difficult due to the challenging macroeconomic environment, leading to a dearth of new supply. This provides an upside potential for Equity Residential.
 
The housing meltdown will continue to help apartment REITs like Equity Residential and we expect this sector to remain relatively stable in the coming quarters. Furthermore, the company has a fully implemented state-of-the-art operating platform that enables it to manage the operations on a real-time basis and deliver market-leading performance. We maintain our long-term Neutral recommendation on Equity Residential, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.

 
EQUITY RESIDENT (EQR): Free Stock Analysis Report
 
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