Equity Residential (EQR), a leading real estate investment trust (REIT), reported fiscal 2010 third quarter funds from operations (FFO) of $166.2 million or 55 cents per share, compared to $154.4 million or 53 cents in the year-ago quarter. Funds 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. The third quarter 2010 FFO marginally beat the Zacks Consensus Estimate by a penny.
Total revenues during the quarter were $527.4 million, compared to $480.2 million in the year-earlier period. Total revenues during the reported quarter were well ahead of the Zacks Consensus Estimate of $504 million.
Same-store (third quarter 2010 vs. third quarter 2009 comparison, which includes 117,286 apartment units) quarterly revenues and operating expenses increased 1.3% and 1.9% respectively. Same-store net operating income (NOI) during the quarter increased 0.9% year-over-year.
During the quarter, Equity Residential acquired six properties totaling 1,955 apartment units for $548.9 million. Out of these, one is located in Los Angeles, one in San Diego, two in the San Francisco Bay Area and two in the Washington, D.C.Metro Area. The company also purchased three land parcels during the quarter – in Washington D.C., San Francisco Bay Area and Southeast Florida – for $42.3 million.
Equity Residential sold three consolidated properties during third quarter 2010 (426 apartment units) for $26.1 million at a weighted average cap rate of 7.3%. In addition, the company sold the remaining 25% joint venture interest in 24 unconsolidated properties (5,635 apartment units) and recorded a $22.5 million gain from the asset sale.
During the quarter, Equity Residential offered $600.0 million of unsecured notes due July 2020 at a coupon rate of 4.75%. The company utilized the proceeds from the offering to repay the outstanding debt under its unsecured revolving credit facility and for general corporate purposes. At quarter-end, the company had cash and cash equivalents of $43.7 million and total debt of $10.2 billion.
For full-year 2010, Equity Residential revised its FFO guidance from the range of $2.14 to $2.20 per share to $2.18 to $2.22 in anticipation of improved occupancy and operating income from its lease-up properties. For the fourth quarter, FFO is expected to be in the range of 56 cents to 60 cents per share. We maintain our Neutral recommendation on the stock, which presently has a Zacks #3 Rank, which translates into a short-term “Hold” rating.
EQUITY RESIDENT (EQR): Free Stock Analysis Report
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