Analyst Note| Kevin Brown, CFA |
Equity Residential reported first-quarter results that were relatively in line with our expectations, leading us to reaffirm our $88 fair value estimate. Occupancy for the same-store portfolio fell 20 basis points sequentially to 96.4%, slightly worse than our assumption of flat occupancy for the quarter. Same-store average rental rates improved 6.2% year over year, matching our estimate for the quarter, and same-store revenue improved 7.8% year over year. Same-store operating expenses only increased 2.5%, leading to same-store net operating income growth of 10.7%, in line with our 10.3% assumption. However, while the company reported portfolio operations that matched our assumptions, it reported slightly higher corporate general and administrative expenses in the quarter, leading to normalized funds from operations of $0.77 per share—up from $0.68 reported in the first quarter of 2021 but slightly missing our $0.80 estimate.