Equity Residential Earnings: Occupancy Improves and Positive Momentum on Rental Rates to New Tenants

Equity Residential reported first-quarter results that were slightly ahead of our estimates, giving us confidence in our $79 fair value estimate. Occupancy in the same-store portfolio was up 0.5% sequentially to 96.3% in the first quarter. Combined with average rental rates increasing 3.4% year over year, same-store revenue was up 3.9% in the quarter, relatively in line with our estimate of 4.1% growth. However, operating expenses were only up 1.2% as payroll costs only increased 0.7% and utility costs fell 5.0%. As a result, same-store net operating income grew 5.2% in the first quarter, slightly better than our estimate of 4.2% same-store NOI growth. Equity Residential reported normalized funds from operations of $0.93 per share, a penny better than our $0.92 estimate and six cents better than the $0.87 figure reported in the first quarter of 2023.