Analyst Note| Kevin Brown |
Second-quarter results for Equity Residential were down sequentially as expected, and we will not make any significant changes to our $78 fair value estimate for the no-moat firm. While the second quarter typically sees sequential occupancy gain, same-store occupancy declined 1.6% from the first quarter to 94.9%, with every market showing some level of decline. Equity Residential managed to keep year-over-year rate growth positive at 0.8%, but the loss in occupancy led to a same-store revenue decline of 0.9%. Same-store expenses stayed flat for the quarter, so same-store net operating income declined 1.2% for the second quarter. As a result, the company reported normalized funds from operations of $0.86 per share, in line with the figure reported in the second quarter of 2019 and 1% lower than the figure reported in the first quarter of 2020.