Analyst Note| Kevin Brown |
No-moat Equity Residential's first-quarter results were slightly disappointing, but we didn't see anything that would materially affect our $71 fair value estimate. Same-store occupancy sequentially improved for the first time in a year, rising 80 basis points to 95.0%, which is in line with our expectations. However, rental rates continued to deteriorate, with a decline of 9.3% year over year slightly worse than our estimate of a 7.7% drop. Same-store operating expenses rose 3.9% compared with our estimate of 3.5%, with repair, maintenance, insurance, and advertising expenditures all rising by double figures. As a result, same-store net operating income fell 17.1% year over year in the first quarter, slightly worse than our estimate of 15.6%. Normalized funds from operations for the first quarter was $0.68, $0.03 below our estimate and $0.08 below the figure Equity Residential reported in the fourth quarter of 2020.