Equity Residential (EQR) Reports Mixed Q3 2023 Results
Earnings Per Share (EPS) for Q3 2023 fell by 47.7% compared to Q3 2022
Funds from Operations (FFO) per share for the same period increased by 6.7%
Same store revenue increased by 4.1% for Q3 2023 compared to Q3 2022
Equity Residential (NYSE:EQR) revised its 2023 annual same store revenue growth guidance to 5.5%
Equity Residential (NYSE:EQR) released its Q3 2023 earnings report on October 31, 2023. The report showed a mixed performance with a significant drop in Earnings Per Share (EPS) and a modest increase in Funds from Operations (FFO) per share.
Financial Highlights
The company's EPS for the quarter ending September 30, 2023, was $0.45, a decrease of 47.7% from $0.86 in Q3 2022. However, FFO per share rose by 6.7% from $0.90 in Q3 2022 to $0.96 in Q3 2023. Normalized FFO (NFFO) per share also saw a rise of 4.3% from $0.92 in Q3 2022 to $0.96 in Q3 2023.
Operational Performance
Equity Residential (NYSE:EQR) reported that same store revenue increased by 4.1% for Q3 2023 compared to Q3 2022. However, this was negatively impacted by weaker than expected revenue performance in San Francisco and Seattle, as well as the non-cash write-off of approximately $1.5 million in straight-line receivables due to the recent bankruptcy of Rite Aid. As a result, the company revised its 2023 annual same store revenue growth guidance to 5.5%.
Investment and Capital Markets Activity
During Q3 2023, Equity Residential (NYSE:EQR) acquired two suburban Atlanta apartment properties, consisting of 634 apartment units, for an aggregate acquisition price of approximately $179.7 million. The company also sold a 166-unit apartment property in Seattle for approximately $60.1 million. Subsequent to the end of the quarter, the company sold three operating properties for a total of approximately $184.6 million.
Looking Forward
The company revised its guidance for its full year 2023 same store operating performance, EPS, FFO per share and Normalized FFO per share. The revised EPS guidance range is primarily due to higher expected property sale gains, partially offset by lower expected Residential and Non-Residential same store NOI and higher expected depreciation expense.
CEO Commentary
Our East Coast portfolio performed very well in the quarter. Strong demand combined with low supply in Boston and New York and rapid absorption of supply in Washington, D.C. position these markets favorably going forward. While the East Coast outperformed our expectations, the San Francisco and Seattle markets underperformed due to lower recent job growth in our target affluent renter demographic and, together with the Rite Aid bankruptcy, led us to adjust guidance, said Mark J. Parrell, Equity Residentials President and CEO.
Explore the complete 8-K earnings release (here) from Equity Residential for further details.
This article first appeared on GuruFocus.
