Equity Residential’s EQR operating limited partnership, ERP Operating Limited Partnership, recently issued 4.15% unsecured notes worth $400 million. Set to mature in 2028, the notes carry an all-in effective rate of nearly 3.85%.
These notes are issued as green bonds and the company is the first apartment real estate investment trust (REIT) to issue such bonds. In fact, the company will allocate net proceeds of nearly $396.7 million to one or more of its eligible green projects, like the recently developed 855 Brannan community in San Francisco. The project is LEED Home Platinum certified.
Per management, the issuance supports Equity Residential’s sustainability activities. Further, it reflects demand for such financing from investors with an environmental focus. In October, the company was accredited as the 2018 Global Residential Listed Sector Leader in ESG by the Global Real Estate Sustainability Benchmark.
Equity Residential has made concerted efforts to reposition its portfolio from low barrier-to-entry/non-core markets to high barrier-to-entry/core markets. In fact, it has a proven track record of opportunistic acquisitions, timely dispositions and focused development. In recent years, the company has opted for substantial sale out of its portfolio.
As Equity Residential has a substantial concentration on the Upper West side of Manhattan, it considered lowering its concentration in that submarket and limiting its exposure to huge real estate tax hikes in the future. Such efforts are likely to drive the company’s growth over the long term.
Over the past six months, shares of this Zacks Rank #2 (Buy) company have outperformed the industry it belongs to. During the period, the stock has rallied 10.3% compared with the industry’s growth of 7.6%.
Other Stocks to Consider
Other top-ranked stocks in the REIT space include OUTFRONT Media Inc. OUT, PS Business Parks, Inc. PSB and Terreno Realty Corporation TRNO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
OUTFRONT Media’s funds from operations (FFO) per share estimates for 2018 have been marginally revised upward to $2.09 in the past 30 days. Its shares have gained 3.5% over the past six months.
PS Business Parks’ Zacks Consensus Estimate for 2018 FFO per share has moved up 0.9% to $6.45 in the past month. Its shares have gained 12.4% over the past six months.
Terreno Realty’s FFO per share estimates for 2018 have been revised marginally north to $1.32 in 30 days’ time. Its shares have inched up 1.9% over the past six months.
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