Equity Residential, the largest publicly traded U.S. apartment landlord, said first-quarter funds from operations climbed as the nation’s rents increased amid surging tenant demand.
FFO, which gauges a property company’s ability to generate cash, increased to $188.3 million, or 60 cents a share, from $173.5 million, or 56 cents, a year earlier, the Chicago-based real estate investment trust said today in a statement. The average of 20 analyst estimates compiled by Bloomberg was for FFO of 62 cents a share. The company reported normalized FFO, which excludes some items, of 61 cents per share compared with 56 cents a year ago.
An improving job market and stricter mortgage-lending standards that impede homebuying are fueling demand for apartments nationally, allowing landlords to increase rents. Multifamily owners’ rental revenue probably will climb 6.3 percent this year, according to Axiometrics Inc. Apartment REITs have pushed rents up 2.8 percent this year, the Dallas-based research firm said.
“While there is much discussion of a housing recovery, we believe the catastrophic housing downturn the country experienced has profoundly changed the way potential homebuyers view housing,” Alexander Goldfarb, an analyst with Sandler O’Neill & Partners LP in New York, wrote in an April 16 note. He has a buy rating on Equity Residential shares.
Equity Residential, founded by Sam Zell, announced first-quarter results after the close of regular U.S. trading. Its shares rose 0.4 percent to $62.69 today in New York. They’ve gained 7.5 percent in the past 12 months, compared with a 12 percent increase in the Bloomberg REIT Apartment Index of 16 companies.