Equity Residential’s Management Paints a Bullish Picture for 2016
Equity Residential upwardly revised its guidance for its 2016 same-store operating performance, normalized FFO per share, and some of its transactions.
Equity Residential’s total revenue for 4Q15 stood at $703.2 million, a rise of 5.8% over 4Q14. On a same-store basis, revenues rose 5.2% to $666.4 million.
Equity Residential had a total of 98,200 same-store apartment units in 4Q15 compared to 98,400 units in 4Q14. All the units were same-store apartment units.
Equity Residential’s (EQR) FFO (funds from operations) rose to $0.92 per share in 4Q15 compared to $0.87 per share in 4Q14, representing growth of 5.7%.
Since 2005, EQR has sold over 166,000 apartment units, primarily in its non-core markets, for an aggregate sales price of around $16.1 billion.
In 2015, EQR was active in both the unsecured and secured credit markets to lower its effective borrowing costs and extend its maturity profile.
On a price-to-FFO (price to funds from operations) multiple basis, most major apartment REITs trade in the range of 15.8x–23.2x. EQR is trading at 23.3x.
Equity Residential, the largest US residential REIT, reported its 4Q15 earnings on February 2, 2016. Its earnings per share were $0.55.
On an EV-to-EBITDA basis, AvalonBay Communities (AVB) trades at 24.6x, much higher than the industry average of 20.82x.
Wall Street analysts expect AvalonBay Communities to post an FFO of $1.967 per share for 4Q15. This translates to a healthy growth of 11.8% over 4Q14.
Wall Street analysts expect AvalonBay’s EBITDA to be at $310.1 million in 4Q15 compared to $278.5 million in 4Q14. This represents a growth of 11.3%.
AvalonBay’s established communities’ occupancy rate declined by 0.4% YpY to 95.3% in 3Q15. It was the lowest occupancy level recorded by the company during the last 14 quarters.
On February 3, 2016, AvalonBay Communities will be the first among the large REIT stocks to report its 4Q15 earnings. In the past few quarters, AvalonBay has posted better-than-expected earnings, topping revenue estimates.
AvalonBay Communities is the second-largest residential REIT company in the US with a market cap of $24.6 billion. Among the 26 analysts following AvalonBay’s stock, 16 have assigned a “buy” rating. AvalonBay received only one sell rating and nine “hold” ratings.
Looking at Camden Property Trust’s (CPT) valuation, we see that CPT shares are trading at a price-to-FFO multiple of 15.3x. The average price-to-FFO multiple for apartment REITs is 19.3x.
Wall Street (SPY) analysts expect Camden Property Trust to post an FFO of $1.19 per share for 4Q15. This translates to a healthy growth of 20.6% over the same previous fiscal period.
Wall Street analysts expect Camden Property Trust’s EBITDA to be $131.4 million in 4Q15. This compares to $114.8 million in 4Q14, representing a growth of 14.5%.
Camden Property Trust’s portfolio occupancy rate inched up marginally by 0.1% year-over-year, reaching 96% in 3Q15. In 4Q15, its occupancy rate may likely be around the same level.
Wall Street analysts expect Camden Property Trust to report revenues of $228.8 million for 4Q15. That’s nearly 4.5% higher than revenue of $219 million reported in 4Q14.
Camden Property Trust is set to release its 4Q15 earnings and full-year 2015 earnings on January 29, 2016. The stock was trading at $72.30 on January 15, 2015.