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Understanding Equity Residential’s Business Segments

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Dec. 4 2020, Updated 10:43 a.m. ET

Equity Residential’s business portfolio

Equity Residential’s (EQR) properties comprise garden-style properties, as well as mid-rise and high-rise properties. While the garden-style properties are usually two- and three-story buildings, the mid-rise and high-rise buildings are taller than three stories.

The residents have access to amenities like a clubhouse, swimming pools, laundry facilities, and cable television. They may also have access to saunas and spas, whirlpools, sports courts, and fitness rooms in these residential properties.

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Equity Residential’s key business segments

Equity Residential redevelops, builds, and acquires residential properties. The same-store operating segments are in the coastal markets of New York, Southern California, Boston, Seattle, San Francisco, and Washington, D.C. These markets are reported as the company’s operating segments in its income statement.

The revenue drivers

In 1Q17, Southern California comprised 25% of Equity Residential’s (EQR) total revenues, 19% of its total revenues came from Washington, D.C., and New York comprised 21% of its total revenues. 

San Francisco contributed 17% to EQR’ss total revenues, Boston contributed 11% to its total revenues, and Seattle comprised 8% of its total revenues.

Target consumers

EQR targets consumers mainly in the Millennials category, who total approximately 83 million people aged 18–34. Further, Baby Boomers, who comprise more than 76 million people aged 53–71, are inclined to rent apartments. Targeting this section of the population helps the company generate higher revenues.

Apart from Equity Residential, several other major apartment owners like AvalonBay Communities (AVB), Essex Property Trust (ESS), and UDR Inc. (UDR) are also concentrating their development projects in major metropolitan markets in the US. Equity Residential forms ~2.9% of the Vanguard REIT ETF (VNQ).

In the next article, we’ll take a look at the apartment rental industry.

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