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Can Equity Residential Ride High on Top Line in 2Q17?

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Jul. 17 2017, Published 2:17 p.m. ET

Revenue in 2Q17

Analysts expect Equity Residential (EQR) to report revenue of $608.5 million for 2Q17 when it releases its results on July 25, 2017.

Its revenue is expected to remain almost flat (a fall of 0.80%) year-over-year as the positive effect of higher occupancy is expected to be offset by moderation in rent growth during the quarter.

The company is expected to report revenue of $2.4 billion for fiscal 2017, a 0.40% fall year-over-year.

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Location plays a key role in revenue growth

Equity Residential has positioned its properties in key areas of the coastal markets of New York, Southern California, Boston, Seattle, San Francisco, and Washington, DC. These cities are closest to the busiest business centers. The locations offer proximity to offices, schools, and other buildings used for an active social life.

Drivers of revenue growth in 2Q17

EQR’s tenants are mainly Millennials, or about 83.0 million people aged 18–34. Its tenants are also Baby Boomers, or about 76.0 million people aged 53–71. That’s expected to boost the company’s revenue growth in 2Q17.

The percentage of leases renewed in 1Q17 was 60.0%, which was higher than 57.0% in 1Q16. Total new renewals also rose 3.0% year-over-year. Renewal rates already soared 4.7% during the first two months of 2Q17. Thus, revenue for the quarter is expected to be significantly higher.

1Q17 signified a strong start to 2017

EQR’s total revenues in 1Q17 were $604.1 million, which was slightly lower than the consensus estimate. Revenues were also 2.4% lower than $616.2 million in 1Q16.

Wall Street expects EQR’s close competitors such as AvalonBay Communities (AVB), Camden Property Trust (CPT), and Essex Property Trust (ESS) to report revenues of $529.3 million, $222.7 million, and $334.8 million, respectively.

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