Equity Residential: Quarterly revenue down

Equity Residential, the largest publicly traded U.S. apartment landlord, said quarterly earnings excluding items were little changed as revenue fell at properties the company owned for at least a year.

Funds from operations were 58 cents, the Chicago-based real estate investment trust said today in a statement. FFO was projected to be 55 cents a share, according to the average estimate of 21 analysts in a Bloomberg survey. The number is a measure of cash flow used by REITs. It excludes depreciation and other items and doesn't comply with generally accepted accounting principles.

"With strong occupancy, little new supply and favorable demographics, we expect top-line growth for years to come," Chief Executive Officer David Neithercut said in a statement.

U.S. apartment vacancies dropped in the second quarter from the previous three months, the first improvement in two years, New York-based real estate research firm Reis Inc. said July 8. Effective rents, or what tenants actually paid, climbed 0.7 percent from the prior quarter.

Equity Residential raised its earnings forecast for the year, saying lease renewals and contracts signed in new buildings will boost net operating income. FFO will be $2.14 to $2.20 a share, the company said. Its previous estimate was for $2.15 or less.

Second-quarter earnings were affected by lease terms the REIT agreed to a year earlier, Haendel St. Juste, a New York- based REIT analyst at Keefe, Bruyette & Woods, said in a telephone interview before results were released. "Typically, apartment companies, it takes them on average two years to get an entirely new renter base," St. Juste said.

"You won't see the real effects until early next year," he said.

Equity Residential started raising rents by the "high single digits" in all its markets since the beginning of the year, Neithercut said in a June 11 interview. The increases can't be sustained without job growth, he said.

The shares were little changed at $46.56 in New York Stock Exchange composite trading today at 4:10 p.m. The shares climbed 38 percent this year through today, compared with a 28 percent gain in the Bloomberg REIT Apartment Index of 13 publicly traded apartment owners.