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No Matter The Scenario, Equity Residential Is Strictly Better Than Treasuries

May 31, 2023 10:49 PM ETEquity Residential (EQR) Stock24 Comments


  • Don't "wait it out" in treasuries as you will inevitably be left behind when credit comes back and REITs rally.
  • I present a safe addition to an income-oriented portfolio with double the yield of a broader market index and meaningful capital appreciation.
  • EQR is one of the highest-quality residential REITs, and now is the time to BUY.

Apartment buildings in a residential area


Dear readers/followers,

Equity Residential (NYSE:EQR) has been on my radar for a while and the only reason I haven't invested in the company to this day, was its similarity to AvalonBay Communities (AVB

This article was written by

David Ksir profile picture

David Ksir has extensive private equity experience in finance and European real estate. He manages a small 8-figure family office focused on generating reliable dividend income through value investing.

David also contributes to the High Yield Landlord which is led by Jussi Askola and has a team of 5 other top Seeking Alpha REIT and income analysts. They help investors become passive landlords with their 8% yielding real estate portfolio. Service features include: three portfolios (core, retirement, international), community through chat room, buy/sell alerts, and educational content.

Disclosure: I am associated with another SA contributor Deep Value Explorer.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (24)

Charlie's Munger profile picture
has further to fall vs 10 year
Emerald profile picture
@Charlie's Munger EQR now trading at 14.7 times FFO with a 4.89% yield and price of $54.23. A good buy for long term equity REIT holders. Yes, the stocks could go lower over the next few months, as the economy deteriorates.
Charlie's Munger profile picture
@Emerald traded in mid 40s in 2020…other than that I don’t care, ps Sam Zell is dead now too
@Charlie's Munger That was a steal but unlikely it will ever trade in the mid 40s again. How it trades going forward this year is mostly related to what happens to the 10 year treasury.
Emerald profile picture
Looking at total return over the last 3, 5 and 10 years, EQR has been an average investment. It trails AvalonBay (AVB) significantly over the 3, 5 and 10 year term and is light years behind Mid America (MAA) over the same periods.

- Good management team and financials.
- Lack of in-house development has hurt them, as they end up with mediocre properties, manufactured by merchant builders.

-Fair value is around $62 a share ($3.60 FFO at 17 times).
-Buy under $58 and sell above $68 is the only way to get a decent return.

Good luck to all.
@Emerald You may need to revise your numbers higher.
Emerald profile picture
@ccking3 FFO forecast around $3.80, after earnings release, and at 17 times FFO would be $64.60, right around where the stock is trading now. I'll stick with buy under $58 and sell above $68 a share. Disclosure: Long EQR between $40-44 a share. Cheers
JBTCP profile picture
I'll start by saying that I did enjoy the article. But I'm curious as to why you used USTs as the barometer to assess EQR's investment potential. I get it that the mere minimum you want to beat as an investor is the risk-free rate of return, but I believe a more beneficial analysis would have been a comparative analysis of the prospects of EQR vs. other apartment REITs such as AVB (that you mentioned in passing), CPT, ESS, MAA, etc.
David Ksir profile picture
Really glad you liked the article it thanks! I've done a separate article on AVB vs EQR. Here I wanted to address what I've been hearing from many investors which is that they would rather wait it out in treasuries.
JBTCP profile picture
@David Ksir got it, thanks
I'm not convinced and will continue to buy Treasury Bills.
Yet another article hyping apartment REITs. Perhaps, it is time for some of the folks on this site to tune into the business news during the day and listen to the litany of folks from the private equity arena talking about the next coming real estate glut- aka bust! Namely, the way, way overbuilt class “A” apartment sector. Yes, the once prevailing shortage has now turned into a glut, and concerns that built them via very low interest rate bridge financing are now coming into trouble as they seek long-term financing at sky high (think unworkable) rates. Couple this with the fact that regional banks have little or no appetite to take on these loans, and you have a toxic mix which likely will result in a whole lot of these REITs retesting their previous 3-yr. lows- if not their 5-yr. lows.

So, be very cautious and wait for the good deaals to come to you- in time.
David Ksir profile picture
@jeffgr EQR trades at 2011 prices, that's enough of a discount for me. I'd rather average on the way down than sit on the sidelines.
@David Ksir The 3yr. low is 26% below today's price- sure you want to go there?
David Ksir profile picture
@jeffgr no guarantee it'll get there
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