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Equity Residential: Less Exposed To New Supply, Shares Fairly Valued

Aug. 03, 2023 10:43 AM ETEquity Residential (EQR) Stock8 Comments
Justin Purohit profile picture
Justin Purohit


  • Equity Residential's exposure to urban markets could have once been seen as a liability. It now appears to be an asset.
  • Increased return-to-work mandates and improving standards surrounding quality of life are driving residents back to the cities they had once left.
  • While rising deliveries of multifamily units poses risks to certain markets, particularly in the Sunbelt states, the urban centers appear more insulated from this threat.
  • Though the company may be at an advantage in relation to others, I view shares as fairly valued, given current market conditions.

Reit inscription on a wooden block. Real estate investment trust concept. Company that owns, operates, or finances income-generating real estate. Magnifying glass

Andrii Yalanskyi

The trend in monthly rents puts the multifamily sector on downside watch. The most recent Zillow Asking Rents report for June showed rental rate growth continuing to cool through June. This same report highlighted a record-high number of

This article was written by

Justin Purohit profile picture
Regularly providing timely analysis on operating results, with a particular emphasis on REITs and other Macro-focused stocks. Opinions are determined through comparative financial statement analysis, earnings coverage, and various valuation techniques. My profession is in accounting, and I am a licensed CPA.

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 (8)

bought 100 shares yesterday at 54.32. Better pricing then buying an acctual apt for rent, and without the headaces. It is trading at close to 6% AFFO. Also bought a 100 shares of AVB. AVB is trading even at a better AFFO.
I looked at EQR debt, and the majority of it are "notes", which is surprising. I wanted to get a feel for how exposed to interest rate increases EQR was. I gave up. They do use derivatives, presumably to reduce interest rate sensitivity. The WSJ had an article today how interest rate increases are creating danger for at least some of the smaller apartment REITs.
My my recollection is that AVB self develops more of the construction of new apartments than eqr. I wish the FFO numbers distinguished depreciation on items which do not depreciate from items which do. Some REITs attempt this, but, for example, if they need to repave, they act as if the new pavement willl not depreciate, but it too will deteriorate.
Justin Purohit profile picture
@algo41 Thanks for sharing the thought! For GAAP reporting purposes, repaving would simply be a recurring capital expenditure, which hits operating expense. Some REITs drill down and provide that disclosure to arrive at AFFO but not all.

Thanks again for taking the time to stop by. I appreciate it!
@Justin Purohit FFO is not a gaap measure, right?
Justin Purohit profile picture
@algo41 Yep that's true.
Enjoyed the article. I really like your work on small stocks too!
Justin Purohit profile picture
@jasonjones Thank you very much for your time, Jason! Thanks also for the feedback. It means a lot to me, and I hope that I can continue preparing reports that are of continued interest to you. Thanks again!
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