Equity Residential Stock Rises 20.9% YTD: Will the Trend Continue?

Core Viewpoint - Equity Residential (EQR) has shown strong performance with a year-to-date stock price increase of 20.9%, surpassing the industry's growth of 11.5% [1] Financial Performance - EQR reported third-quarter 2024 normalized funds from operations (FFO) per share of 98 cents, aligning with the Zacks Consensus Estimate, and reflecting a year-over-year growth of 2.1% [1] - The Zacks Consensus Estimate for EQR's 2024 FFO per share is projected at $3.88, indicating a year-over-year growth of 2.65% [2] Strategic Initiatives - EQR is focusing on affluent renter markets, adapting to hybrid work environments and migration trends by acquiring and developing properties in suburban areas and entering new markets like Atlanta, GA, and Austin, TX [3] - As of September 30, 2024, EQR had 42 properties in expansion markets, contributing to 10% of its total portfolio net operating income (NOI) [4] - The company is repositioning its portfolio by selling older properties and acquiring newer ones in high-demand submarkets, acquiring 14 properties with 4,418 apartment units in Q3 2024 [5] Development Pipeline - EQR has a robust development pipeline with nine projects under development as of September 30, 2024, expected to enhance NOI and support FFO and net asset value (NAV) growth in the coming years [6] Financial Health - EQR maintains a healthy balance sheet with nearly $1.7 billion in liquidity and a well-structured debt maturity schedule, ending Q3 2024 with a net debt to normalized EBITDAre ratio of 4.56X [7][8] - Unencumbered NOI as a percentage of total NOI was 89.7%, providing financial flexibility and favorable access to debt markets [8] Dividend Policy - EQR is committed to solid dividend payouts, with an expected compound annual growth rate of 6% for dividends from 2011 to 2024, and has increased its dividend four times in the last five years, achieving an annualized growth rate of 3.4% [9]