Equity Residential Q4 FFO & Revenues Miss Estimates but Increase Y/Y

Core Insights - Equity Residential (EQR) reported fourth-quarter 2025 normalized funds from operations (FFO) per share of $1.03, missing the Zacks Consensus Estimate of $1.04, but showing a 3% improvement year-over-year [1][8] - The results were influenced by a rise in same-store net operating income (NOI) and physical occupancy, although higher expenses had a negative impact [1][8] Financial Performance - Rental income for the fourth quarter was $781.9 million, below the consensus mark of $789.3 million, but up 2% year-over-year [2] - For the full year 2025, normalized FFO per share was $3.99, missing the Zacks Consensus Estimate of $4, but higher than the previous year's $3.89, supported by a 3.8% growth in rental income to $3.09 billion [2] - Same-store revenues increased by 2.5% year-over-year, while same-store expenses rose by 2.9% [3] - The average rental rate increased by 2.2% year-over-year to $3,152, with same-store portfolio physical occupancy improving by 20 basis points to 96.2% [3] Expense Analysis - Property and maintenance expenses grew by 4.8%, general and administrative expenses increased by 8.5%, and other expenses rose by 37.6% [5] Portfolio Activity - In Q4 2025, EQR sold six properties comprising 1,138 apartment units for approximately $527.6 million, with a disposition yield of 5.6% [6] - Proceeds from the sales were primarily used for share repurchases [6] Balance Sheet Overview - EQR ended Q4 2025 with cash and cash equivalents of $55.9 million, down from $93.1 million at the end of Q3 2025 [7] - The net debt to normalized EBITDAre ratio was 4.27X, a decrease from 4.41X in the previous quarter [7] 2026 Guidance - For full-year 2026, EQR projects normalized FFO per share in the range of $4.02-$4.14, with the Zacks Consensus Estimate at $4.13 [10] - The guidance includes expectations for same-store revenue growth of 1.2-3.2%, expense increases of 3-4%, and NOI expansion of 0.5-2.5% [10] - Physical occupancy is anticipated to be at 96.4% [10] Share Repurchase Activity - During and after Q4 2025, EQR repurchased approximately 3.4 million common shares for a total cost of $205.7 million [9] First Quarter 2026 Projections - For Q1 2026, EQR projects normalized FFO per share in the range of 94-98 cents, with the Zacks Consensus Estimate at 99 cents [11]