Wednesday, real estate investment trust Equity Residential (EQR) reported a profit for the fourth quarter compared to a loss in last year. Funds from operations for the quarter rose from the year ago quarter, helped by the absence of impairment charges recorded last year. Looking ahead, the company issued guidance for the first quarter and fiscal 2010, expected to come in line with Street estimates.
The Chicago, Illinois-based company posted fourth-quarter FFO available to common shares and units of $126.95 million or $0.43 per share, compared to $79.10 million or $0.27 per share in the same period last year.
The company said the current quarter FFO included previously announced charges of about $24.9 million or $0.09 per share related to the tender offers for certain of the company's notes. The prior year FFO included impairment charge on various land parcels of $116.4 million or $0.40 per share, partially offset by debt extinguishment gain of $18.5 million or $0.06 per share.
Excluding one-time items, FFO for the quarter was $0.52 per share, down from $0.61 per share in the comparable quarter last year.
On average, nineteen analysts surveyed by Thomson Reuters expected the company to report earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude special items.
FFO for the quarter was also affected on a $0.06 per share negative impact from lower net operating income from its same store portfolio and a $0.04 per share negative impact from dilution from the company's 2008 and 2009 transaction activity, partially offset by the positive impact of NOI from lease-up activity.
Fourth quarter net income available to common shares were $41.67 million or $0.15 per share, compared to a loss of $40.25 million or $0.15 per share in the year-ago quarter.
Loss from continuing operations for the quarter narrowed to $11.40 million or $0.05 per share from $77.68 million or $0.29 per share in the prior year period. Discontinued operations contributed $58.71 million to net earnings, compared to $39.45 million in the comparable period of fiscal year 2008.
Total revenues for the quarter decreased to $482.98 million from $501.12 million in the prior-year quarter. Eleven analysts had a revenue consensus of $480.38 million for the fourth quarter.
On a same store fourth quarter to fourth quarter comparison, which includes 117,683 apartment units, revenues decreased 4.7%, expenses decreased 1.9% and net operating income decreased 6.3%. The decrease in same store revenues was primarily driven by a 4.5% decrease in average rental rates.
Operating income for the quarter surged to $135.27 million from $31.40 million in the prior year period. Same store net operating income declined to $278.19 million from $296.78 million in the comparable quarter last year.
During the fourth quarter of 2009, the company sold seven consolidated properties, consisting of 2,236 apartment units, for an aggregate sale price of $170.7 million at a weighted average cap rate of 7.8% generating an unlevered internal rate of return of 10.6%.
Cumulative to date, the company has issued about 4.6 million common shares at an average price of $35.03 per share for total consideration of about $159.5 million under the at-the-market share offering program.
For the fiscal 2009, FFO declined to $616.13 million or $2.12 per share from $619.02 million or $2.13 per share last year.
Net income available to common shareholders was $347.79 million or $1.27 per share, down from $393.12 million or $1.46 per share in the previous year. Income from continuing operations was $28.03 million or $0.05 per share, compared to a loss of $12.82 million or $0.10 per share a year ago.
Total revenues for the year decreased to $1.94 billion from $1.98 billion in the preceding year.
Analysts estimated the company to report earnings of $2.13 per share for the year on revenues of $1.99 billion.
Looking forward for the first quarter, the company provided its FFO guidance in the range of $0.48 to $0.53 per share. Analysts currently expect FFO of $0.49 per share for the first quarter. Earnings is projected to be between $0.17 and $0.21 per share for the first quarter.
For the full year 2010, the company expects FFO in the range of $1.95 - $2.15 per share, while analysts currently anticipate the company to earn $1.97 per share for the full year. Earnings is anticipated to be in the range of $0.67 to $0.87 per share.
Same store revenue change is projected to be between down 3.0% and down 1.0% for fiscal 2010. Same store net operating income is anticipated to be in the range of down 6.0% to down 2.0%.
For fiscal year 2010, the company expects weighted average debt outstanding to be between $9.4 billion and $9.6 billion. General and administrative expense is anticipated to be $38.0 million to $40.0 million range.
EQR closed Wednesday's regular trading at $32.37, down $0.98 or 2.94%, on a volume of 2.43 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $15.68- $36.38, with a three-month average volume of 3.26 million shares.
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