Residential REITs Jul 28 Q2 Earnings Lineup: AIV, CPT, ESS
Zacks Investment Research | Jul 26, 2016 10:32PM ET
We are in the busiest week of the current-reporting cycle and the week represents one of full activity from residential real estate investment trust’s (REIT) earnings perspective also.
In fact, results from the big shots like AvalonBay Communities, Inc. (NYSE:AVB) , Equity Residential (NYSE:EQR) and UDR Inc. (NYSE:UDR) are already out in the early half of the week. Next come Apartment Investment and Management Company (NYSE:AIV) , Camden Property Trust (NYSE:CPT) and Essex Property Trust Inc. (NYSE:ESS) , that are slated to report their earnings on Thursday, Jul 28.
So far results have not been much impressive on the residential REIT front. While backed by higher average rental rates, AvalonBay’s second-quarter 2016 core funds from operations (“FFO”) grew 8.6% from the year-ago tally to $2.03 per share, but the figure missed the Zacks Consensus Estimate of $2.09.
Moreover, high-disposition activity in 2016 has led to a decline in Equity Residential’s normalized FFO per share for second-quarter 2016, which came in at 76 cents, missing the Zacks Consensus Estimate by a penny and down from the prior-year quarter figure of 85 cents. Further, the company has lowered its annual revenue growth expectations citing elevated levels of new supply and a slow-down in high- paying jobs in San Francisco and New York.
On the other hand, UDR managed to report second-quarter 2016 FFO of 44 cents per share, in line with the Zacks Consensus Estimate. The figure was up 7.3% from the prior-year quarter tally of 41 cents and the improvement was driven by growth in same-store revenue and net operating income (“NOI”).
No doubt, the New York and San Francisco markets are experiencing rising supply and this remains a concern as elevated supply of new units usually curtails landlords’ capability to command more rents and leads to lesser absorption.
In fact, delivery of new supply in a number of markets has moderated the annual effective rent growth that came in at 3.7% in Q2, reflecting a 134-basis-point (bps) decrease from the solid 5.1% a year ago, per the early end-of-quarter apartment numbers from Zacks Investment Research
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