Equity Residential EQR reported first-quarter 2026 normalized FFO of 99 cents per share, up 4.2% year over year and ahead of the Zacks Consensus Estimate of 95 cents by 4.2%. Rental income grew 2.5% year over year to $779.8 million but came in 0.3% below the consensus mark of $782.6 million.
Operating fundamentals were supported by steady occupancy and improving coastal-market momentum. Same-store performance remained strong, with revenue growth outpacing prior-quarter momentum and occupancy staying firm. Management emphasized strength in San Francisco and New York, citing solid demand from higher-earning renters and moderating new supply across its markets.
Same-store revenues climbed 2.2%, and same-store NOI increased 1.4% year over year. Same-store physical occupancy held firm at 96.5%, while resident turnover fell to 7.8%, the lowest level in the company’s history.
Equity Residential Sees Improvement in Leasing Trends
Leasing indicators pointed to sequential improvement heading into the peak leasing season. Blended rate growth in the quarter was 1.5%, reflecting a 130-basis-point sequential improvement from the fourth quarter of 2025, while April’s preliminary blended rate moved higher to 3% as renewal pricing stayed firm and new-lease pressure moderated.
Concessions also continued to ease. On a same-store cash basis, leasing concessions in the quarter were down 21% from the prior-year period, signaling a healthier competitive backdrop in several key markets as new supply trends soften. At the portfolio level, resident renewals remained steady at 61.6% for the quarter, while new-lease change was negative, underscoring the continued importance of renewal pricing in overall revenue realization.
EQR Faces Expense Pressure
Expense lines were mixed. Property and maintenance costs rose to $149.7 million from $144.0 million, while real estate taxes and insurance increased to $117.0 million from $111.8 million. Interest expense incurred, net, climbed to $77.4 million from $72.1 million.
EQR's Balance Sheet Stays Conservative, Leverage Steady
Balance sheet positioning stayed conservative, with total debt largely unsecured and leverage metrics remaining steady, supporting flexibility as the company moves through the 2026 leasing cycle.
Total debt was $8.34 billion, weighted to unsecured borrowings (about 81% of total), with a 3.78% weighted average rate and a 6.3-year weighted average maturity. Cash and cash equivalents were $34.7 million at quarter-end, and the company also held $104.4 million of restricted deposits.
Leverage remained steady, with net debt to normalized EBITDAre at 4.35X as of March 31, 2026. EQR’s unsecured debt covenant metrics were also comfortably inside limits, including debt-to-adjusted total assets of 27.9% (vs. a 60% cap) and secured debt-to-adjusted total assets of 6.1% (vs. a 40% cap). Unencumbered NOI represented 90.1% of total NOI as of March 31, 2026, underscoring the company’s flexibility within its largely unsecured capital structure.
EQR Steps Up Shareholder Returns
Capital allocation remained a notable highlight. During the quarter, the company repurchased and retired about 3.5 million common shares for roughly $219.4 million, funded with excess disposition proceeds from 2025 sale activity. The company also increased its annual common dividend to $2.81 per share during the quarter.
EQR Sets Q2 FFO Outlook, Reaffirms Full-Year View
Management issued second-quarter 2026 guidance that implies seasonal improvement. The company expects normalized FFO per share of 98 cents to $1.02, with the quarter-to-quarter normalized FFO improvement by a 3-cent per share contribution from residential same-store NOI, partially offset by net interest and corporate overhead. The Zacks Consensus Estimate is currently pegged at $1.02.
For full-year 2026, EQR reaffirmed normalized FFO per share guidance of $4.02-$4.14. The Zacks Consensus Estimate is currently pegged at $4.07. Within its same-store framework, the company expects revenue growth of 1.2%-3.2%, expense growth of 3%-4% and NOI growth of 0.5%-2.5%, alongside a 96.4% physical-occupancy assumption and normalized interest expense of $318-$324 million.
EQR’s Zacks Rank
Equity Residential currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Equity Residential Price, Consensus and EPS Surprise
Equity Residential price-consensus-eps-surprise-chart | Equity Residential Quote
Performance of Other Residential REITs
AvalonBay Communities, Inc. AVB reported first-quarter 2026 core FFO per share of $2.83, beating the Zacks Consensus Estimate of $2.80 by 1.1%. Total revenues came in at $770.3 million, up 3.3% year over year and essentially in line with the consensus mark of $770.6 million.
AvalonBay’s same-store economic occupancy held at 96.1%, underscoring steady demand heading into the peak leasing season. The quarter benefited from incremental development NOI and commercial NOI. However, higher interest expenses undermined the performance of AvalonBay to an extent.
Essex Property Trust, Inc. ESS reported first-quarter 2026 core FFO per diluted share of $4.06, beating the Zacks Consensus Estimate of $3.96 by 2.5%. The figure improved 2.3% from $3.97 in the year-ago quarter. Essex Property Trust’s total revenues were $484.8 million, up 4.3% year over year and ahead of the consensus mark of $481.4 million by 0.7%. Same-property NOI increased 4.1% from the year-ago quarter, reflecting solid property-level momentum.
Essex Property Trust’s management noted that core FFO per share exceeded the midpoint of the company’s prior guidance for the quarter by 11 cents. Of that outperformance, 8 cents was attributed to favorable same-property NOI, with additional help from co-investments.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AvalonBay Communities, Inc. (AVB): Free Stock Analysis Report
Equity Residential (EQR): Free Stock Analysis Report
Essex Property Trust, Inc. (ESS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).