A bit of belt tightening and a lot of faith is helping apartment giant Equity Residential to weather the coronavirus storm.
In its second quarter earnings report, the company reported that while earnings dipped 15.7 percent, its FFO remained stable at 86 cents a share.
During the second quarter of 2020, Equity collected on average 97 percent of its total monthly residential rental income and achieved the highest resident retention rates of the company’s history.
It credited “strong expense control, along with continued enhancements in our operating platform” for a drop in expenses.
Overall, said president an CEO Mark J. Parrell, “These challenging times have brought out the best in the Equity Residential team. We could not be prouder or more grateful.
Parrell said, “We see good demand for our apartments, both urban and suburban, but with increased customer price sensitivity, especially in the urban cores of New York, San Francisco and Boston.
“Looking forward, we believe the rate of improvement in our business will be dictated by how effectively the virus can be controlled and more normal economic activity restored. In the meantime, our strong balance sheet, state of the art operating platform and opportunistic mindset leaves us well positioned to weather the storm and to take advantage should conditions allow.”
Equity Residential reported it began to experience a recovery in demand by late May 2020 and initial indication for future traffic are in-line with the same time last year;
The company covered shareholder payments with the sale of two properties during the second quarter, totaling 655 apartment units for an aggregate sales price of $384.2 million.
Moving forward, Equity Residential said it continues to support its residents and employees during the COVID-19 pandemic.
It is utilizing technology to allow property teams to interact remotely with current and prospective residents, including a touchless new leasing process and a service process designed to limit contact.
Employees impacted by the pandemic are granted paid leave and special bonuses are being paid to certain on-site employees during the second quarter of 2020 in recognition of their “significant efforts.”
Among other resident support efforts, Equity has set up an outreach process for residents financially impacted by the pandemic and have created payment plans to assist them.
Equity Residential focuses on rental apartment properties in urban and high-density suburban communities and had reported a 50 percent slump in apartment applications at the start of the pandemic in late March.
While REITs have been bludgeoned by the pandemic, most analysts believe them to be undervalued and are betting on an upswing post-COVID.
Equity Residential stands out among apartment REITs because of its focus on markets such as New York and Seattle, where housing is in scarce supply. The company overs 37 properties in New York nearly 10,000 apartments. Its strong balance sheet also gives the company a cushion for future disruption that would allow it to make further acquisitions and drive up its cash flow.