Equity Residential (EQR) Q2 FFO Rises 2%

Key Points

• Normalized FFO per share rose to $0.99 for Q2 2025.

• Revenue (GAAP) increased year over year to $768.8 million, though this was slightly below analyst estimates.

• Guidance for FY2025 Normalized FFO (non-GAAP) and same store NOI was raised at the midpoint, with expense growth guidance reduced for the year.

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Equity Residential (NYSE:EQR), a major owner and operator of high-quality apartment properties in urban and high-demand markets across the United States, released its results for Q2 2025 on August 4, 2025. The most notable updates included a substantial outperformance on bottom-line metrics and improved full-year guidance. Normalized FFO per share (non-GAAP) was $0.99 for Q2 2025, while the revenue figure increased 4.7% compared to Q2 2024 but landed just below analyst expectations, as revenue (GAAP) was $768.83 million compared to the analyst estimate of $769.92 million. The quarter showed continued strength in high-barrier coastal markets, steady occupancy, and efficiencies in operating expenses, resulting in a positive overall assessment for the period.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Key Focus Areas

Equity Residential operates a portfolio of more than 86,000 apartment units across major metropolitan areas. Its core business is acquiring, developing, and managing apartment communities in markets with high barriers to entry like New York, Boston, San Francisco, and Washington, D.C. These areas often feature limited housing supply and strong employment drivers, resulting in stable rental demand.

In recent years, the company's primary focuses have included careful market selection, balancing urban and suburban assets, and investing in new technology to streamline operations. The company is also committed to sustainability, workforce engagement, and capital discipline -- all of which play a direct role in its competitive positioning. Success depends on sustaining high occupancy, maintaining efficient operations, and navigating ongoing regulatory and supply dynamics in different markets.

Quarter in Review: Operational and Financial Highlights

Equity Residential's same store revenue rose 2.7% in Q2 2025, driven by steady occupancy levels and strong renewal rents in its established coastal markets. The company reported physical occupancy in its same store portfolio at 96.6%, up from 96.3% in Q2 2024, while resident turnover declined to 11.2%, indicating stronger retention. Blended rental growth -- which combines both new lease and renewal rent changes -- stood at 3.0%, with the highest rates in markets like New York and San Francisco.

Portfolio strategy remained disciplined with the acquisition of eight suburban Atlanta properties (totaling 2,064 units for $533.8 million), part of a careful expansion into Sunbelt markets. At the same time, Equity Residential sold select assets in Seattle and San Diego during the first half of 2025. This match-funding approach allows Equity Residential to reinvest proceeds into higher-conviction markets while keeping leverage in check. Balance sheet strength was underscored by new note issuance ($500.0 million in 7-year notes at 4.95%). and a solid net debt to Normalized EBITDAre (non-GAAP) ratio of 4.45x.

Looking at market dynamics, established coastal cities continued to deliver the best results, with New York and San Francisco led year-over-year same store revenue growth, with New York up 4.3% and San Francisco up 4.5% (GAAP basis). Expansion markets delivered mixed results; for example, Denver saw a 2.9% decline in same store net operating income for the year to date through June 2025 due to new supply, while Atlanta's contribution is expected to materialize in future quarters. The company noted that rental demand remains supported by the high cost of home ownership in its markets, with average rent-to-income ratios at 20% for the trailing 12 months ended Q1 2025, and its customer base showed financial resilience throughout the quarter.

Outlook and What Lies Ahead

Management raised guidance at the midpoint for FY2025 Normalized FFO per share to $3.97–$4.03 (from $3.90–$4.00), with the improvement attributed to higher expected non-operating income and stronger core operations. Guidance for same store revenue and net operating income (NOI) growth for the year was also increased, while the forecast for same store expense growth for FY2025 was reduced by 25 basis points at the midpoint. The company expects physical occupancy to average 96.4% for the year, and acquisition and disposition volumes are both set at $1.0 billion for the year, reflecting a balanced, capital-disciplined strategy. Normalized FFO per share (non-GAAP) for Q3 2025 is forecast between $0.99 and $1.03, in line with the second quarter run rate.

The quarterly dividend remains at $0.6925 per share, with no declared change for the period. Going forward, investors may want to watch the company’s ability to manage expense pressures, especially in the face of utility and tax cost increases, and monitor trends in new lease growth across both established and expansion markets. The company’s guidance signals confidence in the core business, but management continues to highlight potential risks tied to new supply, regulatory changes, and the broader macroeconomic environment.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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