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$25.82 -1.10 (-4.09%)
1/9/2009 4:05 PM

Equity Residential (EQR)

CAPS Rating:
*

The Company is focused on the acquisition, development and management of high quality apartment properties in top United States growth markets.

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Recs

2

Avatar TMFPlatoish (95.21) Submitted: 9/20/06 4:56 AM : Outperform Start Price: $46.69 EQR Score: 6.11

I'm banking on the effect that the current rumblings in the housing market will improve the economic conditions in the rental business. These guys have high concentration in LA and NYC where further development is a difficult task. I think they will do real well in the near term envionment, but I'm looking for niche producers in the same space. This company will outdistance the S&P for a couple of years.

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Avatar kevday (99.87) Submitted: 10/10/06 11:29 AM

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CAPS doesn't take into account dividends, which hurt high yielding stocks. This one yields 3.4% (according to Marketwatch.com), which by all accounts is historically low for a REIT (almost 150 bps below 10 yr Treasuries). I don't get the price of REITs these days, they are priced for really strong growth. While this one does have the advantage of being in hard to build markets, see Avalon Bay for much better .

Because of this games scoring penalty, I see EQR having a hard time outperforming without that 3.4% payout....

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Avatar bricks79 (< 20) Submitted: 2/13/07 2:04 PM

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Rental rates will come under pressure from the new inventory of busted condos in certain markets. However, the demographics are with the better operators in the hard to build coastal markets. Niche players are ok if they are not in Atlanta, Dallas, Denver, Phoenix, Tampa, etc.

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Avatar bricks79 (< 20) Submitted: 2/13/07 2:08 PM

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I agree that there will be a reversion to the norm in terms of REIT dividend yields and a correction in stock prices. Many of these companies will become more bond-like in their total return profiles (say 7-10% annually) over the next five years once the hot M&A money cools next year. Pension funds are still looking to keep money in real estate, both public and private, and this should put a floor under prices after a 10% correction.

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