EQR - Embedded Expectations Analysis - 2021 03 26
Equity Residential (EQR:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 59.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about urban center opportunities, the leasing climate, and rent price sensitivitySpecifically, management may have concerns about the small volume of closed deals in the San Francisco and New York markets, the potential of a lower rent post-pandemic leasing climate, and the potential need to become sellers in urban markets. In addition, they may be overstating the pace of rent recovery in urban centers, their customer's ability to cover future rent increases, and the potential of the District of Columbia market. Furthermore, they may have concerns about stagnant growth trend among residents with children, the sustainability of spot rents, and declines in occupancy rates. Also, they may lack confidence in their ability to construct new starts in urban centers, sustain their disposition proceeds, and maintain their new lease change and renewal rates in Denver
Equity Residential is a real estate investment trust. The company focuses on the acquisition, development and management of rental apartment properties. The company is the general partner of, and owns an ownership interest in ERP Operating Limited Partnership (ERPOP). All of the company's property ownership, development and related business operations are conducted through ERPOP and those entities/subsidiaries owned or controlled by ERPOP (collectively, Operating Partnership). The Operating Partnership holds substantially all of the assets of the company The company, directly or indirectly through investments in title holding entities, owns all or a portion of its properties located in several states and the District of Columbia.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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