Equity Residential, the largest U.S. real estate investment trust that owns and operates apartment buildings, said Wednesday that first-quarter profit rose 11 percent on rent increases, new developments and property sales.
Net income rose to $140.5 million, or 51 cents a share, from $126.2 million, or 40 cents a share, the Chicago-based company said. Funds from operations, a cash-flow measure used by REITs, rose to 59 cents a share from 55 cents.
Owners of rental properties are benefiting as home prices fall and mortgages become more difficult to obtain. Equity Residential has been selling apartments in second-tier markets such as Texas and Minnesota and using the cash to buy in locations such as New York, where rents are higher.
“The apartment business will be golden well through 2009,” Equity Residential Chairman Sam Zell said in an interview before earnings were announced. “The population is growing, household formation is growing at a million a year, new supply is not being created, the existing apartment market is 95 percent occupied, and turnover is down.”
Zell, a billionaire real estate developer, founded the company in 1969. He is also chairman and chief executive of Tribune Co., which owns the Chicago Tribune.
“We for sure have less buyers for everything that we want to sell,” Zell said. “On the other hand, we haven’t had any assets we wanted to dispose of that we didn’t, and everything we have sold has been above our initial analysis.”
The REIT owned or had stakes in 579 properties with almost 153,000 units as of Dec. 31, according to its 2007 annual report.
The results were released after the close of trading.
