“Rent control is a risk, just like climate change:” Equity Residential unbowed by affordable advocates

The Chicago-based REIT reported strong Q1; has 80K units in markets including NY, SoCal

May.May 01, 2019 04:00 PM
Mark Parrell

Mark Parrell

Multifamily investor Equity Residential reported higher earnings in the first quarter thanks to continued demand for rentals and a “sizeable drop in new competitive supply” in its properties in the New York and Boston markets.

The Chicago-based REIT reported first-quarter revenue of $662.3 million, up from $632.8 million in the first quarter of 2018. It was also an increase from the fourth quarter’s $652.6 million.

Funds from operations per share were up 14.1 percent and net operating income per share was up 6.5 percent year over year.

Mark Parrell, who took over as the firm’s CEO Dec. 31, said during a Wednesday earnings call that New York and Boston were particularly strong markets in the first quarter.

“We’re really bullish on New York long term,” he said.

But he added he is optimistic about the outlook in all of the REIT’s markets.

“We like the demand picture across the board. We feel really good,” he said.

While it didn’t acquire any new properties during the first quarter, Equity has since closed on the sale of a 266-unit building at 800 Sixth Avenue in New York to Greystar for $237.5 million, Parrell said.

Equity did spend nearly $259 million on three properties totaling 579 units in Jersey City, N.J., Seattle and Denver. In April, after the quarter closed, it picked up a 366-unit property in Rockville, Maryland, for $103.5 million.

Founded by Sam Zell, Equity Residential has a portfolio of more than 80,000 apartments in 310 properties primarily in New York, Southern California, Boston, Washington, D.C., Seattle and San Francisco.

Occupancy was at 96.6 percent at the end of the quarter, up from 96.3 percent during the same period last year.

Parrell said the firm is not deterred by the growing chorus of affordable housing advocates pushing for greater rent control across the country. The company is taking a wait-and-see approach on potential changes, he said. That is particularly the case in New York, where lawmakers are debating revisions to the rent regulation laws.

“Rent control is a risk, just like climate change, just like the financial strength of the municipality,” Parrell said, He added that Equity focuses more on demand, quality of potential tenants and the ability to build when assessing where to invest.

Still, the industry has a vested interest in being part of the rent control debate, he said.

“We need to continue to get the point across that continuing to limit the incentives for the private side to create new housing will not solve the problem,” Parrell said.

Related Articles

From left: CEO and founder of CA Ventures Thomas Scott, CEOs of WeWork Sebastian Gunningham and Artie Minson, and a rendering of the building

WeWork has troubles, but it also has a new location in River North

The Bolingbrook property along route 53 and Amazon CEO Jeff Bezos (Credit: Google Maps, Getty Images)

Amazon pays $51M for site of former Chicagoland amusement park

Jeff Bezos and the Old Wrigley gum factory at 3535 S. Ashland Avenue (Credit: Getty Images and Google Maps)

Chew on this: Former Wrigley gum factory pitched as potential Amazon warehouse

Peter E. Ricker, Chairman and CEO of MBRE, and 800-810 West Madison Street (Credit: MBRE and Google Maps)

MB Real Estate pays $19M for office building near Fulton Market

W. P. Carey Inc. CEO Jason E. Fox, Pritzker Realty Group founder and Chairman Penny Pritzker, 150 N. Clinton St. (Credit: Google Maps)

WP Carey and Pritzker Realty make big moves in West Loop

Rendering of 800 W. Fulton Market and Thor's Joe Sitt

Thor Equities lands anchor tenant for spec Fulton Market office tower

President of University of Chicago Robert Zimmer, DL3 Realty's Leon Walker and The Jewel-Osco in Woodlawn (Credit: Getty Images, Google Maps)

Near future Obama Center, U. of Chicago buys Jewel-Osco-leased building

Former Takeda Campus in Deerfield, Horizon CEO and president Timothy Walbert

Irish biotech firm in contract to buy entire 70-acre Takeda campus