It is a good time to be in the apartment business. So says Mark Parrell, CEO of Equity Residential on the firm’s Q2 earnings call. “Very strong demand for our product has continued to drive absorption in new supply and our turnover continues to be at all-time lows, resulting in same-store revenue growth that is exceeding our expectations and leading us to increase our same-store revenue, net operating income and normalized FFO per share guidance.”
The midpoints of all these new guidance ranges now exceed the top end of the firm’s original guidance expectations, he explained. “On the investment front, asset prices have remained generally stable in our markets, but there are more assets for sale than earlier this year, just giving us the opportunity to trade-in assets that we believe have more desirable long-term return prospects.”
According to Parrell, the REIT continues to see good demand for the assets that it wishes to sell. “This is often coming from buyers with a value-add thought process. As a result, we have increased our transaction guidance for the year to $1 billion of both dispositions and acquisitions.”
He also talked about rent control on the call, noting that while he agrees that there is a shortage of workforce in affordable housing in many places in the country, he disagrees that the actions taken in New York and being considered in other states will help solve this problem. “The new housing law in New York did not create any incentives to build new affordable housing. In fact, the recent legislation has created disincentives to build new supply at all.” He also said it will over time lead to the deterioration of the existing affordable housing stock.