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4. Equity Residential (NYSE:EQR)

Number of Hedge Fund Holders: 36

Equity Residential (NYSE:EQR) is a US real estate investment trust (REIT) focused on apartment ownership and management. It acquires, develops, and manages rental properties, generating income by leasing units to residents.

Equity Residential (NYSE:EQR) delivered a positive surprise in its first-quarter earnings report on April 23rd. Funds from operations (FFO) of $0.93 per share exceeded analyst estimates by $0.02. Revenue also came in strong, surpassing expectations by $2.74 million and achieving a year-over-year increase of 3.6% to $730.82 million.

Equity Residential (NYSE:EQR) recently received a positive upgrade from CFRA. Analysts upgraded their rating on Equity Residential (NYSE:EQR) from Hold to Buy and increased the price target to $77, up from $66.

This positive outlook is driven by the company’s focus on coastal urban markets with limited new construction, contrasting with trends in the Sun Belt. Moreover, the company benefits from a leasing market tightening, where fewer incentives are offered and renting remains more affordable compared to homeownership.

Here’s what Baron Funds said about Equity Residential (NYSE:EQR) in its Q4 2023 investor letter:

“In the most recent quarter, we re-acquired shares in Equity Residential (NYSE:EQR), the largest U.S. multi-family REIT. The company has assembled an excellent portfolio of Class A apartment buildings located in high barrier-to-entry coastal markets with favorable long-term demographic trends and muted overall supply growth. We believe the company is also well positioned to benefit from the affordability advantages of renting versus home ownership, annual leases that provide the potential for partial inflation protection, and its low levered balance sheet, which positions the company to take advantage of acquisition opportunities.

In our opinion, Equity Residential’s shares are attractively valued relative to private market values and the company owns and operates excellent and relevant real estate that should perform well, long term.”