Equity Residential (EQR) Presents 12% Total Return

Competition

AvalonBay Communities, Inc. (NYSE:AVB) owns and invests in multifamily apartments in similar high barrier to entry locations of the United States. AVB reported its fourth quarter performance on Jan. 30. The FFO per share increased 6.7% to $1.27 from a year. The company expects projected FFO for the year 2013 to be within the range of $4.11 to $4.47, representing a 19.4% decrease from the full year 2012 FFO per share of $5.32. The company expects rental revenue to grow, operating expense to increase 3.5%, while a 4.75% surge in NOI is expected during the full year 2013.

UDR, Inc. (NYSE:UDR) is another equity giant that competes with EQR. UDR has a well diversified apartment portfolio both in terms of asset types and geographical distribution. The company’s reported funds from operations (FFO) of $0.35 remained $0.02 behind what the Street was expecting. Both the bottom line and rental income surged 2.3% and 7% compared to the prior year. According to the company’s guidance, the three year outlook remains solid.

Conclusion

I recommend investors buy EQR and benefit from its decent dividend yield of 5.4% and 6.3% potential for capital appreciation, as analysts have a consensus mean price target of $61.15 for EQR, which is currently exchanging hands at $57.51.

The article This REIT Presents 12% Total Return originally appeared on Fool.com and is written by Adnan Khan.

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