Equity Residential Reports Uptick in Delinquencies, But Also Signs of Resiliency

The COVID-19 crisis has been particularly harsh on the financial sector, especially among real estate investment trusts (REITs). The mortgage REIT sector has been absolutely crushed, and retail/mall REITs are suffering as many stores remain shut. The apartment REIT sector has not been immune either, and it is experiencing higher delinquencies.

All that said, things might not be as bad as feared just a month or two ago.

Equity Residential (NYSE: EQR) earlier this month reported first-quarter earnings of $0.83 a share, compared to $0.28 a year ago. Funds from operations increased 6% from $0.82 to $0.87 per share. Delinquencies ticked up to 5.4% from 2.6% at the end of March; however, this is much better than the typical apartment REIT performance. According to the National Multifamily Housing Council, almost 20% of renters have missed their payment in the first week of May. This is largely because Equity Residential leases upscale apartments to younger professionals in the knowledge industry, who seem to be less affected by the COVID-19 crisis as they are most likely to be able to continue to work from home.