Key Takeaways: Ignore the quarter, everyone knew the numbers were going to be awful and they were. We do think the print has a lot to say about the balance of 2021, however, as we are now one-third of the way through the calendar year with a quarter of results booked.
- EQR came in a penny above the midpoint of its Q1 Core FFO range of $0.65 to $0.69, but more importantly increased the full year outlook for occupancy, SSREV, SSNOI and Core FFO. SSNOI growth of -17.1% was below the prior full year range of -15.0% to -12.0% as expected, and that range was revised +150bp at the midpoint and signals more favorable ROC going forward ahead of the easy 2H21 comps
- ESS not so much. Core FFO in the quarter was better, SSNOI growth of -12.3% was also below the prior -6.25% t0 -3.0% range, but unlike EQR the full year outlook for SSNOI and Core FFO was left unchanged. This signals less confidence in the pace of improvement in numbers for ESS’s 100% West Coast portfolio
In Apartments we are biased towards Coastal Gateway names versus Sunbelt / Suburban, but within that bucket are biased EQR / AVB over ESS.