EQR Equity Residential
Intrinsic value$84.74
Price (at call)$68.31
Margin of safety
+24.1%
vs market (rating basis)
+109.5%
Coastal apartment cash flows support upside, but rates and regulation constrain the valuation gap.
The story
EQR's coastal apartment portfolio benefits from constrained housing supply and resilient urban demand, with revenue growth near its five-year trend. Stronger margins support cash flow, while leverage and long-duration property values remain sensitive to interest rates. Merger activity offers optionality but is not central to the valuation.
Drivers remain unchanged: 4.2% historical revenue growth and margin expansion support 4.8% near-term FFO growth. Reported capex implies approximately 82% AFFO/FFO conversion, while 3% terminal growth stays below the 4.57% risk-free rate.
Value drivers
| AFFO growth (Y1) | 4.8% |
| Terminal AFFO growth | 3.0% |
| AFFO / FFO ratio | 82.0% |
| Beta | 0.90 |
| Failure probability | 0.5% |
| Cost of equity | 8.6% |
Valuation bridge
| PV of AFFO (explicit) | 12.95B |
| PV of terminal value | 18.96B |
| Equity value | 31.75B |
| ÷ shares → per share | $84.74 |
News
bullish +0.30 · 8 articles
- Merger Value Hit a First-Half Record as Deal Sizes Grew
- Global M&A Tops $2.5 Trillion After First-Half Deals Surge
- Truist Raises its Price Target on Equity Residential (EQR)
- Why NYC’s Rent Freeze Isn’t Hitting Real Estate Stocks Harder
- Is AvalonBay Stock Underperforming the S&P 500?
- AvalonBay (AVB) Could Benefit From a Changing Housing Market, Says Mizuho
- Is Essex Property Stock Underperforming the Nasdaq?
- How Is Invitation Homes' Stock Performance Compared to Other Residential and Multisector Real Estate Stocks?
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 2.06B | 1.69B | 4.8% | 1.56B |
| 2 | 2.16B | 1.77B | 4.6% | 1.50B |
| 3 | 2.25B | 1.85B | 4.4% | 1.44B |
| 4 | 2.35B | 1.92B | 4.2% | 1.38B |
| 5 | 2.44B | 2.00B | 4.0% | 1.32B |
| 6 | 2.53B | 2.08B | 3.8% | 1.26B |
| 7 | 2.62B | 2.15B | 3.6% | 1.21B |
| 8 | 2.71B | 2.22B | 3.4% | 1.15B |
| 9 | 2.80B | 2.30B | 3.2% | 1.09B |
| 10 | 2.88B | 2.37B | 3.0% | 1.03B |
Key risks
- Higher interest rates pressure property values and refinancing costs
- Apartment supply or rent regulation weakens same-store growth
- Coastal market concentration increases regulatory and economic exposure
Catalysts
- Sustained occupancy and rent growth drive same-store NOI
- Accretive transactions or merger activity crystallize portfolio value