The largest office and multifamily REITs recently put out their third-quarter reports, providing investors and other commercial real estate observers with a picture of how these sectors are expected to perform during the remainder of the year.
Similar to retail and industrial assets, the outlook is favorable for these property types.
BOSTON PROPERTIES (BXP) owns about 44 million square feet of Class A office space in some of the nation’s top markets, including Boston, New York City, San Francisco, and D.C. The REIT had a strong third quarter, with FFO (funds from operations) hitting $223.4 million, up from $197.9 million during the same year-ago period. Leasing dipped slightly in its portfolio, at 92 percent in the third quarter, from 93.4 percent in the period that ended Dec. 31.
The company’s third quarter FFO beat analysts’ expectations, and analysts have even stronger forecasts for the firm’s fourth quarter.
Equity Residential (EQR) is an apartment REIT that owns and manages roughly 400 multifamily assets in major markets across the country. Its third quarter FFO was 81 cents per share, compared to 71 cents during the same year-ago period.
Equity’s executives expect good news for the remainder of the year as they have upped guidance for all of 2014 in several financial categories, including FFO, occupancy rates, net operating income (NOI), and revenue increases.
Most analysts covering Equity rate its stock as a hold or buy, with some upping their target prices for its shares.
More broadly, research firm Reis, reported that average apartment rental rates were up one percent in 73 metro areas in the third quarter, the 23rd consecutive quarter increase it has tracked.
The industry is now awaiting year-end results from these large commercial real estate companies, and if their predictions come true, there is likely more good news to come in the next three months.
Our team will continue to closely monitor the market’s performance and report back with our thoughts on trends to watch in the months to come.
Image Source: George Rex