* AvalonBay FFO rises on joint-venture goal pay (Adds AvalonBay results, recasts first sentence, adds CEO quote)
NEW YORK, April 29 (Reuters) - Two large U.S. apartment companies, Equity Residential (EQR.N) and AvalonBay Communities Inc (AVB.N), reported first-quarter results which underscored the sector’s softness due to the nation’s job losses.
The recession hit the apartment industry fairly quickly as the sector’s performance is dependent upon job growth and its leases are relatively short — about a year, compared with other real estate where terms last several years.
Both companies said the New York area helped drive down revenue compared to the prior quarter.
“Continuing job losses leave us cautious for the remainder of the year, yet we believe that steady rents and current occupancy of 94 percent position us well as we enter our primary leasing season,” David Neithercut, Equity Residential’s chief executive, said in a statement.
Chicago-based Equity Residential on Wednesday reported quarterly funds from operations (FFO) that slipped 1.2 percent.
The real estate investment trust (REIT) founded by real estate mogul and media investor Sam Zell, reported first-quarter FFO of $166.1 million, or 57 cents per share, down from $168.2 million or 58 cents per share.
Analysts had forecast an average of 55 cents per share, according to Reuters Estimates. The company had expected FFO in the range of 53-58 cents per share.
For the 123,120 apartment units the company has operated for at least a year, net operating income fell 2 percent, primarily on higher expenses. Average rent rose only $4 a month to $1,341, while occupancy slipped 0.5 percentage points to 93.7 percent. Compared with the prior quarter, average rent fell 1.5 percent.
FFO, a key performance measure for real estate investment trusts, excludes the profit-reducing effect of depreciation, a non-cash accounting item.
Equity Residential said it expected second-quarter FFO in a range of 53-58 cents per share, compared with the 55 cents per share analysts’ target.
AvalonBay reported first-quarter FFO that rose 5 percent to $101 million or $1.27 per share. The results were ahead of the $1.18 per share analysts had forecast, chiefly on lower-than-expected expenses.
But, for properties the company has operated at least a year, net operating income fell 2.1 percent. Factoring in free months of rent, rental revenue fell 0.7 percent to $158.3 million
For the second quarter, Alexandria, Virginia-based AvalonBay said it sees FFO per share in a range of $1.16 to $1.20, while analysts forecast $1.16 per share.
Equity Residential shares closed up 4.9 percent, or $1.05, at $22.58 on the New York Stock Exchange, and were unchanged in after-hours activity. AvalonBay closed at $58.04, and fell 7 cents to $57.97 after hours. (Reporting by Ilaina Jonas; Editing by Andre Grenon and Carol Bishopric)