Economic Conditions Drive Steady Earnings for Equity Residential in Q4 2025

Tightening supply and increasing demand for rental housing is playing out well for housing-focused real estate investment trust (REIT) Equity Residential, which reported strong occupancy and shareholder growth in the fourth quarter of 2025.

Equity Residential was well-hedged against troubles in the broader economy impacting home ownership, employment prospects and overall cost of living, with a portfolio consisting of only rental properties in national markets that reached an occupancy of 96.4 percent, the REIT said in a Friday morning earnings call.

Mark Parrell, CEO of Equity Residential, said the firm’s fourth-quarter earnings fell short of expectations, but the firm needs only “a little bit of wind at our back in the form of improved job growth” to see greater success in 2026.

“2025 was a challenging year for the rental housing industry, including Equity Residential,” Parrell said during the call. “While our 2025 same-store net operating income results matched our initial guidance, the road to those results was not as straightforward as we had expected.

“In many of our coastal markets, we saw stronger than expected rental growth through the first half of the year, followed by a deceleration of revenue momentum through the latter part of the year, across all of our markets, except San Francisco and New York, notable bright spots that we expect to continue to deliver strong results in 2026,” Parrell added.

The Chicago-based REIT reported funds from operations amounting to $1.5 billion in the fourth quarter, up from to $1.4 billion year-over-year, as well as net earnings of $626.3 million in the fourth quarter, compared to $546.7 in the same period of 2024, according to Equity Residential’s earnings report.

Revenue reached $743.5 million in the fourth quarter, a 2.5 percent increase over the fourth quarter of 2024, which amounted to $725.6 million.

“We also continue to see the tailwinds in our business from the unaffordability of homeownership,” Michael Manelis, chief operating officer for Equity Residential, said on the call. “In fact, only 7.4 percent of our residents gave ‘bought home’ as the reason for move-out in 2025, which is also the lowest percentage we have seen in our company’s history.”

Manelis added that resident retention will remain strong throughout the year, a trend he attributed to the level of customer service offered by Equity Residential, rather than economic conditions.

While Equity Residential did not buy or sell any properties in the fourth quarter, that doesn’t mean it wasn’t deploying funds, nor did it go the full year without any acquisitions.

Over the full year, it purchased 2,439 housing units for a total of $636.8 million, and it closed a deal around New Year’s with JRK Property Holdings, which paid $400 million for 803 apartment units in L.A., Seattle and Hoboken, N.J.

Equity Residential also initiated a $205.7 million share-repurchasing program in the fourth quarter, retiring about 3.4 million common shares at an average purchase price of $61.06 per share. 

But it wasn’t finished reining in the number of its shares on the market, buying back from investors 4.8 million shares at $62.03 per share for a total amount of $300 million at the beginning of 2026.

Mark Hallum can be reached at mhallum@commercialobserver.com.