(Bloomberg)—Softening apartment rents in New York and San Francisco have forced landlord Equity Residential to lower its revenue forecast for the second time this year, as newly signed leases aren’t meeting the company’s expectations.
Equity Residential said it expects revenue growth from properties open at least a year to be no higher than 4.5 percent this year, according to a statement Wednesday. The reduction follows one made in April, when the Chicago-based real estate investment trust set the upper limit at 5 percent, down from a previous estimate of 5.25 percent.
“The revision is being driven by continued weakness in its New York portfolio and recent under performance in the company’s San Francisco portfolio,” Equity Residential said in the statement. “New lease rates are not meeting original projections due to new rental apartment supply.”
The shares dropped 3.2 percent to $67.01 at 10:30 a.m. New York time. They have fallen about 11 percent in the past year.
Equity Residential is among landlords having to work harder to draw tenants in Manhattan as a glut of new apartments gives residents more bargaining power. In April, Manhattan renters were offered sweeteners, such as a month’s free rent or payment of broker’s fees, on 13 percent of all new leases, up from 2.7 percent a year earlier, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Property owners had to whittle an average of 2.9 percent from their asking rents to reach a deal, while the inventory of available listings jumped 23 percent to 6,718.
To contact the reporter on this story: Oshrat Carmiel in New York at [email protected] To contact the editors responsible for this story: Kara Wetzel at [email protected] Christine Maurus, Daniel Taub
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