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Investing.com -- S&P Global Ratings has revised its outlook for Equity Residential (NYSE:EQR) to positive from stable while affirming the company’s ratings, citing solid operating performance and balance sheet strength.
The rating agency expects EQR’s operating performance to remain stable, supported by high occupancy and favorable housing market conditions. The company benefits from steady demand and solid resident retention across most markets, with strongest results in San Francisco and New York.
In the third quarter of 2025, EQR reported same-property residential revenue growth of 3.0% compared to the same period in 2024, with operating expenses increasing 3.6%. This resulted in same-property residential net operating income (NOI) growth of 2.8%. These results were driven by robust resident retention at 58.5%, a company high.
S&P expects San Francisco and New York City to outperform in terms of rental rate growth. In San Francisco, downtown recovery is underway as tech workers return and AI grows, driving strong rental rate growth for both new and renewed leases. New York shows similar trends, with favorable job sentiment and historically low new supply supporting above-average rental rate growth.
While September new lease demand was slightly softer than anticipated, particularly in Washington, D.C., year-to-date same-property NOI through September 30, 2025, remained favorable at 2.0%.
S&P expects EQR to maintain leverage below 5x, with acquisitions financed in a largely leverage-neutral manner. For the trailing 12 months ended June 30, 2025, S&P Global Ratings-adjusted debt-to-EBITDA was 4.6x, with fixed-charge coverage of 5.5x.
For the year-to-date period ended September 30, 2025, the company completed the disposition of five consolidated rental properties and one consolidated land parcel, generating net proceeds of approximately $589.1 million.
The Federal Reserve cut rates again on October 29, 2025, but S&P notes that even if interest rates continue to drop modestly or demand softens from macroeconomic uncertainty, rental housing should remain in demand due to the large rent differential in EQR’s markets.
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