The two parties to the apartment REITs' "merger of equals" released their second-quarter earnings yesterday. According to analysis by Haendel St. Juste, Managing Director and Senior REIT Analyst at investment bank Mizuho Securities, both AvalonBay Communities and Equity Residential beat funds from operations (FFO) expectations in their second-quarter reports.

According to a report shared by Mizuho with Multifamily Dive, AVB beat consensus FFO expectations by 5 cents due to better-than-expected same-store net operating income (NOI), which included revenue, operating expense timing, and development lease-up performance. EQR also beat FFO expectations due to improved rents and lower same-store operating expenses.

St. Juste wrote in an analyst note: "Overall, we believe AVB and EQR's results bring hope to the beaten-down apartment sector. The sector has lagged REITs by roughly 1,300 basis points year-to-date, implying upside to earnings for their portfolios and coastal peers in 2026 and 2027."

However, due to the impending merger, neither REIT held a conference call to discuss its second-quarter results. Below are details of the two REITs' results and analyst reactions.

AvalonBay Raises Guidance

According to St. Juste's observation, AvalonBay's asking rents have increased 6.5% since the beginning of 2026, consistent with historical seasonal patterns. The Arlington, Virginia-based REIT achieved a blended rental growth rate of 2.6%, up from 0.4% in the first quarter, driven by "lower turnover and healthy renewal growth (+4.1%)." According to a filing with the U.S. Securities and Exchange Commission, its rental change rate grew 3.7% in July, with new leases up 1.8% and renewals up 4.8%.

Anthony Paolone, Managing Director at J.P. Morgan, said in an analyst note shared with Multifamily Dive: "We forecast a blended leasing spread of 2.6% for the entire third quarter, so a strong start to the quarter, which we think is encouraging."

Data at a Glance

Category Q2 YoY Change
Property Revenue $709.6 million 1.6%
Net Operating Income $488.6 million 1%
Operating Expenses $221 million 2.9%
Core FFO per Share $2.86 1.4%
Revenue per Occupied Home $3,097 1.7%
Occupancy 96.1% 10 bps

Source: AVB

Boosted by improving markets and lower supply in core cities, AVB raised the midpoint of its same-store revenue guidance by 20 basis points, lowered the midpoint of its same-store operating expense guidance by 30 basis points, and raised the midpoint of its same-store NOI guidance by 40 basis points.

AVB Chief Operating Officer Sean Breslin said in the earnings release: "A healthier demand environment, easing new supply, and the disciplined execution of our teams have driven strong rent growth and lower operating expenses in the first half, enabling us to raise our full-year same-store NOI guidance."

AVB recorded the strongest year-over-year same-store revenue growth in San Francisco (9.6%), San Jose, California (4.4%), New York City (3.4%), and the East Bay in California (3.2%). Meanwhile, Denver (-3.8%), Washington, D.C. (-2.2%), expansion regions (-1.5%), and Seattle (-0.9%) were the weakest performers in the second quarter.

AVB President and CEO Benjamin Schall said in the earnings release: "Our second-quarter performance was strong and exceeded expectations, and these results reflect the enduring qualities of our business—a high-quality portfolio in supply-constrained markets, a proven operating platform, and a team that executes consistently and with discipline."

Equity Residential Has Not Yet Seen Peak Rents

According to St. Juste, EQR's blended rental growth rate was 2.8%, up 130 basis points from the first quarter, driven by "lower turnover and healthy renewal growth (+5.2% in Q2 2026) as well as new leases (-0.7%)." However, this blended rate was below Paolone's estimate for the second quarter.

EQR President and CEO Mark Parrell said in the earnings release: "An increasingly favorable job market, combined with declining levels of new supply in most of our markets, sets the stage for tremendous success for the combined company."

Similar to AVB, EQR also raised its full-year guidance. It raised the midpoint of its same-store revenue guidance by 20 basis points and the midpoint of its same-store NOI guidance by 30 basis points. Due to the merger, both REITs suspended guidance for earnings per share, FFO, and core FFO.

Paolone wrote: "The upward revision to its same-store guidance is supported by strong momentum in San Francisco and improvements in bad debt."

Data at a Glance

Category Q2 YoY Change
Operating Income $749.4 million 1.9%
Net Operating Income $509.5 million 1.4%
Operating Expenses $239.9 million 3%
FFO per Share $1.00 2%
Revenue per Occupied Home $3,194 2.5%
Occupancy 96.2% 40 bps

Source: EQR

San Francisco (7%), New York (3.8%), Orange County, California (2.4%), and Boston (1.6%) were EQR's strongest markets for year-over-year revenue growth in the quarter. Meanwhile, Denver (-6.4%), Dallas and Austin, Texas (-1.3%), Atlanta (-0.3%), and Washington, D.C. (0.8%) were the weakest metropolitan areas.

EQR's new leases improved to -0.1% in July, while renewals were 4.9%. Paolone wrote: "With the leasing season coming to an end, further acceleration in the coming months may be difficult, but in this regard, management noted that peak rents have not yet been seen."

Paolone wrote: "The positive we see is that the two strongest markets nationally are San Francisco and New York, and EQR has a strong presence in both, although we would have expected its New York numbers to be a bit stronger."

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