Zell's REIT: The Time to Increase Rents is Now

CHICAGO-The time is now to increase apartment rental rates, according to Equity Residential executives during their first quarter conference call Thursday. The Sam Zell-led REIT, which owns 427 properties and may bid $1.5 billion for a share of Denver-based Archstone, said the lost leases will be replaced by renters who can afford the higher rates.

The locally based trust reported revenue growth of 5.5% and net operating income growth of 7.8% in the first quarter, but admitted it faced resistance to price increases in its core markets. “We believe trading some occupancy or holding those higher rates is actually a good strategy at this point in the cycle,” said Fred Tuomi, president of property management, during the call. “As we enter the leasing season, we fully expect and begin to see a recapture of that occupancy at those higher rates. New residents still showed no problem at accepting and achieving these new rates.”