Equity Residential Sets $700M as 2003 Sales Goal

However, Duncan adds Equity Residential believes "we're getting close to a bottom." Getting past the looming conflict in Iraq will help, Duncan suggests, but the multifamily rental industry needs job growth to provide tenants, some of whom continuing to be lured into homeownership with low interest rates.

"All of us are being hurt by the perfect storm," Duncan says. "These continue to be difficult times for the apartment industry."

However, Equity Residential most likely will continue to be a net seller in 2003, having sold $546.2 million in property last year at an 8.1% capitalization rate while acquiring replacement assets for $289.9 million, buying in at a 7.8% capitalization rate.

Equity Residential has a goal of $700 million of asset sales in 2003, Duncan reports, and the largest US multifamily REIT already has contracts or letters of intent for $400 million, with the potential sales representing an 8.1% capitalization rate. Meanwhile, Equity Residential has letters of intent or contracts to buy assets for $337 million, at a 7% capitalization rate.

"Pricing might be coming down a little bit," Duncan believes. "We're in the hunt lately."

Duncan, who took over last year from Douglas Crocker II, says Equity Residential will be leaving smaller markets where it has older properties over the next three years. Instead of a presence in 44 markets now, Equity Residential likely will be in 30 in 2006, Duncan says. The move will result in lower operating costs and stronger performance in the remaining markets, he adds.