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(To read more on the multifamily market, click here.)

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CHICAGO-Equity Residential is enjoying the best of both multifamily worlds this summer. While the pendulum has begun to swing back toward rental property operators, REIT officials are reaping the benefits from sales of assets, including condominiums of its own and joint venture properties.

Thanks to two deals in New York City and Seattle that came directly to the REIT, Equity Residential now expects 2005 acquisitions to total $2 billion, with $1.4 billion in sales of assets. Meanwhile, gains on condominium sales are expected to top $65 million this year, up from the company’s previous $50-million projection. Equity Residential sold 434 units in the second quarter for $106.4 million.

With a 3% increase in revenue in the second quarter, leasing agents are not seeing the usual summer slowdown in traffic, chief executive officer Bruce W. Duncan notes, suggesting the run-up in home prices may be making renting more attractive. “Our rents on average are not where they were in 2001,” Duncan says. “They’re growing, and they could grow more.”

Closer to home, the REIT has sold 96 units at its Four Lakes complex in west suburban Lisle, far enough from Downtown to be affected by a potential condo bubbles, company officials believe. With an average sales price of $144,000, the units are hitting a “starter home” market, Duncan suggests. “What you’re reading about Downtown Chicago will have no impact,” he says during the company’s recent earnings conference call.

The 14 second-quarter deals totaling 3,320 units and $218.7 million were at an internal rate of return of 10.3%, reports president David J. Neitherercut. “There continues to be a great amount of demand for our assets,” Duncan adds.

Assets in the second-quarter sales averaged 19 years in age, Neitherercut says, in markets such as Charlotte, NC; Dallas; Memphis; Raleigh-Durham, NC; St. Louis; and Tulsa, OK.

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