Equity Residential (EQR) recorded funds from operations of $201.4 million in the fourth quarter, a 47.6% increase from a year earlier, as rentals gain steam on the market.

The real estate investment trust’s FFO a share rose to 64 cents from 45 cents in the fourth quarter 2010.

The Chicago-based REIT, which owns, develops and manages apartments, took in about $99.5 million in the fourth quarter in income available to common shareholders, down from $185.9 million a year earlier. FFO represents a more accurate measure of a REIT’s performance than net income.

FFO for all of 2011 increased to $752.2 million from $623.3 million the prior year.

Revenue for the quarter rose to $519.3 million from $460.8 million year-over-year, while expenses dropped to $357.1 million from $384.2 million.

“We are confident that multifamily fundamentals will remain strong as we see no let up in demand and little new supply which will keep retention high, vacancy low and rental rates on the rise,” President and CEO David Neithercut said in a release.

The company, founded by Sam Zell, also released more details on its effort to buy a stake in apartment developer Archstone. The attempted transaction cost Equity Residential $4.4 million, though it can still buy a 26.5% interest for $13.3 billion or more by Feb. 19.

The bankruptcy estate of Lehman Brothers, which holds the remainder of Archstone, could match that offer, but Equity Residential would earn a breakup fee of up to $80 million. The company previously submitted a separate $1.33 billion bid for a separate 26.5% stake in Archstone, but was blocked by Lehman.

Equity Residential closed on 11 properties during the fourth quarter, totaling 3,669 apartment units and a purchase price of $681.3 million. For the year, the REIT bought 20 properties for $1.34 billion, but sold 47 for $1.48 billion.


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