A weak office and apartment market is having a pronounced effect on the nation’s bellwether REITs.

Equity Office Properties Trust and Equity Residential, two of the largest publicly traded office and apartment REITs, released their fourth quarter 2002 earnings yesterday. Chicago-based EOP reports that net income rose 46% to $171.6 million (or 42 cents per share) versus the year-earlier $117.9 million (or 28 cents per share). EOP, which controls 126 million sq. ft. nationwide, dropped from 89.2% at the end of the third quarter to 88.6% at the close of the year. The REIT also reported waning operating earnings in the fourth quarter.

On the residential side, EQR reports that net income fell 16% to $118.5 million (35 cents per share) versus the year-earlier $141.5 million (42 cents per share). EQR’s funds from operations dropped to $182.1 million (49 cents per share) versus $206.3 million (66 cents per share) one year earlier. EQR’s revenues fell roughly 3% from $505.7 million to $492.9 million for the same period.

"We predict a slow recovery in 2003, but remain optimistic that office job growth will continue to accelerate, particularly in the later half of the year," says Richard Kincaid, president of Equity Office Properties Trust.