NEW YORK, N.Y. ( TheStreet) -- Equity Residential ( EQR) and Duke Realty ( DRE) beat top-line expectations for the second quarter but the real estate investment trusts missed earnings estimates.

Shares of Equity Residential seesawed Wednesday ahead of its earnings report, closing higher by 0.4%. Duke Realty shares finished lower by 0.1%.

The Vanguard REIT ( VNQ) and iShares Dow Jones US Real Estate ( IYR), exchange-traded funds that count Equity Residential among their top holdings, closed Wednesday's session off by 0.2%.

Equity Residential upped its outlook for funds from operations, a performance figure generally used by REITs to define cash flow from operations. It now expects third-quarter FFO in a range between 51 cents and 55 cents per share, and full-year FFO between $2.14 and $2.20 per share. Analysts' consensus call is for third-quarter FFO of 55 cents per share, and full-year FFO of $2.14.The company previously forecast 2010 FFO of $1.95 to $2.15 per share.

In the recent quarter Equity Residential's FFO declined to 58 cents per share, from 62 cents in the year-earlier period.

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Duke Realty reaffirmed its 2010 guidance for core FFO between 95 cents and $1.15. (Core FFO, in contrast to net FFO, is similar to adjusted earnings per share when one-time items are calculated into the figures.) For the recent quarter it posted FFO of 17 cents per share for the recent quarter, down from 29 cents in the second quarter last year. The decline was attributed to a non-cash impairment charge of $18.7 million. The company

The economic effects of a still-weak housing and home construction market should benefits firms like Equity Residential. Home prices rose higher-than-expected in May but most analysts agree that the housing market has a long way to go toward sustainable recovery, and that prices will likely fall again before rebounding in any meaningful way.

"I bet in six months, 15 to 20 cities will have falling prices," said IHS Global Insight economist Patrick Newport, who expects home prices to fall between 6% and 8% before rebounding in 2011.

The rate of vacant homes up for sale was 2.5% last quarter, the Commerce Department reported recently, flat year-over-year but historically very high.

With home ownership no longer carrying the prestige -- or even the assurance of an investment that will gain, rather than lose, value -- more and more people look to rent their homes rather than own. That could prove to be a windfall for a REIT like Equity Residential which focuses on apartment rentals.

CEO David J. Neithercut said strong occupancy, little new supply of residential apartments and favorable demographics should drive top-line growth "for years to come," but that "the rate of that growth is highly dependent on employment growth."

The Chicago-based REIT posted quarterly earnings of $6.3 million, or 2 cents per share, on revenue of $510.9 million. Sales beat expectations, but profits came in far short of the expected $34 million, or 12 cents per share.

Indianapolis-based Duke Realty widened its quarterly losses to $42.4 million, or 19 cents loss per share, from a year-earlier loss of $32.4 million, or 16 cents loss per share. Analysts expected a loss of just $18.1 million, or 4 cents per share. Top-line fundamentals came in better than expected at $383.9 million, from $348.3 million in the second quarter last year.

-- Reported by Miriam Marcus Reimer from New York.

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