UPDATE 2-Equity Residential second-quarter FFO rises

* Q2 FFO shr 58 cents vs Street View 55 cents

* Raises 2010 FFO forecast

* Shares close at $46.56, unchanged after-hours (Adds background, third-quarter charge for garage collapse, byline)

By Ilaina Jonas

NEW YORK, July 28 (Reuters) - Equity Residential (EQR.N), the largest U.S. publicly traded apartment landlord, said on Wednesday that quarterly funds from operations rose about 4 percent from a year ago, when the company incurred an impairment charge.

The real estate investment trust (REIT) posted second-quarter FFO available to common shareholders of $175 million, or 58 cents per share, up from $168.7 million, or 58 cents per share, a year earlier when the company had about 10 million fewer shares and incurred an $11 million impairment charge.

Analysts expected 55 cents per share, according to Thomson Reuters I/B/E/S. FFO, a key performance measure for REITs, excludes the profit-reducing effect of depreciation. The company had forecast 53 to 57 cents per share.

The U.S. apartment sector has been the first of the commercial real estate types to stage a rebound from one of the worst declines in 15 years. With its short-term leases, the U.S. apartment sector has been both the first to feel the pain from the collapse of the U.S. commercial real estate market, but also the first to stage a rebound. In the second quarter, the national vacancy rate fell for the first time in nearly three years, according to research firm Reis Inc.

For properties the company has operated for at least a year, revenue fell 1.2 percent, expenses rose 1.5 percent and net operating income, which reflects the cash the properties generate less expenses, declined 2.9 percent.

However, for the first time in six quarters, revenue rose, up 1.3 percent, and net operating income also rose, up 5.1 percent. Occupancy at those properties also increased, to 95.1 percent in the second-quarter 2010 from 93.6 a year earlier. Tenants also stayed longer, with turnover falling to 14.3 percent from 15.1 percent.

"We are pleased that the strong and broad based recovery in apartment fundamentals that began earlier this year has continued through our primary leasing season," said David Neithercut, Equity Residential's chief executive. "With strong occupancy, little new supply and favorable demographics, we expect top line growth for years to come. Obviously, the rate of that growth is highly dependent on employment growth."

Chicago-based Equity Residential, whose chairman is real estate mogul Sam Zell, raised its forecast for the year to FFO in the range of $2.14 to $2.20 per share, up from $1.95 to $2.15 per share.

In the third quarter the company expects to incur a charge of 2 cents a share to cover $12 million of expenses arising from the July 16 collapse of portion of a garage the company owns in Hackensack, New Jersey. No one was injured, but the residents in one of the 18-story high rises at the property Prospect Towers, will not be able to return to their homes until mid-November while electrical, water and life safety systems are restored.

It sees third-quarter FFO in the range of 51 to 55 cents per share.

Analysts had forecast full-year FFO of $2.14 per share and third-quarter FFO of 55 cents per share.

The company reported after the closing bell. Shares of Equity Residential were at $46.56 in after-hours activity, unchanged from their closing price on the New York Stock Exchange. (Reporting by Ilaina Jonas; Editing by Matthew Lewis and Steve Orlofsky)