UPDATE 1-Equity Residential 1st-quarter FFO slips

NEW YORK, April 29 (Reuters) - Equity Residential (EQR.N), one of the biggest U.S. apartment owners, said on Wednesday quarterly funds from operations slipped 1.2 percent, as the company curbed rental rates to hold occupancy.

The real estate investment trust (REIT) founded by real estate mogul and media investor Sam Zell, reported first- quarter funds from operations (FFO) of $166.1 million, or 57 cents per share, from $168.2 million, or 58 cents per share in the year-earlier quarter.

Analysts had forecast an average of 55 cents per share, according to Reuters Estimates. The company had expected FFO in the range of 53 cents to 58 cents per share.

The recession has hit the apartment industry fairly hard as the sector's performance dependents upon job growth.

For its 123,120 apartment units the company has operated for at least a year, net operating income fell 2 percent, primarily on higher expenses. Average rent crept up only $4 a month to $1,341, while occupancy slipped 0.5 percentage points to 93.7 percent. Compared with the prior quarter, average rent fell 1.5 percent.

FFO, a key performance measure for real estate investment trusts, excludes the profit-reducing effect of depreciation, a noncash accounting item.

Equity Residential said it expected second-quarter FFO in a range of 53 cents to 58 cents per share, compared with the 55 cents per share analysts target.

Equity Residential shares closed up 4.9 percent, or $1.05 at $22.58 on the New York Stock Exchange, and was unchanged in after-hours activity. (Reporting by Ilaina Jonas; Editing by Andre Grenon)