Same Store Results Ahead of
Expectations
Equity Residential (NYSE: EQR) today reported results for the
quarter ended March 31, 2024.
First Quarter 2024 Results
All per share results are reported as available to common
shares/units on a diluted basis.
Quarter Ended March
31,
2024
2023
$ Change
% Change
Earnings Per Share (EPS)
$
0.77
$
0.56
$
0.21
37.5
%
Funds from Operations (FFO) per share
$
0.87
$
0.85
$
0.02
2.4
%
Normalized FFO (NFFO) per share
$
0.93
$
0.87
$
0.06
6.9
%
Recent Highlights
- Same store revenue increased 4.1% for the first quarter of 2024
compared to the first quarter of 2023, driven by healthy demand and
modest supply across most of our markets. Same store expense
increased 1.3% with low or negative growth in our primary expense
categories. The Company's continued focus on expense efficiency has
delivered a five-year compounded annual growth rate of same store
expenses of 3.1%. Same store Net Operating Income (NOI) increased
5.5%.
- Our focus on same store revenue growth, same store expense and
corporate overhead efficiency and limited exposure to higher
interest rates led to strong growth.
- Our high quality customer experience along with the overall
desirability of our locations has led to the lowest quarterly same
store Turnover in our history of 8.6%.
- During the first quarter of 2024, the Company sold three
properties - one in Boston, one in Orange County and one in San
Francisco - consisting of 504 apartment units, for an aggregate
sale price of approximately $248.5 million.
- During the first quarter of 2024, the Company repurchased and
retired 652,452 of its common shares, at a weighted average
purchase price of $58.95 per share, for an aggregate purchased
amount of approximately $38.5 million.
“Our operating business performed very well this quarter
positioning us favorably as we enter our primary leasing season,”
said Mark J. Parrell, Equity Residential’s President and CEO. “The
positive demand dynamics in our affluent renter demographic,
limited new apartment supply in our existing predominantly coastal
markets and our laser focus on expense management continue to
produce good results.”
Results Per Share
The change in EPS for the quarter ended March 31, 2024 compared
to the same period of 2023 is due primarily to higher property sale
gains, the various adjustment items listed on page 25 of this
release and the items described below.
The per share change in FFO for the quarter ended March 31, 2024
compared to the same period of 2023 is due primarily to the various
adjustment items listed on page 25 of this release and the items
described below.
The per share change in Normalized FFO is due primarily to:
Positive/(Negative)
Impact
First Quarter 2024 vs. First
Quarter 2023
Same store NOI
$
0.07
2024 and 2023 transaction activity impact
on NOI, net
(0.01
)
Corporate overhead (1)
(0.01
)
Other items
0.01
Net
$
0.06
(1)
Corporate overhead includes property
management and general and administrative expenses.
The Company has a glossary of defined terms and related
reconciliations of Non-GAAP financial measures on pages 27 through
33 of this release. Reconciliations and definitions of FFO and
Normalized FFO are provided on pages 6, 29 and 30 of this
release.
Same Store Results
The following table shows the total same store results for the
periods presented (includes Residential and Non-Residential).
First Quarter 2024 vs. First
Quarter 2023
First Quarter 2024 vs. Fourth
Quarter 2023
Apartment Units
77,373
77,950
Physical Occupancy
96.3% vs. 95.9%
96.3% vs. 95.8%
Revenues (1)
4.1%
1.1%
Expenses
1.3%
6.5%
NOI
5.5%
(1.3%)
(1)
See page 10 for further discussion.
The following table reflects the detail of the change in Same
Store Residential Revenues, which is presented on a GAAP basis
showing Leasing Concessions on a straight-line basis.
First Quarter 2024 vs. First
Quarter 2023
First Quarter 2024 vs. Fourth
Quarter 2023
% Change
% Change
Same Store Residential Revenues-
comparable period
Lease rates
2.9
%
0.1
%
Leasing Concessions
(0.3
%)
0.0
%
Vacancy gain (loss)
0.4
%
0.6
%
Bad Debt, Net (1)
0.3
%
0.0
%
Other (2)
0.6
%
(0.1
%)
Same Store Residential Revenues-
current period
3.9
%
0.6
%
(1)
Change in rental income due to bad debt
write-offs and reserves, net of amounts (including governmental
rental assistance payments) collected on previously written-off or
reserved accounts. See page 12 for more detail.
(2) Includes ancillary income, utility recoveries, early lease
termination income, miscellaneous income and other items.
See page 11 for detail and reconciliations of Same Store
Residential Revenues on a GAAP basis to Same Store Residential
Revenues with Leasing Concessions on a cash basis.
Residential Same Store Operating Statistics
The following table includes select operating metrics for
Residential Same Store Properties (for 77,373 same store apartment
units):
April 2024 (1)
Q1 2024
Q4 2023
Physical Occupancy
96.4%
96.3%
95.8%
Percentage of Residents Renewing by
quarter/month
61.0%
61.1%
59.1%
New Lease Change
0.1%
(2.2%)
(4.6%)
Renewal Rate Achieved
5.1%
4.7%
5.1%
Blended Rate
3.1%
1.6%
0.7%
(1)
April 2024 results are preliminary as of
April 18th.
Investment Activity
The Company did not acquire any operating properties during the
first quarter of 2024. During the first quarter of 2024, the
Company sold three properties - one in Boston, one in Orange County
and one in suburban San Francisco - consisting of 504 apartment
units, for an aggregate sale price of approximately $248.5 million
at a weighted average Disposition Yield of 5.5%, generating an
Unlevered IRR of 13.1%. The average age of the properties sold in
the first quarter of 2024 was approximately 40 years.
During the first quarter of 2024, the Company began construction
on The Basin, a 440 apartment unit property located in suburban
Boston with a Total Budgeted Capital Cost of $232.2 million.
Capital Markets Activity
During the first quarter of 2024, the Company repurchased and
retired 652,452 of its common shares, at a weighted average
purchase price of $58.95 per share, for an aggregate purchased
amount of approximately $38.5 million. Combined with the Company’s
fourth quarter 2023 repurchase activity, the Company has
repurchased approximately $87.5 million of its common shares at a
weighted average purchase price of $57.72 per share.
Second Quarter 2024 Guidance
At this time the Company is not revising its annual operating,
EPS, FFO per share or Normalized FFO per share guidance provided as
part of its fourth quarter 2023 earnings release. See page 26.
The Company has established guidance ranges for the second
quarter of 2024 EPS, FFO per share and Normalized FFO per share as
listed below:
Q2 2024 Guidance
EPS
$0.45 to $0.49
FFO per share
$0.91 to $0.95
Normalized FFO per share
$0.92 to $0.96
The difference between the first quarter of 2024 actual EPS of
$0.77 and the second quarter of 2024 EPS guidance midpoint of $0.47
is due primarily to higher expected same store NOI, lower expected
property sale gains and lower expected other expenses.
The difference between the first quarter of 2024 actual FFO of
$0.87 per share and the second quarter of 2024 FFO guidance
midpoint of $0.93 per share is due primarily to higher expected
same store NOI and lower expected other expenses.
The difference between the first quarter of 2024 actual
Normalized FFO of $0.93 per share and the second quarter of 2024
Normalized FFO guidance midpoint of $0.94 per share is due
primarily to higher expected same store NOI.
About Equity Residential
Equity Residential is committed to creating communities where
people thrive. The Company, a member of the S&P 500, is focused
on the acquisition, development and management of residential
properties located in and around dynamic cities that attract
affluent long-term renters. Equity Residential owns or has
investments in 299 properties consisting of 79,688 apartment units,
with an established presence in Boston, New York, Washington, D.C.,
Seattle, San Francisco and Southern California, and an expanding
presence in Denver, Atlanta, Dallas/Ft. Worth and Austin. For more
information on Equity Residential, please visit our website at
www.equityapartments.com.
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements and information within the
meaning of the federal securities laws. These statements are based
on current expectations, estimates, projections and assumptions
made by management. While Equity Residential’s management believes
the assumptions underlying its forward-looking statements are
reasonable, such information is inherently subject to uncertainties
and may involve certain risks, including, without limitation,
changes in general market conditions, including the rate of job
growth and cost of labor and construction material, the level of
new multifamily construction and development, government
regulations and competition. These and other risks and
uncertainties are described under the heading “Risk Factors” in our
Annual Report on Form 10-K and subsequent periodic reports filed
with the Securities and Exchange Commission (SEC) and available on
our website, www.equityapartments.com. Many of these uncertainties
and risks are difficult to predict and beyond management’s control.
Forward-looking statements are not guarantees of future
performance, results or events. Equity Residential assumes no
obligation to update or supplement forward-looking statements that
become untrue because of subsequent events.
A live web cast of the Company’s conference call discussing
these results will take place tomorrow, Wednesday, April 24, 2024
at 10:00 a.m. CT. Please visit the Investor section of the
Company’s website at www.equityapartments.com for the webcast
link.
Equity Residential
Consolidated Statements of
Operations
(Amounts in thousands except per
share data)
(Unaudited)
Quarter Ended March
31,
2024
2023
REVENUES
Rental income
$
730,818
$
705,088
EXPENSES
Property and maintenance
134,630
137,579
Real estate taxes and insurance
108,927
106,669
Property management
35,458
31,466
General and administrative
15,720
16,165
Depreciation
225,695
215,830
Total expenses
520,430
507,709
Net gain (loss) on sales of real estate
properties
188,185
100,209
Interest and other income
9,329
1,538
Other expenses
(31,738
)
(8,995
)
Interest:
Expense incurred, net
(67,212
)
(66,401
)
Amortization of deferred financing
costs
(1,918
)
(1,979
)
Income before income and other taxes,
income (loss) from
investments in unconsolidated entities and
net gain (loss)
on sales of land parcels
307,034
221,751
Income and other tax (expense) benefit
(304
)
(298
)
Income (loss) from investments in
unconsolidated entities
(1,698
)
(1,382
)
Net income
305,032
220,071
Net (income) loss attributable to
Noncontrolling Interests:
Operating Partnership
(8,275
)
(7,059
)
Partially Owned Properties
(970
)
(977
)
Net income attributable to controlling
interests
295,787
212,035
Preferred distributions
(547
)
(772
)
Premium on redemption of Preferred
Shares
(1,444
)
—
Net income available to Common Shares
$
293,796
$
211,263
Earnings per share – basic:
Net income available to Common Shares
$
0.78
$
0.56
Weighted average Common Shares
outstanding
378,812
378,341
Earnings per share – diluted:
Net income available to Common Shares
$
0.77
$
0.56
Weighted average Common Shares
outstanding
390,561
390,664
Distributions declared per Common Share
outstanding
$
0.675
$
0.6625
Equity Residential
Consolidated Statements of
Funds From Operations and Normalized Funds From Operations
(Amounts in thousands except per
share and Unit data)
(Unaudited)
Quarter Ended March
31,
2024
2023
Net income
$
305,032
$
220,071
Net (income) loss attributable to
Noncontrolling Interests – Partially
Owned Properties
(970
)
(977
)
Preferred distributions
(547
)
(772
)
Premium on redemption of Preferred
Shares
(1,444
)
—
Net income available to Common Shares and
Units
302,071
218,322
Adjustments:
Depreciation
225,695
215,830
Depreciation – Non-real estate
additions
(955
)
(1,156
)
Depreciation – Partially Owned
Properties
(542
)
(545
)
Depreciation – Unconsolidated
Properties
335
632
Net (gain) loss on sales of real estate
properties
(188,185
)
(100,209
)
FFO available to Common Shares and
Units
338,419
332,874
Adjustments (see note for additional
detail):
Write-off of pursuit costs
548
1,332
Debt extinguishment and preferred share
redemption (gains)
losses
1,444
—
Non-operating asset (gains) losses
(6,106
)
714
Other miscellaneous items
30,591
6,292
Normalized FFO available to Common Shares
and Units
$
364,896
$
341,212
FFO
$
340,410
$
333,646
Preferred distributions
(547
)
(772
)
Premium on redemption of Preferred
Shares
(1,444
)
—
FFO available to Common Shares and
Units
$
338,419
$
332,874
FFO per share and Unit – basic
$
0.87
$
0.85
FFO per share and Unit – diluted
$
0.87
$
0.85
Normalized FFO
$
365,443
$
341,984
Preferred distributions
(547
)
(772
)
Normalized FFO available to Common Shares
and Units
$
364,896
$
341,212
Normalized FFO per share and Unit –
basic
$
0.94
$
0.88
Normalized FFO per share and Unit –
diluted
$
0.93
$
0.87
Weighted average Common Shares and Units
outstanding – basic
389,481
389,851
Weighted average Common Shares and Units
outstanding – diluted
390,561
390,664
Note: See Adjustments from FFO to Normalized FFO for additional
detail regarding the adjustments from FFO to Normalized FFO. See
Additional Reconciliations and Definitions of Non-GAAP Financial
Measures and Other Terms for the definitions of non-GAAP financial
measures and other terms as well as the reconciliations of EPS to
FFO per share and Normalized FFO per share.
Equity Residential
Consolidated Balance
Sheets
(Amounts in thousands except for
share amounts)
(Unaudited)
March 31,
December 31,
2024
2023
ASSETS
Land
$
5,550,882
$
5,581,876
Depreciable property
22,930,036
22,938,426
Projects under development
155,729
78,036
Land held for development
64,466
114,300
Investment in real estate
28,701,113
28,712,638
Accumulated depreciation
(9,978,012
)
(9,810,337
)
Investment in real estate, net
18,723,101
18,902,301
Investments in unconsolidated
entities1
289,272
282,049
Cash and cash equivalents
44,535
50,743
Restricted deposits
152,025
89,252
Right-of-use assets
454,035
457,266
Other assets
231,829
252,953
Total assets
$
19,894,797
$
20,034,564
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net
$
1,633,870
$
1,632,902
Notes, net
5,349,938
5,348,417
Line of credit and commercial paper
225,921
409,131
Accounts payable and accrued expenses
146,072
87,377
Accrued interest payable
49,190
65,716
Lease liabilities
310,422
311,640
Other liabilities
274,919
272,596
Security deposits
68,818
69,178
Distributions payable
263,615
259,231
Total liabilities
8,322,765
8,456,188
Commitments and contingencies
Redeemable Noncontrolling Interests –
Operating Partnership
298,219
289,248
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest,
$0.01 par value;
100,000,000 shares authorized; 343,100
shares issued and
outstanding as of March 31, 2024 and
745,600 shares issued
and outstanding as of December 31,
2023
17,155
37,280
Common Shares of beneficial interest,
$0.01 par value;
1,000,000,000 shares authorized;
378,939,751 shares issued
and outstanding as of March 31, 2024 and
379,291,417
shares issued and outstanding as of
December 31, 2023
3,789
3,793
Paid in capital
9,603,743
9,601,866
Retained earnings
1,436,671
1,437,185
Accumulated other comprehensive income
(loss)
6,314
5,704
Total shareholders’ equity
11,067,672
11,085,828
Noncontrolling Interests:
Operating Partnership
207,272
202,306
Partially Owned Properties
(1,131
)
994
Total Noncontrolling Interests
206,141
203,300
Total equity
11,273,813
11,289,128
Total liabilities and equity
$
19,894,797
$
20,034,564
1 Includes $227.3 million and $220.2 million in unconsolidated
development projects as of March 31, 2024 and December 31, 2023,
respectively. See Development and Lease-Up Projects for additional
detail on unconsolidated projects.
Equity Residential
Portfolio Summary
As of March 31, 2024
% of Stabilized
Average
Apartment
Budgeted
Rental
Markets/Metro Areas
Properties
Units
NOI
Rate
Established Markets:
Los Angeles
58
14,732
17.3
%
$
2,925
Orange County
12
3,718
5.0
%
2,900
San Diego
12
2,878
4.1
%
3,103
Subtotal – Southern California
82
21,328
26.4
%
2,945
Washington, D.C.
48
15,028
16.4
%
2,666
San Francisco
42
11,567
15.3
%
3,282
New York
34
8,536
14.2
%
4,592
Boston
26
7,077
11.7
%
3,557
Seattle
44
9,267
10.5
%
2,569
Subtotal – Established Markets
276
72,803
94.5
%
3,146
Expansion Markets:
Denver
9
2,792
2.8
%
2,409
Atlanta
7
2,111
1.6
%
2,049
Dallas/Ft. Worth
4
1,241
0.7
%
1,905
Austin
3
741
0.4
%
1,842
Subtotal – Expansion Markets
23
6,885
5.5
%
2,148
Total
299
79,688
100.0
%
$
3,061
Properties
Apartment Units
Wholly Owned Properties
285
76,628
Partially Owned Properties –
Consolidated
14
3,060
299
79,688
Note: Projects under development are not included in the
Portfolio Summary until construction has been completed.
Equity Residential
Portfolio Rollforward Q1
2024
($ in thousands)
Properties
Apartment Units
Sales Price
Disposition Yield
12/31/2023
302
80,191
Dispositions:
Consolidated Rental Properties
(3
)
(504
)
$
(248,500
)
(5.5
%)
Configuration Changes
—
1
3/31/2024
299
79,688
Equity Residential
First Quarter 2024 vs. First
Quarter 2023
Same Store Results/Statistics
Including 77,373 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands except for
Average Rental Rate)
Results
Statistics
Description
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Q1 2024
$
716,665
$
231,905
$
484,760
$
3,077
96.3
%
8.6
%
Q1 2023
$
688,303
$
228,961
$
459,342
$
2,975
95.9
%
9.1
%
Change
$
28,362
$
2,944
$
25,418
$
102
0.4
%
(0.5
%)
Change
4.1
%
(1)
1.3
%
5.5
%
3.4
%
First Quarter 2024 vs. Fourth
Quarter 2023
Same Store Results/Statistics
Including 77,950 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands except for
Average Rental Rate)
Results
Statistics
Description
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Q1 2024
$
720,261
$
233,087
$
487,174
$
3,070
96.3
%
8.6
%
Q4 2023
$
712,383
$
218,881
$
493,502
$
3,067
95.8
%
9.5
%
Change
$
7,878
$
14,206
$
(6,328
)
$
3
0.5
%
(0.9
%)
Change
1.1
%
(1)
6.5
%
(1.3
%)
0.1
%
(1)
Non-Residential contributed 0.20% and
0.50% to quarterly and sequential same store revenue growth,
respectively, primarily due to improved collectibility expectations
for certain Non-Residential tenants, resulting in the reinstatement
of their respective straight-line receivable balances in the first
quarter of 2024. The Company contemplated these contributions in
its previous 2024 annual guidance.
Equity Residential
Same Store Residential
Revenues – GAAP to Cash Basis (1)
($ in thousands)
First Quarter 2024 vs. First
Quarter 2023
First Quarter 2024 vs. Fourth
Quarter 2023
77,373 Same Store Apartment
Units
77,950 Same Store Apartment
Units
Q1 2024
Q1 2023
Q1 2024
Q4 2023
Same Store Residential Revenues (GAAP
Basis)
$
687,139
$
661,626
$
690,735
$
686,778
Leasing Concessions amortized
5,076
2,801
5,093
4,810
Leasing Concessions granted (2)
(4,951
)
(4,167
)
(4,955
)
(5,392
)
Same Store Residential Revenues with
Leasing
Concessions on a cash basis
$
687,264
$
660,260
$
690,873
$
686,196
% change - GAAP revenue
3.9
%
0.6
%
% change - cash revenue
4.1
%
0.7
%
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional detail.
(2)
Concession usage is primarily concentrated
in Los Angeles, San Francisco and Seattle.
Same Store Net Operating
Income By Quarter
Including 77,373 Same Store
Apartment Units
(includes Residential and
Non-Residential)
($ in thousands)
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Same store revenues
$
716,665
$
708,665
$
704,606
$
700,114
$
688,303
Same store expenses
231,905
217,880
223,739
219,571
228,961
Same store NOI
$
484,760
$
490,785
$
480,867
$
480,543
$
459,342
Equity Residential
Same Store Residential
Accounts Receivable Balances
Including 77,373 Same Store
Apartment Units
($ in thousands)
Balance Sheet (Other assets):
March 31, 2024
December 31, 2023
March 31, 2023
Residential accounts receivable
balances
$
18,290
$
21,021
$
32,210
Allowance for doubtful accounts
(13,204
)
(15,485
)
(28,237
)
Net receivable balances
$
5,086
$
5,536
$
3,973
Straight-line receivable balances
$
8,337
(1)
$
8,461
$
5,702
(1)
Total same store Residential Leasing
Concessions granted in the first quarter of 2024 were approximately
$5.0 million. The straight-line receivable balance of $8.3 million
reflects Residential Leasing Concessions that the Company expects
will be primarily recognized as a reduction of rental revenues in
the remainder of 2024 and the first quarter of 2025.
Same Store Residential Bad
Debt
Including 77,373 Same Store
Apartment Units
($ in thousands)
Income Statement (Rental
income):
Q1 2024
Q4 2023
Q1 2023
Bad debts before governmental rental
assistance
$
9,187
$
9,325
$
11,896
Governmental rental assistance
received
(379
)
(379
)
(1,161
)
Bad Debt, Net
$
8,808
$
8,946
$
10,735
Bad Debt, Net as a % of Same Store
Residential Revenues
1.3
%
1.3
%
1.6
%
Equity Residential
First Quarter 2024 vs. First
Quarter 2023
Same Store Residential
Results/Statistics by Market
Increase (Decrease) from Prior
Year's Quarter
Markets/Metro Areas
Apartment Units
Q1 2024 % of Actual NOI
Q1 2024 Average Rental Rate
Q1 2024 Weighted Average Physical
Occupancy %
Q1 2024 Turnover
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Los Angeles
14,135
17.5
%
$
2,922
95.5
%
9.6
%
5.2
%
1.5
%
7.0
%
5.2
%
0.0
%
(0.4
%)
Orange County
3,718
5.2
%
2,900
96.1
%
7.4
%
5.9
%
3.5
%
6.6
%
5.9
%
(0.1
%)
(0.1
%)
San Diego
2,878
4.3
%
3,103
96.1
%
8.0
%
6.5
%
1.1
%
8.2
%
5.7
%
0.7
%
(1.7
%)
Subtotal – Southern California
20,731
27.0
%
2,943
95.7
%
9.0
%
5.5
%
1.7
%
7.1
%
5.4
%
0.1
%
(0.5
%)
Washington, D.C.
14,716
16.9
%
2,665
97.1
%
7.0
%
5.5
%
(1.9
%)
9.4
%
5.0
%
0.5
%
(0.4
%)
San Francisco
11,345
15.8
%
3,281
96.4
%
9.5
%
2.0
%
2.3
%
1.9
%
1.2
%
0.7
%
0.1
%
New York
8,536
14.1
%
4,592
97.0
%
6.5
%
3.9
%
3.2
%
4.5
%
3.7
%
0.2
%
(1.0
%)
Boston
7,077
11.0
%
3,557
95.7
%
7.4
%
4.8
%
(2.2
%)
8.0
%
4.6
%
0.2
%
(0.6
%)
Seattle
9,266
10.4
%
2,569
96.1
%
9.7
%
0.4
%
5.0
%
(1.4
%)
(0.6
%)
1.0
%
(1.4
%)
Denver
2,505
2.6
%
2,415
96.3
%
10.1
%
1.3
%
(0.5
%)
2.1
%
1.6
%
0.0
%
(1.0
%)
Other Expansion Markets
3,197
2.2
%
1,973
95.5
%
13.3
%
0.9
%
(4.2
%)
5.3
%
0.1
%
0.6
%
0.9
%
Total
77,373
100.0
%
$
3,077
96.3
%
8.6
%
3.9
%
1.2
%
5.2
%
3.4
%
0.4
%
(0.5
%)
Note: The above table reflects Residential
same store results only. Residential operations account for
approximately 96.0% of total revenues for the quarter ended March
31, 2024.
Equity Residential
First Quarter 2024 vs. Fourth
Quarter 2023
Same Store Residential
Results/Statistics by Market
Increase (Decrease) from Prior
Quarter
Markets/Metro Areas
Apartment Units
Q1 2024 % of Actual NOI
Q1 2024 Average Rental Rate
Q1 2024 Weighted Average Physical
Occupancy %
Q1 2024 Turnover
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Los Angeles
14,135
17.3
%
$
2,922
95.5
%
9.6
%
0.9
%
8.0
%
(2.2
%)
0.4
%
0.4
%
(1.3
%)
Orange County
3,718
5.2
%
2,900
96.1
%
7.4
%
0.2
%
5.4
%
(1.2
%)
0.3
%
(0.2
%)
(1.3
%)
San Diego
2,878
4.3
%
3,103
96.1
%
8.0
%
0.7
%
4.7
%
(0.4
%)
(0.2
%)
0.8
%
(3.3
%)
Subtotal – Southern California
20,731
26.8
%
2,943
95.7
%
9.0
%
0.7
%
7.3
%
(1.7
%)
0.3
%
0.4
%
(1.6
%)
Washington, D.C.
14,716
16.8
%
2,665
97.1
%
7.0
%
0.6
%
4.8
%
(1.3
%)
0.4
%
0.1
%
(1.2
%)
San Francisco
11,345
15.7
%
3,281
96.4
%
9.5
%
0.6
%
8.2
%
(2.7
%)
(0.6
%)
1.1
%
(1.4
%)
New York
8,536
14.0
%
4,592
97.0
%
6.5
%
1.0
%
6.7
%
(2.8
%)
0.6
%
0.4
%
(0.4
%)
Boston
7,077
11.0
%
3,557
95.7
%
7.4
%
(0.4
%)
3.3
%
(1.9
%)
(0.3
%)
(0.1
%)
(1.2
%)
Seattle
9,266
10.4
%
2,569
96.1
%
9.7
%
1.2
%
8.3
%
(1.5
%)
0.3
%
0.8
%
1.5
%
Denver
2,792
2.9
%
2,409
96.2
%
10.5
%
0.1
%
6.6
%
(2.5
%)
(0.1
%)
0.2
%
(1.3
%)
Other Expansion Markets
3,487
2.4
%
1,979
95.3
%
13.3
%
(1.1
%)
6.9
%
(6.4
%)
(1.5
%)
0.5
%
0.5
%
Total
77,950
100.0
%
$
3,070
96.3
%
8.6
%
0.6
%
6.5
%
(2.1
%)
0.1
%
0.5
%
(0.9
%)
Note: The above table reflects Residential
same store results only. Residential operations account for
approximately 96.0% of total revenues for the quarter ended March
31, 2024.
Equity Residential
Same Store Residential Net
Effective Lease Pricing Statistics
For 77,373 Same Store
Apartment Units
New Lease Change (1)
Renewal Rate Achieved (1)
Blended Rate (1)
Markets/Metro Areas
Q1 2024
Q4 2023
Q1 2024
Q4 2023
Q1 2024
Q4 2023
Southern California
(3.6
%)
(3.1
%)
4.4
%
5.2
%
0.5
%
1.2
%
San Francisco
(1.2
%)
(9.7
%)
4.1
%
4.4
%
1.6
%
(3.1
%)
Washington, D.C.
1.6
%
0.6
%
5.8
%
6.2
%
4.0
%
3.8
%
New York
(1.1
%)
(2.2
%)
4.1
%
4.5
%
2.2
%
2.1
%
Seattle
(1.2
%)
(8.4
%)
6.1
%
5.6
%
2.8
%
(1.4
%)
Boston
(3.4
%)
(1.0
%)
5.2
%
5.3
%
1.0
%
2.8
%
Denver
(6.3
%)
(5.1
%)
4.3
%
4.7
%
(2.0
%)
(0.3
%)
Other Expansion Markets
(8.7
%)
(12.2
%)
4.1
%
4.8
%
(3.7
%)
(5.1
%)
Total
(2.2
%)
(4.6
%)
4.7
%
5.1
%
1.6
%
0.7
%
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
definitions. See page 3 for April 2024 preliminary data.
Equity Residential
First Quarter 2024 vs. First
Quarter 2023
Total Same Store Operating
Expenses Including 77,373 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands)
Q1 2024
Q1 2023
$ Change (1)
% Change
% of Q1 2024 Operating
Expenses
Real estate taxes
$
94,205
$
90,844
$
3,361
3.7
%
40.6
%
On-site payroll
43,119
42,813
306
0.7
%
18.6
%
Utilities
37,234
39,197
(1,963
)
(5.0
%)
16.1
%
Repairs and maintenance
29,888
30,546
(658
)
(2.2
%)
12.9
%
Insurance
9,341
8,459
882
10.4
%
4.0
%
Leasing and advertising
2,375
2,591
(216
)
(8.3
%)
1.0
%
Other on-site operating expenses
15,743
14,511
1,232
8.5
%
6.8
%
Total Same Store Operating Expenses
(2)
$
231,905
$
228,961
$
2,944
1.3
%
100.0
%
(1)
The quarter-over-quarter changes were
primarily driven by the following factors:
Real estate taxes – Increase due to
escalation in rates and assessed values including an approximately
1.0% contribution to growth from 421-a tax abatement burnoffs in
New York City. Once the burnoffs are completed, previously
rent-restricted apartment units will transition to market.
On-site payroll – Modest increase due
primarily to higher wages partially offset by the impact of various
innovation initiatives.
Utilities – Decrease from electric
primarily driven by lower commodity prices.
Repairs and maintenance – Decrease due
primarily to lower resident Turnover compared to the same period of
2023, moderation of previous wage/staffing pressures and a benefit
from a relatively easy comparable period.
Insurance – Increase due to higher
premiums on property insurance renewal due to conditions in the
insurance market that while less difficult than recent years,
remain challenging.
Other on-site operating expenses –
Increase primarily driven by higher property-related legal
expenses.
(2)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
Equity Residential
Debt Summary as of March 31,
2024
($ in thousands)
Debt Balances (1)
% of Total
Weighted Average Rates (1)
Weighted Average Maturities
(years)
Secured
$
1,633,870
22.7
%
3.84
%
7.6
Unsecured
5,575,859
77.3
%
3.65
%
8.2
Total
$
7,209,729
100.0
%
3.69
%
8.1
Fixed Rate Debt:
Secured – Conventional
$
1,399,221
19.4
%
3.89
%
7.1
Unsecured – Public
5,349,938
74.2
%
3.53
%
8.6
Fixed Rate Debt
6,749,159
93.6
%
3.60
%
8.3
Floating Rate Debt:
Secured – Tax Exempt
234,649
3.3
%
3.49
%
10.4
Unsecured – Revolving Credit Facility
—
—
—
3.6
Unsecured – Commercial Paper Program
(2)
225,921
3.1
%
5.60
%
—
Floating Rate Debt
460,570
6.4
%
4.72
%
5.4
Total
$
7,209,729
100.0
%
3.69
%
8.1
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
(2)
At March 31, 2024, the weighted average
maturity of commercial paper outstanding was 3 days. The weighted
average amount outstanding for the quarter ended March 31, 2024 was
approximately $333.1 million.
Note: The Company capitalized interest of
approximately $3.1 million and $3.4 million during the quarters
ended March 31, 2024 and 2023, respectively.
Equity Residential
Debt Maturity Schedule as of
March 31, 2024
($ in thousands)
Year
Fixed Rate
Floating Rate
Total
% of Total
Weighted Average Coupons on Fixed
Rate Debt (1)
Weighted Average Coupons on Total
Debt (1)
2024
$
—
$
232,200
(2)
$
232,200
3.2
%
—
5.46
%
2025
450,000
8,100
458,100
6.3
%
3.38
%
3.38
%
2026
592,025
9,000
601,025
8.3
%
3.58
%
3.58
%
2027
400,000
9,800
409,800
5.6
%
3.25
%
3.26
%
2028
900,000
10,700
910,700
12.5
%
3.79
%
3.79
%
2029
888,120
11,500
899,620
12.4
%
3.30
%
3.31
%
2030
1,148,462
12,700
1,161,162
15.9
%
2.53
%
2.54
%
2031
528,500
39,800
568,300
7.8
%
1.94
%
2.05
%
2032
—
28,000
28,000
0.4
%
—
3.70
%
2033
550,000
2,300
552,300
7.6
%
5.22
%
5.22
%
2034+
1,350,850
108,600
1,459,450
20.0
%
4.39
%
4.27
%
Subtotal
6,807,957
472,700
7,280,657
100.0
%
3.53
%
3.58
%
Deferred Financing Costs and
Unamortized (Discount)
(58,798
)
(12,130
)
(70,928
)
N/A
N/A
N/A
Total
$
6,749,159
$
460,570
$
7,209,729
100.0
%
3.53
%
3.58
%
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
(2)
Includes $226.0 million in principal
outstanding on the Company's Commercial Paper Program.
Equity Residential
Selected Unsecured Public Debt
Covenants
March 31,
December 31,
2024
2023
Debt to Adjusted Total Assets (not to
exceed 60%)
25.8%
26.5%
Secured Debt to Adjusted Total Assets (not
to exceed 40%)
6.7%
6.7%
Consolidated Income Available for Debt
Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1)
6.41
6.19
Total Unencumbered Assets to Unsecured
Debt
(must be at least 125%)
528.1%
510.7%
Note: These selected covenants represent
the most restrictive financial covenants relating to ERP Operating
Limited Partnership's ("ERPOP") outstanding public debt securities.
Equity Residential is the general partner of ERPOP.
Selected Credit Ratios
March 31,
December 31,
2024
2023
Total debt to Normalized EBITDAre
4.01x
4.17x
Net debt to Normalized EBITDAre
3.97x
4.12x
Unencumbered NOI as a % of total NOI
89.6%
89.8%
Note: See Normalized EBITDAre
Reconciliations for detail.
Equity Residential
Capital Structure as of March
31, 2024
(Amounts in thousands except for
share/unit and per share amounts)
Secured Debt
$
1,633,870
22.7
%
Unsecured Debt
5,575,859
77.3
%
Total Debt
7,209,729
100.0
%
22.6
%
Common Shares (includes Restricted
Shares)
378,939,751
97.0
%
Units (includes OP Units and Restricted
Units)
11,732,622
3.0
%
Total Shares and Units
390,672,373
100.0
%
Common Share Price at March 31, 2024
$
63.11
24,655,333
99.9
%
Perpetual Preferred Equity (see below)
17,155
0.1
%
Total Equity
24,672,488
100.0
%
77.4
%
Total Market Capitalization
$
31,882,217
100.0
%
Perpetual Preferred Equity as
of March 31, 2024
(Amounts in thousands except for
share and per share amounts)
Series
Call Date
Outstanding Shares
Liquidation Value
Annual Dividend Per
Share
Annual Dividend Amount
Preferred Shares:
8.29% Series K (1)
12/10/26
343,100
$
17,155
$
4.145
$
1,422
(1)
During the first quarter of 2024, the
Company repurchased and retired 402,500 Series K Preferred Shares
with a liquidation value of $20.1 million for total cash
consideration of approximately $21.8 million. As a result of this
partial redemption, the Company incurred a cash charge of
approximately $1.4 million which was recorded as a premium on the
redemption of preferred shares, which impacted EPS and FFO per
share but did not impact Normalized FFO per share.
Equity Residential
Common Share and Unit
Weighted Average Amounts
Outstanding
Q1 2024
Q1 2023
Weighted Average Amounts Outstanding
for Net Income Purposes:
Common Shares - basic
378,811,922
378,340,876
Shares issuable from assumed
conversion/vesting of:
- OP Units
10,669,346
11,509,669
- long-term compensation shares/units
1,079,917
813,581
Total Common Shares and Units -
diluted
390,561,185
390,664,126
Weighted Average Amounts Outstanding
for FFO and Normalized FFO Purposes:
Common Shares - basic
378,811,922
378,340,876
OP Units - basic
10,669,346
11,509,669
Total Common Shares and OP Units -
basic
389,481,268
389,850,545
Shares issuable from assumed
conversion/vesting of:
- long-term compensation shares/units
1,079,917
813,581
Total Common Shares and Units -
diluted
390,561,185
390,664,126
Period Ending Amounts
Outstanding:
Common Shares (includes Restricted
Shares)
378,939,751
378,898,221
Units (includes OP Units and Restricted
Units)
11,732,622
12,515,083
Total Shares and Units
390,672,373
391,413,304
Equity Residential
Development and Lease-Up
Projects as of March 31, 2024
(Amounts in thousands except for
project and apartment unit amounts)
Estimated/Actual
Projects
Location
Ownership Percentage
No. of Apartment Units
Total Budgeted Capital
Cost
Total Book Value to
Date
Total Debt (1)
Percentage Completed
Start Date
Initial Occupancy
Completion Date
Stabilization Date
Percentage Leased /
Occupied
CONSOLIDATED:
Projects Under
Development:
Laguna Clara II
Santa Clara, CA
100%
225
$
152,621
$
91,314
$
—
63%
Q2 2022
Q4 2024
Q1 2025
Q4 2025
– / –
The Basin
Wakefield, MA
95%
440
232,172
64,415
—
11%
Q1 2024
Q4 2025
Q3 2026
Q2 2027
– / –
Projects Under Development -
Consolidated
665
384,793
155,729
—
Projects
Completed Not Stabilized:
Reverb (fka 9th and W) (2)
Washington, D.C.
92%
312
108,027
104,795
—
100%
Q3 2021
Q2 2023
Q2 2023
Q3 2024
96% / 93%
Projects Completed Not Stabilized -
Consolidated
312
108,027
104,795
—
UNCONSOLIDATED:
Projects Under
Development:
Alloy Sunnyside
Denver, CO
80%
209
70,004
64,752
28,682
95%
Q3 2021
Q2 2024
Q2 2024
Q1 2025
– / –
Alexan Harrison
Harrison, NY
62%
450
200,664
184,242
88,605
95%
Q3 2021
Q1 2024
Q4 2024
Q2 2026
9% / 2%
Solana Beeler Park
Denver, CO
90%
270
85,206
63,617
28,342
74%
Q4 2021
Q2 2024
Q3 2024
Q1 2025
– / –
Remy (Toll)
Frisco, TX
75%
357
98,937
85,096
39,336
86%
Q1 2022
Q2 2024
Q4 2024
Q3 2025
7% / –
Sadie (fka Settler) (Toll)
Fort Worth, TX
75%
362
82,775
63,612
22,058
82%
Q2 2022
Q2 2024
Q3 2024
Q3 2025
2% / –
Lyle (Toll) (2)
Dallas, TX
75%
334
86,332
66,296
26,390
84%
Q3 2022
Q1 2024
Q3 2024
Q1 2026
5% / 2%
Projects Under Development -
Unconsolidated
1,982
623,918
527,615
233,413
Total Development Projects -
Consolidated
977
492,820
260,524
—
Total Development Projects -
Unconsolidated
1,982
623,918
527,615
233,413
Total Development Projects
2,959
$
1,116,738
$
788,139
$
233,413
NOI CONTRIBUTION FROM DEVELOPMENT
PROJECTS
Total Budgeted Capital Cost
Q1 2024 NOI
Projects Under Development -
Consolidated
$
384,793
$
—
Projects Completed Not Stabilized -
Consolidated
108,027
1,019
Projects Under Development -
Unconsolidated
623,918
(235
)
$
1,116,738
$
784
(1)
All unconsolidated projects are being
partially funded with project-specific construction loans. None of
these loans are recourse to the Company.
(2)
The land parcels under these projects are
subject to long-term ground leases.
Equity Residential
Capital Expenditures to Real
Estate
For the Quarter Ended March
31, 2024
(Amounts in thousands except for
apartment unit and per apartment unit amounts)
Same Store Properties
Non-Same Store
Properties/Other
Total
Same Store Avg. Per Apartment
Unit
Total Apartment Units
77,373
2,315
79,688
Building Improvements
$
28,741
$
3,340
(2)
$
32,081
$
371
Renovation Expenditures
22,280
(1)
4,055
(2)
26,335
288
Replacements
15,050
54
15,104
195
Capital Expenditures to Real Estate
(3)
$
66,071
$
7,449
$
73,520
$
854
(1)
Renovation Expenditures on 690 same store
apartment units for the quarter ended March 31, 2024 approximated
$32,289 per apartment unit renovated.
(2)
Includes expenditures for two properties
that have been removed from same store while undergoing major
renovations requiring a significant number of apartment units to be
vacated to accommodate the extensive planned improvements. The
renovation at one property is expected to continue through the
second quarter of 2024 with the other continuing into 2025.
(3)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
Note: Approximately $29.3 million of the
Company's Capital Expenditures to Real Estate for Same Store
Properties for the quarter ended March 31, 2024 were NOI-Enhancing,
including the $22.3 million of Renovation Expenditures noted above,
with the remainder concentrated in sustainability and
property-level technology spend.
Equity Residential
Normalized EBITDAre
Reconciliations
(Amounts in thousands)
Trailing Twelve Months
2024
2023
March 31, 2024
December 31, 2023
Q1
Q4
Q3
Q2
Q1
Net income
$
953,449
$
868,488
$
305,032
$
322,269
$
181,286
$
144,862
$
220,071
Interest expense incurred, net
270,367
269,556
67,212
68,674
68,891
65,590
66,401
Amortization of deferred financing
costs
8,880
8,941
1,918
1,918
3,027
2,017
1,979
Amortization of above/below market lease
intangibles
4,464
4,464
1,116
1,116
1,116
1,116
1,116
Depreciation
898,574
888,709
225,695
226,788
224,736
221,355
215,830
Income and other tax expense (benefit)
1,154
1,148
304
256
258
336
298
EBITDA
2,136,888
2,041,306
601,277
621,021
479,314
435,276
505,695
Net (gain) loss on sales of real estate
properties
(370,515
)
(282,539
)
(188,185
)
(155,505
)
(26,912
)
87
(100,209
)
EBITDAre
1,766,373
1,758,767
413,092
465,516
452,402
435,363
405,486
Write-off of pursuit costs (other
expenses)
2,863
3,647
548
908
746
661
1,332
(Income) loss from investments in
unconsolidated entities - operations
5,694
5,378
1,698
1,531
1,242
1,223
1,382
Realized (gain) loss on investment
securities (interest and other income)
(1,591
)
(1,504
)
—
7
(1,598
)
—
87
Unrealized (gain) loss on investment
securities (interest and other income)
(20,527
)
(13,466
)
(7,061
)
(9,005
)
(4,461
)
—
—
Insurance/litigation settlement or reserve
income (interest and other income)
(360
)
(1,055
)
(105
)
—
(62
)
(193
)
(800
)
Insurance/litigation/environmental
settlement or reserve expense (other expenses)
42,789
17,310
30,478
5,694
3,104
3,513
4,999
Advocacy contributions (other
expenses)
2,276
2,142
141
1,665
150
320
7
Data transformation project (other
expenses)
1,700
3,780
—
—
295
1,405
2,080
Other
(518
)
(589
)
77
(602
)
1
6
6
Normalized EBITDAre
$
1,798,699
$
1,774,410
$
438,868
$
465,714
$
451,819
$
442,298
$
414,579
Balance Sheet
Items:
March 31, 2024
December 31, 2023
Total debt
$
7,209,729
$
7,390,450
Cash and cash equivalents
(44,535
)
(50,743
)
Mortgage principal reserves/sinking
funds
(31,203
)
(29,270
)
Net debt
$
7,133,991
$
7,310,437
Note: EBITDA, EBITDAre and Normalized
EBITDAre do not include any adjustments for the Company’s share of
partially owned unconsolidated entities or the minority partner’s
share of partially owned consolidated entities due to the
immaterial size of the Company’s partially owned portfolio.
Equity Residential
Adjustments from FFO to
Normalized FFO
(Amounts in thousands)
Quarter Ended March
31,
2024
2023
Variance
Impairment – non-operating real estate
assets
$
—
$
—
$
—
Write-off of pursuit costs (other
expenses)
548
1,332
(784
)
Premium on redemption of Preferred
Shares
1,444
—
1,444
Debt extinguishment and preferred share
redemption (gains) losses
1,444
—
1,444
(Income) loss from investments in
unconsolidated entities ─ non-operating assets
955
627
328
Realized (gain) loss on investment
securities (interest and other income)
—
87
(87
)
Unrealized (gain) loss on investment
securities (interest and other income)
(7,061
)
—
(7,061
)
Non-operating asset (gains) losses
(6,106
)
714
(6,820
)
Insurance/litigation settlement or reserve
income (interest and other income)
(105
)
(800
)
695
Insurance/litigation/environmental
settlement or reserve expense (other expenses) (1)
30,478
4,999
25,479
Advocacy contributions (other
expenses)
141
7
134
Data transformation project (other
expenses)
—
2,080
(2,080
)
Other
77
6
71
Other miscellaneous items
30,591
6,292
24,299
Adjustments from FFO to Normalized FFO
$
26,477
$
8,338
$
18,139
(1)
Insurance/litigation/environmental
settlement or reserve expense includes adjustments to reserves
relating to, among other things, litigation in California regarding
the amount of late fees charged by the Company.
Note: See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for the
definitions of non-GAAP financial measures and other terms as well
as the reconciliations of EPS to FFO per share and Normalized FFO
per share.
Equity Residential
Normalized FFO Guidance and
Assumptions
The guidance/projections provided below are based on current
expectations and are forward-looking. All guidance is given on a
Normalized FFO basis. Therefore, certain items excluded from
Normalized FFO, such as debt extinguishment costs/prepayment
penalties and the write-off of pursuit costs, are not included in
the estimates provided on this page. See Additional Reconciliations
and Definitions of Non-GAAP Financial Measures and Other Terms for
the definitions of non-GAAP financial measures and other terms as
well as the reconciliations of EPS to FFO per share and Normalized
FFO per share.
Q2 2024
Full Year 2024
(no change from previous Full
Year 2024)
2024 Normalized
FFO Guidance (per share diluted)
Expected Normalized FFO Per Share
$0.92 to $0.96
$3.80 to $3.90
2024 Same Store
Assumptions (includes Residential and
Non-Residential)
Physical Occupancy
95.9%
Revenue change
2.0% to 3.0%
Expense change
3.5% to 4.5%
NOI change (1)
1.0% to 2.6%
2024 Transaction
Assumptions
Consolidated rental acquisitions
$1.0B
Consolidated rental dispositions
$1.0B
Transaction Accretion (Dilution)
(25 basis points)
2024 Debt
Assumptions
Weighted average debt outstanding
$7.27B to $7.47B
Interest expense, net (on a Normalized FFO
basis)
$268.0M to $274.0M
Capitalized interest
$9.7M to $13.7M
2024 Capital
Expenditures to Real Estate Assumptions for Same Store Properties
(2)
Capital Expenditures to Real Estate for
Same Store Properties
$295.0M
Capital Expenditures to Real Estate per
Same Store Apartment Unit
$3,800
2024 Other
Guidance Assumptions
Property management expense
$124.0M to $126.0M
General and administrative expense
$57.5M to $61.5M
Debt offerings
No amounts budgeted
Weighted average Common Shares and Units -
Diluted
391.1M
(1)
Approximately 20 basis point change in NOI
percentage = $0.01 per share change in EPS/FFO per share/Normalized
FFO per share.
(2)
During 2024, the Company expects that
approximately 40% of its Capital Expenditures to Real Estate for
Same Store Properties will be NOI-Enhancing (primarily renovations,
sustainability and property-level technology spend). During 2024,
the Company expects to spend approximately $104.0 million for
apartment unit Renovation Expenditures on approximately 3,250 same
store apartment units at an average cost of approximately $32,000
per apartment unit renovated with the remainder of the
NOI-Enhancing spend consisting of sustainability and property-level
technology expenditures.
Equity Residential
Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms
(Amounts in thousands except per
share and per apartment unit data)
(All per share data is
diluted)
This Earnings Release and Supplemental Financial Information
includes certain non-GAAP financial measures and other terms that
management believes are helpful in understanding our business. The
definitions and calculations of these non-GAAP financial measures
and other terms may differ from the definitions and methodologies
used by other real estate investment trusts (“REIT”) and,
accordingly, may not be comparable. These non-GAAP financial
measures should not be considered as an alternative to net earnings
or any other measurement of performance computed in accordance with
accounting principles generally accepted in the United States
(“GAAP”) or as an alternative to cash flows from specific
operating, investing or financing activities. Furthermore, these
non-GAAP financial measures are not intended to be a measure of
cash flow or liquidity.
Acquisition Capitalization Rate or Cap Rate – NOI that
the Company anticipates receiving in the next 12 months (or the
year two or three stabilized NOI for properties that are in
lease-up at acquisition) less an estimate of property management
costs/management fees allocated to the project (generally ranging
from 2.0% to 4.0% of revenues depending on the size and income
streams of the asset) and less an estimate for in-the-unit
replacement capital expenditures (generally ranging from $100-$450
per apartment unit depending on the age and condition of the asset)
divided by the gross purchase price of the asset. The weighted
average Acquisition Cap Rate for acquired properties is weighted
based on the projected NOI streams and the relative purchase price
for each respective property.
Average Rental Rate – Total Residential rental revenues
reflected on a straight-line basis in accordance with GAAP divided
by the weighted average occupied apartment units for the reporting
period presented.
Bad Debt, Net – Change in rental income due to bad debt
write-offs and reserves, net of amounts collected on previously
written-off or reserved accounts.
Blended Rate – The weighted average of New Lease Change
and Renewal Rate Achieved.
Capital Expenditures to Real
Estate:
Building Improvements – Includes roof
replacement, paving, building mechanical equipment systems,
exterior siding and painting, major landscaping, furniture,
fixtures and equipment for amenities and common areas, vehicles and
office and maintenance equipment.
NOI-Enhancing – Primarily includes
Renovation Expenditures as well as sustainability and
property-level technology expenditures that are intended to
increase revenues or decrease expenses.
Renovation Expenditures – Apartment
unit renovation costs (primarily kitchens and baths) designed to
reposition these units for higher rental levels in their respective
markets.
Replacements – Includes appliances,
mechanical equipment, fixtures and flooring (including hardwood and
carpeting).
Debt Balances:
Commercial Paper Program – The Company
may borrow up to a maximum of $1.0 billion under its Commercial
Paper Program subject to market conditions. The notes bear interest
at various floating rates.
Revolving Credit Facility – The
Company’s $2.5 billion unsecured revolving credit facility matures
October 26, 2027. The interest rate on advances under the facility
will generally be SOFR plus a spread (currently 0.715%), or based
on bids received from the lending group, and an annual facility fee
(currently 0.125%). Both the spread and the facility fee are
dependent on the Company’s senior unsecured credit rating. In
addition, the Company limits its utilization of the facility in
order to maintain liquidity to support its $1.0 billion Commercial
Paper Program along with certain other obligations. The following
table presents the availability on the Company’s unsecured
revolving credit facility:
March 31, 2024
Unsecured revolving credit facility
commitment
$
2,500,000
Commercial paper balance outstanding
(226,000
)
Unsecured revolving credit facility
balance outstanding
—
Other restricted amounts
(3,438
)
Unsecured revolving credit facility
availability
$
2,270,562
Debt Covenant Compliance – Our unsecured debt includes
certain financial and operating covenants including, among other
things, maintenance of certain financial ratios. These provisions
are contained in the indentures applicable to each notes payable or
the credit agreement for our line of credit. The Debt Covenant
Compliance ratios that are provided show the Company's compliance
with certain covenants governing our public unsecured debt. These
covenants generally reflect our most restrictive financial
covenants. The Company was in compliance with its unsecured debt
covenants for all periods presented.
Development Yield – NOI that the Company anticipates
receiving in the next 12 months following stabilization less an
estimate of property management costs/management fees allocated to
the project (generally ranging from 2.0% to 4.0% of revenues
depending on the size and income streams of the asset) and less an
estimate for in-the-unit replacement capital expenditures
(generally ranging from $50-$150 per apartment unit depending on
the type of asset) divided by the Total Budgeted Capital Cost of
the asset. The weighted average Development Yield for development
properties is weighted based on the projected NOI streams and the
relative Total Budgeted Capital Cost for each respective
property.
Disposition Yield – NOI that the Company anticipates
giving up in the next 12 months less an estimate of property
management costs/management fees allocated to the project
(generally ranging from 2.0% to 4.0% of revenues depending on the
size and income streams of the asset) and less an estimate for
in-the-unit replacement capital expenditures (generally ranging
from $150-$450 per apartment unit depending on the age and
condition of the asset) divided by the gross sales price of the
asset. The weighted average Disposition Yield for sold properties
is weighted based on the projected NOI streams and the relative
sales price for each respective property.
Earnings Per Share ("EPS") – Net income per share
calculated in accordance with GAAP. Expected EPS is calculated on a
basis consistent with actual EPS. Due to the uncertain timing and
extent of property dispositions and the resulting gains/losses on
sales, actual EPS could differ materially from expected EPS.
EBITDA for Real Estate and Normalized
EBITDA for Real Estate:
Earnings Before Interest, Taxes,
Depreciation and Amortization for Real Estate (“EBITDAre”) –
The National Association of Real Estate Investment Trusts
(“Nareit”) defines EBITDAre (September 2017 White Paper) as net
income (computed in accordance with GAAP) before interest expense,
income taxes, depreciation and amortization expense, and further
adjusted for gains and losses from sales of depreciated operating
properties, impairment write-downs of depreciated operating
properties, impairment write-downs of investments in unconsolidated
entities caused by a decrease in value of depreciated operating
properties within the joint venture and adjustments to reflect the
Company’s share of EBITDAre of investments in unconsolidated
entities.
The Company believes that EBITDAre is useful
to investors, creditors and rating agencies as a supplemental
measure of the Company’s ability to incur and service debt because
it is a recognized measure of performance by the real estate
industry, and by excluding gains or losses related to sales or
impairment of depreciated operating properties, EBITDAre can help
compare the Company’s credit strength between periods or as
compared to different companies.
Normalized Earnings Before Interest,
Taxes, Depreciation and Amortization for Real Estate (“Normalized
EBITDAre”) – Represents net income (computed in accordance with
GAAP) before interest expense, income taxes, depreciation and
amortization expense, and further adjusted for non-comparable
items. Normalized EBITDAre, total debt to Normalized EBITDAre and
net debt to Normalized EBITDAre are important metrics in evaluating
the credit strength of the Company and its ability to service its
debt obligations. The Company believes that Normalized EBITDAre,
total debt to Normalized EBITDAre, and net debt to Normalized
EBITDAre are useful to investors, creditors and rating agencies
because they allow investors to compare the Company’s credit
strength to prior reporting periods and to other companies without
the effect of items that by their nature are not comparable from
period to period and tend to obscure the Company’s actual credit
quality.
Economic Gain (Loss) – Economic Gain (Loss) is calculated
as the net gain (loss) on sales of real estate properties in
accordance with GAAP, excluding accumulated depreciation. The
Company generally considers Economic Gain (Loss) to be an
appropriate supplemental measure to net gain (loss) on sales of
real estate properties in accordance with GAAP because it is one
indication of the gross value created by the Company's acquisition,
development, renovation, management and ultimate sale of a property
and because it helps investors to understand the relationship
between the cash proceeds from a sale and the cash invested in the
sold property. The following table presents a reconciliation of net
gain (loss) on sales of real estate properties in accordance with
GAAP to Economic Gain (Loss):
Quarter Ended March 31,
2024
Net Gain (Loss) on Sales of Real Estate
Properties
$
188,185
Accumulated Depreciation Gain
(58,020
)
Economic Gain (Loss)
$
130,165
Forecasted Embedded Growth – The positive or negative
contribution to growth implied by annualizing total lease income
anticipated for the last month of the current year (without regard
to vacancy) compared to anticipated actual full year lease income
for the current year (without regard to vacancy) and excluding the
impact of Leasing Concessions and other income. This metric is a
helpful data point in that it captures the impact of leases in
existence at the end of the current year and their impact on rental
income for the following year.
FFO and Normalized FFO:
Funds From Operations (“FFO”) – Nareit
defines FFO (December 2018 White Paper) as net income (computed in
accordance with GAAP), excluding gains or losses from sales and
impairment write-downs of depreciable real estate and land when
connected to the main business of a REIT, impairment write-downs of
investments in entities when the impairment is directly
attributable to decreases in the value of depreciable real estate
held by the entity and depreciation and amortization related to
real estate. Adjustments for partially owned consolidated and
unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis. Expected FFO per share is calculated
on a basis consistent with actual FFO per share and is considered
an appropriate supplemental measure of expected operating
performance when compared to expected EPS.
The Company believes that FFO and FFO
available to Common Shares and Units are helpful to investors as
supplemental measures of the operating performance of a real estate
company, because they are recognized measures of performance by the
real estate industry and by excluding gains or losses from sales
and impairment write-downs of depreciable real estate and excluding
depreciation related to real estate (which can vary among owners of
identical assets in similar condition based on historical cost
accounting and useful life estimates), FFO and FFO available to
Common Shares and Units can help compare the operating performance
of a company’s real estate between periods or as compared to
different companies.
Normalized Funds From Operations
("Normalized FFO" or "NFFO") – Normalized FFO begins with FFO
and excludes:
- the impact of any expenses relating to non-operating real
estate asset impairment;
- pursuit cost write-offs;
- gains and losses from early debt extinguishment and preferred
share redemptions;
- gains and losses from non-operating assets; and
- other miscellaneous items.
Expected Normalized FFO per share is
calculated on a basis consistent with actual Normalized FFO per
share and is considered an appropriate supplemental measure of
expected operating performance when compared to expected EPS.
The Company believes that Normalized FFO and
Normalized FFO available to Common Shares and Units are helpful to
investors as supplemental measures of the operating performance of
a real estate company because they allow investors to compare the
Company's operating performance to its performance in prior
reporting periods and to the operating performance of other real
estate companies without the effect of items that by their nature
are not comparable from period to period and tend to obscure the
Company's actual operating results.
FFO, FFO available to Common Shares and
Units, Normalized FFO and Normalized FFO available to Common Shares
and Units do not represent net income, net income available to
Common Shares or net cash flows from operating activities in
accordance with GAAP. Therefore, FFO, FFO available to Common
Shares and Units, Normalized FFO and Normalized FFO available to
Common Shares and Units should not be exclusively considered as
alternatives to net income, net income available to Common Shares
or net cash flows from operating activities as determined by GAAP
or as a measure of liquidity. The Company's calculation of FFO, FFO
available to Common Shares and Units, Normalized FFO and Normalized
FFO available to Common Shares and Units may differ from other real
estate companies due to, among other items, variations in cost
capitalization policies for capital expenditures and, accordingly,
may not be comparable to such other real estate companies.
FFO available to Common Shares and Units and
Normalized FFO available to Common Shares and Units are calculated
on a basis consistent with net income available to Common Shares
and reflects adjustments to net income for preferred distributions
and premiums on redemption of preferred shares in accordance with
GAAP. The equity positions of various individuals and entities that
contributed their properties to the Operating Partnership in
exchange for OP Units are collectively referred to as the
"Noncontrolling Interests – Operating Partnership". Subject to
certain restrictions, the Noncontrolling Interests – Operating
Partnership may exchange their OP Units for Common Shares on a
one-for-one basis.
The following table presents reconciliations of EPS to FFO per
share and Normalized FFO per share for Consolidated Statements of
Funds From Operations and Normalized Funds From Operations.
Actual
Actual
Expected
Expected
Q1 2024
Q1 2023
Q2 2024
2024
Per Share
Per Share
Per Share
Per Share
EPS – Diluted
$
0.77
$
0.56
$0.45 to $0.49
$2.91 to $3.01
Depreciation expense
0.58
0.55
0.56
2.25
Net (gain) loss on sales
(0.48
)
(0.26
)
(0.10
)
(1.42
)
Impairment – operating real estate
assets
—
—
—
—
FFO per share – Diluted
0.87
0.85
0.91 to 0.95
3.74 to 3.84
Impairment – non-operating real estate
assets
—
—
—
—
Write-off of pursuit costs
—
—
—
0.01
Debt extinguishment and preferred
share
redemption (gains) losses
—
—
—
—
Non-operating asset (gains) losses
(0.02
)
—
—
0.01
Other miscellaneous items
0.08
0.02
0.01
0.04
Normalized FFO per share – Diluted
$
0.93
$
0.87
$0.92 to $0.96
$3.80 to $3.90
Lease-Up NOI – Represents NOI for development properties:
(i) in various stages of lease-up; and (ii) where lease-up has been
completed but the properties were not stabilized (defined as having
achieved 90% occupancy for three consecutive months) for all of the
current and comparable periods presented.
Leasing Concessions – Reflects upfront discounts on both
new move-in and renewal leases on a straight-line basis.
Net Operating Income (“NOI”) – NOI is the Company’s
primary financial measure for evaluating each of its apartment
properties. NOI is defined as rental income less direct property
operating expenses (including real estate taxes and insurance). The
Company believes that NOI is helpful to investors as a supplemental
measure of its operating performance because it is a direct measure
of the actual operating results of the Company's apartment
properties. NOI does not include an allocation of property
management expenses either in the current or comparable periods.
Rental income for all leases and operating expense for ground
leases (for both same store and non-same store properties) are
reflected on a straight-line basis in accordance with GAAP for the
current and comparable periods.
The following tables present reconciliations of net income per
the consolidated statements of operations to NOI, along with rental
income, operating expenses and NOI per the consolidated statements
of operations allocated between same store and non-same store/other
results and further allocated between Residential same store and
Non-Residential same store results (see Same Store Results):
Quarter Ended March
31,
2024
2023
Net income
$
305,032
$
220,071
Adjustments:
Property management
35,458
31,466
General and administrative
15,720
16,165
Depreciation
225,695
215,830
Net (gain) loss on sales of real
estate
properties
(188,185
)
(100,209
)
Interest and other income
(9,329
)
(1,538
)
Other expenses
31,738
8,995
Interest:
Expense incurred, net
67,212
66,401
Amortization of deferred financing
costs
1,918
1,979
Income and other tax expense (benefit)
304
298
(Income) loss from investments in
unconsolidated
entities
1,698
1,382
Total NOI
$
487,261
$
460,840
Quarter Ended March
31,
Rental income:
2024
2023
Residential same store
$
687,139
$
661,626
Non-Residential same store
29,526
26,677
Total same store
716,665
688,303
Non-same store/other
14,153
16,785
Total rental income
730,818
705,088
Operating expenses:
Residential same store
224,419
221,848
Non-Residential same store
7,486
7,113
Total same store
231,905
228,961
Non-same store/other
11,652
15,287
Total operating expenses
243,557
244,248
NOI:
Residential same store
462,720
439,778
Non-Residential same store
22,040
19,564
Total same store
484,760
459,342
Non-same store/other
2,501
1,498
Total NOI
$
487,261
$
460,840
New Lease Change – The net effective change in rent
(inclusive of Leasing Concessions) for a lease with a new or
transferring resident compared to the rent for the prior lease of
the identical apartment unit, regardless of lease term.
Non-Residential – Consists of revenues and expenses from
retail and public parking garage operations.
Non-Same Store Properties – For annual comparisons,
primarily includes all properties acquired during 2023 and 2024,
plus any properties in lease-up and not stabilized as of January 1,
2023. Unless otherwise noted, includes both Residential and
Non-Residential operations for these properties.
Percentage of Residents Renewing – Leases renewed
expressed as a percentage of total renewal offers extended during
the reporting period.
Physical Occupancy – The weighted average occupied
apartment units for the reporting period divided by the average of
total apartment units available for rent for the reporting
period.
Pricing Trend – Weighted average of 12-month base rent
including amenity amount less Leasing Concessions on 12-month
signed leases for the reporting period.
Renewal Rate Achieved – The net effective change in rent
(inclusive of Leasing Concessions) for a new lease on an apartment
unit where the lease has been renewed as compared to the rent for
the prior lease of the identical apartment unit, regardless of
lease term.
Residential – Consists of multifamily apartment revenues
and expenses.
Same Store Operating
Expenses:
Insurance – Includes third-party
insurance premiums, broker fees and other insurance-related
procurement fees along with an allocation of estimated uninsured
losses.
On-site Payroll – Includes payroll and
related expenses for on-site personnel including property managers,
leasing consultants and maintenance staff.
Other On-site Operating Expenses –
Includes ground lease costs and administrative costs such as office
supplies, telephone and data charges and association and business
licensing fees.
Repairs and Maintenance – Includes
general maintenance costs, apartment unit turnover costs including
interior painting, routine landscaping, security, exterminating,
fire protection, snow removal, elevator, roof and parking lot
repairs and other miscellaneous building repair and maintenance
costs.
Utilities – Represents gross expenses
prior to any recoveries under the Resident Utility Billing System
(“RUBS”). Recoveries are reflected in rental income.
Same Store Properties – For annual comparisons, primarily
includes all properties acquired or completed that are stabilized
prior to January 1, 2023, less properties subsequently sold.
Properties are included in Same Store when they are stabilized for
all of the current and comparable periods presented. Unless
otherwise noted, includes both Residential and Non-Residential
operations for these properties.
Same Store Residential Revenues – Revenues from our
Residential Same Store Properties only presented on a GAAP basis
which reflects the impact of Leasing Concessions on a straight-line
basis.
Same Store Residential Revenues with Leasing Concessions on a
cash basis is presented in Same Store Results and is considered by
the Company to be a supplemental measure to Same Store Residential
Revenues in conformity with GAAP to help investors evaluate the
impact of both current and historical Leasing Concessions on
GAAP-based Same Store Residential Revenues and to more readily
enable comparisons to revenue as reported by other companies. Same
Store Residential Revenues with Leasing Concessions on a cash basis
reflects the impact of Leasing Concessions used in the period and
allows an investor to understand the historical trend in cash
Leasing Concessions.
% of Stabilized Budgeted NOI – Represents original
budgeted 2024 NOI for stabilized properties and projected annual
NOI at stabilization (defined as having achieved 90% occupancy for
three consecutive months) for properties that are in lease-up.
Total Budgeted Capital Cost – Estimated remaining cost
for projects under development and/or developed plus all
capitalized costs incurred to date, including land acquisition
costs, construction costs, capitalized real estate taxes and
insurance, capitalized interest and loan fees, permits,
professional fees, allocated development overhead and other
regulatory fees, plus any estimates of costs remaining to be funded
for all projects, all in accordance with GAAP. Amounts for
partially owned consolidated and unconsolidated properties are
presented at 100% of the project.
Total Market Capitalization – The aggregate of the market
value of the Company’s outstanding common shares, including
restricted shares, the market value of the Company’s operating
partnership units outstanding, including restricted units (based on
the market value of the Company’s common shares) and the
outstanding principal balance of debt. The Company believes this is
a useful measure of a real estate operating company’s long-term
liquidity and balance sheet strength, because it shows an
approximate relationship between a company’s total debt and the
current total market value of its assets based on the current price
at which the Company’s common shares trade. However, because this
measure of leverage changes with fluctuations in the Company’s
share price, which occur regularly, this measure may change even
when the Company’s earnings, interest and debt levels remain
stable.
Traffic – Consists of an expression of interest in an
apartment by completing an in-person tour, self-guided tour or
virtual tour that may result in an application to lease.
Transaction Accretion (Dilution) – Represents the spread
between the Acquisition Cap Rate and the Disposition Yield.
Turnover – Total Residential move-outs (including
inter-property and intra-property transfers) divided by total
Residential apartment units.
Unencumbered NOI % – Represents NOI generated by
consolidated real estate assets unencumbered by outstanding secured
debt as a percentage of total NOI generated by all of the Company's
consolidated real estate assets.
Unlevered Internal Rate of Return (“IRR”) – The Unlevered
IRR on sold properties is the compound annual rate of return
calculated by the Company based on the timing and amount of: (i)
the gross purchase price of the property plus any direct
acquisition costs incurred by the Company; (ii) total revenues
earned during the Company’s ownership period; (iii) total direct
property operating expenses (including real estate taxes and
insurance) incurred during the Company’s ownership period; (iv)
capital expenditures incurred during the Company’s ownership
period; and (v) the gross sales price of the property net of
selling costs.
The calculation of the Unlevered IRR does not include an
adjustment for the Company’s property management expense, general
and administrative expense or interest expense (including loan
assumption costs and other loan-related costs). Therefore, the
Unlevered IRR is not a substitute for net income as a measure of
our performance. Management believes that the Unlevered IRR
achieved during the period a property is owned by the Company is
useful because it is one indication of the gross value created by
the Company’s acquisition, development, renovation, management and
ultimate sale of a property, before the impact of Company overhead.
The Unlevered IRR achieved on the properties as cited in this
release should not be viewed as an indication of the gross value
created with respect to other properties owned by the Company, and
the Company does not represent that it will achieve similar
Unlevered IRRs upon the disposition of other properties. The
weighted average Unlevered IRR for sold properties is weighted
based on all cash flows over the investment period for each
respective property, including net sales proceeds.
Weighted Average Coupons – Contractual interest rate for
each debt instrument weighted by principal balances as of March 31,
2024. In case of debt for which fair value hedges are in place, the
rate payable under the corresponding derivatives is used in lieu of
the contractual interest rate.
Weighted Average Rates – Interest expense for each debt
instrument for the quarter ended March 31, 2024 weighted by its
average principal balance for the same period. Interest expense
includes amortization of premiums, discounts and other
comprehensive income on debt and related derivative instruments. In
case of debt for which derivatives are in place, the income or
expense recognized under the corresponding derivatives is included
in the total interest expense for the period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240423724317/en/
Marty McKenna 312-928-1901 mmckenna@eqr.com
Equity Residential (NYSE:EQR)
Historical Stock Chart
From Sep 2024 to Oct 2024
Equity Residential (NYSE:EQR)
Historical Stock Chart
From Oct 2023 to Oct 2024