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Equity Residential Reports Third Quarter 2023 Results

Equity Residential (NYSE: EQR) today reported results for the quarter and nine months ended September 30, 2023 and has posted a Q3 2023 Management Presentation to its website as referenced below.

Third Quarter 2023 Results

All per share results are reported as available to common shares/units on a diluted basis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended September 30,

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.45

 

 

$

0.86

 

 

$

(0.41

)

 

 

(47.7

%)

 

 

Funds from Operations (FFO) per share

 

$

0.96

 

 

$

0.90

 

 

$

0.06

 

 

 

6.7

%

 

 

Normalized FFO (NFFO) per share

 

$

0.96

 

 

$

0.92

 

 

$

0.04

 

 

 

4.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

1.38

 

 

$

1.63

 

 

$

(0.25

)

 

 

(15.3

%)

 

 

Funds from Operations (FFO) per share

 

$

2.74

 

 

$

2.56

 

 

$

0.18

 

 

 

7.0

%

 

 

Normalized FFO (NFFO) per share

 

$

2.78

 

 

$

2.58

 

 

$

0.20

 

 

 

7.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recent Highlights

  • Same store revenue increased 4.1% for the third quarter of 2023 compared to the third quarter of 2022 and was negatively impacted by weaker than expected revenue performance in San Francisco and Seattle as well as the non-cash write-off of approximately $1.5 million in straight-line receivables due to the recent bankruptcy of Rite Aid. The Company revised its 2023 annual same store revenue growth guidance to 5.5% as further described in this release and in the Management Presentation referenced below.
  • Bad debt before the application of governmental rental assistance has improved substantially for the nine months ended September 2023 as compared to the same period in 2022, albeit slightly less than our prior expectations due to the timing associated with current eviction proceedings. See page 13 for additional details.
  • Same store expense growth for the third quarter of 2023 compared to the third quarter of 2022 was 3.1%. The Company also reaffirmed its full year 2023 same store expense growth at 4.25%.
  • During the third quarter of 2023, the Company acquired two suburban Atlanta apartment properties, consisting of 634 apartment units, for an aggregate acquisition price of approximately $179.7 million and sold a 166-unit apartment property in Seattle for approximately $60.1 million. Subsequent to the end of the quarter, the Company sold three operating properties for a total of approximately $184.6 million.
  • The Company recently published its tenth annual Environmental, Social and Governance (ESG) report highlighting Equity Residential's goals and accomplishments.

“Our East Coast portfolio performed very well in the quarter. Strong demand combined with low supply in Boston and New York and rapid absorption of supply in Washington, D.C. position these markets favorably going forward. While the East Coast outperformed our expectations, the San Francisco and Seattle markets underperformed due to lower recent job growth in our target affluent renter demographic and, together with the Rite Aid bankruptcy, led us to adjust guidance,” said Mark J. Parrell, Equity Residential’s President and CEO. “We are pleased with our progress in reducing our COVID era delinquency but the legal process is lengthy and uneven and we will likely end the year with modestly more delinquency than our previous goal. As we think about 2024 operating performance, continued demand from our well-employed renter demographic and limited new supply in most of our markets should lead to another year of solid same store revenue growth.”

Full Year 2023 Guidance

The Company has revised its guidance for its full year 2023 same store operating performance, EPS, FFO per share and Normalized FFO per share as listed below:

 

 

Revised

 

Previous

 

Change at Midpoint

Same Store (includes Residential and Non-Residential):

 

 

 

 

Physical Occupancy

 

95.9%

 

96.0%

 

(0.1%)

Revenue change

 

5.5%

 

5.5% to 6.25%

 

(0.375%)

Expense change

 

4.25%

 

4.0% to 4.5%

 

0.00%

Net Operating Income (NOI) change

 

6.2%

 

6.3% to 7.0%

 

(0.45%)

 

 

 

 

 

 

 

EPS

 

$2.20 to $2.22

 

$1.95 to $2.01

 

$0.23

FFO per share

 

$3.74 to $3.76

 

$3.72 to $3.78

 

$0.00

Normalized FFO per share

 

$3.77 to $3.79

 

$3.77 to $3.83

 

($0.02)

The change in the full year 2023 EPS guidance range is due primarily to higher expected property sale gains, partially offset by lower expected Residential and Non-Residential same store NOI and higher expected depreciation expense.

The change in the full year 2023 Normalized FFO per share guidance range is due primarily to lower expected Residential and Non-Residential same store NOI.

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 29 through 34 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 31 and 32 of this release.

Results Per Share

The changes in EPS for the quarter and nine months ended September 30, 2023 compared to the same periods of 2022 are due primarily to lower property sale gains in the current periods, the various adjustment items listed on page 27 of this release and the items described below.

The per share changes in FFO for the quarter and nine months ended September 30, 2023 compared to the same periods of 2022 are due primarily to the various adjustment items listed on page 27 of this release and the items described below.

The per share changes in Normalized FFO are due primarily to:

 

 

Positive/(Negative) Impact

 

 

 

Third Quarter 2023 vs.

Third Quarter 2022

 

 

September YTD 2023 vs.

September YTD 2022

 

Residential same store NOI

 

$

0.06

 

 

$

0.22

 

Non-Residential same store NOI (1)

 

 

(0.01

)

 

 

 

Lease-Up NOI

 

 

 

 

 

0.02

 

2023 and 2022 transaction activity impact on NOI, net

 

 

 

 

(0.02

)

Interest expense, net

 

 

 

 

 

0.03

 

Corporate overhead (2)

 

 

(0.01

)

 

 

(0.02

)

Other items (3)

 

 

 

 

 

(0.03

)

Net

 

$

0.04

 

 

$

0.20

 

(1)

During the third quarter of 2023, the Company recorded a non-cash write-off of approximately $1.5 million in straight-line receivables due to the recent bankruptcy of Rite Aid.

(2)

Corporate overhead includes property management and general and administrative expenses.

(3)

Primarily represents the negative impact from property damage associated with the California rain storms that occurred earlier this year.

Same Store Results

The following table shows the total same store results for the periods presented.

 

 

Third Quarter 2023 vs.

Third Quarter 2022

 

Third Quarter 2023 vs.

Second Quarter 2023

 

September YTD 2023 vs.

September YTD 2022

Apartment Units

 

77,698

 

78,368

 

76,789

Physical Occupancy

 

96.0% vs. 96.4%

 

96.0% vs. 95.9%

 

95.9% vs. 96.5%

 

 

 

 

 

 

 

Revenues

 

4.1%

 

0.7%

 

6.2%

Expenses

 

3.1%

 

1.9%

 

5.3%

NOI

 

4.6%

 

0.1%

 

6.6%

On page 11 of this release, the Company has provided a breakout of Residential and Non-Residential same store results with definitions that can be found on page 33 of this release. Non-Residential operations account for approximately 3.6% of total revenues for the nine months ended September 30, 2023.

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.

 

 

Third Quarter 2023 vs.

Third Quarter 2022

 

 

Third Quarter 2023 vs.

Second Quarter 2023

 

 

September YTD 2023 vs.

September YTD 2022

 

 

 

% Change

 

 

% Change

 

 

% Change

 

Same Store Residential Revenues-

  comparable period

 

 

 

 

 

 

 

 

Lease rates

 

 

5.0

%

 

 

1.3

%

 

 

7.1

%

Leasing Concessions

 

 

(0.4

%)

 

 

(0.1

%)

 

 

(0.1

%)

Vacancy gain (loss)

 

 

(0.5

%)

 

 

(0.2

%)

 

 

(0.7

%)

Bad Debt, Net (1)

 

 

(0.3

%)

 

 

0.0

%

 

 

(0.7

%)

Other (2)

 

 

0.6

%

 

 

0.0

%

 

 

0.7

%

Same Store Residential Revenues-

  current period

 

4.4

%

 

 

1.0

%

 

 

6.3

%

(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. Comparable period changes in quarterly Bad Debt, Net will be volatile throughout 2023 primarily due to the timing of the current legal processes and governmental rental assistance received in 2022. See page 13 for more detail.

(2)

Includes ancillary income, utility recoveries, early lease termination income, miscellaneous income and other items.

See page 12 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 76,789 same store apartment units):

 

 

October 2023 (1)

 

Q3 2023

 

Q2 2023

Physical Occupancy

 

96.0%

 

96.0%

 

95.9%

Percentage of Residents Renewing by quarter/month

59.0%

 

54.0%

 

57.0%

 

 

 

 

 

 

 

New Lease Change (2)

 

(3.1%)

 

0.5%

 

2.3%

Renewal Rate Achieved

 

5.0%

 

5.5%

 

5.9%

Blended Rate

 

1.6%

 

3.1%

 

4.3%

(1)

October 2023 results are preliminary as of October 27th.

(2)

Excluding the impact of San Francisco and Seattle, New Lease Change would have been (0.3%), 2.1% and 3.6% for October 2023, Q3 2023 and Q2 2023, respectively, which is in line with the Company's expectations and consistent with normal seasonal patterns.

Investment Activity

The Company acquired two operating properties, both in suburban Atlanta, during the third quarter of 2023 - a recently completed 344-unit apartment property in Suwanee, which is currently in lease up, for approximately $98.0 million at a stabilized Acquisition Cap Rate of 5.4% and a 290-unit property in Decatur built in 2019, for approximately $81.7 million at an Acquisition Cap Rate of 5.1%. During the first nine months of 2023, the Company has acquired four operating properties, consisting of 1,183 apartment units, for an aggregate purchase price of approximately $366.3 million at a weighted average Acquisition Cap Rate of 5.5%.

Also during the third quarter of 2023, the Company sold a 166-unit property in Seattle for approximately $60.1 million at a Disposition Yield of 5.4%, generating an Unlevered IRR of 7.5%. During the first nine months of 2023, the Company sold eight properties, consisting of 413 apartment units, for an aggregate sale price of approximately $195.4 million at a weighted average Disposition Yield of 5.3%, generating an Unlevered IRR of 8.5%. Subsequent to the end of the quarter, the Company sold three properties located in our West Coast markets (San Francisco, Seattle and Los Angeles), consisting of 499 apartment units, for an aggregate sale price of approximately $184.6 million at a weighted average Disposition Yield of 5.8%.

Capital Markets Activity

In August 2023, the Company closed on secured loans totaling $550.0 million. The Company previously disclosed the rate lock on these loans in July 2023. After the effect of the Company’s hedges, the economic rate on these ten-year loans is approximately 4.7%. The proceeds from these loans were used, along with funding from the Company’s Commercial Paper Program, to paydown the $800.0 million secured debt pool that was due to mature in November 2023 and carried an interest rate of 4.21%. After this paydown, the Company has no significant debt maturities, other than commercial paper, which is supported by its revolving credit facility due 2027, until June 2025.

Fourth Quarter 2023 Guidance

The Company has established guidance ranges for the fourth quarter of 2023 EPS, FFO per share and Normalized FFO per share as listed below:

 

 

Q4 2023

Guidance

EPS

 

$0.82 to $0.84

FFO per share

 

$1.00 to $1.02

Normalized FFO per share

 

$0.99 to $1.01

The difference between the third quarter of 2023 actual EPS of $0.45 and the fourth quarter of 2023 EPS guidance midpoint of $0.83 is due primarily to higher expected property sale gains and the items described below.

The difference between the third quarter of 2023 actual FFO of $0.96 per share and the fourth quarter of 2023 FFO guidance midpoint of $1.01 per share is due primarily to the items described below.

The difference between the third quarter of 2023 actual Normalized FFO of $0.96 per share and the fourth quarter of 2023 Normalized FFO guidance midpoint of $1.00 per share is due primarily to:

 

 

Positive/(Negative)

Impact

 

 

 

Fourth Quarter 2023 vs.

Third Quarter 2023

 

Residential same store NOI

 

$

0.02

 

Non-Residential same store NOI

 

 

0.01

 

Corporate overhead

 

 

0.01

 

Net

 

$

0.04

 

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 305 properties consisting of 80,683 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, November 1, 2023 at 10:00 a.m. CT. In connection with the conference call, the Company is also providing a Management Presentation on its website. 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)

 

 

 

Nine Months Ended September 30,

 

 

Quarter Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

2,146,464

 

 

$

2,035,477

 

 

$

724,067

 

 

$

695,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Property and maintenance

 

 

391,437

 

 

 

365,277

 

 

 

129,087

 

 

 

124,048

 

Real estate taxes and insurance

 

 

312,607

 

 

 

302,899

 

 

 

102,858

 

 

 

100,361

 

Property management

 

 

90,314

 

 

 

83,035

 

 

 

28,169

 

 

 

25,729

 

General and administrative

 

 

49,135

 

 

 

47,033

 

 

 

14,094

 

 

 

13,372

 

Depreciation

 

 

661,921

 

 

 

667,896

 

 

 

224,736

 

 

 

214,129

 

Total expenses

 

 

1,505,414

 

 

 

1,466,140

 

 

 

498,944

 

 

 

477,639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on sales of real estate properties

 

 

127,034

 

 

 

304,346

 

 

 

26,912

 

 

 

196,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

768,084

 

 

 

873,683

 

 

 

252,035

 

 

 

414,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

11,296

 

 

 

4,844

 

 

 

7,627

 

 

 

720

 

Other expenses

 

 

(20,517

)

 

 

(9,191

)

 

 

(4,958

)

 

 

(3,755

)

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred, net

 

 

(200,882

)

 

 

(217,093

)

 

 

(68,891

)

 

 

(72,412

)

Amortization of deferred financing costs

 

 

(7,023

)

 

 

(6,421

)

 

 

(3,027

)

 

 

(2,220

)

Income before income and other taxes, income (loss) from

  investments in unconsolidated entities and net gain (loss)

  on sales of land parcels

 

 

550,958

 

 

 

645,822

 

 

 

182,786

 

 

 

336,344

 

Income and other tax (expense) benefit

 

 

(892

)

 

 

(725

)

 

 

(258

)

 

 

(152

)

Income (loss) from investments in unconsolidated entities

 

 

(3,847

)

 

 

(3,456

)

 

 

(1,242

)

 

 

(1,027

)

Net income

 

 

546,219

 

 

 

641,641

 

 

 

181,286

 

 

 

335,165

 

Net (income) loss attributable to Noncontrolling Interests:

 

 

 

 

 

 

 

 

 

 

 

 

Operating Partnership

 

 

(17,174

)

 

 

(21,024

)

 

 

(5,561

)

 

 

(10,997

)

Partially Owned Properties

 

 

(5,299

)

 

 

(2,726

)

 

 

(3,217

)

 

 

(1,143

)

Net income attributable to controlling interests

 

 

523,746

 

 

 

617,891

 

 

 

172,508

 

 

 

323,025

 

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

Net income available to Common Shares

 

$

521,428

 

 

$

615,573

 

 

$

171,735

 

 

$

322,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.38

 

 

$

1.64

 

 

$

0.45

 

 

$

0.86

 

Weighted average Common Shares outstanding

 

 

378,614

 

 

 

375,710

 

 

 

378,853

 

 

 

375,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.38

 

 

$

1.63

 

 

$

0.45

 

 

$

0.86

 

Weighted average Common Shares outstanding

 

 

391,135

 

 

 

389,394

 

 

 

391,351

 

 

 

389,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

1.9875

 

 

$

1.875

 

 

$

0.6625

 

 

$

0.625

 

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share and Unit data)

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

Quarter Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

546,219

 

 

$

641,641

 

 

$

181,286

 

 

$

335,165

 

Net (income) loss attributable to Noncontrolling Interests – Partially

Owned Properties

 

(5,299

)

 

 

(2,726

)

 

 

(3,217

)

 

 

(1,143

)

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

Net income available to Common Shares and Units

 

 

538,602

 

 

 

636,597

 

 

 

177,296

 

 

 

333,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

661,921

 

 

 

667,896

 

 

 

224,736

 

 

 

214,129

 

Depreciation – Non-real estate additions

 

 

(3,291

)

 

 

(3,189

)

 

 

(1,032

)

 

 

(1,075

)

Depreciation – Partially Owned Properties

 

 

(1,599

)

 

 

(2,097

)

 

 

(544

)

 

 

(543

)

Depreciation – Unconsolidated Properties

 

 

1,921

 

 

 

1,897

 

 

 

695

 

 

 

657

 

Net (gain) loss on sales of unconsolidated entities - operating

  assets

 

 

 

 

 

(9

)

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(127,034

)

 

 

(304,346

)

 

 

(26,912

)

 

 

(196,551

)

Noncontrolling Interests share of gain (loss) on sales

  of real estate properties

 

 

2,336

 

 

 

 

 

 

2,336

 

 

 

 

FFO available to Common Shares and Units

 

 

1,072,856

 

 

 

996,749

 

 

 

376,575

 

 

 

349,866

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (see note for additional detail):

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

2,739

 

 

 

3,296

 

 

 

746

 

 

 

781

 

Debt extinguishment and preferred share redemption (gains)

  losses

 

 

1,143

 

 

 

4,316

 

 

 

1,096

 

 

 

3,847

 

Non-operating asset (gains) losses

 

 

(4,735

)

 

 

(1,174

)

 

 

(5,766

)

 

 

156

 

Other miscellaneous items

 

 

14,831

 

 

 

1,832

 

 

 

3,488

 

 

 

2,017

 

Normalized FFO available to Common Shares and Units

 

$

1,086,834

 

 

$

1,005,019

 

 

$

376,139

 

 

$

356,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

1,075,174

 

 

$

999,067

 

 

$

377,348

 

 

$

350,639

 

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

FFO available to Common Shares and Units

 

$

1,072,856

 

 

$

996,749

 

 

$

376,575

 

 

$

349,866

 

FFO per share and Unit – basic

 

$

2.75

 

 

$

2.57

 

 

$

0.97

 

 

$

0.90

 

FFO per share and Unit – diluted

 

$

2.74

 

 

$

2.56

 

 

$

0.96

 

 

$

0.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO

 

$

1,089,152

 

 

$

1,007,337

 

 

$

376,912

 

 

$

357,440

 

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

Normalized FFO available to Common Shares and Units

 

$

1,086,834

 

 

$

1,005,019

 

 

$

376,139

 

 

$

356,667

 

Normalized FFO per share and Unit – basic

 

$

2.79

 

 

$

2.59

 

 

$

0.96

 

 

$

0.92

 

Normalized FFO per share and Unit – diluted

 

$

2.78

 

 

$

2.58

 

 

$

0.96

 

 

$

0.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares and Units outstanding – basic

 

 

389,991

 

 

 

387,603

 

 

 

390,087

 

 

 

387,745

 

Weighted average Common Shares and Units outstanding – diluted

 

391,135

 

 

 

389,394

 

 

 

391,351

 

 

 

389,300

 

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)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Land

 

$

5,593,425

 

 

$

5,580,878

 

Depreciable property

 

 

22,911,464

 

 

 

22,334,369

 

Projects under development

 

 

61,411

 

 

 

112,940

 

Land held for development

 

 

62,533

 

 

 

60,567

 

Investment in real estate

 

 

28,628,833

 

 

 

28,088,754

 

Accumulated depreciation

 

 

(9,634,013

)

 

 

(9,027,850

)

Investment in real estate, net

 

 

18,994,820

 

 

 

19,060,904

 

Investments in unconsolidated entities1

 

 

313,225

 

 

 

279,024

 

Cash and cash equivalents

 

 

39,250

 

 

 

53,869

 

Restricted deposits

 

 

87,477

 

 

 

83,303

 

Right-of-use assets

 

 

460,489

 

 

 

462,956

 

Other assets

 

 

213,714

 

 

 

278,206

 

Total assets

 

$

20,108,975

 

 

$

20,218,262

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Mortgage notes payable, net

 

$

1,634,726

 

 

$

1,953,438

 

Notes, net

 

 

5,346,895

 

 

 

5,342,329

 

Line of credit and commercial paper

 

 

497,636

 

 

 

129,955

 

Accounts payable and accrued expenses

 

 

164,975

 

 

 

96,028

 

Accrued interest payable

 

 

47,519

 

 

 

66,310

 

Lease liabilities

 

 

312,781

 

 

 

308,748

 

Other liabilities

 

 

231,652

 

 

 

306,941

 

Security deposits

 

 

69,498

 

 

 

68,940

 

Distributions payable

 

 

259,624

 

 

 

244,621

 

Total liabilities

 

 

8,565,306

 

 

 

8,517,310

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests – Operating Partnership

 

 

277,782

 

 

 

318,273

 

Equity:

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred Shares of beneficial interest, $0.01 par value;

  100,000,000 shares authorized; 745,600 shares issued and

  outstanding as of September 30, 2023 and December 31, 2022

 

 

37,280

 

 

 

37,280

 

Common Shares of beneficial interest, $0.01 par value;

  1,000,000,000 shares authorized; 379,723,838 shares issued

  and outstanding as of September 30, 2023 and 378,429,708

  shares issued and outstanding as of December 31, 2022

 

 

3,797

 

 

 

3,784

 

Paid in capital

 

 

9,589,057

 

 

 

9,476,085

 

Retained earnings

 

 

1,426,632

 

 

 

1,658,837

 

Accumulated other comprehensive income (loss)

 

 

5,099

 

 

 

(2,547

)

Total shareholders’ equity

 

 

11,061,865

 

 

 

11,173,439

 

Noncontrolling Interests:

 

 

 

 

 

 

Operating Partnership

 

 

205,845

 

 

 

209,961

 

Partially Owned Properties

 

 

(1,823

)

 

 

(721

)

Total Noncontrolling Interests

 

 

204,022

 

 

 

209,240

 

Total equity

 

 

11,265,887

 

 

 

11,382,679

 

Total liabilities and equity

 

$

20,108,975

 

 

$

20,218,262

 

1 Includes $250.9 million and $218.0 million in unconsolidated development projects as of September 30, 2023 and December 31, 2022, respectively. See Development and Lease-Up Projects for additional detail on unconsolidated projects.

Equity Residential

Portfolio Summary

As of September 30, 2023

 

 

 

 

 

 

 

 

% of

 

 

 

 

Stabilized

Average

 

 

 

 

 

Apartment

 

 

Budgeted

 

 

Rental

 

Markets/Metro Areas

 

Properties

 

 

Units

 

 

NOI

 

 

Rate

 

Established Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

59

 

 

 

15,012

 

 

 

17.6

%

 

$

2,911

 

Orange County

 

 

13

 

 

 

4,028

 

 

 

5.2

%

 

 

2,826

 

San Diego

 

 

12

 

 

 

2,878

 

 

 

4.0

%

 

 

3,063

 

Subtotal – Southern California

 

 

84

 

 

 

21,918

 

 

 

26.8

%

 

 

2,915

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

44

 

 

 

11,790

 

 

 

15.8

%

 

 

3,304

 

Washington, D.C.

 

 

48

 

 

 

15,028

 

 

 

15.6

%

 

 

2,647

 

New York

 

 

34

 

 

 

8,536

 

 

 

13.9

%

 

 

4,531

 

Boston

 

 

27

 

 

 

7,170

 

 

 

11.4

%

 

 

3,525

 

Seattle

 

 

45

 

 

 

9,363

 

 

 

10.7

%

 

 

2,571

 

Subtotal – Established Markets

 

 

282

 

 

 

73,805

 

 

 

94.2

%

 

 

3,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expansion Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

9

 

 

 

2,785

 

 

 

2.8

%

 

 

2,409

 

Atlanta

 

 

7

 

 

 

2,111

 

 

 

1.9

%

 

 

2,160

 

Dallas/Ft. Worth

 

 

4

 

 

 

1,241

 

 

 

0.7

%

 

 

1,897

 

Austin

 

 

3

 

 

 

741

 

 

 

0.4

%

 

 

1,855

 

Subtotal – Expansion Markets

 

 

23

 

 

 

6,878

 

 

 

5.8

%

 

 

2,182

 

Total

 

 

305

 

 

 

80,683

 

 

 

100.0

%

 

$

3,046

 

 

 

Properties

 

Apartment Units

Wholly Owned Properties

 

291

 

77,623

Partially Owned Properties – Consolidated

 

14

 

3,060

 

 

305

 

80,683

Note: Projects under development are not included in the Portfolio Summary until construction has been completed.

Equity Residential

Portfolio Rollforward Q3 2023

($ in thousands)

 

 

 

Properties

 

 

Apartment

Units

 

 

Purchase

Price

 

 

Acquisition

Cap Rate

 

6/30/2023

 

 

304

 

 

 

80,212

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

1

 

 

 

290

 

 

$

81,734

 

 

 

5.1

%

Consolidated Rental Properties – Not Stabilized (1)

 

 

1

 

 

 

344

 

 

$

98,000

 

 

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

Disposition

Yield

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

(1

)

 

 

(166

)

 

$

(60,100

)

 

 

(5.4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

3

 

 

 

 

 

 

 

9/30/2023

 

 

305

 

 

 

80,683

 

 

 

 

 

 

 

Portfolio Rollforward 2023

($ in thousands)

 

 

 

Properties

 

 

Apartment

Units

 

 

Purchase

Price

 

 

Acquisition

Cap Rate

 

12/31/2022

 

 

308

 

 

 

79,597

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

2

 

 

 

577

 

 

$

189,734

 

 

 

5.1

%

Consolidated Rental Properties – Not Stabilized (1)

 

 

2

 

 

 

606

 

 

$

176,600

 

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

Disposition

Yield

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

(8

)

 

 

(413

)

 

$

(195,400

)

 

 

(5.3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed Developments – Consolidated

 

 

1

 

 

 

312

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

4

 

 

 

 

 

 

 

9/30/2023

 

 

305

 

 

 

80,683

 

 

 

 

 

 

 

(1)

The Company acquired two properties in the Atlanta market during the nine months ended September 30, 2023, including a property in the third quarter of 2023, that are in lease-up and are expected to stabilize in their second year of ownership at the weighted average Acquisition Cap Rates listed above.

 Equity Residential

Third Quarter 2023 vs. Third Quarter 2022

Same Store Results/Statistics Including 77,698 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Third Quarter 2023

 

Third Quarter 2022

 

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

 

%

Change

 

Total

 

 

%

Change

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

Revenues

 

$

681,279

 

(1)

4.4%

 

$

22,811

 

(2)

(5.4%)

 

$

704,090

 

 

4.1%

 

Revenues

 

$

652,278

 

 

$

24,109

 

 

$

676,387

 

Expenses

 

$

216,943

 

 

3.1%

 

$

6,531

 

 

5.0%

 

$

223,474

 

 

3.1%

 

Expenses

 

$

210,513

 

 

$

6,222

 

 

$

216,735

 

NOI

 

$

464,336

 

 

5.1%

 

$

16,280

 

 

(9.0%)

 

$

480,616

 

 

4.6%

 

NOI

 

$

441,765

 

 

$

17,887

 

 

$

459,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,048

 

 

5.0%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,904

 

 

 

 

 

 

 

Physical Occupancy

 

96.0

%

 

(0.4%)

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.4

%

 

 

 

 

 

 

Turnover

 

13.8

%

 

(0.2%)

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

14.0

%

 

 

 

 

 

 

Third Quarter 2023 vs. Second Quarter 2023

Same Store Results/Statistics Including 78,368 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Third Quarter 2023

 

Second Quarter 2023

 

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

 

%

Change

 

Total

 

 

%

Change

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

Revenues

 

$

689,144

 

(1)

1.0%

 

$

23,976

 

(2)

(9.3%)

 

$

713,120

 

 

0.7%

 

Revenues

 

$

682,035

 

 

$

26,440

 

 

$

708,475

 

Expenses

 

$

219,491

 

 

2.1%

 

$

6,907

 

 

(6.2%)

 

$

226,398

 

 

1.9%

 

Expenses

 

$

214,894

 

 

$

7,365

 

 

$

222,259

 

NOI

 

$

469,653

 

 

0.5%

 

$

17,069

 

 

(10.5%)

 

$

486,722

 

 

0.1%

 

NOI

 

$

467,141

 

 

$

19,075

 

 

$

486,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,057

 

 

1.0%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

3,027

 

 

 

 

 

 

 

Physical Occupancy

 

96.0

%

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

 

 

 

 

 

Turnover

 

13.8

%

 

2.2%

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

11.6

%

 

 

 

 

 

 

September YTD 2023 vs. September YTD 2022

Same Store Results/Statistics Including 76,789 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

September YTD 2023

 

September YTD 2022

 

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

 

%

Change

 

Total

 

 

%

Change

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

Revenues

 

$

1,997,058

 

(1)

6.3%

 

$

72,798

 

(2)

2.8%

 

$

2,069,856

 

 

6.2%

 

Revenues

 

$

1,878,918

 

 

$

70,830

 

 

$

1,949,748

 

Expenses

 

$

644,494

 

 

5.2%

 

$

20,113

 

 

9.4%

 

$

664,607

 

 

5.3%

 

Expenses

 

$

612,892

 

 

$

18,389

 

 

$

631,281

 

NOI

 

$

1,352,564

 

 

6.8%

 

$

52,685

 

 

0.5%

 

$

1,405,249

 

 

6.6%

 

NOI

 

$

1,266,026

 

 

$

52,441

 

 

$

1,318,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,015

 

 

7.0%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,819

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

(0.6%)

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.5

%

 

 

 

 

 

 

Turnover

 

34.3

%

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

34.1

%

 

 

 

 

 

 

(1)

See page 12 for Same Store Residential Revenues with Leasing Concessions reflected on a cash basis. See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional detail.

(2)

Includes the negative impact from the non-cash write-off of approximately $1.5 million in straight-line receivables during the third quarter of 2023 due to the recent bankruptcy of Rite Aid.

Equity Residential

Same Store Residential Revenues – GAAP to Cash Basis (1)

($ in thousands)

 

 

Third Quarter 2023 vs. Third Quarter 2022

 

 

Third Quarter 2023 vs. Second Quarter 2023

 

 

Sept. YTD 2023 vs. Sept YTD 2022

 

 

77,698 Same Store Apartment Units

 

 

78,368 Same Store Apartment Units

 

 

76,789 Same Store Apartment Units

 

 

Q3 2023

 

 

Q3 2022

 

 

Q3 2023

 

 

Q2 2023

 

 

Sept. YTD 2023

 

 

Sept. YTD 2022

 

Same Store Residential Revenues (GAAP Basis)

$

681,279

 

 

$

652,278

 

 

$

689,144

 

 

$

682,035

 

 

$

1,997,058

 

 

$

1,878,918

 

Leasing Concessions amortized

 

3,743

 

 

 

1,633

 

 

 

4,106

 

 

 

3,233

 

 

 

8,378

 

 

 

7,245

 

Leasing Concessions granted (2)

 

(5,190

)

 

 

(641

)

 

 

(5,433

)

 

 

(4,069

)

 

 

(12,821

)

 

 

(3,443

)

Same Store Residential Revenues with Leasing

  Concessions on a cash basis

$

679,832

 

 

$

653,270

 

 

$

687,817

 

 

$

681,199

 

 

$

1,992,615

 

 

$

1,882,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - GAAP revenue

 

4.4

%

 

 

 

 

 

1.0

%

 

 

 

 

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - cash revenue

 

4.1

%

 

 

 

 

 

1.0

%

 

 

 

 

 

5.8

%

 

 

 

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional detail.

(2)

Concession usage is primarily concentrated in San Francisco and Seattle and is expected to continue through the remainder of 2023.

Same Store Net Operating Income By Quarter

Including 76,789 Same Store Apartment Units

($ in thousands)

 

 

Q3 2023

 

 

Q2 2023

 

 

Q1 2023

 

 

Q4 2022

 

 

Q3 2022

 

Same store revenues

 

$

697,066

 

 

$

692,267

 

 

$

680,523

 

 

$

674,851

 

 

$

669,971

 

Same store expenses

 

 

221,035

 

 

 

217,113

 

 

 

226,459

 

 

 

210,495

 

 

 

214,192

 

Same store NOI

  
(includes Residential and Non-Residential)

 

$

476,031

 

 

$

475,154

 

 

$

454,064

 

 

$

464,356

 

 

$

455,779

 

Equity Residential

Same Store Resident/Tenant Accounts Receivable Balances

Including 76,789 Same Store Apartment Units

($ in thousands)

 

 

 

Residential

 

 

Non-Residential

 

Balance Sheet (Other assets):

 

September 30, 2023

 

 

June 30, 2023

 

 

September 30, 2023

 

 

June 30, 2023

 

Resident/tenant accounts receivable balances

$

24,846

 

 

$

26,626

 

 

$

2,714

 

 

$

2,389

 

Allowance for doubtful accounts

 

(19,574

)

 

 

(22,335

)

 

 

(1,703

)

 

 

(1,383

)

Net receivable balances

$

5,272

 

 

$

4,291

 

 

$

1,011

 

 

$

1,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line receivable balances

 

$

7,458

 

(1)

$

6,012

 

 

$

11,800

 

(2)

$

13,546

 

(1)

Total same store Residential Leasing Concessions granted in the third quarter of 2023 were approximately $5.1 million. The straight-line receivable balance of $7.5 million reflects Residential Leasing Concessions that the Company expects will be primarily recognized as a reduction of rental revenues in the remainder of 2023 and the first three quarters of 2024.

(2)

During the third quarter of 2023, the Company recorded a non-cash write-off of approximately $1.5 million in straight-line receivables due to the recent bankruptcy of Rite Aid.

Same Store Residential Bad Debt

Including 76,789 Same Store Apartment Units

($ in thousands)

 

Income Statement (Rental income):

 

Q3 2023

 

 

Q2 2023

 

 

Q3 2022

 

 

September

YTD 2023

 

 

September

YTD 2022

 

Bad debts before governmental rental assistance

 

$

8,993

 

 

$

9,506

 

 

$

13,456

 

 

$

30,378

 

 

$

45,875

 

Governmental rental assistance received

 

(406

)

 

 

(660

)

 

 

(7,000

)

 

 

(2,245

)

 

 

(30,882

)

Bad Debt, Net

 

$

8,587

 

 

$

8,846

 

 

$

6,456

 

 

$

28,133

 

 

$

14,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bad Debt, Net as a % of Same Store Residential Revenues

 

1.3

%

 

 

1.3

%

 

 

1.0

%

 

 

1.4

%

 

 

0.8

%

Equity Residential

Third Quarter 2023 vs. Third Quarter 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year's Quarter

 

Markets/Metro Areas

 

Apartment

Units

 

 

Q3 2023

% of

Actual

NOI

 

 

Q3 2023

Average

Rental

Rate

 

 

Q3 2023

Weighted

Average

Physical

Occupancy %

 

 

Q3 2023

Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

Los Angeles

 

 

14,415

 

 

 

17.9

%

 

$

2,896

 

 

 

95.7

%

 

 

12.1

%

 

 

3.8

%

(1)

 

7.8

%

 

 

2.2

%

 

 

5.2

%

 

 

(1.2

%)

 

 

1.5

%

Orange County

 

 

4,028

 

 

 

5.5

%

 

 

2,826

 

 

 

96.7

%

 

 

10.9

%

 

 

5.7

%

 

 

7.7

%

 

 

5.1

%

 

 

6.1

%

 

 

(0.4

%)

 

 

0.2

%

San Diego

 

 

2,878

 

 

 

4.2

%

 

 

3,063

 

 

 

95.3

%

 

 

12.5

%

 

 

5.8

%

 

 

3.1

%

 

 

6.7

%

 

 

7.3

%

 

 

(1.4

%)

 

 

1.3

%

Subtotal – Southern California

 

21,321

 

 

 

27.6

%

 

 

2,905

 

 

 

95.9

%

 

 

12.0

%

 

 

4.5

%

 

 

7.2

%

 

 

3.4

%

 

 

5.6

%

 

 

(1.0

%)

 

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, D.C.

 

 

14,716

 

 

 

16.5

%

 

 

2,643

 

 

 

96.8

%

 

 

14.4

%

 

 

5.7

%

 

 

(1.7

%)

 

 

9.6

%

 

 

5.8

%

 

 

(0.1

%)

 

 

0.2

%

San Francisco

 

 

11,368

 

 

 

16.3

%

 

 

3,308

 

 

 

95.5

%

 

 

13.2

%

 

 

2.7

%

(1)

 

2.3

%

 

 

2.8

%

 

 

3.0

%

 

 

(0.4

%)

 

 

(0.1

%)

New York

 

 

8,536

 

 

 

14.1

%

 

 

4,531

 

 

 

96.5

%

 

 

12.7

%

 

 

6.7

%

 

 

3.6

%

 

 

9.1

%

 

 

7.1

%

 

 

(0.4

%)

 

 

(2.1

%)

Seattle

 

 

9,362

 

 

 

10.4

%

 

 

2,571

 

 

 

95.2

%

 

 

14.4

%

 

 

0.2

%

 

 

6.4

%

 

 

(2.3

%)

 

 

0.5

%

 

 

(0.2

%)

 

 

(1.5

%)

Boston

 

 

6,700

 

 

 

10.3

%

 

 

3,452

 

 

 

96.0

%

 

 

16.1

%

 

 

5.8

%

 

 

(0.4

%)

 

 

8.5

%

 

 

5.8

%

 

 

0.1

%

 

 

(1.6

%)

Denver

 

 

2,498

 

 

 

2.6

%

 

 

2,416

 

 

 

96.5

%

 

 

18.5

%

 

 

3.4

%

 

 

4.5

%

 

 

2.9

%

 

 

3.3

%

 

 

0.1

%

 

 

(1.6

%)

Other Expansion Markets

 

 

3,197

 

 

 

2.2

%

 

 

1,994

 

 

 

94.6

%

 

 

18.0

%

 

 

6.7

%

 

 

(0.3

%)

 

 

12.7

%

 

 

7.5

%

 

 

(1.0

%)

 

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

77,698

 

 

 

100.0

%

 

$

3,048

 

 

 

96.0

%

 

 

13.8

%

 

 

4.4

%

 

 

3.1

%

 

 

5.1

%

 

 

5.0

%

 

 

(0.4

%)

 

 

(0.2

%)

(1)

Excluding Bad Debt, Net, which includes the positive impact of governmental rental assistance in the third quarter of 2022, same store revenue growth would have been 4.6% and 3.5% for Los Angeles and San Francisco, respectively.

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.4% of total revenues for the nine months ended September 30, 2023.

Equity Residential

Third Quarter 2023 vs. Second Quarter 2023

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Quarter

 

Markets/Metro Areas

 

Apartment

Units

 

 

Q3 2023

% of

Actual

NOI

 

 

Q3 2023

Average

Rental

Rate

 

 

Q3 2023

Weighted

Average

Physical

Occupancy %

 

 

Q3 2023

Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

Los Angeles

 

 

14,415

 

 

 

17.7

%

 

$

2,896

 

 

 

95.7

%

 

 

12.1

%

 

 

2.0

%

 

 

2.9

%

 

 

1.6

%

 

 

1.2

%

 

 

0.7

%

 

 

0.9

%

Orange County

 

 

4,028

 

 

 

5.5

%

 

 

2,826

 

 

 

96.7

%

 

 

10.9

%

 

 

2.2

%

 

 

1.8

%

 

 

2.3

%

 

 

1.4

%

 

 

0.8

%

 

 

0.5

%

San Diego

 

 

2,878

 

 

 

4.1

%

 

 

3,063

 

 

 

95.3

%

 

 

12.5

%

 

 

1.7

%

 

 

1.0

%

 

 

1.9

%

 

 

2.2

%

 

 

(0.5

%)

 

 

2.6

%

Subtotal – Southern California

 

21,321

 

 

 

27.3

%

 

 

2,905

 

 

 

95.9

%

 

 

12.0

%

 

 

2.0

%

 

 

2.5

%

 

 

1.8

%

 

 

1.4

%

 

 

0.6

%

 

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, D.C.

 

 

14,716

 

 

 

16.4

%

 

 

2,643

 

 

 

96.8

%

 

 

14.4

%

 

 

2.1

%

 

 

2.5

%

 

 

1.9

%

 

 

2.2

%

 

 

0.0

%

 

 

3.8

%

San Francisco

 

 

11,568

 

 

 

16.2

%

 

 

3,303

 

 

 

95.5

%

 

 

13.2

%

 

 

0.5

%

 

 

2.7

%

 

 

(0.4

%)

 

 

0.6

%

 

 

0.0

%

 

 

2.3

%

New York

 

 

8,536

 

 

 

13.9

%

 

 

4,531

 

 

 

96.5

%

 

 

12.7

%

 

 

0.4

%

 

 

1.2

%

 

 

(0.1

%)

 

 

0.9

%

 

 

(0.6

%)

 

 

2.6

%

Seattle

 

 

9,362

 

 

 

10.3

%

 

 

2,571

 

 

 

95.2

%

 

 

14.4

%

 

 

(0.7

%)

 

 

3.8

%

 

 

(2.5

%)

 

 

(0.7

%)

 

 

0.1

%

 

 

0.0

%

Boston

 

 

7,170

 

 

 

11.1

%

 

 

3,525

 

 

 

96.1

%

 

 

16.0

%

 

 

0.9

%

 

 

1.5

%

 

 

0.7

%

 

 

1.4

%

 

 

(0.4

%)

 

 

4.4

%

Denver

 

 

2,498

 

 

 

2.6

%

 

 

2,416

 

 

 

96.5

%

 

 

18.5

%

 

 

0.2

%

 

 

7.8

%

 

 

(2.8

%)

 

 

(0.1

%)

 

 

0.3

%

 

 

1.3

%

Other Expansion Markets

 

 

3,197

 

 

 

2.2

%

 

 

1,994

 

 

 

94.6

%

 

 

18.0

%

 

 

0.0

%

 

 

(4.5

%)

 

 

3.6

%

 

 

0.2

%

 

 

(0.3

%)

 

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

78,368

 

 

 

100.0

%

 

$

3,057

 

 

 

96.0

%

 

 

13.8

%

 

 

1.0

%

 

 

2.1

%

 

 

0.5

%

 

 

1.0

%

 

 

0.1

%

 

 

2.2

%

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.4% of total revenues for the nine months ended September 30, 2023.

Equity Residential

September YTD 2023 vs. September YTD 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year

 

Markets/Metro Areas

 

Apartment

Units

 

 

Sept. YTD 23

% of

Actual

NOI

 

 

Sept. YTD 23

Average

Rental

Rate

 

 

Sept. YTD 23

Weighted

Average

Physical

Occupancy %

 

 

Sept. YTD 23

Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

Los Angeles

 

 

14,415

 

 

 

17.9

%

 

$

2,844

 

 

 

95.4

%

 

 

33.3

%

 

 

3.2

%

(1)

 

9.0

%

 

 

0.7

%

 

 

4.8

%

 

 

(1.5

%)

 

 

5.0

%

Orange County

 

 

4,028

 

 

 

5.6

%

 

 

2,777

 

 

 

96.3

%

 

 

28.7

%

 

 

6.2

%

 

 

9.5

%

 

 

5.3

%

 

 

7.2

%

 

 

(0.8

%)

 

 

2.9

%

San Diego

 

 

2,706

 

 

 

3.9

%

 

 

2,965

 

 

 

95.5

%

 

 

31.1

%

 

 

6.8

%

 

 

6.4

%

 

 

6.9

%

 

 

8.3

%

 

 

(1.5

%)

 

 

1.8

%

Subtotal – Southern California

 

21,149

 

 

 

27.4

%

 

 

2,847

 

 

 

95.6

%

 

 

32.1

%

 

 

4.2

%

 

 

8.8

%

 

 

2.5

%

 

 

5.7

%

 

 

(1.4

%)

 

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,368

 

 

 

16.5

%

 

 

3,280

 

 

 

95.6

%

 

 

33.6

%

 

 

4.1

%

 

 

5.4

%

 

 

3.5

%

 

 

4.9

%

 

 

(0.7

%)

 

 

1.5

%

Washington, D.C.

 

 

14,400

 

 

 

16.1

%

 

 

2,581

 

 

 

96.7

%

 

 

32.3

%

 

 

6.2

%

 

 

2.0

%

 

 

8.4

%

 

 

6.3

%

 

 

(0.1

%)

 

 

(1.6

%)

New York

 

 

8,536

 

 

 

14.3

%

 

 

4,483

 

 

 

96.8

%

 

 

30.3

%

 

 

12.8

%

 

 

3.6

%

 

 

20.6

%

 

 

13.1

%

 

 

(0.2

%)

 

 

(4.6

%)

Seattle

 

 

9,362

 

 

 

10.9

%

 

 

2,581

 

 

 

95.1

%

 

 

39.8

%

 

 

4.2

%

 

 

4.2

%

 

 

4.2

%

 

 

4.3

%

 

 

(0.1

%)

 

 

(1.9

%)

Boston

 

 

6,700

 

 

 

10.2

%

 

 

3,400

 

 

 

96.0

%

 

 

35.3

%

 

 

7.9

%

 

 

3.4

%

 

 

9.8

%

 

 

8.1

%

 

 

(0.2

%)

 

 

(2.1

%)

Denver

 

 

2,498

 

 

 

2.7

%

 

 

2,406

 

 

 

96.3

%

 

 

46.7

%

 

 

5.6

%

 

 

9.4

%

 

 

4.1

%

 

 

5.5

%

 

 

(0.1

%)

 

 

(1.7

%)

Other Expansion Markets

 

 

2,776

 

 

 

1.9

%

 

 

1,989

 

 

 

94.6

%

 

 

44.6

%

 

 

5.4

%

 

 

10.7

%

 

 

1.2

%

 

 

6.9

%

 

 

(1.6

%)

 

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

76,789

 

 

 

100.0

%

 

$

3,015

 

 

 

95.9

%

 

 

34.3

%

 

 

6.3

%

 

 

5.2

%

 

 

6.8

%

 

 

7.0

%

 

 

(0.6

%)

 

 

0.2

%

(1)

Excluding Bad Debt, Net, which includes the positive impact of governmental rental assistance in the nine months ended September 30, 2022, same store revenue growth would have been 5.6%.

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.4% of total revenues for the nine months ended September 30, 2023.

Equity Residential

Same Store Residential Net Effective Lease Pricing Statistics

For 76,789 Same Store Apartment Units

 

 

 

New Lease Change (1)

 

 

Renewal Rate Achieved (1)

 

 

Blended Rate (1)

 

Markets/Metro Areas

 

Q3 2023

 

 

Q2 2023

 

 

Q3 2023

 

 

Q2 2023

 

 

Q3 2023

 

 

Q2 2023

 

Southern California

 

 

2.0

%

 

 

3.5

%

 

 

6.5

%

 

 

7.0

%

 

 

4.2

%

 

 

5.4

%

San Francisco

 

 

(3.8

%)

 

 

1.4

%

 

 

4.4

%

 

 

6.0

%

 

 

0.0

%

 

 

3.8

%

Washington, D.C.

 

 

4.3

%

 

 

4.8

%

 

 

6.7

%

 

 

6.5

%

 

 

5.5

%

 

 

5.7

%

New York

 

 

1.4

%

 

 

4.2

%

 

 

5.3

%

 

 

5.1

%

 

 

3.7

%

 

 

4.7

%

Seattle

 

 

(4.4

%)

 

 

(3.8

%)

 

 

2.5

%

 

 

4.5

%

 

 

(0.9

%)

 

 

0.4

%

Boston

 

 

3.7

%

 

 

4.4

%

 

 

6.1

%

 

 

6.1

%

 

 

5.0

%

 

 

5.3

%

Denver

 

 

0.1

%

 

 

0.9

%

 

 

5.3

%

 

 

5.0

%

 

 

2.4

%

 

 

2.6

%

Other Expansion Markets

 

 

(8.5

%)

 

 

(4.9

%)

 

 

3.4

%

 

 

4.5

%

 

 

(3.8

%)

 

 

(0.8

%)

Total

 

 

0.5

%

(2)

 

2.3

%

 

 

5.5

%

 

 

5.9

%

 

 

3.1

%

 

 

4.3

%

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions. See page 3 for October 2023 preliminary data.

(2)

Excluding the impact of San Francisco and Seattle, New Lease Change would have been 2.1% for the third quarter of 2023.

Equity Residential

Third Quarter 2023 vs. Third Quarter 2022

Total Same Store Operating Expenses Including 77,698 Same Store Apartment Units

($ in thousands)

 

 

 

Q3 2023

 

 

Q3 2022

 

 

$

Change (1)

 

 

%

Change

 

 

% of

Q3 2023

Operating

Expenses

 

Real estate taxes

 

$

90,840

 

 

$

89,113

 

 

$

1,727

 

 

 

1.9

%

 

 

40.7

%

On-site payroll

 

 

44,288

 

 

 

41,613

 

 

 

2,675

 

 

 

6.4

%

 

 

19.8

%

Utilities

 

 

34,261

 

 

 

35,427

 

 

 

(1,166

)

 

 

(3.3

%)

 

 

15.3

%

Repairs and maintenance

 

 

31,093

 

 

 

29,239

 

 

 

1,854

 

 

 

6.3

%

 

 

13.9

%

Insurance

 

 

8,406

 

 

 

7,432

 

 

 

974

 

 

 

13.1

%

 

 

3.8

%

Leasing and advertising

 

 

2,713

 

 

 

2,991

 

 

 

(278

)

 

 

(9.3

%)

 

 

1.2

%

Other on-site operating expenses

 

 

11,873

 

 

 

10,920

 

 

 

953

 

 

 

8.7

%

 

 

5.3

%

Total Same Store Operating Expenses (2)

  (includes Residential and Non-Residential)

 

$

223,474

 

 

$

216,735

 

 

$

6,739

 

 

 

3.1

%

 

 

100.0

%

September YTD 2023 vs. September YTD 2022

Total Same Store Operating Expenses Including 76,789 Same Store Apartment Units

($ in thousands)

 

 

 

YTD 2023

 

 

YTD 2022

 

 

$

Change (1)

 

 

%

Change

 

 

% of

YTD 2023

Operating

Expenses

 

Real estate taxes

 

$

270,055

 

 

$

264,117

 

 

$

5,938

 

 

 

2.2

%

 

 

40.6

%

On-site payroll

 

 

128,291

 

 

 

120,976

 

 

 

7,315

 

 

 

6.0

%

 

 

19.3

%

Utilities

 

 

103,709

 

 

 

100,418

 

 

 

3,291

 

 

 

3.3

%

 

 

15.6

%

Repairs and maintenance

 

 

91,709

 

 

 

81,926

 

 

 

9,783

 

 

 

11.9

%

 

 

13.8

%

Insurance

 

 

25,149

 

 

 

22,043

 

 

 

3,106

 

 

 

14.1

%

 

 

3.8

%

Leasing and advertising

 

 

7,652

 

 

 

7,874

 

 

 

(222

)

 

 

(2.8

%)

 

 

1.2

%

Other on-site operating expenses

 

 

38,042

 

 

 

33,927

 

 

 

4,115

 

 

 

12.1

%

 

 

5.7

%

Total Same Store Operating Expenses (2)

  (includes Residential and Non-Residential)

 

$

664,607

 

 

$

631,281

 

 

$

33,326

 

 

 

5.3

%

 

 

100.0

%

(1)

The quarter-over-quarter and year-over-year changes were primarily driven by the following factors:

 

Real estate taxes – Increase due to modest escalation in rates and assessed values.

 

On-site payroll – Increase due primarily to fewer staffing vacancies compared to the same periods of 2022 and elevated employee benefit costs, partially offset by the impact of innovation initiatives.

 

Utilities – Quarter-over-quarter decrease primarily driven by lower commodity prices for gas and electric. Year-over-year increase primarily driven by higher commodity prices for gas earlier in the year and higher water, sewer and trash expense.

 

Repairs and maintenance – Quarter-over-quarter increase primarily driven by continued wage pressure, particularly due to higher minimum wage on contracted services. Year-over-year increase was also impacted by increased outsourcing due to higher internal staffing utilization to address issues from California rain storms that occurred earlier this year.

 

Insurance – Increase due to higher premiums on property insurance renewal due to challenging conditions in the insurance market.

 

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 September 30, 2023

($ in thousands)

 

 

 

Debt

Balances (1)

 

 

% of Total

 

 

Weighted

Average

Rates (1)

 

 

Weighted

Average

Maturities

(years)

 

Secured

 

$

1,634,726

 

 

 

21.9

%

 

 

3.64

%

 

 

8.1

 

Unsecured

 

 

5,844,531

 

 

 

78.1

%

 

 

3.60

%

 

 

8.3

 

Total

 

$

7,479,257

 

 

 

100.0

%

 

 

3.61

%

 

 

8.3

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

1,397,970

 

 

 

18.7

%

 

 

3.52

%

 

 

7.7

 

Unsecured – Public

 

 

5,346,895

 

 

 

71.5

%

 

 

3.52

%

 

 

9.1

 

Fixed Rate Debt

 

 

6,744,865

 

 

 

90.2

%

 

 

3.52

%

 

 

8.8

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

 

 

 

 

 

 

 

7.18

%

 

 

 

Secured – Tax Exempt

 

 

236,756

 

 

 

3.2

%

 

 

3.49

%

 

 

10.7

 

Unsecured – Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

4.1

 

Unsecured – Commercial Paper Program (2)

 

 

497,636

 

 

 

6.6

%

 

 

5.36

%

 

 

 

Floating Rate Debt

 

 

734,392

 

 

 

9.8

%

 

 

4.75

%

 

 

3.6

 

Total

 

$

7,479,257

 

 

 

100.0

%

 

 

3.61

%

 

 

8.3

 

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.

(2)

At September 30, 2023, the weighted average maturity of commercial paper outstanding was 31 days. The weighted average amount outstanding for the nine months ended September 30, 2023 was approximately $236.4 million.

Note: The Company capitalized interest of approximately $9.6 million and $4.2 million during the nine months ended September 30, 2023 and 2022, respectively. The Company capitalized interest of approximately $2.6 million and $1.9 million during the quarters ended September 30, 2023 and 2022, respectively.

Equity Residential

Debt Maturity Schedule as of September 30, 2023

($ 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)

 

2023

 

$

 

 

$

502,805

 

(2)

$

502,805

 

 

 

6.7

%

 

N/A

 

 

 

5.61

%

2024

 

 

 

 

 

6,200

 

 

 

6,200

 

 

 

0.1

%

 

N/A

 

 

 

4.01

%

2025

 

 

450,000

 

 

 

8,100

 

 

 

458,100

 

 

 

6.1

%

 

 

3.38

%

 

 

3.38

%

2026

 

 

592,025

 

 

 

9,000

 

 

 

601,025

 

 

 

7.9

%

 

 

3.58

%

 

 

3.58

%

2027

 

 

400,000

 

 

 

9,800

 

 

 

409,800

 

 

 

5.4

%

 

 

3.25

%

 

 

3.26

%

2028

 

 

900,000

 

 

 

10,700

 

 

 

910,700

 

 

 

12.0

%

 

 

3.79

%

 

 

3.79

%

2029

 

 

888,120

 

 

 

11,500

 

 

 

899,620

 

 

 

11.9

%

 

 

3.30

%

 

 

3.31

%

2030

 

 

1,148,462

 

 

 

12,700

 

 

 

1,161,162

 

 

 

15.4

%

 

 

2.53

%

 

 

2.54

%

2031

 

 

528,500

 

 

 

39,800

 

 

 

568,300

 

 

 

7.5

%

 

 

1.94

%

 

 

2.08

%

2032

 

 

 

 

 

28,000

 

 

 

28,000

 

 

 

0.4

%

 

N/A

 

 

 

3.73

%

2033+

 

 

1,900,850

 

 

 

110,900

 

 

 

2,011,750

 

 

 

26.6

%

 

 

4.63

%

 

 

4.50

%

Subtotal

 

 

6,807,957

 

 

 

749,505

 

 

 

7,557,462

 

 

 

100.0

%

 

 

3.53

%

 

 

3.65

%

Deferred Financing Costs and Unamortized (Discount)

 

 

(63,092

)

 

 

(15,113

)

 

 

(78,205

)

 

N/A

 

 

N/A

 

 

N/A

 

Total

 

$

6,744,865

 

 

$

734,392

 

 

$

7,479,257

 

 

 

100.0

%

 

 

3.53

%

 

 

3.65

%

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.

(2)

Includes $500.0 million in principal outstanding on the Company's Commercial Paper Program.

Equity Residential

Selected Unsecured Public Debt Covenants

 

 

 

September 30,

 

June 30,

 

 

2023

 

2023

Debt to Adjusted Total Assets (not to exceed 60%)

 

26.9%

 

26.9%

 

 

 

 

 

Secured Debt to Adjusted Total Assets (not to exceed 40%)

 

6.7%

 

7.7%

 

 

 

 

 

Consolidated Income Available for Debt Service to

  Maximum Annual Service Charges

  (must be at least 1.5 to 1)

 

6.08

 

6.21

 

 

 

 

 

Total Unencumbered Assets to Unsecured Debt

  (must be at least 125%)

 

502.3%

 

518.6%

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

 

 

 

September 30,

 

June 30,

 

 

2023

 

2023

Total debt to Normalized EBITDAre

 

4.28x

 

4.30x

 

 

 

 

 

Net debt to Normalized EBITDAre

 

4.24x

 

4.27x

 

 

 

 

 

Unencumbered NOI as a % of total NOI

 

89.8%

 

88.5%

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

Capital Structure as of September 30, 2023

(Amounts in thousands except for share/unit and per share amounts)

 

Secured Debt

 

 

 

 

 

 

 

$

1,634,726

 

 

 

21.9

%

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

5,844,531

 

 

 

78.1

%

 

 

 

Total Debt

 

 

 

 

 

 

 

 

7,479,257

 

 

 

100.0

%

 

 

24.5

%

Common Shares (includes Restricted Shares)

 

 

379,723,838

 

 

 

97.0

%

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

11,733,485

 

 

 

3.0

%

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

391,457,323

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

Common Share Price at September 30, 2023

 

$

58.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,982,459

 

 

 

99.8

%

 

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

 

 

 

 

37,280

 

 

 

0.2

%

 

 

 

Total Equity

 

 

 

 

 

 

 

 

23,019,739

 

 

 

100.0

%

 

 

75.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

 

 

$

30,498,996

 

 

 

 

 

 

100.0

%

Perpetual Preferred Equity as of September 30, 2023

(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

 

12/10/26

 

 

745,600

 

 

$

37,280

 

 

$

4.145

 

 

$

3,091