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Equity Residential Reports First Quarter 2024 Results

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.

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