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Equity Residential Reports Second Quarter 2023 Results

Guidance Updated as Coastal Markets Experience Continued Strong Demand and Limited New Supply

Equity Residential (NYSE: EQR) today reported results for the quarter and six months ended June 30, 2023.

Second Quarter 2023 Results

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30,

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.37

 

 

$

0.59

 

 

$

(0.22

)

 

 

(37.3

%)

 

 

Funds from Operations (FFO) per share

 

$

0.93

 

 

$

0.89

 

 

$

0.04

 

 

 

4.5

%

 

 

Normalized FFO (NFFO) per share

 

$

0.94

 

 

$

0.89

 

 

$

0.05

 

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.92

 

 

$

0.78

 

 

$

0.14

 

 

 

17.9

%

 

 

Funds from Operations (FFO) per share

 

$

1.78

 

 

$

1.66

 

 

$

0.12

 

 

 

7.2

%

 

 

Normalized FFO (NFFO) per share

 

$

1.82

 

 

$

1.66

 

 

$

0.16

 

 

 

9.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Same store revenue performance remains strong and in line with our May 2023 guidance increase. The supply picture in the coastal markets where we predominantly operate remains favorable, demand is steady and we see continued progress in mitigating delinquency in Southern California,” said Mark J. Parrell, Equity Residential’s President and CEO. “We also are pleased to again update our guidance as a result of pending favorable refinancing activity as well as second half same store expenses that we anticipate will be lower than previously expected.”

Recent Highlights

  • Same store revenue increased 5.5% for the second quarter of 2023 compared to the second quarter of 2022. The Company increased its 2023 annual same store revenue growth guidance midpoint to 5.875% in May 2023.
  • Same store expense growth for the second quarter of 2023 compared to the second quarter of 2022 was 5.5%. The Company expects lower same store expense growth in the second half of the year and has lowered its full year same store expense guidance midpoint down 25 basis points to 4.25% from 4.5%.
  • The Company lowered its EPS guidance and increased its FFO and Normalized FFO per share guidance as described on page 2.
  • In July 2023, the Company locked the interest rate on secured loans totaling $530.0 million, which, subject to customary conditions, are anticipated to close in September 2023. After the effect of the Company’s hedges, the economic rate on these ten-year loans will be approximately 4.7%. The proceeds from these loans will be used, along with funding from the Company’s Commercial Paper Program, to paydown the $800.0 million secured debt pool that matures in November 2023 and carries an interest rate of 4.21%. After this paydown, the Company will have no significant debt maturities, other than commercial paper, until June 2025.
  • During the second quarter of 2023, the Company began the lease up of its new 312-unit development in Washington, D.C. The property is expected to stabilize in the third quarter of 2024 at a Development Yield of 5.7%.

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 (1)

 

Change at Midpoint

Same Store (includes Residential and Non-Residential):

 

 

 

 

 

Physical Occupancy

 

96.0%

 

96.0%

 

0.0%

Revenue change

 

5.5% to 6.25%

 

5.5% to 6.25%

 

0.0%

Expense change

 

4.0% to 4.5%

 

4.0% to 5.0%

 

(0.25%)

Net Operating Income (NOI) change

 

6.3% to 7.0%

 

6.0% to 7.0%

 

0.15%

 

 

 

 

 

 

 

EPS

 

$1.95 to $2.01

 

$2.02 to $2.12

 

$(0.09)

FFO per share

 

$3.72 to $3.78

 

$3.69 to $3.79

 

$0.01

Normalized FFO per share

 

$3.77 to $3.83

 

$3.73 to $3.83

 

$0.02

 

(1) Represents the updated guidance provided in the Company's May 30, 2023 press release.

The change in the full year 2023 EPS guidance range is due primarily to higher expected depreciation expense, lower expected property sale gains and the items described below.

The change in the full year 2023 FFO per share guidance range is due primarily to higher expected other expenses and the items described below.

The change in the full year 2023 Normalized FFO per share guidance range is due primarily to:

 

 

Positive/(Negative)

Impact

 

 

Revised Full Year 2023 vs.

Previous Full Year 2023

Residential same store NOI

 

$

0.01

 

Interest expense, net

 

 

0.02

 

Other items

 

 

(0.01

)

Net

 

$

0.02

 

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 six months ended June 30, 2023 compared to the same periods of 2022 are due primarily to lower property sale gains and lower depreciation expense in the current period, 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 six months ended June 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

 

 

Second Quarter 2023 vs.

Second Quarter 2022

 

June YTD 2023 vs.

June YTD 2022

Residential same store NOI

 

$

0.06

 

 

$

0.17

 

Lease-Up NOI

 

 

0.01

 

 

 

0.02

 

2023 and 2022 transaction activity impact on NOI, net

 

(0.01

)

 

 

(0.02

)

Interest expense, net

 

 

0.01

 

 

 

0.03

 

Corporate overhead (1)

 

 

(0.02

)

 

 

(0.01

)

Other items (2)

 

 

 

 

(0.03

)

Net

 

$

0.05

 

 

$

0.16

 

(1)

Corporate overhead includes property management and general and administrative expenses.

(2)

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.

 

 

Second Quarter 2023 vs.

Second Quarter 2022

 

Second Quarter 2023 vs.

First Quarter 2023

 

June YTD 2023 vs.

June YTD 2022

Apartment Units

 

77,545

 

78,531

 

76,952

Physical Occupancy

 

95.9% vs. 96.7%

 

95.9% vs. 95.9%

 

95.9% vs. 96.6%

 

 

 

 

 

 

 

Revenues

 

5.5%

 

1.7%

 

7.3%

Expenses

 

5.5%

 

(4.3%)

 

6.4%

NOI

 

5.4%

 

4.7%

 

7.7%

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 3.8% of total revenues for the six months ended June 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.

 

 

Second Quarter 2023 vs.

Second Quarter 2022

 

Second Quarter 2023 vs.

First Quarter 2023

 

June YTD 2023 vs.

June YTD 2022

 

 

% Change

 

% Change

 

% Change

Same Store Residential Revenues-

comparable period

 

 

 

 

 

 

 

 

Lease rates

 

 

7.3

%

 

 

1.1

%

 

 

8.2

%

Leasing Concessions

 

 

(0.1

%)

 

 

(0.1

%)

 

 

0.1

%

Vacancy gain (loss)

 

 

(0.9

%)

 

 

(0.1

%)

 

 

(0.8

%)

Bad Debt, Net (1)

 

 

(1.6

%)

 

 

0.3

%

 

 

(0.9

%)

Other (2)

 

 

0.8

%

 

 

0.6

%

 

 

0.7

%

Same Store Residential Revenues-

current period

 

5.5

%

 

 

1.8

%

 

 

7.3

%

(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 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 76,952 same store apartment units):

 

 

July 2023 (1)

 

Q2 2023

 

Q1 2023

Physical Occupancy

 

95.8%

 

95.9%

 

95.9%

Percentage of Residents Renewing by quarter/month

54.0%

 

57.0%

 

59.0%

 

 

 

 

 

 

 

New Lease Change

 

2.2%

 

2.3%

 

1.3%

Renewal Rate Achieved

 

5.9%

 

5.9%

 

6.1%

Blended Rate

 

4.2%

 

4.3%

 

3.9%

 

(1) July 2023 results are preliminary.

Investment Activity

The Company acquired two operating properties during the second quarter of 2023 - a recently completed 262-unit apartment property in Atlanta, which is currently in lease up, for approximately $78.6 million at a stabilized Acquisition Cap Rate of 6.6% (5.7% when removing certain real estate tax benefits that will reduce over time) and a 287-unit property in suburban Denver built in 2022, for approximately $108.0 million at an Acquisition Cap Rate of 5.0%. The Company did not acquire any properties during the first quarter of 2023.

The Company did not sell any properties during the second quarter of 2023. During the first quarter of 2023, the Company sold a small portfolio of seven properties in Los Angeles with an average age of 25 years, consisting of 247 apartment units, for an aggregate sale price of approximately $135.3 million at a weighted average Disposition Yield of 5.3%, generating an Unlevered IRR of 8.7%.

Capital Markets Activity

In July 2023, the Company locked the interest rate on secured loans totaling $530.0 million, which, subject to customary conditions, are anticipated to close in September 2023. After the effect of the Company’s hedges, the economic rate on these ten-year loans will be approximately 4.7%. The proceeds from these loans will be used, along with funding from the Company’s Commercial Paper Program, to paydown the $800.0 million secured debt pool that matures in November 2023 and carries an interest rate of 4.21%. After this paydown, the Company will have no significant debt maturities, other than commercial paper supported by its revolving credit facility due in 2027, until June 2025.

Third Quarter 2023 Guidance

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

 

 

Q3 2023

Guidance

EPS

 

$0.59 to $0.63

FFO per share

 

$0.94 to $0.98

Normalized FFO per share

 

$0.95 to $0.99

The difference between the second quarter of 2023 actual EPS of $0.37 and the third quarter of 2023 EPS guidance midpoint of $0.61 is due primarily to higher expected property sale gains and the items described below.

The difference between the second quarter of 2023 actual FFO of $0.93 per share and the third quarter of 2023 FFO guidance midpoint of $0.96 per share is due primarily to the items described below.

The difference between the second quarter of 2023 actual Normalized FFO of $0.94 per share and the third quarter of 2023 Normalized FFO guidance midpoint of $0.97 per share is due primarily to:

 

 

Positive/(Negative)

Impact

 

 

Third Quarter 2023 vs.

Second Quarter 2023

Residential same store NOI

 

$

0.01

 

Corporate overhead

 

 

0.02

 

Net

 

$

0.03

 

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 304 properties consisting of 80,212 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, Friday, July 28, 2023 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)

 

 

 

Six Months Ended June 30,

 

Quarter Ended June 30,

 

 

2023

 

2022

 

2023

 

2022

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

1,422,397

 

 

$

1,340,378

 

 

$

717,309

 

 

$

687,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Property and maintenance

 

 

262,350

 

 

 

241,229

 

 

 

124,771

 

 

 

116,355

 

Real estate taxes and insurance

 

 

209,749

 

 

 

202,538

 

 

 

103,080

 

 

 

101,850

 

Property management

 

 

62,145

 

 

 

57,306

 

 

 

30,679

 

 

 

26,559

 

General and administrative

 

 

35,041

 

 

 

33,661

 

 

 

18,876

 

 

 

16,423

 

Depreciation

 

 

437,185

 

 

 

453,767

 

 

 

221,355

 

 

 

223,806

 

Total expenses

 

 

1,006,470

 

 

 

988,501

 

 

 

498,761

 

 

 

484,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on sales of real estate properties

 

 

100,122

 

 

 

107,795

 

 

 

(87

)

 

 

107,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

516,049

 

 

 

459,672

 

 

 

218,461

 

 

 

309,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

3,669

 

 

 

4,124

 

 

 

2,131

 

 

 

596

 

Other expenses

 

 

(15,559

)

 

 

(5,436

)

 

 

(6,564

)

 

 

(2,380

)

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred, net

 

 

(131,991

)

 

 

(144,681

)

 

 

(65,590

)

 

 

(71,889

)

Amortization of deferred financing costs

 

 

(3,996

)

 

 

(4,201

)

 

 

(2,017

)

 

 

(2,124

)

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

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

 

 

368,172

 

 

 

309,478

 

 

 

146,421

 

 

 

234,137

 

Income and other tax (expense) benefit

 

 

(634

)

 

 

(573

)

 

 

(336

)

 

 

(291

)

Income (loss) from investments in unconsolidated entities

 

 

(2,605

)

 

 

(2,429

)

 

 

(1,223

)

 

 

(1,168

)

Net income

 

 

364,933

 

 

 

306,476

 

 

 

144,862

 

 

 

232,678

 

Net (income) loss attributable to Noncontrolling Interests:

 

 

 

 

 

 

 

 

 

 

 

 

Operating Partnership

 

 

(11,613

)

 

 

(10,027

)

 

 

(4,554

)

 

 

(7,633

)

Partially Owned Properties

 

 

(2,082

)

 

 

(1,583

)

 

 

(1,105

)

 

 

(944

)

Net income attributable to controlling interests

 

 

351,238

 

 

 

294,866

 

 

 

139,203

 

 

 

224,101

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(773

)

Net income available to Common Shares

 

$

349,693

 

 

$

293,321

 

 

$

138,430

 

 

$

223,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

0.92

 

 

$

0.78

 

 

$

0.37

 

 

$

0.59

 

Weighted average Common Shares outstanding

 

 

378,492

 

 

 

375,640

 

 

 

378,642

 

 

 

375,769

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

0.92

 

 

$

0.78

 

 

$

0.37

 

 

$

0.59

 

Weighted average Common Shares outstanding

 

 

391,063

 

 

 

389,463

 

 

 

391,187

 

 

 

389,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

1.325

 

 

$

1.25

 

 

$

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)

 

 

 

Six Months Ended June 30,

 

Quarter Ended June 30,

 

 

2023

 

2022

 

2023

 

2022

Net income

 

$

364,933

 

 

$

306,476

 

 

$

144,862

 

 

$

232,678

 

Net (income) loss attributable to Noncontrolling Interests – Partially

Owned Properties

 

(2,082

)

 

 

(1,583

)

 

 

(1,105

)

 

 

(944

)

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(773

)

Net income available to Common Shares and Units

 

 

361,306

 

 

 

303,348

 

 

 

142,984

 

 

 

230,961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

437,185

 

 

 

453,767

 

 

 

221,355

 

 

 

223,806

 

Depreciation – Non-real estate additions

 

 

(2,259

)

 

 

(2,114

)

 

 

(1,103

)

 

 

(1,062

)

Depreciation – Partially Owned Properties

 

 

(1,055

)

 

 

(1,554

)

 

 

(510

)

 

 

(661

)

Depreciation – Unconsolidated Properties

 

 

1,226

 

 

 

1,240

 

 

 

594

 

 

 

620

 

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

assets

 

 

 

 

 

(9

)

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(100,122

)

 

 

(107,795

)

 

 

87

 

 

 

(107,897

)

FFO available to Common Shares and Units

 

 

696,281

 

 

 

646,883

 

 

 

363,407

 

 

 

345,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (see note for additional detail):

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

1,993

 

 

 

2,515

 

 

 

661

 

 

 

1,052

 

Debt extinguishment and preferred share redemption (gains)

losses

 

 

47

 

 

 

469

 

 

 

47

 

 

 

469

 

Non-operating asset (gains) losses

 

 

1,031

 

 

 

(1,330

)

 

 

317

 

 

 

312

 

Other miscellaneous items

 

 

11,343

 

 

 

(185

)

 

 

5,051

 

 

 

186

 

Normalized FFO available to Common Shares and Units

 

$

710,695

 

 

$

648,352

 

 

$

369,483

 

 

$

347,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

697,826

 

 

$

648,428

 

 

$

364,180

 

 

$

346,540

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(773

)

FFO available to Common Shares and Units

 

$

696,281

 

 

$

646,883

 

 

$

363,407

 

 

$

345,767

 

FFO per share and Unit – basic

 

$

1.79

 

 

$

1.67

 

 

$

0.93

 

 

$

0.89

 

FFO per share and Unit – diluted

 

$

1.78

 

 

$

1.66

 

 

$

0.93

 

 

$

0.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO

 

$

712,240

 

 

$

649,897

 

 

$

370,256

 

 

$

348,559

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(773

)

Normalized FFO available to Common Shares and Units

 

$

710,695

 

 

$

648,352

 

 

$

369,483

 

 

$

347,786

 

Normalized FFO per share and Unit – basic

 

$

1.82

 

 

$

1.67

 

 

$

0.95

 

 

$

0.90

 

Normalized FFO per share and Unit – diluted

 

$

1.82

 

 

$

1.66

 

 

$

0.94

 

 

$

0.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares and Units outstanding – basic

 

 

389,942

 

 

 

387,531

 

 

 

390,032

 

 

 

387,664

 

Weighted average Common Shares and Units outstanding – diluted

 

391,063

 

 

 

389,463

 

 

 

391,187

 

 

 

389,363

 

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)

 

 

 

June 30,

 

December 31,

 

 

2023

 

2022

ASSETS

 

 

 

 

 

 

Land

 

$

5,579,211

 

 

$

5,580,878

 

Depreciable property

 

 

22,697,597

 

 

 

22,334,369

 

Projects under development

 

 

50,916

 

 

 

112,940

 

Land held for development

 

 

61,334

 

 

 

60,567

 

Investment in real estate

 

 

28,389,058

 

 

 

28,088,754

 

Accumulated depreciation

 

 

(9,428,549

)

 

 

(9,027,850

)

Investment in real estate, net

 

 

18,960,509

 

 

 

19,060,904

 

Investments in unconsolidated entities1

 

 

304,710

 

 

 

279,024

 

Cash and cash equivalents

 

 

35,701

 

 

 

53,869

 

Restricted deposits

 

 

88,941

 

 

 

83,303

 

Right-of-use assets

 

 

463,704

 

 

 

462,956

 

Other assets

 

 

292,164

 

 

 

278,206

 

Total assets

 

$

20,145,729

 

 

$

20,218,262

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Mortgage notes payable, net

 

$

1,913,069

 

 

$

1,953,438

 

Notes, net

 

 

5,345,373

 

 

 

5,342,329

 

Line of credit and commercial paper

 

 

184,474

 

 

 

129,955

 

Accounts payable and accrued expenses

 

 

118,316

 

 

 

96,028

 

Accrued interest payable

 

 

66,238

 

 

 

66,310

 

Lease liabilities

 

 

313,866

 

 

 

308,748

 

Other liabilities

 

 

294,263

 

 

 

306,941

 

Security deposits

 

 

69,427

 

 

 

68,940

 

Distributions payable

 

 

258,841

 

 

 

244,621

 

Total liabilities

 

 

8,563,867

 

 

 

8,517,310

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests – Operating Partnership

 

 

355,319

 

 

 

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 June 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; 379,032,722 shares issued

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

shares issued and outstanding as of December 31, 2022

 

 

3,790

 

 

 

3,784

 

Paid in capital

 

 

9,472,628

 

 

 

9,476,085

 

Retained earnings

 

 

1,506,460

 

 

 

1,658,837

 

Accumulated other comprehensive income (loss)

 

 

3,708

 

 

 

(2,547

)

Total shareholders’ equity

 

 

11,023,866

 

 

 

11,173,439

 

Noncontrolling Interests:

 

 

 

 

 

 

Operating Partnership

 

 

207,405

 

 

 

209,961

 

Partially Owned Properties

 

 

(4,728

)

 

 

(721

)

Total Noncontrolling Interests

 

 

202,677

 

 

 

209,240

 

Total equity

 

 

11,226,543

 

 

 

11,382,679

 

Total liabilities and equity

 

$

20,145,729

 

 

$

20,218,262

 

 

1 Includes $242.4 million and $218.0 million in unconsolidated development projects as of June 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 June 30, 2023

 

 

 

 

 

 

 

 

% of

Stabilized

 

Average

 

 

 

 

 

Apartment

 

Budgeted

 

Rental

Markets/Metro Areas

 

Properties

 

Units

 

NOI

 

Rate

Established Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

59

 

 

 

15,012

 

 

 

17.7

%

 

$

2,876

 

Orange County

 

 

13

 

 

 

4,028

 

 

 

5.2

%

 

 

2,787

 

San Diego

 

 

12

 

 

 

2,878

 

 

 

4.0

%

 

 

2,997

 

Subtotal – Southern California

 

 

84

 

 

 

21,918

 

 

 

26.9

%

 

 

2,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

44

 

 

 

11,790

 

 

 

15.8

%

 

 

3,285

 

Washington, D.C.

 

 

48

 

 

 

15,028

 

 

 

15.6

%

 

 

2,592

 

New York

 

 

34

 

 

 

8,536

 

 

 

13.9

%

 

 

4,488

 

Boston

 

 

27

 

 

 

7,170

 

 

 

11.5

%

 

 

3,477

 

Seattle

 

 

46

 

 

 

9,526

 

 

 

11.0

%

 

 

2,587

 

Subtotal – Established Markets

 

 

283

 

 

 

73,968

 

 

 

94.7

%

 

 

3,092

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expansion Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

9

 

 

 

2,785

 

 

 

2.8

%

 

 

2,417

 

Atlanta

 

 

5

 

 

 

1,477

 

 

 

1.4

%

 

 

2,196

 

Dallas/Ft. Worth

 

 

4

 

 

 

1,241

 

 

 

0.7

%

 

 

1,875

 

Austin

 

 

3

 

 

 

741

 

 

 

0.4

%

 

 

1,831

 

Subtotal – Expansion Markets

 

 

21

 

 

 

6,244

 

 

 

5.3

%

 

 

2,189

 

Total

 

 

304

 

 

 

80,212

 

 

 

100.0

%

 

$

3,022

 

 

 

 

Properties

 

Apartment Units

Wholly Owned Properties

 

289

 

76,986

Partially Owned Properties – Consolidated

 

15

 

3,226

 

 

304

 

80,212

 

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

Equity Residential

Portfolio Rollforward Q2 2023

($ in thousands)

 

 

 

Properties

 

Apartment

Units

 

Purchase

Price

 

Acquisition

Cap Rate

 

3/31/2023

 

301

 

 

 

79,351

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

1

 

 

 

287

 

 

$

108,000

 

 

 

5.0

%

Consolidated Rental Properties – Not Stabilized (1)

 

 

1

 

 

 

262

 

 

$

78,600

 

 

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed Developments – Consolidated

 

 

1

 

 

 

312

 

 

 

 

 

 

 

 

6/30/2023

 

304

 

 

 

80,212

 

 

 

 

 

 

 

 

Portfolio Rollforward 2023

($ in thousands)

 

 

 

Properties

 

Apartment

Units

 

Purchase

Price

 

Acquisition

Cap Rate

 

12/31/2022

 

308

 

 

 

79,597

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

1

 

 

 

287

 

 

$

108,000

 

 

 

5.0

%

Consolidated Rental Properties – Not Stabilized (1)

 

 

1

 

 

 

262

 

 

$

78,600

 

 

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

Disposition

Yield

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

(7

)

 

 

(247

)

 

$

(135,300

)

 

 

(5.3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed Developments – Consolidated

 

 

1

 

 

 

312

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

1

 

 

 

 

 

 

 

 

6/30/2023

 

304

 

 

 

80,212

 

 

 

 

 

 

 

(1)

The Company acquired one property in the Atlanta market in the second quarter of 2023 that is in lease-up and is expected to stabilize in its second year of ownership at the Acquisition Cap Rate listed above (5.7% when removing certain real estate tax benefits that will reduce over time).

Equity Residential

Second Quarter 2023 vs. Second Quarter 2022

Same Store Results/Statistics Including 77,545 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Second Quarter 2023

 

Second Quarter 2022

 

 

Residential

 

%

Change

 

Non-

Residential

 

%

Change

 

Total

 

%

Change

 

 

 

Residential

 

Non-

Residential

 

Total

Revenues

 

$

672,595

 

(1)

5.5%

 

$

24,849

 

 

4.3%

 

$

697,444

 

 

5.5%

 

Revenues

 

$

637,547

 

 

$

23,827

 

 

$

661,374

 

Expenses

 

$

212,114

 

 

5.3%

 

$

6,920

 

 

14.2%

 

$

219,034

 

 

5.5%

 

Expenses

 

$

201,520

 

 

$

6,058

 

 

$

207,578

 

NOI

 

$

460,481

 

 

5.6%

 

$

17,929

 

 

0.9%

 

$

478,410

 

 

5.4%

 

NOI

 

$

436,027

 

 

$

17,769

 

 

$

453,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,017

 

 

6.4%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,836

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

(0.8%)

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.7

%

 

 

 

 

 

 

Turnover

 

11.6

%

 

0.4%

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

11.2

%

 

 

 

 

 

 

 

Second Quarter 2023 vs. First Quarter 2023

Same Store Results/Statistics Including 78,531 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Second Quarter 2023

 

First Quarter 2023

 

 

Residential

 

%

Change

 

Non-

Residential

 

%

Change

 

Total

 

%

Change

 

 

 

Residential

 

Non-

Residential

 

Total

Revenues

 

$

683,155

 

(1)

1.8%

 

$

26,456

 

 

(1.8%)

 

$

709,611

 

 

1.7%

 

Revenues

 

$

670,793

 

 

$

26,951

 

 

$

697,744

 

Expenses

 

$

215,239

 

 

(4.5%)

 

$

7,368

 

 

2.3%

 

$

222,607

 

 

(4.3%)

 

Expenses

 

$

225,376

 

 

$

7,202

 

 

$

232,578

 

NOI

 

$

467,916

 

 

5.1%

 

$

19,088

 

 

(3.3%)

 

$

487,004

 

 

4.7%

 

NOI

 

$

445,417

 

 

$

19,749

 

 

$

465,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,026

 

 

1.8%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,972

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

 

 

 

 

 

Turnover

 

11.6

%

 

2.5%

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

9.1

%

 

 

 

 

 

 

 

June YTD 2023 vs. June YTD 2022

Same Store Results/Statistics Including 76,952 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

June YTD 2023

 

June YTD 2022

 

 

Residential

 

%

Change

 

Non-

Residential

 

 

%

Change

 

Total

 

%

Change

 

 

 

Residential

 

Non-

Residential

 

Total

Revenues

 

$

1,324,993

 

(1)

7.3%

 

$

50,085

 

 

7.0%

 

$

1,375,078

 

 

7.3%

 

Revenues

 

$

1,235,134

 

 

$

46,813

 

 

$

1,281,947

 

Expenses

 

$

430,638

 

 

6.2%

 

$

13,613

 

 

11.6%

 

$

444,251

 

 

6.4%

 

Expenses

 

$

405,484

 

 

$

12,202

 

 

$

417,686

 

NOI

 

$

894,355

 

 

7.8%

 

$

36,472

 

 

5.4%

 

$

930,827

 

 

7.7%

 

NOI

 

$

829,650

 

 

$

34,611

 

 

$

864,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

2,995

 

 

8.0%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,772

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

(0.7%)

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.6

%

 

 

 

 

 

 

Turnover

 

20.6

%

 

0.4%

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

20.2

%

 

 

 

 

 

 

(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.

Equity Residential

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

($ in thousands)

 

 

Second Quarter 2023 vs. Second Quarter 2022

 

Second Quarter 2023 vs. First Quarter 2023

 

June YTD 2023 vs. June YTD 2022

 

77,545 Same Store Apartment Units

 

78,531 Same Store Apartment Units

 

76,952 Same Store Apartment Units

 

Q2 2023

 

Q2 2022

 

Q2 2023

 

Q1 2023

 

 

June YTD 2023

 

 

June YTD 2022

 

Same Store Residential Revenues (GAAP Basis)

$

672,595

 

 

$

637,547

 

 

$

683,155

 

 

$

670,793

 

 

$

1,324,993

 

 

$

1,235,134

 

Leasing Concessions amortized

 

2,705

 

 

 

2,156

 

 

 

3,256

 

 

 

2,846

 

 

 

4,744

 

 

 

6,005

 

Leasing Concessions granted

 

(3,921

)

 

 

(1,503

)

 

 

(4,125

)

 

 

(4,241

)

 

 

(7,766

)

 

 

(3,057

)

Same Store Residential Revenues with Leasing

Concessions on a cash basis

$

671,379

 

 

$

638,200

 

 

$

682,286

 

 

$

669,398

 

 

$

1,321,971

 

 

$

1,238,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - GAAP revenue

 

5.5

%

 

 

 

 

 

1.8

%

 

 

 

 

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - cash revenue

 

5.2

%

 

 

 

 

 

1.9

%

 

 

 

 

 

6.8

%

 

 

 

 

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

Same Store Net Operating Income By Quarter

Including 76,952 Same Store Apartment Units

($ in thousands)

 

 

 

Q2 2023

 

Q1 2023

 

Q4 2022

 

Q3 2022

 

Q2 2022

Same store revenues

 

$

693,403

 

 

$

681,675

 

 

$

676,011

 

 

$

671,160

 

 

$

657,582

 

Same store expenses

 

 

217,461

 

 

 

226,790

 

 

 

210,795

 

 

 

214,495

 

 

 

206,152

 

Same store NOI

(includes Residential and Non-Residential)

 

$

475,942

 

 

$

454,885

 

 

$

465,216

 

 

$

456,665

 

 

$

451,430

 

 

Equity Residential

Same Store Resident/Tenant Accounts Receivable Balances

Including 76,952 Same Store Apartment Units

($ in thousands)

 

 

 

Residential

 

Non-Residential

Balance Sheet (Other assets):

 

June 30, 2023

 

March 31, 2023

 

June 30, 2023

 

March 31, 2023

Resident/tenant accounts receivable balances

$

26,628

 

 

$

32,408

 

 

$

2,389

 

 

$

2,414

 

Allowance for doubtful accounts

 

(22,335

)

 

 

(28,430

)

 

 

(1,383

)

 

 

(1,500

)

Net receivable balances

$

4,293

 

 

$

3,978

 

 

$

1,006

 

 

$

914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line receivable balances

 

$

6,067

 

(1)

$

4,861

 

 

$

13,546

 

 

$

13,607

 

(1)

 

Total same store Residential Leasing Concessions granted in the second quarter of 2023 were approximately $3.9 million. The straight-line receivable balance of $6.1 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 half of 2024.

 

Same Store Residential Bad Debt

Including 76,952 Same Store Apartment Units

($ in thousands)

 

Income Statement (Rental income):

 

Q2 2023

 

Q1 2023

 

Q2 2022

Bad debts before governmental rental assistance

 

$

9,504

 

 

$

11,866

 

 

$

13,287

 

Governmental rental assistance received

 

(655

)

 

 

(1,167

)

 

 

(14,398

)

Bad Debt, Net

 

$

8,849

 

 

$

10,699

 

 

$

(1,111

)

 

 

 

 

 

 

 

 

 

 

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

 

 

1.3

%

 

 

1.6

%

 

 

(0.2

%)

Equity Residential

Second Quarter 2023 vs. Second Quarter 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year's Quarter

Markets/Metro Areas

 

Apartment

Units

 

Q2 2023

% of

Actual

NOI

 

Q2 2023

Average

Rental

Rate

 

Q2 2023

Weighted

Average

Physical

Occupancy %

 

Q2 2023

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,415

 

 

 

17.8

%

 

$

2,861

 

 

 

95.0

%

 

 

11.2

%

 

 

(0.2

%)

(1)

 

8.5

%

 

 

(3.5

%)

 

 

1.8

%

 

 

(1.9

%)

 

 

2.0

%

Orange County

 

 

4,028

 

 

 

5.5

%

 

 

2,787

 

 

 

95.9

%

 

 

10.4

%

 

 

3.4

%

(1)

 

10.9

%

 

 

1.5

%

 

 

4.8

%

 

 

(1.3

%)

 

 

1.6

%

San Diego

 

 

2,878

 

 

 

4.1

%

 

 

2,997

 

 

 

95.8

%

 

 

9.9

%

 

 

7.6

%

 

 

10.2

%

 

 

6.9

%

 

 

9.2

%

 

 

(1.5

%)

 

 

0.2

%

Subtotal – Southern California

 

21,321

 

 

 

27.4

%

 

 

2,865

 

 

 

95.3

%

 

 

10.9

%

 

 

1.5

%

 

 

9.0

%

 

 

(1.1

%)

 

 

3.4

%

 

 

(1.7

%)

 

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,368

 

 

 

16.4

%

 

 

3,288

 

 

 

95.6

%

 

 

10.9

%

 

 

3.1

%

(1)

 

6.7

%

 

 

1.6

%

 

 

4.3

%

 

 

(1.1

%)

 

 

1.5

%

Washington, D.C.

 

 

14,400

 

 

 

15.9

%

 

 

2,578

 

 

 

96.8

%

 

 

10.6

%

 

 

6.3

%

 

 

1.4

%

 

 

8.9

%

 

 

6.3

%

 

 

0.0

%

 

 

(0.8

%)

New York

 

 

8,536

 

 

 

14.2

%

 

 

4,488

 

 

 

97.1

%

 

 

10.1

%

 

 

13.3

%

 

 

3.6

%

 

 

21.2

%

 

 

13.4

%

 

 

0.0

%

 

 

(1.8

%)

Seattle

 

 

9,525

 

 

 

10.9

%

 

 

2,587

 

 

 

95.1

%

 

 

14.4

%

 

 

4.2

%

 

 

3.7

%

 

 

4.4

%

 

 

4.4

%

 

 

(0.2

%)

 

 

(0.2

%)

Boston

 

 

6,700

 

 

 

10.3

%

 

 

3,405

 

 

 

96.5

%

 

 

11.3

%

 

 

8.3

%

 

 

3.4

%

 

 

10.4

%

 

 

8.7

%

 

 

(0.3

%)

 

 

(0.7

%)

Denver

 

 

2,498

 

 

 

2.7

%

 

 

2,420

 

 

 

96.2

%

 

 

17.2

%

 

 

5.7

%

 

 

6.0

%

 

 

5.5

%

 

 

6.2

%

 

 

(0.5

%)

 

 

(0.5

%)

Other Expansion Markets

 

 

3,197

 

 

 

2.2

%

 

 

1,990

 

 

 

94.9

%

 

 

14.6

%

 

 

5.1

%

 

 

12.7

%

 

 

(0.4

%)

 

 

7.0

%

 

 

(1.9

%)

 

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

77,545

 

 

 

100.0

%

 

$

3,017

 

 

 

95.9

%

 

 

11.6

%

 

 

5.5

%

 

 

5.3

%

 

 

5.6

%

 

 

6.4

%

 

 

(0.8

%)

 

 

0.4

%

(1)

Excluding Bad Debt, Net, which includes the positive impact of governmental rental assistance in the second quarter of 2022, same store revenue growth would have been 5.6%, 6.9% and 4.6% for Los Angeles, Orange County and San Francisco, respectively.

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the six months ended June 30, 2023.

Equity Residential

Second Quarter 2023 vs. First Quarter 2023

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Quarter

Markets/Metro Areas

 

Apartment

Units

 

 

Q2 2023

% of

Actual

NOI

 

Q2 2023

Average

Rental

Rate

 

Q2 2023

Weighted

Average

Physical

Occupancy %

 

Q2 2023

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,415

 

 

 

17.5

%

 

$

2,861

 

 

 

95.0

%

 

 

11.2

%

 

 

2.5

%

 

 

(5.3

%)

 

 

6.3

%

 

 

3.1

%

 

 

(0.5

%)

 

 

1.3

%

Orange County

 

 

4,028

 

 

 

5.3

%

 

 

2,787

 

 

 

95.9

%

 

 

10.4

%

 

 

2.3

%

 

 

0.0

%

 

 

3.0

%

 

 

2.6

%

 

 

(0.3

%)

 

 

3.1

%

San Diego

 

 

2,878

 

 

 

4.1

%

 

 

2,997

 

 

 

95.8

%

 

 

9.9

%

 

 

2.5

%

 

 

(1.3

%)

 

 

3.7

%

 

 

2.1

%

 

 

0.4

%

 

 

0.2

%

Subtotal – Southern California

 

21,321

 

 

 

26.9

%

 

 

2,865

 

 

 

95.3

%

 

 

10.9

%

 

 

2.5

%

 

 

(4.1

%)

 

 

5.2

%

 

 

2.9

%

 

 

(0.3

%)

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,568

 

 

 

16.4

%

 

 

3,283

 

 

 

95.5

%

 

 

10.9

%

 

 

1.3

%

 

 

(5.4

%)

 

 

4.4

%

 

 

1.3

%

 

 

(0.1

%)

 

 

1.3

%

Washington, D.C.

 

 

14,716

 

 

 

16.1

%

 

 

2,587

 

 

 

96.8

%

 

 

10.6

%

 

 

2.2

%

 

 

(4.7

%)

 

 

5.7

%

 

 

1.9

%

 

 

0.2

%

 

 

3.2

%

New York

 

 

8,536

 

 

 

14.0

%

 

 

4,488

 

 

 

97.1

%

 

 

10.1

%

 

 

1.6

%

 

 

(3.9

%)

 

 

5.8

%

 

 

1.3

%

 

 

0.3

%

 

 

2.6

%

Seattle

 

 

9,525

 

 

 

10.7

%

 

 

2,587

 

 

 

95.1

%

 

 

14.4

%

 

 

0.3

%

 

 

2.8

%

 

 

(0.7

%)

 

 

0.3

%

 

 

0.0

%

 

 

3.3

%

Boston

 

 

7,170

 

 

 

11.1

%

 

 

3,477

 

 

 

96.5

%

 

 

11.6

%

 

 

3.0

%

 

 

(9.2

%)

 

 

8.8

%

 

 

2.0

%

 

 

1.0

%

 

 

3.6

%

Denver

 

 

2,498

 

 

 

2.7

%

 

 

2,420

 

 

 

96.2

%

 

 

17.2

%

 

 

1.4

%

 

 

(9.1

%)

 

 

6.2

%

 

 

1.5

%

 

 

(0.1

%)

 

 

6.1

%

Other Expansion Markets

 

 

3,197

 

 

 

2.1

%

 

 

1,990

 

 

 

94.9

%

 

 

14.6

%

 

 

1.0

%

 

 

(7.3

%)

 

 

9.1

%

 

 

1.0

%

 

 

0.0

%

 

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

78,531

 

 

 

100.0

%

 

$

3,026

 

 

 

95.9

%

 

 

11.6

%

 

 

1.8

%

 

 

(4.5

%)

 

 

5.1

%

 

 

1.8

%

 

 

0.0

%

 

 

2.5

%

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the six months ended June 30, 2023.

Equity Residential

June YTD 2023 vs. June YTD 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year

Markets/Metro Areas

 

Apartment

Units

 

June YTD 23

% of

Actual

NOI

 

June YTD 23

Average

Rental

Rate

 

June YTD 23

Weighted

Average

Physical

Occupancy %

 

June YTD 23

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,415

 

 

 

17.8

%

 

$

2,818

 

 

 

95.2

%

 

 

21.1

%

 

 

2.8

%

(1)

 

9.6

%

 

 

0.0

%

 

 

4.6

%

 

 

(1.7

%)

 

 

3.5

%

Orange County

 

 

4,028

 

 

 

5.5

%

 

 

2,752

 

 

 

96.1

%

 

 

17.8

%

 

 

6.5

%

(1)

 

10.5

%

 

 

5.4

%

 

 

7.7

%

 

 

(1.1

%)

 

 

2.7

%

San Diego

 

 

2,706

 

 

 

3.9

%

 

 

2,931

 

 

 

95.6

%

 

 

19.1

%

 

 

7.2

%

 

 

7.7

%

 

 

7.0

%

 

 

8.8

%

 

 

(1.5

%)

 

 

0.7

%

Subtotal – Southern California

 

21,149

 

 

 

27.2

%

 

 

2,820

 

 

 

95.4

%

 

 

20.2

%

 

 

4.1

%

 

 

9.5

%

 

 

2.0

%

 

 

5.7

%

 

 

(1.6

%)

 

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,368

 

 

 

16.5

%

 

 

3,265

 

 

 

95.6

%

 

 

20.4

%

 

 

4.8

%

(1)

 

7.0

%

 

 

3.9

%

 

 

5.9

%

 

 

(1.0

%)

 

 

1.6

%

Washington, D.C.

 

 

14,400

 

 

 

16.0

%

 

 

2,555

 

 

 

96.7

%

 

 

17.9

%

 

 

6.6

%

 

 

3.7

%

 

 

8.0

%

 

 

6.7

%

 

 

(0.1

%)

 

 

(1.7

%)

New York

 

 

8,536

 

 

 

14.3

%

 

 

4,459

 

 

 

96.9

%

 

 

17.6

%

 

 

16.2

%

 

 

3.7

%

 

 

27.5

%

 

 

16.4

%

 

 

(0.2

%)

 

 

(2.5

%)

Seattle

 

 

9,525

 

 

 

11.3

%

 

 

2,583

 

 

 

95.1

%

 

 

25.6

%

 

 

6.3

%

 

 

3.3

%

 

 

7.6

%

 

 

6.2

%

 

 

0.1

%

 

 

(0.3

%)

Boston

 

 

6,700

 

 

 

10.2

%

 

 

3,374

 

 

 

96.1

%

 

 

19.2

%

 

 

9.0

%

 

 

5.4

%

 

 

10.6

%

 

 

9.3

%

 

 

(0.2

%)

 

 

(0.5

%)

Denver

 

 

2,498

 

 

 

2.7

%

 

 

2,402

 

 

 

96.3

%

 

 

28.3

%

 

 

6.8

%

 

 

12.1

%

 

 

4.7

%

 

 

6.7

%

 

 

0.0

%

 

 

0.0

%

Other Expansion Markets

 

 

2,776

 

 

 

1.8

%

 

 

1,984

 

 

 

94.7

%

 

 

25.4

%

 

 

5.2

%

 

 

17.5

%

 

 

(4.0

%)

 

 

7.0

%

 

 

(1.9

%)

 

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

76,952

 

 

 

100.0

%

 

$

2,995

 

 

 

95.9

%

 

 

20.6

%

 

 

7.3

%

 

 

6.2

%

 

 

7.8

%

 

 

8.0

%

 

 

(0.7

%)

 

 

0.4

%

(1)

Excluding Bad Debt, Net, which includes the positive impact of governmental rental assistance in the six months ended June 30, 2022, same store revenue growth would have been 6.1%, 7.7% and 5.4% for Los Angeles, Orange County and San Francisco, respectively.

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the six months ended June 30, 2023.

Equity Residential

Same Store Residential Net Effective Lease Pricing Statistics

For 76,952 Same Store Apartment Units

 

 

 

New Lease Change (1)

 

Renewal Rate Achieved (1)

 

Blended Rate (1)

Markets/Metro Areas

 

Q2 2023

 

Q1 2023

 

Q2 2023

 

Q1 2023

 

Q2 2023

 

Q1 2023

Southern California

 

 

3.5

%

 

 

4.6

%

 

 

6.9

%

 

 

6.2

%

 

 

5.4

%

 

 

5.4

%

San Francisco

 

 

1.4

%

 

 

2.0

%

 

 

6.0

%

 

 

6.1

%

 

 

3.8

%

 

 

4.3

%

Washington, D.C.

 

 

4.8

%

 

 

2.4

%

 

 

6.5

%

 

 

6.0

%

 

 

5.7

%

 

 

4.4

%

New York

 

 

4.2

%

 

 

2.4

%

 

 

5.1

%

 

 

6.3

%

 

 

4.7

%

 

 

4.6

%

Seattle

 

 

(3.8

%)

 

 

(5.8

%)

 

 

4.5

%

 

 

5.6

%

 

 

0.4

%

 

 

(0.2

%)

Boston

 

 

4.4

%

 

 

0.6

%

 

 

6.1

%

 

 

6.9

%

 

 

5.4

%

 

 

3.8

%

Denver

 

 

0.9

%

 

 

(2.4

%)

 

 

5.0

%

 

 

5.8

%

 

 

2.6

%

 

 

0.8

%

Other Expansion Markets

 

 

(4.8

%)

 

 

(5.3

%)

 

 

4.4

%

 

 

5.5

%

 

 

(0.8

%)

 

 

(0.8

%)

Total

 

 

2.3

%

 

 

1.3

%

 

 

5.9

%

 

 

6.1

%

 

 

4.3

%

 

 

3.9

%

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions. See page 4 for July 2023 preliminary data.

Equity Residential

Second Quarter 2023 vs. Second Quarter 2022

Total Same Store Operating Expenses Including 77,545 Same Store Apartment Units

($ in thousands)

 

 

 

Q2 2023

 

Q2 2022

 

$

Change (1)

 

%

Change

 

% of

Q2 2023

Operating

Expenses

Real estate taxes

 

$

90,898

 

 

$

88,963

 

 

$

1,935

 

 

 

2.2

%

 

 

41.5

%

On-site payroll

 

 

42,504

 

 

 

39,022

 

 

 

3,482

 

 

 

8.9

%

 

 

19.4

%

Utilities

 

 

31,578

 

 

 

31,501

 

 

 

77

 

 

 

0.2

%

 

 

14.4

%

Repairs and maintenance

 

 

31,233

 

 

 

27,421

 

 

 

3,812

 

 

 

13.9

%

 

 

14.3

%

Insurance

 

 

8,455

 

 

 

7,397

 

 

 

1,058

 

 

 

14.3

%

 

 

3.9

%

Leasing and advertising

 

 

2,528

 

 

 

2,619

 

 

 

(91

)

 

 

(3.5

%)

 

 

1.1

%

Other on-site operating expenses

 

 

11,838

 

 

 

10,655

 

 

 

1,183

 

 

 

11.1

%

 

 

5.4

%

Total Same Store Operating Expenses (2)

(includes Residential and Non-Residential)

 

$

219,034

 

 

$

207,578

 

 

$

11,456

 

 

 

5.5

%

 

 

100.0

%

 

June YTD 2023 vs. June YTD 2022

Total Same Store Operating Expenses Including 76,952 Same Store Apartment Units

($ in thousands)

 

 

 

YTD 2023

 

YTD 2022

 

$

Change (1)

 

%

Change

 

% of

YTD 2023

Operating

Expenses

Real estate taxes

 

$

180,521

 

 

$

176,328

 

 

$

4,193

 

 

 

2.4

%

 

 

40.6

%

On-site payroll

 

 

84,629

 

 

 

80,021

 

 

 

4,608

 

 

 

5.8

%

 

 

19.1

%

Utilities

 

 

69,925

 

 

 

65,520

 

 

 

4,405

 

 

 

6.7

%

 

 

15.7

%

Repairs and maintenance

 

 

61,120

 

 

 

53,077

 

 

 

8,043

 

 

 

15.2

%

 

 

13.8

%

Insurance

 

 

16,830

 

 

 

14,719

 

 

 

2,111

 

 

 

14.3

%

 

 

3.8

%

Leasing and advertising

 

 

5,003

 

 

 

4,949

 

 

 

54

 

 

 

1.1

%

 

 

1.1

%

Other on-site operating expenses

 

 

26,223

 

 

 

23,072

 

 

 

3,151

 

 

 

13.7

%

 

 

5.9

%

Total Same Store Operating Expenses (2)

(includes Residential and Non-Residential)

 

$

444,251

 

 

$

417,686

 

 

$

26,565

 

 

 

6.4

%

 

 

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 challenging comparable period and elevated employee benefit costs, partially offset by the impact of innovation initiatives.

 

 

 

Utilities – Moderation in the quarter-over-quarter rate of increase is primarily driven by lower commodity prices for gas and electric. Year-over-year increase primarily driven by higher commodity prices for gas and electric and higher 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 June 30, 2023

($ in thousands)

 

 

 

Debt

Balances (1)

 

% of Total

 

Weighted

Average

Rates (1)

 

Weighted

Average

Maturities

(years)

Secured

 

$

1,913,069

 

 

 

25.7

%

 

 

3.63

%

 

 

4.4

 

Unsecured

 

 

5,529,847

 

 

 

74.3

%

 

 

3.59

%

 

 

9.0

 

Total

 

$

7,442,916

 

 

 

100.0

%

 

 

3.60

%

 

 

7.8

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

1,609,298

 

 

 

21.6

%

 

 

3.45

%

 

 

3.4

 

Unsecured – Public

 

 

5,345,373

 

 

 

71.8

%

 

 

3.54

%

 

 

9.3

 

Fixed Rate Debt

 

 

6,954,671

 

 

 

93.4

%

 

 

3.52

%

 

 

8.0

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

 

66,863

 

 

 

0.9

%

 

 

7.17

%

 

 

2.0

 

Secured – Tax Exempt

 

 

236,908

 

 

 

3.2

%

 

 

3.47

%

 

 

11.0

 

Unsecured – Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

4.3

 

Unsecured – Commercial Paper Program (2)

 

 

184,474

 

 

 

2.5

%

 

 

5.12

%

 

 

 

Floating Rate Debt

 

 

488,245

 

 

 

6.6

%

 

 

4.71

%

 

 

5.8

 

Total

 

$

7,442,916

 

 

 

100.0

%

 

 

3.60

%

 

 

7.8

 

(1)

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

(2)

At June 30, 2023, the weighted average maturity of commercial paper outstanding was 26 days. The weighted average amount outstanding for the six months ended June 30, 2023 was approximately $164.5 million.

Note: The Company capitalized interest of approximately $7.0 million and $2.3 million during the six months ended June 30, 2023 and 2022, respectively. The Company capitalized interest of approximately $3.6 million and $1.3 million during the quarters ended June 30, 2023 and 2022, respectively.

Equity Residential

Debt Maturity Schedule as of June 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 (2)

 

$

800,000

 

 

$

188,487

 

(3)

$

988,487

 

 

 

13.2

%

 

 

4.21

%

 

 

4.45

%

2024

 

 

 

 

 

6,200

 

 

 

6,200

 

 

 

0.1

%

 

N/A

 

 

 

3.86

%

2025

 

 

450,000

 

 

 

75,976

 

 

 

525,976

 

 

 

7.0

%

 

 

3.38

%

 

 

3.96

%

2026

 

 

592,025

 

 

 

9,000

 

 

 

601,025

 

 

 

8.0

%

 

 

3.58

%

 

 

3.58

%

2027

 

 

400,000

 

 

 

9,800

 

 

 

409,800

 

 

 

5.4

%

 

 

3.25

%

 

 

3.26

%

2028

 

 

900,000

 

 

 

10,700

 

 

 

910,700

 

 

 

12.1

%

 

 

3.79

%

 

 

3.79

%

2029

 

 

888,120

 

 

 

11,500

 

 

 

899,620

 

 

 

12.0

%

 

 

3.30

%

 

 

3.31

%

2030

 

 

1,095,000

 

 

 

12,700

 

 

 

1,107,700

 

 

 

14.7

%

 

 

2.55

%

 

 

2.56

%

2031

 

 

528,500

 

 

 

39,800

 

 

 

568,300

 

 

 

7.6

%

 

 

1.94

%

 

 

2.08

%

2032

 

 

 

 

 

28,000

 

 

 

28,000

 

 

 

0.4

%

 

N/A

 

 

 

3.64

%

2033+

 

 

1,350,850

 

 

 

110,900

 

 

 

1,461,750

 

 

 

19.5

%

 

 

4.39

%

 

 

4.28

%

Subtotal

 

 

7,004,495

 

 

 

503,063

 

 

 

7,507,558

 

 

 

100.0

%

 

 

3.48

%

 

 

3.57

%

Deferred Financing Costs and Unamortized (Discount)

 

 

(49,824

)

 

 

(14,818

)

 

 

(64,642

)

 

N/A

 

 

N/A

 

 

N/A

 

Total

 

$

6,954,671

 

 

$

488,245

 

 

$

7,442,916

 

 

 

100.0

%

 

 

3.48

%

 

 

3.57

%

(1)

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

(2)

As of June 30, 2023, the Company had $450.0 million of ten-year forward starting SOFR swaps outstanding at a weighted average rate of 2.90% (currently equivalent to a ten-year U.S. Treasury of approximately 3.15%) to hedge the U.S. Treasury risk for the refinancing of 2023 maturities. See the Capital Markets Activity on page 4 of this release for details of subsequent activity related to these swaps.

(3)

Includes $185.2 million in principal outstanding on the Company's Commercial Paper Program.

Equity Residential

Selected Unsecured Public Debt Covenants

 

 

 

June 30,

 

March 31,

 

 

2023

 

2023

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

 

26.9%

 

26.7%

 

 

 

 

 

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

 

7.7%

 

8.0%

 

 

 

 

 

Consolidated Income Available for Debt Service to

Maximum Annual Service Charges

(must be at least 1.5 to 1)

 

6.21

 

6.30

 

 

 

 

 

Total Unencumbered Assets to Unsecured Debt

(must be at least 125%)

 

518.6%

 

528.9%

 

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

 

 

 

June 30,

 

March 31,

 

 

2023

 

2023

Total debt to Normalized EBITDAre

 

4.30x

 

4.27x

 

 

 

 

 

Net debt to Normalized EBITDAre

 

4.27x

 

4.17x

 

 

 

 

 

Unencumbered NOI as a % of total NOI

 

88.5%

 

88.3%

 

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

Capital Structure as of June 30, 2023

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

 

Secured Debt

 

 

 

 

 

 

 

$

1,913,069

 

 

 

25.7

%

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

5,529,847

 

 

 

74.3

%

 

 

 

Total Debt

 

 

 

 

 

 

 

 

7,442,916

 

 

 

100.0

%

 

 

22.3

%

Common Shares (includes Restricted Shares)

 

 

379,032,722

 

 

 

96.8

%

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

12,415,452

 

 

 

3.2

%

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

391,448,174

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

Common Share Price at June 30, 2023

 

$

65.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,823,836

 

 

 

99.9

%

 

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

 

 

 

 

37,280

 

 

 

0.1

%

 

 

 

Total Equity

 

 

 

 

 

 

 

 

25,861,116

 

 

 

100.0

%