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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

%

 

 

77.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

 

 

$

33,304,032

 

 

 

 

 

 

100.0

%

 

Perpetual Preferred Equity as of June 30, 2023

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

 

Series

 

Call Date

 

Outstanding

Shares

 

 

Liquidation

Value

 

 

Annual

Dividend

Per Share

 

 

Annual

Dividend

Amount

 

Preferred Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.29% Series K

 

12/10/26

 

 

745,600

 

 

$

37,280

 

 

$

4.145

 

 

$

3,091

 

 

Equity Residential

Common Share and Unit

Weighted Average Amounts Outstanding

 

 

June YTD 2023

 

June YTD 2022

 

Q2 2023

 

Q2 2022

Weighted Average Amounts Outstanding for Net Income Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

378,492,171

 

 

 

375,639,505

 

 

 

378,641,804

 

 

 

375,768,632

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

- OP Units

 

 

11,449,790

 

 

 

11,891,583

 

 

 

11,390,569

 

 

 

11,895,086

 

- long-term compensation shares/units

 

 

1,121,169

 

 

 

1,862,666

 

 

 

1,155,127

 

 

 

1,697,634

 

- ATM forward sales

 

 

 

 

 

68,823

 

 

 

 

 

 

1,470

 

Total Common Shares and Units - diluted

 

 

391,063,130

 

 

 

389,462,577

 

 

 

391,187,500

 

 

 

389,362,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

378,492,171

 

 

 

375,639,505

 

 

 

378,641,804

 

 

 

375,768,632

 

OP Units - basic

 

 

11,449,790

 

 

 

11,891,583

 

 

 

11,390,569

 

 

 

11,895,086

 

Total Common Shares and OP Units - basic

 

 

389,941,961

 

 

 

387,531,088

 

 

 

390,032,373

 

 

 

387,663,718

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

- long-term compensation shares/units

 

 

1,121,169

 

 

 

1,862,666

 

 

 

1,155,127

 

 

 

1,697,634

 

- ATM forward sales

 

 

 

 

 

68,823

 

 

 

 

 

 

1,470

 

Total Common Shares and Units - diluted

 

 

391,063,130

 

 

 

389,462,577

 

 

 

391,187,500

 

 

 

389,362,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ending Amounts Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

379,032,722

 

 

 

376,118,433

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

12,415,452

 

 

 

12,851,180

 

 

 

 

 

 

 

Total Shares and Units

 

 

391,448,174

 

 

 

388,969,613

 

 

 

 

 

 

 

Equity Residential

Development and Lease-Up Projects as of June 30, 2023

(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

 

 

$

50,916

 

 

$

 

 

31%

 

Q2 2022

 

Q4 2024

 

Q1 2025

 

Q4 2025

 

– / –

Projects Under Development - Consolidated

 

 

 

 

225

 

 

 

152,621

 

 

 

50,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Completed Not Stabilized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reverb (fka 9th and W) (2)

 

Washington, D.C.

 

92%

 

 

312

 

 

 

108,027

 

 

 

103,675

 

 

 

66,863

 

 

99%

 

Q3 2021

 

Q2 2023

 

Q2 2023

 

Q3 2024

 

47% / 39%

Projects Completed Not Stabilized - Consolidated

 

 

 

 

312

 

 

 

108,027

 

 

 

103,675

 

 

 

66,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNCONSOLIDATED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alloy Sunnyside

 

Denver, CO

 

80%

 

 

209

 

 

 

66,004

 

 

 

52,878

 

 

 

19,028

 

 

79%

 

Q3 2021

 

Q4 2023

 

Q2 2024

 

Q1 2025

 

– / –

Alexan Harrison

 

Harrison, NY

 

62%

 

 

450

 

 

 

198,664

 

 

 

140,799

 

 

 

38,549

 

 

69%

 

Q3 2021

 

Q1 2024

 

Q4 2024

 

Q2 2026

 

– / –

Solana Beeler Park

 

Denver, CO

 

90%

 

 

270

 

 

 

81,206

 

 

 

42,820

 

 

 

7,263

 

 

44%

 

Q4 2021

 

Q4 2023

 

Q2 2024

 

Q1 2025

 

– / –

Remy (Toll)

 

Frisco, TX

 

75%

 

 

357

 

 

 

96,937

 

 

 

61,366

 

 

 

18,338

 

 

58%

 

Q1 2022

 

Q1 2024

 

Q4 2024

 

Q3 2025

 

– / –

Settler (Toll)

 

Fort Worth, TX

 

75%

 

 

362

 

 

 

81,775

 

 

 

41,518

 

 

 

955

 

 

48%

 

Q2 2022

 

Q2 2024

 

Q3 2024

 

Q3 2025

 

– / –

Lyle (Toll) (2)

 

Dallas, TX

 

75%

 

 

334

 

 

 

86,332

 

 

 

28,244

 

 

 

7,680

 

 

34%

 

Q3 2022

 

Q4 2024

 

Q2 2025

 

Q1 2026

 

– / –

Projects Under Development - Unconsolidated

 

 

 

 

1,982

 

 

 

610,918

 

 

 

367,625

 

 

 

91,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects - Consolidated

 

 

 

 

 

 

537

 

 

 

260,648

 

 

 

154,591

 

 

 

66,863

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects - Unconsolidated

 

 

 

 

 

 

1,982

 

 

 

610,918

 

 

 

367,625

 

 

 

91,813

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects

 

 

 

 

 

 

2,519

 

 

$

871,566

 

 

$

522,216

 

 

$

158,676

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS

Total Budgeted

Capital Cost

 

Q2 2023

NOI

Projects Under Development - Consolidated

$

152,621

 

 

$

 

Projects Completed Not Stabilized - Consolidated

 

108,027

 

 

 

(16

)

Projects Under Development - Unconsolidated

 

610,918

 

 

 

 

 

$

871,566

 

 

$

(16

)

(1)

All non-wholly owned 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 Six Months Ended June 30, 2023

(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

 

 

76,952

 

 

 

3,260

 

 

 

80,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Improvements

 

$

53,622

 

 

$

4,626

 

(2)

$

58,248

 

 

$

697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renovation Expenditures

 

 

31,400

 

(1)

 

11,241

 

(2)

 

42,641

 

 

 

408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Replacements

 

 

33,474

 

 

 

884

 

 

 

34,358

 

 

 

435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures to Real Estate (3)

 

$

118,496

 

 

$

16,751

 

 

$

135,247

 

 

$

1,540

 

(1)

Renovation Expenditures on 1,050 same store apartment units for the six months ended June 30, 2023 approximated $29,904 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 renovations are expected to continue through at least the end of 2023 at both properties.

(3)

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

Equity Residential

Normalized EBITDAre Reconciliations

(Amounts in thousands)

 

 

Trailing Twelve Months

 

2023

 

2022

 

 

June 30, 2023

 

March 31, 2023

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Net income

 

$

865,452

 

 

$

953,268

 

 

$

144,862

 

 

$

220,071

 

 

$

165,354

 

 

$

335,165

 

 

$

232,678

 

Interest expense incurred, net

 

 

270,230

 

 

 

276,529

 

 

 

65,590

 

 

 

66,401

 

 

 

65,827

 

 

 

72,412

 

 

 

71,889

 

Amortization of deferred financing costs

 

 

8,524

 

 

 

8,631

 

 

 

2,017

 

 

 

1,979

 

 

 

2,308

 

 

 

2,220

 

 

 

2,124

 

Amortization of above/below market lease intangibles

 

 

4,464

 

 

 

4,464

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

Depreciation

 

 

865,586

 

 

 

868,037

 

 

 

221,355

 

 

 

215,830

 

 

 

214,272

 

 

 

214,129

 

 

 

223,806

 

Income and other tax expense (benefit)

 

 

961

 

 

 

916

 

 

 

336

 

 

 

298

 

 

 

175

 

 

 

152

 

 

 

291

 

EBITDA

 

 

2,015,217

 

 

 

2,111,845

 

 

 

435,276

 

 

 

505,695

 

 

 

449,052

 

 

 

625,194

 

 

 

531,904

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(296,652

)

 

 

(404,636

)

 

 

87

 

 

 

(100,209

)

 

 

21

 

 

 

(196,551

)

 

 

(107,897

)

EBITDAre

 

 

1,718,565

 

 

 

1,707,209

 

 

 

435,363

 

 

 

405,486

 

 

 

449,073

 

 

 

428,643

 

 

 

424,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs (other expenses)

 

 

4,258

 

 

 

4,649

 

 

 

661

 

 

 

1,332

 

 

 

1,484

 

 

 

781

 

 

 

1,052

 

(Income) loss from investments in unconsolidated entities - operations

 

 

5,207

 

 

 

5,152

 

 

 

1,223

 

 

 

1,382

 

 

 

1,575

 

 

 

1,027

 

 

 

1,168

 

Realized (gain) loss on investment securities (interest and other income)

 

 

3,315

 

 

 

3,317

 

 

 

 

 

 

87

 

 

 

3,225

 

 

 

3

 

 

 

2

 

Insurance/litigation settlement or reserve income (interest and other income)

 

 

(1,105

)

 

 

(1,223

)

 

 

(193

)

 

 

(800

)

 

 

(12

)

 

 

(100

)

 

 

(311

)

Insurance/litigation/environmental settlement or reserve expense (other expenses)

 

 

9,257

 

 

 

5,744

 

 

 

3,513

 

 

 

4,999

 

 

 

745

 

 

 

 

 

 

 

Advocacy contributions (other expenses)

 

 

1,097

 

 

 

1,344

 

 

 

320

 

 

 

7

 

 

 

50

 

 

 

720

 

 

 

567

 

Data transformation project (other expenses)

 

 

4,605

 

 

 

3,200

 

 

 

1,405

 

 

 

2,080

 

 

 

1,120

 

 

 

 

 

 

 

Real estate tax transaction adjustment (real estate taxes)

 

 

(18,072

)

 

 

(18,072

)

 

 

 

 

 

 

 

 

(18,072

)

 

 

 

 

 

 

Other

 

 

1,845

 

 

 

1,769

 

 

 

6

 

 

 

6

 

 

 

436

 

 

 

1,397

 

 

 

(70

)

Normalized EBITDAre

 

$

1,728,972

 

 

$

1,713,089

 

 

$

442,298

 

 

$

414,579

 

 

$

439,624

 

 

$

432,471

 

 

$

426,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Items:

 

June 30, 2023

 

March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

7,442,916

 

 

$

7,312,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

(35,701

)

 

 

(133,460

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage principal reserves/sinking funds

 

 

(28,802

)

 

 

(27,017

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

 

$

7,378,413

 

 

$

7,151,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

Six Months Ended June 30,

 

Quarter Ended June 30,

 

 

2023

 

2022

 

Variance

 

2023

 

2022

 

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating real estate assets

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs (other expenses)

 

 

1,993

 

 

 

2,515

 

 

 

(522

)

 

 

661

 

 

 

1,052

 

 

 

(391

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of unamortized deferred financing costs (interest expense)

 

 

47

 

 

 

92

 

 

 

(45

)

 

 

47

 

 

 

92

 

 

 

(45

)

Write-off of unamortized (premiums)/discounts/OCI (interest expense)

 

 

 

 

 

377

 

 

 

(377

)

 

 

 

 

 

377

 

 

 

(377

)

Debt extinguishment and preferred share redemption (gains) losses

 

 

47

 

 

 

469

 

 

 

(422

)

 

 

47

 

 

 

469

 

 

 

(422

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Income) loss from investments in unconsolidated entities ─ non-operating assets

 

 

944

 

 

 

734

 

 

 

210

 

 

 

317

 

 

 

310

 

 

 

7

 

Realized (gain) loss on investment securities (interest and other income)

 

 

87

 

 

 

(2,064

)

 

 

2,151

 

 

 

 

 

 

2

 

 

 

(2

)

Non-operating asset (gains) losses

 

 

1,031

 

 

 

(1,330

)

 

 

2,361

 

 

 

317

 

 

 

312

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance/litigation settlement or reserve income (interest and other income)

 

 

(993

)

 

 

(1,538

)

 

 

545

 

 

 

(193

)

 

 

(311

)

 

 

118

 

Insurance/litigation/environmental settlement or reserve expense (other expenses)

 

 

8,512

 

 

 

750

 

 

 

7,762

 

 

 

3,513

 

 

 

 

 

 

3,513

 

Advocacy contributions (other expenses)

 

 

327

 

 

 

742

 

 

 

(415

)

 

 

320

 

 

 

567

 

 

 

(247

)

Data transformation project (other expenses)

 

 

3,485

 

 

 

 

 

 

3,485

 

 

 

1,405

 

 

 

 

 

 

1,405

 

Other

 

 

12

 

 

 

(139

)

 

 

151

 

 

 

6

 

 

 

(70

)

 

 

76

 

Other miscellaneous items

 

 

11,343

 

 

 

(185

)

 

 

11,528

 

 

 

5,051

 

 

 

186

 

 

 

4,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments from FFO to Normalized FFO

 

$

14,414

 

 

$

1,469

 

 

$

12,945

 

 

$

6,076

 

 

$

2,019

 

 

$

4,057

 

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.

 

 

 

Q3 2023

 

Revised Full Year 2023

 

Previous Full Year 2023

 

 

 

 

 

 

 

2023 Normalized FFO Guidance (per share diluted)

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected Normalized FFO Per Share

 

$0.95 to $0.99

 

$3.77 to $3.83

 

$3.73 to $3.83 (3)

 

 

 

 

 

 

 

2023 Same Store Assumptions (includes Residential and Non-Residential)

 

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

 

 

96.0%

 

96.0% (3)

Revenue change

 

 

 

5.5% to 6.25%

 

5.5% to 6.25% (3)

Expense change

 

 

 

4.0% to 4.5%

 

4.0% to 5.0% (3)

NOI change (1)

 

 

 

6.3% to 7.0%

 

6.0% to 7.0% (3)

 

 

 

 

 

 

 

2023 Transaction Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated rental acquisitions

 

 

 

$300.0M

 

$300.0M

Consolidated rental dispositions

 

 

 

$300.0M

 

$300.0M

Transaction Accretion (Dilution)

 

 

 

 

 

 

 

 

 

 

 

2023 Debt Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average debt outstanding

 

 

 

$7.35B to $7.55B

 

$7.375B to $7.575B

Interest expense, net (on a Normalized FFO basis)

 

 

 

$265.5M to $271.5M

 

$274.5M to $280.5M

Capitalized interest

 

 

 

$11.0M to $14.0M

 

$10.0M to $14.0M

 

 

 

 

 

 

 

2023 Capital Expenditures to Real Estate Assumptions for Same Store Properties (2)

 

 

 

 

 

 

 

 

 

 

Capital Expenditures to Real Estate for Same Store Properties

 

 

 

$255.0M

 

$240.0M

Capital Expenditures to Real Estate per Same Store Apartment Unit

 

 

$3,315

 

$3,100

 

 

 

 

 

 

 

2023 Other Guidance Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

Property management expense

 

 

 

$116.5M to $119.5M

 

$119.0M to $122.0M

General and administrative expense

 

 

 

$59.5M to $63.5M

 

$55.5M to $59.5M

Debt offerings

 

 

 

$530.0M

 

$400.0M to $600.0M

Weighted average Common Shares and Units - Diluted

 

 

391.3M

 

391.3M

(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 2023, the Company expects to spend approximately $75.0 million for apartment unit Renovation Expenditures on approximately 2,500 same store apartment units at an average cost of approximately $30,000 per apartment unit renovated, which is included in the Capital Expenditures to Real Estate assumptions noted above.

(3)

Represents the updated guidance provided in the Company's May 30, 2023 press release. All other Previous Full Year 2023 items represent the guidance provided in the Company's first quarter 2023 earnings release.

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.

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 0.725%), 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:

 

 

June 30, 2023

Unsecured revolving credit facility commitment

 

$

2,500,000

 

Commercial paper balance outstanding

 

 

(185,187

)

Unsecured revolving credit facility balance outstanding

 

 

 

Other restricted amounts

 

 

(3,484

)

Unsecured revolving credit facility availability

 

$

2,311,329

 

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):

 

 

Six Months Ended June 30, 2023

 

 

Quarter Ended June 30, 2023

 

Net Gain (Loss) on Sales of Real Estate Properties

 

$

100,122

 

 

$

(87

)

Accumulated Depreciation Gain

 

 

(36,486

)

 

 

 

Economic Gain (Loss)

 

$

63,636

 

 

$

(87

)

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 June

 

Actual June

 

Actual

 

Actual

 

Expected

 

Expected

 

 

YTD 2023

 

YTD 2022

 

Q2 2023

 

Q2 2022

 

Q3 2023

 

2023

 

 

Per Share

 

Per Share

 

Per Share

 

Per Share

 

Per Share

 

Per Share

EPS – Diluted

 

$

0.92

 

 

$

0.78

 

 

$

0.37

 

$

0.59

 

 

$0.59 to $0.63

 

$1.95 to $2.01

Depreciation expense

 

 

1.11

 

 

 

1.16

 

 

 

0.56

 

 

0.58

 

 

 

0.56

 

 

 

2.23

 

Net (gain) loss on sales

 

 

(0.25

)

 

 

(0.28

)

 

 

 

 

(0.28

)

 

 

(0.21

)

 

 

(0.46

)

Impairment – operating real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share – Diluted

 

 

1.78

 

 

 

1.66

 

 

 

0.93

 

 

0.89

 

 

0.94 to 0.98

 

3.72 to 3.78

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.01

 

Debt extinguishment and preferred share

redemption (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating asset (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other miscellaneous items

 

 

0.03

 

 

 

 

 

 

0.01

 

 

 

 

 

0.01

 

 

 

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO per share – Diluted

 

$

1.82

 

 

$

1.66

 

 

$

0.94

 

$

0.89

 

 

$0.95 to $0.99

 

$3.77 to $3.83

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 operating 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 (see Same Store Results):

 

 

Six Months Ended June 30,

 

Quarter Ended June 30,

 

 

2023

 

2022

 

2023

 

2022

Operating income

 

$

516,049

 

 

$

459,672

 

 

$

218,461

 

 

$

309,934

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Net (gain) loss on sales of real estate

properties

 

 

(100,122

)

 

 

(107,795

)

 

 

87

 

 

 

(107,897

)

Total NOI

 

$

950,298

 

 

$

896,611

 

 

$

489,458

 

 

$

468,825

 

Rental income:

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

$

1,375,078

 

 

$

1,281,947

 

 

$

697,444

 

 

$

661,374

 

Non-same store/other

 

 

47,319

 

 

 

58,431

 

 

 

19,865

 

 

 

25,656

 

Total rental income

 

 

1,422,397

 

 

 

1,340,378

 

 

 

717,309

 

 

 

687,030

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

 

444,251

 

 

 

417,686

 

 

 

219,034

 

 

 

207,578

 

Non-same store/other

 

 

27,848

 

 

 

26,081

 

 

 

8,817

 

 

 

10,627

 

Total operating expenses

 

 

472,099

 

 

 

443,767

 

 

 

227,851

 

 

 

218,205

 

NOI:

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

 

930,827

 

 

 

864,261

 

 

 

478,410

 

 

 

453,796

 

Non-same store/other

 

 

19,471

 

 

 

32,350

 

 

 

11,048

 

 

 

15,029

 

Total NOI

 

$

950,298

 

 

$

896,611

 

 

$

489,458

 

 

$

468,825

 

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 2022 and 2023, plus any properties in lease-up and not stabilized as of January 1, 2022.

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:

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, 2022, less properties subsequently sold. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented.

Same Store Residential Revenues Revenues from our Same Store Properties 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 2023 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 June 30, 2023. 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 six months ended June 30, 2023 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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