Equity Residential (NYSE: EQR) today reported results for the
quarter and nine months ended September 30, 2024 and has posted a
Q3 2024 Management Presentation to its website as referenced
below.
Third Quarter 2024 Results
All per share results are reported as available to common
shares/units on a diluted basis.
Quarter Ended September
30,
2024
2023
$ Change
% Change
Earnings Per Share (EPS)
$
0.38
$
0.45
$
(0.07
)
(15.6
%)
Funds from Operations (FFO) per share
$
0.99
$
0.96
$
0.03
3.1
%
Normalized FFO (NFFO) per share
$
0.98
$
0.96
$
0.02
2.1
%
Nine Months Ended September
30,
2024
2023
$ Change
% Change
Earnings Per Share (EPS)
$
1.62
$
1.38
$
0.24
17.4
%
Funds from Operations (FFO) per share
$
2.79
$
2.74
$
0.05
1.8
%
Normalized FFO (NFFO) per share
$
2.89
$
2.78
$
0.11
4.0
%
Recent Highlights
- During the third quarter of 2024, the Company acquired fourteen
properties, consisting of 4,418 apartment units, for an aggregate
acquisition price of approximately $1.26 billion at a weighted
average Acquisition Cap Rate of 5.1%. These assets are located in
the Company’s Expansion Markets of Atlanta, Dallas/Ft. Worth and
Denver.
- In September of 2024, the Company issued $600.0 million of
unsecured 10-year notes at a coupon rate of 4.65%, the lowest
10-year coupon rate issued by a REIT since 2022, and an all-in
effective yield of 4.9%. Proceeds from this issuance were used to
partially fund the acquisitions described above.
- Same store revenue increased 2.7% for the third quarter of 2024
compared to the third quarter of 2023, driven by good demand and
modest supply across most of the Company’s markets. Same store
expense increased 3.2% with low growth in the primary expense
categories. Same store Net Operating Income (NOI) increased
2.5%.
- The Company published its 11th annual Corporate Responsibility
report highlighting Equity Residential’s goals and
accomplishments.
“We delivered solid same store revenue results in the quarter
with the underlying drivers mostly in line with expectations. Our
business continues to benefit from high employment levels among our
well earning resident base, wage growth across the economy and
limited home ownership and rental options in most of our markets,
making our well-located apartment properties an appealing choice,"
said Mark J. Parrell, Equity Residential’s President and CEO.
“Looking ahead, we continue to be excited about the prospects for
our business as lower levels of competitive new supply in future
years, especially in our Established Markets on the coasts, along
with a positive forward employment picture for our higher earning
customer, positions us well to continue to grow cash flows.”
Results Per Share
The change in EPS for the quarter ended September 30, 2024
compared to the same period of 2023 is due primarily to lower
property sale gains, higher depreciation expense, the various
adjustment items listed on page 27 of this release and the items
described below. The change in EPS for the nine months ended
September 30, 2024 compared to the same period of 2023 is due
primarily to higher property sale gains, higher depreciation
expense, the various adjustment items listed on page 27 of this
release and the items described below.
The per share changes in FFO for the quarter and nine months
ended September 30, 2024 compared to the same periods of 2023 are
due primarily to the various adjustment items listed on page 27 of
this release and the items described below.
The per share changes in Normalized FFO are due primarily
to:
Positive/(Negative)
Impact
Third Quarter 2024 vs. Third
Quarter 2023
September YTD 2024 vs.
September YTD 2023
Same store NOI
$
0.03
$
0.13
Lease-Up NOI
–
0.01
2024 and 2023 transaction activity impact
on NOI, net
0.01
(0.02
)
Interest expense, net
(0.01
)
(0.01
)
Corporate overhead (1)
(0.01
)
(0.02
)
Other items
–
0.02
Net
$
0.02
$
0.11
(1)
Corporate overhead includes property
management and general and administrative expenses.
The Company has a glossary of defined terms and related
reconciliations of Non-GAAP financial measures on pages 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.
Same Store Results
The following table shows the total same store results for the
periods presented (includes Residential and Non-Residential).
Third Quarter 2024 vs. Third
Quarter 2023
Third Quarter 2024 vs. Second
Quarter 2024
September YTD 2024 vs.
September YTD 2023
Apartment Units
77,203
78,633
76,916
Physical Occupancy
96.1% vs. 96.0%
96.1% vs. 96.3%
96.3% vs. 95.9%
Revenues
2.7%
0.5%
3.2%
Expenses
3.2%
2.3%
2.3%
NOI
2.5%
(0.4%)
3.7%
The following table reflects the detail of the change in Same
Store Residential Revenues, which is presented on a GAAP basis
showing Leasing Concessions on a straight-line basis.
Third Quarter 2024 vs. Third
Quarter 2023
Third Quarter 2024 vs. Second
Quarter 2024
September YTD 2024 vs.
September YTD 2023
% Change
% Change
% Change
Same Store Residential Revenues-
comparable period
Lease rates
2.0
%
0.9
%
2.5
%
Leasing Concessions
(0.1
%)
0.0
%
(0.2
%)
Vacancy gain (loss)
0.2
%
(0.4
%)
0.3
%
Bad Debt, Net (1)
0.2
%
0.1
%
0.2
%
Other (2)
0.2
%
0.0
%
0.3
%
Same Store Residential Revenues-
current period
2.5
%
0.6
%
3.1
%
(1)
Change in rental income due to bad debt
write-offs and reserves, net of amounts (including governmental
rental assistance payments) collected on previously written-off or
reserved accounts. See page 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 76,916 same store apartment
units):
Q3 2024
Q2 2024
Physical Occupancy
96.1%
96.4%
Percentage of Residents Renewing by
quarter
56.7%
57.7%
New Lease Change
(1.2%)
0.2%
Renewal Rate Achieved
4.6%
5.0%
Blended Rate (1)
2.0%
2.9%
(1)
Blended Rates for Established Markets were
2.4% and 3.3% for Q3 2024 and Q2 2024, respectively. See page
17.
In the third quarter of 2024, Physical Occupancy and Percentage
of Residents Renewing exceeded expectations while Renewal Rate
Achieved remained strong. In September 2024, New Lease Change, a
volatile metric, seasonally decelerated more quickly than
anticipated, primarily due to weakness in the city of Los Angeles
and in our Expansion Markets, leading to Blended Rates at the low
end of the Company's expected range for the third quarter of 2024.
Blended Rate has normalized with typical seasonal patterns thus far
in the fourth quarter of 2024 and is expected to be between 0.75%
and 1.25% for the fourth quarter of 2024.
Investment Activity
During the third quarter of 2024, the Company acquired 14
properties consisting of 4,418 apartment units, located in the
Company’s Expansion Markets of Atlanta, Dallas/Ft. Worth and
Denver, for an aggregate acquisition price of approximately $1.26
billion at a weighted average Acquisition Cap Rate of 5.1%. The
acquired properties are seven years old on average. Subsequent to
the end of the third quarter of 2024, the Company acquired a two
year old, 274 apartment unit property in suburban Atlanta for a
purchase price of $89.5 million. During the third quarter of 2024,
the Company sold a 63 year old property, located in Washington,
D.C., consisting of 138 apartment units, for a sale price of
approximately $31.5 million at a Disposition Yield of 6.1%.
During the first nine months of 2024, the Company acquired 15
properties, consisting of 4,578 apartment units, for an aggregate
purchase price of approximately $1.3 billion at a weighted average
Acquisition Cap Rate of 5.1%. The acquired properties are six years
old on average. Also during the first nine months of 2024, the
Company sold six properties consisting of 969 apartment units, for
an aggregate sale price of approximately $365.5 million at a
weighted average Disposition Yield of 5.7%. The properties sold
during 2024 have an average age of 43 years.
As of September 30, 2024, the Company has 42 properties
(including those under development) located in its Expansion
Markets of Atlanta, Austin, Dallas/Ft. Worth and Denver, which
constitutes approximately 10% of total portfolio NOI.
“We are seeing an increasingly active transaction market
providing us with opportunities to acquire properties in our
Expansion Markets at attractive prices relative to replacement
costs and at reasonable cap rates on depressed rent rolls as we
execute on our strategy to better balance our portfolio,” said Alec
Brackenridge, Equity Residential's Executive Vice President and
Chief Investment Officer. “We are continuing to build a portfolio
in the metro areas on the coasts and in select markets in the
sunbelt that are most desirable to our target affluent renter
demographic and have favorable long-term return
characteristics.”
Capital Markets Activity
On September 11, 2024, the Company closed on the issuance of
$600.0 million of 10-year unsecured notes at a coupon rate of
4.65%, which is the lowest 10-year coupon rate issued by a REIT
since 2022, and an all-in effective yield of 4.9%. Proceeds from
the offering were used to partially fund the Company’s acquisition
activity during the quarter.
Fourth Quarter 2024 Guidance
The Company has established guidance ranges for the fourth
quarter of 2024 EPS, FFO per share and Normalized FFO per share as
listed below:
Q4 2024 Guidance
EPS
$1.01 to $1.05
FFO per share
$0.95 to $0.99
Normalized FFO per share
$0.98 to $1.02
The difference between the third quarter of 2024 actual EPS of
$0.38 and the fourth quarter of 2024 EPS guidance midpoint of $1.03
is due primarily to higher expected property sale gains, higher
expected depreciation expense, lower expected non-operating asset
gains and the items described below.
The difference between the third quarter of 2024 actual FFO of
$0.99 per share and the fourth quarter of 2024 FFO guidance
midpoint of $0.97 per share is due primarily to lower expected
non-operating asset gains and the items described below.
The difference between the third quarter of 2024 actual
Normalized FFO of $0.98 per share and the fourth quarter of 2024
Normalized FFO guidance midpoint of $1.00 per share is due
primarily to:
Expected Positive/(Negative)
Impact
Fourth Quarter 2024 vs. Third
Quarter 2024
Same store NOI
$
0.01
2024 and 2023 transaction activity impact
on NOI, net
0.02
Interest expense, net
(0.02
)
Corporate overhead
0.01
Net
$
0.02
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 312 properties consisting of 84,018 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, Thursday, October 31, 2024
at 10:30 a.m. CT. In connection with the conference call, the
Company is also providing a Management Presentation on its website.
Please visit the Investor section of the Company’s website at
www.equityapartments.com for the webcast link.
Equity Residential
Consolidated Statements of
Operations
(Amounts in thousands except per
share data)
(Unaudited)
Nine Months Ended September
30,
Quarter Ended September
30,
2024
2023
2024
2023
REVENUES
Rental income
$
2,213,329
$
2,146,464
$
748,348
$
724,067
EXPENSES
Property and maintenance
396,349
391,437
135,221
129,087
Real estate taxes and insurance
320,452
312,607
105,954
102,858
Property management
100,381
90,314
31,412
28,169
General and administrative
48,902
49,135
14,551
14,094
Depreciation
688,041
661,921
237,948
224,736
Total expenses
1,554,125
1,505,414
525,086
498,944
Net gain (loss) on sales of real estate
properties
227,829
127,034
(165
)
26,912
Interest and other income
26,501
11,296
15,844
7,627
Other expenses
(59,094
)
(20,517
)
(13,971
)
(4,958
)
Interest:
Expense incurred, net
(205,762
)
(200,882
)
(72,722
)
(68,891
)
Amortization of deferred financing
costs
(5,784
)
(7,023
)
(1,948
)
(3,027
)
Income before income and other taxes,
income (loss) from
investments in unconsolidated entities and
net gain (loss)
on sales of land parcels
642,894
550,958
150,300
182,786
Income and other tax (expense) benefit
(925
)
(892
)
(290
)
(258
)
Income (loss) from investments in
unconsolidated entities
(4,865
)
(3,847
)
(1,493
)
(1,242
)
Net income
637,104
546,219
148,517
181,286
Net (income) loss attributable to
Noncontrolling Interests:
Operating Partnership
(17,290
)
(17,174
)
(4,012
)
(5,561
)
Partially Owned Properties
(3,098
)
(5,299
)
(1,059
)
(3,217
)
Net income attributable to controlling
interests
616,716
523,746
143,446
172,508
Preferred distributions
(1,258
)
(2,318
)
(356
)
(773
)
Premium on redemption of Preferred
Shares
(1,444
)
—
—
—
Net income available to Common Shares
$
614,014
$
521,428
$
143,090
$
171,735
Earnings per share – basic:
Net income available to Common Shares
$
1.62
$
1.38
$
0.38
$
0.45
Weighted average Common Shares
outstanding
378,718
378,614
378,756
378,853
Earnings per share – diluted:
Net income available to Common Shares
$
1.62
$
1.38
$
0.38
$
0.45
Weighted average Common Shares
outstanding
390,688
391,135
391,026
391,351
Distributions declared per Common Share
outstanding
$
2.025
$
1.9875
$
0.675
$
0.6625
Equity Residential
Consolidated Statements of
Funds From Operations and Normalized Funds From Operations
(Amounts in thousands except per
share and Unit data)
(Unaudited)
Nine Months Ended September
30,
Quarter Ended September
30,
2024
2023
2024
2023
Net income
$
637,104
$
546,219
$
148,517
$
181,286
Net (income) loss attributable to
Noncontrolling Interests – Partially
Owned Properties
(3,098
)
(5,299
)
(1,059
)
(3,217
)
Preferred distributions
(1,258
)
(2,318
)
(356
)
(773
)
Premium on redemption of Preferred
Shares
(1,444
)
—
—
—
Net income available to Common Shares and
Units
631,304
538,602
147,102
177,296
Adjustments:
Depreciation
688,041
661,921
237,948
224,736
Depreciation – Non-real estate
additions
(2,839
)
(3,291
)
(942
)
(1,032
)
Depreciation – Partially Owned
Properties
(1,645
)
(1,599
)
(556
)
(544
)
Depreciation – Unconsolidated
Properties
3,881
1,921
2,429
695
Net (gain) loss on sales of unconsolidated
entities - operating assets
(710
)
—
(710
)
—
Net (gain) loss on sales of real estate
properties
(227,829
)
(127,034
)
165
(26,912
)
Noncontrolling Interests share of gain
(loss) on sales
of real estate properties
—
2,336
—
2,336
FFO available to Common Shares and
Units
1,090,203
1,072,856
385,436
376,575
Adjustments (see note for additional
detail):
Write-off of pursuit costs
1,905
2,739
536
746
Debt extinguishment and preferred share
redemption (gains) losses
1,444
1,143
—
1,096
Non-operating asset (gains) losses
(17,452
)
(4,735
)
(14,236
)
(5,766
)
Other miscellaneous items
53,432
14,831
12,758
3,488
Normalized FFO available to Common Shares
and Units
$
1,129,532
$
1,086,834
$
384,494
$
376,139
FFO
$
1,092,905
$
1,075,174
$
385,792
$
377,348
Preferred distributions
(1,258
)
(2,318
)
(356
)
(773
)
Premium on redemption of Preferred
Shares
(1,444
)
—
—
—
FFO available to Common Shares and
Units
$
1,090,203
$
1,072,856
$
385,436
$
376,575
FFO per share and Unit – basic
$
2.80
$
2.75
$
0.99
$
0.97
FFO per share and Unit – diluted
$
2.79
$
2.74
$
0.99
$
0.96
Normalized FFO
$
1,130,790
$
1,089,152
$
384,850
$
376,912
Preferred distributions
(1,258
)
(2,318
)
(356
)
(773
)
Normalized FFO available to Common Shares
and Units
$
1,129,532
$
1,086,834
$
384,494
$
376,139
Normalized FFO per share and Unit –
basic
$
2.90
$
2.79
$
0.99
$
0.96
Normalized FFO per share and Unit –
diluted
$
2.89
$
2.78
$
0.98
$
0.96
Weighted average Common Shares and Units
outstanding – basic
389,379
389,991
389,379
390,087
Weighted average Common Shares and Units
outstanding – diluted
390,688
391,135
391,026
391,351
Note: See Adjustments from FFO to Normalized FFO for additional
detail regarding the adjustments from FFO to Normalized FFO. See
Additional Reconciliations and Definitions of Non-GAAP Financial
Measures and Other Terms for the definitions of non-GAAP financial
measures and other terms as well as the reconciliations of EPS to
FFO per share and Normalized FFO per share.
Equity Residential
Consolidated Balance
Sheets
(Amounts in thousands except for
share amounts)
(Unaudited)
September 30,
December 31,
2024
2023
ASSETS
Land
$
5,675,037
$
5,581,876
Depreciable property
24,148,043
22,938,426
Projects under development
222,055
78,036
Land held for development
65,113
114,300
Investment in real estate
30,110,248
28,712,638
Accumulated depreciation
(10,386,783
)
(9,810,337
)
Investment in real estate, net
19,723,465
18,902,301
Investments in unconsolidated
entities1
359,810
282,049
Cash and cash equivalents
28,610
50,743
Restricted deposits
97,949
89,252
Right-of-use assets
458,673
457,266
Other assets
257,314
252,953
Total assets
$
20,925,821
$
20,034,564
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net
$
1,633,414
$
1,632,902
Notes, net
5,945,670
5,348,417
Line of credit and commercial paper
786,561
409,131
Accounts payable and accrued expenses
165,787
87,377
Accrued interest payable
50,633
65,716
Lease liabilities
306,119
311,640
Other liabilities
294,543
272,596
Security deposits
74,350
69,178
Distributions payable
263,425
259,231
Total liabilities
9,520,502
8,456,188
Commitments and contingencies
Redeemable Noncontrolling Interests –
Operating Partnership
351,803
289,248
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest,
$0.01 par value;
100,000,000 shares authorized; 343,100
shares issued and
outstanding as of September 30, 2024 and
745,600 shares issued
and outstanding as of December 31,
2023
17,155
37,280
Common Shares of beneficial interest,
$0.01 par value;
1,000,000,000 shares authorized;
379,354,738 shares issued
and outstanding as of September 30, 2024
and 379,291,417
shares issued and outstanding as of
December 31, 2023
3,794
3,793
Paid in capital
9,584,539
9,601,866
Retained earnings
1,244,953
1,437,185
Accumulated other comprehensive income
(loss)
3,534
5,704
Total shareholders’ equity
10,853,975
11,085,828
Noncontrolling Interests:
Operating Partnership
199,206
202,306
Partially Owned Properties
335
994
Total Noncontrolling Interests
199,541
203,300
Total equity
11,053,516
11,289,128
Total liabilities and equity
$
20,925,821
$
20,034,564
1 Includes $297.5 million and $220.2
million in unconsolidated projects (primarily development) as of
September 30, 2024 and December 31, 2023, respectively. See
Development and Lease-Up Projects for additional detail on
unconsolidated projects.
Equity Residential
Portfolio Summary
As of September 30,
2024
% of Stabilized
Average
Apartment
Budgeted
Rental
Markets/Metro Areas
Properties
Units
NOI
Rate
Established Markets:
Los Angeles
58
14,732
16.7
%
$
2,943
Orange County
12
3,718
4.9
%
2,937
San Diego
12
2,878
3.9
%
3,127
Subtotal – Southern California
82
21,328
25.5
%
2,967
Washington, D.C.
46
14,728
15.6
%
2,761
San Francisco
41
11,410
14.6
%
3,343
New York
34
8,536
13.8
%
4,669
Boston
27
7,237
11.6
%
3,612
Seattle
44
9,267
10.1
%
2,636
Subtotal – Established Markets
274
72,506
91.2
%
3,209
Expansion Markets:
Denver
14
4,181
3.9
%
2,350
Atlanta
12
3,788
2.9
%
2,020
Dallas/Ft. Worth
9
2,802
1.6
%
1,903
Austin
3
741
0.4
%
1,780
Subtotal – Expansion Markets
38
11,512
8.8
%
2,096
Total
312
84,018
100.0
%
$
3,058
Properties
Apartment Units
Wholly Owned Properties
297
80,749
Partially Owned Properties –
Consolidated
14
3,060
Partially Owned Properties –
Unconsolidated
1
209
312
84,018
Note: Projects under development are not
included in the Portfolio Summary until construction has been
completed.
Equity Residential
Portfolio Rollforward Q3
2024
($ in thousands)
Properties
Apartment Units
Purchase Price
Acquisition Cap Rate
6/30/2024
299
79,738
Acquisitions:
Consolidated Rental Properties
14
4,418
$
1,255,250
5.1
%
Sales Price
Disposition Yield
Dispositions:
Consolidated Rental Properties
(1
)
(138
)
$
(31,500
)
(6.1
%)
9/30/2024
312
84,018
Portfolio Rollforward
2024
($ in thousands)
Properties
Apartment Units
Purchase Price
Acquisition Cap Rate
12/31/2023
302
80,191
Acquisitions:
Consolidated Rental Properties
14
4,418
$
1,255,250
5.1
%
Consolidated Rental Properties – Not
Stabilized (1)
1
160
$
62,595
5.7
%
Unconsolidated Land Parcels (2)
—
—
$
33,394
Sales Price
Disposition Yield
Dispositions:
Consolidated Rental Properties
(6
)
(969
)
$
(365,500
)
(5.7
%)
Completed Developments –
Unconsolidated
1
209
Configuration Changes
—
9
9/30/2024
312
84,018
(1)
The Company acquired one property in the
Boston market during the nine months ended September 30, 2024 that
is in lease-up and is expected to stabilize in its second year of
ownership at the Acquisition Cap Rate listed above.
(2)
The Company previously entered into
separate unconsolidated joint ventures for the purpose of
developing vacant land parcels in suburban Boston, MA and suburban
Seattle, WA. The joint ventures acquired their respective land
parcels during the nine months ended September 30, 2024 for the
total purchase price listed. The Company's total investment in
these two joint ventures is approximately $69.0 million as of
September 30, 2024. See Development and Lease-Up Projects for
additional detail.
Equity Residential
Third Quarter 2024 vs. Third
Quarter 2023
Same Store Results/Statistics
Including 77,203 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands except for
Average Rental Rate)
Results
Statistics
Description
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Q3 2024
$
722,308
$
230,098
$
492,210
$
3,132
96.1
%
13.3
%
Q3 2023
$
703,370
$
223,047
$
480,323
$
3,060
96.0
%
13.8
%
Change
$
18,938
$
7,051
$
11,887
$
72
0.1
%
(0.5
%)
Change
2.7
%
3.2
%
2.5
%
2.4
%
Third Quarter 2024 vs. Second
Quarter 2024
Same Store Results/Statistics
Including 78,633 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands except for
Average Rental Rate)
Results
Statistics
Description
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Q3 2024
$
731,670
$
233,606
$
498,064
$
3,116
96.1
%
13.3
%
Q2 2024
$
728,288
$
228,344
$
499,944
$
3,091
96.3
%
11.7
%
Change
$
3,382
$
5,262
$
(1,880
)
$
25
(0.2
%)
1.6
%
Change
0.5
%
2.3
%
(0.4
%)
0.8
%
September YTD 2024 vs.
September YTD 2023
Same Store Results/Statistics
Including 76,916 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands except for
Average Rental Rate)
Results
Statistics
Description
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
September YTD 2024
$
2,151,275
$
684,342
$
1,466,933
$
3,108
96.3
%
33.5
%
September YTD 2023
$
2,083,707
$
668,633
$
1,415,074
$
3,025
95.9
%
34.6
%
Change
$
67,568
$
15,709
$
51,859
$
83
0.4
%
(1.1
%)
Change
3.2
%
2.3
%
3.7
%
2.7
%
Equity Residential
Same Store Residential
Revenues – GAAP to Cash Basis (1)
($ in thousands)
Third Quarter 2024 vs. Third
Quarter 2023
Third Quarter 2024 vs. Second
Quarter 2024
Sept. YTD 2024 vs. Sept. YTD
2023
77,203 Same Store Apartment
Units
78,633 Same Store Apartment
Units
76,916 Same Store Apartment
Units
Q3 2024
Q3 2023
Q3 2024
Q2 2024
Sept. YTD 2024
Sept. YTD 2023
Same Store Residential Revenues (GAAP
Basis)
$
696,686
$
679,652
$
706,030
$
701,912
$
2,069,756
$
2,007,129
Leasing Concessions amortized
4,903
4,065
5,277
5,326
14,859
9,997
Leasing Concessions granted (2)
(5,891
)
(5,387
)
(6,187
)
(4,070
)
(14,503
)
(13,538
)
Same Store Residential Revenues with
Leasing Concessions on a cash basis
$
695,698
$
678,330
$
705,120
$
703,168
$
2,070,112
$
2,003,588
% change - GAAP revenue
2.5
%
0.6
%
3.1
%
% change - cash revenue
2.6
%
0.3
%
3.3
%
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional detail.
(2)
Concession usage is primarily concentrated
in San Francisco, Los Angeles, Seattle and the Expansion Markets.
Material declines for the nine months ended September 30, 2024 in
Leasing Concessions granted in Seattle and San Francisco have been
offset by increases in Los Angeles and the Expansion Markets in the
same period.
Same Store Net Operating
Income By Quarter
Including 76,916 Same Store
Apartment Units
(includes Residential and
Non-Residential)
($ in thousands)
Q3 2024
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Same store revenues
$
720,371
$
717,335
$
713,569
$
705,600
$
701,423
Same store expenses
229,559
224,220
230,563
216,667
222,586
Same store NOI
$
490,812
$
493,115
$
483,006
$
488,933
$
478,837
Equity Residential
Same Store Residential
Accounts Receivable Balances
Including 76,916 Same Store
Apartment Units
($ in thousands)
Balance Sheet (Other assets):
September 30, 2024
June 30, 2024
September 30, 2023
Residential accounts receivable
balances
$
15,273
$
16,270
$
24,670
Allowance for doubtful accounts
(9,754
)
(11,147
)
(19,436
)
Net receivable balances
$
5,519
$
5,123
$
5,234
Straight-line receivable balances
$
8,075
(1)
$
7,088
$
7,824
(1)
Total same store Residential Leasing
Concessions granted in the third quarter of 2024 were approximately
$5.9 million. The straight-line receivable balance of $8.1 million
reflects Residential Leasing Concessions that the Company expects
will be primarily recognized as a reduction of rental revenues in
the remainder of 2024 and the first three quarters of 2025.
Same Store Residential Bad
Debt
Including 76,916 Same Store
Apartment Units
($ in thousands)
Income Statement (Rental
income):
Q3 2024
Q2 2024
Q3 2023
Bad debts before governmental rental
assistance
$
7,697
$
8,079
$
9,092
Governmental rental assistance
received
(295
)
(426
)
(410
)
Bad Debt, Net
$
7,402
$
7,653
$
8,682
Bad Debt, Net as a % of Same Store
Residential Revenues
1.1
%
1.1
%
1.3
%
Equity Residential
Third Quarter 2024 vs. Third
Quarter 2023
Same Store Residential
Results/Statistics by Market
Increase (Decrease) from Prior
Year's Quarter
Markets/Metro Areas
Apartment Units
Q3 2024 % of Actual NOI
Q3 2024 Average Rental Rate
Q3 2024 Weighted Average Physical
Occupancy %
Q3 2024 Turnover
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Los Angeles
14,135
17.2
%
$
2,940
95.5
%
12.5
%
1.2
%
3.7
%
0.2
%
1.5
%
(0.2
%)
0.2
%
Orange County
3,718
5.1
%
2,937
96.1
%
10.7
%
2.7
%
6.7
%
1.5
%
3.3
%
(0.6
%)
(0.2
%)
San Diego
2,878
4.2
%
3,127
95.7
%
12.5
%
2.5
%
3.9
%
2.1
%
2.1
%
0.4
%
0.0
%
Subtotal – Southern California
20,731
26.5
%
2,965
95.6
%
12.1
%
1.7
%
4.1
%
0.7
%
1.9
%
(0.2
%)
0.1
%
Washington, D.C.
14,416
16.4
%
2,764
96.6
%
14.1
%
4.2
%
7.8
%
2.5
%
4.4
%
(0.2
%)
(0.4
%)
San Francisco
11,188
15.8
%
3,347
95.8
%
12.7
%
1.2
%
1.6
%
1.0
%
0.9
%
0.2
%
(0.5
%)
New York
8,536
14.5
%
4,669
97.4
%
11.0
%
3.9
%
3.9
%
3.9
%
3.1
%
0.9
%
(1.7
%)
Boston
7,077
11.2
%
3,627
96.1
%
14.9
%
3.2
%
0.4
%
4.3
%
3.1
%
0.0
%
(1.0
%)
Seattle
9,266
10.4
%
2,635
96.1
%
13.8
%
3.3
%
4.9
%
2.6
%
2.4
%
0.9
%
(0.5
%)
Denver
2,792
2.8
%
2,403
95.8
%
17.8
%
(0.9
%)
2.0
%
(2.1
%)
0.0
%
(0.7
%)
(0.4
%)
Other Expansion Markets
3,197
2.4
%
1,931
95.1
%
16.4
%
(2.6
%)
(21.2
%)
(1)
11.5
%
(3.2
%)
0.5
%
(1.6
%)
Total
77,203
100.0
%
$
3,132
96.1
%
13.3
%
2.5
%
3.0
%
2.3
%
2.4
%
0.1
%
(0.5
%)
(1)
Expense decline primarily due to favorable
Texas real estate taxes.
Note: The above table reflects Residential
same store results only. Residential operations account for
approximately 96.3% of total revenues for the nine months ended
September 30, 2024.
Equity Residential
Third Quarter 2024 vs. Second
Quarter 2024
Same Store Residential
Results/Statistics by Market
Increase (Decrease) from Prior
Quarter
Markets/Metro Areas
Apartment Units
Q3 2024 % of Actual NOI
Q3 2024 Average Rental Rate
Q3 2024 Weighted Average Physical
Occupancy %
Q3 2024 Turnover
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Los Angeles
14,135
17.0
%
$
2,940
95.5
%
12.5
%
0.0
%
5.3
%
(2.3
%)
0.2
%
(0.2
%)
0.8
%
Orange County
3,718
5.1
%
2,937
96.1
%
10.7
%
1.0
%
4.5
%
0.0
%
0.8
%
0.2
%
(0.1
%)
San Diego
2,878
4.1
%
3,127
95.7
%
12.5
%
(0.2
%)
4.7
%
(1.6
%)
0.0
%
(0.2
%)
0.9
%
Subtotal – Southern California
20,731
26.2
%
2,965
95.6
%
12.1
%
0.1
%
5.1
%
(1.7
%)
0.3
%
(0.2
%)
0.6
%
Washington, D.C.
14,728
16.4
%
2,761
96.6
%
14.0
%
1.6
%
6.6
%
(0.7
%)
1.9
%
(0.3
%)
2.5
%
San Francisco
11,410
15.9
%
3,342
95.8
%
12.6
%
0.5
%
6.6
%
(2.0
%)
0.7
%
(0.3
%)
1.0
%
New York
8,536
14.3
%
4,669
97.4
%
11.0
%
1.3
%
0.1
%
2.1
%
1.3
%
0.0
%
1.5
%
Boston
7,077
11.1
%
3,627
96.1
%
14.9
%
(0.2
%)
0.2
%
(0.3
%)
0.5
%
(0.6
%)
3.5
%
Seattle
9,266
10.3
%
2,635
96.1
%
13.8
%
1.0
%
0.2
%
1.4
%
1.2
%
(0.2
%)
1.4
%
Denver
2,792
2.8
%
2,403
95.8
%
17.8
%
(1.5
%)
5.3
%
(4.3
%)
(0.6
%)
(1.0
%)
3.8
%
Other Expansion Markets
4,093
3.0
%
1,934
95.1
%
16.1
%
(1.2
%)
(19.8
%)
(1)
13.3
%
(1.4
%)
0.2
%
0.3
%
Total
78,633
100.0
%
$
3,116
96.1
%
13.3
%
0.6
%
2.4
%
(0.3
%)
0.8
%
(0.2
%)
1.6
%
(1)
Expense decline primarily due to favorable
Texas real estate taxes.
Note: The above table reflects Residential
same store results only. Residential operations account for
approximately 96.3% of total revenues for the nine months ended
September 30, 2024.
Equity Residential
September YTD 2024 vs.
September YTD 2023
Same Store Residential
Results/Statistics by Market
Increase (Decrease) from Prior
Year
Markets/Metro Areas
Apartment Units
Sept. YTD 24 % of Actual NOI
Sept. YTD 24 Average Rental
Rate
Sept. YTD 24 Weighted Average
Physical Occupancy %
Sept. YTD 24 Turnover
Revenues
Expenses
NOI
Average Rental Rate
Physical Occupancy
Turnover
Los Angeles
14,135
17.5
%
$
2,932
95.6
%
33.7
%
3.2
%
2.2
%
3.7
%
3.0
%
0.2
%
0.1
%
Orange County
3,718
5.2
%
2,917
96.0
%
28.9
%
4.1
%
4.6
%
3.9
%
4.3
%
(0.3
%)
0.0
%
San Diego
2,878
4.2
%
3,119
95.9
%
32.1
%
4.5
%
1.9
%
5.2
%
4.0
%
0.4
%
0.0
%
Subtotal – Southern California
20,731
26.9
%
2,955
95.7
%
32.6
%
3.6
%
2.5
%
4.0
%
3.4
%
0.1
%
0.0
%
Washington, D.C.
14,416
16.5
%
2,716
96.9
%
32.6
%
4.8
%
2.8
%
5.8
%
4.6
%
0.2
%
0.1
%
San Francisco
11,188
15.9
%
3,321
96.2
%
33.8
%
1.5
%
0.6
%
1.9
%
1.0
%
0.5
%
0.3
%
New York
8,536
14.3
%
4,624
97.3
%
27.1
%
3.6
%
4.0
%
3.4
%
3.1
%
0.5
%
(3.2
%)
Boston
7,077
11.2
%
3,597
96.2
%
33.8
%
4.1
%
0.9
%
5.4
%
3.9
%
0.2
%
(1.7
%)
Seattle
9,266
10.4
%
2,602
96.2
%
36.0
%
1.7
%
4.9
%
0.5
%
0.7
%
1.0
%
(3.8
%)
Denver
2,505
2.6
%
2,418
96.3
%
42.7
%
0.4
%
0.1
%
0.6
%
0.8
%
0.0
%
(3.9
%)
Other Expansion Markets
3,197
2.2
%
1,958
95.2
%
45.8
%
(0.8
%)
(6.8
%)
(1)
3.9
%
(1.4
%)
0.4
%
0.9
%
Total
76,916
100.0
%
$
3,108
96.3
%
33.5
%
3.1
%
2.3
%
3.5
%
2.7
%
0.4
%
(1.1
%)
(1)
Expense decline primarily due to favorable
Texas real estate taxes.
Note: The above table reflects Residential
same store results only. Residential operations account for
approximately 96.3% of total revenues for the nine months ended
September 30, 2024.
Equity Residential
Same Store Residential Net
Effective Lease Pricing Statistics
For 76,916 Same Store
Apartment Units
New Lease Change (1)
Renewal Rate Achieved (1)
Blended Rate (1)
Markets/Metro Areas
Q3 2024
Q2 2024
Q3 2024
Q2 2024
Q3 2024
Q2 2024
Southern California
(2.7
%)
(2)
(2.4
%)
4.2
%
4.5
%
0.9
%
1.4
%
Washington, D.C.
2.3
%
4.8
%
5.2
%
6.7
%
3.9
%
5.9
%
San Francisco
(1.2
%)
0.4
%
5.2
%
5.1
%
2.0
%
2.9
%
New York
0.9
%
3.5
%
4.1
%
4.4
%
2.9
%
4.0
%
Boston
1.5
%
0.3
%
5.1
%
5.0
%
3.6
%
3.0
%
Seattle
(3.8
%)
0.5
%
4.8
%
5.3
%
0.9
%
3.3
%
Subtotal – Established Markets
(0.5
%)
0.9
%
4.7
%
5.1
%
2.4
%
3.3
%
Denver
(10.0
%)
(4.6
%)
4.3
%
3.9
%
(3.1
%)
(0.5
%)
Other Expansion Markets
(13.6
%)
(12.5
%)
1.2
%
2.7
%
(6.8
%)
(6.2
%)
Subtotal – Expansion Markets
(11.8
%)
(9.1
%)
2.8
%
3.3
%
(4.9
%)
(3.5
%)
Total
(1.2
%)
0.2
%
4.6
%
5.0
%
2.0
%
2.9
%
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
definitions.
(2)
As previously mentioned, New Lease Change
in the city of Los Angeles decelerated more quickly than expected
during the third quarter of 2024. Performance in the city of Los
Angeles has improved thus far in the fourth quarter of 2024.
Equity Residential
Third Quarter 2024 vs. Third
Quarter 2023
Total Same Store Operating
Expenses Including 77,203 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands)
Q3 2024
Q3 2023
$ Change
% Change
% of Q3 2024 Operating
Expenses
Real estate taxes
$
92,513
$
90,731
$
1,782
2.0
%
40.2
%
On-site payroll
43,732
44,066
(334
)
(0.8
%)
19.0
%
Utilities
36,838
34,023
2,815
8.3
%
16.0
%
Repairs and maintenance
32,121
31,043
1,078
3.5
%
14.0
%
Insurance
9,223
8,438
785
9.3
%
4.0
%
Leasing and advertising
2,948
2,784
164
5.9
%
1.3
%
Other on-site operating expenses
12,723
11,962
761
6.4
%
5.5
%
Total Same Store Operating Expenses
(2)
$
230,098
$
223,047
$
7,051
3.2
%
100.0
%
September YTD 2024 vs.
September YTD 2023
Total Same Store Operating
Expenses Including 76,916 Same Store Apartment Units
(includes Residential and
Non-Residential)
($ in thousands)
YTD 2024
YTD 2023
$ Change (1)
% Change
% of YTD 2024 Operating
Expenses
Real estate taxes
$
279,731
$
271,701
$
8,030
3.0
%
40.9
%
On-site payroll
128,807
128,853
(46
)
0.0
%
18.8
%
Utilities
105,976
104,312
1,664
1.6
%
15.5
%
Repairs and maintenance
93,180
92,406
774
0.8
%
13.6
%
Insurance
27,800
25,258
2,542
10.1
%
4.0
%
Leasing and advertising
7,990
7,882
108
1.4
%
1.2
%
Other on-site operating expenses
40,858
38,221
2,637
6.9
%
6.0
%
Total Same Store Operating Expenses
(2)
$
684,342
$
668,633
$
15,709
2.3
%
100.0
%
(1)
The year-over-year changes were primarily
driven by the following factors:
Real estate taxes – Increase due to
escalation in rates and assessed values including an approximately
one percentage point contribution to growth from 421-a tax
abatement burnoffs in New York City. Once the burnoffs are
completed, previously rent-restricted apartment units will
transition to market.
On-site payroll – No change as higher
wages were offset by the impact of various innovation
initiatives.
Utilities – Increase primarily driven by
higher water, sewer and trash expense, partially offset by lower
commodity prices for gas and electric.
Repairs and maintenance – Modest growth
benefiting from lower resident Turnover compared to the same period
of 2023.
Insurance – Increase due to higher
premiums on property insurance renewal due to conditions in the
insurance market that while less difficult than recent years,
remain challenging.
Other on-site operating expenses –
Increase primarily driven by higher property-related legal
expenses.
(2)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
Equity Residential
Debt Summary as of September
30, 2024
($ in thousands)
Debt Balances (1)
% of Total
Weighted Average Rates (1)
Weighted Average Maturities
(years)
Secured
$
1,633,414
19.5
%
3.85
%
7.1
Unsecured
6,732,231
80.5
%
3.67
%
7.3
Total
$
8,365,645
100.0
%
3.71
%
7.3
Fixed Rate Debt:
Secured – Conventional
$
1,400,472
16.7
%
3.89
%
6.7
Unsecured – Public
5,945,670
71.1
%
3.52
%
8.2
Fixed Rate Debt
7,346,142
87.8
%
3.60
%
7.9
Floating Rate Debt:
Secured – Tax Exempt
232,942
2.8
%
3.62
%
10.0
Unsecured – Revolving Credit Facility
—
—
6.14
%
3.1
Unsecured – Commercial Paper Program
(2)
786,561
9.4
%
5.51
%
—
Floating Rate Debt
1,019,503
12.2
%
4.85
%
2.4
Total
$
8,365,645
100.0
%
3.71
%
7.3
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
(2)
At September 30, 2024, the weighted
average maturity of commercial paper outstanding was 22 days. The
weighted average amount outstanding for the nine months ended
September 30, 2024 was approximately $420.5 million.
Note: The Company capitalized interest of
approximately $10.7 million and $9.6 million during the nine months
ended September 30, 2024 and 2023, respectively. The Company
capitalized interest of approximately $3.8 million and $2.6 million
during the quarters ended September 30, 2024 and 2023,
respectively.
Equity Residential
Debt Maturity Schedule as of
September 30, 2024
($ in thousands)
Year
Fixed Rate
Floating Rate
Total
% of Total
Weighted Average Coupons on Fixed
Rate Debt (1)
Weighted Average Coupons on Total
Debt (1)
2024
$
—
$
792,700
(2)
$
792,700
9.4
%
—
5.11
%
2025
450,000
8,100
458,100
5.4
%
3.38
%
3.37
%
2026
592,025
9,000
601,025
7.1
%
3.58
%
3.58
%
2027
400,000
9,800
409,800
4.9
%
3.25
%
3.24
%
2028
900,000
10,700
910,700
10.8
%
3.79
%
3.78
%
2029
888,120
11,500
899,620
10.7
%
3.30
%
3.30
%
2030
1,148,462
12,700
1,161,162
13.8
%
2.53
%
2.54
%
2031
528,500
39,800
568,300
6.7
%
1.94
%
2.03
%
2032
—
28,100
28,100
0.3
%
—
2.93
%
2033
550,000
2,300
552,300
6.5
%
5.22
%
5.21
%
2034+
1,950,850
108,600
2,059,450
24.4
%
4.47
%
4.35
%
Subtotal
7,407,957
1,033,300
8,441,257
100.0
%
3.62
%
3.73
%
Deferred Financing Costs and
Unamortized (Discount)
(61,815
)
(13,797
)
(75,612
)
N/A
N/A
N/A
Total
$
7,346,142
$
1,019,503
$
8,365,645
100.0
%
3.62
%
3.73
%
(1)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
(2)
Includes $789.0 million in principal
outstanding on the Company's Commercial Paper Program.
Equity Residential
Selected Unsecured Public Debt
Covenants
September 30,
June 30,
2024
2024
Debt to Adjusted Total Assets (not to
exceed 60%)
28.4%
25.6%
Secured Debt to Adjusted Total Assets (not
to exceed 40%)
6.3%
6.7%
Consolidated Income Available for Debt
Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1)
5.97
6.68
Total Unencumbered Assets to Unsecured
Debt
(must be at least 125%)
457.7%
534.8%
Note: These selected covenants represent
the most restrictive financial covenants relating to ERP Operating
Limited Partnership's ("ERPOP") outstanding public debt securities.
Equity Residential is the general partner of ERPOP.
Selected Credit Ratios
September 30,
June 30,
2024
2024
Total debt to Normalized EBITDAre
4.60x
3.96x
Net debt to Normalized EBITDAre
4.56x
3.92x
Unencumbered NOI as a % of total NOI
89.7%
89.6%
Note: See Normalized EBITDAre Reconciliations for detail.
Equity Residential
Capital Structure as of
September 30, 2024
(Amounts in thousands except for
share/unit and per share amounts)
Secured Debt
$
1,633,414
19.5
%
Unsecured Debt
6,732,231
80.5
%
Total Debt
8,365,645
100.0
%
22.3
%
Common Shares (includes Restricted
Shares)
379,354,738
97.0
%
Units (includes OP Units and Restricted
Units)
11,562,954
3.0
%
Total Shares and Units
390,917,692
100.0
%
Common Share Price at September 30,
2024
$
74.46
29,107,731
99.9
%
Perpetual Preferred Equity (see below)
17,155
0.1
%
Total Equity
29,124,886
100.0
%
77.7
%
Total Market Capitalization
$
37,490,531
100.0
%
Perpetual Preferred Equity as
of September 30, 2024
(Amounts in thousands except for
share and per share amounts)
Series
Call Date
Outstanding Shares
Liquidation Value
Annual Dividend Per
Share
Annual Dividend Amount
Preferred Shares:
8.29% Series K
12/10/26
343,100
$
17,155
$
4.145
$
1,422
Equity Residential
Common Share and Unit
Weighted Average Amounts
Outstanding
Sept. YTD 2024
Sept. YTD 2023
Q3 2024
Q3 2023
Weighted Average Amounts Outstanding
for Net Income Purposes:
Common Shares - basic
378,718,147
378,613,604
378,755,925
378,852,510
Shares issuable from assumed
conversion/vesting of:
- OP Units
10,661,328
11,377,365
10,622,681
11,234,877
- long-term compensation shares/units
1,308,755
1,144,517
1,647,562
1,263,254
Total Common Shares and Units -
diluted
390,688,230
391,135,486
391,026,168
391,350,641
Weighted Average Amounts Outstanding
for FFO and Normalized FFO Purposes:
Common Shares - basic
378,718,147
378,613,604
378,755,925
378,852,510
OP Units - basic
10,661,328
11,377,365
10,622,681
11,234,877
Total Common Shares and OP Units -
basic
389,379,475
389,990,969
389,378,606
390,087,387
Shares issuable from assumed
conversion/vesting of:
- long-term compensation shares/units
1,308,755
1,144,517
1,647,562
1,263,254
Total Common Shares and Units -
diluted
390,688,230
391,135,486
391,026,168
391,350,641
Period Ending Amounts
Outstanding:
Common Shares (includes Restricted
Shares)
379,354,738
379,723,838
Units (includes OP Units and Restricted
Units)
11,562,954
11,733,485
Total Shares and Units
390,917,692
391,457,323
Equity Residential
Development and Lease-Up
Projects as of September 30, 2024
(Amounts in thousands except for
project and apartment unit amounts)
Estimated/Actual
Projects
Location
Ownership Percentage
No. of Apartment Units
Total Budgeted Capital
Cost
Total Book Value to
Date
Total Debt (1)
Percentage Completed
Start Date
Initial Occupancy
Completion Date
Stabilization Date
Percentage Leased /
Occupied
CONSOLIDATED:
Projects Under
Development:
Lorien (fka Laguna Clara II)
Santa Clara, CA
100%
225
$
152,621
$
122,760
$
—
86%
Q2 2022
Q4 2024
Q1 2025
Q4 2025
– / –
The Basin
Wakefield, MA
95%
440
232,172
99,295
—
30%
Q1 2024
Q4 2025
Q3 2026
Q2 2027
– / –
Projects Under Development -
Consolidated
665
384,793
222,055
—
UNCONSOLIDATED:
Projects Under
Development:
Alexan Harrison
Harrison, NY
62%
450
200,664
194,298
104,339
99%
Q3 2021
Q1 2024
Q4 2024
Q2 2026
55% / 47%
Solana Beeler Park
Denver, CO
90%
270
85,206
77,833
43,398
91%
Q4 2021
Q3 2024
Q2 2025
Q4 2025
7% / 1%
Remy (Toll)
Frisco, TX
75%
357
98,937
93,201
47,621
97%
Q1 2022
Q2 2024
Q4 2024
Q3 2025
55% / 51%
Sadie (fka Settler) (Toll)
Fort Worth, TX
75%
362
82,775
75,341
33,675
98%
Q2 2022
Q2 2024
Q4 2024
Q3 2025
44% / 41%
Lyle (Toll) (2)
Dallas, TX
75%
334
86,332
78,282
43,453
96%
Q3 2022
Q1 2024
Q4 2024
Q1 2026
51% / 48%
Modera Bridle Trails
Kirkland, WA
95%
369
185,282
48,741
—
8%
Q3 2024
Q2 2027
Q3 2027
Q4 2028
– / –
Modera South Shore
Marshfield, MA
95%
270
121,918
23,454
—
10%
Q3 2024
Q1 2026
Q4 2026
Q2 2027
– / –
Projects Under Development -
Unconsolidated
2,412
861,114
591,150
272,486
Projects
Completed Not Stabilized:
Alloy Sunnyside
Denver, CO
80%
209
70,004
69,303
32,833
100%
Q3 2021
Q2 2024
Q2 2024
Q3 2025
29% / 23%
Projects Completed Not Stabilized -
Unconsolidated
209
70,004
69,303
32,833
Total Development Projects -
Consolidated
665
384,793
222,055
—
Total Development Projects -
Unconsolidated
2,621
931,118
660,453
305,319
Total Development Projects
3,286
$
1,315,911
$
882,508
$
305,319
NOI CONTRIBUTION FROM DEVELOPMENT
PROJECTS
Total Budgeted Capital Cost
Q3 2024 NOI
Projects Under Development -
Consolidated
$
384,793
$
—
Projects Under Development -
Unconsolidated
861,114
2,461
Projects Completed Not Stabilized -
Unconsolidated
70,004
(330
)
$
1,315,911
$
2,131
(1)
All unconsolidated projects are being
partially funded with project-specific construction loans. None of
these loans are recourse to the Company.
(2)
The land parcel under this project is
subject to a long-term ground lease.
Equity Residential
Capital Expenditures to Real
Estate
For the Nine Months Ended
September 30, 2024
(Amounts in thousands except for
apartment unit and per apartment unit amounts)
Same Store Properties
Non-Same Store
Properties/Other
Total Consolidated Properties
Same Store Avg. Per Apartment
Unit
Total Consolidated Apartment Units
76,916
6,893
83,809
Building Improvements
$
90,648
$
6,943
(2)
$
97,591
$
1,178
Renovation Expenditures
79,695
(1)
8,938
(2)
88,633
1,036
Replacements
43,502
381
43,883
566
Capital Expenditures to Real Estate
(3)
213,845
16,262
230,107
2,780
Less: NOI-Enhancing Expenditures (3)
(98,465
)
(4)
(8,981
)
(107,446
)
(1,280
)
Recurring Capital Expenditures to Real
Estate (3)
$
115,380
$
7,281
$
122,661
$
1,500
(1)
Renovation Expenditures on 2,611 same
store apartment units for the nine months ended September 30, 2024
approximated $30,500 per apartment unit renovated.
(2)
Includes expenditures for two properties
that have been removed from same store while undergoing major
renovations requiring a significant number of apartment units to be
vacated to accommodate the extensive planned improvements. The
renovation at one property was substantially completed in the
second quarter of 2024, while the renovation of the other is
ongoing and expected to continue into 2026.
(3)
See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for
additional details.
(4)
The $98.5 million of NOI-Enhancing
Expenditures for Same Store Properties noted above consists of the
$79.7 million of Renovation Expenditures for Same Store Properties
noted above with the remainder concentrated in sustainability and
property-level technology spend.
Equity Residential
Normalized EBITDAre
Reconciliations
(Amounts in thousands)
Trailing Twelve Months
2024
2023
September 30, 2024
June 30, 2024
Q3
Q2
Q1
Q4
Q3
Net income
$
959,373
$
992,142
$
148,517
$
183,555
$
305,032
$
322,269
$
181,286
Interest expense incurred, net
274,436
270,605
72,722
65,828
67,212
68,674
68,891
Amortization of deferred financing
costs
7,702
8,781
1,948
1,918
1,918
1,918
3,027
Amortization of above/below market lease
intangibles
4,476
4,464
1,128
1,116
1,116
1,116
1,116
Depreciation
914,829
901,617
237,948
224,398
225,695
226,788
224,736
Income and other tax expense (benefit)
1,181
1,149
290
331
304
256
258
EBITDA
2,161,997
2,178,758
462,553
477,146
601,277
621,021
479,314
Net (gain) loss on sales of real estate
properties
(383,334
)
(410,411
)
165
(39,809
)
(188,185
)
(155,505
)
(26,912
)
Net (gain) loss on sales of unconsolidated
entities - operating assets
(710
)
—
(710
)
—
—
—
—
EBITDAre
1,777,953
1,768,347
462,008
437,337
413,092
465,516
452,402
Write-off of pursuit costs (other
expenses)
2,813
3,023
536
821
548
908
746
(Income) loss from investments in
unconsolidated entities - operations
7,106
6,145
2,203
1,674
1,698
1,531
1,242
Realized (gain) loss on investment
securities (interest and other income)
1,323
(275
)
—
1,316
—
7
(1,598
)
Unrealized (gain) loss on investment
securities (interest and other income)
(28,885
)
(19,211
)
(14,135
)
1,316
(7,061
)
(9,005
)
(4,461
)
Insurance/litigation settlement or reserve
income (interest and other income)
(1,584
)
(1,621
)
(25
)
(1,454
)
(105
)
—
(62
)
Insurance/litigation/environmental
settlement or reserve expense (other expenses)
48,762
48,667
3,199
9,391
30,478
5,694
3,104
Advocacy contributions (other
expenses)
13,948
4,514
9,584
2,558
141
1,665
150
Data transformation project (other
expenses)
—
295
—
—
—
—
295
Other
(937
)
(936
)
—
(412
)
77
(602
)
1
Normalized EBITDAre
$
1,820,499
$
1,808,948
$
463,370
$
452,547
$
438,868
$
465,714
$
451,819
Balance Sheet Items:
September 30, 2024
June 30, 2024
Total debt
$
8,365,645
$
7,157,183
Cash and cash equivalents
(28,610
)
(38,298
)
Mortgage principal reserves/sinking
funds
(33,124
)
(33,266
)
Net debt
$
8,303,911
$
7,085,619
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)
Nine Months Ended September
30,
Quarter Ended September
30,
2024
2023
Variance
2024
2023
Variance
Impairment – non-operating real estate
assets
$
—
$
—
$
—
$
—
$
—
$
—
Write-off of pursuit costs (other
expenses)
1,905
2,739
(834
)
536
746
(210
)
Write-off of unamortized deferred
financing costs (interest expense)
—
1,143
(1,143
)
—
1,096
(1,096
)
Premium on redemption of Preferred
Shares
1,444
—
1,444
—
—
—
Debt extinguishment and preferred share
redemption (gains) losses
1,444
1,143
301
—
1,096
(1,096
)
(Income) loss from investments in
unconsolidated entities ─ non-operating assets
1,112
1,237
(125
)
(101
)
293
(394
)
Realized (gain) loss on investment
securities (interest and other income)
1,316
(1,511
)
2,827
—
(1,598
)
1,598
Unrealized (gain) loss on investment
securities (interest and other income)
(19,880
)
(4,461
)
(15,419
)
(14,135
)
(4,461
)
(9,674
)
Non-operating asset (gains) losses
(17,452
)
(4,735
)
(12,717
)
(14,236
)
(5,766
)
(8,470
)
Insurance/litigation settlement or reserve
income (interest and other income)
(1,584
)
(1,055
)
(529
)
(25
)
(62
)
37
Insurance/litigation/environmental
settlement or reserve expense (other expenses) (1)
43,068
11,616
31,452
3,199
3,104
95
Advocacy contributions (other
expenses)
12,283
477
11,806
9,584
150
9,434
Data transformation project (other
expenses)
—
3,780
(3,780
)
—
295
(295
)
Other
(335
)
13
(348
)
—
1
(1
)
Other miscellaneous items
53,432
14,831
38,601
12,758
3,488
9,270
Adjustments from FFO to Normalized FFO
$
39,329
$
13,978
$
25,351
$
(942
)
$
(436
)
$
(506
)
(1)
Insurance/litigation/environmental
settlement or reserve expense for the third quarter of 2024
primarily represents reserve adjustments related to a commercial
dispute and other litigation expenses, while the expense for the
nine months ended September 30, 2024 primarily relates to a reserve
increased in the first quarter of 2024 regarding litigation over
late fees charged by the Company.
Note: See Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms for the
definitions of non-GAAP financial measures and other terms as well
as the reconciliations of EPS to FFO per share and Normalized FFO
per share.
Equity Residential
Normalized FFO Guidance and
Assumptions
The guidance/projections provided below are based on current
expectations and are forward-looking. All guidance is given on a
Normalized FFO basis. Therefore, certain items excluded from
Normalized FFO, such as debt extinguishment costs/prepayment
penalties and the write-off of pursuit costs, are not included in
the estimates provided on this page. See Additional Reconciliations
and Definitions of Non-GAAP Financial Measures and Other Terms for
the definitions of non-GAAP financial measures and other terms as
well as the reconciliations of EPS to FFO per share and Normalized
FFO per share.
Q4 2024
Revised Full Year 2024
Previous Full Year
2024
2024 Normalized
FFO Guidance (per share diluted)
Expected Normalized FFO Per Share
$0.98 to $1.02
$3.87 to $3.91
$3.86 to $3.92
2024 Same Store
Assumptions (includes Residential and
Non-Residential)
Physical Occupancy
96.2%
96.2%
Revenue change
2.9% to 3.5%
2.9% to 3.5%
Expense change
2.5% to 3.5%
2.5% to 3.5%
NOI change (1)
3.0% to 3.5%
3.0% to 3.5%
2024 Transaction
Assumptions
Consolidated rental acquisitions
$1.6B
$1.0B
Consolidated rental dispositions
$800.0M
$1.0B
Transaction Accretion (Dilution)
(25 basis points)
(25 basis points)
2024 Debt
Assumptions
Weighted average debt outstanding
$7.73B to $7.78B
$7.30B to $7.50B
Interest expense, net (on a Normalized FFO
basis)
$283.5M to $287.5M
$267.3M to $273.3M
Capitalized interest
$14.0M to $15.0M
$12.5M to $15.5M
2024 Capital
Expenditures to Real Estate Assumptions for Same Store Properties
(2)
Capital Expenditures to Real Estate for
Same Store Properties
$295.0M
$295.0M
Capital Expenditures to Real Estate per
Same Store Apartment Unit
$3,800
$3,800
2024 Other
Guidance Assumptions
Property management expense
$128.5M to $131.5M
$128.5M to $131.5M
General and administrative expense
$59.5M to $63.5M
$59.5M to $63.5M
Debt offerings
$600.0M
No amounts budgeted
Weighted average Common Shares and Units -
Diluted
390.9M
390.7M
(1)
Approximately 20 basis point change in NOI
percentage = $0.01 per share change in EPS/FFO per share/Normalized
FFO per share.
(2)
During 2024, the Company expects that
approximately 40% of its Capital Expenditures to Real Estate for
Same Store Properties will be NOI-Enhancing (primarily renovations,
sustainability and property-level technology spend). During 2024,
the Company expects to spend approximately $99.2 million for
apartment unit Renovation Expenditures on approximately 3,100 same
store apartment units at an average cost of approximately $32,000
per apartment unit renovated with the remainder of the
NOI-Enhancing spend consisting of sustainability and property-level
technology expenditures.
Equity Residential
Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms
(Amounts in thousands except per
share and per apartment unit data)
(All per share data is
diluted)
This Earnings Release and Supplemental Financial Information
includes certain non-GAAP financial measures and other terms that
management believes are helpful in understanding our business. The
definitions and calculations of these non-GAAP financial measures
and other terms may differ from the definitions and methodologies
used by other real estate investment trusts (“REIT”) and,
accordingly, may not be comparable. These non-GAAP financial
measures should not be considered as an alternative to net earnings
or any other measurement of performance computed in accordance with
accounting principles generally accepted in the United States
(“GAAP”) or as an alternative to cash flows from specific
operating, investing or financing activities. Furthermore, these
non-GAAP financial measures are not intended to be a measure of
cash flow or liquidity.
Acquisition Capitalization Rate or Cap Rate – NOI that
the Company anticipates receiving in the next 12 months (or the
year two or three stabilized NOI for properties that are in
lease-up at acquisition) less an estimate of property management
costs/management fees allocated to the project (generally ranging
from 2.0% to 4.0% of revenues depending on the size and income
streams of the asset) and less an estimate for in-the-unit
replacement capital expenditures (generally ranging from $100-$450
per apartment unit depending on the age and condition of the asset)
divided by the gross purchase price of the asset. The weighted
average Acquisition Cap Rate for acquired properties is weighted
based on the projected NOI streams and the relative purchase price
for each respective property.
Average Rental Rate – Total Residential rental revenues
reflected on a straight-line basis in accordance with GAAP divided
by the weighted average occupied apartment units for the reporting
period presented.
Bad Debt, Net – Change in rental income due to bad debt
write-offs and reserves, net of amounts collected on previously
written-off or reserved accounts.
Blended Rate – The weighted average of New Lease Change
and Renewal Rate Achieved.
Capital Expenditures to Real
Estate:
Building Improvements – Includes roof
replacement, paving, building mechanical equipment systems,
exterior siding and painting, major landscaping, furniture,
fixtures and equipment for amenities and common areas, vehicles and
office and maintenance equipment.
NOI-Enhancing – Primarily includes
Renovation Expenditures as well as sustainability and
property-level technology expenditures that are intended to
increase revenues or decrease expenses.
Recurring – Capital expenditures
necessary to help preserve the value of and maintain the
functionality at our apartment properties.
Renovation Expenditures – Apartment
unit renovation costs (primarily kitchens and baths) designed to
reposition these units for higher rental levels in their respective
markets.
Replacements – Includes appliances,
mechanical equipment, fixtures and flooring (including hardwood and
carpeting).
Debt Balances:
Commercial Paper Program – The Company
may borrow up to a maximum of $1.0 billion under its Commercial
Paper Program subject to market conditions. The notes bear interest
at various floating rates.
Revolving Credit Facility – The
Company’s $2.5 billion unsecured revolving credit facility matures
October 26, 2027. The interest rate on advances under the facility
will generally be SOFR plus a spread (currently 0.715%), or based
on bids received from the lending group, and an annual facility fee
(currently 0.125%). Both the spread and the facility fee are
dependent on the Company’s senior unsecured credit rating and other
terms and conditions per the agreement. 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:
September 30, 2024
Unsecured revolving credit facility
commitment
$
2,500,000
Commercial paper balance outstanding
(789,000
)
Unsecured revolving credit facility
balance outstanding
—
Other restricted amounts
(3,438
)
Unsecured revolving credit facility
availability
$
1,707,562
Debt Covenant Compliance – Our unsecured debt includes
certain financial and operating covenants including, among other
things, maintenance of certain financial ratios. These provisions
are contained in the indentures applicable to each notes payable or
the credit agreement for our line of credit. The Debt Covenant
Compliance ratios that are provided show the Company's compliance
with certain covenants governing our public unsecured debt. These
covenants generally reflect our most restrictive financial
covenants. The Company was in compliance with its unsecured debt
covenants for all periods presented.
Development Yield – NOI that the Company anticipates
receiving in the next 12 months following stabilization less an
estimate of property management costs/management fees allocated to
the project (generally ranging from 2.0% to 4.0% of revenues
depending on the size and income streams of the asset) and less an
estimate for in-the-unit replacement capital expenditures
(generally ranging from $50-$150 per apartment unit depending on
the type of asset) divided by the Total Budgeted Capital Cost of
the asset. The weighted average Development Yield for development
properties is weighted based on the projected NOI streams and the
relative Total Budgeted Capital Cost for each respective
property.
Disposition Yield – NOI that the Company anticipates
giving up in the next 12 months less an estimate of property
management costs/management fees allocated to the project
(generally ranging from 2.0% to 4.0% of revenues depending on the
size and income streams of the asset) and less an estimate for
in-the-unit replacement capital expenditures (generally ranging
from $150-$450 per apartment unit depending on the age and
condition of the asset) divided by the gross sales price of the
asset. The weighted average Disposition Yield for sold properties
is weighted based on the projected NOI streams and the relative
sales price for each respective property.
Earnings Per Share ("EPS") – Net income per share
calculated in accordance with GAAP. Expected EPS is calculated on a
basis consistent with actual EPS. Due to the uncertain timing and
extent of property dispositions and the resulting gains/losses on
sales, actual EPS could differ materially from expected EPS.
EBITDA for Real Estate and Normalized
EBITDA for Real Estate:
Earnings Before Interest, Taxes,
Depreciation and Amortization for Real Estate (“EBITDAre”) –
The National Association of Real Estate Investment Trusts
(“Nareit”) defines EBITDAre (September 2017 White Paper) as net
income (computed in accordance with GAAP) before interest expense,
income taxes, depreciation and amortization expense, and further
adjusted for gains and losses from sales of depreciated operating
properties, impairment write-downs of depreciated operating
properties, impairment write-downs of investments in unconsolidated
entities caused by a decrease in value of depreciated operating
properties within the joint venture and adjustments to reflect the
Company’s share of EBITDAre of investments in unconsolidated
entities.
The Company believes that EBITDAre is useful
to investors, creditors and rating agencies as a supplemental
measure of the Company’s ability to incur and service debt because
it is a recognized measure of performance by the real estate
industry, and by excluding gains or losses related to sales or
impairment of depreciated operating properties, EBITDAre can help
compare the Company’s credit strength between periods or as
compared to different companies.
Normalized Earnings Before Interest,
Taxes, Depreciation and Amortization for Real Estate (“Normalized
EBITDAre”) – Represents net income (computed in accordance with
GAAP) before interest expense, income taxes, depreciation and
amortization expense, and further adjusted for non-comparable
items. Normalized EBITDAre, total debt to Normalized EBITDAre and
net debt to Normalized EBITDAre are important metrics in evaluating
the credit strength of the Company and its ability to service its
debt obligations. The Company believes that Normalized EBITDAre,
total debt to Normalized EBITDAre, and net debt to Normalized
EBITDAre are useful to investors, creditors and rating agencies
because they allow investors to compare the Company’s credit
strength to prior reporting periods and to other companies without
the effect of items that by their nature are not comparable from
period to period and tend to obscure the Company’s actual credit
quality.
Economic Gain (Loss) – Economic Gain (Loss) is calculated
as the net gain (loss) on sales of real estate properties in
accordance with GAAP, excluding accumulated depreciation. The
Company generally considers Economic Gain (Loss) to be an
appropriate supplemental measure to net gain (loss) on sales of
real estate properties in accordance with GAAP because it is one
indication of the gross value created by the Company's acquisition,
development, renovation, management and ultimate sale of a property
and because it helps investors to understand the relationship
between the cash proceeds from a sale and the cash invested in the
sold property. The following table presents a reconciliation of net
gain (loss) on sales of real estate properties in accordance with
GAAP to Economic Gain (Loss):
Nine Months Ended September
30, 2024
Quarter Ended September 30,
2024
Net Gain (Loss) on Sales of Real Estate
Properties
$
227,829
$
(165
)
Accumulated Depreciation Gain
(111,596
)
(14,921
)
Economic Gain (Loss)
$
116,233
$
(15,086
)
Established Markets – Includes Boston, New York,
Washington, D.C., Seattle, San Francisco and Southern California
(Los Angeles, Orange County and San Diego).
Expansion Markets – Includes Denver, Atlanta, Dallas/Ft.
Worth and Austin.
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 Sept.
Actual Sept.
Actual
Actual
Expected
Expected
YTD 2024
YTD 2023
Q3 2024
Q3 2023
Q4 2024
2024
Per Share
Per Share
Per Share
Per Share
Per Share
Per Share
EPS – Diluted
$
1.62
$
1.38
$
0.38
$
0.45
$1.01 to $1.05
$2.63 to $2.67
Depreciation expense
1.76
1.68
0.61
0.57
0.67
2.43
Net (gain) loss on sales
(0.59
)
(0.32
)
—
(0.06
)
(0.73
)
(1.32
)
Impairment – operating real estate
assets
—
—
—
—
—
—
FFO per share – Diluted
2.79
2.74
0.99
0.96
0.95 to 0.99
3.74 to 3.78
Adjustments (1):
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
(0.04
)
(0.01
)
(0.04
)
(0.01
)
—
(0.04
)
Other miscellaneous items
0.14
0.04
0.03
0.01
0.03
0.16
Normalized FFO per share – Diluted
$
2.89
$
2.78
$
0.98
$
0.96
$0.98 to $1.02
$3.87 to $3.91
(1) See Adjustments from FFO to
Normalized FFO for additional detail.
Lease-Up NOI – Represents NOI for development properties:
(i) in various stages of lease-up; and (ii) where lease-up has been
completed but the properties were not stabilized (defined as having
achieved 90% occupancy for three consecutive months) for all of the
current and comparable periods presented.
Leasing Concessions – Reflects upfront discounts on both
new move-in and renewal leases on a straight-line basis.
Net Operating Income (“NOI”) – NOI is the Company’s
primary financial measure for evaluating each of its apartment
properties. NOI is defined as rental income less direct property
operating expenses (including real estate taxes and insurance). The
Company believes that NOI is helpful to investors as a supplemental
measure of its operating performance because it is a direct measure
of the actual operating results of the Company's apartment
properties. NOI does not include an allocation of property
management expenses either in the current or comparable periods.
Rental income for all leases and operating expense for ground
leases (for both same store and non-same store properties) are
reflected on a straight-line basis in accordance with GAAP for the
current and comparable periods.
The following tables present reconciliations of net income per
the consolidated statements of operations to NOI, along with rental
income, operating expenses and NOI per the consolidated statements
of operations allocated between same store and non-same store/other
results and further allocated between Residential same store and
Non-Residential same store results (see Same Store Results):
Nine Months Ended September
30,
Quarter Ended September
30,
2024
2023
2024
2023
Net income
$
637,104
$
546,219
$
148,517
$
181,286
Adjustments:
Property management
100,381
90,314
31,412
28,169
General and administrative
48,902
49,135
14,551
14,094
Depreciation
688,041
661,921
237,948
224,736
Net (gain) loss on sales of real estate
properties
(227,829
)
(127,034
)
165
(26,912
)
Interest and other income
(26,501
)
(11,296
)
(15,844
)
(7,627
)
Other expenses
59,094
20,517
13,971
4,958
Interest:
Expense incurred, net
205,762
200,882
72,722
68,891
Amortization of deferred financing
costs
5,784
7,023
1,948
3,027
Income and other tax expense (benefit)
925
892
290
258
(Income) loss from investments in
unconsolidated entities
4,865
3,847
1,493
1,242
Total NOI
$
1,496,528
$
1,442,420
$
507,173
$
492,122
Nine Months Ended September
30,
Quarter Ended September
30,
Rental income:
2024
2023
2024
2023
Residential same store
$
2,069,756
$
2,007,129
$
696,686
$
679,652
Non-Residential same store
81,519
76,578
25,622
23,718
Total same store
2,151,275
2,083,707
722,308
703,370
Non-same store/other
62,054
62,757
26,040
20,697
Total rental income
2,213,329
2,146,464
748,348
724,067
Operating expenses:
Residential same store
661,935
647,350
222,696
216,121
Non-Residential same store
22,407
21,283
7,402
6,926
Total same store
684,342
668,633
230,098
223,047
Non-same store/other
32,459
35,411
11,077
8,898
Total operating expenses
716,801
704,044
241,175
231,945
NOI:
Residential same store
1,407,821
1,359,779
473,990
463,531
Non-Residential same store
59,112
55,295
18,220
16,792
Total same store
1,466,933
1,415,074
492,210
480,323
Non-same store/other
29,595
27,346
14,963
11,799
Total NOI
$
1,496,528
$
1,442,420
$
507,173
$
492,122
New Lease Change – The net effective change in rent
(inclusive of Leasing Concessions) for a lease with a new or
transferring resident compared to the rent for the prior lease of
the identical apartment unit, regardless of lease term.
Non-Residential – Consists of revenues and expenses from
retail and public parking garage operations.
Non-Same Store Properties – For annual comparisons,
primarily includes all properties acquired during 2023 and 2024,
plus any properties in lease-up and not stabilized as of January 1,
2023. Unless otherwise noted, includes both Residential and
Non-Residential operations for these properties.
Percentage of Residents Renewing – Leases renewed
expressed as a percentage of total renewal offers extended during
the reporting period.
Physical Occupancy – The weighted average occupied
apartment units for the reporting period divided by the average of
total apartment units available for rent for the reporting
period.
Pricing Trend – Weighted average of 12-month base rent
including amenity amount less Leasing Concessions on 12-month
signed leases for the reporting period.
Renewal Rate Achieved – The net effective change in rent
(inclusive of Leasing Concessions) for a new lease on an apartment
unit where the lease has been renewed as compared to the rent for
the prior lease of the identical apartment unit, regardless of
lease term.
Residential – Consists of multifamily apartment revenues
and expenses.
Same Store Operating
Expenses:
Insurance – Includes third-party
insurance premiums, broker fees and other insurance-related
procurement fees along with an allocation of estimated uninsured
losses.
On-site Payroll – Includes payroll and
related expenses for on-site personnel including property managers,
leasing consultants and maintenance staff.
Other On-site Operating Expenses –
Includes ground lease costs and administrative costs such as office
supplies, telephone and data charges and association and business
licensing fees.
Repairs and Maintenance – Includes
general maintenance costs, apartment unit turnover costs including
interior painting, routine landscaping, security, exterminating,
fire protection, snow removal, elevator, roof and parking lot
repairs and other miscellaneous building repair and maintenance
costs.
Utilities – Represents gross expenses
prior to any recoveries under the Resident Utility Billing System
(“RUBS”). Recoveries are reflected in rental income.
Same Store Properties – For annual comparisons, primarily
includes all properties acquired or completed that are stabilized
prior to January 1, 2023, less properties subsequently sold.
Properties are included in Same Store when they are stabilized for
all of the current and comparable periods presented. Unless
otherwise noted, includes both Residential and Non-Residential
operations for these properties.
Same Store Residential Revenues – Revenues from our
Residential Same Store Properties only presented on a GAAP basis
which reflects the impact of Leasing Concessions on a straight-line
basis.
Same Store Residential Revenues with Leasing Concessions on a
cash basis is presented in Same Store Results and is considered by
the Company to be a supplemental measure to Same Store Residential
Revenues in conformity with GAAP to help investors evaluate the
impact of both current and historical Leasing Concessions on
GAAP-based Same Store Residential Revenues and to more readily
enable comparisons to revenue as reported by other companies. Same
Store Residential Revenues with Leasing Concessions on a cash basis
reflects the impact of Leasing Concessions used in the period and
allows an investor to understand the historical trend in cash
Leasing Concessions.
% of Stabilized Budgeted NOI – Represents original
budgeted 2024 NOI for stabilized properties and projected annual
NOI at stabilization (defined as having achieved 90% occupancy for
three consecutive months) for properties that are in lease-up.
Total Budgeted Capital Cost – Estimated remaining cost
for projects under development and/or developed plus all
capitalized costs incurred to date, including land acquisition
costs, construction costs, capitalized real estate taxes and
insurance, capitalized interest and loan fees, permits,
professional fees, allocated development overhead and other
regulatory fees, plus any estimates of costs remaining to be funded
for all projects, all in accordance with GAAP. Amounts for
partially owned consolidated and unconsolidated properties are
presented at 100% of the project.
Total Market Capitalization – The aggregate of the market
value of the Company’s outstanding common shares, including
restricted shares, the market value of the Company’s operating
partnership units outstanding, including restricted units (based on
the market value of the Company’s common shares) and the
outstanding principal balance of debt. The Company believes this is
a useful measure of a real estate operating company’s long-term
liquidity and balance sheet strength, because it shows an
approximate relationship between a company’s total debt and the
current total market value of its assets based on the current price
at which the Company’s common shares trade. However, because this
measure of leverage changes with fluctuations in the Company’s
share price, which occur regularly, this measure may change even
when the Company’s earnings, interest and debt levels remain
stable.
Traffic – Consists of an expression of interest in an
apartment by completing an in-person tour, self-guided tour or
virtual tour that may result in an application to lease.
Transaction Accretion (Dilution) – Represents the spread
between the Acquisition Cap Rate and the Disposition Yield.
Turnover – Total Residential move-outs (including
inter-property and intra-property transfers) divided by total
Residential apartment units.
Unencumbered NOI % – Represents NOI generated by
consolidated real estate assets unencumbered by outstanding secured
debt as a percentage of total NOI generated by all of the Company's
consolidated real estate assets.
Weighted Average Coupons – Contractual interest rate for
each debt instrument weighted by principal balances as of September
30, 2024. In case of debt for which fair value hedges are in place,
the rate payable under the corresponding derivatives is used in
lieu of the contractual interest rate.
Weighted Average Rates – Interest expense for each debt
instrument for the nine months ended September 30, 2024 weighted by
its average principal balance for the same period. Interest expense
includes amortization of premiums, discounts and other
comprehensive income on debt and related derivative instruments. In
case of debt for which derivatives are in place, the income or
expense recognized under the corresponding derivatives is included
in the total interest expense for the period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030322876/en/
Marty McKenna 312-928-1901 mmckenna@eqr.com
Equity Residential (NYSE:EQR)
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