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Equity Residential Reports Third Quarter 2022 Results

Strong Performance Driven by Healthy Demand During the Primary Leasing Season

Equity Residential (NYSE: EQR) today reported results for the quarter and nine months ended September 30, 2022 and has posted a Q3 2022 Management Presentation to its website as referenced below.

Third Quarter 2022 Results

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended September 30,

 

 

 

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

Earnings Per Share (EPS)

 

$

0.86

 

 

$

1.15

 

 

$

(0.29

)

 

 

(25.2

%)

 

 

Funds from Operations (FFO) per share

 

$

0.90

 

 

$

0.76

 

 

$

0.14

 

 

 

18.4

%

 

 

Normalized FFO per share

 

$

0.92

 

 

$

0.77

 

 

$

0.15

 

 

 

19.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

Earnings Per Share (EPS)

 

$

1.63

 

 

$

2.14

 

 

$

(0.51

)

 

 

(23.8

%)

 

 

Funds from Operations (FFO) per share

 

$

2.56

 

 

$

2.21

 

 

$

0.35

 

 

 

15.8

%

 

 

Normalized FFO per share

 

$

2.58

 

 

$

2.17

 

 

$

0.41

 

 

 

18.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Our affluent resident base remains well employed with growing incomes, creating strong demand to live in our desirable properties and driving outstanding financial results this quarter. Demand remains solid, albeit with slightly more price sensitivity in San Francisco and Seattle than we expected,” said Mark J. Parrell, Equity Residential’s President and CEO. “The substantial embedded growth in our rent roll and our financially resilient and highly employable resident base leaves us well positioned to deliver above average results in 2023 despite likely macroeconomic turbulence. Longer term, we will continue to benefit from trends such as high single family housing costs, favorable demographics and an overall deficit in housing across the country.”

Recent Highlights

  • The Company reported an 11.8% increase in same store revenue for the third quarter of 2022 compared to the same period of 2021, driven by healthy demand during the primary leasing season. Moderate same store expense growth of 3.5% continued to be driven by favorable real estate tax and payroll expenses.
  • The Company now expects its full year 2022 same store revenue growth to be approximately 10.6%, slightly above its prior midpoint, and has adjusted various guidance ranges as further described in this release and in the Management Presentation referenced below.
  • The Company sold two properties during the quarter for a total sale price of $480.5 million and used the proceeds to pay down $500.0 million in debt due in 2023.
  • The Company recently published its ninth annual Environmental, Social and Governance (ESG) report highlighting Equity Residential’s goals and accomplishments.

Full Year 2022 Guidance

The Company has revised its guidance for its full year 2022 same store operating performance, EPS, FFO per share and Normalized FFO per share as listed below:

 

 

Revised

 

Previous

 

Change at Midpoint

Same Store (includes Residential and Non-Residential):

 

 

 

 

Physical Occupancy

 

96.4%

 

96.5%

 

(0.1%)

Revenue change

 

10.6%

 

10.0% to 11.0%

 

0.1%

Expense change

 

3.3%

 

2.5% to 3.5%

 

0.3%

NOI change

 

14.25%

 

13.75% to 14.75%

 

0.0%

 

 

 

 

 

 

 

EPS

 

$2.02 to $2.04

 

$1.98 to $2.08

 

$0.00

FFO per share

 

$3.49 to $3.51

 

$3.45 to $3.55

 

$0.00

Normalized FFO per share

 

$3.52 to $3.54

 

$3.48 to $3.58

 

$0.00

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 28 through 33 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 6, 30 and 31 of this release.

Results Per Share

The changes in EPS for the quarter and nine months ended September 30, 2022 compared to the same periods of 2021 are due primarily to lower property sale gains and higher depreciation expense in the current periods, offset by the various adjustment items listed on page 26 of this release and the items described below.

The per share changes in FFO for the quarter and nine months ended September 30, 2022 compared to the same periods of 2021 are due primarily to the various adjustment items listed on page 26 of this release and the items described below.

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

 

 

Positive/(Negative) Impact

 

 

Third Quarter 2022 vs.

Third Quarter 2021

 

September YTD 2022 vs.

September YTD 2021

Residential same store NOI

 

$

0.16

 

 

$

0.43

 

Non-Residential same store NOI

 

 

 

 

0.01

 

Lease-Up NOI

 

 

0.02

 

 

 

0.04

 

2022 and 2021 transaction activity impact on NOI, net

 

(0.01

)

 

 

0.01

 

Interest expense, net

 

 

 

 

(0.03

)

Corporate overhead (1)

 

 

(0.01

)

 

 

(0.03

)

Other items

 

 

(0.01

)

 

 

(0.02

)

Net

 

$

0.15

 

 

$

0.41

 

(1)

Corporate overhead includes property management and general and administrative expenses.

Same Store Results

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

 

 

Third Quarter 2022 vs.

Third Quarter 2021

 

Third Quarter 2022 vs.

Second Quarter 2022

 

September YTD 2022 vs.

September YTD 2021

Apartment Units

 

73,402

 

77,788

 

72,869

Physical Occupancy

 

96.5% vs. 96.6%

 

96.4% vs. 96.7%

 

96.5% vs. 95.9%

 

 

 

 

 

 

 

Revenues

 

11.8%

 

2.1%

 

11.1%

Expenses

 

3.5%

 

4.6%

 

3.0%

NOI

 

16.2%

 

0.9%

 

15.3%

On page 10 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 32 of this release. Non-Residential operations account for approximately 3.7% of total revenues for the nine months ended September 30, 2022.

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 2022 vs.

Third Quarter 2021

 

Third Quarter 2022 vs.

Second Quarter 2022

 

September YTD 2022 vs.

September YTD 2021

 

 

% Change

 

% Change

 

% Change

Same Store Residential Revenues-

 

 

 

 

 

comparable period

Lease rates

 

10.8

%

 

3.6

%

 

7.8

%

Leasing Concessions

 

1.7

%

 

0.1

%

 

1.7

%

Vacancy gain (loss)

 

(0.7

%)

 

(0.6

%)

 

0.2

%

Bad Debt, Net (1)

 

(0.3

%)

 

(1.2

%)

 

0.9

%

Other (2)

 

0.6

%

 

0.2

%

 

0.6

%

Same Store Residential Revenues-

current period

12.1

%

 

2.1

%

 

11.2

%

(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. The negative contributions to revenue growth in the quarter and sequentially in this category are due to lower resident payments from governmental rental assistance as the programs wind down.

(2)

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

See page 11 for detail and reconciliations of Same Store Residential Revenues on a GAAP basis to Same Store Residential Revenues with Leasing Concessions on a cash basis.

Residential Same Store Operating Statistics

The following table includes select operating metrics for Residential Same Store Properties (for 72,869 same store apartment units):

 

 

Q2 2022

 

Q3 2022

 

October 2022 (1)

Physical Occupancy

 

96.7%

 

96.5%

 

96.2%

Percentage of Residents Renewing by quarter/month

56.3%

 

53.8%

 

56.0%

 

 

 

 

 

 

 

New Lease Change

 

19.1%

 

13.0%

 

5.3%

Renewal Rate Achieved

 

11.2%

 

10.0%

 

8.9%

Blended Rate

 

14.8%

 

11.3%

 

7.4%

(1)

October 2022 results are preliminary. October 2022 operating metrics are generally consistent with the Company's expectations and are being driven by a more challenging 2021 comparable period and slightly greater price sensitivity in Seattle and San Francisco.

Investment Activity

The Company did not acquire any operating properties during the third quarter of 2022 but did enter into separate unconsolidated joint ventures to develop vacant land parcels in Frisco, Texas (further described below) and suburban Boston at a total cost of approximately $56.9 million. During the first nine months of 2022, the Company acquired a 172-unit apartment property in San Diego, built in 2020, for $113.0 million at an Acquisition Cap Rate of 3.5% as well as the two land parcels discussed above.

During the third quarter of 2022, the Company sold a 455-unit apartment property in New York, built in 2001, for $415.0 million at a Disposition Yield of 3.4%, and a 136-unit apartment property in Washington, D.C., built in 1962, for $65.5 million at a Disposition Yield of 4.3%. These two asset sales generated an Unlevered IRR of 4.6%. During the first nine months of 2022, the Company sold three properties for a total sale price of approximately $746.2 million at a weighted average Disposition Yield of 3.4%, generating an Unlevered IRR of 5.3%.

Also during the third quarter of 2022, the Company began activity on two unconsolidated projects as part of its joint venture with Toll Brothers. The Company began construction on Lyle, a 334-unit apartment property in Dallas, Texas and entered into a joint venture on Remy, a 357-unit apartment property in Frisco, Texas that began construction in the first quarter of 2022.

Capital Markets Activity

In August 2022, the Company used proceeds from the property sales described above and cash on hand to redeem at par its $500.0 million in 3.0% unsecured notes originally due to mature in April 2023, substantially reducing its 2023 maturities. In conjunction with the redemption, the Company recorded $3.8 million in non-cash write-offs of unamortized debt discounts and deferred financing costs which are not included in Normalized FFO.

In October 2022, the Company settled all of its outstanding forward equity sales agreements under its At-The-Market (ATM) share offering program, which were entered into during the third quarter of 2021. As a result, it issued 1,740,550 common shares at $80.22 per share and received total proceeds of approximately $139.6 million.

Fourth Quarter 2022 Guidance

The Company has established guidance ranges for the fourth quarter of 2022 EPS, FFO per share and Normalized FFO per share as listed below:

 

 

Q4 2022

Guidance

EPS

 

$0.39 to $0.41

FFO per share

 

$0.93 to $0.95

Normalized FFO per share

 

$0.94 to $0.96

The difference between the third quarter of 2022 actual EPS of $0.86 and the fourth quarter of 2022 EPS guidance midpoint of $0.40 is due primarily to lower expected property sale gains, partially offset by higher expected Residential same store NOI.

The difference between the third quarter of 2022 actual FFO of $0.90 per share and the fourth quarter of 2022 FFO guidance midpoint of $0.94 per share is due primarily to higher expected Residential same store NOI.

The difference between the third quarter of 2022 actual Normalized FFO of $0.92 per share and the fourth quarter of 2022 Normalized FFO guidance midpoint of $0.95 per share is due primarily to higher expected Residential same store NOI.

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 308 properties consisting of 79,594 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, competition and government regulation. In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic. These and other risks and uncertainties are described under the heading “Risk Factors” in our Annual Report on Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityapartments.com. Many of these uncertainties and risks are difficult to predict and beyond management’s control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

A live web cast of the Company’s conference call discussing these results will take place tomorrow, Wednesday, October 26, 2022 at 10:00 a.m. CT. In connection with the conference call, the Company is also providing a Management Presentation on its website. Please visit the Investor section of the Company’s website at www.equityapartments.com for the webcast link and the presentation.

Equity Residential

Consolidated Statements of Operations

(Amounts in thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Quarter Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

2,035,477

 

 

$

1,818,867

 

 

$

695,099

 

 

$

623,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Property and maintenance

 

 

365,277

 

 

 

341,261

 

 

 

124,048

 

 

 

116,461

 

Real estate taxes and insurance

 

 

302,899

 

 

 

297,780

 

 

 

100,361

 

 

 

96,909

 

Property management

 

 

83,035

 

 

 

74,357

 

 

 

25,729

 

 

 

23,772

 

General and administrative

 

 

47,033

 

 

 

43,102

 

 

 

13,372

 

 

 

13,041

 

Depreciation

 

 

667,896

 

 

 

616,032

 

 

 

214,129

 

 

 

215,397

 

Total expenses

 

 

1,466,140

 

 

 

1,372,532

 

 

 

477,639

 

 

 

465,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on sales of real estate properties

 

 

304,346

 

 

 

587,623

 

 

 

196,551

 

 

 

363,928

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

873,683

 

 

 

1,033,958

 

 

 

414,011

 

 

 

521,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

4,844

 

 

 

25,293

 

 

 

720

 

 

 

973

 

Other expenses

 

 

(9,191

)

 

 

(10,908

)

 

 

(3,755

)

 

 

(3,456

)

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred, net

 

 

(217,093

)

 

 

(202,733

)

 

 

(72,412

)

 

 

(68,251

)

Amortization of deferred financing costs

 

 

(6,421

)

 

 

(6,172

)

 

 

(2,220

)

 

 

(2,048

)

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

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

 

 

645,822

 

 

 

839,438

 

 

 

336,344

 

 

 

448,772

 

Income and other tax (expense) benefit

 

 

(725

)

 

 

(679

)

 

 

(152

)

 

 

(284

)

Income (loss) from investments in unconsolidated entities

 

 

(3,456

)

 

 

(3,028

)

 

 

(1,027

)

 

 

(1,156

)

Net gain (loss) on sales of land parcels

 

 

 

 

 

5

 

 

 

 

 

 

 

Net income

 

 

641,641

 

 

 

835,736

 

 

 

335,165

 

 

 

447,332

 

Net (income) loss attributable to Noncontrolling Interests:

 

 

 

 

 

 

 

 

 

 

 

 

Operating Partnership

 

 

(21,024

)

 

 

(27,903

)

 

 

(10,997

)

 

 

(14,847

)

Partially Owned Properties

 

 

(2,726

)

 

 

(1,957

)

 

 

(1,143

)

 

 

(534

)

Net income attributable to controlling interests

 

 

617,891

 

 

 

805,876

 

 

 

323,025

 

 

 

431,951

 

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

Net income available to Common Shares

 

$

615,573

 

 

$

803,558

 

 

$

322,252

 

 

$

431,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.64

 

 

$

2.15

 

 

$

0.86

 

 

$

1.15

 

Weighted average Common Shares outstanding

 

 

375,710

 

 

 

373,474

 

 

 

375,850

 

 

 

374,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.63

 

 

$

2.14

 

 

$

0.86

 

 

$

1.15

 

Weighted average Common Shares outstanding

 

 

389,394

 

 

 

387,642

 

 

 

389,300

 

 

 

388,374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

1.875

 

 

$

1.8075

 

 

$

0.625

 

 

$

0.6025

 

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Quarter Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Net income

 

$

641,641

 

 

$

835,736

 

 

$

335,165

 

 

$

447,332

 

Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties

 

(2,726

)

 

 

(1,957

)

 

 

(1,143

)

 

 

(534

)

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

Net income available to Common Shares and Units

 

 

636,597

 

 

 

831,461

 

 

 

333,249

 

 

 

446,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

667,896

 

 

 

616,032

 

 

 

214,129

 

 

 

215,397

 

Depreciation – Non-real estate additions

 

 

(3,189

)

 

 

(3,228

)

 

 

(1,075

)

 

 

(1,052

)

Depreciation – Partially Owned Properties

 

 

(2,097

)

 

 

(2,676

)

 

 

(543

)

 

 

(994

)

Depreciation – Unconsolidated Properties

 

 

1,897

 

 

 

1,867

 

 

 

657

 

 

 

634

 

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

 

 

(9

)

 

 

(4

)

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(304,346

)

 

 

(587,623

)

 

 

(196,551

)

 

 

(363,928

)

FFO available to Common Shares and Units

 

 

996,749

 

 

 

855,829

 

 

 

349,866

 

 

 

296,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (see note for additional detail):

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating assets

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

3,296

 

 

 

3,557

 

 

 

781

 

 

 

910

 

Debt extinguishment and preferred share redemption (gains) losses

 

 

4,316

 

 

 

264

 

 

 

3,847

 

 

 

 

Non-operating asset (gains) losses

 

 

(1,174

)

 

 

(23,014

)

 

 

156

 

 

 

294

 

Other miscellaneous items

 

 

1,832

 

 

 

4,520

 

 

 

2,017

 

 

 

1,179

 

Normalized FFO available to Common Shares and Units

 

$

1,005,019

 

 

$

841,156

 

 

$

356,667

 

 

$

298,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

999,067

 

 

$

858,147

 

 

$

350,639

 

 

$

296,855

 

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

FFO available to Common Shares and Units

 

$

996,749

 

 

$

855,829

 

 

$

349,866

 

 

$

296,082

 

FFO per share and Unit – basic

 

$

2.57

 

 

$

2.22

 

 

$

0.90

 

 

$

0.77

 

FFO per share and Unit – diluted

 

$

2.56

 

 

$

2.21

 

 

$

0.90

 

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO

 

$

1,007,337

 

 

$

843,474

 

 

$

357,440

 

 

$

299,238

 

Preferred distributions

 

 

(2,318

)

 

 

(2,318

)

 

 

(773

)

 

 

(773

)

Normalized FFO available to Common Shares and Units

 

$

1,005,019

 

 

$

841,156

 

 

$

356,667

 

 

$

298,465

 

Normalized FFO per share and Unit – basic

 

$

2.59

 

 

$

2.18

 

 

$

0.92

 

 

$

0.77

 

Normalized FFO per share and Unit – diluted

 

$

2.58

 

 

$

2.17

 

 

$

0.92

 

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares and Units outstanding – basic

 

 

387,603

 

 

 

385,841

 

 

 

387,745

 

 

 

386,327

 

Weighted average Common Shares and Units outstanding – diluted

 

389,394

 

 

 

387,642

 

 

 

389,300

 

 

 

388,374

 

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,

 

 

2022

 

2021

ASSETS

 

 

 

 

 

 

Land

 

$

5,580,878

 

 

$

5,814,790

 

Depreciable property

 

 

22,251,673

 

 

 

22,370,811

 

Projects under development

 

 

89,347

 

 

 

24,307

 

Land held for development

 

 

60,165

 

 

 

62,998

 

Investment in real estate

 

 

27,982,063

 

 

 

28,272,906

 

Accumulated depreciation

 

 

(8,813,578

)

 

 

(8,354,282

)

Investment in real estate, net

 

 

19,168,485

 

 

 

19,918,624

 

Investments in unconsolidated entities1

 

 

256,311

��

 

 

127,448

 

Cash and cash equivalents

 

 

44,788

 

 

 

123,832

 

Restricted deposits

 

 

76,679

 

 

 

236,404

 

Right-of-use assets

 

 

465,814

 

 

 

474,713

 

Other assets

 

 

253,328

 

 

 

288,220

 

Total assets

 

$

20,265,405

 

 

$

21,169,241

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Mortgage notes payable, net

 

$

1,967,827

 

 

$

2,191,201

 

Notes, net

 

 

5,340,807

 

 

 

5,835,222

 

Line of credit and commercial paper

 

 

189,557

 

 

 

315,030

 

Accounts payable and accrued expenses

 

 

175,843

 

 

 

107,013

 

Accrued interest payable

 

 

49,652

 

 

 

69,510

 

Lease liabilities

 

 

309,548

 

 

 

312,335

 

Other liabilities

 

 

287,955

 

 

 

353,102

 

Security deposits

 

 

69,247

 

 

 

66,141

 

Distributions payable

 

 

242,695

 

 

 

233,502

 

Total liabilities

 

 

8,633,131

 

 

 

9,483,056

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests – Operating Partnership

 

 

370,537

 

 

 

498,977

 

Equity:

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred Shares of beneficial interest, $0.01 par value;

 

 

 

 

 

 

 

 

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

outstanding as of September 30, 2022 and December 31, 2021

37,280

37,280

Common Shares of beneficial interest, $0.01 par value;

 

 

 

 

 

 

 

 

1,000,000,000 shares authorized; 376,169,253 shares issued

and outstanding as of September 30, 2022 and 375,527,195

shares issued and outstanding as of December 31, 2021

3,762

3,755

Paid in capital

 

 

9,267,450

 

 

 

9,121,122

 

Retained earnings

 

 

1,737,107

 

 

 

1,827,063

 

Accumulated other comprehensive income (loss)

 

 

(872

)

 

 

(34,272

)

Total shareholders’ equity

 

 

11,044,727

 

 

 

10,954,948

 

Noncontrolling Interests:

 

 

 

 

 

 

Operating Partnership

 

 

218,577

 

 

 

214,094

 

Partially Owned Properties

 

 

(1,567

)

 

 

18,166

 

Total Noncontrolling Interests

 

 

217,010

 

 

 

232,260

 

Total equity

 

 

11,261,737

 

 

 

11,187,208

 

Total liabilities and equity

 

$

20,265,405

 

 

$

21,169,241

 

1 Includes $196.0 million and $72.5 million in unconsolidated development projects as of September 30, 2022 and December 31, 2021, respectively. See Development and Lease-Up Projects for additional detail on unconsolidated projects.

Equity Residential

Portfolio Summary

As of September 30, 2022

 

 

 

 

 

 

 

 

% of

Stabilized

 

Average

 

 

 

 

 

Apartment

 

Budgeted

 

Rental

Markets/Metro Areas

 

Properties

 

Units

 

NOI

 

Rate

Established Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

66

 

 

 

15,259

 

 

 

18.8

%

 

$

2,758

 

Orange County

 

 

13

 

 

 

4,028

 

 

 

5.3

%

 

 

2,663

 

San Diego

 

 

12

 

 

 

2,878

 

 

 

4.1

%

 

 

2,853

 

Subtotal – Southern California

 

 

91

 

 

 

22,165

 

 

 

28.2

%

 

 

2,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

44

 

 

 

11,788

 

 

 

16.2

%

 

 

3,204

 

Washington, D.C.

 

 

47

 

 

 

14,715

 

 

 

15.6

%

 

 

2,501

 

New York

 

 

34

 

 

 

8,536

 

 

 

12.6

%

 

 

4,230

 

Boston

 

 

27

 

 

 

7,170

 

 

 

11.5

%

 

 

3,295

 

Seattle

 

 

46

 

 

 

9,525

 

 

 

11.1

%

 

 

2,558

 

Subtotal – Established Markets

 

 

289

 

 

 

73,899

 

 

 

95.2

%

 

 

2,973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expansion Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

8

 

 

 

2,498

 

 

 

2.6

%

 

 

2,340

 

Atlanta

 

 

4

 

 

 

1,215

 

 

 

1.0

%

 

 

2,035

 

Dallas/Ft. Worth

 

 

4

 

 

 

1,241

 

 

 

0.8

%

 

 

1,820

 

Austin

 

 

3

 

 

 

741

 

 

 

0.4

%

 

 

1,765

 

Subtotal – Expansion Markets

 

 

19

 

 

 

5,695

 

 

 

4.8

%

 

 

2,088

 

Total

 

 

308

 

 

 

79,594

 

 

 

100.0

%

 

$

2,910

 

 

 

 

Properties

 

Apartment Units

Wholly Owned Properties

 

293

 

76,480

Partially Owned Properties – Consolidated

 

15

 

 

3,114

 

 

 

308

 

 

79,594

 

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

Equity Residential

Portfolio Rollforward Q3 2022

($ in thousands)

 

 

Properties

Apartment

Units

Purchase

Price

Acquisition

Cap Rate

6/30/2022

310

 

80,227

 

 

 

Acquisitions:

 

 

 

 

Unconsolidated Land Parcels (1)

 

 

$

56,886

 

 

 

 

 

 

 

 

 

 

Sales Price

Disposition

Yield

Dispositions:

 

 

 

 

Consolidated Rental Properties

(2

)

(591

)

$

(480,500

)

(3.5

%)

 

 

 

 

 

Configuration Changes

 

(42

)

 

 

9/30/2022

308

 

79,594

 

 

 

 

 

 

 

Portfolio Rollforward 2022

($ in thousands)

 

 

Properties

Apartment

Units

Purchase

Price

Acquisition

Cap Rate

12/31/2021

310

 

80,407

 

 

 

Acquisitions:

 

 

 

 

Consolidated Rental Properties

1

 

172

 

$

113,000

 

3.5

%

Unconsolidated Land Parcels (1)

 

 

$

56,886

 

 

 

 

 

 

 

 

 

 

Sales Price

Disposition

Yield

Dispositions:

 

 

 

 

Consolidated Rental Properties

(3

)

(945

)

$

(746,150

)

(3.4

%)

 

 

 

 

 

Configuration Changes

 

(40

)

 

 

9/30/2022

308

 

79,594

 

 

 

(1)

The Company entered into separate unconsolidated joint ventures for the purpose of developing vacant land parcels in suburban Dallas/Ft. Worth, TX and suburban Boston, MA. The purchase price listed represents the total consideration for the closing of the respective joint ventures. The Company's total investment in these two joint ventures is approximately $63.2 million as of September 30, 2022. See Development and Lease-Up Projects for additional detail.

Equity Residential

Third Quarter 2022 vs. Third Quarter 2021

Same Store Results/Statistics Including 73,402 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Third Quarter 2022

Third Quarter 2021

 

Residential

 

%

Change

Non-

Residential

%

Change

Total

%

Change

 

Residential

Non-

Residential

Total

Revenues

$

627,320

 

(1)

12.1%

$

23,392

5.7%

$

650,712

11.8%

Revenues

$

559,690

 

$

22,128

$

581,818

Expenses

$

198,980

 

 

3.4%

$

6,052

 

5.8%

$

205,032

 

3.5%

Expenses

$

192,418

 

$

5,721

 

$

198,139

 

NOI

$

428,340

 

 

16.6%

$

17,340

 

5.7%

$

445,680

 

16.2%

NOI

$

367,272

 

$

16,407

 

$

383,679

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,955

 

 

12.3%

 

 

 

 

Average Rental Rate

$

2,632

 

 

 

Physical Occupancy

 

96.5

%

 

(0.1%)

 

 

 

 

Physical Occupancy

 

96.6

%

 

 

Turnover

 

13.8

%

 

0.0%

 

 

 

 

Turnover

 

13.8

%

 

 

 

Third Quarter 2022 vs. Second Quarter 2022

Same Store Results/Statistics Including 77,788 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

 

 

Third Quarter 2022

 

Second Quarter 2022

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

%

Change

 

Total

 

%

Change

 

 

 

Residential

 

Non-

Residential

 

Total

Revenues

$

653,383

 

(1)

2.1%

$

24,124

1.2%

$

677,507

2.1%

Revenues

$

640,027

 

$

23,827

$

663,854

Expenses

$

210,547

 

 

4.6%

$

6,261

 

4.6%

$

216,808

 

4.6%

Expenses

$

201,334

 

$

5,983

 

$

207,317

 

NOI

$

442,836

 

 

0.9%

$

17,863

 

0.1%

$

460,699

 

0.9%

NOI

$

438,693

 

$

17,844

 

$

456,537

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,906

 

 

2.4%

 

 

 

 

Average Rental Rate

$

2,838

 

 

 

Physical Occupancy

 

96.4

%

 

(0.3%)

 

 

 

 

Physical Occupancy

 

96.7

%

 

 

Turnover

 

14.0

%

 

2.8%

 

 

 

 

Turnover

 

11.2

%

 

 

 

September YTD 2022 vs. September YTD 2021

Same Store Results/Statistics Including 72,869 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

 

 

September YTD 2022

 

September YTD 2021

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

%

Change

 

Total

 

%

Change

 

 

 

Residential

 

Non-

Residential

 

Total

Revenues

$

1,813,450

 

(1)

 

11.2%

 

$

68,731

 

8.1%

 

$

1,882,181

 

11.1%

Revenues

$

1,630,928

 

 

$

63,575

 

$

1,694,503

Expenses

$

583,185

 

 

 

3.0%

 

$

17,802

 

 

3.1%

 

$

600,987

 

 

3.0%

Expenses

$

566,210

 

 

$

17,261

 

 

$

583,471

 

NOI

$

1,230,265

 

 

 

15.5%

 

$

50,929

 

 

10.0%

 

$

1,281,194

 

 

15.3%

NOI

$

1,064,718

 

 

$

46,314

 

 

$

1,111,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,866

 

 

 

10.5%

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,594

 

 

 

 

 

Physical Occupancy

 

96.5

%

 

 

0.6%

 

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

 

 

 

Turnover

 

33.6

%

 

 

(1.6%)

 

 

 

 

 

 

 

 

Turnover

 

35.2

%

 

 

 

 

(1)

See page 11 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)

 

 

 

 

 

 

 

 

 

 

Third Quarter 2022 vs. Third Quarter 2021

 

Third Quarter 2022 vs. Second Quarter 2022

 

Sept. YTD 2022 vs. Sept. YTD 2021

 

73,402 Same Store Apartment Units

 

77,788 Same Store Apartment Units

 

72,869 Same Store Apartment Units

 

Q3 2022

 

Q3 2021

 

Q3 2022

 

Q2 2022

 

Sept. YTD 2022

 

Sept. YTD 2021

Same Store Residential Revenues (GAAP Basis)

$

627,320

 

 

$

559,690

 

 

$

653,383

 

 

$

640,027

 

 

$

1,813,450

 

 

$

1,630,928

 

Leasing Concessions amortized

 

914

 

 

 

10,553

 

 

 

1,431

 

 

 

2,156

 

 

 

6,132

 

 

 

34,517

 

Leasing Concessions granted

 

(417

)

 

 

(2,169

)

 

 

(466

)

 

 

(1,502

)

 

 

(3,018

)

 

 

(26,482

)

Same Store Residential Revenues with Leasing

Concessions on a cash basis

$

627,817

 

 

$

568,074

 

 

$

654,348

 

 

$

640,681

 

 

$

1,816,564

 

 

$

1,638,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - GAAP revenue

 

12.1

%

 

 

 

 

 

2.1

%

 

 

 

 

 

11.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - cash revenue

 

10.5

%

 

 

 

 

 

2.1

%

 

 

 

 

 

10.8

%

 

 

 

(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 72,869 Same Store Apartment Units

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2022

 

Q2 2022

 

Q1 2022

 

Q4 2021

 

Q3 2021

Same store revenues

 

$

647,237

 

 

$

633,755

 

 

$

601,189

 

 

$

597,100

 

 

$

578,667

 

Same store expenses

 

 

203,749

 

 

 

195,775

 

 

 

201,463

 

 

 

191,192

 

 

 

196,950

 

Same store NOI

(includes Residential and Non-Residential)

 

$

443,488

 

 

$

437,980

 

 

$

399,726

 

 

$

405,908

 

 

$

381,717

 

Equity Residential

Same Store Resident/Tenant Accounts Receivable Balances

Including 72,869 Same Store Apartment Units

($ in thousands)

 

 

 

 

 

 

 

 

 

Residential

 

Non-Residential

Balance Sheet (Other assets):

 

September 30, 2022

 

June 30, 2022

 

September 30, 2022

 

June 30, 2022

Resident/tenant accounts receivable balances

$

33,159

 

 

$

34,568

 

 

$

3,915

 

 

$

3,410

 

Allowance for doubtful accounts

 

(29,212

)

 

 

(31,068

)

 

 

(2,735

)

 

 

(2,534

)

Net receivable balances

$

3,947

 

(1)

$

3,500

 

 

$

1,180

 

 

$

876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line receivable balances

 

$

1,496

 

(2)

$

1,993

 

 

$

12,433

 

 

$

12,482

 

(1)

The Company held same store Residential security deposits approximating 56.6% of the net Residential receivable balance at September 30, 2022.

(2)

Total same store Residential Leasing Concessions granted in the third quarter of 2022 were approximately $0.4 million. The straight-line receivable balance of $1.5 million reflects Residential Leasing Concessions that the Company expects will be primarily recognized as a reduction of rental revenues in the remainder of 2022 and the first three quarters of 2023.

 

Same Store Residential Bad Debt

Including 72,869 Same Store Apartment Units

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Income Statement (Rental income):

 

Q3 2022

 

Q2 2022

 

Q3 2021

Bad Debt, Net (1)

 

$

5,860

 

 

$

(1,407

)

 

$

4,070

 

% of Same Store Residential Revenues

 

 

0.9

%

 

 

(0.2

%)

 

 

0.7

%

(1)

Bad Debt, Net benefited from additional resident payments due to governmental rental assistance programs of approximately $7.7 million during the third quarter of 2022 as these programs wind down. These payments totaled $14.2 million and $12.5 million in the second quarter of 2022 and third quarter of 2021, respectively.

Equity Residential

Third Quarter 2022 vs. Third Quarter 2021

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year's Quarter

Markets/Metro Areas

 

Apartment

Units

 

Q3 2022

% of

Actual

NOI

 

Q3 2022

Average

Rental

Rate

 

Q3 2022

Weighted

Average

Physical

Occupancy %

 

Q3 2022

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,662

 

 

 

19.5

%

 

$

2,766

 

 

 

96.9

%

 

 

10.7

%

 

 

8.5

%

(1)

 

3.6

%

 

 

10.6

%

 

 

9.2

%

 

 

(0.6

%)

 

 

(1.1

%)

Orange County

 

 

4,028

 

 

 

5.7

%

 

 

2,663

 

 

 

97.1

%

 

 

10.7

%

 

 

10.5

%

(1)

 

6.5

%

 

 

11.7

%

 

 

11.8

%

 

 

(1.0

%)

 

 

(0.3

%)

San Diego

 

 

2,706

 

 

 

4.0

%

 

 

2,822

 

 

 

96.7

%

 

 

10.8

%

 

 

9.1

%

(1)

 

6.4

%

 

 

9.9

%

 

 

10.5

%

 

 

(1.1

%)

 

 

(3.2

%)

Subtotal – Southern California

 

21,396

 

 

 

29.2

%

 

 

2,754

 

 

 

96.9

%

 

 

10.7

%

 

 

8.9

%

 

 

4.3

%

 

 

10.7

%

 

 

9.8

%

 

 

(0.8

%)

 

 

(1.2

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,366

 

 

 

17.1

%

 

 

3,212

 

 

 

95.9

%

 

 

13.3

%

 

 

10.8

%

 

 

6.1

%

 

 

12.9

%

 

 

10.2

%

 

 

0.6

%

 

 

(1.0

%)

Washington, D.C.

 

 

14,399

 

 

 

16.1

%

 

 

2,492

 

 

 

96.9

%

 

 

14.2

%

 

 

7.2

%

 

 

4.2

%

 

 

8.8

%

 

 

7.0

%

 

 

0.3

%

 

 

(0.5

%)

New York

 

 

8,536

 

 

 

14.2

%

 

 

4,230

 

 

 

96.9

%

 

 

14.8

%

 

 

22.9

%

 

 

1.5

%

 

 

45.2

%

 

 

22.8

%

 

 

0.1

%

 

 

2.5

%

Seattle

 

 

9,331

 

 

 

11.4

%

 

 

2,554

 

 

 

95.5

%

 

 

15.8

%

 

 

13.0

%

 

 

(1.8

%)

 

 

20.2

%

 

 

13.7

%

 

 

(0.6

%)

 

 

1.4

%

Boston

 

 

6,430

 

 

 

9.9

%

 

 

3,288

 

 

 

96.0

%

 

 

17.8

%

 

 

14.4

%

 

 

4.4

%

 

 

19.2

%

 

 

14.1

%

 

 

0.2

%

 

 

0.8

%

Denver

 

 

1,624

 

 

 

1.8

%

 

 

2,341

 

 

 

96.6

%

 

 

19.7

%

 

 

11.6

%

 

 

8.0

%

 

 

13.1

%

 

 

11.9

%

 

 

(0.3

%)

 

 

1.3

%

Other Expansion Markets

 

 

320

 

 

 

0.3

%

 

 

2,190

 

 

 

96.1

%

 

 

14.1

%

 

 

11.3

%

 

 

13.8

%

 

 

9.8

%

 

 

12.6

%

 

 

(0.8

%)

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

73,402

 

 

 

100.0

%

 

$

2,955

 

 

 

96.5

%

 

 

13.8

%

 

 

12.1

%

(2)

 

3.4

%

 

 

16.6

%

 

 

12.3

%

 

 

(0.1

%)

 

 

0.0

%

(1)

Excluding the negative impact of Bad Debt, Net which was primarily driven by a reduction in governmental rental assistance, same store revenue growth would have been 8.9%, 11.3% and 10.9% for Los Angeles, Orange County and San Diego, respectively.

 

(2)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 10.5% in the third quarter of 2022 compared to the third quarter of 2021. See page 11 for additional detail and reconciliations.

 

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, 2022.

 

Equity Residential

Third Quarter 2022 vs. Second Quarter 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Quarter

Markets/Metro Areas

 

Apartment

Units

 

Q3 2022

% of

Actual

NOI

 

Q3 2022

Average

Rental

Rate

 

Q3 2022

Weighted

Average

Physical

Occupancy %

 

Q3 2022

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,662

 

 

 

18.8

%

 

$

2,766

 

 

 

96.9

%

 

 

10.7

%

 

 

(1.9

%)

(1)

 

3.5

%

 

 

(3.9

%)

 

 

(1.9

%)

 

 

0.0

%

 

 

1.5

%

Orange County

 

 

4,028

 

 

 

5.5

%

 

 

2,663

 

 

 

97.1

%

 

 

10.7

%

 

 

0.0

%

(1)

 

7.8

%

 

 

(2.0

%)

 

 

0.2

%

 

 

(0.1

%)

 

 

1.9

%

San Diego

 

 

2,878

 

 

 

4.1

%

 

 

2,853

 

 

 

96.7

%

 

 

11.2

%

 

 

3.4

%

(1)

 

7.8

%

 

 

2.2

%

 

 

4.0

%

 

 

(0.6

%)

 

 

1.5

%

Subtotal – Southern California

 

21,568

 

 

 

28.4

%

 

 

2,758

 

 

 

96.9

%

 

 

10.8

%

 

 

(0.8

%)

 

 

4.6

%

 

 

(2.7

%)

 

 

(0.8

%)

 

 

(0.1

%)

 

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,366

 

 

 

16.6

%

 

 

3,212

 

 

 

95.9

%

 

 

13.3

%

 

 

1.0

%

(1)

 

6.7

%

 

 

(1.3

%)

 

 

1.9

%

 

 

(0.8

%)

 

 

3.9

%

Washington, D.C.

 

 

14,399

 

 

 

15.6

%

 

 

2,492

 

 

 

96.9

%

 

 

14.2

%

 

 

2.8

%

 

 

4.0

%

 

 

2.2

%

 

 

2.8

%

 

 

0.1

%

 

 

2.8

%

New York

 

 

8,536

 

 

 

13.7

%

 

 

4,230

 

 

 

96.9

%

 

 

14.8

%

 

 

6.6

%

 

 

1.5

%

 

 

10.8

%

 

 

6.8

%

 

 

(0.2

%)

 

 

2.9

%

Seattle

 

 

9,524

 

 

 

11.3

%

 

 

2,558

 

 

 

95.5

%

 

 

15.9

%

 

 

3.4

%

 

 

3.8

%

 

 

3.2

%

 

 

3.2

%

 

 

0.2

%

 

 

1.3

%

Boston

 

 

6,700

 

 

 

9.9

%

 

 

3,263

 

 

 

95.9

%

 

 

17.7

%

 

 

3.2

%

 

 

4.0

%

 

 

2.9

%

 

 

4.2

%

 

 

(0.9

%)

 

 

5.7

%

Denver

 

 

2,498

 

 

 

2.7

%

 

 

2,340

 

 

 

96.4

%

 

 

20.1

%

 

 

2.4

%

 

 

10.6

%

 

 

(0.7

%)

 

 

2.7

%

 

 

(0.3

%)

 

 

2.4

%

Other Expansion Markets

 

 

3,197

 

 

 

1.8

%

 

 

1,855

 

 

 

95.6

%

 

 

16.9

%

 

 

(1.5

%)

 

 

16.0

%

 

 

(15.8

%)

 

 

(0.3

%)

 

 

(1.2

%)

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

77,788

 

 

 

100.0

%

 

$

2,906

 

 

 

96.4

%

 

 

14.0

%

 

 

2.1

%

(2)

 

4.6

%

 

 

0.9

%

 

 

2.4

%

 

 

(0.3

%)

 

 

2.8

%

(1)

Excluding the negative impact of Bad Debt, Net which was primarily driven by a reduction in governmental rental assistance, same store revenue growth would have been 2.5%, 2.7% and 1.8% for Los Angeles, Orange County and San Francisco, respectively. In San Diego, same store revenue growth would have been 2.8% excluding the benefit of Bad Debt, Net, which was primarily due to timing of governmental rental assistance.

 

(2)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 2.1% in the third quarter of 2022 compared to the second quarter of 2022. See page 11 for additional detail and reconciliations.

 

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, 2022.

 

Equity Residential

September YTD 2022 vs. September YTD 2021

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year

Markets/Metro Areas

 

Apartment

Units

 

Sept. YTD 22

% of

Actual

NOI

 

Sept. YTD 22

Average

Rental

Rate

 

Sept. YTD 22

Weighted

Average

Physical

Occupancy %

 

Sept. YTD 22

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,662

 

 

 

20.0

%

 

$

2,725

 

 

 

96.9

%

 

 

28.3

%

 

 

11.5

%

(1)

 

3.1

%

 

 

15.4

%

 

 

11.4

%

 

 

0.2

%

 

 

(3.8

%)

Orange County

 

 

4,028

 

 

 

5.8

%

 

 

2,591

 

 

 

97.1

%

 

 

25.8

%

 

 

13.0

%

(1)

 

4.3

%

 

 

15.6

%

 

 

13.6

%

 

 

(0.6

%)

 

 

(1.4

%)

San Diego

 

 

2,706

 

 

 

4.1

%

 

 

2,737

 

 

 

97.0

%

 

 

29.3

%

 

 

10.9

%

(1)

 

4.9

%

 

 

12.7

%

 

 

11.9

%

 

 

(0.7

%)

 

 

(5.2

%)

Subtotal – Southern California

 

21,396

 

 

 

29.9

%

 

 

2,701

 

 

 

97.0

%

 

 

28.0

%

 

 

11.7

%

 

 

3.5

%

 

 

15.1

%

 

 

11.8

%

 

 

0.0

%

 

 

(3.5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,366

 

 

 

17.6

%

 

 

3,127

 

 

 

96.3

%

 

 

32.1

%

 

 

9.8

%

(1)

 

4.4

%

 

 

12.3

%

 

 

8.0

%

 

 

1.6

%

 

 

(5.2

%)

Washington, D.C.

 

 

14,186

 

 

 

16.2

%

 

 

2,432

 

 

 

96.9

%

 

 

33.8

%

 

 

5.3

%

 

 

5.3

%

 

 

5.2

%

 

 

4.7

%

 

 

0.6

%

 

 

(2.5

%)

New York

 

 

8,536

 

 

 

13.1

%

 

 

3,964

 

 

 

97.0

%

 

 

34.9

%

 

 

19.1

%

 

 

1.6

%

 

 

39.0

%

 

 

15.8

%

 

 

2.7

%

 

 

3.9

%

Seattle

 

 

9,331

 

 

 

11.4

%

 

 

2,472

 

 

 

95.1

%

 

 

41.9

%

 

 

10.0

%

 

 

(3.2

%)

 

 

16.3

%

 

 

10.7

%

 

 

(0.7

%)

 

 

2.5

%

Boston

 

 

6,430

 

 

 

9.9

%

 

 

3,165

 

 

 

96.2

%

 

 

37.3

%

 

 

11.5

%

 

 

4.9

%

 

 

14.8

%

 

 

10.9

%

 

 

0.5

%

 

 

(0.4

%)

Denver

 

 

1,624

 

 

 

1.9

%

 

 

2,275

 

 

 

96.9

%

 

 

48.4

%

 

 

12.4

%

 

 

7.3

%

 

 

14.5

%

 

 

12.0

%

 

 

0.2

%

 

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

72,869

 

 

 

100.0

%

 

$

2,866

 

 

 

96.5

%

 

 

33.6

%

 

 

11.2

%

(2)

 

3.0

%

 

 

15.5

%

 

 

10.5

%

 

 

0.6

%

 

 

(1.6

%)

(1)

Excluding the positive impact of Bad Debt, Net which was primarily driven by receipt of governmental rental assistance, same store revenue growth would have been 8.3%, 11.8% and 8.6% for Los Angeles, Orange County and San Francisco, respectively. In San Diego, same store revenue growth would have been 11.6% excluding the negative impact of Bad Debt, Net, which was primarily due to timing of governmental rental assistance.

 

(2)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 10.8% in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. See page 11 for additional detail and reconciliations.

 

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, 2022.

Equity Residential

Same Store Residential Net Effective Lease Pricing Statistics

For 72,869 Same Store Apartment Units

 

 

 

New Lease Change (1)

 

Renewal Rate Achieved (1)

 

Blended Rate (1)

Markets/Metro Areas

 

Q3 2022

 

Q2 2022

 

Q3 2022

 

Q2 2022

 

Q3 2022

 

Q2 2022

Southern California

 

14.0

%

 

15.8

%

 

7.6

%

 

7.3

%

 

10.3

%

 

10.7

%

San Francisco

 

9.1

%

 

14.9

%

 

8.4

%

 

9.1

%

 

8.8

%

 

11.7

%

Washington, D.C.

 

9.4

%

 

11.1

%

 

7.5

%

 

8.3

%

 

8.3

%

 

9.6

%

New York

 

22.2

%

 

38.1

%

 

14.8

%

 

19.2

%

 

18.0

%

 

27.4

%

Seattle

 

10.3

%

 

17.5

%

 

11.1

%

 

13.1

%

 

10.7

%

 

15.3

%

Boston

 

11.1

%

 

17.8

%

 

11.4

%

 

12.4

%

 

11.3

%

 

14.9

%

Denver

 

8.7

%

 

12.7

%

 

8.8

%

 

12.3

%

 

8.7

%

 

12.5

%

Total

 

13.0

%

 

19.1

%

 

10.0

%

 

11.2

%

 

11.3

%

 

14.8

%

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions. See page 3 for October 2022 preliminary data.

Equity Residential

Third Quarter 2022 vs. Third Quarter 2021

Total Same Store Operating Expenses Including 73,402 Same Store Apartment Units

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2022

 

Q3 2021

 

$

Change (1)

 

%

Change

 

% of

Q3 2022

Operating

Expenses

Real estate taxes

 

$

84,246

 

 

$

83,745

 

 

$

501

 

 

 

0.6

%

 

 

41.1

%

On-site payroll

 

 

39,026

 

 

 

40,571

 

 

 

(1,545

)

 

 

(3.8

%)

 

 

19.0

%

Utilities

 

 

33,884

 

 

 

29,764

 

 

 

4,120

 

 

 

13.8

%

 

 

16.5

%

Repairs and maintenance

 

 

27,391

 

 

 

24,850

 

 

 

2,541

 

 

 

10.2

%

 

 

13.4

%

Insurance

 

 

7,325

 

 

 

6,563

 

 

 

762

 

 

 

11.6

%

 

 

3.6

%

Leasing and advertising

 

 

2,668

 

 

 

2,515

 

 

 

153

 

 

 

6.1

%

 

 

1.3

%

Other on-site operating expenses

 

 

10,492

 

 

 

10,131

 

 

 

361

 

 

 

3.6

%

 

 

5.1

%

Total Same Store Operating Expenses (2)

(includes Residential and Non-Residential)

 

$

205,032

 

 

$

198,139

 

 

$

6,893

 

 

 

3.5

%

 

 

100.0

%

 

September YTD 2022 vs. September YTD 2021

Total Same Store Operating Expenses Including 72,869 Same Store Apartment Units

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD 2022

 

YTD 2021

 

$

Change (1)

 

%

Change

 

% of

YTD 2022

Operating

Expenses

Real estate taxes

 

$

251,016

 

 

$

249,863

 

 

$

1,153

 

 

 

0.5

%

 

 

41.8

%

On-site payroll

 

 

114,172

 

 

 

118,679

 

 

 

(4,507

)

 

 

(3.8

%)

 

 

19.0

%

Utilities

 

 

96,872

 

 

 

85,906

 

 

 

10,966

 

 

 

12.8

%

 

 

16.1

%

Repairs and maintenance

 

 

77,581

 

 

 

70,771

 

 

 

6,810

 

 

 

9.6

%

 

 

12.9

%

Insurance

 

 

21,488

 

 

 

19,606

 

 

 

1,882

 

 

 

9.6

%

 

 

3.6

%

Leasing and advertising

 

 

7,121

 

 

 

7,727

 

 

 

(606

)

 

 

(7.8

%)

 

 

1.2

%

Other on-site operating expenses

 

 

32,737

 

 

 

30,919

 

 

 

1,818

 

 

 

5.9

%

 

 

5.4

%

Total Same Store Operating Expenses (2)

(includes Residential and Non-Residential)

 

$

600,987

 

 

$

583,471

 

 

$

17,516

 

 

 

3.0

%

 

 

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 – Improved sales and service staff utilization from various technology initiatives and higher than usual staffing vacancies during the periods presented.

 

Utilities – Increase from gas and electric primarily driven by higher commodity prices.

 

Repairs and maintenance – Increase primarily driven by volume and timing of maintenance and repairs along with increases in minimum wage on contracted services.

 

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

 

Leasing and advertising – Year-over-year decrease due primarily to reduction in use of outside residential brokers. Quarter-over-quarter increase due primarily to increase in use of outside retail brokers.

 

Other on-site operating expenses – Increase 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, 2022

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

Balances (1)

 

% of Total

 

Weighted

Average

Rates (1)

 

Weighted

Average

Maturities

(years)

Secured

 

$

1,967,827

 

 

 

26.2

%

 

 

3.39

%

 

 

4.9

 

Unsecured

 

 

5,530,364

 

 

 

73.8

%

 

 

3.58

%

 

 

9.7

 

Total

 

$

7,498,191

 

 

 

100.0

%

 

 

3.53

%

 

 

8.5

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

1,634,342

 

 

 

21.8

%

 

 

3.68

%

 

 

4.1

 

Unsecured – Public

 

 

5,340,807

 

 

 

71.2

%

 

 

3.65

%

 

 

10.1

 

Fixed Rate Debt

 

 

6,975,149

 

 

 

93.0

%

 

 

3.66

%

 

 

8.7

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

 

97,611

 

 

 

1.3

%

 

 

3.33

%

 

 

1.4

 

Secured – Tax Exempt

 

 

235,874

 

 

 

3.1

%

 

 

1.29

%

 

 

11.7

 

Unsecured – Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

2.1

 

Unsecured – Commercial Paper Program (2)

 

 

189,557

 

 

 

2.6

%

 

 

1.18

%

 

 

 

Floating Rate Debt

 

 

523,042

 

 

 

7.0

%

 

 

1.56

%

 

 

5.7

 

Total

 

$

7,498,191

 

 

 

100.0

%

 

 

3.53

%

 

 

8.5

 

(1)

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

 

(2)

At September 30, 2022, the Weighted Average Coupon and weighted average maturity of commercial paper outstanding was 3.20% and 28 days, respectively. The weighted average amount outstanding for the nine months ended September 30, 2022 was approximately $177.9 million.

 
Note: The Company capitalized interest of approximately $4.2 million and $12.4 million during the nine months ended September 30, 2022 and 2021, respectively. The Company capitalized interest of approximately $1.9 million and $4.2 million during the quarters ended September 30, 2022 and 2021, respectively.

Equity Residential 

Debt Maturity Schedule as of September 30, 2022

($ 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)

2022

 

$

165

 

 

$

190,040

 

(2)

$

190,205

 

 

 

2.5

%

 

 

3.48

%

 

 

3.20

%

2023 (3)

 

 

825,588

 

 

 

68,276

 

 

 

893,864

 

 

 

11.8

%

 

 

4.19

%

 

 

4.21

%

2024

 

 

 

 

 

6,100

 

 

 

6,100

 

 

 

0.1

%

 

N/A

 

 

 

2.37

%

2025

 

 

450,000

 

 

 

42,556

 

 

 

492,556

 

 

 

6.6

%

 

 

3.38

%

 

 

3.50

%

2026

 

 

592,025

 

 

 

9,000

 

 

 

601,025

 

 

 

7.9

%

 

 

3.58

%

 

 

3.56

%

2027

 

 

400,000

 

 

 

9,800

 

 

 

409,800

 

 

 

5.4

%

 

 

3.25

%

 

 

3.23

%

2028

 

 

900,000

 

 

 

10,700

 

 

 

910,700

 

 

 

12.0

%

 

 

3.79

%

 

 

3.77

%

2029

 

 

888,120

 

 

 

11,500

 

 

 

899,620

 

 

 

11.9

%

 

 

3.30

%

 

 

3.29

%

2030

 

 

1,095,000

 

 

 

12,600

 

 

 

1,107,600

 

 

 

14.6

%

 

 

2.55

%

 

 

2.54

%

2031

 

 

528,500

 

 

 

39,700

 

 

 

568,200

 

 

 

7.5

%

 

 

1.94

%

 

 

1.97

%

2032+

 

 

1,350,850

 

 

 

138,900

 

 

 

1,489,750

 

 

 

19.7

%

 

 

4.39

%

 

 

4.21

%

Subtotal

 

 

7,030,248

 

 

 

539,172

 

 

 

7,569,420

 

 

 

100.0

%

 

 

3.48

%

 

 

3.46

%

Deferred Financing Costs and Unamortized (Discount)

 

 

(55,099

)

 

 

(16,130

)

 

 

(71,229

)

 

N/A

 

 

N/A

 

 

N/A

 

Total

 

$

6,975,149

 

 

$

523,042

 

 

$

7,498,191

 

 

 

100.0

%

 

 

3.48

%

 

 

3.46

%

(1)

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

(2)

Includes $190.0 million in principal outstanding on the Company’s commercial paper program.

(3)

During the second and third quarters of 2022, the Company entered into $350.0 million of forward starting swaps on ten-year SOFR at a weighted average rate of 2.69% (currently equivalent to a ten-year U.S. Treasury of approximately 3.0%) to hedge the U.S. Treasury risk for the refinancing of 2023 maturities.

Equity Residential

Selected Unsecured Public Debt Covenants

 

 

 

September 30,

 

June 30,

 

 

2022

 

2022

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

 

27.5%

 

29.0%

 

 

 

 

 

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

 

8.0%

 

7.9%

 

 

 

 

 

Consolidated Income Available for Debt Service to

Maximum Annual Service Charges

(must be at least 1.5 to 1)

 

6.15

 

5.54

 

 

 

 

 

Total Unencumbered Assets to Unsecured Debt

(must be at least 125%)

 

500.0%

 

461.5%

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,

 

 

2022

 

2022

Total debt to Normalized EBITDAre

 

4.58x

 

5.05x

 

 

 

 

 

Net debt to Normalized EBITDAre

 

4.54x

 

5.01x

 

 

 

 

 

Unencumbered NOI as a % of total NOI

 

88.3%

 

88.4%

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

Capital Structure as of September 30, 2022

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

 

Secured Debt

 

 

 

 

 

 

 

$

1,967,827

 

 

 

26.2

%

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

5,530,364

 

 

 

73.8

%

 

 

 

Total Debt

 

 

 

 

 

 

 

 

7,498,191

 

 

 

100.0

%

 

 

22.3

%

Common Shares (includes Restricted Shares)

 

 

376,169,253

 

 

 

96.7

%

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

12,844,608

 

 

 

3.3

%

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

389,013,861

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

Common Share Price at September 30, 2022

 

$

67.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,149,512

 

 

 

99.9

%

 

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

 

 

 

 

37,280

 

 

 

0.1

%

 

 

 

Total Equity

 

 

 

 

 

 

 

 

26,186,792

 

 

 

100.0

%

 

 

77.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

 

 

$

33,684,983

 

 

 

 

 

 

100.0

%

 

Perpetual Preferred Equity as of September 30, 2022

(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

 

 

 

Sept. YTD 2022

 

Sept. YTD 2021

 

Q3 2022

 

Q3 2021

Weighted Average Amounts Outstanding for Net Income Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

375,710,361

 

 

 

373,473,847

 

 

 

375,849,762

 

 

 

374,307,789

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

- OP Units

 

 

11,892,922

 

 

 

12,367,392

 

 

 

11,895,558

 

 

 

12,018,963

 

- long-term compensation shares/units

 

 

1,784,035

 

 

 

1,801,057

 

 

 

1,554,258

 

 

 

2,046,947

 

- ATM forward sales

 

 

6,276

 

 

 

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

389,393,594

 

 

 

387,642,296

 

 

 

389,299,578

 

 

 

388,373,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

375,710,361

 

 

 

373,473,847

 

 

 

375,849,762

 

 

 

374,307,789

 

OP Units - basic

 

 

11,892,922

 

 

 

12,367,392

 

 

 

11,895,558

 

 

 

12,018,963

 

Total Common Shares and OP Units - basic

 

 

387,603,283

 

 

 

385,841,239

 

 

 

387,745,320

 

 

 

386,326,752

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

- long-term compensation shares/units

 

 

1,784,035

 

 

 

1,801,057

 

 

 

1,554,258

 

 

 

2,046,947

 

- ATM forward sales

 

 

6,276

 

 

 

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

389,393,594

 

 

 

387,642,296

 

 

 

389,299,578

 

 

 

388,373,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ending Amounts Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

376,169,253

 

 

 

375,002,588

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

12,844,608

 

 

 

12,859,748

 

 

 

 

 

 

 

Total Shares and Units

 

389,013,861

 

387,862,336

 

 

 

 

 

 

Equity Residential

Development and Lease-Up Projects as of September 30, 2022

(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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reverb (fka 9th and W) (2)

 

Washington, D.C.

 

92%

 

 

312

 

 

$

108,027

 

 

$

74,695

 

 

$

32,963

 

 

74%

 

Q3 2021

 

Q2 2023

 

Q3 2023

 

Q3 2024

 

– / –

Laguna Clara II

 

Santa Clara, CA

 

100%

 

 

225

 

 

 

152,621

 

 

 

14,652