Financial News

Equity Residential Reports Fourth Quarter 2023 Results

Provides 2024 Guidance

Equity Residential (NYSE: EQR) today reported results for the quarter and year ended December 31, 2023.

Fourth Quarter 2023 Results

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31,

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.82

 

 

$

0.42

 

 

$

0.40

 

 

 

95.2

%

 

 

Funds from Operations (FFO) per share

 

$

1.00

 

 

$

0.97

 

 

$

0.03

 

 

 

3.1

%

 

 

Normalized FFO (NFFO) per share

 

$

1.00

 

 

$

0.94

 

 

$

0.06

 

 

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

2.20

 

 

$

2.05

 

 

$

0.15

 

 

 

7.3

%

 

 

Funds from Operations (FFO) per share

 

$

3.75

 

 

$

3.53

 

 

$

0.22

 

 

 

6.2

%

 

 

Normalized FFO (NFFO) per share

 

$

3.78

 

 

$

3.52

 

 

$

0.26

 

 

 

7.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recent Highlights

  • Same store revenue increased 3.9% for the fourth quarter of 2023 compared to the fourth quarter of 2022, driven by strong demand.
  • The Company has provided guidance for the full year 2024 with same store revenue growth expected to be between 2.0% and 3.0%.
  • During the fourth quarter of 2023, the Company sold three properties located in our West Coast markets (San Francisco, Seattle and Los Angeles), consisting of 499 apartment units, for an aggregate sale price of approximately $184.5 million.
  • During the fourth quarter of 2023, the Company repurchased and retired 864,386 of its common shares, at a weighted average purchase price of $56.79 per share, for an aggregate purchased amount of approximately $49.1 million. Following this repurchase activity, the Company’s Board of Trustees approved replenishing the Company’s share repurchase program authorization back to its original 13.0 million shares.

“We are pleased with our fourth quarter results as we finished the year in line with our expectations. I want to thank my colleagues across Equity Residential for their hard work and dedication to our customers and shareholders,” said Mark J. Parrell, Equity Residential’s President and CEO. “We enter 2024 well-positioned to post solid results on the operations side despite expectations of a slowing economy with continuing high employment levels in our target affluent renter demographic and a manageable apartment supply backdrop in our existing predominantly coastal footprint versus oversupplied Sunbelt markets. We are optimistic that in 2024 we will see a variety of favorable opportunities to deploy capital and have a team and a balance sheet well-prepared to do so.”

Full Year 2024 Guidance

The Company has provided guidance for its full year 2024 same store operating performance, EPS, FFO per share, Normalized FFO per share and transactions as listed below:

Same Store (includes Residential and Non-Residential):

 

Physical Occupancy

 

95.9%

Revenue change

 

2.0% to 3.0%

Expense change

 

3.5% to 4.5%

Net Operating Income (NOI) change

 

1.0% to 2.6%

 

 

 

EPS

 

$2.91 to $3.01

FFO per share

 

$3.74 to $3.84

Normalized FFO per share

 

$3.80 to $3.90

 

 

 

Transactions:

 

 

Consolidated rental acquisitions

 

$1.0B

Consolidated rental dispositions

 

$1.0B

Transaction Accretion (Dilution)

 

(25 basis points)

The difference between the Company's full year 2023 actual EPS of $2.20 and the full year 2024 EPS guidance midpoint of $2.96 is due primarily to higher expected property sale gains and the items described below.

The difference between the Company's full year 2023 actual FFO of $3.75 per share and the full year 2024 FFO guidance midpoint of $3.79 per share is due primarily to lower expected non-operating gains on sale offset by the items described below.

The difference between the Company's full year 2023 actual Normalized FFO of $3.78 per share and the full year 2024 Normalized FFO guidance midpoint of $3.85 per share is due primarily to:

 

 

Expected

Positive/(Negative)

Impact

 

 

Full Year 2024 vs.

Full Year 2023

Residential same store NOI

 

$

0.09

 

Lease-Up NOI

 

 

0.01

 

2024 and 2023 transaction activity impact on NOI, net

 

 

(0.03

)

Corporate overhead (1)

 

 

(0.01

)

Other items

 

 

0.01

 

Net

 

$

0.07

 

(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.

Results Per Share

The change in EPS for the quarter ended December 31, 2023 compared to the same period of 2022 is due primarily to higher property sale gains in the current period, the various adjustment items listed on page 27 of this release and the items described below. The change in EPS for the year end December 31, 2023 compared to the same period of 2022 is due primarily to lower property sale gains in the current period, the various adjustment items listed on page 27 of this release and the items described below.

The per share changes in FFO for the quarter and year ended December 31, 2023 compared to the same periods of 2022 are due primarily to the various adjustment items listed on page 27 of this release and the items described below.

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

 

 

Positive/(Negative) Impact

 

 

Fourth Quarter 2023 vs.

Fourth Quarter 2022

 

Full Year 2023 vs.

Full Year 2022

Residential same store NOI

 

$

0.06

 

 

$

0.28

 

Lease-Up NOI

 

 

 

 

0.03

 

2023 and 2022 transaction activity impact on NOI, net

 

 

 

(0.02

)

Interest expense, net

 

 

(0.01

)

 

 

0.02

 

Corporate overhead

 

 

 

 

(0.03

)

Other items

 

 

0.01

 

 

 

(0.02

)

Net

 

$

0.06

 

 

$

0.26

 

Same Store Results

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

 

 

Fourth Quarter 2023 vs.

Fourth Quarter 2022

 

Fourth Quarter 2023 vs.

Third Quarter 2023

 

Full Year 2023 vs.

Full Year 2022

Apartment Units

 

77,676

 

78,163

 

76,297

Physical Occupancy

 

95.8% vs. 95.8%

 

95.8% vs. 96.0%

 

95.9% vs. 96.3%

 

 

 

 

 

 

 

Revenues

 

3.9%

 

0.6%

 

5.6%

Expenses

 

1.3%

 

(3.6%)

 

4.3%

NOI

 

5.0%

 

2.5%

 

6.2%

On page 11 of this release, the Company has provided a breakout of Residential and Non-Residential same store results with definitions that can be found on page 33 of this release. Non-Residential operations account for approximately 3.6% of total revenues for the year ended December 31, 2023.

The following table reflects the detail of the change in Same Store Residential Revenues, which is presented on a GAAP basis showing Leasing Concessions on a straight-line basis.

 

 

Fourth Quarter 2023 vs.

Fourth Quarter 2022

 

Fourth Quarter 2023 vs.

Third Quarter 2023

 

Full Year 2023 vs.

Full Year 2022

 

 

% Change

 

% Change

 

% Change

Same Store Residential Revenues-

 

 

 

 

 

 

 

 

comparable period

Lease rates

 

 

3.5

%

 

 

0.3

%

 

 

6.2

%

Leasing Concessions

 

 

(0.4

%)

 

 

(0.1

%)

 

 

(0.2

%)

Vacancy gain (loss)

 

 

0.0

%

 

 

0.1

%

 

 

(0.5

%)

Bad Debt, Net (1)

 

 

0.4

%

 

 

(0.1

%)

 

 

(0.4

%)

Other (2)

 

 

0.5

%

 

 

0.1

%

 

 

0.6

%

Same Store Residential Revenues-

current period

 

4.0

%

 

 

0.3

%

 

 

5.7

%

(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 comparable full year 2023 period change in Bad Debt, Net was negatively impacted by the much higher governmental rental assistance received in 2022 versus 2023. 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 76,297 same store apartment units):

 

 

January 2024 (1)

 

Q4 2023

 

Q3 2023

Physical Occupancy

 

96.2%

 

95.8%

 

96.0%

Percentage of Residents Renewing by quarter/month

61.0%

 

59.0%

 

54.0%

 

 

 

 

 

 

 

New Lease Change

 

(3.7%)

 

(4.5%)

 

0.5%

Renewal Rate Achieved

 

4.9%

 

5.1%

 

5.5%

Blended Rate

 

1.0%

 

0.8%

 

3.1%

(1)

January 2024 results are preliminary as of January 25th and reflect the 2024 annual same store set including 77,472 apartment units.

Investment Activity

The Company did not acquire any operating properties during the fourth quarter of 2023. During the full year of 2023, the Company has acquired four operating properties, consisting of 1,183 apartment units, for an aggregate purchase price of approximately $366.3 million at a weighted average Acquisition Cap Rate of 5.5%. The average age of the properties acquired in 2023 was approximately 1 year.

During the fourth quarter of 2023, the Company sold three properties located in our West Coast markets (San Francisco, Seattle and Los Angeles), consisting of 499 apartment units, for an aggregate sale price of approximately $184.5 million at a weighted average Disposition Yield of 5.8%, generating an Unlevered IRR of 14.4%. The average age of the properties sold in the fourth quarter of 2023 was approximately 40 years. During the full year of 2023, the Company sold 11 properties, consisting of 912 apartment units, for an aggregate sale price of approximately $379.9 million at a weighted average Disposition Yield of 5.5%, generating an Unlevered IRR of 11.4%. The average age of the properties sold in 2023 was approximately 30 years.

Subsequent to the end of the fourth quarter of 2023, the Company sold a property in each of the Boston and Orange County markets, consisting of a total of 404 apartment units, for an aggregate sale price of approximately $189.0 million at a weighted average Disposition Yield of 5.6%. The average age of the properties sold subsequent to the end of the fourth quarter of 2023 was approximately 41 years.

In 2023, the Company invested $282.8 million in Capital Expenditures to Real Estate for Same Store Properties. Approximately 40% of this spend was NOI-Enhancing. Of that amount, $79.3 million for 2,799 same store apartment units represented Renovation Expenditures with the remainder concentrated in sustainability and property-level technology spend. We expect a similar percentage of 2024 Capital Expenditures to Real Estate for Same Store Properties to be NOI-Enhancing.

Capital Markets Activity

During the fourth quarter of 2023, the Company repurchased and retired 864,386 of its common shares, at a weighted average purchase price of $56.79 per share, for an aggregate purchased amount of approximately $49.1 million. Following this repurchase activity, the Company’s Board of Trustees approved replenishing the Company’s share repurchase program authorization back to its original 13.0 million shares.

First Quarter 2024 Guidance

The Company has established guidance ranges for the first quarter of 2024 EPS, FFO per share and Normalized FFO per share as listed below:

 

 

Q1 2024

Guidance

EPS

 

$0.77 to $0.81

FFO per share

 

$0.87 to $0.91

Normalized FFO per share

 

$0.88 to $0.92

The difference between the fourth quarter of 2023 actual EPS of $0.82 and the first quarter of 2024 EPS guidance midpoint of $0.79 is due primarily to higher expected property sale gains and the items described below.

The difference between the fourth quarter of 2023 actual FFO of $1.00 per share and the first quarter of 2024 FFO guidance midpoint of $0.89 per share is due primarily to the items described below.

The difference between the fourth quarter of 2023 actual Normalized FFO of $1.00 per share and the first quarter of 2024 Normalized FFO guidance midpoint of $0.90 per share is due primarily to:

 

 

Expected

Positive/(Negative)

Impact

 

 

First Quarter 2024 vs.

Fourth Quarter 2023

Residential same store NOI (1)

 

$

(0.05

)

2024 and 2023 transaction activity impact on NOI, net

 

 

(0.01

)

Corporate overhead

 

 

(0.03

)

Other items

 

 

(0.01

)

Net

 

$

(0.10

)

  1. Residential same store NOI impact is primarily driven by higher expected real estate taxes and utilities in the first quarter of 2024 versus the fourth quarter of 2023. This pattern of higher operating expenses is typical between the fourth quarter of the current year and the first quarter of the following year.

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 302 properties consisting of 80,191 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin. For more information on Equity Residential, please visit our website at www.equityapartments.com.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, government regulations and competition. These and other risks and uncertainties are described under the heading “Risk Factors” in our Annual Report on Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityapartments.com. Many of these uncertainties and risks are difficult to predict and beyond management’s control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

A live web cast of the Company’s conference call discussing these results will take place tomorrow, Wednesday, January 31, 2024 at 10:00 a.m. CT. Please visit the Investor section of the Company’s website at www.equityapartments.com for the webcast link.

Equity Residential

Consolidated Statements of Operations

(Amounts in thousands except per share data)

(Unaudited)

 

 

 

Year Ended December 31,

 

 

Quarter Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

2,873,964

 

 

$

2,735,180

 

 

$

727,500

 

 

$

699,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Property and maintenance

 

 

514,575

 

 

 

483,865

 

 

 

123,138

 

 

 

118,588

 

Real estate taxes and insurance

 

 

412,114

 

 

 

388,412

 

 

 

99,507

 

 

 

85,513

 

Property management

 

 

119,804

 

 

 

110,304

 

 

 

29,490

 

 

 

27,269

 

General and administrative

 

 

60,716

 

 

 

58,710

 

 

 

11,581

 

 

 

11,677

 

Depreciation

 

 

888,709

 

 

 

882,168

 

 

 

226,788

 

 

 

214,272

 

Total expenses

 

 

1,995,918

 

 

 

1,923,459

 

 

 

490,504

 

 

 

457,319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on sales of real estate properties

 

 

282,539

 

 

 

304,325

 

 

 

155,505

 

 

 

(21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,160,585

 

 

 

1,116,046

 

 

 

392,501

 

 

 

242,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

22,345

 

 

 

2,193

 

 

 

11,049

 

 

 

(2,651

)

Other expenses

 

 

(29,419

)

 

 

(13,664

)

 

 

(8,902

)

 

 

(4,473

)

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred, net

 

 

(269,556

)

 

 

(282,920

)

 

 

(68,674

)

 

 

(65,827

)

Amortization of deferred financing costs

 

 

(8,941

)

 

 

(8,729

)

 

 

(1,918

)

 

 

(2,308

)

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

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

 

 

875,014

 

 

 

812,926

 

 

 

324,056

 

 

 

167,104

 

Income and other tax (expense) benefit

 

 

(1,148

)

 

 

(900

)

 

 

(256

)

 

 

(175

)

Income (loss) from investments in unconsolidated entities

 

 

(5,378

)

 

 

(5,031

)

 

 

(1,531

)

 

 

(1,575

)

Net income

 

 

868,488

 

 

 

806,995

 

 

 

322,269

 

 

 

165,354

 

Net (income) loss attributable to Noncontrolling Interests:

 

 

 

 

 

 

 

 

 

 

 

 

Operating Partnership

 

 

(26,710

)

 

 

(26,310

)

 

 

(9,536

)

 

 

(5,286

)

Partially Owned Properties

 

 

(6,340

)

 

 

(3,774

)

 

 

(1,041

)

 

 

(1,048

)

Net income attributable to controlling interests

 

 

835,438

 

 

 

776,911

 

 

 

311,692

 

 

 

159,020

 

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

Net income available to Common Shares

 

$

832,348

 

 

$

773,821

 

 

$

310,920

 

 

$

158,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

2.20

 

 

$

2.06

 

 

$

0.82

 

 

$

0.42

 

Weighted average Common Shares outstanding

 

 

378,773

 

 

 

376,209

 

 

 

379,247

 

 

 

377,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

2.20

 

 

$

2.05

 

 

$

0.82

 

 

$

0.42

 

Weighted average Common Shares outstanding

 

 

390,897

 

 

 

389,450

 

 

 

390,787

 

 

 

390,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

2.65

 

 

$

2.50

 

 

$

0.6625

 

 

$

0.625

 

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share and Unit data)

(Unaudited)

 

 

 

Year Ended December 31,

 

 

Quarter Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

868,488

 

 

$

806,995

 

 

$

322,269

 

 

$

165,354

 

Net (income) loss attributable to Noncontrolling Interests – Partially

Owned Properties

 

(6,340

)

 

 

(3,774

)

 

 

(1,041

)

 

 

(1,048

)

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

Net income available to Common Shares and Units

 

 

859,058

 

 

 

800,131

 

 

 

320,456

 

 

 

163,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

888,709

 

 

 

882,168

 

 

 

226,788

 

 

 

214,272

 

Depreciation – Non-real estate additions

 

 

(4,268

)

 

 

(4,306

)

 

 

(977

)

 

 

(1,117

)

Depreciation – Partially Owned Properties

 

 

(2,130

)

 

 

(2,640

)

 

 

(531

)

 

 

(543

)

Depreciation – Unconsolidated Properties

 

 

2,860

 

 

 

2,898

 

 

 

939

 

 

 

1,001

 

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

assets

 

 

 

 

 

(9

)

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(282,539

)

 

 

(304,325

)

 

 

(155,505

)

 

 

21

 

Noncontrolling Interests share of gain (loss) on sales

of real estate properties

 

 

2,336

 

 

 

 

 

 

 

 

 

 

FFO available to Common Shares and Units

 

 

1,464,026

 

 

 

1,373,917

 

 

 

391,170

 

 

 

377,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (see note for additional detail):

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

3,647

 

 

 

4,780

 

 

 

908

 

 

 

1,484

 

Debt extinguishment and preferred share redemption (gains)

losses

 

 

1,143

 

 

 

4,664

 

 

 

 

 

 

348

 

Non-operating asset (gains) losses

 

 

(13,323

)

 

 

2,368

 

 

 

(8,588

)

 

 

3,542

 

Other miscellaneous items

 

 

21,588

 

 

 

(13,901

)

 

 

6,757

 

 

 

(15,733

)

Normalized FFO available to Common Shares and Units

 

$

1,477,081

 

 

$

1,371,828

 

 

$

390,247

 

 

$

366,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

1,467,116

 

 

$

1,377,007

 

 

$

391,942

 

 

$

377,940

 

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

FFO available to Common Shares and Units

 

$

1,464,026

 

 

$

1,373,917

 

 

$

391,170

 

 

$

377,168

 

FFO per share and Unit – basic

 

$

3.75

 

 

$

3.54

 

 

$

1.00

 

 

$

0.97

 

FFO per share and Unit – diluted

 

$

3.75

 

 

$

3.53

 

 

$

1.00

 

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO

 

$

1,480,171

 

 

$

1,374,918

 

 

$

391,019

 

 

$

367,581

 

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

Normalized FFO available to Common Shares and Units

 

$

1,477,081

 

 

$

1,371,828

 

 

$

390,247

 

 

$

366,809

 

Normalized FFO per share and Unit – basic

 

$

3.79

 

 

$

3.54

 

 

$

1.00

 

 

$

0.94

 

Normalized FFO per share and Unit – diluted

 

$

3.78

 

 

$

3.52

 

 

$

1.00

 

 

$

0.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares and Units outstanding – basic

 

 

389,954

 

 

 

388,045

 

 

 

389,844

 

 

 

389,357

 

Weighted average Common Shares and Units outstanding – diluted

 

390,897

 

 

 

389,450

 

 

 

390,787

 

 

 

390,245

 

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)

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Land

 

$

5,581,876

 

 

$

5,580,878

 

Depreciable property

 

 

22,938,426

 

 

 

22,334,369

 

Projects under development

 

 

78,036

 

 

 

112,940

 

Land held for development

 

 

114,300

 

 

 

60,567

 

Investment in real estate

 

 

28,712,638

 

 

 

28,088,754

 

Accumulated depreciation

 

 

(9,810,337

)

 

 

(9,027,850

)

Investment in real estate, net

 

 

18,902,301

 

 

 

19,060,904

 

Investments in unconsolidated entities1

 

 

282,049

 

 

 

279,024

 

Cash and cash equivalents

 

 

50,743

 

 

 

53,869

 

Restricted deposits

 

 

89,252

 

 

 

83,303

 

Right-of-use assets

 

 

457,266

 

 

 

462,956

 

Other assets

 

 

252,953

 

 

 

278,206

 

Total assets

 

$

20,034,564

 

 

$

20,218,262

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Mortgage notes payable, net

 

$

1,632,902

 

 

$

1,953,438

 

Notes, net

 

 

5,348,417

 

 

 

5,342,329

 

Line of credit and commercial paper

 

 

409,131

 

 

 

129,955

 

Accounts payable and accrued expenses

 

 

104,430

 

 

 

96,028

 

Accrued interest payable

 

 

65,716

 

 

 

66,310

 

Lease liabilities

 

 

311,640

 

 

 

308,748

 

Other liabilities

 

 

255,543

 

 

 

306,941

 

Security deposits

 

 

69,178

 

 

 

68,940

 

Distributions payable

 

 

259,231

 

 

 

244,621

 

Total liabilities

 

 

8,456,188

 

 

 

8,517,310

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests – Operating Partnership

 

 

289,248

 

 

 

318,273

 

Equity:

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred Shares of beneficial interest, $0.01 par value;

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

outstanding as of December 31, 2023 and December 31, 2022

 

 

37,280

 

 

 

37,280

 

Common Shares of beneficial interest, $0.01 par value;

1,000,000,000 shares authorized; 379,291,417 shares issued

and outstanding as of December 31, 2023 and 378,429,708

shares issued and outstanding as of December 31, 2022

 

 

3,793

 

 

 

3,784

 

Paid in capital

 

 

9,601,866

 

 

 

9,476,085

 

Retained earnings

 

 

1,437,185

 

 

 

1,658,837

 

Accumulated other comprehensive income (loss)

 

 

5,704

 

 

 

(2,547

)

Total shareholders’ equity

 

 

11,085,828

 

 

 

11,173,439

 

Noncontrolling Interests:

 

 

 

 

 

 

Operating Partnership

 

 

202,306

 

 

 

209,961

 

Partially Owned Properties

 

 

994

 

 

 

(721

)

Total Noncontrolling Interests

 

 

203,300

 

 

 

209,240

 

Total equity

 

 

11,289,128

 

 

 

11,382,679

 

Total liabilities and equity

 

$

20,034,564

 

 

$

20,218,262

 

1 Includes $220.2 million and $218.0 million in unconsolidated development projects as of December 31, 2023 and December 31, 2022, respectively. See Development and Lease-Up Projects for additional detail on unconsolidated projects.

Equity Residential

Portfolio Summary

As of December 31, 2023

 

 

 

 

 

 

 

 

% of

 

 

 

 

Stabilized

Average

 

 

 

 

 

Apartment

 

 

Budgeted

 

 

Rental

 

Markets/Metro Areas

 

Properties

 

 

Units

 

 

NOI

 

 

Rate

 

Established Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

58

 

 

 

14,732

 

 

 

17.1

%

 

$

2,929

 

Orange County

 

 

13

 

 

 

4,028

 

 

 

5.4

%

 

 

2,873

 

San Diego

 

 

12

 

 

 

2,878

 

 

 

4.0

%

 

 

3,108

 

Subtotal – Southern California

 

 

83

 

 

 

21,638

 

 

 

26.5

%

 

 

2,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, D.C.

 

 

48

 

 

 

15,028

 

 

 

16.3

%

 

 

3,303

 

San Francisco

 

 

43

 

 

 

11,667

 

 

 

15.4

%

 

 

2,657

 

New York

 

 

34

 

 

 

8,536

 

 

 

14.1

%

 

 

4,566

 

Boston

 

 

27

 

 

 

7,170

 

 

 

11.8

%

 

 

3,574

 

Seattle

 

 

44

 

 

 

9,267

 

 

 

10.4

%

 

 

2,561

 

Subtotal – Established Markets

 

 

279

 

 

 

73,306

 

 

 

94.5

%

 

 

3,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expansion Markets:

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

9

 

 

 

2,792

 

 

 

2.8

%

 

 

2,411

 

Atlanta

 

 

7

 

 

 

2,111

 

 

 

1.6

%

 

 

2,169

 

Dallas/Ft. Worth

 

 

4

 

 

 

1,241

 

 

 

0.7

%

 

 

1,935

 

Austin

 

 

3

 

 

 

741

 

 

 

0.4

%

 

 

1,819

 

Subtotal – Expansion Markets

 

 

23

 

 

 

6,885

 

 

 

5.5

%

 

 

2,188

 

Total

 

 

302

 

 

 

80,191

 

 

 

100.0

%

 

$

3,063

 

 

 

 

Properties

 

Apartment Units

Wholly Owned Properties

 

288

 

77,131

Partially Owned Properties – Consolidated

 

14

 

3,060

 

 

302

 

80,191

 

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

Equity Residential

Portfolio Rollforward Q4 2023

($ in thousands)

 

 

 

 

 

 

Apartment

 

 

 

 

 

Disposition

 

Properties

 

 

Units

 

 

Sales Price

 

 

Yield

9/30/2023

 

 

305

 

 

 

80,683

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

(3

)

 

 

(499

)

 

$

(184,493

)

 

 

(5.8

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

7

 

 

 

 

 

 

 

12/31/2023

 

 

302

 

 

 

80,191

 

 

 

 

 

 

 

 

Portfolio Rollforward 2023

($ in thousands)

 

 

 

 

Apartment

 

 

Purchase

 

 

Acquisition

 

 

Properties

 

 

Units

 

 

Price

 

 

Cap Rate

 

12/31/2022

 

 

308

 

 

 

79,597

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

2

 

 

 

577

 

 

$

189,734

 

 

 

5.1

%

Consolidated Rental Properties – Not Stabilized (1)

 

 

2

 

 

 

606

 

 

$

176,600

 

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposition

 

 

 

 

 

 

 

 

Sales Price

 

 

Yield

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

(11

)

 

 

(912

)

 

$

(379,893

)

 

 

(5.5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed Developments – Consolidated

 

 

1

 

 

 

312

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

11

 

 

 

 

 

 

 

12/31/2023

 

 

302

 

 

 

80,191

 

 

 

 

 

 

 

(1)

The Company acquired two properties in the Atlanta market during the year ended December 31, 2023 that are in lease-up and are expected to stabilize in their second year of ownership at the weighted average Acquisition Cap Rate listed above.

Equity Residential

Fourth Quarter 2023 vs. Fourth Quarter 2022

Same Store Results/Statistics Including 77,676 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Fourth Quarter 2023

 

Fourth Quarter 2022

 

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

 

%

Change

 

Total

 

 

%

Change

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

Revenues

 

$

685,836

 

(1)

4.0%

 

$

25,920

 

 

(0.6%)

 

$

711,756

 

 

3.9%

 

Revenues

 

$

659,233

 

 

$

26,084

 

 

$

685,317

 

Expenses

 

$

209,164

 

 

1.1%

 

$

7,245

 

 

7.7%

 

$

216,409

 

 

1.3%

 

Expenses

 

$

206,885

 

 

$

6,728

 

 

$

213,613

 

NOI

 

$

476,672

 

 

5.4%

 

$

18,675

 

 

(3.5%)

 

$

495,347

 

 

5.0%

 

NOI

 

$

452,348

 

 

$

19,356

 

 

$

471,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,073

 

 

4.0%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,954

 

 

 

 

 

 

 

Physical Occupancy

 

95.8

%

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

95.8

%

 

 

 

 

 

 

Turnover

 

9.4

%

 

(0.1%)

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

9.5

%

 

 

 

 

 

 

Fourth Quarter 2023 vs. Third Quarter 2023

Same Store Results/Statistics Including 78,163 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Fourth Quarter 2023

 

Third Quarter 2023

 

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

 

%

Change

 

Total

 

 

%

Change

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

Revenues

 

$

689,458

 

(1)

0.3%

 

$

25,920

 

 

8.1%

 

$

715,378

 

 

0.6%

 

Revenues

 

$

687,259

 

 

$

23,971

 

(2)

$

711,230

 

Expenses

 

$

210,167

 

 

(3.9%)

 

$

7,268

 

 

5.2%

 

$

217,435

 

 

(3.6%)

 

Expenses

 

$

218,723

 

 

$

6,906

 

 

$

225,629

 

NOI

 

$

479,291

 

 

2.3%

 

$

18,652

 

 

9.3%

 

$

497,943

 

 

2.5%

 

NOI

 

$

468,536

 

 

$

17,065

 

 

$

485,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,071

 

 

0.5%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

3,056

 

 

 

 

 

 

 

Physical Occupancy

 

95.8

%

 

(0.2%)

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.0

%

 

 

 

 

 

 

Turnover

 

9.4

%

 

(4.4%)

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

13.8

%

 

 

 

 

 

 

2023 vs. 2022

 

Same Store Results/Statistics Including 76,297 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

2023

 

2022

 

 

 

Residential

 

 

%

Change

 

Non-

Residential

 

 

%

Change

 

Total

 

 

%

Change

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

Revenues

 

$

2,657,868

 

(1)

5.7%

 

$

96,843

 

(2)

1.9%

 

$

2,754,711

 

 

5.6%

 

Revenues

 

$

2,514,711

 

 

$

95,055

 

 

$

2,609,766

 

Expenses

 

$

846,546

 

 

4.1%

 

$

26,902

 

 

8.9%

 

$

873,448

 

 

4.3%

 

Expenses

 

$

812,894

 

 

$

24,708

 

 

$

837,602

 

NOI

 

$

1,811,322

 

 

6.4%

 

$

69,941

 

 

(0.6%)

 

$

1,881,263

 

 

6.2%

 

NOI

 

$

1,701,817

 

 

$

70,347

 

 

$

1,772,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

3,029

 

 

6.2%

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,853

 

 

 

 

 

 

 

Physical Occupancy

 

95.9

%

 

(0.4%)

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.3

%

 

 

 

 

 

 

Turnover

 

43.7

%

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

43.6

%

 

 

 

 

 

 

(1)

 

See page 12 for Same Store Residential Revenues with Leasing Concessions reflected on a cash basis.  See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional detail.

 

(2)

 

Includes the negative impact from the non-cash write-off of approximately $1.5 million in straight-line receivables during the third quarter of 2023 due to the bankruptcy of Rite Aid. 

Equity Residential

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

($ in thousands)

 

 

 

Fourth Quarter 2023 vs. Fourth Quarter 2022

 

 

Fourth Quarter 2023 vs. Third Quarter 2023

 

 

2023 vs. 2022

 

 

 

77,676 Same Store Apartment Units

 

 

78,163 Same Store Apartment Units

 

 

76,297 Same Store Apartment Units

 

 

 

Q4 2023

 

 

Q4 2022

 

 

Q4 2023

 

 

Q3 2023

 

 

2023

 

 

2022

 

Same Store Residential Revenues (GAAP Basis)

 

$

685,836

 

 

$

659,233

 

 

$

689,458

 

 

$

687,259

 

 

$

2,657,868

 

 

$

2,514,711

 

Leasing Concessions amortized

 

 

4,531

 

 

 

2,153

 

 

 

4,822

 

 

 

4,100

 

 

 

12,803

 

 

 

8,711

 

Leasing Concessions granted (2)

 

 

(5,074

)

 

 

(2,915

)

 

 

(5,399

)

 

 

(5,427

)

 

 

(17,750

)

 

 

(6,285

)

Same Store Residential Revenues with Leasing

 

Concessions on a cash basis

 

$

685,293

 

 

$

658,471

 

 

$

688,881

 

 

$

685,932

 

 

$

2,652,921

 

 

$

2,517,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - GAAP revenue

 

 

4.0

%

 

 

 

 

 

0.3

%

 

 

 

 

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - cash revenue

 

 

4.1

%

 

 

 

 

 

0.4

%

 

 

 

 

 

5.4

%

 

 

 

(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 and Seattle.

Same Store Net Operating Income By Quarter

Including 76,297 Same Store Apartment Units

($ in thousands)

 

 

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

Q1 2023

 

Q4 2022

Same store revenues

 

$

696,250

 

 

$

693,230

 

 

$

688,481

 

 

$

676,750

 

 

$

671,116

 

Same store expenses

 

 

212,250

 

 

 

219,850

 

 

 

215,983

 

 

 

225,365

 

 

 

209,407

 

Same store NOI

 

(includes Residential and Non-Residential)

 

$

484,000

 

 

$

473,380

 

 

$

472,498

 

 

$

451,385

 

 

$

461,709

 

Equity Residential

Same Store Resident/Tenant Accounts Receivable Balances

Including 76,297 Same Store Apartment Units

($ in thousands)

 

 

 

Residential

 

 

Non-Residential

 

 

Balance Sheet (Other assets):

 

December 31, 2023

 

 

September 30, 2023

 

 

December 31, 2023

 

 

September 30, 2023

 

 

Resident/tenant accounts receivable balances

 

$

20,910

 

 

$

24,674

 

 

$

2,822

 

 

$

2,714

 

 

Allowance for doubtful accounts

 

 

(15,419

)

 

 

(19,462

)

 

 

(1,849

)

 

 

(1,703

)

 

Net receivable balances

 

$

5,491

 

 

$

5,212

 

 

$

973

 

 

$

1,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line receivable balances

 

$

7,944

 

(1)

$

7,423

 

 

$

11,810

 

 

$

11,800

 

(2)

(1)

 

Total same store Residential Leasing Concessions granted in the fourth quarter of 2023 were approximately $5.0 million.  The straight-line receivable balance of $7.9 million reflects Residential Leasing Concessions that the Company expects will be primarily recognized as a reduction of rental revenues in 2024. 

 

(2)

 

During the third quarter of 2023, the Company recorded a non-cash write-off of approximately $1.5 million in straight-line receivables due to the bankruptcy of Rite Aid. 

Same Store Residential Bad Debt

Including 76,297 Same Store Apartment Units

($ in thousands)

 

Income Statement (Rental income):

 

Q4 2023

 

Q3 2023

 

Q4 2022

 

2023

 

2022

Bad debts before governmental rental assistance

 

$

9,341

 

 

$

8,940

 

 

$

13,574

 

 

$

39,591

 

 

$

58,785

 

Governmental rental assistance received

 

(368

)

 

 

(406

)

 

 

(2,275

)

 

 

(2,587

)

 

 

(32,699

)

Bad Debt, Net

 

$

8,973

 

 

$

8,534

 

 

$

11,299

 

 

$

37,004

 

 

$

26,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1.3

%

 

 

1.3

%

 

 

1.7

%

 

 

1.4

%

 

 

1.0

%

Equity Residential

Fourth Quarter 2023 vs. Fourth Quarter 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year's Quarter

Markets/Metro Areas

 

Apartment

Units

 

Q4 2023

% of

Actual

NOI

 

Q4 2023

Average

Rental

Rate

 

Q4 2023

Weighted

Average

Physical

Occupancy %

 

Q4 2023

Turnover

 

Revenues

 

Expenses

 

NOI

 

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,135

 

 

 

17.3

%

 

$

2,909

 

 

 

95.1

%

 

 

10.9

%

 

 

5.2

%

 

 

6.9

%

 

 

4.5

%

 

 

6.0

%

 

 

(0.7

%)

 

 

0.8

%

Orange County

 

 

4,028

 

 

 

5.5

%

 

 

2,873

 

 

 

96.3

%

 

 

8.7

%

 

 

6.5

%

 

 

4.5

%

 

 

7.0

%

 

 

7.0

%

 

 

(0.4

%)

 

 

0.0

%

San Diego

 

 

2,878

 

 

 

4.2

%

 

 

3,108

 

 

 

95.3

%

 

 

11.3

%

 

 

6.6

%

 

 

2.8

%

 

 

7.8

%

 

 

7.4

%

 

 

(0.7

%)

 

 

2.5

%

Subtotal – Southern California

 

 

21,041

 

 

 

27.0

%

 

 

2,929

 

 

 

95.3

%

 

 

10.6

%

 

 

5.6

%

 

 

6.1

%

 

 

5.5

%

 

 

6.4

%

 

 

(0.7

%)

 

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, D.C.

 

 

14,716

 

 

 

16.6

%

 

 

2,654

 

 

 

97.0

%

 

 

8.2

%

 

 

5.3

%

 

 

(0.2

%)

 

 

7.9

%

 

 

4.9

%

 

 

0.5

%

 

 

(1.1

%)

San Francisco

 

 

11,245

 

 

 

15.8

%

 

 

3,307

 

 

 

95.4

%

 

 

10.6

%

 

 

2.1

%

 

 

1.2

%

 

 

2.4

%

 

 

2.3

%

 

 

(0.2

%)

 

 

1.1

%

New York

 

 

8,536

 

 

 

14.3

%

 

 

4,566

 

 

 

96.6

%

 

 

6.9

%

 

 

4.2

%

 

 

0.2

%

 

 

7.1

%

 

 

4.3

%

 

 

(0.1

%)

 

 

(0.7

%)

Boston

 

 

7,170

 

 

 

11.1

%

 

 

3,574

 

 

 

95.8

%

 

 

8.6

%

 

 

5.8

%

 

 

3.8

%

 

 

6.6

%

 

 

6.0

%

 

 

(0.1

%)

 

 

0.2

%

Seattle

 

 

9,266

 

 

 

10.2

%

 

 

2,561

 

 

 

95.3

%

 

 

8.2

%

 

 

(0.4

%)

 

 

0.5

%

 

 

(0.8

%)

 

 

(0.8

%)

 

 

0.4

%

 

 

(1.7

%)

Denver

 

 

2,505

 

 

 

2.5

%

 

 

2,417

 

 

 

96.0

%

 

 

11.5

%

 

 

1.8

%

 

 

4.8

%

 

 

0.6

%

 

 

2.2

%

 

 

(0.1

%)

 

 

(0.5

%)

Other Expansion Markets

 

 

3,197

 

 

 

2.5

%

 

 

1,996

 

 

 

95.0

%

 

 

13.0

%

 

 

3.6

%

 

 

(23.3

%)

 

 

27.6

%

 

 

1.0

%

 

 

2.2

%

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

77,676

 

 

 

100.0

%

 

$

3,073

 

 

 

95.8

%

 

 

9.4

%

 

 

4.0

%

 

 

1.1

%

 

 

5.4

%

 

 

4.0

%

 

 

0.0

%

 

 

(0.1

%)

 

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.4% of total revenues for the year ended December 31, 2023.

Equity Residential

Fourth Quarter 2023 vs. Third Quarter 2023

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Quarter

Markets/Metro Areas

 

Apartment

Units

 

Q4 2023

% of

Actual

NOI

 

Q4 2023

Average

Rental

Rate

 

Q4 2023

Weighted

Average

Physical

Occupancy %

 

Q4 2023

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,135

 

 

 

17.1

%

 

$

2,909

 

 

 

95.1

%

 

 

10.9

%

 

 

(0.3

%)

 

 

(2.6

%)

 

 

0.8

%

 

 

0.4

%

 

 

(0.6

%)

 

 

(1.4

%)

Orange County

 

 

4,028

 

 

 

5.5

%

 

 

2,873

 

 

 

96.3

%

 

 

8.7

%

 

 

1.2

%

 

 

(4.2

%)

 

 

2.7

%

 

 

1.7

%

 

 

(0.4

%)

 

 

(2.2

%)

San Diego

 

 

2,878

 

 

 

4.2

%

 

 

3,108

 

 

 

95.3

%

 

 

11.3

%

 

 

1.4

%

 

 

(3.3

%)

 

 

2.9

%

 

 

1.5

%

 

 

0.0

%

 

 

(1.2

%)

Subtotal – Southern California

 

 

21,041

 

 

 

26.8

%

 

 

2,929

 

 

 

95.3

%

 

 

10.6

%

 

 

0.3

%

 

 

(2.9

%)

 

 

1.5

%

 

 

0.8

%

 

 

(0.6

%)

 

 

(1.4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, D.C.

 

 

14,716

 

 

 

16.5

%

 

 

2,654

 

 

 

97.0

%

 

 

8.2

%

 

 

0.6

%

 

 

(4.4

%)

 

 

2.9

%

 

 

0.4

%

 

 

0.2

%

 

 

(6.2

%)

San Francisco

 

 

11,445

 

 

 

15.9

%

 

 

3,302

 

 

 

95.3

%

 

 

10.9

%

 

 

(0.4

%)

 

 

(2.7

%)

 

 

0.7

%

 

 

(0.2

%)

 

 

(0.2

%)

 

 

(2.2

%)

New York

 

 

8,536

 

 

 

14.2

%

 

 

4,566

 

 

 

96.6

%

 

 

6.9

%

 

 

0.8

%

 

 

(3.7

%)

 

 

4.0

%

 

 

0.8

%

 

 

0.1

%

 

 

(5.8

%)

Boston

 

 

7,170

 

 

 

11.0

%

 

 

3,574

 

 

 

95.8

%

 

 

8.6

%

 

 

1.1

%

 

 

1.3

%

 

 

1.1

%

 

 

1.4

%

 

 

(0.3

%)

 

 

(7.4

%)

Seattle

 

 

9,266

 

 

 

10.2

%

 

 

2,561

 

 

 

95.3

%

 

 

8.2

%

 

 

(0.4

%)

 

 

(7.4

%)

 

 

2.5

%

 

 

(0.6

%)

 

 

0.1

%

 

 

(6.1

%)

Denver

 

 

2,792

 

 

 

2.9

%

 

 

2,411

 

 

 

96.0

%

 

 

11.8

%

 

 

(0.3

%)

 

 

(4.0

%)

 

 

1.2

%

 

 

0.4

%

 

 

(0.5

%)

 

 

(6.4

%)

Other Expansion Markets

 

 

3,197

 

 

 

2.5

%

 

 

1,996

 

 

 

95.0

%

 

 

13.0

%

 

 

0.5

%

 

 

(18.8

%)

 

 

15.2

%

 

 

0.1

%

 

 

0.4

%

 

 

(5.0

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

78,163

 

 

 

100.0

%

 

$

3,071

 

 

 

95.8

%

 

 

9.4

%

 

 

0.3

%

 

 

(3.9

%)

 

 

2.3

%

 

 

0.5

%

 

 

(0.2

%)

 

 

(4.4

%)

 

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.4% of total revenues for the year ended December 31, 2023.

Equity Residential

2023 vs. 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year

Markets/Metro Areas

 

Apartment

Units

 

2023

% of

Actual

NOI

 

2023

Average

Rental

Rate

 

2023

Weighted

Average

Physical

Occupancy %

 

2023

Turnover

 

Revenues

 

Expenses

 

NOI

 

Average

Rental

Rate

 

Physical

Occupancy

 

Turnover

Los Angeles

 

 

14,135

 

 

 

17.6

%

 

$

2,861

 

 

 

95.3

%

 

 

44.5

%

 

 

3.7

%

(1)

 

8.5

%

 

 

1.7

%

 

 

5.1

%

 

 

(1.3

%)

 

 

5.8

%

Orange County

 

 

4,028

 

 

 

5.6

%

 

 

2,801

 

 

 

96.3

%

 

 

37.4

%

 

 

6.3

%

 

 

8.3

%

 

 

5.7

%

 

 

7.1

%

 

 

(0.7

%)

 

 

2.9

%

San Diego

 

 

2,706

 

 

 

4.0

%

 

 

2,993

 

 

 

95.4

%

 

 

42.3

%

 

 

6.9

%

 

 

5.6

%

 

 

7.2

%

 

 

8.2

%

 

 

(1.3

%)

 

 

4.2

%

Subtotal – Southern California

 

 

20,869

 

 

 

27.2

%

 

 

2,867

 

 

 

95.5

%

 

 

42.9

%

 

 

4.6

%

 

 

8.1

%

 

 

3.3

%

 

 

5.9

%

 

 

(1.2

%)

 

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,245

 

 

 

16.4

%

 

 

3,290

 

 

 

95.6

%

 

 

44.1

%

 

 

3.6

%

 

 

4.2

%

 

 

3.3

%

 

 

4.2

%

 

 

(0.6

%)

 

 

2.4

%

Washington, D.C.

 

 

14,400

 

 

 

16.3

%

 

 

2,597

 

 

 

96.8

%

 

 

40.5

%

 

 

6.0

%

 

 

1.4

%

 

 

8.3

%

 

 

5.9

%

 

 

0.0

%

 

 

(2.6

%)

New York

 

 

8,536

 

 

 

14.4

%

 

 

4,504

 

 

 

96.8

%

 

 

37.2

%

 

 

10.5

%

 

 

2.8

%

 

 

16.7

%

 

 

10.7

%

 

 

(0.1

%)

 

 

(5.2

%)

Seattle

 

 

9,266

 

 

 

10.8

%

 

 

2,579

 

 

 

95.2

%

 

 

48.0

%

 

 

3.0

%

 

 

3.3

%

 

 

2.9

%

 

 

2.9

%

 

 

0.1

%

 

 

(3.6

%)

Boston

 

 

6,700

 

 

 

10.3

%

 

 

3,422

 

 

 

96.0

%

 

 

43.9

%

 

 

7.1

%

 

 

3.5

%

 

 

8.7

%

 

 

7.4

%

 

 

(0.1

%)

 

 

(1.5

%)

Denver

 

 

2,505

 

 

 

2.7

%

 

 

2,404

 

 

 

96.3

%

 

 

58.1

%

 

 

4.6

%

 

 

8.2

%

 

 

3.2

%

 

 

4.6

%

 

 

0.0

%

 

 

(2.2

%)

Other Expansion Markets

 

 

2,776

 

 

 

1.9

%

 

 

1,987

 

 

 

94.7

%

 

 

57.1

%

 

 

4.7

%

 

 

1.4

%

 

 

7.4

%

 

 

5.1

%

 

 

(0.6

%)

 

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

76,297

 

 

 

100.0

%

 

$

3,029

 

 

 

95.9

%

 

 

43.7

%

 

 

5.7

%

 

 

4.1

%

 

 

6.4

%

 

 

6.2

%

 

 

(0.4

%)

 

 

0.1

%

(1)

 

Excluding Bad Debt, Net, which includes the positive impact of governmental rental assistance in the year ended December 31, 2022, same store revenue growth would have been 5.3%.

     
Note: The above table reflects Residential same store results only.  Residential operations account for approximately 96.4% of total revenues for the year ended December 31, 2023.

Equity Residential

Same Store Residential Net Effective Lease Pricing Statistics

For 76,297 Same Store Apartment Units

 

 

 

New Lease Change (1)

 

Renewal Rate Achieved (1)

 

Blended Rate (1)

Markets/Metro Areas

 

Q4 2023

 

Q3 2023

 

Q4 2023

 

Q3 2023

 

Q4 2023

 

Q3 2023

Southern California

 

 

(3.0

%)

 

 

2.0

%

 

 

5.2

%

 

 

6.5

%

 

 

1.3

%

 

 

4.2

%

San Francisco

 

 

(9.4

%)

 

 

(3.9

%)

 

 

4.1

%

 

 

4.4

%

 

 

(3.1

%)

 

 

0.0

%

Washington, D.C.

 

 

0.8

%

 

 

4.3

%

 

 

6.1

%

 

 

6.7

%

 

 

3.9

%

 

 

5.5

%

New York

 

 

(2.2

%)

 

 

1.5

%

 

 

4.5

%

 

 

5.3

%

 

 

2.2

%

 

 

3.7

%

Seattle

 

 

(8.4

%)

 

 

(4.4

%)

 

 

5.7

%

 

 

2.5

%

 

 

(1.4

%)

 

 

(0.9

%)

Boston

 

 

(1.2

%)

 

 

3.7

%

 

 

5.3

%

 

 

6.1

%

 

 

2.7

%

 

 

5.0

%

Denver

 

 

(5.0

%)

 

 

0.1

%

 

 

4.7

%

 

 

5.3

%

 

 

(0.3

%)

 

 

2.4

%

Other Expansion Markets

 

 

(12.5

%)

 

 

(8.5

%)

 

 

4.4

%

 

 

3.4

%

 

 

(5.5

%)

 

 

(3.8

%)

Total

 

 

(4.5

%)

 

 

0.5

%

 

 

5.1

%

 

 

5.5

%

 

 

0.8

%

 

 

3.1

%

(1)

 

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions.  See page 4 for January 2024 preliminary data.

Equity Residential

Fourth Quarter 2023 vs. Fourth Quarter 2022

Total Same Store Operating Expenses Including 77,676 Same Store Apartment Units

($ in thousands)

 

 

 

Q4 2023

 

 

Q4 2022

 

 

$

Change (1)

 

 

%

Change

 

 

% of

Q4 2023

Operating

Expenses

 

Real estate taxes

 

$

89,064

 

 

$

89,248

 

 

$

(184

)

 

 

(0.2

%)

 

 

41.2

%

On-site payroll

 

 

42,352

 

 

 

41,696

 

 

 

656

 

 

 

1.6

%

 

 

19.6

%

Utilities

 

 

34,709

 

 

 

34,672

 

 

 

37

 

 

 

0.1

%

 

 

16.0

%

Repairs and maintenance

 

 

27,336

 

 

 

27,008

 

 

 

328

 

 

 

1.2

%

 

 

12.6

%

Insurance

 

 

8,371

 

 

 

7,377

 

 

 

994

 

 

 

13.5

%

 

 

3.9

%

Leasing and advertising

 

 

2,674

 

 

 

2,673

 

 

 

1

 

 

 

0.0

%

 

 

1.2

%

Other on-site operating expenses

 

 

11,903

 

 

 

10,939

 

 

 

964

 

 

 

8.8

%

 

 

5.5

%

Total Same Store Operating Expenses (2)

 

(includes Residential and Non-Residential)

 

$

216,409

 

 

$

213,613

 

 

$

2,796

 

 

 

1.3

%

 

 

100.0

%

 

2023 vs. 2022

Total Same Store Operating Expenses Including 76,297 Same Store Apartment Units

($ in thousands)

 

 

 

2023

 

 

2022

 

 

$

Change (1)

 

 

%

Change

 

 

% of

2023

Operating

Expenses

 

Real estate taxes

 

$

356,679

 

 

$

350,928

 

 

$

5,751

 

 

 

1.6

%

 

 

40.8

%

On-site payroll

 

 

169,280

 

 

 

161,297

 

 

 

7,983

 

 

 

4.9

%

 

 

19.4

%

Utilities

 

 

136,982

 

 

 

133,579

 

 

 

3,403

 

 

 

2.5

%

 

 

15.7

%

Repairs and maintenance

 

 

117,559

 

 

 

107,702

 

 

 

9,857

 

 

 

9.2

%

 

 

13.4

%

Insurance

 

 

33,063

 

 

 

28,999

 

 

 

4,064

 

 

 

14.0

%

 

 

3.8

%

Leasing and advertising

 

 

10,194

 

 

 

10,400

 

 

 

(206

)

 

 

(2.0

%)

 

 

1.2

%

Other on-site operating expenses

 

 

49,691

 

 

 

44,697

 

 

 

4,994

 

 

 

11.2

%

 

 

5.7

%

Total Same Store Operating Expenses (2)

 

(includes Residential and Non-Residential)

 

$

873,448

 

 

$

837,602

 

 

$

35,846

 

 

 

4.3

%

 

 

100.0

%

 

(1)

 

The year-over-year changes were primarily driven by the following factors:

   

 

   

Real estate taxes – Increase due to modest escalation in rates and assessed values.

   

 

   

On-site payroll – Increase due primarily to fewer staffing vacancies compared to the same periods of 2022 and elevated employee benefit costs, partially offset by the impact of innovation initiatives.

   

 

   

Utilities – Increase primarily driven by higher water, sewer and trash expense.

   

 

   

Repairs and maintenance – Increase was impacted by increased outsourcing due to higher internal staffing utilization to address issues from California rain storms that occurred earlier in 2023.

   

 

   

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

   

 

   

Other on-site operating expenses – Increase primarily driven by higher property-related legal expenses.

   

 

(2)

 

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

Equity Residential

Debt Summary as of December 31, 2023

($ in thousands)

 

 

 

Debt

Balances (1)

 

 

% of Total

 

 

Weighted

Average

Rates (1)

 

 

Weighted

Average

Maturities

(years)

 

Secured

 

$

1,632,902

 

 

 

22.1

%

 

 

3.68

%

 

 

7.9

 

Unsecured

 

 

5,757,548

 

 

 

77.9

%

 

 

3.61

%

 

 

8.2

 

Total

 

$

7,390,450

 

 

 

100.0

%

 

 

3.63

%

 

 

8.1

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

1,398,598

 

 

 

18.9

%

 

 

3.60

%

 

 

7.4

 

Unsecured – Public

 

 

5,348,417

 

 

 

72.4

%

 

 

3.51

%

 

 

8.8

 

Fixed Rate Debt

 

 

6,747,015

 

 

 

91.3

%

 

 

3.53

%

 

 

8.5

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

 

 

 

 

 

 

 

7.18

%

 

 

 

Secured – Tax Exempt

 

 

234,304

 

 

 

3.2

%

 

 

3.53

%

 

 

10.6

 

Unsecured – Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

3.8

 

Unsecured – Commercial Paper Program (2)

 

 

409,131

 

 

 

5.5

%

 

 

5.47

%

 

 

 

Floating Rate Debt

 

 

643,435

 

 

 

8.7

%

 

 

4.79

%

 

 

4.0

 

Total

 

$

7,390,450

 

 

 

100.0

%

 

 

3.63

%

 

 

8.1

 

(1)

 

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

(2)

 

At December 31, 2023, the weighted average maturity of commercial paper outstanding was 14 days.  The weighted average amount outstanding for the year ended December 31, 2023 was approximately $276.0 million.

 
Note: The Company capitalized interest of approximately $12.3 million and $7.1 million during the years ended December 31, 2023 and 2022, respectively.  The Company capitalized interest of approximately $2.7 million and $2.9 million during the quarters ended December 31, 2023 and 2022, respectively.

Equity Residential

Debt Maturity Schedule as of December 31, 2023

($ in thousands)

 

Year

 

Fixed

Rate

 

 

Floating

Rate

 

 

Total

 

 

% of Total

 

 

Weighted

Average Coupons

on Fixed

Rate Debt (1)

 

 

Weighted

Average

Coupons on

Total Debt (1)

 

2024

 

$

 

 

$

416,200

 

(2)

$

416,200

 

 

 

5.6

%

 

N/A

 

 

 

5.63

%

2025

 

 

450,000

 

 

 

8,100

 

 

 

458,100

 

 

 

6.1

%

 

 

3.38

%

 

 

3.38

%

2026

 

 

592,025

 

 

 

9,000

 

 

 

601,025

 

 

 

8.0

%

 

 

3.58

%

 

 

3.59

%

2027

 

 

400,000

 

 

 

9,800

 

 

 

409,800

 

 

 

5.5

%

 

 

3.25

%

 

 

3.26

%

2028

 

 

900,000

 

 

 

10,700

 

 

 

910,700

 

 

 

12.2

%

 

 

3.79

%

 

 

3.79

%

2029

 

 

888,120

 

 

 

11,500

 

 

 

899,620

 

 

 

12.1

%

 

 

3.30

%

 

 

3.31

%

2030

 

 

1,148,462

 

 

 

12,700

 

 

 

1,161,162

 

 

 

15.6

%

 

 

2.53

%

 

 

2.55

%

2031

 

 

528,500

 

 

 

39,800

 

 

 

568,300

 

 

 

7.6

%

 

 

1.94

%

 

 

2.09

%

2032

 

 

 

 

 

28,000

 

 

 

28,000

 

 

 

0.4

%

 

N/A

 

 

 

3.82

%

2033

 

 

550,000

 

 

 

2,300

 

 

 

552,300

 

 

 

7.4

%

 

 

5.22

%

 

 

5.21

%

2034+

 

 

1,350,850

 

 

 

108,600

 

 

 

1,459,450

 

 

 

19.5

%

 

 

4.39

%

 

 

4.25

%

Subtotal

 

 

6,807,957

 

 

 

656,700

 

 

 

7,464,657

 

 

 

100.0

%

 

 

3.53

%

 

 

3.64

%

Deferred Financing Costs and Unamortized (Discount)

 

 

(60,942

)

 

 

(13,265

)

 

 

(74,207

)

 

N/A

 

 

N/A

 

 

N/A

 

Total

 

$

6,747,015

 

 

$

643,435

 

 

$

7,390,450

 

 

 

100.0

%

 

 

3.53

%

 

 

3.64

%

(1)

 

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

(2)

 

Includes $410.0 million in principal outstanding on the Company's Commercial Paper Program.

Equity Residential

Selected Unsecured Public Debt Covenants

 

 

 

December 31,

 

September 30,

 

 

2023

 

2023

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

 

26.5%

 

26.9%

 

 

 

 

 

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

 

6.7%

 

6.7%

 

 

 

 

 

Consolidated Income Available for Debt Service to

 

 

 

Maximum Annual Service Charges

 

 

 

(must be at least 1.5 to 1)

 

6.19

 

6.08

 

 

 

 

 

Total Unencumbered Assets to Unsecured Debt

 

 

 

(must be at least 125%)

 

510.7%

 

502.3%

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

 

 

 

December 31,

 

September 30,

 

 

2023

 

2023

Total debt to Normalized EBITDAre

 

4.17x

 

4.28x

 

 

 

 

 

Net debt to Normalized EBITDAre

 

4.12x

 

4.24x

 

 

 

 

 

Unencumbered NOI as a % of total NOI

 

89.8%

 

89.8%

 

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

Capital Structure as of December 31, 2023

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

 

Secured Debt

 

 

 

 

 

 

 

$

1,632,902

 

 

 

22.1

%

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

5,757,548

 

 

 

77.9

%

 

 

 

Total Debt

 

 

 

 

 

 

 

 

7,390,450

 

 

 

100.0

%

 

 

23.6

%

Common Shares (includes Restricted Shares)

 

 

379,291,417

 

 

 

97.0

%

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

11,581,306

 

 

 

3.0

%

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

390,872,723

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

Common Share Price at December 31, 2023

 

$

61.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,905,776

 

 

 

99.8

%

 

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

 

 

 

 

37,280

 

 

 

0.2

%

 

 

 

Total Equity

 

 

 

 

 

 

 

 

23,943,056

 

 

 

100.0

%

 

 

76.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

 

 

$

31,333,506

 

 

 

 

 

 

100.0

%

 

Perpetual Preferred Equity as of December 31, 2023

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

 

Series

 

Call Date

 

Outstanding

Shares

 

 

Liquidation

Value

 

 

Annual

Dividend

Per Share

 

 

Annual

Dividend

Amount

 

Preferred Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.29% Series K

 

12/10/26

 

 

745,600

 

 

$

37,280

 

 

$

4.145

 

 

$

3,091

 

 

Equity Residential

Common Share and Unit

Weighted Average Amounts Outstanding

 

 

2023

 

 

2022

 

 

Q4 2023

 

 

Q4 2022

 

Weighted Average Amounts Outstanding for Net Income Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

378,773,303

 

 

 

376,209,084

 

 

 

379,247,194

 

 

 

377,688,991

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

- OP Units

 

 

11,180,536

 

 

 

11,836,257

 

 

 

10,596,465

 

 

 

11,668,107

 

- long-term compensation shares/units

 

 

942,712

 

 

 

1,401,485

 

 

 

942,942

 

 

 

887,549

 

- ATM forward sales

 

 

 

 

 

3,092

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

390,896,551

 

 

 

389,449,918

 

 

 

390,786,601

 

 

 

390,244,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

378,773,303

 

 

 

376,209,084

 

 

 

379,247,194

 

 

 

377,688,991

 

OP Units - basic

 

 

11,180,536

 

 

 

11,836,257

 

 

 

10,596,465

 

 

 

11,668,107

 

Total Common Shares and OP Units - basic

 

 

389,953,839

 

 

 

388,045,341

 

 

 

389,843,659

 

 

 

389,357,098

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

- long-term compensation shares/units

 

 

942,712

 

 

 

1,401,485

 

 

 

942,942

 

 

 

887,549

 

- ATM forward sales

 

 

 

 

 

3,092

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

390,896,551

 

 

 

389,449,918

 

 

 

390,786,601

 

 

 

390,244,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ending Amounts Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

379,291,417

 

 

 

378,429,708

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

11,581,306

 

 

 

12,429,737

 

 

 

 

 

 

 

Total Shares and Units

 

 

390,872,723

 

 

 

390,859,445

 

 

 

 

 

 

 

Equity Residential

Development and Lease-Up Projects as of December 31, 2023

(Amounts in thousands except for project and apartment unit amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated/Actual

 

 

Projects

 

Location

 

Ownership

Percentage

 

No. of

Apartment

Units

 

Total

Budgeted

Capital

Cost

 

Total

Book

Value

to Date

 

Total

Debt (1)

 

Percentage

Completed

 

Start

Date

 

Initial

Occupancy

 

Completion

Date

 

Stabilization

Date

 

Percentage

Leased /

Occupied

CONSOLIDATED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Laguna Clara II

 

Santa Clara, CA

 

100%

 

 

225

 

 

$

152,621

 

 

$

78,036

 

 

$

 

 

53%

 

Q2 2022

 

Q4 2024

 

Q1 2025

 

Q4 2025

 

– / –

Projects Under Development - Consolidated

 

 

 

 

225

 

 

 

152,621

 

 

 

78,036

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Completed Not Stabilized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reverb (fka 9th and W) (2)

 

Washington, D.C.

 

92%

 

 

312

 

 

 

108,027

 

 

 

104,651

 

 

 

 

 

100%

 

Q3 2021

 

Q2 2023

 

Q2 2023

 

Q3 2024

 

82% / 79%

Projects Completed Not Stabilized - Consolidated

 

 

 

 

312

 

 

 

108,027

 

 

 

104,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNCONSOLIDATED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alloy Sunnyside (3)

 

Denver, CO

 

80%

 

 

209

 

 

 

70,004

 

 

 

62,071

 

 

 

27,304

 

 

94%

 

Q3 2021

 

Q2 2024

 

Q2 2024

 

Q1 2025

 

– / –

Alexan Harrison (3)

 

Harrison, NY

 

62%

 

 

450

 

 

 

200,664

 

 

 

175,135

 

 

 

77,058

 

 

92%

 

Q3 2021

 

Q1 2024

 

Q4 2024

 

Q2 2026

 

– / –

Solana Beeler Park (3)

 

Denver, CO

 

90%

 

 

270

 

 

 

85,206

 

 

 

56,178

 

 

 

22,858

 

 

64%

 

Q4 2021

 

Q2 2024

 

Q3 2024

 

Q1 2025

 

– / –

Remy (Toll) (3)

 

Frisco, TX

 

75%

 

 

357

 

 

 

98,937

 

 

 

77,170

 

 

 

31,494

 

 

80%

 

Q1 2022

 

Q1 2024

 

Q4 2024

 

Q3 2025

 

– / –

Sadie (fka Settler) (Toll) (3)

 

Fort Worth, TX

 

75%

 

 

362

 

 

 

82,775

 

 

 

55,522

 

 

 

14,944

 

 

69%

 

Q2 2022

 

Q2 2024

 

Q3 2024

 

Q3 2025

 

– / –

Lyle (Toll) (2)

 

Dallas, TX

 

75%

 

 

334

 

 

 

86,332

 

 

 

52,914

 

 

 

21,962

 

 

66%

 

Q3 2022

 

Q2 2024

 

Q3 2024

 

Q1 2026

 

– / –

Projects Under Development - Unconsolidated

 

 

 

 

1,982

 

 

 

623,918

 

 

 

478,990

 

 

 

195,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects - Consolidated

 

 

 

 

 

 

537

 

 

 

260,648

 

 

 

182,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects - Unconsolidated

 

 

 

 

 

 

1,982

 

 

 

623,918

 

 

 

478,990

 

 

 

195,620

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects

 

 

 

 

 

 

2,519

 

 

$

884,566

 

 

$

661,677

 

 

$

195,620

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS

 

Total Budgeted

Capital Cost

 

 

Q4 2023

NOI

 

Projects Under Development - Consolidated

 

$

152,621

 

 

$

 

Projects Completed Not Stabilized - Consolidated

 

 

108,027

 

 

 

741

 

Projects Under Development - Unconsolidated

 

 

623,918

 

 

 

(108

)

 

 

$

884,566

 

 

$

633

 

(1)

 

Except for Reverb where the Company paid off the third party construction loan in the third quarter of 2023, all non-wholly owned projects are being partially funded with project-specific construction loans. None of these loans are recourse to the Company.

(2)

 

The land parcels under these projects are subject to long-term ground leases.

(3)

 

The Total Budgeted Capital Cost on these projects increased by an aggregate of $13.0 million or 2.5% of initial budget primarily due to higher than budgeted interest incurred on construction loans.

Equity Residential

Capital Expenditures to Real Estate

For the Year Ended December 31, 2023

(Amounts in thousands except for apartment unit and per apartment unit amounts)

 

 

Same Store

Properties

 

 

Non-Same Store

Properties/Other

 

 

Total

 

 

Same Store Avg.

Per Apartment Unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Apartment Units

 

 

76,297

 

 

 

3,894

 

 

 

80,191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Improvements

 

$

137,058

 

 

$

11,907

 

(2)

$

148,965

 

 

$

1,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renovation Expenditures

 

 

79,291

 

(1)

 

22,863

 

(2)

 

102,154

 

 

 

1,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Replacements

 

 

66,496

 

 

 

1,727

 

 

 

68,223

 

 

 

872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures to Real Estate (3)

 

$

282,845

 

 

$

36,497

 

 

$

319,342

 

 

$

3,707

 

(1)

 

Renovation Expenditures on 2,799 same store apartment units for the year ended December 31, 2023 approximated $28,328 per apartment unit renovated.

(2)

 

Includes expenditures for two properties that have been removed from same store while undergoing major renovations requiring a significant number of apartment units to be vacated to accommodate the extensive planned improvements.  The renovation at one property is expected to continue through the second quarter of 2024 with the other continuing into 2025. 

(3)

 

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

 
Note: Approximately 40% of the Company's 2023 Capital Expenditures to Real Estate for Same Store Properties were NOI-Enhancing, including the $79.3 million of Renovation Expenditures noted above, with the remainder concentrated in sustainability and property-level technology spend.

Equity Residential

Normalized EBITDAre Reconciliations

(Amounts in thousands)

 

 

Trailing Twelve Months

 

 

2023

 

 

2022

 

 

 

December 31, 2023

 

 

September 30, 2023

 

 

Q4

 

 

Q3

 

 

Q2

 

 

Q1

 

 

Q4

 

Net income

 

$

868,488

 

 

$

711,573

 

 

$

322,269

 

 

$

181,286

 

 

$

144,862

 

 

$

220,071

 

 

$

165,354

 

Interest expense incurred, net

 

 

269,556

 

 

 

266,709

 

 

 

68,674

 

 

 

68,891

 

 

 

65,590

 

 

 

66,401

 

 

 

65,827

 

Amortization of deferred financing costs

 

 

8,941

 

 

 

9,331

 

 

 

1,918

 

 

 

3,027

 

 

 

2,017

 

 

 

1,979

 

 

 

2,308

 

Amortization of above/below market lease intangibles

 

 

4,464

 

 

 

4,464

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

Depreciation

 

 

888,709

 

 

 

876,193

 

 

 

226,788

 

 

 

224,736

 

 

 

221,355

 

 

 

215,830

 

 

 

214,272

 

Income and other tax expense (benefit)

 

 

1,148

 

 

 

1,067

 

 

 

256

 

 

 

258

 

 

 

336

 

 

 

298

 

 

 

175

 

EBITDA

 

 

2,041,306

 

 

 

1,869,337

 

 

 

621,021

 

 

 

479,314

 

 

 

435,276

 

 

 

505,695

 

 

 

449,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(282,539

)

 

 

(127,013

)

 

 

(155,505

)

 

 

(26,912

)

 

 

87

 

 

 

(100,209

)

 

 

21

 

EBITDAre

 

 

1,758,767

 

 

 

1,742,324

 

 

 

465,516

 

 

 

452,402

 

 

 

435,363

 

 

 

405,486

 

 

 

449,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs (other expenses)

 

 

3,647

 

 

 

4,223

 

 

 

908

 

 

 

746

 

 

 

661

 

 

 

1,332

 

 

 

1,484

 

(Income) loss from investments in unconsolidated entities - operations

 

 

5,378

 

 

 

5,422

 

 

 

1,531

 

 

 

1,242

 

 

 

1,223

 

 

 

1,382

 

 

 

1,575

 

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

 

 

(1,504

)

 

 

1,714

 

 

 

7

 

 

 

(1,598

)

 

 

 

 

 

87

 

 

 

3,225

 

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

 

 

(13,466

)

 

 

(4,461

)

 

 

(9,005

)

 

 

(4,461

)

 

 

 

 

 

 

 

 

 

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

 

 

(1,055

)

 

 

(1,067

)

 

 

 

 

 

(62

)

 

 

(193

)

 

 

(800

)

 

 

(12

)

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

 

 

17,310

 

 

 

12,361

 

 

 

5,694

 

 

 

3,104

 

 

 

3,513

 

 

 

4,999

 

 

 

745

 

Advocacy contributions (other expenses)

 

 

2,142

 

 

 

527

 

 

 

1,665

 

 

 

150

 

 

 

320

 

 

 

7

 

 

 

50

 

Data transformation project (other expenses)

 

 

3,780

 

 

 

4,900

 

 

 

 

 

 

295

 

 

 

1,405

 

 

 

2,080

 

 

 

1,120

 

Real estate tax transaction adjustment (real estate taxes)

 

 

 

 

 

(18,072

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,072

)

Other

 

 

(589

)

 

 

449

 

 

 

(602

)

 

 

1

 

 

 

6

 

 

 

6

 

 

 

436

 

Normalized EBITDAre

 

$

1,774,410

 

 

$

1,748,320

 

 

$

465,714

 

 

$

451,819

 

 

$

442,298

 

 

$

414,579

 

 

$

439,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Items:

 

December 31, 2023

 

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

7,390,450

 

 

$

7,479,257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

(50,743

)

 

 

(39,250

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage principal reserves/sinking funds

 

 

(29,270

)

 

 

(30,234

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

 

$

7,310,437

 

 

$

7,409,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

Year Ended December 31,

 

 

Quarter Ended December 31,

 

 

 

2023

 

 

2022

 

 

Variance

 

 

2023

 

 

2022

 

 

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating real estate assets

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs (other expenses)

 

 

3,647

 

 

 

4,780

 

 

 

(1,133

)

 

 

908

 

 

 

1,484

 

 

 

(576

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

1,143

 

 

 

717

 

 

 

426

 

 

 

 

 

 

348

 

 

 

(348

)

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

 

 

 

 

 

3,947

 

 

 

(3,947

)

 

 

 

 

 

 

 

 

 

Debt extinguishment and preferred share redemption (gains) losses

 

 

1,143

 

 

 

4,664

 

 

 

(3,521

)

 

 

 

 

 

348

 

 

 

(348

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

1,647

 

 

 

1,204

 

 

 

443

 

 

 

410

 

 

 

317

 

 

 

93

 

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

 

 

(1,504

)

 

 

1,164

 

 

 

(2,668

)

 

 

7

 

 

 

3,225

 

 

 

(3,218

)

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

 

 

(13,466

)

 

 

 

 

 

(13,466

)

 

 

(9,005

)

 

 

 

 

 

(9,005

)

Non-operating asset (gains) losses

 

 

(13,323

)

 

 

2,368

 

 

 

(15,691

)

 

 

(8,588

)

 

 

3,542

 

 

 

(12,130

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(1,055

)

 

 

(1,650

)

 

 

595

 

 

 

 

 

 

(12

)

 

 

12

 

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

 

 

17,310

 

 

 

1,495

 

 

 

15,815

 

 

 

5,694

 

 

 

745

 

 

 

4,949

 

Advocacy contributions (other expenses)

 

 

2,142

 

 

 

1,512

 

 

 

630

 

 

 

1,665

 

 

 

50

 

 

 

1,615

 

Data transformation project (other expenses)

 

 

3,780

 

 

 

1,120

 

 

 

2,660

 

 

 

 

 

 

1,120

 

 

 

(1,120

)

Real estate tax transaction adjustment (real estate taxes)

 

 

 

 

 

(18,072

)

 

 

18,072

 

 

 

 

 

 

(18,072

)

 

 

18,072

 

Other

 

 

(589

)

 

 

1,694

 

 

 

(2,283

)

 

 

(602

)

 

 

436

 

 

 

(1,038

)

Other miscellaneous items

 

 

21,588

 

 

 

(13,901

)

 

 

35,489

 

 

 

6,757

 

 

 

(15,733

)

 

 

22,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments from FFO to Normalized FFO

 

$

13,055

 

 

$

(2,089

)

 

$

15,144

 

 

$

(923

)

 

$

(10,359

)

 

$

9,436

 

 

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.

 

 

Q1 2024

 

Full Year 2024

 

 

 

 

 

2024 Normalized FFO Guidance (per share diluted)

 

 

 

 

 

 

 

 

 

Expected Normalized FFO Per Share

 

$0.88 to $0.92

 

$3.80 to $3.90

 

 

 

 

 

2024 Same Store Assumptions (includes Residential and Non-Residential)

 

 

 

 

 

 

 

Physical Occupancy

 

 

 

95.9%

Revenue change

 

 

 

2.0% to 3.0%

Expense change

 

 

 

3.5% to 4.5%

NOI change (1)

 

 

 

1.0% to 2.6%

 

 

 

 

 

2024 Transaction Assumptions

 

 

 

 

 

 

 

 

 

Consolidated rental acquisitions

 

 

 

$1.0B

Consolidated rental dispositions

 

 

 

$1.0B

Transaction Accretion (Dilution)

 

 

 

(25 basis points)

 

 

 

 

 

2024 Debt Assumptions

 

 

 

 

 

 

 

 

 

Weighted average debt outstanding

 

 

 

$7.27B to $7.47B

Interest expense, net (on a Normalized FFO basis)

 

 

 

$268.0M to $274.0M

Capitalized interest

 

 

 

$9.7M to $13.7M

 

 

 

 

 

2024 Capital Expenditures to Real Estate Assumptions for Same Store Properties (2)

 

 

 

 

 

Capital Expenditures to Real Estate for Same Store Properties

 

 

 

$295.0M

Capital Expenditures to Real Estate per Same Store Apartment Unit

 

$3,800

 

 

 

 

 

2024 Other Guidance Assumptions

 

 

 

 

 

 

 

 

 

Property management expense

 

 

 

$124.0M to $126.0M

General and administrative expense

 

 

 

$57.5M to $61.5M

Debt offerings

 

 

 

No amounts budgeted

Weighted average Common Shares and Units - Diluted

 

391.1M

(1)

 

Approximately 20 basis point change in NOI percentage = $0.01 per share change in EPS/FFO per share/Normalized FFO per share.

(2)

 

Similar to 2023, the Company expects that approximately 40% of its Capital Expenditures to Real Estate for Same Store Properties will be NOI-Enhancing (primarily renovations, sustainability and property-level technology spend).  During 2024, the Company expects to spend approximately $104.0 million for apartment unit Renovation Expenditures on approximately 3,250 same store apartment units at an average cost of approximately $32,000 per apartment unit renovated with the remainder of the NOI-Enhancing spend consisting of sustainability and property-level technology expenditures.

Equity Residential

Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms

(Amounts in thousands except per share and per apartment unit data)

(All per share data is diluted)

This Earnings Release and Supplemental Financial Information includes certain non-GAAP financial measures and other terms that management believes are helpful in understanding our business. The definitions and calculations of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other real estate investment trusts (“REIT”) and, accordingly, may not be comparable. These non-GAAP financial measures should not be considered as an alternative to net earnings or any other measurement of performance computed in accordance with accounting principles generally accepted in the United States (“GAAP”) or as an alternative to cash flows from specific operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity.

Acquisition Capitalization Rate or Cap Rate – NOI that the Company anticipates receiving in the next 12 months (or the year two or three stabilized NOI for properties that are in lease-up at acquisition) less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross purchase price of the asset. The weighted average Acquisition Cap Rate for acquired properties is weighted based on the projected NOI streams and the relative purchase price for each respective property.

Average Rental Rate – Total Residential rental revenues reflected on a straight-line basis in accordance with GAAP divided by the weighted average occupied apartment units for the reporting period presented.

Bad Debt, Net – Change in rental income due to bad debt write-offs and reserves, net of amounts collected on previously written-off or reserved accounts.

Blended Rate – The weighted average of New Lease Change and Renewal Rate Achieved.

Capital Expenditures to Real Estate:

Building Improvements Includes roof replacement, paving, building mechanical equipment systems, exterior siding and painting, major landscaping, furniture, fixtures and equipment for amenities and common areas, vehicles and office and maintenance equipment.

NOI-Enhancing – Primarily includes Renovation Expenditures as well as sustainability and property-level technology expenditures that are intended to increase revenues or decrease expenses.

Renovation Expenditures – Apartment unit renovation costs (primarily kitchens and baths) designed to reposition these units for higher rental levels in their respective markets.

Replacements – Includes appliances, mechanical equipment, fixtures and flooring (including hardwood and carpeting).

Debt Balances:

Commercial Paper Program The Company may borrow up to a maximum of $1.0 billion under its Commercial Paper Program subject to market conditions. The notes bear interest at various floating rates.

Revolving Credit Facility The Company’s $2.5 billion unsecured revolving credit facility matures October 26, 2027. The interest rate on advances under the facility will generally be SOFR plus a spread (currently 0.725%), or based on bids received from the lending group, and an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. In addition, the Company limits its utilization of the facility in order to maintain liquidity to support its $1.0 billion Commercial Paper Program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility:

 

 

December 31, 2023

 

Unsecured revolving credit facility commitment

 

$

2,500,000

 

Commercial paper balance outstanding

 

 

(410,000

)

Unsecured revolving credit facility balance outstanding

 

 

 

Other restricted amounts

 

 

(3,415

)

Unsecured revolving credit facility availability

 

$

2,086,585

 

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):

 

 

Year Ended December 31, 2023

 

 

Quarter Ended December 31, 2023

 

Net Gain (Loss) on Sales of Real Estate Properties

 

$

282,539

 

 

$

155,505

 

Accumulated Depreciation Gain

 

 

(106,110

)

 

 

(50,353

)

Economic Gain (Loss)

 

$

176,429

 

 

$

105,152

 

Forecasted Embedded Growth The positive or negative contribution to growth implied by annualizing total lease income anticipated for the last month of the current year (without regard to vacancy) compared to anticipated actual full year lease income for the current year (without regard to vacancy) and excluding the impact of Leasing Concessions and other income. This metric is a helpful data point in that it captures the impact of leases in existence at the end of the current year and their impact on rental income for the following year.

FFO and Normalized FFO:

Funds From Operations (“FFO”) Nareit defines FFO (December 2018 White Paper) as net income (computed in accordance with GAAP), excluding gains or losses from sales and impairment write-downs of depreciable real estate and land when connected to the main business of a REIT, impairment write-downs of investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and depreciation and amortization related to real estate. Adjustments for partially owned consolidated and unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. Expected FFO per share is calculated on a basis consistent with actual FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

The Company believes that FFO and FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses from sales and impairment write-downs of depreciable real estate and excluding depreciation related to real estate (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies.

Normalized Funds From Operations ("Normalized FFO" or "NFFO") – Normalized FFO begins with FFO and excludes:

  • the impact of any expenses relating to non-operating real estate asset impairment;
  • pursuit cost write-offs;
  • gains and losses from early debt extinguishment and preferred share redemptions;
  • gains and losses from non-operating assets; and
  • other miscellaneous items.

Expected Normalized FFO per share is calculated on a basis consistent with actual Normalized FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

The Company believes that Normalized FFO and Normalized FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company's operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual operating results.

FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

FFO available to Common Shares and Units and Normalized FFO available to Common Shares and Units are calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with GAAP. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Noncontrolling Interests – Operating Partnership". Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.

The following table presents reconciliations of EPS to FFO per share and Normalized FFO per share for Consolidated Statements of Funds From Operations and Normalized Funds From Operations.

 

 

 

 

 

 

 

 

Actual

 

 

Actual

 

 

Expected

 

 

Expected

 

 

 

Actual 2023

 

 

Actual 2022

 

 

Q4 2023

 

 

Q4 2022

 

 

Q1 2024

 

 

2024

 

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

EPS – Diluted

 

$

2.20

 

 

$

2.05

 

 

$

0.82

 

 

$

0.42

 

 

$0.77 to $0.81

 

 

$2.91 to $3.01

 

Depreciation expense

 

 

2.27

 

 

 

2.26

 

 

 

0.58

 

 

 

0.55

 

 

 

0.58

 

 

 

2.25

 

Net (gain) loss on sales

 

 

(0.72

)

 

 

(0.78

)

 

 

(0.40

)

 

 

 

 

 

(0.48

)

 

 

(1.42

)

Impairment – operating real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share – Diluted

 

 

3.75

 

 

 

3.53

 

 

 

1.00

 

 

 

0.97

 

 

0.87 to 0.91

 

 

3.74 to 3.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

0.01

 

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

0.01

 

Debt extinguishment and preferred share

 

redemption (gains) losses

 

 

 

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating asset (gains) losses

 

 

(0.03

)

 

 

0.01

 

 

 

(0.02

)

 

 

0.01

 

 

 

 

 

 

0.01

 

Other miscellaneous items

 

 

0.05

 

 

 

(0.04

)

 

 

0.02

 

 

 

(0.04

)

 

 

0.01

 

 

 

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO per share – Diluted

 

$

3.78

 

 

$

3.52

 

 

$

1.00

 

 

$

0.94

 

 

$0.88 to $0.92

 

 

$3.80 to $3.90

 

Lease-Up NOI – Represents NOI for development properties: (i) in various stages of lease-up; and (ii) where lease-up has been completed but the properties were not stabilized (defined as having achieved 90% occupancy for three consecutive months) for all of the current and comparable periods presented.

Leasing Concessions – Reflects upfront discounts on both new move-in and renewal leases on a straight-line basis.

Net Operating Income (“NOI”) – NOI is the Company’s primary financial measure for evaluating each of its apartment properties. NOI is defined as rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company's apartment properties. NOI does not include an allocation of property management expenses either in the current or comparable periods. Rental income for all leases and operating expense for ground leases (for both same store and non-same store properties) are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

The following tables present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store/other results (see Same Store Results):

 

 

Year Ended December 31,

 

 

Quarter Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating income

 

$

1,160,585

 

 

$

1,116,046

 

 

$

392,501

 

 

$

242,363

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Property management

 

 

119,804

 

 

 

110,304

 

 

 

29,490

 

 

 

27,269

 

General and administrative

 

 

60,716

 

 

 

58,710

 

 

 

11,581

 

 

 

11,677

 

Depreciation

 

 

888,709

 

 

 

882,168

 

 

 

226,788

 

 

 

214,272

 

Net (gain) loss on sales of real estate

 

properties

 

 

(282,539

)

 

 

(304,325

)

 

 

(155,505

)

 

 

21

 

Total NOI

 

$

1,947,275

 

 

$

1,862,903

 

 

$

504,855

 

 

$

495,602

 

Rental income:

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

$

2,754,711

 

 

$

2,609,766

 

 

$

711,756

 

 

$

685,317

 

Non-same store/other

 

 

119,253

 

 

 

125,414

 

 

 

15,744

 

 

 

14,386

 

Total rental income

 

 

2,873,964

 

 

 

2,735,180

 

 

 

727,500

 

 

 

699,703

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

 

873,448

 

 

 

837,602

 

 

 

216,409

 

 

 

213,613

 

Non-same store/other

 

 

53,241

 

 

 

34,675

 

 

 

6,236

 

 

 

(9,512

)

Total operating expenses

 

 

926,689

 

 

 

872,277

 

 

 

222,645

 

 

 

204,101

 

NOI:

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

 

1,881,263

 

 

 

1,772,164

 

 

 

495,347

 

 

 

471,704

 

Non-same store/other

 

 

66,012

 

 

 

90,739

 

 

 

9,508

 

 

 

23,898

 

Total NOI

 

$

1,947,275

 

 

$

1,862,903

 

 

$

504,855

 

 

$

495,602

 

New Lease Change The net effective change in rent (inclusive of Leasing Concessions) for a lease with a new or transferring resident compared to the rent for the prior lease of the identical apartment unit, regardless of lease term.

Non-Residential – Consists of revenues and expenses from retail and public parking garage operations.

Non-Same Store Properties – For annual comparisons, primarily includes all properties acquired during 2022 and 2023, plus any properties in lease-up and not stabilized as of January 1, 2022.

Percentage of Residents Renewing – Leases renewed expressed as a percentage of total renewal offers extended during the reporting period.

Physical Occupancy – The weighted average occupied apartment units for the reporting period divided by the average of total apartment units available for rent for the reporting period.

Pricing Trend – Weighted average of 12-month base rent including amenity amount less Leasing Concessions on 12-month signed leases for the reporting period.

Renewal Rate Achieved The net effective change in rent (inclusive of Leasing Concessions) for a new lease on an apartment unit where the lease has been renewed as compared to the rent for the prior lease of the identical apartment unit, regardless of lease term.

Residential – Consists of multifamily apartment revenues and expenses.

Same Store Operating Expenses:

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

Same Store Residential Revenues Revenues from our Same Store Properties presented on a GAAP basis which reflects the impact of Leasing Concessions on a straight-line basis.

Same Store Residential Revenues with Leasing Concessions on a cash basis is presented in Same Store Results and is considered by the Company to be a supplemental measure to Same Store Residential Revenues in conformity with GAAP to help investors evaluate the impact of both current and historical Leasing Concessions on GAAP-based Same Store Residential Revenues and to more readily enable comparisons to revenue as reported by other companies. Same Store Residential Revenues with Leasing Concessions on a cash basis reflects the impact of Leasing Concessions used in the period and allows an investor to understand the historical trend in cash Leasing Concessions.

% of Stabilized Budgeted NOI – Represents original budgeted 2024 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.

Total Budgeted Capital Cost – Estimated remaining cost for projects under development and/or developed plus all capitalized costs incurred to date, including land acquisition costs, construction costs, capitalized real estate taxes and insurance, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP. Amounts for partially owned consolidated and unconsolidated properties are presented at 100% of the project.

Total Market Capitalization – The aggregate of the market value of the Company’s outstanding common shares, including restricted shares, the market value of the Company’s operating partnership units outstanding, including restricted units (based on the market value of the Company’s common shares) and the outstanding principal balance of debt. The Company believes this is a useful measure of a real estate operating company’s long-term liquidity and balance sheet strength, because it shows an approximate relationship between a company’s total debt and the current total market value of its assets based on the current price at which the Company’s common shares trade. However, because this measure of leverage changes with fluctuations in the Company’s share price, which occur regularly, this measure may change even when the Company’s earnings, interest and debt levels remain stable.

Traffic – Consists of an expression of interest in an apartment by completing an in-person tour, self-guided tour or virtual tour that may result in an application to lease.

Transaction Accretion (Dilution) – Represents the spread between the Acquisition Cap Rate and the Disposition Yield.

Turnover Total Residential move-outs (including inter-property and intra-property transfers) divided by total Residential apartment units.

Unencumbered NOI % – Represents NOI generated by consolidated real estate assets unencumbered by outstanding secured debt as a percentage of total NOI generated by all of the Company's consolidated real estate assets.

Unlevered Internal Rate of Return (“IRR”) – The Unlevered IRR on sold properties is the compound annual rate of return calculated by the Company based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs incurred by the Company; (ii) total revenues earned during the Company’s ownership period; (iii) total direct property operating expenses (including real estate taxes and insurance) incurred during the Company’s ownership period; (iv) capital expenditures incurred during the Company’s ownership period; and (v) the gross sales price of the property net of selling costs.

The calculation of the Unlevered IRR does not include an adjustment for the Company’s property management expense, general and administrative expense or interest expense (including loan assumption costs and other loan-related costs). Therefore, the Unlevered IRR is not a substitute for net income as a measure of our performance. Management believes that the Unlevered IRR achieved during the period a property is owned by the Company is useful because it is one indication of the gross value created by the Company’s acquisition, development, renovation, management and ultimate sale of a property, before the impact of Company overhead. The Unlevered IRR achieved on the properties as cited in this release should not be viewed as an indication of the gross value created with respect to other properties owned by the Company, and the Company does not represent that it will achieve similar Unlevered IRRs upon the disposition of other properties. The weighted average Unlevered IRR for sold properties is weighted based on all cash flows over the investment period for each respective property, including net sales proceeds.

Weighted Average Coupons – Contractual interest rate for each debt instrument weighted by principal balances as of December 31, 2023. In case of debt for which fair value hedges are in place, the rate payable under the corresponding derivatives is used in lieu of the contractual interest rate.

Weighted Average Rates – Interest expense for each debt instrument for the year ended December 31, 2023 weighted by its average principal balance for the same period. Interest expense includes amortization of premiums, discounts and other comprehensive income on debt and related derivative instruments. In case of debt for which derivatives are in place, the income or expense recognized under the corresponding derivatives is included in the total interest expense for the period.

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