Equity Residential (NYSE: EQR) today reported results for the quarter and nine months ended September 30, 2024 and has posted a Q3 2024 Management Presentation to its website as referenced below.

Third Quarter 2024 Results

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

Recent Highlights

• During the third quarter of 2024, the Company acquired fourteen properties, consisting of 4,418 apartment units, for an aggregate acquisition price of approximately $1.26 billion at a weighted average Acquisition Cap Rate of 5.1%. These assets are located in the Company’s Expansion Markets of Atlanta, Dallas/Ft. Worth and Denver.
• In September of 2024, the Company issued $600.0 million of unsecured 10-year notes at a coupon rate of 4.65%, the lowest 10-year coupon rate issued by a REIT since 2022, and an all-in effective yield of 4.9%. Proceeds from this issuance were used to partially fund the acquisitions described above.
• Same store revenue increased 2.7% for the third quarter of 2024 compared to the third quarter of 2023, driven by good demand and modest supply across most of the Company’s markets. Same store expense increased 3.2% with low growth in the primary expense categories. Same store Net Operating Income (NOI) increased 2.5%.
• The Company published its 11th annual Corporate Responsibility report highlighting Equity Residential’s goals and accomplishments.

“We delivered solid same store revenue results in the quarter with the underlying drivers mostly in line with expectations. Our business continues to benefit from high employment levels among our well earning resident base, wage growth across the economy and limited home ownership and rental options in most of our markets, making our well-located apartment properties an appealing choice," said Mark J. Parrell, Equity Residential’s President and CEO. “Looking ahead, we continue to be excited about the prospects for our business as lower levels of competitive new supply in future years, especially in our Established Markets on the coasts, along with a positive forward employment picture for our higher earning customer, positions us well to continue to grow cash flows.”

Results Per Share

The change in EPS for the quarter ended September 30, 2024 compared to the same period of 2023 is due primarily to lower property sale gains, higher depreciation expense, the various adjustment items listed on page 27 of this release and the items described below. The change in EPS for the nine months ended September 30, 2024 compared to the same period of 2023 is due primarily to higher property sale gains, higher depreciation expense, the various adjustment items listed on page 27 of this release and the items described below.

The per share changes in FFO for the quarter and nine months ended September 30, 2024 compared to the same periods of 2023 are due primarily to the various adjustment items listed on page 27 of this release and the items described below.

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

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 29 through 34 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 31 and 32 of this release.

Same Store Results

The following table shows the total same store results for the periods presented (includes Residential and Non-Residential).

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.

See page 12 for detail and reconciliations of Same Store Residential Revenues on a GAAP basis to Same Store Residential Revenues with Leasing Concessions on a cash basis.

Residential Same Store Operating Statistics

The following table includes select operating metrics for Residential Same Store Properties (for 76,916 same store apartment units):

In the third quarter of 2024, Physical Occupancy and Percentage of Residents Renewing exceeded expectations while Renewal Rate Achieved remained strong. In September 2024, New Lease Change, a volatile metric, seasonally decelerated more quickly than anticipated, primarily due to weakness in the city of Los Angeles and in our Expansion Markets, leading to Blended Rates at the low end of the Company's expected range for the third quarter of 2024. Blended Rate has normalized with typical seasonal patterns thus far in the fourth quarter of 2024 and is expected to be between 0.75% and 1.25% for the fourth quarter of 2024.

Investment Activity

During the third quarter of 2024, the Company acquired 14 properties consisting of 4,418 apartment units, located in the Company’s Expansion Markets of Atlanta, Dallas/Ft. Worth and Denver, for an aggregate acquisition price of approximately $1.26 billion at a weighted average Acquisition Cap Rate of 5.1%. The acquired properties are seven years old on average. Subsequent to the end of the third quarter of 2024, the Company acquired a two year old, 274 apartment unit property in suburban Atlanta for a purchase price of $89.5 million. During the third quarter of 2024, the Company sold a 63 year old property, located in Washington, D.C., consisting of 138 apartment units, for a sale price of approximately $31.5 million at a Disposition Yield of 6.1%.

During the first nine months of 2024, the Company acquired 15 properties, consisting of 4,578 apartment units, for an aggregate purchase price of approximately $1.3 billion at a weighted average Acquisition Cap Rate of 5.1%. The acquired properties are six years old on average. Also during the first nine months of 2024, the Company sold six properties consisting of 969 apartment units, for an aggregate sale price of approximately $365.5 million at a weighted average Disposition Yield of 5.7%. The properties sold during 2024 have an average age of 43 years.

As of September 30, 2024, the Company has 42 properties (including those under development) located in its Expansion Markets of Atlanta, Austin, Dallas/Ft. Worth and Denver, which constitutes approximately 10% of total portfolio NOI.

“We are seeing an increasingly active transaction market providing us with opportunities to acquire properties in our Expansion Markets at attractive prices relative to replacement costs and at reasonable cap rates on depressed rent rolls as we execute on our strategy to better balance our portfolio,” said Alec Brackenridge, Equity Residential's Executive Vice President and Chief Investment Officer. “We are continuing to build a portfolio in the metro areas on the coasts and in select markets in the sunbelt that are most desirable to our target affluent renter demographic and have favorable long-term return characteristics.”

Capital Markets Activity

On September 11, 2024, the Company closed on the issuance of $600.0 million of 10-year unsecured notes at a coupon rate of 4.65%, which is the lowest 10-year coupon rate issued by a REIT since 2022, and an all-in effective yield of 4.9%. Proceeds from the offering were used to partially fund the Company’s acquisition activity during the quarter.

Fourth Quarter 2024 Guidance

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

The difference between the third quarter of 2024 actual EPS of $0.38 and the fourth quarter of 2024 EPS guidance midpoint of $1.03 is due primarily to higher expected property sale gains, higher expected depreciation expense, lower expected non-operating asset gains and the items described below.

The difference between the third quarter of 2024 actual FFO of $0.99 per share and the fourth quarter of 2024 FFO guidance midpoint of $0.97 per share is due primarily to lower expected non-operating asset gains and the items described below.

The difference between the third quarter of 2024 actual Normalized FFO of $0.98 per share and the fourth quarter of 2024 Normalized FFO guidance midpoint of $1.00 per share is due primarily to:

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 312 properties consisting of 84,018 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin. For more information on Equity Residential, please visit our website at www.equityapartments.com.

Forward-Looking Statements

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

A live web cast of the Company’s conference call discussing these results will take place tomorrow, Thursday, October 31, 2024 at 10:30 a.m. CT. In connection with the conference call, the Company is also providing a Management Presentation on its website. Please visit the Investor section of the Company’s website at www.equityapartments.com for the webcast link.

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.