Stocks & Financial News
Breaking financial news 24/7 courtesy of TradingCharts.com Inc. / TFC Commodity Charts
Equity Residential Reports First Quarter 2024 Results
First Quarter 2024 Results
All per share results are reported as available to common shares/units on a diluted basis.
Quarter Ended March 31, ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ -------------------- 2024 2023 $ Change % Change -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------ -------------------- Earnings Per Share (EPS) $ 0.77 $ 0.56 $ 0.21 37.5 % Funds from Operations (FFO) per share $ 0.87 $ 0.85 $ 0.02 2.4 % Normalized FFO (NFFO) per share $ 0.93 $ 0.87 $ 0.06 6.9 %
Recent Highlights
Same store revenue increased 4.1% for the first quarter of 2024 compared to the first quarter of 2023, driven by healthy demand and modest supply across most of our markets. Same store expense increased 1.3% with low or negative growth in our primary expense categories. The Company's continued focus on expense efficiency has delivered a five-year compounded annual growth rate of same store expenses of 3.1%. Same store Net Operating Income (NOI) increased 5.5%. Our focus on same store revenue growth, same store expense and corporate overhead efficiency and limited exposure to higher interest rates led to strong growth. Our high quality customer experience along with the overall desirability of our locations has led to the lowest quarterly same store Turnover in our history of 8.6%. During the first quarter of 2024, the Company sold three properties - one in Boston, one in Orange County and one in San Francisco - consisting of 504 apartment units, for an aggregate sale price of approximately $248.5 million. During the first quarter of 2024, the Company repurchased and retired 652,452 of its common shares, at a weighted average purchase price of $58.95 per share, for an aggregate purchased amount of approximately $38.5 million.
"Our operating business performed very well this quarter positioning us favorably as we enter our primary leasing season," said Mark J. Parrell, Equity Residential's President and CEO. "The positive demand dynamics in our affluent renter demographic, limited new apartment supply in our existing predominantly coastal markets and our laser focus on expense management continue to produce good results."
Results Per Share
The change in EPS for the quarter ended March 31, 2024 compared to the same period of 2023 is due primarily to higher property sale gains, the various adjustment items listed on page 25 of this release and the items described below.
The per share change in FFO for the quarter ended March 31, 2024 compared to the same period of 2023 is due primarily to the various adjustment items listed on page 25 of this release and the items described below.
The per share change in Normalized FFO is due primarily to:
Positive/(Negative) Impact --------------------------------- -------------------- First Quarter 2024 vs. First Quarter 2023 --------------------------------- -------------------- Same store NOI $ 0.07 2024 and 2023 transaction activity impact on NOI, net (0.01 ) Corporate overhead (1) (0.01 ) Other items 0.01 -------------------- ------------- --------------------
(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 27 through 33 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 6, 29 and 30 of this release.
Same Store Results
The following table shows the total same store results for the periods presented (includes Residential and Non-Residential).
First Quarter 2024 vs. First Quarter 2024 vs. First Quarter 2023 Fourth Quarter 2023 ---------------------- ---------------------- Apartment Units 77,373 77,950 Physical Occupancy 96.3% vs. 95.9% 96.3% vs. 95.8% Revenues (1) 4.1% 1.1% Expenses 1.3% 6.5%
(1) See page 10 for further discussion.
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.
First Quarter 2024 vs. First Quarter 2024 vs. First Quarter 2023 Fourth Quarter 2023 ------------------------------- -------------------- ------------------------------- -------------------- % Change % Change ------------------------------- -------------------- ------------------------------- -------------------- Same Store Residential Revenues- comparable period Lease rates 2.9 % 0.1 % Leasing Concessions (0.3 %) 0.0 % Vacancy gain (loss) 0.4 % 0.6 % Bad Debt, Net (1) 0.3 % 0.0 % Other (2) 0.6 % (0.1 %) -------------------- ----------- -------------------- -------------------- ----------- -------------------- Same Store Residential Revenues-
(1) Change in rental income due to bad debt write-offs and reserves, net of amounts (including governmental rental assistance payments) collected on previously written-off or reserved accounts. See page 12 for more detail.
See page 11 for detail and reconciliations of Same Store Residential Revenues on a GAAP basis to Same Store Residential Revenues with Leasing Concessions on a cash basis.
Residential Same Store Operating Statistics
The following table includes select operating metrics for Residential Same Store Properties (for 77,373 same store apartment units):
April 2024 (1) Q1 2024 Q4 2023 -------------------- -------------------- -------------------- Physical Occupancy 96.4% 96.3% 95.8% Percentage of Residents Renewing by quarter/month 61.0% 61.1% 59.1% New Lease Change 0.1% (2.2%) (4.6%) Renewal Rate Achieved 5.1% 4.7% 5.1%
(1) April 2024 results are preliminary as of April 18th.
Investment Activity
The Company did not acquire any operating properties during the first quarter of 2024. During the first quarter of 2024, the Company sold three properties - one in Boston, one in Orange County and one in suburban San Francisco - consisting of 504 apartment units, for an aggregate sale price of approximately $248.5 million at a weighted average Disposition Yield of 5.5%, generating an Unlevered IRR of 13.1%. The average age of the properties sold in the first quarter of 2024 was approximately 40 years.
During the first quarter of 2024, the Company began construction on The Basin, a 440 apartment unit property located in suburban Boston with a Total Budgeted Capital Cost of $232.2 million.
Capital Markets Activity
During the first quarter of 2024, the Company repurchased and retired 652,452 of its common shares, at a weighted average purchase price of $58.95 per share, for an aggregate purchased amount of approximately $38.5 million. Combined with the Company's fourth quarter 2023 repurchase activity, the Company has repurchased approximately $87.5 million of its common shares at a weighted average purchase price of $57.72 per share.
Second Quarter 2024 Guidance
At this time the Company is not revising its annual operating, EPS, FFO per share or Normalized FFO per share guidance provided as part of its fourth quarter 2023 earnings release. See page 26.
The Company has established guidance ranges for the second quarter of 2024 EPS, FFO per share and Normalized FFO per share as listed below:
Q2 2024 Guidance -------------- EPS $0.45 to $0.49 FFO per share $0.91 to $0.95
The difference between the first quarter of 2024 actual EPS of $0.77 and the second quarter of 2024 EPS guidance midpoint of $0.47 is due primarily to higher expected same store NOI, lower expected property sale gains and lower expected other expenses.
The difference between the first quarter of 2024 actual FFO of $0.87 per share and the second quarter of 2024 FFO guidance midpoint of $0.93 per share is due primarily to higher expected same store NOI and lower expected other expenses.
The difference between the first quarter of 2024 actual Normalized FFO of $0.93 per share and the second quarter of 2024 Normalized FFO guidance midpoint of $0.94 per share is due primarily to higher expected same store NOI.
About Equity Residential
Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 299 properties consisting of 79,688 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, April 24, 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) Quarter Ended March 31, ---------------------------------------------------------------------------------------------------------------------------- 2024 2023 -------------------------------------------------- ------------------------------------------------------ REVENUES $ 730,818 $ 705,088 Rental income -------------------- ---------- -------------------- -------------------- -------------- -------------------- EXPENSES 134,630 137,579 Property and maintenance 108,927 106,669 Real estate taxes and insurance 35,458 31,466 Property management 15,720 16,165 General and administrative 225,695 215,830 Depreciation -------------------- ---------- -------------------- -------------------- -------------- -------------------- 520,430 507,709 Total expenses 188,185 100,209 Net gain (loss) on sales of real estate properties 9,329 1,538 Interest and other income (31,738 ) (8,995 ) Other expenses Interest: (67,212 ) (66,401 ) Expense incurred, net (1,918 ) (1,979 ) Amortization of deferred financing costs -------------------- ---------- -------------------- -------------------- -------------- -------------------- Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) 307,034 221,751 on sales of land parcels Income and other tax (expense) benefit (304 ) (298 ) Income (loss) from investments in unconsolidated entities (1,698 ) (1,382 ) -------------------- ---------- -------------------- -------------------- -------------- -------------------- Net income 305,032 220,071 Net (income) loss attributable to Noncontrolling Interests: (8,275 ) (7,059 ) Operating Partnership (970 ) (977 ) Partially Owned Properties -------------------- ---------- -------------------- -------------------- -------------- -------------------- Net income attributable to controlling interests 295,787 212,035 Preferred distributions (547 ) (772 ) Premium on redemption of Preferred Shares (1,444 ) -- -------------------- ---------- -------------------- -------------------- -------------- -------------------- Net income available to Common Shares $ 293,796 $ 211,263 ==================== ========== ==================== ==================== ============== ==================== Earnings per share - basic: Net income available to Common Shares $ 0.78 $ 0.56 ==================== ========== ==================== ==================== ============== ==================== Weighted average Common Shares outstanding 378,812 378,341 ==================== ========== ==================== ==================== ============== ==================== Earnings per share - diluted: Net income available to Common Shares $ 0.77 $ 0.56 ==================== ========== ==================== ==================== ============== ==================== Weighted average Common Shares outstanding 390,561 390,664 ==================== ========== ==================== ==================== ============== ====================
Equity Residential Consolidated Statements of Funds From Operations and Normalized Funds From Operations (Amounts in thousands except per share and Unit data) (Unaudited) Quarter Ended March 31, ---------------------------------------------------------------------------------------------------------------------------- 2024 2023 -------------------------------------------------- ------------------------------------------------------ Net income $ 305,032 $ 220,071 Net (income) loss attributable to Noncontrolling Interests - Partially (970 ) (977 ) Owned Properties Preferred distributions (547 ) (772 ) Premium on redemption of Preferred Shares (1,444 ) -- -------------------- ---------- -------------------- -------------------- -------------- -------------------- Net income available to Common Shares and Units 302,071 218,322 Adjustments: 225,695 215,830 Depreciation (955 ) (1,156 ) Depreciation - Non-real estate additions (542 ) (545 ) Depreciation - Partially Owned Properties 335 632 Depreciation - Unconsolidated Properties (188,185 ) (100,209 ) Net (gain) loss on sales of real estate properties -------------------- ---------- -------------------- -------------------- -------------- -------------------- FFO available to Common Shares and Units 338,419 332,874 Adjustments (see note for additional detail): 548 1,332 Write-off of pursuit costs Debt extinguishment and preferred share redemption (gains) 1,444 -- losses (6,106 ) 714 Non-operating asset (gains) losses 30,591 6,292 Other miscellaneous items -------------------- ---------- -------------------- -------------------- -------------- -------------------- Normalized FFO available to Common Shares and Units $ 364,896 $ 341,212 ==================== ========== ==================== ==================== ============== ==================== FFO $ 340,410 $ 333,646 Preferred distributions (547 ) (772 ) Premium on redemption of Preferred Shares (1,444 ) -- -------------------- ---------- -------------------- -------------------- -------------- -------------------- FFO available to Common Shares and Units $ 338,419 $ 332,874 ==================== ========== ==================== ==================== ============== ==================== FFO per share and Unit - basic $ 0.87 $ 0.85 ==================== ========== ==================== ==================== ============== ==================== FFO per share and Unit - diluted $ 0.87 $ 0.85 ==================== ========== ==================== ==================== ============== ==================== Normalized FFO $ 365,443 $ 341,984 Preferred distributions (547 ) (772 ) -------------------- ---------- -------------------- -------------------- -------------- -------------------- Normalized FFO available to Common Shares and Units $ 364,896 $ 341,212 ==================== ========== ==================== ==================== ============== ==================== Normalized FFO per share and Unit - basic $ 0.94 $ 0.88 ==================== ========== ==================== ==================== ============== ==================== Normalized FFO per share and Unit - diluted $ 0.93 $ 0.87 ==================== ========== ==================== ==================== ============== ==================== Weighted average Common Shares and Units outstanding - basic 389,481 389,851 ==================== ========== ==================== ==================== ============== ====================
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) March 31, December 31, 2024 2023 -------------------------------------------------- -------------------------------------------------- ASSETS $ 5,550,882 $ 5,581,876 Land 22,930,036 22,938,426 Depreciable property 155,729 78,036 Projects under development 64,466 114,300 Land held for development -------------------- ---------- -------------------- -------------------- ---------- -------------------- 28,701,113 28,712,638 Investment in real estate (9,978,012 ) (9,810,337 ) Accumulated depreciation -------------------- ---------- -------------------- -------------------- ---------- -------------------- Investment in real estate, net 18,723,101 18,902,301 Investments in unconsolidated entities(1) 289,272 282,049 Cash and cash equivalents 44,535 50,743 Restricted deposits 152,025 89,252 Right-of-use assets 454,035 457,266 Other assets 231,829 252,953 -------------------- ---------- -------------------- -------------------- ---------- -------------------- $ 19,894,797 $ 20,034,564 Total assets ==================== ========== ==================== ==================== ========== ==================== LIABILITIES AND EQUITY Liabilities: $ 1,633,870 $ 1,632,902 Mortgage notes payable, net 5,349,938 5,348,417 Notes, net 225,921 409,131 Line of credit and commercial paper 146,072 87,377 Accounts payable and accrued expenses 49,190 65,716 Accrued interest payable 310,422 311,640 Lease liabilities 274,919 272,596 Other liabilities 68,818 69,178 Security deposits 263,615 259,231 Distributions payable -------------------- ---------- -------------------- -------------------- ---------- -------------------- 8,322,765 8,456,188 Total liabilities -------------------- ---------- -------------------- -------------------- ---------- -------------------- Commitments and contingencies Redeemable Noncontrolling Interests - Operating Partnership 298,219 289,248 -------------------- ---------- -------------------- -------------------- ---------- -------------------- Equity: Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 343,100 shares issued and outstanding as of March 31, 2024 and 745,600 shares issued 17,155 37,280 and outstanding as of December 31, 2023 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 378,939,751 shares issued and outstanding as of March 31, 2024 and 379,291,417 3,789 3,793 shares issued and outstanding as of December 31, 2023 9,603,743 9,601,866 Paid in capital 1,436,671 1,437,185 Retained earnings 6,314 5,704 Accumulated other comprehensive income (loss) -------------------- ---------- -------------------- -------------------- ---------- -------------------- 11,067,672 11,085,828 Total shareholders' equity Noncontrolling Interests: 207,272 202,306 Operating Partnership (1,131 ) 994 Partially Owned Properties -------------------- ---------- -------------------- -------------------- ---------- -------------------- 206,141 203,300 Total Noncontrolling Interests -------------------- ---------- -------------------- -------------------- ---------- -------------------- 11,273,813 11,289,128 Total equity -------------------- ---------- -------------------- -------------------- ---------- --------------------
(1) Includes $227.3 million and $220.2 million in unconsolidated development projects as of March 31, 2024 and December 31, 2023, respectively. See Development and Lease-Up Projects for additional detail on unconsolidated projects.
Equity Residential Portfolio Summary As of March 31, 2024 --------------------
% of Average Stabilized Apartment Budgeted Rental Markets/Metro Areas Properties Units NOI Rate ------------------------------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- Established Markets: Los Angeles 58 14,732 17.3 % $ 2,925 Orange County 12 3,718 5.0 % 2,900 San Diego 12 2,878 4.1 % 3,103 -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- Subtotal - Southern California 82 21,328 26.4 % 2,945 Washington, D.C. 48 15,028 16.4 % 2,666 San Francisco 42 11,567 15.3 % 3,282 New York 34 8,536 14.2 % 4,592 Boston 26 7,077 11.7 % 3,557 Seattle 44 9,267 10.5 % 2,569 -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- Subtotal - Established Markets 276 72,803 94.5 % 3,146 -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- Expansion Markets: Denver 9 2,792 2.8 % 2,409 Atlanta 7 2,111 1.6 % 2,049 Dallas/Ft. Worth 4 1,241 0.7 % 1,905 Austin 3 741 0.4 % 1,842 -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- Subtotal - Expansion Markets 23 6,885 5.5 % 2,148 -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Properties Apartment Units -------------------- -------------------- Wholly Owned Properties 285 76,628 Partially Owned Properties - Consolidated 14 3,060 -------------------- --------------------
Note: Projects under development are not included in the Portfolio Summary until construction has been completed.
Equity Residential ------------------
Portfolio Rollforward Q1 2024 ($ in thousands) Properties Apartment Sales Price Disposition Units Yield ------------------------------------------------------ -------------------------------------------------- ---------------------------------------- -------------------------------------------------- 12/31/2023 302 80,191 Dispositions: (3 ) (504 ) $ (248,500 ) (5.5 %) Consolidated Rental Properties Configuration Changes -- 1 -------------------- -------------- -------------------- -------------------- ---------- -------------------- 3/31/2024 299 79,688 ==================== ============== ==================== ==================== ========== ====================
Equity Residential ------------------
First Quarter 2024 vs. First Quarter 2023 Same Store Results/Statistics Including 77,373 Same Store Apartment Units (includes Residential and Non-Residential) ($ in thousands except for Average Rental Rate) Results Statistics ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Description Revenues Expenses NOI Average Physical Turnover Rental Occupancy Rate -------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- Q1 2024 $ 716,665 $ 231,905 $ 484,760 $ 3,077 96.3 % 8.6 % Q1 2023 $ 688,303 $ 228,961 $ 459,342 $ 2,975 95.9 % 9.1 % -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- Change $ 28,362 $ 2,944 $ 25,418 $ 102 0.4 % (0.5 %) ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== Change 4.1 % (1) 1.3 % 5.5 % 3.4 %
First Quarter 2024 vs. Fourth Quarter 2023 Same Store Results/Statistics Including 77,950 Same Store Apartment Units (includes Residential and Non-Residential) ($ in thousands except for Average Rental Rate) Results Statistics ---------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Description Revenues Expenses NOI Average Physical Turnover Rental Occupancy Rate -------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- -------------------------------------------------- -------------------------------------------------- Q1 2024 $ 720,261 $ 233,087 $ 487,174 $ 3,070 96.3 % 8.6 % Q4 2023 $ 712,383 $ 218,881 $ 493,502 $ 3,067 95.8 % 9.5 % ---------- ---------- -------------------- ---------- ---------- -------------------- ---------- ---------- -------------------- ---------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- Change $ 7,878 $ 14,206 $ (6,328 ) $ 3 0.5 % (0.9 %) ========== ========== ==================== ========== ========== ==================== ========== ========== ==================== ========== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
(1) Non-Residential contributed 0.20% and 0.50% to quarterly and sequential same store revenue growth, respectively, primarily due to improved collectibility expectations for certain Non-Residential tenants, resulting in the reinstatement of their respective straight-line receivable balances in the first quarter of 2024. The Company contemplated these contributions in its previous 2024 annual guidance.
Equity Residential ------------------
Same Store Residential Revenues - GAAP to Cash Basis (1) ($ in thousands) First Quarter 2024 vs. First Quarter 2023 First Quarter 2024 vs. Fourth Quarter 2023 77,373 Same Store Apartment Units 77,950 Same Store Apartment Units ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ Q1 2024 Q1 2023 Q1 2024 Q4 2023 -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- Same Store Residential Revenues (GAAP Basis) $ 687,139 $ 661,626 $ 690,735 $ 686,778 Leasing Concessions amortized 5,076 2,801 5,093 4,810 Leasing Concessions granted (2) (4,951 ) (4,167 ) (4,955 ) (5,392 ) -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- Same Store Residential Revenues with Leasing $ 687,264 $ 660,260 $ 690,873 $ 686,196 Concessions on a cash basis ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== % change - GAAP revenue 3.9 % 0.6 %
(1) See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional detail.
Same Store Net Operating Income By Quarter Including 77,373 Same Store Apartment Units