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Equity Residential Reports Second Quarter 2022 Results

Robust Demand and Continued Strong Cost Controls Drive Guidance Improvements

Equity Residential (NYSE: EQR) today reported results for the quarter and six months ended June 30, 2022.

Second Quarter 2022 Results

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30,

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.59

 

 

$

0.84

 

 

$

(0.25

)

 

 

(29.8

%)

 

 

Funds from Operations (FFO) per share

 

$

0.89

 

 

$

0.78

 

 

$

0.11

 

 

 

14.1

%

 

 

Normalized FFO per share

 

$

0.89

 

 

$

0.72

 

 

$

0.17

 

 

 

23.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.78

 

 

$

1.00

 

 

$

(0.22

)

 

 

(22.0

%)

 

 

Funds from Operations (FFO) per share

 

$

1.66

 

 

$

1.45

 

 

$

0.21

 

 

 

14.5

%

 

 

Normalized FFO per share

 

$

1.66

 

 

$

1.40

 

 

$

0.26

 

 

 

18.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“We delivered outstanding results this quarter supported by favorable supply-and-demand dynamics and a healthy labor market bolstering employment and wages. As a result, we are pleased to significantly raise our full year same store revenue, NOI and Normalized FFO guidance,” said Mark J. Parrell, Equity Residential’s President and CEO. “Going forward, we expect elevated single family home ownership costs and positive household formation trends to buffer the impact on our business from economic weakness and see our affluent resident base as more resilient to rising inflation due to higher levels of disposable income and lower relative rent-to-income ratios.”

Recent Highlights

  • The Company reported a 13.6% increase in same store revenue for the second quarter of 2022 compared to the same period of 2021, driven by strong Physical Occupancy and continued growth in pricing power. Same store expense growth continued to remain in check at 3.1% driven by favorable real estate tax and payroll expense.
  • The Company has increased the midpoint of its full year 2022 same store revenue guidance to 10.5% from 9.0% and adjusted various guidance ranges as described in the table below.
  • The Company sold a 354-unit apartment property in New York for approximately $265.7 million in April 2022 and in July 2022 sold a 455-unit apartment property in New York for $415.0 million.

Full Year 2022 Guidance

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

 

 

Revised

 

 

Previous

 

 

Change at Midpoint

 

Same Store (includes Residential and Non-Residential):

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.5%

 

 

96.5%

 

 

0.0%

 

Revenue change

 

10.0% to 11.0%

 

 

8.0% to 10.0%

 

 

1.5%

 

Expense change

 

2.5% to 3.5%

 

 

2.5% to 3.5%

 

 

0.0%

 

NOI change

 

13.75% to 14.75%

 

 

11.0% to 13.0%

 

 

2.25%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$1.98 to $2.08

 

 

$4.18 to $4.28

 

 

$(2.20)

 

FFO per share

 

$3.45 to $3.55

 

 

$3.36 to $3.46

 

 

$0.09

 

Normalized FFO per share

 

$3.48 to $3.58

 

 

$3.40 to $3.50

 

 

$0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions (1):

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated rental acquisitions

 

$113.0 million

 

 

$2.0 billion

 

 

 

 

 

Consolidated rental dispositions

 

$746.0 million

 

 

$2.0 billion

 

 

 

 

 

(1)

Given current uncertainty in the transaction environment, the Company’s revised acquisition and disposition guidance reflects no additional activities beyond one sale for $65.5 million currently under contract and scheduled to close in the fourth quarter of 2022.

The change in the full year 2022 EPS guidance range is due primarily to lower expected property sale gains and the items described below.

The change in the full year 2022 FFO per share guidance range is due primarily to the items described below.

The change in the full year 2022 Normalized FFO per share guidance range is due primarily to:

 

 

Positive/(Negative)

Impact

 

 

 

Revised Full Year 2022 vs

Previous Full Year 2022

 

Residential same store Net Operating Income (NOI)

 

$

0.09

 

2022 and 2021 transaction activity impact on NOI, net

 

 

(0.02

)

Interest expense, net

 

 

0.01

 

Net

 

$

0.08

 

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 changes in EPS for the quarter and six months ended June 30, 2022 compared to the same periods of 2021 are due primarily to lower property sale gains and higher depreciation expense in the current periods, offset by the various adjustment items listed on page 27 of this release and the items described below.

The per share changes in FFO for the quarter and six months ended June 30, 2022 compared to the same periods of 2021 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

 

 

 

Second Quarter 2022 vs.

Second Quarter 2021

 

 

June YTD 2022 vs.

June YTD 2021

 

Residential Same Store NOI

 

$

0.18

 

 

$

0.27

 

Non-Residential same store NOI

 

 

0.01

 

 

 

0.01

 

Lease-Up NOI

 

 

0.01

 

 

 

0.02

 

2022 and 2021 transaction activity impact on NOI, net

 

 

 

0.01

 

Interest expense, net

 

 

(0.01

)

 

 

(0.02

)

Other items

 

 

(0.02

)

 

 

(0.03

)

Net

 

$

0.17

 

 

$

0.26

 

Same Store Results

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

 

 

Second Quarter 2022 vs.

Second Quarter 2021

 

 

Second Quarter 2022 vs.

First Quarter 2022

 

 

June YTD 2022 vs.

June YTD 2021

 

Apartment Units

 

74,057

 

 

78,108

 

 

74,057

 

Physical Occupancy

 

96.7% vs. 96.1%

 

 

96.7% vs. 96.4%

 

 

96.5% vs. 95.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

13.6%

 

 

5.3%

 

 

10.7%

 

Expenses

 

3.1%

 

 

(2.9%)

 

 

2.8%

 

NOI

 

19.1%

 

 

9.6%

 

 

15.0%

 

 

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 3.8% of total revenues for the six months ended June 30, 2022.

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

 

 

Second Quarter 2022 vs.

Second Quarter 2021

 

 

Second Quarter 2022 vs.

First Quarter 2022

 

 

June YTD 2022 vs.

June YTD 2021

 

 

 

% Change

 

 

% Change

 

 

% Change

 

Same Store Residential Revenues-

 

 

 

 

 

 

 

 

 

 

 

comparable period

Lease rates

 

 

8.3

%

 

 

2.7

%

 

 

6.3

%

Leasing Concessions

 

 

2.0

%

 

 

0.3

%

 

 

1.7

%

Vacancy gain (loss)

 

 

0.2

%

 

 

0.1

%

 

 

0.7

%

Bad Debt, Net (1)

 

 

2.5

%

 

 

1.9

%

 

 

1.6

%

Other (2)

 

 

0.7

%

 

 

0.4

%

 

 

0.5

%

Same Store Residential Revenues-

 

13.7

%

 

 

5.4

%

 

 

10.8

%

current period

(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.

(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:

 

Q1 2022

 

 

Q2 2022

 

 

July 2022 (1)

 

Physical Occupancy (2)

 

96.3%

 

 

96.4%

 

 

96.5%

 

Percentage of Residents Renewing by quarter/month

59.9%

 

 

56.3%

 

 

55.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Lease Change

 

15.3%

 

 

19.2%

 

 

16.4%

 

Renewal Rate Achieved

 

12.0%

 

 

11.2%

 

 

10.0%

 

Blended Rate

 

13.3%

 

 

14.8%

 

 

12.9%

 

(1)

July 2022 results are preliminary. Moderation in July operating metrics is being driven by a more challenging 2021 comparable period, not a loss in operating momentum, as our sequential rents continue to grow.

(2)

Physical Occupancy is as of month-end March for Q1 2022, month-end June for Q2 2022 and as of July 21st for July 2022.

Investment Activity and Portfolio Strategy

The Company did not acquire any properties during the second quarter of 2022. During the first six months of 2022, the Company acquired a 172-unit apartment property in San Diego, built in 2020, for $113.0 million at an Acquisition Cap Rate of 3.5%.

During the second quarter of 2022, the Company sold a 354-unit apartment property in New York, built in 2003, for approximately $265.7 million at a Disposition Yield of 3.3%, generating an Unlevered IRR of 6.6%. Subsequent to the end of the second quarter, the Company sold a 455-unit apartment property in New York, built in 2001, for $415.0 million at a Disposition Yield of 3.4%.

Also during the second quarter of 2022, the Company began construction on one wholly owned densification project located in Santa Clara, CA for the development of 225 apartment units and one unconsolidated project located in Ft. Worth, TX for the development of 362 apartment units as part of its joint venture with Toll Brothers.

Third Quarter 2022 Guidance

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

 

 

Q3 2022

Guidance

EPS

 

$0.77 to $0.81

FFO per share

 

$0.87 to $0.91

Normalized FFO per share

 

$0.89 to $0.93

The difference between the second quarter of 2022 actual EPS of $0.59 and the third quarter of 2022 EPS guidance midpoint of $0.79 is due primarily to higher expected property sale gains and the items described below.

There is no net change between the second quarter of 2022 actual FFO of $0.89 per share and the third quarter of 2022 FFO guidance midpoint of $0.89 per share.

The difference between the second quarter of 2022 actual Normalized FFO of $0.89 per share and the third quarter of 2022 Normalized FFO guidance midpoint of $0.91 per share is due primarily to:

 

 

Positive/(Negative)

Impact

 

 

 

 

Third Quarter 2022 vs.

Second Quarter 2022

 

 

Residential Same Store NOI

 

$

0.01

 

 

2022 transaction activity impact on NOI, net

 

 

(0.01

)

 

Interest expense, net

 

 

0.01

 

 

Other items

 

 

0.01

 

 

Net

 

$

0.02

 

 

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 310 properties consisting of 80,227 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin. For more information on Equity Residential, please visit our website at www.equityapartments.com.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and government regulation. In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration and severity of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers and employees in particular, its impact on the employment rate and the economy and the corresponding impact on our residents’ and tenants’ ability to pay their rent on time or at all, the extent and impact of governmental responses, the rollout and effectiveness of vaccines and the impact of operational changes we have implemented and may implement in response to the pandemic. 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, July 27, 2022 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)

 

 

 

Six Months Ended June 30,

 

 

Quarter Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

1,340,378

 

 

$

1,195,661

 

 

$

687,030

 

 

$

598,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and maintenance

 

 

241,229

 

 

 

224,800

 

 

 

116,355

 

 

 

107,746

 

Real estate taxes and insurance

 

 

202,538

 

 

 

200,871

 

 

 

101,850

 

 

 

97,401

 

Property management

 

 

57,306

 

 

 

50,585

 

 

 

26,559

 

 

 

24,455

 

General and administrative

 

 

33,661

 

 

 

30,061

 

 

 

16,423

 

 

 

14,678

 

Depreciation

 

 

453,767

 

 

 

400,635

 

 

 

223,806

 

 

 

200,673

 

Total expenses

 

 

988,501

 

 

 

906,952

 

 

 

484,993

 

 

 

444,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on sales of real estate properties

 

 

107,795

 

 

 

223,695

 

 

 

107,897

 

 

 

223,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

459,672

 

 

 

512,404

 

 

 

309,934

 

 

 

376,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

4,124

 

 

 

24,320

 

 

 

596

 

 

 

24,104

 

Other expenses

 

 

(5,436

)

 

 

(7,452

)

 

 

(2,380

)

 

 

(3,342

)

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred, net

 

 

(144,681

)

 

 

(134,482

)

 

 

(71,889

)

 

 

(67,124

)

Amortization of deferred financing costs

 

 

(4,201

)

 

 

(4,124

)

 

 

(2,124

)

 

 

(1,939

)

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

 

 

309,478

 

 

 

390,666

 

 

 

234,137

 

 

 

328,543

 

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

Income and other tax (expense) benefit

 

 

(573

)

 

 

(395

)

 

 

(291

)

 

 

(242

)

Income (loss) from investments in unconsolidated entities

 

 

(2,429

)

 

 

(1,872

)

 

 

(1,168

)

 

 

(261

)

Net gain (loss) on sales of land parcels

 

 

 

 

 

5

 

 

 

 

 

 

 

Net income

 

 

306,476

 

 

 

388,404

 

 

 

232,678

 

 

 

328,040

 

Net (income) loss attributable to Noncontrolling Interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Partnership

 

 

(10,027

)

 

 

(13,056

)

 

 

(7,633

)

 

 

(10,913

)

Partially Owned Properties

 

 

(1,583

)

 

 

(1,423

)

 

 

(944

)

 

 

(741

)

Net income attributable to controlling interests

 

 

294,866

 

 

 

373,925

 

 

 

224,101

 

 

 

316,386

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(772

)

Net income available to Common Shares

 

$

293,321

 

 

$

372,380

 

 

$

223,328

 

 

$

315,614

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

0.78

 

 

$

1.00

 

 

$

0.59

 

 

$

0.84

 

Weighted average Common Shares outstanding

 

 

375,640

 

 

 

373,050

 

 

 

375,769

 

 

 

373,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

0.78

 

 

$

1.00

 

 

$

0.59

 

 

$

0.84

 

Weighted average Common Shares outstanding

 

 

389,463

 

 

 

387,367

 

 

 

389,363

 

 

 

387,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

1.25

 

 

$

1.205

 

 

$

0.625

 

 

$

0.6025

 

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share data)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

Quarter Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

306,476

 

 

$

388,404

 

 

$

232,678

 

 

$

328,040

 

Net (income) loss attributable to Noncontrolling Interests – Partially

 

 

(1,583

)

 

 

(1,423

)

 

 

(944

)

 

 

(741

)

Owned Properties

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(772

)

Net income available to Common Shares and Units

 

 

303,348

 

 

 

385,436

 

 

 

230,961

 

 

 

326,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

453,767

 

 

 

400,635

 

 

 

223,806

 

 

 

200,673

 

Depreciation – Non-real estate additions

 

 

(2,114

)

 

 

(2,176

)

 

 

(1,062

)

 

 

(1,076

)

Depreciation – Partially Owned Properties

 

 

(1,554

)

 

 

(1,682

)

 

 

(661

)

 

 

(854

)

Depreciation – Unconsolidated Properties

 

 

1,240

 

 

 

1,233

 

 

 

620

 

 

 

616

 

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

 

 

(9

)

 

 

(4

)

 

 

 

 

 

 

assets

Net (gain) loss on sales of real estate properties

 

 

(107,795

)

 

 

(223,695

)

 

 

(107,897

)

 

 

(223,738

)

FFO available to Common Shares and Units

 

 

646,883

 

 

 

559,747

 

 

 

345,767

 

 

 

302,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (see note for additional detail):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating assets

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

2,515

 

 

 

2,647

 

 

 

1,052

 

 

 

1,316

 

Debt extinguishment and preferred share redemption (gains)

 

 

469

 

 

 

264

 

 

 

469

 

 

 

 

losses

Non-operating asset (gains) losses

 

 

(1,330

)

 

 

(23,308

)

 

 

312

 

 

 

(24,162

)

Other miscellaneous items

 

 

(185

)

 

 

3,341

 

 

 

186

 

 

 

1,099

 

Normalized FFO available to Common Shares and Units

 

$

648,352

 

 

$

542,691

 

 

$

347,786

 

 

$

280,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

648,428

 

 

$

561,292

 

 

$

346,540

 

 

$

302,920

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(772

)

FFO available to Common Shares and Units

 

$

646,883

 

 

$

559,747

 

 

$

345,767

 

 

$

302,148

 

FFO per share and Unit – basic

 

$

1.67

 

 

$

1.45

 

 

$

0.89

 

 

$

0.78

 

FFO per share and Unit – diluted

 

$

1.66

 

 

$

1.45

 

 

$

0.89

 

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO

 

$

649,897

 

 

$

544,236

 

 

$

348,559

 

 

$

281,173

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(773

)

 

 

(772

)

Normalized FFO available to Common Shares and Units

 

$

648,352

 

 

$

542,691

 

 

$

347,786

 

 

$

280,401

 

Normalized FFO per share and Unit – basic

 

$

1.67

 

 

$

1.41

 

 

$

0.90

 

 

$

0.73

 

Normalized FFO per share and Unit – diluted

 

$

1.66

 

 

$

1.40

 

 

$

0.89

 

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares and Units outstanding – basic

 

 

387,531

 

 

 

385,594

 

 

 

387,664

 

 

 

385,856

 

Weighted average Common Shares and Units outstanding – diluted

 

 

389,463

 

 

 

387,367

 

 

 

389,363

 

 

 

387,820

 

 

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)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

Land

 

$

5,733,412

 

 

$

5,814,790

 

Depreciable property

 

 

22,443,313

 

 

 

22,370,811

 

Projects under development

 

 

65,161

 

 

 

24,307

 

Land held for development

 

 

59,573

 

 

 

62,998

 

Investment in real estate

 

 

28,301,459

 

 

 

28,272,906

 

Accumulated depreciation

 

 

(8,740,806

)

 

 

(8,354,282

)

Investment in real estate, net

 

 

19,560,653

 

 

 

19,918,624

 

Investments in unconsolidated entities1

 

 

169,272

 

 

 

127,448

 

Cash and cash equivalents

 

 

45,010

 

 

 

123,832

 

Restricted deposits

 

 

73,641

 

 

 

236,404

 

Right-of-use assets

 

 

468,834

 

 

 

474,713

 

Other assets

 

 

256,935

 

 

 

288,220

 

Total assets

 

$

20,574,345

 

 

$

21,169,241

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Mortgage notes payable, net

 

$

1,944,404

 

 

$

2,191,201

 

Notes, net

 

 

5,838,693

 

 

 

5,835,222

 

Line of credit and commercial paper

 

 

184,946

 

 

 

315,030

 

Accounts payable and accrued expenses

 

 

119,402

 

 

 

107,013

 

Accrued interest payable

 

 

69,037

 

 

 

69,510

 

Lease liabilities

 

 

310,513

 

 

 

312,335

 

Other liabilities

 

 

292,205

 

 

 

353,102

 

Security deposits

 

 

69,609

 

 

 

66,141

 

Distributions payable

 

 

242,667

 

 

 

233,502

 

Total liabilities

 

 

9,071,476

 

 

 

9,483,056

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests – Operating Partnership

 

 

398,188

 

 

 

498,977

 

Equity:

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred Shares of beneficial interest, $0.01 par value;

 

 

37,280

 

 

 

37,280

 

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

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

Common Shares of beneficial interest, $0.01 par value;

 

 

3,761

 

 

 

3,755

 

1,000,000,000 shares authorized; 376,118,433 shares issued

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

shares issued and outstanding as of December 31, 2021

Paid in capital

 

 

9,229,738

 

 

 

9,121,122

 

Retained earnings

 

 

1,649,960

 

 

 

1,827,063

 

Accumulated other comprehensive income (loss)

 

 

(30,650

)

 

 

(34,272

)

Total shareholders’ equity

 

 

10,890,089

 

 

 

10,954,948

 

Noncontrolling Interests:

 

 

 

 

 

 

 

 

Operating Partnership

 

 

216,326

 

 

 

214,094

 

Partially Owned Properties

 

 

(1,734

)

 

 

18,166

 

Total Noncontrolling Interests

 

 

214,592

 

 

 

232,260

 

Total equity

 

 

11,104,681

 

 

 

11,187,208

 

Total liabilities and equity

 

$

20,574,345

 

 

$

21,169,241

 

_________________________

1Includes $110.7 million and $72.5 million in unconsolidated development projects as of June 30, 2022 and December 31, 2021, respectively. See Development and Lease-Up Projects for additional detail on unconsolidated development projects.

Equity Residential

Portfolio Summary

As of June 30, 2022

 

 

 

 

 

 

 

 

 

 

% of

Stabilized

 

 

Average

 

 

 

 

 

 

 

Apartment

 

 

Budgeted

 

 

Rental

 

Markets/Metro Areas

 

Properties

 

 

Units

 

 

NOI

 

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Established Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

66

 

 

 

15,259

 

 

 

18.6

%

 

$

2,815

 

Orange County

 

 

13

 

 

 

4,028

 

 

 

5.3

%

 

 

2,659

 

San Diego

 

 

12

 

 

 

2,878

 

 

 

4.0

%

 

 

2,744

 

Subtotal – Southern California

 

 

91

 

 

 

22,165

 

 

 

27.9

%

 

 

2,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

44

 

 

 

11,830

 

 

 

16.0

%

 

 

3,148

 

Washington DC

 

 

48

 

 

 

14,851

 

 

 

15.7

%

 

 

2,440

 

New York

 

 

35

 

 

 

8,991

 

 

 

13.2

%

 

 

3,995

 

Boston

 

 

27

 

 

 

7,170

 

 

 

11.4

%

 

 

3,215

 

Seattle

 

 

46

 

 

 

9,525

 

 

 

11.0

%

 

 

2,478

 

Subtotal – Established Markets

 

 

291

 

 

 

74,532

 

 

 

95.2

%

 

 

2,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expansion Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

8

 

 

 

2,498

 

 

 

2.6

%

 

 

2,278

 

Atlanta

 

 

4

 

 

 

1,215

 

 

 

1.0

%

 

 

1,993

 

Dallas/Ft. Worth

 

 

4

 

 

 

1,241

 

 

 

0.8

%

 

 

1,877

 

Austin

 

 

3

 

 

 

741

 

 

 

0.4

%

 

 

1,724

 

Subtotal – Expansion Markets

 

 

19

 

 

 

5,695

 

 

 

4.8

%

 

 

2,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

310

 

 

 

80,227

 

 

 

100.0

%

 

$

2,860

 

 

 

 

Properties

 

 

Apartment Units

 

 

 

 

 

 

 

 

 

 

Wholly Owned Properties

 

 

295

 

 

 

77,113

 

Partially Owned Properties – Consolidated (1)

 

 

15

 

 

 

3,114

 

 

 

 

 

 

 

 

 

 

 

 

 

310

 

 

 

80,227

 

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

 

 

(1)

During the second quarter of 2022, the Company acquired its joint venture partner’s 25% interest in a 432-unit apartment property in Chevy Chase, MD for $32.2 million, and the property is now wholly owned.

Equity Residential

 

Portfolio Rollforward Q2 2022

($ in thousands)

 

 

 

 

 

Properties

 

 

Apartment

Units

 

 

Sales Price

 

 

Disposition

Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2022

 

 

311

 

 

 

80,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

 

 

(1

)

 

 

(354

)

 

$

(265,650

)

 

 

(3.3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2022

 

 

310

 

 

 

80,227

 

 

 

 

 

 

 

 

 

 

Portfolio Rollforward 2022

($ in thousands)

 

 

 

 

 

Properties

 

 

Apartment

Units

 

 

Purchase

Price

 

 

Acquisition

Cap Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2021

 

 

310

 

 

 

80,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

 

 

1

 

 

 

172

 

 

$

113,000

 

 

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

Disposition

Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

 

 

(1

)

 

 

(354

)

 

$

(265,650

)

 

 

(3.3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2022

 

 

310

 

 

 

80,227

 

 

 

 

 

 

 

 

 

Equity Residential

 

Second Quarter 2022 vs. Second Quarter 2021

Same Store Results/Statistics Including 74,057 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Second Quarter 2022

 

 

Second Quarter 2021

 

 

 

Residential

 

 

% Change

 

 

Non-

Residential

 

 

% Change

 

 

Total

 

 

% Change

 

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

622,358

 

(1)

13.7%

 

 

$

23,439

 

 

12.3%

 

 

$

645,797

 

 

13.6%

 

 

Revenues

 

$

547,502

 

 

$

20,863

 

 

$

568,365

 

Expenses

 

$

195,372

 

 

3.1%

 

 

$

5,993

 

 

1.5%

 

 

$

201,365

 

 

3.1%

 

 

Expenses

 

$

189,425

 

 

$

5,903

 

 

$

195,328

 

NOI

 

$

426,986

 

 

19.2%

 

 

$

17,446

 

 

16.6%

 

 

$

444,432

 

 

19.1%

 

 

NOI

 

$

358,077

 

 

$

14,960

 

 

$

373,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

2,900

 

 

13.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,566

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.7

%

 

0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.1

%

 

 

 

 

 

 

 

 

Turnover

 

11.1

%

 

(0.3%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

11.4

%

 

 

 

 

 

 

 

 

 

Second Quarter 2022 vs. First Quarter 2022

Same Store Results/Statistics Including 78,108 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

Second Quarter 2022

 

 

First Quarter 2022

 

 

 

Residential

 

 

% Change

 

 

Non-

Residential

 

 

% Change

 

 

Total

 

 

% Change

 

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

646,187

 

(1)

5.4%

 

 

$

23,929

 

 

2.9%

 

 

$

670,116

 

 

5.3%

 

 

Revenues

 

$

612,924

 

 

$

23,246

 

 

$

636,170

 

Expenses

 

$

204,750

 

 

(2.8%)

 

 

$

6,132

 

 

(3.1%)

 

 

$

210,882

 

 

(2.9%)

 

 

Expenses

 

$

210,740

 

 

$

6,331

 

 

$

217,071

 

NOI

 

$

441,437

 

 

9.8%

 

 

$

17,797

 

 

5.2%

 

 

$

459,234

 

 

9.6%

 

 

NOI

 

$

402,184

 

 

$

16,915

 

 

$

419,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

2,855

 

 

5.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,715

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.7

%

 

0.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.4

%

 

 

 

 

 

 

 

 

Turnover

 

11.2

%

 

2.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

8.8

%

 

 

 

 

 

 

 

 

 

June YTD 2022 vs. June YTD 2021

Same Store Results/Statistics Including 74,057 Same Store Apartment Units

($ in thousands except for Average Rental Rate)

 

June YTD 2022

 

 

June YTD 2021

 

 

 

Residential

 

 

% Change

 

 

Non-

Residential

 

 

% Change

 

 

Total

 

 

% Change

 

 

 

 

Residential

 

 

Non-

Residential

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,211,971

 

(1)

10.8%

 

 

$

46,262

 

 

9.5%

 

 

$

1,258,233

 

 

10.7%

 

 

Revenues

 

$

1,094,291

 

 

$

42,246

 

 

$

1,136,537

 

Expenses

 

$

396,666

 

 

2.8%

 

 

$

12,183

 

 

2.0%

 

 

$

408,849

 

 

2.8%

 

 

Expenses

 

$

385,818

 

 

$

11,944

 

 

$

397,762

 

NOI

 

$

815,305

 

 

15.1%

 

 

$

34,079

 

 

12.5%

 

 

$

849,384

 

 

15.0%

 

 

NOI

 

$

708,473

 

 

$

30,302

 

 

$

738,775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

 

$

2,827

 

 

9.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rental Rate

$

2,580

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.5

%

 

1.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

95.5

%

 

 

 

 

 

 

 

 

Turnover

 

19.8

%

 

(1.5%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Turnover

 

21.3

%

 

 

 

 

 

 

 

 

(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.

Equity Residential

 

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

($ in thousands)

 

 

Second Quarter 2022 vs. Second Quarter 2021

 

 

Second Quarter 2022 vs. First Quarter 2022

 

 

June YTD 2022 vs. June YTD 2021

 

 

74,057 Same Store Apartment Units

 

 

78,108 Same Store Apartment Units

 

 

74,057 Same Store Apartment Units

 

 

Q2 2022

 

 

Q2 2021

 

 

Q2 2022

 

 

Q1 2022

 

 

June YTD 2022

 

 

June YTD 2021

 

Same Store Residential Revenues (GAAP Basis)

$

622,358

 

 

$

547,502

 

 

$

646,187

 

 

$

612,924

 

 

$

1,211,971

 

 

$

1,094,291

 

Leasing Concessions amortized

 

1,703

 

 

 

12,871

 

 

 

2,103

 

 

 

3,971

 

 

 

5,298

 

 

 

24,381

 

Leasing Concessions granted

 

(1,253

)

 

 

(8,009

)

 

 

(1,447

)

 

 

(1,559

)

 

 

(2,603

)

 

 

(24,794

)

Same Store Residential Revenues with Leasing

Concessions on a cash basis

$

622,808

 

 

$

552,364

 

 

$

646,843

 

 

$

615,336

 

 

$

1,214,666

 

 

$

1,093,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - GAAP revenue

 

13.7

%

 

 

 

 

 

 

5.4

%

 

 

 

 

 

 

10.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% change - cash revenue

 

12.8

%

 

 

 

 

 

 

5.1

%

 

 

 

 

 

 

11.0

%

 

 

 

 

(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 74,057 Same Store Apartment Units

($ in thousands)

 

 

 

Q2 2022

 

 

Q1 2022

 

 

Q4 2021

 

 

Q3 2021

 

 

Q2 2021

 

Same store revenues

 

$

645,797

 

 

$

612,436

 

 

$

608,065

 

 

$

589,545

 

 

$

568,365

 

Same store expenses

 

 

201,365

 

 

 

207,484

 

 

 

196,936

 

 

 

202,510

 

 

 

195,328

 

Same store NOI

(includes Residential and Non-Residential)

 

$

444,432

 

 

$

404,952

 

 

$

411,129

 

 

$

387,035

 

 

$

373,037

 

Equity Residential

 

Same Store Resident/Tenant Accounts Receivable Balances

Including 74,057 Same Store Apartment Units

($ in thousands)

 

 

 

Residential

 

 

Non-Residential

 

Balance Sheet (Other assets):

 

June 30, 2022

 

 

March 31, 2022

 

 

June 30, 2022

 

 

March 31, 2022

 

Resident/tenant accounts receivable balances

$

35,243

 

 

$

42,302

 

 

$

3,410

 

 

$

3,631

 

Allowance for doubtful accounts

 

(31,690

)

 

 

(37,875

)

 

 

(2,534

)

 

 

(2,379

)

Net receivable balances

$

3,553

 

(1)

$

4,427

 

 

$

876

 

 

$

1,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line receivable balances

 

$

2,002

 

(2)

$

2,452

 

 

$

12,530

 

 

$

12,630

 

(1)

The Company held same store Residential security deposits approximating 63.0% of the net Residential receivable balance at June 30, 2022.

(2)

Total same store Residential Leasing Concessions granted in the second quarter of 2022 were approximately $1.3 million. The straight-line receivable balance of $2.0 million reflects Residential Leasing Concessions that the Company expects will be primarily recognized as a reduction of rental revenues in the remainder of 2022 and the first half of 2023.

Same Store Residential Bad Debt

Including 74,057 Same Store Apartment Units

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Statement (Rental income):

 

Q2 2022

 

 

Q1 2022

 

 

Q2 2021

 

Bad Debt, Net (1)

 

$

(1,791

)

 

$

9,627

 

 

$

11,929

 

% of Same Store Residential Revenues

 

 

(0.3

%)

 

 

1.6

%

 

 

2.2

%

(1)

Bad Debt, Net benefited from additional resident payments due to governmental rental assistance programs of approximately $14.7 million and $9.6 million during the second quarter of 2022 and first quarter of 2022, respectively.

Equity Residential

Second Quarter 2022 vs. Second Quarter 2021

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year's Quarter

 

Markets/Metro Areas

 

Apartment

Units

 

 

Q2 2022

% of

Actual

NOI

 

 

Q2 2022

Average

Rental

Rate

 

 

Q2 2022

Weighted

Average

Physical

Occupancy %

 

 

Q2 2022

Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

15,259

 

 

 

20.9

%

 

$

2,815

 

 

 

96.7

%

 

 

9.2

%

 

 

17.9

%

(1)

 

3.3

%

 

 

24.9

%

 

 

17.6

%

 

 

0.3

%

 

 

(1.3

%)

Orange County

 

 

4,028

 

 

 

5.8

%

 

 

2,659

 

 

 

97.2

%

 

 

8.8

%

 

 

17.2

%

(1)

 

4.7

%

 

 

20.9

%

 

 

17.9

%

 

 

(0.7

%)

 

 

0.5

%

San Diego

 

 

2,706

 

 

 

3.9

%

 

 

2,719

 

 

 

97.4

%

 

 

9.5

%

 

 

11.9

%

 

 

1.8

%

 

 

15.0

%

 

 

12.9

%

 

 

(0.8

%)

 

 

(0.6

%)

Subtotal – Southern California

 

 

21,993

 

 

 

30.6

%

 

 

2,775

 

 

 

96.9

%

 

 

9.2

%

 

 

17.0

%

 

 

3.3

%

 

 

22.8

%

 

 

17.1

%

 

 

0.0

%

 

 

(0.9

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,366

 

 

 

17.4

%

 

 

3,152

 

 

 

96.7

%

 

 

9.4

%

 

 

12.7

%

(1)

 

3.5

%

 

 

16.9

%

 

 

11.0

%

 

 

1.4

%

 

 

(2.0

%)

Washington DC

 

 

14,322

 

 

 

15.8

%

 

 

2,432

 

 

 

96.8

%

 

 

11.4

%

 

 

5.5

%

 

 

7.9

%

 

 

4.4

%

 

 

5.0

%

 

 

0.5

%

 

 

(0.5

%)

New York

 

 

8,991

 

 

 

13.6

%

 

 

3,995

 

 

 

97.1

%

 

 

11.8

%

 

 

19.8

%

 

 

0.7

%

 

 

41.4

%

 

 

17.5

%

 

 

2.0

%

 

 

1.7

%

Seattle

 

 

9,331

 

 

 

11.1

%

 

 

2,476

 

 

 

95.3

%

 

 

14.6

%

 

 

11.9

%

 

 

(2.3

%)

 

 

18.6

%

 

 

12.2

%

 

 

(0.3

%)

 

 

0.9

%

Boston

 

 

6,430

 

 

 

9.7

%

 

 

3,153

 

 

 

96.8

%

 

 

11.9

%

 

 

12.6

%

 

 

5.4

%

 

 

15.9

%

 

 

11.6

%

 

 

0.8

%

 

 

0.1

%

Denver

 

 

1,624

 

 

 

1.8

%

 

 

2,277

 

 

 

96.8

%

 

 

18.2

%

 

 

12.8

%

 

 

7.8

%

 

 

14.8

%

 

 

13.0

%

 

 

(0.2

%)

 

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

74,057

 

 

 

100.0

%

 

$

2,900

 

 

 

96.7

%

 

 

11.1

%

 

 

13.7

%

(2)

 

3.1

%

 

 

19.2

%

 

 

13.0

%

 

 

0.6

%

 

 

(0.3

%)

(1)

Excluding the positive impact of Bad Debt, Net which was primarily driven by receipt of governmental rental assistance, same store revenue growth would have been 8.8%, 12.8% and 9.8% for Los Angeles, Orange County and San Francisco, respectively.

(2)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 12.8% in the second quarter of 2022 compared to the second quarter of 2021. See page 12 for additional detail and reconciliations.

 

 

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the six months ended June 30, 2022.

Equity Residential

Second Quarter 2022 vs. First Quarter 2022

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Quarter

 

Markets/Metro Areas

 

Apartment

Units

 

 

Q2 2022

% of

Actual

NOI

 

 

Q2 2022

Average

Rental

Rate

 

 

Q2 2022

Weighted

Average

Physical

Occupancy %

 

 

Q2 2022

Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

15,259

 

 

 

20.2

%

 

$

2,815

 

 

 

96.7

%

 

 

9.2

%

 

 

8.9

%

(1)

 

(3.0

%)

 

 

14.5

%

 

 

8.9

%

 

 

0.0

%

 

 

0.9

%

Orange County

 

 

4,028

 

 

 

5.6

%

 

 

2,659

 

 

 

97.2

%

 

 

8.8

%

 

 

8.6

%

(1)

 

(0.7

%)

 

 

11.3

%

 

 

8.5

%

 

 

0.1

%

 

 

2.5

%

San Diego

 

 

2,706

 

 

 

3.8

%

 

 

2,719

 

 

 

97.4

%

 

 

9.5

%

 

 

2.5

%

 

 

(6.2

%)

 

 

5.2

%

 

 

2.1

%

 

 

0.5

%

 

 

0.6

%

Subtotal – Southern California

 

 

21,993

 

 

 

29.6

%

 

 

2,775

 

 

 

96.9

%

 

 

9.2

%

 

 

8.1

%

 

 

(3.0

%)

 

 

12.6

%

 

 

8.0

%

 

 

0.1

%

 

 

1.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,366

 

 

 

16.9

%

 

 

3,152

 

 

 

96.7

%

 

 

9.4

%

 

 

4.8

%

(1)

 

(4.7

%)

 

 

9.1

%

 

 

4.5

%

 

 

0.3

%

 

 

0.0

%

Washington DC

 

 

14,535

 

 

 

15.4

%

 

 

2,427

 

 

 

96.8

%

 

 

11.4

%

 

 

2.5

%

 

 

1.0

%

 

 

3.3

%

 

 

2.6

%

 

 

(0.1

%)

 

 

3.2

%

New York

 

 

8,991

 

 

 

13.1

%

 

 

3,995

 

 

 

97.1

%

 

 

11.8

%

 

 

6.9

%

 

 

(5.1

%)

 

 

19.0

%

 

 

6.9

%

 

 

0.1

%

 

 

3.5

%

Seattle

 

 

9,524

 

 

 

11.0

%

 

 

2,478

 

 

 

95.3

%

 

 

14.6

%

 

 

4.5

%

 

 

1.4

%

 

 

5.8

%

 

 

3.8

%

 

 

0.7

%

 

 

3.2

%

Boston

 

 

6,700

 

 

 

9.7

%

 

 

3,133

 

 

 

96.8

%

 

 

12.0

%

 

 

4.1

%

 

 

(5.3

%)

 

 

8.7

%

 

 

3.0

%

 

 

1.0

%

 

 

4.4

%

Denver

 

 

2,223

 

 

 

2.4

%

 

 

2,289

 

 

 

96.6

%

 

 

18.4

%

 

 

2.8

%

 

 

(2.7

%)

 

 

5.1

%

 

 

2.7

%

 

 

(0.1

%)

 

 

7.8

%

Other Expansion Markets

 

 

2,776

 

 

 

1.9

%

 

 

1,870

 

 

 

96.7

%

 

 

13.5

%

 

 

2.2

%

 

 

(0.6

%)

 

 

4.5

%

 

 

1.9

%

 

 

0.1

%

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

78,108

 

 

 

100.0

%

 

$

2,855

 

 

 

96.7

%

 

 

11.2

%

 

 

5.4

%

(2)

 

(2.8

%)

 

 

9.8

%

 

 

5.2

%

 

 

0.3

%

 

 

2.4

%

(1)

Excluding the positive impact of Bad Debt, Net which was primarily driven by receipt of governmental rental assistance, same store revenue growth would have been 2.2%, 3.1% and 2.6% for Los Angeles, Orange County and San Francisco, respectively.

(2)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 5.1% in the second quarter of 2022 compared to the first quarter of 2022. See page 12 for additional detail and reconciliations.

 

 

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the six months ended June 30, 2022.

 

 

Equity Residential

June YTD 2022 vs. June YTD 2021

Same Store Residential Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year

 

Markets/Metro Areas

 

Apartment

Units

 

 

June YTD 22

% of

Actual

NOI

 

 

June YTD 22

Average

Rental

Rate

 

 

June YTD 22

Weighted

Average

Physical

Occupancy %

 

 

June YTD 22

Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

15,259

 

 

 

20.5

%

 

$

2,700

 

 

 

96.7

%

 

 

17.5

%

 

 

13.3

%

(1)

 

3.0

%

 

 

18.3

%

 

 

12.6

%

 

 

0.6

%

 

 

(3.0

%)

Orange County

 

 

4,028

 

 

 

5.8

%

 

 

2,555

 

 

 

97.2

%

 

 

15.1

%

 

 

14.3

%

(1)

 

3.2

%

 

 

17.7

%

 

 

14.6

%

 

 

(0.2

%)

 

 

(1.0

%)

San Diego

 

 

2,706

 

 

 

4.0

%

 

 

2,693

 

 

 

97.1

%

 

 

18.4

%

 

 

11.8

%

 

 

4.1

%

 

 

14.3

%

 

 

12.6

%

 

 

(0.6

%)

 

 

(2.1

%)

Subtotal – Southern California

 

 

21,993

 

 

 

30.3

%

 

 

2,672

 

 

 

96.8

%

 

 

17.2

%

 

 

13.3

%

 

 

3.2

%

 

 

17.7

%

 

 

12.9

%

 

 

0.3

%

 

 

(2.5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

11,366

 

 

 

17.5

%

 

 

3,085

 

 

 

96.6

%

 

 

18.8

%

 

 

9.3

%

(1)

 

3.6

%

 

 

12.0

%

 

 

6.9

%

 

 

2.1

%

 

 

(4.2

%)

Washington DC

 

 

14,322

 

 

 

16.2

%

 

 

2,402

 

 

 

96.8

%

 

 

19.5

%

 

 

4.3

%

 

 

5.9

%

 

 

3.4

%

 

 

3.5

%

 

 

0.7

%

 

 

(2.0

%)

New York

 

 

8,991

 

 

 

13.1

%

 

 

3,867

 

 

 

97.1

%

 

 

20.1

%

 

 

16.8

%

 

 

1.5

%

 

 

35.0

%

 

 

12.1

%

 

 

4.0

%

 

 

1.6

%

Seattle

 

 

9,331

 

 

 

11.3

%

 

 

2,431

 

 

 

95.0

%

 

 

26.1

%

 

 

8.5

%

 

 

(3.9

%)

 

 

14.4

%

 

 

9.2

%

 

 

(0.6

%)

 

 

1.2

%

Boston

 

 

6,430

 

 

 

9.7

%

 

 

3,104

 

 

 

96.4

%

 

 

19.5

%

 

 

10.1

%

 

 

5.2

%

 

 

12.5

%

 

 

9.3

%

 

 

0.8

%

 

 

(1.2

%)

Denver

 

 

1,624

 

 

 

1.9

%

 

 

2,242

 

 

 

97.1

%

 

 

28.7

%

 

 

12.8

%

 

 

6.9

%

 

 

15.2

%

 

 

12.1

%

 

 

0.5

%

 

 

1.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

74,057

 

 

 

100.0

%

 

$

2,827

 

 

 

96.5

%

 

 

19.8

%

 

 

10.8

%

(2)

 

2.8

%

 

 

15.1

%

 

 

9.6

%

 

 

1.0

%

 

 

(1.5

%)

(1)

Excluding the positive impact of Bad Debt, Net which was primarily driven by receipt of governmental rental assistance, same store revenue growth would have been 7.9%, 12.1% and 7.6% for Los Angeles, Orange County and San Francisco, respectively.

(2)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 11.0% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021. See page 12 for additional detail and reconciliations.

 

 

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the six months ended June 30, 2022.

Equity Residential

 

Same Store Residential Net Effective Lease Pricing Statistics

For 74,057 Same Store Apartment Units

 

 

 

New Lease Change (1)

 

 

Renewal Rate Achieved (1)

 

 

Blended Rate (1)

 

Markets/Metro Areas

 

Q2 2022

 

 

Q1 2022

 

 

Q2 2022

 

 

Q1 2022

 

 

Q2 2022

 

 

Q1 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

15.7

%

 

 

14.6

%

 

 

7.1

%

 

 

7.2

%

 

 

10.6

%

 

 

10.0

%

San Francisco

 

 

14.9

%

 

 

12.7

%

 

 

9.1

%

 

 

12.6

%

 

 

11.7

%

 

 

12.6

%

Washington DC

 

 

11.2

%

 

 

9.0

%

 

 

8.3

%

 

 

7.0

%

 

 

9.6

%

 

 

7.8

%

New York

 

 

37.9

%

 

 

29.7

%

 

 

19.2

%

 

 

21.4

%

 

 

27.2

%

 

 

24.7

%

Seattle

 

 

17.5

%

 

 

13.0

%

 

 

13.1

%

 

 

16.4

%

 

 

15.3

%

 

 

14.6

%

Boston

 

 

17.8

%

 

 

13.1

%

 

 

12.4

%

 

 

15.6

%

 

 

14.9

%

 

 

14.4

%

Denver

 

 

12.7

%

 

 

11.0

%

 

 

12.3

%

 

 

11.8

%

 

 

12.5

%

 

 

11.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

19.2

%

 

 

15.3

%

 

 

11.2

%

 

 

12.0

%

 

 

14.8

%

 

 

13.3

%

(1)

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

Equity Residential

 

Second Quarter 2022 vs. Second Quarter 2021

Total Same Store Operating Expenses Including 74,057 Same Store Apartment Units

($ in thousands)

 

 

 

Q2 2022

 

 

Q2 2021

 

 

$

Change (1)

 

 

%

Change

 

 

% of

Q2 2022

Operating

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

86,191

 

 

$

86,026

 

 

$

165

 

 

 

0.2

%

 

 

42.8

%

On-site payroll

 

 

37,357

 

 

 

38,826

 

 

 

(1,469

)

 

 

(3.8

%)

 

 

18.5

%

Utilities

 

 

30,754

 

 

 

27,367

 

 

 

3,387

 

 

 

12.4

%

 

 

15.3

%

Repairs and maintenance

 

 

26,457

 

 

 

23,646

 

 

 

2,811

 

 

 

11.9

%

 

 

13.1

%

Insurance

 

 

7,185

 

 

 

6,613

 

 

 

572

 

 

 

8.6

%

 

 

3.6

%

Leasing and advertising

 

 

2,420

 

 

 

2,670

 

 

 

(250

)

 

 

(9.4

%)

 

 

1.2

%

Other on-site operating expenses

 

 

11,001

 

 

 

10,180

 

 

 

821

 

 

 

8.1

%

 

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Same Store Operating Expenses (2)

(includes Residential and Non-Residential)

 

$

201,365

 

 

$

195,328

 

 

$

6,037

 

 

 

3.1

%

 

 

100.0

%

June YTD 2022 vs. June YTD 2021

Total Same Store Operating Expenses Including 74,057 Same Store Apartment Units

($ in thousands)

 

 

 

YTD 2022

 

 

YTD 2021

 

 

$

Change (1)

 

 

%

Change

 

 

% of

YTD 2022

Operating

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

172,621

 

 

$

172,052

 

 

$

569

 

 

 

0.3

%

 

 

42.2

%

On-site payroll

 

 

77,191

 

 

 

80,091

 

 

 

(2,900

)

 

 

(3.6

%)

 

 

18.9

%

Utilities

 

 

64,426

 

 

 

57,379

 

 

 

7,047

 

 

 

12.3

%

 

 

15.8

%

Repairs and maintenance

 

 

51,689

 

 

 

47,307

 

 

 

4,382

 

 

 

9.3

%

 

 

12.6

%

Insurance

 

 

14,359

 

 

 

13,226

 

 

 

1,133

 

 

 

8.6

%

 

 

3.5

%

Leasing and advertising

 

 

4,641

 

 

 

5,390

 

 

 

(749

)

 

 

(13.9

%)

 

 

1.1

%

Other on-site operating expenses

 

 

23,922

 

 

 

22,317

 

 

 

1,605

 

 

 

7.2

%

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Same Store Operating Expenses (2)

(includes Residential and Non-Residential)

 

$

408,849

 

 

$

397,762

 

 

$

11,087

 

 

 

2.8

%

 

 

100.0

%

 

(1)

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

Leasing and advertising – Decrease due primarily to reduction in use of outside brokers.

 

 

 

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

 

 

(2)

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

Equity Residential

 

Debt Summary as of June 30, 2022

($ in thousands)

 

 

 

Debt

Balances (1)

 

 

% of Total

 

 

Weighted

Average

Rates (1)

 

 

Weighted

Average

Maturities

(years)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured

 

$

1,944,404

 

 

 

24.4

%

 

 

3.37

%

 

 

5.1

 

Unsecured

 

 

6,023,639

 

 

 

75.6

%

 

 

3.50

%

 

 

9.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

7,968,043

 

 

 

100.0

%

 

 

3.47

%

 

 

8.2

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

1,634,255

 

 

 

20.5

%

 

 

3.71

%

 

 

4.3

 

Unsecured – Public

 

 

5,838,693

 

 

 

73.3

%

 

 

3.60

%

 

 

9.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Debt

 

 

7,472,948

 

 

 

93.8

%

 

 

3.62

%

 

 

8.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

 

74,624

 

 

 

0.9

%

 

 

2.76

%

 

 

1.3

 

Secured – Tax Exempt

 

 

235,525

 

 

 

3.0

%

 

 

0.95

%

 

 

12.0

 

Unsecured – Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

2.3

 

Unsecured – Commercial Paper Program (2)

 

 

184,946

 

 

 

2.3

%

 

 

0.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating Rate Debt

 

 

495,095

 

 

 

6.2

%

 

 

1.07

%

 

 

6.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

7,968,043

 

 

 

100.0

%

 

 

3.47

%

 

 

8.2

 

(1)

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

(2)

At June 30, 2022, the weighted average maturity of commercial paper outstanding was 12 days. The weighted average amount outstanding for the six months ended June 30, 2022 was approximately $186.7 million.

 

Note: The Company capitalized interest of approximately $2.3 million and $8.2 million during the six months ended June 30, 2022 and 2021, respectively. The Company capitalized interest of approximately $1.3 million and $4.4 million during the quarters ended June 30, 2022 and 2021, respectively.

Equity Residential

 

Debt Maturity Schedule as of June 30, 2022

($ in thousands)

 

Year

 

Fixed

Rate

 

 

Floating

Rate

 

 

Total

 

 

% of Total

 

 

Weighted

Average Coupons

on Fixed

Rate Debt (1)

 

 

Weighted

Average

Coupons on

Total Debt (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

$

326

 

 

$

185,118

 

(2)

$

185,444

 

 

 

2.3

%

 

 

3.48

%

 

 

1.72

%

2023

 

 

1,325,588

 

(3)

 

68,276

 

 

 

1,393,864

 

 

 

17.3

%

 

 

3.74

%

 

 

3.71

%

2024

 

 

 

 

 

6,100

 

 

 

6,100

 

 

 

0.1

%

 

N/A

 

 

 

0.96

%

2025

 

 

450,000

 

 

 

19,712

 

 

 

469,712

 

 

 

5.8

%

 

 

3.38

%

 

 

3.34

%

2026

 

 

592,025

 

 

 

9,000

 

 

 

601,025

 

 

 

7.5

%

 

 

3.58

%

 

 

3.54

%

2027

 

 

400,000

 

 

 

9,800

 

 

 

409,800

 

 

 

5.1

%

 

 

3.25

%

 

 

3.19

%

2028

 

 

900,000

 

 

 

10,700

 

 

 

910,700

 

 

 

11.3

%

 

 

3.79

%

 

 

3.76

%

2029

 

 

888,120

 

 

 

11,500

 

 

 

899,620

 

 

 

11.2

%

 

 

3.30

%

 

 

3.27

%

2030

 

 

1,095,000

 

 

 

12,600

 

 

 

1,107,600

 

 

 

13.8

%

 

 

2.55

%

 

 

2.53

%

2031

 

 

528,500

 

 

 

39,700

 

 

 

568,200

 

 

 

7.1

%

 

 

1.94

%

 

 

1.87

%

2032+

 

 

1,350,850

 

 

 

138,900

 

 

 

1,489,750

 

 

 

18.5

%

 

 

4.39

%

 

 

4.06

%

Subtotal

 

 

7,530,409

 

 

 

511,406

 

 

 

8,041,815

 

 

 

100.0

%

 

 

3.45

%

 

 

3.33

%

Deferred Financing Costs and Unamortized (Discount)

 

 

(57,461

)

 

 

(16,311

)

 

 

(73,772

)

 

N/A

 

 

N/A

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

7,472,948

 

 

$

495,095

 

 

$

7,968,043

 

 

 

100.0

%

 

 

3.45

%

 

 

3.33

%

(1)

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

(2)

Includes $185.0 million in principal outstanding on the Company’s commercial paper program.

(3)

The Company has sent a redemption notice on its $500.0 million unsecured notes due in 2023. The redemption is expected to occur in the third quarter of 2022 and will be funded from disposition proceeds.

Equity Residential

 

Selected Unsecured Public Debt Covenants

 

 

 

June 30,

 

 

March 31,

 

 

 

2022

 

 

2022

 

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

 

29.0%

 

 

29.6%

 

 

 

 

 

 

 

 

 

 

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

 

7.9%

 

 

8.7%

 

 

 

 

 

 

 

 

 

 

Consolidated Income Available for Debt Service to

 

 

5.54

 

 

 

5.24

 

Maximum Annual Service Charges

 

 

 

 

 

 

(must be at least 1.5 to 1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Unencumbered Assets to Unsecured Debt

 

461.5%

 

 

458.1%

 

(must be at least 125%)

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

 

 

 

June 30,

 

 

March 31,

 

 

 

2022

 

 

2022

 

Total debt to Normalized EBITDAre

 

5.05x

 

 

5.42x

 

 

 

 

 

 

 

 

 

 

Net debt to Normalized EBITDAre

 

5.01x

 

 

5.38x

 

 

 

 

 

 

 

 

 

 

Unencumbered NOI as a % of total NOI

 

88.4%

 

 

87.5%

 

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

 

Capital Structure as of June 30, 2022

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

 

Secured Debt

 

 

 

 

 

 

 

 

 

$

1,944,404

 

 

 

24.4

%

 

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

 

 

6,023,639

 

 

 

75.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

 

 

 

 

 

 

 

 

 

 

7,968,043

 

 

 

100.0

%

 

 

22.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

376,118,433

 

 

 

96.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

12,851,180

 

 

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

388,969,613

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Price at June 30, 2022

 

$

72.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,091,385

 

 

 

99.9

%

 

 

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

 

 

 

 

 

 

37,280

 

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Equity

 

 

 

 

 

 

 

 

 

 

28,128,665

 

 

 

100.0

%

 

 

77.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

 

 

 

 

$

36,096,708

 

 

 

 

 

 

 

100.0

%

 

Perpetual Preferred Equity as of June 30, 2022

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

 

Series

 

Call Date

 

Outstanding

Shares

 

 

Liquidation

Value

 

 

Annual

Dividend

Per Share

 

 

Annual

Dividend

Amount

 

Preferred Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.29% Series K

 

12/10/26

 

 

745,600

 

 

$

37,280

 

 

$

4.145

 

 

$

3,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Residential

Common Share and Unit

Weighted Average Amounts Outstanding

 

 

 

June YTD 2022

 

 

June YTD 2021

 

 

Q2 2022

 

 

Q2 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for Net Income Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

375,639,505

 

 

 

373,049,965

 

 

 

375,768,632

 

 

 

373,811,755

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- OP Units

 

 

11,891,583

 

 

 

12,544,494

 

 

 

11,895,086

 

 

 

12,044,402

 

- long-term compensation shares/units

 

 

1,862,666

 

 

 

1,772,470

 

 

 

1,697,634

 

 

 

1,963,498

 

- ATM forward sales

 

 

68,823

 

 

 

 

 

 

1,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

389,462,577

 

 

 

387,366,929

 

 

 

389,362,822

 

 

 

387,819,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

375,639,505

 

 

 

373,049,965

 

 

 

375,768,632

 

 

 

373,811,755

 

OP Units - basic

 

 

11,891,583

 

 

 

12,544,494

 

 

 

11,895,086

 

 

 

12,044,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares and OP Units - basic

 

 

387,531,088

 

 

 

385,594,459

 

 

 

387,663,718

 

 

 

385,856,157

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- long-term compensation shares/units

 

 

1,862,666

 

 

 

1,772,470

 

 

 

1,697,634

 

 

 

1,963,498

 

- ATM forward sales

 

 

68,823

 

 

 

 

 

 

1,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

389,462,577

 

 

 

387,366,929

 

 

 

389,362,822

 

 

 

387,819,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ending Amounts Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

376,118,433

 

 

 

374,354,830

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

12,851,180

 

 

 

12,929,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

388,969,613

 

 

 

387,284,518

 

 

 

 

 

 

 

 

 

Equity Residential

 

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

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated/Actual

 

 

Projects

 

Location

 

Ownership

Percentage

 

 

No. of

Apartment

Units

 

 

Total

Budgeted Capital

Cost

 

 

Total

Book Value

to Date

 

 

Total

Debt (1)

 

 

Percentage

Completed

 

 

Start

Date

 

Initial

Occupancy

 

Completion

Date

 

Stabilization

Date

 

Percentage

Leased / Occupied

CONSOLIDATED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9th and W (2)

 

Washington, DC

 

92%

 

 

 

312

 

 

$

108,027

 

 

$

55,921

 

 

$

9,993

 

 

53%

 

 

Q3 2021

 

Q2 2023

 

Q3 2023

 

Q3 2024

 

– / –

Laguna Clara II

 

Santa Clara, CA

 

100%

 

 

 

225

 

 

 

152,621

 

 

 

9,240

 

 

 

 

 

1%

 

 

Q2 2022

 

Q4 2024

 

Q1 2025

 

Q4 2025

 

– / –

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development - Consolidated

 

 

 

 

 

 

537

 

 

 

260,648

 

 

 

65,161

 

 

 

9,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Completed Not Stabilized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Edge (fka 4885 Edgemoor Lane) (2)

 

Bethesda, MD

 

100%

 

 

 

154

 

 

 

73,771

 

 

 

73,037

 

 

 

 

 

100%

 

 

Q3 2019

 

Q3 2021

 

Q3 2021

 

Q3 2022

 

97% / 95%

Aero Apartments

 

Alameda, CA

 

90%

 

 

 

200

 

 

 

117,794

 

 

 

113,669

 

 

 

64,631

 

 

100%

 

 

Q3 2019

 

Q2 2021

 

Q2 2021

 

Q4 2022

 

90% / 88%

Alcott Apartments (fka West End Tower)

 

Boston, MA

 

100%

 

 

 

470

 

 

 

409,749

 

 

 

405,236

 

 

 

 

 

99%

 

 

Q2 2018

 

Q3 2021

 

Q4 2021

 

Q4 2022

 

90% / 85%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Completed Not Stabilized - Consolidated

 

 

 

 

 

 

824

 

 

 

601,314

 

 

 

591,942

 

 

 

64,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNCONSOLIDATED: (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alloy Sunnyside

 

Denver, CO

 

80%

 

 

 

209

 

 

 

66,004

 

 

 

24,943

 

 

 

 

 

29%

 

 

Q3 2021

 

Q2 2023

 

Q4 2023

 

Q3 2024

 

– / –

Alexan Harrison

 

Harrison, NY

 

62%

 

 

 

450

 

 

 

198,664

 

 

 

72,692

 

 

 

 

 

18%

 

 

Q3 2021

 

Q3 2023

 

Q2 2024

 

Q4 2025

 

– / –

Solana Beeler Park

 

Denver, CO

 

90%

 

 

 

270

 

 

 

79,956

 

 

 

20,539

 

 

 

 

 

11%

 

 

Q4 2021

 

Q4 2023

 

Q2 2024

 

Q1 2025

 

– / –

Settler

 

Fort Worth, TX

 

75%

 

 

 

362

 

 

 

81,775

 

 

 

17,159

 

 

 

 

 

11%

 

 

Q2 2022

 

Q2 2024

 

Q3 2024

 

Q3 2025

 

– / –

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development - Unconsolidated

 

 

 

 

 

 

1,291

 

 

 

426,399

 

 

 

135,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects - Consolidated

 

 

 

 

 

 

 

 

1,361

 

 

 

861,962

 

 

 

657,103

 

 

 

74,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects - Unconsolidated

 

 

 

 

 

 

 

 

1,291

 

 

 

426,399

 

 

 

135,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Development Projects

 

 

 

 

 

 

 

 

2,652

 

 

$

1,288,361

 

 

$

792,436

 

 

$

74,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS

Total Budgeted

Capital Cost

 

 

Q2 2022

NOI

 

Projects Under Development - Consolidated

$

260,648

 

 

$

 

Projects Completed Not Stabilized - Consolidated

 

601,314

 

 

 

4,693

 

Projects Under Development - Unconsolidated

 

426,399

 

 

 

 

 

$

1,288,361

 

 

$

4,693

 

(1)

All non-wholly owned projects are being partially funded with project-specific construction loans. None of these loans are recourse to the Company. As of June 30, 2022, no draws have been made on the construction loans for the unconsolidated joint venture projects under development.

(2)

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

(3)

The Company has six unconsolidated development joint ventures as of June 30, 2022. In addition to the four projects disclosed in “Projects Under Development – Unconsolidated” above, the Company has two additional unconsolidated joint venture projects that have not yet started but are expected to do so in 2022 and eventually deliver approximately 640 apartment units.

Equity Residential

Capital Expenditures to Real Estate

For the Six Months Ended June 30, 2022

(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

 

 

 

74,057

 

 

 

6,170

 

 

 

80,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Improvements

 

 

$

42,373

 

 

$

5,247

 

 

$

47,620

 

 

$

572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renovation Expenditures (1)

 

 

 

17,555

 

 

 

 

 

 

17,555

 

 

 

237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Replacements

 

 

 

17,209

 

 

 

920

 

 

 

18,129

 

 

 

233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures to Real Estate (2)

 

 

$

77,137

 

 

$

6,167

 

 

$

83,304

 

 

$

1,042

 

(1)

Renovation Expenditures on 714 same store apartment units for the six months ended June 30, 2022 approximated $24,587 per apartment unit renovated.

(2)

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

Equity Residential

Normalized EBITDAre Reconciliations

(Amounts in thousands)

 

 

 

Trailing Twelve Months

 

 

2022

 

 

2021

 

 

 

 

June 30, 2022

 

 

March 31, 2022

 

 

Q2

 

 

Q1

 

 

Q4

 

 

Q3

 

 

Q2

 

 

Net income

 

$

1,314,786

 

 

$

1,410,148

 

 

$

232,678

 

 

$

73,798

 

 

$

560,978

 

 

$

447,332

 

 

$

328,040

 

 

Interest expense incurred, net

 

 

282,672

 

 

 

277,907

 

 

 

71,889

 

 

 

72,792

 

 

 

69,740

 

 

 

68,251

 

 

 

67,124

 

 

Amortization of deferred financing costs

 

 

8,814

 

 

 

8,629

 

 

 

2,124

 

 

 

2,077

 

 

 

2,565

 

 

 

2,048

 

 

 

1,939

 

 

Amortization of above/below market lease intangibles

 

 

4,464

 

 

 

4,327

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

 

 

1,116

 

 

 

979

 

 

Depreciation

 

 

891,404

 

 

 

868,271

 

 

 

223,806

 

 

 

229,961

 

 

 

222,240

 

 

 

215,397

 

 

 

200,673

 

 

Income and other tax expense (benefit)

 

 

1,093

 

 

 

1,044

 

 

 

291

 

 

 

282

 

 

 

236

 

 

 

284

 

 

 

242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

2,503,233

 

 

 

2,570,326

 

 

 

531,904

 

 

 

380,026

 

 

 

856,875

 

 

 

734,428

 

 

 

598,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(956,283

)

 

 

(1,072,124

)

 

 

(107,897

)

 

 

102

 

 

 

(484,560

)

 

 

(363,928

)

 

 

(223,738

)

 

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

 

 

(1,309

)

 

 

(1,309

)

 

 

 

 

 

(9

)

 

 

(1,300

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDAre

 

 

1,545,641

 

 

 

1,496,893

 

 

 

424,007

 

 

 

380,119

 

 

 

371,015

 

 

 

370,500

 

 

 

375,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating assets

 

 

16,769

 

 

 

16,769

 

 

 

 

 

 

 

 

 

16,769

 

 

 

 

 

 

 

 

Write-off of pursuit costs (other expenses)

 

 

6,394

 

 

 

6,658

 

 

 

1,052

 

 

 

1,463

 

 

 

2,969

 

 

 

910

 

 

 

1,316

 

 

(Income) loss from investments in unconsolidated entities - operations

 

 

5,264

 

 

 

4,357

 

 

 

1,168

 

 

 

1,270

 

 

 

1,670

 

 

 

1,156

 

 

 

261

 

 

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

 

 

(2,064

)

 

 

(25,631

)

 

 

2

 

 

 

(2,066

)

 

 

 

 

 

 

 

 

(23,565

)

 

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

 

 

(2,300

)

 

 

(2,317

)

 

 

(311

)

 

 

(1,227

)

 

 

(20

)

 

 

(742

)

 

 

(328

)

 

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

 

 

7,103

 

 

 

8,103

 

 

 

 

 

 

750

 

 

 

4,482

 

 

 

1,871

 

 

 

1,000

 

 

Advocacy contributions (other expenses)

 

 

993

 

 

 

853

 

 

 

567

 

 

 

175

 

 

 

201

 

 

 

50

 

 

 

427

 

 

Other

 

 

(346

)

 

 

(276

)

 

 

(70

)

 

 

(69

)

 

 

(207

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized EBITDAre

 

$

1,577,454

 

 

$

1,505,409

 

 

$

426,415

 

 

$

380,415

 

 

$

396,879

 

 

$

373,745

 

 

$

354,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Items:

 

June 30, 2022

 

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

7,968,043

 

 

$

8,160,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

(45,010

)

 

 

(41,140

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage principal reserves/sinking funds

 

 

(21,752

)

 

 

(20,409

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

 

$

7,901,281

 

 

$

8,098,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

Six Months Ended June 30,

 

 

Quarter Ended June 30,

 

 

 

2022

 

 

2021

 

 

Variance

 

 

2022

 

 

2021

 

 

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating assets

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs (other expenses)

 

 

2,515

 

 

 

2,647

 

 

 

(132

)

 

 

1,052

 

 

 

1,316

 

 

 

(264

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

92

 

 

 

264

 

 

 

(172

)

 

 

92

 

 

 

 

 

 

92

 

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

 

 

377

 

 

 

 

 

 

377

 

 

 

377

 

 

 

 

 

 

377

 

Debt extinguishment and preferred share redemption (gains) losses

 

 

469

 

 

 

264

 

 

 

205

 

 

 

469

 

 

 

 

 

 

469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (gain) loss on sales of land parcels

 

 

 

 

 

(5

)

 

 

5

 

 

 

 

 

 

 

 

 

 

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

 

 

734

 

 

 

129

 

 

 

605

 

 

 

310

 

 

 

(597

)

 

 

907

 

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

 

 

(2,064

)

 

 

(23,432

)

 

 

21,368

 

 

 

2

 

 

 

(23,565

)

 

 

23,567

 

Non-operating asset (gains) losses

 

 

(1,330

)

 

 

(23,308

)

 

 

21,978

 

 

 

312

 

 

 

(24,162

)

 

 

24,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(1,538

)

 

 

(328

)

 

 

(1,210

)

 

 

(311

)

 

 

(328

)

 

 

17

 

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

 

 

750

 

 

 

3,212

 

 

 

(2,462

)

 

 

 

 

 

1,000

 

 

 

(1,000

)

Advocacy contributions (other expenses)

 

 

742

 

 

 

457

 

 

 

285

 

 

 

567

 

 

 

427

 

 

 

140

 

Other

 

 

(139

)

 

 

 

 

 

(139

)

 

 

(70

)

 

 

 

 

 

(70

)

Other miscellaneous items

 

 

(185

)

 

 

3,341

 

 

 

(3,526

)

 

 

186

 

 

 

1,099

 

 

 

(913

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments from FFO to Normalized FFO

 

$

1,469

 

 

$

(17,056

)

 

$

18,525

 

 

$

2,019

 

 

$

(21,747

)

 

$

23,766

 

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.

 

 

 

Q3 2022

 

Revised Full Year 2022

 

 

Previous Full Year 2022

 

 

 

 

 

 

 

 

 

 

 

 

2022 Normalized FFO Guidance (per share diluted)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected Normalized FFO Per Share

 

$0.89 to $0.93

 

$3.48 to $3.58

 

 

$3.40 to $3.50

 

 

 

 

 

 

 

 

 

 

 

 

2022 Same Store Assumptions (includes Residential and Non-Residential)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical Occupancy

 

 

 

96.5%

 

 

96.5%

 

Revenue change

 

 

 

10.0% to 11.0%

 

 

8.0% to 10.0%

 

Expense change

 

 

 

2.5% to 3.5%

 

 

2.5% to 3.5%

 

NOI change (1)

 

 

 

13.75% to 14.75%

 

 

11.0% to 13.0%

 

 

 

 

 

 

 

 

 

 

 

 

2022 Transaction Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated rental acquisitions

 

 

 

$113.0M

 

 

$2.0B

 

Consolidated rental dispositions

 

 

 

$746.0M

 

 

$2.0B

 

Transaction Accretion (Dilution) (2)

 

 

 

 

 

(25 basis points)

 

 

 

 

 

 

 

 

 

 

 

 

2022 Debt Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average debt outstanding (2)

 

 

 

$7.85B to $8.0B

 

 

$8.275B to $8.475B

 

Interest expense, net (on a Normalized FFO basis)

 

 

 

$279.0M to $285.0M

 

 

$285.0M to $291.0M

 

Capitalized interest

 

 

 

$5.5M to $7.5M

 

 

$4.5M to $8.5M

 

 

 

 

 

 

 

 

 

 

 

 

2022 Capital Expenditures to Real Estate Assumptions for Same Store Properties (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures to Real Estate for Same Store Properties

 

 

 

$192.5M

 

 

$200.0M

 

Capital Expenditures to Real Estate per Same Store Apartment Unit

 

$2,600

 

 

$2,700

 

 

 

 

 

 

 

 

 

 

 

 

2022 Other Guidance Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property management expense

 

 

 

$110.0M to $112.0M

 

 

$113.0M to $116.0M

 

General and administrative expense

 

 

 

$58.0M to $60.0M

 

 

$55.0M to $59.0M

 

Debt offerings

 

 

 

No amounts budgeted

 

 

No amounts budgeted

 

Weighted average Common Shares and Units - Diluted

 

389.4M

 

 

390.9M

 

(1)

Approximately 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO per share/Normalized FFO per share.

(2)

The Company has sent a redemption notice on its $500.0 million unsecured notes due in 2023. The redemption is expected to occur in the third quarter of 2022 and will be funded from disposition proceeds. There will be no prepayment penalty, but there will be a non-cash write-off of approximately $3.8 million in unamortized debt discounts and deferred financing costs that will reduce EPS and FFO per share but will not impact Normalized FFO per share.

(3)

During 2022, the Company expects to spend approximately $42.0 million for apartment unit Renovation Expenditures on approximately 1,750 same store apartment units at an average cost of approximately $24,000 per apartment unit renovated, which is included in the Capital Expenditures to Real Estate assumptions noted above.

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.

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 November 1, 2024. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently 0.775%), 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:

 

 

June 30, 2022

 

Unsecured revolving credit facility commitment

 

$

2,500,000

 

 

 

 

 

 

Commercial paper balance outstanding

 

 

(185,037

)

 

 

 

 

 

Unsecured revolving credit facility balance outstanding

 

 

 

 

 

 

 

Other restricted amounts

 

 

(3,463

)

 

 

 

 

 

Unsecured revolving credit facility availability

 

$

2,311,500

 

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.

Equity Residential

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

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

(All per share data is diluted)

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 $100-$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):

 

 

Six Months Ended June 30, 2022

 

 

Quarter Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

Net Gain (Loss) on Sales of Real Estate Properties

 

$

107,795

 

 

$

107,897

 

Accumulated Depreciation Gain

 

 

(61,131

)

 

 

(61,131

)

 

 

 

 

 

 

 

 

 

Economic Gain (Loss)

 

$

46,664

 

 

$

46,766

 

Equity Residential

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

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

(All per share data is diluted)

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") – Normalized FFO begins with FFO and excludes:

  • the impact of any expenses relating to non-operating 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.

Equity Residential

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

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

(All per share data is diluted)

 

 

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 June

 

 

Actual June

 

 

Actual

 

 

Actual

 

 

Expected

 

 

Expected

 

 

 

YTD 2022

 

 

YTD 2021

 

 

Q2 2022

 

 

Q2 2021

 

 

Q3 2022

 

 

2022

 

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

 

Per Share

 

EPS – Diluted

 

$

0.78

 

 

$

1.00

 

 

$

0.59

 

 

$

0.84

 

 

$0.77 to $0.81

 

 

$1.98 to $2.08

 

Depreciation expense

 

 

1.16

 

 

 

1.03

 

 

 

0.58

 

 

 

0.52

 

 

 

0.55

 

 

 

2.25

 

Net (gain) loss on sales

 

 

(0.28

)

 

 

(0.58

)

 

 

(0.28

)

 

 

(0.58

)

 

 

(0.45)

 

 

 

(0.78)

 

Impairment – operating assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share – Diluted

 

 

1.66

 

 

 

1.45

 

 

 

0.89

 

 

 

0.78

 

 

0.87 to 0.91

 

 

3.45 to 3.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.01

 

Debt extinguishment and preferred share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.01

 

 

 

0.01

 

redemption (gains) losses

Non-operating asset (gains) losses

 

 

 

 

 

(0.06

)

 

 

 

 

 

(0.06

)

 

 

 

 

 

 

Other miscellaneous items

 

 

 

 

 

0.01

 

 

 

 

 

 

 

 

 

0.01

 

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO per share – Diluted

 

$

1.66

 

 

$

1.40

 

 

$

0.89

 

 

$

0.72

 

 

$0.89 to $0.93

 

 

$3.48 to $3.58

 

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):

 

 

Six Months Ended June 30,

 

 

Quarter Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating income

 

$

459,672

 

 

$

512,404

 

 

$

309,934

 

 

$

376,844

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property management

 

 

57,306

 

 

 

50,585

 

 

 

26,559

 

 

 

24,455

 

General and administrative

 

 

33,661

 

 

 

30,061

 

 

 

16,423

 

 

 

14,678

 

Depreciation

 

 

453,767

 

 

 

400,635

 

 

 

223,806

 

 

 

200,673

 

Net (gain) loss on sales of real estate

 

 

(107,795

)

 

 

(223,695

)

 

 

(107,897

)

 

 

(223,738

)

properties

Total NOI

 

$

896,611

 

 

$

769,990

 

 

$

468,825

 

 

$

392,912

 

Rental income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

$

1,258,233

 

 

$

1,136,537

 

 

$

645,797

 

 

$

568,365

 

Non-same store/other

 

 

82,145

 

 

 

59,124

 

 

 

41,233

 

 

 

29,694

 

Total rental income

 

 

1,340,378

 

 

 

1,195,661

 

 

 

687,030

 

 

 

598,059

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

 

408,849

 

 

 

397,762

 

 

 

201,365

 

 

 

195,328

 

Non-same store/other

 

 

34,918

 

 

 

27,909

 

 

 

16,840

 

 

 

9,819

 

Total operating expenses

 

 

443,767

 

 

 

425,671

 

 

 

218,205

 

 

 

205,147

 

NOI:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same store

 

 

849,384

 

 

 

738,775

 

 

 

444,432

 

 

 

373,037

 

Non-same store/other

 

 

47,227

 

 

 

31,215

 

 

 

24,393

 

 

 

19,875

 

Total NOI

 

$

896,611

 

 

$

769,990

 

 

$

468,825

 

 

$

392,912

 

Equity Residential

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

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

(All per share data is diluted)

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 2021 and 2022, plus any properties in lease-up and not stabilized as of January 1, 2021.

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:

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, 2021, 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 2022 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.

Equity Residential

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

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

(All per share data is diluted)

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 June 30, 2022. 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 six months ended June 30, 2022 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.

Contacts

Marty McKenna (312) 928-1901

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