Same Store Results Ahead of Expectations

Equity Residential (NYSE:EQR) today reported results for the quarter ended March 31, 2024.

First Quarter 2024 Results

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


	Quarter Ended March 31,
	2024		2023		$ Change		% Change
Earnings Per Share (EPS)	$	0.77	$	0.56	$	0.21		37.5	%
Funds from Operations (FFO) per share	$	0.87	$	0.85	$	0.02		2.4	%
Normalized FFO (NFFO) per share	$	0.93	$	0.87	$	0.06		6.9	%

Recent Highlights

Same store revenue increased 4.1% for the first quarter of 2024 compared to the first quarter of 2023, driven by healthy demand and modest supply across most of our markets. Same store expense increased 1.3% with low or negative growth in our primary expense categories. The Company's continued focus on expense efficiency has delivered a five-year compounded annual growth rate of same store expenses of 3.1%. Same store Net Operating Income (NOI) increased 5.5%.
Our focus on same store revenue growth, same store expense and corporate overhead efficiency and limited exposure to higher interest rates led to strong growth.
Our high quality customer experience along with the overall desirability of our locations has led to the lowest quarterly same store Turnover in our history of 8.6%.
During the first quarter of 2024, the Company sold three properties - one in Boston, one in Orange County and one in San Francisco - consisting of 504 apartment units, for an aggregate sale price of approximately $248.5 million.
During the first quarter of 2024, the Company repurchased and retired 652,452 of its common shares, at a weighted average purchase price of $58.95 per share, for an aggregate purchased amount of approximately $38.5 million.

"Our operating business performed very well this quarter positioning us favorably as we enter our primary leasing season," said Mark J. Parrell, Equity Residential's President and CEO. "The positive demand dynamics in our affluent renter demographic, limited new apartment supply in our existing predominantly coastal markets and our laser focus on expense management continue to produce good results."

Results Per Share

The change in EPS for the quarter ended March 31, 2024 compared to the same period of 2023 is due primarily to higher property sale gains, the various adjustment items listed on page 25 of this release and the items described below.

The per share change in FFO for the quarter ended March 31, 2024 compared to the same period of 2023 is due primarily to the various adjustment items listed on page 25 of this release and the items described below.

The per share change in Normalized FFO is due primarily to:

	Positive/(Negative) Impact
	First Quarter 2024 vs. First Quarter 2023
Same store NOI	$	0.07
2024 and 2023 transaction activity impact on NOI, net		(0.01	)
Corporate overhead ⁽¹⁾		(0.01	)
Other items		0.01
Net	$	0.06

(1)	Corporate overhead includes property management and general and administrative expenses.

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 27 through 33 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 6, 29 and 30 of this release.

Same Store Results

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

	First Quarter 2024 vs. First Quarter 2023	First Quarter 2024 vs. Fourth Quarter 2023
Apartment Units	77,373	77,950
Physical Occupancy	96.3% vs. 95.9%	96.3% vs. 95.8%

Revenues ⁽¹⁾	4.1%	1.1%
Expenses	1.3%	6.5%
NOI	5.5%	(1.3%)

(1)	See page 10 for further discussion.

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

	First Quarter 2024 vs. First Quarter 2023			First Quarter 2024 vs. Fourth Quarter 2023
	% Change			% Change
Same Store Residential Revenues-
comparable period
Lease rates		2.9	%		0.1	%
Leasing Concessions		(0.3	%)		0.0	%
Vacancy gain (loss)		0.4	%		0.6	%
Bad Debt, Net ⁽¹⁾		0.3	%		0.0	%
Other ⁽²⁾		0.6	%		(0.1	%)
Same Store Residential Revenues-
current period		3.9	%		0.6	%

(1)	Change in rental income due to bad debt write-offs and reserves, net of amounts (including governmental rental assistance payments) collected on previously written-off or reserved accounts. See page 12 for more detail.
(2)	Includes ancillary income, utility recoveries, early lease termination income, miscellaneous income and other items.

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

Residential Same Store Operating Statistics

The following table includes select operating metrics for Residential Same Store Properties (for 77,373 same store apartment units):

	April 2024 (1)	Q1 2024	Q4 2023
Physical Occupancy	96.4%	96.3%	95.8%
Percentage of Residents Renewing by quarter/month	61.0%	61.1%	59.1%

New Lease Change	0.1%	(2.2%)	(4.6%)
Renewal Rate Achieved	5.1%	4.7%	5.1%
Blended Rate	3.1%	1.6%	0.7%

(1)	April 2024 results are preliminary as of April 18th.

Investment Activity

The Company did not acquire any operating properties during the first quarter of 2024. During the first quarter of 2024, the Company sold three properties - one in Boston, one in Orange County and one in suburban San Francisco - consisting of 504 apartment units, for an aggregate sale price of approximately $248.5 million at a weighted average Disposition Yield of 5.5%, generating an Unlevered IRR of 13.1%. The average age of the properties sold in the first quarter of 2024 was approximately 40 years.

During the first quarter of 2024, the Company began construction on The Basin, a 440 apartment unit property located in suburban Boston with a Total Budgeted Capital Cost of $232.2 million.

Capital Markets Activity

During the first quarter of 2024, the Company repurchased and retired 652,452 of its common shares, at a weighted average purchase price of $58.95 per share, for an aggregate purchased amount of approximately $38.5 million. Combined with the Company's fourth quarter 2023 repurchase activity, the Company has repurchased approximately $87.5 million of its common shares at a weighted average purchase price of $57.72 per share.

Second Quarter 2024 Guidance

At this time the Company is not revising its annual operating, EPS, FFO per share or Normalized FFO per share guidance provided as part of its fourth quarter 2023 earnings release. See page 26.

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

		Q2 2024 Guidance
EPS		$0.45 to $0.49
FFO per share		$0.91 to $0.95
Normalized FFO per share		$0.92 to $0.96

The difference between the first quarter of 2024 actual EPS of $0.77 and the second quarter of 2024 EPS guidance midpoint of $0.47 is due primarily to higher expected same store NOI, lower expected property sale gains and lower expected other expenses.

The difference between the first quarter of 2024 actual FFO of $0.87 per share and the second quarter of 2024 FFO guidance midpoint of $0.93 per share is due primarily to higher expected same store NOI and lower expected other expenses.

The difference between the first quarter of 2024 actual Normalized FFO of $0.93 per share and the second quarter of 2024 Normalized FFO guidance midpoint of $0.94 per share is due primarily to higher expected same store NOI.

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 299 properties consisting of 79,688 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin. For more information on Equity Residential, please visit our website at www.equityapartments.com.

Forward-Looking Statements

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

A live web cast of the Company's conference call discussing these results will take place tomorrow, Wednesday, April 24, 2024 at 10:00 a.m. CT. Please visit the Investor section of the Company's website at www.equityapartments.com for the webcast link.

Equity Residential Consolidated Statements of Operations (Amounts in thousands except per share data) (Unaudited)

	Quarter Ended March 31,
	2024			2023
REVENUES
Rental income	$	730,818		$	705,088

EXPENSES
Property and maintenance		134,630			137,579
Real estate taxes and insurance		108,927			106,669
Property management		35,458			31,466
General and administrative		15,720			16,165
Depreciation		225,695			215,830
Total expenses		520,430			507,709

Net gain (loss) on sales of real estate properties		188,185			100,209
Interest and other income		9,329			1,538
Other expenses		(31,738	)		(8,995	)
Interest:
Expense incurred, net		(67,212	)		(66,401	)
Amortization of deferred financing costs		(1,918	)		(1,979	)
Income before income and other taxes, income (loss) from
investments in unconsolidated entities and net gain (loss)
on sales of land parcels		307,034			221,751
Income and other tax (expense) benefit		(304	)		(298	)
Income (loss) from investments in unconsolidated entities		(1,698	)		(1,382	)
Net income		305,032			220,071
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership		(8,275	)		(7,059	)
Partially Owned Properties		(970	)		(977	)
Net income attributable to controlling interests		295,787			212,035
Preferred distributions		(547	)		(772	)
Premium on redemption of Preferred Shares		(1,444	)		—
Net income available to Common Shares	$	293,796		$	211,263

Earnings per share – basic:
Net income available to Common Shares	$	0.78		$	0.56
Weighted average Common Shares outstanding		378,812			378,341

Earnings per share – diluted:
Net income available to Common Shares	$	0.77		$	0.56
Weighted average Common Shares outstanding		390,561			390,664

Distributions declared per Common Share outstanding	$	0.675		$	0.6625

Equity Residential Consolidated Statements of Funds From Operations and Normalized Funds From Operations (Amounts in thousands except per share and Unit data) (Unaudited)

	Quarter Ended March 31,
	2024			2023
Net income	$	305,032		$	220,071
Net (income) loss attributable to Noncontrolling Interests – Partially
Owned Properties		(970	)		(977	)
Preferred distributions		(547	)		(772	)
Premium on redemption of Preferred Shares		(1,444	)		—
Net income available to Common Shares and Units		302,071			218,322

Adjustments:
Depreciation		225,695			215,830
Depreciation – Non-real estate additions		(955	)		(1,156	)
Depreciation – Partially Owned Properties		(542	)		(545	)
Depreciation – Unconsolidated Properties		335			632
Net (gain) loss on sales of real estate properties		(188,185	)		(100,209	)
FFO available to Common Shares and Units		338,419			332,874

Adjustments (see note for additional detail):
Write-off of pursuit costs		548			1,332
Debt extinguishment and preferred share redemption (gains)
losses		1,444			—
Non-operating asset (gains) losses		(6,106	)		714
Other miscellaneous items		30,591			6,292
Normalized FFO available to Common Shares and Units	$	364,896		$	341,212

FFO	$	340,410		$	333,646
Preferred distributions		(547	)		(772	)
Premium on redemption of Preferred Shares		(1,444	)		—
FFO available to Common Shares and Units	$	338,419		$	332,874
FFO per share and Unit – basic	$	0.87		$	0.85
FFO per share and Unit – diluted	$	0.87		$	0.85

Normalized FFO	$	365,443		$	341,984
Preferred distributions		(547	)		(772	)
Normalized FFO available to Common Shares and Units	$	364,896		$	341,212
Normalized FFO per share and Unit – basic	$	0.94		$	0.88
Normalized FFO per share and Unit – diluted	$	0.93		$	0.87

Weighted average Common Shares and Units outstanding – basic		389,481			389,851
Weighted average Common Shares and Units outstanding – diluted		390,561			390,664

Note: See Adjustments from FFO to Normalized FFO for additional detail regarding the adjustments from FFO to Normalized FFO. See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

Equity Residential Consolidated Balance Sheets (Amounts in thousands except for share amounts) (Unaudited)

	March 31,			December 31,
	2024			2023
ASSETS
Land	$	5,550,882		$	5,581,876
Depreciable property		22,930,036			22,938,426
Projects under development		155,729			78,036
Land held for development		64,466			114,300
Investment in real estate		28,701,113			28,712,638
Accumulated depreciation		(9,978,012	)		(9,810,337	)
Investment in real estate, net		18,723,101			18,902,301
Investments in unconsolidated entities¹		289,272			282,049
Cash and cash equivalents		44,535			50,743
Restricted deposits		152,025			89,252
Right-of-use assets		454,035			457,266
Other assets		231,829			252,953
Total assets	$	19,894,797		$	20,034,564

LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	1,633,870		$	1,632,902
Notes, net		5,349,938			5,348,417
Line of credit and commercial paper		225,921			409,131
Accounts payable and accrued expenses		146,072			87,377
Accrued interest payable		49,190			65,716
Lease liabilities		310,422			311,640
Other liabilities		274,919			272,596
Security deposits		68,818			69,178
Distributions payable		263,615			259,231
Total liabilities		8,322,765			8,456,188

Commitments and contingencies

Redeemable Noncontrolling Interests – Operating Partnership		298,219			289,248
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 343,100 shares issued and
outstanding as of March 31, 2024 and 745,600 shares issued
and outstanding as of December 31, 2023		17,155			37,280
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 378,939,751 shares issued
and outstanding as of March 31, 2024 and 379,291,417
shares issued and outstanding as of December 31, 2023		3,789			3,793
Paid in capital		9,603,743			9,601,866
Retained earnings		1,436,671			1,437,185
Accumulated other comprehensive income (loss)		6,314			5,704
Total shareholders' equity		11,067,672			11,085,828
Noncontrolling Interests:
Operating Partnership		207,272			202,306
Partially Owned Properties		(1,131	)		994
Total Noncontrolling Interests		206,141			203,300
Total equity		11,273,813			11,289,128
Total liabilities and equity	$	19,894,797		$	20,034,564

¹ Includes $227.3 million and $220.2 million in unconsolidated development projects as of March 31, 2024 and December 31, 2023, respectively. See Development and Lease-Up Projects for additional detail on unconsolidated projects.

Equity Residential

Portfolio Summary

As of March 31, 2024

					% of Stabilized			Average
			Apartment		Budgeted			Rental
Markets/Metro Areas	Properties		Units		NOI			Rate
Established Markets:
Los Angeles		58		14,732		17.3	%	$	2,925
Orange County		12		3,718		5.0	%		2,900
San Diego		12		2,878		4.1	%		3,103
Subtotal – Southern California		82		21,328		26.4	%		2,945

Washington, D.C.		48		15,028		16.4	%		2,666
San Francisco		42		11,567		15.3	%		3,282
New York		34		8,536		14.2	%		4,592
Boston		26		7,077		11.7	%		3,557
Seattle		44		9,267		10.5	%		2,569
Subtotal – Established Markets		276		72,803		94.5	%		3,146

Expansion Markets:
Denver		9		2,792		2.8	%		2,409
Atlanta		7		2,111		1.6	%		2,049
Dallas/Ft. Worth		4		1,241		0.7	%		1,905
Austin

Equity Residential Reports First Quarter 2024 Results