EQUITY RESIDENTIAL
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
VMRK$65.51+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000950170-24-052144
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000950170-24-089300
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 116 previous paragraphs and 115 current paragraphs.
62 unchanged; 42 reworded; 10 added; 12 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Acquisitions
Current report
The consolidated property acquired during the six months ended June 30, 2024 is located in the Boston market.
Current report
Consolidated:
Current report
The Company stabilized one partially owned consolidated apartment property during the six months ended June 30, 2024, located in the Washington, D.C. market, consisting of 312 apartment units totaling approximately $106.0 million of development costs; and
Current report
The Company spent approximately $55.3 million during the six months ended June 30, 2024, primarily for consolidated development projects.
Current report
Unconsolidated:
Current report
The Company completed construction on one unconsolidated apartment property during the six months ended June 30, 2024, located in the Denver market, consisting of 209 apartment units totaling approximately $70.0 million of development costs;
Current report
The Company previously entered into two separate unconsolidated joint ventures for the purpose of developing vacant land parcels in the Boston and Seattle markets. The joint ventures acquired their respective land parcels during the second quarter of 2024 for the total purchase price listed above. The Company's total investment in these two joint ventures is approximately $53.0 million as of June 30, 2024.
Current report
June YTD 2024 vs. June YTD 2023
Current report
Acquired one consolidated rental property for approximately $63.5 million;
Removed paragraphs (12)
Previous report
Repairs and maintenance – A $0.7 million decrease due primarily to lower resident Turnover compared to the same period of 2023, moderation of previous wage/staffing pressures and a benefit from a relatively easy comparable period.
Previous report
The following table provides comparative total same store results and statistics for the First Quarter 2024 Same Store Properties:
Previous report
First Quarter 2024 vs. First Quarter 2023
Previous report
Same Store Results/Statistics Including 77,373 Same Store Apartment Units
Previous report
(includes Residential and Non-Residential)
Previous report
($ in thousands except for Average Rental Rate)
Previous report
Note: Same store revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.
Previous report
Non-Residential contributed 0.20% to quarterly same store revenue growth primarily due to improved collectibility expectations for certain Non-Residential tenants, resulting in the reinstatement of their respective straight-line receivable balances in the first quarter of 2024.
Previous report
First Quarter 2024 vs. First Quarter 2023
Previous report
Pricing – Pricing (net of Leasing Concessions) improved seasonally and was generally consistent with expectations, with particular strength in New York and Washington, D.C., and improvement in San Francisco and Seattle.
Previous report
Physical Occupancy – Physical Occupancy of 96.3% for the first quarter of 2024 was stronger than anticipated due to the low move-out activity discussed below.
Previous report
Percentage of Residents Renewing and Turnover – The Percentage of Residents Renewing was high at 61.1% for the first quarter of 2024, which helped translate into the lowest quarterly same store Turnover in our history of 8.6%. We believe this reflects both the strength of demand and quality of our product and team.
Reworded paragraphs (42)
Previous wording
In conjunction with our business objectives and operating and investing strategies, the following table provides a rollforward of the transactions that occurred during the quarter ended March 31, 2024:
Current wording
In conjunction with our business objectives and operating and investing strategies, the following table provides a rollforward of the transactions that occurred during the six months ended June 30, 2024:
Previous wording
The consolidated properties disposed of during the quarter ended March 31, 2024 were located in the Boston, Orange County and San Francisco markets and the sales generated an Unlevered IRR of 13.1%.
Current wording
The consolidated properties disposed of during the six months ended June 30, 2024 were located in the Boston, Orange County, San Francisco (2) and Washington, D.C. markets.
Previous wording
The Company commenced construction on one consolidated apartment property during the quarter ended March 31, 2024, located in the Boston market, consisting of 440 apartment units totaling approximately $232.2 million of expected development costs; and
Current wording
The Company commenced construction on one partially owned consolidated apartment property during the six months ended June 30, 2024, located in the Boston market, consisting of 440 apartment units totaling approximately $232.2 million of expected development costs;
Previous wording
The Company spent approximately $31.4 million during the quarter ended March 31, 2024, primarily for consolidated and unconsolidated development projects.
Current wording
The Company spent approximately $57.7 million during the six months ended June 30, 2024, primarily for unconsolidated development projects; and
Previous wording
Comparison of the quarter ended March 31, 2024 to the quarter ended March 31, 2023
Current wording
Comparison of the six months and quarter ended June 30, 2024 to the six months and quarter ended June 30, 2023
Previous wording
The following table presents a reconciliation of diluted earnings per share/unit for the quarter ended March 31, 2024 as compared to the same period in 2023:
Current wording
The following table presents a reconciliation of diluted earnings per share/unit for the six months and quarter ended June 30, 2024 as compared to the same periods in 2023:
Previous wording
The increase in same store operating expenses is due primarily to:
Current wording
The increase in year-to-date same store operating expenses is due primarily to:
Previous wording
Real estate taxes – A $3.4 million increase due to escalation in rates and assessed values including an approximately 1.0% contribution to growth from 421-a tax abatement burnoffs in New York City. Once the burnoffs are completed, previously rent-restricted apartment units will transition to market;
Current wording
Real estate taxes – A $6.3 million increase due to escalation in rates and assessed values including an approximately one percentage point contribution to growth from 421-a tax abatement burnoffs in New York City. Once the burnoffs are completed, previously rent-restricted apartment units will transition to market;
Previous wording
Other on-site operating expenses – A $1.2 million increase primarily driven by higher property-related legal expenses;
Current wording
Other on-site operating expenses – A $1.9 million increase primarily driven by higher property-related legal expenses;
Previous wording
Insurance – A $0.9 million increase due to higher premiums on property insurance renewal due to conditions in the insurance market that while less difficult than recent years, remain challenging;
Current wording
Insurance – A $1.8 million increase due to higher premiums on property insurance renewal due to conditions in the insurance market that while less difficult than recent years, remain challenging; and
Previous wording
Utilities – A $2.0 million decrease from electric primarily driven by lower commodity prices; and
Current wording
Utilities – A $1.2 million decrease primarily driven by lower commodity prices for gas and electric.
Previous wording
Non-same store/other NOI results consist primarily of properties acquired in calendar year 2023, operations from the Company’s development properties, other corporate operations and operations prior to disposition from 2023 and 2024 sold properties.
Current wording
Non-same store/other NOI results consist primarily of properties acquired in calendar years 2023 and 2024, operations from the Company’s development properties, other corporate operations and operations prior to disposition from 2023 and 2024 sold properties.
Previous wording
Property management expenses include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third-party management companies. The increase during the quarter ended March 31, 2024 as compared to the prior year period is primarily attributable to increases in payroll-related costs, information technology expenses and legal and professional fees.
Current wording
Property management expenses include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third-party management companies. The increases during the six months and quarter ended June 30, 2024 as compared to the prior year periods are primarily attributable to increases in payroll-related costs and information technology expenses.
Previous wording
General and administrative expenses, which include corporate operating expenses, decreased during the quarter ended March 31, 2024 as compared to the prior year period, primarily due to decreases in payroll-related costs, partially offset by increases in workforce/contractors costs.
Current wording
General and administrative expenses, which include corporate operating expenses, decreased during the six months and quarter ended June 30, 2024 as compared to the prior year periods, primarily due to decreases in payroll-related costs.
Previous wording
Depreciation expense, which includes depreciation on non-real estate assets, increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily as a result of additional depreciation expense on properties acquired in 2023 and a development property placed in service during 2023, partially offset by lower depreciation from properties sold in 2023 and 2024.
Current wording
Depreciation expense, which includes depreciation on non-real estate assets, increased during the six months and quarter ended June 30, 2024 as compared to the prior year periods, primarily as a result of additional depreciation expense on properties acquired in 2023 and 2024 and development properties placed in service during 2023 and 2024, partially offset by lower depreciation from properties sold in 2023 and 2024.
Previous wording
Net gain on sales of real estate properties increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily as a result of the sale of three consolidated apartment properties for a higher gain in 2024 as compared to the sale of seven consolidated apartment properties in the same period in 2023.
Current wording
Net gain on sales of real estate properties increased during the six months ended June 30, 2024 as compared to the prior year period, primarily as a result of the sale of five consolidated apartment properties for a higher gain in 2024 as compared to the sale of seven consolidated apartment properties in the same period in 2023. Net gain on sales of real estate properties increased during the quarter ended June 30, 2024 as compared to the prior year period, primarily as a result of the sale of two consolidated apartment properties in the second quarter of 2024 as compared to no consolidated property sales in the same period in 2023.
Previous wording
Interest and other income increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily due to a net unrealized gain of $7.1 million on various investment securities as well as short-term investment income on cash and restricted deposit accounts due to a higher rate environment and higher overall invested balances, partially offset by decreases in insurance/litigation settlement proceeds received during 2023 as compared to 2024.
Current wording
Interest and other income increased during the six months ended June 30, 2024 as compared to the prior year period, primarily due to a net increase in realized/unrealized gains of $4.5 million on various investment securities as well as short-term investment income on restricted deposit accounts due to a higher rate environment and higher overall invested balances. Interest and other income decreased during the quarter ended June 30, 2024 as compared to the prior year period, primarily due to an increase in realized/unrealized losses of $2.6 million on various investment securities, partially offset by increases of $1.3 million in insurance/litigation settlement proceeds received during 2024 as compared to 2023.
Previous wording
Other expenses increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily due to increases in litigation accruals, partially offset by decreases in data transformation project costs that occurred during 2023 but not during 2024.
Current wording
Other expenses increased during the six months and quarter ended June 30, 2024 as compared to the prior year periods, primarily due to increases in litigation accruals and advocacy contributions, partially offset by decreases in data transformation project costs that occurred during 2023 but not during 2024.
Previous wording
Interest expense, including amortization of deferred financing costs, increased during the quarter ended March 31, 2024, as compared to the prior year period, primarily due to higher rates on floating debt as compared to the prior year period. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the quarter ended March 31, 2024 was 3.89% as compared to 3.86% for the prior year period. The Company capitalized interest of approximately $3.1 million and $3.4 million during the quarters ended March 31, 2024 and 2023, respectively.
Current wording
Interest expense, including amortization of deferred financing costs, increased during the six months and quarter ended June 30, 2024 as compared to the prior year periods, primarily due to higher rates on floating debt. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the six months ended June 30, 2024 was 3.89% as compared to 3.81% for the prior year period, and for the quarter ended June 30, 2024 was 3.88% as compared to 3.75% for the prior year period. The Company capitalized interest of approximately $6.9 million and $7.0 million during the six months ended June 30, 2024 and 2023, respectively, and $3.8 million and $3.6 million during the quarters ended June 30, 2024 and 2023, respectively.
Previous wording
Loss from investments in unconsolidated entities increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily as a result of losses incurred on our unconsolidated development properties which recently started lease-up activities.
Current wording
Loss from investments in unconsolidated entities increased during the six months and quarter ended June 30, 2024 as compared to the prior year periods, primarily as a result of losses incurred on our unconsolidated development properties which recently started lease-up activities.
Previous wording
Properties that the Company owned and were stabilized for all of both of the quarters ended March 31, 2024 and 2023 (the “First Quarter 2024 Same Store Properties”), which represented 77,373 apartment units, drove the Company’s results of operations. Properties are considered “stabilized” when they have achieved 90% occupancy for three consecutive months. Properties are included in same store when they are stabilized for all of the current and comparable periods presented.
Current wording
Properties that the Company owned and were stabilized for all of both of the six months ended June 30, 2024 and 2023 (the “Six-Month 2024 Same Store Properties”), which represented 77,054 apartment units, drove the Company’s results of operations. Properties are considered “stabilized” when they have achieved 90% occupancy for three consecutive months.
Previous wording
The following table provides results and statistics related to our Residential same store operations for the quarters ended March 31, 2024 and 2023:
Current wording
The following table provides results and statistics related to our Residential same store operations for the six months ended June 30, 2024 and 2023:
Previous wording
Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.0% of total revenues for the quarter ended March 31, 2024.
Current wording
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, 2024.
Previous wording
During the quarter ended March 31, 2024, the Company had strong performance in its operating business, with healthy demand across all of our markets supported by a continuing solid job market and high employment for our target affluent renter demographic. Supply has also been modest in most of our existing coastal markets. As expected, our East Coast and Southern California markets performed better than San Francisco, Seattle and our expansion markets (Denver, Atlanta, Dallas/Ft. Worth and Austin). Key performance drivers thus far during 2024 included:
Current wording
During the six months ended June 30, 2024, the Company had strong performance in its operating business, with healthy demand across all of our markets supported by a continuing solid job market and high employment for our target affluent renter demographic. Supply has also been modest in most of our existing coastal markets yet has been elevated in our expansion markets. As expected, our East Coast markets continue to be our best performers. On the West Coast, Seattle has performed particularly well with significant improvement, while San Francisco has improved but at a more modest pace. Our Southern California markets have shown good demand but with price sensitivity.
Previous wording
The Company continued to make progress in move-out activity related to delinquent residents during the quarter ended March 31, 2024, especially in our Los Angeles market, which put modest pressure on pricing and Physical Occupancy in that market. While the eviction process remains challenging and we have more progress to make in reducing delinquencies in our portfolio, we have made significant strides already and timeframes for processing evictions have recently improved.
Current wording
The Company continued to make progress in move-out activity related to delinquent residents during the six months ended June 30, 2024. While the eviction process remains challenging, we have made additional progress in reducing delinquencies in our portfolio. We expect this trend to continue through the remainder of 2024.
Previous wording
Overall, the fundamentals of our business remain healthy. Long-term, we expect elevated single family home ownership costs, positive household formation trends, manageable competitive new supply in our established coastal markets and the overall deficit in housing across the country to buffer the impact on our business from the risks of potential economic weakness. We also see our affluent resident base as being resilient to economic uncertainty, including elevated inflation, due to higher levels of disposable income and lower relative rent-to-income ratios.
Current wording
Overall, the fundamentals of our business are healthy. Long-term, we expect elevated single family home ownership costs, positive household formation trends, manageable competitive new supply in our established coastal markets and the overall deficit in housing across the country to buffer the impact on our business from the risks of potential economic weakness. We also see our affluent resident base as being resilient to economic uncertainty, including elevated inflation, due to higher levels of disposable income and lower relative rent-to-income ratios.
Previous wording
The following table sets forth our sources and uses of cash flows for the quarters ended March 31, 2024 and 2023 (amounts in thousands):
Current wording
The following table sets forth our sources and uses of cash flows for the six months ended June 30, 2024 and 2023 (amounts in thousands):
Previous wording
The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the quarter ended March 31, 2024.
Current wording
The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the six months ended June 30, 2024.
Previous wording
Our operating cash flows are primarily impacted by NOI and its components, such as Average Rental Rates, Physical Occupancy levels and operating expenses related to our properties. Cash provided by operating activities for the quarter ended March 31, 2024 as compared to the prior year period, increased by approximately $27.8 million as a direct result of the NOI and other changes discussed above in Results of Operations.
Current wording
Our operating cash flows are primarily impacted by NOI and its components, such as Average Rental Rates, Physical Occupancy levels and operating expenses related to our properties. Cash provided by operating activities for the six months ended June 30, 2024 as compared to the prior year period, increased by approximately $72.0 million as a direct result of the NOI and other changes discussed above in Results of Operations, as well as the timing of certain real estate tax payments.
Previous wording
Our investing cash flows are primarily impacted by our transaction activity (acquisitions/dispositions), development spend and capital expenditures. For the quarter ended March 31, 2024, key drivers were:
Current wording
Our investing cash flows are primarily impacted by our transaction activity (acquisitions/dispositions), development spend and capital expenditures. For the six months ended June 30, 2024, key drivers were:
Previous wording
Disposed of three consolidated rental properties, receiving net proceeds of approximately $247.3 million;
Current wording
Disposed of five consolidated rental properties, receiving net proceeds of approximately $330.1 million;
Previous wording
Invested $25.5 million primarily in consolidated development projects;
Current wording
Invested $55.3 million primarily in consolidated development projects;
Previous wording
Invested $73.5 million in capital expenditures to real estate; and
Current wording
Invested $153.3 million in capital expenditures to real estate; and
Previous wording
Invested $7.8 million primarily in unconsolidated development joint venture entities as well as unconsolidated investments in real estate technology funds/companies for various technology initiatives.
Current wording
Invested $60.1 million primarily in unconsolidated development joint venture entities as well as unconsolidated investments in real estate technology funds/companies for various technology initiatives.
Previous wording
Our financing cash flows primarily relate to our borrowing activity (debt proceeds or repayment), distributions/dividends to shareholders/unitholders and other Common Share activity. For the quarter ended March 31, 2024, key drivers were:
Current wording
Our financing cash flows primarily relate to our borrowing activity (debt proceeds or repayment), distributions/dividends to shareholders/unitholders and other Common Share activity. For the six months ended June 30, 2024, key drivers were:
Previous wording
Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $6.0 million;
Current wording
Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $8.9 million;
Previous wording
Paid dividends/distributions on Common Shares, Preferred Shares, Units (including OP Units and restricted units) and noncontrolling interests in partially owned properties totaling approximately $262.8 million;
Current wording
Paid dividends/distributions on Common Shares, Preferred Shares, Units (including OP Units and restricted units) and noncontrolling interests in partially owned properties totaling approximately $526.8 million;
Previous wording
The Company generally expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company’s revolving credit facility and commercial paper program. Currently, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.
Current wording
The Company generally expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company’s revolving credit facility and commercial paper program. Currently, the
Previous wording
The Company declared a dividend/distribution for the first quarter of 2024 of $0.675 per share/unit, an annualized increase of 2.0% over the amount paid in 2023. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees.
Current wording
The Company declared a dividend/distribution for the first and second quarters of 2024 of $0.675 per share/unit in each quarter, an annualized increase of 2.0% over the amount paid in 2023. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees.
Previous wording
Total dividends/distributions paid in April 2024 amounted to $263.6 million (excluding distributions on Partially Owned Properties), which consisted of certain distributions declared during the quarter ended March 31, 2024.
Current wording
Total dividends/distributions paid in July 2024 amounted to $263.7 million (excluding distributions on Partially Owned Properties), which consisted of certain distributions declared during the quarter ended June 30, 2024.
Showing the first 40 of 42 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.