EQUITY RESIDENTIAL
For the period ended Sep 30, 2024. Filed Nov 4, 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.
Sep 30, 2024 · Filed Nov 4, 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 2024-06-30; filed 2024-08-01.
0000950170-24-089300
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0000950170-24-120716
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 115 previous paragraphs and 117 current paragraphs.
65 unchanged; 47 reworded; 5 added; 2 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 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 (5)
Current report
The consolidated properties acquired during the nine months ended September 30, 2024 are located in the Atlanta (5), Boston, Dallas/Ft. Worth (5) and Denver (4) markets.
Current report
$69.0 million as of September 30, 2024.
Current report
We are seeing an increasingly active transaction market providing us with opportunities to acquire properties in our expansion markets. We are excited to grow our portfolio and create operating scale in these markets as we execute on our strategy to better balance our portfolio.
Current report
Acquired fifteen consolidated rental properties for approximately $1.3 billion;
Current report
Issued $600.0 million of ten-year 4.65% unsecured notes, receiving net proceeds of approximately $598.0 million before underwriting fees, hedge termination costs and other expenses. The proceeds from this issuance were used to partially fund the Company’s acquisition activity during the third quarter of 2024.
Removed paragraphs (2)
Previous report
The consolidated property acquired during the six months ended June 30, 2024 is located in the Boston market.
Previous report
Acquired one consolidated rental property for approximately $63.5 million;
Reworded paragraphs (47)
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 six months ended June 30, 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 nine months ended September 30, 2024:
Previous 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.
Current wording
The consolidated properties disposed of during the nine months ended September 30, 2024 were located in the Boston, Orange County, San Francisco (2) and Washington, D.C. (2) markets.
Previous 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;
Current wording
The Company commenced construction on one partially owned consolidated apartment property during the nine months ended September 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 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 wording
The Company stabilized one partially owned consolidated apartment property during the nine months ended September 30, 2024, located in the Washington, D.C. market, consisting of 312 apartment units totaling approximately $106.0 million of development costs; and
Previous wording
The Company spent approximately $55.3 million during the six months ended June 30, 2024, primarily for consolidated development projects.
Current wording
The Company spent approximately $90.7 million during the nine months ended September 30, 2024, primarily for consolidated development projects.
Previous wording
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 wording
The Company completed construction on one unconsolidated apartment property during the nine months ended September 30, 2024, located in the Denver market, consisting of 209 apartment units totaling approximately $70.0 million of development costs;
Previous wording
The Company spent approximately $57.7 million during the six months ended June 30, 2024, primarily for unconsolidated development projects; and
Current wording
The Company spent approximately $75.6 million during the nine months ended September 30, 2024, primarily for unconsolidated development projects; and
Previous wording
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 wording
The Company previously entered into two separate unconsolidated joint ventures for the purpose of developing vacant land parcels in the Boston and Seattle markets. During the nine months ended September 30, 2024, the joint ventures acquired their respective land parcels for the total purchase price listed above. The Company commenced construction on these two apartment properties, which are expected to contain 639 total apartment units. Total expected development cost for these projects is $307.2 million, and the Company's total investment in these two joint ventures is approximately
Previous wording
Comparison of the six months and quarter ended June 30, 2024 to the six months and quarter ended June 30, 2023
Current wording
Comparison of the nine months and quarter ended September 30, 2024 to the nine months and quarter ended September 30, 2023
Previous 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:
Current wording
The following table presents a reconciliation of diluted earnings per share/unit for the nine months and quarter ended September 30, 2024 as compared to the same periods in 2023:
Previous wording
The increase in same store rental income is primarily driven by healthy demand and modest supply across most of our markets.
Current wording
The increase in same store rental income is primarily driven by good demand and modest supply across most of our markets.
Previous 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;
Current wording
Real estate taxes – An $8.0 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 $1.9 million increase primarily driven by higher property-related legal expenses;
Current wording
Other on-site operating expenses – A $2.6 million increase primarily driven by higher property-related legal expenses;
Previous 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
Current wording
Insurance – A $2.5 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 $1.2 million decrease primarily driven by lower commodity prices for gas and electric.
Current wording
Utilities – A $1.7 million increase primarily driven by higher water, sewer and trash expense, partially offset by lower commodity prices for gas and electric.
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 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.
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 nine months and quarter ended September 30, 2024 as compared to the prior year periods are primarily attributable to increases in payroll-related costs, information technology expenses and legal and professional fees.
Previous 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.
Current wording
General and administrative expenses, which include corporate operating expenses, decreased during the nine months ended September 30, 2024 as compared to the prior year period, primarily due to decreases in payroll-related costs, partially offset by increases in other public company costs. General and administrative expenses increased during the quarter ended September 30, 2024 as compared to the prior year period, primarily due to increases in travel costs and other public company expenses.
Previous 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.
Current wording
Depreciation expense, which includes depreciation on non-real estate assets, increased during the nine months and quarter ended September 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 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.
Current wording
Net gain on sales of real estate properties increased during the nine months ended September 30, 2024 as compared to the prior year period, primarily as a result of the sale of six consolidated apartment properties for a higher gain in 2024 as compared to the sale of eight consolidated apartment properties in the same period in 2023. Net gain on sales of real estate properties decreased during the quarter ended September 30, 2024 as compared to the prior year period, primarily due to a loss on sale of one consolidated apartment property in the third quarter of 2024 as compared to a gain on sale of one consolidated apartment property in the same period in 2023.
Previous 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.
Current wording
Interest and other income increased during the nine months and quarter ended September 30, 2024 as compared to the prior year periods, primarily due to a net increase in realized/unrealized gains of $12.6 million and $8.1 million, respectively, 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.
Previous 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.
Current wording
Other expenses increased during the nine months ended September 30, 2024 as compared to the prior year period, 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. Other expenses increased during the quarter ended September 30, 2024 as compared to the prior year period, primarily due to increases in advocacy contributions.
Previous 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.
Current wording
Interest expense, including amortization of deferred financing costs, increased during the nine months and quarter ended September 30, 2024 as compared to the prior year periods, primarily due to higher overall debt balances outstanding and higher rates on floating debt. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the nine months ended September 30, 2024 was 3.90% as compared to 3.81% for the prior year period, and for the quarter ended September 30, 2024 was 3.92% as compared to 3.81% for the prior year period. The Company capitalized interest of approximately $10.7 million and $9.6 million during the nine months ended September 30, 2024 and 2023, respectively, and $3.8 million and $2.6 million during the quarters ended September 30, 2024 and 2023, respectively.
Previous 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.
Current wording
Loss from investments in unconsolidated entities increased during the nine months and quarter ended September 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, partially offset by increases in net income of unconsolidated operating properties and a gain on sale of an unconsolidated operating property.
Previous 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.
Current wording
Properties that the Company owned and were stabilized for all of both of the nine months ended September 30, 2024 and 2023, which represented 76,916 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 six months ended June 30, 2024 and 2023:
Current wording
The following table provides results and statistics related to our Residential same store operations for the nine months ended September 30, 2024 and 2023:
Previous 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.
Current wording
Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.3% of total revenues for the nine months ended September 30, 2024.
Previous 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.
Current wording
During the nine months ended September 30, 2024, the Company had solid performance in its operating business, with healthy demand across most of our markets supported by a continuing solid job market, high employment levels among our target affluent renter demographic and wage growth across the economy. Competitive new 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 continued to show improvement, while San Francisco has improved but at a more modest pace. Our Southern California markets (namely the city of Los Angeles) have shown good demand but greater price sensitivity during the third quarter of 2024.
Previous 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.
Current wording
The Company continued to make progress in move-out activity related to delinquent residents during the nine months ended September 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
With approximately $2.3 billion in readily available liquidity, a strong balance sheet, limited near-term debt maturities, very strong credit metrics and ample access to capital markets, the Company believes it is well positioned to meet its future obligations and take advantage of opportunities. See further discussion below.
Current wording
With approximately $1.7 billion in readily available liquidity, a strong balance sheet, limited near-term debt maturities, very strong credit metrics and ample access to capital markets, the Company believes it is well positioned to meet its future obligations and take advantage of opportunities. See further discussion below.
Previous 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):
Current wording
The following table sets forth our sources and uses of cash flows for the nine months ended September 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 six months ended June 30, 2024.
Current wording
The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the nine months ended September 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 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.
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 nine months ended September 30, 2024 as compared to the prior year period increased by approximately $30.9 million primarily as a result of the NOI and other changes discussed above in Results of Operations.
Previous 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:
Current wording
Our investing cash flows are primarily impacted by our transaction activity (acquisitions/dispositions), development spend and capital expenditures. For the nine months ended September 30, 2024, key drivers were:
Previous wording
Disposed of five consolidated rental properties, receiving net proceeds of approximately $330.1 million;
Current wording
Disposed of six consolidated rental properties, receiving net proceeds of approximately $360.9 million;
Previous wording
Invested $55.3 million primarily in consolidated development projects;
Current wording
Invested $90.7 million primarily in consolidated development projects;
Previous wording
Invested $153.3 million in capital expenditures to real estate; and
Current wording
Invested $230.1 million in capital expenditures to real estate; and
Previous 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.
Current wording
Invested $79.6 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 six months ended June 30, 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 nine months ended September 30, 2024, key drivers were:
Previous wording
Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $8.9 million;
Current wording
Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $20.1 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 $526.8 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 $791.2 million;
Showing the first 40 of 47 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.