Equity Residential Reports First Quarter 2020 Results

·14 min read

Provides Update on COVID-19 Related Activities and Preliminary April 2020 Statistics;

Withdraws Full Year 2020 Earnings Guidance

Equity Residential (NYSE: EQR) today reported results for the quarter ended March 31, 2020 and preliminary April 2020 operating statistics as well as provided an update on activities related to the COVID-19 pandemic.

"We are deeply grateful to the entire Equity Residential team and especially our on-site colleagues for their dedication to serving our 150,000 residents during this difficult time," said Mark J. Parrell, Equity Residential’s President and CEO. "We have instituted new programs to support our hard working colleagues and to assist our residents and communities. Thank you to the Equity Residential team for honoring their commitment to our residents and to our residents for their trust and support. Working together is the best way for all of us to get through this crisis."

During this pandemic, Equity Residential is:

Supporting Our Residents by:

  • Keeping our properties open and operating and our residents safe in compliance with state and local shelter-in-place orders.

  • Utilizing technology to allow our property teams to interact remotely with current residents and prospective residents including a touchless new leasing process and a service process designed to limit contact.

  • Currently offering resident renewals with no rent increase and providing flexible lease renewal options to help residents weather the crisis.

  • Currently creating payment plans, waiving late fees and halting evictions for residents who can document that they have been adversely financially impacted by the COVID-19 pandemic.

  • Connecting our residents with governmental and community resources to help residents secure food, financial assistance and healthcare.

Supporting Our Employees by:

  • Providing each employee with extended emergency leave.

  • Providing resources to help our employees with their physical, mental and financial wellbeing.

  • Providing necessary technology and technical resources to limit in-person contact while continuing essential maintenance activities such as emergency repairs and life/safety.

  • Paying special cash bonuses to our on-site service and concierge teams for their hard work and dedication.

Supporting Our Communities by:

  • Making donations from the Equity Residential Foundation to local food banks and groups helping the homeless and needy in our markets.

  • Providing meals to frontline responders from Equity Residential’s restaurant tenants.

Preliminary April 2020 Statistics

The Company has provided various statistics related to its Residential same store operations for the month ended April 30, 2020 to assist investors in understanding the impact of the pandemic on the Company’s operations. These statistics along with comparative numbers for the first quarter of 2020 are set forth below and in more detail on page 13 of this release:

April 2020

Q1 2020

New Lease Change

(1.9

%)

(0.8

%)

Renewal Rate Achieved

2.8

%

4.2

%

Physical Occupancy (end of period)

94.7

%

96.0

%

As the Company’s markets became subject to shelter-in-place orders, the Company experienced significant declines in leasing activity. In the third week of March 2020, Traffic, initial leads and applications declined by 50% or more compared to the same period of last year. In April 2020, the Company experienced a recovery in demand with Traffic, initial leads and applications meaningfully improving. Traffic and initial leads are now down approximately 20% and applications are equal relative to the same period last year.

The Company’s Residential collections are strong. During April 2020, Residential Cash Collections were approximately 97% of Residential Cash Collections in March 2020. As of the end of April 2020, current residents at same store properties had cumulative outstanding Residential Delinquency balances of approximately $11.0 million, representing a same store Residential Delinquency percentage of 5.4%. This compares to cumulative outstanding same store Residential Delinquency balances of approximately $5.4 million, representing a same store Residential Delinquency percentage of 2.6% at the end of March 2020, prior to the impact of COVID-19. The Company continues to work with residents to collect these outstanding balances including through the establishment of payment plans.

The Company’s Non-Residential operations, which mostly consist of ground floor retail in our apartment buildings and public garage parking, have historically been approximately 4.0% of annual total revenues. These operations have been more impacted by the pandemic. The Company collected approximately 58%, or $3.6 million, of retail cash collections during the month of April 2020 as compared to the month of March 2020, and the Company collected approximately 67%, or $1.3 million, of public garage parking cash collections during the month of April 2020 as compared to the month of March 2020. As of the end of April 2020 and March 2020, current retail tenants at our same store properties had cumulative outstanding delinquency or deferred payment balances of approximately $5.0 million and $2.3 million, respectively. The Company is working with remaining retail tenants on payment plans.

"Under very challenging circumstances, our business continues to be durable. Our April payment statistics show a financially resilient resident base and while very early, we have not seen anything to suggest that May will be materially different. We are also seeing an improvement in our leasing activity from the very low levels we experienced in late March though most activity remains lower than usual levels. We are working diligently to prepare our people and properties to operate safely and as efficiently as possible once restrictions are lifted in our markets. While the employment losses of late will pressure operations in the near term, we expect our properties and markets to remain desirable to our affluent renter demographic and our operations to return to a more normal state over time," said Mr. Parrell.

First Quarter 2020 Results

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

Quarter Ended March 31,

2020

2019

$ Change

% Change

Earnings Per Share (EPS)

$

0.83

$

0.28

$

0.55

196.4

%

Funds from Operations (FFO) per share

$

0.86

$

0.81

$

0.05

6.2

%

Normalized FFO per share

$

0.87

$

0.82

$

0.05

6.1

%

Results Per Share

The change in EPS for the quarter ended March 31, 2020 compared to the same period of 2019, is due primarily to higher property sale gains in the first quarter of 2020, the various adjustment items listed on page 23 of this release and the items described below.

The per share change in FFO for the quarter ended March 31, 2020 compared to the same period of 2019, is due primarily to the various adjustment items listed on page 23 of this release and the items described below.

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

Positive/(Negative)
Impact

First Quarter 2020 vs.
First Quarter 2019

Same Store Net Operating Income (NOI)

$

0.03

Lease-Up NOI

0.01

Interest expense

0.02

Other items

(0.01

)

Net

$

0.05

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 24 through 29 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 6, 26 and 27 of this release.

Same Store Results

Given the current environment, the Company has provided a breakout of Residential and Non-Residential same store results on page 10 of this release with definitions that can be found on page 28 of this release. The table below reflects same store Residential only results for the first quarter 2020 to first quarter 2019 comparison, which includes 74,919 apartment units. The Company’s Physical Occupancy was 96.5% compared to 96.3% for the first quarter of 2020 and 2019, respectively.

First Quarter 2020 vs.
First Quarter 2019

Revenues

2.9%

Expenses

2.3%

NOI

3.2%

Investment Activity

The Company sold two wholly-owned properties in the San Francisco Bay Area and one partially-owned consolidated property in Phoenix during the first quarter of 2020, totaling 897 apartment units, for an aggregate sale price of approximately $370.2 million at a weighted average Disposition Yield of 5.0%, generating an Unlevered IRR of 12.9%. The Company did not acquire any apartment properties during the first quarter of 2020.

Subsequent to quarter-end, the Company sold one wholly-owned property located in the San Francisco Bay Area for approximately $108.0 million at a Disposition Yield of 4.5%.

Capital Markets and Liquidity

On April 30, 2020, the Company closed on a $495.0 million secured loan. The loan has a ten-year term, is interest only, and carries a fixed interest rate of 2.60%. Proceeds from the loan were used to pay off outstanding balances under the Company’s revolving line of credit and commercial paper program. As of May 4, 2020, the Company had the following availability under its unsecured revolving credit facility:

May 4, 2020
(amounts in thousands)

Unsecured revolving credit facility commitment

$

2,500,000

Commercial paper balance outstanding

(180,000

)

Unsecured revolving credit facility balance outstanding

Other restricted amounts

(100,949

)

Unsecured revolving credit facility availability

$

2,219,051

The Company has approximately $25.6 million in debt maturities and $200.0 million in estimated development spend remaining in 2020. With over $2.2 billion in readily available liquidity and very strong credit metrics, the Company is well positioned to meet these and future obligations.

2020 Guidance

Due to the inherent uncertainty surrounding the social and economic disruption resulting from the COVID-19 pandemic, the Company believes it is appropriate to withdraw its full-year 2020 guidance, which was included in its January 28, 2020 earnings release. The Company is also suspending issuing guidance in future periods until there is greater certainty surrounding the impact of the ongoing pandemic.

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 rental apartment properties located in urban and high-density suburban communities where today’s renters want to live, work and play. Equity Residential owns or has investments in 306 properties consisting of 79,065 apartment units, located in Boston, New York, Washington, D.C., Seattle, San Francisco, Southern California and Denver. 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 local 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 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, May 6, 2020 at 10:00 a.m. CT. Please visit the Investor section of the Company’s web site at www.equityapartments.com for the link. A replay of the web cast will be available for two weeks at this site.

Equity Residential

Consolidated Statements of Operations

(Amounts in thousands except per share data)

(Unaudited)

Quarter Ended March 31,

2020

2019

REVENUES

Rental income

$

682,305

$

662,302

Fee and asset management

24

192

Total revenues

682,329

662,494

EXPENSES

Property and maintenance

115,816

115,070

Real estate taxes and insurance

97,732

91,442

Property management

27,709

26,396

General and administrative

14,518

15,381

Depreciation

212,422

204,215

Total expenses

468,197

452,504

Net gain (loss) on sales of real estate properties

207,977

(21

)

Operating income

422,109

209,969

Interest and other income

1,936

581

Other expenses

(2,533

)

(3,275

)

Interest:

Expense incurred, net

(85,590

)

(94,938

)

Amortization of deferred financing costs

(2,041

)

(2,136

)

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

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

333,881

110,201

Income and other tax (expense) benefit

(53

)

(238

)

Income (loss) from investments in unconsolidated entities

(1,157

)

(707

)

Net gain (loss) on sales of land parcels

1

Net income

332,671

109,257

Net (income) loss attributable to Noncontrolling Interests:

Operating Partnership

(11,535

)

(3,919

)

Partially Owned Properties

(12,530

)

(799

)

Net income attributable to controlling interests

308,606

104,539

Preferred distributions

(773

)

(773

)

Net income available to Common Shares

$

307,833

$

103,766

Earnings per share – basic:

Net income available to Common Shares

$

0.83

$

0.28

Weighted average Common Shares outstanding

371,582

369,558

Earnings per share – diluted:

Net income available to Common Shares

$

0.83

$

0.28

Weighted average Common Shares outstanding

386,949

385,184

Distributions declared per Common Share outstanding

$

0.6025

$

0.5675

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share data)

(Unaudited)

Quarter Ended March 31,

2020

2019

Net income

$

332,671

$

109,257

Net (income) loss attributable to Noncontrolling Interests – Partially

Owned Properties

(12,530

)

(799

)

Preferred distributions

(773

)

(773

)

Net income available to Common Shares and Units

319,368

107,685

Adjustments:

Depreciation

212,422

204,215

Depreciation – Non-real estate additions

(1,287

)

(1,182

)

Depreciation – Partially Owned Properties

(856

)

(903

)

Depreciation – Unconsolidated Properties

613

922

Net (gain) loss on sales of real estate properties

(207,977

)

21

Noncontrolling Interests share of gain (loss) on sales

of real estate properties

11,655

FFO available to Common Shares and Units

333,938

310,758

Adjustments (see note for additional detail):

Impairment – non-operating assets

Write-off of pursuit costs

1,627

1,448

Debt extinguishment and preferred share redemption (gains)

losses

Non-operating asset (gains) losses

441

229

Other miscellaneous items

(918

)

1,575

Normalized FFO available to Common Shares and Units

$

335,088

$

314,010

FFO

$

334,711

$

311,531

Preferred distributions

(773

)

(773

)

FFO available to Common Shares and Units

$

333,938

$

310,758

FFO per share and Unit – basic

$

0.87

$

0.81

FFO per share and Unit – diluted

$

0.86

$

0.81

Normalized FFO

$

335,861

$

314,783

Preferred distributions

(773

)

(773

)

Normalized FFO available to Common Shares and Units

$

335,088

$

314,010

Normalized FFO per share and Unit – basic

$

0.87

$

0.82

Normalized FFO per share and Unit – diluted

$

0.87

$

0.82

Weighted average Common Shares and Units outstanding – basic

384,586

382,477

Weighted average Common Shares and Units outstanding – diluted

386,949

385,184

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,

2020

2019

ASSETS

Land

$

5,883,065

$

5,936,188

Depreciable property

21,197,547

21,319,101

Projects under development

225,753

181,630

Land held for development

102,602

96,688

Investment in real estate

27,408,967

27,533,607

Accumulated depreciation

(7,420,293

)

(7,276,786

)

Investment in real estate, net

19,988,674

20,256,821

Investments in unconsolidated entities

55,866

52,238

Cash and cash equivalents

82,335

45,753

Restricted deposits

58,435

71,246

Right-of-use assets

507,962

512,774

Other assets

226,046

233,937

Total assets

$

20,919,318

$

21,172,769

LIABILITIES AND EQUITY

Liabilities:

Mortgage notes payable, net

$

1,940,745

$

1,941,610

Notes, net

6,079,308

6,077,513

Line of credit and commercial paper

612,651

1,017,833

Accounts payable and accrued expenses

165,696

94,350

Accrued interest payable

65,925

66,852

Lease liabilities

330,713

331,334

Other liabilities

298,992

346,963

Security deposits

69,074

70,062

Distributions payable

232,186

218,326

Total liabilities

9,795,290

10,164,843

Commitments and contingencies

Redeemable Noncontrolling Interests – Operating Partnership

353,342

463,400

Equity:

Shareholders’ equity:

Preferred Shares of beneficial interest, $0.01 par value;

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

outstanding as of March 31, 2020 and December 31, 2019

37,280

37,280

Common Shares of beneficial interest, $0.01 par value;

1,000,000,000 shares authorized; 372,104,054 shares issued

and outstanding as of March 31, 2020 and 371,670,884

shares issued and outstanding as of December 31, 2019

3,721

3,717

Paid in capital

9,092,441

8,965,577

Retained earnings

1,469,821

1,386,495

Accumulated other comprehensive income (loss)

(72,896

)

(77,563

)

Total shareholders’ equity

10,530,367

10,315,506

Noncontrolling Interests:

Operating Partnership

235,580

227,837

Partially Owned Properties

4,739

1,183

Total Noncontrolling Interests

240,319

229,020

Total equity

10,770,686

10,544,526

Total liabilities and equity

$

20,919,318

$

21,172,769

Equity Residential

Portfolio Summary

As of March 31, 2020

% of
Stabilized

Average

Apartment

Budgeted

Rental

Markets/Metro Areas

Properties

Units

NOI

Rate

Los Angeles

72

16,603

18.9

%

$

2,635

Orange County

13

4,028

4.3

%

2,280

San Diego

12

3,385

3.8

%

2,443

Subtotal – Southern California

97

24,016

27.0

%

2,548

San Francisco

49

12,845

19.9

%

3,349

Washington DC

48

15,248

16.3

%

2,475

New York

37

9,606

14.5

%

3,944

Seattle

45

9,296

10.9

%

2,472

Boston

25

6,430

10.0

%

3,184

Denver

5

1,624

1.4

%

2,055

Total

306

79,065

100.0

%

$

2,868

Properties

Apartment Units

Wholly Owned Properties

289

75,504

Master-Leased Properties – Consolidated

1

162

Partially Owned Properties – Consolidated

16

3,399

306

79,065

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

Equity Residential

Portfolio Rollforward Q1 2020

($ in thousands)

Properties

Apartment

Units

Sales Price

Disposition

Yield

12/31/2019

309

79,962

Dispositions:

Consolidated Rental Properties

(3

)

(897

)

$

(370,200

)

(5.0

%)

3/31/2020

306

79,065

Equity Residential

First Quarter 2020 vs. First Quarter 2019

Total Same Store Results/Statistics Including 74,919 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

First Quarter 2020

First Quarter 2019

Residential

%
Change

Non-
Residential (1)

%
Change

Total

%
Change

Residential

Non-
Residential (1)

Total

Revenues

$

625,286

2.9%

$

23,091

(1.4%)

$

648,377

2.7%

Revenues

$

607,686

$

23,413

$

631,099

Expenses

$

194,207

2.3%

$

5,730

6.3%

$

199,937

2.4%

Expenses

$

189,836

$

5,388

$

195,224

NOI

$

431,079

3.2%

$

17,361

(3.7%)

$

448,440

2.9%

NOI

$

417,850

$

18,025

$

435,875

Average Rental Rate

$

2,885

2.7%

Average Rental Rate

$

2,809

Physical Occupancy

96.5

%

0.2%

Physical Occupancy

96.3

%

Turnover

9.7

%

(0.4%)

Turnover

10.1

%

First Quarter 2020 vs. Fourth Quarter 2019

Total Same Store Results/Statistics Including 77,869 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

First Quarter 2020

Fourth Quarter 2019

Residential

%
Change

Non-
Residential (1)

%
Change

Total

%
Change

Residential

Non-
Residential (1)

Total

Revenues

$

646,410

0.4%

$

23,503

(1.4%)

$

669,913

0.3%

Revenues

$

643,767

$

23,835

$

667,602

Expenses

$

201,020

5.2%

$

5,802

4.1%

$

206,822

5.2%

Expenses

$

191,114

$

5,576

$

196,690

NOI

$

445,390

(1.6%)

$

17,701

(3.1%)

$

463,091

(1.7%)

NOI

$

452,653

$

18,259

$

470,912

Average Rental Rate

$

2,871

0.0%

Average Rental Rate

$

2,871

Physical Occupancy

96.4

%

0.3%

Physical Occupancy

96.1

%

Turnover

9.8

%

(0.9%)

Turnover

10.7

%

Note: See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for reconciliations from operating income.

(1)

Non-Residential – Consists of revenues and expenses from retail and public parking garage operations. Non-Residential same store revenues declined 1.4% in Q1 2020 as compared to Q1 2019 primarily due to elevated parking income and lease termination settlement fees in the comparable period.

Equity Residential

First Quarter 2020 vs. First Quarter 2019

Same Store Residential Results/Statistics by Market

Increase (Decrease) from Prior Year's Quarter

Markets/Metro Areas

Apartment
Units

Q1 2020
% of
Actual
NOI

Q1 2020
Average
Rental
Rate

Q1 2020
Weighted
Average
Physical
Occupancy %

Q1 2020
Turnover

Revenues

Expenses

NOI

Average
Rental
Rate

Physical
Occupancy

Turnover

Los Angeles

15,968

19.6

%

$

2,633

96.0

%

11.3

%

2.1

%

1.3

%

2.4

%

2.2

%

(0.2

%)

(0.3

%)

Orange County

4,028

4.7

%

2,280

96.8

%

9.0

%

3.4

%

0.6

%

4.3

%

2.8

%

0.5

%

(1.5

%)

San Diego

3,385

4.1

%

2,443

96.8

%

12.0

%

3.5

%

2.4

%

3.9

%

2.8

%

0.7

%

(0.1

%)

Subtotal – Southern California

23,381

28.4

%

2,544

96.2

%

11.0

%

2.5

%

1.3

%

2.9

%

2.4

%

0.0

%

(0.5

%)

San Francisco

12,321

20.8

%

3,353

96.8

%

9.6

%

3.1

%

3.9

%

2.8

%

2.9

%

0.2

%

(0.1

%)

Washington DC

14,228

16.3

%

2,485

96.3

%

8.4

%

2.6

%

1.5

%

3.1

%

2.8

%

(0.2

%)

0.0

%

New York

9,475

13.8

%

3,947

96.7

%

7.2

%

2.1

%

3.9

%

0.7

%

1.8

%

0.3

%

(0.8

%)

Seattle

8,442

10.3

%

2,470

97.2

%

11.2

%

5.4

%

2.3

%

6.7

%

4.4

%

0.9

%

(1.7

%)

Boston

6,346

9.6

%

3,181

95.8

%

9.1

%

3.3

%

(0.7

%)

5.0

%

3.2

%

(0.1

%)

0.0

%

Denver

726

0.8

%

2,122

96.2

%

12.1

%

(0.1

%)

2.8

%

(1.1

%)

0.3

%

(0.5

%)

(0.6

%)

Total

74,919

100.0

%

$

2,885

96.5

%

9.7

%

2.9

%

2.3

%

3.2

%

2.7

%

0.2

%

(0.4

%)

Note: The above table reflects Residential same store results only, which historically account for approximately 96.0% of total revenues.

Equity Residential

First Quarter 2020 vs. Fourth Quarter 2019

Same Store Residential Results/Statistics by Market

Increase (Decrease) from Prior Quarter

Markets/Metro Areas

Apartment
Units

Q1 2020
% of
Actual
NOI

Q1 2020
Average
Rental
Rate

Q1 2020
Weighted
Average
Physical
Occupancy %

Q1 2020
Turnover

Revenues

Expenses

NOI

Average
Rental
Rate

Physical
Occupancy

Turnover

Los Angeles

16,603

19.6

%

$

2,635

95.9

%

11.3

%

(0.1

%)

3.5

%

(1.6

%)

(0.1

%)

0.0

%

(0.8

%)

Orange County

4,028

4.6

%

2,280

96.8

%

9.0

%

0.5

%

5.9

%

(1.1

%)

0.2

%

0.2

%

(1.4

%)

San Diego

3,385

4.0

%

2,443

96.8

%

12.0

%

0.5

%

4.9

%

(1.0

%)

0.0

%

0.4

%

(0.9

%)

Subtotal – Southern California

24,016

28.2

%

2,548

96.2

%

11.0

%

0.1

%

4.0

%

(1.4

%)

(0.1

%)

0.1

%

(0.9

%)

San Francisco

12,845

20.9

%

3,349

96.7

%

9.8

%

1.1

%

5.7

%

(0.3

%)

(0.4

%)

1.4

%

(2.4

%)

Washington DC

14,816

16.4

%

2,474

96.3

%

8.5

%

0.1

%

3.7

%

(1.5

%)

0.2

%

(0.1

%)

(1.1

%)

New York

9,606

13.6

%

3,944

96.7

%

7.2

%

0.3

%

7.7

%

(5.0

%)

0.1

%

0.3

%

(0.1

%)

Seattle

8,616

10.1

%

2,470

97.2

%

11.3

%

1.3

%

4.2

%

0.3

%

0.5

%

0.8

%

0.2

%

Boston

6,346

9.3

%

3,181

95.8

%

9.1

%

(0.3

%)

4.0

%

(2.0

%)

(0.1

%)

(0.3

%)

(0.3

%)

Denver

1,624

1.5

%

2,055

95.5

%

14.4

%

1.1

%

10.4

%

(2.3

%)

(0.2

%)

1.0

%

(1.2

%)

Total

77,869

100.0

%

$

2,871

96.4

%

9.8

%

0.4

%

5.2

%

(1.6

%)

0.0

%

0.3

%

(0.9

%)

Note: The above table reflects Residential same store results only, which historically account for approximately 96.0% of total revenues.

Equity Residential

Same Store Residential Lease Pricing and Payment Statistics

For 74,919 Same Store Apartment Units

New Lease Change (1)

Renewal Rate Achieved (1)

Physical Occupancy at

Markets/Metro Areas

April 2020 (2)

Q1 2020

Q1 2019

April 2020 (2)

Q1 2020

Q1 2019

April 30, 2020

March 31, 2020

Los Angeles (3)

(3.4

%)

(0.7

%)

0.5

%

2.2

%

4.2

%

5.4

%

94.1

%

95.2

%

Orange County

(2.4

%)

(0.7

%)

(0.8

%)

3.0

%

4.9

%

5.7

%

95.7

%

96.3

%

San Diego

(1.5

%)

(1.6

%)

(1.4

%)

2.2

%

5.0

%

5.2

%

95.9

%

96.4

%

Subtotal – Southern California

(2.9

%)

(0.9

%)

0.0

%

2.4

%

4.4

%

5.4

%

94.6

%

95.5

%

San Francisco

(2.1

%)

(2.3

%)

1.4

%

1.7

%

3.4

%

4.9

%

94.4

%

96.2

%

Washington DC

(1.3

%)

(1.0

%)

(2.7

%)

2.9

%

4.2

%

4.5

%

95.5

%

96.4

%

New York

(2.0

%)

(1.0

%)

(1.5

%)

2.9

%

3.4

%

4.1

%

94.7

%

96.3

%

Seattle

3.7

%

4.7

%

(1.9

%)

3.9

%

6.4

%

4.8

%

95.2

%

96.6

%

Boston

(4.3

%)

(2.6

%)

(2.7

%)

4.5

%

4.7

%

5.1

%

93.9

%

95.4

%

Denver

(0.6

%)

0.0

%

0.0

%

3.0

%

3.7

%

2.4

%

91.9

%

94.8

%

Total

(1.9

%)

(0.8

%)

(0.8

%)

2.8

%

4.2

%

4.8

%

94.7

%

96.0

%

At month-end

April 2020

March 2020

Residential Delinquency balances (4)

$11.0M

$5.4M

Residential Delinquency percentages (4)

5.4%

2.6%

(1)

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

(2)

Reflects preliminary results for the month of April 2020. The Company believes that providing New Lease Change and Renewal Rate Achieved data is helpful in understanding longer term market trends but cautions that data for shorter time periods has limitations as it may reflect increased volatility. When comparing same store Residential leases with similar twelve-month to twelve-month terms, the change (without concessions or discounts) was (0.8%), 0.2% and 0.6% for April 2020, Q1 2020 and Q1 2019, respectively.

(3)

The Company’s 2020 New Lease Change in Los Angeles was negatively impacted by temporary governmental restrictions put in place in connection with the wildfire emergency. These restrictions affected the Company’s ability to offer premium short-term leases in this market.

(4)

Residential Delinquency – Balances reflect the cumulative outstanding amounts owed to the Company by current residents as of the end of the reporting period relating to the Company’s Residential business. Percentages reflect the balances owed as a percentage of total Residential rental income for the corresponding month.

Equity Residential

First Quarter 2020 vs. First Quarter 2019

Total Same Store Operating Expenses Including 74,919 Same Store Apartment Units

$ in thousands

Actual
Q1 2020

Actual
Q1 2019

$
Change (1)

%
Change

% of Actual
Q1 2020
Operating
Expenses

Real estate taxes

$

86,274

$

82,699

$

3,575

4.3

%

43.1

%

On-site payroll

42,125

41,736

389

0.9

%

21.1

%

Utilities

27,225

26,558

667

2.5

%

13.6

%

Repairs and maintenance

22,918

23,832

(914

)

(3.8

%)

11.5

%

Insurance

6,143

5,225

918

17.6

%

3.1

%

Leasing and advertising

2,297

2,524

(227

)

(9.0

%)

1.1

%

Other on-site operating expenses

12,955

12,650

305

2.4

%

6.5

%

Total Same Store Operating Expenses (2)
(includes Residential and Non-Residential)

$

199,937

$

195,224

$

4,713

2.4

%

100.0

%

(1)

The quarter over quarter changes are due primarily to:

Real estate taxes – Increase in line with expectations. Continued real estate tax growth affected most markets, particularly New York, where the continued burn-off of 421-a tax abatement benefits drove the increase.

On-site payroll – Increase slightly below expectations due in part to faster than anticipated progress in transition to enhanced operating platform.

Utilities – Increase generally in line with expectations for the year.

Repairs and maintenance – Decrease primarily driven by lower snow removal and weather-related expense in the Northeast during the current period and elevated weather-related expense in California during the comparable period.

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

Leasing and advertising – Decrease greater than expectations due to lower than anticipated online advertising spend during the period.

(2)

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

Equity Residential

Debt Summary as of March 31, 2020

($ in thousands)

Debt
Balances (1)

% of Total

Weighted
Average
Rates (1)

Weighted
Average
Maturities
(years)

Secured

$

1,940,745

22.5

%

3.73

%

6.3

Unsecured

6,691,959

77.5

%

3.79

%

9.6

Total

$

8,632,704

100.0

%

3.77

%

8.9

Fixed Rate Debt:

Secured – Conventional

$

1,573,336

18.2

%

4.10

%

4.0

Unsecured – Public

6,079,308

70.4

%

4.05

%

10.6

Fixed Rate Debt

7,652,644

88.6

%

4.06

%

9.2

Floating Rate Debt:

Secured – Conventional

7,188

0.1

%

3.93

%

2.3

Secured – Tax Exempt

360,221

4.2

%

2.11

%

15.7

Unsecured – Revolving Credit Facility

2.24

%

4.6

Unsecured – Commercial Paper Program (2)

612,651

7.1

%

1.95

%

Floating Rate Debt

980,060

11.4

%

2.02

%

6.0

Total

$

8,632,704

100.0

%

3.77

%

8.9

(1)

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

(2)

At March 31, 2020, the weighted average maturity of commercial paper outstanding was 12 days. The weighted average amount outstanding for the quarter ended March 31, 2020 was approximately $850.8 million.

Note:

The Company capitalized interest of approximately $1.8 million and $1.2 million during the quarters ended March 31, 2020 and 2019, respectively.

Equity Residential

Debt Maturity Schedule as of March 31, 2020

($ 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)

2020

$

25,600

$

613,000

(2)

$

638,600

7.3

%

4.64

%

2.31

%

2021

926,404

926,404

10.6

%

4.64

%

4.64

%

2022

264,185

7,730

271,915

3.1

%

3.25

%

3.23

%

2023

1,325,588

3,500

1,329,088

15.2

%

3.74

%

3.74

%

2024

6,100

6,100

0.1

%

N/A

4.15

%

2025

450,000

8,200

458,200

5.3

%

3.38

%

3.39

%

2026

592,025

9,000

601,025

6.9

%

3.58

%

3.59

%

2027

400,000

9,800

409,800

4.7

%

3.25

%

3.27

%

2028

900,000

42,380

942,380

10.8

%

3.79

%

3.80

%

2029

888,120

11,500

899,620

10.3

%

3.30

%

3.31

%

2030+

1,950,850

288,135

2,238,985

25.7

%

3.81

%

3.64

%

Subtotal

7,722,772

999,345

8,722,117

100.0

%

3.75

%

3.60

%

Deferred Financing Costs and Unamortized (Discount)

(70,128

)

(19,285

)

(89,413

)

N/A

N/A

N/A

Total

$

7,652,644

$

980,060

$

8,632,704

100.0

%

3.75

%

3.60

%

(1)

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

(2)

Represents principal outstanding on the Company’s commercial paper program.

Equity Residential

Selected Unsecured Public Debt Covenants

March 31,

December 31,

2020

2019

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

32.5%

33.8%

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

8.2%

8.2%

Consolidated Income Available for Debt Service to

Maximum Annual Service Charges

(must be at least 1.5 to 1)

5.09

5.07

Total Unencumbered Assets to Unsecured Debt

(must be at least 125%)

408.3%

386.1%

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

March 31,

December 31,

2020

2019

Total debt to Normalized EBITDAre

4.91x

5.18x

Net debt to Normalized EBITDAre

4.86x

5.14x

Unencumbered NOI as a % of total NOI

87.2%

87.1%

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

Capital Structure as of March 31, 2020

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

Secured Debt

$

1,940,745

22.5

%

Unsecured Debt

6,691,959

77.5

%

Total Debt

8,632,704

100.0

%

26.6

%

Common Shares (includes Restricted Shares)

372,104,054

96.4

%

Units (includes OP Units and Restricted Units)

13,932,433

3.6

%

Total Shares and Units

386,036,487

100.0

%

Common Share Price at March 31, 2020

$

61.71

23,822,312

99.8

%

Perpetual Preferred Equity (see below)

37,280

0.2

%

Total Equity

23,859,592

100.0

%

73.4

%

Total Market Capitalization

$

32,492,296

100.0

%

Perpetual Preferred Equity as of March 31, 2020

(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

Q1 2020

Q1 2019

Weighted Average Amounts Outstanding for Net Income Purposes:

Common Shares - basic

371,582,086

369,557,650

Shares issuable from assumed conversion/vesting of:

- OP Units

13,003,900

12,919,717

- long-term compensation shares/units

2,363,095

2,706,811

Total Common Shares and Units - diluted

386,949,081

385,184,178

Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:

Common Shares - basic

371,582,086

369,557,650

OP Units - basic

13,003,900

12,919,717

Total Common Shares and OP Units - basic

384,585,986

382,477,367

Shares issuable from assumed conversion/vesting of:

- long-term compensation shares/units

2,363,095

2,706,811

Total Common Shares and Units - diluted

386,949,081

385,184,178

Period Ending Amounts Outstanding:

Common Shares (includes Restricted Shares)

372,104,054

370,462,401

Units (includes OP Units and Restricted Units)

13,932,433

13,852,371

Total Shares and Units

386,036,487

384,314,772

Equity Residential

Development and Lease-Up Projects as of March 31, 2020

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

No. of

Total
Budgeted

Total
Book

Total Book
Value Not

Estimated/Actual (A)

Projects

Location

Apartment
Units

Capital
Cost

Value
to Date

Placed in
Service

Total
Debt

Percentage
Completed

Initial
Occupancy

Completion
Date

Stabilization
Date

Percentage
Leased

Percentage
Occupied

Projects Under Development - Wholly Owned: