10-KPeriod: FY2021

EQUITY RESIDENTIAL Annual Report, Year Ended Dec 31, 2021

Filed February 17, 2022For Securities:EQR

Summary

Equity Residential (EQR) reported its 2021 full-year results, highlighting a strong recovery post-pandemic driven by robust demand in its key urban and suburban markets. The company's investment strategy focuses on high-quality rental apartment properties in dynamic cities with strong job growth and favorable demographic trends, particularly among Millennials and Gen Z. Financially, EQR demonstrated resilience, with significant acquisition and disposition activity in 2021, rebalancing its portfolio towards expansion markets. While the company experienced a decrease in Net Operating Income (NOI) for its same-store properties due to the lingering effects of the pandemic in early 2021, it saw a strong rebound in pricing and occupancy by year-end. The company maintains a strong liquidity position and a solid balance sheet, with a focus on disciplined capital management.

Financial Highlights

32 data points
Beta

Net Income

$1.33B

EPS (Diluted)

$3.54

Total Assets

$21.17B

Cash & Equivalents

$123.83M

Free Cash Flow

$1.26B

Financial Statements
Beta
Operating Expenses$1.84B
Operating Income$1.68B
Interest Expense$272.47M
Net Income$1.33B
EPS (Basic)$3.56
EPS (Diluted)$3.54
Shares Outstanding (Basic)373.83M
Shares Outstanding (Diluted)388.09M

Key Highlights

  • 1EQR completed a strategic portfolio rebalancing in 2021, acquiring approximately $1.7 billion in new properties and disposing of $1.7 billion, with a significant portion of acquisitions focused on expansion markets like Atlanta, Austin, and Dallas/Ft. Worth.
  • 2Same-store residential rental income decreased by 4.6% for the full year 2021 compared to 2020, reflecting the lingering impact of the COVID-19 pandemic, though pricing and occupancy recovered significantly by year-end.
  • 3The company reported its lowest turnover in history in 2021 (44.4%), indicating strong resident retention and desirability of its properties.
  • 4EQR issued its second green bond in 2021, raising approximately $497.5 million to support green building and sustainable investments, underscoring its commitment to ESG initiatives.
  • 5Despite pandemic-related challenges, EQR reported strong employee engagement (79% favorability) and diversity & inclusion scores (83%), with a 99% compliance rate for its COVID-19 Health & Safety Requirement Policy.
  • 6The company maintained substantial liquidity, with approximately $2.2 billion in unsecured revolving credit facility availability as of year-end 2021, supported by a strong balance sheet and access to capital markets.

Frequently Asked Questions

Equity Residential's strategy is to acquire, develop, and manage high-quality rental apartment properties in and around dynamic cities that attract affluent, long-term renters. The company focuses on markets with strong economic drivers, high-quality job growth (especially in STEM fields), significant apartment demand relative to supply, and favorable long-term performance drivers like rising single-family home prices.

In 2021, EQR experienced a recovery in its financial performance. While same-store rental income saw a year-over-year decrease due to pandemic impacts early in the year, the company saw significant improvements in pricing and occupancy by the end of 2021, returning to pre-pandemic levels. The company completed substantial acquisition and disposition activities, rebalancing its portfolio. Diluted earnings per share increased to $3.54 in 2021 from $2.45 in 2020.

Equity Residential is committed to ESG, focusing on providing resilient properties and sustainable practices. This includes managing environmental impacts through energy and water efficiency, supporting social initiatives like diversity, inclusion, and employee well-being, and adhering to strong corporate governance. The company has issued green bonds to finance sustainable projects and actively works to improve its ESG disclosures.

As of December 31, 2021, Equity Residential reported strong liquidity with approximately $2.2 billion in available borrowing capacity under its unsecured revolving credit facility and $123.8 million in cash and cash equivalents. The company expects to meet its short-term and long-term liquidity needs through operating cash flow, its revolving credit facility, commercial paper program, and access to debt and equity capital markets.