10-QPeriod: Q2 FY2023

EQUITY RESIDENTIAL Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 2, 2023For Securities:EQR

Summary

Equity Residential (EQR) reported solid operational performance for the second quarter and first half of 2023, demonstrating resilience despite economic uncertainties. The company's "same store" portfolio, representing its core operating assets, showed robust growth in rental income (7.3% year-over-year for the six months), driven by strong demand and limited new supply in its key urban markets. While operating expenses also increased, particularly for utilities and repairs, Net Operating Income (NOI) for the same-store portfolio grew by a healthy 7.7% year-over-year. The company is actively managing its portfolio through strategic acquisitions and dispositions, focusing on dynamic cities attractive to long-term renters. During the first half of 2023, EQR acquired two properties and disposed of seven, indicating a strategic reshuffling of assets. Liquidity remains strong with approximately $2.3 billion in available borrowing capacity on its revolving credit facility, positioning the company to meet its obligations and capitalize on future opportunities. Management remains optimistic about long-term trends, including favorable household formation and a national housing deficit, which are expected to support the business.

Financial Highlights

31 data points
Beta

Net Income

$139.20M

EPS (Diluted)

$0.37

Total Assets

$20.15B

Cash & Equivalents

$35.70M

Free Cash Flow

$352.70M

Financial Statements
Beta
Operating Expenses$498.76M
Operating Income$218.46M
Interest Expense$65.59M
Net Income$139.20M
EPS (Basic)$0.37
EPS (Diluted)$0.37
Shares Outstanding (Basic)378.64M
Shares Outstanding (Diluted)391.19M

Key Highlights

  • 1Same-store rental income increased by 7.3% year-over-year for the six months ended June 30, 2023, indicating strong rental demand and pricing power.
  • 2Net Operating Income (NOI) for the same-store portfolio grew by 7.7% year-over-year for the first half of 2023, showcasing effective property operations.
  • 3EQR acquired two properties and disposed of seven during the first half of 2023, reflecting active portfolio management and strategic repositioning.
  • 4The company maintained a strong liquidity position with approximately $2.3 billion in unsecured revolving credit facility availability as of June 30, 2023.
  • 5Average rental rates across the same-store portfolio increased by 8.0% year-over-year for the six months ended June 30, 2023.
  • 6Physical occupancy remained strong at 95.9% for the six-month period, despite some increased move-out activity related to delinquent residents.
  • 7The company declared a quarterly dividend of $0.6625 per share/unit, an annualized increase of 6.0% over 2022.

Frequently Asked Questions

The same-store portfolio, representing 76,952 apartment units, demonstrated strong performance. Rental income grew 7.3% year-over-year, and Net Operating Income (NOI) increased by 7.7% year-over-year. This was driven by healthy demand, limited new supply, and a significant increase in average rental rates by 8.0%.

Equity Residential maintains a strong liquidity position. As of June 30, 2023, the company had approximately $2.3 billion in availability under its unsecured revolving credit facility, supplemented by cash and cash equivalents and restricted deposits. This provides ample resources to meet its financial obligations and capitalize on opportunities.

Yes, the company has been actively managing its portfolio. During the first six months of 2023, EQR acquired two consolidated rental properties for approximately $186.7 million and disposed of seven consolidated rental properties, receiving net proceeds of approximately $133.9 million. This indicates a strategic approach to optimizing its property holdings.

Management remains optimistic about the long-term outlook. They anticipate that elevated single-family home ownership costs, positive household formation trends, favorable competitive new supply in many markets, and a national housing deficit will buffer any impact from potential economic weakness. The company also believes its affluent renter base is more resilient to inflation.