Equity Residential (EQR) Bank of America 2024 Global Real Estate Conference summary

Operational performance and market trends

• Raised same-store revenue guidance midpoint to 3.2% in July, with occupancy at 96.2% and renewals outperforming expectations.

• Seasonal rent declines plateaued earlier but had no material impact; delinquency improvement remains on track.

• Northeast and Seattle outperformed expectations, while San Francisco showed modest improvement but remains challenging for rent growth.

• Southern California faces ongoing delinquency issues and some rent fatigue, especially in Orange County and San Diego.

• Resident credit quality remains strong, with no increase in delinquency or move-down trends.

Capital allocation and acquisitions

• Closed or near closing on $1 billion in acquisitions from Blackstone, targeting Atlanta, Denver, and Dallas, with an additional $600 million in debt at 4.7% and $500 million in dispositions.

• All new acquisitions are in expansion markets, priced at a 15% discount to replacement cost and around a 5% cap rate.

• Cap rates in the market are drifting down into the fours, with increased buyer interest in larger deals.

• Expansion market assets expected to reach 10% of the portfolio soon, with a board-set goal of 20% in a few years.

• Most future expansion will come from acquisitions rather than development, funded by both debt and asset sales.

Portfolio strategy and risk management

• Portfolio aims for balanced growth, targeting high-earning renters in both supply-constrained and high-growth markets.

• Strategy is to maintain low leverage and top-quartile expense management for consistent long-term performance.

• Embedded growth is the starting point for revenue projections, with 2024's embedded growth at 1.4%.

• Homeownership risk is low in coastal markets due to high entry costs, but more closely monitored in expansion markets.

• Clustering assets in robust submarkets supports both revenue and cost efficiency.