Equity Residential (EQR) Q3 2024 earnings summary

Executive summary

• Portfolio consists of 84,018 apartment units across 312 properties, focused on affluent renters and efficient management in established and expansion markets, with 90% of the portfolio in established markets.

• Q3 2024 saw strong operational and financial performance, with high occupancy (96.1%), lowest third-quarter resident turnover in company history, and robust demand amid limited new supply in core markets.

• Acquired 14 properties (4,418 units) for $1.26B at a 5.1% cap rate, funded by $600M in 10-year unsecured notes at 4.65% and dispositions; portfolio expansion focused on Atlanta, Dallas/Ft. Worth, and Denver.

• Same store properties (76,916 units) delivered 2.7% NOI growth year-over-year, supported by high occupancy and rental rate increases.

• Balanced strategy between coastal and select Sunbelt/expansion markets aims to optimize long-term returns and reduce volatility.

Financial highlights

• Q3 2024 Normalized FFO per share was $0.98 (up 2.1% year-over-year); YTD Normalized FFO per share is $2.89, up 4% year-over-year.

• Q3 2024 net income attributable to common shares was $143.1M, down from $171.7M in Q3 2023; nine-month net income was $614.0M, up from $521.4M.

• Same store NOI grew 2.5% in Q3 2024, with YTD growth of 3.7%; same store expense growth was 3.2% for the quarter.

• Net effective rents at the portfolio level are about 2% above prior year; blended rate growth for the year expected just under 2%.

• Bad debt as a percentage of revenue expected to end 2024 around 1%, with opportunity to improve toward pre-pandemic levels (0.5%).

Outlook and guidance

• 2024 same store revenue growth guidance is 2.9%–3.5%; expense growth guidance is 2.5%–3.5%; NOI growth expected at 3.0%–3.5%.

• Q4 2024 Normalized FFO per share expected at $0.98–$1.02; full-year 2024 guidance at $3.87–$3.91 per share.

• 2025 performance supported by low new supply in established markets, resilient high-earning renters, and improving West Coast markets.

• Expansion markets expected to remain challenged until 2026, but supply is beginning to decline.

• Expectation for normal seasonal rent deceleration in Q4, with negative new lease change but stable renewal rates.