Equity Residential Reports First Quarter 2023 Results

Rhea-AI Summary

Equity Residential (EQR) reported strong financial results for Q1 2023, with earnings per share (EPS) of $0.56, a remarkable 194.7% increase from $0.19 in Q1 2022. Funds from Operations (FFO) per share rose by 10.4% to $0.85, while Normalized FFO increased 13.0% to $0.87. Same store revenues surged 9.2%, driven by robust demand and improved delinquency rates in Southern California. However, same store expenses grew 7.2%, influenced by higher maintenance costs due to severe weather. The company also sold seven properties in LA for approximately $135.3 million and acquired a 262-unit property in Atlanta for $78.6 million. A 6.0% dividend increase reflects confidence in its business outlook. Q2 2023 guidance estimates EPS between $0.59 and $0.63, with anticipated growth in FFO and Normalized FFO.

Positive

• 194.7% increase in EPS from $0.19 to $0.56 year-over-year.
• 10.4% rise in FFO per share to $0.85.
• 13.0% increase in Normalized FFO per share.
• 9.2% growth in same store revenues.
• Sale of properties generated $135.3 million.
• Acquisition of a 262-unit property in Atlanta for $78.6 million at a stabilized cap rate of 6.6%.
• 6.0% increase in annual dividend.

Negative

• Same store expenses grew 7.2% due to repairs from severe weather.

Continued Strong Demand and Improved Delinquency Drives Results Above Expectations

CHICAGO--(BUSINESS WIRE)-- Equity Residential (NYSE: EQR) today reported results for the quarter ended March 31, 2023.

First Quarter 2023 Results

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

		Quarter Ended March 31,
		2023				2022				$ Change				% Change
Earnings Per Share (EPS)		$	0.56			$	0.19			$	0.37			194.7	%
Funds from Operations (FFO) per share		$	0.85			$	0.77			$	0.08			10.4	%
Normalized FFO per share		$	0.87			$	0.77			$	0.10			13.0	%

“We had a very good first quarter, with our same store revenue results benefitting from continued robust demand as well as improvements in delinquency in Southern California that exceeded our expectations,” said Mark J. Parrell, Equity Residential’s President and CEO. “Our business continues to benefit from durable employment in our affluent renter demographic and limited competition from both new apartment supply and single family home ownership.”

Recent Highlights

• The Company reported a 194.7% increase in EPS, 10.4% increase in FFO per share and 13.0% increase in Normalized FFO per share during the first quarter of 2023 compared to the same period of 2022.
• Same store revenue increased 9.2% for the first quarter of 2023 compared to the first quarter of 2022, which was better than anticipated due to continued healthy demand and lower than anticipated Bad Debt, Net.
• Same store expense growth for the first quarter of 2023 compared to the first quarter of 2022 was 7.2%, which was higher than expected primarily due to repairs and maintenance expenses resulting from the severe California rain storms and increased property-related legal and administrative expenses. Despite this elevated level, the Company believes it will still attain 4.0%-5.0% same store expense growth for 2023 as a result of lower anticipated growth in the second half of the year.
• During the first quarter of 2023, the Company sold a small portfolio of seven properties in Los Angeles, consisting of 247 apartment units, for approximately $135.3 million. Subsequent to the end of the first quarter of 2023, the Company purchased a 262-unit apartment property in Atlanta for approximately $78.6 million.
• The Company raised its annual common share dividend by 6.0% reflecting the current strength of the Company’s business and confidence in the prospects for the business going forward.

Results Per Share

The change in EPS for the quarter ended March 31, 2023 compared to the same period of 2022 is due primarily to higher property sale gains and lower depreciation expense in the current period, the various adjustment items listed on page 25 of this release and the items described below.

The per share change in FFO for the quarter ended March 31, 2023 compared to the same period of 2022 is due primarily to the various adjustment items listed on page 25 of this release and the items described below.

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

		Positive/(Negative) Impact
		First Quarter 2023 vs. First Quarter 2022
Residential same store NOI		$	0.10
Non-Residential same store NOI			0.01
Lease-Up NOI			0.01
2023 and 2022 transaction activity impact on NOI, net			(0.01	)
Interest expense, net			0.01
Other items (1)			(0.02	)
Net		$	0.10

(1)

Primarily represents the negative impact from property damage associated with the California rain storms.

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 27 through 32 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 6, 29 and 30 of this release.

Same Store Results

The following table shows the total same store results for the periods presented.

		First Quarter 2023 vs. First Quarter 2022		First Quarter 2023 vs. Fourth Quarter 2022
Apartment Units		76,952		78,331
Physical Occupancy		95.9% vs. 96.4%		95.9% vs. 95.8%
Revenues		9.2%		0.8%
Expenses		7.2%		7.8%
NOI		10.2%		(2.3%)

On page 10 of this release, the Company has provided a breakout of Residential and Non-Residential same store results with definitions that can be found on page 31 of this release. Non-Residential operations account for approximately 3.8% of total revenues for the quarter ended March 31, 2023.

The following table reflects the detail of the change in Same Store Residential Revenues, which is presented on a GAAP basis showing Leasing Concessions on a straight-line basis.

		First Quarter 2023 vs. First Quarter 2022			First Quarter 2023 vs. Fourth Quarter 2022
		% Change			% Change
Same Store Residential Revenues-comparable period
Lease rates		9.2	%		0.7	%
Leasing Concessions		0.3	%		0.0	%
Vacancy gain (loss)		(0.7	%)		0.1	%
Bad Debt, Net (1)		(0.2	%)		0.1	%
Other (2)		0.6	%		(0.2	%)
Same Store Residential Revenues-current period		9.2	%		0.7	%

(1)		Change in rental income due to bad debt write-offs and reserves, net of amounts (including governmental rental assistance payments) collected on previously written-off or reserved accounts. Comparable period changes in quarterly Bad Debt, Net will be volatile throughout 2023 primarily due to the timing of governmental rental assistance received in 2022. See pages 3, 12 and 26 for more detail.
(2)		Includes ancillary income, utility recoveries, early lease termination income, miscellaneous income and other items.

See page 11 for detail and reconciliations of Same Store Residential Revenues on a GAAP basis to Same Store Residential Revenues with Leasing Concessions on a cash basis.

Residential Same Store Operating Statistics

The following table includes select operating metrics for Residential Same Store Properties (for 76,952 same store apartment units):

		April 2023 (1)			Q1 2023			Q4 2022
Physical Occupancy		96.0	%		95.9	%		95.8	%
Percentage of Residents Renewing by quarter/month		58.0	%		57.7	%		56.5	%
New Lease Change		1.6	%		1.3	%		2.2	%
Renewal Rate Achieved		5.7	%		6.2	%		8.5	%
Blended Rate		4.0	%		3.9	%		5.6	%

(1)

April 2023 results are preliminary.

Improving Delinquency Conditions

The Company’s 2023 guidance published February 9, 2023 assumed that full year same store revenue would be negatively impacted by approximately 0.9% at the midpoint due to continuing elevated levels of forecasted Bad Debt, Net as a result of local government restrictions on evictions in California and significantly reduced levels of governmental rental assistance payments. To date, the Company has experienced better payment and move-out activity related to delinquent residents than assumed in its February 2023 guidance. This is offsetting the declines in governmental rental assistance more than the Company originally expected, and this improvement will be taken into account later this year when the Company customarily adjusts guidance.

Investment Activity

The Company did not acquire any operating properties during the first quarter of 2023, but subsequent to the end of the quarter, the Company acquired a recently completed 262-unit apartment property in Atlanta, which is currently in lease up, for approximately $78.6 million at a stabilized Acquisition Cap Rate of 6.6% (5.7% when removing certain real estate tax benefits that will reduce over time).

During the first quarter of 2023, the Company sold a small portfolio of seven properties in Los Angeles, consisting of 247 apartment units, for an aggregate sale price of approximately $135.3 million at a weighted average Disposition Yield of 5.3%, generating an Unlevered IRR of 8.7%.

Second Quarter 2023 Guidance

The Company has established guidance ranges for the second quarter of 2023 EPS, FFO per share and Normalized FFO per share as listed below:

		Q2 2023 Guidance
EPS		$0.59 to $0.63
FFO per share		$0.90 to $0.94
Normalized FFO per share		$0.91 to $0.95

The difference between the first quarter of 2023 actual EPS of $0.56 and the second quarter of 2023 EPS guidance midpoint of $0.61 is due primarily to the items described below.

The difference between the first quarter of 2023 actual FFO of $0.85 per share and the second quarter of 2023 FFO guidance midpoint of $0.92 per share is due primarily to the items described below.

The difference between the first quarter of 2023 actual Normalized FFO of $0.87 per share and the second quarter of 2023 Normalized FFO guidance midpoint of $0.93 per share is due primarily to higher expected Residential same store NOI and lower expected property damage from California rain storms.

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 residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 301 properties consisting of 79,351 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin. 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, government regulations (such as eviction moratoriums) and competition. These and 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 webcast of the Company’s conference call discussing these results will take place tomorrow, Wednesday, April 26, 2023 at 10:00 a.m. CT. Please visit the Investor section of the Company’s website at www.equityapartments.com for the webcast link.

Equity Residential Consolidated Statements of Operations (Amounts in thousands except per share data) (Unaudited)
		Quarter Ended March 31,
		2023				2022
REVENUES
Rental income		$	705,088			$	653,348
EXPENSES
Property and maintenance			137,579				124,874
Real estate taxes and insurance			106,669				100,688
Property management			31,466				30,747
General and administrative			16,165				17,238
Depreciation			215,830				229,961
Total expenses			507,709				503,508
Net gain (loss) on sales of real estate properties			100,209				(102	)
Operating income			297,588				149,738
Interest and other income			1,538				3,528
Other expenses			(8,995	)			(3,056	)
Interest:
Expense incurred, net			(66,401	)			(72,792	)
Amortization of deferred financing costs			(1,979	)			(2,077	)
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels			221,751				75,341
Income and other tax (expense) benefit			(298	)			(282	)
Income (loss) from investments in unconsolidated entities			(1,382	)			(1,261	)
Net income			220,071				73,798
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership			(7,059	)			(2,394	)
Partially Owned Properties			(977	)			(639	)
Net income attributable to controlling interests			212,035				70,765
Preferred distributions			(772	)			(772	)
Net income available to Common Shares		$	211,263			$	69,993
Earnings per share – basic:
Net income available to Common Shares		$	0.56			$	0.19
Weighted average Common Shares outstanding			378,341				375,509
Earnings per share – diluted:
Net income available to Common Shares		$	0.56			$	0.19
Weighted average Common Shares outstanding			390,664				389,628
Distributions declared per Common Share outstanding		$	0.6625			$	0.625

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,
		2023				2022
Net income		$	220,071			$	73,798
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties			(977	)			(639	)
Preferred distributions			(772	)			(772	)
Net income available to Common Shares and Units			218,322				72,387
Adjustments:
Depreciation			215,830				229,961
Depreciation – Non-real estate additions			(1,156	)			(1,052	)
Depreciation – Partially Owned Properties			(545	)			(893	)
Depreciation – Unconsolidated Properties			632				620
Net (gain) loss on sales of unconsolidated entities - operating assets			—				(9	)
Net (gain) loss on sales of real estate properties			(100,209	)			102
FFO available to Common Shares and Units			332,874				301,116
Adjustments (see note for additional detail):
Write-off of pursuit costs			1,332				1,463
Non-operating asset (gains) losses			714				(1,642	)
Other miscellaneous items			6,292				(371	)
Normalized FFO available to Common Shares and Units		$	341,212			$	300,566
FFO		$	333,646			$	301,888
Preferred distributions			(772	)			(772	)
FFO available to Common Shares and Units		$	332,874			$	301,116
FFO per share and Unit – basic		$	0.85			$	0.78
FFO per share and Unit – diluted		$	0.85			$	0.77
Normalized FFO		$	341,984			$	301,338
Preferred distributions			(772	)			(772	)
Normalized FFO available to Common Shares and Units		$	341,212			$	300,566
Normalized FFO per share and Unit – basic		$	0.88			$	0.78
Normalized FFO per share and Unit – diluted		$	0.87			$	0.77
Weighted average Common Shares and Units outstanding – basic			389,851				387,397
Weighted average Common Shares and Units outstanding – diluted			390,664				389,628
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,
		2023				2022
ASSETS
Land		$	5,559,883			$	5,580,878
Depreciable property			22,343,556				22,334,369
Projects under development			132,341				112,940
Land held for development			60,665				60,567
Investment in real estate			28,096,445				28,088,754
Accumulated depreciation			(9,207,194	)			(9,027,850	)
Investment in real estate, net			18,889,251				19,060,904
Investments in unconsolidated entities1			292,279				279,024
Cash and cash equivalents			133,460				53,869
Restricted deposits			85,625				83,303
Right-of-use assets			466,911				462,956
Other assets			235,000				278,206
Total assets		$	20,102,526			$	20,218,262
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net		$	1,968,243			$	1,953,438
Notes, net			5,343,851				5,342,329
Line of credit and commercial paper			—				129,955
Accounts payable and accrued expenses			144,660				96,028
Accrued interest payable			49,776				66,310
Lease liabilities			314,854				308,748
Other liabilities			283,418				306,941
Security deposits			68,728				68,940
Distributions payable			258,992				244,621
Total liabilities			8,432,522				8,517,310
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership			323,551				318,273
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, 2023 and December 31, 2022			37,280				37,280
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 378,898,221 shares issued and outstanding as of March 31, 2023 and 378,429,708 shares issued and outstanding as of December 31, 2022			3,789				3,784
Paid in capital			9,488,320				9,476,085
Retained earnings			1,619,131				1,658,837
Accumulated other comprehensive income (loss)			(11,232	)			(2,547	)
Total shareholders’ equity			11,137,288				11,173,439
Noncontrolling Interests:
Operating Partnership			211,718				209,961
Partially Owned Properties			(2,553	)			(721	)
Total Noncontrolling Interests			209,165				209,240
Total equity			11,346,453				11,382,679
Total liabilities and equity		$	20,102,526			$	20,218,262
1 Includes $231.7 million and $218.0 million in unconsolidated development projects as of March 31, 2023 and December 31, 2022, respectively. See Development and Lease-Up Projects for additional detail on unconsolidated projects.

Equity Residential Portfolio Summary As of March 31, 2023

								% of Stabilized			Average
					Apartment			Budgeted			Rental
Markets/Metro Areas		Properties			Units			NOI			Rate
Established Markets:
Los Angeles		59			15,012			17.8	%		$	2,792
Orange County		13			4,028			5.3	%			2,717
San Diego		12			2,878			4.0	%			2,936
Subtotal – Southern California		84			21,918			27.1	%			2,797
San Francisco		44			11,790			16.0	%			3,244
Washington, D.C.		47			14,716			15.4	%			2,539
New York		34			8,536			14.1	%			4,430
Boston		27			7,170			11.6	%			3,409
Seattle		46			9,526			11.0	%			2,579
Subtotal – Established Markets		282			73,656			95.2	%			3,039
Expansion Markets:
Denver		8			2,498			2.6	%			2,383
Atlanta		4			1,215			1.1	%			2,163
Dallas/Ft. Worth		4			1,241			0.7	%			1,879
Austin		3			741			0.4	%			1,807
Subtotal – Expansion Markets		19			5,695			4.8	%			2,153
Total		301			79,351			100.0	%		$	2,976

		Properties			Apartment Units
Wholly Owned Properties		286			76,237
Partially Owned Properties – Consolidated		15			3,114
		301			79,351
Note: Projects under development are not included in the Portfolio Summary until construction has been completed.

Equity Residential

Portfolio Rollforward Q1 2023 ($ in thousands)
		Properties			Apartment Units			Sales Price				Disposition Yield
12/31/2022		308			79,597
Dispositions:
Consolidated Rental Properties		(7	)		(247	)		$	(135,300	)		(5.3	%)
Configuration Changes		—			1
3/31/2023		301			79,351

Equity Residential

First Quarter 2023 vs. First Quarter 2022 Same Store Results/Statistics Including 76,952 Same Store Apartment Units ($ in thousands except for Average Rental Rate)
First Quarter 2023																								First Quarter 2022
		Residential					% Change			Non- Residential				% Change			Total				% Change					Residential				Non- Residential				Total
Revenues		$	656,513		(1)		9.2	%		$	25,162			9.2	%		$	681,675			9.2	%		Revenues		$	601,323			$	23,043			$	624,366
Expenses		$	220,069				7.2	%		$	6,721			8.8	%		$	226,790			7.2	%		Expenses		$	205,360			$	6,175			$	211,535
NOI		$	436,444				10.2	%		$	18,441			9.3	%		$	454,885			10.2	%		NOI		$	395,963			$	16,868			$	412,831
Average Rental Rate		$	2,968				9.8	%																Average Rental Rate		$	2,703
Physical Occupancy			95.9	%			(0.5	%)																Physical Occupancy			96.4	%
Turnover			9.0	%			0.1	%																Turnover			8.9	%

First Quarter 2023 vs. Fourth Quarter 2022 Same Store Results/Statistics Including 78,331 Same Store Apartment Units ($ in thousands except for Average Rental Rate)
First Quarter 2023																								Fourth Quarter 2022
		Residential					% Change			Non- Residential				% Change			Total				% Change					Residential				Non- Residential				Total
Revenues		$	669,073		(1)		0.7	%		$	26,951			3.2	%		$	696,024			0.8	%		Revenues		$	664,107			$	26,104			$	690,211
Expenses		$	224,594				7.8	%		$	7,181			6.7	%		$	231,775			7.8	%		Expenses		$	208,270			$	6,731			$	215,001
NOI		$	444,479				(2.5	%)		$	19,770			2.0	%		$	464,249			(2.3	%)		NOI		$	455,837			$	19,373			$	475,210
Average Rental Rate		$	2,972				0.7	%																Average Rental Rate		$	2,950
Physical Occupancy			95.9	%			0.1	%																Physical Occupancy			95.8	%
Turnover			9.1	%			(0.3	%)																Turnover			9.4	%

(1)

See page 11 for Same Store Residential Revenues with Leasing Concessions reflected on a cash basis. See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional detail.

Equity Residential

Same Store Residential Revenues – GAAP to Cash Basis (1) ($ in thousands)
		First Quarter 2023 vs. First Quarter 2022								First Quarter 2023 vs. Fourth Quarter 2022
		76,952 Same Store Apartment Units								78,331 Same Store Apartment Units
		Q1 2023				Q1 2022				Q1 2023				Q4 2022
Same Store Residential Revenues (GAAP Basis)		$	656,513			$	601,323			$	669,073			$	664,107
Leasing Concessions amortized			2,073				3,913				2,511				2,183
Leasing Concessions granted			(3,889	)			(1,579	)			(3,962	)			(2,940	)
Same Store Residential Revenues with Leasing Concessions on a cash basis		$	654,697			$	603,657			$	667,622			$	663,350
% change - GAAP revenue			9.2	%							0.7	%
% change - cash revenue			8.5	%							0.6	%

(1)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional detail.

Same Store Net Operating Income By Quarter Including 76,952 Same Store Apartment Units ($ in thousands)
		Q1 2023				Q4 2022				Q3 2022				Q2 2022				Q1 2022
Same store revenues		$	681,675			$	676,011			$	671,160			$	657,582			$	624,366
Same store expenses			226,790				210,795				214,495				206,152				211,535
Same store NOI (includes Residential and Non-Residential)		$	454,885			$	465,216			$	456,665			$	451,430			$	412,831

Equity Residential

Same Store Resident/Tenant Accounts Receivable Balances Including 76,952 Same Store Apartment Units ($ in thousands)
		Residential									Non-Residential
Balance Sheet (Other assets):		March 31, 2023					December 31, 2022				March 31, 2023				December 31, 2022
Resident/tenant accounts receivable balances		$	32,408				$	34,875			$	2,414			$	2,814
Allowance for doubtful accounts			(28,430	)				(30,624	)			(1,500	)			(2,152	)
Net receivable balances		$	3,978				$	4,251			$	914			$	662
Straight-line receivable balances		$	4,861		(1)		$	3,046			$	13,607			$	13,725

(1)		Total same store Residential Leasing Concessions granted in the first quarter of 2023 were approximately $3.9 million. The straight-line receivable balance of $4.9 million reflects Residential Leasing Concessions that the Company expects will be primarily recognized as a reduction of rental revenues in the remainder of 2023 and the first quarter of 2024.

Same Store Residential Bad Debt Including 76,952 Same Store Apartment Units ($ in thousands)
Income Statement (Rental income) (1):		Q1 2023				Q4 2022				Q1 2022
Bad debts before governmental rental assistance		$	11,690			$	13,464			$	19,144
Governmental rental assistance received			(991	)			(2,054	)			(9,481	)
Bad Debt, Net		$	10,699			$	11,410			$	9,663
Bad Debt, Net as a % of Same Store Residential Revenues			1.6	%			1.8	%			1.6	%

(1)

During the first quarter of 2023, the Company had increased resident payment and move-out activity. This improved activity reduced Bad Debt, Net and more than offset the decline in governmental rental assistance as compared to the Company's original expectations. See pages 2, 3 and 26 for more detail.

Equity Residential First Quarter 2023 vs. First Quarter 2022 Same Store Residential Results/Statistics by Market

																		Increase (Decrease) from Prior Year's Quarter
Markets/Metro Areas		Apartment Units			Q1 2023 % of Actual NOI			Q1 2023 Average Rental Rate				Q1 2023 Weighted Average Physical Occupancy %			Q1 2023 Turnover			Revenues				Expenses				NOI			Average Rental Rate			Physical Occupancy			Turnover
Los Angeles		14,415			17.7	%		$	2,775			95.5	%		9.9	%		6.1	%			10.7	%			4.0	%		7.6	%		(1.4	%)		1.4	%
Orange County		4,028			5.6	%			2,717			96.2	%		7.3	%		9.8	%			10.1	%			9.8	%		10.9	%		(0.9	%)		1.0	%
San Diego		2,706			3.9	%			2,899			95.4	%		9.5	%		7.2	%			4.8	%			7.9	%		8.9	%		(1.5	%)		0.6	%
Subtotal – Southern California		21,149			27.2	%			2,780			95.6	%		9.3	%		6.9	%			9.9	%			5.7	%		8.4	%		(1.3	%)		1.2	%
San Francisco		11,368			16.6	%			3,243			95.6	%		9.5	%		6.6	%			7.2	%			6.4	%		7.5	%		(0.8	%)		0.1	%
Washington, D.C.		14,400			16.0	%			2,531			96.6	%		7.3	%		6.8	%			6.0	%			7.2	%		7.1	%		(0.3	%)		(1.0	%)
New York		8,536			14.2	%			4,430			96.8	%		7.5	%		19.3	%			3.7	%			34.9	%		19.7	%		(0.3	%)		(0.7	%)
Seattle		9,525			11.5	%			2,579			95.1	%		11.1	%		8.6	%			2.9	%			11.0	%		8.0	%		0.5	%		(0.3	%)
Boston		6,700			10.0	%			3,341			95.6	%		7.9	%		9.6	%			7.3	%			10.7	%		9.9	%		(0.2	%)		0.3	%
Denver		2,498			2.7	%			2,383			96.3	%		11.1	%		8.0	%			18.2	%	(2)		3.8	%		7.4	%		0.3	%		0.5	%
Other Expansion Markets		2,776			1.8	%			1,974			94.6	%		11.4	%		5.7	%			22.7	%	(3)		(7.3	%)		7.6	%		(2.0	%)		0.6	%
Total		76,952			100.0	%		$	2,968			95.9	%		9.0	%		9.2	%	(1)		7.2	%			10.2	%		9.8	%		(0.5	%)		0.1	%

(1)		With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 8.5% in the first quarter of 2023 compared to the first quarter of 2022. See page 11 for additional detail and reconciliations.
(2)		Expense growth is primarily due to higher real estate taxes from increased assessed property values.
(3)		High expense growth during the first quarter of 2023 is primarily due to greater variability given the small number of properties and the timing of certain expenses.
Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the quarter ended March 31, 2023.

Equity Residential First Quarter 2023 vs. Fourth Quarter 2022 Same Store Residential Results/Statistics by Market

																		Increase (Decrease) from Prior Quarter
Markets/Metro Areas		Apartment Units			Q1 2023 % of Actual NOI			Q1 2023 Average Rental Rate				Q1 2023 Weighted Average Physical Occupancy %			Q1 2023 Turnover			Revenues				Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Los Angeles		14,415			17.4	%		$	2,775			95.5	%		9.9	%		0.8	%			12.6	%		(4.0	%)		1.2	%		(0.3	%)		(0.1	%)
Orange County		4,028			5.5	%			2,717			96.2	%		7.3	%		0.6	%			7.1	%		(1.1	%)		1.2	%		(0.5	%)		(1.4	%)
San Diego		2,878			4.1	%			2,936			95.4	%		9.7	%		0.8	%			6.6	%		(0.9	%)		1.4	%		(0.6	%)		0.9	%
Subtotal – Southern California		21,321			27.0	%			2,785			95.6	%		9.4	%		0.8	%			11.0	%		(3.0	%)		1.2	%		(0.4	%)		(0.2	%)
San Francisco		11,368			16.3	%			3,243			95.6	%		9.5	%		0.5	%			7.3	%		(2.4	%)		0.5	%		0.0	%		0.1	%
Washington, D.C.		14,716			16.0	%			2,539			96.6	%		7.4	%		0.4	%			7.0	%		(2.7	%)		0.3	%		0.1	%		(1.9	%)
New York		8,536			13.9	%			4,430			96.8	%		7.5	%		1.3	%			6.9	%		(2.6	%)		1.2	%		0.1	%		(0.1	%)
Seattle		9,525			11.4	%			2,579			95.1	%		11.1	%		0.4	%			2.0	%		(0.2	%)		0.2	%		0.1	%		1.2	%
Boston		7,170			10.7	%			3,409			95.5	%		8.0	%		0.7	%			11.3	%		(3.6	%)		1.1	%		(0.4	%)		(0.4	%)
Denver		2,498			2.7	%			2,383			96.3	%		11.1	%		0.7	%			6.9	%		(1.9	%)		0.5	%		0.2	%		(0.9	%)
Other Expansion Markets		3,197			2.0	%			1,971			94.9	%		12.4	%		2.1	%			6.7	%		(2.0	%)		(0.3	%)		2.1	%		(0.6	%)
Total		78,331			100.0	%		$	2,972			95.9	%		9.1	%		0.7	%	(1)		7.8	%		(2.5	%)		0.7	%		0.1	%		(0.3	%)

(1)		With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues increased 0.6% in the first quarter of 2023 compared to the fourth quarter of 2022. See page 11 for additional detail and reconciliations.
Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the quarter ended March 31, 2023.

Equity Residential

Same Store Residential Net Effective Lease Pricing Statistics For 76,952 Same Store Apartment Units
		New Lease Change (1)						Renewal Rate Achieved (1)						Blended Rate (1)
Markets/Metro Areas		Q1 2023			Q4 2022			Q1 2023			Q4 2022			Q1 2023			Q4 2022
Southern California		4.6	%		6.9	%		6.2	%		7.6	%		5.4	%		7.3	%
San Francisco		2.0	%		(0.7	%)		6.1	%		7.1	%		4.3	%		3.0	%
Washington, D.C.		2.4	%		2.9	%		6.0	%		8.9	%		4.4	%		6.2	%
New York		2.4	%		5.9	%		6.4	%		11.3	%		4.7	%		9.1	%
Seattle		(5.8	%)		(6.5	%)		5.6	%		7.2	%		(0.2	%)		(0.2	%)
Boston		0.6	%		2.1	%		6.9	%		8.9	%		3.8	%		6.4	%
Denver		(2.4	%)		(1.6	%)		6.0	%		6.6	%		0.9	%		2.0	%
Other Expansion Markets		(5.3	%)		(9.1	%)		5.5	%		8.5	%		(0.8	%)		(0.1	%)
Total		1.3	%		2.2	%		6.2	%		8.5	%		3.9	%		5.6	%

(1)

Historically, New Lease Change is negative in the first quarter of the year. In contrast, New Lease Change for the first quarter of 2023 was positive, pointing to supportive operating conditions that are consistent with the Company's expectations. See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions. See page 3 for April 2023 preliminary data.

Equity Residential

First Quarter 2023 vs. First Quarter 2022 Total Same Store Operating Expenses Including 76,952 Same Store Apartment Units ($ in thousands)
		Q1 2023				Q1 2022				$ Change (1)				% Change			% of Q1 2023 Operating Expenses
Real estate taxes		$	90,425			$	88,164			$	2,261			2.6	%		39.9	%
On-site payroll			42,359				41,222				1,137			2.8	%		18.7	%
Utilities			38,520				34,184				4,336			12.7	%		17.0	%
Repairs and maintenance			30,136				25,777				4,359			16.9	%		13.3	%
Insurance			8,415				7,360				1,055			14.3	%		3.7	%
Leasing and advertising			2,497				2,360				137			5.8	%		1.1	%
Other on-site operating expenses			14,438				12,468				1,970			15.8	%		6.3	%
Total Same Store Operating Expenses (2) (includes Residential and Non-Residential)		$	226,790			$	211,535			$	15,255			7.2	%		100.0	%

(1)		The quarter-over-quarter changes were primarily driven by the following factors:
		Real estate taxes – Increase due to modest escalation in rates and assessed values.
		On-site payroll – Increase due primarily to timing of employee benefit costs and staffing. Innovation initiatives continue to temper inflationary pressures in wages.
		Utilities – Increase from gas and electric primarily driven by higher commodity prices.
		Repairs and maintenance – Increase primarily driven by greater outsourcing due in part to higher internal staffing utilization to address issues from the recent California rain storms along with increases in minimum wage on contracted services.
		Insurance – Increase due to higher premiums on property insurance renewal due to challenging conditions in the insurance market.
		Leasing and advertising – Increase primarily driven by increased digital advertising and resident activities.
		Other on-site operating expenses – Increase primarily driven by higher property-related legal expenses.
(2)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.

Equity Residential

Debt Summary as of March 31, 2023 ($ in thousands)
		Debt Balances (1)				% of Total			Weighted Average Rates (1)			Weighted Average Maturities (years)
Secured		$	1,968,243			26.9	%		3.82	%		4.5
Unsecured			5,343,851			73.1	%		3.59	%		9.6
Total		$	7,312,094			100.0	%		3.65	%		8.2
Fixed Rate Debt:
Secured – Conventional		$	1,609,068			22.0	%		3.67	%		3.7
Unsecured – Public			5,343,851			73.1	%		3.56	%		9.6
Fixed Rate Debt			6,952,919			95.1	%		3.59	%		8.2
Floating Rate Debt:
Secured – Conventional			122,612			1.7	%		6.87	%		1.2
Secured – Tax Exempt			236,563			3.2	%		3.30	%		11.2
Unsecured – Revolving Credit Facility			—			—			—			4.6
Unsecured – Commercial Paper Program (2)			—			—			4.70	%		—
Floating Rate Debt			359,175			4.9	%		4.54	%		7.9
Total		$	7,312,094			100.0	%		3.65	%		8.2

(1)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.
(2)		At March 31, 2023, there was no commercial paper outstanding. The weighted average amount outstanding for the quarter ended March 31, 2023 was approximately $109.0 million.
Note: The Company capitalized interest of approximately $3.4 million and $1.0 million during the quarters ended March 31, 2023 and 2022, respectively.

Equity Residential

Debt Maturity Schedule as of March 31, 2023 ($ 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)
2023 (2)		$	800,000			$	68,235			$	868,235			11.8	%		4.21	%		4.40	%
2024			—				6,100				6,100			0.1	%		N/A			4.01	%
2025			450,000				67,270				517,270			7.0	%		3.38	%		3.85	%
2026			592,025				9,000				601,025			8.1	%		3.58	%		3.59	%
2027			400,000				9,800				409,800			5.6	%		3.25	%		3.27	%
2028			900,000				10,700				910,700			12.3	%		3.79	%		3.79	%
2029			888,120				11,500				899,620			12.2	%		3.30	%		3.31	%
2030			1,095,000				12,600				1,107,600			15.0	%		2.55	%		2.56	%
2031			528,500				39,700				568,200			7.7	%		1.94	%		2.09	%
2032			—				28,000				28,000			0.4	%		N/A			3.97	%
2033+			1,350,850				110,900				1,461,750			19.8	%		4.39	%		4.32	%
Subtotal			7,004,495				373,805				7,378,300			100.0	%		3.48	%		3.55	%
Deferred Financing Costs and Unamortized (Discount)			(51,576	)			(14,630	)			(66,206	)		N/A			N/A			N/A
Total		$	6,952,919			$	359,175			$	7,312,094			100.0	%		3.48	%		3.55	%

(1)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.
(2)		As of March 31, 2023, the Company had $450.0 million of ten-year forward starting SOFR swaps outstanding at a weighted average rate of 2.90% (currently equivalent to a ten-year U.S. Treasury of approximately 3.16%) to hedge the U.S. Treasury risk for the refinancing of 2023 maturities.

Equity Residential

Selected Unsecured Public Debt Covenants
		March 31, 2023		December 31, 2022
Debt to Adjusted Total Assets (not to exceed 60%)		26.7%		27.1%
Secured Debt to Adjusted Total Assets (not to exceed 40%)		8.0%		7.9%
Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1)		6.30		6.24
Total Unencumbered Assets to Unsecured Debt (must be at least 125%)		528.9%		512.5%

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, 2023		December 31, 2022
Total debt to Normalized EBITDAre		4.27x		4.42x
Net debt to Normalized EBITDAre		4.17x		4.38x
Unencumbered NOI as a % of total NOI		88.3%		88.2%

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

Capital Structure as of March 31, 2023 (Amounts in thousands except for share/unit and per share amounts)
Secured Debt									$	1,968,243			26.9	%
Unsecured Debt										5,343,851			73.1	%
Total Debt										7,312,094			100.0	%		23.7	%
Common Shares (includes Restricted Shares)			378,898,221			96.8	%
Units (includes OP Units and Restricted Units)			12,515,083			3.2	%
Total Shares and Units			391,413,304			100.0	%
Common Share Price at March 31, 2023		$	60.00
										23,484,798			99.8	%
Perpetual Preferred Equity (see below)										37,280			0.2	%
Total Equity										23,522,078			100.0	%		76.3	%
Total Market Capitalization									$	30,834,172						100.0	%

Perpetual Preferred Equity as of March 31, 2023 (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 2023			Q1 2022
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares - basic		378,340,876			375,508,944
Shares issuable from assumed conversion/vesting of:
- OP Units		11,509,669			11,888,041
- long-term compensation shares/units		813,581			2,089,783
- ATM forward sales		—			141,136
Total Common Shares and Units - diluted		390,664,126			389,627,904
Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:
Common Shares - basic		378,340,876			375,508,944
OP Units - basic		11,509,669			11,888,041
Total Common Shares and OP Units - basic		389,850,545			387,396,985
Shares issuable from assumed conversion/vesting of:
- long-term compensation shares/units		813,581			2,089,783
- ATM forward sales		—			141,136
Total Common Shares and Units - diluted		390,664,126			389,627,904
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares)		378,898,221			375,974,070
Units (includes OP Units and Restricted Units)		12,515,083			12,872,604
Total Shares and Units		391,413,304			388,846,674

Equity Residential Development and Lease-Up Projects as of March 31, 2023 (Amounts in thousands except for project and apartment unit amounts)

																									Estimated/Actual
Projects		Location		Ownership Percentage			No. of Apartment Units			Total Budgeted Capital Cost				Total Book Value to Date				Total Debt (1)				Percentage Completed			Start Date		Initial Occupancy		Completion Date		Stabilization Date		Percentage Leased / Occupied
CONSOLIDATED:
Projects Under Development:
Reverb (fka 9th and W) (2)		Washington, D.C.		92	%		312			$	108,027			$	97,367			$	57,931			95	%		Q3 2021		Q2 2023		Q3 2023		Q3 2024		8% / –
Laguna Clara II		Santa Clara, CA		100	%		225				152,621				34,974				—			23	%		Q2 2022		Q4 2024		Q1 2025		Q4 2025		– / –
Projects Under Development - Consolidated							537				260,648				132,341				57,931
Projects Completed and Stabilized During the Quarter:
Aero Apartments		Alameda, CA		90	%		200				116,394				113,611				64,681			100	%		Q3 2019		Q2 2021		Q2 2021		Q1 2023		98% / 96%
Projects Completed and Stabilized During the Quarter - Consolidated							200				116,394				113,611				64,681
UNCONSOLIDATED:
Projects Under Development:
Alloy Sunnyside		Denver, CO		80	%		209				66,004				45,416				9,349			66	%		Q3 2021		Q4 2023		Q2 2024		Q1 2025		– / –
Alexan Harrison		Harrison, NY		62	%		450				198,664				121,258				25,869			52	%		Q3 2021		Q3 2023		Q2 2024		Q4 2025		– / –
Solana Beeler Park		Denver, CO		90	%		270				81,206				32,249				1,384			28	%		Q4 2021		Q4 2023		Q2 2024		Q1 2025		– / –
Remy (Toll)		Frisco, TX		75	%		357				96,937				52,415				10,369			46	%		Q1 2022		Q1 2024		Q4 2024		Q3 2025		– / –
Settler (Toll)		Fort Worth, TX		75	%		362				81,775				33,871				—			35	%		Q2 2022		Q2 2024		Q3 2024		Q3 2025		– / –
Lyle (Toll) (2)		Dallas, TX		75	%		334				86,332				20,255				3,426			22	%		Q3 2022		Q4 2024		Q2 2025		Q1 2026		– / –
Projects Under Development - Unconsolidated							1,982				610,918				305,464				50,397
Total Development Projects - Consolidated							737				377,042				245,952				122,612
Total Development Projects - Unconsolidated							1,982				610,918				305,464				50,397
Total Development Projects							2,719			$	987,960			$	551,416			$	173,009

NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS		Total Budgeted Capital Cost				Q1 2023 NOI
Projects Under Development - Consolidated		$	260,648			$	(64	)
Projects Completed and Stabilized During the Quarter - Consolidated			116,394				928
Projects Under Development - Unconsolidated			610,918				—
		$	987,960			$	864

(1)		All non-wholly owned projects are being partially funded with project-specific construction loans. None of these loans are recourse to the Company.
(2)		The land parcels under these projects are subject to long-term ground leases.

Equity Residential Capital Expenditures to Real Estate For the Quarter Ended March 31, 2023 (Amounts in thousands except for apartment unit and per apartment unit amounts)

		Same Store Properties					Non-Same Store Properties/Other					Total				Same Store Avg. Per Apartment Unit
Total Apartment Units			76,952					2,399					79,351
Building Improvements		$	20,474				$	1,223		(2)		$	21,697			$	266
Renovation Expenditures			15,525		(1)			5,337		(2)			20,862				202
Replacements			12,138					695					12,833				158
Capital Expenditures to Real Estate (3)		$	48,137				$	7,255				$	55,392			$	626

(1)		Renovation Expenditures on 477 same store apartment units for the quarter ended March 31, 2023 approximated $32,547 per apartment unit renovated.
(2)		Includes expenditures for two properties that have been removed from same store while undergoing major renovations requiring a significant number of apartment units to be vacated to accommodate the extensive planned improvements. The renovations are expected to continue through at least the end of 2023 at both properties.
(3)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.

Equity Residential

Normalized EBITDAre Reconciliations

(Amounts in thousands)

		Trailing Twelve Months								2023				2022
		March 31, 2023				December 31, 2022				Q1				Q4				Q3				Q2				Q1
Net income		$	953,268			$	806,995			$	220,071			$	165,354			$	335,165			$	232,678			$	73,798
Interest expense incurred, net			276,529				282,920				66,401				65,827				72,412				71,889				72,792
Amortization of deferred financing costs			8,631				8,729				1,979				2,308				2,220				2,124				2,077
Amortization of above/below market lease intangibles			4,464				4,464				1,116				1,116				1,116				1,116				1,116
Depreciation			868,037				882,168				215,830				214,272				214,129				223,806				229,961
Income and other tax expense (benefit)			916				900				298				175				152				291				282
EBITDA			2,111,845				1,986,176				505,695				449,052				625,194				531,904				380,026
Net (gain) loss on sales of real estate properties			(404,636	)			(304,325	)			(100,209	)			21				(196,551	)			(107,897	)			102
Net (gain) loss on sales of unconsolidated entities - operating assets			—				(9	)			—				—				—				—				(9	)
EBITDAre			1,707,209				1,681,842				405,486				449,073				428,643				424,007				380,119
Write-off of pursuit costs (other expenses)			4,649				4,780				1,332				1,484				781				1,052				1,463
(Income) loss from investments in unconsolidated entities - operations			5,152				5,040				1,382				1,575				1,027				1,168				1,270
Realized (gain) loss on investment securities (interest and other income)			3,317				1,164				87				3,225				3				2				(2,066	)
Insurance/litigation settlement or reserve income (interest and other income)			(1,223	)			(1,650	)			(800	)			(12	)			(100	)			(311	)			(1,227	)
Insurance/litigation/environmental settlement or reserve expense (other expenses)			5,744				1,495				4,999				745				—				—				750
Advocacy contributions (other expenses)			1,344				1,512				7				50				720				567				175
Data transformation project (other expenses)			3,200				1,120				2,080				1,120				—				—				—
Real estate tax transaction adjustment (real estate taxes)			(18,072	)			(18,072	)			—				(18,072	)			—				—				—
Other			1,769				1,694				6				436				1,397				(70	)			(69	)
Normalized EBITDAre		$	1,713,089			$	1,678,925			$	414,579			$	439,624			$	432,471			$	426,415			$	380,415
Balance Sheet Items:		March 31, 2023				December 31, 2022
Total debt		$	7,312,094			$	7,425,722
Cash and cash equivalents			(133,460	)			(53,869	)
Mortgage principal reserves/sinking funds			(27,017	)			(25,304	)
Net debt		$	7,151,617			$	7,346,549
Note: EBITDA, EBITDAre and Normalized EBITDAre do not include any adjustments for the Company’s share of partially owned unconsolidated entities or the minority partner’s share of partially owned consolidated entities due to the immaterial size of the Company’s partially owned portfolio.

Equity Residential

Adjustments from FFO to Normalized FFO

(Amounts in thousands)

		Quarter Ended March 31,
		2023				2022				Variance
Impairment – non-operating real estate assets		$	—			$	—			$	—
Write-off of pursuit costs (other expenses)			1,332				1,463				(131	)
Debt extinguishment and preferred share redemption (gains) losses			—				—				—
(Income) loss from investments in unconsolidated entities ─ non-operating assets			627				424				203
Realized (gain) loss on investment securities (interest and other income)			87				(2,066	)			2,153
Non-operating asset (gains) losses			714				(1,642	)			2,356
Insurance/litigation settlement or reserve income (interest and other income)			(800	)			(1,227	)			427
Insurance/litigation/environmental settlement or reserve expense (other expenses)			4,999				750				4,249
Advocacy contributions (other expenses)			7				175				(168	)
Data transformation project (other expenses)			2,080				—				2,080
Other			6				(69	)			75
Other miscellaneous items			6,292				(371	)			6,663
Adjustments from FFO to Normalized FFO		$	8,338			$	(550	)		$	8,888
Note: 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 Normalized FFO Guidance and Assumptions

The guidance/projections provided below are based on current expectations and are forward-looking. All guidance is given on a Normalized FFO basis. Therefore, certain items excluded from Normalized FFO, such as debt extinguishment costs/prepayment penalties and the write-off of pursuit costs, are not included in the estimates provided on this page. 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.
		Q2 2023		Revised Full Year 2023		Previous Full Year 2023
2023 Normalized FFO Guidance (per share diluted)
Expected Normalized FFO Per Share		$0.91 to $0.95		$3.70 to $3.80		$3.70 to $3.80
2023 Same Store Assumptions (includes Residential and Non-Residential)
Physical Occupancy				96.2%		96.2%
Revenue change (1)				4.5% to 6.0%		4.5% to 6.0%
Expense change				4.0% to 5.0%		4.0% to 5.0%
NOI change (2)				4.75% to 6.25%		4.75% to 6.25%
2023 Transaction Assumptions
Consolidated rental acquisitions				$300.0M		–
Consolidated rental dispositions				$300.0M		–
Transaction Accretion (Dilution)				–		–
2023 Debt Assumptions
Weighted average debt outstanding				$7.375B to $7.575B		$7.375B to $7.575B
Interest expense, net (on a Normalized FFO basis)				$274.5M to $280.5M		$274.5M to $280.5M
Capitalized interest				$10.0M to $14.0M		$10.0M to $14.0M
2023 Capital Expenditures to Real Estate Assumptions for Same Store Properties (3)
Capital Expenditures to Real Estate for Same Store Properties				$240.0M		$240.0M
Capital Expenditures to Real Estate per Same Store Apartment Unit				$3,100		$3,100
2023 Other Guidance Assumptions
Property management expense				$119.0M to $122.0M		$119.0M to $122.0M
General and administrative expense				$55.5M to $59.5M		$55.5M to $59.5M
Debt offerings				$400.0M to $600.0M		$700.0M to $900.0M
Weighted average Common Shares and Units - Diluted				391.3M		391.3M

(1)		The previous full year 2023 same store revenue change assumed a negative impact of 0.9% at the midpoint due to continuing elevated levels of Bad Debt, Net in 2023. Actual Bad Debt, Net results in the first quarter of 2023 have trended better than this assumption. Management will revisit this assumption later this year when it customarily adjusts guidance.
(2)		Approximately 20 basis point change in NOI percentage = $0.01 per share change in EPS/FFO per share/Normalized FFO per share.
(3)		During 2023, the Company expects to spend approximately $78.0 million for apartment unit Renovation Expenditures on approximately 2,600 same store apartment units at an average cost of approximately $30,000 per apartment unit renovated, which is included in the Capital Expenditures to Real Estate assumptions noted above.

Equity Residential Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms (Amounts in thousands except per share and per apartment unit data) (All per share data is diluted)

This Earnings Release and Supplemental Financial Information includes certain non-GAAP financial measures and other terms that management believes are helpful in understanding our business. The definitions and calculations of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other real estate investment trusts (“REIT”) and, accordingly, may not be comparable. These non-GAAP financial measures should not be considered as an alternative to net earnings or any other measurement of performance computed in accordance with accounting principles generally accepted in the United States (“GAAP”) or as an alternative to cash flows from specific operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity.

Acquisition Capitalization Rate or Cap Rate – NOI that the Company anticipates receiving in the next 12 months (or the year two or three stabilized NOI for properties that are in lease-up at acquisition) less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross purchase price of the asset. The weighted average Acquisition Cap Rate for acquired properties is weighted based on the projected NOI streams and the relative purchase price for each respective property.

Average Rental Rate – Total Residential rental revenues reflected on a straight-line basis in accordance with GAAP divided by the weighted average occupied apartment units for the reporting period presented.

Bad Debt, Net – Change in rental income due to bad debt write-offs and reserves, net of amounts collected on previously written-off or reserved accounts.

Blended Rate – The weighted average of New Lease Change and Renewal Rate Achieved.

Capital Expenditures to Real Estate:

Building Improvements – Includes roof replacement, paving, building mechanical equipment systems, exterior siding and painting, major landscaping, furniture, fixtures and equipment for amenities and common areas, vehicles and office and maintenance equipment.

Renovation Expenditures – Apartment unit renovation costs (primarily kitchens and baths) designed to reposition these units for higher rental levels in their respective markets.

Replacements – Includes appliances, mechanical equipment, fixtures and flooring (including hardwood and carpeting).

Debt Balances:

Commercial Paper Program – The Company may borrow up to a maximum of $1.0 billion under its commercial paper program subject to market conditions. The notes bear interest at various floating rates.

Revolving Credit Facility – The Company’s $2.5 billion unsecured revolving credit facility matures October 26, 2027. The interest rate on advances under the facility will generally be SOFR plus a spread (currently 0.725%), or based on bids received from the lending group, and an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. In addition, the Company limits its utilization of the facility in order to maintain liquidity to support its $1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility:

		March 31, 2023
Unsecured revolving credit facility commitment		$	2,500,000
Commercial paper balance outstanding			—
Unsecured revolving credit facility balance outstanding			—
Other restricted amounts			(3,484	)
Unsecured revolving credit facility availability		$	2,496,516

Debt Covenant Compliance – Our unsecured debt includes certain financial and operating covenants including, among other things, maintenance of certain financial ratios. These provisions are contained in the indentures applicable to each notes payable or the credit agreement for our line of credit. The Debt Covenant Compliance ratios that are provided show the Company's compliance with certain covenants governing our public unsecured debt. These covenants generally reflect our most restrictive financial covenants. The Company was in compliance with its unsecured debt covenants for all periods presented.

Development Yield – NOI that the Company anticipates receiving in the next 12 months following stabilization less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $50-$150 per apartment unit depending on the type of asset) divided by the Total Budgeted Capital Cost of the asset. The weighted average Development Yield for development properties is weighted based on the projected NOI streams and the relative Total Budgeted Capital Cost for each respective property.

Disposition Yield – NOI that the Company anticipates giving up in the next 12 months less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $150-$450 per apartment unit depending on the age and condition of the asset) divided by the gross sales price of the asset. The weighted average Disposition Yield for sold properties is weighted based on the projected NOI streams and the relative sales price for each respective property.

Earnings Per Share ("EPS") – Net income per share calculated in accordance with GAAP. Expected EPS is calculated on a basis consistent with actual EPS. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual EPS could differ materially from expected EPS.

EBITDA for Real Estate and Normalized EBITDA for Real Estate:

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) – The National Association of Real Estate Investment Trusts (“Nareit”) defines EBITDAre (September 2017 White Paper) as net income (computed in accordance with GAAP) before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, impairment write-downs of depreciated operating properties, impairment write-downs of investments in unconsolidated entities caused by a decrease in value of depreciated operating properties within the joint venture and adjustments to reflect the Company’s share of EBITDAre of investments in unconsolidated entities.

The Company believes that EBITDAre is useful to investors, creditors and rating agencies as a supplemental measure of the Company’s ability to incur and service debt because it is a recognized measure of performance by the real estate industry, and by excluding gains or losses related to sales or impairment of depreciated operating properties, EBITDAre can help compare the Company’s credit strength between periods or as compared to different companies.

Normalized Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“Normalized EBITDAre”) – Represents net income (computed in accordance with GAAP) before interest expense, income taxes, depreciation and amortization expense, and further adjusted for non-comparable items. Normalized EBITDAre, total debt to Normalized EBITDAre and net debt to Normalized EBITDAre are important metrics in evaluating the credit strength of the Company and its ability to service its debt obligations. The Company believes that Normalized EBITDAre, total debt to Normalized EBITDAre, and net debt to Normalized EBITDAre are useful to investors, creditors and rating agencies because they allow investors to compare the Company’s credit strength to prior reporting periods and to other companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual credit quality.

Economic Gain (Loss) – Economic Gain (Loss) is calculated as the net gain (loss) on sales of real estate properties in accordance with GAAP, excluding accumulated depreciation. The Company generally considers Economic Gain (Loss) to be an appropriate supplemental measure to net gain (loss) on sales of real estate properties in accordance with GAAP because it is one indication of the gross value created by the Company's acquisition, development, renovation, management and ultimate sale of a property and because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold property. The following table presents a reconciliation of net gain (loss) on sales of real estate properties in accordance with GAAP to Economic Gain (Loss):

		Quarter Ended March 31, 2023
Net Gain (Loss) on Sales of Real Estate Properties		$	100,209
Accumulated Depreciation Gain			(36,486	)
Economic Gain (Loss)		$	63,723

Forecasted Embedded Growth – The positive or negative contribution to growth implied by annualizing total lease income anticipated for the last month of the current year (without regard to vacancy) compared to anticipated actual full year lease income for the current year (without regard to vacancy) and excluding the impact of Leasing Concessions and other income. This metric is a helpful data point in that it captures the impact of leases in existence at the end of the current year and their impact on rental income for the following year.

FFO and Normalized FFO:

Funds From Operations (“FFO”) – Nareit defines FFO (December 2018 White Paper) as net income (computed in accordance with GAAP), excluding gains or losses from sales and impairment write-downs of depreciable real estate and land when connected to the main business of a REIT, impairment write-downs of investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and depreciation and amortization related to real estate. Adjustments for partially owned consolidated and unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. Expected FFO per share is calculated on a basis consistent with actual FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

The Company believes that FFO and FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses from sales and impairment write-downs of depreciable real estate and excluding depreciation related to real estate (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies.

Normalized Funds From Operations ("Normalized FFO") – Normalized FFO begins with FFO and excludes:

• the impact of any expenses relating to non-operating real estate asset impairment;
• pursuit cost write-offs;
• gains and losses from early debt extinguishment and preferred share redemptions;
• gains and losses from non-operating assets; and
• other miscellaneous items.

Expected Normalized FFO per share is calculated on a basis consistent with actual Normalized FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

The Company believes that Normalized FFO and Normalized FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company's operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual operating results.

FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

FFO available to Common Shares and Units and Normalized FFO available to Common Shares and Units are calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with GAAP. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Noncontrolling Interests – Operating Partnership". Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.

The following table presents reconciliations of EPS to FFO per share and Normalized FFO per share for Consolidated Statements of Funds From Operations and Normalized Funds From Operations.

		Actual				Actual				Expected			Expected
		Q1 2023				Q1 2022				Q2 2023			2023
		Per Share				Per Share				Per Share			Per Share
EPS – Diluted		$	0.56			$	0.19			$0.59 to $0.63			$1.99 to $2.09
Depreciation expense			0.55				0.58			0.55			2.17
Net (gain) loss on sales			(0.26	)			—			(0.24	)		(0.50	)
Impairment – operating real estate assets			—				—			—			—
FFO per share – Diluted			0.85				0.77			0.90 to 0.94			3.66 to 3.76
Impairment – non-operating real estate assets			—				—			—			—
Write-off of pursuit costs			—				—			—			0.01
Debt extinguishment and preferred share redemption (gains) losses			—				—			—			—
Non-operating asset (gains) losses			—				—			—			0.01
Other miscellaneous items			0.02				—			0.01			0.02
Normalized FFO per share – Diluted		$	0.87			$	0.77			$0.91 to $0.95			$3.70 to $3.80

Lease-Up NOI – Represents NOI for development properties: (i) in various stages of lease-up; and (ii) where lease-up has been completed but the properties were not stabilized (defined as having achieved 90% occupancy for three consecutive months) for all of the current and comparable periods presented.

Leasing Concessions – Reflects upfront discounts on both new move-in and renewal leases on a straight-line basis.

Net Operating Income (“NOI”) – NOI is the Company’s primary financial measure for evaluating each of its apartment properties. NOI is defined as rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company's apartment properties. NOI does not include an allocation of property management expenses either in the current or comparable periods. Rental income for all leases and operating expense for ground leases (for both same store and non-same store properties) are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

The following tables present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store/other results (see Same Store Results):

		Quarter Ended March 31,
		2023				2022
Operating income		$	297,588			$	149,738
Adjustments:
Property management			31,466				30,747
General and administrative			16,165				17,238
Depreciation			215,830				229,961
Net (gain) loss on sales of real estate properties			(100,209	)			102
Total NOI		$	460,840			$	427,786
Rental income:
Same store		$	681,675			$	624,366
Non-same store/other			23,413				28,982
Total rental income			705,088				653,348
Operating expenses:
Same store			226,790				211,535
Non-same store/other			17,458				14,027
Total operating expenses			244,248				225,562
NOI:
Same store			454,885				412,831
Non-same store/other			5,955				14,955
Total NOI		$	460,840			$	427,786

New Lease Change – The net effective change in rent (inclusive of Leasing Concessions) for a lease with a new or transferring resident compared to the rent for the prior lease of the identical apartment unit, regardless of lease term.

Non-Residential – Consists of revenues and expenses from retail and public parking garage operations.

Non-Same Store Properties – For annual comparisons, primarily includes all properties acquired during 2022 and 2023, plus any properties in lease-up and not stabilized as of January 1, 2022.

Percentage of Residents Renewing – Leases renewed expressed as a percentage of total renewal offers extended during the reporting period.

Physical Occupancy – The weighted average occupied apartment units for the reporting period divided by the average of total apartment units available for rent for the reporting period.

Pricing Trend – Weighted average of 12-month base rent including amenity amount less Leasing Concessions on 12-month signed leases for the reporting period.

Renewal Rate Achieved – The net effective change in rent (inclusive of Leasing Concessions) for a new lease on an apartment unit where the lease has been renewed as compared to the rent for the prior lease of the identical apartment unit, regardless of lease term.

Residential – Consists of multifamily apartment revenues and expenses.

Same Store Operating Expenses:

On-site Payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.

Other On-site Operating Expenses – Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees.

Repairs and Maintenance – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair and maintenance costs.

Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income.

Same Store Properties – For annual comparisons, primarily includes all properties acquired or completed that are stabilized prior to January 1, 2022, less properties subsequently sold. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented.

Same Store Residential Revenues – Revenues from our Same Store Properties presented on a GAAP basis which reflects the impact of Leasing Concessions on a straight-line basis.

Same Store Residential Revenues with Leasing Concessions on a cash basis is presented in Same Store Results and is considered by the Company to be a supplemental measure to Same Store Residential Revenues in conformity with GAAP to help investors evaluate the impact of both current and historical Leasing Concessions on GAAP-based Same Store Residential Revenues and to more readily enable comparisons to revenue as reported by other companies. Same Store Residential Revenues with Leasing Concessions on a cash basis reflects the impact of Leasing Concessions used in the period and allows an investor to understand the historical trend in cash Leasing Concessions.

% of Stabilized Budgeted NOI – Represents original budgeted 2023 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.

Total Budgeted Capital Cost – Estimated remaining cost for projects under development and/or developed plus all capitalized costs incurred to date, including land acquisition costs, construction costs, capitalized real estate taxes and insurance, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP. Amounts for partially owned consolidated and unconsolidated properties are presented at 100% of the project.

Total Market Capitalization – The aggregate of the market value of the Company’s outstanding common shares, including restricted shares, the market value of the Company’s operating partnership units outstanding, including restricted units (based on the market value of the Company’s common shares) and the outstanding principal balance of debt. The Company believes this is a useful measure of a real estate operating company’s long-term liquidity and balance sheet strength, because it shows an approximate relationship between a company’s total debt and the current total market value of its assets based on the current price at which the Company’s common shares trade. However, because this measure of leverage changes with fluctuations in the Company’s share price, which occur regularly, this measure may change even when the Company’s earnings, interest and debt levels remain stable.

Traffic – Consists of an expression of interest in an apartment by completing an in-person tour, self-guided tour or virtual tour that may result in an application to lease.

Transaction Accretion (Dilution) – Represents the spread between the Acquisition Cap Rate and the Disposition Yield.

Turnover – Total Residential move-outs (including inter-property and intra-property transfers) divided by total Residential apartment units.

Unencumbered NOI % – Represents NOI generated by consolidated real estate assets unencumbered by outstanding secured debt as a percentage of total NOI generated by all of the Company's consolidated real estate assets.

Unlevered Internal Rate of Return (“IRR”) – The Unlevered IRR on sold properties is the compound annual rate of return calculated by the Company based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs incurred by the Company; (ii) total revenues earned during the Company’s ownership period; (iii) total direct property operating expenses (including real estate taxes and insurance) incurred during the Company’s ownership period; (iv) capital expenditures incurred during the Company’s ownership period; and (v) the gross sales price of the property net of selling costs.

The calculation of the Unlevered IRR does not include an adjustment for the Company’s property management expense, general and administrative expense or interest expense (including loan assumption costs and other loan-related costs). Therefore, the Unlevered IRR is not a substitute for net income as a measure of our performance. Management believes that the Unlevered IRR achieved during the period a property is owned by the Company is useful because it is one indication of the gross value created by the Company’s acquisition, development, renovation, management and ultimate sale of a property, before the impact of Company overhead. The Unlevered IRR achieved on the properties as cited in this release should not be viewed as an indication of the gross value created with respect to other properties owned by the Company, and the Company does not represent that it will achieve similar Unlevered IRRs upon the disposition of other properties. The weighted average Unlevered IRR for sold properties is weighted based on all cash flows over the investment period for each respective property, including net sales proceeds.

Weighted Average Coupons – Contractual interest rate for each debt instrument weighted by principal balances as of March 31, 2023. In case of debt for which fair value hedges are in place, the rate payable under the corresponding derivatives is used in lieu of the contractual interest rate.

Weighted Average Rates – Interest expense for each debt instrument for the quarter ended March 31, 2023 weighted by its average principal balance for the same period. Interest expense includes amortization of premiums, discounts and other comprehensive income on debt and related derivative instruments. In case of debt for which derivatives are in place, the income or expense recognized under the corresponding derivatives is included in the total interest expense for the period.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230425005829/en/

Marty McKenna

312-928-1901

mmckenna@eqr.com

Source: Equity Residential

FAQ

What were Equity Residential's Q1 2023 earnings per share?

Equity Residential reported earnings per share of $0.56 for Q1 2023.

How much did Equity Residential's Funds from Operations (FFO) increase in Q1 2023?

FFO per share increased by 10.4% to $0.85 in Q1 2023.

What drove the increase in Equity Residential's same store revenues?

Increased demand and improved delinquency rates in Southern California contributed to the 9.2% rise in same store revenues.

What significant real estate transactions did Equity Residential complete in Q1 2023?

The company sold seven properties in Los Angeles for approximately $135.3 million and acquired a 262-unit property in Atlanta for $78.6 million.

What is Equity Residential's Q2 2023 EPS guidance?

Equity Residential has set EPS guidance for Q2 2023 between $0.59 and $0.63.