Equity Residential Reports Full Year 2020 Results

  • Oops!
    Something went wrong.
    Please try again later.
·13 min read
  • Oops!
    Something went wrong.
    Please try again later.

Provides Full Year 2021 Guidance

Equity Residential (NYSE: EQR) today reported results for the quarter and year ended December 31, 2020 and has posted a Q4 2020 Management Presentation to its website as referenced below.

Fourth Quarter 2020 Results

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

Quarter Ended December 31,

2020

2019

$ Change

% Change

Earnings Per Share (EPS)

$

0.68

$

0.77

$

(0.09

)

(11.7

%)

Funds from Operations (FFO) per share

$

0.73

$

0.86

$

(0.13

)

(15.1

%)

Normalized FFO per share

$

0.76

$

0.91

$

(0.15

)

(16.5

%)

Year Ended December 31,

2020

2019

$ Change

% Change

Earnings Per Share (EPS)

$

2.45

$

2.60

$

(0.15

)

(5.8

%)

Funds from Operations (FFO) per share

$

3.21

$

3.39

$

(0.18

)

(5.3

%)

Normalized FFO per share

$

3.26

$

3.49

$

(0.23

)

(6.6

%)

"We are optimistic that 2021 will be a year of recovery for Equity Residential. Operating trends are improving and we expect that our financial results will bottom out in the first half of 2021," said Mark J. Parrell, Equity Residential’s President and CEO. "Our affluent, well-employed resident base remains drawn to our nation’s great cities and we expect demand to accelerate and pricing to continue to improve as vaccines are widely administered and cities become more active. Many thanks to our colleagues across the country for their hard work in 2020 under very tough conditions."

Highlights

  • The Company has seen a 0.9% improvement in same store Physical Occupancy since the end of the third quarter 2020 (94.2% on September 30, 2020 to 95.1% on January 31, 2021).

  • Pricing Trends stabilized in November 2020 and modestly improved in December 2020 and January 2021 for the first time since the beginning of the pandemic. See the Management Presentation referenced below for details.

  • The Company collected approximately 97% of its expected Residential revenues in the fourth quarter of 2020.

  • The Company used the proceeds from the sale described below as well as cash on hand and borrowings under its commercial paper program to satisfy its obligations on its $750.0 million 4.625% unsecured notes due in December 2021, by discharging them pursuant to their indenture. During 2020, the Company paid down nearly $1.0 billion in the aggregate in debt, further strengthening its balance sheet.

  • The Company sold Vantage Pointe, a 679-unit apartment property located in downtown San Diego, for a sale price of approximately $312.5 million at a Disposition Yield of 4.1%, generating an Unlevered IRR of 8.8% over the Company’s ten-year ownership period.

Results Per Share

The changes in EPS for the quarter and year ended December 31, 2020 compared to the same periods of 2019 are due primarily to lower depreciation expense in the current periods as a result of the Company's disposition activity, the various adjustment items listed on page 26 of this release and the items described below.

The per share changes in FFO for both the quarter and year ended December 31, 2020 compared to the same periods of 2019, are due primarily to the various adjustment items listed on page 26 of this release and the items described below.

The per share changes in Normalized FFO are due primarily to:

Positive/(Negative) Impact

Fourth Quarter 2020 vs.

Fourth Quarter 2019

Full Year 2020 vs.

Full Year 2019

Residential same store Net Operating Income (NOI)

$

(0.15

)

$

(0.22

)

Non-Residential same store NOI (1)

(0.01

)

(0.08

)

Lease-Up NOI

0.01

2020 and 2019 transaction activity impact on NOI, net

(0.03

)

(0.06

)

Interest expense, net

0.03

0.11

Other items

0.01

0.01

Net

$

(0.15

)

$

(0.23

)

(1)

Non-Residential same store NOI was negatively impacted by a $(0.03) per share non-cash write-off of Non-Residential straight-line lease receivables during the year ended December 31, 2020, primarily in the third quarter of 2020.

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 28 through 33 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 30 and 31 of this release.

Same Store Results

The Company has provided a breakout of Residential and Non-Residential same store results on page 11 of this release with definitions that can be found on page 32 of this release. Non-Residential operations account for approximately 2.7% of total revenues for the year ended December 31, 2020. The table below reflects same store Residential only results for the fourth quarter 2020 to fourth quarter 2019 comparison, which includes 76,535 apartment units, as well as for the year ended December 31, 2020 to year ended December 31, 2019 comparison, which includes 73,585 apartment units. The Company’s Physical Occupancy was 94.2% compared to 96.1% for the fourth quarter of 2020 and 2019, respectively, and 95.1% compared to 96.4% for the full year of 2020 and 2019, respectively.

Fourth Quarter 2020 vs.

Fourth Quarter 2019

Full Year 2020 vs.

Full Year 2019

Revenues

(8.2%)

(2.9%)

Expenses

2.8%

2.1%

NOI

(12.9%)

(5.0%)

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. See pages 12 and 32 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.

Fourth Quarter 2020 vs.
Fourth Quarter 2019

Full Year 2020 vs.

Full Year 2019

% Change

% Change

Same Store Residential Revenues-

comparable period

Lease rates

(4.4

%)

(0.4

%)

Leasing Concessions (1)

(1.2

%)

(0.4

%)

Vacancy loss

(1.6

%)

(1.3

%)

Bad Debt, Net (2)

(1.6

%)

(1.2

%)

Other (3)

0.6

%

0.4

%

Same Store Residential Revenues-

current period

(8.2

%)

(2.9

%)

(1)

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

(2)

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

(3)

Includes ancillary income, utility recoveries, early lease termination income, miscellaneous income and other items.

Residential Same Store Operating Statistics

The following table includes select statistics for Residential Same Store Properties presented on a suburban and urban basis. Statistics for January 2021 are preliminary and Blended Rate is inclusive of Leasing Concessions.

% of
Same
Store
Residential
Revenues

Physical Occupancy on:

Percentage of Residents
Renewing by Month

Blended Rate

Dec
YTD 2020

Sep 30,
2020

Dec 31,
2020

Jan 31,
2021

Jan 2020

Dec 2020

Jan 2021 (1)

Q4

2020

Dec 2020

Jan 2021 (1)

Suburban (2)

44%

95.9%

95.8%

96.1%

58%

58%

55%

(7.0%)

(7.3%)

(7.3%)

Urban Other (2)(3)

33%

94.3%

94.6%

95.3%

55%

47%

45%

(13.4%)

(14.3%)

(14.7%)

Urban Core (2)(4)

23%

89.2%

90.2%

91.8%

63%

49%

51%

(25.0%)

(26.6%)

(25.0%)

Total

100%

94.2%

94.4%

95.1%

58%

53%

52%

(13.0%)

(13.9%)

(14.1%)

(1)

January 2021 results are preliminary.

(2)

The Company defines Urban submarkets as those with 3,500 or more households per square mile with the remainder defined as Suburban.

(3)

Includes all other Urban properties excluding Urban Core.

(4)

Includes Urban properties in Manhattan/Brooklyn, Downtown Boston/Cambridge and Downtown San Francisco.

Investment Activity

The Company sold a 679-unit apartment property in downtown San Diego during the fourth quarter of 2020 for a sale price of approximately $312.5 million at a Disposition Yield of 4.1% generating an Unlevered IRR of 8.8%. The Company also sold two land parcels for an aggregate sale price of approximately $55.5 million. The Company did not acquire any assets during the fourth quarter of 2020.

During the full year of 2020, the Company acquired a 158-unit apartment property in suburban Seattle for a purchase price of approximately $48.9 million at an Acquisition Capitalization Rate of 4.7%. Also, during the full year of 2020, the Company sold six properties, consisting of 2,231 apartment units, for an aggregate sales price of approximately $1.07 billion at a weighted average Disposition Yield of 4.5%, generating an Unlevered IRR of 10.2%.

Capital Markets Activity

In December 2020, the Company used the proceeds from the property sale described above as well as cash on hand and borrowings under its commercial paper program to satisfy its obligations on its $750.0 million 4.625% unsecured notes due in December 2021, by discharging them pursuant to their indenture. As a result, the Company incurred approximately $39.1 million in debt extinguishment charges, of which $25.8 million represented a cash charge and the remaining $13.3 million corresponded to write-offs of unamortized debt costs. These charges impacted the Company’s 2020 Earnings Per Share and Funds from Operations per share but did not impact the Company’s Normalized Funds from Operations per share.

First Quarter 2021 Guidance

The Company has established guidance ranges for the first quarter of 2021 EPS, FFO per share and Normalized FFO per share as listed below:

Q1 2021

Guidance

EPS

$0.31 to $0.35

FFO per share

$0.65 to $0.69

Normalized FFO per share

$0.65 to $0.69

The difference between the fourth quarter 2020 actual EPS of $0.68 and the first quarter of 2021 EPS guidance midpoint of $0.33 is due primarily to lower expected property sale gains, lower expected debt extinguishment costs, lower expected land sale gains and the items described below.

The difference between the fourth quarter 2020 actual FFO of $0.73 per share and the first quarter of 2021 FFO guidance midpoint of $0.67 per share is due primarily to lower expected debt extinguishment costs, lower expected land sale gains and the items described below.

The difference between the fourth quarter 2020 actual Normalized FFO of $0.76 per share and the first quarter of 2021 Normalized FFO guidance midpoint of $0.67 per share is due primarily to:

Positive/(Negative)

Impact

First Quarter 2021 vs.

Fourth Quarter 2020

Same Store NOI

$

(0.07

)

2020 transaction activity impact on NOI, net

(0.01

)

Interest expense, net

0.03

Corporate overhead (1)

(0.03

)

Other items

(0.01

)

Net

$

(0.09

)

(1)

Corporate overhead includes property management and general and administrative expenses.

Full Year 2021 Guidance

The Company has provided guidance for its full year 2021 same store operating performance, EPS, FFO per share and Normalized FFO per share as listed below:

Same Store (includes Residential and Non-Residential):

Physical Occupancy

94.8% to 95.8%

Revenue change

(9.0%) to (7.0%)

Expense change

3.0% to 4.0%

NOI change

(15.0%) to (12.0%)

EPS

$2.55 to $2.75

FFO per share

$2.58 to $2.78

Normalized FFO per share

$2.60 to $2.80

The difference between the Company’s full year 2020 actual EPS of $2.45 and the full year 2021 EPS guidance midpoint of $2.65 is due primarily to higher expected property sale gains, lower expected depreciation expense, lower expected debt extinguishment costs, lower expected land sale gains and the items described below.

The difference between the Company’s full year 2020 actual FFO of $3.21 per share and the full year 2021 FFO guidance midpoint of $2.68 per share is due primarily to lower expected debt extinguishment costs, lower expected land sale gains and the items described below.

The difference between the Company’s full year 2020 actual Normalized FFO of $3.26 per share and the full year 2021 Normalized FFO guidance midpoint of $2.70 per share is due primarily to:

Positive/(Negative)
Impact

Full Year 2021 vs.
Full Year 2020

Same Store NOI

$

(0.60

)

2021 and 2020 transaction activity impact on NOI, net

(0.07

)

Interest expense, net

0.14

Other items, including corporate overhead

(0.03

)

Net

$

(0.56

)

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 high quality long-term renters. Equity Residential owns or has investments in 304 properties consisting of 77,889 apartment units, located in Boston, New York, Washington, D.C., Seattle, San Francisco, Southern California and Denver. 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, competition and local government regulation. In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration and severity of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers and employees in particular, its impact on the employment rate and the economy and the corresponding impact on our residents’ and tenants’ ability to pay their rent on time or at all, the extent and impact of governmental responses, the rollout and effectiveness of vaccines and the impact of operational changes we have implemented and may implement in response to the pandemic. 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 web cast of the Company’s conference call discussing these results will take place tomorrow, Thursday, February 11, 2021 at 10:00 a.m. CT. In connection with the conference call, the Company is also providing a Management Presentation on its website. Please visit the Investor section of the Company’s website at www.equityapartments.com for the web cast link and the presentation.

Equity Residential

Consolidated Statements of Operations

(Amounts in thousands except per share data)

(Unaudited)

Year Ended December 31,

Quarter Ended December 31,

2020

2019

2020

2019

REVENUES

Rental income

$

2,571,705

$

2,700,691

$

613,435

$

683,895

EXPENSES

Property and maintenance

440,998

446,845

107,665

108,348

Real estate taxes and insurance

381,562

366,139

93,519

95,705

Property management

93,825

95,344

22,312

22,639

General and administrative

48,305

52,757

11,093

11,630

Depreciation

820,832

831,083

201,829

214,882

Total expenses

1,785,522

1,792,168

436,418

453,204

Net gain (loss) on sales of real estate properties

531,807

447,637

179,589

178,237

Operating income

1,317,990

1,356,160

356,606

408,928

Interest and other income

5,935

3,201

1,929

620

Other expenses

(17,510

)

(18,177

)

(9,186

)

(6,972

)

Interest:

Expense incurred, net

(365,073

)

(390,076

)

(116,724

)

(100,300

)

Amortization of deferred financing costs

(8,939

)

(11,670

)

(2,686

)

(3,006

)

Income before income and other taxes, income (loss) from

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

932,403

939,438

229,939

299,270

Income and other tax (expense) benefit

(852

)

2,281

(350

)

3,030

Income (loss) from investments in unconsolidated entities

(3,284

)

65,945

(839

)

(961

)

Net gain (loss) on sales of land parcels

34,234

2,044

34,234

(33

)

Net income

962,501

1,009,708

262,984

301,306

Net (income) loss attributable to Noncontrolling Interests:

Operating Partnership

(34,010

)

(36,034

)

(9,386

)

(10,695

)

Partially Owned Properties

(14,855

)

(3,297

)

(742

)

(847

)

Net income attributable to controlling interests

913,636

970,377

252,856

289,764

Preferred distributions

(3,090

)

(3,090

)

(772

)

(772

)

Net income available to Common Shares

$

910,546

$

967,287

$

252,084

$

288,992

Earnings per share – basic:

Net income available to Common Shares

$

2.45

$

2.61

$

0.68

$

0.78

Weighted average Common Shares outstanding

371,791

370,461

371,915

371,155

Earnings per share – diluted:

Net income available to Common Shares

$

2.45

$

2.60

$

0.68

$

0.77

Weighted average Common Shares outstanding

385,874

386,333

385,756

387,143

Distributions declared per Common Share outstanding

$

2.41

$

2.27

$

0.6025

$

0.5675

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share data)

(Unaudited)

Year Ended December 31,

Quarter Ended December 31,

2020

2019

2020

2019

Net income

$

962,501

$

1,009,708

$

262,984

$

301,306

Net (income) loss attributable to Noncontrolling Interests – Partially

Owned Properties

(14,855

)

(3,297

)

(742

)

(847

)

Preferred distributions

(3,090

)

(3,090

)

(772

)

(772

)

Net income available to Common Shares and Units

944,556

1,003,321

261,470

299,687

Adjustments:

Depreciation

820,832

831,083

201,829

214,882

Depreciation – Non-real estate additions

(4,564

)

(5,585

)

(1,131

)

(1,350

)

Depreciation – Partially Owned Properties

(3,345

)

(3,599

)

(831

)

(899

)

Depreciation – Unconsolidated Properties

2,454

2,997

616

612

Net (gain) loss on sales of unconsolidated entities - operating

assets

(1,636

)

(69,522

)

(636

)

Net (gain) loss on sales of real estate properties

(531,807

)

(447,637

)

(179,589

)

(178,237

)

Noncontrolling Interests share of gain (loss) on sales

of real estate properties

11,655

FFO available to Common Shares and Units

1,238,145

1,311,058

281,728

334,695

Adjustments (see note for additional detail):

Impairment – non-operating assets

Write-off of pursuit costs

6,869

5,529

2,005

1,431

Debt extinguishment and preferred share redemption (gains)

losses

39,292

23,991

39,255

12,184

Non-operating asset (gains) losses

(32,590

)

(940

)

(33,612

)

260

Other miscellaneous items

4,652

8,430

5,166

1,891

Normalized FFO available to Common Shares and Units

$

1,256,368

$

1,348,068

$

294,542

$

350,461

FFO

$

1,241,235

$

1,314,148

$

282,500

$

335,467

Preferred distributions

(3,090

)

(3,090

)

(772

)

(772

)

FFO available to Common Shares and Units

$

1,238,145

$

1,311,058

$

281,728

$

334,695

FFO per share and Unit – basic

$

3.22

$

3.42

$

0.73

$

0.87

FFO per share and Unit – diluted

$

3.21

$

3.39

$

0.73

$

0.86

Normalized FFO

$

1,259,458

$

1,351,158

$

295,314

$

351,233

Preferred distributions

(3,090

)

(3,090

)

(772

)

(772

)

Normalized FFO available to Common Shares and Units

$

1,256,368

$

1,348,068

$

294,542

$

350,461

Normalized FFO per share and Unit – basic

$

3.27

$

3.52

$

0.77

$

0.91

Normalized FFO per share and Unit – diluted

$

3.26

$

3.49

$

0.76

$

0.91

Weighted average Common Shares and Units outstanding – basic

384,794

383,368

384,899

384,039

Weighted average Common Shares and Units outstanding – diluted

385,874

386,333

385,756

387,143

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)

December 31,

December 31,

2020

2019

ASSETS

Land

$

5,785,367

$

5,936,188

Depreciable property

20,920,654

21,319,101

Projects under development

411,134

181,630

Land held for development

86,170

96,688

Investment in real estate

27,203,325

27,533,607

Accumulated depreciation

(7,859,657

)

(7,276,786

)

Investment in real estate, net

19,343,668

20,256,821

Investments in unconsolidated entities

52,782

52,238

Cash and cash equivalents

42,591

45,753

Restricted deposits

57,137

71,246

Right-of-use assets

499,287

512,774

Other assets

291,426

233,937

Total assets

$

20,286,891

$

21,172,769

LIABILITIES AND EQUITY

Liabilities:

Mortgage notes payable, net

$

2,293,890

$

1,941,610

Notes, net

5,335,536

6,077,513

Line of credit and commercial paper

414,830

1,017,833

Accounts payable and accrued expenses

107,366

94,350

Accrued interest payable

65,896

66,852

Lease liabilities

329,130

331,334

Other liabilities

345,064

346,963

Security deposits

60,480

70,062

Distributions payable

232,262

218,326

Total liabilities

9,184,454

10,164,843

Commitments and contingencies

Redeemable Noncontrolling Interests – Operating Partnership

338,951

463,400

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 December 31, 2020 and December 31, 2019

37,280

37,280

Common Shares of beneficial interest, $0.01 par value;

1,000,000,000 shares authorized; 372,302,000 shares issued

and outstanding as of December 31, 2020 and 371,670,884

shares issued and outstanding as of December 31, 2019

3,723

3,717

Paid in capital

9,128,599

8,965,577

Retained earnings

1,399,715

1,386,495

Accumulated other comprehensive income (loss)

(43,666

)

(77,563

)

Total shareholders’ equity

10,525,651

10,315,506

Noncontrolling Interests:

Operating Partnership

233,162

227,837

Partially Owned Properties

4,673

1,183

Total Noncontrolling Interests

237,835

229,020

Total equity

10,763,486

10,544,526

Total liabilities and equity

$

20,286,891

$

21,172,769

Equity Residential

Portfolio Summary

As of December 31, 2020

% of
Stabilized

Average

Apartment

Budgeted

Rental

Markets/Metro Areas

Properties

Units

NOI

Rate

Los Angeles

72

16,603

21.5

%

$

2,458

Orange County

13

4,028

5.4

%

2,222

San Diego

11

2,706

3.8

%

2,373

Subtotal – Southern California

96

23,337

30.7

%

2,407

San Francisco

48

12,707

18.3

%

3,053

Washington DC

47

14,731

17.2

%

2,387

Seattle

46

9,454

11.4

%

2,349

New York

37

9,606

11.3

%

3,617

Boston

25

6,430

9.4

%

2,958

Denver

5

1,624

1.7

%

2,003

Total

304

77,889

100.0

%

$

2,680

Properties

Apartment Units

Wholly Owned Properties

287

74,328

Master-Leased Properties – Consolidated

1

162

Partially Owned Properties – Consolidated

16

3,399

304

77,889

Note: Projects under development are not included in the Portfolio Summary until construction has been completed.

Equity Residential

Portfolio Rollforward Q4 2020

($ in thousands)

Properties

Apartment
Units

Sales
Price

Disposition
Yield

9/30/2020

305

78,568

Dispositions:

Consolidated:

Rental Properties

(1

)

(679

)

$

(312,500

)

(4.1

%)

Land Parcels

$

(55,510

)

12/31/2020

304

77,889

Portfolio Rollforward 2020

($ in thousands)

Properties

Apartment
Units

Purchase
Price

Acquisition
Cap Rate

12/31/2019

309

79,962

Acquisitions:

Consolidated Rental Properties – Not Stabilized (A)

1

158

$

48,860

4.7

%

Sales Price

Disposition
Yield

Dispositions:

Consolidated:

Rental Properties

(6

)

(2,231

)

$

(1,066,861

)

(4.5

%)

Land Parcels

$

(55,510

)

12/31/2020

304

77,889

(A)

The Company acquired one property in the Seattle market in the third quarter of 2020 that is in lease-up and is expected to stabilize in its second year of ownership at an Acquisition Cap Rate of 4.7%.

Equity Residential

Fourth Quarter 2020 vs. Fourth Quarter 2019

Same Store Results/Statistics Including 76,535 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

Fourth Quarter 2020

Fourth Quarter 2019

Residential

%
Change

Non-
Residential

%
Change

Total

%
Change

Residential

Non-
Residential

Total

Revenues

$

580,328

(1)

(8.2%)

$

19,926

(2)

(15.8%)

$

600,254

(8.5%)

Revenues

$

632,229

$

23,658

$

655,887

Expenses

$

192,948

2.8%

$

5,541

(0.6%)

$

198,489

2.7%

Expenses

$

187,637

$

5,573

$

193,210

NOI

$

387,380

(12.9%)

$

14,385

(20.5%)

$

401,765

(13.2%)

NOI

$

444,592

$

18,085

$

462,677

Average Rental Rate

$

2,685

(6.4%)

Average Rental Rate

$

2,868

Physical Occupancy

94.2

%

(1.9%)

Physical Occupancy

96.1

%

Turnover

13.4

%

2.7%

Turnover

10.7

%

Fourth Quarter 2020 vs. Third Quarter 2020

Same Store Results/Statistics Including 77,351 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

Fourth Quarter 2020

Third Quarter 2020

Residential

%
Change

Non-
Residential

%
Change

Total

%
Change

Residential

Non-
Residential

Total

Revenues

$

585,992

(1)

(3.7%)

$

19,982

(2)

223.8%

$

605,974

(1.5%)

Revenues

$

608,737

$

6,171

$

614,908

Expenses

$

194,467

(3.4%)

$

5,558

(3.0%)

$

200,025

(3.3%)

Expenses

$

201,218

$

5,732

$

206,950

NOI

$

391,525

(3.9%)

$

14,424

3185.6%

$

405,949

(0.5%)

NOI

$

407,519

$

439

$

407,958

Average Rental Rate

$

2,683

(3.2%)

Average Rental Rate

$

2,771

Physical Occupancy

94.2

%

(0.5%)

Physical Occupancy

94.7

%

Turnover

13.4

%

(4.4%)

Turnover

17.8

%

2020 vs. 2019

Same Store Results/Statistics Including 73,585 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

2020

2019

Residential

%
Change

Non-

Residential

%
Change

Total

%
Change

Residential

Non-

Residential

Total

Revenues

$

2,356,344

(1)

(2.9%)

$

62,674

(2)

(33.2%)

$

2,419,018

(4.0%)

Revenues

$

2,425,471

$

93,764

$

2,519,235

Expenses

$

751,504

2.1%

$

21,975

3.5%

$

773,479

2.1%

Expenses

$

736,279

$

21,223

$

757,502

NOI

$

1,604,840

(5.0%)

$

40,699

(43.9%)

$

1,645,539

(6.6%)

NOI

$

1,689,192

$

72,541

$

1,761,733

Average Rental Rate

$

2,809

(1.5%)

Average Rental Rate

$

2,852

Physical Occupancy

95.1

%

(1.3%)

Physical Occupancy

96.4

%

Turnover

52.3

%

2.5%

Turnover

49.8

%

(1)

See page 12 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.

(2)

Changes in same store Non-Residential revenues for the periods presented are driven by the following:

• Fourth Quarter 2020 vs. Fourth Quarter 2019 – Primarily deferral/abatement of rents, higher bad debt and lower parking income.

• Fourth Quarter 2020 vs. Third Quarter 2020 – Primarily a $10.6 million non-cash write-off of Non-Residential straight-line lease receivables in the third quarter of 2020.

• 2020 vs. 2019 – Primarily deferral/abatement of rents, higher bad debt, lower parking income and the non-cash write-off of $12.9 million of Non-Residential straight-line lease receivables predominately in the third quarter of 2020.

Equity Residential

Same Store Residential Revenues – GAAP to Cash Basis (1)

$ in thousands

Fourth Quarter 2020 vs. Fourth Quarter 2019

Fourth Quarter 2020 vs. Third Quarter 2020

2020 vs. 2019

76,535 Same Store Apartment Units

77,351 Same Store Apartment Units

73,585 Same Store Apartment Units

Q4 2020

Q4 2019

Q4 2020

Q3 2020

2020

2019

Same Store Residential Revenues (GAAP Basis)

$

580,328

$

632,229

$

585,992

$

608,737

$

2,356,344

$

2,425,471

Leasing Concessions amortized

8,091

819

8,335

4,322

13,435

3,189

Leasing Concessions granted

(16,444

)

(1,014

)

(16,793

)

(12,070

)

(31,077

)

(2,034

)

Same Store Residential Revenues with Leasing

Concessions on a cash basis

$

571,975

$

632,034

$

577,534

$

600,989

$

2,338,702

$

2,426,626

% change - GAAP revenue

(8.2

%)

(3.7

%)

(2.9

%)

% change - cash revenue

(9.5

%)

(3.9

%)

(3.6

%)

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

Same Store Resident/Tenant Accounts Receivable Balances

Including 73,585 Same Store Apartment Units

$ in thousands

Residential

Non-Residential

Balance Sheet (Other assets):

December 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

September 30, 2020

December 31, 2019

Resident/tenant accounts receivable balances

$

29,618

$

23,506

$

4,054

$

7,113

$

7,533

$

1,700

Allowance for doubtful accounts

(22,705

)

(14,995

)

(1,082

)

(6,323

)

(6,342

)

(1,349

)

Net receivable balances

$

6,913

(1)

$

8,511

$

2,972

$

790

$

1,191

$

351

Straight-line receivable balances

$

18,672

(2)

$

10,401

$

1,029

$

13,304

$

13,681

$

26,153

(1)

The Company held same store Residential security deposits approximating 29.2% of the net receivable balance at December 31, 2020.

(2)

Total same store Residential Leasing Concessions granted in 2020 were approximately $31.1 million. The straight-line receivable balance of $18.7 million reflects Residential Leasing Concessions that the Company expects will be recognized as a reduction of rental revenues in 2021.

Same Store Residential Bad Debt

Including 73,585 Same Store Apartment Units

$ in thousands

Income Statement (Rental income):

Q4 2020

2020

2019

Bad Debt, Net

$

12,550

$

39,391

$

10,660

% of Same Store Residential Revenues

2.2

%

1.7

%

0.4

%

Equity Residential

Fourth Quarter 2020 vs. Fourth Quarter 2019

Same Store Residential Results/Statistics by Market

Increase (Decrease) from Prior Year's Quarter

Markets/Metro Areas

Apartment
Units

Q4 2020
% of
Actual
NOI

Q4 2020
Average
Rental
Rate

Q4 2020
Weighted
Average
Physical
Occupancy %

Q4 2020
Turnover

Revenues

Expenses

NOI

Average
Rental
Rate

Physical
Occupancy

Turnover

Los Angeles

16,603

20.4

%

$

2,458

95.6

%

13.8

%

(7.1

%)

2.0

%

(10.9

%)

(6.8

%)

(0.3

%)

1.7

%

Orange County

4,028

5.2

%

2,222

96.8

%

10.7

%

(2.2

%)

(0.4

%)

(2.7

%)

(2.3

%)

0.2

%

0.3

%

San Diego

2,706

3.7

%

2,373

97.3

%

11.4

%

0.5

%

3.6

%

(0.5

%)

(0.3

%)

0.8

%

(1.2

%)

Subtotal – Southern California

23,337

29.3

%

2,407

96.0

%

13.0

%

(5.5

%)

1.8

%

(8.3

%)

(5.4

%)

(0.1

%)

1.2

%

San Francisco

12,707

19.9

%

3,053

92.7

%

15.7

%

(11.4

%)

3.4

%

(16.2

%)

(8.9

%)

(2.6

%)

3.5

%

Washington DC

14,299

17.4

%

2,386

95.4

%

12.6

%

(3.5

%)

0.5

%

(5.2

%)

(2.5

%)

(1.0

%)

3.0

%

New York

9,606

11.6

%

3,617

89.8

%

11.8

%

(14.6

%)

5.7

%

(29.2

%)

(8.2

%)

(6.6

%)

4.5

%

Seattle

8,616

10.6

%

2,360

94.5

%

13.8

%

(5.9

%)

1.2

%

(8.5

%)

(4.0

%)

(1.9

%)

2.7

%

Boston

6,346

9.4

%

2,961

93.9

%

13.0

%

(9.1

%)

3.1

%

(13.7

%)

(7.0

%)

(2.2

%)

3.6

%

Denver

1,624

1.8

%

2,003

95.1

%

15.9

%

(1.8

%)

(0.1

%)

(2.4

%)

(2.7

%)

0.6

%

0.3

%

Total

76,535

100.0

%

$

2,685

94.2

%

13.4

%

(8.2

%)

(1)

2.8

%

(12.9

%)

(6.4

%)

(1.9

%)

2.7

%

(1)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues decreased 9.5% in the fourth quarter of 2020 compared to the fourth quarter of 2019. See page 12 for additional detail and reconciliations.

Note: The above table reflects Residential same store results only. Residential operations account for approximately 97.3% of total revenues for the year ended December 31, 2020.

Equity Residential

Fourth Quarter 2020 vs. Third Quarter 2020

Same Store Residential Results/Statistics by Market

Increase (Decrease) from Prior Quarter

Markets/Metro Areas

Apartment
Units

Q4 2020
% of
Actual
NOI

Q4 2020
Average
Rental
Rate

Q4 2020
Weighted
Average
Physical
Occupancy %

Q4 2020
Turnover

Revenues

Expenses

NOI

Average
Rental
Rate

Physical
Occupancy

Turnover

Los Angeles

16,603

20.2

%

$

2,458

95.6

%

13.8

%

(1.5

%)

(1.3

%)

(1.6

%)

(1.2

%)

(0.3

%)

(1.6

%)

Orange County

4,028

5.2

%

2,222

96.8

%

10.7

%

(1.0

%)

(10.6

%)

2.2

%

(0.9

%)

0.0

%

(5.2

%)

San Diego

2,706

3.6

%

2,373

97.3

%

11.4

%

0.5

%

(0.1

%)

0.7

%

0.3

%

0.2

%

(4.6

%)

Subtotal – Southern California

23,337

29.0

%

2,407

96.0

%

13.0

%

(1.2

%)

(2.4

%)

(0.7

%)

(1.0

%)

(0.2

%)

(2.6

%)

San Francisco

12,707

19.7

%

3,053

92.7

%

15.7

%

(6.4

%)

(2.7

%)

(7.8

%)

(4.6

%)

(1.7

%)

(2.9

%)

Washington DC

14,569

17.6

%

2,387

95.4

%

12.8

%

(2.7

%)

(7.0

%)

(0.7

%)

(2.5

%)

(0.2

%)

(4.8

%)

New York

9,606

11.5

%

3,617

89.8

%

11.8

%

(6.5

%)

1.0

%

(13.4

%)

(4.9

%)

(1.5

%)

(8.5

%)

Seattle

9,078

11.1

%

2,363

94.5

%

14.1

%

(3.2

%)

(10.1

%)

(0.1

%)

(3.1

%)

(0.1

%)

(3.4

%)

Boston

6,430

9.4

%

2,958

93.9

%

12.9

%

(3.5

%)

(3.5

%)

(3.5

%)

(3.9

%)

0.4

%

(7.8

%)

Denver

1,624

1.7

%

2,003

95.1

%

15.9

%

(1.8

%)

(12.9

%)

3.1

%

(1.9

%)

0.0

%

(6.8

%)

Total

77,351

100.0

%

$

2,683

94.2

%

13.4

%

(3.7

%)

(1)

(3.4

%)

(3.9

%)

(3.2

%)

(0.5

%)

(4.4

%)

(1)

With Leasing Concessions reflected on a cash basis, Same Store Residential Revenues decreased 3.9% in the fourth quarter of 2020 compared to the third quarter of 2020. See page 12 for additional detail and reconciliations.

Note: The above table reflects Residential same store results only. Residential operations account for approximately 97.3% of total revenues for the year ended December 31, 2020.

Equity Residential

2020 vs. 2019

Same Store Residential Results/Statistics by Market

Increase (Decrease) from Prior Year

Markets/Metro Areas

Apartment
Units

2020
% of
Actual
NOI

2020
Average
Rental
Rate

2020
Weighted
Average
Physical
Occupancy %

2020
Turnover

Revenues

Expenses

NOI

Average
Rental
Rate

Physical
Occupancy

Turnover

Los Angeles

15,968

20.1

%

$

2,547

95.5

%

51.9

%

(3.1

%)

0.8

%