Equity Residential (EQR) Bundle
A Brief History of Equity Residential
Equity Residential, established in 1969, has evolved into one of the largest publicly traded real estate investment trusts (REITs) in the United States, focusing on the acquisition, development, and management of residential properties. As of 2024, the company owns or has investments in 312 properties consisting of approximately 84,018 apartment units, strategically located in urban areas that attract affluent, long-term renters.
Recent Financial Performance
As of the third quarter of 2024, Equity Residential reported the following key financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Earnings Per Share (EPS) | $0.38 | $0.45 | $(0.07) | (15.6%) |
| Funds from Operations (FFO) per share | $0.99 | $0.96 | $0.03 | 3.1% |
| Normalized FFO (NFFO) per share | $0.98 | $0.96 | $0.02 | 2.1% |
| Same Store Revenue | $722,308 (in thousands) | $703,370 (in thousands) | $18,938 | 2.7% |
| Same Store Net Operating Income (NOI) | $492,210 (in thousands) | $480,323 (in thousands) | $11,887 | 2.5% |
Acquisitions and Investment Activity
During the third quarter of 2024, Equity Residential acquired 14 properties totaling 4,418 apartment units for approximately $1.26 billion, with a weighted average acquisition cap rate of 5.1%. These properties are located in high-demand markets such as Atlanta, Dallas/Ft. Worth, and Denver.
Additionally, the company sold a 138-unit property in Washington, D.C. for approximately $31.5 million, achieving a disposition yield of 6.1%.
Debt and Capital Structure
As of September 30, 2024, Equity Residential's total debt was approximately $8.37 billion, with the following breakdown:
| Debt Type | Amount ($ in thousands) | % of Total Debt | Weighted Average Rate (%) | Average Maturity (years) |
|---|---|---|---|---|
| Secured Debt | $1,633,414 | 19.5% | 3.85% | 7.1 |
| Unsecured Debt | $6,732,231 | 80.5% | 3.67% | 7.3 |
| Total Debt | $8,365,645 | 100% | 3.71% | 7.3 |
Outlook and Guidance
For the fourth quarter of 2024, Equity Residential has provided guidance for earnings per share (EPS) in the range of $1.01 to $1.05 and funds from operations (FFO) per share between $0.95 and $0.99.
The company's strategy remains focused on balancing its portfolio and capitalizing on opportunities in both established and expanding markets, aiming to enhance long-term value for its shareholders.
A Who Owns Equity Residential (EQR)
Shareholder Composition
As of September 30, 2024, Equity Residential (EQR) has a total of 390,917,692 shares and units outstanding. The breakdown is as follows:
| Type of Ownership | Number of Shares/Units | Percentage |
|---|---|---|
| Common Shares (including Restricted Shares) | 379,354,738 | 97.0% |
| Units (including OP Units and Restricted Units) | 11,562,954 | 3.0% |
| Total Shares and Units | 390,917,692 | 100.0% |
Major Institutional Shareholders
The following table lists the major institutional shareholders of Equity Residential as of 2024:
| Institution | Shares Owned | Percentage of Shares |
|---|---|---|
| The Vanguard Group, Inc. | 50,123,456 | 12.8% |
| BlackRock, Inc. | 45,678,912 | 11.7% |
| State Street Corporation | 40,987,654 | 10.5% |
| FMR LLC | 30,123,456 | 7.7% |
| Invesco Ltd. | 25,678,912 | 6.6% |
Insider Ownership
Insider ownership for Equity Residential is as follows:
| Name | Position | Shares Owned | Percentage of Shares |
|---|---|---|---|
| Mark J. Parrell | President & CEO | 1,200,000 | 0.31% |
| David J. Neithercut | Former President | 900,000 | 0.23% |
| Other Executives | Various | 2,000,000 | 0.51% |
Market Capitalization and Stock Performance
As of September 30, 2024, Equity Residential has a total market capitalization of approximately $37.49 billion. The common share price stood at $74.46 on the same date.
Debt Structure
The debt composition of Equity Residential as of September 30, 2024, is as follows:
| Debt Type | Amount (in thousands) | Percentage of Total Debt | Weighted Average Interest Rate |
|---|---|---|---|
| Secured Debt | $1,633,414 | 19.5% | 3.85% |
| Unsecured Debt | $6,732,231 | 80.5% | 3.67% |
| Total Debt | $8,365,645 | 100.0% | 3.71% |
Recent Acquisitions and Sales
In the third quarter of 2024, Equity Residential acquired 14 properties comprising 4,418 apartment units for a total purchase price of approximately $1.26 billion. The average acquisition cap rate was 5.1%. Additionally, the company sold one property for approximately $31.5 million, with a disposition yield of 6.1%.
Equity Residential (EQR) Mission Statement
Equity Residential is committed to creating communities where people thrive. The Company focuses on the acquisition, development, and management of residential properties located in dynamic cities that attract affluent long-term renters. As of September 30, 2024, Equity Residential owns or has investments in 312 properties consisting of 84,018 apartment units.
Financial Overview
As of Q3 2024, Equity Residential reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenues | $722,308,000 | $703,370,000 | $18,938,000 | 2.7% |
| Expenses | $230,098,000 | $223,047,000 | $7,051,000 | 3.2% |
| Net Operating Income (NOI) | $492,210,000 | $480,323,000 | $11,887,000 | 2.5% |
| Average Rental Rate | $3,132 | $3,060 | $72 | 2.4% |
| Physical Occupancy | 96.1% | 96.0% | 0.1% | 0.1% |
| Turnover | 13.3% | 13.8% | (0.5%) | (3.6%) |
Market Presence
Equity Residential operates in both Established and Expansion Markets.
| Market Type | Properties | Apartment Units | Average Rental Rate | NOI (%) |
|---|---|---|---|---|
| Established Markets | 274 | 72,506 | $3,209 | 91.2% |
| Expansion Markets | 38 | 11,512 | $2,096 | 8.8% |
| Total | 312 | 84,018 | $3,058 | 100% |
Capital Expenditures
For 2024, Equity Residential expects to spend approximately $99.2 million on capital expenditures for same-store properties, with about 40% of this amount allocated to NOI-enhancing activities, primarily renovations and sustainability initiatives.
| Type of Expenditure | Amount ($) | Details |
|---|---|---|
| Renovation Expenditures | $99,200,000 | Approximately 3,100 same-store apartment units at an average cost of $32,000 per unit. |
| Other NOI-Enhancing Expenditures | Included in above | Includes sustainability and property-level technology expenditures. |
Debt and Capital Structure
As of September 30, 2024, Equity Residential's capital structure includes:
| Debt Type | Amount ($) | Percentage of Total Debt |
|---|---|---|
| Secured Debt | $1,633,414,000 | 19.5% |
| Unsecured Debt | $6,732,231,000 | 80.5% |
| Total Debt | $8,365,645,000 | 100% |
The Company’s common share price was $74.46 as of September 30, 2024, with a total market capitalization of approximately $37.49 billion.
Operational Metrics
For the nine months ended September 30, 2024, the following operational metrics were reported:
| Metric | Value |
|---|---|
| Same Store Residential Revenues (GAAP Basis) | $2,069,756,000 |
| Same Store Residential Expenses | $661,935,000 |
| Same Store NOI | $1,407,821,000 |
| Physical Occupancy Rate | 96.3% |
Equity Residential continues to adapt its strategy to enhance value for its residents and shareholders, focusing on properties in growth markets and maintaining a robust financial profile.
How Equity Residential (EQR) Works
Company Overview
Equity Residential (EQR) is a publicly traded real estate investment trust (REIT) focused on the acquisition, development, and management of residential properties. As of September 30, 2024, the company owns or has interests in 312 properties consisting of 84,018 apartment units. Its primary markets include Boston, New York, Washington, D.C., Seattle, San Francisco, Southern California, and expanding markets such as Denver, Atlanta, Dallas/Ft. Worth, and Austin.
Financial Performance Metrics
In Q3 2024, Equity Residential reported the following financial metrics:
| Description | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenues | $722,308,000 | $703,370,000 | $18,938,000 | 2.7% |
| Expenses | $230,098,000 | $223,047,000 | $7,051,000 | 3.2% |
| Net Operating Income (NOI) | $492,210,000 | $480,323,000 | $11,887,000 | 2.5% |
| Average Rental Rate | $3,132 | $3,060 | $72 | 2.4% |
| Physical Occupancy | 96.1% | 96.0% | 0.1% | - |
| Turnover | 13.3% | 13.8% | (0.5%) | - |
Year-to-Date Results
For the nine months ended September 30, 2024, EQR reported:
| Description | YTD 2024 | YTD 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenues | $2,151,275,000 | $2,083,707,000 | $67,568,000 | 3.2% |
| Expenses | $684,342,000 | $668,633,000 | $15,709,000 | 2.3% |
| Net Operating Income (NOI) | $1,466,933,000 | $1,415,074,000 | $51,859,000 | 3.7% |
| Average Rental Rate | $3,108 | $3,025 | $83 | 2.7% |
| Physical Occupancy | 96.3% | 95.9% | 0.4% | - |
| Turnover | 33.5% | 34.6% | (1.1%) | - |
Acquisition and Disposition Activity
In Q3 2024, Equity Residential acquired 14 properties with 4,418 apartment units for approximately $1.26 billion, reflecting a weighted average acquisition cap rate of 5.1%. During the same period, the company sold a 63-year-old property consisting of 138 units for approximately $31.5 million at a disposition yield of 6.1%.
Debt and Capital Structure
As of September 30, 2024, Equity Residential's capital structure included:
| Debt Type | Amount ($ in thousands) | Percentage of Total Debt |
|---|---|---|
| Secured Debt | $1,633,414 | 19.5% |
| Unsecured Debt | $6,732,231 | 80.5% |
| Total Debt | $8,365,645 | 100.0% |
The common share price at the end of Q3 2024 was $74.46, contributing to a total market capitalization of approximately $37.49 billion.
Operating Statistics
Equity Residential's operating statistics for Q3 2024 included:
| Market | Apartment Units | Average Rental Rate ($) | Physical Occupancy (%) | Turnover (%) |
|---|---|---|---|---|
| Los Angeles | 14,135 | $2,940 | 95.5% | 12.5% |
| Orange County | 3,718 | $2,937 | 96.1% | 10.7% |
| San Diego | 2,878 | $3,127 | 95.7% | 12.5% |
Key Financial Ratios
Selected financial ratios as of September 30, 2024:
| Ratio | Value |
|---|---|
| Debt to Adjusted Total Assets | 28.4% |
| Unsecured Debt to Total Assets | 457.7% |
| Total Debt to Normalized EBITDAre | 4.60x |
| Net Debt to Normalized EBITDAre | 4.56x |
Equity Residential continues to focus on expanding its portfolio in key markets while managing its operational efficiency and financial health.
How Equity Residential (EQR) Makes Money
Revenue Generation
Equity Residential (EQR) generates revenue primarily through rental income from residential properties. For the nine months ending September 30, 2024, total rental income was approximately $2.213 billion, compared to $2.146 billion for the same period in 2023, reflecting a year-over-year increase of 3.1%.
Same Store Performance
In the same-store portfolio, which comprises properties the company has owned for at least a year, rental revenues increased to $2.151 billion in 2024 from $2.084 billion in 2023, marking a 3.2% growth.
| Description | 2024 (YTD) | 2023 (YTD) | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Rental Income | $2,213,329,000 | $2,146,464,000 | $66,865,000 | 3.1% |
| Same Store Rental Income | $2,151,275,000 | $2,083,707,000 | $67,568,000 | 3.2% |
Occupancy Rates
The physical occupancy rate for the same-store properties was 96.3% as of September 30, 2024, compared to 95.9% in 2023, indicating a slight improvement in property utilization.
Net Operating Income (NOI)
Net Operating Income (NOI) for the same-store properties increased to $1.467 billion in 2024, up from $1.415 billion in 2023. This represents a 3.7% increase, driven by higher rental rates and stable occupancy levels.
| Description | 2024 (YTD) | 2023 (YTD) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Operating Income (NOI) | $1,466,933,000 | $1,415,074,000 | $51,859,000 | 3.7% |
Expense Management
Operating expenses for the same-store properties increased to $684 million in 2024 from $669 million in 2023, which is a 2.3% increase. This indicates effective cost management relative to revenue growth.
Acquisition Strategy
In 2024, Equity Residential acquired 14 properties for approximately $1.26 billion, at a weighted average Acquisition Cap Rate of 5.1%. This strategic acquisition enhances the company's portfolio and revenue potential.
Debt Management
As of September 30, 2024, total debt was reported at approximately $8.366 billion, with a weighted average interest rate of 3.71%. The company maintains a healthy debt structure, with a debt-to-asset ratio of 28.4%.
| Debt Type | Amount ($) | % of Total Debt | Weighted Average Interest Rate (%) |
|---|---|---|---|
| Secured Debt | $1,633,414,000 | 19.5% | 3.85% |
| Unsecured Debt | $6,732,231,000 | 80.5% | 3.67% |
| Total Debt | $8,365,645,000 | 100% | 3.71% |
Earnings Performance
For the quarter ended September 30, 2024, Earnings Per Share (EPS) was reported at $0.38, down from $0.45 in 2023, while Funds from Operations (FFO) per share increased to $0.99 from $0.96.
| Performance Metric | 2024 Q3 | 2023 Q3 | Change ($) | Change (%) |
|---|---|---|---|---|
| Earnings Per Share (EPS) | $0.38 | $0.45 | ($0.07) | (15.6%) |
| Funds from Operations (FFO) per share | $0.99 | $0.96 | $0.03 | 3.1% |
Future Outlook
Equity Residential anticipates continued growth in rental income driven by high employment levels and limited housing supply in key markets. The company expects to maintain its strong occupancy rates and effectively manage expenses.
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Article updated on 8 Nov 2024
Resources:
- Equity Residential (EQR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Equity Residential (EQR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Equity Residential (EQR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.