Earnings call transcript Q2 2023

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Operator

Please standby. Good day, and welcome to the EQR 2Q '23 Earnings Conference Call and Webcast. Today's conference is being recorded.

At this time, I would like to turn the conference over to Martin McKenna.

Martin McKenna

Good morning, and thanks for joining us to discuss Equity Residential's second quarter 2023 results.

our are Chief our Garechana, well Operating Financial Alex today Michael and our for speakers is Officer; our Officer Manelis, Officer; Brackenridge, the featured Q&A. Mark us President Parrell, CEO; Chief here Our with Investment as Chief and Bob

Our is the posted Investors of equityapartments.com. earnings release in section

economic securities constitute within the certain meaning be certain discussed and matters subject statements Please risks forward-looking during this are the that subsequent company forward-looking obligation federal laws. untrue The advised that conference These statements events. call supplement because of assumes may update to uncertainties. of become these to no statements or

turn the will to over I Mark Parrell. Now call

Mark Parrell

quarter Good you and thank Marty. us all you, today morning, results. our XXXX joining Thank second for to discuss

our lower season, than As that guidance well a way is performing now leasing to same-store better item little night. bit through us business our the with leading the expenses looking for last thought we we work

and expense, As and of expected our operations revenue based funds net just on operating months NOI NFFO two we again to better guidance guidance a raise from and this, results. are normalize raising income pleased ago same-store same-store result lower after expected interest

guidance, drivers Manelis well you activity. will NFFO a Bob In Michael as moment, markets. refinancing color across on our pending After address details as give our of and in expense, revenue the our successful will remarks, Michael’s the improvement

just be significant less Residential is our markets. the the more continues of industry most Equity unique in benefit levels to the being of to here solid exposed coastal the theme with delivered from that portfolio mostly overall Sunbelt but The multifamily to beginning of demand, supply like benefit

the expect expenses inflationary than well bottom-line more continue will our to in dollars also we an We over us competitors to allow time. drive which to environment, manage

in Southern and quarter, to delinquency California. strong In in results our demand across markets specifics, same-store terms by rapidly good post revenue continued of we improving the driven

right NAREIT As you for midpoint to the before reflect year the same-store may in these at revenue of recall, our conference we increased guidance May, the X.XXX% factors.

our demand improvement These that turn layoff pretty guidance That per business dominated of midpoint. in an at speak midpoint particularly of guidance to in strong a the $X.XX some durable XXXX, economic late volatile early from results points Despite phase renter NFFO operating in affluent caused nature XXXX share news in tech our the demographic. see in conditions. same-store and substantial continued XXX sector improvement the of and we the in NOI the headlines, our a basis

we required Also back return will employers the office incremental and commute these urban in are times improve. now intolerable Amazon demand to to for by into city office far places Seattle, to like of in the drive response city frequently the outside as workers COVID quality the areas areas hopeful become urban as like life that be of are in and the dispersed who issues mandates in

in most absorbed being as are market mentioned supply new our at markets. performing a Washington of levels moderate And Sunbelt of is new DC, certainly competitive where Denver good the and supply while I levels seeing pressuring in before, the well. we the and major rate is Even we seeing are markets highest of supply is

on spoke did deals of anything be the market that We do relatively buy to couple a lease I in call. including quarter quiet. property to continues first Atlanta sell market, about quarter. in a up that in newly developed a second our over Switching We transactions not

we acquisition $XXX other suburban of in property million purchased approximately The quarter in the an is at X%. which acquisition second located rate XXX unit cap a Denver, for

and rates and pretty still have sellers between assets the who well. values huge capital The wedded markets are early large shift remain prices, lower stuck less expect operating who transaction interest buyers that to and given remains in and market accommodative XXXX generally by the

compulsion great now. no right feel they to sell So

Our sellers for sense, reset becomes as with will the the is sales rates as completed that and accept in development and XX pick loans higher longer capital being of floating reality rate to up expiring newly invested next over X caps impatient. developer deals months

Now a capital on quick our note allocation strategy.

markets. a with having of between suburban between few such urban continue the and and We portfolio create As past the supply, discussed Sunbelt we recent we've portfolio risks for the a the current will volatility highest examples caused to more we and due Coastal goal in balanced returns you years, a the to Sunbelt centers and time. think and over The lowest of wish balance. urban to our markets and in issues issues by opportunities have COVID

in present coastal of to themselves assets be prices, opportunities select Sunbelt Denver locations and As we in suburban, markets markets do so. the develop and to fair will or at acquire our there great

years, today. our an as to years has We XX a initial value more a at leading take peak more On in grew $XX public units on And to across our XXth in the public From to before the more York Much XXX,XXX New Equity than it about $XXX went XX,XXX want Exchange. markets million XXXX over billion XX XX Stock I August, past celebrate than moment to of I Residential a to the than valuation XXXX happened XX,XXX of units units, company. and turn Michael, and

to we Chairman, as private this are guidance Sam's some enterprise Residential this On company May. portfolios apartment we REITs, this of Founder those At of years run DNA well Equity all to value of in continue part shareholders. head the legacy for our public very acquired journey, other large was to of honor delivering superior our his number as Archstone. and lost including long-term we Sam and will a and our at amazing influence who Zell

of you over for your regarding We past the years and words your all support passing. XX thank for kind Sam's

Michael. I'll to with that, turn over And the call

Michael Manelis

operating markets. joining to This review second for everyone thanks performance and quarter will our us I morning, Mark, in today. Thanks, XXXX the

produce improved expectations. revenue to with results same-store that line in X.X% very the guidance continued quarter solid second May growth of with are in We our

delinquency, by continuing along a in healthy the continued fundamentals in improvement driven a are Results business. with

As quarter, with to outperform continue markets Coast West East last Coast.

to-date we that our albeit follow a with muted trajectory. view that will have results trends normal, shared previously slightly reflect seasonal you pricing Our

Generally, levels in activities seem economic shape often Resident hover layoff seasonal and line announcement XX%. for our to great early rent-to-income to the during financial and expectations. with indicators reduce with quarter continuing have remains of resident breaks around and below pre-pandemic stress rent in lease transfer to dissipated remained ratios resident new residents average

be are lifestyles available to to markets. in adults expensive the purchases choosing The proposition. overall Single-family employment young and picture attractive our continues home continue an healthy be

their for out less quarter, in well of fact, than second below home period. XX% norm the the X% In which residents as the gave is bought for our move reason this

face markets Combined new overall of supply position, on we we this year in our most good favorable competitive track are and a XXXX. for the with in

As second difficult, more result still periods, of half and a absence more this of reminder, revenue the in of but above the governmental moderate, historical will a rent year in relief same-store combination a growth growth a rental including more to pattern comparison XXXX. normal reversion

the the with XX% back in retention. portfolio sit and resident of demand occupied leasing good half is we here As our today primary season,

season. We the expect continued trajectory healthy the a for remainder leasing of

delinquency as work we by California, primarily is our occupancy the depressed LA, in being Southern turnover issues. through portfolio-wide way Our

replacing, longer with these the the In paying units lower slightly run short-term outweighs vacant residents occupancy.

spend minutes me about let performance. market a Now, few talking

So let's start with East Coast. the

than of with York more residential second the New XX%. the quarter top far revenue same-store by was growth performer for

have We in new market very occupancy little XX%. our competitive and near supply the sits

this positive, the Boston, growth sub-markets demand expected suburban performer revenue our driven outperforming with be produced above Demand the for making by indicators in top market our X%, urban across to ones. continue quarter, the second slightly same-store strong the properties year

to resulting to continue for coming stories the commute residents that are suburbanites We city. tough times hear in back of

the despite above While down average, quarter, to the level new five-year market supply DC, sub-markets. in X.X% is across second it of high market and to revenue this the growth same-store assets is of absorbed. appears with readily be large majority new number of Heading a impress not Supply competitive to our continues in a of with the

healthy the the of portfolio. going, market at just a delivering The and keeps absorbing revenue in some growth pace best units these

Reverb, unit lease delivering example, allowing which us reduce to Central and is is currently application in new an up in DC, development concessions above rate. expectations As push our well XXX weekly volumes

that in will the market recognize be DC is and supply continued in are year, volume Occupancy the for optimistic the just we delivered for strong this below new of increased year. of rest the XX% but performance

the for Coast. West Now

posted good growth. benefits the produced with and of achieved early revenue revenue Our some slightly Los paying County growth, strongest backfilling the quarter quarter-over-quarter the Southern Unlike the revenue markets, of growth demonstrating San Diego which in California negative Orange financial delinquent units long-term sequential residents. Angeles quarter-over-quarter markets

This from bad health however, to X% of the would noise over of have indicative for of debt strip market, in quarter is quarter-over-quarter more you been this relief due XXXX. reported noise second large receipts number not When same-store out, revenue rental growth the but the positive LA.

demand healthy Los Angeles and entertainment worker seeing not negative any still industry. felt the impact the in are We in strikes have from

soften relieve is our exposure not coming our units. overall in months slow significant, vacant market which could to acknowledge it but direct of may conditions Our some ability the

the in XXX out, which the drag basis see least residents continue occupancy we move in addition point to market. to In to strike, non-paying resulting more is at

of growth the next resolve the delinquency We gradually catalysts view LA. we short-term to strikes average as for will in these which issues will coupled market, itself, long-term market demand as both end, impacts as see isolated above and year the with

of expectations San the would quarter-over-quarter respectable the Moving X.X% XXXX. quarter have a of relief velocity in with second line for rental for impact to second the growth after market quarter. Overall, leasing normal in demonstrated Francisco, X.X%, been the at received and market our met reported which Francisco trends, seasonal revenue San adjusting

telling by work and for days market to natural space South our spot. hybrid area of NOI in are lifestyle amenities. meets keeping office access our close and teams bright more and local be outdoor them The to XX% the represents a which their options Prospects in the requirements the better continues that providing Bay,

Our residents that The to our is life of of good Francisco, in our to in or we signs XX% the hear get be San new to downtown office. improve to news residents downtown from resident Bay either recent leasing government’s hybrid work. tells focus In that fully showing that survey are of us that continues the say teams in local Francisco quality the area are San promise. and closer Francisco some they seems San

lot the regain The us are XX% in to to sub-market. in still capture sub-market power occupancy that being remains desired and and less Downtown stable used. has pricing than our been and While allowed concessions demand a overall momentum tech layoffs the of there's indicates optimistic the mostly sentiment in in us that which us, the San recovery behind on Francisco continued this market around AI, market. are and keeps

and vibrancy quality Heading to to in market while of the to underperform issues, back market to activity there Seattle, pre-pandemic life the in level, continues expectations. office some tourism the our return is improvements with

XXXX market in March effective dispersion a pricing Seattle is net X% the levels, in due below While sub-markets the the XXXX there used below with primarily downtown is now levels, well concession the this the sub-market. overall among to March continued wide

the has better anywhere. Overall, to the has see work it tech-heavy struggled to with people market from recover, fully deliver more that consistent, market. back over had consistent market conditions has life this been But the to job of strong flexibility bring years, Seattle of couple as last a to will growth its quality strong needs demand that workforce to

likely starting City news the in in good we Amazon South that of is in Seattle, Union, the to is return The May. is to tech-heavy due a signs and positive see office, which began which some this neighborhood are Lake

We other are will hopeful to that over soon spill this downtown submarkets. activity the

NOI, in been markets, make guidance acquisition expansion has mostly our with in same-store expectations. Finally, up currently line of our X% about performance performance and our which revenue

most Our portfolios we be continued by Dallas last impacted Austin and in new to discussed quarter. Denver, like the supply

innovation to for bright Bob a me will to discuss technology the and both platform, the operating on let In the discuss we double-digit to take the humming I growth a is our Equity. benefits and reap it minute remains performance operating But focus at which of and spot quarter as over continue evolution sheet. minute, to expense turn with balance year-to-date. our a revenue Atlanta our Meanwhile,

our streamlined drive insights which experience the The are receive our customer XX,XXX us focused our customer platform we and from on to survey, than from developing solutions responses the with help combining performance to feedback execution, gained self-service We capabilities science and garnered customers. customers our in of more growing data financial we while validates our our superior strategy resident satisfaction. delivering

of centralized mobile experience opportunities are a what portfolio. create With innovate, to resident feedback position expand data a will scale to operating fully seamless in top allow operating further our us that create a to a rapidly Leveraging margin. we works our to on strong platform and experiment, analytics continues platform, customer this with and across and

I want terrific their a for residents to delivering across teams operating out our results. dedication for platform on their to continued these give shout amazing and focus our

call With I that, over turn will Bob. the to

Robert Garechana

Thanks, Michael.

Let growth me our continued wage by and drivers of the growth the with were maintenance reported particularly repairs expenses start pressure, was maintenance before in activities. of payroll. growth Repairs We expense from this services. financing and covering driven main and quarter. quarter on-site X.X% The in contracted same-store

period during reported Without quarter would expectations with various been have initiatives. benefit same our and employee elevated last in to growth to relative efficiencies was payroll we the line have due year. more our mostly was growth X.X%, been costs, reflective operating of from the cost achieving these Payroll the which

For estate range the basis, which activity, driven of by real due full by low modest growth guidance appeals significantly and XX prices, reduction as tax expense year, are of to for growth. have we to muting This expectations rate same-store increases expectations lowered X.XX%. is points utilities our the expense continued well as commodity lower successful midpoint

eviction growth and payroll These elevated relative respectively. by revised expiration that QX. stemming during to half through slightly from the of second favorable expenses be rate more other guidance administrative expenses lower will the partially benefit of costs The the for the significantly offset moratoriums onsite cost the mentioned trends from implies higher QX employee of results our from and year

into challenging, of definitely that described. back period given the have and but just I half the visibility comparable we the XXXX items think is We from achievable this easier the

our refinancing and turning activities. markets Finally, to the XXXX capital

fourth company previously and originated refinanced in carries reasons. transaction in currently for the we middle As from be of XXXX, the debt the the discussed, it that to percent of $XXX X.XX% matures Archstone million rate needs tax secured secured the of portion in an has debt pool The quarter. a market back a

time basis This to two received opportunity the lenders and points capital began we’ve refinancing. we in X.XX% XX-year treasury from happy below $XXX than was loan commitments During rate marketing variety lower to lenders into we're for million locked QX, slightly we In this I'm we and entered that providers. and we issuing of to over the interest July, was significant unsecured have a approximately selected what the report at bond. been XXX would expected do had an and

the outcome, financings recall, amortized over swaps these and previously $XX the environment. were may an financing gain. loan, hedge believe also interest million rate of life cost you an the an given into is those which in As gain for is this entered we results to over settled for excellent of When it the economic X.X%, we've

expect these over billion arise. floating real outside end of immediately opportunities company year no available company's $X coupled the history us X% leverage the with until rate the any maturities loans XXXX. liquidity commercial lowest paper June should position Once to and well the debt, close, very with we in approximately This, of in debt would

With and the that, question to operator over for answers. I'll turn it

Operator

[Operator Instructions]

with go Citi. We'll Wolfe to Eric first

Eric Wolfe

Hey. taking Thanks question. my for

ramp nice a in earnings back year. your half at there's guidance, the Looking the of in

is or elevated? anything think more as or of a again the that going into non-recurring that sort of good that sort sort I side there. runway Just just And something to curious take expense about if XXXX there on of is of sort to there's were or seasonal if one-time runrate,

Robert Garechana

Bob. it’s Eric, Hey

looking is there's in that kind bit bad is our a and sequential So, debt standpoint QX that would component. NFFO little nothing in in NOI Drilling that, QX item. and a a say pushing for down on standout really a then a little QX, same-store. into seeing one-time from into the that’s thing growth of from cumulative that It's coming bit only particular the the at QX I maybe abnormal you're really

the debt normalization. and the quarter bad in fourth seeing a improve sequentially back in we third we're quarter to get as So

one-time really there beyond growth the about about So, nature sequentially or for strange in that isn't runrate. anything the -

As in talk that early following a ‘XX, it's think it are really relates same-store driving kind where terms you little pattern the typical of kind we've kind is to and ’XX, I is of seen seasonal But are to results. our numbers I operational we what about that of positioning. of would tell

Eric Wolfe

strike, Understood. really piece. impact sound or a doesn't That’s growth debt months. It bad in It And helpful. it's strike. mentioned LA couple rent then like writers the impacting you could actors

that your on based and guidance, what as of into curious factored sort that's Just already well.

Michael Manelis

is Michael. this Eric, Hey,

course keys a you are leases us really to to at onsite now, the exposure the to think of which significant. overall I in is just strikes above, turning anybody seem So, we it. we're It seen folks expect just right that's of kind direct telling be and our from any to pace breaking impact watching And see doesn't would haven't see.

that remarks comments points I clearly you of right occupancy my basis LA in running think in below for were, about prepared time year know now XXX market. this the normal are we

earlier So delinquent which, vacant in delinquent year that were have the the what these the up been - of ability than from residents lease we some units long-term moving to out thought.

keeps just But it. the the could the that - really not make aware anything overall in seeing if a we today, demand overly that market. is just not going prolonged it move to be impact of think to I'm it just it. is But about people's on, of in got into profile And something concerned decisions and a place. bit willingness create just pause a new to and move could strike We little to

Eric Wolfe

helpful. Thank you. That's

Operator

Street. Pawlowski Green to next go with John We’ll

John Pawlowski

Hey. Thanks pretty, time. Alex, in urban sentiment pricing in San the market. market while the curious think pretty assets of the still is could what Fran, today on still achieve of kind just do just transaction the districts question maybe on My given was for large range you as business the first and you Seattle proven down. central

curious of So of for what those is bids assets just types type today?

Alexander Brackenridge

be there harder bid a money is properties to But There's today. don't Yeah, it's sell. to contrary in some make John. a not there. if out This big I yeah, bet. Larger are would Hi, willing Alex. know robust

an have seen don't really I just So number trade. haven't I a exact because

have be willing if trade, the accept I they to didn't just think wouldn't most to people number.

theoretical So, it's almost at point. this

over markets the change think capital it I and owner to capital becomes time, high indicative raise such was be as that'll more the that normal. maybe rate distressed more sell what pretty tough time It's would a access be abnormally an would to to a time. I really think continue and of cap less sizable It hard improve via or at. willing sale distressed to not just

Mark Parrell

And John, it's Mark.

there private exposure. numbers worldwide billion Just you for I up We've a to looking real what to heard capital. private when think estate of lot certainly that, supports mean, of add to $XXX capital about is unallocated apartment values

I see to people, Chief move. think of willing So, to investment officers, before just need they're kind funds, stability some those

numbers Alex. operationally. I'm But hopeful I of you talking flows. be the early And that year to markets capital we'll some I with and better end encourage this next, that agree towards also think in will those about

kind hope conversation given like on shift of rate. results be a the the the next months. hard cap going a square amount foot to and at over sidelines to basis, that will it'd but on It's improve given I capital our moment, operating think peg the think unit per of I almost XX per that's really

John Pawlowski

discovery. there more environment? more guess, is I gateway assets post-COVID rates expect sense to or price meaningfully cap makes little in trophy larger suburban of for you of over coming That the Do what’s when be on months than types a these bit assets Okay. quarters higher kind

Mark Parrell

Well, cost. what a compelling replacement up ends what'd discount is you run really being into to

in of think one really basis that that in these compelling. realize and getting good people just start good looking cities, a - in will I at these it's So, good

a gap that'll think from prevent So arising. be will of a I really too and floor just much

John Pawlowski

years Okay. COVID, meant or the call? as you to right mix what's - Final term see of QR Mark, in longer from magnitude, question, cities just the order portfolio rough heal and this urban not from now but five what be these on precise, suburban

Mark Parrell

we number Great urban now. thought so see question. as probably XX% below or a we've get of And what sort sort that of And ourselves goal. I is be right XX about will

you I idea suburban And our the think markets great of know, expanding with is think is goal. amount current too. And product I coming think of into as the that's I some a opportunity a good through. in the markets, Sunbelt coastal areas a is

And sort is So creature you'll in one-third five urban, the sort you'll suburban. these see, a XX-XX of see more portfolio my of from split of are we Sunbelt and opportunity. John, of guess, But of markets Denver a years now.

feel opportunity think be not urban And, we us growth more mean, cash stay if will that. certainly flow growth stable cash platform described, more to time. more to balanced like there we're Alec absolutely - compelling an a better I flow John, we'd over was just because - as give hard having prices was it about

of a well, different tactically and But for the while a move direction. can name we buy you know very we game is might if buying the right

John Pawlowski

for time. Okay. the Thanks Makes sense.

Mark Parrell

you. Thank

Operator

to next go Steve Sakwa ISI. We’ll with Evercore

Steve Sakwa

look talk is new and you Thanks. data, guess, out those it you I you're some And if wondering where like look leases? renewal but notices. do you Good morning. pressure where guess, July August are maybe the could about most on sending and was I know like? September like seeing where provided I just what discussions the looked I

Michael Manelis

Hey Yeah. This is Steve. Michael.

centralized the to for been or It's really months. consistent three our now now, through expect lot So, quotes out seen we've we've don't of right conversations, in been so. a the last for And on months of what is the got variation. see fairly right We've couple right. based are our team. next seeing there renewal renewal you're We

teams incorporates XX% of as right and kind our season, achieve typically XX% little tightened X.X% continue quote. achieved renewal a bit basis to a points of negotiation thought the see that like the going centralized we're our range, beginning X% rate what is into growth, our get think around, XXX residents renew more to to we on renewal you to which you of and negotiation to peak up about We leasing XXX

we in Now is, peak expect of see tail we get the leasing towards to what end the season.

Just and a performance to kind deliver quickly little about the drop team ability that of bit XXX points think results. of the really to this again, pivot are of quotes probably out I really But us we off remain negotiate there. off that basis and given the really centralizing optimistic has kind consistent about

In the right change those you're the San go of where stats and you positive. at you have lease can think kind Francisco of of see just terms now, would still that pressure on doing of new look ability kind some and if our in weighing some in urban that's definitely new I a to concessions centers, of reported lease Seattle in

new we kind this of But leasing it's I and we like our what's season. normally into out we sit overall, will the the And performance have. are changes kind renewal of where thought the see just reacting markets guidance that of through exactly rents kind baked and they think again, that's playing in kind where sitting, where season, the like we lease today of

Steve Sakwa

I just front I development Great. projects. And know then, a you've on handful the guess, got of

those you to of I yields venture just And any the prospect likely of us Can joint several future you about thinking where out? pencil developments. are one of guess, remind wholly-owned Mark think development development? and how kind are I

guess, hopefully pipeline about XX to development shrink. merchant we're to that builders are? you future that are back next starting the are thinking you If their correctly, teams. hearing starts over scale I months But freak And development pipeline how

Mark Parrell

not with Mark, got team, relationships Hey, a we and a this just internal There's and solid in premium a it's we and risk it's see calls, is has good in a have Steve, mean, a, toll of and development. of out. enough endeavor to Alec have second. good said prior which not as what we've others all join Alec on risky penciling may But stuff. I it's JV

think being. a us, invest time better I for to So, place for seemed like the acquisitions capital

could just going the I are in moved lot. what is think right are pipeline to change costs move I rents down doubt being I like the think sense regard, a but any there some now, development have that, material smaller. I

yields looking our at, we’re fives of terms it’s to high portfolio. mid existing on the In

The California, mile away Laguna asset we’re one little Clara an is was in existing Apple lower that. a headquarters It's deal deal which from than a densifying.

a the situations and a risk there's of to into to need we that kind range. we area I see. Steve, we'll of to deal, don't type We So - less so not start six that, But well. that beyond close development they're high-five do since this we know deal something may year. get And may start anything

Steve Sakwa

me. for it That’s Thanks. Great.

Mark Parrell

Thanks Steve.

Operator

with Josh go Dennerlein Bank of We’ll America. next to

Josh Dennerlein

what the mentioned and and think time. margins you are on thinking? you ultimately your opening frame operating kind go early platform Any Michael, for margin expansion some potential initiatives you can mentioned thoughts Yeah. guys. remarks, I time Thanks in over of where the Hey there. maybe

Michael Manelis

This is Hey Yeah. Michael. Josh.

overall on Bob just of initiatives the actual margins. some I'll the innovations and of in kind base kind maybe I’ll let the on of hit So touch

have resources included million leveraging assets. So, the I of with expense keep NOI the presentation up. put about working front across we innovations in of keyed think $XX of just the investor May kind through being that we in of guidance that what have on XXXX, about as we to year initiatives out And we this our really specific highlighted kind the two-thirds

gear really initiatives And and kind we're start half that on into focused and right round into of results now, of income-based will really probably kick of more and other year really teeing the of kind XXXX. back income-based it's delivering up next the this items in

really ’XX. for and track confident maybe And Right on hit you to we that. right if are Bob, million $XX about feel overall our now, margin we want just the numbers literally with the incremental to impact and on

Robert Garechana

Yeah.

talk a I that to different all we states accretive would I that say very So, will we guess, all be in standpoint a margin. about margins. margin from talk the

to So the NAREIT is I that margin, which talk guess, highlighted important which I'm most cash is Conference. margin the I going at the flow think about we

meaning cash after at of it that So, expense already relates as all margin. We're after to flow at flow that. a cash CapEx margin league-leading running level

layer initiative, in talking that's inclusive we a you that we spend incremental and about order think that's the of few when CapEx, of that and percentage And for. to etcetera, to is what increase and that have Michael you can there ROI striving achieve get points what in we're

Josh Dennerlein

And like remarks that. take to opening it’s will supply? Seattle. It How just the facing work just it on only supply concerns. kind of then, you're with legacy the that long Appreciate through market Okay. seemed

Michael Manelis

Josh, this is Michael so Yeah, again.

in up right now, going kind in Seattle, a of So actually of head-to-head low against competitive of supply. we’re kind

If look of up us. be and in to on Seattle making think And, be and completed delivered delivered. we're see expected will that ‘XX, going hinge watching I it to what's at kind is that we're of units those something number of absolutely you kind sure kind

when for will that market. that something it's ‘XX, we our And into guidance we fold create

gets been us right little it stalls a then of it's it's And it For just then - gets kind now, momentum. Seattle, momentum bit. and

of job that So get out kind we consistent haven't environment. and us on us strong needed to really really really concessionary just get of back track growth felt that's that

that's But supply to-date, it's not really new the impacting us. been

Robert Garechana

us to most Yeah, want away. Seattle. of pretty make a I for on comment It's far just obviously

been amazing to the terms an quite as renaissance in Dig the the access aren't city to similar but Very waterfront. So much, Boston. in Big in people of out there's there

assets. for catalyst of we positive very area in a that's the quality downtown where lot have think a of life I

issues. up. do positive. those improvement There's think livability right. coming That's Michael election city a government in I about I think But been and is, attitude there's in an

I Seattle hand, supply, one the lot see of on a lowest think York a where percent the with you're actually which rent to going of is us. income for market to is New

Amazon's and again, city draw an of pay I area in Seattle a a we people livable feel take metro kind new people there's industry the ability rent scale its office. And high we these to just amenities. more back Waterfront paying hope in good of as advantage there's good lot ability to of of the and and the think, So to and and jobs Seattle called gets people about more lot has in

Union folks is there some there say in workers. on our South Amazon has a of Lake So momentum the or office ground lot

very as ‘XX you takes I optimism of that I'm this you in ‘XX. about narrow more giving have really do navigate but in asked a where some than well. see the and next more. ‘XX we'll But a But question. So have that sense of to supply we Seattle,

Josh Dennerlein

the Appreciate Thank you. color.

Operator

BMO We’ll Kim go Markets. next to Capital John with

John Kim

you. Thank

forward. going lease month strong decelerated and some we rates your But just looks the demand catalysts the wanted described isolate You know, versus than it blended I'm that a picking rather it like – backdrop June. you if like seems And markets now, it to growth as in if surprise you wondering well potentially ago. have July, or potentially had you if would peaked

Michael Manelis

Yeah. Hey Michael. is this John,

I'm touch different going a things on I mean, few So, to here.

And new the and kind back net July. like lease our I'll you years me looked of - then relative for start our tell just change trend to and XX rent our last units. I'll data the is which Let and first pricing at I'm that price we went address going the of effective we with to

time in most we've really volume. August typically really common that had first is you, to peaks - July foot week late out strong of I tell mid-August or kind frame. strong late somewhere of And period. traffic, the August application to It that

in through that increases rates, more kind So, if our I'm we see to of weeks a not don't going slight coming be few surprised of system.

X% that year right and right I the be. where said, now since this is And about it beginning to of we thought mean, it's was the going up trend being pricing

now, out of kind we buying right just and line if level be this in we will in even just through it's peaked its stats. right the at other of So terms flowing

terms really this that by I'd lease any change, time. too single over of month as to it's saying much In would read not new into of better deceleration I at start look stat

being in where and say Francisco. more and a it release, was Seattle like point a moved basis moved of now, urban And in right just was lease I San what the noise in concession the centers think and that ten changes impacted that that by And for versus different. of our new maybe who saw you who done. being I'll out lot That's that used

inch think our wouldn't a the blended those to again, at tight But blended August about that not that be and lease I bit. band if new corner in this surprised expectations as up the turn or into rate. how we I little back relative We're we new looking really and renewals lease of kind translates

too any one read much month So, into I stat. wouldn't

John Kim

the for color. Thanks Okay.

you XXX, continues does that to secured the notes spread basis – this more to trades is unsecured? similar at look above that that. How is if basis market term raised points around attractive you points looks the with your secured XX like historical? it that going forward. XX with is debt On secured the unsecured compared And How

Robert Garechana

Yeah, me Bob. so break - John. let It's hey down

trading - hedges, When you're my of me that where to you're mentioned comparing prepared we right? Let it. unsecured couple guessing you're a the haven’t I'm today. break we down impact remarks, XXX, in we that pieces. secure, what issued when our What incorporating the are in the issue comparing the is I So

XXX when But XXX. really the the that you XXX at on at at points get as reduced we secured call gain loan, the because X.XX. swaps lock you we forward, which it it How some time, we the rate got, treasury that and a that rates to apply basis starting on was, we give attractive are

would remarks that XXX spread the talked what in be really in the about to basis is that we prepared implied should that unsecured. my compare our points where So I spread

miss basis one. between And either That's or that's points five hit to lot a probably ten more narrow.

maybe day's We on top flip other. you points one be that's, relatively of maybe parody. But trading inside worth each So they're of think five you a we're, secured. activity could on and basis

John Kim

Thank you. Great.

Operator

Jamie with Feldman We’ll to next go Wells Fargo.

Jamie Feldman

Great. well, a Thank for of dig decent hoping that sub-market. across tell supply. into It also there's different question. I could you a little I seems, deeper you but the amount pretty DC taking was the can

of for that market? half your the of back in outlook what's kind So the year and into ‘XX

Mark Parrell

Yeah.

environment just what's by is that even other great So see supply part we supply drill new you don't huge in sub really that transit They these a areas. and into submarket, can there from coming when of that when I market. in in performance. about amazing differential And any a DC you of talked think our such got pull really one about markets

So we really haven't seen any deviation of the performance across the submarkets.

the the when half loaded it look for of you Now, to year, balance was back deliveries. like forward

So from And some But more across that that supply. because be could submarkets. transit think to than fairly dispersed facing we the pull these I everywhere. to more again environment forecasting and like one competitive in of don't it are we're more we're pressure other, aware that is going have submarket of

revenue coming momentum coming and positioned round a think well I right? outlook for soften at supply. It’s the the Good strong stability. still good, ‘XX, for It think may producing little of absorption of still balance supply that's up and this year, resilience have in another again. I We're though it's of you The the been we even bit, got you a growth. it's really market but demonstrating

Jamie Feldman

already? something comps? the back that’s talk you your – you around lot Is to you are potential the in And buildings aren't there’s think those tenants certain the of been really or contemplated you to bringing in that stats that see that kind a office. that’s of seeing drag Maybe a agencies not government do

Michael Manelis

the the Well, continues put hopeful to get a been out. such employer, that push that on the there’s those of is in be current of the federal the ground on it's I'm in back push course, guidance administration folks It roundtable, of reality topic. something that the may job. federal office in to continue mean we'll a it and lot But that. around wasn't the key estate the I to all our change back real would is this. implicitly in Michael very the of getting Mark, add I government I strong for mean trying metro, workers not on mean, helpful. to much advocacy through

And between of is I a you type difference the there remind employee.

world, If the be closer and Security been there's National into their that Congress and been continue as office. introduced hopeful in need federal you're the in the back you've office the that in to will - whole be to time to get grows, we group at get relatively office there likely the action Again workers some high. some way, I'm by in closer bills

as hopeful improvement. just inside expect of that but in income, real that's guidance of hope it's we both as So, It's DC. an it have a a I'm frankly and owners not our isn't positive, estate taxpayers that we

Jamie Feldman

your far question And on located guess your are then, similar we've this market Okay. depending I Thank differences in there? you. matters think you what assets how helpful. where markets That's are or seen across And today. in where there? you the the outlook What thoughts the Seattle are? so cycle thinking even or know, implications much a very should diverse Transit we do be about major

Mark Parrell

suburbs I pressure, from you that were materially healthy. of mean, prices XXXX. but great there Belltown for like The like you robust, not where are It's and see CBD us, they right still March see the where really the is are in now, it's off feel where they right? good

suburban kind areas, suburban across the differential a see urban also will the only versus market. that supply that coming, market. when impact Seattle year just that's in urban you really of it's not So And next we for it well but that about as think

Jamie Feldman

Thank Alright. Okay. you.

Operator

Our next comes St. question from Haendel

Juste with Mizuho.

Haendel St. Juste

don't of versus year? Coast markets of go give to back level, a Hey us for bit terms rate your blended high maybe then, could Coast Thanks. if expectations bit? of San there. more are growth on markets West Fran, between Coast the West the you are Seattle, was back East curious, the and LA? what in for you at color the half And Good in parts Why a a what seeing morning. I concessions you

Michael Manelis

Hey, Haendel, Michael. this is

quarter portfolio. kind concession the So all just versus the applications the a in let used first me are just in kind just Fairly about about centers XX% About of the quarter. the – of and running concentrated in are that of start Overall, second are used San overall I’ll receiving the of with the month. concessions being Francisco. we're Seattle urban of both consistent XX%

weeks six about receiving the a of it's month. and downtown XX% third about applications San receiving in Seattle, just applications about are of are over Francisco, a In that the it's downtown

West in of kind that know I for spreads lease In terms change, I the Coast don't new of the markets if handy. have

have debt. spread the have going Coast now you points. East with is My markets the definitely is LA to of with some XXX you some I Coast the that changes fairly West that guess bad consistent been outperforming will tell although by in happening about stay movement right basis

Haendel St. Juste

where highest And loss portfolio and where's you. Thank is it it where in helpful. today? lease That's And is to the the lowest?

Robert Garechana

Sure.

seen So lease, for the is than rather this stronger what of going I bit by group have right loss range. and loss maybe few them And by than you kind actually which, time we like of around the to could to a a a year market historically. now, little at X.X% lease just cluster for

So like to right Diego, highest about which San running lease New loss has and been have the X%. now, York

Denvers, right go X.X% And the all gain San Austin and Francisco, lease. a to range. to X%. to then, and they're then of my that's very LA, X% in the followed those in County, are Boston by are markets Dallas like two DC, have Orange And you now then like flat Seattles all clustered like this I tightly the markets like And expansion are to in the

does kind the a finish a like year, put sitting position I of normal I have X% that's a but is is lease to said, out today, think beginning loss really X you from year. when of which this really all for where ‘XX, not blender the growth point put with to us great It with the year, the above in a norm. to starting above knowing of trend into X the pricing only that

Haendel St. Juste

you. Got color. it. Very Thank helpful

Operator

Piper to Goldfarb next go Sandler. Alexander We’ll with

Alexander Goldfarb

morning good anniversary. XXth happy and Hey,

around actually two both questions acquisitions. on So

eating sardines So, Sam and sardines. about Mark, to trading used talk

in see going the forward? sardines you markets, you the the look As assets in Do assets, more or them - bigger EQR in as trading eating - at your in guys see do those you experience especially the urban ones?

Mark Parrell

mostly the I that the of point. large out New York, in these mean, want Interesting. a like for you and reference presence a definition some are Midtown, right? costly, - I analogy markets assets by love if historical all

large decision, see lower that sell because of market it's well a So, our market than I just more not likely sell say, see have it's you'd a an type to large it's performed asset, to over if or us it. allergic I particularly because us there, more think want a we the a we we're exposure you'll a market not if in concentration in submarket, would asset

sell don't We I asset. with generally I larger don't assets are up sardine what know sell. guess, pretty So, a to to that do generally operate capital in big sense harder spot, analogy for can we’d pretty to have that efficiently efficiently. in a I But that. run say the type if that think I for don't make to we description you. or small like Except We

Alexander Goldfarb

better And getting you'll to a assets seen get more in, rents. we up in it's think have where to like harder record suburbs given you it's that markets, that cities we we've of out in you I'm get harder the where go be say, have the look, nimble. what is where, a more to going that Wait, volatility the forward EQR saying, what urban do I'm guess to I for in at peak, the base

of like then markets to you're trying trade If trying it's sort trading are around. always at. to arbitrage so sort get more I'm and And markets the versus sell easier of to urban That's exposure. what long-term markets,

Mark Parrell

The to about I price with to against in prices. you're just mean, they're that compelled the don't, strategy, that volatility balance I with sorts assets fact saying, these sheet are and the with your has a protect a the be your declined. markets we not position assets in seller. I way just means smaller in of in don't start all I'd agree off the that guess, see by and to kind volatility volatility I of Yeah, Sunbelt that. markets

my buyer. So, for prices go San Francisco, in opportunity, down be us, I volatility in enough, right? as in we'd a mentioned If even can remarks, mean

I that So, want make just clear. to

way protect not opportunity, having is And about a us we broader negative. ourselves the a volatility by is platform. For always

is of there markets over and means those there. trades are broader platform one value Austin, a can learned quickly a volatile I of or the buyer you long-term moments more more the to and trades and we advantage buyer and So New lessons think last Texas you you're a act cheap where, XX-XX take cheap York years

So, a out, from platform I think you're balance going - And more see wouldn't be more the as us see large to away opportunistic. asset. I you even us shy buying

And to assets think your with I sell. you there wide to about something being got those add is Alec? you’d open eyes just go harder

Alexander Brackenridge

our ‘XX, those I or you'd just Boston in Manhattan, to Alec. amount actually I be and virtually I Yeah. add of any would And don't DC any Alex, portfolios this markets well located urban time. assets relate would impossible. mean, Manhattan know really of find take that is how reproduce

advantage taking couldn't and wanted best you it’s in to got we've unusual you just performing in the sudden country. you're today So an reproduce decide Manhattan market seeing that of And of all that. we're opportunity the a

Alexander Goldfarb

saw other your for there initially. you the Okay. are And your to further or there Are in of guys transactions you enhance positions? Or like, junior enhance ways in your yields. yield initial the buying mass then, large the for one duo second question that is, ways given can a the it's two competitive positions be neutral are market peers transactions that we basically it

until it lands, ends and not accretive to year REIT like, two year start it's the So neutral that transaction we when a that up on a seems being you three often do more close deal, one than benefits. in or see it's

Mark Parrell

little I'm team to answer. bit for split the going this to Yeah, a up

I lot a or think expansion year to two certainly at matters going platform Alec But ton. kinds also yields. Alex to I'm talk a things start of ask EQR, and those about Michael affect think I about cap can margin replacement want just about we talk that scaling, to by rate cost Bob

don’t why So, Alec?

Alexander Brackenridge

a What but right targeted Mark supply we're Alec. is now cost opportunities what replacement really buyer is discount pipeline. we're whereas to our also this very says, a limited there's and so focusing Yeah, targeting a

the the has rather be long than base for be little your basis of run bit investment kind out get those fees a in So kinds financial it the a been like mezz some that, might of engineering, just you that that getting good of good that's if irreplaceable. - typically in at it's thing to And suburbs. best - basis a in

Mark Parrell

couple years platform and the that have operator’s Yeah, last build over worked really think from scalable. I the standpoint, think to of I a we is highly hard

we the our looking accretive system us properties, at when of it's kind them go pricing when existing Whether look the kind in them as even these whole. do deals. markets, to at, platform, that So, put submarket what of looking really across Right our acquisitions we're benefits a and these markets, of get we at this market we're these by into our that’s now, bringing across staff underwriting margin put clearly we're portfolio? at when operating leverage into ability into a from level onto we markets, saying any the looking we're an for or

Michael Manelis

to in where position quickly. got And teams we've Sunbelt think, underwrite good to Yeah, some be Alex. a going be supply. We questions, that's we're great the markets. we're you've and markets. I We I in some, just really exposed to can a not lot asked in take the going management But sold the mean, over over quickly. there's can

by be these last the bigger, his to think should the I'll it capacity few legacy some the years buyer. of net over using numerator, debt you not think Bob but have that's and capably a there that I likely about go so just our team And created out some selling making us urban net affecting company call assets and and of

is And the replacement I per Board and cost think what's more pound important the management team discount. that,

has mean, looking in an as on or buying at not initial likely flat most us they're to think signal the basis, discount to to to decline make in opinion and but rate for our But replication construction high sense year been deals meaningful I and we're may important going much. where be important for thing, they I most environment cost a costs well. an a are cap the so, historically

basis. get can discount You to a

around asset. everything that. like moat little about your You I got a

talk to of expansion markets. see existing there what buy think us and if fortunate we're I some the assets markets So you'll to that's about our in suburbs in these hear out

Alexander Goldfarb

Thank you.

Michael Manelis

you. Thank

Operator

next with go We’ll Michael UBS. to Goldsmith

Michael Goldsmith

in morning. your bad some question. or question Can implied Good half lot My in the included debt of Thanks taking debt. is Thanks. a to that terms you of bad in updated first my on back for context provide year the what's guidance? happens

Robert Garechana

Yeah.

good question, Michael. Bob. So, It's

leaves XXXX, of as the, end year a think we and of over at will We basis XXXX. reason you we actually helping with think points rate period, to at historical That the opportunity look the relief payments the third So into for and that that you cross XX will basis bad rental of elevated it to basis, when improvement growth in sequential to will benefit to more comparable over likely will contribution points around, to the debt, of of fourth call, we basis is which percentage quarter, continue to the as we the total and year revenue about back the of switch finally relief, we elevated relative XXX, by norm points the bad growth half the the at because but cross year. difficult occur see full to year, and until in prior end had is in relates going debt is total we by still go quarter the growth rental debt because, the XXX that the accretion XX revenue the bad there. you not year, still or

Michael Goldsmith

balanced right given of areas. between are Got we portfolio the have one market strength best and it. have looking then And strategic Sunbelt. not portfolios question. of, urban suburban in more Arguably, position the second Thanks consistently now, coastal coastal that, told is question a if you're and my the a you for And that. more to urban being for

the how little about strategy just to now what's of So, Thank investors from the away of overall a you of reconcile now? right portfolio, kind kind strength - could should bit you. working diversifying like, of talked the

Mark Parrell

fair. Great. Yeah. Very question. Great

the see pass. of going baton you're think kind I to

I think basis them these stressed. and And capital, for again be assets those as aren't are a few of development with we a owners. years, They’re to add lot good the these long-term I going of discussed. can expensive debt we properties pretty to And a just developers markets the portfolio. Sunbelt impatient buy owners for think

I these the of is Sunbelt markets. kind now. right some increasingly But of supply resident think markets, our you're yet in seeing have that Coastal advantages real

or think demand they're for going our side. just supply from so, balanced investors, better on creating So next coastal the dynamics real to year benefit portfolio I a for the and

after I And year outperforms, more we're year-out portfolio and a certain think while and not periods, balance those in in have demand things just they a risks, urban out. balancing Sunbelt. even and year-in the really will supply, and that I and suburban but and out, requires and year coastal and between think opportunities. It just

risk. regulatory like The are things for significant. And resilience. we're bunch example about more a lot a that thinking in and getting The of thinking repairs We’re about insurance Florida. casualty cost cost of and

well from again, the that's try instruction and and this opportunities balanced our been little investors think I talk risks. we to as as the received more think received to create has a portfolio is and we’ve I So, this to Board and

think of what will to start that we'll an take investors quarters, And advantage and for purchased how basis. at be league-leading and then, new get XX there I months. hopefully, don't to next, hopefully at numbers other are see supply to know some our markets many I point months XX attractive we'll having And the abate these

in it hopes out. my how dreams, and play that's So, would

Michael Goldsmith

in back very Good you luck Thank much. the half.

Mark Parrell

Thank you.

Operator

Kramer from Adam comes with the Morgan line of question last Our Stanley.

Adam Kramer

Yes.

in good for Thinking think a basis trends your seasonal on pricing of kind sequential I deck recent about of of kind presenting example. or most a really X.XX done job historically. you've a

late kind thinking fall, the, assumptions relative of walk for to into summer through months maybe just the the wondering, pattern? kind of seasonal about us and your Just the growth normal

Michael Manelis

Hey Adam, this is Michael.

this going both think seasonal and is, demand we've to we said right it we now I was a expected year said seasonality. to on bit little rent, So, muted. what follow a be rent normal seasonality, And

as would of Right thought we now, where we heading they expect turning several we we're I left up expect where a corner, would normally didn't rents high kind right weeks We would given traffic got to what of the and into doing as peak. quite peak be, the August, just say volume leasing we've would that rate. seeing bit inch of continue season the peak we'll little what foot we're application is to the

And corner you a September, little to the walk rates expect through start we bit. that your you moderate in do turn and will then, as way

tells softening have that occurs - We of so seen at we third of stats normal these us not haven't quarter, years of in the expect not that data. We're kind and to many all late anything to really that and expense looking the little because occupancy pricing both will continue Southern standpoint, the now, the good for situation quarter, the but us the pretty into right from California we bit standpoint, for and on occupancy to that be improve of feel trend year. stable fourth

and third is or stats that I put demand don't good that does seasonality the look we're rent in allow bell now to quarter. quarter. hold the years right going clearly, and through and kind have of the think to fourth year off line We've I just with a curve the the going quarter of fourth of that. just modeling. to just to rate insight So third both all able demand tail and and what yourself just through this into seasonality way late got all seen be you That's been kind have that say to we've where defy any those

Adam Kramer

put know year. if appreciate frankly about about average in in forecast have similar That's you still half that full Or that super thinking a the thinking the kind you this Really the kind question, kind any the to are rent year year of just you a growth market the of I And that market far. of but Wondering X.X% make a point what it year on color. in number? if you knowing out of I for changes earlier so think full you guys growth? you kind how know helpful. of results for Would rent is kind X.X% year, guess, then, back

Michael Manelis

Michael we're top running we're these So, right at is again. right like, we're numbers. Adam, think on like this I it, of No,

market think of in where growth, had period intra rate you lease. to of year, And on then that our the our loss the that ability growth I capture you embedded was beginning layer growth. the top to

stuff and right put pointing we're the the blender it was to headed. rate all together growth us exactly You into like this X% year? of like now, where for And blended that that's

at So, I number wouldn't outlook all. that change

Adam Kramer

so Thanks much the for time.

Operator

session. This Please Parrell. back turn does call question I ahead. the Mark and would over go conclude to to answer today’s like

Mark Parrell

you all we the the interest Conference to seeing today. forward of Thank Circuit. rest summer many on you your Fall Equity of your in you. Residential Thank time and for Enjoy out Roots. Thanks, and look

Everyone concludes participation. And for your call. else disconnect. conference the Thank had left call. today's This does you may you now

Equity Residential (EQR) 28 Jul 232023 Q2 Earnings call transcript