EQR - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Equity Residential Second Quarter 2024 Earnings Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Marty McKenna. Please go ahead.

Marty McKenna

Good morning, and thanks for joining us to discuss Equity Residential's Second Quarter 2024 Results.

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

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

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

Now to Mark I Parrell. call will turn the over

Mark Parrell

Thank you, will we some second operations your well Officer, quarter Chief us our you call property start off, from operations for discuss Marty. our questions. updated and will funds highlights our and as XXXX and then revenue give discuss joining our results machine. Garechana, our we'll thank Financial outlook Officer, all take then us Michael and as results today. Operating then will morning, Good I normalized Manelis, recent Bob what and And innovation guidance, expense Chief from

quarterly increased same-store rose same-store of X.X%. X.X%, X.X%, Same-store at expenses increase to results. X% NOI which NFFO and led and of per share Looking only growth an our our revenues in

of markets met limited has So far our this demand established year, our revenue markets. performance our steady across supply has exceeded expectations all as coastal in

our in are as NOI of New Seattle Northeastern approximately Boston, get reminder, a markets our standouts as the D.C. relative back our the well and XX% from but January. into markets. Washington, York coastal shortly, As will comes expectations established details to Michael of

at continuing our have Worth of the this X% high by a Atlanta, levels which with continue supply, from increase remain midpoint our Austin, and points good Austin revenue XX our led guidance same-store to expansion NOI, of Denver, X.X%. blender, most under all constitutes and to Putting this pressure but markets basis portfolios of in Our Atlanta Dallas-Fort impacted. together demand us of to

and results homeownership continue positive limited a rental though that these are high and for-sale including steady housing picture. inventory outlook moderating trends costs, several employment support Underlying to performance,

retention costs, continue homeownership due levels residents crossing a of record see with high elevated month, making housing homeownership our levels to among good alternative. We last to rental value

a leading all of We levels continuation to demographic picture of quarter, also target In second renter see markets. across growth the steady our of sustained employment higher-earning good employment saw demand. nearly we our in a total

on several in we delayed saw of machine of as a to And for factors Drilling down the is a full We QX expense midpoint the by point the about and Angeles X%, Los growth their to X.XX% equation childbearing, supporting a calls, prior first posted to lifestyle our factor. continue course, positive drive our our to like percentage on-site return our utilize in Washington, time new other. than appreciation cost basis all same-store for which service is strong using the dedication My corporate and and sector-leading employment, customers numbers the Atlanta. and improvements my marriage lowered we prior to annual points which positive side our a midpoint to and year, continue office structure by in to The quarters, talked midpoint. D.C., be news positive similarly our XXX to we've colleagues, outstanding same-store innovation work better each hard of and NOI resident to leading expense of guidance experience. guidance both with

it buyers XXXX stabilizes in cap as Transaction second coalesce in was sellers and in of double XXXX. our triple second first was interest and the in seeing it and climate the Switching the allocation. the volumes markets quarter what of around We're what quarter to activity capital expectations more rate quarter transaction rate was X%. almost

release, second in acquired Investment we you in Brackenridge, in end Atlanta Alex during property questions is acquired one the the your Officer, our the moment. quarter, a saw and to And in we property of one quarter, As answer specific subsequent our in Dallas. a suburban to Chief here Boston.

degradation the that we But rate speaking, get and year compares markets our as X forward at our assuming as expansion built across of but these pro acquired in the with we markets. generally replacement basis delinquency benefits of more X% we vacancy we we our pod properties the buying recently into cost management superior integrated our processes. coastal as are established other operating properties also and year properties assuming and platform, In in nearby cap employees a can properties share acquired properties efficiently obtain that to fully forma a do our underwriting markets in further assuming our focused in we rents, well X scale are with

that rate expansion expected levels acknowledge XXXX weak in much in our property have markets rental expect current we in levels lower underwriting we the recovery. outer term, supply collapsed, and see historical these in current near and in rent we on in relief that to are where and markets the deliveries than levels. oversupplied and way these so be remain XXXX to in longer acquisition While levels likely term, lower likely are significant the both a years These underpin starts

these competencies integrating properties to see acquisitions. turn acquire the add to that, demonstrating as Manelis. normalize basis with I'll also team Equity And a new favorable call Michael acquiring flow a once highly of at excited to growth that and properties over levels strong smartly we cash entire prospects efficiently and The forward supply with few are We core our years. in looks

Michael Manelis

morning, for our thanks as our Thanks, some I to guidance. provide us This operating quarter will as increased Mark, and performance operating highlights review second today. everyone XXXX joining well of same-store

remain process resulted strong low in driven fundamentals overall and release, turnover of the quarter. you resident by for XX.X% operating good strong portfolio a our our across healthy, As that saw renewal occupancy demand our and in

across job growing very picture our country in as supply competitive As from Mark wages markets. residents benefiting little we new as with our solid the mentioned, are well what as established employed we keeping a well see

have The both XX%. on residents are the to out at given driver renewal the homes. as in along X.X% Not surprisingly, a our move-ins remained and during achieved on process, is move-outs About a rent-to-income our This our increases, ratio moving of we our any the benefiting rate around the in low we quarter of renewals, terms to the benefits year-to-date renewing residents stable bought from also number renewal gave quarter. with reason. new key home very percent results buy lowest made of the our centralized That, of seen outperformance. has volume of

been while now, for has Coast the with As our markets around East XX%. best case are a the occupancies performers

improvement Seattle performing at is San and not showing but Coast, is pace West well, the of Seattle. Francisco particularly the On quite

California support markets. improvements we able of or basis markets backlogs in and improvement Southern to Overall, Our demand at number new see on feeling year. to to we impact continue the their feel XX have our to strong pressure In good above given but court for that as of in to expansion contribute are but revenue eviction bad continue markets, work some process overall same-store maintain times supply will those decline. the see delinquent pricing. view through residents long-standing net continues debt our the the the This we systems full been have points to in the occupancy XX% continue expected, trend demand our as

to Given which all occupancy a the our of X.X%, these midpoint full year. seasonal includes revised guidance and an assumption of moderation both we lease in renewals same-store and later trends, revenue new decline in in have normal year

in new strong past has lease as our well on more performing one residents market declining assumed with Occupancy second frequently. seasonal finish would to out is we us saw the holding color little growth, be strong the season. the the quarter, in a it our is in along expectations, markets. positioned more a Starting markets best primary occupancy that compared individual XXXX. in as we when leasing and continued amidst summer in with the years leasing churned highly months line which of often Now retention as Boston Overall,

good picture and employment and produced here, in portfolios suburban the competitive results urban are a but new has in seeing stronger portfolio being urban stable performance market little both delivered our the We XXXX. supply quarter. The in

couple very XX% New of in increasingly We New years. leases to in next employment with economy over think York country and well. Overall, the best dynamics diversified supply-demand this and coming the the We're both continues York base. a than the renewals healthy for better expected. in new feels has with occupied, solid perform probably market

strength at is this York of employment will are In the through market fact, high. to continue New private the All sector all-time leasing the show indications season. that in remainder an

year be, the Traffic be isolated performer keeping is where pressure new quarter Demand up, XX up to good back our but employment standout eye good the while below this second stable a for the rate Washington, The basis felt and from in will of to generally as showing in D.C. across are slightly real In the D.C. growth. half is continues us occupied is in an wanted applications have of we of Angeles, XX% expect picture it second market. central a continue, rental the all periods market submarkets, supply demand over feels XXXX. of submarket. great and and leading our to we we we points and Los quarter to occupancy, be XXXX. deliveries on in

lease from West some downtown was as Mid-Wilshire some supply in During coming well L.A. change the and new new the negatively by in Hollywood market into quarter, as supply our submarkets shadow evictions. impacted concentrated

deals experience leading Ventura this suburban are did which pack. in Our Santa not the Clarita, and

but improvement remains works are quarter, already volatile expect third be marked the as market growth. in this the lease filling these to a We revenue which to catalyst units, seeing we continue the through to change our new to stat

and California, Rounding move out willing see markets Orange with of out demand, Diego are for in affordability reasons. to further but these some Southern good to County we price seeing sensitivity continuing rest the residents San are

Atlanta markets of that and our Dallas-Fort the and Worth, Seattle to potential for with San of Francisco interest, better upside Francisco, markets. we outperforming San Now that with both Remember the these perform be year the most and most. for Austin. expectations expected, relatively modest continued may and markets expansion than entered in the Denver, Seattle Seattle of

are feels now, Francisco, San seeing good of traffic volume. and In we weeks some demand and best the of right terms application in

on impact really is pushing and to reports that Recent the city. is a office We to the city's signs the positive on thriving. Salesforce quality in submarket is scene the life crime of should issues. return have to downtown positive see Property in continue down, regards nightlife harder

new way Looking forward, starts down, little there X market. of quarters, competitive have and for last supports of been next are Overall conditions to there starts is the supply improving which for couple the the products new coming years. no

I Occupancy As really showing of is signs earlier, recovery. mentioned Seattle XX.X%. is

in Amazon. better here Our at companies issues both tractions well positions the for renewal Union postings from performance at the our employment area. enjoy. And Downtown Seattle the spectacular Central quality tech Also, concentration of patterns, South we benefit The good come the large the feeling more additional Seattle us from in places a solid project waterfront life looks We're suburbs, we the city people our an office see migration park are which the like demand market Bellevue, of both assets. is Redmond created also and in as completed looking like for that farther $XXX connects to Lake as strong. from newly to residents return million about out remained to infrastructure and in properties as to we driver to a expect to of our seeing our new more

effort We with to enhance completed the of Seattle are our excited Steps Apartments. XXX-unit our Harbor newly improvement to $X Downtown join Plaza million at the Staircase in

do is activated down the need point, Our At supply well, quarter. pricing see market year, steps to but the and this if is holds Seattle later waterfront newly this we the city associated and and to connect way are there to new the park. the another through the demand retail to there coming positioned third

markets. expansion here. surprises the no Switching to really There's

amount Overall, and We see pressure renewing for line markets in residents with but way. in new on #X makes new it's leases expansion challenging environment leases the the of given a are our Dallas new demand, Right continue with supply. expectations, and the markets. operating priority these the Denver now, both leading retention to performing the

from these markets demonstrate portfolio long-term scale in we're our Looking forward, and demand that to excited target affluent create continue grow demographic. to operating our renter

the finally, general AI members. we those basic past help new could resident service on This our that visit handle the service submit of front. anticipate a then require to resident began inquiries, assistant including And and requests XX% we a automatically innovation triage quarter, testing residents from ability that

In addition, promising we that availability of see to with app results prospects. tour our a increases meet continue self-guided to tour the experience needs

are the a to innovation, to about these more disciplined they I that, their turn create We teams providing and give future approach a our exceptional amazing continue initiatives management. over while very I'll shout experience. will dedication our Bob. expense for platform efficiencies want to operating excited continued service as With out to seamless customer across to their enhancing call customer to

Robert Garechana

the midpoint. the over of our went point in XX at same-store improvement basis drivers Michael revenue and Mark Michael. Thanks,

along FFO. to on our guidance, with So I'll same-store normalized NOI expense and focus revisions

to Turning core competency be to Expense continues team. management a for same-store the expenses.

X Our at is reflects year-to-date. about and our year-to-date the range. below prior end growth either really point half negative and that or now XXX by of which solid X payroll revision major up midpoint, make reflects expenses, driven all the categories: this is of reduction This utilities. basis low with our and performance have same-store a reduction These repairs categories flat maintenance,

efficiency our innovation, While value we this This growth a harnessing outstanding half given comparisons, deliver more team. anticipate we to and year very XXXX technology from still accelerate year. for the in of the yet attribute the of expect results to capable to and our X% second full low is around challenging growth again reflection in delivering platform of

expense rarity is something in Page and or revised NFFO expansion we midpoint year, NFFO today. growth of outlook point margin revenue provides driver apartment growth the guidance these the improvement increasing same-store This NOI of of improvements, the With for now X same-store expect reflected reference. the our are your reconciliation at our NOI operating sector and full the a of to guidance. our XXX main $X.XX a basis detailed release growth our of for

it the I note turn operator. final over before One to

revenue new to This quarter, value-enhancing risk-adjusted make. are into and of with better insight presenting these activities spend can of or consist of renovations, with In discretionary CapEx often are and the disclosure activities believe I'll are we additional in enhanced we spend return income disclosure, providing that, XXXX, that turn enhanced operator. These initiatives reduced also our sustainability we expenses. expenditure projects the intent undertake. provide our the CapEx we growth, positive on we through primarily our With some stakeholders capital unit more that it technology best returns the With this over line industry peers. investments

Operator

from Citi. Your first Instructions] of Wolfe comes line question with the [Operator Eric

Eric Wolfe

half. looks the growth terms could go for it you year. what hoping first was because of did rest like of you seasonality the the expecting into employment detail in I greater the And asked I rate on for X.X% in you're around part question

X.X% the that third guiding in You're quarter.

guiding to no actually if fourth case? trying understand deceleration in like So you're that's quarter, but it the just feels the to

Michael Manelis

this is start guess bit just out. And give you little of Michael. I'll color. a Eric, I'll I

from quarter. think little kind So lease the an rate moderation comp the to first around X.X% and easier we a expect I increases have very year. in Right that now, September of do achieved stable last foremost, new bit specific renewal and we We change. saw slight of of seasonal third declines

little of a better of in bit include forecast initial we up kind now. hold may the it So right but a expected, that than didn't lot

going depend is to at And today, on But the we're kind the both XX% look be mix to the that key is renewals us, takeaway the right if the portfolio quarter. new and fourth that originally full a rates And expecting Overall, blended and lease transactions, about modeled them of like of now, to lot be mid-Xs. to this of I X%. we the year in think mean, occupied. closer the I should third just over snapshot be we for

volumes we net that compared curve a solid, our the as more is and modeled. to effective muted initially normal trend Our remain in line pricing year slightly application with curve

right to and all spot curves think our I we're a all of of both really metrics good third just like and in quarter of normal kind the dashboards, we So July now, fourth deceleration seasonal point for feel these in quarter.

Eric Wolfe

And helpful. as as weakness That's mentioned evictions. L.A., far right. then of you All pricing the seeing from some you're

would I market? And to sort So expect type when was way you through its of make wondering once improvement would you happens? to that the that impact see of expect what

Michael Manelis

focused Yes. were last less that quarter. points. by some I in to that of we XX it to first We what a new Hollywood the that based were doing that mentioned quarter We was able lease about we change mean And we foremost, And some see Mid-Wilshire of LA, and new concessions. on in LA, I in occupancy lot we supply basis on negative key were of right, occupancy lift in the think on build. staying in specific call so saw anticipated in impact the the third than the submarkets was Downtown. really year-over-year a

So have for recovery, us the when performance think built about and I the us. think for clearly, L.A. in we upside we like

I future The to bodes continue of of pressure feel some from start we're in the isolated for supply balance that numbers performance. year, still this materially well think submarkets. to are the year down, going the for those so

because units next we're potential residents. my paying we have continue we are But recovery. and So you work like we upside these should think ourselves to mind, year get now as revenue really some this the expect with year the XXXX, story into going on in to I through just right filling total for

quarter, pretty a producing little kind being lease change still total revenue new is you a in the that strong of see softer the for third despite number us. the So stat

Operator

Your of next from the Evercore question Steve comes Sakwa with line ISI.

Steve Sakwa

a could How the X% the quarter. April, you just May, know did bit notices little today August maybe renewal frame? out kind was for you July, that I more in June? the September renewals? then of maybe are it Michael, where kind sending of And speak about and trend time

Michael Manelis

Yes.

So the first, X% like And stable the we quarter has performance think a been look for right through we renewal I around I said, of at think have confidence us right quarter, that the now. I third pretty as lot mark.

that of for than marketplace and more bit markets some days the expansion in a like slight bias that discussed, think range the negotiating towards occupancy, like We're in L.A. market the just this out clearly, quotes sense norm, a total revenue have X.X% of even and X%. the for us I little kind like standpoint. still next XX We makes and we between from

we as we'll results our achieve pretty performance work think quarter, stable around renewal I somewhere third we expect, right X.X% So the through mark. and that even way

Steve Sakwa

or Okay. has it you capital really yields Mark, guess, are front, And the sounds the then down. hurdles come IRR stock X either of on maybe as is up about And changed like of certainly Alex somewhere bond today? in gone has bond and how have thinking sort price for everything kind pricing, deployment around I that -- you caps. and

guess, changing underwriting perspective? I from at IRR So all your criteria an are you

Alexander Brackenridge

then X. you're years recovery X or product our are buying of number you're of be suburbs year in, within which operating filter some generally, half getting half things right, rent the 'XX, deal you're cap. range, when that's a cost say, what negative improvements, Alex. that some X, couple for -- in fits we that's and for growth by around into mark offset relatively we're an as year flat may in a typically around a has year, And X% a 'XX to capital. and it's we've works been first $XXX the in the Steve, our in and that been price expansion us of X million of And and platform next slightly million And to new newer an $XX -- that say, pricing --

Operator

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

Adam Kramer

your hear fall. lease markets. potential to growth, Great. want marketing kind on on this of of new focusing just maybe Maybe growth view the the expansion I progression

of obviously, typical even to there. can you supply If kind of kind compare it seasonality, more

just will relative I think you how So Sun wanted to out Belt know fall play to the do patterns? typical seasonal this kind of

Michael Manelis

This Michael. Yes. is

market. saying, So lease I the change I would we new the by performance think think start as just about in expansion

anywhere don't seeing these some lease that's we year new you're us. as there's residents far, off little So seasonality, to what that the XX% think in about is some a interesting one, receiving drop of much change. less they received we that, of coastal the of that really seasons as And lot of XX% -- meaning what's X think surprised demonstrate definitely about some is the driving in moving the former never averaging That's seasonality, balance the like as weeks. concession. about shoulder between markets the a thing mean that the of of shoulder and a I applications have I nothing that out demand demand today quite do. they as markets We're

So we this just the stay could been kind we've I opportunity zone in. have of in we that that think

operating we expect those the balance But of conditions year. markets the for in challenging

new You supply can the at that's coming in. look

And the deceleration this for we're see that we're couple occupancy year. would I You think the clearly be in don't expect between think quarters. expect operating of But to we I we're of necessarily have look to at forward. place just balancing from the to going this how forecast balance I the and next kind trade-offs rate. point going of that conditions we marked difficult for

Mark Parrell

we're still be our exposures. Mark. some fair, don't These portfolio. Denver Meaning are with large now markets markets, building Adam, it's we that's of portfolio. XX assets, up But very a to these have meaningful just And

you and ran the would The for we about Michael's less those markets Denver for get portfolio ground. think applicable. ground to larger. until little on markets portfolio we the build say not as other see except telling It's comments again, our these comprehensive. we is maybe are I We out. the and as But certainly will the we're XXXX. a knowledge impact what supply, on in I So generally bit understand of more But Denver

Michael Manelis

Yes.

thing, other the through are own just new The the new supply where besides brand being built. the read a of that is numbers the a I our we would guess, a is areas market in is broader of lot to add assets not lot I

we So like kind those we but that's kind of say why operating playing expected difficult conditions, it's of we expected. out again,

Mark Parrell

would And really better Yes. bought reasons long in on even run, outdated resident better lot those less than over we supply, And and we maybe we're these that add that. that assets and knowing outdated depending owning I plants require mean just assets more the base. a layouts deep time. though of we CapEx bought had they assets a lot face physical suburban CapEx would unit a

Adam Kramer

the I hitting you Great. the this of rate Maybe quarter of bit helpful showing impacts be kind kind this kind was sort market -- the that of had for just relative established color whole That's supply of some thought think here, And and maybe guys on but disclosure later really of added blended cycle these fixated year. a just markets. little guys I to supply I on to really the Seattle in interesting thought helpful. you portfolio. that

of closely the Is maybe deliveries others -- you're that peak Just have terms kind of in maybe peak among in that markets. you terms than of deliveries? the there most national supply? watching of later Are this have established of later terms a similar than wondering -- the kind cadence in market

Michael Manelis

talked the deals look of this is more is that for us, by we expansion we're when concentration back loaded. focus supply going a will that because on we And Adam, again. of the I level do of that of the Michael have that, Seattle probably it's go a Outside market just to really, competitive this depending are the overall Seattle market. was really in the at outside few about, we coming it There pressure, which of Redmond where markets now have that most you half radiuses X-, defined head-to-head. proximity right X-mile online it believe Yes. market. kind newer assets the

We in pockets the Central balance areas, continue isolated from online good of to supply. Korea some those we mentioned a of feel bit have the little prepared and we're year. pressure town a like my the less know supply in coming to of from outside we're spot that from really of the some we limited remarks, the I in feel where going area some But pressure in a like D.C.

Operator

question comes Dennerlein Bank of America. Josh Next from the line of with

Joshua Dennerlein

effect you from just on then follow up of wanted podding of in podding on opening does think uplift What had acquisitions. your Mark, to Atlanta kind in X of, versus I clusters? and underwriting the remarks comment call you X%? podding Dallas a do year that additional expect that assume effect it, properties that And those

Michael Manelis

Josh, this is Michael.

Across XX% are assets level some with podding, properties of which is already really functioning resources. So about have of today, that resources. just I'll just we're we to talk in general how sharing approaching us like shared about our

kind facilitate we Clearly, other what to the to into our those going number upside. up need that create the resources And off acquisitions we you density as there's about you think differently going is these expansion podding. benefits the the well. of does think also of proximity I assets of payroll really markets. that clearly, growth keeps R&M business numbers, about leveraging contractors that off of and down expect is what expansion our side those off because forward that the see the service create dependency see in we as of As in the each markets, that third-party to would take opportunities show think we But opportunities in coming

Mark Parrell

asset we're is. a on just out or the depends again. already. in And have -- own elaborate what where buying we to ways some are from assets it's It Mark contemplation that cases, In

Atlanta, own an it's already. nearby, in we if that's assets example, So asset in Central for Midtown

shared of there. in service an isn't out. services owning quadrant much asset a bought little That assets are their further so obvious as We more play. There And Northeast the is shared the opportunity suburbs. of

bit So it's by little as a well. asset asset

Joshua Dennerlein

just ahead? back, about Maybe we the years portfolio that. opportunity across just expansion appreciate margin in Okay. stepping the your how I think should maybe

Mark Parrell

start, So I'm elaborate then this. Bob on to and going may

is So expansion really the just spoken the really more inflation not I think a I expense Manelis Right little to service to we're sacrifice terms blunting bit on revenue tailing Michael is right what now of more rate in thought this, to allowing us with now, really focus. harvest about inflation has off, in margin and our our expenses. technology savings side. of shifting do

see us residents always I additional you're to to talk or as simply that efficient to will on about There expenses. our can So down provide to going think revenue But expenses be more services getting for just continuing we margin line more screw know, that opposed ways to revenue there? be Bob, anything on there's a you'd bit. point side on the the I probably line on don't think add more if opportunities there. a there's opportunity we're I where

Robert Garechana

just And with expense we've obviously, line being the drive opportunity, expense and kind the in continue as hopefully operates clearly, even side, a that the kind at demonstrate, we maximum is these that margin the we think this to revenue right? top able opportunity discipline of deliver coupled revenue of than approaching No. better layer even efficiency. can that so that technology margin innovation demonstrated and more helps and we or So team to XX%

Mark Parrell

ideas ever we're testing number just highest seen. the a is that has group number of we've There's that the

to fine, and experiments. a of on If if for one residents, X is works things or on And we'll about opportunities, assets. doesn't, next think it it we for our out. revenue platform can it X roll us well, the idea. test And that's open well you lot about go we can and of when just expense the our both So great there's

I journey. So that's what's about we sit exciting in where think our

Operator

from of JPMorgan. question Next Paolone line with Anthony the comes

Anthony Paolone

the on up follow to there. Just OpEx side

all do to are given years? So think a these for next couple X% you of initiatives, range we the growth back X% expense to

Mark Parrell

Mark. correct me it's Tony, start. usual. I'll will Bob as

to load. and of think pressure expense property say to We've I got burn-off going that be there. with taxes it's our we footnoted little being XX% a hard XXX-a

couple be years. at and So close I is in to number going easily think to the next that times X-plus of X

We'll isn't for Mr. other But to think think, seeing difficult number us be the big it's tax push benefit don't to especially to some if continue going insurance. in we some below those much without hurricane I season some it's pretty that to do consistently, so connected. that. occur. uncontrollable. innovation bit little X see And do the bad. Manelis part I too in I I is a there, own challenge markets, opportunity would very but We get property hope all

side, Bob, know, don't the property you'd to would if I but tough on be to challenge the add something are So taxes manage. expense me, there's

Robert Garechana

some have we this -- in XXX-a. mentioned, do step-up Mark And some year, like had we

the the if up. will perform to to to those do, we But some is will so on have minus, pressure and endeavor initiatives we of We is deliver. And or kind step continue think depending we is promise what context I do at endeavor right? can Michael best more can we that's to x, what we continue endeavor inflation what x to

Anthony Paolone

big spending not and even I I one, into up were second that know in EQR. dollars for say, you in quarter lot are noticed versus, my just advocacy XXXX are XXXX. your then costs a the these what And Okay. But

if level can still and it's a if risk So us federal you just you're just and regulatory step or back local landscape how has whether the the as the give shifted of there? And changed some a much perhaps very there thinking about matter? to anything maybe has sense to

Mark Parrell

a more the try a few year have first, like Thanks, Yes. a California There's going in Tony. this you it. that, directly, to initiative, and things spending. through go with you're lot But see I'll so ballot when

So levels much successfully California. proposals fought and rent with rest of off industry control the when going spend the XXXX, akin be on on in XXXX fought of we the more side ballot our this to is

in So course, and contemplation spend expect contemplated towards expect. in I but of would Reg million of the be the that's sort G this will election in November that third the there year, number There's more numbers. $XX to in we a of a sort occur of that's back, that's would quarter And what's reconciliation something California. in of and lot that or the in

of XX on is prior by the for than points. X we've lot our and more something occasions a is industry beaten the effort California. company focused So off regulatory now right It for

control. So voters, against very hearing I think, rent sophisticated the arguments are in

really County want built housing. less know of measure, of it's interesting production the of people forces in means a places in like I that unit people think housing single in Orange control who love California that anti-housing, don't think the this I rent see And California that.

help and voters on win again. optimistic again, we're measure we in can, California the this So educate

relevant the versus statement out is of of rent We We activity talked a think more think that focus where is I not at but than proposal of State state lot did people that's that productive. much federal more and that most that about of in constructive came just isn't think our not of it's President's control there's the sort those the more directly level. is. we anywhere, a and going to state, local conversations administration, terms In are political helpful. lot

local the So I encourage We about the federal think government side. talk of state level. the the the most do. working constructive educate for that's and can to federal X here do with trying them to And to at supply opportunity President, on effort and something are candidates the staffs that is certainly

Trump campaigns. that's conversation that campaigns is and ongoing federal But Harris the so focus educational. both is on with more the a And side the

and On the states, educational. both electoral it's

Operator

next The of the Michael with Goldsmith comes question from line UBS.

Michael Goldsmith

in into rate? intent those guidance, demand pushing heavily about may markets to occupancy of With talk does the which an back where occupancy reflect half seeing you related lean be year? stronger the more the build increase can in you occupancy that, to versus where that maybe And you're or the

Michael Manelis

lot to to drifting think and QX. a seen and the seasonality the occur, start of that for back Yes. because normal foremost, year-to-date of driver modeling first we occupancy occupancy down I probably Michael, part the would later recognizing towards so kind increase the into that are QX of in is we've allow gains which to

right on have our markets towards of got know established So I've all X stands Coast overall, that theme don't that I I that XX% say would I biased I we're out, plus. a occupancy. think right? East for now, us, the East running Coast

focused maximize We're do I think market we revenue. how submarket. really on we're and looking

good with could And meant foot of we rate in achieve we saw several and submarkets, our back see down occupancy. demand, which what put that we hold were on other of and some going this markets next and gas really markets would to the our and in of we going saw quarter like to the L.A., we for even the know and towards thought but we be or what the had occupancy. so, kind markets opportunity, conditions are lean we demand, and like expansion we And

think with to year. I the market now, for different seen ability would overall, the I more say is every of So so to to a approach that outsized and drop-offs and we've strategic far just of occur occupancy gains what indicative expect But the has right kind submarket balance it. achieve the of normal raise seasonal

Michael Goldsmith

And as you of of kind a back half the normal year. like a follow-up, expectations seasonal talked for direct about the

And seasonal coming assuming X.XX%. months? the So take year, thinking today range is about and that, expectations, like if mid-X% took that we that what the change -- over within it like are could earn-in like XXXX from be sit you the typical for factors it spread maybe the the we as a looks blended should you to X it

Mark Parrell

it's Michael, Mark.

going not yet. we're So earn-in about to speculate the

just too it's early that have to conversation. think I

Michael Goldsmith

case, NOI points or by by guidance Got moved basis higher grew in basis ask can I another grew that, and by XXX In it. that guidance FFO question points. the the right, like XXX

in So pieces of flow that period? limited can and through during the you other moving the may through some have just the overhead walk

Robert Garechana

that release costs is portion a Yes, it -- help legal various an item, think that we coming growth is you. way litigation basically normalized in of there's good by property costs management main I include the Michael, -- our cases overhead at facing and associated can litigation property or from and in do through to environment part Unfortunately, FFO. live attempts those where litigation are and rack regulation that actually line of to defense. offset we go in by growth defense forward related it's Bob. management But sometimes a in earnings kind the that regular And contribution is NOI growth we with for regulation overhead by

increase the or points with increase $X.XX And getting point just difference. remaining the down that's XXX reconciling the basis the a costs of is accrual the your typical in good But down to adjustments and the you saw rec in you you stuff and see XXX regular basis the so compensation, the basically -- that that $X.XX and kind quarter. second the versus way you legal is portion associated to of production

Operator

of Our next David Segall Advisors. question the line from Green Street with comes

David Segall

curious change? do do on hundred lease renewal this being pricing was more a is? more spread thoughts several next sustainable feel your normalized I between a of you to provide if that think like you year bps? later the new spread could that, and may or we And How return that year

Michael Manelis

Michael. David, this is

to think going at looking going all be between do uncommon going other, back bit second to spreads, little you're in XXX and looked way the the see these we've the time to forward. spread clearly, a tightening quarter. the from in it's at XXX So spreads I data of for each basis not points different that

kind bit they're fairly don't in pricing renewals, where moderation on I the X that today just right a spread going other of top you'll us marketplace, little for of to think of think sitting a because to of the between that of with see maintain bit a I based it's little compression. normal be is on each those But stats.

David Segall

sit this point could was And what curious for the was XQ? in I if does summer? that to where lease at the And you loss in numbers give the

Michael Manelis

Yes.

kind that sequentially of trend normal was tick put the it's just At lease us beginning of about more position. me So a And that. follow the seen points I think loss-to-lease let back XX in into to year, And portfolio basis we've a explain environment. gain seasonality and then, a rent pricing moderate our first, since up We're curve. gain.

market we said like full which seeing out. pricing historical revenue to portfolio the lease, expansion just the was moves going before, reiterate kind do sitting everyone mark July middle number don't market. I loss But Angeles due directly like a from As to all that to the snapshot occupancy, as and but And would a what market, in position growth. important a they It's of the of like pricing timing lease of of volume. X.X%. the lot it's the well July, kind who as is what with time kind at at an just a you the from with again, the an we where really at in application feel negative to point we lease what our it's of to year. end is Los that a in snapshot X.X%, lot less has today, from trend, that to July I like portfolio of do even remember of kind loss in the to of into were the deal both year have think spot the in we're good for for than years, of a to I'm of of balance little place bit saw the leases translate you gain in late A we're with I to when

Operator

line Nick Yulico with question Scotiabank. the comes from next of The

Nicholas Yulico

in Just kind I going know industry. Hollywood are talk on Los be sector region? that little to bit supply seeing some I in trends about some could mentioned exposure impact, imagine film but Angeles. the there Can impact as going of of just a you well disruption you some you demand back any to TV from within the

Michael Manelis

Yes, Nick, Michael. this is

seen now haven't our anything right I numbers. in So

overly For us, bucket tied I'm us studio to an are kind from, that when concentrated don't where residents to at says kind like the the industries, have looking activity. I of coming we're the heavily

lot feels a studios. in actually upon dependent all demand L.A. activity I the us good for But right are of the jobs of pretty now, that that peripheral think there's

is market. would the market, but we're system, say a the all compete just eviction that occurring through to that's our court of dealing now And really you we getting bringing units, through in the not What supply portfolio the against in process. with what in shadow properties where right own have additional the is supply lot the getting I only

another more strong, for you've just at a the quarters occupancy give this to those demand, the of got So of the holding us I think through work absorption you process. that marketplace. fact It's coming it you that look look at eviction couple demand units XX.X%-plus. you market got to And that into just There's in units. through is lot the

Nicholas Yulico

market. Okay. Great. just question And is transaction then the -- one on other

could initial growth you're assets talk impacting for you sort in about more how are could what like a there of bit rate cap maybe rent If underwriting how little be much terms seeing next of of buyers terms out an several in that the years, expectation?

Alexander Brackenridge

San at some In but a a really same Nick, as and people where still the underwriting starting markets, most probably It underwrite, flat slightly supply opportunity. coming, In that Alex. I Francisco, negative you're rate. there's it's away. say, depends more then setting, seeing expansion and first said, a where as different of are it's the in the goes urban couple years recovery cap pop

little better is seeing growth years. a There haven't expecting a there the probably issues, trade expansion and but in continues markets, expecting the is obviously, things coming. supply that the They're the of buyer market trades, not outsized improve for few that to they're city rent are And a now, are going the deals that is my of next whole right lot been for that they're and understanding X. on round but to

the And So to on is disposition now. the us. -- acquisitions side. seem it, both be well magic works for however X like and slice a number right active that number We're does it you going

Operator

the comes question with Kim from line Markets. John BMO of next Capital Your

John Kim

like It historically. flat what But third bit new only basis in potentially rent softened the a rents of part XX wondering June as you. pricing lease know Thank And it's expect seen comment than or lease relative points. negative? peaking if in quarter to you I be do can new May. that, looks I earlier on to also you was you've

Robert Garechana

they you commentary, those then inference start of monthly that pass is or numbers, inference And off honest have trends. have, one be I'll would the to Bob. where that are were the give numbers, interim gotten information is based on to final and for is while producing June and when Michael of I'll they incorrect monthly the particularly of these the kind it it's different. to your which John, not with was with interim challenges you you,

when actually . April were monthly lower, onion one new when back you change slightly it inflection provide think confusing and why on normal. which you're looked of typical it which But very these the helpful reasons producing blend. June the and on we time, lease over numbers by is and best monthly, quarter is if our and that points. it's very don't monthly not in May that meaningful disclosure was So of peel are number to that you're at gets degree preliminary -- is the

month I'll blend, So and of why to that's the answer pass those. specifically, on June away spreads reiterate outlook. -- best we're was the it and But lease in moving from terms over to Michael actually new on and and

Michael Manelis

we time frame. terms of way in I the rent like that kind rents going July tell August all would week seasonality guess in second peaking, would typically And somewhere So XXXX, you I component. back of time to of the from the peak understand rent in

in then last up of peaked now, of that softened got weeks, of little applications. they last we've little Right and volume. period. We've mix in couple bit but good where the that decelerated strong seen a little come years, back down described For what we've kind August we're got bit a in a in X we've peak, the as like rents June almost we've a double then bit they where

see That's were that points bit. a XX definitely year. normal have X% at pick of So stronger we'll pricing little we and are you, expectations curve a muted whether peak beginning I'll is basis January. that of the and not, rents our today up the up seasonality we up double my from about or stronger tell pick guess kind line a kind the than than trend where of they rent started Regardless

bit more next acceleration we're of couple weeks of at the we doesn't I like little So a year really rent the Whether our get outlook. full level that impact right kind for we now. think position

John Kim

and ask markets could I if then to And But little where about went low been XX.X%. at up a any historically it's established you differences can bit, your but turnover? on relatively Okay. expansion it discuss turnover, still between compared

Michael Manelis

Michael. is John, this

clearly overall for the good in So lows And of right now that right choices now renewal to guess high-XXs, be just but for across historical like are markets. the it, in working kind across residents the not hard do in that's renewing turnover market. The it's these a right and those established in to you, have markets process, more to versus established turnover XX% it's the I in that our percent trends of than you would is see markets. we number I And really mid- turnover historical of even residents to lot low, of the still We're of at And established that markets. is higher XX% the at that the pretty the markets, all see could right? tell I we of all look -- a now. position kind us expansion

Operator

Your of Feldman Fargo. with Wells next question comes from Jamie the line

James Feldman

some of in others INVH their call or some made point markets you're are I markets I change. an the comments of more guess can of sensitivity point there sensitivity more into Kind that than actually there price they're on are any turnover turnover inflection a you the seeing similarly, price than tying mean, an rising? inflection markets sticking seeing topic, with others. flag any where And where where

Michael Manelis

California, I in to for little out saw in just further the Southern my Yes. price Diego willingness said I a of I Orange San and in move mean, think prepared a point. bit a remarks, lower clearly we County

those historical they're those like of when showing in first is out. a for that the which bit was reasons overall stat, norms about increase up could of look denote what quarter, You kind move-out And too remained were which in the it move-outs. our up The areas though, markets. XX%. Actually, our but move-out residents when ticked little moving numbers, was could that reasons, our for well you more that of that see the one below at expensive, from XX% actually

feeling last saw financial going support right -- out notion shape residents ratios as just which income that overall continues aren't in portfolio the to we're in and watch. a financial residents and of this immediate shape. our pressure. little And I really Southern California that is remain bit at continues to we did that of play really this said prepared remarks, really to kind new quarter, good of in that it's But this kind something coming for to in that support in the But the notion just rent to continue good in they're I XX%,

James Feldman

the have And on D.C. in Okay. sounds your comments political like it way, either change a sticking appreciate just environment. But I specifically, with we're going to guess I administration. and

on a election, administration how to occupancy tend And around in market see demand? to should what presidential historically, in that terms trend we side? does Just of change around the expect just a

Michael Manelis

drivers Ins the out in and our can't change impact see that administration if outs Right happens. trying anything at overall completely demand what a We've now, and to very data this, to we looked see there's suggest material there. to actual stable, the actually.

James Feldman

just smooth, normal... through pretty just it's 'XX? think you Barring So

Michael Manelis

I it's stable. Yes, just think

Mark Parrell

government Keeps I is a monolith. think going. federal the a of bit

Operator

St. Next question Haendel line of the comes from

Juste with Mizuho.

Haendel St. Juste

what's versus Mike, mid-X% expectations are markets for for West and blended hoping seeing a concession-wise you're more Fran in half rate provide What the portfolio? on growth across you little those L.A., the the Seattle. San your color And Coast second portfolio. can bit

Michael Manelis

Yes.

remain for the volume the And do and Francisco, of the Coast, a really just Seattle in So of concessions now, a right it's areas. month us Angeles. receiving portfolio it's like month downtown Los to downtown markets San first, San under in the us and Seattle Los in and Francisco concentrated about city around concessions those in for XX% those in West and more in really right XX% XX% were Angeles, ranging

we've concessions half So a where of then acceleration I are. here fourth seasonality quarter anticipate And an looking we third us, our expect demand do are going and of months. kind the just standpoint, the little that's to next back And couple the in of the stable think bit be of for expectations seen for that from quarter. the in a what at through we

we of 'XX. overall expected. lower come than better did It concession use quarter XX% lower the X.X% from about sequentially than the second Our first a little was in quarter and

of at in San and a stats how bit little comp coming In like an Francisco. to terms we Seattle the us have quarter as think to the easier of about do third there,

could little of new Not on stack So my guess lease up lot a bit the is renewals. the hold better. impact a

We expect the stability there.

change feeling through I the excess from I and to material inventory And think going work Los eviction that's in year. abating. said, going And the don't take some a through the pockets that the don't anticipate anticipate we're supply to of were us we like I continue because process, I Angeles, pressure, that think to

I just out just a number those quarter. So would for have don't you playing across give specific scenarios I the markets. I got think we've different

Haendel St. Juste

you I early for Dallas maybe of third bought you. were In Atlanta Got any if And the very Lennar they it. here. guess I'm helpful. their Mark, curious That's Got And and portfolio could exposure. it. that of trade seems monetized portfolio assets Quarterra one your curious as assets, from wheelhouse, of KKR. with coastal, fit had overall the they your Sun I'm a It portfolio. on that some like view some Belt lot quarter, newer

curious they yet? sold may it? a the remaining I'm assets any And have took So not if in that you interest run at

Alexander Brackenridge

no, that assets Haendel, a a portfolio. of that up assets. it's take down. KKR did look ended we the didn't in interested Alex. We taking were those with end any at Yes, we subset up And of

wanted didn't we that So included things frankly. that they want, KKR

prevail us, much for a the assets, fit to that X chunk that XX enough wasn't for say us offer. KKR's of were unfortunately there a were bigger big good to relative about So and

Haendel St. Juste

Okay.

ones the here with nothing third do to had quarter in So early Lennar.

Operator

The question comes Sandler. from next of the line Piper Goldfarb with Alexander

Alexander Goldfarb

Thanks. here apartment to it. in Albany New education extends hopefully, could And Mark, use definitely that York,

X questions So here.

first construction quarter, it's guess, guys commercial The sizable, in is, and the called defects you I dispute a second charge. took

more this could So that could any finally and background fruition? little in that or just for a maybe something just this growing walk there a had that projects are is came maybe if through other little a and fit to if bit you and been just while

Robert Garechana

Alex, Bob. it's

it XX, from which was can see a you that on charge a a take did Page to related a about dispute, dispute it's we portion So basically lease. A of brown $X million. commercial was

very recurring a So unique not is bespoke that situation in any regard.

So it. a that a asset, property, identified of to defect a around a separate was we there and construction that, unrelated at a was defect. reserve portion And took construction that that was on

the assets. in We parties are the pursuing construction involved the of

have recover kind to sometimes few So defect that. isn't the them there company opportunity potentially issues years the recover themselves. insurance later, of contractor of is these This builder the that from situation to then an quarters have or or uncommon you small a of a future some and from later, you a that construction amount in where

but -- X nothing nothing situations. it's So or systemic that There's in recurring just nature. unique is

Alexander Goldfarb

to second you is has same everyone right? years is, is early as great 'XX Supply sort the be question Okay. landscape plummeting. to the guys of these And multifamily. at look then playbook, going and Late 'XX for the

rents assets during assets, to of you more period? degree time benefit your Given buying existing improve are as about this thinking existing more really presumably guys

looks is during you activity up view in years presales joint sometime wave or getting that what after as coming assets may out have guys figure you, to currently in existing to what and development, are to more it's this the development more trying -- to Or that X in X given whether come delivers. to what be in invest developments, view advantageous buy healthy into have period? product to deliver supply or JV Just a your rather more invest you'd developments,

Mark Parrell

doing we're towards open We're of open existing to still going there's question. think But buying We'll our do income, lean that bit now, a for Thanks quite assets. developing both. either, sold. assets. We to streams be Mark. the we're it's Alex, and existing right to is

we sale owners, going going just shorter-term transaction compared ago, And later. volumes comment a play like development about values there's going You may sell. lot debt a made couple fire be not developers still of up, we to years replacement to but saw that a cost, as that are I the in at nonnatural are be that with be assets basis. There expected to think and may people the price are people quite good on of bank that

see may opportunities there. more You

got construction You've issues. cost

the got execution issues And still. issues. funding got you've industry You've all across

is you it you detriment have development of an prefund think REIT hospitable accretive or have are and a need I in naked just the time able and markets go raise you hope you're yourself at the and the challenging cash carry capital scale the to in to because that either to fashion. very money, that shareholders at to

up So what too can that we a is worry free we cash much like flow sort not it is, limit development. it self-fund to which about about limit. is We year. and million of Because like then our the a And about capital usually external $XXX markets.

the right So assets. the towards lean again, now, is existing

Operator

back Mark remarks. turn will any This closing Parrell call and now does conclude today's question-and-answer I the for session. additional to

Mark Parrell

it. call thank today. all Well, interest you for your We day. and on the time appreciate Good

Operator

you This and for your now may you does Thank call. participation today's conclude disconnect.

Equity Residential (EQR) 30 Jul 242024 Q2 Earnings call transcript