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EQUITY RESIDENTIAL (EQR) Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue and operating metrics exceeded internal guidance: rental income $760.8M, diluted EPS $0.67, FFO/share $0.94, Normalized FFO/share $0.95; same‑store revenues +2.2% YoY, occupancy 96.5%, turnover 7.9% (lowest in company history) .
  • Versus Wall Street consensus (S&P Global): revenue modest miss ($760.8M vs $769.2M*), FFO/share slight beat ($0.94 vs $0.939*), Primary EPS slight miss (0.262 vs 0.268*); note SPGI “Primary EPS” definition differs from company’s diluted EPS reporting [functions.GetEstimates].
  • Guidance: FY 2025 ranges maintained (EPS $3.00–$3.10, FFO/share $3.87–$3.97, Normalized FFO/share $3.90–$4.00); Q2 2025 set at EPS $0.49–$0.53, FFO/share $0.95–$0.99, NFFO/share $0.96–$1.00, implying sequential NFFO lift on stronger same‑store NOI .
  • Catalysts: strengthening West Coast (San Francisco/Seattle occupancy and pricing momentum), resilient D.C., record retention, and automation initiatives; watch Los Angeles recovery path and Sunbelt supply digestion (near‑term headwind) .

What Went Well and What Went Wrong

What Went Well

  • Demand/retention beat: occupancy 96.5% and turnover 7.9% (company record) drove same‑store revenue +2.2% YoY; CEO: “operating performance… exceeded our expectations… well positioned going into primary leasing season” .
  • West Coast recovery: San Francisco occupancy >97% with concessions declining and base rents improving; Seattle occupancy 96.5% with RTO from Amazon supporting demand .
  • D.C. resilience: >97% occupied with good rent growth despite layoff headlines; management not seeing weakness in renewals or delinquencies near‑term .

What Went Wrong

  • Margin pressure: same‑store expenses +4.1% YoY and quarterly same‑store NOI down -1.4% sequentially (Q4→Q1) despite revenue growth, driven by utilities, real estate taxes, and on‑site costs .
  • Los Angeles softness: pricing power “elusive” (quality‑of‑life issues and entertainment sector), with elevated concessions in urban submarkets vs suburbs .
  • Expansion markets (Atlanta/Dallas/Austin/Denver) challenged by high competitive supply; concessions widely used, muting rate growth through 1H 2025 .

Financial Results

MetricQ1 2024Q4 2024Q1 2025 ActualQ1 2025 Consensus
Rental Income ($USD Millions)$730.8 $766.8 $760.8 $769.2*
Diluted EPS ($)$0.77 $1.10 $0.67 $0.268 (EPS GAAP)*
FFO/share – Diluted ($)$0.87 $0.97 $0.94 $0.939 (FFO/share REIT)*
Normalized FFO/share – Diluted ($)$0.93 $1.00 $0.95 N/A

Values with asterisk (*) retrieved from S&P Global.

Same-Store KPIsQ1 2024Q4 2024Q1 2025
Physical Occupancy (%)96.3 96.1 96.5
New Lease Change (%)(2.3) (4.4) (2.2)
Renewal Rate Achieved (%)4.7 5.0 4.9
Blended Rate (%)1.5 1.0 1.8
Turnover (%)8.6 9.0 7.9
Same-Store Results ($USD Millions)Q1 2024Q4 2024Q1 2025
Revenues$700.4 $743.7 $715.8
Expenses$226.0 $233.6 $235.2
NOI$474.5 $510.1 $480.6
Portfolio Mix (Stabilized Budgeted NOI %)Q1 2025
Southern California (LA/OC/San Diego)24.4
San Francisco15.2
Washington, D.C.15.1
New York14.5
Boston11.2
Seattle9.8
Expansion Markets (Denver/Atlanta/Dallas/Austin)9.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS ($)Q2 2025—$0.49 – $0.53 New quarterly range
FFO/share ($)Q2 2025—$0.95 – $0.99 New quarterly range
Normalized FFO/share ($)Q2 2025—$0.96 – $1.00 New quarterly range
EPS ($)FY 2025$3.00 – $3.10 $3.00 – $3.10 Maintained
FFO/share ($)FY 2025$3.87 – $3.97 $3.87 – $3.97 Maintained
Normalized FFO/share ($)FY 2025$3.90 – $4.00 $3.90 – $4.00 Maintained
Same‑Store Occupancy (%)FY 202596.2 96.2 Maintained
Same‑Store Revenue change (%)FY 20252.25 – 3.25 2.25 – 3.25 Maintained
Same‑Store Expense change (%)FY 20253.5 – 4.5 3.5 – 4.5 Maintained
Same‑Store NOI change (%)FY 20251.4 – 3.0 1.4 – 3.0 Maintained
Dividends (Common)2025Annualized $2.77 $0.6925 declared in Q1 Increased YoY

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/automation in leasingExpanding centralized processes and data‑driven pricing Conversational AI deployed; targeting 75–80% inquiry coverage to reduce manual tasks Acceleration
Macro/tariffs uncertaintyCaution; rates volatility; supply/demand balance strong in coasts CEO cites heightened uncertainty (tariffs), focus on dashboards not headlines Persistent uncertainty
West Coast recovery (SF/Seattle)Early green shoots, improving comps SF >97% occupied; concessions declining; Seattle 96.5% occupancy; Amazon RTO tailwind Improving
D.C. resilienceStrong occupancy and rent growth despite supply >97% occupied; minimal impact seen from layoffs; diversified employer base Stable/strong
Los Angeles softnessQuality‑of‑life issues; entertainment sector drag; concessions Pricing power elusive; suburban submarkets stronger Ongoing challenge
Regulatory/legalCalifornia anti‑gouging order (fires), Prop 33 debate WA rent cap proposal; limited immediate impact; MD Montgomery County rent control negative for capital Mixed headwinds
Expansion markets supplyElevated Sunbelt supply; muted rate growth until 2026 Concessions widely used; near‑term muted; expecting improvement later Digesting supply

Management Commentary

  • CEO: “Our first quarter results exceeded our expectations… we are well positioned for the primary leasing season” .
  • COO: “Operating dashboards… demand, leasing velocity and pricing power… are blinking green currently” .
  • COO on SF: “Net effective pricing is up 6%+ since the beginning of the year… concessions declining… occupancy over 97%” .
  • CIO: “Pricing around a 5 cap… buying at a good basis in markets with robust likely future job growth” .
  • CFO: “Expense growth proceeding as expected… seeing a little more pressure from utilities; insurance premium tailwind in back half of year” .

Q&A Highlights

  • Acquisition market: Multifamily remains favored; opportunities ~5% cap with lenders forcing sales; near‑term focus on Atlanta/Dallas/Denver; recycle dispositions to fund buys .
  • Blended spreads formation: Expect normal seasonality; renewals ~5%; new lease transactions <1/3 completed early in Q2 .
  • D.C. layoff impact: Minimal to date; ~10–11% of residents are federal employees; diversified employer base mitigates risk .
  • Rent control: WA proposal (cap at min[10%, 7%+CPI]); limited 2025 impact expected; negative for investment climate .
  • Los Angeles long‑term: Expect to own less; policy improvements needed; Prop 13 supports returns; suburban submarkets stronger .

Estimates Context

  • Revenue: Actual $760.8M vs consensus $769.2M* → modest miss [functions.GetEstimates].
  • FFO/share (REIT): Actual $0.94 vs consensus $0.939* → slight beat [functions.GetEstimates].
  • Primary EPS: Actual 0.2616 vs consensus 0.2679* → slight miss (note SPGI “Primary EPS” differs from company diluted EPS definition) [functions.GetEstimates]. Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Same‑store engine steady: +2.2% revenue growth YoY with record retention and 96.5% occupancy; Q2 guidance implies sequential NFFO/share lift on stronger same‑store NOI .
  • West Coast inflection points: SF and Seattle showing tangible improvement (occupancy >96%, concessions abating, RTO demand); watch for continued pricing power through peak leasing season .
  • D.C. durable despite headlines: High occupancy and diversified employers; near‑term impact of federal layoffs appears limited; monitor into late 2025 .
  • Los Angeles remains mixed: Urban submarkets lag; recovery path tied to entertainment activity and municipal quality‑of‑life improvements .
  • Sunbelt supply digestion: Expect muted rate growth and concessions in 1H 2025; out‑years (2026+) positioned for outsized growth as supply wanes .
  • Balance sheet/credit strong: Net debt/Normalized EBITDAre improved to 4.21x (from 4.38x); ample liquidity and flexible funding (CP program, unsecured debt) for match‑funded acquisitions/dispositions .
  • Strategy consistent: Maintain coastal core; expand selectively in Atlanta/Dallas/Denver at ~5% cap below replacement cost; recycle older high‑CapEx assets; automation to blunt expense inflation .

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