Q3 2023 Earnings Summary
Reported on Nov 1, 2023 (After Market Close)
Pre-Earnings Price$53.19Last close (Nov 1, 2023)
Post-Earnings Price$54.11Open (Nov 2, 2023)
Price Change
$0.92(+1.73%)
- EQR remains confident in the long-term growth potential of key markets like San Francisco and Seattle, highlighting historical strong performance, high barriers to entry, and potential for significant rent growth once market conditions improve.
- EQR is strategically managing its portfolio by selling older assets in over-concentrated coastal areas and remains open to acquisitions that make sense relative to their cost of capital, focusing on long-term value creation. ,
- EQR anticipates stable renewal rates and maintains strong credit quality among residents, suggesting consistent revenue streams and resilience against market fluctuations. ,
- Increased Pricing Pressure in San Francisco and Seattle Due to Lack of Job Growth: The company is experiencing larger-than-expected price reductions in these markets, with pricing in San Francisco and Seattle slowing more than normal, resulting in larger price reductions than seasonally expected. This is primarily due to a lack of job growth for their target renter demographic.
- Overexposure to Underperforming Markets with Elongated Recovery: Equity Residential admits to being overexposed to downtown areas of San Francisco and Seattle, where recovery is taking longer than expected. They acknowledge an elongated recovery going on in San Francisco, which could negatively impact their performance if improvements do not materialize.
- Potential for Higher Bad Debt Due to Prolonged Eviction Processes: The company notes that eviction processes are taking twice as long as pre-pandemic, particularly in markets like Los Angeles, leading to higher bad debt levels. They may end up with bad debt levels modestly higher than 50 basis points going forward, not because of changes in customer credit quality, but due to the prolonged eviction process.
Research analysts covering EQUITY RESIDENTIAL.