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EQUITY RESIDENTIAL (EQR) Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered diluted EPS $1.10, FFO/share $0.97, and Normalized FFO/share $1.00; rental income rose to $766.8M, up 5.4% YoY . Same-store revenue grew 2.4% YoY with occupancy at 96.1% and blended rate +1.0% amid seasonal pressure on new leases (-4.3%) .
  • 2025 outlook targets same-store revenue growth of 2.25%–3.25%, NFFO/share $3.90–$4.00, with H2 acceleration driven by stronger leasing and “other income” initiatives; Q1 2025 guidance is EPS $0.63–$0.67 and FFO/share $0.89–$0.93 .
  • Capital allocation advanced: Q4 acquisitions of 795 units for $274.3M (5.2% cap rate) and dispositions of 1,629 units for $610.1M (5.2% yield); full-year 2024 net acquisitions ~$1.6B and dispositions ~$975.6M . Dividend increased 2.6% to $2.77 annualized (Q1 payout $0.6925) .
  • Management highlighted coastal supply normalizing with 2026 deliveries ~30% below pre-pandemic averages and improving office-using job growth in West Coast tech markets—potential catalysts for narrative improvement in H2 2025 and into 2026 .
  • S&P Global consensus estimates were unavailable at the time of this analysis; versus company guidance, Q4 results were in line-to-ahead (EPS beat guidance midpoint; FFO/NFFO in line) .

What Went Well and What Went Wrong

What Went Well

  • Same-store performance: 2024 same-store revenues +3.0%, expenses +2.9%, NOI +3.1%; Q4 occupancy held at 96.1% with blended rate +1.0% .
  • Operating excellence: “delivering same-store expense growth in 2024 of 2.9% and an average of only 3.2% over the past 5 years” (CEO) and “lowest…turnover…42.5%” (COO) .
  • Regional momentum: 2025 guidance expects Seattle (~4% same-store revenue) and DC to lead; New York and San Francisco close behind with potential upside if pricing power improves earlier in the year (COO) .
  • Portfolio optimization: nearly $2B of newer assets added in 2024 across expansion markets, funded by older coastal asset sales and long-term debt; management views this as beneficial for long-term rental growth post supply absorption (CEO) .
  • “Other income” initiatives: 70 bps ($20M) revenue tailwind expected in 2025 (connectivity, tech programs), NOI accretive despite ~$5M expense add (CFO/COO) .

What Went Wrong

  • Bad debt improvement slower than modeled: Q4 Bad Debt, Net held ~1.1% of same-store residential revenues, less improvement than guidance assumptions (press release) .
  • Expansion markets pressure: continued elevated (though declining) supply in Atlanta/Dallas/Denver yields expected negative same-store revenue in 2025 (COO) .
  • Q4 new lease rates negative seasonally: new lease change -4.3% portfolio-wide; concessions remain elevated in downtown San Francisco (COO) .
  • Non-residential drag: ~20 bps headwind to same-store revenue for 2025 due to non-repeat straight-line reinstatement from Q1 2024 (CFO) .
  • Interest expense headwind in 2025 from higher balances and refinancing (including $450M note due June 2025), partially offset by capital markets flexibility (CFO) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Rental Income ($USD Thousands)$727,500 $748,348 $766,779
Diluted EPS ($)$0.82 $0.38 $1.10
FFO per Share – Diluted ($)$1.00 $0.99 $0.97
Normalized FFO per Share – Diluted ($)$1.00 $0.98 $1.00

Same-Store Operating KPIs

MetricQ4 2023Q3 2024Q4 2024
Same-Store Revenues ($USD Thousands)$693,156 $707,513 $710,216
Same-Store Expenses ($USD Thousands)$212,904 $225,459 $222,179
Same-Store NOI ($USD Thousands)$480,252 $482,054 $488,037
Physical Occupancy (%)95.8% 96.1% 96.1%
New Lease Change (%)-4.6% -1.2% -4.3%
Renewal Rate Achieved (%)5.1% 4.6% 5.0%
Blended Rate (%)0.7% 2.0% 1.0%

Same-Store Delta Summary

MetricQ4 2024 vs Q4 2023Q4 2024 vs Q3 2024
Revenues (%)+2.4% +0.4%
Expenses (%)+4.3% -2.0%
NOI (%)+1.6% +1.5%

Portfolio NOI Mix (Stabilized; as of Dec 31, 2024)

Market% of Stabilized Budgeted NOIAvg Rental Rate ($)
Southern California (subtotal)25.1% $2,974
Washington, D.C.15.1% $2,788
San Francisco14.8% $3,351
New York14.1% $4,690
Boston11.3% $3,643
Seattle9.9% $2,636
Denver4.0% $2,369
Atlanta3.1% $2,020
Dallas/Ft. Worth2.3% $1,965
Austin0.3% $1,754

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS ($)Q4 2024$1.01–$1.05 Actual $1.10 Raised vs guidance (beat)
FFO/share ($)Q4 2024$0.95–$0.99 Actual $0.97 In line
Normalized FFO/share ($)Q4 2024$0.98–$1.02 Actual $1.00 In line
EPS ($)Q1 2025—$0.63–$0.67 New
FFO/share ($)Q1 2025—$0.89–$0.93 New
Normalized FFO/share ($)Q1 2025—$0.90–$0.94 New
Same-Store Revenue (%)FY 2025—2.25%–3.25% New
Same-Store Expense (%)FY 2025—3.5%–4.5% New
Same-Store NOI (%)FY 2025—1.4%–3.0% New
EPS ($)FY 2025—$3.00–$3.10 New
FFO/share ($)FY 2025—$3.87–$3.97 New
Normalized FFO/share ($)FY 2025—$3.90–$4.00 New
TransactionsFY 2025—Acquisitions $1.5B; Dispositions $1.0B; (25 bps) dilution New
Debt AssumptionsFY 2025—Avg debt $8.20–$8.40B; net interest $313.5–$319.5M; cap interest $12.6–$13.6M New
OpEx (PM & G&A)FY 2025—PM $139–$141M; G&A $60–$64M New
JV IncomeFY 2025—$(3.0M) to $1.0M New
Dividend2025 Annualized$2.70 in 2024 (declared per share total) $2.77 (+2.6%) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Connectivity/tech-driven “other income”Noted innovation programs; guidance raised on fundamentals —70 bps ($20M) other income growth; bulk WiFi rollout; NOI accretive despite ~$5M expense Positive execution tailwind
Coastal supply normalizationGuidance raised; stable occupancy; concessions clustered in SF/LA/Seattle Coastal same-store growth steady; Q4 guidance in line 2026 deliveries ~30% below pre-pandemic; absorption improving in Seattle/SF (CEO/COO) Improving backdrop
Expansion markets supply dragEarly acquisition into Atlanta/Dallas/Denver; modest pressure $1.26B acquisitions; LA new lease deceleration noted 2025 negative same-store revenue expected in expansion markets; stability in ATL/DAL, Denver later Headwinds persisting H1 2025
Regulatory/legal (LA fires, rent policy)——Management opposes broad eviction moratoria; anti-gouging order acknowledged; potential cleanup costs Policy risk watch
Insurance costs10% YoY insurance increases; manageable Insurance rising high single digits expected Reinsurer feedback constructive post-fires; potential near-flat renewal in March (CEO) Stabilizing
Capital markets & leverageGuidance revised; debt summary detailed Issued $600M 10-year notes; lowest coupon since 2022 $450M note due June 2025 likely refinanced; debt issuance $500M–$1B contingent on net acquisitions (CFO) Flexible/liquidity intact

Management Commentary

  • “We expect a steady improvement in our same store revenue results as we go through 2025… with… significant contributions from other income… With new apartment supply in 2026 at decade lows in our coastal markets… the longer term set up for our business is outstanding.” — Mark J. Parrell, President & CEO .
  • “Our fourth quarter turnover was just 9%, bringing our full year turnover to 42.5%, which is the lowest we have reported in our 30-year history.” — Michael Manelis, COO .
  • “Connectivity expenses are adding approximately $5 million… they are also adding revenue… we expect about 70 basis points or nearly $20 million in other income growth.” — Robert Garechana, CFO .
  • “We made substantial progress towards our goal of having 20% of our NOI in our expansion markets by investing almost $2 billion… while disposing of about $1 billion of older assets….” — Mark J. Parrell, CEO .
  • “We see 2026 total deliveries in our coastal markets, around 30% lower than the pre-pandemic average.” — Mark J. Parrell, CEO .

Q&A Highlights

  • Revenue trajectory: Expect quarter-over-quarter acceleration in H2 2025 as embedded growth is lower and leasing drives growth; other income ramps with connectivity rollout (CFO) .
  • Renewals and pricing: Portfolio-wide renewal asks ~7%, achieved ~5%; centralized renewal process strengthens execution (COO) .
  • Expansion markets timing: New lease growth likely uneven; better sentiment in Q2–Q3 but cash flow improvement more 2026–2027 (CEO) .
  • LA fires/regulatory risk: Management supports relief measures but warns broad eviction moratoria deter housing investment; monitoring cleanup and policy outcomes (CEO) .
  • JV development lease-ups: 2025 FFO drag due to cessation of capitalized interest; accretive NOI as stabilization progresses and potential recap improves debt profile (CFO) .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates were unavailable at the time of this analysis. As a proxy, versus company guidance provided in Q3 2024: Q4 EPS $1.10 beat the $1.03 guidance midpoint, while FFO/share $0.97 and NFFO/share $1.00 were in line with guidance midpoints of $0.97 and $1.00, respectively .
  • Street estimates should adjust for: (i) slower-than-assumed bad debt improvement, (ii) additive “other income” ramp in 2025, (iii) expansion market supply overhang delaying revenue recovery, and (iv) higher interest expense from net acquisitions and refinancing (management bridge) .

Key Takeaways for Investors

  • Q4 2024 execution was solid: EPS beat company guidance; FFO/NFFO were consistent; same-store revenue and occupancy stayed resilient into seasonal headwinds .
  • 2025 set-up: Expect H2 revenue acceleration as leasing momentum and “other income” initiatives ramp; early-year growth muted by lower embedded growth (CFO) .
  • Coastal markets improving: Seattle/DC/NY/SF poised for outperformance; concessions likely to moderate as occupancy strengthens (COO) .
  • Expansion markets remain a drag near term: elevated supply weighs on 2025 same-store revenue; stability emerging in ATL/DAL; Denver later (COO) .
  • Capital deployment balanced: ongoing rotation into newer expansion assets; 2025 plan for $1.5B acquisitions/$1.0B sales; financing flexible with CP and unsecured markets (CEO/CFO) .
  • Dividend signaling: 2.6% increase to $2.77 annualized underscores confidence; Q1 dividend $0.6925 (paid Apr 17) .
  • Watch list: LA policy outcomes post-fires, non-residential revenue normalization, insurance renewal terms, and Q2/Q3 leasing season trajectory for early signs of H2 acceleration (management) .

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