The upcoming report from Equity Residential (EQR) is expected to reveal quarterly earnings of $1 per share, indicating an increase of 6.4% compared to the year-ago period. Analysts forecast revenues of $727.55 million, representing an increase of 4% year over year.Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.Before a company announc ...

CHICAGO--(BUSINESS WIRE)--Equity Residential (NYSE: EQR) today announced that the Company will release its fourth quarter 2023 operating results on Tuesday, January 30, 2024 after the close of market and host a conference call to discuss those results on Wednesday, January 31, 2024 at 10:00 a.m. Central. The conference call will be available via web cast on the Investor section of www.equityapartments.com. About Equity Residential Equity Residential is committed to creating communities where people thrive ...

Financial Data and Key Metrics Changes - The company adjusted its same-store revenue guidance expectation for the year to 5.5% from 5.875% due to underperformance in San Francisco and Seattle, as well as a noncash write-off of a $1.5 million straight-line rent receivable [7][8] - Portfolio-wide bad debt before rental relief funds was about 1.3% in Q3 2023, down from 2.4% in 2022 [6][7] - The company expects 2024 same-store expense growth to be slightly below this year, with continued pressure on repair and maintenance lines [21] Business Line Data and Key Metrics Changes - Residential same-store revenue growth was 4.4% in Q3 2023, driven by healthy fundamentals and some improvement in delinquency [11] - The East Coast markets continue to outperform the West Coast, with strong demand and occupancy, particularly in Washington, D.C. [11][12] - New lease change rates in Seattle and San Francisco are running in the high negative single digits, with increased concession use contributing significantly to the decline [25][26] Market Data and Key Metrics Changes - The company noted lower levels of new apartment construction in established markets, which should continue for the next several years [5] - The average new supply as a percent of total inventory in established markets is around 2%, compared to approximately 6% in Sunbelt markets [19] - The job market for college-educated individuals remains strong, with unemployment at 2.1%, supporting demand for rentals [4][18] Company Strategy and Development Direction - The company is focusing on capital allocation by selling older assets and acquiring newer properties in suburban markets, particularly in Atlanta [8][10] - The long-term outlook remains positive, with favorable demographics driving demand and limited new supply in most markets [22] - The company is cautious about acquisitions in politically charged municipalities due to regulatory risks [47][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term recovery of San Francisco and Seattle, despite current challenges [51][53] - The company anticipates solid growth in 2024, led by East Coast markets, while acknowledging the need for improved fundamentals in San Francisco and Seattle [20][38] - Management highlighted that the credit quality of residents remains strong, and they expect gradual improvement in bad debt levels [20][32] Other Important Information - The company is experiencing a significant increase in same-store CapEx, now at $3,600 per apartment unit, due to various factors including storm damage and new projects [67] - The eviction process is taking longer than pre-pandemic levels, impacting bad debt [20][34] Q&A Session Summary Question: Can you elaborate on the October numbers regarding new lease rates? - Management confirmed that new lease change rates in Seattle and San Francisco are running in the high negative single digits, with increased concession use contributing to the decline [25][26] Question: What is the current state of the transaction market? - Management indicated that the transaction market is uncertain, with upward pressure on cap rates and limited properties available [28][29] Question: How much more would bad debt have decreased if the court process had been quicker? - Management estimated that bad debt would have been about 10 basis points lower if the court process had progressed as expected [30][32] Question: What are the expectations for same-store revenue next year? - Management stated that they are in the middle of the budget process and cannot provide specific guidance yet, but they expect solid growth in certain markets [62] Question: How is the company addressing the Rite Aid bankruptcy issue? - Management confirmed that a new lease is already in place for the space previously occupied by Rite Aid, which is expected to be a good amenity for residents [64][65]

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Two North Riverside Plaza, Chicago, Illinois 60606 (312) 474-1300 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-12252 (Equity Residential) Commission File Number: 0 ...

[Explanatory Note](index=2&type=section&id=Explanatory%20Note) [Corporate Structure and Reporting](index=2&type=section&id=Corporate%20Structure%20and%20Reporting) This report combines EQR and ERPOP financial statements, with EQR as the general partner holding a **96.8%** interest in the UPREIT structure - EQR is the general partner of ERPOP and held an approximate **96.8%** ownership interest as of June 30, 2023, with the remaining **3.2%** owned by limited partners[8](index=8&type=chunk) - The company is structured as an UPREIT, allowing it to acquire properties by issuing OP Units, which can provide tax deferral benefits to sellers[9](index=9&type=chunk) - All property ownership, development, and debt are held at the Operating Partnership (ERPOP) level, with EQR's main assets being its investment in ERPOP and its primary function to act as the general partner and issue equity[11](index=11&type=chunk) - The main differences between EQR's and ERPOP's financial statements are in the equity section, where limited partners of ERPOP are treated as noncontrolling interests in EQR's statements and as partners' capital in ERPOP's statements[12](index=12&type=chunk) [PART I - Financial Information](index=5&type=section&id=PART%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for EQR and ERPOP show **$1.42 billion** in revenue and **$349.7 million** net income for the first half of 2023 Equity Residential - Key Financials (Six Months Ended June 30, 2023 vs 2022) | Metric | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Rental Income** | $1,422,397 | $1,340,378 | | **Operating Income** | $516,049 | $459,672 | | **Net Income Available to Common Shares** | $349,693 | $293,321 | | **Diluted EPS** | $0.92 | $0.78 | | **Net Cash from Operating Activities** | $745,980 | $690,874 | Equity Residential - Balance Sheet Summary | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $20,145,729 | $20,218,262 | | **Total Liabilities** | $8,563,867 | $8,517,310 | | **Total Equity** | $11,226,543 | $11,382,679 | [Notes to Consolidated Financial Statements](index=21&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes cover business overview, accounting policies, and real estate transactions, including the acquisition of two properties for **$186.6 million** and disposition of seven for **$135.3 million** in H1 2023 Portfolio Overview (as of June 30, 2023) | Ownership | Properties | Apartment Units | | :--- | :--- | :--- | | Wholly Owned Properties | 289 | 76,986 | | Partially Owned Properties – Consolidated | 15 | 3,226 | | **Total** | **304** | **80,212** | Real Estate Transactions (Six Months Ended June 30, 2023) | Transaction Type | Properties | Apartment Units | Price (in thousands) | | :--- | :--- | :--- | :--- | | **Acquisitions** | 2 | 549 | $186,600 | | **Dispositions** | 7 | 247 | $135,300 | - Subsequent to June 30, 2023, the company repaid **$67.9 million** of mortgage debt, locked an interest rate of approximately **4.7%** on **$530.0 million** of secured notes, and received **$27.1 million** to settle nine forward starting swaps[134](index=134&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting **7.7%** same-store NOI growth in H1 2023, supported by **$2.3 billion** in available liquidity Diluted EPS Reconciliation (2022 vs 2023) | Description | Six Months Ended June 30 | Quarter Ended June 30 | | :--- | :--- | :--- | | **Diluted EPS 2022** | **$0.78** | **$0.59** | | Property NOI | $0.17 | $0.06 | | Interest expense | $0.03 | $0.01 | | Corporate overhead | ($0.01) | ($0.02) | | Net gain/loss on property sales | ($0.03) | ($0.28) | | Depreciation expense | $0.05 | $0.02 | | Other | ($0.07) | ($0.01) | | **Diluted EPS 2023** | **$0.92** | **$0.37** | Same Store NOI Change (Six Months Ended June 30, 2023 vs 2022) | Metric | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | **Same Store Rental Income** | $1,375,078 | $1,281,947 | 7.3% | | **Same Store Operating Expenses** | $444,251 | $417,686 | 6.4% | | **Same Store NOI** | $930,827 | $864,261 | 7.7% | - The company maintains a strong liquidity position, with approximately **$2.3 billion** in readily available liquidity as of June 30, 2023, consisting of cash and availability on its unsecured revolving credit facility[169](index=169&type=chunk)[175](index=175&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Results show strong same-store performance with **7.7%** NOI growth driven by **7.3%** rental income increase, despite higher operating expenses Portfolio Rollforward (Six Months Ended June 30, 2023) | Description | Properties | Apartment Units | | :--- | :--- | :--- | | **Balance at 12/31/2022** | 308 | 79,597 | | Acquisitions | 2 | 549 | | Dispositions | (7) | (247) | | Completed Developments | 1 | 312 | | **Balance at 6/30/2023** | **304** | **80,212** | - Same-store residential NOI grew **7.8%** for the six months ended June 30, 2023, with an average rental rate increase of **8.0%** and physical occupancy of **95.9%**[161](index=161&type=chunk) - Key drivers for performance include strong pricing, particularly in New York; high physical occupancy at **95.9%**; and a high percentage of residents renewing (**57.0%** in Q2 2023), keeping turnover low[168](index=168&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$2.3 billion** available, supported by **$746.0 million** in operating cash flow and a **$24.9 billion** unencumbered asset pool Sources and Uses of Cash (Six Months Ended June 30, 2023) | Activity | Amount (in thousands) | | :--- | :--- | | **Net Cash from Operating Activities** | $745,980 | | **Net Cash used for Investing Activities** | ($271,279) | | **Net Cash used for Financing Activities** | ($487,231) | Debt Summary (as of June 30, 2023) | Debt Type | Balance (in thousands) | % of Total | | :--- | :--- | :--- | | **Secured** | $1,913,069 | 25.7% | | **Unsecured** | $5,529,847 | 74.3% | | **Total** | **$7,442,916** | **100.0%** | | **Fixed Rate** | $6,954,671 | 93.4% | | **Floating Rate** | $488,245 | 6.6% | - The company has a significant unencumbered asset pool valued at **$24.9 billion** (**87.6%** of total investment in real estate), providing substantial financial flexibility[182](index=182&type=chunk) FFO and Normalized FFO Reconciliation (Six Months Ended June 30, 2023) | Metric (in thousands) | Amount | | :--- | :--- | | **Net Income** | $364,933 | | **FFO available to Common Shares and Units** | $696,281 | | **Normalized FFO available to Common Shares and Units** | $710,695 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no material changes to its market risk profile since the December 31, 2022 Annual Report on Form 10-K - There have been no material changes to the company's market risk profile since the end of 2022[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures for EQR and ERPOP were effective as of June 30, 2023, with no material changes to internal controls - The CEO and CFO concluded that the disclosure controls and procedures for both EQR and ERPOP were effective as of June 30, 2023[192](index=192&type=chunk)[194](index=194&type=chunk) - No changes occurred during the second quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[193](index=193&type=chunk)[195](index=195&type=chunk) [PART II - Other Information](index=53&type=section&id=PART%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2023, the company reports no pending or threatened litigation expected to have a material adverse effect - The company is not aware of any litigation that is reasonably expected to have a material adverse effect[196](index=196&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the December 31, 2022 Annual Report on Form 10-K - No material changes to risk factors have occurred since the 2022 Form 10-K filing[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2023, EQR issued **36,062** Common Shares in exchange for OP Units, relying on a Securities Act registration exemption - In Q2 2023, **36,062** Common Shares were issued in exchange for **36,062** OP Units in transactions exempt from registration[198](index=198&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) EVP & CIO Alexander Brackenridge adopted a Rule 10b5-1 trading arrangement on June 15, 2023, for potential securities sales - EVP & CIO Alexander Brackenridge adopted a Rule 10b5-1 trading plan for selling up to **20,133** Common Shares and exercising options for up to **15,516** shares[201](index=201&type=chunk)

Equity Residential (NYSE:EQR) Q2 2023 Earnings Conference Call July 28, 2023 11:00 AM ET Company Participants Martin McKenna - First VP, Investor & Public Relations Mark Parrell - President, CEO & Trustee Michael Manelis - EVP & COO Alexander Brackenridge - EVP & CIO Robert Garechana - EVP & CFO Conference Call Participants Eric Wolfe - Citi John Pawlowski - Green Street Advisors Steve Sakwa - Evercore ISI Josh Dennerlein - Bank of America Merrill Lynch John Kim - BMO Capital Markets Jamie Feldman - Wells F ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-12252 (Equity Residential) Commission File Number: 0-24920 (ERP Operating Limited Partnership) EQUITY RESIDENTIAL ERP OPER ...

Financial Data and Key Metrics Changes - The company reported same-store revenue growth of 9.2% in Q1 2023, exceeding expectations, primarily due to improved delinquency and strong fundamentals [12][14] - Same-store expense growth was 7.2%, slightly above expectations, driven by higher repairs and maintenance costs [19][20] - The board raised the common share dividend by 6% on an annualized basis, reflecting confidence in business prospects [6] Business Line Data and Key Metrics Changes - The company experienced strong revenue growth across its portfolio, particularly in New York, which saw over 19% same-store revenue growth [15] - The Sunbelt markets, including Dallas-Fort Worth, Austin, and Atlanta, showed higher relative supply and more impact, but Atlanta remained strong with double-digit revenue growth [19][9] Market Data and Key Metrics Changes - The unemployment rate for college-educated individuals remains low, supporting the affluent renter demographic [7] - Only 8% of residents who moved out in Q1 2023 purchased homes, down from 12% in Q1 2022, indicating continued demand for rentals [8] Company Strategy and Development Direction - The company plans to leverage technology and centralization to improve customer and employee experiences while managing payroll costs [10][22] - The focus remains on expanding the portfolio in markets with manageable competitive supply, particularly in coastal markets [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's resilience despite economic uncertainties, noting solid demand and low turnover rates [15][16] - The company anticipates that Q1 2023 will be the highest reported same-store revenue growth, with more moderate growth expected in subsequent quarters [14] Other Important Information - The company sold a collection of 25-year-old properties in Los Angeles for approximately $135 million and acquired a newly developed property in Atlanta for about $79 million [10][11] - The company is focused on innovation and technology evolution, expecting a positive NOI impact of over $10 million in 2023 [22][24] Q&A Session Summary Question: Same-store revenue guidance and expected drop-off - Management indicated that the drop-off in same-store revenue growth is expected to be more ratable throughout the year, with Q1 being the high point [26] Question: Pricing power and market rent growth - Management noted that while rent growth might be slightly muted, the portfolio is positioned well for the peak leasing season with a blended rate for April at 4% [28][29] Question: Real estate taxes and future outlook - Management stated that there is currently not much chatter about increased taxation on apartments, and they feel good about 2023 [31][32] Question: Pricing power in Denver and expansion markets - Management acknowledged supply pressure in Denver but noted suburban portfolios are performing well, while Atlanta is exceeding expectations [34] Question: Bad debt and collections process - Management reported that bad debt improved in March and April, and they are gradually working through past balances with a focus on collections [46][50] Question: Impact of L.A. mansion tax on property sales - Management indicated that the new tax could impact transactions, but they have alternative strategies to reach their portfolio goals [51][53] Question: Concessions in urban markets - Concessions remain concentrated in urban centers like Seattle and San Francisco, but there are signs of demand picking up [55][56] Question: Job losses and turnover impact - Management noted low turnover rates and did not see significant job loss impacts on resident behavior, particularly in tech-heavy markets [62][63]

PART I [Item 1. Business](index=6&type=section&id=Item%201%2E%20Business) EQR is an S&P 500 REIT focused on managing high-quality residential properties in dynamic U.S. cities, operating through its 96.8%-owned subsidiary ERPOP - Equity Residential (EQR) is a REIT focused on the acquisition, development, and management of residential properties in affluent urban and suburban markets[19](index=19&type=chunk) - EQR operates as an UPREIT, with all property ownership and business operations conducted through ERP Operating Limited Partnership (ERPOP), in which EQR held a **96.8% ownership interest** as of December 31, 2022[8](index=8&type=chunk)[20](index=20&type=chunk) - The company's core markets include Boston, New York, Washington, D.C., Southern California, San Francisco, and Seattle, with expansion efforts in Denver, Atlanta, Dallas/Ft. Worth, and Austin[23](index=23&type=chunk)[26](index=26&type=chunk) - EQR's investment strategy targets markets with large economic drivers, strong high-quality job growth, and balanced apartment supply and demand, catering to key demographics[26](index=26&type=chunk) - The company emphasizes ESG initiatives, having issued **two green bonds** to support sustainable projects and incorporating ESG goals into executive compensation[30](index=30&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - As of 2022, the company's workforce of approximately 2,400 employees is **63.0% ethnically diverse** and **36.0% female**, achieving a strong employee engagement score of 78% favorability[36](index=36&type=chunk)[38](index=38&type=chunk) [Item 1A. Risk Factors](index=12&type=section&id=Item%201A%2E%20Risk%20Factors) The company faces risks from real estate illiquidity, geographic concentration, competition, capital market disruptions, regulatory changes, and potential uninsured losses - The company's property portfolio is predominantly concentrated in established coastal markets, making it vulnerable to unfavorable local economic conditions or rent control laws[46](index=46&type=chunk) - The short-term nature of apartment leases exposes the company more quickly to the effects of declining market rents, potentially increasing operational volatility[49](index=49&type=chunk) - The adoption or expansion of rent control, rent stabilization, or eviction moratoriums could limit the company's ability to raise rents and adversely impact property values[73](index=73&type=chunk) - **Failure to qualify as a REIT** would subject the company to U.S. federal income tax at regular corporate rates, significantly reducing funds available for distribution[79](index=79&type=chunk)[80](index=80&type=chunk) - The company faces significant general risks including pandemics, substantial inflation, and cybersecurity incidents that could disrupt operations and compromise information[91](index=91&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Insurance policies carry substantial deductibles and may not cover all losses from catastrophic events, potentially exposing the company to **significant uninsured losses**[104](index=104&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk) [Item 1B. Unresolved Staff Comments](index=24&type=section&id=Item%201B%2E%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[112](index=112&type=chunk) [Item 2. Properties](index=24&type=section&id=Item%202%2E%20Properties) As of year-end 2022, the company's portfolio comprised 308 properties with 79,597 apartment units, concentrated in key established and expansion markets Portfolio Summary as of December 31, 2022 | Ownership Type | Properties | Apartment Units | | :--- | :--- | :--- | | Wholly Owned Properties | 293 | 76,483 | | Partially Owned Properties – Consolidated | 15 | 3,114 | | **Total** | **308** | **79,597** | Portfolio Breakdown by Market (as of Dec 31, 2022) | Market/Metro Area | Properties | Apartment Units | % of Stabilized Budgeted NOI | Average Rental Rate ($) | | :--- | :--- | :--- | :--- | :--- | | **Established Markets** | **289** | **73,902** | **95.1%** | **3,016** | | Southern California | 91 | 22,165 | 27.4% | 2,772 | | San Francisco | 44 | 11,790 | 15.9% | 3,229 | | Washington, D.C. | 47 | 14,716 | 15.3% | 2,531 | | New York | 34 | 8,536 | 14.0% | 4,378 | | Boston | 27 | 7,170 | 11.5% | 3,373 | | Seattle | 46 | 9,525 | 11.0% | 2,575 | | **Expansion Markets** | **19** | **5,695** | **4.9%** | **2,153** | | Denver | 8 | 2,498 | 2.7% | 2,372 | | Atlanta | 4 | 1,215 | 1.1% | 2,120 | | Dallas/Ft. Worth | 4 | 1,241 | 0.7% | 1,904 | | Austin | 3 | 741 | 0.4% | 1,853 | | **Total** | **308** | **79,597** | **100.0%** | **2,956** | - The Same Store portfolio consisted of **283 properties** and **72,872 apartment units** at year-end 2022[119](index=119&type=chunk) - As of December 31, 2022, the company had 8 total development projects, including 2 consolidated projects with a total budgeted cost of **$260.6 million** and 6 unconsolidated projects with a total budgeted cost of **$610.9 million**[122](index=122&type=chunk) [Item 3. Legal Proceedings](index=27&type=section&id=Item%203%2E%20Legal%20Proceedings) The company does not believe any pending or threatened litigation would materially affect its financial condition - As of December 31, 2022, the Company does not believe there is any litigation pending or threatened that would have a **material adverse effect** on the Company[123](index=123&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[123](index=123&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205%2E%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) EQR's Common Shares trade on the NYSE, and the company details share count, holders, and recent share-for-unit exchanges - The Company's Common Shares trade on the NYSE under the symbol EQR, with **378,602,684 Common Shares outstanding** as of February 10, 2023[124](index=124&type=chunk) - In Q4 2022, EQR issued **414,871 Common Shares** in exchange for an equal number of OP Units from various limited partners of ERPOP[125](index=125&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Strong fundamentals drove a 14.1% increase in same-store NOI, though lower property sale gains caused a decrease in diluted EPS to $2.05 [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Diluted EPS decreased to $2.05 in 2022 from $3.54 in 2021, primarily due to lower gains on property sales, while total NOI grew 15.5% Portfolio Rollforward 2021-2022 | Period | Activity | Properties | Apartment Units | Value ($ in thousands) | Cap Rate/Yield | | :--- | :--- | :--- | :--- | :--- | :--- | | **2021** | **Acquisitions** | **17** | **4,747** | **$1,709,379** | **3.7% - 4.0%** | | | **Dispositions** | **(14)** | **(3,053)** | **($1,716,775)** | **(3.7%)** | | **2022** | **Acquisitions** | **1** | **172** | **$113,000** | **3.5%** | | | **Dispositions** | **(3)** | **(945)** | **($746,150)** | **(3.4%)** | Reconciliation of Diluted EPS (2021 to 2022) | Description | Per Share/Unit Impact ($) | | :--- | :--- | | **Diluted EPS for full year 2021** | **3.54** | | Property NOI | 0.60 | | Interest expense | (0.02) | | Corporate overhead | (0.03) | | Net gain/loss on property sales | (1.95) | | Non-operating asset gains/losses | (0.07) | | Impairment – non-operating real estate assets | 0.04 | | Depreciation expense | (0.11) | | Other | 0.05 | | **Diluted EPS for full year 2022** | **2.05** | NOI Comparison (2022 vs 2021, $ in thousands) | Category | 2022 | 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Same store NOI** | **1,731,286** | **1,517,100** | **214,186** | **14.1%** | | Non-same store/other NOI | 131,617 | 96,260 | 35,357 | 36.7% | | **Total NOI** | **1,862,903** | **1,613,360** | **249,543** | **15.5%** | 2022 Same Store Operating Statistics (vs. 2021) | Metric | 2022 | Change from 2021 | | :--- | :--- | :--- | | **Total Revenues** | $2,533,577 (in thousands) | +10.6% | | **Total Expenses** | $802,291 (in thousands) | +3.6% | | **NOI** | $1,731,286 (in thousands) | +14.1% | | **Average Rental Rate** | $2,898 | +10.4% | | **Physical Occupancy** | 96.4% | +0.3% | | **Turnover** | 42.8% | (1.9%) | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with approximately $2.4 billion available, supported by a healthy capital structure and ample financial flexibility - The company reports approximately **$2.4 billion in readily available liquidity**, a strong balance sheet, and limited near-term maturities[163](index=163&type=chunk) Statements of Cash Flows Summary ($ in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Operating activities** | $1,454,756 | $1,260,184 | | **Investing activities** | $107,792 | ($434,620) | | **Financing activities** | ($1,785,612) | ($565,056) | Capital Structure as of December 31, 2022 ($ in thousands) | Component | Amount | % of Total | | :--- | :--- | :--- | | Total Debt | $7,425,722 | 24.3% | | Total Equity | $23,097,987 | 75.7% | | **Total Market Capitalization** | **$30,523,709** | **100.0%** | - As of December 31, 2022, **87.1% of the company's investment in real estate**, valued at $24.5 billion, was unencumbered, providing significant flexibility[176](index=176&type=chunk) Credit Ratings as of February 10, 2023 | Entity/Security | Standard & Poor's | Moody's | | :--- | :--- | :--- | | ERPOP's long-term senior debt | A- | A3 | | ERPOP's short-term commercial paper | A-2 | P-2 | | EQR's long-term preferred equity | BBB | Baa1 | [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company identifies impairment of long-lived assets and allocation of purchase price for acquisitions as its two critical accounting policies - The company's evaluation of its long-lived assets for impairment is a critical accounting policy, involving significant judgments about operational performance and market conditions[201](index=201&type=chunk) - The allocation of purchase price for acquired investment properties is another critical policy, using relative fair values to allocate the price to tangible and intangible assets[202](index=202&type=chunk) [Funds From Operations and Normalized Funds From Operations](index=46&type=section&id=Funds%20From%20Operations%20and%20Normalized%20Funds%20From%20Operations) For 2022, FFO available to Common Shares and Units increased to $1.37 billion, with Normalized FFO also rising to $1.37 billion FFO and Normalized FFO Reconciliation ($ in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income available to Common Shares and Units | $800,131 | $1,375,660 | $944,556 | | **FFO available to Common Shares and Units** | **$1,373,917** | **$1,150,632** | **$1,238,145** | | **Normalized FFO available to Common Shares and Units** | **$1,371,828** | **$1,161,364** | **$1,256,368** | [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=47&type=section&id=Item%207A%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate changes, which affect debt costs and fair values, with a hypothetical 100 bps rate increase adding $4.7 million to annual interest expense - The company's main market risk is from changes in interest rates, impacting debt refinancing, floating-rate debt, and derivatives[206](index=206&type=chunk) - As of December 31, 2022, total variable rate debt was **$0.5 billion**, or 6.4% of total debt, and a 100 basis point rate increase would have increased annual interest expense by an estimated **$4.7 million**[209](index=209&type=chunk) - The fair value of the company's **$7.0 billion in fixed-rate debt** is sensitive to interest rate changes; a 100 basis point decrease would have increased its fair value by approximately **$397.5 million**[210](index=210&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=48&type=section&id=Item%208%2E%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the Index to Consolidated Financial Statements and Schedule on page F-1 of the Form 10-K - This item directs the reader to the full financial statements and schedules beginning on page F-1 of the report[214](index=214&type=chunk) [Item 9A. Controls and Procedures](index=48&type=section&id=Item%209A%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - For both Equity Residential and ERP Operating Limited Partnership, management concluded that **disclosure controls and procedures were effective** as of December 31, 2022[215](index=215&type=chunk)[220](index=220&type=chunk) - Management concluded that **internal control over financial reporting was effective** as of December 31, 2022, based on the COSO framework, an assessment audited by Ernst & Young LLP[216](index=216&type=chunk)[218](index=218&type=chunk)[221](index=221&type=chunk) - No changes in internal control over financial reporting occurred during Q4 2022 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[219](index=219&type=chunk)[224](index=224&type=chunk) PART III [Items 10-14. Corporate Governance, Compensation, and Related Matters](index=50&type=section&id=Items%2010-14) Information for these items is incorporated by reference from the company's Proxy Statement, with equity compensation plan details provided - Information for Items 10, 11, 12, 13, and 14 is **incorporated by reference** from the company's Proxy Statement[227](index=227&type=chunk) Equity Compensation Plan Information as of December 31, 2022 | Plan Category | Securities to be issued upon exercise (a) | Weighted-average exercise price (b) | Securities remaining available for future issuance (c) | | :--- | :--- | :--- | :--- | | **Equity compensation plans approved by shareholders** | **4,061,360** | **$62.60** | **11,407,237** | | Equity compensation plans not approved by shareholders | N/A | N/A | N/A | PART IV [Item 15. Exhibit and Financial Statement Schedules](index=51&type=section&id=Item%2015%2E%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the report, directing readers to the relevant indices - This item lists the documents filed as part of the report, including financial statements and exhibits[233](index=233&type=chunk) Financial Statements and Supplementary Data [Report of Independent Registered Public Accounting Firm](index=59&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued unqualified opinions on the financial statements and internal controls, identifying 'Impairment of Long-Lived Assets' as a Critical Audit Matter - The independent auditor, Ernst & Young LLP, issued an **unqualified opinion**, stating that the financial statements for both Equity Residential and ERP Operating Limited Partnership present fairly their financial position[252](index=252&type=chunk)[262](index=262&type=chunk) - The auditor also issued an **unqualified opinion on the effectiveness** of each entity's internal control over financial reporting as of December 31, 2022[253](index=253&type=chunk)[263](index=263&type=chunk) - A **Critical Audit Matter** was identified concerning the 'Impairment of Long-Lived Assets' due to the complex and subjective judgments required by management[256](index=256&type=chunk)[257](index=257&type=chunk)[266](index=266&type=chunk) [Consolidated Financial Statements](index=65&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $20.2 billion and net income of $807.0 million for 2022, with net income decreasing due to lower gains on real estate sales Consolidated Balance Sheet Data (Equity Residential, $ in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Investment in real estate, net | $19,060,904 | $19,918,624 | | **Total assets** | **$20,218,262** | **$21,169,241** | | Total liabilities | $8,517,310 | $9,483,056 | | **Total equity** | **$11,382,679** | **$11,187,208** | Consolidated Statement of Operations Data (Equity Residential, $ in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Rental income | $2,735,180 | $2,463,997 | $2,571,705 | | Total expenses | $1,923,459 | $1,843,570 | $1,785,522 | | Net gain on sales of real estate | $304,325 | $1,072,183 | $531,807 | | **Net income** | **$806,995** | **$1,396,714** | **$962,501** | [Notes to Consolidated Financial Statements](index=81&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, debt structure, equity changes, share incentive plans, and segment performance - The company's significant accounting policies include treating property acquisitions as asset acquisitions and evaluating long-lived assets for impairment quarterly (Note 2)[323](index=323&type=chunk)[328](index=328&type=chunk) - As of Dec 31, 2022, the company had **378.4 million Common Shares** and **12.4 million Units** outstanding, with a redemption value of $318.3 million for Redeemable Noncontrolling Interests (Note 3)[364](index=364&type=chunk)[368](index=368&type=chunk) - The company has a **$2.5 billion unsecured revolving credit facility** and a **$1.0 billion commercial paper program**, with $2.37 billion available on the credit facility at year-end (Note 9)[421](index=421&type=chunk)[423](index=423&type=chunk) - The company recognized total compensation equity of **$33.8 million** in 2022 related to its share incentive plans, with 4.1 million options outstanding (Note 12)[466](index=466&type=chunk)[471](index=471&type=chunk) [Schedule III - Real Estate and Accumulated Depreciation](index=121&type=section&id=Schedule%20III%20-%20Real%20Estate%20and%20Accumulated%20Depreciation) This schedule details the company's $28.1 billion gross investment in real estate and $9.0 billion in accumulated depreciation as of year-end 2022 Real Estate Summary as of December 31, 2022 | Category | Investment in Real Estate, Gross | Accumulated Depreciation | Investment in Real Estate, Net | Encumbrances | | :--- | :--- | :--- | :--- | :--- | | **Total Unencumbered Properties** | $24,476,818,491 | ($7,904,362,412) | $16,572,456,079 | $— | | **Total Encumbered Properties** | $3,611,935,002 | ($1,123,487,437) | $2,488,447,565 | $1,953,438,085 | | **Total Consolidated** | **$28,088,753,493** | **($9,027,849,849)** | **$19,060,903,644** | **$1,953,438,085** |

Equity Residential (NYSE:EQR) Q4 2022 Results Conference Call February 10, 2023 11:00 AM ET Company Participants Marty McKenna - IR Mark Parrell - President and CEO Michael Manelis - COO Bob Garechana - CFO Alec Brackenridge - CIO Conference Call Participants Nick Joseph - Citi John Pawlowski - Green Street Chandni Luthra - Goldman Sachs Steve Sakwa - Evercore ISI John Kim - BMO Capital Markets Adam Kramer - Morgan Stanley Haendel St. Juste - Mizuho Jeff Spector - Bank of America Nick Yulico - Scotiabank Al ...