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Equity Residential(EQR) - 2021 Q1 - Quarterly Report
EQREquity Residential(EQR)2021-04-29 16:00
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Financial Performance - Total assets decreased from 20,286,891thousandinDecember2020to20,286,891 thousand in December 2020 to 20,169,015 thousand in March 2021[27] - Rental income decreased from 682,305thousandinQ12020to682,305 thousand in Q1 2020 to 597,602 thousand in Q1 2021[32] - Net income dropped significantly from 332,671thousandinQ12020to332,671 thousand in Q1 2020 to 60,364 thousand in Q1 2021[32] - Earnings per share (basic) decreased from 0.83inQ12020to0.83 in Q1 2020 to 0.15 in Q1 2021[32] - Comprehensive income decreased from 337,338thousandinQ12020to337,338 thousand in Q1 2020 to 62,667 thousand in Q1 2021[35] - Net income attributable to controlling interests was 57.5millioninQ12021,comparedto57.5 million in Q1 2021, compared to 308.6 million in Q1 2020[45] - Net income attributable to controlling interests dropped significantly from 320.14millioninQ12020to320.14 million in Q1 2020 to 59.68 million in Q1 2021[53] - Comprehensive income attributable to controlling interests fell from 324.81millioninQ12020to324.81 million in Q1 2020 to 61.99 million in Q1 2021[55] - Net income for the quarter ended March 31, 2021, was 60.36million,comparedto60.36 million, compared to 332.67 million for the same period in 2020[147] - Net income per share (basic and diluted) for the quarter ended March 31, 2021, was 0.15,comparedto0.15, compared to 0.83 for the same period in 2020[147] - Net income attributable to Noncontrolling Interests in Operating Partnership was 2.1millioninQ12021,downfrom2.1 million in Q1 2021, down from 11.5 million in Q1 2020[48] - Net income available to General Partner was 56.8millioninQ12021,downfrom56.8 million in Q1 2021, down from 307.8 million in Q1 2020[67] Cash Flow and Liquidity - Cash and cash equivalents decreased from 42,591thousandinDecember2020to42,591 thousand in December 2020 to 35,453 thousand in March 2021[27] - Net cash provided by operating activities decreased from 382,451thousandinQ12020to382,451 thousand in Q1 2020 to 346,053 thousand in Q1 2021[37] - Net cash provided by (used for) financing activities was (221.6)millioninQ12021,comparedto(221.6) million in Q1 2021, compared to (624.7) million in Q1 2020[40] - Commercial paper proceeds were 1,184.9millioninQ12021,downfrom1,184.9 million in Q1 2021, down from 1,905.8 million in Q1 2020[40] - Cash and cash equivalents and restricted deposits decreased by 1.9millioninQ12021,endingat1.9 million in Q1 2021, ending at 97.8 million[40] - Net cash provided by operating activities decreased from 382.45millioninQ12020to382.45 million in Q1 2020 to 346.05 million in Q1 2021[58] - Net cash used for financing activities was 221.6millioninQ12021,comparedto221.6 million in Q1 2021, compared to 624.7 million in Q1 2020[61] - Commercial paper proceeds were 1.18billioninQ12021,downfrom1.18 billion in Q1 2021, down from 1.91 billion in Q1 2020[61] - Cash and cash equivalents decreased to 97.8millionattheendofQ12021from97.8 million at the end of Q1 2021 from 140.8 million at the end of Q1 2020[61] - The company has approximately 2.0billioninreadilyavailableliquidityandstrongaccesstocapitalmarketsatlowrates[215]−Cashandcashequivalentswere2.0 billion in readily available liquidity and strong access to capital markets at low rates[215] - Cash and cash equivalents were 35.5 million as of March 31, 2021, down from 42.6millionasofDecember31,2020[218]−Thecompanyobtained42.6 million as of December 31, 2020[218] - The company obtained 28.5 million in 3.58% fixed rate mortgage debt and received 24.6millioninnetproceedsfromshareoptionexercisesandESPPpurchasesinQ12021[218]−Thecompanyinvested24.6 million in net proceeds from share option exercises and ESPP purchases in Q1 2021[218] - The company invested 64.6 million in development projects and repaid 61.8millionofmortgageloansinQ12021[219]−Thecompanyhasa61.8 million of mortgage loans in Q1 2021[219] - The company has a 2.5 billion unsecured revolving credit facility maturing November 1, 2024, with the ability to increase available borrowings by an additional 750.0million[220]RealEstateInvestmentsandDevelopment−Investmentinrealestatedevelopmentincreasedfrom750.0 million[220] Real Estate Investments and Development - Investment in real estate development increased from 411,134 thousand in December 2020 to 476,010thousandinMarch2021[27]−Investmentinrealestatedevelopment/otherincreasedfrom476,010 thousand in March 2021[27] - Investment in real estate development/other increased from 52.20 million in Q1 2020 to 64.60millioninQ12021[58]−Thecompany′sinvestmentinrealestate(atcost)asofMarch31,2021,totaled64.60 million in Q1 2021[58] - The company's investment in real estate (at cost) as of March 31, 2021, totaled 27.30 billion, with accumulated depreciation of 8.06billion,resultinginanetinvestmentof8.06 billion, resulting in a net investment of 19.24 billion[105] - The company has entered into an agreement to acquire 1 rental property with 280 apartment units for a purchase price of 95.2million[107]−Thecompanyhasenteredintoseparateagreementstodisposeof2rentalpropertieswith340apartmentunitsforasalespriceof95.2 million[107] - The company has entered into separate agreements to dispose of 2 rental properties with 340 apartment units for a sales price of 240 million[108] - The company sold two properties consisting of 333 apartment units for 123.8millionsubsequenttoMarch31,2021[162]−Thecompanyhasdevelopmentcommitmentstotaling123.8 million subsequent to March 31, 2021[162] - The company has development commitments totaling 126.8 million for 824 apartment units, with estimated completion dates through December 31, 2021[151] - The company anticipates spending approximately 240.0millionondevelopmentcostsfortheyearendingDecember31,2021,with240.0 million on development costs for the year ending December 31, 2021, with 64.6 million spent in Q1 2021[174] Debt and Liabilities - Total liabilities increased slightly from 9,184,454thousandinDecember2020to9,184,454 thousand in December 2020 to 9,207,251 thousand in March 2021[28] - Total liabilities remained relatively stable at 9.18billioninDecember2020and9.18 billion in December 2020 and 9.21 billion in March 2021[51] - Total mortgage notes payable decreased to 2.2707billioninQ12021from2.2707 billion in Q1 2021 from 2.29389 billion in Q4 2020, with a weighted average interest rate of 3.18%[125][127] - Unsecured public notes increased slightly to 5.337103billioninQ12021from5.337103 billion in Q1 2021 from 5.335536 billion in Q4 2020, with a weighted average interest rate of 3.77%[128][131] - The company maintained 2.5billioninunsecuredrevolvingcreditfacilityavailability,with2.5 billion in unsecured revolving credit facility availability, with 1.969301 billion remaining after accounting for commercial paper and other restrictions[133] - Weighted average interest rate for commercial paper was 0.30% with an average maturity of 69 days and an average outstanding balance of 457.3millioninQ12021[132]−Thecompanyrecorded457.3 million in Q1 2021[132] - The company recorded 264,000 in debt extinguishment costs related to write-offs of unamortized deferred financing costs in Q1 2021[133] - Mortgage notes payable, net carrying value decreased from 2,293.89millioninDecember2020to2,293.89 million in December 2020 to 2,270.70 million in March 2021, with estimated fair value also decreasing from 2,313.26millionto2,313.26 million to 2,271.93 million[139] - Total debt, net decreased from 8,044.26millioninDecember2020to8,044.26 million in December 2020 to 8,037.56 million in March 2021, with estimated fair value decreasing from 8,999.88millionto8,999.88 million to 8,584.97 million[139] - Interest expense decreased by 18.1million(20.618.1 million (20.6%) in Q1 2021 due to lower debt balances and interest rates, with an effective interest cost of 3.60% compared to 3.95% in the prior year period[213] - The company anticipates interest expense of 270.0 million to 276.5millionandcapitalizedinterestof276.5 million and capitalized interest of 14.5 million to 16.5millionfortheyearendingDecember31,2021[213]OperationalMetrics−Thecompanyowned304propertieswith77,889apartmentunitsasofMarch31,2021[75]−Whollyownedpropertiesaccountedfor287propertieswith74,328apartmentunits[76]−Partiallyownedpropertiesaccountedfor16propertieswith3,399apartmentunits[76]−SameStorePropertiesforQ12021included77,060apartmentunits,representingasignificantportionofthecompany′soperations[175]−PhysicalOccupancyforSameStorePropertieswas95.016.5 million for the year ending December 31, 2021[213] Operational Metrics - The company owned 304 properties with 77,889 apartment units as of March 31, 2021[75] - Wholly owned properties accounted for 287 properties with 74,328 apartment units[76] - Partially owned properties accounted for 16 properties with 3,399 apartment units[76] - Same Store Properties for Q1 2021 included 77,060 apartment units, representing a significant portion of the company's operations[175] - Physical Occupancy for Same Store Properties was 95.0% in Q1 2021, down 1.4% from Q1 2020[182] - Los Angeles market contributed 20.9% of Same Store NOI in Q1 2021, with a 12.2% decrease in NOI year-over-year[185] - Revised full-year 2021 guidance projects Physical Occupancy between 95.0% to 96.0% and NOI change between (13.0%) to (11.0%)[188] - April 2021 preliminary results show Physical Occupancy at 96.0%, up from 95.6% in Q1 2021[187] - Physical Occupancy reached 96.0% on April 22, 2021, exceeding April 2020 levels for the first time since the pandemic began[190] - Percentage of Residents Renewing leases stands at approximately 56% into April 2021, below historical averages but improving steadily[191] - Leasing Concessions granted in February, March, and April 2021 were 6.1 million, 4.9million,and4.9 million, and 3.6 million respectively, showing a declining trend[192] - Same Store Operating Expenses increased by 3.8% in Q1 2021 compared to Q1 2020, totaling 212.05million[202]−ThecompanyanticipatessamestoreNOItodeclineby13.0212.05 million[202] - The company anticipates same store NOI to decline by 13.0% to 11.0% for the full year 2021, an improvement from the previously anticipated 15.0% to 12.0% decline[204] - Non-same store/other NOI results decreased by approximately 14.6 million in Q1 2021 compared to Q1 2020, primarily due to lost NOI from 2020 dispositions[205] - Consolidated NOI decreased by 19.6% in Q1 2021 compared to Q1 2020, driven by a 12.4% decline in consolidated rental income[208] - Property management expenses decreased by 1.6millionor5.71.6 million or 5.7% in Q1 2021 compared to Q1 2020, with anticipated expenses of 96.5 million to 98.5millionfor2021[210]−Generalandadministrativeexpensesincreasedby98.5 million for 2021[210] - General and administrative expenses increased by 0.9 million or 6.0% in Q1 2021 compared to Q1 2020, with anticipated expenses of 53.0millionto53.0 million to 55.0 million for 2021[211] - Depreciation expense decreased by 12.5millionor5.912.5 million or 5.9% in Q1 2021 compared to Q1 2020, primarily due to fully depreciated in-place leases and net selling activity in 2020[211] - Net gain on sales of real estate properties decreased by 208.0 million in Q1 2021 compared to the prior year period due to no consolidated property sales[212] - Interest and other income decreased by 1.7million(89.01.7 million (89.0%) in Q1 2021 primarily due to the absence of 1.6 million in insurance/litigation settlement proceeds received in 2020[212] - Other expenses increased by 1.6million(62.31.6 million (62.3%) in Q1 2021 mainly due to a 2.2 million construction defect reserve[212] Revenue and Expenses - Rental income for the quarter ended March 31, 2021 was 597.6million,comparedto597.6 million, compared to 682.3 million in the same period in 2020, representing a decrease of 12.4%[157] - Net operating income (NOI) for the quarter ended March 31, 2021 was 377.1million,down19.6377.1 million, down 19.6% from 468.8 million in the same period in 2020[157] - Same store NOI for the quarter ended March 31, 2021 was 380.7million,adecreaseof16.9380.7 million, a decrease of 16.9% from 457.8 million in the same period in 2020[159] - Total NOI for Q1 2021 was 377.1million,withSameStoreNOIcontributing377.1 million, with Same Store NOI contributing 380.7 million and Non-Same Store NOI at a loss of 3.7million[181]−SameStoreResidentialrevenuesdecreasedby10.63.7 million[181] - Same Store Residential revenues decreased by 10.6% year-over-year to 570.9 million in Q1 2021[182] - Average Rental Rate for Same Store Properties decreased by 9.3% to 2,601inQ12021comparedtoQ12020[182]−Residentialoperationsaccountedfor96.22,601 in Q1 2021 compared to Q1 2020[182] - Residential operations accounted for 96.2% of total revenues for Q1 2021[185] - Total lease revenue for Q1 2021 was 573.974 million, compared to 657.657millioninQ12020,reflectingadeclineof12.7657.657 million in Q1 2020, reflecting a decline of 12.7%[119] - Residential bad debt increased significantly to 13.693 million in Q1 2021, representing 2.4% of rental income, compared to 3.784million(0.63.784 million (0.6%) in Q1 2020[122] - Net receivable balances for residential accounts decreased to 5.449 million in Q1 2021 from 6.835millioninQ42020,whilenon−residentialnetreceivablesslightlyincreasedto6.835 million in Q4 2020, while non-residential net receivables slightly increased to 1.123 million from 1.071million[120]−Approximately971.071 million[120] - Approximately 97% of the company's total lease revenue is generated from residential apartment leases, with the remaining 3% from non-residential leases, primarily ground floor retail spaces and parking garages[118] - The company's non-residential presence accounts for approximately 3.8% of total revenues for the quarter ended March 31, 2021[154] COVID-19 Impact - COVID-19 pandemic continues to create uncertainties impacting the company's operations, financial condition, and future performance, with no material changes to disclosures since the 2020 Annual Report[77] - The impact of COVID-19 on the company's operations has not changed materially from the information included in its 2020 Annual Report[173] - Management estimates and assumptions in financial reporting could differ from actual results, with no revisions to COVID-19 related estimates such as lease collectibility and impairment at this time[80] Accounting and Financial Reporting - The company's unaudited condensed consolidated financial statements for Q1 2021 are prepared in accordance with GAAP, but results may not be indicative of full-year performance[78] - The company elected REIT status, resulting in no federal income tax provision, with state and local taxes being the primary tax obligations[82] - The CARES Act tax provisions did not materially impact the company's taxable income or tax liabilities[83] - FASB amendments on convertible instruments and equity contracts may affect the presentation of OP Units in financial statements, effective from January 1, 2022[84] - FASB amendments on reference rate reform provide optional expedients for contract modifications and hedge accounting, effective upon issuance[85] - The company has deferred losses of 41.4 million as of March 31, 2021, related to derivative instruments, with an estimated 10.3milliontoberecognizedasadditionalinterestexpenseinthenexttwelvemonths[145]ShareholderandPartnershipInterests−Commonsharedistributionswere10.3 million to be recognized as additional interest expense in the next twelve months[145] Shareholder and Partnership Interests - Common share distributions were 224.7 million in Q1 2021, slightly higher than 224.5millioninQ12020[45]−Retainedearningsdecreasedto224.5 million in Q1 2020[45] - Retained earnings decreased to 1,231.8 million in Q1 2021 from 1,399.7millionatthebeginningoftheperiod[45]−Accumulatedothercomprehensiveincomeimprovedto1,399.7 million at the beginning of the period[45] - Accumulated other comprehensive income improved to (41.4) million in Q1 2021 from (43.7)millionatthebeginningoftheperiod[45]−DistributionstoNoncontrollingInterestsinPartiallyOwnedPropertieswere(43.7) million at the beginning of the period[45] - Distributions to Noncontrolling Interests in Partially Owned Properties were 2.9 million in Q1 2021, compared to 9.3millioninQ12020[48]−DistributionsdeclaredperUnitoutstandingremainedflatat9.3 million in Q1 2020[48] - Distributions declared per Unit outstanding remained flat at 0.6025 in both Q1 2021 and Q1 2020[67] - Common Shares outstanding increased from 372,302,000 to 372,917,413 in Q1 2021, with Units outstanding rising from 13,858,073 to 14,042,374[90] - Redeemable Noncontrolling Interests – Operating Partnership increased from 338.95millionto338.95 million to 409.52 million in Q1 2021[98] - The company has authorized up to 100,000,000 preferred shares with a par value of 0.01pershare,withspecificrightsandpreferencesdeterminedbytheBoardofTrustees[99]−AsofMarch31,2021,thecompanyhad745,600SeriesKCumulativeRedeemablePreferredShares/PreferenceUnitsissuedandoutstanding,withanannualdividendof0.01 per share, with specific rights and preferences determined by the Board of Trustees[99] - As of March 31, 2021, the company had 745,600 Series K Cumulative Redeemable Preferred Shares/Preference Units issued and outstanding, with an annual dividend of 4.145 per share/unit and a liquidation value of 50pershare/unit[100]−Thecompany′sownershipinterestinERPOPwasapproximately96.450 per share/unit[100] - The company's ownership interest in ERPOP was approximately 96.4% as of March 31, 2021[169] Other Financial Information - Depreciation expenses decreased from 212,422 thousand in Q1 2020 to 199,962thousandinQ12021[32]−Accumulateddepreciationincreasedfrom199,962 thousand in Q1 2021[32] - Accumulated depreciation increased from 7.86 billion in December 2020 to 8.06billioninMarch2021[51]−Right−of−useassetsandleaseliabilitiesinitialmeasurementandreclassificationsamountedto8.06 billion in March 2021[51] - Right-of-use assets and lease liabilities initial measurement and reclassifications amounted to 11.3 million in Q1 2021[42] - The company's consolidated assets and liabilities related to Variable Interest Entities (VIEs) were approximately 780.9millionand780.9 million and 237.8 million, respectively, as of March 31, 2021[112] - The company's investments in unconsolidated entities totaled 53.27millionasofMarch31,2021,includinga33.353.27 million as of March 31, 2021, including a 33.3% ownership in an operating property VIE[114] - The company's restricted deposits as of March 31, 2021, totaled 62.38 million, including 25.54millioninmortgageescrowdepositsand25.54 million in mortgage escrow deposits and 36.84 million in restricted cash[116] - The company's primary financial measure for its rental real estate segment is net operating income (NOI), which represents rental income less property and maintenance expenses and real estate taxes and insurance expenses[156] - Total assets as of March 31, 2021 were 20.17billion,withsamestoreassetsaccountingfor20.17 billion, with same store assets accounting for 18.87 billion[160] - Capital expenditures for the quarter