Equity Residential(EQR) - 2025 Q2 - Quarterly Results

Earnings Release Second Quarter 2025 Results & Highlights Equity Residential reported strong Q2 2025 results, with diluted EPS of $0.50 and Normalized FFO per share of $0.99, raising full-year guidance | | Quarter Ended June 30, | | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | | | | Earnings Per Share (EPS) | $0.50 | $0.47 | $0.03 | 6.4% | | Funds from Operations (FFO) per share | $0.98 | $0.94 | $0.04 | 4.3% | | Normalized FFO (NFFO) per share | $0.99 | $0.97 | $0.02 | 2.1% | | | Six Months Ended June 30, | | | | | | 2025 | 2024 | | | | Earnings Per Share (EPS) | $1.18 | $1.24 | $(0.06) | (4.8%) | | Funds from Operations (FFO) per share | $1.92 | $1.80 | $0.12 | 6.7% | | Normalized FFO (NFFO) per share | $1.94 | $1.91 | $0.03 | 1.6% | - CEO Mark J. Parrell highlighted sustained demand and a financially resilient customer base, with the company's unique exposure to low-supply urban centers like New York and San Francisco driving current results[10] - For Q2 2025 vs. Q2 2024, same-store revenues increased 2.7%, expenses increased 3.7%, and Net Operating Income (NOI) increased 2.3%[11] - During Q2 2025, the company acquired a portfolio of eight properties (2,064 units) in suburban Atlanta for approximately $533.8 million and sold one property in Seattle for $121.0 million[11] Full Year 2025 Guidance Full-year 2025 guidance was updated, raising same-store revenue and NOI midpoints, increasing Normalized FFO per share, and lowering EPS | | Revised | Previous | Change at Midpoint | | :--- | :--- | :--- | :--- | | Same Store Revenue change | 2.6% to 3.2% | 2.25% to 3.25% | 0.15% | | Same Store Expense change | 3.5% to 4.0% | 3.5% to 4.5% | (0.25%) | | Same Store NOI change | 2.2% to 2.8% | 1.4% to 3.0% | 0.3% | | EPS | $2.96 to $3.02 | $3.00 to $3.10 | $(0.06) | | FFO per share | $4.03 to $4.09 | $3.87 to $3.97 | $0.14 | | Normalized FFO per share | $3.97 to $4.03 | $3.90 to $4.00 | $0.05 | Factors Contributing to $0.05 Increase in Normalized FFO per Share Midpoint | Factor | Expected Positive/(Negative) Impact (dollars) | | :--- | :--- | | Residential same store NOI | $0.02 | | Lease-Up NOI | $0.01 | | 2025 and 2024 transaction activity impact on NOI, net | $(0.02) | | Interest expense, net | $0.03 | | Other items | $0.01 | | Net | $0.05 | Investment and Capital Markets Activity Q2 2025 saw significant transaction activity, including a $533.8 million Atlanta acquisition and $500.0 million unsecured note issuance - Acquired a portfolio of eight properties (2,064 units) in Atlanta for approximately $533.8 million at a weighted average Acquisition Cap Rate of 5.1%[22] - Sold one property (289 units) in Seattle for approximately $121.0 million at a Disposition Yield of 4.9%[23] - Completed two wholly-owned development projects in San Francisco and Denver (495 units total) and one joint venture project in New York (450 units)[24] - Issued $500.0 million of 7-year unsecured notes at a 4.95% coupon, using proceeds to pay off $450.0 million of 3.375% notes that matured in June 2025[25] Third Quarter 2025 Guidance Q3 2025 guidance projects Normalized FFO per share between $0.99 and $1.03, driven by same-store NOI growth and transaction impacts | | Q3 2025 Guidance | | :--- | :--- | | EPS | $0.78 to $0.82 | | FFO per share | $1.08 to $1.12 | | Normalized FFO per share | $0.99 to $1.03 | Factors Contributing to $0.02 Increase in NFFO per Share from Q2 2025 Actuals to Q3 2025 Guidance Midpoint | Factor | Expected Positive/(Negative) Impact (dollars) | | :--- | :--- | | Residential same store NOI | $0.01 | | 2025 and 2024 transaction activity impact on NOI, net | $0.01 | | Interest expense, net | $(0.01) | | Corporate overhead | $0.01 | | Net | $0.02 | Financial Statements Consolidated Statements of Operations Q2 2025 total revenues increased to $768.8 million, with net income available to common shares rising to $192.0 million ($0.50 per diluted share) | (In thousands) | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | | :--- | :--- | :--- | | Rental income | $768,827 | $734,163 | | Total expenses | $542,812 | $508,609 | | Net gain on sales of real estate | $58,280 | $39,809 | | Net income | $198,785 | $183,555 | | Net income available to Common Shares | $192,001 | $177,128 | | Earnings per share – diluted | $0.50 | $0.47 | Consolidated Statements of FFO and NFFO Q2 2025 FFO increased to $382.6 million ($0.98 per share), and NFFO rose to $386.8 million ($0.99 per share), with detailed reconciliations provided | (In thousands except per share data) | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $198,785 | $183,555 | | FFO available to Common Shares and Units | $382,633 | $366,348 | | FFO per share – diluted | $0.98 | $0.94 | | Normalized FFO available to Common Shares and Units | $386,790 | $380,142 | | Normalized FFO per share – diluted | $0.99 | $0.97 | Consolidated Balance Sheets As of June 30, 2025, total assets were $21.0 billion, with $9.5 billion in liabilities and $11.2 billion in total equity | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investment in real estate, net | $19,760,201 | $19,558,328 | | Total assets | $21,027,514 | $20,834,176 | | Total liabilities | $9,501,134 | $9,249,829 | | Total equity | $11,208,475 | $11,245,784 | | Total liabilities and equity | $21,027,514 | $20,834,176 | Portfolio and Operations Portfolio Summary & Rollforward As of June 30, 2025, the portfolio included 319 properties and 86,422 units, with established markets contributing 89% of stabilized NOI - The total portfolio consists of 319 properties with 86,422 apartment units. Established Markets account for 89.0% of stabilized budgeted NOI, while Expansion Markets account for 11.0%[40] | Market | Properties | Apartment Units | % of Stabilized Budgeted NOI | Average Rental Rate | | :--- | :--- | :--- | :--- | :--- | | Southern California | 80 | 20,660 | 24.2% | $3,006 | | San Francisco | 41 | 11,540 | 15.0% | $3,451 | | Washington, D.C. | 43 | 13,845 | 14.9% | $2,842 | | New York | 35 | 8,986 | 14.4% | $4,730 | | Boston | 27 | 7,237 | 11.1% | $3,659 | | Seattle | 40 | 8,459 | 9.4% | $2,676 | | Expansion Markets | 53 | 15,695 | 11.0% | $2,064 | Q2 2025 Portfolio Rollforward | | Properties | Apartment Units | | :--- | :--- | :--- | | 3/31/2025 | 312 | 84,648 | | Acquisitions | 8 | 2,064 | | Dispositions | (1) | (289) | | 6/30/2025 | 319 | 86,422 | Same Store Results Q2 2025 same-store NOI grew 2.3% year-over-year, driven by revenue increases and improved occupancy, with varied market performance Overall Same Store Performance Overall same-store performance showed Q2 2025 revenues up 2.7% and NOI up 2.3% year-over-year, with occupancy at 96.6% Same Store Results (Q2 2025 vs. Q2 2024) | Metric | % Change | | :--- | :--- | | Revenues | 2.7% | | Expenses | 3.7% | | NOI | 2.3% | | Physical Occupancy | 96.6% vs. 96.3% | Same Store Results (Q2 2025 vs. Q1 2025) | Metric | % Change | | :--- | :--- | | Revenues | 1.0% | | Expenses | (2.7%) | | NOI | 2.8% | | Physical Occupancy | 96.5% vs. 96.4% | - Same-store residential bad debt, net of governmental assistance, was 1.0% of revenues in Q2 2025, an improvement from 1.1% in Q2 2024[61] Same Store Residential Results by Market Q2 2025 same-store residential NOI growth was strong in Washington, D.C., New York, and San Francisco, with a total blended lease rate growth of 3.0% Same Store Residential NOI Growth by Market (Q2 2025 vs. Q2 2024) | Markets/Metro Areas | Revenue Growth | Expense Growth | NOI Growth | | :--- | :--- | :--- | :--- | | Washington, D.C. | 4.5% | 1.9% | 5.7% | | New York | 4.3% | 3.4% | 4.9% | | San Francisco | 4.5% | 6.0% | 3.9% | | Seattle | 3.1% | 2.0% | 3.5% | | Southern California | 1.6% | 5.0% | 0.4% | | Denver | (3.8%) | (0.8%) | (5.0%) | | Total | 2.9% | 3.7% | 2.5% | Same Store Residential Net Effective Lease Pricing Statistics | | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | New Lease Change | (0.1%) | (2.2%) | 0.1% | | Renewal Rate Achieved | 5.2% | 4.9% | 5.0% | | Blended Rate | 3.0% | 1.8% | 2.9% | Same Store Operating Expenses Total same-store operating expenses increased 3.7% in Q2 2025, primarily driven by higher utilities, repairs and maintenance, and other on-site costs Total Same Store Operating Expenses Breakdown (Q2 2025 vs. Q2 2024) | Expense Category | $ Change (thousands) | % Change | % of Q2 2025 Expenses | | :--- | :--- | :--- | :--- | | Real estate taxes | $1,600 | 1.7% | 41.0% | | On-site payroll | $975 | 2.3% | 18.7% | | Utilities | $2,633 | 8.3% | 15.0% | | Repairs and maintenance | $1,761 | 5.7% | 14.2% | | Insurance | $68 | 0.7% | 4.0% | | Total | $8,116 | 3.7% | 100.0% | - The increase in utilities was driven by higher commodity prices and usage, while repairs and maintenance costs rose due to the implementation of resident technology initiatives like bulk Wi-Fi[79] Debt and Capital Debt Summary & Covenants As of June 30, 2025, total debt was $8.37 billion with an average rate of 3.74%, and the company remained compliant with all debt covenants | Debt Type | Balance (thousands) | % of Total | Weighted Average Rate | Weighted Average Maturities (years) | | :--- | :--- | :--- | :--- | :--- | | Secured | $1,594,765 | 19.0% | 3.77% | 6.4 | | Unsecured | $6,777,061 | 81.0% | 3.73% | 7.1 | | Total | $8,371,826 | 100.0% | 3.74% | 7.0 | | Selected Credit Ratios | June 30, 2025 | | :--- | :--- | | Total debt to Normalized EBITDAre | 4.49x | | Net debt to Normalized EBITDAre | 4.45x | | Unencumbered NOI as a % of total NOI | 90.4% | - The company is in compliance with its most restrictive financial covenants, including Debt to Adjusted Total Assets at 28.0% (vs. a limit of 60%) and Total Unencumbered Assets to Unsecured Debt at 464.8% (vs. a requirement of at least 125%)[91] Capital Structure As of June 30, 2025, total market capitalization was $34.8 billion, comprising $8.4 billion in debt and $26.4 billion in equity | Capital Component | Value (thousands) | % of Total Market Cap | | :--- | :--- | :--- | | Total Debt | $8,371,826 | 24.0% | | Total Equity | $26,445,342 | 76.0% | | Total Market Capitalization | $34,817,168 | 100.0% | Common Share and Unit Weighted Average Amounts Outstanding The weighted average diluted common shares and units outstanding for Q2 2025 was 391.5 million, used for FFO and NFFO calculations | | Q2 2025 | | :--- | :--- | | Weighted Average Common Shares - basic | 379,507,960 | | Total Common Shares and Units - diluted (for FFO) | 391,497,694 | Other Disclosures Development and Lease-Up Projects The total development pipeline includes 3,286 apartment units with a budgeted capital cost of $1.32 billion, contributing to future growth | Project Status | No. of Apartment Units | Total Budgeted Capital Cost (thousands) | | :--- | :--- | :--- | | Consolidated | 935 | $469,999 | | Unconsolidated | 2,351 | $846,407 | | Total Development Projects | 3,286 | $1,316,406 | - The total development pipeline contributed $8.2 million in NOI during the first six months of 2025, primarily from projects that have completed construction but are not yet stabilized[104] Residential Capital Expenditures Total consolidated residential capital expenditures for H1 2025 were $138.4 million, including recurring and NOI-enhancing investments For the Six Months Ended June 30, 2025 (Total Consolidated Properties) | Expenditure Type | Amount (thousands) | | :--- | :--- | | Recurring Capital Expenditures | $81,855 | | NOI-Enhancing Expenditures | $56,588 | | Total Capital Expenditures | $138,443 | - Renovation expenditures on 1,355 same-store apartment units during the first half of 2025 averaged approximately $30,000 per unit[108] Reconciliations and Definitions This section provides detailed reconciliations for non-GAAP financial measures and definitions for key industry and company-specific terms - Provides a reconciliation of Net Income to Normalized EBITDAre, showing a trailing twelve-month Normalized EBITDAre of $1.86 billion as of June 30, 2025[113] - Details the specific adjustments made to reconcile FFO to Normalized FFO, such as excluding pursuit cost write-offs and non-operating asset gains/losses[116] - Includes a reconciliation of reported and expected EPS to FFO and Normalized FFO per share, clarifying the impact of depreciation and gains on sales[155] - Offers definitions for key performance indicators and non-GAAP measures, including FFO, NOI, EBITDAre, Same Store Results, and various leasing metrics, to provide context for the report's data[126][146][157]