Equity Residential(US:EQR)2023-04-26 20:19Financial 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]