Equity Residential(US:EQR)2021-07-28 22:35Financial Data and Key Metrics Changes - The company raised its annual same-store revenue guidance from a decline of 6% to 8% to a decline of 4% to 5%, reflecting a 250 basis point improvement at the midpoint [24] - Same-store NOI guidance was adjusted to a range of negative 7.5% to negative 8.5%, which is a 400 basis point improvement at the midpoint compared to prior guidance [24] - The normalized FFO midpoint was raised from $2.75 to $2.90 [29] Business Line Data and Key Metrics Changes - The company reported that physical occupancy is currently at 96.5%, returning to 2019 levels, with strong demand driving occupancy growth [16] - The average household income for new move-ins increased to $152,000 in Q2 2021, up from just under $150,000 in Q1 2021 [59] - The total dollar amount of concessions granted peaked at over $6 million in February but dropped to $1.5 million in July, indicating a significant reduction in concessions [17] Market Data and Key Metrics Changes - San Francisco and Seattle are still slightly below 2019 occupancy levels, while Southern California markets are slightly above [16] - The pricing trend has grown by $660 from January 2021 to July 2021, surpassing prior year levels in all markets except San Francisco [16] - The company expects the San Francisco pricing trend to return to pre-pandemic levels by the end of Q3 2021 [20] Company Strategy and Development Direction - The company is focusing on capital allocation to suburban areas of established coastal markets and new markets like Austin and Atlanta [8] - The company plans to continue its development activities through joint ventures to leverage local expertise in new markets [14] - The company aims to acquire a mix of urban and suburban assets, with a target of reaching approximately $2 billion in acquisitions in Atlanta and around $1 billion in Austin [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong recovery, anticipating an extended period of higher-than-trend growth beginning in 2022 [7] - The company is optimistic about the demand drivers in its markets, citing job growth and constrained housing as key factors [47] - Management acknowledged the potential impact of the Delta variant but remains confident that widespread lockdowns are less likely than in the past [66] Other Important Information - The company has acquired $645 million in properties year-to-date and expects to close on another $850 million in acquisitions [12] - The company is actively working with eligible residents to access rental relief funds, having recovered approximately $5 million in the quarter [22] Q&A Session Summary Question: Can you frame the total opportunity of collecting back rent through rental assistance programs? - The total receivables on the books in the same-store portfolio is about $44 million, almost entirely reserved [31] Question: How quickly do you expect to get to scale in expansion markets like Austin and Atlanta? - The company aims to achieve about $2 billion in acquisitions in Atlanta and around $1 billion in Austin over the next few years [36] Question: Do you think ground-up development pencils today in stable markets like Boston and DC? - The company has some deals in the Northeast where they expect yields around 5% [39] Question: Do you expect all your markets to resemble normal seasonal paths in terms of market rents in 2022? - The company anticipates a return to a normal pattern in 2022, depending on demand strength in Q4 2021 [45] Question: What are your thoughts on the extended leasing season and its impact on renewals? - The company expects to return to higher retention levels as demand strengthens, potentially reaching the historical average of 60% [52] Question: Are you considering selling older assets in other parts of the country besides California? - The company is open to selling in other markets like DC and New York as fundamentals improve [55] Question: What is the profile of incoming renters in markets like New York and San Francisco? - The average age for move-ins was just over 33 years old, with an average household income of $152,000 [58]