Equity Residential (NYSE: EQR) today announced that it has
raised its guidance ranges for its same store revenue and net
operating income (NOI) as well as its Earnings Per Share (EPS),
Funds from Operations (FFO) per share and Normalized FFO per share.
In connection with the Company’s planned participation in the
upcoming Nareit REITweek Conference, the Company has also posted a
new Investor Update to its website, www.equityapartments.com.
“We are pleased to raise our outlook for full year same store
revenue, NOI and Normalized FFO per share. This increase reflects
continued strong demand across our markets, particularly New York,
and lower than previously anticipated delinquency in Southern
California. We are also benefiting from limited new apartment
supply in most of our markets as well as the high prices and low
availability of single family housing in these markets,” said Mark
J. Parrell, Equity Residential’s President and CEO.
Full Year 2023 Guidance
Revised
Previous
Same Store (includes Residential and
Non-Residential):
Physical Occupancy
96.0%
96.2%
Revenue change
5.5% to 6.25%
4.5% to 6.0%
Expense change
No Change
4.0% to 5.0%
NOI change
6.0% to 7.0%
4.75% to 6.25%
EPS
$2.02 to $2.12
$1.99 to $2.09
FFO per share
$3.69 to $3.79
$3.66 to $3.76
Normalized FFO per share
$3.73 to $3.83
$3.70 to $3.80
All per share results are reported as available to common
shares/units on a diluted basis. The changes in the full year 2023
EPS, FFO per share and Normalized FFO per share guidance ranges are
due primarily to:
Positive/(Negative)
Impact
Revised Full Year 2023 vs
Previous Full Year 2023
Same store NOI
$
0.04
Other items
(0.01
)
Net:
$
0.03
The Company has a glossary of defined terms and related
reconciliations of non-GAAP financial measures on pages 3 and 4 of
this release.
About Equity Residential
Equity Residential is committed to creating communities where
people thrive. The Company, a member of the S&P 500, is focused
on the acquisition, development and management of residential
properties located in and around dynamic cities that attract
affluent long-term renters. Equity Residential owns or has
investments in 303 properties consisting of 79,900 apartment units,
with an established presence in Boston, New York, Washington, D.C.,
Seattle, San Francisco and Southern California, and an expanding
presence in Denver, Atlanta, Dallas/Ft. Worth and Austin. For more
information on Equity Residential, please visit our website at
www.equityapartments.com.
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements and information within the
meaning of the federal securities laws. These statements are based
on current expectations, estimates, projections and assumptions
made by management. While Equity Residential’s management believes
the assumptions underlying its forward-looking statements are
reasonable, such information is inherently subject to uncertainties
and may involve certain risks, including, without limitation,
changes in general market conditions, including the rate of job
growth and cost of labor and construction material, the level of
new multifamily construction and development, government
regulations (such as eviction moratoriums) and competition. These
and other risks and uncertainties are described under the heading
“Risk Factors” in our Annual Report on Form 10-K and subsequent
periodic reports filed with the Securities and Exchange Commission
(SEC) and available on our website, www.equityapartments.com. Many
of these uncertainties and risks are difficult to predict and
beyond management’s control. Forward-looking statements are not
guarantees of future performance, results or events. Equity
Residential assumes no obligation to update or supplement
forward-looking statements that become untrue because of subsequent
events.
Terms and Definitions:
Earnings Per Share ("EPS") – Net income per share
calculated in accordance with accounting principles generally
accepted in the United States (“GAAP”). Expected EPS is calculated
on a basis consistent with actual EPS. Due to the uncertain timing
and extent of property dispositions and the resulting gains/losses
on sales, actual EPS could differ materially from expected EPS.
FFO and Normalized
FFO:
Funds From Operations (“FFO”) – The
National Association of Real Estate Investment Trusts
(“Nareit”) defines FFO (December 2018 White Paper) as net
income (computed in accordance with GAAP), excluding gains or
losses from sales and impairment write-downs of depreciable real
estate and land when connected to the main business of a REIT,
impairment write-downs of investments in entities when the
impairment is directly attributable to decreases in the value of
depreciable real estate held by the entity and depreciation and
amortization related to real estate. Adjustments for partially
owned consolidated and unconsolidated partnerships and joint
ventures are calculated to reflect FFO on the same basis. Expected
FFO per share is calculated on a basis consistent with actual FFO
per share and is considered an appropriate supplemental measure of
expected operating performance when compared to expected EPS.
The Company believes that FFO and FFO
available to Common Shares and Units are helpful to investors as
supplemental measures of the operating performance of a real estate
company, because they are recognized measures of performance by the
real estate industry and by excluding gains or losses from sales
and impairment write-downs of depreciable real estate and excluding
depreciation related to real estate (which can vary among owners of
identical assets in similar condition based on historical cost
accounting and useful life estimates), FFO and FFO available to
Common Shares and Units can help compare the operating performance
of a company’s real estate between periods or as compared to
different companies.
Normalized Funds From Operations
("Normalized FFO") – Normalized FFO begins with FFO and
excludes:
- the impact of any expenses relating to non-operating real
estate asset impairment;
- pursuit cost write-offs;
- gains and losses from early debt extinguishment and preferred
share redemptions;
- gains and losses from non-operating assets; and
- other miscellaneous items.
Expected Normalized FFO per share is
calculated on a basis consistent with actual Normalized FFO per
share and is considered an appropriate supplemental measure of
expected operating performance when compared to expected EPS.
The Company believes that Normalized FFO and
Normalized FFO available to Common Shares and Units are helpful to
investors as supplemental measures of the operating performance of
a real estate company because they allow investors to compare the
Company's operating performance to its performance in prior
reporting periods and to the operating performance of other real
estate companies without the effect of items that by their nature
are not comparable from period to period and tend to obscure the
Company's actual operating results.
FFO, FFO available to Common Shares and
Units, Normalized FFO and Normalized FFO available to Common Shares
and Units do not represent net income, net income available to
Common Shares or net cash flows from operating activities in
accordance with GAAP. Therefore, FFO, FFO available to Common
Shares and Units, Normalized FFO and Normalized FFO available to
Common Shares and Units should not be exclusively considered as
alternatives to net income, net income available to Common Shares
or net cash flows from operating activities as determined by GAAP
or as a measure of liquidity. The Company's calculation of FFO, FFO
available to Common Shares and Units, Normalized FFO and Normalized
FFO available to Common Shares and Units may differ from other real
estate companies due to, among other items, variations in cost
capitalization policies for capital expenditures and, accordingly,
may not be comparable to such other real estate companies.
FFO available to Common Shares and Units and
Normalized FFO available to Common Shares and Units are calculated
on a basis consistent with net income available to Common Shares
and reflects adjustments to net income for preferred distributions
and premiums on redemption of preferred shares in accordance with
GAAP. The equity positions of various individuals and entities that
contributed their properties to the Operating Partnership in
exchange for OP Units are collectively referred to as the
"Noncontrolling Interests – Operating Partnership". Subject to
certain restrictions, the Noncontrolling Interests – Operating
Partnership may exchange their OP Units for Common Shares on a
one-for-one basis.
The following table presents a reconciliation of expected EPS to
expected FFO per share and expected Normalized FFO per share.
Expected
2023
Per Share
EPS – Diluted
$2.02 to $2.12
Depreciation expense
2.17
Net (gain) loss on sales
(0.50)
Impairment – operating real estate
assets
—
FFO per share – Diluted
3.69 to 3.79
Impairment – non-operating real estate
assets
—
Write-off of pursuit costs
0.01
Debt extinguishment and preferred
share
redemption (gains) losses
—
Non-operating asset (gains) losses
0.01
Other miscellaneous items
0.02
Normalized FFO per share – Diluted
$3.73 to $3.83
Net Operating Income (“NOI”) – NOI is the Company’s
primary financial measure for evaluating each of its apartment
properties. NOI is defined as rental income less direct property
operating expenses (including real estate taxes and insurance). The
Company believes that NOI is helpful to investors as a supplemental
measure of its operating performance because it is a direct measure
of the actual operating results of the Company's apartment
properties. NOI does not include an allocation of property
management expenses either in the current or comparable periods.
Rental income for all leases and operating expense for ground
leases (for both same store and non-same store properties) are
reflected on a straight-line basis in accordance with GAAP for the
current and comparable periods.
Non-Residential – Consists of revenues and expenses from
retail and public parking garage operations.
Non-Same Store Properties – For annual comparisons,
primarily includes all properties acquired during 2022 and 2023,
plus any properties in lease-up and not stabilized as of January 1,
2022.
Physical Occupancy – The weighted average occupied
apartment units for the reporting period divided by the average of
total apartment units available for rent for the reporting
period.
Residential – Consists of multifamily apartment revenues
and expenses.
Same Store Properties – For annual comparisons, primarily
includes all properties acquired or completed that are stabilized
prior to January 1, 2022, less properties subsequently sold.
Properties are included in Same Store when they are stabilized for
all of the current and comparable periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230530005640/en/
Marty McKenna (312) 928-1901 mmckenna@eqr.com
Equity Residential (NYSE:EQR)
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