EQUITY RESIDENTIAL Q4 FY2024 earnings call

• 2024 Performance: Finished the year with solid same-store revenue, though bad debt improvement slowed in the fourth quarter. Same-store expense growth was 2.9% in 2024, with an average of 3.2% over the past five years.
• 2025 Outlook: Expect similar annual same-store revenue growth as 2024, but with acceleration in quarter-over-quarter growth, especially in the back half. Driven by positive economic indicators like higher office-using job growth, low unemployment of college graduates, and tight housing supply in most markets.
• Economic Factors: Office-using job growth is expected to be higher in 2025, particularly on the West Coast. Unemployment of college graduates, a key resident demographic, is expected to remain low at 2.4% in 2025.
• Capital Allocation: Targets $1.5 billion in acquisitions and $1 billion in dispositions in 2025, funding acquisitions mostly from proceeds of dispositions and debt. Focus on strategically diversified portfolio with a focus on expansion markets while managing coastal market supply.
• Market Specifics: Seattle and DC are expected to lead revenue growth in 2025, while expansion markets face challenges due to elevated supply but have long-term positive outlooks.

Equity Residential's segment performance is characterized by two main segments: established markets, which account for 90% of net operating income, and expansion markets, which make up 10% of net operating income. In 2024, the established markets showed solid same-store revenue results, while the expansion markets faced challenges due to elevated supply levels. The company's financials are heavily weighted towards the established markets, which have a strong hold on net operating income.

• Revenue: Same-store revenue guidance range for 2025 is 2.25% to 3.25%, driven by embedded growth, leasing activity, and improved market conditions in West Coast markets.
• Expenses: Same-store operating expense growth guidance range is 3.5% to 4.5%, influenced by connectivity expenses, tax abatement step-ups, and utilities.
• NFFO: NFFO guidance includes contributions from transaction NOI, interest expense, and lease-up NOI, with specific considerations for unconsolidated joint ventures.
• Acquisitions/Dispositions: Expect $1.5 billion in acquisitions and $1 billion in dispositions in 2025, with a focus on funding through debt and proceeds from dispositions.

• Regulatory Uncertainty: Potential regulatory actions in markets like LA, such as eviction moratoriums or rent control, could impact operations and pricing power.
• Economic Uncertainties: Impact of governmental actions like tariffs on the economy and business is hard to estimate and not included in guidance.
• Fire Impacts in LA: Potential cleanup expenses and operational impacts from fires in LA, including uncertainty around demand for larger units and regulatory responses.

Q: Eric Wolfe asks about same-store revenue acceleration and market improvement.

A: Robert Garechana and Michael Manelis discuss that revenue acceleration is driven by leasing activity and other income, with higher growth in the back half of the year. Michael Manelis mentions the shape of revenue growth and renewal rates.

Q: Steve Sakwa asks about renewal rates and new leases.

A: Michael Manelis provides color on renewal rates and new lease expectations.

Q: John Pawlowski asks about urban vs suburban supply and D.C. market.

A: Mark Parrell and Michael Manelis discuss urban vs suburban supply and D.C. market conditions.