Equity Residential (EQR) Q4 2022 Earnings Call Transcript

For the period ending December 31, 2022

February 10, 2023 11:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Equity Residential Fourth Quarter 2022 Earnings Conference Call and Webcast. Today’s call is being recorded.

At this time, I’d like to turn the conference over to Mr. Marty McKenna. Please go ahead, sir.

Marty McKenna - IR

Good morning, and thanks for joining us to discuss Equity Residential’s fourth quarter 2022 results.

Our featured speakers today are Mark Parrell, our President and CEO; and Michael Manelis, our Chief Operating Officer; and Bob Garechana, our Chief Financial Officer. Alec Brackenridge, our Chief Investment Officer is here with us as well for the Q&A.

Our earnings release is posted in the Investors section of equityapartments.com. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties. The Company assumes no obligation to update or supplement these statements that become untrue, because of subsequent events.

Now, I will turn the call over to Mark Parrell.

Mark Parrell - President and CEO

Thanks Marty. Good morning and thank you all for joining us today to discuss our fourth quarter and full year results and our outlook for 2023.

2022 was a terrific year for Equity Residential. We finished the year, as we expected, producing same-store revenue growth of 10.6%. We continued to see good demand during the fourth quarter, but certainly saw a return of seasonality to the business. Our strong 2022 same-store revenue growth combined with modest expense growth of 3.6% resulted in same-store net operating income growth for the full year of 14.1%. With continuing positive financial leverage, this led to a 17.7% increase in year-over-year normalized FFO.

I want to take a moment, thank all my colleagues across Equity Residential for their hard work and dedication in delivering these terrific results. In a moment, Michael Manelis will take you through our 2022 highlights and how we expect 2023 to shape up on the revenue side; and Bob Garechana will comment on bad debt and review our 2022 expense results and 2023 expense expectations, as well as recent balance sheet activities and then we will take your questions.

We have provided guidance for same-store revenue growth at a midpoint of 5.25%, which would make 2023 another good year for Equity Residential and produce same-store revenue growth well above our long-term average. We do admit to finding 2023 harder to predict than usual. On the positive side, we go into the year, expecting a benefit from embedded growth of about 4.2% from leases written in 2022 and we also carry into the year and above average loss to lease, both of which will contribute to positive momentum for us, particularly in the first half of 2023.