Equity residential reports first quarter 2022 results
Chicago--(business wire)--equity residential (nyse: eqr) today reported results for the quarter ended march 31, 2022. all per share results are reported as available to common shares/units on a diluted basis. for the first quarter of 2022, the company reported earnings per share (eps), funds from operations (ffo) per share and normalized ffo per share of $0.19, $0.77 and $0.77, respectively. “we delivered very good revenue growth in the first quarter driven by lease rates that accelerated faster than we expected due to exceptionally strong demand partially offset by higher than anticipated levels of new delinquency in southern california,” said mark j. parrell, equity residential’s president and ceo. “operating expense growth remains in check due to a combination of muted property tax increases and continuing efficiencies from our innovation initiatives, leading to 10.7% same store noi growth for the quarter. as we head into our primary leasing season, we remain well positioned to generate excellent cash flow growth for our shareholders.” recent highlights strong demand drove a 26.7% increase in eps, 14.9% increase in ffo per share and 13.2% increase in normalized ffo per share during the first quarter of 2022 compared to the same period of 2021. the company reported a 7.8% increase in same store revenue for the first quarter of 2022 compared to the same period of 2021, driven by strong physical occupancy and significant growth in pricing power. the company reported a 2.5% increase in same store expenses for the first quarter of 2022, reflecting the company’s continued success in managing controllable expenses and modest growth in real estate tax expense. the company reported same store turnover of 8.7% for the first quarter of 2022, the lowest in the company’s history, reflecting a continued trend of historically high resident retention. the company acquired one operating property in the first quarter of 2022, a 172-unit apartment property in san diego, for a purchase price of $113.0 million. the company did not sell any properties during the first quarter of 2022, but sold a 354-unit apartment property in new york for approximately $265.7 million in april 2022. first quarter 2022 results the change in eps for the quarter ended march 31, 2022 compared to the same period of 2021 is due primarily to higher depreciation expense, offset by the various adjustment items listed on page 25 of this release and the items described below. the per share change in ffo for the quarter ended march 31, 2022 compared to the same period of 2021 is due primarily to the various adjustment items listed on page 25 of this release and the items described below. the per share change in normalized ffo is due primarily to: positive/(negative) impact first quarter 2022 vs. first quarter 2021 residential same store net operating income (noi) $ 0.10 lease-up noi 0.01 2022 and 2021 transaction activity impact on noi, net 0.01 interest expense, net (0.02 ) other items (0.01 ) net $ 0.09 the company has a glossary of defined terms and related reconciliations of non-gaap financial measures on pages 27 through 32 of this release. reconciliations and definitions of ffo and normalized ffo are provided on pages 6, 29 and 30 of this release. first quarter 2022 same store results the following table shows the total same store results for the periods presented. first quarter 2022 vs. first quarter 2021 first quarter 2022 vs. fourth quarter 2021 apartment units 74,675 77,276 physical occupancy 96.4% vs. 95.0% 96.4% vs. 96.6% revenues 7.8% 0.9% expenses 2.5% 5.7% noi 10.7% (1.5%) on page 10 of this release, the company has provided a breakout of residential and non-residential same store results with definitions that can be found on page 31 of this release. non-residential operations account for approximately 3.8% of total revenues for the quarter ended march 31, 2022. the following table reflects the detail of the change in same store residential revenues, which is presented on a gaap basis showing leasing concessions on a straight-line basis. first quarter 2022 vs. first quarter 2021 first quarter 2022 vs. fourth quarter 2021 % change % change same store residential revenues- comparable period lease rates 4.2 % 1.9 % leasing concessions 1.5 % 0.6 % vacancy gain (loss) 1.2 % (0.2 %) bad debt, net (1) 0.6 % (1.2 %) other (2) 0.3 % 0.0 % same store residential revenues- current period 7.8 % 1.1 % (1) change in rental income due to bad debt write-offs and reserves, net of amounts (including governmental rental assistance payments) collected on previously written-off or reserved accounts. (2) includes ancillary income, utility recoveries, early lease termination income, miscellaneous income and other items. see page 11 for detail and reconciliations of same store residential revenues on a gaap basis to same store residential revenues with leasing concessions on a cash basis. as indicated in our march 2022 investor update1, both quarter-over-quarter and sequential same store residential revenues in the first quarter of 2022 were impacted by higher than expected delinquency in southern california caused by residents that were previously in good standing failing to pay their rent as they applied for funds under the california rental assistance program as it was expanded and extended into 2022. the company continues to actively pursue payment and is seeing early signs of improved resident payment behavior in april 2022 with the expiration of the program’s eligibility period on march 31, 2022. for the first quarter of 2022, better than expected lease rates partially offset this increased delinquency. for the full year of 2022, we expect these higher lease rates to more than fully offset the increased delinquency, which we now expect to moderate later in the second half of 2022. 1 the march 2022 investor update is included in the investor section on the company’s website. residential same store operating statistics the following table includes select operating metrics for residential same store properties: q4 2021 q1 2022 april 2022 (1) physical occupancy (2) 96.4% 96.3% 96.6% percentage of residents renewing by quarter/month 61.2% 60.0% 60.0% new lease change 10.6% 15.3% 17.6% renewal rate achieved 10.7% 11.9% 12.5% blended rate 10.7% 13.3% 14.7% (1) april 2022 results are preliminary. (2) physical occupancy is as of month-end december for q4 2021, month-end march for q1 2022 and as of april 21st for april 2022. investment activity and portfolio strategy the company continues to optimize its portfolio by allocating capital to desirable suburban locations within its established markets and through expansion into certain new markets that attract a renter demographic that values our exceptional product offering. in support of this strategy, the company acquired a 172-unit apartment property in san diego, built in 2020, during the first quarter of 2022 for $113.0 million at an acquisition cap rate of 3.5%. the company did not sell any properties in the first quarter of 2022, but subsequent to the quarter, sold a 354-unit apartment property in new york, built in 2003, for approximately $265.7 million at a disposition yield of 3.3%. second quarter 2022 guidance the company has established guidance ranges for the second quarter of 2022 eps, ffo per share and normalized ffo per share as listed below: q2 2022 guidance eps $1.00 to $1.04 ffo per share $0.82 to $0.86 normalized ffo per share $0.82 to $0.86 the difference between the first quarter of 2022 actual eps of $0.19 and the second quarter of 2022 eps guidance midpoint of $1.02 is due primarily to higher expected same store noi and property sale gains. the difference between the first quarter of 2022 actual ffo and normalized ffo of $0.77 per share and the second quarter of 2022 ffo and normalized ffo guidance midpoint of $0.84 per share is due primarily to higher expected same store noi. 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 311 properties consisting of 80,581 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, competition and government regulation. in addition, these forward-looking statements are subject to risks related to the covid-19 pandemic, many of which are unknown, including the duration and severity of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers and employees in particular, its impact on the employment rate and the economy and the corresponding impact on our residents’ and tenants’ ability to pay their rent on time or at all, the extent and impact of governmental responses, the rollout and effectiveness of vaccines and the impact of operational changes we have implemented and may implement in response to the pandemic. 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. a live web cast of the company’s conference call discussing these results will take place tomorrow, wednesday, april 27, 2022 at 10:00 a.m. ct. please visit the investor section of the company’s website at www.equityapartments.com for the webcast link. equity residential consolidated statements of operations (amounts in thousands except per share data) (unaudited) quarter ended march 31, 2022 2021 revenues rental income $ 653,348 $ 597,602 expenses property and maintenance 124,874 117,054 real estate taxes and insurance 100,688 103,470 property management 30,747 26,130 general and administrative 17,238 15,383 depreciation 229,961 199,962 total expenses 503,508 461,999 net gain (loss) on sales of real estate properties (102 ) (43 ) operating income 149,738 135,560 interest and other income 3,528 216 other expenses (3,056 ) (4,110 ) interest: expense incurred, net (72,792 ) (67,358 ) amortization of deferred financing costs (2,077 ) (2,185 ) income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels 75,341 62,123 income and other tax (expense) benefit (282 ) (153 ) income (loss) from investments in unconsolidated entities (1,261 ) (1,611 ) net gain (loss) on sales of land parcels — 5 net income 73,798 60,364 net (income) loss attributable to noncontrolling interests: operating partnership (2,394 ) (2,143 ) partially owned properties (639 ) (682 ) net income attributable to controlling interests 70,765 57,539 preferred distributions (772 ) (773 ) net income available to common shares $ 69,993 $ 56,766 earnings per share – basic: net income available to common shares $ 0.19 $ 0.15 weighted average common shares outstanding 375,509 372,280 earnings per share – diluted: net income available to common shares $ 0.19 $ 0.15 weighted average common shares outstanding 389,628 386,916 distributions declared per common share outstanding $ 0.625 $ 0.6025 equity residential consolidated statements of funds from operations and normalized funds from operations (amounts in thousands except per share data) (unaudited) quarter ended march 31, 2022 2021 net income $ 73,798 $ 60,364 net (income) loss attributable to noncontrolling interests – partially owned properties (639 ) (682 ) preferred distributions (772 ) (773 ) net income available to common shares and units 72,387 58,909 adjustments: depreciation 229,961 199,962 depreciation – non-real estate additions (1,052 ) (1,100 ) depreciation – partially owned properties (893 ) (828 ) depreciation – unconsolidated properties 620 617 net (gain) loss on sales of unconsolidated entities - operating assets (9 ) (4 ) net (gain) loss on sales of real estate properties 102 43 ffo available to common shares and units 301,116 257,599 adjustments (see note for additional detail): impairment – non-operating assets — — write-off of pursuit costs 1,463 1,331 debt extinguishment and preferred share redemption (gains) losses — 264 non-operating asset (gains) losses (1,642 ) 854 other miscellaneous items (371 ) 2,242 normalized ffo available to common shares and units $ 300,566 $ 262,290 ffo $ 301,888 $ 258,372 preferred distributions (772 ) (773 ) ffo available to common shares and units $ 301,116 $ 257,599 ffo per share and unit – basic $ 0.78 $ 0.67 ffo per share and unit – diluted $ 0.77 $ 0.67 normalized ffo $ 301,338 $ 263,063 preferred distributions (772 ) (773 ) normalized ffo available to common shares and units $ 300,566 $ 262,290 normalized ffo per share and unit – basic $ 0.78 $ 0.68 normalized ffo per share and unit – diluted $ 0.77 $ 0.68 weighted average common shares and units outstanding – basic 387,397 385,330 weighted average common shares and units outstanding – diluted 389,628 386,916 note: see adjustments from ffo to normalized ffo for additional detail regarding the adjustments from ffo to normalized ffo. see additional reconciliations and definitions of non-gaap financial measures and other terms for the definitions of non-gaap financial measures and other terms as well as the reconciliations of eps to ffo per share and normalized ffo per share. equity residential consolidated balance sheets (amounts in thousands except for share amounts) (unaudited) march 31, december 31, 2022 2021 assets land $ 5,836,951 $ 5,814,790 depreciable property 22,496,307 22,370,811 projects under development 36,718 24,307 land held for development 66,980 62,998 investment in real estate 28,436,956 28,272,906 accumulated depreciation (8,578,131 ) (8,354,282 ) investment in real estate, net 19,858,825 19,918,624 investments in unconsolidated entities (1) 150,092 127,448 cash and cash equivalents 41,140 123,832 restricted deposits 70,560 236,404 right-of-use assets 471,667 474,713 other assets 237,953 288,220 total assets $ 20,830,237 $ 21,169,241 liabilities and equity liabilities: mortgage notes payable, net $ 2,193,199 $ 2,191,201 notes, net 5,836,957 5,835,222 line of credit and commercial paper 129,995 315,030 accounts payable and accrued expenses 157,681 107,013 accrued interest payable 56,876 69,510 lease liabilities 311,293 312,335 other liabilities 303,654 353,102 security deposits 67,515 66,141 distributions payable 242,574 233,502 total liabilities 9,299,744 9,483,056 commitments and contingencies redeemable noncontrolling interests – operating partnership 495,760 498,977 equity: shareholders’ equity: preferred shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 745,600 shares issued and outstanding as of march 31, 2022 and december 31, 2021 37,280 37,280 common shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 375,974,070 shares issued and outstanding as of march 31, 2022 and 375,527,195 shares issued and outstanding as of december 31, 2021 3,760 3,755 paid in capital 9,142,969 9,121,122 retained earnings 1,661,705 1,827,063 accumulated other comprehensive income (loss) (31,847 ) (34,272 ) total shareholders’ equity 10,813,867 10,954,948 noncontrolling interests: operating partnership 217,451 214,094 partially owned properties 3,415 18,166 total noncontrolling interests 220,866 232,260 total equity 11,034,733 11,187,208 total liabilities and equity $ 20,830,237 $ 21,169,241 (1) includes $89.7 million and $72.5 million in unconsolidated development projects as of march 31, 2022 and december 31, 2021, respectively. see development and lease-up projects for additional details on unconsolidated development projects. equity residential portfolio summary as of march 31, 2022 % of stabilized average apartment budgeted rental markets/metro areas properties units noi rate established markets: los angeles 66 15,259 18.5 % $ 2,584 orange county 13 4,028 5.3 % 2,450 san diego 12 2,878 4.0 % 2,697 subtotal – southern california 91 22,165 27.8 % 2,575 san francisco 44 11,830 16.0 % 3,013 washington dc 48 14,851 15.5 % 2,380 new york 36 9,345 13.7 % 3,741 boston 27 7,170 11.3 % 3,131 seattle 46 9,525 11.0 % 2,388 subtotal – established markets 292 74,886 95.3 % 2,781 expansion markets: denver 8 2,498 2.6 % 2,228 atlanta 4 1,215 0.9 % 1,952 dallas/ft. worth 4 1,241 0.8 % 1,837 austin 3 741 0.4 % 1,723 subtotal – expansion markets 19 5,695 4.7 % 2,020 total 311 80,581 100.0 % $ 2,728 properties apartment units wholly owned properties 295 77,035 partially owned properties – consolidated 16 3,546 311 80,581 note: projects under development are not included in the portfolio summary until construction has been completed. equity residential portfolio rollforward q1 2022 ($ in thousands) properties apartment units purchase price acquisition cap rate 12/31/2021 310 80,407 acquisitions: consolidated rental properties 1 172 $ 113,000 3.5 % configuration changes — 2 3/31/2022 311 80,581 equity residential first quarter 2022 vs. first quarter 2021 same store results/statistics including 74,675 same store apartment units $ in thousands (except for average rental rate) first quarter 2022 first quarter 2021 residential % change non- residential % change total % change residential non- residential total revenues $ 595,325 (1) 7.8% $ 23,032 6.4% $ 618,357 7.8% revenues $ 552,111 $ 21,641 $ 573,752 expenses $ 203,752 2.5% $ 6,239 2.2% $ 209,991 2.5% expenses $ 198,784 $ 6,106 $ 204,890 noi $ 391,573 10.8% $ 16,793 8.1% $ 408,366 10.7% noi $ 353,327 $ 15,535 $ 368,862 average rental rate $ 2,757 6.2% average rental rate $ 2,597 physical occupancy 96.4 % 1.4% physical occupancy 95.0 % turnover 8.7 % (1.3%) turnover 10.0 % first quarter 2022 vs. fourth quarter 2021 same store results/statistics including 77,276 same store apartment units $ in thousands (except for average rental rate) first quarter 2022 fourth quarter 2021 residential % change non- residential % change total % change residential non- residential total revenues $ 610,398 (1) 1.1% $ 23,243 (4.0%) $ 633,641 0.9% revenues $ 604,020 $ 24,219 $ 628,239 expenses $ 209,841 5.9% $ 6,308 0.0% $ 216,149 5.7% expenses $ 198,153 $ 6,308 $ 204,461 noi $ 400,557 (1.3%) $ 16,935 (5.4%) $ 417,492 (1.5%) noi $ 405,867 $ 17,911 $ 423,778 average rental rate $ 2,732 1.2% average rental rate $ 2,699 physical occupancy 96.4 % (0.2%) physical occupancy 96.6 % turnover 8.8 % (0.7%) turnover 9.5 % (1) see page 11 for same store residential revenues with leasing concessions reflected on a cash basis. see additional reconciliations and definitions of non-gaap financial measures and other terms for additional detail. equity residential same store residential revenues – gaap to cash basis (1) $ in thousands first quarter 2022 vs. first quarter 2021 first quarter 2022 vs. fourth quarter 2021 74,675 same store apartment units 77,276 same store apartment units q1 2022 q1 2021 q1 2022 q4 2021 same store residential revenues (gaap basis) $ 595,325 $ 552,111 $ 610,398 $ 604,020 leasing concessions amortized 3,677 11,726 3,881 7,306 leasing concessions granted (1,350 ) (17,058 ) (1,440 ) (570 ) same store residential revenues with leasing concessions on a cash basis $ 597,652 $ 546,779 $ 612,839 $ 610,756 % change - gaap revenue 7.8 % 1.1 % % change - cash revenue 9.3 % 0.3 % (1) see additional reconciliations and definitions of non-gaap financial measures and other terms for additional detail. same store net operating income by quarter including 74,675 same store apartment units $ in thousands q1 2022 q4 2021 q3 2021 q2 2021 q1 2021 same store revenues $ 618,357 $ 613,703 $ 595,207 $ 573,916 $ 573,752 same store expenses 209,991 199,218 204,865 197,700 204,890 same store noi (includes residential and non-residential) $ 408,366 $ 414,485 $ 390,342 $ 376,216 $ 368,862 equity residential same store resident/tenant accounts receivable balances including 74,675 same store apartment units $ in thousands residential non-residential balance sheet (other assets): march 31, 2022 december 31, 2021 march 31, 2022 december 31, 2021 resident/tenant accounts receivable balances $ 42,784 $ 37,344 $ 3,631 $ 3,192 allowance for doubtful accounts (38,337 ) (32,665 ) (2,379 ) (2,365 ) net receivable balances $ 4,447 (1) $ 4,679 $ 1,252 $ 827 straight-line receivable balances $ 2,495 (2) $ 4,822 $ 12,641 $ 12,684 (1) the company held same store residential security deposits approximating 55.6% of the net receivable balance at march 31, 2022. (2) total same store residential leasing concessions granted in the first quarter of 2022 were approximately $1.4 million, higher than the fourth quarter of 2021 due to concession usage in seattle. the straight-line receivable balance of $2.5 million reflects residential leasing concessions that the company expects will be primarily recognized as a reduction of rental revenues in the remainder of 2022 and the first quarter of 2023. same store residential bad debt including 74,675 same store apartment units $ in thousands income statement (rental income): q1 2022 q4 2021 q1 2021 bad debt, net (1) $ 9,677 $ 1,612 $ 13,158 % of same store residential revenues 1.6 % 0.3 % 2.4 % (1) bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $9.6 million and $16.3 million during the first quarter of 2022 and fourth quarter of 2021, respectively. equity residential first quarter 2022 vs. first quarter 2021 same store residential results/statistics by market increase (decrease) from prior year's quarter markets/metro areas apartment units q1 2022 % of actual noi q1 2022 average rental rate q1 2022 weighted average physical occupancy % q1 2022 turnover revenues expenses noi average rental rate physical occupancy turnover los angeles 15,259 19.9 % $ 2,584 96.7 % 8.3 % 8.6 % 2.8 % 11.6 % 7.6 % 0.9 % (1.6 %) orange county 4,028 5.7 % 2,450 97.1 % 6.3 % 11.3 % 1.7 % 14.4 % 11.1 % 0.1 % (1.5 %) san diego 2,706 4.1 % 2,662 96.9 % 8.9 % 11.7 % 6.4 % 13.5 % 12.1 % (0.3 %) (1.6 %) subtotal – southern california 21,993 29.7 % 2,569 96.8 % 8.0 % 9.5 % 3.0 % 12.4 % 8.8 % 0.6 % (1.6 %) san francisco 11,630 17.7 % 3,004 96.4 % 9.5 % 6.0 % 3.6 % 7.1 % 2.9 % 2.8 % (2.2 %) washington dc 14,322 16.6 % 2,371 96.9 % 8.2 % 3.0 % 4.0 % 2.5 % 2.0 % 1.0 % (1.4 %) new york 9,345 13.0 % 3,741 97.0 % 8.2 % 13.6 % 2.4 % 27.6 % 6.8 % 5.7 % (0.1 %) seattle 9,331 11.4 % 2,385 94.6 % 11.5 % 5.2 % (5.4 %) 10.3 % 6.2 % (1.0 %) 0.3 % boston 6,430 9.7 % 3,054 95.9 % 7.6 % 7.7 % 5.0 % 9.0 % 7.0 % 0.6 % (1.3 %) denver 1,624 1.9 % 2,207 97.4 % 10.5 % 12.8 % 6.1 % 15.7 % 11.2 % 1.3 % (1.8 %) total 74,675 100.0 % $ 2,757 96.4 % 8.7 % 7.8 % (1) 2.5 % 10.8 % 6.2 % 1.4 % (1.3 %) (1) with leasing concessions reflected on a cash basis, same store residential revenues increased 9.3% in the first quarter of 2022 compared to the first quarter of 2021. see page 11 for additional detail and reconciliations. note: the above table reflects residential same store results only. residential operations account for approximately 96.2% of total revenues for the quarter ended march 31, 2022. equity residential first quarter 2022 vs. fourth quarter 2021 same store residential results/statistics by market increase (decrease) from prior quarter markets/metro areas apartment units q1 2022 % of actual noi q1 2022 average rental rate q1 2022 weighted average physical occupancy % q1 2022 turnover revenues expenses noi average rental rate physical occupancy turnover los angeles 15,259 19.4 % $ 2,584 96.7 % 8.3 % (3.6 %) 6.3 % (7.6 %) (3.3 %) (0.2 %) (1.0 %) orange county 4,028 5.6 % 2,450 97.1 % 6.3 % 0.4 % 5.0 % (0.9 %) 1.0 % (0.6 %) (1.1 %) san diego 2,706 4.0 % 2,662 96.9 % 8.9 % 2.2 % 9.5 % 0.1 % 2.5 % (0.3 %) 0.3 % subtotal – southern california 21,993 29.0 % 2,569 96.8 % 8.0 % (2.2 %) 6.4 % (5.3 %) (1.9 %) (0.3 %) (0.9 %) san francisco 11,630 17.3 % 3,004 96.4 % 9.5 % 2.0 % 7.8 % (0.5 %) 2.0 % 0.0 % (1.2 %) washington dc 14,535 16.5 % 2,367 96.9 % 8.2 % 0.8 % 5.6 % (1.5 %) 1.0 % (0.1 %) (0.8 %) new york 9,345 12.6 % 3,741 97.0 % 8.2 % 3.6 % 4.5 % 2.7 % 4.0 % (0.4 %) 1.3 % seattle 9,524 11.4 % 2,388 94.6 % 11.4 % 2.1 % (1.0 %) 3.4 % 2.4 % (0.4 %) 0.0 % boston 6,700 9.9 % 3,041 95.8 % 7.6 % 2.9 % 9.1 % 0.2 % 3.0 % 0.0 % (1.7 %) denver 1,904 2.2 % 2,205 97.4 % 10.9 % 3.1 % 6.3 % 1.8 % 2.1 % 1.0 % (3.8 %) other expansion markets 1,645 1.1 % 1,807 96.2 % 12.6 % 4.5 % 27.4 % (9.9 %) 4.2 % 0.4 % 0.7 % total 77,276 100.0 % $ 2,732 96.4 % 8.8 % 1.1 % (1) 5.9 % (1.3 %) 1.2 % (0.2 %) (0.7 %) (1) with leasing concessions reflected on a cash basis, same store residential revenues increased 0.3% in the first quarter of 2022 compared to the fourth quarter of 2021. see page 11 for additional detail and reconciliations. note: the above table reflects residential same store results only. residential operations account for approximately 96.2% of total revenues for the quarter ended march 31, 2022. equity residential same store residential net effective lease pricing statistics for 74,675 same store apartment units new lease change (1) renewal rate achieved (1) blended rate (1) markets/metro areas q1 2022 q4 2021 q1 2022 q4 2021 q1 2022 q4 2021 southern california 14.6 % 13.4 % 7.2 % 7.1 % 10.0 % 9.4 % san francisco 12.6 % 3.6 % 12.6 % 12.4 % 12.6 % 8.1 % washington dc 9.0 % 6.0 % 7.0 % 6.8 % 7.8 % 6.5 % new york 29.7 % 20.2 % 21.0 % 14.5 % 24.4 % 16.6 % seattle 13.0 % 11.1 % 16.4 % 17.1 % 14.6 % 14.2 % boston 13.1 % 12.6 % 15.6 % 14.6 % 14.4 % 13.8 % denver 11.0 % 12.4 % 11.8 % 12.8 % 11.3 % 12.6 % total 15.3 % 10.6 % 11.9 % 10.7 % 13.3 % 10.7 % (1) see additional reconciliations and definitions of non-gaap financial measures and other terms for definitions. see page 3 for april 2022 preliminary data. equity residential first quarter 2022 vs. first quarter 2021 total same store operating expenses including 74,675 same store apartment units $ in thousands q1 2022 q1 2021 $ change (1) % change % of q1 2022 operating expenses real estate taxes $ 87,550 $ 87,086 $ 464 0.5 % 41.7 % on-site payroll 40,488 41,917 (1,429 ) (3.4 %) 19.3 % utilities 34,110 30,403 3,707 12.2 % 16.2 % repairs and maintenance 25,380 23,868 1,512 6.3 % 12.1 % insurance 7,233 6,667 566 8.5 % 3.4 % leasing and advertising 2,251 2,744 (493 ) (18.0 %) 1.1 % other on-site operating expenses 12,979 12,205 774 6.3 % 6.2 % total same store operating expenses (2) (includes residential and non-residential) $ 209,991 $ 204,890 $ 5,101 2.5 % 100.0 % (1) the quarter-over-quarter changes were primarily driven by the following factors: real estate taxes – increase due to modest escalation in rates and assessed values. on-site payroll – improved sales and service staff utilization from various technology initiatives and higher than usual staffing vacancies during the current period. utilities – increase from gas and electric primarily driven by higher commodity prices. repairs and maintenance – increase primarily driven by volume and timing of maintenance repairs along with increases in minimum wage on contracted services. insurance – increase due to higher premiums on property insurance renewal due to challenging conditions in the insurance market. leasing and advertising – decrease due primarily to reduction in use of outside brokers. other on-site operating expenses – increase driven primarily by higher ground lease related expenses. (2) see additional reconciliations and definitions of non-gaap financial measures and other terms for additional details. equity residential debt summary as of march 31, 2022 ($ in thousands) debt balances (1) % of total weighted average rates (1) weighted average maturities (years) secured $ 2,193,199 26.9 % 3.33 % 4.5 unsecured 5,966,952 73.1 % 3.48 % 9.5 total $ 8,160,151 100.0 % 3.44 % 8.1 fixed rate debt: secured – conventional $ 1,895,251 23.2 % 3.69 % 3.7 unsecured – public 5,836,957 71.5 % 3.61 % 9.7 fixed rate debt 7,732,208 94.7 % 3.63 % 8.2 floating rate debt: secured – conventional 62,767 0.8 % 2.40 % 0.2 secured – tax exempt 235,181 2.9 % 0.69 % 12.2 unsecured – revolving credit facility — — — 2.6 unsecured – commercial paper program (2) 129,995 1.6 % 0.35 % — floating rate debt 427,943 5.3 % 0.72 % 6.9 total $ 8,160,151 100.0 % 3.44 % 8.1 (1) see additional reconciliations and definitions of non-gaap financial measures and other terms for additional details. (2) at march 31, 2022, the weighted average maturity of commercial paper outstanding was 3 days. the weighted average amount outstanding for the quarter ended march 31, 2022 was approximately $260.9 million. note: the company capitalized interest of approximately $1.0 million and $3.8 million during the quarters ended march 31, 2022 and 2021, respectively. equity residential debt maturity schedule as of march 31, 2022 ($ in thousands) year fixed rate floating rate total % of total weighted average coupons on fixed rate debt (1) weighted average coupons on total debt (1) 2022 $ 262,253 $ 194,332 (2) $ 456,585 5.5 % 3.25 % 2.40 % 2023 1,325,588 3,500 1,329,088 16.1 % 3.74 % 3.73 % 2024 — 6,100 6,100 0.1 % n/a 0.46 % 2025 450,000 8,340 458,340 5.6 % 3.38 % 3.32 % 2026 592,025 9,000 601,025 7.3 % 3.58 % 3.54 % 2027 400,000 9,800 409,800 5.0 % 3.25 % 3.18 % 2028 900,000 10,700 910,700 11.1 % 3.79 % 3.75 % 2029 888,120 11,500 899,620 10.9 % 3.30 % 3.27 % 2030 1,095,000 12,600 1,107,600 13.4 % 2.55 % 2.52 % 2031 528,500 39,700 568,200 6.9 % 1.94 % 1.84 % 2032+ 1,350,850 138,900 1,489,750 18.1 % 4.39 % 4.02 % subtotal 7,792,336 444,472 8,236,808 100.0 % 3.44 % 3.30 % deferred financing costs and unamortized (discount) (60,128 ) (16,529 ) (76,657 ) n/a n/a n/a total $ 7,732,208 $ 427,943 $ 8,160,151 100.0 % 3.44 % 3.30 % (1) see additional reconciliations and definitions of non-gaap financial measures and other terms for additional details. (2) includes $130.0 million in principal outstanding on the company’s commercial paper program. equity residential selected unsecured public debt covenants march 31, december 31, 2022 2021 debt to adjusted total assets (not to exceed 60%) 29.6% 30.3% secured debt to adjusted total assets (not to exceed 40%) 8.7% 8.7% consolidated income available for debt service to maximum annual service charges (must be at least 1.5 to 1) 5.24 5.05 total unencumbered assets to unsecured debt (must be at least 125%) 458.1% 441.0% note: these selected covenants represent the most restrictive financial covenants relating to erp operating limited partnership's ("erpop") outstanding public debt securities. equity residential is the general partner of erpop. selected credit ratios march 31, december 31, 2022 2021 total debt to normalized ebitdare 5.42x 5.71x net debt to normalized ebitdare 5.38x 5.61x unencumbered noi as a % of total noi 87.5% 87.7% note: see normalized ebitdare reconciliations for detail. equity residential capital structure as of march 31, 2022 (amounts in thousands except for share/unit and per share amounts) secured debt $ 2,193,199 26.9 % unsecured debt 5,966,952 73.1 % total debt 8,160,151 100.0 % 18.9 % common shares (includes restricted shares) 375,974,070 96.7 % units (includes op units and restricted units) 12,872,604 3.3 % total shares and units 388,846,674 100.0 % common share price at march 31, 2022 $ 89.92 34,965,093 99.9 % perpetual preferred equity (see below) 37,280 0.1 % total equity 35,002,373 100.0 % 81.1 % total market capitalization $ 43,162,524 100.0 % perpetual preferred equity as of march 31, 2022 (amounts in thousands except for share and per share amounts) series call date outstanding shares liquidation value annual dividend per share annual dividend amount preferred shares: 8.29% series k 12/10/26 745,600 $ 37,280 $ 4.145 $ 3,091 equity residential common share and unit weighted average amounts outstanding q1 2022 q1 2021 weighted average amounts outstanding for net income purposes: common shares - basic 375,508,944 372,279,711 shares issuable from assumed conversion/vesting of: - op units 11,888,041 13,050,142 - long-term compensation shares/units 2,089,783 1,586,077 - atm forward sales 141,136 — total common shares and units - diluted 389,627,904 386,915,930 weighted average amounts outstanding for ffo and normalized ffo purposes: common shares - basic 375,508,944 372,279,711 op units - basic 11,888,041 13,050,142 total common shares and op units - basic 387,396,985 385,329,853 shares issuable from assumed conversion/vesting of: - long-term compensation shares/units 2,089,783 1,586,077 - atm forward sales 141,136 — total common shares and units - diluted 389,627,904 386,915,930 period ending amounts outstanding: common shares (includes restricted shares) 375,974,070 372,917,413 units (includes op units and restricted units) 12,872,604 14,042,374 total shares and units 388,846,674 386,959,787 equity residential development and lease-up projects as of march 31, 2022 (amounts in thousands except for project and apartment unit amounts) estimated/actual projects location ownership percentage no. of apartment units total budgeted capital cost total book value to date total debt (a) percentage completed start date initial occupancy completion date stabilization date percentage leased / occupied consolidated: projects under development: 9th and w (b) washington, dc 92% 312 $ 108,027 $ 36,718 $ — 30% q3 2021 q2 2023 q3 2023 q3 2024 – / – projects under development - consolidated 312 108,027 36,718 — projects completed not stabilized: the edge (fka 4885 edgemoor lane) (b) bethesda, md 100% 154 73,771 73,055 — 100% q3 2019 q3 2021 q3 2021 q3 2022 78% / 69% aero apartments alameda, ca 90% 200 117,794 113,659 64,274 100% q3 2019 q2 2021 q2 2021 q3 2022 85% / 83% alcott apartments (fka west end tower) boston, ma 100% 470 409,749 402,873 — 99% q2 2018 q3 2021 q4 2021 q1 2023 69% / 63% projects completed not stabilized - consolidated 824 601,314 589,587 64,274 unconsolidated: (c) projects under development: alloy sunnyside denver, co 80% 209 66,004 20,437 — 20% q3 2021 q2 2023 q4 2023 q3 2024 – / – alexan harrison harrison, ny 62% 450 198,664 60,447 — 9% q3 2021 q3 2023 q2 2024 q4 2025 – / – solana beeler park denver, co 90% 270 79,956 16,242 — 5% q4 2021 q4 2023 q2 2024 q1 2025 – / – projects under development - unconsolidated 929 344,624 97,126 — total development projects - consolidated 1,136 709,341 626,305 64,274 total development projects - unconsolidated 929 344,624 97,126 — total development projects 2,065 $ 1,053,965 $ 723,431 $ 64,274 noi contribution from development projects total budgeted capital cost q1 2022 noi projects under development - consolidated $ 108,027 $ — projects completed not stabilized - consolidated 601,314 2,390 projects under development - unconsolidated 344,624 — $ 1,053,965 $ 2,390 (a) all non-wholly owned projects are being partially funded with project-specific construction loans. none of these loans are recourse to the company. as of march 31, 2022, no material draws have been made on the construction loans for 9th and w, alloy sunnyside, alexan harrison or solana beeler park. (b) the land parcels under these projects are subject to long-term ground leases. (c) the company has six unconsolidated development joint ventures as of march 31, 2022. in addition to the three projects disclosed in “projects under development – unconsolidated” above, the company has three additional unconsolidated joint venture projects that have not yet started but are expected to do so in 2022 and eventually deliver approximately 1,005 apartment units. equity residential capital expenditures to real estate for the quarter ended march 31, 2022 (amounts in thousands except for apartment unit and per apartment unit amounts) same store properties non-same store properties/other total same store avg. per apartment unit total apartment units 74,675 5,906 80,581 building improvements $ 17,380 $ 2,104 $ 19,484 $ 233 renovation expenditures (1) 8,336 — 8,336 112 replacements 7,284 181 7,465 97 capital expenditures to real estate (2) $ 33,000 $ 2,285 $ 35,285 $ 442 (1) renovation expenditures on 317 same store apartment units for the quarter ended march 31, 2022 approximated $26,295 per apartment unit renovated. (2) see additional reconciliations and definitions of non-gaap financial measures and other termsfor additional details. equity residential normalized ebitdare reconciliations (amounts in thousands) trailing twelve months 2022 2021 march 31, 2022 december 31, 2021 q1 q4 q3 q2 q1 net income $ 1,410,148 $ 1,396,714 $ 73,798 $ 560,978 $ 447,332 $ 328,040 $ 60,364 interest expense incurred, net 277,907 272,473 72,792 69,740 68,251 67,124 67,358 amortization of deferred financing costs 8,629 8,737 2,077 2,565 2,048 1,939 2,185 amortization of above/below market lease intangibles 4,327 4,309 1,116 1,116 1,116 979 1,098 depreciation 868,271 838,272 229,961 222,240 215,397 200,673 199,962 income and other tax expense (benefit) 1,044 915 282 236 284 242 153 ebitda 2,570,326 2,521,420 380,026 856,875 734,428 598,997 331,120 net (gain) loss on sales of real estate properties (1,072,124 ) (1,072,183 ) 102 (484,560 ) (363,928 ) (223,738 ) 43 net (gain) loss on sales of unconsolidated entities - operating assets (1,309 ) (1,304 ) (9 ) (1,300 ) — — (4 ) ebitdare 1,496,893 1,447,933 380,119 371,015 370,500 375,259 331,159 impairment – non-operating assets 16,769 16,769 — 16,769 — — — write-off of pursuit costs (other expenses) 6,658 6,526 1,463 2,969 910 1,316 1,331 (income) loss from investments in unconsolidated entities - operations 4,357 4,702 1,270 1,670 1,156 261 1,615 net (gain) loss on sales of land parcels — (5 ) — — — — (5 ) realized (gain) loss on investment securities (interest and other income) (25,631 ) (23,432 ) (2,066 ) — — (23,565 ) 133 insurance/litigation settlement or reserve income (interest and other income) (2,317 ) (1,090 ) (1,227 ) (20 ) (742 ) (328 ) — insurance/litigation/environmental settlement or reserve expense (other expenses) 8,103 9,565 750 4,482 1,871 1,000 2,212 advocacy contributions (other expenses) 853 708 175 201 50 427 30 other (276 ) (207 ) (69 ) (207 ) — — — normalized ebitdare $ 1,505,409 $ 1,461,469 $ 380,415 $ 396,879 $ 373,745 $ 354,370 $ 336,475 balance sheet items: march 31, 2022 december 31, 2021 total debt $ 8,160,151 $ 8,341,453 cash and cash equivalents (41,140 ) (123,832 ) mortgage principal reserves/sinking funds (20,409 ) (19,104 ) net debt $ 8,098,602 $ 8,198,517 note: ebitda, ebitdare and normalized ebitdare do not include any adjustments for the company’s share of partially owned unconsolidated entities or the minority partner’s share of partially owned consolidated entities due to the immaterial size of the company’s partially owned portfolio. equity residential adjustments from ffo to normalized ffo (amounts in thousands) quarter ended march 31, 2022 2021 variance impairment – non-operating assets $ — $ — $ — write-off of pursuit costs (other expenses) 1,463 1,331 132 write-off of unamortized deferred financing costs (interest expense) — 264 (264 ) debt extinguishment and preferred share redemption (gains) losses — 264 (264 ) net (gain) loss on sales of land parcels — (5 ) 5 (income) loss from investments in unconsolidated entities ─ non-operating assets 424 726 (302 ) realized (gain) loss on investment securities (interest and other income) (2,066 ) 133 (2,199 ) non-operating asset (gains) losses (1,642 ) 854 (2,496 ) insurance/litigation settlement or reserve income (interest and other income) (1,227 ) — (1,227 ) insurance/litigation/environmental settlement or reserve expense (other expenses) 750 2,212 (1,462 ) advocacy contributions (other expenses) 175 30 145 other (69 ) — (69 ) other miscellaneous items (371 ) 2,242 (2,613 ) adjustments from ffo to normalized ffo $ (550 ) $ 4,691 $ (5,241 ) note: see additional reconciliations and definitions of non-gaap financial measures and other terms for the definitions of non-gaap financial measures and other terms as well as the reconciliations of eps to ffo per share and normalized ffo per share. equity residential normalized ffo guidance and assumptions the guidance/projections provided below are based on current expectations and are forward-looking. all guidance is given on a normalized ffo basis. therefore, certain items excluded from normalized ffo, such as debt extinguishment costs/prepayment penalties and the write-off of pursuit costs, are not included in the estimates provided on this page. see additional reconciliations and definitions of non-gaap financial measures and other terms for the definitions of non-gaap financial measures and other terms as well as the reconciliations of eps to ffo per share and normalized ffo per share. q2 2022 full year 2022 (no change from previous full year 2022) 2022 normalized ffo guidance (per share diluted) expected normalized ffo per share $0.82 to $0.86 $3.40 to $3.50 2022 same store assumptions (includes residential and non-residential) physical occupancy 96.5% revenue change 8.0% to 10.0% expense change 2.5% to 3.5% noi change (1) 11.0% to 13.0% 2022 transaction assumptions consolidated rental acquisitions $2.0b consolidated rental dispositions $2.0b transaction accretion (dilution) (25 basis points) 2022 debt assumptions weighted average debt outstanding $8.275b to $8.475b interest expense, net (on a normalized ffo basis) $285.0m to $291.0m capitalized interest $4.5m to $8.5m 2022 capital expenditures to real estate assumptions for same store properties (2) capital expenditures to real estate for same store properties $200.0m capital expenditures to real estate per same store apartment unit $2,700 2022 other guidance assumptions property management expense $113.0m to $116.0m general and administrative expense $55.0m to $59.0m debt offerings no amounts budgeted weighted average common shares and units - diluted 390.9m (1) approximately 25 basis point change in noi percentage = $0.01 per share change in eps/ffo per share/normalized ffo per share. (2) during 2022, the company expects to spend approximately $38.5 million for apartment unit renovation expenditures on approximately 1,750 same store apartment units at an average cost of approximately $22,000 per apartment unit renovated, which is included in the capital expenditures to real estate assumptions noted above. equity residential additional reconciliations and definitions of non-gaap financial measures and other terms (amounts in thousands except per share and per apartment unit data) (all per share data is diluted) this earnings release and supplemental financial information includes certain non-gaap financial measures and other terms that management believes are helpful in understanding our business. the definitions and calculations of these non-gaap financial measures and other terms may differ from the definitions and methodologies used by other real estate investment trusts (“reit”) and, accordingly, may not be comparable. these non-gaap financial measures should not be considered as an alternative to net earnings or any other measurement of performance computed in accordance with accounting principles generally accepted in the united states (“gaap”) or as an alternative to cash flows from specific operating, investing or financing activities. furthermore, these non-gaap financial measures are not intended to be a measure of cash flow or liquidity. acquisition capitalization rate or cap rate – noi that the company anticipates receiving in the next 12 months (or the year two or three stabilized noi for properties that are in lease-up at acquisition) less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross purchase price of the asset. the weighted average acquisition cap rate for acquired properties is weighted based on the projected noi streams and the relative purchase price for each respective property. average rental rate – total residential rental revenues reflected on a straight-line basis in accordance with gaap divided by the weighted average occupied apartment units for the reporting period presented. bad debt, net – change in rental income due to bad debt write-offs and reserves, net of amounts collected on previously written-off or reserved accounts. blended rate – the weighted average of new lease change and renewal rate achieved. capital expenditures to real estate: building improvements – includes roof replacement, paving, building mechanical equipment systems, exterior siding and painting, major landscaping, furniture, fixtures and equipment for amenities and common areas, vehicles and office and maintenance equipment. renovation expenditures – apartment unit renovation costs (primarily kitchens and baths) designed to reposition these units for higher rental levels in their respective markets. replacements – includes appliances, mechanical equipment, fixtures and flooring (including hardwood and carpeting). debt balances: commercial paper program – the company may borrow up to a maximum of $1.0 billion under its commercial paper program subject to market conditions. the notes bear interest at various floating rates. revolving credit facility – the company’s $2.5 billion unsecured revolving credit facility matures november 1, 2024. the interest rate on advances under the facility will generally be libor plus a spread (currently 0.775%), or based on bids received from the lending group, and an annual facility fee (currently 0.125%). both the spread and the facility fee are dependent on the company’s senior unsecured credit rating. in addition, the company limits its utilization of the facility in order to maintain liquidity to support its $1.0 billion commercial paper program along with certain other obligations. the following table presents the availability on the company’s unsecured revolving credit facility: march 31, 2022 unsecured revolving credit facility commitment $ 2,500,000 commercial paper balance outstanding (130,000 ) unsecured revolving credit facility balance outstanding — other restricted amounts (3,507 ) unsecured revolving credit facility availability $ 2,366,493 debt covenant compliance – our unsecured debt includes certain financial and operating covenants including, among other things, maintenance of certain financial ratios. these provisions are contained in the indentures applicable to each notes payable or the credit agreement for our line of credit. the debt covenant compliance ratios that are provided show the company's compliance with certain covenants governing our public unsecured debt. these covenants generally reflect our most restrictive financial covenants. the company was in compliance with its unsecured debt covenants for all periods presented. development yield – noi that the company anticipates receiving in the next 12 months following stabilization less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $50-$150 per apartment unit depending on the type of asset) divided by the total budgeted capital cost of the asset. the weighted average development yield for development properties is weighted based on the projected noi streams and the relative total budgeted capital cost for each respective property. disposition yield – noi that the company anticipates giving up in the next 12 months less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross sales price of the asset. the weighted average disposition yield for sold properties is weighted based on the projected noi streams and the relative sales price for each respective property. earnings per share ("eps") – net income per share calculated in accordance with 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. ebitda for real estate and normalized ebitda for real estate: earnings before interest, taxes, depreciation and amortization for real estate (“ebitdare”) – the national association of real estate investment trusts (“nareit”) defines ebitdare (september 2017 white paper) as net income (computed in accordance with gaap) before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, impairment write-downs of depreciated operating properties, impairment write-downs of investments in unconsolidated entities caused by a decrease in value of depreciated operating properties within the joint venture and adjustments to reflect the company’s share of ebitdare of investments in unconsolidated entities. the company believes that ebitdare is useful to investors, creditors and rating agencies as a supplemental measure of the company’s ability to incur and service debt because it is a recognized measure of performance by the real estate industry, and by excluding gains or losses related to sales or impairment of depreciated operating properties, ebitdare can help compare the company’s credit strength between periods or as compared to different companies. normalized earnings before interest, taxes, depreciation and amortization for real estate (“normalized ebitdare”) – represents net income (computed in accordance with gaap) before interest expense, income taxes, depreciation and amortization expense, and further adjusted for non-comparable items. normalized ebitdare, total debt to normalized ebitdare and net debt to normalized ebitdare are important metrics in evaluating the credit strength of the company and its ability to service its debt obligations. the company believes that normalized ebitdare, total debt to normalized ebitdare, and net debt to normalized ebitdare are useful to investors, creditors and rating agencies because they allow investors to compare the company’s credit strength to prior reporting periods and to other 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 credit quality. economic gain (loss) – economic gain (loss) is calculated as the net gain (loss) on sales of real estate properties in accordance with gaap, excluding accumulated depreciation. the company generally considers economic gain (loss) to be an appropriate supplemental measure to net gain (loss) on sales of real estate properties in accordance with gaap because it is one indication of the gross value created by the company's acquisition, development, renovation, management and ultimate sale of a property and because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold property. the following table presents a reconciliation of net gain (loss) on sales of real estate properties in accordance with gaap to economic gain (loss): quarter ended march 31, 2022 net gain (loss) on sales of real estate properties $ (102 ) accumulated depreciation gain — economic gain (loss) $ (102 ) ffo and normalized ffo: funds from operations (“ffo”) – 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 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 reconciliations of eps to ffo per share and normalized ffo per share for consolidated statements of funds from operations and normalized funds from operations. actual actual expected expected q1 2022 q1 2021 q2 2022 2022 per share per share per share per share eps – diluted $ 0.19 $ 0.15 $1.00 to $1.04 $4.18 to $4.28 depreciation expense 0.58 0.52 0.57 2.21 net (gain) loss on sales — — (0.75) (3.03) impairment – operating assets — — — — ffo per share – diluted 0.77 0.67 0.82 to 0.86 3.36 to 3.46 impairment – non-operating assets — — — — write-off of pursuit costs — — — 0.02 debt extinguishment and preferred share redemption (gains) losses — — — — non-operating asset (gains) losses — — — — other miscellaneous items — 0.01 — 0.02 normalized ffo per share – diluted $ 0.77 $ 0.68 $0.82 to $0.86 $3.40 to $3.50 lease-up noi – represents noi for development properties: (i) in various stages of lease-up; and (ii) where lease-up has been completed but the properties were not stabilized (defined as having achieved 90% occupancy for three consecutive months) for all of the current and comparable periods presented. leasing concessions – reflects upfront discounts on both new move-in and renewal leases on a straight-line basis. 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. the following tables present reconciliations of operating income per the consolidated statements of operations to noi, along with rental income, operating expenses and noi per the consolidated statements of operations allocated between same store and non-same store/other results (see same store results): quarter ended march 31, 2022 2021 operating income $ 149,738 $ 135,560 adjustments: property management 30,747 26,130 general and administrative 17,238 15,383 depreciation 229,961 199,962 net (gain) loss on sales of real estate properties 102 43 total noi $ 427,786 $ 377,078 rental income: same store $ 618,357 $ 573,752 non-same store/other 34,991 23,850 total rental income 653,348 597,602 operating expenses: same store 209,991 204,890 non-same store/other 15,571 15,634 total operating expenses 225,562 220,524 noi: same store 408,366 368,862 non-same store/other 19,420 8,216 total noi $ 427,786 $ 377,078 new lease change – the net effective change in rent (inclusive of leasing concessions) for a lease with a new or transferring resident compared to the rent for the prior lease of the identical apartment unit, regardless of lease term. 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 2021 and 2022, plus any properties in lease-up and not stabilized as of january 1, 2021. percentage of residents renewing – leases renewed expressed as a percentage of total renewal offers extended during the reporting period. 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. pricing trend – weighted average of 12-month base rent including amenity amount less leasing concessions on 12-month signed leases for the reporting period. renewal rate achieved – the net effective change in rent (inclusive of leasing concessions) for a new lease on an apartment unit where the lease has been renewed as compared to the rent for the prior lease of the identical apartment unit, regardless of lease term. residential – consists of multifamily apartment revenues and expenses. same store operating expenses: on-site payroll – includes payroll and related expenses for on-site personnel including property managers, leasing consultants, and maintenance staff. other on-site operating expenses – includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees. repairs and maintenance – includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair and maintenance costs. utilities – represents gross expenses prior to any recoveries under the resident utility billing system (“rubs”). recoveries are reflected in rental income. same store properties – for annual comparisons, primarily includes all properties acquired or completed that are stabilized prior to january 1, 2021, less properties subsequently sold. properties are included in same store when they are stabilized for all of the current and comparable periods presented. same store residential revenues – revenues from our same store properties presented on a gaap basis which reflects the impact of leasing concessions on a straight-line basis. same store residential revenues with leasing concessions on a cash basis is presented in same store results and is considered by the company to be a supplemental measure to same store residential revenues in conformity with gaap to help investors evaluate the impact of both current and historical leasing concessions on gaap-based same store residential revenues and to more readily enable comparisons to revenue as reported by other companies. same store residential revenues with leasing concessions on a cash basis reflects the impact of leasing concessions used in the period and allows an investor to understand the historical trend in cash leasing concessions. % of stabilized budgeted noi – represents original budgeted 2022 noi for stabilized properties and projected annual noi at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up. total budgeted capital cost – estimated remaining cost for projects under development and/or developed plus all capitalized costs incurred to date, including land acquisition costs, construction costs, capitalized real estate taxes and insurance, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, plus any estimates of costs remaining to be funded for all projects, all in accordance with gaap. amounts for partially owned consolidated and unconsolidated properties are presented at 100% of the project. total market capitalization – the aggregate of the market value of the company’s outstanding common shares, including restricted shares, the market value of the company’s operating partnership units outstanding, including restricted units (based on the market value of the company’s common shares) and the outstanding principal balance of debt. the company believes
