It’s popcorn season, everyone.

Earnings calls and results are publishing across the public markets right now.

In our world - that means we get a chance to understand what the publicly traded Multifamily organizations are experiencing.

Financials, tailwinds, headwinds, and top focus areas for 2024.

All of those things and more are talked about in earnings calls, investor presentations, and financial statement releases.

There are a few great ways you can consume these.

Most typical, you might subscribe to Yahoo Finance (Seeking Alpha is great as well) and you can get updates when these come out.

My favorite way? Head to each organizations website, download the presentations, and drill into the details.

So you don’t have to do it, I’m going to share a few of the top learnings from a handful of REIT’s (real estate investment trusts) with you over the next few weeks.

Today, let’s dig into Equity Residential (EQR on the NYSE).

I’ll be referencing their earnings call and pulling visuals from their Q4 investor presentation.

1/ Supply vs Demand

Supply was one of the biggest topics discussed at NMHC Annual last month in San Diego.

Consistently across earnings reports that I’ve either read or listened to - it’s being talked about on every one.

As rent growth slows, and a lot of new supply enters the market, this can be a risk for both rent growth and the need to deploy concessions to compete with lease-ups.

In the case of Equity, they aren’t seeing as much supply forecasted to enter their markets.

Additionally, they shared a lot of data about the rising cost of home-ownership and the positive impact that has had for rental demand in their markets.

Keep your eye on this topic in FY24.

2/ Housing Affordability

To segue from point 1, housing affordability is being discussed consistently across earnings reports for 2024.

According to Equity, only 7.5% of their move outs in Q323 bought a home. Much lower than the data they’ve seen historically (and that we know to be true in the industry).

Additionally, despite consistent concerns about supply - the rising cost of home ownership continues to make the cost of renting the more affordable play for many of today’s consumers.

Take a look at the data below - the markets that Equity focuses on are listed with the home price vs household income.

It really paints a picture.

As a quick note, some operators did talk about credit reporting, or other methods they are looking to invest in to help make it easier for renters to buy a home long-term.

That was not focused on in EQR’s presentation.

3/ Renters by choice

There is no crystal ball in Multifamily - but everyone is talking about demand.

Separate from the cost of home ownership, there was a lot of discussion in this report about lifestyle choices that are driving the decision to rent longer term.

As note - the average age of a renter at Equity is 32.

The two demand metrics that were referenced were lifestyle choices (below) and rising costs of home ownership as we’ve already discussed.

Early in Covid we saw a lot of traction with companies like Sentral and Landing offering easy ways for renters to move around the country within the same portfolio.

We are starting to see larger companies drive employees back to the office, so I’m interested to see what that does to the demand curve in the coming 12-24 months.

Either way - this was interesting and certainly work factoring in when it comes to demand modeling.

4/ Expenses can not outpace revenue

Expense vs revenue growth was a clear focus on every presentation I’ve studied so far.

I liked how Equity positioned theirs here - especially important for shareholders who are concerned about the future of their investment and the predictability of their dividends.

In slide 42 of the presentation - they also drilled into the areas of innovation they’ve focused on historically and going forward.

Many operators said YES to too much technology during Covid without having a plan of how to deploy it - and one thing I enjoyed reading about with Equity and others, is the discipline they are committing to with how they search, select, and implement new technology.

Worth noting that Equity specifically calls out technology and centralization as 2 of the key levers to combat expense growth.

5/ Resident voice to drive focus of technology

I thought this visual was cool and wanted to share with everyone today.

Using the voice of our customer to drive business decisions is a huge advantage no matter what we do for work.

In slides 42-47 there was a lot of good data and visualization around what focus areas look like for EQR and how they are going to quantify it with lifts in NOI.

As you look through the slide below, you can see that some of these will justify continued investment into new technologies likes access control, wi-fi, shared amenities and services like flexible lease terms.

What I love - is you can also see what things they are now prepared to say no to based on what is least important to their renters.

Was this helpful? I really enjoyed the process of researching and summarizing outcomes and am thinking about turning this into a small series.

Let me know if there is anything that you’d like to see more (or less) of in the next installments.

Wishing you a wonderful weekend - as always, thanks for tuning in.

See you next Friday.

Mike