EQR Equity Residential

Management Discussion

• Note: Same store revenues for all leases are reflected on a straight line basis in accordance with GAAP for the current and comparable periods.
• Same store revenues for the full year of 2019 were slightly lower than our most recent expectations but still performed at the high end of our expectations from the beginning of the year.  Revenue increased due to record low turnover, strong occupancy and favorable overall demand.  The Company’s primary focus in 2019 was on providing remarkable experiences for our residents which resulted in record levels of customer satisfaction and resident retention.  The Company’s primary goals for 2020 will be to continue the 2019 trends while accelerating the deployment of various operating initiatives such as smart home technology and other sales and service related innovation improvements.   We expect consistent demand that should help with the absorption of the continued elevated supply that we expect in many of our markets.
• New rent control regulations enacted in both the New York and California markets during 2019 are expected to negatively impact our overall same store revenue results by approximately 20 basis points for 2020.   Of the approximately 9,600 apartment units located in our New York market, approximately 3,100 apartment units are "rent stabilized" (primarily as a result of the 421(a) real estate tax abatement program) and therefore more directly impacted by these new regulations.  Once the abatement expires, the apartment units can be brought to market rents and will no longer be subject to the rent control regulations.  We estimate that the new regulations will have a negative impact on renewal rates for some of these 3,100 apartment units and will impact our ability to charge certain fees at all of our New York City properties (approximately 6,600 apartment units).  California’s new rent control regulations, which became effective on January 1, 2020, among other things limits the ability to raise rents on renewals to the local California consumer price index + 5% on properties fifteen years or older.  It does not, however, impose such a cap upon vacancy of an apartment unit.  Of our approximately 37,600 apartment units located in California, approximately 24,400 are subject to these new regulations.