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 le