During the firm’s Q4 call, Equity Residential president and CEO, Mark Parrell, said he was pleased to have delivered same store revenue growth at the top end of the REIT’s original guidance range as well as solid normalized FFO growth in 2018, the company had strong momentum in the fourth quarter and 2019 has started well.
“Now admittedly December and January are months with a seasonally well volume of transaction. So strong high wage job and income growth in our markets combined with positive demographics and a consumer preference for a Reno lifestyle in our highly desirable city has created a supported backdrop for our business in spite of elevated levels of new supply.”
Recent announcements regarding Amazon HQ2 and Google’s continued business expansion are reinforcement of the company’s belief that analogy economy will be focused and the markets will redo business, he explained on the call. “In Washington DC 70% of our NOI comes within five miles of rural location of HQ2. In New York we’ve more than 20 properties that are start to new. In the Long Island city location of HQ2 we’re more that are start to new from the new Google expansion location in the West Village.”
He expects that 2019 will be “another good year for us with strong demand across our markets creating high occupancy conditions, but continuing elevated supply levels for some of our markets keeping us within the price submission allow our internal dashboards blink and green, we’re also aware that the economic and other headlines are giving me more cautionary yellow signal.”
Michael Manelis, COO of the firm, said that the firm reported 51.1% turnover in 2018 which is around 200 basis points less than 2017 and if you exclude turnover for those residents who moved to a new unit in the same community, our net turnover dropped to 45%.
He also said that the firm’s 2.3% same store revenue growth was achieved with 96.2% occupancy, negative 30 basis points new lease change and achieved renewal increases of 4.9% which were all stronger than 2017 results. “As we sit here today we’ve strong momentum coming out of the fourth quarter. We’ve more pricing power today versus the same time last year which keep the dashboards blink and green and allows us to remain cautiously optimistic about the outlook for 2019, but we acknowledge that the hard work is still ahead of us in the future leasing seasons, but our teams are ready to deliver.”