Equity Residential

Welcome to Equity Residential's first quarter 2022 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Marty McKenna. Please go ahead.

Good morning and thanks for joining us to discuss Equity Residential's first quarter 2022 results. Our featured speakers today are Mark Perel, our president and CEO, and Michael Manelis, our chief operating officer. Bob Gershon, our chief financial officer, and Alec Brackenridge, our chief investment officer, are here with us as well for the Q&A. Our earnings release is posted in the investor section of equityapartments.com. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties. The company assumes no obligation to update or supplement these statements that become untrue because of subsequent events. Now I will turn the call over to Mark Perel.

Thank you, Marty. Good morning, and thank you all for joining us today to discuss our first quarter results. In a minute, Michael Manelis will walk you through a market update, and then we will take your questions. The growth in our business continues, as evidenced by our first quarter performance. Demand is strong, and lease rates are growing faster than we expected. While we are well aware of the recent increases in economic and geopolitical uncertainties, We continue to manage our business by focusing on our operations dashboards, not on the news headlines. Those dashboards continue to nearly universally flash a green signal as our well-located properties and excellent service attract our affluent renter demographic in droves, allowing us to retain a record number of our residents and push rents up nearly everywhere we operate. All of this allowed us to increase normalized funds from operations by 13% in the quarter. and we expect this growth to accelerate over the next few quarters. As we mentioned in our March operating update, our first quarter same-store revenue results were negatively impacted by an increase in delinquency in Southern California. It appears to us that a relatively small number of Southern California residents who had previously been good payers declined to pay rent in order to apply for state rental relief funds. While we remain open to working with residents, With true COVID-related hardships, this sort of behavior is not acceptable, and we will continue to work with these residents to obtain our full rental payment. Translating all this into the numbers, first quarter same-store revenue results were about 125 basis points lower than we anticipated due to these higher bed debt, partially offset by about 25 basis points of better rate growth, leaving the final quarterly same-store revenue number about 100 basis points lower than we expected when we gave you guidance back in very early February 2022. Normalized funds from operations in the quarter ended up being about $0.01 lower than we expected, with a $0.02 per share or about $6 million hit from high or bad debt, offset by the better rate performance I just mentioned and the better-than-expected expense performance that I'll discuss in a moment. As we think about the full year, we feel that we are in a stronger operating position than we had initially contemplated in our full year guidance. With the better lease rate growth trajectory, more than offsetting our now more cautious view of delinquency. Turning to expenses, our residents appreciate the increasingly seamless digital experience we are providing them, which in turn allows us to have a smaller and more focused property management team. As a result of these efficiencies, as well as low property tax expense growth, we're able to deliver 2.5% same-store quarter-over-quarter expense growth in an increasingly inflationary climate. We look forward to continuing to drive innovation and to expanding our operating margins over the balance of the year while creating remarkable experiences for our customers and for our employees. On the transaction side, as we expected, we did not have much activity in the first quarter, We purchased one asset in San Diego that we discussed in the release, and after the quarter end, sold one asset in New York. With that, I'm going to ask Michael to fill you in on the operating details. Go ahead, Michael.