1 340 Fremont San Francisco, CA Estimated completion in 2016 - - PowerPoint PPT Presentation
Equity Residential named 2015 Global Residential Sector Leader in Sustainability by the GRESB Focused Performance, Creating Value JUNE 2016 1 340 Fremont San Francisco, CA Estimated completion in 2016 Investor Presentation June 2016 1
Investor Presentation June 2016 1
340 Fremont – San Francisco, CA Estimated completion in 2016
JUNE 2016 1
Equity Residential named 2015 Global Residential Sector Leader in Sustainability by the GRESB
Investor Presentation June 2016 2
By the Numbers
Americans Are Renting at Historic Levels
*Sources: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. **Source: US Census Bureau
325 500 425 290 500 900
1960s 1970s 1980s 1990s 2000s 2010-14
Average Annual Change In Renter Households*
(in thousands)
Change in Number of U.S. households Since End Of 2020**
(In Millions) 10 8 6 4 2
2001 2005 2010 2015
RECESSIONS
– Owner Occupied – Renter Occupied
June 23, 2015
Baby Boomers Will drive Demand for Apartments, U.S. Fed Study Shows
June 24, 2015
More Americans Are Renting, and Paying More, as Homeownership Falls
December 9, 2015
The Number Of Renters Is Exploding And It's Not Because Of Millennials
Investor Presentation June 2016 3
By the Numbers
Urban Living is on the Rise
Reurbanization Driving Rental Demand In Major Metros
*Source: Study from Smart Growth America and Cushman & Wakefield **Source: United Nations
January 27, 2016
Real Estate Investors Ride the Reurbanization Trend
April 21, 2015
Companies Trade Suburbs for City Life
Locations deemed ‘walkable’ appreciate more than those that are car-dependent
51 52 66 88 79 78
Walk Score Transit Score Bike Score
Corporations Looking for Urban Convenience*
(Before and After a Corporate Move)
Before After
U.S. Urban Population Continues to Expand**
(Population in thousands) 400 350 250 200 150 100 50 1950 1970 1990 2010 2030 2050
Urban Rural
Investor Presentation June 2016 4 Investor Presentation June 2016 4
EQR: Capitalizing on Industry Trends
Proven Leader in Apartment Investing
Attractive Portfolio in High Value Markets
growth markets
Disciplined Capital Allocation Strategy
focused development
capital appreciation
Balance Sheet Strength
multiple sources of financing
two years
WELL-POSITIONED TO CREATE LONG-TERM SHAREHOLDER VALUE
Investor Presentation June 2016 5
Proven Strategy
»
High costs of homeownership;
»
Barriers to new apartment supply in the form of land constraints and government restrictions;
»
Substantial job growth and household formations; and
»
Attractive lifestyle for residents to live, work and play
»
Opportunistic acquisitions and divestitures
»
Timely development of new projects
»
State-of-the-art operating platform
SEEK TO ACQUIRE AND BUILD APARTMENT PROPERTIES THAT GIVE US THE HIGHEST RISK-ADJUSTED TOTAL RETURNS
Investor Presentation June 2016 6
Attractive Industry Fundamentals
»
More than 2.4 million expected to end up in institutional-grade rental apartments
»
More than 4 million young adults turning 25 every year through the end of the decade
»
Forming households and creating demand – 60% to 70% propensity to rent
»
Unemployment rate of the college educated is 2.6%
New households will be formed from 2015 – 2019
Echo Boomers are driving housing demand
Unemployment rate among college educated
Investor Presentation June 2016 7
Source: Census, Rosen Consulting
Lifestyle Choices
Keeping People Renting Longer
ABOUT HALF THE U.S. ADULT POPULATION IS SINGLE AND MORE LIKELY TO BE RENTERS
Average Marrying Age
Male Female 23 24 25 26 27 28 29 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Investor Presentation June 2016 8
Declining Homeownership
Translates Into More Renters
Sources: US Census Bureau, Moody’s Analytics & EQR Market Research
1981 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17E 70% 69% 68% 67% 66% 65% 64% 63% 62%
Homeownership Rate
% of households, 1% = 1.1 million households
64.2% 69.0% 64.5% 63.5% 63.3% 63.5%
Investor Presentation June 2016 9
Rental Households Yet to be Formed
Young Adults Living at Home
Historical Average = 12%
Investor Presentation June 2016 10
Demand for Rental Apartments Continues to be Strong, Driven by The Millennial Generation (but Baby Boomers love urban living, too!)
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
Millions
Births by Generation
Greatest Silent Boomers Gen X Millennnials Post Millennials
Investor Presentation June 2016 11
Median Income vs. Median Home Price
(in thousands)
$82 $58 $66 $73 $92 $68 $53 $1030 $483 $423 $454 $394 $400 $230 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000
San Francisco Los Angeles New York Boston Washington DC Seattle U.S. Average
Median Income Median Home Price
EQR is Strategically Located
In Markets With Attractive Housing Dynamics
0% 2% 4% 6% 8% 10% 12%
U.S. Average Seattle Los Angeles San Francisco Washington DC Boston New York
Rental Vacancy Rates
(in percent) 2010 2015
Source: U.S. Census Data
Price/Income 11.7x 8.4x 6.9x 5.9x 4.3x 5.5x 4.1x
Source: Moody’s Analytics, Nielsen
Investor Presentation June 2016 12
Sources: Census, Rosen Consulting Group
0% 5% 10% 15% 20% 25% 30% 35% 40% U.S. Los Angeles Boston San Diego New York Seattle Orange County Washington, D.C. San Francisco- Oakland Silicon Valley
Percent of Renter Households with Incomes $100,000 or Higher in EQR Markets
Investor Presentation June 2016 13
Source: Census, Rosen Consulting Group
Percent of Renter Households with Incomes $150,000 or Higher in EQR Markets
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% U.S. Los Angeles San Diego Boston Seattle Orange County New York Washington, D.C. San Francisco- Oakland Silicon Valley
Investor Presentation June 2016 14
Source: BLS, Rosen Consulting Group
Educational & Health Services Prof & Business Services Trade Leisure & Hospitality Government Financial Activities Other Services Construction Information Services Transportation & Utilities
23.5% 27.9% 13.4% 11.0% 7.7% 4.6% 4.3% 3.6% 2.1% 1.9%
Sources of Employment Growth in EQR Core Markets, 2016 – 2020
Investor Presentation June 2016 15
Compelling Underlying Fundamentals
EQR Core Markets Resident Profile:
Support Our Long-Term Growth Outlook
$53 $69 $100
All U.S. Markets EQR Markets EQR Residents
Median Resident Incomes
(in thousands)
$1,218 $2,051 $2,376
All U.S. Markets EQR Markets EQR Residents
Average Monthly Rent
$220 $519
All U.S. Markets EQR Markets
Median Single Family Homes Prices
(in thousands)
20-34 year olds:
51%
Median age:
34
Without children:
78%
50+ year olds:
21%
STRONG DEMOGRAPHICS FOR LONG-TERM INCOME GROWTH AND ASSET APPRECIATION
Source: U.S. Census and Company Data
Investor Presentation June 2016 16
Urban Real Estate Produces Better Long Term Values
Urban Suburban Los Angeles 42.1% 33.9% Washington DC 23.8% 14.4% Boston 37.1% 20.5% San Francisco 65.3% 58.7% Seattle 36.9% 33.3%
Source: Zillow – Zillow does not track New York data
Investor Presentation June 2016 17
High-rise/Mid-rise Asset Valuation Growth Outpaces Garden
$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2001 2003 2005 2007 2009 2011 2013 2015
Price per Unit: Garden Vs. High-rise/Mid-rise
Garden Mid/Highrise CAGR: 7.5% CAGR: 4.4%
Source: Real Capital Analytics, Equity Residential Market Research as of Q1 2016
Investor Presentation June 2016 18
170 Amsterdam – New York, NY Expected to receive LEED Certification