Sam Zell and Mark Parrell
Sam Zell and Mark Parrell
Founder and Chairman; President and CEO at Equity Residential
Last year's rank: 46
Coming off a strong 2019, Equity Residential was already expecting to face some headwinds in the new year.
In a fourth-quarter earnings release, the apartment REIT’s president and CEO, Mark Parrell, pointed to strong demand and record resident retention rates as the drivers of a solid year of performance. But he cautioned against elevated levels of new supply in most of its markets as well as the impact of new rent-control regulations in California and New York.
Then, along came the coronavirus crisis.
“When the lockdowns were initially announced, we saw our leasing activity decline significantly, but demand has since picked up,” Parallel said in a first-quarter earnings call in May.
Collections across the board in April come in at about 97 percent on its residential portfolio, which totals 79,065 units across 306 properties. Its coronavirus response strategy has included offering lease renewals with no rent increases, providing flexible lease renewal options, and waiving late fees and halting evictions for tenants financially impacted by COVID.
A look at Equity Residential’s sizable apartment portfolio provides a snapshot of how the country is faring amid the crisis.
Seattle has been its strongest market, with delinquencies below 3 percent; Los Angeles, where the REIT has its largest exposure with more than 16,000 units, is already being pressured by new supply, and saw delinquencies reach 8 percent; while New York City was a mixed bag.
“On one hand, [New York] has the strongest retention of any market, but it has also not shown the signs of recovery that other markets have with traffic and applications,” said Michael Manelis, the REIT’s COO, on the earnings call. “Long term, we expect the New York market to benefit from new supply and technology firms expanding their presence in the city. We are hoping leasing activity will improve as the hard-hit New York area gets through the worst of the pandemic.”
The REIT’s founder and chairman, Sam Zell, has predicted a U-shaped recovery for the nation’s economy. “I think we’ll see some significant recovery between now and the end of the year,” he said in a June interview with financier (and exceedingly brief White House director of communications) Anthony Scaramucci.—S.G.
