Equity Residential (NYSE:EQR) executives said 2025 proved “challenging” for the rental housing industry as the company navigated an uneven demand environment and elevated new supply in certain markets, but management struck an optimistic tone on 2026 as competitive deliveries fall and portfolio occupancy remains high.
During the company’s fourth-quarter 2025 earnings call, President and CEO Mark Parrell said Equity Residential’s same-store NOI for 2025 “matched our initial guidance,” though results were less predictable than expected. Parrell described a year that began with stronger-than-expected rental growth in many coastal markets before revenue momentum decelerated in the second half across most markets, “except San Francisco and New York,” which management called “notable bright spots” expected to remain strong in 2026.
2025 demand cooled as supply weighed on pricing
COO Michael Manelis said fourth-quarter revenue reflected continued high physical occupancy of 96.4%, supported by “solid demand, strong retention, and fewer lease expirations.” Blended rate growth was 0.5% in the quarter, which he said came in at the midpoint of guidance, driven by achieved renewal rate growth of 4.5% offset by negative new lease rates in every market except San Francisco.
Manelis also said other income growth was “a little less than expected,” citing less improvement in bad debt net and lower income from the company’s bulk internet rollout and other fees.
Management highlighted resident behavior as a key support to results. Manelis said customer uncertainty about making “big life changes, including moving,” combined with the company’s operating execution and centralized renewal process, produced the “lowest reported resident turnover” in company history for both the fourth quarter and full year. He also pointed to homeownership affordability as a tailwind, noting that only 7.4% of residents who moved out in 2025 cited buying a home as the reason—also the lowest level in the company’s history.
2026 guidance framed by job uncertainty and improving supply
Looking ahead, Parrell said there is a “broad range of possible outcomes” for the U.S. economy and job growth, which drove a “wider-than-usual” same-store revenue guidance range. He said the midpoint assumes demand conditions similar to the back half of 2025—a “low-hire, low-fire environment”—along with a “significant improvement in the supply picture,” especially in the second half of 2026.
Parrell said the company’s current occupancy above 96%, a declining supply pipeline, and portfolio positioning—about 30% exposure to San Francisco and New York—leave Equity Residential needing “a little bit of wind at our back” via improved job growth to see revenue accelerate beyond current expectations.
On supply, Parrell said the company’s internal tracking shows deliveries of competitive new supply across its markets declining 35%, or roughly 40,000 units, in 2026 versus 2025. Manelis said the company’s outlook is driven by two core variables: competitive supply and job growth. He said the company expects blended rate growth of 1.5% to 3% in 2026, with the high end requiring job market improvement early enough to affect the spring leasing season and the low end tied to further job growth declines leading to a flatter pricing curve and lower occupancy.
Manelis added that Equity Residential begins 2026 with 60 basis points of embedded growth, including about 20 basis points of dilution from adding roughly 5,000 units in expansion markets. He said management expects the ability to reduce concessions based on occupancy strength, and noted renewal behavior remained steady with over 60% of residents renewing. For the next few months, he said achieved renewal increases are expected to remain around 4.5%.
Market outlook: San Francisco and New York lead; expansion markets lag
Management repeatedly emphasized San Francisco and New York as the primary 2026 performance drivers. Manelis said the two markets represent about 30% of NOI and have “the best supply and demand outlooks in the country for 2026,” calling Equity Residential’s urban exposure there a relative strength versus peers.
Elsewhere, Manelis described Washington, D.C. as a “tale of two markets” in 2025, with strength early in the year fading amid federal job cuts, National Guard deployment, and a government shutdown. However, he said new supply in D.C. is expected to drop to about 4,000 units in 2026 from 12,000 in 2025, creating a more favorable setup that could lead to outperformance versus the company’s “somewhat muted expectations.”
In expansion markets—just under 11% of NOI—Manelis said high new supply continues to pressure Atlanta, Dallas, Denver, and Austin, with Atlanta “faring the best” and Denver “the worst.” He said pricing power is expected to improve in Atlanta and Dallas, noting Atlanta rents have accelerated since November.
During Q&A, Manelis said the portfolio started 2026 with a gain-to-lease of 1.2% and described San Francisco as having an opportunity for continued rent increases through the spring.
Capital allocation: dispositions and stock buybacks, selective development
Parrell reiterated the company’s commitment to a diversified portfolio across 12 markets and both urban and suburban settings, arguing that recent strength in New York and San Francisco—and the prolonged Sunbelt softness tied to supply—underscore the value of diversification.
However, he said significant acquisition activity “makes less sense” given the current cost of capital. Development will be “highly selective,” and Parrell said the best opportunity today is selling lower forward-return assets and using proceeds to repurchase shares.
The company bought approximately $206 million of stock in the fourth quarter and just after quarter end, bringing 2025 repurchases to $300 million. Parrell said management views the stock as undervalued versus private market values and argued that funding buybacks with proceeds from sales of slower-growth properties improves the company’s forward growth rate.
Chief Investment Officer Bob Garechana said assets sold tend to be older and “non-core,” often carrying higher capital expenditure needs and lower growth profiles. He said the goal is to reduce concentration risk and redirect capital away from property-level spending the company views as less “ROI-enhancing.” Parrell added that the timing of late-December asset sales reduced the income contribution in 2026, affecting the near-term accretion profile even as the trades are viewed as beneficial longer term.
On development, Garechana said the company had no starts in 2025 but expects starts in 2026, including two projects in Atlanta, following the acquisition of land parcels late in the fourth quarter. He said construction costs have been “relatively steady,” while yields have improved somewhat as rents have grown, and described Equity Residential’s approach of acting as an LP with local partners to limit overhead.
2026 expense and FFO outlook; balance sheet and refinancing plans
CFO Bret McLeod said Equity Residential expects 2026 same-store expense growth of 3% to 4%, with the midpoint 20 basis points lower than 2025. He said controllable expenses such as payroll are expected to be relatively stable year over year, while real estate taxes and insurance should rise at “normal inflationary” rates. Utility costs are expected to outpace inflation again, particularly electricity and water, though at a slower pace than the 8% increase experienced last year.
McLeod also detailed the impact of the bulk Wi-Fi rollout. The company plans to add 64 new properties to the 113 brought online in 2025, creating an incremental $6.8 million expense impact (about 70 basis points). He said bulk Wi-Fi is expected to contribute about $6 million to NOI in 2026 and about $10 million annually once the rollout is complete by the end of 2027.
For normalized FFO, McLeod guided to a midpoint of $4.08 per share in 2026, up 2.25% from $3.99 in 2025. He said the largest incremental improvement beyond same-store operations is expected from consolidated lease-ups, contributing $0.06, following two developments stabilizing in the fourth quarter of 2025 and another expected to stabilize in the first quarter of 2026. Transaction activity is expected to be effectively neutral to normalized FFO per share, as benefits from the lower share count offset the drag from 2025 dispositions.
Interest expense is expected to be a $0.05 headwind, and corporate overhead is expected to be a $0.01 headwind, with savings offset by higher property management and IT spending.
McLeod said the company’s significant 2026 maturities include a $500 million 2.85% note due in November and a $92 million stub payment on an older 7.57% note due in August, both expected to be refinanced near maturity, likely with unsecured debt. Equity Residential’s 2026 guidance assumes $500 million to $1 billion of debt issuance. The company ended 2025 with net debt to normalized EBITDAre of 4.3x, and McLeod noted S&P assigned a positive outlook in November 2025.
About Equity Residential (NYSE:EQR)
Equity Residential (NYSE: EQR) is a publicly traded real estate investment trust that acquires, develops, owns and operates rental apartment properties. Headquartered in Chicago, the company focuses on delivering professionally managed, market-rate apartment homes and related services to renters. Its operations cover a range of property types, including high-rise and mid-rise assets, with amenities and on-site management designed to support resident retention and occupancy.
The company’s core activities include property acquisitions, development and redevelopment, leasing, and day-to-day property management.
