Sam Zell’s Equity Residential had a collection rate of about 97 percent for April despite widespread concerns that tenants would be unable or unwilling to pay their rent amid the pandemic, the company reported on its first quarter earnings call.
Equity Residential held its call on Wednesday morning, and CEO Mark Parrell maintained that the company was well-positioned to weather the ongoing pandemic despite acknowledging that it would still face challenges moving forward.
“Equity Residential has historically performed well in these downturns,” he said, “and we would expect this to be no exception.”
Although it is still early in May, so far the company is on track for a similar collection rate that it saw in April, executives said on the call.
The firm has focused largely on retaining its tenants, given that social distancing restrictions have made it much harder for people to move, and it is giving residents the option to renew their leases with no rent increases. However, COO Michael Manelis did say they were starting to see more signs of life in the residential leasing market that he described as very encouraging.
New York City in particular has seen a strong retention rate for Equity Residential tenants, although it has not shown the same signs of traffic or application recovery as other cities, according to Manelis.
Equity will look for opportunities to buy during the crisis, but the market is still virtually frozen for now, according to Parrell.
“Sellers still remember the price they would have gotten in early March, and buyers think about the price they dream of getting right now,” he said, “and it’s going to take a little while for that all to sort itself out.”
He said Equity has maintained a strong relationship with its tenants overall during the crisis but implied that the firm would be ready to resume evictions for those taking advantage of the situation once moratoriums are lifted.
“We’re not going to stop being persistent pursuing them,” Parrell said. “We’ll follow the law, but they owe the rent, and sooner or later, there will be a discussion about that.”
Equity Residential’s net income for the quarter was about $333 million, and its total revenue for the quarter was about $682 million. Equity Commonwealth, which held its earnings call yesterday, reported net income of $426 million and total revenue of $18.8 million.
Zell did not speak on either earnings call. However, in an interview with Bloomberg on Tuesday, he said he has yet to see an opening to acquire distressed assets in the current crisis.
“There’s very little opportunity to do anything,” he said. “Everybody is in a deer in the headlights kind of state.”