Equity Residential (NYSE:EQR) Q4 2017 Earnings Conference Call - Final Transcript
Jan 31, 2018 • 11:00 am ET
Thank you, sir. [Operator Instructions] And we'll take our first question from Nick Yulico with UBS.
Thanks. David. I just want to go back to the comments you had in the press release where you talked about the outlook in your coastal markets with high homeownership will soon improve significantly as new supply reduces. And I'm just looking to hear your view as to when you think this might happen if you're seeing any light at the end of the tunnel on supply in the second half of this year or is it more of a 2019 impact?
David J. Neithercut
Well we really look at 2019 deliveries Nick as the beginning of the reduction. In 2018 we'll still have 2017 deliveries that are spillover into this year and I will say in 2019 we will still have 2018 deliveries spillover. But the number of deliveries that we count as competitive to our assets we see diminishing considerably in some markets less so in others, but we do see kind of light at the end of the tunnel with elevated level of new supply beginning in 2019. I'm not suggesting this going to zero, but clearly while we look at what we think will be and should be continued very strong demand we do see the supply we do see in 2019 and we believe that by that time we'll begin to see pricing power kind of return to the landlords.
That's helpful. And then on New York City in the past you've talked about Long Island City Brooklyn is having the bulk of the supply delivering this year it feels like you're now saying that that competitive impact could be a little bit worse or at least your guidance is factoring some of that in. So perhaps you can just tell us more about how you thought about Long Island City Brooklyn pricing of the competitive new supply impacting your portfolio in terms of your guidance for New York this year? Thanks.
David S. Santee
This is David. At this point we have a lot of anecdotal stories, we have some examples of residents that move out of our communities in Brooklyn not to Long Island City, but after several months choose to move back. But as I said, I think, the long-term outcome of 6,200 units coming online is very hard to quantify. So we prepared for it last year certainly the number of units that are going to be delivered this year especially in the first half of the year are very, very elevated and we planned accordingly. And we hope the discipline stays in the market and owners remain picking to their guidance on profit.
David J. Neithercut
I guess I'd add to that Nick that these developers that are delivering this product have not seen a lot of rent growth from their regional performance and for them to meet their expectation, meet their investments expectation, meet their refinancing expectations, they're going to be forced to toe the line on pricing. Now that doesn't mean that