Equity Residential (NYSE:EQR) Q2 2020 Earnings Conference Call - Final Transcript
Jul 29, 2020 • 11:00 am ET
Good day, and welcome to the Equity Residential Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
At this time, I would like to turn the conference over to Marty McKenna. Please go ahead.
Good morning, and thank you for joining us to discuss Equity Residential's second quarter 2020 results. Our featured speakers today are Mark Parrell, our President and CEO; Michael Manelis, our Chief Operating Officer; and Bob Garechana, our Chief Financial Officer.
Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties. The Company assumes no obligation to update or supplement these statements that become untrue because of subsequent events.
Now, I'll turn it over to Mark Parrell.
Mark J. Parrell
Good morning, and thank you all for joining us today. During one of the most challenging periods in our country and industry's history. We feel that our business showed considerable resiliency.
We continue to be pleased with the financial strength of our customer base, with our average annual household incomes of $164,000. Data suggests that only 4% of workers making more than $150,000 a year, have recently lost their jobs, compared to the low-teens for lower income categories. We have collected about 97% of our residential rents during the second quarter and attribute this to a customer base that remains well-employed and capable of meeting their obligations, July is trending similarly.
We also demonstrated strong expense results, while the pandemic both added and subtracted costs from our operations, the innovations around leasing and service that we described in prior calls have really taken hold and we expect a durable reduction in our expense growth rate even after COVID is in the rear view mirror. And while our 90 basis point decline in same store residential revenue was our first quarterly revenue decline in 10 years, our residential business held up reasonably well under very trying circumstances. We also believe that we have stabilized our physical occupancy at 95%.
In a moment, Michael will give you some color on what is going on in each of our markets and Bob will address our expenses, non-residential operations, and balance sheet. And then we will welcome your questions.
But before I turn it over, I want to highlight a couple of things. First in the quarter, we stabilized two development properties, one in Cambridge, Massachusetts and another in Seattle, Washington. The Cambridge asset is a 64-unit property, adjacent to an existing asset of ours and was built for $47 million and stabilize at approximately 5% yield on cost. This property complements our large existing Cambridge portfolio of six properties with about a 1,100 units and is ideally suited to house the biotech employees working in that area. The other property consists of 137 units and is located in the Capitol Hill neighborhood of Seattle and cost $65 million to build. It stabilized at about a 5% yield on cost.