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Equity Residential Q1 2022 Earnings Call Transcript


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Participants

Corporate Executives

  • Marty McKenna
    Vice President - Investor and Public Relations
  • Mark J. Parrell
    Chief Executive Officer
  • Michael L. Manelis
    Chief Operating Officer & Executive Vice President
  • Robert A Garechana
    Chief Financial Officer
  • Alec Brackenridge
    Chief Investment Officer

Presentation

Operator

Please standby. We're about to begin. Good day, and welcome to the Equity Residential's First Quarter 2022 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Marty McKenna. Please go ahead.

Marty McKenna
Vice President - Investor and Public Relations at Equity Residential

Good morning, and thanks for joining us to discuss Equity Residential's first quarter 2022 results. Our featured speakers today are Mark Parrell, our President, and CEO. Michael Manelis, our Chief Operating Officer. Bob Garechana, our Chief Financial Officer, and Alec Brackenridge, our Chief Investment Officer are here with us as well for the Q&A.

Our earnings release is posted in the Investors section of equityapartments.com. 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 will turn the call over to Mark Parrell.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Thank you, Marty. Good morning and thank you all for joining us today to discuss our first-quarter results. In a minute Michael Manelis will walk you through a market update and then we will take your questions. The growth in our business continues as evidenced by our first-quarter performance, demand is strong and lease rates are growing faster than we expected. While we are well aware of the recent increases in economic and geopolitical uncertainties. We continue to manage our business by focusing on our operations dashboards, not on the news headlines.

Those dashboards continue to nearly universally flash a green signal as our well-located properties and excellent service attract our affluent renter demographic in droves allowing us to retain a record number of our residents and push rents up nearly everywhere we operate. All of this allowed us to increase normalized funds from operations by 13% in the quarter and we expect this growth to accelerate over the next few quarters. As we mentioned in our March operating update our first quarter same-store revenue results were negatively impacted by an increase in delinquency in Southern California. It appears to us that a relatively small number of Southern California residents with previously been good payers declined to pay rent in order to apply for state rental relief funds. While we remain open to working with residents with true COVID-related hardships this sort of behavior is not acceptable and we will continue to work with these residents to obtain our full rental payment.

Translating all this into the numbers. First-quarter same-store revenue results were about 125 basis points lower than we anticipated due to these higher bad debts. Partially offset by about 25 basis points a better rate growth, leading the final quarterly same-store revenue number, about a 100 basis points lower than we expected when we gave you guidance back in very early February 2022. Normalized funds from operations in the quarter ended up being about $0.01 lower than we expected with a $0.02 per share or about $6 million hit from higher bad debt, offset by the better rate performance I just mentioned. And the better-than-expected expense performance that I'll discuss in a moment. As we think about the full year, we feel that we are in a stronger operating position than we had initially contemplated in our full-year guidance with the better lease rate growth trajectory, more than offsetting are now a more cautious view of delinquency.

Turning to expenses, our residents appreciate the increasingly seamless digital experience we are providing them, which in turn allows us to have a smaller and more focused property management team. As a result of these efficiencies as well as low property tax expense growth, we're able to deliver 2.5% same-store quarter-over-quarter expense growth in an increasingly inflationary climate. We look forward to continuing to drive innovation and to expanding our operating margins over the balance of the year while creating remarkable experiences for our customers and for our employees. On the transaction side, as we expected, we did not have much activity in the first quarter, we purchased one asset in San Diego that we discussed in the release. And after the quarter-end sold one asset in New York.

With that, I'm going to ask Michael to fill you in on the operating details. Go ahead, Michael.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Thanks, Mark. We are pleased to report that we are seeing pricing power ahead of our expectations. Strong demand is being driven by the desire of affluent residents to live in our well-located properties both urban and suburban. We have talked in previous calls about the recovery in our business being connected more to the lifestyle that our residents crave and less to how many days workers are expected to be in the office and that pattern continues. I've visited several of our markets over the last few months and I'm excited by the vibrancy that I am seeing. We reported 96.4% occupancy for the quarter, which is 140 basis points higher than the first quarter of 2021 and in line with our expectations.

First-quarter reported turnover of 8.7%, was over 100 basis points lower than the first quarter of 2021 and represents the lowest reported turnover in the history of our company. This trend reaffirms the desirability of our product as our existing residents signed renewals at record levels with increases that averaged 11.9% in the first quarter. This trend continues into the second quarter with preliminary April renewal increases averaging 12.5% with approximately 60% of our residents renewing. We are limiting rate negotiations, given the strength and demand of new residents willing to pay full price to live in our communities. As we begin our primary leasing season. We feel really go about our pricing position, which includes the near elimination of concession usage across the portfolio, outside of Seattle and is translating into robust new lease change performance with April on track to deliver just over 17.5% new lease growth after posting over 15% in the first quarter.

Now let me give you some color on the markets beginning with Boston. Boston is following normal seasonal patterns with improving demand and pricing heading towards the spring. We're almost 97% occupied and the market is benefiting from the big college campuses being open and the return of international students and workers, and the continued strong demand drivers from the lab and life sciences, financial firms, healthcare, and education. Competition from new supply will be modest and market performance should be strong. New York continues to thrive and was our best performing market in the first quarter with same-store residential revenue growth of 13.6%.

We're 96.9% occupied and continue to expect this market to be our best performer in 2022. Demand is robust, we're renewing about 60% of our residents, which is healthy, but 5% lower than at the beginning of the year. This is primarily due to deal seekers choosing to move out versus paying the higher current price, but it is not a concern since we are easily able to attract new residents at these higher rates. We still expect to feel some pressure from new supply in the Jersey Waterfront in Brooklyn later this year. Washington DC is performing as expected with Residential same-store revenue growth of 3% in the first quarter. This market was our best performing East Coast market in 2021 and as I mentioned in the past has the leased ground to make up. As is often the case in D.C new supply is likely to pressure rate growth in the market that the Metro area continues to post record absorption. Strong employment across job sectors in the market is driving this demand and we are 96.7% occupied. We are renewing about 60% of our residents and feel good about our positioning for the spring leasing season.

Before I talk about our West Coast markets. Let me give you a little color on our expansion markets. Denver continues to demonstrate very strong demand, we're almost 98% occupied and delivered same-store revenue growth of almost 13% in the first quarter. Despite turnover being on the higher end. We are seeing very good pricing power and healthy occupancy. In Atlanta, our acquisitions are performing ahead of their performance as the market continues to produce strong rent growth. Dallas and Austin continue to enjoy robust demand driven by very good in-migration and job growth in these markets. Out of the West Coast. Seattle continues to be slow to recover compared to the other markets, particularly in the downtown submarket. The good news is that the city's new Mayor is focused on the quality of life issues, which we expect will have a positive impact. Also, job postings in the market are at the highest level we have seen with Amazon leading the pack with over 19,000 positions posted with 16,000 of them being in the city of Seattle, which is a good sign for future apartment demand. Market occupancy in Seattle currently sits just above 95% which remained behind our expectations and turnover albeit within historical norms, was the highest of all of our markets.

The suburban portfolio is outperforming the city with the Bellevue, Redmond submarkets seeing immediate demand improvement in March after Microsoft's return to the office announcement. Year-to-date pricing remains flat in the downtown submarket with approximately 60% of new applications receiving a concession, at just over a month and occupancy in this submarket is at 93%. Overall, we expect continued strength in the suburban portfolio and remain optimistic that pricing power and occupancy will improve in the downtown submarket as we are just now beginning to see signs of increasing demand as the quality of life issues continue to slowly improve.

San Francisco is also lag the recovery, but at the moment feels on stronger footing than Seattle. We are very encouraged by the recent announcements from Mayor Breed and the local large employers about their commitment to bringing office workers back to the city, which should help address quality of life issues downtown. There has been consistently good demand in early signs of improved pricing power that the market lacked in 2021. We're almost 97% occupied and resident retention has improved from a year ago. Google, which has asked workers to return this month made a recent announcement that it is investing more than $3.5 billion in California, including a big chunk in the Bay Area with significant projects in Mountain View, Sunnyvale, and downtown San Jose. All areas where we have a significant number of communities. The pricing trend has increased almost 6.5% since the beginning of the year, which is better than the normal seasonal expectation, which would be in the 4% to 5% range. While this market pricing remains below pre-pandemic levels. The good news is that initial indicators point to continued strong recovery of the market.

Now let me move to Southern California. Three markets that have performed exceptionally well but for elevated delinquency. First, Orange County, and San Diego continue to show remarkable performance with high occupancy and strong retention supporting very good new lease rents. Home prices in these markets are out of reach for many of our residents, which is evident by the significant decline to move-outs siding this region during the quarter. We expect to see continued record high retention likely impacted by the local regulations limiting our allowable increases, increasing home prices, and very limited competitive new supply. The result of these factors should allow us to maintain elevated pricing power throughout the year in these markets.

Next, Los Angeles. Even with elevated delinquency, LA continues to be a star performer. The entertainment content creation business is really thriving and driving demand. Occupancy is almost 97% and pricing power is strong and better than expected. The urban market's performance is now on par with the suburban portfolio a scenario, which we have not seen since the onset of the pandemic. The percent of residents renewing is the highest we have seen likely due to the impact of the local regulations limiting our allowable renewal increases and we expect to continue to renew between 60% and 70% of our residents.

Now that rent relief coverage is no longer available for April 2022 rents. We have seen an early uptick in payment activity, but remain cautious. I was in Southern California two weeks ago, and I'm very encouraged by what I saw. Our on-site teams continue to actively engage our non-paying residents and are just now beginning to see a few positive signs, either through payments being made or in some cases residents deciding to move out and give us their apartments. Overall, the strength and demand, and quality of our portfolio clearly points to above-average performance for our Southern California markets as the delinquency issue slowly clears. On the innovation front, we finished deploying our centralized renewal process in the first quarter and are now focused on centralizing our application process. As we mentioned last quarter, the foundation of our operating platform is in place and we are focused on further process automation and multi-site coverage that will create additional efficiencies while continuing to meet the ever-changing needs of our customers and provide them a seamless digital customer experience.

Let me thank the entire Equity Residential team for their continued dedication and hard work. These are exciting times for our industry in the overall operations of our company. Not only are we on track to have a very strong year of financial performance, but we are also advancing our platform. Resident expectations are constantly evolving and our teams continue to focus on leveraging technology to meet those needs and drive operational excellence.

Thank you. I will now turn the call over to the operator to begin the Q&A session.

Questions and Answers

Operator

Thank you. [Operator Instructions] We'll take our first question from Nick Joseph with Citi.

Nick Joseph
Equity Research Analyst at Equity Residential

Thank you. Hoping to get more color on the Southern California delinquency issues. When did it first start to pop up? How many residents is it? How many are paying now? And then is it kind of widespread across Southern California or is it concentrated in specific buildings?

Robert A Garechana
Chief Financial Officer at Equity Residential

Hey Nick, it's Bob. I'll start with that. So we had about --we've had a concentration of bad debt in Southern California, as you mentioned. And in particular, I think Los Angeles, in the city of Los Angeles specifically, and if you drill down even a little bit further, there is a handful of specific assets where it's even more concentrated and that was true of most of 2021, it peaked in terms of severity in September of last year and then had pretty stabilized and started to improve slightly in the fourth quarter which shaped some of our perspectives in our guidance. What changed or what happened in the first quarter was, you saw a little bit of an uptick in terms of, as Mark mentioned in the prepared remarks our residents again concentrated in those specific areas of about 300 more people that didn't pay. We believe that may have been driven by the fact that they were applying for more rent relief, but they had previously been paying and now they stopped and so you went from that kind of increase overall. As you go into April and again it's early and we haven't finished up the month as Michael mentioned, it appears that many of those people are at least starting to pay their April rent.

Now what's changed also is that under the Rent Relief Program you could only have March eligibility. So rent that was through March of 2022, is eligible for the rental relief program, April is not and so that probably is changing the behavior as well as some other opportunities we have to just communicate with the residents, et cetera.

Nick Joseph
Equity Research Analyst at Equity Residential

Thanks. That's very helpful. And then Bob, can you just remind us of the bad debt policy and then what guidance is assumed for net bad debt for the remainder of this year?

Robert A Garechana
Chief Financial Officer at Equity Residential

Yeah. So our bad debt policy in terms of our write-offs is once you get three times behind your rents we would write or reserve against. And we also write off any bad debt associated with people who move out. So there is that combination. Also, if you were kind of three times but got rent relief. So you weren't the actual payer. We also reserve against that. So it's a pretty conservative policy and looking at kind of what the resident themselves is doing from a payment standpoint and that policy hasn't changed since kind of the beginning of the pandemic or even prior to that overall. And what was the second part of your question, Nick, other than the policy?

Nick Joseph
Equity Research Analyst at Equity Residential

What maintained 2022 guidance assumes in net bad debt?

Robert A Garechana
Chief Financial Officer at Equity Residential

Yeah. So our initial guidance back in January, assumed that we would, based on kind of our experience in the fourth quarter, to be honest with you as I just mentioned thought that we would before rental relief start seeing improvement in the first quarter and then accelerate improvement meaning more people paying or just moving out as we went through the remainder of the year. What happened based on the first quarter has made us adjust that perspective a little bit in that we still think that we will see the improvement, but are probably be less pronounced and will be further back in the year. Offsetting some of that change. So more impactful the number, offsetting some of that changes we now think we'll probably have higher rental relief. Right. So based on what occurred to us. So that net-net bad debt is probably going to be flat to maybe marginally helpful to growth between '21 and 2022 whereas previously we had assumed that it would be a contributor to growth. The good news is that everything else that Michael talked about in terms of pricing and everything else relative to guidance is actually more than offsetting that like Mark mentioned. So we feel very good about how we're positioned going into the leasing season.

Nick Joseph
Equity Research Analyst at Equity Residential

Thank you very much.

Operator

Thank you. We'll take our next question from Steve Sakwa with Evercore ISI.

Steve Sakwa
Senior Equity Research Analyst at Equity Residential

Thanks, good morning. I was wondering if you could just maybe speak to the June and July renewal increases that are being sent out to just help us frame against the April and maybe how those numbers compare to when you set guidance several months ago, where are those renewals and new leases in context of the revenue growth that you have currently out there?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah, so. Hey, Steve, this is Michael. So, first basically when we're looking at renewals right now, we're not completely done issuing quotes through kind of July. But if we would just step back and look at where we are for April and May and even preliminary June, we're still putting out quotes that range, somewhere between 14% and 15% for these months, which is probably about 200 basis points stronger than what we originally contemplated, which is just this intra-period kind of strength that we see. We do expect that renewal --achieved renewal increase will moderate especially on a net effective basis as we get into the back half of the year. Because when we look at even the July expirations only 5% of our expirations for the month of July had a concession when they moved in a year ago. So I think that right there is going to put a little bit of pressure just on our ability to post 12.5% achieved renewal increases. But right now the overall performance and even what we see for the next 90 days probably trending about 200 bps higher than what we thought.

Steve Sakwa
Senior Equity Research Analyst at Equity Residential

Okay, great. And I guess, Bob. Maybe just going back to the guidance, I mean I know the bad debt caught you got by surprise and probably certainly limited your desire at this point to a kind of raise guidance just --you see how things play out, but it sounds like all the things Michael has talked about trend-wise are definitely better than maybe what you thought at the start of the year. So if this 125 or 100 basis point drag in Q1 really abates in Q2 and beyond. I guess I'm just trying to think through the potential upside to the numbers that you've currently got out there, like how much --room do you have to kind of revisit guidance next quarter?

Mark J. Parrell
Chief Executive Officer at Equity Residential

Hey, Steve, it's Mark. We feel like we're extraordinarily well-positioned. I mean the team would actually tell you we've never been in this good a spot. So we feel really good about that conversation. We're going to have with you in July about where the numbers are going to go, but we are entering into the beginning of the leasing season. It's really hard to predict. On the bad debt side, we may get more reimbursements. California may slow down. It's just really unpredictable. So the exact place we're going to end up but we feel like there is upside to the numbers. Absolutely.

Steve Sakwa
Senior Equity Research Analyst at Equity Residential

Right. And then just one last question on transactions. Just given the move, we've seen in the bond market in the last, call it six weeks, eight weeks. I'm just curious, are you seeing unlevered IRR hurdles changing at all. Levered buyers dropping out. Like I'm just curious, the transaction market, the dynamic that's out there with the sharp move in bond yields, and how is that influencing your desire to put capital out?

Alec Brackenridge
Chief Investment Officer at Equity Residential

Sure, see this is Alec. You're right, the market has changed a lot in the last three or four weeks from an interest rate standpoint, but there are countervailing forces that work. Still, all of this capital flowing into our sector and operating results are still so good that it's a really attractive place for people to put money and so I would say more that the frothiness has gone where a month or two ago, we had multiple bidders going in over ask and really bidding the pricing up and frankly, we didn't buy in that environment because we thought it got so overheated. So right now it's kind of a feeling-out process, but I don't see distressed sellers out there. Operations are really strong and there is still as I said, a lot of interest in buying. So I don't see any fire sales coming and certainly not for us. And when you ask about the cost of capital for us that really comes from our dispositions and we expect to continue to be able to sell at low cap rates and redeploy that money non-dilutive into our new expansion markets.

Mark J. Parrell
Chief Executive Officer at Equity Residential

And Steve, it's Mark. Just to build on that, I think already a very complete answer. I mean interest rates right now that two years and 10-year treasury are just back to where they were in early to mid-2019. So, and I know you know this is we're not at some crazy new interest rate level and yet our growth prospects are much better now for the industry for our company than they were in 2019. Now a lot of that's been capitalized into the value of these assets being much higher now than in 2019. But I still think that the growth picture, which doesn't have any fractures in it at all for us and I think for most of the industry is very supportive of values. I'll also add, I think the private market is recognized and I think the public market is increasingly recognizing that apartments are very, very resilient. I mean this pandemic was about the worst thing that could happen to an urban apartment owner and yet we're 25 months out of the start of that and we're telling you about how well everything is performing, how well occupied we are again, how we're moving rents up. So I think the combination of the market's perception of the resiliency of the product, especially compared to all the volatility and other investment alternatives, and combined with this, the growth prospects makes us feel pretty good about value going forward. And maybe that exception is if you get into a stagflation environment where the pressures would be a little different, but we feel pretty strongly that values are going to hang in there for us.

Steve Sakwa
Senior Equity Research Analyst at Equity Residential

Great, that's it from me. Thanks.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Thank you.

Operator

We'll take our next question from John Pawlowski with Green Street.

John Pawlowski
Consumer Bank Analyst at Equity Residential

Thanks for the time. Alec, just a few follow-up questions to the transaction comments. So the dispositions you have paid up out in the market right now. Can you just give us a little bit of color on how the bidding tent for those assets has changed in terms of any re-trading you're seeing or the number of bidders getting whittled down, particularly on a levered buyer side?

Alec Brackenridge
Chief Investment Officer at Equity Residential

Sure. John. So I would say at this point there are some bidders that are stepping back for sure. They are relying on higher leverage, it's harder for them to make it underwrite, but I can tell you that the both what we've been competing to buy and what we've had on the market is seeing a lot of interest and then we see a lot of tours on stuff we've just put on the market recently. And so far haven't seen a dramatic move in pricing. So really can't make a call on that. I would just say there is this feeling outsense that buyers and sellers are just going to determine whether there is a market right now. And at this point, it really feels like there will be, there's just so much capital out there.

John Pawlowski
Consumer Bank Analyst at Equity Residential

Okay. New York specifically with additional sales that we can expect in the coming quarters, should we expect these low to mid three cap rates that we saw on 140 Riverside asset?

Alec Brackenridge
Chief Investment Officer at Equity Residential

Yes, that's generally been the case in the market and certainly for the properties that we're looking or thinking about selling that would be generally the case.

John Pawlowski
Consumer Bank Analyst at Equity Residential

Okay. Thanks for the time.

Alec Brackenridge
Chief Investment Officer at Equity Residential

Thank you.

Operator

We'll take our next question from Rich Hill with Morgan Stanley.

Rich Hill
Analyst at Morgan Stanley

Hey, good morning guys. So I want to maybe talk about turnover for a second, I think on an annualized basis, you guys were just shy below 35%. Do you think that's sort of the new normal or do you think that will pick up in the peak leasing season and maybe more specifically, can you walk through what's driving the sort of the collapse and then turnover rate, is it really because there is no place to live and so people are just taking the renewals that you're giving them and saying, well, it's better than trying to find another apartment?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. Hey Rich, this is Michael. So first just there is normal seasonality to turnover by quarter. So the first quarter typically is one of the lower kind of reported turnover numbers and it will tick up as you work your way through the leasing season and then kind of fall back off again in the fourth quarter, but the fact that we reported at 8.7 normal historical like going back into '18 and '19 and even '17. Typically the first quarter like right around 10%. So you could see that kind of improvement that we're seeing. My guess is that as we work our way through the second and third quarter. Yes, it will tick up, but it is still going to stay relatively low compared to comparative norms part of which is what you just said, which is the optionality. Where our residents are going to go? We're delivering great service to our residents, so our customer service scores are kind of maintaining at the all-time high levels. The price point that we're offering is competitive in the marketplace and there is still a little bit of this lift that we're seeing in retention regarding kind of just regulatory limits that we're bumping up against that is keeping some of these quotes, while there is still significant increases below what the otherwise the market price would be. And again, that's just a matter of time as we work our way through kind of another cycle of renewals with those residents that will catch up to those market rates.

Rich Hill
Analyst at Morgan Stanley

Got it. And so what that tells me is, and I know you've emphasized this a couple of times, but pricing power is significantly in your favor. And so if we're thinking about new leases and renewals. I have a hard time believing that there's very little that could lead that to start to roll over, is that a fair assessment? And I have a quick follow-up to that.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah, I don't know exactly what you mean by rollover, but I would tell you, just looking at the strength of like the reported new lease renewals and blended. Right. Knowing where the intra-period rent growth is today, we are going to produce stronger results in the second quarter than what we originally anticipated based on that strength, but we still have a difficult comp period as we turn the corner into the second half, just based on the recovery of rents last year. So they will start to moderate off in the second half. But relative to our original expectations, strong early intra-period rent growth is the biggest catalyst to produce revenue growth in the current year and that's what we're seeing right now.

Rich Hill
Analyst at Morgan Stanley

Understood. That's helpful. I shouldn't have used rollover. I was asking a rate of change question, so thank you for that. Could you maybe just talk about supply real quickly. Starts and permits across the United States are pretty high here. Do you think all those permits are going to become starts and do you think those starts are going to be delivered on time?

Alec Brackenridge
Chief Investment Officer at Equity Residential

Hey, Rich. Its Alec. I'll start and others can chime in, but generally that there haven't been that many projects that have stopped at all that I'm aware of and that we see in the market, but everything has gotten harder. So things are taking longer to deliver. So typically about a three-month or so lag. So things that are in the pipeline will deliver a little more slowly. In terms of things that are being underwritten right now to generate future supply that's certainly gotten more challenging. It's a combination of costs going up and costs that were going up say 0.5% a month are now going up 1% a month and even things like lumber, which may have abated a little bit are now being offset by steel going up pretty dramatically. So it's a cost challenge on top of which interest rates are up. So all of those things are going to combine to make development a little more challenging to underwrite in the future. We haven't seen that stop anything yet, but if you just look out, it does get harder to make the numbers work.

Rich Hill
Analyst at Morgan Stanley

Got it. Thank you, guys.

Operator

Thank you. We'll take our next question from Chandni Luthra with Goldman Sachs.

Chandni Luthra
Analyst at The Goldman Sachs Group

Hi. Thank you for taking my question. So I wanted to talk about rent control. The narrative has definitely going to be heightened as we have seek instead of these staggering great numbers. So, could you perhaps talk about what you are seeing in your circles, not necessarily in the market that you're in already, but just generally in the markets that you are planning to kind of expand your presence in? And how do you think the parts to be to [phonetic] the housing crisis that rent control is being offered as one solution to?

Mark J. Parrell
Chief Executive Officer at Equity Residential

Right. Thank you for that question. Chandni it's Mark. What I'd say is that rent control continues to be a conversation, not just in the coastal markets as you implied but also in places like Florida and other jurisdictions, because again as you noted, rents are up significantly. In some of our coastal markets, they are frankly just these big increases or frankly just recovering the rents to where they were in 2019. In some places, they are significantly higher like in Southern California. So there's a little bit of that. We have had residents especially our residents have their incomes continue to rise, which is an offsetting factor. But the biggest thing is we just need to keep an industry-focused and have these conversations with policymakers and in some cases, voters about that rent control doesn't work and we're doing that. The industry is very well organized on these topics. We continue to have these conversations. They are relatively productive I mean, rent control just, New York set forms of rent control since World War II and it's the highest cost housing market in the country and just doesn't work and we're continuing to advocate for zoning reforms, continue to advocate for regulatory reforms, public-private partnerships like the 485-W program in New York that we do hope gets going.

So the industry is aware, we acknowledge the problem of the lack of affordable housing in the country but that problem is a problem that is in some regards of the government making and we need their cooperation here with some effective policies to improve. So we do see it as a risk. And one of the reasons you see our strategy diversifying is to diversify away from that risk. New York's a great market for us, it's going to have league-leading revenue growth. Some of the assets we're selling we intended to sell well before the pandemic for tax abatement reasons for 21A type reasons or ground leases or whatnot, but it is also part of just diversifying into some markets that may be a little less political risk and having a company that can I have a little less volatility and compound cash flows more reliably going forward. So we're really excited about where we're headed. And this rent control topic does influence our capital allocation.

Chandni Luthra
Analyst at The Goldman Sachs Group

Thank you. Thank you for that insight. And if I could follow up with a question on seasonality. Now that you're entering your peak leasing season pardon my voice. What are you seeing from a seasonality standpoint, is it still a typical? Any thoughts in terms of are we back to where you were with its 2019 seasonality patterns. Any color on that would be very helpful.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah, sure. So, this is Michael. So typically in a normal year. The way to think about the kind of transaction volume seasonality is about 20% occurs in the first and fourth quarter and about 30% occurs in the second and third quarter. We did see a little bit of a shift as we were working our way through kind of the recovery in '21 and right now, I will tell you we are getting very close back to those normal kinds of percentages by quarter. We did have slightly more expirations in the first quarter of this year like it was like 24% versus the 20% norm. But as we're working our way through these new leases and renewals. I think it's just a matter of time by next year, we're going to be right back in line with those numbers.

Chandni Luthra
Analyst at The Goldman Sachs Group

All right, thank you so much.

Operator

We'll take our next question from Nick Yulico with Scotiabank.

Nick Yulico
Analyst at Scotiabank

Thanks. I just wanted to go back to the bad debt number that you gave, I think you said it was $6 million was the uptick in bad debt versus what you expected. I wasn't sure if that was --should we think about that $6 million is only applying to those 300 additional people that didn't pay that you sided in Southern California or is their other pieces within that $6 million?

Robert A Garechana
Chief Financial Officer at Equity Residential

Hey, Nick, it's Bob. There are other pieces associated with it. It's probably about half the 300 people that didn't pay that we mentioned earlier and the other half is really we had anticipated improvement based on our fourth quarter experience and we didn't see any improvement. Right. So it's the staying flat relative to our expectations that you were going to actually go down and then on top of it adding these 300 people.

Nick Yulico
Analyst at Scotiabank

Okay, guys. Thanks, that's helpful. And then just other question is on, I know this is an issue that probably plays out in New York. I don't know if it's also maybe in San Francisco or some other markets that had heightened concessions where you had some residents move into the portfolio over the last year and a half at discounted rents when free months were given those leases, I think in New York we've just heard and the market increasingly are starting to turn in second quarter summer. And I guess I'm just wondering if you have any early read on how some of those conversations are going in terms of the resident who got a bunch of free rent is now being pushed up to market and what's happening. The market itself is very tight. So maybe the person can move, but any sort of anecdotal color you're hearing on that topic would be helpful. Thanks.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. Hey, Nick, this is Michael. So I said something in my prepared remarks about in New York in the first quarter we were renewing about 60% of our residents versus like the historical norm from the fourth quarter and third quarter last year that was up at like 65%. So we did see a little bit of that drop-off. And what we started to hear back in like late February, early March is some of those folks from Manhattan, we're looking at those increases and actually choosing to go across the river, end of the Hudson Waterfront to trade down from a rent perspective, but given the strength of the demand that we see at the front door. I mean we are more than, okay kind of with that trade-off occurring and as we look into April, May, and even like this preliminary June, it really isn't materially different. We still expect to renew a large percentage of our residents in New York. But we will allow some of that trade out. We've centralized our renewal negotiation team, which really allows us to kind of be very strategic and tighten up kind of renewal negotiations to ensure that we're consistent in these markets. And right now, the results appear to be very consistent to us.

Robert A Garechana
Chief Financial Officer at Equity Residential

And Nick, just to add, you might remember. We qualify everyone on the basis of their base rent. So they may have gotten a one or two-month concession from us, but they can afford to pay that face rent. So they may react to any increase above the face rent. But the disappearance of a one-month concession on our financial statements is an 8% increase in revenues, but they've been paying us 11 months' worth of that higher face rents. So for them, there is no change beyond what Michael and his team push above face rent. So again it will look a little different on the financial statements than it will to the resident in hand.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

But we really are at the tail end of this, because the concessions really ramped down last year. So by the time we hit July, there are very few of those residents that have those big concessions when they came in.

Nick Yulico
Analyst at Scotiabank

Okay, great, that's very helpful. Thanks, guys.

Operator

Thank you. We will take our next question from Brad Heffern with RBC Capital Markets.

Brad Heffern
Analyst at RBC Capital Markets

Hey, good morning everyone. You mentioned in the prepared comments a decline in residents moving out to buy a home in San Diego. I'm curious if that's a trend that you've seen across the rest of the portfolio as well?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. So, during the first quarter, we did see a decline in the percent of residents that site buying a home is the reason when they move out, remember the turnover was low, so the absolute number of residents leaving to go buy a home is materially down and the percentage ticked down to about 11.5% of move-outs, citing that reason. Pretty much in line with our historical norms of like in 11% to 12% but reduced from like the 15% that we were seeing in the fourth quarter and third quarter of last year. I think right now what you're starting to see is just the supply constraints. The cost of single-family housing in our markets. Rising mortgage rates. We expect this is going to keep this percent at a very low and which really eliminates pressure on move-outs from this region going forward.

Robert A Garechana
Chief Financial Officer at Equity Residential

And because renewals are so high. The absolute number of people actually moving is really small, I mean like when you talk about a percentage that's one thing, but 10% or 11% is being applied against a much smaller number of people that are in fact leaving us at all for any reason.

Brad Heffern
Analyst at RBC Capital Markets

Okay, got it. And then, have you seen any change in demand for one-bedrooms versus two bedrooms, I'm just trying to see if people are starting to double up again given the increase in rates?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yes. So, this is Michael. We really haven't seen kind of any change right now. We're back to like a pre-pandemic level where we average about 1.7 adults per kind of occupied unit in the portfolio. What I will tell you is what we've seen is through the pandemic studios were the lowest occupied unit type that we had. I talked a little bit that we were seeing the trends of the recovery in the portfolio of that unit type. But even sitting here today in the first quarter studios were 95.9% occupied and today they're at 96%. So there is still trailing the other unit type mix which if we're going to have a vacancy in the portfolio. I'm okay with that vacancy being at the lower price point unit of a studio.

Brad Heffern
Analyst at RBC Capital Markets

Okay, thank you.

Operator

Thank you. We'll take our next question from John Kim with BMO Capital Markets.

John Kim
Analyst at BMO Capital Markets

Thank you. You have a fair amount of debt expiring this year and next. There is no debt offerings in your guidance, what are your thoughts on refinancing some of that debt with equity given your implied cost of equity is lower than your long-term cost of debt?

Robert A Garechana
Chief Financial Officer at Equity Residential

So, I'll start with the debt maturity real quick, and then maybe, Mark and I will tag in. So this year, we don't have much debt maturing John actually. And the next year we have the bigger amount of the $1.3 billion or so, some of which is secured and for various structural reasons needs to maintain secured and then we literally have no debt maturing at all in 2024. So when you look at the profile over the three-year time horizon, it's a pretty average to below-average kind of maturity profile and we have lots of flexibility in the markets at least in the debt markets to refinance whether that shorter-dated, longer-dated, fixed, floating, secured, unsecured kind of the full access to the capital. Our leverage is also very low relative to kind of targets and other things. And it will be, continue to be low, particularly as the recovery and just the overall business performance is great. So, and maybe I'll let Mark talk a little bit about the equity side.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Yeah. And just thinking about cost, I appreciate the point that the sort of FFO yield as compared to interest rates may be lower, but the long-term cost of adding partners, which is effectively what equity is to the company. And when you have all this as Bob said additional debt expansion capability. When you have all this additional availability on the debt side, that seems to us to be dilutive at this point. I don't feel like the stock's trading above our NAV estimates internally. So again, that doesn't seem to us to be the best idea right now relative to just refinancing. And I think Bob and his team have done a good job of giving us a multitude of options. I mean we can go short, it doesn't have to be 10-year debt, almost 20% of our debt was issued at 30-year maturities and expires in 28 years or more. So we've got the whole curve to use. We have a 5% floating rate debt, maybe will float some debt for a little while on the line. So I think we can manage this increase in rates pretty well without having to issue equity that I appreciate might feel cheaper but to us kind of doesn't.

John Kim
Analyst at BMO Capital Markets

Okay. And Mark, you mentioned some of the reasons for selling more New York assets and deemphasizing the market. Has a strong rebound in rents in New York given you any pause for reconsidering this?

Mark J. Parrell
Chief Executive Officer at Equity Residential

Yeah, I know. Thanks for that question. I think we're really to your point kind of in an enviable position in New York. We got great properties and a great team running them. And the assets that were potentially going to sell and have sold have been assets that have had these ground lease accounting issues. Have had these 421A tax reassessment increases that are coming up in the near term. You know that maybe have more intensive renovation plays that maybe aren't our thing to do or aren't things we believe in but buyers would. So we're keeping the assets that we think are going to drive performance. We're going to have this and we'll continue to have this amazing New York portfolio that we'll benefit from I think very limited supply, from some good job growth. So I think owning New York, in the next couple of years is going to be great. I think it has to be balanced against these regulatory concerns. So this didn't change our mind on New York. This is something we wish we had sold some of these assets in the past, but the pandemic interfered with that and we waited for them to recover and now our investors are going to harvest those gains and we are going to help with our diversification place so let the company is little more balanced against, again some of these regulatory pressures. So, no, it doesn't make us reassess our position, but I -- I mean, we're really pleased to own what we own in New York and what we will own long term, I think it will be a big driver in the next couple of years.

John Kim
Analyst at BMO Capital Markets

Appreciate it. Thank you.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Thank you.

Operator

We'll take our next question from Rich Anderson with SMBC. Mr. Anderson, please go ahead, your line is open.

Richard Anderson
REIT Analyst at Equity Residential

Apologies on mute. So, on the topic of guidance and your decision not to raise it to your peers did this quarter, you had done it last year at this time, I don't think it's a policy thing for EQR. I'm just curious if, is it entirely the unknowns around bad debt that caused you to hold the line, or were there other factors behind your decision to wait until next quarter to reassess guide beyond just the bad debt issue.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Hey, Rich. It's Mark. You know, last year was a year like no other. So I would say -- saying what our behavior is off of last year we were really challenged trying to figure out guidance, other folks don't even bother giving guidance in '21 and we at least told you what we thought the business was, and then obviously the recovery was really vigorous. In '19 and '18 we didn't raise the April mark. So it is kind of our general view here. Since I've been here in '07 not to do much in April, and the reason for that is we try to give you a real hard good look when we issue guidance early in February. I mean, the other guidance changes really took the numbers to our range, we had the highest range. So again, that was only a couple of months ago and there just isn't enough time in the period. I mean, we think we gave you a pretty high-quality estimate. Everyone's portfolio is different, and everyone's process is different, but I think we started off with a higher number. So we don't have to adjust it in April, and we're sort of looking at July, and going at that point. We'll have a real good sense of where the leasing season is going. We hope to adjust the guidance ranges appropriately, but it isn't just a matter of, you do it, you create guidance ranges so you can definitely raise every quarter that isn't our goal.

Richard Anderson
REIT Analyst at Equity Residential

Okay, fair enough. I appreciate that. The second question is you and your multifamily peers have been kind of gifted with this incredible environment and we can all see what 2022 is going to look like, and I hate to say it, but the conversation is going to shift to 2023 really soon here. I'm curious what you're doing differently given this unprecedented level of growth that you're enjoying and how that might be influencing longer-term plans. I doubt EQR given the quality of the organization is just taking the money and running and hoping for the best in 2023 is, this causing you, this environment causing you to maybe do things a little bit differently, so that you can lock in some of this growth for next year and thereafter, maybe longer-term leases. I don't know what it would be, but I'm just curious if there is a change in strategy so that you can extend the lifeline of what's happening today.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Maybe we'll split that up into two pieces. On the operation side, this custom of one-year leases is so deep in our business, that it's really hard Rich for us. I mean in New York, we have to offer two-year leases, and we just don't have a lot of uptake on that and we haven't seen a lot of uptake on that anywhere in the country. So it's an interesting idea and we've tried that before and we just have not had a lot of progress on that. So on the operation side, I think all the things we're doing in Michael's word to manage expenses better because this inflationary pressure on payroll is real and it isn't going to abate, and I think that is part of the '23 conversation and that I think it's something we're working really hard on and we're making good progress and you could see that in our numbers. So I think as we think about '23, '24, '25 we are thinking we're going to live in an inflationary climate for a while and we need to adjust to that by managing our people and processes as best we can.

On the transaction side, the blessing here is that we're able to do this trade. I would love to have done it accretively. It was a little accretive last year, but we're able to switch into these new markets, a much newer product, a much less capital intensive product, without dilution is a wonderful thing and we're taking full advantage of that. So the opportunity to sell a product that's an older product in markets that do have real regulatory challenges that we think a lot of private owners aren't that concerned about because they've got other things on their mind that's an opportunity from our perspective and we're selling into that opportunity.

Richard Anderson
REIT Analyst at Equity Residential

Okay, fair enough. See you in New York.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Yeah. Thank you. See you there.

Operator

Thank you. We'll take our next question from Joshua Dennerlein with Bank of America.

Joshua Dennerlein
Analyst at Bank of America

Yeah. Hey, everyone. I appreciate all the market color in the beginning. Just curious on the LA market. It looks like year-over-year same-store revenues were up 8.6%, what would that have been if you backed out the delinquency impact?

Alec Brackenridge
Chief Investment Officer at Equity Residential

Yeah, that would have been a little over 200 basis points better. So something that would have been around not similar to what the reported Orange County and kind of San Diego were so like was in ish percent.

Joshua Dennerlein
Analyst at Bank of America

Okay, that makes sense. And then, Michael, you mentioned in your prepared remarks that you're working on what I heard correctly centralizing you're the application process. What's the benefit if you are expected to drive from this, is it more on the expense front, or better able to kind of drive revenue growth something else?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

So it is --this is Michael. So it's really, it's just part of the overarching plan of just centralizing, a lot of the on-site kind of tasks into a group, where we can create that operating efficiency and running assets with fewer kind of folks in the office and really getting more into this multi-site coverage kind of model. So that's really the biggest thing which is layering in. We started with renewals, we saw the immediate benefit to kind of being able to create the guard rails and negotiation. Now we're looking at this application processing and creating efficiencies in that process and having fewer people have to be touchpoints with that and creating more of that seamless kind of experience kind of for prospects as they're going through, and then we'll move into kind of the evictions and delinquency, so we're looking at every single thing that gets done on-site and saying, is there an opportunity and benefit to the organization to streamline that process and have fewer touchpoints with it. And that's really the essence of what we're doing right now.

Joshua Dennerlein
Analyst at Bank of America

Awesome. Thanks for the time.

Operator

We'll go next to Haendel St Juste with Mizuho.

Haendel St. Juste
Analyst at Mizuho

Hey, there. So a couple of questions from me. First, Mark maybe another one on transactions but from a different angle. I know, transactions can be lumpy, but I guess I'm curious what the strategy you're thinking today here is, come of May and you have only done about a $100 million of acquisitions, $200 million at a disposition side, well behind the $2 billion annualized pace. One of the questions or comments if you're waiting for the market to settle down a bit here? Are you looking to perhaps sell a bit more aggressively now and buy more later given the surge in interest rates, anything under LOI put it maybe some color on how you're thinking and maybe how we should think about maybe the pace of acquisition, disposition and if you have anything under LOI or far along today? Thanks.

Alec Brackenridge
Chief Investment Officer at Equity Residential

Hi, Haendel. This is Alec. The whole market kind of took a pause at the beginning of the year, just because it had been so busy at the end of '21 and certainly we are part of that we closed literally five deals in the last two weeks of the year. So the whole market kind of took a break and then it started back up again really in February and from our perspective, as I alluded earlier was super frothy, really a lot of bidding wars going on. We were part of the process, but we didn't feel like it was the time to step in, lean into that. Now the market seems to come down a little bit, I think there's going to be an opportunity for us to get back on pace and last year, where we bought a -- we sold at $7 billion and bought at $7 billion. We didn't do anything in the first quarter either. So picking up to that pace is certainly our goal, and certainly my job to make that happen and we are pricing very actively right now.

Haendel St. Juste
Analyst at Mizuho

Okay, fair enough. A question may be on the market based on your comments this quarter versus last quarter, it seems to me that San Francisco might be the market were which is perhaps standing out most in terms of expectations at the start of the year versus now putting the bad debt issues in LA aside, obviously. So I guess I'm curious one, is that fair. And maybe what you sense of the market same-store revenue potential today in San Francisco versus kind of 7% you outlined a few months ago.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. So, this is Michael. So I think the way I would look at this right now. If I think about intra-period rent growth the markets that I kind of alluded to in my prepared remarks are really kind of outperforming expectations in New York, San Francisco, and LA. Relative to San Francisco right now, you're just now starting to see some of that pricing power come back. So from our full-year expectation that was probably a 7, at the beginning of the year it's like a 50, 60 basis point improvement right now to the full-year projection, but I think what I said in my prepared remarks is I more excited because we're seeing that pricing power improving week after week. So sequentially, right now we have a great opportunity as we head into May and June to write a lot of leases at a rate higher than what we otherwise thought, which would then add to those numbers.

Haendel St. Juste
Analyst at Mizuho

Got it. Fair enough. Can you give us an updated loss to lease growth for the portfolio? Thanks. And that's my final question.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. So as of April 15, the portfolio loss to lease remains at 11% for all leases in place. So really it's the strength of this interim period rent growth that has allowed us to maintain this loss to lease at a very high level sitting here in April, even though we just captured a whole bunch of it in the first quarter through this renewal and new lease process that you can see when you look at that blended rate that we reported for the quarter. So I think right now in the portfolio. There is 85% of the leases that are in place that are below current market pricing and I think as we mentioned in the past, we're not going to be able to capture this full 11% this year, but the fact that this number remains at 11% and is higher than what we otherwise would have expected it to be in April really does put us in a great position for the portfolio, not only to contribute into 2022 revenue but position it for 2023 to have stronger embedded growth.

Haendel St. Juste
Analyst at Mizuho

It's a great color. Thank you.

Operator

Next, we'll go to Connor Mitchell with Piper Sandler.

Connor Mitchell
Analyst at Piper Sandler Companies

Hi, thank you. So how soon can EQR turn the delinquent tenant over to the credit agencies?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

So, this is Michael. So there is a lot of nuances to that. So for residents that have moved out that have balances with us, we are able to turn them over to a collection agency now and they can begin that process. There is periods of protected rent, so it's not as clean as what it would have been in a pre-pandemic period. What we are started to do or what we've started to do in April as our credit reporting now for folks with their April rent payments and that's something that really kind of the law shifted around and we were able to kind of great to have that ability. So we are now reporting to the credit agencies each and every month our resident's ability to pay rent and any balances that they own.

Connor Mitchell
Analyst at Piper Sandler Companies

Okay, thank you. That's helpful. And then as EQR moves into the Sunbelt and noncoastal markets, the expansion markets, are you seeing any different affordability dynamics?

Alec Brackenridge
Chief Investment Officer at Equity Residential

Hey, Conner, it's Alec. When you say affordability about affordable units on-site or are you just saying generally about...

Robert A Garechana
Chief Financial Officer at Equity Residential

Rent as a percent.

Alec Brackenridge
Chief Investment Officer at Equity Residential

Okay. Rent as a percentage of, no we're keeping track generally low 20% rent as a percent of income and as we've talked about in the past, we're really finding the same general kind of renter who is working in the same general knowledge-based industries and has a growing income that supports rent growth over time.

Connor Mitchell
Analyst at Piper Sandler Companies

Okay. Yeah. Thank you. Sorry if there is any confusion. So yes, I was really asking about if tends to spend more kind of the percent that you're talking about and then compared to other markets like Canada [Phonetic] or that's been touched on a few times.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

So one of the dynamics is that we're growing off of a lower rent base as well. So the average rent is 2500 versus 4,000. We like that spot for a renter who has a good income. We can take the next question, operator.

Operator

Thank you. Moving on, we'll go to Anthony Powell with Barclays.

Anthony Powell
Analyst at Barclays

Hi, good morning. A question on Los Angeles. You cited streaming content creation as a source of strength there has been a talk about some of the streaming providers coming down their content spend given the competitive market there. How much frankly was driven by content creation and how do you see the overall demand generators in LA?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. So, this is Michael. So I think one, some of the announcements that you're reading today is probably more going to be impacting the future in the like 2023. The demand in the LA market is really strong. I don't quantify like how many applications came to us from that content creation. But you can look at like the strength in West LA and really just the overall kind of inbound leads that we're seeing in the overall LA market, it's really strong on a year-over-year basis and that's just one component of the strength of that market to generate demand, but I think the announcements that we just saw in the last week or so, really way too soon to understand if it's any impact on the future demand.

And you g

Robert A Garechana
Chief Financial Officer at Equity Residential

And you got to feel bullish about entertainment in general. How people will consume it has changed. I mean many of us were older like me consumed it through network television. Now you're consuming it through streaming services and there may be a different way to consume entertainment but LA is one of the worldwide centers of the entertainment industry, that's a very powerful economic magnet. And again, even if streaming kind of does withdraw a little bit and maybe there are tighter budgets there. You may have more people going entertainers going direct to the audience and a TikTok type format and needing production services for those sort of things outside of the streaming industry. So I just think entertainment can be consumed in a lot of different ways, but I think LA has a central role and how that's all done. And I think one way or another will benefit from it, even if, so to some of the streaming stuff these very elaborate productions become a little less.

Anthony Powell
Analyst at Barclays

Got it. Thanks. And maybe one more on rental income, you said that is still in the low 20s. So there's really been no movement there, even as you push rents higher and how do you look at rental income and an inflationary environment, would you maybe like to see a bit lower given there could be some other cost pressures outside of rent that may be impacting certain renters?

Alec Brackenridge
Chief Investment Officer at Equity Residential

This is Alec. I mean I would say our typical renters also seeing their income going up pretty aggressively as well. So you see that, particularly within the profile that we typically rent to. So that is keeping pace.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

And at the overall portfolio. I mean, we're at 19.5% rent as a percent of income, and really when you look at move-ins from the first quarter. The only change that happened was New York that used to be the absolute low point at 17.5% ticked up to 18%, which still shows that from an overall affordability standpoint those residents are going to be able to absorb additional increases.

Mark J. Parrell
Chief Executive Officer at Equity Residential

And it's Mark just to add a little to that because this is important in the inflationary climate, we've had a lot of good conversations with investors about this point too. Our higher-end renter paying, call it 20% of their income to us in rent with a lot of those folks commuting by public transit, especially in the East Coast are less susceptible to some of these energy pressures because they are higher earners. They have more disposable income. So even if their energy and food costs are up. They're liable to be pinched less. I think the pressure implied in your question is more likely to occur in Class B apartment buildings, in apartment properties in more further suburbs, and maybe in the SFR sector where people are a little more stressed than our renter.

Anthony Powell
Analyst at Barclays

Got it. Thank you.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Thank you.

Operator

And next, we'll go to Omotayo Okusanya with Credit Suisse.

Omotayo Okusanya
Analyst at Credit Suisse Group

Yes, good morning, everyone. If we go back to the bad debt question. What I'm curious is, why did happen just particularly in LA if the extension was kind of done statewide through June 30? Why is only happen in LA and then by June 30th when the protections all kind of come off do we kind of expect kind of a repeat of what we just kind of saw in 1Q?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. So, this is Michael. Maybe I'll start and then others can kind of build in. So I think when you look at the concentration of our delinquency, it has been Southern California focused, but LA has always had the highest concentration of the overall delinquency in the portfolio. What we also saw early on into January as we saw rent relief payments actually slow down in January and February as the programs, we're very focused on working on first-time rent relief applications and really put everything that they call like recertification, residents that were coming back for more they put those kinds of on hold. Now what we saw in March is they basically started to work those cases and net-net for the whole quarter we came out right around where we thought we were going to be, but you can really look into April right now and look at this, rent relief volume that we're seeing and we're already over $5 million for the month of April. So you can see these programs catching up. So, the concentration in LA is probably just due to the fact that that is where the delinquency is and there's also a lot of publication around these rent relief programs in that market that kind of influences the behaviors of the renters there.

Mark J. Parrell
Chief Executive Officer at Equity Residential

And it's. Mark, I'm going to add a little to that because I think there is another regulatory impact that Michael alluded to there, I mean in the city of Los Angeles there is an eviction moratorium. I mean that still exists there is exceptions to it. There are different actions we can take. I think residents have been diluted into thinking that means they don't have to pay their rent when in fact as Michael said, we can do other things to affect their credit and have other more pointed conversations. So I think in some places a moral hazard has been created by these, I think initially well-intended but now well overdue policies and I think that's part of it. I think the reason you see it a little more in Southern California than in Northern California is because of that and I think if these programs get extended. I think you're going to see very much more effective legal challenges to them because we're 25 months into the pandemic and all these emergency measures have expired and the idea that this is the one measure that needs to keep going. And that this cost needs to be put on landlords as opposed to dealing with the housing crisis is a public good that needs to be dealt with. That's I don't understand how that's going to work. I think there is going to be pressure on policymakers on that topic. So I think it's a combination of a little moral hazard a little regulatory shift as well as just I think some PR in that market.

Omotayo Okusanya
Analyst at Credit Suisse Group

But when it does expire on June 30. Do you think people just kind of start paying or do you expect the shock to the system or platform?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

You know, our resident base is different. We don't -- I mean this is troubling to us sure. But it's not deeply material. We just don't have a lot of evictions, I think we need to just keep having conversations with residents. There is no rent forgiveness program in EQR, we will continue to pursue you, we will follow the rules, but we will be persistent. So I guess I'd say that we're going to advocate that these various eviction moratoriums have served their purpose and now should lapse and we'll continue to have these direct conversations with our residents and the vast, vast majority of them are paying and paying on time and like their service like their property. But you can't leave for free and you need to meet your financial obligations, meet your contractual obligations and that's something we'll be diligent and following upon. So I guess I'd say to you, I think it is going to get better, but it's probably going to get better slower in LA than anywhere else.

Omotayo Okusanya
Analyst at Credit Suisse Group

Great, thank you.

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Thank you.

Operator

[Operator Instructions] Moving on, we'll go to Michael Goldsmith with UBS.

Michael Goldsmith
Analyst at UBS Group

Good morning. Thanks a lot for taking my questions. First-quarter operating metrics such as same-store revenue growth and same-store NOI growth were below the low end of the full-year range for reasons already discussed in-depth, but how should we think about the pace of the acceleration of these metrics through the year and given the tougher comparisons in the back half, when does this peak and we're trying to get an updated view of the shape of the year and the exit rate into 2023? Thank you.

Robert A Garechana
Chief Financial Officer at Equity Residential

Yeah. So, this is Bob. So the shape is actually not changed all that materially, even with the negative impact on the first quarter from bad debt. So the first quarter was always in our mind going to be lower because you're getting this compounding effect of the rent roll. Right. You're getting this compounding effect of like putting on these great new lease changes. Great renewal rates. Great blended piece. And so, in our minds, that's really Q2 and Q3 are going to be probably the peak above kind of midpoint of full-year guidance range performance from a same-store revenue standpoint that has to do with the comp period. Right. And just kind of the comp period trajectory from Q2 and '21, but also just that compounding effect and we felt like in our original guidance that you would then see more normal seasonality in the fourth quarter as you went into the fourth quarter and so you'd see a little bit of a dip there. The question will be given where we sit today about how strong the leasing like the lead up to the leasing season is if that normal seasonality returns or not. Right. We've had years where we decide that normal seasonality. The setup again sitting here today, feels like that normal seasonality might not be as pronounced as what we assumed in our initial guidance. So, that feels pretty good. But I think we'll know more in July when we talked to you on the call and we'll be able to give you kind of a robust view on that.

Michael Goldsmith
Analyst at UBS Group

That's very helpful. And you invested in technology initiatives and you still have higher than usual staffing vacancies. And I'm just kind of wondering when do these higher vacancies just become the norm. And based on your investments, you kind of reached a new equilibrium between technology and employment levels?

Michael L. Manelis
Chief Operating Officer & Executive Vice President at Equity Residential

Yeah. So, this is Michael. So in terms of staff vacancies on site right now. The portfolio is running just below 7% which is about 100 basis points higher than what historically we see in the first quarter, it is nowhere near like what we saw in Q3 of last year where we were like 10%, 11% kind of vacant positions on site. So a lot of that vacancy, kind of evaporated through recruiting efforts and really all of the work that we're doing right now around the centralization and creating these operating efficiencies like we're still in the early innings of all of this coming through, and I think I've said in my prepared remarks, even last quarter that this stuff is going to go and flow into 2023 as well because we're redoing a lot of the on-site processes, but again a lot of the gain that you see in payroll is not from vacant positions in the first quarter it's from the efficiencies that were created.

Michael Goldsmith
Analyst at UBS Group

Great, thank you very much.

Operator

And there are no further questions, I'd like to turn it back to our presenters for any additional or closing comments.

Mark J. Parrell
Chief Executive Officer at Equity Residential

Thank you all for your time on the call today. We look forward to seeing many of you in conferences and in your offices over the next few months. Stay well, thank you.

Operator

[Operator Closing Remarks]

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