Equity Residential (EQR) Earnings Call Transcript & Summary

I'm Nick Joseph with Citi Research. And we're pleased to have with us Equity Residential and CEO, Mark Parrell. This session is for investing clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available up here and on the webcast on the Disclosures tab. For those in the room or the webcast, you can sign on to liveqa.com and enter code Citi2020 to submit any questions. Mark, I'll turn it over to you to introduce the company and the team and provide the audience 3 reasons why investors should buy your stock today and then we'll get into Q&A.

Yes. Thanks, Nick. Good afternoon, everyone. As Nick just said, I'm Mark Parrell, the CEO; and to my left, Bob Garechana, our Chief Financial Officer; to his left, our Marty McKenna, who runs investor and public relations for EQR. So delighted to be here today just recapping a couple of things in terms of these 3 questions. We love these sort of questions, the tradition you have here at Citi. So we think the things that distinguish us as a residential company are our customer, the quality of our customer, and we have a page in our new book on that. So our average resident household income is about $163,000 a year, which is about double the U.S. average. Many of our residents work in new media, technology and other such professions which we think are both recession-resilient and have higher income growth potential in the long run. We think our property portfolio is distinguishing as well. We have the highest quality properties in the sector, average age around 20 years, high Walk Scores, great livability, dense suburban/urban locations that we think distinguish us as well. We spend less on capital than our competitors which we think also leaves free cash flow at the end that's more available to us for reinvestment or for increasing the dividend. So we think our portfolio is a big positive factor there as well. And third, we do have a long and we think distinguished record of good capital allocation through cycles, whether it's buying Archstone or coming out of the great recession and purchasing assets at pretty good discounts. And more recently, trying to increase, last year, we bought about $1.5 billion of assets at a 4.7% cap rate and sold about $1.1 billion of assets at a 4.6% cap rate. So we think we're pretty good at our business, understand the real estate cycle and understand value when we see it.

Great. Thanks. So we're starting each session off with the same question. ESG is of increasing importance for all company stakeholders. What's the one thing EQR is doing to improve your overall ESG score over the next 12 months?

Well, what I would say is, it isn't as much one thing as a different way of disclosing. We do a lot of things that we're very positive in terms of sustainability especially. Some of those are required or mandated by places like New York City that have pretty high standards for building climate control and just sustainability in general. So what we're trying to do is be in and be involved with more indices. So last year, we started reporting under the GRI framework and we got our numbers audited. This year, when you see our report in a few months, you'll see that we'll be SASB compliant as well. So we're just trying to report along the lines of various indices so that you as investors can use whatever information you like, in whatever form you'd like, to draw your opinion on us. I think we do a great number of things that have always been beneficial for the environment, but also, frankly, have been very beneficial for our bottom line. So we would say it's more, Nick, in terms of the amount and quality of data we provide. It's not in actions because I think a lot of those actions were already taken.

Excellent. Maybe just start, and I recognize it's kind of a constantly evolving situation, but how is EQR handling kind of coronavirus concerns, both as a corporation and also at a property level?

Yes. So at this point, there's been no impact on the company whatsoever from the virus. We're obviously closely monitoring the situation as all of the folks in this room are. I'm certainly not an epidemiologist, don't know what is actually going to happen here. But we have reinforced with our on-site personnel and with our people in our corporate offices the importance of good hygiene, all the things that I think we know is common sense: dispensing with handshakes for the time being, washing our hands more frequently, all of those things. It was funny, about a month ago, I started talking with our field operators about what we might do as coronavirus began to be a bigger issue. And it was very interesting. They just pulled out of their hands and said, well, we have our pandemic response materials already ready because our team is very tenured. A lot of the people have been there a long time and are very experienced. So when SARS went through the world, we developed a series of procedures for that and we called it our pandemic response procedures. And they're in all our books, in all 300 of our properties. And all our property people were reminded of that. And on Wednesday, every Wednesday, we have a video session that runs out of Chicago where we close all our properties down for about an hour and we talk about current issues. Sometimes, those are business issues like leasing. In this case, it's going to be, again, about hygiene, cleaning common surfaces. What to do if the CDC or some other health office speaks to you about something going on in your property. So we feel on-site as prepared as we can be. And as I said, a lot of our senior operators, frankly, have been through variants of this before.

Great. I guess in advance of the conference, you put out an operating update. Maybe we can just go over that in terms of how things are trending relative year-to-date and also any markets that are either outperforming or underperforming expectations?

Yes. So I'll start with an overall view of performance. And I'll remind everyone that we're very early in the year, obviously. So we're about a month away from having issued our guidance. And for us, in our business, our prime leasing season really starts in the second and third quarter. So not a lot has changed since our last earnings release. But as you could see in the materials that we produced, we're right on track of where we would have expected to be to marginally better. So as we sit here today, our portfolio is 96.8% occupied, which is very strong, which positions us very well as we get into that new leasing season. It also positions us very well to deal with new supply that's scheduled to be delivered later in the year. From a base rent standpoint portfolio-wide, base rents in the markets are about 3.2%, which is modestly down from what they were at this time last year, but still relatively strong and consistent with our overall expectations. As you think about the markets in general, I'd say that all markets are pretty much in line with expectations. I think we are pleasantly surprised with the strength and performance in Seattle, where you do see a fair bit of supply, but that supply is back-end loaded. So we've been able to drive rents stronger than what we would have otherwise anticipated and to drive occupancy. The only other highlight I'd make from a market-specific standpoint is in San Francisco, where we've seen good strength and recovering from the seasonality that we experienced in the fourth quarter. So if you recall, in the fourth quarter, we saw some dip in occupancy and some seasonality. That has now recovered. And as we sit here today, we're 97% on occupied and well positioned as we face supply in the market.

I think one thing we've heard from you and a lot of your peers is the strengthening of the East Coast on a relative basis and maybe a slight deceleration on the West Coast to where growth is converging. Is your expectation for those trends to continue for the East Coast to actually start to outperform a little or do you think are kind of going to trend together going forward?

So our guidance implies convergence, as you mentioned, Nick, between the East and the West Coast. So we think that those will converge from a same-store revenue performance within, call it, 20 to 30 basis points. That's really driven by strengthening in both New York and D.C., which we expect to have better years in 2020 relative to what they were in 2019. So we think that trend would continue. On the West Coast, I think the most notable market where you're seeing a deceleration as implied in our guidance is really Los Angeles, and that's largely a function of supply. So supply in Los Angeles, which is, call it, around 12,000 units, is impacting overall performance, and that's where we're seeing moderation in growth.

From a regulatory standpoint, I think you've talked about, about 20 basis points headwind this year, a lot of that's, I guess, New York, somewhat California. Once you get through this year of comp, does that headwind go away absent any additional regulations which we can get into after?

Sure. So let's talk about California, which is this CPI plus 5% limit. Conceivably, if rents, if the economy grew, I mean, already occupancy is very tight in all these markets. If we all got through this virus thing and the economy reaccelerated, you could have years where you could push the rents more. So we have had years, particularly in San Francisco, where we probably did have same-store revenue growth in excess of CPI plus 5%. So I would say to you, Nick, that limit, which I think of more as a consumer protection measure than anything else, is something that on renewals is a limiter. But I'd also say that because we can reset rents on vacancy and because about half our units do become vacant every year, you won't fall much behind. So I think what's happened here is, we clipped the wave tops off. So I think those opportunities to, once every 15 years, put up a really, really big number, probably not the case anymore in San Francisco, for example, but I still think that the overall strength of those markets is there.

And then on New York?

Well, New York is, and you said we'd talk about future regulatory issues in a moment. I'd say New York is going to be done with the impact really this year for us because we have the second half impact on fees. There are certain fees you can't charge anymore, so half that impact was in 2019, half is in 2020. You have these renewal reductions. So once that's in the run rate with New York, you really won't see it the same way.

Great. Maybe just on the potential additional regulatory environment. Costa-Hawkins soundly defeated 2 years ago, seems like it will be back on the ballot again this November. What are your expectations for that just given the tweaks? And how is EQR going to contribute to the message going forward?

We'll start with California. I think the industry is extremely well organized and mobilized to have this conversation both with policymakers and in the case of California, with the public at large. We know how to run a political campaign now. We know how to communicate in a large state like California. We're in the fundraising part of the discussion. To our advantage, I'd point out a couple of things. Nick did point out, we won the last time. Well, we won by 20 percentage points and took every county but San Francisco. So I think we come at this issue with the idea that a lot of people in California see rent control for what it is, not an answer to housing constraint and affordability or homelessness and not a constructive economic policy. And second, I'd point out that as much as we aren't very fond of 1482, it is the law, and so we can point to that. So there is really a consumer protection measure. So for folks that really did get 20% rent increases and were displaced, those are no longer part of the landscape in California. So I think we're going to have a good, strong argument to take to the voters. And like I said, we're very well organized. Going across the country to New York, I'd say New York to us is a little harder to read. New York has just got a different, I'd say, process than California, much less public. There have been different discussions about changing some of the rules around eviction that might amount to rent caps on us and the rest of the industry. Again, I think we have good conversations through the trade association, which is re-energized in New York and is talking, I think, to a wider array of policymakers. We understand some of the leaders of the Assembly and the Senate aren't in favor of some of these new rules. So we'll just have to wait that out in New York, but I think the state would be well put to just leave that go and sort of see how these new changes went. I mean, for example, south of 96th Street in New York, there's only 1,100 market rate units being built this year. That is an enormous area to have that little supply. And though supply does hurt me, as an owner, I would say, in the long run for New York to continue to grow, it needs more supply than that. And I think these kind of rules are dissuading that. And I think they'd be better served backing off that a little bit and trying things like zoning reforms and trying to make the Affordable New York Program more efficient. We feel okay about Washington state. You didn't ask about that, but that's an area of interest as well. So in Washington state, there was a move afoot in the legislature to get rid of the preemption that doesn't allow localities to institute rent control. It looks like that's not going to pass so the preemption will continue. There may be a ballot measure in Washington state and the industry is well organized there as well. In Colorado, we think the rent control measures in the legislature are not going to move forward. We think it is likely there'll be some discussion about inclusionary zoning. We think some of those programs can work and we're involved in those conversations, and we'll see where they go.

In Massachusetts?

Yes. Well, the governor has not shown great support for rent control. And the mayor has shown interest here and there, but is really, I think, very well attuned to what needs to be done here. So we feel okay about Massachusetts at the moment, has been some discussion there as well, though.

Great. That's helpful. You guys have been on the forefront of kind of next-generation operating platforms, both in terms of smart home technology, a lot on the AI side. And I think you've put out some level of quantification of where you think the margins could ultimately go. How early days are we in terms of really modernizing the operating platform, optimizing it? Is this kind of the first wave or is this kind of your current expectations in terms of the path forward over the next 2 years?

I'm going to have Bob speak to the detail in a moment. We do have some disclosure in the book on the 3 main initiatives. But I want to say, I do think we're pretty early days in this next wave. I would say that just to organize our thoughts, one of the things we're trying to do is, if you think about the industry in the last 30 years, it's always been for every 100 units, you have one maintenance person. For every 100 units, you have one leasing person. So in a 300-unit property, you generally have 6 or 7 staff. So the ability to attack that ratio and challenge that thought process is what all these innovations are about. So it's about serving your customer, and we have a very high-end customer, as I mentioned before. We need to, Nick, be very conscious of that and not chintz on customer service. On the same hand, our employees do a terrific job in the field. I think what you're going to end up with is smaller, better paid, more motivated employee team, and I think a customer that will be just as happy with some of these self-serve technologies. So I'm going to let Bob serve this up. But again, I'd point out that some of this is about attacking those really long-term thought processes about how you staff an apartment building. And part of it is about selling more services, like smart home to your resident to see if they might pay for it. And I probably have more optimism about the former than I do about the ability to sell things to residents and have them not include it in their thoughts about what the rent is. So I think when you start saying you're getting $30 or $25, especially when the economy cycle is down per month because you put in smart technology in a home, I'm going to wonder whether you're going to continue to get that premium. I think residents are well aware of what their total cost is and take that into account. So why don't you go.

Yes. So to Mark's point, we're really focused on areas where we can harness technology to kind of establish that foundational platform to disrupt a lot of the staffing models and other models that the business has traditionally operated on. And so starting of the three-pronged approach, kind of starting with the third prong first, which is the smart home technology. We have about 2,400 units currently installed and anticipate another 10,000-or-so units being installed in 2020. This does entail a fair bit of capital investment. So every installation per community or per unit, pardon me, is about $1,000. So we're very careful on how we deploy that capital and making sure that we are realizing the benefits that we expect to. A portion of that benefit is from the revenue side, but a bigger portion and another side of it is also expense savings and how we can utilize the smart home technology to better service our customer and how we can save on the expense side as well. So that's kind of one channel of the innovation platform, if you will. The other 2 foundational areas really are targeting the sales side of the business, which is the leasing consulting side of the business and the traditional model of one leasing consultant per 100 and how we can get more efficient and use technology to be more efficient in that regard. And that's kind of a two-pronged approach that focuses on artificial intelligence, which we have deployed at probably 2/3 or 3/4 of our portfolio and will be fully deployed in the next couple of months and how we use that to convert e-leads into actual visits to our communities. So that has been incredibly successful. In fact, we've seen better performance from our artificial intelligence than we have actual human-to-human interaction. Anecdotally, oftentimes or I will say, we had on more than one occasion -- we call our AI Ella -- we have had prospects come to our communities and ask for Ella by name. Unfortunately, Ella is not a human being so we have to dance around that a bit. The other area that you'll see kind of that we are working on and so are others in the space is just self-guided tours. So we've deployed that. Some of that is technology-enabled and some of that is not technology-enabled. It's just using the infrastructure of the concierge buildings that we have in the portfolio. We've been able to add about 60 properties overall. So that's kind of the sales side. The final piece is really the service side. So how do we better utilize our existing workforce to handle service requests, to handle maintenance and to handle the in-source/outsource decision-making process. So we've rolled out in 2019 something called Site Plan, which is a mobile app that provides mobility to the service personnel, and have really started to see good adoption in that from our employee base and starting to see efficiencies on how our service teams work at the property. I think the next step of that could potentially be flex staffing and how you staff the properties and maintenance and whether or not you pod different properties together, but that's probably something that's more of a 2021 kind of framework.

Mark, you mentioned the quality of your customers, the number kind of one reason to be interested in the EQR. How do you think about from a marketing standpoint or customer selection how you reach the customer that you want to ultimately rent in an EQR building if it means lower turnover ultimately or kind of lower CapEx, how do you think about making sure you're finding the right customers that ultimately flow into the financials?

Well, finding our customers in our markets isn't as difficult. There's a lot of people. One of the reasons we chose our markets is because there's a fairly large number of people that are making very high incomes and are renters. And so I would say that our leasing and advertising costs are only about 3% of same-store expenses. We buy occasional search terms, but we mostly get traffic through our website. We do invest a lot of money in our website to make sure we're attracting traffic. We've had a lot of conversations, a lot of improvement. For example, you can now do 3D tours in our properties. You can do things online that you weren't able to do before. A lot more video on our site because if you think about our demographic, what do they do, they watch YouTube. They like videos more so than just still shots of the pool. So I think we're constantly trying to be thoughtful about that and our marketing team does a good job of that. But attracting our customers, we're at 96, what, 7?

8.

96.8% occupied today and we're in really good shape in terms of being able to attract their demographic.

And how do you think about reputation management and third-party review sites?

Yes. So we are really focused. I mean one of the things -- this is true for prospective employees as well, being thoughtful about what's being said about the company on Glassdoor and Indeed, being thoughtful and responsive about resident concerns on Yelp and other sites. And so we do have a team that responds to that. We think of it as very valuable feedback and will act on it. A lot of times, they're compliments, and that's great. But when we don't meet our own expectations, we get all over that and try and improve our performance. So I think it's really important. It's our front door.

Any questions from the audience? Had a question come in through LiveQA. Bob, maybe specific to you, how is the commercial paper program roll in? And if the commercial paper market doesn't roll and you had to draw on to your revolving credit line, are higher funding costs factored into guidance?

Yes. So at the moment, we have about $600 million of outstanding commercial paper, and we've actually seen no disruption in the near term or in really the last 6 months. Commercial paper is an important source of liquidity for the company, but it's obviously not the only source. So at the end of the fourth quarter, we upsized our commercial paper program, but we correspondingly also upsized our revolving credit facility to $2.5 billion and extended our maturity profile. So at the moment, we have not factored in drawing on the line of credit from a funding cost standpoint. But I would also add that we have a relatively modest amount outstanding and we have almost no maturities in 2020, which positions us well for any kind of alternative source of funding if we needed it.

And I might add that if you had a situation where the CP market kind of went away, which does happen, you're probably in a position where LIBOR has crashed through the floor. And so because our revolver is a LIBOR-denominated revolver, I'm sure our budget then would -- I mean, we certainly do not have a 1% 10-year and what looks like a Fed rate that could get cut any day now or certainly in March, later in March in our budget. So my guess is, it would be more of a wash on the numbers because I think whatever we give up in spread, we're going to get back in lower LIBOR.

Yes.

Maybe turning to the transaction market. You guys have been active kind of repositioning the portfolio, but also kind of buying and selling assets at very tight cap rates. Given that cap rate compression between newer and older assets, I mean, how does that play into the transaction activity going forward?

Yes. I mean, the feedback, we'll start by saying the harder thing to do is to find good things to buy. So we do have a few properties when you have $40 billion of assets that become obsolete for the market or to be improved, we don't think the capital is worth it to put into and renovate a property. So we do have a few of those and we look to sell those and reallocate the capital. Right now, it's really hard to find things to buy. Coming out of the National Multihousing Conference in January, which is a big industry event, attended by, I think, 4,000 or more brokers, believe it or not. I didn't know there were 4,000 brokers for apartments, but there are, and they're all there. And the theme was, everyone is a net buyer. So there's a lot of competition. That's great for NAV. It makes it harder, Nick, for us to recycle. So we do have some dispositions that are close and closing, and we're looking hard for things to buy. So we continue to hope to be at our guidance, which is to buy $1.25 billion and sell $1 billion, but we'll have to ratchet down the dispositions if we can't find anything worth buying.

Is there anything from a portfolio geography standpoint that overlays that or is it more trading within existing markets?

We'd like to get Denver up. So Denver is 1.5% of NOI. We were in the market before we left it for a couple of years. We're back in. We'd like to get closer to 5%. You could see some of that capital. We like Washington, D.C. a lot. There is a lot of supply in that market. So you could see a little bit of capital come from D.C. there. We have a big exposure in California. We do like California long term. San Francisco has been the best apartment market in the country for many years, but you might see us take a little bit of California exposure and put it into Denver as well.

I think you mentioned re-entering Denver, and I know you have a slide in your deck of other markets that you're not in that screen kind of across different attributes. Should we expect any expansion over the next, call it, 2 years into any markets that you're not currently in?

Yes. There was a great back and forth on the earnings call about this. So we spend a lot of time talking about this with the Board. We will again next week at our regular first quarter meeting. And we look to find our customer. So our customer, again, is this sort of affluent renter who likes an urban/dense suburban lifestyle, will rent for a while, isn't dying to buy a home. So that's the kind of person we're looking for. Well, we see a lot of those people like, for example, in Austin, Texas. In Austin, there's a good number of people. And it isn't just the growth rate of those type of professionals, it's the absolute number. And there are markets like Las Vegas that have very high growth rates of renters making over $100,000, but the absolute number is way too small to make it a market we'd be interested in. But a place like Austin now has a significant number and so you feel like that's a market that could be of interest. And then it's a matter of price and supply and timing at some point, Nick.

And what ultimately made you decide to re-enter Denver in terms of those?

Yes. It was all of that. We really like the demand dynamic, excuse me. We really like what we saw in terms of the people that were moving in. The supply is, there's significant supply in Denver. There was last year. There is this year. There'll be a lot less, we think, in 2021, but we like Denver long term. There's a lot of people that move there that love it and that are, again, our kind of renters.

We have a question on LiveQA in terms of market expansion or exposure. In your discussions with the Board, how frequently does climate change get discussed specific to something, California, in your case, or Florida, if you're ever to look there again?

Yes. So not exposed to Florida. So that isn't something we talk about anymore, but we certainly talk -- this is, frankly, the Board meeting where we talk about our insurance renewal, we talk about deductibles, levels of coverage. So Bob and his team will take the Audit Committee, which functions for this purpose as our insurance risk committee, through it in a great deal of detail. So we do look to mitigate risks, like wildfire risk, by either buying more insurance or selling the asset. We do capital improvement work at those assets, for example, putting flame retardant coverings on roofs, putting in special sprinkler systems that we think can kind of reduce the fire hazard at those assets, but we are not standing still. So an asset will either be insured, it will be improved or it will be sold if it's a material risk.

How much densification opportunity is here within the existing portfolio today?

Yes. That's great. That's one of the terrific things. So we own a fair number of garden apartments, particularly in California, where you can take down maybe a 2-, 3-story garden product, might be 40 to 60 units and put 200 to 250 units up. Municipalities are often more open to that than many other things because there's already apartments there. And as long as we honor the ratio of parking and as long as they get some below market rate units in there, some affordable units in there, we can often make a deal. So I think what you're going to see is a deal or so this year in 2020 that will start of that nature and then a few more. And what's great about it is, while we go through the permitting process, which can take half a decade, you've got an income-producing asset there. So it's a covered land play. It isn't something where I'm adding it to my land bank and having to carry it for a great period of time.

Are you doing anything different on the development side in terms of parking? Obviously, there's still some requirements. But as maybe the usage of cars goes down, how are you thinking about the capital you're putting into that today and maybe the ability to repurpose it in the future?

Yes. We've had some great conversations about that. We had a project on that last year, we did some work on. So a couple of things about garages. First of all, we do try and make them as compact as we can. These stacker units that, again, people live in New York, San Francisco and L.A. are probably used to; other parts of the country, less so. But where you can use these mechanical stackers, those have worked very well for us. We put those in a lot of properties. That means the garage is smaller. We have built some garages, including an asset in Seattle. And I'm not an expert engineer here, but with the ramps in a way that would allow for a reuse of that property for more like a storage or delivery usage as opposed to merely for parked cars. So we try to be thoughtful about that. It's often difficult to repurpose it as apartments, for example. We have wondered about whether it could be battery storage or last-mile storage for like an Amazon or something because we are often literally in the basement, the garages of where they're trying to deliver to. So we've tried to be thoughtful about that. That's about power connections, Nick, and a lot of logistics. So we'll spend a little bit more on our garages so that we have that optionality later.

And when you think about development, you have the project going on in Boston, but certainly much lower than it was after you took on Archstone and finished off those developments. What are your thoughts kind of, given we are pretty far into a cycle and who knows how long it goes, of development going forward?

Yes. We'd like to be a little bit more in the development business than we've been in the last couple of years, but we don't have some giant need to do development. We're happy to be just acquirers if that's what is warranted. What's good about development from our point of view is the $300 million of net cash flow our business throws off. This is after the dividend, after CapEx. So that's a terrific amount of cash. Combined with the innate borrowing ability that $300 million gives you and not to change your coverage ratios, you get $500 million or $600 million that we can invest in development every year without really having to access the outside equity markets. So that's terrific. So then we can go and do that and we can build accretively in some of our markets these deals that are density deals where you're getting 5% to 5.5% cap rates. A few of these towers that we think are in really hard places to build. You mentioned the tower we're building in Boston. So we think doing a little bit more development is a good thing to do. And for us, we're not as concerned about delivering at a year that happens to be the recession year, where a developer would get wiped out by their equity or wiped out by their lender. If we like the price per foot and the location, we can stay long term and like that deal over 10 years. We don't need to like it in year 1.

And my rapid fire questions, but any final questions from the audience?

Just on your California kind of garden-style assets that you think you can do densification on. What would the replacement rent on the existing rents be? So if the rents right now are like $1,500 and you're going to do a densification play, what sort of rents we're talking about an increase would have to make that project work?

I'm not sure I have that level of detail with me. But what's nice about those is you're usually keeping a good number of the classic units around. So it's always great to have 2 price points. In your example, $1,500 and $2,500, that's great to have, just you can offer the customer a wider array, but I don't have that at my fingertips.

It's grown to 4 rapid-fire questions to end the session. Will the apartment sector have more or fewer public companies a year from now?

I think we'll have the same. There's just no imperative for them to get smaller number.

What will same-store NOI growth be for the apartment sector overall in 2021? It's 3.1% this year.

So I like that we have this tradition of you asking the question and us declining to answer because we think it's kind of our implied guidance for 2021.

I have to ask it every year.

I appreciate and I like the tradition. You have to have these.

What will the 10-year Treasury yield be a year from today?

A couple of weeks ago, I would have said this wouldn't be that hard of a question, but it is a little bit harder than I would have anticipated. I'd say 1.5%.

Positive or negative?

Positive.

And then finally, in what year will the U.S. enter a recession?

We would say '22.

Great. Thank you very much.

Thank you.