CHICAGO--(BUSINESS WIRE)--Feb. 4, 2004--Equity Residential
(NYSE:EQR) today reported results for the quarter and year ended
December 31, 2003. All per share results are reported on a fully
diluted basis.
"We still await the job growth and related household formations
that will drive the recovery of the multifamily industry," said Bruce
W. Duncan, Equity Residential's President and CEO. "We continue to
focus our efforts on the reconfiguration of our portfolio as well as
customer service and resident retention, as we keep an eye on the
improving economy."
Fourth Quarter 2003
For the quarter ended December 31, 2003, the Company reported
earnings of $0.33 per share compared to $0.35 per share in the fourth
quarter of 2002.
Funds from Operations (FFO) for the quarter ended December 31,
2003 were $0.45 per share compared to $0.59 per share in the same
period of 2002. The primary components of the reduction in FFO quarter
over quarter include a one-time 2003 fourth quarter $0.07 per share
expense related to the December 26, 2003 redemption of the Company's
Series G Preferred Shares and a $0.03 per share reduction of
"same-store" Net Operating Income (NOI) results.
Total revenues from continuing operations for the quarter were
$459.5 million compared to $447.8 million in the fourth quarter of
2002.
Twelve Months Ended December 31, 2003
For the twelve months ended December 31, 2003, the Company
reported earnings of $1.55 per share compared to $1.18 per share in
the same period of 2002. The twelve-month increase is primarily
attributable to higher gains on property sales.
FFO for the twelve months ended December 31, 2003 were $2.15 per
share compared to $2.39 per share for the twelve months ended December
31, 2002. The primary components of the reduction year over year
relate to a 2003 $0.25 per share reduction of "same-store" NOI results
and the one-time $0.07 per share expense related to the Series G
redemption. In addition, this reduction is partially offset by a 2002
one-time $0.06 per share impairment charge.
Total revenues from continuing operations remained constant at
$1.8 billion for the twelve months ended December 31, 2003 and
December 31, 2002, respectively.
"Same-Store" Results
On a "same-store" fourth quarter to fourth quarter comparison,
which includes 175,333 units, revenues decreased 0.7 percent, expenses
increased 4.1 percent and NOI decreased 3.6 percent. On a sequential
"same-store" comparison for these same 175,333 units from third
quarter 2003 to fourth quarter 2003, revenues decreased 0.3 percent,
expenses decreased 2.4 percent and NOI increased 1.1 percent.
On a "same-store" twelve-month to twelve-month comparison, which
includes 171,841 units, revenues decreased 2.3 percent, expenses
increased 5.8 percent and NOI decreased 7.0 percent.
Acquisitions/Dispositions
During the fourth quarter of 2003, the Company acquired nine
properties, consisting of 2,522 units, for an aggregate purchase price
of $294.4 million at an average capitalization (cap) rate of 6.3
percent.
Also during the quarter, the Company sold 33 properties,
consisting of 7,490 units, for an aggregate sale price of $414.7
million at an average cap rate of 7.2 percent.
During 2003, the Company acquired 17 properties, consisting of
5,200 units, for an aggregate purchase price of $684.1 million at an
average cap rate of 6.5 percent and sold 96 properties, consisting of
23,486 units, for an aggregate sale price of $1.2 billion at an
average cap rate of 7.4 percent.
First Quarter 2004 Results
Equity Residential expects to announce first quarter 2004 results
on Wednesday, April 28, 2004 and host a conference call to discuss
those results at 10:00 a.m. CT that day.
Equity Residential is the largest publicly traded apartment
company in America. Nationwide, Equity Residential owns or has
investments in 968 properties in 34 states consisting of 207,506
units. For more information on Equity Residential, please visit our
website at www.equityapartments.com.
Forward-Looking Statements
The Company lists parameters for 2004 results in the final page of
this release. 2004 results will depend upon a slowdown in multifamily
starts and economic recovery and job growth. The forward-looking
statements contained in this news release regarding 2004 results are
further subject to certain risks and uncertainties including, without
limitation, the risks described under the heading "Risk Factors" in
our Annual Report on Form 10-K filed with the Securities and Exchange
Commission (SEC) and available on our website,
www.equityapartments.com. This news release also contains
forward-looking statements concerning development properties. The
total number of units and cost of development and completion dates
reflect the Company's best estimates and are subject to uncertainties
arising from changing economic conditions (such as costs of labor and
construction materials), completion and local government regulation.
The Company assumes no obligation to update or supplement
forward-looking statements that become untrue because of subsequent
events.
A live web cast of the Company's conference call discussing these
results and outlook for 2004 will take place today at 10:00 a.m.
Central. Please visit the Investor Information section of the
Company's web site at www.equityapartments.com for the link. A replay
of the web cast will be available for two weeks at this site.
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share data)
Year Ended Quarter Ended
December 31, December 31,
----------------------- ----------------------
2003 2002 2003 2002
----------------------- ----------------------
REVENUES
Rental income $1,808,925 $1,799,581 $456,109 $445,209
Fee and asset
management 14,373 9,582 3,412 2,625
----------- ----------- ----------- ----------
Total revenues 1,823,298 1,809,163 459,521 447,834
----------- ----------- ----------- ----------
EXPENSES
Property and
maintenance 498,608 464,981 126,290 118,463
Real estate taxes
and insurance 196,987 181,890 51,703 44,266
Property management 68,058 72,416 19,608 16,315
Fee and asset
management 7,819 7,885 2,311 2,476
Depreciation 444,339 419,039 113,731 107,515
General and
administrative 38,810 46,492 9,531 13,492
Impairment on
technology investments 1,162 1,162 290 290
Impairment on corporate
housing business - 17,122 - -
----------- ----------- ----------- ----------
Total expenses 1,255,783 1,210,987 323,464 302,817
----------- ----------- ----------- ----------
Operating income 567,515 598,176 136,057 145,017
Interest and
other income 16,235 14,806 2,497 3,293
Interest:
Expense incurred, net (326,465) (333,152) (80,431) (81,285)
Amortization of
deferred financing
costs (6,164) (5,617) (1,943) (1,381)
----------- ----------- ----------- ----------
Income before allocation
to Minority Interests,
(loss) from investments
in unconsolidated
entities, net gain on
sales of unconsolidated
entities and discontinued
operations 251,121 274,213 56,180 65,644
Allocation to Minority
Interests:
Operating Partnership (34,658) (26,862) (7,224) (7,795)
Partially Owned
Properties 271 (1,867) 348 (283)
(Loss) from investments
in unconsolidated
entities (10,118) (3,698) (6,524) (1,952)
Net gain on sales of
unconsolidated entities 4,942 5,054 269 5,680
----------- ----------- ----------- ----------
Income from continuing
operations 211,558 246,840 43,049 61,294
Net gain on sales of
discontinued operations 310,706 104,296 91,731 43,087
Discontinued operations,
net 21,583 70,177 56 14,096
----------- ----------- ----------- ----------
Net income 543,847 421,313 134,836 118,477
Preferred distributions (96,971) (97,151) (23,856) (24,182)
Premium on redemption of
preferred shares (20,237) - (20,237) -
----------- ----------- ----------- ----------
Net income available to
Common Shares $426,639 $324,162 $90,743 $94,295
=========== =========== =========== ==========
Earnings per share -
basic:
Income from continuing
operations available to
Common Shares $0.44 $0.60 $0.02 $0.15
=========== =========== =========== ==========
Net income available to
Common Shares $1.57 $1.19 $0.33 $0.35
=========== =========== =========== ==========
Weighted average Common
Shares outstanding 272,337 271,974 274,457 269,706
=========== =========== =========== ==========
Earnings per share -
diluted:
Income from continuing
operations available to
Common Shares $0.43 $0.59 $0.02 $0.15
=========== =========== =========== ==========
Net income available to
Common Shares $1.55 $1.18 $0.33 $0.35
=========== =========== =========== ==========
Weighted average Common
Shares outstanding 297,041 297,969 299,516 294,714
=========== =========== =========== ==========
Distributions declared
per Common Share
outstanding $1.73 $1.73 $0.4325 $0.4325
=========== =========== =========== ==========
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
(Amounts in thousands except per share data)
Year Ended Quarter Ended
December 31, December 31,
---------------------- ----------------------
2003 2002 2003 2002
---------------------- ----------------------
Net income $543,847 $421,313 $134,836 $118,477
Net income allocation
to Minority
Interests-Operating
Partnership 34,658 26,862 7,224 7,795
Adjustments:
Depreciation 444,339 419,039 113,731 107,515
Depreciation - Non-real
estate additions (7,019) (9,213) (495) (2,390)
Depreciation -
Partially Owned
Properties (8,390) (7,706) (2,150) (1,996)
Depreciation -
Unconsolidated
Properties 28,301 19,872 12,683 5,404
Net (gain) on sales
of unconsolidated
entities (4,942) (5,054) (269) (5,680)
Discontinued
Operations:
Depreciation 27,230 53,917 2,940 12,235
Net gain on sales
of depreciable
property (300,426) (102,614) (88,938) (42,603)
----------- ----------- ----------- ----------
FFO (1)(2) 757,598 816,416 179,562 198,757
Preferred distributions (96,971) (97,151) (23,856) (24,182)
Premium on redemption of
preferred shares (20,237) - (20,237) -
----------- ----------- ----------- ----------
FFO available to
Common Shares and
OP Units - basic $640,390 $719,265 $135,469 $174,575
=========== =========== =========== ==========
FFO available to
Common Shares and
OP Units - diluted $645,190 $747,676 $136,628 $181,530
=========== =========== =========== ==========
FFO per share and
OP Unit - basic $2.17 $2.44 $0.46 $0.60
=========== =========== =========== ==========
FFO per share and
OP Unit - diluted $2.15 $2.39 $0.45 $0.59
=========== =========== =========== ==========
Weighted average Common
Shares and OP Units
outstanding - basic 294,523 294,637 296,371 292,125
=========== =========== =========== ==========
Weighted average Common
Shares and OP Units
outstanding - diluted 300,141 312,301 302,515 308,673
=========== =========== =========== ==========
(1) The National Association of Real Estate Investment Trusts
("NAREIT") defines funds from operations ("FFO") (April 2002 White
Paper) as net income (computed in accordance with accounting
principles generally accepted in the United States), excluding
gains (or losses) from sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect
funds from operations on the same basis. The April 2002 White
Paper states that gain or loss on sales of property is excluded
from FFO for previously depreciated operating properties only.
Once the Company commences the conversion of units to
condominiums, it simultaneously discontinues depreciation of such
property. Accordingly, the Company included in FFO its incremental
gains or losses from the sale of condominium units to third
parties, which represented net gains of $10,280 and $1,682 for the
years ended December 31, 2003 and 2002, respectively, and $2,793
and $484 for the quarters ended December 31, 2003 and 2002,
respectively.
Effective January 1, 2003, the Company no longer adds back
impairment losses when computing FFO in accordance with NAREIT's
definition. As a result, FFO for the year and quarter ended
December 31, 2002 have been reduced by $18,284 and $290,
respectively, to conform to the current year presentation.
(2) The Company believes that FFO is helpful to investors as a
supplemental measure of the operating performance of a real estate
company because it provides investors an understanding of the
ability of the Company to incur and service debt and to make
capital expenditures. FFO in and of itself does not represent net
income or net cash flows from operating activities in accordance
with GAAP. Therefore, FFO should not be exclusively considered as
an alternative to net income or to net cash flows from operating
activities as determined by GAAP or as a measure of liquidity. The
Company's calculation of FFO may differ from other real estate
companies due to, among other items, variations in cost
capitalization policies for capital expenditures and, accordingly,
may not be comparable to such other real estate companies.
EQUITY RESIDENTIAL
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
December 31, December 31,
2003 2002
------------ ------------
ASSETS
Investment in real estate
Land $1,853,093 $1,803,577
Depreciable property 11,018,326 11,240,245
Construction in progress 2,960 2,441
------------ ------------
Investment in real estate 12,874,379 13,046,263
Accumulated depreciation (2,296,013) (2,112,017)
------------ ------------
Investment in real estate, net of
accumulated depreciation 10,578,366 10,934,246
Cash and cash equivalents 49,579 29,875
Investments in unconsolidated
entities 473,977 509,789
Rents receivable 426 2,926
Deposits - restricted 133,752 141,278
Escrow deposits - mortgage 41,104 50,565
Deferred financing costs, net 31,135 32,144
Goodwill, net 30,000 30,000
Other assets 128,554 80,094
------------ ------------
Total assets $11,466,893 $11,810,917
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $2,693,815 $2,927,614
Notes, net 2,656,674 2,456,085
Line of credit 10,000 140,000
Accounts payable and accrued
expenses 55,463 58,784
Accrued interest payable 60,334 63,151
Rents received in advance and other
liabilities 189,372 170,680
Security deposits 44,670 45,333
Distributions payable 140,195 140,844
------------ ------------
Total liabilities 5,850,523 6,002,491
------------ ------------
Commitments and contingencies
Minority Interests:
Operating Partnership 342,809 349,646
Preference Interests 246,000 246,000
Junior Preference Units 2,217 5,846
Partially Owned Properties 9,903 9,811
------------ ------------
Total Minority Interests 600,929 611,303
------------ ------------
Shareholders' equity:
Preferred Shares of beneficial interest,
$0.01 par value; 100,000,000 shares
authorized; 5,496,518 shares issued and
outstanding as of December 31, 2003 and
10,524,034 shares issued and outstanding
as of December 31, 2002 670,913 946,157
Common Shares of beneficial interest,
$0.01 par value; 1,000,000,000 shares
authorized; 277,643,885 shares issued
and outstanding as of December 31, 2003
and 271,095,481 shares issued and
outstanding as of December 31, 2002 2,776 2,711
Paid in capital 4,957,150 4,844,542
Deferred compensation (3,554) (12,118)
Distributions in excess of
accumulated earnings (588,443) (540,380)
Accumulated other comprehensive loss (23,401) (43,789)
------------ ------------
Total shareholders' equity 5,015,441 5,197,123
------------ ------------
Total liabilities and
shareholders' equity $11,466,893 $11,810,917
============ ============
2003 vs. 2002
Year over Year Same-Store Results
$ in Millions - 171,841 Same-Store Units
Description Revenues Expenses NOI(ii)
----------- --------- -------- ---------
2003 $1,650.8 $659.0 $991.8
2002 $1,689.0 $622.7 $1,066.3
--------- -------- ---------
Change $(38.2) $36.3 $(74.5)
========= ======== =========
Change (2.3%) 5.8% (7.0%)
Fourth Quarter 2003 vs. Fourth Quarter 2002
Quarter over Quarter Same-Store Results
$ in Millions - 175,333 Same-Store Units
Description Revenues Expenses NOI(ii)
----------- --------- -------- ---------
Q4 2003 $421.6 $168.8 $252.8
Q4 2002 $424.5 $162.2 $262.3
--------- -------- ---------
Change $(2.9) $6.6 $(9.5)
========= ======== =========
Change (0.7%) 4.1% (3.6%)
Fourth Quarter 2003 vs. Third Quarter 2003
Sequential Quarter over Quarter Same-Store Results
$ in Millions - 175,333 Same-Store Units(i)
Description Revenues Expenses NOI(ii)
----------- --------- -------- ---------
Q4 2003 $421.6 $168.8 $252.8
Q3 2003 $422.9 $172.9 $250.0
--------- -------- ---------
Change $(1.3) $(4.1) $2.8
========= ======== =========
Change (0.3%) (2.4%) 1.1%
(i) Includes the same units as the Fourth Quarter 2003 vs. Fourth
Quarter 2002 Same Store results for comparability purposes.
Same-Store Occupancy Statistics
Year 2003 93.0% Q4 2003 92.8% Q4 2003 92.8%
Year 2002 93.7% Q4 2002 92.6% Q3 2003 93.5%
------------ --------- ------
Change (0.7%) Change 0.2% Change (0.7%)
(ii) The Company's primary financial measure for evaluating each of
its apartment communities is net operating income ("NOI"). NOI
represents rental income less property and maintenance expense,
real estate tax and insurance expense, and property management
expense. The Company believes that NOI is helpful to investors as
a supplemental measure of the operating performance of a real
estate company because it is a direct measure of the actual
operating results of the Company's apartment communities.
2003 vs. 2002
Same-Store Results by Market
2003 2003
% of Weighted
Actual Average
Markets Units NOI Occupancy %
-------------------------- ---------- --------------- ------------
1 Boston 5,352 7.2% 95.0%
2 Atlanta 11,643 5.3% 92.0%
3 San Francisco Bay Area 5,010 5.2% 95.1%
4 South Florida 8,345 5.1% 94.0%
5 Phoenix 10,533 4.8% 89.2%
6 Los Angeles 4,073 4.4% 95.0%
7 Dallas/Ft Worth 9,229 4.2% 93.1%
8 Denver 7,523 4.2% 92.3%
9 New England (excl Boston) 6,112 4.1% 95.8%
10 DC Suburban Maryland 5,525 3.9% 94.7%
11 San Diego 3,708 3.8% 95.1%
12 Seattle 5,772 3.3% 92.9%
13 Orlando 6,263 3.1% 93.7%
14 Orange Co 3,013 3.1% 94.9%
15 New York Metro Area 2,306 2.9% 94.8%
16 Inland Empire, CA 3,404 2.8% 94.9%
17 North Florida 6,222 2.8% 93.6%
18 Tampa/Ft Myers 5,353 2.2% 92.8%
19 Minn/St Paul 3,826 2.2% 91.2%
20 DC Suburban Virginia 2,631 2.1% 95.2%
---------- --------------- ------------
Top 20 Markets 115,843 76.4% 93.3%
All Other Markets 55,998 23.6% 92.3%
---------- --------------- ------------
Total 171,841 100.0% 93.0%
========== =============== ============
----------------------------------------
Increase (Decrease) from Prior Year
-------------------------------------------------------------------
Revenues Expenses NOI Occupancy
-------------------------- ---------- ---------- ------- ---------
1 Boston 0.2% 11.7% (4.7%) (0.9%)
2 Atlanta (6.7%) 4.6% (13.8%) (1.2%)
3 San Francisco Bay Area (6.8%) 7.5% (12.5%) (0.3%)
4 South Florida 0.8% 7.9% (3.7%) (0.4%)
5 Phoenix (3.0%) 4.6% (8.0%) (0.2%)
6 Los Angeles 2.2% 7.7% 0.0% (0.9%)
7 Dallas/Ft Worth (5.7%) 1.5% (11.3%) (1.1%)
8 Denver (7.4%) 4.6% (13.0%) (0.5%)
9 New England (excl Boston) 3.5% 8.8% 0.2% (0.3%)
10 DC Suburban Maryland 2.4% 11.9% (2.0%) (0.8%)
11 San Diego 1.3% 8.0% (1.4%) (0.6%)
12 Seattle (3.8%) 4.0% (8.4%) 0.1%
13 Orlando (1.8%) 6.7% (7.0%) (0.7%)
14 Orange Co 2.1% 5.0% 0.9% (0.1%)
15 New York Metro Area (4.9%) 7.2% (10.5%) (0.1%)
16 Inland Empire, CA 3.2% 4.2% 2.7% (1.0%)
17 North Florida 2.3% 6.6% (0.5%) 0.5%
18 Tampa/Ft Myers (0.6%) 6.7% (6.2%) (0.4%)
19 Minn/St Paul (6.9%) 2.7% (13.7%) (2.4%)
20 DC Suburban Virginia (0.3%) 14.6% (6.4%) 0.8%
---------- ---------- ------- ---------
Top 20 Markets (1.9%) 6.5% (6.5%) (0.6%)
All Other Markets (3.3%) 4.3% (8.7%) (1.1%)
---------- ---------- ------- ---------
Total (2.3%) 5.8% (7.0%) (0.7%)
========== ========== ======= =========
Fourth Quarter 2003 vs. Fourth Quarter 2002
Same-Store Results by Market
4Q03 4Q03
% of Weighted
Actual Average
Markets Units NOI Occupancy %
-------------------------- ---------- --------------- ------------
1 Boston 5,352 7.3% 95.4%
2 South Florida 10,093 6.0% 93.8%
3 Atlanta 11,643 5.0% 92.6%
4 San Francisco Bay Area 5,010 5.0% 95.0%
5 Phoenix 10,533 4.9% 90.4%
6 Los Angeles 4,126 4.3% 94.4%
7 San Diego 4,048 4.2% 95.7%
8 Dallas/Ft Worth 9,579 4.2% 92.7%
9 Denver 7,523 4.1% 92.2%
10 New England (excl Boston) 6,112 4.1% 95.5%
11 DC Suburban Maryland 5,525 3.8% 93.9%
12 Seattle 5,772 3.1% 92.0%
13 Orlando 6,263 3.0% 93.7%
14 Orange Co 3,013 3.0% 94.7%
15 Inland Empire, CA 3,504 2.9% 95.3%
16 North Florida 6,222 2.7% 93.1%
17 New York Metro Area 2,306 2.7% 94.6%
18 Tampa/Ft Myers 5,353 2.2% 92.7%
19 Minn/St Paul 3,826 2.1% 91.4%
20 DC Suburban Virginia 2,631 2.1% 94.0%
---------- --------------- ------------
Top 20 Markets 118,434 76.8% 93.3%
All Other Markets 56,899 23.2% 91.7%
---------- --------------- ------------
Total 175,333 100.0% 92.8%
========== =============== ============
---------------------------------------
Increase (Decrease) from Prior Quarter
-------------------------------------------------------------------
Markets Revenues Expenses NOI Occupancy
-------------------------- ---------- ---------- ------- ---------
1 Boston 3.4% 11.2% (0.1%) 1.0%
2 South Florida 2.6% 4.9% 1.0% 0.9%
3 Atlanta (5.4%) 4.5% (12.0%) 0.3%
4 San Francisco Bay Area (3.3%) 8.4% (8.4%) 0.9%
5 Phoenix 1.0% 1.5% 0.7% 2.8%
6 Los Angeles 1.3% 4.5% (0.1%) (1.0%)
7 San Diego 1.4% 9.5% (1.8%) 0.1%
8 Dallas/Ft Worth (3.2%) 1.6% (7.3%) 0.3%
9 Denver (4.5%) (0.4%) (6.6%) 0.5%
10 New England (excl Boston) 2.9% 3.9% 2.3% 0.2%
11 DC Suburban Maryland 3.7% 8.1% 1.5% (0.4%)
12 Seattle (1.8%) 3.8% (5.4%) 0.2%
13 Orlando 0.4% 3.9% (2.0%) 0.7%
14 Orange Co 3.4% 4.1% 3.1% (0.3%)
15 Inland Empire, CA 3.3% 1.1% 4.5% (0.4%)
16 North Florida 1.2% 4.4% (0.8%) 0.3%
17 New York Metro Area (4.2%) 6.5% (9.5%) 0.3%
18 Tampa/Ft Myers 0.9% 6.2% (3.2%) 0.2%
19 Minn/St Paul (2.0%) 1.9% (5.1%) 0.2%
20 DC Suburban Virginia 1.3% 10.8% (2.8%) 1.1%
---------- ---------- ------- ---------
Top 20 Markets 0.0% 4.8% (2.8%) 0.5%
---------- ---------- ------- ---------
All Other Markets (2.6%) 2.4% (6.3%) (0.5%)
========== ========== ======= =========
Total (0.7%) 4.1% (3.6%) 0.2%
Fourth Quarter 2003 vs. Third Quarter 2003(i)
Sequential Same-Store Results by Market
4Q03 4Q03
% of Weighted
Actual Average
Markets Units NOI Occupancy %
-------------------------- --------- --------------- ------------
1 Boston 5,352 7.3% 95.4%
2 South Florida 10,093 6.0% 93.8%
3 Atlanta 11,643 5.0% 92.6%
4 San Francisco Bay Area 5,010 5.0% 95.0%
5 Phoenix 10,533 4.9% 90.4%
6 Los Angeles 4,126 4.3% 94.4%
7 San Diego 4,048 4.2% 95.7%
8 Dallas/Ft Worth 9,579 4.2% 92.7%
9 Denver 7,523 4.1% 92.2%
10 New England (excl Boston) 6,112 4.1% 95.5%
11 DC Suburban Maryland 5,525 3.8% 93.9%
12 Seattle 5,772 3.1% 92.0%
13 Orlando 6,263 3.0% 93.7%
14 Orange Co 3,013 3.0% 94.7%
15 Inland Empire, CA 3,504 2.9% 95.3%
16 North Florida 6,222 2.7% 93.1%
17 New York Metro Area 2,306 2.7% 94.6%
18 Tampa/Ft Myers 5,353 2.2% 92.7%
19 Minn/St Paul 3,826 2.1% 91.4%
20 DC Suburban Virginia 2,631 2.1% 94.0%
---------- --------------- ------------
Top 20 Markets 118,434 76.8% 93.3%
All Other Markets 56,899 23.2% 91.7%
---------- --------------- ------------
Total 175,333 100.0% 92.8%
========== =============== ============
---------------------------------------
Increase (Decrease) from Prior Quarter
-------------------------------------------------------------------
Markets Revenues Expenses NOI Occupancy
-------------------------- ---------- ---------- ------- ---------
1 Boston 1.8% 2.1% 1.7% (0.8%)
2 South Florida 0.7% (1.9%) 2.7% (0.2%)
3 Atlanta (1.4%) (5.2%) 2.0% 0.6%
4 San Francisco Bay Area (0.1%) (1.2%) 0.5% (0.7%)
5 Phoenix 4.6% (6.2%) 13.9% 1.0%
6 Los Angeles (0.4%) 3.9% (2.3%) (1.4%)
7 San Diego (0.7%) (1.1%) (0.6%) (0.9%)
8 Dallas/Ft Worth (0.6%) (2.1%) 1.0% (0.9%)
9 Denver 0.2% (8.1%) 5.5% 0.2%
10 New England (excl Boston) (0.6%) (2.8%) 0.8% (0.2%)
11 DC Suburban Maryland 0.3% (0.6%) 0.8% (0.9%)
12 Seattle (1.8%) (2.2%) (1.6%) (1.2%)
13 Orlando (1.1%) (3.0%) 0.3% (0.3%)
14 Orange Co 0.2% 2.1% (0.6%) (0.9%)
15 Inland Empire, CA 3.5% 1.9% 4.4% 1.3%
16 North Florida (1.7%) (0.5%) (2.5%) (1.3%)
17 New York Metro Area (2.4%) 2.5% (5.1%) (1.3%)
18 Tampa/Ft Myers (0.2%) (0.4%) (0.1%) (0.3%)
19 Minn/St Paul 1.0% (1.4%) 3.1% (1.0%)
20 DC Suburban Virginia (1.8%) (4.1%) (0.6%) (2.0%)
---------- ---------- ------- ---------
Top 20 Markets 0.1% (1.9%) 1.4% (0.4%)
All Other Markets (1.6%) (3.6%) 0.1% (1.2%)
---------- ---------- ------- ---------
Total (0.3%) (2.4%) 1.1% (0.7%)
========== ========== ======= =========
(i) Includes the same units as the Fourth Quarter 2003 vs. Fourth
Quarter 2002 Same Store results for comparability purposes.
Portfolio Rollforward 2003
Properties Units $ Millions Cap Rate
----------- ----------- ----------- ---------
12/31/2002 1,039 223,591
Acquisitions 17 5,200 $684.1 6.5%
Dispositions (96) (23,486) $1,217.9 7.4%
Completed Developments 8 2,112
Unit Configuration
Changes - 89
----------- -----------
12/31/2003 968 207,506
Portfolio Rollforward 2003 Q4
Properties Units $ Millions Cap Rate
----------- ----------- ----------- ---------
9/30/2003 990 212,147
Acquisitions 9 2,522 $294.4 6.3%
Dispositions (33) (7,490) $414.7 7.2%
Completed Developments 2 367
Unit Configuration
Changes - (40)
----------- -----------
12/31/2003 968 207,506
Portfolio as of December 31, 2003
Properties Units
----------- -----------
Wholly Owned Properties 849 178,150
Partially Owned
Properties
(Consolidated) 35 6,778
Unconsolidated
Properties 84 22,578
----------- -----------
968 207,506
Portfolio Summary
As of December 31, 2003
Market Properties Units % of % of 2004
Units NOI Budget
Boston 34 6,349 3.1% 5.9%
DC Northern Virginia 14 4,956 2.4% 4.4%
New England (excluding Boston) 45 6,114 2.9% 3.9%
DC Suburban Maryland 27 5,833 2.8% 3.6%
New York Metro Area 11 3,144 1.5% 3.2%
Richmond 3 916 0.4% 0.2%
----------------------------------------
Atlantic Region 134 27,312 13.2% 21.2%
South Florida 53 11,391 5.5% 6.3%
Orlando 30 6,394 3.1% 2.9%
North Florida 49 6,931 3.3% 2.7%
Tampa/Ft Myers 34 6,335 3.1% 2.2%
----------------------------------------
Florida Region 166 31,051 15.0% 14.1%
Raleigh/Durham 16 3,917 1.9% 1.3%
Charlotte 14 4,195 2.0% 1.2%
----------------------------------------
Carolina Region 30 8,112 3.9% 2.5%
Atlanta 67 14,246 6.9% 5.5%
Birmingham 1 240 0.1% 0.0%
----------------------------------------
Georgia Region 68 14,486 7.0% 5.5%
Minneapolis/St Paul 18 3,982 1.9% 2.1%
Southeastern Michigan 24 3,867 1.9% 1.7%
Chicago 8 3,443 1.7% 1.7%
Nashville 11 2,729 1.3% 1.0%
Columbus 31 3,415 1.6% 0.9%
Northern Ohio 26 2,771 1.3% 0.9%
Indianapolis 29 3,056 1.5% 0.8%
Southern Ohio 22 1,865 0.9% 0.5%
St Louis 5 984 0.5% 0.4%
Milwaukee 3 686 0.3% 0.4%
Lexington 7 656 0.3% 0.2%
Louisville 8 608 0.3% 0.2%
Memphis 1 568 0.3% 0.1%
----------------------------------------
Midwest Region 193 28,630 13.8% 10.8%
Lexford Other 54 4,916 2.4% 1.2%
Dallas/Ft Worth 37 11,463 5.5% 4.1%
Houston 18 5,525 2.7% 2.2%
Austin 13 3,867 1.9% 1.3%
Kansas City 7 2,024 1.0% 0.8%
San Antonio 8 2,557 1.2% 0.7%
Tulsa 8 2,036 1.0% 0.5%
----------------------------------------
Texas Region 91 27,472 13.2% 9.6%
Phoenix 43 12,177 5.9% 4.6%
Las Vegas 3 1,220 0.6% 0.5%
Tucson 2 558 0.3% 0.1%
Albuquerque 2 369 0.2% 0.1%
----------------------------------------
Arizona Region 50 14,324 6.9% 5.2%
Denver 30 8,530 4.1% 3.6%
----------------------------------------
Colorado Region 30 8,530 4.1% 3.6%
Los Angeles 26 5,489 2.6% 4.9%
San Diego 13 4,048 2.0% 4.1%
Orange County, CA 8 3,013 1.5% 2.9%
Inland Empire, CA 11 3,504 1.7% 2.8%
----------------------------------------
Southern Cal Region 58 16,054 7.7% 14.7%
San Francisco Bay Area 26 6,249 3.0% 4.7%
Central Valley CA 10 1,595 0.8% 0.5%
----------------------------------------
Northern Cal Region 36 7,844 3.8% 5.3%
Seattle 37 7,999 3.9% 3.4%
Portland OR 13 4,678 2.3% 1.9%
Tacoma 7 2,341 1.1% 1.1%
----------------------------------------
Washington Region 57 15,018 7.2% 6.3%
----------------------------------------
Total 967 203,749 98.2% 100.0%
Ft. Lewis - Military Housing 1 3,757 1.8% 0.0%
----------------------------------------
Grand Total 968 207,506 100.0% 100.0%
Debt Summary
For the Year
As of Ended 12/31/0312/31/03 Weighted
$ Millions(1) Average Rate(1)
------------------ ---------------
Secured $2,694 5.80%
Unsecured 2,666 6.38%
------------------ ---------------
Total $5,360 6.08%
Fixed Rate $4,610 6.65%
Floating Rate 750 2.24%
------------------ ---------------
Total $5,360 6.08%
Above Totals Include:
---------------------
Tax Exempt:
Fixed $343 4.38%
Floating 587 1.74%
------------------ ---------------
Total $930 3.01%
Unsecured Revolving Credit Facility $10 1.85%
(1) Net of the effect of any derivative instruments.
Debt Maturity Schedule as of December 31, 2003
Year $ Millions % of Total
-------- ----------- ----------
2004 $515 9.6%
2005 (2) 605 11.3%
2006 (3) 490 9.1%
2007 333 6.2%
2008 495 9.2%
2009 246 4.6%
2010 196 3.7%
2011 688 12.8%
2012 424 7.9%
2013+ 1,368 25.6%
----------- ----------
Total $5,360 100.0%
(2) Includes $300 million of unsecured debt with a final maturity of
2015 that is putable/callable in 2005.
(3) Includes $150 million of unsecured debt with a final maturity of
2026 that is putable in 2006.
Unsecured Public Debt Covenants
December 31,
2003
------------
Total Debt to Adjusted Total Assets (not to exceed 60%) 39.1%
Secured Debt to Adjusted Total Assets (not to exceed 40%) 19.6%
Consolidated Income Available For Debt Service To
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.90
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 330.2%
These covenants relate to ERP Operating Limited Partnership's
outstanding unsecured public debt. Equity Residential is the general
partner of ERP Operating Limited Partnership. The terms are defined in
the indentures.
Capitalization as of December 31, 2003
Total Debt $5,360,488,661
Common Shares & OP Units 299,551,617
Common Share Equivalents 3,598,234
------------
Total Outstanding at quarter-end 303,149,851
Common Share Price at
December 31, 2003 $29.51
------------
8,945,952,103
Perpetual Preferred Shares
Liquidation Value 615,000,000
Perpetual Preference Interests
Liquidation Value 211,500,000
------------------------
Total Market Capitalization $15,132,940,764
Total Debt/Total Market
Capitalization 35%
Weighted Average Amounts Outstanding
2003 2002 4Q03 4Q02
----------- ----------- ----------- -----------
Weighted Average
Amounts Outstanding for
Net Income Purposes:
Common Shares
- basic 272,337,070 271,973,702 274,457,492 269,705,588
Shares issuable
from assumed
conversion/
vesting of:
- OP Units 22,185,987 22,663,199 21,913,702 22,419,479
- share
options/
restricted
shares 2,517,600 3,332,025 3,145,291 2,589,197
----------- ----------- ----------- -----------
Total Common
Shares and OP
Units - diluted 297,040,657 297,968,926 299,516,485 294,714,264
Weighted Average
Amounts Outstanding
for FFO Purposes:
OP Units - basic 22,185,987 22,663,199 21,913,702 22,419,479
Common Shares
- basic 272,337,070 271,973,702 274,457,492 269,705,588
----------- ----------- ----------- -----------
Total Common
Shares and OP
Units - basic 294,523,057 294,636,901 296,371,194 292,125,067
Shares issuable
from assumed
conversion/
vesting of:
- convertible
preferred
shares/units 3,100,663 14,331,807 2,998,695 13,958,269
- share
options/
restricted
shares 2,517,600 3,332,025 3,145,291 2,589,197
----------- ----------- ----------- -----------
Total Common
Shares and OP
Units - diluted 300,141,320 312,300,733 302,515,180 308,672,533
Period Ending
Amounts Outstanding:
OP Units 21,907,732
Common Shares 277,643,885
-----------
Total Common
Shares and OP
Units 299,551,617
Unconsolidated Entities as of December 31, 2003
(Amounts in thousands except for project and unit amounts)
Institutional Stabilized Projects
Joint Development Under
Ventures Projects (1) Development
-------------- ------------ ------------
Total projects 45 13 13
-------------- ------------ ------------
Total units 10,846 3,964 3,795
-------------- ------------ ------------
Company's percentage share
of outstanding debt 25.0% 100.0% 100.0%
Company's share of
outstanding debt (4) $121,200 $375,168 $502,549 (3)
-------------- ------------ ------------
Operating information
for year ended 12/31/03
(at 100%):
Revenue $88,973 $52,979 N/A
Operating expenses 39,674 21,959 N/A
-------------- ------------ ------------
Net operating
income 49,299 31,020 N/A
Interest expense 37,443 19,874 N/A
Depreciation 19,578 21,705 N/A
Amortization 617 1,428 N/A
Other 445 287 N/A
-------------- ------------ ------------
Net income/(loss) $(8,784) $(12,274) N/A
============== ============ ============
Company's Funds from
Operations (FFO) $2,698 $12,925 $17,110 (5)
============== ============ ============
Lexford / Other Totals
--------------- -------------
Total projects 19 90(2)
--------------- -------------
Total units 2,254 20,859(2)
--------------- -------------
Company's percentage share of outstanding debt 11.5%
Company's share of outstanding debt (4) $4,891 $1,003,808
--------------- -------------
Operating information for year ended
12/31/03 (at 100%):
Revenue $15,434 $157,386
Operating expenses 7,885 69,518
--------------- -------------
Net operating income 7,549 87,868
Interest expense 3,915 61,232
Depreciation 3,128 44,411
Amortization 246 2,291
Other - 732
--------------- -------------
Net income/(loss) $260 $(20,798)
=============== =============
Company's Funds from Operations (FFO) $2,216 $34,949
=============== =============
(1) The Company determines a project to be stabilized once it has
maintained an average physical occupancy of 90% or more for a
three-month period or one year from the cessation of major
development activities, whichever is earlier.
(2) Includes seven projects under development containing 2,038 units,
which are not included in the Company's property/unit counts at
December 31, 2003. Totals exclude Fort Lewis Military Housing
consisting of one property and 3,757 units, which is not accounted
for under the equity method of accounting. The Fort Lewis Military
Housing is included in the Company's property/unit counts as of
December 31, 2003.
(3) A total of $666.6 million is available for funding under this
construction debt, of which $502.5 million was funded and
outstanding at December 31, 2003.
(4) As of February 3, 2004, the Company has funded $44.0 million as
additional collateral on selected debt. All remaining debt is
non-recourse to the Company.
(5) Represents capitalized interest on the Company's invested capital.
Development Projects as of December 31, 2003
(Amounts in millions except for project and unit amounts)
Estimated EQR Funded
Unconsolidated No. of Development as of
Projects Location Units Cost 12/31/2003
----------------------------------------------------------------------
Water Terrace I Marina Del Rey, CA
(Regatta I) 450 $235.3 $73.0
Watermarke Irvine, CA 535 120.6 35.2
Bella Vista I&II Woodland Hills, CA
(Warner Ridge
I&II) 315 80.9 24.5
Concord Center Concord, CA 259 52.3 13.1
2400 M Street Washington, DC 333 104.2 37.2
1111 25th Street Washington, DC
(2440 M St.) 140 37.5 11.3
1210 Washington, DC
Massachusetts
Ave. 142 36.3 9.1
13th & N Street Washington, DC 170 35.4 12.4
North Pier at Jersey City, NJ
Harborside 297 94.2 24.0
City View at the Lombard, IL
Highlands
(Lombard) 403 67.1 16.8
Ball Park Lofts Denver, CO 355 56.4 14.1
City Place Kansas City, MO
(Westport) 288 34.7 8.7
Marina Bay II Quincy, MA 108 22.8 5.7
---------------------------------
Total Projects 13 3,795 $977.7 $285.1
=================================
Estimated Estimated
Unconsolidated EQR Future Total EQR Completion
Projects Location Fundings Fundings (1) Date
----------------------------------------------------------------------
Water Terrace I Marina Del Rey, CA
(Regatta I) $73.0 Completed
Watermarke Irvine, CA 35.2 1Q 2004
Bella Vista I&II Woodland Hills, CA
(Warner Ridge
I&II) 24.5 1Q 2004
Concord Center Concord, CA 13.1 Completed
2400 M Street Washington, DC 37.2 2Q 2005
1111 25th Street Washington, DC
(2440 M St.) 11.3 4Q 2004
1210 Washington, DC
Massachusetts
Ave. 9.1 2Q 2004
13th & N Street Washington, DC 12.4 1Q 2004
North Pier at Jersey City, NJ
Harborside 24.0 Completed
City View at the Lombard, IL
Highlands
(Lombard) 16.8 1Q 2004
Ball Park Lofts Denver, CO 14.1 Completed
City Place Kansas City, MO
(Westport) 8.7 Completed
Marina Bay II Quincy, MA 5.7 Completed
-------------------
Total Projects 13 $0.0 $285.1
===================
(1) EQR generally funds between 25% and 35% of the estimated
development cost for the unconsolidated projects.
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Year Ended December 31, 2003
(Amounts in thousands except for unit and per unit amounts)
------------------------------------------------
Maintenance Expenses
------------------------------------------------
Total Avg. Avg. Avg.
Units Expense Per Payroll Per Per
(1) (2) Unit (3) Unit Total Unit
-------- --------------- -------------- -----------------
Established
Properties
(6) 162,477 $91,816 $565 $79,413 $489 $171,229 $1,054
New
Acquisition
Properties
(7) 14,457 6,907 656 4,446 422 11,353 1,078
Other (8) 7,994 16,930 13,561 30,491
-------- --------- -------- ---------
Total 184,928 $115,653 $97,420 $213,073
======== ========= ======== =========
----------------------------------------------------
Capitalized Improvements to Real Estate
----------------------------------------------------
Avg. Building Avg. Avg.
Replacements Per Improvements Per Per
(4) Unit (5) Unit Total Unit
------------------ ----------------- ---------------
Established
Properties (6) $57,931 $356 $77,607 $478 $135,538 $834
New Acquisition
Properties (7) 2,653 252 5,250 498 7,903 750
Other (8) 13,417 25,090 38,507
------------ ----------- ---------
Total $74,001 $107,947 $181,948
============ =========== =========
-----------------
Total
Expenditures
-----------------
Grand Avg. Per
Total Unit
-----------------
Established
Properties (6) $306,767 $1,888
New Acquisition
Properties (7) 19,256 1,828
Other (8) 68,998
---------
Total $395,021
=========
(1) Total units exclude 22,578 unconsolidated units.
(2) Maintenance expenses include general maintenance costs, unit
turnover costs including interior painting, regularly scheduled
landscaping and tree trimming costs, security, exterminating, fire
protection, snow and ice removal, elevator repairs, and other
miscellaneous building repair costs.
(3) Maintenance payroll includes employee costs for maintenance,
cleaning, housekeeping, and landscaping.
(4) Replacements include new expenditures inside the units such as
carpets, appliances, mechanical equipment, fixtures and vinyl
flooring.
(5) Building improvements include roof replacement, paving, amenities
and common areas, building mechanical equipment systems, exterior
painting and siding, major landscaping, vehicles and office and
maintenance equipment.
(6) Wholly Owned Properties acquired prior to January 1, 2001.
(7) Wholly Owned Properties acquired during 2001, 2002 and 2003. Per
unit amounts are based on a weighted average of 10,533 units.
(8) Includes properties either Partially Owned or sold during the
period, commercial space, condominium conversions and $6.5 million
included in building improvements spent on seven specific assets
related to major renovations and repositioning of these assets.
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Year Ended December 31, 2002
(Amounts in thousands except for unit and per unit amounts)
-----------------------------------------------
Maintenance Expenses
-----------------------------------------------
Total Avg. Avg. Avg.
Units Expense Per Payroll Per Per
(1) (2) Unit (3) Unit Total Unit
-------- --------------- -------------- ----------------
Established
Properties
(6) 171,913 $88,040 $512 $77,526 $451 $165,566 $963
New
Acquisition
Properties
(7) 22,146 10,550 541 9,598 493 20,148 1,034
Other (8) 7,758 11,249 8,274 19,523
-------- --------- -------- ---------
Total 201,817 $109,839 $95,398 $205,237
======== ========= ======== =========
----------------------------------------------------
Capitalized Improvements to Real Estate
----------------------------------------------------
Avg. Building Avg. Avg.
Replacements Per Improvements Per Per
(4) Unit (5) Unit Total Unit
------------------ ----------------- ---------------
Established
Properties (6) $49,903 $290 $65,985 $384 $115,888 $674
New Acquisition
Properties (7) 5,542 285 8,691 446 14,233 731
Other (8) 5,787 20,868 26,655
------------ ----------- ---------
Total $61,232 $95,544 $156,776
============ =========== =========
-----------------
Total
Expenditures
-----------------
Grand Avg. Per
Total Unit
-----------------
Established
Properties (6) $281,454 $1,637
New Acquisition
Properties (7) 34,381 1,765
Other (8) 46,178
---------
Total $362,013
=========
(1) Total units exclude 21,774 unconsolidated units.
(2) Maintenance expenses include general maintenance costs, unit
turnover costs including interior painting, regularly scheduled
landscaping and tree trimming costs, security, exterminating, fire
protection, snow and ice removal, elevator repairs, and other
miscellaneous building repair costs.
(3) Maintenance payroll includes employee costs for maintenance,
cleaning, housekeeping, and landscaping.
(4) Replacements include new expenditures inside the units such as
carpets, appliances, mechanical equipment, fixtures and vinyl
flooring.
(5) Building improvements include roof replacement, paving, amenities
and common areas, building mechanical equipment systems, exterior
painting and siding, major landscaping, vehicles and office and
maintenance equipment.
(6) Wholly Owned Properties acquired prior to January 1, 2000.
(7) Wholly Owned Properties acquired during 2000, 2001 and 2002. Per
unit amounts are based on a weighted average of 19,478 units.
(8) Includes properties either Partially Owned or sold during the
period, commercial space, condominium conversions and $9.1 million
included in building improvements spent on six specific assets
related to major renovations and repositioning of these assets.
Discontinued Operations
(Amounts in thousands)
Year Ended December 31, Quarter Ended December 31,
------------------------ --------------------------
2003 2002 2003 2002
------------------------ --------------------------
REVENUES
Rental income $102,092 $216,607 $10,324 $46,946
Furniture income - 1,361 - -
------------ ----------- ------------ -------------
Total revenues 102,092 217,968 10,324 46,946
------------ ----------- ------------ -------------
EXPENSES (1)
Property and
maintenance 39,051 64,076 5,958 14,662
Real estate taxes
and insurance 11,107 22,155 1,195 4,651
Property management 103 162 - 39
Depreciation 27,230 53,917 2,940 12,235
Furniture expenses - 1,303 - -
------------ ----------- ------------ -------------
Total expenses 77,491 141,613 10,093 31,587
------------ ----------- ------------ -------------
Discontinued
operating income 24,601 76,355 231 15,359
Interest and other
income 304 69 127 30
Interest:
Expense
incurred, net (2,784) (6,110) (87) (1,270)
Amortization
of deferred
financing
costs (538) (137) (215) (23)
------------ ----------- ------------ -------------
Discontinued
operations, net $21,583 $70,177 $56 $14,096
============ =========== ============ =============
(1) Includes expenses paid in the current period for Wholly Owned
Properties sold in prior periods related to the Company's period
of ownership.
As a result of the Securities and Exchange Commission's Regulation
FD, the Company will provide earnings guidance in its quarterly
earnings release. These projections are based on current expectations
and are forward-looking.
2004 Earnings Guidance (per share diluted)
------------------------------------------
Q1 YEAR
-------------- --------------
Expected EPS (1) $0.27 to $0.29 $1.21 to $1.35
Add: Expected depreciation expense 0.40 1.62
Less: Expected net gain on sales (1) (0.17) (0.68)
-------------- --------------
Expected FFO (2) $0.50 to $0.52 $2.15 to $2.29
============== ==============
2004 Same-Store Assumptions
---------------------------
Physical occupancy 93.0%
Revenue change (0.75%) to 1.50%
Expense change 3.0% to 4.0%
NOI change (4.0%) to 0.5%
Acquisitions $800 million
Dispositions $800 million
(1) Earnings per share ("EPS") represents net income per share
calculated in accordance with accounting principles generally
accepted in the United States. Expected EPS is calculated on a
basis consistent with actual EPS. Due to the uncertain timing and
extent of property dispositions and the resulting gains/losses on
sales, actual EPS could differ materially from expected EPS.
(2) The National Association of Real Estate Investment Trusts
("NAREIT") defines funds from operations ("FFO") (April 2002 White
Paper) as net income (computed in accordance with accounting
principles generally accepted in the United States), excluding
gains (or losses) from sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect
funds from operations on the same basis. Expected FFO is
calculated on a basis consistent with actual FFO.
CONTACT: Equity Residential
Marty McKenna, 312-928-1901
SOURCE: Equity Residential