CHICAGO--(BUSINESS WIRE)--
Equity Residential (NYSE: EQR) today reported results for the quarter
ended March 31, 2009. All per share results are reported on a
fully-diluted basis.
"Our first quarter performance was in line with our expectations, with
good overall occupancy across the country demonstrating continued demand
for our apartments," said David J. Neithercut, Equity Residential's
President and CEO. "Although net effective new lease rents have
decreased in our markets from a year ago, we are pleased to see these
levels holding steady, on average, since the beginning of the year.
Continuing job losses leave us cautious for the remainder of the year,
yet we believe that steady rents and current occupancy of 94% position
us well as we enter our primary leasing season."
First Quarter 2009
For the first quarter of 2009, the company reported earnings per share
of $0.28 compared to earnings of $0.50 per share in the first quarter of
2008. The difference is primarily due to lower property sales gains due
to lower property sales volume in 2009.
Funds from Operations (FFO) for the quarter ended March 31, 2009 were
$0.57 per share compared to $0.58 per share in the same period of 2008.
The difference is due primarily to:
-- A net negative impact of approximately $0.01 per share from lower total
net operating income (NOI) from the company's same store portfolio and
dilution from 2008 and 2009 transaction activity, partially offset by
the positive impact of NOI from lease-up activity and property
management expense savings;
-- A negative impact from higher interest expense of approximately $0.02
per share as a result of higher debt balances, lower capitalized
interest and write offs of unamortized loan costs from the company's
debt tender and debt repurchase activities, offset in part by lower
floating rates of interest;
-- Higher interest and other income of approximately $0.01 per share as a
result of gain from the company's debt repurchase activities; and
-- Lower general and administrative expenses of approximately $0.01 per
share.
On January 1, 2009 the company adopted FASB Staff Position APB 14-1,
which requires companies to expense certain implied costs of the option
value related to convertible debt. As a result, the company's first
quarter 2008 and 2009 FFO per share were both negatively impacted by
$0.01 per share.
The difference between the company's first quarter 2009 FFO of $0.57 per
share and the company's fourth quarter 2008 FFO of $0.27 per share (as
restated for comparison purposes for the adoption of FASB Staff Position
APB 14-1) is primarily attributable to the following:
-- Approximately $0.40 per share higher FFO in the first quarter due to the
impairment charge on land held for development that the company recorded
in the fourth quarter of 2008;
-- A negative impact of approximately $0.07 per share as a result of lower
NOI from the company's same store portfolio and dilution from first
quarter 2009 transaction activity;
-- A negative impact of approximately $0.06 per share from lower debt
extinguishment gains in the first quarter of 2009;
-- A positive impact of approximately $0.02 per share as a result of lower
rates of interest on the company's debt; and
-- A net positive impact of approximately $0.01 per share due to
miscellaneous other activities, including lower general and
administrative expenses and lower transaction expenses offset by higher
income taxes.
Same Store Results
On a same store first quarter to first quarter comparison, which
includes 123,120 apartment units, revenues decreased 0.2%, expenses
increased 2.8% and NOI decreased 2.0%.
Acquisitions/Dispositions
During the first quarter of 2009, the company sold 11 consolidated
properties, consisting of 1,531 apartment units, for an aggregate sale
price of $139.6 million at an average capitalization (cap) rate of 7.1%
generating an unlevered internal rate of return (IRR) of 11.0%.
The company acquired no properties during the first quarter of 2009.
Liquidity
During the first quarter of 2009, the company completed a public tender
to repurchase and retire at par approximately $105.2 million of the
principal amount of its 4.75% Notes due June 15, 2009 and approximately
$185.2 of the million principal amount of its 6.95% Notes due March 2,
2011. Also during the first quarter, the company repurchased and retired
approximately $17.5 million of the principal amount of its 3.85%
Convertible Notes due August 15, 2026, resulting in debt extinguishment
gains to the company of approximately $2.0 million. Details of these
transactions can be found on page 15 of this release.
At March 31, 2009, the company had approximately $611 million of
unrestricted cash or securities readily convertible to cash (including
approximately $139 million of federally insured notes and deposits
classified as "Other assets" and approximately $43 million of 1031
exchange proceeds classified as "Deposits-restricted" on the balance
sheet) and approximately $1.31 billion available on its unsecured
revolving credit facility. The company has access to this credit
facility, well-priced secured debt, improving public debt markets and
net transaction proceeds from its sale of non-core assets to meet its
near and longer-term funding needs.
Second Quarter 2009 Guidance
The company has established an FFO guidance range of $0.53 to $0.58 per
share for the second quarter of 2009. The difference between the
company's actual first quarter 2009 FFO of $0.57 per share and the
midpoint of the second quarter 2009 guidance range is primarily a result
of lower total NOI partially offset by lower interest expense. The
second quarter 2009 guidance midpoint assumes no additional gains from
debt extinguishment.
Second Quarter 2009 Conference Call
Equity Residential expects to announce second quarter 2009 results on
Wednesday, July 29, 2009 and host a conference call to discuss those
results at 10:00 a.m. CT on Thursday, July 30, 2009.
Equity Residential is an S&P 500 company focused on the acquisition,
development and management of high quality apartment properties in top
U.S. growth markets. Equity Residential owns or has investments in 537
properties located in 23 states and the District of Columbia, consisting
of 146,232 apartment units. For more information on Equity Residential,
please visit our website at www.equityresidential.com.
Forward-Looking Statements
In addition to historical information, this press release contains
forward-looking statements and information within the meaning of the
federal securities laws. These statements are based on current
expectations, estimates, projections and assumptions made by management.
While Equity Residential's management believes the assumptions
underlying its forward-looking statements are reasonable, such
information is inherently subject to uncertainties and may involve
certain risks, including, without limitation, changes in general market
conditions, including the rate of job growth and cost of labor and
construction material, the level of new multifamily construction and
development, competition and local government regulation. Other risks
and uncertainties are described under the heading "Risk Factors" in our
Annual Report on Form 10-K and subsequent periodic reports filed with
the Securities and Exchange Commission (SEC) and available on our
website, www.equityresidential.com.
Many of these uncertainties and risks are difficult to predict and
beyond management's control. Forward-looking statements are not
guarantees of future performance, results or events. Equity Residential
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 2009 will take place tomorrow, Thursday, April
30, at 10:00 a.m. Central. Please visit the Investor Information
section of the company's web site at www.equityresidential.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)
(Unaudited)
Quarter Ended March 31,
2009 2008
REVENUES
Rental income $ 512,281 $ 500,347
Fee and asset management 2,863 2,294
Total revenues 515,144 502,641
EXPENSES
Property and maintenance 133,543 132,837
Real estate taxes and insurance 55,964 53,327
Property management 19,014 21,176
Fee and asset management 2,003 2,180
Depreciation 150,045 141,195
General and administrative 10,394 12,417
Total expenses 370,963 363,132
Operating income 144,181 139,509
Interest and other income 6,021 3,369
Other expenses (292 ) (176 )
Interest:
Expense incurred, net (123,897 ) (119,518 )
Amortization of deferred financing costs (2,965 ) (2,160 )
Income before income and other taxes, (loss) from
investments in
unconsolidated entities, net gain on sales of
unconsolidated entities
and discontinued operations 23,048 21,024
Income and other tax (expense) benefit (2,131 ) (2,995 )
(Loss) from investments in unconsolidated entities (195 ) (95 )
Net gain on sales of unconsolidated entities 2,765 -
Income from continuing operations 23,487 17,934
Discontinued operations, net 61,934 129,594
Net income 85,421 147,528
Net (income) loss attributable to Noncontrolling
Interests:
Operating Partnership (4,691 ) (9,133 )
Preference Interests and Units (4 ) (4 )
Partially Owned Properties 69 (268 )
Net income attributable to controlling interests 80,795 138,123
Preferred distributions (3,620 ) (3,633 )
Net income available to Common Shares $ 77,175 $ 134,490
Earnings per share - basic:
Income from continuing operations available to Common $ 0.07 $ 0.05
Shares
Net income available to Common Shares $ 0.28 $ 0.50
Weighted average Common Shares outstanding 272,324 268,784
Earnings per share - diluted:
Income from continuing operations available to Common $ 0.07 $ 0.05
Shares
Net income available to Common Shares $ 0.28 $ 0.50
Weighted average Common Shares outstanding 288,853 289,317
Distributions declared per Common Share outstanding $ 0.4825 $ 0.4825
Equity Residential
Consolidated Statements of Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended March 31,
2009 2008 (3)
Net income $ 85,421 $ 147,528
Adjustments:
Net (income) loss attributable to Noncontrolling
Interests:
Preference Interests and Units (4 ) (4 )
Partially Owned Properties 69 (268 )
Depreciation 150,045 141,195
Depreciation - Non-real estate additions (1,898 ) (2,051 )
Depreciation - Partially Owned and 183 1,034
Unconsolidated Properties
Net gain on sales of unconsolidated entities (2,765 ) -
Discontinued operations:
Depreciation 443 6,385
Net gain on sales of discontinued operations (61,871 ) (122,517 )
Net incremental (loss) gain on sales of (64 ) 366
condominium units
FFO (1) (2) 169,559 171,668
Preferred distributions (3,620 ) (3,633 )
FFO available to Common Shares and Units - basic (1) $ 165,939 $ 168,035
(2)
FFO available to Common Shares and Units - diluted (1) $ 166,096 $ 168,208
(2)
FFO per share and Unit - basic $ 0.57 $ 0.59
FFO per share and Unit - diluted $ 0.57 $ 0.58
Weighted average Common Shares and
Units outstanding - basic 288,710 287,079
Weighted average Common Shares and
Units outstanding - diluted 289,259 289,761
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 ("GAAP")), excluding gains (or losses) from sales of
depreciable 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
(1) the conversion of units to condominiums, it simultaneously discontinues
depreciation of such property. FFO available to Common Shares and Units is
calculated on a basis consistent with net income available to Common Shares
and reflects adjustments to net income for preferred distributions and
premiums on redemption of preferred shares in accordance with accounting
principles generally accepted in the United States. The equity positions of
various individuals and entities that contributed their properties to the
Operating Partnership in exchange for OP Units are collectively referred to
as the "Noncontrolling Interests - Operating Partnership". Subject to
certain restrictions, the Noncontrolling Interests - Operating Partnership
may exchange their OP Units for EQR Common Shares on a one-for-one basis.
The Company believes that FFO and FFO available to Common Shares and Units
are helpful to investors as supplemental measures of the operating
performance of a real estate company, because they are recognized measures
of performance by the real estate industry and by excluding gains or losses
related to dispositions of depreciable property and excluding real estate
depreciation (which can vary among owners of identical assets in similar
condition based on historical cost accounting and useful life estimates),
FFO and FFO available to Common Shares and Units can help compare the
operating performance of a company's real estate between periods or as
(2) compared to different companies. FFO and FFO available to Common Shares and
Units do not represent net income, net income available to Common Shares or
net cash flows from operating activities in accordance with GAAP. Therefore,
FFO and FFO available to Common Shares and Units should not be exclusively
considered as alternatives to net income, net income available to Common
Shares or net cash flows from operating activities as determined by GAAP or
as a measure of liquidity. The Company's calculation of FFO and FFO
available to Common Shares and Units 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.
Net income, FFO and FFO available to Common Shares and Units - basic and
(3) diluted have all been reduced by approximately $2.5 million in the first
quarter of 2008 for the retrospective application of FSP APB 14-1 on
convertible debt, which the Company adopted as required on January 1, 2009.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
March 31, December 31,
2009 2008
ASSETS
Investment in real estate
Land $ 3,675,048 $ 3,671,299
Depreciable property 14,002,717 13,908,594
Projects under development 762,641 855,473
Land held for development 258,923 254,873
Investment in real estate 18,699,329 18,690,239
Accumulated depreciation (3,674,402 ) (3,561,300 )
Investment in real estate, net 15,024,927 15,128,939
Cash and cash equivalents 428,596 890,794
Investments in unconsolidated entities 8,196 5,795
Deposits - restricted 187,176 152,372
Escrow deposits - mortgage 19,483 19,729
Deferred financing costs, net 55,905 53,817
Other assets 311,373 283,664
Total assets $ 16,035,656 $ 16,535,110
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 4,941,277 $ 5,036,930
Notes, net 5,141,358 5,447,012
Lines of credit - -
Accounts payable and accrued expenses 128,008 108,463
Accrued interest payable 75,268 113,846
Other liabilities 243,541 289,562
Security deposits 63,484 64,355
Distributions payable 142,209 141,843
Total liabilities 10,735,145 11,202,011
Commitments and contingencies
Redeemable Noncontrolling Interests - Operating 153,617 264,394
Partnership
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01
par value;
100,000,000 shares authorized; 1,950,925
shares issued
and outstanding as of March 31, 2009 and
1,951,475
shares issued and outstanding as of December 208,773 208,786
31, 2008
Common Shares of beneficial interest, $0.01
par value;
1,000,000,000 shares authorized; 273,843,970
shares issued
and outstanding as of March 31, 2009 and
272,786,760
shares issued and outstanding as of December 2,738 2,728
31, 2008
Paid in capital 4,399,559 4,273,489
Retained earnings 401,262 456,152
Accumulated other comprehensive loss (29,289 ) (35,799 )
Total shareholders' equity 4,983,043 4,905,356
Noncontrolling Interests:
Operating Partnership 138,165 137,645
Preference Interests and Units 184 184
Partially Owned Properties 25,502 25,520
Total Noncontrolling Interests 163,851 163,349
Total equity 5,146,894 5,068,705
Total liabilities and equity $ 16,035,656 $ 16,535,110
Equity Residential
Portfolio Summary
As of March 31, 2009
% of 2009 Average
% of Stabilized Rental
Markets Properties Units Total Units NOI Rate (1)
1 New York Metro Area 22 6,246 4.3% 10.0% $ 2,692
2 DC Northern Virginia 26 8,781 6.0% 8.8% 1,635
3 South Florida 39 12,897 8.8% 8.4% 1,277
4 Los Angeles 39 7,841 5.4% 8.1% 1,759
5 Seattle/Tacoma 49 11,138 7.6% 7.5% 1,304
6 Boston 38 6,699 4.6% 6.6% 1,931
7 San Francisco Bay 34 6,731 4.6% 6.5% 1,703
Area
8 Phoenix 42 12,084 8.3% 5.4% 891
9 Denver 25 8,606 5.9% 5.0% 1,013
10 San Diego 14 4,491 3.1% 4.4% 1,656
11 Orlando 26 8,042 5.5% 4.3% 1,018
12 Atlanta 29 8,882 6.1% 3.9% 950
13 Inland Empire, CA 15 4,655 3.2% 3.7% 1,351
14 Suburban Maryland 22 5,819 4.0% 3.5% 1,204
15 Orange County, CA 10 3,307 2.3% 3.3% 1,593
16 New England 25 4,121 2.8% 2.1% 1,098
(excluding Boston)
17 Portland, OR 11 3,713 2.5% 1.9% 957
18 Jacksonville 12 3,951 2.7% 1.7% 883
19 Raleigh/Durham 12 3,058 2.1% 1.3% 812
20 Tampa 10 3,158 2.1% 1.2% 928
Top 20 Total 500 134,220 91.9% 97.6% 1,336
21 Dallas/Ft. Worth 12 2,963 2.0% 1.2% 915
22 Central Valley, CA 8 1,343 0.9% 0.7% 1,070
23 Other EQR 13 2,939 2.0% 0.5% 866
Total 533 141,465 96.8% 100.0% 1,315
Condominium 2 64 - - -
Conversion
Military Housing 2 4,703 3.2% - -
Grand Total 537 146,232 100.0% 100.0% $ 1,315
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the month of March 2009.
Equity Residential
Portfolio as of March 31, 2009
Properties Units
Wholly Owned 469 126,563
Properties
Partially Owned
Properties:
Consolidated 26 5,406
Unconsolidated 40 9,560
Military Housing (Fee 2 4,703
Managed)
537 146,232
Portfolio Rollforward Q1 2009
($ in thousands)
Properties Units Sale Price Cap Rate
12/31/2008 548 147,244
Dispositions:
Rental Properties:
Consolidated (11 ) (1,531 ) $ (139,573 ) 7.1 %
Unconsolidated (1) (1 ) (216 ) $ (20,700 ) 8.0 %
Condominium Conversion (1 ) (1 ) $ (146 )
Properties
Completed Developments 2 742
Configuration Changes - (6 )
3/31/2009 537 146,232
(1) ERPOP owned a 25% interest in this unconsolidated rental property. Sale
price listed is the gross sale price.
Equity Residential
First Quarter 2009 vs. First Quarter 2008
Quarter over Quarter Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 123,120 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q1 2009 $ $ $ $ 1,341 93.7 % 13.5 %
463,845 178,497 285,348
Q1 2008 $ $ $ $ 1,337 94.2 % 13.7 %
464,702 173,678 291,024
Change $ (857 ) $ 4,819 $ (5,676 ) $ 4 (0.5 %) (0.2 %)
Change (0.2 %) 2.8 % (2.0 %) 0.3 %
First Quarter 2009 vs. Fourth Quarter 2008
Sequential Quarter over Quarter Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 127,205 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q1 2009 $ $ $ $ 1,344 93.7 % 13.5 %
480,107 184,915 295,192
Q4 2008 $ $ $ $ 1,364 94.2 % 15.3 %
489,662 176,099 313,563
Change $ ) $ 8,816 $ ) $ (20 ) (0.5 %) (1.8 %)
(9,555 (18,371
Change (2.0 %) 5.0 % (5.9 %) (1.5 %)
(1) 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.
(2) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the period.
Equity Residential
Same Store NOI Reconciliation
First Quarter 2009 vs. First Quarter 2008
The following table presents a reconciliation of operating income per the
consolidated statements of operations to NOI for the First Quarter 2009
Same Store Properties:
Quarter Ended March 31,
2009 2008
(Amounts in thousands)
Operating income $ 144,181 $ 139,509
Adjustments:
Non-same store operating results (18,412 ) (1,983 )
Fee and asset management revenue (2,863 ) (2,294 )
Fee and asset management expense 2,003 2,180
Depreciation 150,045 141,195
General and administrative 10,394 12,417
Same store NOI $ 285,348 $ 291,024
Equity Residential
First Quarter 2009 vs. First Quarter 2008
Same Store Results by Market
Increase (Decrease) from Prior Year's Quarter
Q1 2009 Q1 2009 Q1 2009
% of Average Weighted Average
Actual Rental Average Rental
Markets Units NOI Rate Occupancy Revenues Expenses NOI Rate Occupancy
(1) % (1)
1 New York Metro 6,246 10.3 % $ 2,720 93.8 % 0.5 % 2.0 % (0.3 %) (0.1 %) 0.6 %
Area
2 South Florida 11,761 8.4 % 1,287 93.3 % (1.5 %) 4.8 % (5.9 %) (1.4 %) (0.1 %)
3 DC Northern 7,661 8.3 % 1,653 94.6 % 1.1 % 2.3 % 0.5 % 1.3 % (0.3 %)
Virginia
4 Los Angeles 6,863 7.8 % 1,744 93.7 % 0.0 % 3.0 % (1.4 %) (0.1 %) 0.1 %
5 Seattle/Tacoma 8,708 7.3 % 1,356 93.2 % 1.0 % 4.0 % (0.7 %) 2.0 % (0.9 %)
6 San Francisco 6,200 6.8 % 1,716 93.5 % 2.4 % 2.6 % 2.3 % 4.7 % (2.1 %)
Bay Area
7 Boston 5,805 6.4 % 1,901 94.3 % 1.4 % 3.1 % 0.2 % 2.7 % (1.3 %)
8 Phoenix 10,238 5.3 % 886 93.9 % (6.2 %) 3.7 % (11.9 %) (4.8 %) (1.4 %)
9 Denver 8,059 5.3 % 1,006 93.6 % 1.1 % 0.4 % 1.5 % 2.6 % (1.4 %)
10 San Diego 4,491 4.8 % 1,650 93.3 % 1.1 % 1.7 % 0.9 % 1.8 % (0.6 %)
11 Orlando 7,525 4.4 % 1,004 92.8 % (4.4 %) (1.3 %) (6.5 %) (3.7 %) (0.7 %)
12 Atlanta 7,698 4.1 % 981 93.5 % (0.3 %) 3.8 % (3.4 %) 0.4 % (0.7 %)
13 Inland Empire, 4,355 3.8 % 1,349 94.5 % (0.1 %) 2.4 % (1.4 %) (1.8 %) 1.6 %
CA
14 Orange County, 3,175 3.5 % 1,596 94.1 % 0.1 % 1.5 % (0.5 %) 0.1 % 0.0 %
CA
15 Suburban 3,977 2.7 % 1,154 93.7 % 3.0 % 3.8 % 2.5 % 2.5 % 0.4 %
Maryland
New England
16 (excluding 4,121 2.1 % 1,088 94.1 % (0.9 %) 6.2 % (8.0 %) (0.9 %) 0.0 %
Boston)
17 Portland, OR 3,409 2.0 % 977 94.6 % 1.4 % 1.5 % 1.2 % 1.6 % (0.2 %)
18 Jacksonville 3,711 1.8 % 885 93.2 % (4.9 %) 2.2 % (9.7 %) (4.5 %) (0.3 %)
19 Tampa 2,598 1.3 % 951 94.4 % (2.4 %) 2.6 % (6.2 %) (2.8 %) 0.4 %
20 Raleigh/Durham 2,666 1.3 % 826 95.2 % (0.2 %) 2.6 % (2.0 %) 0.2 % (0.4 %)
Top 20 Markets 119,267 97.7 % 1,352 93.7 % (0.2 %) 2.8 % (2.0 %) 0.3 % (0.5 %)
All Other 3,853 2.3 % 1,007 94.1 % 1.8 % 1.7 % 1.8 % 1.7 % 0.0 %
Markets
Total 123,120 100.0 % $ 1,341 93.7 % (0.2 %) 2.8 % (2.0 %) 0.3 % (0.5 %)
(1 ) Average rental rate is defined as total rental revenues divided by the weighted average
occupied units for the period.
Equity Residential
First Quarter 2009 vs. Fourth Quarter 2008
Sequential Same Store Results by Market
Increase (Decrease) from Prior Quarter
Q1 2009 Q1 2009 Q1 2009
% of Average Weighted Average
Actual Rental Average Rental
Markets Units NOI Rate Occupancy Revenues Expenses NOI Rate Occupancy
(1) % (1)
1 New York Metro 6,246 9.9 % $ 2,720 93.8 % (4.0 %) 5.3 % (9.0 %) (1.9 %) (2.1 %)
Area
2 DC Northern 8,781 9.1 % 1,639 94.6 % (1.3 %) 6.4 % (4.9 %) (1.0 %) (0.3 %)
Virginia
3 South Florida 12,465 8.6 % 1,289 93.3 % (0.1 %) 5.3 % (4.0 %) (0.4 %) 0.3 %
4 Los Angeles 7,442 8.2 % 1,760 93.7 % (2.4 %) 0.8 % (3.9 %) (1.9 %) (0.4 %)
5 Seattle/Tacoma 8,708 7.0 % 1,356 93.2 % (4.1 %) 5.4 % (9.0 %) (3.0 %) (1.1 %)
6 San Francisco 6,200 6.6 % 1,716 93.5 % (2.2 %) 5.9 % (6.1 %) (0.6 %) (1.6 %)
Bay Area
7 Boston 5,805 6.2 % 1,901 94.3 % (1.0 %) 11.3 % (8.1 %) (0.4 %) (0.6 %)
8 Phoenix 10,646 5.4 % 889 94.0 % (1.7 %) 3.5 % (5.0 %) (1.9 %) 0.2 %
9 Denver 8,059 5.2 % 1,006 93.6 % (2.1 %) (0.5 %) (2.8 %) (1.7 %) (0.4 %)
10 San Diego 4,491 4.6 % 1,650 93.3 % (1.4 %) 0.5 % (2.4 %) (1.7 %) 0.2 %
11 Orlando 7,525 4.2 % 1,004 92.8 % (2.2 %) 5.1 % (6.7 %) (1.5 %) (0.7 %)
12 Atlanta 7,698 4.0 % 981 93.5 % (1.3 %) 5.8 % (6.4 %) (0.2 %) (1.1 %)
13 Inland Empire, 4,355 3.7 % 1,349 94.5 % (2.3 %) 1.1 % (4.1 %) (2.3 %) (0.1 %)
CA
14 Suburban 5,251 3.5 % 1,189 93.1 % 0.1 % 4.5 % (2.7 %) 0.0 % 0.0 %
Maryland
15 Orange County, 3,175 3.3 % 1,596 94.1 % (2.6 %) 1.4 % (4.3 %) (1.2 %) (1.3 %)
CA
New England
16 (excluding 4,121 2.0 % 1,088 94.1 % (2.2 %) 17.0 % (17.7 %) (2.0 %) (0.2 %)
Boston)
17 Portland, OR 3,409 1.9 % 977 94.6 % (1.8 %) 4.9 % (5.7 %) (1.0 %) (0.7 %)
18 Jacksonville 3,711 1.8 % 885 93.2 % (1.0 %) 6.8 % (6.3 %) (1.1 %) 0.1 %
19 Tampa 2,598 1.3 % 951 94.4 % 1.2 % 6.7 % (2.9 %) 0.6 % 0.5 %
20 Raleigh/Durham 2,666 1.3 % 826 95.2 % (1.9 %) 2.3 % (4.4 %) (1.9 %) 0.1 %
Top 20 Markets 123,352 97.8 % 1,355 93.7 % (1.9 %) 5.1 % (5.9 %) (1.5 %) (0.5 %)
All Other 3,853 2.2 % 1,007 94.1 % (2.5 %) 1.8 % (5.2 %) (1.7 %) (0.7 %)
Markets
Total 127,205 100.0 % $ 1,344 93.7 % (2.0 %) 5.0 % (5.9 %) (1.5 %) (0.5 %)
(1 ) Average rental rate is defined as total rental revenues divided by the weighted average occupied units
for the period.
Equity Residential
Debt Summary as of March 31, 2009
(Amounts in thousands)
Weighted
Weighted Average
% of Average Maturities
Amounts (1) Total Rates (1) (years)
Secured $ 4,941,277 49.0% 4.84% 8.3
Unsecured 5,141,358 51.0% 5.42% 5.5
Total $10,082,635 100.0% 5.14% 6.8
Fixed Rate Debt:
Secured - Conventional $ 3,681,350 36.5% 5.97% 7.2
Unsecured - Public/Private 4,429,508 43.9% 5.99% 5.7
Unsecured - Tax Exempt 75,790 0.8% 5.20% 20.2
Fixed Rate 8,186,648 81.2% 5.97% 6.5
Debt
Floating Rate Debt:
Secured - Conventional 624,022 6.2% 2.11% 2.1
Secured - Tax Exempt 635,905 6.3% 0.79% 21.3
Unsecured - Public/Private 600,460 6.0% 1.49% 1.3
Unsecured - Tax Exempt 35,600 0.3% 0.46% 19.7
Unsecured - Revolving Credit - - - 2.8
Facility
Floating Rate Debt 1,895,987 18.8% 1.43% 8.3
Total $10,082,635 100.0% 5.14% 6.8
(1) Net of the effect of any derivative instruments. Weighted average rates are
for the quarter ended March 31, 2009.
Note: The Company capitalized interest of approximately $10.6 million and
$14.7 million during the quarters ended March 31, 2009 and 2008,
respectively.
Debt Maturity Schedule as of March 31, 2009
(Amounts in thousands)
Weighted Weighted
Average Average
Rates
Fixed Floating % of on Fixed Rates on
Year Rate (1) Rate (1) Total Total Rate Debt Total Debt
(1) (1)
2009 $ 155,979 $ 463,187 $ 619,166 6.1% 7.53% 4.03%
2010 (2) 274,993 670,053 945,046 9.4% 7.23% 3.22%
2011 (3) 1,253,533 78,417 1,331,950 13.2% 5.56% 5.35%
2012 924,579 3,673 928,252 9.2% 6.01% 6.01%
2013 565,865 - 565,865 5.6% 5.93% 5.93%
2014 516,959 - 516,959 5.1% 5.28% 5.28%
2015 355,081 - 355,081 3.5% 6.41% 6.41%
2016 1,088,709 - 1,088,709 10.8% 5.32% 5.32%
2017 1,345,997 456 1,346,453 13.4% 5.87% 5.87%
2018 335,500 44,677 380,177 3.8% 5.96% 5.61%
2019+ 1,369,453 635,524 2,004,977 19.9% 5.85% 4.91%
Total $ $ $10,082,635 100.0% 5.83% 5.18%
8,186,648 1,895,987
(1) Net of the effect of any derivative instruments. Weighted average rates are
as of March 31, 2009.
Includes the Company's $500.0 million floating rate term loan facility,
(2) which matures on October 5, 2010, subject to two one-year extension options
exercisable by the Company.
Includes $531.1 million face value of 3.85% convertible unsecured debt with
(3) a final maturity of 2026. The notes are callable by the Company on or after
August 18, 2011. The notes are putable by the holders on August 18, 2011,
August 15, 2016 and August 15, 2021.
Equity Residential
Unsecured Debt Summary as of March 31, 2009
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
Fixed
Rate
Notes:
4.750 % 06/15/09 (1 ) $ 122,239 $ (26 ) $ 122,213
6.950 % 03/02/11 (2 ) 114,806 1,914 116,720
6.625 % 03/15/12 400,000 (868 ) 399,132
5.500 % 10/01/12 350,000 (1,208 ) 348,792
5.200 % 04/01/13 400,000 (473 ) 399,527
5.250 % 09/15/14 500,000 (337 ) 499,663
6.584 % 04/13/15 300,000 (672 ) 299,328
5.125 % 03/15/16 500,000 (372 ) 499,628
5.375 % 08/01/16 400,000 (1,360 ) 398,640
5.750 % 06/15/17 650,000 (4,196 ) 645,804
7.125 % 10/15/17 150,000 (554 ) 149,446
7.570 % 08/15/26 140,000 - 140,000
3.850 % 08/15/26 (3 ) 531,092 (20,477 ) 510,615
Floating
Rate (1 ) (100,000 ) - (100,000 )
Adjustments
4,458,137 (28,629 ) 4,429,508
Fixed Rate Tax
Exempt Notes:
5.200 % 06/15/29 (4 ) 75,790 - 75,790
Floating Rate Tax
Exempt Notes:
7-Day SIFMA 12/15/28 (4 ) 35,600 - 35,600
Floating
Rate
Notes:
06/15/09 (1 ) 100,000 - 100,000
FAS 133
Adjustments (1 ) 460 - 460
- net
Term Loan LIBOR+0.50% 10/05/10 (4 ) 500,000 - 500,000
Facility (5)
600,460 - 600,460
Revolving
Credit LIBOR+0.50% 02/28/12 (6 ) - - -
Facility:
Total $ $ $
Unsecured 5,169,987 (28,629 ) 5,141,358
Debt
Note: SIFMA stands for the Securities Industry and Financial Markets
Association and is the tax-exempt index equivalent of LIBOR.
$100.0 million in fair value interest rate swaps converts a portion of the
4.750% notes due June 15, 2009 to a floating interest rate. On January 27,
2009, the Company repurchased $105.2 million of these notes at par
(1 ) pursuant to a cash tender offer announced on January 16, 2009. In
conjunction with the tender offer, the Company terminated $50.0 million of
the $150.0 million in fair value swaps outstanding at January 1, 2009 and
received approximately $0.4 million.
(2 ) On January 27, 2009, the Company repurchased $185.2 million of these notes
at par pursuant to a cash tender offer announced on January 16, 2009.
Convertible notes mature on August 15, 2026. The notes are callable by the
Company on or after August 18, 2011. The notes are putable by the holders
on August 18, 2011, August 15, 2016 and August 15, 2021. During the
quarter ended March 31, 2009, the Company repurchased $17.5 million of
these notes at a discount to par of approximately 11.6% and recognized a
(3 ) gain on early debt extinguishment of $2.0 million. Effective January 1,
2009, the Company adopted FSP APB 14-1, which requires companies to
expense the implied option value inherent in convertible debt. In
conjunction with this adoption, the Company recorded an adjustment of
$17.3 million to the beginning balance of the discount on its convertible
notes.
(4 ) Notes are private. All other
unsecured debt is public.
Represents the Company's $500.0 million term loan facility, which matures
(5 ) on October 5, 2010, subject to two one-year extension options exercisable
by the Company.
As of March 31, 2009, there was no amount outstanding and approximately
(6 ) $1.31 billion available on the Company's unsecured revolving credit
facility.
Equity Residential
Selected Unsecured Public Debt Covenants
March 31, December 31,
2009 2008
Total Debt to Adjusted Total Assets 51.2 % 52.3 %
(not to exceed 60%)
Secured Debt to Adjusted Total 25.1 % 25.1 %
Assets (not to exceed 40%)
Consolidated Income Available
for Debt Service to
Maximum Annual Service
Charges
(must be at least 2.34 2.21
1.5 to 1)
Total Unsecured Assets to
Unsecured Debt
(must be at least 231.1 % 218.8 %
150%)
These selected covenants relate to ERP Operating Limited Partnership's
("ERPOP") outstanding unsecured public debt. Equity Residential is the general
partner of ERPOP.
Debt Repurchases
(Amounts in thousands)
First Quarter 2009 Activity
Write-off
of
Unamortized
Bonds Price % ExtinguishmentDiscount/
Security Retired Paid Discount Gain Fees/OCI
2009 4.75% $ $ - $ - $ 125
Public Notes 105,161 105,161
2011 6.95% 185,194 185,194 - - 1,379
Public Notes
2026 3.85%
Convertible Notes 17,465 15,445 11.6 % 2,020 879
(1)
Total $ $ 0.7 % $ $ 2,383
307,820 305,800 2,020
(1) 2026 3.85% Convertible Notes are putable to the
Company in 2011.
Equity Residential
Capital Structure as of March 31, 2009
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 4,941,277 49.0%
Unsecured Debt 5,141,358 51.0%
Total 10,082,635 100.0% 64.6%
Debt
Common Shares
(includes 273,843,970 94.4%
Restricted Shares)
Units 16,283,376 5.6%
Total Shares and 290,127,346 100.0%
Units
Common Share
Equivalents (see 405,555
below)
Total outstanding 290,532,901
at quarter-end
Common Share Price $ 18.35
at March 31, 2009
5,331,279 96.4%
Perpetual Preferred 200,000 3.6%
Equity (see below)
Total 5,531,279 100.0% 35.4%
Equity
Total Market $15,613,914 100.0%
Capitalization
Convertible Preferred Equity as of March 31, 2009
(Amounts in thousands except for share/unit and per share/unit amounts)
Annual Annual Weighted Common
Redemption Outstanding Liquidation Dividend Dividend Average Conversion Share
Series Date Shares/Units Value Per Amount Rate Ratio Equivalents
Share/Unit
Preferred
Shares:
7.00% 11/1/98 328,466 $ 8,212 $ 1.75 $ 575 1.1128 365,517
Series E
7.00% 6/30/98 22,459 561 1.75 39 1.4480 32,521
Series H
Junior Preference
Units:
8.00% 7/29/09 7,367 184 2.00 15 1.020408 7,517
Series B
Total Convertible 358,292 $ 8,957 $ 629 7.02% 405,555
Preferred Equity
Perpetual Preferred Equity as of March 31, 2009
(Amounts in thousands except for share and per share amounts)
Annual Annual Weighted
Redemption Outstanding Liquidation Dividend Dividend Average
Series Date Shares Value Per Share Amount Rate
Preferred
Shares:
8.29% 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145
Series K
6.48% 6/19/08 600,000 150,000 16.20 9,720
Series N
Total Perpetual 1,600,000 $ 200,000 $ 13,865 6.93%
Preferred Equity
Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
Q109 Q108
Weighted Average Amounts Outstanding for Net Income
Purposes:
Common Shares - basic 272,323,545 268,784,258
Shares issuable from assumed conversion/vesting of:
- OP Units 16,386,489 18,294,706
- long-term compensation award shares/units 142,870 2,237,869
Total Common Shares and Units - diluted 288,852,904 289,316,833
Weighted Average Amounts Outstanding for FFO Purposes:
Common Shares - basic 272,323,545 268,784,258
OP Units - basic 16,386,489 18,294,706
Total Common Shares and OP Units - basic 288,710,034 287,078,964
Shares issuable from assumed conversion/vesting of:
- convertible preferred shares/units 406,031 444,474
- long-term compensation award shares/units 142,870 2,237,869
Total Common Shares and Units - diluted 289,258,935 289,761,307
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares) 273,843,970
Units 16,283,376
Total Shares and Units 290,127,346
Equity Residential
Partially Owned Entities as of March 31, 2009
(Amounts in thousands except for project and unit amounts)
Consolidated Unconsolidated
Development Projects
Held for Institutional
and/or Completed, Completed Joint
Under Not
Development Stabilized and Other Total Ventures (5)
(4) Stabilized
Total projects (1 ) - 2 3 21 26 40
Total units (1 ) - 760 704 3,942 5,406 9,560
Operating information
for the quarter
ended 3/31/09 (at
100%):
Operating revenue $ 401 $ 1,716 $ 3,129 $ $ 19,724 $
14,478 24,383
Operating expenses 534 1,306 1,252 5,057 8,149 11,367
Net operating (loss) (133 ) 410 1,877 9,421 11,575 13,016
income
Depreciation 93 1,662 1,488 3,714 6,957 5,097
General and 375 6 178 6 565 94
administrative/other
Operating (loss) (601 ) (1,258 ) 211 5,701 4,053 7,825
income
Interest and other 12 - - 43 55 61
income
Other expenses (81 ) - - - (81 ) -
Interest:
Expense incurred, (553 ) (546 ) (830 ) (5,036 ) (6,965 ) (9,375 )
net
Amortization of deferred (20 ) (38 ) (53 ) (41 ) (152 ) (154 )
financing costs
Income and other tax (18 ) - - (34 ) (52 ) (265 )
(expense) benefit
Net (loss) income $ ) $ ) $ (672 ) $ 633 $ (3,142 ) $ )
(1,261 (1,842 (1,908
Debt - Secured (2):
EQR Ownership (3) $ $ $ $ $ 945,106 $
400,041 220,779 108,466 215,820 121,200
Noncontrolling - - - 86,310 86,310 363,600
Ownership
Total (at 100%) $ $ $ $ $ $
400,041 220,779 108,466 302,130 1,031,416 484,800
(1) Project and unit counts exclude all uncompleted development projects until those projects are
substantially completed. See the Consolidated Development Projects schedule for more detail.
(2) All debt is non-recourse to the Company with the exception of $125.8 million in mortgage debt on
various development projects.
(3) Represents the Company's current economic ownership interest.
(4) Projects included here are substantially complete. However, they may still require additional
exterior and interior work for all units to be available for leasing.
(5) Mortgage debt is also partially collateralized by $52.9 million in unconsolidated restricted cash set
aside from the net proceeds of property sales.
Equity Residential
Consolidated Development Projects as of March 31, 2009
(Amounts in thousands except for project and unit amounts)
Total Book
Total Total Value Not Estimated Estimated
No. Capital Book Placed in Total Percentage Percentage Percentage Completion Stabilization
of Value
Projects Location Units Cost (1) to Date Service Debt Completed Leased Occupied Date Date
Projects
Under
Development -
Wholly Owned:
70 Greene Jersey City,
(a.k.a. 77 NJ 480 $ 269,958 $ 222,582 $ 222,582 $ - 88% 7% - Q4 2009 Q1 2011
Hudson)
Reserve at Mill Creek,
Town Center WA 100 24,464 11,713 11,713 - 44% - - Q1 2010 Q3 2010
II
Redmond Way Redmond, WA 250 84,382 28,970 28,970 - 19% - - Q1 2011 Q1 2012
Projects
Under 830 378,804 263,265 263,265 -
Development -
Wholly Owned
Projects
Under
Development -
Partially
Owned:
Veridian
(a.k.a. Silver 457 148,705 145,314 145,314 104,322 97% 43% 33% Q2 2009 Q3 2010
Silver Spring, MD
Spring)
Montclair Montclair, 163 48,730 33,011 33,011 17,056 78% - - Q3 2009 Q1 2010
Metro NJ
Red Road South Miami, 404 128,816 110,458 110,458 54,267 84% 20% - Q1 2010 Q3 2011
Commons FL
111 Lawrence Brooklyn, NY 492 283,968 130,481 130,481 16,829 47% - - Q2 2010 Q3 2011
Street
Westgate Pasadena, CA 480 170,558 80,112 80,112 163,160 (2) 33% - - Q2 2011 Q2 2012
Projects
Under
Development - 1,996 780,777 499,376 499,376 355,634
Partially
Owned
Projects
Under 2,826 1,159,581 762,641 762,641 355,634 (3)
Development
Land Held for N/A - 258,923 258,923 44,407
Development
Land/Projects
Held for 2,826 1,159,581 1,021,564 1,021,564 400,041
and/or Under
Development
Completed Not
Stabilized -
Wholly Owned
(4):
West End
Apartments
(a.k.a. Boston, MA 310 164,981 163,284 - - 98% 97% Completed Q2 2009
Emerson/CRP
II)
Highland Glen Westwood, MA 102 19,888 19,868 - - 95% 94% Completed Q2 2009
II
Crowntree Orlando, FL 352 56,618 56,618 - - 91% 81% Completed Q4 2009
Lakes
Mosaic at Hyattsville, 260 61,483 57,041 - 41,252 35% 27% Completed Q1 2010
Metro MD
Reunion at Redmond, WA 321 53,175 53,142 - - 35% 31% Completed Q3 2010
Redmond Ridge
Projects
Completed Not 1,345 356,145 349,953 - 41,252
Stabilized -
Wholly Owned
Completed Not
Stabilized -
Partially
Owned (4):
1401 South
State (a.k.a. Chicago, IL 278 69,952 69,575 - 50,726 75% 60% Completed Q4 2009
City Lofts)
Third Square
(a.k.a. 303 Cambridge, 482 254,523 249,000 - 170,053 72% 53% Completed Q2 2010
Third Street) MA
(5)
Projects
Completed Not
Stabilized - 760 324,475 318,575 - 220,779
Partially
Owned
Projects
Completed Not 2,105 680,620 668,528 - 262,031
Stabilized
Completed and
Stabilized
During the
Quarter -
Wholly Owned:
Key Isle at Orlando, FL 165 27,881 27,833 - - 93% 91% Completed Stabilized
Windermere II
Projects
Completed and
Stabilized 165 27,881 27,833 - -
During the
Quarter -
Wholly Owned
Completed and
Stabilized
During the
Quarter -
Partially
Owned:
Alta Pacific Irvine, CA 132 45,402 45,377 - 28,260 96% 95% Completed Stabilized
Projects
Completed and
Stabilized
During the 132 45,402 45,377 - 28,260
Quarter -
Partially
Owned
Projects
Completed and
Stabilized 297 73,283 73,210 - 28,260
During the
Quarter
Total 5,228 $ $ $ $
Projects 1,913,484 1,763,302 1,021,564 690,332
Total Q1 2009
Capital
NOI
CONTRIBUTION
FROM Cost (1) NOI
DEVELOPMENT
PROJECTS
Projects $
Under 1,159,581 $ (269)
Development
Completed Not 680,620 2,279
Stabilized
Completed and
Stabilized 73,283 836
During the
Quarter
Total
Development $ $ 2,846
NOI 1,913,484
Contribution
(1) Total capital cost represents estimated development cost for projects under development and all capitalized costs incurred to date plus
any estimates of costs remaining to be funded for all projects, all in accordance with GAAP.
(2) Debt is primarily tax-exempt bonds that are entirely outstanding with $86.9 million held in escrow by the lender and released as draw
requests are made. This escrowed amount is classified as "Deposits - restricted" in the consolidated balance sheets at 3/31/09.
(3) Of the approximately $396.9 million of capital cost remaining to be funded at 3/31/09 for projects under development, $277.9 million will
be funded by fully committed third party bank loans and the remaining $119.0 million will be funded by cash on hand.
(4) Properties included here are substantially complete. However, they may still require additional exterior and interior work for all units
to be available for leasing.
(5) Third Square - Both the percentage leased and percentage occupied reflect only the 292 units included in phase one.
Equity Residential
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Quarter Ended March 31, 2009
(Amounts in thousands except for unit and per unit amounts)
Maintenance Expenses Capitalized Improvements to Real Estate Total
Expenditures
Building
Total Avg. Avg. Avg. Replacements Avg. Improvements Avg. Avg. Grand Avg.
Units Expense Per Payroll Per Total Per (4) Per (5) Per Total Per Total Per
(1) (2) Unit (3) Unit Unit Unit Unit Unit Unit
Established $ $ $ $ $ $ $ $ $ $
Properties 112,050 21,795 195 19,737 176 41,532 371 $ 8,556 $ 76 $ 6,398 $ 57 14,954 133 (9) 56,486 504
(6)
New
Acquisition 13,784 2,667 197 2,305 171 4,972 368 724 54 1,642 121 2,366 175 7,338 543
Properties
(7)
Other 6,135 1,920 1,654 3,574 8,125 1,199 9,324 12,898
(8)
Total 131,969 $ $ $ $ 17,405 $ 9,239 $ $
26,382 23,696 50,078 26,644 76,722
(1) Total Units - Excludes 9,560 unconsolidated units and 4,703 military housing (fee managed) units, for which maintenance expenses
and capitalized improvements to real estate are self-funded and do not consolidate into the Company's results.
(2) Maintenance Expenses - Includes 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 - Includes new expenditures inside the units such as appliances, mechanical equipment, fixtures and flooring,
including carpeting.
(5) Building Improvements - Includes roof replacement, paving, amenities and common areas, building mechanical equipment systems,
exterior painting and siding, major landscaping, vehicles and office and maintenance equipment.
(6) Established Properties - Wholly Owned Properties acquired prior to January 1, 2007.
(7) New Acquisition Properties - Wholly Owned Properties acquired during 2007, 2008 and 2009. Per unit amounts are based on a weighted
average of 13,524 units.
(8) Other - Primarily includes properties either partially owned or sold during the period, commercial space and corporate housing.
Also includes $7.4 million included in replacements spent on various assets related to major renovations and repositioning of these
assets.
(9) For 2009, the Company estimates an annual stabilized run rate of approximately $925 per unit of capital expenditures for its
established properties.
Equity Residential
Discontinued Operations
(Amounts in thousands)
Quarter Ended
March 31,
2009 2008
REVENUES
Rental income $ 3,945 $ 25,501
Total revenues 3,945 25,501
EXPENSES (1)
Property and maintenance 2,796 8,777
Real estate taxes and insurance 528 3,235
Property management - (65 )
Depreciation 443 6,385
General and administrative 5 3
Total expenses 3,772 18,335
Discontinued operating income 173 7,166
Interest and other income 3 (18 )
Interest (2):
Expense incurred, net (35 ) (269 )
Amortization of deferred financing costs (32 ) (1 )
Income and other tax (expense) benefit (46 ) 199
Discontinued operations 63 7,077
Net gain on sales of discontinued operations 61,871 122,517
Discontinued operations, net $ 61,934 $ 129,594
(1 ) Includes expenses paid in the current period for properties sold or held
for sale in prior periods related to the Company's period of ownership.
(2 ) Includes only interest expense specific to secured mortgage notes
payable for properties sold and/or held for sale.
Equity Residential
Additional Reconciliations and Non-Comparable Items
(Amounts in thousands except per share data)
(All per share data is diluted)
FFO Reconciliations
FFO Reconciliations
Guidance Midpoint Q1
2009 to Actual Q1 2009
Amounts Per Share
Guidance midpoint Q1 2009 FFO - $ 159,237 $ 0.549
Diluted (1) (2)
Property NOI (including reserve 6,436 0.022
adjustments)
Debt extinguishment gains (interest 2,020 0.007
and other income)
Income and
other tax (1,792 ) (0.006 )
expense
Other 195 0.002
Actual Q1 2009 FFO - $ 166,096 $ 0.574
Diluted (1) (2)
Non-Comparable Items (3)
Quarter Ended March 31,
2009 2008 Variance
Debt extinguishment gains (interest $ 2,020 $ - $ 2,020
and other income)
FSP APB 14-1 convertible debt discount (2,884 ) (2,518 ) (366 )
(includes extinguishment write-offs)
Debt extinguishment
costs (interest):
Prepayment (35 ) - (35 )
penalties
Write-off of unamortized deferred (655 ) (6 ) (649 )
financing costs
Write-off of unamortized premiums/ (805 ) - (805 )
(discounts)/(OCI)
Other (1,078 ) (726 ) (352 )
Net
non-comparable $ (3,437 ) $ (3,250 ) $ (187 )
items (3)
Note: See page 24 for definitions, footnotes and
reconciliations of EPS to FFO.
Equity Residential
The earnings guidance/projections provided below are based on current
expectations and are forward-looking.
2009 Earnings Guidance (per share diluted)
Q2 2009 2009
Expected FFO (1) (2) $0.53 to $0.58 $2.00 to $2.30
2009 Same Store Assumptions
Physical occupancy 93.5%
Revenue change (4.50%) to (1.50%)
Expense change 2.50% to 3.50%
NOI change (9.25%) to (3.75%)
(Note: 25 basis point change in NOI percentage =
$0.01 per share change in EPS/FFO)
2009 Transaction Assumptions
Rental acquisitions $250.0 million
Rental dispositions $700.0 million
Capitalization rate spread 125 basis points
2009 Debt Assumptions
Weighted average debt $9.7 billion to $10.1
outstanding billion
Weighted average interest rate (reduced for
capitalized interest and
including prepayment 4.93%
penalties)
Interest expense $475.0 million to $495.0
million
Unrestricted cash at 12/31/09 $50.0 million
Note: Debt guidance assumes no debt offerings and no additional debt
extinguishments, but does include approximately $9.3 million of interest
expense for the mandatory adoption of FSP APB 14-1, which requires companies
to expense the implied option value inherent in convertible debt. This change
does not affect the Company's continued compliance with its financial or debt
covenants.
2009 Other Guidance Assumptions
General and administrative $40.0 million to $42.0
expense million
Interest and other income $11.0 million to $14.0
million
Income and other tax expense $3.0 million to $4.0
million
Net gain on sales of land No amounts budgeted
parcels
Preferred share redemptions No amounts budgeted
Weighted average Common 291.1 million
Shares and Units - Diluted
Note: See page 24 for definitions, footnotes and reconciliations of EPS to
FFO.
Equity Residential
The earnings guidance/projections provided below are based on current
expectations and are forward-looking.
Reconciliations of EPS to FFO for Pages 22 and 23
(Amounts in thousands except per share data)
(All per share data is diluted)
Expected Expected
Expected Q1 2009 Q2 2009 2009
Amounts Per Share Per Share Per Share
Expected Earnings - $ 68,257 $ 0.235 $0.13 to $0.18 $0.96 to $1.26
Diluted (4)
Add: Expected 151,145 0.522 0.51 2.09
depreciation expense
Less: Expected net (60,165 ) (0.208 ) (0.11 ) (1.05 )
gain on sales (4)
Expected FFO - $ 159,237 $ 0.549 $0.53 to $0.58 $2.00 to $2.30
Diluted (1) (2)
Definitions and Footnotes for Pages 22 and 23
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 ("GAAP")), excluding gains (or losses) from sales of
depreciable 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
(1) the conversion of units to condominiums, it simultaneously discontinues
depreciation of such property. FFO available to Common Shares and Units is
calculated on a basis consistent with net income available to Common Shares
and reflects adjustments to net income for preferred distributions and
premiums on redemption of preferred shares in accordance with accounting
principles generally accepted in the United States. The equity positions of
various individuals and entities that contributed their properties to the
Operating Partnership in exchange for OP Units are collectively referred to
as the "Noncontrolling Interests - Operating Partnership". Subject to
certain restrictions, the Noncontrolling Interests - Operating Partnership
may exchange their OP Units for EQR Common Shares on a one-for-one basis.
The Company believes that FFO and FFO available to Common Shares and Units
are helpful to investors as supplemental measures of the operating
performance of a real estate company, because they are recognized measures
of performance by the real estate industry and by excluding gains or losses
related to dispositions of depreciable property and excluding real estate
depreciation (which can vary among owners of identical assets in similar
condition based on historical cost accounting and useful life estimates),
FFO and FFO available to Common Shares and Units can help compare the
operating performance of a company's real estate between periods or as
(2) compared to different companies. FFO and FFO available to Common Shares and
Units do not represent net income, net income available to Common Shares or
net cash flows from operating activities in accordance with GAAP. Therefore,
FFO and FFO available to Common Shares and Units should not be exclusively
considered as alternatives to net income, net income available to Common
Shares or net cash flows from operating activities as determined by GAAP or
as a measure of liquidity. The Company's calculation of FFO and FFO
available to Common Shares and Units 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.
Non-comparable items are those items included in FFO that by their nature
(3) are not comparable from period to period, such as net incremental gain on
sales of condominium units, impairment charges, debt extinguishment costs
and redemption premiums on Preferred Shares/Preference Interests.
Earnings represents net income per share calculated in accordance with
accounting principles generally accepted in the United States. Expected
(4) earnings is calculated on a basis consistent with actual earnings. Due to
the uncertain timing and extent of property dispositions and the resulting
gains/losses on sales, actual earnings could differ materially from expected
earnings.
Source: Equity Residential
Contact: Equity Residential
Marty McKenna, 312-928-1901
mmckenna@eqrworld.com