CHICAGO--(BUSINESS WIRE)--
Equity Residential (NYSE: EQR) today reported results for the quarter
and six months ended June 30, 2009. All per share results are reported
on a fully-diluted basis.
"We are pleased to deliver better than expected second quarter results
as well as forecast modestly higher same store net operating income for
the year than we originally thought," said David J. Neithercut, Equity
Residential's President and CEO. "While lower operating expenses are the
major contributor to our improved forecast, we are pleased that our
revenue expectation for the year is essentially unchanged because our
commitment to resident satisfaction is enabling us to retain existing
residents at renewal rents higher than might have been expected in this
extremely difficult economic climate."
Second Quarter 2009
For the second quarter of 2009, the company reported earnings per share
of $0.35 compared to earnings of $0.46 per share in the second quarter
of 2008. The difference is primarily due to lower gains from property
sales caused by lower property sales volume in 2009 and lower property
net operating income (NOI) and a development-related impairment charge,
which are both discussed below.
Funds from Operations (FFO) for the quarter ended June 30, 2009 was
$0.58 per share compared to $0.64 per share in the same period of 2008.
The difference is due primarily to:
-- the net negative impact of approximately $0.05 per share from lower
total 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;
-- the negative impact of approximately $0.04 per share from a non-cash
charge of $11.1 million to reflect impairment in the value of a land
parcel; and
-- the net positive impact of approximately $0.03 per share due to lower
interest expense, higher interest and other income and certain other
non-comparable items listed on page 23 of this release.
Six Months Ended June 30, 2009
For the six months ended June 30, 2009, the company reported earnings of
$0.64 per share compared to $0.96 per share in the same period of 2008.
FFO for the six months ended June 30, 2009 was $1.16 per share compared
to $1.22 per share in the same period of 2008.
Same Store Results
On a same store second quarter to second quarter comparison, which
includes 121,256 apartment units, revenues decreased 2.4%, expenses
decreased 0.6% and NOI decreased 3.4%. The revenue decrease was due to a
1.2% decrease in average rental rate and a 1.2% decrease in occupancy to
93.7%. The expense decrease was primarily due to a 2.8% decrease in
utility expense and a 0.8% decrease in payroll.
On a same store six-month to six-month comparison, which includes
120,452 apartment units, revenues decreased 1.3%, expenses increased
1.1% and NOI decreased 2.8%.
Acquisitions/Dispositions
During the second quarter of 2009, the company sold 12 properties,
consisting of 2,668 apartment units, for an aggregate sale price of
$213.8 million at a weighted average capitalization (cap) rate of 7.6%
generating an unlevered internal rate of return (IRR) of 9.7%. The
company acquired no properties during the second quarter of 2009.
During the first six months of 2009, the company sold 23 consolidated
properties, consisting of 4,199 apartment units, for an aggregate sale
price of $353.4 million at a weighted average cap rate of 7.4%
generating an unlevered IRR of 10.2%. The company acquired no properties
during the first six months of 2009.
Liquidity
On June 29, 2009, the company closed a $500.0 million secured loan with
Freddie Mac (NYSE: FRE), originated by Deutsche Bank Berkshire Mortgage.
The loan is interest only and matures in eleven years with the first ten
years fixed and the final year at a floating rate of interest. The loan,
which is collateralized with thirteen assets in seven markets, has an
all-in effective interest rate of approximately 5.6%. The closing of
this loan continues the company's strategy of maintaining excellent
liquidity and addressing funding obligations well before loan maturities.
The company currently has $565.0 million in unrestricted cash or
securities readily convertible to cash, inclusive of the secured loan
proceeds, and $1.35 billion available on its unsecured revolving credit
facility. With current cash on hand, the company can meet all of its
2009 and 2010 debt maturities and development obligations. Inclusive of
current cash on hand, the unsecured revolving credit facility and net
disposition proceeds for 2009 as provided in current guidance, the
company can meet all of its obligations through 2011.
Expected Dividend Reduction
The company expects to reduce its quarterly common share dividend,
beginning with the dividend for the third quarter of 2009, from $0.4825
per share (an annual rate of $1.93 per share) to $0.3375 per share (an
annual rate of $1.35 per share).
"We expect to take this step as a result of reductions in our cash flow
from ongoing operations and also to position the company to take
advantage of opportunities that may lie ahead," said Mr. Neithercut.
Third Quarter 2009 Guidance
The company has established an FFO guidance range of $0.49 to $0.53 per
share for the third quarter of 2009. The difference between the
company's actual pre-impairment second quarter 2009 FFO of $0.62 per
share and the midpoint of the range for the third quarter is primarily
attributable to:
-- the negative impact of approximately $0.07 per share from lower NOI from
the company's same store portfolio as well as dilution from 2009
transaction activity;
-- the negative impact of approximately $0.02 per share from increased
interest expense due to higher debt balances as a result of the
company's recent $500.0 million loan from Freddie Mac and lower
capitalized interest due to reduced development activity; and
-- the negative impact of approximately $0.02 per share from lower interest
and other income in the third quarter.
Full Year 2009 Guidance
The company has revised its guidance for its full year 2009 same store
operating performance, funds from operations results and transactions
activities as well as other items listed on page 24 of this release. The
changes to the full year same store and FFO guidance are listed below:
Previous Revised
Same store:
Revenue change (4.5%) to (1.5%) (3.5%) to (3.0%)
Expense change 2.5% to 3.5% 1.25% to 1.75%
NOI change (9.25%) to (3.75%) (6.5%) to (5.5%)
FFO per share $2.00 to $2.30 $2.10 to $2.20
The guidance midpoint for the company's full year 2009 FFO remains the
same as the company's previous guidance due to higher than expected
property NOI and higher interest and other income offset by the
impairment charge. Annual interest expense is largely unchanged as
higher expense due to the $500.0 million loan from Freddie Mac is offset
by lower than anticipated rates on the company's floating rate debt.
Third Quarter 2009 Conference Call
Equity Residential expects to announce third quarter 2009 results on
Wednesday, October 28, 2009 and host a conference call to discuss those
results at 10:00 a.m. CT on Thursday, October 29, 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 526
properties located in 23 states and the District of Columbia, consisting
of 143,856 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, July
30, at 10:00 a.m. Central. Please visit the Investor Information
section of the company's website 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)
Six Months Ended June 30, Quarter Ended June 30,
2009 2008 2009 2008
REVENUES
Rental income $ 1,007,540 $ 1,003,532 $ 502,738 $ 510,567
Fee and asset 5,275 5,010 2,412 2,716
management
Total revenues 1,012,815 1,008,542 505,150 513,283
EXPENSES
Property and 254,977 261,248 123,430 130,402
maintenance
Real estate taxes 108,799 103,884 53,824 51,457
and insurance
Property management 37,732 40,667 18,718 19,491
Fee and asset 3,985 4,171 1,982 1,991
management
Depreciation 298,194 279,253 149,909 139,812
General and 20,595 24,191 10,201 11,774
administrative
Impairment 11,124 - 11,124 -
Total expenses 735,406 713,414 369,188 354,927
Operating income 277,409 295,128 135,962 158,356
Interest and other 12,639 8,167 6,622 4,808
income
Other expenses (306 ) (780 ) (14 ) (604 )
Interest:
Expense incurred, (239,565 ) (238,780 ) (115,866 ) (119,511 )
net
Amortization of
deferred financing (6,220 ) (4,338 ) (3,255 ) (2,178 )
costs
Income before income
and other taxes,
(loss) from
investments in
unconsolidated
entities, net gain
(loss) on sales of
unconsolidated
entities and
discontinued 43,957 59,397 23,449 40,871
operations
Income and other tax (2,389 ) (4,622 ) (259 ) (1,628 )
(expense) benefit
(Loss) from
investments in (2,221 ) (190 ) (2,026 ) (95 )
unconsolidated
entities
Net gain (loss) on
sales of 2,759 - (6 ) -
unconsolidated
entities
Income from
continuing 42,106 54,585 21,158 39,148
operations
Discontinued 149,247 232,936 84,774 100,845
operations, net
Net income 191,353 287,521 105,932 139,993
Net (income) loss
attributable to
Noncontrolling
Interests:
Operating (10,420 ) (17,481 ) (5,729 ) (8,348 )
Partnership
Preference (7 ) (7 ) (3 ) (3 )
Interests and Units
Partially Owned 74 (1,659 ) 5 (1,391 )
Properties
Net income
attributable to 181,000 268,374 100,205 130,251
controlling
interests
Preferred (7,240 ) (7,259 ) (3,620 ) (3,626 )
distributions
Net income available $ 173,760 $ 261,115 $ 96,585 $ 126,625
to Common Shares
Earnings per share -
basic:
Income from
continuing $ 0.12 $ 0.16 $ 0.06 $ 0.12
operations available
to Common Shares
Net income available $ 0.64 $ 0.97 $ 0.35 $ 0.47
to Common Shares
Weighted average
Common Shares 272,614 269,196 272,901 269,608
outstanding
Earnings per share -
diluted:
Income from
continuing $ 0.12 $ 0.16 $ 0.06 $ 0.12
operations available
to Common Shares
Net income available $ 0.64 $ 0.96 $ 0.35 $ 0.46
to Common Shares
Weighted average
Common Shares 289,152 289,921 289,338 290,445
outstanding
Distributions
declared per Common $ 0.9650 $ 0.9650 $ 0.4825 $ 0.4825
Share outstanding
Equity Residential
Consolidated Statements of Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Six Months Ended June 30, Quarter Ended June 30,
2009 (3) 2008 (3) 2009 (3) 2008 (3)
Net income $ 191,353 $ 287,521 $ 105,932 $ 139,993
Adjustments:
Net (income) loss
attributable to
Noncontrolling
Interests:
Preference Interests (7 ) (7 ) (3 ) (3 )
and Units
Partially Owned 74 (1,659 ) 5 (1,391 )
Properties
Depreciation 298,194 279,253 149,909 139,812
Depreciation - Non-real (3,792 ) (4,081 ) (1,894 ) (2,030 )
estate additions
Depreciation -
Partially Owned and 431 2,040 248 1,006
Unconsolidated
Properties
Net (gain) loss on
sales of unconsolidated (2,759 ) - 6 -
entities
Discontinued
operations:
Depreciation 3,641 14,921 1,438 6,782
Net gain on sales of
discontinued (145,798 ) (214,797 ) (83,927 ) (92,280 )
operations
Net incremental gain
(loss) on sales of 335 (3,090 ) 399 (3,456 )
condominium units
FFO (1) (2) 341,672 360,101 172,113 188,433
Preferred distributions (7,240 ) (7,259 ) (3,620 ) (3,626 )
FFO available to Common
Shares and Units - basic $ 334,432 $ 352,842 $ 168,493 $ 184,807
(1) (2)
FFO available to Common
Shares and Units - $ 334,747 $ 353,183 $ 168,651 $ 184,975
diluted (1) (2)
FFO per share and Unit - $ 1.16 $ 1.23 $ 0.58 $ 0.64
basic
FFO per share and Unit - $ 1.16 $ 1.22 $ 0.58 $ 0.64
diluted
Weighted average Common
Shares and
Units outstanding - 288,851 287,260 288,990 287,440
basic
Weighted average Common
Shares and
Units outstanding - 289,558 290,360 289,743 290,878
diluted
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
(1) Company commences 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.
On January 1, 2009, the Company adopted FSP APB 14-1, which requires
companies to retrospectively expense certain implied costs of the option
value related to convertible debt. As a result, net income, FFO and FFO
(3) available to Common Shares and Units - basic and diluted have all been
reduced by approximately $5.0 million for both the six months ended June
30, 2009 and 2008, and by approximately $2.1 million and $2.5 million for
the quarters ended June 30, 2009 and 2008, respectively.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
June 30, December 31,
2009 2008
ASSETS
Investment in real estate
Land $ 3,669,394 $ 3,671,299
Depreciable property 13,993,241 13,908,594
Projects under development 725,598 855,473
Land held for development 239,377 254,873
Investment in real estate 18,627,610 18,690,239
Accumulated depreciation (3,759,948 ) (3,561,300 )
Investment in real estate, net 14,867,662 15,128,939
Cash and cash equivalents 667,495 890,794
Investments in unconsolidated entities 3,666 5,795
Deposits - restricted 158,181 152,372
Escrow deposits - mortgage 17,541 19,729
Deferred financing costs, net 54,283 53,817
Other assets 154,234 283,664
Total assets $ 15,923,062 $ 16,535,110
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 5,028,736 $ 5,036,930
Notes, net 4,945,244 5,447,012
Lines of credit - -
Accounts payable and accrued expenses 113,915 108,463
Accrued interest payable 107,566 113,846
Other liabilities 258,677 289,562
Security deposits 62,035 64,355
Distributions payable 142,187 141,843
Total liabilities 10,658,360 11,202,011
Commitments and contingencies
Redeemable Noncontrolling Interests - 185,923 264,394
Operating 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 June 30, 2009 and
1,951,475
shares issued and outstanding as of 208,773 208,786
December 31, 2008
Common Shares of beneficial interest, $0.01
par value;
1,000,000,000 shares authorized;
273,975,692 shares issued
and outstanding as of June 30, 2009 and
272,786,760
shares issued and outstanding as of 2,740 2,728
December 31, 2008
Paid in capital 4,373,983 4,273,489
Retained earnings 365,705 456,152
Accumulated other comprehensive loss (22,222 ) (35,799 )
Total shareholders' equity 4,928,979 4,905,356
Noncontrolling Interests:
Operating Partnership 136,251 137,645
Preference Interests and Units 184 184
Partially Owned Properties 13,365 25,520
Total Noncontrolling Interests 149,800 163,349
Total equity 5,078,779 5,068,705
Total liabilities and equity $ 15,923,062 $ 16,535,110
Equity Residential
Portfolio Summary
As of June 30, 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 % 10.1 % $ 2,627
2 DC Northern Virginia 26 8,781 6.1 % 9.0 % 1,631
3 South Florida 39 12,897 9.0 % 8.5 % 1,264
4 Los Angeles 39 7,841 5.5 % 8.2 % 1,729
5 Seattle/Tacoma 47 10,645 7.4 % 7.3 % 1,314
6 Boston 37 6,608 4.6 % 6.7 % 1,980
7 San Francisco Bay 34 6,731 4.7 % 6.6 % 1,670
Area
8 Phoenix 42 12,085 8.4 % 5.4 % 880
9 Denver 25 8,606 6.0 % 5.1 % 998
10 San Diego 14 4,491 3.1 % 4.5 % 1,638
11 Orlando 26 8,042 5.6 % 4.3 % 1,008
12 Atlanta 28 8,730 6.1 % 3.9 % 934
13 Inland Empire, CA 15 4,655 3.2 % 3.8 % 1,333
14 Suburban Maryland 23 6,276 4.4 % 3.6 % 1,217
15 Orange County, CA 10 3,307 2.3 % 3.3 % 1,553
16 New England 24 3,945 2.7 % 2.1 % 1,110
(excluding Boston)
17 Portland, OR 10 3,417 2.4 % 1.8 % 967
18 Jacksonville 12 3,951 2.7 % 1.7 % 871
19 Raleigh/Durham 12 3,058 2.1 % 1.3 % 789
20 Tampa 10 3,158 2.2 % 1.2 % 903
Top 20 Total 495 133,470 92.8 % 98.4 % 1,328
21 Central Valley, CA 7 1,205 0.8 % 0.6 % 1,032
22 Dallas/Ft. Worth 7 1,641 1.1 % 0.5 % 860
23 Other EQR 13 2,939 2.1 % 0.5 % 866
Total 522 139,255 96.8 % 100.0 % 1,311
Condominium 2 42 - - -
Conversion
Military Housing 2 4,559 3.2 % - -
Grand Total 526 143,856 100.0 % 100.0 % $ 1,311
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the month of June 2009.
Equity Residential
Portfolio as of June 30, 2009
Properties Units
Wholly Owned 459 124,627
Properties
Partially Owned
Properties:
Consolidated 25 5,110
Unconsolidated 40 9,560
Military Housing (Fee 2 4,559
Managed)
526 143,856
Portfolio Rollforward Q2 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
3/31/2009 537 146,232
Acquisitions:
Rental Properties - - - -
Dispositions:
Rental Properties:
Consolidated (12 ) (2,668 ) $ (213,817 ) 7.6 %
Condominium Conversion - (22 ) $ (4,523 )
Properties
Completed Developments 1 457
Configuration Changes - (143 )
6/30/2009 526 143,856
Portfolio Rollforward 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
12/31/2008 548 147,244
Acquisitions:
Rental Properties - - - -
Dispositions:
Rental Properties:
Consolidated (23 ) (4,199 ) $ (353,390 ) 7.4 %
Unconsolidated (1) (1 ) (216 ) $ (20,700 ) 8.0 %
Condominium Conversion (1 ) (23 ) $ (4,669 )
Properties
Completed Developments 3 1,199
Configuration Changes - (149 )
6/30/2009 526 143,856
(1) EQR owned a 25% interest in this unconsolidated rental property. Sale price
listed is the gross sale price.
Equity Residential
Second Quarter 2009 vs. Second Quarter 2008
Quarter over Quarter Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 121,256 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q2 2009 $ 457,052 $ 167,886 $ 289,166 $ 1,343 93.7 % 15.0 %
Q2 2008 $ 468,282 $ 168,890 $ 299,392 $ 1,359 94.9 % 15.9 %
Change $ (11,230 ) $ (1,004 ) $ (10,226 ) $ (16 ) (1.2 %) (0.9 %)
Change (2.4 %) (0.6 %) (3.4 %) (1.2 %)
Second Quarter 2009 vs. First Quarter 2009
Sequential Quarter over Quarter Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 125,012 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q2 2009 $ 473,860 $ 175,183 $ 298,677 $ 1,350 93.7 % 15.0 %
Q1 2009 $ 475,924 $ 182,910 $ 293,014 $ 1,356 93.7 % 13.5 %
Change $ (2,064 ) $ (7,727 ) $ 5,663 $ (6 ) 0.0 % 1.5 %
Change (0.4 %) (4.2 %) 1.9 % (0.4 %)
June YTD 2009 vs. June YTD 2008
YTD over YTD Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 120,452 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
YTD 2009 $ 910,279 $ 341,960 $ 568,319 $ 1,346 93.7 % 28.5 %
YTD 2008 $ 922,549 $ 338,147 $ 584,402 $ 1,352 94.5 % 29.7 %
Change $ (12,270 ) $ 3,813 $ (16,083 ) $ (6 ) (0.8 %) (1.2 %)
Change (1.3 %) 1.1 % (2.8 %) (0.4 %)
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
(1) 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
Second Quarter 2009 vs. Second Quarter 2008
Same Store Results by Market
Increase (Decrease) from Prior Year's Quarter
Q2 2009 Q2 2009 Q2 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 % $ 2,680 94.8 % (3.3 %) 5.6 % (7.8 %) (3.0 %) (0.2 %)
Area
2 DC Northern 8,057 8.9 % 1,664 94.2 % (1.4 %) 1.5 % (2.7 %) 0.3 % (1.7 %)
Virginia
3 South Florida 11,761 8.6 % 1,281 93.4 % (2.8 %) (2.3 %) (3.1 %) (2.1 %) (0.6 %)
4 Los Angeles 6,863 7.7 % 1,719 92.9 % (4.1 %) (1.9 %) (5.1 %) (2.0 %) (2.0 %)
5 Seattle/Tacoma 8,215 6.9 % 1,374 92.8 % (3.4 %) 0.0 % (5.3 %) (1.2 %) (2.2 %)
6 Boston 5,714 6.9 % 1,924 95.0 % 0.6 % (3.7 %) 3.2 % 1.8 % (1.2 %)
7 San Francisco 6,200 6.6 % 1,692 93.2 % (1.2 %) (2.1 %) (0.7 %) 1.7 % (2.7 %)
Bay Area
8 Phoenix 10,646 5.5 % 876 92.7 % (6.9 %) (3.3 %) (9.2 %) (5.7 %) (1.3 %)
9 Denver 8,059 5.2 % 997 94.0 % (0.7 %) (3.4 %) 0.6 % 0.5 % (1.2 %)
10 San Diego 4,491 4.9 % 1,646 93.8 % 0.5 % (1.5 %) 1.4 % 0.9 % (0.5 %)
11 Orlando 7,525 4.3 % 998 92.9 % (4.5 %) 0.4 % (7.5 %) (3.6 %) (0.9 %)
12 Atlanta 7,546 4.1 % 974 94.0 % (3.0 %) 0.8 % (5.7 %) (1.7 %) (1.2 %)
13 Inland Empire, 4,355 3.8 % 1,339 94.2 % (2.3 %) (2.7 %) (2.1 %) (1.4 %) (0.9 %)
CA
14 Orange County, 3,175 3.4 % 1,578 93.9 % (2.3 %) (4.0 %) (1.6 %) (1.7 %) (0.6 %)
CA
15 Suburban 3,977 2.9 % 1,176 94.4 % 1.5 % 1.5 % 1.5 % 2.4 % (0.8 %)
Maryland
New England
16 (excluding 3,945 2.3 % 1,104 93.9 % (1.1 %) 1.2 % (3.0 %) 0.0 % (1.1 %)
Boston)
17 Jacksonville 3,711 1.9 % 890 93.4 % (2.8 %) 1.5 % (5.7 %) (2.6 %) (0.2 %)
18 Portland, OR 3,113 1.8 % 989 93.7 % (0.8 %) 1.5 % (2.2 %) 1.0 % (1.7 %)
19 Tampa 2,598 1.3 % 941 93.9 % (3.5 %) 0.9 % (6.6 %) (3.1 %) (0.3 %)
20 Raleigh/Durham 2,666 1.3 % 821 93.9 % (2.1 %) (3.8 %) (0.9 %) (0.5 %) (1.5 %)
Top 20 Markets 118,863 98.6 % 1,350 93.7 % (2.4 %) (0.5 %) (3.4 %) (1.1 %) (1.2 %)
All Other 2,393 1.4 % 1,002 94.2 % (3.4 %) (4.5 %) (2.6 %) (2.1 %) (1.3 %)
Markets
Total 121,256 100.0 % $ 1,343 93.7 % (2.4 %) (0.6 %) (3.4 %) (1.2 %) (1.2 %)
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the period.
Equity Residential
Second Quarter 2009 vs. First Quarter 2009
Sequential Same Store Results by Market
Increase (Decrease) from Prior Quarter
Q2 2009 Q2 2009 Q2 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 % $ 2,680 94.8 % (0.4 %) (2.6 %) 0.9 % (1.5 %) 1.0 %
Area
2 DC Northern 8,781 9.2 % 1,642 94.3 % (0.1 %) (5.0 %) 2.4 % 0.2 % (0.3 %)
Virginia
3 South Florida 12,465 8.8 % 1,282 93.4 % (0.3 %) (5.3 %) 3.5 % (0.5 %) 0.2 %
4 Los Angeles 7,442 8.0 % 1,735 92.9 % (2.3 %) (2.3 %) (2.3 %) (1.4 %) (0.8 %)
5 Boston 6,024 7.2 % 2,001 95.0 % 1.9 % (10.1 %) 10.7 % 0.9 % 0.9 %
6 Seattle/Tacoma 8,215 6.7 % 1,374 92.8 % (0.2 %) (3.0 %) 1.4 % 0.0 % (0.2 %)
7 San Francisco 6,200 6.4 % 1,692 93.2 % (1.7 %) (2.1 %) (1.4 %) (1.4 %) (0.3 %)
Bay Area
8 Phoenix 10,646 5.3 % 876 92.7 % (2.7 %) (5.0 %) (1.2 %) (1.5 %) (1.2 %)
9 Denver 8,059 5.1 % 997 94.0 % (0.4 %) 0.8 % (1.0 %) (0.9 %) 0.4 %
10 San Diego 4,491 4.7 % 1,646 93.8 % 0.3 % (5.5 %) 3.3 % (0.2 %) 0.5 %
11 Orlando 7,690 4.3 % 1,002 92.8 % (0.5 %) (1.9 %) 0.6 % (0.6 %) 0.1 %
12 Atlanta 7,546 3.9 % 974 94.0 % (0.6 %) (2.9 %) 1.2 % (1.1 %) 0.4 %
13 Suburban 5,251 3.8 % 1,210 94.5 % 3.4 % (3.7 %) 8.1 % 1.8 % 1.5 %
Maryland
14 Inland Empire, 4,355 3.7 % 1,339 94.2 % (1.1 %) (5.2 %) 1.1 % (0.8 %) (0.3 %)
CA
15 Orange County, 3,175 3.3 % 1,578 93.9 % (1.3 %) (3.0 %) (0.5 %) (1.1 %) (0.2 %)
CA
New England
16 (excluding 3,945 2.2 % 1,104 93.9 % 1.2 % (11.8 %) 16.0 % 1.3 % (0.1 %)
Boston)
17 Jacksonville 3,711 1.8 % 890 93.4 % 0.8 % (1.8 %) 2.9 % 0.6 % 0.2 %
18 Portland, OR 3,113 1.8 % 989 93.7 % (0.8 %) (1.4 %) (0.5 %) 0.1 % (0.9 %)
19 Tampa 2,598 1.3 % 941 93.9 % (1.5 %) (4.8 %) 1.2 % (1.0 %) (0.4 %)
20 Raleigh/Durham 2,666 1.2 % 821 93.9 % (2.0 %) (2.6 %) (1.6 %) (0.7 %) (1.3 %)
Top 20 Markets 122,619 98.6 % 1,357 93.7 % (0.4 %) (4.2 %) 1.9 % (0.4 %) 0.0 %
All Other 2,393 1.4 % 1,002 94.2 % (0.7 %) (4.5 %) 1.8 % (1.4 %) 0.7 %
Markets
Total 125,012 100.0 % $ 1,350 93.7 % (0.4 %) (4.2 %) 1.9 % (0.4 %) 0.0 %
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the period.
Equity Residential
June YTD 2009 vs. June YTD 2008
Same Store Results by Market
Increase (Decrease) from Prior Year
June June June YTD
YTD 09 YTD 09 09
% 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 10.4 % $ 2,700 94.3 % (1.4 %) 3.7 % (4.3 %) (1.6 %) 0.2 %
Area
2 South Florida 11,761 8.6 % 1,284 93.4 % (2.1 %) 1.3 % (4.5 %) (1.7 %) (0.4 %)
3 DC Northern 7,661 8.5 % 1,655 94.4 % (0.3 %) 2.1 % (1.4 %) 0.8 % (1.1 %)
Virginia
4 Los Angeles 6,863 7.8 % 1,732 93.3 % (2.1 %) 0.6 % (3.3 %) (1.1 %) (0.9 %)
5 Seattle/Tacoma 8,215 7.0 % 1,374 92.9 % (1.4 %) 2.1 % (3.3 %) 0.3 % (1.6 %)
6 San Francisco 6,200 6.8 % 1,704 93.3 % 0.6 % 0.2 % 0.8 % 3.2 % (2.4 %)
Bay Area
7 Boston 5,714 6.7 % 1,918 94.7 % 1.1 % (0.3 %) 1.9 % 2.3 % (1.2 %)
8 Phoenix 10,238 5.3 % 879 93.3 % (6.7 %) 0.4 % (10.9 %) (5.4 %) (1.4 %)
9 Denver 8,059 5.3 % 1,002 93.8 % 0.2 % (1.5 %) 1.1 % 1.6 % (1.3 %)
10 San Diego 4,491 4.9 % 1,648 93.6 % 0.8 % 0.1 % 1.1 % 1.4 % (0.5 %)
11 Orlando 7,525 4.4 % 1,001 92.8 % (4.5 %) (0.5 %) (7.0 %) (3.6 %) (0.8 %)
12 Atlanta 7,546 4.1 % 979 93.8 % (1.7 %) 2.3 % (4.6 %) (0.7 %) (1.0 %)
13 Inland Empire, 4,355 3.9 % 1,344 94.3 % (1.2 %) (0.1 %) (1.8 %) (1.6 %) 0.4 %
CA
14 Orange County, 3,175 3.5 % 1,587 94.0 % (1.1 %) (1.3 %) (1.1 %) (0.8 %) (0.3 %)
CA
15 Suburban 3,977 2.8 % 1,165 94.1 % 2.2 % 2.7 % 2.0 % 2.5 % (0.2 %)
Maryland
New England
16 (excluding 3,945 2.1 % 1,097 94.0 % (1.0 %) 3.8 % (5.3 %) (0.5 %) (0.5 %)
Boston)
17 Portland, OR 3,113 1.9 % 989 94.2 % 0.3 % 1.4 % (0.3 %) 1.4 % (1.0 %)
18 Jacksonville 3,711 1.9 % 888 93.3 % (3.8 %) 1.9 % (7.7 %) (3.6 %) (0.2 %)
19 Tampa 2,598 1.3 % 946 94.2 % (2.9 %) 1.8 % (6.4 %) (3.0 %) 0.0 %
20 Raleigh/Durham 2,666 1.3 % 824 94.6 % (1.1 %) (0.7 %) (1.5 %) (0.2 %) (0.9 %)
Top 20 Markets 118,059 98.5 % 1,353 93.7 % (1.3 %) 1.2 % (2.8 %) (0.4 %) (0.9 %)
All Other 2,393 1.5 % 1,010 93.8 % (0.6 %) (1.9 %) 0.2 % (0.4 %) (0.2 %)
Markets
Total 120,452 100.0 % $ 1,346 93.7 % (1.3 %) 1.1 % (2.8 %) (0.4 %) (0.8 %)
(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 June 30, 2009
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts (1) % of Total Rates (1) (years)
Secured $ 5,028,736 50.4 % 4.86 % 9.0
Unsecured 4,945,244 49.6 % 5.34 % 5.2
Total $ 9,973,980 100.0 % 5.11 % 7.1
Fixed Rate Debt:
Secured - Conventional $ 4,033,465 40.4 % 5.96 % 7.7
Unsecured - 4,409,644 44.2 % 5.92 % 5.5
Public/Private
Fixed Rate 8,443,109 84.6 % 5.93 % 6.6
Debt
Floating Rate
Debt:
Secured - Conventional 359,597 3.6 % 2.07 % 3.5
Secured - Tax Exempt 635,674 6.4 % 0.73 % 21.1
Unsecured - 500,000 5.0 % 1.36 % 1.3
Public/Private
Unsecured - Tax Exempt 35,600 0.4 % 0.44 % 19.5
Unsecured - Revolving Credit - - - 2.7
Facility
Floating Rate Debt 1,530,871 15.4 % 1.32 % 10.1
Total $ 9,973,980 100.0 % 5.11 % 7.1
(1) Net of the effect of any derivative instruments. Weighted average rates are
for the six months ended June 30, 2009.
Note: The Company capitalized interest of approximately $21.0 million and
$29.5 million during the six months ended June 30, 2009 and 2008,
respectively. The Company capitalized interest of approximately $10.4
million and $14.8 million during the quarters ended June 30, 2009 and 2008,
respectively.
Debt Maturity Schedule as of June 30, 2009
(Amounts in thousands)
Weighted Weighted
Average Average
Rates
Fixed Floating on Fixed Rates on
Year Rate (1) Rate (1) Total % of Rate Total
Total Debt (1) Debt (1)
2009 $ 6,455 $ 86,725 $ 93,180 0.9 % 7.58 % 2.64 %
2010 220,603 672,235 (2) 892,838 8.9 % 7.54 % 2.93 %
2011 1,258,011 (3) 87,812 1,345,823 13.5 % 5.58 % 5.33 %
2012 955,972 3,442 959,414 9.6 % 5.89 % 5.88 %
2013 565,881 - 565,881 5.7 % 5.93 % 5.93 %
2014 516,964 - 516,964 5.2 % 5.28 % 5.28 %
2015 355,107 - 355,107 3.6 % 6.41 % 6.41 %
2016 1,088,710 - 1,088,710 10.9 % 5.32 % 5.32 %
2017 1,345,998 456 1,346,454 13.5 % 5.87 % 5.87 %
2018 335,501 44,677 380,178 3.8 % 5.96 % 5.60 %
2019 + 1,793,907 635,524 2,429,431 24.4 % 5.86 % 5.04 %
Total $ 8,443,109 $ 1,530,871 $ 9,973,980 100.0 % 5.80 % 5.22 %
(1) Net of the effect of any derivative instruments. Weighted average rates are
as of June 30, 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 June 30, 2009
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
Fixed
Rate
Notes:
6.950 % 03/02/11 (1) $ 114,806 $ 1,688 $ 116,494
6.625 % 03/15/12 400,000 (795 ) 399,205
5.500 % 10/01/12 350,000 (1,122 ) 348,878
5.200 % 04/01/13 400,000 (444 ) 399,556
5.250 % 09/15/14 500,000 (320 ) 499,680
6.584 % 04/13/15 300,000 (645 ) 299,355
5.125 % 03/15/16 500,000 (359 ) 499,641
5.375 % 08/01/16 400,000 (1,314 ) 398,686
5.750 % 06/15/17 650,000 (4,069 ) 645,931
7.125 % 10/15/17 150,000 (538 ) 149,462
7.570 % 08/15/26 140,000 - 140,000
3.850 % 08/15/26 (2) 531,092 (18,336 ) 512,756
4,435,898 (26,254 ) 4,409,644
Floating Rate Tax
Exempt Notes:
7-Day SIFMA 12/15/28 (3) 35,600 - 35,600
Floating
Rate
Notes:
Term Loan LIBOR+0.50% 10/05/10 (3)(4) 500,000 - 500,000
Facility
Revolving
Credit LIBOR+0.50% 02/28/12 (5) - - -
Facility:
Total
Unsecured $ 4,971,498 $ (26,254 ) $ 4,945,244
Debt
Note: SIFMA stands for the Securities Industry and Financial Markets
Association and is the tax-exempt index equivalent of LIBOR.
(1) 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 six
months ended June 30, 2009, the Company repurchased $17.5 million of these
(2) notes at a discount to par of approximately 11.6% and recognized a 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.
(3) Notes are private. All other unsecured debt is public.
Represents the Company's $500.0 million term loan facility, which matures
(4) on October 5, 2010, subject to two one-year extension options exercisable
by the Company.
As of June 30, 2009, there was no amount outstanding and approximately
(5) $1.35 billion available on the Company's unsecured revolving credit
facility.
Equity Residential
Selected Unsecured Public Debt Covenants
June 30, March 31,
2009 2009
Total Debt to Adjusted Total Assets (not to exceed 60%) 50.8 % 51.2 %
Secured Debt to Adjusted Total Assets (not to exceed 40%) 25.6 % 25.1 %
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.30 2.34
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 238.2 % 231.1 %
These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP")
outstanding unsecured public debt. Equity Residential is the general partner of
ERPOP.
Equity Residential
Capital Structure as of June 30, 2009
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 5,028,736 50.4 %
Unsecured Debt 4,945,244 49.6 %
Total 9,973,980 100.0 % 60.0 %
Debt
Common Shares (includes 273,975,692 94.4 %
Restricted Shares)
Units 16,205,905 5.6 %
Total Shares and 290,181,597 100.0 %
Units
Common Share Equivalents (see 405,555
below)
Total outstanding at 290,587,152
quarter-end
Common Share Price at June 30, $ 22.23
2009
6,459,752 97.0 %
Perpetual Preferred Equity 200,000 3.0 %
(see below)
Total 6,659,752 100.0 % 40.0 %
Equity
Total Market Capitalization $ 16,633,732 100.0 %
Convertible Preferred Equity as of June 30, 2009
(Amounts in thousands except for share/unit and per share/unit amounts)
Annual Annual Weighted Common
RedemptionOutstanding Liquidation Dividend Dividend Average Conversion Share
Series Date Shares/Units Value Per Amount Rate Ratio Equivalents
Share/Unit
Preferred
Shares:
7.00% Series 11/1/98 328,466 $ 8,212 $ 1.75 $ 575 1.1128 365,517
E
7.00% Series 6/30/98 22,459 561 1.75 39 1.4480 32,521
H
Junior Preference
Units:
8.00% Series 7/29/09 7,367 184 2.00 15 1.020408 7,517
B
Total Convertible 358,292 $ 8,957 $ 629 7.02 % 405,555
Preferred Equity
Perpetual Preferred Equity as of June 30, 2009
(Amounts in thousands except for share and per share amounts)
Annual Annual Weighted
RedemptionOutstanding Liquidation Dividend Dividend Average
Series Date Shares Value Per Share Amount Rate
Preferred
Shares:
8.29% Series 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145
K
6.48% Series 6/19/08 600,000 150,000 16.20 9,720
N
Total Perpetual 1,600,000 $ 200,000 $ 13,865 6.93 %
Preferred Equity
Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
YTD Q209 YTD Q208 Q209 Q208
Weighted Average Amounts
Outstanding for Net Income
Purposes:
Common Shares 272,613,907 269,196,050 272,901,078 269,607,843
- basic
Shares issuable from
assumed conversion/vesting
of:
- OP 16,237,055 18,063,520 16,089,264 17,832,334
Units
- long-term
compensation award 300,939 2,661,461 347,395 3,004,340
shares/units
Total Common Shares and 289,151,901 289,921,031 289,337,737 290,444,517
Units - diluted
Weighted Average Amounts
Outstanding for FFO
Purposes:
Common Shares 272,613,907 269,196,050 272,901,078 269,607,843
- basic
OP Units - 16,237,055 18,063,520 16,089,264 17,832,334
basic
Total Common Shares and OP 288,850,962 287,259,570 288,990,342 287,440,177
Units - basic
Shares issuable from
assumed conversion/vesting
of:
- convertible
preferred 405,791 438,825 405,555 433,179
shares/units
- long-term
compensation award 300,939 2,661,461 347,395 3,004,340
shares/units
Total Common Shares and 289,557,692 290,359,856 289,743,292 290,877,696
Units - diluted
Period Ending
Amounts
Outstanding:
Common Shares (includes 273,975,692
Restricted Shares)
Units 16,205,905
Total Shares 290,181,597
and Units
Equity Residential
Partially Owned Entities as of June 30, 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
(4) Stabilized
Total projects (1) - 2 2 21 25 40
Total units (1) - 735 432 3,943 5,110 9,560
Operating information
for the six months
ended 6/30/09 (at
100%):
Operating revenue $ 309 $ 2,891 $ 3,564 $ 28,639 $ 35,403 $ 48,107
Operating expenses 635 2,171 1,473 9,670 13,949 21,716
Net operating (loss) (326 ) 720 2,091 18,969 21,454 26,391
income
Depreciation 185 1,179 1,780 7,445 10,589 10,105
General and 50 411 5 7 473 190
administrative/other
Operating (loss) (561 ) (870 ) 306 11,517 10,392 16,096
income
Interest and other 19 - - 71 90 98
income
Other expenses 2 - - - 2 -
Interest:
Expense incurred, (51 ) (1,887 ) (1,074 ) (10,070 ) (13,082 ) (25,865 )
net
Amortization of
deferred financing (40 ) (76 ) (26 ) (83 ) (225 ) (427 )
costs
Income and other tax (19 ) - - (34 ) (53 ) (132 )
(expense) benefit
Net (loss) income $ (650 ) $ (2,833 ) $ (794 ) $ 1,401 $ (2,876 ) $ (10,230 )
Debt - Secured (2):
EQR Ownership (3) $ 332,765 $ 161,981 $ 61,260 $ 218,087 $ 774,093 $ 109,958
Noncontrolling - - - 83,957 83,957 329,874
Ownership
Total (at 100%) $ 332,765 $ 161,981 $ 61,260 $ 302,044 $ 858,050 $ 439,832
Project and unit counts exclude all uncompleted development projects until
(1) those projects are substantially completed. See the Consolidated
Development Projects schedule for more detail.
All debt is non-recourse to the Company with the exception of $42.2 million
(2) in mortgage debt on various development projects. In addition, $66.0
million in mortgage debt on one development project will become recourse to
the Company upon completion of that project.
(3) Represents the Company's current economic ownership interest.
Projects included here are substantially complete. However, they may still
(4) require additional exterior and interior work for all units to be available
for leasing.
Equity Residential
Consolidated Development Projects as of June 30, 2009
(Amounts in thousands except for project and unit amounts)
Total
Total Book
No. Total Book Value Total Percentage Percentage Percentage Estimated Estimated
of Capital Value Not Completion Stabilization
Placed
in
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 $ 244,591 244,591 $ - 93 % 26 % 15 % Q4 2009 Q1 2011
Hudson)
Reserve at Mill Creek,
Town Center WA 100 24,464 15,090 15,090 - 64 % - - Q1 2010 Q3 2010
II
Redmond Way Redmond, WA 250 84,382 37,097 37,097 - 35 % - - Q1 2011 Q1 2012
Projects
Under 830 378,804 296,778 296,778 -
Development -
Wholly Owned
Projects
Under
Development -
Partially
Owned:
Montclair Montclair, 163 48,730 40,471 40,471 23,070 89 % - - Q3 2009 Q1 2010
Metro NJ
Red Road South Miami, 404 128,816 119,329 119,329 63,662 96 % 54 % 12 % Q1 2010 Q3 2011
Commons FL
111 Lawrence Brooklyn, NY 492 283,968 169,202 169,202 48,272 66 % - - Q2 2010 Q3 2011
Street
Westgate Pasadena, CA 480 170,558 99,818 99,818 163,160 (2 ) 48 % - - Q2 2011 Q2 2012
Projects
Under
Development - 1,539 632,072 428,820 428,820 298,164
Partially
Owned
Projects
Under 2,369 1,010,876 725,598 725,598 298,164 (3 )
Development
Land Held for N/A - 239,377 239,377 34,601
Development
Land/Projects
Held for 2,369 1,010,876 964,975 964,975 332,765
and/or Under
Development
Completed Not
Stabilized -
Wholly Owned
(4):
Crowntree Orlando, FL 352 56,628 56,628 - - 98 % 93 % Completed Q3 2009
Lakes
Mosaic at Hyattsville, 260 60,383 59,560 - 41,499 70 % 60 % Completed Q1 2010
Metro MD
Third Square
(a.k.a. 303 Cambridge, 482 255,625 254,587 - 172,235 67 % 55 % Completed Q2 2010
Third Street) MA
(5)
Reunion at Redmond, WA 321 53,175 53,150 - - 38 % 36 % Completed Q3 2010
Redmond Ridge
Projects
Completed Not 1,415 425,811 423,925 - 213,734
Stabilized -
Wholly Owned
Completed Not
Stabilized -
Partially
Owned (4):
1401 South
State (a.k.a. Chicago, IL 278 69,952 68,438 - 52,124 87 % 74 % Completed Q4 2009
City Lofts)
Veridian
(a.k.a. Silver 457 148,705 147,748 - 109,857 76 % 54 % Completed Q3 2010
Silver Spring, MD
Spring)
Projects
Completed Not
Stabilized - 735 218,657 216,186 - 161,981
Partially
Owned
Projects
Completed Not 2,150 644,468 640,111 - 375,715
Stabilized
Completed and
Stabilized
During the
Quarter -
Wholly Owned:
Highland Glen Westwood, MA 102 19,888 19,868 - - 99 % 97 % Completed Stabilized
II
West End
Apartments
(a.k.a. Boston, MA 310 163,489 163,432 - - 98 % 96 % Completed Stabilized
Emerson/CRP
II)
Projects
Completed and
Stabilized 412 183,377 183,300 - -
During the
Quarter -
Wholly Owned
Projects
Completed and
Stabilized 412 183,377 183,300 - -
During the
Quarter
Total 4,931 $ $ $ $
Projects 1,838,721 1,788,386 964,975 708,480
NOI
CONTRIBUTION Total Q2 2009
FROM Capital NOI
DEVELOPMENT Cost (1)
PROJECTS
Projects $ $
Under 1,010,876 (290 )
Development
Completed Not 644,468 1,521
Stabilized
Completed and
Stabilized 183,377 1,881
During the
Quarter
Total
Development $ $
NOI 1,838,721 3,112
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 $72.4
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 June 30, 2009.
(3) Of the approximately $285.3 million of capital cost remaining to be funded
at 6/30/09 for projects under development, $203.3 million will be funded by
fully committed third party bank loans and the remaining $82.0 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
the full 482 units included in phases I & II. Phase I is 94% leased and 83%
occupied. Phase II is 26% leased and 11% occupied. The partner's interest was
acquired during the second quarter of 2009 for $4.8 million and as a result the
project is now wholly owned.
Equity Residential
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Six Months Ended June 30, 2009
(Amounts in thousands except for unit and per unit amounts)
Maintenance Expenses Capitalized Improvements to Real Estate Total
Expenditures
Total Expense Avg. Payroll Avg. Avg. Replacements Avg. Building Avg. Avg. Grand Avg.
Units (2) Per (3) Per Total Per (4) Per Improvements Per Total Per Total Per
(1) Unit Unit Unit Unit (5) Unit Unit Unit
Established $ $ $ $ $ $ $ $ $ $ $ $
Properties 109,382 42,957 393 38,490 352 81,447 745 $ 16,543 151 $ 17,513 160 34,056 311 (9 ) 115,503 1,056
(6)
New
Acquisition 14,348 5,608 398 4,843 344 10,451 742 1,578 112 3,806 271 5,384 383 15,835 1,125
Properties
(7)
Other (8) 6,007 4,384 3,587 7,971 16,853 2,827 19,680 27,651
Total 129,737 $ $ $ $ 34,974 $ 24,146 $ $
52,949 46,920 99,869 59,120 158,989
Total Units - Excludes 9,560 unconsolidated units and 4,559 military
(1) 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.
Maintenance Expenses - Includes general maintenance costs, unit turnover
(2) 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.
Replacements - Includes new expenditures inside the units such as
(4) appliances, mechanical equipment, fixtures and flooring, including
carpeting.
Building Improvements - Includes roof replacement, paving, amenities and
(5) 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.
New Acquisition Properties - Wholly Owned Properties acquired during 2007,
(7) 2008 and 2009. Per unit amounts are based on a weighted average of 14,074
units.
Other - Primarily includes properties either partially owned or sold during
(8) the period, commercial space and corporate housing. Also includes $15.4
million included in replacements spent on various assets related to major
renovations and repositioning of these assets.
For 2009, the Company estimates an annual stabilized run rate of
(9) approximately $925 per unit of capital expenditures for its established
properties.
Equity Residential
Discontinued Operations
(Amounts in thousands)
Six Months Ended Quarter Ended
June 30, June 30,
2009 2008 2009 2008
REVENUES
Rental income $ 17,832 $ 60,482 $ 6,408 $ 27,599
Total revenues 17,832 60,482 6,408 27,599
EXPENSES (1)
Property and maintenance 8,036 19,312 3,244 8,544
Real estate taxes and 2,284 7,936 767 3,801
insurance
Property management - (62 ) - 3
Depreciation 3,641 14,921 1,438 6,782
General and administrative 25 17 20 14
Total expenses 13,986 42,124 5,469 19,144
Discontinued operating income 3,846 18,358 939 8,455
Interest and other income 10 140 3 148
Interest (2):
Expense incurred, net (310 ) (1,014 ) (77 ) (496 )
Amortization of deferred (32 ) (2 ) - (1 )
financing costs
Income and other tax (65 ) 657 (18 ) 459
(expense) benefit
Discontinued operations 3,449 18,139 847 8,565
Net gain on sales of 145,798 214,797 83,927 92,280
discontinued operations
Discontinued operations, net $ 149,247 $ 232,936 $ 84,774 $ 100,845
(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
FFO Midpoint Reconciliations and Non-Comparable Items
(Amounts in thousands except per share data)
(All per share data is diluted)
FFO Midpoint Reconciliations
FFO Reconciliations
Guidance Midpoint Q2
2009 to Actual Q2
2009
Amounts Per Share
Guidance midpoint Q2 2009 FFO - $ $ 0.548
Diluted (1) (2) 158,912
Property NOI (including reserve 10,780 0.037
adjustments)
Interest and other income 4,014 0.014
Impairment (11,124 ) (0.038 )
Interest expense 4,003 0.014
Other 2,066 0.007
Actual Q2 2009 FFO - Diluted (1) (2) $ $ 0.582
168,651
Non-Comparable Items (3)
Six Months Ended June 30, Quarter Ended June 30,
2009 2008 Variance 2009 2008 Variance
Impairment $ ) $ - $ ) $ ) $ - $ )
(11,124 (11,124 (11,124 (11,124
Debt
extinguishment
gains (interest 2,020 - 2,020 - - -
and other
income)
Gain on sale of
investment
securities 4,943 - 4,943 4,943 - 4,943
(interest and
other income)
FSP APB 14-1
convertible debt
discount
(includes
extinguishment (5,025 ) (5,036 ) 11 (2,141 ) (2,518 ) 377
write-offs)
Debt
extinguishment
costs
(interest):
Prepayment (35 ) - (35 ) - - -
penalties
Write-off of
unamortized (1,435 ) (6 ) (1,429 ) (780 ) - (780 )
deferred
financing costs
Write-off of
unamortized
premiums/ (758 ) - (758 ) 47 - 47
(discounts)/
(OCI)
EQR 25% share of
unconsolidated
defeasance costs
((loss) from
investments in (1,775 ) - (1,775 ) (1,775 ) - (1,775 )
unconsolidated
entities)
Net incremental
gain (loss) on
sales of 335 (3,090 ) 3,425 399 (3,456 ) 3,855
condominium
units
Other (1,842 ) (465 ) (1,377 ) (828 ) 627 (1,455 )
Net $ $ $ $ $ $
non-comparable (14,696 ) (8,597 ) (6,099 ) (11,259 ) (5,347 ) (5,912 )
items (3)
Note: See page 25 for definitions, footnotes and reconciliations of EPS to FFO.
Equity Residential
Earnings Guidance and Assumptions
The earnings guidance/projections provided below are based on current
expectations and are forward-looking.
2009 Earnings Guidance (per share diluted)
Q3 2009 2009
Expected FFO (1) (2) $0.49 to $0.53 $2.10 to $2.20
2009 Same Store Assumptions
Physical occupancy 93.5%
Revenue change (3.50%) to (3.00%)
Expense change 1.25% to 1.75%
NOI change (6.50%) to (5.50%)
(Note: 25 basis point change in NOI percentage = $0.01 per share change in
EPS/FFO)
2009 Transaction Assumptions
Rental acquisitions $150.0 million
Rental dispositions $800.0 million
Capitalization rate spread 125 basis points
2009 Debt Assumptions
Weighted average debt $9.7 billion to $10.1 billion
outstanding
Weighted average interest rate
(reduced for capitalized 4.90%
interest and including
prepayment penalties)
Interest expense $475.0 million to $495.0
million
Unrestricted cash at 12/31/09 $545.0 million
Note:Debt guidance assumes no additional 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 million
expense
Interest and other income $13.0 million to $15.0 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 Shares 289.7 million
and Units - Diluted
Equity Residential
Additional Reconciliations
(Amounts in thousands except per share data)
(All per share data is diluted)
The earnings guidance/projections provided below are based on current
expectations and are forward-looking.
Reconciliations of EPS to FFO for Pages 23 and 24
Expected Expected
Expected Q2 2009 Q3 2009 2009
Amounts Per Share Per Share Per Share
Expected Earnings - $ 43,719 $ 0.150 $0.48 to $0.52 $1.22 to $1.32
Diluted (4)
Add: Expected 148,381 0.513 0.51 2.07
depreciation expense
Less: Expected net gain (33,188 ) (0.115 ) (0.50 ) (1.19 )
on sales (4)
Expected FFO - Diluted $ 158,912 $ 0.548 $0.49 to $0.53 $2.10 to $2.20
(1) (2)
Definitions and Footnotes for Pages 23 and 24
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
(1) Company commences 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.
Same Store NOI Reconciliation for Page 10
The following tables present reconciliations of operating income per the
consolidated
statements of operations to NOI for the June YTD 2009 and Second Quarter 2009
Same Store Properties:
Six Months Ended June 30, Quarter Ended June 30,
2009 2008 2009 2008
Operating income $ 277,409 $ 295,128 $ 135,962 $ 158,356
Adjustments:
Non-same store operating (37,713 ) (13,331 ) (17,600 ) (9,825 )
results
Fee and asset management (5,275 ) (5,010 ) (2,412 ) (2,716 )
revenue
Fee and asset management 3,985 4,171 1,982 1,991
expense
Depreciation 298,194 279,253 149,909 139,812
General and administrative 20,595 24,191 10,201 11,774
Impairment 11,124 - 11,124 -
Same store NOI $ 568,319 $ 584,402 $ 289,166 $ 299,392
Source: Equity Residential
Contact: Equity Residential
Marty McKenna, 312-928-1901
mmckenna@eqrworld.com