CHICAGO--(BUSINESS WIRE)--
Equity Residential (NYSE: EQR) today reported results for the quarter
and nine months ended September 30, 2009. All per share results are
reported on a fully-diluted basis.
"We have spent the year focused on the basics - keeping our customers
satisfied and maintaining the quality of our assets while controlling
our expenses. As a result of these efforts, our third quarter
performance was better than anticipated and we expect to deliver same
store operating results for the year that are very much in line with our
expectations at the beginning of the year," said David J. Neithercut,
Equity Residential's President and CEO. "Many thanks go to our
colleagues across the enterprise for delivering these results despite
very tough conditions."
Third Quarter 2009
For the third quarter of 2009, the company reported earnings per share
of $0.48 compared to earnings of $0.63 per share in the third quarter of
2008. The difference is primarily due to lower gains from property sales
in 2009 and lower property net operating income (NOI).
FFO (Funds from Operations) for the quarter ended September 30, 2009 was
$0.53 per share compared to $0.64 per share in the same period of 2008.
The difference is primarily due to:
-- the negative impact of approximately $0.06 per share from lower NOI from
the company's same store portfolio; and
-- the negative impact of approximately $0.05 per share from dilution from
the company's 2008 and 2009 transaction activity.
Nine Months Ended September 30, 2009
For the nine months ended September 30, 2009, the company reported
earnings of $1.12 per share compared to $1.59 per share in the same
period of 2008.
FFO for the nine months ended September 30, 2009 was $1.69 per share
compared to $1.86 per share in the same period of 2008.
Same Store Results
On a same store third quarter to third quarter comparison, which
includes 119,121 apartment units, revenues decreased 3.9%, expenses
decreased 0.6% and NOI decreased 5.8%. The revenue decrease was due to a
3.2% decrease in average rental rates and a 0.7% decrease in occupancy
to 93.7%.
On a same store nine-month to nine-month comparison, which includes
115,832 apartment units, revenues decreased 2.3%, expenses increased
0.5% and NOI decreased 3.9%.
Acquisitions/Dispositions
During the third quarter of 2009, the company sold 24 consolidated
properties, consisting of 4,620 apartment units, for an aggregate sale
price of $381.1 million at an average capitalization (cap) rate of 7.7%
generating an unlevered internal rate of return (IRR) of 9.5%.
During the first nine months of 2009, the company sold 47 consolidated
properties, consisting of 8,819 apartment units, for an aggregate sale
price of $734.5 million at an average cap rate of 7.5% generating an
unlevered IRR of 9.8%.
"We continue to execute our portfolio transformation strategy, achieving
good prices for non-core assets that we are selling in secondary markets
and, as a result, have increased our dispositions guidance for the year
to $900 million. The proceeds from these asset sales, combined with
$1.36 billion of availability under our revolving credit facility and
our access to the capital markets, strongly position us to take
advantage of any future opportunities to add high quality properties to
our portfolio," said Mr. Neithercut.
At-The-Market Share Offering Program
On September 29, 2009, the company announced the creation of an
At-The-Market (ATM) share offering program which would allow the company
to sell up to 17 million common shares from time to time. To date, the
company has not issued any shares through this program.
Fourth Quarter 2009 Guidance
The company has established an FFO guidance range of $0.49 to $0.53 per
share for the fourth quarter of 2009. The difference between the
company's actual third quarter FFO of $0.53 per share and the midpoint
of the range for the fourth quarter is primarily due to lower total
property NOI expected in the fourth quarter of 2009 as compared to the
third quarter of 2009.
Full Year 2009 Guidance
The company has revised its guidance for its full year 2009 same store
operating performance, funds from operations and transaction activities
as well as other items listed on page 25 of this release. The changes to
the full year same store and FFO guidance are listed below:
Previous Revised
Same store:
Revenue change (3.5%) to (3.0%) (3.0%)
Expense change 1.25% to 1.75% 0.5%
NOI change (6.5%) to (5.5%) (5.0%)
FFO per share $2.10 to $2.20 $2.18 to $2.22
The difference between the midpoint of the range of the company's
previous guidance and the midpoint of the revised range is primarily due
to higher than previously expected property NOI.
Fourth Quarter 2009 Conference Call
Equity Residential expects to announce fourth quarter 2009 results on
Wednesday, February 3, 2010 and host a conference call to discuss those
results at 10:00 a.m. CT on Thursday, February 4, 2010.
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 501
properties located in 23 states and the District of Columbia, consisting
of 138,887 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, October
29, 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)
Nine Months Ended September 30, Quarter Ended September 30,
2009 2008 2009 2008
REVENUES
Rental income $ 1,471,383 $ 1,485,814 $ 490,104 $ 508,619
Fee and asset 7,928 7,397 2,653 2,387
management
Total revenues 1,479,311 1,493,211 492,757 511,006
EXPENSES
Property and 374,067 389,042 125,904 134,658
maintenance
Real estate taxes 161,777 153,317 55,743 52,039
and insurance
Property 56,457 59,587 18,725 18,920
management
Fee and asset 5,916 6,154 1,931 1,983
management
Depreciation 438,726 417,662 147,477 145,382
General and 30,476 34,040 9,881 9,849
administrative
Impairment 11,124 - - -
Total expenses 1,078,543 1,059,802 359,661 362,831
Operating income 400,768 433,409 133,096 148,175
Interest and other 15,854 11,038 3,215 2,871
income
Other expenses (2,228 ) (2,886 ) (1,922 ) (2,106 )
Interest:
Expense incurred, (361,085 ) (361,125 ) (121,520 ) (122,345 )
net
Amortization of
deferred financing (9,614 ) (6,748 ) (3,394 ) (2,410 )
costs
Income before
income and other
taxes, (loss)
income
from investments
in unconsolidated
entities, net
gain on sales of
unconsolidated
entities and land
parcels and
discontinued 43,695 73,688 9,475 24,185
operations
Income and other
tax (expense) (2,846 ) (5,937 ) (459 ) (1,317 )
benefit
(Loss) income from
investments in (2,372 ) 60 (151 ) 250
unconsolidated
entities
Net gain on sales
of unconsolidated 6,718 - 3,959 -
entities
Net gain on sales - 2,976 - 2,976
of land parcels
Income from
continuing 45,195 70,787 12,824 26,094
operations
Discontinued 289,523 403,859 130,541 161,031
operations, net
Net income 334,718 474,646 143,365 187,125
Net (income) loss
attributable to
Noncontrolling
Interests:
Operating (18,119 ) (28,622 ) (7,699 ) (11,141 )
Partnership
Preference
Interests and (9 ) (11 ) (2 ) (4 )
Units
Partially Owned 391 (1,765 ) 317 (106 )
Properties
Net income
attributable to 316,981 444,248 135,981 175,874
controlling
interests
Preferred (10,859 ) (10,887 ) (3,619 ) (3,628 )
distributions
Net income
available to $ 306,122 $ 433,361 $ 132,362 $ 172,246
Common Shares
Earnings per share
- basic:
Income from
continuing
operations $ 0.12 $ 0.20 $ 0.03 $ 0.08
available to
Common Shares
Net income
available to $ 1.12 $ 1.61 $ 0.48 $ 0.64
Common Shares
Weighted average
Common Shares 272,966 269,582 273,658 270,345
outstanding
Earnings per share
- diluted:
Income from
continuing
operations $ 0.12 $ 0.20 $ 0.03 $ 0.08
available to
Common Shares
Net income
available to $ 1.12 $ 1.59 $ 0.48 $ 0.63
Common Shares
Weighted average
Common Shares 289,518 290,267 290,215 290,795
outstanding
Distributions
declared per $ 1.3025 $ 1.4475 $ 0.3375 $ 0.4825
Common Share
outstanding
Equity Residential
Consolidated Statements of Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Nine Months Ended September 30, Quarter Ended September 30,
2009 (3) 2008 (3) 2009 (3) 2008 (3)
Net income $ 334,718 $ 474,646 $ 143,365 $ 187,125
Adjustments:
Net (income) loss
attributable to
Noncontrolling
Interests:
Preference
Interests and (9 ) (11 ) (2 ) (4 )
Units
Partially Owned 391 (1,765 ) 317 (106 )
Properties
Depreciation 438,726 417,662 147,477 145,382
Depreciation -
Non-real estate (5,569 ) (6,057 ) (1,777 ) (1,976 )
additions
Depreciation -
Partially Owned
and 656 3,103 225 1,063
Unconsolidated
Properties
Net (gain) on
sales of (6,718 ) - (3,959 ) -
unconsolidated
entities
Discontinued
operations:
Depreciation 12,761 30,274 2,175 8,380
Net gain on
sales of (274,933 ) (365,052 ) (129,135 ) (150,255 )
discontinued
operations
Net incremental
(loss) gain on
sales of (450 ) (2,643 ) (785 ) 447
condominium
units
FFO (1) (2) 499,573 550,157 157,901 190,056
Preferred (10,859 ) (10,887 ) (3,619 ) (3,628 )
distributions
FFO available to
Common Shares and $ 488,714 $ 539,270 $ 154,282 $ 186,428
Units - basic (1)
(2)
FFO available to
Common Shares and $ 489,183 $ 539,773 $ 154,436 $ 186,590
Units - diluted
(1) (2)
FFO per share and $ 1.69 $ 1.88 $ 0.53 $ 0.65
Unit - basic
FFO per share and $ 1.69 $ 1.86 $ 0.53 $ 0.64
Unit - diluted
Weighted average
Common Shares and
Units outstanding 288,990 287,422 289,263 287,744
- basic
Weighted average
Common Shares and
Units outstanding 289,922 290,699 290,616 291,215
- 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.
Effective January 1, 2009, companies are required to retrospectively
expense certain implied costs of the option value related to convertible
debt. As a result, net income, FFO and FFO available to Common Shares and
(3) Units - basic and diluted have all been reduced by approximately $7.2
million and $7.6 million for the nine months ended September 30, 2009 and
2008, respectively, and by approximately $2.2 million and $2.6 million for
the quarters ended September 30, 2009 and 2008, respectively.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
September 30, December 31,
2009 2008
ASSETS
Investment in real estate
Land $ 3,629,701 $ 3,671,299
Depreciable property 13,755,610 13,908,594
Projects under development 753,831 855,473
Land held for development 239,158 254,873
Investment in real estate 18,378,300 18,690,239
Accumulated depreciation (3,785,198 ) (3,561,300 )
Investment in real estate, net 14,593,102 15,128,939
Cash and cash equivalents 637,588 890,794
Investments in unconsolidated entities 4,616 5,795
Deposits - restricted 360,022 152,732
Escrow deposits - mortgage 18,954 19,729
Deferred financing costs, net 50,438 53,817
Other assets 126,676 283,304
Total assets $ 15,791,396 $ 16,535,110
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 4,885,560 $ 5,036,930
Notes, net 4,949,560 5,447,012
Lines of credit - -
Accounts payable and accrued expenses 131,730 108,463
Accrued interest payable 72,970 113,846
Other liabilities 264,221 289,562
Security deposits 60,517 64,355
Distributions payable 100,230 141,843
Total liabilities 10,464,788 11,202,011
Commitments and contingencies
Redeemable Noncontrolling Interests - Operating 236,333 264,394
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 September 30, 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; 276,147,420
shares issued
and outstanding as of September 30, 2009 and
272,786,760
shares issued and outstanding as of December 2,761 2,728
31, 2008
Paid in capital 4,364,503 4,273,489
Retained earnings 405,250 456,152
Accumulated other comprehensive loss (21,636 ) (35,799 )
Total shareholders' equity 4,959,651 4,905,356
Noncontrolling Interests:
Operating Partnership 118,332 137,645
Preference Interests and Units - 184
Partially Owned Properties 12,292 25,520
Total Noncontrolling Interests 130,624 163,349
Total equity 5,090,275 5,068,705
Total liabilities and equity $ 15,791,396 $ 16,535,110
Equity Residential
Portfolio Summary
As of September 30, 2009
% of 2009 Average
% of Stabilized Rental
Markets Properties Units Total Units NOI Rate (1)
1 New York Metro Area 23 6,410 4.6 % 10.4 % $ 2,575
2 DC Northern Virginia 26 8,781 6.3 % 9.2 % 1,631
3 South Florida 39 12,897 9.3 % 8.8 % 1,263
4 Los Angeles 36 7,463 5.4 % 8.1 % 1,699
5 Seattle/Tacoma 46 10,545 7.6 % 7.4 % 1,289
6 Boston 36 6,503 4.7 % 6.8 % 1,999
7 San Francisco Bay 34 6,731 4.8 % 6.8 % 1,641
Area
8 Phoenix 41 11,769 8.5 % 5.6 % 858
9 Denver 23 7,963 5.7 % 5.0 % 1,015
10 San Diego 14 4,491 3.2 % 4.6 % 1,631
11 Orlando 26 8,042 5.8 % 4.4 % 971
12 Inland Empire, CA 14 4,519 3.3 % 3.7 % 1,316
13 Suburban Maryland 22 6,084 4.4 % 3.6 % 1,210
14 Atlanta 24 7,621 5.5 % 3.5 % 921
15 Orange County, CA 10 3,307 2.4 % 3.4 % 1,535
16 New England 19 3,477 2.5 % 1.9 % 1,121
(excluding Boston)
17 Portland, OR 10 3,417 2.5 % 1.8 % 970
18 Jacksonville 12 3,951 2.8 % 1.7 % 869
19 Tampa 10 3,158 2.3 % 1.3 % 895
20 Raleigh/Durham 10 2,524 1.8 % 1.0 % 761
Top 20 Total 475 129,653 93.4 % 99.0 % 1,324
21 Central Valley, CA 5 804 0.6 % 0.4 % 987
22 Dallas/Ft. Worth 5 1,081 0.8 % 0.1 % 738
23 Other EQR 12 2,739 1.9 % 0.5 % 888
Total 497 134,277 96.7 % 100.0 % 1,309
Condominium 2 15 - - -
Conversion
Military Housing 2 4,595 3.3 % - -
Grand Total 501 138,887 100.0 % 100.0 % $ 1,309
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the month of September 2009.
Equity Residential
Portfolio as of September 30, 2009
Properties Units
Wholly Owned Properties 436 120,378
Partially Owned Properties:
Consolidated 26 5,126
Unconsolidated 37 8,788
Military Housing (Fee Managed) 2 4,595
501 138,887
Portfolio Rollforward Q3 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
6/30/2009 526 143,856
Acquisitions:
Rental Properties (1) - - - -
Dispositions:
Rental Properties:
Consolidated (24 ) (4,620 ) $ (381,119 ) 7.7 %
Unconsolidated (1) (2) (2 ) (516 ) $ (37,000 ) 7.3 %
Condominium Conversion - (27 ) $ (5,117 )
Properties
Completed Developments 1 163
Configuration Changes - 31
9/30/2009 501 138,887
Portfolio Rollforward 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
12/31/2008 548 147,244
Acquisitions:
Rental Properties (1) - - - -
Dispositions:
Rental Properties:
Consolidated (47 ) (8,819 ) $ (734,509 ) 7.5 %
Unconsolidated (1) (2) (3 ) (732 ) $ (57,700 ) 7.5 %
Condominium Conversion (1 ) (50 ) $ (9,786 )
Properties
Completed Developments 4 1,362
Configuration Changes - (118 )
9/30/2009 501 138,887
Both the acquisition and disposition amounts do not include the Company's
(1) buyout of its partner's interest in one previously unconsolidated property.
See the Partially Owned Entities schedule for additional discussion.
(2) EQR owned a 25% interest in these unconsolidated rental properties. Sale
price listed is the gross sale price.
Equity Residential
Third Quarter 2009 vs. Third Quarter 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 119,121 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q3 2009 $ 449,889 $ $ $ 93.7 % 18.4 %
170,616 279,273 1,345
Q3 2008 $ 468,168 $ $ $ 94.4 % 18.6 %
171,560 296,608 1,390
Change $ (18,279 ) $ (944 ) $ ) $ (45 ) (0.7 %) (0.2 %)
(17,335
Change (3.9 %) (0.6 %) (5.8 %) (3.2 %)
Third Quarter 2009 vs. Second Quarter 2009
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 121,593 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q3 2009 $ 460,738 $ $ $ 93.7 % 18.4 %
174,937 285,801 1,350
Q2 2009 $ 465,543 $ $ $ 93.6 % 15.1 %
172,152 293,391 1,365
Change $ (4,805 ) $ 2,785 $ ) $ (15 ) 0.1 % 3.3 %
(7,590
Change (1.0 %) 1.6 % (2.6 %) (1.1 %)
September YTD 2009 vs. September YTD 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 115,832 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
YTD 2009 $ $ $ $ 93.7 % 46.9 %
1,320,158 496,499 823,659 1,353
YTD 2008 $ $ $ $ 94.5 % 48.3 %
1,350,698 493,958 856,740 1,373
Change $ (30,540 ) $ 2,541 $ ) $ (20 ) (0.8 %) (1.4 %)
(33,081
Change (2.3 %) 0.5 % (3.9 %) (1.5 %)
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
Third Quarter 2009 vs. Third Quarter 2008
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year's Quarter
Q3 2009 Q3 2009 Q3 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 10.2 % $ 2,599 95.3 % (7.4 %) 6.3 % (14.3 %) (7.0 %) (0.4 %)
Area
2 DC Northern 8,781 9.9 % 1,641 95.0 % (1.2 %) 1.4 % (2.4 %) (0.6 %) (0.6 %)
Virginia
3 South Florida 12,465 9.2 % 1,282 93.1 % (1.8 %) 1.9 % (4.4 %) (1.8 %) (0.1 %)
4 Los Angeles 7,064 7.8 % 1,715 93.3 % (5.2 %) (1.9 %) (6.9 %) (4.4 %) (0.7 %)
5 Boston 5,609 7.1 % 1,920 95.6 % 1.1 % (2.8 %) 3.4 % 1.3 % (0.2 %)
6 Seattle/Tacoma 8,115 6.6 % 1,356 91.2 % (9.2 %) 0.3 % (14.3 %) (5.6 %) (3.6 %)
7 San Francisco 6,200 6.6 % 1,661 93.3 % (4.7 %) (0.2 %) (7.0 %) (2.9 %) (1.8 %)
Bay Area
8 Phoenix 10,646 5.1 % 862 91.2 % (8.2 %) (0.7 %) (13.1 %) (6.4 %) (1.8 %)
9 San Diego 4,491 5.1 % 1,639 94.7 % (1.1 %) (4.8 %) 0.7 % (1.2 %) 0.0 %
10 Denver 7,416 4.9 % 1,019 94.1 % (3.4 %) (0.3 %) (5.0 %) (2.6 %) (0.7 %)
11 Orlando 7,525 4.4 % 982 93.9 % (4.6 %) (3.0 %) (5.6 %) (4.9 %) 0.3 %
12 Inland Empire, 4,219 3.7 % 1,331 94.7 % (2.3 %) (6.7 %) 0.1 % (3.6 %) 1.2 %
CA
13 Atlanta 6,443 3.5 % 964 94.8 % (4.9 %) (1.2 %) (7.7 %) (4.8 %) (0.1 %)
14 Orange County, 3,175 3.4 % 1,555 93.9 % (5.0 %) (2.8 %) (5.9 %) (4.5 %) (0.5 %)
CA
15 Suburban 4,263 3.3 % 1,201 95.0 % 0.8 % (3.1 %) 3.1 % (0.1 %) 0.8 %
Maryland
New England
16 (excluding 3,477 2.1 % 1,123 94.1 % (1.1 %) 0.0 % (2.0 %) (0.8 %) (0.3 %)
Boston)
17 Jacksonville 3,711 2.0 % 883 93.6 % (3.5 %) (9.6 %) 0.8 % (3.2 %) (0.4 %)
18 Portland, OR 3,113 1.9 % 989 93.7 % (1.9 %) 1.6 % (4.1 %) (0.8 %) (1.1 %)
19 Tampa 2,598 1.4 % 932 94.1 % (3.3 %) (6.4 %) (0.9 %) (3.6 %) 0.3 %
20 Raleigh/Durham 2,132 1.0 % 793 93.0 % (3.7 %) (0.3 %) (6.1 %) (1.7 %) (1.9 %)
Top 20 Markets 117,689 99.2 % 1,350 93.7 % (3.9 %) (0.6 %) (5.8 %) (3.2 %) (0.7 %)
All Other 1,432 0.8 % 943 95.0 % (4.0 %) 0.7 % (6.8 %) (4.5 %) 0.6 %
Markets
Total 119,121 100.0 % $ 1,345 93.7 % (3.9 %) (0.6 %) (5.8 %) (3.2 %) (0.7 %)
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the period.
Equity Residential
Third Quarter 2009 vs. Second Quarter 2009
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Quarter
Q3 2009 Q3 2009 Q3 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 % $ 2,599 95.3 % (2.4 %) 0.9 % (4.4 %) (3.0 %) 0.6 %
Area
2 DC Northern 8,781 9.7 % 1,641 95.0 % 0.7 % 1.0 % 0.6 % 0.0 % 0.7 %
Virginia
3 South Florida 12,465 8.9 % 1,282 93.1 % (0.4 %) 3.0 % (2.8 %) 0.0 % (0.4 %)
4 Los Angeles 7,099 7.7 % 1,720 93.3 % (0.9 %) 5.1 % (3.9 %) (1.3 %) 0.5 %
5 Boston 6,021 7.6 % 1,989 95.7 % (0.2 %) (1.9 %) 0.8 % (0.9 %) 0.6 %
6 San Francisco 6,567 6.8 % 1,657 93.1 % (1.6 %) 1.0 % (3.0 %) (1.8 %) 0.2 %
Bay Area
7 Seattle/Tacoma 8,473 6.7 % 1,352 91.2 % (3.3 %) 2.1 % (6.4 %) (1.8 %) (1.4 %)
8 Denver 7,755 5.1 % 1,031 94.1 % (0.2 %) 7.8 % (4.2 %) (0.6 %) 0.4 %
9 Phoenix 10,646 5.0 % 862 91.2 % (3.1 %) 6.2 % (9.1 %) (1.5 %) (1.5 %)
10 San Diego 4,491 4.9 % 1,639 94.7 % 0.6 % 1.5 % 0.1 % (0.4 %) 0.9 %
11 Orlando 7,690 4.4 % 985 93.9 % (0.6 %) 0.5 % (1.3 %) (1.7 %) 1.1 %
12 Suburban 5,059 3.9 % 1,192 94.9 % (1.0 %) (4.2 %) 0.9 % (1.5 %) 0.4 %
Maryland
13 Inland Empire, 4,219 3.7 % 1,331 94.7 % (0.2 %) 3.3 % (2.0 %) (0.7 %) 0.5 %
CA
14 Atlanta 6,443 3.4 % 964 94.8 % (2.0 %) 1.9 % (5.0 %) (2.8 %) 0.8 %
15 Orange County, 3,175 3.3 % 1,555 93.9 % (1.4 %) 3.0 % (3.4 %) (1.5 %) 0.0 %
CA
New England
16 (excluding 3,477 2.1 % 1,123 94.1 % (0.2 %) (2.0 %) 1.3 % (0.3 %) 0.1 %
Boston)
17 Jacksonville 3,711 2.0 % 883 93.6 % (0.6 %) (8.5 %) 5.1 % (0.8 %) 0.2 %
18 Portland, OR 3,113 1.8 % 989 93.7 % (0.1 %) 2.3 % (1.7 %) (0.1 %) 0.0 %
19 Tampa 2,598 1.4 % 932 94.1 % (0.8 %) (4.7 %) 2.2 % (1.0 %) 0.1 %
20 Raleigh/Durham 2,132 0.9 % 793 93.0 % (0.6 %) 7.7 % (6.1 %) 0.4 % (0.9 %)
Top 20 Markets 120,161 99.2 % 1,355 93.7 % (1.0 %) 1.6 % (2.6 %) (1.1 %) 0.1 %
All Other 1,432 0.8 % 943 95.0 % (0.7 %) 3.3 % (3.2 %) (0.6 %) (0.1 %)
Markets
Total 121,593 100.0 % $ 1,350 93.7 % (1.0 %) 1.6 % (2.6 %) (1.1 %) 0.1 %
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the period.
Equity Residential
September YTD 2009 vs. September YTD 2008
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year
Sept. Sept. Sept. 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 10.6 % $ 2,666 94.6 % (3.4 %) 4.6 % (7.8 %) (3.4 %) 0.0 %
Area
2 South Florida 11,761 8.8 % 1,282 93.3 % (2.2 %) 1.6 % (4.8 %) (1.8 %) (0.4 %)
3 DC Northern 7,661 8.8 % 1,655 94.6 % (0.8 %) 1.7 % (2.0 %) 0.2 % (1.1 %)
Virginia
4 Los Angeles 6,485 7.6 % 1,722 93.3 % (2.9 %) (1.2 %) (3.8 %) (2.0 %) (0.8 %)
5 Seattle/Tacoma 8,115 7.0 % 1,372 92.3 % (4.1 %) 1.4 % (7.1 %) (1.7 %) (2.3 %)
6 Boston 5,609 7.0 % 1,929 95.0 % 1.1 % (1.3 %) 2.5 % 2.0 % (0.9 %)
7 San Francisco 6,200 6.9 % 1,690 93.3 % (1.2 %) 0.1 % (1.9 %) 1.1 % (2.2 %)
Bay Area
8 Phoenix 10,238 5.4 % 873 92.6 % (7.2 %) 0.0 % (11.6 %) (5.7 %) (1.5 %)
9 Denver 7,416 5.1 % 1,023 93.8 % (1.1 %) (1.4 %) (1.0 %) 0.0 % (1.1 %)
10 San Diego 4,491 5.1 % 1,645 93.9 % 0.1 % (1.6 %) 1.0 % 0.5 % (0.3 %)
11 Orlando 7,525 4.5 % 995 93.2 % (4.5 %) (1.3 %) (6.5 %) (4.0 %) (0.4 %)
12 Inland Empire, 4,219 3.8 % 1,341 94.4 % (1.7 %) (2.5 %) (1.3 %) (2.3 %) 0.6 %
CA
13 Atlanta 6,443 3.7 % 987 94.1 % (2.7 %) 1.3 % (5.7 %) (1.9 %) (0.8 %)
14 Orange County, 3,175 3.6 % 1,576 94.0 % (2.4 %) (1.8 %) (2.7 %) (2.1 %) (0.3 %)
CA
15 Suburban 3,785 2.8 % 1,165 94.3 % 1.6 % 1.3 % 1.8 % 1.7 % 0.0 %
Maryland
New England
16 (excluding 3,477 2.1 % 1,120 94.1 % (1.1 %) 2.7 % (4.4 %) (0.7 %) (0.3 %)
Boston)
17 Jacksonville 3,711 2.0 % 886 93.4 % (3.7 %) (2.0 %) (4.9 %) (3.4 %) (0.3 %)
18 Portland, OR 3,113 1.9 % 989 94.0 % (0.4 %) 1.4 % (1.6 %) 0.7 % (1.0 %)
19 Tampa 2,598 1.4 % 941 94.1 % (3.0 %) (1.0 %) (4.6 %) (3.2 %) 0.1 %
20 Raleigh/Durham 2,132 1.0 % 793 94.0 % (1.8 %) (0.6 %) (2.7 %) (0.3 %) (1.4 %)
Top 20 Markets 114,400 99.1 % 1,358 93.7 % (2.3 %) 0.5 % (3.9 %) (1.4 %) (0.8 %)
All Other 1,432 0.9 % 952 94.5 % (2.6 %) 0.3 % (4.4 %) (2.5 %) (0.1 %)
Markets
Total 115,832 100.0 % $ 1,353 93.7 % (2.3 %) 0.5 % (3.9 %) (1.5 %) (0.8 %)
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the period.
Equity Residential
Third Quarter 2009 vs. Third Quarter 2008
Same Store Operating Expenses
$ in thousands - 119,121 Same Store Units
% of Actual
Q3 2009
Actual Actual $ % Operating
Q3 2009 Q3 2008 Change Change Expenses
Real estate taxes $ 45,824 $ 45,061 $ 763 1.7 % 26.9 %
On-site payroll (1) 40,847 41,766 (919 ) (2.2 %) 23.9 %
Utilities (2) 26,165 25,707 458 1.8 % 15.3 %
Repairs and maintenance 26,078 26,963 (885 ) (3.3 %) 15.3 %
(3)
Property management costs 16,758 17,673 (915 ) (5.2 %) 9.8 %
(4)
Insurance 5,716 5,468 248 4.5 % 3.4 %
Leasing and advertising 4,637 4,032 605 15.0 % 2.7 %
Other operating expenses 4,591 4,890 (299 ) (6.1 %) 2.7 %
(5)
Same store operating $ 170,616 $ 171,560 $ (944 ) (0.6 %) 100.0 %
expenses
September YTD 2009 vs. September YTD 2008
Same Store Operating Expenses
$ in thousands - 115,832 Same Store Units
% of Actual
YTD 2009
Actual Actual $ % Operating
YTD 2009 YTD 2008 Change Change Expenses
Real estate taxes $ 133,538 $ 129,924 $ 3,614 2.8 % 26.9 %
On-site payroll (1) 119,963 119,781 182 0.2 % 24.2 %
Utilities (2) 77,544 76,989 555 0.7 % 15.6 %
Repairs and maintenance 73,134 73,387 (253 ) (0.3 %) 14.7 %
(3)
Property management costs 49,176 50,989 (1,813 ) (3.6 %) 9.9 %
(4)
Insurance 16,514 15,907 607 3.8 % 3.3 %
Leasing and advertising 11,730 11,654 76 0.7 % 2.4 %
Other operating expenses 14,900 15,327 (427 ) (2.8 %) 3.0 %
(5)
Same store operating $ 496,499 $ 493,958 $ 2,541 0.5 % 100.0 %
expenses
On-site payroll - Includes payroll and related expenses for on-site
(1) personnel including property managers, leasing consultants and maintenance
staff.
(2) Utilities - Includes expenses recovered under the Resident Utility Billing
System ("RUBS"). Recoveries are reflected in rental income.
Repairs and maintenance - Includes general maintenance costs, unit turnover
(3) costs including interior painting, routine landscaping, security,
exterminating, fire protection, snow removal, elevator, roof and parking
lot repairs and other miscellaneous building repair costs.
Property management costs - Includes payroll and related expenses for
departments, or portions of departments, that directly support on-site
(4) management. These include such departments as regional and corporate
property management, property accounting, human resources, training,
marketing and revenue management, procurement, real estate tax, property
legal services and information technology.
Other operating expenses - Includes administrative costs such as office
(5) supplies, telephone and data charges and association and business licensing
fees.
Equity Residential
Debt Summary as of September 30, 2009
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts % of Rates (years)
(1) Total (1)
Secured $ 49.7 % 4.90 % 8.9
4,885,560
Unsecured 4,949,560 50.3 % 5.32 % 4.9
Total $ 100.0 % 5.11 % 6.9
9,835,120
Fixed Rate Debt:
Secured - Conventional $ 41.3 % 5.92 % 7.3
4,065,470
Unsecured - Public/Private 4,311,989 43.9 % 5.89 % 5.3
Fixed Rate Debt 8,377,459 85.2 % 5.90 % 6.3
Floating Rate Debt:
Secured - Conventional 192,462 2.0 % 2.11 % 5.5
Secured - Tax Exempt 627,628 6.4 % 0.68 % 20.8
Unsecured - Public/Private 601,971 6.1 % 1.27 % 1.4
Unsecured - Tax Exempt 35,600 0.3 % 0.40 % 19.2
Unsecured - Revolving Credit - - - 2.4
Facility
Floating Rate Debt 1,457,661 14.8 % 1.24 % 10.4
Total $ 100.0 % 5.11 % 6.9
9,835,120
(1) Net of the effect of any derivative instruments. Weighted average rates are
for the nine
months ended September 30, 2009.
Note: The Company capitalized interest of approximately $28.7 million and
$45.1 million
during the nine months ended September 30, 2009 and 2008, respectively. The
Company
capitalized interest of approximately $7.7 million and $15.6 million during
the
quarters ended September 30, 2009 and 2008, respectively.
Debt Maturity Schedule as of September 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 Debt
Total Debt (1) (1)
2009 $ 3,315 $ 86,818 $ 90,133 0.9 % 7.53 % 2.34 %
2010 225,798 500,000 (2 ) 725,798 7.4 % 7.51 % 2.92 %
2011 1,261,103 (3) 92,819 1,353,922 13.8 % 5.58 % 5.30 %
2012 982,427 3,492 985,919 10.0 % 5.77 % 5.77 %
2013 466,338 101,971 568,309 5.8 % 6.64 % 5.51 %
2014 517,438 - 517,438 5.2 % 5.28 % 5.28 %
2015 355,629 - 355,629 3.6 % 6.41 % 6.41 %
2016 1,089,233 - 1,089,233 11.1 % 5.32 % 5.32 %
2017 1,346,550 456 1,347,006 13.7 % 5.87 % 5.87 %
2018 336,083 44,677 380,760 3.9 % 5.95 % 5.60 %
2019+ 1,793,545 627,428 2,420,973 24.6 % 5.86 % 5.06 %
Total $ $ $ 100.0 % 5.82 % 5.22 %
8,377,459 1,457,661 9,835,120
(1) Net of the effect of any derivative instruments. Weighted average rates are
as of September 30, 2009.
Represents 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 September 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 $ 1,457 $ 116,263
6.625 % 03/15/12 400,000 (722 ) 399,278
5.500 % 10/01/12 350,000 (1,035 ) 348,965
5.200 % 04/01/13 (2) 400,000 (414 ) 399,586
5.250 % 09/15/14 500,000 (305 ) 499,695
6.584 % 04/13/15 300,000 (617 ) 299,383
5.125 % 03/15/16 500,000 (345 ) 499,655
5.375 % 08/01/16 400,000 (1,268 ) 398,732
5.750 % 06/15/17 650,000 (3,942 ) 646,058
7.125 % 10/15/17 150,000 (522 ) 149,478
7.570 % 08/15/26 140,000 - 140,000
3.850 % 08/15/26 (3) 531,092 (16,196 ) 514,896
Fair Value Derivative (2) (100,000 ) - (100,000 )
Adjustments
4,335,898 (23,909 ) 4,311,989
Floating Rate Tax Exempt
Notes:
7-Day SIFMA 12/15/28 (4) 35,600 - 35,600
Floating
Rate
Notes:
04/01/13 (2) 100,000 - 100,000
Fair Value Derivative (2) 1,971 - 1,971
Adjustments
Term Loan LIBOR+0.50% 10/05/10 (4)(5) 500,000 - 500,000
Facility
601,971 - 601,971
Revolving
Credit LIBOR+0.50% 02/28/12 (6) - - -
Facility:
Total $ $
Unsecured 4,973,469 $ (23,909 ) 4,949,560
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.
(2) $100.0 million in fair value interest rate swaps converts a portion of the
5.200% notes due April 1, 2013 to a floating interest rate.
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 nine
months ended September 30, 2009, the Company repurchased $17.5 million of
(3) these 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, companies are required to expense the implied option value inherent
in convertible debt. In conjunction with this requirement, 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 September 30, 2009, there was no amount outstanding and approximately
(6) $1.36 billion available on the Company's unsecured revolving credit
facility.
Equity Residential
Selected Unsecured Public Debt Covenants
September 30, June 30,
2009 2009
Total Debt to Adjusted Total Assets (not to exceed 60%) 50.3 % 50.8 %
Secured Debt to Adjusted Total Assets (not to exceed 25.0 % 25.6 %
40%)
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.26 2.30
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 241.3 % 238.2 %
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 September 30, 2009
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 4,885,560 49.7 %
Unsecured Debt 4,949,560 50.3 %
Total Debt 9,835,120 100.0 % 51.9 %
Common Shares (includes 276,147,420 95.0 %
Restricted Shares)
Units 14,432,942 5.0 %
Total Shares and 290,580,362 100.0 %
Units
Common Share Equivalents (see 398,038
below)
Total outstanding at quarter-end 290,978,400
Common Share Price at September $ 30.70
30, 2009
8,933,037 97.8 %
Perpetual Preferred Equity (see 200,000 2.2 %
below)
Total Equity 9,133,037 100.0 % 48.1 %
Total Market Capitalization $18,968,157 100.0 %
Convertible Preferred Equity as of September 30, 2009
(Amounts in thousands except for share and per share amounts)
Annual Annual Weighted Common
Redemption Outstanding Liquidation Dividend Dividend Average Conversion Share
Series Date Shares Value Per Amount Rate Ratio Equivalents
Share
Preferred
Shares:
7.00% 11/1/98 328,466 $ 8,212 $ $ 575 1.1128 365,517
Series E 1.75
7.00% 6/30/98 22,459 561 1.75 39 1.4480 32,521
Series H
Total Convertible 350,925 $ 8,773 $ 614 7.00 % 398,038
Preferred Equity
Perpetual Preferred Equity as of September 30, 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 Amount Rate
Share
Preferred
Shares:
8.29% 12/10/26 1,000,000 $ 50,000 $ $ 4,145
Series K 4.145
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
YTD Q309 YTD Q308 Q309 Q308
Weighted Average Amounts
Outstanding for Net Income
Purposes:
Common Shares - basic 272,965,818 269,581,967 273,658,165 270,345,399
Shares issuable from
assumed conversion/vesting
of:
- OP Units 16,023,881 17,840,134 15,604,484 17,398,225
- long-term compensation 527,805 2,844,883 952,568 3,051,930
award shares/units
Total Common Shares and 289,517,504 290,266,984 290,215,217 290,795,554
Units - diluted
Weighted Average Amounts
Outstanding for FFO
Purposes:
Common Shares - basic 272,965,818 269,581,967 273,658,165 270,345,399
OP Units - basic 16,023,881 17,840,134 15,604,484 17,398,225
Total Common Shares and OP 288,989,699 287,422,101 289,262,649 287,743,624
Units - basic
Shares issuable from
assumed conversion/vesting
of:
- convertible preferred 404,004 432,445 400,489 419,822
shares/units
- long-term compensation 527,805 2,844,883 952,568 3,051,930
award shares/units
Total Common Shares and 289,921,508 290,699,429 290,615,706 291,215,376
Units - diluted
Period Ending
Amounts
Outstanding:
Common Shares (includes 276,147,420
Restricted Shares)
Units 14,432,942
Total Shares and Units 290,580,362
Equity Residential
Partially Owned Entities as of September 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 (5)
(4) Stabilized
Total projects (1) - 3 2 21 26 37
Total units (1) - 898 432 3,796 5,126 8,788
Operating information
for the nine months
ended 9/30/09 (at
100%):
Operating revenue $ 1,204 $ 5,345 $ $ $ $
5,325 42,663 54,537 70,762
Operating expenses 1,877 3,561 2,328 14,924 22,690 32,278
Net operating (loss) (673 ) 1,784 2,997 27,739 31,847 38,484
income
Depreciation 278 2,918 2,674 11,305 17,175 14,947
General and 51 426 5 19 501 302
administrative/other
Operating (loss) (1,002 ) (1,560 ) 318 16,415 14,171 23,235
income
Interest and other 25 14 - 88 127 380
income
Other expenses (314 ) - - (13 ) (327 ) -
Interest:
Expense incurred, (355 ) (3,593 ) (1,592 ) (15,103 ) (20,643 ) (33,794 )
net
Amortization of
deferred financing (183 ) (186 ) (39 ) (129 ) (537 ) (696 )
costs
Income and other tax (53 ) - - (34 ) (87 ) (117 )
(expense) benefit
Net (loss) income $ ) $ ) $ ) $ 1,224 $ ) $ )
(1,882 (5,325 (1,313 (7,296 (10,992
Debt - Secured (2):
EQR Ownership (3) $ $ $ $ $ $
340,813 192,516 61,260 219,171 813,760 105,266
Noncontrolling - - - 82,786 82,786 315,798
Ownership
Total (at 100%) $ $ $ $ $ $
340,813 192,516 61,260 301,957 896,546 421,064
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.
Unconsolidated debt maturities and rates for institutional joint ventures
are as follows: $112.6 million, May 1, 2010, 8.33%; $121.0 million,
December 1, 2010, 7.54%; $143.8 million, March 1, 2011, 6.95%; and $43.6
million, July 1, 2019, 5.305%. A portion of this mortgage debt is also
(5) partially collateralized by $22.0 million in unconsolidated restricted cash
set aside from the net proceeds of property sales. The Company acquired its
partner's interest in one of the previously unconsolidated properties
containing 250 units in the third quarter of 2009 for $18.5 million and as
a result, the project is now consolidated and wholly owned.
Equity Residential
Consolidated Development Projects as of September 30, 2009
(Amounts in thousands except for project and unit amounts)
Total
Book
Total Total Value Estimated Estimated
Not
No. Capital Book Placed Total Percentage Percentage Percentage Completion Stabilization
of Value 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 $ 257,775 257,775 $ - 97 % 42 % 36 % Q4 2009 Q1 2011
Hudson)
Reserve at Mill Creek,
Town Center WA 100 24,464 18,557 18,557 - 84 % 35 % 13 % Q4 2009 Q3 2010
II
Redmond Way Redmond, WA 250 84,382 44,669 44,669 - 48 % - - Q1 2011 Q1 2012
Projects
Under 830 378,804 321,001 321,001 -
Development -
Wholly Owned
Projects
Under
Development -
Partially
Owned:
Red Road South Miami, 404 128,816 124,664 124,664 68,669 97 % 64 % 64 % Q4 2009 Q3 2011
Commons FL
The
Brooklyner
(a.k.a. 111 Brooklyn, NY 492 283,968 195,636 195,636 74,291 71 % - - Q2 2010 Q3 2011
Lawrence
Street)
Westgate Pasadena, CA 480 170,558 112,530 112,530 163,160 (2 ) 59 % - - Q2 2011 Q2 2012
Projects
Under
Development - 1,376 583,342 432,830 432,830 306,120
Partially
Owned
Projects
Under 2,206 962,146 753,831 753,831 306,120 (3 )
Development
Land Held for N/A N/A 239,158 239,158 34,693
Development
Land/Projects
Held for 2,206 962,146 992,989 992,989 340,813
and/or Under
Development
Completed Not
Stabilized -
Wholly Owned
(4):
Mosaic at Hyattsville, 260 60,383 59,692 - 45,507 95 % 95 % Completed Q4 2009
Metro MD
Third Square
(a.k.a. 303 Cambridge, 482 257,457 255,127 - - 83 % 81 % Completed Q2 2010
Third Street) MA
(5)
Reunion at Redmond, WA 321 53,175 53,151 - - 47 % 45 % Completed Q3 2010
Redmond Ridge
Projects
Completed Not 1,063 371,015 367,970 - 45,507
Stabilized -
Wholly Owned
Completed Not
Stabilized -
Partially
Owned (4):
1401 South
State (a.k.a. Chicago, IL 278 68,923 68,445 - 52,124 92 % 88 % Completed Q4 2009
City Lofts)
Veridian
(a.k.a. Silver 457 149,962 148,920 - 112,511 92 % 86 % Completed Q1 2010
Silver Spring, MD
Spring)
Montclair Montclair, 163 48,730 43,930 - 27,881 18 % 4 % Completed Q2 2010
Metro NJ
Projects
Completed Not
Stabilized - 898 267,615 261,295 - 192,516
Partially
Owned
Projects
Completed Not 1,961 638,630 629,265 - 238,023
Stabilized
Completed and
Stabilized
During the
Quarter -
Wholly Owned:
Crowntree Orlando, FL 352 56,631 56,631 - - 97 % 93 % Completed Stabilized
Lakes
Projects
Completed and
Stabilized 352 56,631 56,631 - -
During the
Quarter -
Wholly Owned
Projects
Completed and
Stabilized 352 56,631 56,631 - -
During the
Quarter
Total 4,519 $ $ $ $
Projects 1,657,407 1,678,885 992,989 578,836
NOI
CONTRIBUTION Total Q3 2009
FROM Capital NOI
DEVELOPMENT Cost (1)
PROJECTS
Projects
Under $ 962,146 $ 224
Development
Completed Not 638,630 2,656
Stabilized
Completed and
Stabilized 56,631 510
During the
Quarter
Total
Development $ $
NOI 1,657,407 3,390
Contribution
Total capital cost represents estimated development cost for projects under
(1) 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.
Debt is primarily tax-exempt bonds that are entirely outstanding with $59.4
(2) 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 September 30, 2009.
Of the approximately $208.3 million of capital cost remaining to be funded
(3) at 9/30/09 for projects under development, $150.5 million will be funded by
fully committed third party bank loans and the remaining $57.8 million will
be funded by cash on hand.
Properties included here are substantially complete. However, they may
(4) still require additional exterior and interior work for all units to be
available for leasing.
Third Square - Both the percentage leased and percentage occupied reflect
(5) the full 482 units included in phases I & II. Phase I is 96% leased and 95%
occupied. Phase II is 63% leased and 59% occupied.
Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Nine Months Ended September 30, 2009
(Amounts in thousands except for unit and per unit amounts)
Repairs and Maintenance Expenses Capital Expenditures 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
Same Store $ $ $ $ $ $ $ $ $ $ $ $ $ $
Properties 115,832 73,134 631 59,057 510 132,191 1,141 54,529 471 31,987 276 86,516 747 (9 ) 218,707 1,888
(6)
Non-Same
Store 9,657 6,253 677 4,107 444 10,360 1,121 1,784 193 2,508 272 4,292 465 14,652 1,586
Properties
(7)
Other (8) 15 1,433 6,253 7,686 1,481 760 2,241 9,927
Total 125,504 $ $ $ $ $ $ $
80,820 69,417 150,237 57,794 35,255 93,049 243,286
Total Units - Excludes 8,788 unconsolidated units and 4,595 military
(1) housing (fee managed) units, for which repairs and maintenance expenses and
capital expenditures to real estate are self-funded and do not consolidate
into the Company's results.
Repairs and Maintenance Expenses - Includes general maintenance costs, unit
(2) turnover costs including interior painting, routine landscaping, security,
exterminating, fire protection, snow removal, elevator, roof and parking
lot repairs and other miscellaneous building repair costs.
(3) Maintenance Payroll - Includes payroll and related expenses for maintenance
staff.
Replacements - Includes new expenditures inside the units such as
appliances, mechanical equipment, fixtures and flooring, including
(4) carpeting. Replacements for same store properties also include $21.3
million spent on various assets related to unit renovations/rehabs
(primarily kitchens and baths) designed to reposition these assets for
higher rental levels in their respective markets.
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.
Same Store Properties - Primarily includes all properties acquired or
(6) completed and stabilized prior to January 1, 2008, less properties
subsequently sold.
Non-Same Store Properties - Primarily includes all properties acquired
(7) during 2008 and 2009, plus any properties in lease-up and not stabilized as
of 1/1/08. Per unit amounts are based on a weighted average of 9,239 units.
(8) Other - Primarily includes expenditures for properties sold during the
period, Equity Corporate Housing and condominium conversion properties.
For 2009, the Company estimates that it will spend approximately $1,050 per
(9) unit of capital expenditures for its same store properties inclusive of
unit renovation/rehab costs, or $800 per unit excluding unit
renovation/rehab costs.
Equity Residential
Discontinued Operations
(Amounts in thousands)
Nine Months Ended Quarter Ended
September 30, September 30,
2009 2008 2009 2008
REVENUES
Rental income $ 52,595 $ 120,729 $ 8,502 $ 33,910
Total revenues 52,595 120,729 8,502 33,910
EXPENSES (1)
Property and maintenance 18,707 36,972 3,857 10,796
Real estate taxes and 6,094 14,465 1,045 3,923
insurance
Property management - (62 ) - -
Depreciation 12,761 30,274 2,175 8,380
General and administrative 29 24 4 7
Total expenses 37,591 81,673 7,081 23,106
Discontinued operating 15,004 39,056 1,421 10,804
income
Interest and other income 12 233 2 93
Interest (2):
Expense incurred, net (308 ) (1,493 ) 2 (479 )
Amortization of deferred (32 ) (3 ) - (1 )
financing costs
Income and other tax (86 ) 1,014 (19 ) 359
(expense) benefit
Discontinued operations 14,590 38,807 1,406 10,776
Net gain on sales of 274,933 365,052 129,135 150,255
discontinued operations
Discontinued operations, net $ 289,523 $ 403,859 $ 130,541 $ 161,031
(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
Q3
2009 to Actual Q3
2009
Amounts Per
Share
Guidance midpoint Q3 2009 FFO $ $
- Diluted (1) (2) 146,393 0.505
Property NOI 5,617 0.019
Debt extinguishment gains 2,435 0.008
Interest 1,458 0.005
expense
Other expenses (write-off of (1,672 ) (0.006 )
pursuit costs)
Other 205 -
Actual Q3 2009 FFO - Diluted $ $
(1) (2) 154,436 0.531
Non-Comparable Items (3)
Nine Months Ended September Quarter Ended September 30,
30,
2009 2008 Variance 2009 2008 Variance
Impairment $ ) $ - $ ) $ - $ - $ -
(11,124 (11,124
Debt extinguishment
gains (interest and 4,455 266 4,189 2,435 266 2,169
other income)
Gain on sale of
investment
securities 4,943 - 4,943 - - -
(interest and other
income)
Non-cash
convertible debt
discount (includes (7,165 ) (7,554 ) 389 (2,140 ) (2,518 ) 378
extinguishment
write-offs)
Debt extinguishment
costs (interest):
Prepayment (35 ) (41 ) 6 - (41 ) 41
penalties
Write-off of
unamortized (2,328 ) (169 ) (2,159 ) (893 ) (163 ) (730 )
deferred financing
costs
Write-off of
unamortized (758 ) (25 ) (733 ) - (25 ) 25
premiums/
(discounts)/(OCI)
EQR 25% share of
unconsolidated
defeasance costs
((loss) income from
investments in (1,775 ) - (1,775 ) - - -
unconsolidated
entities)
Net gain on sales - 2,976 (2,976 ) - 2,976 (2,976 )
of land parcels
Net incremental
(loss) gain on (450 ) (2,643 ) 2,193 (785 ) 447 (1,232 )
sales of
condominium units
Other (4,655 ) (1,644 ) (3,011 ) (2,813 ) (1,179 ) (1,634 )
Net non-comparable $ ) $ ) $ ) $ ) $ (237 ) $ )
items (3) (18,892 (8,834 (10,058 (4,196 (3,959
Note: See page 26 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)
Q4 2009 2009
Expected FFO (1) (2) $0.49 to $0.53 $2.18 to $2.22
2009 Same Store Assumptions
Physical occupancy 93.7%
Revenue change (3.0%)
Expense change 0.5%
NOI change (5.0%)
(Note: 25 basis point change in NOI percentage = $0.01 per share change in
EPS/FFO)
2009 Transaction Assumptions
Consolidated rental acquisitions $150.0 million
Consolidated rental dispositions $900.0 million
Capitalization rate spread 125 basis points
2009 Debt Assumptions
Weighted average debt outstanding $9.9 billion to $10.0 billion
Weighted average interest rate
(reduced for capitalized interest 4.84%
and including prepayment
penalties)
Interest expense $479.0 million to $484.0
million
Unrestricted cash at 12/31/09 $580.0 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 requirement 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
expense
Interest and other income $16.5 million
Income and other tax expense $3.5 million
Net gain on sales of land parcels No amounts budgeted
Preferred share redemptions No amounts budgeted
Equity ATM share offerings No amounts budgeted
Weighted average Common Shares and 290.0 million
Units - Diluted
Note: See page 26 for definitions, footnotes and reconciliations of EPS to FFO.
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 24 and 25
Expected Expected
Expected Q3 2009 Q4 2009 2009
Amounts Per Share Per Share Per Share
Expected Earnings - $ 141,864 $ 0.490 $0.24 to $0.28 $1.37 to $1.41
Diluted (4)
Add: Expected 148,341 0.512 0.51 2.05
depreciation expense
Less: Expected net gain (143,812 ) (0.497 ) (0.26) (1.24)
on sales (4)
Expected FFO - Diluted $ 146,393 $ 0.505 $0.49 to $0.53 $2.18 to $2.22
(1) (2)
Definitions and Footnotes for Pages 24 and 25
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 September YTD 2009 and Third Quarter 2009 Same
Store Properties:
Nine Months Ended September 30, Quarter Ended September 30,
2009 2008 2009 2008
Operating income $ 400,768 $ 433,409 $ 133,096 $ 148,175
Adjustments:
Non-same store (55,423 ) (27,128 ) (10,459 ) (6,394 )
operating results
Fee and asset (7,928 ) (7,397 ) (2,653 ) (2,387 )
management revenue
Fee and asset 5,916 6,154 1,931 1,983
management expense
Depreciation 438,726 417,662 147,477 145,382
General and 30,476 34,040 9,881 9,849
administrative
Impairment 11,124 - - -
Same store NOI $ 823,659 $ 856,740 $ 279,273 $ 296,608
Source: Equity Residential
Contact: Equity Residential
Marty McKenna, 312/928-1901