Provides Outlook for 2010 Performance
CHICAGO--(BUSINESS WIRE)--
Equity Residential (NYSE: EQR) today reported results for the quarter
and year ended December 31, 2009. All per share results are reported on
a fully-diluted basis.
"2009 was a difficult year for our national economy, the apartment
business and for Equity Residential," said David J. Neithercut, Equity
Residential's President and CEO. "However, despite the highest
unemployment levels in recent history, our same store revenues were down
only 2.9% for the year, which is a credit to our people, our properties
and our platform. We are excited about our prospects as fundamentals
improve in the year ahead."
Fourth Quarter 2009
For the fourth quarter of 2009, the company reported earnings of $0.15
per share compared to a loss of $0.15 per share in the fourth quarter of
2008. The difference is primarily due to the fourth quarter 2008
impairment charge on various land parcels of $116.4 million, or $0.40
per share, partially offset by the $18.5 million, or $0.06 per share,
debt extinguishment gain in the same period and the previously announced
charges of approximately $24.9 million, or $0.09 per share, in the
fourth quarter of 2009 related to the tender offers for certain of the
company's notes.
FFO (funds from operations) for the quarter ended December 31, 2009 was
$0.43 per share compared to $0.27 per share in the same period of 2008.
Excluding the tender offer related charge, the company's fourth quarter
2009 FFO was $0.52 per share.
Excluding the one-time items discussed above, the difference between the
company's fourth quarter 2009 FFO of $0.52 per share and the fourth
quarter 2008 FFO of $0.61 per share is primarily due to the negative
impact of:
-- approximately $0.06 per share from lower net operating income (NOI) from
the company's same store portfolio; and
-- approximately $0.04 per share from dilution from the company's 2008 and
2009 transaction activity, partially offset by the positive impact of
NOI from lease-up activity.
Year Ended December 31, 2009
For the year ended December 31, 2009, the company reported earnings of
$1.27 per share compared to $1.46 per share for 2008.
FFO for the year ended December 31, 2009 was $2.12 per share compared to
$2.13 per share in the same period of 2008.
Same Store Results
On a same store fourth quarter to fourth quarter comparison, which
includes 117,683 apartment units, revenues decreased 4.7%, expenses
decreased 1.9% and NOI decreased 6.3%. The decrease in same store
revenues was primarily driven by a 4.5% decrease in average rental
rates. The decrease in same store expenses was primarily driven by
decreases in real estate taxes and payroll.
On a same store year over year comparison, which includes 113,598
apartment units, revenues decreased 2.9%, expenses decreased 0.1% and
NOI decreased 4.6%. The decrease in same store revenues was due to a
2.2% decrease in average rental rates and a 0.7% decrease in average
occupancy to 93.8%.
Acquisitions/Dispositions
During the fourth quarter and for the full year 2009, the company
acquired two properties, consisting of 566 units, for an aggregate
purchase price of $145.0 million at a weighted average capitalization
(cap) rate of 5.9%, as well as a long-term leasehold interest in a land
parcel located in Manhattan for a purchase price of $11.5 million.
Since the end of 2009, the company acquired five properties, consisting
of 1,174 units, for an aggregate purchase price of $495.6 million at a
weighted average cap rate of 5.7%. This includes the acquisition of the
two properties located in Manhattan which was previously announced on
February 1, 2010.
"We have been very patient for the last several years, waiting for the
right opportunities to acquire assets and grow our portfolio in core
markets," said Mr. Neithercut. "We have recently been presented with
such opportunities and are delighted to have acquired several extremely
well located, premier assets at significant discounts to replacement
cost. Our access to capital and our ability to execute large, complex
transactions will be competitive advantages in 2010."
During the fourth quarter of 2009, the company sold seven consolidated
properties, consisting of 2,236 apartment units, for an aggregate sale
price of $170.7 million at a weighted average cap rate of 7.8%
generating an unlevered internal rate of return (IRR) of 10.6%.
During 2009, the company sold 54 consolidated properties, consisting of
11,055 apartment units, for an aggregate sale price of $905.2 million at
a weighted average cap rate of 7.6% generating an unlevered IRR of 9.9%.
Debt Tender Offer Results
During the fourth quarter of 2009, the company purchased approximately
$344.3 million of certain of its non-exchangeable and exchangeable notes
in a debt tender offer. The aggregate consideration for the notes
accepted for purchase was approximately $366.2 million. These purchases
are described in more detail in the supplemental information on page 17
of this press release.
At-The-Market (ATM) Share Offering Program
During the fourth quarter of 2009, the company issued approximately 3.5
million common shares at an average price of $35.38 per share for total
consideration of approximately $123.7 million. In addition, during the
first quarter of 2010, the company has issued approximately 1.1 million
common shares at an average price of $33.87 per share for total
consideration of approximately $35.8 million. Cumulative to date, the
company has issued approximately 4.6 million common shares at an average
price of $35.03 per share for total consideration of approximately
$159.5 million under this program.
First Quarter and Full Year 2010 Guidance
The company has established an FFO guidance range of $0.48 to $0.52 per
share for the first quarter of 2010. The difference between the
company's fourth-quarter 2009 FFO of $0.52 per share, excluding the
tender offer related charge, and the midpoint of the first quarter 2010
FFO guidance range is primarily the result of the following:
-- the negative impact from lower same store NOI of approximately $0.03 per
share sequentially from the fourth quarter to the first quarter; and
-- the positive impact of lower interest expense of approximately $0.01 per
share.
The company has established an FFO guidance range of $1.95 to $2.15 per
share for the full year 2010. The assumptions underlying this guidance
can be found on page 25 of this release. The difference between the
company's full-year 2009 FFO of $2.21 per share, excluding the tender
offer related charge, and the midpoint of the company's guidance range
for full year 2010 FFO is primarily the result of:
-- the negative impact of lower same store NOI of approximately $0.16 per
share year over year;
-- the negative impact of net dilution from 2009 and 2010 transaction
activity of approximately $0.11 per share;
-- the positive impact of approximately $0.09 per share from the lease up
of development properties; and
-- the positive impact of approximately $0.03 per share from lower interest
expense.
First Quarter 2010 Conference Call
Equity Residential expects to announce first quarter 2010 results on
Wednesday, April 28, 2010 and host a conference call to discuss those
results at 10:00 a.m. CT on Thursday, April 29, 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 495
properties located in 23 states and the District of Columbia, consisting
of 137,007 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 2010 will take place tomorrow, Thursday,
February 4, 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)
Year Ended December 31, Quarter Ended December 31,
2009 2008 2009 2008
REVENUES
Rental income $ 1,933,365 $ 1,964,954 $ 480,569 $ 497,801
Fee and asset 10,346 10,715 2,418 3,318
management
Total revenues 1,943,711 1,975,669 482,987 501,119
EXPENSES
Property and 487,216 508,048 118,542 124,363
maintenance
Real estate taxes and 215,250 203,582 55,190 52,010
insurance
Property management 71,938 77,063 15,481 17,476
Fee and asset 7,519 7,981 1,603 1,827
management
Depreciation 582,280 559,468 148,383 146,718
General and 38,994 44,951 8,518 10,911
administrative
Impairment 11,124 116,418 - 116,418
Total expenses 1,414,321 1,517,511 347,717 469,723
Operating income 529,390 458,158 135,270 31,396
Interest and other 16,684 33,515 830 22,477
income
Other expenses (6,487 ) (5,760 ) (4,259 ) (2,874 )
Interest:
Expense incurred, net (503,828 ) (489,513 ) (143,331 ) (129,099 )
Amortization of
deferred financing (12,794 ) (9,684 ) (3,477 ) (2,946 )
costs
Income (loss) before
income and other
taxes, (loss)
from investments in
unconsolidated
entities, net
gain on sales of
unconsolidated
entities and land
parcels and
discontinued 22,965 (13,284 ) (14,967 ) (81,046 )
operations
Income and other tax (2,808 ) (5,284 ) 38 653
(expense) benefit
(Loss) from
investments in (2,815 ) (107 ) (443 ) (167 )
unconsolidated
entities
Net gain on sales of
unconsolidated 10,689 2,876 3,971 2,876
entities
Net gain on sales of - 2,976 - -
land parcels
Income (loss) from 28,031 (12,823 ) (11,401 ) (77,684 )
continuing operations
Discontinued 353,998 449,236 58,712 39,451
operations, net
Net income (loss) 382,029 436,413 47,311 (38,233 )
Net (income) loss
attributable to
Noncontrolling
Interests:
Operating Partnership (20,305 ) (26,126 ) (2,186 ) 2,496
Preference Interests (9 ) (15 ) - (4 )
and Units
Partially Owned 558 (2,650 ) 167 (885 )
Properties
Net income (loss)
attributable to 362,273 407,622 45,292 (36,626 )
controlling interests
Preferred (14,479 ) (14,507 ) (3,620 ) (3,620 )
distributions
Net income (loss)
available to Common $ 347,794 $ 393,115 $ 41,672 $ (40,246 )
Shares
Earnings per share -
basic:
Income (loss) from
continuing operations $ 0.05 $ (0.10 ) $ (0.05 ) $ (0.29 )
available to Common
Shares
Net income (loss)
available to Common $ 1.27 $ 1.46 $ 0.15 $ (0.15 )
Shares
Weighted average
Common Shares 273,609 270,012 275,519 271,293
outstanding
Earnings per share -
diluted:
Income (loss) from
continuing operations $ 0.05 $ (0.10 ) $ (0.05 ) $ (0.29 )
available to Common
Shares
Net income (loss)
available to Common $ 1.27 $ 1.46 $ 0.15 $ (0.15 )
Shares
Weighted average
Common Shares 290,105 270,012 275,519 271,293
outstanding
Distributions declared
per Common Share $ 1.64 $ 1.93 $ 0.3375 $ 0.4825
outstanding
Equity Residential
Consolidated Statements of Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Year Ended December 31, Quarter Ended December 31,
2009 (3) 2008 (3) 2009 (3) 2008 (3)
Net income (loss) $ 382,029 $ 436,413 $ 47,311 $ (38,233 )
Adjustments:
Net (income) loss
attributable to
Noncontrolling Interests:
Preference Interests and (9 ) (15 ) - (4 )
Units
Partially Owned 558 (2,650 ) 167 (885 )
Properties
Depreciation 582,280 559,468 148,383 146,718
Depreciation - Non-real (7,355 ) (8,269 ) (1,786 ) (2,212 )
estate additions
Depreciation - Partially
Owned and Unconsolidated 759 4,157 103 1,054
Properties
Net (gain) on sales of (10,689 ) (2,876 ) (3,971 ) (2,876 )
unconsolidated entities
Discontinued operations:
Depreciation 18,095 43,440 505 8,254
Net (gain) on sales of (335,299 ) (392,857 ) (60,366 ) (27,805 )
discontinued operations
Net incremental (loss)
gain on sales of (385 ) (3,932 ) 65 (1,289 )
condominium units
FFO (1) (2) 629,984 632,879 130,411 82,722
Preferred distributions (14,479 ) (14,507 ) (3,620 ) (3,620 )
FFO available to Common
Shares and Units - basic $ 615,505 $ 618,372 $ 126,791 $ 79,102
(1) (2)
FFO available to Common
Shares and Units - diluted $ 616,128 $ 619,020 $ 126,945 $ 79,102
(1) (2)
FFO per share and Unit - $ 2.13 $ 2.15 $ 0.44 $ 0.27
basic
FFO per share and Unit - $ 2.12 $ 2.13 $ 0.43 $ 0.27
diluted
Weighted average Common
Shares and
Units outstanding - basic 289,167 287,630 289,693 288,251
Weighted average Common
Shares and
Units outstanding - 290,508 290,479 291,984 289,511
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 $10.6
million and $13.3 million for the years ended December 31, 2009 and 2008,
respectively, and by approximately $3.4 million and $5.7 million for the
quarters ended December 31, 2009 and 2008, respectively.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
December 31, December 31,
2009 2008
ASSETS
Investment in real estate
Land $ 3,650,324 $ 3,671,299
Depreciable property 13,893,521 13,908,594
Projects under development 668,979 855,473
Land held for development 252,320 254,873
Investment in real estate 18,465,144 18,690,239
Accumulated depreciation (3,877,564 ) (3,561,300 )
Investment in real estate, net 14,587,580 15,128,939
Cash and cash equivalents 193,288 890,794
Investments in unconsolidated entities 6,995 5,795
Deposits - restricted 352,008 152,732
Escrow deposits - mortgage 17,292 19,729
Deferred financing costs, net 46,396 53,817
Other assets 213,956 283,304
Total assets $ 15,417,515 $ 16,535,110
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 4,783,446 $ 5,036,930
Notes, net 4,609,124 5,447,012
Lines of credit - -
Accounts payable and accrued expenses 58,537 108,463
Accrued interest payable 101,849 113,846
Other liabilities 272,236 289,562
Security deposits 59,264 64,355
Distributions payable 100,266 141,843
Total liabilities 9,984,722 11,202,011
Commitments and contingencies
Redeemable Noncontrolling Interests - Operating 258,280 264,394
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 December
31, 2009 and 1,951,475 shares issued and
outstanding as of December 31, 2008 208,773 208,786
Common Shares of beneficial interest, $0.01
par value;
1,000,000,000 shares authorized; 279,959,048
shares issued and outstanding as of December
31, 2009 and 272,786,760 shares issued and
outstanding as of December 31, 2008 2,800 2,728
Paid in capital 4,477,426 4,273,489
Retained earnings 353,659 456,152
Accumulated other comprehensive income (loss) 4,681 (35,799 )
Total shareholders' equity 5,047,339 4,905,356
Noncontrolling Interests:
Operating Partnership 116,120 137,645
Preference Interests and Units - 184
Partially Owned Properties 11,054 25,520
Total Noncontrolling Interests 127,174 163,349
Total equity 5,174,513 5,068,705
Total liabilities and equity $ 15,417,515 $ 16,535,110
Equity Residential
Portfolio Summary
As of December 31, 2009
% of 2010 Average
% of Stabilized Rental
Markets Properties Units Total Units NOI Rate (1)
1 DC Northern Virginia 27 9,107 6.6 % 10.1 % $ 1,643
2 New York Metro Area 23 6,410 4.7 % 9.5 % 2,493
3 South Florida 39 13,013 9.5 % 9.2 % 1,262
4 Boston 36 6,503 4.7 % 8.4 % 2,057
5 Los Angeles 36 7,463 5.4 % 7.9 % 1,666
6 Seattle/Tacoma 47 10,645 7.8 % 6.6 % 1,234
7 San Francisco Bay 33 6,239 4.6 % 5.7 % 1,611
Area
8 Phoenix 41 11,769 8.6 % 5.2 % 840
9 San Diego 14 4,491 3.3 % 5.0 % 1,610
10 Denver 23 7,963 5.8 % 4.9 % 1,002
11 Suburban Maryland 22 6,088 4.4 % 4.8 % 1,283
12 Orlando 26 8,042 5.9 % 4.4 % 968
13 Inland Empire, CA 14 4,519 3.3 % 3.6 % 1,301
14 Orange County, CA 10 3,307 2.4 % 3.3 % 1,482
15 Atlanta 23 7,157 5.2 % 3.1 % 904
16 New England 19 3,477 2.5 % 2.0 % 1,120
(excluding Boston)
17 Jacksonville 12 3,951 2.9 % 1.8 % 851
18 Portland, OR 10 3,417 2.5 % 1.6 % 924
19 Tampa 9 2,878 2.1 % 1.2 % 893
20 Raleigh/Durham 6 1,584 1.2 % 0.6 % 734
Top 20 Total 470 128,023 93.4 % 98.9 % 1,316
21 Central Valley, CA 5 804 0.6 % 0.4 % 984
22 Dallas/Ft. Worth 4 843 0.6 % 0.1 % 722
23 Other EQR 12 2,739 2.0 % 0.6 % 873
Total 491 132,409 96.6 % 100.0 % 1,301
Condominium 2 3 - - -
Conversion
Military Housing 2 4,595 3.4 % - -
Grand Total 495 137,007 100.0 % 100.0 % $ 1,301
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the month of December 2009.
Equity Residential
Portfolio as of December 31, 2009
Properties Units
Wholly Owned Properties 432 118,796
Partially Owned Properties:
Consolidated 27 5,530
Unconsolidated 34 8,086
Military Housing 2 4,595
495 137,007
Portfolio Rollforward Q4 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
9/30/2009 501 138,887
Acquisitions:
Rental Properties 2 566 $ 145,036 5.9 %
Land Parcel (one) - - $ 11,500
Dispositions:
Rental Properties:
Consolidated (7 ) (2,236 ) $ (170,710 ) 7.8 %
Unconsolidated (1) (3 ) (702 ) $ (38,318 ) 7.5 %
Condominium Conversion - (12 ) $ (2,235 )
Properties
Completed Developments 2 504
12/31/2009 495 137,007
Portfolio Rollforward 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
12/31/2008 548 147,244
Acquisitions:
Rental Properties (2) 2 566 $ 145,036 5.9 %
Land Parcel (one) - - $ 11,500
Dispositions:
Rental Properties:
Consolidated (54 ) (11,055 ) $ (905,219 ) 7.6 %
Unconsolidated (1) (2) (6 ) (1,434 ) $ (96,018 ) 7.5 %
Condominium Conversion (1 ) (62 ) $ (12,021 )
Properties
Completed Developments 6 1,866
Configuration Changes - (118 )
12/31/2009 495 137,007
(1) EQR owned a 25% interest in these unconsolidated rental properties. Sale
price listed is the gross sale price.
Both the acquisition and disposition amounts do not include the Company's
(2) buyout of its partner's interest in one previously unconsolidated property.
See the Partially Owned Entities schedule for additional discussion.
Equity Residential
Fourth Quarter 2009 vs. Fourth Quarter 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 117,683 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q4 2009 $ 440,421 $ $ 278,189 $ 94.0 % 14.1 %
162,232 1,329
Q4 2008 $ 462,183 $ $ 296,780 $ 94.2 % 15.4 %
165,403 1,392
Change $ (21,762 ) $ ) $ (18,591 ) $ (63 ) (0.2 %) (1.3 %)
(3,171
Change (4.7 %) (1.9 %) (6.3 %) (4.5 %)
Fourth Quarter 2009 vs. Third Quarter 2009
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 119,870 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q4 2009 $ 450,182 $ $ 283,381 $ 94.0 % 14.1 %
166,801 1,334
Q3 2009 $ 456,243 $ $ 283,189 $ 93.7 % 18.4 %
173,054 1,356
Change $ (6,061 ) $ ) $ 192 $ (22 ) 0.3 % (4.3 %)
(6,253
Change (1.3 %) (3.6 %) 0.1 % (1.6 %)
2009 vs. 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 113,598 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
2009 $ $ $ $ 93.8 % 61.0 %
1,725,774 644,294 1,081,480 1,352
2008 $ $ $ $ 94.5 % 63.7 %
1,778,183 645,123 1,133,060 1,383
Change $ (52,409 ) $ (829 ) $ (51,580 ) $ (31 ) (0.7 %) (2.7 %)
Change (2.9 %) (0.1 %) (4.6 %) (2.2 %)
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
Fourth Quarter 2009 vs. Fourth Quarter 2008
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year's Quarter
Q4 2009 Q4 2009 Q4 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 6,247 9.9 % $ 2,534 95.7 % (8.7 %) 2.0 % (14.5 %) (8.5 %) (0.3 %)
Area
2 DC Northern 8,781 9.9 % 1,629 94.5 % (2.0 %) (1.0 %) (2.5 %) (1.6 %) (0.4 %)
Virginia
3 South Florida 12,465 9.7 % 1,269 93.5 % (1.4 %) (7.2 %) 2.7 % (2.0 %) 0.6 %
4 Los Angeles 7,064 7.8 % 1,682 94.3 % (6.2 %) 1.5 % (9.9 %) (6.4 %) 0.3 %
5 Boston 5,609 7.2 % 1,949 95.4 % 1.4 % (1.4 %) 3.0 % 0.9 % 0.5 %
6 Seattle/Tacoma 8,115 6.4 % 1,303 90.9 % (11.7 %) 0.5 % (17.9 %) (8.5 %) (3.3 %)
7 San Francisco 5,708 6.3 % 1,646 94.3 % (7.1 %) (2.0 %) (9.5 %) (6.2 %) (0.9 %)
Bay Area
8 Phoenix 10,647 5.4 % 843 92.5 % (8.3 %) (3.4 %) (11.2 %) (7.0 %) (1.3 %)
9 San Diego 4,491 5.1 % 1,625 95.2 % (0.9 %) (4.9 %) 1.1 % (3.1 %) 2.1 %
10 Denver 7,416 4.9 % 1,006 94.0 % (3.8 %) 2.7 % (6.9 %) (3.9 %) 0.0 %
11 Orlando 7,525 4.6 % 960 94.0 % (5.3 %) (5.9 %) (5.0 %) (5.9 %) 0.6 %
12 Suburban 4,823 3.7 % 1,193 94.3 % 2.0 % (2.0 %) 4.5 % 0.5 % 1.4 %
Maryland
13 Inland Empire, 4,219 3.7 % 1,309 94.8 % (5.2 %) (2.8 %) (6.4 %) (5.4 %) 0.2 %
CA
14 Atlanta 5,979 3.5 % 955 95.0 % (6.0 %) (5.5 %) (6.3 %) (6.3 %) 0.4 %
15 Orange County, 3,175 3.3 % 1,512 94.6 % (7.2 %) 0.7 % (10.6 %) (6.4 %) (0.8 %)
CA
New England
16 (excluding 3,477 2.1 % 1,121 94.0 % (1.4 %) (0.2 %) (2.4 %) (1.3 %) (0.1 %)
Boston)
17 Jacksonville 3,711 2.0 % 867 93.5 % (2.8 %) (7.1 %) 0.2 % (3.1 %) 0.4 %
18 Portland, OR 3,113 1.8 % 955 94.6 % (5.2 %) 3.3 % (10.2 %) (4.1 %) (1.0 %)
19 Tampa 2,318 1.3 % 932 94.0 % (1.6 %) (5.5 %) 1.3 % (1.9 %) 0.2 %
20 Raleigh/Durham 1,368 0.6 % 754 95.0 % (4.6 %) (2.0 %) (6.4 %) (5.1 %) 0.4 %
Top 20 Markets 116,251 99.2 % 1,334 94.0 % (4.7 %) (1.9 %) (6.2 %) (4.5 %) (0.2 %)
All Other 1,432 0.8 % 935 94.6 % (5.2 %) 1.3 % (9.1 %) (5.6 %) 0.5 %
Markets
Total 117,683 100.0 % $ 1,329 94.0 % (4.7 %) (1.9 %) (6.3 %) (4.5 %) (0.2 %)
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units
for the period.
Equity Residential
Fourth Quarter 2009 vs. Third Quarter 2009
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Quarter
Q4 2009 Q4 2009 Q4 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 6,247 9.7 % $ 2,534 95.7 % (2.2 %) (0.8 %) (3.0 %) (2.4 %) 0.3 %
Area
2 DC Northern 8,781 9.7 % 1,629 94.5 % (1.3 %) (2.3 %) (0.8 %) (0.8 %) (0.5 %)
Virginia
3 South Florida 12,465 9.6 % 1,269 93.5 % (0.5 %) (9.1 %) 5.9 % (1.0 %) 0.5 %
4 Boston 6,021 7.7 % 2,012 95.3 % 0.9 % 1.0 % 0.8 % 1.2 % (0.3 %)
5 Los Angeles 7,191 7.7 % 1,684 94.2 % (1.0 %) (0.5 %) (1.3 %) (1.9 %) 0.9 %
6 San Francisco 6,075 6.6 % 1,639 94.2 % (1.5 %) (8.3 %) 2.4 % (2.6 %) 1.1 %
Bay Area
7 Seattle/Tacoma 8,540 6.5 % 1,298 91.1 % (4.0 %) (3.8 %) (4.2 %) (3.9 %) (0.1 %)
8 Phoenix 10,647 5.2 % 843 92.5 % (0.9 %) (7.0 %) 3.7 % (2.3 %) 1.3 %
9 Denver 7,755 5.1 % 1,017 94.0 % (1.4 %) (5.0 %) 0.5 % (1.2 %) (0.2 %)
10 San Diego 4,491 5.0 % 1,625 95.2 % (0.3 %) (0.7 %) (0.2 %) (0.9 %) 0.5 %
11 Orlando 8,042 4.8 % 969 94.0 % (2.2 %) (7.7 %) 1.5 % (2.3 %) 0.1 %
12 Suburban 4,823 3.6 % 1,193 94.3 % (0.3 %) 2.1 % (1.7 %) 0.3 % (0.5 %)
Maryland
13 Inland Empire, 4,219 3.6 % 1,309 94.8 % (1.6 %) (1.0 %) (1.9 %) (1.7 %) 0.1 %
CA
14 Atlanta 5,979 3.4 % 955 95.0 % (2.0 %) (9.5 %) 4.0 % (2.3 %) 0.3 %
15 Orange County, 3,175 3.2 % 1,512 94.6 % (2.1 %) 0.2 % (3.2 %) (2.8 %) 0.7 %
CA
New England
16 (excluding 3,477 2.1 % 1,121 94.0 % (0.4 %) (0.5 %) (0.2 %) (0.2 %) (0.2 %)
Boston)
17 Jacksonville 3,711 2.0 % 867 93.5 % (1.9 %) (2.6 %) (1.5 %) (1.8 %) (0.1 %)
18 Portland, OR 3,113 1.8 % 955 94.6 % (2.4 %) (1.2 %) (3.2 %) (3.3 %) 0.9 %
19 Tampa 2,318 1.3 % 932 94.0 % (0.6 %) (1.6 %) 0.0 % (0.6 %) (0.1 %)
20 Raleigh/Durham 1,368 0.6 % 754 95.0 % 1.1 % (4.9 %) 5.8 % (1.3 %) 2.2 %
Top 20 Markets 118,438 99.2 % 1,338 94.0 % (1.3 %) (3.7 %) 0.1 % (1.6 %) 0.3 %
All Other 1,432 0.8 % 935 94.6 % (1.3 %) 1.2 % (2.8 %) (0.9 %) (0.4 %)
Markets
Total 119,870 100.0 % $ 1,334 94.0 % (1.3 %) (3.6 %) 0.1 % (1.6 %) 0.3 %
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units
for the period.
Equity Residential
2009 vs. 2008
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year
2009 2009 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 6,247 10.6 % $ 2,631 94.9 % (4.8 %) 3.9 % (9.5 %) (4.7 %) (0.1 %)
Area
2 South Florida 11,761 9.1 % 1,278 93.3 % (2.1 %) (0.5 %) (3.2 %) (1.9 %) (0.2 %)
3 DC Northern 7,661 8.9 % 1,652 94.6 % (1.2 %) 1.0 % (2.3 %) (0.3 %) (1.0 %)
Virginia
4 Los Angeles 6,485 7.7 % 1,709 93.5 % (3.8 %) (1.7 %) (4.8 %) (3.1 %) (0.6 %)
5 Boston 5,609 7.2 % 1,933 95.1 % 1.1 % (1.4 %) 2.7 % 1.7 % (0.6 %)
6 Seattle/Tacoma 8,115 7.0 % 1,355 92.0 % (6.0 %) 1.2 % (9.9 %) (3.4 %) (2.5 %)
7 San Francisco 5,708 6.6 % 1,700 93.6 % (2.7 %) (0.4 %) (3.9 %) (0.7 %) (1.9 %)
Bay Area
8 Phoenix 10,239 5.4 % 865 92.6 % (7.5 %) (0.7 %) (11.6 %) (6.0 %) (1.5 %)
9 Denver 7,416 5.2 % 1,018 93.9 % (1.8 %) (0.4 %) (2.5 %) (1.0 %) (0.8 %)
10 San Diego 4,491 5.2 % 1,640 94.3 % (0.1 %) (2.4 %) 1.0 % (0.4 %) 0.3 %
11 Orlando 7,525 4.6 % 986 93.4 % (4.7 %) (2.4 %) (6.2 %) (4.5 %) (0.2 %)
12 Inland Empire, 4,219 3.9 % 1,333 94.5 % (2.6 %) (2.6 %) (2.6 %) (3.1 %) 0.5 %
CA
13 Orange County, 3,175 3.6 % 1,560 94.1 % (3.6 %) (1.2 %) (4.7 %) (3.2 %) (0.5 %)
CA
14 Atlanta 5,979 3.5 % 989 94.4 % (3.6 %) (0.3 %) (5.9 %) (3.0 %) (0.6 %)
15 Suburban 3,549 2.7 % 1,164 94.3 % 1.5 % 1.5 % 1.4 % 1.4 % 0.0 %
Maryland
New England
16 (excluding 3,477 2.1 % 1,120 94.1 % (1.1 %) 2.0 % (3.8 %) (0.9 %) (0.3 %)
Boston)
17 Jacksonville 3,711 2.0 % 881 93.4 % (3.5 %) (3.3 %) (3.7 %) (3.4 %) (0.1 %)
18 Portland, OR 3,113 1.9 % 979 94.2 % (1.6 %) 1.9 % (3.8 %) (0.6 %) (1.0 %)
19 Tampa 2,318 1.3 % 943 94.1 % (2.9 %) (2.3 %) (3.3 %) (3.0 %) 0.1 %
20 Raleigh/Durham 1,368 0.6 % 764 94.1 % (3.1 %) (0.9 %) (4.6 %) (2.1 %) (1.0 %)
Top 20 Markets 112,166 99.1 % 1,357 93.8 % (2.9 %) (0.1 %) (4.5 %) (2.2 %) (0.7 %)
All Other 1,432 0.9 % 948 94.5 % (3.3 %) 0.6 % (5.6 %) (3.3 %) 0.0 %
Markets
Total 113,598 100.0 % $ 1,352 93.8 % (2.9 %) (0.1 %) (4.6 %) (2.2 %) (0.7 %)
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units
for the period.
Equity Residential
Fourth Quarter 2009 vs. Fourth Quarter 2008
Same Store Operating Expenses
$ in thousands - 117,683 Same Store Units
% of Actual
Q4 2009
Actual Actual $ % Operating
Q4 2009 Q4 2008 Change Change Expenses
Real estate taxes $ 43,599 $ 44,684 $ (1,085 ) (2.4 %) 26.9 %
On-site payroll (1) 39,261 40,258 (997 ) (2.5 %) 24.2 %
Utilities (2) 25,162 24,496 666 2.7 % 15.5 %
Repairs and maintenance 23,674 24,270 (596 ) (2.5 %) 14.6 %
(3)
Property management 15,965 17,447 (1,482 ) (8.5 %) 9.8 %
costs (4)
Insurance 5,658 5,412 246 4.5 % 3.5 %
Leasing and advertising 4,224 3,754 470 12.5 % 2.6 %
Other operating expenses 4,689 5,082 (393 ) (7.7 %) 2.9 %
(5)
Same store operating $ 162,232 $ 165,403 $ (3,171 ) (1.9 %) 100.0 %
expenses
2009 vs. 2008
Same Store Operating Expenses
$ in thousands - 113,598 Same Store Units
% of Actual
2009
Actual Actual $ % Operating
2009 2008 Change Change Expenses
Real estate taxes $ 173,113 $ 171,234 $ 1,879 1.1 % 26.9 %
On-site payroll (1) 155,912 156,601 (689 ) (0.4 %) 24.2 %
Utilities (2) 100,184 99,045 1,139 1.1 % 15.5 %
Repairs and maintenance 94,556 95,142 (586 ) (0.6 %) 14.7 %
(3)
Property management 63,854 67,126 (3,272 ) (4.9 %) 9.9 %
costs (4)
Insurance 21,689 20,890 799 3.8 % 3.4 %
Leasing and advertising 15,664 15,043 621 4.1 % 2.4 %
Other operating expenses 19,322 20,042 (720 ) (3.6 %) 3.0 %
(5)
Same store operating $ 644,294 $ 645,123 $ (829 ) (0.1 %) 100.0 %
expenses
On-site payroll - Includes payroll and related expenses for on-site
(1) personnel including property managers, leasing consultants and maintenance
staff.
Utilities - Represents gross expenses prior to any recoveries under the
(2) 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 December 31, 2009
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts % of Total Rates (1) (years)
(1)
Secured $ 50.9 % 4.89 % 8.9
4,783,446
Unsecured 4,609,124 49.1 % 5.31 % 4.9
Total $ 100.0 % 5.11 % 6.9
9,392,570
Fixed Rate Debt:
Secured - Conventional $ 40.2 % 5.89 % 7.6
3,773,008
Unsecured - Public/Private 3,771,700 40.1 % 5.93 % 5.4
Fixed Rate Debt 7,544,708 80.3 % 5.91 % 6.5
Floating Rate Debt:
Secured - Conventional 382,939 4.0 % 2.18 % 4.2
Secured - Tax Exempt 627,499 6.7 % 0.65 % 20.5
Unsecured - Public/Private 801,824 8.6 % 1.37 % 1.7
Unsecured - Tax Exempt 35,600 0.4 % 0.37 % 19.0
Unsecured - Revolving Credit - - - 2.2
Facility
Floating Rate Debt 1,847,862 19.7 % 1.28 % 8.7
Total $ 100.0 % 5.11 % 6.9
9,392,570
(1) Net of the effect of any derivative instruments. Weighted average rates are
for the
year ended December 31, 2009.
Note: The Company capitalized interest of approximately $34.9 million and
$60.1
million during the years ended December 31, 2009 and 2008, respectively. The
Company capitalized interest of approximately $6.2 million and $15.0 million
during
the quarters ended December 31, 2009 and 2008, respectively.
Debt Maturity Schedule as of December 31, 2009
(Amounts in thousands)
Weighted Weighted
Average Average
Rates
Fixed Floating on Fixed Rates on
Year Rate (1) Rate (1) Total % of Total Rate Debt Total Debt
(1) (1)
2010 $ 34,123 $ 568,310 (2) $ 602,433 6.4 % 7.61 % 1.36 %
2011 1,066,274 (3) 261,805 1,328,079 14.1 % 5.52 % 4.83 %
2012 739,469 3,362 742,831 7.9 % 5.48 % 5.48 %
2013 266,347 301,824 568,171 6.1 % 6.76 % 4.89 %
2014 517,443 - 517,443 5.5 % 5.28 % 5.28 %
2015 355,632 - 355,632 3.8 % 6.41 % 6.41 %
2016 1,089,236 39,999 1,129,235 12.0 % 5.32 % 5.25 %
2017 1,346,553 456 1,347,009 14.3 % 5.87 % 5.87 %
2018 336,086 44,677 380,763 4.1 % 5.95 % 5.57 %
2019 502,244 20,766 523,010 5.6 % 5.19 % 5.01 %
2020+ 1,291,301 606,663 1,897,964 20.2 % 6.11 % 5.07 %
Total $ $ $ 100.0 % 5.85 % 5.03 %
7,544,708 1,847,862 9,392,570
(1) Net of the effect of any derivative instruments. Weighted average rates are
as of December 31, 2009.
Includes the Company's $500.0 million floating rate term loan facility,
(2) which matures on October 5, 2010, subject to two one-year extension options
exercisable by the Company.
Includes $482.5 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 December 31, 2009
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
Fixed
Rate
Notes:
6.950 % 03/02/11 (1) $ 93,096 $ 990 $ 94,086
6.625 % 03/15/12 (2) 253,858 (412 ) 253,446
5.500 % 10/01/12 (3) 222,133 (602 ) 221,531
5.200 % 04/01/13 (4) 400,000 (385 ) 399,615
5.250 % 09/15/14 500,000 (289 ) 499,711
6.584 % 04/13/15 300,000 (590 ) 299,410
5.125 % 03/15/16 500,000 (332 ) 499,668
5.375 % 08/01/16 400,000 (1,221 ) 398,779
5.750 % 06/15/17 650,000 (3,815 ) 646,185
7.125 % 10/15/17 150,000 (505 ) 149,495
7.570 % 08/15/26 140,000 - 140,000
3.850 % 08/15/26 (5) 482,545 (12,771 ) 469,774
Fair Value Derivative (4) (300,000 ) - (300,000 )
Adjustments
3,791,632 (19,932 ) 3,771,700
Floating Rate Tax
Exempt Notes:
7-Day SIFMA 12/15/28 (6) 35,600 - 35,600
Floating
Rate
Notes:
04/01/13 (4) 300,000 - 300,000
Fair Value Derivative (4) 1,824 - 1,824
Adjustments
Term Loan LIBOR+0.50% 10/05/10 (6)(7) 500,000 - 500,000
Facility
801,824 - 801,824
Revolving
Credit LIBOR+0.50% 02/28/12 (8) - - -
Facility:
Total $ $
Unsecured 4,629,056 $ (19,932 ) 4,609,124
Debt
Note: SIFMA stands for the Securities Industry and Financial Markets
Association and is the tax-
exempt index equivalent of LIBOR.
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. On
(1) December 10, 2009, the Company repurchased $21.7 million of these notes at
a price of 106% of par pursuant to a cash tender offer announced on
December 2, 2009.
On December 10, 2009, the Company repurchased $146.1 million of these notes
(2) at a price of 108% of par pursuant to a cash tender offer announced on
December 2, 2009.
On December 10, 2009, the Company repurchased $127.9 million of these notes
(3) at a price of 107% of par pursuant to a cash tender offer announced on
December 2, 2009.
(4) $300.0 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 quarter
ended March 31, 2009, the Company repurchased $17.5 million of these notes
at a price of 88.4% of par. On December 31, 2009, the Company repurchased
(5) $48.5 million of these notes at par pursuant to a cash tender offer
announced on December 2, 2009. 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.
(6) Notes are private. All other unsecured debt is public.
Represents the Company's $500.0 million term loan facility, which matures
(7) on October 5, 2010, subject to two one-year extension options exercisable
by the Company.
As of December 31, 2009, there was no amount outstanding and approximately
(8) $1.37 billion available on the Company's unsecured revolving credit
facility.
Equity Residential
Selected Unsecured Public Debt Covenants
December 31, September 30,
2009 2009
Total Debt to Adjusted Total Assets 48.8 % 50.3 %
(not to exceed 60%)
Secured Debt to Adjusted Total 24.9 % 25.0 %
Assets (not to exceed 40%)
Consolidated Income Available for
Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.44 2.26
Total Unsecured Assets to Unsecured
Debt
(must be at least 150%) 256.5 % 241.3 %
These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP")
outstanding
unsecured public debt. Equity Residential is the general partner of ERPOP.
Debt Repurchases
(Amounts in thousands)
Fourth Quarter 2009 Activity
Write-off of
Bonds Price Price Extinguishment Unamortized
Security Retired Paid to Par (Loss)/Gain Costs
2011 6.95%
Public $ 21,710 $ 23,013 106.0 % $ (1,303 ) $ 177
Notes
2012 6.625%
Public 146,142 157,833 108.0 % (11,691 ) (499 )
Notes
2012 5.50%
Public 127,867 136,818 107.0 % (8,951 ) (912 )
Notes
2026 3.85%
Convertible 48,547 48,547 100.0 % - (1,755 )
Notes (1)
Total $ 344,266 $ 366,211 106.4 % $ (21,945 ) $ (2,989 )
2009 Activity
Write-off of
Bonds Price Price Extinguishment Unamortized
Security Retired Paid to Par (Loss)/Gain Costs
2009 4.75%
Public $ 105,161 $ 105,161 100.0 % $ - $ (125 )
Notes
2011 6.95%
Public 206,904 208,207 100.6 % (1,303 ) (1,202 )
Notes
2012 6.625%
Public 146,142 157,833 108.0 % (11,691 ) (499 )
Notes
2012 5.50%
Public 127,867 136,818 107.0 % (8,951 ) (912 )
Notes
2026 3.85%
Convertible 66,012 63,992 96.9 % 2,020 (2,634 )
Notes (1)
Total $ 652,086 $ 672,011 103.1 % $ (19,925 ) $ (5,372 )
(1) 2026 3.85% Convertible Notes are putable to the Company in 2011.
Equity Residential
Capital Structure as of December 31, 2009
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 4,783,446 50.9 %
Unsecured Debt 4,609,124 49.1 %
Total Debt 9,392,570 100.0 % 48.1 %
Common Shares (includes Restricted 279,959,048 95.2 %
Shares)
Units 14,197,969 4.8 %
Total Shares and Units 294,157,017 100.0 %
Common Share Equivalents (see below) 398,038
Total outstanding at quarter-end 294,555,055
Common Share Price at December 31, $ 33.78
2009
9,950,070 98.0 %
Perpetual Preferred Equity (see 200,000 2.0 %
below)
Total Equity 10,150,070 100.0 % 51.9 %
Total Market Capitalization $19,542,640 100.0 %
Convertible Preferred Equity as of December 31, 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 December 31, 2009
(Amounts in thousands except for share and per share amounts)
Annual Annual Weighted
Redemption Outstanding Liquidation Dividend Dividend Average
Series Date Shares Value Per 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
2009 2008 (1) Q409 (1) Q408 (1)
Weighted Average
Amounts Outstanding for
Net Income Purposes:
Common
Shares - 273,609,477 270,011,946 275,519,463 271,292,534
basic
Shares issuable from
assumed
conversion/vesting of:
- OP 15,557,540 - - -
Units
- long-term
compensation award 938,094 - - -
shares/units
Total Common Shares 290,105,111 270,011,946 275,519,463 271,292,534
and Units - diluted
Weighted Average
Amounts Outstanding for
FFO Purposes:
Common
Shares - 273,609,477 270,011,946 275,519,463 271,292,534
basic
OP Units 15,557,540 17,618,514 14,173,726 16,958,491
- basic
Total Common Shares 289,167,017 287,630,460 289,693,189 288,251,025
and OP Units - basic
Shares issuable from
assumed
conversion/vesting of:
- convertible
preferred 402,501 419,573 398,038 -
shares/units
- long-term
compensation award 938,094 2,429,163 1,892,471 1,260,145
shares/units
Total Common Shares 290,507,612 290,479,196 291,983,698 289,511,170
and Units - diluted
Period Ending
Amounts
Outstanding:
Common Shares
(includes Restricted 279,959,048
Shares)
Units 14,197,969
Total
Shares 294,157,017
and Units
Potential common shares issuable from the assumed conversion of OP Units
and the exercise/vesting of long-term compensation award shares/units are
(1) automatically anti-dilutive and therefore excluded from the diluted
earnings per share calculation as the Company had a loss from continuing
operations for the year ended December 31, 2008 and the fourth quarters
ended December 31, 2009 and 2008, respectively.
Equity Residential
Partially Owned Entities as of December 31, 2009
(Amounts in thousands except for project and unit amounts)
Consolidated Unconsolidated
Development Projects
Held for Institutional
and/or Completed, Completed Joint
Under Not
Development Stabilized and Other Total Ventures (5)
(4) Stabilized
Total projects (1) - 3 3 21 27 34
Total units (1) - 1,024 710 3,796 5,530 8,086
Operating information
for the year
ended 12/31/09 (at
100%):
Operating revenue $ 406 $ 7,078 $ $ $ $
11,238 56,565 75,287 91,200
Operating expenses 1,506 4,209 5,484 19,678 30,877 42,143
Net operating (loss) (1,100 ) 2,869 5,754 36,887 44,410 49,057
income
Depreciation 370 2,744 5,927 15,032 24,073 19,341
General and 128 446 5 78 657 423
administrative/other
Operating (loss) (1,598 ) (321 ) (178 ) 21,777 19,680 29,293
income
Interest and other 28 17 - 109 154 443
income
Other expenses (508 ) - - (17 ) (525 ) -
Interest:
Expense incurred, (1,552 ) (3,743 ) (3,158 ) (20,135 ) (28,588 ) (41,417 )
net
Amortization of
deferred financing (211 ) (176 ) (191 ) (185 ) (763 ) (1,004 )
costs
Income and other tax (53 ) - - (28 ) (81 ) (318 )
(expense) benefit
Net (loss) income $ ) $ ) $ ) $ 1,521 $ ) $ )
(3,894 (4,223 (3,527 (10,123 (13,003
Debt - Secured (2):
EQR Ownership (3) $ $ $ $ $ $
303,253 218,965 113,385 219,136 854,739 101,809
Noncontrolling - - - 82,732 82,732 305,426
Ownership
Total (at 100%) $ $ $ $ $ $
303,253 218,965 113,385 301,868 937,471 407,235
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 $29.8
million, July 1, 2019, 5.305%. A portion of this mortgage debt is also
(5) partially collateralized by $42.6 million in unconsolidated restricted cash
set aside from the net proceeds of property sales. During the third quarter
of 2009, the Company acquired its partner's interest in one of the
previously unconsolidated properties containing 250 units for $18.5 million
and as a result, the project is now consolidated and wholly owned.
Equity Residential
Consolidated Development Projects as of December 31, 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 $ 264,663 264,663 $ - 98 % 57 % 53 % Q1 2010 Q1 2011
Hudson)
Red 160
(a.k.a. Redmond, WA 250 84,382 51,920 51,920 - 62 % - - Q1 2011 Q1 2012
Redmond Way)
Projects
Under
Development 730 354,340 316,583 316,583 -
- Wholly
Owned
Projects
Under
Development
- Partially
Owned:
The
Brooklyner
(a.k.a. 111 Brooklyn, NY 490 283,968 227,882 227,882 105,217 85 % 13 % 2 % Q3 2010 Q3 2011
Lawrence
Street)
Westgate Pasadena, CA 480 170,558 124,514 124,514 163,160 (2 ) 70 % 11 % 5 % Q2 2011 Q2 2012
Projects
Under
Development 970 454,526 352,396 352,396 268,377
- Partially
Owned
Projects
Under 1,700 808,866 668,979 668,979 268,377 (3 )
Development
Completed
Not
Stabilized -
Wholly Owned
(4):
Third Square Cambridge,
(a.k.a. 303 MA 482 257,457 256,263 - - 81 % 78 % Completed Q3 2010
Third) (5)
Reserve at Mill Creek,
Town Center WA 100 24,464 20,591 - - 69 % 60 % Completed Q3 2010
II
Reunion at
Redmond Redmond, WA 321 53,175 53,151 - - 54 % 52 % Completed Q1 2011
Ridge
Projects
Completed
Not 903 335,096 330,005 - -
Stabilized -
Wholly Owned
Completed
Not
Stabilized -
Partially
Owned (4):
Veridian
(a.k.a. Silver 457 149,962 149,289 - 113,282 97 % 95 % Completed Q1 2010
Silver Spring, MD
Spring)
Montclair Montclair, 163 48,730 45,076 - 33,434 49 % 40 % Completed Q3 2010
Metro NJ
Red Road South Miami, 404 128,816 125,460 - 72,249 82 % 78 % Completed Q4 2010
Commons FL
Projects
Completed
Not 1,024 327,508 319,825 - 218,965
Stabilized -
Partially
Owned
Projects
Completed 1,927 662,604 649,830 - 218,965
Not
Stabilized
Completed
and
Stabilized
During the
Quarter -
Wholly
Owned:
Mosaic at Hyattsville, 260 59,733 59,643 - 45,418 96 % 95 % Completed Stabilized
Metro MD
Projects
Completed
and
Stabilized 260 59,733 59,643 - 45,418
During the
Quarter -
Wholly Owned
Completed
and
Stabilized
During the
Quarter -
Partially
Owned:
1401 South
State Chicago, IL 278 68,923 68,455 - 52,125 93 % 91 % Completed Stabilized
(a.k.a. City
Lofts)
Projects
Completed
and
Stabilized 278 68,923 68,455 - 52,125
During the
Quarter -
Partially
Owned
Projects
Completed
and 538 128,656 128,098 - 97,543
Stabilized
During the
Quarter
Total 4,165 $ $ $ $
Projects 1,600,126 1,446,907 668,979 584,885
Land Held $ $
for N/A N/A $ 252,320 252,320 34,876
Development
NOI
CONTRIBUTION Total Q4 2009
FROM Capital NOI
DEVELOPMENT Cost (1)
PROJECTS
Projects $
Under $ 808,866 (177 )
Development
Completed
Not 662,604 3,991
Stabilized
Completed
and
Stabilized 128,656 1,680
During the
Quarter
Total
Development $ $
NOI 1,600,126 5,494
Contribution
(1) Total capital cost represents estimated development cost for projects under
development and/or developed 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 $47.4
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 December 31, 2009.
(3) Of the approximately $139.9 million of capital cost remaining to be funded
at 12/31/09 for projects under development, $102.1 million will be funded by
fully committed third party bank loans and the remaining $37.8 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 96% leased and 94%
occupied. Phase II is 58% leased and 53% occupied.
Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Year Ended December 31, 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 113,598 94,556 832 77,121 679 171,677 1,511 69,808 614 44,611 393 114,419 1,007 (9 ) 286,096 2,518
(6)
Non-Same
Store 10,728 8,649 880 5,596 570 14,245 1,450 2,361 240 3,675 374 6,036 614 20,281 2,064
Properties
(7)
Other (8) - 2,645 8,776 11,421 2,130 1,352 3,482 14,903
Total 124,326 $ $ $ $ $ $ $
105,850 91,493 197,343 74,299 49,638 123,937 321,280
Total Units - Excludes 8,086 unconsolidated units and 4,595 military
(1) housing 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 $28.0
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 January 1, 2008. Per unit amounts are based on a weighted average of
9,823 units.
(8) Other - Primarily includes expenditures for properties sold during the
period.
For 2010, the Company estimates that it will spend approximately $1,075 per
(9) unit of capital expenditures for its same store properties inclusive of
unit renovation/rehab costs, or $825 per unit excluding unit
renovation/rehab costs.
Equity Residential
Discontinued Operations
(Amounts in thousands)
Year Ended Quarter Ended
December 31, December 31,
2009 2008 2009 2008
REVENUES
Rental income $ 72,823 $ 173,243 $ 1,641 $ 33,853
Total revenues 72,823 173,243 1,641 33,853
EXPENSES (1)
Property and maintenance 26,681 52,785 2,581 10,456
Real estate taxes and 9,062 19,853 1,251 3,643
insurance
Property management - (62 ) - -
Depreciation 18,095 43,440 505 8,254
General and administrative 34 29 5 5
Total expenses 53,872 116,045 4,342 22,358
Discontinued operating income 18,951 57,198 (2,701 ) 11,495
(loss)
Interest and other income 21 249 9 16
Other expenses (1 ) - (1 ) -
Interest (2):
Expense incurred, net (1,104 ) (2,897 ) (208 ) (693 )
Amortization of deferred (333 ) (17 ) (4 ) (4 )
financing costs
Income and other tax (expense) 1,165 1,846 1,251 832
benefit
Discontinued operations 18,699 56,379 (1,654 ) 11,646
Net gain on sales of 335,299 392,857 60,366 27,805
discontinued operations
Discontinued operations, net $ 353,998 $ 449,236 $ 58,712 $ 39,451
(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 Q4
2009 to Actual Q4
2009
Amounts Per Share
Guidance midpoint Q4 2009 FFO - Diluted $ $ 0.506
(1) (2) 147,085
Property NOI 3,906 0.013
Debt extinguishment costs related to (24,934 ) (0.085 )
tender offers
Income and other taxes 1,676 0.006
Other expenses (2,702 ) (0.009 )
Other 1,914 0.004
Actual Q4 2009 FFO - Diluted (1) (2) $ $ 0.435
126,945
Non-Comparable Items (3)
Year Ended December 31, Quarter Ended December 31,
2009 2008 Variance 2009 2008 Variance
Impairment $ ) $ ) $ $ - $ ) $
(11,124 (116,418 105,294 (116,418 116,418
Debt extinguishment
gains (interest and 4,455 18,737 (14,282 ) - 18,471 (18,471 )
other income)
Gain on sale of
investment
securities 4,943 - 4,943 - - -
(interest and other
income)
Write-off of
pursuit costs (4,838 ) (5,535 ) 697 (2,865 ) (2,679 ) (186 )
(other expenses)
Transaction costs (1,650 ) (225 ) (1,425 ) (1,395 ) (195 ) (1,200 )
(other expenses)
Non-cash
convertible debt
discount (includes (10,590 ) (13,272 ) 2,682 (3,425 ) (5,718 ) 2,293
extinguishment
write-offs)
Debt extinguishment
costs (interest):
Prepayment (21,980 ) (81 ) (21,899 ) (21,945 ) (40 ) (21,905 )
premiums/penalties
Write-off of
unamortized (3,536 ) (1,020 ) (2,516 ) (1,208 ) (851 ) (357 )
deferred financing
costs
Write-off of
unamortized (907 ) (53 ) (854 ) (149 ) (28 ) (121 )
premiums/
(discounts)/(OCI)
EQR 25% share of
unconsolidated
defeasance costs
((loss) from
investments in (1,775 ) - (1,775 ) - - -
unconsolidated
entities)
Net gain on sales - 2,976 (2,976 ) - - -
of land parcels
Net incremental
(loss) gain on (385 ) (3,932 ) 3,547 65 (1,289 ) 1,354
sales of
condominium units
Other (1,600 ) 83 (1,683 ) 827 (1,159 ) 1,986
Net non-comparable $ ) $ ) $ $ ) $ ) $
items (3) (48,987 (118,740 69,753 (30,095 (109,906 79,811
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.
2010 Earnings Guidance (per share diluted)
Q1 2010 2010
Expected FFO (1) (2) $0.48 to $0.52 $1.95 to $2.15
2010 Same Store Assumptions
Physical occupancy 94.3%
Revenue change (3.0%) to (1.0%)
Expense change 1.0% to 2.0%
NOI change (6.0%) to (2.0%)
(Note: 25 basis point change in NOI percentage = $0.01 per share change in
EPS/FFO)
2010 Transaction Assumptions
Consolidated rental acquisitions $1.0 billion
Consolidated rental dispositions $600.0 million
Capitalization rate spread 150 basis points
2010 Debt Assumptions
Weighted average debt $9.4 billion to $9.6 billion
outstanding
Weighted average interest rate
(reduced for capitalized 4.96%
interest and including
prepayment penalties)
Interest expense $466.0 million to $476.0
million
Note: Debt guidance assumes no additional debt offerings and no additional debt
extinguishments, but does include approximately $7.8 million of interest expense
for the requirement to expense the implied option value inherent in convertible
debt. The terms of the Company's debt covenants do not include this charge as
interest expense.
2010 Other Guidance Assumptions
General and administrative $38.0 million to $40.0 million
expense
Interest and other income $1.0 million to $3.0 million
Other expenses (write-off of $9.0 million to $12.0 million
pursuit and transaction costs)
Income and other tax expense $1.0 million to $2.0 million
Net gain on sales of land No amounts budgeted
parcels
Preferred share redemptions No amounts budgeted
Equity ATM share offerings No additional amounts budgeted
Weighted average Common Shares 297.0 million
and 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 Q4 2009 Q1 2010 2010
Amounts Per Share Per Share Per Share
Expected Earnings - $ 75,251 $ 0.259 $0.17 to $0.21 $0.67 to $0.87
Diluted (4)
Add: Expected 147,495 0.508 0.50 2.03
depreciation expense
Less: Expected net gain (75,661 ) (0.261 ) (0.19 ) (0.75 )
on sales (4)
Expected FFO - Diluted $ 147,085 $ 0.506 $0.48 to $0.52 $1.95 to $2.15
(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 2009 and Fourth Quarter
2009 Same Store Properties:
Year Ended December 31, Quarter Ended December 31,
2009 2008 2009 2008
Operating income $ 529,390 $ 458,158 $ 135,270 $ 31,396
Adjustments:
Non-same store (77,481 ) (43,201 ) (13,167 ) (7,172 )
operating results
Fee and asset (10,346 ) (10,715 ) (2,418 ) (3,318 )
management revenue
Fee and asset 7,519 7,981 1,603 1,827
management expense
Depreciation 582,280 559,468 148,383 146,718
General and 38,994 44,951 8,518 10,911
administrative
Impairment 11,124 116,418 - 116,418
Same store NOI $ 1,081,480 $ 1,133,060 $ 278,189 $ 296,780
Source: Equity Residential
Contact: Equity Residential
Marty McKenna, 312/928-1901