Same Store Revenues Exceeding Company's Expectations
CHICAGO--(BUSINESS WIRE)--
Equity Residential (NYSE: EQR) today reported results for the quarter
ended March 31, 2010. All per share results are reported on a
fully-diluted basis.
"We are very pleased with our same store revenue results for the quarter
and encouraged by the improving fundamentals we are seeing across all of
our markets," said David J. Neithercut, Equity Residential's President
and CEO. "If these trends continue, we expect sequential same store
revenues to be positive as soon as the second quarter and we should
achieve both same store revenue and FFO (funds from operations) results
for the year at the upper end of our guidance ranges."
First Quarter 2010
For the first quarter of 2010, the company reported earnings of $0.18
per share compared to $0.28 per share in the first quarter of 2009.
FFO for the quarter ended March 31, 2010 was $0.51 per share excluding
the negative impact of property acquisition costs previously budgeted to
occur in the second quarter and unexpected storm related costs as a
result of severe snow on the East Coast and heavy rains in California
and Arizona. Reported FFO for the period including these items was $0.49
per share.
The difference between the company's first quarter 2010 FFO of $0.49 per
share and the first quarter 2009 FFO of $0.57 per share is primarily due
to:
-- a negative impact of approximately $0.09 per share from lower total
property net operating income (NOI) driven by lower same store NOI,
inclusive of the impact of the unexpected storm related costs mentioned
above, and dilution from the company's 2009 transaction activity
partially offset by the positive impact of NOI from lease-up activity;
-- a negative impact of approximately $0.02 per share from accelerated
property acquisition and other miscellaneous costs; and
-- a positive impact of approximately $0.03 per share from lower total
interest expense as a result of the company's debt tenders in 2009.
Same Store Results
On a same store first quarter to first quarter comparison, which
includes 117,512 apartment units, revenues decreased 2.9%, expenses
increased 1.5% and NOI decreased 5.6%. Same store revenue results were
impacted by the following, all of which were better than company
expectations:
-- a 100 basis point increase in occupancy to 94.7%;
-- a 170 basis point decrease in turnover;
-- the spread between expiring lease rates and net effective new lease
rates was less than expected, in part, because some markets turned
positive; and
-- renewal lease rate increases across the company's portfolio.
Acquisitions/Dispositions
During the first quarter of 2010, the company acquired six properties,
consisting of 1,467 apartment units, for an aggregate purchase price of
$639.3 million at an average capitalization (cap) rate of 5.6% and one
land parcel, located adjacent to one of the company's properties in
Arlington, Virginia, for approximately $12.0 million.
Since the end of the first quarter, the company acquired one property,
the previously announced acquisition of 425 Mass in Washington, D.C.,
for a purchase price of approximately $166.8 million.
During the first quarter of 2010, the company sold eight consolidated
properties, consisting of 2,011 apartment units, for an aggregate sale
price of $145.9 million at an average cap rate of 7.5% generating an
unlevered internal rate of return (IRR) of 9.4%. The company has not
sold any properties since the end of the first quarter.
At-The-Market (ATM) Share Offering Program
During the first quarter of 2010, the company issued approximately 1.1
million common shares at an average price of $33.87 per share for total
consideration of approximately $35.8 million under its ATM Share
Offering Program. The company has approximately 12.4 million shares
available for issuance under this program and has not issued any such
shares since January 14, 2010.
Second Quarter 2010 Guidance
The company has established an FFO guidance range of $0.53 to $0.57 per
share for the second quarter of 2010. The primary drivers of the
difference between the company's first quarter 2010 actual FFO of $0.49
per share and the midpoint of the second quarter 2010 guidance range of
$0.55 per share are:
-- a positive impact of approximately $0.03 per share from same store NOI;
-- a positive impact of approximately $0.02 per share from 2010
acquisitions and lease up activity; and
-- a positive impact of approximately $0.01 per share from the timing of
property acquisition costs.
Second Quarter 2010 Conference Call
Equity Residential expects to announce second quarter 2010 results on
Wednesday, July 28, 2010 and host a conference call to discuss those
results at 10:00 a.m. CT on Thursday, July 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 491
properties located in 23 states and the District of Columbia, consisting
of 136,470 apartment units. For more information on Equity Residential,
please visit our website at www.equityapartments.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.equityapartments.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 will take place tomorrow, Thursday, April 29, at 10:00 a.m.
Central. Please visit the Investor Information section of the
company's web site at www.equityapartments.com
for the link. A replay of the web cast will be available for two
weeks at this site.
Equity Residential
Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended March 31,
2010 2009
REVENUES
Rental income $ 486,268 $ 480,215
Fee and asset management 2,422 2,863
Total revenues 488,690 483,078
EXPENSES
Property and maintenance 126,753 124,932
Real estate taxes and insurance 57,607 52,539
Property management 20,680 19,014
Fee and asset management 2,014 2,003
Depreciation 152,319 141,809
General and administrative 10,721 10,394
Total expenses 370,094 350,691
Operating income 118,596 132,387
Interest and other income 2,225 6,017
Other expenses (4,383 ) (292 )
Interest:
Expense incurred, net (115,297 ) (123,502 )
Amortization of deferred financing costs (3,197 ) (2,962 )
(Loss) income before income and other taxes, (loss)
from investments in
unconsolidated entities, net gain on sales of
unconsolidated entities
and discontinued operations (2,056 ) 11,648
Income and other tax (expense) benefit (166 ) (2,128 )
(Loss) from investments in unconsolidated entities (464 ) (195 )
Net gain on sales of unconsolidated entities 478 2,765
(Loss) income from continuing operations (2,208 ) 12,090
Discontinued operations, net 60,064 73,331
Net income 57,856 85,421
Net (income) loss attributable to Noncontrolling
Interests:
Operating Partnership (2,623 ) (4,691 )
Preference Interests and Units - (4 )
Partially Owned Properties 250 69
Net income attributable to controlling interests 55,483 80,795
Preferred distributions (3,620 ) (3,620 )
Net income available to Common Shares $ 51,863 $ 77,175
Earnings per share - basic:
(Loss) income from continuing operations available $ (0.02 ) $ 0.03
to Common Shares
Net income available to Common Shares $ 0.18 $ 0.28
Weighted average Common Shares outstanding 280,645 272,324
Earnings per share - diluted:
(Loss) income from continuing operations available $ (0.02 ) $ 0.03
to Common Shares
Net income available to Common Shares $ 0.18 $ 0.28
Weighted average Common Shares outstanding 280,645 288,853
Distributions declared per Common Share outstanding $ 0.3375 $ 0.4825
Equity Residential
Consolidated Statements of Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended March 31,
2010 2009
Net income $ 57,856 $ 85,421
Adjustments:
Net (income) loss attributable to Noncontrolling
Interests:
Preference Interests and Units - (4 )
Partially Owned Properties 250 69
Depreciation 152,319 141,809
Depreciation - Non-real estate additions (1,693 ) (1,898 )
Depreciation - Partially Owned and Unconsolidated 11 183
Properties
Net (gain) on sales of unconsolidated entities (478 ) (2,765 )
Discontinued operations:
Depreciation 415 8,679
Net (gain) on sales of discontinued operations (60,036 ) (61,871 )
Net incremental gain (loss) on sales of condominium 388 (64 )
units
FFO (1) (2) 149,032 169,559
Preferred distributions (3,620 ) (3,620 )
FFO available to Common Shares and Units - basic (1) $ 145,412 $ 165,939
(2)
FFO available to Common Shares and Units - diluted (1) $ 145,565 $ 166,096
(2)
FFO per share and Unit - basic $ 0.49 $ 0.57
FFO per share and Unit - diluted $ 0.49 $ 0.57
Weighted average Common Shares and
Units outstanding - basic 294,450 288,710
Weighted average Common Shares and
Units outstanding - diluted 297,286 289,259
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.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
March 31, December 31,
2010 2009
ASSETS
Investment in real estate
Land $ 3,948,967 $ 3,650,324
Depreciable property 14,387,262 13,893,521
Projects under development 429,444 668,979
Land held for development 266,287 252,320
Investment in real estate 19,031,960 18,465,144
Accumulated depreciation (3,972,022 ) (3,877,564 )
Investment in real estate, net 15,059,938 14,587,580
Cash and cash equivalents 60,186 193,288
Investments in unconsolidated entities 5,645 6,995
Deposits - restricted 163,378 352,008
Escrow deposits - mortgage 20,675 17,292
Deferred financing costs, net 44,034 46,396
Other assets 164,557 213,956
Total assets $ 15,518,413 $ 15,417,515
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 4,825,356 $ 4,783,446
Notes, net 4,578,377 4,609,124
Lines of credit 91,000 -
Accounts payable and accrued expenses 95,046 58,537
Accrued interest payable 68,895 101,849
Other liabilities 251,970 272,236
Security deposits 62,637 59,264
Distributions payable 102,106 100,266
Total liabilities 10,075,387 9,984,722
Commitments and contingencies
Redeemable Noncontrolling Interests - Operating 295,985 258,280
Partnership
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01
par value;
100,000,000 shares authorized; 1,950,425
shares issued
and outstanding as of March 31, 2010 and
1,950,925
shares issued and outstanding as of December 208,761 208,773
31, 2009
Common Shares of beneficial interest, $0.01
par value;
1,000,000,000 shares authorized; 282,404,498
shares issued
and outstanding as of March 31, 2010 and
279,959,048
shares issued and outstanding as of December 2,824 2,800
31, 2009
Paid in capital 4,508,322 4,477,426
Retained earnings 310,276 353,659
Accumulated other comprehensive (loss) income (8,255 ) 4,681
Total shareholders' equity 5,021,928 5,047,339
Noncontrolling Interests:
Operating Partnership 114,714 116,120
Partially Owned Properties 10,399 11,054
Total Noncontrolling Interests 125,113 127,174
Total equity 5,147,041 5,174,513
Total liabilities and equity $ 15,518,413 $ 15,417,515
Equity Residential
Portfolio Summary
As of March 31, 2010
% of 2010 Average
% of Stabilized Rental
Markets Properties Units Total Units NOI Rate (1)
1 New York Metro Area 27 7,800 5.7% 12.2% $ 2,729
2 DC Northern Virginia 28 9,327 6.8% 10.2% 1,679
3 South Florida 39 13,013 9.5% 8.9% 1,271
4 Boston 36 6,503 4.8% 8.1% 2,027
5 Los Angeles 36 7,463 5.5% 7.7% 1,665
6 Seattle/Tacoma 48 10,801 7.9% 6.8% 1,237
7 San Francisco Bay 33 6,239 4.6% 5.5% 1,604
Area
8 Phoenix 41 11,769 8.6% 5.0% 833
9 Denver 23 7,963 5.8% 4.8% 997
10 Suburban Maryland 22 6,090 4.5% 4.6% 1,310
11 San Diego 13 4,284 3.1% 4.6% 1,642
12 Orlando 26 8,042 5.9% 4.3% 960
13 Inland Empire, CA 14 4,519 3.3% 3.5% 1,300
14 Orange County, CA 10 3,307 2.4% 3.2% 1,493
15 Atlanta 22 6,889 5.1% 3.0% 926
16 All Other Markets 71 17,855 13.1% 7.6% 925
(2)
Total 489 131,864 96.6% 100.0% 1,337
Military Housing 2 4,606 3.4% - -
Grand Total 491 136,470 100.0% 100.0% $ 1,337
(1) Average rental rate is defined as total rental revenues divided by the
weighted average occupied units for the month of March 2010.
(2) All Other Markets - Each individual market is less than 2.0% of 2010
stabilized NOI.
Equity Residential
Portfolio as of March 31, 2010
Properties Units
Wholly Owned 430 118,732
Properties
Partially Owned
Properties:
Consolidated 27 5,530
Unconsolidated 32 7,602
Military Housing 2 4,606
491 136,470
Portfolio Rollforward Q1 2010
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
12/31/2009 495 137,007
Acquisitions:
Rental Properties 6 1,467 $ 639,261 5.6 %
Land Parcel (one) - - $ 12,000
Dispositions:
Rental Properties:
Consolidated (8 ) (2,011 ) $ (145,940 ) 7.5 %
Unconsolidated (1) (2 ) (484 ) $ (24,100 ) 7.7 %
Condominium Conversion (1 ) (2 ) $ (360 )
Properties
Completed Developments 1 480
Configuration Changes - 13
3/31/2010 491 136,470
(1) EQR owned a 25% interest in these unconsolidated rental properties. Sale
price listed is the gross sale price.
Equity Residential
First Quarter 2010 vs. First Quarter 2009
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 117,512 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q1 2010 $ 443,697 $ 176,847 $ 266,850 $ 1,331 94.7 % 11.8 %
Q1 2009 $ 456,902 $ 174,161 $ 282,741 $ 1,385 93.7 % 13.5 %
Change $ (13,205 ) $ 2,686 $ (15,891 ) $ (54 ) 1.0 % (1.7 %)
Change (2.9% ) 1.5 % (5.6% ) (3.9% )
First Quarter 2010 vs. Fourth Quarter 2009
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 119,401 Same Store Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q1 2010 $ 451,546 $ 180,049 $ 271,497 $ 1,334 94.6 % 11.8 %
Q4 2009 $ 451,773 $ 169,366 $ 282,407 $ 1,344 93.9 % 14.1 %
Change $ (227 ) $ 10,683 $ (10,910 ) $ (10 ) 0.7 % (2.3 %)
Change (0.1% ) 6.3 % (3.9% ) (0.7% )
The Company's primary financial measure for evaluating each of its apartment
communities is net operating income ("NOI"). NOI represents rental income less
property and maintenance expense, real estate tax and insurance expense, and
(1) 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
First Quarter 2010 vs. First Quarter 2009
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year's Quarter
Q1 2010 Q1 2010 Q1 2010
% of Average Weighted Average
Actual Rental Average Rental
Markets Units NOI Rate Occupancy Revenues Expenses NOI Rate Occupancy
(1) % (1)
1 DC Northern 8,781 9.8 % $ 1,622 94.9 % (0.7 %) 3.0 % (2.6 %) (1.1 %) 0.3 %
Virginia
2 South Florida 12,465 9.6 % 1,267 94.8 % (0.1 %) 1.8 % (1.4 %) (1.7 %) 1.5 %
3 New York Metro 6,247 9.5 % 2,527 95.3 % (5.5 %) 8.3 % (14.0 %) (7.0 %) 1.4 %
Area
4 Los Angeles 7,099 8.1 % 1,670 94.8 % (4.4 %) (1.9 %) (5.8 %) (5.5 %) 1.0 %
5 Boston 6,021 7.8 % 2,011 94.9 % 2.1 % (4.7 %) 7.1 % 1.1 % 0.8 %
6 Seattle/Tacoma 8,473 6.7 % 1,274 93.2 % (7.1 %) 1.5 % (12.3 %) (7.2 %) 0.0 %
7 San Francisco 6,239 6.6 % 1,617 95.0 % (5.3 %) 2.9 % (9.7 %) (6.6 %) 1.4 %
Bay Area
8 Denver 7,755 5.4 % 1,004 95.1 % (2.2 %) 1.9 % (4.2 %) (3.5 %) 1.3 %
9 Phoenix 10,647 5.4 % 830 94.3 % (6.2 %) 0.2 % (10.5 %) (6.6 %) 0.3 %
10 San Diego 4,103 4.8 % 1,640 94.7 % 0.1 % (1.5 %) 0.9 % (1.5 %) 1.5 %
11 Orlando 7,690 4.5 % 958 94.2 % (3.4 %) 4.2 % (8.4 %) (4.9 %) 1.5 %
12 Inland Empire, 4,219 3.8 % 1,297 94.4 % (4.0 %) (2.7 %) (4.7 %) (4.0 %) 0.0 %
CA
13 Suburban 4,823 3.7 % 1,201 94.4 % 2.6 % 3.3 % 2.1 % 1.1 % 1.3 %
Maryland
14 Orange County, 3,175 3.4 % 1,498 94.6 % (5.6 %) (1.0 %) (7.6 %) (6.1 %) 0.5 %
CA
15 Atlanta 5,979 3.2 % 951 95.6 % (4.6 %) 4.4 % (11.4 %) (6.6 %) 1.9 %
16 All Other 13,796 7.7 % 960 94.8 % (2.1 %) 0.4 % (4.0 %) (2.9 %) 0.8 %
Markets
Total 117,512 100.0 % $ 1,331 94.7 % (2.9 %) 1.5 % (5.6 %) (3.9 %) 1.0 %
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units
for the period.
Equity Residential
First Quarter 2010 vs. Fourth Quarter 2009
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Quarter
Q1 2010 Q1 2010 Q1 2010
% of Average Weighted Average
Actual Rental Average Rental
Markets Units NOI Rate Occupancy Revenues Expenses NOI Rate Occupancy
(1) % (1)
1 DC Northern 8,781 9.6 % $ 1,622 94.9 % 0.0 % 11.2 % (5.3 %) (0.4 %) 0.4 %
Virginia
2 South Florida 12,465 9.5 % 1,267 94.8 % 1.2 % 5.1 % (1.5 %) (0.1 %) 1.2 %
3 New York Metro 6,247 9.4 % 2,527 95.3 % (0.6 %) 7.0 % (5.8 %) (0.3 %) (0.4 %)
Area
4 Los Angeles 7,463 8.3 % 1,674 94.7 % 0.1 % 1.1 % (0.4 %) (0.6 %) 0.6 %
5 Boston 6,313 8.1 % 2,032 94.9 % (0.6 %) 9.2 % (6.0 %) (0.1 %) (0.4 %)
6 Seattle/Tacoma 8,540 6.6 % 1,274 93.2 % 0.4 % 6.6 % (3.5 %) (1.9 %) 2.1 %
7 San Francisco 6,239 6.5 % 1,617 95.0 % (0.4 %) 9.8 % (5.8 %) (1.2 %) 0.8 %
Bay Area
8 Phoenix 11,201 5.6 % 833 94.2 % 0.5 % 5.6 % (3.0 %) (1.5 %) 1.9 %
9 Denver 7,755 5.4 % 1,004 95.1 % (0.1 %) (0.1 %) (0.1 %) (1.3 %) 1.1 %
10 San Diego 4,103 4.7 % 1,640 94.7 % (0.8 %) 2.8 % (2.5 %) (0.2 %) (0.5 %)
11 Orlando 8,042 4.7 % 965 94.2 % (0.2 %) 8.6 % (5.8 %) (0.5 %) 0.2 %
12 Suburban 5,083 3.9 % 1,234 94.5 % 1.0 % 9.8 % (4.0 %) 0.9 % 0.1 %
Maryland
13 Inland Empire, 4,219 3.7 % 1,297 94.4 % (1.3 %) 0.2 % (2.0 %) (0.9 %) (0.3 %)
CA
14 Orange County, 3,175 3.3 % 1,498 94.6 % (0.9 %) (1.0 %) (0.8 %) (0.9 %) 0.0 %
CA
15 Atlanta 5,979 3.2 % 951 95.6 % 0.2 % 9.1 % (6.5 %) (0.4 %) 0.6 %
16 All Other 13,796 7.5 % 960 94.8 % (0.4 %) 7.4 % (6.1 %) (1.2 %) 0.7 %
Markets
Total 119,401 100.0 % $ 1,334 94.6 % (0.1 %) 6.3 % (3.9 %) (0.7 %) 0.7 %
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units
for the period.
Equity Residential
First Quarter 2010 vs. First Quarter 2009
Same Store Operating Expenses
$ in thousands - 117,512 Same Store Units
% of Actual
Q1 2010
Actual Actual $ % Operating
Q1 2010 Q1 2009 Change Change Expenses
Real estate taxes $ 46,920 $ 46,255 $ 665 1.4 % 26.5 %
On-site payroll (1) 41,754 42,651 (897 ) (2.1 %) 23.6 %
Utilities (2) 28,978 28,374 604 2.1 % 16.4 %
Repairs and maintenance 26,089 24,453 1,636 6.7 % 14.8 %
(3)
Property management costs 17,836 16,905 931 5.5 % 10.1 %
(4)
Insurance 5,637 5,634 3 0.1 % 3.2 %
Leasing and advertising 3,805 3,636 169 4.6 % 2.1 %
Other operating expenses 5,828 6,253 (425 ) (6.8 %) 3.3 %
(5)
Same store operating $ 176,847 $ 174,161 $ 2,686 1.5 % 100.0 %
expenses
On-site payroll - Includes payroll and related expenses for on-site
(1) personnel including property managers, leasing consultants and maintenance
staff.
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 March 31, 2010
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts (1) % of Rates (years)
Total (1)
Secured $ 4,825,356 50.8% 4.84% 8.6
Unsecured 4,669,377 49.2% 4.99% 4.4
Total $ 9,494,733 100.0% 4.92% 6.5
Fixed Rate Debt:
Secured - Conventional $ 3,876,409 40.8% 5.75% 7.2
Unsecured - Public/Private 3,773,828 39.8% 5.85% 5.1
Fixed Rate Debt 7,650,237 80.6% 5.80% 6.2
Floating Rate Debt:
Secured - Conventional 343,275 3.6% 2.49% 3.6
Secured - Tax Exempt 605,672 6.4% 0.55% 21.1
Unsecured - Public/Private 804,549 8.5% 1.67% 1.4
Unsecured - Revolving Credit 91,000 0.9% 0.59% 1.9
Facility
Floating Rate Debt 1,844,496 19.4% 1.38% 8.0
Total $ 9,494,733 100.0% 4.92% 6.5
(1) Net of the effect of any derivative instruments. Weighted average rates are
for the quarter ended March 31, 2010.
Note: The Company capitalized interest of approximately $4.4 million and
$10.6 million during the quarters ended March 31, 2010 and 2009,
respectively.
Debt Maturity Schedule as of March 31, 2010
(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)
2010 $ 115,757 $ 568,442 (2) $ 684,199 7.2% 5.78% 1.73%
2011 1,066,539 (3) 237,858 1,304,397 13.7% 5.51% 4.92%
2012 752,897 94,379 (4) 847,276 8.9% 5.42% 4.89%
2013 266,581 304,549 571,130 6.0% 6.76% 4.87%
2014 517,682 - 517,682 5.5% 5.28% 5.28%
2015 355,914 - 355,914 3.8% 6.41% 6.41%
2016 1,089,484 - 1,089,484 11.5% 5.32% 5.32%
2017 1,355,743 456 1,356,199 14.3% 5.87% 5.87%
2018 336,092 44,677 380,769 4.0% 5.95% 5.59%
2019 502,244 20,766 523,010 5.5% 5.19% 5.01%
2020+ 1,291,304 573,369 1,864,673 19.6% 6.11% 5.11%
Total $ 7,650,237 $ 1,844,496 $ 9,494,733 100.0% 5.83% 5.01%
(1) Net of the effect of any derivative instruments. Weighted average rates are
as of March 31, 2010.
Includes the Company's $500.0 million term loan facility, which originally
matured on October 5, 2010. Effective April 12, 2010, the Company exercised
(2) the first of its two one-year extension options. As a result, the maturity
date is now October 5, 2011 and there is one remaining one-year extension
option exercisable by the Company.
Includes $482.5 million face value of 3.85% convertible unsecured debt with a
(3) 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.
Includes $91.0 million outstanding on the Company's unsecured revolving
(4) credit facility. As of March 31, 2010, there was approximately $1.28 billion
available on this facility.
Equity Residential
Unsecured Debt Summary as of March 31, 2010
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
Fixed
Rate
Notes:
6.950% 03/02/11 $ 93,096 $ 798 $ 93,894
6.625% 03/15/12 253,858 (366 ) 253,492
5.500% 10/01/12 222,133 (548 ) 221,585
5.200% 04/01/13 (1) 400,000 (355 ) 399,645
Fair Value
Derivative (1) (300,000 ) - (300,000 )
Adjustments
5.250% 09/15/14 500,000 (274 ) 499,726
6.584% 04/13/15 300,000 (563 ) 299,437
5.125% 03/15/16 500,000 (318 ) 499,682
5.375% 08/01/16 400,000 (1,175 ) 398,825
5.750% 06/15/17 650,000 (3,688 ) 646,312
7.125% 10/15/17 150,000 (489 ) 149,511
7.570% 08/15/26 140,000 - 140,000
3.850% 08/15/26 (2) 482,545 (10,826 ) 471,719
3,791,632 (17,804 ) 3,773,828
Floating
Rate
Notes:
04/01/13 (1) 300,000 - 300,000
Fair Value
Derivative (1) 4,549 - 4,549
Adjustments
Term Loan LIBOR+0.50% 10/05/10 (3) 500,000 - 500,000
Facility (4)
804,549 - 804,549
Revolving (3)
Credit LIBOR+0.50% 02/28/12 (5) 91,000 - 91,000
Facility:
Total
Unsecured $ 4,687,181 $ (17,804 ) $ 4,669,377
Debt
(1) $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
(2) 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.
(3) Facilities are private. All other unsecured debt is public.
Represents the Company's $500.0 million term loan facility, which originally
matured on October 5, 2010. Effective April 12, 2010, the Company exercised the
(4) first of its two one-year extension options. As a result, the maturity date is
now October 5, 2011 and there is one remaining one-year extension option
exercisable by the Company.
Represents amount outstanding on the Company's unsecured revolving credit
(5) facility which matures on February 28, 2012. As of March 31, 2010, there was
approximately $1.28 billion available on this facility.
Equity Residential
Selected Unsecured Public Debt Covenants
March 31, December 31,
2010 2009
Total Debt to Adjusted Total Assets (not to exceed 48.8% 48.8%
60%)
Secured Debt to Adjusted Total Assets (not to exceed 24.8% 24.9%
40%)
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.48 2.44
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 255.5% 256.5%
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 March 31, 2010
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 4,825,356 50.8%
Unsecured Debt 4,669,377 49.2%
Total 9,494,733 100.0% 44.5%
Debt
Common Shares (includes 282,404,498 95.3%
Restricted Shares)
Units (includes OP Units and 14,070,786 4.7%
LTIP Units)
Total Shares and Units 296,475,284 100.0%
Common Share Equivalents (see 397,482
below)
Total outstanding at quarter-end 296,872,766
Common Share Price at March 31, $ 39.15
2010
11,622,569 98.3%
Perpetual Preferred Equity (see 200,000 1.7%
below)
Total Equity 11,822,569 100.0% 55.5%
Total Market Capitalization $ 21,317,302 100.0%
Convertible Preferred Equity as of March 31, 2010
(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% 11/1/98 327,966 $ 8,199 $ 1.75 $ 574 1.1128 364,961
Series E
7.00% 6/30/98 22,459 562 1.75 39 1.4480 32,521
Series H
Total Convertible 350,425 $ 8,761 $ 613 7.00% 397,482
Preferred Equity
Perpetual Preferred Equity as of March 31, 2010
(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 $ 4,145
Series K
6.48% 6/19/08 600,000 150,000 16.20 9,720
Series N
Total Perpetual 1,600,000 $ 200,000 $ 13,865 6.93%
Preferred Equity
Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
Q110 (1) Q109
Weighted Average Amounts Outstanding for Net Income
Purposes:
Common Shares - basic 280,644,744 272,323,545
Shares issuable from assumed conversion/vesting
of:
- OP Units - 16,386,489
- long-term compensation award shares/units - 142,870
Total Common Shares and Units - diluted 280,644,744 288,852,904
Weighted Average Amounts Outstanding for FFO Purposes:
Common Shares - basic 280,644,744 272,323,545
OP Units - basic 13,804,885 16,386,489
Total Common Shares and OP Units - basic 294,449,629 288,710,034
Shares issuable from assumed conversion/vesting
of:
- convertible preferred shares/units 397,611 406,031
- long-term compensation award shares/units 2,438,875 142,870
Total Common Shares and Units - diluted 297,286,115 289,258,935
Period Ending Amounts
Outstanding:
Common Shares (includes Restricted Shares) 282,404,498 273,843,970
Units (includes OP Units and LTIP Units) 14,070,786 16,283,376
Total Shares and 296,475,284 290,127,346
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 first quarter ended March 31, 2010.
Equity Residential
Partially Owned Entities as of March 31, 2010
(Amounts in thousands except for project and unit amounts)
Consolidated Unconsolidated
Development Projects
Held for Institutional
and/or Completed, Completed Joint
Under Not
Development Stabilized and Other Total Ventures (5)
(4) Stabilized
Total projects (1) - 2 4 21 27 32
Total units (1) - 567 1,167 3,796 5,530 7,602
Operating
information for the
quarter
ended 3/31/10 (at
100%):
Operating revenue $ 711 $ 2,066 $ 5,544 $ 13,816 $ 22,137 $ 19,006
Operating expenses 1,291 1,079 1,814 4,983 9,167 9,220
Net operating (loss) (580 ) 987 3,730 8,833 12,970 9,786
income
Depreciation - 1,309 2,636 3,708 7,653 4,108
General and 69 - 43 11 123 107
administrative/other
Operating (loss) (649 ) (322 ) 1,051 5,114 5,194 5,571
income
Interest and other 6 3 - 5 14 46
income
Other expenses (371 ) - (1 ) - (372 ) -
Interest:
Expense incurred, (678 ) (458 ) (1,552 ) (5,030 ) (7,718 ) (7,394 )
net
Amortization of
deferred financing - (89 ) (111 ) (56 ) (256 ) (313 )
costs
Income and other tax (33 ) - (8 ) (16 ) (57 ) (92 )
(expense) benefit
Net (loss) income $ (1,725 ) $ (866 ) $ (621 ) $ 17 $ (3,195 ) $ (2,182 )
Debt - Secured (2):
EQR Ownership (3) $ 316,421 $ 106,162 $ 226,523 $ 219,100 $ 868,206 $ 97,319
Noncontrolling - - - 82,678 82,678 291,958
Ownership
Total (at 100%) $ 316,421 $ 106,162 $ 226,523 $ 301,778 $ 950,884 $ 389,277
(1) Project and unit counts exclude all uncompleted development projects until those projects are
substantially completed. See the Consolidated Development Projects schedule for more detail.
(2) All debt is non-recourse to the Company with the exception of $42.2 million 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.
(4) Projects included here are substantially complete. However, they may still require additional
exterior and interior work for all units to be available for leasing.
(5) Unconsolidated debt maturities and rates are as follows: $70.0 million (net of $42.6 million in
cash collateral held by the lender), May 1, 2010, 8.33%; $121.0 million, December 1, 2010, 7.54%;
$143.8 million, March 1, 2011, 6.95%; and $11.9 million, July 1, 2019, 5.305%. On April 30, 2010, the
Company anticipates acquiring the 75% equity interest it does not currently own in seven of the
unconsolidated properties containing 1,811 units in exchange for an approximate $30.0 million payment
to its partner. In addition, the Company will repay the net $70.0 million mortgage loan, which
matures on May 1, 2010, concurrent with closing using proceeds drawn from the Company's line of
credit. The total consideration paid by the Company represents an implied 8.2% cap rate.
Equity Residential
Consolidated Development Projects as of March 31, 2010
(Amounts in thousands except for project and unit amounts)
Total
Book
Total Total Value Not Estimated Estimated
No. Capital Book Value Placed in Total Percentage Percentage Percentage Completion Stabilization
of
Projects Location Units Cost (1) to Date Service Debt Completed Leased Occupied Date Date
Projects
Under
Development
- Wholly
Owned:
Red 160
(a.k.a. Redmond, 250 $ 84,382 $ 59,557 $ 59,557 $ - 67 % - - Q1 2011 Q1 2012
Redmond WA
Way)
Projects
Under
Development 250 84,382 59,557 59,557 -
- Wholly
Owned
Projects
Under
Development
- Partially
Owned:
The
Brooklyner Brooklyn,
(a.k.a. 111 NY 490 280,868 238,847 238,847 118,386 90 % 35 % 31 % Q3 2010 Q3 2011
Lawrence
Street)
Westgate Pasadena, 480 170,558 131,040 131,040 163,160 (2) 78 % 31 % 23 % Q2 2011 Q2 2012
CA
Projects
Under
Development 970 451,426 369,887 369,887 281,546
- Partially
Owned
Projects
Under 1,220 535,808 429,444 429,444 281,546 (3)
Development
Completed
Not
Stabilized
- Wholly
Owned (4):
Reserve at Mill
Town Center Creek, WA 100 22,535 20,998 - - 95 % 95 % Completed Q2 2010
II
Third
Square Cambridge, 482 257,457 256,434 - - 88 % 85 % Completed Q4 2010
(a.k.a. 303 MA
Third) (5)
70 Greene Jersey
(a.k.a. 77 City, NJ 480 269,958 265,602 - - 76 % 68 % Completed Q1 2011
Hudson)
Reunion at Redmond,
Redmond WA 321 53,175 53,151 - - 65 % 62 % Completed Q1 2011
Ridge
Projects
Completed
Not 1,383 603,125 596,185 - -
Stabilized
- Wholly
Owned
Completed
Not
Stabilized
- Partially
Owned (4):
Red Road South 404 128,816 126,810 - 72,595 96 % 89 % Completed Q2 2010
Commons Miami, FL
Montclair Montclair, 163 48,730 45,121 - 33,567 80 % 64 % Completed Q3 2010
Metro NJ
Projects
Completed
Not 567 177,546 171,931 - 106,162
Stabilized
- Partially
Owned
Projects
Completed 1,950 780,671 768,116 - 106,162
Not
Stabilized
Completed
and
Stabilized
During the
Quarter -
Partially
Owned:
Veridian
(a.k.a. Silver 457 149,962 149,284 - 114,018 98 % 97 % Completed Stabilized
Silver Spring, MD
Spring)
Projects
Completed
and
Stabilized 457 149,962 149,284 - 114,018
During the
Quarter -
Partially
Owned
Projects
Completed
and 457 149,962 149,284 - 114,018
Stabilized
During the
Quarter
Total 3,627 $ 1,466,441 $ 1,346,844 $ 429,444 $ 501,726
Projects
Land Held
for N/A N/A $ 266,287 $ 266,287 $ 34,875
Development
Total Capital Q1 2010
NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Cost (1) NOI
Projects Under Development $ 535,808 $ (283 )
Completed Not Stabilized 780,671 3,821
Completed and Stabilized During the Quarter 149,962 1,996
Total Development NOI Contribution $ 1,466,441 $ 5,534
(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 $40.0 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 March 31, 2010.
(3) Of the approximately $106.4 million of capital cost remaining to be funded at 3/31/10 for projects under development, $81.5 million will be
funded by fully committed third party bank loans and the remaining $24.9 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 occupied reflect the full 482 units included in phases I & II. Phase I is 96% leased and 94%
occupied. Phase II is 76% leased and 71% occupied.
Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Quarter Ended March 31, 2010
(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 117,512 $ 26,089 $ 222 $ 20,782 $ 177 $ 46,871 $ 399 $ 16,087 $ 137 $ 8,461 $ 72 $ 24,548 $ 209 (9) $ 71,419 $ 608
(6)
Non-Same
Store 6,750 1,222 216 894 158 2,116 374 455 80 551 97 1,006 177 3,122 551
Properties
(7)
Other (8) - - 698 698 114 23 137 835
Total 124,262 $ 27,311 $ 22,374 $ 49,685 $ 16,656 $ 9,035 $ 25,691 $ 75,376
(1) Total Units - Excludes 7,602 unconsolidated units and 4,606 military 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.
(2) Repairs and Maintenance Expenses - Includes general maintenance costs, unit 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 carpeting.
(4) Replacements for same store properties also include $6.2 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.
(5) Building Improvements - Includes roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting
and siding, major landscaping, vehicles and office and maintenance equipment.
(6) Same Store Properties - Primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties
subsequently sold.
(7) Non-Same Store Properties - Primarily includes all properties acquired during 2009 and 2010, plus any properties in lease-up and not stabilized
as of January 1, 2009. Per unit amounts are based on a weighted average of 5,663 units.
(8) Other - Primarily includes expenditures for properties sold during the period.
(9) For 2010, the Company estimates that it will spend approximately $1,075 per 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)
Quarter Ended
March 31,
2010 2009
REVENUES
Rental income $ 2,278 $ 36,011
Total revenues 2,278 36,011
EXPENSES (1)
Property and maintenance 1,281 11,407
Real estate taxes and insurance 501 3,953
Depreciation 415 8,679
General and administrative 3 5
Total expenses 2,200 24,044
Discontinued operating income 78 11,967
Interest and other income 1 7
Interest (2):
Expense incurred, net (22 ) (430 )
Amortization of deferred financing costs - (35 )
Income and other tax (expense) benefit (29 ) (49 )
Discontinued operations 28 11,460
Net gain on sales of discontinued operations 60,036 61,871
Discontinued operations, net $ 60,064 $ 73,331
Includes expenses paid in the current period for properties sold or
(1) 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 Guidance Reconciliations and Non-Comparable Items
(Amounts in thousands except per share data)
(All per share data is diluted)
FFO Guidance Reconciliations
FFO Reconciliations
Guidance Q1 2010
to Actual Q1 2010
Amounts Per Share
Guidance Q1 2010 FFO - Diluted (1) (2) $ 148,365 $ 0.500
Property NOI (excluding storm related 1,340 0.005
costs)
Storm related (2,728 ) (0.009 )
costs
Property acquisition costs (other expenses) (1,349 ) (0.005 )
Other (63 ) (0.001 )
Actual Q1 2010 FFO - Diluted (1) (2) $ 145,565 $ 0.490
Non-Comparable Items (3)
Quarter Ended March 31,
2010 2009 Variance
Insurance/litigation settlement proceeds $ 2,000 $ 171 $ 1,829
(interest and other income)
Debt extinguishment gains (interest and - 2,020 (2,020 )
other income)
Write-off of pursuit costs (other expenses) (1,046 ) (192 ) (854 )
Property acquisition costs (other expenses) (3,337 ) (100 ) (3,237 )
Non-cash convertible debt discount (1,945 ) (2,884 ) 939
(includes extinguishment write-offs)
Debt extinguishment costs
(interest):
Prepayment premiums/penalties - (35 ) 35
Write-off of unamortized deferred financing (927 ) (655 ) (272 )
costs
Write-off of unamortized premiums/ - (805 ) 805
(discounts)/(OCI)
Net incremental gain (loss) on sales of 388 (64 ) 452
condominium units
Other (453 ) (893 ) 440
Net non-comparable items (3) $ (5,320 ) $ (3,437 ) $ (1,883 )
Note: See page 24 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)
Q2 2010 2010
Expected FFO (1) (2) $0.53 to $0.57 $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 $1.25 billion
Consolidated rental dispositions $850.0 million
Capitalization rate spread 150 basis points
2010 Debt Assumptions
Weighted average debt outstanding $9.4 billion to $9.6
billion
Weighted average interest rate (reduced for
capitalized interest and
including prepayment penalties) 4.96%
Interest expense $466.0 million to $476.0
million
Debt guidance assumes no additional debt offerings and no additional
debt extinguishments, but does include approximately $7.8 million of
Note: 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 expense $38.0 million to $40.0
million
Interest and other income $3.0 million to $4.0
million
Other expenses (write-off of pursuit and property $10.0 million to $13.0
acquisition costs) million
Income and other tax expense $1.0 million to $2.0
million
Net gain on sales of land parcels No amounts budgeted
Preferred share redemptions No amounts budgeted
Equity ATM share offerings No additional amounts
budgeted
Weighted average Common Shares and Units - Diluted 299.0 million
Note: See page 24 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 22 and 23
Expected Expected
Expected Q1 2010 Q2 2010 2010
Amounts Per Share Per Share Per Share
Expected Earnings - $ 55,850 $ 0.188 $0.01 to $0.05 $0.96 to $1.16
Diluted (4)
Add: Expected 148,140 0.500 0.52 2.06
depreciation expense
Less: Expected net gain (55,625 ) (0.188 ) - (1.07)
on sales (4)
Expected FFO - Diluted $ 148,365 $ 0.500 $0.53 to $0.57 $1.95 to $2.15
(1) (2)
Definitions and Footnotes for Pages 22 and 23
The National Association of Real Estate Investment Trusts ("NAREIT")
defines funds from operations ("FFO") (April 2002 White Paper) as net
income (computed in accordance with accounting principles generally
accepted in the United States ("GAAP")), excluding gains (or losses) from
sales of depreciable property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis. The April
2002 White Paper states that gain or loss on sales of property is excluded
from FFO for previously depreciated operating properties only. Once the
(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 9
The following tables present reconciliations of operating income per
the consolidated statements of operations to NOI for the First
Quarter 2010 Same Store Properties:
Quarter Ended March 31,
2010 2009
Operating income $ 118,596 $ 132,387
Adjustments:
Non-same store operating results (14,378 ) (989 )
Fee and asset management revenue (2,422 ) (2,863 )
Fee and asset management expense 2,014 2,003
Depreciation 152,319 141,809
General and administrative 10,721 10,394
Same store NOI $ 266,850 $ 282,741
Source: Equity Residential
Contact: Equity Residential
Marty McKenna, (312) 928-1901