Equity Residential Reports Third Quarter 2009 Results
CHICAGO, Oct 28, 2009 (BUSINESS WIRE) --
Company: Equity Residential (EQR)
Equity Residential (NYSE: EQR) today reported results for the quarter and nine months ended September 30, 2009. All per share results are reported on a fully-diluted basis.
"We have spent the year focused on the basics - keeping our customers satisfied and maintaining the quality of our assets while controlling our expenses. As a result of these efforts, our third quarter performance was better than anticipated and we expect to deliver same store operating results for the year that are very much in line with our expectations at the beginning of the year," said David J. Neithercut, Equity Residential's President and CEO. "Many thanks go to our colleagues across the enterprise for delivering these results despite very tough conditions."
Third Quarter 2009
For the third quarter of 2009, the company reported earnings per share of $0.48 compared to earnings of $0.63 per share in the third quarter of 2008. The difference is primarily due to lower gains from property sales in 2009 and lower property net operating income (NOI).
FFO (Funds from Operations) for the quarter ended September 30, 2009 was $0.53 per share compared to $0.64 per share in the same period of 2008. The difference is primarily due to:
-- the negative impact of approximately $0.06 per share from lower NOI from the company's same store portfolio; and
-- the negative impact of approximately $0.05 per share from dilution from the company's 2008 and 2009 transaction activity.
Nine Months Ended September 30, 2009
For the nine months ended September 30, 2009, the company reported earnings of $1.12 per share compared to $1.59 per share in the same period of 2008.
FFO for the nine months ended September 30, 2009 was $1.69 per share compared to $1.86 per share in the same period of 2008.
Same Store Results
On a same store third quarter to third quarter comparison, which includes 119,121 apartment units, revenues decreased 3.9%, expenses decreased 0.6% and NOI decreased 5.8%. The revenue decrease was due to a 3.2% decrease in average rental rates and a 0.7% decrease in occupancy to 93.7%.
On a same store nine-month to nine-month comparison, which includes 115,832 apartment units, revenues decreased 2.3%, expenses increased 0.5% and NOI decreased 3.9%.
Acquisitions/Dispositions
During the third quarter of 2009, the company sold 24 consolidated properties, consisting of 4,620 apartment units, for an aggregate sale price of $381.1 million at an average capitalization (cap) rate of 7.7% generating an unlevered internal rate of return (IRR) of 9.5%.
During the first nine months of 2009, the company sold 47 consolidated properties, consisting of 8,819 apartment units, for an aggregate sale price of $734.5 million at an average cap rate of 7.5% generating an unlevered IRR of 9.8%.
"We continue to execute our portfolio transformation strategy, achieving good prices for non-core assets that we are selling in secondary markets and, as a result, have increased our dispositions guidance for the year to $900 million. The proceeds from these asset sales, combined with $1.36 billion of availability under our revolving credit facility and our access to the capital markets, strongly position us to take advantage of any future opportunities to add high quality properties to our portfolio," said Mr. Neithercut.
At-The-Market Share Offering Program
On September 29, 2009, the company announced the creation of an At-The-Market (ATM) share offering program which would allow the company to sell up to 17 million common shares from time to time. To date, the company has not issued any shares through this program.
Fourth Quarter 2009 Guidance
The company has established an FFO guidance range of $0.49 to $0.53 per share for the fourth quarter of 2009. The difference between the company's actual third quarter FFO of $0.53 per share and the midpoint of the range for the fourth quarter is primarily due to lower total property NOI expected in the fourth quarter of 2009 as compared to the third quarter of 2009.
Full Year 2009 Guidance
The company has revised its guidance for its full year 2009 same store operating performance, funds from operations and transaction activities as well as other items listed on page 25 of this release. The changes to the full year same store and FFO guidance are listed below:
Previous Revised Same store: Revenue change (3.5%) to (3.0%) (3.0%) Expense change 1.25% to 1.75% 0.5% NOI change (6.5%) to (5.5%) (5.0%) FFO per share $2.10 to $2.20 $2.18 to $2.22
The difference between the midpoint of the range of the company's previous guidance and the midpoint of the revised range is primarily due to higher than previously expected property NOI.
Fourth Quarter 2009 Conference Call
Equity Residential expects to announce fourth quarter 2009 results on Wednesday, February 3, 2010 and host a conference call to discuss those results at 10:00 a.m. CT on Thursday, February 4, 2010.
Equity Residential is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top U.S. growth markets. Equity Residential owns or has investments in 501 properties located in 23 states and the District of Columbia, consisting of 138,887 apartment units. For more information on Equity Residential, please visit our website at www.equityresidential.com.
Forward-Looking Statements
In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential's management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading "Risk Factors" in our Annual Report on Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityresidential.com. Many of these uncertainties and risks are difficult to predict and beyond management's control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
A live web cast of the company's conference call discussing these results and outlook for 2009 will take place tomorrow, Thursday, October 29, at 10:00 a.m. Central. Please visit the Investor Information section of the company's web site at www.equityresidential.com for the link. A replay of the web cast will be available for two weeks at this site.
Equity Residential
Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)
Nine Months Ended September 30, Quarter Ended September 30,
2009 2008 2009 2008
REVENUES
Rental income $ 1,471,383 $ 1,485,814 $ 490,104 $ 508,619
Fee and asset management 7,928 7,397 2,653 2,387
Total revenues 1,479,311 1,493,211 492,757 511,006
EXPENSES
Property and maintenance 374,067 389,042 125,904 134,658
Real estate taxes and insurance 161,777 153,317 55,743 52,039
Property management 56,457 59,587 18,725 18,920
Fee and asset management 5,916 6,154 1,931 1,983
Depreciation 438,726 417,662 147,477 145,382
General and administrative 30,476 34,040 9,881 9,849
Impairment 11,124 - - -
Total expenses 1,078,543 1,059,802 359,661 362,831
Operating income 400,768 433,409 133,096 148,175
Interest and other income 15,854 11,038 3,215 2,871
Other expenses (2,228 ) (2,886 ) (1,922 ) (2,106 )
Interest:
Expense incurred, net (361,085 ) (361,125 ) (121,520 ) (122,345 )
Amortization of deferred financing costs (9,614 ) (6,748 ) (3,394 ) (2,410 )
Income before income and other taxes, (loss) income
from investments in unconsolidated entities, net
gain on sales of unconsolidated entities and land
parcels and discontinued operations 43,695 73,688 9,475 24,185
Income and other tax (expense) benefit (2,846 ) (5,937 ) (459 ) (1,317 )
(Loss) income from investments in unconsolidated entities (2,372 ) 60 (151 ) 250
Net gain on sales of unconsolidated entities 6,718 - 3,959 -
Net gain on sales of land parcels - 2,976 - 2,976
Income from continuing operations 45,195 70,787 12,824 26,094
Discontinued operations, net 289,523 403,859 130,541 161,031
Net income 334,718 474,646 143,365 187,125
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership (18,119 ) (28,622 ) (7,699 ) (11,141 )
Preference Interests and Units (9 ) (11 ) (2 ) (4 )
Partially Owned Properties 391 (1,765 ) 317 (106 )
Net income attributable to controlling interests 316,981 444,248 135,981 175,874
Preferred distributions (10,859 ) (10,887 ) (3,619 ) (3,628 )
Net income available to Common Shares $ 306,122 $ 433,361 $ 132,362 $ 172,246
Earnings per share - basic:
Income from continuing operations available to Common Shares $ 0.12 $ 0.20 $ 0.03 $ 0.08
Net income available to Common Shares $ 1.12 $ 1.61 $ 0.48 $ 0.64
Weighted average Common Shares outstanding 272,966 269,582 273,658 270,345
Earnings per share - diluted:
Income from continuing operations available to Common Shares $ 0.12 $ 0.20 $ 0.03 $ 0.08
Net income available to Common Shares $ 1.12 $ 1.59 $ 0.48 $ 0.63
Weighted average Common Shares outstanding 289,518 290,267 290,215 290,795
Distributions declared per Common Share outstanding $ 1.3025 $ 1.4475 $ 0.3375 $ 0.4825
Equity Residential
Consolidated Statements of Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Nine Months Ended September 30, Quarter Ended September 30,
2009 (3) 2008 (3) 2009 (3) 2008 (3)
Net income $ 334,718 $ 474,646 $ 143,365 $ 187,125
Adjustments:
Net (income) loss attributable to Noncontrolling Interests:
Preference Interests and Units (9 ) (11 ) (2 ) (4 )
Partially Owned Properties 391 (1,765 ) 317 (106 )
Depreciation 438,726 417,662 147,477 145,382
Depreciation - Non-real estate additions (5,569 ) (6,057 ) (1,777 ) (1,976 )
Depreciation - Partially Owned and Unconsolidated Properties 656 3,103 225 1,063
Net (gain) on sales of unconsolidated entities (6,718 ) - (3,959 ) -
Discontinued operations:
Depreciation 12,761 30,274 2,175 8,380
Net gain on sales of discontinued operations (274,933 ) (365,052 ) (129,135 ) (150,255 )
Net incremental (loss) gain on sales of condominium units (450 ) (2,643 ) (785 ) 447
FFO (1) (2) 499,573 550,157 157,901 190,056
Preferred distributions (10,859 ) (10,887 ) (3,619 ) (3,628 )
FFO available to Common Shares and Units - basic (1) (2) $ 488,714 $ 539,270 $ 154,282 $ 186,428
FFO available to Common Shares and Units - diluted (1) (2) $ 489,183 $ 539,773 $ 154,436 $ 186,590
FFO per share and Unit - basic $ 1.69 $ 1.88 $ 0.53 $ 0.65
FFO per share and Unit - diluted $ 1.69 $ 1.86 $ 0.53 $ 0.64
Weighted average Common Shares and
Units outstanding - basic 288,990 287,422 289,263 287,744
Weighted average Common Shares and
Units outstanding - diluted 289,922 290,699 290,616 291,215
(1) The National Association of Real Estate Investment Trusts
("NAREIT") defines funds from operations ("FFO") (April 2002 White
Paper) as net income (computed in accordance with accounting
principles generally accepted in the United States ("GAAP")),
excluding gains (or losses) from sales of depreciable property,
plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures.Adjustments for
unconsolidated partnerships and joint ventures will be calculated
to reflect funds from operations on the same basis.The April
2002 White Paper states that gain or loss on sales of property is
excluded from FFO for previously depreciated operating properties
only.Once the Company commences 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.
(2) 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 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.
(3) 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 Units - basic and diluted have all
been reduced by approximately $7.2 million and $7.6 million for
the nine months ended September 30, 2009 and 2008, respectively,
and by approximately $2.2 million and $2.6 million for the
quarters ended September 30, 2009 and 2008, respectively.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
September 30, December 31,
2009 2008
ASSETS
Investment in real estate
Land $ 3,629,701 $ 3,671,299
Depreciable property 13,755,610 13,908,594
Projects under development 753,831 855,473
Land held for development 239,158 254,873
Investment in real estate 18,378,300 18,690,239
Accumulated depreciation (3,785,198 ) (3,561,300 )
Investment in real estate, net 14,593,102 15,128,939
Cash and cash equivalents 637,588 890,794
Investments in unconsolidated entities 4,616 5,795
Deposits - restricted 360,022 152,732
Escrow deposits - mortgage 18,954 19,729
Deferred financing costs, net 50,438 53,817
Other assets 126,676 283,304
Total assets $ 15,791,396 $ 16,535,110
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 4,885,560 $ 5,036,930
Notes, net 4,949,560 5,447,012
Lines of credit - -
Accounts payable and accrued expenses 131,730 108,463
Accrued interest payable 72,970 113,846
Other liabilities 264,221 289,562
Security deposits 60,517 64,355
Distributions payable 100,230 141,843
Total liabilities 10,464,788 11,202,011
Commitments and contingencies
Redeemable Noncontrolling Interests - Operating Partnership 236,333 264,394
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 1,950,925 shares issued
and outstanding as of September 30, 2009 and 1,951,475
shares issued and outstanding as of December 31, 2008 208,773 208,786
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 276,147,420 shares issued
and outstanding as of September 30, 2009 and 272,786,760
shares issued and outstanding as of December 31, 2008 2,761 2,728
Paid in capital 4,364,503 4,273,489
Retained earnings 405,250 456,152
Accumulated other comprehensive loss (21,636 ) (35,799 )
Total shareholders' equity 4,959,651 4,905,356
Noncontrolling Interests:
Operating Partnership 118,332 137,645
Preference Interests and Units - 184
Partially Owned Properties 12,292 25,520
Total Noncontrolling Interests 130,624 163,349
Total equity 5,090,275 5,068,705
Total liabilities and equity $ 15,791,396 $ 16,535,110
Equity Residential
Portfolio Summary
As of September 30, 2009
% of 2009 Average
% of Stabilized Rental
Markets Properties Units Total Units NOI Rate (1)
1 New York Metro Area 23 6,410 4.6 % 10.4 % $ 2,575
2 DC Northern Virginia 26 8,781 6.3 % 9.2 % 1,631
3 South Florida 39 12,897 9.3 % 8.8 % 1,263
4 Los Angeles 36 7,463 5.4 % 8.1 % 1,699
5 Seattle/Tacoma 46 10,545 7.6 % 7.4 % 1,289
6 Boston 36 6,503 4.7 % 6.8 % 1,999
7 San Francisco Bay Area 34 6,731 4.8 % 6.8 % 1,641
8 Phoenix 41 11,769 8.5 % 5.6 % 858
9 Denver 23 7,963 5.7 % 5.0 % 1,015
10 San Diego 14 4,491 3.2 % 4.6 % 1,631
11 Orlando 26 8,042 5.8 % 4.4 % 971
12 Inland Empire, CA 14 4,519 3.3 % 3.7 % 1,316
13 Suburban Maryland 22 6,084 4.4 % 3.6 % 1,210
14 Atlanta 24 7,621 5.5 % 3.5 % 921
15 Orange County, CA 10 3,307 2.4 % 3.4 % 1,535
16 New England (excluding Boston) 19 3,477 2.5 % 1.9 % 1,121
17 Portland, OR 10 3,417 2.5 % 1.8 % 970
18 Jacksonville 12 3,951 2.8 % 1.7 % 869
19 Tampa 10 3,158 2.3 % 1.3 % 895
20 Raleigh/Durham 10 2,524 1.8 % 1.0 % 761
Top 20 Total 475 129,653 93.4 % 99.0 % 1,324
21 Central Valley, CA 5 804 0.6 % 0.4 % 987
22 Dallas/Ft. Worth 5 1,081 0.8 % 0.1 % 738
23 Other EQR 12 2,739 1.9 % 0.5 % 888
Total 497 134,277 96.7 % 100.0 % 1,309
Condominium Conversion 2 15 - - -
Military Housing 2 4,595 3.3 % - -
Grand Total 501 138,887 100.0 % 100.0 % $ 1,309
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the month of September
2009.
Equity Residential
Portfolio as of September 30, 2009
Properties Units
Wholly Owned Properties 436 120,378
Partially Owned Properties:
Consolidated 26 5,126
Unconsolidated 37 8,788
Military Housing (Fee Managed) 2 4,595
501 138,887
Portfolio Rollforward Q3 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
6/30/2009 526 143,856
Acquisitions:
Rental Properties (1) - - - -
Dispositions:
Rental Properties:
Consolidated (24 ) (4,620 ) $ (381,119 ) 7.7 %
Unconsolidated (1) (2) (2 ) (516 ) $ (37,000 ) 7.3 %
Condominium Conversion Properties - (27 ) $ (5,117 )
Completed Developments 1 163
Configuration Changes - 31
9/30/2009 501 138,887
Portfolio Rollforward 2009
($ in thousands)
Purchase/
Properties Units (Sale) Price Cap Rate
12/31/2008 548 147,244
Acquisitions:
Rental Properties (1) - - - -
Dispositions:
Rental Properties:
Consolidated (47 ) (8,819 ) $ (734,509 ) 7.5 %
Unconsolidated (1) (2) (3 ) (732 ) $ (57,700 ) 7.5 %
Condominium Conversion Properties (1 ) (50 ) $ (9,786 )
Completed Developments 4 1,362
Configuration Changes - (118 )
9/30/2009 501 138,887
(1) Both the acquisition and disposition amounts do not include the
Company's buyout of its partner's interest in one previously
unconsolidated property. See the Partially Owned Entities schedule
for additional discussion.
(2) EQR owned a 25% interest in these unconsolidated rental properties.
Sale price listed is the gross sale price.
Equity Residential
Third Quarter 2009 vs. Third Quarter 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 119,121 Same Store
Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q3 2009 $ 449,889 $ 170,616 $ 279,273 $ 1,345 93.7 % 18.4 %
Q3 2008 $ 468,168 $ 171,560 $ 296,608 $ 1,390 94.4 % 18.6 %
Change $ (18,279 ) $ (944 ) $ (17,335 ) $ (45 ) (0.7 %) (0.2 %)
Change (3.9 %) (0.6 %) (5.8 %) (3.2 %)
Third Quarter 2009 vs. Second Quarter 2009
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 121,593 Same Store
Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q3 2009 $ 460,738 $ 174,937 $ 285,801 $ 1,350 93.7 % 18.4 %
Q2 2009 $ 465,543 $ 172,152 $ 293,391 $ 1,365 93.6 % 15.1 %
Change $ (4,805 ) $ 2,785 $ (7,590 ) $ (15 ) 0.1 % 3.3 %
Change (1.0 %) 1.6 % (2.6 %) (1.1 %)
September YTD 2009 vs. September YTD 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 115,832 Same Store
Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
YTD 2009 $ 1,320,158 $ 496,499 $ 823,659 $ 1,353 93.7 % 46.9 %
YTD 2008 $ 1,350,698 $ 493,958 $ 856,740 $ 1,373 94.5 % 48.3 %
Change $ (30,540 ) $ 2,541 $ (33,081 ) $ (20 ) (0.8 %) (1.4 %)
Change (2.3 %) 0.5 % (3.9 %) (1.5 %)
(1) The Company's primary financial measure for evaluating each of its
apartment communities is net operating income ("NOI"). NOI
represents rental income less property and maintenance expense, real
estate tax and insurance expense, and property management expense.
The Company believes that NOI is helpful to investors as a
supplemental measure of the operating performance of a real estate
company because it is a direct measure of the actual operating
results of the Company's apartment communities.
(2) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
Equity Residential
Third Quarter 2009 vs. Third Quarter 2008
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year's Quarter
Q3 2009 Q3 2009 Q3 2009
% of Average Weighted Average
Actual Rental Average Rental
Markets Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy
1 New York Metro Area 6,246 10.2 % $ 2,599 95.3 % (7.4 %) 6.3 % (14.3 %) (7.0 %) (0.4 %)
2 DC Northern Virginia 8,781 9.9 % 1,641 95.0 % (1.2 %) 1.4 % (2.4 %) (0.6 %) (0.6 %)
3 South Florida 12,465 9.2 % 1,282 93.1 % (1.8 %) 1.9 % (4.4 %) (1.8 %) (0.1 %)
4 Los Angeles 7,064 7.8 % 1,715 93.3 % (5.2 %) (1.9 %) (6.9 %) (4.4 %) (0.7 %)
5 Boston 5,609 7.1 % 1,920 95.6 % 1.1 % (2.8 %) 3.4 % 1.3 % (0.2 %)
6 Seattle/Tacoma 8,115 6.6 % 1,356 91.2 % (9.2 %) 0.3 % (14.3 %) (5.6 %) (3.6 %)
7 San Francisco Bay Area 6,200 6.6 % 1,661 93.3 % (4.7 %) (0.2 %) (7.0 %) (2.9 %) (1.8 %)
8 Phoenix 10,646 5.1 % 862 91.2 % (8.2 %) (0.7 %) (13.1 %) (6.4 %) (1.8 %)
9 San Diego 4,491 5.1 % 1,639 94.7 % (1.1 %) (4.8 %) 0.7 % (1.2 %) 0.0 %
10 Denver 7,416 4.9 % 1,019 94.1 % (3.4 %) (0.3 %) (5.0 %) (2.6 %) (0.7 %)
11 Orlando 7,525 4.4 % 982 93.9 % (4.6 %) (3.0 %) (5.6 %) (4.9 %) 0.3 %
12 Inland Empire, CA 4,219 3.7 % 1,331 94.7 % (2.3 %) (6.7 %) 0.1 % (3.6 %) 1.2 %
13 Atlanta 6,443 3.5 % 964 94.8 % (4.9 %) (1.2 %) (7.7 %) (4.8 %) (0.1 %)
14 Orange County, CA 3,175 3.4 % 1,555 93.9 % (5.0 %) (2.8 %) (5.9 %) (4.5 %) (0.5 %)
15 Suburban Maryland 4,263 3.3 % 1,201 95.0 % 0.8 % (3.1 %) 3.1 % (0.1 %) 0.8 %
16 New England (excluding Boston) 3,477 2.1 % 1,123 94.1 % (1.1 %) 0.0 % (2.0 %) (0.8 %) (0.3 %)
17 Jacksonville 3,711 2.0 % 883 93.6 % (3.5 %) (9.6 %) 0.8 % (3.2 %) (0.4 %)
18 Portland, OR 3,113 1.9 % 989 93.7 % (1.9 %) 1.6 % (4.1 %) (0.8 %) (1.1 %)
19 Tampa 2,598 1.4 % 932 94.1 % (3.3 %) (6.4 %) (0.9 %) (3.6 %) 0.3 %
20 Raleigh/Durham 2,132 1.0 % 793 93.0 % (3.7 %) (0.3 %) (6.1 %) (1.7 %) (1.9 %)
Top 20 Markets 117,689 99.2 % 1,350 93.7 % (3.9 %) (0.6 %) (5.8 %) (3.2 %) (0.7 %)
All Other Markets 1,432 0.8 % 943 95.0 % (4.0 %) 0.7 % (6.8 %) (4.5 %) 0.6 %
Total 119,121 100.0 % $ 1,345 93.7 % (3.9 %) (0.6 %) (5.8 %) (3.2 %) (0.7 %)
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
Equity Residential
Third Quarter 2009 vs. Second Quarter 2009
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Quarter
Q3 2009 Q3 2009 Q3 2009
% of Average Weighted Average
Actual Rental Average Rental
Markets Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy
1 New York Metro Area 6,246 9.9 % $ 2,599 95.3 % (2.4 %) 0.9 % (4.4 %) (3.0 %) 0.6 %
2 DC Northern Virginia 8,781 9.7 % 1,641 95.0 % 0.7 % 1.0 % 0.6 % 0.0 % 0.7 %
3 South Florida 12,465 8.9 % 1,282 93.1 % (0.4 %) 3.0 % (2.8 %) 0.0 % (0.4 %)
4 Los Angeles 7,099 7.7 % 1,720 93.3 % (0.9 %) 5.1 % (3.9 %) (1.3 %) 0.5 %
5 Boston 6,021 7.6 % 1,989 95.7 % (0.2 %) (1.9 %) 0.8 % (0.9 %) 0.6 %
6 San Francisco Bay Area 6,567 6.8 % 1,657 93.1 % (1.6 %) 1.0 % (3.0 %) (1.8 %) 0.2 %
7 Seattle/Tacoma 8,473 6.7 % 1,352 91.2 % (3.3 %) 2.1 % (6.4 %) (1.8 %) (1.4 %)
8 Denver 7,755 5.1 % 1,031 94.1 % (0.2 %) 7.8 % (4.2 %) (0.6 %) 0.4 %
9 Phoenix 10,646 5.0 % 862 91.2 % (3.1 %) 6.2 % (9.1 %) (1.5 %) (1.5 %)
10 San Diego 4,491 4.9 % 1,639 94.7 % 0.6 % 1.5 % 0.1 % (0.4 %) 0.9 %
11 Orlando 7,690 4.4 % 985 93.9 % (0.6 %) 0.5 % (1.3 %) (1.7 %) 1.1 %
12 Suburban Maryland 5,059 3.9 % 1,192 94.9 % (1.0 %) (4.2 %) 0.9 % (1.5 %) 0.4 %
13 Inland Empire, CA 4,219 3.7 % 1,331 94.7 % (0.2 %) 3.3 % (2.0 %) (0.7 %) 0.5 %
14 Atlanta 6,443 3.4 % 964 94.8 % (2.0 %) 1.9 % (5.0 %) (2.8 %) 0.8 %
15 Orange County, CA 3,175 3.3 % 1,555 93.9 % (1.4 %) 3.0 % (3.4 %) (1.5 %) 0.0 %
16 New England (excluding Boston) 3,477 2.1 % 1,123 94.1 % (0.2 %) (2.0 %) 1.3 % (0.3 %) 0.1 %
17 Jacksonville 3,711 2.0 % 883 93.6 % (0.6 %) (8.5 %) 5.1 % (0.8 %) 0.2 %
18 Portland, OR 3,113 1.8 % 989 93.7 % (0.1 %) 2.3 % (1.7 %) (0.1 %) 0.0 %
19 Tampa 2,598 1.4 % 932 94.1 % (0.8 %) (4.7 %) 2.2 % (1.0 %) 0.1 %
20 Raleigh/Durham 2,132 0.9 % 793 93.0 % (0.6 %) 7.7 % (6.1 %) 0.4 % (0.9 %)
Top 20 Markets 120,161 99.2 % 1,355 93.7 % (1.0 %) 1.6 % (2.6 %) (1.1 %) 0.1 %
All Other Markets 1,432 0.8 % 943 95.0 % (0.7 %) 3.3 % (3.2 %) (0.6 %) (0.1 %)
Total 121,593 100.0 % $ 1,350 93.7 % (1.0 %) 1.6 % (2.6 %) (1.1 %) 0.1 %
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
Equity Residential
September YTD 2009 vs. September YTD 2008
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year
Sept. YTD 09 Sept. YTD 09 Sept. YTD 09
% of Average Weighted Average
Actual Rental Average Rental
Markets Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy
1 New York Metro Area 6,246 10.6 % $ 2,666 94.6 % (3.4 %) 4.6 % (7.8 %) (3.4 %) 0.0 %
2 South Florida 11,761 8.8 % 1,282 93.3 % (2.2 %) 1.6 % (4.8 %) (1.8 %) (0.4 %)
3 DC Northern Virginia 7,661 8.8 % 1,655 94.6 % (0.8 %) 1.7 % (2.0 %) 0.2 % (1.1 %)
4 Los Angeles 6,485 7.6 % 1,722 93.3 % (2.9 %) (1.2 %) (3.8 %) (2.0 %) (0.8 %)
5 Seattle/Tacoma 8,115 7.0 % 1,372 92.3 % (4.1 %) 1.4 % (7.1 %) (1.7 %) (2.3 %)
6 Boston 5,609 7.0 % 1,929 95.0 % 1.1 % (1.3 %) 2.5 % 2.0 % (0.9 %)
7 San Francisco Bay Area 6,200 6.9 % 1,690 93.3 % (1.2 %) 0.1 % (1.9 %) 1.1 % (2.2 %)
8 Phoenix 10,238 5.4 % 873 92.6 % (7.2 %) 0.0 % (11.6 %) (5.7 %) (1.5 %)
9 Denver 7,416 5.1 % 1,023 93.8 % (1.1 %) (1.4 %) (1.0 %) 0.0 % (1.1 %)
10 San Diego 4,491 5.1 % 1,645 93.9 % 0.1 % (1.6 %) 1.0 % 0.5 % (0.3 %)
11 Orlando 7,525 4.5 % 995 93.2 % (4.5 %) (1.3 %) (6.5 %) (4.0 %) (0.4 %)
12 Inland Empire, CA 4,219 3.8 % 1,341 94.4 % (1.7 %) (2.5 %) (1.3 %) (2.3 %) 0.6 %
13 Atlanta 6,443 3.7 % 987 94.1 % (2.7 %) 1.3 % (5.7 %) (1.9 %) (0.8 %)
14 Orange County, CA 3,175 3.6 % 1,576 94.0 % (2.4 %) (1.8 %) (2.7 %) (2.1 %) (0.3 %)
15 Suburban Maryland 3,785 2.8 % 1,165 94.3 % 1.6 % 1.3 % 1.8 % 1.7 % 0.0 %
16 New England (excluding Boston) 3,477 2.1 % 1,120 94.1 % (1.1 %) 2.7 % (4.4 %) (0.7 %) (0.3 %)
17 Jacksonville 3,711 2.0 % 886 93.4 % (3.7 %) (2.0 %) (4.9 %) (3.4 %) (0.3 %)
18 Portland, OR 3,113 1.9 % 989 94.0 % (0.4 %) 1.4 % (1.6 %) 0.7 % (1.0 %)
19 Tampa 2,598 1.4 % 941 94.1 % (3.0 %) (1.0 %) (4.6 %) (3.2 %) 0.1 %
20 Raleigh/Durham 2,132 1.0 % 793 94.0 % (1.8 %) (0.6 %) (2.7 %) (0.3 %) (1.4 %)
Top 20 Markets 114,400 99.1 % 1,358 93.7 % (2.3 %) 0.5 % (3.9 %) (1.4 %) (0.8 %)
All Other Markets 1,432 0.9 % 952 94.5 % (2.6 %) 0.3 % (4.4 %) (2.5 %) (0.1 %)
Total 115,832 100.0 % $ 1,353 93.7 % (2.3 %) 0.5 % (3.9 %) (1.5 %) (0.8 %)
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
Equity Residential
Third Quarter 2009 vs. Third Quarter 2008
Same Store Operating Expenses
$ in thousands - 119,121 Same Store Units
% of Actual
Q3 2009
Actual Actual $ % Operating
Q3 2009 Q3 2008 Change Change Expenses
Real estate taxes $ 45,824 $ 45,061 $ 763 1.7 % 26.9 %
On-site payroll (1) 40,847 41,766 (919 ) (2.2 %) 23.9 %
Utilities (2) 26,165 25,707 458 1.8 % 15.3 %
Repairs and maintenance (3) 26,078 26,963 (885 ) (3.3 %) 15.3 %
Property management costs (4) 16,758 17,673 (915 ) (5.2 %) 9.8 %
Insurance 5,716 5,468 248 4.5 % 3.4 %
Leasing and advertising 4,637 4,032 605 15.0 % 2.7 %
Other operating expenses (5) 4,591 4,890 (299 ) (6.1 %) 2.7 %
Same store operating expenses $ 170,616 $ 171,560 $ (944 ) (0.6 %) 100.0 %
September YTD 2009 vs. September YTD 2008
Same Store Operating Expenses
$ in thousands - 115,832 Same Store Units
% of Actual
YTD 2009
Actual Actual $ % Operating
YTD 2009 YTD 2008 Change Change Expenses
Real estate taxes $ 133,538 $ 129,924 $ 3,614 2.8 % 26.9 %
On-site payroll (1) 119,963 119,781 182 0.2 % 24.2 %
Utilities (2) 77,544 76,989 555 0.7 % 15.6 %
Repairs and maintenance (3) 73,134 73,387 (253 ) (0.3 %) 14.7 %
Property management costs (4) 49,176 50,989 (1,813 ) (3.6 %) 9.9 %
Insurance 16,514 15,907 607 3.8 % 3.3 %
Leasing and advertising 11,730 11,654 76 0.7 % 2.4 %
Other operating expenses (5) 14,900 15,327 (427 ) (2.8 %) 3.0 %
Same store operating expenses $ 496,499 $ 493,958 $ 2,541 0.5 % 100.0 %
(1) On-site payroll - Includes payroll and related expenses for on-site
personnel including property managers, leasing consultants and
maintenance staff.
(2) Utilities - Includes expenses recovered under the Resident Utility
Billing System ("RUBS"). Recoveries are reflected in rental income.
(3) Repairs and maintenance - 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.
(4) Property management costs - Includes payroll and related expenses
for departments, or portions of departments, that directly support
on-site 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.
(5) Other operating expenses - Includes administrative costs such as
office supplies, telephone and data charges and association and
business licensing fees.
Equity Residential
Debt Summary as of September 30, 2009
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts (1) % of Total Rates (1) (years)
Secured $ 4,885,560 49.7 % 4.90 % 8.9
Unsecured 4,949,560 50.3 % 5.32 % 4.9
Total $ 9,835,120 100.0 % 5.11 % 6.9
Fixed Rate Debt:
Secured - Conventional $ 4,065,470 41.3 % 5.92 % 7.3
Unsecured - Public/Private 4,311,989 43.9 % 5.89 % 5.3
Fixed Rate Debt 8,377,459 85.2 % 5.90 % 6.3
Floating Rate Debt:
Secured - Conventional 192,462 2.0 % 2.11 % 5.5
Secured - Tax Exempt 627,628 6.4 % 0.68 % 20.8
Unsecured - Public/Private 601,971 6.1 % 1.27 % 1.4
Unsecured - Tax Exempt 35,600 0.3 % 0.40 % 19.2
Unsecured - Revolving Credit Facility - - - 2.4
Floating Rate Debt 1,457,661 14.8 % 1.24 % 10.4
Total $ 9,835,120 100.0 % 5.11 % 6.9
(1) Net of the effect of any derivative instruments. Weighted average
rates are for the nine
months ended September 30, 2009.
Note: The Company capitalized interest of approximately $28.7
million and $45.1 million
during the nine months ended September 30, 2009 and 2008,
respectively. The Company
capitalized interest of approximately $7.7 million and $15.6 million
during the
quarters ended September 30, 2009 and 2008, respectively.
Debt Maturity Schedule as of September 30, 2009
(Amounts in thousands)
Weighted Weighted
Average Rates Average
Fixed Floating on Fixed Rates on
Year Rate (1) Rate (1) Total % of Total Rate Debt (1) Total Debt (1)
2009 $ 3,315 $ 86,818 $ 90,133 0.9 % 7.53 % 2.34 %
2010 225,798 500,000 (2 ) 725,798 7.4 % 7.51 % 2.92 %
2011 1,261,103 (3) 92,819 1,353,922 13.8 % 5.58 % 5.30 %
2012 982,427 3,492 985,919 10.0 % 5.77 % 5.77 %
2013 466,338 101,971 568,309 5.8 % 6.64 % 5.51 %
2014 517,438 - 517,438 5.2 % 5.28 % 5.28 %
2015 355,629 - 355,629 3.6 % 6.41 % 6.41 %
2016 1,089,233 - 1,089,233 11.1 % 5.32 % 5.32 %
2017 1,346,550 456 1,347,006 13.7 % 5.87 % 5.87 %
2018 336,083 44,677 380,760 3.9 % 5.95 % 5.60 %
2019+ 1,793,545 627,428 2,420,973 24.6 % 5.86 % 5.06 %
Total $ 8,377,459 $ 1,457,661 $ 9,835,120 100.0 % 5.82 % 5.22 %
(1) Net of the effect of any derivative instruments. Weighted average
rates are as of September 30, 2009.
(2) Represents the Company's $500.0 million floating rate term loan
facility, which matures on October 5, 2010, subject to two one-year
extension options exercisable by the Company.
(3) Includes $531.1 million face value of 3.85% convertible unsecured
debt with a final maturity of 2026. The notes are callable by the
Company on or after August 18, 2011. The notes are putable by the
holders on August 18, 2011, August 15, 2016 and August 15, 2021.
Equity Residential
Unsecured Debt Summary as of September 30, 2009
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
Fixed Rate Notes:
6.950 % 03/02/11 (1) $ 114,806 $ 1,457 $ 116,263
6.625 % 03/15/12 400,000 (722 ) 399,278
5.500 % 10/01/12 350,000 (1,035 ) 348,965
5.200 % 04/01/13 (2) 400,000 (414 ) 399,586
5.250 % 09/15/14 500,000 (305 ) 499,695
6.584 % 04/13/15 300,000 (617 ) 299,383
5.125 % 03/15/16 500,000 (345 ) 499,655
5.375 % 08/01/16 400,000 (1,268 ) 398,732
5.750 % 06/15/17 650,000 (3,942 ) 646,058
7.125 % 10/15/17 150,000 (522 ) 149,478
7.570 % 08/15/26 140,000 - 140,000
3.850 % 08/15/26 (3) 531,092 (16,196 ) 514,896
Fair Value Derivative Adjustments (2) (100,000 ) - (100,000 )
4,335,898 (23,909 ) 4,311,989
Floating Rate Tax Exempt Notes:
7-Day SIFMA 12/15/28 (4) 35,600 - 35,600
Floating Rate Notes:
04/01/13 (2) 100,000 - 100,000
Fair Value Derivative Adjustments (2) 1,971 - 1,971
Term Loan Facility LIBOR+0.50% 10/05/10 (4)(5) 500,000 - 500,000
601,971 - 601,971
Revolving Credit Facility: LIBOR+0.50% 02/28/12 (6) - - -
Total Unsecured Debt $ 4,973,469 $ (23,909 ) $ 4,949,560
Note: SIFMA stands for the Securities Industry and Financial Markets
Association and is the tax-exempt index equivalent of LIBOR.
(1) On January 27, 2009, the Company repurchased $185.2 million of these
notes at par pursuant to a cash tender offer announced on January
16, 2009.
(2) $100.0 million in fair value interest rate swaps converts a portion
of the 5.200% notes due April 1, 2013 to a floating interest rate.
(3) Convertible notes mature on August 15, 2026. The notes are callable
by the Company on or after August 18, 2011. The notes are putable by
the holders on August 18, 2011, August 15, 2016 and August 15, 2021.
During the nine months ended September 30, 2009, the Company
repurchased $17.5 million of these notes at a discount to par of
approximately 11.6% and recognized a gain on early debt
extinguishment of $2.0 million. Effective January 1, 2009, companies
are required to expense the implied option value inherent in
convertible debt. In conjunction with this requirement, the Company
recorded an adjustment of $17.3 million to the beginning balance of
the discount on its convertible notes.
(4) Notes are private. All other unsecured debt is public.
(5) Represents the Company's $500.0 million term loan facility, which
matures on October 5, 2010, subject to two one-year extension
options exercisable by the Company.
(6) As of September 30, 2009, there was no amount outstanding and
approximately $1.36 billion available on the Company's unsecured
revolving credit facility.
Equity Residential
Selected Unsecured Public Debt Covenants
September 30, June 30,
2009 2009
Total Debt to Adjusted Total Assets (not to exceed 60%) 50.3 % 50.8 %
Secured Debt to Adjusted Total Assets (not to exceed 40%) 25.0 % 25.6 %
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.26 2.30
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 241.3 % 238.2 %
These selected covenants relate to ERP Operating Limited
Partnership's ("ERPOP")
outstanding unsecured public debt. Equity Residential is the general
partner of
ERPOP.
Equity Residential
Capital Structure as of September 30, 2009
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 4,885,560 49.7 %
Unsecured Debt 4,949,560 50.3 %
Total Debt 9,835,120 100.0 % 51.9 %
Common Shares (includes Restricted Shares) 276,147,420 95.0 %
Units 14,432,942 5.0 %
Total Shares and Units 290,580,362 100.0 %
Common Share Equivalents (see below) 398,038
Total outstanding at quarter-end 290,978,400
Common Share Price at September 30, 2009 $ 30.70
8,933,037 97.8 %
Perpetual Preferred Equity (see below) 200,000 2.2 %
Total Equity 9,133,037 100.0 % 48.1 %
Total Market Capitalization $18,968,157 100.0 %
Convertible Preferred Equity as of September 30, 2009
(Amounts in thousands except for share and per share amounts)
Annual Annual Weighted Common
Redemption Outstanding Liquidation Dividend Dividend Average Conversion Share
Series Date Shares Value Per Share Amount Rate Ratio Equivalents
Preferred Shares:
7.00% Series E 11/1/98 328,466 $ 8,212 $ 1.75 $ 575 1.1128 365,517
7.00% Series H 6/30/98 22,459 561 1.75 39 1.4480 32,521
Total Convertible Preferred Equity 350,925 $ 8,773 $ 614 7.00 % 398,038
Perpetual Preferred Equity as of September 30, 2009
(Amounts in thousands except for share and per share amounts)
Annual Annual Weighted
Redemption Outstanding Liquidation Dividend Dividend Average
Series Date Shares Value Per Share Amount Rate
Preferred Shares:
8.29% Series K 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145
6.48% Series N 6/19/08 600,000 150,000 16.20 9,720
Total Perpetual Preferred Equity 1,600,000 $ 200,000 $ 13,865 6.93 %
Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
YTD Q309 YTD Q308 Q309 Q308
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares - basic 272,965,818 269,581,967 273,658,165 270,345,399
Shares issuable from assumed conversion/vesting of:
- OP Units 16,023,881 17,840,134 15,604,484 17,398,225
- long-term compensation award shares/units 527,805 2,844,883 952,568 3,051,930
Total Common Shares and Units - diluted 289,517,504 290,266,984 290,215,217 290,795,554
Weighted Average Amounts Outstanding for FFO Purposes:
Common Shares - basic 272,965,818 269,581,967 273,658,165 270,345,399
OP Units - basic 16,023,881 17,840,134 15,604,484 17,398,225
Total Common Shares and OP Units - basic 288,989,699 287,422,101 289,262,649 287,743,624
Shares issuable from assumed conversion/vesting of:
- convertible preferred shares/units 404,004 432,445 400,489 419,822
- long-term compensation award shares/units 527,805 2,844,883 952,568 3,051,930
Total Common Shares and Units - diluted 289,921,508 290,699,429 290,615,706 291,215,376
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares) 276,147,420
Units 14,432,942
Total Shares and Units 290,580,362
Equity Residential
Partially Owned Entities as of September 30, 2009
(Amounts in thousands except for project and unit amounts)
Consolidated Unconsolidated
Development Projects
Held for Institutional
and/or Under Completed, Not Completed Joint
Development Stabilized (4) and Stabilized Other Total Ventures (5)
Total projects (1) - 3 2 21 26 37
Total units (1) - 898 432 3,796 5,126 8,788
Operating information for the nine months
ended 9/30/09 (at 100%):
Operating revenue $ 1,204 $ 5,345 $ 5,325 $ 42,663 $ 54,537 $ 70,762
Operating expenses 1,877 3,561 2,328 14,924 22,690 32,278
Net operating (loss) income (673 ) 1,784 2,997 27,739 31,847 38,484
Depreciation 278 2,918 2,674 11,305 17,175 14,947
General and administrative/other 51 426 5 19 501 302
Operating (loss) income (1,002 ) (1,560 ) 318 16,415 14,171 23,235
Interest and other income 25 14 - 88 127 380
Other expenses (314 ) - - (13 ) (327 ) -
Interest:
Expense incurred, net (355 ) (3,593 ) (1,592 ) (15,103 ) (20,643 ) (33,794 )
Amortization of deferred financing costs (183 ) (186 ) (39 ) (129 ) (537 ) (696 )
Income and other tax (expense) benefit (53 ) - - (34 ) (87 ) (117 )
Net (loss) income $ (1,882 ) $ (5,325 ) $ (1,313 ) $ 1,224 $ (7,296 ) $ (10,992 )
Debt - Secured (2):
EQR Ownership (3) $ 340,813 $ 192,516 $ 61,260 $ 219,171 $ 813,760 $ 105,266
Noncontrolling Ownership - - - 82,786 82,786 315,798
Total (at 100%) $ 340,813 $ 192,516 $ 61,260 $ 301,957 $ 896,546 $ 421,064
(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 for institutional joint
ventures are as follows: $112.6 million, May 1, 2010, 8.33%; $121.0
million, December 1, 2010, 7.54%; $143.8 million, March 1, 2011,
6.95%; and $43.6 million, July 1, 2019, 5.305%. A portion of this
mortgage debt is also partially collateralized by $22.0 million in
unconsolidated restricted cash set aside from the net proceeds of
property sales. The Company acquired its partner's interest in one
of the previously unconsolidated properties containing 250 units in
the third quarter of 2009 for $18.5 million and as a result, the
project is now consolidated and wholly owned.
Equity Residential
Consolidated Development Projects as of September 30, 2009
(Amounts in thousands except for project and unit amounts)
Total Book
Total Total Value Not Estimated Estimated
No. of Capital Book Value Placed in Total Percentage Percentage Percentage Completion Stabilization
Projects Location Units Cost (1) to Date Service Debt Completed Leased Occupied Date Date
Projects Under Development - Wholly Owned:
70 Greene (a.k.a. 77 Hudson) Jersey City, NJ 480 $ 269,958 $ 257,775 $ 257,775 $ - 97 % 42 % 36 % Q4 2009 Q1 2011
Reserve at Town Center II Mill Creek, WA 100 24,464 18,557 18,557 - 84 % 35 % 13 % Q4 2009 Q3 2010
Redmond Way Redmond, WA 250 84,382 44,669 44,669 - 48 % - - Q1 2011 Q1 2012
Projects Under Development - Wholly Owned 830 378,804 321,001 321,001 -
Projects Under Development - Partially Owned:
Red Road Commons South Miami, FL 404 128,816 124,664 124,664 68,669 97 % 64 % 64 % Q4 2009 Q3 2011
The Brooklyner (a.k.a. 111 Lawrence Street) Brooklyn, NY 492 283,968 195,636 195,636 74,291 71 % - - Q2 2010 Q3 2011
Westgate Pasadena, CA 480 170,558 112,530 112,530 163,160 (2 ) 59 % - - Q2 2011 Q2 2012
Projects Under Development - Partially Owned 1,376 583,342 432,830 432,830 306,120
Projects Under Development 2,206 962,146 753,831 753,831 306,120 (3 )
Land Held for Development N/A N/A 239,158 239,158 34,693
Land/Projects Held for and/or Under Development 2,206 962,146 992,989 992,989 340,813
Completed Not Stabilized - Wholly Owned (4):
Mosaic at Metro Hyattsville, MD 260 60,383 59,692 - 45,507 95 % 95 % Completed Q4 2009
Third Square (a.k.a. 303 Third Street) (5) Cambridge, MA 482 257,457 255,127 - - 83 % 81 % Completed Q2 2010
Reunion at Redmond Ridge Redmond, WA 321 53,175 53,151 - - 47 % 45 % Completed Q3 2010
Projects Completed Not Stabilized - Wholly Owned 1,063 371,015 367,970 - 45,507
Completed Not Stabilized - Partially Owned (4):
1401 South State (a.k.a. City Lofts) Chicago, IL 278 68,923 68,445 - 52,124 92 % 88 % Completed Q4 2009
Veridian (a.k.a. Silver Spring) Silver Spring, MD 457 149,962 148,920 - 112,511 92 % 86 % Completed Q1 2010
Montclair Metro Montclair, NJ 163 48,730 43,930 - 27,881 18 % 4 % Completed Q2 2010
Projects Completed Not Stabilized - Partially Owned 898 267,615 261,295 - 192,516
Projects Completed Not Stabilized 1,961 638,630 629,265 - 238,023
Completed and Stabilized During the Quarter - Wholly Owned:
Crowntree Lakes Orlando, FL 352 56,631 56,631 - - 97 % 93 % Completed Stabilized
Projects Completed and Stabilized During the Quarter - Wholly Owned 352 56,631 56,631 - -
Projects Completed and Stabilized During the Quarter 352 56,631 56,631 - -
Total Projects 4,519 $ 1,657,407 $ 1,678,885 $ 992,989 $ 578,836
NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Total Capital Cost (1) Q3 2009 NOI
Projects Under Development $ 962,146 $ 224
Completed Not Stabilized 638,630 2,656
Completed and Stabilized During the Quarter 56,631 510
Total Development NOI Contribution $ 1,657,407 $ 3,390
(1) Total capital cost represents estimated development cost for
projects under development and all capitalized costs incurred to
date plus any estimates of costs remaining to be funded for all
projects, all in accordance with GAAP.
(2) Debt is primarily tax-exempt bonds that are entirely outstanding
with $59.4 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
September 30, 2009.
(3) Of the approximately $208.3 million of capital cost remaining to
be funded at 9/30/09 for projects under development, $150.5
million will be funded by fully committed third party bank loans
and the remaining $57.8 million will be funded by cash on hand.
(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 95% occupied. Phase II is 63% leased and 59%
occupied.
Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real
Estate
For the Nine Months Ended September 30, 2009
(Amounts in thousands except for unit and per unit amounts)
Repairs and Maintenance Expenses Capital Expenditures to Real Estate Total Expenditures
Building
Total Avg. Avg. Avg. Replacements Avg. Improvements Avg. Avg. Grand Avg.
Units (1) Expense (2) Per Unit Payroll (3) Per Unit Total Per Unit (4) Per Unit (5) Per Unit Total Per Unit Total Per Unit
Same Store Properties (6) 115,832 $ 73,134 $ 631 $ 59,057 $ 510 $ 132,191 $ 1,141 $ 54,529 $ 471 $ 31,987 $ 276 $ 86,516 $ 747 (9 ) $ 218,707 $ 1,888
Non-Same Store Properties (7) 9,657 6,253 677 4,107 444 10,360 1,121 1,784 193 2,508 272 4,292 465 14,652 1,586
Other (8) 15 1,433 6,253 7,686 1,481 760 2,241 9,927
Total 125,504 $ 80,820 $ 69,417 $ 150,237 $ 57,794 $ 35,255 $ 93,049 $ 243,286
(1) Total Units - Excludes 8,788 unconsolidated units and 4,595 military
housing (fee managed) units, for which repairs and maintenance
expenses and capital expenditures to real estate are self-funded and
do not consolidate into the Company's results.
(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.
(4) Replacements - Includes new expenditures inside the units such as
appliances, mechanical equipment, fixtures and flooring, including
carpeting. Replacements for same store properties also include $21.3
million spent on various assets related to unit renovations/rehabs
(primarily kitchens and baths) designed to reposition these assets
for higher rental levels in their respective markets.
(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, 2008, less
properties subsequently sold.
(7) Non-Same Store Properties - Primarily includes all properties
acquired during 2008 and 2009, plus any properties in lease-up and
not stabilized as of 1/1/08. Per unit amounts are based on a
weighted average of 9,239 units.
(8) Other - Primarily includes expenditures for properties sold during
the period, Equity Corporate Housing and condominium conversion
properties.
(9) For 2009, the Company estimates that it will spend approximately
$1,050 per unit of capital expenditures for its same store
properties inclusive of unit renovation/rehab costs, or $800 per
unit excluding unit renovation/rehab costs.
Equity Residential
Discontinued Operations
(Amounts in thousands)
Nine Months Ended Quarter Ended
September 30, September 30,
2009 2008 2009 2008
REVENUES
Rental income $ 52,595 $ 120,729 $ 8,502 $ 33,910
Total revenues 52,595 120,729 8,502 33,910
EXPENSES (1)
Property and maintenance 18,707 36,972 3,857 10,796
Real estate taxes and insurance 6,094 14,465 1,045 3,923
Property management - (62 ) - -
Depreciation 12,761 30,274 2,175 8,380
General and administrative 29 24 4 7
Total expenses 37,591 81,673 7,081 23,106
Discontinued operating income 15,004 39,056 1,421 10,804
Interest and other income 12 233 2 93
Interest (2):
Expense incurred, net (308 ) (1,493 ) 2 (479 )
Amortization of deferred financing costs (32 ) (3 ) - (1 )
Income and other tax (expense) benefit (86 ) 1,014 (19 ) 359
Discontinued operations 14,590 38,807 1,406 10,776
Net gain on sales of discontinued operations 274,933 365,052 129,135 150,255
Discontinued operations, net $ 289,523 $ 403,859 $ 130,541 $ 161,031
(1) Includes expenses paid in the current period for properties sold or
held for sale in prior periods related to the Company's period of
ownership.
(2) Includes only interest expense specific to secured mortgage notes
payable for properties sold and/or held for sale.
Equity Residential
FFO Midpoint Reconciliations and Non-Comparable Items
(Amounts in thousands except per share data)
(All per share data is diluted)
FFO Midpoint Reconciliations
FFO Reconciliations
Guidance Midpoint Q3
2009 to Actual Q3 2009
Amounts Per Share
Guidance midpoint Q3 2009 FFO - Diluted (1) (2) $ 146,393 $ 0.505
Property NOI 5,617 0.019
Debt extinguishment gains 2,435 0.008
Interest expense 1,458 0.005
Other expenses (write-off of pursuit costs) (1,672 ) (0.006 )
Other 205 -
Actual Q3 2009 FFO - Diluted (1) (2) $ 154,436 $ 0.531
Non-Comparable Items (3)
Nine Months Ended September 30, Quarter Ended September 30,
2009 2008 Variance 2009 2008 Variance
Impairment $ (11,124 ) $ - $ (11,124 ) $ - $ - $ -
Debt extinguishment gains (interest and other income) 4,455 266 4,189 2,435 266 2,169
Gain on sale of investment securities (interest and other income) 4,943 - 4,943 - - -
Non-cash convertible debt discount (includes extinguishment (7,165 ) (7,554 ) 389 (2,140 ) (2,518 ) 378
write-offs)
Debt extinguishment costs (interest):
Prepayment penalties (35 ) (41 ) 6 - (41 ) 41
Write-off of unamortized deferred financing costs (2,328 ) (169 ) (2,159 ) (893 ) (163 ) (730 )
Write-off of unamortized premiums/(discounts)/(OCI) (758 ) (25 ) (733 ) - (25 ) 25
EQR 25% share of unconsolidated defeasance costs
((loss) income from investments in unconsolidated entities) (1,775 ) - (1,775 ) - - -
Net gain on sales of land parcels - 2,976 (2,976 ) - 2,976 (2,976 )
Net incremental (loss) gain on sales of condominium units (450 ) (2,643 ) 2,193 (785 ) 447 (1,232 )
Other (4,655 ) (1,644 ) (3,011 ) (2,813 ) (1,179 ) (1,634 )
Net non-comparable items (3) $ (18,892 ) $ (8,834 ) $ (10,058 ) $ (4,196 ) $ (237 ) $ (3,959 )
Note: See page 26 for definitions, footnotes and reconciliations
of EPS to FFO.
Equity Residential
Earnings Guidance and Assumptions
The earnings guidance/projections provided below are based on
current expectations and are forward-looking.
2009 Earnings Guidance (per
share diluted)
Q4 2009 2009
Expected FFO (1) (2) $0.49 to $0.53 $2.18 to $2.22
2009 Same Store Assumptions
Physical occupancy 93.7%
Revenue change (3.0%)
Expense change 0.5%
NOI change (5.0%)
(Note: 25 basis point change in NOI percentage = $0.01 per share
change in EPS/FFO)
2009 Transaction Assumptions
Consolidated rental acquisitions $150.0 million
Consolidated rental dispositions $900.0 million
Capitalization rate spread 125 basis points
2009 Debt Assumptions
Weighted average debt outstanding $9.9 billion to $10.0 billion
Weighted average interest rate (reduced for capitalized interest 4.84%
and including prepayment penalties)
Interest expense $479.0 million to $484.0 million
Unrestricted cash at 12/31/09 $580.0 million
Note: Debt guidance assumes no additional debt offerings and no
additional debt extinguishments, but does include approximately $9.3
million of interest expense for the requirement to expense the
implied option value inherent in convertible debt. This change does
not affect the Company's continued compliance with its financial or
debt covenants.
2009 Other Guidance Assumptions
General and administrative expense $40.0 million
Interest and other income $16.5 million
Income and other tax expense $3.5 million
Net gain on sales of land parcels No amounts budgeted
Preferred share redemptions No amounts budgeted
Equity ATM share offerings No amounts budgeted
Weighted average Common Shares and Units - Diluted 290.0 million
Note: See page 26 for definitions, footnotes and reconciliations
of EPS to FFO.
Equity Residential
Additional Reconciliations
(Amounts in thousands except per share data)
(All per share data is diluted)
The earnings guidance/projections provided below are based on
current expectations and are forward-looking.
Reconciliations of EPS to FFO for Pages 24 and 25
Expected Expected
Expected Q3 2009 Q4 2009 2009
Amounts Per Share Per Share Per Share
Expected Earnings - Diluted (4) $ 141,864 $ 0.490 $0.24 to $0.28 $1.37 to $1.41
Add: Expected depreciation expense 148,341 0.512 0.51 2.05
Less: Expected net gain on sales (4) (143,812 ) (0.497 ) (0.26) (1.24)
Expected FFO - Diluted (1) (2) $ 146,393 $ 0.505 $0.49 to $0.53 $2.18 to $2.22
Definitions and Footnotes for Pages 24 and 25
(1) The National Association of Real Estate Investment Trusts
("NAREIT") defines funds from operations ("FFO") (April 2002 White
Paper) as net income (computed in accordance with accounting
principles generally accepted in the United States ("GAAP")),
excluding gains (or losses) from sales of depreciable property,
plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures.Adjustments for
unconsolidated partnerships and joint ventures will be calculated
to reflect funds from operations on the same basis.The April
2002 White Paper states that gain or loss on sales of property is
excluded from FFO for previously depreciated operating properties
only.Once the Company commences 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
"NoncontrollingInterests - 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.
(2) 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 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.
(3) Non-comparable items are those items included in FFO that by their
nature 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.
(4) Earnings represents net income per share calculated in accordance
with accounting principles generally accepted in the United
States.Expected earnings is calculated on a basis consistent
with actual earnings.Due to the uncertain timing and extent of
property dispositions and the resulting gains/losses on sales,
actual earnings could differ materially from expected earnings.
Same Store NOI Reconciliation for Page 10
The following tables present reconciliations of operating income
per the consolidated statements
of operations to NOI for the
September YTD 2009 and Third Quarter 2009 Same Store Properties:
Nine Months Ended September 30, Quarter Ended September 30,
2009 2008 2009 2008
Operating income $ 400,768 $ 433,409 $ 133,096 $ 148,175
Adjustments:
Non-same store operating results (55,423 ) (27,128 ) (10,459 ) (6,394 )
Fee and asset management revenue (7,928 ) (7,397 ) (2,653 ) (2,387 )
Fee and asset management expense 5,916 6,154 1,931 1,983
Depreciation 438,726 417,662 147,477 145,382
General and administrative 30,476 34,040 9,881 9,849
Impairment 11,124 - - -
Same store NOI $ 823,659 $ 856,740 $ 279,273 $ 296,608
SOURCE: Equity Residential
Equity Residential Marty McKenna, 312/928-1901
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News Provided by COMTEX
Company: Equity Residential (EQR)
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