Equity Residential (NYSE: EQR) today reported results for the quarter ended March 31, 2015. All per share results are reported as available to common shares on a diluted basis.
“Apartment fundamentals remain very strong across our markets and 2015 should be another terrific year for Equity Residential,” said David J. Neithercut, Equity Residential’s President and CEO. “As we head into our primary leasing season, we continue to experience less turnover, better occupancy and higher rental rates than original expectations and are therefore pleased to raise our guidance range for same store revenue growth to 4.3% to 4.7%.”
First Quarter 2015
FFO (Funds from Operations), as defined by the National Association of Real Estate Investment Trusts (NAREIT), for the first quarter of 2015 was $0.79 per share compared to $0.71 per share in the first quarter of 2014. The difference is due primarily to the items described below.
For the first quarter of 2015, the company reported Normalized FFO of $0.79 per share compared to $0.71 per share in the same period of 2014. The following items impacted Normalized FFO per share in the quarter:
- a positive impact of approximately $0.07 per share from higher same store net operating income (NOI) and approximately $0.02 per share from NOI from non-same store properties currently in lease-up;
- a positive impact of approximately $0.01 per share from lower interest expense primarily due to higher capitalized interest in the first quarter of 2015; and
- a negative impact of approximately $0.02 per share from the timing of the company’s 2014 and 2015 transaction activity and other items.
Normalized FFO begins with FFO and eliminates certain items that by their nature are not comparable from period to period or that tend to obscure the company’s actual operating performance. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 5 and 25 of this release and the company has included guidance for Normalized FFO on page 24 and FFO on page 25 of this release.
For the first quarter of 2015, the company reported earnings of $0.49 per share compared to $0.22 per share in the first quarter of 2014. The difference is due primarily to higher gains on property sales in the first quarter of 2015 and the items described above.
Same Store Results
On a same store first quarter to first quarter comparison, which includes 97,586 apartment units, revenues increased 5.0%, expenses increased 1.4% and NOI increased 7.0%.
Capital Markets Activity
In February 2015, the company established a $500 million unsecured commercial paper note program which allows Equity Residential to borrow on a daily, weekly and monthly basis. As of April 27, 2015, the company’s program has approximately $500 million outstanding at a weighted average rate of 0.61% for a weighted average period of 12 days.
Investment Activity
The company did not acquire any operating properties during the first quarter of 2015.
During the first quarter of 2015, the company sold three consolidated apartment properties, consisting of 550 apartment units, for an aggregate sale price of approximately $145.4 million at a weighted average capitalization (cap) rate of 5.3%. These sales generated an unlevered internal rate of return (IRR), inclusive of indirect management costs, of 11.9%.
Second Quarter 2015 Guidance
The company has established a Normalized FFO guidance range of $0.82 to $0.86 per share for the second quarter of 2015. The difference between the company’s first quarter 2015 Normalized FFO of $0.79 per share and the midpoint of the second quarter 2015 guidance range of $0.84 per share is due primarily to:
- a positive impact of approximately $0.04 per share from higher same store NOI; and
- a positive impact of approximately $0.01 per share from lower G&A costs.
Full Year 2015 Guidance
The company has revised its guidance for its full year 2015 same store operating performance and Normalized FFO per share as listed below:
Previous | Revised | |||||||
| Same store: | ||||||||
| Physical occupancy | 95.8% | 95.9% | ||||||
| Revenue change | 3.75% to 4.5% | 4.3% to 4.7% | ||||||
| Expense change | 2.5% to 3.5% | 2.5% to 3.5% | ||||||
| NOI change | 4.0% to 5.5% | 4.8% to 5.8% | ||||||
| Normalized FFO per share | $3.35 to $3.45 | $3.37 to $3.45 | ||||||
The company’s guidance for transaction activity remains unchanged at $500 million of acquisitions and $500 million of dispositions with a cap rate spread of 100 basis points.
Second Quarter 2015 Earnings and Conference Call
Equity Residential expects to announce second quarter 2015 results on Tuesday, July 28, 2015 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, July 29, 2015.
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 389 properties consisting of 108,793 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, Wednesday, April 29, at 10:00 a.m. Central. Please visit the Investor 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, | ||||||||||
| 2015 | 2014 | |||||||||
| REVENUES | ||||||||||
| Rental income | $ | 664,606 | $ | 630,725 | ||||||
| Fee and asset management | 1,765 | 2,717 | ||||||||
| Total revenues | 666,371 | 633,442 | ||||||||
| EXPENSES | ||||||||||
| Property and maintenance | 124,560 | 125,566 | ||||||||
| Real estate taxes and insurance | 86,432 | 82,094 | ||||||||
| Property management | 21,444 | 22,118 | ||||||||
| Fee and asset management | 1,321 | 1,662 | ||||||||
| Depreciation | 194,521 | 185,167 | ||||||||
| General and administrative | 19,922 | 17,576 | ||||||||
| Total expenses | 448,200 | 434,183 | ||||||||
| Operating income | 218,171 | 199,259 | ||||||||
| Interest and other income | 120 | 605 | ||||||||
| Other expenses | 70 | (664 | ) | |||||||
| Interest: | ||||||||||
| Expense incurred, net | (108,622 | ) | (113,049 | ) | ||||||
| Amortization of deferred financing costs | (2,589 | ) | (2,792 | ) | ||||||
Income before income and other taxes, income (loss) from investments in unconsolidated entities, net gain (loss) on sales of real estate properties and land parcels and discontinued operations | 107,150 | 83,359 | ||||||||
| Income and other tax (expense) benefit | (43 | ) | (240 | ) | ||||||
| Income (loss) from investments in unconsolidated entities | 2,963 | (1,409 | ) | |||||||
| Net gain on sales of real estate properties | 79,951 | — | ||||||||
| Net (loss) on sales of land parcels | (1 | ) | (30 | ) | ||||||
| Income from continuing operations | 190,020 | 81,680 | ||||||||
| Discontinued operations, net | 204 | 1,052 | ||||||||
| Net income | 190,224 | 82,732 | ||||||||
| Net (income) attributable to Noncontrolling Interests: | ||||||||||
| Operating Partnership | (7,059 | ) | (3,093 | ) | ||||||
| Partially Owned Properties | (643 | ) | (504 | ) | ||||||
| Net income attributable to controlling interests | 182,522 | 79,135 | ||||||||
| Preferred distributions | (891 | ) | (1,036 | ) | ||||||
| Premium on redemption of Preferred Shares | (2,789 | ) | — | |||||||
| Net income available to Common Shares | $ | 178,842 | $ | 78,099 | ||||||
| Earnings per share – basic: | ||||||||||
| Income from continuing operations available to Common Shares | $ | 0.49 | $ | 0.21 | ||||||
| Net income available to Common Shares | $ | 0.49 | $ | 0.22 | ||||||
| Weighted average Common Shares outstanding | 363,098 | 360,470 | ||||||||
| Earnings per share – diluted: | ||||||||||
| Income from continuing operations available to Common Shares | $ | 0.49 | $ | 0.21 | ||||||
| Net income available to Common Shares | $ | 0.49 | $ | 0.22 | ||||||
| Weighted average Common Shares outstanding | 380,327 | 376,384 | ||||||||
| Distributions declared per Common Share outstanding | $ | 0.5525 | $ | 0.50 | ||||||
| Equity Residential | ||||||||||
| Consolidated Statements of Funds From Operations and Normalized Funds From Operations | ||||||||||
| (Amounts in thousands except per share data) | ||||||||||
| (Unaudited) | ||||||||||
| Quarter Ended March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Net income | $ | 190,224 | $ | 82,732 | ||||||
| Net (income) attributable to Noncontrolling Interests – Partially Owned Properties | (643 | ) | (504 | ) | ||||||
| Preferred distributions | (891 | ) | (1,036 | ) | ||||||
| Premium on redemption of Preferred Shares | (2,789 | ) | — | |||||||
| Net income available to Common Shares and Units | 185,901 | 81,192 | ||||||||
| Adjustments: | ||||||||||
| Depreciation | 194,521 | 185,167 | ||||||||
| Depreciation – Non-real estate additions | (1,261 | ) | (1,188 | ) | ||||||
| Depreciation – Partially Owned Properties | (1,079 | ) | (1,068 | ) | ||||||
| Depreciation – Unconsolidated Properties | 1,228 | 1,603 | ||||||||
| Net (gain) on sales of real estate properties | (79,951 | ) | — | |||||||
| Discontinued operations: | ||||||||||
| Net (gain) on sales of discontinued operations | — | (71 | ) | |||||||
| FFO available to Common Shares and Units (1) (3) (4) | 299,359 | 265,635 | ||||||||
| Adjustments (see page 23 for additional detail): | ||||||||||
| Asset impairment and valuation allowances | — | — | ||||||||
| Property acquisition costs and write-off of pursuit costs | (4,825 | ) | 474 | |||||||
| Debt extinguishment (gains) losses, including prepayment penalties, preferred share | ||||||||||
| redemptions and non-cash convertible debt discounts | 1,473 | — | ||||||||
| (Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) | 1,658 | 9 | ||||||||
| Other miscellaneous non-comparable items | 1,337 | (463 | ) | |||||||
| Normalized FFO available to Common Shares and Units (2) (3) (4) | $ | 299,002 | $ | 265,655 | ||||||
| FFO (1) (3) | $ | 303,039 | $ | 266,671 | ||||||
| Preferred distributions | (891 | ) | (1,036 | ) | ||||||
| Premium on redemption of Preferred Shares | (2,789 | ) | — | |||||||
| FFO available to Common Shares and Units - basic and diluted (1) (3) (4) | $ | 299,359 | $ | 265,635 | ||||||
| FFO per share and Unit - basic | $ | 0.79 | $ | 0.71 | ||||||
| FFO per share and Unit - diluted | $ | 0.79 | $ | 0.71 | ||||||
| Normalized FFO (2) (3) | $ | 299,893 | $ | 266,691 | ||||||
| Preferred distributions | (891 | ) | (1,036 | ) | ||||||
| Normalized FFO available to Common Shares and Units - basic and diluted (2) (3) (4) | $ | 299,002 | $ | 265,655 | ||||||
| Normalized FFO per share and Unit - basic | $ | 0.79 | $ | 0.71 | ||||||
| Normalized FFO per share and Unit - diluted | $ | 0.79 | $ | 0.71 | ||||||
| Weighted average Common Shares and Units outstanding - basic | 376,696 | 374,201 | ||||||||
| Weighted average Common Shares and Units outstanding - diluted | 380,327 | 376,384 | ||||||||
| Note: | See page 23 for additional detail regarding the adjustments from FFO to Normalized FFO. See page 25 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO. | |
| Equity Residential | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (Amounts in thousands except for share amounts) | ||||||||||
| (Unaudited) | ||||||||||
| March 31, | December 31, | |||||||||
| 2015 | 2014 | |||||||||
| ASSETS | ||||||||||
| Investment in real estate | ||||||||||
| Land | $ | 6,357,580 | $ | 6,295,404 | ||||||
| Depreciable property | 20,024,497 | 19,851,504 | ||||||||
| Projects under development | 1,269,784 | 1,343,919 | ||||||||
| Land held for development | 143,997 | 184,556 | ||||||||
| Investment in real estate | 27,795,858 | 27,675,383 | ||||||||
| Accumulated depreciation | (5,600,485 | ) | (5,432,805 | ) | ||||||
| Investment in real estate, net | 22,195,373 | 22,242,578 | ||||||||
| Cash and cash equivalents | 49,418 | 40,080 | ||||||||
| Investments in unconsolidated entities | 89,284 | 105,434 | ||||||||
| Deposits – restricted | 203,800 | 72,303 | ||||||||
| Escrow deposits – mortgage | 50,659 | 48,085 | ||||||||
| Deferred financing costs, net | 55,791 | 58,380 | ||||||||
| Other assets | 384,723 | 383,754 | ||||||||
| Total assets | $ | 23,029,048 | $ | 22,950,614 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Liabilities: | ||||||||||
| Mortgage notes payable | $ | 4,957,876 | $ | 5,086,515 | ||||||
| Notes, net | 5,430,806 | 5,425,346 | ||||||||
| Line of credit and commercial paper | 470,826 | 333,000 | ||||||||
| Accounts payable and accrued expenses | 202,110 | 153,590 | ||||||||
| Accrued interest payable | 84,670 | 89,540 | ||||||||
| Other liabilities | 383,057 | 389,915 | ||||||||
| Security deposits | 75,294 | 75,633 | ||||||||
| Distributions payable | 208,954 | 188,566 | ||||||||
| Total liabilities | 11,813,593 | 11,742,105 | ||||||||
| Commitments and contingencies | ||||||||||
| Redeemable Noncontrolling Interests – Operating Partnership | 541,866 | 500,733 | ||||||||
| Equity: | ||||||||||
| Shareholders’ equity: | ||||||||||
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 803,600 shares issued and outstanding as of March 31, 2015 and 1,000,000 shares issued and outstanding as of December 31, 2014 | 40,180 | 50,000 | ||||||||
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 363,968,420 shares issued and outstanding as of March 31, 2015 and 362,855,454 shares issued and outstanding as of December 31, 2014 | 3,640 | 3,629 | ||||||||
| Paid in capital | 8,539,115 | 8,536,340 | ||||||||
| Retained earnings | 1,928,449 | 1,950,639 | ||||||||
| Accumulated other comprehensive (loss) | (180,022 | ) | (172,152 | ) | ||||||
| Total shareholders’ equity | 10,331,362 | 10,368,456 | ||||||||
| Noncontrolling Interests: | ||||||||||
| Operating Partnership | 219,566 | 214,411 | ||||||||
| Partially Owned Properties | 122,661 | 124,909 | ||||||||
| Total Noncontrolling Interests | 342,227 | 339,320 | ||||||||
| Total equity | 10,673,589 | 10,707,776 | ||||||||
| Total liabilities and equity | $ | 23,029,048 | $ | 22,950,614 | ||||||
| Equity Residential | ||||||||||||||
| Portfolio Summary | ||||||||||||||
| As of March 31, 2015 | ||||||||||||||
| % of | Average | |||||||||||||
| Apartment | Stabilized | Rental | ||||||||||||
| Markets/Metro Areas | Properties | Units | NOI (1) | Rate (2) | ||||||||||
| Core: | ||||||||||||||
| Washington DC | 57 | 18,652 | 17.6% | $ 2,202 | ||||||||||
| New York | 38 | 10,330 | 16.5% | 3,879 | ||||||||||
| San Francisco | 51 | 13,208 | 14.3% | 2,453 | ||||||||||
| Los Angeles | 61 | 13,313 | 12.7% | 2,248 | ||||||||||
| Boston | 34 | 7,816 | 10.0% | 2,915 | ||||||||||
| South Florida | 35 | 11,434 | 7.5% | 1,647 | ||||||||||
| Seattle | 41 | 8,170 | 7.0% | 1,940 | ||||||||||
| Denver | 19 | 6,935 | 4.7% | 1,466 | ||||||||||
| San Diego | 13 | 3,505 | 3.1% | 2,008 | ||||||||||
| Orange County, CA | 11 | 3,490 | 3.0% | 1,821 | ||||||||||
| Subtotal – Core | 360 | 96,853 | 96.4% | 2,319 | ||||||||||
| Non-Core: | ||||||||||||||
| Inland Empire, CA | 10 | 3,081 | 2.2% | 1,587 | ||||||||||
| Orlando | 3 | 827 | 0.4% | 1,255 | ||||||||||
| All Other Markets | 14 | 2,969 | 1.0% | 1,188 | ||||||||||
| Subtotal – Non-Core | 27 | 6,877 | 3.6% | 1,374 | ||||||||||
| Total | 387 | 103,730 | 100.0% | 2,256 | ||||||||||
| Military Housing | 2 | 5,063 | — | — | ||||||||||
| Grand Total | 389 | 108,793 | 100.0% | $ 2,256 | ||||||||||
| Note: Projects under development are not included in the Portfolio Summary until construction has been completed. |
| (1) % of Stabilized NOI includes budgeted 2015 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up. |
| (2) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the last month of the period presented. |
| Equity Residential | |||||||||||||||
| Portfolio as of March 31, 2015 | |||||||||||||||
| Apartment | |||||||||||||||
| Properties | Units | ||||||||||||||
| Wholly Owned Properties | 362 | 97,825 | |||||||||||||
| Master-Leased Properties - Consolidated | 3 | 853 | |||||||||||||
| Partially Owned Properties - Consolidated | 19 | 3,771 | |||||||||||||
| Partially Owned Properties - Unconsolidated | 3 | 1,281 | |||||||||||||
| Military Housing | 2 | 5,063 | |||||||||||||
| 389 | 108,793 | ||||||||||||||
| Portfolio Rollforward Q1 2015 | |||||||||||||||
| ($ in thousands) | |||||||||||||||
| Apartment | Purchase/ | ||||||||||||||
| Properties | Units | (Sale) Price | Cap Rate | ||||||||||||
| 12/31/2014 | 391 | 109,225 | |||||||||||||
| Acquisitions: | |||||||||||||||
| Consolidated: | |||||||||||||||
| Rental Properties | — | — | — | — | |||||||||||
| Dispositions: | |||||||||||||||
| Consolidated: | |||||||||||||||
| Rental Properties | (3) | (550) | $ 145,400 | 5.3% | |||||||||||
| Completed Developments - Consolidated | 1 | 88 | |||||||||||||
| Configuration Changes | — | 30 | |||||||||||||
| 3/31/2015 | 389 | 108,793 | |||||||||||||
| Equity Residential | ||||||||||||||||||||||||||||
| First Quarter 2015 vs. First Quarter 2014 | ||||||||||||||||||||||||||||
| Same Store Results/Statistics for 97,586 Same Store Apartment Units | ||||||||||||||||||||||||||||
| $ in thousands (except for Average Rental Rate) | ||||||||||||||||||||||||||||
| Results | Statistics | |||||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||||||
| Rental | ||||||||||||||||||||||||||||
| Description | Revenues | Expenses | NOI (1) | Rate (2) | Occupancy | Turnover | ||||||||||||||||||||||
| Q1 2015 | $ | 632,034 | $ | 216,544 | $ | 415,490 | $ | 2,252 | 95.9 | % | 11.2 | % | ||||||||||||||||
| Q1 2014 | $ | 601,794 | $ | 213,460 | $ | 388,334 | $ | 2,164 | 95.1 | % | 11.3 | % | ||||||||||||||||
| Change | $ | 30,240 | $ | 3,084 | $ | 27,156 | $ | 88 | 0.8 | % | (0.1 | %) | ||||||||||||||||
| Change | 5.0 | % | 1.4 | % | 7.0 | % | 4.1 | % | ||||||||||||||||||||
| First Quarter 2015 vs. Fourth Quarter 2014 | ||||||||||||||||||||||||||||
| Same Store Results/Statistics for 99,502 Same Store Apartment Units | ||||||||||||||||||||||||||||
| $ in thousands (except for Average Rental Rate) | ||||||||||||||||||||||||||||
| Results | Statistics | |||||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||||||
| Rental | ||||||||||||||||||||||||||||
| Description | Revenues | Expenses | NOI (1) | Rate (2) | Occupancy | Turnover | ||||||||||||||||||||||
| Q1 2015 | $ | 644,513 | $ | 221,006 | $ | 423,507 | $ | 2,252 | 95.9 | % | 11.2 | % | ||||||||||||||||
| Q4 2014 | $ | 640,589 | $ | 206,764 | $ | 433,825 | $ | 2,236 | 96.0 | % | 12.3 | % | ||||||||||||||||
| Change | $ | 3,924 | $ | 14,242 | $ | (10,318 | ) | $ | 16 | (0.1 | %) | (1.1 | %) | |||||||||||||||
| Change | 0.6 | % | 6.9 | % | (2.4 | %) | 0.7 | % | ||||||||||||||||||||
| (1) | The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance) as well as an allocation of indirect property management costs. The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company's apartment communities. See page 25 for reconciliations from operating income. | |
| (2) | Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. | |
| Equity Residential | ||||||||||||||||||||||||||
| First Quarter 2015 vs. First Quarter 2014 | ||||||||||||||||||||||||||
| Same Store Results/Statistics by Market | ||||||||||||||||||||||||||
| Increase (Decrease) from Prior Year's Quarter | ||||||||||||||||||||||||||
| Q1 2015 | Q1 2015 | Q1 2015 | ||||||||||||||||||||||||
| % of | Average | Weighted | Average | |||||||||||||||||||||||
| Apartment | Actual | Rental | Average | Rental | ||||||||||||||||||||||
| Markets/Metro Areas | Units | NOI | Rate (1) | Occupancy % | Revenues | Expenses | NOI | Rate (1) | Occupancy | |||||||||||||||||
| Core: | ||||||||||||||||||||||||||
| Washington DC | 17,741 | 17.8 | % | $ | 2,213 | 95.7 | % | 0.7 | % | 1.9 | % | 0.1 | % | (0.4 | %) | 1.2 | % | |||||||||
| New York | 10,330 | 16.8 | % | 3,895 | 96.4 | % | 4.4 | % | 0.6 | % | 7.0 | % | 3.5 | % | 0.8 | % | ||||||||||
| San Francisco | 12,764 | 15.1 | % | 2,428 | 96.6 | % | 10.6 | % | 1.9 | % | 14.8 | % | 8.5 | % | 1.8 | % | ||||||||||
| Los Angeles | 10,641 | 10.6 | % | 2,177 | 95.9 | % | 5.5 | % | 0.9 | % | 8.0 | % | 4.7 | % | 0.7 | % | ||||||||||
| Boston | 7,722 | 10.0 | % | 2,892 | 95.6 | % | 3.4 | % | 1.9 | % | 4.3 | % | 2.8 | % | 0.5 | % | ||||||||||
| South Florida | 10,537 | 7.5 | % | 1,627 | 95.9 | % | 5.1 | % | 2.5 | % | 6.7 | % | 4.5 | % | 0.6 | % | ||||||||||
| Seattle | 7,380 | 6.7 | % | 1,910 | 95.5 | % | 7.4 | % | (0.5 | %) | 11.4 | % | 6.6 | % | 0.6 | % | ||||||||||
| Denver | 6,935 | 5.2 | % | 1,455 | 95.8 | % | 9.0 | % | 0.0 | % | 12.5 | % | 8.3 | % | 0.6 | % | ||||||||||
| San Diego | 3,505 | 3.4 | % | 2,008 | 95.9 | % | 5.2 | % | 2.6 | % | 6.4 | % | 4.3 | % | 0.9 | % | ||||||||||
| Orange County, CA | 3,490 | 3.2 | % | 1,820 | 96.2 | % | 5.5 | % | 4.4 | % | 5.9 | % | 4.4 | % | 1.1 | % | ||||||||||
| Subtotal – Core | 91,045 | 96.3 | % | 2,315 | 96.0 | % | 5.1 | % | 1.4 | % | 7.1 | % | 4.0 | % | 1.0 | % | ||||||||||
| Non-Core: | ||||||||||||||||||||||||||
| Inland Empire, CA | 3,081 | 2.3 | % | 1,591 | 95.0 | % | 3.1 | % | 3.3 | % | 3.0 | % | 3.6 | % | (0.5 | %) | ||||||||||
| Orlando | 827 | 0.4 | % | 1,244 | 95.7 | % | 4.4 | % | 5.6 | % | 3.6 | % | 2.4 | % | 1.8 | % | ||||||||||
| All Other Markets | 2,633 | 1.0 | % | 1,142 | 96.0 | % | 3.5 | % | 0.2 | % | 7.2 | % | 3.6 | % | (0.1 | %) | ||||||||||
| Subtotal – Non-Core | 6,541 | 3.7 | % | 1,366 | 95.5 | % | 3.4 | % | 2.2 | % | 4.2 | % | 3.5 | % | 0.0 | % | ||||||||||
| Total | 97,586 | 100.0 | % | $ | 2,252 | 95.9 | % | 5.0 | % | 1.4 | % | 7.0 | % | 4.1 | % | 0.8 | % | |||||||||
| (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. | ||||||||||||||||||||||||||
| Equity Residential | ||||||||||||||||||||||||||
| First Quarter 2015 vs. Fourth Quarter 2014 | ||||||||||||||||||||||||||
| Same Store Results/Statistics by Market | ||||||||||||||||||||||||||
| Increase (Decrease) from Prior Quarter | ||||||||||||||||||||||||||
| Q1 2015 | Q1 2015 | Q1 2015 | ||||||||||||||||||||||||
| % of | Average | Weighted | Average | |||||||||||||||||||||||
| Apartment | Actual | Rental | Average | Rental | ||||||||||||||||||||||
| Markets/Metro Areas | Units | NOI | Rate (1) | Occupancy % | Revenues | Expenses | NOI | Rate (1) | Occupancy | |||||||||||||||||
| Core: | ||||||||||||||||||||||||||
| Washington DC | 18,130 | 17.8 | % | $ | 2,203 | 95.7 | % | 0.1 | % | 9.4 | % | (4.1 | %) | (0.3 | %) | 0.3 | % | |||||||||
| New York | 10,330 | 16.5 | % | 3,895 | 96.4 | % | 0.7 | % | 10.5 | % | (4.8 | %) | 1.2 | % | (0.4 | %) | ||||||||||
| San Francisco | 12,764 | 14.8 | % | 2,428 | 96.6 | % | 1.6 | % | 2.9 | % | 1.0 | % | 1.7 | % | (0.2 | %) | ||||||||||
| Los Angeles | 11,811 | 11.6 | % | 2,217 | 95.9 | % | 0.8 | % | 2.7 | % | (0.2 | %) | 0.9 | % | 0.0 | % | ||||||||||
| Boston | 7,722 | 9.8 | % | 2,892 | 95.6 | % | (0.8 | %) | 16.0 | % | (8.0 | %) | 0.1 | % | (0.8 | %) | ||||||||||
| South Florida | 10,665 | 7.5 | % | 1,628 | 95.9 | % | 1.2 | % | 5.0 | % | (0.9 | %) | 0.9 | % | 0.3 | % | ||||||||||
| Seattle | 7,609 | 6.8 | % | 1,908 | 95.6 | % | 1.0 | % | 0.3 | % | 1.3 | % | 1.0 | % | 0.1 | % | ||||||||||
| Denver | 6,935 | 5.1 | % | 1,455 | 95.8 | % | 0.7 | % | (1.4 | %) | 1.4 | % | 0.8 | % | 0.0 | % | ||||||||||
| San Diego | 3,505 | 3.3 | % | 2,008 | 95.9 | % | 0.3 | % | 1.7 | % | (0.4 | %) | 0.9 | % | (0.6 | %) | ||||||||||
| Orange County, CA | 3,490 | 3.1 | % | 1,820 | 96.2 | % | 0.4 | % | 5.6 | % | (1.5 | %) | 0.9 | % | (0.4 | %) | ||||||||||
| Subtotal – Core | 92,961 | 96.3 | % | 2,314 | 96.0 | % | 0.6 | % | 6.8 | % | (2.3 | %) | 0.7 | % | 0.0 | % | ||||||||||
| Non-Core: | ||||||||||||||||||||||||||
| Inland Empire, CA | 3,081 | 2.3 | % | 1,591 | 95.0 | % | 0.6 | % | 2.3 | % | (0.2 | %) | 1.0 | % | (0.4 | %) | ||||||||||
| Orlando | 827 | 0.4 | % | 1,244 | 95.7 | % | 1.4 | % | 3.5 | % | 0.0 | % | 1.6 | % | (0.2 | %) | ||||||||||
| All Other Markets | 2,633 | 1.0 | % | 1,142 | 96.0 | % | 0.1 | % | 16.0 | % | (12.4 | %) | 0.1 | % | 0.0 | % | ||||||||||
| Subtotal – Non-Core | 6,541 | 3.7 | % | 1,366 | 95.5 | % | 0.5 | % | 8.0 | % | (3.8 | %) | 0.7 | % | (0.2 | %) | ||||||||||
| Total | 99,502 | 100.0 | % | $ | 2,252 | 95.9 | % | 0.6 | % | 6.9 | % | (2.4 | %) | 0.7 | % | (0.1 | %) | |||||||||
| (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. | ||||||||||||||||||||||||||
| Equity Residential | |||||||||||||||||||||
| First Quarter 2015 vs. First Quarter 2014 | |||||||||||||||||||||
| Same Store Operating Expenses for 97,586 Same Store Apartment Units | |||||||||||||||||||||
| $ in thousands | |||||||||||||||||||||
| % of Actual | |||||||||||||||||||||
| Q1 2015 | |||||||||||||||||||||
| Actual | Actual | $ | % | Operating | |||||||||||||||||
| Q1 2015 | Q1 2014 | Change | Change | Expenses | |||||||||||||||||
| Real estate taxes | $ | 75,356 | $ | 71,697 | $ | 3,659 | 5.1 | % | 34.8 | % | |||||||||||
| On-site payroll (1) | 45,491 | 43,684 | 1,807 | 4.1 | % | 21.0 | % | ||||||||||||||
| Utilities (2) | 32,688 | 37,622 | (4,934 | ) | (13.1 | %) | 15.1 | % | |||||||||||||
| Repairs and maintenance (3) | 26,334 | 24,218 | 2,116 | 8.7 | % | 12.2 | % | ||||||||||||||
| Property management costs (4) | 18,961 | 18,054 | 907 | 5.0 | % | 8.7 | % | ||||||||||||||
| Insurance | 5,405 | 6,050 | (645 | ) | (10.7 | %) | 2.5 | % | |||||||||||||
| Leasing and advertising | 2,587 | 2,511 | 76 | 3.0 | % | 1.2 | % | ||||||||||||||
| Other on-site operating expenses (5) | 9,722 | 9,624 | 98 | 1.0 | % | 4.5 | % | ||||||||||||||
| Same store operating expenses | $ | 216,544 | $ | 213,460 | $ | 3,084 | 1.4 | % | 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 - Represents gross expenses prior to any recoveries under the Resident Utility Billing System ("RUBS"). Recoveries are reflected in rental income. | |
| (3) | Repairs and maintenance - Includes general maintenance costs, apartment 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 on-site operating expenses - Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees. |
| Equity Residential | ||||||||||||||||
| Debt Summary as of March 31, 2015 | ||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||
| Weighted | ||||||||||||||||
| Weighted | Average | |||||||||||||||
| Average | Maturities | |||||||||||||||
| Amounts (1) | % of Total | Rates (1) | (years) | |||||||||||||
| Secured | $ | 4,957,876 | 45.7 | % | 4.13 | % | 7.4 | |||||||||
| Unsecured | 5,901,632 | 54.3 | % | 4.68 | % | 7.2 | ||||||||||
| Total | $ | 10,859,508 | 100.0 | % | 4.43 | % | 7.3 | |||||||||
| Fixed Rate Debt: | ||||||||||||||||
| Secured – Conventional | $ | 4,221,811 | 38.9 | % | 4.73 | % | 5.8 | |||||||||
| Unsecured – Public | 4,974,750 | 45.8 | % | 5.39 | % | 8.1 | ||||||||||
| Fixed Rate Debt | 9,196,561 | 84.7 | % | 5.08 | % | 7.1 | ||||||||||
| Floating Rate Debt: | ||||||||||||||||
| Secured – Conventional | 7,985 | 0.1 | % | 0.11 | % | 18.8 | ||||||||||
| Secured – Tax Exempt | 728,080 | 6.7 | % | 0.63 | % | 16.0 | ||||||||||
| Unsecured – Public (2) | 456,056 | 4.2 | % | 0.89 | % | 4.3 | ||||||||||
| Unsecured – Revolving Credit Facility | 130,000 | 1.2 | % | 1.02 | % | 3.0 | ||||||||||
| Unsecured – Commercial Paper Program | 340,826 | 3.1 | % | 0.53 | % | (3 | ) | |||||||||
| Floating Rate Debt | 1,662,947 | 15.3 | % | 0.77 | % | 8.5 | ||||||||||
| Total | $ | 10,859,508 | 100.0 | % | 4.43 | % | 7.3 | |||||||||
| (1) Net of the effect of any derivative instruments. Weighted average rates are for the quarter ended March 31, 2015. |
| (2) Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%. |
| (3) As of March 31, 2015, the weighted average maturity on the Company's outstanding commercial paper was 14 days. |
| Note: The Company capitalized interest of approximately $15.3 million and $12.8 million during the quarters ended March 31, 2015 and 2014, respectively. |
| Note: The Company recorded approximately $0.5 million and $1.1 million of net debt discount/deferred derivative settlement amortization as additional interest expense during the quarters ended March 31, 2015 and 2014, respectively. |
| Debt Maturity Schedule as of March 31, 2015 | ||||||||||||||||||||||||
| (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) | ||||||||||||||||||
| 2015 | $ | 344,995 | $ | 340,900 | (2) | $ | 685,895 | 6.3 | % | 6.43 | % | 3.53 | % | |||||||||||
| 2016 | 1,132,141 | — | 1,132,141 | 10.4 | % | 5.31 | % | 5.31 | % | |||||||||||||||
| 2017 | 1,346,252 | 456 | 1,346,708 | 12.4 | % | 6.16 | % | 6.16 | % | |||||||||||||||
| 2018 | 83,854 | 227,659 | (3) | 311,513 | 2.9 | % | 5.61 | % | 2.17 | % | ||||||||||||||
| 2019 | 806,113 | 477,204 | 1,283,317 | 11.8 | % | 5.48 | % | 3.75 | % | |||||||||||||||
| 2020 | 1,678,020 | 809 | 1,678,829 | 15.5 | % | 5.49 | % | 5.49 | % | |||||||||||||||
| 2021 | 1,194,624 | 856 | 1,195,480 | 11.0 | % | 4.63 | % | 4.63 | % | |||||||||||||||
| 2022 | 228,273 | 905 | 229,178 | 2.1 | % | 3.16 | % | 3.17 | % | |||||||||||||||
| 2023 | 1,331,497 | 956 | 1,332,453 | 12.3 | % | 3.74 | % | 3.74 | % | |||||||||||||||
| 2024 | 2,497 | 1,011 | 3,508 | 0.0 | % | 4.97 | % | 5.14 | % | |||||||||||||||
| 2025+ | 1,022,417 | 673,977 | 1,696,394 | 15.6 | % | 4.97 | % | 3.16 | % | |||||||||||||||
| Premium/(Discount) | 25,878 | (61,786 | ) | (35,908 | ) | (0.3 | %) | N/A | N/A | |||||||||||||||
| Total | $ | 9,196,561 | $ | 1,662,947 | $ | 10,859,508 | 100.0 | % | 5.12 | % | 4.41 | % | ||||||||||||
| (1) Net of the effect of any derivative instruments. Weighted average rates are as of March 31, 2015. |
| (2) Represents the principal outstanding on the Company's unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on the program subject to market conditions. |
| (3) Includes $130.0 million outstanding on the Company's unsecured revolving credit facility. As of March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program). |
| Equity Residential | |||||||||||||||||||||||||
| Unsecured Debt Summary as of March 31, 2015 | |||||||||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||||||
| Unamortized | |||||||||||||||||||||||||
| Coupon | Due | Face | Premium/ | Net | |||||||||||||||||||||
| Rate | Date | Amount | (Discount) | Balance | |||||||||||||||||||||
| Fixed Rate Notes: | |||||||||||||||||||||||||
| 6.584 | % | 04/13/15 | $ | 300,000 | $ | — | $ | 300,000 | |||||||||||||||||
| 5.125 | % | 03/15/16 | 500,000 | (49 | ) | 499,951 | |||||||||||||||||||
| 5.375 | % | 08/01/16 | 400,000 | (247 | ) | 399,753 | |||||||||||||||||||
| 5.750 | % | 06/15/17 | 650,000 | (1,144 | ) | 648,856 | |||||||||||||||||||
| 7.125 | % | 10/15/17 | 150,000 | (165 | ) | 149,835 | |||||||||||||||||||
| 2.375 | % | 07/01/19 | (1 | ) | 450,000 | (382 | ) | 449,618 | |||||||||||||||||
| Fair Value Derivative Adjustments | (1 | ) | (450,000 | ) | 382 | (449,618 | ) | ||||||||||||||||||
| 4.750 | % | 07/15/20 | 600,000 | (2,404 | ) | 597,596 | |||||||||||||||||||
| 4.625 | % | 12/15/21 | 1,000,000 | (2,540 | ) | 997,460 | |||||||||||||||||||
| 3.000 | % | 04/15/23 | 500,000 | (3,560 | ) | 496,440 | |||||||||||||||||||
| 7.570 | % | 08/15/26 | 140,000 | — | 140,000 | ||||||||||||||||||||
| 4.500 | % | 07/01/44 | 750,000 | (5,141 | ) | 744,859 | |||||||||||||||||||
| 4,990,000 | (15,250 | ) | 4,974,750 | ||||||||||||||||||||||
| Floating Rate Notes: | |||||||||||||||||||||||||
| 07/01/19 | (1 | ) | 450,000 | (382 | ) | 449,618 | |||||||||||||||||||
| Fair Value Derivative Adjustments | 07/01/19 | (1 | ) | 6,438 | — | 6,438 | |||||||||||||||||||
| 456,438 | (382 | ) | 456,056 | ||||||||||||||||||||||
| Line of Credit and Commercial Paper: | |||||||||||||||||||||||||
| Revolving Credit Facility | LIBOR+1.05% | 04/01/18 | (2 | )(3) | 130,000 | — | 130,000 | ||||||||||||||||||
| Commercial Paper Program | (4) | (4) | (2 | ) | 340,900 | (74 | ) | 340,826 | |||||||||||||||||
| 470,900 | (74 | ) | 470,826 | ||||||||||||||||||||||
| Total Unsecured Debt | $ | 5,917,338 | $ | (15,706 | ) | $ | 5,901,632 | ||||||||||||||||||
| (1) | Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%. | |
| (2) | Facility/program is private. All other unsecured debt is public. | |
| (3) | Represents the Company's $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The interest rate on advances under the credit facility will generally be LIBOR plus a spread (currently 1.05%) and an annual facility fee (currently 15 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. As of March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program). | |
| (4) | Represents the Company's unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on this program subject to market conditions. The notes bear interest at various floating rates with a weighted average of 0.53% for the quarter ended March 31, 2015 and a weighted average maturity of 14 days as of March 31, 2015. |
| Equity Residential | ||||||||
| Selected Unsecured Public Debt Covenants | ||||||||
| March 31, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Total Debt to Adjusted Total Assets (not to exceed 60%) | 38.9% | 39.2% | ||||||
| Secured Debt to Adjusted Total Assets (not to exceed 40%) | 17.8% | 18.4% | ||||||
| Consolidated Income Available for Debt Service to | ||||||||
| Maximum Annual Service Charges | ||||||||
| (must be at least 1.5 to 1) | 3.48 | 3.38 | ||||||
| Total Unsecured Assets to Unsecured Debt | 337.7% | 336.5% | ||||||
| (must be at least 150%) | ||||||||
| Note: | These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt, which represent the Company's most restrictive covenants. Equity Residential is the general partner of ERPOP. |
| Selected Credit Ratios (1) | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| 2015 | 2014 | |||||||||||||
| Total debt to Normalized EBITDA | 6.35x | 6.45x | ||||||||||||
| Net debt to Normalized EBITDA | 6.29x | 6.40x | ||||||||||||
| Note: | See page 22 for the footnote referenced above and the Normalized EBITDA reconciliations. |
| Equity Residential | |||||||||||||||||||||
| Capital Structure as of March 31, 2015 | |||||||||||||||||||||
| (Amounts in thousands except for share/unit and per share amounts) | |||||||||||||||||||||
| Secured Debt | $ | 4,957,876 | 45.7 | % | |||||||||||||||||
| Unsecured Debt | 5,901,632 | 54.3 | % | ||||||||||||||||||
| Total Debt | 10,859,508 | 100.0 | % | 26.9 | % | ||||||||||||||||
| Common Shares (includes Restricted Shares) | 363,968,420 | 96.2 | % | ||||||||||||||||||
| Units (includes OP Units and Restricted Units) | 14,477,945 | 3.8 | % | ||||||||||||||||||
| Total Shares and Units | 378,446,365 | 100.0 | % | ||||||||||||||||||
| Common Share Price at March 31, 2015 | $ | 77.86 | |||||||||||||||||||
| 29,465,834 | 99.9 | % | |||||||||||||||||||
| Perpetual Preferred Equity (see below) | 40,180 | 0.1 | % | ||||||||||||||||||
| Total Equity | 29,506,014 | 100.0 | % | 73.1 | % | ||||||||||||||||
| Total Market Capitalization | $ | 40,365,522 | 100.0 | % | |||||||||||||||||
| Perpetual Preferred Equity as of March 31, 2015 | |||||||||||||||||||||
| (Amounts in thousands except for share and per share amounts) | |||||||||||||||||||||
| Annual | Annual | ||||||||||||||||||||
| Redemption | Outstanding | Liquidation | Dividend | Dividend | |||||||||||||||||
| Series | Date | Shares | Value | Per Share | Amount | ||||||||||||||||
| Preferred Shares: | |||||||||||||||||||||
| 8.29% Series K (1) | 12/10/26 | 803,600 | $ | 40,180 | $ | 4.145 | $ | 3,331 | |||||||||||||
| Total Perpetual Preferred Equity | 803,600 | $ | 40,180 | $ | 3,331 | ||||||||||||||||
| (1) | Effective January 26, 2015, the Company repurchased and retired 196,400 Series K Preferred Shares with a par value of $9.82 million for total cash consideration of approximately $12.7 million. As a result of this partial redemption, the Company incurred a cash charge of approximately $2.8 million which was recorded as a premium on the redemption of preferred shares but did not impact Normalized FFO. |
| Equity Residential | ||||||
| Common Share and Unit | ||||||
| Weighted Average Amounts Outstanding | ||||||
| Q1 2015 | Q1 2014 | |||||
| Weighted Average Amounts Outstanding for Net Income Purposes: | ||||||
| Common Shares - basic | 363,098,200 | 360,470,366 | ||||
| Shares issuable from assumed conversion/vesting of: | ||||||
| - OP Units | 13,597,682 | 13,730,577 | ||||
| - long-term compensation shares/units | 3,631,489 | 2,183,239 | ||||
| Total Common Shares and Units - diluted | 380,327,371 | 376,384,182 | ||||
| Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes: | ||||||
| Common Shares - basic | 363,098,200 | 360,470,366 | ||||
| OP Units - basic | 13,597,682 | 13,730,577 | ||||
| Total Common Shares and OP Units - basic | 376,695,882 | 374,200,943 | ||||
| Shares issuable from assumed conversion/vesting of: | ||||||
| - long-term compensation shares/units | 3,631,489 | 2,183,239 | ||||
| Total Common Shares and Units - diluted | 380,327,371 | 376,384,182 | ||||
| Period Ending Amounts Outstanding: | ||||||
| Common Shares (includes Restricted Shares) | 363,968,420 | 361,148,189 | ||||
| Units (includes OP Units and Restricted Units) | 14,477,945 | 14,375,319 | ||||
| Total Shares and Units | 378,446,365 | 375,523,508 | ||||
| Equity Residential | ||||||||||||||||||||||
| Partially Owned Entities as of March 31, 2015 | ||||||||||||||||||||||
| (Amounts in thousands except for project and apartment unit amounts) | ||||||||||||||||||||||
| Consolidated | Unconsolidated | |||||||||||||||||||||
| Development Projects | ||||||||||||||||||||||
| Held for | ||||||||||||||||||||||
| and/or Under | ||||||||||||||||||||||
| Development (4) | Operating | Total | Operating | Total | ||||||||||||||||||
| Total projects (1) | — | 19 | 19 | 3 | 3 | |||||||||||||||||
| Total apartment units (1) | — | 3,771 | 3,771 | 1,281 | 1,281 | |||||||||||||||||
| Operating information for the quarter ended 3/31/15 (at 100%): | ||||||||||||||||||||||
| Operating revenue | $ | 250 | $ | 22,688 | $ | 22,938 | $ | 7,813 | $ | 7,813 | ||||||||||||
| Operating expenses | 418 | 6,875 | 7,293 | 2,443 | 2,443 | |||||||||||||||||
| Net operating (loss) income | (168 | ) | 15,813 | 15,645 | 5,370 | 5,370 | ||||||||||||||||
| Depreciation | 991 | 5,520 | 6,511 | 3,076 | 3,076 | |||||||||||||||||
| General and administrative/other | — | 15 | 15 | 56 | 56 | |||||||||||||||||
| Operating (loss) income | (1,159 | ) | 10,278 | 9,119 | 2,238 | 2,238 | ||||||||||||||||
| Interest and other income | — | 4 | 4 | — | — | |||||||||||||||||
| Other expenses | — | (50 | ) | (50 | ) | — | — | |||||||||||||||
| Interest: | ||||||||||||||||||||||
| Expense incurred, net | — | (3,884 | ) | (3,884 | ) | (2,346 | ) | (2,346 | ) | |||||||||||||
| Amortization of deferred financing costs | — | (89 | ) | (89 | ) | (1 | ) | (1 | ) | |||||||||||||
| (Loss) income before income and other taxes and (loss) from | ||||||||||||||||||||||
| investments in unconsolidated entities | (1,159 | ) | 6,259 | 5,100 | (109 | ) | (109 | ) | ||||||||||||||
| Income and other tax (expense) benefit | — | (35 | ) | (35 | ) | (18 | ) | (18 | ) | |||||||||||||
| (Loss) from investments in unconsolidated entities | — | (377 | ) | (377 | ) | — | — | |||||||||||||||
| Net (loss) income | $ | (1,159 | ) | $ | 5,847 | $ | 4,688 | $ | (127 | ) | $ | (127 | ) | |||||||||
| Debt - Secured (2): | ||||||||||||||||||||||
| EQR Ownership (3) | $ | — | $ | 282,121 | $ | 282,121 | $ | 35,055 | $ | 35,055 | ||||||||||||
| Noncontrolling Ownership | — | 78,446 | 78,446 | 140,221 | 140,221 | |||||||||||||||||
| Total (at 100%) | $ | — | $ | 360,567 | $ | 360,567 | $ | 175,276 | $ | 175,276 | ||||||||||||
| (1) | Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed. | |
| (2) | All debt is non-recourse to the Company. | |
| (3) | Represents the Company's current equity ownership interest. | |
| (4) | See Projects Under Development - Partially Owned on page 19 for further information. | |
| Note: | The above table excludes the Company's interests in unconsolidated joint ventures entered into with AvalonBay ("AVB") in connection with the Archstone transaction. These ventures own certain non-core Archstone assets that are held for sale and succeeded to certain residual Archstone liabilities, such as liability for various employment-related matters as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests have an aggregate liquidation value of $72.6 million at March 31, 2015. The ventures are owned 60% by the Company and 40% by AVB. |
| Equity Residential | |||||||||||||||||||||||||||||||||
| Consolidated Development and Lease-Up Projects as of March 31, 2015 | |||||||||||||||||||||||||||||||||
| (Amounts in thousands except for project and apartment unit amounts) | |||||||||||||||||||||||||||||||||
| Total Book | |||||||||||||||||||||||||||||||||
| No. of | Total | Total | Value Not | Estimated | Estimated | ||||||||||||||||||||||||||||
| Apartment | 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: | |||||||||||||||||||||||||||||||||
| Parc on Powell (formerly 1333 Powell) | Emeryville, CA | 173 | $ | 87,500 | $ | 75,585 | $ | 42,801 | $ | — | 90 | % | 44 | % | 21 | % | Q2 2015 | Q4 2015 | |||||||||||||||
| 170 Amsterdam (2) | New York, NY | 236 | 110,892 | 104,549 | 104,549 | — | 97 | % | — | — | Q2 2015 | Q1 2016 | |||||||||||||||||||||
| Azure (at Mission Bay) | San Francisco, CA | 273 | 189,090 | 161,788 | 161,788 | — | 88 | % | — | — | Q3 2015 | Q4 2016 | |||||||||||||||||||||
| Junction 47 (formerly West Seattle) | Seattle, WA | 206 | 67,112 | 53,603 | 53,603 | — | 78 | % | — | — | Q4 2015 | Q3 2016 | |||||||||||||||||||||
| Odin (formerly Tallman) | Seattle, WA | 301 | 84,277 | 65,518 | 65,518 | — | 79 | % | — | — | Q4 2015 | Q2 2017 | |||||||||||||||||||||
| Village at Howard Hughes | Los Angeles, CA | 545 | 193,231 | 98,965 | 98,965 | — | 34 | % | — | — | Q2 2016 | Q2 2017 | |||||||||||||||||||||
| Potrero | San Francisco, CA | 453 | 224,474 | 92,222 | 92,222 | — | 35 | % | — | — | Q2 2016 | Q3 2017 | |||||||||||||||||||||
| Millikan | Irvine, CA | 344 | 102,331 | 47,001 | 47,001 | — | 20 | % | — | — | Q2 2016 | Q3 2017 | |||||||||||||||||||||
| Tasman | San Jose, CA | 554 | 214,923 | 142,279 | 142,279 | — | 60 | % | — | — | Q2 2016 | Q2 2018 | |||||||||||||||||||||
| 340 Fremont (formerly Rincon Hill) | San Francisco, CA | 348 | 287,454 | 119,998 | 119,998 | — | 33 | % | — | — | Q3 2016 | Q1 2018 | |||||||||||||||||||||
| One Henry Adams | San Francisco, CA | 241 | 164,434 | 47,768 | 47,768 | — | 7 | % | — | — | Q4 2016 | Q4 2017 | |||||||||||||||||||||
| Cascade | Seattle, WA | 483 | 158,494 | 40,420 | 40,420 | — | 5 | % | — | — | Q2 2017 | Q1 2019 | |||||||||||||||||||||
| 801 Brannan | San Francisco, CA | 449 | 290,209 | 57,265 | 57,265 | — | 1 | % | — | — | Q3 2017 | Q1 2019 | |||||||||||||||||||||
| 2nd & Pine (3) | Seattle, WA | 398 | 214,742 | 51,097 | 51,097 | — | 10 | % | — | — | Q3 2017 | Q2 2019 | |||||||||||||||||||||
| Projects Under Development - Wholly Owned | 5,004 | 2,389,163 | 1,158,058 | 1,125,274 | — | ||||||||||||||||||||||||||||
Projects Under Development - Partially Owned: | |||||||||||||||||||||||||||||||||
| Prism at Park Avenue South (4) | New York, NY | 269 | 251,961 | 232,713 | 29,414 | — | 94 | % | 18 | % | 14 | % | Q3 2015 | Q1 2016 | |||||||||||||||||||
| Projects Under Development - Partially Owned | 269 | 251,961 | 232,713 | 29,414 | — | ||||||||||||||||||||||||||||
| Projects Under Development | 5,273 | 2,641,124 | 1,390,771 | 1,154,688 | — | ||||||||||||||||||||||||||||
Completed Not Stabilized - Wholly Owned (5): | |||||||||||||||||||||||||||||||||
| Urbana (formerly Market Street Landing) | Seattle, WA | 287 | 88,774 | 87,259 | — | — | 95 | % | 94 | % | Completed | Q2 2015 | |||||||||||||||||||||
| Residences at Westgate I (formerly Westgate II) | Pasadena, CA | 252 | 127,292 | 124,641 | — | — | 83 | % | 79 | % | Completed | Q3 2015 | |||||||||||||||||||||
| Residences at Westgate II (formerly Westgate III) | Pasadena, CA | 88 | 55,037 | 49,313 | — | — | — | — | Completed | Q4 2015 | |||||||||||||||||||||||
| Projects Completed Not Stabilized - Wholly Owned | 627 | 271,103 | 261,213 | — | — | ||||||||||||||||||||||||||||
| Projects Completed Not Stabilized | 627 | 271,103 | 261,213 | — | — | ||||||||||||||||||||||||||||
Completed and Stabilized During the Quarter - Wholly Owned: | |||||||||||||||||||||||||||||||||
| 1111 Belle Pre (formerly The Madison) | Alexandria, VA | 360 | 111,922 | 111,738 | — | — | 99 | % | 97 | % | Completed | Stabilized | |||||||||||||||||||||
| Park Aire (formerly Enclave at Wellington) | Wellington, FL | 268 | 48,910 | 48,909 | — | — | 98 | % | 94 | % | Completed | Stabilized | |||||||||||||||||||||
| Jia (formerly Chinatown Gateway) | Los Angeles, CA | 280 | 92,920 | 90,359 | — | — | 97 | % | 96 | % | Completed | Stabilized | |||||||||||||||||||||
| Projects Completed and Stabilized During the Quarter - Wholly Owned | 908 | 253,752 | 251,006 | — | — | ||||||||||||||||||||||||||||
| Projects Completed and Stabilized During the Quarter | 908 | 253,752 | 251,006 | — | — | ||||||||||||||||||||||||||||
| Total Consolidated Projects | 6,808 | $ | 3,165,979 | $ | 1,902,990 | $ | 1,154,688 | $ | — | ||||||||||||||||||||||||
| Land Held for Development | N/A | N/A | $ | 143,997 | $ | 143,997 | $ | — | |||||||||||||||||||||||||
| NOI CONTRIBUTION FROM CONSOLIDATED DEVELOPMENT PROJECTS |
Total Capital |
Q1 2015 | |||||||||||||||||||||||||||||||
| Projects Under Development | $ | 2,641,124 | $ | (365 | ) | ||||||||||||||||||||||||||||
| Completed Not Stabilized | 271,103 | 2,431 | |||||||||||||||||||||||||||||||
| Completed and Stabilized During the Quarter | 253,752 | 3,745 | |||||||||||||||||||||||||||||||
| Total Consolidated Development NOI Contribution | $ | 3,165,979 | $ | 5,811 | |||||||||||||||||||||||||||||
| (1) | Total capital cost represents estimated 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) | 170 Amsterdam – The land under this project is subject to a long term ground lease. | |
| (3) | 2nd & Pine – Includes an adjacent land parcel on which certain improvements including a portion of a parking structure will be constructed as part of the development of this project. The Company may eventually construct an additional apartment tower on this site or sell a portion of the garage and the related air rights. | |
| (4) | Prism at Park Avenue South – The Company is jointly developing with Toll Brothers (NYSE: TOL) a project at 400 Park Avenue South in New York City with the Company's rental portion on floors 2-22 and Toll's for sale portion on floors 23-40. The total capital cost and total book value to date represent only the Company's portion of the project. Toll Brothers has funded $115.1 million for their allocated share of the project. | |
| (5) | Properties included here are substantially complete. However, they may still require additional exterior and interior work for all apartment units to be available for leasing. |
| Equity Residential | |||||||||||||||||||||||||||||||
| Unconsolidated Development and Lease-Up Projects as of March 31, 2015 | |||||||||||||||||||||||||||||||
| (Amounts in thousands except for project and apartment unit amounts) | |||||||||||||||||||||||||||||||
| Total | Total Book | ||||||||||||||||||||||||||||||
| No. of | Total | Book | Value Not | Estimated | Estimated | ||||||||||||||||||||||||||
| Percentage | Apartment | Capital | Value | Placed in | Total | Percentage | Percentage | Percentage | Completion | Stabilization | |||||||||||||||||||||
| Projects | Location | Ownership | Units | Cost (1) | to Date | Service | Debt | Completed | Leased | Occupied | Date | Date | |||||||||||||||||||
Completed and Stabilized During the Quarter - Unconsolidated: | |||||||||||||||||||||||||||||||
| Domain (2) | San Jose, CA | 20.0 | % | 444 | $ | 155,820 | $ | 155,128 | $ | - | $ | 96,793 | 98 | % | 97 | % | Completed | Stabilized | |||||||||||||
| Projects Completed and Stabilized During the Quarter - Unconsolidated | 444 | 155,820 | 155,128 | — | 96,793 | ||||||||||||||||||||||||||
| Projected Completed and Stabilized During the Quarter | 444 | 155,820 | 155,128 | — | 96,793 | ||||||||||||||||||||||||||
| Total Unconsolidated Projects | 444 | $ | 155,820 | $ | 155,128 | $ | - | $ | 96,793 | ||||||||||||||||||||||
| (1) | Total capital cost represents estimated 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) | Domain – This development project is owned 20% by the Company and 80% by an institutional partner in an unconsolidated joint venture. Total project cost is approximately $155.8 million and construction was predominantly funded with a long-term, non-recourse secured loan from the partner. The Company was responsible for constructing the project and had given certain construction cost overrun guarantees but currently has no further funding obligations. Domain has a maximum debt commitment of $98.6 million, the loan bears interest at 5.75% and matures January 1, 2022. |
| Equity Residential | ||||||||||||||||||||||||||||||||
| Repairs and Maintenance Expenses and Capital Expenditures to Real Estate | ||||||||||||||||||||||||||||||||
| For the Quarter Ended March 31, 2015 | ||||||||||||||||||||||||||||||||
| (Amounts in thousands except for apartment unit and per apartment unit amounts) | ||||||||||||||||||||||||||||||||
| Repairs and Maintenance Expenses | Capital Expenditures to Real Estate | Total Expenditures | ||||||||||||||||||||||||||||||
| Total | Avg. Per | Avg. Per | Avg. Per | Avg. Per | Building | Avg. Per | Avg. Per | Avg. Per | ||||||||||||||||||||||||
| Apartment | Apartment | Payroll | Apartment | Apartment | Replacements | Apartment | Improvements | Apartment | Apartment | Grand | Apartment | |||||||||||||||||||||
| Units (1) | Expense (2) | Unit | (3) | Unit | Total | Unit | (4) | Unit | (5) | Unit | Total | Unit | Total | Unit | ||||||||||||||||||
| Same Store Properties (6) | 97,586 | $ 26,334 | $ 270 | $ 21,437 | $ 219 | $ 47,771 | $ 489 | $ 21,633 | $ 222 | $ 13,675 | $ 140 | $ 35,308 | $ 362 | (9) | $ 83,079 | $ 851 | ||||||||||||||||
| Non-Same Store Properties (7) | 4,863 | 856 | 179 | 658 | 138 | 1,514 | 317 | 67 | 14 | 2,753 | 577 | 2,820 | 591 | 4,334 | 908 | |||||||||||||||||
| Other (8) | — | 80 | 153 | 233 | 23 | 19 | 42 | 275 | ||||||||||||||||||||||||
| Total | 102,449 | $ 27,270 | $ 22,248 | $ 49,518 | $ 21,723 | $ 16,447 | $ 38,170 | $ 87,688 | ||||||||||||||||||||||||
| (1) | Total Apartment Units - Excludes 1,281 unconsolidated apartment units and 5,063 military housing apartment 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, apartment 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 apartment units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $13.1 million spent in Q1 2015 on apartment unit renovations/rehabs (primarily kitchens and baths) on 1,432 same store apartment units (equating to approximately $9,100 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. In 2015, the Company expects to spend approximately $60.0 million for all unit renovation/rehab costs (primarily on same store properties) at a weighted average cost of $9,000 per apartment unit rehabbed. | |
| (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, 2014, less properties subsequently sold. | |
| (7) | Non-Same Store Properties - Primarily includes all properties acquired during 2014 and 2015, plus any properties in lease-up and not stabilized as of January 1, 2014. Per apartment unit amounts are based on a weighted average of 4,775 apartment units. | |
| (8) | Other - Primarily includes expenditures for properties sold and properties under development. | |
| (9) | For 2015, the Company estimates that it will spend approximately $1,850 per apartment unit of capital expenditures, inclusive of apartment unit renovation/rehab costs, or $1,250 per apartment unit excluding apartment unit renovation/rehab costs. |
| Equity Residential | |||||||||||||||||||||||||||||||
| Normalized EBITDA Reconciliations | |||||||||||||||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||||||||||||
| Normalized EBITDA Reconciliations for Page 15 | |||||||||||||||||||||||||||||||
| Trailing Twelve Months | 2015 | 2014 | |||||||||||||||||||||||||||||
| March 31, 2015 | December 31, 2014 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||||||
| Net income | $ | 766,175 | $ | 658,683 | $ | 190,224 | $ | 227,041 | $ | 231,190 | $ | 117,720 | $ | 82,732 | |||||||||||||||||
| Interest expense incurred, net (includes discontinued operations) | 452,764 | 457,191 | 108,622 | 109,967 | 118,251 | 115,924 | 113,049 | ||||||||||||||||||||||||
| Amortization of deferred financing costs (includes discontinued operations) | 10,885 | 11,088 | 2,589 | 2,534 | 2,628 | 3,134 | 2,792 | ||||||||||||||||||||||||
| Depreciation (includes discontinued operations) | 768,215 | 758,861 | 194,521 | 193,089 | 190,469 | 190,136 | 185,167 | ||||||||||||||||||||||||
| Income and other tax expense (benefit) (includes discontinued operations) | 1,209 | 1,402 | 58 | 243 | 260 | 648 | 251 | ||||||||||||||||||||||||
| Archstone direct acquisition costs (other expenses) | 29 | (1 | ) | — | — | 6 | 23 | (30 | ) | ||||||||||||||||||||||
| Property acquisition costs (other expenses) | 405 | 355 | 99 | 77 | 135 | 94 | 49 | ||||||||||||||||||||||||
| Write-off of pursuit costs (other expenses) | 3,648 | 3,607 | 493 | 1,540 | 575 | 1,040 | 452 | ||||||||||||||||||||||||
| Loss (income) from investments in unconsolidated entities | 3,580 | 7,952 | (2,963 | ) | (2,249 | ) | 1,176 | 7,616 | 1,409 | ||||||||||||||||||||||
| Net (gain) loss on sales of land parcels | (5,306 | ) | (5,277 | ) | 1 | (3,431 | ) | (1,052 | ) | (824 | ) | 30 | |||||||||||||||||||
| (Gain) on sale of investment securities (interest and other income) | (36 | ) | (57 | ) | — | — | — | (36 | ) | (21 | ) | ||||||||||||||||||||
| Write-off of unamortized retail lease intangibles (rental income) | (147 | ) | (147 | ) | — | — | — | (147 | ) | — | |||||||||||||||||||||
| Executive compensation program duplicative costs | 2,337 | — | 2,337 | — | — | — | — | ||||||||||||||||||||||||
| Forfeited deposits (interest and other income) | (150 | ) | (150 | ) | — | (150 | ) | — | — | — | |||||||||||||||||||||
| Insurance/litigation settlement or reserve income (interest and other income) | (2,330 | ) | (2,793 | ) | — | (32 | ) | (419 | ) | (1,879 | ) | (463 | ) | ||||||||||||||||||
| Insurance/litigation settlement or reserve expense (other expenses) | 3,099 | 4,099 | (1,000 | ) | — | 4,000 | 99 | — | |||||||||||||||||||||||
| Other (interest and other income) | (750 | ) | (750 | ) | — | (750 | ) | — | — | — | |||||||||||||||||||||
| Net (gain) loss on sales of discontinued operations | (108 | ) | (179 | ) | — | 44 | 1 | (153 | ) | (71 | ) | ||||||||||||||||||||
| Net (gain) on sales of real estate properties | (292,636 | ) | (212,685 | ) | (79,951 | ) | (84,141 | ) | (113,641 | ) | (14,903 | ) | — | ||||||||||||||||||
| Normalized EBITDA (1) | $ | 1,710,883 | $ | 1,681,199 | $ | 415,030 | $ | 443,782 | $ | 433,579 | $ | 418,492 | $ | 385,346 | |||||||||||||||||
Balance Sheet Items: | March 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||||||
| Total debt (1) | $ | 10,859,508 | $ | 10,844,861 | |||||||||||||||||||||||||||
| Cash and cash equivalents | (49,418 | ) | (40,080 | ) | |||||||||||||||||||||||||||
| Mortgage principal reserves/sinking funds | (43,626 | ) | (41,567 | ) | |||||||||||||||||||||||||||
| Net debt (1) | $ | 10,766,464 | $ | 10,763,214 | |||||||||||||||||||||||||||
| (1) Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are important metrics in evaluating the credit strength of the Company and its ability to service its debt obligations. The Company believes that Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are useful to investors, creditors and rating agencies because they allow investors to compare the Company's credit strength to prior reporting periods and to other companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual credit quality. |
| Equity Residential | |||||||||||||||
| Normalized FFO Guidance Reconciliations and Non-Comparable Items | |||||||||||||||
| (Amounts in thousands except per share data) | |||||||||||||||
| (All per share data is diluted) | |||||||||||||||
| Normalized FFO Guidance Reconciliations | |||||||||||||||
| Normalized | |||||||||||||||
| FFO Reconciliations | |||||||||||||||
| Guidance Q1 2015 | |||||||||||||||
| to Actual Q1 2015 | |||||||||||||||
| Amounts | Per Share | ||||||||||||||
| Guidance Q1 2015 Normalized FFO - Diluted (2) (3) | $ | 298,632 | $ | 0.786 | |||||||||||
| Property NOI | (1,016 | ) | (0.003 | ) | |||||||||||
| Interest expense | 763 | 0.002 | |||||||||||||
| Other | 623 | 0.001 | |||||||||||||
| Actual Q1 2015 Normalized FFO - Diluted (2) (3) | $ | 299,002 | $ | 0.786 | |||||||||||
| Non-Comparable Items – Adjustments from FFO to Normalized FFO (2) (3) | |||||||||||||||
| Quarter Ended March 31, | |||||||||||||||
| 2015 | 2014 | Variance | |||||||||||||
| Impairment | $ | — | $ | — | $ | — | |||||||||
| Asset impairment and valuation allowances | — | — | — | ||||||||||||
| Archstone direct acquisition costs (other expenses) (A) | — | . | (30 | ) | 30 | ||||||||||
| Archstone indirect costs ((income) loss from investments in unconsolidated entities) (B) | (5,417 | ) | 3 | (5,420 | ) | ||||||||||
| Property acquisition costs (other expenses) | 99 | 49 | 50 | ||||||||||||
| Write-off of pursuit costs (other expenses) | 493 | 452 | 41 | ||||||||||||
| Property acquisition costs and write-off of pursuit costs | (4,825 | ) | 474 | (5,299 | ) | ||||||||||
| Write-off of unamortized deferred financing costs (interest expense) | 74 | — | 74 | ||||||||||||
| Write-off of unamortized (premiums)/discounts/OCI (interest expense) | (1,390 | ) | — | (1,390 | ) | ||||||||||
| Premium on redemption of Preferred Shares | 2,789 | — | 2,789 | ||||||||||||
|
Debt extinguishment (gains) losses, including prepayment penalties,
preferred share
redemptions and non-cash convertible debt discounts | 1,473 | — | 1,473 | ||||||||||||
| Net loss on sales of land parcels | 1 | 30 | (29 | ) | |||||||||||
| Net loss on sales of unconsolidated entities – non-operating assets | 1,657 | — | 1,657 | ||||||||||||
| (Gain) on sale of investment securities (interest and other income) | — | (21 | ) | 21 | |||||||||||
| (Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) | 1,658 | 9 | 1,649 | ||||||||||||
| Executive compensation program duplicative costs (C) | 2,337 | — | 2,337 | ||||||||||||
| Insurance/litigation settlement or reserve income (interest and other income) | — | (463 | ) | 463 | |||||||||||
| Insurance/litigation settlement or reserve expense (other expenses) | (1,000 | ) | — | (1,000 | ) | ||||||||||
| Other miscellaneous non-comparable items | 1,337 | (463 | ) | 1,800 | |||||||||||
| Non-comparable items – Adjustments from FFO to Normalized FFO (2) (3) | $ | (357 | ) | $ | 20 | $ | (377 | ) | |||||||
| (A) Archstone direct acquisition costs primarily includes items such as investment banking and legal/accounting fees that were incurred directly by the Company. |
| (B) Archstone indirect costs primarily includes the Company's 60% share of winddown costs for such items as office leases, litigation and German operations/sales that were incurred indirectly through the Company's interest in various unconsolidated joint ventures with AvalonBay. During 2015, the amount also includes approximately $6.9 million received related to the favorable settlement of a lawsuit. |
| (C) Represents the accounting cost associated with the Company's new performance based executive compensation program. The Company is required to expense in 2015 a portion of both the previous program's time based equity grants for service in 2014 and the performance based grants issued under the new program, creating a duplicative charge. Of this amount, $0.3 million and $2.0 million has been recorded to property management expense and general and administrative expense, respectively. |
| Note: See page 25 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO. |
| Equity Residential | ||||||
| Normalized FFO Guidance and Assumptions | ||||||
| The guidance/projections provided below are based on current expectations and are forward-looking. All guidance is given on a Normalized FFO basis. Therefore, certain items excluded from Normalized FFO, such as debt extinguishment costs/prepayment penalties, property acquisition costs and the write-off of pursuit costs, are not included in the estimates provided on this page. See page 25 for the definitions, the footnotes referenced below and the reconciliations of EPS to FFO and Normalized FFO. | ||||||
2015 Normalized FFO Guidance (per share diluted) | ||||||
Q2 2015 | 2015 | |||||
| Expected Normalized FFO (2) (3) | $0.82 to $0.86 | $3.37 to $3.45 | ||||
2015 Same Store Assumptions | ||||||
| Physical occupancy | 95.9% | |||||
| Revenue change | 4.3% to 4.7% | |||||
| Expense change | 2.5% to 3.5% | |||||
| NOI change | 4.8% to 5.8% | |||||
(Note: Approximately 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO/Normalized FFO) | ||||||
2015 Transaction Assumptions | ||||||
| Consolidated rental acquisitions | $500.0 million | |||||
| Consolidated rental dispositions | $500.0 million | |||||
| Capitalization rate spread | 100 basis points | |||||
2015 Debt Assumptions | ||||||
| Weighted average debt outstanding | $10.8 billion to $11.1 billion | |||||
| Weighted average interest rate (reduced for capitalized interest) | 4.10% | |||||
| Interest expense, net | $442.8 million to $455.1 million | |||||
| Capitalized interest | $55.0 million to $61.0 million | |||||
2015 Other Guidance Assumptions | ||||||
| General and administrative expense (see Note below) | $51.0 million to $53.0 million | |||||
| Interest and other income | $0.5 million | |||||
| Income and other tax expense | $1.0 million | |||||
| Debt offerings | $950.0 million | |||||
| Equity ATM share offerings | No amounts budgeted | |||||
| Preferred share offerings | No amounts budgeted | |||||
| Weighted average Common Shares and Units - Diluted | 380.8 million | |||||
| Note: Normalized FFO guidance excludes a duplicative charge of approximately $9.3 million, of which $8.0 million will be recorded to general and administrative expense and $1.3 million will be recorded to property management expense, related to the Company's revised executive compensation program. |
| Equity Residential | ||||||||||||||||
| Additional Reconciliations, Definitions and Footnotes | ||||||||||||||||
| (Amounts in thousands except per share data) | ||||||||||||||||
| (All per share data is diluted) | ||||||||||||||||
| The guidance/projections provided below are based on current expectations and are forward-looking. | ||||||||||||||||
| Reconciliations of EPS to FFO and Normalized FFO for Pages 5, 23 and 24 | ||||||||||||||||
| Expected | Expected | |||||||||||||||
Expected Q1 2015 | Q2 2015 | 2015 | ||||||||||||||
| Amounts | Per Share | Per Share | Per Share | |||||||||||||
| Expected Earnings - Diluted (5) | $ | 270,480 | $ | 0.712 | $0.65 to $0.69 | $2.15 to $2.23 | ||||||||||
| Add: Expected depreciation expense | 194,325 | 0.511 | 0.52 | 2.10 | ||||||||||||
| Less: Expected net gain on sales (5) | (154,690 | ) | (0.407 | ) | (0.32) | (0.88) | ||||||||||
| Expected FFO - Diluted (1) (3) | 310,115 | 0.816 | 0.85 to 0.89 | 3.37 to 3.45 | ||||||||||||
| Asset impairment and valuation allowances | — | — | — | — | ||||||||||||
| Property acquisition costs and write-off of pursuit costs | (15,702 | ) | (0.041 | ) | (0.02) | (0.02) | ||||||||||
Debt extinguishment (gains) losses, including prepayment penalties, preferred share redemptions and non-cash convertible debt discounts | 1,473 | 0.004 | — | — | ||||||||||||
|
(Gains) losses on sales of non-operating assets, net of income and
other tax
expense (benefit) | — | — | — | 0.01 | ||||||||||||
| Other miscellaneous non-comparable items | 2,746 | 0.007 | (0.01) | 0.01 | ||||||||||||
| Expected Normalized FFO - Diluted (2) (3) | $ | 298,632 | $ | 0.786 | $0.82 to $0.86 | $3.37 to $3.45 | ||||||||||
| Definitions and Footnotes for Pages 5, 23 and 24 | ||
| (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 and impairment write-downs of depreciable operating properties, 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 apartment units to condominiums, it simultaneously discontinues depreciation of such property. | |
| (2) | Normalized funds from operations ("Normalized FFO") begins with FFO and excludes: | |
| • the impact of any expenses relating to non-operating asset impairment and valuation allowances; | ||
| • property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs; | ||
| • gains and losses from early debt extinguishment, including prepayment penalties, preferred share redemptions and the cost related to the implied option value of non-cash convertible debt discounts; | ||
| • gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and | ||
| • other miscellaneous non-comparable items. | ||
| (3) | 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. The Company also believes that Normalized FFO and Normalized 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 allow investors to compare the Company's operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual operating results. FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized 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, FFO available to Common Shares and Units, Normalized FFO and Normalized 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, FFO available to Common Shares and Units, Normalized FFO and Normalized 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. | |
| (4) | FFO available to Common Shares and Units and Normalized FFO available to Common Shares and Units are 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 Common Shares on a one-for-one basis. | |
| (5) | 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 9 | ||||||||||
| The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the First Quarter 2015 Same Store Properties: | ||||||||||
| Quarter Ended March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Operating income | $ | 218,171 | $ | 199,259 | ||||||
| Adjustments: | ||||||||||
| Non-same store operating results | (16,680 | ) | (12,613 | ) | ||||||
| Fee and asset management revenue | (1,765 | ) | (2,717 | ) | ||||||
| Fee and asset management expense | 1,321 | 1,662 | ||||||||
| Depreciation | 194,521 | 185,167 | ||||||||
| General and administrative | 19,922 | 17,576 | ||||||||
| Same store NOI | $ | 415,490 | $ | 388,334 | ||||||
Contacts:
Marty McKenna, (312) 928-1901
