Attached files
| file | filename |
|---|---|
| 8-K - 8-K - EQUITY RESIDENTIAL | a8-kcoverpage.htm |
NEWS RELEASE - FOR IMMEDIATE RELEASE
OCTOBER 24, 2012
Equity Residential Reports Third Quarter Results
Same Store Revenues Increase 5.8%; Same Store NOI Increases 7.4%;
Normalized FFO per Share Increases 17.7%
Chicago, IL - October 24, 2012 - Equity Residential (NYSE: EQR) today reported results for the quarter and nine months ended September 30, 2012. All per share results are reported as available to common shares on a diluted basis.
“We continue to experience strong fundamentals across our markets and turned consistent demand into terrific same store revenue growth of 5.8% in the third quarter,” said David J. Neithercut, Equity Residential's President and CEO. “For the full year, we expect to deliver 5.6% same store revenue growth, slightly ahead of our original plan and a very good result following growth of 5.0% in 2011. Fundamentals should remain favorable in 2013 which should produce same store revenue growth of 4.0% to 5.0%.”
Third Quarter 2012
FFO (Funds from Operations), as defined by the National Association of Real Estate Investment Trusts (NAREIT), for the third quarter of 2012 was $0.92 per share compared to $0.63 per share in the third quarter of 2011. The difference is primarily due to a termination fee of $70 million, or $0.22 per share, that the company received in connection with its pursuit of Archstone, as well as the items discussed below.
For the third quarter of 2012, the company reported Normalized FFO of $0.73 per share compared to $0.62 per share in the same period of 2011. The difference is due primarily to:
• | a positive impact of $0.07 per share from higher same store net operating income (NOI) and $0.01 per share from higher NOI from properties in lease up; and |
• | a positive impact of $0.03 per share from 2011 and 2012 transaction activity and timing. |
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. A reconciliation and definition of Normalized FFO are provided on pages 24 and 26 of this release and the company has included guidance for Normalized FFO on page 25 of this release.
For the third quarter of 2012, the company reported earnings of $0.72 per share compared to $0.35 per share in the third quarter of 2011. The difference is due primarily to higher gains on property sales, the Archstone-related fee and the other items discussed above.
1
Nine Months Ended September 30, 2012
FFO for the nine months ended September 30, 2012 was $2.16 per share compared to $1.77 per share in the same period of 2011.
For the nine months ended September 30, 2012, the company reported Normalized FFO of $2.02 per share compared to $1.78 per share in the same period of 2011.
For the nine months ended September 30, 2012, the company reported earnings of $1.52 per share compared to $2.62 per share in the same period of 2011.
Same Store Results
On a same store third quarter to third quarter comparison, which includes 105,902 apartment units, revenues increased 5.8%, expenses increased 2.9% and NOI increased 7.4%.
On a same store nine-month to nine-month comparison, which includes 102,241 apartment units, revenues increased 5.5%, expenses increased 2.2% and NOI increased 7.4%.
Acquisitions/Dispositions
During the third quarter of 2012, the company acquired four properties with a total of 540 apartment units for an aggregate purchase price of $236.3 million at a weighted average capitalization (cap) rate of 4.3%.
Also during the quarter, the company acquired, for future development, two land parcels in Seattle and one in Southern California for an aggregate purchase price of $38.5 million. The company expects to start construction in early 2014 of 640 apartment units on the Seattle land parcels for a total development cost of approximately $226.0 million. The company expects to start construction in 2014 of 154 apartment units on the Southern California land parcel for a total development cost of approximately $43.2 million.
During the quarter, the company sold eight properties, consisting of 2,153 apartment units, for an aggregate sale price of $280.7 million at a weighted average cap rate of 6.0%. These sales, excluding two leveraged, partially-owned assets sold during the quarter, generated an unlevered internal rate of return (IRR), inclusive of management costs, of 10.2%.
During the first nine months of 2012, the company acquired nine properties with a total of 1,896 apartment units for an aggregate purchase price of $906.3 million at a weighted average cap rate of 4.7% and five land parcels for $62.2 million.
Also during the first nine months of 2012, the company sold 20 properties with a total of 5,337 apartment units for an aggregate sale price of $616.9 million at a weighted average cap rate of 6.2%. These sales, excluding two leveraged, partially-owned assets sold during the third quarter, generated an unlevered IRR, inclusive of management costs, of 10.8%.
Archstone
As previously disclosed, on June 6, 2012, Equity Residential received $150 million in termination fees from Bank of America, Barclays Bank PLC (together, the “Sellers”) and Lehman Brothers Holdings Inc. (“Lehman”) as a result of Lehman's acquisition of the Sellers' remaining 26.5% interest in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. The company recognized $70 million of these fees in interest and other income in the third quarter of 2012 and will recognize $80 million of these fees in interest and other income in the fourth quarter of 2012. These termination fees will not be included in the company's Normalized FFO.
2
Financing Activities
On August 20, 2012, the company redeemed all of its outstanding Series N Depositary Shares (with a liquidation value of $150 million) each representing 1/10 of a 6.48% Series N Cumulative Redeemable Preferred Share of Beneficial Interest. As a result of this redemption, the company recorded a non-cash charge of approximately $5.1 million, or approximately $0.02 per share, in the third quarter of 2012 for the write-off of the original issuance costs. This charge reduced earnings per share and FFO but did not impact Normalized FFO.
During the quarter, the company issued 1,095,609 common shares at an average price of $62.70 per share for total proceeds of approximately $68.7 million under its At-the-Market (ATM) share offering program. Since the beginning of 2012, the company has issued 3,173,919 common shares at an average price of $60.59 per share for total proceeds of approximately $192.3 million under the program. The company has not issued any shares under the program since the end of the third quarter and currently has approximately 6.0 million shares available for issuance under this program.
On October 1, 2012, the company redeemed the approximately $222.1 million outstanding of its 5.5% unsecured notes which matured on that date and on October 5, 2012, the company paid off its $500 million Term Loan which matured on that date. Both of these activities were funded from the company's revolving credit facility. As of October 23, 2012, the company had an outstanding balance of $850 million and approximately $870 million available on its revolving credit facility.
Fourth Quarter 2012 Guidance
The company has established a Normalized FFO guidance range of $0.72 to $0.76 per share for the fourth quarter of 2012. The difference between the company's third quarter 2012 Normalized FFO of $0.73 per share and the midpoint of the fourth quarter guidance range of $0.74 per share is primarily due to:
• | a positive impact of $0.02 per share from higher same store NOI; |
• | a positive impact of $0.01 per share from lower interest expense and preferred share distributions; and |
• | a negative impact of $0.02 per share from 2011 and 2012 transaction activity and timing and other items. |
Full Year 2012 Guidance
The company has revised its guidance for its full year 2012 same store operating performance, transactions and Normalized FFO results as well as other items listed on page 25 of this release. The changes to the full year same store, transactions and Normalized FFO guidance are listed below:
Previous | Revised | |||
Same store: | ||||
Physical occupancy | 95.2% | 95.3% | ||
Revenue change | 5.4% to 5.6% | 5.6% | ||
Expense change | 1.5% to 2.5% | 2.3% | ||
NOI change | 7.0% to 8.0% | 7.5% | ||
Acquisitions: | $1.25 billion | $1.1 billion | ||
Dispositions: | $1.25 billion | $1.1 billion | ||
Cap Rate Spread: | 130 basis points | 150 basis points | ||
Normalized FFO per share: | $2.73 to $2.78 | $2.74 to $2.78 | ||
3
Fourth Quarter 2012 Earnings and Conference Call
Equity Residential expects to announce fourth quarter 2012 results on Tuesday, February 5, 2013 and host a conference call to discuss those results at 9:00 a.m. CT on Wednesday, February 6, 2013.
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 418 properties located in 13 states and the District of Columbia, consisting of 118,986 apartment units. For more information on Equity Residential, please visit our website at www.equityapartments.com.
Forward-Looking Statements
In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential's management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading “Risk Factors” in our Annual Report on Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityapartments.com. Many of these uncertainties and risks are difficult to predict and beyond management's control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
A live web cast of the company's conference call discussing these results will take place tomorrow, Thursday, October 25, at 9:00 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.
4
Equity Residential
Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)
Nine Months Ended September 30, | Quarter Ended September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
REVENUES | ||||||||||||||||
Rental income | $ | 1,602,635 | $ | 1,417,136 | $ | 553,092 | $ | 490,944 | ||||||||
Fee and asset management | 7,328 | 6,682 | 3,052 | 2,928 | ||||||||||||
Total revenues | 1,609,963 | 1,423,818 | 556,144 | 493,872 | ||||||||||||
EXPENSES | ||||||||||||||||
Property and maintenance | 325,071 | 300,362 | 110,679 | 101,712 | ||||||||||||
Real estate taxes and insurance | 182,222 | 162,430 | 64,235 | 57,109 | ||||||||||||
Property management | 62,769 | 62,191 | 18,493 | 19,175 | ||||||||||||
Fee and asset management | 3,595 | 3,207 | 1,108 | 1,250 | ||||||||||||
Depreciation | 509,338 | 467,416 | 167,406 | 159,691 | ||||||||||||
General and administrative | 37,178 | 32,462 | 10,096 | 10,121 | ||||||||||||
Total expenses | 1,120,173 | 1,028,068 | 372,017 | 349,058 | ||||||||||||
Operating income | 489,790 | 395,750 | 184,127 | 144,814 | ||||||||||||
Interest and other income | 70,516 | 6,598 | 70,087 | 5,313 | ||||||||||||
Other expenses | (20,678 | ) | (9,318 | ) | (4,094 | ) | (2,528 | ) | ||||||||
Interest: | ||||||||||||||||
Expense incurred, net | (347,452 | ) | (350,957 | ) | (113,876 | ) | (112,449 | ) | ||||||||
Amortization of deferred financing costs | (10,319 | ) | (11,900 | ) | (3,338 | ) | (4,650 | ) | ||||||||
Income before income and other taxes, (loss) from investments in unconsolidated entities, net gain on sales of land parcels and discontinued operations | 181,857 | 30,173 | 132,906 | 30,500 | ||||||||||||
Income and other tax (expense) benefit | (627 | ) | (669 | ) | (222 | ) | (283 | ) | ||||||||
(Loss) from investments in unconsolidated entities | (3 | ) | — | (3 | ) | — | ||||||||||
Net gain on sales of land parcels | — | 4,217 | — | — | ||||||||||||
Income from continuing operations | 181,227 | 33,721 | 132,681 | 30,217 | ||||||||||||
Discontinued operations, net | 315,578 | 794,075 | 103,642 | 82,760 | ||||||||||||
Net income | 496,805 | 827,796 | 236,323 | 112,977 | ||||||||||||
Net (income) loss attributable to Noncontrolling Interests: | ||||||||||||||||
Operating Partnership | (21,646 | ) | (36,275 | ) | (10,496 | ) | (4,742 | ) | ||||||||
Partially Owned Properties | (457 | ) | (418 | ) | 312 | (387 | ) | |||||||||
Net income attributable to controlling interests | 474,702 | 791,103 | 226,139 | 107,848 | ||||||||||||
Preferred distributions | (9,319 | ) | (10,399 | ) | (2,386 | ) | (3,466 | ) | ||||||||
Premium on redemption of Preferred Shares | (5,150 | ) | — | (5,150 | ) | — | ||||||||||
Net income available to Common Shares | $ | 460,233 | $ | 780,704 | $ | 218,603 | $ | 104,382 | ||||||||
Earnings per share – basic: | ||||||||||||||||
Income from continuing operations available to Common Shares | $ | 0.53 | $ | 0.07 | $ | 0.40 | $ | 0.09 | ||||||||
Net income available to Common Shares | $ | 1.53 | $ | 2.65 | $ | 0.73 | $ | 0.35 | ||||||||
Weighted average Common Shares outstanding | 300,116 | 294,474 | 301,336 | 295,831 | ||||||||||||
Earnings per share – diluted: | ||||||||||||||||
Income from continuing operations available to Common Shares | $ | 0.52 | $ | 0.07 | $ | 0.39 | $ | 0.08 | ||||||||
Net income available to Common Shares | $ | 1.52 | $ | 2.62 | $ | 0.72 | $ | 0.35 | ||||||||
Weighted average Common Shares outstanding | 317,265 | 311,908 | 318,773 | 312,844 | ||||||||||||
Distributions declared per Common Share outstanding | $ | 1.0125 | $ | 1.0125 | $ | 0.3375 | $ | 0.3375 | ||||||||
5
Equity Residential
Consolidated Statements of Funds From Operations and Normalized Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Nine Months Ended September 30, | Quarter Ended September 30, | ||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Net income | $ | 496,805 | $ | 827,796 | $ | 236,323 | $ | 112,977 | |||||||||
Net (income) loss attributable to Noncontrolling Interests – | |||||||||||||||||
Partially Owned Properties | (457 | ) | (418 | ) | 312 | (387 | ) | ||||||||||
Preferred Distributions | (9,319 | ) | (10,399 | ) | (2,386 | ) | (3,466 | ) | |||||||||
Premium on redemption of Preferred Shares | (5,150 | ) | — | (5,150 | ) | — | |||||||||||
Net income available to Common Shares and Units | 481,879 | 816,979 | 229,099 | 109,124 | |||||||||||||
Adjustments: | |||||||||||||||||
Depreciation | 509,338 | 467,416 | 167,406 | 159,691 | |||||||||||||
Depreciation – Non-real estate additions | (4,211 | ) | (4,202 | ) | (1,430 | ) | (1,297 | ) | |||||||||
Depreciation – Partially Owned and Unconsolidated Properties | (2,395 | ) | (2,263 | ) | (798 | ) | (758 | ) | |||||||||
Discontinued operations: | |||||||||||||||||
Depreciation | 7,602 | 28,879 | 1,428 | 5,762 | |||||||||||||
Net (gain) on sales of discontinued operations | (307,447 | ) | (759,100 | ) | (103,394 | ) | (76,864 | ) | |||||||||
Net incremental gain on sales of condominium units | 49 | 2,050 | — | 935 | |||||||||||||
Gain (loss) on sale of Equity Corporate Housing (ECH) | 350 | 1,022 | — | (2 | ) | ||||||||||||
FFO available to Common Shares and Units (1) (3) (4) | 685,165 | 550,781 | 292,311 | 196,591 | |||||||||||||
Adjustments (see page 24 for additional detail): | |||||||||||||||||
Asset impairment and valuation allowances | — | — | — | — | |||||||||||||
Property acquisition costs and write-off of pursuit costs (other expenses) | 14,898 | 9,318 | 4,004 | 2,528 | |||||||||||||
Debt extinguishment (gains) losses, including prepayment penalties, preferred share redemptions and non-cash convertible debt discounts | 7,491 | 9,250 | 6,114 | 677 | |||||||||||||
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) | (491 | ) | (6,554 | ) | — | (1,025 | ) | ||||||||||
Other miscellaneous non-comparable items | (67,687 | ) | (7,762 | ) | (69,910 | ) | (5,662 | ) | |||||||||
Normalized FFO available to Common Shares and Units (2) (3) (4) | $ | 639,376 | $ | 555,033 | $ | 232,519 | $ | 193,109 | |||||||||
FFO (1) (3) | $ | 699,634 | $ | 561,180 | $ | 299,847 | $ | 200,057 | |||||||||
Preferred distributions | (9,319 | ) | (10,399 | ) | (2,386 | ) | (3,466 | ) | |||||||||
Premium on redemption of Preferred Shares | (5,150 | ) | — | (5,150 | ) | — | |||||||||||
FFO available to Common Shares and Units - basic and diluted (1) (3) (4) | $ | 685,165 | $ | 550,781 | $ | 292,311 | $ | 196,591 | |||||||||
FFO per share and Unit - basic | $ | 2.18 | $ | 1.79 | $ | 0.93 | $ | 0.64 | |||||||||
FFO per share and Unit - diluted | $ | 2.16 | $ | 1.77 | $ | 0.92 | $ | 0.63 | |||||||||
Normalized FFO (2) (3) | $ | 648,695 | $ | 565,432 | $ | 234,905 | $ | 196,575 | |||||||||
Preferred distributions | (9,319 | ) | (10,399 | ) | (2,386 | ) | (3,466 | ) | |||||||||
Normalized FFO available to Common Shares and Units - basic and diluted (2) (3) (4) | $ | 639,376 | $ | 555,033 | $ | 232,519 | $ | 193,109 | |||||||||
Normalized FFO per share and Unit - basic | $ | 2.04 | $ | 1.80 | $ | 0.74 | $ | 0.63 | |||||||||
Normalized FFO per share and Unit - diluted | $ | 2.02 | $ | 1.78 | $ | 0.73 | $ | 0.62 | |||||||||
Weighted average Common Shares and Units outstanding - basic | 313,932 | 307,705 | 315,513 | 308,884 | |||||||||||||
Weighted average Common Shares and Units outstanding - diluted | 317,265 | 311,908 | 318,773 | 312,844 | |||||||||||||
Note: | See page 24 for additional detail regarding the adjustments from FFO to Normalized FFO. See page 26 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO. | ||||||||||||||||
6
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
September 30, 2012 | December 31, 2011 | |||||||
ASSETS | ||||||||
Investment in real estate | ||||||||
Land | $ | 4,609,337 | $ | 4,367,816 | ||||
Depreciable property | 15,943,139 | 15,554,740 | ||||||
Projects under development | 194,254 | 160,190 | ||||||
Land held for development | 404,846 | 325,200 | ||||||
Investment in real estate | 21,151,576 | 20,407,946 | ||||||
Accumulated depreciation | (4,880,808 | ) | (4,539,583 | ) | ||||
Investment in real estate, net | 16,270,768 | 15,868,363 | ||||||
Cash and cash equivalents | 45,623 | 383,921 | ||||||
Investments in unconsolidated entities | 17,906 | 12,327 | ||||||
Deposits – restricted | 120,440 | 152,237 | ||||||
Escrow deposits – mortgage | 10,462 | 10,692 | ||||||
Deferred financing costs, net | 38,823 | 44,608 | ||||||
Other assets | 164,523 | 187,155 | ||||||
Total assets | $ | 16,668,545 | $ | 16,659,303 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Mortgage notes payable | $ | 3,948,115 | $ | 4,111,487 | ||||
Notes, net | 5,354,038 | 5,609,574 | ||||||
Lines of credit | 7,000 | — | ||||||
Accounts payable and accrued expenses | 105,602 | 35,206 | ||||||
Accrued interest payable | 78,869 | 88,121 | ||||||
Other liabilities | 370,046 | 291,289 | ||||||
Security deposits | 68,758 | 65,286 | ||||||
Distributions payable | 108,048 | 179,079 | ||||||
Total liabilities | 10,040,476 | 10,380,042 | ||||||
Commitments and contingencies | ||||||||
Redeemable Noncontrolling Interests – Operating Partnership | 414,219 | 416,404 | ||||||
Equity: | ||||||||
Shareholders’ equity: | ||||||||
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 1,000,000 shares issued and outstanding as of September 30, 2012 and 1,600,000 shares issued and outstanding as of December 31, 2011 | 50,000 | 200,000 | ||||||
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 302,674,716 shares issued and outstanding as of September 30, 2012 and 297,508,185 shares issued and outstanding as of December 31, 2011 | 3,027 | 2,975 | ||||||
Paid in capital | 5,364,802 | 5,047,186 | ||||||
Retained earnings | 770,697 | 615,572 | ||||||
Accumulated other comprehensive (loss) | (197,754 | ) | (196,718 | ) | ||||
Total shareholders’ equity | 5,990,772 | 5,669,015 | ||||||
Noncontrolling Interests: | ||||||||
Operating Partnership | 147,650 | 119,536 | ||||||
Partially Owned Properties | 75,428 | 74,306 | ||||||
Total Noncontrolling Interests | 223,078 | 193,842 | ||||||
Total equity | 6,213,850 | 5,862,857 | ||||||
Total liabilities and equity | $ | 16,668,545 | $ | 16,659,303 | ||||
7
Equity Residential | ||||||||||||||||||
Portfolio Summary | ||||||||||||||||||
As of September 30, 2012 | ||||||||||||||||||
Markets | Properties | Apartment Units | % of Total Apartment Units | % of Stabilized NOI (1) | Average Rental Rate (2) | |||||||||||||
1 | New York Metro Area | 30 | 8,047 | 6.8 | % | 13.8 | % | $ | 3,422 | |||||||||
2 | DC Northern Virginia | 27 | 9,569 | 8.0 | % | 11.6 | % | 2,150 | ||||||||||
3 | Los Angeles | 48 | 9,815 | 8.3 | % | 9.7 | % | 1,863 | ||||||||||
4 | South Florida | 39 | 12,990 | 10.9 | % | 9.4 | % | 1,452 | ||||||||||
5 | Boston | 26 | 5,832 | 4.9 | % | 8.0 | % | 2,549 | ||||||||||
6 | San Francisco Bay Area | 40 | 9,094 | 7.6 | % | 7.8 | % | 1,838 | ||||||||||
7 | Seattle/Tacoma | 44 | 9,901 | 8.3 | % | 7.3 | % | 1,491 | ||||||||||
8 | Denver | 24 | 8,141 | 6.8 | % | 5.1 | % | 1,221 | ||||||||||
9 | San Diego | 14 | 4,963 | 4.2 | % | 5.0 | % | 1,846 | ||||||||||
10 | Suburban Maryland | 16 | 4,856 | 4.1 | % | 4.5 | % | 1,689 | ||||||||||
11 | Phoenix | 28 | 8,209 | 6.9 | % | 3.9 | % | 953 | ||||||||||
12 | Orlando | 21 | 6,413 | 5.4 | % | 3.4 | % | 1,083 | ||||||||||
13 | Orange County, CA | 11 | 3,490 | 2.9 | % | 3.2 | % | 1,653 | ||||||||||
14 | Inland Empire, CA | 10 | 3,081 | 2.6 | % | 2.4 | % | 1,474 | ||||||||||
15 | Atlanta | 13 | 3,820 | 3.2 | % | 2.0 | % | 1,129 | ||||||||||
16 | All Other Markets (3) | 25 | 5,774 | 4.9 | % | 2.9 | % | 1,085 | ||||||||||
Total | 416 | 113,995 | 95.8 | % | 100.0 | % | 1,708 | |||||||||||
Military Housing | 2 | 4,991 | 4.2 | % | — | — | ||||||||||||
Grand Total | 418 | 118,986 | 100.0 | % | 100.0 | % | $ | 1,708 | ||||||||||
Note: | Projects under development are not included in the Portfolio Summary until construction has been completed. | |||||||||||||||||
(1 | ) | % of Stabilized NOI includes budgeted 2012 NOI for properties that are stabilized 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 month of September 2012. | ||||||||||||||||
(3 | ) | All Other Markets - Each individual market is less than 1.5% of stabilized NOI. | ||||||||||||||||
3rd Quarter 2012 Earnings Release | 8 | |
Equity Residential | ||||||||||
Portfolio as of September 30, 2012 | ||||||||||
Properties | Apartment Units | |||||||||
Wholly Owned Properties | 397 | 110,520 | ||||||||
Partially Owned Properties - Consolidated | 19 | 3,475 | ||||||||
Military Housing | 2 | 4,991 | ||||||||
418 | 118,986 | |||||||||
______________________________________________________________________________________________________
Portfolio Rollforward Q3 2012 | |||||||||||||
($ in thousands) | |||||||||||||
Properties | Apartment Units | Purchase/ (Sale) Price | Cap Rate | ||||||||||
6/30/2012 | 421 | 120,355 | |||||||||||
Acquisitions: | |||||||||||||
Rental Properties - Consolidated | 4 | 540 | $ | 236,336 | 4.3 | % | |||||||
Land Parcels (three) | — | — | $ | 38,500 | |||||||||
Dispositions: | |||||||||||||
Rental Properties - Consolidated | (8 | ) | (2,153 | ) | $ | (280,654 | ) | 6.0 | % | ||||
Completed Developments | 1 | 188 | |||||||||||
Configuration Changes | — | 56 | |||||||||||
9/30/2012 | 418 | 118,986 | |||||||||||
______________________________________________________________________________________________________
Portfolio Rollforward 2012 | |||||||||||||
($ in thousands) | |||||||||||||
Properties | Apartment Units | Purchase/ (Sale) Price | Cap Rate | ||||||||||
12/31/2011 | 427 | 121,974 | |||||||||||
Acquisitions: | |||||||||||||
Rental Properties - Consolidated | 9 | 1,896 | $ | 906,305 | 4.7 | % | |||||||
Land Parcels (five) | — | — | $ | 62,240 | |||||||||
Dispositions: | |||||||||||||
Rental Properties - Consolidated | (20 | ) | (5,337 | ) | $ | (616,904 | ) | 6.2 | % | ||||
Completed Developments | 2 | 356 | |||||||||||
Configuration Changes | — | 97 | |||||||||||
9/30/2012 | 418 | 118,986 | |||||||||||
3rd Quarter 2012 Earnings Release | 9 | |
Equity Residential | ||||||||||||||||||||||
Third Quarter 2012 vs. Third Quarter 2011 | ||||||||||||||||||||||
Same Store Results/Statistics | ||||||||||||||||||||||
$ in thousands (except for Average Rental Rate) – 105,902 Same Store Apartment Units | ||||||||||||||||||||||
Results | Statistics | |||||||||||||||||||||
Average Rental Rate (2) | ||||||||||||||||||||||
Description | Revenues | Expenses | NOI (1) | Occupancy | Turnover | |||||||||||||||||
Q3 2012 | $ | 508,063 | $ | 177,463 | $ | 330,600 | $ | 1,670 | 95.8 | % | 17.5 | % | ||||||||||
Q3 2011 | $ | 480,256 | $ | 172,382 | $ | 307,874 | $ | 1,588 | 95.3 | % | 17.7 | % | ||||||||||
Change | $ | 27,807 | $ | 5,081 | $ | 22,726 | $ | 82 | 0.5 | % | (0.2 | %) | ||||||||||
Change | 5.8 | % | 2.9 | % | 7.4 | % | 5.2 | % | ||||||||||||||
______________________________________________________________________________________________________
Third Quarter 2012 vs. Second Quarter 2012 | ||||||||||||||||||||||
Same Store Results/Statistics | ||||||||||||||||||||||
$ in thousands (except for Average Rental Rate) – 112,078 Same Store Apartment Units | ||||||||||||||||||||||
Results | Statistics | |||||||||||||||||||||
Average Rental Rate (2) | ||||||||||||||||||||||
Description | Revenues | Expenses | NOI (1) | Occupancy | Turnover | |||||||||||||||||
Q3 2012 | $ | 541,067 | $ | 190,793 | $ | 350,274 | $ | 1,681 | 95.8 | % | 17.4 | % | ||||||||||
Q2 2012 | $ | 528,590 | $ | 185,273 | $ | 343,317 | $ | 1,654 | 95.1 | % | 15.4 | % | ||||||||||
Change | $ | 12,477 | $ | 5,520 | $ | 6,957 | $ | 27 | 0.7 | % | 2.0 | % | ||||||||||
Change | 2.4 | % | 3.0 | % | 2.0 | % | 1.6 | % | ||||||||||||||
______________________________________________________________________________________________________
September YTD 2012 vs. September YTD 2011 | ||||||||||||||||||||||
Same Store Results/Statistics | ||||||||||||||||||||||
$ in thousands (except for Average Rental Rate) – 102,241 Same Store Apartment Units | ||||||||||||||||||||||
Results | Statistics | |||||||||||||||||||||
Average Rental Rate (2) | ||||||||||||||||||||||
Description | Revenues | Expenses | NOI (1) | Occupancy | Turnover | |||||||||||||||||
YTD 2012 | $ | 1,428,431 | $ | 505,516 | $ | 922,915 | $ | 1,630 | 95.3 | % | 45.3 | % | ||||||||||
YTD 2011 | $ | 1,353,690 | $ | 494,509 | $ | 859,181 | $ | 1,547 | 95.2 | % | 44.2 | % | ||||||||||
Change | $ | 74,741 | $ | 11,007 | $ | 63,734 | $ | 83 | 0.1 | % | 1.1 | % | ||||||||||
Change | 5.5 | % | 2.2 | % | 7.4 | % | 5.4 | % | ||||||||||||||
(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 its operating performance because it is a direct measure of the actual operating results of the Company's apartment communities. See page 26 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. | ||||||||||||
3rd Quarter 2012 Earnings Release | 10 | |
Equity Residential | |||||||||||||||||||||||||||||||
Third Quarter 2012 vs. Third Quarter 2011 | |||||||||||||||||||||||||||||||
Same Store Results/Statistics by Market | |||||||||||||||||||||||||||||||
Increase (Decrease) from Prior Year's Quarter | |||||||||||||||||||||||||||||||
Q3 2012 % of Actual NOI | Q3 2012 Average Rental Rate (1) | Q3 2012 Weighted Average Occupancy % | |||||||||||||||||||||||||||||
Average Rental Rate (1) | |||||||||||||||||||||||||||||||
Apartment Units | |||||||||||||||||||||||||||||||
Markets | Revenues | Expenses | NOI | Occupancy | |||||||||||||||||||||||||||
1 | New York Metro Area | 7,063 | 12.6 | % | $ | 3,350 | 96.8 | % | 6.2 | % | 3.8 | % | 7.7 | % | 5.8 | % | 0.3 | % | |||||||||||||
2 | DC Northern Virginia | 8,822 | 11.2 | % | 2,081 | 96.6 | % | 5.5 | % | 6.1 | % | 5.2 | % | 4.9 | % | 0.5 | % | ||||||||||||||
3 | South Florida | 12,743 | 9.7 | % | 1,448 | 95.0 | % | 4.9 | % | 6.6 | % | 3.9 | % | 4.1 | % | 0.7 | % | ||||||||||||||
4 | Los Angeles | 8,763 | 9.5 | % | 1,842 | 96.2 | % | 4.8 | % | (1.5 | %) | 8.2 | % | 3.9 | % | 0.8 | % | ||||||||||||||
5 | Boston | 5,470 | 8.2 | % | 2,581 | 95.7 | % | 6.6 | % | 2.9 | % | 8.6 | % | 6.9 | % | (0.3 | %) | ||||||||||||||
6 | Seattle/Tacoma | 9,582 | 7.7 | % | 1,465 | 95.3 | % | 6.4 | % | 2.3 | % | 8.9 | % | 5.5 | % | 0.8 | % | ||||||||||||||
7 | San Francisco Bay Area | 6,194 | 7.4 | % | 2,018 | 96.0 | % | 11.2 | % | 3.3 | % | 15.4 | % | 11.0 | % | 0.2 | % | ||||||||||||||
8 | Denver | 7,973 | 5.8 | % | 1,212 | 96.1 | % | 8.9 | % | 0.8 | % | 13.1 | % | 8.2 | % | 0.5 | % | ||||||||||||||
9 | San Diego | 4,284 | 4.6 | % | 1,753 | 96.2 | % | 3.0 | % | 2.2 | % | 3.3 | % | 1.9 | % | 0.9 | % | ||||||||||||||
10 | Phoenix | 8,209 | 4.3 | % | 962 | 95.2 | % | 3.5 | % | 3.2 | % | 3.7 | % | 2.8 | % | 0.6 | % | ||||||||||||||
11 | Suburban Maryland | 4,222 | 3.8 | % | 1,512 | 95.5 | % | 2.7 | % | (1.3 | %) | 4.7 | % | 2.0 | % | 0.7 | % | ||||||||||||||
12 | Orlando | 6,413 | 3.7 | % | 1,092 | 95.8 | % | 5.3 | % | 2.8 | % | 7.1 | % | 5.1 | % | 0.2 | % | ||||||||||||||
13 | Orange County, CA | 3,490 | 3.5 | % | 1,650 | 96.2 | % | 5.7 | % | 2.2 | % | 7.4 | % | 4.9 | % | 0.7 | % | ||||||||||||||
14 | Inland Empire, CA | 3,081 | 2.7 | % | 1,469 | 96.0 | % | 3.8 | % | (4.2 | %) | 8.0 | % | 2.2 | % | 1.4 | % | ||||||||||||||
15 | Atlanta | 3,820 | 2.2 | % | 1,134 | 96.5 | % | 6.2 | % | 3.4 | % | 8.3 | % | 5.8 | % | 0.3 | % | ||||||||||||||
16 | All Other Markets | 5,773 | 3.1 | % | 1,094 | 95.4 | % | 3.5 | % | 5.0 | % | 2.5 | % | 3.7 | % | (0.2 | %) | ||||||||||||||
Total | 105,902 | 100.0 | % | $ | 1,670 | 95.8 | % | 5.8 | % | 2.9 | % | 7.4 | % | 5.2 | % | 0.5 | % | ||||||||||||||
(1 | ) | Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. | |||||||||||||||||||||||||||||
3rd Quarter 2012 Earnings Release | 11 | |
Equity Residential | |||||||||||||||||||||||||||||||
Third Quarter 2012 vs. Second Quarter 2012 | |||||||||||||||||||||||||||||||
Same Store Results/Statistics by Market | |||||||||||||||||||||||||||||||
Increase (Decrease) from Prior Quarter | |||||||||||||||||||||||||||||||
Q3 2012 % of Actual NOI | Q3 2012 Average Rental Rate (1) | Q3 2012 Weighted Average Occupancy % | |||||||||||||||||||||||||||||
Average Rental Rate (1) | |||||||||||||||||||||||||||||||
Apartment Units | |||||||||||||||||||||||||||||||
Markets | Revenues | Expenses | NOI | Occupancy | |||||||||||||||||||||||||||
1 | New York Metro Area | 7,536 | 12.4 | % | $ | 3,301 | 96.8 | % | 2.2 | % | 1.8 | % | 2.4 | % | 1.7 | % | 0.5 | % | |||||||||||||
2 | DC Northern Virginia | 9,381 | 11.6 | % | 2,137 | 96.5 | % | 1.8 | % | 2.7 | % | 1.4 | % | 1.1 | % | 0.6 | % | ||||||||||||||
3 | Los Angeles | 9,716 | 10.0 | % | 1,863 | 96.2 | % | 3.4 | % | 3.8 | % | 3.2 | % | 1.7 | % | 1.5 | % | ||||||||||||||
4 | South Florida | 12,990 | 9.4 | % | 1,459 | 94.9 | % | 1.8 | % | 5.6 | % | (0.6 | %) | 1.8 | % | 0.0 | % | ||||||||||||||
5 | Boston | 5,832 | 8.2 | % | 2,547 | 95.7 | % | 1.6 | % | 2.7 | % | 1.1 | % | 1.3 | % | 0.3 | % | ||||||||||||||
6 | San Francisco Bay Area | 8,656 | 8.2 | % | 1,801 | 95.9 | % | 3.4 | % | 2.5 | % | 4.0 | % | 2.7 | % | 0.7 | % | ||||||||||||||
7 | Seattle/Tacoma | 9,901 | 7.6 | % | 1,471 | 95.3 | % | 3.3 | % | 2.0 | % | 4.0 | % | 1.8 | % | 1.4 | % | ||||||||||||||
8 | Denver | 7,973 | 5.4 | % | 1,212 | 96.1 | % | 3.9 | % | 7.4 | % | 2.3 | % | 3.1 | % | 0.7 | % | ||||||||||||||
9 | San Diego | 4,963 | 5.1 | % | 1,814 | 95.9 | % | 2.4 | % | (2.5 | %) | 4.7 | % | 1.1 | % | 1.1 | % | ||||||||||||||
10 | Phoenix | 8,209 | 4.0 | % | 962 | 95.2 | % | 1.5 | % | 6.8 | % | (1.3 | %) | 1.2 | % | 0.3 | % | ||||||||||||||
11 | Suburban Maryland | 4,344 | 3.7 | % | 1,543 | 95.5 | % | 1.4 | % | 1.9 | % | 1.1 | % | 0.3 | % | 1.0 | % | ||||||||||||||
12 | Orlando | 6,413 | 3.5 | % | 1,092 | 95.8 | % | 2.9 | % | 4.1 | % | 2.1 | % | 2.1 | % | 0.8 | % | ||||||||||||||
13 | Orange County, CA | 3,490 | 3.3 | % | 1,650 | 96.2 | % | 1.9 | % | 3.3 | % | 1.2 | % | 1.1 | % | 0.8 | % | ||||||||||||||
14 | Inland Empire, CA | 3,081 | 2.5 | % | 1,469 | 96.0 | % | 2.2 | % | 0.4 | % | 3.1 | % | 0.9 | % | 1.3 | % | ||||||||||||||
15 | Atlanta | 3,820 | 2.1 | % | 1,134 | 96.5 | % | 2.0 | % | (0.7 | %) | 4.0 | % | 1.4 | % | 0.5 | % | ||||||||||||||
16 | All Other Markets | 5,773 | 3.0 | % | 1,094 | 95.4 | % | 0.9 | % | 3.1 | % | (0.6 | %) | 1.2 | % | (0.2 | %) | ||||||||||||||
Total | 112,078 | 100.0 | % | $ | 1,681 | 95.8 | % | 2.4 | % | 3.0 | % | 2.0 | % | 1.6 | % | 0.7 | % | ||||||||||||||
(1 | ) | Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. | |||||||||||||||||||||||||||||
3rd Quarter 2012 Earnings Release | 12 | |
Equity Residential | |||||||||||||||||||||||||||||||
September YTD 2012 vs. September YTD 2011 | |||||||||||||||||||||||||||||||
Same Store Results/Statistics by Market | |||||||||||||||||||||||||||||||
Increase (Decrease) from Prior Year | |||||||||||||||||||||||||||||||
Sept. YTD 12 % of Actual NOI | Sept. YTD 12 Average Rental Rate (1) | Sept. YTD 12 Weighted Average Occupancy % | |||||||||||||||||||||||||||||
Average Rental Rate (1) | |||||||||||||||||||||||||||||||
Apartment Units | |||||||||||||||||||||||||||||||
Markets | Revenues | Expenses | NOI | Occupancy | |||||||||||||||||||||||||||
1 | New York Metro Area | 7,063 | 13.0 | % | $ | 3,302 | 96.2 | % | 6.4 | % | 3.6 | % | 8.3 | % | 6.3 | % | 0.1 | % | |||||||||||||
2 | DC Northern Virginia | 7,974 | 10.6 | % | 2,060 | 95.7 | % | 4.7 | % | 5.0 | % | 4.6 | % | 4.8 | % | (0.1 | %) | ||||||||||||||
3 | South Florida | 12,114 | 9.7 | % | 1,394 | 95.1 | % | 4.3 | % | 4.1 | % | 4.5 | % | 3.6 | % | 0.5 | % | ||||||||||||||
4 | Los Angeles | 7,832 | 8.8 | % | 1,786 | 95.3 | % | 4.0 | % | (2.4 | %) | 7.5 | % | 3.6 | % | 0.4 | % | ||||||||||||||
5 | Boston | 5,175 | 8.2 | % | 2,546 | 95.5 | % | 6.6 | % | 0.1 | % | 10.2 | % | 6.9 | % | (0.3 | %) | ||||||||||||||
6 | San Francisco Bay Area | 6,194 | 7.6 | % | 1,964 | 95.5 | % | 11.2 | % | 3.7 | % | 15.2 | % | 11.5 | % | (0.2 | %) | ||||||||||||||
7 | Seattle/Tacoma | 9,081 | 7.5 | % | 1,432 | 94.5 | % | 5.5 | % | 3.0 | % | 7.0 | % | 5.4 | % | 0.1 | % | ||||||||||||||
8 | Denver | 7,973 | 6.0 | % | 1,176 | 95.6 | % | 9.1 | % | 2.1 | % | 12.6 | % | 8.8 | % | 0.3 | % | ||||||||||||||
9 | San Diego | 4,284 | 4.7 | % | 1,736 | 95.1 | % | 2.5 | % | 1.6 | % | 3.0 | % | 2.4 | % | 0.0 | % | ||||||||||||||
10 | Phoenix | 8,209 | 4.6 | % | 951 | 95.1 | % | 4.1 | % | (1.3 | %) | 7.4 | % | 4.0 | % | 0.0 | % | ||||||||||||||
11 | Orlando | 6,413 | 3.9 | % | 1,068 | 95.4 | % | 4.4 | % | 2.9 | % | 5.3 | % | 4.2 | % | 0.1 | % | ||||||||||||||
12 | Orange County, CA | 3,490 | 3.7 | % | 1,627 | 95.6 | % | 5.3 | % | 3.7 | % | 6.1 | % | 5.1 | % | 0.2 | % | ||||||||||||||
13 | Suburban Maryland | 3,765 | 3.3 | % | 1,437 | 94.8 | % | 2.5 | % | (0.5 | %) | 4.0 | % | 2.6 | % | (0.2 | %) | ||||||||||||||
14 | Inland Empire, CA | 3,081 | 2.8 | % | 1,459 | 94.9 | % | 2.9 | % | 0.3 | % | 4.3 | % | 2.9 | % | 0.0 | % | ||||||||||||||
15 | Atlanta | 3,820 | 2.3 | % | 1,114 | 96.1 | % | 5.9 | % | 2.2 | % | 8.7 | % | 6.0 | % | 0.0 | % | ||||||||||||||
16 | All Other Markets | 5,773 | 3.3 | % | 1,079 | 95.2 | % | 4.4 | % | 2.0 | % | 6.2 | % | 4.4 | % | 0.0 | % | ||||||||||||||
Total | 102,241 | 100.0 | % | $ | 1,630 | 95.3 | % | 5.5 | % | 2.2 | % | 7.4 | % | 5.4 | % | 0.1 | % | ||||||||||||||
(1 | ) | Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. | |||||||||||||||||||||||||||||
3rd Quarter 2012 Earnings Release | 13 | |
Equity Residential | |||||||||||||||||
Third Quarter 2012 vs. Third Quarter 2011 | |||||||||||||||||
Same Store Operating Expenses | |||||||||||||||||
$ in thousands – 105,902 Same Store Apartment Units | |||||||||||||||||
% of Actual Q3 2012 Operating Expenses | |||||||||||||||||
Actual Q3 2012 | Actual Q3 2011 | $ Change | % Change | ||||||||||||||
Real estate taxes | $ | 52,973 | $ | 48,452 | $ | 4,521 | 9.3 | % | 29.9 | % | |||||||
On-site payroll (1) | 39,675 | 39,922 | (247 | ) | (0.6 | %) | 22.4 | % | |||||||||
Utilities (2) | 26,861 | 26,366 | 495 | 1.9 | % | 15.1 | % | ||||||||||
Repairs and maintenance (3) | 25,792 | 25,082 | 710 | 2.8 | % | 14.5 | % | ||||||||||
Property management costs (4) | 18,544 | 19,210 | (666 | ) | (3.5 | %) | 10.4 | % | |||||||||
Insurance | 5,572 | 5,179 | 393 | 7.6 | % | 3.1 | % | ||||||||||
Leasing and advertising | 3,109 | 3,180 | (71 | ) | (2.2 | %) | 1.8 | % | |||||||||
Other on-site operating expenses (5) | 4,937 | 4,991 | (54 | ) | (1.1 | %) | 2.8 | % | |||||||||
Same store operating expenses | $ | 177,463 | $ | 172,382 | $ | 5,081 | 2.9 | % | 100.0 | % | |||||||
______________________________________________________________________________________________________
September YTD 2012 vs. September YTD 2011 | |||||||||||||||||
Same Store Operating Expenses | |||||||||||||||||
$ in thousands – 102,241 Same Store Apartment Units | |||||||||||||||||
% of Actual YTD 2012 Operating Expenses | |||||||||||||||||
Actual YTD 2012 | Actual YTD 2011 | $ Change | % Change | ||||||||||||||
Real estate taxes | $ | 150,745 | $ | 141,365 | $ | 9,380 | 6.6 | % | 29.8 | % | |||||||
On-site payroll (1) | 114,836 | 113,798 | 1,038 | 0.9 | % | 22.7 | % | ||||||||||
Utilities (2) | 76,423 | 77,136 | (713 | ) | (0.9 | %) | 15.1 | % | |||||||||
Repairs and maintenance (3) | 70,369 | 69,209 | 1,160 | 1.7 | % | 13.9 | % | ||||||||||
Property management costs (4) | 53,566 | 54,148 | (582 | ) | (1.1 | %) | 10.6 | % | |||||||||
Insurance | 15,955 | 14,906 | 1,049 | 7.0 | % | 3.2 | % | ||||||||||
Leasing and advertising | 8,382 | 9,224 | (842 | ) | (9.1 | %) | 1.7 | % | |||||||||
Other on-site operating expenses (5) | 15,240 | 14,723 | 517 | 3.5 | % | 3.0 | % | ||||||||||
Same store operating expenses | $ | 505,516 | $ | 494,509 | $ | 11,007 | 2.2 | % | 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 administrative costs such as office supplies, telephone and data charges and association and business licensing fees. | |||||||||||
3rd Quarter 2012 Earnings Release | 14 | |
Equity Residential | ||||||||||||||
Debt Summary as of September 30, 2012 | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Weighted Average Maturities (years) | ||||||||||||||
Weighted Average Rates (1) | ||||||||||||||
Amounts (1) | % of Total | |||||||||||||
Secured | $ | 3,948,115 | 42.4 | % | 4.95 | % | 7.3 | |||||||
Unsecured | 5,361,038 | 57.6 | % | 5.09 | % | 4.6 | ||||||||
Total | $ | 9,309,153 | 100.0 | % | 5.03 | % | 5.7 | |||||||
Fixed Rate Debt: | ||||||||||||||
Secured – Conventional | $ | 3,566,932 | 38.3 | % | 5.50 | % | 6.4 | |||||||
Unsecured – Public/Private | 4,550,999 | 48.9 | % | 5.70 | % | 5.4 | ||||||||
Fixed Rate Debt | 8,117,931 | 87.2 | % | 5.61 | % | 5.8 | ||||||||
Floating Rate Debt: | ||||||||||||||
Secured – Conventional | 30,641 | 0.3 | % | 3.35 | % | 2.0 | ||||||||
Secured – Tax Exempt | 350,542 | 3.8 | % | 0.22 | % | 17.9 | ||||||||
Unsecured – Public/Private | 803,039 | 8.6 | % | 1.67 | % | 0.2 | ||||||||
Unsecured – Revolving Credit Facility | 7,000 | 0.1 | % | 1.34 | % | 1.8 | ||||||||
Floating Rate Debt | 1,191,222 | 12.8 | % | 1.30 | % | 5.0 | ||||||||
Total | $ | 9,309,153 | 100.0 | % | 5.03 | % | 5.7 | |||||||
(1) Net of the effect of any derivative instruments. Weighted average rates are for the nine months ended September 30, 2012. | |||||||||||
Note: The Company capitalized interest of approximately $15.8 million and $5.9 million during the nine months ended September 30, 2012 and 2011, respectively. The Company capitalized interest of approximately $5.7 million and $2.2 million during the quarters ended September 30, 2012 and 2011, respectively. | |||||||||||
______________________________________________________________________________________________________
Debt Maturity Schedule as of September 30, 2012 | |||||||||||||||||||||
(Amounts in thousands) | |||||||||||||||||||||
Weighted Average Rates on Fixed Rate Debt (1) | Weighted Average Rates on Total Debt (1) | ||||||||||||||||||||
Fixed Rate (1) | Floating Rate (1) | ||||||||||||||||||||
Year | Total | % of Total | |||||||||||||||||||
2012 | $ | 225,280 | $ | 500,125 | $ | 725,405 | (2) | 7.8 | % | 5.51 | % | 2.20 | % | ||||||||
2013 | 267,888 | 303,548 | 571,436 | 6.1 | % | 6.69 | % | 4.84 | % | ||||||||||||
2014 | 564,302 | 29,022 | (3) | 593,324 | 6.4 | % | 5.31 | % | 5.19 | % | |||||||||||
2015 | 417,812 | — | 417,812 | 4.5 | % | 6.30 | % | 6.30 | % | ||||||||||||
2016 | 1,190,538 | — | 1,190,538 | 12.8 | % | 5.34 | % | 5.34 | % | ||||||||||||
2017 | 1,446,121 | 456 | 1,446,577 | 15.5 | % | 5.95 | % | 5.95 | % | ||||||||||||
2018 | 81,448 | 724 | 82,172 | 0.9 | % | 5.70 | % | 5.70 | % | ||||||||||||
2019 | 802,635 | 20,766 | 823,401 | 8.8 | % | 5.49 | % | 5.36 | % | ||||||||||||
2020 | 1,672,482 | 809 | 1,673,291 | 18.0 | % | 5.50 | % | 5.50 | % | ||||||||||||
2021 | 1,188,906 | 856 | 1,189,762 | 12.8 | % | 4.64 | % | 4.64 | % | ||||||||||||
2022+ | 233,862 | 338,604 | 572,466 | 6.2 | % | 6.75 | % | 3.33 | % | ||||||||||||
Premium/(Discount) | 26,657 | (3,688 | ) | 22,969 | 0.2 | % | N/A | N/A | |||||||||||||
Total | $ | 8,117,931 | $ | 1,191,222 | $ | 9,309,153 | 100.0 | % | 5.54 | % | 5.01 | % | |||||||||
(1) | Net of the effect of any derivative instruments. Weighted average rates are as of September 30, 2012. | ||||||||||||
(2) | In October 2012, the Company paid off the $222.1 million outstanding of its 5.500% public notes and its $500.0 million term loan facility, both at maturity. | ||||||||||||
(3) | Includes $7.0 million outstanding on the Company's unsecured revolving credit facility. As of September 30, 2012, there was approximately $1.71 billion available on this facility. | ||||||||||||
3rd Quarter 2012 Earnings Release | 15 | |
Equity Residential | |||||||||||||||
Unsecured Debt Summary as of September 30, 2012 | |||||||||||||||
(Amounts in thousands) | |||||||||||||||
Unamortized Premium/(Discount) | |||||||||||||||
Coupon Rate | Due Date | Face Amount | Net Balance | ||||||||||||
Fixed Rate Notes: | |||||||||||||||
5.500% | 10/01/12 | (1) | $ | 222,133 | $ | — | $ | 222,133 | |||||||
5.200% | 04/01/13 | (2) | 400,000 | (59 | ) | 399,941 | |||||||||
Fair Value Derivative Adjustments | (2) | (300,000 | ) | — | (300,000 | ) | |||||||||
5.250% | 09/15/14 | 500,000 | (120 | ) | 499,880 | ||||||||||
6.584% | 04/13/15 | 300,000 | (276 | ) | 299,724 | ||||||||||
5.125% | 03/15/16 | 500,000 | (184 | ) | 499,816 | ||||||||||
5.375% | 08/01/16 | 400,000 | (711 | ) | 399,289 | ||||||||||
5.750% | 06/15/17 | 650,000 | (2,416 | ) | 647,584 | ||||||||||
7.125% | 10/15/17 | 150,000 | (327 | ) | 149,673 | ||||||||||
4.750% | 07/15/20 | 600,000 | (3,548 | ) | 596,452 | ||||||||||
4.625% | 12/15/21 | 1,000,000 | (3,493 | ) | 996,507 | ||||||||||
7.570% | 08/15/26 | 140,000 | — | 140,000 | |||||||||||
4,562,133 | (11,134 | ) | 4,550,999 | ||||||||||||
Floating Rate Notes: | |||||||||||||||
04/01/13 | (2) | 300,000 | — | 300,000 | |||||||||||
Fair Value Derivative Adjustments | (2) | 3,039 | — | 3,039 | |||||||||||
Term Loan Facility | LIBOR+0.50% | 10/05/12 | (3)(4) | 500,000 | — | 500,000 | |||||||||
803,039 | — | 803,039 | |||||||||||||
Revolving Credit Facility: | LIBOR+1.15% | 07/13/14 | (3)(5) | 7,000 | — | 7,000 | |||||||||
Total Unsecured Debt | $ | 5,372,172 | $ | (11,134 | ) | $ | 5,361,038 | ||||||||
(1) | On October 1, 2012, the Company paid off its 5.500% public notes at maturity. | ||||||||||
(2) | Fair value interest rate swaps convert $300.0 million of the 5.200% notes due April 1, 2013 to a floating interest rate. | ||||||||||
(3) | Facilities are private. All other unsecured debt is public. | ||||||||||
(4) | On October 5, 2012, the Company paid off its $500.0 million term loan facility at maturity. | ||||||||||
(5) | As of September 30, 2012, there was approximately $1.71 billion available on the Company's unsecured revolving credit facility. | ||||||||||
3rd Quarter 2012 Earnings Release | 16 | |
Equity Residential | ||||||
Selected Unsecured Public Debt Covenants | ||||||
September 30, 2012 | June 30, 2012 | |||||
Total Debt to Adjusted Total Assets (not to exceed 60%) | 43.2 | % | 43.8 | % | ||
Secured Debt to Adjusted Total Assets (not to exceed 40%) | 18.3 | % | 18.7 | % | ||
Consolidated Income Available for Debt Service to | ||||||
Maximum Annual Service Charges | ||||||
(must be at least 1.5 to 1) | 2.95 | 2.85 | ||||
Total Unsecured Assets to Unsecured Debt | 286.5 | % | 280.0 | % | ||
(must be at least 150%) | ||||||
These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP. | ||||||
3rd Quarter 2012 Earnings Release | 17 | |
Equity Residential | |||||||||||||||||
Capital Structure as of September 30, 2012 | |||||||||||||||||
(Amounts in thousands except for share/unit and per share amounts) | |||||||||||||||||
Secured Debt | $ | 3,948,115 | 42.4 | % | |||||||||||||
Unsecured Debt | 5,361,038 | 57.6 | % | ||||||||||||||
Total Debt | 9,309,153 | 100.0 | % | 33.7 | % | ||||||||||||
Common Shares (includes Restricted Shares) | 302,674,716 | 95.5 | % | ||||||||||||||
Units (includes OP Units and LTIP Units) | 14,399,790 | 4.5 | % | ||||||||||||||
Total Shares and Units | 317,074,506 | 100.0 | % | ||||||||||||||
Common Share Price at September 30, 2012 | $ | 57.53 | |||||||||||||||
18,241,296 | 99.7 | % | |||||||||||||||
Perpetual Preferred Equity (see below) | 50,000 | 0.3 | % | ||||||||||||||
Total Equity | 18,291,296 | 100.0 | % | 66.3 | % | ||||||||||||
Total Market Capitalization | $ | 27,600,449 | 100.0 | % | |||||||||||||
__________________________________________________________________________________________________________________________________________
Perpetual Preferred Equity as of September 30, 2012 | |||||||||||||||||
(Amounts in thousands except for share and per share amounts) | |||||||||||||||||
Annual Dividend Per Share | Annual Dividend Amount | ||||||||||||||||
Redemption Date | Outstanding Shares | Liquidation Value | |||||||||||||||
Series | |||||||||||||||||
Preferred Shares: | |||||||||||||||||
8.29% Series K | 12/10/26 | 1,000,000 | $ | 50,000 | $ | 4.145 | $ | 4,145 | |||||||||
Total Perpetual Preferred Equity | 1,000,000 | $ | 50,000 | $ | 4,145 | ||||||||||||
Note: The Series N Preferred Shares ($150.0 million liquidation value) were redeemed on August 20, 2012. | |||||||||||||||||
3rd Quarter 2012 Earnings Release | 18 | |
Equity Residential | ||||||||||||
Common Share and Unit | ||||||||||||
Weighted Average Amounts Outstanding | ||||||||||||
YTD Q312 | YTD Q311 | Q312 | Q311 | |||||||||
Weighted Average Amounts Outstanding for Net Income Purposes: | ||||||||||||
Common Shares - basic | 300,116,136 | 294,473,642 | 301,336,325 | 295,830,970 | ||||||||
Shares issuable from assumed conversion/vesting of: | ||||||||||||
- OP Units | 13,815,887 | 13,231,470 | 14,176,635 | 13,053,174 | ||||||||
- long-term compensation shares/units | 3,332,695 | 4,203,347 | 3,260,210 | 3,960,089 | ||||||||
Total Common Shares and Units - diluted | 317,264,718 | 311,908,459 | 318,773,170 | 312,844,233 | ||||||||
Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes: | ||||||||||||
Common Shares - basic | 300,116,136 | 294,473,642 | 301,336,325 | 295,830,970 | ||||||||
OP Units - basic | 13,815,887 | 13,231,470 | 14,176,635 | 13,053,174 | ||||||||
Total Common Shares and OP Units - basic | 313,932,023 | 307,705,112 | 315,512,960 | 308,884,144 | ||||||||
Shares issuable from assumed conversion/vesting of: | ||||||||||||
- long-term compensation shares/units | 3,332,695 | 4,203,347 | 3,260,210 | 3,960,089 | ||||||||
Total Common Shares and Units - diluted | 317,264,718 | 311,908,459 | 318,773,170 | 312,844,233 | ||||||||
Period Ending Amounts Outstanding: | ||||||||||||
Common Shares (includes Restricted Shares) | 302,674,716 | 296,620,833 | ||||||||||
Units (includes OP Units and LTIP Units) | 14,399,790 | 13,509,488 | ||||||||||
Total Shares and Units | 317,074,506 | 310,130,321 | ||||||||||
3rd Quarter 2012 Earnings Release | 19 | |
Equity Residential | ||||||||||||||||
Partially Owned Entities as of September 30, 2012 | ||||||||||||||||
(Amounts in thousands except for project and apartment unit amounts) | ||||||||||||||||
Consolidated | Unconsolidated | |||||||||||||||
Development Projects | ||||||||||||||||
Held for and/or Under Development | Institutional Joint Ventures (4) | |||||||||||||||
Other | Total | |||||||||||||||
Total projects (1) | — | 19 | 19 | — | ||||||||||||
Total apartment units (1) | — | 3,475 | 3,475 | — | ||||||||||||
Operating information for the nine months ended 9/30/12 (at 100%): | ||||||||||||||||
Operating revenue | $ | — | $ | 46,432 | $ | 46,432 | $ | 2 | ||||||||
Operating expenses | 121 | 14,789 | 14,910 | 112 | ||||||||||||
Net operating (loss) income | (121 | ) | 31,643 | 31,522 | (110 | ) | ||||||||||
Depreciation | — | 11,516 | 11,516 | — | ||||||||||||
General and administrative/other | 93 | 39 | 132 | — | ||||||||||||
Operating (loss) income | (214 | ) | 20,088 | 19,874 | (110 | ) | ||||||||||
Interest and other income | 2 | 100 | 102 | — | ||||||||||||
Other expenses | (248 | ) | — | (248 | ) | — | ||||||||||
Interest: | ||||||||||||||||
Expense incurred, net | — | (7,040 | ) | (7,040 | ) | — | ||||||||||
Amortization of deferred financing costs | — | (125 | ) | (125 | ) | — | ||||||||||
(Loss) income before income and other taxes | (460 | ) | 13,023 | 12,563 | (110 | ) | ||||||||||
Income and other tax (expense) benefit | (25 | ) | (75 | ) | (100 | ) | — | |||||||||
Net (loss) income | $ | (485 | ) | $ | 12,948 | $ | 12,463 | $ | (110 | ) | ||||||
Debt - Secured (2): | ||||||||||||||||
EQR Ownership (3) | $ | — | $ | 159,068 | $ | 159,068 | $ | 10,187 | ||||||||
Noncontrolling Ownership | — | 41,269 | 41,269 | 40,747 | ||||||||||||
Total (at 100%) | $ | — | $ | 200,337 | $ | 200,337 | $ | 50,934 | ||||||||
(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 - Unconsolidated on page 21 for further information. | ||||||||||
3rd Quarter 2012 Earnings Release | 20 | |
Equity Residential | |||||||||||||||||||||||||||||||||||||
Development and Lease-Up Projects as of September 30, 2012 | |||||||||||||||||||||||||||||||||||||
(Amounts in thousands except for project and apartment unit amounts) | |||||||||||||||||||||||||||||||||||||
Projects | Location | No. of Apartment Units | Total Capital Cost (1) | Total Book Value to Date | Total Book Value Not Placed in Service | Total Debt | Percentage Completed | Percentage Leased | Percentage Occupied | Estimated Completion Date | Estimated Stabilization Date | ||||||||||||||||||||||||||
Consolidated | |||||||||||||||||||||||||||||||||||||
Projects Under Development - Wholly Owned: | |||||||||||||||||||||||||||||||||||||
Jia (formerly Chinatown Gateway) | Los Angeles, CA | 280 | $ | 92,920 | $ | 47,420 | $ | 47,420 | $ | — | 32 | % | — | — | Q3 2013 | Q2 2015 | |||||||||||||||||||||
Westgate II | Pasadena, CA | 252 | 125,293 | 55,711 | 55,711 | — | 17 | % | — | — | Q1 2014 | Q1 2015 | |||||||||||||||||||||||||
The Madison | Alexandria, VA | 360 | 115,072 | 41,245 | 41,245 | — | 21 | % | — | — | Q1 2014 | Q2 2015 | |||||||||||||||||||||||||
Market Street Landing | Seattle, WA | 287 | 90,024 | 32,102 | 32,102 | — | 23 | % | — | — | Q1 2014 | Q3 2015 | |||||||||||||||||||||||||
Westgate III | Pasadena, CA | 88 | 54,037 | 17,776 | 17,776 | — | 1 | % | — | — | Q2 2014 | Q1 2015 | |||||||||||||||||||||||||
Projects Under Development - Wholly Owned | 1,267 | 477,346 | 194,254 | 194,254 | — | ||||||||||||||||||||||||||||||||
Projects Under Development | 1,267 | 477,346 | 194,254 | 194,254 | — | ||||||||||||||||||||||||||||||||
Completed Not Stabilized - Wholly Owned (2): | |||||||||||||||||||||||||||||||||||||
Ten23 (formerly 500 West 23rd Street) (3) | New York, NY | 111 | 55,555 | 55,048 | — | — | 99 | % | 99 | % | Completed | Q4 2012 | |||||||||||||||||||||||||
The Savoy at Dayton Station III (formerly Savoy III) | Aurora, CO | 168 | 23,856 | 21,288 | — | — | 77 | % | 74 | % | Completed | Q1 2013 | |||||||||||||||||||||||||
2201 Pershing Drive | Arlington, VA | 188 | 64,242 | 51,961 | — | — | 48 | % | 8 | % | Completed | Q3 2013 | |||||||||||||||||||||||||
Projects Completed Not Stabilized - Wholly Owned | 467 | 143,653 | 128,297 | — | — | ||||||||||||||||||||||||||||||||
Projects Completed Not Stabilized | 467 | 143,653 | 128,297 | — | — | ||||||||||||||||||||||||||||||||
Completed and Stabilized During the Quarter - Wholly Owned: | |||||||||||||||||||||||||||||||||||||
88 Hillside (4) | Daly City, CA | 95 | 39,374 | 39,374 | — | — | 100 | % | 100 | % | Completed | Stabilized | |||||||||||||||||||||||||
Projects Completed and Stabilized During the Quarter - Wholly Owned | 95 | 39,374 | 39,374 | — | — | ||||||||||||||||||||||||||||||||
Projects Completed and Stabilized During the Quarter | 95 | 39,374 | 39,374 | — | — | ||||||||||||||||||||||||||||||||
Total Consolidated Projects | 1,829 | $ | 660,373 | $ | 361,925 | $ | 194,254 | $ | — | ||||||||||||||||||||||||||||
Land Held for Development (5) | N/A | N/A | $ | 404,846 | $ | 404,846 | $ | — | |||||||||||||||||||||||||||||
Unconsolidated | |||||||||||||||||||||||||||||||||||||
Projects Under Development - Unconsolidated: | |||||||||||||||||||||||||||||||||||||
Nexus Sawgrass (formerly Sunrise Village) (6) | Sunrise, FL | 501 | $ | 78,212 | $ | 50,551 | $ | 50,551 | $ | 19,119 | 63 | % | 3 | % | — | Q3 2013 | Q3 2014 | ||||||||||||||||||||
Domain (6) | San Jose, CA | 444 | 154,570 | 93,445 | 93,445 | 31,815 | 51 | % | — | — | Q4 2013 | Q4 2015 | |||||||||||||||||||||||||
Projects Under Development - Unconsolidated | 945 | 232,782 | 143,996 | 143,996 | 50,934 | ||||||||||||||||||||||||||||||||
Projects Under Development | 945 | 232,782 | 143,996 | 143,996 | 50,934 | ||||||||||||||||||||||||||||||||
Total Unconsolidated Projects | 945 | $ | 232,782 | $ | 143,996 | $ | 143,996 | $ | 50,934 | ||||||||||||||||||||||||||||
Total Capital Cost (1) | Q3 2012 NOI | ||||||||||||||||||||||||||||||||||||
NOI CONTRIBUTION FROM CONSOLIDATED DEVELOPMENT PROJECTS | |||||||||||||||||||||||||||||||||||||
Projects Under Development | $ | 477,346 | $ | (60 | ) | ||||||||||||||||||||||||||||||||
Completed Not Stabilized | 143,653 | 735 | |||||||||||||||||||||||||||||||||||
Completed and Stabilized During the Quarter | 39,374 | 515 | |||||||||||||||||||||||||||||||||||
Total Consolidated Development NOI Contribution | $ | 660,373 | $ | 1,190 | |||||||||||||||||||||||||||||||||
(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) | 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. | ||||||||||||||||||||||||||||||||||||
(3) | Ten23 - The land under this development is subject to a long term ground lease. | ||||||||||||||||||||||||||||||||||||
(4) | The Company acquired this project prior to stabilization and has completed lease-up activities. | ||||||||||||||||||||||||||||||||||||
(5) | Includes $60.5 million funded by Toll Brothers (NYSE: TOL) for their allocated share of a vacant land parcel at 400 Park Avenue South in New York City. | ||||||||||||||||||||||||||||||||||||
(6) | These development projects are owned 20% by the Company and 80% by an institutional partner in two separate unconsolidated joint ventures. Total project costs are approximately $232.8 million and construction will be predominantly funded with two separate long-term, non-recourse secured loans from the partner. The Company is responsible for constructing the projects and has given certain construction cost overrun guarantees but currently has no further funding obligations. Nexus Sawgrass has a maximum debt commitment of $47.1 million and a current unconsolidated outstanding balance of $19.1 million; the loan bears interest at 5.60% and matures January 1, 2021. Domain has a maximum debt commitment of $98.6 million and a current unconsolidated outstanding balance of $31.8 million; the loan bears interest at 5.75% and matures January 1, 2022. | ||||||||||||||||||||||||||||||||||||
3rd Quarter 2012 Earnings Release | 21 | |
Equity Residential | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands except for apartment unit and per apartment unit amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repairs and Maintenance Expenses | Capital Expenditures to Real Estate | Total Expenditures | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Apartment Units (1) | Expense (2) | Avg. Per Apartment Unit | Payroll (3) | Avg. Per Apartment Unit | Total | Avg. Per Apartment Unit | Replacements (4) | Avg. Per Apartment Unit | Building Improvements (5) | Avg. Per Apartment Unit | Total | Avg. Per Apartment Unit | Grand Total | Avg. Per Apartment Unit | |||||||||||||||||||||||||||||||||||||||||||||
Same Store Properties (6) | 102,241 | $ | 70,369 | $ | 688 | $ | 57,831 | $ | 566 | $ | 128,200 | $ | 1,254 | $ | 52,719 | $ | 516 | $ | 39,723 | $ | 388 | $ | 92,442 | $ | 904 | (9) | $ | 220,642 | $ | 2,158 | |||||||||||||||||||||||||||||
Non-Same Store Properties (7) | 11,754 | 9,815 | 942 | 5,216 | 501 | 15,031 | 1,443 | 5,572 | 535 | 15,594 | 1,496 | 21,166 | 2,031 | 36,197 | 3,474 | ||||||||||||||||||||||||||||||||||||||||||||
Other (8) | — | 1,682 | 2,690 | 4,372 | 636 | 291 | 927 | 5,299 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 113,995 | $ | 81,866 | $ | 65,737 | $ | 147,603 | $ | 58,927 | $ | 55,608 | $ | 114,535 | $ | 262,138 | ||||||||||||||||||||||||||||||||||||||||||||
(1) | Total Apartment Units - Excludes 4,991 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 $26.0 million spent during the nine months ended September 30, 2012 on apartment unit renovations/rehabs (primarily kitchens and baths) on 3,497 apartment units (equating to about $7,400 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. In 2012, the Company expects to spend approximately $35.0 million rehabbing 4,600 apartment units (equating to about $7,600 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, 2011, less properties subsequently sold. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(7) | Non-Same Store Properties - Primarily includes all properties acquired during 2011 and 2012, plus any properties in lease-up and not stabilized as of January 1, 2011. Per apartment unit amounts are based on a weighted average of 10,418 apartment units. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(8) | Other - Primarily includes expenditures for properties sold during the period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(9) | For 2012, the Company estimates that it will spend approximately $1,200 per apartment unit of capital expenditures for its same store properties inclusive of apartment unit renovation/rehab costs, or $850 per apartment unit excluding apartment unit renovation/rehab costs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3rd Quarter 2012 Earnings Release | 22 | |
Equity Residential | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
(Amounts in thousands) | ||||||||||||||||
Nine Months Ended September 30, | Quarter Ended September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
REVENUES | ||||||||||||||||
Rental income | $ | 27,764 | $ | 140,541 | $ | 4,014 | $ | 21,850 | ||||||||
Total revenues | 27,764 | 140,541 | 4,014 | 21,850 | ||||||||||||
EXPENSES (1) | ||||||||||||||||
Property and maintenance | 8,420 | 60,583 | 1,611 | 7,125 | ||||||||||||
Real estate taxes and insurance | 2,010 | 10,995 | 309 | 2,125 | ||||||||||||
Property management | 211 | 198 | 70 | 66 | ||||||||||||
Depreciation | 7,602 | 28,967 | 1,428 | 5,762 | ||||||||||||
General and administrative | 71 | 49 | 31 | 2 | ||||||||||||
Total expenses | 18,314 | 100,792 | 3,449 | 15,080 | ||||||||||||
Discontinued operating income | 9,450 | 39,749 | 565 | 6,770 | ||||||||||||
Interest and other income | 79 | 150 | 34 | 46 | ||||||||||||
Interest (2): | ||||||||||||||||
Expense incurred, net | (1,381 | ) | (4,086 | ) | (341 | ) | (942 | ) | ||||||||
Amortization of deferred financing costs | (65 | ) | (869 | ) | (9 | ) | (71 | ) | ||||||||
Income and other tax (expense) benefit | 48 | 31 | (1 | ) | 93 | |||||||||||
Discontinued operations | 8,131 | 34,975 | 248 | 5,896 | ||||||||||||
Net gain on sales of discontinued operations | 307,447 | 759,100 | 103,394 | 76,864 | ||||||||||||
Discontinued operations, net | $ | 315,578 | $ | 794,075 | $ | 103,642 | $ | 82,760 | ||||||||
(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. | ||||||||||||||||
3rd Quarter 2012 Earnings Release | 23 | |
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 Q3 2012 | ||||||||||
to Actual Q3 2012 | ||||||||||
Amounts | Per Share | |||||||||
Guidance Q3 2012 Normalized FFO - Diluted (2) (3) | $ | 231,552 | $ | 0.726 | ||||||
Property NOI | 283 | 0.001 | ||||||||
Other | 684 | 0.002 | ||||||||
Actual Q3 2012 Normalized FFO - Diluted (2) (3) | $ | 232,519 | $ | 0.729 | ||||||
__________________________________________________________________________________________________________________________________________
Non-Comparable Items – Adjustments from FFO to Normalized FFO (2) (3) | ||||||||||||||||||||||||
Nine Months Ended September 30, | Quarter Ended September 30, | |||||||||||||||||||||||
2012 | 2011 | Variance | 2012 | 2011 | Variance | |||||||||||||||||||
Impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Asset impairment and valuation allowances | — | — | — | — | — | — | ||||||||||||||||||
Property acquisition costs (other expenses) (A) | 8,757 | 5,266 | 3,491 | 1,428 | 1,514 | (86 | ) | |||||||||||||||||
Write-off of pursuit costs (other expenses) | 6,141 | 4,052 | 2,089 | 2,576 | 1,014 | 1,562 | ||||||||||||||||||
Property acquisition costs and write-off of pursuit costs (other expenses) | 14,898 | 9,318 | 5,580 | 4,004 | 2,528 | 1,476 | ||||||||||||||||||
Prepayment premiums/penalties (interest expense) | 272 | — | 272 | — | — | — | ||||||||||||||||||
Write-off of unamortized deferred financing costs (interest expense) | 2,111 | 4,347 | (2,236 | ) | 964 | 2,233 | (1,269 | ) | ||||||||||||||||
Write-off of unamortized (premiums)/discounts/OCI (interest expense) | (42 | ) | (89 | ) | 47 | — | (89 | ) | 89 | |||||||||||||||
Non-cash convertible debt discount (interest expense) | — | 4,992 | (4,992 | ) | — | 1,102 | (1,102 | ) | ||||||||||||||||
Unrealized loss due to ineffectiveness of forward starting swaps (interest expense) | — | — | — | — | (2,569 | ) | 2,569 | |||||||||||||||||
Premium on redemption of Preferred Shares (B) | 5,150 | — | 5,150 | 5,150 | — | 5,150 | ||||||||||||||||||
Debt extinguishment (gains) losses, including prepayment penalties, preferred share redemptions and non-cash convertible debt discounts | 7,491 | 9,250 | (1,759 | ) | 6,114 | 677 | 5,437 | |||||||||||||||||
Net (gain) loss on sales of land parcels | — | (4,217 | ) | 4,217 | — | — | — | |||||||||||||||||
Net incremental (gain) on sales of condominium units | (49 | ) | (2,050 | ) | 2,001 | — | (935 | ) | 935 | |||||||||||||||
Income and other tax expense (benefit) - Condo sales | (92 | ) | (66 | ) | (26 | ) | — | (92 | ) | 92 | ||||||||||||||
(Gain) on sale of Equity Corporate Housing (ECH), net of severance | (350 | ) | (221 | ) | (129 | ) | — | 2 | (2 | ) | ||||||||||||||
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) | (491 | ) | (6,554 | ) | 6,063 | — | (1,025 | ) | 1,025 | |||||||||||||||
Insurance/litigation settlement expense (other expenses) | 4,714 | — | 4,714 | — | — | — | ||||||||||||||||||
Prospect Towers garage insurance proceeds (real estate taxes and insurance) | (3,467 | ) | (2,725 | ) | (742 | ) | — | (1,125 | ) | 1,125 | ||||||||||||||
Archstone termination fees (interest and other income) | (70,000 | ) | — | (70,000 | ) | (70,000 | ) | — | (70,000 | ) | ||||||||||||||
Forfeited deposits (interest and other income) | — | (500 | ) | 500 | — | — | — | |||||||||||||||||
Termination of royalty participation in LRO (interest and other income) | — | (4,537 | ) | 4,537 | — | (4,537 | ) | 4,537 | ||||||||||||||||
Other (other expenses) | 1,066 | — | 1,066 | 90 | — | 90 | ||||||||||||||||||
Other miscellaneous non-comparable items | (67,687 | ) | (7,762 | ) | (59,925 | ) | (69,910 | ) | (5,662 | ) | (64,248 | ) | ||||||||||||
Non-comparable items – Adjustments from FFO to Normalized FFO (2) (3) | $ | (45,789 | ) | $ | 4,252 | $ | (50,041 | ) | $ | (59,792 | ) | $ | (3,482 | ) | $ | (56,310 | ) | |||||||
(A) For the nine months and quarter ended September 30, 2012, includes $1.9 million and $0.1 million, respectively, of transaction costs related to the potential Archstone transaction. | ||||||||||||||||||||||||
(B) Includes $5.13 million of original issuance costs previously deferred. | ||||||||||||||||||||||||
Note: See page 26 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO. | ||||||||||||||||||||||||
3rd Quarter 2012 Earnings Release | 24 | |
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. | |||||
2012 Normalized FFO Guidance (per share diluted) | |||||
Q4 2012 | 2012 | ||||
Expected Normalized FFO (2) (3) | $0.72 to $0.76 | $2.74 to $2.78 | |||
2012 Same Store Assumptions | |||||
Physical occupancy | 95.3% | ||||
Revenue change | 5.6% | ||||
Expense change | 2.3% | ||||
NOI change | 7.5% | ||||
(Note: 30 basis point change in NOI percentage = $0.01 per share change in EPS/FFO/Normalized FFO) | |||||
2012 Transaction Assumptions | |||||
Consolidated rental acquisitions | $1.1 billion | ||||
Consolidated rental dispositions | $1.1 billion | ||||
Capitalization rate spread | 150 basis points | ||||
2012 Debt Assumptions (see Note) | |||||
Weighted average debt outstanding | $9.4 billion to $9.5 billion | ||||
Weighted average interest rate (reduced for capitalized interest) | 4.87% | ||||
Interest expense | $458.0 million to $463.0 million | ||||
2012 Other Guidance Assumptions (see Note) | |||||
General and administrative expense | $47.8 million | ||||
Interest and other income | $0.7 million | ||||
Income and other tax expense | $1.0 million | ||||
Equity ATM share offerings | No additional amounts budgeted | ||||
Weighted average Common Shares and Units - Diluted | 318.0 million | ||||
(Note: Guidance assumes no preferred share or debt offerings during 2012) | |||||
Note: 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, the write-off of pursuit costs and the $150.0 million in Archstone-related termination fees that the Company received in the second quarter of 2012, are not included in the estimates provided on this page. See page 26 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO. | |||||
3rd Quarter 2012 Earnings Release | 25 | |
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 6, 24 and 25 | ||||||||||||
Expected Q4 2012 Per Share | Expected 2012 Per Share | |||||||||||
Expected Q3 2012 | ||||||||||||
Amounts | Per Share | |||||||||||
Expected Earnings - Diluted (5) | $ | 262,520 | $ | 0.823 | $1.28 to $1.32 | $2.81 to $2.85 | ||||||
Add: Expected depreciation expense | 177,684 | 0.557 | 0.52 | 2.13 | ||||||||
Less: Expected net gain on sales (5) | (155,290 | ) | (0.487 | ) | (0.86) | (1.83) | ||||||
Expected FFO - Diluted (1) (3) | 284,914 | 0.893 | 0.94 to 0.98 | 3.11 to 3.15 | ||||||||
Asset impairment and valuation allowances | — | — | — | — | ||||||||
Property acquisition costs and write-off of pursuit costs (other expenses) | 9,867 | 0.031 | 0.03 | 0.07 | ||||||||
Debt extinguishment (gains) losses, including prepayment penalties, preferred share redemptions and non-cash convertible debt discounts | 6,553 | 0.021 | — | 0.02 | ||||||||
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) | 3 | — | — | — | ||||||||
Other miscellaneous non-comparable items | (69,785 | ) | (0.219 | ) | (0.25) | (0.46) | ||||||
Expected Normalized FFO - Diluted (2) (3) | $ | 231,552 | $ | 0.726 | $0.72 to $0.76 | $2.74 to $2.78 | ||||||
Definitions and Footnotes for Pages 6, 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 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 (other expenses); | |||||||||
• 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 10 | ||||||||||||||||
The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the September YTD 2012 and Third Quarter 2012 Same Store Properties: | ||||||||||||||||
Nine Months Ended September 30, | Quarter Ended September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating income | $ | 489,790 | $ | 395,750 | $ | 184,127 | $ | 144,814 | ||||||||
Adjustments: | ||||||||||||||||
Non-same store operating results | (109,658 | ) | (32,972 | ) | (29,085 | ) | (5,074 | ) | ||||||||
Fee and asset management revenue | (7,328 | ) | (6,682 | ) | (3,052 | ) | (2,928 | ) | ||||||||
Fee and asset management expense | 3,595 | 3,207 | 1,108 | 1,250 | ||||||||||||
Depreciation | 509,338 | 467,416 | 167,406 | 159,691 | ||||||||||||
General and administrative | 37,178 | 32,462 | 10,096 | 10,121 | ||||||||||||
Same store NOI | $ | 922,915 | $ | 859,181 | $ | 330,600 | $ | 307,874 | ||||||||
3rd Quarter 2012 Earnings Release | 26 | |