Equity Residential Reports Strong Results

Same Store Revenues Increase 4.1% in 3Q and 4.7% YTD

Same Store NOI Increases 4.5% in 3Q and 5.4% YTD

Business Wire

CHICAGO--(BUSINESS WIRE)--

Equity Residential (EQR) today reported results for the quarter and nine months ended September 30, 2013. All per share results are reported as available to common shares on a diluted basis.

“For 2013, we currently expect to deliver same store revenue growth of 4.5%, very much in line with our original expectations,” said David J. Neithercut, Equity Residential’s President and CEO. “In the long term, favorable demographics will generate demand for housing in our markets that will not be met with new supply and we should enjoy strong growth for many years. In the short term, new supply will produce modest negative revenue growth in Washington, D.C., partially offsetting continued strong growth across many of our other markets and resulting in expected portfolio wide same store revenue growth of 3% to 4% in 2014.”

Third Quarter 2013

FFO (Funds from Operations), as defined by the National Association of Real Estate Investment Trusts (NAREIT), for the third quarter of 2013 was $0.71 per share compared to $0.92 per share in the third quarter of 2012. The difference is due primarily to the $70.0 million Archstone termination fee that the company recognized in the third quarter of 2012.

For the third quarter of 2013, the company reported Normalized FFO of $0.73 per share compared to $0.73 per share in the same period of 2012. The following items impacted Normalized FFO per share in the quarter:

  • the positive impact of approximately $0.04 per share from higher same store net operating income (NOI);
  • the positive impact of approximately $0.28 per share from the Archstone properties, offset by the negative impact of approximately $0.28 per share from 2012 and 2013 disposition activity and common share issuance in connection with the company’s purchase of Archstone; and
  • the negative impact of approximately $0.04 per share from higher interest expense, general and administrative expenses 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. Merger expenses and prepayment penalties are not included in the company’s Normalized FFO. A reconciliation and definition of Normalized FFO are provided on pages 26 and 29 of this release and the company has included guidance for Normalized FFO on page 27 of this release.

For the third quarter of 2013, the company reported earnings of $1.05 per share compared to $0.72 per share in the third quarter of 2012. The difference is due primarily to higher gains from property sales in the third quarter of 2013, partially offset by higher depreciation as a result of the Archstone acquisition, as well as the termination fee and other items discussed above.

Nine Months Ended September 30, 2013

FFO for the nine months ended September 30, 2013 was $1.68 per share compared to $2.16 per share in the same period of 2012. The difference is due primarily to merger-related expenses and prepayment penalties incurred in the first nine months of 2013 in connection with the company’s acquisition of Archstone, as well as the termination fee described above.

For the nine months ended September 30, 2013, the company reported Normalized FFO of $2.08 per share compared to $2.02 per share in the same period of 2012.

For the nine months ended September 30, 2013, the company reported earnings of $4.87 per share compared to $1.52 per share in the same period of 2012. The difference is due primarily to higher gains from property sales during 2013, partially offset by higher depreciation as a result of the Archstone acquisition, as well as the termination fee and other items described above.

Same Store Results

On a same store third quarter to third quarter comparison, which includes 82,553 apartment units, revenues increased 4.1%, expenses increased 3.1% and NOI increased 4.5%.

On a same store sequential third quarter to second quarter comparison, which includes 101,820 apartment units, revenues increased 1.5%, expenses increased 2.2% and NOI increased 1.2%. The company’s sequential same store pool of assets includes 18,448 apartment units the company acquired in the Archstone transaction. The acquired Archstone properties performed in line with both the company’s underwriting expectations and its comparable properties in the same markets.

On a same store nine-month to nine-month comparison, which includes 81,099 apartment units, revenues increased 4.7%, expenses increased 3.3% and NOI increased 5.4%.

Acquisitions/Dispositions

The company did not acquire any properties or land sites in the third quarter.

During the first nine months of 2013, the company acquired 77 properties, consisting of 22,103 apartment units. The company does not expect to acquire any operating assets in the fourth quarter.

During the third quarter, the company sold 10 apartment properties, consisting of 4,131 apartment units, for an aggregate sale price of $657.6 million at a weighted average cap rate of 5.9%. These sales, excluding one Archstone asset that was sold during the quarter, generated an unlevered internal rate of return (IRR), inclusive of management costs, of 11.1%.

Also during the quarter, the company sold two land parcels for an aggregate sale price of $44.3 million.

During the first nine months of 2013, the company sold 92 apartment properties, consisting of 28,328 apartment units, for an aggregate sale price of $4.36 billion at a weighted average cap rate of 6.0%. These sales, excluding three Archstone assets that were sold shortly after their acquisition, generated an unlevered IRR, inclusive of management costs, of 10.0%.

Please see page nine of this release for comparative portfolio summaries for the end of the fourth quarter 2012 and the end of the third quarter 2013.

Capital Markets Activities

On October 1, 2013, the company used cash on hand from dispositions to repay a $963.5 million secured loan that it assumed in conjunction with the Archstone acquisition. This loan was set to mature in November 2014 and carried a cash interest rate of 5.88% and a GAAP interest rate of 3.45% due to the amortization of the Archstone-related debt premium.

The company anticipates closing a new $800 million secured loan from a large insurance company in the fourth quarter of 2013. The loan, which has been committed to by the company and the lender, has a 10 year term, is interest only and carries a fixed interest rate of 4.21%. The company expects to simultaneously use the loan proceeds to repay $825 million of a $1.27 billion secured loan that the company assumed as part of the Archstone transaction. The approximately $440 million balance will remain outstanding, continue to mature in November 2017 and continue to carry a cash interest rate of 6.26% and a GAAP interest rate of 3.58% due to the amortization of the Archstone-related debt premium.

The company expects to incur cash prepayment costs of approximately $150 million and a charge to earnings and FFO of approximately $43 million in the fourth quarter, which is reflected in our revised guidance below. The difference is due to the write off of Archstone-related debt premiums. Normalized FFO will not be impacted by this charge.

Assuming that these transactions occur as expected, the company will have locked in an attractive piece of long term debt and substantially extended the duration of its debt maturities as well as reduced its 2017 maturities as a percentage of outstanding debt.

Fourth Quarter 2013 Guidance

The company has established a Normalized FFO guidance range of $0.75 to $0.77 per share for the fourth quarter of 2013. The difference between the company’s third quarter 2013 Normalized FFO of $0.73 per share and the midpoint of the fourth quarter guidance range of $0.76 per share is due primarily to:

  • a positive impact of approximately $0.02 per share from higher same store NOI offset by approximately $0.02 from dilution from 2013 transaction activity and other items; and
  • a positive impact of approximately $0.03 per share from lower total financing costs.

Full Year 2013 Guidance

The company has revised its guidance for its full year 2013 same store operating performance, transactions and Normalized FFO results as well as other items listed on page 27 of this release. Revised full year same store, transactions and Normalized FFO guidance are listed below:

   

Previous

Revised

Same store:
Physical occupancy 95.3% 95.4%
Revenue change 4.4% to 4.6% 4.5%
Expense change 3.0% to 3.5% 3.3%
NOI change 5.0% to 5.25% 5.1%
 
Acquisitions
(excluding Archstone): $100 million $100 million
Dispositions: $4.1 billion $4.4 billion
Cap Rate Spread: 110 basis points 110 basis points
 
Normalized FFO per share: $2.80 to $2.85 $2.83 to $2.85
 

Fourth Quarter 2013 Earnings and Conference Call

Equity Residential expects to announce fourth quarter and full year 2013 results on Tuesday, February 4, 2014 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, February 5, 2014.

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 109,795 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 31, 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)
 
Nine Months Ended September 30, Quarter Ended September 30,
2013 2012 2013 2012
REVENUES
Rental income $ 1,749,374 $ 1,295,431 $ 626,880 $ 448,647
Fee and asset management   7,399     7,328     2,566     3,052  
Total revenues   1,756,773     1,302,759     629,446     451,699  
 
EXPENSES
Property and maintenance 333,202 254,009 119,632 86,682
Real estate taxes and insurance 218,777 154,633 76,255 53,064
Property management 63,395 62,769 18,875 18,493
Fee and asset management 4,739 3,595 1,516 1,108
Depreciation 798,121 422,148 277,336 139,337
General and administrative   47,018     37,162     14,438     10,083  
Total expenses   1,465,252     934,316     508,052     308,767  
 
Operating income 291,521 368,443 121,394 142,932
 
Interest and other income 1,320 70,514 816 70,087
Other expenses (7,530 ) (18,587 ) (3,986 ) (3,984 )
Merger expenses (19,741 ) (1,921 ) (182 ) (87 )
Interest:
Expense incurred, net (437,452 ) (345,476 ) (120,035 ) (113,222 )
Amortization of deferred financing costs   (15,636 )   (10,265 )   (4,335 )   (3,320 )
(Loss) income before income and other taxes, (loss) from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entities and land parcels and discontinued operations (187,518 ) 62,708 (6,328 ) 92,406
Income and other tax (expense) benefit (1,326 ) (602 ) (493 ) (222 )
(Loss) from investments in unconsolidated entities due to operations (2,984 ) (3 ) (1,454 ) (3 )
(Loss) from investments in unconsolidated entities due to merger expenses (54,781 ) (1,771 )
Net gain on sales of unconsolidated entities 16 16
Net gain (loss) on sales of land parcels   12,179         (2,437 )    
(Loss) income from continuing operations (234,414 ) 62,103 (12,467 ) 92,181
Discontinued operations, net   2,023,897     434,702     404,184     144,142  
Net income 1,789,483 496,805 391,717 236,323
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership (70,947 ) (21,646 ) (14,836 ) (10,496 )
Partially Owned Properties   1,101     (457 )   311     312  
Net income attributable to controlling interests 1,719,637 474,702 377,192 226,139
Preferred distributions (3,109 ) (9,319 ) (1,037 ) (2,386 )
Premium on redemption of Preferred Shares       (5,150 )       (5,150 )
Net income available to Common Shares $ 1,716,528   $ 460,233   $ 376,155   $ 218,603  
 
Earnings per share – basic:

(Loss) income from continuing operations available to Common Shares

$ (0.64 ) $ 0.15   $ (0.04 ) $ 0.27  
Net income available to Common Shares $ 4.87   $ 1.53   $ 1.05   $ 0.73  
Weighted average Common Shares outstanding   352,414     300,116     359,811     301,336  
 
Earnings per share – diluted:

(Loss) income from continuing operations available to Common Shares

$ (0.64 ) $ 0.15   $ (0.04 ) $ 0.27  
Net income available to Common Shares $ 4.87   $ 1.52   $ 1.05   $ 0.72  
Weighted average Common Shares outstanding   352,414     317,265     359,811     318,773  
 
Distributions declared per Common Share outstanding $ 1.20   $ 1.0125   $ 0.40   $ 0.3375  
       
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,
2013 2012 2013 2012
Net income $ 1,789,483 $ 496,805 $ 391,717 $ 236,323
Net loss (income) attributable to Noncontrolling Interests –
Partially Owned Properties 1,101 (457 ) 311 312
Preferred distributions (3,109 ) (9,319 ) (1,037 ) (2,386 )
Premium on redemption of Preferred Shares       (5,150 )       (5,150 )
Net income available to Common Shares and Units 1,787,475 481,879 390,991 229,099
 
Adjustments:
Depreciation 798,121 422,148 277,336 139,337
Depreciation – Non-real estate additions (3,626 ) (4,211 ) (1,153 ) (1,430 )
Depreciation – Partially Owned and Unconsolidated Properties (3,074 ) (2,395 ) (566 ) (798 )
Net (gain) on sales of unconsolidated entities (16 ) (16 )
Discontinued operations:
Depreciation 31,976 94,792 2,273 29,497
Net (gain) on sales of discontinued operations (1,990,577 ) (307,447 ) (401,703 ) (103,394 )
Net incremental gain on sales of condominium units 7 49
Gain on sale of Equity Corporate Housing (ECH)   709     350     108      
FFO available to Common Shares and Units (1) (3) (4) 620,995 685,165 267,270 292,311
 
Adjustments (see page 26 for additional detail):
Asset impairment and valuation allowances
Property acquisition costs and write-off of pursuit costs 78,694 14,898 2,578 4,004
Debt extinguishment (gains) losses, including prepayment penalties, preferred share
redemptions and non-cash convertible debt discounts 78,820 7,491 6,114
(Gains) losses on sales of non-operating assets, net of income and other tax expense
(benefit) (13,725 ) (491 ) 1,499
Other miscellaneous non-comparable items   3,361     (67,687 )   3,361     (69,910 )
Normalized FFO available to Common Shares and Units (2) (3) (4) $ 768,145   $ 639,376   $ 274,708   $ 232,519  
 
FFO (1) (3) $ 624,104 $ 699,634 $ 268,307 $ 299,847
Preferred distributions (3,109 ) (9,319 ) (1,037 ) (2,386 )
Premium on redemption of Preferred Shares       (5,150 )       (5,150 )
FFO available to Common Shares and Units - basic and diluted (1) (3) (4) $ 620,995   $ 685,165   $ 267,270   $ 292,311  
FFO per share and Unit - basic $ 1.70   $ 2.18   $ 0.72   $ 0.93  
FFO per share and Unit - diluted $ 1.68   $ 2.16   $ 0.71   $ 0.92  
 
Normalized FFO (2) (3) $ 771,254 $ 648,695 $ 275,745 $ 234,905
Preferred distributions   (3,109 )   (9,319 )   (1,037 )   (2,386 )
Normalized FFO available to Common Shares and Units - basic and diluted (2) (3) (4) $ 768,145   $ 639,376   $ 274,708   $ 232,519  
Normalized FFO per share and Unit - basic $ 2.10   $ 2.04   $ 0.74   $ 0.74  
Normalized FFO per share and Unit - diluted $ 2.08   $ 2.02   $ 0.73   $ 0.73  
 
Weighted average Common Shares and Units outstanding - basic   366,150     313,932     373,547     315,513  
Weighted average Common Shares and Units outstanding - diluted   368,611     317,265     375,883     318,773  
 
Note: See page 26 for additional detail regarding the adjustments from FFO to Normalized FFO. See page 29 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)
   
September 30, December 31,
2013 2012
ASSETS
Investment in real estate
Land $ 6,201,333 $ 4,554,912
Depreciable property 19,254,957 15,711,944
Projects under development 779,053 387,750
Land held for development   505,494     353,823  
Investment in real estate 26,740,837 21,008,429
Accumulated depreciation   (4,654,594 )   (4,912,221 )
Investment in real estate, net 22,086,243 16,096,208
Cash and cash equivalents 972,761 612,590
Investments in unconsolidated entities 165,898 17,877
Deposits – restricted 98,874 250,442
Escrow deposits – mortgage 40,901 9,129
Deferred financing costs, net 66,775 44,382
Other assets   379,979     170,372  
Total assets $ 23,811,431   $ 17,201,000  
 
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 6,230,675 $ 3,898,369
Notes, net 5,476,522 4,630,875
Lines of credit
Accounts payable and accrued expenses 166,939 38,372
Accrued interest payable 85,353 76,223
Other liabilities 331,797 304,518
Security deposits 71,462 66,988
Distributions payable   149,836     260,176  
Total liabilities   12,512,584     9,275,521  
 
Commitments and contingencies
 
Redeemable Noncontrolling Interests – Operating Partnership   376,057     398,372  
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, 2013 and December 31, 2012 50,000 50,000
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 360,395,959 shares issued and
outstanding as of September 30, 2013 and 325,054,654 shares
issued and outstanding as of December 31, 2012 3,604 3,251
Paid in capital 8,542,822 6,542,355
Retained earnings 2,171,603 887,355
Accumulated other comprehensive (loss)   (169,392 )   (193,148 )
Total shareholders’ equity 10,598,637 7,289,813
Noncontrolling Interests:
Operating Partnership 213,518 159,606
Partially Owned Properties   110,635     77,688  
Total Noncontrolling Interests   324,153     237,294  
Total equity   10,922,790     7,527,107  
Total liabilities and equity $ 23,811,431   $ 17,201,000  
                 
Equity Residential
               
Portfolio Summary as of December 31, 2012 Portfolio Summary as of September 30, 2013
% of Average % of Average
Apartment Stabilized Rental Apartment Stabilized Rental
Markets/Metro Areas Properties Units NOI (1) Rate (2) Properties Units NOI (1) Rate (2)
 
Core:
Washington DC 43 14,425 15.9 % $ 1,992 56 18,275 19.9 % $ 2,249
New York 30 8,047 13.9 % 3,433 38 10,330 17.3 % 3,720
San Francisco 40 9,094 8.6 % 1,902 50 12,766 12.0 % 2,170
Los Angeles 48 9,815 9.9 % 1,879 57 11,960 11.5 % 2,071
Boston 26 5,832 8.2 % 2,560 34 7,816 10.5 % 2,780
South Florida 36 12,253 9.0 % 1,463 34 11,334 7.2 % 1,543
Seattle 38 7,563 6.4 % 1,627 38 7,734 6.0 % 1,741
Denver 24 8,144 5.5 % 1,226 19 6,935 4.2 % 1,309
San Diego 14 4,963 5.0 % 1,851 13 3,505 3.2 % 1,943
Orange County, CA 11 3,490 3.3 %   1,660 11 3,490 2.9 %   1,710
Subtotal – Core 310 83,626 85.7 % 1,941 350 94,145 94.7 % 2,195
 
Non-Core:
Inland Empire, CA 10 3,081 2.4 % 1,491 10 3,081 2.1 % 1,498
Orlando 21 6,413 3.5 % 1,086 10 3,383 1.7 % 1,131
New England (excluding Boston) 14 2,611 1.3 % 1,174 11 1,965 0.9 % 1,233
Phoenix 25 7,400 3.4 % 946 3 872 0.2 % 898
Atlanta 12 3,616 2.0 % 1,157 2 666 0.2 % 1,339
Tacoma, WA 3 1,467 0.6 % 951 1 522 0.2 % 1,016
Jacksonville 6 2,117 1.1 %   1,005 —%  
Subtotal – Non-Core 91 26,705 14.3 %   1,099 37 10,489 5.3 %   1,247
Total 401 110,331 100.0 %   1,737 387 104,634 100.0 %   2,099
 
Military Housing 2 5,039   2 5,161  
 
Grand Total 403 115,370 100.0 % $ 1,737 389 109,795 100.0 % $ 2,099
 
Note: Projects under development are not included in the Portfolio Summary until construction has been completed.
 
(1) % of Stabilized NOI includes budgeted 2013 NOI for stabilized properties, budgeted year one (March 2013 to February 2014) NOI for the Archstone 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 September 30, 2013
 
Apartment
Properties Units
Wholly Owned Properties 363 99,192
Master-Leased Properties - Consolidated 3 853
Partially Owned Properties - Consolidated 19 3,752
Partially Owned Properties - Unconsolidated 2 837
Military Housing 2     5,161  
 
389     109,795  
                     
 
Portfolio Rollforward Q3 2013
($ in thousands)
 
Apartment Purchase/
Properties Units (Sale) Price Cap Rate
6/30/2013 398 113,388
Dispositions:
Consolidated:
Rental Properties (10 ) (4,131 ) $ (657,607 ) 5.9 %
Land Parcel (one) $ (17,900 )
Unconsolidated:
Land Parcel (one) (1) $ (26,350 )
Completed Developments - Unconsolidated 1 501
Configuration Changes   37  
 
9/30/2013 389   109,795  
                     
 
Portfolio Rollforward 2013
($ in thousands)
 
Apartment Purchase/
Properties Units (Sale) Price Cap Rate
12/31/2012 403 115,370
Acquisitions:
Consolidated:
Rental Properties (2) 73 20,914 $ 8,519,895 4.9 %
Master-Leased Properties (2) 3 853 $ 251,828 5.6 %
Uncompleted Developments (two) $ 36,583
Land Parcels (fourteen) (2) $ 256,398
Unconsolidated (3):
Rental Properties 1 336 $ 5,113 5.8 %
Uncompleted Developments (two) (2) $ 14,854
Land Parcel (one) (2) $ 6,572
Dispositions:
Consolidated:
Rental Properties (92 ) (28,328 ) $ (4,362,689 ) 6.0 %
Land Parcels (six) $ (77,650 )
Other (4) $ (30,734 )
Unconsolidated:
Land Parcel (one) (1) $ (26,350 )
Completed Developments - Unconsolidated 1 501
Configuration Changes   149  
 
9/30/2013 389   109,795  
 
(1) Sales price listed is the gross sales price. EQR's share of the net sales proceeds approximated 25%.
 
(2) Amounts have been adjusted to reflect Q2/Q3 2013 changes to the purchase price allocation for certain assets which were acquired in the Archstone transaction.
 
(3) EQR owns various equity interests in these unconsolidated rental properties, uncompleted developments and land parcels. Purchase price listed is EQR's net investment price.
 
(4) Represents a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle that was acquired in 2011.
...
   
Equity Residential
           
Third Quarter 2013 vs. Third Quarter 2012
Same Store Results/Statistics for 82,553 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
 
Results Statistics

Average

Rental

Description Revenues Expenses NOI (1)

Rate (2)

Occupancy Turnover
 
Q3 2013 $ 463,607 $ 159,302 $ 304,305 $ 1,957 95.7 % 16.9 %
Q3 2012 $ 445,521 $ 154,450 $ 291,071 $ 1,878 95.9 % 17.2 %
 
Change $ 18,086 $ 4,852 $ 13,234 $ 79 (0.2)% (0.3)%
 
Change 4.1 % 3.1 % 4.5 % 4.2 %
                         
 
Third Quarter 2013 vs. Second Quarter 2013
Same Store Results/Statistics for 101,820 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
 
Results Statistics

Average

Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
 
Q3 2013 $ 615,239 $ 211,724 $ 403,515 $ 2,106 95.7 % 17.1 %
Q2 2013 $ 605,869 $ 207,252 $ 398,617 $ 2,077 95.6 % 14.5 %
 
Change $ 9,370 $ 4,472 $ 4,898 $ 29 0.1 % 2.6 %
 
Change 1.5 % 2.2 % 1.2 % 1.4 %
 
Note: Sequential same store results/statistics include 18,448 apartment units acquired in the Archstone acquisition.
                         
 
September YTD 2013 vs. September YTD 2012
Same Store Results/Statistics for 81,099 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
 
Results Statistics

Average

Rental

Description Revenues Expenses NOI (1)

Rate (2)

Occupancy Turnover
 
YTD 2013 $ 1,329,326 $ 462,509 $ 866,817 $ 1,910 95.4 % 43.8 %
YTD 2012 $ 1,269,876 $ 447,600 $ 822,276 $ 1,827 95.3 % 44.0 %
 
Change $ 59,450 $ 14,909 $ 44,541 $ 83 0.1 % (0.2)%
 
Change 4.7 % 3.3 % 5.4 % 4.5 %
 
(1) The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense and property management expense. The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company's apartment communities. See page 29 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
Third Quarter 2013 vs. Third Quarter 2012
Same Store Results/Statistics by Market
                 
Increase (Decrease) from Prior Year's Quarter

Q3 2013

Q3 2013

Q3 2013

% 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 11,077 15.6 % $ 2,155 95.6 % 1.6 % 1.6 % 1.6 % 2.1 % (0.5)%
New York 7,478 15.4 % 3,554 96.4 % 3.6 % 4.8 % 2.9 % 4.2 % (0.5)%
Los Angeles 8,996 11.1 % 1,957 96.0 % 3.7 % 3.2 % 4.0 % 4.0 % (0.2)%
San Francisco 8,039 9.9 % 1,981 95.4 % 8.4 % 3.1 % 11.4 % 8.9 % (0.5)%
Boston (2) 5,832 9.8 % 2,637 96.0 % 3.8 % 2.0 % 4.6 % 3.5 % 0.3 %
South Florida 10,637 9.5 % 1,544 95.1 % 4.2 % 3.7 % 4.5 % 4.0 % 0.2 %
Seattle 6,867 7.5 % 1,751 96.1 % 5.4 % 6.4 % 4.8 % 5.1 % 0.2 %
Denver 6,767 5.8 % 1,314 96.0 % 6.7 % 5.7 % 7.2 % 6.8 % (0.1)%
San Diego 3,217 4.0 % 1,889 96.1 % 3.4 % 2.2 % 3.9 % 3.2 % 0.2 %
Orange County, CA 3,490 3.9 % 1,712 95.9 % 3.5 % (0.2)% 5.2 % 3.8 % (0.3)%
Subtotal – Core 72,400 92.5 % 2,055 95.8 % 4.2 % 3.4 % 4.6 % 4.3 % (0.2)%
 
Non-Core:
Inland Empire, CA 3,081 3.0 % 1,513 95.9 % 3.0 % 0.7 % 4.1 % 3.0 % (0.1)%
Orlando 3,383 2.3 % 1,138 95.4 % 2.4 % (2.3)% 5.4 % 2.8 % (0.4)%
New England (excluding Boston) 1,965 1.2 % 1,231 94.4 % 1.2 % 1.2 % 1.2 % 2.4 % (1.1)%
Phoenix 872 0.4 % 904 94.7 % 1.6 % (2.0)% 4.1 % 1.9 % (0.2)%
Tacoma, WA 522 0.3 % 1,017 94.9 % 10.4 % 14.0 % 7.4 % 5.2 % 4.4 %
Atlanta 330 0.3 % 1,390 95.8 % 3.8 % (3.1)% 9.4 % 4.0 % (0.2)%
Subtotal – Non-Core 10,153 7.5 % 1,253 95.3 % 2.7 % 0.2 % 4.3 % 2.9 % (0.2)%
                 
Total 82,553 100.0 % $ 1,957 95.7 % 4.1 % 3.1 % 4.5 % 4.2 % (0.2)%
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
(2) Quarter over quarter same store revenues in Boston were negatively impacted by non-residential related income. Residential-only same store revenues increased in Boston 4.4% quarter over quarter.
                                     
Equity Residential
Third Quarter 2013 vs. Second Quarter 2013
Same Store Results/Statistics by Market
                 
Increase (Decrease) from Prior Quarter    

Q3 2013

Q3 2013

Q3 2013

% 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 17,536 19.2 % $ 2,256 95.6 % 0.6 % 1.4 % 0.2 % 0.2 % 0.3 %
New York 10,330 17.2 % 3,721 96.2 % 1.2 % 1.5 % 1.0 % 1.1 % 0.1 %
San Francisco 12,766 13.0 % 2,177 95.5 % 2.7 % 4.5 % 1.8 % 2.8 % (0.2)%
Los Angeles 11,139 10.6 % 2,059 96.0 % 2.6 % 2.2 % 2.8 % 2.1 % 0.5 %
Boston (2) 7,722 10.3 % 2,785 95.7 % 0.5 % 2.7 % (0.6)% 0.1 % 0.3 %
South Florida 10,833 7.2 % 1,541 95.1 % 1.2 % 3.2 % (0.1)% 1.6 % (0.4)%
Seattle 7,411 6.1 % 1,742 96.2 % 2.9 % 2.8 % 3.0 % 2.2 % 0.7 %
Denver 6,935 4.5 % 1,317 96.0 % 3.1 % 0.7 % 4.1 % 2.8 % 0.2 %
San Diego 3,505 3.3 % 1,904 96.1 % 1.7 % (0.2)% 2.5 % 1.5 % 0.1 %
Orange County, CA 3,490 3.0 % 1,712 95.9 % 1.7 % 3.3 % 1.0 % 1.4 % 0.3 %
Subtotal – Core 91,667 94.4 % 2,200 95.8 % 1.6 % 2.3 % 1.2 % 1.4 % 0.2 %
 
Non-Core:
Inland Empire, CA 3,081 2.3 % 1,513 95.9 % 0.9 % 0.1 % 1.3 % 0.3 % 0.5 %
Orlando 3,383 1.7 % 1,138 95.4 % 1.2 % 2.2 % 0.6 % 1.3 % (0.2)%
New England (excluding Boston) 1,965 0.9 % 1,231 94.4 % —% (4.4)% 4.0 % 0.8 % (0.7)%
Phoenix 872 0.3 % 904 94.7 % 2.8 % 5.7 % 1.0 % 2.8 % —%
Tacoma, WA 522 0.2 % 1,017 94.9 % 3.6 % 6.4 % 1.2 % 2.5 % 1.0 %
Atlanta 330 0.2 % 1,390 95.8 % 3.8 % 4.0 % 3.6 % 2.7 % 1.1 %
Subtotal – Non-Core 10,153 5.6 % 1,253 95.3 % 1.1 % 0.4 % 1.6 % 1.1 % 0.1 %
                 
Total 101,820 100.0 % $ 2,106 95.7 % 1.5 % 2.2 % 1.2 % 1.4 % 0.1 %
 
Note: Sequential same store results/statistics include 18,448 apartment units acquired in the Archstone acquisition.
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
(2) Sequential same store revenues in Boston were negatively impacted by non-residential related income. Residential-only same store revenues increased in Boston 1.9% sequentially.
                                     
Equity Residential
September YTD 2013 vs. September YTD 2012
Same Store Results/Statistics by Market
                 
Increase (Decrease) from Prior Year

Sept. YTD 13

Sept. YTD 13

Sept. YTD 13

% 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 10,564 15.2 % $ 2,101 95.2 % 2.6 % 0.8 % 3.4 % 2.8 % (0.3)%
New York 7,176 14.7 % 3,468 95.9 % 4.7 % 5.6 % 4.0 % 4.9 % (0.3)%
Los Angeles 8,894 11.3 % 1,916 95.7 % 4.3 % 4.0 % 4.5 % 3.8 % 0.3 %
Boston (2) 5,832 10.0 % 2,612 95.2 % 3.9 % 4.5 % 3.6 % 3.9 % —%
South Florida 10,637 9.9 % 1,521 95.2 % 4.5 % 2.5 % 5.8 % 4.2 % 0.2 %
San Francisco 7,821 9.7 % 1,918 95.1 % 8.8 % 2.3 % 12.6 % 8.7 % 0.1 %
Seattle 6,548 7.3 % 1,711 95.5 % 5.4 % 4.6 % 5.9 % 5.4 % 0.1 %
Denver 6,767 6.0 % 1,281 95.9 % 7.7 % 5.3 % 8.7 % 7.3 % 0.3 %
San Diego 3,217 4.1 % 1,866 95.4 % 3.9 % 2.7 % 4.4 % 3.0 % 0.6 %
Orange County, CA 3,490 4.1 % 1,688 95.7 % 3.9 % 2.4 % 4.6 % 3.7 % 0.1 %
Subtotal – Core 70,946 92.3 % 2,006 95.5 % 4.8 % 3.6 % 5.4 % 4.6 % 0.1 %
 
Non-Core:
Inland Empire, CA 3,081 3.1 % 1,502 95.3 % 3.4 % 1.0 % 4.5 % 2.9 % 0.4 %
Orlando 3,383 2.4 % 1,122 95.7 % 4.3 % (0.6)% 7.4 % 3.9 % 0.3 %
New England (excluding Boston) 1,965 1.2 % 1,220 94.8 % 2.3 % 4.9 % —% 2.8 % (0.4)%
Phoenix 872 0.5 % 887 94.7 % 1.2 % (3.8)% 4.6 % 0.9 % 0.2 %
Tacoma, WA 522 0.3 % 997 94.3 % 8.6 % 4.8 % 12.4 % 2.8 % 4.9 %
Atlanta 330 0.2 % 1,353 95.0 % 3.1 % (4.9)% 10.0 % 4.4 % (1.2)%
Subtotal – Non-Core 10,153 7.7 % 1,238 95.2 % 3.5 % 1.0 % 5.1 % 3.2 % 0.4 %
                 
Total 81,099 100.0 % $ 1,910 95.4 % 4.7 % 3.3 % 5.4 % 4.5 % 0.1 %
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
(2) September year-to-date same store revenues in Boston were negatively impacted by non-residential related income. Residential-only same store revenues increased in Boston 5.3% September year-to-date.
 
Equity Residential
         
Third Quarter 2013 vs. Third Quarter 2012
Same Store Operating Expenses for 82,553 Same Store Apartment Units
$ in thousands
 
% of Actual
Q3 2013
Actual Actual $ % Operating
Q3 2013 Q3 2012 Change Change Expenses
 
Real estate taxes $ 51,834 $ 47,551 $ 4,283 9.0 % 32.5 %
On-site payroll (1) 34,266 33,351 915 2.7 % 21.5 %
Utilities (2) 23,658 23,058 600 2.6 % 14.9 %
Repairs and maintenance (3) 22,595 21,976 619 2.8 % 14.2 %
Property management costs (4) 15,067 16,707 (1,640 ) (9.8 )% 9.5 %
Insurance 5,012 4,717 295 6.3 % 3.1 %
Leasing and advertising 2,462 2,536 (74 ) (2.9 )% 1.5 %
Other on-site operating expenses (5)   4,408   4,554   (146 ) (3.2 )% 2.8 %
 
Same store operating expenses $ 159,302 $ 154,450 $ 4,852   3.1 % 100.0 %
                     
 
September YTD 2013 vs. September YTD 2012
Same Store Operating Expenses for 81,099 Same Store Apartment Units
$ in thousands
 
% of Actual
YTD 2013
Actual Actual $ % Operating
YTD 2013 YTD 2012 Change Change Expenses
 
Real estate taxes $ 150,852 $ 140,089 $ 10,763 7.7 % 32.6 %
On-site payroll (1) 99,109 97,775 1,334 1.4 % 21.4 %
Utilities (2) 69,474 66,885 2,589 3.9 % 15.0 %
Repairs and maintenance (3) 63,099 60,332 2,767 4.6 % 13.7 %
Property management costs (4) 44,532 47,620 (3,088 ) (6.5 )% 9.6 %
Insurance 14,779 13,904 875 6.3 % 3.2 %
Leasing and advertising 7,150 6,952 198 2.8 % 1.6 %
Other on-site operating expenses (5)   13,514   14,043   (529 ) (3.8 )% 2.9 %
 
Same store operating expenses $ 462,509 $ 447,600 $ 14,909   3.3 % 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 September 30, 2013
(Amounts in thousands)

 

Weighted
Weighted Average
Average Maturities
Amounts (1) % of Total Rates (1) (years)
 
Secured $ 6,230,675 53.2 % 4.25 % 6.6
Unsecured   5,476,522 46.8 % 4.93 % 4.8
 
Total $ 11,707,197 100.0 % 4.58 % 5.7
 
Fixed Rate Debt:

Secured – Conventional

$ 5,547,506 47.4 % 4.67 % 5.0
Unsecured – Public/Private   4,726,522 40.4 % 5.57 % 5.3
 
Fixed Rate Debt   10,274,028 87.8 % 5.09 % 5.2
 
Floating Rate Debt:
Secured – Conventional 57,133 0.5 % 2.33 % 1.0
Secured – Tax Exempt 626,036 5.3 % 0.60 % 19.4
Unsecured – Public/Private 750,000 6.4 % 1.66 % 1.3
Unsecured – Revolving Credit Facility   0.0% 1.28 % 4.5
 
Floating Rate Debt   1,433,169 12.2 % 1.23 % 9.4
 
Total $ 11,707,197 100.0 % 4.58 % 5.7
 
(1) Net of the effect of any derivative instruments. Weighted average rates are for the nine months ended September 30, 2013.
 
Note: The Company capitalized interest of approximately $32.9 million and $15.8 million during the nine months ended September 30, 2013 and 2012, respectively. The Company capitalized interest of approximately $12.9 million and $5.7 million during the quarters ended September 30, 2013 and 2012, respectively.
                       
         
Debt Maturity Schedule as of September 30, 2013
(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)
 
2013 $ 3,004 $ 131 $ 3,135 0.0% 5.41 % 5.32 %
2014 1,517,991 (2) 49,017 1,567,008 13.4 % 5.67 % 5.57 %
2015 420,449 750,000 (3) 1,170,449 10.0 % 6.28 % 3.12 %
2016 1,193,251 1,193,251 10.2 % 5.34 % 5.34 %
2017 2,171,735 (4) 456 2,172,191 18.6 % 6.20 % 6.20 %
2018 84,355 724 85,079 0.7 % 5.61 % 5.61 %
2019 806,634 20,766 827,400 7.1 % 5.48 % 5.35 %
2020 1,678,601 809 1,679,410 14.3 % 5.49 % 5.49 %
2021 1,195,243 856 1,196,099 10.2 % 4.63 % 4.64 %
2022 228,933 905 229,838 2.0 % 3.17 % 3.18 %
2023+ 800,999 675,944 1,476,943 12.6 % 4.22 % 2.50 %
Premium/(Discount)   172,833   (66,439)   106,394 0.9 % N/A N/A
 
Total $ 10,274,028 $ 1,433,169 $ 11,707,197 100.0 % 5.43 % 4.86 %
 
(1) Net of the effect of any derivative instruments. Weighted average rates are as of September 30, 2013.
 
(2)

On October 1, 2013, the Company paid off the $963.5 million outstanding of 5.883% mortgage debt assumed as a part of the Archstone transaction, prior to the November 1, 2014 maturity date. Following this payoff, remaining debt maturing in 2014 totals $603.5 million.

 
(3) Includes the Company's senior unsecured $750.0 million delayed draw term loan facility that matures on January 11, 2015 and is subject to a one-year extension option exercisable by the Company.
 
(4) Includes $1.27 billion in Archstone mortgage notes payable of which $825.0 million may be paid off in the fourth quarter of 2013 in connection with certain planned refinancing activities described more fully on page 3 of this release. The approximately $440.0 million balance will remain outstanding and continue to mature in November 2017. Following these anticipated refinancing activities, remaining debt maturing in 2017 would be $1.3 billion.
                       
Equity Residential
Unsecured Debt Summary as of September 30, 2013
(Amounts in thousands)
         

 

 
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
 
Fixed Rate Notes:
5.250 % 09/15/14 $ 500,000 $ (59) $ 499,941
6.584 % 04/13/15 300,000 (165) 299,835
5.125 % 03/15/16 500,000 (130) 499,870
5.375 % 08/01/16 400,000 (526) 399,474
5.750 % 06/15/17 650,000 (1,907) 648,093
7.125 % 10/15/17 150,000 (262) 149,738
4.750 % 07/15/20 600,000 (3,090) 596,910
4.625 % 12/15/21 1,000,000 (3,112) 996,888
3.000 % 04/15/23 500,000 (4,227) 495,773
7.570 % 08/15/26   140,000     140,000
 
  4,740,000   (13,478)   4,726,522
Floating Rate Notes:
Delayed Draw Term Loan Facility LIBOR+1.20% 01/11/15 (1)(2)   750,000     750,000
 
  750,000     750,000
 
Revolving Credit Facility: LIBOR+1.05% 04/01/18 (1)(3)      
 
Total Unsecured Debt $ 5,490,000 $ (13,478) $ 5,476,522
 
(1) Facilities are private. All other unsecured debt is public.
 
(2) On January 11, 2013, the Company entered into a senior unsecured $750.0 million delayed draw term loan facility which was fully drawn on February 27, 2013 in connection with the Archstone acquisition. The maturity date of January 11, 2015 is subject to a one-year extension option exercisable by the Company. The interest rate on advances under the term loan facility will generally be LIBOR plus a spread (currently 1.20%), which is dependent on the credit rating of the Company's long-term debt.
 
(3) On January 11, 2013, the Company replaced its existing $1.75 billion facility with a $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The interest rate on advances under the new 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 September 30, 2013, there was approximately $2.47 billion available on the Company's unsecured revolving credit facility.
           
Equity Residential
       
Selected Unsecured Public Debt Covenants
 
September 30, June 30,
2013 2013
 
Total Debt to Adjusted Total Assets (not to exceed 60%) 42.2 % 42.9 %
 
Secured Debt to Adjusted Total Assets (not to exceed 40%) 22.4 % 22.9 %
 
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.65 2.68
 
Total Unsecured Assets to Unsecured Debt 324.6 % 315.4 %
(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.
                             
Equity Residential
               
Capital Structure as of September 30, 2013
(Amounts in thousands except for share/unit and per share amounts)
 
Secured Debt $ 6,230,675 53.2 %
Unsecured Debt   5,476,522 46.8 %
 
Total Debt 11,707,197 100.0 % 36.8 %
 
Common Shares (includes Restricted Shares) 360,395,959 96.2 %
Units (includes OP Units and LTIP Units)   14,200,376   3.8 %
 
Total Shares and Units 374,596,335 100.0 %
Common Share Price at September 30, 2013 $ 53.57
20,067,126 99.8 %
Perpetual Preferred Equity (see below)   50,000 0.2 %
 
Total Equity 20,117,126 100.0 % 63.2 %
 
Total Market Capitalization $ 31,824,323 100.0 %
                               
 
Perpetual Preferred Equity as of September 30, 2013
(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 12/10/2026 1,000,000 $ 50,000 $ 4.145 $ 4,145
 
Total Perpetual Preferred Equity 1,000,000 $ 50,000 $ 4,145
                 
Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
       
YTD Q313 YTD Q312 Q313 Q312
 
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares - basic 352,413,769 300,116,136 359,811,378 301,336,325
Shares issuable from assumed conversion/vesting of (1):
- OP Units 13,815,887 14,176,635
- long-term compensation shares/units 3,332,695 3,260,210
 
Total Common Shares and Units - diluted (1) 352,413,769 317,264,718 359,811,378 318,773,170
 
Weighted Average Amounts Outstanding for FFO and Normalized

FFO Purposes:

Common Shares - basic 352,413,769 300,116,136 359,811,378 301,336,325
OP Units - basic 13,736,059 13,815,887 13,735,575 14,176,635
 
Total Common Shares and OP Units - basic 366,149,828 313,932,023 373,546,953 315,512,960
Shares issuable from assumed conversion/vesting of:
- long-term compensation shares/units 2,461,479 3,332,695 2,336,330 3,260,210
 
Total Common Shares and Units - diluted 368,611,307 317,264,718 375,883,283 318,773,170
 
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares) 360,395,959 302,674,716
Units (includes OP Units and LTIP Units) 14,200,376 14,399,790
 
Total Shares and Units 374,596,335 317,074,506
 
(1) Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations during the nine months and quarter ended September 30, 2013.
                             
Equity Residential
Partially Owned Entities as of September 30, 2013
(Amounts in thousands except for project and apartment unit amounts)
             
Consolidated Unconsolidated
Development Projects Development Projects
 
Held for Held for
and/or Under and/or Under Completed, Not
Development (4) Operating Total Development (5) Stabilized (6) Operating Total
 
Total projects (1)       19     19         1     1     2  
 
Total apartment units (1)       3,752     3,752         501     336     837  
 
Operating information for the nine months ended 9/30/13 (at 100%):
Operating revenue $ 12 $ 59,666 $ 59,678 $ 1,305 $ 1,861 $ 3,173 $ 6,339
Operating expenses   407     18,458     18,865     1,141     1,023     1,402     3,566  
 
Net operating (loss) income (395 ) 41,208 40,813 164 838 1,771 2,773
Depreciation 26,478 26,478 84 4,165 4,249
General and administrative/other   520     79     599     23         141     164  
 
Operating (loss) income (915 ) 14,651 13,736 57 838 (2,535 ) (1,640 )
Interest and other income 2 3 5 10 10
Other expenses (334 ) (4 ) (338 )
Interest:
Expense incurred, net (2 ) (10,615 ) (10,617 ) (152 ) (501 ) (658 ) (1,311 )
Amortization of deferred financing costs       (216 )   (216 )           (1 )   (1 )
 
(Loss) income before income and other taxes, (loss) from
investments in unconsolidated entities, net (loss)
gain on sales of land parcels and discontinued
operations (1,249 ) 3,819 2,570 (95 ) 337 (3,184 ) (2,942 )
Income and other tax (expense) benefit (11 ) (56 ) (67 )
(Loss) from investments in unconsolidated entities (1,010 ) (1,010 )
Net (loss) on sales of land parcels (17 ) (17 )
Net gain on sales of discontinued operations 26,673 26,673
             
Net (loss) income $ (1,277 ) $ 29,426   $ 28,149   $ (95 ) $ 337   $ (3,184 ) $ (2,942 )
 
Debt - Secured (2):
EQR Ownership (3) $ $ 280,671 $ 280,671 $ 42,914 $ 9,044 $ 6,110 $ 58,068
Noncontrolling Ownership       78,059     78,059     75,809     36,173     24,440     136,422  
 
Total (at 100%) $   $ 358,730   $ 358,730   $ 118,723   $ 45,217   $ 30,550   $ 194,490  
 
(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 with the exception of 50% of the current $5.7 million outstanding debt balance on one unconsolidated development project.
 
(3) Represents the Company's current equity ownership interest.
 
(4) See Projects Under Development - Partially Owned on page 22 for further information.
 
(5) See Projects Under Development - Unconsolidated on page 23 for further information.
 
(6) Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. See Projects Under Development - Unconsolidated on page 23 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 $88.3 million at September 30, 2013. The ventures are owned 60% by the Company and 40% by AVB.
                                             
Equity Residential
Consolidated Development and Lease-Up Projects as of September 30, 2013
(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:

Jia (formerly Chinatown Gateway) Los Angeles, CA 280 $ 92,920 $ 79,564 $ 79,564 $ 85 % 3 % Q4 2013 Q3 2015
Oasis at Delray Beach II (2) Delray Beach, FL 128 23,739 19,669 19,669 89 % 11 % Q1 2014 Q2 2014
Residences at Westgate I (formerly Westgate II) Pasadena, CA 252 125,293 89,319 89,319 60 % Q1 2014 Q1 2015
1111 Belle Pre (formerly The Madison) Alexandria, VA 360 115,072 95,437 95,437 86 % 12 % Q1 2014 Q2 2015
Urbana (formerly Market Street Landing) Seattle, WA 287 90,024 68,106 68,106 76 % Q1 2014 Q3 2015
Reserve at Town Center III Mill Creek, WA 95 21,330 14,036 14,036 60 % Q2 2014 Q4 2014
Residences at Westgate II (formerly Westgate III) Pasadena, CA 88 54,037 28,871 28,871 29 % Q2 2014 Q1 2015
170 Amsterdam (3) New York, NY 237 110,892 31,524 31,524 17 % Q1 2015 Q1 2016
West Seattle Seattle, WA 206 67,112 16,233 16,233 1 % Q4 2015 Q3 2016
Tallman Seattle, WA 303 84,277 20,339 20,339 1 % Q4 2015 Q2 2017
Tasman San Jose, CA 554   214,923   32,474   32,474   1 % Q2 2016 Q2 2018
Projects Under Development - Wholly Owned 2,790 999,619 495,572 495,572
 

Projects Under Development - Partially Owned:

Park Aire (formerly Enclave at Wellington) (2) Wellington, FL 268 50,000 44,616 44,616 91 % 15 % 5 % Q1 2014 Q1 2015
400 Park Avenue South (4) New York, NY 269   251,961   152,651   152,651   45 % Q2 2015 Q1 2016
Projects Under Development - Partially Owned 537 301,961 197,267 197,267
         
Projects Under Development 3,327   1,301,580   692,839   692,839  
 

Completed Not Stabilized - Wholly Owned (5):

Breakwater at Marina Del Rey (3) (6) (7) Marina Del Rey, CA 224 90,449 86,388 27,000 66 % 64 % Completed Q2 2014
Gaithersburg Station (7) (8) Gaithersburg, MD 389   93,000   92,191     89,653 77 % 72 % Completed Q2 2014
Projects Completed Not Stabilized - Wholly Owned 613 183,449 178,579 116,653
         
Projects Completed Not Stabilized 613   183,449   178,579     116,653
 

Completed and Stabilized During the Quarter - Wholly Owned:

2201 Pershing Drive Arlington, VA 188   61,338   58,660     98 % 97 % Completed Stabilized
Projects Completed and Stabilized During the Quarter - Wholly Owned 188 61,338 58,660
         
Projects Completed and Stabilized During the Quarter 188   61,338   58,660    
 
Total Consolidated Projects 4,128 $ 1,546,367 $ 930,078 $ 692,839 $ 116,653
 
Land Held for Development N/A   N/A $ 505,494 $ 505,494 $
 

 

 

Total Capital Q3 2013
NOI CONTRIBUTION FROM CONSOLIDATED DEVELOPMENT PROJECTS Cost (1) NOI
Projects Under Development $ 1,301,580 $ (324)
Completed Not Stabilized 183,449 1,245
Completed and Stabilized During the Quarter   61,338   922
Total Consolidated Development NOI Contribution $ 1,546,367 $ 1,843
 
(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) The Company acquired this development project in connection with the Archstone transaction and is continuing development activities. The Company owns 100% of Oasis at Delray Beach II and has a 95.0% ownership interest in Park Aire.
 
(3) The land under this development is subject to a long term ground lease.
 
(4) The Company is jointly developing with Toll Brothers (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 $86.2 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.
 
(6) The Company acquired this property in connection with the Archstone transaction and has completed renovations. The non-recourse loan on this property has a current outstanding balance of $27.0 million, bears interest at LIBOR plus 1.75% and matures September 1, 2014.
 
(7) Amounts have been adjusted to reflect Q2/Q3 2013 changes to the purchase price allocation for these projects which were acquired in the Archstone transaction.
 
(8) The Company acquired this completed development project prior to stabilization in connection with the Archstone transaction and is continuing lease-up activities. This project has a non-recourse loan with a current outstanding balance of $89.7 million, bears interest at 5.24% and matures April 1, 2053.
                                                 
Equity Residential
Unconsolidated Development and Lease-Up Projects as of September 30, 2013
(Amounts in thousands except for project and apartment unit amounts)
                         
Total Book
No. of Total Total Value Not Estimated Estimated
Percentage Apartment Capital Book Value Placed in Total Percentage Percentage Percentage Completion Stabilization
Projects Location Ownership Units Cost (1) to Date Service Debt Completed Leased Occupied Date Date
 

Projects Under Development - Unconsolidated:

San Norterra (2) Phoenix, AZ 85.0 % 388 $ 56,250 $ 52,842 $ 52,842 $ 30,816 96 % 72 % 61 % Q4 2013 Q2 2014
Domain (3) San Jose, CA 20.0 % 444 154,570 147,433 147,433 82,168 93 % 31 % 25 % Q4 2013 Q4 2015
Parkside at Emeryville (4) (5) Emeryville, CA 5.0 % 180   75,000   38,528   38,528   5,739 38 % Q3 2014 Q4 2015
Projects Under Development - Unconsolidated 1,012 285,820 238,803 238,803 118,723
         
Projects Under Development 1,012   285,820   238,803   238,803   118,723
 

Completed Not Stabilized - Unconsolidated (6):

Nexus Sawgrass (formerly Sunrise Village) (3) Sunrise, FL 20.0 % 501   78,212   77,290     45,217 58 % 52 % Completed Q3 2014
Projects Completed Not Stabilized - Unconsolidated 501 78,212 77,290 45,217
         
Projects Completed Not Stabilized 501   78,212   77,290     45,217
 
Total Unconsolidated Projects 1,513 $ 364,032 $ 316,093 $ 238,803 $ 163,940
 
(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) The Company acquired this development project in connection with the Archstone transaction. Total project costs are approximately $56.3 million and construction is being partially funded with a non-recourse construction loan. San Norterra has a maximum debt commitment of $34.8 million, the loan bears interest at LIBOR plus 2.00% and matures January 6, 2015.
 
(3) 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 $48.7 million, the loan bears interest at 5.60% and matures January 1, 2021. Domain has a maximum debt commitment of $98.6 million, the loan bears interest at 5.75% and matures January 1, 2022.
 
(4) The Company acquired this development project in connection with the Archstone transaction. Total project costs are approximately $75.0 million and construction is being partially funded with a construction loan. Parkside at Emeryville has a maximum debt commitment of $39.5 million, the loan bears interest at LIBOR plus 2.25% and matures August 14, 2015. The Company has given a repayment guaranty on the construction loan of 50% of the outstanding balance, up to a maximum of $19.7 million, and has given certain construction cost overrun guarantees.
 
(5) Amounts have been adjusted to reflect Q2/Q3 2013 changes to the purchase price allocation for this project which was acquired in the Archstone transaction.
 
(6) 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
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Nine Months Ended September 30, 2013
(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 Apartment Apartment Replacements Apartment Improvements Apartment Apartment Grand Apartment
Units (1) Expense (2) Unit Payroll (3) Unit Total Unit (4) Unit (5)   Unit Total Unit Total Unit
 
Same Store Properties (6) 81,099 $ 63,099 $ 778 $ 48,658 $ 600 $ 111,757 $ 1,378 $ 36,029 $ 444 $ 34,737 $ 429 $ 70,766 $ 873 (9) $ 182,523 $ 2,251
 
Non-Same Store Properties (7) 22,698 15,290 830 10,846 589 26,136 1,419 11,230 610 9,758 530 20,988 1,140 47,124 2,559
 
Other (8)   6,590   10,089   16,679   2,899   2,213   5,112   21,791
 
Total 103,797 $ 84,979 $ 69,593 $ 154,572 $ 50,158 $ 46,708 $ 96,866 $ 251,438
 
(1) Total Apartment Units - Excludes 837 unconsolidated apartment units and 5,161 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 $15.2 million spent during the nine months ended September 30, 2013 on apartment unit renovations/rehabs (primarily kitchens and baths) on 2,046 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 2013, the Company expects to spend approximately $30.0 million for all unit renovation/rehab costs, of which approximately $20.0 million will be spent on same store properties, at a weighted average cost of $7,000 to $8,000 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, 2012, less properties subsequently sold.
 
(7) Non-Same Store Properties - Primarily includes all properties acquired during 2012 and 2013, plus any properties in lease-up and not stabilized as of January 1, 2012. Per apartment unit amounts are based on a weighted average of 18,413 apartment units. Includes approximately seven months of activity for the Archstone properties.
 
(8) Other - Primarily includes expenditures for properties sold during the period.
 
(9) For 2013, the Company estimates that it will spend approximately $1,200 per apartment unit of capital expenditures for the approximately 80,000 apartment units that the Company expects to have in its annual same store set, inclusive of apartment unit renovation/rehab costs, or $950 per apartment unit excluding apartment unit renovation/rehab costs.
                 
Equity Residential
Discontinued Operations
(Amounts in thousands)
       
Nine Months Ended Quarter Ended
September 30, September 30,
2013 2012 2013 2012
 
REVENUES
Rental income $ 110,986   $ 334,968   $ 8,418   $ 108,459  
 
Total revenues   110,986     334,968     8,418     108,459  
 
EXPENSES (1)
Property and maintenance 33,181 79,482 3,272 25,608
Real estate taxes and insurance 10,578 29,599 396 11,480
Property management 1 211 70
Depreciation 31,976 94,792 2,273 29,497
General and administrative   76     87     3     44  
 
Total expenses   75,812     204,171     5,944     66,699  
 
Discontinued operating income 35,174 130,797 2,474 41,760
 
Interest and other income 156 81 65 34
Other expenses (3 ) (170 ) (23 )
Interest (2):
Expense incurred, net (1,276 ) (3,357 ) (18 ) (995 )
Amortization of deferred financing costs (228 ) (119 ) (27 )
Income and other tax (expense) benefit   (503 )   23     (40 )   (1 )
 
Discontinued operations 33,320 127,255 2,481 40,748
Net gain on sales of discontinued operations   1,990,577     307,447     401,703     103,394  
 
Discontinued operations, net $ 2,023,897   $ 434,702   $ 404,184   $ 144,142  
 
(1) Includes expenses paid in the current period for properties sold 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.
 
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 2013
to Actual Q3 2013
Amounts Per Share
Guidance Q3 2013 Normalized FFO - Diluted (2) (3) $ 274,077 $ 0.729
Property NOI (primarily Archstone properties) 188 0.001
Other   443     0.001  
 
Actual Q3 2013 Normalized FFO - Diluted (2) (3) $ 274,708   $ 0.731  
 
                           
 
 
Non-Comparable Items – Adjustments from FFO to Normalized FFO (2) (3)
 
Nine Months Ended September 30, Quarter Ended September 30,
2013 2012 Variance 2013 2012 Variance
 
Impairment $   $   $   $   $   $  
Asset impairment and valuation allowances                        
 
Archstone merger costs (merger expenses) 19,741 1,921 17,820 182 87 95
Archstone merger costs (loss from investments in unconsolidated entities due to merger expenses) 54,781 54,781 1,771 1,771
Property acquisition costs (other expenses) 203 6,836 (6,633 ) 21 1,341 (1,320 )
Write-off of pursuit costs (other expenses)   3,969     6,141     (2,172 )   604     2,576     (1,972 )
Property acquisition costs and write-off of pursuit costs   78,694     14,898     63,796     2,578     4,004     (1,426 )
 
Prepayment premiums/penalties (interest expense) 71,443 272 71,171
Write-off of unamortized deferred financing costs (interest expense) (A) 4,126 2,111 2,015 964 (964 )
Write-off of unamortized (premiums)/discounts/OCI (interest expense) 3,251 (42 ) 3,293
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   78,820     7,491     71,329         6,114     (6,114 )
 
Net (gain) loss on sales of land parcels (12,179 ) (12,179 ) 2,437 2,437
Net incremental (gain) on sales of condominium units (7 ) (49 ) 42
Income and other tax expense (benefit) - Condo sales (92 ) 92
(Gain) on sale of Equity Corporate Housing (ECH) (709 ) (350 ) (359 ) (108 ) (108 )
(Gain) on sale of investment securities   (830 )       (830 )   (830 )       (830 )
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)   (13,725 )   (491 )   (13,234 )   1,499         1,499  
 
 
Insurance/litigation settlement expense (other expenses) 3,361 4,714 (1,353 ) 3,361 3,361
Prospect Towers garage insurance proceeds (real estate taxes and insurance) (3,467 ) 3,467
Archstone termination fees (interest and other income) (70,000 ) 70,000 (70,000 ) 70,000
Other (other expenses)       1,066     (1,066 )       90     (90 )
Other miscellaneous non-comparable items   3,361     (67,687 )   71,048     3,361     (69,910 )   73,271  
           
Non-comparable items – Adjustments from FFO to Normalized FFO (2) (3) $ 147,150   $ (45,789 ) $ 192,939   $ 7,438   $ (59,792 ) $ 67,230  
 
(A) For the nine months ended September 30, 2013, includes $2.5 million of bridge loan costs related to the Archstone transaction.
   
(B) Includes $5.13 million of original issuance costs previously deferred.
 
Note: See page 29 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 (including the $150.0 million that may be incurred in Q4 2013), property acquisition costs and the write-off of pursuit costs, are not included in the estimates provided on this page. See page 28 for estimates of property acquisition costs, prepayment premiums/penalties and other amounts not included in 2013 Normalized FFO guidance. See page 29 for the definitions, the footnotes referenced below and the reconciliations of EPS to FFO and Normalized FFO.
 
 

2013 Normalized FFO Guidance (per share diluted)

 

Q4 2013

2013

 
Expected Normalized FFO (2) (3) $0.75 to $0.77 $2.83 to $2.85
 

2013 Same Store Assumptions

 
Physical occupancy 95.4 %
Revenue change 4.5 %
Expense change 3.3 %
NOI change 5.1 %
 
(Note: The same store guidance above is computed based on the portfolio of approximately 80,000 apartment units that the Company expects to have in its annual same store set after the completion of its planned 2013 dispositions. 30 basis point change in NOI percentage = $0.01 per share change in EPS/FFO/Normalized FFO)
 

2013 Transaction Assumptions

 
Consolidated rental acquisitions (excluding Archstone) $100.0 million
Consolidated rental dispositions - EQR assets $4.4 billion
Consolidated rental dispositions - Archstone assets (pre-closing) $500.0 million
Capitalization rate spread 110 basis points
 

2013 Debt Assumptions, Includes Impact of Archstone Debt Premium (see Note below)

 
Weighted average debt outstanding $11.2 billion to $11.4 billion
Weighted average interest rate (reduced for capitalized interest) 4.22 %
Interest expense $472.6 million to $481.1 million
 

2013 Other Guidance Assumptions

 
General and administrative expense $63.0 million
Interest and other income $0.7 million
Income and other tax expense $2.6 million
Debt offerings $800.0 million
Equity ATM share offerings No amounts budgeted
Preferred share offerings No amounts budgeted
Weighted average Common Shares and Units - Diluted 370.5 million
 
Note: All debt assumptions include the impact of a mark-to-market non-cash adjustment relating to Archstone's debt that the Company assumed. Excluding the impact of the Archstone net debt premium, the Company's debt assumptions would be as follows:
 
Weighted average debt outstanding without Archstone net premium $11.1 billion to $11.3 billion
Weighted average interest rate (reduced for capitalized interest) without Archstone net premium 4.56 %
Interest expense without Archstone net premium $506.2 million to $515.3 million
                 
Equity Residential
2013 Non-Comparable Items Guidance
(Amounts in thousands)
       
The Non-Comparable Items provided below are based on current expectations and are forward looking.
 
Midpoint of Forecasted 2013 Non-Comparable Items – Adjustments from FFO to Normalized FFO (2) (3)
 
Expected Q4 2013 Expected 2013
 
Amounts Per Share Amounts Per Share
       
Asset impairment and valuation allowances $   $   $   $  
 
Archstone merger costs (merger expenses) 19,741 0.05
Archstone merger costs (loss from investments in unconsolidated entities due to merger expenses) 1,269 56,050 0.15
Property acquisition costs (other expenses) 30 233
Write-off of pursuit costs (other expenses)   1,700     0.01     5,669     0.02  
Property acquisition costs and write-off of pursuit costs   2,999     0.01     81,693     0.22  
 
Prepayment premiums/penalties 150,000 0.40 221,443 0.60
Write-off of unamortized deferred financing costs 5,652 0.01 9,778 0.02
Write-off of unamortized (premiums)/discounts/OCI   (112,292 )   (0.30 )   (109,041 )   (0.29 )
Debt extinguishment (gains) losses, including prepayment penalties, preferred share redemptions
and non-cash convertible debt discounts   43,360     0.11     122,180     0.33  
 
Net (gain) loss on sales of land parcels (12,179 ) (0.03 )
Net incremental (gain) on sales of condominium units (7 )
(Gain) on sale of Equity Corporate Housing (ECH) (761 ) (1,470 )
(Gain) on sale of investment securities   (1,292 )       (2,122 )   (0.01 )
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)   (2,053 )       (15,778 )   (0.04 )
 
Insurance/litigation settlement expense           3,361     0.01  
Other miscellaneous non-comparable items           3,361     0.01  
       
Non-comparable items – Adjustments from FFO to Normalized FFO (2) (3) $ 44,306   $ 0.12   $ 191,456   $ 0.52  
 
Note: See page 29 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.
 
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 7, 26 and 28
 
 
Expected Q3 2013

Expected

Expected

Q4 2013

2013

Amounts Per Share

Per Share

Per Share

 
Expected Earnings - Diluted (5) $ 112,852 $ 0.300 $0.21 to $0.23 $5.03 to $5.05
Add: Expected depreciation expense 316,372 0.841 0.47 2.70
Less: Expected net gain on sales (5)   (162,548 )   (0.432 ) (0.05 ) (5.42 )
 
Expected FFO - Diluted (1) (3) 266,676 0.709 0.63 to 0.65 2.31 to 2.33
 
Asset impairment and valuation allowances
Property acquisition costs and write-off of pursuit costs 5,153 0.014 0.01 0.22
Debt extinguishment (gains) losses, including prepayment penalties,
preferred share redemptions and non-cash convertible debt discounts 0.11 0.33
(Gains) losses on sales of non-operating assets, net of income and other tax
expense (benefit) 2,248 0.006 (0.04 )
Other miscellaneous non-comparable items           0.01  
 
Expected Normalized FFO - Diluted (2) (3) $ 274,077   $ 0.729   $0.75 to $0.77 $2.83 to $2.85
 
Definitions and Footnotes for Pages 7, 26 and 28
   
(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 11
 
The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the September YTD 2013 and the Third Quarter 2013 Same Store Properties:
 
Nine Months Ended September 30, Quarter Ended September 30,
2013 2012 2013 2012
 
Operating income $ 291,521 $ 368,443 $ 121,394 $ 142,932
Adjustments:
Non-same store operating results (267,183 ) (1,744 ) (107,813 ) 663
Fee and asset management revenue (7,399 ) (7,328 ) (2,566 ) (3,052 )
Fee and asset management expense 4,739 3,595 1,516 1,108
Depreciation 798,121 422,148 277,336 139,337
General and administrative   47,018     37,162     14,438     10,083  
 
Same store NOI $ 866,817   $ 822,276   $ 304,305   $ 291,071  
 

Contact:
Equity Residential
Marty McKenna, (312) 928-1901

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