Exhibit 99.2
July 25, 2012, Equity Residential (NYSE: EQR) today reported results for the quarter and six months ended June 30, 2012. All per share results are reported on a fully-diluted basis.
Second Quarter 2012
For the second quarter of 2012, the company reported earnings of $0.33 per share compared to $1.85 per share in the second quarter of 2011.
Six Months Ended June 30, 2012
For the six months ended June 30, 2012, the company reported earnings of $0.80 per share compared to $2.30 per share in the same period of 2011.
Same Store Results
On a same store second quarter to second quarter comparison, which includes 105,604 apartment units, revenues increased 5.5%, expenses increased 2.0% and NOI increased 7.5%.
On a same store six-month to six-month comparison, which includes 103,950 apartment units, revenues increased 5.5%, expenses increased 1.9% and NOI increased 7.5%.
Acquisitions/Dispositions
During the first six months of 2012, the company acquired five properties with a total of 1,356 apartment units for an aggregate purchase price of $670.0 million at a weighted average cap rate of 4.8% and two land parcels for $23.7 million.
Also during the first six months of 2012, the company sold 12 properties with a total of 3,184 apartment units for an aggregate sale price of $336.3 million at a weighted average cap rate of 6.4% generating an unlevered internal rate of return (IRR), inclusive of management costs, of 11.0%.
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 will recognize $70 million of these fees in interest and other income in the third quarter of 2012 and expects to recognize $80 million of these fees in interest and other income in the fourth quarter of 2012, subject to resolution of certain contingencies more fully described in previous disclosures.
Financing Activities
The company previously entered into a new senior unsecured $500 million delayed draw term loan facility that provided for a single draw anytime on or before July 4, 2012 and could have been used for any corporate purpose including to finance an Archstone acquisition. The company elected not to draw on this facility and the facility expired undrawn.
As previously disclosed on July 20, 2012, the company called for redemption, on August 20, 2012, 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 will record 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.
During the first six months of 2012, the company issued 1,081,797 units in its operating limited partnership having a value of approximately $66.6 million in connection with a property acquisition. The company has not issued any common shares under its At-the-Market (ATM) share offering program since the first quarter of 2012.
As of July 24, 2012, the company had cash on hand of approximately $75 million and approximately $1.72 billion available on its revolving credit facility.
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.
Equity Residential | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(Amounts in thousands except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Six Months Ended June 30, | Quarter Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
REVENUES | ||||||||||||||||
Rental income | $ | 1,063,162 | $ | 939,121 | $ | 541,569 | $ | 478,419 | ||||||||
Fee and asset management | 4,276 | 3,754 | 2,212 | 1,948 | ||||||||||||
Total revenues | 1,067,438 | 942,875 | 543,781 | 480,367 | ||||||||||||
EXPENSES | ||||||||||||||||
Property and maintenance | 218,004 | 202,157 | 107,024 | 98,571 | ||||||||||||
Real estate taxes and insurance | 118,768 | 106,610 | 63,126 | 54,803 | ||||||||||||
Property management | 44,417 | 43,148 | 21,008 | 20,767 | ||||||||||||
Fee and asset management | 2,487 | 1,957 | 1,180 | 1,009 | ||||||||||||
Depreciation | 346,079 | 311,891 | 172,338 | 154,452 | ||||||||||||
General and administrative | 27,082 | 22,341 | 13,394 | 10,908 | ||||||||||||
Total expenses | 756,837 | 688,104 | 378,070 | 340,510 | ||||||||||||
Operating income | 310,601 | 254,771 | 165,711 | 139,857 | ||||||||||||
Interest and other income | 431 | 1,288 | 259 | 277 | ||||||||||||
Other expenses | (16,584 | ) | (6,790 | ) | (9,517 | ) | (4,630 | ) | ||||||||
Interest: | ||||||||||||||||
Expense incurred, net | (234,247 | ) | (240,443 | ) | (115,618 | ) | (119,997 | ) | ||||||||
Amortization of deferred financing costs | (7,037 | ) | (7,401 | ) | (4,063 | ) | (4,396 | ) | ||||||||
Income before income and other taxes, net gain on sales | ||||||||||||||||
of land parcels and discontinued operations | 53,164 | 1,425 | 36,772 | 11,111 | ||||||||||||
Income and other tax (expense) benefit | (405 | ) | (386 | ) | (214 | ) | (202 | ) | ||||||||
Net gain on sales of land parcels | — | 4,217 | — | 4,217 | ||||||||||||
Income from continuing operations | 52,759 | 5,256 | 36,558 | 15,126 | ||||||||||||
Discontinued operations, net | 207,723 | 709,563 | 71,757 | 566,627 | ||||||||||||
Net income | 260,482 | 714,819 | 108,315 | 581,753 | ||||||||||||
Net (income) attributable to Noncontrolling Interests: | ||||||||||||||||
Operating Partnership | (11,150 | ) | (31,533 | ) | (4,732 | ) | (25,758 | ) | ||||||||
Partially Owned Properties | (769 | ) | (31 | ) | (319 | ) | (71 | ) | ||||||||
Net income attributable to controlling interests | 248,563 | 683,255 | 103,264 | 555,924 | ||||||||||||
Preferred distributions | (6,933 | ) | (6,933 | ) | (3,467 | ) | (3,467 | ) | ||||||||
Net income available to Common Shares | $ | 241,630 | $ | 676,322 | $ | 99,797 | $ | 552,457 | ||||||||
Earnings per share – basic: | ||||||||||||||||
Income (loss) from continuing operations available to Common | ||||||||||||||||
Shares | $ | 0.14 | $ | (0.01 | ) | $ | 0.10 | $ | 0.04 | |||||||
Net income available to Common Shares | $ | 0.81 | $ | 2.30 | $ | 0.33 | $ | 1.88 | ||||||||
Weighted average Common Shares outstanding | 299,499 | 293,784 | 300,193 | 294,663 | ||||||||||||
Earnings per share – diluted: | ||||||||||||||||
Income (loss) from continuing operations available to Common | ||||||||||||||||
Shares | $ | 0.14 | $ | (0.01 | ) | $ | 0.10 | $ | 0.04 | |||||||
Net income available to Common Shares | $ | 0.80 | $ | 2.30 | $ | 0.33 | $ | 1.85 | ||||||||
Weighted average Common Shares outstanding | 316,457 | 293,784 | 317,648 | 312,199 | ||||||||||||
Distributions declared per Common Share outstanding | $ | 0.6750 | $ | 0.6750 | $ | 0.3375 | $ | 0.3375 |
Equity Residential | ||||||||||||||||
Consolidated Statements of Funds From Operations and Normalized Funds From Operations | ||||||||||||||||
(Amounts in thousands except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Six Months Ended June 30, | Quarter Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income | $ | 260,482 | $ | 714,819 | $ | 108,315 | $ | 581,753 | ||||||||
Adjustments: | ||||||||||||||||
Net (income) attributable to Noncontrolling Interests – | ||||||||||||||||
Partially Owned Properties | (769 | ) | (31 | ) | (319 | ) | (71 | ) | ||||||||
Depreciation | 346,079 | 311,891 | 172,338 | 154,452 | ||||||||||||
Depreciation – Non-real estate additions | (2,781 | ) | (2,905 | ) | (1,427 | ) | (1,521 | ) | ||||||||
Depreciation – Partially Owned and Unconsolidated Properties | (1,597 | ) | (1,505 | ) | (797 | ) | (755 | ) | ||||||||
Discontinued operations: | ||||||||||||||||
Depreciation | 2,027 | 18,951 | 660 | 7,081 | ||||||||||||
Net (gain) on sales of discontinued operations | (204,053 | ) | (682,236 | ) | (71,097 | ) | (558,482 | ) | ||||||||
Net incremental gain on sales of condominium units | 49 | 1,115 | — | 720 | ||||||||||||
Gain on sale of Equity Corporate Housing (ECH) | 350 | 1,024 | 350 | 1,024 | ||||||||||||
FFO (1) (3) | 399,787 | 361,123 | 208,023 | 184,201 | ||||||||||||
Adjustments: | ||||||||||||||||
Asset impairment and valuation allowances | — | — | — | — | ||||||||||||
Property acquisition costs and write-off of pursuit costs (other | ||||||||||||||||
expenses) | 10,894 | 6,790 | 8,268 | 4,626 | ||||||||||||
Debt extinguishment (gains) losses, including prepayment | ||||||||||||||||
penalties, preferred share redemptions and non-cash | ||||||||||||||||
convertible debt discounts | 1,377 | 8,573 | 1,418 | 6,510 | ||||||||||||
(Gains) losses on sales of non-operating assets, net of income and | ||||||||||||||||
other tax expense (benefit) | (491 | ) | (5,529 | ) | (487 | ) | (5,153 | ) | ||||||||
Other miscellaneous non-comparable items | 2,223 | (2,100 | ) | 1,249 | — | |||||||||||
Normalized FFO (2) (3) | $ | 413,790 | $ | 368,857 | $ | 218,471 | $ | 190,184 | ||||||||
FFO (1) (3) | $ | 399,787 | $ | 361,123 | $ | 208,023 | $ | 184,201 | ||||||||
Preferred distributions | (6,933 | ) | (6,933 | ) | (3,467 | ) | (3,467 | ) | ||||||||
FFO available to Common Shares and Units - basic and diluted (1) (3) (4) | $ | 392,854 | $ | 354,190 | $ | 204,556 | $ | 180,734 | ||||||||
Normalized FFO (2) (3) | $ | 413,790 | $ | 368,857 | $ | 218,471 | $ | 190,184 | ||||||||
Preferred distributions | (6,933 | ) | (6,933 | ) | (3,467 | ) | (3,467 | ) | ||||||||
Normalized FFO available to Common Shares and Units - basic and diluted (2) (3) (4) | $ | 406,857 | $ | 361,924 | $ | 215,004 | $ | 186,717 |
(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. |
Equity Residential | ||||||||
Consolidated Balance Sheets | ||||||||
(Amounts in thousands except for share amounts) | ||||||||
(Unaudited) | ||||||||
June 30, | December 31, | |||||||
2012 | 2011 | |||||||
ASSETS | ||||||||
Investment in real estate | ||||||||
Land | $ | 4,565,646 | $ | 4,367,816 | ||||
Depreciable property | 15,886,832 | 15,554,740 | ||||||
Projects under development | 198,912 | 160,190 | ||||||
Land held for development | 372,108 | 325,200 | ||||||
Investment in real estate | 21,023,498 | 20,407,946 | ||||||
Accumulated depreciation | (4,777,887 | ) | (4,539,583 | ) | ||||
Investment in real estate, net | 16,245,611 | 15,868,363 | ||||||
Cash and cash equivalents | 44,585 | 383,921 | ||||||
Investments in unconsolidated entities | 17,886 | 12,327 | ||||||
Deposits – restricted | 193,892 | 152,237 | ||||||
Escrow deposits – mortgage | 9,139 | 10,692 | ||||||
Deferred financing costs, net | 41,854 | 44,608 | ||||||
Other assets | 161,445 | 187,155 | ||||||
Total assets | $ | 16,714,412 | $ | 16,659,303 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Mortgage notes payable | 4,004,496 | 4,111,487 | ||||||
Notes, net | 5,354,768 | 5,609,574 | ||||||
Lines of credit | 35,000 | - | ||||||
Accounts payable and accrued expenses | 72,647 | 35,206 | ||||||
Accrued interest payable | 82,695 | 88,121 | ||||||
Other liabilities | 430,650 | 291,289 | ||||||
Security deposits | 68,265 | 65,286 | ||||||
Distributions payable | 109,463 | 179,079 | ||||||
Total liabilities | 10,157,984 | 10,380,042 | ||||||
Commitments and contingencies | ||||||||
Redeemable Noncontrolling Interests – Operating Partnership | 452,203 | 416,404 | ||||||
Equity: | ||||||||
Shareholders’ equity: | ||||||||
Preferred Shares of beneficial interest, $0.01 par value; | ||||||||
100,000,000 shares authorized; 1,600,000 shares issued and outstanding as of | ||||||||
June 30, 2012 and December 31, 2011 | 200,000 | 200,000 | ||||||
Common Shares of beneficial interest, $0.01 par value; | ||||||||
1,000,000,000 shares authorized; 300,961,645 shares issued and outstanding as of | ||||||||
June 30, 2012 and 297,508,185 shares issued and outstanding as of December 31, 2011 | 3,010 | 2,975 | ||||||
Paid in capital | 5,226,088 | 5,047,186 | ||||||
Retained earnings | 654,235 | 615,572 | ||||||
Accumulated other comprehensive (loss) | (198,075 | ) | (196,718 | ) | ||||
Total shareholders’ equity | 5,885,258 | 5,669,015 | ||||||
Noncontrolling Interests: | ||||||||
Operating Partnership | 144,521 | 119,536 | ||||||
Partially Owned Properties | 74,446 | 74,306 | ||||||
Total Noncontrolling Interests | 218,967 | 193,842 | ||||||
Total equity | 6,104,225 | 5,862,857 | ||||||
Total liabilities and equity | $ | 16,714,412 | $ | 16,659,303 |
Equity Residential | |||||||||||||||||
Portfolio as of June 30, 2012 | |||||||||||||||||
Properties | Apartment Units | ||||||||||||||||
Wholly Owned Properties | 398 | 111,500 | |||||||||||||||
Partially Owned Properties - Consolidated | 21 | 3,916 | |||||||||||||||
Military Housing | 2 | 4,939 | |||||||||||||||
421 | 120,355 | ||||||||||||||||
Portfolio Rollforward 2012 | |||||||||||||||||
($ in thousands) | |||||||||||||||||
Properties | Apartment Units | Purchase/ (Sale) Price | Cap Rate | ||||||||||||||
12/31/2011 | 427 | 121,974 | |||||||||||||||
Acquisitions: | |||||||||||||||||
Rental Properties - Consolidated | 5 | 1,356 | $ | 669,969 | 4.8 | % | |||||||||||
Land Parcels (two) | - | - | $ | 23,740 | |||||||||||||
Dispositions: | |||||||||||||||||
Rental Properties - Consolidated | (12 | ) | (3,184 | ) | $ | (336,250 | ) | 6.4 | % | ||||||||
Completed Developments | 1 | 168 | |||||||||||||||
Configuration Changes | - | 41 | |||||||||||||||
6/30/2012 | 421 | 120,355 |
Equity Residential | ||||||||||||||||||||||||
Second Quarter 2012 vs. Second Quarter 2011 | ||||||||||||||||||||||||
Same Store Results/Statistics | ||||||||||||||||||||||||
$ in thousands (except for Average Rental Rate) - 105,604 Same Store Apartment Units | ||||||||||||||||||||||||
Results | Statistics | |||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Rental | ||||||||||||||||||||||||
Description | Revenues | Expenses | NOI (1) | Rate (2) | Occupancy | Turnover | ||||||||||||||||||
Q2 2012 | $ | 489,865 | $ | 170,209 | $ | 319,656 | $ | 1,626 | 95.2 | % | 15.5 | % | ||||||||||||
Q2 2011 | $ | 464,313 | $ | 166,862 | $ | 297,451 | $ | 1,539 | 95.4 | % | 15.1 | % | ||||||||||||
Change | $ | 25,552 | $ | 3,347 | $ | 22,205 | $ | 87 | (0.2 | %) | 0.4 | % | ||||||||||||
Change | 5.5 | % | 2.0 | % | 7.5 | % | 5.7 | % | ||||||||||||||||
June YTD 2012 vs. June YTD 2011 | ||||||||||||||||||||||||
Same Store Results/Statistics | ||||||||||||||||||||||||
$ in thousands (except for Average Rental Rate) - 103,950 Same Store Apartment Units | ||||||||||||||||||||||||
Results | Statistics | |||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Rental | ||||||||||||||||||||||||
Description | Revenues | Expenses | NOI (1) | Rate (2) | Occupancy | Turnover | ||||||||||||||||||
YTD 2012 | $ | 950,505 | $ | 338,380 | $ | 612,125 | $ | 1,605 | 95.1 | % | 27.9 | % | ||||||||||||
YTD 2011 | $ | 901,181 | $ | 331,925 | $ | 569,256 | $ | 1,520 | 95.2 | % | 26.6 | % | ||||||||||||
Change | $ | 49,324 | $ | 6,455 | $ | 42,869 | $ | 85 | (0.1 | %) | 1.3 | % | ||||||||||||
Change | 5.5 | % | 1.9 | % | 7.5 | % | 5.6 | % |
(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. | ||||||||||||
(2) | Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. |
Equity Residential | ||||||||||||||||||||
Second Quarter 2012 vs. Second Quarter 2011 | ||||||||||||||||||||
Same Store Operating Expenses | ||||||||||||||||||||
$ in thousands - 105,604 Same Store Apartment Units | ||||||||||||||||||||
Actual Q2 2012 | Actual Q2 2011 | $ Change | % Change | % of Actual Q2 2012 Operating Expenses | ||||||||||||||||
Real estate taxes | $ | 51,110 | $ | 48,219 | $ | 2,891 | 6.0 | % | 30.0 | % | ||||||||||
On-site payroll (1) | 38,804 | 38,371 | 433 | 1.1 | % | 22.8 | % | |||||||||||||
Utilities (2) | 25,049 | 24,761 | 288 | 1.2 | % | 14.7 | % | |||||||||||||
Repairs and maintenance (3) | 24,081 | 23,975 | 106 | 0.4 | % | 14.2 | % | |||||||||||||
Property management costs (4) | 18,370 | 18,573 | (203 | ) | (1.1 | %) | 10.8 | % | ||||||||||||
Insurance | 5,528 | 5,137 | 391 | 7.6 | % | 3.2 | % | |||||||||||||
Leasing and advertising | 2,877 | 3,092 | (215 | ) | (7.0 | %) | 1.7 | % | ||||||||||||
Other on-site operating expenses (5) | 4,390 | 4,734 | (344 | ) | (7.3 | %) | 2.6 | % | ||||||||||||
Same store operating expenses | $ | 170,209 | $ | 166,862 | $ | 3,347 | 2.0 | % | 100.0 | % | ||||||||||
June YTD 2012 vs. June YTD 2011 | ||||||||||||||||||||
Same Store Operating Expenses | ||||||||||||||||||||
$ in thousands - 103,950 Same Store Apartment Units | ||||||||||||||||||||
Actual YTD 2012 | Actual YTD 2011 | $ Change | % Change | % of Actual YTD 2012 Operating Expenses | ||||||||||||||||
Real estate taxes | $ | 100,173 | $ | 94,906 | $ | 5,267 | 5.5 | % | 29.6 | % | ||||||||||
On-site payroll (1) | 77,526 | 76,323 | 1,203 | 1.6 | % | 22.9 | % | |||||||||||||
Utilities (2) | 51,263 | 52,307 | (1,044 | ) | (2.0 | %) | 15.2 | % | ||||||||||||
Repairs and maintenance (3) | 46,468 | 45,902 | 566 | 1.2 | % | 13.7 | % | |||||||||||||
Property management costs (4) | 36,119 | 36,047 | 72 | 0.2 | % | 10.7 | % | |||||||||||||
Insurance | 10,768 | 10,062 | 706 | 7.0 | % | 3.2 | % | |||||||||||||
Leasing and advertising | 5,492 | 6,307 | (815 | ) | (12.9 | %) | 1.6 | % | ||||||||||||
Other on-site operating expenses (5) | 10,571 | 10,071 | 500 | 5.0 | % | 3.1 | % | |||||||||||||
Same store operating expenses | $ | 338,380 | $ | 331,925 | $ | 6,455 | 1.9 | % | 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. |
Equity Residential | ||||||||||||||||||||||||||
Debt Summary as of June 30, 2012 | ||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||
Amount (1) | % of Total | Weighted Average Rates (1) | Weighted Average Maturities (years) | |||||||||||||||||||||||
Secured | $ | 4,004,496 | 42.6 | % | 4.94 | % | 7.4 | |||||||||||||||||||
Unsecured | 5,389,768 | 57.4 | % | 5.11 | % | 4.9 | ||||||||||||||||||||
Total | $ | 9,394,264 | 100.0 | % | 5.03 | % | 5.9 | |||||||||||||||||||
Fixed Rate Debt: | ||||||||||||||||||||||||||
Secured - Conventional | $ | 3,590,277 | 38.2 | % | 5.51 | % | 6.5 | |||||||||||||||||||
Unsecured - Public/Private | 4,550,459 | 48.4 | % | 5.70 | % | 5.7 | ||||||||||||||||||||
Fixed Rate Debt | 8,140,736 | 86.6 | % | 5.62 | % | 6.0 | ||||||||||||||||||||
Floating Rate Debt: | ||||||||||||||||||||||||||
Secured - Conventional | 63,714 | 0.7 | % | 3.33 | % | 1.0 | ||||||||||||||||||||
Secured - Tax Exempt | 350,505 | 3.7 | % | 0.23 | % | 18.1 | ||||||||||||||||||||
Unsecured - Public/Private | 804,309 | 8.6 | % | 1.67 | % | 0.4 | ||||||||||||||||||||
Unsecured - Revolving Credit Facility | 35,000 | 0.4 | % | 1.35 | % | 2.0 | ||||||||||||||||||||
Floating Rate Debt | 1,253,528 | 13.4 | % | 1.29 | % | 5.1 | ||||||||||||||||||||
Total | $ | 9,394,264 | 100.0 | % | 5.03 | % | 5.9 | |||||||||||||||||||
(1) Net of the effect of any derivative instruments. Weighted average rates are for the six months ended June 30, 2012. | ||||||||||||||||||||||||||
Note: The Company capitalized interest of approximately $10.1 million and $3.7 million during the six months ended June 30, 2012 and 2011, respectively. The Company capitalized interest of approximately $5.1 million and $2.0 million during the quarters ended June 30, 2012 and 2011, respectively. | ||||||||||||||||||||||||||
Debt Maturity Schedule as of June 30, 2012 | ||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||
Year | Fixed Rate (1) | Floating Rate (1) | Total | % of Total | Weighted Average Rates on Fixed Rate Debt (1) | Weighted Average Rates on Total Debt (1) | ||||||||||||||||||||
2012 | $ | 276,867 | $ | 533,198 | (2) | $ | 810,065 | 8.6 | % | 5.52 | % | 2.50 | % | |||||||||||||
2013 | 267,283 | 304,819 | 572,102 | 6.1 | % | 6.69 | % | 4.85 | % | |||||||||||||||||
2014 | 563,844 | 57,021 | (3) | 620,865 | 6.6 | % | 5.31 | % | 5.02 | % | ||||||||||||||||
2015 | 417,330 | - | 417,330 | 4.4 | % | 6.30 | % | 6.30 | % | |||||||||||||||||
2016 | 1,190,036 | - | 1,190,036 | 12.7 | % | 5.34 | % | 5.34 | % | |||||||||||||||||
2017 | 1,445,589 | 456 | 1,446,045 | 15.4 | % | 5.95 | % | 5.95 | % | |||||||||||||||||
2018 | 80,887 | 724 | 81,611 | 0.9 | % | 5.71 | % | 5.71 | % | |||||||||||||||||
2019 | 802,044 | 20,766 | 822,810 | 8.8 | % | 5.49 | % | 5.36 | % | |||||||||||||||||
2020 | 1,671,868 | 809 | 1,672,677 | 17.8 | % | 5.50 | % | 5.50 | % | |||||||||||||||||
2021 | 1,165,475 | 856 | 1,166,331 | 12.4 | % | 4.64 | % | 4.64 | % | |||||||||||||||||
2022+ | 233,861 | 338,604 | 572,465 | 6.1 | % | 6.75 | % | 3.33 | % | |||||||||||||||||
Premium/(Discount) | 25,652 | (3,725 | ) | 21,927 | 0.2 | % | N/A | N/A | ||||||||||||||||||
Total | $ | 8,140,736 | $ | 1,253,528 | $ | 9,394,264 | 100.0 | % | 5.54 | % | 5.00 | % | ||||||||||||||
(1) Net of the effect of any derivative instruments. Weighted average rates are as of June 30, 2012. | ||||||||||||||||||||||||||
(2) Effective April 5, 2011, the Company exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012. | ||||||||||||||||||||||||||
(3) Includes $35.0 million outstanding on the Company's unsecured revolving credit facility. As of June 30, 2012, there was approximately $1.68 billion available on this facility. |
Equity Residential | ||||||||||||||||||
Unsecured Debt Summary as of June 30, 2012 | ||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||
Coupon Rate | Due Date | Face Amount | Unamortized Premium/ (Discount) | Net Balance | ||||||||||||||
Fixed Rate Notes: | ||||||||||||||||||
5.500% | 10/01/12 | $ | 222,133 | $ | (55 | ) | $ | 222,078 | ||||||||||
5.200% | 04/01/13 | (1) | 400,000 | (89 | ) | 399,911 | ||||||||||||
Fair Value Derivative Adjustments | (1) | (300,000 | ) | - | (300,000 | ) | ||||||||||||
5.250% | 09/15/14 | 500,000 | (136 | ) | 499,864 | |||||||||||||
6.584% | 04/13/15 | 300,000 | (303 | ) | 299,697 | |||||||||||||
5.125% | 03/15/16 | 500,000 | (197 | ) | 499,803 | |||||||||||||
5.375% | 08/01/16 | 400,000 | (758 | ) | 399,242 | |||||||||||||
5.750% | 06/15/17 | 650,000 | (2,543 | ) | 647,457 | |||||||||||||
7.125% | 10/15/17 | 150,000 | (343 | ) | 149,657 | |||||||||||||
4.750% | 07/15/20 | 600,000 | (3,662 | ) | 596,338 | |||||||||||||
4.625% | 12/15/21 | 1,000,000 | (3,588 | ) | 996,412 | |||||||||||||
7.570% | 08/15/26 | 140,000 | - | 140,000 | ||||||||||||||
4,562,133 | (11,674 | ) | 4,550,459 | |||||||||||||||
Floating Rate Notes: | ||||||||||||||||||
04/01/13 | (1) | 300,000 | - | 300,000 | ||||||||||||||
Fair Value Derivative Adjustments | (1) | 4,309 | - | 4,309 | ||||||||||||||
Term Loan Facility | LIBOR+0.50% | 10/05/12 | (2)(3) | 500,000 | - | 500,000 | ||||||||||||
804,309 | - | 804,309 | ||||||||||||||||
Revolving Credit Facility: | LIBOR+1.15% | 07/13/14 | (2)(4) | 35,000 | - | 35,000 | ||||||||||||
Total Unsecured Debt | $ | 5,401,442 | $ | (11,674 | ) | $ | 5,389,768 |
(1) | Fair value interest rate swaps convert $300.0 million of the 5.200% notes due April 1, 2013 to a floating interest rate. |
(2) | Facilities are private. All other unsecured debt is public. |
(3) | Effective April 5, 2011, the Company exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012. |
(4) | As of June 30, 2012, there was approximately $1.68 billion available on the Company's unsecured revolving credit facility. |
Equity Residential | ||||||||||||||||||||||||
Capital Structure as of June 30, 2012 | ||||||||||||||||||||||||
(Amounts in thousands except for share/unit and per share amounts) | ||||||||||||||||||||||||
Secured Debt | $ | 4,004,496 | 42.6 | % | ||||||||||||||||||||
Unsecured Debt | 5,389,768 | 57.4 | % | |||||||||||||||||||||
Total Debt | 9,394,264 | 100.0 | % | 32.1 | % | |||||||||||||||||||
Common Shares (includes Restricted Shares) | 300,961,645 | 95.4 | % | |||||||||||||||||||||
Units (includes OP Units and LTIP Units) | 14,508,752 | 4.6 | % | |||||||||||||||||||||
Total Shares and Units | 315,470,397 | 100.0 | % | |||||||||||||||||||||
Common Share Price at June 30, 2012 | $ | 62.36 | ||||||||||||||||||||||
19,672,734 | 99.0 | % | ||||||||||||||||||||||
Perpetual Preferred Equity (see below) | 200,000 | 1.0 | % | |||||||||||||||||||||
Total Equity | 19,872,734 | 100.0 | % | 67.9 | % | |||||||||||||||||||
Total Market Capitalization | $ | 29,266,998 | 100.0 | % | ||||||||||||||||||||
Perpetual Preferred Equity as of June 30, 2012 | ||||||||||||||||||||||||
(Amounts in thousands except for share and per share amounts) | ||||||||||||||||||||||||
Series | Redemption Date | Outstanding Shares | Liquidation Value | Annual Dividend Per Share | Annual Dividend Amount | Weighted Average Rate | ||||||||||||||||||
Preferred Shares: | ||||||||||||||||||||||||
8.29% Series K | 12/10/26 | 1,000,000 | $ | 50,000 | $ | 4.145 | $ | 4,145 | ||||||||||||||||
6.48% Series N (1) | 6/19/08 | 600,000 | 150,000 | 16.20 | 9,720 | |||||||||||||||||||
Total Perpetual Preferred Equity | 1,600,000 | $ | 200,000 | $ | 13,865 | 6.93 | % |
(1) The Series N Preferred Shares have been called for redemption effective august 20, 2012
Equity Residential | ||||||||||||||||
Common Share and Unit | ||||||||||||||||
Weighted Average Amounts Outstanding | ||||||||||||||||
YTD Q212 | YTD Q211 | Q212 | Q211 | |||||||||||||
Weighted Average Amounts Outstanding for Net Income Purposes: | ||||||||||||||||
Common Shares - basic | 299,499,337 | 293,783,729 | 300,193,311 | 294,662,571 | ||||||||||||
Shares issuable from assumed conversion/vesting of (1): | ||||||||||||||||
- OP Units | 13,633,531 | - | 14,061,763 | 13,291,204 | ||||||||||||
- long-term compensation shares/units | 3,324,096 | - | 3,392,527 | 4,245,599 | ||||||||||||
Total Common Shares and Units - diluted (1) | 316,456,964 | 293,783,729 | 317,647,601 | 312,199,374 | ||||||||||||
Period Ending Amounts Outstanding: | ||||||||||||||||
Common Shares (includes Restricted Shares) | 300,961,645 | 296,280,085 | ||||||||||||||
Units (includes OP Units and LTIP Units) | 14,508,752 | 13,488,276 | ||||||||||||||
Total Shares and Units | 315,470,397 | 309,768,361 |
(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 for the six months ended June 30, 2011. |
Equity Residential | ||||||||||||||||||||
Partially Owned Entities as of June 30, 2012 | ||||||||||||||||||||
(Amounts in thousands except for project and apartment unit amounts) | ||||||||||||||||||||
Consolidated | Unconsolidated | |||||||||||||||||||
Development Projects | ||||||||||||||||||||
Held for and/or Under Development | Completed and Stabilized | Other | Total | Institutional Joint Ventures (4) | ||||||||||||||||
Total projects (1) | - | 2 | 19 | 21 | - | |||||||||||||||
Total apartment units (1) | - | 441 | 3,475 | 3,916 | - | |||||||||||||||
Operating information for the six months ended 6/30/12 (at 100%): | ||||||||||||||||||||
Operating revenue | $ | - | $ | 4,733 | $ | 30,467 | $ | 35,200 | $ | - | ||||||||||
Operating expenses | 75 | 1,358 | 9,711 | 11,144 | - | |||||||||||||||
Net operating (loss) income | (75 | ) | 3,375 | 20,756 | 24,056 | - | ||||||||||||||
Depreciation | - | 2,085 | 7,683 | 9,768 | - | |||||||||||||||
General and administrative/other | 42 | 3 | 30 | 75 | - | |||||||||||||||
Operating (loss) income | (117 | ) | 1,287 | 13,043 | 14,213 | - | ||||||||||||||
Interest and other income | 1 | 2 | - | 3 | - | |||||||||||||||
Other expenses | (126 | ) | - | - | (126 | ) | - | |||||||||||||
Interest: | ||||||||||||||||||||
Expense incurred, net | - | (671 | ) | (4,694 | ) | (5,365 | ) | - | ||||||||||||
Amortization of deferred financing costs | - | (135 | ) | (89 | ) | (224 | ) | - | ||||||||||||
(Loss) income before income and other taxes | (242 | ) | 483 | 8,260 | 8,501 | - | ||||||||||||||
Income and other tax (expense) benefit | (25 | ) | - | (21 | ) | (46 | ) | - | ||||||||||||
Net (loss) income | $ | (267 | ) | $ | 483 | $ | 8,239 | $ | 8,455 | $ | - | |||||||||
Debt - Secured (2): | ||||||||||||||||||||
EQR Ownership (3) | $ | - | $ | 32,950 | $ | 159,068 | $ | 192,018 | $ | 2,594 | ||||||||||
Noncontrolling Ownership | - | - | 41,269 | 41,269 | 10,374 | |||||||||||||||
Total (at 100%) | $ | - | $ | 32,950 | $ | 200,337 | $ | 233,287 | $ | 12,968 |
(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 economic ownership interest. |
(4) | These development projects (Nexus Sawgrass and Domain) are owned 20% by the company and 80% by an institutional partner in two separate unconsolidated joint ventures. 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. |
Equity Residential | ||||||||||||||||||||||||||||
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate | ||||||||||||||||||||||||||||
For the Six Months Ended June 30, 2012 | ||||||||||||||||||||||||||||
(Amounts in thousands except for apartment unit and per apartment unit amounts) | ||||||||||||||||||||||||||||
Capital Expenditures to Real Estate | ||||||||||||||||||||||||||||
Total Apartment Units (1) | Replacements (2) | Avg. Per Apartment Unit | Building Improvements (3) | Avg. Per Apartment Unit | Total | Avg. Per Apartment Unit | ||||||||||||||||||||||
Same Store Properties (4) | 103,950 | $ | 32,501 | $ | 313 | $ | 23,856 | $ | 229 | $ | 56,357 | $ | 542 | (7) | ||||||||||||||
Non-Same Store Properties (5) | 11,466 | 2,940 | 281 | 8,636 | 825 | 11,576 | 1,106 | |||||||||||||||||||||
Other (6) | - | 288 | 98 | 386 | ||||||||||||||||||||||||
Total | 115,416 | $ | 35,729 | $ | 32,590 | $ | 68,319 |
(1) | Total Apartment Units - Excludes 4,939 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) | 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 $15.9 million spent during the six months ended June 30, 2012 on apartment unit renovations/rehabs (primarily kitchens and baths) on 2,254 apartment units (equating to about $7,100 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 $39.2 million rehabbing 4,700 apartment units (equating to about $8,300 per apartment unit rehabbed). |
(3) | 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. |
(4) | Same Store Properties - Primarily includes all properties acquired or completed and stabilized prior to January 1, 2011, less properties subsequently sold. |
(5) | 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 10,463 apartment units. |
(6) | Other - Primarily includes expenditures for properties sold during the period. |
(7) | For 2012, the Company estimates that it will spend approximately $1,225 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. |
Equity Residential | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
(Amounts in thousands) | ||||||||||||||||
Six Months Ended June 30, | Quarter Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
REVENUES | ||||||||||||||||
Rental income | $ | 10,131 | $ | 105,762 | $ | 3,198 | $ | 41,757 | ||||||||
Total revenues | 10,131 | 105,762 | 3,198 | 41,757 | ||||||||||||
EXPENSES (1) | ||||||||||||||||
Property and maintenance | 3,197 | 49,951 | 1,376 | 22,471 | ||||||||||||
Real estate taxes and insurance | 920 | 7,581 | 325 | 2,887 | ||||||||||||
Depreciation | 2,027 | 19,039 | 660 | 7,115 | ||||||||||||
General and administrative | 40 | 47 | 36 | 36 | ||||||||||||
Total expenses | 6,184 | 76,618 | 2,397 | 32,509 | ||||||||||||
Discontinued operating income | 3,947 | 29,144 | 801 | 9,248 | ||||||||||||
Interest and other income | 43 | 101 | 18 | 96 | ||||||||||||
Other expenses | - | - | - | 4 | ||||||||||||
Interest (2): | ||||||||||||||||
Expense incurred, net | (369 | ) | (1,209 | ) | (288 | ) | (605 | ) | ||||||||
Amortization of deferred financing costs | - | (647 | ) | - | (578 | ) | ||||||||||
Income and other tax (expense) benefit | 49 | (62 | ) | 129 | (20 | ) | ||||||||||
Discontinued operations | 3,670 | 27,327 | 660 | 8,145 | ||||||||||||
Net gain on sales of discontinued operations | 204,053 | 682,236 | 71,097 | 558,482 | ||||||||||||
Discontinued operations, net | $ | 207,723 | $ | 709,563 | $ | 71,757 | $ | 566,627 |
(1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company's period of ownership. |
(2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. |
Equity Residential | ||||||||||||||||
Additional Reconciliations | ||||||||||||||||
(Amounts in thousands except) | ||||||||||||||||
Same Store NOI Reconciliation | ||||||||||||||||
The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the June YTD 2012 and Second Quarter 2012 Same Store Properties: | ||||||||||||||||
Six Months Ended June 30, | Quarter Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating income | $ | 310,601 | $ | 254,771 | $ | 165,711 | $ | 139,857 | ||||||||
Adjustments: | ||||||||||||||||
Non-same store operating results | (69,848 | ) | (17,950 | ) | (30,755 | ) | (6,827 | ) | ||||||||
Fee and asset management revenue | (4,276 | ) | (3,754 | ) | (2,212 | ) | (1,948 | ) | ||||||||
Fee and asset management expense | 2,487 | 1,957 | 1,180 | 1,009 | ||||||||||||
Depreciation | 346,079 | 311,891 | 172,338 | 154,452 | ||||||||||||
General and administrative | 27,082 | 22,341 | 13,394 | 10,908 | ||||||||||||
Same store NOI | $ | 612,125 | $ | 569,256 | $ | 319,656 | $ | 297,451 |