Statement Of Financial Position
Statement Of Financial Position Unclassified - Real Estate Operations (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Investment in real estate | ||
Land | $3,669,394 | $3,671,299 |
Depreciable property | 13,993,241 | 13,908,594 |
Projects under development | 725,598 | 855,473 |
Land held for development | 239,377 | 254,873 |
Investment in real estate | 18,627,610 | 18,690,239 |
Accumulated depreciation | (3,759,948) | (3,561,300) |
Investment in real estate, net | 14,867,662 | 15,128,939 |
Cash and cash equivalents | 667,495 | 890,794 |
Investments in unconsolidated entities | 3,666 | 5,795 |
Deposits - restricted | 158,181 | 152,372 |
Escrow deposits - mortgage | 17,541 | 19,729 |
Deferred financing costs, net | 54,283 | 53,817 |
Other assets | 154,234 | 283,664 |
Total assets | 15,923,062 | 16,535,110 |
Liabilities: | ||
Mortgage notes payable | 5,028,736 | 5,036,930 |
Notes, net | 4,945,244 | 5,447,012 |
Lines of credit | 0 | 0 |
Accounts payable and accrued expenses | 113,915 | 108,463 |
Accrued interest payable | 107,566 | 113,846 |
Other liabilities | 258,677 | 289,562 |
Security deposits | 62,035 | 64,355 |
Distributions payable | 142,187 | 141,843 |
Total liabilities | 10,658,360 | 11,202,011 |
Commitments and contingencies | 0 | 0 |
Partners' capital: | ||
Preference Units | 208,773 | 208,786 |
Preference Interests and Junior Preference Units | 184 | 184 |
General Partner | 4,782,998 | 4,840,613 |
Limited Partners | 281,604 | 293,795 |
Accumulated other comprehensive loss | (22,222) | (35,799) |
Total partners' capital | 5,251,337 | 5,307,579 |
Noncontrolling Interests - Partially Owned Properties | 13,365 | 25,520 |
Total capital | 5,264,702 | 5,333,099 |
Total liabilities and capital | $15,923,062 | $16,535,110 |
Statement Of Income Real Estate
Statement Of Income Real Estate Excluding REITs (USD $) | ||||
In Thousands | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
REVENUES | ||||
Rental income | $502,738 | $510,567 | $1,007,540 | $1,003,532 |
Fee and asset management | 2,412 | 2,716 | 5,275 | 5,010 |
Total revenues | 505,150 | 513,283 | 1,012,815 | 1,008,542 |
EXPENSES | ||||
Property and maintenance | 123,430 | 130,402 | 254,977 | 261,248 |
Real estate taxes and insurance | 53,824 | 51,457 | 108,799 | 103,884 |
Property management | 18,718 | 19,491 | 37,732 | 40,667 |
Fee and asset management | 1,982 | 1,991 | 3,985 | 4,171 |
Depreciation | 149,909 | 139,812 | 298,194 | 279,253 |
General and administrative | 10,201 | 11,774 | 20,595 | 24,191 |
Impairment | 11,124 | 0 | 11,124 | 0 |
Total expenses | 369,188 | 354,927 | 735,406 | 713,414 |
Operating income | 135,962 | 158,356 | 277,409 | 295,128 |
Interest and other income | 6,622 | 4,808 | 12,639 | 8,167 |
Other expenses | (14) | (604) | (306) | (780) |
Interest: | ||||
Expense incurred, net | (115,866) | (119,511) | (239,565) | (238,780) |
Amortization of deferred financing costs | (3,255) | (2,178) | (6,220) | (4,338) |
Income before income and other taxes, (loss) from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entities and discontinued operations | 23,449 | 40,871 | 43,957 | 59,397 |
Income and other tax (expense) benefit | (259) | (1,628) | (2,389) | (4,622) |
(Loss) from investments in unconsolidated entities | (2,026) | (95) | (2,221) | (190) |
Net gain (loss) on sales of unconsolidated entities | (6) | 0 | 2,759 | 0 |
Income from continuing operations | 21,158 | 39,148 | 42,106 | 54,585 |
Discontinued operations, net | 84,774 | 100,845 | 149,247 | 232,936 |
Net income | 105,932 | 139,993 | 191,353 | 287,521 |
Net loss (income) attributable to Noncontrolling Interests - Partially Owned Properties | 5 | (1,391) | 74 | (1,659) |
Net income attributable to controlling interests | 105,937 | 138,602 | 191,427 | 285,862 |
ALLOCATION OF NET INCOME: | ||||
Preference Units | 3,620 | 3,626 | 7,240 | 7,259 |
Preference Interests and Junior Preference Units | 3 | 3 | 7 | 7 |
General Partner | 96,585 | 126,625 | 173,760 | 261,115 |
Limited Partners | 5,729 | 8,348 | 10,420 | 17,481 |
Net income available to Units | $102,314 | $134,973 | $184,180 | $278,596 |
Earnings per Unit - basic: | ||||
Income from continuing operations available to Units | 0.06 | 0.12 | 0.12 | 0.16 |
Net income available to Units | 0.35 | 0.47 | 0.64 | 0.97 |
Weighted average Units outstanding | 288,990 | 287,440 | 288,851 | 287,260 |
Earnings per Unit - diluted: | ||||
Income from continuing operations available to Units | 0.06 | 0.12 | 0.12 | 0.16 |
Net income available to Units | 0.35 | 0.46 | 0.64 | 0.96 |
Weighted average Units outstanding | 289,338 | 290,445 | 289,152 | 289,921 |
Distributions declared per Unit outstanding | 0.4825 | 0.4825 | 0.965 | 0.965 |
Statement Of Other Comprehensiv
Statement Of Other Comprehensive Income (USD $) | ||||
In Thousands | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Comprehensive income: | ||||
Net income | $105,932 | $139,993 | $191,353 | $287,521 |
Other comprehensive income (loss) - derivative instruments: | ||||
Unrealized holding gains (losses) arising during the period | 9,995 | 3,941 | 12,655 | (5,207) |
Losses reclassified into earnings from other comprehensive income | 812 | 703 | 2,305 | 1,216 |
Other | 0 | 0 | 449 | 0 |
Other comprehensive income (loss) - other instruments: | ||||
Unrealized holding gains (losses) arising during the period | 1,203 | 24 | 3,111 | (372) |
(Gains) realized during the period | (4,943) | 0 | (4,943) | 0 |
Comprehensive income | 112,999 | 144,661 | 204,930 | 283,158 |
Comprehensive loss (income) attributable to Noncontrolling Interests - Partially Owned Properties | 5 | (1,391) | 74 | (1,659) |
Comprehensive income attributable to controlling interests | $113,004 | $143,270 | $205,004 | $281,499 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect Real Estate (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $191,353 | $287,521 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 301,835 | 294,174 |
Amortization of deferred financing costs | 6,252 | 4,340 |
Amortization of discounts on investment securities | (1,658) | 0 |
Amortization of discounts and premiums on debt | 2,541 | 2,697 |
Amortization of deferred settlements on derivative instruments | 1,604 | 527 |
Impairment | 11,124 | 0 |
Write-off of pursuit costs | 162 | 759 |
Transaction costs | 144 | 21 |
Loss from investments in unconsolidated entities | 2,221 | 190 |
Distributions from unconsolidated entities - return on capital | 82 | 49 |
Net (gain) on sales of investment securities | (4,943) | 0 |
Net (gain) on sales of unconsolidated entities | (2,759) | 0 |
Net (gain) on sales of discontinued operations | (145,798) | (214,797) |
(Gain) on debt extinguishments | (1,985) | 0 |
Compensation paid with Company Common Shares | 9,533 | 11,677 |
Changes in assets and liabilities: | ||
Decrease (increase) in deposits - restricted | 1,801 | (3,477) |
(Increase) in other assets | (2,656) | (13,287) |
Increase in accounts payable and accrued expenses | 14,315 | 37,702 |
(Decrease) in accrued interest payable | (6,280) | (7,732) |
(Decrease) in other liabilities | (8,958) | (13,304) |
(Decrease) increase in security deposits | (2,320) | 2,066 |
Net cash provided by operating activities | 365,610 | 389,126 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Investment in real estate - acquisitions | 0 | (344,230) |
Investment in real estate - development/other | (197,362) | (275,074) |
Improvements to real estate | (59,120) | (86,381) |
Additions to non-real estate property | (1,107) | (1,413) |
Interest capitalized for real estate under development | (21,018) | (29,477) |
Proceeds from disposition of real estate, net | 347,519 | 494,215 |
Proceeds from disposition of unconsolidated entities | 0 | 2,629 |
Distributions from unconsolidated entities - return of capital | 2,585 | 0 |
Purchase of investment securities | (52,822) | 0 |
Proceeds from sale of investment securities | 181,692 | 0 |
Transaction costs | (144) | (21) |
(Increase) decrease in deposits on real estate acquisitions, net | (29,309) | 25,984 |
Decrease in mortgage deposits | 2,188 | 537 |
Acquisition of Noncontrolling Interests - Partially Owned Properties | (9,220) | (20) |
Net cash provided by (used for) investing activities | 163,882 | (213,251) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Loan and bond acquisition costs | (8,851) | (3,902) |
Mortgage notes payable: | ||
Proceeds | 614,409 | 619,745 |
Restricted cash | 21,699 | 13,662 |
Lump sum payoffs | (593,453) | (132,232) |
Scheduled principal repayments | (9,666) | (12,449) |
Prepayment premiums/fees | (35) | 0 |
Notes, net: | ||
Lump sum payoffs | (505,849) | 0 |
Gain on debt extinguishments | 2,020 | 0 |
Lines of credit: | ||
Proceeds | 0 | 841,000 |
Repayments | 0 | (980,000) |
Proceeds from (payments on) settlement of derivative instruments | 11,251 | (13,256) |
Proceeds from sale of OP Units | 3,960 | 4,320 |
Proceeds from exercise of EQR options | 128 | 6,939 |
OP Units repurchased and retired | (1,124) | (10,935) |
Payment of offering costs | (131) | (45) |
Other financing activities, net | (8) | (8) |
Contributions - Noncontrolling Interests - Partially Owned Properties | 874 | 1,221 |
Contributions - Limited Partners | 78 | 0 |
Distributions: | ||
OP Units - General Partner | (263,636) | (260,426) |
Preference Units | (7,240) | (7,268) |
Preference Interests and Junior Preference Units | (7) | (7) |
OP Units - Limited Partners | (15,914) | (17,718) |
Noncontrolling Interests - Partially Owned Properties | (1,296) | (1,747) |
Net cash (used for) provided by financing activities | (752,791) | 46,894 |
Net (decrease) increase in cash and cash equivalents | (223,299) | 222,769 |
Cash and cash equivalents, beginning of period | 890,794 | 50,831 |
Cash and cash equivalents, end of period | 667,495 | 273,600 |
SUPPLEMENTAL INFORMATION: | ||
Cash paid for interest, net of amounts capitalized | 242,010 | 244,303 |
Net cash paid for income and other taxes | 3,343 | 2,240 |
Real estate acquisitions/dispositions/other: | ||
Mortgage loans assumed | 0 | 24,946 |
Valuation of OP Units issued | 0 | 849 |
Mortgage loans (assumed) by purchaser | (4,387) | 0 |
Amortization of deferred financing costs: | ||
Investment in real estate, net | (2,133) | (1,048) |
Deferred financing costs, net | 8,385 | 5,388 |
Amortization of discounts and premiums on debt: | ||
Investment in real estate, net | (3) | 0 |
Mortgage notes payable | (3,091) | (3,147) |
Notes, net | 5,635 | 5,844 |
Amortization of deferred settlements on derivative instruments: | ||
Other liabilities | (701) | (689) |
Accumulated other comprehensive loss | 2,305 | 1,216 |
Unrealized (gain) loss on derivative instruments: | ||
Other assets | (7,894) | (3,090) |
Mortgage notes payable | (1,806) | 1,079 |
Notes, net | (1,105) | 1,233 |
Other liabilities | (1,850) | 5,985 |
Accumulated other comprehensive loss | 12,655 | (5,207) |
Proceeds from (payments on) settlement of derivative instruments: | ||
Other assets | 11,251 | (39) |
Other liabilities | $0 | ($13,217) |
Statement Of Partners Capital
Statement Of Partners Capital (USD $) | |||||||
In Thousands | PREFERENCE UNITS
| Preference Interests and Junior Preference Units [Member]
| General Partner [Member]
| LIMITED PARTNERS
| Accumulated Other Comprehensive Income [Member]
| Partially Owned Properties [Member]
| Total
|
Balance, beginning of year at Dec. 31, 2008 | $208,786 | $184 | $4,840,613 | $293,795 | ($35,799) | $25,520 | $5,333,099 |
PARTNERS' CAPITAL | |||||||
Issuance of LTIP Units | 78 | ||||||
OP Unit Issuance: | |||||||
Conversion of Preference Units into OP Units held by General Partner | 13 | ||||||
Conversion of OP Units held by Limited Partners into OP Units held by General Partner | 11,138 | (11,138) | |||||
Exercise of EQR share options | 128 | ||||||
EQR's Employee Share Purchase Plan (ESPP) | 3,960 | ||||||
Accumulated other comprehensive income - derivative instruments: | |||||||
Unrealized holding gains arising during the period | 12,655 | 12,655 | |||||
Losses reclassified into earnings from other comprehensive income | 2,305 | 2,305 | |||||
Other | 449 | 449 | |||||
Net loss (income) attributable to Noncontrolling Interests - Partially Owned Properties | (74) | 74 | |||||
Conversion of 7.00% Series E Cumulative Convertible | (13) | ||||||
Share-based employee compensation expense: | |||||||
EQR performance shares | 108 | ||||||
EQR restricted shares | 6,007 | ||||||
EQR share options | 3,112 | ||||||
EQR ESPP discount | 840 | ||||||
Accumulated other comprehensive income - other instruments: | |||||||
Unrealized holding gains arising during the period | 3,111 | 3,111 | |||||
(Gains) realized during the period | (4,943) | (4,943) | |||||
Conversion of OP Units held by Limited Partners into OP Units held by General Partner | 11,138 | (11,138) | |||||
Contributions by Noncontrolling Interests | 874 | ||||||
OP Units repurchased and retired | (1,124) | ||||||
Equity compensation associated with LTIP Units - Limited Partners | 599 | ||||||
Distributions to Noncontrolling Interests | (1,304) | ||||||
Offering costs | (131) | ||||||
Net income available to Units - Limited Partners | 10,420 | 10,420 | |||||
Acquisition of additional ownership interest by Operating Partnership | (11,651) | ||||||
Net income available to Units - General Partner | 173,760 | 173,760 | |||||
Units - Limited Partners distributions | (15,687) | ||||||
OP Units - General Partner distributions | (264,207) | ||||||
Supplemental Executive Retirement Plan (SERP) | 12,831 | ||||||
Acquisition of Noncontrolling Interests - Partially Owned Properties | (513) | ||||||
Adjustment for Limited Partners ownership in Operating Partnership | (3,537) | 3,537 | |||||
Balance, end of period at Jun. 30, 2009 | 208,773 | 184 | 4,782,998 | 281,604 | (22,222) | 13,365 | 5,264,702 |
Balance, beginning of year at Mar. 31, 2009 | 184 | ||||||
Accumulated other comprehensive income - other instruments: | |||||||
Balance, end of period at Jun. 30, 2009 | $184 |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 | |
Notes to Financial Statements [Abstract] | |
1.Business | 1. Business ERP Operating Limited Partnership (ERPOP), an Illinois limited partnership, was formed in May 1993 to conduct the multifamily residential property business of Equity Residential (EQR). EQR, a Maryland real estate investment trust (REIT) formed in March 1993, is an SP 500 company focused on the acquisition, development and management of high quality apartment properties in top United States growth markets. EQR has elected to be taxed as a REIT. EQR is the general partner of, and as of June30, 2009 owned an approximate 94.4% ownership interest in ERPOP. EQR is structured as an umbrella partnership REIT (UPREIT) under which all property ownership and related business operations are conducted through ERPOP and its subsidiaries. References to the Operating Partnership include ERPOP and those entities owned or controlled by it. References to the Company mean EQR and the Operating Partnership. As of June30, 2009, the Operating Partnership, directly or indirectly through investments in title holding entities, owned all or a portion of 526 properties in 23 states and the District of Columbia consisting of 143,856 units. The ownership breakdown includes (table does not include various uncompleted development properties): Properties Units Wholly Owned Properties 459 124,627 Partially Owned Properties: Consolidated 25 5,110 Unconsolidated 40 9,560 Military Housing (Fee Managed) 2 4,559 526 143,856 |
2.Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Certain reclassifications have been made to the prior period financial statements in order to conform to the current year presentation. Operating results for the six months ended June30, 2009 are not necessarily indicative of the results that may be expected for the year ending December31, 2009. In preparation of the Operating Partnerships financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The balance sheet at December31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, including definitions of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Operating Partnerships annual report on Form 10-K for the year ended December31, 2008. Income and Other Taxes The Operating Partnership generally is not liable for federal income taxes as the partners recognize their proportionate share of the Operating Partnerships income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Operating Partnership has generally only incurred certain state and local income, excise and franchise taxes. The Operating Partnership has elected Taxable REIT Subsidiary (TRS) status for certain of its corporate subsidiaries, primarily those entities engaged in condominium conversion and corporate housing activities and as a result, these entities will incur both federal and state income taxes on any taxable income of such entities. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to be recovered or settled. The effect of deferred tax assets a |
3.Capital | 3. Capital The following tables present the changes in the Operating Partnerships issued and outstanding Units (which includes OP Units and Long-Term Incentive Plan (LTIP) Units) and in the limited partners Units for the six months ended June30, 2009: 2009 General and Limited Partner Units General and Limited Partner Units outstanding at January1, 289,466,537 Issued to General Partner: Conversion of Series E Preference Units 612 Exercise of EQR options 6,216 Employee Share Purchase Plan 263,003 Restricted EQR share grants, net 337,490 Issued to Limited Partners: LTIP Unit Issuance 155,189 OP Units Other: Repurchased and retired (47,450) General and Limited Partner Units outstanding at June30, 290,181,597 Limited Partner Units Limited Partner Units outstanding at January1, 16,679,777 Limited Partner LTIP Unit issuance 155,189 Conversion of Limited Partner OP Units to EQR Common Shares (629,061) Limited Partner Units outstanding at June30, 16,205,905 Limited Partner Units Ownership Interest in Operating Partnership 5.6% Limited Partner LTIP Units Issued: Issuance per unit $0.50 Issuance contribution valuation $0.1 million During the six months ended June30, 2009, the Company repurchased 47,450 of its Common Shares at an average price of $23.69 per share for total consideration of $1.1 million. These shares were retired subsequent to the repurchases. Concurrent with these transactions, the Operating Partnership repurchased and retired 47,450 OP Units previously issued to EQR. All of the shares repurchased during the six months ended June30, 2009 were repurchased from employees at the then current market prices to cover the minimum statutory tax withholding obligations related to the vesting of employees restricted shares. EQR has authorization to repurchase an additional $466.5 million of its shares as of June30, 2009. The Limited Partners of the Operating Partnership as of June30, 2009 include various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of LTIP Units. Subject to certain exceptions (including the book-up requirements of LTIP Units), the Limited Partners may exchange their Units with EQR for EQR Common Shares on a one-for-one basis. The Operating Partnership has the right but not the obligation to make a cash payment to any holder of OP Units requesting an exchange from EQR at the market price of EQRs Common Shares. However, no aspect of an exchange requires a cash settlement by the Operating Partnership under any circumstances. EQR contributes all net proceeds from its various equity offerings (including proceeds from exercise of options for EQR Common Shares) to the Operating Partnership. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units i |
4.Real Estate | 4. Real Estate The following table summarizes the carrying amounts for the Operating Partnerships investment in real estate (at cost) as of June30, 2009 and December31, 2008 (amounts in thousands): June30, 2009 December31, 2008 Land $ 3,669,394 $ 3,671,299 Depreciable property: Buildings and improvements 12,896,417 12,836,310 Furniture, fixtures and equipment 1,096,824 1,072,284 Projects under development: Land 140,618 175,355 Construction-in-progress 584,980 680,118 Land held for development: Land 181,430 205,757 Construction-in-progress 57,947 49,116 Investment in real estate 18,627,610 18,690,239 Accumulated depreciation (3,759,948) (3,561,300) Investment in real estate, net $ 14,867,662 $ 15,128,939 During the six months ended June30, 2009, the Operating Partnership disposed of the following to unaffiliated parties (sales price in thousands): Properties Units SalesPrice Rental Properties: Consolidated 23 4,199 $ 353,390 Unconsolidated (1) 1 216 20,700 Condominium Conversion Properties 1 23 4,669 Total 25 4,438 $ 378,759 (1) The Operating Partnership owned a 25% interest in this unconsolidated rental property. Sales price listed is the gross sales price. The Operating Partnership recognized a net gain on sales of discontinued operations of approximately $145.8 million and a net gain on sales of unconsolidated entities of approximately $2.8 million on the above sales. |
5.Commitments to Acquire/Dispose of Real Estate | 5. Commitments to Acquire/Dispose of Real Estate As of July30, 2009, in addition to the properties that were subsequently disposed of as discussed in Note 16, the Operating Partnership had entered into separate agreements to dispose of the following (sales price in thousands): Properties Units SalesPrice Rental Properties: Consolidated 41 6,035 $ 534,089 Unconsolidated 2 516 37,000 Total 43 6,551 $ 571,089 The closings of these pending transactions are subject to certain conditions and restrictions, therefore, there can be no assurance that these transactions will be consummated or that the final terms will not differ in material respects from those summarized in the preceding paragraphs. |
6.Investments in Partially Owned Entities | 6. Investments in Partially Owned Entities The Operating Partnership has co-invested in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). The following table summarizes the Operating Partnerships investments in partially owned entities as of June30, 2009 (amounts in thousands except for project and unit amounts): Consolidated Unconsolidated Development Projects Held for and/orUnder Development Completed, Not Stabilized(4) Completed and Stabilized Other Total Institutional Joint Ventures Total projects (1) - 2 2 21 25 40 Total units (1) - 735 432 3,943 5,110 9,560 Debt Secured (2): EQR Ownership (3) $ 332,765 $ 161,981 $ 61,260 $ 218,087 $ 774,093 $ 109,958 Noncontrolling Ownership - - - 83,957 83,957 329,874 Total (at 100%) $ 332,765 $ 161,981 $ 61,260 $ 302,044 $ 858,050 $ 439,832 (1) Project and unit counts exclude all uncompleted development projects until those projects are completed. (2) All debt is non-recourse to the Operating Partnership with the exception of $42.2 million in mortgage debt on various development projects. In addition, $66.0 million in mortgage debt on one development project will become recourse to the Operating Partnership upon completion of that project. (3) Represents the Operating Partnerships current economic ownership interest. (4) Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. |
7.Deposits - Restricted | 7. Deposits Restricted The following table presents the Operating Partnerships restricted deposits as of June30, 2009 and December31, 2008 (amounts in thousands): June30, 2009 December31, 2008 Taxdeferred (1031)exchange proceeds $ 29,309 $ - Earnest money on pending acquisitions 1,200 1,200 Restricted deposits on debt (1) 74,530 96,229 Resident security and utility deposits 40,707 41,478 Other 12,435 13,465 Totals $ 158,181 $ 152,372 (1) Primarily represents amounts held in escrow by the lender and released as draw requests are made on fully funded development mortgage loans. |
8.Mortgage Notes Payable | 8. Mortgage Notes Payable As of June30, 2009, the Operating Partnership had outstanding mortgage debt of approximately $5.0 billion. During the six months ended June30, 2009, the Operating Partnership: Repaid $603.1 million of mortgage loans; Obtained $500.0 million of mortgage loan proceeds through the issuance of an 11-year cross-collateralized loan with an all-in fixed interest rate for 10 years at approximately 5.6% secured by 13 properties; Obtained $114.4 million of new mortgage loans primarily on development properties; and Was released from $4.4 million of mortgage debt assumed by the purchaser on a disposed property. As of June30, 2009, scheduled maturities for the Operating Partnerships outstanding mortgage indebtedness were at various dates through September1, 2048. At June30, 2009, the interest rate range on the Operating Partnerships mortgage debt was 0.18% to 12.465%. During the six months ended June30, 2009, the weighted average interest rate on the Operating Partnerships mortgage debt was 4.86%. |
9.Notes | 9. Notes As of June30, 2009, the Operating Partnership had outstanding unsecured notes of approximately $4.9 billion. During the six months ended June30, 2009, the Operating Partnership repurchased at par $105.2 million of its 4.75% fixed rate public notes due June15, 2009 and $185.2 million of its 6.95% fixed rate public notes due March2, 2011 pursuant to a cash tender offer announced on January16, 2009. The Operating Partnership wrote-off approximately $0.4 million of unamortized deferred financing costs and approximately $1.1 million of unamortized discounts on notes payable in connection with these repurchases. In addition, the Operating Partnership repaid the remaining $122.2 million of its 4.75% fixed rate public notes at maturity and $75.8 million of its 5.20% fixed rate tax-exempt notes during the quarter ended June30, 2009. During the six months ended June30, 2009, the Operating Partnership repurchased $17.5 million of its 3.85% convertible fixed rate public notes due August15, 2026 at a discount to par of approximately 11.6%. The Operating Partnership recognized a gain on early debt extinguishment of $2.0 million and wrote-off approximately $0.1 million of unamortized deferred financing costs and approximately $0.8 million of unamortized discounts on notes payable in connection with these repurchases. As of June30, 2009, scheduled maturities for the Operating Partnerships outstanding notes were at various dates through 2028. At June30, 2009, the interest rate range on the Operating Partnerships notes was 0.63% to 7.57%. During the six months ended June30, 2009, the weighted average interest rate on the Operating Partnerships notes was 5.34%. |
10.Lines of Credit | 10. Lines of Credit The Operating Partnership has a $1.5 billion unsecured revolving credit facility maturing on February28, 2012, with the ability to increase available borrowings by an additional $500.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. Advances under the credit facility bear interest at variable rates based upon LIBOR at various interest periods plus a spread (currently 0.5%) dependent upon the Operating Partnerships credit rating or based on bids received from the lending group. EQR has guaranteed the Operating Partnerships credit facility up to the maximum amount and for the full term of the facility. During the year ended December31, 2008, one of the providers of the Operating Partnerships unsecured revolving credit facility declared bankruptcy. Under the existing terms of the credit facility, the providers share is up to $75.0 million of potential borrowings. As a result, the Operating Partnerships borrowing capacity under the unsecured revolving credit facility has in essence been permanently reduced to $1.425 billion of potential borrowings. The obligation to fund by all of the other providers has not changed. As of June30, 2009, the amount available on the credit facility was $1.35 billion (net of $74.5 million which was restricted/dedicated to support letters of credit and net of the $75.0 million discussed above). The Operating Partnership did not draw on its revolving credit facility at any time during the six months ended June30, 2009. |
11.Derivative and Other Fair Value Instruments | 11. Derivative and Other Fair Value Instruments The Operating Partnership follows the guidance under SFAS No.157 when valuing its financial instruments. The valuation of financial instruments under SFAS No.107, Disclosures about Fair Value of Financial Instruments, and SFAS No.133 and its amendments (SFAS Nos. 137/138/149), Accounting for Derivative Instruments and Hedging Activities, requires the Operating Partnership to make estimates and judgments that affect the fair value of the instruments. The Operating Partnership, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Operating Partnership bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments. The carrying value of the Operating Partnerships mortgage notes payable and unsecured notes were approximately $5.0 billion and $4.9 billion, respectively, at June30, 2009. The fair value of the Operating Partnerships mortgage notes payable and unsecured notes were approximately $4.9 billion and $4.8 billion, respectively, at June30, 2009. The fair values of the Operating Partnerships financial instruments, other than mortgage notes payable, unsecured notes, derivative instruments and investment securities, including cash and cash equivalents, lines of credit and other financial instruments, approximate their carrying or contract values. In the normal course of business, the Operating Partnership is exposed to the effect of interest rate changes. The Operating Partnership seeks to limit these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The following table summarizes the Operating Partnerships consolidated derivative instruments at June30, 2009 (dollar amounts are in thousands): FairValue Hedges(1) Development Cash Flow Hedges (2) Current Notional Balance $ 15,693 $ 250,762 Lowest Possible Notional $ 15,693 $ 46,753 Highest Possible Notional $ 17,694 $ 320,061 Lowest Interest Rate 4.800% 4.059% Highest Interest Rate 4.800% 6.000% Earliest Maturity Date 2012 2009 Latest Maturity Date 2012 2011 (1) Fair Value Hedges Converts outstanding fixed rate debt to a floating interest rate. (2) Development Cash Flow Hedges Converts outstanding floating rate debt to a fixed interest rate. The following table provides the location of the Operating Partnerships derivative instruments within the accompanying Consolidated Balance Sheets and their fair market values as of June30, 2009 (amounts in thousands): Asset Derivatives Liability Derivatives BalanceSheet Location FairValue BalanceSheet Location FairValue Derivatives designated as hedging instruments: Interest Rate Contracts: Fair Value Hedges Otherassets $ 3,442 Other liabilities $ - Devel |
12.Earnings Per Unit | 12. Earnings Per Unit The following tables set forth the computation of net income per Unit basic and net income per Unit diluted (amounts in thousands except per Unit amounts): SixMonthsEndedJune30, QuarterEndedJune30, 2009 2008 2009 2008 Numerator for net income per Unit basic and diluted: Income from continuing operations $ 42,106 $ 54,585 $ 21,158 $ 39,148 Net loss (income) attributable to Noncontrolling Interests Partially Owned Properties 74 (1,659) 5 (1,391) Allocation to Preference Units (7,240) (7,259) (3,620) (3,626) Allocation to Preference Interests and Junior Preference Units (7) (7) (3) (3) Income from continuing operations available to Units 34,933 45,660 17,540 34,128 Discontinued operations, net 149,247 232,936 84,774 100,845 Numerator for net income per Unit basic and diluted $ 184,180 $ 278,596 $ 102,314 $ 134,973 Denominator for net income per Unit basic and diluted: Denominator for net income per Unit basic 288,851 287,260 288,990 287,440 Effect of dilutive securities: Dilution for Units issuable upon assumed exercise/vesting of EQRs long-term compensation award shares/units 301 2,661 348 3,005 Denominator for net income per Unit diluted 289,152 289,921 289,338 290,445 Net income per Unit basic $ 0.64 $ 0.97 $ 0.35 $ 0.47 Net income per Unit diluted $ 0.64 $ 0.96 $ 0.35 $ 0.46 Net income per Unit basic: Income from continuing operations available to Units $ 0.121 $ 0.159 $ 0.061 $ 0.119 Discontinued operations, net 0.516 0.811 0.293 0.351 Net income per Unit basic $ 0.637 $ 0.970 $ 0.354 $ 0.470 Net income per Unit diluted: Income from continuing operations available to Units $ 0.121 $ 0.158 $ 0.061 $ 0.117 Discontinued operations, net 0.516 0.803 0.293 0.347 Net income per Unit diluted $ 0.637 $ 0.961 $ 0.354 $ 0.464 Convertible preference interests/units that could be converted into 405,791 and 438,825 weighted average Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units) for the six months ended June30, 2009 and 2008, respectively, and 405,555 and 433,179 weighted average Common Shares for the quarters ended June30, 2009 and 2008, respectively, were outstanding but were not included in the computation of diluted earnings per Unit because the effects would be anti-dilutive. In addition, the effect of the C |
13.Discontinued Operations | 13. Discontinued Operations The Operating Partnership has presented separately as discontinued operations in all periods the results of operations for all consolidated assets disposed of on or after January1, 2002 (the date of adoption of SFAS No.144), all operations related to active condominium conversion properties effective upon their respective transfer into a TRS and all properties held for sale, if any. The components of discontinued operations are outlined below and include the results of operations for the respective periods that the Operating Partnership owned such assets during the six months and quarters ended June30, 2009 and 2008 (amounts in thousands). SixMonthsEndedJune30, QuarterEndedJune30, 2009 2008 2009 2008 REVENUES Rental income $ 17,832 $ 60,482 $ 6,408 $ 27,599 Total revenues 17,832 60,482 6,408 27,599 EXPENSES (1) Property and maintenance 8,036 19,312 3,244 8,544 Real estate taxes and insurance 2,284 7,936 767 3,801 Property management - (62) - 3 Depreciation 3,641 14,921 1,438 6,782 General and administrative 25 17 20 14 Total expenses 13,986 42,124 5,469 19,144 Discontinued operating income 3,846 18,358 939 8,455 Interest and other income 10 140 3 148 Interest (2): Expense incurred, net (310) (1,014) (77) (496) Amortization of deferred financing costs (32) (2) - (1) Income and other tax (expense) benefit (65) 657 (18) 459 Discontinued operations 3,449 18,139 847 8,565 Net gain on sales of discontinued operations 145,798 214,797 83,927 92,280 Discontinued operations, net $ 149,247 $ 232,936 $ 84,774 $ 100,845 (1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Operating Partnerships period of ownership. (2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. For the properties sold during the six months ended June30, 2009 (excluding condominium conversion properties), the investment in real estate, net of accumulated depreciation, and the mortgage notes payable balances at December31, 2008 were $205.3 million and $17.8 million, respectively. The net real estate basis of the Operating Partnerships active condominium conversion properties owned by the TRS and included in discontinued operations (excludes the Operating Partnerships halted conversions as they are now held for use), which were included in investment in real estate, net in the consolidated balance sheets, was $8.0 million and $12.6 million at |
14.Commitments and Contingencies | 14. Commitments and Contingencies The Operating Partnership, as an owner of real estate, is subject to various Federal, state and local environmental laws. Compliance by the Operating Partnership with existing laws has not had a material adverse effect on the Operating Partnership. However, the Operating Partnership cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future. The Operating Partnership is party to a housing discrimination lawsuit brought by a non-profit civil rights organization in April 2006 in the U.S. District Court for the District of Maryland. The suit alleges that the Operating Partnership designed and built approximately 300 of its properties in violation of the accessibility requirements of the Fair Housing Act and Americans with Disabilities Act. The suit seeks actual and punitive damages, injunctive relief (including modification of non-compliant properties), costs and attorneys fees. The Operating Partnership believes it has a number of viable defenses, including that a majority of the named properties were completed before the operative dates of the statutes in question and/or were not designed or built by the Operating Partnership. Accordingly, the Operating Partnership is defending the suit vigorously. Due to the pendency of the Operating Partnerships defenses and the uncertainty of many other critical factual and legal issues, it is not possible to determine or predict the outcome of the suit and as a result, no amounts have been accrued at June30, 2009. While no assurances can be given, the Operating Partnership does not believe that the suit, if adversely determined, would have a material adverse effect on the Operating Partnership. The Operating Partnership does not believe there is any other litigation pending or threatened against it that, individually or in the aggregate, reasonably may be expected to have a material adverse effect on the Operating Partnership. The Operating Partnership has established a reserve and recorded a corresponding reduction to its net gain on sales of discontinued operations related to potential liabilities associated with its condominium conversion activities. The reserve covers potential product liability related to each conversion. The Operating Partnership periodically assesses the adequacy of the reserve and makes adjustments as necessary. During the six months ended June30, 2009, the Operating Partnership recorded additional reserves of approximately $2.5 million (primarily related to an insurance settlement), paid approximately $0.7 million in settlements and released approximately $1.0 million of remaining reserves for settled claims. As a result, the Operating Partnership had total reserves of approximately $11.1 million at June30, 2009. While no assurances can be given, the Operating Partnership does not believe that the ultimate resolution of these potential liabilities, if adversely determined, would have a material adverse effect on the Operating Partnership. As of June30, 2009, the Operating Partnership has seven projects totaling 2,369 units in various stages of dev |
15.Reportable Segments | 15. Reportable Segments Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by senior management. Senior management decides how resources are allocated and assesses performance on a monthly basis. The Operating Partnerships primary business is owning, managing and operating multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. Senior management evaluates the performance of each of our apartment communities individually and geographically, and both on a same store and non-same store basis; however, each of our apartment communities generally has similar economic characteristics, residents, products and services. The Operating Partnerships operating segments have been aggregated by geography in a manner identical to that which is provided to its chief operating decision maker. The Operating Partnerships fee and asset management, development (including FIN No.46(R) partially owned properties), condominium conversion and corporate housing (Equity Corporate Housing or ECH) activities are immaterial and do not individually meet the threshold requirements of a reportable segment as provided for in SFAS No.131 and as such, have been aggregated in the tables presented below. All revenues are from external customers and there is no customer who contributed 10% or more of the Operating Partnerships total revenues during the six months and quarters ended June30, 2009 and 2008, respectively. The primary financial measure for the Operating Partnerships rental real estate segment is net operating income (NOI), which represents rental income less: 1) property and maintenance expense; 2) real estate taxes and insurance expense; and 3) property management expense (all as reflected in the accompanying consolidated statements of operations). The Operating Partnership believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Operating Partnerships apartment communities. Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance. The following tables present NOI for each segment from our rental real estate specific to continuing operations for the six months and quarters ended June30, 2009 and 2008, respectively, as well as total assets at June30, 2009 (amounts in thousands): Six Months Ended June30, 2009 Northeast Northwest Southeast Southwest Other (3) Total Rental income: Same store (1) $ 279,346 $ 191,779 $ 218,041 $ 221,113 $ - $ 910,279 Non-same store/other (2)(3) 27,942 8,977 6,547 15,917 37,878 97,261 Total rental income 307,288 200,756 224,588 237,030 37,878 1,007,540 Operating expenses: Same store (1) 106,007 |
16.Subsequent Events/Other | 16. Subsequent Events/Other Subsequent Events Subsequent to June30, 2009 and up until the time of this filing, the Operating Partnership sold three apartment properties consisting of 749 units for $74.2 million (excluding condominium units). Other During the six months ended June30, 2009, the Operating Partnership recorded an approximate $11.1 million non-cash asset impairment charge on a parcel of land held for development. Following the guidance in SFAS No.144, this charge was the result of an analysis of the parcels estimated fair value (determined using internally developed models based on market assumptions and comparable sales data) compared to its current capitalized carrying value. During the six months ended June30, 2009 and 2008, the Operating Partnership recorded approximately $1.0 million and $2.2 million of additional general and administrative expense, respectively, and $0.7 million and $0.2 million of additional property management expense, respectively, related primarily to cash severance for various employees. |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information | |
6 Months Ended
Jun. 30, 2009 | |
Entity [Text Block] | |
Entity Registrant Name | ERP OPERATING LTD PARTNERSHIP |
Entity Central Index Key | 0000931182 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Large Accelerated Filer |