Document and Entity Information
Document and Entity Information | ||
3 Months Ended
Mar. 31, 2010 | Mar. 31, 2010
| |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | 2010-03-31 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | ERP OPERATING LTD PARTNERSHIP | |
Entity Central Index Key | 0000931182 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Investment in real estate | ||
Land | $3,948,967 | $3,650,324 |
Depreciable property | 14,387,262 | 13,893,521 |
Projects under development | 429,444 | 668,979 |
Land held for development | 266,287 | 252,320 |
Investment in real estate | 19,031,960 | 18,465,144 |
Accumulated depreciation | (3,972,022) | (3,877,564) |
Investment in real estate, net | 15,059,938 | 14,587,580 |
Cash and cash equivalents | 60,186 | 193,288 |
Investments in unconsolidated entities | 5,645 | 6,995 |
Deposits - restricted | 163,378 | 352,008 |
Escrow deposits - mortgage | 20,675 | 17,292 |
Deferred financing costs, net | 44,034 | 46,396 |
Other assets | 164,557 | 213,956 |
Total assets | 15,518,413 | 15,417,515 |
Liabilities: | ||
Mortgage notes payable | 4,825,356 | 4,783,446 |
Notes, net | 4,578,377 | 4,609,124 |
Lines of credit | 91,000 | |
Accounts payable and accrued expenses | 95,046 | 58,537 |
Accrued interest payable | 68,895 | 101,849 |
Other liabilities | 251,970 | 272,236 |
Security deposits | 62,637 | 59,264 |
Distributions payable | 102,106 | 100,266 |
Total liabilities | 10,075,387 | 9,984,722 |
Commitments and contingencies | ||
Redeemable Limited Partners | 295,985 | 258,280 |
Partners' capital: | ||
Preference Units | 208,761 | 208,773 |
General Partner | 4,821,422 | 4,833,885 |
Limited Partners | 114,714 | 116,120 |
Accumulated other comprehensive (loss) income | (8,255) | 4,681 |
Total partners' capital | 5,136,642 | 5,163,459 |
Noncontrolling Interests - Partially Owned Properties | 10,399 | 11,054 |
Total capital | 5,147,041 | 5,174,513 |
Total liabilities and capital | $15,518,413 | $15,417,515 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | ||
In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
REVENUES | ||
Rental income | $486,268 | $480,215 |
Fee and asset management | 2,422 | 2,863 |
Total revenues | 488,690 | 483,078 |
EXPENSES | ||
Property and maintenance | 126,753 | 124,932 |
Real estate taxes and insurance | 57,607 | 52,539 |
Property management | 20,680 | 19,014 |
Fee and asset management | 2,014 | 2,003 |
Depreciation | 152,319 | 141,809 |
General and administrative | 10,721 | 10,394 |
Total expenses | 370,094 | 350,691 |
Operating income | 118,596 | 132,387 |
Interest and other income | 2,225 | 6,017 |
Other expenses | (4,383) | (292) |
Interest: | ||
Expense incurred, net | (115,297) | (123,502) |
Amortization of deferred financing costs | (3,197) | (2,962) |
(Loss) income before income and other taxes, (loss) from investments in unconsolidated entities, net gain on sales of unconsolidated entities and discontinued operations | (2,056) | 11,648 |
Income and other tax (expense) benefit | (166) | (2,128) |
(Loss) from investments in unconsolidated entities | (464) | (195) |
Net gain on sales of unconsolidated entities | 478 | 2,765 |
(Loss) income from continuing operations | (2,208) | 12,090 |
Discontinued operations, net | 60,064 | 73,331 |
Net income | 57,856 | 85,421 |
Net loss attributable to Noncontrolling Interests - Partially Owned Properties | 250 | 69 |
Net income attributable to controlling interests | 58,106 | 85,490 |
ALLOCATION OF NET INCOME: | ||
Preference Units | 3,620 | 3,620 |
Preference Interests and Junior Preference Units | 4 | |
General Partner | 51,863 | 77,175 |
Limited Partners | 2,623 | 4,691 |
Net income available to Units | 54,486 | 81,866 |
Earnings per Unit - basic: | ||
(Loss) income from continuing operations available to Units | -0.02 | 0.03 |
Net income available to Units | 0.18 | 0.28 |
Weighted average Units outstanding | 294,450 | 288,710 |
Earnings per Unit - diluted: | ||
(Loss) income from continuing operations available to Units | -0.02 | 0.03 |
Net income available to Units | 0.18 | 0.28 |
Weighted average Units outstanding | 294,450 | 288,853 |
Distributions declared per Unit outstanding | 0.3375 | 0.4825 |
Comprehensive income: | ||
Net income | 57,856 | 85,421 |
Other comprehensive (loss) income - derivative instruments: | ||
Unrealized holding (losses) gains arising during the period | (13,503) | 2,660 |
Losses reclassified into earnings from other comprehensive income | 726 | 1,493 |
Other | 449 | |
Other comprehensive (loss) income - other instruments: | ||
Unrealized holding (losses) gains arising during the period | (159) | 1,908 |
Comprehensive income | 44,920 | 91,931 |
Comprehensive loss attributable to Noncontrolling Interests - Partially Owned Properties | 250 | 69 |
Comprehensive income attributable to controlling interests | 45,170 | 92,000 |
GENERAL PARTNER | ||
ALLOCATION OF NET INCOME: | ||
General Partner | 51,863 | |
LIMITED PARTNERS | ||
ALLOCATION OF NET INCOME: | ||
Limited Partners | 2,623 | |
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME | ||
Other comprehensive (loss) income - derivative instruments: | ||
Unrealized holding (losses) gains arising during the period | (13,503) | |
Losses reclassified into earnings from other comprehensive income | 726 | |
Other comprehensive (loss) income - other instruments: | ||
Unrealized holding (losses) gains arising during the period | (159) | |
NONCONTROLLING INTERESTS - PARTIALLY OWNED PROPERTIES | ||
Interest: | ||
Net loss attributable to Noncontrolling Interests - Partially Owned Properties | $250 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $57,856 | $85,421 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 152,734 | 150,488 |
Amortization of deferred financing costs | 3,197 | 2,997 |
Amortization of discounts on investment securities | (1,096) | |
Amortization of discounts and premiums on debt | 565 | 1,706 |
Amortization of deferred settlements on derivative instruments | 593 | 1,148 |
Write-off of pursuit costs | 1,046 | 192 |
Property acquisition costs | 3,337 | 100 |
Loss from investments in unconsolidated entities | 464 | 195 |
Distributions from unconsolidated entities - return on capital | 61 | 59 |
Net (gain) on sales of unconsolidated entities | (478) | (2,765) |
Net (gain) on sales of discontinued operations | (60,036) | (61,871) |
(Gain) on debt extinguishments | (1,985) | |
Unrealized loss on derivative instruments | 1 | |
Compensation paid with Company Common Shares | 5,757 | 4,920 |
Changes in assets and liabilities: | ||
(Increase) decrease in deposits - restricted | (1,000) | 1,039 |
Decrease in other assets | 1,798 | 6,763 |
Increase in accounts payable and accrued expenses | 39,148 | 19,026 |
(Decrease) in accrued interest payable | (32,954) | (38,578) |
(Decrease) in other liabilities | (20,005) | (24,437) |
Increase (decrease) in security deposits | 3,373 | (871) |
Net cash provided by operating activities | 155,457 | 142,451 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Investment in real estate - acquisitions | (498,272) | |
Investment in real estate - development/other | (31,347) | (82,171) |
Improvements to real estate | (25,691) | (26,644) |
Additions to non-real estate property | (353) | (712) |
Interest capitalized for real estate under development | (4,365) | (10,617) |
Proceeds from disposition of real estate, net | 105,071 | 133,154 |
Distributions from unconsolidated entities - return of capital | 1,303 | 110 |
Purchase of investment securities | (52,822) | |
Proceeds from sale of investment securities | 15,000 | |
Property acquisitions costs | (3,337) | (100) |
Decrease (increase) in deposits on real estate acquisitions, net | 182,203 | (43,020) |
(Increase) decrease in mortgage deposits | (3,383) | 246 |
Acquisition of Noncontrolling Interests - Partially Owned Properties | (2,823) | |
Net cash (used for) investing activities | (278,171) | (70,399) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Loan and bond acquisition costs | (1,435) | (6,096) |
Mortgage notes payable: | ||
Proceeds | 55,664 | 57,713 |
Restricted cash | 7,427 | 7,177 |
Lump sum payoffs | (149,409) | (141,132) |
Scheduled principal repayments | (4,059) | (5,111) |
(Loss) on debt extinguishments | (35) | |
Notes, net: | ||
Lump sum payoffs | (307,820) | |
Gain on debt extinguishments | 2,020 | |
Lines of credit: | ||
Proceeds | 1,469,125 | |
Repayments | (1,378,125) | |
Proceeds from settlement of derivative instruments | 449 | |
Proceeds from sale of OP Units | 73,356 | |
Proceeds from EQR's Employee Share Purchase Plan (ESPP) | 2,478 | 2,787 |
Proceeds from exercise of EQR options | 19,215 | 105 |
OP Units repurchased and retired | (1,887) | (1,124) |
Payment of offering costs | (604) | (121) |
Contributions - Noncontrolling Interests - Partially Owned Properties | 222 | 522 |
Contributions - Limited Partners | 78 | |
Distributions: | ||
OP Units - General Partner | (93,317) | (131,567) |
Preference Units | (3,620) | (3,620) |
Preference Interests and Junior Preference Units | (4) | |
OP Units - Limited Partners | (4,794) | (8,000) |
Noncontrolling Interests - Partially Owned Properties | (625) | (471) |
Net cash (used for) financing activities | (10,388) | (534,250) |
Net (decrease) in cash and cash equivalents | (133,102) | (462,198) |
Cash and cash equivalents, beginning of period | 193,288 | 890,794 |
Cash and cash equivalents, end of period | 60,186 | 428,596 |
SUPPLEMENTAL INFORMATION: | ||
Cash paid for interest, net of amounts capitalized | 144,902 | 159,656 |
Net cash (received) paid for income and other taxes | (1,850) | 564 |
Real estate acquisitions/dispositions/other: | ||
Mortgage loans assumed | 145,660 | |
Valuation of OP Units | 7,383 | |
Mortgage loans (assumed) by purchaser | (39,999) | (4,387) |
Amortization of deferred financing costs: | ||
Investment in real estate, net | (600) | (1,011) |
Deferred financing costs, net | 3,797 | 4,008 |
Amortization of discounts and premiums on debt: | ||
Investment in real estate, net | (4) | |
Mortgage notes payable | (1,563) | (1,550) |
Notes, net | 2,128 | 3,260 |
Amortization of deferred settlements on derivative instruments: | ||
Other liabilities | (133) | (345) |
Accumulated other comprehensive loss | 726 | 1,493 |
Unrealized loss (gain) on derivative instruments: | ||
Other assets | 7,579 | (379) |
Mortgage notes payable | 16 | (1,186) |
Notes, net | 2,725 | (645) |
Other liabilities | 3,184 | (450) |
Accumulated other comprehensive (loss) income | (13,503) | 2,660 |
Proceeds from settlement of derivative instruments: | ||
Other assets | 449 | |
Other | ||
Receivable on sale of OP Units | 37,550 | |
Transfer from notes, net to mortgage notes payable | $35,600 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL (USD $) | |
In Thousands | 3 Months Ended
Mar. 31, 2010 |
Balance, beginning of year | $5,174,513 |
Accumulated other comprehensive income (loss) - derivative instruments: | |
Unrealized holding (losses) gains arising during the period | (13,503) |
Losses reclassified into earnings from other comprehensive income | 726 |
Net (loss) attributable to Noncontrolling Interests | (250) |
Accumulated other comprehensive income (loss) - other instruments: | |
Unrealized holding (losses) gains arising during the period | (159) |
Net income available to Units - Limited Partners | 2,623 |
Net income available to Units - General Partner | 51,863 |
Balance, end of period | 5,147,041 |
PREFERENCE UNITS | |
Balance, beginning of year | 208,773 |
Accumulated other comprehensive income (loss) - other instruments: | |
Conversion of 7.00% Series E Cumulative Convertible | (12) |
Balance, end of period | 208,761 |
GENERAL PARTNER | |
Balance, beginning of year | 4,833,885 |
OP Unit Issuance: | |
Conversion of Preference Units into OP Units held by General Partner | 12 |
Conversion of OP Units held by Limited Partners into OP Units held by General Partner | 8,007 |
Issuance of OP Units | 35,806 |
Exercise of EQR share options | 19,215 |
EQR's Employee Share Purchase Plan (ESPP) | 2,478 |
Share-based employee compensation expense: | |
EQR restricted shares | 2,647 |
EQR share options | 2,205 |
EQR ESPP discount | 687 |
Accumulated other comprehensive income (loss) - other instruments: | |
OP Units repurchased and retired | (1,887) |
Offering costs | (604) |
OP Units - General Partner distributions | (95,246) |
Supplemental Executive Retirement Plan (SERP) | 570 |
Net income available to Units - General Partner | 51,863 |
Change in market value of Redeemable Limited Partners | (39,985) |
Adjustment for Limited Partners ownership in Operating Partnership | 1,769 |
Balance, end of period | 4,821,422 |
LIMITED PARTNERS | |
Balance, beginning of year | 116,120 |
OP Unit Issuance: | |
Conversion of OP Units held by Limited Partners into OP Units held by General Partner | (8,007) |
Issuance of OP Units | 7,383 |
Accumulated other comprehensive income (loss) - other instruments: | |
Equity compensation associated with Units - Limited Partners | 788 |
Net income available to Units - Limited Partners | 2,623 |
Units - Limited Partners distributions | (4,704) |
Change in carrying value of Redeemable Limited Partners | 2,280 |
Adjustment for Limited Partners ownership in Operating Partnership | (1,769) |
Balance, end of period | 114,714 |
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME | |
Balance, beginning of year | 4,681 |
Accumulated other comprehensive income (loss) - derivative instruments: | |
Unrealized holding (losses) gains arising during the period | (13,503) |
Losses reclassified into earnings from other comprehensive income | 726 |
Accumulated other comprehensive income (loss) - other instruments: | |
Unrealized holding (losses) gains arising during the period | (159) |
Balance, end of period | (8,255) |
NONCONTROLLING INTERESTS - PARTIALLY OWNED PROPERTIES | |
Balance, beginning of year | 11,054 |
Accumulated other comprehensive income (loss) - derivative instruments: | |
Net (loss) attributable to Noncontrolling Interests | (250) |
Accumulated other comprehensive income (loss) - other instruments: | |
Contributions by Noncontrolling Interests | 222 |
Distributions to Noncontrolling Interests | (625) |
Other | (2) |
Balance, end of period | $10,399 |
Business
Business | |
3 Months Ended
Mar. 31, 2010 | |
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 March 31, 2010 owned an approximate 95.3% 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 EPROP and those entities owned or controlled by it. References to the "Company" mean EQR and the Operating Partnership. As of March 31, 2010, the Operating Partnership, directly or indirectly through investments in title holding entities, owned all or a portion of 491 properties located in 23 states and the District of Columbia consisting of 136,470 units. The ownership breakdown includes (table does not include various uncompleted development properties): Properties Units Wholly Owned Properties 430 118,732 Partially Owned Properties: Consolidated 27 5,530 Unconsolidated 32 7,602 Military Housing 2 4,606 491 136,470 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
3 Months Ended
Mar. 31, 2010 | |
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 promulgated under the Securities Act of 1933, as amended. 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 quarter ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. In preparation of the Operating Partnership's 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 December 31, 2009 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 Partnership's annual report on Form 10-K for the year ended December 31, 2009. 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 Partnership's 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 after consideration of any net operating losses. 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 ra |
Capital and Redeemable Limited
Capital and Redeemable Limited Partners | |
3 Months Ended
Mar. 31, 2010 | |
Capital and Redeemable Limited Partners | 3. Capital and Redeemable Limited Partners The following tables present the changes in the Operating Partnership's issued and outstanding "Units" (which includes OP Units and Long-Term Incentive Plan ("LTIP") Units) and in the limited partners' Units for the quarter ended March 31, 2010: 2010 General and Limited Partner Units General and Limited Partner Units outstanding at January1, 294,157,017 Issued to General Partner: Conversion of Series E Preference Units 556 Issuance of OP Units 1,057,304 Exercise of EQR share options 717,482 Employee Share Purchase Plan (ESPP) 87,680 Restricted EQR share grants, net 230,708 Issued to Limited Partners: Issuance of LTIP Units 94,096 OP Units issued through acquisitions 188,571 OP Units Other: Repurchased and retired (58,130 ) General and Limited Partner Units outstanding at March31, 296,475,284 Limited Partner Units Limited Partner Units outstanding at January1, 14,197,969 Limited Partner Issuance of LTIP Units 94,096 Limited Partner OP Units issued through acquisitions 188,571 Conversion of Limited Partner OP Units to EQR Common Shares (409,850 ) Limited Partner Units outstanding at March31, 14,070,786 Limited Partner Units Ownership Interest in Operating Partnership 4.7 % In September 2009, EQR announced the establishment of an At-The-Market ("ATM") share offering program which would allow EQR to sell up to 17.0 million Common Shares from time to time over the next three years into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOP's partnership agreement, EQR contributes the net proceeds from all equity offerings to the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis). During the quarter ended March 31, 2010, EQR issued approximately 1.1 million Common Shares at an average price of $33.87 per share for total consideration of approximately $35.8 million through the ATM program. Concurrent with these transactions, the Operating Partnership issued approximately 1.1 million OP Units to EQR. EQR has authorization to issue an additional 12.4 million of its shares as of March 31, 2010. On March 31, 2010, the Operating Partnership issued 188,571 OP Units at a price of $39.15 per OP Unit for total valuation of $7.4 million as partial consideration for the acquisition of one rental property. As the value of the OP Units issued was agreed by contract to be $35.00 per OP Unit, the difference between the contracted value and fair value (the closing price of EQR Common Shares on the closing date) was recorded as an increase to the purchase price. During the quarter ended March 31, 2010, EQR repurchased 58,130 of its Common Shares at an average price of $32.46 per share for total consideration of $1.9 million. These shares were retired subsequent to the repurchases. Concurrent with these transactions, the Operating Partnership repurchased and retired 58,130 OP Units previously issued to EQR |
Real Estate
Real Estate | |
3 Months Ended
Mar. 31, 2010 | |
Real Estate | 4. Real Estate The following table summarizes the carrying amounts for the Operating Partnership's investment in real estate (at cost) as of March 31, 2010 and December 31, 2009 (amounts in thousands): March31,2010 December31,2009 Land $ 3,948,967 $ 3,650,324 Depreciable property: Buildings and improvements 13,245,764 12,781,543 Furniture, fixtures and equipment 1,141,498 1,111,978 Projects under development: Land 78,545 106,716 Construction-in-progress 350,899 562,263 Land held for development: Land 193,201 181,430 Construction-in-progress 73,086 70,890 Investment in real estate 19,031,960 18,465,144 Accumulated depreciation (3,972,022 ) (3,877,564 ) Investment in real estate, net $ 15,059,938 $ 14,587,580 During the quarter ended March 31, 2010, the Operating Partnership acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands): Properties Units PurchasePrice Rental Properties 6 1,467 $ 639,261 Land Parcel (one) - - 12,000 Total 6 1,467 $ 651,261 During the quarter ended March 31, 2010, the Operating Partnership disposed of the following to unaffiliated parties (sales price in thousands): Properties Units SalesPrice Rental Properties: Consolidated 8 2,011 $ 145,940 Unconsolidated (1) 2 484 24,100 Condominium Conversion Properties 1 2 360 Total 11 2,497 $ 170,400 (1) The Operating Partnership owned a 25% interest in these unconsolidated rental properties. Sales price listed is the gross sales price. The Operating Partnership recognized a net gain on sales of discontinued operations of approximately $60.0 million and a net gain on sales of unconsolidated entities of approximately $0.5 million on the above sales. |
Commitments to Acquire/Dispose
Commitments to Acquire/Dispose of Real Estate | |
3 Months Ended
Mar. 31, 2010 | |
Commitments to Acquire/Dispose of Real Estate | 5. Commitments to Acquire/Dispose of Real Estate In addition to the properties that were subsequently acquired as discussed in Note 16, the Operating Partnership had entered into separate agreements to acquire one rental property consisting of 183 units for $43.5 million and one land parcel for $13.5 million. The Operating Partnership had entered into separate agreements to dispose of 14 properties consisting of 1,282 units for $133.0 million. 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. |
Investments in Partially Owned
Investments in Partially Owned Entities | |
3 Months Ended
Mar. 31, 2010 | |
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 Partnership's investments in partially owned entities as of March 31, 2010 (amounts in thousands except for project and unit amounts): Consolidated Unconsolidated Development Projects (VIEs) Other Total InstitutionalJointVentures(5) Held forand/orUnderDevelopment Completed,NotStabilized(4) CompletedandStabilized Total projects (1) - 2 4 21 27 32 Total units (1) - 567 1,167 3,796 5,530 7,602 Balance sheet information at 3/31/10 (at 100%): ASSETS Investment in real estate $ 556,375 $ 171,931 $ 318,036 $ 423,521 $ 1,469,863 $ 553,306 Accumulated depreciation (740 ) (1,745 ) (16,912 ) (115,882 ) (135,279 ) (175,403 ) Investment in real estate, net 555,635 170,186 301,124 307,639 1,334,584 377,903 Cash and cash equivalents 2,616 3,068 4,135 12,998 22,817 10,832 Deposits restricted 41,293 2,826 382 9 44,510 42,666 Escrow deposits mortgage - - 42 3,583 3,625 - Deferred financing costs, net 6,530 233 965 296 8,024 375 Other assets 95 13 282 85 475 2,821 Total assets $ 606,169 $ 176,326 $ 306,930 $ 324,610 $ 1,414,035 $ 434,597 LIABILITIES AND CAPITAL Mortgage notes payable $ 316,421 $ 106,162 $ 226,523 $ 301,778 $ 950,884 $ 389,277 Accounts payable accrued expenses 15,673 2,698 2,697 2,572 23,640 2,707 Accrued interest payable 2,411 158 252 1,677 4,498 2,424 Other liabilities 5,991 231 1,263 849 8,334 2,074 Security deposits 402 659 321 1,635 3,017 2,077 Total liabilities $ 340,898 $ 109,908 $ 231,056 $ 308,511 $ 990,373 $ 398,559 Noncontrolling Interests Partially Owned Properties $ 8,944 $ 1,076 $ 3,878 $ (3,499 ) $ 10,399 $ - Accumulated other comprehensive (loss) (3,429 ) - - - (3,429 ) - Partner's capital - - - - - 27,029 General and Limited Partners' |
Deposits - Restricted
Deposits - Restricted | |
3 Months Ended
Mar. 31, 2010 | |
Deposits - Restricted | 7. Deposits Restricted The following table presents the Operating Partnership's restricted deposits as of March 31, 2010 and December 31, 2009 (amounts in thousands): March31,2010 December 31,2009 Taxdeferred (1031)exchange proceeds $ 51,549 $ 244,257 Earnest money on pending acquisitions 16,505 6,000 Restricted deposits on debt (1) 42,138 49,565 Resident security and utility deposits 41,660 39,361 Other 11,526 12,825 Totals $ 163,378 $ 352,008 (1) Primarily represents amounts held in escrow by the lender and released as draw requests are made on fully funded development mortgage loans. |
Mortgage Notes Payable
Mortgage Notes Payable | |
3 Months Ended
Mar. 31, 2010 | |
Mortgage Notes Payable | 8. Mortgage Notes Payable As of March 31, 2010, the Operating Partnership had outstanding mortgage debt of approximately $4.8 billion. During the quarter ended March 31, 2010, the Operating Partnership: * Repaid $153.5 million of mortgage loans; * Obtained $55.7 million of new mortgage loan proceeds; * Assumed $145.7 million of mortgage debt on two acquired properties; and * Was released from $40.0 million of mortgage debt assumed by the purchaser on two disposed properties. The Operating Partnership recorded approximately $900,000 and $700,000 of write-offs of unamortized deferred financing costs during the quarters ended March 31, 2010 and 2009, respectively, as additional interest related to debt extinguishment of mortgages. As of March 31, 2010, scheduled maturities for the Operating Partnership's outstanding mortgage indebtedness were at various dates through September 1, 2048. At March 31, 2010, the interest rate range on the Operating Partnership's mortgage debt was 0.17% to 12.465%. During the quarter ended March 31, 2010, the weighted average interest rate on the Operating Partnership's mortgage debt was 4.84%. |
Notes
Notes | |
3 Months Ended
Mar. 31, 2010 | |
Notes | 9. Notes As of March 31, 2010, the Operating Partnership had outstanding unsecured notes of approximately $4.6 billion. As of March 31, 2010, scheduled maturities for the Operating Partnership's outstanding notes were at various dates through 2026. At March 31, 2010, the interest rate range on the Operating Partnership's notes was 0.54% to 7.57%. During the quarter ended March 31, 2010, the weighted average interest rate on the Operating Partnership's notes was 5.09%. |
Lines of Credit
Lines of Credit | |
3 Months Ended
Mar. 31, 2010 | |
Lines of Credit | 10. Lines of Credit The Operating Partnership has a $1.425 billion (net of $75.0 million which had been committed by a now bankrupt financial institution and is not available for borrowing) unsecured revolving credit facility maturing on February 28, 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 0.50%) dependent upon the Operating Partnership's credit rating or based on bids received from the lending group. EQR has guaranteed the Operating Partnership's credit facility up to the maximum amount and for the full term of the facility. As of March 31, 2010, the amount available on the credit facility was $1.28 billion (net of $58.2 million which was restricted/dedicated to support letters of credit, net of $91.0 million outstanding and net of the $75.0 million discussed above). During the quarter ended March 31, 2010, the weighted average interest rate was 0.59%. |
Derivative and Other Fair Value
Derivative and Other Fair Value Instruments | |
3 Months Ended
Mar. 31, 2010 | |
Derivative and Other Fair Value Instruments | 11. Derivative and Other Fair Value Instruments The valuation of financial instruments 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 values of the Operating Partnership's mortgage notes payable and unsecured notes (including its line of credit) were approximately $4.8 billion and $4.7 billion, respectively, at March 31, 2010. The fair values of the Operating Partnership's mortgage notes payable and unsecured notes (including its line of credit) were approximately $4.7 billion and $4.9 billion, respectively, at March 31, 2010. The fair values of the Operating Partnership's financial instruments (other than mortgage notes payable, unsecured notes, lines of credit, derivative instruments and investment securities) including cash and cash equivalents 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 Partnership's consolidated derivative instruments at March 31, 2010 (dollar amounts are in thousands): FairValueHedges (1) ForwardStartingSwaps(2) DevelopmentCash FlowHedges(3) Current Notional Balance $ 315,693 $ 900,000 $ 69,660 Lowest Possible Notional $ 315,693 $ 900,000 $ 3,020 Highest Possible Notional $ 317,694 $ 900,000 $ 91,343 Lowest Interest Rate 2.009% 4.005% 4.059% Highest Interest Rate 4.800% 4.695% 4.059% Earliest Maturity Date 2012 2020 2011 Latest Maturity Date 2013 2023 2011 (1) Fair Value Hedges Converts outstanding fixed rate debt to a floating interest rate. (2) Forward Starting Swaps Designed to partially fix the interest rate in advance of a planned future debt issuance. These swaps have mandatory counterparty terminations from 2011 through 2014. (3) Development Cash Flow Hedges Converts outstanding floating rate debt to a fixed interest rate. The following tables provide the location of the Operating Partnership's derivative instruments within the accompanying Consolidated Balance Sheets and their fair market values as of March 31, 2010 and December 31, 2009, respectively (amounts in thousands): Asset Derivatives LiabilityDerivatives March31, 2010 BalanceSheetLocation FairValue BalanceSheetLocation FairValue Derivatives designated as hedging instruments: |
Earnings Per Unit
Earnings Per Unit | |
3 Months Ended
Mar. 31, 2010 | |
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): QuarterEndedMarch31, 2010 2009 Numerator for net income per Unit basic and diluted: (Loss) income from continuing operations $ (2,208 ) $ 12,090 Net loss attributable to Noncontrolling Interests Partially Owned Properties 250 69 Allocation to Preference Units (3,620 ) (3,620 ) Allocation to Preference Interests and Junior Preference Units - (4 ) (Loss) income from continuing operations available to Units (5,578 ) 8,535 Discontinued operations, net 60,064 73,331 Numerator for net income per Unit basic and diluted $ 54,486 $ 81,866 Denominator for net income per Unit basic and diluted: Denominator for net income per Unit basic 294,450 288,710 Effect of dilutive securities: Dilution for Units issuable upon assumed exercise/vesting of EQR's long-term compensation award shares/units 143 Denominator for net income per Unit diluted 294,450 288,853 Net income per Unit basic $ 0.18 $ 0.28 Net income per Unit diluted $ 0.18 $ 0.28 Net income per Unit basic: (Loss) income from continuing operations available to Units $ (0.019 ) $ 0.029 Discontinued operations, net 0.204 0.254 Net income per Unit basic $ 0.185 $ 0.283 Net income per Unit diluted: (Loss) income from continuing operations available to Units $ (0.019 ) $ 0.029 Discontinued operations, net 0.204 0.254 Net income per Unit diluted $ 0.185 $ 0.283 Potential common shares issuable from the assumed exercise/vesting of EQR long-term compensation award shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per Unit calculation as the Operating Partnership had a loss from continuing operations for the quarter ended March 31, 2010. Convertible preference interests/units that could be converted into 397,611 and 406,031 weighted average Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units) for the quarters ended March 31, 2010 and 2009, 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 Common Shares/OP Units that could ultimately be issued upon the conversion/exchange of the Operating Partnership's $650.0 million ($482.5 million outstanding at March 31, 2010) exchangeable senior notes was not included in the computation of diluted earnings per Unit because the effects would be anti-dilutive. |
Discontinued Operations
Discontinued Operations | |
3 Months Ended
Mar. 31, 2010 | |
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, all operations related to 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 quarters ended March 31, 2010 and 2009 (amounts in thousands). QuarterEndedMarch31, 2010 2009 REVENUES Rental income $ 2,278 $ 36,011 Total revenues 2,278 36,011 EXPENSES (1) Property and maintenance 1,281 11,407 Real estate taxes and insurance 501 3,953 Depreciation 415 8,679 General and administrative 3 5 Total expenses 2,200 24,044 Discontinued operating income 78 11,967 Interest and other income 1 7 Interest (2): Expense incurred, net (22 ) (430 ) Amortization of deferred financing costs - (35 ) Income and other tax (expense) benefit (29 ) (49 ) Discontinued operations 28 11,460 Net gain on sales of discontinued operations 60,036 61,871 Discontinued operations, net $ 60,064 $ 73,331 (1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Operating Partnership's 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 quarter ended March 31, 2010 (excluding condominium conversion properties), the investment in real estate, net of accumulated depreciation, and the mortgage notes payable balances at December 31, 2009 were $85.3 million and $40.0 million, respectively. The net real estate basis of the Operating Partnership's condominium conversion properties owned by the TRS and included in discontinued operations (excludes the Operating Partnership's halted conversions as they are now held for use), which were included in investment in real estate, net in the consolidated balance sheets, was $0.3 million and $0.8 million at March 31, 2010 and December 31, 2009, respectively. |
Commitments and Contingencies
Commitments and Contingencies | |
3 Months Ended
Mar. 31, 2010 | |
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 Partnership's 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 March 31, 2010. 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, may reasonably 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 quarter ended March 31, 2010, the Operating Partnership recorded additional reserves of approximately $0.7 million, paid approximately $0.7 million in claims and legal fees and released approximately $0.2 million of remaining reserves for settled claims. As a result, the Operating Partnership had total reserves of approximately $6.5 million at March 31, 2010. 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 March 31, 2010, the Operating Partnership has three projects totaling 1,220 units in various stages of development with estimated comple |
Reportable Segments
Reportable Segments | |
3 Months Ended
Mar. 31, 2010 | |
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 Partnership's 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 Partnership's operating segments have been aggregated by geography in a manner identical to that which is provided to its chief operating decision maker. The Operating Partnership's fee and asset management, development (including its 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 and as such, have been aggregated in the "Other" segment in the tables presented below. All revenues are from external customers and there is no customer who contributed 10% or more of the Operating Partnership's total revenues during the quarters ended March 31, 2010 and 2009, respectively. The primary financial measure for the Operating Partnership's 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 Partnership's 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 quarters ended March 31, 2010 and 2009, respectively, as well as total assets for the quarter ended March 31, 2010 (amounts in thousands): Quarter Ended March31, 2010 Northeast Northwest Southeast Southwest Other(3) Total Rental income: Same store (1) $ 147,207 $ 91,612 $ 97,523 $ 107,355 $ - $ 443,697 Non-same store/other (2)(3) 16,630 1,446 1,111 3,859 19,525 42,571 Total rental income 163,837 93,058 98,634 111,214 19,525 486,268 Operating expenses: Same store (1) 60,0 |
Subsequent Events/Other
Subsequent Events/Other | |
3 Months Ended
Mar. 31, 2010 | |
Subsequent Events/Other | 16. Subsequent Events/Other Subsequent Events Subsequent to March 31, 2010, the Operating Partnership: * Acquired its joint venture partner's interest in one development property for $0.1 million; * Acquired one apartment property consisting of 559 units for $166.8 million; * Exercised the first of its two one-year extension options related to the Operating Partnership's $500.0 million term loan facility, which originally matured on October5, 2010 but now matures on October5, 2011 and has one remaining one-year extension option exercisable by the Operating Partnership; * Repaid $102.2 million in mortgage loans on various properties; and * Acquired the 75% equity interest it did not previously own in seven of the unconsolidated properties containing 1,811 units in exchange for an approximate $30.0 million payment to its partner. In addition, the Operating Partnership repaid the $112.6 million mortgage loan, which was to mature on May1, 2010, concurrent with closing using $70.0 million drawn from the Operating Partnership's line of credit and $42.6 million in proceeds held by the lender from four property sales in 2009. Other During the quarters ended March 31, 2010 and 2009, the Operating Partnership incurred charges of $4.4 million and $0.3 million, respectively, related to the write-off of various pursuit and out-of-pocket costs for terminated acquisition, disposition (including halted condominium conversions) and development transactions ($1.0 million and $0.2 million, respectively) and related to property acquisition costs, such as survey, title and legal fees, on the acquisition of operating properties ($3.4 million and $0.1 million, respectively). These costs are included in other expenses in the accompanying consolidated statements of operations. During the quarters ended March 31, 2010 and 2009, the Operating Partnership received $2.0 million and $0.2 million, respectively, for the settlement of insurance/litigation claims, which are included in interest and other income in the accompanying consolidated statements of operations. |