Exhibit 99.1
Equity Residential Reports Second Quarter Results; Announces First Acquisition
in Manhattan
CHICAGO--(BUSINESS WIRE)--Aug. 3, 2004--Equity Residential
(NYSE:EQR) today reported results for the quarter and six months ended
June 30, 2004. All per share results are reported on a fully diluted
basis.
"We are encouraged by improving revenues in the majority of our
top twenty markets, which we believe is a sign of the continuing
recovery of the apartment industry," said Bruce W. Duncan, Equity
Residential's President and CEO. "The improvement in our revenues is a
result primarily of increases in occupancy and therefore we continue
to remain cautious about the strength of the recovery until we see
meaningful improvement in rental rate."
Second Quarter 2004
For the quarter ended June 30, 2004, the Company reported earnings
of $0.39 per share compared to $0.41 per share in the second quarter
of 2003.
Funds from Operations (FFO) for the quarter ended June 30, 2004
were $0.56 per share compared to $0.57 per share in the same period of
2003. The $0.56 per share FFO for the quarter was $0.03 above the
guidance range of $0.51 to $0.53 provided by the Company in its first
quarter earnings release on April 28, 2004. The positive variance was
the result of $0.02 from the sale of vacant land associated with the
Company's Water Terrace project in Marina del Rey, California and
$0.01 from increased condominium sales for the quarter as well as
lower than budgeted short-term interest rates. From an operating
standpoint, the Company's results achieved the high end of the
guidance range.
Total revenues from continuing operations for the quarter were
$488.6 million compared to $440.1 million in the second quarter of
2003. The primary components of this $48.5 million increase in
revenues includes the properties acquired since July 1, 2003, the
interests in the 15 development properties acquired in the first
quarter of 2004 from the Company's joint venture partners as well as
the properties consolidated due to the adoption of FIN 46 effective
March 31, 2004.
Six Months Ended June 30, 2004
For the six months ended June 30, 2004, the Company reported
earnings of $0.74 per share compared to $0.82 per share in the same
period of 2003.
FFO for the six months ended June 30, 2004 were $1.08 per share
compared to $1.14 per share in the same period of 2003.
Total revenues from continuing operations for the six months ended
June 30, 2004 were $945.7 million compared to $872.9 million in the
same period of 2003.
"Same-Store" Results
On a "same-store" second quarter to second quarter comparison,
which includes 169,099 units, revenues increased 1.1 percent, expenses
increased 3.6 percent and NOI decreased 0.5 percent. On a sequential
"same-store" comparison for these same 169,099 units from first
quarter 2004 to second quarter 2004, revenues increased 1.3 percent,
expenses increased 0.6 percent and NOI increased 1.8 percent.
On a "same-store" six-month to six-month comparison, which
includes 168,179 units, revenues increased 0.4 percent, expenses
increased 3.4 percent and NOI decreased 1.5 percent.
Acquisitions/Dispositions
During the second quarter of 2004, the Company acquired eight
properties, consisting of 1,869 units, for an aggregate purchase price
of $223.6 million at an average capitalization (cap) rate of 5.9
percent.
Also during the quarter, the Company sold 10 properties,
consisting of 2,620 units, for an aggregate sale price of $167.8
million at an average cap rate of 5.9 percent. In addition, the
Company sold 188 condominium units and one vacant land parcel for
$25.7 million and $27.7 million, respectively.
In the first six months of 2004, the Company acquired 13
properties, consisting of 3,540 units, for an aggregate purchase price
of $448.0 million at an average cap rate of 5.8 percent and sold 31
properties, consisting of 8,485 units, for an aggregate sale price of
$452.2 million at an average cap rate of 6.3 percent. In addition, the
Company sold 313 condominiums and two vacant land parcels for $42.4
million and $27.9 million, respectively.
Hudson Crossing
On July 29, 2004, the Company closed on its first acquisition in
New York City: Hudson Crossing, a 259-unit property located on Ninth
Avenue between 36th and 37th in Manhattan. The property, which was
constructed in 2003, features a mixture of studio, one and two-bedroom
units, and an indoor parking garage. The purchase price was $93.1
million, representing a cap rate of 5.2%.
Third Quarter 2004 Results
Equity Residential expects to announce third quarter 2004 results
on Tuesday, November 2, 2004 and host a conference call to discuss
those results at 10:00 a.m. CT that day.
Equity Residential is the largest publicly traded apartment
company in America. Nationwide, Equity Residential owns or has
investments in 951 properties in 34 states consisting of 203,012
units. For more information on Equity Residential, please visit our
website at www.equityresidential.com.
Forward-Looking Statements
The Company lists parameters for 2004 results in the final page of
this release. 2004 results will depend upon a slowdown in multifamily
starts and economic recovery and job growth. The forward-looking
statements contained in this news release regarding 2004 results are
further subject to certain risks and uncertainties including, without
limitation, the risks described under the heading "Risk Factors" in
our Annual Report on Form 10-K filed with the Securities and Exchange
Commission (SEC) and available on our website,
www.equityresidential.com. This news release also contains
forward-looking statements concerning development properties. The
total number of units and cost of development and completion dates
reflect the Company's best estimates and are subject to uncertainties
arising from changing economic conditions (such as costs of labor and
construction materials), completion and local government regulation.
The Company assumes no obligation to update or supplement
forward-looking statements that become untrue because of subsequent
events.
A live web cast of the Company's conference call discussing these
results and outlook for 2004 will take place today at 10:00 a.m.
Central. Please visit the Investor Information section of the
Company's web site at www.equityresidential.com for the link. A replay
of the web cast will be available for two weeks at this site.
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share data)
(Unaudited)
Six Months Ended Quarter Ended June
June 30, 30,
---------------------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
REVENUES
Rental income $939,158 $865,045 $485,062 $434,733
Fee and asset management 6,541 7,878 3,534 5,390
--------- --------- --------- ---------
Total revenues 945,699 872,923 488,596 440,123
--------- --------- --------- ---------
EXPENSES
Property and maintenance 258,559 234,007 134,203 117,232
Real estate taxes and
insurance 105,906 93,310 54,144 46,151
Property management 37,441 32,194 20,155 16,343
Fee and asset management 4,274 3,607 2,279 1,837
Depreciation 238,266 210,377 123,981 105,926
General and administrative 23,036 20,146 13,048 8,970
Impairment on technology
investments - 581 - 290
--------- --------- --------- ---------
Total expenses 667,482 594,222 347,810 296,749
--------- --------- --------- ---------
Operating income 278,217 278,701 140,786 143,374
Interest and other income 5,012 7,121 2,906 3,784
Interest:
Expense incurred, net (166,338) (162,380) (86,527) (83,227)
Amortization of
deferred financing
costs (3,127) (2,897) (1,727) (1,579)
--------- --------- --------- ---------
Income before allocation to Minority
Interests, loss from investments in
unconsolidated entities, net gain on
sales of unconsolidated entities
and discontinued operations 113,764 120,545 55,438 62,352
Allocation to Minority
Interests:
Operating Partnership (15,738) (18,281) (8,098) (9,171)
Partially Owned Properties 296 (243) 443 (128)
Loss from investments in
unconsolidated entities (7,797) (1,744) (391) (1,851)
Net gain on sales of
unconsolidated entities 4,405 4,675 1,971 3,463
--------- --------- --------- ---------
Income from continuing
operations 94,930 104,952 49,363 54,665
Net gain on sales of
discontinued operations 149,259 140,992 77,760 70,320
Discontinued operations, net 166 25,794 167 11,406
--------- --------- --------- ---------
Net income 244,355 271,738 127,290 136,391
Preferred distributions (37,493) (48,417) (18,737) (24,237)
--------- --------- --------- ---------
Net income available to Common
Shares $206,862 $223,321 $108,553 $112,154
========= ========= ========= =========
Earnings per share - basic:
Income from continuing operations
available to Common Shares $0.24 $0.25 $0.13 $0.13
========= ========= ========= =========
Net income available to Common
Shares $0.74 $0.82 $0.39 $0.41
========= ========= ========= =========
Weighted average Common Shares
outstanding 278,224 271,031 278,949 271,380
========= ========= ========= =========
Earnings per share - diluted:
Income from continuing operations
available to Common Shares $0.24 $0.25 $0.13 $0.13
========= ========= ========= =========
Net income available to Common
Shares $0.74 $0.82 $0.39 $0.41
========= ========= ========= =========
Weighted average Common Shares
outstanding 302,017 295,269 302,201 296,084
========= ========= ========= =========
Distributions declared per
Common Share outstanding $0.865 $0.865 $0.4325 $0.4325
========= ========= ========= =========
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
(Amounts in thousands except per share data)
(Unaudited)
Six Months Ended Quarter Ended June
June 30, 30,
---------------------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net income $244,355 $271,738 $127,290 $136,391
Net income allocation to
Minority Interests-Operating
Partnership 15,738 18,281 8,098 9,171
Adjustments:
Depreciation 238,266 210,377 123,981 105,926
Depreciation - Non-real
estate additions (2,717) (4,598) (1,417) (2,323)
Depreciation - Partially
Owned Properties (4,171) (4,116) (2,075) (2,077)
Depreciation -
Unconsolidated
Properties 7,879 10,150 1,116 4,955
Net (gain) on sales of
unconsolidated entities (4,405) (4,675) (1,971) (3,463)
Discontinued operations:
Depreciation 3,495 27,015 595 12,548
Net (gain) on sales
of discontinued
operations (149,259) (140,992) (77,760) (70,320)
Net incremental
gain on sales of
condominium units 8,470 2,887 4,946 2,444
Net gain on sales
of vacant land 5,536 - 5,521 -
--------- --------- --------- ---------
FFO (1)(2) 363,187 386,067 188,324 193,252
Preferred distributions (37,493) (48,417) (18,737) (24,237)
--------- --------- --------- ---------
FFO available to Common
Shares and OP Units - basic $325,694 $337,650 $169,587 $169,015
========= ========= ========= =========
FFO available to Common
Shares and OP Units -
diluted $327,672 $340,083 $170,572 $170,229
========= ========= ========= =========
FFO per share and OP Unit -
basic $1.09 $1.15 $0.57 $0.58
========= ========= ========= =========
FFO per share and OP Unit -
diluted $1.08 $1.14 $0.56 $0.57
========= ========= ========= =========
Weighted average Common
Shares and
OP Units outstanding -
basic 299,438 293,325 299,847 293,696
========= ========= ========= =========
Weighted average Common
Shares and
OP Units outstanding -
diluted 304,557 298,412 304,733 299,224
========= ========= ========= =========
(1) The National Association of Real Estate Investment Trusts
("NAREIT") defines funds from operations ("FFO") (April 2002 White
Paper) as net income (computed in accordance with accounting
principles generally accepted in the United States ("GAAP")),
excluding gains (or losses) from sales of depreciable property,
plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated
to reflect funds from operations on the same basis. The April 2002
White Paper states that gain or loss on sales of property is
excluded from FFO for previously depreciated operating properties
only. Once the Company commences the conversion of units to
condominiums, it simultaneously discontinues depreciation of such
property.
(2) The Company believes that FFO is helpful to investors as a
supplemental measure of the operating performance of a real estate
company because it provides investors an understanding of the
ability of the Company to incur and service debt and to make
capital expenditures. FFO in and of itself does not represent net
income or net cash flows from operating activities in accordance
with GAAP. Therefore, FFO should not be exclusively considered as
an alternative to net income or to net cash flows from operating
activities as determined by GAAP or as a measure of liquidity. The
Company's calculation of FFO may differ from other real estate
companies due to, among other items, variations in cost
capitalization policies for capital expenditures and, accordingly,
may not be comparable to such other real estate companies.
EQUITY RESIDENTIAL
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
(Unaudited)
June 30, December 31,
2004 2003
------------ ------------
ASSETS
Investment in real estate
Land $2,102,954 $1,845,547
Depreciable property 12,076,194 11,018,326
Construction in progress (including land) 327,701 10,506
------------ ------------
Investment in real estate 14,506,849 12,874,379
Accumulated depreciation (2,424,665) (2,296,013)
------------ ------------
Investment in real estate, net 12,082,184 10,578,366
Cash and cash equivalents 143,252 49,579
Investments in unconsolidated entities 12,409 473,977
Rents receivable 2,002 426
Deposits - restricted 84,988 133,752
Escrow deposits - mortgage 41,839 41,104
Deferred financing costs, net 32,864 31,135
Goodwill, net 30,000 30,000
Other assets 121,257 128,554
------------ ------------
Total assets $12,550,795 $11,466,893
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $3,384,916 $2,693,815
Notes, net 2,577,108 2,656,674
Line of credit 415,000 10,000
Accounts payable and accrued expenses 96,432 55,463
Accrued interest payable 63,370 60,334
Rents received in advance and other
liabilities 203,991 189,372
Security deposits 47,620 44,670
Distributions payable 141,314 140,195
------------ ------------
Total liabilities 6,929,751 5,850,523
------------ ------------
Commitments and contingencies
Minority Interests:
Operating Partnership 325,096 342,809
Preference Interests 246,000 246,000
Junior Preference Units 184 2,217
Partially Owned Properties 12,841 9,903
------------ ------------
Total Minority Interests 584,121 600,929
------------ ------------
Shareholders' equity:
Preferred Shares of beneficial interest,
$0.01 par value; 100,000,000 shares authorized;
5,428,737 shares issued and outstanding as of
June 30, 2004 and 5,496,518 shares issued
and outstanding as of December 31, 2003 669,218 670,913
Common Shares of beneficial interest,
$0.01 par value; 1,000,000,000 shares
authorized; 280,675,819 shares issued
and outstanding as of June 30, 2004
and 277,643,885 shares issued and
outstanding as of December 31, 2003 2,807 2,776
Paid in capital 5,003,289 4,956,712
Deferred compensation (1,716) (3,554)
Distributions in excess of accumulated
earnings (623,647) (588,005)
Accumulated other comprehensive loss (13,028) (23,401)
------------ ------------
Total shareholders' equity 5,036,923 5,015,441
------------ ------------
Total liabilities and shareholders'
equity $12,550,795 $11,466,893
============ ============
June YTD 2004 vs. June YTD 2003
YTD over YTD Same-Store Results
$ in Millions - 168,179 Same-Store Units
Description Revenues Expenses NOI(b)
----------- ---------- ---------- ------------
YTD 2004 $826.0 $333.2 $492.8
YTD 2003 $822.8 $322.3 $500.5
---------- ---------- ------------
Change $3.2 $10.9 $(7.7)
========== ========== ============
Change 0.4% 3.4% (1.5%)
Second Quarter 2004 vs. Second Quarter 2003
Quarter over Quarter Same-Store Results
$ in Millions - 169,099 Same-Store Units
Description Revenues Expenses NOI(b)
----------- ---------- ---------- ------------
Q2 2004 $418.7 $168.2 $250.5
Q2 2003 $414.1 $162.3 $251.8
---------- ---------- ------------
Change $4.6 $5.9 $(1.3)
========== ========== ============
Change 1.1% 3.6% (0.5%)
Second Quarter 2004 vs. First Quarter 2004
Sequential Quarter over Quarter Same-Store Results
$ in Millions - 169,099 Same-Store Units(a)
Description Revenues Expenses NOI(b)
----------- ---------- ---------- --------------
Q2 2004 $418.7 $168.2 $250.5
Q1 2004 $413.3 $167.2 $246.1
---------- ---------- --------------
Change $5.4 $1.0 $4.4
========== ========== ==============
Change 1.3% 0.6% 1.8%
(a)Includes the same units as the Second Quarter 2004 vs. Second
Quarter 2003 Same Store results for comparability purposes.
Same-Store Occupancy Statistics
YTD 2004 93.3% Q2 2004 93.7% Q2 2004 93.7%
YTD 2003 92.9% Q2 2003 93.1% Q1 2004 92.9%
----------- -------- -------
Change 0.4% Change 0.6% Change 0.8%
(b) The Company's primary financial measure for evaluating each of its
apartment communities is net operating income ("NOI"). NOI
represents rental income less property and maintenance expense,
real estate tax and insurance expense, and property management
expense. The Company believes that NOI is helpful to investors as
a supplemental measure of the operating performance of a real
estate company because it is a direct measure of the actual
operating results of the Company's apartment communities.
Same Store NOI Reconciliation
June YTD 2004 vs. June YTD 2003
The following table provides a reconciliation of operating income
per the consolidated statements of operations to NOI for the
Six-Month 2004 Same Store Properties:
Six Months Ended June 30,
-----------------------------
2004 2003
----------- ---------------
(Amounts in millions)
Operating income $278.2 $278.7
Adjustments:
NOI for properties not in same
store (44.5) (5.0)
Fee and asset management
revenue (6.5) (7.9)
Fee and asset management
expense 4.3 3.6
Depreciation 238.3 210.4
General and administrative 23.0 20.1
Impairment on technology
investments - 0.6
----------- ---------------
Same store NOI $492.8 $500.5
=========== ===============
Same Store NOI Reconciliation
Second Quarter 2004 vs. Second Quarter 2003
The following table presents a reconciliation of operating income
per the consolidated statements of operations to NOI for the
Second Quarter 2004 Same Store Properties:
Quarter Ended June 30,
--------------------------
2004 2003
----------- -----------
(Amounts in millions)
Operating income $140.8 $143.4
Adjustments:
NOI for properties not in same
store (26.1) (3.2)
Fee and asset management
revenue (3.5) (5.4)
Fee and asset management
expense 2.3 1.8
Depreciation 124.0 105.9
General and administrative 13.0 9.0
Impairment on technology
investments - 0.3
--------------------------
Same store NOI $250.5 $251.8
=========== ===========
June YTD 2004 vs. June YTD 2003
Same-Store Results by Market
Increase (Decrease) from
Prior Quarter
-------------------------------------------------------------------
Jun Jun
YTD YTD
% of Weighted
Actual Average
Markets Units NOI Occu- Rev- Expenses NOI Occu-
pancy % enues pancy
-------------------------------------------------------------------
1 Boston 5,526 7.1% 94.6% 0.3% 4.6% (1.9%) 0.5%
2 South Florida 9,895 6.4% 94.5% 3.5% 1.1% 5.3% 0.8%
3 San Francisco
Bay Area 5,010 5.1% 95.0% (2.3%) 2.7% (4.7%) 0.2%
4 Atlanta 10,401 4.7% 93.4% (2.6%) 6.6% (8.8%) 1.3%
5 Phoenix 9,567 4.7% 90.6% 3.7% 3.2% 4.1% 2.3%
6 Los Angeles 3,868 4.4% 94.9% 3.4% 5.1% 2.7% (0.0%)
7 San Diego 4,048 4.3% 94.5% 3.0% 7.0% 1.3% 0.4%
8 Dallas/Ft
Worth 9,579 4.2% 93.8% (2.5%) 2.7% (7.2%) 0.7%
9 New England
(excl
Boston) 6,114 4.0% 95.3% 2.6% 5.5% 0.6% (0.7%)
10 Denver 7,187 4.0% 92.7% (3.0%) (1.9%)(3.5%) 0.2%
11 Seattle/
Tacoma 6,874 3.8% 93.7% (0.6%) 6.1% (4.8%) 0.5%
12 DC Suburban
Maryland 5,525 3.8% 94.0% 1.9% 9.4% (2.1%) (0.9%)
13 New York
Metro Area 2,666 3.3% 94.3% (0.5%) 4.4% (3.2%) 0.9%
14 Orange Co 3,013 3.2% 94.9% 4.7% 7.0% 3.7% 0.3%
15 Orlando 5,725 2.9% 94.2% 1.5% (1.5%) 3.5% 0.8%
16 Inland
Empire, CA 3,252 2.9% 95.9% 7.0% 1.4% 9.7% 0.8%
17 DC Suburban
Virginia 3,283 2.8% 94.8% 2.2% 3.4% 1.6% (0.2%)
18 North Florida 6,223 2.8% 92.5% 0.3% 0.7% 0.1% (1.0%)
19 Houston 4,920 2.3% 90.9% (4.0%) (3.8%)(4.2%) (1.3%)
20 Minn/St Paul 3,826 2.3% 91.1% (0.7%) (4.0%) 2.1% 0.6%
------------------------------------------------------
Top 20
Markets 116,502 79.1% 93.6% 0.7% 3.1% (0.7%) 0.4%
All Other
Markets 51,677 20.9% 92.6% (0.7%) 4.2% (4.7%) 0.4%
------------------------------------------------------
Total 168,179 100.0% 93.3% 0.4% 3.4% (1.5%) 0.4%
======================================================
Second Quarter 2004 vs. Second Quarter 2003
Same-Store Results by Market
Increase (Decrease) from
Prior Quarter
-------------------------------------------------------------------
2Q04 2Q04
% of Weighted
Actual Average
Markets Units NOI Occu- Rev- Expenses NOI Occupancy
pancy % enues
-------------------------------------------------------------------
1 Boston 5,526 7.0% 95.5% (0.1%) 8.1% (4.1%) 0.9%
2 South Florida 9,895 6.3% 94.3% 4.0% 0.4% 6.6% 0.9%
3 San Francisco
Bay Area 5,010 5.1% 95.5% (1.5%) 4.1% (4.2%) 0.5%
4 Atlanta 10,401 4.7% 93.8% (1.2%) 6.5% (6.4%) 1.4%
5 Los Angeles 4,008 4.6% 95.2% 5.1% 5.1% 5.1% 0.6%
6 Phoenix 9,567 4.6% 90.5% 4.9% 4.1% 5.4% 2.4%
7 San Diego 4,048 4.3% 94.9% 3.7% 11.2% 0.7% 0.0%
8 New England
(excl
Boston) 6,114 4.2% 95.9% 3.2% 5.4% 1.7% (0.4%)
9 Dallas/Ft
Worth 9,579 4.1% 94.4% (2.2%) 2.7% (6.6%) 0.9%
10 Denver 7,187 3.9% 93.2% (3.5%) (3.3%)(3.6%) 0.7%
11 DC Suburban
Maryland 5,525 3.8% 94.2% 2.6% 11.1% (1.7%) (0.8%)
12 Seattle/
Tacoma 6,874 3.8% 94.1% (0.2%) 8.5% (5.6%) 0.7%
13 New York
Metro Area 2,666 3.3% 95.4% 0.0% 6.2% (3.3%) 0.3%
14 Orange Co 3,013 3.2% 95.8% 6.5% 7.0% 6.3% 1.3%
15 DC Suburban
Virginia 3,509 3.1% 95.9% 5.4% 5.7% 5.3% 1.8%
16 Orlando 5,725 3.0% 94.7% 2.6% (0.7%) 4.8% 1.2%
17 Inland
Empire, CA 3,252 2.9% 95.9% 6.2% 1.5% 8.4% 0.1%
18 North Florida 6,223 2.8% 92.8% 0.9% (2.2%) 3.0% (0.7%)
19 Houston 4,920 2.3% 91.2% (3.1%) (4.4%)(1.8%) (1.1%)
20 Minn/St Paul 3,826 2.2% 91.5% 1.0% (6.3%) 7.7% 1.4%
------------------------------------------------------
Top 20
Markets 116,868 79.1% 94.0% 1.5% 3.5% 0.2% 0.7%
All Other
Markets 52,231 20.9% 93.0% (0.1%) 3.8% (3.2%) 0.5%
------------------------------------------------------
Total 169,099 100.0% 93.7% 1.1% 3.6% (0.5%) 0.6%
======================================================
Second Quarter 2004 vs. First Quarter 2004(a)
Sequential Same-Store Results by Market
Increase (Decrease) from
Prior Quarter
-------------------------------------------------------------------
2Q04 2Q04
% of Weighted
Actual Average
Markets Units NOI Occu- Rev- Expenses NOI Occupancy
pancy % enues
-------------------------------------------------------------------
1 Boston 5,526 7.0% 95.5% 0.1% (0.4%) 0.3% 1.7%
2 South Florida 9,895 6.3% 94.3% 0.8% 0.5% 1.1% (0.4%)
3 San Francisco
Bay Area 5,010 5.1% 95.5% 1.2% 1.3% 1.2% 1.1%
4 Atlanta 10,401 4.7% 93.8% 1.5% (1.1%) 3.5% 0.7%
5 Los Angeles 4,008 4.6% 95.2% 1.9% 0.4% 2.6% 0.7%
6 Phoenix 9,567 4.6% 90.5% (1.5%) 1.3% (3.3%) (0.3%)
7 San Diego 4,048 4.3% 94.9% 2.1% 2.2% 2.0% 0.8%
8 New England
(excl
Boston) 6,114 4.2% 95.9% 2.7% (6.2%) 9.7% 1.2%
9 Dallas/Ft
Worth 9,579 4.1% 94.4% 0.6% 2.1% (0.9%) 1.3%
10 Denver 7,187 3.9% 93.2% (1.5%) 4.0% (4.4%) 1.0%
11 DC Suburban
Maryland 5,525 3.8% 94.2% 2.0% 0.1% 3.2% 0.4%
12 Seattle/
Tacoma 6,874 3.8% 94.1% 1.5% 1.0% 1.8% 0.8%
13 New York
Metro Area 2,666 3.3% 95.4% 3.0% 1.3% 4.0% 2.1%
14 Orange Co 3,013 3.2% 95.8% 3.9% (0.5%) 5.9% 1.8%
15 DC Suburban
Virginia 3,509 3.1% 95.9% 5.6% 0.4% 8.3% 2.3%
16 Orlando 5,725 3.0% 94.7% 3.0% 0.5% 4.8% 1.1%
17 Inland
Empire, CA 3,252 2.9% 95.9% 2.4% (2.4%) 4.7% 0.1%
18 North Florida 6,223 2.8% 92.8% 2.2% (0.8%) 4.4% 0.6%
19 Houston 4,920 2.3% 91.2% (0.0%) 1.1% (1.0%) 0.6%
20 Minn/St Paul 3,826 2.2% 91.5% (0.8%) 0.0% (1.5%) 0.9%
------------------------------------------------------
Top 20
Markets 116,868 79.1% 94.0% 1.3% 0.2% 2.0% 0.8%
All Other
Markets 52,231 20.9% 93.0% 1.3% 1.6% 1.1% 0.8%
------------------------------------------------------
Total 169,099 100.0% 93.7% 1.3% 0.6% 1.8% 0.8%
======================================================
(a)Includes the same units as the Second Quarter 2004 vs. Second
Quarter 2003 Same Store results for comparability purposes.
Portfolio as of June 30, 2004
Properties Units
-------------------
Wholly Owned Properties 851 178,836
Partially Owned Properties
(Consolidated) 41 7,800
Unconsolidated Properties 59 16,376
---------- --------
951 203,012
Portfolio Rollforward 2004
$ Cap
Properties Units Millions Rate
------------------- --------- -----
12/31/2003 968 207,506
Acquisitions 13 3,540 $448.0 5.8%
Dispositions:
Rental Properties (31) (8,485) $(452.2) 6.3%
Condominium Units (1) (313) $(42.4)
Vacant Land - - $(27.9)
Completed Developments 2 718
Unit Configuration Changes - 46
---------- --------
6/30/2004 951 203,012
Portfolio Rollforward Q2 2004
$ Cap
Properties Units Millions Rate
------------------- --------- -----
3/31/2004 952 203,590
Acquisitions 8 1,869 $223.6 5.9%
Dispositions:
Rental Properties (10) (2,620) $(167.8) 5.9%
Condominium Units - (188) $(25.7)
Vacant Land - - $(27.7)
Completed Developments 1 315
Unit Configuration Changes - 46
---------- --------
6/30/2004 951 203,012
Portfolio Summary
As of June 30, 2004
Market Properties Units % of % of 2004
Units NOI
Budget
Boston 34 6,349 3.1% 6.0%
DC Northern Virginia 14 4,956 2.4% 4.4%
New England (excluding Boston) 45 6,117 3.0% 3.8%
DC Suburban Maryland 27 5,833 2.9% 3.6%
New York Metro Area 11 3,145 1.5% 3.6%
Richmond 3 916 0.5% 0.2%
---------------------------------------
Atlantic Region 134 27,316 13.5% 21.6%
South Florida 54 11,931 5.9% 6.5%
Orlando 31 6,732 3.3% 3.2%
North Florida 48 6,852 3.4% 2.6%
Tampa/Ft Myers 31 5,431 2.7% 1.8%
---------------------------------------
Florida Region 164 30,946 15.2% 14.1%
Raleigh/Durham 17 4,201 2.1% 1.4%
Charlotte 12 3,701 1.8% 1.1%
---------------------------------------
Carolina Region 29 7,902 3.9% 2.5%
Atlanta 64 13,410 6.6% 5.4%
Birmingham 1 240 0.1% 0.0%
---------------------------------------
Georgia Region 65 13,650 6.7% 5.4%
Minneapolis/St Paul 18 3,982 2.0% 2.0%
Chicago 9 3,724 1.8% 1.8%
Southeastern Michigan 23 3,637 1.8% 1.6%
Nashville 11 2,729 1.3% 1.0%
Columbus 31 3,415 1.7% 0.8%
Indianapolis 29 3,056 1.5% 0.7%
Northern Ohio 25 2,691 1.3% 0.6%
Southern Ohio 22 1,865 0.9% 0.4%
St Louis 5 984 0.5% 0.4%
Milwaukee 3 686 0.3% 0.4%
Lexington 7 656 0.3% 0.2%
Louisville 8 608 0.3% 0.2%
Memphis 1 568 0.3% 0.1%
---------------------------------------
Midwest Region 192 28,601 14.1% 10.4%
Lexford Other 50 4,194 2.1% 1.0%
Dallas/Ft Worth 37 11,463 5.6% 4.1%
Houston 17 5,282 2.6% 2.1%
Austin 13 3,867 1.9% 1.3%
San Antonio 7 2,146 1.1% 0.6%
Tulsa 8 2,036 1.0% 0.5%
Kansas City 2 568 0.3% 0.3%
---------------------------------------
Texas Region 84 25,362 12.5% 8.8%
Phoenix 40 11,382 5.6% 4.5%
Las Vegas 2 980 0.5% 0.4%
Tucson 2 558 0.3% 0.1%
Albuquerque 2 369 0.2% 0.1%
---------------------------------------
Arizona Region 46 13,289 6.5% 5.0%
Denver 29 8,194 4.0% 3.7%
---------------------------------------
Colorado Region 29 8,194 4.0% 3.7%
Los Angeles 30 6,528 3.2% 6.1%
San Diego 13 4,048 2.0% 4.0%
Orange County, CA 8 3,013 1.5% 2.9%
Inland Empire, CA 11 3,504 1.7% 2.7%
---------------------------------------
Southern Cal Region 62 17,093 8.4% 15.7%
San Francisco Bay Area 26 6,249 3.1% 4.9%
Central Valley CA 10 1,595 0.8% 0.5%
---------------------------------------
Northern Cal Region 36 7,844 3.9% 5.4%
Seattle 39 7,801 3.8% 3.5%
Portland OR 13 4,678 2.3% 1.8%
Tacoma 7 2,341 1.2% 1.0%
---------------------------------------
Washington Region 59 14,820 7.3% 6.4%
---------------------------------------
Total 950 199,211 98.1% 100.0%
Ft. Lewis - Military Housing 1 3,801 1.9% 0.0%
---------------------------------------
Grand Total 951 203,012 100.0% 100.0%
Debt Summary as of June 30, 2004
$ Millions Weighted
Average Rate
(1)
---------- --------------
Secured $3,385 5.46%
Unsecured 2,992 5.97%
---------- --------------
Total $6,377 5.71%
Fixed Rate $5,038 6.59%
Floating Rate 1,339 1.95%
---------- --------------
Total $6,377 5.71%
Above Totals Include:
-----------------------
Tax Exempt:
Fixed $327 4.40%
Floating 573 1.52%
---------- --------------
Total $900 2.56%
Unsecured Revolving Credit
Facility $415 1.50%
Net of the effect of any derivative
(1) instruments.
Debt Maturity Schedule as of June 30, 2004
Year $ Millions % of Total
----------------- --------- ----------
2004 $333 5.2%
2005 (2)(3) 1,060 16.6%
2006 (4) 487 7.6%
2007 355 5.6%
2008 625 9.8%
2009 810 12.7%
2010 210 3.3%
2011 704 11.0%
2012 456 7.2%
2013+ 1,337 21.0%
--------- ----------
Total $6,377 100.0%
(2) Includes $300 million of unsecured debt with a final maturity of
2015 that is putable/callable in 2005.
(3) Includes $415 million outstanding on the Company's unsecured
revolving credit facility.
(4) Includes $150 million of unsecured debt with a final maturity of
2026 that is putable in 2006.
Unsecured Public Debt Covenants
June 30,
2004
---------
Total Debt to Adjusted Total Assets (not to exceed 60%) 42.7%
Secured Debt to Adjusted Total Assets (not to exceed 40%) 22.7%
Consolidated Income Available For Debt Service To
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.86
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 293.5%
These covenants relate to ERP Operating Limited Partnership's
outstanding unsecured public debt. Equity Residential is the general
partner of ERP Operating Limited Partnership. The terms are defined in
the indentures.
Capitalization as of June 30, 2004
Total Debt $6,377,024,696
Common Shares & OP Units 301,567,043
Common Share Equivalents 3,439,516
------------
Total Outstanding at quarter-
end 305,006,559
Common Share Price at June 30,
2004 $29.73
------------
9,067,844,999
Perpetual Preferred Shares Liquidation Value 615,000,000
Perpetual Preference Interests Liquidation
Value 211,500,000
-------------------------
Total Market Capitalization $16,271,369,695
Total Debt/Total Market
Capitalization 39%
Common Share and Operating Partnership Unit (OP Unit)
Weighted Average Amounts Outstanding
YTD 2Q04 YTD 2Q03 2Q04 2Q03
-------- -------- ---- ----
Weighted Average Amounts Outstanding for
Net Income Purposes:
Common Shares
- basic 278,223,576 271,030,690 278,949,482 271,379,981
Shares issuable from assumed
conversion/vesting of:
- OP Units 21,214,377 22,294,139 20,897,740 22,316,255
- share
options/restricted
shares 2,578,607 1,944,403 2,354,058 2,387,777
--------- --------- --------- ---------
Total Common Shares and OP
Units - diluted 302,016,560 295,269,232 302,201,280 296,084,013
Weighted Average Amounts Outstanding
for FFO Purposes:
OP Units - basic 21,214,377 22,294,139 20,897,740 22,316,255
Common Shares
- basic 278,223,576 271,030,690 278,949,482 271,379,981
----------- ----------- ----------- -----------
Total Common Shares and OP
Units - basic 299,437,953 293,324,829 299,847,222 293,696,236
Shares issuable from
assumed conversion/vesting of:
- convertible
preferred
shares/units 2,540,697 3,143,122 2,531,588 3,140,077
- share
options/restricted
shares 2,578,607 1,944,403 2,354,058 2,387,777
--------- --------- --------- ---------
Total Common Shares and OP
Units - diluted 304,557,257 298,412,354 304,732,868 299,224,090
Period Ending Amounts
Outstanding:
OP Units 20,891,224
Common Shares 280,675,819
-----------
Total Common Shares and OP
Units 301,567,043
Unconsolidated Entities as of June 30, 2004
(Amounts in thousands except for project and unit amounts)
Institutional
Joint Lexford/
Ventures Other Totals
--------------------- ---------
Total projects 45 13 58 (1)
------------- ------- ---------
Total units 10,846 1,729 12,575 (1)
------------- ------- ---------
Company's ownership percentage of
outstanding debt 25.0% 11.0%
Company's share of outstanding debt(2) $121,200 $3,420 $124,620
------------- ------- ---------
Operating information for the six-months ended
6/30/04 (at 100%) (3):
Operating revenue $44,820 $5,757 $50,577
Operating expenses 19,949 3,053 23,002
------------- ------- ---------
Net operating income 24,871 2,704 27,575
Depreciation 10,268 1,232 11,500
Other 228 - 228
------------- ------- ---------
Operating income 14,375 1,472 15,847
Interest and other income 64 14 78
Interest:
Expense incurred, net (18,722) (1,372) (20,094)
Amortization of deferred
financing costs (308) (117) (425)
------------- ------- ---------
Net (loss) $(4,591) $(3) $(4,594)
============= ======= =========
(1) Totals exclude Fort Lewis Military Housing consisting of one
property and 3,801 units, which is not accounted for under the
equity method of accounting, but is included in the Company's
property/unit counts at June 30, 2004.
(2) All debt is non-recourse to the Company.
(3) Excludes approximately $7.3 million of losses from previously
unconsolidated development entities. The Company consolidated
these development entities during the first quarter of 2004 either
through its adoption of FIN 46 effective March 31, 2004 or through
its acquisition of 15 of these projects during the quarter.
Consolidated Development Projects as of June 30, 2004
(Amounts in thousands except for project and unit amounts)
Projects Location No. of Total Total Percentage
Units Capital Fundings Completed
Cost (1) To Date
(1) (2)
- ----------------------------------------------------------------------
Projects Under
Development
- ----------------------
Watermarke (3) Irvine, CA 535 $121,541 $113,738 94%
2400 M Street Washington,
(Sovereign at 2400) D.C. 358 102,913 50,878 49%
Union Station Los
Angeles, CA 278 57,507 14,250 25%
Indian Ridge Waltham, MA 264 47,269 13,412 28%
1111 25th Street Washington,
(Sovereign House) D.C. 140 37,732 31,720 84%
1210 Massachusetts Washington,
Ave. (Sovereign Park) D.C. 142 37,077 36,295 98%
1300 N Street, NW Washington,
(Radius at Logan D.C.
Circle) (3) 170 38,412 38,352 99%
--------------------------
Total Projects Under Development 1,887 442,451 298,645
Completed Not Stabilized:
- ----------------------
Water Terrace I Marina Del
(Regatta I) (4) Rey, CA 450 225,813 225,813 100%
Bella Vista I & II Woodland
(Warner Ridge) (4) Hills, CA 315 80,112 76,155 100%
City View at the Lombard, IL
Highlands 403 65,874 65,624 100%
Legacy Park Central Concord, CA 259 52,337 50,824 100%
City Place (Westport) Kansas, MO
(4) 288 33,895 33,895 100%
Marina Bay II Quincy, MA 108 22,954 22,854 100%
--------------------------
Total Projects Completed Not
Stabilized 1,823 480,985 475,165
Completed And
Stabilized:
- ----------------------
North Pier at Jersey
Harborside (4) City, NJ 297 98,187 95,687 100%
Ball Park Lofts Denver, CO 355 58,738 58,738 100%
--------------------------
Total Projects Completed And
Stabilized 652 156,925 154,425
--------------------------
Total Projects 15 4,362 $1,080,361 $928,235
==========================
Projects Location Percen- Percen- Estimated Estimated
tage tage Completion Stabili-
Leased Occupied Date zation
Date
- ----------------------------------------------------------------------
Projects Under
Development
- -------------------
Watermarke (3) Irvine, CA 47% 47% 3Q 2004 3Q 2005
2400 M Street Washington, D.C.
(Sovereign at 2400) - - 4Q 2005 4Q 2006
Union Station Los
Angeles, CA - - 3Q 2005 3Q 2006
Indian Ridge Waltham, MA - - 4Q 2005 4Q 2006
1111 25th Street Washington, D.C.
(Sovereign House) - - 4Q 2004 4Q 2005
1210 Massachusetts Washington, D.C.
Ave. (Sovereign Park) - - 3Q 2004 3Q 2005
1300 N Street, NW Washington, D.C.
(Radius at Logan
Circle) (3) - - 3Q 2004 3Q 2005
Completed Not
Stabilized:
- -------------------
Water Terrace I Marina Del
(Regatta I) (4) Rey, CA 70% 63% Completed 1Q 2005
Bella Vista I & II Woodland
(Warner Ridge) (4) Hills, CA 63% 60% Completed 4Q 2004
City View at the Lombard, IL
Highlands 61% 56% Completed 3Q 2005
Legacy Park Central Concord, CA
80% 74% Completed 1Q 2005
City Place Kansas, MO
(Westport) (4) 83% 80% Completed 4Q 2004
Marina Bay II Quincy, MA 30% 26% Completed 4Q 2004
Total Projects Completed Not Stabilized
Completed And
Stabilized:
- -------------------
North Pier at Jersey
Harborside (4) City, NJ 96% 95% Completed 2Q 2004
Ball Park Lofts Denver, CO 97% 93% Completed 2Q 2004
Total Q2 2004
Capital
NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Cost (1) NOI
------------------
Projects Under Development $442,451 $354
Completed Not Stabilized 480,985 1,976
Completed And Stabilized 156,925 1,949
------------------
Total Development/Newly Stabilized NOI
Contribution $1,080,361 $4,279
(1) Total capital cost represents estimated development cost for
projects under development and all capitalized costs incurred to
date plus any estimates of costs remaining to be funded for all
completed projects. Total capital cost and total fundings to date
exclude purchase consideration paid to the development partner of
$1.8 million, $1.0 million and $2.5 million on Water Terrace I,
Bella Vista I & II and North Pier at Harborside, respectively.
(2) Of the total fundings to date, $679.4 million has been transferred
to land and depreciable property and $248.8 million is currently
reflected as construction in progress ("CIP"). The remaining $78.9
million of CIP represents land held for future development and
related costs. Of the $152.2 million remaining to be invested,
$143.7 million will be funded through third party construction
mortgages.
(3) Projects will be converted to condominiums (Watermarke in phases).
(4) Projects are wholly owned. All others are partially owned.
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Six Months Ended June 30, 2004
(Amounts in thousands except for unit and per unit amounts)
Maintenance Expenses
---------------------------------------------
Total Avg. Avg. Avg.
Units Expense Per Payroll Per Per
(1) (2) Unit (3) Unit Total Unit
------------------------------------------------------
Established
Properties (6) 158,595 $43,662 $275 $41,087 $259 $84,749 $534
New Acquisition
Properties (7) 18,609 4,808 318 3,258 215 8,066 533
Other (8) 9,432 5,233 5,220 10,453
----- ----- ----- ------
Total 186,636 $53,703 $49,565 $103,268
======= ======= ======= ========
Capitalized Improvements to Real Estate Total
Expenditures
----------------------------------------------- -------------
Building
Improve-
Avg. ments Avg. Avg. Avg.
Replacements Per (5) Per Per Grand Per
(4) Unit Unit Total Unit Total Unit
-----------------------------------------------------------
Established
Properties(6) $27,090 $171 $40,711 $257 $67,801 $428 $152,550 $962
New
Acquisition
Properties(7) 1,540 102 3,870 256 5,410 358 13,476 891
Other(8) 6,685 9,393 16,078 26,531
----- ----- ------ ------
Total $35,315 $53,974 $89,289 $192,557
======= ======= ======= ========
(1) Total units exclude 16,376 unconsolidated units.
(2) Maintenance expenses include general maintenance costs, unit
turnover costs including interior painting, regularly scheduled
landscaping and tree trimming costs, security, exterminating, fire
protection, snow and ice removal, elevator repairs, and other
miscellaneous building repair costs.
(3) Maintenance payroll includes employee costs for maintenance,
cleaning, housekeeping, and landscaping.
(4) Replacements include new expenditures inside the units such as
carpets, appliances, mechanical equipment, fixtures and vinyl
flooring.
(5) Building improvements include roof replacement, paving, amenities
and common areas, building mechanical equipment systems, exterior
painting and siding, major landscaping, vehicles and office and
maintenance equipment.
(6) Wholly Owned Properties acquired prior to January 1, 2002.
(7) Wholly Owned Properties acquired during 2002, 2003 and 2004. Per
unit amounts are based on a weighted average of 15,130 units.
(8) Includes properties either Partially Owned or sold during the
period, commercial space, condominium conversions and $2.2 million
included in building improvements spent on seven specific assets
related to major renovations and repositioning of these assets.
Discontinued Operations
(Amounts in thousands)
Six Months Ended Quarter Ended
June 30, June 30,
------------------ ----------------
2004 2003 2004 2003
------------------ ----------------
REVENUES
Rental income $14,986 $101,596 $3,988 $46,663
-------- --------- ------- --------
Total revenues 14,986 101,596 3,988 46,663
-------- --------- ------- --------
EXPENSES (1)
Property and maintenance 8,716 34,653 2,600 16,276
Real estate taxes and insurance 1,880 11,101 567 5,240
Property management - 112 - 62
Depreciation 3,495 27,015 595 12,548
-------- --------- ------- --------
Total expenses 14,091 72,881 3,762 34,126
-------- --------- ------- --------
Discontinued operating income 895 28,715 226 12,537
Interest and other income 57 129 35 112
Interest:
Expense incurred, net (561) (2,837) (59) (1,120)
Amortization of deferred
financing costs (225) (213) (35) (123)
-------- --------- ------- --------
Discontinued operations, net $166 $25,794 $167 $11,406
======== ========= ======= ========
(1) Includes expenses paid in the current period for properties sold
in prior periods related to the Company's period of ownership.
As a result of the Securities and Exchange Commission's Regulation
FD, the Company will provide earnings guidance in its quarterly
earnings release. These projections are based on current
expectations and are forward-looking.
2004 Earnings Guidance (per share diluted)
------------------------------------------
Q3 YEAR
-------- ------
Expected EPS (1) $0.22 to $0.24 $1.21 to $1.35
Add: Expected depreciation expense 0.40 1.62
Less: Expected net gain on sales (1) (0.09) (0.68)
----- ------
Expected FFO (2) $0.53 to $0.55 $2.15 to $2.29
============= =============
2004 Same-Store Assumptions
---------------------------
Physical occupancy 93.0%
Revenue change (0.75%) to 1.50%
Expense change 3.0% to 4.0%
NOI change (4.0%) to 0.5%
Acquisitions $800 million
Dispositions $800 million
(1) Earnings per share ("EPS") represents net income per share
calculated in accordance with accounting principles generally
accepted in the United States. Expected EPS is calculated on a
basis consistent with actual EPS. Due to the uncertain timing and
extent of property dispositions and the resulting gains/losses on
sales, actual EPS could differ materially from expected EPS.
(2) The National Association of Real Estate Investment Trusts
("NAREIT") defines funds from operations ("FFO") (April 2002 White
Paper) as net income (computed in accordance with accounting
principles generally accepted in the United States), excluding
gains (or losses) from sales of depreciable property, plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated
to reflect funds from operations on the same basis. Expected FFO
is calculated on a basis consistent with actual FFO.
CONTACT: Equity Residential
Marty McKenna, 312-928-1901