Exhibit 99.1
Equity Residential Reports Third Quarter Results
Third Quarter Same-Store NOI Increases 9.1 Percent
CHICAGO--(BUSINESS WIRE)--Oct. 31, 2006--Equity Residential (NYSE:
EQR) today reported results for the quarter and nine months ended
September 30, 2006. All per share results are reported on a fully
diluted basis.
"We had an excellent third quarter, with our same-store portfolio
generating 9.1 percent NOI growth and our 2003, 2004 and 2005
acquisitions generating average NOI growth of 12.5 percent.
Complimenting this terrific operating performance were acquisitions of
high quality assets in our target markets and the completion of the
sale of our Lexford portfolio in early October," said David J.
Neithercut, Equity Residential's President and CEO. "Although we have
expectations for continued strong same-store performance for the
remainder of the year, we are revising our FFO guidance range for the
full year to $2.32 to $2.35 per share, from our previous guidance
toward the middle of a $2.30 to $2.50 per share range, due primarily
to slightly higher than expected debt prepayment costs from the sale
of Lexford as well as a lower than expected contribution from our
condominium business."
Third Quarter 2006
For the quarter ended September 30, 2006, the company reported
earnings of $0.19 per share compared to $0.87 per share in the third
quarter of 2005. The quarterly decrease is primarily attributable to
higher gains on sales of properties in the third quarter of 2005 as
well as the items discussed below.
Funds from Operations (FFO) for the quarter ended September 30,
2006 were $0.62 per share compared to $0.56 per share in the same
period of 2005. The increase is primarily attributable to continued
improvement in same store net operating income and excellent growth
from new acquisitions.
Total revenues from continuing operations for the quarter were
$513.9 million compared to $430.8 million in the third quarter of
2005. The primary components of this $83.1 million increase in
revenues are the properties acquired in 2005 and 2006 as well as
strong same-store performance.
Nine Months Ended September 30, 2006
For the nine months ended September 30, 2006, the company reported
earnings of $1.95 per share compared to $2.05 per share in the same
period of 2005.
FFO for the nine months ended September 30, 2006 were $1.78 per
share compared to $1.86 per share in the same period of 2005.
Total revenues from continuing operations for the nine months
ended September 30, 2006 were $1.5 billion compared to $1.2 billion in
the same period of 2005.
Same-Store Results
On a same-store third quarter to third quarter comparison, which
includes 133,526 units, revenues increased 5.9 percent, expenses
increased 1.4 percent and NOI increased 9.1 percent. The increase in
same-store revenues was driven primarily by continued increases in
rental rate.
On a same-store nine-month to nine-month comparison, which
includes 129,965 units, revenues increased 6.0 percent, expenses
increased 3.2 percent and NOI increased 7.8 percent.
All same-store results exclude the Lexford Housing Division.
Portfolio Transformation
During the third quarter of 2006, the company acquired ten
properties, consisting of 2,558 units, for an aggregate purchase price
of $504.8 million at an average capitalization (cap) rate of 5.1
percent, and one land parcel for $17.0 million.
Also during the quarter, the company sold two properties,
consisting of 133 units, for an aggregate sale price of $3.0 million
at an average cap rate of 7.6 percent. In addition, the company sold
315 condominium units for $65.4 million and one land parcel for $0.7
million.
In the first nine months of 2006, the company acquired 28
properties, consisting of 7,480 units, for an aggregate purchase price
of $1.4 billion at an average cap rate of 5.0 percent, and six land
parcels for $93.5 million.
During the nine months ended September 30, 2006, the company sold
40 properties, consisting of 10,661 units, for an aggregate sale price
of $1.0 billion at an average cap rate of 5.5 percent generating an
unlevered internal rate of return (IRR) of 12.2 percent. In addition,
the company sold 840 condominium units for $172.6 million and two land
parcels for $1.6 million.
Lexford Housing Division Sale
On October 5, 2006, Equity Residential completed the previously
announced sale of its Lexford Housing Division, comprised of 289
properties consisting of 27,115 apartment units, for a cash purchase
price of $1.086 billion.
Fourth Quarter/Full Year 2006 Results
Equity Residential expects to announce results for the fourth
quarter and full year 2006 on Tuesday, February 6, 2007 and host a
conference call to discuss those results and the company's outlook for
2007 at 10:00 a.m. CT on Wednesday, February 7, 2007.
Equity Residential is an S&P 500 company focused on the
acquisition, development and management of high quality apartment
properties in top U.S. growth markets. Equity Residential owns or has
investments in 616 properties totaling 166,577 units. For more
information on Equity Residential, please visit our website at
www.equityresidential.com.
Forward-Looking Statements
In addition to historical information, this press release contains
forward-looking statements and information within the meaning of the
federal securities laws. These statements are based on current
expectations, estimates, projections and assumptions made by
management. While Equity Residential's management believes the
assumptions underlying its forward-looking statements are reasonable,
such information is inherently subject to uncertainties and may
involve certain risks, including, without limitation, changes in
general market conditions, including the rate of job growth and cost
of labor and construction materials, the level of new multifamily
construction and development, competition and local government
regulation. Other risks and uncertainties are described under the
heading "Risk Factors" in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission (SEC) and available on our
website, www.equityresidential.com. Many of these uncertainties and
risks are difficult to predict and are beyond management's control.
Forward-looking statements are not guarantees of future performance,
results or events. Equity Residential assumes no obligation to update
or supplement forward-looking statements that become untrue because of
subsequent events.
A live web cast of the company's conference call discussing these
results will take place Wednesday, November 1, at 1:00 p.m. CT. 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)
Nine Months Ended Quarter Ended
September 30, September 30,
----------------------- ----------------------
2006 2005 2006 2005
----------- ----------- ---------- -----------
REVENUES
Rental income $1,470,705 $1,237,279 $511,794 $428,357
Fee and asset
management 6,878 7,763 2,071 2,401
----------- ----------- ---------- -----------
Total revenues 1,477,583 1,245,042 513,865 430,758
----------- ----------- ---------- -----------
EXPENSES
Property and
maintenance 390,732 338,810 138,285 121,562
Real estate taxes and
insurance 148,604 136,813 51,525 50,181
Property management 70,081 63,351 23,417 21,944
Fee and asset
management 6,477 6,358 2,151 2,182
Depreciation 415,179 323,608 143,255 111,370
General and
administrative 37,638 45,944 14,448 14,442
----------- ----------- ---------- -----------
Total expenses 1,068,711 914,884 373,081 321,681
----------- ----------- ---------- -----------
Operating income 408,872 330,158 140,784 109,077
Interest and other
income 11,668 64,824 7,303 2,554
Interest:
Expense incurred,
net (319,236) (266,063) (110,187) (92,335)
Amortization of
deferred financing
costs (6,419) (4,832) (1,906) (1,602)
----------- ----------- ---------- -----------
Income before allocation
to Minority Interests,
loss from investments
in unconsolidated
entities, net gain on
sales of unconsolidated
entities and land
parcels and
discontinued operations 94,885 124,087 35,994 17,694
Allocation to Minority
Interests:
Operating
Partnership, net (3,891) (5,509) (1,627) 183
Preference Interests
and Units (1,779) (6,442) (223) (1,163)
Partially Owned
Properties (2,550) 672 (482) (1,624)
Premium on redemption
of Preference
Interests (684) (4,134) (1) (22)
Loss from investments in
unconsolidated entities (565) (450) (190) (235)
Net gain on sales of
unconsolidated entities 370 124 18 -
Net gain on sales of
land parcels 3,183 10,366 2,937 -
----------- ----------- ---------- -----------
Income from continuing
operations, net of
minority interests 88,969 118,714 36,426 14,833
Discontinued operations,
net of minority
interests 518,814 517,193 33,385 252,691
----------- ----------- ---------- -----------
Net income 607,783 635,907 69,811 267,524
Preferred distributions (29,682) (39,004) (9,514) (12,961)
Premium on redemption of
Preferred Shares (3,941) (4,316) (3,941) (4,316)
----------- ----------- ---------- -----------
Net income available to
Common Shares $574,160 $592,587 $56,356 $250,247
=========== =========== ========== ===========
Earnings per share -
basic:
Income (loss) from
continuing operations
available to Common
Shares $0.19 $0.26 $0.08 $(0.01)
=========== =========== ========== ===========
Net income available to
Common Shares $1.98 $2.08 $0.19 $0.87
=========== =========== ========== ===========
Weighted average Common
Shares outstanding 289,463 285,331 290,036 286,182
=========== =========== ========== ===========
Earnings per share -
diluted:
Income (loss) from
continuing operations
available to Common
Shares $0.19 $0.26 $0.08 $(0.01)
=========== =========== ========== ===========
Net income available to
Common Shares $1.95 $2.05 $0.19 $0.87
=========== =========== ========== ===========
Weighted average Common
Shares outstanding 314,982 310,211 315,886 286,182
=========== =========== ========== ===========
Distributions declared
per Common Share
outstanding $1.3275 $1.2975 $0.4425 $0.4325
=========== =========== ========== ===========
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
(Amounts in thousands except per share data)
(Unaudited)
Nine Months Ended Quarter Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net income $607,783 $635,907 $69,811 $267,524
Allocation to Minority
Interests - Operating
Partnership, net 3,891 5,509 1,627 (183)
Adjustments:
Depreciation 415,179 323,608 143,255 111,370
Depreciation - Non-real
estate additions (5,615) (3,928) (1,933) (1,243)
Depreciation - Partially
Owned and Unconsolidated
Properties 3,473 2,136 910 2,774
Net gain on sales of
unconsolidated entities (370) (124) (18) -
Discontinued operations:
Depreciation 25,429 67,543 - 20,513
Gain on sales of
discontinued operations,
net of minority
interests (3) (487,607) (468,999) (18,404) (237,047)
Net incremental gain on
sales of condominium
units 31,431 56,667 12,878 27,631
Minority Interests -
Operating Partnership 1,881 3,497 740 1,130
--------- --------- --------- ---------
FFO (1)(2) 595,475 621,816 208,866 192,469
Preferred distributions (29,682) (39,004) (9,514) (12,961)
Premium on redemption of
Preferred Shares (3,941) (4,316) (3,941) (4,316)
--------- --------- --------- ---------
FFO available to Common
Shares and OP Units - basic $561,852 $578,496 $195,411 $175,192
========= ========= ========= =========
FFO available to Common
Shares and OP Units -
diluted $562,551 $579,432 $195,634 $175,466
========= ========= ========= =========
FFO per share and OP Unit -
basic $1.81 $1.89 $0.63 $0.57
========= ========= ========= =========
FFO per share and OP Unit -
diluted $1.78 $1.86 $0.62 $0.56
========= ========= ========= =========
Weighted average Common
Shares and OP Units
outstanding - basic 310,012 306,171 310,671 306,915
========= ========= ========= =========
Weighted average Common
Shares and OP Units
outstanding - diluted 315,584 311,015 316,462 312,272
========= ========= ========= =========
(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 is a recognized measure of performance by the
real estate industry and by excluding gains or losses related to
dispositions of depreciable property and excluding real estate
depreciation (which can vary among owners of identical assets in
similar condition based on historical cost accounting and useful life
estimates), FFO can help compare the operating performance of a
company's real estate between periods or as compared to different
companies. 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.
(3) Gain on sales of discontinued operations, net of minority
interests, has been reduced by approximately $4.5 million in one-time
accrued retention benefits for both the nine months and quarter ended
September 30, 2006, related to the previously announced October 5,
2006 closing of the Lexford Housing Division disposition.
EQUITY RESIDENTIAL
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
(Unaudited)
September 30, December 31,
2006 2005
------------- --------------
ASSETS
Investment in real estate
Land $3,118,538 $2,848,601
Depreciable property 13,195,156 13,336,636
Projects under development 335,227 240,980
Land held for development 199,369 164,153
------------- --------------
Investment in real estate 16,848,290 16,590,370
Accumulated depreciation (2,911,481) (2,888,140)
------------- --------------
Investment in real estate, net 13,936,809 13,702,230
Real estate held for sale 646,155 -
Cash and cash equivalents 76,324 88,828
Investments in unconsolidated entities 4,528 6,838
Rents receivable 1,452 789
Deposits - restricted 96,567 77,093
Escrow deposits - mortgage 32,410 35,225
Deferred financing costs, net 43,957 40,636
Goodwill, net 30,000 30,000
Other assets 101,864 117,306
------------- --------------
Total assets $14,970,066 $14,098,945
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $3,157,088 $3,379,289
Mortgage notes payable, held for sale 196,325 -
Notes, net 4,469,043 3,442,784
Lines of credit 506,000 769,000
Accounts payable and accrued expenses 146,091 108,855
Accrued interest payable 73,174 78,441
Rents received in advance and other
liabilities 292,515 302,418
Security deposits 63,901 54,823
Distributions payable 144,758 145,812
------------- --------------
Total liabilities 9,048,895 8,281,422
------------- --------------
Commitments and contingencies
Minority Interests:
Operating Partnership 361,060 345,034
Preference Interests and Units 11,684 60,184
Partially Owned Properties 23,842 16,965
------------- --------------
Total Minority Interests 396,586 422,183
------------- --------------
Shareholders' equity:
Preferred Shares of beneficial
interest, $0.01 par value; 100,000,000
shares authorized; 2,794,050 shares
issued and outstanding as of September
30, 2006 and 3,323,830 shares issued
and outstanding as of December 31,
2005 387,351 504,096
Common Shares of beneficial interest,
$0.01 par value; 1,000,000,000 shares
authorized; 292,132,743 shares issued
and outstanding as of September 30,
2006 and 289,536,344 shares issued and
outstanding as of December 31, 2005 2,921 2,895
Paid in capital 5,311,347 5,253,188
Distributions in excess of accumulated
earnings (162,408) (350,367)
Accumulated other comprehensive loss (14,626) (14,472)
------------- --------------
Total shareholders' equity 5,524,585 5,395,340
------------- --------------
Total liabilities and shareholders'
equity $14,970,066 $14,098,945
============= ==============
Third Quarter 2006 vs. Third Quarter 2005
Quarter over Quarter Same-Store Results
$ in Millions - 133,526 Same-Store Units (excludes Lexford)
Description Revenues Expenses NOI (1)
--------------- --------------- --------------- ---------------
Q3 2006 $423.7 $165.9 $257.8
Q3 2005 $399.9 $163.6 $236.3
--------------- --------------- ---------------
Change $23.8 $2.3 $21.5
=============== =============== ===============
Change 5.9% 1.4% 9.1%
Third Quarter 2006 vs. Second Quarter 2006
Sequential Quarter over Quarter Same-Store Results
$ in Millions - 143,169 Same-Store Units (excludes Lexford)
Description Revenues Expenses NOI (1)
--------------- --------------- --------------- ---------------
Q3 2006 $468.6 $182.5 $286.1
Q2 2006 $459.7 $176.4 $283.3
--------------- --------------- ---------------
Change $8.9 $6.1 $2.8
=============== =============== ===============
Change 1.9% 3.4% 1.0%
September YTD 2006 vs. September YTD 2005
YTD over YTD Same-Store Results
$ in Millions - 129,965 Same-Store Units (excludes Lexford)
Description Revenues Expenses NOI (1)
--------------- --------------- --------------- ---------------
YTD 2006 $1,214.5 $474.5 $740.0
YTD 2005 $1,146.1 $459.9 $686.2
--------------- --------------- ---------------
Change $68.4 $14.6 $53.8
=============== =============== ===============
Change 6.0% 3.2% 7.8%
Same-Store Statistics (excludes Lexford)
Occupancy Turnover Occupancy Turnover
---------- ---------- ---------- ----------
Q3 2006 94.6% 18.8% Q3 2006 94.6% 18.8%
Q3 2005 95.2% 18.7% Q2 2006 94.6% 16.5%
---------- ---------- ---------- ----------
Change (0.6%) 0.1% Change 0.0% 2.3%
Occupancy Turnover
---------- --------
YTD 2006 94.6% 49.3%
YTD 2005 94.7% 50.4%
---------- --------
Change (0.1%) (1.1%)
(1) The Company's primary financial measure for evaluating each of
its apartment communities is net operating income ("NOI"). NOI
represents rental income less property and maintenance expense, real
estate tax and insurance expense, and property management expense. The
Company believes that NOI is helpful to investors as a supplemental
measure of 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. All same-store results exclude the
Lexford Housing Division.
Same-Store NOI Reconciliation
Third Quarter 2006 vs. Third Quarter 2005
The following table presents a reconciliation of operating income per
the consolidated statements of operations to NOI for the Third
Quarter 2006 Same-Store Properties:
Quarter Ended September 30,
-------------------------------
2006 2005
--------------- ---------------
(Amounts in millions)
Operating income $140.8 $109.1
Adjustments:
Non-same-store operating results (40.8) 1.6
Fee and asset management revenue (2.1) (2.4)
Fee and asset management expense 2.2 2.2
Depreciation 143.3 111.4
General and administrative 14.4 14.4
--------------- ---------------
Same-store NOI $257.8 $236.3
=============== ===============
Same-Store NOI Reconciliation
September YTD 2006 vs. September YTD 2005
The following table presents a reconciliation of operating income per
the consolidated statements of operations to NOI for the Nine-Month
2006 Same-Store Properties:
Nine Months Ended September 30,
-------------------------------
2006 2005
--------------- ---------------
(Amounts in millions)
Operating income $408.9 $330.2
Adjustments:
Non-same-store operating results (121.3) (12.1)
Fee and asset management revenue (6.9) (7.8)
Fee and asset management expense 6.5 6.4
Depreciation 415.2 323.6
General and administrative 37.6 45.9
--------------- ---------------
Same-store NOI $740.0 $686.2
=============== ===============
Third Quarter 2006 vs. Third Quarter 2005
Same-Store Results by Market
-------------------------------------------------------------------
3Q 2006 3Q 2006
% of Weighted
Actual Average
Markets Units NOI Occupancy %
-------------------------------------------------------------------
1 Los Angeles 6,221 7.6% 95.4%
2 Boston 5,761 6.5% 94.6%
3 South Florida 7,662 6.5% 92.1%
4 San Francisco Bay Area 5,990 6.4% 95.7%
5 DC Northern Virginia 5,183 5.8% 94.8%
6 New York Metro Area 3,576 5.7% 96.7%
7 Phoenix 9,247 5.6% 94.6%
8 Seattle/Tacoma 7,802 5.4% 92.8%
9 Atlanta 8,945 4.9% 95.5%
10 Denver 7,425 4.3% 94.8%
11 Dallas/Ft Worth 8,339 4.0% 94.7%
12 Orlando 5,465 3.9% 95.0%
13 San Diego 3,486 3.9% 95.5%
14 New England (excl Boston) 5,823 3.7% 94.7%
15 Orange County 3,013 3.3% 96.0%
16 Inland Empire, CA 3,504 3.2% 94.0%
17 DC Suburban Maryland 4,325 3.0% 92.6%
18 Houston 5,282 2.6% 93.8%
19 Portland 3,409 2.0% 95.7%
20 Jacksonville 3,337 1.9% 94.3%
---------------------------------------
Top 20 Markets 113,795 90.2% 94.5%
All Other Markets 19,731 9.8% 94.7%
---------------------------------------
Total 133,526 100.0% 94.6%
=======================================
--------------------------------------------
Increase (Decrease) from Prior Quarter
-------------------------------------------------------------------
Markets Revenues Expenses NOI Occupancy
-------------------------------------------------------------------
1 Los Angeles 6.5% 2.6% 8.5% (0.9%)
2 Boston 2.8% 5.3% 1.3% (0.3%)
3 South Florida 8.3% 4.2% 11.2% (2.7%)
4 San Francisco Bay Area 6.2% (1.3%) 10.7% (0.8%)
5 DC Northern Virginia 6.4% (3.5%) 11.3% (0.4%)
6 New York Metro Area 7.8% (3.6%) 14.8% 0.3%
7 Phoenix 12.7% 1.8% 20.9% (0.1%)
8 Seattle/Tacoma 6.6% 3.2% 9.0% (2.5%)
9 Atlanta 4.5% (1.0%) 9.0% (0.2%)
10 Denver 4.7% 0.0% 7.7% (0.3%)
11 Dallas/Ft Worth 4.3% (7.2%) 17.8% (0.1%)
12 Orlando 7.5% 6.0% 8.4% (1.5%)
13 San Diego 4.5% 8.4% 2.6% (0.4%)
14 New England (excl
Boston) 3.5% 5.0% 2.3% 0.8%
15 Orange County 7.3% 7.9% 7.0% 0.3%
16 Inland Empire, CA 3.4% 6.7% 1.6% (0.4%)
17 DC Suburban Maryland 1.8% 2.3% 1.6% (0.6%)
18 Houston 6.0% (6.2%) 20.7% (1.1%)
19 Portland 7.5% 2.1% 11.6% 1.2%
20 Jacksonville 3.6% (1.0%) 7.0% (0.4%)
--------------------------------------------
Top 20 Markets 6.0% 1.2% 9.2% (0.6%)
All Other Markets 5.8% 2.8% 8.5% (0.5%)
--------------------------------------------
Total 5.9% 1.4% 9.1% (0.6%)
============================================
Note: All same store results exclude the Lexford Housing Division.
Third Quarter 2006 vs. Second Quarter 2006
Same-Store Results by Market
-------------------------------------------------------------------
3Q 2006 3Q 2006
% of Weighted
Actual Average
Markets Units NOI Occupancy %
-------------------------------------------------------------------
1 New York Metro Area 5,288 8.8% 96.7%
2 Los Angeles 6,469 7.0% 95.4%
3 DC Northern Virginia 6,662 6.4% 94.3%
4 Boston 6,109 6.3% 94.6%
5 South Florida 8,210 6.2% 92.1%
6 Seattle/Tacoma 8,708 6.2% 93.0%
7 San Francisco Bay Area 5,990 5.8% 95.7%
8 Phoenix 9,247 5.1% 94.6%
9 Atlanta 9,833 5.0% 95.4%
10 Denver 8,111 4.2% 94.8%
11 Orlando 6,473 4.2% 94.9%
12 San Diego 3,822 3.8% 95.4%
13 Dallas/Ft Worth 8,489 3.6% 94.7%
14 New England (excl Boston) 5,823 3.4% 94.7%
15 Inland Empire, CA 3,712 3.0% 94.1%
16 Orange County 3,013 3.0% 96.0%
17 DC Suburban Maryland 4,837 3.0% 91.9%
18 Houston 5,282 2.3% 93.8%
19 Jacksonville 3,659 1.9% 94.5%
20 Portland 3,409 1.8% 95.7%
---------------------------------------
Top 20 Markets 123,146 91.0% 94.5%
All Other Markets 20,023 9.0% 94.7%
---------------------------------------
Total 143,169 100.0% 94.6%
=======================================
--------------------------------------------
Increase (Decrease) from Prior Quarter
-------------------------------------------------------------------
Markets Revenues Expenses NOI Occupancy
-------------------------------------------------------------------
1 New York Metro Area 2.6% 0.8% 3.6% (0.1%)
2 Los Angeles 2.8% 6.2% 1.2% 1.5%
3 DC Northern Virginia 2.0% (1.4%) 3.7% (1.4%)
4 Boston 1.4% (2.0%) 3.6% 0.6%
5 South Florida 1.0% 6.8% (2.6%) (1.3%)
6 Seattle/Tacoma 0.7% 4.3% (1.5%) (2.9%)
7 San Francisco Bay Area 2.1% 3.5% 1.4% (0.6%)
8 Phoenix 3.5% 5.8% 2.1% 0.4%
9 Atlanta 1.6% 3.7% 0.1% 0.3%
10 Denver 2.4% 4.0% 1.5% 0.3%
11 Orlando 2.9% 5.8% 1.2% 0.5%
12 San Diego 2.3% 9.7% (1.3%) 2.0%
13 Dallas/Ft Worth 1.1% 1.3% 0.8% (0.1%)
14 New England (excl
Boston) 2.5% (3.7%) 7.9% 0.8%
15 Inland Empire, CA 1.1% 12.9% (4.6%) 1.3%
16 Orange County 2.6% 11.0% (1.2%) 1.8%
17 DC Suburban Maryland (1.2%) 0.1% (1.9%) (0.8%)
18 Houston 2.3% (3.6%) 8.6% 0.4%
19 Jacksonville 0.2% 1.7% (0.7%) (0.5%)
20 Portland 4.0% 1.1% 6.1% 0.6%
--------------------------------------------
Top 20 Markets 1.9% 3.0% 1.2% 0.0%
All Other Markets 2.2% 6.8% (1.5%) 0.0%
--------------------------------------------
Total 1.9% 3.4% 1.0% 0.0%
============================================
Note: All same store results exclude the Lexford Housing Division.
September YTD 2006 vs. September YTD 2005
Same-Store Results by Market
-------------------------------------------------------------------
Sep YTD 2006 Sep YTD 2006
% of Weighted
Actual Average
Markets Units NOI Occupancy %
-------------------------------------------------------------------
1 Los Angeles 6,079 7.7% 94.6%
2 Boston 5,761 6.7% 94.0%
3 South Florida 7,398 6.6% 93.9%
4 San Francisco Bay Area 5,990 6.4% 95.7%
5 DC Northern Virginia 5,183 5.9% 95.3%
6 Phoenix 9,247 5.8% 94.9%
7 New York Metro Area 3,406 5.6% 96.4%
8 Seattle/Tacoma 7,153 4.9% 94.4%
9 Atlanta 8,743 4.9% 95.1%
10 Denver 6,921 4.1% 94.8%
11 San Diego 3,486 4.1% 94.5%
12 Dallas/Ft Worth 8,152 4.0% 94.6%
13 Orlando 5,151 3.8% 94.8%
14 New England (excl Boston) 5,823 3.6% 93.2%
15 Orange County 3,013 3.5% 95.2%
16 Inland Empire, CA 3,504 3.4% 93.1%
17 DC Suburban Maryland 4,325 3.1% 93.1%
18 Houston 5,282 2.6% 93.8%
19 Portland 3,409 2.0% 95.2%
20 Austin 3,671 1.6% 95.5%
---------------------------------------
Top 20 Markets 111,697 90.3% 94.6%
All Other Markets 18,268 9.9% 94.4%
---------------------------------------
Total 129,965 100.2% 94.6%
=======================================
--------------------------------------------
Increase (Decrease) from Prior Year
-------------------------------------------------------------------
Markets Revenues Expenses NOI Occupancy
-------------------------------------------------------------------
1 Los Angeles 6.9% 3.6% 8.6% (0.6%)
2 Boston 2.9% 5.6% 1.1% (0.1%)
3 South Florida 9.8% 4.0% 13.9% (1.1%)
4 San Francisco Bay Area 5.6% 2.8% 7.2% 0.0%
5 DC Northern Virginia 6.3% 2.0% 8.4% 0.3%
6 Phoenix 11.5% 2.1% 18.1% 0.6%
7 New York Metro Area 8.2% 0.2% 12.9% 0.3%
8 Seattle/Tacoma 6.8% 4.5% 8.5% (0.9%)
9 Atlanta 3.6% 2.6% 4.3% (0.2%)
10 Denver 3.6% 1.9% 4.6% 0.2%
11 San Diego 4.8% 7.0% 3.8% (0.7%)
12 Dallas/Ft Worth 4.2% (2.4%) 11.2% (0.3%)
13 Orlando 9.6% 4.9% 12.5% (0.8%)
14 New England (excl
Boston) 1.8% 6.8% (2.3%) (0.3%)
15 Orange County 7.2% 6.2% 7.7% (0.1%)
16 Inland Empire, CA 4.4% 5.2% 4.1% (1.1%)
17 DC Suburban Maryland 3.1% 6.7% 1.0% (0.3%)
18 Houston 6.6% 0.7% 13.1% 1.3%
19 Portland 4.6% 3.7% 5.3% 0.9%
20 Austin 7.3% 4.2% 10.8% 0.2%
--------------------------------------------
Top 20 Markets 6.0% 3.3% 7.8% (0.2%)
All Other Markets 5.4% 1.9% 8.2% 0.3%
--------------------------------------------
Total 6.0% 3.2% 7.8% (0.1%)
============================================
Note: All same store results exclude the Lexford Housing Division.
Portfolio Summary
After Lexford Housing
As of September 30, 2006 Division Sale
------------------------- -------------------------
Properties Units Properties Units
------------ ------------ ------------ ------------
Wholly Owned
Properties 825 173,313 545 147,215
Partially Owned
Properties:
Consolidated 34 5,890 25 4,873
Unconsolidated 45 10,846 45 10,846
Military Housing
(Fee Managed) 1 3,643 1 3,643
------------ ------------ ------------ ------------
905 193,692 616 166,577
Portfolio Rollforward Q3 2006
Properties Units $ Millions Cap Rate
------------ ------------ ------------ ------------
6/30/2006 898 191,582
Acquisitions:
Rental
Properties 10 2,558 $504.8 5.1%
Land Parcels
(one) - - $17.0
Dispositions:
Rental
Properties (1) (2) (133) $(3.0) 7.6%
Condominium
Units (1) (315) $(65.4)
Land Parcels
(one) - - $(0.7)
------------ ------------
9/30/2006 905 193,692
(1) Represents the sale of two Lexford ranch properties which were
not part of the larger portfolio sale.
Portfolio Rollforward 2006
Properties Units $ Millions Cap Rate
------------ ------------ ------------ ------------
12/31/2005 926 197,404
Acquisitions:
Rental
Properties 28 7,480 $1,442.0 5.0%
Land Parcels
(six) - - $93.5
Dispositions:
Rental
Properties (40) (10,661) $(1,032.5) 5.5%
Condominium
Units (5) (840) $(172.6)
Land Parcels
(two) - - $(1.6)
Completed
Developments 1 359
Configuration
Changes (5) (50)
------------ ------------
9/30/2006 905 193,692
Portfolio Summary
As of September 30, 2006
% of 2006
% of Total Stabilized
Markets Properties Units Units NOI (1)
------------------ ----------- ----------- ----------- -----------
1 New York Metro
Area 17 5,288 2.7% 8.1%
2 DC Northern
Virginia 23 8,045 4.1% 7.3%
3 South Florida 31 9,779 5.0% 7.1%
4 Los Angeles 33 7,012 3.6% 6.9%
5 Seattle/Tacoma 47 10,979 5.7% 6.4%
6 Boston 37 6,889 3.6% 5.7%
7 San Francisco Bay
Area 27 6,501 3.4% 5.1%
8 Atlanta 35 11,017 5.7% 5.0%
9 Phoenix 36 10,381 5.4% 4.9%
10 Denver 29 9,547 4.9% 4.8%
11 Orlando 22 6,959 3.6% 4.4%
12 San Diego 12 3,822 2.0% 3.9%
13 Inland Empire CA 14 4,355 2.2% 3.6%
14 Dallas/Ft Worth 34 9,919 5.1% 3.5%
15 DC Suburban
Maryland 21 5,145 2.7% 3.1%
16 New England (excl
Boston) 41 5,823 3.0% 3.1%
17 Orange County 8 3,013 1.6% 3.0%
18 Houston 17 5,282 2.7% 2.1%
19 Jacksonville 13 3,899 2.0% 2.0%
20 Portland OR 11 3,713 1.9% 1.7%
----------- ----------- ----------- -----------
Top 20 Total 508 137,368 70.9% 91.7%
21 Raleigh/Durham 17 4,392 2.3% 1.6%
22 Tampa/Ft Myers 10 3,141 1.6% 1.4%
23 Austin 12 3,671 1.9% 1.3%
24 Charlotte 11 3,391 1.8% 1.0%
25 Nashville 8 2,325 1.2% 0.9%
26 Central Valley CA 10 1,595 0.8% 0.5%
27 Minneapolis/St
Paul 6 817 0.4% 0.4%
28 Other EQR 18 4,355 2.2% 1.2%
----------- ----------- ----------- -----------
Total 600 161,055 83.1% 100.0%
Lexford Portfolio 289 27,115 14.0% 0.0%
Condominium
Conversion 15 1,879 1.0% 0.0%
Military Housing 1 3,643 1.9% 0.0%
----------- ----------- ----------- -----------
Grand Total 905 193,692 100.0% 100.0%
=========== =========== =========== ===========
(1) Excludes the Lexford Portfolio, which was reclassified as held for
sale and included in discontinued operations at June 30, 2006. As
previously disclosed, Equity Residential completed the disposition of
the Lexford Portfolio on October 5, 2006.
Debt Summary as of September 30, 2006
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts (1) % of Total Rates (1) (years)
----------- ----------- ----------- -----------
Secured $3,353,413 40.3% 5.83% 6.3
Unsecured 4,975,043 59.7% 5.91% 6.7
----------- ----------- ----------- -----------
Total $8,328,456 100.0% 5.87% 6.5
=========== =========== =========== ===========
Fixed Rate Debt:
Secured -
Conventional $2,495,958 30.0% 6.33% 4.3
Secured - Tax Exempt 18,289 0.2% 6.40% 18.5
Unsecured -
Public/Private 4,207,653 50.5% 6.00% 7.0
Unsecured - Tax
Exempt 111,390 1.3% 5.07% 22.6
----------- ----------- ----------- -----------
Fixed Rate Debt 6,833,290 82.0% 6.12% 6.3
----------- ----------- ----------- -----------
Floating Rate Debt:
Secured -
Conventional 304,008 3.7% 6.24% 2.0
Secured - Tax Exempt 535,158 6.4% 3.43% 17.6
Unsecured - Public 150,000 1.8% 6.03% 2.7
Unsecured - Revolving
Credit Facilities 506,000 6.1% 5.34% 1.4
----------- ----------- ----------- -----------
Floating Rate
Debt 1,495,166 18.0% 4.84% 7.4
----------- ----------- ----------- -----------
Total $8,328,456 100.0% 5.87% 6.5
=========== =========== =========== ===========
(1) Net of the effect of any derivative instruments. Weighted average
rates are for the nine months ended September 30, 2006.
Debt Maturity Schedule as of September 30, 2006
(Amounts in thousands)
Weighted Weighted
Average Average
Rates Rates
Floating on Fixed on Total
Fixed Rate Rate % of Rate Debt
Year (1) (1) Total (5) Total Debt (1) (1)
------ ----------- ----------- ----------- ------ -------- --------
2006 $227,510 $28,578 $256,088 3.1% 7.03% 7.02%
2007 (2) 325,525 249,202 574,727 6.9% 6.88% 6.52%
2008 (3) 556,308 359,334 915,642 11.0% 6.73% 6.23%
2009 480,003 382,029 862,032 10.3% 6.43% 5.34%
2010 279,768 - 279,768 3.4% 7.05% 7.05%
2011 (4) 1,450,123 24,150 1,474,273 17.7% 5.52% 5.49%
2012 558,522 - 558,522 6.7% 6.48% 6.48%
2013 567,485 - 567,485 6.8% 5.93% 5.93%
2014 504,291 - 504,291 6.1% 5.27% 5.27%
2015 316,638 - 316,638 3.8% 6.53% 6.53%
2016+ 1,567,117 451,873 2,018,990 24.2% 5.74% 5.44%
----------- ----------- ----------- ------ -------- --------
Total $6,833,290 $1,495,166 $8,328,456 100.0% 6.05% 5.84%
=========== =========== =========== ====== ======== ========
(1) Net of the effect of any derivative instruments. Weighted average
rates are as of September 30, 2006.
(2) Includes $176.0 million outstanding on the Company's short-term
$500.0 million unsecured revolving credit facility. This facility
was terminated by the Company on October 13, 2006.
(3) Includes $330.0 million outstanding on the Company's long-term
$1.0 billion unsecured revolving credit facility, which matures
on May 29, 2008.
(4) Includes $650.0 million of 3.85% convertible unsecured debt with a
final maturity of 2026. The notes are callable by the Company on
or after August 18, 2011. The notes are putable by the holders on
August 18, 2011, August 15, 2016 and August 15, 2021.
(5) The above table includes the following maturity amounts (in
thousands) related to the Lexford Portfolio, all of which was
repaid in full in October 2006: 2006 - $94,981; 2007 - $28,618;
2008 - $44,152; 2009 - $27,459; 2010 - $515; 2011 - $600.
Unsecured Debt Summary as of September 30, 2006
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
--------------------------------------------------------
Fixed Rate
Notes:
6.690% 11/01/06 $50,000 $(4) $49,996
7.625% 04/15/07 50,000 94 50,094
6.900% 08/01/07 50,000 (21) 49,979
7.540% 09/01/07 (1) 4,286 - 4,286
4.861% 11/30/07 50,000 - 50,000
7.500% 08/15/08 (1) 130,000 - 130,000
4.750% 06/15/09 (2) 300,000 (743) 299,257
6.950% 03/02/11 300,000 3,817 303,817
6.625% 03/15/12 400,000 (1,603) 398,397
5.200% 04/01/13 400,000 (770) 399,230
5.250% 09/15/14 500,000 (489) 499,511
6.584% 04/13/15 300,000 (946) 299,054
5.125% 03/15/16 500,000 (507) 499,493
5.375% 08/01/16 400,000 (1,824) 398,176
7.125% 10/15/17 150,000 (716) 149,284
7.570% 08/15/26 140,000 - 140,000
3.850% 08/15/26 (3) 650,000 (8,091) 641,909
Floating
Rate
Adjustments (2) (150,000) - (150,000)
FAS 133
Adjustments
- net (2) (4,830) - (4,830)
-----------------------------------
4,219,456 (11,803) 4,207,653
-----------------------------------
Fixed Rate
Tax Exempt
Notes:
4.750% 12/15/28 (1) 35,600 - 35,600
5.200% 06/15/29 (1) 75,790 - 75,790
-----------------------------------
111,390 - 111,390
-----------------------------------
Floating
Rate Notes: 06/15/09 (2) 150,000 - 150,000
-----------------------------------
Revolving
Credit
Facilities: 05/29/08 (4) 506,000 - 506,000
-----------------------------------
Total
Unsecured
Debt $4,986,846 $(11,803) $4,975,043
===================================
(1) Notes are private. All other unsecured debt is public.
(2) $150.0 million in fair value interest rate swaps converts 50% of
the 4.750% Notes due June 15, 2009 to a floating interest rate.
(3) Convertible notes mature on August 15, 2026. The notes are
callable by the Company on or after August 18, 2011. The notes
are putable by the holders on August 18, 2011, August 15, 2016
and August 15, 2021.
(4) Includes $176.0 million and $330.0 million outstanding on the
Company's short-term $500.0 million and long-term $1.0 billion
unsecured revolving credit facilities, respectively. The short-
term facility was terminated on October 13, 2006.
Selected Unsecured Public Debt Covenants
September 30, December 31,
2006 2005
--------------- ---------------
Total Debt to Adjusted Total Assets
(not to exceed 60%) 46.2% 44.9%
Secured Debt to Adjusted Total Assets
(not to exceed 40%) 18.6% 20.0%
Consolidated Income Available for
Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.58 2.89
Total Unsecured Assets to Unsecured
Debt
(must be at least 150%) 239.7% 261.4%
These selected covenants relate to ERP Operating Limited Partnership's
("ERPOP") outstanding unsecured public debt. Equity Residential is
the general partner of ERPOP.
Capital Structure as of September 30, 2006
(Amounts in thousands except for share and per share amounts)
Secured Debt $3,157,088 38%
Secured Debt - Properties
Held for Sale 196,325 2%
Unsecured Debt 4,469,043 54%
Lines of Credit 506,000 6%
------------ ----
Total Debt 8,328,456 100% 34%
Common Shares 292,132,743 93%
OP Units 20,531,951 7%
------------ ----
Total Shares and OP Units 312,664,694 100%
Common Share Equivalents (see
below) 891,646
------------
Total outstanding at
quarter-end 313,556,340
Common Share Price at
September 30, 2006 $50.58
------------
15,859,680 98%
Perpetual Preferred Equity
(see below) 375,000 2%
------------ ----
Total Equity 16,234,680 100% 66%
Total Market Capitalization $24,563,136 100%
Convertible Preferred Equity as of September 30, 2006
(Amounts in thousands except for share and per share amounts)
Annual
Dividend
Redemption Outstanding Liquidation Per
Series Date Shares/Units Value Share/Unit
- --------------------- ---------- ------------- ----------- -----------
Preferred Shares:
7.00% Series E 11/1/98 464,616 $11,615 $1.75
7.00% Series H 6/30/98 29,434 736 1.75
Preference
Interests:
7.625% Series J 12/14/06 230,000 11,500 3.8125
Junior Preference
Units:
8.00% Series B 7/29/09 7,367 184 2.00
------------- -----------
Total Convertible
Preferred Equity 731,417 $24,035
Annual Weighted Common
Dividend Average Conversion Share
Series Amount Rate Ratio Equivalents
- --------------------- ---------- ------------- ----------- -----------
Preferred Shares:
7.00% Series E $813 1.1128 517,025
7.00% Series H 52 1.4480 42,620
Preference
Interests:
7.625% Series J 877 1.4108 324,484
Junior Preference
Units:
8.00% Series B 15 1.020408 7,517
---------- -----------
Total Convertible
Preferred Equity $1,757 7.31% 891,646
Perpetual Preferred Equity as of September 30, 2006
(Amounts in thousands except for share and per share amounts)
Redemption Outstanding Liquidation
Series Date Shares/Units Value
- ------------------------------ ----------- -------------- ------------
Preferred Shares:
8.60% Series D 7/15/07 700,000 $175,000
8.29% Series K 12/10/26 1,000,000 50,000
6.48% Series N 6/19/08 600,000 150,000
-------------- ------------
Total Perpetual Preferred
Equity 2,300,000 $375,000
Annual
Dividend Annual Weighted
Per Dividend Average
Series Share/Unit Amount Rate
- ------------------------------ ------------ ------------- ------------
Preferred Shares:
8.60% Series D $21.50 $15,050
8.29% Series K 4.145 4,145
6.48% Series N 16.20 9,720
-------------
Total Perpetual Preferred
Equity $28,915 7.71%
Common Share and Operating Partnership Unit (OP Unit)
Weighted Average Amounts Outstanding
YTD 3Q06 YTD 3Q05 3Q06 3Q05 (1)
------------ ------------ ------------ ------------
Weighted Average
Amounts
Outstanding for
Net Income
Purposes:
Common Shares -
basic 289,462,778 285,331,211 290,035,523 286,181,532
Shares issuable
from assumed
conversion/
vesting of:
- OP Units 20,549,456 20,839,532 20,635,182 -
- share
options/
restricted
shares 4,970,074 4,040,522 5,215,312 -
------------ ------------ ------------ ------------
Total Common
Shares and OP
Units - diluted 314,982,308 310,211,265 315,886,017 286,181,532
Weighted Average
Amounts
Outstanding for
FFO Purposes:
Common Shares -
basic 289,462,778 285,331,211 290,035,523 286,181,532
OP Units - basic 20,549,456 20,839,532 20,635,182 20,733,194
------------ ------------ ------------ ------------
Total Common
Shares and OP
Units - basic 310,012,234 306,170,743 310,670,705 306,914,726
Shares issuable
from assumed
conversion/
vesting of:
- convertible
preferred
shares/units 601,388 803,417 576,318 708,559
- share
options/
restricted
shares 4,970,074 4,040,522 5,215,312 4,648,912
------------ ------------ ------------ ------------
Total Common
Shares and OP
Units - diluted 315,583,696 311,014,682 316,462,335 312,272,197
Period Ending
Amounts
Outstanding:
Common Shares 292,132,743
OP Units 20,531,951
------------
Total Common
Shares and OP
Units 312,664,694
(1) In accordance with SFAS No. 128, Earnings Per Share, potential
common shares issuable from the assumed conversion of OP Units, the
exercise of share options and the vesting of restricted shares are
automatically anti-dilutive and therefore excluded from the diluted
earnings per share calculation as the Company had a loss from
continuing operations for the third quarter ended September 30, 2005.
Partially Owned Entities as of September 30, 2006
(Amounts in thousands except for project and unit amounts)
Consolidated
-----------------------------------------------------
Development Projects
------------------------
Held for
and/or Completed
Under and
Development Stabilized Lexford Other Total
------------ ----------- -------- --------- ---------
Total projects(1) - 4 9 21 34
------------ ----------- -------- --------- ---------
Total units (1) - 977 1,017 3,896 5,890
------------ ----------- -------- --------- ---------
Operating
information
for the nine
months ended
9/30/06 (at
100%):
Operating
revenue $- $11,951 $4,791 $39,998 $56,740
Operating
expenses 726 4,304 2,365 13,883 21,278
------------ ----------- -------- --------- ---------
Net operating
income
(loss) (726) 7,647 2,426 26,115 35,462
Depreciation - 4,349 641 10,666 15,656
Other 1 - - 1,492 1,493
------------ ----------- -------- --------- ---------
Operating
income
(loss) (727) 3,298 1,785 13,957 18,313
Interest and
other income 2,085 86 9 854 3,034
Interest:
Expense
incurred,
net (724) (2,547) (760) (15,062) (19,093)
Amortization
of deferred
financing
costs - (36) (3) (83) (122)
------------ ----------- -------- --------- ---------
Net income
(loss) $634 $801 $1,031 $(334) $2,132
============ =========== ======== ========= =========
Debt - Secured
(2):
EQR
Ownership
(3) $142,099 $61,000 $13,994 $287,086 $504,179
Minority
Ownership - - 415 13,321 13,736
------------ ----------- -------- --------- ---------
Total (at
100%) $142,099 $61,000 $14,409 $300,407 $517,915
============ =========== ======== ========= =========
Unconsolidated
---------------------
Institutional Joint
Ventures
---------------------
Total projects 45
---------------------
Total units 10,846
---------------------
Operating information for the nine months ended
9/30/06 (at 100%):
Operating revenue $74,468
Operating expenses 33,601
---------------------
Net operating income (loss) 40,867
Depreciation 15,716
Other 222
---------------------
Operating income (loss) 24,929
Interest and other income 491
Interest:
Expense incurred, net (28,083)
Amortization of deferred financing costs (463)
---------------------
Net income (loss) $(3,126)
=====================
Debt - Secured (2):
EQR Ownership (3) $121,200
Minority Ownership 363,600
---------------------
Total (at 100%) $484,800
=====================
(1) Project and unit counts exclude all uncompleted development
projects until those projects are completed. See the Consolidated
Development Projects schedule for more detail.
(2) All debt is non-recourse to the Company with the exception of
$28.3 million in mortgage bonds on one development project.
(3) Represents the Company's economic ownership interest.
Consolidated Development Projects as of September 30, 2006
(Amounts in thousands except for project and unit amounts)
Total
Book
Value
Total Not
Total Book Placed
No. of Capital Value To in Total
Projects Location Units Cost (1) Date (1) Service Debt
- ----------------------------------------------------------------------
Projects Under Development
- Wholly Owned:
- --------------------------
Bella Vista Woodland
III Hills, CA 264 $72,370 $52,875 $52,875 $-
Highland Glen Westwood,
II MA 102 21,620 5,110 5,110 -
Emerson/CRP II Boston, MA 310 161,309 34,521 34,521 -
Redmond Ridge Redmond, WA 321 53,536 10,174 10,174 -
77 Hudson Jersey
City, NJ 481 242,129 36,563 36,563 -
--------------------------------------------
Projects Under Development
- Wholly Owned 1,478 550,964 139,243 139,243 -
Projects Under
Development- Partially
Owned:
- --------------------------
Union Station Los
Angeles,
CA 278 69,661 61,286 61,286 36,583
Vintage Ontario,
CA 300 53,810 34,134 34,134 32,610
Silver Spring Silver
Spring,
MD 457 147,454 34,319 34,319 -
303 Third Cambridge,
Street MA 531 242,969 38,674 38,674 -
City Lofts Chicago,
IL 278 71,109 9,749 9,749 -
Alta Pacific Irvine,
(2) CA 132 39,380 17,822 17,822 28,260
--------------------------------------------
Projects Under Development
- Partially Owned 1,976 624,383 195,984 195,984 97,453
--------------------------------------------
Projects Under Development3,454 1,175,347 335,227 335,227 97,453
--------------------------------------------
Land Held for Development N/A - 199,369 199,369 44,646
--------------------------------------------
Land/Projects Held for
and/or Under Development 3,454 1,175,347 534,596 534,596 142,099
--------------------------------------------
Completed Not Stabilized:
- --------------------------
2400 M St (3) Washington,
D.C. 359 111,947 107,454 - 75,163
--------------------------------------------
Projects Completed Not
Stabilized 359 111,947 107,454 - 75,163
--------------------------------------------
Completed and Stabilized
During the Quarter:
- --------------------------
--------------------------------------------
Projects Completed and
Stabilized During the
Quarter - - - - -
--------------------------------------------
Total Projects 3,813 $1,287,294 $642,050 $534,596 $217,262
============================================
NOI CONTRIBUTION FROM
DEVELOPMENT PROJECTS
Projects Under Development
Completed Not Stabilized
Completed and Stabilized
During the Quarter
Total Development/Newly
Stabilized NOI
Contribution
Percentage Percentage Percentage
Projects Location Completed Leased Occupied
- ----------------------------------------------------------------------
Projects Under Development - Wholly
Owned:
- --------------------------------------
Bella Vista III Woodland
Hills, CA 71% - -
Highland Glen II Westwood,
MA 24% - -
Emerson/CRP II Boston, MA 22% - -
Redmond Ridge Redmond, WA 6% - -
77 Hudson Jersey
City, NJ 4% - -
Projects Under Development - Wholly
Owned
Projects Under Development- Partially
Owned:
- --------------------------------------
Union Station Los
Angeles,
CA 97% - -
Vintage Ontario,
CA 61% - -
Silver Spring Silver
Spring,
MD 9% - -
303 Third Street Cambridge,
MA 2% - -
City Lofts Chicago,
IL 2% - -
Alta Pacific (2) Irvine,
CA 11% - -
Projects Under Development - Partially
Owned
Projects Under Development
Land Held for Development
Land/Projects Held for and/or Under
Development
Completed Not Stabilized:
- --------------------------------------
2400 M St (3) Washington,
D.C. 100% 55% 51%
Projects Completed Not Stabilized
Completed and Stabilized During the
Quarter:
- --------------------------------------
Projects Completed and Stabilized
During the Quarter
Total Projects
Total
NOI CONTRIBUTION FROM DEVELOPMENT Capital
PROJECTS Cost (1) Q3 2006 NOI
----------------------
Projects Under Development $1,175,347 $(87)
Completed Not Stabilized 111,947 340
Completed and Stabilized During the
Quarter - -
----------------------
Total Development/Newly Stabilized
NOI Contribution $1,287,294 $253
======================
Estimated Estimated
Completion Stabilization
Projects Location Date Date
- ----------------------------------------------------------------------
Projects Under Development - Wholly Owned:
- ---------------------------------------------
Bella Vista III Woodland
Hills, CA 1Q 2007 4Q 2007
Highland Glen II Westwood,
MA 1Q 2007 4Q 2007
Emerson/CRP II Boston, MA 2Q 2008 1Q 2009
Redmond Ridge Redmond, WA 1Q 2008 2Q 2010
77 Hudson Jersey
City, NJ 2Q 2009 4Q 2010
Projects Under Development - Wholly Owned
Projects Under Development- Partially Owned:
- ---------------------------------------------
Union Station Los
Angeles,
CA 1Q 2007 1Q 2008
Vintage Ontario,
CA 3Q 2007 1Q 2008
Silver Spring Silver
Spring,
MD 3Q 2008 2Q 2010
303 Third Street Cambridge,
MA 3Q 2008 1Q 2010
City Lofts Chicago,
IL 3Q 2008 2Q 2009
Alta Pacific (2) Irvine,
CA 3Q 2007 2Q 2008
Projects Under Development - Partially Owned
Projects Under Development
Land Held for Development
Land/Projects Held for and/or Under
Development
Completed Not Stabilized:
- ---------------------------------------------
2400 M St (3) Washington,
D.C. Completed 3Q 2007
Projects Completed Not Stabilized
Completed and Stabilized During the Quarter:
- ---------------------------------------------
Projects Completed and Stabilized During the
Quarter
Total Projects
NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS
Projects Under Development
Completed Not Stabilized
Completed and Stabilized During the Quarter
Total Development/Newly Stabilized NOI
Contribution
(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 projects.
(2) Debt is primarily tax-exempt bonds that are entirely outstanding,
with $19.2 million unfunded and classified as deposits - restricted
in the consolidated balance sheets at 9/30/06.
(3) EQR acquired its partner's interest on 4/28/2006 and now wholly-
owns the property. Total Book Value to Date does not include
additional purchase consideration of $30.7M.
Consolidated Condominium Conversion Projects as of September 30, 2006
(Amounts in thousands except for project and unit amounts)
Units
--------------------------
Available for
Sale
-------------
Project
Start Estimated Sold
Date Close Units Not Avail-
Projects Location (1) Out Date Total Closed Closed able
- ------------------------------------------- --------------------------
For Sale
- ---------------
Fairway Pembroke Q1 2005 Q4 2006
Greens Pines, FL 152 148 - 4
Timber Woodinville,Q1 2005 Q1 2007
Ridge WA 203 175 13 15
Milano Scottsdale, Q2 2005 Q2 2007
Terrace AZ 224 125 12 87
Braewood Bothell, WA Q2 2005 Q4 2006 84 70 5 9
South Palm Tamarac, FL Q2 2005 Q3 2007
Place 208 81 28 99
Chantecleer Naperville, Q4 2005 Q4 2007
Lakes IL 304 152 34 118
Fifth Seattle, WA Q2 2005 Q1 2007
Avenue
North (2) 62 50 5 7
Parkside Seattle, WA Q4 2005 Q1 2007 44 28 1 15
Bella Phoenix, AZ Q4 2005
Vista (5) 248 11 8 229
Oaks at Falls Q4 2005
Falls Church, VA
Church (5) 176 - 19 157
Regency Centreville,Q4 2005
Park VA (5) 252 - 26 226
Park Blooming- Blooming- Q2 2006 Q1 2008
dale dale, IL 250 - 43 207
Alameda Ranch Scottsdale, Q4 2005
AZ (5) 272 - - 272
Azure Creek Phoenix, AZ Q2 2006 (5) 160 - - 160
Pacific Cove Playa Del Q3 2006 Q4 2007
Ray, CA 80 - - 80
--------------------------
2,719 840 194 1,685
Closed Out
- ---------------
Tuscany Scottsdale, Q4 2004 Q1 2006
Villas AZ 180 180 - -
Venetian Phoenix, AZ Q1 2004 Q1 2006
I & II 264 264 - -
Four Lakes Lisle, IL Q4 2001 Q2 2006 942 942 - -
Atlas (3) Washington, Q4 2004 Q2 2006
DC 141 141 - -
Grand Marquis Plantation, Q4 2004 Q2 2006
FL 198 198 - -
Magnuson Seattle, WA Q1 2005 Q3 2006
Pointe 105 105 - -
Projects
closed out
prior
to 2006 1,914 1,914 - -
--------------------------
3,744 3,744 - -
Totals 21 6,463 4,584 194 1,685
==========================
Gross incremental gain on sales of
condominium units
Provision for income taxes
Net incremental gain on sales of
condominium units
Property management and general and
administrative expenses
Discontinued operating income (loss)
Net Income - Condominium Division (4)
2006 YTD Activity
----------------------------
Project FFO
Start Estimated Incremental
Date Close Units Sales Gain on
Projects Location (1) Out Date Closed Price Sale
- ---------------------------------------- ----------------------------
For Sale
- ------------
Fairway Pembroke Q1 2005 Q4 2006
Greens Pines, FL 45 $9,085 $2,323
Timber Woodinville,Q1 2005 Q1 2007
Ridge WA 147 27,385 7,774
Milano Scottsdale, Q2 2005 Q2 2007
Terrace AZ 115 27,128 7,881
Braewood Bothell, WA Q2 2005 Q4 2006 70 15,281 4,454
South Palm Tamarac, FL Q2 2005 Q3 2007
Place 81 14,909 2,366
Chantecleer Naperville, Q4 2005 Q4 2007
Lakes IL 152 23,329 3,882
Fifth Seattle, WA Q2 2005 Q1 2007
Avenue
North (2) 50 13,970 3,201
Parkside Seattle, WA Q4 2005 Q1 2007 28 6,950 1,328
Bella Phoenix, AZ Q4 2005
Vista (5) 11 1,972 180
Oaks at Falls Q4 2005
Falls Church, VA
Church (5) - - -
Regency Centreville,Q4 2005
Park VA (5) - - -
Park Blooming- Q2 2006 Q1 2008
Blooming- dale, IL
dale - - -
Alameda Scottsdale, Q4 2005
Ranch AZ (5) - - -
Azure Creek Phoenix, AZ Q2 2006 (5) - - -
Pacific CovePlaya Del Q3 2006 Q4 2007
Ray, CA - - -
----------------------------
699 140,009 33,389
Closed Out
- ------------
Tuscany Scottsdale, Q4 2004 Q1 2006
Villas AZ 2 331 99
Venetian Phoenix, AZ Q1 2004 Q1 2006
I & II 1 204 (166)
Four Lakes Lisle, IL Q4 2001 Q2 2006 46 7,688 889
Atlas (3) Washington, Q4 2004 Q2 2006
DC 6 3,006 416
Grand Plantation, Q4 2004 Q2 2006
Marquis FL 16 2,998 517
Magnuson Seattle, WA Q1 2005 Q3 2006
Pointe 70 18,397 6,240
Projects
closed out
prior
to 2006 - - 1,213
----------------------------
141 32,624 9,208
Totals 21 840 $172,633 $42,597
============================
Gross incremental gain on sales of
condominium units $42,597
Provision for income taxes (11,166)
------------
Net incremental gain on sales of
condominium units 31,431
Property management and general and
administrative expenses (4,444)
Discontinued operating income (loss) (525)
------------
Net Income - Condominium Division (4) $26,462
============
3Q 2006
---------------------------
Project FFO
Start Estimated Incremental
Date Close Units Sales Gain on
Projects Location (1) Out Date Closed Price Sale
- ----------------------------------------- ---------------------------
For Sale
- -------------
Fairway Pembroke Q1 2005 Q4 2006
Greens Pines, FL 3 $637 $62
Timber Woodinville,Q1 2005 Q1 2007
Ridge WA 50 10,048 3,185
Milano Scottsdale, Q2 2005 Q2 2007
Terrace AZ 35 8,584 2,270
Braewood Bothell, WA Q2 2005 Q4 2006 37 8,502 2,529
South Palm Tamarac, FL Q2 2005 Q3 2007
Place 45 8,447 1,213
Chantecleer Naperville, Q4 2005 Q4 2007
Lakes IL 82 13,092 2,188
Fifth Seattle, WA Q2 2005 Q1 2007
Avenue
North (2) 15 3,978 1,001
Parkside Seattle, WA Q4 2005 Q1 2007 12 3,204 555
Bella Phoenix, AZ Q4 2005
Vista (5) 11 1,972 180
Oaks at Falls Q4 2005
Falls Church, VA
Church (5) - - -
Regency Centreville,Q4 2005
Park VA (5) - - -
Park Blooming- Q2 2006 Q1 2008
Blooming- dale, IL
dale - - -
Alameda RanchScottsdale, Q4 2005
AZ (5) - - -
Azure Creek Phoenix, AZ Q2 2006 (5) - - -
Pacific Cove Playa Del Q3 2006 Q4 2007
Ray, CA - - -
---------------------------
290 58,464 13,183
Closed Out
- -------------
Tuscany Scottsdale, Q4 2004 Q1 2006
Villas AZ - - (1)
Venetian Phoenix, AZ Q1 2004 Q1 2006
I & II - - (14)
Four Lakes Lisle, IL Q4 2001 Q2 2006 - - (3)
Atlas (3) Washington, Q4 2004 Q2 2006
DC - - -
Grand MarquisPlantation, Q4 2004 Q2 2006
FL - - -
Magnuson Seattle, WA Q1 2005 Q3 2006
Pointe 25 7,013 2,582
Projects
closed out
prior
to 2006 - - 157
---------------------------
25 7,013 2,721
Totals 21 315 $65,477 $15,904
===========================
Gross incremental gain on sales of
condominium units $15,904
Provision for income taxes (3,026)
------------
Net incremental gain on sales of
condominium units 12,878
Property management and general and
administrative expenses (1,470)
Discontinued operating income (loss) (1,241)
------------
Net Income - Condominium Division (4) $10,167
============
(1) Project start date represents the date that each respective
property was acquired by the taxable REIT subsidiary and included in
discontinued operations.
(2) Includes the sale of 3,744 square feet of retail space, which
amounted to a gain of $89,100 on proceeds of $956,500.
(3) Partially owned project; incremental gain on sale represents
portion attributable to the Company.
(4) Excludes interest income and interest expense specific to
condominium conversion projects.
(5) Due to the continued softening of condominium markets, these
projects will continue to be operated as rental properties and no
further conversion activities will be undertaken.
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Nine Months Ended September 30, 2006
(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) 116,680 $59,699 $512 $53,133 $455 $112,832 $967
New
Acquisition
Properties
(7) 28,352 15,230 622 10,633 434 25,863 1,056
Properties
Held for Sale
(8) 27,115 10,852 400 7,007 258 17,859 658
Other (9) 7,056 6,952 6,395 13,347
-------- -------- -------- ---------
Total 179,203 $92,733 $77,168 $169,901
======== ======== ======== =========
-------------------------------------------------------
Capitalized Improvements to Real Estate
-------------------------------------------------------
Avg. Building Avg. Avg.
Replacements Per Improvements Per Per
(4) Unit (5) Unit Total Unit
------------------- ------------------ ----------------
Established
Properties
(6) $34,665 $297 $57,681 $494 $92,346 $791
New
Acquisition
Properties
(7) 6,746 275 22,117 903 28,863 1,178
Properties
Held for Sale
(8) 8,723 322 6,383 235 15,106 557
Other (9) 15,978 28,933 44,911
------------- ------------ ---------
Total $66,112 $115,114 $181,226
============= ============ =========
-------------------------
Total Expenditures
-------------------------
Avg.
Grand Per
Total Unit
-------------------------
Established Properties (6) $205,178 $1,758
New Acquisition Properties (7) 54,726 2,234
Properties Held for Sale (8) 32,965 1,215
Other (9) 58,258
------------
Total $351,127
============
(1) Total units exclude 10,846 unconsolidated units and 3,643 military
housing (fee managed) 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
appliances, mechanical equipment, fixtures and flooring, including
carpeting.
(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, 2004.
(7) Wholly Owned Properties acquired during 2004, 2005 and 2006. Per
unit amounts are based on a weighted average of 24,498 units.
(8) Properties held for sale include the entire Lexford Portfolio,
which was sold on October 5, 2006.
(9) Includes properties either Partially Owned or sold during the
period, commercial space, condominium conversions and $12.7 million
included in building improvements spent on fourteen specific assets
related to major renovations and repositioning of these assets.
Discontinued Operations
(Amounts in thousands)
Nine Months Ended Quarter Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
------------------- -------------------
REVENUES
Rental income $163,033 $275,982 $46,710 $85,445
Fee and asset management - 693 - 229
--------- --------- --------- ---------
Total revenues 163,033 276,675 46,710 85,674
--------- --------- --------- ---------
EXPENSES (1)
Property and maintenance 61,084 89,467 18,615 27,392
Real estate taxes and insurance 19,452 34,656 5,568 11,006
Property management 8,894 7,835 2,960 2,717
Depreciation 25,548 67,543 - 20,513
General and administrative 5,555 924 4,729 218
--------- --------- --------- ---------
Total expenses 120,533 200,425 31,872 61,846
--------- --------- --------- ---------
Discontinued operating income 42,500 76,250 14,838 23,828
Interest and other income 1,519 857 504 388
Interest (2):
Expense incurred, net (14,803) (24,778) (4,126) (7,077)
Amortization of deferred
financing costs (673) (638) (40) (365)
--------- --------- --------- ---------
Discontinued operations 28,543 51,691 11,176 16,774
Minority Interests - Operating
Partnership (1,881) (3,497) (740) (1,130)
--------- --------- --------- ---------
Discontinued operations, net of
minority interests 26,662 48,194 10,436 15,644
--------- --------- --------- ---------
Net gain on sales of
discontinued operations 526,873 503,053 24,576 254,178
Minority Interests - Operating
Partnership (34,721) (34,054) (1,627) (17,131)
--------- --------- --------- ---------
Gain on sales of discontinued
operations, net of minority
interests 492,152 468,999 22,949 237,047
--------- --------- --------- ---------
Discontinued operations, net of
minority interests $518,814 $517,193 $33,385 $252,691
========= ========= ========= =========
Note: Discontinued operations includes the Lexford Housing Division.
(1) Includes expenses paid in the current period for properties sold
or held for sale in prior periods related to the Company's period of
ownership.
(2) Includes only interest expense specific to secured mortgage notes
payable for properties sold and/or held for sale.
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.
2006 Earnings Guidance (per share diluted)
- ----------------------------------------------------------------------
Q4 2006 2006
--------------- ---------------
Expected EPS (1) $1.42 to $1.45 $3.37 to $3.40
Add: Expected depreciation expense 0.47 1.87
Less: Expected net gain on sales (1) (1.35) (2.92)
--------------- ---------------
Expected FFO (2) $0.54 to $0.57 $2.32 to $2.35
=============== ===============
Same-Store Assumptions
- ------------------------------------------------------
2006
---------------
Physical occupancy 94.5%
Revenue change 5.75%
Expense change 3.50%
NOI change 7.20%
Acquisitions $2.2 billion
Dispositions $2.2 billion
(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