EXHIBIT 99.1
Equity Residential Reports Second Quarter Results
CHICAGO--(BUSINESS WIRE)--July 31, 2007--Equity Residential
(NYSE:EQR) today reported results for the quarter and six months ended
June 30, 2007. All per share results are reported on a fully diluted
basis.
"The first half of 2007 produced good operating results with
same-store revenue growth of 4.8 percent and net operating income
(NOI) growth of 5.4 percent," said David J. Neithercut, Equity
Residential's President and CEO. "And we will put more money in the
bank in the second half of the year than the first half of the year.
But our revenue growth will slow in the second half of the year
because we will not see the same pick up that we saw in the second
half of 2006, caused primarily by markets negatively impacted by
excessive condominium construction and/or reversion and high single
family home inventories, specifically Florida, Phoenix, the Inland
Empire and Washington, D.C. As a result, we have lowered our guidance
for same-store performance, which should produce $0.05 per share less
in Funds from Operations (FFO) than expected for the full year.
However, we are leaving our full year FFO guidance range of $2.25 to
$2.35 per share unchanged because lower than expected G&A costs and a
land sale, which combined, will offset the same-store shortfall."
Second Quarter 2007
For the quarter ended June 30, 2007, the company reported earnings
of $0.95 per share compared to $0.51 per share in the second quarter
of 2006. The increase is primarily attributable to higher gains on
property sales in the second quarter of 2007.
FFO for the quarter ended June 30, 2007 were $0.60 per share
compared to $0.61 per share in the same period of 2006. The decrease
is primarily attributable to lower gains on sales of condominium units
and higher debt extinguishment costs in the second quarter of 2007
than in the second quarter of 2006, partially offset by higher gains
on the sale of a land parcel in the second quarter of 2007.
The company's FFO of $0.60 per share exceeded its second quarter
guidance range of $0.54 to $0.58 per share primarily for the following
reasons:
-- A $4.5 million gain on the sale of a land parcel in New York
City that had not been included in guidance;
-- Approximately $3.0 million higher gains than expected from the
company's condominium division; and
-- Approximately $1.5 million lower than projected debt
prepayment penalties and write-offs of unamortized financing
costs.
These and other items describing the difference between actual FFO
per share for the quarter and the midpoint of the company's original
guidance range are listed on page 26 of this release.
Six Months Ended June 30, 2007
For the six months ended June 30, 2007, the company reported
earnings of $1.35 per share compared to $1.76 per share in the same
period of 2006.
FFO for the six months ended June 30, 2007 were $1.15 per share
compared to $1.17 per share in the same period of 2006.
Same-Store Results
On a same-store second quarter to second quarter comparison,
revenues increased 4.3 percent, expenses increased 2.6 percent and NOI
increased 5.4 percent. The increase in same-store revenues was driven
primarily by increases in average rental rates and a slight increase
in occupancy.
On a same-store six-month to six-month comparison, revenues
increased 4.8 percent, expenses increased 3.8 percent and NOI
increased 5.4 percent.
Acquisitions/Dispositions
"Through the first half of the year we continued to see very
stable pricing for property transactions with little or no movement in
cap rates on both assets we were acquiring or selling. As a result, we
were able to continue to exit non-core markets and increase our
investments in our core markets at a 100 basis point cap rate spread.
However, we are revising our acquisition and disposition targets for
the full year to $1.75 billion each due to an expectation that the
recent pull back in the debt markets will cause a reduction in
transaction activity," said Mr. Neithercut.
During the second quarter of 2007, the company acquired 15
properties, consisting of 2,310 apartment units, for an aggregate
purchase price of $551.6 million at an average capitalization (cap)
rate of 4.1 percent. Included in the acquisitions for the quarter were
three rent stabilized properties on the Upper West Side of Manhattan.
This $180.0 million portfolio was acquired at a cap rate of 2.7
percent and is projected to produce a year two yield in excess of 4.0
percent. Excluding these properties, the average cap rate would have
been 4.8 percent for the quarter ended June 30, 2007. The company also
acquired two land parcels for $23.0 million during the quarter.
Also during the quarter, the company sold 25 properties,
consisting of 6,307 apartment units, for an aggregate sale price of
$536.7 million at an average cap rate of 5.7 percent generating an
unlevered internal rate of return (IRR) of 11.8 percent. In addition,
the company sold 226 condominium units for $65.8 million and one land
parcel for $40.7 million.
In the first six months of 2007, the company acquired 28
properties, consisting of 6,209 apartment units, for an aggregate
purchase price of $1.2 billion at an average cap rate of 4.8 percent.
Excluding the acquisition of three rent stabilized properties on the
Upper West Side of Manhattan, the average cap rate would have been 5.2
percent for the six months ended June 30, 2007. The company also
acquired five land parcels for $65.5 million during the first six
months of 2007.
During the six months ended June 30, 2007, the company sold 37
properties, consisting of 10,018 apartment units, for an aggregate
sale price of $790.6 million at an average cap rate of 5.8 percent
generating an unlevered IRR of 11.2 percent. In addition, the company
sold 383 condominium units for $103.1 million and one land parcel for
$40.7 million.
Share Repurchase
During the second quarter of 2007, the company repurchased and
retired 14,319,952 of its common shares at an average price of $46.38
per share for an aggregate purchase of approximately $664.2 million.
Through the first six months of 2007, the company repurchased and
retired 18,460,206 of its common shares at an average price of $46.91
per share for an aggregate purchase of approximately $866.0 million.
Since the end of the second quarter, the company has repurchased
and retired 1,137,900 of its common shares at an average price of
$45.35 per share for an aggregate purchase of approximately $51.6
million. The company currently has $284.2 million remaining under its
share repurchase program.
Preferred Share Redemption
On July 16, 2007, the company redeemed its 8.60 percent Series D
Preferred Shares at its cash liquidation value of $175.0 million plus
accrued and unpaid dividends. As a result of this redemption, the
company will record an expense of approximately $6.1 million, or
approximately $0.02 per share, in the third quarter of 2007 for the
write-off of the original issuance costs.
Debt Offerings
On June 4, 2007, the company issued $650.0 million of unsecured
notes maturing June 15, 2017 and $350.0 million of unsecured notes
maturing October 1, 2012. The all-in effective interest rates are 5.89
percent and 5.74 percent, respectively. Proceeds from the issuances
were used to pay down the company's unsecured revolving credit
facility.
On July 19, 2007, the company issued $300.0 million of mortgage
notes maturing February 1, 2019. The all-in effective interest rate is
6.0 percent. Proceeds from the issuance were used to pay down the
company's unsecured revolving credit facility.
Third Quarter 2007 Guidance
The company's actual FFO of $0.60 per share for the second quarter
of 2007 is higher than the guidance range of $0.54 to $0.58 per share
projected for the third quarter of 2007 primarily as a result of the
following items:
-- Lower expected property NOI, which will be partially offset by
lower debt extinguishment costs and higher interest and other
income;
-- Lower anticipated gains on sales of condos in the third
quarter;
-- The $6.1 million expense that the company will record in the
third quarter of 2007 for the write-off of the original
issuance costs related to the redemption of the Series D
Preferred Shares; and
-- The $4.5 million gain on the sale of the land parcel in New
York City during the second quarter of 2007.
Equity Residential expects to announce third quarter 2007 results
on Tuesday, October 30, 2007 and host a conference call to discuss
those results at 10:00 a.m. CT on Wednesday, October 31, 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 608 properties located in 24 states and the District of
Columbia, consisting of 162,532 apartment 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 material, the level of new multifamily
construction and development, competition and local government
regulation. Other risks and uncertainties are described under the
heading "Risk Factors" in our Annual Report on Form 10-K 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 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 and outlook for 2007 will take place tomorrow, Wednesday,
August 1, 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 30, June 30,
---------------------- ---------------------
2007 2006 2007 2006
----------- ---------- ---------- ----------
REVENUES
Rental income $1,037,668 $910,242 $529,310 $465,213
Fee and asset management 4,703 4,807 2,436 2,320
----------- ---------- ---------- ----------
Total revenues 1,042,371 915,049 531,746 467,533
----------- ---------- ---------- ----------
EXPENSES
Property and maintenance 273,801 238,594 136,682 120,823
Real estate taxes and
insurance 112,017 88,963 55,302 45,132
Property management 47,254 46,661 22,412 23,077
Fee and asset management 4,504 4,326 2,163 2,158
Depreciation 304,052 257,683 155,032 132,771
General and
administrative 21,515 22,378 11,549 9,338
Impairment 394 805 158 239
----------- ---------- ---------- ----------
Total expenses 763,537 659,410 383,298 333,538
----------- ---------- ---------- ----------
Operating income 278,834 255,639 148,448 133,995
Interest and other
income 6,228 4,246 3,784 1,894
Interest:
Expense incurred, net (233,075) (203,862) (122,019) (103,120)
Amortization of
deferred financing
costs (6,162) (4,383) (3,615) (1,752)
----------- ---------- ---------- ----------
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 45,825 51,640 26,598 31,017
Allocation to Minority
Interests:
Operating Partnership,
net (2,097) (1,828) (1,449) (1,317)
Preference Interests and
Units (434) (1,556) (211) (457)
Partially Owned
Properties (779) (2,068) (187) (547)
Premium on redemption of
Preference Interests - (683) - (9)
Loss from investments in
unconsolidated entities (363) (375) (134) (145)
Net gain on sales of
unconsolidated entities - 352 - 23
Net gain on sales of land
parcels 4,516 246 4,516 246
----------- ---------- ---------- ----------
Income from continuing
operations, net of
minority interests 46,668 45,728 29,133 28,811
Discontinued operations,
net of minority interests 361,970 492,244 253,268 131,346
----------- ---------- ---------- ----------
Net income 408,638 537,972 282,401 160,157
Preferred distributions (14,840) (20,168) (7,416) (10,073)
----------- ---------- ---------- ----------
Net income available to
Common Shares $393,798 $517,804 $274,985 $150,084
=========== ========== ========== ==========
Earnings per share -
basic:
Income from continuing
operations available to
Common Shares $0.11 $0.09 $0.08 $0.07
=========== ========== ========== ==========
Net income available to
Common Shares $1.37 $1.79 $0.97 $0.52
=========== ========== ========== ==========
Weighted average Common
Shares outstanding 288,316 289,172 284,424 289,460
=========== ========== ========== ==========
Earnings per share -
diluted:
Income from continuing
operations available to
Common Shares $0.11 $0.09 $0.08 $0.06
=========== ========== ========== ==========
Net income available to
Common Shares $1.35 $1.76 $0.95 $0.51
=========== ========== ========== ==========
Weighted average Common
Shares outstanding 311,963 314,420 307,631 314,698
=========== ========== ========== ==========
Distributions declared per
Common Share outstanding $0.9250 $0.8850 $0.4625 $0.4425
=========== ========== ========== ==========
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
(Amounts in thousands except per share data)
(Unaudited)
Six Months Ended Quarter Ended
June 30, June 30,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net income $408,638 $537,972 $282,401 $160,157
Allocation to Minority
Interests - Operating
Partnership, net 2,097 1,828 1,449 1,317
Adjustments:
Depreciation 304,052 257,683 155,032 132,771
Depreciation - Non-real
estate additions (4,173) (3,682) (2,138) (1,886)
Depreciation - Partially
Owned and
Unconsolidated
Properties 2,081 2,563 1,138 1,013
Net gain on sales of
unconsolidated entities - (352) - (23)
Discontinued operations:
Depreciation 7,689 39,670 2,035 17,859
Gain on sales of
discontinued
operations, net of
minority interests (361,356) (469,246) (256,568) (121,281)
Net incremental gain
on sales of
condominium units 13,594 18,553 8,902 11,426
Provision for income
taxes - Non-condo
sales (187) - - -
Minority Interests -
Operating Partnership 41 1,620 (218) 707
---------- ---------- ---------- ----------
FFO (1)(2) 372,476 386,609 192,033 202,060
Preferred distributions (14,840) (20,168) (7,416) (10,073)
---------- ---------- ---------- ----------
FFO available to Common
Shares and OP Units -
basic (1) (2) $357,636 $366,441 $184,617 $191,987
========== ========== ========== ==========
FFO available to Common
Shares and OP Units -
diluted (1) (2) $358,035 $366,917 $184,811 $192,217
========== ========== ========== ==========
FFO per share and OP Unit
- basic $1.16 $1.18 $0.61 $0.62
========== ========== ========== ==========
FFO per share and OP Unit
- diluted $1.15 $1.17 $0.60 $0.61
========== ========== ========== ==========
Weighted average Common
Shares and OP Units
outstanding - basic 307,582 309,678 303,511 310,017
========== ========== ========== ==========
Weighted average Common
Shares and OP Units
outstanding - diluted 312,478 315,034 308,131 315,289
========== ========== ========== ==========
(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. FFO
available to Common Shares and OP Units is calculated on a basis
consistent with net income available to Common Shares and reflects
adjustments to net income for preferred distributions and premiums on
redemption of preferred shares in accordance with accounting
principles generally accepted in the United States. The equity
positions of various individuals and entities that contributed their
properties to the Operating Partnership in exchange for OP Units are
collectively referred to as the "Minority Interests - Operating
Partnership". Subject to certain restrictions, the Minority Interests
- Operating Partnership may exchange their OP Units for EQR Common
Shares on a one-for-one basis.
(2) The Company believes that FFO and FFO available to Common Shares
and OP Units are helpful to investors as supplemental measures of the
operating performance of a real estate company, because they are
recognized measures of performance by the real estate industry and by
excluding gains or losses related to dispositions of depreciable
property and excluding real estate depreciation (which can vary among
owners of identical assets in similar condition based on historical
cost accounting and useful life estimates), FFO and FFO available to
Common Shares and OP Units can help compare the operating performance
of a company's real estate between periods or as compared to
different companies. FFO and FFO available to Common Shares and OP
Units do not represent net income, net income available to Common
Shares or net cash flows from operating activities in accordance with
GAAP. Therefore, FFO and FFO available to Common Shares and OP Units
should not be exclusively considered as alternatives to net income,
net income available to Common Shares or net cash flows from
operating activities as determined by GAAP or as a measure of
liquidity. The Company's calculation of FFO and FFO available to
Common Shares and OP Units may differ from other real estate
companies due to, among other items, variations in cost
capitalization policies for capital expenditures and, accordingly,
may not be comparable to such other real estate companies.
EQUITY RESIDENTIAL
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
(Unaudited)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
Investment in real estate
Land $3,582,455 $3,217,672
Depreciable property 13,855,981 13,376,359
Projects under development 392,616 399,131
Land held for development 313,360 242,013
------------ ------------
Investment in real estate 18,144,412 17,235,175
Accumulated depreciation (3,125,555) (3,022,480)
------------ ------------
Investment in real estate, net 15,018,857 14,212,695
Cash and cash equivalents 66,266 260,277
Investments in unconsolidated entities 4,225 4,448
Deposits - restricted 350,934 391,825
Escrow deposits - mortgage 21,214 25,528
Deferred financing costs, net 54,889 43,384
Other assets 152,279 124,062
------------ ------------
Total assets $15,668,664 $15,062,219
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $3,188,395 $3,178,223
Notes, net 5,363,139 4,419,433
Lines of credit 780,000 460,000
Accounts payable and accrued expenses 111,140 96,699
Accrued interest payable 95,183 91,172
Other liabilities 332,927 311,557
Security deposits 62,812 58,072
Distributions payable 145,112 151,382
------------ ------------
Total liabilities 10,078,708 8,766,538
------------ ------------
Commitments and contingencies
Minority Interests:
Operating Partnership 333,056 372,961
Preference Interests and Units 184 11,684
Partially Owned Properties 23,392 26,814
------------ ------------
Total Minority Interests 356,632 411,459
------------ ------------
Shareholders' equity:
Preferred Shares of beneficial interest,
$0.01 par value; 100,000,000 shares
authorized; 2,727,250 shares issued and
outstanding as of June 30, 2007 and
2,762,950 shares issued and outstanding
as of December 31, 2006 385,681 386,574
Common Shares of beneficial interest,
$0.01 par value; 1,000,000,000 shares
authorized; 277,134,550 shares issued and
outstanding as of June 30, 2007 and
293,551,633 shares issued and outstanding
as of December 31, 2006 2,771 2,936
Paid in capital 4,563,630 5,349,194
Retained earnings 288,109 159,528
Accumulated other comprehensive loss (6,867) (14,010)
------------ ------------
Total shareholders' equity 5,233,324 5,884,222
------------ ------------
Total liabilities and shareholders'
equity $15,668,664 $15,062,219
============ ============
EQUITY RESIDENTIAL
Portfolio Summary
As of June 30, 2007
% of 2007 Average
% of Total Stabilized Rental
Markets Properties Units Units NOI Rate (1)
-------------- ---------- -------- ---------- ---------- ----------
New York Metro
1 Area 21 5,922 3.6% 9.0% $2,473
2 South Florida 37 12,193 7.5% 8.7% 1,305
3 Los Angeles 38 7,973 4.9% 7.4% 1,719
DC Northern
4 Virginia 25 8,473 5.2% 7.4% 1,567
5 Seattle/Tacoma 49 11,285 6.9% 6.9% 1,214
6 Boston 37 6,826 4.2% 6.3% 1,501
7 Phoenix 40 11,640 7.2% 5.7% 949
San Francisco
8 Bay Area 34 6,920 4.3% 5.4% 1,622
9 Orlando 25 7,825 4.8% 4.8% 1,042
10 Denver 28 9,327 5.7% 4.6% 929
11 Atlanta 33 9,862 6.1% 4.3% 914
12 San Diego 14 4,491 2.8% 4.0% 1,575
Inland Empire
13 CA 15 4,655 2.9% 3.4% 1,391
Dallas/Ft
14 Worth 31 8,731 5.4% 3.1% 846
15 Orange County 9 3,175 1.9% 3.0% 1,535
Suburban
16 Maryland 21 5,145 3.2% 2.9% 1,082
New England
17 (excl Boston) 38 5,597 3.4% 2.9% 1,077
18 Portland OR 11 3,713 2.3% 1.7% 905
19 Jacksonville 11 3,471 2.1% 1.6% 910
20 Raleigh/Durham 16 4,032 2.5% 1.5% 752
---------- -------- ---------- ---------- ----------
Top 20 Total 533 141,256 86.9% 94.6% 1,248
21 Tampa/Ft Myers 10 3,141 1.9% 1.3% 926
22 Austin 12 3,671 2.3% 1.3% 822
23 Charlotte 11 3,391 2.1% 0.9% 683
24 Nashville 7 1,989 1.2% 0.7% 869
Central Valley
25 CA 10 1,595 1.0% 0.5% 1,060
26 Other 14 3,088 1.9% 0.7% 930
---------- -------- ---------- ---------- ----------
Total 597 158,131 97.3% 100.0% 1,206
Condominium
Conversion 10 780 0.5% - -
Military
Housing 1 3,621 2.2% - -
---------- -------- ---------- ---------- ----------
Grand Total 608 162,532 100.0% 100.0% $1,206
========== ======== ========== ========== ==========
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the month of June 2007.
EQUITY RESIDENTIAL
Portfolio as of June 30, 2007
Properties Units
---------- -----------
Wholly Owned
Properties 535 142,620
Partially Owned
Properties:
Consolidated 27 5,445
Unconsolidated 45 10,846
Military Housing
(Fee Managed) 1 3,621
---------- -----------
608 162,532
Portfolio Rollforward Q2 2007
Properties Units $ Thousands Cap Rate
---------- ---------- ----------- ----------
3/31/2007 618 166,324
Acquisitions:
Rental Properties 15 2,310 $551,629 4.1% (1)
Land Parcels (two) - - $23,000
Dispositions:
Rental Properties (25) (6,307) $(536,699) 5.7%
Condominium Units (2) (226) $(65,778)
Land Parcel (one) - - $(40,662)
Completed
Developments 2 366
Configuration Changes - 65
---------- ----------
6/30/2007 608 162,532
Portfolio Rollforward 2007
Properties Units $ Thousands Cap Rate
---------- ---------- ----------- ----------
12/31/2006 617 165,716
Acquisitions:
Rental Properties 28 6,209 $1,225,785 4.8% (1)
Land Parcels (five) - - $65,450
Dispositions:
Rental Properties (37) (10,018) $(790,629) 5.8%
Condominium Units (4) (383) $(103,058)
Land Parcel (one) - - $(40,662)
Completed
Developments 4 938
Configuration Changes - 70
---------- ----------
6/30/2007 608 162,532
(1) Excluding the acquisition of three rent stabilized properties on
the Upper West Side of Manhattan, the cap rates would have been 4.8%
and 5.2% for the quarter and six months ended June 30, 2007,
respectively. The cap rate on this $180.0 million portfolio
acquisition was 2.7%.
EQUITY RESIDENTIAL
Second Quarter 2007 vs. Second Quarter 2006
Quarter over Quarter Same-Store Results/Statistics
$ in Thousands (except for Average Rental Rate)
- 130,175 Same-Store Units
Results Statistics
------------------------------ --------------------------
Average
Rental
Rate
Description Revenues Expenses NOI (1) (2) Occupancy Turnover
- ------------ --------- ---------- --------- ------- --------- --------
Q2 2007 $447,480 $166,226 $281,254 $1,210 94.8% (16.5%)
Q2 2006 $428,832 $162,078 $266,754 $1,162 94.7% (16.6%)
--------- ---------- --------- ------- --------- --------
Change $18,648 $4,148 $14,500 $48 0.1% 0.1%
========= ========== ========= ======= ========= ========
Change 4.3% 2.6% 5.4% 4.1%
Second Quarter 2007 vs. First Quarter 2007
Sequential Quarter over Quarter Same-Store Results/Statistics
$ in Thousands (except for Average Rental Rate)
- 136,234 Same-Store Units
Results Statistics
------------------------------ --------------------------
Average
Rental
Rate
Description Revenues Expenses NOI (1) (2) Occupancy Turnover
- ------------ --------- ---------- --------- ------- --------- --------
Q2 2007 $471,000 $174,972 $296,028 $1,218 94.8% (16.5%)
Q1 2007 $466,144 $180,496 $285,648 $1,206 94.7% (13.6%)
--------- ---------- --------- ------- --------- --------
Change $4,856 $(5,524) $10,380 $12 0.1% (2.9%)
========= ========== ========= ======= ========= ========
Change 1.0% (3.1%) 3.6% 1.0%
June YTD 2007 vs. June YTD 2006
YTD over YTD Same-Store Results/Statistics
$ in Thousands (except for Average Rental Rate)
- 127,396 Same-Store Units
Results Statistics
------------------------------ --------------------------
Average
Rental
Rate
Description Revenues Expenses NOI (1) (2) Occupancy Turnover
- ------------ --------- ---------- --------- ------- --------- --------
YTD 2007 $869,998 $329,496 $540,502 $1,202 94.8% (30.0%)
YTD 2006 $830,284 $317,287 $512,997 $1,149 94.7% (30.6%)
--------- ---------- --------- ------- --------- --------
Change $39,714 $12,209 $27,505 $53 0.1% 0.6%
========= ========== ========= ======= ========= ========
Change 4.8% 3.8% 5.4% 4.6%
(1) The Company's primary financial measure for evaluating each of its
apartment communities is net operating income ("NOI"). NOI represents
rental income less property and maintenance expense, real estate tax
and insurance expense, and property management expense. The Company
believes that NOI is helpful to investors as a supplemental measure
of 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.
(2) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
EQUITY RESIDENTIAL
Same-Store NOI Reconciliation
Second Quarter 2007 vs. Second Quarter 2006
The following table presents a reconciliation of operating income per
the consolidated statements of operations to NOI for the Second
Quarter 2007 Same-Store Properties:
Quarter Ended June 30,
-------------------------
2007 2006
------------ ------------
(Amounts in thousands)
Operating income $148,448 $133,995
Adjustments:
Non-same-store operating results (33,660) (9,427)
Fee and asset management revenue (2,436) (2,320)
Fee and asset management expense 2,163 2,158
Depreciation 155,032 132,771
General and administrative 11,549 9,338
Impairment 158 239
------------ ------------
Same-store NOI $281,254 $266,754
============ ============
Same-Store NOI Reconciliation
June YTD 2007 vs. June YTD 2006
The following table presents a reconciliation of operating income per
the consolidated statements of operations to NOI for the Six-Month
2007 Same-Store Properties:
Six Months Ended June 30,
-------------------------
2007 2006
------------ ------------
(Amounts in thousands)
Operating income $278,834 $255,639
Adjustments:
Non-same-store operating results (64,094) (23,027)
Fee and asset management revenue (4,703) (4,807)
Fee and asset management expense 4,504 4,326
Depreciation 304,052 257,683
General and administrative 21,515 22,378
Impairment 394 805
------------ ------------
Same-store NOI $540,502 $512,997
============ ============
EQUITY RESIDENTIAL
Second Quarter 2007 vs. Second Quarter 2006
Same-Store Results by Market
------------------------------------------------------------------
2Q 2007 2Q 2007 2Q 2007
% of Average Weighted
Actual Rental Average
Markets Units NOI Rate (1) Occupancy %
------------------------------------------------------------------
New York Metro
1 Area 5,288 9.6% $2,585 96.5%
2 Los Angeles 6,469 7.7% 1,680 95.4%
3 Seattle/Tacoma 8,708 6.9% 1,232 94.8%
4 South Florida 8,210 6.5% 1,306 93.5%
DC Northern
5 Virginia 6,662 6.3% 1,428 95.0%
San Francisco
6 Bay Area 5,990 6.3% 1,523 96.0%
7 Boston 5,596 6.1% 1,727 95.0%
8 Phoenix 9,023 5.5% 934 93.8%
9 Atlanta 8,496 4.7% 928 95.1%
10 Denver 7,891 4.5% 859 95.5%
11 San Diego 3,822 4.2% 1,589 94.8%
12 Orlando 6,473 4.2% 1,033 93.4%
Dallas/Ft
13 Worth 7,301 3.6% 881 95.0%
14 Orange County 3,013 3.3% 1,541 95.5%
New England
15 (excl Boston) 5,597 3.3% 1,077 94.7%
Suburban
16 Maryland 4,041 2.7% 1,077 93.6%
Inland Empire
17 CA 3,712 2.3% 1,331 93.9%
18 Portland OR 3,409 1.9% 913 96.1%
19 Jacksonville 3,231 1.8% 913 94.5%
20 Raleigh/Durham 3,640 1.7% 762 95.2%
----------------------------------------------------
Top 20 Markets 116,572 93.1% 1,249 94.8%
All Other
Markets 13,603 6.9% 880 94.8%
----------------------------------------------------
Total 130,175 100.0% $1,210 94.8%
====================================================
--------------------------------------------
Increase (Decrease) from Prior Quarter
------------------------------------------------------------------
Average
Rental
Markets Units Revenues Expenses NOI Rate (1) Occupancy
------------------------------------------------------------------
New York Metro
1 Area 5,288 6.7% 0.7% 9.8% 7.0% (0.4%)
2 Los Angeles 6,469 5.9% 0.5% 8.6% 4.3% 1.4%
3 Seattle/Tacoma 8,708 5.8% 3.9% 6.9% 7.0% (1.2%)
4 South Florida 8,210 1.9% 4.0% 0.6% 1.6% 0.1%
DC Northern
5 Virginia 6,662 2.1% 6.4% 0.0% 3.0% (0.8%)
San Francisco
6 Bay Area 5,990 6.1% 3.3% 7.6% 6.4% (0.3%)
7 Boston 5,596 2.7% 2.5% 2.8% 1.9% 0.8%
8 Phoenix 9,023 5.7% 0.2% 9.0% 6.2% (0.5%)
9 Atlanta 8,496 4.0% 5.8% 2.7% 4.1% 0.0%
10 Denver 7,891 5.1% 0.2% 7.9% 4.0% 1.0%
11 San Diego 3,822 4.4% (0.7%) 7.0% 2.8% 1.4%
12 Orlando 6,473 0.5% 5.1% (2.1%) 1.5% (1.0%)
Dallas/Ft
13 Worth 7,301 3.3% (1.0%) 7.1% 2.9% 0.3%
14 Orange County 3,013 4.6% 2.9% 5.4% 3.2% 1.2%
New England
15 (excl Boston) 5,597 4.9% 3.9% 5.7% 3.8% 1.0%
Suburban
16 Maryland 4,041 1.8% 3.8% 0.6% 1.5% 0.2%
Inland Empire
17 CA 3,712 4.0% 3.3% 4.3% 2.6% 1.2%
18 Portland OR 3,409 8.1% 1.0% 13.3% 7.2% 0.8%
19 Jacksonville 3,231 2.6% 2.1% 2.9% 3.0% (0.5%)
20 Raleigh/Durham 3,640 4.5% 3.5% 5.2% 4.5% (0.1%)
----------------------------------------------------
Top 20 Markets 116,572 4.3% 2.6% 5.3% 4.1% 0.1%
All Other
Markets 13,603 4.9% 2.0% 7.1% 4.7% 0.1%
----------------------------------------------------
Total 130,175 4.3% 2.6% 5.4% 4.1% 0.1%
====================================================
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
EQUITY RESIDENTIAL
Second Quarter 2007 vs. First Quarter 2007
Sequential Same-Store Results by Market
------------------------------------------------------------------
2Q 2007 2Q 2007 2Q 2007
% of Average Weighted
Actual Rental Average
Markets Units NOI Rate (1) Occupancy %
------------------------------------------------------------------
New York Metro
1 Area 5,443 9.2% $2,575 96.3%
2 Los Angeles 7,063 7.9% 1,688 95.3%
3 South Florida 9,347 7.0% 1,305 93.2%
4 Seattle/Tacoma 9,060 6.8% 1,229 94.8%
DC Northern
5 Virginia 7,286 6.7% 1,448 95.1%
6 Boston 6,124 6.3% 1,733 95.1%
San Francisco
7 Bay Area 6,242 6.1% 1,508 95.9%
8 Phoenix 9,343 5.4% 937 93.7%
9 Denver 8,587 4.8% 877 95.4%
10 Orlando 7,231 4.5% 1,040 93.7%
11 Atlanta 8,496 4.4% 928 95.1%
12 San Diego 3,822 4.0% 1,589 94.8%
13 Dallas/Ft Worth 7,301 3.4% 881 95.0%
14 Orange County 3,013 3.1% 1,541 95.5%
New England
15 (excl Boston) 5,597 3.1% 1,077 94.7%
Inland Empire
16 CA 4,355 2.9% 1,343 93.8%
Suburban
17 Maryland 4,041 2.6% 1,077 93.6%
18 Portland OR 3,409 1.9% 913 96.1%
19 Jacksonville 3,231 1.8% 913 94.5%
20 Raleigh/Durham 3,640 1.6% 762 95.2%
---------------------------------------------------
Top 20 Markets 122,631 93.5% 1,255 94.8%
All Other
Markets 13,603 6.5% 880 94.8%
---------------------------------------------------
Total 136,234 100.0% $1,218 94.8%
===================================================
---------------------------------------------
Increase (Decrease) from Prior Quarter
------------------------------------------------------------------
Average
Rental
Markets Units Revenues Expenses NOI Rate (1) Occupancy
------------------------------------------------------------------
New York Metro
1 Area 5,443 2.0% (6.5%) 6.8% 1.7% 0.3%
2 Los Angeles 7,063 1.8% (4.7%) 5.1% 1.3% 0.4%
3 South Florida 9,347 (1.3%) (3.1%) 0.0% (0.1%) (1.1%)
4 Seattle/Tacoma 9,060 2.8% (1.7%) 5.6% 2.5% 0.3%
DC Northern
5 Virginia 7,286 0.1% (4.5%) 2.7% (0.1%) 0.2%
6 Boston 6,124 1.2% (3.3%) 4.4% (0.8%) 2.0%
San Francisco
7 Bay Area 6,242 2.0% (4.0%) 5.4% 1.5% 0.5%
8 Phoenix 9,343 (0.1%) (4.4%) 2.4% 0.5% (0.6%)
9 Denver 8,587 1.6% (3.5%) 4.6% 1.3% 0.3%
10 Orlando 7,231 (1.1%) (1.5%) (0.8%) (0.8%) (0.2%)
11 Atlanta 8,496 1.2% (0.1%) 2.2% 1.3% (0.1%)
12 San Diego 3,822 1.5% (3.7%) 4.1% 1.1% 0.4%
Dallas/Ft
13 Worth 7,301 1.5% (1.7%) 4.4% 1.2% 0.3%
14 Orange County 3,013 1.4% (1.1%) 2.5% 1.5% (0.1%)
New England
15 (excl Boston) 5,597 2.0% (1.0%) 4.7% 1.0% 0.9%
Inland Empire
16 CA 4,355 0.8% (3.9%) 3.0% 1.1% (0.3%)
Suburban
17 Maryland 4,041 1.6% (10.5%) 10.9% 1.4% 0.2%
18 Portland OR 3,409 1.6% (0.1%) 2.6% 0.6% 0.9%
19 Jacksonville 3,231 1.0% (3.4%) 4.0% 1.1% (0.1%)
20 Raleigh/Durham 3,640 0.9% 1.1% 0.8% 0.9% 0.0%
----------------------------------------------------
Top 20 Markets 122,631 1.1% (3.3%) 3.8% 0.9% 0.1%
All Other
Markets 13,603 0.4% (0.1%) 0.8% 1.2% (0.8%)
----------------------------------------------------
Total 136,234 1.0% (3.1%) 3.6% 1.0% 0.1%
====================================================
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
EQUITY RESIDENTIAL
June YTD 2007 vs. June YTD 2006
Same-Store Results by Market
------------------------------------------------------------------
Jun YTD 07 Jun YTD 07 Jun YTD 07
% of Average Weighted
Actual Rental Average
Markets Units NOI Rate (1) Occupancy %
------------------------------------------------------------------
New York Metro
1 Area 5,153 9.2% $2,544 96.3%
2 Los Angeles 6,221 7.6% 1,682 95.4%
3 Seattle/Tacoma 8,532 6.8% 1,213 94.7%
DC Northern
4 Virginia 6,662 6.4% 1,429 94.9%
5 South Florida 7,662 6.3% 1,314 93.9%
San Francisco Bay
6 Area 5,990 6.2% 1,514 95.8%
7 Boston 5,596 6.1% 1,733 94.1%
8 Phoenix 9,023 5.6% 931 94.0%
9 Atlanta 7,938 4.4% 902 95.5%
10 Denver 7,555 4.4% 854 95.4%
11 Orlando 6,473 4.3% 1,038 93.7%
12 San Diego 3,486 3.9% 1,575 94.6%
13 Dallas/Ft Worth 7,151 3.5% 868 94.9%
14 Inland Empire CA 3,712 3.4% 1,321 94.1%
15 Orange County 3,013 3.4% 1,529 95.5%
New England (excl
16 Boston) 5,597 3.3% 1,072 94.3%
17 Suburban Maryland 4,041 2.7% 1,070 93.5%
18 Portland OR 3,409 2.0% 910 95.6%
19 Jacksonville 3,231 1.9% 908 94.6%
20 Austin 3,671 1.6% 815 96.0%
-------------------------------------------------
Top 20 Markets 114,116 93.0% 1,242 94.8%
All Other Markets 13,280 7.0% 861 95.0%
-------------------------------------------------
Total 127,396 100.0% $1,202 94.8%
=================================================
---------------------------------------------
Increase (Decrease) from Prior Year
------------------------------------------------------------------
Average
Rental
Markets Units Revenues Expenses NOI Rate (1) Occupancy
------------------------------------------------------------------
New York Metro
1 Area 5,153 6.8% 2.6% 9.1% 6.7% 0.1%
2 Los Angeles 6,221 5.9% 1.3% 8.2% 4.6% 1.2%
3 Seattle/Tacoma 8,532 6.1% 3.5% 7.8% 6.8% (0.7%)
DC Northern
4 Virginia 6,662 4.0% 10.5% 0.7% 4.2% (0.1%)
5 South Florida 7,662 2.1% 6.3% (0.6%) 3.0% (0.9%)
San Francisco
6 Bay Area 5,990 7.0% 3.5% 9.0% 7.0% 0.0%
7 Boston 5,596 2.2% 1.2% 2.8% 1.9% 0.3%
8 Phoenix 9,023 6.4% 4.6% 7.5% 7.6% (1.0%)
9 Atlanta 7,938 5.1% 3.7% 6.1% 4.5% 0.5%
10 Denver 7,555 4.9% 5.5% 4.5% 4.1% 0.7%
11 Orlando 6,473 2.2% 8.0% (1.1%) 3.1% (0.9%)
12 San Diego 3,486 4.2% 0.6% 6.0% 3.6% 0.6%
Dallas/Ft
13 Worth 7,151 3.2% 1.4% 4.8% 2.8% 0.4%
Inland Empire
14 CA 3,712 4.5% 4.8% 4.4% 2.9% 1.4%
15 Orange County 3,013 4.7% 2.4% 5.7% 3.8% 0.8%
New England
16 (excl Boston) 5,597 6.0% 2.3% 9.6% 3.8% 2.0%
Suburban
17 Maryland 4,041 1.4% 8.4% (2.9%) 1.9% (0.5%)
18 Portland OR 3,409 8.2% 2.1% 12.7% 7.7% 0.4%
19 Jacksonville 3,231 2.6% 3.7% 1.9% 3.0% (0.4%)
20 Austin 3,671 7.7% (0.4%) 16.7% 6.8% 0.8%
----------------------------------------------------
Top 20 Markets 114,116 4.8% 3.8% 5.3% 4.6% 0.1%
All Other
Markets 13,280 4.8% 3.9% 5.5% 4.4% 0.4%
----------------------------------------------------
Total 127,396 4.8% 3.8% 5.4% 4.6% 0.1%
====================================================
(1) Average rental rate is defined as total rental revenues divided by
the weighted average occupied units for the period.
EQUITY RESIDENTIAL
Debt Summary as of June 30, 2007
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts (1) % of Total Rates (1) (years)
----------- ---------- ---------- ----------
Secured $3,188,395 34.2% 5.73% 7.4
Unsecured 6,143,139 65.8% 5.65% 6.7
----------- ---------- ---------- ----------
Total $9,331,534 100.0% 5.68% 6.9
=========== ========== ========== ==========
Fixed Rate Debt:
Secured - Conventional $2,135,082 22.9% 6.13% 4.2
Unsecured -
Public/Private 5,106,127 54.7% 5.64% 6.8
Unsecured - Tax Exempt 111,390 1.2% 5.06% 21.8
----------- ---------- ---------- ----------
Fixed Rate Debt 7,352,599 78.8% 5.79% 6.3
----------- ---------- ---------- ----------
Floating Rate Debt:
Secured - Conventional 435,516 4.7% 7.13% 6.0
Secured - Tax Exempt 617,797 6.6% 3.20% 20.2
Unsecured - Public 145,622 1.5% 6.60% 1.9
Unsecured - Revolving
Credit Facility 780,000 8.4% 5.65% 4.7
----------- ---------- ---------- ----------
Floating Rate Debt 1,978,935 21.2% 5.33% 9.4
----------- ---------- ---------- ----------
Total $9,331,534 100.0% 5.68% 6.9
=========== ========== ========== ==========
(1) Net of the effect of any derivative instruments. Weighted average
rates are for the six months ended June 30, 2007.
Note: The Company capitalized interest of approximately $17.9 million
and $7.8 million during the six months ended June 30, 2007 and 2006,
respectively. The Company capitalized interest of approximately $10.0
million and $3.8 million during the quarters ended June 30, 2007 and
2006, respectively.
Debt Maturity Schedule as of June 30, 2007
(Amounts in thousands)
Weighted Weighted
Average Average
Rates Rates
Floating on Fixed on Total
Fixed Rate Rate % of Rate Debt
Year (1) (1) Total Total Debt (1) (1)
- ------ ----------- ----------- ---------- ------ -------- ----------
2007 $156,908 $40,946 $197,854 2.1% 6.11% 6.30%
2008 470,272 136,471 606,743 6.5% 6.65% 6.56%
2009 457,504 386,711 844,215 9.0% 6.35% 5.37%
2010 279,484 1,654 281,138 3.0% 7.05% 7.05%
2011 (2) 1,475,336 24,150 1,499,486 16.1% 5.55% 5.52%
2012 (3) 890,335 780,000 1,670,335 17.9% 6.09% 5.87%
2013 565,655 - 565,655 6.1% 5.93% 5.93%
2014 504,708 - 504,708 5.4% 5.27% 5.27%
2015 355,491 - 355,491 3.8% 6.41% 6.41%
2016 1,089,241 - 1,089,241 11.7% 5.32% 5.32%
2017+ 1,107,665 609,003 1,716,668 18.4% 6.14% 5.66%
----------- ----------- ---------- ------ -------- ----------
Total $7,352,599 $1,978,935 $9,331,534 100.0% 5.91% 5.75%
=========== =========== ========== ====== ======== ==========
(1) Net of the effect of any derivative instruments. Weighted average
rates are as of June 30, 2007.
(2) 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.
(3) Includes $780.0 million outstanding on the Company's $1.5 billion
unsecured revolving credit facility, which matures on February 28,
2012.
EQUITY RESIDENTIAL
Unsecured Debt Summary as of June 30, 2007
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
------------------------------------------------------
Fixed Rate
Notes:
6.900% 08/01/07 $50,000 $(2) $49,998
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 (537) 299,463
6.950% 03/02/11 300,000 3,254 303,254
6.625% 03/15/12 400,000 (1,382) 398,618
5.500% 10/01/12 350,000 (1,812) 348,188
5.200% 04/01/13 400,000 (681) 399,319
5.250% 09/15/14 500,000 (443) 499,557
6.584% 04/13/15 300,000 (865) 299,135
5.125% 03/15/16 500,000 (466) 499,534
5.375% 08/01/16 400,000 (1,685) 398,315
5.750% 06/15/17 650,000 (5,086) 644,914
7.125% 10/15/17 150,000 (668) 149,332
7.570% 08/15/26 140,000 - 140,000
3.850% 08/15/26(3) 650,000 (7,786) 642,214
Floating Rate
Adjustments (2) (150,000) - (150,000)
-----------------------------------
5,124,286 (18,159) 5,106,127
-----------------------------------
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
FAS 133 Adjustments -
net (2) (4,378) - (4,378)
-----------------------------------
145,622 - 145,622
-----------------------------------
Revolving Credit
Facility: 02/28/12(4) 780,000 - 780,000
-----------------------------------
Total Unsecured
Debt $6,161,298 $(18,159) $6,143,139
===================================
(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) Represents amount outstanding on the Company's $1.5 billion
unsecured revolving credit facility which matures on February 28,
2012.
EQUITY RESIDENTIAL
Selected Unsecured Public Debt Covenants
June 30, December 31,
2007 2006
-------------- ------------
Total Debt to Adjusted Total Assets (not to
exceed 60%) 49.7% 44.6%
Secured Debt to Adjusted Total Assets (not
to exceed 40%) 17.0% 17.6%
Consolidated Income Available for Debt
Service to Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.28 2.54
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 208.9% 250.6%
These selected covenants relate to ERP Operating Limited Partnership's
("ERPOP") outstanding unsecured public debt. Equity Residential is
the general partner of ERPOP.
EQUITY RESIDENTIAL
Capital Structure as of June 30, 2007
(Amounts in thousands except for share and per share amounts)
Secured Debt $3,188,395 34.2%
Unsecured Debt 5,363,139 57.5%
Revolving
Credit
Facility 780,000 8.3%
----------- --------
Total Debt 9,331,534 100.0% 40.1%
Common Shares 277,134,550 93.6%
OP Units 19,040,440 6.4%
----------- --------
Total Shares and OP
Units 296,174,990 100.0%
Common Share
Equivalents (see
below) 491,520
-----------
Total outstanding
at quarter-end 296,666,510
Common Share Price
at June 30, 2007 $45.63
-----------
13,536,893 97.3%
Perpetual Preferred
Equity (see below) 375,000 2.7%
----------- --------
Total Equity 13,911,893 100.0% 59.9%
Total Market
Capitalization $23,243,427 100.0%
Convertible Preferred Equity as of June 30, 2007
(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 11/1/98 401,716 $10,043 $1.75
7.00% Series H 6/30/98 25,534 638 1.75
Junior Preference
Units:
8.00% Series B 7/29/09 7,367 184 2.00
------------ -----------
Total Convertible
Preferred Equity 434,617 $10,865
Annual Weighted Common
Dividend Average Conversion Share
Series Amount Rate Ratio Equivalents
- ---------------------- ----------- ----------- ----------- -----------
Preferred Shares:
7.00% Series E $703 1.1128 447,030
7.00% Series H 45 1.4480 36,973
Junior Preference
Units:
8.00% Series B 15 1.020408 7,517
----------- -----------
Total Convertible
Preferred Equity $763 7.02% 491,520
Perpetual Preferred Equity as of June 30, 2007
(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:
8.60% Series D
(1) 7/15/07 700,000 $175,000 $21.50
8.29% Series K 12/10/26 1,000,000 50,000 4.145
6.48% Series N 6/19/08 600,000 150,000 16.20
------------ -----------
Total Perpetual
Preferred Equity 2,300,000 $375,000
Annual Weighted
Dividend Average
Series Amount Rate
- --------------------- ----------- -----------
Preferred Shares:
8.60% Series D
(1) $15,050
8.29% Series K 4,145
6.48% Series N 9,720
-----------
Total Perpetual
Preferred Equity $28,915 7.71%
(1) The Company redeemed its Series D Preferred Shares on July 16,
2007 at its cash liquidation value of $175.0 million.
EQUITY RESIDENTIAL
Common Share and Operating Partnership Unit (OP Unit)
Weighted Average Amounts Outstanding
YTD 2Q07 YTD 2Q06 2Q07 2Q06
----------- ----------- ----------- -----------
Weighted Average
Amounts Outstanding
for Net Income
Purposes:
Common Shares -
basic 288,316,068 289,171,660 284,424,108 289,459,922
Shares issuable
from assumed
conversion/
vesting of:
- OP Units 19,265,714 20,505,880 19,087,151 20,556,844
- share options/
restricted
shares 4,381,549 4,742,794 4,119,457 4,680,985
----------- ----------- ----------- -----------
Total Common Shares
and OP Units -
diluted 311,963,331 314,420,334 307,630,716 314,697,751
Weighted Average
Amounts Outstanding
for FFO Purposes:
Common Shares -
basic 288,316,068 289,171,660 284,424,108 289,459,922
OP Units - basic 19,265,714 20,505,880 19,087,151 20,556,844
----------- ----------- ----------- -----------
Total Common Shares
and OP Units -
basic 307,581,782 309,677,540 303,511,259 310,016,766
Shares issuable
from assumed
conversion/vesting
of:
- convertible
preferred
shares/units 514,384 614,125 500,257 591,694
- share options/
restricted
shares 4,381,549 4,742,794 4,119,457 4,680,985
----------- ----------- ----------- -----------
Total Common Shares
and OP Units -
diluted 312,477,715 315,034,459 308,130,973 315,289,445
Period Ending Amounts
Outstanding:
Common Shares -
basic 277,134,550
OP Units - basic 19,040,440
-----------
Total Common Shares
and OP Units -
basic 296,174,990
EQUITY RESIDENTIAL
Partially Owned Entities as of June 30, 2007
(Amounts in thousands except for project and unit amounts)
Consolidated
----------------------------------------------------
Development Projects
--------------------------------
Held for Completed, Completed
and/or Not and
Under Stabi- Stabi-
Development lized (4) lized Other Total
----------- ---------- --------- --------- ---------
Total projects(1) - 2 4 21 27
----------- ---------- --------- --------- ---------
Total units(1) - 572 977 3,896 5,445
----------- ---------- --------- --------- ---------
Operating
information for
the six months
ended 6/30/07 (at
100%):
Operating
revenue $5 $1,317 $8,093 $27,801 $37,216
Operating
expenses 312 1,552 2,808 9,622 14,294
----------- ---------- --------- --------- ---------
Net operating
income (loss) (307) (235) 5,285 18,179 22,922
Depreciation - 1,383 2,919 6,847 11,149
Other 1 - - 65 66
----------- ---------- --------- --------- ---------
Operating income
(loss) (308) (1,618) 2,366 11,267 11,707
Interest and
other income 28 8 75 600 711
Interest:
Expense
incurred, net (406) (1,651) (1,684) (10,035) (13,776)
Amortization
of deferred
financing
costs (12) - (24) (55) (91)
----------- ---------- --------- --------- ---------
Net income (loss) $(698) $(3,261) $733 $1,777 $(1,449)
=========== ========== ========= ========= =========
Debt - Secured
(2):
EQR Ownership
(3) $262,878 $97,596 $61,000 $286,891 $708,365
Minority
Ownership - - - 13,321 13,321
----------- ---------- --------- --------- ---------
Total (at 100%) $262,878 $97,596 $61,000 $300,212 $721,686
=========== ========== ========= ========= =========
Unconsolidated
--------------
Institutional
Joint
Ventures
--------------
Total projects(1) 45
--------------
Total units(1) 10,846
--------------
Operating
information for
the six months
ended 6/30/07 (at
100%):
Operating
revenue $52,274
Operating
expenses 24,571
--------------
Net operating
income (loss) 27,703
Depreciation 10,790
Other 191
--------------
Operating income
(loss) 16,722
Interest and
other income 269
Interest:
Expense
incurred, net (18,722)
Amortization
of deferred
financing
costs (308)
--------------
Net income (loss) $(2,039)
==============
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 substantially 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 current economic ownership interest.
(4) Projects included here are substantially complete. However, they
may still require additional exterior and interior work for all units
to be available for leasing.
EQUITY RESIDENTIAL
Consolidated Development Projects as of June 30, 2007
(Amounts in thousands except for project and unit amounts)
Total
Book
Value
Not
Total Total Book Placed
No. of Capital Value To in Total
Projects Location Units Cost (1) Date Service Debt
- ----------------------------------------------------------------------
Projects Under
Development - Wholly
Owned:
- ------------------------
West End Boston, MA
Apartments
(a.k.a.
Emerson/CRP
II) 310 167,953 82,245 82,245 -
Redmond Redmond, WA
Ridge 321 55,457 23,534 23,534 -
77 Hudson Jersey
City, NJ 480 269,958 57,702 57,702 -
Crowntree Orlando, FL
Lakes 352 58,628 20,350 20,350 -
Key Isle at Orlando, FL
Windermere
II 165 29,058 10,474 10,474 -
----------------------------------------------
Projects Under
Development - Wholly
Owned 1,628 581,054 194,305 194,305 -
Projects Under
Development - Partially
Owned:
- ------------------------
Silver Silver
Spring Spring, MD 457 147,454 58,680 58,680 26,035
303 Third Cambridge,
Street MA 531 248,307 79,685 79,685 1,654
City Lofts Chicago, IL 278 71,109 27,842 27,842 7,827
Alta Pacific Irvine, CA
(2) 132 46,416 32,104 32,104 28,260
----------------------------------------------
Projects Under
Development - Partially
Owned 1,398 513,286 198,311 198,311 63,776
----------------------------------------------
Projects Under
Development 3,026 1,094,340 392,616 392,616 63,776
----------------------------------------------
Land Held for
Development N/A - 313,360 313,360 199,102
----------------------------------------------
Land/Projects Held for
and/or Under
Development 3,026 1,094,340 705,976 705,976 262,878
----------------------------------------------
Completed Not Stabilized
- Wholly Owned:
- ------------------------
2400 M St Washington,
(3) D.C. 359 111,947 107,880 - -
Bella Vista Woodland
III (4) Hills, CA 264 73,336 71,220 - -
Highland Westwood,
Glen II (4) MA 102 21,620 17,220 - 5,000
----------------------------------------------
Projects Completed Not
Stabilized - Wholly
Owned 725 206,903 196,320 - 5,000
Completed Not Stabilized
- Partially Owned (4):
- ------------------------
Mozaic Los
(a.k.a. Angeles,
Union CA
Station) 272 69,661 68,732 - 43,788
Vintage Ontario, CA 300 54,013 54,013 - 53,808
----------------------------------------------
Projects Completed Not
Stabilized - Partially
Owned 572 123,674 122,745 - 97,596
----------------------------------------------
Projects Completed Not
Stabilized 1,297 330,577 319,065 - 102,596
----------------------------------------------
Completed and Stabilized
During the Quarter:
- ------------------------
----------------------------------------------
Projects Completed and
Stabilized During the
Quarter - - - - -
----------------------------------------------
Total
Projects 4,323 $1,424,917 $1,025,041 $705,976 $365,474
==============================================
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:
- ---------------------------------------
West End Apartments Boston, MA
(a.k.a. Emerson/CRP
II) 66% - -
Redmond Ridge Redmond, WA 38% - -
77 Hudson Jersey City, NJ 17% - -
Crowntree Lakes Orlando, FL 14% - -
Key Isle at Orlando, FL
Windermere II 10% - -
Projects Under Development - Wholly
Owned
Projects Under Development - Partially
Owned:
- ---------------------------------------
Silver Spring Silver Spring, MD 30% - -
303 Third Street Cambridge, MA 23% - -
City Lofts Chicago, IL 38% - -
Alta Pacific (2) Irvine, CA 56% - -
Projects Under Development - Partially
Owned
Projects Under Development
Land Held for Development
Land/Projects Held for and/or Under
Development
Completed Not Stabilized - Wholly
Owned:
- ---------------------------------------
2400 M St (3) Washington, D.C. 91% 84%
Bella Vista III (4) Woodland Hills, CA 20% 16%
Highland Glen II (4) Westwood, MA 6% 4%
Projects Completed Not Stabilized -
Wholly Owned
Completed Not Stabilized - Partially
Owned (4):
- ---------------------------------------
Mozaic (a.k.a. Union Los Angeles, CA
Station) 64% 55%
Vintage Ontario, CA 73% 58%
Projects Completed Not Stabilized -
Partially Owned
Projects Completed Not Stabilized
Completed and Stabilized During the
Quarter:
- ---------------------------------------
Projects Completed and Stabilized
During the Quarter
Total Projects
Total Q2 2007
Capital
NOI CONTRIBUTION FROM DEVELOPMENT Cost (1) NOI
PROJECTS
---------------------
Projects Under Development $1,094,340 $(3)
Completed Not Stabilized 330,577 1,911
Completed and Stabilized During the
Quarter - -
---------------------
Total Development/ Newly Stabilized NOI
Contribution $1,424,917 $1,908
=====================
Estimated Estimated
Completion Stabilization
Projects Location Date Date
- ----------------------------------------------------------------------
Projects Under Development - Wholly Owned:
- ------------------------------------------
West End Apartments Boston, MA 2Q 2008 1Q 2009
(a.k.a. Emerson/CRP
II)
Redmond Ridge Redmond, WA 2Q 2008 3Q 2010
77 Hudson Jersey City, NJ 3Q 2009 4Q 2010
Crowntree Lakes Orlando, FL 3Q 2008 3Q 2009
Key Isle at Orlando, FL 4Q 2008 1Q 2009
Windermere II
Projects Under Development - Wholly Owned
Projects Under Development - Partially
Owned:
- ------------------------------------------
Silver Spring Silver Spring, MD 4Q 2008 3Q 2010
303 Third Street Cambridge, MA 3Q 2008 1Q 2010
City Lofts Chicago, IL 3Q 2008 2Q 2009
Alta Pacific (2) Irvine, CA 4Q 2007 3Q 2008
Projects Under Development - Partially
Owned
Projects Under Development
Land Held for Development
Land/Projects Held for and/or Under
Development
Completed Not Stabilized - Wholly Owned:
- ------------------------------------------
2400 M St (3) Washington, D.C. Completed 3Q 2007
Bella Vista III (4) Woodland Hills, CA Completed 1Q 2008
Highland Glen II (4) Westwood, MA Completed 1Q 2008
Projects Completed Not Stabilized - Wholly
Owned
Completed Not Stabilized - Partially Owned
(4):
- ------------------------------------------
Mozaic (a.k.a. Union Los Angeles, CA Completed 1Q 2008
Station)
Vintage Ontario, CA Completed 1Q 2008
Projects Completed Not Stabilized -
Partially Owned
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,
all in accordance with GAAP.
(2) Debt is primarily tax-exempt bonds that are entirely outstanding,
with $15.0 million held in escrow by the lender and released as draw
requests are made. This amount is classified as deposits - restricted
in the consolidated balance sheets at 6/30/07.
(3) EQR acquired its partner's interest on 4/28/06 and now wholly-owns
the property. Total Book Value to Date does not include additional
purchase consideration of $30.7 million.
(4) Projects included here are substantially complete. However, they
may still require additional exterior and interior work for all units
to be available for leasing.
EQUITY RESIDENTIAL
Consolidated Condominium Conversion Projects as of June 30, 2007
(Amounts in thousands except for project and unit amounts)
Units
-------------------------------
Available for
Sale
-----------------
Project
Start Estimated Sold
Date Close Units Not
Projects Location (1) Out Date Total Closed Closed Available
- ----------------------------------------------------------------------
For Sale
- ----------
Milano Scotts- Q2 2005 Q4 2007
Terrace dale, AZ 224 192 8 24
South Palm Tamarac, Q2 2005 Q4 2007
Place FL 208 180 7 21
Chante- Naper- Q4 2005 Q4 2007
cleer ville, IL
Lakes 304 265 4 35
Parkside Seattle, Q4 2005 Q3 2007
WA 44 43 - 1
Park Blooming- Q2 2006 Q1 2008
Blooming- dale, IL
dale 250 133 13 104
Belle Arts Bellevue, Q4 2006 Q1 2008
WA 128 81 3 44
Pacific Playa Del Q3 2006 Q4 2007
Cove Ray, CA 80 57 18 5
Arrington Issaquah, Q1 2007 Q3 2008
Place WA 130 - 26 104
Dania Dania Q2 2007 Q1 2009
Beach Beach,
Club FL 240 - - 240
Sage Everett, Q2 2007 Q3 2008
WA 123 - - 123
-------------------------------
1,731 951 79 701
Closed Out
- ----------
Timber Woodin- Q1 2005 Q1 2007
Ridge ville, WA 203 203 - -
Braewood Bothell, Q2 2005 Q1 2007
WA 84 84 - -
Fairway Pembroke Q1 2005 Q2 2007
Greens Pines,
FL 152 152 - -
Fifth Seattle, Q2 2005 Q2 2007
Avenue WA
North 62 62 - -
Projects
closed
out prior
to 2007 3,744 3,744 - -
-------------------------------
4,245 4,245 - -
Totals 14 5,976 5,196 79 701
===============================
Gross incremental
gain on sales of
condominium units
(3)
Provision for income
taxes
Net incremental gain
on sales of
condominium units
(3)
Corporate overhead
(property
management expense)
Other expenses
Discontinued
operating income
(loss)
Operating income of
halted conversions
Net Income -
Condominium
Division (2)
2007 YTD Activity
--------------------------------------
FFO
Incremental
Gain on
Projects Location Units Closed Sales Price Sale (3)
- ----------------------------------------------------------------------
For Sale
- ------------
Milano Scotts-
Terrace dale, AZ 39 $ 9,498 $ 1,612
South Palm Tamarac, FL
Place 71 14,428 892
Chante- Naper-
cleer Lakes ville, IL 59 9,298 1,508
Parkside Seattle, WA 7 2,680 33
Park Blooming-
Blooming- dale, IL
dale 55 8,469 887
Belle Arts Bellevue, WA 81 26,886 3,707
Pacific Cove Playa Del Ray, CA 57 27,756 4,094
Arrington Issaquah, WA
Place - - -
Dania Beach Dania Beach, FL
Club - - -
Sage Everett, WA - - -
--------------------------------------
369 99,015 12,733
Closed Out
- ------------
Timber Ridge Woodin-
ville, WA 4 1,059 435
Braewood Bothell, WA 2 573 22
Fairway Pembroke Pines, FL
Greens 2 410 142
Fifth Avenue Seattle, WA
North 6 2,001 311
Projects
closed out
prior to
2007 - - (56)
--------------------------------------
14 4,043 854
Totals 383 $ 103,058 $ 13,587
======================================
Gross incremental gain on sales
of condominium units (3) $ 13,587
Provision for income taxes 7
-----------
Net incremental gain on sales
of condominium units (3) 13,594
Corporate overhead (property
management expense) (2,442)
Other expenses (218)
Discontinued operating income
(loss) (2,578)
Operating income of halted
conversions 1,170
-----------
Net Income - Condominium
Division (2) $ 9,526
===========
2Q 2007
---------------------------------------
FFO
Incremental
Gain on
Projects Location Units Closed Sales Price Sale (3)
- ----------------------------------------------------------------------
For Sale
- ------------
Milano Scotts-
Terrace dale, AZ 10 $ 2,490 $ 355
South Palm Tamarac, FL
Place 37 7,554 367
Chante- Naper-
cleer Lakes ville, IL 44 7,001 1,186
Parkside Seattle, WA 1 470 (3)
Park Blooming-
Blooming- dale, IL
dale 29 4,477 564
Belle Arts Bellevue, WA 45 15,159 2,242
Pacific Cove Playa Del Ray, CA 57 27,756 4,094
Arrington Issaquah, WA
Place - - -
Dania Beach Dania Beach, FL
Club - - -
Sage Everett, WA - - -
---------------------------------------
223 64,907 8,805
Closed Out
- ------------
Timber Ridge Woodin-
ville, WA - - (16)
Braewood Bothell, WA - - (69)
Fairway Pembroke Pines,
Greens FL 2 410 146
Fifth Avenue Seattle, WA
North 1 461 89
Projects
closed out
prior to
2007 - - (52)
---------------------------------------
3 871 98
Totals 226 $ 65,778 $ 8,903
=======================================
Gross incremental gain on
sales of condominium units
(3) $ 8,903
Provision for income taxes (1)
-----------
Net incremental gain on sales
of condominium units (3) 8,902
Corporate overhead (property
management expense) (1,216)
Other expenses (147)
Discontinued operating income
(loss) (1,223)
Operating income of halted
conversions 1,083
-----------
Net Income - Condominium
Division (2) $ 7,399
===========
(1)Project start date represents the date that each respective
property was acquired by the taxable REIT subsidiary and included in
discontinued operations.
(2)Excludes interest income, interest expense and certain other items
specific to condominium conversion projects that ultimately eliminate
in consolidation. Also excludes depreciation expense on halted
conversions (active conversions are not depreciated).
(3)Amounts are net of $1,191,000 and $732,000 in reserves for
potential homeowners' disputes for the six months and quarter ended
June 30, 2007, respectively.
EQUITY RESIDENTIAL
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Six Months Ended June 30, 2007
(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) 114,823 $42,472 $370 $36,949 $322 $79,421 $692
New Acquisition
Properties (7) 25,909 9,810 412 7,976 335 17,786 747
Other (8) 7,333 6,730 6,100 12,830
------- ------- ------- --------
Total 148,065 $59,012 $51,025 $110,037
======= ======= ======= ========
-----------------------------------------------------
Capitalized Improvements to Real Estate
-----------------------------------------------------
Avg. Building Avg. Avg.
Replacements Per Improvements Per Per
(4) Unit (5) Unit Total Unit
------------------- ------------------ --------------
Established
Properties (6) $19,495 $170 $37,141 $323 $56,636 $493
New Acquisition
Properties (7) 4,096 172 27,987 1,176 32,083 1,348
Other (8) 9,486 19,640 29,126
------------- ------------ --------
Total $33,077 $84,768 $117,845
============= ============ ========
------------------
Total Expenditures
------------------
Avg.
Per
Grand Total Unit
------------------
Established Properties (6) $136,057 $1,185
New Acquisition Properties (7) 49,869 2,095
Other (8) 41,956
-----------
Total $227,882
===========
(1) Total units exclude 10,846 unconsolidated units and 3,621
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, 2005.
(7) Wholly Owned Properties acquired during 2005, 2006 and 2007. Per
unit amounts are based on a weighted average of 23,807 units.
(8) Includes properties either partially owned or sold during the
period, commercial space, corporate housing, condominium
conversions and $9.8 million included in building improvements
spent on fifteen specific assets related to major renovations and
repositioning of these assets.
EQUITY RESIDENTIAL
Discontinued Operations
(Amounts in thousands)
Six Months Ended, Quarter Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
------------------- -------------------
REVENUES
Rental income $31,880 $164,992 $8,591 $75,261
--------- --------- --------- ---------
Total revenues 31,880 164,992 8,591 75,261
--------- --------- --------- ---------
EXPENSES (1)
Property and maintenance 15,469 56,322 6,523 26,571
Real estate taxes and
insurance 4,695 22,000 1,224 10,014
Property management 272 5,937 69 3,146
Depreciation 7,689 39,789 2,035 17,930
General and administrative 11 482 9 271
Impairment - 351 - 125
--------- --------- --------- ---------
Total expenses 28,136 124,881 9,860 58,057
--------- --------- --------- ---------
Discontinued operating income
(loss) 3,744 40,111 (1,269) 17,204
Interest and other income 130 1,134 43 154
Interest (2):
Expense incurred, net (1,897) (15,864) (987) (5,982)
Amortization of deferred
financing costs (1,322) (763) (1,305) (604)
--------- --------- --------- ---------
Discontinued operations 655 24,618 (3,518) 10,772
Minority Interests - Operating
Partnership (41) (1,620) 218 (707)
--------- --------- --------- ---------
Discontinued operations, net
of minority interests 614 22,998 (3,300) 10,065
--------- --------- --------- ---------
Net gain on sales of
discontinued operations 385,323 502,297 273,556 129,796
Minority Interests - Operating
Partnership (23,967) (33,051) (16,988) (8,515)
--------- --------- --------- ---------
Gain on sales of discontinued
operations, net of minority
interests 361,356 469,246 256,568 121,281
--------- --------- --------- ---------
Discontinued operations, net
of minority interests $361,970 $492,244 $253,268 $131,346
========= ========= ========= =========
(1) Includes expenses paid in the current period for properties sold
or held for sale in prior periods related to the Company's period of
ownership.
(2) Includes only interest expense specific to secured mortgage notes
payable for properties sold and/or held for sale.
EQUITY RESIDENTIAL
Additional Reconciliations and Non-Comparable Items
(Amounts in thousands except per share data)
(All per share data is diluted)
FFO Reconciliations
FFO Reconciliations
Guidance Midpoint Q2
2007 to Actual Q2 2007
----------------------
Amounts Per Share
------------ ---------
Guidance midpoint Q2 2007 FFO - Diluted (1)
(2) $177,245 $0.564
Property NOI (1,923) (0.006)
General and administrative expense 518 0.002
Florida litigation reserve reduction (general
and administrative expense) 42 -
Interest and other income 2,245 0.007
Interest expense (excluding debt
extinguishment):
Share repurchase and transaction timing (2,851) (0.009)
Capitalized interest, floating rates and
other 425 0.001
Amortization of deferred financing costs
(excluding debt extinguishment) (78) -
Prepayment penalties on debt extinguishment 619 0.002
Write-off of unamortized deferred financing
costs on debt extinguishment 861 0.003
Net income - Condominium division (after
taxes/overhead/operations) 3,000 0.010
Gain on sale of vacant land 4,516 0.015
Other (primarily ECH NOI and impairment) 192 -
Weighted average share count adjustment - 0.011
------------ ---------
Actual Q2 2007 FFO - Diluted (1) (2) $184,811 $0.600
============ =========
Non-Comparable Items (3)
Six Months Ended Quarter Ended
June 30, June 30,
----------------- -----------------
2007 2006 2007 2006
-------- -------- -------- --------
Florida litigation reserve
reduction (general and
administrative expense) $1,667 $2,843 $42 $2,843
Performance shares (general and
administrative expense) (219) (1,571) (179) (140)
Impairment (including
discontinued operations) (394) (1,156) (158) (364)
Prepayment penalties on debt
extinguishment (3,041) (2,892) (2,900) (25)
Write-off of unamortized deferred
financing costs on debt
extinguishment (3,828) (1,542) (3,110) (555)
Gain on debt extinguishment - 782 - -
Premium on redemption of
Preference Interests - (683) - (9)
Net gain on sales of land parcels 4,516 246 4,516 246
Net incremental gain on sales of
condominium units 13,594 18,553 8,902 11,426
-------- -------- -------- --------
Net non-comparable items (3) $12,295 $14,580 $7,113 $13,422
======== ======== ======== ========
Note: See page 28 for definitions, footnotes and reconciliations of
EPS to FFO.
EQUITY RESIDENTIAL
The earnings guidance/projections provided below are based on current
expectations and are forward-looking.
2007 Earnings Guidance (per share diluted)
- ----------------------------------------------------------------------
Q3 2007 2007
--------------- ---------------
Expected FFO (1) (2) $0.54 to $0.58 $2.25 to $2.35
2007 Same-Store Assumptions
- ----------------------------------------------------------------------
Physical occupancy 95.0%
Revenue change 3.75% to 4.25%
Expense change 2.50% to 3.00%
NOI change 4.50% to 5.25%
(Note: 30 basis point change in NOI percentage = $0.01 per share
change in EPS/FFO)
2007 Transaction Assumptions
- ----------------------------------------------------------------------
Acquisitions $1.75 billion
Dispositions $1.75 billion
Capitalization rate spread 100 basis
points
2007 Debt Assumptions
- ----------------------------------------------------------------------
Weighted average debt outstanding $9.2 billion -
$9.6 billion
Weighted average interest rate (reduced
for capitalized interest and
including prepayment penalties) 5.35%
Interest expense (including $495.0 million
discontinued operations) - $510.0
million
2007 Preferred Share Assumptions
- ----------------------------------------------------------------------
Series D Preferred Shares:
- ---------------------------------------
Redemption timing July 2007
Liquidation value $175.0 million
Premium on redemption (non-cash) $6.1 million
2007 Condominium Conversion Assumptions
- ----------------------------------------------------------------------
Net incremental gain on sales of $19.6 million -
condominium units $25.9 million
Net income - Condominium division $12.6 million -
(after taxes/overhead/operations) $21.0 million
Number of condominium unit sales 600 units - 850
units
2007 Other Guidance Assumptions
- ----------------------------------------------------------------------
General and administrative expense $46.0 million -
$49.0 million
Interest and other income $20.0 million -
$25.0 million
Net gain (loss) on sales of land $4.5 million
parcels (all recorded in Q2 2007)
Weighted average Common Shares and OP 306.0 million
Units - Diluted
Note: See page 28 for definitions, footnotes and reconciliations of
EPS to FFO.
EQUITY RESIDENTIAL
The earnings guidance/projections provided below are based on current
expectations and are forward-looking.
Reconciliations of EPS to FFO for Pages 26 and 27
(Amounts in thousands except per share data)
(All per share data is diluted)
Expected Expected
Expected Q2 2007 Q3 2007 2007
Amounts Per Share Per Share Per Share
--------- --------- --------- ---------
$1.79 to $3.35 to
Expected EPS - Diluted (4) $306,700 $0.975 $1.83 $3.45
Add: Expected depreciation
expense 154,530 0.492 0.52 2.05
Less: Expected net gain on
sales (4) (283,985) (0.903) (1.77) (3.15)
--------- --------- --------- ---------
$0.54 to $2.25 to
Expected FFO - Diluted (1) (2) $177,245 $0.564 $0.58 $2.35
========= ========= ========= =========
Definitions and Footnotes for Pages 26 and 27
(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. FFO available to
Common Shares and OP Units is calculated on a basis consistent
with net income available to Common Shares and reflects
adjustments to net income for preferred distributions and
premiums on redemption of preferred shares in accordance with
accounting principles generally accepted in the United States.
The equity positions of various individuals and entities that
contributed their properties to the Operating Partnership in
exchange for OP Units are collectively referred to as the
"Minority Interests - Operating Partnership". Subject to certain
restrictions, the Minority Interests - Operating Partnership may
exchange their OP Units for EQR Common Shares on a one-for-one
basis.
(2) The Company believes that FFO and FFO available to Common Shares
and OP Units are helpful to investors as supplemental measures of
the operating performance of a real estate company, because they
are recognized measures of performance by the real estate
industry and by excluding gains or losses related to dispositions
of depreciable property and excluding real estate depreciation
(which can vary among owners of identical assets in similar
condition based on historical cost accounting and useful life
estimates), FFO and FFO available to Common Shares and OP Units
can help compare the operating performance of a company's real
estate between periods or as compared to different companies. FFO
and FFO available to Common Shares and OP Units do not represent
net income, net income available to Common Shares or net cash
flows from operating activities in accordance with GAAP.
Therefore, FFO and FFO available to Common Shares and OP Units
should not be exclusively considered as alternatives to net
income, net income available to Common Shares or net cash flows
from operating activities as determined by GAAP or as a measure
of liquidity. The Company's calculation of FFO and FFO available
to Common Shares and OP Units may differ from other real estate
companies due to, among other items, variations in cost
capitalization policies for capital expenditures and,
accordingly, may not be comparable to such other real estate
companies.
(3) Non-comparable items are those items included in FFO that by their
nature are not comparable from period to period, such as net
incremental gain on sales of condominium units, impairment
charges, debt extinguishment costs and redemption premiums on
Preferred Shares/Preference Interests.
(4) 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.
CONTACT: Equity Residential
Marty McKenna, 312-928-1901