Equity Residential Reports Full Year 2012 Results
Equity Residential Reports Full Year 2012 Results
Same Store Revenues Increased 5.5%; Same Store NOI Increased 7.6%;
Provides Outlook for 2013 Performance
Business Wire
CHICAGO -- February 5, 2013
Equity Residential (NYSE: EQR) today reported results for the quarter and year
ended December 31, 2012. All per share results are reported as available to
common shares on a diluted basis.
“Operating fundamentals were very strong in 2012 and we delivered same store
revenue growth of 5.5% and NOI growth of 7.6%, among the best numbers in our
history,” said David J. Neithercut, Equity Residential’s President and CEO.
“Market conditions remain favorable and we currently expect to achieve 4% to
5% same store revenue growth in 2013, yet another year above historical
trend.”
Fourth Quarter 2012
FFO (Funds from Operations), as defined by the National Association of Real
Estate Investment Trusts (NAREIT), for the fourth quarter of 2012 was $0.94
per share compared to $0.64 per share in the fourth quarter of 2011. The
difference is primarily due to a termination fee of $80 million, or $0.24 per
share, that the company received in connection with its pursuit of Archstone
as well as the items discussed below.
For the fourth quarter of 2012, the company reported Normalized FFO of $0.75
per share compared to $0.65 per share in the same period of 2011. The
difference is due primarily to:
* a positive impact of approximately $0.08 per share from higher net
operating income (NOI) from the company’s same store portfolio;
* a positive impact of approximately $0.02 per share from lower total debt
costs;
* a positive impact of approximately $0.01 per share from 2011 and 2012
transaction activity; and
* a negative impact of $0.01 per share from increased share count resulting
from the approximately 21.9 million common shares sold in the company’s
December 2012 public offering.
Normalized FFO begins with FFO and eliminates certain items that by their
nature are not comparable from period to period or that tend to obscure the
company’s actual operating performance. A reconciliation and definition of
Normalized FFO are provided on pages 26 and 29 of this release and the company
has included guidance for Normalized FFO on page 27 of this release. The
company has also included some additional guidance on forecasted 2013
non-comparable items, primarily Archstone-related costs, on page 28 of this
release.
For the fourth quarter of 2012, the company reported earnings of $1.17 per
share compared to $0.33 per share in the fourth quarter of 2011. The
difference is due primarily to higher gains on property sales, the
Archstone-related fee and the other items discussed above.
Year Ended December 31, 2012
FFO for the year ended December 31, 2012 was $3.11 per share compared to $2.41
per share in the same period of 2011.
For the year ended December 31, 2012, the company reported Normalized FFO of
$2.76 per share compared to $2.43 per share in the same period of 2011.
For the year ended December 31, 2012, the company reported earnings of $2.70
per share compared to $2.95 per share in the same period of 2011.
Same Store Results
On a same store fourth quarter to fourth quarter comparison, which includes
103,522 apartment units, revenues increased 5.4%, expenses increased 0.5% and
NOI increased 8.1%.
On a same store year to year comparison, which includes 98,577 apartment
units, revenues increased 5.5%, expenses increased 1.8% and NOI increased
7.6%.
Acquisitions/Dispositions
The company did not acquire any operating properties during the fourth quarter
of 2012 but did purchase, for approximately $79.0 million, four adjacent land
parcels in Los Angeles for future development of as many as 970 apartment
units.
During the fourth quarter, the company sold 15 properties, consisting of 3,675
apartment units, for an aggregate sale price of $444.4 million at a weighted
average capitalization (cap) rate of 6.1%. These sales generated an unlevered
internal rate of return (IRR), inclusive of management costs, of 10.4%.
During 2012, the company acquired nine properties with a total of 1,896
apartment units for an aggregate purchase price of $906.3 million at a
weighted average cap rate of 4.7% and six land parcels for $141.2 million.
During 2012, the company sold 35 properties with a total of 9,012 apartment
units for an aggregate sale price of $1.06 billion at a weighted average cap
rate of 6.2%. These sales, excluding two leveraged, partially-owned assets
sold during the third quarter, generated an unlevered IRR, inclusive of
management costs, of 10.6%.
The Archstone Acquisition
On November 26, 2012, Equity Residential announced that the company and
AvalonBay Communities, Inc. had entered into an agreement with Lehman Brothers
Holdings Inc. to acquire, for approximately $16 billion, the assets and
liabilities of Archstone Enterprise LP (“Archstone”), which consists
principally of a portfolio of high-quality apartment properties in major
markets in the United States. Under the terms of the agreement, Equity
Residential will acquire approximately 60% of Archstone’s assets and
liabilities. At closing, the company expects to assume, net of payoffs,
approximately $3.3 billion of consolidated Archstone debt, plus a
mark-to-market of approximately $225 million. The transaction is expected to
close in late February. Please see the company’s November 26, 2012 press
release for details of the transaction.
Archstone-related Financing Activities
On December 4, 2012, the company completed the public offering of 21.9 million
common shares at a price of $54.75 per share for net proceeds of approximately
$1.16 billion.
On January 11, 2013, the company entered into a new $2.5 billion unsecured
revolving credit agreement with a group of 25 financial institutions. The new
facility matures in April 2018 and has an interest rate of LIBOR plus a spread
and an annual facility fee that are dependent on the company’s then current
credit rating. At the company’s current rating, the interest rate spread is
1.05% and the annual facility fee is 15 basis points. This facility replaced
the company’s existing $1.75 billion facility which was scheduled to mature in
July 2014.
Also on January 11, 2013, the company entered into a new senior unsecured $750
million delayed draw term loan facility with an interest rate of LIBOR plus a
spread which is dependent on the company’s then current credit rating. At the
company’s current rating, the interest rate spread is 1.20%. The maturity date
of the facility is January 11, 2015, subject to a one year extension option
exercisable by the company. The facility is currently undrawn and is available
in one draw made on or before July 11, 2013 and may be used to fund the
Archstone acquisition or for other corporate purposes.
With the completion of these financing activities, along with cash on hand,
the company has sufficient capital available to completely fund its portion of
the Archstone acquisition cash price, transaction costs and required debt pay
downs. Therefore, the company terminated the $2.5 billion bridge loan facility
commitment that it obtained contemporaneously with entering into the Archstone
acquisition contract in November 2012.
Property Sale Update
Equity Residential has previously announced its intention to fund a
significant portion of the Archstone acquisition with the proceeds from the
sale of assets that are not part of the company’s long-term strategic plans
and expects to sell approximately $4.0 billion of its non-core assets in 2013.
Because of the great demand for these assets, the company has been able to
sell more assets sooner and quickly mitigate much of the execution risk of the
Archstone acquisition. The company now expects approximately $2.8 billion of
these asset sales to occur before the end of the first quarter. Because the
majority of the company’s disposition activity will now occur much earlier in
the year than had been previously planned, the current outlook for the
company’s 2013 Normalized FFO has been reduced by $0.13 per share below the
company’s original projections.
The properties that have been sold since the Archstone transaction
announcement on November 26, 2012 or are currently under contract for sale,
including the previously announced asset sale to the Goldman Sachs/Greystar
entity, are located in the following markets:
Market Properties Units Sale Price (millions)
Phoenix 15 4,241 $536.3
Washington DC Metro 10 3,085 $608.2
Atlanta 9 2,590 $356.2
Orlando 10 2,574 $290.6
South Florida 7 2,353 $357.4
Jacksonville 5 1,637 $162.4
Southern California 3 1,056 $270.8
Denver 4 1,003 $156.0
Seattle/Tacoma 4 802 $ 81.9
Northern California 3 711 $188.5
New York Metro 2 360 $ 99.2
Suburban New England 2 331 $ 39.5
Total 74 20,743 $3,147.0
“The strategic benefits of acquiring the Archstone portfolio included the
ability to fund much of the acquisition with proceeds from the exit of
non-core markets such as Phoenix, Atlanta, Orlando and Jacksonville,” said Mr.
Neithercut. “In addition, the acquisition has created the opportunity to
dispose of assets located in certain sub-markets that are not part of our long
term strategy such as far Suburban Washington, DC submarkets in Virginia and
Maryland, Tacoma, Washington and parts of Northern New Jersey. We are pleased
that the market reception to our asset sales has been strong and that our
sales pace is ahead of plan at pricing that is consistent with our
expectations.”
First Quarter 2013 Guidance
The company has established a Normalized FFO guidance range of $0.62 to $0.66
per share for the first quarter of 2013. The difference between the company’s
fourth quarter 2012 Normalized FFO of $0.75 per share and the midpoint of the
first quarter 2013 guidance range of $0.64 per share is primarily due to:
* a positive impact of approximately $0.10 per share of NOI from
approximately one month of income from the Archstone stabilized
properties;
* a negative impact of approximately $0.05 per share of lower NOI from
Equity Residential same store properties as a result of higher operating
expenses in the first quarter of 2013;
* a negative impact of approximately $0.05 per share from 2012 and 2013
disposition activity;
* a negative impact of approximately $0.06 per share from increased share
count resulting from a combination of the approximately 21.9 million
common shares sold in the company’s December 2012 public offering and the
expected issuance of approximately 34.5 million common shares to Lehman
Brothers Holdings, Inc. upon closing of the Archstone acquisition;
* a negative impact of approximately $0.02 per share from higher interest
expense, primarily as a result of the increased debt associated with the
Archstone acquisition; and
* a negative impact of approximately $0.03 per share of other various
expenses.
Full Year 2013 Guidance
The company’s 2013 same store operating guidance on page 27 of this release is
computed based on the portfolio of approximately 80,000 apartment units that
the company expects to have in its annual same store set after the completion
of its planned 2013 dispositions.
The company has established a Normalized FFO guidance range of $2.80 to $2.90
per share for the full year 2013. The assumptions underlying this guidance can
be found on page 27 of this release. The difference between the company’s
full-year 2012 Normalized FFO of $2.76 per share and the midpoint of the
company’s guidance range of $2.85 per share for full year 2013 Normalized FFO
is primarily due to:
* a positive impact of approximately $0.95 per share of NOI from
approximately ten months of income from the Archstone stabilized
properties;
* a positive impact of approximately $0.19 per share of higher NOI from
Equity Residential properties consisting of $0.18 per share from same
store NOI and $0.01 per share of NOI from properties in lease-up;
* a positive impact of approximately $0.06 per share from NOI from 2012
acquisition activity;
* a negative impact of approximately $0.63 per share from disposition
activity with $0.11 coming from 2012 activity and $0.52 from 2013
activity;
* a negative impact of approximately $0.36 per share from increased share
count resulting from a combination of the approximately 21.9 million
common shares sold in the company’s December 2012 public offering and the
expected issuance of approximately 34.5 million common shares to Lehman
Brothers Holdings, Inc. upon closing of the Archstone acquisition;
* a negative impact of approximately $0.08 per share from higher interest
expense, primarily as a result of the increased debt associated with the
Archstone acquisition; and
* a negative impact of approximately $0.04 per share of other various
expenses.
First Quarter 2013 Earnings and Conference Call
Equity Residential expects to announce first quarter 2013 results on Tuesday,
April 30, 2013 and host a conference call to discuss those results at 11:00
a.m. CT on Wednesday, May 1, 2013.
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 403 properties
located in 13 states and the District of Columbia, consisting of 115,370
apartment units. For more information on Equity Residential, please visit our
website at www.equityapartments.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 and subsequent periodic
reports filed with the Securities and Exchange Commission (SEC) and available
on our website, www.equityapartments.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 will
take place tomorrow, Wednesday, February 6, at 9:00 a.m. Central. Please visit
the Investor section of the company’s web site at www.equityapartments.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)
Year Ended December 31, Quarter Ended December 31,
2012 2011 2012 2011
REVENUES
Rental income $ 2,114,142 $ 1,874,465 $ 545,405 $ 490,006
Fee and asset 9,573 9,026 2,245 2,344
management
Total revenues 2,123,715 1,883,491 547,650 492,350
EXPENSES
Property and 415,986 387,968 99,971 96,467
maintenance
Real estate
taxes and 241,876 211,518 62,996 52,331
insurance
Property 81,902 81,867 19,133 19,676
management
Fee and asset 4,663 4,279 1,068 1,072
management
Depreciation 664,082 612,579 166,196 156,938
General and 47,248 43,605 10,072 11,144
administrative
Total expenses 1,455,757 1,341,816 359,436 337,628
Operating income 667,958 541,675 188,214 154,722
Interest and 150,547 7,965 80,032 1,368
other income
Other expenses (27,361 ) (14,292 ) (6,803 ) (5,166 )
Interest:
Expense (457,666 ) (464,277 ) (110,214 ) (113,525 )
incurred, net
Amortization of
deferred (21,370 ) (16,766 ) (11,051 ) (4,833 )
financing costs
Income before
income and other
taxes, (loss)
from investments
in
unconsolidated 312,108 54,305 140,178 32,566
entities, net
gain on sales of
land parcels and
discontinued
operations
Income and other
tax (expense) (539 ) (728 ) 88 (60 )
benefit
(Loss) from
investments in (14 ) — (11 ) —
unconsolidated
entities
Net gain on
sales of land — 4,217 — —
parcels
Income from
continuing 311,555 57,794 140,255 32,506
operations
Discontinued 569,649 877,403 244,144 74,895
operations, net
Net income 881,204 935,197 384,399 107,401
Net (income)
attributable to
Noncontrolling
Interests:
Operating (38,641 ) (40,780 ) (16,995 ) (4,505 )
Partnership
Partially Owned (844 ) (832 ) (387 ) (414 )
Properties
Net income
attributable to 841,719 893,585 367,017 102,482
controlling
interests
Preferred (10,355 ) (13,865 ) (1,036 ) (3,466 )
distributions
Premium on
redemption of (5,152 ) — (2 ) —
Preferred Shares
Net income
available to $ 826,212 $ 879,720 $ 365,979 $ 99,016
Common Shares
Earnings per
share – basic:
Income from
continuing
operations $ 0.93 $ 0.14 $ 0.43 $ 0.09
available to
Common Shares
Net income
available to $ 2.73 $ 2.98 $ 1.18 $ 0.33
Common Shares
Weighted average
Common Shares 302,701 294,856 310,398 295,990
outstanding
Earnings per
share – diluted:
Income from
continuing
operations $ 0.92 $ 0.14 $ 0.42 $ 0.09
available to
Common Shares
Net income
available to $ 2.70 $ 2.95 $ 1.17 $ 0.33
Common Shares
Weighted average
Common Shares 319,766 312,065 327,108 312,731
outstanding
Distributions
declared per $ 1.78 $ 1.58 $ 0.7675 $ 0.5675
Common Share
outstanding
Equity Residential
Consolidated Statements of Funds From Operations and Normalized Funds From
Operations
(Amounts in thousands except per share data)
(Unaudited)
Year Ended December 31, Quarter Ended December 31,
2012 2011 2012 2011
Net Income $ 881,204 $ 935,197 $ 384,399 $ 107,401
Net (income)
attributable to
Noncontrolling
Interests –
Partially Owned (844 ) (832 ) (387 ) (414 )
Properties
Preferred (10,355 ) (13,865 ) (1,036 ) (3,466 )
Distributions
Premium on
redemption of (5,152 ) — (2 ) —
Preferred
Shares
Net income
available to 864,853 920,500 382,974 103,521
Common Shares
and Units
Adjustments:
Depreciation 664,082 612,579 166,196 156,938
Depreciation –
Non-real estate (5,346 ) (5,519 ) (1,135 ) (1,317 )
additions
Depreciation –
Partially Owned
and (3,193 ) (3,062 ) (798 ) (799 )
Unconsolidated
Properties
Discontinued
operations:
Depreciation 20,910 50,949 1,856 10,295
Net (gain) on
sales of (548,278 ) (826,489 ) (240,831 ) (67,389 )
discontinued
operations
Net incremental
(loss) gain on
sales of (11 ) 1,993 (60 ) (57 )
condominium
units
Gain (loss) on
sale of Equity 200 1,202 (150 ) 180
Corporate
Housing (ECH)
FFO available
to Common
Shares and 993,217 752,153 308,052 201,372
Units (1) (3)
(4)
Adjustments
(see page 26
for additional
detail):
Asset
impairment and — — — —
valuation
allowances
Property
acquisition
costs and
write-off of 21,649 14,557 6,751 5,239
pursuit costs
(other
expenses)
Debt
extinguishment
(gains) losses,
including
prepayment
penalties, 16,293 12,300 8,802 3,050
preferred share
redemptions and
non-cash
convertible
debt discounts
(Gains) losses
on sales of
non-operating
assets, net of (255 ) (6,976 ) 236 (422 )
income and
other tax
expense
(benefit)
Other
miscellaneous (147,635 ) (12,369 ) (79,948 ) (4,607 )
non-comparable
items
Normalized FFO
available to
Common Shares $ 883,269 $ 759,665 $ 243,893 $ 204,632
and Units (2)
(3) (4)
FFO (1) (3) $ 1,008,724 $ 766,018 $ 309,090 $ 204,838
Preferred (10,355 ) (13,865 ) (1,036 ) (3,466 )
distributions
Premium on
redemption of (5,152 ) — (2 ) —
Preferred
Shares
FFO available
to Common
Shares and $ 993,217 $ 752,153 $ 308,052 $ 201,372
Units - basic
and diluted (1)
(3) (4)
FFO per share
and Unit - $ 3.14 $ 2.44 $ 0.95 $ 0.65
basic
FFO per share
and Unit - $ 3.11 $ 2.41 $ 0.94 $ 0.64
diluted
Normalized FFO $ 893,624 $ 773,530 $ 244,929 $ 208,098
(2) (3)
Preferred (10,355 ) (13,865 ) (1,036 ) (3,466 )
distributions
Normalized FFO
available to
Common Shares
and Units - $ 883,269 $ 759,665 $ 243,893 $ 204,632
basic and
diluted (2) (3)
(4)
Normalized FFO
per share and $ 2.79 $ 2.47 $ 0.75 $ 0.66
Unit - basic
Normalized FFO
per share and $ 2.76 $ 2.43 $ 0.75 $ 0.65
Unit - diluted
Weighted
average Common
Shares and 316,554 308,062 324,364 309,120
Units
outstanding -
basic
Weighted
average Common
Shares and 319,766 312,065 327,108 312,731
Units
outstanding -
diluted
Note: See page 26 for additional detail regarding the adjustments from FFO to
Normalized FFO. See page 29 for the definitions, the footnotes referenced
above and the reconciliations of EPS to FFO and Normalized FFO.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
December 31, December 31,
2012 2011
ASSETS
Investment in real estate
Land $ 4,554,912 $ 4,367,816
Depreciable property 15,711,944 15,554,740
Projects under development 387,750 160,190
Land held for development 353,823 325,200
Investment in real estate 21,008,429 20,407,946
Accumulated depreciation (4,912,221 ) (4,539,583 )
Investment in real estate, net 16,096,208 15,868,363
Cash and cash equivalents 612,590 383,921
Investments in unconsolidated entities 17,877 12,327
Deposits – restricted 250,442 152,237
Escrow deposits – mortgage 9,129 10,692
Deferred financing costs, net 44,382 44,608
Other assets 170,372 187,155
Total assets $ 17,201,000 $ 16,659,303
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 3,898,369 $ 4,111,487
Notes, net 4,630,875 5,609,574
Lines of credit — —
Accounts payable and accrued expenses 38,372 35,206
Accrued interest payable 76,223 88,121
Other liabilities 304,518 291,289
Security deposits 66,988 65,286
Distributions payable 260,176 179,079
Total liabilities 9,275,521 10,380,042
Commitments and contingencies
Redeemable Noncontrolling Interests – 398,372 416,404
Operating Partnership
Equity:
Shareholders’ equity:
Preferred Shares of beneficial interest,
$0.01 par value;
100,000,000 shares authorized; 1,000,000
shares issued
50,000 200,000
and outstanding as of December 31, 2012 and
1,600,000
shares issued and outstanding as of December
31, 2011
Common Shares of beneficial interest, $0.01
par value;
1,000,000,000 shares authorized; 325,054,654
shares issued
3,251 2,975
and outstanding as of December 31, 2012 and
297,508,185
shares issued and outstanding as of December
31, 2011
Paid in capital 6,542,355 5,047,186
Retained earnings 887,355 615,572
Accumulated other comprehensive (loss) (193,148 ) (196,718 )
Total shareholders’ equity 7,289,813 5,669,015
Noncontrolling Interests:
Operating Partnership 159,606 119,536
Partially Owned Properties 77,688 74,306
Total Noncontrolling Interests 237,294 193,842
Total equity 7,527,107 5,862,857
Total liabilities and equity $ 17,201,000 $ 16,659,303
Equity Residential
Portfolio Summary
As of December 31, 2012
% of % of Average
Total
Apartment Apartment Stabilized Rental
Markets Properties Units Units NOI (1) Rate
(2)
1 New York Metro 30 8,047 7.0 % 13.9 % $ 3,433
Area
2 DC Northern 27 9,569 8.3 % 11.5 % 2,136
Virginia
3 Los Angeles 48 9,815 8.5 % 9.9 % 1,879
4 South Florida 36 12,253 10.6 % 9.0 % 1,463
5 San Francisco 40 9,094 7.9 % 8.6 % 1,902
Bay Area
6 Boston 26 5,832 5.0 % 8.2 % 2,560
7 Seattle/Tacoma 40 9,029 7.8 % 7.0 % 1,520
8 Denver 24 8,144 7.1 % 5.5 % 1,226
9 San Diego 14 4,963 4.3 % 5.0 % 1,851
10 Suburban 16 4,856 4.2 % 4.4 % 1,711
Maryland
11 Orlando 21 6,413 5.6 % 3.5 % 1,086
12 Phoenix 25 7,400 6.4 % 3.4 % 946
13 Orange County, 11 3,490 3.0 % 3.3 % 1,660
CA
14 Inland Empire, 10 3,081 2.7 % 2.4 % 1,491
CA
15 Atlanta 12 3,616 3.1 % 2.0 % 1,157
16 All Other 21 4,729 4.1 % 2.4 % 1,098
Markets (3)
Total 401 110,331 95.6 % 100.0 % 1,737
Military 2 5,039 4.4 % — —
Housing
Grand Total 403 115,370 100.0 % 100.0 % $ 1,737
Note: Projects under development are not included in the Portfolio Summary
until construction has been completed.
% of Stabilized NOI includes budgeted 2013 NOI for properties that are
(1) stabilized and projected annual NOI at stabilization (defined as
having achieved 90% occupancy for three consecutive months) for
properties that are in lease-up.
Average rental rate is defined as total rental revenues divided by the
(2) weighted average occupied apartment units for the month of December
2012.
(3) All Other Markets - Each individual market is less than 1.5% of
stabilized NOI.
Equity Residential
Portfolio as of December 31, 2012
Apartment
Properties Units
Wholly Owned 382 106,856
Properties
Partially
Owned 19 3,475
Properties -
Consolidated
Military 2 5,039
Housing
403 115,370
Portfolio Rollforward Q4 2012
($ in thousands)
Apartment Purchase/
Properties Units (Sale) Price Cap
Rate
9/30/2012 418 118,986
Acquisitions:
Land Parcel — — $ 79,000
(one)
Dispositions:
Rental
Properties - (15 ) (3,675 ) $ (444,430 ) 6.1 %
Consolidated
Configuration — 59
Changes
12/31/2012 403 115,370
Portfolio Rollforward 2012
($ in thousands)
Apartment Purchase/
Properties Units (Sale) Price Cap
Rate
12/31/2011 427 121,974
Acquisitions:
Rental
Properties - 9 1,896 $ 906,305 4.7 %
Consolidated
Land Parcels — — $ 141,240
(six)
Dispositions:
Rental
Properties - (35 ) (9,012 ) $ (1,061,334 ) 6.2 %
Consolidated
Completed 2 356
Developments
Configuration — 156
Changes
12/31/2012 403 115,370
Equity Residential
Fourth Quarter 2012 vs. Fourth Quarter 2011
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) – 103,522 Same Store Apartment Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q4 2012 $ 505,296 $ 167,964 $ 337,332 $ 1,707 95.4 % 12.9 %
Q4 2011 $ 479,299 $ 167,116 $ 312,183 $ 1,626 95.0 % 13.1 %
Change $ 25,997 $ 848 $ 25,149 $ 81 0.4 % (0.2 )%
Change 5.4 % 0.5 % 8.1 % 5.0 %
Fourth Quarter 2012 vs. Third Quarter 2012
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) – 109,323 Same Store Apartment Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q4 2012 $ 539,044 $ 178,468 $ 360,576 $ 1,725 95.3 % 12.8 %
Q3 2012 $ 538,845 $ 188,894 $ 349,951 $ 1,716 95.8 % 17.3 %
Change $ 199 $ (10,426 ) $ 10,625 $ 9 (0.5 )% (4.5 )%
Change 0.0 % (5.5 )% 3.0 % 0.5 %
2012 vs. 2011
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) – 98,577 Same Store Apartment Units
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
2012 $ 1,868,918 $ 649,914 $ 1,219,004 $ 1,658 95.4 % 58.2 %
2011 $ 1,771,449 $ 638,671 $ 1,132,778 $ 1,575 95.2 % 57.3 %
Change $ 97,469 $ 11,243 $ 86,226 $ 83 0.2 % 0.9 %
Change 5.5 % 1.8 % 7.6 % 5.3 %
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
(1) insurance expense and property management expense. The Company believes
that NOI is helpful to investors as a supplemental measure of its
operating performance because it is a direct measure of the actual
operating results of the Company's apartment communities. See page 29
for reconciliations from operating income.
(2) Average rental rate is defined as total rental revenues divided by the
weighted average occupied apartment units for the period.
Equity Residential
Fourth Quarter 2012 vs. Fourth Quarter 2011
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year's Quarter
Q4 2012 Q4 2012 Q4 2012
% of Average Weighted Average
Apartment Actual Rental Average Rental
Markets Units NOI Rate Occupancy Revenues Expenses NOI Rate Occupancy
(1) % (1)
1 New York Metro 7,423 12.7 % $ 3,325 96.3 % 5.4 % 3.5 % 6.7 % 5.3 % 0.1 %
Area
2 DC Northern 9,381 12.0 % 2,134 95.5 % 4.4 % 2.8 % 5.1 % 3.9 % 0.5 %
Virginia
3 Los Angeles 8,881 9.7 % 1,857 95.9 % 4.5 % (3.2 )% 8.3 % 4.2 % 0.2 %
4 South Florida 12,253 9.6 % 1,464 95.2 % 5.4 % 1.3 % 7.9 % 4.4 % 0.8 %
5 Boston 5,470 8.2 % 2,579 95.6 % 5.2 % 4.1 % 5.8 % 5.5 % (0.3 )%
6 San Francisco 6,194 7.6 % 2,055 95.4 % 10.3 % 0.3 % 15.2 % 9.8 % 0.4 %
Bay Area
7 Seattle/Tacoma 8,710 7.3 % 1,502 94.5 % 6.2 % (0.9 )% 10.2 % 5.7 % 0.5 %
8 Denver 7,976 6.0 % 1,226 95.5 % 8.4 % (3.0 )% 13.6 % 8.0 % 0.4 %
9 San Diego 4,284 4.3 % 1,754 94.7 % 2.1 % 0.2 % 3.0 % 1.7 % 0.3 %
10 Phoenix 7,400 4.0 % 952 95.3 % 3.3 % (4.0 )% 7.5 % 3.0 % 0.4 %
11 Orlando 6,413 3.8 % 1,085 95.4 % 5.6 % 1.3 % 8.1 % 4.8 % 0.8 %
12 Suburban 4,222 3.8 % 1,521 95.2 % 4.2 % (3.4 )% 7.8 % 3.6 % 0.6 %
Maryland
13 Orange County, 3,490 3.5 % 1,662 95.9 % 5.1 % 2.4 % 6.3 % 4.8 % 0.1 %
CA
14 Inland Empire, 3,081 2.7 % 1,487 95.0 % 4.4 % (4.9 )% 9.1 % 3.8 % 0.5 %
CA
15 Atlanta 3,616 2.2 % 1,159 95.9 % 6.9 % 1.9 % 10.2 % 6.9 % (0.1 )%
16 All Other 4,728 2.6 % 1,108 95.4 % 3.5 % (2.3 )% 7.7 % 2.7 % 0.7 %
Markets
Total 103,522 100.0 % $ 1,707 95.4 % 5.4 % 0.5 % 8.1 % 5.0 % 0.4 %
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment
units for the period.
Equity Residential
Fourth Quarter 2012 vs. Third Quarter 2012
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Quarter
Q4 2012 Q4 2012 Q4 2012
% of Average Weighted Average
Apartment Actual Rental Average Rental
Markets Units NOI Rate Occupancy Revenues Expenses NOI Rate Occupancy
(1) % (1)
1 New York Metro 7,838 13.2 % $ 3,390 96.3 % 0.4 % (1.4 )% 1.6 % 1.0 % (0.6 )%
Area
2 DC Northern 9,381 11.2 % 2,134 95.5 % (1.2 )% (3.3 )% (0.3 )% (0.1 )% (1.0 )%
Virginia
3 Los Angeles 9,716 10.0 % 1,869 95.8 % 0.0 % (4.9 )% 2.3 % 0.3 % (0.4 )%
4 South Florida 12,253 9.0 % 1,464 95.2 % 0.1 % (7.2 )% 4.8 % (0.2 )% 0.3 %
5 San Francisco 8,751 8.9 % 1,867 95.0 % 2.1 % (11.4 )% 9.7 % 3.1 % (0.9 )%
Bay Area
6 Boston 5,832 8.0 % 2,547 95.7 % (0.1 )% (2.5 )% 1.1 % 0.0 % 0.0 %
7 Seattle/Tacoma 9,029 7.1 % 1,511 94.5 % (0.8 )% (7.1 )% 2.7 % 0.2 % (0.9 )%
8 Denver 7,976 5.6 % 1,226 95.5 % 0.5 % (11.4 )% 6.0 % 1.2 % (0.6 )%
9 San Diego 4,963 4.8 % 1,828 94.3 % (1.0 )% 2.8 % (2.7 )% 0.8 % (1.6 )%
10 Suburban 4,856 4.6 % 1,708 95.1 % 0.7 % (7.1 )% 4.4 % 0.9 % (0.3 )%
Maryland
11 Phoenix 7,400 3.7 % 952 95.3 % 0.4 % (10.7 )% 7.0 % 0.3 % 0.1 %
12 Orlando 6,413 3.6 % 1,085 95.4 % (1.1 )% (10.1 )% 4.6 % (0.6 )% (0.4 )%
13 Orange County, 3,490 3.2 % 1,662 95.9 % 0.5 % (3.4 )% 2.3 % 0.7 % (0.3 )%
CA
14 Inland Empire, 3,081 2.5 % 1,487 95.0 % 0.1 % (4.4 )% 2.3 % 1.2 % (1.0 )%
CA
15 Atlanta 3,616 2.1 % 1,159 95.9 % 0.4 % (6.3 )% 5.0 % 1.1 % (0.7 )%
16 All Other 4,728 2.5 % 1,108 95.4 % (0.6 )% (5.5 )% 3.0 % (0.5 )% (0.1 )%
Markets
Total 109,323 100.0 % $ 1,725 95.3 % 0.0 % (5.5 )% 3.0 % 0.5 % (0.5 )%
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units
for the period.
Equity Residential
2012 vs. 2011
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year
2012 2012 2012
% of Average Weighted Average
Apartment Actual Rental Average Rental
Markets Units NOI Rate Occupancy Revenues Expenses NOI Rate Occupancy
(1) % (1)
1 New York Metro 7,063 13.3 % $ 3,322 96.2 % 6.1 % 3.7 % 7.8 % 6.0 % 0.1 %
Area
2 DC Northern 7,974 10.8 % 2,068 95.7 % 4.6 % 4.2 % 4.8 % 4.6 % 0.1 %
Virginia
3 South Florida 11,377 9.3 % 1,404 95.1 % 4.4 % 3.5 % 5.0 % 3.8 % 0.5 %
4 Los Angeles 7,832 8.9 % 1,794 95.4 % 4.1 % (2.5 )% 7.5 % 3.7 % 0.3 %
5 Boston 5,175 8.4 % 2,552 95.6 % 6.2 % 0.8 % 9.1 % 6.5 % (0.2 )%
6 San Francisco 6,194 7.9 % 1,986 95.5 % 11.0 % 2.9 % 15.2 % 11.0 % 0.0 %
Bay Area
7 Seattle/Tacoma 8,209 7.2 % 1,476 94.6 % 5.8 % 1.7 % 8.3 % 5.6 % 0.2 %
8 Denver 7,976 6.2 % 1,188 95.6 % 8.9 % 0.8 % 12.9 % 8.5 % 0.3 %
9 San Diego 4,284 4.8 % 1,740 95.0 % 2.4 % 1.3 % 3.0 % 2.2 % 0.1 %
10 Phoenix 7,400 4.2 % 941 95.1 % 3.8 % (1.8 )% 7.3 % 3.7 % 0.0 %
11 Orlando 6,413 4.0 % 1,072 95.4 % 4.7 % 2.6 % 6.1 % 4.3 % 0.3 %
12 Orange County, 3,490 3.7 % 1,636 95.7 % 5.3 % 3.4 % 6.1 % 5.1 % 0.2 %
CA
13 Suburban 3,765 3.4 % 1,441 94.9 % 2.9 % (1.7 )% 5.3 % 2.9 % 0.0 %
Maryland
14 Inland Empire, 3,081 2.8 % 1,466 94.9 % 3.3 % (1.0 )% 5.5 % 3.1 % 0.1 %
CA
15 Atlanta 3,616 2.3 % 1,134 96.1 % 6.2 % 2.0 % 9.3 % 6.3 % 0.0 %
16 All Other 4,728 2.8 % 1,102 95.3 % 4.1 % 1.3 % 6.2 % 4.0 % 0.1 %
Markets
Total 98,577 100.0 % $ 1,658 95.4 % 5.5 % 1.8 % 7.6 % 5.3 % 0.2 %
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment
units for the period.
Equity Residential
Fourth Quarter 2012 vs. Fourth Quarter 2011
Same Store Operating Expenses
$ in thousands – 103,522 Same Store Apartment Units
% of Actual
Q4 2012
Actual Actual $ % Operating
Q4 2012 Q4 2011 Change Change Expenses
Real estate $ 52,980 $ 48,982 $ 3,998 8.2 % 31.5 %
taxes
On-site payroll 37,054 37,358 (304 ) (0.8 )% 22.1 %
(1)
Utilities (2) 24,399 25,241 (842 ) (3.3 )% 14.5 %
Repairs and 22,092 23,305 (1,213 ) (5.2 )% 13.2 %
maintenance (3)
Property
management costs 18,949 19,172 (223 ) (1.2 )% 11.3 %
(4)
Insurance 5,497 5,097 400 7.8 % 3.3 %
Leasing and 2,870 3,126 (256 ) (8.2 )% 1.7 %
advertising
Other on-site
operating 4,123 4,835 (712 ) (14.7 )% 2.4 %
expenses (5)
Same store
operating $ 167,964 $ 167,116 $ 848 0.5 % 100.0 %
expenses
2012 vs. 2011
Same Store Operating Expenses
$ in thousands – 98,577 Same Store Apartment Units
% of Actual
2012
Actual Actual $ % Operating
2012 2011 Change Change Expenses
Real estate $ 197,316 $ 184,773 $ 12,543 6.8 % 30.3 %
taxes
On-site payroll 146,637 145,979 658 0.5 % 22.5 %
(1)
Utilities (2) 97,313 98,572 (1,259 ) (1.3 )% 15.0 %
Repairs and 88,931 89,152 (221 ) (0.2 )% 13.7 %
maintenance (3)
Property
management costs 70,084 70,858 (774 ) (1.1 )% 10.8 %
(4)
Insurance 20,629 19,257 1,372 7.1 % 3.2 %
Leasing and 10,812 11,798 (986 ) (8.4 )% 1.7 %
advertising
Other on-site
operating 18,192 18,282 (90 ) (0.5 )% 2.8 %
expenses (5)
Same store
operating $ 649,914 $ 638,671 $ 11,243 1.8 % 100.0 %
expenses
On-site payroll - Includes payroll and related expenses for on-site
(1) personnel including property managers, leasing consultants and
maintenance staff.
Utilities - Represents gross expenses prior to any recoveries under the
(2) Resident Utility Billing System ("RUBS"). Recoveries are reflected in
rental income.
Repairs and maintenance - Includes general maintenance costs, apartment
(3) unit turnover costs including interior painting, routine landscaping,
security, exterminating, fire protection, snow removal, elevator, roof
and parking lot repairs and other miscellaneous building repair costs.
Property management costs - Includes payroll and related expenses for
departments, or portions of departments, that directly support on-site
(4) management. These include such departments as regional and corporate
property management, property accounting, human resources, training,
marketing and revenue management, procurement, real estate tax, property
legal services and information technology.
Other on-site operating expenses - Includes administrative costs such as
(5) office supplies, telephone and data charges, association and business
licensing fees and ground lease costs.
Equity Residential
Debt Summary as of December 31, 2012
(Amounts in thousands)
Weighted
Weighted Average
Average Maturities
Amounts (1) % of Total Rates (years)
(1)
Secured $ 3,898,369 45.7 % 4.96 % 7.3
Unsecured 4,630,875 54.3 % 5.10 % 5.1
Total $ 8,529,244 100.0 % 5.04 % 6.1
Fixed Rate Debt:
Secured – $ 3,517,273 41.2 % 5.49 % 6.2
Conventional
Unsecured – 4,329,352 50.8 % 5.70 % 5.4
Public/Private
Fixed Rate Debt 7,846,625 92.0 % 5.61 % 5.8
Floating Rate
Debt:
Secured – 30,516 0.4 % 3.25 % 1.8
Conventional
Secured – Tax 350,580 4.1 % 0.23 % 19.7
Exempt
Unsecured – 301,523 3.5 % 1.83 % 0.2
Public/Private
Unsecured –
Revolving Credit — — 1.35 % 1.5
Facility
Floating Rate Debt 682,619 8.0 % 1.35 % 9.8
Total $ 8,529,244 100.0 % 5.04 % 6.1
(1) Net of the effect of any derivative instruments. Weighted average rates are for the year ended
December 31, 2012.
Note: The Company capitalized interest of approximately $22.5 million and $9.1 million during the
years ended December 31, 2012 and 2011, respectively. The Company capitalized interest of
approximately $6.7 million and $3.2 million during the quarters ended December 31, 2012 and 2011,
respectively.
Debt Maturity Schedule as of December 31, 2012
(Amounts in thousands)
Weighted Weighted
Average Average
Rates
Fixed Floating on Fixed Rates on
Year Rate (1) Rate (1) Total % of Rate Debt Total
Total (1) Debt (1)
2013 $ 224,277 $ 302,033 $ 526,310 6.2 % 6.93 % 4.79 %
2014 564,302 22,021 586,323 6.9 % 5.31 % 5.24 %
2015 417,812 — 417,812 4.9 % 6.30 % 6.30 %
2016 1,190,538 — 1,190,538 14.0 % 5.34 % 5.34 %
2017 1,446,120 456 1,446,576 17.0 % 5.95 % 5.95 %
2018 81,450 724 82,174 1.0 % 5.70 % 5.70 %
2019 802,640 20,766 823,406 9.6 % 5.49 % 5.36 %
2020 1,672,482 809 1,673,291 19.6 % 5.50 % 5.50 %
2021 1,188,905 856 1,189,761 13.9 % 4.64 % 4.64 %
2022 2,401 905 3,306 — 5.81 % 5.74 %
2023+ 231,464 337,699 569,163 6.7 % 6.76 % 3.29 %
Premium/(Discount) 24,234 (3,650 ) 20,584 0.2 % N/A N/A
Total $ 7,846,625 $ 682,619 $ 8,529,244 100.0 % 5.54 % 5.25 %
(1) Net of the effect of any derivative instruments. Weighted average rates are as of December 31,
2012.
Equity Residential
Unsecured Debt Summary as of December 31, 2012
(Amounts in thousands)
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
Fixed Rate
Notes:
5.200 % 04/01/13 (1) $ 400,000 $ (30 ) $ 399,970
Fair Value
Derivative (1) (300,000 ) — (300,000 )
Adjustments
5.250 % 09/15/14 500,000 (105 ) 499,895
6.584 % 04/13/15 300,000 (248 ) 299,752
5.125 % 03/15/16 500,000 (170 ) 499,830
5.375 % 08/01/16 400,000 (665 ) 399,335
5.750 % 06/15/17 650,000 (2,289 ) 647,711
7.125 % 10/15/17 150,000 (311 ) 149,689
4.750 % 07/15/20 600,000 (3,433 ) 596,567
4.625 % 12/15/21 1,000,000 (3,397 ) 996,603
7.570 % 08/15/26 140,000 — 140,000
4,340,000 (10,648 ) 4,329,352
Floating
Rate Notes:
04/01/13 (1) 300,000 — 300,000
Fair Value
Derivative (1) 1,523 — 1,523
Adjustments
301,523 — 301,523
Revolving
Credit LIBOR+1.15% 07/13/14 (2)(3) — — —
Facility:
Total
Unsecured $ 4,641,523 $ (10,648 ) $ 4,630,875
Debt
(1) Fair value interest rate swaps convert $300.0 million of the 5.200%
notes due April 1, 2013 to a floating interest rate.
(2) Facility is private. All other unsecured debt is public.
As of December 31, 2012, there was approximately $1.72 billion available
on the Company's unsecured revolving credit facility. On January 11,
2013, the Company replaced its existing $1.75 billion facility with a
new $2.5 billion unsecured revolving credit facility maturing in April
(3) 2018. The interest rate on advances under the new credit facility will
be LIBOR plus a spread (currently 1.05%) and an annual facility fee
(currently 15 basis points). Both the spread and the facility fee are
dependent on the credit rating of the Company's long-term debt. As of
January 31, 2013, there was approximately $2.47 billion available on the
Company's unsecured revolving credit facility.
Note: In October 2012, the Company paid off the $222.1 million
outstanding of its 5.500% public notes and its $500.0 million term loan
facility, both at maturity.
Equity Residential
Selected Unsecured Public Debt Covenants
December 31, September 30,
2012 2012
Total Debt to Adjusted Total Assets (not to 38.6 % 43.2 %
exceed 60%)
Secured Debt to Adjusted Total Assets (not 17.6 % 18.3 %
to exceed 40%)
Consolidated Income Available for Debt
Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 3.00 2.95
Total Unsecured Assets to Unsecured Debt 346.3 % 286.5 %
(must be at least 150%)
These selected covenants relate to ERP Operating Limited Partnership's
("ERPOP") outstanding
unsecured public debt. Equity Residential is the general partner of ERPOP.
<td colspa*Story too large*
Equity Residential
Capital Structure as of December 31, 2012
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 3,898,369 45.7 %
Unsecured Debt 4,630,875 54.3 %
Total Debt 8,529,244 100.0 % 30.7 %
Common Shares
(includes 325,054,654 95.9 %
Restricted
Shares)
Units
(includes OP 13,968,758 4.1 %
Units and LTIP
Units)
Total Shares 339,023,412 100.0 %
and Units
Common Share
Price at $ 56.67
December 31,
2012
19,212,457 99.7 %
Perpetual
Preferred 50,000 0.3 %
Equity (see
below)
Total Equity 19,262,457 100.0 % 69.3 %
Total Market $ 27,791,701
Capitalization
[TRUNCATED]
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