Equity Residential (NYSE: EQR) today reported
results for the quarter and nine months ended September 30, 2016.
All per share results are reported as available to common
shares/units on a diluted basis.
“Renter demand in urban and high density, close-in suburban
markets remains extraordinarily strong as demonstrated by 96%
occupancy across our portfolio,” said David J. Neithercut, Equity
Residential’s President and CEO. “However, new apartment supply and
slowing growth of higher paying jobs have combined to constrain
rental rates causing our revenue growth this year to revert more in
line with historical trends.”
Highlights
- Increased same store revenues 3.4% in
the third quarter.
- Paid a special cash dividend of $3.00
per share, or approximately $1.1 billion, to its shareholders on
October 14, 2016, which, when combined with the special cash
dividend of $8.00 per share paid in March 2016, resulted in total
capital returned to EQR’s shareholders of more than $4.0 billion in
2016.
- On October 12, 2016, completed a $500
million unsecured debt offering at a coupon of 2.85%, the lowest
ever for an EQR 10-year and the third lowest of any REIT
10-year.
- Named the 2016 Global Residential
Listed Sector Leader in Sustainability by GRESB.
Third Quarter 2016
Earnings per Share (EPS) for the third quarter of 2016 was $0.56
compared to $0.53 in the third quarter of 2015. The difference is
due primarily to a higher amount of property sale gains due to more
property sales in the third quarter of 2016, lower depreciation
expense in the third quarter of 2016 as a direct result of the
Company’s significant sales activity in 2016 and the items
described below.
FFO (Funds from Operations), as defined by the National
Association of Real Estate Investment Trusts (NAREIT), was $0.77
per share for the third quarter of 2016 compared to $0.87 per share
in the third quarter of 2015. The difference is due primarily to
the various adjustment items listed on page 25 of this release and
the items described below.
Normalized FFO for the third quarter of 2016 was $0.78 per share
compared to $0.89 per share in the third quarter of 2015. The
following items impacted Normalized FFO per share in the
quarter:
- A positive impact of approximately
$0.02 per share from increased same store net operating income
(NOI);
- A positive impact of approximately
$0.03 per share from NOI from non-same store properties currently
in lease-up;
- A positive impact of approximately
$0.07 per share from lower total interest expense due to lower debt
balances;
- A negative impact of approximately
$0.22 per share of lower NOI primarily as a result of the Company’s
2016 disposition activity; and
- A negative impact of approximately
$0.01 per share from other items including lower fee and asset
management income.
Reconciliations and definitions of FFO and Normalized FFO are
provided on pages 7, 28 and 29 of this release and the Company has
included guidance for Normalized FFO on page 26 and FFO and EPS on
page 29 of this release.
Nine Months Ended September 30, 2016
EPS for the nine months ended September 30, 2016 was $10.92
compared to $1.80 for the same period of 2015. The difference is
due primarily to a higher amount of property sale gains due to
significantly more property sales in the first nine months of 2016
and the various adjustment items listed on page 25 of this
release.
FFO for the nine months ended September 30, 2016 was $2.14 per
share compared to $2.56 per share in the same period of 2015. The
difference is due primarily to the various adjustment items listed
on page 25 of this release and the items described below.
Normalized FFO for the nine months ended September 30, 2016 was
$2.29 per share compared to $2.54 per share for the same period of
2015. The difference is due primarily to:
- A positive impact of approximately
$0.14 per share from increased same store NOI;
- A positive impact of approximately
$0.09 per share from NOI from non-same store properties currently
in lease-up;
- A positive impact of approximately
$0.16 per share from lower total interest expense due to lower debt
balances;
- A negative impact of approximately
$0.60 per share of lower NOI primarily as a result of the Company’s
2016 disposition activity; and
- A negative impact of approximately
$0.04 per share from higher general and administrative expense,
lower fee and asset management income and other items.
Same Store Results
On a same store third quarter to third quarter comparison, which
includes 72,229 apartment units, revenues increased 3.4%, expenses
increased 5.9% and NOI increased 2.4%. Average Rental Rate
increased 3.4% and occupancy decreased 0.2%. The Company’s same
store expenses in the quarter were impacted by an adverse legal
decision regarding the calculation of real estate taxes for several
of the Company’s properties in Jersey City, New Jersey, higher
property payroll costs due to fuller property-level employment and
increased wage rates, and increased leasing and advertising
expenses due primarily to spending on promotional and incentive
efforts in San Francisco and New York.
On a same store nine-month to nine-month comparison, which
includes 71,488 apartment units, revenues increased 4.0%, expenses
increased 2.5% and NOI increased 4.7%. Average Rental Rate
increased 4.0% and occupancy remained flat at 96.1%.
Investment Activity
During the third quarter of 2016, the Company acquired a 94-unit
apartment property in Los Angeles for a purchase price of
approximately $45.2 million and an Acquisition Capitalization Rate
of 4.5%. Also during the third quarter of 2016, the Company sold
eight consolidated apartment properties, consisting of 941
apartment units, for an aggregate sale price of approximately
$140.6 million at a weighted average Disposition Yield of 6.2% and
generating an Unlevered Internal Rate of Return (Unlevered IRR) of
12.0%. During the quarter, the Company also sold a land parcel in
Berkeley, California for $30.0 million and an unconsolidated
property in Atlanta for which the Company received approximately
$12.4 million for its 20% interest.
Also during the quarter, the Company stabilized three
development properties: 170 Amsterdam in New York, Azure in San
Francisco and Odin in Seattle, at a weighted average projected
yield of 5.8%.
During the first nine months of 2016, the Company acquired four
consolidated apartment properties, consisting of 573 apartment
units, for an aggregate purchase price of approximately $249.3
million at a weighted average Acquisition Capitalization Rate of
4.8%. During the first nine months of 2016, the Company sold 91
consolidated apartment properties, consisting of 27,831 apartment
units, for an aggregate sale price of approximately $6.57 billion,
generating an Unlevered IRR of 11.8%. These sales produced a net
gain on sales of real estate properties of approximately $3.87
billion and an Economic Gain of approximately $2.52 billion. The
weighted average Disposition Yield on these sales is estimated at
5.3%. Also during the first nine months of 2016, the Company sold
its entire interest in the management contracts and related rights
associated with the military housing ventures at Joint Base Lewis
McChord in Washington State, for approximately $63.3 million,
generating a gain on sale of approximately $52.4 million. Also
during the first nine months of 2016, the Company sold three land
parcels for an aggregate sale price of approximately $57.5 million
as well as the unconsolidated property in which it had a partial
interest as described above.
Capital Markets Activity
On October 12, 2016, the Company closed a $500 million unsecured
note offering maturing November 1, 2026 with a coupon of 2.85% and
an all in effective rate of approximately 3.10% including the
effect of underwriters’ fees and the termination of certain
interest rate hedges. Proceeds from this issuance were used for
working capital and general corporate purposes.
Fourth Quarter 2016 Guidance
The Company has established an EPS guidance range of $0.62 to
$0.66 for the fourth quarter of 2016. The difference between the
Company’s third quarter 2016 EPS of $0.56 and the midpoint of the
fourth quarter 2016 guidance range of $0.64 is due primarily to
higher expected gains on property sales and sales of non-operating
assets and the items described below.
The Company has established an FFO guidance range of $0.82 to
$0.86 per share for the fourth quarter of 2016. The difference
between the Company’s third quarter 2016 FFO of $0.77 per share and
the midpoint of the fourth quarter 2016 guidance range of $0.84 per
share is due primarily to higher expected gains on sales of
non-operating assets and the items described below.
The Company has established a Normalized FFO guidance range of
$0.77 to $0.81 per share for the fourth quarter of 2016. The
difference between the Company’s third quarter 2016 Normalized FFO
of $0.78 per share and the midpoint of the fourth quarter 2016
guidance range of $0.79 per share is due primarily to:
- A positive impact of approximately
$0.03 per share from increased same store NOI;
- A positive impact of approximately
$0.01 per share from NOI from non-same store properties currently
in lease-up;
- A negative impact of approximately
$0.01 per share of lower NOI primarily as a result of the Company’s
2016 disposition activity; and
- A negative impact of approximately
$0.02 per share from higher total interest expense due to lower
capitalized interest as well as higher debt balances.
Full Year 2016 Guidance
The Company has revised its guidance for its full year 2016 same
store operating performance, EPS, FFO per share, Normalized FFO per
share and transactions as listed below:
Previous
Revised
Same store: Physical occupancy 95.9% 96.0% Revenue change 3.5% to
4.0% 3.6% to 3.9% Expense change 2.5% to 3.0% 2.8% to 3.2% NOI
change 3.75% to 4.25% 3.8% to 4.1% EPS $11.84 to
$11.90 $11.54 to $11.58 FFO per share $2.96 to $3.02 $2.96 to $3.00
Normalized FFO per share $3.05 to $3.11 $3.06 to $3.10
Transactions: Consolidated Rental Acquisitions $350 million $250
million Consolidated Rental Dispositions $6.9 billion $6.7 billion
Acquisition Cap Rate/Disposition Yield Spread 75 basis points 60
basis points
The change in the full year EPS guidance range is due primarily
to lower gains on property sales as a result of the Company’s
reduced disposition guidance and the items described below.
The change in the full year FFO per share guidance range is due
primarily to the items described below.
The midpoint of the Company’s full year Normalized FFO per share
guidance range has not changed. The small reduction in expected
same store NOI has been offset by the positive impact of an
expected reduction in general and administrative expense.
Glossary of Terms and Definitions
To improve comparability and enhance disclosure, the Company has
a glossary of defined terms and related reconciliations of Non-GAAP
financial measures on pages 27 through 30 of this release.
Fourth Quarter 2016 Earnings and Conference Call
Equity Residential expects to announce fourth quarter 2016
results on Tuesday, January 31, 2017 and host a conference call to
discuss those results at 10:00 a.m. CT on Wednesday, February 1,
2017.
About Equity Residential
Equity Residential is an S&P 500 company focused on the
acquisition, development and management of rental apartment
properties in urban and high-density suburban coastal gateway
markets where today’s affluent renters want to live, work and play.
Equity Residential owns or has investments in 308 properties
consisting of 78,826 apartment units, primarily located in Boston,
New York, Washington, D.C., Seattle, San Francisco and Southern
California. 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, October 26, at
10:00 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)
Nine Months Ended
September 30, Quarter Ended September 30, 2016
2015 2016 2015 REVENUES Rental income $
1,816,960 $ 2,035,359 $ 605,856 $ 694,245 Fee and asset management
3,351 6,413 218
2,044 Total revenues 1,820,311
2,041,772 606,074 696,289
EXPENSES Property and maintenance 309,688 364,948 104,216
122,383 Real estate taxes and insurance 238,954 254,513 81,343
84,962 Property management 64,003 64,651 19,517 20,094 General and
administrative 47,408 50,618 12,395 15,197 Depreciation
528,242 584,862 179,230
196,059 Total expenses 1,188,295
1,319,592 396,701 438,695
Operating income 632,016 722,180 209,373 257,594 Interest
and other income 65,092 6,906 5,509 256 Other expenses (14,480 )
(2,839 ) (10,420 ) (1,139 ) Interest: Expense incurred, net
(386,316 ) (333,946 ) (86,352 ) (114,298 ) Amortization of deferred
financing costs (10,000 ) (7,734 ) (2,261 )
(2,607 ) Income before income and other taxes, income (loss)
from investments in unconsolidated entities, net gain (loss) on
sales of real estate properties and land parcels and discontinued
operations 286,312 384,567 115,849 139,806 Income and other tax
(expense) benefit (1,189 ) (698 ) (426 ) (329 ) Income (loss) from
investments in unconsolidated entities 5,846 14,388 7,750 (1,041 )
Net gain on sales of real estate properties 3,870,871 295,692
90,036 66,939 Net gain (loss) on sales of land parcels
15,759 (1 ) 4,037 —
Income from continuing operations 4,177,599 693,948 217,246 205,375
Discontinued operations, net 124 350
246 81 Net income 4,177,723 694,298
217,492 205,456 Net (income) attributable to Noncontrolling
Interests: Operating Partnership (160,442 ) (26,191 ) (8,353 )
(7,778 ) Partially Owned Properties (2,368 ) (2,473 )
(823 ) (986 ) Net income attributable to controlling
interests 4,014,913 665,634 208,316 196,692 Preferred distributions
(2,318 ) (2,557 ) (773 ) (833 ) Premium on redemption of Preferred
Shares — (2,789 ) — —
Net income available to Common Shares $ 4,012,595 $
660,288 $ 207,543 $ 195,859
Earnings
per share – basic: Income from continuing operations available
to Common Shares $ 11.00 $ 1.82 $ 0.57 $ 0.54
Net income available to Common Shares $ 11.00 $ 1.82
$ 0.57 $ 0.54 Weighted average Common Shares
outstanding 364,917 363,386
365,109 363,579
Earnings per share –
diluted: Income from continuing operations available to Common
Shares $ 10.92 $ 1.80 $ 0.56 $ 0.53 Net
income available to Common Shares $ 10.92 $ 1.80 $
0.56 $ 0.53 Weighted average Common Shares
outstanding 382,284 380,423
382,373 380,663 Distributions declared
per Common Share outstanding $ 12.51125 $ 1.6575 $
3.50375 $ 0.5525
Equity Residential Consolidated Statements of Funds From
Operations and Normalized Funds From Operations (Amounts in
thousands except per share data) (Unaudited)
Nine Months
Ended September 30, Quarter Ended September 30,
2016 2015 2016 2015 Net income $
4,177,723 $ 694,298 $ 217,492 $ 205,456 Net (income) attributable
to Noncontrolling Interests – Partially Owned Properties (2,368 )
(2,473 ) (823 ) (986 ) Preferred distributions (2,318 ) (2,557 )
(773 ) (833 ) Premium on redemption of Preferred Shares —
(2,789 ) — — Net income
available to Common Shares and Units 4,173,037 686,479 215,896
203,637 Adjustments: Depreciation 528,242 584,862 179,230
196,059 Depreciation – Non-real estate additions (3,932 ) (3,767 )
(1,297 ) (1,243 ) Depreciation – Partially Owned Properties (2,896
) (3,248 ) (953 ) (1,086 ) Depreciation – Unconsolidated Properties
3,606 3,688 1,139 1,231 Net (gain) on sales of unconsolidated
entities – operating assets (8,841 ) (100 ) (8,841 ) (100 ) Net
(gain) on sales of real estate properties (3,870,871 ) (295,692 )
(90,036 ) (66,939 ) Discontinued operations: Net (gain) on sales of
discontinued operations (43 ) — (28 )
— FFO available to Common Shares and Units 818,302
972,222 295,110 331,559 Adjustments (see page 25 for
additional detail): Asset impairment and valuation allowances — — —
— Property acquisition costs and write-off of pursuit costs 5,487
(13,947 ) 1,228 943 Debt extinguishment (gains) losses, including
prepayment penalties, preferred share redemptions and non-cash
convertible debt discounts 120,276 4,501 112 3,032 (Gains) losses
on sales of non-operating assets, net of income and other tax
expense (benefit) (74,256 ) (728 ) (7,378 ) 72 Other miscellaneous
items 7,221 2,701 8,118
4,880 Normalized FFO available to Common Shares and
Units $ 877,030 $ 964,749 $ 297,190 $ 340,486
FFO $ 820,620 $ 977,568 $ 295,883 $ 332,392 Preferred
distributions (2,318 ) (2,557 ) (773 ) (833 ) Premium on redemption
of Preferred Shares — (2,789 ) —
— FFO available to Common Shares and Units $ 818,302
$ 972,222 $ 295,110 $ 331,559 FFO per
share and Unit - basic $ 2.16 $ 2.58 $ 0.78 $
0.88 FFO per share and Unit - diluted $ 2.14 $ 2.56
$ 0.77 $ 0.87 Normalized FFO $ 879,348
$ 967,306 $ 297,963 $ 341,319 Preferred distributions (2,318
) (2,557 ) (773 ) (833 ) Normalized FFO
available to Common Shares and Units $ 877,030 $ 964,749
$ 297,190 $ 340,486 Normalized FFO per share
and Unit - basic $ 2.32 $ 2.56 $ 0.78 $ 0.90
Normalized FFO per share and Unit - diluted $ 2.29 $
2.54 $ 0.78 $ 0.89 Weighted average
Common Shares and Units outstanding - basic 378,745
376,970 379,008 377,147
Weighted average Common Shares and Units outstanding - diluted
382,284 380,423 382,373
380,663 Note: See page 25 for additional
detail regarding the adjustments from FFO to Normalized FFO. See
pages 27 through 30 for the definitions of non-GAAP financial
measures and other terms as well as the reconciliations of EPS to
FFO per share and Normalized FFO per share.
Equity
Residential Consolidated Balance Sheets (Amounts in
thousands except for share amounts) (Unaudited)
September
30, 2016 December 31, 2015 ASSETS Investment in
real estate Land $ 5,874,647 $ 5,864,046 Depreciable property
18,610,446 18,037,087 Projects under development 761,068 1,122,376
Land held for development 115,082 158,843
Investment in real estate 25,361,243 25,182,352 Accumulated
depreciation (5,255,965 ) (4,905,406 ) Investment in
real estate, net 20,105,278 20,276,946 Real estate held for sale —
2,181,135 Cash and cash equivalents 517,586 42,276 Investments in
unconsolidated entities 60,911 68,101 Deposits – restricted 129,569
55,893 Escrow deposits – mortgage 62,994 56,946 Other assets
421,406 428,899
Total assets $
21,297,744 $ 23,110,196
LIABILITIES AND EQUITY Liabilities: Mortgage notes payable,
net $ 4,138,301 $ 4,685,134 Notes, net 4,360,486 5,848,956 Line of
credit and commercial paper — 387,276 Accounts payable and accrued
expenses 199,795 187,124 Accrued interest payable 69,441 85,221
Other liabilities 353,605 366,387 Security deposits 64,060 77,582
Distributions payable 1,331,363 209,378
Total liabilities 10,517,051
11,847,058 Commitments and contingencies
Redeemable Noncontrolling Interests – Operating
Partnership 441,892 566,783
Equity: Shareholders’ equity: Preferred Shares of beneficial
interest, $0.01 par value; 100,000,000 shares authorized; 745,600
shares issued and outstanding as of September 30, 2016 and December
31, 2015 37,280 37,280 Common Shares of beneficial interest, $0.01
par value; 1,000,000,000 shares authorized; 365,657,065 shares
issued and outstanding as of September 30, 2016 and 364,755,444
shares issued and outstanding as of December 31, 2015 3,657 3,648
Paid in capital 8,741,846 8,572,365 Retained earnings 1,451,452
2,009,091 Accumulated other comprehensive (loss) (118,730 )
(152,016 ) Total shareholders’ equity 10,115,505 10,470,368
Noncontrolling Interests: Operating Partnership 219,102 221,379
Partially Owned Properties 4,194 4,608
Total Noncontrolling Interests 223,296 225,987
Total equity 10,338,801
10,696,355 Total liabilities and equity
$ 21,297,744 $ 23,110,196
Equity Residential Portfolio Summary As of
September 30, 2016 % of
Average Apartment Stabilized Rental Markets/Metro Areas Properties
Units NOI Rate Los Angeles 70 15,857 18.0% $ 2,376 Orange
County 12 3,684 3.7% 2,012 San Diego 13 3,505 3.6% 2,189
Subtotal – Southern California 95 23,046 25.3% 2,287 San
Francisco 53 12,718 19.6% 3,058 New York 40 10,632 19.0% 3,766
Washington DC 47 15,637 17.2% 2,352 Boston 29 7,432 10.8% 2,753
Seattle 37 7,096 7.6% 2,149 All Other Markets 5 1,320
0.5% 1,261
Total 306 77,881
100.0% 2,645 Unconsolidated Properties 2
945 — —
Grand Total
308 78,826 100.0% $ 2,645
Note: Projects under development are not included in the Portfolio
Summary until construction has been completed. See pages 27 through
30 for the definitions of non-GAAP financial measures and other
terms, such as Average Rental Rate and % of Stabilized NOI.
Equity Residential
Portfolio as of September 30, 2016 Properties
Apartment Units
Wholly Owned Properties 285 73,557 Master-Leased Properties -
Consolidated 3 853 Partially Owned Properties - Consolidated 18
3,471 Partially Owned Properties - Unconsolidated 2
945 308 78,826
Portfolio Rollforward Q3 2016 ($ in thousands)
Properties Apartment
Units
Purchase Price Acquisition
Cap Rate
6/30/2016 315 79,458 Acquisitions: Consolidated: Rental Properties
– Stabilized 1 94 $ 45,200 4.5 % Sales Price Disposition
Yield
Dispositions: Consolidated: Rental Properties (8 ) (941 ) $
(140,600 ) (6.2 %) Land Parcels — — $ (30,000 ) Unconsolidated:
Rental Properties (A) (1 ) (336 ) $ (74,500 ) (5.6 %) Completed
Developments - Consolidated 1 545 Configuration Changes — 6
9/30/2016 308 78,826
Portfolio Rollforward 2016 ($ in thousands)
Properties Apartment
Units
Purchase Price Acquisition
Cap Rate
12/31/2015 394 109,652 Acquisitions: Consolidated: Rental
Properties 4 573 $ 249,334 4.8 % Sales Price Disposition
Yield
Dispositions: Consolidated: Rental Properties (91 ) (27,831 ) $
(6,568,003 ) (5.3 %) Land Parcels — — $ (57,455 ) Unconsolidated:
Rental Properties (A) (1 ) (336 ) $ (74,500 ) (5.6 %) Other:
Military Housing (B) (2 ) (5,161 ) $ (63,250 ) Completed
Developments - Consolidated 4 1,900 Configuration Changes —
29 9/30/2016 308 78,826 Note:
See pages 27 through 30 for the definitions of non-GAAP financial
measures and other terms, such as Acquisition Cap Rate and
Disposition Yield. (A) The Company owned a 20% interest in
this unconsolidated rental property. Sale price listed is the gross
sale price. The Company's share of the net sales proceeds
approximated $12.4 million. (B) The Company sold its entire
interest in the management contracts and related rights associated
with the military housing ventures at Joint Base Lewis McChord
during the second quarter of 2016.
Equity Residential
Third Quarter 2016 vs.
Third Quarter 2015 Same Store Results/Statistics for 72,229
Same Store Apartment Units $ in thousands (except for Average
Rental Rate) Results Statistics Average Rental Physical
Description Revenues Expenses NOI Rate Occupancy Turnover Q3
2016 $ 563,892 $ 168,706 $ 395,186 $ 2,602 96.0 % 17.5 % Q3 2015 $
545,281 $ 159,343 $ 385,938 $ 2,516
96.2 % 17.9 % Change $ 18,611 $ 9,363 $ 9,248
$ 86 (0.2 %) (0.4 %) Change 3.4 % 5.9 %
2.4 % 3.4 %
Third Quarter 2016 vs.
Second Quarter 2016 Same Store Results/Statistics for 73,867
Same Store Apartment Units $ in thousands (except for Average
Rental Rate) Results Statistics Average Rental Physical
Description Revenues Expenses NOI Rate Occupancy Turnover Q3
2016 $ 578,222 $ 173,015 $ 405,207 $ 2,609 96.0 % 17.4 % Q2 2016 $
570,080 $ 163,646 $ 406,434 $ 2,571
96.2 % 14.8 % Change $ 8,142 $ 9,369 $ (1,227
) $ 38 (0.2 %) 2.6 % Change 1.4 % 5.7 % (0.3 %) 1.5 %
September YTD 2016 vs.
September YTD 2015 Same Store Results/Statistics for 71,488
Same Store Apartment Units $ in thousands (except for Average
Rental Rate) Results Statistics Average Rental Physical
Description Revenues Expenses NOI Rate Occupancy Turnover
YTD 2016 $ 1,647,480 $ 484,643 $ 1,162,837 $ 2,562 96.1 % 43.0 %
YTD 2015 $ 1,583,810 $ 472,930 $ 1,110,880 $
2,463 96.1 % 42.9 % Change $ 63,670 $ 11,713
$ 51,957 $ 99 0.0 % 0.1 % Change 4.0 %
2.5 % 4.7 % 4.0 % Note: Same store operating expenses and
same store NOI no longer include an allocation of property
management expenses either in the current or comparable periods.
The Company has added guidance on property management expense on
page 26 of this release. See pages 27 through 30 for the
definitions of non-GAAP financial measures and other terms, such as
Average Rental Rate, NOI, Physical Occupancy and Turnover.
Equity Residential Third Quarter 2016 vs. Third Quarter
2015 Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year's Quarter Q3 2016 Q3
2016 Q3 2016 Weighted % of Average Average Average Apartment Actual
Rental Physical Q3 2016 Rental Physical Markets/Metro Areas Units
NOI Rate Occupancy % Turnover Revenues Expenses NOI Rate Occupancy
Turnover Los Angeles 13,950 17.1 % $ 2,352 96.2 % 19.0 % 5.2
% 3.9 % 5.7 % 4.9 % 0.1 % (0.4 %) San Diego 3,505 4.1 % 2,189 96.6
% 19.1 % 5.0 % 2.2 % 6.1 % 4.8 % 0.1 % (0.7 %) Orange County 3,490
3.9 % 1,997 96.2 % 17.2 % 5.9 % 2.0 % 7.2 % 5.5 % 0.4 % (0.8
%) Subtotal – Southern California 20,945 25.1 % 2,266 96.3 % 18.7 %
5.2 % 3.4 % 6.0 % 5.0 % 0.2 % (0.6 %) Washington DC 15,475
18.8 % 2,352 96.1 % 17.0 % 1.6 % 3.6 % 0.7 % 1.5 % (0.1 %) 0.0 %
New York 10,007 18.6 % 3,702 96.2 % 13.6 % 1.3 % 12.1 % (4.0 %) 1.5
% (0.5 %) (0.3 %) San Francisco 10,846 17.6 % 2,914 95.6 % 19.9 %
5.0 % 5.5 % 4.9 % 5.9 % (0.8 %) 0.7 % Boston 7,338 11.5 % 2,753
95.9 % 17.7 % 1.9 % 2.6 % 1.5 % 2.3 % (0.3 %) (0.8 %) Seattle 6,298
7.7 % 2,155 95.9 % 16.3 % 6.7 % 7.6 % 6.4 % 5.1 % 0.5 % (3.0 %) All
Other Markets 1,320 0.7 % 1,261 96.0 % 16.7 % 6.5 % (5.9 %) 16.9 %
6.4 % 0.1 % 1.2 %
Total 72,229 100.0 % $ 2,602
96.0 % 17.5 % 3.4 % 5.9 % 2.4 % 3.4 % (0.2 %) (0.4 %)
Equity Residential Third Quarter 2016 vs. Second Quarter
2016 Same Store Results/Statistics by Market
Increase (Decrease) from Prior Quarter Q3 2016 Q3 2016 Q3
2016 Weighted % of Average Average Average Apartment Actual Rental
Physical Q3 2016 Rental Physical Markets/Metro Areas Units NOI Rate
Occupancy % Turnover Revenues Expenses NOI Rate Occupancy Turnover
Los Angeles 14,336 17.1 % $ 2,352 96.2 % 19.0 % 1.8 % 5.5 %
0.3 % 1.6 % 0.1 % 1.9 % San Diego 3,505 4.1 % 2,189 96.6 % 19.1 %
2.4 % 2.8 % 2.2 % 2.2 % 0.1 % 2.4 % Orange County 3,684 3.9 %
2,012 96.1 % 17.1 % 2.1 % 11.2 % (0.7 %) 2.3 % (0.3 %) 2.7 %
Subtotal – Southern California 21,525 25.1 % 2,267 96.2 % 18.7 %
1.9 % 5.8 % 0.4 % 1.8 % 0.0 % 2.2 % New York 10,396 19.1 %
3,742 96.2 % 13.6 % 0.9 % 7.8 % (2.5 %) 0.6 % (0.2 %) 2.2 %
Washington DC 15,475 18.3 % 2,352 96.1 % 17.0 % 1.0 % 6.5 % (1.3 %)
1.2 % (0.1 %) 3.1 % San Francisco 11,019 17.4 % 2,920 95.6 % 19.9 %
1.3 % 3.5 % 0.6 % 2.0 % (0.7 %) 4.0 % Boston 7,338 11.2 % 2,753
95.9 % 17.7 % 0.7 % 7.0 % (1.6 %) 1.5 % (0.3 %) 4.8 % Seattle 6,794
8.2 % 2,146 95.9 % 16.3 % 3.7 % (0.8 %) 5.5 % 2.4 % 0.3 % (1.0 %)
All Other Markets 1,320 0.7 % 1,261 96.0 % 16.7 % 1.4 % 4.1 % (0.3
%) 1.9 % (0.6 %) 3.7 %
Total 73,867 100.0 % $
2,609 96.0 % 17.4 % 1.4 % 5.7 % (0.3 %) 1.5 % (0.2 %) 2.6 %
Equity Residential September YTD 2016 vs. September YTD
2015 Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year Sept. YTD 16 Sept. YTD
16 Sept. YTD 16 Weighted % of Average Average Average Apartment
Actual Rental Physical Sept. YTD 16 Rental Physical Markets/Metro
Areas Units NOI Rate Occupancy % Turnover Revenues Expenses NOI
Rate Occupancy Turnover Los Angeles 13,698 16.7 % $ 2,295
96.1 % 47.8 % 5.8 % 2.2 % 7.4 % 5.5 % 0.2 % (0.1 %) San Diego 3,505
4.1 % 2,149 96.3 % 49.8 % 5.6 % 2.4 % 6.9 % 5.4 % 0.2 % (1.0 %)
Orange County 3,490 3.9 % 1,954 96.3 % 41.4 % 5.9 % 0.7 %
7.7 % 5.6 % 0.3 % (1.7 %) Subtotal – Southern California 20,693
24.7 % 2,212 96.2 % 47.1 % 5.8 % 2.0 % 7.4 % 5.5 % 0.2 % (0.5 %)
New York 10,007 19.2 % 3,671 96.4 % 33.7 % 2.1 % 4.6 % 0.8 %
2.2 % (0.2 %) 0.8 % Washington DC 15,475 19.1 % 2,326 96.0 % 40.4 %
1.2 % 0.8 % 1.4 % 1.0 % 0.0 % 0.8 % San Francisco 10,846 17.7 %
2,863 96.1 % 47.7 % 7.4 % 4.2 % 8.4 % 7.9 % (0.4 %) 1.1 % Boston
7,136 11.4 % 2,705 95.8 % 41.6 % 2.6 % (2.6 %) 4.8 % 2.8 % (0.4 %)
1.1 % Seattle 6,011 7.2 % 2,101 95.6 % 45.5 % 6.2 % 7.9 % 5.5 % 5.7
% 0.1 % (3.5 %) All Other Markets 1,320 0.7 % 1,235 96.4 % 38.9 %
5.6 % (5.1 %) 14.7 % 5.3 % 0.3 % (0.8 %)
Total 71,488 100.0 % $ 2,562 96.1 % 43.0 % 4.0 % 2.5 % 4.7 %
4.0 % 0.0 % 0.1 %
Equity Residential
Third Quarter 2016 vs. Third Quarter 2015
Same Store Operating Expenses for 72,229 Same Store Apartment
Units ($ in thousands)
% of Actual Q3 2016 Actual Actual $ % Operating Q3 2016 Q3 2015
Change Change Expenses Real estate taxes $ 68,753 $ 63,565 $
5,188 8.2 % 40.7 % On-site payroll (1) 38,240 35,557 2,683 7.5 %
22.7 % Utilities (2) 23,480 23,901 (421 ) (1.8 %) 13.9 % Repairs
and maintenance (3) 23,049 22,098 951 4.3 % 13.7 % Insurance 4,359
4,211 148 3.5 % 2.6 % Leasing and advertising 3,380 2,254 1,126
50.0 % 2.0 % Other on-site operating expenses (4) 7,445
7,757 (312 ) (4.0 %) 4.4 % Same store
operating expenses $ 168,706 $ 159,343 $ 9,363 5.9 % 100.0 %
September YTD 2016 vs. September YTD
2015 Same Store Operating Expenses for 71,488 Same Store
Apartment Units $ in thousands
% of Actual YTD 2016 Actual Actual $ % Operating YTD 2016 YTD 2015
Change Change Expenses Real estate taxes $ 200,022 $ 188,669
$ 11,353 6.0 % 41.3 % On-site payroll (1) 109,028 106,079 2,949 2.8
% 22.5 % Utilities (2) 67,836 72,091 (4,255 ) (5.9 %) 14.0 %
Repairs and maintenance (3) 63,126 62,534 592 0.9 % 13.0 %
Insurance 12,910 12,440 470 3.8 % 2.7 % Leasing and advertising
7,518 6,351 1,167 18.4 % 1.5 % Other on-site operating expenses (4)
24,203 24,766 (563 ) (2.3 %) 5.0 % Same
store operating expenses $ 484,643 $ 472,930 $ 11,713 2.5 %
100.0 % Note: Same store operating expenses no longer
include an allocation of property management expenses either in the
current or comparable periods. The Company has added guidance on
property management expense on page 26 of this release. (1)
On-site payroll - Includes payroll and related expenses for on-site
personnel including property managers, leasing consultants and
maintenance staff. (2) Utilities - Represents gross expenses
prior to any recoveries under the Resident Utility Billing System
("RUBS"). Recoveries are reflected in rental income. (3)
Repairs and maintenance - Includes general maintenance costs,
apartment 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 and maintenance costs. (4)
Other on-site operating expenses - Includes ground lease costs and
administrative costs such as office supplies, telephone and data
charges and association and business licensing fees.
Equity Residential Debt
Summary as of September 30, 2016 ($ in thousands)
Weighted Weighted Average
Average Maturities Amounts (1)
% of Total
Rates (1) (years) Secured $ 4,138,301 48.7 % 4.34 % 6.7
Unsecured 4,360,486 51.3 % 4.54 % 10.3 Total $
8,498,787 100.0 % 4.44 % 8.5 Fixed Rate Debt: Secured –
Conventional $ 3,503,487 41.2 %
4.95
% 5.1 Unsecured – Public 3,904,035 46.0 %
4.96
% 11.2
Fixed Rate Debt
7,407,522 87.2 %
4.96
% 8.3 Floating Rate Debt: Secured – Conventional 7,041 0.1 %
0.50
% 15.6 Secured – Tax Exempt 627,773 7.4 %
0.98
% 14.5 Unsecured – Public (2) 456,451 5.3 %
1.22
% 2.8 Unsecured – Revolving Credit Facility — —
1.34
% 1.5 Unsecured – Commercial Paper Program (3) — —
0.96
% — Floating Rate Debt 1,091,265 12.8 %
1.07
% 9.9 Total $ 8,498,787 100.0 %
4.44
% 8.5 (1) Net of the effect of any derivative instruments.
Weighted average rates are for the nine months ended September 30,
2016. (2) Fair value interest rate swaps convert the $450.0
million 2.375% notes due July 1, 2019 to a floating interest rate
of 90-Day LIBOR plus 0.61%. (3) As of September 30, 2016,
there was no commercial paper outstanding. Note: The Company
capitalized interest of approximately $41.7 million and $45.8
million during the nine months ended September 30, 2016 and 2015,
respectively. The Company capitalized interest of approximately
$13.3 million and $15.4 million during the quarters ended September
30, 2016 and 2015, respectively. Note: The Company recorded
approximately $18.9 million and $5.8 million of net debt
discount/deferred derivative settlement amortization as additional
interest expense during the nine months ended September 30, 2016
and 2015, respectively. The Company recorded approximately $5.1
million and $2.7 million of net debt discount/deferred derivative
settlement amortization as additional interest expense during the
quarters ended September 30, 2016 and 2015, respectively.
Debt Maturity Schedule as of September 30, 2016 ($ in
thousands)
Weighted Weighted Average Rates Average
Fixed Floating on Fixed Rates on Year Rate (1) Rate (1) Total % of
Total Rate Debt (1) Total Debt (1) 2016 $ 1,938 $ — $ 1,938
0.0 % 4.68 % 4.68 % 2017 605,397 388 605,785 7.0 % 6.19 % 6.18 %
2018 83,695 97,550 181,245 2.1 % 5.57 % 3.18 % 2019 807,680 478,867
1,286,547 15.0 % 5.47 % 3.89 % 2020 1,679,590 686 1,680,276 19.5 %
5.49 % 5.49 % 2021 946,257 725 946,982 11.0 % 4.63 % 4.63 % 2022
266,447 766 267,213 3.1 % 3.27 % 3.26 % 2023 1,327,965 809
1,328,774 15.5 % 3.74 % 3.74 % 2024 2,498 854 3,352 0.0 % 4.97 %
3.94 % 2025 452,625 903 453,528 5.3 % 3.38 % 3.38 % 2026+
1,271,816 575,470 1,847,286 21.5
% 4.76 % 3.55 % Subtotal 7,445,908 1,157,018 8,602,926 100.0 % 4.79
% 4.29 % Deferred Financing Costs (30,658 ) (9,272 ) (39,930 ) N/A
N/A N/A Premium/(Discount) (7,728 ) (56,481 )
(64,209 ) N/A N/A N/A Total $ 7,407,522
$ 1,091,265 $ 8,498,787 100.0 % 4.79 % 4.29 %
(1) Net of the effect of any derivative instruments.
Weighted average rates are as of September 30, 2016.
Equity Residential Unsecured Debt Summary as of September
30, 2016 ($ in thousands)
Interest Due Rate Date Amount
Fixed Rate Notes: 5.750
% 06/15/17 $ 394,077 7.125 % 10/15/17 103,898 4.750 % 07/15/20
600,000 4.625 % 12/15/21 750,000 3.000 % 04/15/23 500,000 3.375 %
06/01/25
450,000 7.570 % 08/15/26 92,025 4.500 %
07/01/44
750,000 4.500 %
06/01/45
300,000 Deferred Financing Costs and Unamortized (Discount)
(35,965 ) 3,904,035
Floating Rate
Notes: (1) 07/01/19 450,000 Fair Value Derivative Adjustments
(1) 07/01/19 8,218 Deferred Financing Costs and Unamortized
(Discount) (1,767 ) 456,451
Line of Credit and Commercial Paper: Revolving Credit
Facility (2) (3) LIBOR+0.95% 04/01/18 — Commercial Paper Program
(2) (4) — —
Total
Unsecured Debt $ 4,360,486 (1) Fair value
interest rate swaps convert the $450.0 million 2.375% notes due
July 1, 2019 to a floating interest rate of 90-Day LIBOR plus
0.61%. (2) Facility/program is private. All other unsecured
debt is public. (3) The interest rate on advances under the
$2.5 billion revolving credit facility maturing April 1, 2018 will
generally be LIBOR plus a spread (currently 0.95%) 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 September 30, 2016, there was approximately
$2.48 billion available on this facility (net of $24.6 million
which was restricted/dedicated to support letters of credit).
(4) The Company may borrow up to a maximum of $500.0 million
on the commercial paper program subject to market conditions. The
notes bear interest at various floating rates with a weighted
average of 0.96% for the nine months ended September 30, 2016. No
amounts were outstanding at September 30, 2016.
Equity
Residential Selected Unsecured
Public Debt Covenants
September 30, June 30, 2016 2016 Total Debt to Adjusted
Total Assets (not to exceed 60%) 32.8% 33.1% Secured Debt to
Adjusted Total Assets (not to exceed 40%) 16.0% 16.2%
Consolidated Income Available for Debt Service to Maximum Annual
Service Charges (must be at least 1.5 to 1) 3.88 3.86 Total
Unsecured Assets to Unsecured Debt 447.4% 442.6% (must be at least
150%) Note: These selected covenants relate to ERP Operating
Limited Partnership's ("ERPOP") outstanding unsecured public debt,
which represent the Company's most restrictive covenants. Equity
Residential is the general partner of ERPOP.
Selected
Credit Ratios
September 30, June 30, 2016 2016 Total debt to Normalized
EBITDA 5.20x 5.00x Net debt to Normalized EBITDA 4.85x 4.67x
Unencumbered NOI as a % of total NOI 70.9% 71.0%
Note: See page 24 for the Normalized EBITDA reconciliations.
Equity Residential
Capital Structure as of September 30, 2016
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 4,138,301 48.7% Unsecured Debt
4,360,486 51.3%
Total Debt 8,498,787
100.0% 25.8% Common Shares (includes
Restricted Shares) 365,657,065 96.2% Units (includes OP Units and
Restricted Units) 14,627,745 3.8% Total Shares
and Units 380,284,810 100.0% Common Share Price at September 30,
2016 $ 64.33 24,463,722 99.8 % Perpetual Preferred Equity (see
below) 37,280 0.2 %
Total Equity
24,501,002 100.0 % 74.2 % Total
Market Capitalization $ 32,999,789 100.0 %
Perpetual Preferred Equity as of September 30, 2016 (Amounts
in thousands except for share and per share amounts)
Annual Annual Redemption Outstanding Liquidation Dividend Dividend
Series Date Shares Value Per Share Amount Preferred Shares:
8.29% Series K 12/10/26 745,600 $ 37,280 $ 4.145 $ 3,091
Total Perpetual Preferred Equity 745,600 $ 37,280 $ 3,091
Equity Residential Common Share and Unit Weighted
Average Amounts Outstanding YTD Q3
2016 YTD Q3 2015 Q3 2016 Q3 2015
Weighted Average Amounts
Outstanding for Net Income Purposes: Common Shares - basic
364,916,765 363,386,211 365,109,088 363,578,666 Shares issuable
from assumed conversion/vesting of: - OP Units 13,827,914
13,583,959 13,898,660 13,568,180 - long-term compensation
shares/units 3,539,383 3,452,974 3,365,546 3,516,096 Total
Common Shares and Units - diluted 382,284,062 380,423,144
382,373,294 380,662,942
Weighted Average Amounts
Outstanding for FFO and Normalized FFO Purposes: Common Shares
- basic 364,916,765 363,386,211 365,109,088 363,578,666 OP Units -
basic 13,827,914 13,583,959 13,898,660 13,568,180 Total
Common Shares and OP Units - basic 378,744,679 376,970,170
379,007,748 377,146,846 Shares issuable from assumed
conversion/vesting of: - long-term compensation shares/units
3,539,383 3,452,974 3,365,546 3,516,096 Total Common Shares
and Units - diluted 382,284,062 380,423,144 382,373,294 380,662,942
Period Ending Amounts Outstanding: Common Shares
(includes Restricted Shares) 365,657,065 364,140,040 Units
(includes OP Units and Restricted Units) 14,627,745 14,455,727
Total Shares and Units 380,284,810 378,595,767
Equity Residential Partially Owned Entities as of
September 30, 2016 (Amounts in thousands except for property
and apartment unit amounts) Consolidated
Unconsolidated Total properties 18 2
Total apartment units 3,471 945
Operating information for the nine months ended
9/30/16 (at 100%): Operating revenue $ 70,123 $ 23,844 Operating
expenses 17,183 8,368 Net
operating income 52,940 15,476 Property management 2,476 636
General and administrative/other 50 49 Depreciation 16,161
12,001 Operating income 34,253 2,790
Interest and other income 47 — Other expenses (7 ) — Interest:
Expense incurred, net (11,073 ) (6,217 ) Amortization of deferred
financing costs (289 ) — Income (loss)
before income and other taxes and (loss) from investments in
unconsolidated entities 22,931 (3,427 ) Income and other tax
(expense) benefit (44 ) (13 ) (Loss) from investments in
unconsolidated entities (1,091 ) — Net income
(loss) $ 21,796 $ (3,440 ) Debt - Secured (1): EQR
Ownership (2) $ 243,145 $ 29,084 Noncontrolling Ownership
75,282 116,339 Total (at 100%) $
318,427 $ 145,423 (1) All debt is non-recourse
to the Company. (2) Represents the Company's current equity
ownership interest. Note: The above table excludes the
Company's interests in unconsolidated joint ventures established in
connection with the acquisition of certain real estate related
assets from Archstone Enterprise LP (such assets are referred to
herein as "Archstone"). These ventures owned certain non-core
Archstone assets and succeeded to certain residual Archstone
liabilities/litigation, as well as responsibility for tax
protection arrangements and third-party preferred interests in
former Archstone subsidiaries. The preferred interests had an
aggregate liquidation value of $41.3 million at September 30, 2016.
The ventures are owned 60% by the Company.
Equity
Residential Development and Lease-Up Projects as of
September 30, 2016 (Amounts in thousands except for project and
apartment unit amounts) Total
Book No. of Total Total
Value Not Estimated Estimated Apartment Capital Book Value Placed
in Total Percentage Percentage Percentage Completion Stabilization
Projects Location Units Cost to Date Service
Debt Completed Leased Occupied
Date Date
Projects Under
Development:
One Henry Adams San Francisco, CA 241 $ 172,337 $ 150,049 $ 150,049
$
—
92 % 3 % — Q4 2016 Q4 2017 The Alton (formerly Millikan) Irvine, CA
344 102,331 97,031 97,031
—
86 % 2 % — Q1 2017 Q3 2017 455 I St Washington, DC 174 73,157
52,291 52,291 — 60 % — — Q3 2017 Q2 2018 855 Brannan (formerly 801
Brannan) San Francisco, CA 449 304,035 174,190 174,190 — 53 % — —
Q3 2017 Q1 2019 2nd & Pine Seattle, WA 398 215,787 156,240
156,240 — 70 % — — Q3 2017 Q2 2019 Cascade Seattle, WA 477 176,378
108,753 108,753 — 59 % — — Q3 2017 Q2 2019 100 K Street Washington,
DC 222 88,023 22,514 22,514 — 3 % — — Q4 2018 Q4 2019
Projects Under Development 2,305
1,132,048 761,068 761,068
—
Completed Not
Stabilized (1):
Vista 99 (formerly Tasman) San Jose, CA 554 208,923 202,161 — — 94
% 93 % Completed Q4 2016 Potrero 1010 San Francisco, CA 453 224,474
217,296 — — 85 % 83 % Completed Q1 2017 Altitude (formerly Village
at Howard Hughes) Los Angeles, CA 545 193,231 186,930 — — 39 % 36 %
Completed Q2 2017 340 Fremont (formerly Rincon Hill) San Francisco,
CA 348 287,454 285,149 — — 61 % 56 % Completed Q1 2018
Projects Completed Not
Stabilized 1,900 914,082
891,536 — —
Completed and
Stabilized During the Quarter:
Odin (formerly Tallman) Seattle, WA 301 80,677 80,509 — — 99 % 98 %
Completed Stabilized Azure (at Mission Bay) San Francisco, CA 273
185,290 185,111 — — 97 % 96 % Completed Stabilized 170 Amsterdam
(2) New York, NY 236 111,932 111,859 — — 92 % 91 % Completed
Stabilized
Projects Completed
and Stabilized During the Quarter 810
377,899 377,479 —
— Total Development Projects 5,015
$ 2,424,029 $ 2,030,083 $
761,068 $ — Land Held for
Development N/A N/A $
115,082 $ 115,082 $ —
Total Capital Q3 2016
NOI CONTRIBUTION FROM DEVELOPMENT
PROJECTS Cost NOI Projects Under Development $ 1,132,048 $ (206
) Completed Not Stabilized 914,082 3,799 Completed and Stabilized
During the Quarter 377,899 5,643 Total
Development NOI Contribution $ 2,424,029 $ 9,236
Note: All development projects listed are wholly owned by
the Company. (1) Properties included here are substantially
complete. However, they may still require additional exterior and
interior work for all apartment units to be available for leasing.
(2) 170 Amsterdam - The land under this project is subject
to a long term ground lease.
Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to
Real Estate For the Nine Months Ended September 30, 2016
(Amounts in thousands except for apartment unit and per apartment
unit amounts)
Repairs and
Maintenance Expenses Capital Expenditures to Real Estate Total
Expenditures Total
Apartment
Units (1)
Expense (2) Avg. Per
Apartment
Unit
Payroll (3) Avg. Per
Apartment
Unit
Total Avg. Per
Apartment
Unit
Replacements
(4)
Avg. Per
Apartment
Unit
Building
Improvements
(5)
Avg. Per
Apartment
Unit
Total Avg. Per
Apartment
Unit
Grand
Total
Avg. Per
Apartment
Unit
Same Store Properties 71,488 $ 63,126 $ 883 $ 49,786 $ 696 $
112,912 $ 1,579 $ 57,224 $ 801 $ 55,290 $ 773 $ 112,514 $ 1,574 $
225,426 $ 3,153 Non-Same Store Properties (6) 6,393 3,353
684 2,494 508 5,847 1,192 3,278 669 5,987 1,221 9,265 1,890 15,112
3,082 Other (7) — 3,685 3,981 7,666
1,985 787 2,772 10,438 Total
77,881 $ 70,164 $ 56,261 $ 126,425 $ 62,487 $ 62,064 $ 124,551 $
250,976 (1) Total Apartment Units - Excludes 945
unconsolidated apartment units for which repairs and maintenance
expenses and capital expenditures to real estate are self-funded
and do not consolidate into the Company's results. (2)
Repairs and Maintenance Expenses - Includes general maintenance
costs, apartment 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 and maintenance costs. (3)
Maintenance Payroll - Includes payroll and related expenses for
maintenance staff. (4) Replacements - Includes new
expenditures inside the apartment units such as appliances,
mechanical equipment, fixtures and flooring, including carpeting.
Replacements for same store properties also include $35.9 million
spent during the nine months ended September 30, 2016 on apartment
unit renovations/rehabs (primarily kitchens and baths) on
approximately 3,200 same store apartment units (equating to
approximately $11,000 per apartment unit rehabbed) designed to
reposition these units for higher rental levels in their respective
markets. In 2016, the Company expects to spend approximately $50.0
million for all unit renovation/rehab costs (primarily on same
store properties) at a weighted average cost of $11,000 per
apartment unit rehabbed. (5) Building Improvements -
Includes roof replacement, paving, amenities and common areas,
building mechanical equipment systems, exterior painting and
siding, major landscaping, vehicles and office and maintenance
equipment. (6) Per apartment unit amounts are based on a
weighted average of 4,904 apartment units. (7) Other -
Primarily includes expenditures for properties sold and properties
under development. (8) Based on the approximately 70,000
apartment units expected to be included in same store properties at
December 31, 2016, the Company estimates that during 2016 it will
spend approximately $2,300 per apartment unit of capital
expenditures, inclusive of apartment unit renovation/rehab costs,
or $1,600 per apartment unit excluding apartment unit
renovation/rehab costs.
Equity Residential
Normalized EBITDA Reconciliations (Amounts in thousands)
Normalized EBITDA Reconciliations for Page 18
Trailing Twelve Months 2016 2015 September
30, 2016 June 30, 2016 Q3 Q2 Q1
Q4 Q3 Net income $ 4,391,443 $ 4,379,407 $ 217,492 $
228,400 $ 3,731,831 $ 213,720 $ 205,456 Interest expense incurred,
net 496,856 524,802 86,352 86,472 213,492 110,540 114,298
Amortization of deferred financing costs 13,067 13,413 2,261 2,345
5,394 3,067 2,607 Depreciation 709,275 726,104 179,230 176,127
172,885 181,033 196,059 Income and other tax expense (benefit)
(includes discontinued operations) 1,419 1,322
426 416 358
219 329
EBITDA 5,612,060
5,645,048 485,761 493,760
4,123,960
508,579 518,749 Property acquisition costs
(other expenses) 2,256 2,242 41 76 1,335 804 27 Write-off of
pursuit costs (other expenses) 4,265 4,120 816 1,115 1,448 886 671
(Income) loss from investments in unconsolidated entities (6,483 )
2,308 (7,750 ) 800 1,104 (637 ) 1,041 Net (gain) on sales of land
parcels (15,759 ) (11,722 ) (4,037 ) — (11,722 ) — — (Gain) on sale
of investment securities and other investments (interest and other
income) (58,555 ) (55,295 ) (3,260 ) (54,600 ) (556 ) (139 ) —
Executive compensation program duplicative costs and retirement
benefit obligations 3,413 8,021 359 359 359 2,336 4,967
Insurance/litigation settlement or reserve income (interest and
other income) (3,098 ) (1,581 ) (1,517 ) (1,321 ) (53 ) (207 ) —
Insurance/litigation/environmental settlement or reserve expense
(other expenses) 7,169 (2,149 ) 9,339 3 (244 ) (1,929 ) 21 Other
(interest and other income) (63 ) (108 ) (63 ) — — — (108 ) Net
(gain) on sales of discontinued operations (43 ) (15 ) (28 ) — (15
) — — Net (gain) on sales of real estate properties
(3,910,313 ) (3,887,216 ) (90,036 ) (57,356 )
(3,723,479 ) (39,442 ) (66,939 )
Normalized EBITDA $ 1,634,849 $
1,703,653 $ 389,625 $
382,836 $ 392,137
$ 470,251 $ 458,429
Balance Sheet
Items:
September 30, 2016 June 30, 2016 Total debt $
8,498,787 $ 8,510,994 Cash and cash equivalents (517,586 ) (497,843
) Mortgage principal reserves/sinking funds (56,404 )
(54,126 ) Net debt $ 7,924,797 $ 7,959,025
Equity Residential Adjustments from FFO to Normalized
FFO (Amounts in thousands)
Nine Months Ended September 30, Quarter Ended
September 30, 2016 2015 Variance 2016 2015 Variance Impairment $ —
$ — $ — $ — $ — $ — Asset
impairment and valuation allowances — —
— — — —
Archstone indirect costs ((income) loss from investments in
unconsolidated entities) (A) 656 (16,473 ) 17,129 371 245 126
Property acquisition costs (other expenses) 1,452 204 1,248 41 27
14 Write-off of pursuit costs (other expenses) 3,379
2,322 1,057 816
671 145 Property acquisition costs and
write-off of pursuit costs 5,487 (13,947 )
19,434 1,228 943
285 Prepayment premiums/penalties (interest expense)
112,419 — 112,419 — — — Write-off of unamortized deferred financing
costs (interest expense) 3,363 88 3,275 112 13 99 Write-off of
unamortized (premiums)/discounts/OCI (interest expense) 4,494
(1,379 ) 5,873 — 16 (16 ) Loss due to ineffectiveness of forward
starting swaps (interest expense) — 3,003 (3,003 ) — 3,003 (3,003 )
Premium on redemption of Preferred Shares —
2,789 (2,789 ) — —
— Debt extinguishment (gains) losses, including prepayment
penalties, preferred share redemptions and non-cash convertible
debt discounts 120,276 4,501
115,775 112 3,032 (2,920
) Net (gain) loss on sales of land parcels (15,759 ) 1
(15,760 ) (4,037 ) — (4,037 ) Net (gain) loss on sales of
unconsolidated entities – non-operating assets (81 ) (342 ) 261 (81
) 72 (153 ) (Gain) on sale of investment securities and other
investments (interest and other income) (B) (58,416 )
(387 ) (58,029 ) (3,260 ) —
(3,260 ) (Gains) losses on sales of non-operating assets, net of
income and other tax expense (benefit) (74,256 ) (728
) (73,528 ) (7,378 ) 72 (7,450 )
Executive compensation program duplicative costs and
retirement benefit obligations (C) 1,077 9,640 (8,563 ) 359 4,967
(4,608 ) Insurance/litigation settlement or reserve income
(interest and other income) (2,891 ) (5,770 ) 2,879 (1,517 ) —
(1,517 ) Insurance/litigation/environmental settlement or reserve
expense (other expenses) (D) 9,098 (867 ) 9,965 9,339 21 9,318
Other (interest and other income) (63 ) (302 )
239 (63 ) (108 ) 45 Other
miscellaneous items 7,221 2,701
4,520 8,118 4,880 3,238
Adjustments from
FFO to Normalized FFO $ 58,728 $ (7,473 ) $ 66,201 $
2,080 $ 8,927 $ (6,847 ) (A) Archstone
indirect costs primarily includes the Company's 60% share of
winddown costs for such items as office leases, litigation and
German operations/sales that were incurred indirectly through the
Company's interest in various Archstone-related unconsolidated
joint ventures. During the nine months ended September 30, 2015,
the amount also includes approximately $18.6 million received
related to the favorable settlement of a lawsuit. (B) The
nine months ended September 30, 2016 includes a $52.4 million gain
related to the sale of the Company's entire interest in the
management contracts and related rights associated with the
military housing ventures at Joint Base Lewis McChord. (C)
Represents the accounting cost associated with the overlap of the
Company's current and former performance based executive
compensation programs. The Company is required to expense in 2016
and 2015 a portion of both the previous program's time based equity
grants for service in 2014 or 2015 and the performance based grants
issued under the current program, creating a duplicative charge.
For the nine months and quarter ended September 30, 2016, the
entire amounts have been recorded to general and administrative
expense. For the nine months ended September 30, 2015, $1.0 million
and $6.0 million has been recorded to property management expense
and general and administrative expense, respectively. For the
quarter ended September 30, 2015, $0.3 million and $2.0 million has
been recorded to property management expense and general and
administrative expense, respectively. Also includes $2.6 million
recorded to general and administrative expense during the nine
months and quarter ended September 30, 2015 as a result of certain
adjustments for retirement benefit obligations. (D) For the
nine months and quarter ended September 30, 2016, includes a $5.0
million litigation reserve and a $4.3 million environmental
reserve. Note: See pages 27 through 30 for the definitions
of non-GAAP financial measures and other terms as well as the
reconciliations of EPS to FFO per share and Normalized FFO per
share.
Equity Residential Normalized FFO Guidance
and Assumptions The guidance/projections provided
below are based on current expectations and are forward-looking.
All guidance is given on a Normalized FFO basis. Therefore, certain
items excluded from Normalized FFO, such as debt extinguishment
costs/prepayment penalties, property acquisition costs and the
write-off of pursuit costs, are not included in the estimates
provided on this page. See pages 27 through 30 for the definitions
of non-GAAP financial measures and other terms as well as the
reconciliations of EPS to FFO per share and Normalized FFO per
share.
2016 Normalized
FFO Guidance (per share diluted)
Q4
2016
2016
Expected Normalized FFO Per Share $0.77 to $0.81 $3.06 to
$3.10
2016 Same Store
Assumptions (see Note below)
Physical occupancy 96.0% Revenue change 3.60% to 3.90%
Expense change 2.80% to 3.20% NOI change 3.80% to 4.10%
Note: The same store guidance provided above is based on the
approximately 70,000 apartment units expected to be included in
same store properties at December 31, 2016. Approximately 25 basis
point change in NOI percentage = $0.01 per share change in EPS/FFO
per share/Normalized FFO per share.
2016 Transaction
Assumptions
Consolidated rental acquisitions $250.0 million Consolidated
rental dispositions $6.7 billion Spread between Acquisition Cap
Rate and Disposition Yield 60 basis points
2016 Debt
Assumptions
Weighted average debt outstanding $9.0 billion to $9.1
billion Weighted average interest rate (reduced for capitalized
interest) 4.02% Interest expense, net (on a Normalized FFO basis)
$361.8 million to $365.8 million Capitalized interest $50.0 million
to $52.0 million Note: All 2016 debt assumptions are shown
on a Normalized FFO basis and therefore exclude the impact of the
debt extinguishment costs/prepayment premiums/penalties shown on
page 25.
2016 Other
Guidance Assumptions
Property management expense $82.0 million to $84.0 million
General and administrative expense (see Note below) $57.0 million
to $58.0 million Interest and other income $3.8 million to $4.0
million Income and other tax expense $1.5 million to $2.0 million
Debt offerings $500.0 million Equity ATM share offerings No amounts
budgeted Preferred share offerings No amounts budgeted Special
dividend paid in Q1 2016 $8.00 per share Special dividend paid in
Q4 2016 $3.00 per share Regular annual dividend (paid in four equal
quarterly installments) $2.015 per share Weighted average Common
Shares and Units - Diluted 382.3 million Note: Normalized
FFO guidance excludes a duplicative charge of approximately $1.4
million, which will be recorded to general and administrative
expense, related to the overlap of accounting costs for the
Company's current and former executive compensation programs.
Equity Residential Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms
(Amounts in thousands except per share and per apartment unit data)
(All per share data is diluted) This Earnings Release
and Supplemental Information includes certain non-GAAP financial
measures and other terms that management believes are helpful in
understanding our business. The definitions and calculations of
these non-GAAP financial measures and other terms may differ from
the definitions and methodologies used by other REITs and,
accordingly, may not be comparable. These non-GAAP financial
measures should not be considered as an alternative to net earnings
or any other GAAP measurement of performance or as an alternative
to cash flows from specific operating, investing or financing
activities. Furthermore, these non-GAAP financial measures are not
intended to be a measure of cash flow or liquidity.
Acquisition Capitalization Rate or Cap Rate – NOI that the
Company anticipates receiving in the next 12 months (or the year
two or three stabilized NOI for properties that are in lease-up at
acquisition) less an estimate of property management
costs/management fees allocated to the project (generally ranging
from 2.0% to 4.0% of revenues depending on the size and income
streams of the asset) and less an estimate for in-the-unit
replacement capital expenditures (generally ranging from $100-$450
per apartment unit depending on the age and condition of the asset)
divided by the gross purchase price of the asset. The weighted
average Acquisition Cap Rate for acquired properties is weighted
based on the projected NOI streams and the relative purchase price
for each respective property.
Average Rental Rate –
Total residential rental revenues divided by the weighted average
occupied apartment units for the reporting period presented.
Debt Covenant Compliance – Our unsecured debt includes
certain financial and operating covenants including, among other
things, maintenance of certain financial ratios. These provisions
are contained in the indentures applicable to each notes payable or
the credit agreement for our line of credit. The Debt Covenant
Compliance ratios that are provided show the Company's compliance
with certain covenants governing our public unsecured debt. These
covenants generally reflect our most restrictive financial
covenants. The Company was in compliance with its unsecured debt
covenants for all years presented (the ratios should not be used
for any other purpose, including without limitation, to evaluate
the Company's financial condition or results of operations, nor do
they indicate the Company's covenant compliance as of any other
date or for any other period).
Disposition Yield –
NOI that the Company anticipates giving up in the next 12 months
less an estimate of property management costs/management fees
allocated to the project (generally ranging from 2.0% to 4.0% of
revenues depending on the size and income streams of the asset) and
less an estimate for in-the-unit replacement capital expenditures
(generally ranging from $100-$450 per apartment unit depending on
the age and condition of the asset) divided by the gross sale price
of the asset. The weighted average Disposition Yield for sold
properties is weighted based on the projected NOI streams and the
relative sales price for each respective property.
Earnings Per Share ("EPS") – Net income per share calculated
in accordance with GAAP. 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.
Economic Gain – Economic Gain is calculated as the net gain
on sales of real estate properties in accordance with GAAP,
excluding accumulated depreciation. The Company generally considers
Economic Gain to be an appropriate supplemental measure to net gain
on sales of real estate properties in accordance with GAAP because
it is one indication of the gross value created by the Company's
acquisition, development, rehab, management and ultimate sale of a
property and because it helps investors to understand the
relationship between the cash proceeds from a sale and the cash
invested in the sold property. The following table presents a
reconciliation of Economic Gain to net gain on sales of real estate
properties in accordance with GAAP: Nine
Months Ended September 30, 2016 Net Gain on Sales
Accumulated of Real Estate Economic Gain Depreciation Gain
Properties Starwood sale $ 1,981,887 $ 1,179,210 $ 3,161,097
Woodland Park sale 258,890 30,442 $ 289,332 River Tower sale
152,320 32,076 $ 184,396 Other sales 123,068 112,978
$ 236,046 Totals $ 2,516,165 $ 1,354,706 $ 3,870,871
Equity Residential Additional Reconciliations and
Definitions of Non-GAAP Financial Measures and Other Terms –
Continued (Amounts in thousands except per share and per
apartment unit data) (All per share data is diluted)
Funds From
Operations and Normalized Funds From Operations:
Funds From Operations (“FFO”) – The National
Association of Real Estate Investment Trusts (“NAREIT”) defines 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 and impairment
write-downs of depreciable operating properties, 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. Expected FFO
per share is calculated on a basis consistent with actual FFO per
share and is considered an appropriate supplemental measure of
expected operating performance when compared to expected EPS.
The Company believes that FFO and FFO available to Common
Shares and 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 Units can help compare the
operating performance of a company’s real estate between periods or
as compared to different companies.
Normalized Funds From
Operations ("Normalized FFO") – Normalized FFO begins with FFO
and excludes: • the impact of any expenses relating to
non-operating asset impairment and valuation allowances; • property
acquisition and other transaction costs related to mergers and
acquisitions and pursuit cost write-offs; • gains and losses from
early debt extinguishment, including prepayment penalties,
preferred share redemptions and the cost related to the implied
option value of non-cash convertible debt discounts; • gains and
losses on the sales of non-operating assets, including gains and
losses from land parcel sales, net of the effect of income tax
benefits or expenses; and • other miscellaneous items.
Expected Normalized FFO per share is calculated on a basis
consistent with actual Normalized FFO per share and is considered
an appropriate supplemental measure of expected operating
performance when compared to expected EPS. The Company
believes that Normalized FFO and Normalized FFO available to Common
Shares and Units are helpful to investors as supplemental measures
of the operating performance of a real estate company because they
allow investors to compare the Company's operating performance to
its performance in prior reporting periods and to the operating
performance of other real estate companies without the effect of
items that by their nature are not comparable from period to period
and tend to obscure the Company's actual operating results.
FFO, FFO available to Common Shares and Units, Normalized FFO and
Normalized FFO available to Common Shares and 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, FFO available to Common Shares and Units,
Normalized FFO and Normalized FFO available to Common Shares and
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, FFO available to
Common Shares and Units, Normalized FFO and Normalized FFO
available to Common Shares and 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.
FFO available to Common Shares and Units and Normalized FFO
available to Common Shares and Units are 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 GAAP. 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
"Noncontrolling Interests – Operating Partnership". Subject to
certain restrictions, the Noncontrolling Interests – Operating
Partnership may exchange their OP Units for Common Shares on a
one-for-one basis.
Equity Residential
Additional Reconciliations and Definitions of Non-GAAP Financial
Measures and Other Terms – Continued (Amounts in thousands
except per share and per apartment unit data) (All per share data
is diluted) The
following table presents reconciliations of EPS to FFO per share
and Normalized FFO per share for pages 7 and 26 (the expected
guidance/projections provided below are based on current
expectations and are forward-looking):
Actual Sept.
Actual Sept.
Actual Actual Expected Expected YTD 2016 YTD 2015 Q3 2016 Q3 2015
Q4 2016 2016 Per Share Per Share Per Share Per Share Per Share Per
Share EPS - Diluted $ 10.92 $ 1.80 $ 0.56 $ 0.53 $0.62 to
$0.66 $11.54 to $11.58 Add: Depreciation expense 1.37 1.53 0.47
0.51 0.47 1.84 Less: Net gain on sales (10.15 ) (0.77
) (0.26 ) (0.17 ) (0.27) (10.42) FFO per share
- Diluted 2.14 2.56 0.77 0.87 0.82 to 0.86 2.96 to 3.00
Asset impairment and valuation allowances — — — — — — Property
acquisition costs and write-off of pursuit costs 0.01 (0.04 ) 0.01
— — 0.01 Debt extinguishment (gains) losses, including prepayment
penalties, preferred share redemptions and non-cash convertible
debt discounts 0.31 0.01 — 0.01 — 0.31 (Gains) losses on sales of
non-operating assets, net of
income and other tax expense (benefit)
(0.19 ) — (0.02 ) — (0.05) (0.24) Other miscellaneous items
0.02 0.01 0.02 0.01
— 0.02 Normalized FFO per share - Diluted $ 2.29
$ 2.54 $ 0.78 $ 0.89 $0.77 to $0.81
$3.06 to $3.10
Net Operating Income (“NOI”) –
NOI is the Company’s primary financial measure for evaluating each
of its apartment properties. NOI is defined as rental income less
direct property operating expenses (including real estate taxes and
insurance). 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 properties. NOI does not include an allocation
of property management expenses. The following tables
present reconciliations of rental income, operating expenses and
NOI for the September YTD 2016 and the Third Quarter 2016 Same
Store Properties (see page 11) to rental income, operating expenses
and NOI per the consolidated statements of operations and NOI to
operating income per the consolidated statements of operations:
Nine Months Ended September 30, Quarter Ended
September 30, 2016 2015 2016 2015 Rental income: Same store
$ 1,647,480 $ 1,583,810 $ 563,892 $ 545,281 Non-same store
169,480 451,549 41,964
148,964 Total rental income 1,816,960 2,035,359 605,856
694,245 Operating expenses: Same store 484,643 472,930
168,706 159,343 Non-same store 63,999 146,531
16,853 48,002 Total operating
expenses 548,642 619,461 185,559 207,345 NOI: Same store
1,162,837 1,110,880 395,186 385,938 Non-same store 105,481
305,018 25,111 100,962
Total NOI 1,268,318 1,415,898 420,297 486,900
Adjustments: Fee and asset management revenue 3,351 6,413 218 2,044
Property management (64,003 ) (64,651 ) (19,517 ) (20,094 ) General
and administrative (47,408 ) (50,618 ) (12,395 ) (15,197 )
Depreciation (528,242 ) (584,862 ) (179,230 )
(196,059 ) Operating income $ 632,016 $
722,180 $ 209,373 $ 257,594
Equity
Residential Additional Reconciliations and Definitions of
Non-GAAP Financial Measures and Other Terms – Continued
(Amounts in thousands except per share and per apartment unit data)
(All per share data is diluted)
Non-Same Store
Properties – For annual comparisons, primarily includes all
properties acquired during 2015 and 2016, plus any properties in
lease-up and not stabilized as of January 1, 2015.
Normalized Earnings Before Interest, Income Taxes, Depreciation
and Amortization ("EBITDA") – Represents net income in
accordance with GAAP before interest expense, income taxes,
depreciation expense and amortization expense and further adjusted
for non-comparable items. Normalized EBITDA, total debt to
Normalized EBITDA and net debt to Normalized EBITDA are important
metrics in evaluating the credit strength of the Company and its
ability to service its debt obligations. The Company believes that
Normalized EBITDA, total debt to Normalized EBITDA and net debt to
Normalized EBITDA are useful to investors, creditors and rating
agencies because they allow investors to compare the Company's
credit strength to prior reporting periods and to other companies
without the effect of items that by their nature are not comparable
from period to period and tend to obscure the Company's actual
credit quality.
Physical Occupancy – The weighted
average occupied apartment units for the reporting period divided
by the average of total apartment units available for rent for the
reporting period.
Same Store Properties – For annual
comparisons, primarily includes all properties acquired or
completed that are stabilized prior to January 1, 2015, less
properties subsequently sold. Properties are included in Same Store
when they are stabilized for all of the current and comparable
periods presented.
% of Stabilized NOI – Represents
budgeted 2016 NOI for stabilized properties and projected annual
NOI at stabilization (defined as having achieved 90% occupancy for
three consecutive months) for properties that are in lease-up.
Total Capital Cost – Estimated cost for projects
under development and/or developed and all capitalized costs
incurred to date plus any estimates of costs remaining to be funded
for all projects, including land acquisition costs, construction
costs, capitalized real estate taxes and insurance, capitalized
interest and loan fees, permits, professional fees, allocated
development overhead and other regulatory fees, all in accordance
with GAAP.
Total Market Capitalization – The
aggregate of the market value of the Company’s outstanding common
shares, including restricted shares, the market value of the
Company’s operating partnership units outstanding, including
restricted units (based on the market value of the Company’s common
shares) and the outstanding principal balance of debt. The Company
believes this is a useful measure of a real estate operating
company’s long-term liquidity and balance sheet strength, because
it shows an approximate relationship between a company’s total debt
and the current total market value of its assets based on the
current price at which the Company’s common shares trade. However,
because this measure of leverage changes with fluctuations in the
Company’s share price, which occur regularly, this measure may
change even when the Company’s earnings, interest and debt levels
remain stable.
Turnover – Total residential move-outs
divided by total residential apartment units, including
inter-property and intra-property transfers.
Unencumbered
NOI % – Represents NOI generated by consolidated real estate
assets unencumbered by outstanding secured debt as a percentage of
total NOI generated by all of the Company's consolidated real
estate assets.
Unlevered Internal Rate of Return
(“IRR”) – The Unlevered IRR on sold properties refers to the
internal rate of return calculated by the Company based on the
timing and amount of (i) total revenue earned during the period
owned by the Company and (ii) the gross sales price net of selling
costs, offset by (iii) the undepreciated capital cost of the
properties at the time of sale and (iv) total direct property
operating expenses (including real estate taxes and insurance)
incurred during the period owned by the Company. Each of the items
(i), (ii), (iii) and (iv) is calculated in accordance with GAAP.
The calculation of the Unlevered IRR does not include an
adjustment for the Company’s general and administrative expense,
interest expense or property management expense. Therefore, the
Unlevered IRR is not a substitute for net income as a measure of
our performance. Management believes that the Unlevered IRR
achieved during the period a property is owned by the Company is
useful because it is one indication of the gross value created by
the Company’s acquisition, development, rehab, management and
ultimate sale of a property, before the impact of Company overhead.
The Unlevered IRR achieved on the properties as cited in this
release should not be viewed as an indication of the gross value
created with respect to other properties owned by the Company, and
the Company does not represent that it will achieve similar
Unlevered IRRs upon the disposition of other properties. The
weighted average Unlevered IRR for sold properties is weighted
based on all cash flows over the investment period for each
respective property, including net sales proceeds.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161025006737/en/
Equity ResidentialMarty McKenna, (312) 928-1901
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