EX-99.1 2 a4q14pressrelease.htm EXHIBIT 99.1 4Q'14 Press Release
                                            

Exhibit 99.1
                    
NEWS RELEASE - FOR IMMEDIATE RELEASE    

FEBRUARY 3, 2015

Equity Residential Reports Full Year 2014 Results
2014 Normalized FFO Per Share Increased 11.2%
2015 Normalized FFO Per Share Expected to Increase 7.3%
2015 Common Share Dividend Expected to Increase 10.5%

Chicago, IL - February 3, 2015 - Equity Residential (NYSE: EQR) today reported results for the quarter and year ended December 31, 2014. All per share results are reported as available to common shares on a diluted basis.

“2014 was another exceptional year for Equity Residential in which we delivered year over year growth in Normalized FFO per share of more than 11%, among the best years in our history,” said David J. Neithercut, Equity Residential’s President and CEO.  “Improving labor markets, robust household formation and declining single family home ownership levels will keep demand for rental housing high and produce above trend growth for many years to come.”

Fourth Quarter 2014
FFO (Funds from Operations), as defined by the National Association of Real Estate Investment Trusts (NAREIT), for the fourth quarter of 2014 was $0.87 per share compared to $0.67 per share in the fourth quarter of 2013. The difference is due primarily to higher prepayment penalties incurred in the fourth quarter of 2013 and the items described below.

For the fourth quarter of 2014, the company reported Normalized FFO of $0.86 per share compared to $0.77 per share in the same period of 2013. The following items impacted Normalized FFO per share in the quarter:

•
a positive impact of approximately $0.07 per share from higher same store net operating income (NOI) and approximately $0.02 per share from NOI from non-same store properties currently in lease-up;

•
a positive impact of approximately $0.01 per share from lower G&A expenses; and

•
a negative impact of approximately $0.01 per share due to dilution from the timing of the company’s 2014 transaction activity.

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. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 6 and 28 of this release and the company has included guidance for Normalized FFO on page 27 and FFO on page 28 of this release.


1
                                            

For the fourth quarter of 2014, the company reported earnings of $0.59 per share compared to $0.30 per share in the fourth quarter of 2013. The difference is due primarily to higher gains on property sales in the fourth quarter of 2014, higher prepayment penalties incurred in the fourth quarter of 2013 and the items described above.

Year Ended December 31, 2014
FFO for the year ended December 31, 2014 was $3.15 per share compared to $2.35 per share in the same period of 2013. The difference is due primarily to higher acquisition expenses and prepayment penalties incurred during 2013 and improved operations during 2014.

For the year ended December 31, 2014, the company reported Normalized FFO of $3.17 per share compared to $2.85 per share in the same period of 2013.

For the year ended December 31, 2014, the company reported earnings of $1.73 per share compared to $5.16 per share in the same period of 2013. The difference is due primarily to higher gains on property sales during 2013, partially offset by higher depreciation expense, acquisition expenses and prepayment penalties incurred during 2013 and improved operations during 2014.

Same Store Results
The company’s same store results for all periods include the stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the company.

On a same store fourth quarter to fourth quarter comparison, which includes 98,421 apartment units, revenues increased 4.9%, expenses increased 2.2% and NOI increased 6.3%.

On a same store year to year comparison, which includes 97,911 apartment units, revenues increased 4.3%, expenses increased 1.8% and NOI increased 5.6%.

Investment Activity
The company acquired two properties during the fourth quarter, both in Seattle, with a total of 273 apartment units for an aggregate purchase price of approximately $94.2 million at a weighted average capitalization (cap) rate of 4.8%. Also during the quarter, the company acquired its joint venture partner’s 95% interest in Parc on Powell, a 176-unit apartment property currently under development in Emeryville, a suburb of San Francisco, for a stabilized value of $87.5 million. The company acquired its original 5% interest in the property as part of the Archstone acquisition. The project is expected to stabilize in the second year of full ownership at a 4.8% yield on cost.

During the fourth quarter, the company sold six consolidated apartment properties, consisting of 1,775 apartment units, for an aggregate sale price of approximately $269.9 million at a weighted average cap rate of 5.9%. These sales generated an unlevered internal rate of return (IRR), inclusive of management costs, of 6.5%. Also during the quarter, the company sold for approximately $62.5 million an unconsolidated 388-unit apartment property located in Phoenix, in which it had an 85% interest acquired as part of the Archstone transaction. In addition, the company sold a land parcel located in Los Angeles for a sale price of $32.1 million during the quarter.

During 2014, the company acquired six properties, consisting of 1,353 apartment units, for an aggregate purchase price of approximately $469.8 million and a weighted average cap rate of

2
                                            

4.9%. In addition, the company acquired two land parcels for an aggregate purchase price of approximately $28.8 million as well as the Parc on Powell transaction described above.

During 2014, the company sold 10 consolidated apartment properties, consisting of 3,092 apartment units, for an aggregate sale price of approximately $467.0 million at a weighted average cap rate of 6.1%. These sales generated an unlevered IRR, inclusive of management costs, of 8.9%. The company also sold three land parcels for an aggregate sale price of $62.6 million during 2014. In addition, the company sold the unconsolidated asset in Phoenix described above.

Revised Executive Compensation Program
In response to input from its shareholders, the company has revised its executive compensation program beginning in 2015. The long term incentive portion of the revised program will be performance based and determined by the company’s absolute and relative total shareholder return over the three year performance period ending December 31, 2017.  Accounting rules require the company to expense in 2015 a portion of both the previous program’s time based equity grants for service in 2014 and the performance based grants issued under the revised plan creating a duplicative charge of approximately $11.0 million. This charge will not be included in the company’s Normalized FFO in 2015.

First Quarter 2015 Guidance
The company has established a Normalized FFO guidance range of $0.77 to $0.81 per share for the first quarter of 2015. The difference between the company’s fourth quarter 2014 Normalized FFO of $0.86 per share and the midpoint of the first quarter 2015 guidance range of $0.79 per share is due primarily to:

•
a negative impact of approximately $0.05 per share from lower NOI primarily as a result of higher operating expenses in the first quarter of 2015; and

•
a negative impact of approximately $0.02 per share from other items.

Full Year 2015 Guidance
The company has established a Normalized FFO guidance range of $3.35 to $3.45 per share for the full year 2015. The assumptions underlying this guidance can be found on page 27 of this release. The difference between the company’s full-year 2014 Normalized FFO of $3.17 per share and the midpoint of the full year 2015 guidance range of $3.40 per share is primarily due to:

•
a positive impact of approximately $0.21 per share from higher NOI from same store properties;

•
a positive impact of approximately $0.05 per share from non-same store properties, including properties in lease-up;

•
a negative impact of approximately $0.04 per share from the timing of the company’s 2014 and 2015 transaction activity;

•
a positive impact of approximately $0.03 per share from lower interest expense; and

•
a negative impact of approximately $0.02 per share from other items.

3
                                            


2015 Common Share Dividend
As previously announced, the company’s dividend policy is to pay 65% of the midpoint of the range of Normalized FFO guidance customarily provided as part of the company’s fourth quarter earnings release.  Based on the guidance above, the company expects to pay four quarterly dividends of $0.5525 per share for an annual dividend of $2.21 per share in 2015, which represents a 10.5% increase over the 2014 dividend. All future dividends remain subject to the discretion of the company’s Board of Trustees.

First Quarter 2015 Earnings and Conference Call
Equity Residential expects to announce first quarter 2015 results on Tuesday, April 28, 2015 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, April 29, 2015.

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 391 properties consisting of 109,225 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 4, 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.


4
                                            

Equity Residential
Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)
 
 
Year Ended December 31,
 
Quarter Ended December 31,
 
 
2014
 
2013
 
2014
 
2013
REVENUES
 
 
 
 
 
 
 
 
Rental income
 
$
2,605,311

 
$
2,378,004

 
$
662,819

 
$
636,835

Fee and asset management
 
9,437

 
9,698

 
1,841

 
2,299

Total revenues
 
2,614,748

 
2,387,702

 
664,660

 
639,134

 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
Property and maintenance
 
473,098

 
449,427

 
112,011

 
118,641

Real estate taxes and insurance
 
325,401

 
293,999

 
79,684

 
76,246

Property management
 
79,636

 
84,342

 
18,556

 
20,947

Fee and asset management
 
5,429

 
6,460

 
1,136

 
1,721

Depreciation
 
758,861

 
978,973

 
193,089

 
182,740

General and administrative
 
50,948

 
62,179

 
9,652

 
15,162

Total expenses
 
1,693,373

 
1,875,380

 
414,128

 
415,457

 
 
 
 
 
 
 
 
 
Operating income
 
921,375

 
512,322

 
250,532

 
223,677

 
 
 
 
 
 
 
 
 
Interest and other income
 
4,462

 
5,283

 
1,249

 
3,516

Other expenses
 
(9,073
)
 
(29,630
)
 
(1,894
)
 
(1,886
)
Interest:
 
 
 
 
 
 
 
 
Expense incurred, net
 
(457,191
)
 
(586,854
)
 
(109,967
)
 
(149,402
)
Amortization of deferred financing costs
 
(11,088
)
 
(22,197
)
 
(2,534
)
 
(6,561
)
Income (loss) before income and other taxes, (loss) income from investments
in unconsolidated entities, net gain on sales of real estate properties and
land parcels and discontinued operations
 
448,485

 
(121,076
)
 
137,386

 
69,344

Income and other tax (expense) benefit
 
(1,394
)
 
(1,169
)
 
(248
)
 
156

(Loss) income from investments in unconsolidated entities
 
(7,952
)
 
(58,156
)
 
2,249

 
(407
)
Net gain on sales of real estate properties
 
212,685

 
—

 
84,141

 
—

Net gain on sales of land parcels
 
5,277

 
12,227

 
3,431

 
48

Income (loss) from continuing operations
 
657,101

 
(168,174
)
 
226,959

 
69,141

Discontinued operations, net
 
1,582

 
2,073,527

 
82

 
46,729

Net income
 
658,683

 
1,905,353

 
227,041

 
115,870

Net (income) loss attributable to Noncontrolling Interests:
 
 
 
 
 
 
 
 
Operating Partnership
 
(24,831
)
 
(75,278
)
 
(8,558
)
 
(4,331
)
Partially Owned Properties
 
(2,544
)
 
538

 
(744
)
 
(563
)
Net income attributable to controlling interests
 
631,308

 
1,830,613

 
217,739

 
110,976

Preferred distributions
 
(4,145
)
 
(4,145
)
 
(1,036
)
 
(1,036
)
Net income available to Common Shares
 
$
627,163

 
$
1,826,468

 
$
216,703

 
$
109,940

 
 
 
 
 
 
 
 
 
Earnings per share – basic:
 
 
 
 
 
 
 
 
Income (loss) from continuing operations available to Common Shares
 
$
1.73

 
$
(0.47
)
 
$
0.60

 
$
0.18

Net income available to Common Shares
 
$
1.74

 
$
5.16

 
$
0.60

 
$
0.31

Weighted average Common Shares outstanding
 
361,181

 
354,305

 
362,018

 
359,919

 
 
 
 
 
 
 
 
 
Earnings per share – diluted:
 
 
 
 
 
 
 
 
Income (loss) from continuing operations available to Common Shares
 
$
1.72

 
$
(0.47
)
 
$
0.59

 
$
0.18

Net income available to Common Shares
 
$
1.73

 
$
5.16

 
$
0.59

 
$
0.30

Weighted average Common Shares outstanding
 
377,735

 
354,305

 
378,886

 
375,860

 
 
 
 
 
 
 
 
 
Distributions declared per Common Share outstanding
 
$
2.00

 
$
1.85

 
$
0.50

 
$
0.65








5
                                            

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,
 
 
 
2014
 
2013
 
2014
 
2013
Net income
 
$
658,683

 
$
1,905,353

 
$
227,041

 
$
115,870

Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties
 
(2,544
)
 
538

 
(744
)
 
(563
)
Preferred distributions
 
(4,145
)
 
(4,145
)
 
(1,036
)
 
(1,036
)
Net income available to Common Shares and Units
 
651,994

 
1,901,746

 
225,261

 
114,271

 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Depreciation
 
758,861

 
978,973

 
193,089

 
182,740

Depreciation – Non-real estate additions
 
(4,643
)
 
(4,806
)
 
(1,158
)
 
(1,180
)
Depreciation – Partially Owned Properties
 
(4,285
)
 
(6,499
)
 
(1,074
)
 
(1,094
)
Depreciation – Unconsolidated Properties
 
6,754

 
3,661

 
1,572

 
1,330

Net (gain) loss on sales of unconsolidated entities – operating assets
 
(4,902
)
 
(7
)
 
(4,902
)
 
9

Net (gain) on sales of real estate properties
 
(212,685
)
 
—

 
(84,141
)
 
—

Discontinued operations:
 
 
 
 
 
 
 
 
Depreciation
 
—

 
34,380

 
—

 
516

Net (gain) loss on sales of discontinued operations
 
(179
)
 
(2,036,505
)
 
44

 
(45,928
)
Net incremental gain on sales of condominium units
 
—

 
8

 
—

 
1

Gain on sale of Equity Corporate Housing (ECH)
 
—

 
1,470

 
—

 
761

FFO available to Common Shares and Units (1) (3) (4)
 
1,190,915

 
872,421

 
328,691

 
251,426

 
 
 
 
 
 
 
 
 
Adjustments (see page 26 for additional detail):
 
 
 
 
 
 
 
 
Asset impairment and valuation allowances
 
—

 
—

 
—

 
—

Property acquisition costs and write-off of pursuit costs
 
8,248

 
79,365

 
(466
)
 
671

Debt extinguishment (gains) losses, including prepayment penalties, preferred share
 
 
 
 
 
 
 
 
    redemptions and non-cash convertible debt discounts
 
(1,110
)
 
121,730

 
(1,623
)
 
42,910

(Gains) losses on sales of non-operating assets, net of income and other tax expense
 
 
 
 
 
 
 
 
    (benefit)
 
(1,866
)
 
(17,908
)
 
37

 
(4,183
)
Other miscellaneous non-comparable items
 
259

 
1,465

 
(932
)
 
(1,896
)
Normalized FFO available to Common Shares and Units (2) (3) (4)
 
$
1,196,446

 
$
1,057,073

 
$
325,707

 
$
288,928

 
 
 
 
 
 
 
 
 
 
FFO (1) (3)
 
$
1,195,060

 
$
876,566

 
$
329,727

 
$
252,462

Preferred distributions
 
(4,145
)
 
(4,145
)
 
(1,036
)
 
(1,036
)
FFO available to Common Shares and Units - basic and diluted (1) (3) (4)
 
$
1,190,915

 
$
872,421

 
$
328,691

 
$
251,426

FFO per share and Unit - basic
 
$
3.18

 
$
2.37

 
$
0.87

 
$
0.67

FFO per share and Unit - diluted
 
$
3.15

 
$
2.35

 
$
0.87

 
$
0.67

 
 
 
 
 
 
 
 
 
 
Normalized FFO (2) (3)
 
$
1,200,591

 
$
1,061,218

 
$
326,743

 
$
289,964

Preferred distributions
 
(4,145
)
 
(4,145
)
 
(1,036
)
 
(1,036
)
Normalized FFO available to Common Shares and Units - basic and diluted (2) (3) (4)
 
$
1,196,446

 
$
1,057,073

 
$
325,707

 
$
288,928

Normalized FFO per share and Unit - basic
 
$
3.19

 
$
2.87

 
$
0.87

 
$
0.77

Normalized FFO per share and Unit - diluted
 
$
3.17

 
$
2.85

 
$
0.86

 
$
0.77

 
 
 
 
 
 
 
 
 
 
Weighted average Common Shares and Units outstanding - basic
 
374,899

 
368,038

 
375,711

 
373,643

Weighted average Common Shares and Units outstanding - diluted
 
377,735

 
370,478

 
378,886

 
375,860

 
 
 
 
 
 
 
 
 
 
Note:
See page 26 for additional detail regarding the adjustments from FFO to Normalized FFO. See page 28 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.








6
                                            

Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
 
 
December 31,
2014
 
December 31,
2013
ASSETS
 
 
 
 
Investment in real estate
 
 
 
 
Land
 
$
6,295,404

 
$
6,192,512

Depreciable property
 
19,851,504

 
19,226,047

Projects under development
 
1,343,919

 
988,867

Land held for development
 
184,556

 
393,522

Investment in real estate
 
27,675,383

 
26,800,948

Accumulated depreciation
 
(5,432,805
)
 
(4,807,709
)
Investment in real estate, net
 
22,242,578

 
21,993,239

Cash and cash equivalents
 
40,080

 
53,534

Investments in unconsolidated entities
 
105,434

 
178,526

Deposits – restricted
 
72,303

 
103,567

Escrow deposits – mortgage
 
48,085

 
42,636

Deferred financing costs, net
 
58,380

 
58,486

Other assets
 
383,754

 
404,557

Total assets
 
$
22,950,614

 
$
22,834,545

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Mortgage notes payable
 
$
5,086,515

 
$
5,174,166

Notes, net
 
5,425,346

 
5,477,088

Lines of credit
 
333,000

 
115,000

Accounts payable and accrued expenses
 
153,590

 
118,791

Accrued interest payable
 
89,540

 
78,309

Other liabilities
 
389,915

 
347,748

Security deposits
 
75,633

 
71,592

Distributions payable
 
188,566

 
243,511

Total liabilities
 
11,742,105

 
11,626,205

 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests – Operating Partnership
 
500,733

 
363,144

Equity:
 
 
 
 
Shareholders’ equity:
 
 
 
 
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 1,000,000 shares issued and
outstanding as of December 31, 2014 and December 31, 2013
 
50,000

 
50,000

Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 362,855,454 shares issued and
outstanding as of December 31, 2014 and 360,479,260 shares
issued and outstanding as of December 31, 2013
 
3,629

 
3,605

Paid in capital
 
8,536,340

 
8,561,500

Retained earnings
 
1,950,639

 
2,047,258

Accumulated other comprehensive (loss)
 
(172,152
)
 
(155,162
)
Total shareholders’ equity
 
10,368,456

 
10,507,201

Noncontrolling Interests:
 
 
 
 
Operating Partnership
 
214,411

 
211,412

Partially Owned Properties
 
124,909

 
126,583

Total Noncontrolling Interests
 
339,320

 
337,995

Total equity
 
10,707,776

 
10,845,196

Total liabilities and equity
 
$
22,950,614

 
$
22,834,545


7
                                            

Equity Residential
Portfolio Summary
As of December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% of
 
Average
 
 
 
 
Apartment
 
Stabilized
 
Rental
Markets/Metro Areas
 
Properties
 
Units
 
NOI (1)
 
Rate (2)
 
 
 
 
 
 
 
 
 
Core:
 
 
 
 
 
 
 
 
Washington DC
 
57

 
18,652

 
17.5
%
 
$
2,196

New York
 
38

 
10,330

 
16.3
%
 
3,863

San Francisco
 
51

 
13,208

 
14.3
%
 
2,403

Los Angeles
 
61

 
13,403

 
13.0
%
 
2,208

Boston
 
34

 
7,816

 
10.1
%
 
2,889

South Florida
 
35

 
11,434

 
7.4
%
 
1,629

Seattle
 
43

 
8,542

 
7.2
%
 
1,896

Denver
 
19

 
6,935

 
4.7
%
 
1,438

San Diego
 
13

 
3,505

 
3.1
%
 
1,982

Orange County, CA
 
11

 
3,490

 
2.9
%
 
1,790

Subtotal – Core
 
362

 
97,315

 
96.5
%
 
2,291

 
 
 
 
 
 
 
 
 
Non-Core:
 
 
 
 
 
 
 
 
Inland Empire, CA
 
10

 
3,081

 
2.1
%
 
1,570

Orlando
 
3

 
827

 
0.4
%
 
1,218

All Other Markets
 
14

 
2,969

 
1.0
%
 
1,178

Subtotal – Non-Core
 
27

 
6,877

 
3.5
%
 
1,357

Total
 
389

 
104,192

 
100.0
%
 
2,229

 
 
 
 
 
 
 
 
 
Military Housing
 
2

 
5,033

 
—

 
—

 
 
 
 
 
 
 
 
 
Grand Total
 
391

 
109,225

 
100.0
%
 
$
2,229

 
 
 
 
 
 
 
 
 
Note: Projects under development are not included in the Portfolio Summary until construction has been completed.
 
 
 
 
 
 
 
 
 
(1) % of Stabilized NOI includes budgeted 2015 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.
 
 
 
 
 
 
 
 
 
(2) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the last month of the period presented.




4th Quarter 2014 Earnings Release
 
8
                                            

Equity Residential
 
 
 
 
 
 
 
 
 
 
Portfolio as of December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
Apartment
Units
 
 
Wholly Owned Properties
 
 
364

 
98,287

 
 
Master-Leased Properties - Consolidated
 
 
3

 
853

 
 
Partially Owned Properties - Consolidated
 
 
19

 
3,771

 
 
Partially Owned Properties - Unconsolidated
 
 
3

 
1,281

 
 
Military Housing
 
 
2

 
5,033

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
391

 
109,225

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Rollforward Q4 2014
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
Apartment
Units
 
Purchase/
(Sale) Price
 
Cap Rate
 
 
9/30/2014
396

 
111,087

 
 
 
 
Acquisitions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties - Stabilized
2

 
273

 
$
94,240

 
4.8
%
Dispositions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties
(6
)
 
(1,775
)
 
$
(269,868
)
 
5.9
%
Land Parcel (one)
—

 
—

 
$
(32,100
)
 
 
Unconsolidated:
 
 
 
 
 
 
 
Rental Properties (1)
(1
)
 
(388
)
 
$
(62,500
)
 
5.6
%
Configuration Changes
—

 
28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12/31/2014
391

 
109,225

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Rollforward 2014
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
Apartment
Units
 
Purchase/
(Sale) Price
 
Cap Rate
 
 
12/31/2013
390

 
109,855

 
 
 
 
Acquisitions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties - Stabilized
4

 
1,011

 
$
363,240

 
4.8
%
Rental Properties - Not Stabilized (2)
2

 
342

 
$
106,610

 
5.4
%
Land Parcels (two)
—

 
—

 
$
28,790

 
 
Dispositions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties
(10
)
 
(3,092
)
 
$
(466,968
)
 
6.1
%
Land Parcels (three)
—

 
—

 
$
(62,602
)
 
 
Unconsolidated:
 
 
 
 
 
 
 
Rental Properties (1)
(1
)
 
(388
)
 
$
(62,500
)
 
5.6
%
Completed Developments - Consolidated
6

 
1,542

 
 
 
 
Configuration Changes
—

 
(45
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12/31/2014
391

 
109,225

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The Company owned an 85% interest in this unconsolidated rental property. Sale price listed is the gross sale price.
(2)
The Company acquired two properties in the second quarter of 2014, one that had just completed lease up and the other which was still in lease up, both of which are expected to stabilize in their second year of ownership at a 6.4% yield on cost and a 4.9% yield on cost, respectively.


4th Quarter 2014 Earnings Release
 
9
                                            

 
Equity Residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter 2014 vs. Fourth Quarter 2013
 
Same Store Results/Statistics for 98,421 Same Store Apartment Units
 
$ in thousands (except for Average Rental Rate)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI (1)
 
 
Occupancy
 
Turnover
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
$
632,740

 
$
203,787

 
$
428,953

 
$
2,233

 
96.0
%
 
12.4
%
 
Q4 2013
 
$
603,015

 
$
199,463

 
$
403,552

 
$
2,143

 
95.4
%
 
12.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
$
29,725

 
$
4,324

 
$
25,401

 
$
90

 
0.6
%
 
0.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
4.9
%
 
2.2
%
 
6.3
%
 
4.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter 2014 vs. Third Quarter 2014
 
Same Store Results/Statistics for 99,726 Same Store Apartment Units
 
$ in thousands (except for Average Rental Rate)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI (1)
 
 
Occupancy
 
Turnover
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
$
641,086

 
$
206,421

 
$
434,665

 
$
2,233

 
96.0
%
 
12.4
%
 
Q3 2014
 
$
638,016

 
$
212,764

 
$
425,252

 
$
2,221

 
96.1
%
 
17.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
$
3,070

 
$
(6,343
)
 
$
9,413

 
$
12

 
(0.1
%)
 
(4.8
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
0.5
%
 
(3.0
%)
 
2.2
%
 
0.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 vs. 2013
 
Same Store Results/Statistics for 97,911 Same Store Apartment Units
 
$ in thousands (except for Average Rental Rate)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI (1)
 
 
Occupancy
 
Turnover
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
$
2,475,933

 
$
830,697

 
$
1,645,236

 
$
2,202

 
95.8
%
 
55.0
%
 
2013
 
$
2,374,350

 
$
815,865

 
$
1,558,485

 
$
2,119

 
95.4
%
 
55.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
$
101,583

 
$
14,832

 
$
86,751

 
$
83

 
0.4
%
 
(0.5
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
4.3
%
 
1.8
%
 
5.6
%
 
3.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Same store results/statistics include the stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense and property management expense. The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company's apartment communities. See page 28 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.


4th Quarter 2014 Earnings Release
 
10
                                            

Equity Residential
Fourth Quarter 2014 vs. Fourth Quarter 2013
Same Store Results/Statistics by Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) from Prior Year's Quarter
 
 
 
 
Q4 2014
% of
Actual
NOI
 
Q4 2014
Average
Rental
Rate (1)
 
Q4 2014
Weighted
Average
Occupancy %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (1)
 
 
 
 
Apartment
Units
 
 
 
 
 
 
 
 
 
 
 
 
Markets/Metro Areas
 
 
 
 
 
 Revenues
 
Expenses
 
 NOI
 
 
Occupancy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington DC
 
17,741

 
18.0
%
 
$
2,219

 
95.3
%
 
(0.1
%)
 
5.2
%
 
(2.4
%)
 
(0.4
%)
 
0.3
%
New York
 
10,330

 
17.1
%
 
3,850

 
96.8
%
 
4.3
%
 
3.5
%
 
4.8
%
 
3.4
%
 
0.8
%
San Francisco
 
12,764

 
14.5
%
 
2,387

 
96.8
%
 
10.2
%
 
(1.0
%)
 
15.7
%
 
8.5
%
 
1.4
%
Los Angeles
 
11,104

 
10.7
%
 
2,152

 
96.1
%
 
5.8
%
 
0.6
%
 
8.5
%
 
4.8
%
 
0.8
%
Boston
 
7,722

 
10.5
%
 
2,890

 
96.4
%
 
3.7
%
 
3.2
%
 
3.9
%
 
3.0
%
 
0.6
%
South Florida
 
10,537

 
7.4
%
 
1,613

 
95.6
%
 
5.9
%
 
(1.7
%)
 
10.4
%
 
5.6
%
 
0.3
%
Seattle
 
7,752

 
6.7
%
 
1,882

 
95.5
%
 
7.7
%
 
5.1
%
 
8.9
%
 
6.8
%
 
0.8
%
Denver
 
6,935

 
4.9
%
 
1,444

 
95.8
%
 
9.4
%
 
1.0
%
 
12.7
%
 
8.7
%
 
0.5
%
San Diego
 
3,505

 
3.3
%
 
1,990

 
96.5
%
 
4.6
%
 
(0.4
%)
 
7.0
%
 
3.9
%
 
0.8
%
Orange County, CA
 
3,490

 
3.1
%
 
1,804

 
96.6
%
 
5.3
%
 
0.5
%
 
7.2
%
 
4.3
%
 
0.8
%
Subtotal – Core
 
91,880

 
96.2
%
 
2,295

 
96.1
%
 
5.0
%
 
2.1
%
 
6.4
%
 
4.2
%
 
0.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inland Empire, CA
 
3,081

 
2.3
%
 
1,576

 
95.4
%
 
3.4
%
 
(1.9
%)
 
6.0
%
 
3.9
%
 
(0.4
%)
Orlando
 
827

 
0.4
%
 
1,225

 
95.9
%
 
3.8
%
 
10.4
%
 
(0.2
%)
 
1.7
%
 
2.0
%
All Other Markets
 
2,633

 
1.1
%
 
1,141

 
96.0
%
 
4.1
%
 
6.3
%
 
2.4
%
 
3.6
%
 
0.4
%
Subtotal – Non-Core
 
6,541

 
3.8
%
 
1,356

 
95.7
%
 
3.7
%
 
2.8
%
 
4.2
%
 
3.4
%
 
0.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
98,421

 
100.0
%
 
$
2,233

 
96.0
%
 
4.9
%
 
2.2
%
 
6.3
%
 
4.2
%
 
0.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Same store results/statistics include 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




4th Quarter 2014 Earnings Release
 
11
                                            

Equity Residential
Fourth Quarter 2014 vs. Third Quarter 2014
Same Store Results/Statistics by Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) from Prior Quarter
 
 
 
 
Q4 2014
% of
Actual
NOI
 
Q4 2014
Average
Rental
Rate (1)
 
Q4 2014
Weighted
Average
Occupancy %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (1)
 
 
 
 
Apartment Units
 
 
 
 
 
 
 
 
 
 
 
 
Markets/Metro Areas
 
 
 
 
 
 Revenues
 
Expenses
 
 NOI
 
 
Occupancy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington DC
 
18,130

 
18.1
%
 
$
2,209

 
95.4
%
 
(1.7
%)
 
(4.7
%)
 
(0.3
%)
 
(1.1
%)
 
(0.5
%)
New York
 
10,330

 
16.9
%
 
3,850

 
96.8
%
 
0.2
%
 
0.8
%
 
(0.1
%)
 
0.0
%
 
0.2
%
San Francisco
 
12,764

 
14.3
%
 
2,387

 
96.8
%
 
2.3
%
 
(2.7
%)
 
4.5
%
 
1.7
%
 
0.6
%
Los Angeles
 
11,758

 
11.3
%
 
2,183

 
96.0
%
 
0.5
%
 
(5.9
%)
 
3.9
%
 
0.6
%
 
(0.1
%)
Boston
 
7,722

 
10.4
%
 
2,890

 
96.4
%
 
1.6
%
 
(1.5
%)
 
3.1
%
 
1.4
%
 
0.2
%
South Florida
 
10,665

 
7.4
%
 
1,614

 
95.6
%
 
1.1
%
 
(5.0
%)
 
4.6
%
 
1.0
%
 
0.1
%
Seattle
 
7,886

 
6.7
%
 
1,880

 
95.5
%
 
0.4
%
 
(1.8
%)
 
1.5
%
 
0.9
%
 
(0.5
%)
Denver
 
6,935

 
4.9
%
 
1,444

 
95.8
%
 
1.9
%
 
(7.5
%)
 
5.7
%
 
2.0
%
 
(0.2
%)
San Diego
 
3,505

 
3.2
%
 
1,990

 
96.5
%
 
0.5
%
 
(3.6
%)
 
2.4
%
 
0.5
%
 
0.1
%
Orange County, CA
 
3,490

 
3.1
%
 
1,804

 
96.6
%
 
1.1
%
 
(5.5
%)
 
3.8
%
 
0.7
%
 
0.3
%
Subtotal – Core
 
93,185

 
96.3
%
 
2,294

 
96.1
%
 
0.5
%
 
(3.1
%)
 
2.3
%
 
0.5
%
 
0.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inland Empire, CA
 
3,081

 
2.2
%
 
1,576

 
95.4
%
 
(0.8
%)
 
(5.8
%)
 
1.7
%
 
(0.1
%)
 
(0.6
%)
Orlando
 
827

 
0.4
%
 
1,225

 
95.9
%
 
(0.8
%)
 
1.0
%
 
(2.0
%)
 
(1.0
%)
 
0.2
%
All Other Markets
 
2,633

 
1.1
%
 
1,141

 
96.0
%
 
0.6
%
 
4.1
%
 
(2.0
%)
 
0.9
%
 
(0.2
%)
Subtotal – Non-Core
 
6,541

 
3.7
%
 
1,356

 
95.7
%
 
(0.3
%)
 
(1.1
%)
 
0.2
%
 
0.1
%
 
(0.4
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
99,726

 
100.0
%
 
$
2,233

 
96.0
%
 
0.5
%
 
(3.0
%)
 
2.2
%
 
0.5
%
 
(0.1
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Same store results/statistics include 19,206 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


4th Quarter 2014 Earnings Release
 
12
                                            

Equity Residential
2014 vs. 2013
Same Store Results/Statistics by Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) from Prior Year
 
 
 
 
2014
% of
Actual
NOI
 
2014
Average
Rental
Rate (1)
 
2014
Weighted
Average
Occupancy %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (1)
 
 
 
 
Apartment Units
 
 
 
 
 
 
 
 
 
 
 
 
Markets/Metro Areas
 
 
 
 
 
 Revenues
 
Expenses
 
 NOI
 
 
Occupancy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington DC
 
17,553

 
18.4
%
 
$
2,225

 
95.2
%
 
(0.5
%)
 
2.2
%
 
(1.8
%)
 
(0.6
%)
 
0.0
%
New York
 
10,330

 
17.3
%
 
3,826

 
96.3
%
 
3.9
%
 
3.6
%
 
4.1
%
 
3.5
%
 
0.4
%
San Francisco
 
12,764

 
14.2
%
 
2,315

 
96.0
%
 
8.9
%
 
(1.7
%)
 
14.5
%
 
8.1
%
 
0.7
%
Los Angeles
 
11,104

 
10.7
%
 
2,117

 
95.7
%
 
4.8
%
 
0.4
%
 
7.3
%
 
4.5
%
 
0.2
%
Boston
 
7,722

 
10.5
%
 
2,847

 
96.0
%
 
3.5
%
 
3.1
%
 
3.8
%
 
2.8
%
 
0.7
%
South Florida
 
10,537

 
7.4
%
 
1,587

 
95.6
%
 
5.0
%
 
1.2
%
 
7.3
%
 
4.6
%
 
0.3
%
Seattle
 
7,430

 
6.4
%
 
1,839

 
95.6
%
 
7.3
%
 
4.3
%
 
8.7
%
 
6.9
%
 
0.3
%
Denver
 
6,935

 
4.9
%
 
1,395

 
95.8
%
 
7.8
%
 
0.8
%
 
10.8
%
 
7.7
%
 
0.1
%
San Diego
 
3,505

 
3.3
%
 
1,963

 
96.0
%
 
4.4
%
 
2.4
%
 
5.4
%
 
4.0
%
 
0.4
%
Orange County, CA
 
3,490

 
3.1
%
 
1,777

 
96.0
%
 
5.0
%
 
0.1
%
 
7.1
%
 
4.7
%
 
0.3
%
Subtotal – Core
 
91,370

 
96.2
%
 
2,264

 
95.8
%
 
4.3
%
 
1.8
%
 
5.6
%
 
3.9
%
 
0.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inland Empire, CA
 
3,081

 
2.3
%
 
1,558

 
95.7
%
 
3.7
%
 
2.4
%
 
4.4
%
 
3.5
%
 
0.3
%
Orlando
 
827

 
0.4
%
 
1,223

 
95.0
%
 
1.8
%
 
3.3
%
 
0.8
%
 
2.3
%
 
(0.5
%)
All Other Markets
 
2,633

 
1.1
%
 
1,124

 
96.2
%
 
3.5
%
 
2.7
%
 
4.2
%
 
2.5
%
 
1.0
%
Subtotal – Non-Core
 
6,541

 
3.8
%
 
1,341

 
95.8
%
 
3.4
%
 
2.7
%
 
3.9
%
 
3.0
%
 
0.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
97,911

 
100.0
%
 
$
2,202

 
95.8
%
 
4.3
%
 
1.8
%
 
5.6
%
 
3.9
%
 
0.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Same store results/statistics include 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


4th Quarter 2014 Earnings Release
 
13
                                            

Equity Residential
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter 2014 vs. Fourth Quarter 2013
Same Store Operating Expenses for 98,421 Same Store Apartment Units
$ in thousands
 
 
 
 
 
 
 
 
 
 
% of Actual
Q4 2014
Operating
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Actual
Q4 2014
 
Actual
Q4 2013
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate taxes
$
72,118

 
$
68,299

 
$
3,819

 
5.6
%
 
35.4
%
On-site payroll (1)
41,140

 
42,049

 
(909
)
 
(2.2
%)
 
20.2
%
Utilities (2)
29,757

 
28,273

 
1,484

 
5.2
%
 
14.6
%
Repairs and maintenance (3)
24,296

 
24,001

 
295

 
1.2
%
 
11.9
%
Property management costs (4)
18,982

 
19,900

 
(918
)
 
(4.6
%)
 
9.3
%
Insurance
6,111

 
6,180

 
(69
)
 
(1.1
%)
 
3.0
%
Leasing and advertising
3,059

 
3,059

 
—

 
—

 
1.5
%
Other on-site operating expenses (5)
8,324

 
7,702

 
622

 
8.1
%
 
4.1
%
 
 
 
 
 
 
 
 
 
 
 
Same store operating expenses
$
203,787

 
$
199,463

 
$
4,324

 
2.2
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 vs. 2013
Same Store Operating Expenses for 97,911 Same Store Apartment Units
$ in thousands
 
 
 
 
 
 
 
 
 
 
% of Actual
2014
Operating
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Actual
2014
 
Actual
2013
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate taxes
$
287,214

 
$
271,888

 
$
15,326

 
5.6
%
 
34.6
%
On-site payroll (1)
174,273

 
174,589

 
(316
)
 
(0.2
%)
 
21.0
%
Utilities (2)
125,235

 
119,253

 
5,982

 
5.0
%
 
15.1
%
Repairs and maintenance (3)
100,496

 
100,319

 
177

 
0.2
%
 
12.1
%
Property management costs (4)
74,278

 
78,354

 
(4,076
)
 
(5.2
%)
 
8.9
%
Insurance
24,354

 
24,626

 
(272
)
 
(1.1
%)
 
2.9
%
Leasing and advertising
10,802

 
12,072

 
(1,270
)
 
(10.5
%)
 
1.3
%
Other on-site operating expenses (5)
34,045

 
34,764

 
(719
)
 
(2.1
%)
 
4.1
%
 
 
 
 
 
 
 
 
 
 
 
Same store operating expenses
$
830,697

 
$
815,865

 
$
14,832

 
1.8
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
Note: Same store operating results include the stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.
 
 
 
 
 
 
 
 
 
 
 
(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 costs.
 
 
 
 
 
 
 
 
 
 
 
(4)
Property management costs - Includes payroll and related expenses for departments, or portions of departments, that directly support on-site 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.
 
 
 
 
 
 
 
 
 
 
 
(5)
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.



4th Quarter 2014 Earnings Release
 
14
                                            

Equity Residential
 
Debt Summary as of December 31, 2014
(Amounts in thousands)
 
 
 
 
 
 
 
 
Weighted
Average
Maturities
(years)
 
 
 
 
 
 
Weighted
Average
Rates (1)
 
 
 
 
 
 
 
 
 
 
Amounts (1)
 
% of Total
 
 
 
 
 
 
 
 
 
 
 
Secured
 
$
5,086,515

 
46.9
%
 
4.21
%
 
7.5

Unsecured
 
5,758,346

 
53.1
%
 
4.79
%
 
7.7

 
 
 
 
 
 
 
 
 
Total
$
10,844,861

 
100.0
%
 
4.52
%
 
7.6

 
 
 
 
 
 
 
 
 
Fixed Rate Debt:
 
 
 
 
 
 
 
 
Secured – Conventional
 
$
4,351,301

 
40.1
%
 
4.82
%
 
5.9

Unsecured – Public
 
4,974,154

 
45.9
%
 
5.45
%
 
8.3

 
 
 
 
 
 
 
 
 
Fixed Rate Debt
9,325,455

 
86.0
%
 
5.15
%
 
7.2

 
 
 
 
 
 
 
 
 
Floating Rate Debt:
 
 
 
 
 
 
 
 
Secured – Conventional
 
7,985

 
0.1
%
 
2.08
%
 
19.1

Secured – Tax Exempt
 
727,229

 
6.7
%
 
0.66
%
 
16.2

Unsecured – Public (2)
 
451,192

 
4.1
%
 
1.15
%
 
4.5

Unsecured – Revolving Credit Facility
 
333,000

 
3.1
%
 
0.95
%
 
3.3

 
 
 
 
 
 
 
 
 
Floating Rate Debt
 
1,519,406

 
14.0
%
 
0.92
%
 
9.9

 
 
 
 
 
 
 
 
 
Total
 
$
10,844,861

 
100.0
%
 
4.52
%
 
7.6

 
 
 
 
 
 
 
 
 
(1) Net of the effect of any derivative instruments. Weighted average rates are for the year ended December 31, 2014.
 
 
 
 
 
 
 
 
 
(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%.
 
 
 
 
 
 
 
 
 
Note: The Company capitalized interest of approximately $52.8 million and $47.3 million during the years ended December 31, 2014 and 2013, respectively. The Company capitalized interest of approximately $14.7 million and $14.4 million during the quarters ended December 31, 2014 and 2013, respectively.
______________________________________________________________________________________________________
Debt Maturity Schedule as of December 31, 2014
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
Weighted
Average Rates
on Fixed
Rate Debt (1)
 
Weighted
Average
Rates on
Total Debt (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed
Rate (1)
 
Floating
Rate (1)
 
 
 
 
 
 
Year
 
 
 
Total
 
% of Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
$
408,420

 
$
—

 
$
408,420

 
3.8
%
 
6.32
%
 
6.32
%
2016
 
1,192,798

 
—

 
1,192,798

 
11.0
%
 
5.34
%
 
5.34
%
2017
 
1,346,252

 
456

 
1,346,708

 
12.4
%
 
6.16
%
 
6.16
%
2018
 
83,851

 
430,659

(2)
514,510

 
4.7
%
 
5.61
%
 
1.72
%
2019
 
806,106

 
472,363


1,278,469

 
11.8
%
 
5.48
%
 
3.76
%
2020
 
1,678,020

 
809

 
1,678,829

 
15.5
%
 
5.49
%
 
5.49
%
2021
 
1,194,624

 
856

 
1,195,480

 
11.0
%
 
4.63
%
 
4.63
%
2022
 
228,273

 
905

 
229,178

 
2.1
%
 
3.16
%
 
3.17
%
2023
 
1,331,497

 
956

 
1,332,453

 
12.3
%
 
3.74
%
 
3.74
%
2024
 
2,497

 
1,011

 
3,508

 
0.0
%
 
4.97
%
 
5.14
%
2025+
 
1,022,417

 
673,977

 
1,696,394

 
15.7
%
 
4.97
%
 
3.17
%
Premium/(Discount)
 
30,700

 
(62,586
)
 
(31,886
)
 
(0.3
%)
 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
9,325,455

 
$
1,519,406

 
$
10,844,861

 
100.0
%
 
5.13
%
 
4.49
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Net of the effect of any derivative instruments. Weighted average rates are as of December 31, 2014.
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Includes $333.0 million outstanding on the Company's unsecured revolving credit facility. As of December 31, 2014, there was approximately $2.12 billion available on this facility.
 
 
 
 
 
 
 
 
 
 
 
 
 


4th Quarter 2014 Earnings Release
 
15
                                            

Equity Residential
Unsecured Debt Summary as of December 31, 2014
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized
Premium/(Discount)
 
 
 
 
Coupon
Rate
 
Due
Date
 
Face
Amount
 
 
Net
Balance
 
 
 
 
 
 
Fixed Rate Notes:
 
 
 
 
 
 
 
 
 
 
 
 
6.584%
 
04/13/15
 
$
300,000

 
$
(27
)
 
$
299,973

 
 
5.125%
 
03/15/16
 
500,000

 
(63
)
 
499,937

 
 
5.375%
 
08/01/16
 
400,000

 
(294
)
 
399,706

 
 
5.750%
 
06/15/17
 
650,000

 
(1,272
)
 
648,728

 
 
7.125%
 
10/15/17
 
150,000

 
(181
)
 
149,819

 
 
2.375%
 
07/01/19
(1)
450,000

 
(405
)
 
449,595

Fair Value Derivative Adjustments
 
 
 
 
(1)
(450,000
)
 
405

 
(449,595
)
 
 
4.750%
 
07/15/20
 
600,000

 
(2,518
)
 
597,482

 
 
4.625%
 
12/15/21
 
1,000,000

 
(2,635
)
 
997,365

 
 
3.000%
 
04/15/23
 
500,000

 
(3,671
)
 
496,329

 
 
7.570%
 
08/15/26
 
140,000

 
—

 
140,000

 
 
4.500%
 
07/01/44
 
750,000

 
(5,185
)
 
744,815

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,990,000

 
(15,846
)
 
4,974,154

Floating Rate Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
07/01/19
(1)
450,000

 
(405
)
 
449,595

Fair Value Derivative Adjustments
 

 
07/01/19
(1)
1,597

 
—

 
1,597

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
451,597

 
(405
)
 
451,192

 
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility:
 
LIBOR+1.05%
 
04/01/18
(2)(3) 
333,000

 
—

 
333,000

 
 
 
 
 
 
 
 
 
 
 
Total Unsecured Debt
 
 
 
 
 
$
5,774,597

 
$
(16,251
)
 
$
5,758,346


(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 is private. All other unsecured debt is public.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3
)
Represents the Company's $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The interest rate on advances under the credit facility will generally 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 December 31, 2014, there was approximately $2.12 billion available on this facility.


4th Quarter 2014 Earnings Release
 
16
                                            

Equity Residential
 
 
 
 
 
 
Selected Unsecured Public Debt Covenants
 
 
 
 
 
 
 
 
 
December 31, 2014
 
September 30, 2014
 
 
 
 
 
 
 
 
 
 
 
Total Debt to Adjusted Total Assets (not to exceed 60%)
 
39.2%
 
39.7%
 
 
 
 
 
 
 
Secured Debt to Adjusted Total Assets (not to exceed 40%)
 
18.4%
 
18.4%
 
 
 
 
 
 
 
Consolidated Income Available for Debt Service to
 
 
 
 
 
Maximum Annual Service Charges
 
 
 
 
 
(must be at least 1.5 to 1)
 
3.38
 
3.23
 
 
 
 
 
 
 
Total Unsecured Assets to Unsecured Debt
 
336.5%
 
329.5%
 
(must be at least 150%)
 
 
 
 
 
 
 
 
 
 
Note:
These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP.
 
 
 
 
 
 
 
 
 
 
 
 
Selected Credit Ratios (1)
 
 
 
 
 
 
 
 
 
December 31, 2014
 
September 30, 2014
 
 
 
 
 
 
 
Total debt to Normalized EBITDA
 
6.45x
 
6.67x
 
Net debt to Normalized EBITDA
 
6.40x
 
6.63x
 
 
 
Note:
See page 25 for the footnote referenced above and the Normalized EBITDA reconciliations.


4th Quarter 2014 Earnings Release
 
17
                                            

Equity Residential
 
Capital Structure as of December 31, 2014
(Amounts in thousands except for share/unit and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
Secured Debt
 
 
 
 
 
$
5,086,515

 
46.9
%
 
 
Unsecured Debt
 
 
 
 
 
5,758,346

 
53.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
 
 
 
 
10,844,861

 
100.0
%
 
28.5
%
 
 
 
 
 
 
 
 
 
 
 
Common Shares (includes Restricted Shares)
 
362,855,454

 
96.2
%
 
 
 
 
 
 
Units (includes OP Units and Restricted Units)
 
14,298,691

 
3.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Shares and Units
 
377,154,145

 
100.0
%
 
 
 
 
 
 
Common Share Price at December 31, 2014
 
$
71.84

 
 
 
 
 
 
 
 
 
 
 
 
 
 
27,094,754

 
99.8
%
 
 
Perpetual Preferred Equity (see below)
 
 
 
 
 
50,000

 
0.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Equity
 
 
 
 
 
27,144,754

 
100.0
%
 
71.5
%
 
 
 
 
 
 
 
 
 
 
 
Total Market Capitalization
 
 
 
 
 
$
37,989,615

 
 
 
100.0
%

__________________________________________________________________________________________________________________________________________

Perpetual Preferred Equity as of December 31, 2014
(Amounts in thousands except for share and per share amounts)
 
 
 
 
 
 
 
 
 
Annual
Dividend
Per Share
 
Annual
Dividend
Amount
 
 
 
Redemption
Date
 
Outstanding
Shares
 
Liquidation
Value
 
 
Series
 
 
 
 
 
Preferred Shares:
 
 
 
 
 
 
 
 
 
 
8.29% Series K
 
12/10/26
 
1,000,000

 
$
50,000

 
$
4.145

 
$
4,145

 
 
 
 
 
 
 
 
 
 
 
 
Total Perpetual Preferred Equity
 
 
 
1,000,000

 
$
50,000

 
 
 
$
4,145

 
 
 
 
 
 
 
 
 
 
 
 

4th Quarter 2014 Earnings Release
 
18
                                            

Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Q4 2014
 
Q4 2013
 
 
 
 
 
 
 
 
 
 
Weighted Average Amounts Outstanding for Net Income Purposes:
 
 
 
 
 
 
 
 
Common Shares - basic
 
361,181,497

 
354,305,373

 
362,017,851

 
359,918,500

Shares issuable from assumed conversion/vesting of (1):
 
 
 
 
 
 
 
 
- OP Units
 
13,717,844

 
—

 
13,692,848

 
13,724,142

- long-term compensation shares/units
 
2,836,034

 
—

 
3,174,890

 
2,217,058

 
 
 
 
 
 
 
 
 
 
Total Common Shares and Units - diluted (1)
 
377,735,375

 
354,305,373

 
378,885,589

 
375,859,700

 
 
 
 
 
 
 
 
 
Weighted Average Amounts Outstanding for FFO and Normalized
FFO Purposes:
 
 
 
 
 
 
 
 
Common Shares - basic
 
361,181,497

 
354,305,373

 
362,017,851

 
359,918,500

OP Units - basic
 
13,717,844

 
13,733,055

 
13,692,848

 
13,724,142

 
 
 
 
 
 
 
 
 
 
Total Common Shares and OP Units - basic
 
374,899,341

 
368,038,428

 
375,710,699

 
373,642,642

Shares issuable from assumed conversion/vesting of:
 
 
 
 
 
 
 
 
- long-term compensation shares/units
 
2,836,034

 
2,439,738

 
3,174,890

 
2,217,058

 
 
 
 
 
 
 
 
 
 
Total Common Shares and Units - diluted
 
377,735,375

 
370,478,166

 
378,885,589

 
375,859,700

 
 
 
 
 
 
 
 
 
 
Period Ending Amounts Outstanding:
 
 
 
 
 
 
 
 
Common Shares (includes Restricted Shares)
 
362,855,454

 
360,479,260

 
 
 
 
Units (includes OP Units and Restricted Units)
 
14,298,691

 
14,180,376

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Shares and Units
 
377,154,145

 
374,659,636

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations during the year ended December 31, 2013.






4th Quarter 2014 Earnings Release
 
19
                                            

Equity Residential
Partially Owned Entities as of December 31, 2014
(Amounts in thousands except for project and apartment unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
Unconsolidated
 
 
Development Projects
 
 
 
 
Development Projects
 
 
 
 
 
Held for
and/or Under
Development (4)
 
 
 
 
 
Completed, Not Stabilized (5)
 
Operating
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
 
Total
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Total projects (1)
 
—

 
19

 
19

 
1

 
2

 
3

 
 
 
 
 
 
 
 
 
 
 
 
 
Total apartment units (1)
 
—

 
3,771

 
3,771

 
444

 
837

 
1,281

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating information for the year
ended 12/31/14 (at 100%):
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
22

 
$
88,157

 
$
88,179

 
$
10,182

 
$
15,160

 
$
25,342

Operating expenses
 
91

 
25,674

 
25,765

 
3,781

 
6,818

 
10,599

 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating (loss) income
 
(69
)
 
62,483

 
62,414

 
6,401

 
8,342

 
14,743

Depreciation
 
—

 
21,679

 
21,679

 
6,512

 
5,800

 
12,312

General and administrative/other
 
1

 
116

 
117

 
1

 
209

 
210

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (loss) income
 
(70
)
 
40,688

 
40,618

 
(112
)
 
2,333

 
2,221

Interest and other income
 
—

 
11

 
11

 
—

 
—

 
—

Other expenses
 
—

 
(54
)
 
(54
)
 
—

 
—

 
—

Interest:
 
 
 
 
 
 
 
 
 
 
 
 
Expense incurred, net
 
—

 
(15,626
)
 
(15,626
)
 
(5,296
)
 
(3,831
)
 
(9,127
)
Amortization of deferred financing costs
 
—

 
(355
)
 
(355
)
 
—

 
(2
)
 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income before income and other
taxes and (loss) from investments in
unconsolidated entities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(70
)
 
24,664

 
24,594

 
(5,408
)
 
(1,500
)
 
(6,908
)
Income and other tax (expense) benefit
 
—

 
(36
)
 
(36
)
 
(7
)
 
—

 
(7
)
(Loss) from investments in
unconsolidated entities
 
—

 
(1,593
)
 
(1,593
)
 
—

 
—

 
—

Net (loss) income
 
$
(70
)
 
$
23,035

 
$
22,965

 
$
(5,415
)
 
$
(1,500
)
 
$
(6,915
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt - Secured (2):
 
 
 
 
 
 
 
 
 
 
 
 
EQR Ownership (3)
 
$
—

 
$
282,084

 
$
282,084

 
$
19,359

 
$
15,726

 
$
35,085

Noncontrolling Ownership
 
—

 
78,395

 
78,395

 
77,434

 
62,902

 
140,336

 
 
 
 
 
 
 
 
 
 
 
 
 
Total (at 100%)
 
$
—

 
$
360,479

 
$
360,479

 
$
96,793

 
$
78,628

 
$
175,421

(1)
Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed.
 
 
 
 
 
 
 
 
 
 
(2)
All debt is non-recourse to the Company.
 
 
 
 
 
 
 
 
 
 
(3)
Represents the Company's current equity ownership interest.
 
 
 
 
 
 
 
 
 
 
(4)
See Consolidated Projects Under Development - Partially Owned on page 21 for further information.
 
 
 
(5)
Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. See Projects Completed, Not Stabilized - Unconsolidated on page 22 for further information.
 
 
Note:
The above table excludes the Company's interests in unconsolidated joint ventures entered into with AvalonBay ("AVB") in connection with the Archstone transaction. These ventures own certain non-core Archstone assets that are held for sale and succeeded to certain residual Archstone liabilities, such as liability for various employment-related matters as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests have an aggregate liquidation value of $74.6 million at December 31, 2014. The ventures are owned 60% by the Company and 40% by AVB.

4th Quarter 2014 Earnings Release
 
20

 
Equity Residential
 
Consolidated Development and Lease-Up Projects as of December 31, 2014
 
(Amounts in thousands except for project and apartment unit amounts)
 
Projects
 
Location
 
No. of
Apartment
Units
 
Total
Capital
Cost (1)
 
Total
Book Value
to Date
 
Total Book
Value Not
Placed in
Service
 
Total
Debt
 
Percentage
Completed
 
Percentage
Leased
 
Percentage
Occupied
 
Estimated
Completion
Date
 
Estimated
Stabilization
Date
 
Projects Under Development - Wholly Owned:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residences at Westgate II (formerly Westgate III)
 
Pasadena, CA
 
88

 
$
55,037

 
$
45,661

 
$
45,661

 
$
—

 
86
%
 
—

 
—

 
Q1 2015
 
Q3 2015
 
170 Amsterdam (2)
 
New York, NY
 
236

 
110,892

 
97,372

 
97,372

 
—

 
88
%
 
—

 
—

 
Q1 2015
 
Q1 2016
 
Parc on Powell (formerly 1333 Powell) (3)
 
Emeryville, CA
 
176

 
87,500

 
71,765

 
71,765

 
—

 
85
%
 
13
%
 
—

 
Q2 2015
 
Q4 2015
 
Azure (at Mission Bay)
 
San Francisco, CA
 
273

 
189,090

 
146,609

 
146,609

 
—

 
75
%
 
—

 
—

 
Q3 2015
 
Q4 2016
 
Junction 47 (formerly West Seattle)
 
Seattle, WA
 
206

 
67,112

 
44,514

 
44,514

 
—

 
62
%
 
—

 
—

 
Q4 2015
 
Q3 2016
 
Tallman
 
Seattle, WA
 
303

 
84,277

 
55,794

 
55,794

 
—

 
62
%
 
—

 
—

 
Q4 2015
 
Q2 2017
 
Village at Howard Hughes
 
Los Angeles, CA
 
545

 
193,231

 
86,642

 
86,642

 
—

 
26
%
 
—

 
—

 
Q2 2016
 
Q2 2017
 
Potrero
 
San Francisco, CA
 
453

 
224,474

 
72,354

 
72,354

 
—

 
14
%
 
—

 
—

 
Q2 2016
 
Q3 2017
 
Millikan
 
Irvine, CA
 
344

 
102,331

 
41,367

 
41,367

 
—

 
13
%
 
—

 
—

 
Q2 2016
 
Q3 2017
 
Tasman
 
San Jose, CA
 
554

 
214,923

 
119,554

 
119,554

 
—

 
46
%
 
—

 
—

 
Q2 2016
 
Q2 2018
 
340 Fremont (formerly Rincon Hill)
 
San Francisco, CA
 
348

 
287,454

 
106,972

 
106,972

 
—

 
24
%
 
—

 
—

 
Q3 2016
 
Q1 2018
 
One Henry Adams
 
San Francisco, CA
 
241

 
164,434

 
39,923

 
39,923

 
—

 
1
%
 
—

 
—

 
Q4 2016
 
Q4 2017
 
Cascade
 
Seattle, WA
 
483

 
158,494

 
34,543

 
34,543

 
—

 
1
%
 
—

 
—

 
Q2 2017
 
Q1 2019
 
2nd & Pine (4)
 
Seattle, WA
 
398

 
214,742

 
40,122

 
40,122

 
—

 
4
%
 
—

 
—

 
Q3 2017
 
Q2 2019
 
Projects Under Development - Wholly Owned
 
 
 
4,648

 
2,153,991

 
1,003,192

 
1,003,192

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Under Development - Partially Owned:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prism at Park Avenue South (5)
 
New York, NY
 
269

 
251,961

 
226,959

 
226,959

 
—

 
91
%
 
5
%
 
3
%
 
Q2 2015
 
Q1 2016
 
Projects Under Development - Partially Owned
 
 
 
269

 
251,961

 
226,959

 
226,959

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Under Development
 
 
 
4,917

 
2,405,952

 
1,230,151

 
1,230,151

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed Not Stabilized - Wholly Owned (6):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jia (formerly Chinatown Gateway)
 
Los Angeles, CA
 
280

 
92,920

 
89,611

 
—

 
—

 
 
 
98
%
 
97
%
 
Completed
 
Q1 2015
 
1111 Belle Pre (formerly The Madison)
 
Alexandria, VA
 
360

 
112,072

 
111,433

 
—

 
—

 
 
 
97
%
 
96
%
 
Completed
 
Q1 2015
 
Park Aire (formerly Enclave at Wellington)
 
Wellington, FL
 
268

 
49,000

 
48,917

 
—

 
—

 
 
 
95
%
 
93
%
 
Completed
 
Q1 2015
 
Urbana (formerly Market Street Landing)
 
Seattle, WA
 
287

 
88,774

 
86,789

 
—

 
—

 
 
 
90
%
 
86
%
 
Completed
 
Q2 2015
 
Residences at Westgate I (formerly Westgate II)
 
Pasadena, CA
 
252

 
127,292

 
124,606

 
—

 
—

 
 
 
68
%
 
67
%
 
Completed
 
Q2 2015
 
Projects Completed Not Stabilized - Wholly Owned
 
 
 
1,447

 
470,058

 
461,356

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Completed Not Stabilized
 
 
 
1,447

 
470,058

 
461,356

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed and Stabilized During the Quarter - Wholly Owned:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Elevé (7)
 
Glendale, CA
 
208

 
70,500

 
70,500

 
—

 
—

 
 
 
99
%
 
96
%
 
Completed
 
Stabilized
 
Reserve at Town Center III
 
Mill Creek, WA
 
95

 
21,280

 
21,264

 
—

 
—

 
 
 
95
%
 
94
%
 
Completed
 
Stabilized
 
Projects Completed and Stabilized During the Quarter - Wholly Owned
 
 
 
303

 
91,780

 
91,764

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Completed and Stabilized During the Quarter
 
 
 
303

 
91,780

 
91,764

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated Projects
 
 
 
6,667

 
$
2,967,790

 
$
1,783,271

 
$
1,230,151

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Land Held for Development
 
 
 
N/A
 
N/A
 
$
184,556

 
$
184,556

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Capital
Cost (1)
 
Q4 2014
NOI
 
 
 
 
 
 
 
NOI CONTRIBUTION FROM CONSOLIDATED DEVELOPMENT PROJECTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Under Development
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,405,952

 
$
(73
)
 
 
 
 
 
 
 
Completed Not Stabilized
 
 
 
 
 
 
 
 
 
 
 
 
 
470,058

 
5,871

 
 
 
 
 
 
 
Completed and Stabilized During the Quarter
 
 
 
 
 
 
 
 
 
 
 
 
 
91,780

 
1,128

 
 
 
 
 
 
 
Total Consolidated Development NOI Contribution
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,967,790

 
$
6,926

 
 
 
 
 
 
 
 
(1)
Total capital cost represents 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, all in accordance with GAAP.
(2)
170 Amsterdam – The land under this project is subject to a long term ground lease.
(3)
Parc on Powell – During the fourth quarter of 2014, the Company acquired its partner's 95% interest in this unconsolidated development project which was valued at $87.5 million.  In conjunction with the buyout, the outstanding construction loan of $27.2 million was paid off. The project is now wholly-owned.
(4)
2nd & Pine – Includes an adjacent land parcel on which certain improvements including a portion of a parking structure will be constructed as part of the development of this project. The Company may eventually construct an additional apartment tower on this site or sell a portion of the garage and the related air rights.
(5)
Prism at Park Avenue South – The Company is jointly developing with Toll Brothers (NYSE: TOL) a project at 400 Park Avenue South in New York City with the Company's rental portion on floors 2-22 and Toll's for sale portion on floors 23-40.The total capital cost and total book value to date represent only the Company's portion of the project. Toll Brothers has funded $113.8 million for their allocated share of the project.
(6)
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.
(7)
Elevé – The Company acquired this project during the second quarter of 2014, prior to stabilization, and has completed lease-up activities.

4th Quarter 2014 Earnings Release
 
21

Equity Residential
Unconsolidated Development and Lease-Up Projects as of December 31, 2014
(Amounts in thousands except for project and apartment unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects
 
Location
 
Percentage Ownership
 
No. of
Apartment
Units
 
Total
Capital
Cost (1)
 
Total
Book Value
to Date
 
Total Book
Value Not
Placed in
Service
 
Total
Debt
 
Percentage
Completed
 
Percentage
Leased
 
Percentage
Occupied
 
Estimated
Completion
Date
 
Estimated
Stabilization
Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed Not Stabilized - Unconsolidated (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domain (3)
 
San Jose, CA
 
20.0%
 
444

 
$
155,820

 
$
155,274

 
$
—

 
$
96,793

 
 
 
93
%
 
91
%
 
Completed
 
Q1 2015
Projects Completed Not Stabilized - Unconsolidated
 
 
 
 
 
444

 
155,820

 
155,274

 
—

 
96,793

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Completed Not Stabilized
 
 
 
 
 
444

 
155,820

 
155,274

 
—

 
96,793

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Unconsolidated Projects
 
 
 
 
 
444

 
$
155,820

 
$
155,274

 
$
—

 
$
96,793

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Total capital cost represents 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, all in accordance with GAAP.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2)
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3)
Domain – This development project is owned 20% by the Company and 80% by an institutional partner in an unconsolidated joint venture. Total project cost is approximately $155.8 million and construction was predominantly funded with a long-term, non-recourse secured loan from the partner. The Company was responsible for constructing the project and had given certain construction cost overrun guarantees but currently has no further funding obligations. Domain has a maximum debt commitment of $98.6 million, the loan bears interest at 5.75% and matures January 1, 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



4th Quarter 2014 Earnings Release
 
22
                                            

Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Year Ended December 31, 2014
(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 (6)
97,911

 
$
100,496

 
$
1,026

 
$
87,745

 
$
896

 
$
188,241

 
$
1,922

 
$
85,045

 
$
869

 
$
93,988

 
$
960

 
$
179,033

 
$
1,829

(9)
$
367,274

 
$
3,751

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Same Store Properties (7)
5,000

 
2,714

 
694

 
1,961

 
501

 
4,675

 
1,195

 
236

 
60

 
5,513

 
1,410

 
5,749

 
1,470

 
10,424

 
2,665

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other (8)
—

 
2,247

 
 
 
1,933

 
 
 
4,180

 
 
 
920

 
 
 
255

 
 
 
1,175

 
 
 
5,355

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
102,911

 
$
105,457

 
 
 
$
91,639

 
 
 
$
197,096

 
 
 
$
86,201

 
 
 
$
99,756

 
 
 
$
185,957

 
 
 
$
383,053

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Total Apartment Units - Excludes 1,281 unconsolidated apartment units and 5,033 military housing 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 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 $51.4 million spent in 2014 on apartment unit renovations/rehabs (primarily kitchens and baths) on 6,111 same store apartment units (equating to approximately $8,400 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. In 2015, the Company expects to spend approximately $60.0 million for all unit renovation/rehab costs (primarily on same store properties) at a weighted average cost of $9,000 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)
Same Store Properties - Primarily includes all properties acquired or completed and stabilized prior to January 1, 2013, less properties subsequently sold. Also includes 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.
 
 
(7)
Non-Same Store Properties - Primarily includes all properties acquired during 2013 and 2014, plus any properties in lease-up and not stabilized as of January 1, 2013, but excludes 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company. Per apartment unit amounts are based on a weighted average of 3,911 apartment units.
 
 
(8)
Other - Primarily includes expenditures for properties sold.
 
 
(9)
For 2015, the Company estimates that it will spend approximately $1,850 per apartment unit of capital expenditures, inclusive of apartment unit renovation/rehab costs, or $1,250 per apartment unit excluding apartment unit renovation/rehab costs.



4th Quarter 2014 Earnings Release
 
23
                                            

Equity Residential
Discontinued Operations
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
 
Quarter Ended
December 31,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
REVENUES
 
 
 
 
 
 
 
 
Rental income
 
$
1,309

 
$
121,942

 
$
91

 
$
2,751

 
 
 
 
 
 
 
 
 
Total revenues
 
1,309

 
121,942

 
91

 
2,751

 
 
 
 
 
 
 
 
 
EXPENSES (1)
 
 
 
 
 
 
 
 
Property and maintenance
 
(141
)
 
36,792

 
(16
)
 
1,221

Real estate taxes and insurance
 
267

 
11,903

 
121

 
301

Property management
 
—

 
1

 
—

 
—

Depreciation
 
—

 
34,380

 
—

 
516

General and administrative
 
89

 
85

 
30

 
8

 
 
 
 
 
 
 
 
 
Total expenses
 
215

 
83,161

 
135

 
2,046

 
 
 
 
 
 
 
 
 
Discontinued operating income (loss)
 
1,094

 
38,781

 
(44
)
 
705

 
 
 
 
 
 
 
 
 
Interest and other income
 
317

 
217

 
165

 
61

Other expenses
 
—

 
(3
)
 
—

 
—

Interest (2):
 
 
 
 
 
 
 
 
Expense incurred, net
 
—

 
(1,296
)
 
—

 
(20
)
Amortization of deferred financing costs
 
—

 
(228
)
 
—

 
—

Income and other tax (expense) benefit
 
(8
)
 
(449
)
 
5

 
55

 
 
 
 
 
 
 
 
 
Discontinued operations
 
1,403

 
37,022

 
126

 
801

Net gain (loss) on sales of discontinued operations
 
179

 
2,036,505

 
(44
)
 
45,928

 
 
 
 
 
 
 
 
 
Discontinued operations, net
 
$
1,582

 
$
2,073,527

 
$
82

 
$
46,729

 
 
 
 
 
 
 
 
 
Note: The amounts included in discontinued operations for the year and quarter ended December 31, 2014 represent trailing activity for properties sold in 2013 and prior years.
 
 
 
 
 
 
 
 
 
(1) Includes expenses paid in the current period for properties sold in prior periods related to the Company's period of ownership.
 
 
 
 
 
 
 
 
 
(2) Includes only interest expense specific to secured mortgage notes payable for properties sold.



4th Quarter 2014 Earnings Release
 
24
                                            

Equity Residential
Normalized EBITDA Reconciliations
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Normalized EBITDA Reconciliations for Page 17
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trailing Twelve Months
 
2014
 
2013
 
 
 
December 31, 2014
 
September 30, 2014
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
Net income
$
658,683

 
$
547,512

 
$
227,041

 
$
231,190

 
$
117,720

 
$
82,732

 
$
115,870

Interest expense incurred, net (includes discontinued operations)
457,191

 
496,646

 
109,967

 
118,251

 
115,924

 
113,049

 
149,422

Amortization of deferred financing costs (includes discontinued operations)
11,088

 
15,115

 
2,534

 
2,628

 
3,134

 
2,792

 
6,561

Depreciation (includes discontinued operations)
758,861

 
749,028

 
193,089

 
190,469

 
190,136

 
185,167

 
183,256

Income and other tax expense (benefit) (includes discontinued operations)
1,402

 
948

 
243

 
260

 
648

 
251

 
(211
)
Archstone direct acquisition costs (other expenses)
(1
)
 
122

 
—

 
6

 
23

 
(30
)
 
123

Property acquisition costs (other expenses)
355

 
388

 
77

 
135

 
94

 
49

 
110

Write-off of pursuit costs (other expenses)
3,607

 
3,282

 
1,540

 
575

 
1,040

 
452

 
1,215

Loss (income) from investments in unconsolidated entities
7,952

 
10,608

 
(2,249
)
 
1,176

 
7,616

 
1,409

 
407

Net (gain) loss on sales of land parcels
(5,277
)
 
(1,894
)
 
(3,431
)
 
(1,052
)
 
(824
)
 
30

 
(48
)
(Gain) on sale of investment securities (interest and other income)
(57
)
 
(3,430
)
 
—

 
—

 
(36
)
 
(21
)
 
(3,373
)
Write-off of unamortized retail lease intangibles (rental income)
(147
)
 
(2,293
)
 
—

 
—

 
(147
)
 
—

 
(2,146
)
Forfeited deposits (interest and other income)
(150
)
 
—

 
(150
)
 
—

 
—

 
—

 
—

Insurance/litigation settlement or reserve income (interest and other income)
(2,793
)
 
(2,761
)
 
(32
)
 
(419
)
 
(1,879
)
 
(463
)
 
—

Insurance/litigation settlement or reserve expense (other expenses)
4,099

 
4,349

 
—

 
4,000

 
99

 
—

 
250

Other (interest and other income)
(750
)
 
—

 
(750
)
 
—

 
—

 
—

 
—

Net (gain) loss on sales of discontinued operations
(179
)
 
(46,151
)
 
44

 
1

 
(153
)
 
(71
)
 
(45,928
)
Net (gain) on sales of real estate properties
(212,685
)
 
(128,544
)
 
(84,141
)
 
(113,641
)
 
(14,903
)
 
—

 
—

Normalized EBITDA (1)
$
1,681,199

 
$
1,642,925

 
$
443,782

 
$
433,579

 
$
418,492

 
$
385,346

 
$
405,508

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Items:
 
 
December 31, 2014
 
September 30, 2014
 
 
 
 
 
 
 
 
 
 
Total debt (1)
 
 
$
10,844,861

 
$
10,957,606

 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
(40,080
)
 
(31,478
)
 
 
 
 
 
 
 
 
 
 
Mortgage principal reserves/sinking funds
 
(41,567
)
 
(39,425
)
 
 
 
 
 
 
 
 
 
 
Net debt (1)
 
 
$
10,763,214

 
$
10,886,703

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 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.

4th Quarter 2014 Earnings Release
 
25
                                            

Equity Residential
 
Normalized FFO Guidance Reconciliations and Non-Comparable Items
 
(Amounts in thousands except per share data)
 
(All per share data is diluted)
 
 
 
 
 
 
Normalized FFO Guidance Reconciliations
 
 
Normalized
 
 
FFO Reconciliations
 
 
Guidance Q4 2014
 
 
to Actual Q4 2014
 
 
 
 
 
 
 
Amounts
 
Per Share
 
Guidance Q4 2014 Normalized FFO - Diluted (2) (3)
$
311,882

 
$
0.824

 
Property NOI
12,715

 
0.034

 
Other
1,110

 
0.002

 
 
 
 
 
 
Actual Q4 2014 Normalized FFO - Diluted (2) (3)
$
325,707

 
$
0.860

 
_________________________________________________________________________________________________
Non-Comparable Items – Adjustments from FFO to Normalized FFO (2) (3)
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
Quarter Ended December 31,
 
 
2014
 
2013
 
Variance
 
2014
 
2013
 
Variance
Impairment
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Asset impairment and valuation allowances
 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Archstone direct acquisition costs (other expenses) (A)
 
(1
)
 
19,864

 
(19,865
)
 
—

 
123

 
(123
)
Archstone indirect costs (loss (income) from investments in unconsolidated entities) (B)
4,287

 
54,004

 
(49,717
)
 
(2,083
)
 
(777
)
 
(1,306
)
Property acquisition costs (other expenses)
 
355

 
313

 
42

 
77

 
110

 
(33
)
Write-off of pursuit costs (other expenses)
 
3,607

 
5,184

 
(1,577
)
 
1,540

 
1,215

 
325

Property acquisition costs and write-off of pursuit costs
 
8,248

 
79,365

 
(71,117
)
 
(466
)
 
671

 
(1,137
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepayment premiums/penalties (interest expense)
 
250

 
222,415

 
(222,165
)
 
250

 
150,972

 
(150,722
)
Write-off of unamortized deferred financing costs (interest expense)
 
614

 
9,853

 
(9,239
)
 
10

 
5,727

 
(5,717
)
Write-off of unamortized (premiums)/discounts/OCI (interest expense)
 
(1,883
)
 
(110,538
)
 
108,655

 
(1,883
)
 
(113,789
)
 
111,906

(Gain) due to ineffectiveness of forward starting swaps (interest expense)
 
(91
)
 
—

 
(91
)
 
—

 
—

 
—

Debt extinguishment (gains) losses, including prepayment penalties, preferred share
redemptions and non-cash convertible debt discounts
 
(1,110
)
 
121,730

 
(122,840
)
 
(1,623
)
 
42,910

 
(44,533
)
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain) on sales of land parcels
 
(5,277
)
 
(12,227
)
 
6,950

 
(3,431
)
 
(48
)
 
(3,383
)
Net loss on sales of unconsolidated entities – non-operating assets
 
3,468

 
—

 
3,468

 
3,468

 
—

 
3,468

Net incremental (gain) on sales of condominium units
 
—

 
(8
)
 
8

 
—

 
(1
)
 
1

(Gain) on sale of Equity Corporate Housing (ECH)
 
—

 
(1,470
)
 
1,470

 
—

 
(761
)
 
761

(Gain) on sale of investment securities (interest and other income)
(57
)
 
(4,203
)
 
4,146

 
—

 
(3,373
)
 
3,373

(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)
 
(1,866
)
 
(17,908
)
 
16,042

 
37

 
(4,183
)
 
4,220

 
 
 
 
 
 
 
 
 
 
 
 
 
Write-off of unamortized retail lease intangibles (rental income)
(147
)
 
(2,146
)
 
1,999

 
—

 
(2,146
)
 
2,146

Forfeited deposits (interest and other income)
(150
)
 
—

 
(150
)
 
(150
)
 
—

 
(150
)
Insurance/litigation settlement or reserve income (interest and other income)
(2,793
)
 
—

 
(2,793
)
 
(32
)
 
—

 
(32
)
Insurance/litigation settlement or reserve expense (other expenses)
4,099

 
3,611

 
488

 
—

 
250

 
(250
)
Other (interest and other income)
(750
)
 
—

 
(750
)
 
(750
)
 
—

 
(750
)
Other miscellaneous non-comparable items
259

 
1,465

 
(1,206
)
 
(932
)
 
(1,896
)
 
964

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-comparable items – Adjustments from FFO to Normalized FFO (2) (3)
$
5,531

 
$
184,652

 
$
(179,121
)
 
$
(2,984
)
 
$
37,502

 
$
(40,486
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(A) Archstone direct acquisition costs primarily includes items such as investment banking and legal/accounting fees that were incurred directly by the Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(B) Archstone indirect costs primarily includes the Company's 60% share of items such as severance and retention obligations, office leases and German operations/sales that were incurred indirectly through the Company's interest in unconsolidated joint ventures with AvalonBay.
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: See page 28 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.
 
 
 
 
 
 

4th Quarter 2014 Earnings Release
 
26
                                            

    
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 page 28 for the definitions, the footnotes referenced below and the reconciliations of EPS to FFO and Normalized FFO.
 
 
 
2015 Normalized FFO Guidance (per share diluted)
 
 
 
 
 
 
 
 
 
 
 
Q1 2015
 
2015
 
 
 
 
 
 
 
 
Expected Normalized FFO (2) (3)
 
$0.77 to $0.81
 
$3.35 to $3.45
 
 
 
 
 
 
 
 
2015 Same Store Assumptions
 
 
 
 
 
 
 
 
Physical occupancy
 
 
 
 
95.8%
 
Revenue change
 
 
 
 
3.75% to 4.5%
 
Expense change
 
 
 
 
2.5% to 3.5%
 
NOI change
 
 
 
 
4.0% to 5.5%
 
 
 
 
 
 
 
 
(Note: Approximately 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO/Normalized FFO)
 
 
 
2015 Transaction Assumptions
 
 
 
 
 
 
 
 
Consolidated rental acquisitions
 
 
 
$500.0 million
 
Consolidated rental dispositions
 
 
 
$500.0 million
 
Capitalization rate spread
 
 
 
100 basis points
 
 
 
 
 
 
 
 
2015 Debt Assumptions
 
 
 
 
 
 
 
 
Weighted average debt outstanding
 
 
 
$10.8 billion to $11.1 billion
 
Weighted average interest rate (reduced for capitalized interest)
 
4.10%
 
Interest expense, net
 
 
 
 
$442.8 million to $455.1 million
 
 
 
2015 Other Guidance Assumptions
 
 
 
 
 
 
 
 
General and administrative expense (see Note below)
 
 
 
$51.0 million to $53.0 million
 
Interest and other income
 
 
 
$0.5 million
 
Income and other tax expense
 
 
 
$1.0 million to $1.5 million
 
Debt offerings
 
 
 
$950.0 million
 
Equity ATM share offerings
 
 
 
No amounts budgeted
 
Preferred share offerings
 
 
No amounts budgeted
 
Weighted average Common Shares and Units - Diluted
 
 
380.6 million
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Normalized FFO guidance excludes a duplicative charge of approximately $11.0 million, of which $9.7 million will be recorded to general and administrative expense and $1.3 million will be recorded to property management expense, related to the Company's revised executive compensation program.
 







4th Quarter 2014 Earnings Release
 
27
                                            

Equity Residential
 
Additional Reconciliations, Definitions and Footnotes
 
(Amounts in thousands except per share data)
 
(All per share data is diluted)
 
 
 
 
 
 
 
 
 
 
 
The guidance/projections provided below are based on current expectations and are forward-looking.
 
 
 
 
 
 
 
 
 
 
 
Reconciliations of EPS to FFO and Normalized FFO for Pages 6, 26 and 27
 
 
 
 
 
 
 
Expected
Q1 2015
Per Share
 
Expected
2015
Per Share
 
 
 
Expected Q4 2014
 
 
 
 
 
Amounts
 
Per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected Earnings - Diluted (5)
$
220,095

 
$
0.582

 
$0.70 to $0.74
 
$1.86 to $1.96
 
Add: Expected depreciation expense
192,181

 
0.508

 
0.51
 
2.12
 
Less: Expected net gain on sales (5)
(101,557
)
 
(0.269
)
 
(0.41)
 
(0.64)
 
 
 
 
 
 
 
 
 
 
 
Expected FFO - Diluted (1) (3)
310,719

 
0.821

 
0.80 to 0.84
 
3.34 to 3.44
 
 
 
 
 
 
 
 
 
 
 
Asset impairment and valuation allowances
—

 
—

 
—
 
—
 
Property acquisition costs and write-off of pursuit costs
1,163

 
0.003

 
(0.04)
 
(0.02)
 
Debt extinguishment (gains) losses, including prepayment penalties,
preferred share redemptions and non-cash convertible debt discounts
—

 
—

 
—
 
—
 
(Gains) losses on sales of non-operating assets, net of income and other tax
expense (benefit)
—

 
—

 
—
 
—
 
Other miscellaneous non-comparable items
—

 
—

 
0.01
 
0.03
 
 
 
 
 
 
 
 
 
 
 
Expected Normalized FFO - Diluted (2) (3)
$
311,882

 
$
0.824

 
$0.77 to $0.81
 
$3.35 to $3.45
 

Definitions and Footnotes for Pages 6, 26 and 27
 
 
 
 
 
 
 
 
 
(1
)
The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains (or losses) from sales 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. Once the Company commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property.
 
 
(2
)
Normalized funds from operations ("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 and condominium sales, net of the effect of income tax benefits or expenses; and
 
• other miscellaneous non-comparable items.
 
 
 
 
 
 
 
 
 
(3
)
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. The Company also 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.
 
 
 
 
 
 
 
 
 
(4
)
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 accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "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.
 
 
 
 
 
 
 
 
 
(5
)
Earnings represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected earnings is calculated on a basis consistent with actual earnings. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual earnings could differ materially from expected earnings.

       
Same Store NOI Reconciliation for Page 10
 
 
 
 
 
 
 
 
 
The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the 2014 and the Fourth Quarter 2014 Same Store Properties:
 
 
 
 
 
 
 
Year Ended December 31,
 
Quarter Ended December 31,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Operating income
$
921,375

 
$
512,322

 
$
250,532

 
$
223,677

Adjustments:
 
 
 
 
 
 
 
Archstone pre-ownership operating results
—

 
55,694

 
—

 
—

Non-same store operating results
(81,940
)
 
(47,445
)
 
(23,615
)
 
(17,449
)
Fee and asset management revenue
(9,437
)
 
(9,698
)
 
(1,841
)
 
(2,299
)
Fee and asset management expense
5,429

 
6,460

 
1,136

 
1,721

Depreciation
758,861

 
978,973

 
193,089

 
182,740

General and administrative
50,948

 
62,179

 
9,652

 
15,162

 
 
 
 
 
 
 
 
 
Same store NOI
$
1,645,236

 
$
1,558,485

 
$
428,953

 
$
403,552



4th Quarter 2014 Earnings Release
 
28