0000906107-15-000009.txt : 20150428 0000906107-15-000009.hdr.sgml : 20150428 20150428162421 ACCESSION NUMBER: 0000906107-15-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20150428 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20150428 DATE AS OF CHANGE: 20150428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY RESIDENTIAL CENTRAL INDEX KEY: 0000906107 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363877868 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12252 FILM NUMBER: 15798903 BUSINESS ADDRESS: STREET 1: EQUITY RESIDENTIAL STREET 2: TWO NORTH RIVERSIDE PLAZA, SUITE 400 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129281178 MAIL ADDRESS: STREET 1: TWO NORTH RIVERSIDE PLAZA STREET 2: SUITE 400 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY RESIDENTIAL PROPERTIES TRUST DATE OF NAME CHANGE: 19930524 8-K 1 a8-kcoverpage1q15.htm 8-K 8-K Cover Page 1Q'15


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported): April 28, 2015


EQUITY RESIDENTIAL
(Exact Name of Registrant as Specified in its Charter)

 
 
 
 
 
Maryland
 
1-12252
 
13-3675988
(State or Other Jurisdiction
of Incorporation or Organization)
 
(Commission
 File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
Two North Riverside Plaza
Chicago, Illinois
 
 
60606
 
(Address of Principal Executive Offices)
 
 
(Zip Code)
 

Registrant's telephone number, including area code: (312) 474-1300

Not applicable
(Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))














Item 2.02. Results of Operations and Financial Condition.

On April 28, 2015, Equity Residential issued a press release announcing its results of operations and financial condition as of March 31, 2015 and for the quarter then ended. The press release is furnished as Exhibit 99.1. The information contained in this Item 2.02 on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Equity Residential under the Securities Act of 1933, as amended.

Item 8.01. Other Events.

Selected financial results and related information of Equity Residential for the quarter ended March 31, 2015 is filed as Exhibit 99.2 hereto and incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

Exhibit
Number
 
Exhibit
99.1
 
Press Release dated April 28, 2015, announcing the results of operations and financial condition of Equity Residential as of March 31, 2015 and for the quarter then ended.
 
 
 
 
 
 
 
 
99.2
 
Selected financial results and related information of Equity Residential for the quarter ended March 31, 2015.
 
 







































SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


                        
 
 
 
 
EQUITY RESIDENTIAL
 
 
 
 
 
Date:
April 28, 2015
 
By:
/s/ Ian S. Kaufman
 
 
 
 
 
 
 
 
Name:
Ian S. Kaufman
 
 
 
 
 
 
 
 
Its:
Senior Vice President and Chief Accounting Officer
 
 
 
 
(Principal Accounting Officer)
 
 
 
 
 
 
 
 
 
 







































EXHIBIT INDEX


Exhibit
Number
 
Exhibit
99.1
 
Press Release dated April 28, 2015, announcing the results of operations and financial condition of Equity Residential as of March 31, 2015 and for the quarter then ended.
 
 
 
 
 
 
 
 
99.2
 
Selected financial results and related information of Equity Residential for the quarter ended March 31, 2015.
 
 













































 EX-99.1 2 a1q15pressrelease.htm EX-99.1 1Q'15 Press Release
                                            

Exhibit 99.1
                    
NEWS RELEASE - FOR IMMEDIATE RELEASE    

APRIL 28, 2015


Equity Residential Reports First Quarter 2015 Results
Same Store Revenue Increased 5.0%
Same Store NOI Increased 7.0%
Normalized FFO per Share Increased 11.3%
Revises 2015 Same Store Revenue and NOI and Normalized FFO Guidance

Chicago, IL - April 28, 2015 - Equity Residential (NYSE: EQR) today reported results for the quarter ended March 31, 2015. All per share results are reported as available to common shares on a diluted basis.

“Apartment fundamentals remain very strong across our markets and 2015 should be another terrific year for Equity Residential,” said David J. Neithercut, Equity Residential’s President and CEO.  “As we head into our primary leasing season, we continue to experience less turnover, better occupancy and higher rental rates than original expectations and are therefore pleased to raise our guidance range for same store revenue growth to 4.3% to 4.7%.”   

First Quarter 2015
FFO (Funds from Operations), as defined by the National Association of Real Estate Investment Trusts (NAREIT), for the first quarter of 2015 was $0.79 per share compared to $0.71 per share in the first quarter of 2014. The difference is due primarily to the items described below.

For the first quarter of 2015, the company reported Normalized FFO of $0.79 per share compared to $0.71 per share in the same period of 2014. 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 interest expense primarily due to higher capitalized interest in the first quarter of 2015; and
•
a negative impact of approximately $0.02 per share from the timing of the company’s 2014 and 2015 transaction activity and other items.

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 5 and 25 of this release and the company has included guidance for Normalized FFO on page 24 and FFO on page 25 of this release.

1
                                            

For the first quarter of 2015, the company reported earnings of $0.49 per share compared to $0.22 per share in the first quarter of 2014. The difference is due primarily to higher gains on property sales in the first quarter of 2015 and the items described above.

Same Store Results
On a same store first quarter to first quarter comparison, which includes 97,586 apartment units, revenues increased 5.0%, expenses increased 1.4% and NOI increased 7.0%.

Capital Markets Activity
In February 2015, the company established a $500 million unsecured commercial paper note program which allows Equity Residential to borrow on a daily, weekly and monthly basis. As of April 27, 2015, the company’s program has approximately $500 million outstanding at a weighted average rate of 0.61% for a weighted average period of 12 days.

Investment Activity
The company did not acquire any operating properties during the first quarter of 2015.

During the first quarter of 2015, the company sold three consolidated apartment properties, consisting of 550 apartment units, for an aggregate sale price of approximately $145.4 million at a weighted average capitalization (cap) rate of 5.3%. These sales generated an unlevered internal rate of return (IRR), inclusive of indirect management costs, of 11.9%.

Second Quarter 2015 Guidance
The company has established a Normalized FFO guidance range of $0.82 to $0.86 per share for the second quarter of 2015. The difference between the company’s first quarter 2015 Normalized FFO of $0.79 per share and the midpoint of the second quarter 2015 guidance range of $0.84 per share is due primarily to:

•
a positive impact of approximately $0.04 per share from higher same store NOI; and
•
a positive impact of approximately $0.01 per share from lower G&A costs.

Full Year 2015 Guidance
The company has revised its guidance for its full year 2015 same store operating performance and Normalized FFO per share as listed below:
 
 
Previous
 
Revised
Same store:
 
 
 
 
Physical occupancy
 
95.8%
 
95.9%
Revenue change
 
3.75% to 4.5%
 
4.3% to 4.7%
Expense change
 
2.5% to 3.5%
 
2.5% to 3.5%
NOI change
 
4.0% to 5.5%
 
4.8% to 5.8%
 
 
 
 
 
Normalized FFO per share
 
$3.35 to $3.45
 
$3.37 to $3.45

The company’s guidance for transaction activity remains unchanged at $500 million of acquisitions and $500 million of dispositions with a cap rate spread of 100 basis points.




2
                                            


Second Quarter 2015 Earnings and Conference Call
Equity Residential expects to announce second quarter 2015 results on Tuesday, July 28, 2015 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, July 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 389 properties consisting of 108,793 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, April 29, 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.


3
                                            

Equity Residential
Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)
 
 
Quarter Ended March 31,
 
 
2015
 
2014
REVENUES
 
 
 
 
Rental income
 
$
664,606

 
$
630,725

Fee and asset management
 
1,765

 
2,717

Total revenues
 
666,371

 
633,442

 
 
 
 
 
EXPENSES
 
 
 
 
Property and maintenance
 
124,560

 
125,566

Real estate taxes and insurance
 
86,432

 
82,094

Property management
 
21,444

 
22,118

Fee and asset management
 
1,321

 
1,662

Depreciation
 
194,521

 
185,167

General and administrative
 
19,922

 
17,576

Total expenses
 
448,200

 
434,183

 
 
 
 
 
Operating income
 
218,171

 
199,259

 
 
 
 
 
Interest and other income
 
120

 
605

Other expenses
 
70

 
(664
)
Interest:
 
 
 
 
Expense incurred, net
 
(108,622
)
 
(113,049
)
Amortization of deferred financing costs
 
(2,589
)
 
(2,792
)
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
 
107,150

 
83,359

Income and other tax (expense) benefit
 
(43
)
 
(240
)
Income (loss) from investments in unconsolidated entities
 
2,963

 
(1,409
)
Net gain on sales of real estate properties
 
79,951

 
—

Net (loss) on sales of land parcels
 
(1
)
 
(30
)
Income from continuing operations
 
190,020

 
81,680

Discontinued operations, net
 
204

 
1,052

Net income
 
190,224

 
82,732

Net (income) attributable to Noncontrolling Interests:
 
 
 
 
Operating Partnership
 
(7,059
)
 
(3,093
)
Partially Owned Properties
 
(643
)
 
(504
)
Net income attributable to controlling interests
 
182,522

 
79,135

Preferred distributions
 
(891
)
 
(1,036
)
Premium on redemption of Preferred Shares
 
(2,789
)
 
—

Net income available to Common Shares
 
$
178,842

 
$
78,099

 
 
 
 
 
Earnings per share – basic:
 
 
 
 
Income from continuing operations available to Common Shares
 
$
0.49

 
$
0.21

Net income available to Common Shares
 
$
0.49

 
$
0.22

Weighted average Common Shares outstanding
 
363,098

 
360,470

 
 
 
 
 
Earnings per share – diluted:
 
 
 
 
Income from continuing operations available to Common Shares
 
$
0.49

 
$
0.21

Net income available to Common Shares
 
$
0.49

 
$
0.22

Weighted average Common Shares outstanding
 
380,327

 
376,384

 
 
 
 
 
Distributions declared per Common Share outstanding
 
$
0.5525

 
$
0.50








4
                                            

Equity Residential
Consolidated Statements of Funds From Operations and Normalized Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
 
 
 
Quarter Ended March 31,
 
 
 
2015
 
2014
Net income
 
$
190,224

 
$
82,732

Net (income) attributable to Noncontrolling Interests – Partially Owned Properties
 
(643
)
 
(504
)
Preferred distributions
 
(891
)
 
(1,036
)
Premium on redemption of Preferred Shares
 
(2,789
)
 
—

Net income available to Common Shares and Units
 
185,901

 
81,192

 
 
 
 
 
Adjustments:
 
 
 
 
Depreciation
 
194,521

 
185,167

Depreciation – Non-real estate additions
 
(1,261
)
 
(1,188
)
Depreciation – Partially Owned Properties
 
(1,079
)
 
(1,068
)
Depreciation – Unconsolidated Properties
 
1,228

 
1,603

Net (gain) on sales of real estate properties
 
(79,951
)
 
—

Discontinued operations:
 
 
 
 
Net (gain) on sales of discontinued operations
 
—

 
(71
)
FFO available to Common Shares and Units (1) (3) (4)
 
299,359

 
265,635

 
 
 
 
 
Adjustments (see page 23 for additional detail):
 
 
 
 
Asset impairment and valuation allowances
 
—

 
—

Property acquisition costs and write-off of pursuit costs
 
(4,825
)
 
474

Debt extinguishment (gains) losses, including prepayment penalties, preferred share
 
 
 
 
    redemptions and non-cash convertible debt discounts
 
1,473

 
—

(Gains) losses on sales of non-operating assets, net of income and other tax expense
 
 
 
 
    (benefit)
 
1,658

 
9

Other miscellaneous non-comparable items
 
1,337

 
(463
)
Normalized FFO available to Common Shares and Units (2) (3) (4)
 
$
299,002

 
$
265,655

 
 
 
 
 
 
FFO (1) (3)
 
$
303,039

 
$
266,671

Preferred distributions
 
(891
)
 
(1,036
)
Premium on redemption of Preferred Shares
 
(2,789
)
 
—

FFO available to Common Shares and Units - basic and diluted (1) (3) (4)
 
$
299,359

 
$
265,635

FFO per share and Unit - basic
 
$
0.79

 
$
0.71

FFO per share and Unit - diluted
 
$
0.79

 
$
0.71

 
 
 
 
 
 
Normalized FFO (2) (3)
 
$
299,893

 
$
266,691

Preferred distributions
 
(891
)
 
(1,036
)
Normalized FFO available to Common Shares and Units - basic and diluted (2) (3) (4)
 
$
299,002

 
$
265,655

Normalized FFO per share and Unit - basic
 
$
0.79

 
$
0.71

Normalized FFO per share and Unit - diluted
 
$
0.79

 
$
0.71

 
 
 
 
 
 
Weighted average Common Shares and Units outstanding - basic
 
376,696

 
374,201

Weighted average Common Shares and Units outstanding - diluted
 
380,327

 
376,384

 
 
 
 
 
 
Note:
See page 23 for additional detail regarding the adjustments from FFO to Normalized FFO. See page 25 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.








5
                                            

Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
 
 
March 31,
2015
 
December 31,
2014
ASSETS
 
 
 
 
Investment in real estate
 
 
 
 
Land
 
$
6,357,580

 
$
6,295,404

Depreciable property
 
20,024,497

 
19,851,504

Projects under development
 
1,269,784

 
1,343,919

Land held for development
 
143,997

 
184,556

Investment in real estate
 
27,795,858

 
27,675,383

Accumulated depreciation
 
(5,600,485
)
 
(5,432,805
)
Investment in real estate, net
 
22,195,373

 
22,242,578

Cash and cash equivalents
 
49,418

 
40,080

Investments in unconsolidated entities
 
89,284

 
105,434

Deposits – restricted
 
203,800

 
72,303

Escrow deposits – mortgage
 
50,659

 
48,085

Deferred financing costs, net
 
55,791

 
58,380

Other assets
 
384,723

 
383,754

Total assets
 
$
23,029,048

 
$
22,950,614

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Mortgage notes payable
 
$
4,957,876

 
$
5,086,515

Notes, net
 
5,430,806

 
5,425,346

Line of credit and commercial paper
 
470,826

 
333,000

Accounts payable and accrued expenses
 
202,110

 
153,590

Accrued interest payable
 
84,670

 
89,540

Other liabilities
 
383,057

 
389,915

Security deposits
 
75,294

 
75,633

Distributions payable
 
208,954

 
188,566

Total liabilities
 
11,813,593

 
11,742,105

 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests – Operating Partnership
 
541,866

 
500,733

Equity:
 
 
 
 
Shareholders’ equity:
 
 
 
 
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 803,600 shares issued and
outstanding as of March 31, 2015 and 1,000,000 shares
issued and outstanding as of December 31, 2014
 
40,180

 
50,000

Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 363,968,420 shares issued and
outstanding as of March 31, 2015 and 362,855,454 shares
issued and outstanding as of December 31, 2014
 
3,640

 
3,629

Paid in capital
 
8,539,115

 
8,536,340

Retained earnings
 
1,928,449

 
1,950,639

Accumulated other comprehensive (loss)
 
(180,022
)
 
(172,152
)
Total shareholders’ equity
 
10,331,362

 
10,368,456

Noncontrolling Interests:
 
 
 
 
Operating Partnership
 
219,566

 
214,411

Partially Owned Properties
 
122,661

 
124,909

Total Noncontrolling Interests
 
342,227

 
339,320

Total equity
 
10,673,589

 
10,707,776

Total liabilities and equity
 
$
23,029,048

 
$
22,950,614


6
                                            

Equity Residential
Portfolio Summary
As of March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% of
 
Average
 
 
 
 
Apartment
 
Stabilized
 
Rental
Markets/Metro Areas
 
Properties
 
Units
 
NOI (1)
 
Rate (2)
 
 
 
 
 
 
 
 
 
Core:
 
 
 
 
 
 
 
 
Washington DC
 
57

 
18,652

 
17.6
%
 
$
2,202

New York
 
38

 
10,330

 
16.5
%
 
3,879

San Francisco
 
51

 
13,208

 
14.3
%
 
2,453

Los Angeles
 
61

 
13,313

 
12.7
%
 
2,248

Boston
 
34

 
7,816

 
10.0
%
 
2,915

South Florida
 
35

 
11,434

 
7.5
%
 
1,647

Seattle
 
41

 
8,170

 
7.0
%
 
1,940

Denver
 
19

 
6,935

 
4.7
%
 
1,466

San Diego
 
13

 
3,505

 
3.1
%
 
2,008

Orange County, CA
 
11

 
3,490

 
3.0
%
 
1,821

Subtotal – Core
 
360

 
96,853

 
96.4
%
 
2,319

 
 
 
 
 
 
 
 
 
Non-Core:
 
 
 
 
 
 
 
 
Inland Empire, CA
 
10

 
3,081

 
2.2
%
 
1,587

Orlando
 
3

 
827

 
0.4
%
 
1,255

All Other Markets
 
14

 
2,969

 
1.0
%
 
1,188

Subtotal – Non-Core
 
27

 
6,877

 
3.6
%
 
1,374

Total
 
387

 
103,730

 
100.0
%
 
2,256

 
 
 
 
 
 
 
 
 
Military Housing
 
2

 
5,063

 
—

 
—

 
 
 
 
 
 
 
 
 
Grand Total
 
389

 
108,793

 
100.0
%
 
$
2,256

 
 
 
 
 
 
 
 
 
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.



1st Quarter 2015 Earnings Release
 
7
                                            

Equity Residential
 
 
 
 
 
 
 
 
 
Portfolio as of March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
Apartment
Units
 
 
 
 
 
 
 
 
 
 
 
 
Wholly Owned Properties
 
362

 
97,825

 
 
 
Master-Leased Properties - Consolidated
 
3

 
853

 
 
 
Partially Owned Properties - Consolidated
 
19

 
3,771

 
 
 
Partially Owned Properties - Unconsolidated
 
3

 
1,281

 
 
 
Military Housing
 
2

 
5,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
389

 
108,793

 
 

______________________________________________________________________________________________________

Portfolio Rollforward Q1 2015
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
Apartment
Units
 
Purchase/
(Sale) Price
 
Cap Rate
 
 
 
 
 
 
 
 
 
 
 
 
12/31/2014
391

 
109,225

 
 
 
 
Acquisitions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties
—

 
—

 
—

 
—

Dispositions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties
(3
)
 
(550
)
 
$
145,400

 
5.3
%
Completed Developments - Consolidated
1

 
88

 
 
 
 
Configuration Changes
—

 
30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3/31/2015
389

 
108,793

 
 
 
 



1st Quarter 2015 Earnings Release
 
8
                                            

Equity Residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2015 vs. First Quarter 2014
Same Store Results/Statistics for 97,586 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
Average
Rental
Rate (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI (1)
 
 
Occupancy
 
Turnover
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2015
 
$
632,034

 
$
216,544

 
$
415,490

 
$
2,252

 
95.9
%
 
11.2
%
Q1 2014
 
$
601,794

 
$
213,460

 
$
388,334

 
$
2,164

 
95.1
%
 
11.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
$
30,240

 
$
3,084

 
$
27,156

 
$
88

 
0.8
%
 
(0.1
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
5.0
%
 
1.4
%
 
7.0
%
 
4.1
%
 
 
 
 
_______________________________________________________________________________________________________

First Quarter 2015 vs. Fourth Quarter 2014
Same Store Results/Statistics for 99,502 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
Average
Rental
Rate (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI (1)
 
 
Occupancy
 
Turnover
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2015
 
$
644,513

 
$
221,006

 
$
423,507

 
$
2,252

 
95.9
%
 
11.2
%
Q4 2014
 
$
640,589

 
$
206,764

 
$
433,825

 
$
2,236

 
96.0
%
 
12.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
$
3,924

 
$
14,242

 
$
(10,318
)
 
$
16

 
(0.1
%)
 
(1.1
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
0.6
%
 
6.9
%
 
(2.4
%)
 
0.7
%
 
 
 
 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance) as well as an allocation of indirect property management costs. 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 25 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.


1st Quarter 2015 Earnings Release
 
9
                                            

Equity Residential
First Quarter 2015 vs. First Quarter 2014
Same Store Results/Statistics by Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) from Prior Year's Quarter
 
 
 
 
Q1 2015
% of
Actual
NOI
 
Q1 2015
Average
Rental
Rate (1)
 
Q1 2015
Weighted
Average
Occupancy %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (1)
 
 
 
 
Apartment
Units
 
 
 
 
 
 
 
 
 
 
 
 
Markets/Metro Areas
 
 
 
 
 
 Revenues
 
Expenses
 
 NOI
 
 
Occupancy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington DC
 
17,741

 
17.8
%
 
$
2,213

 
95.7
%
 
0.7
%
 
1.9
%
 
0.1
%
 
(0.4
%)
 
1.2
%
New York
 
10,330

 
16.8
%
 
3,895

 
96.4
%
 
4.4
%
 
0.6
%
 
7.0
%
 
3.5
%
 
0.8
%
San Francisco
 
12,764

 
15.1
%
 
2,428

 
96.6
%
 
10.6
%
 
1.9
%
 
14.8
%
 
8.5
%
 
1.8
%
Los Angeles
 
10,641

 
10.6
%
 
2,177

 
95.9
%
 
5.5
%
 
0.9
%
 
8.0
%
 
4.7
%
 
0.7
%
Boston
 
7,722

 
10.0
%
 
2,892

 
95.6
%
 
3.4
%
 
1.9
%
 
4.3
%
 
2.8
%
 
0.5
%
South Florida
 
10,537

 
7.5
%
 
1,627

 
95.9
%
 
5.1
%
 
2.5
%
 
6.7
%
 
4.5
%
 
0.6
%
Seattle
 
7,380

 
6.7
%
 
1,910

 
95.5
%
 
7.4
%
 
(0.5
%)
 
11.4
%
 
6.6
%
 
0.6
%
Denver
 
6,935

 
5.2
%
 
1,455

 
95.8
%
 
9.0
%
 
0.0
%
 
12.5
%
 
8.3
%
 
0.6
%
San Diego
 
3,505

 
3.4
%
 
2,008

 
95.9
%
 
5.2
%
 
2.6
%
 
6.4
%
 
4.3
%
 
0.9
%
Orange County, CA
 
3,490

 
3.2
%
 
1,820

 
96.2
%
 
5.5
%
 
4.4
%
 
5.9
%
 
4.4
%
 
1.1
%
Subtotal – Core
 
91,045

 
96.3
%
 
2,315

 
96.0
%
 
5.1
%
 
1.4
%
 
7.1
%
 
4.0
%
 
1.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inland Empire, CA
 
3,081

 
2.3
%
 
1,591

 
95.0
%
 
3.1
%
 
3.3
%
 
3.0
%
 
3.6
%
 
(0.5
%)
Orlando
 
827

 
0.4
%
 
1,244

 
95.7
%
 
4.4
%
 
5.6
%
 
3.6
%
 
2.4
%
 
1.8
%
All Other Markets
 
2,633

 
1.0
%
 
1,142

 
96.0
%
 
3.5
%
 
0.2
%
 
7.2
%
 
3.6
%
 
(0.1
%)
Subtotal – Non-Core
 
6,541

 
3.7
%
 
1,366

 
95.5
%
 
3.4
%
 
2.2
%
 
4.2
%
 
3.5
%
 
0.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
97,586

 
100.0
%
 
$
2,252

 
95.9
%
 
5.0
%
 
1.4
%
 
7.0
%
 
4.1
%
 
0.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




1st Quarter 2015 Earnings Release
 
10
                                            

Equity Residential
First Quarter 2015 vs. Fourth Quarter 2014
Same Store Results/Statistics by Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) from Prior Quarter
 
 
 
 
Q1 2015
% of
Actual
NOI
 
Q1 2015
Average
Rental
Rate (1)
 
Q1 2015
Weighted
Average
Occupancy %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average
Rental
Rate (1)
 
 
 
 
Apartment Units
 
 
 
 
 
 
 
 
 
 
 
 
Markets/Metro Areas
 
 
 
 
 
 Revenues
 
Expenses
 
 NOI
 
 
Occupancy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington DC
 
18,130

 
17.8
%
 
$
2,203

 
95.7
%
 
0.1
%
 
9.4
%
 
(4.1
%)
 
(0.3
%)
 
0.3
%
New York
 
10,330

 
16.5
%
 
3,895

 
96.4
%
 
0.7
%
 
10.5
%
 
(4.8
%)
 
1.2
%
 
(0.4
%)
San Francisco
 
12,764

 
14.8
%
 
2,428

 
96.6
%
 
1.6
%
 
2.9
%
 
1.0
%
 
1.7
%
 
(0.2
%)
Los Angeles
 
11,811

 
11.6
%
 
2,217

 
95.9
%
 
0.8
%
 
2.7
%
 
(0.2
%)
 
0.9
%
 
0.0
%
Boston
 
7,722

 
9.8
%
 
2,892

 
95.6
%
 
(0.8
%)
 
16.0
%
 
(8.0
%)
 
0.1
%
 
(0.8
%)
South Florida
 
10,665

 
7.5
%
 
1,628

 
95.9
%
 
1.2
%
 
5.0
%
 
(0.9
%)
 
0.9
%
 
0.3
%
Seattle
 
7,609

 
6.8
%
 
1,908

 
95.6
%
 
1.0
%
 
0.3
%
 
1.3
%
 
1.0
%
 
0.1
%
Denver
 
6,935

 
5.1
%
 
1,455

 
95.8
%
 
0.7
%
 
(1.4
%)
 
1.4
%
 
0.8
%
 
0.0
%
San Diego
 
3,505

 
3.3
%
 
2,008

 
95.9
%
 
0.3
%
 
1.7
%
 
(0.4
%)
 
0.9
%
 
(0.6
%)
Orange County, CA
 
3,490

 
3.1
%
 
1,820

 
96.2
%
 
0.4
%
 
5.6
%
 
(1.5
%)
 
0.9
%
 
(0.4
%)
Subtotal – Core
 
92,961

 
96.3
%
 
2,314

 
96.0
%
 
0.6
%
 
6.8
%
 
(2.3
%)
 
0.7
%
 
0.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Core:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inland Empire, CA
 
3,081

 
2.3
%
 
1,591

 
95.0
%
 
0.6
%
 
2.3
%
 
(0.2
%)
 
1.0
%
 
(0.4
%)
Orlando
 
827

 
0.4
%
 
1,244

 
95.7
%
 
1.4
%
 
3.5
%
 
0.0
%
 
1.6
%
 
(0.2
%)
All Other Markets
 
2,633

 
1.0
%
 
1,142

 
96.0
%
 
0.1
%
 
16.0
%
 
(12.4
%)
 
0.1
%
 
0.0
%
Subtotal – Non-Core
 
6,541

 
3.7
%
 
1,366

 
95.5
%
 
0.5
%
 
8.0
%
 
(3.8
%)
 
0.7
%
 
(0.2
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
99,502

 
100.0
%
 
$
2,252

 
95.9
%
 
0.6
%
 
6.9
%
 
(2.4
%)
 
0.7
%
 
(0.1
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



1st Quarter 2015 Earnings Release
 
11
                                            

Equity Residential
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2015 vs. First Quarter 2014
Same Store Operating Expenses for 97,586 Same Store Apartment Units
$ in thousands
 
 
 
 
 
 
 
 
 
 
% of Actual
Q1 2015
Operating
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Actual
Q1 2015
 
Actual
Q1 2014
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate taxes
$
75,356

 
$
71,697

 
$
3,659

 
5.1
%
 
34.8
%
On-site payroll (1)
45,491

 
43,684

 
1,807

 
4.1
%
 
21.0
%
Utilities (2)
32,688

 
37,622

 
(4,934
)
 
(13.1
%)
 
15.1
%
Repairs and maintenance (3)
26,334

 
24,218

 
2,116

 
8.7
%
 
12.2
%
Property management costs (4)
18,961

 
18,054

 
907

 
5.0
%
 
8.7
%
Insurance
5,405

 
6,050

 
(645
)
 
(10.7
%)
 
2.5
%
Leasing and advertising
2,587

 
2,511

 
76

 
3.0
%
 
1.2
%
Other on-site operating expenses (5)
9,722

 
9,624

 
98

 
1.0
%
 
4.5
%
 
 
 
 
 
 
 
 
 
 
 
Same store operating expenses
$
216,544

 
$
213,460

 
$
3,084

 
1.4
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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.

1st Quarter 2015 Earnings Release
 
12
                                            

Equity Residential
 
Debt Summary as of March 31, 2015
(Amounts in thousands)
 
 
 
 
 
 
 
 
Weighted
Average
Maturities
(years)
 
 
 
 
 
 
Weighted
Average
Rates (1)
 
 
 
 
 
 
 
 
 
 
Amounts (1)
 
% of Total
 
 
 
 
 
 
 
 
 
 
 
Secured
 
$
4,957,876

 
45.7
%
 
4.13
%
 
7.4

Unsecured
 
5,901,632

 
54.3
%
 
4.68
%
 
7.2

 
 
 
 
 
 
 
 
 
Total
$
10,859,508

 
100.0
%
 
4.43
%
 
7.3

 
 
 
 
 
 
 
 
 
Fixed Rate Debt:
 
 
 
 
 
 
 
 
Secured – Conventional
 
$
4,221,811

 
38.9
%
 
4.73
%
 
5.8

Unsecured – Public
 
4,974,750

 
45.8
%
 
5.39
%
 
8.1

 
 
 
 
 
 
 
 
 
Fixed Rate Debt
9,196,561

 
84.7
%
 
5.08
%
 
7.1

 
 
 
 
 
 
 
 
 
Floating Rate Debt:
 
 
 
 
 
 
 
 
Secured – Conventional
 
7,985

 
0.1
%
 
0.11
%
 
18.8

Secured – Tax Exempt
 
728,080

 
6.7
%
 
0.63
%
 
16.0

Unsecured – Public (2)
 
456,056

 
4.2
%
 
0.89
%
 
4.3

Unsecured – Revolving Credit Facility
 
130,000

 
1.2
%
 
1.02
%
 
3.0

Unsecured – Commercial Paper Program
 
340,826

 
3.1
%
 
0.53
%
 
              (3)

 
 
 
 
 
 
 
 
 
Floating Rate Debt
 
1,662,947

 
15.3
%
 
0.77
%
 
8.5

 
 
 
 
 
 
 
 
 
Total
 
$
10,859,508

 
100.0
%
 
4.43
%
 
7.3

 
 
 
 
 
 
 
 
 
(1) Net of the effect of any derivative instruments. Weighted average rates are for the quarter ended March 31, 2015.
 
(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 March 31, 2015, the weighted average maturity on the Company's outstanding commercial paper was 14 days.
 
 
 
 
 
 
 
 
 
Note: The Company capitalized interest of approximately $15.3 million and $12.8 million during the quarters ended March 31, 2015 and 2014, respectively.
 
Note: The Company recorded approximately $0.5 million and $1.1 million of net debt discount/deferred derivative settlement amortization as additional interest expense during the quarters ended March 31, 2015 and 2014, respectively.
______________________________________________________________________________________________________
Debt Maturity Schedule as of March 31, 2015
(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
 
$
344,995

 
$
340,900

(2)
$
685,895

 
6.3
%
 
6.43
%
 
3.53
%
2016
 
1,132,141

 
—

 
1,132,141

 
10.4
%
 
5.31
%
 
5.31
%
2017
 
1,346,252

 
456

 
1,346,708

 
12.4
%
 
6.16
%
 
6.16
%
2018
 
83,854

 
227,659

(3)
311,513

 
2.9
%
 
5.61
%
 
2.17
%
2019
 
806,113

 
477,204

 
1,283,317

 
11.8
%
 
5.48
%
 
3.75
%
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

 
15.6
%
 
4.97
%
 
3.16
%
Premium/(Discount)
 
25,878

 
(61,786
)
 
(35,908
)
 
(0.3
%)
 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
9,196,561

 
$
1,662,947

 
$
10,859,508

 
100.0
%
 
5.12
%
 
4.41
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Net of the effect of any derivative instruments. Weighted average rates are as of March 31, 2015.
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Represents the principal outstanding on the Company's unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on the program subject to market conditions.
 
 
 
 
 
 
 
 
 
 
 
 
 
(3) Includes $130.0 million outstanding on the Company's unsecured revolving credit facility. As of March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program).

1st Quarter 2015 Earnings Release
 
13
                                            

Equity Residential
Unsecured Debt Summary as of March 31, 2015
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized
Premium/
(Discount)
 
 
 
 
Coupon
Rate
 
Due
Date
 
Face
Amount
 
 
Net
Balance
 
 
 
 
 
 
Fixed Rate Notes:
 
 
 
 
 
 
 
 
 
 
 
 
6.584%
 
04/13/15
 
$
300,000

 
$
—

 
$
300,000

 
 
5.125%
 
03/15/16
 
500,000

 
(49
)
 
499,951

 
 
5.375%
 
08/01/16
 
400,000

 
(247
)
 
399,753

 
 
5.750%
 
06/15/17
 
650,000

 
(1,144
)
 
648,856

 
 
7.125%
 
10/15/17
 
150,000

 
(165
)
 
149,835

 
 
2.375%
 
07/01/19
(1)
450,000

 
(382
)
 
449,618

Fair Value Derivative Adjustments
 
 
 
 
(1)
(450,000
)
 
382

 
(449,618
)
 
 
4.750%
 
07/15/20
 
600,000

 
(2,404
)
 
597,596

 
 
4.625%
 
12/15/21
 
1,000,000

 
(2,540
)
 
997,460

 
 
3.000%
 
04/15/23
 
500,000

 
(3,560
)
 
496,440

 
 
7.570%
 
08/15/26
 
140,000

 
—

 
140,000

 
 
4.500%
 
07/01/44
 
750,000

 
(5,141
)
 
744,859

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,990,000

 
(15,250
)
 
4,974,750

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

 
(382
)
 
449,618

Fair Value Derivative Adjustments
 
 
 
07/01/19
(1)
6,438

 
—

 
6,438

 
 
 
 
 
 
456,438

 
(382
)
 
456,056

 
 
 
 
 
 
 
 
 
 
 
Line of Credit and Commercial Paper:
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility
 
LIBOR+1.05%
 
04/01/18
(2)(3) 
130,000

 
—

 
130,000

Commercial Paper Program
 
(4)
 
(4)
(2)
340,900

 
(74
)
 
340,826

 
 
 
 
 
 
470,900

 
(74
)
 
470,826

 
 
 
 
 
 
 
 
 
 
 
Total Unsecured Debt
 
 
 
 
 
$
5,917,338

 
$
(15,706
)
 
$
5,901,632


(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)
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 March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4)
Represents the Company's unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on this program subject to market conditions. The notes bear interest at various floating rates with a weighted average of 0.53% for the quarter ended March 31, 2015 and a weighted average maturity of 14 days as of March 31, 2015.

1st Quarter 2015 Earnings Release
 
14
                                            

 
Equity Residential
 
 
 
Selected Unsecured Public Debt Covenants
 
 
 
March 31,
2015
 
December 31,
2014
 
 
 
 
 
 
 
 
 
 
 
Total Debt to Adjusted Total Assets (not to exceed 60%)
 
38.9
%
 
39.2
%
 
 
 
 
 
 
 
Secured Debt to Adjusted Total Assets (not to exceed 40%)
 
17.8
%
 
18.4
%
 
 
 
 
 
 
 
Consolidated Income Available for Debt Service to
 
 
 
 
 
Maximum Annual Service Charges
 
 
 
 
 
(must be at least 1.5 to 1)
 
3.48

 
3.38

 
 
 
 
 
 
 
Total Unsecured Assets to Unsecured Debt
 
 
 
 
 
(must be at least 150%)
 
337.7
%
 
336.5
%
 
 
 
 
 
 
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 (1)
 
 
 
March 31,
2015
 
December 31,
2014
 
 
 
 
 
 
 
 
 
 
 
Total debt to Normalized EBITDA
 
6.35x
 
6.45x
 
 
 
 
 
 
 
Net debt to Normalized EBITDA
 
6.29x
 
6.40x
 
 
 
 
 
 
Note:
See page 22 for the footnote referenced above and the Normalized EBITDA reconciliations.

1st Quarter 2015 Earnings Release
 
15
                                            

Equity Residential
 
Capital Structure as of March 31, 2015
(Amounts in thousands except for share/unit and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
Secured Debt
 
 
 
 
 
$
4,957,876

 
45.7
%
 
 
Unsecured Debt
 
 
 
 
 
5,901,632

 
54.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
 
 
 
 
10,859,508

 
100.0
%
 
26.9
%
 
 
 
 
 
 
 
 
 
 
 
Common Shares (includes Restricted Shares)
 
363,968,420

 
96.2
%
 
 
 
 
 
 
Units (includes OP Units and Restricted Units)
 
14,477,945

 
3.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Shares and Units
 
378,446,365

 
100.0
%
 
 
 
 
 
 
Common Share Price at March 31, 2015
 
$
77.86

 
 
 
 
 
 
 
 
 
 
 
 
 
 
29,465,834

 
99.9
%
 
 
Perpetual Preferred Equity (see below)
 
 
 
 
 
40,180

 
0.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Equity
 
 
 
 
 
29,506,014

 
100.0
%
 
73.1
%
 
 
 
 
 
 
 
 
 
 
 
Total Market Capitalization
 
 
 
 
 
$
40,365,522

 
 
 
100.0
%

__________________________________________________________________________________________________________________________________________

Perpetual Preferred Equity as of March 31, 2015
(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 (1)
 
12/10/26
 
803,600

 
$
40,180

 
$
4.145

 
$
3,331

 
 
 
 
 
 
 
 
 
 
 
Total Perpetual Preferred Equity
 
 
 
803,600

 
$
40,180

 
 
 
$
3,331

 
 
 
 
 
 
 
 
 
 
 
(1
)
Effective January 26, 2015, the Company repurchased and retired 196,400 Series K Preferred Shares with a par value of $9.82 million for total cash consideration of approximately $12.7 million. As a result of this partial redemption, the Company incurred a cash charge of approximately $2.8 million which was recorded as a premium on the redemption of preferred shares but did not impact Normalized FFO.


1st Quarter 2015 Earnings Release
 
16
                                            

Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
 
 
 
 
 
 
 
 
 
Q1 2015
 
Q1 2014
 
 
 
 
 
 
Weighted Average Amounts Outstanding for Net Income Purposes:
 
 
 
 
Common Shares - basic
 
363,098,200

 
360,470,366

Shares issuable from assumed conversion/vesting of:
 
 
 
 
- OP Units
 
13,597,682

 
13,730,577

- long-term compensation shares/units
 
3,631,489

 
2,183,239

 
 
 
 
 
 
Total Common Shares and Units - diluted
 
380,327,371

 
376,384,182

 
 
 
 
 
Weighted Average Amounts Outstanding for FFO and Normalized
FFO Purposes:
 
 
 
 
Common Shares - basic
 
363,098,200

 
360,470,366

OP Units - basic
 
13,597,682

 
13,730,577

 
 
 
 
 
 
Total Common Shares and OP Units - basic
 
376,695,882

 
374,200,943

Shares issuable from assumed conversion/vesting of:
 
 
 
 
- long-term compensation shares/units
 
3,631,489

 
2,183,239

 
 
 
 
 
 
Total Common Shares and Units - diluted
 
380,327,371

 
376,384,182

 
 
 
 
 
 
Period Ending Amounts Outstanding:
 
 
 
 
Common Shares (includes Restricted Shares)
 
363,968,420

 
361,148,189

Units (includes OP Units and Restricted Units)
 
14,477,945

 
14,375,319

 
 
 
 
 
 
Total Shares and Units
 
378,446,365

 
375,523,508

 
 
 
 
 
 






1st Quarter 2015 Earnings Release
 
17
                                            

Equity Residential
Partially Owned Entities as of March 31, 2015
(Amounts in thousands except for project and apartment unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
Unconsolidated
 
 
Development Projects
 
 
 
 
 
 
 
 
 
 
Held for
and/or Under
Development (4)
 
 
 
 
 
Operating
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
 
Total
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
Total projects (1)
 
—

 
19

 
19

 
3

 
3

 
 
 
 
 
 
 
 
 
 
 
Total apartment units (1)
 
—

 
3,771

 
3,771

 
1,281

 
1,281

 
 
 
 
 
 
 
 
 
 
 
Operating information for the quarter ended 3/31/15 (at 100%):
     
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
250

 
$
22,688

 
$
22,938

 
$
7,813

 
$
7,813

Operating expenses
 
418

 
6,875

 
7,293

 
2,443

 
2,443

 
 
 
 
 
 
 
 
 
 
 
Net operating (loss) income
 
(168
)
 
15,813

 
15,645

 
5,370

 
5,370

Depreciation
 
991

 
5,520

 
6,511

 
3,076

 
3,076

General and administrative/other
 
—

 
15

 
15

 
56

 
56

 
 
 
 
 
 
 
 
 
 
 
Operating (loss) income
 
(1,159
)
 
10,278

 
9,119

 
2,238

 
2,238

Interest and other income
 
—

 
4

 
4

 
—

 
—

Other expenses
 
—

 
(50
)
 
(50
)
 
—

 
—

Interest:
 
 
 
 
 
 
 
 
 
 
Expense incurred, net
 
—

 
(3,884
)
 
(3,884
)
 
(2,346
)
 
(2,346
)
Amortization of deferred financing costs
 
—

 
(89
)
 
(89
)
 
(1
)
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
(Loss) income before income and other taxes and (loss)
    from investments in unconsolidated entities
    
 
 
 
 
 
 
 
 
 
 
 
(1,159
)
 
6,259

 
5,100

 
(109
)
 
(109
)
Income and other tax (expense) benefit
 
—

 
(35
)
 
(35
)
 
(18
)
 
(18
)
(Loss) from investments in unconsolidated entities
    

 
—

 
(377
)
 
(377
)
 
—

 
—

Net (loss) income
 
$
(1,159
)
 
$
5,847

 
$
4,688

 
$
(127
)
 
$
(127
)
 
 
 
 
 
 
 
 
 
 
 
Debt - Secured (2):
 
 
 
 
 
 
 
 
 
 
EQR Ownership (3)
 
$
—

 
$
282,121

 
$
282,121

 
$
35,055

 
$
35,055

Noncontrolling Ownership
 
—

 
78,446

 
78,446

 
140,221

 
140,221

 
 
 
 
 
 
 
 
 
 
 
Total (at 100%)
 
$
—

 
$
360,567

 
$
360,567

 
$
175,276

 
$
175,276

(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 Projects Under Development - Partially Owned on page 19 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 $72.6 million at March 31, 2015. The ventures are owned 60% by the Company and 40% by AVB.

1st Quarter 2015 Earnings Release
 
18

Equity Residential
Consolidated Development and Lease-Up Projects as of March 31, 2015
(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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parc on Powell (formerly 1333 Powell)
 
Emeryville, CA
 
173

 
$
87,500

 
$
75,585

 
$
42,801

 
$
—

 
90
%
 
44
%
 
21
%
 
Q2 2015
 
Q4 2015
170 Amsterdam (2)
 
New York, NY
 
236

 
110,892

 
104,549

 
104,549

 
—

 
97
%
 
—

 
—

 
Q2 2015
 
Q1 2016
Azure (at Mission Bay)
 
San Francisco, CA
 
273

 
189,090

 
161,788

 
161,788

 
—

 
88
%
 
—

 
—

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

 
67,112

 
53,603

 
53,603

 
—

 
78
%
 
—

 
—

 
Q4 2015
 
Q3 2016
Odin (formerly Tallman)
 
Seattle, WA
 
301

 
84,277

 
65,518

 
65,518

 
—

 
79
%
 
—

 
—

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

 
193,231

 
98,965

 
98,965

 
—

 
34
%
 
—

 
—

 
Q2 2016
 
Q2 2017
Potrero
 
San Francisco, CA
 
453

 
224,474

 
92,222

 
92,222

 
—

 
35
%
 
—

 
—

 
Q2 2016
 
Q3 2017
Millikan
 
Irvine, CA
 
344

 
102,331

 
47,001

 
47,001

 
—

 
20
%
 
—

 
—

 
Q2 2016
 
Q3 2017
Tasman
 
San Jose, CA
 
554

 
214,923

 
142,279

 
142,279

 
—

 
60
%
 
—

 
—

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

 
287,454

 
119,998

 
119,998

 
—

 
33
%
 
—

 
—

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

 
164,434

 
47,768

 
47,768

 
—

 
7
%
 
—

 
—

 
Q4 2016
 
Q4 2017
Cascade
 
Seattle, WA
 
483

 
158,494

 
40,420

 
40,420

 
—

 
5
%
 
—

 
—

 
Q2 2017
 
Q1 2019
801 Brannan
 
San Francisco, CA
 
449

 
290,209

 
57,265

 
57,265

 
—

 
1
%
 
—

 
—

 
Q3 2017
 
Q1 2019
2nd & Pine (3)
 
Seattle, WA
 
398

 
214,742

 
51,097

 
51,097

 
—

 
10
%
 
—

 
—

 
Q3 2017
 
Q2 2019
Projects Under Development - Wholly Owned
 
 
 
5,004

 
2,389,163

 
1,158,058

 
1,125,274

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Under Development - Partially Owned:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prism at Park Avenue South (4)
 
New York, NY
 
269

 
251,961

 
232,713

 
29,414

 
—

 
94
%
 
18
%
 
14
%
 
Q3 2015
 
Q1 2016
Projects Under Development - Partially Owned
 
 
 
269

 
251,961

 
232,713

 
29,414

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Under Development
 
 
 
5,273

 
2,641,124

 
1,390,771

 
1,154,688

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed Not Stabilized - Wholly Owned (5):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Urbana (formerly Market Street Landing)
 
Seattle, WA
 
287

 
88,774

 
87,259

 
—

 
—

 
 
 
95
%
 
94
%
 
Completed
 
Q2 2015
Residences at Westgate I (formerly Westgate II)
 
Pasadena, CA
 
252

 
127,292

 
124,641

 
—

 
—

 
 
 
83
%
 
79
%
 
Completed
 
Q3 2015
Residences at Westgate II (formerly Westgate III)
 
Pasadena, CA
 
88

 
55,037

 
49,313

 
—

 
—

 
 
 
—

 
—

 
Completed
 
Q4 2015
Projects Completed Not Stabilized - Wholly Owned
 
 
 
627

 
271,103

 
261,213

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Completed Not Stabilized
 
 
 
627

 
271,103

 
261,213

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed and Stabilized During the Quarter - Wholly Owned:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1111 Belle Pre (formerly The Madison)
 
Alexandria, VA
 
360

 
111,922

 
111,738

 
—

 
—

 
 
 
99
%
 
97
%
 
Completed
 
Stabilized
Park Aire (formerly Enclave at Wellington)
 
Wellington, FL
 
268

 
48,910

 
48,909

 
—

 
—

 
 
 
98
%
 
94
%
 
Completed
 
Stabilized
Jia (formerly Chinatown Gateway)
 
Los Angeles, CA
 
280

 
92,920

 
90,359

 
—

 
—

 
 
 
97
%
 
96
%
 
Completed
 
Stabilized
Projects Completed and Stabilized During the Quarter - Wholly Owned
 
 
 
908

 
253,752

 
251,006

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Completed and Stabilized During the Quarter
 
 
 
908

 
253,752

 
251,006

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated Projects
 
 
 
6,808

 
$
3,165,979

 
$
1,902,990

 
$
1,154,688

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Land Held for Development
 
 
 
N/A
 
N/A
 
$
143,997

 
$
143,997

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Capital
Cost (1)
 
Q1 2015
NOI
 
 
 
 
 
 
NOI CONTRIBUTION FROM CONSOLIDATED DEVELOPMENT PROJECTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects Under Development
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,641,124

 
$
(365
)
 
 
 
 
 
 
Completed Not Stabilized
 
 
 
 
 
 
 
 
 
 
 
 
 
271,103

 
2,431

 
 
 
 
 
 
Completed and Stabilized During the Quarter
 
 
 
 
 
 
 
 
 
 
 
253,752

 
3,745

 
 
 
 
 
 
Total Consolidated Development NOI Contribution
 
 
 
 
 
 
 
 
 
 
 
$
3,165,979

 
$
5,811

 
 
 
 
 
 
 
 
(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)
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.
(4)
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 $115.1 million for their allocated share of the project.
(5)
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.

1st Quarter 2015 Earnings Release
 
19

Equity Residential
Unconsolidated Development and Lease-Up Projects as of March 31, 2015
(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 and Stabilized During the Quarter - Unconsolidated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domain (2)
 
San Jose, CA
 
20.0%
 
444

 
$
155,820

 
$
155,128

 
$
—

 
$
96,793

 
 
 
98
%
 
97
%
 
Completed
 
Stabilized
Projects Completed and Stabilized During the Quarter - Unconsolidated
 
 
 
 
 
444

 
155,820

 
155,128

 
—

 
96,793

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projected Completed and Stabilized During the Quarter
 
 
 
 
 
444

 
155,820

 
155,128

 
—

 
96,793

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Unconsolidated Projects
 
 
 
 
 
444

 
$
155,820

 
$
155,128

 
$
—

 
$
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)
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



1st Quarter 2015 Earnings Release
 
20
                                            

Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Quarter Ended March 31, 2015
(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)
97,586

 
$
26,334

 
$
270

 
$
21,437

 
$
219

 
$
47,771

 
$
489

 
$
21,633

 
$
222

 
$
13,675

 
$
140

 
$
35,308

 
$
362

(9)
$
83,079

 
$
851

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Same Store Properties (7)
4,863

 
856

 
179

 
658

 
138

 
1,514

 
317

 
67

 
14

 
2,753

 
577

 
2,820

 
591

 
4,334

 
908

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other (8)
—

 
80

 
 
 
153

 
 
 
233

 
 
 
23

 
 
 
19

 
 
 
42

 
 
 
275

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
102,449

 
$
27,270

 
 
 
$
22,248

 
 
 
$
49,518

 
 
 
$
21,723

 
 
 
$
16,447

 
 
 
$
38,170

 
 
 
$
87,688

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Total Apartment Units - Excludes 1,281 unconsolidated apartment units and 5,063 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 $13.1 million spent in Q1 2015 on apartment unit renovations/rehabs (primarily kitchens and baths) on 1,432 same store apartment units (equating to approximately $9,100 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, 2014, less properties subsequently sold.
 
 
(7)
Non-Same Store Properties - Primarily includes all properties acquired during 2014 and 2015, plus any properties in lease-up and not stabilized as of January 1, 2014. Per apartment unit amounts are based on a weighted average of 4,775 apartment units.
 
 
(8)
Other - Primarily includes expenditures for properties sold and properties under development.
 
 
(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.



1st Quarter 2015 Earnings Release
 
21
                                            

Equity Residential
Normalized EBITDA Reconciliations
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Normalized EBITDA Reconciliations for Page 15
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trailing Twelve Months
 
2015
 
2014
 
 
 
March 31, 2015
 
December 31, 2014
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
Net income
$
766,175

 
$
658,683

 
$
190,224

 
$
227,041

 
$
231,190

 
$
117,720

 
$
82,732

Interest expense incurred, net (includes discontinued operations)
452,764

 
457,191

 
108,622

 
109,967

 
118,251

 
115,924

 
113,049

Amortization of deferred financing costs (includes discontinued operations)
10,885

 
11,088

 
2,589

 
2,534

 
2,628

 
3,134

 
2,792

Depreciation (includes discontinued operations)
768,215

 
758,861

 
194,521

 
193,089

 
190,469

 
190,136

 
185,167

Income and other tax expense (benefit) (includes discontinued operations)
1,209

 
1,402

 
58

 
243

 
260

 
648

 
251

Archstone direct acquisition costs (other expenses)
29

 
(1
)
 
—

 
—

 
6

 
23

 
(30
)
Property acquisition costs (other expenses)
405

 
355

 
99

 
77

 
135

 
94

 
49

Write-off of pursuit costs (other expenses)
3,648

 
3,607

 
493

 
1,540

 
575

 
1,040

 
452

Loss (income) from investments in unconsolidated entities
3,580

 
7,952

 
(2,963
)
 
(2,249
)
 
1,176

 
7,616

 
1,409

Net (gain) loss on sales of land parcels
(5,306
)
 
(5,277
)
 
1

 
(3,431
)
 
(1,052
)
 
(824
)
 
30

(Gain) on sale of investment securities (interest and other income)
(36
)
 
(57
)
 
—

 
—

 
—

 
(36
)
 
(21
)
Write-off of unamortized retail lease intangibles (rental income)
(147
)
 
(147
)
 
—

 
—

 
—

 
(147
)
 
—

Executive compensation program duplicative costs
2,337

 
—

 
2,337

 
—

 
—

 
—

 
—

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

 
(150
)
 
—

 
—

 
—

Insurance/litigation settlement or reserve income (interest and other income)
(2,330
)
 
(2,793
)
 
—

 
(32
)
 
(419
)
 
(1,879
)
 
(463
)
Insurance/litigation settlement or reserve expense (other expenses)
3,099

 
4,099

 
(1,000
)
 
—

 
4,000

 
99

 
—

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

 
(750
)
 
—

 
—

 
—

Net (gain) loss on sales of discontinued operations
(108
)
 
(179
)
 
—

 
44

 
1

 
(153
)
 
(71
)
Net (gain) on sales of real estate properties
(292,636
)
 
(212,685
)
 
(79,951
)
 
(84,141
)
 
(113,641
)
 
(14,903
)
 
—

Normalized EBITDA (1)
$
1,710,883

 
$
1,681,199

 
$
415,030

 
$
443,782

 
$
433,579

 
$
418,492

 
$
385,346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Items:
 
 
March 31, 2015
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
Total debt (1)
 
 
$
10,859,508

 
$
10,844,861

 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
(49,418
)
 
(40,080
)
 
 
 
 
 
 
 
 
 
 
Mortgage principal reserves/sinking funds
 
(43,626
)
 
(41,567
)
 
 
 
 
 
 
 
 
 
 
Net debt (1)
 
 
$
10,766,464

 
$
10,763,214

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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.

1st Quarter 2015 Earnings Release
 
22
                                            

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 Q1 2015
 
to Actual Q1 2015
 
 
 
 
 
Amounts
 
Per Share
Guidance Q1 2015 Normalized FFO - Diluted (2) (3)
$
298,632

 
$
0.786

Property NOI
(1,016
)
 
(0.003
)
Interest expense
763

 
0.002

Other
623

 
0.001

 
 
 
 
Actual Q1 2015 Normalized FFO - Diluted (2) (3)
$
299,002

 
$
0.786

_____________________________________________________________________________________________________
Non-Comparable Items – Adjustments from FFO to Normalized FFO (2) (3)
 
 
 
 
 
Quarter Ended March 31,
 
 
2015
 
2014
 
Variance
Impairment
 
$
—

 
$
—

 
$
—

Asset impairment and valuation allowances
 
—

 
—

 
—

 
 
 
 
 
 
 
Archstone direct acquisition costs (other expenses) (A)
 
—

 
(30
)
 
30

Archstone indirect costs ((income) loss from investments in unconsolidated entities) (B)
 
(5,417
)
 
3

 
(5,420
)
Property acquisition costs (other expenses)
 
99

 
49

 
50

Write-off of pursuit costs (other expenses)
 
493

 
452

 
41

Property acquisition costs and write-off of pursuit costs
 
(4,825
)
 
474

 
(5,299
)
 
 
 
 
 
 
 
Write-off of unamortized deferred financing costs (interest expense)
 
74

 
—

 
74

Write-off of unamortized (premiums)/discounts/OCI (interest expense)
 
(1,390
)
 
—

 
(1,390
)
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
 
1,473

 
—

 
1,473

 
 
 
 
 
 
Net loss on sales of land parcels
 
1

 
30

 
(29
)
Net loss on sales of unconsolidated entities – non-operating assets
 
1,657

 
—

 
1,657

(Gain) on sale of investment securities (interest and other income)
—

 
(21
)
 
21

(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)
 
1,658

 
9

 
1,649

 
 
 
 
 
 
 
Executive compensation program duplicative costs (C)
 
2,337

 
—

 
2,337

Insurance/litigation settlement or reserve income (interest and other income)
 
—

 
(463
)
 
463

Insurance/litigation settlement or reserve expense (other expenses)
(1,000
)
 
—

 
(1,000
)
Other miscellaneous non-comparable items
1,337

 
(463
)
 
1,800

 
 
 
 
 
 
 
Non-comparable items – Adjustments from FFO to Normalized FFO (2) (3)
$
(357
)
 
$
20

 
$
(377
)
 
 
 
 
 
 
 
(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 winddown costs for such items as office leases, litigation and German operations/sales that were incurred indirectly through the Company's interest in various unconsolidated joint ventures with AvalonBay. During 2015, the amount also includes approximately $6.9 million received related to the favorable settlement of a lawsuit.
 
 
 
 
 
 
 
(C) Represents the accounting cost associated with the Company's new performance based executive compensation program. The Company is required 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 new program, creating a duplicative charge. Of this amount, $0.3 million and $2.0 million has been recorded to property management expense and general and administrative expense, respectively.
 
 
 
 
 
 
 
Note: See page 25 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.

1st Quarter 2015 Earnings Release
 
23
                                            

    
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 25 for the definitions, the footnotes referenced below and the reconciliations of EPS to FFO and Normalized FFO.
 
 
2015 Normalized FFO Guidance (per share diluted)
 
 
 
 
 
 
 
 
 
 
 
Q2 2015
 
2015
 
 
 
 
 
 
 
 
Expected Normalized FFO (2) (3)
 
$0.82 to $0.86
 
$3.37 to $3.45

 
 
 
 
 
 
 
2015 Same Store Assumptions
 
 
 
 
 
 
 
 
Physical occupancy
 
 
 
 
95.9%
 
Revenue change
 
 
 
 
4.3% to 4.7%
 
Expense change
 
 
 
 
2.5% to 3.5%
 
NOI change
 
 
 
 
4.8% to 5.8%
 
 
 
 
 
 
 
 
(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
 
Capitalized interest
 
 
 
 
$55.0 million to $61.0 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
 
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
 
 
380.8 million
 
 
 
 
 
 
 
 
Note: Normalized FFO guidance excludes a duplicative charge of approximately $9.3 million, of which $8.0 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.






1st Quarter 2015 Earnings Release
 
24
                                            

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 5, 23 and 24
 
 
 
 
 
 
 
Expected
Q2 2015
Per Share
 
Expected
2015
Per Share
 
 
 
Expected Q1 2015
 
 
 
 
 
Amounts
 
Per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected Earnings - Diluted (5)
$
270,480

 
$
0.712

 
$0.65 to $0.69
 
$2.15 to $2.23
 
Add: Expected depreciation expense
194,325

 
0.511

 
0.52
 
2.10
 
Less: Expected net gain on sales (5)
(154,690
)
 
(0.407
)
 
(0.32)
 
(0.88)
 
 
 
 
 
 
 
 
 
 
 
Expected FFO - Diluted (1) (3)
310,115

 
0.816

 
0.85 to 0.89
 
3.37 to 3.45
 
 
 
 
 
 
 
 
 
 
 
Asset impairment and valuation allowances
—

 
—

 
—
 
—
 
Property acquisition costs and write-off of pursuit costs
(15,702
)
 
(0.041
)
 
(0.02)
 
(0.02)
 
Debt extinguishment (gains) losses, including prepayment penalties,
preferred share redemptions and non-cash convertible debt discounts
1,473

 
0.004

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

 
—

 
—
 
0.01
 
Other miscellaneous non-comparable items
2,746

 
0.007

 
(0.01)
 
0.01
 
 
 
 
 
 
 
 
 
 
 
Expected Normalized FFO - Diluted (2) (3)
$
298,632

 
$
0.786

 
$0.82 to $0.86
 
$3.37 to $3.45
 

Definitions and Footnotes for Pages 5, 23 and 24
 
 
 
 
 
 
 
 
 
(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 9
 
 
 
 
 
 
 
 
 
The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the First Quarter 2015 Same Store Properties:
 
 
Quarter Ended March 31,
 
 
 
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
$
218,171

 
$
199,259

 
 
 
 
Adjustments:
 
 
 
 
 
 
 
Non-same store operating results
(16,680
)
 
(12,613
)
 
 
 
 
Fee and asset management revenue
(1,765
)
 
(2,717
)
 
 
 
 
Fee and asset management expense
1,321

 
1,662

 
 
 
 
Depreciation
194,521

 
185,167

 
 
 
 
General and administrative
19,922

 
17,576

 
 
 
 
 
 
 
 
 
 
 
 
 
Same store NOI
$
415,490

 
$
388,334

 
 
 
 

1st Quarter 2015 Earnings Release
 
25
 EX-99.2 3 a1q15exhibit992.htm EX-99.2 1Q'15 Exhibit 99.2
                                            

Exhibit 99.2

Chicago, IL - April 28, 2015 - Equity Residential (NYSE: EQR) today reported results for the quarter ended March 31, 2015. All per share results are reported as available to common shares on a diluted basis.

First Quarter 2015
For the first quarter of 2015, the company reported earnings of $0.49 per share compared to $0.22 per share in the first quarter of 2014. The difference is due primarily to higher gains on property sales in the first quarter of 2015.

Same Store Results
On a same store first quarter to first quarter comparison, which includes 97,586 apartment units, revenues increased 5.0%, expenses increased 1.4% and NOI increased 7.0%.

Capital Markets Activity
In February 2015, the company established a $500 million unsecured commercial paper note program which allows Equity Residential to borrow on a daily, weekly and monthly basis. As of April 27, 2015, the company’s program has approximately $500.0 million outstanding at a weighted average rate of 0.61% for a weighted average period of 12 days.

Investment Activity
The company did not acquire any operating properties during the first quarter of 2015.

During the first quarter of 2015, the company sold three consolidated apartment properties, consisting of 550 apartment units, for an aggregate sale price of approximately $145.4 million at a weighted average capitalization (cap) rate of 5.3%. These sales generated an unlevered internal rate of return (IRR), inclusive of indirect management costs, of 11.9%.

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.



                                            

Equity Residential
Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)
 
 
Quarter Ended March 31,
 
 
2015
 
2014
REVENUES
 
 
 
 
Rental income
 
$
664,606

 
$
630,725

Fee and asset management
 
1,765

 
2,717

Total revenues
 
666,371

 
633,442

 
 
 
 
 
EXPENSES
 
 
 
 
Property and maintenance
 
124,560

 
125,566

Real estate taxes and insurance
 
86,432

 
82,094

Property management
 
21,444

 
22,118

Fee and asset management
 
1,321

 
1,662

Depreciation
 
194,521

 
185,167

General and administrative
 
19,922

 
17,576

Total expenses
 
448,200

 
434,183

 
 
 
 
 
Operating income
 
218,171

 
199,259

 
 
 
 
 
Interest and other income
 
120

 
605

Other expenses
 
70

 
(664
)
Interest:
 
 
 
 
Expense incurred, net
 
(108,622
)
 
(113,049
)
Amortization of deferred financing costs
 
(2,589
)
 
(2,792
)
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
 
107,150

 
83,359

Income and other tax (expense) benefit
 
(43
)
 
(240
)
Income (loss) from investments in unconsolidated entities
 
2,963

 
(1,409
)
Net gain on sales of real estate properties
 
79,951

 
—

Net (loss) on sales of land parcels
 
(1
)
 
(30
)
Income from continuing operations
 
190,020

 
81,680

Discontinued operations, net
 
204

 
1,052

Net income
 
190,224

 
82,732

Net (income) attributable to Noncontrolling Interests:
 
 
 
 
Operating Partnership
 
(7,059
)
 
(3,093
)
Partially Owned Properties
 
(643
)
 
(504
)
Net income attributable to controlling interests
 
182,522

 
79,135

Preferred distributions
 
(891
)
 
(1,036
)
Premium on redemption of Preferred Shares
 
(2,789
)
 
—

Net income available to Common Shares
 
$
178,842

 
$
78,099

 
 
 
 
 
Earnings per share – basic:
 
 
 
 
Income from continuing operations available to Common Shares
 
$
0.49

 
$
0.21

Net income available to Common Shares
 
$
0.49

 
$
0.22

Weighted average Common Shares outstanding
 
363,098

 
360,470

 
 
 
 
 
Earnings per share – diluted:
 
 
 
 
Income from continuing operations available to Common Shares
 
$
0.49

 
$
0.21

Net income available to Common Shares
 
$
0.49

 
$
0.22

Weighted average Common Shares outstanding
 
380,327

 
376,384

 
 
 
 
 
Distributions declared per Common Share outstanding
 
$
0.5525

 
$
0.50









                                            

Equity Residential
Consolidated Statements of Funds From Operations and Normalized Funds From Operations
(Amounts in thousands)
(Unaudited)
 
 
 
Quarter Ended March 31,
 
 
 
2015
 
2014
Net income
 
$
190,224

 
$
82,732

Net (income) attributable to Noncontrolling Interests – Partially Owned Properties
 
(643
)
 
(504
)
Preferred distributions
 
(891
)
 
(1,036
)
Premium on redemption of Preferred Shares
 
(2,789
)
 
—

Net income available to Common Shares and Units
 
185,901

 
81,192

 
 
 
 
 
Adjustments:
 
 
 
 
Depreciation
 
194,521

 
185,167

Depreciation – Non-real estate additions
 
(1,261
)
 
(1,188
)
Depreciation – Partially Owned Properties
 
(1,079
)
 
(1,068
)
Depreciation – Unconsolidated Properties
 
1,228

 
1,603

Net (gain) on sales of real estate properties
 
(79,951
)
 
—

Discontinued operations:
 
 
 
 
Net (gain) on sales of discontinued operations
 
—

 
(71
)
FFO available to Common Shares and Units (1) (3) (4)
 
299,359

 
265,635

 
 
 
 
 
Adjustments:
 
 
 
 
Asset impairment and valuation allowances
 
—

 
—

Property acquisition costs and write-off of pursuit costs
 
(4,825
)
 
474

Debt extinguishment (gains) losses, including prepayment penalties, preferred share
 
 
 
 
    redemptions and non-cash convertible debt discounts
 
1,473

 
—

(Gains) losses on sales of non-operating assets, net of income and other tax expense
 
 
 
 
    (benefit)
 
1,658

 
9

Other miscellaneous non-comparable items
 
1,337

 
(463
)
Normalized FFO available to Common Shares and Units (2) (3) (4)
 
$
299,002

 
$
265,655

 
 
 
 
 
 
FFO (1) (3)
 
$
303,039

 
$
266,671

Preferred distributions
 
(891
)
 
(1,036
)
Premium on redemption of Preferred Shares
 
(2,789
)
 
—

FFO available to Common Shares and Units - basic and diluted (1) (3) (4)
 
$
299,359

 
$
265,635

 
 
 
 
 
 
Normalized FFO (2) (3)
 
$
299,893

 
$
266,691

Preferred distributions
 
(891
)
 
(1,036
)
Normalized FFO available to Common Shares and Units - basic and diluted (2) (3) (4)
 
$
299,002

 
$
265,655


(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.







                                            

Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
 
 
March 31,
2015
 
December 31,
2014
ASSETS
 
 
 
 
Investment in real estate
 
 
 
 
Land
 
$
6,357,580

 
$
6,295,404

Depreciable property
 
20,024,497

 
19,851,504

Projects under development
 
1,269,784

 
1,343,919

Land held for development
 
143,997

 
184,556

Investment in real estate
 
27,795,858

 
27,675,383

Accumulated depreciation
 
(5,600,485
)
 
(5,432,805
)
Investment in real estate, net
 
22,195,373

 
22,242,578

Cash and cash equivalents
 
49,418

 
40,080

Investments in unconsolidated entities
 
89,284

 
105,434

Deposits – restricted
 
203,800

 
72,303

Escrow deposits – mortgage
 
50,659

 
48,085

Deferred financing costs, net
 
55,791

 
58,380

Other assets
 
384,723

 
383,754

Total assets
 
$
23,029,048

 
$
22,950,614

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Mortgage notes payable
 
$
4,957,876

 
$
5,086,515

Notes, net
 
5,430,806

 
5,425,346

Line of credit and commercial paper
 
470,826

 
333,000

Accounts payable and accrued expenses
 
202,110

 
153,590

Accrued interest payable
 
84,670

 
89,540

Other liabilities
 
383,057

 
389,915

Security deposits
 
75,294

 
75,633

Distributions payable
 
208,954

 
188,566

Total liabilities
 
11,813,593

 
11,742,105

 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests – Operating Partnership
 
541,866

 
500,733

Equity:
 
 
 
 
Shareholders’ equity:
 
 
 
 
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 803,600 shares issued and
outstanding as of March 31, 2015 and 1,000,000 shares
issued and outstanding as of December 31, 2014
 
40,180

 
50,000

Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 363,968,420 shares issued and
outstanding as of March 31, 2015 and 362,855,454 shares
issued and outstanding as of December 31, 2014
 
3,640

 
3,629

Paid in capital
 
8,539,115

 
8,536,340

Retained earnings
 
1,928,449

 
1,950,639

Accumulated other comprehensive (loss)
 
(180,022
)
 
(172,152
)
Total shareholders’ equity
 
10,331,362

 
10,368,456

Noncontrolling Interests:
 
 
 
 
Operating Partnership
 
219,566

 
214,411

Partially Owned Properties
 
122,661

 
124,909

Total Noncontrolling Interests
 
342,227

 
339,320

Total equity
 
10,673,589

 
10,707,776

Total liabilities and equity
 
$
23,029,048

 
$
22,950,614



                                            

Equity Residential
 
 
 
 
 
 
 
 
 
Portfolio as of March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
Apartment
Units
 
 
 
 
 
 
 
 
 
 
 
 
Wholly Owned Properties
 
362

 
97,825

 
 
 
Master-Leased Properties - Consolidated
 
3

 
853

 
 
 
Partially Owned Properties - Consolidated
 
19

 
3,771

 
 
 
Partially Owned Properties - Unconsolidated
 
3

 
1,281

 
 
 
Military Housing
 
2

 
5,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
389

 
108,793

 
 

______________________________________________________________________________________________________

Portfolio Rollforward Q1 2015
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
Apartment
Units
 
Purchase/
(Sale) Price
 
Cap Rate
 
 
 
 
 
 
 
 
 
 
 
 
12/31/2014
391

 
109,225

 
 
 
 
Acquisitions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties
—

 
—

 
—

 
—

Dispositions:
 
 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Rental Properties
(3
)
 
(550
)
 
$
145,400

 
5.3
%
Completed Developments - Consolidated
1

 
88

 
 
 
 
Configuration Changes
—

 
30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3/31/2015
389

 
108,793

 
 
 
 



                                            

Equity Residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2015 vs. First Quarter 2014
Same Store Results/Statistics for 97,586 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
Average
Rental
Rate (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI (1)
 
 
Occupancy
 
Turnover
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2015
 
$
632,034

 
$
216,544

 
$
415,490

 
$
2,252

 
95.9
%
 
11.2
%
Q1 2014
 
$
601,794

 
$
213,460

 
$
388,334

 
$
2,164

 
95.1
%
 
11.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
$
30,240

 
$
3,084

 
$
27,156

 
$
88

 
0.8
%
 
(0.1
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
5.0
%
 
1.4
%
 
7.0
%
 
4.1
%
 
 
 
 
(1)
The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance) as well as an allocation of indirect property management costs. 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.
 
 
(2)
Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.


                                            

Equity Residential
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2015 vs. First Quarter 2014
Same Store Operating Expenses for 97,586 Same Store Apartment Units
$ in thousands
 
 
 
 
 
 
 
 
 
 
% of Actual
Q1 2015
Operating
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Actual
Q1 2015
 
Actual
Q1 2014
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate taxes
$
75,356

 
$
71,697

 
$
3,659

 
5.1
%
 
34.8
%
On-site payroll (1)
45,491

 
43,684

 
1,807

 
4.1
%
 
21.0
%
Utilities (2)
32,688

 
37,622

 
(4,934
)
 
(13.1
%)
 
15.1
%
Repairs and maintenance (3)
26,334

 
24,218

 
2,116

 
8.7
%
 
12.2
%
Property management costs (4)
18,961

 
18,054

 
907

 
5.0
%
 
8.7
%
Insurance
5,405

 
6,050

 
(645
)
 
(10.7
%)
 
2.5
%
Leasing and advertising
2,587

 
2,511

 
76

 
3.0
%
 
1.2
%
Other on-site operating expenses (5)
9,722

 
9,624

 
98

 
1.0
%
 
4.5
%
 
 
 
 
 
 
 
 
 
 
 
Same store operating expenses
$
216,544

 
$
213,460

 
$
3,084

 
1.4
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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.

                                            

Equity Residential
 
Debt Summary as of March 31, 2015
(Amounts in thousands)
 
 
 
 
 
 
 
 
Weighted
Average
Maturities
(years)
 
 
 
 
 
 
Weighted
Average
Rates (1)
 
 
 
 
 
 
 
 
 
 
Amounts (1)
 
% of Total
 
 
 
 
 
 
 
 
 
 
 
Secured
 
$
4,957,876

 
45.7
%
 
4.13
%
 
7.4

Unsecured
 
5,901,632

 
54.3
%
 
4.68
%
 
7.2

 
 
 
 
 
 
 
 
 
Total
$
10,859,508

 
100.0
%
 
4.43
%
 
7.3

 
 
 
 
 
 
 
 
 
Fixed Rate Debt:
 
 
 
 
 
 
 
 
Secured – Conventional
 
$
4,221,811

 
38.9
%
 
4.73
%
 
5.8

Unsecured – Public
 
4,974,750

 
45.8
%
 
5.39
%
 
8.1

 
 
 
 
 
 
 
 
 
Fixed Rate Debt
9,196,561

 
84.7
%
 
5.08
%
 
7.1

 
 
 
 
 
 
 
 
 
Floating Rate Debt:
 
 
 
 
 
 
 
 
Secured – Conventional
 
7,985

 
0.1
%
 
0.11
%
 
18.8

Secured – Tax Exempt
 
728,080

 
6.7
%
 
0.63
%
 
16.0

Unsecured – Public (2)
 
456,056

 
4.2
%
 
0.89
%
 
4.3

Unsecured – Revolving Credit Facility
 
130,000

 
1.2
%
 
1.02
%
 
3.0

Unsecured – Commercial Paper Program
 
340,826

 
3.1
%
 
0.53
%
 
              (3)

 
 
 
 
 
 
 
 
 
Floating Rate Debt
 
1,662,947

 
15.3
%
 
0.77
%
 
8.5

 
 
 
 
 
 
 
 
 
Total
 
$
10,859,508

 
100.0
%
 
4.43
%
 
7.3

 
 
 
 
 
 
 
 
 
(1) Net of the effect of any derivative instruments. Weighted average rates are for the quarter ended March 31, 2015.
 
(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 March 31, 2015, the weighted average maturity on the Company's outstanding commercial paper was 14 days.
 
 
 
 
 
 
 
 
 
Note: The Company capitalized interest of approximately $15.3 million and $12.8 million during the quarters ended March 31, 2015 and 2014, respectively.
 
Note: The Company recorded approximately $0.5 million and $1.1 million of net debt discount/deferred derivative settlement amortization as additional interest expense during the quarters ended March 31, 2015 and 2014, respectively.
______________________________________________________________________________________________________
Debt Maturity Schedule as of March 31, 2015
(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
 
$
344,995

 
$
340,900

(2)
$
685,895

 
6.3
%
 
6.43
%
 
3.53
%
2016
 
1,132,141

 
—

 
1,132,141

 
10.4
%
 
5.31
%
 
5.31
%
2017
 
1,346,252

 
456

 
1,346,708

 
12.4
%
 
6.16
%
 
6.16
%
2018
 
83,854

 
227,659

(3)
311,513

 
2.9
%
 
5.61
%
 
2.17
%
2019
 
806,113

 
477,204

 
1,283,317

 
11.8
%
 
5.48
%
 
3.75
%
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

 
15.6
%
 
4.97
%
 
3.16
%
Premium/(Discount)
 
25,878

 
(61,786
)
 
(35,908
)
 
(0.3
%)
 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
9,196,561

 
$
1,662,947

 
$
10,859,508

 
100.0
%
 
5.12
%
 
4.41
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Net of the effect of any derivative instruments. Weighted average rates are as of March 31, 2015.
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Represents the principal outstanding on the Company's unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on the program subject to market conditions.
 
 
 
 
 
 
 
 
 
 
 
 
 
(3) Includes $130.0 million outstanding on the Company's unsecured revolving credit facility. As of March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program).

                                            

Equity Residential
Unsecured Debt Summary as of March 31, 2015
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized
Premium/
(Discount)
 
 
 
 
Coupon
Rate
 
Due
Date
 
Face
Amount
 
 
Net
Balance
 
 
 
 
 
 
Fixed Rate Notes:
 
 
 
 
 
 
 
 
 
 
 
 
6.584%
 
04/13/15
 
$
300,000

 
$
—

 
$
300,000

 
 
5.125%
 
03/15/16
 
500,000

 
(49
)
 
499,951

 
 
5.375%
 
08/01/16
 
400,000

 
(247
)
 
399,753

 
 
5.750%
 
06/15/17
 
650,000

 
(1,144
)
 
648,856

 
 
7.125%
 
10/15/17
 
150,000

 
(165
)
 
149,835

 
 
2.375%
 
07/01/19
(1)
450,000

 
(382
)
 
449,618

Fair Value Derivative Adjustments
 
 
 
 
(1)
(450,000
)
 
382

 
(449,618
)
 
 
4.750%
 
07/15/20
 
600,000

 
(2,404
)
 
597,596

 
 
4.625%
 
12/15/21
 
1,000,000

 
(2,540
)
 
997,460

 
 
3.000%
 
04/15/23
 
500,000

 
(3,560
)
 
496,440

 
 
7.570%
 
08/15/26
 
140,000

 
—

 
140,000

 
 
4.500%
 
07/01/44
 
750,000

 
(5,141
)
 
744,859

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,990,000

 
(15,250
)
 
4,974,750

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

 
(382
)
 
449,618

Fair Value Derivative Adjustments
 
 
 
07/01/19
(1)
6,438

 
—

 
6,438

 
 
 
 
 
 
456,438

 
(382
)
 
456,056

 
 
 
 
 
 
 
 
 
 
 
Line of Credit and Commercial Paper:
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility
 
LIBOR+1.05%
 
04/01/18
(2)(3) 
130,000

 
—

 
130,000

Commercial Paper Program
 
(4)
 
(4)
(2)
340,900

 
(74
)
 
340,826

 
 
 
 
 
 
470,900

 
(74
)
 
470,826

 
 
 
 
 
 
 
 
 
 
 
Total Unsecured Debt
 
 
 
 
 
$
5,917,338

 
$
(15,706
)
 
$
5,901,632


(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)
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 March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4)
Represents the Company's unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on this program subject to market conditions. The notes bear interest at various floating rates with a weighted average of 0.53% for the quarter ended March 31, 2015 and a weighted average maturity of 14 days as of March 31, 2015.

                                            

Equity Residential
 
Capital Structure as of March 31, 2015
(Amounts in thousands except for share/unit and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
Secured Debt
 
 
 
 
 
$
4,957,876

 
45.7
%
 
 
Unsecured Debt
 
 
 
 
 
5,901,632

 
54.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
 
 
 
 
10,859,508

 
100.0
%
 
26.9
%
 
 
 
 
 
 
 
 
 
 
 
Common Shares (includes Restricted Shares)
 
363,968,420

 
96.2
%
 
 
 
 
 
 
Units (includes OP Units and Restricted Units)
 
14,477,945

 
3.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Shares and Units
 
378,446,365

 
100.0
%
 
 
 
 
 
 
Common Share Price at March 31, 2015
 
$
77.86

 
 
 
 
 
 
 
 
 
 
 
 
 
 
29,465,834

 
99.9
%
 
 
Perpetual Preferred Equity (see below)
 
 
 
 
 
40,180

 
0.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Equity
 
 
 
 
 
29,506,014

 
100.0
%
 
73.1
%
 
 
 
 
 
 
 
 
 
 
 
Total Market Capitalization
 
 
 
 
 
$
40,365,522

 
 
 
100.0
%

__________________________________________________________________________________________________________________________________________

Perpetual Preferred Equity as of March 31, 2015
(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 (1)
 
12/10/26
 
803,600

 
$
40,180

 
$
4.145

 
$
3,331

 
 
 
 
 
 
 
 
 
 
 
Total Perpetual Preferred Equity
 
 
 
803,600

 
$
40,180

 
 
 
$
3,331

 
 
 
 
 
 
 
 
 
 
 
(1
)
Effective January 26, 2015, the Company repurchased and retired 196,400 Series K Preferred Shares with a par value of $9.82 million for total cash consideration of approximately $12.7 million. As a result of this partial redemption, the Company incurred a cash charge of approximately $2.8 million which was recorded as a premium on the redemption of preferred shares.


                                            

Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
 
 
 
 
 
 
 
 
 
Q1 2015
 
Q1 2014
 
 
 
 
 
 
Weighted Average Amounts Outstanding for Net Income Purposes:
 
 
 
 
Common Shares - basic
 
363,098,200

 
360,470,366

Shares issuable from assumed conversion/vesting of:
 
 
 
 
- OP Units
 
13,597,682

 
13,730,577

- long-term compensation shares/units
 
3,631,489

 
2,183,239

 
 
 
 
 
 
Total Common Shares and Units - diluted
 
380,327,371

 
376,384,182

 
 
 
 
 
Period Ending Amounts Outstanding:
 
 
 
 
Common Shares (includes Restricted Shares)
 
363,968,420

 
361,148,189

Units (includes OP Units and Restricted Units)
 
14,477,945

 
14,375,319

 
 
 
 
 
 
Total Shares and Units
 
378,446,365

 
375,523,508

 
 
 
 
 
 






                                            

Equity Residential
Partially Owned Entities as of March 31, 2015
(Amounts in thousands except for project and apartment unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
Unconsolidated
 
 
Development Projects
 
 
 
 
 
 
 
 
 
 
Held for
and/or Under
Development
 
 
 
 
 
Operating
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
 
Total
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
Total projects (1)
 
—

 
19

 
19

 
3

 
3

 
 
 
 
 
 
 
 
 
 
 
Total apartment units (1)
 
—

 
3,771

 
3,771

 
1,281

 
1,281

 
 
 
 
 
 
 
 
 
 
 
Operating information for the quarter ended 3/31/15 (at 100%):
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
250

 
$
22,688

 
$
22,938

 
$
7,813

 
$
7,813

Operating expenses
 
418

 
6,875

 
7,293

 
2,443

 
2,443

 
 
 
 
 
 
 
 
 
 
 
Net operating (loss) income
 
(168
)
 
15,813

 
15,645

 
5,370

 
5,370

Depreciation
 
991

 
5,520

 
6,511

 
3,076

 
3,076

General and administrative/other
 
—

 
15

 
15

 
56

 
56

 
 
 
 
 
 
 
 
 
 
 
Operating (loss) income
 
(1,159
)
 
10,278

 
9,119

 
2,238

 
2,238

Interest and other income
 
—

 
4

 
4

 
—

 
—

Other expenses
 
—

 
(50
)
 
(50
)
 
—

 
—

Interest:
 
 
 
 
 
 
 
 
 
 
Expense incurred, net
 
—

 
(3,884
)
 
(3,884
)
 
(2,346
)
 
(2,346
)
Amortization of deferred financing costs
 
—

 
(89
)
 
(89
)
 
(1
)
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
(Loss) income before income and other taxes and (loss)
from investments in unconsolidated entities
 
 
 
 
 
 
 
 
 
 
 
(1,159
)
 
6,259

 
5,100

 
(109
)
 
(109
)
Income and other tax (expense) benefit
 
—

 
(35
)
 
(35
)
 
(18
)
 
(18
)
(Loss) from investments in unconsolidated entities

 
—

 
(377
)
 
(377
)
 
—

 
—

Net (loss) income
 
$
(1,159
)
 
$
5,847

 
$
4,688

 
$
(127
)
 
$
(127
)
 
 
 
 
 
 
 
 
 
 
 
Debt - Secured (at 100%) (2):
 
$
—

 
$
360,567

 
$
360,567

 
$
175,276

 
$
175,276

(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.
 
 
 
 
 
 
 
 
 
 
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 $72.6 million at March 31, 2015. The ventures are owned 60% by the Company and 40% by AVB.

                                            

Equity Residential
Capital Expenditures to Real Estate
For the Quarter Ended March 31, 2015
(Amounts in thousands except for apartment unit and per apartment unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures to Real Estate
 
 
 
Total
Apartment
Units (1)
 
Replacements
(2)
 
Avg. Per
Apartment
Unit
 
Building
Improvements
(3)
 
Avg. Per
Apartment
Unit
 
Total
 
Avg. Per
Apartment
Unit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Properties (4)
97,586

 
$
21,633

 
$
222

 
$
13,675

 
$
140

 
$
35,308

 
$
362

(7)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Same Store Properties (5)
4,863

 
67

 
14

 
2,753

 
577

 
2,820

 
591

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other (6)
—

 
23

 
 
 
19

 
 
 
42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
102,449

 
$
21,723

 
 
 
$
16,447

 
 
 
$
38,170

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Total Apartment Units - Excludes 1,281 unconsolidated apartment units and 5,063 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)
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 $13.1 million spent in Q1 2015 on apartment unit renovations/rehabs (primarily kitchens and baths) on 1,432 same store apartment units (equating to approximately $9,100 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.
 
 
(3)
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.
 
 
(4)
Same Store Properties - Primarily includes all properties acquired or completed and stabilized prior to January 1, 2014, less properties subsequently sold.
 
 
(5)
Non-Same Store Properties - Primarily includes all properties acquired during 2014 and 2015, plus any properties in lease-up and not stabilized as of January 1, 2014. Per apartment unit amounts are based on a weighted average of 4,775 apartment units.
 
 
(6)
Other - Primarily includes expenditures for properties sold and properties under development.
 
 
(7)
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.



                                            

Equity Residential
Additional Reconciliations
(Amounts in thousands)
Same Store NOI Reconciliation
 
 
 
 
 
 
 
 
 
The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the First Quarter 2015 Same Store Properties:
 
 
Quarter Ended March 31,
 
 
 
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
$
218,171

 
$
199,259

 
 
 
 
Adjustments:
 
 
 
 
 
 
 
Non-same store operating results
(16,680
)
 
(12,613
)
 
 
 
 
Fee and asset management revenue
(1,765
)
 
(2,717
)
 
 
 
 
Fee and asset management expense
1,321

 
1,662

 
 
 
 
Depreciation
194,521

 
185,167

 
 
 
 
General and administrative
19,922

 
17,576

 
 
 
 
 
 
 
 
 
 
 
 
 
Same store NOI
$
415,490

 
$
388,334

 
 
 
 

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