-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RbiwkmguhNLp5eW6Q6iNxHxsfWHGgoQY2clQcwxrR3qcCOzmLQ5mLCGc9rBJexGA kL8O2yE/41AtzuH8Y3Ya9w== /in/edgar/work/20000810/0000912057-00-035925/0000912057-00-035925.txt : 20000921 0000912057-00-035925.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-035925 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY RESIDENTIAL PROPERTIES TRUST CENTRAL INDEX KEY: 0000906107 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 363877868 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12252 FILM NUMBER: 690693 BUSINESS ADDRESS: STREET 1: TWO N RIVERSIDE PLZ STREET 2: STE 400 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124741300 MAIL ADDRESS: STREET 1: TWO N RIVERSIDE PLAZA STREET 2: SUITE 450 CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 a10-q.txt 10-Q FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-12252 EQUITY RESIDENTIAL PROPERTIES TRUST (Exact Name of Registrant as Specified in Its Charter) MARYLAND 13-3675988 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606 (Address of Principal Executive Offices) (Zip Code) (312) 474-1300 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO CORPORATE USERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: At August 9, 2000, 131,240,880 of the Registrant's Common Shares of Beneficial Interest were outstanding. EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS EXCEPT FOR SHARE AMOUNTS) (UNAUDITED)
JUNE 30, DECEMBER 31, 2000 1999 ------------ ------------ ASSETS Investment in real estate Land $ 1,534,812 $ 1,550,378 Depreciable property 10,462,309 10,670,550 Construction in progress 28,755 18,035 ------------ ------------ 12,025,876 12,238,963 Accumulated depreciation (1,208,331) (1,070,487) ------------ ------------ Investment in real estate, net of accumulated depreciation 10,817,545 11,168,476 Real estate held for disposition 55,997 12,868 Cash and cash equivalents 237,066 29,117 Investment in mortgage notes, net 81,777 84,977 Rents receivable 1,408 1,731 Deposits - restricted 150,579 111,270 Escrow deposits - mortgage 73,008 75,328 Deferred financing costs, net 31,784 33,968 Other assets 297,579 197,954 ------------ ------------ TOTAL ASSETS $ 11,746,743 $ 11,715,689 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 2,987,921 $ 2,883,583 Notes, net 2,289,680 2,290,285 Line of credit -- 300,000 Accounts payable and accrued expenses 119,214 102,955 Accrued interest payable 47,182 44,257 Rents received in advance and other liabilities 71,509 74,196 Security deposits 39,077 39,687 Distributions payable 127,594 18,813 ------------ ------------ TOTAL LIABILITIES 5,682,177 5,753,776 ------------ ------------ COMMITMENTS AND CONTINGENCIES Minority Interests: Operating Partnership 533,990 456,979 Partially Owned Properties 2,891 -- ------------ ------------ Total Minority Interests 536,881 456,979 ------------ ------------ Shareholders' equity: Preferred Shares of beneficial interest, $.01 par value; 100,000,000 shares authorized; 20,397,124 shares issued and outstanding as of June 30, 2000 and 25,085,652 shares issued and outstanding as of December 31, 1999 1,193,053 1,310,266 Common Shares of beneficial interest, $.01 par value; 350,000,000 shares authorized; 131,180,186 shares issued and outstanding as of June 30, 2000 and 127,450,798 shares issued and outstanding as of December 31, 1999 1,312 1,275 Paid in capital 4,662,432 4,523,919 Employee notes (4,551) (4,670) Distributions in excess of accumulated earnings (324,561) (325,856) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 5,527,685 5,504,934 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,746,743 $ 11,715,689 ============ ============
SEE ACCOMPANYING NOTES 2 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
SIX MONTHS ENDED QUARTER ENDED JUNE 30, JUNE 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 ----------------------------- ----------------------------- REVENUES Rental income $ 952,740 $ 819,178 $ 479,193 $ 413,116 Fee and asset management 2,632 2,414 1,334 1,180 Interest income - investment in mortgage notes 5,499 5,644 2,737 2,749 Interest and other income 17,652 11,123 9,849 5,177 ------------ ------------ ------------ ------------ Total revenues 978,523 838,359 493,113 422,222 ------------ ------------ ------------ ------------ EXPENSES Property and maintenance 227,845 196,865 113,977 99,818 Real estate taxes and insurance 95,001 84,515 46,667 42,467 Property management 37,760 27,973 18,846 13,772 Fee and asset management 2,102 1,624 1,036 757 Depreciation 224,512 197,134 112,626 100,233 Interest: Expense incurred 190,263 158,499 95,152 79,302 Amortization of deferred financing costs 2,703 1,661 1,362 816 General and administrative 13,216 10,714 6,518 4,947 ------------ ------------ ------------ ------------ Total expenses 793,402 678,985 396,184 342,112 ------------ ------------ ------------ ------------ Income before gain on disposition of properties, net, extraordinary item and allocation to Minority Interests 185,121 159,374 96,929 80,110 Gain on disposition of properties, net 87,652 45,807 67,654 24,391 Loss on early extinguishment of debt -- (451) -- (451) Allocation to Minority Interests: Operating Partnership (19,132) (14,514) (12,036) (7,388) Partially Owned Properties 157 -- 112 -- ------------ ------------ ------------ ------------ Net income 253,798 190,216 152,659 96,662 Preferred distributions (55,654) (57,111) (27,266) (27,734) ------------ ------------ ------------ ------------ Net income available to Common Shares $ 198,144 $ 133,105 $ 125,393 $ 68,928 ============ ============ ============ ============ Weighted average Common Shares outstanding - basic 128,435 119,762 129,072 120,558 ============ ============ ============ ============ Net income per share - basic $ 1.54 $ 1.11 $ 0.97 $ 0.57 ============ ============ ============ ============ Net income per share - diluted $ 1.54 $ 1.11 $ 0.96 $ 0.57 ============ ============ ============ ============ Distributions declared per Common Share outstanding $ 1.52 $ 1.42 $ 0.76 $ 0.71 ============ ============ ============ ============
SEE ACCOMPANYING NOTES 3 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, -------------------------- 2000 1999 -------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 253,798 $ 190,216 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Allocation to Minority Interests - Operating Partnership 19,132 14,514 Allocation to Minority Interests - Partially Owned Properties (157) -- Depreciation 224,512 197,134 Amortization of deferred financing costs 2,703 1,661 Amortization of discounts and premiums on debt (1,153) (1,172) Amortization of deferred settlements on interest rate protection agreements 246 513 Gain on disposition of properties, net (87,652) (45,807) Compensation paid with Company Common Shares 2,845 -- CHANGES IN ASSETS AND LIABILITIES: Decrease in rents receivable 535 3,428 (Increase) in deposits - restricted (3,510) (4,342) (Increase) decrease in other assets (1,808) 51,052 Increase in accounts payable and accrued expenses 16,769 6,936 Increase (decrease) in accrued interest payable 818 (1,176) (Decrease) increase in rents received in advance and other liabilities (5,378) 6,411 (Decrease) in security deposits (803) (1,577) ------------ ------------ Net cash provided by operating activities 420,897 417,791 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate, net (143,680) (200,613) Improvements to real estate (58,360) (55,783) Additions to non-real estate property (2,399) (3,640) Interest capitalized for real estate under construction (480) (943) Proceeds from disposition of real estate, net 219,409 125,150 Principal receipts on investment in mortgage notes 3,200 2,159 (Increase) decrease in deposits on real estate acquisitions, net (35,854) 2,961 Decrease in mortgage deposits 2,461 131 Investment in joint ventures, net (84,875) (44,314) Investment in limited partnerships and other, net (449) -- Proceeds from disposition of Unconsolidated Properties, net 4,400 -- Purchase of management contract rights (779) (285) Costs related to Mergers (4,261) (4,002) Other investing activities, net (11,827) 603 ------------ ------------ Net cash (used for) investing activities (113,494) (178,576) ------------ ------------
SEE ACCOMPANYING NOTES 4 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (AMOUNTS IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ----------------------------- 2000 1999 ----------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Loan and bond acquisition costs $ (2,005) $ (2,055) MORTGAGE NOTES PAYABLE: Proceeds, net 378,318 62,885 Lump sum payoffs (104,484) (54,231) Scheduled principal payments (14,126) (8,400) NOTES, NET: Proceeds -- 298,014 Payoffs -- (125,000) LINES OF CREDIT: Proceeds 162,000 689,000 Repayments (462,000) (894,000) Loss on early extinguishment of debt -- 451 Proceeds from settlement of interest rate protection agreements 7,055 -- Proceeds from sale of Common Shares 4,575 5,661 Proceeds from sale of Preferred Shares/Units, net 84,825 -- Proceeds from exercise of options 9,473 24,254 Payment of offering costs (65) (296) DISTRIBUTIONS: Common Shares (97,486) (84,672) Preferred Shares/Units (55,444) (57,111) Minority Interests - Operating Partnership (9,592) (9,654) Minority Interests - Partially Owned Properties (617) -- Principal receipts on employee notes, net 119 95 Principal receipts on other notes receivable, net -- 7,375 ------------ ------------ Net cash (used for) financing activities (99,454) (147,684) ------------ ------------ Net increase in cash and cash equivalents 207,949 91,531 Cash and cash equivalents, beginning of period 29,117 3,965 ------------ ------------ Cash and cash equivalents, end of period $ 237,066 $ 95,496 ============ ============ SUPPLEMENTAL INFORMATION: Cash paid during the period for interest $ 190,854 $ 161,277 ============ ============ Transfers to real estate held for disposition $ 55,997 $ 32,844 ============ ============ Net real estate contributed in exchange for OP Units or Preference Units $ 636 $ 14,183 ============ ============ Mortgage loans assumed and/or entered into through acquisitions of real estate $ -- $ 58,320 ============ ============ Mortgage loans assumed by purchaser in real estate dispositions $ (220,000) $ -- ============ ============ Refinancing of mortgage notes payable in favor of notes, net $ -- $ 75,790 ============ ============ Mortgage loans assumed through consolidation of Partially Owned Properties $ 65,095 $ -- ============ ============ Net liabilities assumed through consolidation of Partially Owned Properties $ 792 $ -- ============ ============
SEE ACCOMPANYING NOTES 5 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) DEFINITION OF SPECIAL TERMS: Capitalized terms used but not defined in this Quarterly Report on Form 10-Q are as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 ("Form 10-K"). 1. BUSINESS Equity Residential Properties Trust, formed in March 1993 ("EQR"), is a self-administered and self-managed equity real estate investment trust ("REIT"). As used herein, the term "Company" means EQR, and its subsidiaries, as the survivor of the mergers between EQR and each of Wellsford Residential Property Trust ("Wellsford") (the "Wellsford Merger"), Evans Withycombe Residential, Inc. ("EWR") (the "EWR Merger"), Merry Land & Investment Company, Inc. ("MRY") (the "MRY Merger") and Lexford Residential Trust ("LFT") ("the LFT Merger"). The Company has elected to be taxed as a REIT under Section 856(c) of the Internal Revenue Code of 1986, as amended (the "Code"). The Company is engaged in the acquisition, disposition, ownership, management and operation of multifamily properties. As of June 30, 2000, the Company owned or had interests in a portfolio of 1,053 multifamily properties containing 224,383 apartment units (individually a "Property" and collectively the "Properties") consisting of the following:
Number of Number of Properties Units ------------------------------------------------------------ Wholly Owned Properties 951 206,783 Partially Owned Properties 14 2,995 Unconsolidated Properties 88 14,605 ---------------------------------- Total Properties 1,053 224,383 ==================================
The "Partially Owned Properties" are controlled and partially owned by the Company but have partners with minority interests (see further discussion in Notes 3 and 4). The "Unconsolidated Properties" are partially owned but not controlled by the Company and consist of investments in partnership interests and/or subordinated mortgages. The Properties are located in 35 states throughout the United States. 2. BASIS OF PRESENTATION The balance sheet and statements of operations and cash flows as of and for the six months and quarter ended June 30, 2000 represent the consolidated financial information of the Company and its subsidiaries. Due to the Company's ability as general partner to control either through ownership or by contract the Operating Partnership, a series of management limited partnerships and companies (collectively, the "Management Partnerships" or the "Management Companies"), the Financing Partnerships, the LLC's, and certain other entities, each such entity has been consolidated with the Company for financial reporting purposes. In regard to the Management Companies, the Company does not have legal control; however, these entities are consolidated for financial reporting purposes, the effects of which are immaterial. Certain reclassifications have been made to the prior year's financial statements in order to conform to the current year presentation. These unaudited Consolidated Financial Statements of the Company have been prepared pursuant to the Securities and Exchange Commission ("SEC") rules and regulations and should be read in conjunction with the Financial Statements and Notes thereto included in the Company's Annual Report on 6 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) Form 10-K. The following Notes to Consolidated Financial Statements highlight significant changes to the notes included in the Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature. 3. SHAREHOLDERS' EQUITY AND MINORITY INTERESTS The following table presents the changes in the Company's issued and outstanding Common Shares for the six months ended June 30, 2000:
----------------------------------------------------------------------- 2000 ----------------------------------------------------------------------- Common Shares outstanding at January 1, 127,450,798 COMMON SHARES ISSUED: Conversion of Series E Preferred Shares 2,333 Conversion of Series H Preferred Shares 61,628 Conversion of Series J Preferred Shares 2,822,012 Employee Share Purchase Plan 110,373 Dividend Reinvestment - DRIP Plan 9,917 Share Purchase - DRIP Plan 7,778 Exercise of options 240,886 Restricted share grants, net 232,161 Conversion of OP Units 242,300 ----------------------------------------------------------------------- Common Shares outstanding at June 30, 131,180,186 =======================================================================
The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for a partnership interest are collectively referred to as the "Minority Interests - -Operating Partnership". As of June 30, 2000, the Minority Interests - Operating Partnership held 12,258,530 OP Units. As a result, the Minority Interests - Operating Partnership had an 8.55% interest in the Operating Partnership at June 30, 2000. Assuming conversion of all OP Units into Common Shares, total Common Shares outstanding at June 30, 2000 would have been 143,438,716. Net proceeds from the Company's Common Share and Preferred Share offerings are contributed by the Company to the Operating Partnership in return for an increased ownership percentage and are treated as capital transactions in the Company's Consolidated Financial Statements. As a result, the net offering proceeds from Common Shares are allocated between shareholders' equity and Minority Interests - Operating Partnership to account for the change in their respective percentage ownership of the underlying equity of the Operating Partnership. The Guilford portfolio properties (see further discussion in Note 4) are controlled and partially owned by the Company but have partners with minority interests. Effective January 1, 2000, the Company has included 100% of the financial condition and results of operations of these Partially Owned Properties in the Consolidated Financial Statements due to an increased ownership interest in these properties. The equity interests of the unaffiliated partners are reflected as Minority Interests - Partially Owned Properties. On March 3, 2000, Lexford Properties, L.P., a subsidiary of the Operating Partnership, issued 1.1 million units of 8.50% Series B Cumulative Convertible Redeemable Preference Units (collectively known as "Preference Interests") with an equity value of $55.0 million. Lexford Properties, L.P. received $53.6 7 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) million in net proceeds from this transaction. The liquidation value of these units is $50 per unit. The 1.1 million units are exchangeable into 1.1 million shares of 8.50% Series M-1 Cumulative Redeemable Preferred Shares of Beneficial Interest of the Company. Dividends for the Series B Preference Interests or the Series M-1 Preferred Shares are payable quarterly at the rate of $4.25 per unit/share per year. On March 23, 2000, Lexford Properties, L.P., a subsidiary of the Operating Partnership, issued 220,000 units of 8.50% Series C Cumulative Convertible Redeemable Preference Units with an equity value of $11.0 million. Lexford Properties, L.P. received $10.7 million in net proceeds from this transaction. The liquidation value of these units is $50 per unit. The 220,000 units are exchangeable into 220,000 shares of 8.50% Series M-1 Cumulative Redeemable Preferred Shares of Beneficial Interest of the Company. Dividends for the Series C Preference Interests or the Series M-1 Preferred Shares are payable quarterly at the rate of $4.25 per unit/share per year. On May 1, 2000, Lexford Properties, L.P., a subsidiary of the Operating Partnership, issued 420,000 units of 8.375% Series D Cumulative Convertible Redeemable Preference Units with an equity value of $21.0 million. Lexford Properties, L.P. received $20.5 million in net proceeds from this transaction. The liquidation value of these units is $50 per unit. The 420,000 units are exchangeable into 420,000 shares of 8.375% Series M-2 Cumulative Redeemable Preferred Shares of Beneficial Interest of the Company. Dividends for the Series D Preference Interests or the Series M-2 Preferred Shares are payable quarterly at the rate of $4.1875 per unit/share per year. The value of these Preference Interests are included in Minority Interests - Operating Partnership in the Consolidated Balance Sheets and the distributions incurred are included in preferred distributions in the Consolidated Statements of Operations. The Series M-1 and M-2 Preferred Shares are not convertible into EQR Common Shares. The following table presents the Company's issued and outstanding Preferred Shares as of June 30, 2000 and December 31, 1999: 8 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------- AMOUNTS ARE IN THOUSANDS ----------------------------- ANNUAL DIVIDEND RATE PER JUNE DECEMBER SHARE (1) 30, 2000 31, 1999 - ----------------------------------------------------------------------------------------------------------------- Preferred Shares of beneficial interest, $.01 par value; 100,000,000 shares authorized: 9 3/8% Series A Cumulative Redeemable Preferred; liquidation $2.34375 $ 153,000 $ 153,000 value $25 per share; 6,120,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 9 1/8% Series B Cumulative Redeemable Preferred; liquidation $22.81252 125,000 125,000 value $250 per share; 500,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 9 1/8% Series C Cumulative Redeemable Preferred; liquidation $22.81252 115,000 115,000 value $250 per share; 460,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 8.60% Series D Cumulative Redeemable Preferred; liquidation $21.50000 175,000 175,000 value $250 per share; 700,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 Series E Cumulative Convertible Preferred; liquidation value $1.75000 99,745 99,850 $25 per share; 3,989,800 and 3,994,000 shares issued and outstanding at June 30, 2000 and December 31, 1999, respectively 9.65% Series F Cumulative Redeemable Preferred; liquidation $2.41250 57,500 57,500 value $25 per share; 2,300,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 7 1/4% Series G Convertible Cumulative Preferred; liquidation $18.12500 316,250 316,250 value $250 per share; 1,265,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 7.00% Series H Cumulative Convertible Preferred; liquidation $1.75000 1,558 3,686 value $25 per share; 62,324 and 147,452 shares issued and outstanding at June 30, 2000 and December 31, 1999, respectively 8.60% Series J Cumulative Convertible Preferred; liquidation $2.15000 - 114,980 value $25 per share; 0 and 4,599,200 shares issued and outstanding at June 30, 2000 and December 31, 1999, respectively (2) 8.29% Series K Cumulative Redeemable Preferred; liquidation $4.14500 50,000 50,000 value $50 per share; 1,000,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 7.625% Series L Cumulative Redeemable Preferred; liquidation $1.90625 100,000 100,000 value $25 per share; 4,000,000 shares issued and outstanding at June 30, 2000 and December 31, 1999 - ----------------------------------------------------------------------------------------------------------------- $1,193,053 $1,310,266 - -----------------------------------------------------------------------------------------------------------------
(1) Dividends on all series of Preferred Shares are payable quarterly at various pay dates. Dividend rates listed for Series B, C, D and G are Preferred Share rates and the equivalent Depositary Share annual dividend rates are $2.281252, $2.281252, $2.15 and $1.8125, respectively. 9 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (2) On June 2, 2000, the Company redeemed all of its remaining issued and outstanding Series J Cumulative Convertible Preferred Shares of Beneficial Interest. The preferred shares were redeemed for such number of common shares that were issuable at a conversion rate of 0.6136 of a common share of EQR for each Series J Preferred Share. 4. Real Estate Acquisitions During the six months ended June 30, 2000, the Company acquired the three Properties listed below from unaffiliated parties. The cash portion of these transactions was funded from proceeds received from the disposition of properties and working capital.
- ------------------------------------------------------------------------------------------------------------------ PURCHASE DATE NUMBER OF PRICE ACQUIRED PROPERTY LOCATION UNITS (IN THOUSANDS) - ------------------------------------------------------------------------------------------------------------------ 01/19/00 Windmont Atlanta, GA 178 $ 10,310 04/05/00 Alborada Fremont, CA 442 83,500 06/30/00 Jefferson at Wyndham Lakes Coral Springs, FL 332 33,340 - ------------------------------------------------------------------------------------------------------------------ 952 $127,150 ==================================================================================================================
On January 19, 2000, the Company paid $1.25 million to acquire an additional ownership interest in LFT's Guilford portfolio (14 properties containing 2,995 units located in four states). The transaction was effective on January 1, 2000. Prior to January 1, 2000, the Company accounted for this portfolio under the equity method of accounting. As a result of this additional ownership acquisition, the Company acquired a controlling interest, and as such, now consolidates these properties for financial reporting purposes. The Company recorded additional investments in real estate totaling $69.4 million in connection with this transaction. 5. REAL ESTATE DISPOSITIONS During the six months ended June 30, 2000, the Company disposed of the fourteen properties listed below to unaffiliated parties. The Company recognized a net gain for financial reporting purposes of approximately $38.1 million.
- ------------------------------------------------------------------------------------------------------ DISPOSITION DATE NUMBER PRICE DISPOSED PROPERTY LOCATION OF UNITS (IN THOUSANDS) - ------------------------------------------------------------------------------------------------------ 02/04/00 Lakeridge at the Moors Miami, FL 175 $ 10,000 02/09/00 Sonnet Cove I & II Lexington, KY 331 12,300 02/25/00 Yuma Court Colorado Springs, CO 40 2,350 02/25/00 Indigo Plantation Daytona Beach, FL 304 14,200 02/25/00 The Oaks of Lakebridge Ormond Beach, FL 170 7,800 03/23/00 Tanglewood Lake Oswego, OR 158 10,750 03/30/00 Preston Lake Tucker, GA 320 17,325 03/31/00 Cypress Cove Melbourne, FL 326 18,800 04/20/00 Village of Sycamore Ridge Memphis, TN 114 5,200 04/28/00 Towne Centre III & IV Laurel, MD 562 29,244 05/11/00 3000 Grand Des Moines, IA 186 9,625 06/14/00 Villa Madeira Scottsdale, AZ 332 17,500 - ------------------------------------------------------------------------------------------------------ 3,108 $155,094 ======================================================================================================
10 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) Also, on June 30, 2000, the Company entered into two separate joint ventures with an unaffiliated party. At closing, the Company sold and/or contributed twenty-one wholly owned properties containing 5,211 units in eight states valued at $303.4 million to the joint ventures encumbered with $220 million in mortgage loans obtained on June 26, 2000 (see further discussion in Note 8). The unaffiliated party acquired a 75% interest in the joint ventures while the Company retained a 25% interest along with the right to manage the properties. The Company will account for its 25% interest in the joint ventures under the equity method of accounting. The Company recognized a net gain for financial reporting purposes of approximately $49.6 million. In addition, during the six months ended June 30, 2000, the Company sold its entire interest in two Unconsolidated Properties containing 338 units for approximately $4.4 million. 6. COMMITMENTS TO ACQUIRE/DISPOSE OF REAL ESTATE As of June 30, 2000, in addition to the Properties that were subsequently acquired as discussed in Note 14 of the Notes to Consolidated Financial Statements, the Company entered into separate agreements to acquire two multifamily properties containing 560 units from unaffiliated parties. The Company expects a combined purchase price of approximately $35.3 million, including the assumption of mortgage indebtedness of approximately $27.1 million. As of June 30, 2000, in addition to the Properties that were subsequently disposed of as discussed in Note 14 of the Notes to Consolidated Financial Statements, the Company entered into separate agreements to dispose of eighteen multifamily properties containing 4,414 units to unaffiliated parties. The Company expects a combined disposition price of approximately $222.5 million. The closings of these pending transactions are subject to certain contingencies and conditions; therefore, there can be no assurance that these transactions will be consummated or that the final terms thereof will not differ in material respects from those summarized in the preceding paragraphs. 7. DEPOSITS - RESTRICTED Deposits-restricted as of June 30, 2000 primarily included the following: - deposits in the amount of $29.5 million held in third party escrow accounts to provide collateral for third party construction financing in connection with two separate joint venture agreements; - approximately $76.0 million held in third party escrow accounts, representing proceeds received in connection with the Company's disposition of sixteen properties and earnest money deposits made for nine additional acquisitions; - approximately $32.9 million for tenant security, utility deposits, and other deposits for certain of the Company's Properties; and - approximately $12.2 million of other deposits. 8. MORTGAGE NOTES PAYABLE As of June 30, 2000, the Company had outstanding mortgage indebtedness of approximately $3.0 billion encumbering 514 of the Properties. The carrying value of such Properties (net of accumulated depreciation of $525.9 million) was approximately $4.7 billion. The mortgage notes payables are generally due in monthly installments of principal and interest. 11 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) During the six months ended June 30, 2000 the Company: - recorded additional third-party mortgage debt totaling $65.1 million in connection with the consolidation of the Guilford portfolio on January 1, 2000 (see Note 4); - repaid the outstanding mortgage balances on fifty-six Properties in the aggregate amount of $104.5 million; - obtained new mortgage financing on eleven previously unencumbered properties in the amount of $148.3 million on March 20, 2000; - settled on a $100 million forward starting swap and received $7.1 million. This amount is being amortized over the life of the financing for the eleven previously unencumbered Properties that occurred in March 2000; and - obtained new mortgage financings on twenty-one previously unencumbered properties in the amount of $220 million on June 26, 2000. These mortgage loans were assumed by the joint ventures that closed on June 30, 2000 (see Note 5). As of June 30, 2000, scheduled maturities for the Company's outstanding mortgage indebtedness are at various dates through October 1, 2033. The interest rate range on the Company's mortgage debt was 4.00% to 10.67% at June 30, 2000. During the six months ended June 30, 2000, the weighted average interest rate on the Company's mortgage debt was 7.33%. 9. NOTES The following tables summarize the Company's unsecured note balances and certain interest rate and maturity date information as of and for the six months ended June 30, 2000:
Weighted June 30, 2000 Net Principal Interest Rate Average Maturity (AMOUNTS ARE IN THOUSANDS) Balance Ranges Interest Rate Date Ranges - ------------------------------------------------------------------------------------------------------------------ Fixed Rate Public Notes $ 2,062,118 6.150% - 9.375% 7.07% 2000 - 2026 Floating Rate Public Notes 99,782 (1) 7.09% 2003 Fixed Rate Tax-Exempt Bonds 127,780 4.750% - 5.200% 5.10% 2024 - 2029 ------------ ------------ Totals $ 2,289,680 6.97% ============ ============
(1) As of June 30, 2000, floating rate public notes consisted of one note. The interest rate on this note was LIBOR (reset quarterly) plus a spread equal to 0.75% at June 30, 2000 (reset annually in August). As of June 30, 2000, the Company had outstanding unsecured notes of approximately $2.3 billion net of a $4.1 million discount and including a $6.0 million premium. As of June 30, 2000, the remaining unamortized balance of deferred settlement receipts and payments from treasury locks and interest rate protection agreements was $9.1 million and $2.9 million, respectively. 10. LINE OF CREDIT The Company has a revolving credit facility with Bank of America Securities LLC and Chase Securities Inc. acting as joint lead arrangers to provide the Operating Partnership with potential borrowings of up to $700 million. As of June 30, 2000 no amounts were outstanding under this facility 12 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) and $51.4 million was restricted on the line of credit. During the six months ended June 30, 2000, the weighted average interest rate on the Company's line of credit was 6.58%. 11. CALCULATION OF NET INCOME PER WEIGHTED AVERAGE COMMON SHARE The following tables set forth the computation of net income per share - basic and net income per share - diluted.
SIX MONTHS ENDED JUNE 30, QUARTER ENDED JUNE 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 ----------------------------- ----------------------------- (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Numerator: Income before gain on disposition of properties, net, extraordinary item, allocation to Minority Interests and preferred distributions $ 185,121 $ 159,374 $ 96,929 $ 80,110 Allocation to Minority Interests: Operating Partnership (19,132) (14,514) (12,036) (7,388) Partially Owned Properties 157 -- 112 -- Distributions to preferred shareholders (55,654) (57,111) (27,266) (27,734) ----------------------------- ----------------------------- Income before gain on disposition of properties, net and extraordinary item 110,492 87,749 57,739 44,988 Gain on disposition of properties, net 87,652 45,807 67,654 24,391 Loss on early extinguishment of debt -- (451) -- (451) ----------------------------- ----------------------------- Numerator for net income per share - basic 198,144 133,105 125,393 68,928 Effect of dilutive securities: Allocation to Minority Interests - Operating Partnership 19,132 14,514 12,036 7,388 Distributions to convertible preferred shareholders 267 -- 3,526 -- ----------------------------- ----------------------------- Numerator for net income per share - diluted $ 217,543 $ 147,619 $ 140,955 $ 76,316 ============================= ============================= Denominator: Denominator for net income per share - basic 128,435 119,762 129,072 120,558 Effect of dilutive securities: Dilution for assumed exercise of stock options 579 742 770 908 OP Units 12,415 13,064 12,364 12,920 Convertible preferred shares 204 -- 4,304 -- ----------------------------- ----------------------------- Denominator for net income per share - diluted 141,633 133,568 146,510 134,386 ============================= ============================= Net income per share - basic $ 1.54 $ 1.11 $ 0.97 $ 0.57 ============================= ============================= Net income per share - diluted $ 1.54 $ 1.11 $ 0.96 $ 0.57 ============================= =============================
13 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, QUARTER ENDED JUNE 30, ---------------------------- ---------------------------- 2000 1999 2000 1999 -------------- ------------- -------------- ------------- (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Net income per share - basic: Income before gain on disposition of properties, net and extraordinary item per share - basic $ 0.92 $ 0.77 $ 0.49 $ 0.39 Gain on disposition of properties, net 0.62 0.34 0.48 0.18 Loss on early extinguishment of debt -- -- -- -- -------------- ------------- -------------- ------------- Net income per share - basic $ 1.54 $ 1.11 $ 0.97 $ 0.57 ============== ============= ============== ============= Net income per share - diluted: Income before gain on disposition of properties, net and extraordinary item per share - diluted $ 0.92 $ 0.77 $ 0.50 $ 0.39 Gain on disposition of properties, net 0.62 0.34 0.46 0.18 Loss on early extinguishment of debt -- -- -- -- -------------- ------------- -------------- ------------- Net income per share - diluted $ 1.54 $ 1.11 $ 0.96 $ 0.57 ============== ============= ============== =============
CONVERTIBLE PREFERRED SHARES AND JUNIOR CONVERTIBLE PREFERENCE UNITS THAT COULD BE CONVERTED INTO 9,970,878 AND 12,761,757 WEIGHTED COMMON SHARES FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999, RESPECTIVELY, AND 5,402,779 AND 12,404,422 WEIGHTED COMMON SHARES FOR THE QUARTERS ENDED JUNE 30, 2000 AND 1999, RESPECTIVELY, WERE OUTSTANDING BUT WERE NOT INCLUDED IN THE COMPUTATION OF DILUTED EARNINGS PER SHARE BECAUSE THE EFFECTS WOULD BE ANTI-DILUTIVE. 12. COMMITMENTS AND CONTINGENCIES The Company, as an owner of real estate, is subject to various environmental laws of Federal and local governments. Compliance by the Company with existing laws has not had a material adverse effect on the Company's financial condition and results of operations. However, the Company cannot predict the impact of new or changed laws or regulations on its current Properties or on properties that it may acquire in the future. The Company does not believe there is any litigation threatened against the Company other than routine litigation arising out of the ordinary course of business, some of which is expected to be covered by liability insurance, none of which is expected to have a material adverse effect on the consolidated financial statements of the Company. In regards to the funding of Properties in the development and/or earnout stage and the joint venture agreements with two multifamily residential real estate developers, the Company funded a total of $91.7 million during the six months ended June 30, 2000. During the remainder of 2000, the Company expects to fund approximately $63.8 million in connection with these Properties. In connection with one joint venture agreement, the Company has an obligation to fund up to an additional $17.5 million to guarantee third party construction financing. Pursuant to the terms of a Stock Purchase Agreement with Wellsford Real Properties, Inc. ("WRP Newco"), the Company had agreed to purchase up to 1,000,000 shares of WRP Newco Series A Preferred at $25.00 per share on a standby basis over a three-year period ending on May 30, 2000. This 14 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) agreement was terminated on May 5, 2000, and, as such, the Company has no further obligations under this agreement. In connection with the Wellsford Merger, the Company provided a $14.8 million credit enhancement with respect to certain tax-exempt bonds issued to finance certain public improvements at a multifamily development project. As of June 30, 2000, this enhancement was still in effect. 13. REPORTABLE SEGMENTS The following tables set forth the reconciliation of net income and total assets for the Company's reportable segments for the six months and quarter ended June 30, 2000 and net income for the six months and quarter ended June 30, 1999.
SIX MONTHS ENDED JUNE 30, 2000 RENTAL REAL CORPORATE/ (AMOUNTS IN THOUSANDS) ESTATE (1) OTHER (2) CONSOLIDATED - --------------------------------------------------------------------------------------------------------------- Rental income $ 952,740 $ -- $ 952,740 Property and maintenance expense (227,845) -- (227,845) Real estate tax and insurance expense (95,001) -- (95,001) Property management expense (37,760) -- (37,760) ---------------------------------------------- Net operating income 592,134 -- 592,134 Fee and asset management income -- 2,632 2,632 Interest income - investment in mortgage notes -- 5,499 5,499 Interest and other income -- 17,652 17,652 Fee and asset management expense -- (2,102) (2,102) Depreciation expense on non-real estate assets -- (3,157) (3,157) Interest expense: Expense incurred -- (190,263) (190,263) Amortization of deferred financing costs -- (2,703) (2,703) General and administrative expense -- (13,216) (13,216) Preferred distributions -- (55,654) (55,654) Allocation to Minority Interests - Partially Owned Properties -- 157 157 Adjustment for depreciation expense related to Unconsolidated and Partially Owned Properties -- (491) (491) ---------------------------------------------- Funds from operations available to Common Shares and OP Units 592,134 (241,646) 350,488 Depreciation expense on real estate assets (221,355) -- (221,355) Gain on disposition of properties, net 87,652 -- 87,652 Allocation to Minority Interests - Operating Partnership -- (19,132) (19,132) Adjustment for depreciation expense related to Unconsolidated and Partially Owned Properties -- 491 491 ---------------------------------------------- Net income available to Common Shares $ 458,431 $ (260,287) $ 198,144 ============================================== Investment in real estate, net of accumulated depreciation $ 10,801,004 $ 16,541 $ 10,817,545 ============================================== Total assets $ 10,857,001 $ 889,742 $ 11,746,743 ==============================================
15 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1999 RENTAL REAL CORPORATE/ (AMOUNTS IN THOUSANDS) ESTATE (1) OTHER (2) CONSOLIDATED - ---------------------------------------------------------------------------------------------------------- Rental income $ 819,178 $ -- $ 819,178 Property and maintenance expense (196,865) (196,865) Real estate tax and insurance expense (84,515) (84,515) Property management expense (27,973) (27,973) ---------------------------------------------- Net operating income 509,825 -- 509,825 Fee and asset management income -- 2,414 2,414 Interest income - investment in mortgage notes -- 5,644 5,644 Interest and other income -- 11,123 11,123 Fee and asset management expense -- (1,624) (1,624) Depreciation expense on non-real estate assets -- (3,423) (3,423) Interest expense: Expense incurred -- (158,499) (158,499) Amortization of deferred financing costs -- (1,661) (1,661) General and administrative expense -- (10,714) (10,714) Preferred distributions -- (57,111) (57,111) Adjustment for depreciation expense related to Unconsolidated Properties -- 551 551 ---------------------------------------------- Funds from operations available to Common Shares and OP Units 509,825 (213,300) 296,525 Depreciation expense on real estate assets (193,711) -- (193,711) Gain on disposition of properties, net 45,807 -- 45,807 Loss on early extinguishment of debt -- (451) (451) Allocation to Minority Interests - Operating Partnership -- (14,514) (14,514) Adjustment for depreciation expense related to Unconsolidated Properties -- (551) (551) ---------------------------------------------- Net income available to Common Shares $ 361,921 $ (228,816) $ 133,105 ==============================================
16 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
QUARTER ENDED JUNE 30, 2000 RENTAL REAL CORPORATE/ (AMOUNTS IN THOUSANDS) ESTATE (1) OTHER (2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------ Rental income $ 479,193 $ -- $ 479,193 Property and maintenance expense (113,977) -- (113,977) Real estate tax and insurance expense (46,667) -- (46,667) Property management expense (18,846) -- (18,846) ---------------------------------------------- Net operating income 299,703 -- 299,703 Fee and asset management income -- 1,334 1,334 Interest income - investment in mortgage notes -- 2,737 2,737 Interest and other income -- 9,849 9,849 Fee and asset management expense -- (1,036) (1,036) Depreciation expense on non-real estate assets -- (1,590) (1,590) Interest expense: Expense incurred -- (95,152) (95,152) Amortization of deferred financing costs -- (1,362) (1,362) General and administrative expense -- (6,518) (6,518) Preferred distributions -- (27,266) (27,266) Allocation to Minority Interests - Partially Owned Properties -- 112 112 Adjustment for depreciation expense related to Unconsolidated and Partially Owned Properties -- (253) (253) ---------------------------------------------- Funds from operations available to Common Shares and OP Units 299,703 (119,145) 180,558 Depreciation expense on real estate assets (111,036) -- (111,036) Gain on disposition of properties, net 67,654 -- 67,654 Allocation to Minority Interests - Operating Partnership -- (12,036) (12,036) Adjustment for depreciation expense related to Unconsolidated and Partially Owned Properties -- 253 253 ---------------------------------------------- Net income available to Common Shares $ 256,321 $ (130,928) $ 125,393 ==============================================
17 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
QUARTER ENDED JUNE 30, 1999 RENTAL REAL CORPORATE/ (AMOUNTS IN THOUSANDS) ESTATE (1) OTHER (2) CONSOLIDATED - ---------------------------------------------------------------------------------------------------------- Rental income $ 413,116 $ -- $ 413,116 Property and maintenance expense (99,818) -- (99,818) Real estate tax and insurance expense (42,467) -- (42,467) Property management expense (13,772) -- (13,772) ---------------------------------------------- Net operating income 257,059 -- 257,059 Fee and asset management income -- 1,180 1,180 Interest income - investment in mortgage notes -- 2,749 2,749 Interest and other income -- 5,177 5,177 Fee and asset management expense -- (757) (757) Depreciation expense on non-real estate assets -- (1,719) (1,719) Interest expense: Expense incurred -- (79,302) (79,302) Amortization of deferred financing costs -- (816) (816) General and administrative expense -- (4,947) (4,947) Preferred distributions -- (27,734) (27,734) Adjustment for depreciation expense related to Unconsolidated Properties -- 276 276 ---------------------------------------------- Funds from operations available to Common Shares and OP Units 257,059 (105,893) 151,166 Depreciation expense on real estate assets (98,514) -- (98,514) Gain on disposition of properties, net 24,391 -- 24,391 Loss on early extinguishment of debt -- (451) (451) Allocation to Minority Interests - Operating Partnership -- (7,388) (7,388) Adjustment for depreciation expense related to Unconsolidated Properties -- (276) (276) ---------------------------------------------- Net income available to Common Shares $ 182,936 $ (114,008) $ 68,928 ==============================================
(1) The Company has one primary reportable business segment, which consists of investment in rental real estate. The Company's primary business is owning, managing, and operating multifamily residential properties which includes the generation of rental and other related income through the leasing of apartment units to tenants. (2) The Company has a segment for corporate level activity including such items as interest income earned on short-term investments, interest income earned on investment in mortgage notes, general and administrative expenses, and interest expense on mortgage notes payable and unsecured note issuances. In addition, the Company has a segment for third party management activity that is immaterial and does not meet the threshold requirements of a reportable segment as provided for in Statement No. 131. Interest expense on debt is not allocated to individual Properties, even if the Properties secure such debt. Further, income allocated to Minority Interests is not allocated to the Properties. 18 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 14. SUBSEQUENT EVENTS On July 11, 2000, the Company closed on its acquisition, in an all cash and debt transaction, of Globe Business Resources, Inc. ("Globe"), one of the nation's largest providers of temporary corporate housing and furniture rental. Shareholders of Globe received $13.00 per share, which approximated $58.7 million in cash based on the Globe shares outstanding. In addition, the Company assumed approximately $70.8 million in debt. On July 6, 2000, the Company disposed of Idlewood Apartments, a 320-unit multifamily property located in Indianapolis, IN, to an unaffiliated party for a total sales price of $15.6 million. On July 11, 2000, the Company repaid the outstanding mortgage balance on one Property totaling $5.9 million. On July 12, 2000, the Company acquired Ambergate Villas Apartments, a 72-unit multifamily property located in West Palm Beach, FL, from an unaffiliated party for a total purchase price of approximately $2.4 million, which included the issuance of approximately $0.4 million of OP Units. On July 12, 2000, the Company acquired Greengate Villas Apartments, a 120-unit multifamily property located in West Palm Beach, FL, from an unaffiliated party for a total purchase price of approximately $4.0 million, which included the assumption of mortgage indebtedness of approximately $2.7 million and the issuance of approximately $1.2 million of OP Units. On July 12, 2000, the Company acquired Jupiter Sound Villas Apartments, a 61-unit multifamily property located in Juno Beach, FL, from an unaffiliated party for a total purchase price of approximately $1.7 million, which included the assumption of mortgage indebtedness of approximately $1.6 million and the issuance of approximately $10,000 of OP Units. On July 12, 2000, the Company acquired Oakland Hills Apartments, a 189-unit multifamily property located in Margate, FL, from an unaffiliated party for a total purchase price of approximately $7.8 million, which included the assumption of mortgage indebtedness of approximately $5.0 million and the issuance of approximately $2.4 million of OP Units. On July 12, 2000, the Company acquired Summit Center Apartments, a 87-unit multifamily property located in West Palm Beach, FL, from an unaffiliated party for a total purchase price of approximately $2.4 million, which included the assumption of mortgage indebtedness of approximately $2.3 million and the issuance of approximately $10,000 of OP Units. On July 12, 2000, the Company acquired Whispering Pines Apartments, a 64-unit multifamily property located in Fort Pierce, FL, from an unaffiliated party for a total purchase price of approximately $1.0 million, which included the issuance of approximately $0.1 million of OP Units. On July 17, 2000, the Company announced that it has entered into a definitive agreement and plan of merger with Grove Property Trust ("Grove"). Grove's portfolio of 60 properties contains 7,296 units located in three New England states. The transaction values Grove at approximately $461 million, including the assumption of approximately $244 million in debt. This merger is expected to close during the fourth quarter of 2000 and does not require EQR shareholder approval. 19 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) On July 25, 2000, the Company acquired Harbour Town Apartments, a 392-unit multifamily property located in Boca Raton, FL, from an unaffiliated party for a total purchase price of approximately $31.9 million. On July 25, 2000, the Company disposed of Sabal Palms Apartments, a 416-unit multifamily property located in Pompano Beach, FL, to an unaffiliated party for a total sales price of $27.2 million. On July 27, 2000, the Company disposed of Lake in the Woods Apartments, a 1,028-unit multifamily property located in Ypsilanti, MI, to an unaffiliated party for a total sales price of $57.0 million. On July 28, 2000, the Company disposed of Lamplight Court Apartments, a 53-unit multifamily property located in London, OH, to an unaffiliated party for a total sales price of $0.7 million. On July 28, 2000, the Company disposed of Cheyenne Crest Apartments, a 208-unit multifamily property located in Colorado Springs, CO, to an unaffiliated party for a total sales price of $12.3 million. On July 28, 2000, the Company disposed of Windmill Apartments, a 304-unit multifamily property located in Colorado Springs, CO, to an unaffiliated party for a total sales price of $12.4 million. On July 28, 2000, the Company sold its entire interest in an Unconsolidated Property containing 39 units for approximately $0.2 million. 20 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following discussion and analysis of the results of operations and financial condition of the Company should be read in connection with the Consolidated Financial Statements and Notes thereto. Due to the Company's ability to control the Operating Partnership, the Management Partnerships and Management Companies, the Financing Partnerships, the LLC's and certain other entities, each entity has been consolidated with the Company for financial reporting purposes. Capitalized terms used herein and not defined, are as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Forward-looking statements in this report are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believes", "expects" and "anticipates" and other similar expressions which are predictions of or indicate future events and trends and which do not relate solely to historical matters identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results, performance, or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such differences include, but are not limited to, the following: - alternative sources of capital to the Company are higher than anticipated; - occupancy levels and market rents may be adversely affected by local economic and market conditions, which are beyond the Company's control; and - additional factors as discussed in Part I of the Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. RESULTS OF OPERATIONS The acquired properties are presented in the Consolidated Financial Statements of the Company from the date of each acquisition or the closing dates of the Mergers. The following table summarizes the number of Wholly Owned Acquired and Disposed Properties and related units for the periods presented:
ACQUISITIONS DISPOSITIONS ------------------------------------------------------------------ Number of Number of Number of Number of YEAR Properties Units Properties Units ---------------------------------------------------------------------------------------------- 1999 366 35,450 36 7,886 2000 3 952 35 8,229
In addition, during the six months ended June 30, 2000, the Company sold its entire interest in two Unconsolidated Properties containing 338 units for approximately $4.4 million. 21 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) The Company's overall results of operations for the six months ended June 30, 2000 and 1999 have been significantly impacted by the Company's acquisition and disposition activity. The significant changes in rental revenues, property and maintenance expenses, real estate taxes and insurance, depreciation expense, property management and interest expense can all primarily be attributed to the acquisition of the 1999 Acquired Properties and the 2000 Acquired Properties, partially offset by the disposition of the 1999 Disposed Properties and the 2000 Disposed Properties. The impact of the 1999 Acquired Properties and the 2000 Acquired Properties, the 1999 Disposed Properties and the 2000 Disposed Properties are discussed in greater detail in the following paragraphs. Properties that the Company owned for all of both the six-month periods ended June 30, 2000 and June 30, 1999 (the "Six-Month 2000 Same Store Properties"), which represented 167,210 units, also impacted the Company's results of operations. Properties that the Company owned for all of both the quarters ended June 30, 2000 and June 30, 1999 (the "Second-Quarter 2000 Same Store Properties"), which represented 168,634 units, also impacted the Company's results of operations. Both the Six-Month 2000 Same Store Properties and Second-Quarter 2000 Same Store Properties are discussed in the following paragraphs. COMPARISON OF SIX MONTHS ENDED JUNE 30, 2000 TO SIX MONTHS ENDED JUNE 30, 1999 For the six months ended June 30, 2000, income before gain on disposition of properties, net, extraordinary item and allocation to Minority Interests increased by approximately $25.7 million when compared to the six months ended June 30, 1999. This increase was primarily due to the acquisition of the 1999 Acquired Properties as well as increases in rental revenues net of increases in property and maintenance expenses, real estate taxes and insurance, property management expenses, depreciation expense, interest expense and general and administrative expenses. In regard to the Six-Month 2000 Same Store Properties, total revenues increased by approximately $29.0 million to $770.5 million or 3.92% primarily as a result of higher rental rates charged to new tenants and tenant renewals and an increase in income from billing tenants for their share of utility costs as well as other ancillary services provided to tenants. Overall, property operating expenses, which include property and maintenance, real estate taxes and insurance and an allocation of property management expenses, increased approximately $5.3 million or 1.96%. This increase was primarily the result of higher expenses for on-site compensation costs and an increase in real estate taxes on certain properties, but was partially offset by lower leasing and advertising, administrative, maintenance, building and insurance costs. Property management represents expenses associated with the self-management of the Company's Properties. These expenses increased by approximately $9.8 million primarily due to the operations of the property management business obtained through the LFT Merger and a current year compensation charge associated with the issuance of restricted shares to our property management personnel. Fee and asset management revenues and fee and asset management expenses are associated with the management of properties not owned by the Company that are managed for affiliates. These revenues and expenses increased slightly. Interest expense, including amortization of deferred financing costs, increased by approximately $32.8 million. This increase was primarily the result of a $719.2 million increase in the Company's average indebtedness outstanding. The effective interest cost on all of the Company's indebtedness for the six months ending June 30, 2000 was 7.26% as compared to 6.98% for the six months ended June 30, 1999. 22 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) General and administrative expenses, which include corporate operating expenses, increased approximately $2.5 million between the periods under comparison. This increase was primarily due to recording higher compensation expense associated with the issuance of restricted shares. These expenses as a percentage of total revenues were 1.35% for the six months ended June 30, 2000 compared to 1.28% of total revenues for the six months ended June 30, 1999. COMPARISON OF QUARTER ENDED JUNE 30, 2000 TO QUARTER ENDED JUNE 30, 1999 For the quarter ended June 30, 2000, income before gain on disposition of properties, net, extraordinary item and allocation to Minority Interests increased by approximately $16.8 million when compared to the quarter ended June 30, 1999. This increase was primarily due to the acquisition of the 1999 Acquired Properties as well as increases in rental revenues net of increases in property and maintenance expenses, real estate taxes and insurance, property management expenses, depreciation expense, interest expense and general and administrative expenses. In regard to the Second-Quarter 2000 Same Store Properties, total revenues increased by approximately $15.3 million or 4.08% primarily as a result of higher rental rates charged to new tenants and tenant renewals and an increase in income from billing tenants for their share of utility costs as well as other ancillary services provided to tenants. Overall, property operating expenses, which include property and maintenance, real estate taxes and insurance and an allocation of property management expenses, increased approximately $3.1 million or 2.24%. This increase was primarily the result of higher expenses for on-site compensation costs and an increase in real estate taxes on certain properties, but was partially offset by lower administrative, building and insurance costs. Property management represents expenses associated with the self-management of the Company's Properties. These expenses increased by approximately $5.1 million primarily due to the operations of the property management business obtained through the LFT Merger and a current year compensation charge associated with the issuance of restricted shares to our property management personnel. Fee and asset management revenues and fee and asset management expenses are associated with the management of properties not owned by the Company that are managed for affiliates. These revenues and expenses increased slightly. Interest expense, including amortization of deferred financing costs, increased by approximately $16.4 million. This increase was primarily the result of a $625.0 million increase in the Company's average indebtedness outstanding. The effective interest cost on all of the Company's indebtedness for the quarter ending June 30, 2000 was 7.37% as compared to 6.92% for the quarter ended June 30, 1999. General and administrative expenses, which include corporate operating expenses, increased approximately $1.6 million between the periods under comparison. This increase was primarily due to recording higher compensation expense associated with the issuance of restricted shares. These expenses as a percentage of total revenues were 1.32% for the quarter ended June 30, 2000 compared to 1.17% of total revenues for the quarter ended June 30, 1999. LIQUIDITY AND CAPITAL RESOURCES As of January 1, 2000, the Company had approximately $29.1 million of cash and cash equivalents and the amount available on the Company's line of credit was $400 million, of which $65.8 million was restricted. After taking into effect the various transactions discussed in the following 23 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) paragraphs, the Company's cash and cash equivalents balance at June 30, 2000 was approximately $237.1 million and the amount available on the Company's line of credit was $700 million, of which $51.4 million was restricted. The following discussion also explains the changes in net cash provided by operating activities, net cash (used for) investing activities and net cash (used for) financing activities, all of which are presented in the Company's Statements of Cash Flows. Part of the Company's strategy in funding the purchase of multifamily properties, funding its Properties in the development and/or earnout stage and the funding of the Company's investment in two joint ventures with multifamily real estate developers is to utilize its line of credit and to subsequently repay the line of credit from the disposition of Properties or the issuance of additional equity or debt securities. Utilizing this strategy during the first six months of 2000, the Company: - obtained new mortgage financing on eleven previously unencumbered properties and received net proceeds of $147.7 million; - disposed of sixteen properties (including the sale of the Company's entire interest in two Unconsolidated Properties) and received net proceeds of $159.5 million; - sold and/or contributed twenty-one properties to two separate joint ventures and received net proceeds of $60.5 million; - issued approximately 0.4 million Common Shares and received net proceeds of $14.1 million; - issued the Series B, C and D Cumulative Convertible Redeemable Preference Units and received net proceeds of $84.8 million; and - obtained new mortgage financing on twenty-one previously unencumbered properties and received net proceeds of $217.2 million. All of these proceeds were utilized to either: - repay the line of credit; - repay mortgage indebtedness on certain Properties; - provide funding for properties in the development and/or earnout stage including the joint venture agreements; and/or - purchase additional properties. During the six months ended June 30, 2000, the Company: - repaid approximately $104.5 million of mortgage indebtedness on fifty-six Properties; - settled on a $100 million interest rate protection agreement and received approximately $7.1 million in connection therewith. This amount is being amortized over the life of the financing for the eleven previously unencumbered Properties that occurred in March 2000; - funded $91.7 million related to the development, earnout and joint venture agreements; - purchased three Properties for a total purchase price of approximately $127.2 million; - funded $1.25 million to acquire an additional ownership interest in LFT's Guilford portfolio; and - acquired $25.0 million of 8.25% preferred securities of WRP Convertible Trust I, an affiliate of WRP Newco. As of June 30, 2000, the Company had total indebtedness of approximately $5.3 billion, which included mortgage indebtedness of $3.0 billion (including premiums of $2.9 million), of which $837.1 million represented tax-exempt bond indebtedness, and unsecured debt of $2.3 billion (including net discounts and premiums in the amount of $1.9 million), of which $127.8 million represented tax-exempt bond indebtedness. 24 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Subsequent to June 30, 2000 and through August 9, 2000, the Company: - repaid the outstanding mortgage balance on one Property totaling approximately $5.9 million; - disposed of seven properties (including the sale of the Company's entire interest in one Unconsolidated Property) for a total sales price of $125.4 million; - acquired seven properties containing 985 units for a total purchase price of approximately $51.1 million, including the assumption of mortgage indebtedness of approximately $11.5 million and the issuance of OP Units with a value of approximately $4.1 million; and - acquired Globe Business Resources, Inc. ("Globe") for cash of approximately $58.7 million, plus the assumption of mortgage indebtedness of approximately $70.8 million. During the remainder of 2000, the Company expects to fund $63.8 million related to the development, earnout and joint venture agreements. In connection with one joint venture agreement, the Company has an obligation to fund up to an additional $17.5 million to guarantee third party construction financing. In addition, during the remainder of 2000, the Company expects to fund the: - repayment of total indebtedness related to scheduled unsecured note and mortgage note maturities in the amount of approximately $215.0 million; and - acquisition of Grove Property Trust for cash of approximately $210.0 million. The Company has a policy of capitalizing expenditures made for new assets, including newly acquired properties and the costs associated with placing these assets into service. Expenditures for improvements and renovations that significantly enhance the value of existing assets or substantially extend the useful life of an asset are also capitalized. Expenditures for in-the-unit replacement-type items such as appliances, draperies, carpeting and floor coverings, mechanical equipment and certain furniture and fixtures are also capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. With respect to acquired properties, the Company has determined that it generally spends $1,000 per unit during its first three years of ownership to fully improve and enhance these properties to meet the Company's standards. In regard to replacement-type items described above, the Company generally expects to spend $250 per unit on an annual recurring basis. During the six months ended June 30, 2000, total capital expenditures for the Company approximated $60.7 million. Of this amount, approximately $12.5 million, or $137 per unit, related to capital improvements and major repairs for the 1998, 1999 and 2000 Acquired Properties. Capital improvements and major repairs for all of the Company's pre-EQR IPO properties and 1993, 1994, 1995, 1996 and 1997 Acquired Properties approximated $14.7 million, or $122 per unit. Capital spent for replacement-type items approximated $25.4 million, or $119 per unit. In addition, approximately $4.4 million was spent on nine specific assets related to major renovations and repositioning of these assets. Also included in total capital expenditures was approximately $2.4 million expended for non-real estate additions such as computer software, computer equipment, and furniture and fixtures and leasehold improvements for the Company's property management offices and its corporate headquarters, $0.4 million spent on commercial/other assets, $0.8 million spent on the Partially Owned Properties and $0.1 million was spent on properties that were sold prior to 2000. Such capital expenditures were primarily funded from working capital reserves and from net cash provided by operating activities. Total capital expenditures for the remaining portion of 2000 are estimated to be approximately $61.3 million. Minority Interests as of June 30, 2000 increased by $79.9 million when compared to December 31, 1999. The primary factors that impacted this account during the six months were: - distributions declared to Minority Interests, which amounted to $18.8 million for the six months (excluding preference unit/interest distributions); - the allocation of income from operations in the amount of $19.1 million; - the allocation of Minority Interests from Partially Owned Properties in the amount of $2.9 million; 25 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - the conversion of OP Units into Common Shares; and - the issuance of Common Shares, OP Units and Preference Interests during the six months ended June 30, 2000. Total distributions paid in July 2000 amounted to approximately $130.4 million, which included distributions declared for the quarter ended June 30, 2000. The Company expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing Properties and certain scheduled unsecured note and mortgage note repayments, generally through its working capital, net cash provided by operating activities and borrowings under its line of credit. The Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. The Company also expects to meet its long-term liquidity requirements, such as scheduled unsecured note and mortgage debt maturities, property acquisitions, financing of construction and development activities and capital improvements, through undistributed FFO and proceeds received from the disposition of certain Properties and/or through the issuance of unsecured notes and equity securities including additional OP Units. In addition, the Company has certain uncollateralized Properties available for additional mortgage borrowings in the event that the public capital markets are unavailable to the Company or the cost of alternative sources of capital to the Company is too high. The Company has a revolving credit facility with Bank of America Securities LLC and Chase Securities Inc. acting as joint lead arrangers to provide the Operating Partnership with potential borrowings of up to $700 million. As of August 9, 2000, no amounts were outstanding under this facility. In connection with the Globe merger, the Company assumed a revolving credit facility with Fifth Third Bank with potential borrowings of up to $55.0 million. This line of credit matures on May 31, 2003. As of August 9, 2000, $40.3 million was outstanding under this facility. In connection with the Wellsford Merger, the Company provided a $14.8 million credit enhancement with respect to certain tax-exempt bonds issued to finance certain public improvements at a multifamily development project. As of August 9, 2000, this enhancement was still in effect. Pursuant to the terms of a Stock Purchase Agreement with Wellsford Real Properties, Inc. ("WRP Newco"), the Company had agreed to purchase up to 1,000,000 shares of WRP Newco Series A Preferred at $25.00 per share on a standby basis over a three-year period ending on May 30, 2000. This agreement was terminated on May 5, 2000, and, as such, the Company has no further obligations under this agreement. On May 5, 2000, the Company acquired $25.0 million of 8.25% preferred securities of WRP Convertible Trust I, an affiliate of WRP Newco. These preferred securities are indirectly convertible into WRP Newco common shares under certain circumstances. FUNDS FROM OPERATIONS Funds from Operations ("FFO") represents net income (loss) (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains or losses from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. This definition of FFO is in accordance with the National Association of Real Estate Investment Trust's ("NAREIT") recommended definition. NAREIT modified this definition effective January 1, 2000. However, as a result of this modification, no changes were 26 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) required to the Company's calculation of FFO for either the current or prior periods presented. The Company believes that FFO is helpful to investors as a supplemental measure of the operating performance of a real estate company because, along with cash flows from operating activities, financing activities and investing activities, it provides investors an understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO in and of itself does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indication of the Company's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. The Company's calculation of FFO may differ from the methodology for calculating FFO utilized by other real estate companies and may differ as a result of differences between the Company's and other real estate company's accounting policies for replacement type items and, accordingly, may not be comparable to such other real estate companies. FFO per share and OP Unit is presented giving affect to the Statement of Financial Accounting Standards No. 128 "Earnings Per Share". For the six months ended June 30, 2000, FFO available to Common Shares and OP Units increased by $54.0 million, or 18.2%, and FFO per share and OP Unit - diluted increased by $0.25, or 11.4%, when compared to the six months ended June 30, 1999. For the quarter ended June 30, 2000, FFO available to Common Shares and OP Units increased by $29.4 million, or 19.4%, and FFO per share and OP Unit -diluted increased by $0.14, or 12.6%, when compared to the quarter ended June 30, 1999. The following is a reconciliation of net income to FFO available to Common Shares and OP Units for the six months and quarters ended June 30, 2000 and 1999: 27 EQUITY RESIDENTIAL PROPERTIES TRUST PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 30, QUARTER ENDED JUNE 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 ----------------------------- ----------------------------- (Amounts in thousands, except per share and OP Unit amounts) STATEMENTS OF FUNDS FROM OPERATIONS Net income $ 253,798 $ 190,216 $ 152,659 $ 96,662 Adjustments: Allocation to Minority Interests - Operating Partnership 19,132 14,514 12,036 7,388 Depreciation on real estate assets* 220,864 194,262 110,783 98,790 Loss on early extinguishment of debt -- 451 -- 451 Gain on disposition of properties, net (87,652) (45,807) (67,654) (24,391) ------------ ------------ ------------ ------------ FFO 406,142 353,636 207,824 178,900 Preferred distributions (55,654) (57,111) (27,266) (27,734) ------------ ------------ ------------ ------------ FFO available to Common Shares and OP Units $ 350,488 $ 296,525 $ 180,558 $ 151,166 ============ ============ ============ ============ Weighted average Common Shares and OP Units outstanding - basic 140,850 132,825 141,436 133,478 ============ ============ ============ ============ FFO per share and OP Unit - basic $ 2.49 $ 2.23 $ 1.28 $ 1.13 ============ ============ ============ ============ FFO per share and OP Unit - diluted $ 2.44 $ 2.19 $ 1.25 $ 1.11 ============ ============ ============ ============
* INCLUDES $210,000 AND $551,000 FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999, RESPECTIVELY, AND $105,000 AND $276,000 FOR THE QUARTERS ENDED JUNE 30, 2000 AND 1999, RESPECTIVELY, RELATED TO THE COMPANY'S SHARE OF DEPRECIATION FROM UNCONSOLIDATED PROPERTIES. EXCLUDES $701,000 FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND $358,000 FOR THE QUARTER ENDED JUNE 30, 2000 RELATED TO THE MINORITY INTERESTS' SHARE OF DEPRECIATION FROM PARTIALLY OWNED PROPERTIES. 28 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There have been no new or significant developments related to the legal proceedings that were discussed in Part I, Item III of the Company's Form 10-K for the year ended December 31, 1999. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits: 12 Computation of Ratio of Earnings to Fixed Charges 27 Financial Data Schedule (B) Reports on Form 8-K: None. 29 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 thereunto duly authorized. EQUITY RESIDENTIAL PROPERTIES TRUST Date: AUGUST 10, 2000 By: /s/ BRUCE C. STROHM --------------- ---------------------------------------------- Bruce C. Strohm Executive Vice President, General Counsel and Secretary Date: AUGUST 10, 2000 By: /s/ MICHAEL J. McHUGH --------------- --------------------------------------------- Michael J. McHugh Executive Vice President, Chief Accounting Officer and Treasurer 30 EX-12 2 ex-12.txt EXHIBIT 12 EXHIBIT 12 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED HISTORICAL COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
HISTORICAL ----------------------------------------------------------- 6/30/00 6/30/99 12/31/99 12/31/98 ----------------------------------------------------------- (AMOUNTS IN THOUSANDS) REVENUES Rental income $ 952,740 819,178 $ 1,711,738 $ 1,293,560 Fee income - outside managed 2,632 2,414 4,970 5,622 Interest income - investment in mortgage notes 5,499 5,644 12,559 18,564 Interest and other income 17,652 11,123 23,851 19,250 ----------- ----------- ----------- ----------- Total revenues 978,523 838,359 1,753,118 1,336,996 ----------- ----------- ----------- ----------- EXPENSES Property and maintenance 227,845 196,865 414,026 326,733 Real estate taxes and insurance 95,001 84,515 171,289 126,009 Property management 37,760 27,973 61,626 53,101 Fee and asset management 2,102 1,624 3,587 4,279 Depreciation 224,512 197,134 408,688 301,869 Interest: Expense incurred 190,263 158,499 337,189 246,585 Amortization of deferred financing costs 2,703 1,661 4,084 2,757 General and administrative 13,216 10,714 22,296 20,631 ----------- ----------- ----------- ----------- Total expenses 793,402 678,985 1,422,785 1,081,964 ----------- ----------- ----------- ----------- Income before extraordinary items $ 185,121 $ 159,374 $ 330,333 $ 255,032 =========== =========== =========== =========== Combined Fixed Charges and Preferred Distributions: Interest and other financing costs $ 190,263 $ 158,499 $ 337,189 $ 246,585 Amortization of deferred financing costs 2,703 1,661 4,084 2,757 Preferred distributions 55,654 57,111 113,196 92,917 ----------- ----------- ----------- ----------- Total Combined Fixed Charges and Preferred Distributions $ 248,620 $ 217,271 $ 454,469 $ 342,259 =========== =========== =========== =========== Earnings before combined fixed charges and preferred distributions $ 378,087 $ 319,534 $ 671,606 $ 504,374 =========== =========== =========== =========== Funds from operations before combined fixed charges and preferred distributions (1)(2)(3) $ 598,951 $ 513,796 $ 1,074,072 $ 801,065 =========== =========== =========== =========== Ratio of earnings before combined fixed charges and preferred distributions to combined fixed charges and preferred distributions 1.52 1.47 1.48 1.47 =========== =========== =========== =========== Ratio of funds from operations before combined fixed charges and preferred distributions to combined fixed charges and preferred distributions 2.41 2.36 2.36 2.34 =========== =========== =========== =========== - ------------------------------------------------------------------------------------------------------------------------- (1) Includes the Company's share of depreciation from Unconsolidated Properties $ 210 $ 551 $ 1,009 $ 183 =========== =========== =========== =========== (2) Excludes non-real estate depreciation $ (3,157) $ (3,423) $ (7,231) $ (5,361) =========== =========== =========== =========== (3) Excludes the minority interests' share of depreciation from Partially Owned Properties $ (701) $ -- $ -- $ -- =========== =========== =========== =========== HISTORICAL ------------------------------------------- 12/31/97 12/31/96 12/31/95 ------------------------------------------- (AMOUNTS IN THOUSANDS) REVENUES Rental income $ 707,733 $ 454,412 $ 373,919 Fee income - outside managed 5,697 6,749 7,030 Interest income - investment in mortgage notes 20,366 12,819 4,862 Interest and other income 13,282 4,405 4,573 ----------- ----------- ----------- Total revenues 747,078 478,385 390,384 ----------- ----------- ----------- EXPENSES Property and maintenance 176,075 127,172 112,186 Real estate taxes and insurance 69,520 44,128 37,002 Property management 26,793 17,512 15,213 Fee and asset management 3,364 3,837 3,887 Depreciation 156,644 93,253 72,410 Interest: Expense incurred 121,324 81,351 78,375 Amortization of deferred financing costs 2,523 4,242 3,444 General and administrative 14,821 9,857 8,129 ----------- ----------- ----------- Total expenses 571,064 381,352 330,646 ----------- ----------- ----------- Income before extraordinary items $ 176,014 $ 97,033 $ 59,738 =========== =========== =========== Combined Fixed Charges and Preferred Distributions: Interest and other financing costs $ 121,324 $ 81,351 $ 78,375 Amortization of deferred financing costs 2,523 4,242 3,444 Preferred distributions 59,012 29,015 10,109 ----------- ----------- ----------- Total Combined Fixed Charges and Preferred Distributions $ 182,859 $ 114,608 $ 91,928 =========== =========== =========== Earnings before combined fixed charges and preferred distributions $ 299,861 $ 182,626 $ 141,557 =========== =========== =========== Funds from operations before combined fixed charges and preferred distributions (1)(2)(3) $ 453,387 $ 273,800 $ 212,138 =========== =========== =========== Ratio of earnings before combined fixed charges and preferred distributions to combined fixed charges and preferred distributions 1.64 1.59 1.54 =========== =========== =========== Ratio of funds from operations before combined fixed charges and preferred distributions to combined fixed charges and preferred distributions 2.48 2.39 2.31 =========== =========== =========== - --------------------------------------------------------------------------------------------------------- (1) Includes the Company's share of depreciation from Unconsolidated Properties $ -- $ -- $ -- =========== =========== =========== (2) Excludes non-real estate depreciation $ (3,118) $ (2,079) $ (1,829) =========== =========== =========== (3) Excludes the minority interests' share of depreciation from Partially Owned Properties $ -- $ -- $ -- =========== =========== ===========
EX-27 3 ex-27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 237,066 0 1,408 0 0 640,845 12,025,876 1,208,331 11,746,743 404,576 5,277,601 0 1,193,053 1,312 4,333,320 11,746,743 960,871 978,523 0 362,708 13,216 0 192,966 185,121 0 185,121 87,652 0 0 217,276 1.54 1.54
-----END PRIVACY-ENHANCED MESSAGE-----