EX-99.2 3 a6166571ex992.htm EXHIBIT 99.2

Exhibit 99.2

On February 3, 2010, Equity Residential reported results for the year ended December 31, 2009.  All per share results are reported on a fully-diluted basis.

Year Ended December 31, 2009
For the year ended December 31, 2009, the company reported earnings of $1.27 per share compared to $1.46 per share for 2008.

Same Store Results
On a same store year over year comparison, which includes 113,598 apartment units, revenues decreased 2.9%, expenses decreased 0.1% and NOI decreased 4.6%.  The decrease in same store revenues was due to a 2.2% decrease in average rental rates and a 0.7% decrease in average occupancy to 93.8%.

Acquisitions/Dispositions
During 2009, the company acquired two properties, consisting of 566 units, for an aggregate purchase price of $145.0 million as well as a long-term leasehold interest in a land parcel located in Manhattan for a purchase price of $11.5 million.

Since the end of 2009, the company acquired five properties, consisting of 1,174 units, for an aggregate purchase price of $495.6 million.  This includes the acquisition of the two properties located in Manhattan which was previously announced on February 1, 2010.

During 2009, the company sold 54 consolidated properties, consisting of 11,055 apartment units, for an aggregate sale price of $905.2 million.

At-The-Market (ATM) Share Offering Program
During the fourth quarter of 2009, the company issued approximately 3.5 million common shares at an average price of $35.38 per share for total consideration of approximately $123.7 million.  In addition, during the first quarter of 2010, the company has issued approximately 1.1 million common shares at an average price of $33.87 per share for total consideration of approximately $35.8 million.  Cumulative to date, the company has issued approximately 4.6 million common shares at an average price of $35.03 per share for total consideration of approximately $159.5 million under this program.

1

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.equityresidential.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.

2

Equity Residential
Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)
     
Year Ended December 31,
2009 2008
REVENUES
Rental income $ 1,933,365 $ 1,964,954
Fee and asset management   10,346     10,715  
 
Total revenues   1,943,711     1,975,669  
 
EXPENSES
Property and maintenance 487,216 508,048
Real estate taxes and insurance 215,250 203,582
Property management 71,938 77,063
Fee and asset management 7,519 7,981
Depreciation 582,280 559,468
General and administrative 38,994 44,951
Impairment   11,124     116,418  
 
Total expenses   1,414,321     1,517,511  
 
Operating income 529,390 458,158
 
Interest and other income 16,684 33,515
Other expenses (6,487 ) (5,760 )
Interest:
Expense incurred, net (503,828 ) (489,513 )
Amortization of deferred financing costs   (12,794 )   (9,684 )
 
Income (loss) before income and other taxes, (loss) from investments
in unconsolidated entities, net gain on sales of unconsolidated entities
and land parcels and discontinued operations 22,965 (13,284 )
Income and other tax (expense) benefit (2,808 ) (5,284 )
(Loss) from investments in unconsolidated entities (2,815 ) (107 )
Net gain on sales of unconsolidated entities 10,689 2,876
Net gain on sales of land parcels   -     2,976  
Income (loss) from continuing operations 28,031 (12,823 )
Discontinued operations, net   353,998     449,236  
Net income 382,029 436,413
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership (20,305 ) (26,126 )
Preference Interests and Units (9 ) (15 )
Partially Owned Properties   558     (2,650 )
Net income attributable to controlling interests 362,273 407,622
Preferred distributions   (14,479 )   (14,507 )
Net income available to Common Shares $ 347,794   $ 393,115  
 
Earnings per share – basic:
Income (loss) from continuing operations available to Common Shares $ 0.05   $ (0.10 )
Net income available to Common Shares $ 1.27   $ 1.46  
Weighted average Common Shares outstanding   273,609     270,012  
 
Earnings per share – diluted:
Income (loss) from continuing operations available to Common Shares $ 0.05   $ (0.10 )
Net income available to Common Shares $ 1.27   $ 1.46  
Weighted average Common Shares outstanding   290,105     270,012  
 
Distributions declared per Common Share outstanding $ 1.64   $ 1.93  
3

Equity Residential
Consolidated Statements of Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
     
 
Year Ended December 31,

2009 (3)

2008 (3)

 
Net income $ 382,029 $ 436,413
Adjustments:
Net (income) loss attributable to Noncontrolling Interests:
Preference Interests and Units (9 ) (15 )
Partially Owned Properties 558 (2,650 )
Depreciation 582,280 559,468
Depreciation – Non-real estate additions (7,355 ) (8,269 )
Depreciation – Partially Owned and Unconsolidated Properties 759 4,157
Net (gain) on sales of unconsolidated entities

(10,689

)

(2,876 )
Discontinued operations:
Depreciation 18,095 43,440
Net (gain) on sales of discontinued operations (335,299 ) (392,857 )
Net incremental (loss) on sales of condominium units   (385 )   (3,932 )
 
FFO (1) (2) 629,984 632,879
Preferred distributions   (14,479 )   (14,507 )
 
FFO available to Common Shares and Units – basic (1) (2) $ 615,505   $ 618,372  
 
 

(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 of depreciable 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.  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 units to condominiums, it simultaneously discontinues depreciation of such property.  FFO available to Common Shares and Units is 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 EQR Common Shares on a one-for-one basis.

 

(2)

 

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.  FFO and 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 and 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 and 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.

 

(3)

 

Effective January 1, 2009, companies are required to retrospectively expense certain implied costs of the option value related to convertible debt.  As a result, net income, FFO and FFO available to Common Shares and Units – basic have all been reduced by approximately $10.6 million and $13.3 million for the years ended December 31, 2009 and 2008, respectively.

4

Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
         
December 31, December 31,
2009 2008
ASSETS
Investment in real estate
Land $ 3,650,324 $ 3,671,299
Depreciable property 13,893,521 13,908,594
Projects under development 668,979 855,473
Land held for development   252,320     254,873  
Investment in real estate 18,465,144 18,690,239
Accumulated depreciation   (3,877,564 )   (3,561,300 )
Investment in real estate, net 14,587,580 15,128,939
 
Cash and cash equivalents 193,288 890,794
Investments in unconsolidated entities 6,995 5,795
Deposits – restricted 352,008 152,732
Escrow deposits – mortgage 17,292 19,729
Deferred financing costs, net 46,396 53,817
Other assets   213,956     283,304  
Total assets $ 15,417,515   $ 16,535,110  
 
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 4,783,446 $ 5,036,930
Notes, net 4,609,124 5,447,012
Lines of credit - -
Accounts payable and accrued expenses 58,537 108,463
Accrued interest payable 101,849 113,846
Other liabilities 272,236 289,562
Security deposits 59,264 64,355
Distributions payable   100,266     141,843  
Total liabilities   9,984,722     11,202,011  
 
Commitments and contingencies
 
Redeemable Noncontrolling Interests – Operating Partnership   258,280     264,394  
 
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 1,950,925 shares issued
and outstanding as of December 31, 2009 and 1,951,475
shares issued and outstanding as of December 31, 2008 208,773 208,786
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 279,959,048 shares issued
and outstanding as of December 31, 2009 and 272,786,760
shares issued and outstanding as of December 31, 2008 2,800 2,728
Paid in capital 4,477,426 4,273,489
Retained earnings 353,659 456,152
Accumulated other comprehensive income (loss)   4,681     (35,799 )
Total shareholders' equity 5,047,339 4,905,356
Noncontrolling Interests:
Operating Partnership 116,120 137,645
Preference Interests and Units - 184
Partially Owned Properties   11,054     25,520  
Total Noncontrolling Interests   127,174     163,349  
Total equity   5,174,513     5,068,705  
Total liabilities and equity $ 15,417,515   $ 16,535,110  
5

Equity Residential
Portfolio Summary
As of December 31, 2009
           
 
% of 2010 Average
% of Stabilized Rental
Markets Properties Units Total Units NOI Rate (1)
 
1 DC Northern Virginia 27 9,107 6.6 % 10.1 % $ 1,643
2 New York Metro Area 23 6,410 4.7 % 9.5 % 2,493
3 South Florida 39 13,013 9.5 % 9.2 % 1,262
4 Boston 36 6,503 4.7 % 8.4 % 2,057
5 Los Angeles 36 7,463 5.4 % 7.9 % 1,666
6 Seattle/Tacoma 47 10,645 7.8 % 6.6 % 1,234
7 San Francisco Bay Area 33 6,239 4.6 % 5.7 % 1,611
8 Phoenix 41 11,769 8.6 % 5.2 % 840
9 San Diego 14 4,491 3.3 % 5.0 % 1,610
10 Denver 23 7,963 5.8 % 4.9 % 1,002
11 Suburban Maryland 22 6,088 4.4 % 4.8 % 1,283
12 Orlando 26 8,042 5.9 % 4.4 % 968
13 Inland Empire, CA 14 4,519 3.3 % 3.6 % 1,301
14 Orange County, CA 10 3,307 2.4 % 3.3 % 1,482
15 Atlanta 23 7,157 5.2 % 3.1 % 904
16 New England (excluding Boston) 19 3,477 2.5 % 2.0 % 1,120
17 Jacksonville 12 3,951 2.9 % 1.8 % 851
18 Portland, OR 10 3,417 2.5 % 1.6 % 924
19 Tampa 9 2,878 2.1 % 1.2 % 893
20 Raleigh/Durham 6   1,584   1.2 % 0.6 %   734  
 
Top 20 Total 470 128,023 93.4 % 98.9 % 1,316
 
21 Central Valley, CA 5 804 0.6 % 0.4 % 984
22 Dallas/Ft. Worth 4 843 0.6 % 0.1 % 722
23 Other EQR 12   2,739   2.0 % 0.6 %   873  
 
Total 491 132,409 96.6 % 100.0 % 1,301
 
Condominium Conversion 2 3 - - -
Military Housing 2   4,595   3.4 % -     -  
 
Grand Total 495   137,007   100.0 % 100.0 % $ 1,301  
 
 
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the month of December 2009.
6

 
Equity Residential
           
 
Portfolio as of December 31, 2009
 
Properties Units
 
Wholly Owned Properties 432 118,796
Partially Owned Properties:
Consolidated 27 5,530
Unconsolidated 34 8,086
Military Housing 2     4,595  
 
495     137,007  
 
                     
 
Portfolio Rollforward 2009
($ in thousands)
 
Purchase/
Properties Units (Sale) Price
 
12/31/2008 548 147,244
 
Acquisitions:
Rental Properties (1) 2 566 $ 145,036
Land Parcel (one) - - $ 11,500
Dispositions:
Rental Properties:
Consolidated (54 ) (11,055 ) $ (905,219 )
Unconsolidated (1) (2) (6 ) (1,434 ) $ (96,018 )
Condominium Conversion Properties (1 ) (62 ) $ (12,021 )
Completed Developments 6 1,866
Configuration Changes -   (118 )
 
12/31/2009 495   137,007  
 
 

(1)

 

Both the acquisition and disposition amounts do not include the Company's buyout of its partner's interest in one previously unconsolidated property. See the Partially Owned Entities schedule for additional discussion.
 

(2)

 

EQR owned a 25% interest in these unconsolidated rental properties. Sale price listed is the gross sale price.
7

 
Equity Residential
2009 vs. 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) - 113,598 Same Store Units
             
 
 
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
 
2009 $ 1,725,774 $ 644,294 $ 1,081,480 $ 1,352 93.8 % 61.0 %
2008 $ 1,778,183   $ 645,123   $ 1,133,060   $ 1,383   94.5 % 63.7 %
 
Change $ (52,409 ) $ (829 ) $ (51,580 ) $ (31 ) (0.7 %) (2.7 %)
 
Change (2.9 %) (0.1 %) (4.6 %) (2.2 %)
 
 

(1)

 

The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense, and property management expense. The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company 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 units for the period.
8

   
Equity Residential
Same Store Operating Expenses
$ in thousands - 113,598 Same Store Units
           
% of Actual
2009
Actual Actual $ % Operating
2009 2008 Change Change Expenses
 
Real estate taxes $ 173,113 $ 171,234 $ 1,879 1.1 % 26.9 %
On-site payroll (1) 155,912 156,601 (689 ) (0.4 %) 24.2 %
Utilities (2) 100,184 99,045 1,139 1.1 % 15.5 %
Repairs and maintenance (3) 94,556 95,142 (586 ) (0.6 %) 14.7 %
Property management costs (4) 63,854 67,126 (3,272 ) (4.9 %) 9.9 %
Insurance 21,689 20,890 799 3.8 % 3.4 %
Leasing and advertising 15,664 15,043 621 4.1 % 2.4 %
Other operating expenses (5)   19,322     20,042     (720 ) (3.6 %) 3.0 %
 
Same store operating expenses $ 644,294   $ 645,123   $ (829 ) (0.1 %) 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, 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 operating expenses - Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees.
9

 
Equity Residential
       
Debt Summary as of December 31, 2009
(Amounts in thousands)
 
Weighted
Weighted Average
Average Maturities
Amounts (1) % of Total Rates (1) (years)
 
Secured $ 4,783,446 50.9 % 4.89 % 8.9
Unsecured   4,609,124 49.1 % 5.31 % 4.9  
 
Total $ 9,392,570 100.0 % 5.11 % 6.9  
 
Fixed Rate Debt:
Secured - Conventional $ 3,773,008 40.2 % 5.89 % 7.6
Unsecured - Public/Private   3,771,700 40.1 % 5.93 % 5.4  
 
Fixed Rate Debt   7,544,708 80.3 % 5.91 % 6.5  
 
Floating Rate Debt:
Secured - Conventional 382,939 4.0 % 2.18 % 4.2
Secured - Tax Exempt 627,499 6.7 % 0.65 % 20.5
Unsecured - Public/Private 801,824 8.6 % 1.37 % 1.7
Unsecured - Tax Exempt 35,600 0.4 % 0.37 % 19.0
Unsecured - Revolving Credit Facility   - -   -   2.2  
 
Floating Rate Debt   1,847,862 19.7 % 1.28 % 8.7  
 
Total $ 9,392,570 100.0 % 5.11 % 6.9  
 
 

(1)

 

Net of the effect of any derivative instruments. Weighted average rates are for the year ended December 31, 2009.
 

Note: The Company capitalized interest of approximately $34.9 million and $60.1 million during the years ended December 31, 2009 and 2008, respectively.

 
                           
 
Debt Maturity Schedule as of December 31, 2009
(Amounts in thousands)
 
Weighted Weighted
Average Rates Average
Fixed Floating on Fixed Rates on
Year Rate (1) Rate (1) Total % of Total Rate Debt (1) Total Debt (1)
 
2010 $ 34,123 $ 568,310 (2 ) $ 602,433 6.4 % 7.61 % 1.36 %
2011 1,066,274 (3

)

261,805 1,328,079 14.1 % 5.52 % 4.83 %
2012 739,469 3,362 742,831 7.9 % 5.48 % 5.48 %
2013 266,347 301,824 568,171 6.1 % 6.76 % 4.89 %
2014 517,443 - 517,443 5.5 % 5.28 % 5.28 %
2015 355,632 - 355,632 3.8 % 6.41 % 6.41 %
2016 1,089,236 39,999 1,129,235 12.0 % 5.32 % 5.25 %
2017 1,346,553 456 1,347,009 14.3 % 5.87 % 5.87 %
2018 336,086 44,677 380,763 4.1 % 5.95 % 5.57 %
2019 502,244 20,766 523,010 5.6 % 5.19 % 5.01 %
2020+   1,291,301   606,663   1,897,964 20.2 % 6.11 % 5.07 %
 
Total $ 7,544,708 $ 1,847,862 $ 9,392,570 100.0 % 5.85 % 5.03 %
 
 

(1)

 

Net of the effect of any derivative instruments. Weighted average rates are as of December 31, 2009.
 

(2)

 

Includes the Company's $500.0 million floating rate term loan facility, which matures on October 5, 2010, subject to two one-year extension options exercisable by the Company.
 

(3)

 

Includes $482.5 million face value of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.
10
 
Equity Residential
Unsecured Debt Summary as of December 31, 2009
(Amounts in thousands)
     
Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
 
Fixed Rate Notes:
6.950% 03/02/11 (1) $ 93,096 $ 990 $ 94,086
6.625% 03/15/12 (2) 253,858 (412) 253,446
5.500% 10/01/12 (3) 222,133 (602) 221,531
5.200% 04/01/13 (4) 400,000 (385) 399,615
5.250% 09/15/14 500,000 (289) 499,711
6.584% 04/13/15 300,000 (590) 299,410
5.125% 03/15/16 500,000 (332) 499,668
5.375% 08/01/16 400,000 (1,221) 398,779
5.750% 06/15/17 650,000 (3,815) 646,185
7.125% 10/15/17 150,000 (505) 149,495
7.570% 08/15/26 140,000 - 140,000
3.850% 08/15/26 (5) 482,545 (12,771) 469,774
Fair Value Derivative Adjustments (4)   (300,000)   -   (300,000)
 
  3,791,632   (19,932)   3,771,700
 
Floating Rate Tax Exempt Notes:
7-Day SIFMA 12/15/28 (6)   35,600   -   35,600
 
 
Floating Rate Notes:
04/01/13 (4) 300,000 - 300,000
Fair Value Derivative Adjustments (4) 1,824 - 1,824
Term Loan Facility LIBOR+0.50% 10/05/10 (6) (7)   500,000   -   500,000
801,824 - 801,824
 
Revolving Credit Facility: LIBOR+0.50% 02/28/12 (8)   -   -   -
 
Total Unsecured Debt $ 4,629,056 $ (19,932) $ 4,609,124
 
 
Note: SIFMA stands for the Securities Industry and Financial Markets Association and is the tax-exempt index equivalent of LIBOR.
 
(1) On January 27, 2009, the Company repurchased $185.2 million of these notes at par pursuant to a cash tender offer announced on January 16, 2009. On December 10, 2009, the Company repurchased $21.7 million of these notes at a price of 106% of par pursuant to a cash tender offer announced on December 2, 2009.
 
(2) On December 10, 2009, the Company repurchased $146.1 million of these notes at a price of 108% of par pursuant to a cash tender offer announced on December 2, 2009.
 
(3) On December 10, 2009, the Company repurchased $127.9 million of these notes at a price of 107% of par pursuant to a cash tender offer announced on December 2, 2009.
 
(4) $300.0 million in fair value interest rate swaps converts a portion of the 5.200% notes due April 1, 2013 to a floating interest rate.
 
(5) Convertible notes mature on August 15, 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. During the quarter ended March 31, 2009, the Company repurchased $17.5 million of these notes at a price of 88.4% of par. On December 31, 2009, the Company repurchased $48.5 million of these notes at par pursuant to a cash tender offer announced on December 2, 2009. Effective January 1, 2009, companies are required to expense the implied option value inherent in convertible debt. In conjunction with this requirement, the Company recorded an adjustment of $17.3 million to the beginning balance of the discount on its convertible notes.
 
(6) Notes are private. All other unsecured debt is public.
 
(7) Represents the Company's $500.0 million term loan facility, which matures on October 5, 2010, subject to two one-year extension options exercisable by the Company.
 
(8) As of December 31, 2009, there was no amount outstanding and approximately $1.37 billion available on the Company's unsecured revolving credit facility.
11
   

Equity Residential

Debt Repurchases

(Amounts in thousands)
 
  2009 Activity
Bonds   Price   Price   Extinguishment   Write-off of
Unamortized
Security Retired Paid to Par (Loss)/Gain Costs
 
2009 4.75% Public Notes $ 105,161 $ 105,161 100.0 % $ - $ (125 )
 
2011 6.95% Public Notes 206,904 208,207 100.6 % (1,303 ) (1,202 )
 
2012 6.625% Public Notes 146,142 157,833 108.0 % (11,691 ) (499 )
 
2012 5.50% Public Notes 127,867 136,818 107.0 % (8,951 ) (912 )
 
2026 3.85% Convertible Notes (1)   66,012   63,992 96.9 %   2,020     (2,634 )
 
Total $ 652,086 $ 672,011 103.1 % $ (19,925 ) $ (5,372 )
 
 
(1) 2026 3.85% Convertible Notes are putable to the Company in 2011.
12
 
Equity Residential
                 
 
Capital Structure as of December 31, 2009
(Amounts in thousands except for share/unit and per share amounts)
 
Secured Debt $ 4,783,446 50.9%
Unsecured Debt   4,609,124 49.1%
 
Total Debt 9,392,570 100.0% 48.1%
 
Common Shares (includes Restricted Shares) 279,959,048 95.2%
Units   14,197,969   4.8%
 
Total Shares and Units 294,157,017 100.0%
Common Share Equivalents (see below)   398,038
 
Total outstanding at quarter-end 294,555,055
Common Share Price at December 31, 2009 $ 33.78
9,950,070 98.0%
Perpetual Preferred Equity (see below)   200,000 2.0%
 
Total Equity 10,150,070 100.0% 51.9%
 
Total Market Capitalization $ 19,542,640 100.0%
                                       
 
Convertible Preferred Equity as of December 31, 2009
(Amounts in thousands except for share and per share amounts)
 
Annual Annual Weighted Common
Redemption Outstanding Liquidation Dividend Dividend Average Conversion Share
Series Date Shares Value Per Share Amount Rate Ratio Equivalents
 
Preferred Shares:
7.00% Series E 11/1/98 328,466 $ 8,212 $ 1.75 $ 575 1.1128 365,517
7.00% Series H 6/30/98 22,459   561 1.75   39 1.4480 32,521
 
Total Convertible Preferred Equity 350,925 $ 8,773 $ 614 7.00% 398,038
                                       
 
Perpetual Preferred Equity as of December 31, 2009
(Amounts in thousands except for share and per share amounts)
 
Annual Annual Weighted
Redemption Outstanding Liquidation Dividend Dividend Average
Series Date Shares Value Per Share Amount Rate
 
Preferred Shares:
8.29% Series K 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145
6.48% Series N 6/19/08 600,000   150,000 16.20   9,720
 
Total Perpetual Preferred Equity 1,600,000 $ 200,000 $ 13,865 6.93%
13
                 
Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
         
 
2009 2008 (1)
 
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares - basic 273,609,477 270,011,946
Shares issuable from assumed conversion/vesting of:
- OP Units 15,557,540 -
- long-term compensation award shares/units 938,094 -
 
Total Common Shares and Units - diluted 290,105,111 270,011,946
 
 
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares) 279,959,048
Units 14,197,969
 
Total Shares and Units 294,157,017
 
 
 
 
(1) Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation award shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations for the year ended December 31, 2008.
14
 
Equity Residential
Partially Owned Entities as of December 31, 2009
(Amounts in thousands except for project and unit amounts)
           
 
Consolidated Unconsolidated
Development Projects
Held for Institutional
and/or Under Completed, Not Completed Joint
Development Stabilized (4) and Stabilized Other Total Ventures (5)
 
Total projects (1)   -   3   3   21   27   34
 
Total units (1)   -   1,024   710   3,796   5,530   8,086
 
Debt - Secured (2):
EQR Ownership (3) $ 303,253 $ 218,965 $ 113,385 $ 219,136 $ 854,739 $ 101,809
Noncontrolling Ownership   -   -   -   82,732   82,732   305,426
 
Total (at 100%) $ 303,253 $ 218,965 $ 113,385 $ 301,868 $ 937,471 $ 407,235
 
 
(1) Project and unit counts exclude all uncompleted development projects until those projects are substantially completed. See the Consolidated Development Projects schedule for more detail.
 
(2) All debt is non-recourse to the Company with the exception of $42.2 million in mortgage debt on various development projects. In addition, $66.0 million in mortgage debt on one development project will become recourse to the Company upon completion of that project.
 
(3) Represents the Company's current economic ownership interest.
 
(4) Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing.
 
(5) Unconsolidated debt maturities and rates for institutional joint ventures are as follows: $112.6 million, May 1, 2010, 8.33%; $121.0 million, December 1, 2010, 7.54%; $143.8 million, March 1, 2011, 6.95%; and $29.8 million, July 1, 2019, 5.305%. A portion of this mortgage debt is also partially collateralized by $42.6 million in unconsolidated restricted cash set aside from the net proceeds of property sales. During the third quarter of 2009, the Company acquired its partner's interest in one of the previously unconsolidated properties containing 250 units for $18.5 million and as a result, the project is now consolidated and wholly owned.
15
       
Equity Residential
Consolidated Development Projects as of December 31, 2009
(Amounts in thousands except for project and unit amounts)
                 
Total Book
Total Total Value Not Estimated Estimated
No. of Capital Book Value Placed in Total Percentage Percentage Percentage Completion Stabilization
Projects Location Units Cost (1) to Date Service Debt Completed Leased Occupied Date Date
 

Projects Under Development - Wholly Owned:

70 Greene (a.k.a. 77 Hudson) Jersey City, NJ 480 $ 269,958 $ 264,663 $ 264,663 $ - 98 % 57 % 53 % Q1 2010 Q1 2011
Red 160 (a.k.a. Redmond Way) Redmond, WA 250   84,382   51,920   51,920   - 62 % - - Q1 2011 Q1 2012
 
Projects Under Development - Wholly Owned 730 354,340 316,583 316,583 -
 

Projects Under Development - Partially Owned:

The Brooklyner (a.k.a. 111 Lawrence Street) Brooklyn, NY 490 283,968 227,882 227,882 105,217 85 % 13 % 2 % Q3 2010 Q3 2011
Westgate Pasadena, CA 480   170,558   124,514   124,514   163,160 (2) 70 % 11 % 5 % Q2 2011 Q2 2012
 
Projects Under Development - Partially Owned 970 454,526 352,396 352,396 268,377
         
Projects Under Development 1,700   808,866   668,979   668,979   268,377 (3)
 

Completed Not Stabilized - Wholly Owned (4):

Third Square (a.k.a. 303 Third) (5) Cambridge, MA 482 257,457 256,263 - - 81 % 78 % Completed Q3 2010
Reserve at Town Center II Mill Creek, WA 100 24,464 20,591 - - 69 % 60 % Completed Q3 2010
Reunion at Redmond Ridge Redmond, WA 321   53,175   53,151   -   - 54 % 52 % Completed Q1 2011
 
Projects Completed Not Stabilized - Wholly Owned 903 335,096 330,005 - -
 

Completed Not Stabilized - Partially Owned (4):

Veridian (a.k.a. Silver Spring) Silver Spring, MD 457 149,962 149,289 - 113,282 97 % 95 % Completed Q1 2010
Montclair Metro Montclair, NJ 163 48,730 45,076 - 33,434 49 % 40 % Completed Q3 2010
Red Road Commons South Miami, FL 404   128,816   125,460   -   72,249 82 % 78 % Completed Q4 2010
 
Projects Completed Not Stabilized - Partially Owned 1,024 327,508 319,825 - 218,965
         
Projects Completed Not Stabilized 1,927   662,604   649,830   -   218,965
 

Completed and Stabilized During the Quarter - Wholly Owned:

Mosaic at Metro Hyattsville, MD 260   59,733   59,643   -   45,418 96 % 95 % Completed Stabilized
 
Projects Completed and Stabilized During the Quarter - Wholly Owned 260 59,733 59,643 - 45,418
 

Completed and Stabilized During the Quarter - Partially Owned:

1401 South State (a.k.a. City Lofts) Chicago, IL 278   68,923   68,455   -   52,125 93 % 91 % Completed Stabilized
 
Projects Completed and Stabilized During the Quarter - Partially Owned 278 68,923 68,455 - 52,125
         
Projects Completed and Stabilized During the Quarter 538   128,656   128,098   -   97,543
 
Total Projects 4,165 $ 1,600,126 $ 1,446,907 $ 668,979 $ 584,885
 
Land Held for Development N/A   N/A $ 252,320 $ 252,320 $ 34,876
 
 
(1) Total capital cost represents estimated development 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) Debt is primarily tax-exempt bonds that are entirely outstanding with $47.4 million held in escrow by the lender and released as draw requests are made. This escrowed amount is classified as "Deposits - restricted" in the consolidated balance sheets at December 31, 2009.
 
(3) Of the approximately $139.9 million of capital cost remaining to be funded at 12/31/09 for projects under development, $102.1 million will be funded by fully committed third party bank loans and the remaining $37.8 million will be funded by cash on hand.
 
(4) Properties included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing.
 
(5) Third Square - Both the percentage leased and percentage occupied reflect the full 482 units included in phases I & II. Phase I is 96% leased and 94% occupied. Phase II is 58% leased and 53% occupied.
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Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Year Ended December 31, 2009
(Amounts in thousands except for unit and per unit amounts)
           
 
 
Capital Expenditures to Real Estate
 
Building
Total Replacements Avg. Improvements Avg. Avg.
Units (1) (2) Per Unit (3) Per Unit Total Per Unit
 
Same Store Properties (4) 113,598 $ 69,808 $ 614 $ 44,611 $ 393 $ 114,419 $ 1,007 (7)
 
Non-Same Store Properties (5) 10,728 2,361 240 3,675 374 6,036 614
 
Other (6) -   2,130   1,352   3,482
 
Total 124,326 $ 74,299 $ 49,638 $ 123,937
 
 
(1) Total Units - Excludes 8,086 unconsolidated units and 4,595 military housing 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 units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $28.0 million spent on various assets related to unit renovations/rehabs (primarily kitchens and baths) designed to reposition these assets for higher rental levels in their respective markets.
 
(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, 2008, less properties subsequently sold.
 
(5) Non-Same Store Properties - Primarily includes all properties acquired during 2008 and 2009, plus any properties in lease-up and not stabilized as of January 1, 2008. Per unit amounts are based on a weighted average of 9,823 units.
 
(6) Other - Primarily includes expenditures for properties sold during the period.
 
(7) For 2010, the Company estimates that it will spend approximately $1,075 per unit of capital expenditures for its same store properties inclusive of unit renovation/rehab costs, or $825 per unit excluding unit renovation/rehab costs.
17
   
Equity Residential
Discontinued Operations
(Amounts in thousands)
   
 
Year Ended
December 31,
2009 2008
 
REVENUES
Rental income $ 72,823   $ 173,243  
 
Total revenues   72,823     173,243  
 
EXPENSES (1)
Property and maintenance 26,681 52,785
Real estate taxes and insurance 9,062 19,853
Property management - (62 )
Depreciation 18,095 43,440
General and administrative   34     29  
 

 

Total expenses

  53,872     116,045  
 
Discontinued operating income 18,951 57,198
 
Interest and other income 21 249
Other expenses (1 ) -
Interest (2):
Expense incurred, net (1,104 ) (2,897 )
Amortization of deferred financing costs (333 ) (17 )
Income and other tax (expense) benefit   1,165     1,846  
 
Discontinued operations 18,699 56,379
Net gain on sales of discontinued operations   335,299     392,857  
 
Discontinued operations, net $ 353,998   $ 449,236  
 
 
(1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership.
 
 
(2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale.
18
 
Equity Residential
Additional Reconciliations
(Amounts in thousands)
     
 
Same Store NOI Reconciliation
 
The following table presents reconciliations of operating income per the consolidated statements of operations to NOI for the 2009 Same Store Properties:
 
 
Year Ended December 31,
2009 2008
 
Operating income $ 529,390 $ 458,158
Adjustments:
Non-same store operating results (77,481 ) (43,201 )
Fee and asset management revenue (10,346 ) (10,715 )
Fee and asset management expense 7,519 7,981
Depreciation 582,280 559,468
General and administrative 38,994 44,951
Impairment   11,124   116,418  
 
Same store NOI $ 1,081,480   $ 1,133,060  







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