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Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2017
Summary Of Significant Accounting Policies [Abstract]  
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology

The fair value for the Company’s share options was estimated at the time the share options were granted using the Black-Scholes option pricing model with the primary grant in each year having the following weighted average assumptions:

 

 

 

2017

 

 

2016

 

 

2015

 

Expected volatility (1)

 

 

15.3

%

 

 

26.3

%

 

 

26.6

%

Expected life (2)

 

5 years

 

 

5 years

 

 

5 years

 

Expected dividend yield (3)

 

 

3.08

%

 

 

3.04

%

 

 

3.13

%

Risk-free interest rate (4)

 

 

1.93

%

 

 

1.27

%

 

 

1.29

%

Option valuation per share

 

$

5.86

 

 

$

13.02

 

 

$

13.68

 

 

(1)

Expected volatility – For the 2017 grant, estimated based on the historical five-year volatility (the period matching the expected life) of EQR’s share price measured on a monthly basis. For the 2015 and 2016 grants, estimated based on the historical ten-year volatility of EQR’s share price measured on a monthly basis.  This change in estimate reflects the Company’s belief that the historical five-year period provides a better estimate of the expected volatility in EQR shares over the expected life of the options.

(2)

Expected life – Approximates the actual weighted average life of all share options granted since the Company went public in 1993.

(3)

Expected dividend yield – Calculated by averaging the historical annual yield on EQR shares for a period matching the expected life of each grant, with the annual yield calculated by dividing actual regular dividends (excluding any special dividends) by the average price of EQR’s shares in a given year.

(4)

Risk-free interest rate – The most current U.S. Treasury rate available prior to the grant date for a period matching the expected life of each grant.
Allocation Of Income Franchise And Excise Taxes In Consolidated Statements Of Operations

The Company provided for income, franchise and excise taxes allocated as follows in the consolidated statements of operations and comprehensive income for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):

  

 

 

Year Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Income and other tax expense (benefit) (1)

 

$

478

 

 

$

1,613

 

 

$

917

 

Discontinued operations, net (2)

 

 

—

 

 

 

12

 

 

 

15

 

Provision for income, franchise and excise taxes (3)

 

$

478

 

 

$

1,625

 

 

$

932

 

 

(1)

Primarily includes state and local income, excise and franchise taxes.

(2)

Primarily represents state and local income, excise and franchise taxes on operating properties sold prior to January 1, 2014 and included in discontinued operations.  The amounts included in discontinued operations for the years ended December 31, 2016 and 2015 represent trailing activity for properties sold in 2013 and prior years.  None of the properties sold during the years ended December 31, 2017, 2016 and 2015 met the criteria for reporting discontinued operations.

(3)

All provisions for income tax amounts are current and none are deferred.
Tax Treatment Of Dividends And Distributions

During the years ended December 31, 2017, 2016 and 2015, the Company’s tax treatment of dividends and distributions were as follows (unaudited):

 

 

Year Ended December 31,

 

 

 

2017 (1)

 

 

2016

 

 

2015

 

Tax treatment of dividends and distributions:

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary dividends

 

$

1.22126

 

 

$

0.722

 

 

$

1.591

 

Qualified dividends

 

 

—

 

 

 

—

 

 

 

0.037

 

Long-term capital gain

 

 

0.18959

 

 

 

9.176

 

 

 

0.443

 

Unrecaptured section 1250 gain

 

 

0.10040

 

 

 

3.117

 

 

 

0.139

 

Dividends and distributions per

 

 

 

 

 

 

 

 

 

 

 

 

Common Share/Unit outstanding

 

$

1.51125

 

 

$

13.015

 

 

$

2.210

 

 

(1)

The Company’s fourth quarter 2017 dividends and distributions of $0.50375 per Common Share/Unit outstanding will be included as taxable income in calendar year 2018.
Schedule of Material Changes Between Cash Flow Classifications due to Substantial Debt Prepayment Penalties

While overall cash flows did not change, there are changes between cash flow classifications due primarily to the debt prepayment penalties that the Company has incurred in the comparative period.  As of December 31, 2016 and 2015, the following cash flows were reclassified (amounts in thousands):

 

 

Year Ended December 31, 2016

 

 

 

As Originally

Presented

 

 

Reclassification

Adjustments

 

 

As Presented

Herein

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of discounts and premiums on debt

 

$

(17,378

)

 

$

(608

)

 

$

(17,986

)

Net (gain) loss on debt extinguishment

 

$

—

 

 

$

114,666

 

 

$

114,666

 

(Increase) decrease in deposits - restricted

 

$

11,450

 

 

$

(11,450

)

 

$

—

 

(Increase) decrease in mortgage deposits

 

$

(26

)

 

$

26

 

 

$

—

 

Net cash provided by operating activities

 

$

1,111,489

 

 

$

102,634

 

 

$

1,214,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in deposits on real estate acquisitions

    and investments, net

 

$

(32,503

)

 

$

32,503

 

 

$

—

 

(Increase) decrease in mortgage deposits

 

$

534

 

 

$

(534

)

 

$

—

 

Net cash provided by investing activities

 

$

5,871,973

 

 

$

31,969

 

 

$

5,903,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage deposits

 

$

(8,497

)

 

$

8,497

 

 

$

—

 

Mortgage notes payable, net: Net gain (loss) on debt extinguishment

 

$

—

 

 

$

(31,732

)

 

$

(31,732

)

Notes, net: Net gain (loss) on debt extinguishment

 

$

—

 

 

$

(82,934

)

 

$

(82,934

)

Line of credit and commercial paper: Commercial paper proceeds

 

$

1,759,586

 

 

$

608

 

 

$

1,760,194

 

Net cash (used for) financing activities

 

$

(6,948,531

)

 

$

(105,561

)

 

$

(7,054,092

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of year

 

$

42,276

 

 

 

 

 

 

 

 

 

(adjustments for restricted deposits, beginning of year)

 

 

 

 

 

$

112,839

 

 

 

 

 

Cash and cash equivalents and restricted deposits, beginning of year

 

 

 

 

 

 

 

 

 

$

155,115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of year

 

$

77,207

 

 

 

 

 

 

 

 

 

(adjustments for restricted deposits, end of year)

 

 

 

 

 

$

141,881

 

 

 

 

 

Cash and cash equivalents and restricted deposits, end of year

 

 

 

 

 

 

 

 

 

$

219,088

 

 

 

 

 

Year Ended December 31, 2015

 

 

 

As Originally

Presented

 

 

Reclassification

Adjustments

 

 

As Presented

Herein

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of discounts and premiums on debt

 

$

(9,492

)

 

$

(1,077

)

 

$

(10,569

)

Write-off of pursuit costs

 

$

3,208

 

 

$

(330

)

 

$

2,878

 

(Increase) decrease in deposits - restricted

 

$

(1,794

)

 

$

1,794

 

 

$

—

 

(Increase) decrease in mortgage deposits

 

$

258

 

 

$

(258

)

 

$

—

 

Net cash provided by operating activities

 

$

1,356,499

 

 

$

129

 

 

$

1,356,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in deposits on real estate acquisitions

    and investments, net

 

$

17,874

 

 

$

(17,874

)

 

$

—

 

(Increase) decrease in mortgage deposits

 

$

(531

)

 

$

531

 

 

$

—

 

Net cash (used for) investing activities

 

$

(678,471

)

 

$

(17,343

)

 

$

(695,814

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage deposits

 

$

(8,588

)

 

$

8,588

 

 

$

—

 

Line of credit and commercial paper: Commercial paper proceeds

 

$

3,931,227

 

 

$

1,077

 

 

$

3,932,304

 

Net cash (used for) financing activities

 

$

(675,832

)

 

$

9,665

 

 

$

(666,167

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of year

 

$

40,080

 

 

 

 

 

 

 

 

 

(adjustments for restricted deposits, beginning of year)

 

 

 

 

 

$

120,388

 

 

 

 

 

Cash and cash equivalents and restricted deposits, beginning of year

 

 

 

 

 

 

 

 

 

$

160,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of year

 

$

42,276

 

 

 

 

 

 

 

 

 

(adjustments for restricted deposits, end of year)

 

 

 

 

 

$

112,839

 

 

 

 

 

Cash and cash equivalents and restricted deposits, end of year

 

 

 

 

 

 

 

 

 

$

155,115