Summary of Significant Accounting Policies (Tables)
|
12 Months Ended |
Dec. 31, 2019 |
|---|
| Summary Of Significant Accounting Policies [Abstract] |
|
| Schedule of Rental Income Detail by Leasing and Revenue Recognition Standards Along with Percentages of Rental Income |
The Company’s rental income detail by leasing and revenue recognition standards along with the percentages of rental income are disclosed in the table below for the years ended December 31, 2019 and 2018 (amounts in thousands).
|
|
|
Year Ended December 31, 2019 |
|
|
Year Ended December 31, 2018 |
|
|
Income Type |
|
$ Rental Income |
|
|
% of Rental Income |
|
|
$ Rental Income |
|
|
% of Rental Income |
|
|
Residential and retail rent |
|
$ |
2,486,189 |
|
|
|
|
|
|
$ |
2,369,552 |
|
|
|
|
|
|
Utility recoveries ("RUBS") |
|
|
68,576 |
|
|
|
|
|
|
|
63,218 |
|
|
|
|
|
|
Parking rent |
|
|
37,905 |
|
|
|
|
|
|
|
33,757 |
|
|
|
|
|
|
Storage rent |
|
|
3,816 |
|
|
|
|
|
|
|
3,674 |
|
|
|
|
|
|
Pet rent |
|
|
11,617 |
|
|
|
|
|
|
|
11,185 |
|
|
|
|
|
|
Leasing standard (1) |
|
|
2,608,103 |
|
|
|
96.6 |
% |
|
|
2,481,386 |
|
|
|
96.3 |
% |
|
Parking revenue |
|
|
28,272 |
|
|
|
|
|
|
|
26,743 |
|
|
|
|
|
|
Other revenue |
|
|
64,316 |
|
|
|
|
|
|
|
69,552 |
|
|
|
|
|
|
Revenue recognition standard |
|
|
92,588 |
|
|
|
3.4 |
% |
|
|
96,295 |
|
|
|
3.7 |
% |
|
Rental income |
|
$ |
2,700,691 |
|
|
|
100.0 |
% |
|
$ |
2,577,681 |
|
|
|
100.0 |
% |
|
(1) |
See Note 8 for additional details on leasing revenue. |
|
| Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology |
The fair value of the option grants is recognized over the requisite service/vesting period of the options. 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:
|
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
Expected volatility (1) |
|
|
16.3 |
% |
|
|
14.8 |
% |
|
|
15.3 |
% |
|
Expected life (2) |
|
5 years |
|
|
5 years |
|
|
5 years |
|
|
Expected dividend yield (3) |
|
|
3.10 |
% |
|
|
3.09 |
% |
|
|
3.08 |
% |
|
Risk-free interest rate (4) |
|
|
2.43 |
% |
|
|
2.52 |
% |
|
|
1.93 |
% |
|
Option valuation per share |
|
$ |
8.06 |
|
|
$ |
6.15 |
|
|
$ |
5.86 |
|
|
(1) |
Expected volatility – Estimated based on the historical five-year volatility (the period matching the expected life) of EQR’s share price measured on a monthly basis. |
|
(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 at 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’s provision for income and other tax expense (benefit) was as follows for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):
|
|
|
Year Ended December 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
State and local income, franchise and excise tax (benefit) |
|
$ |
963 |
|
|
$ |
878 |
|
|
$ |
478 |
|
|
Alternative minimum tax credit (benefit) (1) |
|
|
(3,244 |
) |
|
|
— |
|
|
|
— |
|
|
Income and other tax expense (benefit) (2) |
|
$ |
(2,281 |
) |
|
$ |
878 |
|
|
$ |
478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
As provided in recent tax legislation which repealed the alternative minimum tax on corporations, in 2019 the Company claimed/received $1.6 million of refunds of various alternative minimum tax credit carryovers generated in prior tax years. The provision allows for carryover amounts to be refunded over four years, with 50% available in the first year. The remaining $1.6 million, which will be claimed over three years, was accrued in 2019, for a total expected benefit of $3.2 million. |
|
(2) |
All provisions for income tax amounts are current and none are deferred. |
|
| Tax Treatment Of Dividends And Distributions |
During the years ended December 31, 2019, 2018 and 2017, the tax character of the Company’s dividends and distributions were as follows (unaudited):
|
|
|
Year Ended December 31, |
|
|
|
|
2019 (1) |
|
|
2018 (2) |
|
|
2017 (3) |
|
|
Tax character of dividends and distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary dividends |
|
$ |
1.39604 |
|
|
$ |
1.84454 |
|
|
$ |
1.22126 |
|
|
Long-term capital gain |
|
|
0.61243 |
|
|
|
0.21423 |
|
|
|
0.18959 |
|
|
Unrecaptured section 1250 gain |
|
|
0.23403 |
|
|
|
0.06498 |
|
|
|
0.10040 |
|
|
Dividends and distributions per |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share/Unit outstanding |
|
$ |
2.24250 |
|
|
$ |
2.12375 |
|
|
$ |
1.51125 |
|
|
(1) |
The Company’s fourth quarter 2019 dividends and distributions of $0.5675 per Common Share/Unit outstanding will be included as taxable income in calendar year 2020. |
|
(2) |
The Company’s fourth quarter 2018 dividends and distributions of $0.54 per Common Share/Unit outstanding was included as taxable income in calendar year 2019. |
|
(3) |
The Company’s fourth quarter 2017 dividends and distributions of $0.50375 per Common Share/Unit outstanding was included as taxable income in calendar year 2018. |
|
| Schedule of Reclassification's to Initial Right-of-use Assets |
The Company calculated the net present value of the lease liabilities on January 1, 2019 and reclassed the following amounts from other assets and other liabilities to record our initial ROU assets (amounts in thousands):
|
|
|
January 1, 2019 |
|
|
Balance Sheet Reclass: |
|
Initial lease liabilities |
|
$ |
278,287 |
|
|
|
|
Reclassifications: |
|
|
|
|
|
|
|
Prepaid ground leases |
|
|
17,886 |
|
|
Other Assets |
|
Ground lease intangibles – below market, net |
|
|
166,230 |
|
|
Other Assets |
|
Ground lease intangibles – above market, net |
|
|
(2,110 |
) |
|
Other Liabilities |
|
Straight-line rent liabilities (1) |
|
|
(26,092 |
) |
|
Other Liabilities |
|
Initial right-of-use assets |
|
$ |
434,201 |
|
|
|
|
(1) |
Straight-line rent liabilities relate to corporate office leases and certain ground leases. |
|