Equity Residential Reports First Quarter Results.CHICAGO Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. -- Equity Residential (NYSE NYSE See: New York Stock Exchange :EQR EQR External Quality Review EQR Educational Quality Ranking EQR Environmental Quality Report EQR Enlisted Qualification Record EQR Essential Qualification Requirement EQR Equi-Rectangular ) today reported results for the quarter ended March 31, 2006. All per share results are reported on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis. "As expected, 2006 will be a very good year for the multifamily industry," said David J David J. Haskins (b. April 24, 1957, in Northampton, England) is a British alternative rock musician. He was the bassist for the seminal gothic rock band Bauhaus. Life and work . Neithercut, Equity Residential's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We continue to see good job growth and household formation across all of our markets. That, combined with little new supply, existing rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. units taken off the market when converted to condominiums and the rising cost of single family homes, make for the strongest fundamentals we have seen in years." First Quarter 2006 For the quarter ended March 31, 2006, the company reported earnings of $1.25 per share compared to $0.74 per share in the first quarter of 2005. The quarterly increase is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to higher gains on sales of properties as well as the items discussed below. Funds from Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (FFO FFO See: Funds from operations ) for the quarter ended March 31, 2006 were $0.56 per share compared to $0.74 per share in the same period of 2005. The decrease is primarily attributable to an $0.18 per share decrease in other income due to the gain recognized in 2005 from eBay's acquisition of the company's interest in Rent.com Rent.com is the largest apartment listing service on the Internet. It was acquired by EBay in 2005.[1] History Rent.com was co-founded by Scott Ingraham in 1999. , a $0.03 per share reduction in gains on sales of land parcels and a $0.02 per share decrease in incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. gains on sales of condominiums, offset by a $0.05 per share improvement in same-store NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics results. Total revenues from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the quarter were $521.0 million compared to $444.0 million in the first quarter of 2005. The primary components of this $77.0 million increase in revenues include the properties acquired in 2005. "Same-Store" Results "Our same-store properties experienced exceptionally strong net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. ("NOI") growth of 6.3% in the first quarter," said Mr. Neithercut. "Once again the benefits of our portfolio repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. were evident in the first quarter, with our 2003 acquisitions achieving 9.2% NOI growth and the 2004 acquisitions delivering NOI growth of 10.8%." On a "same-store" first quarter to first quarter comparison, which includes 158,398 units, revenues increased 6.0 percent, expenses increased 5.7 percent and NOI increased 6.3 percent. The increase in same-store revenues was driven primarily by increases in occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy and rental rate and a decrease in concessions. The same-store expense increase was primarily attributable to increases in utilities, real estate taxes and insurance. Acquisitions/Dispositions During the first quarter of 2006, the company acquired eleven properties, consisting of 2,779 units, for an aggregate purchase price of $506.6 million at an average capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. (cap) rate of 5.0 percent and two land parcels for $14.2 million. Also during the quarter, the company sold 25 properties, consisting of 8,110 units, for an aggregate sale price of $799.9 million at an average cap rate of 5.5 percent. In addition, the company sold 171 condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. units for $35.0 million. Lexford Housing Division Sale On March 2, 2006, Equity Residential announced that it had retained JPMorgan to assist the company in the possible sale of its Lexford Housing Division, currently comprised of 289 properties consisting of 26,118 apartment units and a property management business based in Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. . Potential purchasers are currently in contact with JPMorgan but there can be no guarantee that a sale will occur. Second Quarter 2006 Results Equity Residential expects to announce second quarter 2006 results on Tuesday Tuesday: see week. , August 1, 2006 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday Wednesday: see week. , August 2, 2006. Equity Residential is the largest publicly traded apartment company in America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. . Nationwide, Equity Residential owns or has investments in 911 properties, in 31 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , consisting of 192,240 units. For more information on Equity Residential, please visit our website at www.equityresidential.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. 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 un·true adj. un·tru·er, un·tru·est 1. Contrary to fact; false. 2. Deviating from a standard; not straight, even, level, or exact. 3. Disloyal; unfaithful. because of subsequent events. A live web cast of the company's conference call discussing these results and outlook for 2006 will take place tomorrow, Wednesday, May 3, at 10:00 a.m. Central. Please visit the Investor Information section of the company's web site at www.equityresidential.com for the link. A replay of the web cast will be available for two weeks at this site.
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended March 31,
-----------------------
2006 2005
----------- -----------
REVENUES
Rental income $518,492 $441,392
Fee and asset management 2,487 2,572
----------- -----------
Total revenues 520,979 443,964
----------- -----------
EXPENSES
Property and maintenance 140,030 119,464
Real estate taxes and insurance 53,070 47,933
Property management 26,384 22,943
Fee and asset management 2,069 2,187
Depreciation 143,590 115,231
General and administrative 13,817 18,070
----------- -----------
Total expenses 378,960 325,828
----------- -----------
Operating income 142,019 118,136
Interest and other income 2,328 59,454
Interest:
Expense incurred, net (110,292) (89,522)
Amortization of deferred financing
costs (2,790) (1,676)
----------- -----------
Income before allocation to Minority Interests,
loss from investments in unconsolidated
entities, net gain on sales of unconsolidated
entities and land parcels and
discontinued operations 31,265 86,392
Allocation to Minority Interests:
Operating Partnership, net (1,201) (5,426)
Preference Interests (1,095) (3,884)
Junior Preference Units (4) (4)
Partially Owned Properties (1,521) 1,477
Premium on redemption of Preference
Interests (674) (1,728)
Loss from investments in unconsolidated
entities (230) (58)
Net gain on sales of unconsolidated entities 329 124
Net gain on sales of land parcels - 10,368
----------- -----------
Income from continuing operations, net of
minority interests 26,869 87,261
Gain on sales of discontinued operations, net
of minority interests 347,953 131,136
Discontinued operations, net of minority
interests 2,993 8,642
----------- -----------
Net income 377,815 227,039
Preferred distributions (10,095) (13,025)
----------- -----------
Net income available to Common Shares $367,720 $214,014
=========== ===========
Earnings per share - basic:
Income from continuing operations available to
Common Shares $0.06 $0.26
=========== ===========
Net income available to Common Shares $1.27 $0.75
=========== ===========
Weighted average Common Shares outstanding 288,880 284,511
=========== ===========
Earnings per share - diluted:
Income from continuing operations available to
Common Shares $0.06 $0.26
=========== ===========
Net income available to Common Shares $1.25 $0.74
=========== ===========
Weighted average Common Shares outstanding 314,049 308,576
=========== ===========
Distributions declared per Common Share
outstanding $0.4425 $0.4325
=========== ===========
EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended March 31,
-----------------------
2006 2005
----------- -----------
Net income $377,815 $227,039
Allocation to Minority Interests - Operating
Partnership, net 1,201 5,426
Adjustments:
Depreciation 143,590 115,231
Depreciation - Non-real estate additions (1,844) (1,294)
Depreciation - Partially Owned and
Unconsolidated Properties 1,550 (250)
Net gain on sales of unconsolidated
entities (329) (124)
Discontinued operations:
Depreciation 3,181 13,837
Gain on sales of discontinued
operations, net of minority interests (347,953) (131,136)
Net incremental gain on sales of
condominium units 7,127 13,482
Minority Interests - Operating
Partnership 211 631
----------- -----------
FFO (1)(2) 184,549 242,842
Preferred distributions (10,095) (13,025)
----------- -----------
FFO available to Common Shares and OP Units -
basic $174,454 $229,817
=========== ===========
FFO available to Common Shares and OP Units -
diluted $174,700 $230,592
=========== ===========
FFO per share and OP Unit - basic $0.56 $0.75
=========== ===========
FFO per share and OP Unit - diluted $0.56 $0.74
=========== ===========
Weighted average Common Shares and
OP Units outstanding - basic 309,335 305,391
=========== ===========
Weighted average Common Shares and
OP Units outstanding - diluted 314,686 310,123
=========== ===========
(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.
(2) The Company believes that FFO is helpful to investors as a
supplemental measure of the operating performance of a real estate
company, because it is a recognized measure 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 can help compare the operating performance of
a company's real estate between periods or as compared to
different companies. FFO in and of itself does not represent net
income or net cash flows from operating activities in accordance
with GAAP. Therefore, FFO should not be exclusively considered as
an alternative to net income or to net cash flows from operating
activities as determined by GAAP or as a measure of liquidity. The
Company's calculation of FFO 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.
EQUITY RESIDENTIAL
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
(Unaudited)
March 31, December 31,
2006 2005
------------ ------------
ASSETS
Investment in real estate
Land $2,980,663 $2,848,601
Depreciable property 13,339,890 13,336,636
Construction in progress (including land) 336,822 405,133
------------ ------------
Investment in real estate 16,657,375 16,590,370
Accumulated depreciation (2,908,508) (2,888,140)
------------ ------------
Investment in real estate, net 13,748,867 13,702,230
Cash and cash equivalents 86,777 88,828
Investments in unconsolidated entities 4,891 6,838
Rents receivable 1,364 789
Deposits - restricted 125,662 77,093
Escrow deposits - mortgage 32,234 35,225
Deferred financing costs, net 42,575 40,636
Goodwill, net 30,000 30,000
Other assets 108,537 117,306
------------ ------------
Total assets $14,180,907 $14,098,945
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $3,455,316 $3,379,289
Notes, net 3,839,475 3,442,784
Lines of credit 145,000 769,000
Accounts payable and accrued expenses 105,108 108,855
Accrued interest payable 70,016 78,441
Rents received in advance and other
liabilities 306,209 302,418
Security deposits 56,716 54,823
Distributions payable 145,116 145,812
------------ ------------
Total liabilities 8,122,956 8,281,422
------------ ------------
Commitments and contingencies
Minority Interests:
Operating Partnership 358,626 345,034
Preference Interests 25,000 60,000
Junior Preference Units 184 184
Partially Owned Properties 19,034 16,965
------------ ------------
Total Minority Interests 402,844 422,183
------------ ------------
Shareholders' equity:
Preferred Shares of beneficial interest,
$0.01 par value; 100,000,000 shares
authorized; 3,284,250 shares issued
and outstanding as of March 31, 2006
and 3,323,830 shares issued and
outstanding as of December 31, 2005 503,106 504,096
Common Shares of beneficial interest,
$0.01 par value; 1,000,000,000 shares
authorized; 291,244,226 shares issued
and outstanding as of March 31, 2006
and 289,536,344 shares issued and
outstanding as of December 31, 2005 2,912 2,895
Paid in capital 5,272,754 5,253,188
Distributions in excess of accumulated
earnings (111,305) (350,367)
Accumulated other comprehensive loss (12,360) (14,472)
------------ ------------
Total shareholders' equity 5,655,107 5,395,340
------------ ------------
Total liabilities and shareholders'
equity $14,180,907 $14,098,945
============ ============
First Quarter 2006 vs. First Quarter 2005
Quarter over Quarter Same-Store Results
$ in Millions - 158,398 Same-Store Units
Description Revenues Expenses NOI (2)
----------- ---------- ------------ ----------
Q1 2006 $444.9 $180.5 $264.4
Q1 2005 $419.6 $170.8 $248.8
---------- ------------ ----------
Change $25.3 $9.7 $15.6
========== ============ ==========
Change 6.0% 5.7% 6.3%
First Quarter 2006 vs. Fourth Quarter 2005
Sequential Quarter over Quarter Same-Store Results
$ in Millions - 158,398 Same-Store Units(a)
Description Revenues Expenses (1) NOI (2)
----------- ---------- ------------ ----------
Q1 2006 $444.9 $180.5 $264.4
Q4 2005 $440.5 $174.5 $266.0
---------- ------------ ----------
Change $4.4 $6.0 $(1.6)
========== ============ ==========
Change 1.0% 3.4% (0.6%)
(a) Includes the same units as the First Quarter 2006 vs.
First Quarter 2005 Same Store results for comparability
purposes.
Same-Store Statistics
Occupancy Turnover Occupancy Turnover
----------- ---------- ---------- ---------
Q1 2006 94.5% 13.5% Q1 2006 94.5% 13.5%
Q1 2005 93.7% 14.4% Q4 2005 94.0% 15.2%
----------- ---------- ---------- ---------
Change 0.8% (0.9%) Change 0.5% (1.7%)
(1) Fourth Quarter 2005 expenses exclude $11.1 million of uninsured
property damage caused by Hurricane Wilma.
(2) 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.
Same Store NOI Reconciliation
First Quarter 2006 vs. First Quarter 2005
The following table presents a reconciliation of operating income per
the consolidated statements of operations to NOI for the First Quarter
2006 Same Store Properties:
Quarter Ended March 31,
-----------------------
2006 2005
----------- -----------
(Amounts in millions)
Operating income $142.0 $118.1
Adjustments:
Insurance (1) (2.9) -
Non-same store operating results (31.7) (2.2)
Fee and asset management revenue (2.5) (2.6)
Fee and asset management expense 2.1 2.2
Depreciation 143.6 115.2
General and administrative 13.8 18.1
----------- -----------
Same store NOI $264.4 $248.8
=========== ===========
(1) Amount represents additional hurricane insurance reimbursements.
First Quarter 2006 vs. First Quarter 2005
Same-Store Results by Market
--------------------------------
Increase (Decrease) from Prior
Quarter
-------------------------------------------------------------------
1Q 2006
1Q 2006 Weighted
% of Average
Actual Occupancy
Markets Units NOI % Revenues Expenses NOI Occupancy
-------------------------------------------------------------------
1 South
Florida 9,582 7.3% 96.4% 11.1% 6.8% 14.0% 0.5%
2 Los Angeles 6,079 6.9% 94.8% 7.8% 6.5% 8.6% 0.4%
3 Boston 5,761 6.0% 93.3% 4.2% 4.5% 4.0% 0.1%
4 San
Francisco
Bay Area 5,990 5.6% 95.2% 4.2% 8.1% 2.0% 0.0%
5 Phoenix 9,247 5.4% 95.8% 10.8% 1.9% 16.8% 1.5%
6 DC Suburban
Virginia 5,183 5.1% 95.0% 7.1% 9.9% 5.7% 1.2%
7 Atlanta 11,142 5.1% 94.8% 2.7% 7.0% 0.5% 0.4%
8 New York
Metro Area 3,406 4.9% 95.9% 8.6% 5.7% 10.3% 0.6%
9 Seattle/
Tacoma 7,153 4.5% 94.8% 7.0% 6.4% 7.4% (0.3%)
10 Orlando 6,072 3.9% 95.0% 10.6% 5.8% 13.7% 0.0%
11 Denver 6,921 3.9% 95.1% 3.7% 1.6% 4.8% 1.5%
12 San Diego 3,486 3.7% 94.7% 5.2% 8.3% 3.7% 0.0%
13 Dallas/
Ft Worth 8,152 3.6% 94.3% 3.5% 2.1% 4.8% (0.7%)
14 Orange Co 3,013 3.2% 95.3% 7.2% 7.4% 7.1% 0.5%
15 Inland
Empire, CA 3,504 3.1% 92.7% 5.5% 5.5% 5.6% (1.1%)
16 New England
(excl
Boston) 5,823 3.0% 91.2% (0.2%) 6.8% (6.7%) (1.9%)
17 DC Suburban
Maryland 4,739 2.9% 93.5% 3.4% 14.2% (3.2%) 0.2%
18 Houston 5,282 2.4% 94.2% 6.9% 5.4% 8.4% 3.4%
19 Tampa/
Ft Myers 3,976 2.0% 95.8% 10.8% 6.4% 14.4% 1.5%
20 Portland 3,409 1.8% 95.1% 3.1% 5.7% 1.2% 0.6%
-------------------------------------------------------
Top 20
Markets 117,920 84.2% 94.7% 6.3% 6.1% 6.4% 0.4%
All Other
Markets 40,478 15.8% 94.0% 4.9% 3.9% 5.8% 1.9%
-------------------------------------------------------
Total 158,398 100.0% 94.5% 6.0% 5.7% 6.3% 0.8%
=======================================================
First Quarter 2006 vs. Fourth Quarter 2005(a)
Sequential Same-Store Results by Market
---------------------------------
Increase (Decrease) from Prior
Quarter
-------------------------------------------------------------------
1Q 2006
1Q 2006 Weighted
% of Average
Actual Occupancy
Markets Units NOI % Revenues Expenses NOI Occupancy
-------------------------------------------------------------------
1 South
Florida 9,582 7.3% 96.4% 3.8% 5.2% 2.9% 0.4%
2 Los Angeles 6,079 6.9% 94.8% 1.1% 2.7% 0.3% (0.4%)
3 Boston 5,761 6.0% 93.3% (1.4%) 7.9% (7.2%) (1.4%)
4 San
Francisco
Bay Area 5,990 5.6% 95.2% 0.2% 4.2% (2.1%) 0.1%
5 Phoenix 9,247 5.4% 95.8% 3.7% 1.4% 5.1% 1.1%
6 DC Suburban
Virginia 5,183 5.1% 95.0% 0.7% 7.4% (2.3%) 1.2%
7 Atlanta 11,142 5.1% 94.8% (0.2%) 3.6% (3.0%) 0.4%
8 New York
Metro Area 3,406 4.9% 95.9% 1.8% 2.8% 1.2% 0.1%
9 Seattle/
Tacoma 7,153 4.5% 94.8% 2.1% 5.3% (0.1%) 1.2%
10 Orlando 6,072 3.9% 95.0% 2.8% 3.6% 2.3% 0.3%
11 Denver 6,921 3.9% 95.1% 1.3% (2.4%) 3.4% 1.2%
12 San Diego 3,486 3.7% 94.7% (0.6%) 1.1% (1.5%) (1.7%)
13 Dallas/
Ft Worth 8,152 3.6% 94.3% 1.4% (4.9%) 8.2% 0.4%
14 Orange Co 3,013 3.2% 95.3% 0.5% 2.8% (0.6%) (0.6%)
15 Inland
Empire, CA 3,504 3.1% 92.7% (0.7%) 4.1% (3.0%) (0.4%)
16 New England
(excl
Boston) 5,823 3.0% 91.2% (1.4%) 14.4% (13.9%) (0.4%)
17 DC
Suburban
Maryland 4,739 2.9% 93.5% 1.9% 12.2% (4.5%) 2.0%
18 Houston 5,282 2.4% 94.2% 0.2% 0.3% 0.0% (1.2%)
19 Tampa/
Ft Myers 3,976 2.0% 95.8% 3.1% 3.2% 2.9% 1.3%
20 Portland 3,409 1.8% 95.1% 2.0% 1.6% 2.3% 1.1%
---------------------------------------------------------
Top 20
Markets 117,920 84.2% 94.7% 1.1% 3.9% (0.6%) 0.3%
All Other
Markets 40,478 15.8% 94.0% 0.5% 1.4% (0.3%) 1.0%
---------------------------------------------------------
Total 158,398 100.0% 94.5% 1.0% 3.4% (0.6%) 0.5%
=========================================================
(a) Includes the same units as First Quarter 2006 vs. First Quarter
2005 Same Store results for comparability purposes.
Portfolio as of March 31, 2006
Properties Units
---------- ----------
Wholly Owned Properties 820 170,356
Partially Owned
Properties:
Consolidated 45 7,366
Unconsolidated 45 10,846
Military Housing (Fee
Managed) 1 3,672
---------- ----------
911 192,240
Portfolio Rollforward Q1 2006
Properties Units $ Millions Cap Rate
---------- ---------- ---------- ----------
12/31/2005 926 197,404
Acquisitions:
Rental Properties 11 2,779 $506.6 5.0%
Land Parcels - - $14.2
Dispositions:
Rental Properties (25) (8,110) $(799.9) 5.5%
Condominium Units (2) (171) $(35.0)
Completed Developments 1 359
Unit Configuration Changes - (21)
---------- ----------
3/31/2006 911 192,240
Portfolio Summary
As of March 31, 2006
% of % of 2006
Total Stabilized
Market Properties Units Units NOI
---------- ---------- --------- -----------
1 New York Metro Area 17 5,288 2.8 7.7
2 South Florida 49 10,928 5.7 6.7
3 Los Angeles 32 6,727 3.5 6.3
4 DC Northern Virginia 20 7,165 3.7 6.2
5 Seattle/Tacoma 45 10,627 5.5 5.8
6 Atlanta 64 13,590 7.1 5.4
7 Boston 36 6,709 3.5 5.2
8 San Francisco Bay Area 26 6,249 3.3 4.7
9 Phoenix 36 10,381 5.4 4.7
10 Orlando 34 7,664 4.0 4.3
11 Denver 27 8,658 4.5 4.0
12 San Diego 12 3,822 2.0 3.7
13 Inland Empire CA 14 4,355 2.3 3.4
14 Dallas/Ft Worth 34 9,919 5.2 3.3
15 DC Suburban Maryland 25 5,559 2.9 3.1
16 New England (excl
Boston) 41 5,823 3.0 2.9
17 Orange County 8 3,013 1.6 2.8
18 Jacksonville 22 4,659 2.4 2.1
19 Houston 17 5,282 2.7 2.0
20 Tampa/Ft Myers 27 4,694 2.4 1.8
---------- ---------- --------- -----------
Top 20 Total 586 141,112 73.5 86.1
21 Portland OR 11 3,713 1.9 1.6
22 Raleigh/Durham 17 4,392 2.3 1.5
23 Austin 12 3,671 1.9 1.3
24 Minneapolis/St Paul 14 2,405 1.3 1.1
25 Nashville 10 2,451 1.3 0.9
26 Charlotte 11 3,391 1.8 0.9
27 Southeastern Michigan 18 1,963 1.0 0.7
28 Chicago 5 1,716 0.9 0.7
29 Central Valley CA 10 1,595 0.8 0.5
30 Other EQR 14 3,093 1.6 0.7
31 Other Lexford 187 17,008 8.8 4.0
---------- ---------- --------- -----------
Total 895 186,510 97.1 100.0
Condominium Conversion 15 2,058 1.1 0.0
Military Housing 1 3,672 1.9 0.0
---------- ---------- --------- -----------
Grand Total 911 192,240 100.0 100.0
========== ========== ========= ===========
Debt Summary as of March 31, 2006
Weighted
$ Millions (1) Average Rate (1)
---------------- ----------------
Secured $3,455 5.74%
Unsecured 3,985 5.95%
---------------- ----------------
Total $7,440 5.86%
Fixed Rate $6,237 6.21%
Floating Rate 1,203 4.47%
---------------- ----------------
Total $7,440 5.86%
Above Totals Include:
---------------------
Tax Exempt:
Fixed $130 5.35%
Floating 611 3.29%
---------------- ----------------
Total $741 3.65%
Unsecured Revolving Credit
Facilities $145 4.81%
(1) Net of the effect of any derivative instruments.
Debt Maturity Schedule as of March 31, 2006
Year $ Millions % of Total
---------- ----------- ----------
2006 (1) $533 7.2%
2007 358 4.8%
2008 (2) 725 9.7%
2009 859 11.6%
2010 278 3.7%
2011 818 11.0%
2012 535 7.2%
2013 567 7.6%
2014 504 6.8%
2015+ 2,263 30.4%
----------- ----------
Total $7,440 100.0%
(1) Includes $150.0 million of 7.57% unsecured debt with a final
maturity of 2026 that is putable effective August 15, 2006.
(2) Includes $145.0 million outstanding on the Company's unsecured
revolving credit facility, which matures on May 29, 2008.
Selected Unsecured Public Debt Covenants
March 31, December 31,
2006 2005
------------ ------------
Total Debt to Adjusted Total Assets (not to
exceed 60%) 43.7% 44.9%
Secured Debt to Adjusted Total Assets (not
to exceed 40%) 20.3% 20.0%
Consolidated Income Available For Debt
Service To Maximum Annual Service Charges
(must be at least 1.5 to 1) 2.68 2.84
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) 274.2% 261.4%
These selected covenants relate to ERP Operating Limited Partnership's
("ERPOP") outstanding unsecured public debt. Equity Residential is the
general partner of ERPOP.
Capital Structure as of March 31, 2006
(Amounts in thousands except for share and per share amounts)
Secured Debt $3,455,316 46%
Unsecured Debt 3,839,475 52%
Lines of Credit 145,000 2%
------------ -------
Total Debt 7,439,791 100% 33%
Common Shares 291,244,226 93%
OP Units 20,273,234 7%
------------ -------
Total Shares and OP
Units 311,517,460 100%
Common Share
Equivalents (see
below) 1,318,993
------------
Total outstanding at
quarter-end 312,836,453
Common Share Price at
March 31, 2006 $46.79
------------
14,637,618 97%
Perpetual Preferred
Equity (see below) 490,000 3%
------------ -------
Total Equity 15,127,618 100% 67%
Total Market
Capitalization $22,567,409 100%
Convertible Preferred Equity as of March 31, 2006
(Amounts in thousands except for share and per share amounts)
Annual
Dividend
Redemption Outstanding Liquidation Per
Series Date Shares/Units Value Share/Unit
------------------ ------------ ------------ ------------ ------------
Preferred Shares:
7.00% Series E 11/1/98 491,516 $12,288 $1.75
7.00% Series H 6/30/98 32,734 818 1.75
Preference Interests:
7.625% Series I 6/22/06 270,000 13,500 3.8125
7.625% Series J 12/14/06 230,000 11,500 3.8125
Junior Preference
Units:
8.00% Series B 7/29/09 7,367 184 2.00
------------ ------------
Total Convertible
Preferred Equity 1,031,617 $38,290
Annual Weighted Common
Dividend Average Conversion Share
Series Amount Rate Ratio Equivalents
------------------ ------------ ------------ ------------ ------------
Preferred Shares:
7.00% Series E $860 1.1128 546,959
7.00% Series H 57 1.4480 47,399
Preference Interests:
7.625% Series I 1,029 1.4542 392,634
7.625% Series J 877 1.4108 324,484
Junior Preference
Units:
8.00% Series B 15 1.020408 7,517
------------ -----------
Total Convertible
Preferred Equity $2,838 7.41% 1,318,993
Perpetual Preferred Equity as of March 31, 2006
(Amounts in thousands except for share and per share amounts)
Redemption Outstanding Liquidation
Series Date Shares/Units Value
------------------------------- ------------ ------------ ------------
Preferred Shares:
9 1/8% Series C 9/9/06 460,000 $115,000
8.60% Series D 7/15/07 700,000 175,000
8.29% Series K 12/10/26 1,000,000 50,000
6.48% Series N 6/19/08 600,000 150,000
------------ ------------
Total Perpetual Preferred Equity 2,760,000 $490,000
Annual
Dividend Annual Weighted
Series Per Dividend Average
Share/Unit Amount Rate
------------------------------- ------------ ------------ ------------
Preferred Shares:
9 1/8% Series C $22.8125 $10,494
8.60% Series D 21.50 15,050
8.29% Series K 4.145 4,145
6.48% Series N 16.20 9,720
------------
Total Perpetual Preferred Equity $39,409 8.04%
Common Share and Operating Partnership Unit (OP Unit)
Weighted Average Amounts Outstanding
1Q06 1Q05
------------ ------------
Weighted Average Amounts Outstanding for Net
Income Purposes:
Common Shares - basic 288,880,193 284,510,654
Shares issuable from assumed
conversion/vesting of:
- OP Units 20,454,349 20,880,456
- share options/restricted shares 4,714,712 3,184,776
------------ ------------
Total Common Shares and OP Units - diluted 314,049,254 308,575,886
Weighted Average Amounts Outstanding for FFO
Purposes:
Common Shares - basic 288,880,193 284,510,654
OP Units - basic 20,454,349 20,880,456
------------ ------------
Total Common Shares and OP Units - basic 309,334,542 305,391,110
Shares issuable from assumed
conversion/vesting of:
- convertible preferred shares/units 636,811 1,546,710
- share options/restricted shares 4,714,712 3,184,776
------------ ------------
Total Common Shares and OP Units - diluted 314,686,065 310,122,596
Period Ending Amounts Outstanding:
Common Shares 291,244,226
OP Units 20,273,234
------------
Total Common Shares and OP Units 311,517,460
Partially Owned Entities as of March 31, 2006
(Amounts in thousands except for project and unit amounts)
Consolidated
---------------------------------------------
FIN 46 /
Lexford Development Other Total
---------- ----------- ---------- ----------
Total projects 18 6 (2) 21 45
---------- ---------- ---------- ----------
Total units 2,133 1,337 (2) 3,896 7,366
---------- ---------- ---------- ----------
Company's ownership
percentage 44.9% 100.0% 66.6%
Company's share of
outstanding debt (1) $15,764 $229,317 $200,168 $445,249
---------- ---------- ---------- ----------
Operating information for
the quarter ended
3/31/06 (at 100%):
Operating revenue $3,261 $3,867 $12,931 $20,059
Operating expenses 1,737 1,285 4,558 7,580
---------- ---------- ---------- ----------
Net operating income 1,524 2,582 8,373 12,479
Depreciation 690 1,449 3,714 5,853
Other 1 - 476 477
---------- ---------- ---------- ----------
Operating income 833 1,133 4,183 6,149
Interest and other
income 16 83 236 335
Interest:
Expense incurred,
net (643) (1,371) (5,022) (7,036)
Amortization of
deferred
financing costs (36) (12) (28) (76)
---------- ---------- ---------- ----------
Net income (loss) $170 $(167) $(631) $(628)
========== ========== ========== ==========
Unconsolidated
---------------------
Institutional Joint
Ventures
---------------------
Total projects 45
---------------------
Total units 10,846
---------------------
Company's ownership percentage 25.0%
Company's share of outstanding debt (1) $121,200
---------------------
Operating information for the quarter
ended 3/31/06 (at 100%):
Operating revenue $24,302
Operating expenses 10,968
---------------------
Net operating income 13,334
Depreciation 5,371
Other 61
---------------------
Operating income 7,902
Interest and other income 164
Interest:
Expense incurred, net (9,361)
Amortization of deferred financing costs (154)
---------------------
Net income (loss) $(1,449)
=====================
(1) All debt is non-recourse to the Company.
(2) Amounts exclude various uncompleted development projects.
Consolidated Development Projects as of March 31, 2006
(Amounts in thousands except for project and unit amounts)
Total Book
Total Value To
No. of Capital Date
Projects Location Units Cost (1) (1)(2)
----------------------------------------------------------------------
Projects Under Development
--------------------------
Union Station Los Angeles,
CA 278 $63,325 $51,795
Bella Vista III (3) Woodland
Hills, CA 264 71,139 38,892
Vintage Ontario, CA 300 52,412 20,038
Highland Glen II (3) Westwood, MA 102 21,620 2,651
Silver Spring Silver Spring,
MD 457 145,224 21,116
Emerson/CRP II (3) Boston, MA 310 161,309 7,062
--------------------------------
Total Projects Under
Development 1,711 515,029 141,554
Completed Not Stabilized: (4)
-----------------------------
2400 M St (5) Washington,
D.C. 359 111,947 107,000
--------------------------------
Total Projects Completed Not
Stabilized 359 111,947 107,000
Completed And Stabilized
During the Quarter:
------------------------
Total Projects Completed And
Stabilized During the Quarter - - -
--------------------------------
Total Projects 2,070 $626,976 $248,554
================================
Percentage Percentage Percentage
Projects Location Completed Leased Occupied
----------------------------------------------------------------------
Projects Under Development
--------------------------
Union Station Los Angeles, CA 83% - -
Bella Vista III (3) Woodland
Hills, CA 38% - -
Vintage Ontario, CA 19% - -
Highland Glen II (3) Westwood, MA 4% - -
Silver Spring Silver Spring, MD 3% - -
Emerson/CRP II (3) Boston, MA 2% - -
Completed Not Stabilized: (4)
-----------------------------
2400 M St (5) Washington, D.C. 100% - -
Estimated Estimated
Completion Stabilization
Projects Location Date Date
----------------------------------------------------------------------
Projects Under Development
--------------------------
Union Station Los Angeles, CA 2Q 2006 4Q 2006
Bella Vista III (3) Woodland Hills, CA 4Q 2006 3Q 2007
Vintage Ontario, CA 1Q 2007 4Q 2007
Highland Glen II (3) Westwood, MA 1Q 2007 4Q 2007
Silver Spring Silver Spring, MD 1Q 2008 4Q 2009
Emerson/CRP II (3) Boston, MA 2Q 2008 1Q 2009
Completed Not Stabilized: (4)
-----------------------------
2400 M St (5) Washington, D.C. 1Q 2006 3Q 2007
Total
NOI CONTRIBUTION FROM DEVELOPMENT Capital Q1 2006
PROJECTS Cost (1) NOI
---------------------
Projects Under Development $515,029 -
Completed Not Stabilized 111,947 -
Completed And Stabilized During the
Quarter - -
---------------------
Total Development/Newly
Stabilized NOI Contribution $626,976 -
=====================
(1) Total capital cost represents estimated development cost for
projects under development and all capitalized costs incurred to
date plus any estimates of costs remaining to be funded for all
projects.
(2) Of the total book value to date, $107.0 million has been
transferred to land and depreciable property and $141.6 million is
currently reflected as construction in progress ("CIP"). The
remaining $195.2 million of CIP represents land held for future
development and related costs and land and related development
costs for one uncompleted condominium project. Of the $378.4
million remaining to be invested, $48.8 million will be funded
through third party construction mortgages.
(3) Projects are wholly owned. All others are partially owned.
(4) Indian Ridge was completed in Q4 2005 and purchased by a third
party on 2/28/2006.
(5) EQR acquired its partner's interest on 4/28/2006 and now wholly-
owns the property.
Consolidated Condominium Conversion Projects as of March 31, 2006
(Amounts in thousands except for project and unit amounts)
Units
-----------------------------
Available for
Sale
----------------
Project
Start Estimated Sold
Date Close Units Not Avail-
Projects Location (1) Out Date Total Closed Closed able
----------------------------------------------------------------------
For Sale
--------
Four Lakes Lisle, IL Q4 2001 Q2 2006 942 926 8 8
Atlas (2) Washington,
DC Q4 2004 Q2 2006 141 140 1 -
Grand Plantation,
Marquis FL Q4 2004 Q2 2006 198 196 1 1
Fairway Pembroke
Greens Pines, FL Q1 2005 Q2 2006 152 135 8 9
Magnuson Seattle,
Pointe WA Q1 2005 Q4 2006 105 49 23 33
Timber Woodinville,
Ridge WA Q1 2005 Q1 2007 203 58 36 109
Milano Scottsdale,
Terrace AZ Q2 2005 Q4 2006 224 53 50 121
Braewood Bothell, WA Q2 2005 Q4 2006 84 - 4 80
South Palm Tamarac,
Place FL Q2 2005 Q1 2007 208 - 53 155
Chantecleer Naperville,
Lakes IL Q4 2005 Q4 2007 304 - 62 242
Fifth Seattle,
Avenue North WA Q2 2005 Q4 2006 62 - - 62
Parkside Seattle,
WA Q4 2005 Q4 2006 44 - - 44
Oaks at Falls
Falls Church,
Church VA Q4 2005 Q2 2007 176 - - 176
Bella Phoenix,
Vista AZ Q4 2005 Q2 2007 248 - - 248
Regency Centreville,
Park VA Q4 2005 Q3 2007 252 - - 252
Alameda Scottsdale,
Ranch AZ Q4 2005 Q3 2007 272 - - 272
-----------------------------
3,615 1,557 246 1,812
Closed Out
----------
Tuscany Scottsdale,
Villas AZ Q4 2004 Q1 2006 180 180 - -
Venetian I Phoenix,
& II AZ Q1 2004 Q1 2006 264 264 - -
Projects closed out
prior to 2006 1,914 1,914 - -
-----------------------------
2,358 2,358 - -
Totals 18 5,973 3,915 246 1,812
=============================
2006 YTD Activity
-----------------------------
Project FFO
Start Estimated Incremental
Date Close Units Sales Gain on
Projects Location (1) Out Date Closed Price Sale
----------------------------------------------------------------------
For Sale
--------
Four Lakes Lisle, IL Q4 2001 Q2 2006 30 $4,948 $496
Atlas (2) Washington,
DC Q4 2004 Q2 2006 5 2,576 166
Grand Plantation,
Marquis FL Q4 2004 Q2 2006 14 2,610 642
Fairway Pembroke
Greens Pines, FL Q1 2005 Q2 2006 32 6,469 1,832
Magnuson Seattle,
Pointe WA Q1 2005 Q4 2006 14 3,348 929
Timber Woodinville,
Ridge WA Q1 2005 Q1 2007 30 4,859 1,138
Milano Scottsdale,
Terrace AZ Q2 2005 Q4 2006 43 9,670 3,080
Braewood Bothell, WA Q2 2005 Q4 2006 - - -
South Palm Tamarac,
Place FL Q2 2005 Q1 2007 - - -
Chantecleer Naperville,
Lakes IL Q4 2005 Q4 2007 - - -
Fifth Seattle,
Avenue North WA Q2 2005 Q4 2006 - - -
Parkside Seattle,
WA Q4 2005 Q4 2006 - - -
Oaks at Falls
Falls Church,
Church VA Q4 2005 Q2 2007 - - -
Bella Phoenix,
Vista AZ Q4 2005 Q2 2007 - - -
Regency Centreville,
Park VA Q4 2005 Q3 2007 - - -
Alameda Scottsdale,
Ranch AZ Q4 2005 Q3 2007 - - -
-----------------------------
168 34,480 8,283
Closed Out
----------
Tuscany Scottsdale,
Villas AZ Q4 2004 Q1 2006 2 331 127
Venetian I Phoenix,
& II AZ Q1 2004 Q1 2006 1 204 (49)
Projects closed out
prior to 2006 - - 1,486
-----------------------------
3 535 1,564
Totals 18 171 $35,015 $9,847
=============================
Gross incremental gain on sales of condominium units $9,847
Provision for income taxes (2,720)
---------------
Net incremental gain on sales of condominium units 7,127
Property management and general and administrative
expenses (1,739)
Discontinued operating income 707
---------------
Net Income - Condominium Division (3) $6,095
===============
(1) Project start date represents the date that each respective
property was acquired by the taxable REIT subsidiary.
(2) Partially owned project; incremental gain on sale represents
portion attributable to the Company.
(3) Excludes interest income and interest expense specific to
condominium conversion projects.
Maintenance Expenses and Capitalized Improvements to Real Estate
For the Quarter Ended March 31, 2006
(Amounts in thousands except for unit and per unit amounts)
--------------------------------------------
Maintenance Expenses
--------------------------------------------
Total Avg. Avg. Avg.
Units Expense Per Payroll Per Per
(1) (2) Unit (3) Unit Total Unit
-------- -------- ----- -------- ----- -------- -----
Established
Properties (6) 144,257 $20,858 $144 $20,177 $140 $41,035 $284
New Acquisition
Properties (7) 23,738 4,373 197 3,023 136 7,396 333
Other (8) 9,727 2,819 2,614 5,433
-------- -------- -------- --------
Total 177,722 $28,050 $25,814 $53,864
======== ======== ======== ========
-----------------------------------------------------
Capitalized Improvements to Real Estate
-----------------------------------------------------
Avg. Building Avg. Avg.
Replacements Per Improvements Per Per
(4) Unit (5) Unit Total Unit
------------- ----- ------------ ----- -------- -----
Established
Properties (6) $13,090 $91 $20,042 $139 $33,132 $230
New Acquisition
Properties (7) 1,900 85 4,828 217 6,728 302
Other (8) 4,308 7,246 11,554
------------- ------------ --------
Total $19,298 $32,116 $51,414
============= ============ ========
-------------------------
Total Expenditures
-------------------------
Avg.
Per
Grand Total Unit
------------ ------------
Established Properties (6) $74,167 $514
New Acquisition Properties (7) 14,124 635
Other (8) 16,987
------------
Total $105,278
============
(1) Total units exclude 10,846 unconsolidated units and 3,672 military
housing (fee managed) units.
(2) Maintenance expenses include general maintenance costs, unit
turnover costs including interior painting, regularly scheduled
landscaping and tree trimming costs, security, exterminating, fire
protection, snow and ice removal, elevator repairs, and other
miscellaneous building repair costs.
(3) Maintenance payroll includes employee costs for maintenance,
cleaning, housekeeping, and landscaping.
(4) Replacements include new expenditures inside the units such as
carpets, appliances, mechanical equipment, fixtures and vinyl
flooring.
(5) Building improvements include roof replacement, paving, amenities
and common areas, building mechanical equipment systems, exterior
painting and siding, major landscaping, vehicles and office and
maintenance equipment.
(6) Wholly Owned Properties acquired prior to January 1, 2004.
(7) Wholly Owned Properties acquired during 2004, 2005 and 2006. Per
unit amounts are based on a weighted average of 22,237 units.
(8) Includes properties either Partially Owned or sold during the
period, commercial space, condominium conversions and $2.2 million
included in building improvements spent on eight specific assets
related to major renovations and repositioning of these assets.
Discontinued Operations
(Amounts in thousands)
Quarter Ended March 31,
-----------------------
2006 2005
-----------------------
REVENUES
Rental income $16,268 $53,789
----------- -----------
Total revenues 16,268 53,789
----------- -----------
EXPENSES (1)
Property and maintenance 7,492 17,825
Real estate taxes and insurance 2,747 8,384
Property management 90 118
Depreciation 3,181 13,837
General and administrative 226 96
----------- -----------
Total expenses 13,736 40,260
----------- -----------
Discontinued operating income 2,532 13,529
Interest and other income 1,004 56
Interest (2):
Expense incurred, net (332) (4,176)
Amortization of deferred financing costs - (136)
----------- -----------
Discontinued operations 3,204 9,273
Minority Interests - Operating Partnership (211) (631)
----------- -----------
Discontinued operations, net of minority
interests $2,993 $8,642
=========== ===========
(1) Includes expenses paid in the current period for properties sold
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.
As a result of the Securities and Exchange Commission's Regulation
FD, the Company will provide earnings guidance in its quarterly
earnings release. These projections are based on current expectations
and are forward-looking.
2006 Earnings Guidance (per share diluted)
------------------------------------------
Q2 2006 2006
------- ----
Expected EPS (1) $0.61 to $0.66 $2.73 to $2.93
Add: Expected depreciation expense 0.47 1.71
Less: Expected net gain on sales (1) (0.53) (2.14)
----------------- ----------------
Expected FFO (2) $0.55 to $0.60 $2.30 to $2.50
================= ================
Same-Store Assumptions
----------------------
2006
----
Physical occupancy 94.5%
Revenue change 4.75% to 5.75%
Expense change 4.25% to 5.25%
NOI change 4.50% to 6.50%
Acquisitions $1.5 billion
Dispositions $1.5 billion
(1) Earnings per share ("EPS") represents net income per share
calculated in accordance with accounting principles generally
accepted in the United States. Expected EPS is calculated on a
basis consistent with actual EPS. Due to the uncertain timing and
extent of property dispositions and the resulting gains/losses on
sales, actual EPS could differ materially from expected EPS.
(2) 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), 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. Expected FFO
is calculated on a basis consistent with actual FFO.
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