þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland (Equity Residential)
Illinois (ERP Operating Limited Partnership) |
13-3675988 (Equity Residential)
36-3894853 (ERP Operating Limited Partnership) |
|
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
Two North Riverside Plaza, Chicago, Illinois 60606 | (312) 474-1300 | |
(Address of Principal Executive Offices) (Zip Code) | (Registrants Telephone Number, Including Area Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
| enhances investors understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; | ||
| eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and | ||
| creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
PAGE | ||||||||
|
||||||||
|
||||||||
2 | ||||||||
|
||||||||
3 to 4 | ||||||||
|
||||||||
5 to 7 | ||||||||
|
||||||||
8 to 9 | ||||||||
|
||||||||
|
||||||||
10 | ||||||||
|
||||||||
11 to 12 | ||||||||
|
||||||||
13 to 15 | ||||||||
|
||||||||
16 to 17 | ||||||||
|
||||||||
18 to 39 | ||||||||
|
||||||||
40 to 60 | ||||||||
|
||||||||
60 | ||||||||
|
||||||||
60 to 61 | ||||||||
|
||||||||
|
||||||||
62 | ||||||||
|
||||||||
62 | ||||||||
|
||||||||
62 | ||||||||
|
||||||||
62 | ||||||||
EX-10.1 | ||||||||
EX-10.3 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-31.3 | ||||||||
EX-31.4 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-32.3 | ||||||||
EX-32.4 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
(Amounts in thousands except for share amounts)
(Unaudited)
Table of Contents
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
(Amounts in thousands except per share data)
(Unaudited)
Six Months Ended June 30,
Quarter Ended June 30,
2011
2010
2011
2010
$
714,819
$
67,945
$
581,753
$
10,089
(25,119
)
(85,746
)
(31,201
)
(72,243
)
1,891
1,465
935
739
493
(66
)
347
93
(22,735
)
(84,347
)
(29,919
)
(71,411
)
692,084
(16,402
)
551,834
(61,322
)
(31,564
)
(2,501
)
(25,829
)
(128
)
$
660,520
$
(18,903
)
$
526,005
$
(61,450
)
Table of Contents
(Amounts in thousands)
(Unaudited)
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30,
2011
2010
$
(1,466
)
$
(2,193
)
135,230
104,994
(11,663
)
58,474
(632,477
)
(400,033
)
(8,366
)
(8,323
)
(93,096
)
3,679,125
(3,359,125
)
154,508
73,356
3,501
3,546
83,534
43,809
(1,887
)
(2,611
)
(723
)
(33
)
(33
)
222
(231,995
)
(188,543
)
(6,933
)
(7,238
)
(10,866
)
(9,496
)
(454
)
(1,344
)
(623,187
)
(15,412
)
173,356
(145,306
)
431,408
193,288
$
604,764
$
47,982
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30,
2011
2010
$
242,655
$
229,507
$
628
$
(2,940
)
$
99,131
$
169,428
$
$
7,433
$
$
(39,999
)
$
$
(1,211
)
$
8,048
$
6,727
$
(3,816
)
$
(3,130
)
$
4,667
$
4,253
$
(267
)
$
(267
)
$
1,891
$
1,465
$
1,975
$
16,620
$
(226
)
$
(13
)
$
(501
)
$
7,023
$
26,440
$
62,117
$
(25,119
)
$
(85,746
)
$
(3,597
)
$
(7,940
)
$
(86
)
$
$
$
(105,065
)
$
$
7,376
$
$
(42,633
)
$
$
112,631
$
$
837
$
$
37,550
$
$
35,600
Table of Contents
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Amounts in thousands)
(Unaudited)
Table of Contents
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Continued)
(Amounts in thousands)
(Unaudited)
Table of Contents
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per Unit data)
(Unaudited)
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
(Amounts in thousands except per Unit data)
(Unaudited)
Six Months Ended June 30,
Quarter Ended June 30,
2011
2010
2011
2010
$
714,819
$
67,945
$
581,753
$
10,089
(25,119
)
(85,746
)
(31,201
)
(72,243
)
1,891
1,465
935
739
493
(66
)
347
93
(22,735
)
(84,347
)
(29,919
)
(71,411
)
692,084
(16,402
)
551,834
(61,322
)
(31
)
435
(71
)
185
$
692,053
$
(15,967
)
$
551,763
$
(61,137
)
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30,
2011
2010
$
(1,466
)
$
(2,193
)
135,230
104,994
(11,663
)
58,474
(632,477
)
(400,033
)
(8,366
)
(8,323
)
(93,096
)
3,679,125
(3,359,125
)
154,508
73,356
3,501
3,546
83,534
43,809
(1,887
)
(2,611
)
(723
)
(33
)
(33
)
222
(231,995
)
(188,543
)
(6,933
)
(7,238
)
(10,866
)
(9,496
)
(454
)
(1,344
)
(623,187
)
(15,412
)
173,356
(145,306
)
431,408
193,288
$
604,764
$
47,982
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30,
2011
2010
$
242,655
$
229,507
$
628
$
(2,940
)
$
99,131
$
169,428
$
$
7,433
$
$
(39,999
)
$
$
(1,211
)
$
8,048
$
6,727
$
(3,816
)
$
(3,130
)
$
4,667
$
4,253
$
(267
)
$
(267
)
$
1,891
$
1,465
$
1,975
$
16,620
$
(226
)
$
(13
)
$
(501
)
$
7,023
$
26,440
$
62,117
$
(25,119
)
$
(85,746
)
$
(3,597
)
$
(7,940
)
$
(86
)
$
$
$
(105,065
)
$
$
7,376
$
$
(42,633
)
$
$
112,631
$
$
837
$
$
37,550
$
$
35,600
Table of Contents
Table of Contents
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL
(Continued)
(Amounts in thousands)
(Unaudited)
Six Months Ended
June 30, 2011
$
7,991
31
(487
)
(3,000
)
(1,240
)
$
3,295
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Properties
Apartment Units
397
111,539
22
4,371
2
4,850
421
120,760
Table of Contents
Table of Contents
Table of Contents
2011
290,197,242
284,691
3,038,980
2,632,021
78,121
151,018
(101,988
)
296,280,085
13,612,037
58,942
101,988
(284,691
)
13,488,276
309,768,361
4.4
%
Table of Contents
2011
$
383,540
41,377
13,224
$
438,141
Table of Contents
Amounts in thousands
Annual
Redemption
Dividend per
June 30,
December 31,
Date (1)
Share (2)
2011
2010
100,000,000 shares authorized:
liquidation value $50 per share; 1,000,000 shares issued and
outstanding at June 30, 2011 and December 31, 2010
12/10/26
$
4.145
$
50,000
$
50,000
liquidation value $250 per share; 600,000 shares issued and
outstanding at June 30, 2011 and December 31, 2010 (3)
6/19/08
$
16.20
150,000
150,000
$
200,000
$
200,000
(1)
On or after the redemption date, redeemable preferred shares (Series K and N) may be
redeemed for cash at the option of the Company, in whole or in part, at a redemption price
equal to the liquidation price per share, plus accrued and unpaid distributions, if any.
(2)
Dividends on all series of Preferred Shares are payable quarterly at various pay dates. The
dividend listed for Series N is a Preferred Share rate and the equivalent Depositary Share
annual dividend is $1.62 per share.
(3)
The Series N Preferred Shares have a corresponding depositary share that consists of ten
times the number of shares and one-tenth the liquidation value and dividend per share.
2011
303,809,279
3,038,980
2,632,021
78,121
151,018
58,942
309,768,361
13,612,037
58,942
101,988
(284,691
)
13,488,276
4.4
%
Table of Contents
2011
$
383,540
41,377
13,224
$
438,141
Table of Contents
Amounts in thousands
Annual
Redemption
Dividend per
June 30,
December 31,
Date (1)
Unit (2)
2011
2010
liquidation value $50 per
unit; 1,000,000 units
issued and outstanding at
June 30, 2011 and December
31, 2010
12/10/26
$
4.145
$
50,000
$
50,000
liquidation value $250 per
unit; 600,000 units issued
and outstanding at June
30, 2011 and December 31,
2010 (3)
6/19/08
$
16.20
150,000
150,000
$
200,000
$
200,000
(1)
On or after the redemption date, redeemable preference units (Series K and N) may be
redeemed for cash at the option of the Operating Partnership, in whole or in part, at a
redemption price equal to the liquidation price per unit, plus accrued and unpaid
distributions, if any, in conjunction with the concurrent redemption of the corresponding
Company Preferred Shares.
(2)
Dividends on all series of Preference Units are payable quarterly at various pay dates. The
dividend listed for Series N is a Preference Unit rate and the equivalent depositary unit
annual dividend is $1.62 per unit.
(3)
The Series N Preference Units have a corresponding depositary unit that consists of ten times
the number of units and one-tenth the liquidation value and dividend per unit.
June 30,
December 31,
2011
2010
$
4,161,358
$
4,110,275
13,833,714
13,995,121
1,212,536
1,231,391
26,766
28,260
88,319
102,077
178,321
198,465
36,174
36,782
19,537,188
19,702,371
(4,307,406
)
(4,337,357
)
$
15,229,782
$
15,365,014
Properties
Apartment Units
Purchase Price
7
2,069
$
549,253
12,850
11,750
7
2,069
$
573,853
(1)
Represents the acquisition of a 97,000 square foot commercial building adjacent to our Harbor
Steps apartment property in downtown Seattle for potential redevelopment.
Table of Contents
Properties
Apartment Units
Sales Price
38
11,267
$
1,173,314
22,786
38
11,267
$
1,196,100
(1)
Represents the sale of a land parcel, on which the Company no longer planned to develop, in
suburban Washington, D.C.
Properties
Apartment Units
Purchase Price
5
851
$
223,025
29,100
5
851
$
252,125
Properties
Apartment Units
Sales Price
6
1,961
$
173,900
6
1,961
$
173,900
Table of Contents
Table of Contents
Consolidated
Development Projects (VIEs)
Held for
and/or Under
Completed
Development
and Stabilized
Other
Total
$
$
10,763
$
28,261
$
39,024
124
3,848
9,371
13,343
(124
)
6,915
18,890
25,681
5,872
7,491
13,363
103
5
27
135
(227
)
1,038
11,372
12,183
4
4
8
16
(207
)
(14
)
(221
)
(399
)
(4,440
)
(6,785
)
(11,624
)
(1,337
)
(324
)
(1,661
)
(829
)
(4,735
)
4,257
(1,307
)
(57
)
(8
)
(65
)
4,217
4,217
169
169
$
3,500
$
(4,735
)
$
4,249
$
3,014
(1)
Project and apartment unit counts exclude all uncompleted development projects
until those projects are substantially completed.
(2)
All debt is non-recourse to the Company with the exception of $14.0 million in
mortgage debt on one development project.
(3)
Represents the Companys/Operating Partnerships current economic ownership
interest.
7.
Deposits Restricted
June 30,
December 31,
2011
2010
$
278,903
$
103,887
5,400
9,264
30,629
18,966
40,801
40,745
6,098
8,125
$
361,831
$
180,987
Table of Contents
8.
Mortgage Notes Payable
Repaid $640.8 million of mortgage loans;
Obtained $135.2 million of new mortgage loan proceeds; and
Assumed $99.1 million of mortgage debt on three acquired properties.
9.
Notes
Repaid $93.1 million of 6.95% unsecured notes at maturity and
Exercised the second of its two one-year extension options for its $500.0 million
term loan facility and as a result, the maturity date is now October 5, 2012.
10.
Lines of Credit
11.
Derivative and Other Fair Value Instruments
Table of Contents
Forward
Fair Value
Starting
Hedges (1)
Swaps (2)
$
315,693
$
950,000
$
315,693
$
950,000
$
317,694
$
950,000
2.009
%
3.478
%
4.800
%
4.695
%
2012
2021
2013
2023
(1)
Fair Value Hedges Converts outstanding fixed rate debt to a floating interest rate.
(2)
Forward Starting Swaps Designed to partially fix the interest rate in advance of a
planned future debt issuance. These swaps have mandatory counterparty terminations from
2012 through 2014, and $750.0 million and $200.0 million are targeted to 2012 and 2013
issuances, respectively.
Asset Derivatives
Liability Derivatives
Balance Sheet
Balance Sheet
June 30, 2011
Location
Fair Value
Location
Fair Value
Other assets
$
11,794
Other liabilities
$
Other assets
2,029
Other liabilities
65,519
$
13,823
$
65,519
Asset Derivatives
Liability Derivatives
Balance Sheet
Balance Sheet
December 31, 2010
Location
Fair Value
Location
Fair Value
Other assets
$
12,521
Other liabilities
$
Other assets
3,276
Other liabilities
37,756
Other assets
Other liabilities
1,322
$
15,797
$
39,078
Table of Contents
Location of Gain/(Loss)
Amount of Gain/(Loss)
Income Statement
Amount of Gain/(Loss)
June 30, 2011
Recognized in Income
Recognized in Income
Location of Hedged
Recognized in Income
Type of Fair Value Hedge
on Derivative
on Derivative
Hedged Item
Item Gain/(Loss)
on Hedged Item
Interest expense
$
(727
)
Fixed rate
debt
Interest expense
$
727
$
(727
)
$
727
Location of Gain/(Loss)
Amount of Gain/(Loss)
Income Statement
Amount of Gain/(Loss)
June 30, 2011
Recognized in Income
Recognized in Income
Location of Hedged
Recognized in Income
Type of Fair Value Hedge
on Derivative
on Derivative
Hedged Item
Item Gain/(Loss)
on Hedged Item
Interest expense
$
7,009
Fixed rate
debt
Interest expense
$
(7,009
)
$
7,009
$
(7,009
)
Effective Portion
Ineffective Portion
Location of
Amount of
Amount of
Gain/(Loss)
Gain/(Loss)
Location of
Amount of Gain/(Loss)
Gain/(Loss)
Reclassified from
Reclassified from
Gain/(Loss)
Reclassified from
June 30, 2011
Recognized in OCI
Accumulated OCI
Accumulated OCI
Recognized in Income
Accumulated OCI
Type of Cash Flow Hedge
on Derivative
into Income
into Income
on Derivative
into Income
$
(26,441
)
Interest expense
$
(1,891
)
Interest expense
$
(2,569
)
1,322
Interest expense
N/A
$
(25,119
)
$
(1,891
)
$
(2,569
)
Effective Portion
Ineffective Portion
Location of
Amount of
Amount of
Gain/(Loss)
Gain/(Loss)
Location of
Amount of Gain/(Loss)
Gain/(Loss)
Reclassified from
Reclassified from
Gain/(Loss)
Reclassified from
June 30, 2010
Recognized in OCI
Accumulated OCI
Accumulated OCI
Recognized in Income
Accumulated OCI
Type of Cash Flow Hedge
on Derivative
into Income
into Income
on Derivative
into Income
$
(86,530
)
Interest expense
$
(1,465
)
N/A
$
784
Interest expense
N/A
$
(85,746
)
$
(1,465
)
$
Other Assets
Amortized
Unrealized
Unrealized
Book/
Interest and
Security
Maturity
Cost
Gains
Losses
Fair Value
Other Income
N/A
$
675
$
1,012
$
$
1,687
$
$
675
$
1,012
$
$
1,687
$
Table of Contents
Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
Level 2 Inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
Level 3 Inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Active Markets for
Significant Other
Significant
Identical Assets/Liabilities
Observable Inputs
Unobservable Inputs
Description
6/30/2011
(Level 1)
(Level 2)
(Level 3)
$
13,823
$
$
13,823
$
57,776
57,776
1,687
1,687
$
73,286
$
59,463
$
13,823
$
$
65,519
$
$
65,519
$
57,776
57,776
$
123,295
$
57,776
$
65,519
$
$
438,141
$
$
438,141
$
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Active Markets for
Significant Other
Significant
Identical Assets/Liabilities
Observable Inputs
Unobservable Inputs
Description
12/31/2010
(Level 1)
(Level 2)
(Level 3)
$
15,797
$
$
15,797
$
58,132
58,132
1,194
1,194
$
75,123
$
59,326
$
15,797
$
$
39,078
$
$
39,078
$
58,132
58,132
$
97,210
$
58,132
$
39,078
$
$
383,540
$
$
383,540
$
Table of Contents
12.
Earnings Per Share and Earnings Per Unit
Six Months Ended June 30,
Quarter Ended June 30,
2011
2010
2011
2010
$
16,495
$
(29,153
)
$
21,195
$
(9,945
)
(457
)
1,725
(814
)
628
(31
)
435
(71
)
185
(6,933
)
(7,238
)
(3,467
)
(3,618
)
9,074
(34,231
)
16,843
(12,750
)
667,248
92,437
535,614
19,093
$
676,322
$
58,206
$
552,457
$
6,343
$
16,495
$
21,195
(31
)
(71
)
(6,933
)
(3,467
)
9,531
17,657
698,324
560,558
$
707,855
$
58,206
$
578,215
$
6,343
293,784
281,435
294,663
282,217
13,322
13,291
4,274
4,245
311,380
281,435
312,199
282,217
$
2.30
$
0.21
$
1.88
$
0.02
$
2.27
$
0.21
$
1.85
$
0.02
$
0.031
$
(0.121
)
$
0.057
$
(0.045
)
2.271
0.328
1.818
0.067
$
2.302
$
0.207
$
1.875
$
0.022
$
0.031
$
(0.121
)
$
0.057
$
(0.045
)
2.242
0.328
1.795
0.067
$
2.273
$
0.207
$
1.852
$
0.022
(1)
Potential common shares issuable from the assumed conversion of OP Units and the
exercise/vesting of long-term compensation 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 six months and quarter ended June 30, 2010.
Table of Contents
Six Months Ended June 30,
Quarter Ended June 30,
2011
2010
2011
2010
$
16,495
$
(29,153
)
$
21,195
$
(9,945
)
(31
)
435
(71
)
185
(6,933
)
(7,238
)
(3,467
)
(3,618
)
9,531
(35,956
)
17,657
(13,378
)
698,324
97,098
560,558
20,034
$
707,855
$
61,142
$
578,215
$
6,656
307,106
295,177
307,954
295,898
4,274
4,245
311,380
295,177
312,199
295,898
$
2.30
$
0.21
$
1.88
$
0.02
$
2.27
$
0.21
$
1.85
$
0.02
$
0.031
$
(0.121
)
$
0.057
$
(0.045
)
2.271
0.328
1.818
0.067
$
2.302
$
0.207
$
1.875
$
0.022
$
0.031
$
(0.121
)
$
0.057
$
(0.045
)
2.242
0.328
1.795
0.067
$
2.273
$
0.207
$
1.852
$
0.022
(1)
Potential Units issuable from the assumed exercise/vesting of the Companys long-term
compensation shares/units are automatically anti-dilutive and therefore excluded from the
diluted earnings per Unit calculation as the Operating Partnership had a loss from
continuing operations for the six months and quarter ended June 30, 2010.
13.
Discontinued Operations
Table of Contents
(1)
Includes expenses paid in the current period for properties sold or held for
sale in prior periods related to the Companys period of ownership.
(2)
Includes only interest expense specific to secured mortgage notes payable for
properties sold and/or held for sale.
14.
Commitments and Contingencies
Table of Contents
Table of Contents
Six Months Ended June 30, 2011
Northeast
Northwest
Southeast
Southwest
Other (3)
Total
$
290,625
$
169,611
$
185,295
$
213,357
$
$
858,888
64,704
18,504
8,058
17,247
6,695
115,208
355,329
188,115
193,353
230,604
6,695
974,096
107,507
60,614
74,328
72,723
315,172
26,068
7,294
3,241
7,176
5,947
49,726
133,575
67,908
77,569
79,899
5,947
364,898
183,118
108,997
110,967
140,634
543,716
38,636
11,210
4,817
10,071
748
65,482
$
221,754
$
120,207
$
115,784
$
150,705
$
748
$
609,198
$
6,216,580
$
2,664,432
$
2,575,526
$
3,229,298
$
1,712,286
$
16,398,122
(1)
Same store primarily includes all properties acquired or completed and stabilized prior
to January 1, 2010, less properties subsequently sold, which represented 104,163 apartment
units.
(2)
Non-same store primarily includes properties acquired after January 1, 2010, plus any
properties in lease-up and not stabilized as of January 1, 2010.
(3)
Other includes development, condominium conversion overhead of $0.2 million and
other corporate operations.
Six Months Ended June 30, 2010
Northeast
Northwest
Southeast
Southwest
Other (3)
Total
$
275,609
$
160,758
$
178,368
$
207,541
$
$
822,276
36,915
5,008
4,273
3,313
(694
)
48,815
312,524
165,766
182,641
210,854
(694
)
871,091
106,286
60,215
74,069
75,470
316,040
16,326
2,261
2,102
1,675
10,649
33,013
122,612
62,476
76,171
77,145
10,649
349,053
169,323
100,543
104,299
132,071
506,236
20,589
2,747
2,171
1,638
(11,343
)
15,802
$
189,912
$
103,290
$
106,470
$
133,709
$
(11,343
)
$
522,038
(1)
Same store primarily includes all properties acquired or completed and stabilized prior
to January 1, 2010, less properties subsequently sold, which represented 104,163 apartment
units.
(2)
Non-same store primarily includes properties acquired after January 1, 2010, plus any
properties in lease-up and not stabilized as of January 1, 2010.
(3)
Other includes development, condominium conversion overhead of $0.3 million and
other corporate operations.
Table of Contents
Quarter Ended June 30, 2011
Northeast
Northwest
Southeast
Southwest
Other (3)
Total
$
161,318
$
87,338
$
93,372
$
108,394
$
$
450,422
20,581
8,323
4,099
8,909
3,777
45,689
181,899
95,661
97,471
117,303
3,777
496,111
58,024
30,819
37,198
36,989
163,030
7,536
3,061
1,660
3,619
1,654
17,530
65,560
33,880
38,858
40,608
1,654
180,560
103,294
56,519
56,174
71,405
287,392
13,045
5,262
2,439
5,290
2,123
28,159
$
116,339
$
61,781
$
58,613
$
76,695
$
2,123
$
315,551
(1)
Same store primarily includes all properties acquired or completed and stabilized prior
to April 1, 2010, less properties subsequently sold, which represented 105,730 apartment
units.
(2)
Non-same store primarily includes properties acquired after April 1, 2010, plus any
properties in lease-up and not stabilized as of April 1, 2010.
(3)
Other includes development, condominium conversion overhead of $0.1 million and
other corporate operations.
Quarter Ended June 30, 2010
Northeast
Northwest
Southeast
Southwest
Other (3)
Total
$
152,989
$
82,166
$
89,389
$
104,968
$
$
429,512
8,832
2,309
2,573
1,378
(271
)
14,821
161,821
84,475
91,962
106,346
(271
)
444,333
57,136
30,498
36,054
38,143
161,831
4,407
1,198
1,276
423
3,524
10,828
61,543
31,696
37,330
38,566
3,524
172,659
95,853
51,668
53,335
66,825
267,681
4,425
1,111
1,297
955
(3,795
)
3,993
$
100,278
$
52,779
$
54,632
$
67,780
$
(3,795
)
$
271,674
(1)
Same store primarily includes all properties acquired or completed and stabilized prior
to April 1, 2010, less properties subsequently sold, which represented 105,730 apartment
units.
(2)
Non-same store primarily includes properties acquired after April 1, 2010, plus any
properties in lease-up and not stabilized as of April 1, 2010.
(3)
Other includes development, condominium conversion overhead of $0.1 million and other
corporate operations.
Table of Contents
Six Months Ended June 30,
Quarter Ended June 30,
2011
2010
2011
2010
$
974,096
$
871,091
$
496,111
$
444,333
(211,418
)
(202,801
)
(103,092
)
(100,045
)
(110,332
)
(105,496
)
(56,701
)
(52,350
)
(43,148
)
(40,756
)
(20,767
)
(20,264
)
(364,898
)
(349,053
)
(180,560
)
(172,659
)
$
609,198
$
522,038
$
315,551
$
271,674
Repaid $176.3 million in mortgage loans;
Called for redemption its 3.85% convertible unsecured debt with a final maturity of
2026;
Sold two properties containing 685 apartment units for $66.5 million; and
Replaced its then existing unsecured revolving credit facility with a new $1.25 billion
unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year
extension option exercisable by the Company. The interest rate on advances under the new
credit facility will generally be LIBOR plus a spread (currently 1.15%) and the Company
pays an annual facility fee of 0.2%. Both the spread and the facility fee are dependent on
the credit rating of the Companys long-term debt. ERPOP entered into the new revolving
credit facility and EQR has guaranteed the revolving credit facility up to the maximum
amount and for the full term of the facility. There is approximately $1.17 billion
available on the new unsecured revolving credit facility as of July 28, 2011.
Table of Contents
We intend to actively acquire and/or develop multifamily properties for rental
operations as market conditions dictate. We may also acquire multifamily properties
that are unoccupied or in the early stages of lease up. We may be unable to lease
apartment properties on schedule, resulting in decreases in expected rental revenues
and/or lower yields due to lower occupancy and rates as well as higher than expected
concessions. We may underestimate the costs necessary to bring an acquired property up
to standards established for its intended market position or to complete a development
property. Additionally, we expect that other real estate investors with capital will
compete with us for attractive investment opportunities or may also develop properties
in markets where we focus our development and acquisition efforts. This competition (or
lack thereof) may increase (or depress) prices for multifamily properties. We may not
be in a position or have the opportunity in the future to make suitable property
acquisitions on favorable terms. The total number of apartment units under development,
costs of development and estimated completion dates are subject to uncertainties
arising from changing economic conditions (such as the cost of labor and construction
materials), competition and local government regulation;
Debt financing and other capital required by the Company may not be available or may
only be available on adverse terms;
Labor and materials required for maintenance, repair, capital expenditure or
development may be more expensive than anticipated;
Occupancy levels and market rents may be adversely affected by national and local
economic and market conditions including slow or negative employment growth and
household formation as well as the potential for geopolitical instability, all of which
are beyond the Companys control;
Our residents may choose to leave our properties or not rent at all because owned
housing has become a more attractive option for them due to, among other things, the
availability of low interest mortgages, government programs and changes in social
preferences; and
Additional factors as discussed in Part I of both the Companys and the Operating
Partnerships Annual Reports on Form 10-K, particularly those under Item 1A. Risk
Factors.
Table of Contents
High barriers to entry where, because of land scarcity or government regulation, it is
difficult or costly to build new apartment properties, creating limits on new
supply;
High single family home prices making our apartments a more economical housing choice;
Strong economic growth leading to household formation and job growth, which in turn
leads to high demand for our apartments; and
An attractive quality of life leading to high demand and retention that allows us to
more aggressively increase rents.
Table of Contents
Table of Contents
Acquired $549.3 million of apartment properties consisting of seven consolidated
properties and 2,069 apartment units at a weighted average cap rate (see definition
below) of 5.2% and one land parcel for $12.9 million, all of which we deem to be in our
strategic targeted markets;
Acquired a 97,000 square foot commercial building adjacent to our Harbor Steps
apartment property in downtown Seattle for $11.8 million for potential redevelopment;
and
Sold $1.2 billion of consolidated apartment properties consisting of 38 properties
and 11,267 apartment units at a weighted average cap rate of 6.4% and one land parcel
for $22.8 million, the majority of which was in exit or less desirable markets.
Table of Contents
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) 104,163 Same Store Apartment Units
Results
Statistics
Average
Rental
Description
Revenues
Expenses
NOI
Rate (1)
Occupancy
Turnover
$
858,888
$
315,172
$
543,716
$
1,445
95.2
%
26.7
%
$
822,276
$
316,040
$
506,236
$
1,389
94.8
%
26.2
%
$
36,612
$
(868
)
$
37,480
$
56
0.4
%
0.5
%
4.5
%
(0.3
%)
7.4
%
4.0
%
(1)
Average rental rate is defined as total rental revenues divided by the weighted average
occupied apartment units for the period.
Table of Contents
Same Store Operating Expenses
$ in thousands 104,163 Same Store Apartment Units
% of Actual
YTD 2011
Actual
Actual
$
%
Operating
YTD 2011
YTD 2010
Change
Change
Expenses
$
85,461
$
84,735
$
726
0.9
%
27.1
%
73,921
76,078
(2,157
)
(2.8
%)
23.5
%
50,214
49,004
1,210
2.5
%
15.9
%
45,406
45,700
(294
)
(0.6
%)
14.4
%
34,699
32,891
1,808
5.5
%
11.0
%
9,944
10,556
(612
)
(5.8
%)
3.2
%
5,877
7,050
(1,173
)
(16.6
%)
1.9
%
9,650
10,026
(376
)
(3.8
%)
3.0
%
$
315,172
$
316,040
$
(868
)
(0.3
%)
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, apartment 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 on-site operating expenses Includes administrative costs such as office supplies,
telephone and data charges and association and business licensing fees.
Six Months Ended June 30,
2011
2010
(Amounts in thousands)
$
267,473
$
200,171
(65,482
)
(15,802
)
(3,754
)
(5,468
)
1,957
3,563
321,181
302,964
22,341
20,808
$
543,716
$
506,236
2011 Same Store Assumptions
95.2%
Revenue change
4.8% to 5.1%
Expense change
0.0% to 1.0%
NOI change
7.0% to 8.0%
Table of Contents
Development and other miscellaneous properties in lease-up of $20.2 million;
Properties acquired in 2010 and 2011 of $24.8 million;
Newly stabilized development properties of $2.0 million; and
Partially offset by other miscellaneous properties of $2.3 million.
Table of Contents
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) 105,730 Same Store Apartment Units
Results
Statistics
Average
Rental
Description
Revenues
Expenses
NOI
Rate (1)
Occupancy
Turnover
$
450,422
$
163,030
$
287,392
$
1,490
95.5
%
15.0
%
$
429,512
$
161,831
$
267,681
$
1,426
95.1
%
14.3
%
$
20,910
$
1,199
$
19,711
$
64
0.4
%
0.7
%
4.9
%
0.7
%
7.4
%
4.5
%
(1)
Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
Table of Contents
Same Store Operating Expenses
$ in thousands 105,730 Same Store Apartment Units
% of Actual
Q2 2011
Actual
Actual
$
%
Operating
Q2 2011
Q2 2010
Change
Change
Expenses
$
46,715
$
45,889
$
826
1.8
%
28.6
%
37,883
39,232
(1,349
)
(3.4
%)
23.2
%
24,070
23,325
745
3.2
%
14.8
%
23,811
22,589
1,222
5.4
%
14.6
%
18,197
17,180
1,017
5.9
%
11.2
%
5,049
5,365
(316
)
(5.9
%)
3.1
%
2,894
3,564
(670
)
(18.8
%)
1.8
%
4,411
4,687
(276
)
(5.9
%)
2.7
%
$
163,030
$
161,831
$
1,199
0.7
%
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, apartment 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 on-site operating expenses Includes administrative costs such as office supplies,
telephone and data charges and association and business licensing fees.
Quarter Ended June 30,
2011
2010
(Amounts in thousands)
$
146,495
$
100,329
(28,159
)
(3,993
)
(1,948
)
(3,046
)
1,009
1,605
159,087
162,697
10,908
10,089
$
287,392
$
267,681
Development and other miscellaneous properties in lease-up of $10.9 million;
Properties acquired in 2010 and 2011 of $11.8 million;
Newly stabilized development properties of $1.0 million; and
Partially offset by other miscellaneous properties of $1.2 million.
Table of Contents
Table of Contents
Disposed of 38 consolidated properties and one land parcel, receiving net proceeds of
approximately $1.2 billion;
Obtained $135.2 million in new mortgage financing; and
Issued approximately 5.7 million Common Shares (including Common Shares issued under the
ATM program see further discussion below) and received net proceeds of $241.5 million,
which were contributed to the capital of the Operating Partnership in exchange for
additional OP Units (on a one-for-one Common Share per OP Unit basis).
Acquire seven rental properties, a 97,000 square foot commercial building and one land
parcel for approximately $475.4 million;
Invest $63.6 million primarily in development projects; and
Repay $640.8 million of mortgage loans and $93.1 million of unsecured notes.
Table of Contents
(Amounts in thousands)
Weighted
Weighted
Average
Average
Maturities
Amounts (1)
% of Total
Rates (1)
(years)
$
4,352,372
46.1
%
4.81
%
8.3
5,096,250
53.9
%
5.17
%
4.2
$
9,448,622
100.0
%
5.00
%
6.0
$
3,590,353
38.0
%
5.59
%
7.3
4,287,431
45.4
%
5.83
%
4.7
7,877,784
83.4
%
5.72
%
5.9
264,612
2.8
%
3.05
%
0.9
497,407
5.3
%
0.29
%
19.7
808,819
8.5
%
1.67
%
1.5
0.7
1,570,838
16.6
%
1.38
%
6.8
$
9,448,622
100.0
%
5.00
%
6.0
(1)
Net of the effect of any derivative instruments. Weighted average rates are for the six
months ended June 30, 2011.
(2)
On July 13, 2011, the Company replaced its then existing unsecured revolving credit facility
with a new $1.25 billion unsecured revolving credit facility maturing on July 13, 2014,
subject to a one-year extension option exercisable by the Company. The interest rate on
advances under the new credit facility will generally be LIBOR plus a spread (currently 1.15%)
and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are
dependent on the credit rating of the Companys long-term debt.
(Amounts in thousands)
Weighted Average
Weighted Average
Fixed
Floating
Rates on Fixed
Rates on
Year
Rate (1)
Rate (1)
Total
% of Total
Rate Debt (1)
Total Debt (1)
$
492,335
(2)
$
50,914
$
543,249
5.8
%
3.91
%
3.89
%
640,027
685,360
(3)
1,325,387
14.0
%
6.06
%
3.52
%
272,761
309,357
582,118
6.2
%
6.71
%
4.88
%
566,288
21,959
588,247
6.2
%
5.32
%
5.24
%
418,764
418,764
4.4
%
6.31
%
6.31
%
1,192,934
1,192,934
12.6
%
5.35
%
5.35
%
1,355,833
456
1,356,289
14.4
%
5.87
%
5.87
%
80,768
44,677
125,445
1.3
%
5.72
%
4.23
%
801,760
20,766
822,526
8.7
%
5.49
%
5.36
%
1,671,836
809
1,672,645
17.7
%
5.50
%
5.50
%
384,478
436,540
821,018
8.7
%
5.99
%
3.23
%
$
7,877,784
$
1,570,838
$
9,448,622
100.0
%
5.58
%
4.92
%
(1)
Net of the effect of any derivative instruments. Weighted average rates are as of June 30,
2011.
(2)
Includes $482.5 million face value of 3.85% convertible unsecured debt with a final maturity
of 2026. On July 18, 2011, the
Table of Contents
notes were called for redemption and are subject to exchange
prior to the redemption date of August 18, 2011.
(3)
Effective April 5, 2011, the Company exercised the second of its two one-year extension
options for its $500.0 million term loan facility and as a result, the maturity date is now
October 5, 2012.
(Amounts in thousands)
Unamortized
Coupon
Due
Face
Premium/
Net
Rate
Date
Amount
(Discount)
Balance
6.625
%
03/15/12
$
253,858
$
(137
)
$
253,721
5.500
%
10/01/12
222,133
(274
)
221,859
5.200
%
04/01/13
(1)
400,000
(207
)
399,793
(1)
(300,000
)
(300,000
)
5.250
%
09/15/14
500,000
(197
)
499,803
6.584
%
04/13/15
300,000
(414
)
299,586
5.125
%
03/15/16
500,000
(251
)
499,749
5.375
%
08/01/16
400,000
(943
)
399,057
5.750
%
06/15/17
650,000
(3,052
)
646,948
7.125
%
10/15/17
150,000
(408
)
149,592
4.750
%
07/15/20
600,000
(4,120
)
595,880
7.570
%
08/15/26
140,000
140,000
3.850
%
08/15/26
(2)
482,545
(1,102
)
481,443
4,298,536
(11,105
)
4,287,431
04/01/13
(1)
300,000
300,000
(1)
8,819
8,819
LIBOR+0.50%
10/05/12
(3)(4)
500,000
500,000
808,819
808,819
(3)(5)
$
5,107,355
$
(11,105
)
$
5,096,250
(1)
Fair value interest rate swaps convert $300.0 million of the 5.200% notes due April 1,
2013 to a floating interest rate.
(2)
Convertible notes mature on August 15, 2026. On July 18, 2011, the notes were called
for redemption and are subject to exchange prior to the redemption date of August 18, 2011.
(3)
Facilities are private. All other unsecured debt is public.
(4)
Effective April 5, 2011, the Company exercised the second of its two one-year extension
options for its $500.0 million term loan facility and as a result, the maturity date is now
October 5, 2012.
(5)
On July 13, 2011, the Company replaced its then existing unsecured revolving credit
facility with a new $1.25 billion unsecured revolving credit facility maturing on July 13,
2014, subject to a one-year extension option exercisable by the Company. The interest rate
on advances under the new credit facility will generally be LIBOR plus a spread (currently
1.15%) and the Company pays an annual facility fee of 0.2%. Both the spread and the
facility fee are dependent on the credit rating of the Companys long-term debt.
Table of Contents
Capital Structure as of June 30, 2011
(Amounts in thousands except for share/unit and per share amounts)
$
4,352,372
46.1
%
5,096,250
53.9
%
9,448,622
100.0
%
33.5
%
296,280,085
95.6
%
13,488,276
4.4
%
309,768,361
100.0
%
$
60.00
18,586,102
98.9
%
200,000
1.1
%
18,786,102
100.0
%
66.5
%
$
28,234,724
100.0
%
Perpetual Preferred Equity as of June 30, 2011
(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
12/10/26
1,000,000
$
50,000
$
4.145
$
4,145
6/19/08
600,000
150,000
16.20
9,720
1,600,000
$
200,000
$
13,865
6.93
%
Capital Structure as of June 30, 2011
(Amounts in thousands except for unit and per unit amounts)
$
4,352,372
46.1
%
5,096,250
53.9
%
9,448,622
100.0
%
33.5
%
309,768,361
$
60.00
18,586,102
98.9
%
200,000
1.1
%
18,786,102
100.0
%
66.5
%
$
28,234,724
100.0
%
Table of Contents
Perpetual Preference Units as of June 30, 2011
(Amounts in thousands except for unit and per unit amounts)
Annual
Annual
Weighted
Redemption
Outstanding
Liquidation
Dividend
Dividend
Average
Series
Date
Units
Value
Per Unit
Amount
Rate
12/10/26
1,000,000
$
50,000
$
4.145
$
4,145
6/19/08
600,000
150,000
16.20
9,720
1,600,000
$
200,000
$
13,865
6.93
%
Table of Contents
Replacements
(inside the apartment unit)
. These include:
flooring such as carpets, hardwood, vinyl, linoleum or tile;
appliances;
mechanical equipment such as individual furnace/air units, hot water heaters, etc;
furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans,
sinks, tubs, toilets, mirrors, countertops, etc; and
blinds/shades.
Building improvements (
outside the apartment unit
). These include:
roof replacement and major repairs;
paving or major resurfacing of parking lots, curbs and sidewalks;
amenities and common areas such as pools, exterior sports and playground equipment,
lobbies, clubhouses, laundry rooms, alarm and security systems and offices;
major building mechanical equipment systems;
interior and exterior structural repair and exterior painting and siding;
major landscaping and grounds improvement; and
vehicles and office and maintenance equipment.
Table of Contents
For the Six Months Ended June 30, 2011
Total
Avg. Per
Avg. Per
Avg. Per
Apartment
Apartment
Building
Apartment
Apartment
Units (1)
Replacements (2)
Unit
Improvements
Unit
Total
Unit
104,163
$
33,373
$
321
$
22,942
$
220
$
56,315
$
541
11,747
2,220
214
4,949
477
7,169
691
1,226
153
1,379
115,910
$
36,819
$
28,044
$
64,863
(1)
Total Apartment Units Excludes 4,850 military housing apartment units for which repairs
and maintenance expenses and capital expenditures to real estate are self-funded and do not
consolidate into the Companys results.
(2)
Replacements Includes new expenditures inside the apartment units such as appliances,
mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store
properties also include $18.2 million spent during the six months ended June 30, 2011 on
apartment unit renovations/rehabs (primarily kitchens and baths) on 2,497 apartment units
(equating to about $7,300 per apartment unit rehabbed) designed to reposition these assets for
higher rental levels in their respective markets.
(3)
Same Store Properties Primarily includes all properties acquired or completed and
stabilized prior to January 1, 2010, less properties subsequently sold.
(4)
Non-Same Store Properties Primarily includes all properties acquired during 2010 and 2011,
plus any properties in lease-up and not stabilized as of January 1, 2010. Per apartment unit
amounts are based on a weighted average of 10,369 apartment units.
(5)
Other Primarily includes expenditures for properties sold during the period.
Table of Contents
Table of Contents
Table of Contents
(Amounts in thousands)
Six Months Ended June 30,
Quarter Ended June 30,
2011
2010
2011
2010
$
714,819
$
67,945
$
581,753
$
10,089
(31
)
435
(71
)
185
321,181
302,964
159,087
162,697
(2,905
)
(3,257
)
(1,521
)
(1,620
)
(1,505
)
7
(755
)
(4
)
(5,557
)
(5,079
)
9,661
24,600
2,446
12,189
(682,236
)
(60,253
)
(558,482
)
(217
)
1,115
631
720
243
1,024
1,024
361,123
327,515
184,201
178,483
6,790
6,026
4,626
1,643
8,573
4,819
6,510
1,947
(5,529
)
(612
)
(5,153
)
(245
)
(2,100
)
(5,192
)
(3,192
)
$
368,857
$
332,556
$
190,184
$
178,636
$
361,123
$
327,515
$
184,201
$
178,483
(6,933
)
(7,238
)
(3,467
)
(3,618
)
$
354,190
$
320,277
$
180,734
$
174,865
$
368,857
$
332,556
$
190,184
$
178,636
(6,933
)
(7,238
)
(3,467
)
(3,618
)
$
361,924
$
325,318
$
186,717
$
175,018
(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 apartment units to condominiums, it simultaneously
discontinues depreciation of such property.
(2)
Normalized funds from operations (Normalized FFO) begins with FFO and excludes:
the impact of any expenses relating to asset impairment and valuation allowances;
property acquisition and other transaction costs related to mergers and acquisitions and
pursuit cost write-offs (other expenses);
gains and losses from early debt extinguishment, including prepayment penalties,
preferred share/preference unit redemptions and the cost related to the implied option
value of non-cash convertible debt discounts;
gains and losses on the sales of non-operating assets, including gains and losses from
land parcel and condominium sales, net of the effect of income tax benefits or expenses;
and
other miscellaneous non-comparable items.
(3)
The Company believes that FFO and FFO available to Common Shares and Units / Units are
helpful to investors as
Table of Contents
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 / Units can help compare the operating performance of a companys real
estate between periods or as compared to different companies. The company also believes that
Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to
investors as supplemental measures of the operating performance of a real estate company
because they allow investors to compare the companys operating performance to its performance
in prior reporting periods and to the operating performance of other real estate companies
without the effect of items that by their nature are not comparable from period to period and
tend to obscure the Companys actual operating results. FFO, FFO available to Common Shares
and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units /
Units do not represent net income, net income available to Common Shares / Units or net cash
flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to
Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares
and Units / Units should not be exclusively considered as alternatives to net income, net
income available to Common Shares / Units or net cash flows from operating activities as
determined by GAAP or as a measure of liquidity. The Companys calculation of FFO, FFO
available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to
Common Shares and Units / 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.
(4)
FFO available to Common Shares and Units / Units and Normalized FFO available to Common
Shares and Units / Units are calculated on a basis consistent with net income available to
Common Shares / Units and reflects adjustments to net income for preferred distributions and
premiums on redemption of preferred shares/preference units 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 Common Shares on a one-for-one basis.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
Table of Contents
Table of Contents
62
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Exhibits
See the Exhibit Index
Table of Contents
EQUITY RESIDENTIAL
Date: August 5, 2011
By:
/s/ Mark J. Parrell
Mark J. Parrell
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 5, 2011
By:
/s/ Ian S. Kaufman
Ian S. Kaufman
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
ERP OPERATING LIMITED PARTNERSHIP
BY: EQUITY RESIDENTIAL
ITS GENERAL PARTNER
Date: August 5, 2011
By:
/s/ Mark J. Parrell
Mark J. Parrell
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 5, 2011
By:
/s/ Ian S. Kaufman
Ian S. Kaufman
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
Table of Contents
Exhibit
Description
Location
The Equity Residential Supplemental Executive Retirement Plan as Amended and
Restated Effective April 1, 2011.
Attached herein.
Equity Residential 2011 Share Incentive Plan.
Included as Exhibit
99.1 to Equity
Residentials and
ERP Operating
Limited
Partnerships Form
8-K dated June 16,
2011, filed on June
22, 2011.
Second Amendment to Second Restated 2002 Share Incentive Plan.
Attached herein.
Equity ResidentialCertification of David J. Neithercut, Chief Executive
Officer.
Attached herein.
Equity ResidentialCertification of Mark J. Parrell, Chief Financial Officer.
Attached herein.
ERP Operating Limited PartnershipCertification of David J. Neithercut,
Chief Executive Officer of Registrants General Partner.
Attached herein.
ERP Operating Limited PartnershipCertification of Mark J. Parrell, Chief
Financial Officer of Registrants General Partner.
Attached herein.
Equity ResidentialCertification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J.
Neithercut, Chief Executive Officer of the Company.
Attached herein.
Equity ResidentialCertification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J.
Parrell, Chief Financial Officer of the Company.
Attached herein.
ERP Operating Limited PartnershipCertification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, of David J. Neithercut, Chief Executive Officer of Registrants General
Partner.
Attached herein.
ERP Operating Limited PartnershipCertification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, of Mark J. Parrell, Chief Financial Officer of Registrants General
Partner.
Attached herein.
XBRL (Extensible Business Reporting Language). The following materials from
Equity Residentials and ERP Operating Limited Partnerships Quarterly Report
on Form 10-Q for the period ended June 30, 2011, formatted in XBRL: (i)
consolidated balance sheets, (ii) consolidated statements of operations, (iii)
consolidated statements of cash flows, (iv) consolidated statement of changes
in equity (Equity Residential), (v) consolidated statement of changes in
capital (ERP Operating Limited Partnership) and (vi) notes to consolidated
financial statements. As provided in Rule 406T of Regulation S-T, this
information is furnished and not filed for purpose of Sections 11 and 12 of the
Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
Attached herein.
*
Management contracts and compensatory plans or arrangements filed as exhibits to this report
are identified by an asterisk.
ARTICLE 1 INTRODUCTION
|
1 | |||
1.1 Purpose of Plan
|
1 | |||
1.2 Status of Plan
|
1 | |||
1.3 Good Faith Compliance
|
1 | |||
ARTICLE 2 DEFINITIONS
|
2 | |||
2.1 Account
|
2 | |||
2.2 Code
|
2 | |||
2.3 Compensation
|
2 | |||
2.4 Elective Deferral
|
3 | |||
2.5 Eligible Employee
|
3 | |||
2.6 Eligible Trustee
|
3 | |||
2.7 Employer
|
3 | |||
2.8 Employer Contribution
|
3 | |||
2.9 Enrollment Form
|
3 | |||
2.10 Entry Date
|
3 | |||
2.11 EQR
|
4 | |||
2.12 ERISA
|
4 | |||
2.13 Extended Company
|
4 | |||
2.14 Funding Trust
|
4 | |||
2.15 Funding Trustee
|
5 | |||
2.16 In-Service Sub-Account
|
5 | |||
2.17 Participant
|
5 | |||
2.18 Plan
|
5 | |||
2.19 Plan Administrator
|
5 | |||
2.20 Plan Year
|
5 | |||
2.21 Restricted Share
|
5 | |||
2.22 Retirement Sub-Account
|
6 | |||
2.23 Separation from Service
|
6 | |||
2.24 Share
|
6 | |||
2.25 Share Deferral
|
6 |
-i-
2.26 Share Unit
|
6 | |||
2.27 Specified Employee
|
6 | |||
2.28 Unforeseeable Emergency
|
7 | |||
ARTICLE 3 PARTICIPATION
|
7 | |||
3.1 Satisfaction of Eligibility Requirements
|
7 | |||
3.2 Commencement of Participation
|
8 | |||
3.3 Continued Participation
|
8 | |||
ARTICLE 4 ELECTIVE AND SHARE DEFERRALS AND EMPLOYER
CONTRIBUTIONS
|
8 | |||
4.1 Elective Deferrals
|
8 | |||
4.2 Share Deferrals
|
10 | |||
4.3 Enrollment Forms
|
11 | |||
4.4 Employer Contribution
|
12 | |||
ARTICLE 5 ACCOUNTS
|
12 | |||
5.1 Accounts
|
12 | |||
5.2 Investments
|
13 | |||
ARTICLE 6 VESTING
|
14 | |||
6.1 General
|
14 | |||
ARTICLE 7 PAYMENTS
|
15 | |||
7.1 Election as to Time and Form of Payment
|
15 | |||
7.2 Separation from Service
|
17 | |||
7.3 Death
|
18 | |||
7.4 Withdrawal Due to Unforeseeable Emergency
|
18 | |||
7.5 Taxes
|
19 | |||
ARTICLE 8 PLAN ADMINISTRATOR
|
19 | |||
8.1 Plan Administration and Interpretation
|
19 | |||
8.2 Powers, Duties, Procedures, Etc
|
20 | |||
8.3 Information
|
20 | |||
8.4 Indemnification of Plan Administrator
|
20 |
-ii-
ARTICLE 9 CLAIMS PROCEDURES
|
21 | |||
ARTICLE 10 AMENDMENT AND TERMINATION
|
22 | |||
10.1 Amendment
|
22 | |||
10.2 Termination of Plan
|
22 | |||
10.3 Existing Rights
|
23 | |||
10.4 409A
|
23 | |||
ARTICLE 11 MISCELLANEOUS
|
24 | |||
11.1 No Funding
|
24 | |||
11.2 Non-assignability
|
24 | |||
11.3 Limitation of Participants Rights
|
25 | |||
11.4 Participants Bound
|
25 | |||
11.5 Receipt and Release
|
25 | |||
11.6 Governing Law
|
26 | |||
11.7 Headings and Subheadings
|
26 |
-iii-
1
2
3
4
5
6
7
8
(i) | An Enrollment Form with respect to salary and commissions paid from and after the Entry Date shall be filed on or before a deadline established by the Plan Administrator, but in no event later than the date that precedes such Entry Date. | ||
(ii) | Notwithstanding clause (i) in the case of a Participants Initial Entry Date, the Enrollment Form will be effective with respect to salary and commissions received for services performed after the Enrollment Form is filed, if it is filed within 30 days after the Participants Initial Entry Date. | ||
(iii) | An Enrollment Form with respect to incentive pay which is performance based compensation, within the meaning of Treas. Reg. 1.409A-1(e), shall be filed on or before July 1 of the Plan Year in which the incentive pay is earned. An enrollment form with respect to incentive pay which is not performance based compensation, within the meaning of Treas. Reg. 1.409A-1(e), shall be filed on or before January 1 of the Plan Year in which the incentive pay is earned. |
9
10
11
12
13
(i) | lockout periods established by EQR in connection with the quarterly release of earnings results; or | ||
(ii) | blackout periods (periods during which Participants may not provide investment direction, other than lockout periods established by EQR in connection with the quarterly release of earnings results) with respect to the Equity Residential Advantage Retirement Savings Plan. |
14
(i) | A single lump-sum payment; | ||
(ii) | Annual installments over a period elected by the Participant of up to ten (10) years, the amount of each installment to equal the then balance of the Account divided by the number of installments remaining to be paid; or | ||
(iii) | a combination of (i) and (ii). |
15
16
17
18
19
20
21
22
23
24
25
EQUITY RESIDENTIAL
|
||||
By | /s/ Catherine Carraway | |||
Catherine Carraway | ||||
1 st Vice President, HR Operations |
26
EQUITY RESIDENTIAL
|
||||
By: | /s/ Bruce C. Strohm | |||
Bruce C. Strohm | ||||
Executive Vice President and General Counsel | ||||
1. | I have reviewed this quarterly report on Form 10-Q of Equity Residential; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ David J. Neithercut | ||||
David J. Neithercut | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Equity Residential; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Mark J. Parrell | ||||
Mark J. Parrell | ||||
Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of ERP Operating Limited Partnership; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ David J. Neithercut | ||||
David J. Neithercut | ||||
Chief Executive Officer of Registrants General Partner |
1. | I have reviewed this quarterly report on Form 10-Q of ERP Operating Limited Partnership; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Mark J. Parrell | ||||
Mark J. Parrell | ||||
Chief Financial Officer of Registrants General Partner |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David J. Neithercut | ||||
David J. Neithercut | ||||
Chief Executive Officer | ||||
August 5, 2011 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Mark J. Parrell | ||||
Mark J. Parrell | ||||
Chief Financial Officer | ||||
August 5, 2011 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. |
/s/ David J. Neithercut | ||||
David J. Neithercut | ||||
Chief Executive Officer of Registrants General Partner | ||||
August 5, 2011 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. |
/s/ Mark J. Parrell | ||||
Mark J. Parrell | ||||
Chief Financial Officer of Registrants General Partner | ||||
August 5, 2011 |