Equity Residential Reports Second Quarter 2019 Results

Raises Full Year Guidance

CHICAGO--()--Equity Residential (NYSE: EQR) today reported results for the quarter and six months ended June 30, 2019. All per share results are reported as available to common shares/units on a diluted basis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30,

 

 

 

 

 

2019

 

 

 

2018

 

 

$ Change

 

 

% Change

 

 

Earnings Per Share (EPS)

 

$

 

0.83

 

 

$

 

0.31

 

 

$

 

0.52

 

 

 

167.7%

 

 

Funds from Operations (FFO) per share

 

$

 

0.80

 

 

$

 

0.81

 

 

$

 

(0.01

)

 

 

(1.2%

)

 

Normalized FFO per share

 

$

 

0.86

 

 

$

 

0.81

 

 

$

 

0.05

 

 

 

6.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

 

Earnings Per Share (EPS)

 

$

1.11

 

 

$

0.88

 

 

$

0.23

 

 

 

26.1%

 

 

Funds from Operations (FFO) per share

 

$

1.61

 

 

$

1.52

 

 

$

0.09

 

 

 

5.9%

 

 

Normalized FFO per share

 

$

1.67

 

 

$

1.58

 

 

$

0.09

 

 

 

5.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Our operating results in the second quarter exceeded even our prior elevated expectations, led by improving results in our East Coast markets and Seattle and continued strength in our California markets,” said Mark J. Parrell, Equity Residential’s President and CEO. “The story in our business continues to be nearly limitless demand for the high quality lifestyle that our urban and dense suburban apartment properties and dedicated property teams provide. Based on this strong demand and the lowest second quarter turnover in our history, we are pleased to increase our full year same store revenue, NOI and Normalized FFO per share guidance ranges, with the new midpoints above the top end of our prior ranges.”

Highlights

  • The Company produced same store revenue growth of 3.5% for the second quarter of 2019, which was above its expectations, with Physical Occupancy of 96.6% and Renewal Rate Achieved growth of 5.1%.
  • The Company produced Normalized FFO per share growth of 6.2% for the second quarter of 2019.
  • During the second quarter of 2019, the Company acquired three apartment properties, totaling 1,065 apartment units, for an aggregate purchase price of approximately $376.0 million.
  • During the second quarter of 2019, the Company issued $600.0 million of unsecured notes at a coupon rate of 3.0%, one of the lowest ten-year coupons in the Company’s and the REIT industry’s history.

Results Per Share

The change in EPS for both the quarter and six months ended June 30, 2019 compared to the same periods of 2018, are due primarily to higher property and unconsolidated sale gains in the second quarter of 2019, the various adjustment items listed on page 25 of this release and the items described below.

The per share changes in FFO for both the quarter and six months ended June 30, 2019 compared to the same periods of 2018, are due primarily to the various adjustment items listed on page 25 of this release and the items described below.

The per share changes in Normalized FFO are due primarily to:

 

 

Positive/(Negative) Impact

 

 

 

Second Quarter 2019 vs.

Second Quarter 2018

 

 

June YTD 2019 vs.

June YTD 2018

 

Same Store Net Operating Income (NOI)

 

$

0.04

 

 

$

0.07

 

Lease-Up NOI and other non-same store NOI

 

 

0.01

 

 

 

0.02

 

2019 and 2018 transaction activity impact on NOI

 

 

0.01

 

 

 

0.02

 

Other items, including corporate overhead 1

 

 

(0.01

)

 

 

(0.02

)

Net

 

$

0.05

 

 

$

0.09

 

1 Corporate overhead includes property management and general and administrative expenses.

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 27 through 31 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 28 and 29 of this release and the Company has included guidance for 2019 Normalized FFO per share on page 26 and 2019 FFO per share and 2019 EPS on page 29 of this release.

Same Store Results

The following table shows the increases in same store results for the second quarter 2019 to second quarter 2018 comparison, which includes 74,236 apartment units, and for the six months ended June 30, 2019 to six months ended June 30, 2018 comparison, which includes 73,609 apartment units. The Company’s Physical Occupancy was 96.6% compared to 96.2% for the second quarter of 2019 and 2018, respectively, and 96.4% compared to 96.1% for the first six months of 2019 and 2018, respectively.

 

 

Second Quarter 2019 vs.

Second Quarter 2018

 

 

June YTD 2019 vs.

June YTD 2018

 

Revenues

 

3.5%

 

 

3.3%

 

Expenses

 

3.3%

 

 

3.9%

 

NOI

 

3.6%

 

 

3.1%

 

Investment Activity

The Company acquired three apartment properties during the second quarter of 2019, totaling 1,065 apartment units, for an aggregate purchase price of approximately $376.0 million at a weighted average Acquisition Capitalization Rate of 4.9%. The properties are located in suburban Washington, D.C., suburban Denver and San Jose, CA.

The Company sold two wholly owned properties during the second quarter of 2019, totaling 561 apartment units, for an aggregate sale price of approximately $402.8 million at a weighted average Disposition Yield of 4.4%, generating an Unlevered IRR of 8.6%. The properties are located in New York and Boston. Also during the second quarter of 2019, the Company sold two unconsolidated properties, totaling 945 apartment units, for an aggregate sale price of approximately $394.5 million at a weighted average Disposition Yield of 4.7%, received net proceeds of approximately $78.3 million and recognized a GAAP gain on sale of approximately $69.5 million from these sales. The properties are located in San Jose, CA and South Florida.

During the first six months of 2019, the Company acquired six properties, totaling 1,644 apartment units, for an aggregate purchase price of approximately $634.7 million at a weighted average Acquisition Capitalization Rate of 4.8%. The Company did not sell any properties in the first quarter of 2019. Therefore, year-to-date 2019 disposition activity is the same as listed above for the second quarter 2019.

Capital Markets Activity

On June 26, 2019, the Company issued $600.0 million of 10-year unsecured notes at a coupon rate of 3.0%. After the effect of the termination of certain interest rate hedges, underwriters’ fees and other costs associated with the offering, the all-in effective rate of the notes is approximately 3.85%. Proceeds were used to repay a portion of $950.0 million in secured and unsecured debt that was paid off on July 1, 2019. See page 18 of this release for more details.

Third Quarter 2019 Guidance

The Company has established guidance ranges for the third quarter of 2019 EPS, FFO per share and Normalized FFO per share as listed below:

 

 

Q3 2019

Guidance

EPS

 

$0.71 to $0.75

FFO per share

 

$0.87 to $0.91

Normalized FFO per share

 

$0.87 to $0.91

The difference between the second quarter 2019 actual EPS of $0.83 and the third quarter 2019 EPS guidance midpoint of $0.73 is due primarily to lower expected property and unconsolidated sale gains, offset by lower expected debt extinguishment costs and the items described below.

The difference between the second quarter 2019 actual FFO of $0.80 per share and the third quarter 2019 FFO guidance midpoint of $0.89 per share is due primarily to lower expected debt extinguishment costs and the items described below.

The difference between the second quarter 2019 actual Normalized FFO of $0.86 per share and the third quarter 2019 Normalized FFO guidance midpoint of $0.89 per share is due primarily to:

 

 

Positive/(Negative)

Impact

 

 

 

 

Third Quarter 2019 vs.

Second Quarter 2019

 

 

Same Store NOI

 

$

0.01

 

 

2019 and 2018 transaction activity impact on NOI

 

 

0.01

 

 

Corporate overhead

 

 

0.01

 

 

Net

 

$

0.03

 

 

Full Year 2019 Guidance

The Company has revised its guidance for its full year 2019 same store operating performance, EPS, FFO per share, Normalized FFO per share and transactions as listed below:

 

 

Revised

 

 

Previous

 

Same Store:

 

 

 

 

 

 

 

 

Physical Occupancy

 

96.4%

 

 

96.2%

 

Revenue change

 

3.1% to 3.5%

 

 

2.2% to 3.2%

 

Expense change

 

3.5% to 4.0%

 

 

3.5% to 4.5%

 

NOI change

 

2.7% to 3.5%

 

 

1.5% to 3.0%

 

 

 

 

 

 

 

 

 

 

EPS

 

$2.48 to $2.54

 

 

$1.94 to $2.04

 

FFO per share

 

$3.36 to $3.42

 

 

$3.26 to $3.36

 

Normalized FFO per share

 

$3.43 to $3.49

 

 

$3.34 to $3.44

 

 

 

 

 

 

 

 

 

 

Transactions:

 

 

 

 

 

 

 

 

Consolidated rental acquisitions

 

$1.0 billion

 

 

$700.0 million

 

Consolidated rental dispositions

 

$1.0 billion

 

 

$700.0 million

 

Transaction Accretion (Dilution)

 

None

 

 

(25 basis points)

 

The change in the full year 2019 EPS guidance range is due primarily to higher expected property and unconsolidated sale gains and the items described below.

The change in the full year 2019 FFO per share guidance range is due primarily to the items described below.

The change in the full year 2019 Normalized FFO per share guidance range is due primarily to:

 

 

Positive/(Negative)

Impact

 

 

 

 

Revised Full Year 2019 vs.

Previous Full Year 2019

 

 

Same Store NOI

 

$

0.04

 

 

2019 and 2018 transaction activity impact on NOI

 

 

0.03

 

 

Interest expense

 

 

0.01

 

 

Other items, including corporate overhead

 

 

(0.01

)

 

Net

 

$

0.07

 

 

Third Quarter 2019 Earnings and Conference Call

Equity Residential expects to announce its third quarter 2019 results on Tuesday, October 22, 2019 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, October 23, 2019.

About Equity Residential

Equity Residential is an S&P 500 company focused on the acquisition, development and management of rental apartment properties located in urban and high-density suburban markets where today’s renters want to live, work and play. Equity Residential owns or has investments in 309 properties consisting of 79,624 apartment units, primarily located in Boston, New York, Washington, D.C., Seattle, San Francisco, Southern California and Denver. For more information on Equity Residential, please visit our website at www.equityapartments.com.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading “Risk Factors” in our Annual Report on Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityapartments.com. Many of these uncertainties and risks are difficult to predict and beyond management’s control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

A live web cast of the Company’s conference call discussing these results will take place tomorrow, Wednesday, July 31, at 10:00 a.m. CT. Please visit the Investor section of the Company’s web site at www.equityapartments.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)

 

 

 

Six Months Ended June 30,

 

 

Quarter Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

1,331,676

 

 

$

1,272,451

 

 

$

669,374

 

 

$

639,620

 

Fee and asset management

 

 

335

 

 

 

373

 

 

 

143

 

 

 

188

 

Total revenues

 

 

1,332,011

 

 

 

1,272,824

 

 

 

669,517

 

 

 

639,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and maintenance

 

 

223,531

 

 

 

211,946

 

 

 

108,461

 

 

 

103,744

 

Real estate taxes and insurance

 

 

182,888

 

 

 

181,396

 

 

 

91,446

 

 

 

89,482

 

Property management

 

 

50,765

 

 

 

46,928

 

 

 

24,369

 

 

 

23,484

 

General and administrative

 

 

29,710

 

 

 

28,780

 

 

 

14,329

 

 

 

12,502

 

Depreciation

 

 

404,723

 

 

 

389,251

 

 

 

200,508

 

 

 

192,942

 

Total expenses

 

 

891,617

 

 

 

858,301

 

 

 

439,113

 

 

 

422,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on sales of real estate properties

 

 

138,835

 

 

 

142,162

 

 

 

138,856

 

 

 

(51

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

579,229

 

 

 

556,685

 

 

 

369,260

 

 

 

217,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

1,590

 

 

 

6,996

 

 

 

1,009

 

 

 

1,116

 

Other expenses

 

 

(8,392

)

 

 

(7,210

)

 

 

(5,117

)

 

 

(3,769

)

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred, net

 

 

(203,840

)

 

 

(210,235

)

 

 

(108,902

)

 

 

(94,131

)

Amortization of deferred financing costs

 

 

(5,783

)

 

 

(5,778

)

 

 

(3,647

)

 

 

(2,099

)

Income before income and other taxes, income (loss) from

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

362,804

 

340,458

 

252,603

 

118,720

 

Income and other tax (expense) benefit

 

 

(484

)

 

 

(487

)

 

 

(246

)

 

 

(274

)

Income (loss) from investments in unconsolidated entities

 

 

68,058

 

 

 

(2,008

)

 

 

68,765

 

 

 

(1,031

)

Net gain (loss) on sales of land parcels

 

 

178

 

 

 

995

 

 

 

177

 

 

 

995

 

Net income

 

 

430,556

 

 

 

338,958

 

 

 

321,299

 

 

 

118,410

 

Net (income) loss attributable to Noncontrolling Interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Partnership

 

 

(15,429

)

 

 

(12,358

)

 

 

(11,510

)

 

 

(4,299

)

Partially Owned Properties

 

 

(1,620

)

 

 

(1,189

)

 

 

(821

)

 

 

(509

)

Net income attributable to controlling interests

 

 

413,507

 

 

 

325,411

 

 

 

308,968

 

 

 

113,602

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(772

)

 

 

(772

)

Net income available to Common Shares

 

$

411,962

 

 

$

323,866

 

 

$

308,196

 

 

$

112,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.11

 

 

$

0.88

 

 

$

0.83

 

 

$

0.31

 

Weighted average Common Shares outstanding

 

 

369,952

 

 

 

367,865

 

 

 

370,342

 

 

 

367,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.11

 

 

$

0.88

 

 

$

0.83

 

 

$

0.31

 

Weighted average Common Shares outstanding

 

 

385,644

 

 

 

383,224

 

 

 

386,107

 

 

 

383,423

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

1.135

 

 

$

1.08

 

 

$

0.5675

 

 

$

0.54

 

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share data)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

Quarter Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

430,556

 

 

$

338,958

 

 

$

321,299

 

 

$

118,410

 

Net (income) loss attributable to Noncontrolling Interests – Partially

Owned Properties

 

 

(1,620

)

 

 

(1,189

)

 

 

(821

)

 

 

(509

)

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(772

)

 

 

(772

)

Net income available to Common Shares and Units

 

 

427,391

 

 

 

336,224

 

 

 

319,706

 

 

 

117,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

404,723

 

 

 

389,251

 

 

 

200,508

 

 

 

192,942

 

Depreciation – Non-real estate additions

 

 

(2,303

)

 

 

(2,260

)

 

 

(1,121

)

 

 

(1,115

)

Depreciation – Partially Owned Properties

 

 

(1,802

)

 

 

(1,933

)

 

 

(899

)

 

 

(901

)

Depreciation – Unconsolidated Properties

 

 

1,772

 

 

 

2,297

 

 

 

850

 

 

 

1,149

 

Net (gain) loss on sales of unconsolidated entities - operating

assets

 

 

(69,522

)

 

 

 

 

 

(69,522

)

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(138,835

)

 

 

(142,162

)

 

 

(138,856

)

 

 

51

 

Noncontrolling Interests share of gain (loss) on sales

of real estate properties

 

 

 

 

 

(284

)

 

 

 

 

 

(284

)

FFO available to Common Shares and Units

 

 

621,424

 

 

 

581,133

 

 

 

310,666

 

 

 

308,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (see page 25 for additional detail):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating assets

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

2,987

 

 

 

2,066

 

 

 

1,539

 

 

 

1,135

 

Debt extinguishment and preferred share redemption (gains)

losses

 

 

16,647

 

 

 

23,539

 

 

 

16,647

 

 

 

 

Non-operating asset (gains) losses

 

 

252

 

 

 

(478

)

 

 

23

 

 

 

(691

)

Other miscellaneous items

 

 

4,418

 

 

 

(1,470

)

 

 

2,843

 

 

 

1,769

 

Normalized FFO available to Common Shares and Units

 

$

645,728

 

 

$

604,790

 

 

$

331,718

 

 

$

311,184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

622,969

 

 

$

582,678

 

 

$

311,438

 

 

$

309,743

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(772

)

 

 

(772

)

FFO available to Common Shares and Units

 

$

621,424

 

 

$

581,133

 

 

$

310,666

 

 

$

308,971

 

FFO per share and Unit – basic

 

$

1.62

 

 

$

1.53

 

 

$

0.81

 

 

$

0.81

 

FFO per share and Unit – diluted

 

$

1.61

 

 

$

1.52

 

 

$

0.80

 

 

$

0.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO

 

$

647,273

 

 

$

606,335

 

 

$

332,490

 

 

$

311,956

 

Preferred distributions

 

 

(1,545

)

 

 

(1,545

)

 

 

(772

)

 

 

(772

)

Normalized FFO available to Common Shares and Units

 

$

645,728

 

 

$

604,790

 

 

$

331,718

 

 

$

311,184

 

Normalized FFO per share and Unit – basic

 

$

1.69

 

 

$

1.59

 

 

$

0.87

 

 

$

0.82

 

Normalized FFO per share and Unit – diluted

 

$

1.67

 

 

$

1.58

 

 

$

0.86

 

 

$

0.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares and Units outstanding – basic

 

 

382,854

 

 

 

380,729

 

 

 

383,227

 

 

 

380,795

 

Weighted average Common Shares and Units outstanding – diluted

 

 

385,644

 

 

 

383,224

 

 

 

386,107

 

 

 

383,423

 

Note: See page 25 for additional detail regarding the adjustments from FFO to Normalized FFO. See pages 27 through 31 for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

Equity Residential

Consolidated Balance Sheets

(Amounts in thousands except for share amounts)

(Unaudited)

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Land

 

$

5,889,308

 

 

$

5,875,803

 

Depreciable property

 

 

20,824,053

 

 

 

20,435,901

 

Projects under development

 

 

171,869

 

 

 

109,409

 

Land held for development

 

 

110,545

 

 

 

89,909

 

Investment in real estate

 

 

26,995,775

 

 

 

26,511,022

 

Accumulated depreciation

 

 

(7,026,622

)

 

 

(6,696,281

)

Investment in real estate, net

 

 

19,969,153

 

 

 

19,814,741

 

Investments in unconsolidated entities

 

 

52,907

 

 

 

58,349

 

Cash and cash equivalents

 

 

251,273

 

 

 

47,442

 

Restricted deposits

 

 

58,195

 

 

 

68,871

 

Right-of-use assets

 

 

431,753

 

 

 

 

Other assets

 

 

227,430

 

 

 

404,806

 

Total assets

 

$

20,990,711

 

 

$

20,394,209

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Mortgage notes payable, net

 

$

2,599,013

 

 

$

2,385,470

 

Notes, net

 

 

6,531,408

 

 

 

5,933,286

 

Line of credit and commercial paper

 

 

 

 

 

499,183

 

Accounts payable and accrued expenses

 

 

108,574

 

 

 

102,471

 

Accrued interest payable

 

 

64,158

 

 

 

62,622

 

Lease liabilities

 

 

281,620

 

 

 

 

Other liabilities

 

 

302,628

 

 

 

358,563

 

Security deposits

 

 

69,027

 

 

 

67,258

 

Distributions payable

 

 

218,697

 

 

 

206,601

 

Total liabilities

 

 

10,175,125

 

 

 

9,615,454

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests – Operating Partnership

 

 

436,035

 

 

 

379,106

 

Equity:

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred Shares of beneficial interest, $0.01 par value;

 

 

 

 

 

 

 

 

100,000,000 shares authorized; 745,600 shares issued and

outstanding as of June 30, 2019 and December 31, 2018

37,280

37,280

Common Shares of beneficial interest, $0.01 par value;

 

 

 

 

 

 

 

 

1,000,000,000 shares authorized; 370,838,810 shares issued

and outstanding as of June 30, 2019 and 369,405,161

shares issued and outstanding as of December 31, 2018

3,708

3,694

Paid in capital

 

 

8,949,581

 

 

 

8,935,453

 

Retained earnings

 

 

1,252,809

 

 

 

1,261,763

 

Accumulated other comprehensive income (loss)

 

 

(89,849

)

 

 

(64,986

)

Total shareholders’ equity

 

 

10,153,529

 

 

 

10,173,204

 

Noncontrolling Interests:

 

 

 

 

 

 

 

 

Operating Partnership

 

 

227,320

 

 

 

228,738

 

Partially Owned Properties

 

 

(1,298

)

 

 

(2,293

)

Total Noncontrolling Interests

 

 

226,022

 

 

 

226,445

 

Total equity

 

 

10,379,551

 

 

 

10,399,649

 

Total liabilities and equity

 

$

20,990,711

 

 

$

20,394,209

 

Equity Residential

Portfolio Summary

As of June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

% of

Stabilized

 

 

Average

 

 

 

 

 

 

 

Apartment

 

 

Budgeted

 

 

Rental

 

Markets/Metro Areas

 

Properties

 

 

Units

 

 

NOI

 

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

70

 

 

 

15,968

 

 

 

18.4

%

 

$

2,599

 

Orange County

 

 

13

 

 

 

4,028

 

 

 

4.3

%

 

 

2,232

 

San Diego

 

 

12

 

 

 

3,385

 

 

 

3.8

%

 

 

2,395

 

Subtotal – Southern California

 

 

95

 

 

 

23,381

 

 

 

26.5

%

 

 

2,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

56

 

 

 

13,812

 

 

 

21.0

%

 

 

3,265

 

Washington DC

 

 

50

 

 

 

16,416

 

 

 

17.2

%

 

 

2,424

 

New York

 

 

37

 

 

 

9,606

 

 

 

14.6

%

 

 

3,891

 

Boston

 

 

24

 

 

 

6,346

 

 

 

9.7

%

 

 

3,112

 

Seattle

 

 

42

 

 

 

8,615

 

 

 

9.7

%

 

 

2,384

 

Denver

 

 

4

 

 

 

1,312

 

 

 

1.3

%

 

 

2,117

 

Other Markets

 

 

1

 

 

 

136

 

 

 

%

 

 

1,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

309

 

 

 

79,624

 

 

 

100.0

%

 

$

2,815

 

 

 

 

Properties

 

 

Apartment Units

 

 

 

 

 

 

 

 

 

 

Wholly Owned Properties

 

 

291

 

 

 

75,927

 

Master-Leased Properties - Consolidated

 

 

1

 

 

 

162

 

Partially Owned Properties - Consolidated

 

 

17

 

 

 

3,535

 

 

 

 

 

 

 

 

 

 

 

 

 

309

 

 

 

79,624

 

Note 1: Projects under development are not included in the Portfolio Summary until construction has been completed.

Note 2: The Company sold two unconsolidated properties located in San Jose, CA and South Florida in the second quarter of 2019, which represented its entire unconsolidated rental property portfolio.

Equity Residential

Portfolio Rollforward Q2 2019

($ in thousands)

 

 

 

 

 

Properties

 

 

Apartment

Units

 

 

Purchase

Price

 

 

Acquisition

Cap Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2019

 

 

310

 

 

 

80,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

 

 

 

 

2

 

 

 

753

 

 

$

284,000

 

 

 

4.8%

Rental Properties – Not Stabilized (A)

 

 

 

 

1

 

 

 

312

 

 

$

92,000

 

 

 

5.0%

Land Parcels

 

 

 

 

 

 

 

 

 

$

16,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

Disposition

Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

 

 

(2

)

 

 

(561

)

 

$

(402,750

)

 

 

(4.4%)

Unconsolidated Rental Properties (B)

 

 

 

 

(2

)

 

 

(945

)

 

$

(394,500

)

 

 

(4.7%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2019

 

 

309

 

 

 

79,624

 

 

 

 

 

 

 

 

Portfolio Rollforward 2019

($ in thousands)

 

 

 

 

 

Properties

 

 

Apartment

Units

 

 

Purchase Price

 

 

Acquisition

Cap Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2018

 

 

307

 

 

 

79,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

 

 

 

 

4

 

 

 

1,058

 

 

$

432,150

 

 

 

4.7%

Rental Properties – Not Stabilized (A)

 

 

 

 

2

 

 

 

586

 

 

$

202,500

 

 

 

4.8%

Land Parcels

 

 

 

 

 

 

 

 

 

$

16,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

Disposition

Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

 

 

(2

)

 

 

(561

)

 

$

(402,750

)

 

 

(4.4%)

Unconsolidated Rental Properties (B)

 

 

 

 

(2

)

 

 

(945

)

 

$

(394,500

)

 

 

(4.7%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2019

 

 

309

 

 

 

79,624

 

 

 

 

 

 

 

 

(A)

The Company acquired two properties in the Denver market in the six months ended June 30, 2019 that are in the final stages of completing lease-up and are expected to stabilize in the second year of ownership at the Acquisition Cap Rates listed above.

(B)

The Company owned a 20% interest in both unconsolidated rental properties located in San Jose, CA and South Florida. Sales price listed is the gross sales price. The Company received net sales proceeds of approximately $78.3 million and recognized a GAAP gain on sale of approximately $69.5 million.

Equity Residential

Second Quarter 2019 vs. Second Quarter 2018

Same Store Results/Statistics for 74,236 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

 

 

 

Results

 

 

Statistics

Description

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2019

 

$

 

630,569

 

 

$

 

186,521

 

 

$

 

444,048

 

 

$

 

2,822

 

 

 

96.6

%

 

 

13.0

%

Q2 2018

 

$

 

609,272

 

 

$

 

180,488

 

 

$

 

428,784

 

 

$

 

2,740

 

 

 

96.2

%

 

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

$

 

21,297

 

 

$

 

6,033

 

 

$

 

15,264

 

 

$

 

82

 

 

 

0.4

%

 

 

(0.5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

3.5

%

 

 

3.3

%

 

 

3.6

%

 

 

3.0

%

 

 

 

 

 

 

 

Second Quarter 2019 vs. First Quarter 2019

Same Store Results/Statistics for 77,595 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

 

 

 

Results

 

 

Statistics

 

Description

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2019

 

$

658,785

 

 

$

195,726

 

 

$

463,059

 

 

$

2,824

 

 

 

96.5

%

 

 

13.1

%

Q1 2019

 

$

649,919

 

 

$

200,892

 

 

$

449,027

 

 

$

2,792

 

 

 

96.3

%

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

$

8,866

 

 

$

(5,166

)

 

$

14,032

 

 

$

32

 

 

 

0.2

%

 

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

1.4

%

 

 

(2.6

%)

 

 

3.1

%

 

 

1.1

%

 

 

 

 

 

 

 

 

June YTD 2019 vs. June YTD 2018

Same Store Results/Statistics for 73,609 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

 

 

 

Results

 

 

Statistics

 

Description

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD 2019

 

$

1,241,077

 

 

$

374,457

 

 

$

866,620

 

 

$

2,806

 

 

 

96.4

%

 

 

22.9

%

YTD 2018

 

$

1,201,296

 

 

$

360,407

 

 

$

840,889

 

 

$

2,727

 

 

 

96.1

%

 

 

24.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

$

39,781

 

 

$

14,050

 

 

$

25,731

 

 

$

79

 

 

 

0.3

%

 

 

(1.4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

3.3

%

 

 

3.9

%

 

 

3.1

%

 

 

2.9

%

 

 

 

 

 

 

 

 

Note: See page 30 for reconciliations from operating income.

Equity Residential

Second Quarter 2019 vs. Second Quarter 2018

Same Store Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year's Quarter

 

Markets/Metro Areas

 

Apartment

Units

 

 

Q2 2019

% of

Actual

NOI

 

 

Q2 2019

Average

Rental

Rate

 

 

Q2 2019

Weighted

Average

Physical

Occupancy
%

 

 

Q2 2019

Turnover

 

 

Revenues

 

 

Expenses

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles (1)

 

 

15,371

 

 

 

18.8

%

 

$

2,605

 

 

 

96.3

%

 

 

14.0

%

 

 

5.3

%

 

 

6.1%

 

 

5.0

%

 

 

4.3

%

 

 

0.3

%

 

 

(0.7

%)

Orange County

 

 

4,028

 

 

 

4.5

%

 

 

2,232

 

 

 

96.4

%

 

 

13.7

%

 

 

3.4

%

 

 

(2.3%

)

 

 

5.3

%

 

 

2.7

%

 

 

0.5

%

 

 

(1.6

%)

San Diego

 

 

3,385

 

 

 

4.0

%

 

 

2,395

 

 

 

96.7

%

 

 

14.3

%

 

 

3.4

%

 

 

2.9%

 

 

3.6

%

 

 

3.2

%

 

 

0.3

%

 

 

(0.6

%)

Subtotal – Southern California

 

 

22,784

 

 

 

27.3

%

 

 

2,508

 

 

 

96.4

%

 

 

14.0

%

 

 

4.7

%

 

 

4.5%

 

 

4.9

%

 

 

3.9

%

 

 

0.3

%

 

 

(0.9

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

12,976

 

 

 

21.2

%

 

 

3,244

 

 

 

96.1

%

 

 

13.3

%

 

 

4.2

%

 

 

2.5%

 

 

4.7

%

 

 

4.3

%

 

 

(0.1

%)

 

 

0.3

%

Washington DC

 

 

15,666

 

 

 

17.7

%

 

 

2,429

 

 

 

96.8

%

 

 

12.1

%

 

 

2.4

%

 

 

1.5%

 

 

2.7

%

 

 

1.9

%

 

 

0.5

%

 

 

(1.3

%)

New York

 

 

9,235

 

 

 

15.1

%

 

 

3,904

 

 

 

97.1

%

 

 

10.4

%

 

 

2.6

%

 

 

6.0%

 

 

0.4

%

 

 

2.0

%

 

 

0.3

%

 

 

0.8

%

Boston

 

 

5,874

 

 

 

9.5

%

 

 

3,109

 

 

 

96.5

%

 

 

12.5

%

 

 

3.3

%

 

 

2.5%

 

 

3.6

%

 

 

3.3

%

 

 

0.2

%

 

 

(1.0

%)

Seattle

 

 

7,565

 

 

 

9.1

%

 

 

2,338

 

 

 

96.6

%

 

 

14.7

%

 

 

2.7

%

 

 

(1.2%

)

 

 

4.2

%

 

 

1.6

%

 

 

0.8

%

 

 

(0.8

%)

Other Markets

 

 

136

 

 

 

0.1

%

 

 

1,282

 

 

 

98.8

%

 

 

19.1

%

 

 

7.7

%

 

 

9.7%

 

 

6.6

%

 

 

8.0

%

 

 

(0.2

%)

 

 

(2.2

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

74,236

 

 

 

100.0

%

 

$

2,822

 

 

 

96.6

%

 

 

13.0

%

 

 

3.5

%

 

 

3.3%

 

 

3.6

%

 

 

3.0

%

 

 

0.4

%

 

 

(0.5

%)

(1)

Quarter over quarter same store revenues in Los Angeles were positively impacted by non residential related income. Residential-only same store revenues in Los Angeles increased 4.6% quarter over quarter.

Equity Residential

Second Quarter 2019 vs. First Quarter 2019

Same Store Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Quarter

 

Markets/Metro Areas

 

Apartment

Units

 

 

Q2 2019

% of

Actual

NOI

 

 

Q2 2019

Average

Rental

Rate

 

 

Q2 2019

Weighted

Average

Physical
Occupancy
%

 

 

Q2 2019

Turnover

 

 

Revenues

 

Expenses

 

NOI

 

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

15,968

 

 

 

18.5

%

 

$

2,598

 

 

 

96.3

%

 

 

14.1

%

 

 

1.4%

 

 

(2.1%)

 

 

2.9

%

 

 

1.0

%

 

 

0.1%

 

 

2.5

%

Orange County

 

 

4,028

 

 

 

4.3

%

 

 

2,232

 

 

 

96.4

%

 

 

13.7

%

 

 

0.9%

 

 

(3.4%)

 

 

2.2

%

 

 

0.8

%

 

 

0.1%

 

 

3.2

%

San Diego

 

 

3,385

 

 

 

3.8

%

 

 

2,395

 

 

 

96.7

%

 

 

14.3

%

 

 

1.8%

 

 

(2.8%)

 

 

3.4

%

 

 

0.9

%

 

 

0.6%

 

 

2.2

%

Subtotal – Southern California

 

 

23,381

 

 

 

26.6

%

 

 

2,506

 

 

 

96.4

%

 

 

14.1

%

 

 

1.4%

 

 

(2.3%)

 

 

2.9

%

 

 

1.0

%

 

 

0.2%

 

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

13,425

 

 

 

21.1

%

 

 

3,275

 

 

 

96.0

%

 

 

13.2

%

 

 

1.4%

 

 

(3.5%)

 

 

3.0

%

 

 

1.8

%

 

 

(0.6%

)

 

3.7

%

Washington DC

 

 

15,666

 

 

 

17.0

%

 

 

2,429

 

 

 

96.8

%

 

 

12.1

%

 

 

1.7%

 

 

(1.8%

)

 

3.3

%

 

 

1.4

%

 

 

0.3%

 

 

3.8

%

New York

 

 

9,475

 

 

 

14.9

%

 

 

3,896

 

 

 

97.1

%

 

 

10.3

%

 

 

1.1%

 

 

(3.9%

)

 

4.9

%

 

 

0.5

%

 

 

0.7%

 

 

2.3

%

Boston

 

 

6,346

 

 

 

9.8

%

 

 

3,112

 

 

 

96.4

%

 

 

12.4

%

 

 

1.3%

 

 

(4.6%

)

 

3.8

%

 

 

1.1

%

 

 

0.5%

 

 

3.3

%

Seattle

 

 

8,440

 

 

 

9.8

%

 

 

2,385

 

 

 

96.6

%

 

 

15.1

%

 

 

1.4%

 

 

3.3%

 

 

0.6

%

 

 

1.0

%

 

 

0.3%

 

 

2.2

%

Other Markets

 

 

862

 

 

 

0.8

%

 

 

1,984

 

 

 

96.5

%

 

 

18.1

%

 

 

(0.6%

)

 

(4.8%

)

 

0.9

%

 

 

0.3

%

 

 

(0.6%

)

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

77,595

 

 

 

100.0

%

 

$

2,824

 

 

 

96.5

%

 

 

13.1

%

 

 

1.4%

 

 

(2.6%)

 

 

3.1

%

 

 

1.1

%

 

 

0.2%

 

 

3.0

%

Equity Residential

June YTD 2019 vs. June YTD 2018

Same Store Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year

Markets/Metro Areas

 

Apartment

Units

 

 

June YTD 19

% of

Actual

NOI

 

 

June YTD 19

Average

Rental

Rate

 

 

June YTD 19

Weighted

Average

Physical
Occupancy
%

 

 

June YTD 19

Turnover

 

 

Revenues

 

 

Expenses

 

NOI

 

Average

Rental

Rate

 

 

Physical

Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles (1)

 

 

15,371

 

 

 

19.0

%

 

$

2,591

 

 

 

96.2

%

 

 

25.5

%

 

 

4.6

%

 

 

6.8%

 

 

3.8%

 

 

4.2

%

 

 

0.1

%

 

 

(1.8%)

Orange County

 

 

4,028

 

 

 

4.6

%

 

 

2,224

 

 

 

96.4

%

 

 

24.2

%

 

 

3.8

%

 

 

(0.2%

)

 

5.1%

 

 

3.3

%

 

 

0.4

%

 

 

(1.0%)

San Diego

 

 

3,385

 

 

 

4.0

%

 

 

2,384

 

 

 

96.4

%

 

 

26.4

%

 

 

3.5

%

 

 

2.8%

 

 

3.8%

 

 

3.3

%

 

 

0.3

%

 

 

(2.2%)

Subtotal – Southern California

 

 

22,784

 

 

 

27.6

%

 

 

2,495

 

 

 

96.3

%

 

 

25.4

%

 

 

4.3

%

 

 

5.3%

 

 

4.0%

 

 

3.9

%

 

 

0.2

%

 

 

(1.7%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

12,976

 

 

 

21.4

%

 

 

3,217

 

 

 

96.3

%

 

 

22.8

%

 

 

4.0

%

 

 

3.0%

 

 

4.3%

 

 

3.9

%

 

 

0.0

%

 

 

(0.6%)

Washington DC

 

 

15,666

 

 

 

17.8

%

 

 

2,412

 

 

 

96.6

%

 

 

20.4

%

 

 

2.2

%

 

 

1.9%

 

 

2.4%

 

 

1.8

%

 

 

0.4

%

 

 

(2.3%)

New York

 

 

9,235

 

 

 

15.2

%

 

 

3,894

 

 

 

96.8

%

 

 

18.4

%

 

 

2.5

%

 

 

6.8%

 

 

(0.4%

)

 

1.8

%

 

 

0.4

%

 

 

0.3%

Boston

 

 

5,714

 

 

 

9.3

%

 

 

3,073

 

 

 

96.2

%

 

 

21.4

%

 

 

3.5

%

 

 

3.1%

 

 

3.7%

 

 

3.1

%

 

 

0.2

%

 

 

(1.1%)

Seattle

 

 

7,098

 

 

 

8.6

%

 

 

2,316

 

 

 

96.4

%

 

 

27.4

%

 

 

2.5

%

 

 

(2.0%

)

 

4.2%

 

 

1.5

%

 

 

0.6

%

 

 

(2.3%)

Other Markets

 

 

136

 

 

 

0.1

%

 

 

1,286

 

 

 

98.9

%

 

 

33.8

%

 

 

7.4

%

 

 

11.1%

 

 

5.4%

 

 

7.3

%

 

 

0.1

%

 

 

0.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

73,609

 

 

 

100.0

%

 

$

2,806

 

 

 

96.4

%

 

 

22.9

%

 

 

3.3

%

 

 

3.9%

 

 

3.1%

 

 

2.9

%

 

 

0.3

%

 

 

(1.4%)

(1)

June year-to-date same store revenues in Los Angeles were positively impacted by non-residential related income. Residential-only same store revenues in Los Angeles increased 4.4% June year-to-date.

Equity Residential

Same Store Lease Pricing Statistics by Market

For 73,609 Same Store Apartment Units

 

 

New Lease Change (1)

 

Renewal Rate Achieved (2)

 

 

Markets/Metro Areas

 

Q2 2019

 

 

Q2 2018

 

Q2 2019

 

 

Q2 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

0.4

%

 

 

2.3%

 

 

5.3

%

 

 

6.1

%

 

Orange County

 

 

1.8

%

 

 

0.1%

 

 

6.0

%

 

 

5.3

%

 

San Diego

 

 

3.4

%

 

 

3.7%

 

 

6.0

%

 

 

6.3

%

 

Subtotal – Southern California

 

 

1.0

%

 

 

2.2%

 

 

5.5

%

 

 

6.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

4.3

%

 

 

4.9%

 

 

5.6

%

 

 

5.1

%

 

Washington DC

 

 

2.4

%

 

 

(1.0%

)

 

4.4

%

 

 

4.0

%

 

New York

 

 

0.7

%

 

 

(1.2%

)

 

4.3

%

 

 

2.8

%

 

Boston

 

 

2.2

%

 

 

0.9%

 

 

5.2

%

 

 

4.8

%

 

Seattle

 

 

3.6

%

 

 

0.7%

 

 

6.0

%

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

2.2

%

 

 

1.5%

 

 

5.1

%

 

 

4.7

%

 

(1)

 

New Lease Change – The change in rent for a lease with a new or transferring resident compared to the rent for the prior lease of the identical apartment unit, regardless of lease term and without concessions or discounts being applied.

(2)

Renewal Rate Achieved – The change in rent for a new lease on an apartment unit where the lease has been renewed as compared to the rent for the prior lease of the identical apartment unit, regardless of lease term.

Equity Residential

 

Second Quarter 2019 vs. Second Quarter 2018

Same Store Operating Expenses for 74,236 Same Store Apartment Units

$ in thousands

 

 

Actual

Q2 2019

 

 

Actual

Q2 2018

 

 

$

Change (1)

 

 

%

Change

 

% of Actual

Q2 2019

Operating

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

80,027

 

 

$

77,716

 

 

$

2,311

 

 

 

3.0%

 

 

42.9

%

On-site payroll

 

 

40,430

 

 

 

39,135

 

 

 

1,295

 

 

 

3.3%

 

 

21.7

%

Utilities

 

 

23,727

 

 

 

23,302

 

 

 

425

 

 

 

1.8%

 

 

12.7

%

Repairs and maintenance

 

 

24,591

 

 

 

24,106

 

 

 

485

 

 

 

2.0%

 

 

13.2

%

Insurance

 

 

5,355

 

 

 

4,866

 

 

 

489

 

 

 

10.0%

 

 

2.9

%

Leasing and advertising

 

 

2,401

 

 

 

2,450

 

 

 

(49

)

 

 

(2.0%

)

 

1.3

%

Other on-site operating expenses

 

 

9,990

 

 

 

8,913

 

 

 

1,077

 

 

 

12.1%

 

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same store operating expenses

 

$

186,521

 

 

$

180,488

 

 

$

6,033

 

 

 

3.3%

 

 

100.0

%

June YTD 2019 vs. June YTD 2018

Same Store Operating Expenses for 73,609 Same Store Apartment Units

$ in thousands

 

 

Actual

YTD 2019

 

 

Actual

YTD 2018

 

 

$

Change (1)

 

 

%

Change

 

% of Actual

YTD 2019

Operating

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

158,984

 

 

$

153,972

 

 

$

5,012

 

 

 

3.3%

 

 

42.4

%

On-site payroll

 

 

81,135

 

 

 

78,338

 

 

 

2,797

 

 

 

3.6%

 

 

21.7

%

Utilities

 

 

49,328

 

 

 

48,535

 

 

 

793

 

 

 

1.6%

 

 

13.2

%

Repairs and maintenance

 

 

47,663

 

 

 

45,494

 

 

 

2,169

 

 

 

4.8%

 

 

12.7

%

Insurance

 

 

10,632

 

 

 

9,659

 

 

 

973

 

 

 

10.1%

 

 

2.8

%

Leasing and advertising

 

 

4,771

 

 

 

4,864

 

 

 

(93

)

 

 

(1.9%

)

 

1.3

%

Other on-site operating expenses

 

 

21,944

 

 

 

19,545

 

 

 

2,399

 

 

 

12.3%

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same store operating expenses

 

$

374,457

 

 

$

360,407

 

 

$

14,050

 

 

 

3.9%

 

 

100.0

%

Note: See pages 27 through 31 for the definitions of non-GAAP financial measures and other terms.

(1)

 

Both quarter over quarter and YTD over YTD changes (unless otherwise noted) are due primarily to:

 

 

Real estate taxes – Increase below expectations. Continue to experience growth across most markets, particularly New York. Growth rate is lower than original expectations due to lower than anticipated rates in Seattle and modestly favorable appeals activity.

 

 

On-site payroll – Increase below expectations. Payroll pressures continue but are somewhat lower than expected.

 

 

Utilities – Increase in line with expectations.

 

 

Repairs and maintenance – Quarter over quarter growth driven primarily by minimum wage pressure on contract labor. YTD over YTD growth driven primarily by minimum wage pressure on contract labor and higher than anticipated repairs, including weather-related repairs in California in the first quarter of 2019.

 

 

Insurance – Increase due to higher premiums on property insurance renewal due to challenging conditions in the insurance market.

 

Other on-site operating expenses – Increase primarily driven by higher ground lease costs due to a contractual revaluation at one property along with higher association fees.

Equity Residential

Debt Summary as of June 30, 2019

($ in thousands)

 

 

Amounts (1)

 

 

% of Total

 

 

Weighted

Average

Rates (1)

 

 

Weighted

Average

Maturities

(years)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured

 

$

2,599,013

 

 

 

28.5

%

 

 

4.01

%

 

 

6.4

 

Unsecured

 

 

6,531,408

 

 

 

71.5

%

 

 

4.20

%

 

 

9.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

9,130,421

 

 

 

100.0

%

 

 

4.15

%

 

 

8.7

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

2,170,114

 

 

 

23.8

%

 

 

4.44

%

 

 

4.6

 

Unsecured – Public

 

 

6,081,432

 

 

 

66.6

%

 

 

4.38

%

 

 

10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Debt

 

 

8,251,546

 

 

 

90.4

%

 

 

4.40

%

 

 

8.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

 

13,057

 

 

 

0.1

%

 

 

2.42

%

 

 

5.3

 

Secured – Tax Exempt

 

 

415,842

 

 

 

4.6

%

 

 

2.09

%

 

 

15.5

 

Unsecured – Public (2)

 

 

449,976

 

 

 

4.9

%

 

 

3.34

%

 

 

 

Unsecured – Revolving Credit Facility (3)

 

 

 

 

 

 

 

 

3.25

%

 

 

2.5

 

Unsecured – Commercial Paper Program (4)

 

 

 

 

 

 

 

 

2.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating Rate Debt

 

 

878,875

 

 

 

9.6

%

 

 

2.74

%

 

 

7.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

9,130,421

 

 

 

100.0

%

 

 

4.15

%

 

 

8.7

 

(1)

Includes the effect of any derivative instruments and amortization of premiums/discounts/OCI on debt and derivatives. Weighted average rates are for the six months ended June 30, 2019.

(2)

Fair value interest rate swaps convert the $450.0 million 2.375% notes to a floating interest rate of 90-Day LIBOR plus 0.61%. These notes were repaid at maturity on July 1, 2019.

(3)

The Company’s $2.0 billion unsecured revolving credit facility matures January 10, 2022. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently 0.825%), or based on bids received from the lending group, and an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. As of June 30, 2019, there were no borrowings outstanding under the facility and $6.7 million was restricted/dedicated to support letters of credit. In addition, the Company limits its utilization of the facility in order to maintain liquidity to support its $500.0 million commercial paper program along with certain other obligations. As a result, the Company had approximately $1.90 billion available under the facility at June 30, 2019.

(4)

The Company may borrow up to a maximum of $500.0 million under its commercial paper program subject to market conditions. The notes bear interest at various floating rates. The weighted average amount outstanding for the six months ended June 30, 2019 was approximately $348.8 million.

Note: The Company capitalized interest of approximately $2.7 million and $2.9 million during the six months ended June 30, 2019 and 2018, respectively. The Company capitalized interest of approximately $1.5 million and $1.2 million during the quarters ended June 30, 2019 and 2018, respectively.

Equity Residential

Debt Maturity Schedule as of June 30, 2019

($ in thousands)

Year

 

Fixed

Rate (1)

 

 

Floating

Rate (1)

 

 

Total

 

 

% of Total

 

 

Weighted

Average Coupons

on Fixed

Rate Debt (1)

 

 

Weighted

Average

Coupons on

Total Debt (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

$

3,821

 

 

$

470,276

 

(2)

$

474,097

 

 

 

5.1

%

 

 

3.61

%

 

 

3.14

%

2020

 

 

1,128,592

 

(3)

 

700

 

 

 

1,129,292

 

 

 

12.3

%

 

 

5.20

%

 

 

5.20

%

2021

 

 

927,506

 

 

 

600

 

 

 

928,106

 

 

 

10.1

%

 

 

4.64

%

 

 

4.64

%

2022

 

 

265,341

 

 

 

8,300

 

 

 

273,641

 

 

 

3.0

%

 

 

3.26

%

 

 

3.26

%

2023

 

 

1,326,800

 

 

 

4,300

 

 

 

1,331,100

 

 

 

14.4

%

 

 

3.74

%

 

 

3.73

%

2024

 

 

1,272

 

 

 

6,900

 

 

 

8,172

 

 

 

0.1

%

 

 

4.79

%

 

 

2.40

%

2025

 

 

451,334

 

 

 

9,000

 

 

 

460,334

 

 

 

5.0

%

 

 

3.38

%

 

 

3.35

%

2026

 

 

593,424

 

 

 

10,000

 

 

 

603,424

 

 

 

6.5

%

 

 

3.59

%

 

 

3.56

%

2027

 

 

401,468

 

 

 

10,700

 

 

 

412,168

 

 

 

4.5

%

 

 

3.26

%

 

 

3.22

%

2028

 

 

901,540

 

 

 

43,380

 

 

 

944,920

 

 

 

10.3

%

 

 

3.79

%

 

 

3.70

%

2029+

 

 

2,311,549

 

 

 

335,220

 

 

 

2,646,769

 

 

 

28.7

%

 

 

3.98

%

 

 

3.63

%

Subtotal

 

 

8,312,647

 

 

 

899,376

 

 

 

9,212,023

 

 

 

100.0

%

 

 

4.01

%

 

 

3.87

%

Deferred Financing Costs and Unamortized (Discount)

 

 

(61,101

)

 

 

(20,501

)

 

 

(81,602

)

 

N/A

 

 

N/A

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

8,251,546

 

 

$

878,875

 

 

$

9,130,421

 

 

 

100.0

%

 

 

4.01

%

 

 

3.87

%

(1)

Includes the effect of any derivative instruments. Weighted average coupons are as of June 30, 2019.

(2)

Includes $450.0 million in 2.375% notes that were repaid at maturity on July 1, 2019.

(3)

Includes a $500.0 million 5.78% mortgage loan with a maturity date of July 1, 2020 that was repaid at par on July 1, 2019.

Note: Due to the July 1, 2019 payoffs noted above, the outstanding balances on the Company’s revolving credit facility and commercial paper program are $465.0 million and $490.0 million, respectively, as of July 26, 2019.

Equity Residential

 

Selected Unsecured Public Debt Covenants

 

 

June 30,

 

 

March 31,

 

 

 

2019

 

 

2019

 

Debt to Adjusted Total Assets (not to exceed 60%)

 

34.5%

 

 

34.3%

 

 

 

 

 

 

 

 

 

 

Secured Debt to Adjusted Total Assets (not to exceed 40%)

 

10.5%

 

 

11.0%

 

 

 

 

 

 

 

 

 

 

Consolidated Income Available for Debt Service to

 

 

 

 

 

 

 

 

Maximum Annual Service Charges

(must be at least 1.5 to 1)

4.40

4.60

 

 

 

 

 

 

 

 

 

Total Unencumbered Assets to Unsecured Debt

 

 

 

 

 

 

(must be at least 125%)

390.5%

395.4%

Note: These selected covenants represent the most restrictive financial covenants relating to ERP Operating Limited Partnership's ("ERPOP") outstanding public debt securities. Equity Residential is the general partner of ERPOP.

Selected Credit Ratios

 

 

 

June 30,

 

 

March 31,

 

 

 

2019

 

 

2019

 

Total debt to Normalized EBITDAre

 

5.40x

 

 

5.36x

 

 

 

 

 

 

 

 

 

 

Net debt to Normalized EBITDAre

 

5.24x

 

 

5.33x

 

 

 

 

 

 

 

 

 

 

Unencumbered NOI as a % of total NOI

 

81.8%

 

 

81.0%

 

Note: See page 24 for the Normalized EBITDAre reconciliations.

Equity Residential

 

Capital Structure as of June 30, 2019

(Amounts in thousands except for share/unit and per share amounts)

 

Secured Debt

 

 

 

 

 

 

 

 

 

$

2,599,013

 

 

 

28.5

%

 

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

 

 

6,531,408

 

 

 

71.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

 

 

 

 

 

 

 

 

 

 

9,130,421

 

 

 

100.0

%

 

 

23.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

370,838,810

 

 

 

96.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

13,855,684

 

 

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

384,694,494

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Price at June 30, 2019

 

$

75.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,206,006

 

 

 

99.9

%

 

 

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

 

 

 

 

 

 

37,280

 

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Equity

 

 

 

 

 

 

 

 

 

 

29,243,286

 

 

 

100.0

%

 

 

76.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

 

 

 

 

$

38,373,707

 

 

 

 

 

 

 

100.0

%

Perpetual Preferred Equity as of June 30, 2019

(Amounts in thousands except for share and per share amounts)

 

Series

 

Call Date

 

Outstanding

Shares

 

 

Liquidation

Value

 

 

Annual

Dividend

Per Share

 

 

Annual

Dividend

Amount

 

Preferred Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.29% Series K

 

12/10/26

 

 

745,600

 

 

$

37,280

 

 

$

4.145

 

 

$

3,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Residential

Common Share and Unit

Weighted Average Amounts Outstanding

 

 

June YTD 2019

 

 

June YTD 2018

 

 

Q2 2019

 

 

Q2 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for Net Income Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

369,952,087

 

 

 

367,865,479

 

 

 

370,342,189

 

 

 

367,930,497

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- OP Units

 

 

12,902,350

 

 

 

12,863,844

 

 

 

12,885,175

 

 

 

12,864,756

 

- long-term compensation shares/units

 

 

2,789,234

 

 

 

2,494,962

 

 

 

2,879,255

 

 

 

2,627,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

385,643,671

 

 

 

383,224,285

 

 

 

386,106,619

 

 

 

383,422,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

369,952,087

 

 

 

367,865,479

 

 

 

370,342,189

 

 

 

367,930,497

 

OP Units - basic

 

 

12,902,350

 

 

 

12,863,844

 

 

 

12,885,175

 

 

 

12,864,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares and OP Units - basic

 

 

382,854,437

 

 

 

380,729,323

 

 

 

383,227,364

 

 

 

380,795,253

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- long-term compensation shares/units

 

 

2,789,234

 

 

 

2,494,962

 

 

 

2,879,255

 

 

 

2,627,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

385,643,671

 

 

 

383,224,285

 

 

 

386,106,619

 

 

 

383,422,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ending Amounts Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

370,838,810

 

 

 

368,278,336

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

13,855,684

 

 

 

14,024,018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

384,694,494

 

 

 

382,302,354

 

 

 

 

 

 

 

 

 

Equity Residential

Development and Lease-Up Projects as of June 30, 2019

(Amounts in thousands except for project and apartment unit amounts)

 

 

 

 

 

 

 

 

Total

 

 

Total

 

 

Total Book

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No. of

 

 

Budgeted

 

 

Book

 

 

Value Not

 

 

 

 

 

 

 

 

 

 

Estimated/Actual

 

 

 

 

 

 

 

 

 

 

 

 

Apartment

 

 

Capital

 

 

Value

 

 

Placed in

 

 

Total

 

 

Percentage

 

 

Initial

 

 

Completion

 

Stabilization

 

Percentage

 

 

Percentage

 

Projects

 

Location

 

Units

 

 

Cost

 

 

to Date

 

 

Service

 

 

Debt

 

 

Completed

 

 

Occupancy

 

 

Date

 

Date

 

Leased

 

 

Occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chloe on Madison (fka 1401 E. Madison)

 

Seattle, WA

 

 

137

 

 

$

65,341

 

 

$

52,469

 

 

$

52,469

 

 

$

 

 

81%

 

 

Q3 2019

 

 

Q3 2019

 

Q2 2020

 

1%

 

 

 

 

Lofts at Kendall Square II (fka 249 Third Street)

 

Cambridge, MA

 

 

84

 

 

 

51,447

 

 

 

37,812

 

 

 

37,812

 

 

 

 

 

69%

 

 

Q3 2019

 

 

Q3 2019

 

Q2 2020

 

36%

 

 

 

 

Alcott (fka West End Tower)

 

Boston, MA

 

 

470

 

 

 

409,749

 

 

 

81,588

 

 

 

81,588

 

 

 

 

 

16%

 

 

Q2 2021

 

 

Q3 2021

 

Q1 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development

 

 

 

 

691

 

 

 

526,537

 

 

 

171,869

 

 

 

171,869