Equity Residential Reports Full Year 2019 Results

Provides Outlook for 2020

CHICAGO--()--Equity Residential (NYSE: EQR) today reported results for the quarter and year ended December 31, 2019. All per share results are reported as available to common shares/units on a diluted basis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31,

 

 

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.77

 

 

$

0.31

 

 

$

0.46

 

 

 

148.4

%

 

 

Funds from Operations (FFO) per share

 

$

0.86

 

 

$

0.84

 

 

$

0.02

 

 

 

2.4

%

 

 

Normalized FFO per share

 

$

0.91

 

 

$

0.84

 

 

$

0.07

 

 

 

8.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

2.60

 

 

$

1.77

 

 

$

0.83

 

 

 

46.9

%

 

 

Funds from Operations (FFO) per share

 

$

3.39

 

 

$

3.14

 

 

$

0.25

 

 

 

8.0

%

 

 

Normalized FFO per share

 

$

3.49

 

 

$

3.25

 

 

$

0.24

 

 

 

7.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Equity Residential had a very good 2019. Strong demand and record resident satisfaction and retention drove same store revenue growth to the high end of our original expectations. Also, Normalized FFO grew by a healthy 7.4%, which was above our expectations. Thanks to the entire Equity Residential team for all they did to accomplish this,” said Mark J. Parrell, Equity Residential’s President and CEO. “We expect a consistently growing economy in 2020 to create steady demand to absorb the continuing elevated levels of new supply that will be delivered in most of our markets. This, combined with the impact of the new rent control regulations in California and New York, leads us to anticipate same store revenue growth slightly below our 2019 result.”

Company Highlights

  • Produced same store revenue growth of 3.2% for the fourth quarter of 2019, with Physical Occupancy of 96.1% and Renewal Rate Achieved growth of 4.8%. For the full year 2019, produced same store revenue growth of 3.2% with Physical Occupancy of 96.4% and Renewal Rate Achieved growth of 4.9%.
  • Produced Normalized FFO per share growth of 8.3% for the fourth quarter of 2019 and 7.4% for the full year 2019.
  • During the fourth quarter of 2019, acquired three apartment properties, totaling 812 apartment units, for an aggregate purchase price of approximately $370.1 million.
  • Planned annualized increase of 6.2% in its 2020 common share dividend.
  • Continued to enhance its operating platform in 2019, including roll-outs of self-guided tours, application of artificial intelligence to leasing and installation of smart home technology at selected properties, and it plans a significant acceleration of these activities in 2020.
  • Enhanced its balance sheet, liquidity and financial flexibility to support its business objectives and growth through increasing the size of its revolving credit facility to $2.5 billion from $2.0 billion and increasing the maximum size of its unsecured commercial paper program from $500.0 million to $1.0 billion.

Results Per Share

The change in EPS for both the quarter and year ended December 31, 2019 compared to the same periods of 2018, are due primarily to higher property and unconsolidated sale gains in the fourth quarter and/or full year 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 year ended December 31, 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

 

 

 

Fourth Quarter 2019 vs.
Fourth Quarter 2018

 

 

Full Year 2019 vs.
Full Year 2018

 

Same Store NOI

 

$

0.04

 

 

$

0.13

 

Lease-Up NOI and other non-same store NOI

 

 

0.01

 

 

 

0.07

 

2019 and 2018 transaction activity impact on NOI

 

 

0.02

 

 

 

0.05

 

Interest expense

 

 

0.01

 

 

 

0.02

 

Other items

 

 

(0.01

)

 

 

(0.03

)

Net

 

$

0.07

 

 

$

0.24

 

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 27 through 32 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 29 and 30 of this release and the Company has included guidance for 2020 Normalized FFO per share on page 26 and 2020 FFO per share and 2020 EPS on page 30 of this release.

Same Store Results

The following table shows the increases in same store results for the fourth quarter 2019 to fourth quarter 2018 comparison, which includes 75,816 apartment units, and for the year ended December 31, 2019 to year ended December 31, 2018 comparison, which includes 71,830 apartment units. The Company’s Physical Occupancy was 96.1% compared to 96.2% for the fourth quarter of 2019 and 2018, respectively, and 96.4% compared to 96.2% for the full years 2019 and 2018, respectively.

 

 

Fourth Quarter 2019 vs.
Fourth Quarter 2018

 

 

Full Year 2019 vs.
Full Year 2018

 

Revenues

 

3.2%

 

 

3.2%

 

Expenses

 

3.0%

 

 

3.7%

 

NOI

 

3.2%

 

 

3.0%

 

Operating Initiatives

In 2020, the Company will accelerate the deployment of the following initiatives aimed at delighting our customers, improving the efficiency of our operating platform and providing enhanced career opportunities for our employees:

  • Smart Home Technology: The installation of smart home technology in an additional 10,000 apartment units at a cost of approximately $1,000 per unit (included in the Company’s capital expenditures guidance on page 26). The Company expects to receive a rent premium of approximately $30 per month per apartment unit;
  • Sales-Focused Improvements: Full deployment of an AI-enabled sales tool, self-guided tours and a new mobile customer relationship management platform, resulting in efficiencies across the sales function; and
  • Service Enhancements: Full deployment of service mobility, creating efficiencies in the service function by driving improved service personnel utilization and enhanced outsourcing decision quality.

The Company expects the impact of these initiatives to deliver approximately $15 million in annual NOI improvements once fully deployed with approximately $5 million of that NOI benefit expected in 2020. These early stage initiatives provide a foundation upon which the Company will build in 2021 and beyond.

Investment Activity

The Company acquired three apartment properties during the fourth quarter of 2019, totaling 812 apartment units, for an aggregate purchase price of approximately $370.1 million at a weighted average Acquisition Capitalization Rate of 4.8%. Two of the properties are located in Seattle and the other in suburban Washington, D.C.

The Company sold two properties during the fourth quarter of 2019, totaling 1,159 apartment units, for an aggregate sale price of approximately $374.0 million at a weighted average Disposition Yield of 4.8%, generating an Unlevered IRR of 7.6%. The properties are located in suburban Washington, D.C.

During 2019, the Company acquired 13 properties, totaling 3,540 apartment units, for an aggregate purchase price of approximately $1.49 billion at a weighted average Acquisition Capitalization Rate of 4.7%.

During 2019, the Company sold 11 wholly-owned properties, totaling 2,361 apartment units, for an aggregate sale price of approximately $1.08 billion at a weighted average Disposition Yield of 4.6%, generating an Unlevered IRR of 7.8%. During 2019, the Company also 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.

Capital Markets Activity

On November 1, 2019, the Company’s operating partnership entered into a $2.5 billion multi-currency revolving credit facility, replacing its existing $2.0 billion credit agreement. The new facility matures on November 1, 2024, and can be extended or increased, subject to lender consent and customary conditions. The interest rate and facility fees are based on the operating partnership’s long-term unsecured credit ratings.

In addition, the operating partnership increased the maximum size for its unsecured commercial paper note program from $500.0 million to $1.0 billion. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the other unsecured senior indebtedness of the operating partnership.

On December 6, 2019, the Company redeemed $600.0 million in 4.75% unsecured notes originally due to mature on July 15, 2020. In conjunction with the redemption, the Company incurred approximately $11.6 million in debt extinguishment costs, of which $10.3 million represented cash prepayment penalties and $1.3 million represented non-cash write-offs of unamortized debt discounts and deferred financing costs, all of which are not included in Normalized FFO. The Company's strong liquidity profile as a result of the credit facility and commercial paper program activity discussed above allowed for this early redemption.

2020 Common Share Dividend

The Company expects to declare a common share dividend of $0.6025 per share for the first quarter of 2020, which is an annualized increase of approximately 6.2% over the 2019 dividend. This increase is driven by the Company’s continued strong cash flow performance, solid balance sheet and modest payout ratio. The first quarter dividend and all future dividends remain subject to the discretion of the Company’s Board of Trustees.

First Quarter 2020 Guidance

The Company has established guidance ranges for the first quarter of 2020 EPS, FFO per share and Normalized FFO per share as listed below:

 

 

Q1 2020
Guidance

EPS

 

$0.98 to $1.02

FFO per share

 

$0.83 to $0.87

Normalized FFO per share

 

$0.84 to $0.88

The difference between the fourth quarter 2019 actual EPS of $0.77 and the first quarter 2020 EPS guidance midpoint of $1.00 is due primarily to higher expected property sale gains, lower expected debt extinguishment costs and the items described below.

The difference between the fourth quarter 2019 actual FFO of $0.86 per share and the first quarter 2020 FFO guidance midpoint of $0.85 per share is due primarily to lower expected debt extinguishment costs and the items described below.

The difference between the fourth quarter 2019 actual Normalized FFO of $0.91 per share and the first quarter 2020 Normalized FFO guidance midpoint of $0.86 per share is due primarily to:

 

 

Positive/(Negative)
Impact

 

 

 

 

First Quarter 2020 vs.
Fourth Quarter 2019

 

 

Same Store NOI

 

$

(0.02

)

 

2020 and 2019 transaction activity impact on NOI

 

 

(0.01

)

 

Interest expense

 

 

0.01

 

 

Corporate overhead

 

 

(0.02

)

 

Other items

 

 

(0.01

)

 

Net

 

$

(0.05

)

 

Full Year 2020 Guidance

The Company has provided guidance for its full year 2020 same store operating performance, EPS, FFO per share, Normalized FFO per share, transactions and debt offerings as listed below:

Same Store:

 

 

 

 

Physical Occupancy

 

96.4%

 

Revenue change

 

2.3% to 3.3%

 

Expense change

 

3.0% to 4.0%

 

NOI change

 

1.5% to 3.5%

 

 

 

 

 

 

EPS

 

$2.64 to $2.74

 

FFO per share

 

$3.57 to $3.67

 

Normalized FFO per share

 

$3.59 to $3.69

 

 

 

 

 

 

Transactions:

 

 

 

 

Consolidated rental acquisitions

 

$1.25 billion

 

Consolidated rental dispositions

 

$1.0 billion

 

Transaction Accretion (Dilution)

 

(25 basis points)

 

 

 

 

 

 

Debt Offerings

 

$600.0 million to $1.0 billion

 

The difference between the Company’s full year 2019 actual EPS of $2.60 and the full year 2020 EPS guidance midpoint of $2.69 is due primarily to lower expected property sale gains, lower expected debt extinguishment costs, lower expected depreciation expense and the items described below.

The difference between the Company’s full year 2019 actual FFO of $3.39 per share and the full year 2020 FFO guidance midpoint of $3.62 per share is due primarily to lower expected debt extinguishment costs and the items described below.

The difference between the Company’s full year 2019 actual Normalized FFO of $3.49 per share and the full year 2020 Normalized FFO guidance midpoint of $3.64 per share is due primarily to:

 

 

Positive/(Negative)
Impact

 

 

 

Full Year 2020 vs.
Full Year 2019

 

Same Store NOI

 

$

0.11

 

Lease-Up NOI

 

 

0.01

 

Interest expense

 

 

0.07

 

Corporate overhead

 

 

(0.01

)

Other items

 

 

(0.03

)

Net

 

$

0.15

 

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of rental apartment properties located in urban and high-density suburban communities where today’s renters want to live, work and play. Equity Residential owns or has investments in 309 properties consisting of 79,962 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, January 29, 2020 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)

 

 

Year Ended December 31,

 

 

Quarter Ended December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

2,700,691

 

 

$

2,577,681

 

 

$

683,895

 

 

$

652,553

 

Fee and asset management

 

 

384

 

 

 

753

 

 

 

24

 

 

 

190

 

Total revenues

 

 

2,701,075

 

 

 

2,578,434

 

 

 

683,919

 

 

 

652,743

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and maintenance

 

 

446,845

 

 

 

429,335

 

 

 

108,348

 

 

 

106,848

 

Real estate taxes and insurance

 

 

366,139

 

 

 

357,814

 

 

 

95,705

 

 

 

89,030

 

Property management

 

 

95,344

 

 

 

92,485

 

 

 

22,639

 

 

 

23,310

 

General and administrative

 

 

52,757

 

 

 

53,813

 

 

 

11,630

 

 

 

12,393

 

Depreciation

 

 

831,083

 

 

 

785,725

 

 

 

214,882

 

 

 

201,856

 

Total expenses

 

 

1,792,168

 

 

 

1,719,172

 

 

 

453,204

 

 

 

433,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on sales of real estate properties

 

 

447,637

 

 

 

256,810

 

 

 

178,237

 

 

 

(24

)

Impairment

 

 

 

 

 

(702

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,356,544

 

 

 

1,115,370

 

 

 

408,952

 

 

 

219,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

2,817

 

 

 

15,317

 

 

 

596

 

 

 

457

 

Other expenses

 

 

(18,177

)

 

 

(17,267

)

 

 

(6,972

)

 

 

(2,396

)

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred, net

 

 

(390,076

)

 

 

(413,360

)

 

 

(100,300

)

 

 

(91,906

)

Amortization of deferred financing costs

 

 

(11,670

)

 

 

(11,310

)

 

 

(3,006

)

 

 

(2,256

)

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

investments in unconsolidated entities and net gain (loss)

on sales of land parcels

 

 

939,438

 

 

 

688,750

 

 

 

299,270

 

 

 

123,181

 

Income and other tax (expense) benefit

 

 

2,281

 

 

 

(878

)

 

 

3,030

 

 

 

(111

)

Income (loss) from investments in unconsolidated entities

 

 

65,945

 

 

 

(3,667

)

 

 

(961

)

 

 

(674

)

Net gain (loss) on sales of land parcels

 

 

2,044

 

 

 

987

 

 

 

(33

)

 

 

(8

)

Net income

 

 

1,009,708

 

 

 

685,192

 

 

 

301,306

 

 

 

122,388

 

Net (income) loss attributable to Noncontrolling Interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Partnership

 

 

(36,034

)

 

 

(24,939

)

 

 

(10,695

)

 

 

(4,422

)

Partially Owned Properties

 

 

(3,297

)

 

 

(2,718

)

 

 

(847

)

 

 

(779

)

Net income attributable to controlling interests

 

 

970,377

 

 

 

657,535

 

 

 

289,764

 

 

 

117,187

 

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

Net income available to Common Shares

 

$

967,287

 

 

$

654,445

 

 

$

288,992

 

 

$

116,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

2.61

 

 

$

1.78

 

 

$

0.78

 

 

$

0.32

 

Weighted average Common Shares outstanding

 

 

370,461

 

 

 

368,052

 

 

 

371,155

 

 

 

368,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

2.60

 

 

$

1.77

 

 

$

0.77

 

 

$

0.31

 

Weighted average Common Shares outstanding

 

 

386,333

 

 

 

383,695

 

 

 

387,143

 

 

 

384,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

2.27

 

 

$

2.16

 

 

$

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)

 

 

Year Ended December 31,

 

 

Quarter Ended December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

1,009,708

 

 

$

685,192

 

 

$

301,306

 

 

$

122,388

 

Net (income) loss attributable to Noncontrolling Interests – Partially

Owned Properties

 

 

(3,297

)

 

 

(2,718

)

 

 

(847

)

 

 

(779

)

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

Net income available to Common Shares and Units

 

 

1,003,321

 

 

 

679,384

 

 

 

299,687

 

 

 

120,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

831,083

 

 

 

785,725

 

 

 

214,882

 

 

 

201,856

 

Depreciation – Non-real estate additions

 

 

(5,585

)

 

 

(4,561

)

 

 

(1,350

)

 

 

(1,164

)

Depreciation – Partially Owned Properties

 

 

(3,599

)

 

 

(3,740

)

 

 

(899

)

 

 

(903

)

Depreciation – Unconsolidated Properties

 

 

2,997

 

 

 

4,451

 

 

 

612

 

 

 

1,004

 

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

assets

 

 

(69,522

)

 

 

 

 

 

 

 

 

 

Net (gain) loss on sales of real estate properties

 

 

(447,637

)

 

 

(256,810

)

 

 

(178,237

)

 

 

24

 

Noncontrolling Interests share of gain (loss) on sales

of real estate properties

 

 

 

 

 

(284

)

 

 

 

 

 

 

Impairment – operating assets

 

 

 

 

 

702

 

 

 

 

 

 

 

FFO available to Common Shares and Units

 

 

1,311,058

 

 

 

1,204,867

 

 

 

334,695

 

 

 

321,654

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (see note for additional detail):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment – non-operating assets

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of pursuit costs

 

 

5,529

 

 

 

4,450

 

 

 

1,431

 

 

 

1,325

 

Debt extinguishment and preferred share redemption (gains)

losses

 

 

23,991

 

 

 

41,335

 

 

 

12,184

 

 

 

193

 

Non-operating asset (gains) losses

 

 

(940

)

 

 

(161

)

 

 

260

 

 

 

94

 

Other miscellaneous items

 

 

8,430

 

 

 

(1,781

)

 

 

1,891

 

 

 

827

 

Normalized FFO available to Common Shares and Units

 

$

1,348,068

 

 

$

1,248,710

 

 

$

350,461

 

 

$

324,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

1,314,148

 

 

$

1,207,957

 

 

$

335,467

 

 

$

322,426

 

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

FFO available to Common Shares and Units

 

$

1,311,058

 

 

$

1,204,867

 

 

$

334,695

 

 

$

321,654

 

FFO per share and Unit – basic

 

$

3.42

 

 

$

3.16

 

 

$

0.87

 

 

$

0.84

 

FFO per share and Unit – diluted

 

$

3.39

 

 

$

3.14

 

 

$

0.86

 

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO

 

$

1,351,158

 

 

$

1,251,800

 

 

$

351,233

 

 

$

324,865

 

Preferred distributions

 

 

(3,090

)

 

 

(3,090

)

 

 

(772

)

 

 

(772

)

Normalized FFO available to Common Shares and Units

 

$

1,348,068

 

 

$

1,248,710

 

 

$

350,461

 

 

$

324,093

 

Normalized FFO per share and Unit – basic

 

$

3.52

 

 

$

3.28

 

 

$

0.91

 

 

$

0.85

 

Normalized FFO per share and Unit – diluted

 

$

3.49

 

 

$

3.25

 

 

$

0.91

 

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares and Units outstanding – basic

 

 

383,368

 

 

 

380,921

 

 

 

384,039

 

 

 

381,306

 

Weighted average Common Shares and Units outstanding – diluted

 

 

386,333

 

 

 

383,695

 

 

 

387,143

 

 

 

384,296

 

Note: See Adjustments from FFO to Normalized FFO for additional detail regarding the adjustments from FFO to Normalized FFO. See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms 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)

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Land

 

$

5,936,188

 

 

$

5,875,803

 

Depreciable property

 

 

21,319,101

 

 

 

20,435,901

 

Projects under development

 

 

181,630

 

 

 

109,409

 

Land held for development

 

 

96,688

 

 

 

89,909

 

Investment in real estate

 

 

27,533,607

 

 

 

26,511,022

 

Accumulated depreciation

 

 

(7,276,786

)

 

 

(6,696,281

)

Investment in real estate, net

 

 

20,256,821

 

 

 

19,814,741

 

Investments in unconsolidated entities

 

 

52,238

 

 

 

58,349

 

Cash and cash equivalents

 

 

45,753

 

 

 

47,442

 

Restricted deposits

 

 

71,246

 

 

 

68,871

 

Right-of-use assets

 

 

512,774

 

 

 

 

Other assets

 

 

233,937

 

 

 

404,806

 

Total assets

 

$

21,172,769

 

 

$

20,394,209

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Mortgage notes payable, net

 

$

1,941,610

 

 

$

2,385,470

 

Notes, net

 

 

6,077,513

 

 

 

5,933,286

 

Line of credit and commercial paper

 

 

1,017,833

 

 

 

499,183

 

Accounts payable and accrued expenses

 

 

94,350

 

 

 

102,471

 

Accrued interest payable

 

 

66,852

 

 

 

62,622

 

Lease liabilities

 

 

331,334

 

 

 

 

Other liabilities

 

 

346,963

 

 

 

358,563

 

Security deposits

 

 

70,062

 

 

 

67,258

 

Distributions payable

 

 

218,326

 

 

 

206,601

 

Total liabilities

 

 

10,164,843

 

 

 

9,615,454

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests – Operating Partnership

 

 

463,400

 

 

 

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 December 31, 2019 and December 31, 2018

 

 

37,280

 

 

 

37,280

 

Common Shares of beneficial interest, $0.01 par value;

1,000,000,000 shares authorized; 371,670,884 shares issued

and outstanding as of December 31, 2019 and 369,405,161

shares issued and outstanding as of December 31, 2018

 

 

3,717

 

 

 

3,694

 

Paid in capital

 

 

8,965,577

 

 

 

8,935,453

 

Retained earnings

 

 

1,386,495

 

 

 

1,261,763

 

Accumulated other comprehensive income (loss)

 

 

(77,563

)

 

 

(64,986

)

Total shareholders’ equity

 

 

10,315,506

 

 

 

10,173,204

 

Noncontrolling Interests:

 

 

 

 

 

 

 

 

Operating Partnership

 

 

227,837

 

 

 

228,738

 

Partially Owned Properties

 

 

1,183

 

 

 

(2,293

)

Total Noncontrolling Interests

 

 

229,020

 

 

 

226,445

 

Total equity

 

 

10,544,526

 

 

 

10,399,649

 

Total liabilities and equity

 

$

21,172,769

 

 

$

20,394,209

 

Equity Residential

Portfolio Summary

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

% of
Stabilized

 

 

Average

 

 

 

 

 

 

 

Apartment

 

 

Budgeted

 

 

Rental

 

Markets/Metro Areas

 

Properties

 

 

Units

 

 

NOI

 

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

72

 

 

 

16,603

 

 

 

18.7

%

 

$

2,634

 

Orange County

 

 

13

 

 

 

4,028

 

 

 

4.3

%

 

 

2,271

 

San Diego

 

 

12

 

 

 

3,385

 

 

 

3.8

%

 

 

2,437

 

Subtotal – Southern California

 

 

97

 

 

 

24,016

 

 

 

26.8

%

 

 

2,545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

51

 

 

 

13,606

 

 

 

20.6

%

 

 

3,320

 

Washington DC

 

 

48

 

 

 

15,248

 

 

 

16.2

%

 

 

2,466

 

New York

 

 

37

 

 

 

9,606

 

 

 

14.4

%

 

 

3,937

 

Seattle

 

 

45

 

 

 

9,296

 

 

 

10.7

%

 

 

2,459

 

Boston

 

 

25

 

 

 

6,430

 

 

 

9.9

%

 

 

3,179

 

Denver

 

 

5

 

 

 

1,624

 

 

 

1.4

%

 

 

2,053

 

Other Markets

 

 

1

 

 

 

136

 

 

 

%

 

 

1,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

309

 

 

 

79,962

 

 

 

100.0

%

 

$

2,858

 

 

 

Properties

 

 

Apartment Units

 

 

 

 

 

 

 

 

 

 

Wholly Owned Properties

 

 

291

 

 

 

76,265

 

Master-Leased Properties – Consolidated

 

 

1

 

 

 

162

 

Partially Owned Properties – Consolidated

 

 

17

 

 

 

3,535

 

 

 

 

 

 

 

 

 

 

 

 

 

309

 

 

 

79,962

 

 

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

Equity Residential

Portfolio Rollforward Q4 2019

($ in thousands)

 

 

 

 

Properties

 

 

Apartment
Units

 

 

Purchase
Price

 

 

Acquisition
Cap Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2019

 

 

308

 

 

 

80,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

 

 

 

 

1

 

 

 

270

 

 

$

117,750

 

 

 

4.4

%

Rental Properties – Not Stabilized (A)

 

 

 

 

2

 

 

 

542

 

 

$

252,359

 

 

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

Disposition
Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Rental Properties

 

 

 

 

(2

)

 

 

(1,159

)

 

$

(374,000

)

 

 

(4.8

%)

Land Parcels

 

 

 

 

 

 

 

 

 

$

(200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2019

 

 

309

 

 

 

79,962

 

 

 

 

 

 

 

 

 

Portfolio Rollforward 2019

($ in thousands)

 

 

 

 

Properties

 

 

Apartment
Units

 

 

Purchase
Price

 

 

Acquisition
Cap Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2018

 

 

307

 

 

 

79,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

 

 

 

 

9

 

 

 

2,412

 

 

$

1,039,830

 

 

 

4.6

%

Rental Properties – Not Stabilized (A)

 

 

 

 

4

 

 

 

1,128

 

 

$

454,859

 

 

 

4.9

%

Land Parcels

 

 

 

 

 

 

 

 

 

$

19,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

Disposition
Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

(11

)

(2,361

)

$

(1,080,675

)

(4.6

%)

Land Parcels

 

 

 

 

 

 

 

 

 

$

(2,100

)

 

 

 

 

Unconsolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties (B)

 

 

 

 

(2

)

 

 

(945

)

 

$

(394,500

)

 

 

(4.7

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed Developments – Consolidated

 

 

 

 

2

 

 

 

221

 

 

 

 

 

 

 

 

 

Configuration Changes

 

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2019

 

 

309

 

 

 

79,962

 

 

 

 

 

 

 

 

 

(A)

The Company acquired four properties during the year ended December 31, 2019, including two properties in the Seattle market in the fourth quarter of 2019, all of which 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 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

Fourth Quarter 2019 vs. Fourth Quarter 2018

Same Store Results/Statistics for 75,816 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

 

 

Results

 

 

Statistics

 

Description

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average
Rental
Rate

 

 

Physical
Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 2019

 

$

652,391

 

 

$

193,494

 

 

$

458,897

 

 

$

2,875

 

 

 

96.1

%

 

 

10.6

%

Q4 2018

 

$

632,463

 

 

$

187,924

 

 

$

444,539

 

 

$

2,789

 

 

 

96.2

%

 

 

10.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

$

19,928

 

 

$

5,570

 

 

$

14,358

 

 

$

86

 

 

 

(0.1

%)

 

 

(0.2

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

3.2

%

 

 

3.0

%

 

 

3.2

%

 

 

3.1

%

 

 

 

 

 

 

 

 

Fourth Quarter 2019 vs. Third Quarter 2019

Same Store Results/Statistics for 77,148 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

 

 

Results

 

 

Statistics

 

Description

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average
Rental
Rate

 

 

Physical
Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 2019

 

$

662,071

 

 

$

196,300

 

 

$

465,771

 

 

$

2,869

 

 

 

96.1

%

 

 

10.6

%

Q3 2019

 

$

665,043

 

 

$

200,708

 

 

$

464,335

 

 

$

2,868

 

 

 

96.5

%

 

 

16.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

$

(2,972

)

 

$

(4,408

)

 

$

1,436

 

 

$

1

 

 

 

(0.4

%)

 

 

(5.5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

(0.4

%)

 

 

(2.2

%)

 

 

0.3

%

 

 

0.0

%

 

 

 

 

 

 

 

 

2019 vs. 2018

Same Store Results/Statistics for 71,830 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

 

 

Results

 

 

Statistics

 

Description

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average
Rental
Rate

 

 

Physical
Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

$

2,453,259

 

 

$

734,553

 

 

$

1,718,706

 

 

$

2,843

 

 

 

96.4

%

 

 

49.5

%

2018

 

$

2,377,066

 

 

$

708,616

 

 

$

1,668,450

 

 

$

2,762

 

 

 

96.2

%

 

 

51.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

$

76,193

 

 

$

25,937

 

 

$

50,256

 

 

$

81

 

 

 

0.2

%

 

 

(1.9

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

3.2

%

 

 

3.7

%

 

 

3.0

%

 

 

2.9

%

 

 

 

 

 

 

 

 

Note: See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for reconciliations from operating income.

Equity Residential

Fourth Quarter 2019 vs. Fourth Quarter 2018

Same Store Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year's Quarter

 

Markets/Metro Areas

 

Apartment
Units

 

 

Q4 2019
% of
Actual
NOI

 

 

Q4 2019
Average
Rental
Rate

 

 

Q4 2019
Weighted
Average
Physical
Occupancy %

 

 

Q4 2019
Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average
Rental
Rate

 

 

Physical
Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

15,968

 

 

 

18.8

%

 

$

2,631

 

 

 

96.0

%

 

 

11.9

%

 

 

2.7

%

 

 

0.8

%

 

 

3.5

%

 

 

3.1

%

 

 

(0.3

%)

 

 

(0.9

%)

Orange County

 

 

4,028

 

 

 

4.5

%

 

 

2,271

 

 

 

96.6

%

 

 

10.4

%

 

 

3.8

%

 

 

(3.5

%)

 

 

6.0

%

 

 

3.1

%

 

 

0.4

%

 

 

(0.1

%)

San Diego

 

 

3,385

 

 

 

3.9

%

 

 

2,437

 

 

 

96.4

%

 

 

12.9

%

 

 

2.7

%

 

 

1.1

%

 

 

3.2

%

 

 

2.6

%

 

 

0.1

%

 

 

(0.9

%)

Subtotal – Southern California

 

 

23,381

 

 

 

27.2

%

 

 

2,540

 

 

 

96.1

%

 

 

11.8

%

 

 

2.9

%

 

 

0.3

%

 

 

3.9

%

 

 

3.0

%

 

 

(0.1

%)

 

 

(0.7

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

13,082

 

 

 

20.9

%

 

 

3,324

 

 

 

95.2

%

 

 

12.1

%

 

 

3.4

%

 

 

4.5

%

 

 

3.1

%

 

 

3.6

%

 

 

(0.4

%)

 

 

0.9

%

Washington DC

 

 

14,228

 

 

 

15.8

%

 

 

2,473

 

 

 

96.5

%

 

 

9.4

%

 

 

2.4

%

 

 

3.5

%

 

 

1.9

%

 

 

2.6

%

 

 

0.1

%

 

 

(0.7

%)

New York (1)

 

 

9,475

 

 

 

15.0

%

 

 

3,941

 

 

 

96.5

%

 

 

7.3

%

 

 

1.8

%

 

 

3.3

%

 

 

0.8

%

 

 

2.3

%

 

 

(0.1

%)

 

 

(0.3

%)

Boston

 

 

6,346

 

 

 

10.2

%

 

 

3,178

 

 

 

96.1

%

 

 

9.4

%

 

 

4.8

%

 

 

3.0

%

 

 

5.6

%

 

 

3.9

%

 

 

0.1

%

 

 

0.0

%

Seattle (2)

 

 

8,442

 

 

 

10.1

%

 

 

2,455

 

 

 

96.4

%

 

 

11.1

%

 

 

5.6

%

 

 

6.5

%

 

 

5.2

%

 

 

3.9

%

 

 

0.4

%

 

 

(0.2

%)

Other Markets

 

 

862

 

 

 

0.8

%

 

 

1,979

 

 

 

96.0

%

 

 

13.9

%

 

 

2.3

%

 

 

(4.6

%)

 

 

5.1

%

 

 

1.7

%

 

 

1.6

%

 

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

75,816

 

 

 

100.0

%

 

$

2,875

 

 

 

96.1

%

 

 

10.6

%

 

 

3.2

%

 

 

3.0

%

 

 

3.2

%

 

 

3.1

%

 

 

(0.1

%)

 

 

(0.2

%)

(1)

Quarter over quarter same store revenues in New York were negatively impacted by non-residential related income. Residential-only same store revenues in New York increased 2.2% quarter over quarter.

 

(2)

Quarter over quarter same store revenues in Seattle were positively impacted by non-residential related income. Residential-only same store revenues in Seattle increased 4.5% quarter over quarter.

Equity Residential

Fourth Quarter 2019 vs. Third Quarter 2019

Same Store Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Quarter

 

Markets/Metro Areas

 

Apartment
Units

 

 

Q4 2019
% of
Actual
NOI

 

 

Q4 2019
Average
Rental
Rate

 

 

Q4 2019
Weighted
Average
Physical
Occupancy %

 

 

Q4 2019
Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average
Rental
Rate

 

 

Physical
Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

15,968

 

 

 

18.5

%

 

$

2,631

 

 

 

96.0

%

 

 

11.9

%

 

 

(0.6

%)

 

 

(3.3

%)

 

 

0.6

%

 

 

0.3

%

 

 

(0.6

%)

 

 

(4.8

%)

Orange County

 

 

4,028

 

 

 

4.5

%

 

 

2,271

 

 

 

96.6

%

 

 

10.4

%

 

 

(0.3

%)

 

 

(8.7

%)

 

 

2.4

%

 

 

(0.2

%)

 

 

0.0

%

 

 

(6.9

%)

San Diego

 

 

3,385

 

 

 

3.8

%

 

 

2,437

 

 

 

96.4

%

 

 

12.9

%

 

 

(0.5

%)

 

 

(5.3

%)

 

 

1.3

%

 

 

0.0

%

 

 

(0.2

%)

 

 

(5.6

%)

Subtotal – Southern California

 

 

23,381

 

 

 

26.8

%

 

 

2,540

 

 

 

96.1

%

 

 

11.8

%

 

 

(0.5

%)

 

 

(4.3

%)

 

 

1.0

%

 

 

0.1

%

 

 

(0.5

%)

 

 

(5.3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

13,469

 

 

 

20.9

%

 

 

3,310

 

 

 

95.2

%

 

 

12.2

%

 

 

(0.6

%)

 

 

(1.7

%)

 

 

(0.3

%)

 

 

0.0

%

 

 

(0.5

%)

 

 

(4.0

%)

Washington DC

 

 

14,594

 

 

 

15.9

%

 

 

2,463

 

 

 

96.4

%

 

 

9.6

%

 

 

(0.5

%)

 

 

(3.4

%)

 

 

0.8

%

 

 

(0.1

%)

 

 

(0.2

%)

 

 

(6.7

%)

New York (1)

 

 

9,606

 

 

 

15.0

%

 

 

3,937

 

 

 

96.4

%

 

 

7.3

%

 

 

(1.1

%)

 

 

(2.0

%)

 

 

(0.5

%)

 

 

(0.2

%)

 

 

(0.5

%)

 

 

(6.0

%)

Seattle

 

 

8,616

 

 

 

10.2

%

 

 

2,454

 

 

 

96.4

%

 

 

11.1

%

 

 

0.2

%

 

 

3.2

%

 

 

(0.8

%)

 

 

0.5

%

 

 

(0.1

%)

 

 

(4.0

%)

Boston

 

 

6,346

 

 

 

10.1

%

 

 

3,178

 

 

 

96.1

%

 

 

9.4

%

 

 

0.9

%

 

 

(0.7

%)

 

 

1.5

%

 

 

0.3

%

 

 

(0.3

%)

 

 

(7.0

%)

Other Markets

 

 

1,136

 

 

 

1.1

%

 

 

2,056

 

 

 

95.3

%

 

 

14.4

%

 

 

(2.4

%)

 

 

(4.8

%)

 

 

(1.5

%)

 

 

(1.5

%)

 

 

(0.8

%)

 

 

(5.8

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

77,148

 

 

 

100.0

%

 

$

2,869

 

 

 

96.1

%

 

 

10.6

%

 

 

(0.4

%)

 

 

(2.2

%)

 

 

0.3

%

 

 

0.0

%

 

 

(0.4

%)

 

 

(5.5

%)

(1)

Sequential same store revenues in New York were negatively impacted by non-residential related income. Residential-only same store revenues in New York decreased 0.6% sequentially.

Equity Residential

2019 vs. 2018

Same Store Results/Statistics by Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) from Prior Year

 

Markets/Metro Areas

 

Apartment
Units

 

 

2019
% of
Actual
NOI

 

 

2019
Average
Rental
Rate

 

 

2019
Weighted
Average
Physical
Occupancy %

 

 

2019
Turnover

 

 

Revenues

 

 

Expenses

 

 

NOI

 

 

Average
Rental
Rate

 

 

Physical
Occupancy

 

 

Turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

 

15,371

 

 

 

19.3

%

 

$

2,612

 

 

 

96.3

%

 

 

54.2

%

 

 

3.7

%

 

 

5.1

%

 

 

3.2

%

 

 

3.7

%

 

 

0.1

%

 

 

(3.1

%)

Orange County

 

 

4,028

 

 

 

4.7

%

 

 

2,249

 

 

 

96.5

%

 

 

51.8

%

 

 

3.8

%

 

 

(0.2

%)

 

 

5.1

%

 

 

3.4

%

 

 

0.4

%

 

 

(0.8

%)

San Diego

 

 

3,385

 

 

 

4.1

%

 

 

2,410

 

 

 

96.5

%

 

 

57.8

%

 

 

3.3

%

 

 

2.5

%

 

 

3.6

%

 

 

3.2

%

 

 

0.2

%

 

 

(2.7

%)

Subtotal – Southern California

 

 

22,784

 

 

 

28.1

%

 

 

2,518

 

 

 

96.4

%

 

 

54.3

%

 

 

3.7

%

 

 

4.0

%

 

 

3.6

%

 

 

3.6

%

 

 

0.2

%

 

 

(2.6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

12,633

 

 

 

21.2

%

 

 

3,254

 

 

 

95.9

%

 

 

51.2

%

 

 

3.7

%

 

 

3.3

%

 

 

3.8

%

 

 

3.7

%

 

 

(0.1

%)

 

 

0.0

%

Washington DC

 

 

14,228

 

 

 

16.7

%

 

 

2,454

 

 

 

96.6

%

 

 

46.2

%

 

 

2.3

%

 

 

1.9

%

 

 

2.5

%

 

 

2.1

%

 

 

0.3

%

 

 

(3.5

%)

New York

 

 

9,235

 

 

 

15.5

%

 

 

3,924

 

 

 

96.7

%

 

 

38.7

%

 

 

2.3

%

 

 

6.0

%

 

 

(0.1

%)

 

 

2.1

%

 

 

0.1

%

 

 

0.1

%

Boston

 

 

5,714

 

 

 

9.6

%

 

 

3,109

 

 

 

96.2

%

 

 

47.0

%

 

 

4.0

%

 

 

2.9

%

 

 

4.4

%

 

 

3.3

%

 

 

0.2

%

 

 

(1.8

%)

Seattle

 

 

7,100

 

 

 

8.8

%

 

 

2,349

 

 

 

96.5

%

 

 

53.3

%

 

 

3.4

%

 

 

0.3

%

 

 

4.6

%

 

 

2.2

%

 

 

0.7

%

 

 

(3.4

%)

Other Markets

 

 

136

 

 

 

0.1

%

 

 

1,295

 

 

 

98.7

%

 

 

56.6

%

 

 

7.9

%

 

 

8.5

%

 

 

7.6

%

 

 

7.6

%

 

 

0.2

%

 

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

71,830

 

 

 

100.0

%

 

$

2,843

 

 

 

96.4

%

 

 

49.5

%

 

 

3.2

%

 

 

3.7

%

 

 

3.0

%

 

 

2.9

%

 

 

0.2

%

 

 

(1.9

%)

Equity Residential

Same Store Lease Pricing Statistics by Market

For 71,830 Same Store Apartment Units

 

 

New Lease Change (1)

 

 

Renewal Rate Achieved (1)

 

Markets/Metro Areas

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles (2)

 

 

(0.4

%)

 

 

1.2

%

 

 

5.2

%

 

 

6.1

%

Orange County

 

 

0.1

%

 

 

(0.2

%)

 

 

5.7

%

 

 

5.7

%

San Diego

 

 

(0.1

%)

 

 

1.6

%

 

 

5.5

%

 

 

6.1

%

Subtotal – Southern California

 

 

(0.3

%)

 

 

1.1

%

 

 

5.3

%

 

 

6.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

0.3

%

 

 

0.8

%

 

 

5.1

%

 

 

5.0

%

Washington DC

 

 

0.6

%

 

 

(1.8

%)

 

 

4.7

%

 

 

4.4

%

New York

 

 

0.5

%

 

 

(1.5

%)

 

 

3.9

%

 

 

3.4

%

Boston

 

 

0.1

%

 

 

(0.6

%)

 

 

5.3

%

 

 

4.9

%

Seattle

 

 

1.3

%

 

 

(2.2

%)

 

 

6.0

%

 

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

0.3

%

 

 

(0.2

%)

 

 

4.9

%

 

 

4.9

%

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions.

 

(2)

The Company’s 2019 New Lease Change in Los Angeles was negatively impacted by temporary governmental restrictions put in place in connection with the wildfire emergency. These restrictions affected the Company’s ability to offer premium short-term leases in this market.

Equity Residential

Fourth Quarter 2019 vs. Fourth Quarter 2018

Same Store Operating Expenses for 75,816 Same Store Apartment Units

$ in thousands

 

 

Actual
Q4 2019

 

 

Actual
Q4 2018

 

 

$
Change (1)

 

 

%
Change

 

 

% of Actual
Q4 2019
Operating
Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

85,010

 

 

$

79,920

 

 

$

5,090

 

 

 

6.4

%

 

 

43.9

%

On-site payroll

 

 

38,925

 

 

 

41,844

 

 

 

(2,919

)

 

 

(7.0

%)

 

 

20.1

%

Utilities

 

 

26,585

 

 

 

25,108

 

 

 

1,477

 

 

 

5.9

%

 

 

13.8

%

Repairs and maintenance

 

 

23,553

 

 

 

23,405

 

 

 

148

 

 

 

0.6

%

 

 

12.2

%

Insurance

 

 

5,487

 

 

 

5,004

 

 

 

483

 

 

 

9.7

%

 

 

2.8

%

Leasing and advertising

 

 

2,749

 

 

 

2,784

 

 

 

(35

)

 

 

(1.3

%)

 

 

1.4

%

Other on-site operating expenses

 

 

11,185

 

 

 

9,859

 

 

 

1,326

 

 

 

13.4

%

 

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same store operating expenses (2)

 

$

193,494

 

 

$

187,924

 

 

$

5,570

 

 

 

3.0

%

 

 

100.0

%

2019 vs. 2018

Same Store Operating Expenses for 71,830 Same Store Apartment Units

$ in thousands

 

 

Actual
2019

 

 

Actual
2018

 

 

$
Change (1)

 

 

%
Change

 

 

% of Actual
2019
Operating
Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

315,033

 

 

$

301,969

 

 

$

13,064

 

 

 

4.3

%

 

 

42.9

%

On-site payroll

 

 

157,120

 

 

 

155,901

 

 

 

1,219

 

 

 

0.8

%

 

 

21.4

%

Utilities

 

 

98,015

 

 

 

94,949

 

 

 

3,066

 

 

 

3.2

%

 

 

13.4

%

Repairs and maintenance

 

 

92,361

 

 

 

90,050

 

 

 

2,311

 

 

 

2.6

%

 

 

12.6

%

Insurance

 

 

20,869

 

 

 

18,973

 

 

 

1,896

 

 

 

10.0

%

 

 

2.8

%

Leasing and advertising

 

 

9,774

 

 

 

9,883

 

 

 

(109

)

 

 

(1.1

%)

 

 

1.3

%

Other on-site operating expenses

 

 

41,381

 

 

 

36,891

 

 

 

4,490

 

 

 

12.2

%

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same store operating expenses (2)

 

$

734,553

 

 

$

708,616

 

 

$

25,937

 

 

 

3.7

%

 

 

100.0

%

(1)

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

 

Real estate taxes – Increase above expectations due primarily to fewer recoveries from appeals activity.

 

On-site payroll – Year over year increase below expectations. Payroll pressures continue but were offset by lower than expected employee benefit- related costs.

 

Utilities – Quarter over quarter growth slightly higher than expected but generally in line with expectations for the year.

 

Insurance – Increase due to higher premiums on property insurance renewal as a result of 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.

 

(2)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions.

Equity Residential

Debt Summary as of December 31, 2019

($ in thousands)

 

 

Debt
Balances (1)

 

 

% of Total

 

 

Weighted
Average
Rates (1)

 

 

Weighted
Average
Maturities
(years)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured

 

$

1,941,610

 

 

 

21.5

%

 

 

3.84

%

 

 

6.5

 

Unsecured

 

 

7,095,346

 

 

 

78.5

%

 

 

4.07

%

 

 

9.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

9,036,956

 

 

 

100.0

%

 

 

4.02

%

 

 

8.6

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

1,574,699

 

 

 

17.4

%

 

 

4.28

%

 

 

4.3

 

Unsecured – Public

 

 

6,077,513

 

 

 

67.3

%

 

 

4.24

%

 

 

10.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Debt

 

 

7,652,212

 

 

 

84.7

%

 

 

4.25

%

 

 

9.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

 

7,050

 

 

 

0.1

%

 

 

3.28

%

 

 

2.5

 

Secured – Tax Exempt

 

 

359,861

 

 

 

4.0

%

 

 

1.94

%

 

 

16.0

 

Unsecured – Public

 

 

 

 

 

 

 

 

3.34

%

 

 

 

Unsecured – Revolving Credit Facility

 

 

20,000

 

 

 

0.2

%

 

 

3.12

%

 

 

4.8

 

Unsecured – Commercial Paper Program (2)

 

 

997,833

 

 

 

11.0

%

 

 

2.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating Rate Debt

 

 

1,384,744

 

 

 

15.3

%

 

 

2.49

%

 

 

4.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

9,036,956

 

 

 

100.0

%

 

 

4.02

%

 

 

8.6

 

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.

(2)

At December 31, 2019, the weighted average maturity of commercial paper outstanding was 40 days. The weighted average amount outstanding for the year ended December 31, 2019 was approximately $434.4 million.

Note: The Company capitalized interest of approximately $6.9 million and $6.3 million during the years ended December 31, 2019 and 2018, respectively. The Company capitalized interest of approximately $2.1 million and $1.8 million during the quarters ended December 31, 2019 and 2018, respectively.

Equity Residential

Debt Maturity Schedule as of December 31, 2019

($ in thousands)

 

Year

 

Fixed
Rate

 

 

Floating
Rate

 

 

Total

 

 

% of Total

 

 

Weighted
Average Coupons
on Fixed
Rate Debt (1)

 

 

Weighted
Average
Coupons on
Total Debt (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

$

27,542

 

 

$

1,000,000

 

(2)

$

1,027,542

 

 

 

11.3

%

 

 

4.56

%

 

 

2.07

%

2021

 

 

926,404

 

 

 

 

 

 

926,404

 

 

 

10.1

%

 

 

4.64

%

 

 

4.64

%

2022

 

 

264,185

 

 

 

7,650

 

 

 

271,835

 

 

 

3.0

%

 

 

3.25

%

 

 

3.23

%

2023

 

 

1,325,588

 

 

 

3,500

 

 

 

1,329,088

 

 

 

14.5

%

 

 

3.74

%

 

 

3.73

%

2024

 

 

 

 

 

26,100

 

(3)

 

26,100

 

 

 

0.3

%

 

N/A

 

 

 

2.37

%

2025

 

 

450,000

 

 

 

8,200

 

 

 

458,200

 

 

 

5.0

%

 

 

3.38

%

 

 

3.34

%

2026

 

 

592,025

 

 

 

9,000

 

 

 

601,025

 

 

 

6.6

%

 

 

3.58

%

 

 

3.56

%

2027

 

 

400,000

 

 

 

9,800

 

 

 

409,800

 

 

 

4.5

%

 

 

3.25

%

 

 

3.21

%

2028

 

 

900,000

 

 

 

42,380

 

 

 

942,380

 

 

 

10.3

%

 

 

3.79

%

 

 

3.70

%

2029

 

 

888,120

 

 

 

11,500

 

 

 

899,620

 

 

 

9.9

%

 

 

3.30

%

 

 

3.28

%

2030+

 

 

1,950,850

 

 

 

288,135

 

 

 

2,238,985

 

 

 

24.5

%

 

 

3.81

%

 

 

3.53

%

Subtotal

 

 

7,724,714

 

 

 

1,406,265

 

 

 

9,130,979

 

 

 

100.0

%

 

 

3.75

%

 

 

3.47

%

Deferred Financing Costs and Unamortized (Discount)

 

 

(72,502

)

 

 

(21,521

)

 

 

(94,023

)

 

N/A

 

 

N/A

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

7,652,212

 

 

$

1,384,744

 

 

$

9,036,956

 

 

 

100.0

%

 

 

3.75

%

 

 

3.47

%

(1)

See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.

(2)

Represents principal outstanding on the Company’s commercial paper program.

(3)

Includes $20.0 million in principal outstanding on the Company’s revolving credit facility.

Equity Residential

Selected Unsecured Public Debt Covenants

 

 

December 31,

 

 

September 30,

 

 

 

2019

 

 

2019

 

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

 

33.8%

 

 

33.9%

 

 

 

 

 

 

 

 

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

 

8.2%

 

 

8.3%

 

 

 

 

 

 

 

 

Consolidated Income Available for Debt Service to

 

 

 

 

 

Maximum Annual Service Charges

 

 

 

 

 

(must be at least 1.5 to 1)

 

5.07

 

 

4.75

 

 

 

 

 

 

 

 

Total Unencumbered Assets to Unsecured Debt

 

 

 

 

 

(must be at least 125%)

 

386.1%

 

 

385.3%

 

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

 

 

December 31,

 

 

September 30,

 

 

 

2019

 

 

2019

 

Total debt to Normalized EBITDAre

 

5.18x

 

 

5.22x

 

 

 

 

 

 

 

 

 

 

Net debt to Normalized EBITDAre

 

5.14x

 

 

5.20x

 

 

 

 

 

 

 

 

 

 

Unencumbered NOI as a % of total NOI

 

87.1%

 

 

86.9%

 

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential

Capital Structure as of December 31, 2019

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

Secured Debt

 

 

 

 

 

 

 

 

 

$

1,941,610

 

 

 

21.5

%

 

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

 

 

7,095,346

 

 

 

78.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

 

 

 

 

 

 

 

 

 

 

9,036,956

 

 

 

100.0

%

 

 

22.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares (includes Restricted Shares)

 

 

371,670,884

 

 

 

96.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Units (includes OP Units and Restricted Units)

 

 

13,731,315

 

 

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shares and Units

 

 

385,402,199

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Price at December 31, 2019

 

$

80.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,186,746

 

 

 

99.9

%

 

 

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

 

 

 

 

 

 

37,280

 

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Equity

 

 

 

 

 

 

 

 

 

 

31,224,026

 

 

 

100.0

%

 

 

77.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

 

 

 

 

$

40,260,982

 

 

 

 

 

 

 

100.0

%

Perpetual Preferred Equity as of December 31, 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

 

 

2019

 

 

2018

 

 

Q4 2019

 

 

Q4 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for Net Income Purposes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares - basic

 

 

370,460,884

 

 

 

368,052,312

 

 

 

371,155,240

 

 

 

368,444,736

 

Shares issuable from assumed conversion/vesting of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- OP Units

 

 

12,907,453

 

 

 

12,868,188

 

 

 

12,883,309

 

 

 

12,860,819

 

- long-term compensation shares/units

 

 

2,965,118

 

 

 

2,774,227

 

 

 

3,104,719

 

 

 

2,990,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares and Units - diluted

 

 

386,333,455

 

 

 

383,694,727

 

 

 

387,143,268

 

 

 

384,296,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Amounts Outstanding for FFO and N