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Equity Residential Reports First Quarter 2015 Results

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Equity Residential (NYSE:EQR) today reported results for the quarter ended March 31, 2015. All per share results are reported as available to common shares on a diluted basis.

“Apartment fundamentals remain very strong across our markets and 2015 should be another terrific year for Equity Residential,” said David J. Neithercut, Equity Residential’s President and CEO. “As we head into our primary leasing season, we continue to experience less turnover, better occupancy and higher rental rates than original expectations and are therefore pleased to raise our guidance range for same store revenue growth to 4.3% to 4.7%.”

First Quarter 2015

FFO (Funds from Operations), as defined by the National Association of Real Estate Investment Trusts (NAREIT), for the first quarter of 2015 was $0.79 per share compared to $0.71 per share in the first quarter of 2014. The difference is due primarily to the items described below.

For the first quarter of 2015, the company reported Normalized FFO of $0.79 per share compared to $0.71 per share in the same period of 2014. The following items impacted Normalized FFO per share in the quarter:

  • a positive impact of approximately $0.07 per share from higher same store net operating income (NOI) and approximately $0.02 per share from NOI from non-same store properties currently in lease-up;
  • a positive impact of approximately $0.01 per share from lower interest expense primarily due to higher capitalized interest in the first quarter of 2015; and
  • a negative impact of approximately $0.02 per share from the timing of the company’s 2014 and 2015 transaction activity and other items.

Normalized FFO begins with FFO and eliminates certain items that by their nature are not comparable from period to period or that tend to obscure the company’s actual operating performance. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 5 and 25 of this release and the company has included guidance for Normalized FFO on page 24 and FFO on page 25 of this release.

For the first quarter of 2015, the company reported earnings of $0.49 per share compared to $0.22 per share in the first quarter of 2014. The difference is due primarily to higher gains on property sales in the first quarter of 2015 and the items described above.

Same Store Results

On a same store first quarter to first quarter comparison, which includes 97,586 apartment units, revenues increased 5.0%, expenses increased 1.4% and NOI increased 7.0%.

Capital Markets Activity

In February 2015, the company established a $500 million unsecured commercial paper note program which allows Equity Residential to borrow on a daily, weekly and monthly basis. As of April 27, 2015, the company’s program has approximately $500 million outstanding at a weighted average rate of 0.61% for a weighted average period of 12 days.

Investment Activity

The company did not acquire any operating properties during the first quarter of 2015.

During the first quarter of 2015, the company sold three consolidated apartment properties, consisting of 550 apartment units, for an aggregate sale price of approximately $145.4 million at a weighted average capitalization (cap) rate of 5.3%. These sales generated an unlevered internal rate of return (IRR), inclusive of indirect management costs, of 11.9%.

Second Quarter 2015 Guidance

The company has established a Normalized FFO guidance range of $0.82 to $0.86 per share for the second quarter of 2015. The difference between the company’s first quarter 2015 Normalized FFO of $0.79 per share and the midpoint of the second quarter 2015 guidance range of $0.84 per share is due primarily to:

  • a positive impact of approximately $0.04 per share from higher same store NOI; and
  • a positive impact of approximately $0.01 per share from lower G&A costs.

Full Year 2015 Guidance

The company has revised its guidance for its full year 2015 same store operating performance and Normalized FFO per share as listed below:

Previous

Revised

Same store:
Physical occupancy 95.8% 95.9%
Revenue change 3.75% to 4.5% 4.3% to 4.7%
Expense change 2.5% to 3.5% 2.5% to 3.5%
NOI change 4.0% to 5.5% 4.8% to 5.8%
Normalized FFO per share $3.35 to $3.45 $3.37 to $3.45

The company’s guidance for transaction activity remains unchanged at $500 million of acquisitions and $500 million of dispositions with a cap rate spread of 100 basis points.

Second Quarter 2015 Earnings and Conference Call

Equity Residential expects to announce second quarter 2015 results on Tuesday, July 28, 2015 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, July 29, 2015.

Equity Residential is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top U.S. growth markets. Equity Residential owns or has investments in 389 properties consisting of 108,793 apartment units. 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, April 29, at 10:00 a.m. Central. 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)
Quarter Ended March 31,
2015 2014
REVENUES
Rental income $ 664,606 $ 630,725
Fee and asset management 1,765 2,717
Total revenues 666,371 633,442
EXPENSES
Property and maintenance 124,560 125,566
Real estate taxes and insurance 86,432 82,094
Property management 21,444 22,118
Fee and asset management 1,321 1,662
Depreciation 194,521 185,167
General and administrative 19,922 17,576
Total expenses 448,200 434,183
Operating income 218,171 199,259
Interest and other income 120 605
Other expenses 70 (664 )
Interest:
Expense incurred, net (108,622 ) (113,049 )
Amortization of deferred financing costs (2,589 ) (2,792 )

Income before income and other taxes, income (loss) from investments in unconsolidated entities, net gain (loss) on sales of real estate properties and land parcels and discontinued operations

107,150 83,359
Income and other tax (expense) benefit (43 ) (240 )
Income (loss) from investments in unconsolidated entities 2,963 (1,409 )
Net gain on sales of real estate properties 79,951
Net (loss) on sales of land parcels (1 ) (30 )
Income from continuing operations 190,020 81,680
Discontinued operations, net 204 1,052
Net income 190,224 82,732
Net (income) attributable to Noncontrolling Interests:
Operating Partnership (7,059 ) (3,093 )
Partially Owned Properties (643 ) (504 )
Net income attributable to controlling interests 182,522 79,135
Preferred distributions (891 ) (1,036 )
Premium on redemption of Preferred Shares (2,789 )
Net income available to Common Shares $ 178,842 $ 78,099
Earnings per share – basic:
Income from continuing operations available to Common Shares $ 0.49 $ 0.21
Net income available to Common Shares $ 0.49 $ 0.22
Weighted average Common Shares outstanding 363,098 360,470
Earnings per share – diluted:
Income from continuing operations available to Common Shares $ 0.49 $ 0.21
Net income available to Common Shares $ 0.49 $ 0.22
Weighted average Common Shares outstanding 380,327 376,384
Distributions declared per Common Share outstanding $ 0.5525 $ 0.50
Equity Residential
Consolidated Statements of Funds From Operations and Normalized Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended March 31,
2015 2014
Net income $ 190,224 $ 82,732
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties (643 ) (504 )
Preferred distributions (891 ) (1,036 )
Premium on redemption of Preferred Shares (2,789 )
Net income available to Common Shares and Units 185,901 81,192
Adjustments:
Depreciation 194,521 185,167
Depreciation – Non-real estate additions (1,261 ) (1,188 )
Depreciation – Partially Owned Properties (1,079 ) (1,068 )
Depreciation – Unconsolidated Properties 1,228 1,603
Net (gain) on sales of real estate properties (79,951 )
Discontinued operations:
Net (gain) on sales of discontinued operations (71 )
FFO available to Common Shares and Units (1) (3) (4) 299,359 265,635
Adjustments (see page 23 for additional detail):
Asset impairment and valuation allowances
Property acquisition costs and write-off of pursuit costs (4,825 ) 474
Debt extinguishment (gains) losses, including prepayment penalties, preferred share
redemptions and non-cash convertible debt discounts 1,473
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) 1,658 9
Other miscellaneous non-comparable items 1,337 (463 )
Normalized FFO available to Common Shares and Units (2) (3) (4) $ 299,002 $ 265,655
FFO (1) (3) $ 303,039 $ 266,671
Preferred distributions (891 ) (1,036 )
Premium on redemption of Preferred Shares (2,789 )
FFO available to Common Shares and Units – basic and diluted (1) (3) (4) $ 299,359 $ 265,635
FFO per share and Unit – basic $ 0.79 $ 0.71
FFO per share and Unit – diluted $ 0.79 $ 0.71
Normalized FFO (2) (3) $ 299,893 $ 266,691
Preferred distributions (891 ) (1,036 )
Normalized FFO available to Common Shares and Units – basic and diluted (2) (3) (4) $ 299,002 $ 265,655
Normalized FFO per share and Unit – basic $ 0.79 $ 0.71
Normalized FFO per share and Unit – diluted $ 0.79 $ 0.71
Weighted average Common Shares and Units outstanding – basic 376,696 374,201
Weighted average Common Shares and Units outstanding – diluted 380,327 376,384
Note: See page 23 for additional detail regarding the adjustments from FFO to Normalized FFO. See page 25 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.
Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
March 31, December 31,
2015 2014
ASSETS
Investment in real estate
Land $ 6,357,580 $ 6,295,404
Depreciable property 20,024,497 19,851,504
Projects under development 1,269,784 1,343,919
Land held for development 143,997 184,556
Investment in real estate 27,795,858 27,675,383
Accumulated depreciation (5,600,485 ) (5,432,805 )
Investment in real estate, net 22,195,373 22,242,578
Cash and cash equivalents 49,418 40,080
Investments in unconsolidated entities 89,284 105,434
Deposits – restricted 203,800 72,303
Escrow deposits – mortgage 50,659 48,085
Deferred financing costs, net 55,791 58,380
Other assets 384,723 383,754
Total assets $ 23,029,048 $ 22,950,614
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable $ 4,957,876 $ 5,086,515
Notes, net 5,430,806 5,425,346
Line of credit and commercial paper 470,826 333,000
Accounts payable and accrued expenses 202,110 153,590
Accrued interest payable 84,670 89,540
Other liabilities 383,057 389,915
Security deposits 75,294 75,633
Distributions payable 208,954 188,566
Total liabilities 11,813,593 11,742,105
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership 541,866 500,733
Equity:
Shareholders’ equity:

Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 803,600 shares issued and outstanding as of March 31, 2015 and 1,000,000 shares issued and outstanding as of December 31, 2014

40,180 50,000

Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 363,968,420 shares issued and outstanding as of March 31, 2015 and 362,855,454 shares issued and outstanding as of December 31, 2014

3,640 3,629
Paid in capital 8,539,115 8,536,340
Retained earnings 1,928,449 1,950,639
Accumulated other comprehensive (loss) (180,022 ) (172,152 )
Total shareholders’ equity 10,331,362 10,368,456
Noncontrolling Interests:
Operating Partnership 219,566 214,411
Partially Owned Properties 122,661 124,909
Total Noncontrolling Interests 342,227 339,320
Total equity 10,673,589 10,707,776
Total liabilities and equity $ 23,029,048 $ 22,950,614
Equity Residential
Portfolio Summary
As of March 31, 2015
% of Average
Apartment Stabilized Rental
Markets/Metro Areas Properties Units NOI (1) Rate (2)
Core:
Washington DC 57 18,652 17.6% $ 2,202
New York 38 10,330 16.5% 3,879
San Francisco 51 13,208 14.3% 2,453
Los Angeles 61 13,313 12.7% 2,248
Boston 34 7,816 10.0% 2,915
South Florida 35 11,434 7.5% 1,647
Seattle 41 8,170 7.0% 1,940
Denver 19 6,935 4.7% 1,466
San Diego 13 3,505 3.1% 2,008
Orange County, CA 11 3,490 3.0% 1,821
Subtotal – Core 360 96,853 96.4% 2,319
Non-Core:
Inland Empire, CA 10 3,081 2.2% 1,587
Orlando 3 827 0.4% 1,255
All Other Markets 14 2,969 1.0% 1,188
Subtotal – Non-Core 27 6,877 3.6% 1,374
Total 387 103,730 100.0% 2,256
Military Housing 2 5,063
Grand Total 389 108,793 100.0% $ 2,256
Note: Projects under development are not included in the Portfolio Summary until construction has been completed.
(1) % of Stabilized NOI includes budgeted 2015 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.
(2) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the last month of the period presented.
Equity Residential
Portfolio as of March 31, 2015
Apartment
Properties Units
Wholly Owned Properties 362 97,825
Master-Leased Properties – Consolidated 3 853
Partially Owned Properties – Consolidated 19 3,771
Partially Owned Properties – Unconsolidated 3 1,281
Military Housing 2 5,063
389 108,793
Portfolio Rollforward Q1 2015
($ in thousands)
Apartment Purchase/
Properties Units (Sale) Price Cap Rate
12/31/2014 391 109,225
Acquisitions:
Consolidated:
Rental Properties
Dispositions:
Consolidated:
Rental Properties (3) (550) $ 145,400 5.3%
Completed Developments – Consolidated 1 88
Configuration Changes 30
3/31/2015 389 108,793
Equity Residential
First Quarter 2015 vs. First Quarter 2014
Same Store Results/Statistics for 97,586 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q1 2015 $ 632,034 $ 216,544 $ 415,490 $ 2,252 95.9 % 11.2 %
Q1 2014 $ 601,794 $ 213,460 $ 388,334 $ 2,164 95.1 % 11.3 %
Change $ 30,240 $ 3,084 $ 27,156 $ 88 0.8 % (0.1 %)
Change 5.0 % 1.4 % 7.0 % 4.1 %
First Quarter 2015 vs. Fourth Quarter 2014
Same Store Results/Statistics for 99,502 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
Results Statistics
Average
Rental
Description Revenues Expenses NOI (1) Rate (2) Occupancy Turnover
Q1 2015 $ 644,513 $ 221,006 $ 423,507 $ 2,252 95.9 % 11.2 %
Q4 2014 $ 640,589 $ 206,764 $ 433,825 $ 2,236 96.0 % 12.3 %
Change $ 3,924 $ 14,242 $ (10,318 ) $ 16 (0.1 %) (1.1 %)
Change 0.6 % 6.9 % (2.4 %) 0.7 %
(1) The Company’s primary financial measure for evaluating each of its apartment communities is net operating income (“NOI”). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance) as well as an allocation of indirect property management costs. The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment communities. See page 25 for reconciliations from operating income.
(2) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
Equity Residential
First Quarter 2015 vs. First Quarter 2014
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Year’s Quarter

Q1 2015 Q1 2015 Q1 2015
% of Average Weighted Average
Apartment Actual Rental Average Rental
Markets/Metro Areas Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy
Core:
Washington DC 17,741 17.8 % $ 2,213 95.7 % 0.7 % 1.9 % 0.1 % (0.4 %) 1.2 %
New York 10,330 16.8 % 3,895 96.4 % 4.4 % 0.6 % 7.0 % 3.5 % 0.8 %
San Francisco 12,764 15.1 % 2,428 96.6 % 10.6 % 1.9 % 14.8 % 8.5 % 1.8 %
Los Angeles 10,641 10.6 % 2,177 95.9 % 5.5 % 0.9 % 8.0 % 4.7 % 0.7 %
Boston 7,722 10.0 % 2,892 95.6 % 3.4 % 1.9 % 4.3 % 2.8 % 0.5 %
South Florida 10,537 7.5 % 1,627 95.9 % 5.1 % 2.5 % 6.7 % 4.5 % 0.6 %
Seattle 7,380 6.7 % 1,910 95.5 % 7.4 % (0.5 %) 11.4 % 6.6 % 0.6 %
Denver 6,935 5.2 % 1,455 95.8 % 9.0 % 0.0 % 12.5 % 8.3 % 0.6 %
San Diego 3,505 3.4 % 2,008 95.9 % 5.2 % 2.6 % 6.4 % 4.3 % 0.9 %
Orange County, CA 3,490 3.2 % 1,820 96.2 % 5.5 % 4.4 % 5.9 % 4.4 % 1.1 %
Subtotal – Core 91,045 96.3 % 2,315 96.0 % 5.1 % 1.4 % 7.1 % 4.0 % 1.0 %
Non-Core:
Inland Empire, CA 3,081 2.3 % 1,591 95.0 % 3.1 % 3.3 % 3.0 % 3.6 % (0.5 %)
Orlando 827 0.4 % 1,244 95.7 % 4.4 % 5.6 % 3.6 % 2.4 % 1.8 %
All Other Markets 2,633 1.0 % 1,142 96.0 % 3.5 % 0.2 % 7.2 % 3.6 % (0.1 %)
Subtotal – Non-Core 6,541 3.7 % 1,366 95.5 % 3.4 % 2.2 % 4.2 % 3.5 % 0.0 %
Total 97,586 100.0 % $ 2,252 95.9 % 5.0 % 1.4 % 7.0 % 4.1 % 0.8 %
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
Equity Residential
First Quarter 2015 vs. Fourth Quarter 2014
Same Store Results/Statistics by Market
Increase (Decrease) from Prior Quarter

Q1 2015 Q1 2015 Q1 2015
% of Average Weighted Average
Apartment Actual Rental Average Rental
Markets/Metro Areas Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy
Core:
Washington DC 18,130 17.8 % $ 2,203 95.7 % 0.1 % 9.4 % (4.1 %) (0.3 %) 0.3 %
New York 10,330 16.5 % 3,895 96.4 % 0.7 % 10.5 % (4.8 %) 1.2 % (0.4 %)
San Francisco 12,764 14.8 % 2,428 96.6 % 1.6 % 2.9 % 1.0 % 1.7 % (0.2 %)
Los Angeles 11,811 11.6 % 2,217 95.9 % 0.8 % 2.7 % (0.2 %) 0.9 % 0.0 %
Boston 7,722 9.8 % 2,892 95.6 % (0.8 %) 16.0 % (8.0 %) 0.1 % (0.8 %)
South Florida 10,665 7.5 % 1,628 95.9 % 1.2 % 5.0 % (0.9 %) 0.9 % 0.3 %
Seattle 7,609 6.8 % 1,908 95.6 % 1.0 % 0.3 % 1.3 % 1.0 % 0.1 %
Denver 6,935 5.1 % 1,455 95.8 % 0.7 % (1.4 %) 1.4 % 0.8 % 0.0 %
San Diego 3,505 3.3 % 2,008 95.9 % 0.3 % 1.7 % (0.4 %) 0.9 % (0.6 %)
Orange County, CA 3,490 3.1 % 1,820 96.2 % 0.4 % 5.6 % (1.5 %) 0.9 % (0.4 %)
Subtotal – Core 92,961 96.3 % 2,314 96.0 % 0.6 % 6.8 % (2.3 %) 0.7 % 0.0 %
Non-Core:
Inland Empire, CA 3,081 2.3 % 1,591 95.0 % 0.6 % 2.3 % (0.2 %) 1.0 % (0.4 %)
Orlando 827 0.4 % 1,244 95.7 % 1.4 % 3.5 % 0.0 % 1.6 % (0.2 %)
All Other Markets 2,633 1.0 % 1,142 96.0 % 0.1 % 16.0 % (12.4 %) 0.1 % 0.0 %
Subtotal – Non-Core 6,541 3.7 % 1,366 95.5 % 0.5 % 8.0 % (3.8 %) 0.7 % (0.2 %)
Total 99,502 100.0 % $ 2,252 95.9 % 0.6 % 6.9 % (2.4 %) 0.7 % (0.1 %)
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
Equity Residential
First Quarter 2015 vs. First Quarter 2014
Same Store Operating Expenses for 97,586 Same Store Apartment Units
$ in thousands
% of Actual
Q1 2015
Actual Actual $ % Operating
Q1 2015 Q1 2014 Change Change Expenses
Real estate taxes $ 75,356 $ 71,697 $ 3,659 5.1 % 34.8 %
On-site payroll (1) 45,491 43,684 1,807 4.1 % 21.0 %
Utilities (2) 32,688 37,622 (4,934 ) (13.1 %) 15.1 %
Repairs and maintenance (3) 26,334 24,218 2,116 8.7 % 12.2 %
Property management costs (4) 18,961 18,054 907 5.0 % 8.7 %
Insurance 5,405 6,050 (645 ) (10.7 %) 2.5 %
Leasing and advertising 2,587 2,511 76 3.0 % 1.2 %
Other on-site operating expenses (5) 9,722 9,624 98 1.0 % 4.5 %
Same store operating expenses $ 216,544 $ 213,460 $ 3,084 1.4 % 100.0 %
(1) On-site payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.
(2) Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income.
(3) Repairs and maintenance – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
(4) Property management costs – Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology.
(5) Other on-site operating expenses – Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees.
Equity Residential
Debt Summary as of March 31, 2015
(Amounts in thousands)
Weighted
Weighted Average

Average Maturities
Amounts (1)

% of Total

Rates (1) (years)
Secured $ 4,957,876 45.7 % 4.13 % 7.4
Unsecured 5,901,632 54.3 % 4.68 % 7.2
Total $ 10,859,508 100.0 % 4.43 % 7.3
Fixed Rate Debt:
Secured – Conventional

$ 4,221,811 38.9 % 4.73 % 5.8
Unsecured – Public 4,974,750 45.8 % 5.39 % 8.1
Fixed Rate Debt 9,196,561 84.7 % 5.08 % 7.1
Floating Rate Debt:
Secured – Conventional 7,985 0.1 % 0.11 % 18.8
Secured – Tax Exempt 728,080 6.7 % 0.63 % 16.0
Unsecured – Public (2) 456,056 4.2 % 0.89 % 4.3
Unsecured – Revolving Credit Facility 130,000 1.2 % 1.02 % 3.0
Unsecured – Commercial Paper Program 340,826 3.1 % 0.53 % (3 )
Floating Rate Debt 1,662,947 15.3 % 0.77 % 8.5
Total $ 10,859,508 100.0 % 4.43 % 7.3
(1) Net of the effect of any derivative instruments. Weighted average rates are for the quarter ended March 31, 2015.
(2) Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.
(3) As of March 31, 2015, the weighted average maturity on the Company’s outstanding commercial paper was 14 days.
Note: The Company capitalized interest of approximately $15.3 million and $12.8 million during the quarters ended March 31, 2015 and 2014, respectively.
Note: The Company recorded approximately $0.5 million and $1.1 million of net debt discount/deferred derivative settlement amortization as additional interest expense during the quarters ended March 31, 2015 and 2014, respectively.
Debt Maturity Schedule as of March 31, 2015
(Amounts in thousands)

Weighted Weighted
Average Rates Average
Fixed Floating on Fixed Rates on
Year Rate (1) Rate (1) Total % of Total Rate Debt (1) Total Debt (1)
2015 $ 344,995 $ 340,900 (2) $ 685,895 6.3 % 6.43 % 3.53 %
2016 1,132,141 1,132,141 10.4 % 5.31 % 5.31 %
2017 1,346,252 456 1,346,708 12.4 % 6.16 % 6.16 %
2018 83,854 227,659 (3) 311,513 2.9 % 5.61 % 2.17 %
2019 806,113 477,204 1,283,317 11.8 % 5.48 % 3.75 %
2020 1,678,020 809 1,678,829 15.5 % 5.49 % 5.49 %
2021 1,194,624 856 1,195,480 11.0 % 4.63 % 4.63 %
2022 228,273 905 229,178 2.1 % 3.16 % 3.17 %
2023 1,331,497 956 1,332,453 12.3 % 3.74 % 3.74 %
2024 2,497 1,011 3,508 0.0 % 4.97 % 5.14 %
2025+ 1,022,417 673,977 1,696,394 15.6 % 4.97 % 3.16 %
Premium/(Discount) 25,878 (61,786 ) (35,908 ) (0.3 %) N/A N/A
Total $ 9,196,561 $ 1,662,947 $ 10,859,508 100.0 % 5.12 % 4.41 %
(1) Net of the effect of any derivative instruments. Weighted average rates are as of March 31, 2015.
(2) Represents the principal outstanding on the Company’s unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on the program subject to market conditions.
(3) Includes $130.0 million outstanding on the Company’s unsecured revolving credit facility. As of March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program).
Equity Residential
Unsecured Debt Summary as of March 31, 2015
(Amounts in thousands)

Unamortized
Coupon Due Face Premium/ Net
Rate Date Amount (Discount) Balance
Fixed Rate Notes:
6.584 % 04/13/15 $ 300,000 $ $ 300,000
5.125 % 03/15/16 500,000 (49 ) 499,951
5.375 % 08/01/16 400,000 (247 ) 399,753
5.750 % 06/15/17 650,000 (1,144 ) 648,856
7.125 % 10/15/17 150,000 (165 ) 149,835
2.375 % 07/01/19 (1 ) 450,000 (382 ) 449,618
Fair Value Derivative Adjustments (1 ) (450,000 ) 382 (449,618 )
4.750 % 07/15/20 600,000 (2,404 ) 597,596
4.625 % 12/15/21 1,000,000 (2,540 ) 997,460
3.000 % 04/15/23 500,000 (3,560 ) 496,440
7.570 % 08/15/26 140,000 140,000
4.500 % 07/01/44 750,000 (5,141 ) 744,859
4,990,000 (15,250 ) 4,974,750
Floating Rate Notes:
07/01/19 (1 ) 450,000 (382 ) 449,618
Fair Value Derivative Adjustments 07/01/19 (1 ) 6,438 6,438
456,438 (382 ) 456,056
Line of Credit and Commercial Paper:
Revolving Credit Facility LIBOR+1.05% 04/01/18 (2 )(3) 130,000 130,000
Commercial Paper Program (4) (4) (2 ) 340,900 (74 ) 340,826
470,900 (74 ) 470,826
Total Unsecured Debt $ 5,917,338 $ (15,706 ) $ 5,901,632
(1) Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.
(2) Facility/program is private. All other unsecured debt is public.
(3) Represents the Company’s $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The interest rate on advances under the credit facility will generally be LIBOR plus a spread (currently 1.05%) and an annual facility fee (currently 15 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company’s long-term debt. As of March 31, 2015, there was approximately $1.986 billion available on this facility (net of $43.3 million which was restricted/dedicated to support letters of credit, net of the $130.0 million outstanding on the revolving credit facility and net of $340.9 million outstanding on the commercial paper program).
(4) Represents the Company’s unsecured commercial paper program. The Company may borrow up to a maximum of $500.0 million on this program subject to market conditions. The notes bear interest at various floating rates with a weighted average of 0.53% for the quarter ended March 31, 2015 and a weighted average maturity of 14 days as of March 31, 2015.
Equity Residential
Selected Unsecured Public Debt Covenants
March 31, December 31,
2015

2014

Total Debt to Adjusted Total Assets (not to exceed 60%) 38.9% 39.2%
Secured Debt to Adjusted Total Assets (not to exceed 40%) 17.8% 18.4%
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) 3.48 3.38
Total Unsecured Assets to Unsecured Debt 337.7% 336.5%
(must be at least 150%)
Note: These selected covenants relate to ERP Operating Limited Partnership’s (“ERPOP”) outstanding unsecured public debt, which represent the Company’s most restrictive covenants. Equity Residential is the general partner of ERPOP.
Selected Credit Ratios (1)
March 31, December 31,
2015 2014
Total debt to Normalized EBITDA 6.35x 6.45x
Net debt to Normalized EBITDA 6.29x 6.40x
Note: See page 22 for the footnote referenced above and the Normalized EBITDA reconciliations.
Equity Residential
Capital Structure as of March 31, 2015
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt $ 4,957,876 45.7 %
Unsecured Debt 5,901,632 54.3 %
Total Debt 10,859,508 100.0 % 26.9 %
Common Shares (includes Restricted Shares) 363,968,420 96.2 %
Units (includes OP Units and Restricted Units) 14,477,945 3.8 %
Total Shares and Units 378,446,365 100.0 %
Common Share Price at March 31, 2015 $ 77.86
29,465,834 99.9 %
Perpetual Preferred Equity (see below) 40,180 0.1 %
Total Equity 29,506,014 100.0 % 73.1 %
Total Market Capitalization $ 40,365,522 100.0 %
Perpetual Preferred Equity as of March 31, 2015
(Amounts in thousands except for share and per share amounts)

Annual Annual
Redemption Outstanding Liquidation Dividend Dividend
Series Date Shares Value Per Share Amount
Preferred Shares:
8.29% Series K (1) 12/10/26 803,600 $ 40,180 $ 4.145 $ 3,331
Total Perpetual Preferred Equity 803,600 $ 40,180 $ 3,331
(1) Effective January 26, 2015, the Company repurchased and retired 196,400 Series K Preferred Shares with a par value of $9.82 million for total cash consideration of approximately $12.7 million. As a result of this partial redemption, the Company incurred a cash charge of approximately $2.8 million which was recorded as a premium on the redemption of preferred shares but did not impact Normalized FFO.
Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
Q1 2015 Q1 2014
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares – basic 363,098,200 360,470,366
Shares issuable from assumed conversion/vesting of:
– OP Units 13,597,682 13,730,577
– long-term compensation shares/units 3,631,489 2,183,239
Total Common Shares and Units – diluted 380,327,371 376,384,182
Weighted Average Amounts Outstanding for FFO and Normalized

FFO Purposes:

Common Shares – basic 363,098,200 360,470,366
OP Units – basic 13,597,682 13,730,577
Total Common Shares and OP Units – basic 376,695,882 374,200,943
Shares issuable from assumed conversion/vesting of:
– long-term compensation shares/units 3,631,489 2,183,239
Total Common Shares and Units – diluted 380,327,371 376,384,182
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares) 363,968,420 361,148,189
Units (includes OP Units and Restricted Units) 14,477,945 14,375,319
Total Shares and Units 378,446,365 375,523,508
Equity Residential
Partially Owned Entities as of March 31, 2015
(Amounts in thousands except for project and apartment unit amounts)
Consolidated Unconsolidated
Development Projects
Held for
and/or Under
Development (4) Operating Total Operating Total
Total projects (1) 19 19

3

3
Total apartment units (1) 3,771 3,771 1,281 1,281
Operating information for the quarter ended 3/31/15 (at 100%):
Operating revenue $ 250 $ 22,688 $ 22,938 $ 7,813 $ 7,813
Operating expenses 418 6,875 7,293 2,443 2,443
Net operating (loss) income (168 ) 15,813 15,645 5,370 5,370
Depreciation 991 5,520 6,511 3,076 3,076
General and administrative/other 15 15 56 56
Operating (loss) income (1,159 ) 10,278 9,119 2,238 2,238
Interest and other income 4 4
Other expenses (50 ) (50 )
Interest:
Expense incurred, net (3,884 ) (3,884 ) (2,346 ) (2,346 )
Amortization of deferred financing costs (89 ) (89 ) (1 ) (1 )
(Loss) income before income and other taxes and (loss) from
investments in unconsolidated entities (1,159 ) 6,259 5,100 (109 ) (109 )
Income and other tax (expense) benefit (35 ) (35 ) (18 ) (18 )
(Loss) from investments in unconsolidated entities (377 ) (377 )
Net (loss) income $ (1,159 ) $ 5,847 $ 4,688 $ (127 ) $ (127 )
Debt – Secured (2):
EQR Ownership (3) $ $ 282,121 $ 282,121 $ 35,055 $ 35,055
Noncontrolling Ownership 78,446 78,446 140,221 140,221
Total (at 100%) $ $ 360,567 $ 360,567 $ 175,276 $ 175,276
(1) Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed.
(2) All debt is non-recourse to the Company.
(3) Represents the Company’s current equity ownership interest.
(4) See Projects Under Development – Partially Owned on page 19 for further information.
Note: The above table excludes the Company’s interests in unconsolidated joint ventures entered into with AvalonBay (“AVB”) in connection with the Archstone transaction. These ventures own certain non-core Archstone assets that are held for sale and succeeded to certain residual Archstone liabilities, such as liability for various employment-related matters as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests have an aggregate liquidation value of $72.6 million at March 31, 2015. The ventures are owned 60% by the Company and 40% by AVB.
Equity Residential
Consolidated Development and Lease-Up Projects as of March 31, 2015
(Amounts in thousands except for project and apartment unit amounts)
Total Book
No. of Total Total Value Not Estimated Estimated
Apartment Capital Book Value Placed in Total Percentage Percentage Percentage Completion Stabilization
Projects Location Units Cost (1) to Date Service Debt Completed Leased Occupied Date Date

Projects Under Development – Wholly Owned:

Parc on Powell (formerly 1333 Powell) Emeryville, CA 173 $ 87,500 $ 75,585 $ 42,801 $ 90 % 44 % 21 % Q2 2015 Q4 2015
170 Amsterdam (2) New York, NY 236 110,892 104,549 104,549 97 % Q2 2015 Q1 2016
Azure (at Mission Bay) San Francisco, CA 273 189,090 161,788 161,788 88 % Q3 2015 Q4 2016
Junction 47 (formerly West Seattle) Seattle, WA 206 67,112 53,603 53,603 78 % Q4 2015 Q3 2016
Odin (formerly Tallman) Seattle, WA 301 84,277 65,518 65,518 79 % Q4 2015 Q2 2017
Village at Howard Hughes Los Angeles, CA 545 193,231 98,965 98,965 34 % Q2 2016 Q2 2017
Potrero San Francisco, CA 453 224,474 92,222 92,222 35 % Q2 2016 Q3 2017
Millikan Irvine, CA 344 102,331 47,001 47,001 20 % Q2 2016 Q3 2017
Tasman San Jose, CA 554 214,923 142,279 142,279 60 % Q2 2016 Q2 2018
340 Fremont (formerly Rincon Hill) San Francisco, CA 348 287,454 119,998 119,998 33 % Q3 2016 Q1 2018
One Henry Adams San Francisco, CA 241 164,434 47,768 47,768 7 % Q4 2016 Q4 2017
Cascade Seattle, WA 483 158,494 40,420 40,420 5 % Q2 2017 Q1 2019
801 Brannan San Francisco, CA 449 290,209 57,265 57,265 1 % Q3 2017 Q1 2019
2nd & Pine (3) Seattle, WA 398 214,742 51,097 51,097 10 % Q3 2017 Q2 2019
Projects Under Development – Wholly Owned 5,004 2,389,163 1,158,058 1,125,274

Projects Under Development – Partially Owned:

Prism at Park Avenue South (4) New York, NY 269 251,961 232,713 29,414 94 % 18 % 14 % Q3 2015 Q1 2016
Projects Under Development – Partially Owned 269 251,961 232,713 29,414
Projects Under Development 5,273 2,641,124 1,390,771 1,154,688 -

Completed Not Stabilized – Wholly Owned (5):

Urbana (formerly Market Street Landing) Seattle, WA 287 88,774 87,259 95 % 94 % Completed Q2 2015
Residences at Westgate I (formerly Westgate II) Pasadena, CA 252 127,292 124,641 83 % 79 % Completed Q3 2015
Residences at Westgate II (formerly Westgate III) Pasadena, CA 88 55,037 49,313 Completed Q4 2015
Projects Completed Not Stabilized – Wholly Owned 627 271,103 261,213
Projects Completed Not Stabilized 627 271,103 261,213 - -

Completed and Stabilized During the Quarter – Wholly Owned:

1111 Belle Pre (formerly The Madison) Alexandria, VA 360 111,922 111,738 99 % 97 % Completed Stabilized
Park Aire (formerly Enclave at Wellington) Wellington, FL 268 48,910 48,909 98 % 94 % Completed Stabilized
Jia (formerly Chinatown Gateway) Los Angeles, CA 280 92,920 90,359 97 % 96 % Completed Stabilized
Projects Completed and Stabilized During the Quarter – Wholly Owned 908 253,752 251,006
Projects Completed and Stabilized During the Quarter 908 253,752 251,006 - -
Total Consolidated Projects 6,808 $ 3,165,979 $ 1,902,990 $ 1,154,688 $ -
Land Held for Development N/A N/A $ 143,997 $ 143,997 $ -

NOI CONTRIBUTION FROM CONSOLIDATED DEVELOPMENT PROJECTS

Total Capital
Cost (1)

Q1 2015
NOI

Projects Under Development $ 2,641,124 $ (365 )
Completed Not Stabilized 271,103 2,431
Completed and Stabilized During the Quarter 253,752 3,745
Total Consolidated Development NOI Contribution $ 3,165,979 $ 5,811
(1) Total capital cost represents estimated cost for projects under development and/or developed and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP.
(2) 170 Amsterdam – The land under this project is subject to a long term ground lease.
(3) 2nd & Pine – Includes an adjacent land parcel on which certain improvements including a portion of a parking structure will be constructed as part of the development of this project. The Company may eventually construct an additional apartment tower on this site or sell a portion of the garage and the related air rights.
(4) Prism at Park Avenue South – The Company is jointly developing with Toll Brothers (NYSE:TOL) a project at 400 Park Avenue South in New York City with the Company’s rental portion on floors 2-22 and Toll’s for sale portion on floors 23-40. The total capital cost and total book value to date represent only the Company’s portion of the project. Toll Brothers has funded $115.1 million for their allocated share of the project.
(5) Properties included here are substantially complete. However, they may still require additional exterior and interior work for all apartment units to be available for leasing.
Equity Residential
Unconsolidated Development and Lease-Up Projects as of March 31, 2015
(Amounts in thousands except for project and apartment unit amounts)
Total Total Book
No. of Total Book Value Not Estimated Estimated
Percentage Apartment Capital Value Placed in Total Percentage Percentage Percentage Completion Stabilization
Projects Location Ownership Units Cost (1) to Date Service Debt Completed Leased Occupied Date Date

Completed and Stabilized During the Quarter – Unconsolidated:

Domain (2) San Jose, CA 20.0 % 444 $ 155,820 $ 155,128 $ $ 96,793 98 % 97 % Completed Stabilized
Projects Completed and Stabilized During the Quarter – Unconsolidated 444 155,820 155,128 96,793
Projected Completed and Stabilized During the Quarter 444 155,820 155,128 - 96,793
Total Unconsolidated Projects 444 $ 155,820 $ 155,128 $ - $ 96,793
(1) Total capital cost represents estimated cost for projects under development and/or developed and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP.
(2) Domain – This development project is owned 20% by the Company and 80% by an institutional partner in an unconsolidated joint venture. Total project cost is approximately $155.8 million and construction was predominantly funded with a long-term, non-recourse secured loan from the partner. The Company was responsible for constructing the project and had given certain construction cost overrun guarantees but currently has no further funding obligations. Domain has a maximum debt commitment of $98.6 million, the loan bears interest at 5.75% and matures January 1, 2022.
Equity Residential
Repairs and Maintenance Expenses and Capital Expenditures to Real Estate
For the Quarter Ended March 31, 2015
(Amounts in thousands except for apartment unit and per apartment unit amounts)
Repairs and Maintenance Expenses Capital Expenditures to Real Estate Total Expenditures
Total Avg. Per Avg. Per Avg. Per Avg. Per Building Avg. Per Avg. Per Avg. Per
Apartment Apartment Payroll Apartment Apartment Replacements Apartment Improvements Apartment Apartment Grand Apartment
Units (1) Expense (2) Unit (3) Unit Total Unit (4) Unit (5) Unit Total Unit Total Unit
Same Store Properties (6) 97,586 $ 26,334 $ 270 $ 21,437 $ 219 $ 47,771 $ 489 $ 21,633 $ 222 $ 13,675 $ 140 $ 35,308 $ 362 (9) $ 83,079 $ 851
Non-Same Store Properties (7) 4,863 856 179 658 138 1,514 317 67 14 2,753 577 2,820 591 4,334 908
Other (8) 80 153 233 23 19 42 275
Total 102,449 $ 27,270 $ 22,248 $ 49,518 $ 21,723 $ 16,447 $ 38,170 $ 87,688
(1) Total Apartment Units – Excludes 1,281 unconsolidated apartment units and 5,063 military housing apartment units for which repairs and maintenance expenses and capital expenditures to real estate are self-funded and do not consolidate into the Company’s results.
(2) Repairs and Maintenance Expenses – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
(3) Maintenance Payroll – Includes payroll and related expenses for maintenance staff.
(4) Replacements – Includes new expenditures inside the apartment units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $13.1 million spent in Q1 2015 on apartment unit renovations/rehabs (primarily kitchens and baths) on 1,432 same store apartment units (equating to approximately $9,100 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. In 2015, the Company expects to spend approximately $60.0 million for all unit renovation/rehab costs (primarily on same store properties) at a weighted average cost of $9,000 per apartment unit rehabbed.
(5) Building Improvements – Includes roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting and siding, major landscaping, vehicles and office and maintenance equipment.
(6) Same Store Properties – Primarily includes all properties acquired or completed and stabilized prior to January 1, 2014, less properties subsequently sold.
(7) Non-Same Store Properties – Primarily includes all properties acquired during 2014 and 2015, plus any properties in lease-up and not stabilized as of January 1, 2014. Per apartment unit amounts are based on a weighted average of 4,775 apartment units.
(8) Other – Primarily includes expenditures for properties sold and properties under development.
(9) For 2015, the Company estimates that it will spend approximately $1,850 per apartment unit of capital expenditures, inclusive of apartment unit renovation/rehab costs, or $1,250 per apartment unit excluding apartment unit renovation/rehab costs.
Equity Residential
Normalized EBITDA Reconciliations
(Amounts in thousands)
Normalized EBITDA Reconciliations for Page 15
Trailing Twelve Months 2015 2014
March 31, 2015 December 31, 2014 Q1 Q4 Q3 Q2 Q1
Net income $ 766,175 $ 658,683 $ 190,224 $ 227,041 $ 231,190 $ 117,720 $ 82,732
Interest expense incurred, net (includes discontinued operations) 452,764 457,191 108,622 109,967 118,251 115,924 113,049
Amortization of deferred financing costs (includes discontinued operations) 10,885 11,088 2,589 2,534 2,628 3,134 2,792
Depreciation (includes discontinued operations) 768,215 758,861 194,521 193,089 190,469 190,136 185,167
Income and other tax expense (benefit) (includes discontinued operations) 1,209 1,402 58 243 260 648 251
Archstone direct acquisition costs (other expenses) 29 (1 ) 6 23 (30 )
Property acquisition costs (other expenses) 405 355 99 77 135 94 49
Write-off of pursuit costs (other expenses) 3,648 3,607 493 1,540 575 1,040 452
Loss (income) from investments in unconsolidated entities 3,580 7,952 (2,963 ) (2,249 ) 1,176 7,616 1,409
Net (gain) loss on sales of land parcels (5,306 ) (5,277 ) 1 (3,431 ) (1,052 ) (824 ) 30
(Gain) on sale of investment securities (interest and other income) (36 ) (57 ) (36 ) (21 )
Write-off of unamortized retail lease intangibles (rental income) (147 ) (147 ) (147 )
Executive compensation program duplicative costs 2,337 2,337
Forfeited deposits (interest and other income) (150 ) (150 ) (150 )
Insurance/litigation settlement or reserve income (interest and other income) (2,330 ) (2,793 ) (32 ) (419 ) (1,879 ) (463 )
Insurance/litigation settlement or reserve expense (other expenses) 3,099 4,099 (1,000 ) 4,000 99
Other (interest and other income) (750 ) (750 ) (750 )
Net (gain) loss on sales of discontinued operations (108 ) (179 ) 44 1 (153 ) (71 )
Net (gain) on sales of real estate properties (292,636 ) (212,685 ) (79,951 ) (84,141 ) (113,641 ) (14,903 )
Normalized EBITDA (1) $ 1,710,883 $ 1,681,199 $ 415,030 $ 443,782 $ 433,579 $ 418,492 $ 385,346

Balance Sheet Items:

March 31, 2015 December 31, 2014
Total debt (1) $ 10,859,508 $ 10,844,861
Cash and cash equivalents (49,418 ) (40,080 )
Mortgage principal reserves/sinking funds (43,626 ) (41,567 )
Net debt (1) $ 10,766,464 $ 10,763,214
(1) Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are important metrics in evaluating the credit strength of the Company and its ability to service its debt obligations. The Company believes that Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are useful to investors, creditors and rating agencies because they allow investors to compare the Company’s credit strength to prior reporting periods and to other companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual credit quality.
Equity Residential
Normalized FFO Guidance Reconciliations and Non-Comparable Items
(Amounts in thousands except per share data)
(All per share data is diluted)
Normalized FFO Guidance Reconciliations
Normalized
FFO Reconciliations
Guidance Q1 2015
to Actual Q1 2015
Amounts Per Share
Guidance Q1 2015 Normalized FFO – Diluted (2) (3) $ 298,632 $ 0.786
Property NOI (1,016 ) (0.003 )
Interest expense 763 0.002
Other 623 0.001
Actual Q1 2015 Normalized FFO – Diluted (2) (3) $ 299,002 $ 0.786
Non-Comparable Items – Adjustments from FFO to Normalized FFO (2) (3)
Quarter Ended March 31,
2015 2014 Variance
Impairment $ $ $
Asset impairment and valuation allowances
Archstone direct acquisition costs (other expenses) (A) . (30 ) 30
Archstone indirect costs ((income) loss from investments in unconsolidated entities) (B) (5,417 ) 3 (5,420 )
Property acquisition costs (other expenses) 99 49 50
Write-off of pursuit costs (other expenses) 493 452 41
Property acquisition costs and write-off of pursuit costs (4,825 ) 474 (5,299 )
Write-off of unamortized deferred financing costs (interest expense) 74 74
Write-off of unamortized (premiums)/discounts/OCI (interest expense) (1,390 ) (1,390 )
Premium on redemption of Preferred Shares 2,789 2,789
Debt extinguishment (gains) losses, including prepayment penalties, preferred share

redemptions and non-cash convertible debt discounts

1,473 1,473
Net loss on sales of land parcels 1 30 (29 )
Net loss on sales of unconsolidated entities – non-operating assets 1,657 1,657
(Gain) on sale of investment securities (interest and other income) (21 ) 21
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) 1,658 9 1,649
Executive compensation program duplicative costs (C) 2,337 2,337
Insurance/litigation settlement or reserve income (interest and other income) (463 ) 463
Insurance/litigation settlement or reserve expense (other expenses) (1,000 ) (1,000 )
Other miscellaneous non-comparable items 1,337 (463 ) 1,800
Non-comparable items – Adjustments from FFO to Normalized FFO (2) (3) $ (357 ) $ 20 $ (377 )
(A) Archstone direct acquisition costs primarily includes items such as investment banking and legal/accounting fees that were incurred directly by the Company.
(B) Archstone indirect costs primarily includes the Company’s 60% share of winddown costs for such items as office leases, litigation and German operations/sales that were incurred indirectly through the Company’s interest in various unconsolidated joint ventures with AvalonBay. During 2015, the amount also includes approximately $6.9 million received related to the favorable settlement of a lawsuit.
(C) Represents the accounting cost associated with the Company’s new performance based executive compensation program. The Company is required to expense in 2015 a portion of both the previous program’s time based equity grants for service in 2014 and the performance based grants issued under the new program, creating a duplicative charge. Of this amount, $0.3 million and $2.0 million has been recorded to property management expense and general and administrative expense, respectively.
Note: See page 25 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.
Equity Residential
Normalized FFO Guidance and Assumptions
The guidance/projections provided below are based on current expectations and are forward-looking. All guidance is given on a Normalized FFO basis. Therefore, certain items excluded from Normalized FFO, such as debt extinguishment costs/prepayment penalties, property acquisition costs and the write-off of pursuit costs, are not included in the estimates provided on this page. See page 25 for the definitions, the footnotes referenced below and the reconciliations of EPS to FFO and Normalized FFO.

2015 Normalized FFO Guidance (per share diluted)

Q2 2015

2015

Expected Normalized FFO (2) (3) $0.82 to $0.86 $3.37 to $3.45

2015 Same Store Assumptions

Physical occupancy 95.9%
Revenue change 4.3% to 4.7%
Expense change 2.5% to 3.5%
NOI change 4.8% to 5.8%

(Note: Approximately 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO/Normalized FFO)

2015 Transaction Assumptions

Consolidated rental acquisitions $500.0 million
Consolidated rental dispositions $500.0 million
Capitalization rate spread 100 basis points

2015 Debt Assumptions

Weighted average debt outstanding $10.8 billion to $11.1 billion
Weighted average interest rate (reduced for capitalized interest) 4.10%
Interest expense, net $442.8 million to $455.1 million
Capitalized interest $55.0 million to $61.0 million

2015 Other Guidance Assumptions

General and administrative expense (see Note below) $51.0 million to $53.0 million
Interest and other income $0.5 million
Income and other tax expense $1.0 million
Debt offerings $950.0 million
Equity ATM share offerings No amounts budgeted
Preferred share offerings No amounts budgeted
Weighted average Common Shares and Units – Diluted 380.8 million
Note: Normalized FFO guidance excludes a duplicative charge of approximately $9.3 million, of which $8.0 million will be recorded to general and administrative expense and $1.3 million will be recorded to property management expense, related to the Company’s revised executive compensation program.
Equity Residential
Additional Reconciliations, Definitions and Footnotes
(Amounts in thousands except per share data)
(All per share data is diluted)
The guidance/projections provided below are based on current expectations and are forward-looking.
Reconciliations of EPS to FFO and Normalized FFO for Pages 5, 23 and 24

Expected Expected

Expected Q1 2015

Q2 2015 2015
Amounts Per Share Per Share Per Share
Expected Earnings – Diluted (5) $ 270,480 $ 0.712 $0.65 to $0.69 $2.15 to $2.23
Add: Expected depreciation expense 194,325 0.511 0.52 2.10
Less: Expected net gain on sales (5) (154,690 ) (0.407 ) (0.32) (0.88)
Expected FFO – Diluted (1) (3) 310,115 0.816 0.85 to 0.89 3.37 to 3.45
Asset impairment and valuation allowances
Property acquisition costs and write-off of pursuit costs (15,702 ) (0.041 ) (0.02) (0.02)

Debt extinguishment (gains) losses, including prepayment penalties,

preferred share redemptions and non-cash convertible debt discounts

1,473 0.004
(Gains) losses on sales of non-operating assets, net of income and other tax

expense (benefit)

0.01
Other miscellaneous non-comparable items 2,746 0.007 (0.01) 0.01
Expected Normalized FFO – Diluted (2) (3) $ 298,632 $ 0.786 $0.82 to $0.86 $3.37 to $3.45
Definitions and Footnotes for Pages 5, 23 and 24
(1) The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales and impairment write-downs of depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property.
(2) Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes:
o the impact of any expenses relating to non-operating asset impairment and valuation allowances;
o property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs;
o gains and losses from early debt extinguishment, including prepayment penalties, preferred share redemptions and the cost related to the implied option value of non-cash convertible debt discounts;
o gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and
o other miscellaneous non-comparable items.
(3) The Company believes that FFO and FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The Company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.
(4) FFO available to Common Shares and Units and Normalized FFO available to Common Shares and Units are calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.
(5) Earnings represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected earnings is calculated on a basis consistent with actual earnings. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual earnings could differ materially from expected earnings.
Same Store NOI Reconciliation for Page 9
The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the First Quarter 2015 Same Store Properties:
Quarter Ended March 31,
2015 2014
Operating income $ 218,171 $ 199,259
Adjustments:
Non-same store operating results (16,680 ) (12,613 )
Fee and asset management revenue (1,765 ) (2,717 )
Fee and asset management expense 1,321 1,662
Depreciation 194,521 185,167
General and administrative 19,922 17,576
Same store NOI $ 415,490 $ 388,334

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