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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Maryland | 13-3675988 | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
|
Two North Riverside Plaza, Chicago, Illinois
(Address of Principal Executive Offices) |
60606
(Zip Code) |
| Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company o |
| PAGE | ||||||||
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| 44 | ||||||||
| EX-31.1 | ||||||||
| EX-31.2 | ||||||||
| EX-32.1 | ||||||||
| EX-32.2 | ||||||||
| EX-101 INSTANCE DOCUMENT | ||||||||
| EX-101 SCHEMA DOCUMENT | ||||||||
| EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
| EX-101 LABELS LINKBASE DOCUMENT | ||||||||
| EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
| EX-101 DEFINITION LINKBASE DOCUMENT | ||||||||
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
|
ASSETS
|
||||||||
|
Investment in real estate
|
||||||||
|
Land
|
$ | 4,107,769 | $ | 4,110,275 | ||||
|
Depreciable property
|
15,279,033 | 15,226,512 | ||||||
|
Projects under development
|
97,151 | 130,337 | ||||||
|
Land held for development
|
211,968 | 235,247 | ||||||
|
|
||||||||
|
Investment in real estate
|
19,695,921 | 19,702,371 | ||||||
|
Accumulated depreciation
|
(4,424,078 | ) | (4,337,357 | ) | ||||
|
|
||||||||
|
Investment in real estate, net
|
15,271,843 | 15,365,014 | ||||||
|
|
||||||||
|
Cash and cash equivalents
|
306,072 | 431,408 | ||||||
|
Investments in unconsolidated entities
|
3,533 | 3,167 | ||||||
|
Deposits — restricted
|
309,605 | 180,987 | ||||||
|
Escrow deposits — mortgage
|
12,087 | 12,593 | ||||||
|
Deferred financing costs, net
|
39,182 | 42,033 | ||||||
|
Other assets
|
133,007 | 148,992 | ||||||
|
|
||||||||
|
Total assets
|
$ | 16,075,329 | $ | 16,184,194 | ||||
|
|
||||||||
|
|
||||||||
|
LIABILITIES AND EQUITY
|
||||||||
|
Liabilities:
|
||||||||
|
Mortgage notes payable
|
$ | 4,583,545 | $ | 4,762,896 | ||||
|
Notes, net
|
5,092,967 | 5,185,180 | ||||||
|
Lines of credit
|
— | — | ||||||
|
Accounts payable and accrued expenses
|
80,385 | 39,452 | ||||||
|
Accrued interest payable
|
71,972 | 98,631 | ||||||
|
Other liabilities
|
260,873 | 304,202 | ||||||
|
Security deposits
|
60,784 | 60,812 | ||||||
|
Distributions payable
|
106,020 | 140,905 | ||||||
|
|
||||||||
|
Total liabilities
|
10,256,546 | 10,592,078 | ||||||
|
|
||||||||
|
|
||||||||
|
Commitments and contingencies
|
||||||||
|
|
||||||||
|
Redeemable Noncontrolling Interests — Operating Partnership
|
416,334 | 383,540 | ||||||
|
|
||||||||
|
|
||||||||
|
Equity:
|
||||||||
|
Shareholders’ equity:
|
||||||||
|
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 1,600,000 shares issued
and outstanding as of March 31, 2011 and December 31, 2010
|
200,000 | 200,000 | ||||||
|
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 294,522,273 shares issued
and outstanding as of March 31, 2011 and 290,197,242
shares issued and outstanding as of December 31, 2010
|
2,945 | 2,902 | ||||||
|
Paid in capital
|
4,898,435 | 4,741,521 | ||||||
|
Retained earnings
|
228,092 | 203,581 | ||||||
|
Accumulated other comprehensive (loss)
|
(50,634 | ) | (57,818 | ) | ||||
|
|
||||||||
|
Total shareholders’ equity
|
5,278,838 | 5,090,186 | ||||||
|
Noncontrolling Interests:
|
||||||||
|
Operating Partnership
|
115,924 | 110,399 | ||||||
|
Partially Owned Properties
|
7,687 | 7,991 | ||||||
|
|
||||||||
|
Total Noncontrolling Interests
|
123,611 | 118,390 | ||||||
|
|
||||||||
|
Total equity
|
5,402,449 | 5,208,576 | ||||||
|
|
||||||||
|
Total liabilities and equity
|
$ | 16,075,329 | $ | 16,184,194 | ||||
|
|
||||||||
2
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
REVENUES
|
||||||||
|
Rental income
|
$ | 518,817 | $ | 462,577 | ||||
|
Fee and asset management
|
1,806 | 2,422 | ||||||
|
|
||||||||
|
Total revenues
|
520,623 | 464,999 | ||||||
|
|
||||||||
|
|
||||||||
|
EXPENSES
|
||||||||
|
Property and maintenance
|
128,357 | 120,203 | ||||||
|
Real estate taxes and insurance
|
56,024 | 55,575 | ||||||
|
Property management
|
22,381 | 20,492 | ||||||
|
Fee and asset management
|
948 | 1,958 | ||||||
|
Depreciation
|
167,968 | 146,042 | ||||||
|
General and administrative
|
11,435 | 10,721 | ||||||
|
|
||||||||
|
Total expenses
|
387,113 | 354,991 | ||||||
|
|
||||||||
|
|
||||||||
|
Operating income
|
133,510 | 110,008 | ||||||
|
|
||||||||
|
Interest and other income
|
972 | 2,220 | ||||||
|
Other expenses
|
(2,164 | ) | (4,383 | ) | ||||
|
Interest:
|
||||||||
|
Expense incurred, net
|
(121,376 | ) | (114,111 | ) | ||||
|
Amortization of deferred financing costs
|
(3,023 | ) | (2,996 | ) | ||||
|
|
||||||||
|
|
||||||||
|
Income
(loss) before income and other taxes, (loss) from
investments in unconsolidated entities, net gain on sales of unconsolidated entities and discontinued operations
|
7,919 | (9,262 | ) | |||||
|
Income and other tax (expense) benefit
|
(192 | ) | (159 | ) | ||||
|
(Loss) from investments in unconsolidated entities
|
— | (464 | ) | |||||
|
Net gain on sales of unconsolidated entities
|
— | 478 | ||||||
|
|
||||||||
|
Income (loss) from continuing operations
|
7,727 | (9,407 | ) | |||||
|
Discontinued operations, net
|
125,339 | 67,263 | ||||||
|
|
||||||||
|
Net income
|
133,066 | 57,856 | ||||||
|
Net (income) loss attributable to Noncontrolling Interests:
|
||||||||
|
Operating Partnership
|
(5,775 | ) | (2,623 | ) | ||||
|
Partially Owned Properties
|
40 | 250 | ||||||
|
|
||||||||
|
Net income attributable to controlling interests
|
127,331 | 55,483 | ||||||
|
Preferred distributions
|
(3,466 | ) | (3,620 | ) | ||||
|
|
||||||||
|
Net income available to Common Shares
|
$ | 123,865 | $ | 51,863 | ||||
|
|
||||||||
|
|
||||||||
|
Earnings per share — basic:
|
||||||||
|
Income (loss) from continuing operations available to Common Shares
|
$ | 0.01 | $ | (0.04 | ) | |||
|
|
||||||||
|
Net income available to Common Shares
|
$ | 0.42 | $ | 0.18 | ||||
|
|
||||||||
|
Weighted average Common Shares outstanding
|
292,895 | 280,645 | ||||||
|
|
||||||||
|
|
||||||||
|
Earnings per share — diluted:
|
||||||||
|
Income (loss) from continuing operations available to Common Shares
|
$ | 0.01 | $ | (0.04 | ) | |||
|
|
||||||||
|
Net income available to Common Shares
|
$ | 0.42 | $ | 0.18 | ||||
|
|
||||||||
|
Weighted average Common Shares outstanding
|
310,467 | 280,645 | ||||||
|
|
||||||||
|
|
||||||||
|
Distributions declared per Common Share outstanding
|
$ | 0.3375 | $ | 0.3375 | ||||
|
|
||||||||
3
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
Comprehensive income:
|
||||||||
|
|
||||||||
|
Net income
|
$ | 133,066 | $ | 57,856 | ||||
|
Other comprehensive income (loss) — derivative instruments:
|
||||||||
|
Unrealized holding gains (losses) arising during the period
|
6,082 | (13,503 | ) | |||||
|
Losses reclassified into earnings from other comprehensive income
|
956 | 726 | ||||||
|
Other comprehensive income (loss) — other instruments:
|
||||||||
|
Unrealized holding gains (losses) arising during the period
|
146 | (159 | ) | |||||
|
|
||||||||
|
Comprehensive income
|
140,250 | 44,920 | ||||||
|
Comprehensive (income) attributable to Noncontrolling Interests
|
(5,735 | ) | (2,373 | ) | ||||
|
|
||||||||
|
Comprehensive income attributable to controlling interests
|
$ | 134,515 | $ | 42,547 | ||||
|
|
||||||||
|
|
||||||||
4
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net income
|
$ | 133,066 | $ | 57,856 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Depreciation
|
169,363 | 152,734 | ||||||
|
Amortization of deferred financing costs
|
3,074 | 3,197 | ||||||
|
Amortization of discounts and premiums on debt
|
373 | 565 | ||||||
|
Amortization of deferred settlements on derivative instruments
|
822 | 593 | ||||||
|
Write-off of pursuit costs
|
1,683 | 1,046 | ||||||
|
Loss from investments in unconsolidated entities
|
— | 464 | ||||||
|
Distributions from unconsolidated entities — return on capital
|
41 | 61 | ||||||
|
Net (gain) on sales of unconsolidated entities
|
— | (478 | ) | |||||
|
Net (gain) on sales of discontinued operations
|
(123,754 | ) | (60,036 | ) | ||||
|
Unrealized loss on derivative instruments
|
— | 1 | ||||||
|
Compensation paid with Company Common Shares
|
6,524 | 5,757 | ||||||
|
|
||||||||
|
Changes in assets and liabilities:
|
||||||||
|
Decrease (increase) in deposits — restricted
|
1,557 | (1,000 | ) | |||||
|
Decrease in other assets
|
5,771 | 1,798 | ||||||
|
Increase in accounts payable and accrued expenses
|
44,531 | 39,148 | ||||||
|
(Decrease) in accrued interest payable
|
(26,659 | ) | (32,954 | ) | ||||
|
(Decrease) in other liabilities
|
(28,836 | ) | (20,005 | ) | ||||
|
(Decrease) increase in security deposits
|
(28 | ) | 3,373 | |||||
|
|
||||||||
|
Net cash provided by operating activities
|
187,528 | 152,120 | ||||||
|
|
||||||||
|
|
||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Investment in real estate — acquisitions
|
(123,868 | ) | (498,272 | ) | ||||
|
Investment in real estate — development/other
|
(29,840 | ) | (31,347 | ) | ||||
|
Improvements to real estate
|
(29,891 | ) | (25,691 | ) | ||||
|
Additions to non-real estate property
|
(2,677 | ) | (353 | ) | ||||
|
Interest capitalized for real estate and unconsolidated entities under development
|
(1,700 | ) | (4,365 | ) | ||||
|
Proceeds from disposition of real estate, net
|
258,212 | 105,071 | ||||||
|
Investments in unconsolidated entities
|
(366 | ) | — | |||||
|
Distributions from unconsolidated entities — return of capital
|
— | 1,303 | ||||||
|
(Increase) decrease in deposits on real estate acquisitions, net
|
(107,878 | ) | 182,203 | |||||
|
Decrease (increase) in mortgage deposits
|
506 | (3,383 | ) | |||||
|
Acquisition of Noncontrolling Interests — Partially Owned Properties
|
(504 | ) | — | |||||
|
|
||||||||
|
Net cash (used for) investing activities
|
(38,006 | ) | (274,834 | ) | ||||
|
|
||||||||
5
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Loan and bond acquisition costs
|
$ | (223 | ) | $ | (1,435 | ) | ||
|
Mortgage notes payable:
|
||||||||
|
Proceeds
|
707 | 55,664 | ||||||
|
Restricted cash
|
(22,297 | ) | 7,427 | |||||
|
Lump sum payoffs
|
(200,733 | ) | (149,409 | ) | ||||
|
Scheduled principal repayments
|
(4,223 | ) | (4,059 | ) | ||||
|
Notes, net:
|
||||||||
|
Lump sum payoffs
|
(93,096 | ) | — | |||||
|
Lines of credit:
|
||||||||
|
Proceeds
|
— | 1,469,125 | ||||||
|
Repayments
|
— | (1,378,125 | ) | |||||
|
Proceeds from sale of Common Shares
|
154,508 | 73,356 | ||||||
|
Proceeds from Employee Share Purchase Plan (ESPP)
|
2,742 | 2,478 | ||||||
|
Proceeds from exercise of options
|
32,719 | 19,215 | ||||||
|
Common Shares repurchased and retired
|
— | (1,887 | ) | |||||
|
Payment of offering costs
|
(2,352 | ) | (604 | ) | ||||
|
Contributions — Noncontrolling Interests — Partially Owned Properties
|
— | 222 | ||||||
|
Distributions:
|
||||||||
|
Common Shares
|
(132,655 | ) | (93,317 | ) | ||||
|
Preferred Shares
|
(3,466 | ) | (3,620 | ) | ||||
|
Noncontrolling Interests — Operating Partnership
|
(6,225 | ) | (4,794 | ) | ||||
|
Noncontrolling Interests — Partially Owned Properties
|
(264 | ) | (625 | ) | ||||
|
|
||||||||
|
Net cash (used for) financing activities
|
(274,858 | ) | (10,388 | ) | ||||
|
|
||||||||
|
Net (decrease) in cash and cash equivalents
|
(125,336 | ) | (133,102 | ) | ||||
|
Cash and cash equivalents, beginning of period
|
431,408 | 193,288 | ||||||
|
|
||||||||
|
Cash and cash equivalents, end of period
|
$ | 306,072 | $ | 60,186 | ||||
|
|
||||||||
6
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
SUPPLEMENTAL INFORMATION:
|
||||||||
|
Cash paid for interest, net of amounts capitalized
|
$ | 146,514 | $ | 144,902 | ||||
|
|
||||||||
|
|
||||||||
|
Net cash paid (received) for income and other taxes
|
$ | 341 | $ | (1,850 | ) | |||
|
|
||||||||
|
|
||||||||
|
Real estate acquisitions/dispositions/other:
|
||||||||
|
Mortgage loans assumed
|
$ | 26,900 | $ | 145,660 | ||||
|
|
||||||||
|
|
||||||||
|
Valuation of OP Units issued
|
$ | — | $ | 7,383 | ||||
|
|
||||||||
|
|
||||||||
|
Mortgage loans (assumed) by purchaser
|
$ | — | $ | (39,999 | ) | |||
|
|
||||||||
|
|
||||||||
|
Amortization of deferred financing costs:
|
||||||||
|
Investment in real estate, net
|
$ | — | $ | (600 | ) | |||
|
|
||||||||
|
|
||||||||
|
Deferred financing costs, net
|
$ | 3,074 | $ | 3,797 | ||||
|
|
||||||||
|
|
||||||||
|
Amortization of discounts and premiums on debt:
|
||||||||
|
Mortgage notes payable
|
$ | (1,858 | ) | $ | (1,563 | ) | ||
|
|
||||||||
|
|
||||||||
|
Notes, net
|
$ | 2,231 | $ | 2,128 | ||||
|
|
||||||||
|
|
||||||||
|
Amortization of deferred settlements on derivative instruments:
|
||||||||
|
Other liabilities
|
$ | (134 | ) | $ | (133 | ) | ||
|
|
||||||||
|
|
||||||||
|
Accumulated other comprehensive income
|
$ | 956 | $ | 726 | ||||
|
|
||||||||
|
|
||||||||
|
Unrealized loss on derivative instruments:
|
||||||||
|
Other assets
|
$ | 810 | $ | 7,579 | ||||
|
|
||||||||
|
|
||||||||
|
Mortgage notes payable
|
$ | (144 | ) | $ | 16 | |||
|
|
||||||||
|
|
||||||||
|
Notes, net
|
$ | (1,348 | ) | $ | 2,725 | |||
|
|
||||||||
|
|
||||||||
|
Other liabilities
|
$ | (5,400 | ) | $ | 3,184 | |||
|
|
||||||||
|
|
||||||||
|
Accumulated other comprehensive income (loss)
|
$ | 6,082 | $ | (13,503 | ) | |||
|
|
||||||||
|
|
||||||||
|
Interest capitalized for real estate and unconsolidated entities under development
|
||||||||
|
Investment in real estate, net
|
$ | (1,659 | ) | $ | (4,365 | ) | ||
|
|
||||||||
|
|
||||||||
|
Investments in unconsolidated entities
|
$ | (41 | ) | $ | — | |||
|
|
||||||||
|
|
||||||||
|
Other
|
||||||||
|
Receivable on sale of Common Shares
|
$ | — | $ | 37,550 | ||||
|
|
||||||||
|
|
||||||||
|
Transfer from notes, net to mortgage notes payable
|
$ | — | $ | 35,600 | ||||
|
|
||||||||
7
| Quarter Ended | ||||
| March 31, 2011 | ||||
|
SHAREHOLDERS’ EQUITY
|
||||
|
|
||||
|
PREFERRED SHARES
|
||||
|
Balance, beginning of year
|
$ | 200,000 | ||
|
|
||||
|
Balance, end of period
|
$ | 200,000 | ||
|
|
||||
|
|
||||
|
COMMON SHARES, $0.01 PAR VALUE
|
||||
|
Balance, beginning of year
|
$ | 2,902 | ||
|
Issuance of Common Shares
|
30 | |||
|
Exercise of share options
|
11 | |||
|
Employee Share Purchase Plan (ESPP)
|
1 | |||
|
Conversion of restricted shares to LTIP Units
|
(1 | ) | ||
|
Share-based employee compensation expense:
|
||||
|
Restricted shares
|
2 | |||
|
|
||||
|
Balance, end of period
|
$ | 2,945 | ||
|
|
||||
|
|
||||
|
PAID IN CAPITAL
|
||||
|
Balance, beginning of year
|
$ | 4,741,521 | ||
|
Common Share Issuance:
|
||||
|
Conversion of OP Units into Common Shares
|
737 | |||
|
Issuance of Common Shares
|
154,478 | |||
|
Exercise of share options
|
32,708 | |||
|
Employee Share Purchase Plan (ESPP)
|
2,741 | |||
|
Conversion of restricted shares to LTIP Units
|
(3,933 | ) | ||
|
Share-based employee compensation expense:
|
||||
|
Restricted shares
|
2,709 | |||
|
Share options
|
2,751 | |||
|
ESPP discount
|
689 | |||
|
Offering costs
|
(2,352 | ) | ||
|
Supplemental Executive Retirement Plan (SERP)
|
(108 | ) | ||
|
Acquisition of Noncontrolling Interests — Partially Owned Properties
|
(504 | ) | ||
|
Change in market value of Redeemable Noncontrolling Interests — Operating Partnership
|
(29,294 | ) | ||
|
Adjustment for Noncontrolling Interests ownership in Operating Partnership
|
(3,708 | ) | ||
|
|
||||
|
Balance, end of period
|
$ | 4,898,435 | ||
|
|
||||
|
|
||||
|
RETAINED EARNINGS
|
||||
|
Balance, beginning of year
|
$ | 203,581 | ||
|
Net income attributable to controlling interests
|
127,331 | |||
|
Common Share distributions
|
(99,354 | ) | ||
|
Preferred Share distributions
|
(3,466 | ) | ||
|
|
||||
|
Balance, end of period
|
$ | 228,092 | ||
|
|
||||
|
|
||||
|
ACCUMULATED OTHER COMPREHENSIVE (LOSS)
|
||||
|
Balance, beginning of year
|
$ | (57,818 | ) | |
|
Accumulated other comprehensive income — derivative instruments:
|
||||
|
Unrealized holding gains arising during the period
|
6,082 | |||
|
Losses reclassified into earnings from other comprehensive income
|
956 | |||
|
Accumulated other comprehensive income — other instruments:
|
||||
|
Unrealized holding gains arising during the period
|
146 | |||
|
|
||||
|
Balance, end of period
|
$ | (50,634 | ) | |
|
|
||||
8
| Quarter Ended | ||||
| March 31, 2011 | ||||
|
NONCONTROLLING INTERESTS
|
||||
|
OPERATING PARTNERSHIP
|
||||
|
Balance, beginning of year
|
$ | 110,399 | ||
|
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner
|
(737 | ) | ||
|
Conversion of restricted shares to LTIP Units
|
3,934 | |||
|
Equity compensation associated with Noncontrolling Interests
|
986 | |||
|
Net income attributable to Noncontrolling Interests
|
5,775 | |||
|
Distributions to Noncontrolling Interests
|
(4,641 | ) | ||
|
Change in carrying value of Redeemable Noncontrolling Interests — Operating Partnership
|
(3,500 | ) | ||
|
Adjustment for Noncontrolling Interests ownership in Operating Partnership
|
3,708 | |||
|
|
||||
|
Balance, end of period
|
$ | 115,924 | ||
|
|
||||
|
|
||||
|
PARTIALLY OWNED PROPERTIES
|
||||
|
Balance, beginning of year
|
$ | 7,991 | ||
|
Net (loss) attributable to Noncontrolling Interests
|
(40 | ) | ||
|
Distributions to Noncontrolling Interests
|
(264 | ) | ||
|
|
||||
|
Balance, end of period
|
$ | 7,687 | ||
|
|
||||
9
| Properties | Apartment Units | |||||||
|
Wholly Owned Properties
|
417 | 118,078 | ||||||
|
Partially Owned Properties — Consolidated
|
23 | 4,828 | ||||||
|
Military Housing
|
2 | 4,805 | ||||||
|
|
||||||||
|
|
442 | 127,711 | ||||||
10
11
| 2011 | ||||
|
Common Shares
|
||||
|
Common Shares outstanding at January 1,
|
290,197,242 | |||
|
|
||||
|
Common Shares Issued:
|
||||
|
Conversion of OP Units
|
23,901 | |||
|
Issuance of Common Shares
|
3,038,980 | |||
|
Exercise of share options
|
1,146,933 | |||
|
Employee Share Purchase Plan (ESPP)
|
62,266 | |||
|
Restricted share grants, net
|
154,939 | |||
|
|
||||
|
Common Shares Other:
|
||||
|
Conversion of restricted shares to LTIP Units
|
(101,988 | ) | ||
|
|
||||
|
Common Shares outstanding at March 31,
|
294,522,273 | |||
|
|
||||
|
|
||||
|
Units
|
||||
|
Units outstanding at January 1,
|
13,612,037 | |||
|
LTIP Units, net
|
58,942 | |||
|
Conversion of restricted shares to LTIP Units
|
101,988 | |||
|
Conversion of OP Units to Common Shares
|
(23,901 | ) | ||
|
|
||||
|
Units outstanding at March 31,
|
13,749,066 | |||
|
|
||||
|
Total Common Shares and Units outstanding at March 31,
|
308,271,339 | |||
|
|
||||
|
|
||||
|
Units Ownership Interest in Operating Partnership
|
4.5 | % | ||
12
| 2011 | ||||
|
Balance at January 1,
|
$ | 383,540 | ||
|
Change in market value
|
29,294 | |||
|
Change in carrying value
|
3,500 | |||
|
|
||||
|
Balance at March 31,
|
$ | 416,334 | ||
|
|
||||
13
| Amounts in thousands | ||||||||||||||
| Annual | ||||||||||||||
| Redemption | Dividend per | March 31, | December 31, | |||||||||||
| Date (1) | Share (2) | 2011 | 2010 | |||||||||||
|
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized:
|
||||||||||||||
|
|
||||||||||||||
|
8.29% Series K Cumulative Redeemable Preferred;
liquidation value $50 per share; 1,000,000 shares
issued and outstanding at March 31, 2011 and December 31, 2010
|
12/10/26 | $ | 4.145 | $ | 50,000 | $ | 50,000 | |||||||
|
|
||||||||||||||
|
6.48% Series N Cumulative Redeemable Preferred;
liquidation value $250 per share; 600,000 shares issued and
outstanding at March 31, 2011 and December 31, 2010 (3)
|
6/19/08 | $ | 16.20 | 150,000 | 150,000 | |||||||||
|
|
||||||||||||||
|
|
$ | 200,000 | $ | 200,000 | ||||||||||
|
|
||||||||||||||
| (1) | On or after the redemption date, redeemable preferred shares (Series K and N) may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation price per share, plus accrued and unpaid distributions, if any. | |
| (2) | Dividends on all series of Preferred Shares are payable quarterly at various pay dates. The dividend listed for Series N is a Preferred Share rate and the equivalent Depositary Share annual dividend is $1.62 per share. | |
| (3) | The Series N Preferred Shares have a corresponding depositary share that consists of ten times the number of shares and one-tenth the liquidation value and dividend per share. |
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
|
Land
|
$ | 4,107,769 | $ | 4,110,275 | ||||
|
Depreciable property:
|
||||||||
|
Buildings and improvements
|
14,042,212 | 13,995,121 | ||||||
|
Furniture, fixtures and equipment
|
1,236,821 | 1,231,391 | ||||||
|
Projects under development:
|
||||||||
|
Land
|
27,505 | 28,260 | ||||||
|
Construction-in-progress
|
69,646 | 102,077 | ||||||
|
Land held for development:
|
||||||||
|
Land
|
183,674 | 198,465 | ||||||
|
Construction-in-progress
|
28,294 | 36,782 | ||||||
|
|
||||||||
|
Investment in real estate
|
19,695,921 | 19,702,371 | ||||||
|
Accumulated depreciation
|
(4,424,078 | ) | (4,337,357 | ) | ||||
|
|
||||||||
|
Investment in real estate, net
|
$ | 15,271,843 | $ | 15,365,014 | ||||
|
|
||||||||
| Properties | Apartment Units | Purchase Price | ||||||||||
|
Rental Properties
|
2 | 521 | $ | 139,018 | ||||||||
|
Other (1)
|
— | — | 11,750 | |||||||||
|
|
||||||||||||
|
Total
|
2 | 521 | $ | 150,768 | ||||||||
|
|
||||||||||||
14
| (1) | Represents the acquisition of a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle for potential redevelopment. |
| Properties | Apartment Units | Sales Price | ||||||||||
|
Rental Properties — Consolidated
|
12 | 2,731 | $ | 261,771 | ||||||||
|
|
||||||||||||
|
Total
|
12 | 2,731 | $ | 261,771 | ||||||||
|
|
||||||||||||
| Properties | Apartment Units | Purchase Price | ||||||||||
|
Rental Properties
|
3 | 975 | $ | 255,250 | ||||||||
|
Land Parcels (one)
|
— | — | 12,000 | |||||||||
|
|
||||||||||||
|
Total
|
3 | 975 | $ | 267,250 | ||||||||
|
|
||||||||||||
| Properties | Apartment Units | Sales Price | ||||||||||
|
Rental Properties
|
7 | 2,797 | $ | 240,880 | ||||||||
|
|
||||||||||||
|
Total
|
7 | 2,797 | $ | 240,880 | ||||||||
|
|
||||||||||||
15
| Consolidated | ||||||||||||||||||||
| Development Projects (VIEs) | ||||||||||||||||||||
| Held for | Completed, | Completed | ||||||||||||||||||
| and/or Under | Not | and | ||||||||||||||||||
| Development | Stabilized (4) | Stabilized | Other | Total | ||||||||||||||||
|
Total projects (1)
|
— | 1 | 3 | 19 | 23 | |||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Total apartment units (1)
|
— | 490 | 898 | 3,440 | 4,828 | |||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Balance sheet information
at 3/31/11 (at 100%):
|
||||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
Investment in real estate
|
$ | 44,103 | $ | 257,480 | $ | 263,567 | $ | 439,481 | $ | 1,004,631 | ||||||||||
|
Accumulated depreciation
|
— | (1,896 | ) | (17,162 | ) | (128,088 | ) | (147,146 | ) | |||||||||||
|
|
||||||||||||||||||||
|
Investment in real estate, net
|
44,103 | 255,584 | 246,405 | 311,393 | 857,485 | |||||||||||||||
|
Cash and cash equivalents
|
536 | 650 | 2,454 | 7,744 | 11,384 | |||||||||||||||
|
Deposits — restricted
|
1,120 | 1,189 | 2,507 | 8 | 4,824 | |||||||||||||||
|
Escrow deposits — mortgage
|
— | — | 163 | 1,470 | 1,633 | |||||||||||||||
|
Deferred financing costs, net
|
— | 2,206 | 254 | 403 | 2,863 | |||||||||||||||
|
Other assets
|
78 | 117 | 181 | 258 | 634 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total assets
|
$ | 45,837 | $ | 259,746 | $ | 251,964 | $ | 321,276 | $ | 878,823 | ||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
LIABILITIES AND EQUITY
|
||||||||||||||||||||
|
Mortgage notes payable
|
$ | 18,342 | $ | 142,448 | $ | 200,765 | $ | 215,631 | $ | 577,186 | ||||||||||
|
Accounts payable & accrued expenses
|
617 | 1,157 | 911 | 2,371 | 5,056 | |||||||||||||||
|
Accrued interest payable
|
1,528 | 528 | 465 | 1,109 | 3,630 | |||||||||||||||
|
Other liabilities
|
1,280 | 870 | 273 | 795 | 3,218 | |||||||||||||||
|
Security deposits
|
— | 1,173 | 249 | 1,382 | 2,804 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total liabilities
|
21,767 | 146,176 | 202,663 | 221,288 | 591,894 | |||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Noncontrolling Interests — Partially Owned Properties
|
3,418 | 5,025 | 4,078 | (4,834 | ) | 7,687 | ||||||||||||||
|
Accumulated other comprehensive (loss)
|
— | (495 | ) | — | — | (495 | ) | |||||||||||||
|
EQR equity
|
20,652 | 109,040 | 45,223 | 104,822 | 279,737 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total equity
|
24,070 | 113,570 | 49,301 | 99,988 | 286,929 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total liabilities and equity
|
$ | 45,837 | $ | 259,746 | $ | 251,964 | $ | 321,276 | $ | 878,823 | ||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Debt — Secured (2):
|
||||||||||||||||||||
|
EQR Ownership (3)
|
$ | 18,342 | $ | 142,448 | $ | 200,765 | $ | 162,912 | $ | 524,467 | ||||||||||
|
Noncontrolling Ownership
|
— | — | — | 52,719 | 52,719 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total (at 100%)
|
$ | 18,342 | $ | 142,448 | $ | 200,765 | $ | 215,631 | $ | 577,186 | ||||||||||
|
|
||||||||||||||||||||
16
| Consolidated | ||||||||||||||||||||
| Development Projects (VIEs) | ||||||||||||||||||||
| Held for | Completed, | |||||||||||||||||||
| and/or Under | Not | Completed | ||||||||||||||||||
| Development | Stabilized (4) | and Stabilized | Other | Total | ||||||||||||||||
|
Operating
information for the quarter ended 3/31/11 (at 100%):
|
||||||||||||||||||||
|
Operating revenue
|
$ | — | $ | 2,992 | $ | 4,680 | $ | 13,949 | $ | 21,621 | ||||||||||
|
Operating expenses
|
161 | 1,093 | 1,507 | 4,733 | 7,494 | |||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Net operating (loss) income
|
(161 | ) | 1,899 | 3,173 | 9,216 | 14,127 | ||||||||||||||
|
Depreciation
|
— | 1,897 | 2,189 | 3,741 | 7,827 | |||||||||||||||
|
General and administrative/other
|
19 | 2 | 9 | 11 | 41 | |||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Operating (loss) income
|
(180 | ) | — | 975 | 5,464 | 6,259 | ||||||||||||||
|
Interest and other income
|
4 | — | 2 | 5 | 11 | |||||||||||||||
|
Other expenses
|
(124 | ) | — | — | (17 | ) | (141 | ) | ||||||||||||
|
Interest:
|
||||||||||||||||||||
|
Expense incurred, net
|
(234 | ) | (1,528 | ) | (1,389 | ) | (3,882 | ) | (7,033 | ) | ||||||||||
|
Amortization of deferred financing costs
|
— | (601 | ) | (139 | ) | (102 | ) | (842 | ) | |||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
(Loss)
income before income and other taxes and discontinued operations
|
(534 | ) | (2,129 | ) | (551 | ) | 1,468 | (1,746 | ) | |||||||||||
|
Income and other tax (expense) benefit
|
(45 | ) | — | — | (2 | ) | (47 | ) | ||||||||||||
|
Net gain on sales of discontinued operations
|
169 | — | — | — | 169 | |||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Net (loss) income
|
$ | (410 | ) | $ | (2,129 | ) | $ | (551 | ) | $ | 1,466 | $ | (1,624 | ) | ||||||
|
|
||||||||||||||||||||
| (1) | Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed. | |
| (2) | All debt is non-recourse to the Company with the exception of $14.0 million in mortgage debt on one development project. | |
| (3) | Represents the Company’s current economic ownership interest. | |
| (4) | Projects included here are substantially complete. However, they may still require additional exterior and interior work for all apartment units to be available for leasing. |
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
|
Tax—deferred (1031) exchange proceeds
|
$ | 212,779 | $ | 103,887 | ||||
|
Earnest money on pending acquisitions
|
8,250 | 9,264 | ||||||
|
Restricted deposits on debt (1)
|
41,263 | 18,966 | ||||||
|
Resident security and utility deposits
|
41,283 | 40,745 | ||||||
|
Other
|
6,030 | 8,125 | ||||||
|
|
||||||||
|
|
||||||||
|
Totals
|
$ | 309,605 | $ | 180,987 | ||||
|
|
||||||||
| (1) | Primarily represents amounts held in escrow by the lender and released as draw requests are made on fully funded |
17
| development mortgage loans. |
| § | Repaid $205.0 million of mortgage loans; | ||
| § | Obtained $0.7 million of new mortgage loan proceeds; and | ||
| § | Assumed $26.9 million of mortgage debt on one acquired property. |
| § | Repaid $93.1 million of 6.95% unsecured notes at maturity. |
18
| Forward | Development | |||||||||||
| Fair Value | Starting | Cash Flow | ||||||||||
| Hedges (1) | Swaps (2) | Hedges (3) | ||||||||||
|
Current Notional Balance
|
$ | 315,693 | $ | 950,000 | $ | 88,833 | ||||||
|
Lowest Possible Notional
|
$ | 315,693 | $ | 950,000 | $ | 3,020 | ||||||
|
Highest Possible Notional
|
$ | 317,694 | $ | 950,000 | $ | 91,343 | ||||||
|
Lowest Interest Rate
|
2.009 | % | 3.478 | % | 4.059 | % | ||||||
|
Highest Interest Rate
|
4.800 | % | 4.695 | % | 4.059 | % | ||||||
|
Earliest Maturity Date
|
2012 | 2021 | 2011 | |||||||||
|
Latest Maturity Date
|
2013 | 2023 | 2011 | |||||||||
| (1) | Fair Value Hedges — Converts outstanding fixed rate debt to a floating interest rate. | |
| (2) | Forward Starting Swaps — Designed to partially fix the interest rate in advance of a planned future debt issuance. These swaps have mandatory counterparty terminations from 2012 through 2014, and $350.0 million, $400.0 million and $200.0 million are designated for 2011, 2012 and 2013 maturities, respectively. | |
| (3) | Development Cash Flow Hedges — Converts outstanding floating rate debt to a fixed interest rate. |
| Asset Derivatives | Liability Derivatives | |||||||||||||||
| Balance Sheet | Balance Sheet | |||||||||||||||
| March 31, 2011 | Location | Fair Value | Location | Fair Value | ||||||||||||
|
Derivatives designated as hedging instruments:
|
||||||||||||||||
|
Interest Rate Contracts:
|
||||||||||||||||
|
Fair Value Hedges
|
Other assets | $ | 11,029 | Other liabilities | $ | — | ||||||||||
|
Forward Starting Swaps
|
Other assets | 3,959 | Other liabilities | (33,184 | ) | |||||||||||
|
Development Cash Flow Hedges
|
Other assets | — | Other liabilities | (495 | ) | |||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 14,988 | $ | (33,679 | ) | |||||||||||
|
|
||||||||||||||||
| Asset Derivatives | Liability Derivatives | |||||||||||||||
| Balance Sheet | Balance Sheet | |||||||||||||||
| December 31, 2010 | Location | Fair Value | Location | Fair Value | ||||||||||||
|
Derivatives designated as hedging instruments:
|
||||||||||||||||
|
Interest Rate Contracts:
|
||||||||||||||||
|
Fair Value Hedges
|
Other assets | $ | 12,521 | Other liabilities | $ | — | ||||||||||
|
Forward Starting Swaps
|
Other assets | 3,276 | Other liabilities | (37,756 | ) | |||||||||||
|
Development Cash Flow Hedges
|
Other assets | — | Other liabilities | (1,322 | ) | |||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 15,797 | $ | (39,078 | ) | |||||||||||
|
|
||||||||||||||||
| Location of Gain/(Loss) | Amount of Gain/(Loss) | Income Statement | Amount of Gain/(Loss) | |||||||||||||||||
| March 31, 2011 | Recognized in Income | Recognized in Income | Location of Hedged | Recognized in Income | ||||||||||||||||
| Type of Fair Value Hedge | on Derivative | on Derivative | Hedged Item | Item Gain/(Loss) | on Hedged Item | |||||||||||||||
|
Derivatives designated as hedging instruments:
|
||||||||||||||||||||
|
Interest Rate Contracts:
|
||||||||||||||||||||
|
Interest Rate Swaps
|
Interest expense | $ | (1,492 | ) | Fixed rate debt | Interest expense | $ | 1,492 | ||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | (1,492 | ) | $ | 1,492 | |||||||||||||||
|
|
||||||||||||||||||||
19
| Location of Gain/(Loss) | Amount of Gain/(Loss) | Income Statement | Amount of Gain/(Loss) | |||||||||||||||||
| March 31, 2010 | Recognized in Income | Recognized in Income | Location of Hedged | Recognized in Income | ||||||||||||||||
| Type of Fair Value Hedge | on Derivative | on Derivative | Hedged Item | Item Gain/(Loss) | on Hedged Item | |||||||||||||||
|
Derivatives designated as hedging instruments:
|
||||||||||||||||||||
|
Interest Rate Contracts:
|
||||||||||||||||||||
|
Interest Rate Swaps
|
Interest expense | $ | 2,742 | Fixed rate debt | Interest expense | $ | (2,742 | ) | ||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | 2,742 | $ | (2,742 | ) | |||||||||||||||
|
|
||||||||||||||||||||
| Effective Portion | Ineffective Portion | |||||||||||||||||||
| Amount of | Location of Gain/(Loss) | Amount of Gain/(Loss) | Location of | Amount of Gain/(Loss) | ||||||||||||||||
| Gain/(Loss) | Reclassified from | Reclassified from | Gain/(Loss) | Reclassified from | ||||||||||||||||
| March 31, 2011 | Recognized in OCI | Accumulated OCI | Accumulated OCI | Recognized in Income | Accumulated OCI | |||||||||||||||
| Type of Cash Flow Hedge | on Derivative | into Income | into Income | on Derivative | into Income | |||||||||||||||
|
Derivatives designated as hedging instruments:
|
||||||||||||||||||||
|
Interest Rate Contracts:
|
||||||||||||||||||||
|
Forward Starting Swaps/Treasury Locks
|
$ | 5,255 | Interest expense | $ | (956 | ) | N/A | $ | — | |||||||||||
|
Development Interest Rate Swaps/Caps
|
827 | Interest expense | — | N/A | — | |||||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | 6,082 | $ | (956 | ) | $ | — | |||||||||||||
|
|
||||||||||||||||||||
| Effective Portion | Ineffective Portion | |||||||||||||||||||
| Amount of | Location of Gain/(Loss) | Amount of Gain/(Loss) | Location of | Amount of Gain/(Loss) | ||||||||||||||||
| Gain/(Loss) | Reclassified from | Reclassified from | Gain/(Loss) | Reclassified from | ||||||||||||||||
| March 31, 2010 | Recognized in OCI | Accumulated OCI | Accumulated OCI | Recognized in Income | Accumulated OCI | |||||||||||||||
| Type of Cash Flow Hedge | on Derivative | into Income | into Income | on Derivative | into Income | |||||||||||||||
|
Derivatives designated as hedging instruments:
|
||||||||||||||||||||
|
Interest Rate Contracts:
|
||||||||||||||||||||
|
Forward Starting Swaps/Treasury Locks
|
$ | (13,652 | ) | Interest expense | $ | (726 | ) | N/A | $ | — | ||||||||||
|
Development Interest Rate Swaps/Caps
|
149 | Interest expense | — | N/A | — | |||||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | (13,503 | ) | $ | (726 | ) | $ | — | ||||||||||||
|
|
||||||||||||||||||||
| Other Assets | ||||||||||||||||||||||||
| Amortized | Unrealized | Unrealized | Book/ | Interest and | ||||||||||||||||||||
| Security | Maturity | Cost | Gains | Losses | Fair Value | Other Income | ||||||||||||||||||
|
Available-for-Sale Investment Securities
|
N/A | $ | 675 | $ | 666 | $ | — | $ | 1,341 | $ | — | |||||||||||||
|
|
||||||||||||||||||||||||
|
Total
|
$ | 675 | $ | 666 | $ | — | $ | 1,341 | $ | — | ||||||||||||||
|
|
||||||||||||||||||||||||
| § | Level 1 — Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||
| § | Level 2 — Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
20
| § | Level 3 — Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||
| Quoted Prices in | ||||||||||||||||
| Active Markets for | Significant Other | Significant | ||||||||||||||
| Identical Assets/Liabilities | Observable Inputs | Unobservable Inputs | ||||||||||||||
| Description | 3/31/2011 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
|
Assets
|
||||||||||||||||
|
Derivatives
|
$ | 14,988 | $ | — | $ | 14,988 | $ | — | ||||||||
|
Supplemental Executive Retirement Plan
|
49,466 | 49,466 | — | — | ||||||||||||
|
Available-for-Sale Investment Securities
|
1,341 | 1,341 | — | — | ||||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 65,795 | $ | 50,807 | $ | 14,988 | $ | — | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Liabilities
|
||||||||||||||||
|
Derivatives
|
$ | 33,679 | $ | — | $ | 33,679 | $ | — | ||||||||
|
Supplemental Executive Retirement Plan
|
49,466 | 49,466 | — | — | ||||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 83,145 | $ | 49,466 | $ | 33,679 | $ | — | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Redeemable Noncontrolling Interests —
Operating Partnership
|
$ | 416,334 | $ | — | $ | 416,334 | $ | — | ||||||||
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||
| Quoted Prices in | ||||||||||||||||
| Active Markets for | Significant Other | Significant | ||||||||||||||
| Identical Assets/Liabilities | Observable Inputs | Unobservable Inputs | ||||||||||||||
| Description | 12/31/2010 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
|
Assets
|
||||||||||||||||
|
Derivatives
|
$ | 15,797 | $ | — | $ | 15,797 | $ | — | ||||||||
|
Supplemental Executive Retirement Plan
|
58,132 | 58,132 | — | — | ||||||||||||
|
Available-for-Sale Investment Securities
|
1,194 | 1,194 | — | — | ||||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 75,123 | $ | 59,326 | $ | 15,797 | $ | — | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Liabilities
|
||||||||||||||||
|
Derivatives
|
$ | 39,078 | $ | — | $ | 39,078 | $ | — | ||||||||
|
Supplemental Executive Retirement Plan
|
58,132 | 58,132 | — | — | ||||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 97,210 | $ | 58,132 | $ | 39,078 | $ | — | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Redeemable Noncontrolling Interests —
Operating Partnership
|
$ | 383,540 | $ | — | $ | 383,540 | $ | — | ||||||||
21
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
Numerator for net income per share — basic:
|
||||||||
|
Income (loss) from continuing operations
|
$ | 7,727 | $ | (9,407 | ) | |||
|
Allocation to Noncontrolling Interests — Operating Partnership, net
|
(197 | ) | 613 | |||||
|
Net loss attributable to Noncontrolling Interests — Partially Owned Properties
|
40 | 250 | ||||||
|
Preferred distributions
|
(3,466 | ) | (3,620 | ) | ||||
|
|
||||||||
|
|
||||||||
|
Income (loss) from continuing operations available to Common Shares,
net of Noncontrolling Interests
|
4,104 | (12,164 | ) | |||||
|
Discontinued operations, net of Noncontrolling Interests
|
119,761 | 64,027 | ||||||
|
|
||||||||
|
|
||||||||
|
Numerator for net income per share — basic
|
$ | 123,865 | $ | 51,863 | ||||
|
|
||||||||
|
|
||||||||
|
Numerator for net income per share — diluted (1):
|
||||||||
|
Income from continuing operations
|
$ | 7,727 | ||||||
|
Net loss attributable to Noncontrolling Interests — Partially Owned Properties
|
40 | |||||||
|
Preferred distributions
|
(3,466 | ) | ||||||
|
|
||||||||
|
|
||||||||
|
Income from continuing operations available to Common Shares
|
4,301 | |||||||
|
Discontinued operations, net
|
125,339 | |||||||
|
|
||||||||
|
|
||||||||
|
Numerator for net income per share — diluted (1)
|
$ | 129,640 | $ | 51,863 | ||||
|
|
||||||||
|
|
||||||||
|
Denominator for net income per share — basic and diluted (1):
|
||||||||
|
Denominator for net income per share — basic
|
292,895 | 280,645 | ||||||
|
Effect of dilutive securities:
|
||||||||
|
OP Units
|
13,353 | |||||||
|
Long-term compensation award shares/units
|
4,219 | |||||||
|
|
||||||||
|
|
||||||||
|
Denominator for net income per share — diluted (1)
|
310,467 | 280,645 | ||||||
|
|
||||||||
|
|
||||||||
|
Net income per share — basic
|
$ | 0.42 | $ | 0.18 | ||||
|
|
||||||||
|
|
||||||||
|
Net income per share — diluted
|
$ | 0.42 | $ | 0.18 | ||||
|
|
||||||||
|
|
||||||||
|
Net income per share — basic:
|
||||||||
|
Income (loss) from continuing operations available to Common Shares,
net of Noncontrolling Interests
|
$ | 0.014 | $ | (0.043 | ) | |||
|
Discontinued operations, net of Noncontrolling Interests
|
0.409 | 0.228 | ||||||
|
|
||||||||
|
|
||||||||
|
Net income per share — basic
|
$ | 0.423 | $ | 0.185 | ||||
|
|
||||||||
|
|
||||||||
|
Net income per share — diluted (1):
|
||||||||
|
Income (loss) from continuing operations available to Common Shares
|
$ | 0.014 | $ | (0.043 | ) | |||
|
Discontinued operations, net
|
0.404 | 0.228 | ||||||
|
|
||||||||
|
|
||||||||
|
Net income per share — diluted
|
$ | 0.418 | $ | 0.185 | ||||
|
|
||||||||
| (1) | Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation award shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations for the quarter ended March 31, 2010. |
22
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
REVENUES
|
||||||||
|
Rental income
|
$ | 5,890 | $ | 25,969 | ||||
|
|
||||||||
|
Total revenues
|
5,890 | 25,969 | ||||||
|
|
||||||||
|
|
||||||||
|
EXPENSES (1)
|
||||||||
|
Property and maintenance
|
2,709 | 7,831 | ||||||
|
Real estate taxes and insurance
|
477 | 2,777 | ||||||
|
Depreciation
|
1,395 | 6,692 | ||||||
|
General and administrative
|
9 | 3 | ||||||
|
|
||||||||
|
Total expenses
|
4,590 | 17,303 | ||||||
|
|
||||||||
|
|
||||||||
|
Discontinued operating income
|
1,300 | 8,666 | ||||||
|
|
||||||||
|
Interest and other income
|
44 | 6 | ||||||
|
Interest (2):
|
||||||||
|
Expense incurred, net
|
326 | (1,208 | ) | |||||
|
Amortization of deferred financing costs
|
(51 | ) | (201 | ) | ||||
|
Income and other tax (expense) benefit
|
(34 | ) | (36 | ) | ||||
|
|
||||||||
|
|
||||||||
|
Discontinued operations
|
1,585 | 7,227 | ||||||
|
Net gain on sales of discontinued operations
|
123,754 | 60,036 | ||||||
|
|
||||||||
|
|
||||||||
|
Discontinued operations, net
|
$ | 125,339 | $ | 67,263 | ||||
|
|
||||||||
| (1) | Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership. | |
| (2) | Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. |
23
24
| Quarter Ended March 31, 2011 | ||||||||||||||||||||||||
| Northeast | Northwest | Southeast | Southwest | Other (3) | Total | |||||||||||||||||||
|
Rental income:
|
||||||||||||||||||||||||
|
Same store (1)
|
$ | 151,373 | $ | 88,893 | $ | 97,531 | $ | 110,150 | $ | — | $ | 447,947 | ||||||||||||
|
Non-same store/other (2) (3)
|
28,474 | 8,061 | 4,787 | 7,313 | 22,235 | 70,870 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total rental income
|
179,847 | 96,954 | 102,318 | 117,463 | 22,235 | 518,817 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||
|
Same store (1)
|
58,874 | 32,404 | 39,346 | 37,615 | — | 168,239 | ||||||||||||||||||
|
Non-same store/other (2) (3)
|
11,967 | 3,379 | 1,867 | 3,135 | 18,175 | 38,523 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total operating expenses
|
70,841 | 35,783 | 41,213 | 40,750 | 18,175 | 206,762 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
NOI:
|
||||||||||||||||||||||||
|
Same store (1)
|
92,499 | 56,489 | 58,185 | 72,535 | — | 279,708 | ||||||||||||||||||
|
Non-same store/other (2) (3)
|
16,507 | 4,682 | 2,920 | 4,178 | 4,060 | 32,347 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total NOI
|
$ | 109,006 | $ | 61,171 | $ | 61,105 | $ | 76,713 | $ | 4,060 | $ | 312,055 | ||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total assets
|
$ | 6,050,142 | $ | 2,623,015 | $ | 2,700,350 | $ | 3,194,880 | $ | 1,506,942 | $ | 16,075,329 | ||||||||||||
|
|
||||||||||||||||||||||||
| (1) | Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2010, less properties subsequently sold, which represented 112,363 apartment units. | |
| (2) | Non-same store primarily includes properties acquired after January 1, 2010, plus any properties in lease-up and not stabilized as of January 1, 2010. | |
| (3) | Other includes ECH, development, condominium conversion overhead of $0.1 million and other corporate operations. Also reflects a $2.4 million elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH. |
| Quarter Ended March 31, 2010 | ||||||||||||||||||||||||
| Northeast | Northwest | Southeast | Southwest | Other (3) | Total | |||||||||||||||||||
|
Rental income:
|
||||||||||||||||||||||||
|
Same store (1)
|
$ | 143,813 | $ | 84,971 | $ | 94,389 | $ | 107,500 | $ | — | $ | 430,673 | ||||||||||||
|
Non-same
store/other (2) (3)
|
12,057 | 1,464 | 1,699 | 1,062 | 15,622 | 31,904 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total rental income
|
155,870 | 86,435 | 96,088 | 108,562 | 15,622 | 462,577 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||
|
Same store (1)
|
57,903 | 32,308 | 40,483 | 39,327 | — | 170,021 | ||||||||||||||||||
|
Non-same
store/other (2) (3)
|
5,622 | 754 | 826 | 854 | 18,193 | 26,249 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total operating expenses
|
63,525 | 33,062 | 41,309 | 40,181 | 18,193 | 196,270 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
NOI:
|
||||||||||||||||||||||||
|
Same store (1)
|
85,910 | 52,663 | 53,906 | 68,173 | — | 260,652 | ||||||||||||||||||
|
Non-same
store/other (2) (3)
|
6,435 | 710 | 873 | 208 | (2,571 | ) | 5,655 | |||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total NOI
|
$ | 92,345 | $ | 53,373 | $ | 54,779 | $ | 68,381 | $ | (2,571 | ) | $ | 266,307 | |||||||||||
|
|
||||||||||||||||||||||||
| (1) | Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2010, less properties subsequently sold, which represented 112,363 apartment units. | |
| (2) | Non-same store primarily includes properties acquired after January 1, 2010, plus any properties in lease-up and not stabilized as of January 1, 2010. | |
| (3) | Other includes ECH, development, condominium conversion overhead of $0.2 million and other corporate operations. Also reflects a $2.0 million elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH. |
| (a) | Northeast — New England (excluding Boston), Boston, New York Metro, DC Northern Virginia and Suburban Maryland. | |
| (b) | Northwest — Denver, Portland, San Francisco Bay Area and Seattle/Tacoma. | |
| (c) | Southeast — Atlanta, Jacksonville, Orlando, South Florida and Tampa. | |
| (d) | Southwest — Albuquerque, Inland Empire, Los Angeles, Orange County, Phoenix and San Diego. |
25
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
Rental income
|
$ | 518,817 | $ | 462,577 | ||||
|
Property and maintenance expense
|
(128,357 | ) | (120,203 | ) | ||||
|
Real estate taxes and insurance expense
|
(56,024 | ) | (55,575 | ) | ||||
|
Property management expense
|
(22,381 | ) | (20,492 | ) | ||||
|
|
||||||||
|
Total operating expenses
|
(206,762 | ) | (196,270 | ) | ||||
|
|
||||||||
|
Net operating income
|
$ | 312,055 | $ | 266,307 | ||||
|
|
||||||||
| § | Repaid $193.7 million in mortgage loans; | ||
| § | Obtained $91.5 million of new mortgage loan proceeds; | ||
| § | Acquired one operating property consisting of 322 apartment units for $100.0 million and one land parcel for $12.9 million; | ||
| § | Sold 15 properties containing 4,369 apartment units for $530.2 million; and | ||
| § | Exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012. |
26
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| § | We intend to actively acquire and/or develop multifamily properties for rental operations as market conditions dictate. We may also acquire multifamily properties that are unoccupied or in the early stages of lease up. We may be unable to lease up these apartment properties on schedule, resulting in decreases in expected rental revenues and/or lower yields due to lower occupancy and rates as well as higher than expected concessions. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or to complete a development property. Additionally, we expect that other major real estate investors with significant capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development efforts. This competition (or lack thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. The total number of development apartment units, costs of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation; | ||
| § | Debt financing and other capital required by the Company may not be available or may only be available on adverse terms; | ||
| § | Labor and materials required for maintenance, repair, capital expenditure or development may be more expensive than anticipated; | ||
| § | Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new construction and excess inventory of multifamily housing and single family housing, slow or negative employment growth, availability of low interest mortgages for single family home buyers and the potential for geopolitical instability, all of which are beyond the Company’s control; and | ||
| § | Additional factors as discussed in Part I of the Company’s Annual Report on Form 10-K, particularly those under “Item 1A. Risk Factors”. |
27
| • | High barriers to entry where, because of land scarcity or government regulation, it is difficult or costly to build new apartment properties leading to low supply; |
| • | High single family home prices making our apartments a more economical housing choice; |
| • | Strong economic growth leading to household formation and job growth, which in turn leads to high demand for our apartments; and |
| • | An attractive quality of life leading to high demand and retention and allowing us to more readily increase rents. |
28
29
| § | Acquired $139.0 million of apartment properties consisting of two consolidated properties and 521 apartment units at a weighted average cap rate (see definition below) of 5.7%, both of which we deem to be in our strategic targeted markets; | ||
| § | Acquired a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle for $11.8 million for potential redevelopment; and | ||
| § | Sold $261.8 million of consolidated apartment properties consisting of 12 properties and 2,731 apartment units at a weighted average cap rate of 6.7%, the majority of which was in exit or less desirable markets. |
30
| Results | Statistics | |||||||||||||||||||||||
| Average | ||||||||||||||||||||||||
| Rental | ||||||||||||||||||||||||
| Description | Revenues | Expenses | NOI | Rate (1) | Occupancy | Turnover | ||||||||||||||||||
|
Q1 2011
|
$ | 447,947 | $ | 168,239 | $ | 279,708 | $ | 1,400 | 95.0 | % | 11.6 | % | ||||||||||||
|
Q1 2010
|
$ | 430,673 | $ | 170,021 | $ | 260,652 | $ | 1,352 | 94.6 | % | 11.8 | % | ||||||||||||
|
|
||||||||||||||||||||||||
|
Change
|
$ | 17,274 | $ | (1,782 | ) | $ | 19,056 | $ | 48 | 0.4 | % | (0.2 | %) | |||||||||||
|
|
||||||||||||||||||||||||
|
Change
|
4.0 | % | (1.0 | %) | 7.3 | % | 3.6 | % | ||||||||||||||||
| (1) | Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. |
| % of Actual | ||||||||||||||||||||
| Q1 2011 | ||||||||||||||||||||
| Actual | Actual | $ | % | Operating | ||||||||||||||||
| Q1 2011 | Q1 2010 | Change | Change | Expenses | ||||||||||||||||
|
Real estate taxes
|
$ | 44,613 | $ | 44,445 | $ | 168 | 0.4 | % | 26.5 | % | ||||||||||
|
On-site payroll (1)
|
39,757 | 40,453 | (696 | ) | (1.7 | %) | 23.6 | % | ||||||||||||
|
Utilities (2)
|
28,285 | 27,752 | 533 | 1.9 | % | 16.8 | % | |||||||||||||
|
Repairs and maintenance (3)
|
23,501 | 25,034 | (1,533 | ) | (6.1 | %) | 14.0 | % | ||||||||||||
|
Property management costs (4)
|
18,097 | 17,227 | 870 | 5.1 | % | 10.8 | % | |||||||||||||
|
Insurance
|
5,256 | 5,571 | (315 | ) | (5.7 | %) | 3.1 | % | ||||||||||||
|
Leasing and advertising
|
3,218 | 3,802 | (584 | ) | (15.4 | %) | 1.9 | % | ||||||||||||
|
Other on-site operating expenses (5)
|
5,512 | 5,737 | (225 | ) | (3.9 | %) | 3.3 | % | ||||||||||||
|
|
||||||||||||||||||||
|
Same store operating expenses
|
$ | 168,239 | $ | 170,021 | $ | (1,782 | ) | (1.0 | %) | 100.0 | % | |||||||||
|
|
||||||||||||||||||||
| (1) | On-site payroll — Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff. | |
| (2) | Utilities — Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income. | |
| (3) | Repairs and maintenance — Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs. | |
| (4) | Property management costs — Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology. | |
| (5) | Other on-site operating expenses — Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees. |
31
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| (Amounts in thousands) | ||||||||
|
Operating income
|
$ | 133,510 | $ | 110,008 | ||||
|
Adjustments:
|
||||||||
|
Non-same store operating results
|
(32,347 | ) | (5,655 | ) | ||||
|
Fee and asset management revenue
|
(1,806 | ) | (2,422 | ) | ||||
|
Fee and asset management expense
|
948 | 1,958 | ||||||
|
Depreciation
|
167,968 | 146,042 | ||||||
|
General and administrative
|
11,435 | 10,721 | ||||||
|
|
||||||||
|
|
||||||||
|
Same store NOI
|
$ | 279,708 | $ | 260,652 | ||||
|
|
||||||||
| 2011 Same Store Assumptions | ||||
|
Physical occupancy
|
95.0% | |||
|
Revenue change
|
4.0% to 5.0% | |||
|
Expense change
|
1.0% to 2.0% | |||
|
NOI change
|
5.0% to 7.5% | |||
| § | Development and other miscellaneous properties in lease-up of $9.3 million; | ||
| § | Properties acquired in 2010 and 2011 of $13.4 million; | ||
| § | Newly stabilized development properties of $1.0 million; and | ||
| § | Partially offset by other miscellaneous properties of $1.1 million. |
32
| § | Disposed of 12 consolidated properties, receiving net proceeds of approximately $258.2 million; |
| § | Obtained $0.7 million in new mortgage financing; and |
| § | Issued approximately 4.2 million Common Shares (including shares issued under the ATM program — see further discussion below) and received net proceeds of $190.0 million. |
33
| § | Acquire two rental properties and a 97,000 square foot commercial building for approximately $123.9 million; |
| § | Invest $29.8 million primarily in development projects; and |
| § | Repay $205.0 million of mortgage loans and $93.1 million of unsecured notes. |
| Weighted | ||||||||||||||||
| Weighted | Average | |||||||||||||||
| Average | Maturities | |||||||||||||||
| Amounts (1) | % of Total | Rates (1) | (years) | |||||||||||||
|
Secured
|
$ | 4,583,545 | 47.4 | % | 4.76 | % | 8.1 | |||||||||
|
Unsecured
|
5,092,967 | 52.6 | % | 5.08 | % | 4.3 | ||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 9,676,512 | 100.0 | % | 4.93 | % | 6.1 | |||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Fixed Rate Debt:
|
||||||||||||||||
|
Secured — Conventional
|
$ | 3,737,865 | 38.6 | % | 5.60 | % | 6.9 | |||||||||
|
Unsecured — Public/Private
|
4,284,995 | 44.3 | % | 5.71 | % | 5.0 | ||||||||||
|
|
||||||||||||||||
|
Fixed Rate Debt
|
8,022,860 | 82.9 | % | 5.66 | % | 5.8 | ||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Floating Rate Debt:
|
||||||||||||||||
|
Secured — Conventional
|
251,305 | 2.6 | % | 2.85 | % | 0.7 | ||||||||||
|
Secured — Tax Exempt
|
594,375 | 6.2 | % | 0.32 | % | 19.1 | ||||||||||
|
Unsecured — Public/Private
|
807,972 | 8.3 | % | 1.68 | % | 1.1 | ||||||||||
|
Unsecured — Revolving Credit Facility
|
— | — | — | 0.9 | ||||||||||||
|
|
||||||||||||||||
|
Floating Rate Debt
|
1,653,652 | 17.1 | % | 1.38 | % | 7.2 | ||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Total
|
$ | 9,676,512 | 100.0 | % | 4.93 | % | 6.1 | |||||||||
|
|
||||||||||||||||
| (1) | Net of the effect of any derivative instruments. Weighted average rates are for the quarter ended March 31, 2011. |
34
| Weighted Average | Weighted Average | |||||||||||||||||||||||
| Fixed | Floating | Rates on Fixed | Rates on | |||||||||||||||||||||
| Year | Rate (1) | Rate (1) | Total | % of Total | Rate Debt (1) | Total Debt (1) | ||||||||||||||||||
|
2011
|
$ | 694,503 | (2) | $ | 685,347 | (3) | $ | 1,379,850 | 14.3 | % | 4.80 | % | 3.03 | % | ||||||||||
|
2012
|
779,271 | 37,676 | 816,947 | 8.4 | % | 5.62 | % | 5.55 | % | |||||||||||||||
|
2013
|
269,502 | 308,489 | 577,991 | 6.0 | % | 6.72 | % | 4.88 | % | |||||||||||||||
|
2014
|
562,921 | 22,007 | 584,928 | 6.0 | % | 5.31 | % | 5.24 | % | |||||||||||||||
|
2015
|
358,051 | — | 358,051 | 3.7 | % | 6.40 | % | 6.40 | % | |||||||||||||||
|
2016
|
1,192,909 | — | 1,192,909 | 12.3 | % | 5.35 | % | 5.35 | % | |||||||||||||||
|
2017
|
1,355,833 | 456 | 1,356,289 | 14.0 | % | 5.87 | % | 5.87 | % | |||||||||||||||
|
2018
|
80,767 | 44,677 | 125,444 | 1.3 | % | 5.72 | % | 4.26 | % | |||||||||||||||
|
2019
|
801,759 | 20,766 | 822,525 | 8.5 | % | 5.49 | % | 5.36 | % | |||||||||||||||
|
2020
|
1,671,836 | 809 | 1,672,645 | 17.3 | % | 5.50 | % | 5.50 | % | |||||||||||||||
|
2021+
|
255,508 | 533,425 | 788,933 | 8.2 | % | 6.62 | % | 2.66 | % | |||||||||||||||
|
|
||||||||||||||||||||||||
|
Total
|
$ | 8,022,860 | $ | 1,653,652 | $ | 9,676,512 | 100.0 | % | 5.60 | % | 4.91 | % | ||||||||||||
|
|
||||||||||||||||||||||||
| (1) | Net of the effect of any derivative instruments. Weighted average rates are as of March 31, 2011. | |
| (2) | Includes $482.5 million face value of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. | |
| (3) | Effective April 5, 2011, the Company exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012. |
35
| Unamortized | ||||||||||||||||||||
| Coupon | Due | Face | Premium/ | Net | ||||||||||||||||
| Rate | Date | Amount | (Discount) | Balance | ||||||||||||||||
|
Fixed Rate Notes:
|
||||||||||||||||||||
|
|
6.625 | % | 03/15/12 | $ | 253,858 | $ | (183 | ) | $ | 253,675 | ||||||||||
|
|
5.500 | % | 10/01/12 | 222,133 | (329 | ) | 221,804 | |||||||||||||
|
|
5.200 | % | 04/01/13 | (1) | 400,000 | (237 | ) | 399,763 | ||||||||||||
|
Fair Value Derivative Adjustments
|
(1) | (300,000 | ) | — | (300,000 | ) | ||||||||||||||
|
|
5.250 | % | 09/15/14 | 500,000 | (213 | ) | 499,787 | |||||||||||||
|
|
6.584 | % | 04/13/15 | 300,000 | (441 | ) | 299,559 | |||||||||||||
|
|
5.125 | % | 03/15/16 | 500,000 | (264 | ) | 499,736 | |||||||||||||
|
|
5.375 | % | 08/01/16 | 400,000 | (989 | ) | 399,011 | |||||||||||||
|
|
5.750 | % | 06/15/17 | 650,000 | (3,179 | ) | 646,821 | |||||||||||||
|
|
7.125 | % | 10/15/17 | 150,000 | (424 | ) | 149,576 | |||||||||||||
|
|
4.750 | % | 07/15/20 | 600,000 | (4,235 | ) | 595,765 | |||||||||||||
|
|
7.570 | % | 08/15/26 | 140,000 | — | 140,000 | ||||||||||||||
|
|
3.850 | % | 08/15/26 | (2) | 482,545 | (3,047 | ) | 479,498 | ||||||||||||
|
|
||||||||||||||||||||
|
|
4,298,536 | (13,541 | ) | 4,284,995 | ||||||||||||||||
|
|
||||||||||||||||||||
|
Floating Rate Notes:
|
||||||||||||||||||||
|
|
04/01/13 | (1) | 300,000 | — | 300,000 | |||||||||||||||
|
Fair Value Derivative Adjustments
|
(1) | 7,972 | — | 7,972 | ||||||||||||||||
|
Term Loan Facility
|
LIBOR+0.50% | 10/05/11 | (3)(4) | 500,000 | — | 500,000 | ||||||||||||||
|
|
||||||||||||||||||||
|
|
807,972 | — | 807,972 | |||||||||||||||||
|
|
||||||||||||||||||||
|
Revolving Credit Facility:
|
LIBOR+0.50% | 02/28/12 | (3)(5) | — | — | — | ||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Total Unsecured Debt
|
$ | 5,106,508 | $ | (13,541 | ) | $ | 5,092,967 | |||||||||||||
|
|
||||||||||||||||||||
| (1) | Fair value interest rate swaps convert $300.0 million of the 5.200% notes due April 1, 2013 to a floating interest rate. | |
| (2) | Convertible notes mature on August 15, 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. | |
| (3) | Facilities are private. All other unsecured debt is public. | |
| (4) | Effective April 5, 2011, the Company exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012. | |
| (5) | As of March 31, 2011, there was approximately $1.34 billion available on the Company’s unsecured revolving credit facility. |
36
|
Secured Debt
|
$ | 4,583,545 | 47.4 | % | ||||||||||||||||
|
Unsecured Debt
|
5,092,967 | 52.6 | % | |||||||||||||||||
|
|
||||||||||||||||||||
|
Total Debt
|
9,676,512 | 100.0 | % | 35.5 | % | |||||||||||||||
|
|
||||||||||||||||||||
|
Common
Shares (includes Restricted Shares)
|
294,522,273 | 95.5 | % | |||||||||||||||||
|
Units (includes OP Units and LTIP Units)
|
13,749,066 | 4.5 | % | |||||||||||||||||
|
Total Shares and Units
|
308,271,339 | 100.0 | % | |||||||||||||||||
|
Common Share Price at March 31, 2011
|
$ | 56.41 | ||||||||||||||||||
|
|
17,389,586 | 98.9 | % | |||||||||||||||||
|
Perpetual Preferred Equity (see below)
|
200,000 | 1.1 | % | |||||||||||||||||
|
|
||||||||||||||||||||
|
Total Equity
|
17,589,586 | 100.0 | % | 64.5 | % | |||||||||||||||
|
|
||||||||||||||||||||
|
Total Market Capitalization
|
$ | 27,266,098 | 100.0 | % | ||||||||||||||||
| Annual | Annual | Weighted | ||||||||||||||||||||||
| Redemption | Outstanding | Liquidation | Dividend | Dividend | Average | |||||||||||||||||||
| Series | Date | Shares | Value | Per Share | Amount | Rate | ||||||||||||||||||
|
Preferred Shares:
|
||||||||||||||||||||||||
|
8.29% Series K
|
12/10/26 | 1,000,000 | $ | 50,000 | $ | 4.145 | $ | 4,145 | ||||||||||||||||
|
6.48% Series N
|
6/19/08 | 600,000 | 150,000 | 16.20 | 9,720 | |||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total Perpetual Preferred Equity
|
1,600,000 | $ | 200,000 | $ | 13,865 | 6.93 | % | |||||||||||||||||
37
| § | Replacements (inside the apartment unit) . These include: |
| § | flooring such as carpets, hardwood, vinyl, linoleum or tile; | ||
| § | appliances; | ||
| § | mechanical equipment such as individual furnace/air units, hot water heaters, etc; | ||
| § | furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and | ||
| § | blinds/shades. |
| § | Building improvements ( outside the apartment unit ). These include: |
| § | roof replacement and major repairs; | ||
| § | paving or major resurfacing of parking lots, curbs and sidewalks; | ||
| § | amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems and offices; | ||
| § | major building mechanical equipment systems; | ||
| § | interior and exterior structural repair and exterior painting and siding; | ||
| § | major landscaping and grounds improvement; and | ||
| § | vehicles and office and maintenance equipment. |
38
| Total | Avg. Per | Avg. Per | Avg. Per | |||||||||||||||||||||||||
| Apartment | Apartment | Building | Apartment | Apartment | ||||||||||||||||||||||||
| Units (1) | Replacements (2) | Unit | Improvements | Unit | Total | Unit | ||||||||||||||||||||||
|
Same Store Properties (3)
|
112,363 | $ | 16,503 | $ | 147 | $ | 10,329 | $ | 92 | $ | 26,832 | $ | 239 | |||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Non-Same Store Properties (4)
|
10,543 | 1,054 | 104 | 1,743 | 172 | 2,797 | 276 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Other (5)
|
— | 211 | 51 | 262 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Total
|
122,906 | $ | 17,768 | $ | 12,123 | $ | 29,891 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| (1) | Total Apartment Units — Excludes 4,805 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) | 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 $8.9 million spent in Q1 2011 on apartment unit renovations/rehabs (primarily kitchens and baths) on 1,132 apartment units (equating to about $7,900 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. | |
| (3) | Same Store Properties — Primarily includes all properties acquired or completed and stabilized prior to January 1, 2010, less properties subsequently sold. | |
| (4) | Non-Same Store Properties — Primarily includes all properties acquired during 2010 and 2011, plus any properties in lease-up and not stabilized as of January 1, 2010. Per apartment unit amounts are based on a weighted average of 10,137 apartment units. | |
| (5) | Other — Primarily includes expenditures for properties sold during the period. |
39
40
41
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
|
Net income
|
$ | 133,066 | $ | 57,856 | ||||
|
Adjustments:
|
||||||||
|
Net (income) loss attributable to Noncontrolling Interests —
Partially Owned Properties
|
40 | 250 | ||||||
|
Depreciation
|
167,968 | 146,042 | ||||||
|
Depreciation — Non-real estate additions
|
(1,438 | ) | (1,693 | ) | ||||
|
Depreciation — Partially Owned and Unconsolidated Properties
|
(750 | ) | 11 | |||||
|
Net (gain) on sales of unconsolidated entities
|
— | (478 | ) | |||||
|
Discontinued operations:
|
||||||||
|
Depreciation
|
1,395 | 6,692 | ||||||
|
Net (gain) on sales of discontinued operations
|
(123,754 | ) | (60,036 | ) | ||||
|
Net incremental gain on sales of condominium units
|
395 | 388 | ||||||
|
|
||||||||
|
|
||||||||
|
FFO (1) (3)
|
176,922 | 149,032 | ||||||
|
|
||||||||
|
Adjustments:
|
||||||||
|
Asset impairment and valuation allowances
|
— | — | ||||||
|
Property acquisition costs and write-off of pursuit costs (other expenses)
|
2,164 | 4,383 | ||||||
|
Debt extinguishment (gains) losses, including prepayment penalties,
preferred share redemptions and non-cash convertible debt discounts
|
2,063 | 2,872 | ||||||
|
(Gains) losses on sales of non-operating assets, net of income and other
tax expense (benefit)
|
(376 | ) | (367 | ) | ||||
|
Other miscellaneous non-comparable items
|
(2,100 | ) | (2,000 | ) | ||||
|
|
||||||||
|
|
||||||||
|
Normalized FFO (2) (3)
|
$ | 178,673 | $ | 153,920 | ||||
|
|
||||||||
|
|
||||||||
|
FFO (1) (3)
|
$ | 176,922 | $ | 149,032 | ||||
|
Preferred distributions
|
(3,466 | ) | (3,620 | ) | ||||
|
|
||||||||
|
|
||||||||
|
FFO available to Common Shares and Units (1) (3) (4)
|
$ | 173,456 | $ | 145,412 | ||||
|
|
||||||||
|
|
||||||||
|
Normalized FFO (2) (3)
|
$ | 178,673 | $ | 153,920 | ||||
|
Preferred distributions
|
(3,466 | ) | (3,620 | ) | ||||
|
|
||||||||
|
|
||||||||
|
Normalized FFO available to Common Shares and Units (2) (3) (4)
|
$ | 175,207 | $ | 150,300 | ||||
|
|
||||||||
| (1) | The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property. | |
| (2) | Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes: |
| • | the impact of any expenses relating to asset impairment and valuation allowances; |
| • | property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs (other expenses); |
| • | gains and losses from early debt extinguishment, including prepayment penalties, preferred share redemptions and the cost related to the implied option value of non-cash convertible debt discounts; |
| • | gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and |
| • | other miscellaneous non-comparable items. |
| (3) | The Company believes that FFO and FFO available to Common Shares and Units 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 |
42
| 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 EQR Common Shares on a one-for-one basis. |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
| Item 4. | Controls and Procedures |
43
| Item 1. | Legal Proceedings |
| Item 1A. | Risk Factors |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
| Item 6. | Exhibits — See the Exhibit Index |
44
|
EQUITY RESIDENTIAL
|
||||
| Date: May 5, 2011 | By: | /s/ Mark J. Parrell | ||
| Mark J. Parrell | ||||
|
Executive Vice President and
Chief Financial Officer |
||||
| Date: May 5, 2011 | By: | /s/ Ian S. Kaufman | ||
| Ian S. Kaufman | ||||
|
Senior Vice President and
Chief Accounting Officer |
||||
45
| Exhibit | Description | Location | ||
|
31.1
|
Certification of David J. Neithercut, Chief Executive Officer. | Attached herein. | ||
|
|
||||
|
31.2
|
Certification of Mark J. Parrell, Chief Financial Officer. | Attached herein. | ||
|
|
||||
|
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of the Company. | Attached herein. | ||
|
|
||||
|
32.2
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of the Company. | Attached herein. | ||
|
|
||||
|
101
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XBRL (Extensible Business Reporting Language). The following materials from Equity Residential’s Quarterly Report on Form 10-Q for the period ended March 31, 2011, formatted in XBRL: (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of cash flows, (iv) consolidated statement of changes in equity and (v) notes to consolidated financial statements. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purpose of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. | Attached herein. |
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* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
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| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
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Yield
| Owner | Position | Direct Shares | Indirect Shares |
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