Equity residential reports second quarter 2015
results
Chicago--(business wire)--equity residential (nyse: eqr) today reported results for the quarter and six months ended june 30, 2015. all per share results are reported as available to common shares on a diluted basis. “fundamental apartment demand in the coastal, high density urban markets targeted by equity residential continues to benefit significantly from extremely favorable demographics, steady improvement in employment and changing lifestyles,” said david j. neithercut, equity residential’s president and ceo. “these powerful trends combined with our exceptional portfolio of assets and best-in-class operating platform and local management teams will deliver another very strong year of operating results and value creation in 2015 and for many years to come.” second quarter 2015 ffo (funds from operations), as defined by the national association of real estate investment trusts (nareit), for the second quarter of 2015 was $0.90 per share compared to $0.77 per share in the second quarter of 2014. the difference is due primarily to the various non-comparable items listed on page 24 of this release and the items described below. for the second quarter of 2015, the company reported normalized ffo of $0.85 per share compared to $0.78 per share in the same period of 2014. the following items impacted normalized ffo per share in the quarter: a positive impact of approximately $0.06 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 the impact of higher capitalized interest in the second quarter of 2015 and other items; and a negative impact of approximately $0.02 per share from the timing of the company’s 2014 and 2015 transaction activity. 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 6 and 26 of this release and the company has included guidance for normalized ffo on page 25 and ffo on page 26 of this release. for the second quarter of 2015, the company reported earnings of $0.78 per share compared to $0.31 per share in the second quarter of 2014. the difference is due primarily to higher gains on property sales in the second quarter of 2015 and the items described above. six months ended june 30, 2015 ffo for the six months ended june 30, 2015 was $1.68 per share compared to $1.48 per share in the same period of 2014. for the six months ended june 30, 2015, the company reported normalized ffo of $1.64 per share compared to $1.49 per share for the same period of 2014. for the six months ended june 30, 2015, the company reported earnings of $1.27 per share compared to $0.52 per share for the same period of 2014. the difference is due primarily to higher gains on property sales and improved operations during the six months ended june 30, 2015. same store results on a same store second quarter to second quarter comparison, which includes 97,580 apartment units, revenues increased 4.9%, expenses increased 3.7% and noi increased 5.5%. on a same store six-month to six-month comparison, which includes 96,761 apartment units, revenues increased 5.0%, expenses increased 2.6% and noi increased 6.2%. capital markets activity on may 14, 2015, the company closed two unsecured note offerings totaling $750 million. the company closed a $450 million unsecured note offering maturing june 1, 2025 with a coupon of 3.375% and an all in effective rate of approximately 3.81% including the effect of underwriters’ fees and the termination of certain interest rate hedges. in addition, the company closed a $300 million unsecured note offering maturing june 1, 2045 with a coupon of 4.5% and an all in effective rate of approximately 4.55% including the effect of underwriters’ fees. proceeds from these issuances were used to repay outstanding balances on the company’s revolving line of credit and commercial paper program. investment activity during the second quarter of 2015, the company acquired a 202-unit apartment property located in boston for a total purchase price of approximately $130.3 million at a capitalization (cap) rate of 4.2%. during the second quarter of 2015, the company sold three consolidated apartment properties, consisting of 827 apartment units, for an aggregate sale price of approximately $118.0 million at a weighted average cap rate of 6.0%. the company also sold a 193,230 square foot medical office building located adjacent to its longfellow place property in boston for approximately $123.3 million at a cap rate of 4.5%. these combined sales generated an unlevered internal rate of return (irr), inclusive of indirect management costs, of 13.4%. during the first six months of 2015, the company acquired the one asset listed above. during the same period, the company sold six consolidated apartment properties, consisting of 1,377 apartment units, for an aggregate sale price of approximately $263.4 million at a weighted average cap rate of 5.6%. the company also sold the medical office building described above. these combined sales generated an unlevered irr, inclusive of indirect management costs, of 12.8%. third quarter 2015 guidance the company has established a normalized ffo guidance range of $0.85 to $0.89 per share for the third quarter of 2015. the difference between the company’s second quarter 2015 normalized ffo of $0.85 per share and the midpoint of the third quarter 2015 guidance range of $0.87 per share is due primarily to: a positive impact of approximately $0.01 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 *the company’s consolidated rental disposition guidance includes the sale of the medical office building in boston described above. third quarter 2015 earnings and conference call equity residential expects to announce third quarter 2015 results on tuesday, october 27, 2015 and host a conference call to discuss those results at 10:00 a.m. ct on wednesday, october 28, 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 388 properties consisting of 108,430 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, july 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. units military housing units (sale) price units (sale) price average rental rate (2) average rental rate (2) average rental rate (2) apartment units q2 2015 % of actual noi q2 2015 average rental rate (1) q2 2015 weighted average occupancy % average rental rate (1) apartment units q2 2015 % of actual noi q2 2015 average rental rate (1) q2 2015 weighted average occupancy % average rental rate (1) june ytd 15 june ytd 15 june ytd 15 % of average weighted actual rental average noi rate (1) occupancy % actual q2 2015 actual q2 2014 $change % change % of actual q2 2015 operating expenses actual ytd 2015 actual ytd 2014 $change % change % of actual ytd 2015 operating expenses weighted average rates (1) weighted average maturities (years) fixed rate (1) floating rate (1) weighted average rates on fixed rate debt (1) weighted average rates on total debt (1) coupon rate due date face amount unamortized premium/ (discount) net balance june 30, 2015 march 31, 2015 june 30, 2015 march 31, 2015 redemption date outstanding shares liquidation value annual dividend per share annual dividend amount held for and/or under development (4) operating apartment units capital cost (1) book value to date value not placed in service debt completed leased occupied completion date stabilization date total capital cost (1) q2 2015 noi apartment units (1) apartment unit apartment unit apartment unit (4) apartment unit improvements (5) apartment unit apartment unit total apartment unit balance sheet items: 2015 normalized ffo guidance (per share diluted) q3 2015 2015 2015 same store assumptions 2015 transaction assumptions 2015 debt assumptions 2015 other guidance assumptions expected expected q3 2015 2015 per share per share )
