Equity residential reports first quarter 2014
results
Chicago--(business wire)--equity residential (nyse: eqr) today reported results for the quarter ended march 31, 2014. all per share results are reported as available to common shares on a diluted basis. “as expected, fundamentals across our core markets, with the exception of washington dc, remain favorable with continued strong demand and manageable new supply,” said david j. neithercut, equity residential’s president and ceo. “as we approach our primary leasing season with occupancy of 95.9% and renewal rates achieved to date of 5.3%, we are well positioned for yet another year of strong revenue growth.” first quarter 2014 ffo (funds from operations), as defined by the national association of real estate investment trusts (nareit), for the first quarter of 2014 was $0.71 per share compared to $0.22 per share in the first quarter of 2013. the difference is due primarily to the expenses and prepayment penalties the company incurred in the first quarter of 2013 in connection with the archstone acquisition, along with the items described below. for the first quarter of 2014, the company reported normalized ffo of $0.71 per share compared to $0.64 per share in the same period of 2013. the following items impacted normalized ffo per share in the quarter: the positive impact of approximately $0.04 per share from higher same store net operating income (noi) and approximately $0.01 per share from noi from non-same store properties currently in lease up; and the positive impact of approximately $0.02 per share from lower total interest expense. 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. a reconciliation and definition of normalized ffo are provided on pages 23 and 25 of this release and the company has included guidance for normalized ffo on page 24 of this release. for the first quarter of 2014, the company reported earnings of $0.22 per share compared to $3.01 per share in the first quarter of 2013. the difference is due primarily to approximately $1.2 billion in higher gains on property sales in the first quarter of 2013, partially offset by higher depreciation expense in the first quarter of 2013 as a result of the archstone acquisition as well as the expenses and prepayment penalties incurred in connection with the archstone acquisition. same store results the company’s same store results include 18,465 stabilized apartment units acquired in the archstone acquisition that are owned and managed by the company. on a same store first quarter to first quarter comparison, which includes 100,984 apartment units, revenues increased 4.0%, expenses increased 3.2% and noi increased 4.4%. investment activity during the first quarter of 2014, the company acquired a 430-unit apartment property in los angeles for a purchase price of approximately $143.0 million and a capitalization (cap) rate of 4.9%. also during the quarter, the company acquired additional development rights at one of its existing land sites in manhattan for approximately $5.5 million. the company sold no properties or land parcels during the first quarter of 2014. during the first quarter of 2014, the company completed construction on five development projects, consisting of 1,290 apartment units, at a total development cost of approximately $368.3 million. two of these properties are located in seattle and one each in southern california, south florida and washington, dc. also during the quarter, the company started construction on three development projects, which will consist of a total of 1,145 apartment units, at a total development cost of approximately $614.3 million. two of these properties are located in san francisco and one in southern california. second quarter 2014 guidance the company has established a normalized ffo guidance range of $0.74 to $0.78 per share for the second quarter of 2014. the difference between the company’s first quarter normalized ffo of $0.71 per share and the midpoint of the second quarter guidance range of $0.76 per share is due primarily to: the positive impact of approximately $0.05 per share from higher noi from same store properties and properties in lease up; the positive impact of approximately $0.01 per share from other items including lower general and administrative expenses; and the negative impact of approximately $0.01 per share from higher total interest expense. second quarter 2014 earnings and conference call equity residential expects to announce second quarter 2014 results on tuesday, july 29, 2014 and host a conference call to discuss those results at 10:00 a.m. ct on wednesday, july 30, 2014. 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 396 properties consisting of 111,537 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, thursday, may 1, 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. average rental rate (2) average q1 2014 q1 2014 q1 2014 % of average weighted average apartment actual rental average rental units noi rate (1) occupancy % rate (1) weighted weighted average average maturities rates (1) (years) secured – conventional weighted weighted average rates average fixed floating on fixed rates on rate (1) rate (1) rate debt (1) total debt (1) march 31, december 31, 2014 2013 annual annual redemption outstanding liquidation dividend dividend date shares value per share amount ffo purposes: held for held for and/or under completed, not and/or under completed, not development (4) stabilized (5) operating total development (4) stabilized (5) operating total projects under development - wholly owned: projects under development - partially owned: completed not stabilized - wholly owned (4): completed not stabilized - partially owned (4): total capital cost (1) noi 2,476,609 2,049 projects under development - unconsolidated: completed not stabilized - unconsolidated (3): 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 $7.9 million spent in q1 2014 on apartment unit renovations/rehabs (primarily kitchens and baths) on 980 same store apartment units (equating to about $8,100 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. in 2014, the company expects to spend approximately $45.0 million for all unit renovation/rehab costs (primarily on same store properties) at a weighted average cost of $8,500 per apartment unit rehabbed. 2014 normalized ffo guidance (per share diluted) q2 2014 2014 2014 same store assumptions 2014 transaction assumptions 2014 debt assumptions 2014 other guidance assumptions expected expected q2 2014 2014 per share per share preferred share redemptions and non-cash convertible debt discounts expense (benefit)
