10-KPeriod: FY2007

EQUITY RESIDENTIAL Annual Report, Year Ended Dec 31, 2007

Filed February 27, 2008For Securities:EQR

Summary

Equity Residential (EQR) reported its full fiscal year 2007 results, highlighting a period of strategic portfolio management. The company acquired approximately $1.7 billion in apartment properties and sold $1.9 billion of assets, indicating active capital recycling. Despite a challenging market environment, EQR demonstrated resilience, with its same-store net operating income (NOI) increasing by 5.6% year-over-year, driven by higher rental rates. The company also made significant progress in its capital structure, issuing new debt and repurchasing a substantial amount of its own shares, reducing its outstanding common stock by over 27 million shares. Financially, EQR's income from continuing operations saw a notable increase, and the company maintained a solid debt-to-total market capitalization ratio of 47.0% as of year-end 2007. The report also detailed the company's extensive property portfolio, comprising 152,821 units across 579 properties in 24 states and the District of Columbia. While facing inherent risks in the real estate sector, including market fluctuations and potential regulatory changes, EQR's focus on targeted growth markets and operational efficiency positions it to navigate the economic landscape.

Financial Highlights

27 data points
Beta

Revenue

$1.82B

Net Income

$980.19M

53.7% Net Margin

EPS (Diluted)

$3.40

Cash & Equivalents

$50.83M

Free Cash Flow

$793.23M

Financial Statements
Beta
Revenue$1.82B
Operating Expenses$1.33B
Operating Income$495.43M
Interest Expense$489.31M
Net Income$980.19M
EPS (Basic)$3.40
EPS (Diluted)$3.40
Shares Outstanding (Basic)279.41M
Shares Outstanding (Diluted)279.41M

Key Highlights

  • 1Acquired $1.7 billion of apartment properties and sold $1.9 billion of properties in 2007, demonstrating active portfolio management.
  • 2Same-store net operating income (NOI) increased by 5.6% year-over-year, driven by higher rental rates.
  • 3Repurchased 27.5 million common shares for $1.2 billion, reducing outstanding shares and returning capital to shareholders.
  • 4Maintained a Consolidated Debt-to-Total Market Capitalization Ratio of 47.0% as of December 31, 2007.
  • 5Owned a diversified portfolio of 152,821 units across 579 properties in 24 states and the District of Columbia.
  • 6Reported income from continuing operations of $93.0 million, a significant increase from $51.9 million in 2006.
  • 7Ended the year with $50.8 million in cash and cash equivalents and $1.3 billion available on revolving credit facilities.

Frequently Asked Questions

In 2007, Equity Residential actively managed its portfolio by acquiring approximately $1.7 billion of apartment properties and selling $1.9 billion of assets. This strategy aimed to recycle capital and invest in strategically targeted markets, aligning with the company's objective to maximize total return for shareholders.

Equity Residential reported income from continuing operations of $93.0 million, a significant increase compared to $51.9 million in 2006. The company's same-store net operating income (NOI) grew by 5.6%, reflecting strong rental rate increases. The company also executed a substantial share repurchase program, buying back 27.5 million shares for $1.2 billion.

The company identified several risks, including the illiquidity of real estate investments, the inability to renew leases or relet units, competition for acquisitions leading to increased prices, potential adverse effects of changes in laws and litigation, environmental liabilities, and risks associated with debt financing and leverage. Disruptions in financial markets were also noted as a significant concern.

Equity Residential actively managed its capital structure by issuing $350 million of 5.50% notes and $650 million of 5.75% notes in 2007. The company also secured a $500 million senior unsecured credit facility. These actions, along with the significant share repurchases, contributed to maintaining a debt-to-total market capitalization ratio of 47.0% at year-end 2007.