10-KPeriod: FY2013

EQUITY RESIDENTIAL Annual Report, Year Ended Dec 31, 2013

Filed February 27, 2014For Securities:EQR

Summary

Equity Residential (EQR) presents its 2013 annual report, highlighting a transformative year driven by the significant acquisition of the Archstone Portfolio. This strategic move has reshaped the company's geographic focus, concentrating its portfolio on six core coastal, high-barrier-to-entry markets known for favorable rental growth conditions. Despite the integration of Archstone and associated transaction costs, EQR maintained solid operational performance, with its same-store properties showing increased revenues and stabilized net operating income. The company's financial strategy in 2013 involved substantial debt and equity activities, including new debt issuances and share offerings, primarily to fund the Archstone acquisition and manage its capital structure. EQR also continued its portfolio repositioning through strategic dispositions of non-core assets. Looking ahead, EQR anticipates continued revenue and NOI growth in 2014, supported by positive demographic trends and a focus on operational efficiency, even while navigating potential market challenges like increased supply in certain core markets.

Financial Highlights

37 data points
Beta

Revenue

$2.39B

Net Income

$1.83B

76.5% Net Margin

EPS (Diluted)

$5.16

Total Assets

$22.83B

Cash & Equivalents

$53.53M

Free Cash Flow

$868.92M

Financial Statements
Beta
Revenue$2.39B
Operating Expenses$1.88B
Operating Income$512.32M
Interest Expense$586.85M
Net Income$1.83B
EPS (Basic)$5.16
EPS (Diluted)$5.16
Shares Outstanding (Basic)354.31M
Shares Outstanding (Diluted)354.31M

Key Highlights

  • 1Acquisition of the Archstone Portfolio, significantly expanding EQR's property base and focusing it on core coastal markets.
  • 2Strategic dispositions of non-core assets to fund acquisitions and reposition the portfolio.
  • 3Increased property portfolio to 390 properties with 109,855 apartment units as of December 31, 2013.
  • 4Completion of a $2.5 billion unsecured revolving credit facility and a $750 million delayed draw term loan facility.
  • 5Issuance of $500 million in public notes and $1.9 billion in common shares as part of the Archstone Transaction financing.
  • 6Anticipated same-store revenue growth of 3.0%-4.0% and NOI growth of 3.50%-4.75% for 2014.
  • 7Continued focus on high-quality, well-located assets in strategically targeted markets with high barriers to entry.

Frequently Asked Questions

The primary driver of change was the significant acquisition of the Archstone Portfolio in February 2013, which expanded EQR's property count and further concentrated its holdings in core coastal markets.

The acquisition was financed through a combination of cash (approximately $4.0 billion), the issuance of 34,468,085 EQR common shares (valued at $1.9 billion), and the assumption of $3.1 billion in mortgage debt.

EQR's strategy is to focus on six core coastal, high-barrier-to-entry markets (Boston, New York, Washington D.C., Southern California, San Francisco, and Seattle) due to their favorable conditions for rental growth, including high barriers to entry, high home ownership costs, and strong economic growth leading to job growth and household formation.

Equity Residential anticipates a same-store revenue increase of 3.0% to 4.0% and a same-store Net Operating Income (NOI) increase of 3.50% to 4.75% for the full year 2014.