10-QPeriod: Q3 FY2000

EQUITY RESIDENTIAL Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 13, 2000For Securities:EQR

Summary

Equity Residential Properties Trust (EQR) reported strong growth in its third-quarter and year-to-date results for 2000, primarily driven by significant acquisition and disposition activity, including the Globe Merger. The company experienced an increase in income before extraordinary items, driven by higher rental revenues from improved rental rates and ancillary services, alongside strategic property acquisitions. Despite an increase in interest expense due to higher average indebtedness, the company's "same store" properties demonstrated robust revenue growth of 4.34% year-to-date and 5.12% for the quarter. Equity Residential also highlighted its active capital management, utilizing lines of credit and property dispositions to fund acquisitions and development. The company's liquidity position appears stable, with substantial availability on its lines of credit and a clear strategy for meeting both short-term and long-term financial obligations through operating cash flow, property disposals, and capital market issuances. The growth in Funds From Operations (FFO) by 18.8% year-to-date and 19.9% for the quarter underscores the company's expanding operational scale and profitability.

Key Highlights

  • 1Significant increase in income before extraordinary items for both the nine months ended September 30, 2000 ($47.1 million) and the quarter ended September 30, 2000 ($21.3 million), largely attributable to acquisitions and mergers.
  • 2"Same Store" properties showed healthy revenue growth: 4.34% year-to-date and 5.12% for the third quarter, driven by higher rental rates and ancillary income.
  • 3Robust growth in Funds From Operations (FFO) available to Common Shares and OP Units: 18.8% year-to-date and 19.9% for the third quarter.
  • 4Active property portfolio management with 18 properties and 2,738 units acquired year-to-date through September 30, 2000, alongside 27 property dispositions totaling 6,977 units.
  • 5Increased total indebtedness to approximately $5.2 billion as of September 30, 2000, with interest expense rising due to a $661.7 million increase in average debt.
  • 6Strengthened liquidity position with cash and cash equivalents increasing to $56.2 million and available credit lines growing to $721.4 million as of September 30, 2000.

Frequently Asked Questions

The primary drivers of the increased income were the acquisition of new properties in 1999 and 2000, the significant Globe Merger, and an overall increase in rental revenues. These were partially offset by increases in property operating expenses, property management, depreciation, and interest expenses.

Total indebtedness increased significantly to approximately $5.2 billion as of September 30, 2000. Consequently, interest expense rose by approximately $45.1 million for the nine-month period and $12.3 million for the third quarter due to a substantial increase in average indebtedness outstanding. The effective interest cost also saw a slight increase.

Equity Residential plans to meet short-term liquidity needs through working capital, operating cash flow, and credit lines. Long-term needs, including debt maturities, acquisitions, and capital improvements, are expected to be funded by undistributed FFO, property dispositions, and the issuance of debt or equity securities. The company also has unencumbered properties available for additional mortgage borrowings if needed.

Year-to-date through September 30, 2000, Equity Residential acquired 18 properties with 2,738 units and disposed of 27 properties with 6,977 units. The company also engaged in strategic dispositions and contributions to joint ventures, receiving significant proceeds to fund its activities.