10-QPeriod: Q1 FY2002

EQUITY RESIDENTIAL Quarterly Report for Q1 Ended Mar 31, 2002

Filed May 13, 2002For Securities:EQR

Summary

Equity Residential Properties Trust (EQR) reported its first quarter 2002 results, showing a decline in net income available to common shareholders to $76.4 million from $106.8 million in the prior year period. This decrease was primarily driven by lower rental income from same-store properties, which experienced a slight decrease in rental rates, increased concessions, and lower occupancy. While overall revenues saw a marginal decrease, the company managed to keep property operating expenses relatively stable. Despite the dip in net income, EQR demonstrated robust liquidity, with cash and cash equivalents increasing significantly to $249.8 million from $51.6 million at the start of the year, supplemented by a strong available credit facility. The company also actively managed its debt portfolio, issuing new notes while repaying others. EQR continues to strategically acquire and dispose of properties, with several transactions pending, indicating a proactive approach to portfolio management. The company maintained its debt-to-total market capitalization ratio below its policy limit of 50%, suggesting a sound financial structure.

Key Highlights

  • 1Net income available to common shareholders decreased by approximately 28.5% to $76.4 million for the quarter ended March 31, 2002, compared to $106.8 million in the prior year period.
  • 2Total revenues for the quarter decreased slightly to $516.2 million from $521.9 million in the comparable period.
  • 3Same-store net operating income (NOI) saw a marginal decrease of 0.5% to $297.3 million, reflecting challenges in rental rates and occupancy.
  • 4Cash and cash equivalents significantly increased to $249.8 million as of March 31, 2002, compared to $51.6 million as of December 31, 2001.
  • 5The company issued $400 million of ten-year notes and repaid $100 million of existing notes during the quarter.
  • 6EQR completed the disposition of its furniture rental business on January 11, 2002.
  • 7The debt-to-total market capitalization ratio stood at 37.43% as of March 31, 2002, well within the company's policy of maintaining it below 50%.

Frequently Asked Questions

The primary driver for the decrease in net income available to common shareholders was a decline in rental income from same-store properties. This was attributed to lower rental rates charged to new residents, increased concessions, and a slight decrease in occupancy at certain properties.

The company's liquidity position has significantly improved. Cash and cash equivalents increased substantially from $51.6 million at the end of 2001 to $249.8 million at the end of the first quarter of 2002. Additionally, the available amount on the company's revolving credit facility increased, providing further financial flexibility.

During the quarter, EQR acquired one property in Sunrise, Florida, for approximately $26.0 million. They also disposed of four properties totaling 444 units for approximately $30.7 million, recognizing a net gain of $2.8 million on these sales. Furthermore, they sold their entire interest in one unconsolidated property for approximately $11.3 million, realizing a gain of $5.7 million. The company also entered into agreements to acquire two more properties and dispose of twenty-four properties.

EQR actively manages its debt. During the quarter, they issued $400 million of ten-year 6.625% fixed-rate notes, receiving net proceeds of $394.5 million. They also repaid $100 million of 9.375% fixed-rate notes at maturity. The total debt as of March 31, 2002, was approximately $5.8 billion, with a weighted average interest rate of 6.44%. The company's debt-to-total market capitalization ratio remained healthy at 37.43%.