10-QPeriod: Q3 FY2011

EQUITY RESIDENTIAL Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 4, 2011For Securities:EQR

Summary

Equity Residential (EQR) reported its third-quarter 2011 results, showcasing a significant increase in net income attributable to common shareholders, primarily driven by substantial gains from property dispositions and improved same-store net operating income (NOI). The company demonstrated strong operational performance with high occupancy rates and revenue growth from rental income, coupled with effective cost management. EQR continues its strategic focus on acquiring and developing high-quality apartment properties in targeted growth markets while divesting non-core assets. The company has strengthened its balance sheet and liquidity position through a new revolving credit facility and significant proceeds from property sales. Looking ahead, EQR anticipates sustained growth in revenue and NOI, supported by positive market fundamentals and a well-diversified portfolio.

Financial Statements
Beta
Revenue$493.87M
Operating Expenses$349.06M
Operating Income$142.78M
Interest Expense$112.45M
Net Income$107.85M
EPS (Basic)$0.35
EPS (Diluted)$0.35
Shares Outstanding (Basic)295.83M
Shares Outstanding (Diluted)312.84M

Key Highlights

  • 1Net income attributable to common shareholders surged to $791.1 million for the nine months ended September 30, 2011, up from $94.2 million in the prior year period, largely due to substantial gains from property dispositions.
  • 2Total revenues for the nine months ended September 30, 2011, increased to $1.47 billion from $1.32 billion in the prior year period, driven by higher rental income.
  • 3Same-store Net Operating Income (NOI) for the nine months ended September 30, 2011, increased by 7.9% to $816.3 million, reflecting strong rental rate growth and high occupancy levels.
  • 4The company successfully managed operating expenses, with same-store operating expenses decreasing by 0.3% for the nine months ended September 30, 2011, compared to the prior year period.
  • 5Equity Residential acquired $731.9 million in new properties and disposed of $1.4 billion in assets during the first nine months of 2011, demonstrating active portfolio management.
  • 6The company replaced its existing revolving credit facility with a new $1.25 billion facility maturing in July 2014, enhancing its financial flexibility.
  • 7Diluted Earnings Per Share (EPS) for the nine months ended September 30, 2011, rose to $2.62 from $0.30 in the prior year period, reflecting the strong financial performance.

Frequently Asked Questions

The primary driver for the substantial increase in net income for the nine months ended September 30, 2011, was the significant gains realized from property dispositions. The company strategically sold assets, generating substantial capital gains that boosted the bottom line.

Equity Residential demonstrated effective cost control. For its same-store properties, operating expenses decreased by 0.3% for the nine months ended September 30, 2011, compared to the prior year. This was achieved through a combination of decreases in costs like on-site payroll, leasing and advertising, and repairs and maintenance, though partially offset by increases in property management costs.

Equity Residential is actively managing its portfolio by acquiring and developing high-quality apartment properties in strategically targeted growth markets while simultaneously divesting non-core assets. This strategy aims to optimize returns and align the portfolio with long-term growth objectives.

The company has a diversified capital structure. It generates cash flow from operations, has access to a new $1.25 billion revolving credit facility, and has received significant proceeds from property sales. It also issues equity through its At-The-Market (ATM) program. These sources collectively provide liquidity for acquisitions, development, and debt maturities.