UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-K

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended DECEMBER 31, 2007

 

OR

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 1-12252

 

EQUITY RESIDENTIAL

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

 

13-3675988

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

Two North Riverside Plaza, Chicago, Illinois

 

60606

(Address of Principal Executive Offices)

 

(Zip Code)

 

(312) 474-1300

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Common Shares of Beneficial Interest, $0.01 Par Value

 

New York Stock Exchange

(Title of Each Class)

 

(Name of Each Exchange on Which Registered)

 

 

 

Preferred Shares of Beneficial Interest, $0.01 Par Value

 

New York Stock Exchange

(Title of Each Class)

 

(Name of Each Exchange on Which Registered)

 

Securities registered pursuant to Section 12(g) of the Act:  None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes x   No o

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer x

 

Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)

 

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o  No x

 

The aggregate market value of Common Shares held by non-affiliates of the Registrant was approximately $12.2 billion based upon the closing price on June 29, 2007 of $45.63 using beneficial ownership of shares rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to exclude voting shares owned by Trustees and Executive Officers, some of who may not be held to be affiliates upon judicial determination.

 

The number of Common Shares of Beneficial Interest, $0.01 par value, outstanding on January 31, 2008 was 269,644,705.

 

 

 



 

DOCUMENTS INCORPORATED BY REFERENCE

 

Part III incorporates by reference certain information to be contained in the Company’s definitive proxy statement, which the Company anticipates will be filed no later than April 17, 2008, and thus these items have been omitted in accordance with General Instruction G (3) to Form 10-K.

 

 

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EQUITY RESIDENTIAL

 

TABLE OF CONTENTS

 

 

 

 

PAGE

PART I.

 

 

 

 

 

 

 

 

Item 1.

Business

4

 

Item 1A.

Risk Factors

8

 

Item 1B.

Unresolved Staff Comments

24

 

Item 2.

Properties

24

 

Item 3.

Legal Proceedings

28

 

Item 4.

Submission of Matters to a Vote of Security Holders

28

 

 

 

 

PART II.

 

 

 

 

 

 

 

 

Item 5.

Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities

29

 

Item 6.

Selected Financial Data

30

 

Item 7.

Management’s Discussion and Analysis of Financial Condition
and Results of Operations

32

 

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

49

 

Item 8.

Financial Statements and Supplementary Data

50

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

51

 

Item 9A.

Controls and Procedures

51

 

Item 9B.

Other Information

51

 

 

 

 

PART III.

 

 

 

 

 

 

 

 

Item 10.

Trustees, Executive Officers and Corporate Governance

52

 

Item 11.

Executive Compensation

52

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters

52

 

Item 13.

Certain Relationships and Related Transactions, and Trustee Independence

52

 

Item 14.

Principal Accounting Fees and Services

52

 

 

 

 

PART IV.

 

 

 

 

 

 

 

 

Item 15.

Exhibits and Financial Statement Schedules

53

 

 

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Item 1.  Business

 

General

 

Equity Residential (“EQR”), a Maryland real estate investment trust (“REIT”) formed in March 1993, is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top United States growth markets.  EQR has elected to be taxed as a REIT.

 

The Company is one of the largest publicly traded real estate companies and is the largest publicly traded owner of multifamily properties (based on the aggregate market value of its outstanding Common Shares, the number of apartment units wholly owned and total revenues earned).  The Company’s corporate headquarters are located in Chicago, Illinois and the Company also operates approximately thirty-five property management offices throughout the United States.

 

EQR is the general partner of, and as of December 31, 2007 owned an approximate 93.6% ownership interest in, ERP Operating Limited Partnership, an Illinois limited partnership (the “Operating Partnership”).  The Company is structured as an umbrella partnership REIT (“UPREIT”), under which all property ownership and business operations are conducted through the Operating Partnership and its subsidiaries.  References to the “Company” include EQR, the Operating Partnership and those entities owned or controlled by the Operating Partnership and/or EQR.

 

As of December 31, 2007, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 579 properties in 24 states and the District of Columbia consisting of 152,821 units.  The ownership breakdown includes (table does not include various uncompleted development properties):

 

 

 

Properties

 

Units

 

Wholly Owned Properties

 

507

 

133,189

 

Partially Owned Properties:

 

 

 

 

 

Consolidated

 

27

 

5,455

 

Unconsolidated

 

44

 

10,446

 

Military Housing (Fee Managed)

 

1

 

3,731

 

 

 

579

 

152,821

 

 

As of February 6, 2008, the Company has approximately 4,800 employees who provide real estate operations, leasing, legal, financial, accounting, acquisition, disposition, development and other support functions.

 

Certain capitalized terms used herein are defined in the Notes to Consolidated Financial Statements.

 

Available Information

 

You may access our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to any of those reports we file with the SEC free of charge at our website, www.equityresidential.com.  These reports are made available at our website as soon as reasonably practicable after we file them with the SEC.

 

Business Objectives and Operating Strategies

 

                The Company seeks to maximize current income, capital appreciation of each property and the total return for its shareholders.  The Company’s strategy for accomplishing these objectives includes:

 

·                  Leveraging our size and scale in four critical ways:

 

 

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·                  Investing in apartment communities located in strategically targeted markets, to maximize our total return on an enterprise level;

·      Meeting the needs of our residents by offering a wide array of product choices and a commitment to service;

·                  Engaging, retaining, and attracting the best employees by providing them with the education, resources and opportunities to succeed; and

·                  Sharing resources, customers and best practices in property management and across the enterprise.

 

·                  Owning a highly diversified portfolio by investing in target markets defined by a combination of the following criteria:

 

·                  High barrier-to-entry (low supply);

·      Strong economic predictors (high demand); and

·      Attractive quality of life (high demand and retention).

 

·                  Giving residents reasons to stay with the Company by providing a range of product options available in our diversified portfolio and by enhancing their experience through our employees and our services.

 

·                  Being open and responsive to market realities to take advantage of investment opportunities that align with our long-term vision.

 

Acquisition, Development and Disposition Strategies

 

The Company anticipates that future property acquisitions, developments and dispositions will occur within the United States.  Acquisitions and developments may be financed from various sources of capital, which may include retained cash flow, issuance of additional equity and debt securities, sales of properties, joint venture agreements and collateralized and uncollateralized borrowings.  In addition, the Company may acquire properties in transactions that include the issuance of limited partnership interests in the Operating Partnership (“OP Units”) as consideration for the acquired properties.  Such transactions may, in certain circumstances, enable the sellers to defer, in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales.  In addition, EQR may acquire or develop multifamily properties specifically to convert directly into condominiums as well as upgrade and sell existing properties as individual condominiums.  EQR may also acquire land parcels to hold and/or sell based on market opportunities.

 

When evaluating potential acquisitions, developments and dispositions, the Company generally considers the following factors:

 

·                  strategically targeted markets;

·                  income levels and employment growth trends in the relevant market;

·                  employment and household growth and net migration of the relevant markets population;

·                  barriers to entry that would limit competition (zoning laws, building permit availability, supply of undeveloped or developable real estate, local building costs and construction costs, among other factors);

·                  the location, construction quality, condition and design of the property;

·                  the current and projected cash flow of the property and the ability to increase cash flow;

·                  the potential for capital appreciation of the property;

·                  the terms of resident leases, including the potential for rent increases;

·                  the potential for economic growth and the tax and regulatory environment of the community in which the property is located;

·                  the occupancy and demand by residents for properties of a similar type in the vicinity (the overall market and submarket);

 

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·                  the prospects for liquidity through sale, financing or refinancing of the property;

·                  the benefits of integration into existing operations;

·                  purchase prices and yields of available existing stabilized properties, if any;

·                  competition from existing multifamily properties, residential properties under development and the potential for the construction of new multifamily properties in the area; and

·                  opportunistic selling based on demand and price of high quality assets, including condominium conversions.

 

The Company generally reinvests the proceeds received from property dispositions primarily to achieve its acquisition and development strategies and at times to fund its share repurchase activities.  In addition, when feasible, the Company may structure these transactions as tax-deferred exchanges.

 

Debt and Equity Activity

 

Please refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the Company’s Capital Structure chart as of December 31, 2007.

 

Debt and Equity Offerings for the Years Ended December 31, 2007, 2006 and 2005

 

During 2007:

 

·                  The Operating Partnership issued $350.0 million of five-year 5.50% fixed rate notes (the “October 2012 Notes”) in a public debt offering in May/June 2007.  The October 2012 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis.  The October 2012 Notes are due October 1, 2012 with interest payable semiannually in arrears on January 15 and July 15, commencing January 15, 2008.  The Operating Partnership received net proceeds of approximately $346.1 million in connection with this issuance.

·                  The Operating Partnership issued $650.0 million of ten-year 5.75% fixed rate notes (the “June 2017 Notes”) in a public debt offering in May/June 2007.  The June 2017 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis.  The June 2017 Notes are due June 15, 2017 with interest payable semiannually in arrears on January 15 and July 15, commencing January 15, 2008.  The Operating Partnership received net proceeds of approximately $640.6 million in connection with this issuance.

·                  The Operating Partnership obtained a three-year (subject to two one-year extension options) $500.0 million senior unsecured credit facility (term loan) which generally pays a variable interest rate of LIBOR plus a spread dependent upon the current credit rating on the Operating Partnership’s long-term unsecured debt.  The Operating Partnership paid $1.1 million in upfront costs, which will be deferred and amortized over the three-year term.  EQR has guaranteed the Operating Partnership’s term loan facility up to the maximum amount and for the full term of the facility.

·                  The Company issued 1,040,765 Common Shares pursuant to its Share Incentive Plans and received net proceeds of approximately $28.8 million.

·                  The Company issued 189,071 Common Shares pursuant to its Employee Share Purchase Plan and received net proceeds of approximately $7.2 million.

·                  The Company repurchased and retired 27,484,346 of its Common Shares at an average price of $44.62 per share for total consideration of $1.2 billion.  See Note 3 in the Notes to Consolidated Financial Statements for further discussion.

 

During 2006:

 

·                  The Operating Partnership issued $400.0 million of ten and one-half year 5.375% unsecured fixed rate notes (the “August 2016 Notes”) in a public debt offering in January 2006.  The August 2016 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis.  The August 2016 Notes are due August 1, 2016 with interest payable semiannually in arrears on February 1 and August 1, commencing August 1, 2006.  The Operating Partnership received net

 

6



 

proceeds of approximately $395.5 million in connection with this issuance.

·                  The Operating Partnership issued $650.0 million of twenty-year 3.85% exchangeable senior notes (the “August 2026 Notes”) in a public debt offering in August 2006.  The August 2026 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis.  The August 2026 Notes are due August 15, 2026 with interest payable semiannually in arrears on February 15 and August 15, commencing February 15, 2007.  The Operating Partnership received net proceeds of approximately $637.0 million in connection with this issuance.  See Note 9 in the Notes to Consolidated Financial Statements for further discussion.

·                  The Company issued 2,647,776 Common Shares pursuant to its Share Incentive Plans and received net proceeds of approximately $69.7 million.

·                  The Company issued 213,427 Common Shares pursuant to its Employee Share Purchase Plan and received net proceeds of approximately $8.0 million.

·                  The Company repurchased 1,897,912 of its Common Shares on the open market at an average price of $43.85 per share.  The Company paid approximately $83.2 million for these shares, which were retired subsequent to the repurchase.

 

During 2005:

 

·                  The Operating Partnership issued $500.0 million of ten and one-half year 5.125% unsecured fixed rate notes (the “March 2016 Notes”) in a public debt offering in September 2005.  The March 2016 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis.  The March 2016 Notes are due March 15, 2016 with interest payable semiannually in arrears on March 15 and September 15, commencing March 15, 2006.  The Operating Partnership received net proceeds of approximately $469.2 million in connection with this issuance.

·                  The Company issued 2,248,744 Common Shares pursuant to its Share Incentive Plans and received net proceeds of approximately $54.9 million.

·                  The Company issued 286,751 Common Shares pursuant to its Employee Share Purchase Plan and received net proceeds of approximately $8.3 million.

 

As of February 27, 2008, an unlimited amount of debt securities remains available for issuance by the Operating Partnership under a registration statement that became automatically effective upon filing with the SEC in June 2006 (under SEC regulations enacted in 2005, the registration statement automatically expires on June 29, 2009 and does not contain a maximum issuance amount).  As of February 27, 2008, $956.5 million in equity securities remains available for issuance by the Company under a registration statement the SEC declared effective in February 1998.

 

In May 2002, the Company’s shareholders approved the Company’s 2002 Share Incentive Plan.  In January 2003, the Company filed a Form S-8 registration statement to register 23,125,828 Common Shares under this plan.  As of January 1, 2008, 21,631,555 shares are the maximum shares issuable under this plan.   See Note 14 in the Notes to Consolidated Financial Statements for further discussion.

 

Credit Facilities

 

The Operating Partnership has an unsecured revolving credit facility with potential borrowings of up to $1.5 billion maturing on February 28, 2012, with the ability to increase available borrowings by an additional $500.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments.  Advances under the credit facility bear interest at variable rates based upon LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating or based on bids received from the lending group.  EQR has guaranteed the Operating Partnership’s credit facility up to the maximum amount and for the full term of the facility.

 

On April 1, 2005, the Operating Partnership obtained a three-year $1.0 billion unsecured revolving credit facility maturing on May 29, 2008.  Advances under the credit facility bore interest at variable rates based upon LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s

 

7



 

credit rating or based on bids received from the lending group.  EQR guaranteed the Operating Partnership’s credit facility up to the maximum amount and for the full term of the facility.  This credit facility was repaid in full and terminated on February 28, 2007.  The Company recorded $0.4 million of write-offs of unamortized deferred financing costs as additional interest in connection with this termination.

 

On May 7, 2007, the Operating Partnership obtained a one-year $500.0 million unsecured revolving credit facility maturing on May 5, 2008.  Advances under this facility bore interest at variable rates based on LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating.  EQR guaranteed this credit facility up to the maximum amount and for its full term.  This credit facility was repaid in full and terminated on June 4, 2007.

 

On July 6, 2006, the Operating Partnership obtained a one-year $500.0 million unsecured revolving credit facility maturing on July 6, 2007.  Advances under this facility bore interest at variable rates based on LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating.  EQR guaranteed this credit facility up to the maximum amount and for its full term.  This credit facility was repaid in full and terminated on October 13, 2006.

 

As of December 31, 2007 and December 31, 2006, $139.0 million and $460.0 million, respectively, was outstanding and $80.8 million and $69.3 million, respectively, was restricted (dedicated to support letters of credit and not available for borrowing) on the credit facilities.  During the years ended December 31, 2007 and 2006, the weighted average interest rates under the credit facilities were 5.68% and 5.40%, respectively.

 

Competition

 

                All of the Company’s properties are located in developed areas that include other multifamily properties.  The number of competitive multifamily properties in a particular area could have a material effect on the Company’s ability to lease units at the properties or at any newly acquired properties and on the rents charged.  The Company may be competing with other entities that have greater resources than the Company and whose managers have more experience than the Company’s managers.  In addition, other forms of rental properties and single-family housing provide housing alternatives to potential residents of multifamily properties.  See Item 1A Risk Factors for additional information with respect to competition.

 

Environmental Considerations

 

                See Item 1A Risk Factors for information concerning the potential effects of environmental regulations on our operations.

 

Item 1A.  Risk Factors

 

General

 

The following Risk Factors may contain defined terms that are different from those used in the other sections of this report.  Unless otherwise indicated, when used in this section, the terms we and us refer to Equity Residential and its subsidiaries, including ERP Operating Limited Partnership.

 

The occurrence of the events discussed in the following risk factors could adversely affect, possibly in a material manner, our business, financial condition or results of operations, which could adversely affect the value of our common shares of beneficial interest or preferred shares of beneficial interest (which we refer to collectively as “Shares”); preference interests (“Interests”) of a subsidiary of ERP Operating Limited Partnership, our operating partnership; and limited partnership interests in the Operating Partnership (“OP Units”).  In this section, we refer to the Shares, Interests, Units and the OP Units together as our “securities”, and the investors who own Shares, Interests, Units and/or OP Units as our “security holders”.

 

8



 

Our Performance and Securities Value are Subject to Risks Associated with the Real Estate Industry
 
General
 

Real property investments are subject to varying degrees of risk and are relatively illiquid. Several factors may adversely affect the economic performance and value of our properties.  These factors include changes in the national, regional and local economic climates, local conditions such as an oversupply of multifamily properties or a reduction in demand for our multifamily properties, the attractiveness of our properties to residents, competition from other available multifamily property owners and changes in market rental rates.  Our performance also depends on our ability to collect rent from residents and to pay for adequate maintenance, insurance and other operating costs, including real estate taxes, which could increase over time.  Also, the expenses of owning and operating a property are not necessarily reduced when circumstances such as market factors and competition cause a reduction in income from the property.

 

We May Be Unable to Renew Leases or Relet Units as Leases Expire

 

When our residents decide not to renew their leases upon expiration, we may not be able to relet their units.  Even if the residents do renew or we can relet the units, the terms of renewal or reletting may be less favorable than current lease terms.  Because virtually all of our leases are for apartments, they are generally for terms of no more than one year.  If we are unable to promptly renew the leases or relet the units, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then our results of operations and financial condition will be adversely affected.  Consequently, our cash flow and ability to service debt and make distributions to security holders would be reduced.

 

New Acquisitions, Developments and/or Condominium Conversion Projects May Fail to Perform as Expected and Competition for Acquisitions May Result in Increased Prices for Properties

 

We intend to actively acquire and develop multifamily properties for rental operations and/or conversion into condominiums, as well as upgrade and sell existing properties as individual condominiums. We may underestimate the costs necessary to bring an acquired or development property up to standards established for its intended market position.  Additionally, we expect that other major real estate investors with significant capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development efforts.  This competition may increase prices for multifamily properties or decrease the price at which we expect to sell individual properties.  We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms.  We also plan to develop more properties ourselves in addition to co-investing with our development partners for either the rental or condominium market, depending on opportunities in each sub-market.  This may increase the overall level of risk associated with our developments.  The total number of development units, cost of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation.

 

Because Real Estate Investments Are Illiquid, We May Not Be Able to Sell Properties When Appropriate

 

Real estate investments generally cannot be sold quickly.  We may not be able to reconfigure our portfolio promptly in response to economic or other conditions.  This inability to respond promptly to changes in the performance of our investments could adversely affect our financial condition and ability to make distributions to our security holders.

 

Changes in Laws and Litigation Risk Could Affect Our Business

 

We are generally not able to pass through to our residents under existing leases real estate or other federal, state or local taxes.  Consequently, any such tax increases may adversely affect our financial

 

9



 

condition and limit our ability to make distributions to our security holders.  Similarly, changes that increase our potential liability under environmental laws or our expenditures on environmental compliance would adversely affect our cash flow and ability to make distributions on our securities.

 

We may become involved in legal proceedings, including but not limited to, proceedings related to consumer, employment, development, condominium conversion, tort and commercial legal issues that if decided adversely to or settled by us, could result in liability material to our financial condition or results of operations.

 

Environmental Problems Are Possible and Can Be Costly

 

Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at such property.  The owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination.  These laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants.  Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred.  In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site.

 

Substantially all of our properties have been the subject of environmental assessments completed by qualified independent environmental consultant companies.  These environmental assessments have not revealed, nor are we aware of, any environmental liability that our management believes would have a material adverse effect on our business, results of operations, financial condition or liquidity.

 

Over the past several years, there have been an increasing number of lawsuits against owners and managers of multifamily properties alleging personal injury and property damage caused by the presence of mold in residential real estate.  Some of these lawsuits have resulted in substantial monetary judgments or settlements.  Insurance carriers have reacted to these liability awards by excluding mold related claims from standard policies and pricing mold endorsements at prohibitively high rates.  We have adopted programs designed to minimize the existence of mold in any of our properties as well as guidelines for promptly addressing and resolving reports of mold to minimize any impact mold might have on residents or the property.

 

We cannot be assured that existing environmental assessments of our properties reveal all environmental liabilities, that any prior owner of any of our properties did not create a material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any of our properties.

 

Insurance Policy Deductibles and Exclusions

 

In order to partially mitigate the substantial increase in insurance costs in recent years, management has gradually increased deductible and self-insured retention amounts.  As of December 31, 2007, the Company’s property insurance policy provides for a per occurrence deductible of $250,000 and self-insured retention of $5.0 million per occurrence, subject to a maximum annual aggregate self-insured retention of $7.5 million, with approximately 85% of any excess losses being covered by insurance.  Any earthquake and named windstorm losses are subject to a deductible of 5% of the values of the buildings involved in the losses and are not subject to the aggregate self-insured retention.  The Company’s general liability and worker’s compensation policies at December 31, 2007 provide for a $2.0 million and $1.0 million per occurrence deductible, respectively.  These higher deductible and self-insured retention amounts do expose the Company to greater potential uninsured losses, but management believes the savings in insurance premium expense justifies this potential increased exposure over the long-term.

 

 

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As a result of the terrorist attacks of September 11, 2001, property insurance carriers have created exclusions for losses from terrorism from our all risk property insurance policies.  As of December 31, 2007, the Company was insured for $500.0 million in terrorism insurance coverage, with a $100,000 deductible.  This coverage excludes losses from nuclear, biological and chemical attacks.  In the event of a terrorist attack impacting one or more of our properties, we could lose the revenues from the property, our capital investment in the property and possibly face liability claims from residents or others suffering injuries or losses.  The Company believes, however, that the number and geographic diversity of its portfolio and its terrorism insurance coverage help to mitigate its exposure to the risks associated with potential terrorist attacks.

 

Debt Financing, Preferred Shares and Preference Interests and Units Could Adversely Affect Our Performance
 

General

 

Please refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the Company’s total debt and unsecured debt summaries as of December 31, 2007.

 

In addition to debt, we have $209.8 million of combined liquidation value of outstanding preferred shares of beneficial interest and preference interests and units, with a weighted average dividend preference of 6.94% per annum, as of December 31, 2007.  Our use of debt and preferred equity financing creates certain risks, including the following:

 

Disruptions in the Financial Markets Could Adversely Affect Our Ability to Obtain Debt Financing and Impact our Acquisitions and Dispositions

 

The United States credit markets could experience significant dislocations and liquidity disruptions which could cause the spreads on prospective debt financings to widen considerably and make it harder for borrowers to borrow money.  These circumstances could materially impact liquidity in the debt markets, make financing terms for us less attractive, and result in the unavailability of certain types of debt financing.  For example, the Company has debt obligations where the interest rates reset weekly (floating rate tax exempt bond debt).  We could be negatively impacted by disruptions in this market or in the credit market’s perception of Fannie Mae and Freddie Mac, who guaranty and provide liquidity for these bonds.  Uncertainty in the credit markets could negatively impact our ability to make acquisitions and make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of debt financing or difficulties in obtaining debt financing.  Potential disruptions in the financial markets could also have other unknown adverse effects on us or the economy generally.

 

Scheduled Debt Payments Could Adversely Affect Our Financial Condition

 

In the future, our cash flow could be insufficient to meet required payments of principal and interest or to pay distributions on our securities at expected levels.

 

We may not be able to refinance existing debt (which in virtually all cases requires substantial principal payments at maturity) and, if we can, the terms of such refinancing might not be as favorable as the terms of existing indebtedness.  If principal payments due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our cash flow will not be sufficient in all years to repay all maturing debt.  As a result, we may be forced to postpone capital expenditures necessary for the maintenance of our properties and may have to dispose of one or more properties on terms that would otherwise be unacceptable to us.

 

Please refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the Company’s debt maturity schedule as of December 31, 2007.

 

Financial Covenants Could Adversely Affect the Company’s Financial Condition

 

If a property we own is mortgaged to secure debt and we are unable to meet the mortgage

 

11



 

payments, the holder of the mortgage could foreclose on the property, resulting in loss of income and asset value.  Foreclosure on mortgaged properties or an inability to refinance existing indebtedness would likely have a negative impact on our financial condition and results of operations.

 

The mortgages on our properties may contain negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to reduce or change insurance coverage.  In addition, our unsecured credit facilities contain certain restrictions, requirements and other limitations on our ability to incur debt.  The indentures under which a substantial portion of our debt was issued also contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios, as well as limitations on our ability to incur secured and unsecured debt (including acquisition financing), and to sell all or substantially all of our assets.  Our credit facilities and indentures are cross-defaulted and also contain cross default provisions with other material debt.  Our most restrictive unsecured public debt covenants as of December 31, 2007 and 2006, respectively, are (terms are defined in the indentures):

 

Selected Unsecured Public Debt Covenants

 

 

 

December 31,
2007

 

December 31,
2006

 

 

 

 

 

 

 

Total Debt to Adjusted Total Assets (not to exceed 60%)

 

50.5

%

44.6

%

 

 

 

 

 

 

Secured Debt to Adjusted Total Assets (not to exceed 40%)

 

19.2

%

17.6

%

 

 

 

 

 

 

Consolidated Income Available for Debt Service to

 

 

 

 

 

Maximum Annual Service Charges (must be at least 1.5 to 1)

 

2.09

 

2.59

 

 

 

 

 

 

 

Total Unsecured Assets to Unsecured Debt (must be at least 150%)

 

207.4

%

250.6

%

 

Some of the properties were financed with tax-exempt bonds that contain certain restrictive covenants or deed restrictions.  We have retained an independent outside consultant to monitor compliance with the restrictive covenants and deed restrictions that affect these properties.  If these bond compliance requirements restrict our ability to increase our rental rates to attract low or moderate-income residents, or eligible/qualified residents, then our income from these properties may be limited.

 

Our Degree of Leverage Could Limit Our Ability to Obtain Additional Financing

 

Our consolidated debt-to-total market capitalization ratio was 47.0% as of December 31, 2007.  Our degree of leverage could have important consequences to security holders.  For example, the degree of leverage could affect our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, development or other general corporate purposes, making us more vulnerable to a downturn in business or the economy in general.

 

Rising Interest Rates Could Adversely Affect Cash Flow

 

Advances under our credit facilities bear interest at variable rates based upon LIBOR at various interest periods, plus a spread dependent upon the Operating Partnership’s credit rating, or based upon bids received from the lending group.  Certain public issuances of our senior unsecured debt instruments may also, from time to time, bear interest at floating rates.  We may also borrow additional money with variable interest rates in the future.  Increases in interest rates would increase our interest expense under these debt instruments and would increase the costs of refinancing existing debt and of issuing new debt.  Accordingly, higher interest rates could adversely affect cash flow and our ability to service our debt and to make distributions to security holders.  We use interest rate hedging arrangements to manage our exposure to interest rate volatility, but these arrangements may expose us to additional risks, and no strategy can

 

 

12


 


 

completely insulate us from risks associated with interest rate fluctuations.  There can be no assurance that our hedging arrangements will have the desired beneficial impact and may involve costs, such as transaction fees or breakage costs, if we terminate them.

 

We Depend on Our Key Personnel

 

We depend on the efforts of the Chairman of our Board of Trustees, Samuel Zell, and our executive officers, particularly David J. Neithercut, our President and Chief Executive Officer.  If they resign or otherwise cease to be employed by us, our operations could be temporarily adversely affected.  Mr. Zell has entered into retirement benefit and noncompetition agreements with the Company. 

 

In the event the Chairman of the Board and/or the CEO are unable to serve, (i) the Lead Trustee will automatically be appointed to serve as the interim successor to the Chairman, (ii) the Chairman will automatically be appointed to serve as the interim successor to the CEO and (iii) the Chair of the Compensation Committee of the Board will immediately call a meeting of the Committee to recommend to the full Board the selection of a permanent replacement for either or both positions, as necessary.

 

Control and Influence by Significant Shareholders Could Be Exercised in a Manner Adverse to Other Shareholders

 

The consent of certain affiliates of Mr. Zell is required for certain amendments to the Fifth Amended and Restated Agreement of Limited Partnership of the Operating Partnership (the Partnership Agreement).  As a result of their security ownership and rights concerning amendments to the Partnership Agreement, the security holders referred to herein may have influence over the Company.  Although these security holders have not agreed to act together on any matter, they would be in a position to exercise even more influence over the Company’s affairs if they were to act together in the future.  This influence could conceivably be exercised in a manner that is inconsistent with the interests of other security holders.  For additional information regarding the security ownership of our trustees, including Mr. Zell, and our executive officers, see the Companys definitive proxy statement.

 

Shareholders’ Ability to Effect Changes in Control of the Company is Limited

 

Provisions of Our Declaration of Trust and Bylaws Could Inhibit Changes in Control

 

Certain provisions of our Declaration of Trust and Bylaws may delay or prevent a change in control of the Company or other transactions that could provide the security holders with a premium over the then-prevailing market price of their securities or which might otherwise be in the best interest of our security holders.  This includes the 5% Ownership Limit described below.  Also, any future series of preferred shares of beneficial interest may have certain voting provisions that could delay or prevent a change of control or other transactions that might otherwise be in the interest of our security holders.

 

We Have a Share Ownership Limit for REIT Tax Purposes

 

To remain qualified as a REIT for federal income tax purposes, not more than 50% in value of our outstanding Shares may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any year.  To facilitate maintenance of our REIT qualification, our Declaration of Trust, subject to certain exceptions, prohibits ownership by any single shareholder of more than 5% of the lesser of the number or value of the outstanding class of common or preferred shares.  We refer to this restriction as the Ownership Limit.  Absent any exemption or waiver granted by our Board of Trustees, securities acquired or held in violation of the Ownership Limit will be transferred to a trust for the exclusive benefit of a designated charitable beneficiary, and the security holders rights to distributions and to vote would terminate.  A transfer of Shares may be void if it causes a person to violate the Ownership Limit.  The Ownership Limit could delay or prevent a change in control and, therefore, could adversely affect our security holders’ ability to realize a premium over the then-prevailing market price for their Shares.  To

 

13



 

reduce the ability of the Board to use the Ownership Limit as an anti-takeover device, in 2004 the Company amended the Ownership Limit to require, rather than permit, the Board to grant a waiver of the Ownership Limit if the individual seeking a waiver demonstrates that such ownership would not jeopardize the Company’s status as a REIT.

 

Our Preferred Shares May Affect Changes in Control

 

Our Declaration of Trust authorizes the Board of Trustees to issue up to 100 million preferred shares, and to establish the preferences and rights (including the right to vote and the right to convert into common shares) of any preferred shares issued.  The Board of Trustees may use its powers to issue preferred shares and to set the terms of such securities to delay or prevent a change in control of the Company, even if a change in control were in the interest of security holders.

 

Inapplicability of Maryland Law Limiting Certain Changes in Control

 

Certain provisions of Maryland law applicable to real estate investment trusts prohibit business combinations (including certain issuances of equity securities) with any person who beneficially owns ten percent or more of the voting power of outstanding securities, or with an affiliate who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the Company’s outstanding voting securities (an Interested Shareholder), or with an affiliate of an Interested Shareholder.  These prohibitions last for five years after the most recent date on which the Interested Shareholder became an Interested Shareholder.  After the five-year period, a business combination with an Interested Shareholder must be approved by two super-majority shareholder votes unless, among other conditions, holders of common shares receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the Interested Shareholder for its common shares.  As permitted by Maryland law, however, the Board of Trustees of the Company has opted out of these restrictions with respect to any business combination involving Mr. Zell and certain of his affiliates and persons acting in concert with them.  Consequently, the five-year prohibition and the super-majority vote requirements will not apply to a business combination involving us and/or any of them. Such business combinations may not be in the best interest of our security holders.

 

Our Success as a REIT Is Dependent on Compliance with Federal Income Tax Requirements

 

Our Failure to Qualify as a REIT Would Have Serious Adverse Consequences to Our Security Holders

 

We believe that we have qualified for taxation as a REIT for federal income tax purposes since our taxable year ended December 31, 1992 based, in part, upon opinions of tax counsel received whenever we have issued equity securities or engaged in significant merger transactions.  We plan to continue to meet the requirements for taxation as a REIT.  Many of these requirements, however, are highly technical and complex.  We cannot, therefore, guarantee that we have qualified or will qualify in the future as a REIT.  The determination that we are a REIT requires an analysis of various factual matters that may not be totally within our control.  For example, to qualify as a REIT, our gross income must generally come from rental and other real estate or passive related sources that are itemized in the REIT tax laws.  We are also required to distribute to security holders at least 90% of our REIT taxable income excluding capital gains.  The fact that we hold our assets through ERP Operating Limited Partnership and its subsidiaries further complicates the application of the REIT requirements.  Even a technical or inadvertent mistake could jeopardize our REIT status.  Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new rulings that make it more difficult, or impossible, for us to remain qualified as a REIT.  We do not believe, however, that any pending or proposed tax law changes would jeopardize our REIT status.

 

If we fail to qualify as a REIT, we would be subject to federal income tax at regular corporate rates.  Also, unless the IRS granted us relief under certain statutory provisions, we would remain disqualified as a REIT for four years following the year we first failed to qualify.  If we fail to qualify as a

 

14



 

REIT, we would have to pay significant income taxes.  We, therefore, would have less money available for investments or for distributions to security holders.  This would likely have a significant adverse affect on the value of our securities.  In addition, we would no longer be required to make any distributions to security holders.  Even if we qualify as a REIT, we are and will continue to be subject to certain federal, state and local taxes on our income and property.  In addition, our corporate housing business and condominium conversion business, which are conducted through taxable REIT subsidiaries, generally will be subject to federal income tax at regular corporate rates to the extent they have taxable income.

 

We Could Be Disqualified as a REIT or Have to Pay Taxes if Our Merger Partners Did Not Qualify as REITs

 

If any of our prior merger partners had failed to qualify as a REIT throughout the duration of their existence, then they might have had undistributed C corporation earnings and profits at the time of their merger with us.  If that was the case and we did not distribute those earnings and profits prior to the end of the year in which the merger took place, we might not qualify as a REIT.  We believe based, in part, upon opinions of legal counsel received pursuant to the terms of our merger agreements as well as our own investigations, among other things, that each of our prior merger partners qualified as a REIT and that, in any event, none of them had any undistributed C corporation earnings and profits at the time of their merger with us.  If any of our prior merger partners failed to qualify as a REIT, an additional concern would be that they would have recognized taxable gain at the time they merged with us.  We would be liable for the tax on such gain.  In this event, we would have to pay corporate income tax on any gain existing at the time of the applicable merger on assets acquired in the merger if the assets are sold within ten years of the merger.  Finally, we could be precluded from electing REIT status for up to four years after the year in which the predecessor entity failed to qualify for REIT status.

 

Compliance with REIT Distribution Requirements May Affect Our Financial Condition

 

Distribution Requirements May Increase the Indebtedness of the Company

 

We may be required from time to time, under certain circumstances, to accrue as income for tax purposes interest and rent earned but not yet received.  In such event, or upon our repayment of principal on debt, we could have taxable income without sufficient cash to enable us to meet the distribution requirements of a REIT.  Accordingly, we could be required to borrow funds or liquidate investments on adverse terms in order to meet these distribution requirements.

 

                Tax Elections Regarding Distributions May Impact Future Liquidity of the Company

 

                Under certain circumstances, we may make a tax election to treat future distributions to shareholders as distributions in the current year.  This election, which is provided for in the REIT tax code, may allow us to avoid increasing our dividends or paying additional income taxes in the current year.  However, this could result in a constraint on our ability to decrease our dividends in future years without creating risk of either violating the REIT distribution requirements or generating additional income tax liability.

 

Federal Income Tax Considerations

 

General

 

The following discussion summarizes the federal income tax considerations material to a holder of common shares.  It is not exhaustive of all possible tax considerations.  For example, it does not give a detailed discussion of any state, local or foreign tax considerations.  The following discussion also does not address all tax matters that may be relevant to prospective shareholders in light of their particular circumstances.  Moreover, it does not address all tax matters that may be relevant to shareholders who are subject to special treatment under the tax laws, such as insurance companies, tax-exempt entities, financial institutions or broker-dealers, foreign corporations and persons who are not citizens or residents of the United States.

 

The specific tax attributes of a particular shareholder could have a material impact on the tax considerations associated with the purchase, ownership and disposition of common shares.  Therefore, it is essential that each prospective shareholder consult with his or her own tax advisors with regard to the application of the federal income tax laws to the shareholders personal tax situation, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

 

The information in this section is based on the current Internal Revenue Code, current, temporary

 

15



 

and proposed Treasury regulations, the legislative history of the Internal Revenue Code, current administrative interpretations and practices of the Internal Revenue Service, including its practices and policies as set forth in private letter rulings, which are not binding on the Internal Revenue Service, and existing court decisions.  Future legislation, regulations, administrative interpretations and court decisions could change current law or adversely affect existing interpretations of current law.  Any change could apply retroactively.  Thus, it is possible that the Internal Revenue Service could challenge the statements in this discussion, which do not bind the Internal Revenue Service or the courts, and that a court could agree with the Internal Revenue Service.

 

Our Taxation

 

We elected REIT status beginning with the year that ended December 31, 1992.  In any year in which we qualify as a REIT, we generally will not be subject to federal income tax on the portion of our REIT taxable income or capital gain that we distribute to our shareholders.  This treatment substantially eliminates the double taxation that applies to most corporations, which pay a tax on their income and then distribute dividends to shareholders who are in turn taxed on the amount they receive.  We elected taxable REIT subsidiary status for certain of our corporate subsidiaries, primarily those engaged in condominium conversion and sale activities.  As a result, we will be subject to federal income taxes for activities performed by our taxable REIT subsidiaries.

 

We will be subject to federal income tax at regular corporate rates upon our REIT taxable income or capital gain that we do not distribute to our shareholders.  In addition, we will be subject to a 4% excise tax if we do not satisfy specific REIT distribution requirements.  We could also be subject to the alternative minimum tax on our items of tax preference.  In addition, any net income from prohibited transactions (i.e., dispositions of property, other than property held by a taxable REIT subsidiary, held primarily for sale to customers in the ordinary course of business) will be subject to a 100% tax.  We could also be subject to a 100% penalty tax on certain payments received from or on certain expenses deducted by a taxable REIT subsidiary if any such transaction is not respected by the Internal Revenue Service.  If we fail to satisfy the 75% gross income test or the 95% gross income test (described below) but have maintained our qualification as a REIT because we satisfied certain other requirements, we will still generally be subject to a 100% penalty tax on the amount by which we fail such gross income test.  If we fail to satisfy any of the REIT asset tests (described below) by more than a de minimis amount, due to reasonable cause, and we nonetheless maintain our REIT qualification because of specified cure provisions, we will be required to pay a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying assets.  If we fail to satisfy any provision of the Internal Revenue Code that would result in our failure to qualify as a REIT (other than a violation of the REIT gross income or asset tests described below) and the violation is due to reasonable cause, we may retain our REIT qualification but we will be required to pay a penalty of $50,000 for each such failure. Moreover, we may be subject to taxes in certain situations and on certain transactions that we do not presently contemplate.

 

We believe that we have qualified as a REIT for all of our taxable years beginning with 1992.  We also believe that our current structure and method of operation is such that we will continue to qualify as a REIT.  However, given the complexity of the REIT qualification requirements, we cannot provide any assurance that the actual results of our operations have satisfied or will satisfy the requirements under the Internal Revenue Code for a particular year.

 

If we fail to qualify for taxation as a REIT in any taxable year and the relief provisions described herein do not apply, we will be subject to tax on our taxable income at regular corporate rates.  We also may be subject to the corporate “alternative minimum tax.”  As a result, our failure to qualify as a REIT would significantly reduce the cash we have available to distribute to our shareholders.  Unless entitled to statutory relief, we would be disqualified as a REIT for the four taxable years following the year during which qualification was lost.  It is not possible to state whether we would be entitled to statutory relief.

 

Our qualification and taxation as a REIT depend on our ability to satisfy various requirements

 

16



 

under the Internal Revenue Code.  We are required to satisfy these requirements on a continuing basis through actual annual operating and other results.  Accordingly, there can be no assurance that we will be able to continue to operate in a manner so as to remain qualified as a REIT.

 

Ownership of Taxable REIT Subsidiaries by Us.  The Internal Revenue Code provides that REITs may own greater than ten percent of the voting power and value of the securities of taxable REIT subsidiaries or TRSs, which are corporations subject to tax as a regular C corporation that have elected, jointly with a REIT, to be a TRS.  Generally, a taxable REIT subsidiary may own assets that cannot otherwise be owned by a REIT and can perform impermissible tenant services (discussed above), which would otherwise taint our rental income under the REIT income tests.  However, the REIT will be obligated to pay a 100% penalty tax on some payments that we receive or on certain expenses deducted by our TRSs if the economic arrangements between us, our tenants and the TRS are not comparable to similar arrangements among unrelated parties.  A TRS may also receive income from prohibited transactions without incurring the 100% federal income tax liability imposed to REITs.  Income from prohibited transactions may include the purchase and sale of land, the purchase and sale of completed development properties and the sale of condominium units.

 

TRSs pay federal and state income tax at the full applicable corporate rates.  The amount of taxes paid on impermissible tenant services income and the sale of real estate held primarily for sale to customers in the ordinary course of business may be material in amount.  The TRSs will attempt to minimize the amount of these taxes, but we cannot guarantee whether, or the extent to which, measures taken to minimize these taxes will be successful.  To the extent that these companies are required to pay taxes, less cash may be available for distributions to shareholders.

 

Share Ownership Test and Organizational RequirementIn order to qualify as a REIT, our shares of beneficial interest must be held by a minimum of 100 persons for at least 335 days of a taxable year that is 12 months, or during a proportionate part of a taxable year of less than 12 months.  Also, not more than 50% in value of our shares of beneficial interest may be owned directly or indirectly by applying certain constructive ownership rules, by five or fewer individuals during the last half of each taxable year.  In addition, we must meet certain other organizational requirements, including, but not limited to, that (i) the beneficial ownership in us is evidenced by transferable shares and (ii) we are managed by one or more trustees.  We believe that we have satisfied all of these tests and all other organizational requirements and that we will continue to do so in the future.  In order to ensure compliance with the 100 person test and the 50% share ownership test discussed above, we have placed certain restrictions on the transfer of our shares that are intended to prevent further concentration of share ownership.  However, such restrictions may not prevent us from failing these requirements, and thereby failing to qualify as a REIT.

 

Gross Income Tests.  To qualify as a REIT, we must satisfy two gross income tests:

 

(1)          At least 75% of our gross income for each taxable year must be derived directly or indirectly from rents from real property, investments in real estate and/or real estate mortgages, dividends paid by another REIT and from some types of temporary investments.

(2)          At least 95% of our gross income for each taxable year must be derived from any combination of income qualifying under the 75% test and dividends, non-real estate mortgage interest, some payments under hedging instruments and gain from the sale or disposition of stock or securities.

 

To qualify as rents from real property for the purpose of satisfying the gross income tests, rental payments must generally be received from unrelated persons and not be based on the net income of the resident.  Also, the rent attributable to personal property must not exceed 15% of the total rent.  We may generally provide services to residents without tainting our rental income only if such services are usually or customarily rendered in connection with the rental of real property and not otherwise considered impermissible services.  If such services are impermissible, then we may generally provide them only if they are considered de minimis in amount, or are provided through an independent contractor from whom we derive no revenue and that meets other requirements, or through a taxable REIT subsidiary.

 

17



 

We believe that services provided to residents by us either are usually or customarily rendered in connection with the rental of real property and not otherwise considered impermissible, or, if considered impermissible services, will meet the de minimis test or will be provided by an independent contractor or taxable REIT subsidiary.  However, we cannot provide any assurance that the Internal Revenue Service will agree with these positions.

 

If we fail to satisfy one or both of the gross income tests for any taxable year, we may nevertheless qualify as a REIT for the year if we are entitled to relief under certain provisions of the Internal Revenue Code.  In this case, a penalty tax would still be applicable as discussed above.  Generally, it is not possible to state whether in all circumstances we would be entitled to the benefit of these relief provisions and in the event these relief provisions do not apply, we will not qualify as a REIT.

 

Asset Tests.  In general, at the close of each quarter of our taxable year, we must satisfy four tests relating to the nature of our assets:

 

(1)                At least 75% of the value of our total assets must be represented by real estate assets (which include for this purpose shares in other real estate investment trusts) and certain cash related items;

(2)     Not more than 25% of our total assets may be represented by securities other than those in the

75% asset class;

(3)                Except for equity investments in other REITs, qualified REIT subsidiaries (i.e., corporations owned 100% by a REIT that are not TRSs or REITs), or taxable REIT subsidiaries: (a) the value of any one issuer’s securities owned by us may not exceed 5% of the value of our total assets and (b) we may not own more than 10% of the value of or the voting securities of any one issuer; and

(4)                Not more than 20% of our total assets may be represented by securities of one or more taxable REIT subsidiaries.

 

The 10% value test described in clause (b) of (3) above does not apply to certain securities that fall within a safe harbor under the Code.  Under the safe harbor, the following are not considered securities held by us for purposes of this 10% value test: (i) straight debt securities, (ii) any loan of an individual or an estate, (iii) certain rental agreements for the use of tangible property, (iv) any obligation to pay rents from real property, (v) any security issued by a state or any political subdivision thereof, foreign government or Puerto Rico only if the determination of any payment under such security is not based on the profits of another entity or payments on any obligation issued by such other entity, or (vi) any security issued by a REIT.  The timing and payment of interest or principal on a security qualifying as straight debt may be subject to a contingency provided that (A) such contingency does not change the effective yield to maturity, not considering a de minimis change which does not exceed the greater of ¼ of 1% or 5% of the annual yield to maturity or we own $1,000,000 or less of the aggregate issue price or value of the particular issuer’s debt and not more than 12 months of unaccrued interest can be required to be prepaid or (B) the contingency is consistent with commercial practice and the contingency is effective upon a default or the exercise of a prepayment right by the issuer of the debt.  If we hold indebtedness from any issuer, including a REIT, the indebtedness will be subject to, and may cause a violation of, the asset tests, unless it is a qualifying real estate asset or otherwise satisfies the above safe harbor.  We currently own equity interests in certain entities that have elected to be taxed as REITs for federal income tax purposes and are not publicly traded.  If any such entity were to fail to qualify as a REIT, we would not meet the 10% voting stock limitation and the 10% value limitation and we would fail to qualify as a REIT.  We believe that we and each of the REITs we own an interest in have and will comply with the foregoing asset tests for REIT qualification.  However, we cannot provide any assurance that the Internal Revenue Service will agree with our determinations.

 

If we fail to satisfy the 5% or 10% asset tests described above after a 30-day cure period provided in the Internal Revenue Code, we will be deemed to have met such tests if the value of our non-qualifying assets is de minimis (i.e., does not exceed the lesser of 1% of the total value of our assets at the end of the applicable quarter or $10,000,000) and we dispose of the non-qualifying assets within six months after the

 

18



 

last day of the quarter in which the failure to satisfy the asset tests is discovered.  For violations due to reasonable cause and not willful neglect that are in excess of the de minimis exception described above, we may avoid disqualification as a REIT under any of the asset tests, after the 30-day cure period, by disposing of sufficient assets to meet the asset test within such six month period, paying a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying assets and disclosing certain information to the Internal Revenue Service.  If we cannot avail ourselves of these relief provisions, or if we fail to timely cure any noncompliance with the asset tests, we would cease to qualify as a REIT.

 

Annual Distribution Requirements.  To qualify as a REIT, we are generally required to distribute dividends, other than capital gain dividends, to our shareholders each year in an amount at least equal to 90% of our REIT taxable income.  These distributions must be paid either in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for the prior year and if paid with or before the first regular dividend payment date after the declaration is made.  We intend to make timely distributions sufficient to satisfy our annual distribution requirements.  To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100% of our REIT taxable income, as adjusted, we are subject to tax on these amounts at regular corporate rates.  We will be subject to a 4% excise tax on the excess of the required distribution over the sum of amounts actually distributed and amounts retained for which federal income tax was paid, if we fail to distribute during each calendar year at least the sum of:  (1) 85% of our REIT ordinary income for the year; (2) 95% of our REIT capital gain net income for the year; and (3) any undistributed taxable income from prior taxable years.  A REIT may elect to retain rather than distribute all or a portion of its net capital gains and pay the tax on the gains.  In that case, a REIT may elect to have its shareholders include their proportionate share of the undistributed net capital gains in income as long-term capital gains and receive a credit for their share of the tax paid by the REIT.  For purposes of the 4% excise tax described above, any retained amounts would be treated as having been distributed.

 

Ownership of Partnership Interests By Us.  As a result of our ownership of the Operating Partnership, we will be considered to own and derive our proportionate share of the assets and items of income of the Operating Partnership, respectively, for purposes of the REIT asset and income tests, including its share of assets and items of income of any subsidiaries that are partnerships or limited liability companies.

 

State and Local Taxes.  We may be subject to state or local taxation in various jurisdictions, including those in which we transact business or reside.  Our state and local tax treatment may not conform to the federal income tax treatment discussed above.  Consequently, prospective shareholders should consult their own tax advisors regarding the effect of state and local tax laws on an investment in common shares.

 

Taxation of Domestic Shareholders Subject to U.S. Tax

 

General.  If we qualify as a REIT, distributions made to our taxable domestic shareholders with respect to their common shares, other than capital gain distributions and distributions attributable to taxable REIT subsidiaries, will be treated as ordinary income to the extent that the distributions come out of earnings and profits.  These distributions will not be eligible for the dividends received deduction for shareholders that are corporations nor will they constitute qualified dividend income under the Internal Revenue Code, meaning that such dividends will be taxed at marginal rates applicable to ordinary income rather than the special capital gain rates applicable to qualified dividend income distributed to shareholders who satisfy applicable holding period requirements.  In determining whether distributions are out of earnings and profits, we will allocate our earnings and profits first to preferred shares and second to the common shares.  The portion of ordinary dividends which represent ordinary dividends we receive from a TRS, will be designated as qualified dividend income to REIT shareholders and are eligible for preferential tax rates if paid to our non-corporate shareholders.

 

To the extent we make distributions to our taxable domestic shareholders in excess of our earnings

 

19



 

and profits, such distributions will be considered a return of capital.  Such distributions will be treated as a tax-free distribution and will reduce the tax basis of a shareholder’s common shares by the amount of the distribution so treated.  To the extent such distributions cumulatively exceed a taxable domestic shareholder’s tax basis; such distributions are taxable as a gain from the sale of shares.  Shareholders may not include in their individual income tax returns any of our net operating losses or capital losses.

 

Dividends declared by a REIT in October, November, or December are deemed to have been paid by the REIT and received by its shareholders on December 31 of that year, so long as the dividends are actually paid during January of the following year.  However, this treatment only applies to the extent of the REITs earnings and profits existing on December 31.  To the extent the shareholder distribution paid in January exceeds available earnings and profits as of December 31, the excess is treated as a distribution taxable to shareholders in the year paid.  As such, for tax reporting purposes, January distributions paid to our shareholders may be split between two tax years.

 

Distributions made by us that we properly designate as capital gain dividends will be taxable to taxable domestic shareholders as gain from the sale or exchange of a capital asset held for more than one year.  This treatment applies only to the extent that the designated distributions do not exceed our actual net capital gain for the taxable year.  It applies regardless of the period for which a domestic shareholder has held his or her common shares.  Despite this general rule, corporate shareholders may be required to treat up to 20% of certain capital gain dividends as ordinary income.

 

Generally, we will classify a portion of our designated capital gain dividends as a 15% rate gain distribution and the remaining portion as an unrecaptured Section 1250 gain distribution.  A 15% rate gain distribution would be taxable to taxable domestic shareholders that are individuals, estates or trusts at a maximum rate of 15%.  An unrecaptured Section 1250 gain distribution would be taxable to taxable domestic shareholders that are individuals, estates or trusts at a maximum rate of 25%.

 

If, for any taxable year, we elect to designate as capital gain dividends any portion of the dividends paid or made available for the year to holders of all classes of shares of beneficial interest, then the portion of the capital gains dividends that will be allocable to the holders of common shares will be the total capital gain dividends multiplied by a fraction.  The numerator of the fraction will be the total dividends paid or made available to the holders of the common shares for the year.  The denominator of the fraction will be the total dividends paid or made available to holders of all classes of shares of beneficial interest.

 

We may elect to retain (rather than distribute as is generally required) net capital gain for a taxable year and pay the income tax on that gain.  If we make this election, shareholders must include in income, as long-term capital gain, their proportionate share of the undistributed net capital gain.  Shareholders will be treated as having paid their proportionate share of the tax paid by us on these gains.  Accordingly, they will receive a tax credit or refund for the amount.  Shareholders will increase the basis in their common shares by the difference between the amount of capital gain included in their income and the amount of the tax they are treated as having paid.  Our earnings and profits will be adjusted appropriately.

 

In general, a shareholder will recognize gain or loss for federal income tax purposes on the sale or other disposition of common shares in an amount equal to the difference between:

 

(a)                            the amount of cash and the fair market value of any property received in the sale or other disposition; and

 

(b)                           the shareholder’s adjusted tax basis in the common shares.

 

The gain or loss will be capital gain or loss if the common shares were held as a capital asset.  Generally, the capital gain or loss will be long-term capital gain or loss if the common shares were held for more than one year.

 

In general, a loss recognized by a shareholder upon the sale of common shares that were held for

 

20



 

six months or less, determined after applying certain holding period rules, will be treated as long-term capital loss to the extent that the shareholder received distributions that were treated as long-term capital gains.  For shareholders who are individuals, trusts and estates, the long-term capital loss will be apportioned among the applicable long-term capital gain rates to the extent that distributions received by the shareholder were previously so treated.

 

Taxation of Domestic Tax-Exempt Shareholders

 

Most tax-exempt organizations are not subject to federal income tax except to the extent of their unrelated business taxable income, which is often referred to as UBTI.  Unless a tax-exempt shareholder holds its common shares as debt financed property or uses the common shares in an unrelated trade or business, distributions to the shareholder should not constitute UBTI.  Similarly, if a tax-exempt shareholder sells common shares, the income from the sale should not constitute UBTI unless the shareholder held the shares as debt financed property or used the shares in a trade or business.

 

However, for tax-exempt shareholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans, income from owning or selling common shares will constitute UBTI unless the organization is able to properly deduct amounts set aside or placed in reserve so as to offset the income generated by its investment in common shares.  These shareholders should consult their own tax advisors concerning these set aside and reserve requirements which are set forth in the Internal Revenue Code.

 

In addition, certain pension trusts that own more than 10% of a pension-held REIT must report a portion of the distributions that they receive from the REIT as UBTI.  We have not been and do not expect to be treated as a pension-held REIT for purposes of this rule.

 

Taxation of Foreign Shareholders

 

The following is a discussion of certain anticipated United States federal income tax consequences of the ownership and disposition of common shares applicable to a foreign shareholder.  For purposes of this discussion, a “foreign shareholder” is any person other than:

 

(a)                            a citizen or resident of the United States;

 

(b)                           a corporation or partnership created or organized in the United States or under the laws of the United States or of any state thereof; or

 

(c)                            an estate or trust whose income is includable in gross income for United States federal income tax purposes regardless of its source.

 

Distributions by Us.  Distributions by us to a foreign shareholder that are neither attributable to gain from sales or exchanges by us of United States real property interests nor designated by us as capital gains dividends will be treated as dividends of ordinary income to the extent that they are made out of our earnings and profits.  These distributions ordinarily will be subject to withholding of United States federal income tax on a gross basis at a 30% rate, or a lower treaty rate, unless the dividends are treated as effectively connected with the conduct by the foreign shareholder of a United States trade or business.  Please note that under certain treaties lower withholding rates generally applicable to dividends do not apply to dividends from REITs.  Dividends that are effectively connected with a United States trade or business will be subject to tax on a net basis at graduated rates, and are generally not subject to withholding.  Certification and disclosure requirements must be satisfied before a dividend is exempt from withholding under this exemption.  A foreign shareholder that is a corporation also may be subject to an additional branch profits tax at a 30% rate or a lower treaty rate.

 

We expect to withhold United States income tax at the rate of 30% on any distributions made to a foreign shareholder unless:

 

21



 

(a)                            a lower treaty rate applies and any required form or certification evidencing eligibility for that reduced rate is filed with us; or

 

(b)                           the foreign shareholder files an IRS Form W-8ECI with us claiming that the distribution is effectively connected income.

 

A distribution in excess of our current or accumulated earnings and profits will not be taxable to a foreign shareholder to the extent that the distribution does not exceed the adjusted basis of the shareholder’s common shares.  Instead, the distribution will reduce the adjusted basis of the common shares.  To the extent that the distribution exceeds the adjusted basis of the common shares, it will give rise to gain from the sale or exchange of the shareholder’s common shares.  The tax treatment of this gain is described below.

 

We intend to withhold at a rate of 30%, or a lower applicable treaty rate, on the entire amount of any distribution not designated as a capital gain distribution.  In such event, a foreign shareholder may seek a refund of the withheld amount from the IRS if it subsequently determined that the distribution was, in fact, in excess of our earnings and profits, and the amount withheld exceeded the foreign shareholder’s United States tax liability with respect to the distribution.

 

Any capital gain dividend with respect to any class of our stock which is regularly traded on an established securities market, will be treated as an ordinary dividend described above, if the foreign shareholder did not own more than 5% of such class of stock at any time during the taxable year.  Foreign shareholders generally will not be required to report distributions received from us on U.S. federal income tax returns and all distributions treated as dividends for U.S. federal income tax purposes, including any capital gain dividends, will be subject to a 30% U.S. withholding tax (unless reduced or eliminated under an applicable income tax treaty), as described above.  In addition, the branch profits tax will no longer apply to such distributions.

 

Distributions to a foreign shareholder that we designate at the time of the distributions as capital gain dividends, other than those arising from the disposition of a United States real property interest, generally will not be subject to United States federal income taxation unless:

 

(a)                            the investment in the common shares is effectively connected with the foreign shareholder’s United States trade or business, in which case the foreign shareholder will be subject to the same treatment as domestic shareholders, except that a shareholder that is a foreign corporation may also be subject to the branch profits tax, as discussed above; or

 

(b)                           the foreign shareholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a tax home in the United States, in which case the nonresident alien individual will be subject to a 30% tax on the individual’s capital gains.

 

Except as described above, under the Foreign Investment in Real Property Tax Act, which is known as FIRPTA, distributions to a foreign shareholder that are attributable to gain from sales or exchanges of United States real property interests will cause the foreign shareholder to be treated as recognizing the gain as income effectively connected with a United States trade or business.  This rule applies whether or not a distribution is designated as a capital gain dividend.  Accordingly, foreign shareholders generally would be taxed on these distributions at the same rates applicable to U.S. shareholders, subject to a special alternative minimum tax in the case of nonresident alien individuals.  In addition, a foreign corporate shareholder might be subject to the branch profits tax discussed above.  We are required to withhold 35% of these distributions.  The withheld amount can be credited against the foreign shareholder’s United States federal income tax liability.

 

Although the law is not entirely clear on the matter, it appears that amounts we designate as

 

22



 

undistributed capital gains in respect of the common shares held by U.S. shareholders would be treated with respect to foreign shareholders in the same manner as actual distributions of capital gain dividends. Under that approach, foreign shareholders would be able to offset as a credit against the United States federal income tax liability their proportionate share of the tax paid by us on these undistributed capital gains.  In addition, foreign shareholders would be able to receive from the IRS a refund to the extent their proportionate share of the tax paid by us were to exceed their actual United States federal income tax liability.

 

Foreign Shareholders’ Sales of Common Shares.  Gain recognized by a foreign shareholder upon the sale or exchange of common shares generally will not be subject to United States taxation unless the shares constitute a “United States real property interest” within the meaning of FIRPTA.  The common shares will not constitute a United States real property interest so long as we are a domestically controlled REIT.  A domestically controlled REIT is a REIT in which at all times during a specified testing period less than 50% in value of its stock is held directly or indirectly by foreign shareholders.  We believe that we are a domestically controlled REIT.  Therefore, we believe that the sale of common shares will not be subject to taxation under FIRPTA.  However, because common shares and preferred shares are publicly traded, we cannot guarantee that we will continue to be a domestically controlled REIT.  In any event, gain from the sale or exchange of common shares not otherwise subject to FIRPTA will be subject to U.S. tax, if either:

 

(a)                            the investment in the common shares is effectively connected with the foreign shareholders United States trade or business, in which case the foreign shareholder will be subject to the same treatment as domestic shareholders with respect to the gain; or

 

(b)                           the foreign shareholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a tax home in the United States, in which case the nonresident alien individual will be subject to a 30% tax on the individual’s capital gains.

 

Even if we do not qualify as or cease to be a domestically controlled REIT, gain arising from the sale or exchange by a foreign shareholder of common shares still would not be subject to United States taxation under FIRPTA as a sale of a United States real property interest if:

 

(a)                            the class or series of shares being sold is regularly traded, as defined by applicable IRS regulations, on an established securities market such as the New York Stock Exchange; and

 

(b)                           the selling foreign shareholder owned 5% or less of the value of the outstanding class or series of shares being sold throughout the five-year period ending on the date of the sale or exchange.

 

If gain on the sale or exchange of common shares were subject to taxation under FIRPTA, the foreign shareholder would be subject to regular United States income tax with respect to the gain in the same manner as a taxable U.S. shareholder, subject to any applicable alternative minimum tax, a special alternative minimum tax in the case of nonresident alien individuals and the possible application of the branch profits tax in the case of foreign corporations.  The purchaser of the common shares would be required to withhold and remit to the IRS 10% of the purchase price.

 

 

23



 

Information Reporting Requirement and Backup Withholding

 

We will report to our domestic shareholders and the Internal Revenue Service the amount of distributions paid during each calendar year and the amount of tax withheld, if any.  Under certain circumstances, domestic shareholders may be subject to backup withholding.  Backup withholding will apply only if such domestic shareholder fails to furnish certain information to us or the Internal Revenue Service.  Backup withholding will not apply with respect to payments made to certain exempt recipients, such as corporations and tax-exempt organizations.  Domestic shareholders should consult their own tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining such an exemption.  Backup withholding is not an additional tax.  Rather, the amount of any backup withholding with respect to a payment to a domestic shareholder will be allowed as a credit against such persons United States federal income tax liability and may entitle such person to a refund, provided that the required information is furnished to the Internal Revenue Service.

 

Item 1B.   Unresolved Staff Comments

 

None.

 

Item 2.  Properties

 

As of December 31, 2007, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 579 properties in 24 states and the District of Columbia consisting of 152,821 units.  The Company’s properties are more fully described as follows:

 


Type

 


Properties

 


Units

 

Average
Units

 

December 31, 2007
Occupancy

 

Garden

 

505

 

131,865

 

261

 

94.6%

 

Mid/High-Rise

 

73

 

17,225

 

236

 

93.5%

 

Military Housing

 

1

 

3,731

 

3,731

 

95.8%

 

Total

 

579

 

152,821

 

 

 

 

 

 

Resident leases are generally for twelve months in length and often require security deposits.  The garden-style properties are generally defined as properties with two and/or three story buildings while the mid-rise/high-rise are defined as properties with greater than three story buildings.  These two property types typically provide residents with amenities, which may include a clubhouse, swimming pool, laundry facilities and cable television access.  Certain of these properties offer additional amenities such as saunas, whirlpools, spas, sports courts and exercise rooms or other amenities.  The military housing properties are defined as those properties located on military bases.

 

The distribution of the properties throughout the United States reflects the Company’s belief that geographic diversification helps insulate the portfolio from regional and economic influences.  At the same time, the Company has sought to create clusters of properties within each of its primary markets in order to achieve economies of scale in management and operation.  The Company may nevertheless acquire additional multifamily properties located anywhere in the continental United States.

 

The following tables set forth certain information by type and state relating to the Company’s properties (occupancy information excludes condominium conversion, development and unstabilized acquired properties) at December 31, 2007:

 

24



GARDEN-STYLE PROPERTIES

 

 


State

 


Properties

 


Units

 

Percentage of
Total Units

 

December 31, 2007
Occupancy

 

Arizona

 

43

 

12,216

 

    7.99%

 

    94.7%

 

California

 

106

 

26,487

 

17.33 

 

93.4

 

Colorado

 

27

 

9,003

 

5.89

 

94.5

 

Connecticut

 

19

 

2,426

 

1.59

 

94.2

 

Florida

 

84

 

26,976

 

17.65 

 

93.0

 

Georgia

 

29

 

8,684

 

5.68

 

93.2

 

Illinois

 

2

 

72

 

0.05

 

        — (1)

 

Maine

 

5

 

672

 

0.44

 

91.0

 

Maryland

 

20

 

5,081

 

3.32

 

93.6

 

Massachusetts

 

36

 

4,947

 

3.24

 

95.2

 

Minnesota

 

1

 

156

 

0.10

 

96.2

 

Missouri

 

1

 

192

 

0.13

 

96.9

 

New Hampshire

 

1

 

390

 

0.26

 

94.6

 

New Jersey

 

4

 

1,402

 

0.92

 

93.9

 

New Mexico

 

2

 

369

 

0.24

 

95.1

 

New York

 

1

 

300

 

0.20

 

95.3

 

North Carolina

 

19

 

4,852

 

3.17

 

95.1

 

Oklahoma

 

3

 

580

 

0.38

 

95.1

 

Oregon

 

9

 

3,164

 

2.07

 

95.6

 

Rhode Island

 

3

 

654

 

0.43

 

94.9

 

Tennessee

 

2

 

396

 

0.26

 

97.5

 

Texas

 

30

 

8,304

 

5.43

 

95.4

 

Virginia

 

15

 

4,699

 

3.08

 

93.2

 

Washington

 

43

 

9,843

 

6.44

 

94.4

 

 

 

 

 

 

 

 

 

 

 

Total Garden-Style

 

505

 

131,865

 

    86.29% 

 

 

 

Average Garden-Style

 

 

 

261

 

 

 

    94.6%

 

 


(1) Illinois only contains unsold condominium units, so no occupancy information has been provided.

 

 

25



 

MID-RISE/HIGH RISE PROPERTIES

 

 


State

 


Properties

 


Units

 

Percentage of
Total Units

 

December 31, 2007
Occupancy

 

California

 

16

 

2,238

 

   1.46%

 

   95.9%

 

Colorado

 

1

 

339

 

0.22

 

88.7

 

Connecticut

 

1

 

263

 

0.17

 

94.3

 

Florida

 

3

 

653

 

0.43

 

92.2

 

Georgia

 

4

 

1,178

 

0.77

 

94.9

 

Massachusetts

 

10

 

2,415

 

1.58

 

96.4

 

Minnesota

 

1

 

163

 

0.11

 

93.2

 

New Jersey

 

5

 

1,366

 

0.89

 

93.6

 

New York

 

11

 

2,915

 

1.91

 

91.8

 

Texas

 

1

 

150

 

0.10

 

94.7

 

Virginia

 

7

 

2,855

 

1.87

 

94.0

 

Washington

 

11

 

2,187

 

1.43

 

92.3

 

Washington, D.C.

 

2

 

503

 

0.33

 

93.3

 

 

 

 

 

 

 

 

 

 

 

Total Mid-Rise/High-Rise

 

73

 

17,225

 

   11.27%

 

 

 

Average Mid-Rise/High-Rise

 

 

 

236

 

 

 

   93.5%

 

 

MILITARY HOUSING PROPERTIES

 

Washington (Ft. Lewis)

 

1

 

3,731

 

   2.44%

 

  95.8%

 

 

 

 

 

 

 

 

 

 

 

Total Military Housing

 

1

 

3,731

 

   2.44%

 

 

 

Average Military Housing

 

 

 

3,731

 

 

 

  95.8%

 

 

 

 

 

 

 

 

 

 

 

Total Residential Portfolio

 

579

 

152,821

 

   100%

 

 

 

 

The properties currently in various stages of development at December 31, 2007 are included in the following table.

 

26



 

Consolidated Development Projects as of December 31, 2007

(Amounts in thousands except for project and unit amounts)

 

Projects

 

Location

 

No. of
Units

 

Total
Capital
Cost (1)

 

Total Book
Value to
Date

 

Total Book
Value Not

Placed in
Service

 

Total Debt

 

Percentage
Completed

 

Percentage
Leased

 

Percentage
Occupied

 

Estimated
Completion
Date

 

Estimated
Stabilization
Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development — Wholly Owned:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West End Apartments (a.k.a.Emerson/CRP II)

 

Boston, MA

 

310

 

$

167,953

 

$

138,440

 

$

138,440

 

$

 

92

%

29

%

25

%

Q2 2008

 

Q1 2009

 

Redmond Ridge

 

Redmond, WA

 

321

 

55,457

 

42,991

 

42,991

 

 

83

%

8

%

 

Q2 2008

 

Q3 2010

 

Crowntree Lakes

 

Orlando, FL

 

352

 

58,628

 

38,379

 

38,379

 

 

66

%

 

 

Q4 2008

 

Q4 2009

 

Key Isle at Windemere II

 

Orlando, FL

 

165

 

29,058

 

17,372

 

17,372

 

 

58

%

 

 

Q4 2008

 

Q1 2009

 

70 Greene (a.k.a. 77 Hudson)

 

Jersey City, NJ

 

480

 

269,958

 

109,147

 

109,147

 

 

42

%

 

 

Q4 2009

 

Q1 2011

 

Reserve at Town Center II

 

Mill Creek, WA

 

100

 

23,485

 

5,464

 

5,464

 

 

6

%

 

 

Q2 2010

 

Q4 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development — Wholly Owned

 

1,728

 

604,539

 

351,793

 

351,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development — Partially Owned:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alta Pacific (2)

 

Irvine, CA

 

132

 

46,416

 

41,143

 

41,143

 

28,260

 

88

%

 

 

Q1 2008

 

Q4 2008

 

City Lofts

 

Chicago, IL

 

278

 

71,109

 

52,614

 

52,614

 

27,569

 

84

%

 

 

Q3 2008

 

Q2 2009

 

Silver Spring

 

Silver Spring, MD

 

457

 

147,454

 

89,853

 

89,853

 

53,202

 

59

%

 

 

Q4 2008

 

Q3 2010

 

303 Third Street

 

Cambridge, MA

 

531

 

248,307

 

140,832

 

140,832

 

50,981

 

52

%

 

 

Q4 2008

 

Q1 2010

 

Montclair Metro

 

Montclair, NJ

 

163

 

48,730

 

11,398

 

11,398

 

1

 

16

%

 

 

Q2 2009

 

Q1 2010

 

Red Road Commons

 

South Miami, FL

 

404

 

128,816

 

35,000

 

35,000

 

17,387

 

3

%

 

 

Q1 2010

 

Q3 2011

 

111 Lawrence Street

 

Brooklyn, NY

 

492

 

283,968

 

49,769

 

49,769

 

 

1

%

 

 

Q2 2010

 

Q3 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development — Partially Owned

 

2,457

 

974,800

 

420,609

 

420,609

 

177,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development

 

 

 

4,185

 

1,579,339

 

772,402

 

772,402

 

177,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land Held for Development

 

 

 

N/A

 

 

396,962

 

396,962

 

218,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land/Projects Held for and/or Under Development

 

4,185

 

1,579,339

 

1,169,364

 

1,169,364

 

395,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed Not Stabilized — Wholly Owned (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bella Vista III

 

Woodland Hills, CA

 

264

 

73,336

 

73,190

 

 

 

 

 

62

%

59

%

Completed

 

Q3 2008

 

Highland Glen II

 

Westwood, MA

 

102

 

21,620

 

19,797

 

 

 

 

 

39

%

33

%

Completed

 

Q3 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Completed Not Stabilized

 

 

 

366

 

94,956

 

92,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed And Stabilized During the Quarter:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mozaic (a.k.a. Union Station)

 

Los Angeles, CA

 

272

 

69,661

 

67,849

 

 

47,206

 

 

 

91

%

90

%

Completed

 

Stabilized

 

Vintage

 

Ontario, CA

 

300

 

54,722

 

54,722

 

 

33,000

 

 

 

94

%

96

%

Completed

 

Stabilized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Completed And Stabilized During the Quarter

 

 

 

572

 

124,383

 

122,571

 

 

80,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Projects

 

 

 

5,123

 

$

1,798,678

 

$

1,384,922

 

$

1,169,364

 

$

475,869

 

 

 

 

 

 

 

 

 

 

 


(1)

 

Total capital cost represents estimated development cost for projects under development and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP.

 

 

 

(2)

 

Debt is primarily tax-exempt bonds that are entirely outstanding, with $6.7 million held in escrow by the lender and released as draw requests are made. This amount is classified as deposits — restricted in the consolidated balance sheets at December 31, 2007.

 

 

 

(3)

 

Properties included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing.

 

 

27



 

Item 3.  Legal Proceedings

 

The Company is party to a housing discrimination lawsuit brought by a non-profit civil rights organization in April 2006 in the U.S. District Court for the District of Maryland.  The suit alleges that the Company designed and built approximately 300 of its properties in violation of the accessibility requirements of the Fair Housing Act and Americans With Disabilities Act.  The suit seeks actual and punitive damages, injunctive relief (including modification of non-compliant properties), costs and attorneys’ fees.  The Company believes it has a number of viable defenses, including that a majority of the named properties were completed before the operative dates of the statutes in question and/or were not designed or built by the Company.  Accordingly, the Company is defending the suit vigorously.  Due to the pendency of the Company’s defenses and the uncertainty of many other critical factual and legal issues, it is not possible to determine or predict the outcome of the suit and as a result, no amounts have been accrued at December, 31, 2007.  While no assurances can be given, the Company does not believe that the suit, if adversely determined, would have a material adverse effect on the Company.

 

The Company does not believe there is any other litigation pending or threatened against it that, individually or in the aggregate, reasonably may be expected to have a material adverse effect on the Company.

 

Item 4.  Submission of Matters to a Vote of Security Holders

 

None.

 

 

28



 

PART II

 

Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Common Share Market Prices and Dividends

 

The following table sets forth, for the years indicated, the high, low and closing sales prices for and the distributions paid on the Company’s Common Shares, which trade on the New York Stock Exchange under the trading symbol EQR.

 

 

 

Sales Price

 

 

 

 

 

High

 

Low

 

Closing

 

Distributions

 

2007

 

 

 

 

 

 

 

 

 

Fourth Quarter Ended December 31, 2007

 

$

45.01

 

$

33.79

 

$

36.47

 

$

0.4825

 

Third Quarter Ended September 30, 2007

 

$

47.48

 

$

35.00

 

$

42.36

 

$

0.4625

 

Second Quarter Ended June 30, 2007

 

$

52.25

 

$

44.36

 

$

45.63

 

$

0.4625

 

First Quarter Ended March 31, 2007

 

$

56.46

 

$

46.66

 

$

48.23

 

$

0.4625

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Price

 

 

 

 

 

High

 

Low

 

Closing

 

Distributions

 

2006

 

 

 

 

 

 

 

 

 

Fourth Quarter Ended December 31, 2006

 

$

61.50

 

$

49.42

 

$

50.75

 

$

0.4625

 

Third Quarter Ended September 30, 2006

 

$

51.35

 

$

44.04

 

$

50.58

 

$

0.4425

 

Second Quarter Ended June 30, 2006

 

$

47.47

 

$

41.45

 

$

44.73

 

$

0.4425

 

First Quarter Ended March 31, 2006

 

$

47.74

 

$

38.84

 

$

46.79

 

$

0.4425

 

 

The number of record holders of Common Shares at January 31, 2008 was approximately 4,000.  The number of outstanding Common Shares as of January 31, 2008 was 269,644,705.

 

Common Shares Repurchased in the Quarter Ended December 31, 2007

 

The Company repurchased the following Common Shares during the quarter ended December 31, 2007:



Period

 


Total Number
of Common
Shares
Purchased (1)

 


Average Price
Paid Per Share (1)

 


Total Number of
Common Shares
Purchased as Part of
Publicly Announced
Plans or Programs (1)

 

Dollar Value of
Common Shares
that May Yet Be
Purchased Under
the Plans or
Programs (1)

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

 

$

 

 

$

65,045,391

 

 

 

 

 

 

 

 

 

 

 

November 2007

 

1,600,000

 

$

38.30

 

1,600,000

 

$

3,762,666

 

 

 

 

 

 

 

 

 

 

 

December 2007

 

790,000

 

$

35.69

 

790,000

 

$

475,568,955

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter 2007

 

2,390,000

 

$

37.44

 

2,390,000

 

 

 


 

(1)

 

The Common Shares repurchased during the quarter ended December 31, 2007 represent Common Shares repurchased under the Company’s publicly announced share repurchase program approved by its Board of Trustees. All shares were repurchased in the open market. As of December 31, 2007, transactions to repurchase 125,000 of the 2,390,000 Common Shares had not yet settled. On April 27, May 24, and December 3, 2007, the Board of Trustees approved an increase of $200.1 million, an additional $500.0 million and an additional $500.0 million, respectively, to the Company’s authorized share repurchase program. Considering the above additional authorizations and the repurchase activity for the quarter, the Company has authorization to repurchase an additional $475.6 million of its shares as of December 31, 2007.

 

 

29



 

Equity Compensation Plan Information

 

The following table provides information as of December 31, 2007 with respect to the Company’s Common Shares that may be issued under its existing equity compensation plans.

 




Plan Category

 


Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights

 


Weighted average

exercise price of

outstanding
options, warrants
and rights

 

Number of securities
remaining available
for future issuance
under equity
compensation plans

(excluding securities
in column (a))

 

 

 

(a) (1) (2)

 

(b) (2)

 

(c) (3)

 

Equity compensation plans approved by shareholders

 

9,185,141

 

$32.37

 

14,473,789

 

 

 

 

 

 

 

 

 

Equity compensation plans not approved by shareholders

 

N/A

 

N/A

 

N/A

 


 

(1)

Amount shown includes 5,400 shares reserved for issuance upon exercise of outstanding options assumed by the Company as a result of mergers.

 

 

 

 

 

 

(2)

The amounts shown in columns (a) and (b) of the above table do not include 1,178,188 outstanding Common Shares (all of which are restricted and subject to vesting requirements) that were granted under the Company’s Fifth Amended and Restated 1993 Share Option and Share Award Plan, as amended (the “1993 Plan) and the Company’s 2002 Share Incentive Plan, as amended (the “2002 Plan”) and outstanding Common Shares that have been purchased by employees and trustees under the Company’s ESPP.

 

 

 

 

 

 

(3)

Includes 10,392,101 Common Shares that may be issued under the 2002 Plan, of which only 25% may be in the form of restricted shares, and 4,081,688 Common Shares that may be sold to employees and trustees under the ESPP.

 

The aggregate number of securities available for issuance (inclusive of restricted shares previously granted and outstanding and shares underlying outstanding options) under the 2002 Plan equals 7.5% of the Company’s outstanding Common Shares, calculated on a fully diluted basis, determined annually on the first day of each calendar year.  On January 1, 2008, this amount equaled 21,631,555, of which 10,392,101 shares were available for future issuance.

 

Item 6.  Selected Financial Data

 

The following table sets forth selected financial and operating information on a historical basis for the Company.  The following information should be read in conjunction with all of the financial statements and notes thereto included elsewhere in this Form 10-K.  The historical operating and balance sheet data have been derived from the historical financial statements of the Company.  All amounts have also been restated in accordance with the discontinued operations provisions of SFAS No. 144.  Certain capitalized terms as used herein are defined in the Notes to Consolidated Financial Statements.

 

30



 

CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

(Financial information in thousands except for per share and property data)

 

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

2004

 

2003

 

OPERATING DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues from continuing operations

 

$

2,038,084

 

$

1,789,932

 

$

1,495,510

 

$

1,308,643

 

$

1,142,985

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

$

20,176

 

$

30,976

 

$

68,372

 

$

8,702

 

$

15,553

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of minority interests

 

$

93,006

 

$

51,929

 

$

106,509

 

$

45,035

 

$

54,968

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations, net of minority interests

 

$

896,616

 

$

1,020,915

 

$

755,284

 

$

427,294

 

$

468,343

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

989,622

 

$

1,072,844

 

$

861,793

 

$

472,329

 

$

523,311

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

960,676

 

$

1,031,766

 

$

807,792

 

$

418,583

 

$

426,639

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares

 

$

0.23

 

$

0.04

 

$

0.18

 

$

(0.03

)

$

(0.15

)

Net income available to Common Shares

 

$

3.44

 

$

3.56

 

$

2.83

 

$

1.50

 

$

1.57

 

Weighted average Common Shares outstanding

 

279,406

 

290,019

 

285,760

 

279,744

 

272,337

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares

 

$

0.23

 

$

0.04

 

$

0.18

 

$

(0.03

)

$

(0.15

)

Net income available to Common Shares

 

$

3.39

 

$

3.50

 

$

2.79

 

$

1.50

 

$

1.57

 

Weighted average Common Shares outstanding

 

302,235

 

315,579

 

310,785

 

279,744

 

272,337

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

1.87

 

$

1.79

 

$

1.74

 

$

1.73

 

$

1.73

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET DATA (at end of period):

 

 

 

 

 

 

 

 

 

 

 

Real estate, before accumulated depreciation

 

$

18,333,350

 

$

17,235,175

 

$

16,590,370

 

$

14,852,621

 

$

12,874,379

 

Real estate, after accumulated depreciation

 

$

15,163,225

 

$

14,212,695

 

$

13,702,230

 

$

12,252,794

 

$

10,578,366

 

Total assets

 

$

15,689,777

 

$

15,062,219

 

$

14,108,751

 

$

12,656,306

 

$

11,477,917

 

Total debt

 

$

9,508,733

 

$

8,057,656

 

$

7,591,073

 

$

6,459,806

 

$

5,360,489

 

Minority Interests

 

$

358,046

 

$

411,459

 

$

422,183

 

$

535,582

 

$

600,929

 

Shareholders’ equity

 

$

5,062,518

 

$

5,884,222

 

$

5,395,340

 

$

5,072,528

 

$

5,015,441

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA:

 

 

 

 

 

 

 

 

 

 

 

Total properties (at end of period)

 

579

 

617

 

926

 

939

 

968

 

Total apartment units (at end of period)

 

152,821

 

165,716

 

197,404

 

200,149

 

207,506

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from operations available to Common Shares and OP Units - basic (1)(2)

 

$

723,484

 

$

716,143

 

$

784,625

 

$

651,741

 

$

640,390

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow provided by (used for):

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

$

793,128

 

$

755,466

 

$

698,531

 

$

707,061

 

$

744,319

 

Investing activities

 

$

(200,645

)

$

(259,472

)

$

(592,201

)

$

(555,279

)

$

334,028

 

Financing activities

 

$

(801,929

)

$

(324,545

)

$

(101,007

)

$

(117,856

)

$

(1,058,643

)


(1)  The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventureswill be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to

 

31



 

the Operating Partnership in exchange for OP Units are collectively referred to as the “Minority Interests - Operating Partnership”. Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis. See Item 7 for a reconciliation of net income to FFO and FFO available to Common Shares and OP Units.

 

(2)  The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies.  FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP.  Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as measures of liquidity.  The Company’s calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

 

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Overview

 

The following discussion and analysis of the results of operations and financial condition of the Company should be read in connection with the Consolidated Financial Statements and Notes thereto.  Due to the Company’s ability to control the Operating Partnership and its subsidiaries other than entities owning interests in the Partially Owned Properties - Unconsolidated and certain other entities in which the Company has investments, the Operating Partnership and each such subsidiary entity has been consolidated with the Company for financial reporting purposes.  Capitalized terms used herein and not defined are as defined elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2007.

 

Forward-looking statements in this Item 7 as well as elsewhere in this Annual Report on Form 10-K are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These statements are based on current expectations, estimates, projections and assumptions made by management.  While the Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, which could cause actual results, performance, or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.  Many of these uncertainties and risks are difficult to predict and beyond management’s control.  Forward-looking statements are not guarantees of future performance, results or events.  The Company assumes no obligation to update or supplement forward-looking statements because of subsequent events.  Factors that might cause such differences include, but are not limited to, the following:

 

·                  We intend to actively acquire and develop multifamily properties for rental operations and/or conversion into condominiums, as well as upgrade and sell existing properties as individual condominiums.  We may underestimate the costs necessary to bring an acquired or development property up to standards established for its intended market position.  Additionally, we expect that other major real estate investors with significant capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development efforts.  This competition may increase prices for multifamily properties or decrease the price at which we expect to sell individual properties.  We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms.  We also plan to develop more properties ourselves in addition to co-investing with our development partners for either the rental or condominium market, depending on opportunities in each sub-market.  This may increase the overall level of risk associated with our developments.  The total number of development units, cost of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation;

 

 

32



 

·                  Sources of capital to the Company or labor and materials required for maintenance, repair, capital expenditure or development are more expensive than anticipated;

·                  Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new construction of multifamily housing, slow employment growth, availability of low interest mortgages for single-family home buyers and the potential for geopolitical instability, all of which are beyond the Company’s control; and

·                  Additional factors as discussed in Part I of this Annual Report on Form 10-K, particularly those under Risk Factors.

 

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company undertakes no obligation to publicly release any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.  Forward-looking statements and related uncertainties are also included in Notes 5 and 11 in the Notes to Consolidated Financial Statements in this report.

 

Results of Operations

 

In conjunction with our business objectives and operating strategy, the Company has continued to invest or recycle its capital investment in apartment properties located in strategically targeted markets during the years ended December 31, 2007 and December 31, 2006.  In summary, we:

 

Year Ended December 31, 2007:

 

·                  Acquired $1.7 billion of apartment properties consisting of 36 properties and 8,167 units, and $212.8 million of land parcels, all of which we deem to be in our strategic targeted markets; and

·                  Sold $1.9 billion of apartment properties consisting of 73 properties and 21,563 units, as well as 617 condominium units for $164.2 million and $50.0 million of land parcels.

 

Year Ended December 31, 2006:

 

·                  Acquired $1.8 billion of apartment properties consisting of 35 properties and 8,768 units, and $134.4 million of land parcels, all of which we deem to be in our strategic targeted markets; and

·                  Sold $2.3 billion of apartment properties consisting of 335 properties and 39,608 units, as well as 1,069 condominium units for $216.0 million and $1.6 million of land parcels.

 

On June 28, 2006, the Company announced that it agreed to sell its Lexford Housing Division for a cash purchase price of $1.086 billion.  The sale closed on October 5, 2006.  The Lexford Housing Division results are classified as discontinued operations, net of minority interests, in the consolidated statements of operations for all periods presented.  The Company recorded a gain on sale of approximately $418.7 million on the sale of the Lexford Housing Division in the fourth quarter of 2006.  In conjunction with the Lexford disposition, the Company paid off/extinguished $196.3 million of mortgage notes payable secured by the properties and incurred approximately $9.2 million in prepayment penalties upon extinguishment.

 

The Company’s primary financial measure for evaluating each of its apartment communities is net operating income (NOI).  NOI represents rental income less property and maintenance expense, real estate tax and insurance expense and property management expense.  The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Company’s apartment communities.

 

Properties that the Company owned for all of both 2007 and 2006 (the 2007 Same Store Properties), which represented 115,857 units, impacted the Company’s results of operations.  Properties that the Company owned for all of both 2006 and 2005 (the “2006 Same Store Properties”), which

 

 

 

33



 

represented 128,133 units, also impacted the Company’s results of operations.  Both the 2007 Same Store Properties and 2006 Same Store Properties are discussed in the following paragraphs.

 

The Company’s acquisition, disposition, completed development and consolidation of previously unconsolidated property activities also impacted overall results of operations for the years ended December 31, 2007 and 2006.  The impacts of these activities are also discussed in greater detail in the following paragraphs.

 

Comparison of the year ended December 31, 2007 to the year ended December 31, 2006

 

For the year ended December 31, 2007, income from continuing operations, net of minority interests, increased by approximately $41.1 million when compared to the year ended December 31, 2006.  The increase in continuing operations is discussed below.

 

Revenues from the 2007 Same Store Properties increased $67.2 million primarily as a result of higher rental rates charged to residents.  Expenses from the 2007 Same Store Properties increased $12.6 million primarily due to higher payroll, building, utility costs, insurance and real estate taxes.  The following tables provide comparative same store results and statistics for the 2007 Same Store Properties:

 

2007 vs. 2006

Year over Year Same Store Results/Statistics

$ in Thousands (except for Average Rental Rate) — 115,857 Same Store Units

 

 

 

 

Results

 

Statistics

 

Description

 

Revenues

 

Expenses

 

NOI

 

Average
Rental
Rate (1)

 

Occupancy

 

Turnover

 

2007

 

$

1,643,513

 

$

607,691

 

$

1,035,822

 

$

1,250

 

94.7

%

63.3

%

2006

 

$

1,576,322

 

$

595,074

 

$

981,248

 

$

1,199

 

94.7

%

64.9

%

Change

 

$

67,191

 

$

12,617

 

$

54,574

 

$

51

 

0.0

%

(1.6

%)

Change

 

4.3

%

2.1

%

5.6

%

4.3

%

 

 

 

 


(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period.

 

The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the 2007 Same Store Properties.

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

Operating income

 

$

565,817

 

$

452,956

 

Adjustments:

 

 

 

 

 

Non-same store operating results

 

(167,579

)

(61,520

)

Fee and asset management revenue

 

(9,183

)

(9,101

)

Fee and asset management expense

 

8,412

 

8,934

 

Depreciation

 

587,647

 

507,508

 

General and administrative

 

49,290

 

48,469

 

Impairment

 

1,418

 

34,002

 

 

 

 

 

 

 

Same store NOI

 

$

1,035,822

 

$

981,248

 

 

For properties that the Company acquired prior to January 1, 2007 and expects to continue to own through December 31, 2008, the Company anticipates the following same store results for the full year ending December 31, 2008:

 

34



2008 Same Store Assumptions

Physical Occupancy

 

94.5%

Revenue Change

 

3.00% to 4.00%

Expense Change

 

2.50% to 3.25%

NOI Change

 

3.00% to 4.75%

 

These 2008 assumptions are based on current expectations and are forward-looking.

 

Non-same store operating results increased $106.1 million and consist primarily of properties acquired in calendar years 2007 and 2006 as well as operations from completed development properties and our corporate housing business.

 

See also Note 20 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s segment disclosures.

 

Fee and asset management revenues, net of fee and asset management expenses, increased $0.6 million primarily as a result of an increase in property management fees from unconsolidated entities along with a decrease in asset management expenses from managing fewer properties for third parties and unconsolidated entities.  As of December 31, 2007 and 2006, the Company managed 14,472 units and 15,020 units, respectively, primarily for unconsolidated entities and our military housing venture at Fort Lewis.

 

Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third party management companies.  These expenses decreased by approximately $8.8 million or 9.1%.  This decrease is primarily attributable to lower overall payroll costs, various reserve adjustments for workers compensation and medical costs and lower training costs associated with the completion of a majority of the rollout of a new property management system, partially offset by higher legal and professional fees.

 

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased $80.1 million primarily as a result of additional depreciation expense on newly acquired properties and capital expenditures for all properties owned.

 

General and administrative expenses from continuing operations, which include corporate operating expenses, increased approximately $0.8 million between the periods under comparison.  This increase was primarily due to an increase in restricted share expense and severance costs associated with the resignation of two of the Company’s executives as well as less expense recovery related to a certain lawsuit in Florida (see Note 21), partially offset by a decrease in profit sharing and state and franchise taxes.  The Company anticipates that general and administrative expenses will approximate $48.0 million to $50.0 million for the year ending December 31, 2008.  The above assumption is based on current expectations and is forward-looking.

 

Impairment from continuing operations decreased $32.6 million primarily due to an impairment charge on goodwill of $30.0 million taken in 2006 related to the corporate housing business.  In addition, in 2006 the Company wrote-off $2.0 million of various deferred sales costs following the decision to halt the condominium conversion and sale process at five assets.

 

Interest and other income from continuing operations decreased approximately $10.8 million primarily as a result of $14.7 million of forfeited deposits for various terminated transactions along with $3.7 million in proceeds from eBay’s acquisition of Rent.com received during the year ended December 31, 2006. This was partially offset by $4.1 million received in 2007 for insurance litigation settlement proceeds, a $2.7 million increase in interest earned on 1031 exchange and earnest money deposits and a $0.7 million increase in interest earned on short-term investments.  The Company anticipates that interest and other income will approximate $5.0 million to $10.0 million for the year ending December 31, 2008.  The above assumption is based on current expectations and is forward-looking.

 

35



 

Interest expense from continuing operations, including amortization of deferred financing costs, increased approximately $67.4 million primarily as a result of higher overall debt levels outstanding due to the Company’s share repurchase activity as well as the timing of acquisitions and dispositions, partially offset by lower overall effective interest rates.  During the year ended December 31, 2007, the Company capitalized interest costs of approximately $45.1 million as compared to $20.7 million for the year ended December 31, 2006.  This capitalization of interest primarily relates to consolidated projects under development.  The effective interest cost on all indebtedness for the year ended December 31, 2007 was 5.96% as compared to 6.21% for the year ended December 31, 2006.  The Company anticipates that interest expense (including discontinued operations) will approximate $470.0 million to $490.0 million for the year ending December 31, 2008.  The above assumption is based on current expectations and is forward-looking.

 

Income from investments in unconsolidated entities increased approximately $1.0 million between the periods under comparison.  This increase is primarily due to the sale of the Company’s 7.075% ownership interest in Wellsford Park Highlands Corporation, an entity which owns a condominium development in Denver, Colorado and profit participation received from the sale of condominium units at  a development project that was sold in 2003.

 

Net gain on sales of unconsolidated entities increased $2.3 million primarily as a result of a $2.6 million gain on the sale of an unconsolidated institutional joint venture property during the year ended December 31, 2007.

 

Net gain on sales of land parcels increased $3.6 million primarily as a result of higher net gains realized in 2007 on the sales of land parcels compared to the net gains realized in 2006.

 

Discontinued operations, net of minority interests, decreased approximately $124.3 million between the periods under comparison.  This decrease is primarily due to a significant decrease in the number of properties sold during the year ended December 31, 2007 compared to the same period in 2006, as well as the mix of properties sold in each year.  See Note 13 in the Notes to Consolidated Financial Statements for further discussion.

 

Comparison of the year ended December 31, 2006 to the year ended December 31, 2005

 

For the year ended December 31, 2006, income from continuing operations, net of minority interests, decreased by approximately $54.6 million when compared to the year ended December 31, 2005.  The decrease in continuing operations is discussed below.

 

Revenues from the 2006 Same Store Properties increased $88.7 million primarily as a result of higher rental rates charged to residents.  Expenses from the 2006 Same Store Properties increased $23.9 million primarily due to higher maintenance, payroll, utility costs and real estate taxes.  The following tables provide comparative same store results and statistics for the 2006 Same Store Properties:

 

2006 vs. 2005

Year over Year Same Store Results/Statistics

$ in Thousands (except for Average Rental Rate) – 128,133 Same Store Units

 

 

 

 

Results

 

Statistics

 

Description

 

Revenues

 

Expenses

 

NOI

 

Average
Rental
Rate (1)

 

Occupancy

 

Turnover

 

2006

 

$

1,612,529

 

$

628,210

 

$

984,319

 

$

1,110

 

94.6

%

(64.6

%)

2005

 

$

1,523,858

 

$

604,318

 

$

919,540

 

$

1,050

 

94.6

%

(65.5

%)

Change

 

$

88,671

 

$

23,892

 

$

64,779

 

$

60

 

0.0

%

0.9

%

Change

 

5.8

%

4.0

%

7.0

%

5.7

%

 

 

 

 


(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period.

 

 

36



 

Non-same store operating results increased $151.0 million and consist primarily of properties acquired in calendar years 2006 and 2005 as well as our corporate housing business.

 

See also Note 20 in the Notes to Consolidated Financial Statements for additional discussion regarding the Companys segment disclosures.

 

Fee and asset management revenues, net of fee and asset management expenses decreased $1.5 million primarily as a result of lower income earned from managing fewer properties for third parties and unconsolidated entities.  As of December 31, 2006 and 2005, the Company managed 15,020 units and 16,269 units, respectively, primarily for unconsolidated entities and our military housing venture at Fort Lewis.

 

Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third party management companies.  These expenses increased by approximately $9.3 million or 10.7%.  This increase is primarily attributable to higher overall payroll costs and higher overall computer and training costs specific to the Company’s rollout of a new property management system.

 

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased $119.4 million primarily as a result of additional depreciation expense on newly acquired properties and capital expenditures for all properties owned.

 

General and administrative expenses from continuing operations, which include corporate operating expenses, decreased approximately $21.9 million between the periods under comparison.  This decrease was primarily due to lower executive compensation expense due to severance costs for several executive officers incurred during the year ended December 31, 2005 and a $2.8 million reimbursement of legal expenses during the year ended December 31, 2006.

 

Impairment from continuing operations increased $33.4 million primarily due to an impairment charge on goodwill of $30.0 million related to the corporate housing business and $2.0 million related to the write-off of various deferred sales costs following the decision to halt the condominium conversion and sale process at five assets.

 

Interest and other income from continuing operations decreased by approximately $37.4 million, primarily as a result of the $57.1 million in cash received during the year ended December 31, 2005 for the Company’s ownership interest in Rent.com, which was acquired by eBay, Inc.  This was partially offset by the $3.7 million in additional proceeds for Rent.com, an increase in interest earned on tax deferred 1031 exchange proceeds from the Lexford disposition and $14.7 million of forfeited deposits for various terminated transactions received during the year ended December 31, 2006.

 

Interest expense from continuing operations, including amortization of deferred financing costs, increased approximately $67.9 million primarily as a result of higher variable interest rates and overall debt levels outstanding.  During the year ended December 31, 2006, the Company capitalized interest costs of approximately $20.7 million as compared to $13.7 million for the year ended December 31, 2005.  This capitalization of interest primarily relates to consolidated projects under development.  The effective interest cost on all indebtedness for the year ended December 31, 2006 was 6.21% as compared to 6.16% for the year ended December 31, 2005.

 

Loss from investments in unconsolidated entities increased approximately $1.1 million between the periods under comparison.  This increase is primarily the result of consolidating previously unconsolidated properties as of January 1, 2006 as the result of EITF Issue No. 04-5.

 

Net gain on sales of unconsolidated entities decreased $1.0 million due to increased unconsolidated sales during the year ended December 31, 2005.

 

 

37



 

Net gain on sales of land parcels decreased $27.5 million due to a large gain recorded on the sale of one land parcel during the year ended December 31, 2005.

 

Discontinued operations, net of minority interests, increased approximately $265.6 million between the periods under comparison.  This increase is primarily the result of lower real estate net book values for properties sold during the year ended December 31, 2006 as compared to the same period in 2005.  See Note 13 in the Notes to Consolidated Financial Statements for further discussion.

 

Liquidity and Capital Resources

 

For the Year Ended December 31, 2007

 

As of January 1, 2007, the Company had approximately $260.3 million of cash and cash equivalents and $470.7 million available under its revolving credit facilities (net of $69.3 million which was restricted/dedicated to support letters of credit and not available for borrowing).  After taking into effect the various transactions discussed in the following paragraphs and the net cash provided by operating activities, the Company’s cash and cash equivalents balance at December 31, 2007 was approximately $50.8 million and the amount available on the Company’s revolving credit facilities was $1.3 billion (net of $80.8 million which was restricted/dedicated to support letters of credit and not available for borrowing).

 

During the year ended December 31, 2007, the Company generated proceeds from various transactions, which included the following:

 

·      Disposed of 78 properties, various individual condominium units and two land parcels, receiving net proceeds of approximately $2.0 billion;

·      Obtained $346.1 million in net proceeds from the issuance of $350.0 million of five-year 5.50% fixed rate public notes;

·      Obtained $640.6 million in net proceeds from the issuance of $650.0 million of ten-year 5.75% fixed rate public notes and terminated five forward starting swaps designated to hedge the note issuance, receiving net proceeds of $2.4 million;

·      Obtained a three-year (subject to two one-year extension options) $500.0 million floating rate term loan at LIBOR plus a spread (currently 42.5 basis points) dependent upon the current credit rating on the Operating Partnership’s long-term unsecured debt;

·      Obtained $827.8 million in new mortgage financing; and

·      Issued approximately 1.2 million Common Shares and received net proceeds of $35.9 million.

 

During the year ended December 31, 2007, the above proceeds were primarily utilized to:

 

·      Invest $480.2 million primarily in development projects;

·      Acquire 36 properties and eight land parcels, utilizing cash of $1.7 billion;

·      Repurchase 27.5 million Common Shares utilizing cash of $1.2 billion;

·      Repay $548.0 million of mortgage loans;

·      Repay $150.0 million of fixed rate public notes; and

·      Redeem the Series D Preferred Shares at a liquidation value of $175.0 million.

 

Depending on its analysis of market prices, economic conditions, and other opportunities for the investment of available capital, the Company may repurchase its Common Shares pursuant to its existing share buyback program authorized by the Board of Trustees.  On April 27, May 24 and December 3, 2007, the Board of Trustees approved an increase of $200.1 million, an additional $500.0 million and an additional $500.0 million, respectively, to the Company’s authorized share repurchase program.  As of December 31, 2007 and after giving effect to the above increases, the Company had authorization to repurchase an additional $475.6 million of its shares.  The Company repurchased $1.2 billion (27,484,346 shares at an average price per share of $44.62) of its Common Shares during the year ended December 31, 2007.  See Note 3 in the Notes to Consolidated Financial Statements for further discussion.

 

 

38



 

                The Company’s total debt summary and debt maturity schedules as of December 31, 2007, are as follows:

 

Debt Summary as of December 31, 2007

(Amounts in thousands)

 

 

 

 

Amounts (1)

 

% of Total

 

Weighted
Average
Rates (1)

 

Weighted
Average
Maturities
(years)

 

 

 

 

 

 

 

 

 

 

 

Secured

 

$

3,605,971

 

37.9

%

5.74

%

7.6

 

Unsecured

 

5,902,762

 

62.1

%

5.67

%

6.2

 

Total

 

$

9,508,733

 

100.0

%

5.69

%

6.7

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Debt:

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

$

2,475,279

 

26.0

%

6.15

%

4.8

 

Unsecured – Public/Private

 

5,002,664

 

52.6

%

5.65

%

6.5

 

Unsecured – Tax Exempt

 

111,390

 

1.2

%

5.05

%

21.3

 

Fixed Rate Debt

 

7,589,333

 

79.8

%

5.80

%

6.1

 

 

 

 

 

 

 

 

 

 

 

Floating Rate Debt:

 

 

 

 

 

 

 

 

 

Secured – Conventional

 

492,138

 

5.2

%

6.26

%

5.5

 

Secured – Tax Exempt

 

638,554

 

6.7

%

3.81

%

20.6

 

Unsecured – Public/Private

 

649,708

 

6.8

%

6.15

%

2.5

 

Unsecured – Revolving Credit Facility

 

139,000

 

1.5

%

5.68

%

4.1

 

Floating Rate Debt

 

1,919,400

 

20.2

%

5.31

%

9.1

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

9,508,733

 

100.0

%

5.69

%

6.7

 


(1) Net of the effect of any derivative instruments.  Weighted average rates are for the year ended December 31, 2007.

 

 

39



 

Debt Maturity Schedule as of December 31, 2007

(Amounts in thousands)

 


Year

 


Fixed
Rate (1)

 


Floating
Rate (1)

 


Total

 


% of Total

 

Weighted
Average Rates
on Fixed Rate
Debt (1)

 

Weighted Average
Rates on
Total Debt (1)

 

2008

 

$

457,610

 

$

83,391

 

$

541,001

 

5.7

%

6.65

%

6.54

%

2009

 

458,326

 

457,432

 

915,758

 

9.6

%

6.35

%

5.47

%

2010 (2)

 

280,414

 

550,982

 

831,396

 

8.7

%

7.04

%

6.07

%

2011 (3)

 

1,503,562

 

41,537

 

1,545,099

 

16.3

%

5.56

%

5.54

%

2012 (4)

 

907,986

 

139,000

 

1,046,986

 

11.0

%

6.08

%

5.92

%

2013

 

566,267

 

 

566,267

 

6.0

%

5.93

%

5.93

%

2014

 

517,445

 

 

517,445

 

5.4

%

5.28

%

5.28

%

2015

 

355,587

 

 

355,587

 

3.7

%

6.41

%

6.41

%

2016

 

1,089,320

 

 

1,089,320

 

11.5

%

5.32

%

5.32

%

2017

 

803,649

 

456

 

804,105

 

8.5

%

6.01

%

6.01

%

2018+

 

649,167

 

646,602

 

1,295,769

 

13.6

%

6.20

%

5.38

%

Total

 

$

7,589,333

 

$

1,919,400

 

$

9,508,733

 

100.0

%

5.91

%

5.71

%


(1)          Net of the effect of any derivative instruments. Weighted average rates are as of December 31, 2007.

 

(2)          Includes the Company’s $500.0 million floating rate term loan facility, which matures on October 5, 2010, subject to two one-year extension options exercisable by the Company.

 

(3)          Includes $650.0 million of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.

 

(4)          Includes $139.0 million outstanding on the Company’s $1.5 billion unsecured revolving credit facility, which matures on February 28, 2012.

 

40



 

The following table provides a summary of the Company’s unsecured debt as of December 31, 2007:

 

Unsecured Debt Summary as of December 31, 2007

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

Unamortized

 

 

 

 

 

 

 

Coupon

 

Due

 

Face

 

Premium/

 

Net

 

 

 

 

 

Rate

 

Date

 

Amount

 

(Discount)

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.500

%

08/15/08

(1)

$

130,000

 

$

 

$

130,000

 

 

 

 

 

4.750

%

06/15/09

(2)

300,000

 

(400

)

299,600

 

 

 

 

 

6.950

%

03/02/11

 

300,000

 

2,864

 

302,864

 

 

 

 

 

6.625

%

03/15/12

 

400,000

 

(1,236

)

398,764

 

 

 

 

 

5.500

%

10/01/12

 

350,000

 

(1,640

)

348,360

 

 

 

 

 

5.200

%

04/01/13

 

400,000

 

(622

)

399,378

 

 

 

 

 

5.250

%

09/15/14

 

500,000

 

(412

)

499,588

 

 

 

 

 

6.584

%

04/13/15

 

300,000

 

(809

)

299,191

 

 

 

 

 

5.125

%

03/15/16

 

500,000

 

(439

)

499,561

 

 

 

 

 

5.375

%

08/01/16

 

400,000

 

(1,592

)

398,408

 

 

 

 

 

5.750

%

06/15/17

 

650,000

 

(4,832

)

645,168

 

 

 

 

 

7.125

%

10/15/17

 

150,000

 

(635

)

149,365

 

 

 

 

 

7.570

%

08/15/26

 

140,000

 

 

140,000

 

 

 

 

 

3.850

%

08/15/26

(3)

650,000

 

(7,583

)

642,417

 

Floating Rate Adjustments

 

 

 

 

(2)

(150,000

)

 

(150,000

)

 

 

 

 

 

 

 

 

5,020,000

 

(17,336

)

5,002,664

 

Fixed Rate Tax Exempt Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.750

%

12/15/28

(1)

35,600

 

 

35,600

 

 

 

 

 

5.200

%

06/15/29

(1)

75,790

 

 

75,790

 

 

 

 

 

 

 

 

 

111,390

 

 

111,390

 

Floating Rate Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/15/09

(2)

150,000

 

 

150,000

 

FAS 133 Adjustments — net

 

 

(2)

(292

)

 

(292

)

Term Loan Facility

 

 

 

10/05/10

(4)

500,000

 

 

500,000

 

 

 

 

 

 

 

 

 

649,708

 

 

649,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving Credit Facility:

 

 

 

02/28/12

(5)

139,000

 

 

139,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Unsecured Debt

 

 

 

 

 

$

5,920,098

 

$

(17,336

)

$

5,902,762

 


(1)                 Notes are private. All other unsecured debt is public.

(2)                 $150.0 million in fair value interest rate swaps converts 50% of the 4.750% Notes due June 15, 2009 to a floating interest rate.

(3)                 Convertible notes mature on August 15, 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.

(4)                 Represents the Company’s $500.0 million term loan facility, which matures on October 5, 2010, subject to two one-year extension options exercisable by the Company.

(5)                 Represents amount outstanding on the Company’s $15 billion unsecured revolving credit facility which matures on February 28, 2012.

 

                As of February 27, 2008, an unlimited amount of debt securities remains available for issuance by the Operating Partnership under a registration statement that became automatically effective upon filing with the SEC in June 2006 (under SEC regulations enacted in 2005, the registration statement automatically expires on

 

41



 

June 29, 2009 and does not contain a maximum issuance amount).   As of February 27, 2008, $956.5 million in equity securities remains available for issuance by the Company under a registration statement the SEC declared effective in February 1998.

 

The Company’s “Consolidated Debt-to-Total Market Capitalization Ratio” as of December 31, 2007 is presented in the following table.  The Company calculates the equity component of its market capitalization as the sum of (i) the total outstanding Common Shares and assumed conversion of all OP Units at the equivalent market value of the closing price of the Company’s Common Shares on the New York Stock Exchange; (ii) the “Common Share Equivalent” of all convertible preferred shares and preference interests/units; and (iii) the liquidation value of all perpetual preferred shares outstanding.

 

Capital Structure as of December 31, 2007

(Amounts in thousands except for share and per share amounts)

 

Secured Debt

 

 

 

 

$

3,605,971

 

37.9

%

 

 

Unsecured Debt

 

 

 

 

5,763,762

 

60.6

%

 

 

Revolving Credit Facility

 

 

 

 

139,000

 

1.5

%

 

 

Total Debt

 

 

 

 

9,508,733

 

100.0

%

47.0

%

 

 

 

 

 

 

 

 

 

 

 

Common Shares

269,554,661

 

93.6

%

 

 

 

 

 

 

OP Units

18,420,320

 

6.4

%

 

 

 

 

 

 

Total Shares and OP Units

287,974,981

 

100.0

%

 

 

 

 

 

 

Common Share Equivalents (see below)

445,752

 

 

 

 

 

 

 

 

 

Total outstanding at quarter-end

288,420,733

 

 

 

 

 

 

 

 

 

Common Share Price at December 31, 2007

$

36.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,518,704

 

98.1

%

 

 

Perpetual Preferred Equity (see below)

 

 

 

 

200,000

 

1.9

%

 

 

Total Equity

 

 

 

 

10,718,704

 

100.0

%

53.0

%

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

$

20,227,437

 

 

 

100.0

%

 

Convertible Preferred Equity as of December 31, 2007

(Amounts in thousands except for share and per share amounts)

 

Series

 

Redemption Date

 

Outstanding Shares/Units

 

Liquidation
Value

 

Annual
Dividend
Per
Share/Unit

 

Annual
Dividend
Amount

 

Weighted
Average
Rate

 

Conversion
 Ratio

 

Common Share
Equivalents

 

Preferred Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.00% Series E

 

11/1/98

 

362,116

 

$

9,053

 

$

1.75

 

$

634

 

 

 

1.1128

 

402,963

 

7.00% Series H

 

6/30/98

 

24,359

 

609

 

1.75

 

43

 

 

 

1.4480

 

35,272

 

Junior Preference Units:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.00% Series B

 

7/29/09

 

7,367

 

184

 

2.00

 

15

 

 

 

1.020408

 

7,517

 

Total Convertible Preferred Equity

 

 

 

393,842

 

$

9,846

 

 

 

$

692

 

7.03

%

 

 

445,752

 

 

Perpetual Preferred Equity as of December 31, 2007

(Amounts in thousands except for share and per share amounts)

 

Series

 

Redemption
Date

 

Outstanding
Shares

 

Liquidation
Value

 

Annual
Dividend
Per Share

 

Annual
Dividend
Amount

 

Weighted
Average Rate

 

Preferred Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

8.29% Series K

 

12/10/26

 

1,000,000

 

$

50,000

 

$

4.145

 

$

4,145

 

 

 

6.48% Series N

 

6/19/08

 

600,000

 

150,000

 

16.20

 

9,720

 

 

 

Total Perpetual Preferred Equity

 

 

 

1,600,000

 

$

200,000

 

 

 

$

13,865

 

6.93

%

 

                The Company expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and certain scheduled unsecured note and mortgage note repayments, generally through its working capital, net cash provided by operating activities and borrowings under its revolving credit facilities.  The Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.  The Company also expects to meet its long-term liquidity requirements, such as scheduled unsecured note and mortgage debt maturities, property acquisitions, financing of construction and development activities and capital improvements through the

 

 

 

42



 

issuance of unsecured notes and equity securities, including additional OP Units, and proceeds received from the disposition of certain properties as well as joint ventures.  In addition, the Company has significant unencumbered properties available to secure additional mortgage borrowings in the event that the public capital markets are unavailable or the cost of alternative sources of capital is too high.  The fair value of and cash flow from these unencumbered properties are in excess of the requirements the Company must maintain in order to comply with covenants under its unsecured notes and line of credit.  Of the $18.3 billion in investment in real estate on the Company’s balance sheet at December 31, 2007, $12.0 billion or 65.5%, was unencumbered.

 

                The Operating Partnership’s senior debt credit ratings from Standard & Poors (S&P), Moody’s and Fitch are A-, Baal and A-, respectively.  The Company’s preferred equity ratings from S&P, Moody’s and Fitch are BBB+, Baa2 and BBB+, respectively.

 

                The Operating Partnership has a long-term revolving credit facility with potential borrowings of up to $1.5 billion which matures in February 2012.  This facility may, among other potential uses, be used to fund property acquisitions, costs for certain properties under development and short term liquidity requirements. As of February 25, 2008, $40.0 million was outstanding under this facility.

 

                See Note 21 in the Notes to Consolidated Financial Statements for discussion of the events which occurred subsequent to December 31, 2007.

 

                Capitalization of Fixed Assets and Improvements to Real Estate

 

                Our policy with respect to capital expenditures is generally to capitalize expenditures that improve the value of the property or extend the useful life of the component asset of the property.  We track improvements to real estate in two major categories and several subcategories:

 

·            Replacements (inside the unit).  These include:

·                  flooring such as carpets, hardwood, vinyl, linoleum or tile;

·                  appliances;

·                  mechanical equipment such as individual furnace/air units, hot water heaters, etc;

·                  furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and

·                  blinds/shades.

 

All replacements are depreciated over a five-year estimated useful life.  We expense as incurred all make-ready maintenance and turnover costs such as cleaning, interior painting of individual units and the repair of any replacement item noted above.

 

·            Building improvements (outside the unit).  These include:

·                  roof replacement and major repairs;

·                  paving or major resurfacing of parking lots, curbs and sidewalks;

·                  amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems and offices;

·                  major building mechanical equipment systems;

·                  interior and exterior structural repair and exterior painting and siding;

·                  major landscaping and grounds improvement; and

·                  vehicles and office and maintenance equipment.

 

All building improvements are depreciated over a five to ten-year estimated useful life.  We capitalize building improvements and upgrades only if the item: (i) exceeds $2,500 (selected projects must exceed $10,000); (ii) extends the useful life of the asset; and (iii) improves the value of the asset.

 

                For the year ended December 31, 2007, our actual improvements to real estate totaled approximately $252.7 million.  This includes the following (amounts in thousands except for unit and per unit amounts):

 

43



 

Capitalized Improvements to Real Estate

For the Year Ended December 31, 2007

 

 

 

Total Units (1)

 

Replacements

 

Avg.
Per Unit

 

Building Improvements

 

Avg.
Per Unit

 

Total

 

Avg.
Per Unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Established Properties (2)

 

103,560

 

$

37,695

 

$

364

 

$

77,109

 

$

745

 

$

114,804

 

$

1,109

 

New Acquisition Properties (3)

 

27,696

 

9,433

 

371

 

66,182

 

2,605

 

75,615

 

2,976

 

Other (4)

 

7,388

 

16,398

 

 

 

45,858

 

 

 

62,256

 

 

 

Total

 

138,644

 

$

63,526

 

 

 

$

189,149

 

 

 

$

252,675

 

 

 

 


(1)          Total units exclude 10,446 unconsolidated units and 3,731 military housing (fee managed) units.

(2)          Wholly Owned Properties acquired prior to January 1, 2005.

(3)          Wholly Owned Properties acquired during 2005, 2006 and 2007.  Per unit amounts are based on a weighted average of 25,406 units.

(4)          Includes properties either partially owned or sold during the period, commercial space, corporate housing, condominium conversions and $22.2 million included in building improvements spent on twenty-six specific assets related to major renovations and repositioning of these assets.

 

                For the year ended December 31, 2006, our actual improvements to real estate totaled approximately $255.2 million.  This includes the following (amounts in thousands except for unit and per unit amounts):

 

Capitalized Improvements to Real Estate

For the Year Ended December 31, 2006

 

 

 

Total Units (1)

 

Replacements

 

Avg.
Per Unit

 

Building Improvements

 

Avg.
Per Unit

 

Total

 

Avg.
Per Unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Established Properties (2)

 

115,152

 

$

46,094

 

$

400

 

$

81,127

 

$

705

 

$

127,221

 

$

1,105

 

New Acquisition Properties (3)

 

29,512

 

9,194

 

336

 

35,854

 

1,311

 

45,048

 

1,647

 

Other (4)

 

6,651

 

30,384

 

 

 

52,527

 

 

 

82,911

 

 

 

Total

 

151,315

 

$

85,672

 

 

 

$

169,508

 

 

 

$

255,180

 

 

 

 


(1)          Total units exclude 10,846 unconsolidated units and 3,555 military housing (fee managed) units.

(2)          Wholly Owned Properties acquired prior to January 1, 2004.

(3)          Wholly Owned Properties acquired during 2004, 2005 and 2006.  Per unit amounts are based on a weighted average of 27,346 units.

(4)          Includes properties either Partially Owned or sold during the period, commercial space, condominium conversions and $21.4 million included in building improvements spent on seventeen specific assets related to major renovations and repositioning of these assets.

 

                The Company expects to fund approximately $104.0 million for capital expenditures for replacements and building improvements for all established properties, exclusive of condominium conversion properties, in 2008.  This includes an average of approximately $1,000 per unit for capital improvements for established properties.

 

                During the year ended December 31, 2007, the Company’s total non-real estate capital additions, such as computer software, computer equipment, and furniture and fixtures and leasehold improvements to the Company’s property management offices and its corporate offices, were approximately $7.7 million.  The Company expects to fund approximately $3.7 million in total additions to non-real estate property in 2008.

 

                Improvements to real estate and additions to non-real estate property are generally funded from net cash provided by operating activities.

 

44



 

                Derivative Instruments

 

In the normal course of business, the Company is exposed to the effect of interest rate changes.  The Company limits these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.

 

The Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.  When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

 

                See Note 11 in the Notes to Consolidated Financial Statements for additional discussion of derivative instruments at December 31, 2007.

 

                Other

 

                Minority Interests as of December 31, 2007 decreased by $53.4 million when compared to December 31, 2006, primarily as a result of the following:

 

·                  Distributions declared to Minority Interests, which amounted to $35.2 million (excluding Junior Preference Unit and Preference Interest distributions);

·                  The allocation of income from operations to holders of OP Units in the amount of $65.2 million;

·                  The conversion of 230,000 Series J Preference Interests with a liquidation value of $11.5 million into Common Shares; and

·                  The conversion of 1.5 million OP Units into Common Shares valued at $32.4 million.

 

Total distributions paid in January 2008 amounted to $141.6 million (excluding distributions on Partially Owned Properties), which included certain distributions declared during the fourth quarter ended December 31, 2007.

 

45



 

Off-Balance Sheet Arrangements and Contractual Obligations

 

                The Company has co-invested in various properties that are unconsolidated and accounted for under the equity method of accounting.  Management does not believe these investments have a materially different impact upon the Company’s liquidity, cash flows, capital resources, credit or market risk than its property management and ownership activities.  During 2000 and 2001, the Company entered into institutional ventures with an unaffiliated partner.  At the respective closing dates, the Company sold and/or contributed 45 properties containing 10,846 units to these ventures and retained a 25% ownership interest in the ventures.  The Company’s joint venture partner contributed cash equal to 75% of the agreed-upon equity value of the properties comprising the ventures, which was then distributed to the Company.  The Company’s strategy with respect to these ventures was to reduce its concentration of properties in a variety of markets.  See also Note 4 in the Notes to Consolidated Financial Statements for additional discussion regarding the sale of one of these properties containing 400 units.

 

                As of December 31, 2007, the Company has 13 projects totaling 4,185 units in various stages of development with estimated completion dates ranging through June 30, 2010.  The development agreements currently in place are discussed in detail in Note 18 of the Company’s Consolidated Financial Statements.

 

                See also Notes 2 and 6 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s investments in partially owned entities.

 

                The following table summarizes the Company’s contractual obligations for the next five years and thereafter as of December 31, 2007:

 

 

 

Payments Due by Year (in thousands)

 

Contractual Obligations

 

2008

 

2009

 

2010

 

2011

 

2012

 

Thereafter

 

Total

 

Debt (a)

 

$

541,001

 

$

915,758

 

$

831,396

 

$

1,545,099

 

$

1,046,986

 

$

4,628,493

 

$

9,508,733

 

Operating Leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Rent Payments (b)

 

6,491

 

5,733

 

5,154

 

3,356

 

987

 

59,259

 

80,980

 

Other Long-Term Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation (c)

 

813

 

1,454

 

1,454

 

2,058

 

2,058

 

12,810

 

20,647

 

Total

 

$

548,305

 

$

922,945

 

$

838,004

 

$

1,550,513

 

$

1,050,031

 

$

4,700,562

 

$

9,610,360

 


(a)          Amounts include aggregate principal payments only.  The Company paid $502,807, $465,388 and $397,886 for interest on debt,
inclusive of derivative instruments, for the years ended December 31, 2007, 2006 and 2005, respectively.

(b)         Minimum basic rent due for various office space the Company leases and fixed base rent due on ground leases for two properties.

(c)          Estimated payments to the Company’s Chairman, two former CEO’s and its former chief operating officer based on planned
retirement dates.

 

Critical Accounting Policies and Estimates

 

                The Company’s significant accounting policies are described in Note 2 in the Notes to Consolidated Financial Statements.  These policies were followed in preparing the consolidated financial statements at and for the year ended December 31, 2007 and are consistent with the year ended December 31, 2006.

 

                The Company has identified six significant accounting policies as critical accounting policies.  These critical accounting policies are those that have the most impact on the reporting of our financial condition and those requiring significant judgments and estimates.  With respect to these critical accounting policies, management believes that the application of judgments and estimates is consistently applied and produces financial information that fairly presents the results of operations for all periods presented.  The six critical accounting policies are:

 

46



 

Impairment of Long-Lived Assets, Including Goodwill

 

                                                The Company periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for indicators of permanent impairment.  The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and legal and environmental concerns.  Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment loss is warranted.

 

Depreciation of Investment in Real Estate

 

                                                The Company depreciates the building component of its investment in real estate over a 30-year estimated useful life, building improvements over a 5-year to 10-year estimated useful life and both the furniture, fixtures and equipment and replacements components over a 5-year estimated useful life, all of which are judgmental determinations.

 

Cost Capitalization

 

                                                See the Capitalization of Fixed Assets and Improvements to Real Estate section for discussion of the policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs.  In addition, the Company capitalizes the payroll and associated costs of employees directly responsible for and who spend all of their time on the supervision of major capital and/or renovation projects.  These costs are reflected on the balance sheet as an increase to depreciable property.

 

                                                The Company follows the guidance in SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, for all development projects and uses its professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred.  The Company capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend all of their time on development activities, with capitalization ceasing no later than 90 days following issuance of the certificate of occupancy.  These costs are reflected on the balance sheet as construction in progress for each specific property.  The Company expenses as incurred all payroll costs of on-site employees working directly at our properties, except as noted above on our development properties prior to certificate of occupancy issuance and on specific major renovation at selected properties when additional incremental employees are hired.

 

Fair Value of Financial Instruments, Including Derivative Instruments

 

                                                The valuation of financial instruments under SFAS No. 107 and SFAS No. 133 and its amendments (SFAS Nos. 137/138/149) requires the Company to make estimates and judgments that affect the fair value of the instruments.  The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes.  Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

 

Revenue Recognition

 

                                                Rental income attributable to leases is recorded when due from residents and is recognized monthly as it is earned, which is not materially different than on a straight-line basis.  Leases entered into between a resident and a property for the rental of an apartment unit are generally year-to-year, renewable upon consent of both parties on an annual or monthly basis.  Fee and asset management revenue and interest income are recorded on an accrual basis.

 

Share-Based Compensation

 

                                                The Company accounts for its share-based compensation in accordance with SFAS No. 123 (R),

 

47


 


 

Share-Based Payment, effective January 1, 2006, which results in compensation expense being recorded based on the fair value of the share compensation granted.

 

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable.  This model is only one method of valuing options and the Company’s use of this model should not be interpreted as an endorsement of its accuracy.  Because the Company’s share options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its share options and the actual value of the options may be significantly different.

 

Funds From Operations

 

For the year ended December 31, 2007, Funds From Operations (“FFO”) available to Common Shares and OP Units increased $7.3 million, or 1.0%, as compared to the year ended December 31, 2006.  For the year ended December 31, 2006, FFO available to Common Shares and OP Units decreased $68.5 million, or 8.7%, as compared to the year ended December 31, 2005.

 

The following is a reconciliation of net income to FFO available to Common Shares and OP Units for each of the five years ended December 31, 2007:

 

Funds From Operations

(Amounts in thousands)

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

2004

 

2003

 

Net income

 

$

989,622

 

$

1,072,844

 

$

861,793

 

$

472,329

 

$

523,311

 

Allocation to Minority Interests – Operating Partnership, net

 

4,369

 

784

 

3,842

 

(638

)

(3,371

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

587,647

 

507,508

 

388,061

 

331,312

 

275,734

 

Depreciation – Non-real estate additions

 

(8,279

)

(7,840

)

(5,541

)

(5,303

)

(6,774

)

Depreciation – Partially Owned and Unconsolidated Properties

 

4,378

 

4,338

 

2,487

 

1,903

 

19,911

 

Net gain on sales of unconsolidated entities

 

(2,629

)

(370

)

(1,330

)

(4,593

)

(4,942

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

28,767

 

85,010

 

140,686

 

165,000

 

195,590

 

Gain on sales of discontinued operations, net of minority interests

 

(880,541

)

(955,863

)

(650,563

)

(296,343

)

(287,372

)

Net incremental gain on sales of condominium units

 

20,771

 

48,961

 

100,361

 

32,682

 

10,356

 

Provision for income taxes – Condo sales

 

7,319

 

(3,161

)

(8,750

)

(628

)

(76

)

Provision for income taxes – Non-condo sales

 

(84

)

 

 

 

-

 

Minority Interests – Operating Partnership

 

1,090

 

5,010

 

7,580

 

9,766

 

14,695

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO (1)(2)

 

752,430

 

757,221

 

838,626

 

705,487

 

737,062

 

Preferred distributions

 

(22,792

)

(37,113

)

(49,642

)

(53,746

)

(76,435

)

Premium on redemption of Preferred Shares

 

(6,154

)

(3,965

)

(4,359

)

 

(20,237

)

 

 

 

 

 

 

 

 

 

 

 

 

FFO available to Common Shares and OP Units (1) (2)

 

$

723,484

 

$

716,143

 

$

784,625

 

$

651,741

 

$

640,390

 


(1)  The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.  The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only.  Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is

 

48



 

calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the “Minority Interests - Operating Partnership”. Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis.

 

(2)       The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies.  FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP.  Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as measures of liquidity.  The Company’s calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

 

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

 

Market risks relating to the Company’s financial instruments result primarily from changes in short-term LIBOR interest rates and changes in the SIFMA index for tax exempt debt.  The Company does not have any direct foreign exchange or other significant market risk.

 

The Company’s exposure to market risk for changes in interest rates relates primarily to the unsecured revolving and term credit facilities as well as floating rate tax exempt debt.  The Company typically incurs fixed rate debt obligations to finance acquisitions and capital expenditures, while it typically incurs floating rate debt obligations to finance working capital needs and as a temporary measure in advance of securing long-term fixed rate financing.  The Company continuously evaluates its level of floating rate debt with respect to total debt and other factors, including its assessment of the current and future economic environment.

 

The Company also utilizes certain derivative financial instruments to limit market risk.  Interest rate protection agreements are used to convert floating rate debt to a fixed rate basis or vice versa.  Derivatives are used for hedging purposes rather than speculation.  The Company does not enter into financial instruments for trading purposes.  See also Note 11 to the Notes to Consolidated Financial Statements for additional discussion of derivative instruments.

 

The fair values of the Company’s financial instruments (including such items in the financial statement captions as cash and cash equivalents, other assets, lines of credit, accounts payable and accrued expenses and other liabilities) approximate their carrying or contract values based on their nature, terms and interest rates that approximate current market rates.  The fair value of the Company’s mortgage notes payable and unsecured notes were approximately $3.7 billion and $5.6 billion, respectively, at December 31, 2007.

 

At December 31, 2007, the Company had total outstanding floating rate debt of approximately $1.9 billion, or 20.2% of total debt, net of the effects of any derivative instruments.  If market rates of interest on all of the floating rate debt permanently increased by 53 basis points (a 10% increase from the Company’s existing weighted average interest rates), the increase in interest expense on the floating rate debt would decrease future earnings and cash flows by approximately $10.2 million.  If market rates of interest on all of the floating rate debt permanently decreased by 53 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the decrease in interest expense on the floating rate debt would increase future earnings and cash flows by approximately $10.2 million.

 

At December 31, 2007, the Company had total outstanding fixed rate debt of approximately $7.6 billion, or 79.8% of total debt, net of the effects of any derivative instruments.  If market rates of interest

 

49



 

permanently increased by 58 basis points (a 10% increase from the Company’s existing weighted average interest rates), the estimated fair value of the Company’s fixed rate debt would be approximately $6.9 billion.  If market rates of interest permanently decreased by 58 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the estimated fair value of the Company’s fixed rate debt would be approximately $8.4 billion.

 

At December 31, 2007, the Company’s derivative instruments had a net liability fair value of approximately $10.6 million.  If market rates of interest permanently increased by 47 basis points (a 10% increase from the Company’s existing weighted average interest rates), the net liability fair value of the Company’s derivative instruments would be approximately $6.5 million.  If market rates of interest permanently decreased by 47 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the net liability fair value of the Company’s derivative instruments would be approximately $15.0 million.

 

At December 31, 2006, the Company had total outstanding floating rate debt of approximately $1.5 billion, or 18.4% of total debt, net of the effects of any derivative instruments.  If market rates of interest on all of the floating rate debt permanently increased by 49 basis points (a 10% increase from the Company’s existing weighted average interest rates), the increase in interest expense on the floating rate debt would decrease future earnings and cash flows by approximately $7.3 million.  If market rates of interest on all of the floating rate debt permanently decreased by 49 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the decrease in interest expense on the floating rate debt would increase future earnings and cash flows by approximately $7.3 million.

 

At December 31, 2006, the Company had total outstanding fixed rate debt of approximately $6.6 billion, or 81.6% of total debt, net of the effects of any derivative instruments.  If market rates of interest permanently increased by 60 basis points (a 10% increase from the Company’s existing weighted average interest rates), the estimated fair value of the Company’s fixed rate debt would be approximately $6.0 billion.  If market rates of interest permanently decreased by 60 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the estimated fair value of the Company’s fixed rate debt would be approximately $7.3 billion.

 

At December 31, 2006, the Company’s derivative instruments had a net liability fair value of approximately $16.2 million.  If market rates of interest permanently increased by 54 basis points (a 10% increase from the Company’s existing weighted average interest rates), the net liability fair value of the Company’s derivative instruments would be approximately $16.4 million.  If market rates of interest permanently decreased by 54 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the net liability fair value of the Company’s derivative instruments would be approximately $16.2 million.

 

These amounts were determined by considering the impact of hypothetical interest rates on the Company’s financial instruments.  The foregoing assumptions apply to the entire amount of the Company’s debt and derivative instruments and do not differentiate among maturities.  These analyses do not consider the effects of the changes in overall economic activity that could exist in such an environment.  Further, in the event of changes of such magnitude, management would likely take actions to further mitigate its exposure to the changes.  However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in the Company’s financial structure or results.

 

The Company cannot predict the effect of adverse changes in interest rates on its debt and derivative instruments and, therefore, its exposure to market risk, nor can there be any assurance that long term debt will be available at advantageous pricing.  Consequently, future results may differ materially from the estimated adverse changes discussed above.

 

Item 8.  Financial Statements and Supplementary Data

 

See Index to Consolidated Financial Statements on page F-1 of this Form 10-K.

 

50



 

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

                None.

 

Item 9A.   Controls and Procedures

 

(a)         Evaluation of Disclosure Controls and Procedures:

 

Effective as of December 31, 2007, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

(b)         Managements Report on Internal Control over Financial Reporting:

 

Equity Residential’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.  Under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial statement preparation and presentation.

 

Based on the Company’s evaluation under the framework in Internal Control — Integrated Framework, management concluded that its internal control over financial reporting was effective as of December 31, 2007.  Our internal control over financial reporting has been audited as of December 31, 2007 by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

 

(c)         Changes in Internal Control over Financial Reporting:

 

There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to above that occurred during the fourth quarter of 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Item 9B.   Other Information

 

None.

 

51



 

PART III

 

Items 10, 11, 12, 13 and 14.

 

Trustees, Executive Officers and Corporate Governance; Executive Compensation; Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships and Related Transactions, and Trustee Independence; and Principal Accounting Fees and Services.

 

The information required by Item 10, Item 11, Item 12, Item 13 and Item 14 is incorporated by reference to, and will be contained in, the Company’s definitive proxy statement, which the Company anticipates will be filed no later than April 17, 2008, and thus these items have been omitted in accordance with General Instruction G(3) to Form 10-K.

 

52



 

PART IV

 

Item 15.  Exhibits and Financial Statement Schedules.

 

(a) The following documents are filed as part of the Report:

 

(1) Financial Statements: See Index to Financial Statements and Schedule on page F-1 of this Form 10-K.

(2) Exhibits: See the Exhibit Index.

(3) Financial Statement Schedules:  See Index to Financial Statements attached hereto on page F-1 of this Form 10-K.

 

53



 

SIGNATURES

 

                Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

EQUITY RESIDENTIAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 /s/ David J. Neithercut

 

 

 

 

 

David J. Neithercut, President and

 

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

Date:

February 27, 2008

 

 

 

 



 

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

 

POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below, hereby constitutes and appoints David J. Neithercut, Mark J. Parrell and Ian S. Kaufman, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to do all acts and things which said attorneys and agents, or any of them, deem advisable to enable the company to comply with the Securities Exchange Act of 1934, as amended, and any requirements or regulations of the Securities and Exchange Commission in respect thereof, in connection with the company’s filing of an annual report on Form 10-K for the company’s fiscal year 2007, including specifically, but without limitation of the general authority hereby granted, the power and authority to sign his name as a trustee or officer, or both, of the company, as indicated below opposite his signature, to the Form 10-K, and any amendment thereto; and each of the undersigned does hereby fully ratify and confirm all that said attorneys and agents, or any of them, or the substitute of any of them, shall do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities set forth below and on the dates indicated:

 

 

Name

 

Title

 

Date

 

 

 

 

 

 /s/ David J. Neithercut

 

President, Chief Executive Officer and Trustee

 

February 18, 2008

David J. Neithercut

 

 

 

 

 

 

 

 

 

 /s/ Mark J. Parrell

 

Executive Vice President and Chief Financial Officer

 

February 22, 2008

Mark J. Parrell

 

 

 

 

 

 

 

 

 

 /s/ Ian S. Kaufman

 

First Vice President and Chief Accounting Officer

 

February 27, 2008

Ian S. Kaufman

 

 

 

 

 

 

 

 

 

 /s/ John W. Alexander

 

Trustee

 

February 18, 2008

John W. Alexander

 

 

 

 

 

 

 

 

 

 /s/ Charles L. Atwood

 

Trustee

 

February 20, 2008

Charles L. Atwood

 

 

 

 

 

 

 

 

 

 /s/ Stephen O. Evans

 

Trustee

 

February 17, 2008

Stephen O. Evans

 

 

 

 

 

 

 

 

 

 /s/ Boone A. Knox

 

Trustee

 

February 18, 2008

Boone A. Knox

 

 

 

 

 

 

 

 

 

 /s/ John E. Neal

 

Trustee

 

February 19, 2008

John E. Neal

 

 

 

 

 

 

 

 

 

 /s/ Desiree G. Rogers

 

Trustee

 

February 22, 2008

Desiree G. Rogers

 

 

 

 

 

 

 

 

 

 /s/ Sheli Z. Rosenberg

 

Trustee

 

February 25, 2008

Sheli Z. Rosenberg

 

 

 

 

 

 

 

 

 

 /s/ B. Joseph White

 

Trustee

 

February 19, 2008

B. Joseph White

 

 

 

 

 

 

 

 

 

 /s/ Gerald A. Spector

 

Vice Chairman of the Board of Trustees

 

February 22, 2008

Gerald A. Spector

 

 

 

 

 

 

 

 

 

 /s/ Samuel Zell

 

Chairman of the Board of Trustees

 

February 19, 2008

Samuel Zell

 

 

 

 

 

 


 


 

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

 

EQUITY RESIDENTIAL

 

 

 

 

 

 

PAGE

 

 

 

 

 

FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT

 

 

 

 

 

 

 

 

Report of Independent Registered Public Accounting Firm

 

F-2

 

 

 

 

 

 

Report of Independent Registered Public Accounting Firm

F-3

 

 

 

 

 

 

Consolidated Balance Sheets as of December 31, 2007 and 2006

F-4

 

 

 

 

 

 

Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005

 

F-5 to F-6

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005

 

F-7 to F-9

 

 

 

 

 

 

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2007, 2006 and 2005

 

F-10 to F-11

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 

F-12 to F-46

 

 

 

 

 

SCHEDULE FILED AS PART OF THIS REPORT

 

 

 

 

 

 

 

 

Schedule III - Real Estate and Accumulated Depreciation

 

S-1 to S-11

 

 

 

 

All other schedules have been omitted because they are inapplicable, not required or the information is included elsewhere in the consolidated financial statements or notes thereto.



 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Trustees and Shareholders

Equity Residential

 

We have audited the accompanying consolidated balance sheets of Equity Residential (the “Company”) as of December 31, 2007 and 2006 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2007.  Our audits also included the financial statement schedule listed in the accompanying index to the financial statements and schedule.  These financial statements and schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Equity Residential at December 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.  Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Equity Residential’s internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2008 expressed an unqualified opinion thereon.

 

 

 

 

/s/ ERNST & YOUNG LLP

 

 

 

ERNST & YOUNG LLP

 

 

 

 

 

 

 

 

Chicago, Illinois

 

 

 

February 22, 2008

 

 

 

 

 

F-2



 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Trustees and Shareholders

Equity Residential

 

We have audited Equity Residential’s (the “Company”) internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Criteria”).  Equity Residentials management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.  Our responsibility is to express an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

 

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

In our opinion, Equity Residential maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO Criteria.

 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Equity Residential as of December 31, 2007 and 2006 and the related consolidated statements of operations, changes in shareholders equity and cash flows for each of the three years in the period ended December 31, 2007 of Equity Residential and our report dated February 22, 2008, expressed an unqualified opinion thereon.

 

 

 

 

/s/ Ernst & Young LLP

 

 

 

Ernst & Young LLP

 

 

 

 

 

 

 

 

Chicago, Illinois

 

 

 

February 22, 2008

 

 

 

 

 

F-3



 

EQUITY RESIDENTIAL

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except for share amounts)

 

 



 

December 31,
2007

 

December 31,
2006

 

ASSETS

 

 

 

 

 

Investment in real estate

 

 

 

 

 

Land

 

$

3,607,305

 

$

3,217,672

 

Depreciable property

 

13,556,681

 

13,376,359

 

Projects under development

 

772,402

 

431,031

 

Land held for development

 

396,962

 

210,113

 

Investment in real estate

 

18,333,350

 

17,235,175

 

Accumulated depreciation

 

(3,170,125

)

(3,022,480

)

Investment in real estate, net

 

15,163,225

 

14,212,695

 

 

 

 

 

 

 

Cash and cash equivalents

 

50,831

 

260,277

 

Investments in unconsolidated entities

 

3,547

 

4,448

 

Deposits – restricted

 

253,276

 

391,825

 

Escrow deposits – mortgage

 

20,174

 

25,528

 

Deferred financing costs, net

 

56,271

 

43,384

 

Other assets

 

142,453

 

124,062

 

Total assets

 

$

15,689,777

 

$

15,062,219

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Liabilities:

 

 

 

 

 

Mortgage notes payable

 

$

3,605,971

 

$

3,178,223

 

Notes, net

 

5,763,762

 

4,419,433

 

Lines of credit

 

139,000

 

460,000

 

Accounts payable and accrued expenses

 

109,385

 

96,699

 

Accrued interest payable

 

124,717

 

91,172

 

Other liabilities

 

322,975

 

311,557

 

Security deposits

 

62,159

 

58,072

 

Distributions payable

 

141,244

 

151,382

 

Total liabilities

 

10,269,213

 

8,766,538

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

Minority Interests:

 

 

 

 

 

Operating Partnership

 

331,626

 

372,961

 

Preference Interests and Units

 

184

 

11,684

 

Partially Owned Properties

 

26,236

 

26,814

 

Total Minority Interests

 

358,046

 

411,459

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 1,986,475 shares issued and outstanding as of December 31, 2007 and 2,762,950 shares issued and outstanding as of December 31, 2006

 

209,662

 

386,574

 

Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 269,554,661 shares issued and outstanding as of December 31, 2007 and 293,551,633 shares issued and outstanding as of December 31, 2006

 

2,696

 

2,936

 

Paid in capital

 

4,266,538

 

5,349,194

 

Retained earnings

 

599,504

 

159,528

 

Accumulated other comprehensive loss

 

(15,882

)

(14,010

)

Total shareholders’ equity

 

5,062,518

 

5,884,222

 

Total liabilities and shareholders’ equity

 

$

15,689,777

 

$

15,062,219

 

 

See accompanying notes

 

F-4



 

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands except per share data)

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

REVENUES

 

 

 

 

 

 

 

Rental income

 

$

2,028,901

 

$

1,780,831

 

$

1,485,270

 

Fee and asset management

 

9,183

 

9,101

 

10,240

 

Total revenues

 

2,038,084

 

1,789,932

 

1,495,510

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Property and maintenance

 

530,793

 

469,267

 

394,850

 

Real estate taxes and insurance

 

207,286

 

172,618

 

165,248

 

Property management

 

87,421

 

96,178

 

86,873

 

Fee and asset management

 

8,412

 

8,934

 

8,555

 

Depreciation

 

587,647

 

507,508

 

388,061

 

General and administrative

 

49,290

 

48,469

 

70,382

 

Impairment

 

1,418

 

34,002

 

613

 

Total expenses

 

1,472,267

 

1,336,976

 

1,114,582

 

 

 

 

 

 

 

 

 

Operating income

 

565,817

 

452,956

 

380,928

 

 

 

 

 

 

 

 

 

Interest and other income

 

20,176

 

30,976

 

68,372

 

Interest:

 

 

 

 

 

 

 

Expense incurred, net

 

(484,776

)

(419,812

)

(353,674

)

Amortization of deferred financing costs

 

(10,522

)

(8,120

)

(6,381

)

 

 

 

 

 

 

 

 

Income before allocation to Minority Interests, income (loss) from investments in unconsolidated entities, net gain on sales of unconsolidated entities and land parcels and discontinued operations

 

90,695

 

56,000

 

89,245

 

Allocation to Minority Interests:

 

 

 

 

 

 

 

Operating Partnership, net

 

(4,369

)

(784

)

(3,842

)

Preference Interests and Units

 

(441

)

(2,002

)

(7,606

)

Partially Owned Properties

 

(2,200

)

(3,132

)

801

 

Premium on redemption of Preference Interests

 

 

(684

)

(4,134

)

Income (loss) from investments in unconsolidated entities

 

332

 

(631

)

470

 

Net gain on sales of unconsolidated entities

 

2,629

 

370

 

1,330

 

Net gain on sales of land parcels

 

6,360

 

2,792

 

30,245

 

Income from continuing operations, net of minority interests

 

93,006

 

51,929

 

106,509

 

Discontinued operations, net of minority interests

 

896,616

 

1,020,915

 

755,284

 

Net income

 

989,622

 

1,072,844

 

861,793

 

Preferred distributions

 

(22,792

)

(37,113

)

(49,642

)

Premium on redemption of Preferred Shares

 

(6,154

)

(3,965

)

(4,359

)

Net income available to Common Shares

 

$

960,676

 

$

1,031,766

 

$

807,792

 

 

 

 

 

 

 

 

 

Earnings per share – basic:

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares

 

$

0.23

 

$

0.04

 

$

0.18

 

Net income available to Common Shares

 

$

3.44

 

$

3.56

 

$

2.83

 

Weighted average Common Shares outstanding

 

279,406

 

290,019

 

285,760

 

 

 

 

 

 

 

 

 

Earnings per share – diluted:

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares

 

$

0.23

 

$

0.04

 

$

0.18

 

Net income available to Common Shares

 

$

3.39

 

$

3.50

 

$

2.79

 

Weighted average Common Shares outstanding

 

302,235

 

315,579

 

310,785

 

 

 

 

 

 

 

 

 

Distributions declared per Common Share outstanding

 

$

1.87

 

$

1.79

 

$

1.74

 

 

See accompanying notes

 

F-5



 

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Amounts in thousands except per share data)

 

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

Net income

 

$

989,622

 

$

1,072,844

 

$

861,793

 

Other comprehensive (loss) income – derivative and other instruments:

 

 

 

 

 

 

 

Unrealized holding (losses) gains arising during the year

 

(3,826

)

(1,785

)

4,357

 

Losses reclassified into earnings from other comprehensive income

 

1,954

 

2,247

 

2,541

 

Comprehensive income

 

$

987,750

 

$

1,073,306

 

$

868,691

 

 

 

See accompanying notes

 

 

F-6



 

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

 

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

 

$

989,622

 

$

1,072,844

 

$

861,793

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Allocation to Minority Interests:

 

 

 

 

 

 

 

Operating Partnership

 

65,165

 

72,574

 

58,514

 

Preference Interests and Units

 

441

 

2,002

 

7,606

 

Partially Owned Properties

 

2,200

 

3,132

 

(801

)

Premium on redemption of Preference Interests

 

 

684

 

4,134

 

Depreciation

 

616,414

 

592,637

 

528,958

 

Amortization of deferred financing costs

 

11,849

 

9,134

 

7,166

 

Amortization of discounts and premiums on debt

 

(4,990

)

(6,506

)

(3,502

)

Amortization of deferred settlements on derivative instruments

 

575

 

841

 

1,160

 

Impairment

 

1,726

 

34,353

 

613

 

(Income) from technology investments

 

 

(4,021

)

(57,054

)

(Income) loss from investments in unconsolidated entities

 

(332

)

631

 

(470

)

Distributions from unconsolidated entities – return on capital

 

102

 

171

 

 

Net (gain) on sales of unconsolidated entities

 

(2,629

)

(370

)

(1,330

)

Net (gain) on sales of land parcels

 

(6,360

)

(2,792

)

(30,245

)

Net (gain) on sales of discontinued operations

 

(940,247

)

(1,016,443

)

(697,655

)

Loss on debt extinguishments

 

3,339

 

12,171

 

10,977

 

Unrealized (gain) loss on derivative instruments

 

(1

)

7

 

10

 

Compensation paid with Company Common Shares

 

21,631

 

22,080

 

35,905

 

Other operating activities, net

 

(19

)

555

 

(279

)

 

 

 

 

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Decrease in deposits – restricted

 

3,406

 

2,225

 

5,829

 

(Increase) decrease in other assets

 

(5,352

)

975

 

(20,635

)

(Decrease) in accounts payable and accrued expenses

 

(2,526

)

(10,797

)

(10,400

)

Increase in accrued interest payable

 

33,545

 

17,192

 

8,171

 

Increase (decrease) in other liabilities

 

1,482

 

(50,727

)

(15,203

)

Increase in security deposits

 

4,087

 

2,914

 

5,269

 

Net cash provided by operating activities

 

793,128

 

755,466

 

698,531

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Investment in real estate – acquisitions

 

(1,680,074

)

(1,718,105

)

(2,229,881

)

Investment in real estate – development/other

 

(480,184

)

(291,338

)

(164,202

)

Improvements to real estate

 

(252,675

)

(255,180

)

(232,500

)

Additions to non-real estate property

 

(7,696

)

(10,652

)

(17,610

)

Interest capitalized for real estate under development

 

(45,107

)

(20,734

)

(13,701

)

Proceeds from disposition of real estate, net

 

2,012,939

 

2,318,247

 

1,978,087

 

Proceeds from disposition of unconsolidated entities

 

 

373

 

3,533

 

Proceeds from technology investments

 

 

4,021

 

82,054

 

Investments in unconsolidated entities

 

(191

)

(1,072

)

(1,480

)

Distributions from unconsolidated entities – return of capital

 

122

 

92

 

3,194

 

Decrease (increase) in deposits on real estate acquisitions, net

 

245,667

 

(296,589

)

(706

)

Decrease in mortgage deposits

 

5,354

 

10,098

 

683

 

 

 

See accompanying notes

 

F-7



 

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

 

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

CASH FLOWS FROM INVESTING ACTIVITIES (continued):

 

 

 

 

 

 

 

Consolidation of previously Unconsolidated Properties:

 

 

 

 

 

 

 

Via acquisition (net of cash acquired)

 

$

 

$

 

$

(62

)

Via EITF 04-5 (cash consolidated)

 

 

1,436

 

 

Acquisition of Minority Interests – Partially Owned Properties

 

 

(71

)

(1,989

)

Other investing activities, net

 

1,200

 

2

 

2,379

 

Net cash (used for) investing activities

 

(200,645

)

(259,472

)

(592,201

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Loan and bond acquisition costs

 

(26,257

)

(11,662

)

(12,816

)

Mortgage notes payable:

 

 

 

 

 

 

 

Proceeds

 

827,831

 

267,045

 

280,125

 

Restricted cash

 

(113,318

)

(20,193

)

 

Lump sum payoffs

 

(523,299

)

(466,035

)

(442,786

)

Scheduled principal repayments

 

(24,732

)

(26,967

)

(27,607

)

Prepayment premiums/fees

 

(3,339

)

(12,171

)

(10,977

)

Notes, net:

 

 

 

 

 

 

 

Proceeds

 

1,493,030

 

1,039,927

 

499,435

 

Lump sum payoffs

 

(150,000

)

(60,000

)

(190,000

)

Scheduled principal repayments

 

(4,286

)

(4,286

)

(4,286

)

Lines of credit:

 

 

 

 

 

 

 

Proceeds

 

17,536,000

 

6,417,500

 

6,291,300

 

Repayments

 

(17,857,000

)

(6,726,500

)

(5,672,300

)

Proceeds from (payments on) settlement of derivative instruments

 

2,370

 

10,722

 

(7,823

)

Proceeds from sale of Common Shares

 

7,165

 

7,972

 

8,285

 

Proceeds from exercise of options

 

28,760

 

69,726

 

54,858

 

Common Shares repurchased and retired

 

(1,221,680

)

(83,230

)

 

Redemption of Preferred Shares

 

(175,000

)

(115,000

)

(125,000

)

Redemption of Preference Interests

 

 

(25,500

)

(146,000

)

Premium on redemption of Preferred Shares

 

(24

)

(27

)

(43

)

Premium on redemption of Preference Interests

 

 

(10

)

(322

)

Payment of offering costs

 

(175

)

(125

)

(26

)

Other financing activities, net

 

(14

)

 

 

Contributions – Minority Interests – Partially Owned Properties

 

10,267

 

9,582

 

7,439

 

Distributions:

 

 

 

 

 

 

 

Common Shares

 

(526,281

)

(514,055

)

(496,004

)

Preferred Shares

 

(27,008

)

(39,344

)

(51,092

)

Preference Interests and Units

 

(453

)

(2,054

)

(7,778

)

Minority Interests – Operating Partnership

 

(35,543

)

(36,202

)

(35,833

)

Minority Interests – Partially Owned Properties

 

(18,943

)

(3,658

)

(11,756

)

Net cash (used for) financing activities

 

(801,929

)

(324,545

)

(101,007

)

Net (decrease) increase in cash and cash equivalents

 

(209,446

)

171,449

 

5,323

 

Cash and cash equivalents, beginning of year

 

260,277

 

88,828

 

83,505

 

Cash and cash equivalents, end of year

 

$

50,831

 

$

260,277

 

$

88,828

 

 

 

See accompanying notes

 

 

F-8



 

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

 

 

 

 

Year Ended December 31,

 

 

 

 

2007

 

2006

 

2005

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

 

 

 

Cash paid during the year for interest

 

$

502,807

 

$

465,388

 

$

397,886

 

 

 

 

 

 

 

 

 

Net cash (received) paid during the year for income, franchise and excise taxes

 

$

(1,587

)

$

11,750

 

$

11,605

 

 

 

 

 

 

 

 

 

Real estate acquisitions/dispositions/other:

 

 

 

 

 

 

 

Mortgage loans assumed

 

$

226,196

 

$

126,988

 

$

443,478

 

Valuation of OP Units issued

 

$

 

$

49,591

 

$

33,662

 

Mortgage loans (assumed) by purchaser

 

$

(76,744

)

$

(117,949

)

$

(35,031

)

 

 

 

 

 

 

 

 

Consolidation of previously Unconsolidated Properties – Via acquisition:

 

 

 

 

 

 

 

Investment in real estate

 

$

 

$

 

$

(5,608

)

Mortgage loans assumed

 

$

 

$

 

$

2,839

 

Minority Interests – Partially Owned Properties

 

$

 

$

 

$

59

 

Investments in unconsolidated entities

 

$

 

$

 

$

1,176

 

Net other liabilities recorded

 

$

 

$

 

$

1,472

 

 

 

 

 

 

 

 

 

Consolidation of previously Unconsolidated Properties – Via EITF 04-5:

 

 

 

 

 

 

 

Investment in real estate, net

 

$

 

$

(24,637

)

$

 

Mortgage loans consolidated

 

$

 

$

22,545

 

$

 

Investments in unconsolidated entities

 

$

 

$

2,602

 

$

 

Net other liabilities recorded

 

$

 

$

926

 

$

 

 

See accompanying notes

 

 

F-9



 

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands)

 

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

PREFERRED SHARES

 

 

 

 

 

 

 

Balance, beginning of year

 

$

386,574

 

$

504,096

 

$

636,216

 

Redemption of 9 1/8% Series B Cumulative Redeemable

 

 

 

(125,000

)

Redemption of 9 1/8% Series C Cumulative Redeemable

 

 

(115,000

)

 

Redemption of 8.60% Series D Cumulative Redeemable

 

(175,000

)

 

 

Conversion of 7.00% Series E Cumulative Convertible

 

(1,818

)

(2,357

)

(7,065

)

Conversion of 7.00% Series H Cumulative Convertible

 

(94

)

(165

)

(55

)

Balance, end of year

 

$

209,662

 

$

386,574

 

$

504,096

 

 

 

 

 

 

 

 

 

COMMON SHARES, $0.01 PAR VALUE

 

 

 

 

 

 

 

Balance, beginning of year

 

$

2,936

 

$

2,895

 

$

2,851

 

Conversion of Preferred Shares into Common Shares

 

1

 

1

 

3

 

Conversion of Preference Interests into Common Shares

 

3

 

7

 

 

Conversion of OP Units into Common Shares

 

15

 

17

 

11

 

Exercise of share options

 

10

 

27

 

22

 

Employee Share Purchase Plan (ESPP)

 

2

 

2

 

3

 

Share-based employee compensation expense:

 

 

 

 

 

 

 

Restricted/performance shares

 

4

 

6

 

5

 

Common Shares repurchased and retired

 

(275

)

(19

)

 

Balance, end of year

 

$

2,696

 

$

2,936

 

$

2,895

 

 

 

 

 

 

 

 

 

PAID IN CAPITAL

 

 

 

 

 

 

 

Balance, beginning of year

 

$

5,349,194

 

$

5,253,188

 

$

5,112,311

 

Common Share Issuance:

 

 

 

 

 

 

 

Conversion of Preferred Shares into Common Shares

 

1,911

 

2,521

 

7,117

 

Conversion of Preference Interests into Common Shares

 

11,497

 

22,993

 

 

Conversion of OP Units into Common Shares

 

32,430

 

27,865

 

24,185

 

Exercise of share options

 

28,750

 

69,699

 

54,836

 

Employee Share Purchase Plan (ESPP)

 

7,163

 

7,970

 

8,282

 

Share-based employee compensation expense:

 

 

 

 

 

 

 

Performance shares

 

1,278

 

1,795

 

7,697

 

Restricted shares

 

15,226

 

14,938

 

20,032

 

Share options

 

5,345

 

5,198

 

6,562

 

ESPP discount

 

1,701

 

1,578

 

1,591

 

Common Shares repurchased and retired

 

(1,226,045

)

(83,211

)

 

Offering costs

 

(175

)

(125

)

(26

)

Premium on redemption of Preferred Shares – original issuance costs

 

6,130

 

3,938

 

4,316

 

Premium on redemption of Preference Interests – original issuance costs

 

 

674

 

3,812

 

Supplemental Executive Retirement Plan (SERP)

 

(6,709

)

(9,947

)

(4,177

)

Adjustment for Minority Interests ownership in Operating Partnership

 

38,842

 

30,120

 

6,650

 

Balance, end of year

 

$

4,266,538

 

$

5,349,194

 

$

5,253,188

 

 

See accompanying notes

 

 

F-10



 

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)

(Amounts in thousands)

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

DEFERRED COMPENSATION

 

 

 

 

 

 

 

Balance, beginning of year

 

$

 

$

 

$

(18

)

Amortization to compensation expense:

 

 

 

 

 

 

 

Restricted shares

 

 

 

18

 

Balance, end of year

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS (DEFICIT)

 

 

 

 

 

 

 

Balance, beginning of year

 

$

159,528

 

$

(350,367

)

$

(657,462

)

Net income

 

989,622

 

1,072,844

 

861,793

 

Common Share distributions

 

(520,700

)

(521,871

)

(500,697

)

Preferred Share distributions

 

(22,792

)

(37,113

)

(49,642

)

Premium on redemption of Preferred Shares – cash charge

 

(24

)

(27

)

(43

)

Premium on redemption of Preferred Shares – original issuance costs

 

(6,130

)

(3,938

)

(4,316

)

Balance, end of year

 

$

599,504

 

$

159,528

 

$

(350,367

)

 

 

 

 

 

 

 

 

ACCUMULATED OTHER COMPREHENSIVE LOSS

 

 

 

 

 

 

 

Balance, beginning of year

 

$

(14,010

)

$

(14,472

)

$

(21,370

)

Accumulated other comprehensive (loss) income – derivative and other instruments:

 

 

 

 

 

 

 

Unrealized holding (losses) gains arising during the year

 

(3,826

)

(1,785

)

4,357

 

Losses reclassified into earnings from other comprehensive income

 

1,954

 

2,247

 

2,541

 

Balance, end of year

 

$

(15,882

)

$

(14,010

)

$

(14,472

)

 

 

See accompanying notes

 

F-11



 

EQUITY RESIDENTIAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.              Business

 

Equity Residential (“EQR”), a Maryland real estate investment trust (“REIT”) formed in March 1993, is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top United States growth markets.  EQR has elected to be taxed as a REIT.

 

EQR is the general partner of, and as of December 31, 2007 owned an approximate 93.6% ownership interest in, ERP Operating Limited Partnership, an Illinois limited partnership (the “Operating Partnership”).  The Company is structured as an umbrella partnership REIT (“UPREIT”), under which all property ownership and business operations are conducted through the Operating Partnership and its subsidiaries.  References to the “Company” include EQR, the Operating Partnership and those entities owned or controlled by the Operating Partnership and/or EQR.

 

As of December 31, 2007, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 579 properties in 24 states and the District of Columbia consisting of 152,821 units.  The ownership breakdown includes (table does not include various uncompleted development properties):

 

 

 

Properties

 

Units

Wholly Owned Properties

 

507

 

133,189

Partially Owned Properties:

 

 

 

 

Consolidated

 

27

 

5,455

Unconsolidated

 

44

 

10,446

Military Housing (Fee Managed)

 

1

 

3,731

 

 

579

 

152,821

 

The Wholly Owned Properties are accounted for under the consolidation method of accounting.  The Company beneficially owns 100% fee simple title to 505 of the 507 Wholly Owned Properties.  The Company owns the building and improvements and leases the land underlying the improvements under long-term ground leases that expire in 2026 for one property and 2077 for another property.  These properties are consolidated and reflected as real estate assets while the ground leases are accounted for as operating leases in accordance with Statement of Financial Accounting Standards (SFAS) No. 13, Accounting for Leases.

 

The “Partially Owned Properties - Consolidated” are controlled by the Company but have partners with minority interests and are accounted for under the consolidation method of accounting.  The “Partially Owned Properties - Unconsolidated” are partially owned but not controlled by the Company and consist of investments in partnership interests and/or subordinated mortgages that are accounted for under the equity method of accounting.  The “Military Housing (Fee Managed)” property consists of an investment in a limited liability company that, as a result of the terms of the operating agreement, is accounted for as a management contract right with all fees recognized as fee and asset management revenue.

 

2.                                      Summary of Significant Accounting Policies

 

Basis of Presentation

 

Due to the Company’s ability as general partner to control either through ownership or by contract the Operating Partnership and its subsidiaries, other than entities that own controlling interests in the

 

 

F-12



 

Partially Owned Properties - Unconsolidated and certain other entities in which the Company has investments, the Operating Partnership and each such subsidiary has been consolidated with the Company for financial reporting purposes.  Effective March 31, 2004, the consolidated financial statements also include all variable interest entities for which the Company is the primary beneficiary.

 

The Companys mergers and acquisitions were accounted for as purchases in accordance with either Accounting Principles Board (APB) Opinion No. 16, Business Combinations, or SFAS No. 141, Business CombinationsSFAS No. 141 requires all business combinations initiated after June 30, 2001 be accounted for under the purchase method of accounting.  The fair value of the consideration given by the Company in the mergers were used as the valuation basis for each of the combinations.  The accompanying consolidated statements of operations and cash flows include the results of the properties purchased through the mergers and through acquisitions from their respective closing dates.

 

Real Estate Assets and Depreciation of Investment in Real Estate

 

The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values in accordance with the provisions of SFAS No. 141.  In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio, and other market data.  The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.  The Company allocates the purchase price of acquired real estate to various components as follows:

 

·                  Land – Based on actual purchase price if acquired separately or market research/comparables if acquired with an operating property.

 

·                  Furniture, Fixtures and Equipment – Ranges between $8,000 and $13,000 per apartment unit acquired as an estimate of the fair value of the appliances & fixtures inside a unit.  The per-unit amount applied depends on the type of apartment building acquired.  Depreciation is calculated on the straight-line method over an estimated useful life of five years.

 

·                  In-Place Leases – The Company considers the value of acquired in-place leases that meet the definition outlined in SFAS No. 141, paragraph 37.  The amortization period is the average remaining term of each respective in-place acquired lease.

 

·                  Other Intangible Assets – The Company considers whether it has acquired other intangible assets that meet the definition outlined in SFAS No. 141, paragraph 39, including any customer relationship intangibles.  The amortization period is the estimated useful life of the acquired intangible asset.

 

·                  Building – Based on the fair value determined on an “as-if vacant” basis.  Depreciation is calculated on the straight-line method over an estimated useful life of thirty years.

 

Replacements inside a unit such as appliances and carpeting are depreciated over a five-year estimated useful life.  Expenditures for ordinary maintenance and repairs are expensed to operations as incurred and significant renovations and improvements that improve and/or extend the useful life of the asset are capitalized over their estimated useful life, generally five to ten years.  Initial direct leasing costs are expensed as incurred as such expense approximates the deferral and amortization of initial direct leasing costs over the lease terms.  Property sales or dispositions are recorded when title transfers to unrelated third parties, contingencies have been removed and sufficient cash consideration has been received by the Company.  Upon disposition, the related costs and accumulated depreciation are removed from the respective accounts.  Any gain or loss on sale is recognized in accordance with accounting principles generally accepted in the United States.

 

The Company classifies real estate assets as real estate held for disposition when it is certain a property will be disposed of in accordance with SFAS No. 144 (see further discussion below).

 

 

F-13



 

The Company classifies properties under development and/or expansion and properties in the lease up phase (including land) as construction in progress until construction has been completed and all certificates of occupancy permits have been obtained.

 

Impairment of Long-Lived Assets, Including Goodwill

 

In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No. 142 prohibits the amortization of goodwill and requires that goodwill be reviewed for impairment at least annually.  In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  SFAS Nos. 142 and 144 were effective for fiscal years beginning after December 15, 2001.  The Company adopted these standards effective January 1, 2002.  See Notes 13 and 19 for further discussion.

 

The Company periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for indicators of permanent impairment.  The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and legal and environmental concerns.  Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment loss is warranted.

 

For long-lived assets to be held and used, the Company compares the expected future undiscounted cash flows for the long-lived asset against the carrying amount of that asset.  If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, the Company further analyzes each individual asset for other temporary or permanent indicators of impairment.  An impairment loss would be recorded for the difference between the estimated fair value and the carrying amount of the asset if the Company deems this difference to be permanent.

 

For long-lived assets to be disposed of, an impairment loss is recognized when the estimated fair value of the asset, less the estimated cost to sell, is less than the carrying amount of the asset measured at the time that the Company has determined it will sell the asset.  Long-lived assets held for disposition and the related liabilities are separately reported at the lower of their carrying amounts or their estimated fair values, less their costs to sell, and are not depreciated after reclassification to real estate held for disposition.

 

Cost Capitalization

 

See the Real Estate Assets and Depreciation of Investment in Real Estate section for discussion of the policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs.  In addition, the Company capitalizes the payroll and associated costs of employees directly responsible for and who spend all of their time on the supervision of major capital and/or renovation projects.  These costs are reflected on the balance sheet as an increase to depreciable property.

 

The Company follows the guidance in SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, for all development projects and uses its professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred.  The Company capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend all of their time on development activities, with capitalization ceasing no later than 90 days following issuance of the certificate of occupancy.  These costs are reflected on the balance sheet as construction in progress for each specific property.  The Company expenses as incurred all payroll costs of on-site employees working directly at our properties, except as noted above on our development properties prior to certificate of occupancy issuance and on specific major renovation at selected properties when additional incremental employees are hired.

 

F-14



 

Cash and Cash Equivalents

 

The Company considers all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements purchased with a maturity of three months or less, at the date of purchase, to be cash equivalents.  The Company maintains its cash and cash equivalents at financial institutions.  The combined account balances at one or more institutions typically exceed the Federal Depository Insurance Corporation (“FDIC”) insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage.  The Company believes that the risk is not significant, as the Company does not anticipate the financial institutions’ non-performance.

 

Deferred Financing Costs

 

Deferred financing costs include fees and costs incurred to obtain the Company’s lines of credit and long-term financings.  These costs are amortized over the terms of the related debt.  Unamortized financing costs are written-off when debt is retired before the maturity date.  The accumulated amortization of such deferred financing costs was $28.0 million and $24.5 million at December 31, 2007 and 2006, respectively.

 

Fair Value of Financial Instruments, Including Derivative Instruments

 

The valuation of financial instruments under SFAS No. 107, Disclosures about Fair Value of Financial Instruments, and SFAS No. 133 and its amendments (SFAS Nos. 137/138/149), Accounting for Derivative Instruments and Hedging Activities, requires the Company to make estimates and judgments that affect the fair value of the instruments.  The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

 

In the normal course of business, the Company is exposed to the effect of interest rate changes.  The Company limits these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.

 

The Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.  When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

 

On January 1, 2001, the Company adopted SFAS No. 133 and its amendments (SFAS Nos. 137/138/149), which requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and to measure those instruments at fair value.  Additionally, the fair value adjustments will affect either shareholders equity or net income depending on whether the derivative instruments qualify as a hedge for accounting purposes and, if so, the nature of the hedging activity.  When the terms of an underlying transaction are modified, or when the underlying transaction is terminated or completed, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income each period until the instrument matures.  Any derivative instrument used for risk management that does not meet the hedging criteria of SFAS No. 133 is marked-to-market each period.  The Company does not use derivatives for trading or speculative purposes.

 

The fair value of the Companys mortgage notes payable and unsecured notes were approximately $3.7 billion and $5.6 billion, respectively, at December 31, 2007.  The fair values of the Companys financial instruments, other than mortgage notes payable, unsecured notes and derivative instruments, including cash and cash equivalents, lines of credit and other financial instruments, approximate their carrying or contract values.  See Note 11 for further discussion of derivative instruments.

 

F-15



 

Revenue Recognition

 

Rental income attributable to leases is recorded when due from residents and is recognized monthly as it is earned, which is not materially different than on a straight-line basis.  Leases entered into between a resident and a property, for the rental of an apartment unit, are generally year-to-year, renewable upon consent of both parties on an annual or monthly basis.  Fee and asset management revenue and interest income are recorded on an accrual basis.

 

Share-Based Compensation

 

The Company adopted SFAS No. 123(R), Share-Based Payment, as required effective January 1, 2006.  SFAS No. 123(R) requires all companies to expense share-based compensation (such as share options), as well as making other revisions to SFAS No. 123.  As the Company began expensing all share-based compensation effective January 1, 2003, the adoption of SFAS No. 123(R) did not have a material effect on its consolidated statements of operations or financial position.

 

The cost related to share-based employee compensation included in the determination of net income for the years ended December 31, 2007, 2006 and 2005 is equal to that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS No. 123.

 

The fair value of the option grants as computed under SFAS No. 123 would be recognized over the vesting period of the options.  The fair value for the Companys share options was estimated at the time the share options were granted using the Black-Scholes option pricing model with the following weighted-average assumptions:

 

 

 

2007

 

2006

 

2005

 

Expected volatility (1)

 

18.9

%

19.1

%

18.2

%

Expected life (2)

 

5 years

 

6 years

 

6 years

 

Expected dividend yield (3)

 

5.41

%

6.04

%

6.37

%

Risk-free interest rate (4)

 

4.74

%

4.52

%

3.81

%

Option valuation per share

 

$

6.26

 

$

4.22

 

$

2.64

 


(1)          Expected volatility — Estimated based on the historical volatility of EQR’s share price, on a monthly basis, for a period matching the expected life of each grant.

(2)          Expected life — Approximates the actual weighted average life of all share options granted since the Company went public in 1993.

(3)          Expected dividend yield — Calculated by averaging the historical annual yield on EQR shares for a period matching the expected life of each grant, with the annual yield calculated by dividing actual dividends by the average price of EQR’s shares in a given year.

(4)          Risk-free interest rate — The most current U.S. Treasury rate available prior to the grant date for a period matching the expected life of each grant.

 

The valuation method and assumptions are the same as those the Company used in accounting for option expense in its consolidated financial statements.  The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable.  This model is only one method of valuing options and the Companys use of this model should not be interpreted as an endorsement of its accuracy.  Because the Companys share options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its share options and the actual value of the options may be significantly different.

 

Income Taxes

 

Due to the structure of the Company as a REIT and the nature of the operations of its operating properties, no provision for federal income taxes has been made at the EQR level.  Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes.  The Company has elected Taxable REIT Subsidiary (“TRS”) status for certain of its corporate subsidiaries, primarily those entities engaged in condominium conversion and corporate housing activities and as a result, these entities will incur both federal and state income taxes on any taxable income of such entities.

 

 

F-16



 

Deferred tax assets and liabilities are recognized for future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to be recovered or settled.  The effect of deferred tax assets and liabilities are recognized in earnings in the period enacted.  The Companys deferred tax assets are generally the result of tax affected amortization of goodwill, differing depreciable lives on capitalized assets and the timing of expense recognition for certain accrued liabilities.  As of December 31, 2007, the Company has recorded a deferred tax asset of approximately $12.5 million, which was fully offset by a valuation allowance due to the uncertainty in forecasting future TRS taxable income.

 

The Company provided for income, franchise and excise taxes allocated as follows in the consolidated statements of operations for the years ended December 31, 2007, 2006 and 2005 (amounts in thousands):

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

General and administrative (1)

 

$

2,522

 

$

4,269

 

$

3,927

 

Discontinued operations, net of minority interests (2)

 

(7,311

)

3,624

 

9,626

 

 

 

 

 

 

 

 

 

Provision for income, franchise and excise taxes (3)

 

$

(4,789

)

$

7,893

 

$

13,553

 


(1)          Primarily includes state and local income, excise and franchise taxes.  In 2006, also includes $2.9 million of federal income taxes related to a forfeited deposit on a terminated sale transaction and included in income from continuing operations.  In 2005, also includes $2.0 million of federal income taxes related to the sale of land parcels owned by a TRS and included in income from continuing operations.

 

(2)          Primarily represents federal income taxes (recovered) incurred on the gains on sales of condominium units owned by a TRS and included in discontinued operations.  Also represents state and local income, excise and franchise taxes on operating properties sold and included in discontinued operations.

 

(3)          All provision for income tax amounts are current and none are deferred.

 

The Company utilized approximately $13.9 million and $43.9 million of net operating losses (NOL) during the years ended December 31, 2007 and 2005, respectively, and none were utilized in 2006.  The Company had no NOL carryforwards available as of January 1, 2008 or 2006.

 

During the years ended December 31, 2007, 2006 and 2005, the Companys tax treatment of dividends and distributions were as follows:

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

Tax treatment of dividends and distributions:

 

 

 

 

 

 

 

Ordinary dividends

 

$

 

$

1.276

 

$

0.902

 

Qualified dividends

 

 

0.090

 

0.070

 

Long-term capital gain

 

1.426

 

0.330

 

0.669

 

Unrecaptured section 1250 gain

 

0.444

 

0.094

 

0.099

 

Dividends and distributions declared per Common Share outstanding

 

$

1.870

 

$

1.790

 

$

1.740

 

 

The aggregate cost of land and depreciable property for federal income tax purposes as of December 31, 2007 and 2006 was approximately $9.7 billion and $10.2 billion, respectively.

 

Minority Interests

 

Operating Partnership:  Net income is allocated to minority interests based on their respective ownership percentage of the Operating Partnership.  The ownership percentage is calculated by dividing the number of units of limited partnership interest (“OP Units”) held by the minority interests by the total OP Units held by the minority interests and EQR.  Issuance of additional common shares of beneficial interest,

 

F-17



 

$0.01 par value per share (the “Common Shares”), and OP Units changes the ownership interests of both the minority interests and EQR.  Such transactions and the related proceeds are treated as capital transactions.

 

Partially Owned Properties:  The Company reflects minority interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Company that are not wholly owned by the Company.  The earnings or losses from those properties attributable to the minority interests are reflected as minority interests in partially owned properties in the consolidated statements of operations.

 

Use of Estimates

 

In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Reclassifications

 

Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year presentation.  These reclassifications have not changed the results of operations or shareholders equity.

 

Other

 

The Company adopted FASB Interpretation (FIN) No. 46, Consolidation of Variable Interest Entities, as required, effective March 31, 2004.  The adoption required the consolidation of all previously unconsolidated development projects.  FIN No. 46 requires the Company to consolidate the assets, liabilities and results of operations of the activities of a variable interest entity, which for the Company includes only its development partnerships, if the Company is entitled to receive a majority of the entitys residual returns and/or is subject to a majority of the risk of loss from such entitys activities.  The adoption of FIN No. 46 did not have any effect on net income as the aggregate results of operations of these development properties were previously included in income (loss) from investments in unconsolidated entities.

 

The Company adopted the disclosure provisions of SFAS No. 150 and FSP No. FAS 150-3, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, effective December 31, 2003.  SFAS No. 150 and FSP No. FAS 150-3 require the Company to make certain disclosures regarding noncontrolling interests that are classified as equity in the financial statements of a subsidiary but would be classified as a liability in the parents financial statements under SFAS No. 150 (e.g., minority interests in consolidated limited-life subsidiaries).  The Company is presently the controlling partner in various consolidated partnerships consisting of 27 properties and 5,455 units and various uncompleted development properties having a minority interest book value of $26.2 million at December 31, 2007.  Some of these partnerships contain provisions that require the partnerships to be liquidated through the sale of its assets upon reaching a date specified in each respective partnership agreement.  The Company, as controlling partner, has an obligation to cause the property owning partnerships to distribute proceeds of liquidation to the Minority Interests in these Partially Owned Properties only to the extent that the net proceeds received by the partnerships from the sale of its assets warrant a distribution based on the partnership agreements.  As of December 31, 2007, the Company estimates the value of Minority Interest distributions would have been approximately $106.9 million (Settlement Value) had the partnerships been liquidated.  This Settlement Value is based on estimated third party consideration realized by the partnerships upon disposition of the Partially Owned Properties and is net of all other assets and liabilities, including yield maintenance on the mortgages encumbering the properties, that would have been due on December 31, 2007 had those mortgages been prepaid.  Due to, among other things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the Minority Interests in the Companys Partially

 

F-18



 

Owned Properties is subject to change.  To the extent that the partnerships underlying assets are worth less than the underlying liabilities, the Company has no obligation to remit any consideration to the Minority Interests in Partially Owned Properties.

 

The Company adopted EITF Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (Issue 04-5), effective January 1, 2006.  Issue 04-5 provides guidance in determining whether a general partner controls a limited partnership.  The Company consolidated its Lexford syndicated portfolio consisting of 20 separate partnerships (10 properties) containing 1,272 units, all of which were sold October 5, 2006.  The adoption did not have a material effect on the results of operations or financial position.  See Note 4 for further discussion of the adoption of EITF Issue No. 04-5.

 

In March 2005, the FASB issued FIN No. 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of SFAS No. 143, Asset Retirement Obligations.  A conditional asset retirement obligation refers to a legal obligation to retire assets where the timing and/or method of settlement are conditioned on future events.  FIN No. 47 requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liabilitys fair value can be reasonably estimated.  The Company adopted the provisions of FIN No. 47 for the year ended December 31, 2005.  The adoption did not have a material impact on the Companys consolidated financial position, results of operations or cash flows.

 

In July 2006, the FASB ratified the consensus in FIN No. 48, Accounting for Uncertainty in Income Taxes.  FIN No. 48 creates a single model to address uncertainty in income tax positions and prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.  It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition and clearly scopes income taxes out of SFAS No. 5, Accounting for Contingencies.  The Company adopted FIN No. 48 as required effective January 1, 2007.  The adoption of FIN No. 48 did not have a material effect on the consolidated results of operations or financial position.

 

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements.  SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosure about fair value measurements. The Company will adopt SFAS No. 157 as required effective January 1, 2008.  While still under review, adoption is not expected to have a material effect on the consolidated results of operations or financial position.

 

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities.  SFAS No. 159 provides a Fair Value Option under which a company may irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial instruments.  The Fair Value Option will be available on a contract-by-contract basis with changes in fair value recognized in earnings as those changes occur.  SFAS No. 159 is effective beginning January 1, 2008, but the Company has decided not to adopt this optional standard.

 

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations.  SFAS No. 141(R) will significantly change the accounting for business combinations.  Under SFAS No. 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions.  SFAS No. 141(R) will change the accounting treatment for certain specific acquisition related items including: (1) expensing acquisition related costs as incurred; (2) valuing noncontrolling interests at fair value at the acquisition date; and (3) expensing restructuring costs associated with an acquired business.  SFAS No. 141(R) also includes a substantial number of new disclosure requirements.  SFAS No. 141(R) is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009.  We expect SFAS No. 141(R) will have an impact on our accounting for future business combinations once adopted, but we

 

F-19



 

are still currently assessing the impact it will have on the consolidated results of operations and financial position.

 

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements.  SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  It clarifies that a noncontrolling interest in a subsidiary (minority interest) is an ownership interest in the consolidated entity that should be reported as equity in the Consolidated Financial Statements and separate from the parent company’s equity.  Among other requirements, this statement requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the Consolidated Statements of Operations, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest.  This statement is effective for the Company on January 1, 2009.  The Company is currently evaluating the impact SFAS No. 160 will have on its consolidated results of operations and financial position.

 

3.                                      Shareholders’ Equity and Minority Interests

 

The following tables present the changes in the Company’s issued and outstanding Common Shares and OP Units for the years ended December 31, 2007, 2006 and 2005:

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

Common Shares outstanding at January 1,

 

293,551,633

 

289,536,344

 

285,076,915

 

 

 

 

 

 

 

 

 

Common Shares Issued:

 

 

 

 

 

 

 

Conversion of Series E Preferred Shares

 

80,895

 

104,904

 

314,485

 

Conversion of Series H Preferred Shares

 

5,463

 

9,554

 

3,182

 

Conversion of Preference Interests

 

324,484

 

679,686

 

 

Conversion of OP Units

 

1,494,263

 

1,653,988

 

1,085,446

 

Exercise of options

 

1,040,765

 

2,647,776

 

2,248,744

 

Employee Share Purchase Plan

 

189,071

 

213,427

 

286,751

 

Dividend Reinvestment – DRIP Plan

 

 

169

 

 

Restricted share grants, net

 

352,433

 

603,697

 

520,821

 

 

 

 

 

 

 

 

 

Common Shares Other:

 

 

 

 

 

 

 

Repurchased and retired

 

(27,484,346

)

(1,897,912

)

 

Common Shares outstanding at December 31,

 

269,554,661

 

293,551,633

 

289,536,344

 

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

OP Units outstanding at January 1,

 

19,914,583

 

20,424,245

 

20,552,940

 

 

 

 

 

 

 

 

 

OP Units Issued:

 

 

 

 

 

 

 

Acquisitions/consolidations

 

 

1,144,326

 

956,751

 

Conversion of OP Units to Common Shares

 

(1,494,263

)

(1,653,988

)

(1,085,446

)

OP Units Outstanding at December 31,

 

18,420,320

 

19,914,583

 

20,424,245

 

Total Common Shares and OP Units Outstanding at December 31,

 

287,974,981

 

313,466,216

 

309,960,589

 

OP Units Ownership Interest in Operating Partnership

 

6.4

%

6.4

%

6.6

%

 

 

 

 

 

 

 

 

OP Units Issued:

 

 

 

 

 

 

 

Acquisitions/consolidations – per unit

 

 

$

43.34

 

$

35.18

 

Acquisitions/consolidations – valuation

 

 

$

49.6 million

 

$

33.7 million

 

 

In February 1998, the Company filed and the SEC declared effective a Form S-3 Registration Statement to register $1.0 billion of equity securities.  In addition, the Company carried over $272.4 million related to a prior registration statement.  As of February 6, 2008, $956.5 million in equity securities remained available for issuance under this registration statement.

 

F-20


 


 

On April 27, May 24 and December 3, 2007, the Board of Trustees approved an increase of $200.1 million, an additional $500.0 million and an additional $500.0 million, respectively, to the Company’s authorized share repurchase program.  Considering the above additional authorizations and the repurchase activity for the year ended December 31, 2007, EQR has authorization to repurchase an additional $475.6 million of its shares as of December 31, 2007.

 

During the year ended December 31, 2007, the Company repurchased 27,484,346 of its Common Shares at an average price of $44.62 per share for total consideration of $1.2 billion.  These shares were retired subsequent to the repurchases.  Of the total shares repurchased, 84,046 shares were repurchased from employees at an average price of $53.85 per share (the average of the then current market prices) to cover the minimum statutory tax withholding obligations related to the vesting of employees restricted shares.  The remaining 27,400,300 shares were repurchased in the open market at an average price of $44.59 per share.  As of December 31, 2007, transactions to repurchase 125,000 of the 27,484,346 Common Shares had not yet settled.  As of December 31, 2007, the Company has reduced the number of Common Shares issued and outstanding by this amount and recorded a liability of $4.6 million included in other liabilities on the consolidated balance sheets.

 

During the year ended December 31, 2006, the Company repurchased 1,897,912 of its Common Shares in the open market at an average price of $43.85 per share.  The Company paid approximately $83.2 million for these shares, which were retired subsequent to the repurchases.

 

The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the “Minority Interests — Operating Partnership”.  Subject to certain restrictions, the Minority Interests — Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis.

 

Net proceeds from the Company’s Common Share and Preferred Share (see definition below) offerings are contributed by the Company to the Operating Partnership.  In return for those contributions, EQR receives a number of OP Units in the Operating Partnership equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in the Operating Partnership equal in number and having the same terms as the Preferred Shares issued in the equity offering).  As a result, the net offering proceeds from Common Shares and Preferred Shares are allocated between shareholders’ equity and Minority Interests — Operating Partnership to account for the change in their respective percentage ownership of the underlying equity of the Operating Partnership.

 

The Companys declaration of trust authorizes the Company to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares.

 

The following table presents the Company’s issued and outstanding Preferred Shares as of December 31, 2007 and 2006:

 

F-21



 

 

 

 

 

 

 

Annual Dividend per Share (3)

 

 

 

 

 

 

 

 

 

 

Amounts in thousands

 

 

 

Redemption Date (1) (2)

 

Conversion Rate (2)

 

 

December 31, 2007

 

December 31, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.60% Series D Cumulative Redeemable Preferred; liquidation value $250 per share; 0 and 700,000 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively

 

7/15/07

 

    N/A

 

       (5)

 

$

 

$

175,000

 

 

 

 

 

 

 

 

 

 

 

 

 

7.00% Series E Cumulative Convertible Preferred; liquidation value $25 per share; 362,116 and 434,816 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively

 

11/1/98

 

1.1128

 

$

  1.75

 

9,053

 

10,871

 

 

 

 

 

 

 

 

 

 

 

 

 

7.00% Series H Cumulative Convertible Preferred; liquidation value $25 per share; 24,359 and 28,134 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively

 

6/30/98

 

1.4480

 

$

  1.75

 

609

 

703

 

 

 

 

 

 

 

 

 

 

 

 

 

8.29% Series K Cumulative Redeemable Preferred; liquidation value $50 per share; 1,000,000 shares issued and outstanding at December 31, 2007 and December 31, 2006

 

12/10/26

 

    N/A

 

$

4.145

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

6.48% Series N Cumulative Redeemable Preferred; liquidation value $250 per share; 600,000 shares issued and outstanding at December 31, 2007 and December 31, 2006 (4)

 

6/19/08

 

    N/A

 

$

16.20

 

150,000

 

150,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

209,662

 

$

386,574

 


(1)          On or after the redemption date, redeemable preferred shares (Series K and N) may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation price per share, plus accrued and unpaid distributions, if any.

 

(2)          On or after the redemption date, convertible preferred shares (Series E & H) may be redeemed under certain circumstances at the option of the Company for cash (in the case of Series E) or Common Shares (in the case of Series H), in whole or in part, at various redemption prices per share based upon the contractual conversion rate, plus accrued and unpaid distributions, if any.

 

(3)          Dividends on all series of Preferred Shares are payable quarterly at various pay dates.  The dividend listed for Series N is a Preferred Share rate and the equivalent Depositary Share annual dividend is $1.62 per share.

 

(4)          The Series N Preferred Shares have a corresponding depositary share that consists of ten times the number of shares and one-tenth the liquidation value and dividend per share.

 

(5)          On May 25, 2007, the Company issued an irrevocable notice to redeem for cash on July 16, 2007 all 700,000 shares of its 8.60% Series D Preferred Shares.  The Company recorded the write-off of approximately $6.1 million in original issuance costs as a premium on redemption of Preferred Shares in the accompanying consolidated statements of operations.

 

During the year ended December 31, 2006, the Company redeemed for cash all 460,000 shares of its 9.125% Series C Preferred Shares with a liquidation value of $115.0 million.  The Company recorded the write-off of approximately $4.0 million in original issuance costs as a premium on redemption of Preferred Shares in the accompanying consolidated statements of operations.

 

During the year ended December 31, 2005, the Company redeemed for cash all 500,000 shares of its 9.125% Series B Preferred Shares with a liquidation value of $125.0 million.  The Company recorded the write-off of approximately $4.3 million in original issuance costs as a premium on redemption of Preferred Shares in the accompanying consolidated statements of operations.

 

The following table presents the issued and outstanding Preference Interests as of December 31, 2007 and 2006:

 

F-22



 

 

 

 

 

 

 

Annual

 

Amounts in thousands

 

 

 

 

 

 

 

Dividend

 

 

 

 

Redemption Date (1) (2)

 

Conversion
Rate (2)

 

per
Unit (3)

 

December 31, 2007

 

December  31, 2006

 

Preference Interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.625% Series J Cumulative Convertible Redeemable Preference Units; liquidation value $50 per unit; 0 and 230,000 units issued and outstanding at December 31, 2007 and December 31, 2006, respectively

 

12/14/06

 

1.4108

 

(4)

 

$

 

$

11,500

 

 

 

 

 

 

 

 

 

$

 

$

11,500

 


(1)          On or after the fifth anniversary of the issuance (the “Redemption Date”), the Series J Preference Interests were redeemable for cash at the option of the Company, in whole or in part, at any time or from time to time, at a redemption price equal to the liquidation preference of $50.00 per unit plus the cumulative amount of accrued and unpaid distributions, if any.

 

(2)          On or after the tenth anniversary of the issuance (the “Conversion Date”), the Series J Preference Interests were exchangeable at the option of the holder (in whole but not in part) on a one-for-one basis for a respective reserved series of EQR Preferred Share. In addition, on or after the Conversion Date, the Series J Preference Interests were convertible under certain circumstances at the option of the holder (in whole but not in part) to Common Shares based upon the contractual conversion rate, plus accrued and unpaid distributions, if any.  Prior to the Conversion Date, the Series J Preference Interests were convertible under certain circumstances at the option of the holder (in whole but not in part) to Common Shares based upon the contractual conversion rate, plus accrued and unpaid distributions, if any, if the issuer called the series for redemption (the “Accelerated Conversion Right”).

 

(3)          Dividends on the Series J Preference Interests were payable quarterly on March 25th, June 25th, September 25th, and December 25th of each year.

 

(4)          On May 24, 2007, the Company issued an irrevocable notice to redeem for cash on June 25, 2007 all 230,000 units of its 7.625% Series J Preference Interests with a liquidation value of $11.5 million.  This notice triggered the holder’s Accelerated Conversion Right, which they exercised.  As a result, effective June 25, 2007, the 230,000 units were converted into 324,484 Common Shares.

 

During the year ended December 31, 2006, the Company redeemed for cash all of its 7.875% Series G Preference Interests with a liquidation value of $25.5 million. The Company recorded approximately $0.7 million as a premium on redemption of Preference Interests (Minority Interests) in the accompanying consolidated statements of operations.

 

During the year ended December 31, 2006, the Company issued irrevocable notices to redeem for cash all 460,000 units of its 7.625% Series H and I Preference Interests with a liquidation value of $23.0 million.  This notice triggered the respective holders’ Accelerated Conversion Rights, which they exercised. As a result, the 460,000 units were converted into 679,686 Common Shares.

 

During the year ended December 31, 2005, the Company redeemed or repurchased for cash all of its Series B through F Preference Interests with a liquidation value of $146.0 million.  The Company recorded approximately $4.1 million as premiums on redemption of Preference Interests (Minority Interests) in the accompanying consolidated statements of operations, which included $3.8 million in original issuance costs and $0.3 million in cash redemption charges.

 

The following table presents the Operating Partnership’s issued and outstanding Junior Convertible Preference Units (the Junior Preference Units) as of December 31, 2007 and 2006:

 

F-23



 

 

 

 

 

 

 

Annual

 

 

 

 

 

 

 

 

 

Dividend

 

Amounts in thousands

 

 

 

Redemption
Date (2)

 

Conversion
Rate (2)

 

per
Unit(1)

 

December 31,
2007

 

December 31,
2006

 

Junior Preference Units:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series B Junior Convertible Preference Units; liquidation value $25 per unit; 7,367 units issued and outstanding at December 31, 2007 and December 31, 2006

 

07/29/09

 

1.020408

 

$

2.00

 

$

184

 

$

184

 

 

 

 

 

 

 

 

 

$

184

 

$

184

 


(1)          Dividends on the Junior Preference Units are payable quarterly at various pay dates.

 

(2)          On or after the tenth anniversary of the issuance (the Redemption Date), the Series B Junior Preference Units may be converted into OP Units at the option of the Operating Partnership based on the contractual conversion rate.  Prior to the Redemption Date, the holders may elect to convert the Series B Junior Preference Units to OP Units under certain circumstances based on the contractual conversion rate.  The contractual rate is based upon a ratio dependent upon the closing price of EQR’s Common Shares.

 

4.             Real Estate

 

The following table summarizes the carrying amounts for investment in real estate (at cost) as of December 31, 2007 and 2006 (amounts in thousands):

 

 

 

2007

 

2006

 

Land

 

$

3,607,305

 

$

3,217,672

 

Depreciable property:

 

 

 

 

 

Buildings and improvements

 

12,665,706

 

12,563,807

 

Furniture, fixtures and equipment

 

890,975

 

812,552

 

Projects under development:

 

 

 

 

 

Land

 

187,515

 

167,318

 

Construction-in-progress

 

584,887

 

263,713

 

Land held for development:

 

 

 

 

 

Land

 

334,574

 

172,882

 

Construction-in-progress

 

62,388

 

37,231

 

Investment in real estate

 

18,333,350

 

17,235,175

 

Accumulated depreciation

 

(3,170,125

)

(3,022,480

)

Investment in real estate, net

 

$

15,163,225

 

$

14,212,695

 

 

During the year ended December 31, 2007, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):

 

 

 

Properties

 

Units

 

Purchase
Price

 

Rental Properties

 

36

 

8,167

 

$

1,686,435

 

Land Parcels (eight)

 

 

 

212,841

 

 

 

36

 

8,167

 

$

1,899,276

 

 

During the year ended December 31, 2006, the Company acquired the entire equity interest in 35 properties containing 8,768 units and nine land parcels from unaffiliated parties for a total purchase price of $1.9 billion.  The Company also acquired the majority of its partners’ interest in eighteen partially owned properties containing 1,643 units for $56.6 million, partially funded through the issuance of 417,039 OP Units valued at $18.6 million.

 

The Company adopted EITF Issue No. 04-5, as required for existing limited partnership

 

F-24



 

arrangements, effective January 1, 2006.  The adoption required the consolidation of the Lexford syndicated portfolio consisting of 20 separate partnerships (10 properties) containing 1,272 units, all of which were sold October 5, 2006.  The Company recorded $24.6 million in investment in real estate and also:

 

·      Consolidated $22.5 million in mortgage debt;

·      Reduced investments in unconsolidated entities by $2.6 million;

·      Consolidated $0.9 million of other liabilities net of other assets acquired; and

·      Consolidated $1.4 million of cash.

 

During the year ended December 31, 2007, the Company disposed of the following to unaffiliated parties (sales price in thousands):

 

 

 

Properties

 

Units

 

Sales Price

 

Rental Properties

 

73

 

21,563

 

$

1,921,302

 

Condominium Units

 

5

 

617

 

164,226

 

Land Parcels (two)

 

 

 

49,959

 

 

 

78

 

22,180

 

$

2,135,487

 

 

The Company recognized a net gain on sales of discontinued operations of approximately $940.2 million, a net gain on sales of land parcels of approximately $6.4 million and a net gain on sales of unconsolidated entities of $2.6 million on the above sales.  Of the 73 rental properties sold during the year ended December 31, 2007, one property consisting of 400 units was a partially owned unconsolidated property.

 

During the year ended December 31, 2006, the Company disposed of the following to unaffiliated parties (sales price in thousands):

 

 

 

Properties

 

Units

 

Sales Price

 

Rental Properties

 

335

 

39,608

 

$

2,255,442

 

Condominium Units

 

5

 

1,069

 

215,972

 

Land Parcels (two)

 

 

 

1,569

 

 

 

340

 

40,677

 

$

2,472,983

 

 

The Company recognized a net gain on sales of discontinued operations of approximately $1.0 billion, a net gain on sales of land parcels of approximately $2.8 million and a net gain on sales of unconsolidated entities of $0.4 million on the above sales.

 

On June 28, 2006, the Company announced that it agreed to sell its Lexford Housing Division for a cash purchase price of $1.086 billion.  The sale closed on October 5, 2006.  The Lexford Housing Division results are classified as discontinued operations, net of minority interests, in the consolidated statements of operations for all periods presented.  The Company recorded a gain on sale of approximately $418.7 million on the sale of the Lexford Housing Division in the fourth quarter of 2006.  In conjunction with the Lexford disposition, the Company paid off/extinguished $196.3 million of mortgage notes payable secured by the properties and incurred approximately $9.2 million in prepayment penalties upon extinguishment.  The Company also recorded approximately $4.5 million in one-time accrued retention benefits during the third quarter of 2006 related to the Lexford disposition.  These costs are included in discontinued operations, net of minority interests, in the consolidated statements of operations.  See Note 13 for additional information.

 

 

F-25



 

5.             Commitments to Acquire/Dispose of Real Estate

 

                As of February 6, 2008, in addition to the property that was subsequently acquired as discussed in Note 21, the Company had entered into separate agreements to acquire the following (purchase price in thousands):

 

 

 

Properties/
Parcels

 


Units

 

Purchase
Price

 

Operating Properties

 

1

 

136

 

$

17,625

 

Land Parcels

 

4

 

 

92,362

 

Total

 

5

 

136

 

$

109,987

 

 

                As of February 6, 2008, in addition to the properties that were subsequently disposed of as discussed in Note 21, the Company had entered into separate agreements to dispose of the following (sales price in thousands):

 

 

 

Properties/
Parcels

 


Units

 

Sales Price

 

Operating Properties

 

14

 

2,712

 

$

262,792

 

Land Parcels

 

1

 

 

3,300

 

Total

 

15

 

2,712

 

$

266,092

 

 

                The closings of these pending transactions are subject to certain conditions and restrictions, therefore, there can be no assurance that these transactions will be consummated or that the final terms will not differ in material respects from those summarized in the preceding paragraphs.

 

6.                                      Investments in Partially Owned Entities

 

                The Company has co-invested in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated).  The following table summarizes the Company’s investments in partially owned entities as of December 31, 2007 (amounts in thousands except for project and unit amounts):

 

 

 

 

Consolidated

 

Unconsolidated

 

 

 

 

 

Development Projects

 

 

 

 

 

 

 

 

 

 

 

Held for
and/or Under Development

 

Completed and Stabilized

 

Other

 

Total

 

Institutional
Joint Ventures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total projects

 

(1)

 

 

6

 

21

 

27

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total units

 

(1)

 

 

1,549

 

3,906

 

5,455

 

10,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt — Secured (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

EQR Ownership (3)

 

 

 

$

395,663

 

$

141,206

 

$

286,755

 

$

823,624

 

$

121,200

 

Minority Ownership

 

 

 

 

 

13,321

 

13,321

 

363,600

 

Total (at 100%)

 

 

 

$

395,663

 

$

141,206

 

$

300,076

 

$

836,945

 

$

484,800

 


(1) Project and unit counts exclude all uncompleted development projects until those projects are completed.

(2) All debt is non-recourse to the Company with the exception of $28.3 million in mortgage bonds on one development project.

(3) Represents the Company’s economic ownership interest.

 

F-26



 

7.             Deposits — Restricted

 

The following table presents the restricted deposits as of December 31, 2007 and 2006 (amounts in thousands):

 

 

 

December 31,
2007

 

December 31,
2006

 

 

 

 

 

 

 

Tax-deferred (1031) exchange proceeds

 

$

63,795

 

$

299,392

 

Earnest money on pending acquisitions

 

3,050

 

13,170

 

Restricted deposits on debt (1)

 

133,491

 

22,917

 

Resident security and utility deposits

 

39,889

 

36,260

 

Other

 

13,051

 

20,086

 

 

 

 

 

 

 

Totals

 

$

253,276

 

$

391,825

 


(1)          Primarily represents amounts held in escrow by the lender and released as draw requests are made on fully funded development                         mortgage loans.

 

8.             Mortgage Notes Payable

 

As of December 31, 2007, the Company had outstanding mortgage debt of approximately $3.6 billion.

 

During the year ended December 31, 2007, the Company:

 

·                  Repaid $548.0 million of mortgage loans;

·                  Assumed $226.2 million of mortgage debt on certain properties in connection with their acquisitions;

·                  Obtained $827.8 million of new mortgage loans on certain properties; and

·                  Was released from $76.7 million of mortgage debt assumed by the purchaser on disposed properties.

 

The Company recorded approximately $3.3 million and $3.6 million of prepayment penalties and write-offs of unamortized deferred financing costs, respectively, as additional interest related to debt extinguishment of mortgages during the year ended December 31, 2007.

 

As of December 31, 2007, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through September 1, 2045.  At December 31, 2007, the interest rate range on the Company’s mortgage debt was 3.00% to 12.465%.  During the year ended December 31, 2007, the weighted average interest rate on the Company’s mortgage debt was 5.74%.

 

The historical cost, net of accumulated depreciation, of encumbered properties was $5.3 billion and $4.7 billion at December 31, 2007 and 2006, respectively.

 

Aggregate payments of principal on mortgage notes payable for each of the next five years and thereafter are as follows (amounts in thousands):

 

Year

 

Total

 

 

 

 

 

2008

 

$

412,604

 

2009

 

617,452

 

2010

 

332,613

 

2011

 

602,960

 

2012

 

159,408

 

Thereafter

 

1,480,934

 

Total

 

$

3,605,971

 

 

 

F-27



 

                As of December 31, 2006, the Company had outstanding mortgage debt of approximately $3.2 billion.

 

                During the year ended December 31, 2006, the Company:

 

·                  Repaid $493.0 million of mortgage loans;

·                  Assumed/consolidated $149.5 million of mortgage debt on certain properties in connection with their acquisition and/or consolidation;

·                  Obtained $267.0 million of new mortgage loans on certain properties; and

·                  Was released from $117.9 million of mortgage debt assumed by the purchaser on disposed properties.

 

                As of December 31, 2006, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through September 1, 2045.  At December 31, 2006, the interest rate range on the Company’s mortgage debt was 3.32% to 12.465%.  During the year ended December 31, 2006, the weighted average interest rate on the Company’s mortgage debt was 5.82%.

 

                The Company recorded approximately $12.2 million and $1.6 million of prepayment penalties and write-offs of unamortized deferred financing costs, respectively, as additional interest related to debt extinguishment of mortgages during the year ended December 31, 2006.

 

9.         Notes

 

            The following tables summarize the Company’s unsecured note balances and certain interest rate and maturity date information as of and for the years ended December 31, 2007 and 2006, respectively:

December 31, 2007
(Amounts are in thousands)

 

Net Principal
Balance

 

Interest Rate
Ranges

 

Weighted
Average
Interest Rate

 

Maturity
Date Ranges

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Public/Private Notes (1)

 

$

5,002,664

 

3.85% - 7.57%

 

5.65

%

2008 - 2026

 

Floating Rate Public/Private Notes (1)

 

649,708

 

(1)

 

6.15

%

2009 - 2010

 

Fixed Rate Tax-Exempt Bonds

 

111,390

 

4.75% - 5.20%

 

5.05

%

2028 - 2029

 

Totals

 

$

5,763,762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2006
(Amounts are in thousands)

 

Net Principal
Balance

 

Interest Rate
Ranges

 

Weighted
Average
Interest Rate

 

Maturity
Date Ranges

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Public/Private Notes (1)

 

$

4,158,043

 

3.85% - 7.625%

 

5.90

%

2007 - 2026

 

Floating Rate Public Notes (1)

 

150,000

 

(1)

 

6.13

%

2009

 

Fixed Rate Tax-Exempt Bonds

 

111,390

 

4.75% - 5.20%

 

5.06

%

2028 - 2029

 

Totals

 

$

4,419,433

 

 

 

 

 

 

 


(1)           $150.0 million in fair value interest rate swaps converts 50% of the $300.0 million 4.750% notes due June 15, 2009 to a floating interest rate.

 

 

F-28



 

The Company’s unsecured public debt contains certain financial and operating covenants including, among other things, maintenance of certain financial ratios.  The Company was in compliance with its unsecured public debt covenants for both the years ended December 31, 2007 and 2006.

 

                As of February 6, 2008, an unlimited amount of debt securities remains available for issuance by the Operating Partnership under a registration statement that became automatically effective upon filing with the SEC in June 2006 (under SEC regulations enacted in 2005, the registration statement automatically expires on June 29, 2009 and does not contain a maximum issuance amount).

 

                During the year ended December 31, 2007, the Company:

 

·                  Issued $350.0 million of five-year 5.50% fixed rate public notes, receiving net proceeds of $346.1 million;

·                  Issued $650.0 million of ten-year 5.75% fixed rate public notes, receiving net proceeds of $640.6 million;

·                  Obtained a three-year $500.0 million floating rate term loan (see below);

·                  Repaid $150.0 million of fixed-rate public notes at maturity; and

·                  Repaid $4.3 million of other unsecured notes.

 

                On October 11, 2007, the Operating Partnership closed on a new $500.0 million senior unsecured term loan.  The new loan matures on October 5, 2010, subject to two one-year extension options exercisable by the Operating Partnership.  The Operating Partnership has the ability to increase available borrowings by an additional $250.0 million under certain circumstances.  Advances under the loan bear interest at variable rates based upon LIBOR plus a spread dependent upon the current credit rating on the Operating Partnerships long-term senior unsecured debt.  EQR has guaranteed the Operating Partnerships term loan up to the maximum amount and for the full term of the loan.

 

                During the year ended December 31, 2006, the Company:

 

·                  Issued $400.0 million of ten and one-half year 5.375% fixed rate public notes, receiving net proceeds of $395.5 million;

·                  Issued $650.0 million of twenty-year 3.85% fixed rate public notes that are exchangeable into EQR Common Shares, receiving net proceeds of $637.0 million (see below);

·                  Repaid $60.0 million of fixed-rate public notes at maturity; and

·                  Repaid $4.3 million of other unsecured notes.

 

                The Operating Partnership recorded approximately $0.1 million of write-offs of unamortized deferred financing costs as additional interest related to partial debt extinguishment on unsecured notes during the year ended December 31, 2006.

 

                On August 23, 2006, the Operating Partnership issued $650.0 million of exchangeable senior notes that mature on August 15, 2026.  The notes bear interest at a fixed rate of 3.85%.  The notes are exchangeable into EQR Common Shares, at the option of the holders, under specific circumstances or on or after August 15, 2025, at an initial exchange rate of 16.3934 shares per $1,000 principal amount of notes (equivalent to an initial exchange price of $61.00 per share).  The initial exchange rate is subject to adjustment in certain circumstances, including upon an increase in the Company’s dividend rate.  Upon an exchange of the notes, the Operating Partnership will settle any amounts up to the principal amount of the notes in cash and the remaining exchange value, if any, will be settled, at the Operating Partnership’s option, in cash, EQR Common Shares or a combination of both.

 

                On or after August 18, 2011, the Operating Partnership may redeem the notes at a redemption price equal to the principal amount of the notes plus any accrued and unpaid interest thereon.  Upon notice of redemption by the Operating Partnership, the holders may elect to exercise their exchange rights.  In addition, on August 18, 2011, August 15, 2016 and August 15, 2021 or following the occurrence of certain change in control transactions prior to August 18, 2011, note holders may require the Operating Partnership

 

F-29



 

to repurchase the notes for an amount equal to the principal amount of the notes plus any accrued and unpaid interest thereon.

 

                Note holders may also require an exchange of the notes should the closing sale price of Common Shares exceed 130% of the exchange price for a certain period of time or should the trading price on the notes be less than 98% of the product of the closing sales price of Common Shares multiplied by the applicable exchange rate for a certain period of time.

 

Aggregate payments of principal on unsecured notes payable for each of the next five years and thereafter are as follows (amounts in thousands):

 

Year

 

Total (1)

 

2008

 

$

128,397

 

2009

 

298,306

 

2010 (2)

 

498,783

 

2011 (3)

 

942,139

 

2012

 

748,578

 

Thereafter

 

3,147,559

 

Total

 

$

5,763,762

 


(1)  Principal payments on unsecured notes includes amortization of any discounts or premiums related to the notes.  Premiums and discounts are amortized over the life of the unsecured notes.

(2)  Includes the $500.0 million term loan, which matures on October 5, 2010, subject to two one-year extension options exercisable by the Operating Partnership.

(3)   Includes the $650.0 million of 3.85% convertible unsecured debt with a final maturity of 2026.

 

10.          Lines of Credit

 

The Operating Partnership has an unsecured revolving credit facility with potential borrowings of up to $1.5 billion maturing on February 28, 2012, with the ability to increase available borrowings by an additional $500.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments.  Advances under the credit facility bear interest at variable rates based upon LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating or based on bids received from the lending group.  EQR has guaranteed the Operating Partnership’s credit facility up to the maximum amount and for the full term of the facility.

 

                On April 1, 2005, the Operating Partnership obtained a three-year $1.0 billion unsecured revolving credit facility maturing on May 29, 2008.  Advances under the credit facility bore interest at variable rates based upon LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating or based on bids received from the lending group.  EQR guaranteed the Operating Partnership’s credit facility up to the maximum amount and for the full term of the facility.  This credit facility was repaid in full and terminated on February 28, 2007.  The Company recorded $0.4 million of write-offs of unamortized deferred financing costs as additional interest in connection with this termination.

 

                On May 7, 2007, the Operating Partnership obtained a one-year $500.0 million unsecured revolving credit facility maturing on May 5, 2008.  Advances under this facility bore interest at variable rates based on LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating.  EQR guaranteed this credit facility up to the maximum amount and for its full term.  This credit facility was repaid in full and terminated on June 4, 2007.

 

                On July 6, 2006, the Operating Partnership obtained a one-year $500.0 million unsecured revolving credit facility maturing on July 6, 2007.  Advances under this facility bore interest at variable rates based on LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating.  EQR guaranteed this credit facility up to the maximum amount and for its full term.  This credit facility was repaid in full and terminated on October 13, 2006.

 

 

F-30



 

As of December 31, 2007 and 2006, $139.0 million and $460.0 million, respectively, was outstanding and $80.8 million and $69.3 million, respectively, was restricted (dedicated to support letters of credit and not available for borrowing) on the credit facilities.  During the years ended December 31, 2007 and 2006, the weighted average interest rates were 5.68% and 5.40%, respectively.

 

11.          Derivative Instruments

 

The following table summarizes the consolidated derivative instruments at December 31, 2007 (dollar amounts are in thousands):

 

 

 

Fair Value
Hedges (1)

 

Forward Starting
Swaps (2)

 

Development Cash
Flow Hedges (3)

 

Current Notional Balance

 

$

370,000

 

$

150,000

 

$

62,464

 

Lowest Possible Notional

 

$

370,000

 

$

150,000

 

$

17,942

 

Highest Possible Notional

 

$

370,000

 

$

150,000

 

$

157,715

 

Lowest Interest Rate

 

3.245

%

5.263

%

4.928

%

Highest Interest Rate

 

3.787

%

5.408

%

5.850

%

Earliest Maturity Date

 

2009

 

2018

 

2009

 

Latest Maturity Date

 

2009

 

2018

 

2009

 

Estimated Asset (Liability) Fair Value

 

$

(1,315

)

$

(7,467

)

$

(1,821

)

 

 

 

 

 

 

 

 


(1) Fair Value Hedges — Converts outstanding fixed rate debt to a floating interest rate.

(2) Forward Starting Swaps — Designed to partially fix the interest rate in advance of a planned future debt issuance.

(3) Development Cash Flow Hedges — Converts outstanding floating rate debt to a fixed interest rate.

 

On December 31, 2007, the net derivative instruments were reported at their fair value as other liabilities of approximately $10.6 million and other assets of $29,000.  As of December 31, 2007, there were approximately $16.5 million in deferred losses, net, included in accumulated other comprehensive loss.  Based on the estimated fair values of the net derivative instruments at December 31, 2007, the Company may recognize an estimated $3.6 million of accumulated other comprehensive loss as additional interest expense during the year ending December 31, 2008.

 

In June 2007, the Company received approximately $2.4 million to terminate five forward starting swaps in conjunction with the issuance of $650.0 million of ten-year unsecured notes.  The majority of the $2.4 million has been deferred as a component of accumulated other comprehensive loss and will be recognized as a reduction of interest expense over the life of the unsecured notes.

 

In January 2006, the Company received approximately $10.7 million to terminate six forward starting swaps in conjunction with the issuance of $400.0 million of ten and one-half year unsecured notes.  The $10.7 million has been deferred as a component of accumulated other comprehensive loss and will be recognized as a reduction of interest expense over the life of the unsecured notes.

 

12.          Earnings Per Share

 

The following tables set forth the computation of net income per share — basic and net income per share — diluted (amounts in thousands except per share amounts):

 

F-31



 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

Numerator for net income per share — basic:

 

 

 

 

 

 

 

Income from continuing operations, net of minority interests

 

$

93,006

 

$

51,929

 

$

106,509

 

Preferred distributions

 

(22,792

)

(37,113

)

(49,642

)

Premium on redemption of Preferred Shares

 

(6,154

)

(3,965

)

(4,359

)

 

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares, net of minority interests

 

64,060

 

10,851

 

52,508

 

Discontinued operations, net of minority interests

 

896,616

 

1,020,915

 

755,284

 

 

 

 

 

 

 

 

 

Numerator for net income per share — basic

 

$

960,676

 

$

1,031,766

 

$

807,792

 

 

 

 

 

 

 

 

 

Numerator for net income per share — diluted:

 

 

 

 

 

 

 

Income from continuing operations, net of minority interests

 

$

93,006

 

$

51,929

 

$

106,509

 

Preferred distributions

 

(22,792

)

(37,113

)

(49,642

)

Premium on redemption of Preferred Shares

 

(6,154

)

(3,965

)

(4,359

)

Effect of dilutive securities:

 

 

 

 

 

 

 

Allocation to Minority Interests — Operating Partnership, net

 

4,369

 

784

 

3,842

 

 

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares

 

68,429

 

11,635

 

56,350

 

Discontinued operations

 

957,412

 

1,092,705

 

809,956

 

 

 

 

 

 

 

 

 

Numerator for net income per share — diluted

 

$

1,025,841

 

$

1,104,340

 

$

866,306

 

 

 

 

 

 

 

 

 

Denominator for net income per share — basic and diluted:

 

 

 

 

 

 

 

Denominator for net income per share — basic

 

279,406

 

290,019

 

285,760

 

Effect of dilutive securities:

 

 

 

 

 

 

 

OP Units

 

18,986

 

20,433

 

20,819

 

Share options/restricted shares

 

3,843

 

5,127

 

4,206

 

 

 

 

 

 

 

 

 

Denominator for net income per share — diluted

 

302,235

 

315,579

 

310,785

 

 

 

 

 

 

 

 

 

Net income per share — basic

 

$

3.44

 

$

3.56

 

$

2.83

 

Net income per share — diluted

 

$

3.39

 

$

3.50

 

$

2.79

 

 

 

 

 

 

 

 

 

Net income per share — basic:

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares, net of minority interests

 

$

0.229

 

$

0.038

 

$

0.184

 

Discontinued operations, net of minority interests

 

3.209

 

3.520

 

2.643

 

 

 

 

 

 

 

 

 

Net income per share — basic

 

$

3.438

 

$

3.558

 

$

2.827

 

 

 

 

 

 

 

 

 

Net income per share — diluted:

 

 

 

 

 

 

 

Income from continuing operations available to Common Shares

 

$

0.226

 

$

0.037

 

$

0.182

 

Discontinued operations

 

3.168

 

3.463

 

2.606

 

 

 

 

 

 

 

 

 

Net income per share — diluted

 

$

3.394

 

$

3.500

 

$

2.788

 

 

Convertible preferred shares/units that could be converted into 652,534, 1,163,908 and 1,772,048 weighted average Common Shares for the years ended December 31, 2007, 2006 and 2005, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.  In addition, the effect of the Common Shares that could ultimately be issued upon the conversion/exchange of the Operating Partnership’s $650.0 million exchangeable senior notes were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.

 

For additional disclosures regarding the employee share options and restricted shares, see Notes 2 and 14.

 

F-32



 

13.                               Discontinued Operations

 

The Company has presented separately as discontinued operations in all periods the results of operations for all consolidated assets disposed of on or after January 1, 2002 (the date of adoption of SFAS No. 144), all operations related to condominium conversion properties effective upon their respective transfer into a TRS and all properties held for sale, if any.

 

The components of discontinued operations are outlined below and include the results of operations for the respective periods that the Company owned such assets during each of the years ended December 31, 2007, 2006, and 2005 (amounts in thousands).

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

REVENUES

 

 

 

 

 

 

 

Rental income

 

$

109,104

 

$

374,411

 

$

552,640

 

Fee and asset management

 

 

 

908

 

Total revenues

 

109,104

 

374,411

 

553,548

 

 

 

 

 

 

 

 

 

EXPENSES (1)

 

 

 

 

 

 

 

Property and maintenance

 

44,497

 

123,758

 

176,499

 

Real estate taxes and insurance

 

14,918

 

46,992

 

72,500

 

Property management

 

321

 

8,934

 

10,639

 

Depreciation

 

28,767

 

85,129

 

140,897

 

General and administrative

 

(63

)

575

 

1,165

 

Impairment

 

308

 

351

 

 

Total expenses

 

88,748

 

265,739

 

401,700

 

 

 

 

 

 

 

 

 

Discontinued operating income

 

20,356

 

108,672

 

151,848

 

 

 

 

 

 

 

 

 

Interest and other income

 

189

 

1,662

 

1,438

 

Interest (2):

 

 

 

 

 

 

 

Expense incurred, net

 

(2,053

)

(33,058

)

(40,200

)

Amortization of deferred financing costs

 

(1,327

)

(1,014

)

(785

)

 

 

 

 

 

 

 

 

Discontinued operations

 

17,165

 

76,262

 

112,301

 

Minority Interests — Operating Partnership

 

(1,090

)

(5,010

)

(7,580

)

Discontinued operations, net of minority interests

 

16,075

 

71,252

 

104,721

 

Net gain on sales of discontinued operations

 

940,247

 

1,016,443

 

697,655

 

Minority Interests — Operating Partnership

 

(59,706

)

(66,780

)

(47,092

)

Gain on sales of discontinued operations, net of minority interests

 

880,541

 

949,663

 

650,563

 

Discontinued operations, net of minority interests

 

$

896,616

 

$

1,020,915

 

$

755,284

 

 

 

 

 

 

 

 

 


(1)       Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership.

(2)       Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale.

 

For the properties sold during 2007 (excluding condominium conversion properties), the investment in real estate, net of accumulated depreciation, and the mortgage notes payable balances at December 31, 2006 were $1.1 billion and $91.7 million, respectively.

 

The net real estate basis of the Companys condominium conversion properties owned by the TRS and included in discontinued operations (excludes the Companys six halted conversions as they are now held for use), which were included in investment in real estate, net in the consolidated balance

 

F-33



 

sheets, was $87.2 million and $107.8 million at December 31, 2007 and 2006, respectively.

 

14.                               Share Incentive Plans

 

On May 15, 2002, the shareholders of EQR approved the Company’s 2002 Share Incentive Plan.  The maximum aggregate number of awards that may be granted under this plan may not exceed 7.5% of the Company’s outstanding Common Shares calculated on a “fully diluted” basis and determined annually on the first day of each calendar year.  As of January 1, 2008, this amount equaled 21,631,555, of which 10,392,101 shares were available for future issuance.  No awards may be granted under the 2002 Share Incentive Plan after February 20, 2012.

 

Pursuant to the 2002 Share Incentive Plan and the Fifth Amended and Restated 1993 Share Option and Share Award Plan (collectively the “Share Incentive Plans”), officers, trustees and key employees of the Company may be granted share options to acquire Common Shares (“Options”) including non-qualified share options (“NQSOs”), incentive share options (“ISOs”) and share appreciation rights (“SARs”), or may be granted restricted or non-restricted shares, subject to conditions and restrictions as described in the Share Incentive Plans.  Finally, certain executive officers of the Company participate in the Company’s performance based restricted share plan.  Options, SARs, restricted shares and performance shares are sometimes collectively referred to herein as “Awards”.

 

The Options are generally granted at the fair market value of the Company’s Common Shares at the date of grant, vest in three equal installments over a three year period, are exercisable upon vesting and expire ten years from the date of grant.  The exercise price for all Options under the Share Incentive Plans is equal to the fair market value of the underlying Common Shares at the time the Option is granted.  The Fifth Amended and Restated 1993 Share Option and Share Award Plan will terminate at such time as all outstanding Awards have expired or have been exercised/vested.  The Board of Trustees may at any time amend or terminate the Share Incentive Plans, but termination will not affect Awards previously granted.  Any Options which had vested prior to such a termination would remain exercisable by the holder.

 

As to the restricted shares that have been awarded through December 31, 2007, these shares generally vest three years from the award date.  During the three-year period of restriction, the Company’s unvested restricted shareholders receive quarterly dividend payments on their shares at the same rate and on the same date as any other Common Share holder.  In addition, the Companys unvested restricted shareholders have the same voting rights as any other Common Share holder.  As a result, dividends paid on unvested restricted shares are included as a component of retained earnings (deficit) and have not been considered in reducing net income available to Common Shares in a manner similar to the Companys preferred share dividends for the earnings per share calculation.  If employment is terminated prior to the lapsing of the restriction, the shares are generally canceled.

 

In addition, each year prior to 2007, selected executive officers of the Company received performance-based awards.  Effective January 1, 2007, the Company has elected to discontinue the award of new performance-based award grants.  The executive officers have the opportunity to earn in Common Shares an amount as little as 0% to as much as 225% of the target number of performance-based awards. The owners of performance-based awards have no right to vote, receive dividends or transfer the awards until Common Shares are issued in exchange for the awards.  The number of Common Shares the executive officer actually receives on the third anniversary of the grant date will depend on the excess, if any, by which the Companys Average Annual Return (i.e., the average of the Common Share dividends declared during each year as a percentage of the Common Share price as of the first business day of the first performance year and the average percentage increase in funds from operations (FFO) for each calendar year on a per share basis over the prior year) for the three performance years exceeds the average of the 10-year Treasury Note interest rate as of the first business day in January of each performance year (the T-Note Rate).

 

F-34



 

If the Company’s Average Annual Return exceeds the T-Note Rate by:

 

Less
than

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater
than

 

 

0.99%

 

1-1.99%

 

2%

 

3%

 

4%

 

5%

 

6%

 

7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Then the executive officer will receive Common Shares equal to the target number of awards times the following %:

 

0%

 

50%

 

100%

 

115%

 

135%

 

165%

 

190%

 

225%

 

If the Companys Average Annual Return exceeds the T-Note Rate by an amount which falls between any of the percentages in excess of the 2% threshold, the performance-based award will be determined by extrapolation between the two percentages.  Fifty percent of the Common Shares to which an executive officer may be entitled under the performance share grants will vest, subject to the executives continued employment with the Company, on the third anniversary of the award (which will be the date the Common Shares are issued); twenty-five percent will vest on the fourth anniversary and the remaining twenty-five percent will vest on the fifth anniversary.  The Common Shares will also fully vest upon the executives death, retirement at or after age 62, disability or upon a change in control of the Company.

 

The following tables summarize compensation information regarding the performance shares, restricted shares, share options and Employee Share Purchase Plan (“ESPP”) for the three years ended December 31, 2007, 2006 and 2005 (amounts in thousands):

 

 

 

Year Ended December 31, 2007

 

 

 

Compensation
Expense

 

Compensation Capitalized

 

Compensation
Equity

 

Dividends
Incurred

 

Performance shares

 

$

1,278

 

$

 

$

1,278

 

$

 

Restricted shares

 

13,816

 

1,414

 

15,230

 

2,296

 

Share options

 

4,922

 

423

 

5,345

 

 

ESPP discount

 

1,615

 

86

 

1,701

 

 

Total

 

$

21,631

 

$

1,923

 

$

23,554

 

$

2,296

 

 

 

 

Year Ended December 31, 2006

 

 

 

Compensation
Expense

 

Compensation Capitalized

 

Compensation
Equity

 

Dividends
Incurred

 

Performance shares

 

$

1,795

 

$

 

$

1,795

 

$

 

Restricted shares

 

13,923

 

1,021

 

14,944

 

2,437

 

Share options

 

4,868

 

330

 

5,198

 

 

ESPP discount

 

1,494

 

84

 

1,578

 

 

Total

 

$

22,080

 

$

1,435

 

$

23,515

 

$

2,437

 

 

 

 

Year Ended December 31, 2005

 

 

 

Compensation
Expense/Equity

 

Dividends
Incurred

 

Performance shares

 

$

7,697

 

$

 

Restricted shares

 

20,055

 

2,743

 

Share options

 

6,562

 

 

ESPP discount

 

1,591

 

 

Total

 

$

35,905

 

$

2,743

 

 

                                                Compensation expense is generally recognized for Awards as follows:

                        ·                  Restricted shares and share options — Straight-line method over the vesting period of the options or shares regardless of cliff or ratable vesting distinctions.

                        ·                  Performance shares — Accelerated method with each vesting tranche valued as a separate award, with a separate vesting date, consistent with the estimated value of the award at each period end.

                        ·                  ESPP discount — Immediately upon the purchase of common shares each quarter.

 

The total compensation expense related to Awards not yet vested at December 31, 2007 is $24.6 million, which is

 

F-35



 

expected to be recognized over a weighted average term of 1.4 years.

 

See Note 2 for additional information regarding the Company’s share-based compensation.

 

The table below summarizes the Award activity of the Share Incentive Plans and options assumed in connection with mergers (the “Merger Options”) for the three years ended December 31, 2007, 2006 and 2005:

 

 

 

Common Shares
Subject to Options

 

Weighted Average
Exercise Price
Per Option

 

Restricted Shares

 

Weighted
Average Fair
Value per Restricted Share

 

Balance at December 31, 2004

 

10,819,222

 

$

25.48

 

1,413,255

 

$

26.06

 

Awards granted (2002 plan) (2)

 

2,235,268

 

$

31.91

 

620,192

 

$

31.89

 

Awards exercised/vested (1993 plan)

 

(1,630,321

)

$

23.44

 

(373,310

)

$

24.68

 

Awards exercised/vested (2002 plan)

 

(611,943

)

$

26.31

 

(190,938

)

$

29.36

 

Merger Options exercised

 

(6,480

)

$

18.10

 

 

 

Awards canceled (1993 plan)

 

(27,677

)

$

24.53

 

(12,363

)

$

23.64

 

Awards canceled (2002 plan)

 

(205,326

)

$

30.32

 

(87,008

)

$

29.55

 

Balance at December 31, 2005

 

10,572,743

 

$

27.02

 

1,369,828

 

$

28.42

 

Awards granted (2002 plan) (2)

 

1,671,122

 

$

42.32

 

684,998

 

$

34.76

 

Awards exercised/vested (1993 plan) (1)

 

(1,754,288

)

$

25.24

 

(151,104

)

$

23.55

 

Awards exercised/vested (2002 plan) (1)

 

(890,326

)

$

29.24

 

(519,664

)

$

21.07

 

Merger Options exercised

 

(3,162

)

$

19.49

 

 

 

Awards canceled (1993 plan)

 

(8,866

)

$

22.46

 

(275

)

$

23.55

 

Awards canceled (2002 plan)

 

(171,436

)

$

35.28

 

(81,026

)

$

34.74

 

Balance at December 31, 2006

 

9,415,787

 

$

29.71

 

1,302,757

 

$

34.85

 

Awards granted (2002 plan) (2)

 

1,030,935

 

$

53.46

 

453,580

 

$

52.56

 

Awards exercised/vested (1993 plan) (1)

 

(753,864

)

$

25.18

 

 

 

Awards exercised/vested (2002 plan) (1)

 

(286,901

)

$

31.79

 

(477,002

)

$

31.78

 

Awards canceled (1993 plan)

 

(23,778

)

$

23.70

 

 

 

Awards canceled (2002 plan)

 

(196,946

)

$

45.13

 

(101,147

)

$

41.92

 

Merger Options canceled

 

(92

)

$

9.55

 

 

 

Balance at December 31, 2007

 

9,185,141

 

$

32.37

 

1,178,188

 

$

42.30

 

 

 

 

 

 

 

 

 

 

 


(1)  The aggregate intrinsic value of options exercised during the years ended December 31, 2007 and 2006 was $13.7 million and $58.0 million, respectively.  These values were calculated as the difference between the strike price of the underlying awards and the per share price at which each respective award was exercised.

(2)  The weighted average grant date fair value for Options granted during the years ended December 31, 2007, 2006 and 2005 was $6.26 per share, $4.22 per share and $2.64 per share, respectively.

 

The following table summarizes information regarding options outstanding and exercisable at December 31, 2007:

 

F-36



 

 

 

Options Outstanding (1)

 

Options Exercisable (2)

 

 

 

 

 

Weighted

 

 

 

 

 

Range of Exercise Prices

 

Options

 

Average
Remaining
Contractual
Life in Years

 

Weighted
Average
Exercise
Price

 

Options

 

Weighted
Average
Exercise
Price

 

 

$ 16.05 to $21.40

 

817,375

 

1.53

 

$

20.55

 

817,375

 

$

20.55

 

 

$ 21.41 to $26.75

 

1,614,905

 

3.95

 

$

24.35

 

1,614,905

 

$

24.35

 

 

$ 26.76 to $32.10

 

4,297,841

 

5.73

 

$

29.61

 

3,820,364

 

$

29.34

 

 

$ 32.11 to $37.45

 

26,047

 

6.75

 

$

32.54

 

25,573

 

$

32.46

 

 

$ 37.46 to $42.80

 

1,481,288

 

7.98

 

$

42.12

 

709,326

 

$

41.48

 

 

$ 42.81 to $48.15

 

3,992

 

8.51

 

$

45.33

 

2,661

 

$

45.33

 

 

$ 48.16 to $53.50

 

943,693

 

8.96

 

$

53.50

 

10,018

 

$

53.50

 

 

$ 16.05 to $53.50

 

9,185,141

 

5.74

 

$

32.37

 

7,000,222

 

$

28.45

 

Vested and expected to vest as of December 31, 2007

 

8,980,625

 

5.72

 

$

31.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)          The aggregate intrinsic value of both options outstanding and options vested and expected to vest as of December 31, 2007 is $62.2 million.

(2)          The aggregate intrinsic value and weighted average remaining contractual life in years of options exercisable as of December 31, 2007 is $59.9 million and 5.0 years, respectively.

Note:  The aggregate intrinsic values in Notes (1) and (2) above were both calculated as the excess between the Company’s closing share price of $36.47 per share on December 31, 2007 and the strike price of the underlying awards.

 

As of December 31, 2006 and 2005, 6,567,868 Options (with a weighted average exercise price of $26.87) and 6,940,065 Options (with a weighted average exercise price of $25.65) were exercisable, respectively.

 

F-37



 

15.                               Employee Plans

 

The Company established an Employee Share Purchase Plan to provide each employee and trustee the ability to annually acquire up to $100,000 of Common Shares of the Company.  In 2003, the Companys shareholders approved an increase in the aggregate number of Common Shares available under the ESPP to 7,000,000 (from 2,000,000).  The Company has 4,081,688 Common Shares available for purchase under the ESPP at December 31, 2007.  The Common Shares may be purchased quarterly at a price equal to 85% of the lesser of: (a) the closing price for a share on the last day of such quarter; and (b) the greater of: (i) the closing price for a share on the first day of such quarter, and (ii) the average closing price for a share for all the business days in the quarter.  The following table summarizes information regarding the Common Shares issued under the ESPP:

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

(Amounts in thousands except share and per share amounts)

 

 

 

 

 

 

 

 

 

Shares issued

 

189,071

 

213,427

 

286,751

 

Issuance price ranges

 

$31.38 – $43.17

 

$35.43 – $43.30

 

$27.89 – $32.27

 

Issuance proceeds

 

$7,165

 

$7,972

 

$8,285

 

 

The Company established a defined contribution plan (the “401(k) Plan”) to provide retirement benefits for employees that meet minimum employment criteria.  The Company matches dollar for dollar up to the first 3% of eligible compensation that a participant contributes to the 401(k) Plan.  Participants are vested in the Companys contributions over five years.  The Company recognized an expense in the amount of $4.2 million, $2.3 million and $3.0 million for the years ended December 31, 2007, 2006 and 2005, respectively.

 

The Company may also elect to make an annual discretionary profit-sharing contribution as a percentage of each individual employees eligible compensation under the 401(k) Plan.  The Company recognized an expense of approximately $1.5 million, $3.3 million and $2.5 million for the years ended December 31, 2007, 2006 and 2005, respectively.

 

The Company established a supplemental executive retirement plan (the “SERP”) to provide certain officers and trustees an opportunity to defer a portion of their eligible compensation in order to save for retirement.  The SERP is restricted to investments in Company Common Shares, certain marketable securities that have been specifically approved and cash equivalents.  The deferred compensation liability represented in the SERP and the securities issued to fund such deferred compensation liability are consolidated by the Company and carried on the Companys balance sheet, and the Companys Common Shares held in the SERP are accounted for as a reduction to paid in capital.

 

16.                               Distribution Reinvestment and Share Purchase Plan

 

On November 3, 1997, the Company filed with the SEC a Form S-3 Registration Statement to register 14,000,000 Common Shares pursuant to a Distribution Reinvestment and Share Purchase Plan (the “DRIP Plan”).  The registration statement was declared effective on November 25, 1997.  The Company has 11,571,277 Common Shares available for issuance under the DRIP Plan at December 31, 2007.

 

The DRIP Plan provides holders of record and beneficial owners of Common Shares and Preferred Shares with a simple and convenient method of investing cash distributions in additional Common Shares (which is referred to herein as the “Dividend Reinvestment — DRIP Plan”).  Common Shares may also be purchased on a monthly basis with optional cash payments made by participants in the DRIP Plan and interested new investors, not currently shareholders of the Company, at the market price of the Common Shares less a discount ranging between 0% and 5%, as determined in accordance with the DRIP Plan (which

 

F-38


 


 

is referred to herein as the “Share Purchase — DRIP Plan”).  Common Shares purchased under the DRIP Plan may, at the option of the Company, be directly issued by the Company or purchased by the Companys transfer agent in the open market using participants’ funds.

 

17.                               Transactions with Related Parties

 

The Company provided asset and property management services to certain related entities for properties not owned by the Company.  Fees received for providing such services were approximately $0.3 million, $0.3 million and $0.2 million for the years ended December 31, 2007, 2006 and 2005, respectively.

 

The Company leases its corporate headquarters from an entity controlled by EQRs Chairman of the Board of Trustees.  The lease terminates on July 31, 2011.  Amounts incurred for such office space for the years ended December 31, 2007, 2006 and 2005, respectively, were approximately $2.9 million, $2.8 million and $2.1 million.  The Company believes these amounts equal market rates for such space.

 

The Company had the following additional non-continuing related party transaction:

 

·          The Company reimbursed its former Chief Operating Officer for the actual operating costs (excluding acquisition costs) of operating his personal aircraft for himself and other employees on Company business in 2005.  For the year ended December 31, 2005, the amount incurred was approximately $0.4 million.

 

18.                               Commitments and Contingencies

 

The Company, as an owner of real estate, is subject to various Federal, state and local environmental laws.  Compliance by the Company with existing laws has not had a material adverse effect on the Company.  However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future.

 

The Company is party to a housing discrimination lawsuit brought by a non-profit civil rights organization in April 2006 in the U.S. District Court for the District of Maryland.  The suit alleges that the Company designed and built approximately 300 of its properties in violation of the accessibility requirements of the Fair Housing Act and Americans With Disabilities Act.  The suit seeks actual and punitive damages, injunctive relief (including modification of non-compliant properties), costs and attorneys’ fees.  The Company believes it has a number of viable defenses, including that a majority of the named properties were completed before the operative dates of the statutes in question and/or were not designed or built by the Company.  Accordingly, the Company is defending the suit vigorously.  Due to the pendency of the Companys defenses and the uncertainty of many other critical factual and legal issues, it is not possible to determine or predict the outcome of the suit and as a result, no amounts have been accrued at December 31, 2007.  While no assurances can be given, the Company does not believe that the suit, if adversely determined, would have a material adverse effect on the Company.

 

The Company does not believe there is any other litigation pending or threatened against it that, individually or in the aggregate, reasonably may be expected to have a material adverse effect on the Company.

 

During the years ended December 31, 2005 and 2004, the Company established a reserve and recorded a corresponding expense, net of insurance receivables, for estimated uninsured property damage at certain of its properties caused by various hurricanes in each respective year.  During the year ended December 31, 2007, the Company received $11.2 million in insurance proceeds and recorded an additional $7.9 million of receivables in anticipation of proceeds expected.  As of December 31, 2007, a receivable of $1.8 million and a liability of $1.3 million are included in other assets and other liabilities, respectively, on the consolidated balance sheets.

 

F-39



 

As of December 31, 2007, the Company has thirteen projects totaling 4,185 units in various stages of development with estimated completion dates ranging through June 30, 2010.  Some of the projects are developed solely by the Company, while others are co-developed with various third party development partners.  The development venture agreements with partners are primarily deal-specific, with differing terms regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions.  The partner is most often the “general” or “managing” partner of the development venture.  The typical buy-sell arrangements contain appraisal rights and provisions that provide the right, but not the obligation, for the Company to acquire the partner’s interest in the project at fair market value upon the expiration of a negotiated time period (typically two to five years after substantial completion of the project).  However, the buy-sell provisions with one partner covering three projects does require the Company to purchase the partner’s interest in the projects at fair market value five years following the receipt of the final certificate of occupancy on the last developed property.

 

During the years ended December 31, 2007, 2006 and 2005, total operating lease payments incurred for office space, including a portion of real estate taxes, insurance, repairs and utilities, and including rent due under two ground leases, aggregated $7.6 million, $6.9 million and $6.3 million, respectively.

 

The Company has entered into a retirement benefits agreement with its Chairman of the Board of Trustees and deferred compensation agreements with its former chief operating officer and two former chief executive officers.  During the years ended December 31, 2007, 2006 and 2005, the Company recognized compensation expense of $0.7 million, $1.1 million and $2.2 million, respectively, related to these agreements.

 

The following table summarizes the Companys contractual obligations for minimum rent payments under operating leases and deferred compensation for the next five years and thereafter as of December 31, 2007:

 

 

 

Payments Due by Year (in thousands)

 

 

 

2008

 

2009

 

2010

 

2011

 

2012

 

Thereafter

 

Total

 

Operating Leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Rent Payments (a)

 

$

6,491

 

$

5,733

 

$

5,154

 

$

3,356

 

$

987

 

$

59,259

 

$

80,980

 

Other Long-Term Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation (b)

 

813

 

1,454

 

1,454

 

2,058

 

2,058

 

12,810

 

20,647

 

 


(a)          Minimum basic rent due for various office space the Company leases and fixed base rent due on ground leases for two properties.

(b)         Estimated payments to the Company’s Chairman, two former CEO’s and its former chief operating officer based on planned retirement dates.

 

19.                               Impairment

 

The Company incurred impairment losses of $1.1 million, $2.4 million and $0.6 million for the years ended December 31, 2007, 2006 and 2005, respectively, related to the write-off of various pursuit and out-of-pocket costs for terminated acquisition, disposition and development transactions.  The Company also took impairment charges of $0.6 and $2.0 million associated with the write-off of various deferred sales costs following the decision to halt the condominium conversion and sale process at assets for the year ended December 31, 2007 and 2006, respectively.

 

During the year ended December 31, 2006, the Company recorded approximately $30.0 million of asset impairment charges related to its write-down of the entire carrying value of the goodwill on its corporate housing business.  Following the guidance in SFAS No. 142, this charge was the result of the continued poor operating performance of the corporate housing business and managements expectations for future performance.

 

F-40



 

20.                               Reportable Segments

 

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by senior management.  Senior management decides how resources are allocated and assesses performance on a monthly basis.

 

The Companys primary business is owning, managing, and operating multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents.  Senior management evaluates the performance of each of our apartment communities individually and geographically, and both on a same store and non-same store basis; however, each of our apartment communities generally has similar economic characteristics, residents, products and services.  The Companys operating segments have been aggregated by geography in a manner identical to that which is provided to its chief operating decision maker.

 

The Companys fee and asset management, development (including FIN No. 46 partially owned properties), condominium conversion and corporate housing (Equity Corporate Housing or ECH) activities are immaterial and do not individually meet the threshold requirements of a reportable segment as provided for in SFAS No. 131 and as such, have been aggregated in the tables presented below.

 

All revenues are from external customers and there is no customer who contributed 10% or more of the Companys total revenues during the three years ended December 31, 2007, 2006, or 2005.

 

The primary financial measure for the Companys rental real estate properties is net operating income (NOI), which represents rental income less:  1) property and maintenance expense; 2) real estate taxes and insurance expense; and 3) property management expense (all as reflected in the accompanying statements of operations).  The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Companys apartment communities.  Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance.  The following table presents NOI for each segment from our rental real estate specific to continuing operations for the years ended December 31, 2007, 2006 and 2005, respectively, as well as total assets for the years ended December 31, 2007 and 2006, respectively (amounts in thousands):

 

 

 

Year Ended December 31, 2007

 

 

 

Northeast

 

South

 

West

 

Other (3)

 

Total

 

Rental income:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

$

471,736

 

$

531,189

 

$

640,588

 

$

 

$

1,643,513

 

Non-same store/other (2) (3)

 

85,231

 

105,576

 

87,049

 

107,532

 

385,388

 

Total rental income

 

556,967

 

636,765

 

727,637

 

107,532

 

2,028,901

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

173,756

 

214,646

 

219,289

 

 

607,691

 

Non-same store/other (2) (3)

 

36,381

 

43,642

 

35,133

 

102,653

 

217,809

 

Total operating expenses

 

210,137

 

258,288

 

254,422

 

102,653

 

825,500

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

297,980

 

316,543

 

421,299

 

 

1,035,822

 

Non-same store/other (2) (3)

 

48,850

 

61,934

 

51,916

 

4,879

 

167,579

 

Total NOI

 

$

346,830

 

$

378,477

 

$

473,215

 

$

4,879

 

$

1,203,401

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

4,591,068

 

$

4,196,436

 

$

4,917,936

 

$

1,984,337

 

$

15,689,777

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)          Same store includes properties owned for all of both 2007 and 2006 which represented 115,857 units.

(2)          Non-same store includes properties acquired after January 1, 2006.

(3)          Other includes ECH, development, condominium conversion overhead of $4.8 million and other corporate operations.  Also        

 

F-41



 

reflects a $16.6 million elimination of rental income recorded in Northeast, South and West operating segments related to ECH.

 

 

 

Year Ended December 31, 2006

 

 

 

Northeast

 

South

 

West

 

Other (3)

 

Total

 

Rental income:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

$

452,226

 

$

517,847

 

$

606,249

 

$

 

$

1,576,322

 

Non-same store/other (2) (3)

 

50,849

 

34,774

 

32,742

 

86,144

 

204,509

 

Total rental income

 

503,075

 

552,621

 

638,991

 

86,144

 

1,780,831

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

168,732

 

210,759

 

215,583

 

 

595,074

 

Non-same store/other (2) (3)

 

22,119

 

15,178

 

13,225

 

92,467

 

142,989

 

Total operating expenses

 

190,851

 

225,937

 

228,808

 

92,467

 

738,063

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

283,494

 

307,088

 

390,666

 

 

981,248

 

Non-same store/other (2) (3)

 

28,730

 

19,596

 

19,517

 

(6,323

)

61,520

 

Total NOI

 

$

312,224

 

$

326,684

 

$

410,183

 

$

(6,323

)

$

1,042,768

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

4,465,461

 

$

4,316,252

 

$

4,507,019

 

$

1,773,487

 

$

15,062,219

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)          Same store includes properties owned for all of both 2007 and 2006 which represented 115,857 units.

(2)          Non-same store includes properties acquired after January 1, 2006.

(3)          Other includes ECH, development, condominium conversion overhead of $5.9 million and other corporate operations.  Also reflects a $15.8 million elimination of rental income recorded in Northeast, South and West operating segments related to ECH.

 

 

 

Year Ended December 31, 2005

 

 

 

Northeast

 

South

 

West

 

Other (3)

 

Total

 

Rental income:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

$

405,983

 

$

571,485

 

$

546,390

 

$

 

$

1,523,858

 

Non-same store/other (2) (3)

 

32,478

 

21,006

 

22,677

 

72,399

 

148,560

 

Properties sold in 2007 (4)

 

 

 

 

(187,148

)

(187,148

)

Total rental income

 

438,461

 

592,491

 

569,067

 

(114,749

)

1,485,270

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

157,065

 

250,989

 

196,264

 

 

604,318

 

Non-same store/other (2) (3)

 

13,737

 

7,784

 

8,868

 

95,320

 

125,709

 

Properties sold in 2007 (4)

 

 

 

 

(83,056

)

(83,056

)

Total operating expenses

 

170,802

 

258,773

 

205,132

 

12,264

 

646,971

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI:

 

 

 

 

 

 

 

 

 

 

 

Same store (1)

 

248,918

 

320,496

 

350,126

 

 

919,540

 

Non-same store/other (2) (3)

 

18,741

 

13,222

 

13,809

 

(22,921

)

22,851

 

Properties sold in 2007 (4)

 

 

 

 

(104,092

)

(104,092

)

Total NOI

 

$

267,659

 

$

333,718

 

$

363,935

 

$

(127,013

)

$

838,299

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)          Same store includes properties owned for all of both 2006 and 2005 which represented 128,133 units.

(2)          Non-same store includes properties acquired after January 1, 2005.

(3)          Other includes ECH, development, condominium conversion overhead of $3.1 million and other corporate operations.  Also       reflects a $13.4 million elimination of rental income recorded in Northeast, South and West operating segments related to ECH  and $11.1 million of hurricane insurance losses.

(4)          Reflects discontinued operations for properties sold during 2007.

 

Note:  Markets included in the above geographic segments are as follows:

(a)          Northeast — New England (excluding Boston), Boston, New York Metro, DC Northern Virginia, Suburban Maryland, Chicago, Milwaukee and Minneapolis/St. Paul.

 

F-42



 

(b)         South — Charlotte, Raleigh/Durham, Atlanta, Jacksonville, Orlando, Tampa/Ft. Myers, South Florida, Nashville, Tulsa, Austin, Houston, Dallas/Ft. Worth, Albuquerque and Phoenix.

 

(c)          West — Seattle/Tacoma, Portland, Central Valley, San Francisco Bay Area, Inland Empire, Los Angeles, Orange County, San Diego and Denver.

 

The following table presents a reconciliation of NOI from our rental real estate specific to continuing operations for the years ended December 31, 2007, 2006 and 2005, respectively:

 

 

 

Year Ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

Rental income

 

$

2,028,901

 

$

1,780,831

 

$

1,485,270

 

Property and maintenance expense

 

(530,793

)

(469,267

)

(394,850

)

Real estate taxes and insurance expense

 

(207,286

)

(172,618

)

(165,248

)

Property management expense

 

(87,421

)

(96,178

)

(86,873

)

Total operating expenses

 

(825,500

)

(738,063

)

(646,971

)

Net operating income

 

$

1,203,401

 

$

1,042,768

 

$

838,299

 

 

21.                               Subsequent Events/Other

 

Subsequent Events

 

Subsequent to December 31, 2007 and through February 6, 2008, the Company:

 

·                  Acquired the remaining equity interest it did not previously own of a 144 unit partially-owned property for $5.9 million;

·                  Sold seven apartment properties consisting of 1,420 units for $107.3 million (excluding condominium units);

·                  Terminated three forward-starting swaps paying $13.2 million in conjunction with locking the interest rate on a $500.0 million secured mortgage loan pool scheduled to close in March 2008; and

·                  Repaid $17.9 million of mortgage loans.

 

Subsequent to December 31, 2007 and through February 22, 2008, the Company repurchased 170,956 Common Shares at an average price of $36.78 per share for total consideration of $6.3 million, leaving $469.3 million remaining available for share repurchases.

 

Other

 

The Company recorded a reduction to general and administrative expense of approximately $1.7 million during the year ended December 31, 2007 due to the successful resolution of a certain lawsuit in Florida, resulting in the reversal of the majority of a previously established litigation reserve.  The Company had previously recorded a reduction to general and administrative expense of approximately $2.8 million during the year ended December 31, 2006 due to the recovery of insurance proceeds related to the same lawsuit.

 

The Company received $1.2 million related to its 7.075% ownership interest in Wellsford Park Highlands Corporation (“WPHC”), an entity which owns a condominium development in Denver, Colorado.  The Company recorded a gain of approximately $0.7 million as income from investments in unconsolidated entities and has no further ownership interest in WPHC.

 

During the year ended December 31, 2007, the Company entered into resignation/release agreements with its former Chief Financial Officer (“CFO”) and one other former executive vice president.  The Company recorded approximately $3.4 million of additional general and administrative expense during

 

F-43



 

the year ended December 31, 2007 related to cash severance and accelerated vesting of share options and restricted/performance shares.

 

During the years ended December 31, 2007 and 2006, the Company recognized $0.3 million and $14.7 million, respectively, of forfeited deposits for various terminated transactions, included in interest and other income.  In addition, during 2007 the Company received $4.1 million for the settlement of insurance litigation claims from 2000 through 2002.  This amount was recorded as interest and other income.

 

During the years ended December 31, 2006 and 2005, the Company received proceeds from technology and other investments of $4.0 million and $82.1 million, respectively, from the following:

 

·                  $25.0 million in full redemption of 1,000,000 shares of Wellsford 8.25% Convertible Trust Preferred Securities during 2005;

·                  $3.7 million and $57.1 million for its ownership interest in Rent.com in connection with the acquisition of Rent.com by eBay, Inc. in 2006 and 2005, respectively.  Both amounts were recorded as interest and other income in the accompanying consolidated statements of operations; and

·                  $0.3 million as a partial distribution for its ownership interest in Constellation Real Technologies, LLC in 2006.  The amount was recorded as interest and other income.

 

During the years ended December 31, 2007 and 2006, the Company established a reserve and recorded a corresponding expense related to potential liabilities associated with certain asset sales.  During the year ended December 31, 2007, the Company paid approximately $0.7 million in settlements and recorded $1.9 million in additional reserves.  The balance of the reserves as of December 31, 2007 and 2006 was approximately $7.4 million and $6.2 million, respectively.  While no assurances can be given, the Company does not believe that the potential issue, if adversely determined or settled, will have a material adverse effect on the Company.

 

22.                               Quarterly Financial Data (Unaudited)

 

                The following unaudited quarterly data has been prepared on the basis of a December 31 year-end.  All amounts have also been restated in accordance with the discontinued operations provisions of SFAS No 144 and reflect dispositions and/or properties held for sale through December 31, 2007.  Amounts are in thousands, except for per share amounts.

 



2007

 

Fourth
Quarter
12/31

 

Third
Quarter
9/30

 

Second
Quarter
6/30

 

First
Quarter
3/31

 

 

 

 

 

 

 

 

 

 

 

Total revenues (1)

 

$

528,066

 

$

522,609

 

$

504,204

 

$

483,205

 

Operating income (1)

 

159,362

 

144,272

 

139,695

 

122,488

 

Income from continuing operations, net of minority interests (1)

 

39,574

 

22,270

 

20,963

 

10,199

 

Discontinued operations, net of minority interests (1)

 

83,703

 

435,437

 

261,438

 

116,038

 

Net income*

 

123,277

 

457,707

 

282,401

 

126,237

 

Net income available to Common Shares

 

119,632

 

447,246

 

274,985

 

118,813

 

Earnings per share — basic:

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

0.44

 

$

1.64

 

$

0.97

 

$

0.41

 

Weighted average Common Shares outstanding

 

269,197

 

272,086

 

284,424

 

292,251

 

Earnings per share — diluted:

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

0.44

 

$

1.62

 

$

0.95

 

$

0.40

 

Weighted average Common Shares outstanding

 

290,658

 

294,331

 

307,631

 

316,265

 

 

 

F-44




(1)         The amounts presented for the first three quarters of 2007 are not equal to the same amounts previously reported in the respective Form 10-Qs filed with the SEC for each period as a result of changes in discontinued operations due to additional property sales which occurred throughout 2007.  Below is a reconciliation to the amounts previously reported in the respective Form 10-Qs:

 


2007

 

 

 

Third
Quarter
9/30

 

Second
Quarter
6/30

 

First
Quarter
3/31

 

 

 

 

 

 

 

 

 

Total revenues previously reported in Form 10-Q

 

 

 

$

527,456

 

$

531,746

 

$

526,165

 

Total revenues subsequently reclassified to discontinued operations

 

 

 

(4,847

)

(27,542

)

(42,960

)

Total revenues disclosed in Form 10-K

 

 

 

$

522,609

 

$

504,204

 

$

483,205

 

 

 

 

 

 

 

 

 

 

 

Operating income previously reported in Form 10-Q

 

 

 

$

145,981

 

$

148,448

 

$

135,339

 

Operating income subsequently reclassified to discontinued operations

 

 

 

(1,709

)

(8,753

)

(12,851

)

Operating income disclosed in Form 10-K

 

 

 

$

144,272

 

$

139,695

 

$

122,488

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of minority interests previously reported in Form 10-Q

 

 

 

$

23,869

 

$

29,133

 

$

21,576

 

Income from continuing operations, net of minority interests subsequently reclassified to discontinued operations

 

 

 

(1,599

)

(8,170

)

(11,377

)

Income from continuing operations, net of minority interests disclosed in Form 10-K

 

 

 

$

22,270

 

$

20,963

 

$

10,199

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations, net of minority interests previously reported in Form 10-Q

 

 

 

$

433,838

 

$

253,268

 

$

104,661

 

Discontinued operations, net of minority interests from properties sold subsequent to the respective reporting period

 

 

 

1,599

 

8,170

 

11,377

 

Discontinued operations, net of minority interests disclosed in Form 10-K

 

 

 

$

435,437

 

$

261,438

 

$

116,038

 

 

 

 

 

 

 

 

 

2006

 

Fourth Quarter 12/31

 

Third Quarter 9/30

 

Second Quarter 6/30

 

First Quarter 3/31

 

 

 

 

 

 

 

 

 

 

 

Total revenues (2)

 

$

467,180

 

$

460,745

 

$

440,806

 

$

421,201

 

Operating income (2)

 

89,488

 

123,422

 

125,995

 

114,051

 

(Loss) income from continuing operations, net of minority interests (2)

 

(1,205

)

21,370

 

21,570

 

10,194

 

Discontinued operations, net of minority interests (2)

 

466,266

 

48,441

 

138,587

 

367,621

 

Net income*

 

465,061

 

69,811

 

160,157

 

377,815

 

Net income available to Common Shares

 

457,606

 

56,356

 

150,084

 

367,720

 

Earnings per share — basic:

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.57

 

$

0.19

 

$

0.52

 

$

1.27

 

Weighted average Common Shares outstanding

 

291,669

 

290,036

 

289,460

 

288,880

 

Earnings per share — diluted:

 

 

 

 

 

 

 

 

 

Net income available to Common Shares

 

$

1.57

 

$

0.19

 

$

0.51

 

$

1.25

 

Weighted average Common Shares outstanding

 

291,669

 

315,886

 

314,698

 

314,049

 

 

 

 

 

 

 

 

 

 

 


(2)                  The amounts presented for the four quarters of 2006 are not equal to the same amounts previously reported in the Form 8-K

filed

 

 

F-45



 

with the SEC on August 28, 2007 for each period as a result of changes in discontinued operations due to additional property sales which occurred throughout 2007.  Below is a reconciliation to the amounts previously reported:

 


2006

 

Fourth
Quarter
12/31

 

Third
Quarter
9/30

 

Second
Quarter
6/30

 

First
Quarter
3/31

 

 

 

 

 

 

 

 

 

 

 

Total revenues previously reported in August 2007 Form 8-K

 

$

494,355

 

$

487,994

 

$

467,533

 

$

447,516

 

Total revenues subsequently reclassified to discontinued operations

 

(27,175

)

(27,249

)

(26,727

)

(26,315

)

Total revenues disclosed in Form 10-K

 

$

467,180

 

$

460,745

 

$

440,806

 

$

421,201

 

 

 

 

 

 

 

 

 

 

 

Operating income previously reported in August 2007 Form 8-K

 

$

97,494

 

$

132,206

 

$

133,995

 

$

121,644

 

Operating income subsequently reclassified to discontinued operations

 

(8,006

)

(8,784

)

(8,000

)

(7,593

)

Operating income disclosed in Form 10-K

 

$

89,488

 

$

123,422

 

$

125,995

 

$

114,051

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of minority interests previously reported in August 2007 Form 8-K

 

$

6,085

 

$

29,337

 

$

28,811

 

$

16,940

 

Income from continuing operations, net of minority interests subsequently reclassified to discontinued operations

 

(7,290

)

(7,967

)

(7,241

)

(6,746

)

(Loss) income from continuing operations, net of minority interests disclosed in Form 10-K

 

$

(1,205

)

$

21,370

 

$

21,570

 

$

10,194

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations, net of minority interests previously reported in August 2007 Form 8-K

 

$

458,976

 

$

40,474

 

$

131,346

 

$

360,875

 

Discontinued operations, net of minority interests from properties sold subsequent to the respective reporting period

 

7,290

 

7,967

 

7,241

 

6,746

 

Discontinued operations, net of minority interests disclosed in Form 10-K

 

$

466,266

 

$

48,441

 

$

138,587

 

$

367,621

 


* The Company did not have any extraordinary items or cumulative effect of change in accounting principle during the years ended December 31, 2007 and 2006.  Therefore, income before extraordinary items and cumulative effect of change in accounting principle is not shown as it was equal to the net income amounts disclosed above.

 

 

F-46



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

Overall Summary

December 31, 2007

 

 

 

Properties
(H)

 

Units (H)

 

Investment in Real
Estate, Gross

 

Accumulated
Depreciation

 

Investment in Real
Estate, Net

 

Encumbrances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned Unencumbered

 

344

 

89,501

 

$

11,661,970,127

 

$

(2,097,077,530

)

$

9,564,892,597

 

$

 

Wholly Owned Encumbered

 

163

 

43,688

 

5,184,926,837

 

(968,402,375

)

4,216,524,462

 

1,730,258,477

 

Portfolio/Entity Encumbrances (1)

 

 

 

 

 

 

1,038,768,281

 

Wholly Owned Properties

 

507

 

133,189

 

16,846,896,964

 

(3,065,479,905

)

13,781,417,059

 

2,769,026,758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partially Owned Unencumbered

 

2

 

483

 

351,447,131

 

(10,742,614

)

340,704,517

 

 

Partially Owned Encumbered

 

25

 

4,972

 

1,135,006,210

 

(93,902,700

)

1,041,103,510

 

836,944,629

 

Partially Owned Properties

 

27

 

5,455

 

1,486,453,341

 

(104,645,314

)

1,381,808,027

 

836,944,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Unencumbered Properties

 

346

 

89,984

 

12,013,417,259

 

(2,107,820,144

)

9,905,597,114

 

 

Total Encumbered Properties

 

188

 

48,660

 

6,319,933,047

 

(1,062,305,075

)

5,257,627,972

 

3,605,971,387

 

Total Consolidated Investment in Real Estate

 

534

 

138,644

 

$

18,333,350,305

 

$

(3,170,125,219

)

$

15,163,225,086

 

$

3,605,971,387

 

 

 


(1) See attached Encumbrances Reconciliation.

 

S-1



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

Encumbrances Reconciliation

December 31, 2007

 

Portfolio/Entity Encumbrances

 

Number of
Properties
Encumbered By

 

See Properties
With Note:

 

Amount

 

 

 

 

 

 

 

 

 

EQR-Bond Partnership

 

10

 

I

 

$

88,189,000

 

Grove Property Trust

 

13

 

J

 

53,923,849

 

EQR-Codelle, LP

 

8*

 

K

 

112,393,993

 

EQR-Conner, LP

 

13*

 

L

 

193,813,989

 

EQR-FANCAP 2000A LP

 

9

 

M

 

148,333,000

 

EQR-Fankey 2004 Ltd. Pship

 

4

 

N

 

218,976,450

 

EQR-Fanwell 2007 LP

 

7

 

O

 

223,138,000

 

 

 

 

 

 

 

 

 

Portfolio/Entity Encumbrances

 

64

 

 

 

1,038,768,281

 

Individual Property Encumbrances

 

 

 

 

 

2,567,203,106

 

 

 

 

 

 

 

 

 

Total Encumbrances per Financial Statements

 

 

 

 

 

$

3,605,971,387

 

 


* Collateral also includes letters of credit supported by the Company’s revolving credit facility.

 

S-2



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

(Amounts in thousands)

 

The changes in total real estate for the years ended December 31, 2007, 2006 and 2005 are as follows:

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

Balance, beginning of year

 

$

17,235,175

 

$

16,590,370

 

$

14,852,621

 

Acquisitions and development

 

2,456,495

 

2,252,039

 

2,906,414

 

Improvements

 

260,371

 

265,832

 

250,110

 

Dispositions and other

 

(1,618,691

)

(1,873,066

)

(1,418,775

)

Balance, end of year

 

$

18,333,350

 

$

17,235,175

 

$

16,590,370

 

 

The changes in accumulated depreciation for the years ended December 31, 2007, 2006, and 2005 are as follows:

 

 

 

2007

 

2006

 

2005

 

 

 

 

 

 

 

 

 

Balance, beginning of year

 

$

3,022,480

 

$

2,888,140

 

$

2,599,827

 

Depreciation

 

616,414

 

592,637

 

528,152

 

Dispositions and other

 

(468,769

)

(458,297

)

(239,839

)

Balance, end of year

 

$

3,170,125

 

$

3,022,480

 

$

2,888,140

 

 

 

S-3



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent to

 

 

 

Gross Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition

 

 

 

Carried

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Cost to

 

 

 

(Improvements,

 

 

 

at Close of

 

 

 

 

 

 

 

 

 

 

 

Description

 

 

 

 

 

Company

 

 

 

net) (E)

 

 

 

Period 12/31/07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date of

 

 

 

 

 

Building &

 

 

 

Building &

 

 

 

Building &

 

 

 

Accumulated

 

Investment in Real

 

 

 

Apartment Name

 

Location

 

Construction

 

Units(H)

 

Land

 

Fixtures

 

Land

 

Fixtures

 

Land

 

Fixtures(A)

 

Total (B)

 

Depreciation(C)

 

Estate, Net at 12/31/07

 

Encumbrances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQR Wholly Owned Unencumbered:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1660 Peachtree

 

Atlanta, GA

 

1999

 

355

 

$

7,924,126

 

$

23,602,563

 

$

 

$

1,511,988

 

$

7,924,126

 

$

25,114,551

 

$

33,038,678

 

$

(4,031,619

)

$

29,007,059

 

$

 

2300 Elliott

 

Seattle, WA

 

1992

 

92

 

796,800

 

7,173,725

 

 

4,846,720

 

796,800

 

12,020,445

 

12,817,245

 

(6,350,342

)

6,466,903

 

 

2400 M St

 

Washington, D.C. (G)

 

2006

 

359

 

30,006,593

 

113,516,196

 

 

363,964

 

30,006,593

 

113,880,160

 

143,886,753

 

(7,828,584

)

136,058,169

 

 

345 S. Alexandria

 

Los Angeles, CA

 

1989

 

104

 

7,326,320

 

16,046,940

 

 

42,348

 

7,326,320

 

16,089,288

 

23,415,608

 

 

23,415,608

 

 

420 East 80th Street

 

New York, NY

 

1961

 

155

 

39,277,000

 

23,026,445

 

 

462,264

 

39,277,000

 

23,488,709

 

62,765,709

 

(2,106,951

)

60,658,758

 

 

600 Washington

 

New York, NY (G)

 

2004

 

135

 

32,852,000

 

43,140,551

 

 

41,988

 

32,852,000

 

43,182,539

 

76,034,539

 

(4,336,441

)

71,698,098

 

 

70 Greene

 

Jersey City, NJ

 

(F)

 

 

28,170,659

 

80,976,103

 

 

 

28,170,659

 

80,976,103

 

109,146,762

 

 

109,146,762

 

 

71 Broadway

 

New York, NY (G)

 

1997

 

238

 

22,611,600

 

77,492,171

 

 

665,444

 

22,611,600

 

78,157,615

 

100,769,215

 

(9,491,575

)

91,277,640

 

 

Abington Glen

 

Abington, MA

 

1968

 

90

 

553,105

 

3,697,396

 

 

2,082,960

 

553,105

 

5,780,357

 

6,333,462

 

(1,680,140

)

4,653,322

 

 

Acacia Creek

 

Scottsdale, AZ

 

1988-1994

 

304

 

3,663,473

 

21,172,386

 

 

2,095,496

 

3,663,473

 

23,267,882

 

26,931,355

 

(8,416,505

)

18,514,851

 

 

Alexander on Ponce

 

Atlanta, GA

 

2003

 

330

 

9,900,000

 

35,819,022

 

 

897,567

 

9,900,000

 

36,716,589

 

46,616,589

 

(3,710,560

)

42,906,029

 

 

Alexandria at Lake Buena Vista

 

Orlando, FL

 

2000

 

336

 

11,760,000

 

40,542,177

 

 

1,608,218

 

11,760,000

 

42,150,394

 

53,910,394

 

(4,053,253

)

49,857,141

 

 

Arrington Place Condominium Homes, LLC

 

Issaquah, WA

 

1988

 

85

 

3,891,971

 

9,595,975

 

 

797,115

 

3,891,971

 

10,393,090

 

14,285,060

 

 

14,285,060

 

 

Ashley Park at Brier Creek

 

Raleigh, NC

 

2002

 

374

 

5,610,000

 

31,467,489

 

 

1,929,396

 

5,610,000

 

33,396,886

 

39,006,886

 

(4,222,254

)

34,784,632

 

 

Ashton, The

 

Corona Hills, CA

 

1986

 

492

 

2,594,264

 

33,042,398

 

 

5,004,834

 

2,594,264

 

38,047,232

 

40,641,496

 

(13,803,677

)

26,837,819

 

 

Aspen Crossing

 

Silver Spring, MD

 

1979

 

192

 

2,880,000

 

8,551,377

 

 

2,815,658

 

2,880,000

 

11,367,035

 

14,247,035

 

(4,218,315

)

10,028,720

 

 

Audubon Village

 

Tampa, FL

 

1990

 

447

 

3,576,000

 

26,121,909

 

 

2,461,534

 

3,576,000

 

28,583,442

 

32,159,442

 

(9,624,469

)

22,534,973

 

 

Autumn River

 

Raleigh, NC

 

2002

 

284

 

3,408,000

 

20,890,457

 

 

750,976

 

3,408,000

 

21,641,432

 

25,049,432

 

(3,586,255

)

21,463,177

 

 

Auvers Village

 

Orlando, FL

 

1991

 

480

 

3,840,000

 

29,322,243

 

 

4,777,770

 

3,840,000

 

34,100,012

 

37,940,012

 

(11,267,197

)

26,672,816

 

 

Avanti

 

Anaheim, CA

 

1987

 

162

 

12,960,000

 

18,495,974

 

 

389,252

 

12,960,000

 

18,885,226

 

31,845,226

 

(1,352,210

)

30,493,016

 

 

Avenue Royale

 

Jacksonville, FL

 

2001

 

200

 

5,000,000

 

17,785,388

 

 

541,956

 

5,000,000

 

18,327,344

 

23,327,344

 

(2,244,450

)

21,082,894

 

 

Azure Creek

 

Phoenix, AZ

 

2001

 

160

 

8,778,000

 

17,840,790

 

 

548,933

 

8,778,000

 

18,389,723

 

27,167,723

 

(1,730,209

)

25,437,514

 

 

Barrington Place

 

Oviedo, FL

 

1998

 

233

 

6,990,000

 

15,740,825

 

 

2,193,729

 

6,990,000

 

17,934,554

 

24,924,554

 

(2,076,951

)

22,847,603

 

 

Bay Ridge

 

San Pedro, CA

 

1987

 

60

 

2,401,300

 

2,176,963

 

 

632,520

 

2,401,300

 

2,809,484

 

5,210,784

 

(1,192,176

)

4,018,608

 

 

Bayside at the Islands

 

Gilbert, AZ

 

1989

 

272

 

3,306,484

 

15,573,006

 

 

2,260,569

 

3,306,484

 

17,833,575

 

21,140,059

 

(6,769,808

)

14,370,251

 

 

Bella Vista

 

Phoenix, AZ

 

1995

 

248

 

2,978,879

 

20,641,333

 

 

3,053,484

 

2,978,879

 

23,694,817

 

26,673,696

 

(8,156,398

)

18,517,298

 

 

Bella Vista I & II

 

Los Angeles, CA

 

2003

 

315

 

16,883,410

 

61,699,705

 

 

733,555

 

16,883,410

 

62,433,261

 

79,316,671

 

(9,221,612

)

70,095,059

 

 

Bella Vista III

 

Woodland Hills, CA

 

2004-2007

 

264

 

14,799,344

 

58,390,472

 

 

30,646

 

14,799,344

 

58,421,118

 

73,220,462

 

(1,062,965

)

72,157,497

 

 

Bellagio Apartment Homes

 

Scottsdale, AZ

 

1995

 

202

 

2,626,000

 

16,025,041

 

 

675,369

 

2,626,000

 

16,700,410

 

19,326,410

 

(2,416,803

)

16,909,606

 

 

Belle Arts Condominium Homes, LLC

 

Bellevue, WA

 

2000

 

1

 

63,158

 

248,929

 

 

(16,098)

 

63,158

 

232,830

 

295,988

 

 

295,988

 

 

Bellevue Meadows

 

Bellevue, WA

 

1983

 

180

 

4,507,100

 

12,574,814

 

 

3,783,626

 

4,507,100

 

16,358,441

 

20,865,541

 

(4,947,981

)

15,917,560

 

 

Beneva Place

 

Sarasota, FL

 

1986

 

192

 

1,344,000

 

9,665,447

 

 

1,395,435

 

1,344,000

 

11,060,881

 

12,404,881

 

(3,804,266

)

8,600,615

 

 

Bermuda Cove

 

Jacksonville, FL

 

1989

 

350

 

1,503,000

 

19,561,896

 

 

3,905,785

 

1,503,000

 

23,467,681

 

24,970,681

 

(8,058,845

)

16,911,836

 

 

Bishop Park

 

Winter Park, FL

 

1991

 

324

 

2,592,000

 

17,990,436

 

 

3,050,699

 

2,592,000

 

21,041,135

 

23,633,135

 

(7,687,681

)

15,945,454

 

 

Brentwood

 

Vancouver, WA

 

1990

 

296

 

1,357,221

 

12,202,521

 

 

2,187,812

 

1,357,221

 

14,390,334

 

15,747,555

 

(6,857,944

)

8,889,611

 

 

Bridford Lakes II

 

Greensboro, NC

 

(F)

 

 

1,100,564

 

792,509

 

 

 

1,100,564

 

792,509

 

1,893,073

 

 

1,893,073

 

 

Bridgeport

 

Raleigh, NC

 

1990

 

276

 

1,296,700

 

11,666,278

 

 

1,888,186

 

1,296,700

 

13,554,464

 

14,851,164

 

(6,950,178

)

7,900,986

 

 

Bridgewater at Wells Crossing

 

Orange Park, FL

 

1986

 

288

 

2,160,000

 

13,347,549

 

 

1,492,087

 

2,160,000

 

14,839,636

 

16,999,636

 

(4,639,329

)

12,360,307

 

 

Brookside (CO)

 

Boulder, CO

 

1993

 

144

 

3,600,400

 

10,211,159

 

 

687,578

 

3,600,400

 

10,898,737

 

14,499,137

 

(3,775,025

)

10,724,112

 

 

Brookside II (MD)

 

Frederick, MD

 

1979

 

204

 

2,450,800

 

6,913,202

 

 

2,162,521

 

2,450,800

 

9,075,723

 

11,526,523

 

(3,556,524

)

7,969,999

 

 

Cambridge Estates

 

Norwich, CT

 

1977

 

92

 

588,206

 

3,945,265

 

 

516,824

 

588,206

 

4,462,089

 

5,050,295

 

(1,240,352

)

3,809,942

 

 

Camellero

 

Scottsdale, AZ

 

1979

 

348

 

1,924,900

 

17,324,593

 

 

4,961,471

 

1,924,900

 

22,286,064

 

24,210,964

 

(11,335,871

)

12,875,093

 

 

Canyon Crest

 

Santa Clarita, CA

 

1993

 

158

 

2,370,000

 

10,141,878

 

 

1,942,266

 

2,370,000

 

12,084,144

 

14,454,144

 

(3,865,775

)

10,588,370

 

 

Canyon Ridge

 

San Diego, CA

 

1989

 

162

 

4,869,448

 

11,955,064

 

 

1,471,347

 

4,869,448

 

13,426,411

 

18,295,859

 

(4,879,675

)

13,416,184

 

 

Carlyle

 

Dallas, TX

 

1993

 

180

 

1,890,000

 

14,155,000

 

 

851,068

 

1,890,000

 

15,006,068

 

16,896,068

 

(2,820,248

)

14,075,820

 

 

Carlyle Mill

 

Alexandria, VA

 

2002

 

317

 

10,000,000

 

51,368,058

 

 

3,089,357

 

10,000,000

 

54,457,416

 

64,457,416

 

(9,110,592

)

55,346,824

 

 

Carmel Terrace

 

San Diego, CA

 

1988-1989

 

384

 

2,288,300

 

20,596,281

 

 

8,731,235

 

2,288,300

 

29,327,516

 

31,615,816

 

(11,489,522

)

20,126,294

 

 

Casa Capricorn

 

San Diego, CA

 

1981

 

192

 

1,262,700

 

11,365,093

 

 

2,954,759

 

1,262,700

 

14,319,852

 

15,582,552

 

(5,904,619

)

9,677,933

 

 

Casa Ruiz

 

San Diego, CA

 

1976-1986

 

196

 

3,922,400

 

9,389,153

 

 

2,877,938

 

3,922,400

 

12,267,091

 

16,189,491

 

(4,791,683

)

11,397,808

 

 

Cascade at Landmark

 

Alexandria, VA

 

1990

 

277

 

3,603,400

 

19,657,554

 

 

4,518,033

 

3,603,400

 

24,175,587

 

27,778,987

 

(9,242,729

)

18,536,258

 

 

CenterPointe

 

Beaverton, OR

 

1996

 

264

 

3,421,535

 

15,708,853

 

 

2,309,749

 

3,421,535

 

18,018,602

 

21,440,137

 

(4,718,402

)

16,721,735

 

 

Centre Club

 

Ontario, CA

 

1994

 

312

 

5,616,000

 

23,485,891

 

 

1,773,058

 

5,616,000

 

25,258,949

 

30,874,949

 

(6,825,242

)

24,049,706

 

 

Centre Club II

 

Ontario, CA

 

2002

 

100

 

1,820,000

 

9,528,898

 

 

276,542

 

1,820,000

 

9,805,440

 

11,625,440

 

(2,065,199

)

9,560,241

 

 

Chandler Court

 

Chandler, AZ

 

1987

 

312

 

1,353,100

 

12,175,173

 

 

3,321,123

 

1,353,100

 

15,496,296

 

16,849,396

 

(7,331,142

)

9,518,253

 

 

Chantecleer Lakes Condominium Homes

 

Naperville, IL

 

1986

 

2

 

52,439

 

128,689

 

 

44,144

 

52,439

 

172,833

 

225,272

 

(43,783

)

181,488

 

 

Chatelaine Park

 

Duluth, GA

 

1995

 

303

 

1,818,000

 

24,489,671

 

 

1,366,418

 

1,818,000

 

25,856,089

 

27,674,089

 

(8,460,378

)

19,213,711

 

 

Chelsea Square

 

Redmond, WA

 

1991

 

113

 

3,397,100

 

9,289,074

 

 

528,424

 

3,397,100

 

9,817,498

 

13,214,598

 

(3,397,534

)

9,817,064

 

 

Chestnut Hills

 

Puyallup, WA

 

1991

 

157

 

756,300

 

6,806,635

 

 

1,080,436

 

756,300

 

7,887,071

 

8,643,371

 

(3,244,332

)

5,399,039

 

 

Cimarron Ridge

 

Aurora, CO

 

1984

 

296

 

1,591,100

 

14,320,031

 

 

2,611,538

 

1,591,100

 

16,931,569

 

18,522,669

 

(7,299,703

)

11,222,966

 

 

Citrus Falls

 

Tampa, FL

 

2003

 

273

 

8,190,000

 

28,890,880

 

 

74,811

 

8,190,000

 

28,965,691

 

37,155,691

 

(1,108,535

)

36,047,156

 

 

City View (GA)

 

Atlanta, GA (G)

 

2003

 

202

 

6,440,800

 

19,992,518

 

 

685,824

 

6,440,800

 

20,678,342

 

27,119,142

 

(2,561,711

)

24,557,431

 

 

Clarion

 

Decatur, GA

 

1990

 

217

 

1,504,300

 

13,537,919

 

 

1,725,874

 

1,504,300

 

15,263,794

 

16,768,094

 

(5,646,742

)

11,121,352

 

 

Clarys Crossing

 

Columbia, MD

 

1984

 

198

 

891,000

 

15,489,721

 

 

1,721,620

 

891,000

 

17,211,341

 

18,102,341

 

(5,933,927

)

12,168,414

 

 

Club at the Green

 

Beaverton, OR

 

1991

 

254

 

2,030,950

 

12,616,747

 

 

2,068,459

 

2,030,950

 

14,685,207

 

16,716,157

 

(6,072,695

)

10,643,461

 

 

Coach Lantern

 

Scarborough, ME

 

1971/1981

 

90

 

452,900

 

4,405,723

 

 

878,275

 

452,900

 

5,283,998

 

5,736,898

 

(2,010,617

)

3,726,281

 

 

Coconut Palm Club

 

Coconut Creek, GA

 

1992

 

300

 

3,001,700

 

17,678,928

 

 

1,681,305

 

3,001,700

 

19,360,233

 

22,361,933

 

(6,897,109

)

15,464,824

 

 

Colinas Pointe

 

Denver, CO

 

1986

 

272

 

1,587,400

 

14,285,902

 

 

1,586,705

 

1,587,400

 

15,872,607

 

17,460,007

 

(6,264,323

)

11,195,683

 

 

Collier Ridge

 

Atlanta, GA

 

1980

 

300

 

5,100,000

 

20,425,822

 

 

4,243,144

 

5,100,000

 

24,668,966

 

29,768,966

 

(8,552,469

)

21,216,497

 

 

Colorado Pointe

 

Denver, CO

 

2006

 

193

 

5,790,000

 

28,815,766

 

 

98,054

 

5,790,000

 

28,913,820

 

34,703,820

 

(2,217,896

)

32,485,924

 

 

Copper Canyon

 

Highlands Ranch, CO

 

1999

 

222

 

1,442,212

 

16,251,114

 

 

860,827

 

1,442,212

 

17,111,941

 

18,554,152

 

(5,355,172

)

13,198,981

 

 

Copper Creek

 

Tempe, AZ

 

1984

 

144

 

1,017,400

 

9,148,068

 

 

1,549,806

 

1,017,400

 

10,697,873

 

11,715,273

 

(4,224,469

)

7,490,804

 

 

Copper Terrace

 

Orlando, FL

 

1989

 

300

 

1,200,000

 

17,887,868

 

 

3,069,613

 

1,200,000

 

20,957,481

 

22,157,481

 

(7,187,795

)

14,969,686

 

 

Cortona at Dana Park

 

Mesa, AZ

 

1986

 

222

 

2,028,939

 

12,466,128

 

 

1,888,579

 

2,028,939

 

14,354,707

 

16,383,646

 

(5,489,277

)

10,894,369

 

 

Country Brook

 

Chandler, AZ

 

1986-1996

 

396

 

1,505,219

 

29,542,535

 

 

2,801,953

 

1,505,219

 

32,344,488

 

33,849,707

 

(11,619,124

)

22,230,583

 

 

Country Gables

 

Beaverton, OR

 

1991

 

288

 

1,580,500

 

14,215,444

 

 

2,944,305

 

1,580,500

 

17,159,749

 

18,740,249

 

(7,249,147

)

11,491,102

 

 

Cove at Boynton Beach I

 

Boynton Beach, FL

 

1996

 

252

 

12,600,000

 

31,590,391

 

 

873,846

 

12,600,000

 

32,464,237

 

45,064,237

 

(3,929,117

)

41,135,120

 

 

Cove at Boynton Beach II

 

Boynton Beach, FL

 

1998

 

296

 

14,800,000

 

37,874,719

 

 

 

14,800,000

 

37,874,719

 

52,674,719

 

(4,519,617

)

48,155,102

 

 

Cove at Fishers Landing

 

Vancouver, WA

 

1993

 

253

 

2,277,000

 

15,656,887

 

 

872,610

 

2,277,000

 

16,529,497

 

18,806,497

 

(3,843,333

)

14,963,164

 

 

Creekside Village

 

Mountlake Terrace, WA

 

1987

 

512

 

2,807,600

 

25,270,594

 

 

3,649,435

 

2,807,600

 

28,920,029

 

31,727,629

 

(13,935,621

)

17,792,008

 

 

Crescent at Cherry Creek

 

Denver, CO

 

1994

 

216

 

2,594,000

 

15,149,470

 

 

1,144,780

 

2,594,000

 

16,294,250

 

18,888,250

 

(6,048,050

)

12,840,200

 

 

Crosspointe

 

Bellevue, WA

 

1984

 

67

 

3,200,000

 

9,554,365

 

 

 

3,200,000

 

9,554,365

 

12,754,365

 

 

12,754,365

 

 

 

 

S-4



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent to

 

 

 

Gross Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition

 

 

 

Carried

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Cost to

 

 

 

(Improvements,

 

 

 

at Close of

 

 

 

 

 

 

 

 

 

 

 

Description

 

 

 

 

 

Company

 

 

 

net) (E)

 

 

 

Period 12/31/07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date of

 

 

 

 

 

Building &

 

 

 

Building &

 

 

 

Building &

 

 

 

Accumulated

 

Investment in Real

 

 

 

Apartment Name

 

Location

 

Construction

 

Units(H)

 

Land

 

Fixtures

 

Land

 

Fixtures

 

Land

 

Fixtures(A)

 

Total (B)

 

Depreciation(C)

 

Estate, Net at 12/31/07

 

Encumbrances

 

Crosswinds

 

St. Petersburg, FL

 

1986

 

208

 

1,561,200

 

5,756,822

 

 

1,742,938

 

1,561,200

 

7,499,759

 

9,060,959

 

(3,195,332

)

5,865,627

 

 

Crowntree Lakes

 

Orlando, FL

 

(F)

 

 

12,009,630

 

26,369,104

 

 

 

12,009,630

 

26,369,104

 

38,378,734

 

 

38,378,734

 

 

Crystal Village

 

Attleboro, MA

 

1974

 

91

 

1,369,000

 

4,989,028

 

 

2,326,875

 

1,369,000

 

7,315,903

 

8,684,903

 

(2,921,036

)

5,763,867

 

 

Cypress Lake at Waterford

 

Orlando, Fl

 

2001

 

316

 

7,000,000

 

27,654,816

 

 

957,654

 

7,000,000

 

28,612,470

 

35,612,470

 

(4,438,739

)

31,173,731

 

 

Dartmouth Woods

 

Lakewood, CO

 

1990

 

201

 

1,609,800

 

10,832,754

 

 

1,458,545

 

1,609,800

 

12,291,299

 

13,901,099

 

(4,944,374

)

8,956,726

 

 

Dean Estates

 

Taunton, MA

 

1984

 

58

 

498,080

 

3,329,560

 

 

558,678

 

498,080

 

3,888,239

 

4,386,318

 

(1,113,922

)

3,272,396

 

 

Deerwood (SD)

 

San Diego, CA

 

1990

 

316

 

2,082,095

 

18,739,815

 

 

7,803,759

 

2,082,095

 

26,543,575

 

28,625,670

 

(13,344,389

)

15,281,281

 

 

Defoor Village

 

Atlanta, GA

 

1997

 

156

 

2,966,400

 

10,570,210

 

 

1,832,189

 

2,966,400

 

12,402,400

 

15,368,800

 

(4,242,996

)

11,125,804

 

 

Desert Homes

 

Phoenix, AZ

 

1982

 

412

 

1,481,050

 

13,390,249

 

 

3,828,524

 

1,481,050

 

17,218,772

 

18,699,822

 

(7,978,688

)

10,721,135

 

 

Duraleigh Woods

 

Raleigh, NC

 

1987

 

362

 

1,629,000

 

19,917,750

 

 

3,255,538

 

1,629,000

 

23,173,287

 

24,802,287

 

(8,492,643

)

16,309,644

 

 

Eagle Canyon

 

Chino Hills, CA

 

1985

 

252

 

1,808,900

 

16,274,361

 

 

3,001,763

 

1,808,900

 

19,276,124

 

21,085,024

 

(7,680,650

)

13,404,374

 

 

Emerson Place

 

Boston, MA (G)

 

1962

 

444

 

14,855,000

 

57,566,636

 

 

13,526,389

 

14,855,000

 

71,093,024

 

85,948,024

 

(27,763,258

)

58,184,767

 

 

West End Apartments (fka Emerson Place/CRP II)

 

Boston, MA (G)

 

(F)

 

 

 

138,440,092

 

 

40,874

 

 

138,480,966

 

138,480,966

 

 

138,480,966

 

 

Enclave at Lake Underhill

 

Orlando, FL

 

1989

 

312

 

9,359,688

 

29,539,347

 

 

462,208

 

9,359,688

 

30,001,555

 

39,361,242

 

(2,378,724

)

36,982,518

 

 

Enclave at Waterways

 

Deerfield Beach, FL

 

1998

 

300

 

15,000,000

 

33,194,344

 

 

557,180

 

15,000,000

 

33,751,524

 

48,751,524

 

(2,770,105

)

45,981,419

 

 

Enclave at Winston Park

 

Coconut Creek, FL

 

1995

 

278

 

5,560,000

 

19,939,324

 

 

1,184,275

 

5,560,000

 

21,123,599

 

26,683,599

 

(4,903,174

)

21,780,425

 

 

Enclave, The

 

Tempe, AZ

 

1994

 

204

 

1,500,192

 

19,281,399

 

 

1,089,375

 

1,500,192

 

20,370,774

 

21,870,966

 

(7,203,028

)

14,667,938

 

 

Estates at Maitland Summit

 

Orlando, FL

 

1998

 

272

 

9,520,000

 

28,352,160

 

 

250,895

 

9,520,000

 

28,603,054

 

38,123,054

 

(2,507,404

)

35,615,650

 

 

Estates at Phipps

 

Atlanta, GA

 

1996

 

234

 

9,360,000

 

29,705,236

 

 

3,091,933

 

9,360,000

 

32,797,169

 

42,157,169

 

(4,014,238

)

38,142,931

 

 

Estates at Wellington Green

 

Wellington, FL

 

2003

 

400

 

20,000,000

 

64,790,850

 

 

793,446

 

20,000,000

 

65,584,297

 

85,584,297

 

(5,970,164

)

79,614,133

 

 

Fairfield

 

Stamford, CT (G)

 

1996

 

263

 

6,510,200

 

39,690,120

 

 

4,005,614

 

6,510,200

 

43,695,734

 

50,205,934

 

(14,486,874

)

35,719,060

 

 

Fairland Gardens

 

Silver Spring, MD

 

1981

 

400

 

6,000,000

 

19,972,183

 

 

4,989,976

 

6,000,000

 

24,962,159

 

30,962,159

 

(8,707,077

)

22,255,082

 

 

Fox Run (WA)

 

Federal Way, WA

 

1988

 

144

 

639,700

 

5,765,018

 

 

1,392,537

 

639,700

 

7,157,555

 

7,797,255

 

(3,566,826

)

4,230,430

 

 

Fox Run II (WA)

 

Federal Way, WA

 

1988

 

18

 

80,000

 

1,286,139

 

 

53,086

 

80,000

 

1,339,225

 

1,419,225

 

(242,163

)

1,177,062

 

 

Foxcroft

 

Scarborough, ME

 

1977/1979

 

104

 

523,400

 

4,527,409

 

 

955,615

 

523,400

 

5,483,024

 

6,006,424

 

(2,078,097

)

3,928,327

 

 

Gables Grand Plaza

 

Coral Gables, FL (G)

 

1998

 

195

 

 

44,601,000

 

 

1,780,298

 

 

46,381,298

 

46,381,298

 

(7,006,376

)

39,374,922

 

 

Gallery, The

 

Hermosa Beach,CA

 

1971

 

168

 

18,144,000

 

46,565,936

 

 

1,073,215

 

18,144,000

 

47,639,151

 

65,783,151

 

(3,269,803

)

62,513,348

 

 

Gatehouse at Pine Lake

 

Pembroke Pines, FL

 

1990

 

296

 

1,896,600

 

17,070,795

 

 

2,441,184

 

1,896,600

 

19,511,978

 

21,408,578

 

(7,882,536

)

13,526,043

 

 

Gatehouse on the Green

 

Plantation, FL

 

1990

 

312

 

2,228,200

 

20,056,270

 

 

2,810,599

 

2,228,200

 

22,866,869

 

25,095,069

 

(9,323,846

)

15,771,223

 

 

Gates of Redmond

 

Redmond, WA

 

1979

 

180

 

2,306,100

 

12,064,015

 

 

2,117,119

 

2,306,100

 

14,181,134

 

16,487,234

 

(5,159,949

)

11,327,285

 

 

Gateway at Malden Center

 

Malden, MA (G)

 

1988

 

203

 

9,209,780

 

25,722,666

 

 

4,762,837

 

9,209,780

 

30,485,502

 

39,695,282

 

(5,737,966

)

33,957,316

 

 

Gatewood

 

Pleasanton, CA

 

1985

 

200

 

6,796,511

 

20,249,392

 

 

1,716,776

 

6,796,511

 

21,966,168

 

28,762,679

 

(4,010,809

)

24,751,871

 

 

Glastonbury Center

 

Glastonbury, CT

 

1962

 

105

 

852,606

 

5,699,497

 

 

574,691

 

852,606

 

6,274,188

 

7,126,794

 

(1,784,292

)

5,342,502

 

 

Grandeville at River Place

 

Oviedo, FL

 

2002

 

280

 

6,000,000

 

23,114,693

 

 

1,228,367

 

6,000,000

 

24,343,060

 

30,343,060

 

(3,984,699

)

26,358,361

 

 

Greenfield Village

 

Rocky Hill , CT

 

1965

 

151

 

911,534

 

6,093,418

 

 

530,215

 

911,534

 

6,623,634

 

7,535,168

 

(1,842,474

)

5,692,693

 

 

Greentree 1

 

Glen Burnie, MD

 

1973

 

350

 

3,912,968

 

11,784,021

 

 

8,633,840

 

3,912,968

 

20,417,861

 

24,330,829

 

(6,111,417

)

18,219,412

 

 

Greentree 2

 

Glen Burnie, MD

 

1973

 

239

 

2,700,000

 

8,246,737

 

 

5,233,518

 

2,700,000

 

13,480,254

 

16,180,254

 

(3,956,581

)

12,223,674

 

 

Greentree 3

 

Glen Burnie, MD

 

1973

 

207

 

2,380,443

 

7,270,294

 

 

4,473,940

 

2,380,443

 

11,744,234

 

14,124,677

 

(3,433,007

)

10,691,670

 

 

Greenwood Park

 

Centennial, CO

 

1994

 

291

 

4,365,000

 

38,370,757

 

 

349,474

 

4,365,000

 

38,720,231

 

43,085,231

 

(1,326,589

)

41,758,642

 

 

Greenwood Plaza

 

Centennial, CO

 

1996

 

266

 

3,990,000

 

35,845,025

 

 

652,657

 

3,990,000

 

36,497,682

 

40,487,682

 

(1,206,643

)

39,281,039

 

 

Hammocks Place

 

Miami, FL

 

1986

 

296

 

319,180

 

12,513,467

 

 

2,378,719

 

319,180

 

14,892,185

 

15,211,365

 

(7,677,231

)

7,534,135

 

 

Hamptons

 

Puyallup, WA

 

1991

 

230

 

1,119,200

 

10,075,844

 

 

1,344,056

 

1,119,200

 

11,419,900

 

12,539,100

 

(4,582,260

)

7,956,840

 

 

Harborview

 

San Pedro, CA

 

1985

 

160

 

6,402,500

 

12,627,347

 

 

1,647,872

 

6,402,500

 

14,275,219

 

20,677,719

 

(5,745,084

)

14,932,636

 

 

Harbour Town

 

Boca Raton, FL

 

1985

 

392

 

11,760,000

 

20,190,252

 

 

5,410,265

 

11,760,000

 

25,600,517

 

37,360,517

 

(8,403,442

)

28,957,075

 

 

Hathaway

 

Long Beach, CA

 

1987

 

385

 

2,512,500

 

22,611,912

 

 

4,401,028

 

2,512,500

 

27,012,939

 

29,525,439

 

(12,000,984

)

17,524,455

 

 

Heights on Capitol Hill

 

Seattle, WA (G)

 

2006

 

104

 

5,425,000

 

21,138,028

 

 

59,926

 

5,425,000

 

21,197,954

 

26,622,954

 

(1,162,064

)

25,460,890

 

 

Heritage Ridge

 

Lynwood, WA

 

1999

 

197

 

6,895,000

 

18,983,597

 

 

219,267

 

6,895,000

 

19,202,864

 

26,097,864

 

(1,874,146

)

24,223,718

 

 

Heritage, The

 

Phoenix, AZ

 

1995

 

204

 

1,211,205

 

13,136,903

 

 

1,005,272

 

1,211,205

 

14,142,176

 

15,353,381

 

(5,145,562

)

10,207,818

 

 

Heron Pointe

 

Boynton Beach, FL

 

1989

 

192

 

1,546,700

 

7,774,676

 

 

1,539,272

 

1,546,700

 

9,313,948

 

10,860,648

 

(3,836,004

)

7,024,644

 

 

Heronfield

 

Kirkland, WA

 

1990

 

202

 

9,245,000

 

27,018,110

 

 

586,722

 

9,245,000

 

27,604,832

 

36,849,832

 

(1,525,678

)

35,324,154

 

 

Hidden Lakes

 

Haltom City, TX

 

1996

 

312

 

1,872,000

 

20,242,109

 

 

1,589,567

 

1,872,000

 

21,831,676

 

23,703,676

 

(7,379,138

)

16,324,538

 

 

Hidden Oaks

 

Cary, NC

 

1988

 

216

 

1,178,600

 

10,614,135

 

 

2,227,604

 

1,178,600

 

12,841,739

 

14,020,339

 

(5,218,265

)

8,802,074

 

 

Hidden Palms

 

Tampa, FL

 

1986

 

256

 

2,049,600

 

6,345,885

 

 

2,055,742

 

2,049,600

 

8,401,627

 

10,451,227

 

(3,684,009

)

6,767,217

 

 

Highland Glen

 

Westwood, MA

 

1979

 

180

 

2,229,095

 

16,828,153

 

 

1,802,796

 

2,229,095

 

18,630,949

 

20,860,045

 

(4,566,387

)

16,293,658

 

 

Highland Glen II

 

Westwood, MA

 

2007

 

102

 

 

19,796,546

 

 

2,820

 

 

19,799,367

 

19,799,367

 

(358,327

)

19,441,040

 

 

Highlands, The

 

Scottsdale, AZ

 

1990

 

272

 

11,823,840

 

31,990,970

 

 

2,430,281

 

11,823,840

 

34,421,250

 

46,245,090

 

(2,828,545

)

43,416,546

 

 

Hudson Crossing

 

New York, NY (G)

 

2003

 

259

 

23,420,000

 

70,086,976

 

 

305,192

 

23,420,000

 

70,392,168

 

93,812,168

 

(8,690,311

)

85,121,857

 

 

Hudson Pointe

 

Jersey City, NJ

 

2003

 

182

 

5,148,500

 

41,025,870

 

 

368,465

 

5,148,500

 

41,394,335

 

46,542,834

 

(5,778,885

)

40,763,950

 

 

Hunt Club II

 

Charlotte, NC

 

(F)

 

 

100,000

 

 

 

 

100,000

 

 

100,000

 

 

100,000

 

 

Huntington Park

 

Everett, WA

 

1991

 

381

 

1,597,500

 

14,367,864

 

 

2,967,920

 

1,597,500

 

17,335,784

 

18,933,284

 

(8,550,776

)

10,382,508

 

 

Indian Bend

 

Scottsdale, AZ

 

1973

 

277

 

1,075,700

 

9,800,330

 

 

2,775,060

 

1,075,700

 

12,575,390

 

13,651,090

 

(6,566,135

)

7,084,955

 

 

Indian Tree

 

Arvada, CO

 

1982

 

168

 

881,225

 

4,552,815

 

 

1,835,640

 

881,225

 

6,388,455

 

7,269,680

 

(3,673,118

)

3,596,562

 

 

Indigo Springs

 

Kent, WA

 

1991

 

278

 

1,270,500

 

11,446,902

 

 

2,391,074

 

1,270,500

 

13,837,975

 

15,108,475

 

(5,979,520

)

9,128,956

 

 

Ivy Place

 

Atlanta, GA

 

1978

 

122

 

802,950

 

7,228,257

 

 

1,892,669

 

802,950

 

9,120,925

 

9,923,875

 

(3,955,081

)

5,968,795

 

 

James Street Crossing

 

Kent, WA

 

1989

 

300

 

2,081,254

 

18,748,337

 

 

1,746,512

 

2,081,254

 

20,494,849

 

22,576,103

 

(7,570,161

)

15,005,941

 

 

Junipers at Yarmouth

 

Yarmouth, ME

 

1970

 

225

 

1,355,700

 

7,860,135

 

 

2,274,297

 

1,355,700

 

10,134,432

 

11,490,132

 

(4,268,213

)

7,221,918

 

 

Kempton Downs

 

Gresham, OR

 

1990

 

278

 

1,217,349

 

10,943,372

 

 

2,400,786

 

1,217,349

 

13,344,158

 

14,561,506

 

(6,436,619

)

8,124,887

 

 

Kenwood Mews

 

Burbank, CA

 

1991

 

141

 

14,100,000

 

24,659,883

 

 

384,993

 

14,100,000

 

25,044,876

 

39,144,876

 

(1,836,344

)

37,308,531

 

 

Key Isle at Windermere

 

Ocoee, FL

 

2000

 

282

 

8,460,000

 

31,761,470

 

 

240,639

 

8,460,000

 

32,002,109

 

40,462,109

 

(2,059,617

)

38,402,492

 

 

Key Isle at Windermere II

 

Ocoee, FL

 

(F)

 

 

3,306,286

 

14,065,675

 

 

 

3,306,286

 

14,065,675

 

17,371,961

 

 

17,371,961

 

 

Kings Colony (FL)

 

Miami, FL

 

1986

 

480

 

19,200,000

 

48,379,586

 

 

1,094,366

 

19,200,000

 

49,473,952

 

68,673,952

 

(4,780,658

)

63,893,294

 

 

La Mirage

 

San Diego, CA

 

1988/1992

 

1,070

 

28,895,200

 

95,567,943

 

 

9,400,311

 

28,895,200

 

104,968,254

 

133,863,454

 

(38,916,187

)

94,947,267

 

 

La Mirage IV

 

San Diego, CA

 

2001

 

340

 

6,000,000

 

47,449,353

 

 

1,529,897

 

6,000,000

 

48,979,250

 

54,979,250

 

(10,639,104

)

44,340,146

 

 

Laguna Clara

 

Santa Clara, CA

 

1972

 

264

 

13,642,420

 

29,707,475

 

 

1,969,661

 

13,642,420

 

31,677,136

 

45,319,555

 

(4,953,579

)

40,365,976

 

 

Lakes at Vinings

 

Atlanta, GA

 

1972/1975

 

464

 

6,498,000

 

21,832,252

 

 

3,219,665

 

6,498,000

 

25,051,917

 

31,549,917

 

(9,151,777

)

22,398,140

 

 

Lakeshore at Preston

 

Plano, TX

 

1992

 

302

 

3,325,800

 

15,208,348

 

 

2,234,548

 

3,325,800

 

17,442,896

 

20,768,696

 

(6,117,233

)

14,651,462

 

 

Lakeville Resort

 

Petaluma, CA

 

1984

 

492

 

2,736,500

 

24,610,651

 

 

4,532,675

 

2,736,500

 

29,143,326

 

31,879,826

 

(12,363,825

)

19,516,001

 

 

Landings at Pembroke Lakes

 

Pembroke Pines, FL

 

1989

 

358

 

17,900,000

 

24,530,806

 

 

2,020,856

 

17,900,000

 

26,551,661

 

44,451,661

 

(2,372,483

)

42,079,179

 

 

Landings at Port Imperial

 

W. New York, NJ

 

1999

 

276

 

27,246,045

 

37,741,050

 

 

4,669,554

 

27,246,045

 

42,410,604

 

69,656,649

 

(9,667,388

)

59,989,261

 

 

Larkspur Woods

 

Sacramento, CA

 

1989/1993

 

232

 

5,802,900

 

14,576,106

 

 

1,607,728

 

5,802,900

 

16,183,835

 

21,986,735

 

(6,187,055

)

15,799,680

 

 

Las Colinas at Black Canyon

 

Phoenix, AZ

 

(F)

 

 

 

710,850

 

 

 

 

710,850

 

710,850

 

 

710,850

 

 

Laurel Ridge

 

Chapel Hill, NC

 

1975

 

160

 

160,000

 

3,206,076

 

 

4,049,523

 

160,000

 

7,255,599

 

7,415,599

 

(5,222,345

)

2,193,254

 

 

Laurel Ridge II

 

Chapel Hill, NC

 

(F)

 

 

22,551

 

 

 

 

22,551

 

 

22,551

 

 

22,551

 

 

Legends at Preston

 

Morrisville, NC

 

2000

 

382

 

3,056,000

 

27,150,092

 

 

976,510

 

3,056,000

 

28,126,603

 

31,182,603

 

(7,452,958

)

23,729,645

 

 

Lexington Farm

 

Alpharetta, GA

 

1995

 

352

 

3,521,900

 

22,888,305

 

 

2,008,955

 

3,521,900

 

24,897,260

 

28,419,160

 

(8,192,928

)

20,226,232

 

 

Lexington Park

 

Orlando, FL

 

1988

 

252

 

2,016,000

 

12,346,726

 

 

2,109,187

 

2,016,000

 

14,455,913

 

16,471,913

 

(5,202,695

)

11,269,218

 

 

 

S-5



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent to

 

 

 

Gross Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition

 

 

 

Carried

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Cost to

 

 

 

(Improvements,

 

 

 

at Close of

 

 

 

 

 

 

 

 

 

 

 

Description

 

 

 

 

 

Company

 

 

 

net) (E)

 

 

 

Period 12/31/07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date of

 

 

 

 

 

Building &

 

 

 

Building &

 

 

 

Building &

 

 

 

Accumulated

 

Investment in Real

 

 

 

Apartment Name

 

Location

 

Construction

 

Units (H)

 

Land

 

Fixtures

 

Land

 

Fixtures

 

Land

 

Fixtures (A)

 

Total (B)

 

Depreciation (C)

 

Estate, Net at 12/31/07

 

Encumbrances

 

Liberty Park

 

Brain Tree, MA

 

2000

 

202

 

5,977,504

 

26,749,111

 

 

1,388,748

 

5,977,504

 

28,137,859

 

34,115,363

 

(5,140,626

)

28,974,737

 

 

Lincoln Green

 

Pleasant Hill, CA

 

1973

 

252

 

15,000,000

 

24,335,549

 

 

3,860,341

 

15,000,000

 

28,195,890

 

43,195,890

 

(2,484,196

)

40,711,694

 

 

Little Cottonwoods

 

Tempe, AZ

 

1984

 

379

 

3,050,133

 

26,991,689

 

 

2,827,760

 

3,050,133

 

29,819,449

 

32,869,582

 

(10,957,034

)

21,912,548

 

 

Lofton Place

 

Tampa, FL

 

1988

 

280

 

2,240,000

 

16,679,214

 

 

2,458,150

 

2,240,000

 

19,137,364

 

21,377,364

 

(6,670,472

)

14,706,893

 

 

Longfellow Place

 

Boston, MA (G)

 

1975

 

710

 

53,164,160

 

183,940,619

 

 

33,745,271

 

53,164,160

 

217,685,890

 

270,850,050

 

(69,909,360

)

200,940,690

 

 

Longview Place

 

Waltham, MA

 

2004

 

348

 

20,880,000

 

90,255,509

 

 

346,175

 

20,880,000

 

90,601,684

 

111,481,684

 

(8,648,809

)

102,832,875

 

 

Madison at Scofield Farms

 

Austin, TX

 

1996

 

260

 

2,080,000

 

14,597,971

 

 

1,879,016

 

2,080,000

 

16,476,987

 

18,556,987

 

(4,755,658

)

13,801,330

 

 

Madison at Stone Creek

 

Austin, TX

 

1995

 

390

 

2,535,000

 

22,611,700

 

 

2,018,084

 

2,535,000

 

24,629,784

 

27,164,784

 

(8,400,734

)

18,764,050

 

 

Madison at the Arboretum

 

Austin, TX

 

1995

 

161

 

1,046,500

 

9,638,269

 

 

2,064,189

 

1,046,500

 

11,702,458

 

12,748,958

 

(4,017,210

)

8,731,748

 

 

Madison at Walnut Creek

 

Austin, TX

 

1994

 

342

 

2,737,600

 

14,623,574

 

 

1,976,522

 

2,737,600

 

16,600,096

 

19,337,696

 

(6,561,891

)

12,775,805

 

 

Madison at Wells Branch

 

Austin, TX

 

1995

 

300

 

2,377,344

 

16,370,879

 

 

2,466,115

 

2,377,344

 

18,836,994

 

21,214,339

 

(5,495,322

)

15,719,016

 

 

Madison on Melrose

 

Richardson, TX

 

1995

 

200

 

1,300,000

 

15,096,551

 

 

906,141

 

1,300,000

 

16,002,692

 

17,302,692

 

(5,286,379

)

12,016,313

 

 

Magnolia at Whitlock

 

Marietta, GA

 

1971

 

152

 

132,979

 

1,526,005

 

 

3,870,849

 

132,979

 

5,396,854

 

5,529,833

 

(3,926,208

)

1,603,625

 

 

Mariners Wharf (OLD)

 

Orange Park, FL

 

1989

 

272

 

1,861,200

 

16,744,951

 

 

2,720,844

 

1,861,200

 

19,465,795

 

21,326,995

 

(7,078,611

)

14,248,384

 

 

Market Street Village

 

San Diego, CA

 

2006

 

229

 

13,740,000

 

40,777,683

 

 

200,473

 

13,740,000

 

40,978,156

 

54,718,156

 

(1,929,626

)

52,788,530

 

 

Marquessa

 

Corona Hills, CA

 

1992

 

336

 

6,888,500

 

21,604,584

 

 

2,319,642

 

6,888,500

 

23,924,225

 

30,812,725

 

(9,064,156

)

21,748,570

 

 

Martha Lake

 

Lynnwood, WA

 

1991

 

155

 

821,200

 

7,405,070

 

 

1,624,188

 

821,200

 

9,029,259

 

9,850,459

 

(3,734,804

)

6,115,655

 

 

Merrill Creek

 

Lakewood, WA

 

1994

 

149

 

814,200

 

7,330,606

 

 

791,349

 

814,200

 

8,121,955

 

8,936,155

 

(3,164,386

)

5,771,769

 

 

Metro on First

 

Seattle, WA (G)

 

2002

 

102

 

8,540,000

 

12,209,981

 

 

104,986

 

8,540,000

 

12,314,967

 

20,854,967

 

(1,341,160

)

19,513,806

 

 

Milano Terrace Private Residences

 

Scottsdale, AZ

 

1984

 

18

 

278,382

 

1,665,733

 

 

818,907

 

278,382

 

2,484,640

 

2,763,022

 

(497,376

)

2,265,646

 

 

Mill Creek

 

Milpitas, CA

 

1991

 

516

 

12,858,693

 

57,168,503

 

 

1,579,489

 

12,858,693

 

58,747,992

 

71,606,685

 

(10,646,464

)

60,960,222

 

 

Millbrook Apartments Phase I

 

Alexandria, VA

 

1996

 

406

 

24,360,000

 

86,178,714

 

 

1,033,125

 

24,360,000

 

87,211,840

 

111,571,840

 

(7,647,495

)

103,924,345

 

 

Mira Flores

 

Palm Beach Gardens, FL

 

1996

 

352

 

7,039,313

 

22,515,299

 

 

1,307,162

 

7,039,313

 

23,822,461

 

30,861,774

 

(5,612,669

)

25,249,105

 

 

Miramar Lakes

 

Miramar, FL

 

2003

 

344

 

17,200,000

 

51,486,960

 

 

265,981

 

17,200,000

 

51,752,941

 

68,952,941

 

(3,675,897

)

65,277,044

 

 

Mission Bay

 

Orlando, FL

 

1991

 

304

 

2,432,000

 

21,623,560

 

 

1,999,337

 

2,432,000

 

23,622,897

 

26,054,897

 

(7,969,258

)

18,085,639

 

 

Mission Verde, LLC

 

San Jose, CA

 

1986

 

108

 

5,190,700

 

9,661,109

 

 

757,460

 

5,190,700

 

10,418,569

 

15,609,269

 

(3,441,051

)

12,168,218

 

 

Missions at Sunbow

 

Chula Vista, CA

 

2003

 

336

 

28,560,000

 

59,287,595

 

 

741,283

 

28,560,000

 

60,028,878

 

88,588,878

 

(6,413,035

)

82,175,843

 

 

Montecito

 

Valencia, CA

 

1999

 

210

 

8,400,000

 

24,709,146

 

 

1,315,531

 

8,400,000

 

26,024,677

 

34,424,677

 

(6,504,104

)

27,920,573

 

 

Monterra in Mill Creek

 

Mill Creek, WA

 

2003

 

139

 

2,800,000

 

13,255,123

 

 

140,417

 

2,800,000

 

13,395,540

 

16,195,540

 

(1,690,652

)

14,504,888

 

 

Montierra (CA)

 

San Diego, CA

 

1990

 

272

 

8,160,000

 

29,360,938

 

 

5,882,768

 

8,160,000

 

35,243,706

 

43,403,706

 

(9,241,040

)

34,162,666

 

 

Morningside

 

Scottsdale, AZ

 

1989

 

160

 

670,470

 

12,607,976

 

 

1,219,772

 

670,470

 

13,827,748

 

14,498,218

 

(5,085,929

)

9,412,289

 

 

Mountain Terrace

 

Stevenson Ranch, CA

 

1992

 

510

 

3,966,500

 

35,814,995

 

 

3,330,329

 

3,966,500

 

39,145,324

 

43,111,824

 

(15,224,331

)

27,887,493

 

 

New River Cove

 

Davie, FL

 

1999

 

316

 

15,800,000

 

46,142,648

 

 

271,623

 

15,800,000

 

46,414,271

 

62,214,271

 

(3,433,370

)

58,780,902

 

 

Northampton 2

 

Largo, MD

 

1988

 

276

 

1,513,500

 

14,246,990

 

 

2,962,068

 

1,513,500

 

17,209,058

 

18,722,558

 

(8,262,288

)

10,460,271

 

 

Northlake (MD)

 

Germantown, MD

 

1985

 

304

 

15,000,000

 

23,142,302

 

 

9,330,029

 

15,000,000

 

32,472,331

 

47,472,331

 

(3,774,917

)

43,697,414

 

 

Northridge

 

Pleasant Hill, CA

 

1974

 

221

 

5,527,800

 

14,691,705

 

 

2,507,751

 

5,527,800

 

17,199,455

 

22,727,255

 

(6,479,007

)

16,248,249

 

 

Northwoods Village

 

Cary, NC

 

1986

 

228

 

1,369,700

 

11,460,337

 

 

2,346,172

 

1,369,700

 

13,806,509

 

15,176,209

 

(5,586,820

)

9,589,389

 

 

Oaks at Falls Church

 

Falls Church, VA

 

1966

 

176

 

20,240,000

 

20,152,616

 

 

2,486,502

 

20,240,000

 

22,639,118

 

42,879,118

 

(1,999,884

)

40,879,234

 

 

Ocean Crest

 

Solana Beach, CA

 

1986

 

146

 

5,111,200

 

11,910,438

 

 

1,698,167

 

5,111,200

 

13,608,605

 

18,719,805

 

(4,664,445

)

14,055,360

 

 

Olympus Towers

 

Seattle, WA (G)

 

2000

 

328

 

14,752,034

 

73,376,841

 

 

1,535,341

 

14,752,034

 

74,912,182

 

89,664,216

 

(11,166,850

)

78,497,366

 

 

Orchard Ridge

 

Lynnwood, WA

 

1988

 

104

 

480,600

 

4,372,033

 

 

886,708

 

480,600

 

5,258,741

 

5,739,341

 

(2,640,993

)

3,098,348

 

 

Overlook Manor

 

Frederick, MD

 

1980/1985

 

108

 

1,299,100

 

3,930,931

 

 

1,692,596

 

1,299,100

 

5,623,527

 

6,922,627

 

(2,284,460

)

4,638,168

 

 

Overlook Manor II

 

Frederick, MD

 

1980/1985

 

182

 

2,186,300

 

6,262,597

 

 

776,463

 

2,186,300

 

7,039,060

 

9,225,360

 

(2,509,035

)

6,716,325

 

 

Paces Station

 

Atlanta, GA

 

1984-1988/1989

 

610

 

4,801,500

 

32,548,053

 

 

6,769,437

 

4,801,500

 

39,317,489

 

44,118,989

 

(15,799,922

)

28,319,068

 

 

Pacific Cove at Playa Del Rey, LLC

 

Playa Del Ray, CA

 

1984

 

1

 

98,208

 

264,696

 

 

47,659

 

98,208

 

312,355

 

410,563

 

 

410,563

 

 

Palladia

 

Hillsboro, OR

 

2000

 

497

 

6,461,000

 

44,888,156

 

 

925,859

 

6,461,000

 

45,814,014

 

52,275,014

 

(10,934,782

)

41,340,232

 

 

Palm Trace Landings

 

Davie, FL

 

1995

 

768

 

38,400,000

 

105,788,437

 

 

619,554

 

38,400,000

 

106,407,991

 

144,807,991

 

(7,921,773

)

136,886,218

 

 

Panther Ridge

 

Federal Way, WA

 

1980

 

260

 

1,055,800

 

9,506,117

 

 

1,552,156

 

1,055,800

 

11,058,273

 

12,114,073

 

(4,575,981

)

7,538,092

 

 

Paradise Pointe

 

Dania, FL

 

1987-1990

 

320

 

1,913,414

 

17,417,956

 

 

6,127,753

 

1,913,414

 

23,545,709

 

25,459,123

 

(10,438,380

)

15,020,743

 

 

Parc 77

 

New York, NY (G)

 

1903

 

137

 

40,504,000

 

18,025,128

 

 

235,035

 

40,504,000

 

18,260,163

 

58,764,163

 

(1,363,498

)

57,400,664

 

 

Parc Cameron

 

New York, NY (G)

 

1927

 

166

 

37,600,000

 

9,855,670

 

 

256,470

 

37,600,000

 

10,112,139

 

47,712,139

 

(973,444

)

46,738,695

 

 

Parc Coliseum

 

New York, NY (G)

 

1910

 

176

 

52,654,000

 

23,043,967

 

 

619,432

 

52,654,000

 

23,663,400

 

76,317,400

 

(1,574,005

)

74,743,394

 

 

Parc Vue at Lake Buena Vista

 

Orlando, FL

 

2000/2002

 

336

 

11,760,000

 

34,526,029

 

 

1,192,270

 

11,760,000

 

35,718,299

 

47,478,299

 

(3,640,939

)

43,837,360

 

 

Park at Turtle Run, The

 

Coral Springs, FL

 

2001

 

257

 

15,420,000

 

36,064,629

 

 

429,599

 

15,420,000

 

36,494,228

 

51,914,228

 

(3,881,493

)

48,032,735

 

 

Park Bloomingdale Condominium Homes

 

Bloomingdale, IL

 

1989

 

70

 

980,935

 

4,960,292

 

 

1,849,234

 

980,935

 

6,809,526

 

7,790,461

 

(1,765,570

)

6,024,891

 

 

Park Meadow

 

Gilbert, AZ

 

1986

 

225

 

835,217

 

15,120,769

 

 

1,936,950

 

835,217

 

17,057,718

 

17,892,935

 

(6,260,298

)

11,632,637

 

 

Park West (CA)

 

Los Angeles, CA

 

1987/1990

 

444

 

3,033,500

 

27,302,383

 

 

3,912,844

 

3,033,500

 

31,215,226

 

34,248,726

 

(14,054,430

)

20,194,297

 

 

Parkside

 

Union City, CA

 

1979

 

208

 

6,246,700

 

11,827,453

 

 

2,896,537

 

6,246,700

 

14,723,990

 

20,970,690

 

(5,853,232

)

15,117,458

 

 

Parkview Terrace

 

Redlands, CA

 

1986

 

558

 

4,969,200

 

35,653,777

 

 

10,441,918

 

4,969,200

 

46,095,695

 

51,064,895

 

(15,509,100

)

35,555,795

 

 

Parkwood (CT)

 

East Haven, CT

 

1975

 

102

 

531,365

 

3,552,064

 

 

556,730

 

531,365

 

4,108,794

 

4,640,158

 

(1,156,114

)

3,484,044

 

 

Phillips Park

 

Wellesley, MA

 

1988

 

49

 

816,922

 

5,460,955

 

 

774,547

 

816,922

 

6,235,502

 

7,052,424

 

(1,600,260

)

5,452,163

 

 

Pine Harbour

 

Orlando, FL

 

1991

 

366

 

1,664,300

 

14,970,915

 

 

2,922,990

 

1,664,300

 

17,893,905

 

19,558,205

 

(9,046,317

)

10,511,888

 

 

Playa Pacifica

 

Hermosa Beach,CA

 

1972

 

285

 

35,100,000

 

33,473,822

 

 

5,933,956

 

35,100,000

 

39,407,778

 

74,507,778

 

(3,700,875

)

70,806,903

 

 

Pointe at South Mountain

 

Phoenix, AZ

 

1988

 

364

 

2,228,800

 

20,059,311

 

 

2,693,839

 

2,228,800

 

22,753,150

 

24,981,950

 

(9,061,184

)

15,920,767

 

 

Polos East

 

Orlando, FL

 

1991

 

308

 

1,386,000

 

19,058,620

 

 

1,748,952

 

1,386,000

 

20,807,572

 

22,193,572

 

(7,089,445

)

15,104,128

 

 

Port Royale

 

Ft. Lauderdale, FL (G)

 

1988

 

252

 

1,754,200

 

15,789,873

 

 

5,465,381

 

1,754,200

 

21,255,254

 

23,009,454

 

(9,295,809

)

13,713,644

 

 

Port Royale II

 

Ft. Lauderdale, FL (G)

 

1988

 

161

 

1,022,200

 

9,203,166

 

 

3,448,319

 

1,022,200

 

12,651,485

 

13,673,685

 

(5,128,121

)

8,545,564

 

 

Port Royale III

 

Ft. Lauderdale, FL (G)

 

1988

 

324

 

7,454,900

 

14,725,802

 

 

6,412,206

 

7,454,900

 

21,138,008

 

28,592,908

 

(7,828,857

)

20,764,051

 

 

Port Royale IV

 

Ft. Lauderdale, FL

 

(F)

 

 

 

26,997

 

 

 

 

26,997

 

26,997

 

 

26,997

 

 

Portofino

 

Chino Hills, CA

 

1989

 

176

 

3,572,400

 

14,660,994

 

 

1,483,517

 

3,572,400

 

16,144,511

 

19,716,911

 

(5,872,739

)

13,844,172

 

 

Preserve at Briarcliff

 

Atlanta, GA

 

1994

 

182

 

6,370,000

 

17,714,254

 

 

248,581

 

6,370,000

 

17,962,835

 

24,332,835

 

(1,124,512

)

23,208,323

 

 

Preserve at Deer Creek

 

Deerfield Beach, FL

 

1997

 

540

 

13,500,000

 

60,011,208

 

 

1,319,837

 

13,500,000

 

61,331,045

 

74,831,045

 

(9,513,890

)

65,317,155

 

 

Prime, The

 

Arlington, VA

 

2002

 

256

 

32,000,000

 

64,451,521

 

 

406,034

 

32,000,000

 

64,857,555

 

96,857,555

 

(3,837,144

)

93,020,411

 

 

Promenade (FL)

 

St. Petersburg, FL

 

1994

 

334

 

2,124,193

 

25,804,037

 

 

3,415,447

 

2,124,193

 

29,219,484

 

31,343,678

 

(10,006,699

)

21,336,979

 

 

Promenade at Aventura

 

Aventura, FL

 

1995

 

296

 

13,320,000

 

30,353,748

 

 

2,069,947

 

13,320,000

 

32,423,695

 

45,743,695

 

(8,225,385

)

37,518,311

 

 

Promenade at Peachtree

 

Chamblee, GA

 

2001

 

406

 

10,150,000

 

31,219,739

 

 

1,256,928

 

10,150,000

 

32,476,668

 

42,626,668

 

(4,769,449

)

37,857,219

 

 

Promenade at Town Center I

 

Valencia, CA

 

2001

 

294

 

14,700,000

 

35,390,279

 

 

981,357

 

14,700,000

 

36,371,635

 

51,071,635

 

(5,859,872

)

45,211,763

 

 

Promenade at Wyndham Lakes

 

Coral Springs, FL

 

1998

 

332

 

6,640,000

 

26,743,760

 

 

1,333,993

 

6,640,000

 

28,077,752

 

34,717,752

 

(7,612,433

)

27,105,320

 

 

Promontory Pointe I & II

 

Phoenix, AZ

 

1984/1996

 

424

 

2,355,509

 

30,421,840

 

 

3,225,075

 

2,355,509

 

33,646,914

 

36,002,423

 

(12,336,109

)

23,666,315

 

 

Prospect Towers

 

Hackensack, NJ

 

1995

 

157

 

3,926,600

 

27,966,416

 

 

2,494,780

 

3,926,600

 

30,461,196

 

34,387,796

 

(11,197,014

)

23,190,783

 

 

Prospect Towers II

 

Hackensack, NJ

 

2002

 

203

 

4,500,000

 

33,104,733

 

 

1,103,137

 

4,500,000

 

34,207,869

 

38,707,869

 

(6,975,698

)

31,732,171

 

 

Ranch at Fossil Creek

 

Haltom City, TX

 

2003

 

274

 

1,715,435

 

16,829,282

 

 

518,489

 

1,715,435

 

17,347,771

 

19,063,206

 

(3,066,508

)

15,996,697

 

 

Redlands Lawn and Tennis

 

Redlands, CA

 

1986

 

496

 

4,822,320

 

26,359,328

 

 

3,651,843

 

4,822,320

 

30,011,172

 

34,833,492

 

(11,140,908

)

23,692,584

 

 

Redmond Ridge

 

Redmond, WA

 

(F)

 

 

6,975,705

 

36,015,240

 

 

299

 

6,975,705

 

36,015,540

 

42,991,245

 

(10

)

42,991,235

 

 

Redmond Way

 

Redmond , WA

 

(F)

 

 

15,546,376

 

644,616

 

 

 

15,546,376

 

644,616

 

16,190,992

 

 

16,190,992

 

 

Regency Palms

 

Huntington Beach, CA

 

1969

 

310

 

1,857,400

 

16,713,254

 

 

3,230,599

 

1,857,400

 

19,943,852

 

21,801,252

 

(8,931,251

)

12,870,001

 

 

 

 

S-6



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent to

 

 

 

Gross Amount Carried

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Cost to

 

 

 

Acquisition

 

 

 

at Close of

 

 

 

 

 

 

 

 

 

 

 

Description

 

 

 

 

 

Company

 

 

 

(Improvements, net) (E)

 

 

 

Period 12/31/07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date of

 

 

 

 

 

Building &

 

 

 

Building &

 

 

 

Building &

 

 

 

Accumulated

 

Investment in Real

 

 

 

Apartment Name

 

Location

 

Construction

 

Units (H)

 

Land

 

Fixtures

 

Land

 

Fixtures

 

Land

 

Fixtures (A)

 

Total (B)

 

Depreciation (C)

 

Estate, Net at 12/31/07

 

Encumbrances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regency Park

 

Centreville, VA

 

1989

 

252

 

2,521,500

 

16,200,666

 

 

7,081,348

 

2,521,500

 

23,282,013

 

25,803,513

 

(7,619,234

)

18,184,280

 

 

Remington Place

 

Phoenix, AZ

 

1983

 

412

 

1,492,750

 

13,377,478

 

 

3,783,993

 

1,492,750

 

17,161,471

 

18,654,221

 

(8,077,958

)

10,576,263

 

 

Reserve at Clarendon Centre, The

 

Arlington, VA (G)

 

2003

 

252

 

10,500,000

 

52,812,935

 

 

1,132,493

 

10,500,000

 

53,945,428

 

64,445,428

 

(8,384,025

)

56,061,403

 

 

Reserve at Eisenhower, The

 

Alexandria, VA

 

2002

 

226

 

6,500,000

 

34,585,060

 

 

263,628

 

6,500,000

 

34,848,687

 

41,348,687

 

(6,393,167

)

34,955,521

 

 

Reserve at Moreno Valley Ranch

 

Moreno Valley, CA

 

2005

 

176

 

8,800,000

 

26,151,298

 

 

82,171

 

8,800,000

 

26,233,469

 

35,033,469

 

(2,162,466

)

32,871,003

 

 

Reserve at Town Center II (WA)

 

Mill Creek, WA

 

(F)

 

 

4,310,417

 

1,153,399

 

 

 

4,310,417

 

1,153,399

 

5,463,817

 

 

5,463,817

 

 

Residences at Little River

 

Haverhill, MA

 

2003

 

174

 

6,905,138

 

19,172,747

 

 

321,098

 

6,905,138

 

19,493,845

 

26,398,983

 

(3,215,547

)

23,183,436

 

 

Ridgewood Village

 

San Diego, CA

 

1997

 

192

 

5,761,500

 

14,032,511

 

 

973,218

 

5,761,500

 

15,005,729

 

20,767,229

 

(5,175,792

)

15,591,437

 

 

Ridgewood Village II

 

San Diego, CA

 

1997

 

216

 

6,048,000

 

19,971,537

 

 

174,360

 

6,048,000

 

20,145,897

 

26,193,897

 

(4,997,685

)

21,196,211

 

 

River Stone Ranch

 

Austin, TX

 

1998

 

448

 

5,376,000

 

27,004,185

 

 

1,579,737

 

5,376,000

 

28,583,922

 

33,959,922

 

(5,355,285

)

28,604,636

 

 

Rivers Edge

 

Waterbury, CT

 

1974

 

156

 

781,900

 

6,561,167

 

 

1,111,099

 

781,900

 

7,672,266

 

8,454,166

 

(2,742,881

)

5,711,285

 

 

Riverview Condominiums

 

Norwalk, CT

 

1991

 

92

 

2,300,000

 

7,406,730

 

 

1,547,296

 

2,300,000

 

8,954,026

 

11,254,026

 

(3,049,528

)

8,204,498

 

 

Riviera at West Village

 

Dallas, TX

 

1995

 

150

 

6,534,000

 

14,749,422

 

 

1,423,129

 

6,534,000

 

16,172,551

 

22,706,551

 

(1,977,936

)

20,728,615

 

 

Rock Creek

 

Carrboro, NC

 

1986

 

188

 

895,700

 

8,062,543

 

 

1,993,740

 

895,700

 

10,056,283

 

10,951,983

 

(4,341,233

)

6,610,750

 

 

Rosecliff

 

Quincy, MA

 

1990

 

156

 

5,460,000

 

15,721,570

 

 

674,292

 

5,460,000

 

16,395,861

 

21,855,861

 

(4,764,037

)

17,091,825

 

 

Royal Oaks (FL)

 

Jacksonville, FL

 

1991

 

284

 

1,988,000

 

13,645,117

 

 

2,244,201

 

1,988,000

 

15,889,318

 

17,877,318

 

(5,460,576

)

12,416,742

 

 

Sabal Palm at Boot Ranch

 

Palm Harbor, FL

 

1996

 

432

 

3,888,000

 

28,923,692

 

 

2,505,791

 

3,888,000

 

31,429,483

 

35,317,483

 

(10,533,957

)

24,783,526

 

 

Sabal Palm at Carrollwood Place

 

Tampa, FL

 

1995

 

432

 

3,888,000

 

26,911,542

 

 

1,772,561

 

3,888,000

 

28,684,103

 

32,572,103

 

(9,526,605

)

23,045,498

 

 

Sabal Palm at Lake Buena Vista

 

Orlando, FL

 

1988

 

400

 

2,800,000

 

23,687,893

 

 

2,498,986

 

2,800,000

 

26,186,879

 

28,986,879

 

(8,936,995

)

20,049,884

 

 

Sabal Palm at Metrowest

 

Orlando, FL

 

1998

 

411

 

4,110,000

 

38,394,865

 

 

2,835,986

 

4,110,000

 

41,230,851

 

45,340,851

 

(13,600,290

)

31,740,561

 

 

Sabal Palm at Metrowest II

 

Orlando, FL

 

1997

 

456

 

4,560,000

 

33,907,283

 

 

1,901,325

 

4,560,000

 

35,808,608

 

40,368,608

 

(11,706,633

)

28,661,975

 

 

Sabal Pointe

 

Coral Springs, FL

 

1995

 

275

 

1,951,600

 

17,570,508

 

 

3,008,839

 

1,951,600

 

20,579,347

 

22,530,947

 

(8,772,321

)

13,758,626

 

 

Saddle Ridge

 

Ashburn, VA

 

1989

 

216

 

1,364,800

 

12,283,616

 

 

1,772,747

 

1,364,800

 

14,056,364

 

15,421,164

 

(6,207,600

)

9,213,564

 

 

Sage Condominium Homes, LLC

 

Everett, WA

 

2002

 

123

 

2,500,000

 

12,020,856

 

 

240,533

 

2,500,000

 

12,261,388

 

14,761,388

 

 

14,761,388

 

 

Sailboat Bay

 

Raleigh, NC

 

1986

 

192

 

960,000

 

8,797,580

 

 

1,215,487

 

960,000

 

10,013,067

 

10,973,067

 

(3,538,287

)

7,434,780

 

 

San Marcos Apartments

 

Scottsdale, AZ

 

1995

 

320

 

20,000,000

 

31,261,609

 

 

566,099

 

20,000,000

 

31,827,709

 

51,827,709

 

(2,560,969

)

49,266,740

 

 

Savannah at Park Place

 

Atlanta, GA

 

2001

 

416

 

7,696,095

 

34,114,542

 

 

2,300,750

 

7,696,095

 

36,415,292

 

44,111,387

 

(5,609,932

)

38,501,455

 

 

Savannah Lakes

 

Boynton Beach, FL

 

1991

 

466

 

7,000,000

 

30,422,607

 

 

1,950,935

 

7,000,000

 

32,373,542

 

39,373,542

 

(7,567,441

)

31,806,101

 

 

Savoy III

 

Aurora, CO

 

(F)

 

 

659,165

 

1,327,403

 

 

 

659,165

 

1,327,403

 

1,986,568

 

 

1,986,568

 

 

Seeley Lake

 

Lakewood, WA

 

1990

 

522

 

2,760,400

 

24,845,286

 

 

3,056,887

 

2,760,400

 

27,902,173

 

30,662,573

 

(10,929,411

)

19,733,162

 

 

Seventh & James

 

Seattle, WA

 

1992

 

96

 

663,800

 

5,974,803

 

 

2,204,741

 

663,800

 

8,179,544

 

8,843,344

 

(3,634,758

)

5,208,587

 

 

Shadow Creek

 

Winter Springs, FL

 

2000

 

280

 

6,000,000

 

21,719,768

 

 

893,913

 

6,000,000

 

22,613,681

 

28,613,681

 

(3,507,516

)

25,106,165

 

 

Shadow Lake

 

Doraville, GA

 

1989

 

228

 

1,140,000

 

13,117,277

 

 

988,218

 

1,140,000

 

14,105,495

 

15,245,495

 

(4,801,622

)

10,443,872

 

 

Sheffield Court

 

Arlington, VA

 

1986

 

597

 

3,342,381

 

31,337,332

 

 

5,088,045

 

3,342,381

 

36,425,377

 

39,767,758

 

(16,670,283

)

23,097,475

 

 

Sheridan Lake Club

 

Dania Beach, FL

 

2001

 

240

 

12,000,000

 

23,157,694

 

 

442,873

 

12,000,000

 

23,600,566

 

35,600,566

 

(878,642

)

34,721,924

 

 

Sheridan Ocean Club

 

Dania Beach, FL

 

1991

 

328

 

16,400,000

 

29,672,330

 

 

735,628

 

16,400,000

 

30,407,959

 

46,807,959

 

(1,793,392

)

45,014,567

 

 

Silver Springs (FL)

 

Jacksonville, FL

 

1985

 

432

 

1,831,100

 

16,474,735

 

 

4,979,915

 

1,831,100

 

21,454,650

 

23,285,750

 

(9,315,413

)

13,970,337

 

 

Skylark

 

Union City, CA

 

1986

 

174

 

1,781,600

 

16,731,916

 

 

1,290,035

 

1,781,600

 

18,021,951

 

19,803,551

 

(6,109,928

)

13,693,623

 

 

Sommerset Place

 

Raleigh, NC

 

1983

 

144

 

360,000

 

7,800,206

 

 

1,111,233

 

360,000

 

8,911,439

 

9,271,439

 

(3,181,124

)

6,090,316

 

 

Sonata at Cherry Creek

 

Denver, CO

 

1999

 

183

 

5,490,000

 

18,130,479

 

 

818,987

 

5,490,000

 

18,949,467

 

24,439,467

 

(4,803,361

)

19,636,106

 

 

Sonoran

 

Phoenix, AZ

 

1995

 

429

 

2,361,922

 

31,841,724

 

 

2,114,135

 

2,361,922

 

33,955,859

 

36,317,781

 

(12,180,556

)

24,137,224

 

 

South Palm Place Condominium Homes

 

Tamarac, FL

 

1991

 

6

 

51,877

 

471,571

 

 

242,060

 

51,877

 

713,631

 

765,508

 

(142,610

)

622,898

 

 

Southwood

 

Palo Alto, CA

 

1985

 

100

 

6,936,600

 

14,324,069

 

 

1,698,711

 

6,936,600

 

16,022,780

 

22,959,380

 

(5,659,014

)

17,300,366

 

 

Spring Hill Commons

 

Acton, MA

 

1973

 

105

 

1,107,436

 

7,402,980

 

 

2,631,919

 

1,107,436

 

10,034,899

 

11,142,334

 

(2,287,963

)

8,854,371

 

 

St. Andrews at Winston Park

 

Coconut Creek, FL

 

1997

 

284

 

5,680,000

 

19,812,090

 

 

1,216,053

 

5,680,000

 

21,028,143

 

26,708,143

 

(4,920,908

)

21,787,236

 

 

Stoneleigh at Deerfield

 

Alpharetta, GA

 

2003

 

370

 

4,810,000

 

29,999,596

 

 

439,364

 

4,810,000

 

30,438,960

 

35,248,960

 

(4,072,782

)

31,176,178

 

 

Stoney Creek

 

Lakewood, WA

 

1990

 

231

 

1,215,200

 

10,938,134

 

 

1,855,676

 

1,215,200

 

12,793,810

 

14,009,010

 

(5,002,710

)

9,006,300

 

 

Sturbridge Meadows

 

Sturbridge, MA

 

1985

 

104

 

702,447

 

4,695,714

 

 

759,514

 

702,447

 

5,455,229

 

6,157,676

 

(1,460,940

)

4,696,735

 

 

Summer Ridge

 

Riverside, CA

 

1985

 

136

 

602,400

 

5,422,807

 

 

1,831,510

 

602,400

 

7,254,317

 

7,856,717

 

(3,103,775

)

4,752,943

 

 

Summerset Village II

 

Chatsworth, CA

 

(F)

 

 

260,646

 

 

 

 

260,646

 

 

260,646

 

 

260,646

 

 

Summerwood

 

Hayward, CA

 

1982

 

162

 

4,866,600

 

6,942,743

 

 

1,150,701

 

4,866,600

 

8,093,444

 

12,960,044

 

(3,035,392

)

9,924,652

 

 

Summit at Lake Union

 

Seattle, WA

 

1995 -1997

 

150

 

1,424,700

 

12,852,461

 

 

1,742,226

 

1,424,700

 

14,594,688

 

16,019,388

 

(5,739,464

)

10,279,924

 

 

Sunforest

 

Davie, FL

 

1989

 

494

 

10,000,000

 

32,124,850

 

 

2,439,044

 

10,000,000

 

34,563,894

 

44,563,894

 

(6,386,099

)

38,177,795

 

 

Surrey Downs

 

Bellevue, WA

 

1986

 

122

 

3,057,100

 

7,848,618

 

 

962,099

 

3,057,100

 

8,810,717

 

11,867,817

 

(3,154,238

)

8,713,579

 

 

Sycamore Creek

 

Scottsdale, AZ

 

1984

 

350

 

3,152,000

 

19,083,727

 

 

2,431,015

 

3,152,000

 

21,514,743

 

24,666,743

 

(8,283,039

)

16,383,703

 

 

Tamarlane

 

Portland, ME

 

1986

 

115

 

690,900

 

5,153,633

 

 

694,021

 

690,900

 

5,847,654

 

6,538,554

 

(2,320,667

)

4,217,887

 

 

Timber Hollow

 

Chapel Hill, NC

 

1986

 

198

 

800,000

 

11,219,537

 

 

1,558,075

 

800,000

 

12,777,611

 

13,577,611

 

(4,428,748

)

9,148,864

 

 

Tortuga Bay

 

Orlando, FL

 

2004

 

314

 

6,280,000

 

32,121,779

 

 

579,950

 

6,280,000

 

32,701,729

 

38,981,729

 

(4,023,614

)

34,958,115

 

 

Toscana

 

Irvine, CA

 

1991/1993

 

563

 

39,410,000

 

50,806,072

 

 

4,939,062

 

39,410,000

 

55,745,134

 

95,155,134

 

(14,772,794

)

80,382,340

 

 

Townes at Herndon

 

Herndon, VA

 

2002

 

218

 

10,900,000

 

49,216,125

 

 

156,052

 

10,900,000

 

49,372,177

 

60,272,177

 

(4,019,028

)

56,253,150

 

 

Tradition at Alafaya

 

Oviedo, FL

 

2006

 

253

 

7,590,000

 

32,014,299

 

 

143,444

 

7,590,000

 

32,157,743

 

39,747,743

 

(2,851,671

)

36,896,071

 

 

Trump Place, 140 Riverside

 

New York, NY (G)

 

2003

 

354

 

103,539,100

 

94,082,725

 

 

648,128

 

103,539,100

 

94,730,852

 

198,269,952

 

(10,053,914

)

188,216,038

 

 

Trump Place, 160 Riverside

 

New York, NY (G)

 

2001

 

455

 

139,933,500

 

190,964,745

 

 

1,576,666

 

139,933,500

 

192,541,411

 

332,474,911

 

(18,786,105

)

313,688,806

 

 

Trump Place, 180 Riverside

 

New York, NY (G)

 

1998

 

516

 

144,968,250

 

138,346,681

 

 

2,130,279

 

144,968,250

 

140,476,960

 

285,445,210

 

(14,720,438

)

270,724,772

 

 

Turnberry Isle

 

Dallas, TX

 

1994

 

187

 

2,992,000

 

15,287,285

 

 

728,167

 

2,992,000

 

16,015,452

 

19,007,452

 

(2,301,027

)

16,706,425

 

 

Tuscany at Lindbergh

 

Atlanta, GA

 

2001

 

324

 

9,720,000

 

40,874,023

 

 

1,274,268

 

9,720,000

 

42,148,291

 

51,868,291

 

(4,664,179

)

47,204,112

 

 

Uptown Square

 

Denver, CO (G)

 

1999/2001

 

696

 

17,492,000

 

100,705,311

 

 

773,255

 

17,492,000

 

101,478,566

 

118,970,566

 

(8,826,786

)

110,143,780

 

 

Valencia Plantation

 

Orlando, FL

 

1990

 

194

 

873,000

 

12,819,377

 

 

1,181,095

 

873,000

 

14,000,472

 

14,873,472

 

(4,582,693

)

10,290,779

 

 

Versailles

 

Woodland Hills, CA

 

1991

 

253

 

12,650,000

 

33,656,292

 

 

2,825,246

 

12,650,000

 

36,481,539

 

49,131,539

 

(6,352,060

)

42,779,478

 

 

Via Ventura

 

Scottsdale, AZ

 

1980

 

328

 

1,351,785

 

13,382,006

 

 

7,471,333

 

1,351,785

 

20,853,339

 

22,205,124

 

(12,251,640

)

9,953,484

 

 

Victor on Venice

 

Los Angeles, CA

 

2006

 

116

 

10,350,000

 

35,430,461

 

 

31,063

 

10,350,000

 

35,461,524

 

45,811,524

 

(1,992,301

)

43,819,224

 

 

View Pointe

 

Riverside, CA

 

1998

 

208

 

10,400,000

 

26,315,150

 

 

1,020,549

 

10,400,000

 

27,335,699

 

37,735,699

 

(2,701,092

)

35,034,607

 

 

Villa Solana

 

Laguna Hills, CA

 

1984

 

272

 

1,665,100

 

14,985,678

 

 

3,934,348

 

1,665,100

 

18,920,025

 

20,585,125

 

(9,857,936

)

10,727,189

 

 

Village at Lakewood

 

Phoenix, AZ

 

1988

 

240

 

3,166,411

 

13,859,090

 

 

1,622,847

 

3,166,411

 

15,481,937

 

18,648,348

 

(5,935,930

)

12,712,417

 

 

Village Oaks

 

Austin, TX

 

1984

 

280

 

1,186,000

 

10,663,736

 

 

3,254,410

 

1,186,000

 

13,918,146

 

15,104,146

 

(5,614,268

)

9,489,878

 

 

Village of Newport

 

Kent, WA

 

1987

 

100

 

416,300

 

3,756,582

 

 

661,878

 

416,300

 

4,418,460

 

4,834,760

 

(2,220,106

)

2,614,655

 

 

Virgil Square

 

Los Angeles, CA

 

1979

 

142

 

5,500,000

 

15,216,613

 

 

702,087

 

5,500,000

 

15,918,700

 

21,418,700

 

(1,830,214

)

19,588,486

 

 

Vista Del Lago

 

Mission Viejo, CA

 

1986-1988

 

608

 

4,525,800

 

40,736,293

 

 

7,963,522

 

4,525,800

 

48,699,815

 

53,225,615

 

(24,073,071

)

29,152,544

 

 

Vista Grove

 

Mesa, AZ

 

1997/1998

 

224

 

1,341,796

 

12,157,045

 

 

1,035,597

 

1,341,796

 

13,192,642

 

14,534,438

 

(4,693,015

)

9,841,424

 

 

Waterford (Jax) II

 

Jacksonville, FL

 

(F)

 

 

566,923

 

62,373

 

 

 

566,923

 

62,373

 

629,296

 

 

629,296

 

 

Waterford at Deerwood

 

Jacksonville, FL

 

1985

 

248

 

1,696,000

 

10,659,702

 

 

2,318,705

 

1,696,000

 

12,978,407

 

14,674,407

 

(4,789,667

)

9,884,740

 

 

Waterford at the Lakes

 

Kent, WA

 

1990

 

344

 

3,100,200

 

16,140,924

 

 

2,000,633

 

3,100,200

 

18,141,556

 

21,241,756

 

(7,408,357

)

13,833,399

 

 

Waterside

 

Reston, VA

 

1984

 

276

 

20,700,000

 

27,474,388

 

 

5,177,352

 

20,700,000

 

32,651,739

 

53,351,739

 

(3,432,271

)

49,919,468

 

 

Webster Green

 

Needham, MA

 

1985

 

77

 

1,418,893

 

9,485,006

 

 

587,384

 

1,418,893

 

10,072,390

 

11,491,283

 

(2,617,156

)

8,874,127

 

 

Welleby Lake Club

 

Sunrise, FL

 

1991

 

304

 

3,648,000

 

17,620,879

 

 

1,951,070

 

3,648,000

 

19,571,950

 

23,219,950

 

(6,699,026

)

16,520,924

 

 

Westfield Village

 

Centerville, VA

 

1988

 

228

 

7,000,000

 

23,245,834

 

 

4,118,919

 

7,000,000

 

27,364,753

 

34,364,753

 

(4,216,168

)

30,148,585

 

 

 

S-7



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent to

 

 

 

Gross Amount Carried

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Cost to

 

 

 

Acquisition

 

 

 

at Close of

 

 

 

 

 

 

 

 

 

 

 

Description

 

 

 

 

 

Company

 

 

 

(Improvements, net) (E)

 

 

 

Period 12/31/07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date of

 

 

 

 

 

Building &

 

 

 

Building &

 

 

 

Building &

 

 

 

Accumulated

 

Investment in Real

 

 

 

Apartment Name

 

Location

 

Construction

 

Units (H)

 

Land

 

Fixtures

 

Land

 

Fixtures

 

Land

 

Fixtures (A)

 

Total (B)

 

Depreciation (C)

 

Estate, Net at 12/31/07

 

Encumbrances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westridge

 

Tacoma, WA

 

1987 -1991

 

714

 

3,501,900

 

31,506,082

 

 

4,883,555

 

3,501,900

 

36,389,638

 

39,891,538

 

(14,471,581

)

25,419,956

 

 

Westside Villas I

 

Los Angeles, CA

 

1999

 

21

 

1,785,000

 

3,233,254

 

 

203,860

 

1,785,000

 

3,437,114

 

5,222,114

 

(961,175

)

4,260,939

 

 

Westside Villas II

 

Los Angeles, CA

 

1999

 

23

 

1,955,000

 

3,541,435

 

 

83,036

 

1,955,000

 

3,624,471

 

5,579,471

 

(906,430

)

4,673,041

 

 

Westside Villas III

 

Los Angeles, CA

 

1999

 

36

 

3,060,000

 

5,538,871

 

 

128,399

 

3,060,000

 

5,667,270

 

8,727,270

 

(1,431,674

)

7,295,596

 

 

Westside Villas IV

 

Los Angeles, CA

 

1999

 

36

 

3,060,000

 

5,539,390

 

 

128,514

 

3,060,000

 

5,667,904

 

8,727,904

 

(1,417,186

)

7,310,717

 

 

Westside Villas V

 

Los Angeles, CA

 

1999

 

60

 

5,100,000

 

9,224,485

 

 

226,552

 

5,100,000

 

9,451,038

 

14,551,038

 

(2,370,108

)

12,180,929

 

 

Westside Villas VI

 

Los Angeles, CA

 

1989

 

18

 

1,530,000

 

3,023,523

 

 

180,077

 

1,530,000

 

3,203,600

 

4,733,600

 

(813,756

)

3,919,844

 

 

Westside Villas VII

 

Los Angeles, CA

 

2001

 

53

 

4,505,000

 

10,758,900

 

 

239,811

 

4,505,000

 

10,998,710

 

15,503,710

 

(2,187,127

)

13,316,583

 

 

Whispering Oaks

 

Walnut Creek, CA

 

1974

 

316

 

2,170,800

 

19,539,586

 

 

3,398,965

 

2,170,800

 

22,938,551

 

25,109,351

 

(9,792,385

)

15,316,965

 

 

Willow Trail

 

Norcross, GA

 

1985

 

224

 

1,120,000

 

11,412,982

 

 

1,136,452

 

1,120,000

 

12,549,434

 

13,669,434

 

(4,346,608

)

9,322,825

 

 

Wimberly at Deerwood

 

Jacksonville, FL

 

2000

 

322

 

8,000,000

 

30,057,214

 

 

1,087,446

 

8,000,000

 

31,144,660

 

39,144,660

 

(3,145,168

)

35,999,492

 

 

Winchester Park

 

Riverside, RI

 

1972

 

416

 

2,822,618

 

18,868,626

 

 

3,651,790

 

2,822,618

 

22,520,415

 

25,343,034

 

(6,965,386

)

18,377,648

 

 

Winchester Wood

 

Riverside, RI

 

1989

 

62

 

683,215

 

4,567,154

 

 

604,437

 

683,215

 

5,171,591

 

5,854,807

 

(1,313,688

)

4,541,119

 

 

Windmont

 

Atlanta, GA

 

1988

 

178

 

3,204,000

 

7,128,448

 

 

1,103,229

 

3,204,000

 

8,231,678

 

11,435,678

 

(2,496,868

)

8,938,810

 

 

Windsor at Fair Lakes

 

Fairfax, VA

 

1988

 

250

 

10,000,000

 

28,587,109

 

 

4,288,025

 

10,000,000

 

32,875,134

 

42,875,134

 

(4,805,270

)

38,069,863

 

 

Wood Creek (CA)

 

Pleasant Hill, CA

 

1987

 

256

 

9,729,900

 

23,009,768

 

 

2,513,423

 

9,729,900

 

25,523,191

 

35,253,091

 

(9,544,934

)

25,708,158

 

 

Woodbridge II

 

Cary, GA

 

1993 -1995

 

216

 

1,244,600

 

11,243,364

 

 

1,689,956

 

1,244,600

 

12,933,320

 

14,177,920

 

(5,428,162

)

8,749,758

 

 

Woodland Hills

 

Decatur, GA

 

1985

 

228

 

1,224,600

 

11,010,681

 

 

2,863,450

 

1,224,600

 

13,874,130

 

15,098,730

 

(6,141,303

)

8,957,427

 

 

Woodside

 

Lorton, VA

 

1987

 

252

 

1,326,000

 

12,510,903

 

 

5,302,637

 

1,326,000

 

17,813,540

 

19,139,540

 

(7,729,366

)

11,410,174

 

 

Yarmouth Woods

 

Yarmouth, ME

 

1971- 1978

 

138

 

692,800

 

6,096,155

 

 

1,414,987

 

692,800

 

7,511,143

 

8,203,943

 

(2,870,416

)

5,333,527

 

 

Management Business

 

Chicago, IL

 

(D)

 

 

 

 

 

77,877,640

 

 

77,877,640

 

77,877,640

 

(40,112,199

)

37,765,441

 

 

Operating Partnership

 

Chicago, IL

 

(F)

 

 

 

814,597

 

 

 

 

814,597

 

814,597

 

 

814,597

 

 

EQR Wholly Owned Unencumbered

 

 

 

 

 

89,501

 

2,574,262,769

 

8,278,952,125

 

 

808,755,233

 

2,574,262,769

 

9,087,707,358

 

11,661,970,127

 

(2,097,077,530

)

9,564,892,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQR Wholly Owned Encumbered:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

740 River Drive

 

St. Paul, MN

 

1962

 

163

 

1,626,700

 

11,234,943

 

 

3,630,026

 

1,626,700

 

14,864,968

 

16,491,668

 

(6,325,709

)

10,165,959

 

4,772,907

 

929 House

 

Cambridge, MA (G)

 

1975

 

127

 

3,252,993

 

21,745,595

 

 

1,855,123

 

3,252,993

 

23,600,718

 

26,853,711

 

(6,159,817

)

20,693,895

 

3,814,940

 

Academy Village

 

North Hollywood, CA

 

1989

 

248

 

25,000,000

 

23,593,194

 

 

4,209,691

 

25,000,000

 

27,802,885

 

52,802,885

 

(3,354,267

)

49,448,618

 

20,000,000

 

Acton Courtyard

 

Berkeley, CA (G)

 

2003

 

71

 

5,550,000

 

15,785,509

 

 

6,657

 

5,550,000

 

15,792,166

 

21,342,166

 

(760,837

)

20,581,329

 

9,920,000

 

Alborada

 

Fremont, CA

 

1999

 

442

 

24,310,000

 

59,214,129

 

 

1,806,971

 

24,310,000

 

61,021,100

 

85,331,100

 

(16,632,264

)

68,698,836

 

(O)

 

Amberton

 

Manassas, VA

 

1986

 

190

 

900,600

 

11,921,815

 

 

2,158,191

 

900,600

 

14,080,005

 

14,980,605

 

(5,562,706

)

9,417,899

 

10,705,000

 

Arbor Terrace

 

Sunnyvale, CA

 

1979

 

174

 

9,057,300

 

18,483,642

 

 

1,790,232

 

9,057,300

 

20,273,874

 

29,331,174

 

(6,786,523

)

22,544,651

 

(L)

 

Arboretum (MA)

 

Canton, MA

 

1989

 

156

 

4,685,900

 

10,992,751

 

 

1,477,994

 

4,685,900

 

12,470,745

 

17,156,645

 

(4,422,702

)

12,733,943

 

(I)

 

Arboretum at Stonelake

 

Austin, TX

 

1996

 

408

 

6,120,000

 

24,069,023

 

 

2,241,418

 

6,120,000

 

26,310,440

 

32,430,440

 

(4,949,258

)

27,481,182

 

14,970,000

 

Arden Villas

 

Orlando, FL

 

1999

 

336

 

5,500,000

 

28,600,796

 

 

2,598,724

 

5,500,000

 

31,199,520

 

36,699,520

 

(3,556,543

)

33,142,978

 

23,128,732

 

Artech Building

 

Berkeley, CA (G)

 

2002

 

21

 

1,642,000

 

9,152,518

 

 

3,367

 

1,642,000

 

9,155,885

 

10,797,885

 

(363,105

)

10,434,781

 

3,200,000

 

Artisan Square

 

Northridge, CA

 

2002

 

140

 

7,000,000

 

20,537,359

 

 

495,409

 

7,000,000

 

21,032,768

 

28,032,768

 

(3,958,435

)

24,074,334

 

(N)

 

Avon Place

 

Avon, CT

 

1973

 

163

 

1,788,943

 

12,440,003

 

 

846,346

 

1,788,943

 

13,286,349

 

15,075,293

 

(3,517,682

)

11,557,611

 

(J)

 

Bachenheimer Building

 

Berkeley, CA (G)

 

2004

 

44

 

3,439,000

 

13,866,379

 

 

6,529

 

3,439,000

 

13,872,908

 

17,311,908

 

(619,167

)

16,692,742

 

8,585,000

 

Bay Hill

 

Long Beach, CA

 

2002

 

160

 

7,600,000

 

27,437,239

 

 

437,847

 

7,600,000

 

27,875,086

 

35,475,086

 

(3,943,907

)

31,531,179

 

13,995,000

 

Berkeleyan

 

Berkeley, CA (G)

 

1998

 

56

 

4,377,000

 

16,022,110

 

 

51,061

 

4,377,000

 

16,073,171

 

20,450,171

 

(722,779

)

19,727,391

 

8,560,516

 

Bradford Apartments

 

Newington, CT

 

1964

 

64

 

401,091

 

2,681,210

 

 

441,407

 

401,091

 

3,122,617

 

3,523,708

 

(875,115

)

2,648,593

 

(J)

 

Bradley Park

 

Puyallup, WA

 

1999

 

155

 

3,813,000

 

18,313,645

 

 

205,366

 

3,813,000

 

18,519,010

 

22,332,010

 

(2,057,609

)

20,274,402

 

12,138,256

 

Briar Knoll Apts

 

Vernon, CT

 

1986

 

150

 

928,972

 

6,209,988

 

 

1,034,287

 

928,972

 

7,244,275

 

8,173,247

 

(2,031,594

)

6,141,653

 

5,492,613

 

Briarwood (CA)

 

Sunnyvale, CA

 

1985

 

192

 

9,991,500

 

22,247,278

 

 

1,137,393

 

9,991,500

 

23,384,671

 

33,376,171

 

(7,685,586

)

25,690,585

 

12,800,000

 

Brookside (MD)

 

Frederick, MD

 

1993

 

228

 

2,736,000

 

7,934,069

 

 

1,706,271

 

2,736,000

 

9,640,340

 

12,376,340

 

(3,415,421

)

8,960,919

 

8,170,000

 

Brooksyde Apts

 

West Hartford, CT

 

1945

 

80

 

594,711

 

3,975,523

 

 

548,728

 

594,711

 

4,524,251

 

5,118,962

 

(1,267,699

)

3,851,263

 

(J)

 

Canterbury

 

Germantown, MD

 

1986

 

544

 

2,781,300

 

32,942,531

 

 

12,878,270

 

2,781,300

 

45,820,801

 

48,602,101

 

(17,124,836

)

31,477,266

 

31,680,000

 

Cape House I

 

Jacksonville, FL

 

1998

 

240

 

4,800,000

 

22,481,691

 

 

(800

)

4,800,000

 

22,480,891

 

27,280,891

 

 

27,280,891

 

14,300,774

 

Cape House II

 

Jacksonville, FL

 

1998

 

240

 

4,800,000

 

22,225,455

 

 

(1,200

)

4,800,000

 

22,224,255

 

27,024,255

 

 

27,024,255

 

14,094,768

 

Cedar Glen

 

Reading, MA

 

1980

 

114

 

1,248,505

 

8,346,003

 

 

980,284

 

1,248,505

 

9,326,287

 

10,574,792

 

(2,491,505

)

8,083,287

 

858,201

 

Centennial Court

 

Seattle, WA (G)

 

2001

 

187

 

3,800,000

 

21,280,039

 

 

181,096

 

3,800,000

 

21,461,134

 

25,261,134

 

(2,596,195

)

22,664,939

 

17,167,804

 

Centennial Tower

 

Seattle, WA (G)

 

1991

 

221

 

5,900,000

 

48,800,339

 

 

1,075,856

 

5,900,000

 

49,876,195

 

55,776,195

 

(5,711,526

)

50,064,669

 

27,287,441

 

Chestnut Glen

 

Abington, MA

 

1983

 

130

 

1,178,965

 

7,881,139

 

 

744,403

 

1,178,965

 

8,625,542

 

9,804,507

 

(2,336,424

)

7,468,083

 

2,900,230

 

Chickasaw Crossing

 

Orlando, FL

 

1986

 

292

 

2,044,000

 

12,366,832

 

 

1,380,061

 

2,044,000

 

13,746,893

 

15,790,893

 

(4,805,425

)

10,985,468

 

11,640,686

 

Church Corner

 

Cambridge, MA (G)

 

1987

 

85

 

5,220,000

 

16,744,643

 

 

252,596

 

5,220,000

 

16,997,239

 

22,217,239

 

(2,180,887

)

20,036,352

 

12,000,000

 

Cierra Crest

 

Denver, CO

 

1996

 

480

 

4,803,100

 

34,894,898

 

 

2,492,434

 

4,803,100

 

37,387,331

 

42,190,431

 

(13,481,933

)

28,708,499

 

(L)

 

Club at Tanasbourne

 

Hillsboro, OR

 

1990

 

352

 

3,521,300

 

16,257,934

 

 

2,708,990

 

3,521,300

 

18,966,924

 

22,488,224

 

(7,662,528

)

14,825,696

 

(K)

 

Coachlight Village

 

Agawam, MA

 

1967

 

88

 

501,726

 

3,353,933

 

 

299,361

 

501,726

 

3,653,294

 

4,155,019

 

(1,032,145

)

3,122,875

 

(J)

 

Colonial Village

 

Plainville, CT

 

1968

 

104

 

693,575

 

4,636,410

 

 

747,850

 

693,575

 

5,384,260

 

6,077,835

 

(1,553,613

)

4,524,223

 

(J)

 

Conway Court

 

Roslindale, MA

 

1920

 

28

 

101,451

 

710,524

 

 

182,997

 

101,451

 

893,521

 

994,972

 

(255,838

)

739,134

 

347,430

 

Country Club Lakes

 

Jacksonville, FL

 

1997

 

555

 

15,000,000

 

41,055,786

 

 

2,309,580

 

15,000,000

 

43,365,365

 

58,365,365

 

(5,101,497

)

53,263,868

 

33,669,874

 

Creekside (San Mateo)

 

San Mateo, CA

 

1985

 

192

 

9,606,600

 

21,193,232

 

 

1,165,959

 

9,606,600

 

22,359,191

 

31,965,791

 

(7,511,262

)

24,454,529

 

(L)

 

Creekside Homes at Legacy

 

Plano. TX

 

1998

 

380

 

4,560,000

 

32,275,748

 

 

2,157,476

 

4,560,000

 

34,433,224

 

38,993,224

 

(11,279,108

)

27,714,116

 

16,800,000

 

Crown Court

 

Scottsdale, AZ

 

1987

 

416

 

3,156,600

 

28,414,599

 

 

5,292,364

 

3,156,600

 

33,706,963

 

36,863,563

 

(12,964,625

)

23,898,938

 

(M)

 

Deerwood (Corona)

 

Corona, CA

 

1992

 

316

 

4,742,200

 

20,272,892

 

 

2,705,403

 

4,742,200

 

22,978,295

 

27,720,495

 

(8,827,736

)

18,892,759

 

(N)

 

Eastbridge

 

Dallas, TX

 

1998

 

169

 

3,380,000

 

11,860,382

 

 

734,248

 

3,380,000

 

12,594,629

 

15,974,629

 

(3,220,705

)

12,753,925

 

7,741,568

 

Estates at Tanglewood

 

Westminster, CO

 

2003

 

504

 

7,560,000

 

51,256,538

 

 

1,090,178

 

7,560,000

 

52,346,716

 

59,906,716

 

(6,011,219

)

53,895,497

 

(O)

 

Fine Arts Building

 

Berkeley, CA (G)

 

2004

 

100

 

7,817,000

 

26,462,772

 

 

5,139

 

7,817,000

 

26,467,911

 

34,284,911

 

(1,229,259

)

33,055,652

 

16,215,000

 

Fireside Park

 

Rockville, MD

 

1961

 

236

 

4,248,000

 

9,977,101

 

 

2,555,476

 

4,248,000

 

12,532,577

 

16,780,577

 

(4,435,089

)

12,345,488

 

8,095,000

 

Four Winds

 

Fall River, MA

 

1987

 

168

 

1,370,843

 

9,163,804

 

 

1,400,423

 

1,370,843

 

10,564,227

 

11,935,070

 

(2,815,522

)

9,119,548

 

(J)

 

Fox Hill Apartments

 

Enfield, CT

 

1974

 

168

 

1,129,018

 

7,547,256

 

 

919,201

 

1,129,018

 

8,466,457

 

9,595,475

 

(2,314,649

)

7,280,826

 

(J)

 

Gaia Building

 

Berkeley, CA (G)

 

2000

 

91

 

7,113,000

 

25,623,826

 

 

13,861

 

7,113,000

 

25,637,687

 

32,750,687

 

(1,192,071

)

31,558,616

 

14,630,000

 

Geary Court Yard

 

San Francisco, CA

 

1990

 

164

 

1,722,400

 

15,471,429

 

 

1,550,725

 

1,722,400

 

17,022,154

 

18,744,554

 

(6,121,888

)

12,622,666

 

17,693,865

 

Glen Grove

 

Wellesley, MA

 

1979

 

125

 

1,344,601

 

8,988,383

 

 

780,240

 

1,344,601

 

9,768,623

 

11,113,224

 

(2,627,643

)

8,485,581

 

1,033,027

 

Glen Meadow

 

Franklin, MA

 

1971

 

288

 

2,339,330

 

17,796,431

 

 

2,396,931

 

2,339,330

 

20,193,362

 

22,532,692

 

(5,408,808

)

17,123,885

 

1,333,929

 

Gosnold Grove

 

East Falmouth, MA

 

1978

 

33

 

124,296

 

830,891

 

 

242,101

 

124,296

 

1,072,992

 

1,197,287

 

(336,644

)

860,643

 

492,012

 

Greenhaven

 

Union City, CA

 

1983

 

250

 

7,507,000

 

15,210,399

 

 

1,919,360

 

7,507,000

 

17,129,759

 

24,636,759

 

(6,118,173

)

18,518,586

 

10,975,000

 

Greenhouse - Frey Road

 

Kennesaw, GA

 

1985

 

489

 

2,467,200

 

22,187,443

 

 

4,369,310

 

2,467,200

 

26,556,754

 

29,023,954

 

(12,975,843

)

16,048,111

 

(I)

 

Greenhouse - Roswell

 

Roswell, GA

 

1985

 

236

 

1,220,000

 

10,974,727

 

 

2,186,257

 

1,220,000

 

13,160,984

 

14,380,984

 

(6,777,876

)

7,603,108

 

(I)

 

Hampshire Place

 

Los Angeles, CA

 

1989

 

259

 

10,806,000

 

30,335,330

 

 

1,223,638

 

10,806,000

 

31,558,968

 

42,364,968

 

(4,233,952

)

38,131,016

 

18,011,106

 

Harbor Steps

 

Seattle, WA (G)

 

2000

 

730

 

59,900,000

 

158,829,432

 

 

2,348,454

 

59,900,000

 

161,177,886

 

221,077,886

 

(15,799,640

)

205,278,246

 

139,030,349

 

Heritage at Stone Ridge

 

Burlington, MA

 

2005

 

180

 

10,800,000

 

31,808,335

 

 

351,085

 

10,800,000

 

32,159,420

 

42,959,420

 

(2,826,856

)

40,132,564

 

28,945,096

 

Heritage Green

 

Sturbridge, MA

 

1974

 

130

 

835,313

 

5,583,898

 

 

925,677

 

835,313

 

6,509,575

 

7,344,888

 

(1,904,057

)

5,440,831

 

1,408,832

 

High Meadow

 

Ellington, CT

 

1975

 

100

 

583,679

 

3,901,774

 

 

417,769

 

583,679

 

4,319,544

 

4,903,222

 

(1,187,795

)

3,715,427

 

3,925,867

 

Highland Point

 

Aurora, CO

 

1984

 

319

 

1,631,900

 

14,684,439

 

 

1,979,510

 

1,631,900

 

16,663,949

 

18,295,849

 

(6,767,199

)

11,528,650

 

(K)

 

 

S-8



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent to

 

 

 

Gross Amount Carried

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Cost to

 

 

 

Acquisition

 

 

 

at Close of

 

 

 

 

 

 

 

 

 

 

 

Description

 

 

 

 

 

Company

 

 

 

(Improvements, net) (E)

 

 

 

Period 12/31/07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date of

 

 

 

 

 

Building &

 

 

 

Building &

 

 

 

Building &

 

 

 

Accumulated

 

Investment in Real

 

 

 

Apartment Name

 

Location

 

Construction

 

Units (H)

 

Land

 

Fixtures

 

Land

 

Fixtures

 

Land

 

Fixtures (A)

 

Total (B)

 

Depreciation (C)

 

Estate, Net at 12/31/07

 

Encumbrances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Highlands at Cherry Hill

 

Cherry Hills, NJ

 

2002

 

170

 

6,800,000

 

21,459,108

 

 

392,239

 

6,800,000

 

21,851,348

 

28,651,348

 

(2,358,198

)

26,293,150

 

16,500,728

 

Highlands at South Plainfield

 

South Plainfield, NJ

 

2000

 

252

 

10,080,000

 

37,526,912

 

 

474,531

 

10,080,000

 

38,001,443

 

48,081,443

 

(3,592,829

)

44,488,614

 

21,770,717

 

Isle at Arrowhead Ranch

 

Glendale, AZ

 

1996

 

256

 

1,650,237

 

19,593,123

 

 

1,184,935

 

1,650,237

 

20,778,059

 

22,428,296

 

(7,435,673

)

14,992,623

 

(K)

 

Ivory Wood

 

Bothell, WA

 

2000

 

144

 

2,732,800

 

13,888,282

 

 

391,886

 

2,732,800

 

14,280,168

 

17,012,968

 

(2,120,497

)

14,892,471

 

8,020,000

 

Jaclen Towers

 

Beverly, MA

 

1976

 

100

 

437,072

 

2,921,735

 

 

864,990

 

437,072

 

3,786,726

 

4,223,797

 

(1,245,830

)

2,977,968

 

1,560,143

 

La Terrazza at Colma Station

 

Colma, CA (G)

 

2005

 

153

 

 

41,248,955

 

 

68,451

 

 

41,317,406

 

41,317,406

 

(1,235,581

)

40,081,824

 

25,940,000

 

LaSalle

 

Beaverton, OR (G)

 

1998

 

554

 

7,202,000

 

35,877,612

 

 

1,692,566

 

7,202,000

 

37,570,178

 

44,772,178

 

(7,966,988

)

36,805,189

 

31,420,615

 

Legacy at Highlands Ranch

 

Highlands Ranch, CO

 

1999

 

422

 

6,330,000

 

37,557,013

 

 

843,759

 

6,330,000

 

38,400,772

 

44,730,772

 

(5,242,201

)

39,488,572

 

22,513,718

 

Lenox at Patterson Place

 

Durham, NC

 

1999

 

292

 

4,380,000

 

18,974,425

 

 

367,898

 

4,380,000

 

19,342,322

 

23,722,322

 

(3,038,844

)

20,683,479

 

13,161,818

 

Lincoln Heights

 

Quincy, MA

 

1991

 

336

 

5,928,400

 

33,595,262

 

 

7,007,277

 

5,928,400

 

40,602,539

 

46,530,939

 

(13,079,279

)

33,451,660

 

(L)

 

Longfellow Glen

 

Sudbury, MA

 

1984

 

120

 

1,094,273

 

7,314,994

 

 

2,148,563

 

1,094,273

 

9,463,557

 

10,557,830

 

(2,864,090

)

7,693,741

 

3,310,700

 

Longwood

 

Decatur, GA

 

1992

 

268

 

1,454,048

 

13,087,393

 

 

1,563,646

 

1,454,048

 

14,651,039

 

16,105,087

 

(7,124,770

)

8,980,317

 

(M)

 

Loomis Manor

 

West Hartford, CT

 

1948

 

43

 

422,350

 

2,823,326

 

 

362,657

 

422,350

 

3,185,983

 

3,608,333

 

(913,248

)

2,695,085

 

(J)

 

Madison at Cedar Springs

 

Dallas, TX

 

1995

 

380

 

2,470,000

 

33,194,620

 

 

3,281,942

 

2,470,000

 

36,476,563

 

38,946,563

 

(11,411,712

)

27,534,851

 

(L)

 

Madison at Chase Oaks

 

Plano, TX

 

1995

 

470

 

3,055,000

 

28,932,885

 

 

2,092,387

 

3,055,000

 

31,025,272

 

34,080,272

 

(10,381,634

)

23,698,638

 

(L)

 

Madison at River Sound

 

Lawrenceville, GA

 

1996

 

586

 

3,666,999

 

47,387,106

 

 

1,854,500

 

3,666,999

 

49,241,606

 

52,908,606

 

(16,021,676

)

36,886,930

 

(N)

 

Marks

 

Englewood, CO (G)

 

1987

 

616

 

4,928,500

 

44,622,314

 

 

4,213,564

 

4,928,500

 

48,835,878

 

53,764,378

 

(18,967,762

)

34,796,617

 

19,195,000

 

Meadow Ridge

 

Norwich, CT

 

1987

 

120

 

747,957

 

4,999,937

 

 

559,717

 

747,957

 

5,559,654

 

6,307,611

 

(1,515,227

)

4,792,384

 

4,114,957

 

Merritt at Satellite Place

 

Duluth, GA

 

1999

 

424

 

3,400,000

 

30,115,674

 

 

2,117,467

 

3,400,000

 

32,233,142

 

35,633,142

 

(9,152,163

)

26,480,979

 

(M)

 

Mill Pond

 

Millersville, MD

 

1984

 

240

 

2,880,000

 

8,468,014

 

 

1,907,347

 

2,880,000

 

10,375,361

 

13,255,361

 

(3,873,637

)

9,381,724

 

7,300,000

 

Monte Viejo

 

Phoneix, AZ

 

2004

 

480

 

12,700,000

 

45,926,784

 

 

455,809

 

12,700,000

 

46,382,593

 

59,082,593

 

(3,358,503

)

55,724,091

 

40,759,577

 

Montierra

 

Scottsdale, AZ

 

1999

 

249

 

3,455,000

 

17,266,787

 

 

1,007,476

 

3,455,000

 

18,274,263

 

21,729,263

 

(5,716,964

)

16,012,298

 

(K)

 

Mountain Park Ranch

 

Phoenix, AZ

 

1994

 

240

 

1,662,332

 

18,260,276

 

 

1,423,621

 

1,662,332

 

19,683,897

 

21,346,229

 

(7,203,336

)

14,142,893

 

(O)

 

Nehoiden Glen

 

Needham, MA

 

1978

 

61

 

634,538

 

4,241,755

 

 

628,398

 

634,538

 

4,870,153

 

5,504,691

 

(1,303,135

)

4,201,556

 

468,599

 

Noonan Glen

 

Winchester, MA

 

1983

 

18

 

151,344

 

1,011,700

 

 

326,786

 

151,344

 

1,338,487

 

1,489,830

 

(386,188

)

1,103,642

 

313,036

 

North Pier at Harborside

 

Jersey City, NJ (O)

 

2003

 

297

 

4,000,159

 

94,406,116

 

 

576,802

 

4,000,159

 

94,982,918

 

98,983,077

 

(12,435,081

)

86,547,996

 

76,862,000

 

Northampton 1

 

Largo, MD

 

1977

 

344

 

1,843,200

 

17,528,381

 

 

4,936,967

 

1,843,200

 

22,465,347

 

24,308,547

 

(11,371,967

)

12,936,580

 

18,166,979

 

Northglen

 

Valencia, CA

 

1988

 

234

 

9,360,000

 

20,778,553

 

 

1,333,926

 

9,360,000

 

22,112,479

 

31,472,479

 

(5,670,483

)

25,801,996

 

13,714,509

 

Norton Glen

 

Norton, MA

 

1983

 

150

 

1,012,556

 

6,768,727

 

 

2,835,409

 

1,012,556

 

9,604,136

 

10,616,691

 

(2,937,478

)

7,679,214

 

3,079,429

 

Oak Mill I

 

Germantown, MD

 

1984

 

208

 

10,000,000

 

13,155,522

 

 

6,096,589

 

10,000,000

 

19,252,111

 

29,252,111

 

(2,161,255

)

27,090,855

 

13,656,351

 

Oak Mill II

 

Germantown, MD

 

1985

 

192

 

854,133

 

10,233,947

 

 

4,928,817

 

854,133

 

15,162,765

 

16,016,897

 

(5,625,257

)

10,391,640

 

9,600,000

 

Oaks

 

Santa Clarita, CA

 

2000

 

520

 

23,400,000

 

61,020,438

 

 

1,880,716

 

23,400,000

 

62,901,154

 

86,301,154

 

(10,871,549

)

75,429,605

 

43,476,737

 

Oak Park North

 

Agoura Hills, CA

 

1990

 

220

 

1,706,900

 

15,362,666

 

 

1,884,274

 

1,706,900

 

17,246,940

 

18,953,840

 

(7,325,057

)

11,628,783

 

(I)

 

Oak Park South

 

Agoura Hills, CA

 

1989

 

224

 

1,683,800

 

15,154,608

 

 

1,991,618

 

1,683,800

 

17,146,226

 

18,830,026

 

(7,325,463

)

11,504,563

 

(I)

 

Ocean Walk

 

Key West, FL

 

1990

 

297

 

2,838,749

 

25,545,009

 

 

2,275,775

 

2,838,749

 

27,820,784

 

30,659,532

 

(10,102,261

)

20,557,271

 

21,079,921

 

Old Mill Glen

 

Maynard, MA

 

1983

 

50

 

396,756

 

2,652,233

 

 

417,954

 

396,756

 

3,070,186

 

3,466,942

 

(867,331

)

2,599,611

 

1,321,102

 

Olde Redmond Place

 

Redmond, WA

 

1986

 

192

 

4,807,100

 

14,126,038

 

 

3,687,109

 

4,807,100

 

17,813,147

 

22,620,247

 

(6,049,041

)

16,571,206

 

(L)

 

Parc East Towers

 

New York, NY (G)

 

1977

 

324

 

102,163,000

 

108,946,642

 

 

2,555,100

 

102,163,000

 

111,501,742

 

213,664,742

 

(3,419,156

)

210,245,587

 

18,520,642

 

Parkfield

 

Denver, CO

 

2000

 

476

 

8,330,000

 

28,667,618

 

 

1,519,104

 

8,330,000

 

30,186,721

 

38,516,721

 

(7,714,997

)

30,801,724

 

23,275,000

 

Portofino (Val)

 

Valencia, CA

 

1989

 

216

 

8,640,000

 

21,487,126

 

 

1,837,321

 

8,640,000

 

23,324,447

 

31,964,447

 

(5,842,351

)

26,122,096

 

13,327,748

 

Portside Towers

 

Jersey City, NJ (G)

 

1992-1997

 

527

 

22,487,006

 

96,842,913

 

 

6,874,383

 

22,487,006

 

103,717,296

 

126,204,302

 

(34,823,731

)

91,380,572

 

50,559,546

 

Prairie Creek I & II

 

Richardson, TX

 

1998-1999

 

464

 

4,067,292

 

38,986,022

 

 

2,010,070

 

4,067,292

 

40,996,093

 

45,063,384

 

(12,853,449

)

32,209,935

 

(K)

 

Preston Bend

 

Dallas, TX

 

1986

 

255

 

1,075,200

 

9,532,056

 

 

1,914,415

 

1,075,200

 

11,446,471

 

12,521,671

 

(4,579,812

)

7,941,859

 

(I)

 

Promenade at Town Center II

 

Valencia, CA

 

2001

 

270

 

13,500,000

 

34,405,636

 

 

1,225,229

 

13,500,000

 

35,630,866

 

49,130,866

 

(5,540,025

)

43,590,841

 

34,784,190

 

Promenade Terrace

 

Corona, CA

 

1990

 

330

 

2,272,800

 

20,546,289

 

 

3,747,410

 

2,272,800

 

24,293,699

 

26,566,499

 

(10,190,123

)

16,376,376

 

16,571,829

 

Providence

 

Bothell, WA

 

2000

 

200

 

3,573,621

 

19,055,505

 

 

342,320

 

3,573,621

 

19,397,826

 

22,971,447

 

(3,151,462

)

19,819,985

 

(O)

 

Ravens Crest

 

Plainsboro, NJ

 

1984

 

704

 

4,670,850

 

42,080,642

 

 

10,495,305

 

4,670,850

 

52,575,948

 

57,246,798

 

(24,479,186

)

32,767,612

 

(L)

 

Reserve at Ashley Lake

 

Boynton Beach, FL

 

1990

 

440

 

3,520,400

 

23,332,494

 

 

3,459,404

 

3,520,400

 

26,791,898

 

30,312,298

 

(9,838,098

)

20,474,200

 

24,150,000

 

Reserve at Empire Lakes

 

Rancho Cucamonga, CA

 

2005

 

467

 

16,345,000

 

73,081,671

 

 

428,556

 

16,345,000

 

73,510,227

 

89,855,227

 

(7,215,451

)

82,639,776

 

(O)

 

Reserve at Fairfax Corners

 

Fairfax, VA

 

2001

 

652

 

15,804,057

 

63,129,051

 

 

1,454,258

 

15,804,057

 

64,583,308

 

80,387,365

 

(12,944,749

)

67,442,616

 

(N)

 

Reserve at Potomac Yard

 

Alexandria, VA

 

2002

 

588

 

11,918,917

 

68,976,484

 

 

1,418,504

 

11,918,917

 

70,394,989

 

82,313,905

 

(10,014,972

)

72,298,933

 

66,470,000

 

Reserve at Town Center

 

Loudon, VA

 

2002

 

290

 

3,144,056

 

27,669,121

 

 

505,969

 

3,144,056

 

28,175,090

 

31,319,145

 

(4,273,621

)

27,045,525

 

26,500,000

 

Reserve at Town Center (WA)

 

Mill Creek, WA

 

2001

 

389

 

10,369,400

 

41,172,081

 

 

817,575

 

10,369,400

 

41,989,656

 

52,359,056

 

(6,012,384

)

46,346,673

 

29,160,000

 

Retreat, The

 

Phoenix, AZ

 

1999

 

480

 

3,475,114

 

27,265,252

 

 

1,613,390

 

3,475,114

 

28,878,642

 

32,353,756

 

(8,908,352

)

23,445,404

 

(M)

 

Ribbon Mill

 

Manchester, CT

 

1908

 

104

 

787,929

 

5,267,144

 

 

486,059

 

787,929

 

5,753,203

 

6,541,132

 

(1,611,390

)

4,929,743

 

4,105,953

 

River Pointe at Den Rock Park

 

Lawrence, MA

 

2000

 

174

 

4,615,702

 

18,440,147

 

 

866,143

 

4,615,702

 

19,306,290

 

23,921,992

 

(3,862,632

)

20,059,361

 

18,100,000

 

Rivers Bend (CT)

 

Windsor, CT

 

1973

 

373

 

3,325,517

 

22,573,826

 

 

1,631,098

 

3,325,517

 

24,204,924

 

27,530,440

 

(6,569,695

)

20,960,745

 

(J)

 

Rockingham Glen

 

West Roxbury, MA

 

1974

 

143

 

1,124,217

 

7,515,160

 

 

1,176,910

 

1,124,217

 

8,692,070

 

9,816,287

 

(2,474,321

)

7,341,965

 

1,860,250

 

Rolling Green (Amherst)

 

Amherst, MA

 

1970

 

204

 

1,340,702

 

8,962,317

 

 

2,672,687

 

1,340,702

 

11,635,005

 

12,975,707

 

(3,506,324

)

9,469,383

 

2,958,497

 

Rolling Green (Milford)

 

Milford, MA

 

1970

 

304

 

2,012,350

 

13,452,150

 

 

2,773,174

 

2,012,350

 

16,225,324

 

18,237,675

 

(4,939,539

)

13,298,135

 

6,010,718

 

Savannah Midtown

 

Atlanta, GA

 

2000

 

322

 

7,209,873

 

29,433,507

 

 

1,084,912

 

7,209,873

 

30,518,420

 

37,728,293

 

(4,684,392

)

33,043,901

 

17,800,000

 

Savoy I

 

Aurora, CO

 

2001

 

444

 

5,450,295

 

38,765,670

 

 

1,219,192

 

5,450,295

 

39,984,862

 

45,435,157

 

(6,251,814

)

39,183,343

 

(L)

 

Scarborough Square

 

Rockville, MD

 

1967

 

121

 

1,815,000

 

7,608,126

 

 

1,979,653

 

1,815,000

 

9,587,779

 

11,402,779

 

(3,468,212

)

7,934,567

 

4,563,900

 

Security Manor

 

Westfield, MA

 

1971

 

63

 

355,456

 

2,376,152

 

 

252,530

 

355,456

 

2,628,682

 

2,984,138

 

(693,641

)

2,290,497

 

(J)

 

Sedona Springs

 

Austin, TX

 

1995

 

396

 

2,574,000

 

23,477,043

 

 

3,163,825

 

2,574,000

 

26,640,868

 

29,214,868

 

(9,116,226

)

20,098,642

 

(M)

 

Siena Terrace

 

Lake Forest, CA

 

1988

 

356

 

8,900,000

 

24,083,024

 

 

2,016,430

 

8,900,000

 

26,099,453

 

34,999,453

 

(8,490,698

)

26,508,756

 

16,425,607

 

Skycrest

 

Valencia, CA

 

1999

 

264

 

10,560,000

 

25,574,457

 

 

1,338,002

 

10,560,000

 

26,912,460

 

37,472,460

 

(6,857,217

)

30,615,243

 

16,597,178

 

Skyline Towers

 

Falls Church, VA (G)

 

1971

 

939

 

78,278,200

 

91,485,591

 

 

18,324,816

 

78,278,200

 

109,810,407

 

188,088,607

 

(11,514,751

)

176,573,856

 

91,416,201

 

Skyview

 

Rancho Santa Margarita, CA

 

1999

 

260

 

3,380,000

 

21,952,863

 

 

1,028,178

 

3,380,000

 

22,981,041

 

26,361,041

 

(6,951,382

)

19,409,660

 

(M)

 

Sonterra at Foothill Ranch

 

Foothill Ranch, CA

 

1997

 

300

 

7,503,400

 

24,048,507

 

 

1,136,310

 

7,503,400

 

25,184,817

 

32,688,217

 

(8,740,401

)

23,947,817

 

(L)

 

South Winds

 

Fall River, MA

 

1971

 

404

 

2,481,821

 

16,780,359

 

 

2,777,265

 

2,481,821

 

19,557,624

 

22,039,445

 

(5,923,237

)

16,116,208

 

5,896,043

 

Springs Colony

 

Altamonte Springs, FL

 

1986

 

188

 

630,411

 

5,852,157

 

 

2,053,426

 

630,411

 

7,905,582

 

8,535,993

 

(4,074,820

)

4,461,174

 

(I)

 

Stonegate (CO)

 

Broomfield, CO

 

2003

 

350

 

8,750,000

 

32,998,775

 

 

2,019,931

 

8,750,000

 

35,018,707

 

43,768,707

 

(3,951,208

)

39,817,498

 

(O)

 

Stoney Ridge

 

Dale City, VA

 

1985

 

264

 

8,000,000

 

24,147,091

 

 

4,790,990

 

8,000,000

 

28,938,081

 

36,938,081

 

(3,007,693

)

33,930,388

 

16,180,463

 

Stonybrook

 

Boynton Beach, FL

 

2001

 

264

 

10,500,000

 

24,967,638

 

 

599,089

 

10,500,000

 

25,566,727

 

36,066,727

 

(3,059,141

)

33,007,586

 

22,583,763

 

Summerhill Glen

 

Maynard, MA

 

1980

 

120

 

415,812

 

3,000,816

 

 

565,749

 

415,812

 

3,566,565

 

3,982,377

 

(1,121,739

)

2,860,639

 

1,515,977

 

Summerset Village

 

Chatsworth, CA

 

1985

 

280

 

2,629,658

 

23,670,889

 

 

2,641,762

 

2,629,658

 

26,312,652

 

28,942,310

 

(10,318,943

)

18,623,367

 

(K)

 

Summit & Birch Hill

 

Farmington, CT

 

1967

 

186

 

1,757,438

 

11,748,112

 

 

1,731,963

 

1,757,438

 

13,480,076

 

15,237,514

 

(3,638,725

)

11,598,788

 

(J)

 

Talleyrand

 

Tarrytown, NY (I)

 

1997-1998

 

300

 

12,000,000

 

49,838,160

 

 

3,378,346

 

12,000,000

 

53,216,506

 

65,216,506

 

(11,777,037

)

53,439,469

 

35,000,000

 

Tanasbourne Terrace

 

Hillsboro, OR

 

1986-1989

 

373

 

1,876,700

 

16,891,205

 

 

3,342,596

 

1,876,700

 

20,233,800

 

22,110,500

 

(10,037,130

)

12,073,371

 

(K)

 

Tanglewood (RI)

 

West Warwick, RI

 

1973

 

176

 

1,141,415

 

7,630,129

 

 

790,833

 

1,141,415

 

8,420,962

 

9,562,377

 

(2,276,979

)

7,285,399

 

6,014,861

 

Tanglewood (VA)

 

Manassas, VA

 

1987

 

432

 

2,108,295

 

24,619,495

 

 

7,657,839

 

2,108,295

 

32,277,334

 

34,385,629

 

(13,054,441

)

21,331,187

 

25,110,000

 

Teresina

 

Chula Vista, CA

 

2000

 

440

 

28,600,000

 

61,916,670

 

 

891,546

 

28,600,000

 

62,808,216

 

91,408,216

 

(3,630,606

)

87,777,610

 

45,359,962

 

Touriel Building

 

Berkeley, CA (G)

 

2004

 

35

 

2,736,000

 

7,810,027

 

 

10,684

 

2,736,000

 

7,820,711

 

10,556,711

 

(387,404

)

10,169,306

 

5,050,000

 

Turf Club

 

Littleton, CO

 

1986

 

324

 

2,107,300

 

15,478,040

 

 

2,559,346

 

2,107,300

 

18,037,387

 

20,144,687

 

(7,074,186

)

13,070,501

 

(M)

 

Uwajimaya Village

 

Seattle, WA

 

2002

 

176

 

8,800,000

 

22,188,288

 

 

63,037

 

8,800,000

 

22,251,325

 

31,051,325

 

(2,471,980

)

28,579,345

 

16,806,170

 

 

 

S-9


 


EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 

Description

 

 

 

 

Initial Cost to
Company

Cost Capitalized
Subsequent to
Acquisition
(Improvements, net) (E)

Gross Amount Carried
at Close of
Period 12/31/07

 

 

 

 

 

 

 

 

 

 

Apartment Name

 

Location

 

Date of
Construction

 

Units (H)

 

Land

 

Building &
Fixtures

 

Land

 

Building &
Fixtures

 

Land

 

Building &
Fixtures (A)

 

Total (B)

 

Accumulated
Depreciation (C)

 

Investment in Real
Estate, Net at 12/31/07

 

Encumbrances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Van Deene Manor

 

West Springfield, MA

 

1970

 

111

 

744,491

 

4,976,771

 

 

449,954

 

744,491

 

5,426,725

 

6,171,216

 

(1,518,587

)

4,652,629

 

(J

)

Villa Encanto

 

Phoenix, AZ

 

1983

 

385

 

2,884,447

 

22,197,363

 

 

2,942,785

 

2,884,447

 

25,140,147

 

28,024,594

 

(9,687,196

)

18,337,398

 

(M

)

Village at Bear Creek

 

Lakewood, CO

 

1987

 

472

 

4,519,700

 

40,676,390

 

 

2,946,873

 

4,519,700

 

43,623,263

 

48,142,963

 

(16,258,637

)

31,884,326

 

(L

)

Vista Del Lago (TX)

 

Dallas, TX

 

1992

 

296

 

3,552,000

 

20,066,912

 

 

1,480,067

 

3,552,000

 

21,546,979

 

25,098,979

 

(5,563,391

)

19,535,588

 

(K

)

Warwick Station

 

Westminster, CO

 

1986

 

332

 

2,282,000

 

21,113,974

 

 

2,360,516

 

2,282,000

 

23,474,490

 

25,756,490

 

(8,586,825

)

17,169,666

 

8,355,000

 

Waterford at Orange Park

 

Orange Park, FL

 

1986

 

280

 

1,960,000

 

12,098,784

 

 

2,485,964

 

1,960,000

 

14,584,748

 

16,544,748

 

(5,585,973

)

10,958,776

 

9,540,000

 

Waterford Place (CO)

 

Thornton, CO

 

1998

 

336

 

5,040,000

 

29,733,022

 

 

915,957

 

5,040,000

 

30,648,979

 

35,688,979

 

(4,116,844

)

31,572,136

 

(M

)

Wellington Hill

 

Manchester, NH

 

1987

 

390

 

1,890,200

 

17,120,662

 

 

5,731,196

 

1,890,200

 

22,851,858

 

24,742,058

 

(11,433,549

)

13,308,509

 

(I

)

Westwood Glen

 

Westwood, MA

 

1972

 

156

 

1,616,505

 

10,806,004

 

 

640,413

 

1,616,505

 

11,446,416

 

13,062,921

 

(2,966,297

)

10,096,624

 

846,015

 

Whisper Creek

 

Denver, CO

 

2002

 

272

 

5,310,000

 

22,998,558

 

 

431,958

 

5,310,000

 

23,430,516

 

28,740,516

 

(3,212,048

)

25,528,469

 

13,580,000

 

Wilkins Glen

 

Medfield, MA

 

1975

 

103

 

538,483

 

3,629,943

 

 

704,662

 

538,483

 

4,334,606

 

4,873,088

 

(1,343,500

)

3,529,589

 

1,343,140

 

Windridge (CA)

 

Laguna Niguel, CA

 

1989

 

344

 

2,662,900

 

23,985,497

 

 

3,394,610

 

2,662,900

 

27,380,107

 

30,043,007

 

(13,043,657

)

16,999,350

 

(I

)

Woodbridge

 

Cary, GA

 

1993-1995

 

128

 

737,400

 

6,636,870

 

 

1,206,217

 

737,400

 

7,843,087

 

8,580,487

 

(3,406,070

)

5,174,417

 

4,082,366

 

Woodbridge (CT)

 

Newington, CT

 

1968

 

73

 

498,377

 

3,331,548

 

 

665,636

 

498,377

 

3,997,184

 

4,495,561

 

(1,057,216

)

3,438,345

 

(J

)

Woodlake (WA)

 

Kirkland, WA

 

1984

 

288

 

6,631,400

 

16,735,484

 

 

2,060,179

 

6,631,400

 

18,795,663

 

25,427,063

 

(6,734,462

)

18,692,601

 

(L

)

Woodleaf

 

Campbell, CA

 

1984

 

178

 

8,550,600

 

16,988,183

 

 

1,211,456

 

8,550,600

 

18,199,638

 

26,750,238

 

(6,105,420

)

20,644,818

 

(L

)

EQR Wholly Owned Encumbered

 

 

 

 

 

43,688

 

1,011,383,522

 

3,860,942,268

 

 

312,601,047

 

1,011,383,522

 

4,173,543,315

 

5,184,926,837

 

(968,402,375

)

4,216,524,462

 

1,730,258,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQR Partially Owned Unencumbered:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111 Lawrence Street

 

Brooklyn, NY

 

(F)

 

 

40,099,922

 

9,669,357

 

 

 

40,099,922

 

9,669,357

 

49,769,280

 

 

49,769,280

 

 

1210 Mass

 

Washington, D.C.

 

2004

 

144

 

9,213,512

 

30,728,957

 

 

74,091

 

9,213,512

 

30,803,048

 

40,016,560

 

(3,716,881

)

36,299,679

 

 

Ball Park Lofts

 

Denver, CO (G)

 

2003

 

339

 

5,481,556

 

53,281,695

 

 

552,223

 

5,481,556

 

53,833,918

 

59,315,474

 

(7,025,733

)

52,289,741

 

 

Butterfield Ranch

 

Chino Hills, CA

 

(F)

 

 

15,617,709

 

1,675,042

 

 

 

15,617,709

 

1,675,042

 

17,292,750

 

 

17,292,750

 

 

Chinatown Gateway (Land)

 

Los Angeles, CA

 

(F)

 

 

13,191,831

 

6,062,720

 

 

 

13,191,831

 

6,062,720

 

19,254,551

 

 

19,254,551

 

 

Hudson Crossing II

 

New York, NY

 

(F)

 

 

13,177,769

 

7,502,163

 

 

 

13,177,769

 

7,502,163

 

20,679,932

 

 

20,679,932

 

 

Springbrook Estates

 

Riverside, CA

 

(F)

 

 

70,532,700

 

770,100

 

 

 

70,532,700

 

770,100

 

71,302,801

 

 

71,302,801

 

 

Vista Montana - Residential

 

San Jose, CA

 

(F)

 

 

31,468,209

 

1,723,019

 

 

 

31,468,209

 

1,723,019

 

33,191,228

 

 

33,191,228

 

 

Vista Montana - Townhomes

 

San Jose, CA

 

(F)

 

 

33,432,829

 

3,453,129

 

 

 

33,432,829

 

3,453,129

 

36,885,958

 

 

36,885,958

 

 

Westgate

 

Pasadena, CA

 

(F)

 

 

 

3,347,784

 

 

 

 

3,347,784

 

3,347,784

 

 

3,347,784

 

 

Westgate Pasadena and Green

 

Pasadena, CA

 

(F)

 

 

 

390,813

 

 

 

 

390,813

 

390,813

 

 

390,813

 

 

EQR Partially Owned Unencumbered

 

 

 

 

 

483

 

232,216,038

 

118,604,779

 

 

626,314

 

232,216,038

 

119,231,093

 

351,447,131

 

(10,742,614

)

340,704,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQR Partially Owned Encumbered

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

303 Third Street

 

Cambridge, MA

 

(F)

 

 

27,812,384

 

113,019,691

 

 

 

27,812,384

 

113,019,691

 

140,832,075

 

 

140,832,075

 

50,980,648

 

Agliano

 

Tampa, FL

 

(F)

 

 

8,424,662

 

6,973,908

 

 

 

8,424,662

 

6,973,908

 

15,398,570

 

 

15,398,570

 

6,299,434

 

Alta Pacific

 

Irvine, CA

 

(F)

 

 

10,752,145

 

30,391,191

 

 

10,642

 

10,752,145

 

30,401,832

 

41,153,977

 

(309

)

41,153,668

 

28,260,000

 

Bella Terra I

 

Mukilteo, WA

 

2002

 

235

 

5,686,861

 

26,070,540

 

 

379,506

 

5,686,861

 

26,450,046

 

32,136,908

 

(4,267,508

)

27,869,400

 

23,350,000

 

Brookside Crossing I

 

Stockton, CA

 

1981

 

90

 

625,000

 

4,663,298

 

 

1,459,876

 

625,000

 

6,123,174

 

6,748,174

 

(1,945,549

)

4,802,625

 

4,658,000

 

Brookside Crossing II

 

Stockton, CA

 

1981

 

128

 

770,000

 

5,967,676

 

 

1,447,234

 

770,000

 

7,414,910

 

8,184,910

 

(2,135,120

)

6,049,790

 

4,867,000

 

Canyon Creek (CA)

 

San Ramon, CA

 

1984

 

268

 

5,425,000

 

18,812,121

 

 

2,074,613

 

5,425,000

 

20,886,733

 

26,311,733

 

(5,252,501

)

21,059,232

 

28,000,000

 

City Lofts

 

Chicago, IL

 

(F)

 

 

5,946,369

 

46,667,828

 

 

 

5,946,369

 

46,667,828

 

52,614,197

 

 

52,614,197

 

27,568,548

 

Cobblestone Village

 

Fresno, CA

 

1983

 

162

 

315,000

 

7,587,004

 

 

1,673,932

 

315,000

 

9,260,937

 

9,575,937

 

(2,350,022

)

7,225,915

 

6,000,000

 

Country Oaks

 

Agoura Hills, CA

 

1985

 

256

 

6,105,000

 

29,561,865

 

 

2,457,023

 

6,105,000

 

32,018,887

 

38,123,887

 

(6,725,845

)

31,398,042

 

29,412,000

 

Dublin West

 

Dublin, CA

 

(F)

 

 

17,442,432

 

2,389,875

 

 

 

17,442,432

 

2,389,875

 

19,832,307

 

 

19,832,307

 

8,704,590

 

Edgewater

 

Bakersfield, CA

 

1984

 

258

 

580,000

 

17,710,063

 

 

1,928,816

 

580,000

 

19,638,879

 

20,218,879

 

(4,499,247

)

15,719,632

 

11,988,000

 

EDS Dulles

 

Herndon, VA

 

(F)

 

 

60,152,675

 

2,729,438

 

 

 

60,152,675

 

2,729,438

 

62,882,113

 

 

62,882,113

 

27,730,522

 

Fox Ridge

 

Englewood, CO

 

1984

 

300

 

2,490,000

 

17,522,114

 

 

2,603,152

 

2,490,000

 

20,125,265

 

22,615,265

 

(5,528,077

)

17,087,188

 

20,300,000

 

Hidden Lake

 

Sacramento, CA

 

1985

 

272

 

1,715,000

 

16,413,154

 

 

1,844,574

 

1,715,000

 

18,257,728

 

19,972,728

 

(4,588,328

)

15,384,400

 

15,165,000

 

Lakeview

 

Lodi, CA

 

1983

 

138

 

950,000

 

7,383,862

 

 

1,271,535

 

950,000

 

8,655,397

 

9,605,397

 

(2,278,839

)

7,326,557

 

7,286,000

 

Lakewood

 

Tulsa, OK

 

1985

 

152

 

855,000

 

6,480,774

 

 

1,133,695

 

855,000

 

7,614,469

 

8,469,469

 

(2,306,534

)

6,162,934

 

5,600,000

 

Lantern Cove

 

Foster City, CA

 

1985

 

232

 

6,945,000

 

23,332,206

 

 

1,719,769

 

6,945,000

 

25,051,975

 

31,996,975

 

(6,042,279

)

25,954,696

 

36,403,000

 

Legacy Park Central

 

Concord, CA

 

2003

 

259

 

6,469,230

 

46,745,854

 

 

114,448

 

6,469,230

 

46,860,301

 

53,329,531

 

(5,965,625

)

47,363,906

 

37,650,000

 

Mesa Del Oso

 

Albuquerque, NM

 

1983

 

221

 

4,305,000

 

12,160,419

 

 

1,028,594

 

4,305,000

 

13,189,013

 

17,494,013

 

(3,634,157

)

13,859,856

 

10,103,519

 

Montclair Metro

 

Montclair, NJ

 

(F)

 

 

2,208,343

 

9,189,521

 

 

 

2,208,343

 

9,189,521

 

11,397,864

 

 

11,397,864

 

1,022

 

Mozaic (Union Station)

 

Los Angeles, CA

 

2007

 

272

 

8,500,000

 

59,348,998

 

 

52,100

 

8,500,000

 

59,401,098

 

67,901,098

 

(2,038,543

)

65,862,556

 

47,205,878

 

Red Road Commons

 

Miami, FL

 

(F)

 

 

27,383,547

 

7,616,356

 

 

 

27,383,547

 

7,616,356

 

34,999,903

 

 

34,999,903

 

17,387,500

 

Schooner Bay I

 

Foster City, CA

 

1985

 

168

 

5,345,000

 

20,509,239

 

 

1,693,257

 

5,345,000

 

22,202,496

 

27,547,496

 

(5,046,332

)

22,501,164

 

27,000,000

 

Schooner Bay II

 

Foster City, CA

 

1985

 

144

 

4,550,000

 

18,142,163

 

 

1,767,771

 

4,550,000

 

19,909,934

 

24,459,934

 

(4,456,367

)

20,003,567

 

23,760,000

 

Scottsdale Meadows

 

Scottsdale, AZ

 

1984

 

168

 

1,512,000

 

11,423,349

 

 

1,226,437

 

1,512,000

 

12,649,786

 

14,161,786

 

(4,713,735

)

9,448,051

 

9,100,000

 

Silver Spring

 

Silver Spring, MD

 

(F)

 

 

18,539,817

 

71,313,437

 

 

 

18,539,817

 

71,313,437

 

89,853,254

 

 

89,853,254

 

53,202,351

 

South Shore

 

Stockton, CA

 

1979

 

129

 

840,000

 

9,380,786

 

 

1,375,431

 

840,000

 

10,756,217

 

11,596,217

 

(2,610,685

)

8,985,532

 

6,833,000

 

Tierra Antigua

 

Albuquerque, NM

 

1985

 

148

 

1,825,000

 

7,841,358

 

 

545,378

 

1,825,000

 

8,386,737

 

10,211,737

 

(2,342,098

)

7,869,638

 

5,970,261

 

Vintage

 

Ontario, CA

 

2005-2007

 

300

 

7,059,230

 

47,663,026

 

 

1,212

 

7,059,230

 

47,664,238

 

54,723,468

 

(1,674,723

)

53,048,745

 

33,000,000

 

Waterfield Square I

 

Stockton, CA

 

1984

 

170

 

950,000

 

9,300,249

 

 

1,949,168

 

950,000

 

11,249,417

 

12,199,417

 

(3,010,231

)

9,189,186

 

6,923,000

 

Waterfield Square II

 

Stockton, CA

 

1984

 

158

 

845,000

 

8,657,988

 

 

1,521,408

 

845,000

 

10,179,396

 

11,024,396

 

(2,557,143

)

8,467,253

 

6,595,000

 

Westgate Pasadena Apartments

 

Pasadena, CA

 

(F)

 

 

22,898,848

 

13,690,500

 

 

 

22,898,848

 

13,690,500

 

36,589,348

 

 

36,589,348

 

163,160,000

 

Westgate Pasadena Condos

 

Pasadena, CA

 

(F)

 

 

29,977,725

 

8,040,439

 

 

 

29,977,725

 

8,040,439

 

38,018,164

 

 

38,018,164

 

12,368,357

 

Willow Brook (CA)

 

Pleasant Hill, CA

 

1985

 

228

 

5,055,000

 

38,388,672

 

 

1,374,088

 

5,055,000

 

39,762,760

 

44,817,760

 

(5,975,553

)

38,842,207

 

29,000,000

 

Willow Creek

 

Fresno, CA

 

1984

 

116

 

275,000

 

6,639,018

 

 

1,093,306

 

275,000

 

7,732,324

 

8,007,324

 

(1,957,350

)

6,049,974

 

5,112,000

 

EQR Partially Owned Encumbered

 

 

 

 

 

4,972

 

311,531,268

 

789,727,977

 

 

33,746,965

 

311,531,268

 

823,474,942

 

1,135,006,210

 

(93,902,700

)

1,041,103,510

 

836,944,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio/Entity Encumberances (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,038,768,281

 

Total Consolidated Investment in Real Estate

 

 

 

 

 

138,644

 

$

4,129,393,596

 

$

13,048,227,149

 

$

 

$

1,155,729,558

 

$

4,129,393,596

 

$

14,203,956,708

 

$

18,333,350,305

 

$

(3,170,125,219

)

$

15,163,225,086

 

$

3,605,971,387

 


(1) See attached Encumberances Reconciliation

 

S-10



 

EQUITY RESIDENTIAL

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2007

 


NOTES:

(A) 

The balance of furniture & fixtures included in the total investment in real estate amount was $890,975,304 as of December 31, 2007.

(B) 

The aggregate cost for Federal Income Tax purposes as of December 31, 2007 was approximately $9.7 billion.

(C) 

The life to compute depreciation for building is 30 years, for building improvements ranges from 5 to 10 years, for furniture & fixtures and replacements is 5 years, and for in-place leases is the average remaining term of each respective lease.

(D) 

This asset consists of various acquisition dates and largely represents furniture, fixtures and equipment, leasehold improvements and capitalized software costs owned by the Management Business, which are generally depreciated over periods ranging from 3 to 7 years.

(E) 

Primarily represents capital expenditures for major maintenance and replacements incurred subsequent to each property’s acquisition date.

(F) 

Represents land, construction-in-progress and/or miscellaneous pursuit costs on projects either held for future development or projects currently under development.

(G) 

A portion or all of these properties includes commercial space (retail, parking and/or office space).

(H)  

Total properties and units exclude both the Partially Owned Properties - Unconsolidated consisting of 44 properties and 10,446 units, and the Military Housing (Fee Managed) consisting of one property and 3,731 units.

 

S-11


 

 


EXHIBIT INDEX

 

     The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption Location indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference.  The Commission file number for our Exchange Act filings referenced below is 1-12252.

 

Exhibit

 

Description

 

Location

3.1

 

Articles of Restatement of Declaration of Trust of Equity Residential dated December 9, 2004.

 

Included as Exhibit 3.1 to the Companys Form 10-K for the year ended December 31, 2004.

 

 

 

 

 

3.2

 

Fifth Amended and Restated Bylaws of Equity Residential dated December 9, 2004.

 

Included as Exhibit 3.1 to the Companys Form 8-K dated December 9, 2004, filed on December 10, 2004.

 

 

 

 

 

4.1

 

Indenture, dated October 1, 1994, between the Operating Partnership, as obligor and The First National Bank of Chicago, as trustee (Indenture).

 

Included as an exhibit to the Operating Partnership’s Form 10/A, dated December 12, 1994, File No. 0-24920.

 

 

 

 

 

4.2

 

First Supplemental Indenture to Indenture, dated as of September 9, 2004.

 

Included as Exhibit 4.2 to the Operating Partnerships Form 8-K, filed on September 10, 2004.

 

 

 

 

 

4.3

 

Second Supplemental Indenture to Indenture, dated as of August 23, 2006.

 

Included as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated August 16, 2007, filed on August 23, 2007.

 

 

 

 

 

4.4

 

Third Supplemental Indenture to Indenture, dated as of June 4, 2007.

 

Included as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated May 30, 2007, filed on June 1, 2007.

 

 

 

 

 

4.5

 

Form of 4.75% Note due June 15, 2009.

 

Included as Exhibit 4 to the Operating Partnerships Form 8-K, filed on June 4, 2004.

 

 

 

 

 

4.6

 

Terms Agreement regarding 6.95% Notes due March 2, 2011.

 

Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on March 2, 2001.

 

 

 

 

 

4.7

 

Terms Agreement regarding 6.625% Notes due March 15, 2012.

 

Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on March 14, 2002.

 

 

 

 

 

4.8

 

Form of 5.50% Note due October 1, 2012.

 

Included as Exhibit 4.2 to the Operating Partnerships Form 8-K dated May 30, 2007, filed on June 1, 2007.

 

 

 

 

 

4.9

 

Form of 5.2% Note due April 1, 2013.

 

Included as Exhibit 4 to the Operating Partnerships Form 8-K, filed on March 19, 2003.

 

 

 

 

 

4.10

 

Form of 5.25% Note due September 15, 2014.

 

Included as Exhibit 4.1 to the Operating Partnerships Form 8-K, filed on September 10, 2004.

 

 

 

 

 

4.11

 

Terms Agreement regarding 6.63% (subsequently remarketed to a 6.584% fixed rate) Notes due April 13, 2015.

 

Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on April 13, 1998.

 

 

 

 

 

4.12

 

Terms Agreement regarding 5.125% Notes due March 15, 2016.

 

Included as Exhibit 1.1 to the Operating Partnerships Form 8-K, filed on September 13, 2005.

 



 

Exhibit

 

Description

 

Location

4.13

 

Form of 5.375% Note due August 1, 2016.

 

Included as Exhibit 4.1 to the Operating Partnerships Form 8-K, dated January 11, 2006, filed on January 18, 2006.

 

 

 

 

 

4.14

 

Form of 5.75% Note due June 15, 2017.

 

Included as Exhibit 4.3 to the Operating Partnerships Form 8-K dated May 30, 2007, filed on June 1, 2007.

 

 

 

 

 

4.15

 

Terms Agreement regarding 7 1/8% Notes due October 15, 2017.

 

Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on October 9, 1997.

 

 

 

 

 

4.16

 

Terms Agreement regarding 7.57% Notes due August 15, 2026.

 

Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on August 13, 1996.

 

 

 

 

 

4.17

 

Form of 3.85% Exchangeable Senior Note due August 15, 2026.

 

Included as Exhibit 4.2 to the Operating Partnerships Form 8-K, dated August 16, 2006, filed August 23, 2006.

 

 

 

 

 

10.1

 

Fifth Amended and Restated Agreement of Limited Partnership of ERP Operating Limited Partnership.

 

Included as Exhibit 4.2 to the Operating Partnership’s Form 8-K/A dated July 23, 1998, filed on August 18, 1998.

 

 

 

 

 

10.2

 

Master Amendment to Other Securities Term Sheets and Joinders to Operating Partnership Agreement of ERP Operating Limited Partnership dated December 19, 2003.

 

Included as Exhibit 10.2 to the Companys Form 10-K for the year ended December 31, 2003.

 

 

 

 

 

10.3

 

Assignment and Assumption Agreement between the Company and ERP Operating Limited Partnership dated December 19, 2003.

 

Included as Exhibit 10.3 to the Companys Form 10-K for the year ended December 31, 2003.

 

 

 

 

 

10.4*

 

Noncompetition Agreement (Zell).

 

Included as an exhibit to the Company’s Form S-11 Registration Statement, File No. 33-63158.

 

 

 

 

 

10.5*

 

Noncompetition Agreement (Spector).

 

Included as an exhibit to the Company’s Form S-11 Registration Statement, File No. 33-63158.

 

 

 

 

 

10.6*

 

Form of Noncompetition Agreement (other officers).

 

Included as an exhibit to the Company’s Form S-11 Registration Statement, File No. 33-63158.

 

 

 

 

 

10.7

 

Amended and Restated Master Reimbursement Agreement, dated as of November 1, 1996 by and between Federal National Mortgage Association and EQR-Bond Partnership.

 

Included as an exhibit to the Company’s Form S-11 Registration Statement, File No. 33-63158.

 

 

 

 

 

10.8

 

Revolving Credit Agreement dated as of February 28, 2007 among ERP Operating Limited Partnership, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, Banc of America Securities LLC and J.P. Morgan Securities Inc., as joint lead arrangers and joint book runners, Suntrust Bank, Wachovia Bank, National Association, Wells Fargo Bank, N.A., LaSalle Bank National Association, The Royal Bank of Scotland plc, and US Bank National Association, as co-documentation agents, and a syndicate of other banks (the “Credit Agreement”).

 

Included as Exhibit 10.1 to the Company’s Form 8-K dated February 28, 2007, filed on March 5, 2007.

 



 

Exhibit

 

Description

 

Location

10.9

 

Guaranty of Payment made as of February 28, 2007 between Equity Residential and Bank of America, N.A., as administrative agent for the banks party to the Credit Agreement.

 

Included as Exhibit 10.2 to the Company’s Form 8-K dated February 28, 2007, filed on March 5, 2007.

 

 

 

 

 

10.10

 

Amendment to Revolving Credit Agreement

 

Included as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended March 31, 2007.

 

 

 

 

 

10.11

 

Credit Agreement dated as of October 5, 2007, among ERP Operating Limited Partnership, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, Banc of America Securities LLC, as joint lead arranger and joint book runner, J.P. Morgan Securities Inc., as joint lead arranger and joint book runner, Citicorp North America Inc., Deutsche Bank Securities Inc., Regions Bank, The Royal Bank of Scotland PLC, and U.S. Bank National Association, as documentation agents, and a syndicate of other banks (the “Term Loan Agreement”).

 

Included as Exhibit 10.1 to the Companys Form 8-K dated October 5, 2007, filed on October 11, 2007.

 

 

 

 

 

10.12

 

Guaranty of Payment made as of October 5, 2007 between Equity Residential and Bank of America, N.A., as administrative agent for the lenders party to the Term Loan Agreement.

 

Included as Exhibit 10.2 to the Company’s Form 8-K dated October 5, 2007, filed on October 11, 2007.

 

 

 

 

 

10.13

 

Amended and Restated Limited Partnership Agreement of Lexford Properties, L.P.

 

Included as Exhibit 10.16 to the Companys Form 10-K for the year ended December 31, 1999.

 

 

 

 

 

10.14*

 

The Equity Residential Advantage Retirement Savings Plan, restated effective January 1, 2004.

 

Included as Exhibit 10.11 to the Companys Form 10-K for the year ended December 31, 2006.

 

 

 

 

 

10.15*

 

First Amendment to The Equity Residential Properties Advantage Retirement Savings Plan, dated April 25, 2005.

 

Included as Exhibit 10.12 to the Companys Form 10-K for the year ended December 31, 2006.

 

 

 

 

 

10.16*

 

Second Amendment to Equity Residential Advantage Retirement Savings Plan, dated April 30, 2005.

 

Included as Exhibit 10.13 to the Companys Form 10-K for the year ended December 31, 2006.

 

 

 

 

 

10.17*

 

Equity Residential 2002 Share Incentive Plan.

 

Included as Exhibit 4.4 to the Company’s Form S-8 filed on January 21, 2003.

 

 

 

 

 

10.18*

 

First Amendment to Equity Residential 2002 Share Incentive Plan.

 

Included as Exhibit 10.16 to the Companys Form 10-K for the year ended December 31, 2004.

 

 

 

 

 

10.19*

 

Second Amendment to Equity Residential 2002 Share Incentive Plan.

 

Included as Exhibit 10.17 to the Companys Form 10-K for the year ended December 31, 2004.

 

 

 

 

 

10.20*

 

Third Amendment to Equity Residential 2002 Share Incentive Plan.

 

Included as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended March 31, 2005.

 

 

 

 

 

10.21*

 

Fourth Amendment to Equity Residential 2002 Share Incentive Plan.

 

Included as Exhibit 10.21 to the Companys Form 10-K for the year ended December 31, 2005.

 

 

 

 

 

10.22*

 

Fifth Amendment to Equity Residential 2002 Share Incentive Plan.

 

Included as Exhibit 10.19 to the Companys Form 10-K for the year ended December 31, 2006.

 



 

Exhibit

 

Description

 

Location

10.23*

 

Sixth Amendment to Equity Residential 2002 Share Incentive Plan.

 

Included as Exhibit 10.2 to the Company’s Form 10-Q for the quarterly period ended June 30, 2007.

 

 

 

 

 

10.24*

 

Equity Residential Amended and Restated 1993 Share Option and Share Award Plan, as amended.

 

Included as Exhibit 10.11 to the Companys Form 10-K for the year ended December 31, 2001.

 

 

 

 

 

10.25*

 

First Amendment to Equity Residential 1993 Share Option and Share Award Plan.

 

Included as Exhibit 10.1 to the Companys Form 10-Q for the quarterly period ended June 30, 2003.

 

 

 

 

 

10.26*

 

Second Amendment to Equity Residential 1993 Share Option and Share Award Plan.

 

Included as Exhibit 10.20 to the Companys Form 10-K for the year ended December 31, 2006.

 

 

 

 

 

10.27*

 

Third Amendment to Equity Residential 1993 Share Option and Share Award Plan.

 

Included as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2007.

 

 

 

 

 

10.28*

 

Form of Equity Residential Performance Based Unit Award Grant Agreement.

 

Included as Exhibit 10.18 to the Companys Form 10-K for the year ended December 31, 2004.

 

 

 

 

 

10.29*

 

Form of Change in Control Agreement between the Company and other executive officers.

 

Included as Exhibit 10.13 to the Company’s Form 10-K for the year ended December 31, 2001.

 

 

 

 

 

10.30*

 

Form of Indemnification Agreement between the Company and each trustee and executive officer.

 

Included as Exhibit 10.18 to the Companys Form 10-K for the year ended December 31, 2003.

 

 

 

 

 

10.31*

 

Form of Executive Retirement Benefits Agreement.

 

Included as Exhibit 10.24 to the Companys Form 10-K for the year ended December 31, 2006.

 

 

 

 

 

10.32*

 

Retirement Benefits Agreement between Samuel Zell and the Company dated October 18, 2001.

 

Included as Exhibit 10.18 to the Company’s Form 10-K for the year ended December 31, 2001.

 

 

 

 

 

10.33*

 

Amended and Restated Deferred Compensation Agreement between the Company and Gerald A. Spector dated January 1, 2002.

 

Included as Exhibit 10.17 to the Company’s Form 10-K for the year ended December 31, 2001.

 

 

 

 

 

10.34*

 

Retirement Agreement dated October 30, 2007, by and between Equity Residential and Gerald A. Spector.

 

Included as Exhibit 99.1 to the Company’s Form 8-K dated October 30, 2007, filed on October 31, 2007.

 

 

 

 

 

10.35*

 

Severance Agreement (Change in Control) between the Company and Donna Brandin dated September 10, 2004.

 

Included as Exhibit 10.30 to the Companys Form 10-K for the year ended December 31, 2006.

 



 

Exhibit

 

Description

 

Location

10.36

 

Resignation Agreement dated September 5, 2007 by and between the Company and Donna Brandin.

 

Included as Exhibit 10.1 to the Companys Form 8-K dated September 5, 2007, filed on September 6, 2007.

 

 

 

 

 

10.37*

 

Summary of Changes to Trustee Compensation.

 

Included as Exhibit 10.1 to the Companys Form 8-K dated September 21, 2005, filed on September 27, 2005.

 

 

 

 

 

10.38*

 

Equity Residential Supplemental Executive Retirement Savings Plan as Amended and Restated effective January 1, 2003.

 

Included as Exhibit 10.35 to the Companys Form 10-K for the year ended December 31, 2005.

 

 

 

 

 

10.39*

 

Amendment No. 1 to the Equity Residential Supplemental Executive Retirement Savings Plan.

 

Included as Exhibit 10.36 to the Companys Form 10-K for the year ended December 31, 2005.

 

 

 

 

 

12

 

Computation of Ratio of Earnings to Combined Fixed Charges.

 

Attached herein.

 

 

 

 

 

21

 

List of Subsidiaries of Equity Residential.

 

Attached herein.

 

 

 

 

 

23.1

 

Consent of Ernst & Young LLP.

 

Attached herein.

 

 

 

 

 

24

 

Power of Attorney.

 

Signature page to this report.

 

 

 

 

 

31.1

 

Certification of David J. Neithercut, Chief Executive Officer.

 

Attached herein.

 

 

 

 

 

31.2

 

Certification of Mark J. Parrell, Chief Financial Officer.

 

Attached herein.

 

 

 

 

 

32.1

 

Certification Pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of the Company.

 

Attached herein.

 

 

 

 

 

32.2

 

Certification Pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of the Company.

 

Attached herein.

 


* Management contracts and compensatory plans or arrangements filed as exhibits to this report are identified by an asterisk.