Financial Strength and Operational Excellence

Transcription

1 Financial Strength and Operational Excellence 425 Mass Washington, D.C. RiverTower New York, NY Longacre House New York, NY 1401 Joyce on Pentagon Row Arlington, VA JUNE 2010

2 Trump Place New York, NY 180 Riverside

3 Equity Residential has a portfolio of high-quality assets focused in high-growth markets where very little new multifamily supply is being built. Favorable demographics, the high cost of owning a home in our markets and the decline in homeownership will continue to drive demand. Combined with improving business conditions, we are well-positioned to drive more net income to the bottom line to the benefit of our debt holders and shareholders alike. We will continue to maintain a strong and flexible balance sheet to support our future growth. 160 Riverside 140 Riverside 3

4 Good long-term demand for rental apartments Favorable demographics and a declining homeownership rate mean positive fundamental demand for apartments. 4 Legacy Park Concord, CA

5 Declining Homeownership is Creating Renter Households Source: Moody s Economy.com Source: U.S. Census Bureau 2009 and 2010 data is Moody s Economy.com estimate. There are over 4.5 million more renter households today than there were in 2004 when homeownership peaked at 69%. More than 1.1 million renter households will be created in Homeownership Rate (% of households) E Total Households Owner Renter 69.0% 67.4%667.8% 66.7% 64.2% 32.6% 33.3% 37.4M 38.5M 67.4% 66.7% 77.3M 77.2M Estimated 5

6 Echo Boomers are a Key Demand Driver for Apartment Rentals The Echo Boomer generation is creating demand for rentals. Nearly four million people turn 18 each year until 2020 and are creating new households. We believe that this generation will be renters longer as they respond to the recent negative image of single family housing as an expensive and inflexible housing choice. Population Aged (in millions) People aged 20 to 34 have a 60% to 70% propensity to rent. Nearly four million people are turning 18 each year. Source: Green Street Advisors as of 12/20/09 St. Andrews at Winston Park Coconut Creek, FL 6

7 Carlyle Mill Alexandria, VA 7

8 Limited New Apartment Supply There is very little new apartment supply currently being built and almost no new projects will be started in the next several years. As a result, we are very well positioned to reap the benefits of an economic recovery. 8 The Prime at Arlington Courthouse Arlington, VA

9 Multifamily Construction Being Held in Check Total Multifamily Starts (units in thousands) Source: Moody s Economy.com Source: U.S. Census Bureau, NMHC and company reports Household Formations Multifamily Permits 1, Household Formations vs. Multifamily Permits (units in thousands) 1,800 1,600 1,400 1,200 1, E 10E 11E 9 12E

10 Equity Residential has transformed its portfolio. Since 2000, we have sold more than $11 billion of assets and exited secondary markets. We have invested more than $10.5 billion in high-quality assets in long-term growth markets. Over the last three years we have been a net seller of approximately $1.5 billion of assets. We intend net new investment activity to be funded on a balance sheet-neutral basis. Building Value with High-Quality Properties in Major Markets Victor 10 on Venice Los Angeles, CA Portside Towers Jersey City, NJ

11 Port Royale Fort Lauderdale, FL Chelsea Square Redmond, WA 71 Broadway New York, NY 11

12 We have focused our investments in markets that will produce better long-term returns. These markets have long-term job growth and rates of household formation that outpace expectations for the national average, and are the places that will attract the Echo Boomer generation as they finish school and head into the workplace. They are also markets in which the high cost of housing makes renting a very attractive option. Equity Residential is Focused on Higher Growth Markets 12 Third Square Cambridge, MA

13 Equity Residential Portfolio Percent of 2010 Budgeted NOI 4-7% 7-10% 10% + Median Income vs. Median Home Price Per Market (in thousands) $600 $507 $500 $433 $400 $300 $307 $347 $283 $315 Source: Claritas, Moody s Economy.com and Company Data 2010 Estimates Median Home Price Median Income $200 $100 0 % of EQR 2010 NOI $ % Washington D.C. Metro Area $ % New York Metro Area $213 $49 8.9% South Florida $64 8.1% Boston Metro Area $54 7.7% Los Angeles $63 6.8% Seattle $76 5.5% San Francisco Bay Area $173 $51 U.S. Average 13

14 Equity Residential s superior, high-tech operating platform gives us great visibility into our markets. It allowed us to react quickly to improving market conditions and to drive occupancy and rents. Market trends are promising though the recovery will be fragile until job growth takes hold. Equity Residential is Focused on Operations Rents are Trending Positive % New Lease Increase (Move-In vs. Move-Out) % Renewal Increase 4% 2% 0% -2% -4% -6% -8% -10% 5/18/09 6/15/09 7/13/09 8/10/09 9/7/09 10/5/09 11/2/09 11/30/09 12/28/09 1/25/10 2/22/10 3/22/10 4/19/10 5/17/10 14

15 10-Year Quarter-to-Quarter Same-Store Comparison Total Revenues Revenue velocity out of recession is promising. 10% 5% 0% -5% % Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q First Quarter 2010 Same-Store Performance Market Units 1Q 2010 % of Actual NOI 1Q 2010 Avg. Rental Rate1 Change in Revenues D.C./ Northern Virginia 8, % $1,622 (0.7%) South Florida 12, % 1,267 (0.1%) New York Metro Area 6, % 2,527 (5.5%) Los Angeles 7, % 1,670 (4.4%) Boston 6, % 2, % Seattle/Tacoma 8, % 1,274 (7.1%) San Francisco Bay Area 6, % 1,617 (5.3%) Denver 7, % 1,004 (2.2%) Phoenix 10, % 830 (6.2%) San Diego 4, % 1, % Orlando 7, % 958 (3.4%) Inland Empire, CA 4, % 1,297 (4.0%) Suburban Maryland 4, % 1, % Orange County, CA 3, % 1,498 (5.6%) Atlanta 5, % 951 (4.6%) All Other Markets 13, % 960 (2.1%) Total 117, % $1,331 (2.9%) 1 Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. 15

16 Equity Residential has a strong and flexible balance sheet. We have an enormous and geographically diverse pool of high-quality unencumbered assets, and access to a variety of capital sources. We carry among the highest credit ratings of any real estate investment trust. Equity Residential is Focused on Maintaining the Strength of its Balance Sheet 16 Reunion at Redmond Ridge Redmond, WA

17 Promenade at Aventura Aventura, FL 2400M Washington, D.C. Balance Sheet Strength and Flexibility Equity Residential s credit metrics continue to be strong. The company has an unencumbered debt yield of 15%. Unsecured Debt Covenants* March 31, 2010 March 31, 2009 Total Debt to Adjusted Total Assets (not to exceed 60%) 48.8% 51.2% Secured Debt to Adjusted Total Assets (not to exceed 40%) 24.8% 25.1% Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1.0) Total Unsecured Assets to Unsecured Debt (must be at least 150%) 255.5% 231.1% * As computed per 1994 Base Indenture 17

18 High-Quality and Diverse Unencumbered Assets Our unencumbered portfolio is geographically diverse with no single market providing in excess of 13% of total unencumbered NOI. This portfolio has $712M of unencumbered NOI, a gross book value of $11.1B and an unencumbered debt yield of 15%. The asset quality is reflective of the overall Equity Residential portfolio; a mix of high-rise, mid-rise and garden-style communities in long-term growth markets. Equity Residential Unencumbered Portfolio Percent of Total Unencumbered NOI 4-7% 7-10% 10% + Selected Unencumbered Assets La Mirage 6554 Ambrosia Drive, San Diego, CA Total Units: 1,410 Completion Date: 1988 Average Unit Size: 934 sq. ft. Average Monthly Rent/Unit: $1,561 Average Rent/sq. ft.: $1.67 Occupancy: 96.5% 18

19 The West End Apartments 72 Staniford Street, Boston, MA Total Units: 310 Completion Date: 2008 Average Unit Size: 854 sq. ft. Average Monthly Rent/Unit: $2,675 Average Rent/sq. ft.: $3.13 Occupancy: 94.9% 777 Sixth Avenue 777 6th Avenue, New York City, NY Total Units: 294 Completion Date: 2002 Average Unit Size: 673 sq. ft. Average Monthly Rent/Unit: $3,417 Average Rent/sq. ft.: $5.08 Occupancy: 96.3% Vista on Courthouse th Court, North Arlington, VA Total Units: 220 Completion Date: 2008 Average Unit Size: 1,123 sq. ft. Average Monthly Rent/Unit: $2,493 Average Rent/Sq. Ft.: $2.22 Occupancy: 96.6% 19

20 Financing Obligations Our funding requirements are manageable and we maintain excellent access to various sources of capital. Debt Maturity Schedule (in thousands) $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 Unsecured Secured * Includes the company s $500 million term loan facility, which originally matured on October 5, Effective April 12, 2010, the company exercised the first of its two one-year options. As a result, the maturity date is now October 5, 2011 and there is one remaining one-year extension option exercisable by the company maturities include $91 million outstanding on the company s unsecured revolving credit facility. As of March 31, 2010, there was approximately $1.28 billion available on this facility. 0 % of Total Assets * % 8.5% 8.7% 3.7% 3.4% 2.3% 7.1% 8.8% We have been and will continue to be proactive in addressing our maturities. We maintain strong liquidity with approximately $1.2B available on our unsecured line of credit. Besides access to the unsecured bond market, we have access to Fannie Mae and Freddie Mac (the GSEs), life insurance companies, equity-linked, bank and preferred debt markets. Through our ATM program, we have issued approximately 4.6 million common shares at an average price of $35.03 per share for a total consideration of approximately $160M. Victor on Venice Los Angeles, CA 20

21 Our Development Capability is a Source of Attractively Priced Assets in High-Growth Markets Equity Residential is a proven developer of high-quality multifamily properties in markets across the country. We currently have approximately $536 million (3.5% of our balance sheet) of projects under development: $281 million to be completed in 2010; $255 million to be completed in Of the approximately $106 million of capital cost remaining to be funded on these projects, approximately $82 million will be funded by fully committed third-party bank loans and the remaining $24 million will be funded by Equity Residential from cash on hand. We will continue to develop properties where development returns provide an appropriate premium over acquiring existing assets. Seattle Active Development Markets Southern California New York Washington, D.C. Delivery Timeline of Projects Under Development (in millions) $106 M of Capital Cost Funding Remaining $750 $500 $24M $250 $281 $255 $82M $ $536 million total Funded by fully committed third-party bank loans Funded by Equity Residential from cash on hand 21

22 A Leader in Multifamily Housing 22

23 We have a well-located portfolio of high-quality assets in high-growth markets that will benefit from the downturn in homeownership and favorable demographics. We utilize a state-of-the-art operating platform that allows us to adapt quickly and aggressively manage our assets. We have a solid balance sheet and sufficient liquidity to support our growth going forward. View of Seattle, WA 23

24 Equity Residential is an S&P 500 company focused on the acquisition, development and management of high-quality apartment properties in top U.S. growth markets. Equity Residential owns or has investments in 491 properties consisting of 136,470 apartment units. Equity Residential Two North Riverside Plaza Chicago, Illinois EquityResidential.com from left to right: 600 Washington New York City, NY; Colorado Pointe Denver, CO; Sabal Palm at Boot Ranch Palm Harbor, FL; Olympus Seattle, WA; The Reserve at Empire Lakes Rancho Cucamonga, CA June 2010 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: The forward-looking statements contained in this document are subject to certain economic risks and uncertainties described under the heading Risk Factors in the company s 2009 Annual Report on Form 10-K. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. All projections are based on 2010 budgets and proforma expectations on recent acquisitions.