Form 8-K EQUITY RESIDENTIAL For: Feb 03

February 3, 2015 4:56 PM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 3, 2015

EQUITY RESIDENTIAL

(Exact Name of Registrant as Specified in its Charter)



�	�	�	�	�
Maryland	�	1-12252	�	13-3675988
(State or Other Jurisdiction of Incorporation or Organization)	�	(Commission �File Number)	�	(I.R.S. Employer Identification No.)
�	�	�	�	�
Two North Riverside Plaza Chicago, Illinois	�	�	60606	�
(Address of Principal Executive Offices)	�	�	(Zip Code)	�

Registrant's telephone number, including area code: (312) 474-1300

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


�	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


�	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

� Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

� Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 3, 2015, Equity Residential issued a press release announcing its results of operations and financial condition as of December�31, 2014 and for the year and quarter then ended. The press release is furnished as Exhibit 99.1. The information contained in this Item 2.02 on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Equity Residential under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.



Exhibit Number	�	Exhibit
99.1	�	Press Release dated February 3, 2015, announcing the results of operations and financial condition of Equity Residential as of December 31, 2014 and for the year and quarter then ended.
�	�
�	�	�	�	�	�

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

��



�	�	�	�	EQUITY RESIDENTIAL
�	�	�	�	�
Date:	February 3, 2015	�	By:	/s/ Ian S. Kaufman
�	�	�	�	�
�	�	�	Name:	Ian S. Kaufman
�	�	�	�	�
�	�	�	Its:	Senior Vice President and Chief Accounting Officer
�	�	�	�	(Principal Accounting Officer)
�	�	�	�	�
�	�	�	�	�

EXHIBIT INDEX



Exhibit Number	�	Exhibit
99.1	�	Press Release dated February 3, 2015, announcing the results of operations and financial condition of Equity Residential as of December 31, 2014 and for the year and quarter then ended.
�	�
�	�	�	�	�	�

��

Exhibit 99.1

��

NEWS RELEASE - FOR IMMEDIATE RELEASE��

FEBRUARY 3, 2015

Equity Residential Reports Full Year 2014 Results

2014 Normalized FFO Per Share Increased 11.2%

2015 Normalized FFO Per Share Expected to Increase 7.3%

2015 Common Share Dividend Expected to Increase 10.5%

Chicago, IL - February 3, 2015 - Equity Residential (NYSE: EQR) today reported results for the quarter and year ended December 31, 2014. All per share results are reported as available to common shares on a diluted basis.

2014 was another exceptional year for Equity Residential in which we delivered year over year growth in Normalized FFO�per share of more than 11%, among the best years in our history, said David J. Neithercut, Equity Residentials President and CEO.� Improving labor markets, robust�household formation and declining single family home ownership levels will keep demand for rental housing high and produce�above trend growth for many years to come.

Fourth Quarter 2014

FFO (Funds from Operations), as defined by the National Association of Real Estate Investment Trusts (NAREIT), for the fourth quarter of 2014 was $0.87 per share compared to $0.67 per share in the fourth quarter of 2013. The difference is due primarily to higher prepayment penalties incurred in the fourth quarter of 2013 and the items described below.

For the fourth quarter of 2014, the company reported Normalized FFO of $0.86 per share compared to $0.77 per share in the same period of 2013. The following items impacted Normalized FFO per share in the quarter:


"	a positive impact of approximately $0.07 per share from higher same store net operating income (NOI) and approximately $0.02 per share from NOI from non-same store properties currently in lease-up;


"	a positive impact of approximately $0.01 per share from lower G&A expenses; and


"	a negative impact of approximately $0.01 per share due to dilution from the timing of the companys 2014 transaction activity.

Normalized FFO begins with FFO and eliminates certain items that by their nature are not comparable from period to period or that tend to obscure the companys actual operating performance. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 6 and 28 of this release and the company has included guidance for Normalized FFO on page 27 and FFO on page 28 of this release.

��

For the fourth quarter of 2014, the company reported earnings of $0.59 per share compared to $0.30 per share in the fourth quarter of 2013. The difference is due primarily to higher gains on property sales in the fourth quarter of 2014, higher prepayment penalties incurred in the fourth quarter of 2013 and the items described above.

Year Ended December 31, 2014

FFO for the year ended December 31, 2014 was $3.15 per share compared to $2.35 per share in the same period of 2013. The difference is due primarily to higher acquisition expenses and prepayment penalties incurred during 2013 and improved operations during 2014.

For the year ended December 31, 2014, the company reported Normalized FFO of $3.17 per share compared to $2.85 per share in the same period of 2013.

For the year ended December 31, 2014, the company reported earnings of $1.73 per share compared to $5.16 per share in the same period of 2013. The difference is due primarily to higher gains on property sales during 2013, partially offset by higher depreciation expense, acquisition expenses and prepayment penalties incurred during 2013 and improved operations during 2014.

Same Store Results

The companys same store results for all periods include the stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the company.

On a same store fourth quarter to fourth quarter comparison, which includes 98,421 apartment units, revenues increased 4.9%, expenses increased 2.2% and NOI increased 6.3%.

On a same store year to year comparison, which includes 97,911 apartment units, revenues increased 4.3%, expenses increased 1.8% and NOI increased 5.6%.

Investment Activity

The company acquired two properties during the fourth quarter, both in Seattle, with a total of 273 apartment units for an aggregate purchase price of approximately $94.2 million at a weighted average capitalization (cap) rate of 4.8%. Also during the quarter, the company acquired its joint venture partners 95% interest in Parc on Powell, a 176-unit apartment property currently under development in Emeryville, a suburb of San Francisco, for a stabilized value of $87.5 million. The company acquired its original 5% interest in the property as part of the Archstone acquisition. The project is expected to stabilize in the second year of full ownership at a 4.8% yield on cost.

During the fourth quarter, the company sold six consolidated apartment properties, consisting of 1,775 apartment units, for an aggregate sale price of approximately $269.9 million at a weighted average cap rate of 5.9%. These sales generated an unlevered internal rate of return (IRR), inclusive of management costs, of 6.5%. Also during the quarter, the company sold for approximately $62.5 million an unconsolidated 388-unit apartment property located in Phoenix, in which it had an 85% interest acquired as part of the Archstone transaction. In addition, the company sold a land parcel located in Los Angeles for a sale price of $32.1 million during the quarter.

During 2014, the company acquired six properties, consisting of 1,353 apartment units, for an aggregate purchase price of approximately $469.8 million and a weighted average cap rate of

��

4.9%. In addition, the company acquired two land parcels for an aggregate purchase price of approximately $28.8 million as well as the Parc on Powell transaction described above.

During 2014, the company sold 10 consolidated apartment properties, consisting of 3,092 apartment units, for an aggregate sale price of approximately $467.0 million at a weighted average cap rate of 6.1%. These sales generated an unlevered IRR, inclusive of management costs, of 8.9%. The company also sold three land parcels for an aggregate sale price of $62.6 million during 2014. In addition, the company sold the unconsolidated asset in Phoenix described above.

Revised Executive Compensation Program

In response to input from its shareholders, the company has revised its executive compensation program beginning in 2015. The long term incentive portion of the revised program will be performance based and determined by the companys absolute and relative total shareholder return over the three year performance period ending�December 31, 2017.� Accounting rules require the company to expense in 2015 a portion of both the previous programs time based equity grants for service in 2014 and the performance based grants issued under the revised plan creating a duplicative charge of approximately $11.0 million. This charge will not be included in the companys Normalized FFO in 2015.

First Quarter 2015 Guidance

The company has established a Normalized FFO guidance range of $0.77 to $0.81 per share for the first quarter of 2015. The difference between the companys fourth quarter 2014 Normalized FFO of $0.86 per share and the midpoint of the first quarter 2015 guidance range of $0.79 per share is due primarily to:


"	a negative impact of approximately $0.05 per share from lower NOI primarily as a result of higher operating expenses in the first quarter of 2015; and


"	a negative impact of approximately $0.02 per share from other items.

Full Year 2015 Guidance

The company has established a Normalized FFO guidance range of $3.35 to $3.45 per share for the full year 2015. The assumptions underlying this guidance can be found on page 27 of this release. The difference between the companys full-year 2014 Normalized FFO of $3.17 per share and the midpoint of the full year 2015 guidance range of $3.40 per share is primarily due to:


"	a positive impact of approximately $0.21 per share from higher NOI from same store properties;


"	a positive impact of approximately $0.05 per share from non-same store properties, including properties in lease-up;


"	a negative impact of approximately $0.04 per share from the timing of the companys 2014 and 2015 transaction activity;


"	a positive impact of approximately $0.03 per share from lower interest expense; and


"	a negative impact of approximately $0.02 per share from other items.

��

2015 Common Share Dividend

As previously announced, the companys dividend policy is to pay 65% of the midpoint of the range of Normalized FFO guidance customarily provided as part of the companys fourth quarter earnings release. �Based on the guidance above, the company expects to pay four quarterly dividends of $0.5525 per share for an annual dividend of $2.21 per share in 2015, which represents a 10.5% increase over the 2014 dividend. All future dividends remain subject to the discretion of the companys Board of Trustees.

First Quarter 2015 Earnings and Conference Call

Equity Residential expects to announce first quarter 2015 results on Tuesday, April 28, 2015 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, April 29, 2015.

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 391 properties consisting of 109,225 apartment units. For more information on Equity Residential, please visit our website at www.equityapartments.com.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residentials management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading Risk Factors in our Annual Report on Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityapartments.com. Many of these uncertainties and risks are difficult to predict and beyond managements control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

A live web cast of the companys conference call discussing these results will take place tomorrow, Wednesday, February 4, at 10:00 a.m. Central. Please visit the Investor section of the companys web site at www.equityapartments.com for the link. A replay of the web cast will be available for two weeks at this site.

��

Equity Residential

Consolidated Statements of Operations

(Amounts in thousands except per share data)

(Unaudited)



�	�	Year Ended December 31,							�	Quarter Ended December 31,
�	�	2014			�	2013			�	2014			�	2013
REVENUES	�	�			�	�			�	�			�	�
Rental income	�	$	2,605,311		�	$	2,378,004		�	$	662,819		�	$	636,835
Fee and asset management	�	9,437			�	9,698			�	1,841			�	2,299
Total revenues	�	2,614,748			�	2,387,702			�	664,660			�	639,134
�	�	�			�	�			�	�			�	�
EXPENSES	�	�			�	�			�	�			�	�
Property and maintenance	�	473,098			�	449,427			�	112,011			�	118,641
Real estate taxes and insurance	�	325,401			�	293,999			�	79,684			�	76,246
Property management	�	79,636			�	84,342			�	18,556			�	20,947
Fee and asset management	�	5,429			�	6,460			�	1,136			�	1,721
Depreciation	�	758,861			�	978,973			�	193,089			�	182,740
General and administrative	�	50,948			�	62,179			�	9,652			�	15,162
Total expenses	�	1,693,373			�	1,875,380			�	414,128			�	415,457
�	�	�			�	�			�	�			�	�
Operating income	�	921,375			�	512,322			�	250,532			�	223,677
�	�	�			�	�			�	�			�	�
Interest and other income	�	4,462			�	5,283			�	1,249			�	3,516
Other expenses	�	(9,073		)	�	(29,630		)	�	(1,894		)	�	(1,886		)
Interest:	�	�			�	�			�	�			�	�
Expense incurred, net	�	(457,191		)	�	(586,854		)	�	(109,967		)	�	(149,402		)
Amortization of deferred financing costs	�	(11,088		)	�	(22,197		)	�	(2,534		)	�	(6,561		)
Income (loss) before income and other taxes, (loss) income from investments in unconsolidated entities, net gain on sales of real estate properties and land parcels and discontinued operations	�	448,485			�	(121,076		)	�	137,386			�	69,344
Income and other tax (expense) benefit	�	(1,394		)	�	(1,169		)	�	(248		)	�	156
(Loss) income from investments in unconsolidated entities	�	(7,952		)	�	(58,156		)	�	2,249			�	(407		)
Net gain on sales of real estate properties	�	212,685			�				�	84,141			�
Net gain on sales of land parcels	�	5,277			�	12,227			�	3,431			�	48
Income (loss) from continuing operations	�	657,101			�	(168,174		)	�	226,959			�	69,141
Discontinued operations, net	�	1,582			�	2,073,527			�	82			�	46,729
Net income	�	658,683			�	1,905,353			�	227,041			�	115,870
Net (income) loss attributable to Noncontrolling Interests:	�	�			�	�			�	�			�	�
Operating Partnership	�	(24,831		)	�	(75,278		)	�	(8,558		)	�	(4,331		)
Partially Owned Properties	�	(2,544		)	�	538			�	(744		)	�	(563		)
Net income attributable to controlling interests	�	631,308			�	1,830,613			�	217,739			�	110,976
Preferred distributions	�	(4,145		)	�	(4,145		)	�	(1,036		)	�	(1,036		)
Net income available to Common Shares	�	$	627,163		�	$	1,826,468		�	$	216,703		�	$	109,940
�	�	�			�	�			�	�			�	�
Earnings per share� basic:	�	�			�	�			�	�			�	�
Income (loss) from continuing operations available to Common Shares	�	$	1.73		�	$	(0.47	)	�	$	0.60		�	$	0.18
Net income available to Common Shares	�	$	1.74		�	$	5.16		�	$	0.60		�	$	0.31
Weighted average Common Shares outstanding	�	361,181			�	354,305			�	362,018			�	359,919
�	�	�			�	�			�	�			�	�
Earnings per share� diluted:	�	�			�	�			�	�			�	�
Income (loss) from continuing operations available to Common Shares	�	$	1.72		�	$	(0.47	)	�	$	0.59		�	$	0.18
Net income available to Common Shares	�	$	1.73		�	$	5.16		�	$	0.59		�	$	0.30
Weighted average Common Shares outstanding	�	377,735			�	354,305			�	378,886			�	375,860
�	�	�			�	�			�	�			�	�
Distributions declared per Common Share outstanding	�	$	2.00		�	$	1.85		�	$	0.50		�	$	0.65

��

Equity Residential

Consolidated Statements of Funds From Operations and Normalized Funds From Operations

(Amounts in thousands except per share data)

(Unaudited)



�	�	�	Year Ended December 31,							�	Quarter Ended December 31,
�	�	�	2014			�	2013			�	2014			�	2013
Net income		�	$	658,683		�	$	1,905,353		�	$	227,041		�	$	115,870
Net (income) loss attributable to Noncontrolling Interests Partially Owned Properties		�	(2,544		)	�	538			�	(744		)	�	(563		)
Preferred distributions		�	(4,145		)	�	(4,145		)	�	(1,036		)	�	(1,036		)
Net income available to Common Shares and Units		�	651,994			�	1,901,746			�	225,261			�	114,271
�		�	�			�	�			�	�			�	�
Adjustments:		�	�			�	�			�	�			�	�
Depreciation		�	758,861			�	978,973			�	193,089			�	182,740
Depreciation Non-real estate additions		�	(4,643		)	�	(4,806		)	�	(1,158		)	�	(1,180		)
Depreciation Partially Owned Properties		�	(4,285		)	�	(6,499		)	�	(1,074		)	�	(1,094		)
Depreciation Unconsolidated Properties		�	6,754			�	3,661			�	1,572			�	1,330
Net (gain) loss on sales of unconsolidated entities operating assets		�	(4,902		)	�	(7		)	�	(4,902		)	�	9
Net (gain) on sales of real estate properties		�	(212,685		)	�				�	(84,141		)	�
Discontinued operations:		�	�			�	�			�	�			�	�
Depreciation		�				�	34,380			�				�	516
Net (gain) loss on sales of discontinued operations		�	(179		)	�	(2,036,505		)	�	44			�	(45,928		)
Net incremental gain on sales of condominium units		�				�	8			�				�	1
Gain on sale of Equity Corporate Housing (ECH)		�				�	1,470			�				�	761
FFO available to Common Shares and Units (1)�(3) (4)		�	1,190,915			�	872,421			�	328,691			�	251,426
�		�	�			�	�			�	�			�	�
Adjustments (see page 26 for additional detail):		�	�			�	�			�	�			�	�
Asset impairment and valuation allowances		�				�				�				�
Property acquisition costs and write-off of pursuit costs		�	8,248			�	79,365			�	(466		)	�	671
Debt extinguishment (gains) losses, including prepayment penalties, preferred share		�	�			�	�			�	�			�	�
��redemptions and non-cash convertible debt discounts		�	(1,110		)	�	121,730			�	(1,623		)	�	42,910
(Gains) losses on sales of non-operating assets, net of income and other tax expense		�	�			�	�			�	�			�	�
��(benefit)		�	(1,866		)	�	(17,908		)	�	37			�	(4,183		)
Other miscellaneous non-comparable items		�	259			�	1,465			�	(932		)	�	(1,896		)
Normalized FFO available to Common Shares and Units (2)�(3) (4)		�	$	1,196,446		�	$	1,057,073		�	$	325,707		�	$	288,928
�	�	�	�			�	�			�	�			�	�
FFO (1)�(3)		�	$	1,195,060		�	$	876,566		�	$	329,727		�	$	252,462
Preferred distributions		�	(4,145		)	�	(4,145		)	�	(1,036		)	�	(1,036		)
FFO available to Common Shares and Units - basic and diluted (1)�(3)�(4)		�	$	1,190,915		�	$	872,421		�	$	328,691		�	$	251,426
FFO per share and Unit - basic		�	$	3.18		�	$	2.37		�	$	0.87		�	$	0.67
FFO per share and Unit - diluted		�	$	3.15		�	$	2.35		�	$	0.87		�	$	0.67
�	�	�	�			�	�			�	�			�	�
Normalized FFO (2)�(3)		�	$	1,200,591		�	$	1,061,218		�	$	326,743		�	$	289,964
Preferred distributions		�	(4,145		)	�	(4,145		)	�	(1,036		)	�	(1,036		)
Normalized FFO available to Common Shares and Units - basic and diluted�(2)�(3)�(4)		�	$	1,196,446		�	$	1,057,073		�	$	325,707		�	$	288,928
Normalized FFO per share and Unit - basic		�	$	3.19		�	$	2.87		�	$	0.87		�	$	0.77
Normalized FFO per share and Unit - diluted		�	$	3.17		�	$	2.85		�	$	0.86		�	$	0.77
�	�	�	�			�	�			�	�			�	�
Weighted average Common Shares and Units outstanding - basic		�	374,899			�	368,038			�	375,711			�	373,643
Weighted average Common Shares and Units outstanding - diluted		�	377,735			�	370,478			�	378,886			�	375,860
�	�	�	�			�	�			�	�			�	�
Note:	See page 26 for additional detail regarding the adjustments from FFO to Normalized FFO. See page 28 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.

��

Equity Residential

Consolidated Balance Sheets

(Amounts in thousands except for share amounts)

(Unaudited)



�	�	December�31, 2014			�	December�31, 2013
ASSETS	�	�			�	�
Investment in real estate	�	�			�	�
Land	�	$	6,295,404		�	$	6,192,512
Depreciable property	�	19,851,504			�	19,226,047
Projects under development	�	1,343,919			�	988,867
Land held for development	�	184,556			�	393,522
Investment in real estate	�	27,675,383			�	26,800,948
Accumulated depreciation	�	(5,432,805		)	�	(4,807,709		)
Investment in real estate, net	�	22,242,578			�	21,993,239
Cash and cash equivalents	�	40,080			�	53,534
Investments in unconsolidated entities	�	105,434			�	178,526
Deposits� restricted	�	72,303			�	103,567
Escrow deposits� mortgage	�	48,085			�	42,636
Deferred financing costs, net	�	58,380			�	58,486
Other assets	�	383,754			�	404,557
Total assets	�	$	22,950,614		�	$	22,834,545
�	�	�			�	�
LIABILITIES AND EQUITY	�	�			�	�
Liabilities:	�	�			�	�
Mortgage notes payable	�	$	5,086,515		�	$	5,174,166
Notes, net	�	5,425,346			�	5,477,088
Lines of credit	�	333,000			�	115,000
Accounts payable and accrued expenses	�	153,590			�	118,791
Accrued interest payable	�	89,540			�	78,309
Other liabilities	�	389,915			�	347,748
Security deposits	�	75,633			�	71,592
Distributions payable	�	188,566			�	243,511
Total liabilities	�	11,742,105			�	11,626,205
�	�	�			�	�
Commitments and contingencies	�	�			�	�
�	�	�			�	�
Redeemable Noncontrolling Interests� Operating Partnership	�	500,733			�	363,144
Equity:	�	�			�	�
Shareholders equity:	�	�			�	�
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 1,000,000 shares issued and outstanding as of December 31, 2014 and December 31, 2013	�	50,000			�	50,000
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 362,855,454 shares issued and outstanding as of December 31, 2014 and 360,479,260 shares issued and outstanding as of December�31, 2013	�	3,629			�	3,605
Paid in capital	�	8,536,340			�	8,561,500
Retained earnings	�	1,950,639			�	2,047,258
Accumulated other comprehensive (loss)	�	(172,152		)	�	(155,162		)
Total shareholders equity	�	10,368,456			�	10,507,201
Noncontrolling Interests:	�	�			�	�
Operating Partnership	�	214,411			�	211,412
Partially Owned Properties	�	124,909			�	126,583
Total Noncontrolling Interests	�	339,320			�	337,995
Total equity	�	10,707,776			�	10,845,196
Total liabilities and equity	�	$	22,950,614		�	$	22,834,545

��

Equity Residential

Portfolio Summary

As of December 31, 2014

�

% of

�

Average

�

Apartment

�

Stabilized

�

Rental

Markets/Metro Areas

�

Properties

�

Units

�

NOI (1)

�

Rate (2)

�

Core:

�

Washington DC

�

18,652

�

17.5

�

2,196

New York

�

10,330

�

16.3

�

3,863

San Francisco

�

13,208

�

14.3

�

2,403

Los Angeles

�

13,403

�

13.0

�

2,208

Boston

�

7,816

�

10.1

�

2,889

South Florida

�

11,434

�

7.4

�

1,629

Seattle

�

8,542

�

7.2

�

1,896

Denver

�

6,935

�

4.7

�

1,438

San Diego

�

3,505

�

3.1

�

1,982

Orange County, CA

�

3,490

�

2.9

�

1,790

Subtotal Core

�

362

�

97,315

�

96.5

�

2,291

�

Non-Core:

�

Inland Empire, CA

�

3,081

�

2.1

�

1,570

Orlando

�

827

�

0.4

�

1,218

All Other Markets

�

2,969

�

1.0

�

1,178

Subtotal Non-Core

�

6,877

�

3.5

�

1,357

Total

�

389

�

104,192

�

100.0

�

2,229

�

Military Housing

�

5,033

�

Grand Total

�

391

�

109,225

�

100.0

�

2,229

�

Note: Projects under development are not included in the Portfolio Summary until construction has been completed.

�

(1) % of Stabilized NOI includes budgeted 2015 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.

�

(2) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the last month of the period presented.



4th Quarter 2014 Earnings Release	�	8

��

Equity Residential

�

Portfolio as of December 31, 2014

�

Properties

�

Apartment
Units

�

Wholly Owned Properties

�

364

�

98,287

�

Master-Leased Properties - Consolidated

�

853

�

Partially Owned Properties - Consolidated

�

3,771

�

Partially Owned Properties - Unconsolidated

�

1,281

�

Military Housing

�

5,033

�

391

�

109,225

�

Portfolio Rollforward Q4 2014

($ in thousands)

�

Properties

�

Apartment

Units

�

Purchase/

(Sale) Price

�

Cap Rate

�

9/30/2014

396

�

111,087

�

Acquisitions:

�

Consolidated:

�

Rental Properties - Stabilized

�

273

�

94,240

�

4.8

Dispositions:

�

Consolidated:

�

Rental Properties

)

�

(1,775

)

�

(269,868

)

�

5.9

Land Parcel (one)

�

(32,100

)

�

Unconsolidated:

�

Rental Properties (1)

)

�

(388

)

�

(62,500

)

�

5.6

Configuration Changes

�

12/31/2014

391

�

109,225

�

Portfolio Rollforward 2014

($ in thousands)

�

Properties

�

Apartment
Units

�

Purchase/
(Sale) Price

�

Cap Rate

�

12/31/2013

390

�

109,855

�

Acquisitions:

�

Consolidated:

�

Rental Properties - Stabilized

�

1,011

�

363,240

�

4.8

Rental Properties - Not Stabilized (2)

�

342

�

106,610

�

5.4

Land Parcels (two)

�

28,790

�

Dispositions:

�

Consolidated:

�

Rental Properties

(10

)

�

(3,092

)

�

(466,968

)

�

6.1

Land Parcels (three)

�

(62,602

)

�

Unconsolidated:

�

Rental Properties (1)

)

�

(388

)

�

(62,500

)

�

5.6

Completed Developments - Consolidated

�

1,542

�

Configuration Changes

�

(45

)

�

12/31/2014

391

�

109,225

�

(1)

The Company owned an 85% interest in this unconsolidated rental property. Sale price listed is the gross sale price.

(2)

The Company acquired two properties in the second quarter of 2014, one that had just completed lease up and the other which was still in lease up, both of which are expected to stabilize in their second year of ownership at a 6.4% yield on cost and a 4.9% yield on cost, respectively.



4th Quarter 2014 Earnings Release	�	9

��

�

Equity Residential

�

Fourth Quarter 2014 vs. Fourth Quarter 2013

�

Same Store Results/Statistics for 98,421 Same Store Apartment Units

�

$ in thousands (except for Average Rental Rate)

�

Results

�

Statistics

�

Average
Rental
Rate (2)

�

Description

�

Revenues

�

Expenses

�

NOI (1)

�

Occupancy

�

Turnover

�

Q4 2014

�

632,740

�

203,787

�

428,953

�

2,233

�

96.0

�

12.4

�

Q4 2013

�

603,015

�

199,463

�

403,552

�

2,143

�

95.4

�

12.2

�

Change

�

29,725

�

4,324

�

25,401

�

0.6

�

0.2

�

Change

�

4.9

�

2.2

�

6.3

�

4.2

�

Fourth Quarter 2014 vs. Third Quarter 2014

�

Same Store Results/Statistics for 99,726 Same Store Apartment Units

�

$ in thousands (except for Average Rental Rate)

�

Results

�

Statistics

�

Average
Rental
Rate (2)

�

Description

�

Revenues

�

Expenses

�

NOI (1)

�

Occupancy

�

Turnover

�

Q4 2014

�

641,086

�

206,421

�

434,665

�

2,233

�

96.0

�

12.4

�

Q3 2014

�

638,016

�

212,764

�

425,252

�

2,221

�

96.1

�

17.2

�

Change

�

3,070

�

(6,343

)

�

9,413

�

(0.1

�

(4.8

�

Change

�

0.5

�

(3.0

�

2.2

�

0.5

�

2014 vs. 2013

�

Same Store Results/Statistics for 97,911 Same Store Apartment Units

�

$ in thousands (except for Average Rental Rate)

�

Results

�

Statistics

�

Average
Rental
Rate (2)

�

Description

�

Revenues

�

Expenses

�

NOI (1)

�

Occupancy

�

Turnover

�

2014

�

2,475,933

�

830,697

�

1,645,236

�

2,202

�

95.8

�

55.0

�

2013

�

2,374,350

�

815,865

�

1,558,485

�

2,119

�

95.4

�

55.5

�

Change

�

101,583

�

14,832

�

86,751

�

0.4

�

(0.5

�

Change

�

4.3

�

1.8

�

5.6

�

3.9

�

Note: Same store results/statistics include the stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.

�

(1)

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 its operating performance because it is a direct measure of the actual operating results of the Company's apartment communities. See page 28 for reconciliations from operating income.

�

(2)

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



4th Quarter 2014 Earnings Release	�	10

��

Equity Residential

Fourth Quarter 2014 vs. Fourth Quarter 2013

Same Store Results/Statistics by Market

�

Increase (Decrease) from Prior Year's Quarter

�

Q4 2014
% of
Actual
NOI

�

Q4 2014
Average
Rental
Rate (1)

�

Q4 2014
Weighted
Average
Occupancy %

�

Average
Rental
Rate (1)

�

Apartment
Units

�

Markets/Metro Areas

�

�Revenues

�

Expenses

�

�NOI

�

Occupancy

�

Core:

�

Washington DC

�

17,741

�

18.0

�

2,219

�

95.3

�

(0.1

�

5.2

�

(2.4

�

(0.4

�

0.3

New York

�

10,330

�

17.1

�

3,850

�

96.8

�

4.3

�

3.5

�

4.8

�

3.4

�

0.8

San Francisco

�

12,764

�

14.5

�

2,387

�

96.8

�

10.2

�

(1.0

�

15.7

�

8.5

�

1.4

Los Angeles

�

11,104

�

10.7

�

2,152

�

96.1

�

5.8

�

0.6

�

8.5

�

4.8

�

0.8

Boston

�

7,722

�

10.5

�

2,890

�

96.4

�

3.7

�

3.2

�

3.9

�

3.0

�

0.6

South Florida

�

10,537

�

7.4

�

1,613

�

95.6

�

5.9

�

(1.7

�

10.4

�

5.6

�

0.3

Seattle

�

7,752

�

6.7

�

1,882

�

95.5

�

7.7

�

5.1

�

8.9

�

6.8

�

0.8

Denver

�

6,935

�

4.9

�

1,444

�

95.8

�

9.4

�

1.0

�

12.7

�

8.7

�

0.5

San Diego

�

3,505

�

3.3

�

1,990

�

96.5

�

4.6

�

(0.4

�

7.0

�

3.9

�

0.8

Orange County, CA

�

3,490

�

3.1

�

1,804

�

96.6

�

5.3

�

0.5

�

7.2

�

4.3

�

0.8

Subtotal Core

�

91,880

�

96.2

�

2,295

�

96.1

�

5.0

�

2.1

�

6.4

�

4.2

�

0.7

�

Non-Core:

�

Inland Empire, CA

�

3,081

�

2.3

�

1,576

�

95.4

�

3.4

�

(1.9

�

6.0

�

3.9

�

(0.4

Orlando

�

827

�

0.4

�

1,225

�

95.9

�

3.8

�

10.4

�

(0.2

�

1.7

�

2.0

All Other Markets

�

2,633

�

1.1

�

1,141

�

96.0

�

4.1

�

6.3

�

2.4

�

3.6

�

0.4

Subtotal Non-Core

�

6,541

�

3.8

�

1,356

�

95.7

�

3.7

�

2.8

�

4.2

�

3.4

�

0.2

�

Total

�

98,421

�

100.0

�

2,233

�

96.0

�

4.9

�

2.2

�

6.3

�

4.2

�

0.6

�

Note: Same store results/statistics include 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.

�

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

�



4th Quarter 2014 Earnings Release	�	11

��

Equity Residential

Fourth Quarter 2014 vs. Third Quarter 2014

Same Store Results/Statistics by Market

�

Increase (Decrease) from Prior Quarter

�

Q4 2014
% of
Actual
NOI

�

Q4 2014
Average
Rental
Rate (1)

�

Q4 2014
Weighted
Average
Occupancy %

�

Average
Rental
Rate (1)

�

Apartment Units

�

Markets/Metro Areas

�

�Revenues

�

Expenses

�

�NOI

�

Occupancy

�

Core:

�

Washington DC

�

18,130

�

18.1

�

2,209

�

95.4

�

(1.7

�

(4.7

�

(0.3

�

(1.1

�

(0.5

New York

�

10,330

�

16.9

�

3,850

�

96.8

�

0.2

�

0.8

�

(0.1

�

0.0

�

0.2

San Francisco

�

12,764

�

14.3

�

2,387

�

96.8

�

2.3

�

(2.7

�

4.5

�

1.7

�

0.6

Los Angeles

�

11,758

�

11.3

�

2,183

�

96.0

�

0.5

�

(5.9

�

3.9

�

0.6

�

(0.1

Boston

�

7,722

�

10.4

�

2,890

�

96.4

�

1.6

�

(1.5

�

3.1

�

1.4

�

0.2

South Florida

�

10,665

�

7.4

�

1,614

�

95.6

�

1.1

�

(5.0

�

4.6

�

1.0

�

0.1

Seattle

�

7,886

�

6.7

�

1,880

�

95.5

�

0.4

�

(1.8

�

1.5

�

0.9

�

(0.5

Denver

�

6,935

�

4.9

�

1,444

�

95.8

�

1.9

�

(7.5

�

5.7

�

2.0

�

(0.2

San Diego

�

3,505

�

3.2

�

1,990

�

96.5

�

0.5

�

(3.6

�

2.4

�

0.5

�

0.1

Orange County, CA

�

3,490

�

3.1

�

1,804

�

96.6

�

1.1

�

(5.5

�

3.8

�

0.7

�

0.3

Subtotal Core

�

93,185

�

96.3

�

2,294

�

96.1

�

0.5

�

(3.1

�

2.3

�

0.5

�

0.0

�

Non-Core:

�

Inland Empire, CA

�

3,081

�

2.2

�

1,576

�

95.4

�

(0.8

�

(5.8

�

1.7

�

(0.1

�

(0.6

Orlando

�

827

�

0.4

�

1,225

�

95.9

�

(0.8

�

1.0

�

(2.0

�

(1.0

�

0.2

All Other Markets

�

2,633

�

1.1

�

1,141

�

96.0

�

0.6

�

4.1

�

(2.0

�

0.9

�

(0.2

Subtotal Non-Core

�

6,541

�

3.7

�

1,356

�

95.7

�

(0.3

�

(1.1

�

0.2

�

0.1

�

(0.4

�

Total

�

99,726

�

100.0

�

2,233

�

96.0

�

0.5

�

(3.0

�

2.2

�

0.5

�

(0.1

�

Note: Same store results/statistics include 19,206 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.

�

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

�



4th Quarter 2014 Earnings Release	�	12

��

Equity Residential

2014 vs. 2013

Same Store Results/Statistics by Market

�

Increase (Decrease) from Prior Year

�

2014
% of
Actual
NOI

�

2014
Average
Rental
Rate (1)

�

2014
Weighted
Average
Occupancy %

�

Average
Rental
Rate (1)

�

Apartment Units

�

Markets/Metro Areas

�

�Revenues

�

Expenses

�

�NOI

�

Occupancy

�

Core:

�

Washington DC

�

17,553

�

18.4

�

2,225

�

95.2

�

(0.5

�

2.2

�

(1.8

�

(0.6

�

0.0

New York

�

10,330

�

17.3

�

3,826

�

96.3

�

3.9

�

3.6

�

4.1

�

3.5

�

0.4

San Francisco

�

12,764

�

14.2

�

2,315

�

96.0

�

8.9

�

(1.7

�

14.5

�

8.1

�

0.7

Los Angeles

�

11,104

�

10.7

�

2,117

�

95.7

�

4.8

�

0.4

�

7.3

�

4.5

�

0.2

Boston

�

7,722

�

10.5

�

2,847

�

96.0

�

3.5

�

3.1

�

3.8

�

2.8

�

0.7

South Florida

�

10,537

�

7.4

�

1,587

�

95.6

�

5.0

�

1.2

�

7.3

�

4.6

�

0.3

Seattle

�

7,430

�

6.4

�

1,839

�

95.6

�

7.3

�

4.3

�

8.7

�

6.9

�

0.3

Denver

�

6,935

�

4.9

�

1,395

�

95.8

�

7.8

�

0.8

�

10.8

�

7.7

�

0.1

San Diego

�

3,505

�

3.3

�

1,963

�

96.0

�

4.4

�

2.4

�

5.4

�

4.0

�

0.4

Orange County, CA

�

3,490

�

3.1

�

1,777

�

96.0

�

5.0

�

0.1

�

7.1

�

4.7

�

0.3

Subtotal Core

�

91,370

�

96.2

�

2,264

�

95.8

�

4.3

�

1.8

�

5.6

�

3.9

�

0.4

�

Non-Core:

�

Inland Empire, CA

�

3,081

�

2.3

�

1,558

�

95.7

�

3.7

�

2.4

�

4.4

�

3.5

�

0.3

Orlando

�

827

�

0.4

�

1,223

�

95.0

�

1.8

�

3.3

�

0.8

�

2.3

�

(0.5

All Other Markets

�

2,633

�

1.1

�

1,124

�

96.2

�

3.5

�

2.7

�

4.2

�

2.5

�

1.0

Subtotal Non-Core

�

6,541

�

3.8

�

1,341

�

95.8

�

3.4

�

2.7

�

3.9

�

3.0

�

0.4

�

Total

�

97,911

�

100.0

�

2,202

�

95.8

�

4.3

�

1.8

�

5.6

�

3.9

�

0.4

�

Note: Same store results/statistics include 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.

�

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

�



4th Quarter 2014 Earnings Release	�	13

��

Equity Residential

�

Fourth Quarter 2014 vs. Fourth Quarter 2013

Same Store Operating Expenses for 98,421 Same Store Apartment Units

$ in thousands

�

%�of�Actual
Q4 2014
Operating
Expenses

�

Actual
Q4 2014

�

Actual
Q4 2013

�

$
Change

�

%
Change

�

Real estate taxes

72,118

�

68,299

�

3,819

�

5.6

�

35.4

On-site payroll (1)

41,140

�

42,049

�

(909

)

�

(2.2

�

20.2

Utilities (2)

29,757

�

28,273

�

1,484

�

5.2

�

14.6

Repairs and maintenance (3)

24,296

�

24,001

�

295

�

1.2

�

11.9

Property management costs (4)

18,982

�

19,900

�

(918

)

�

(4.6

�

9.3

Insurance

6,111

�

6,180

�

(69

)

�

(1.1

�

3.0

Leasing and advertising

3,059

�

3,059

�

1.5

Other on-site operating expenses (5)

8,324

�

7,702

�

622

�

8.1

�

4.1

�

Same store operating expenses

203,787

�

199,463

�

4,324

�

2.2

�

100.0

�

2014 vs. 2013

Same Store Operating Expenses for 97,911 Same Store Apartment Units

$ in thousands

�

%�of�Actual
2014
Operating
Expenses

�

Actual
2014

�

Actual
2013

�

$
Change

�

%
Change

�

Real estate taxes

287,214

�

271,888

�

15,326

�

5.6

�

34.6

On-site payroll (1)

174,273

�

174,589

�

(316

)

�

(0.2

�

21.0

Utilities (2)

125,235

�

119,253

�

5,982

�

5.0

�

15.1

Repairs and maintenance (3)

100,496

�

100,319

�

177

�

0.2

�

12.1

Property management costs (4)

74,278

�

78,354

�

(4,076

)

�

(5.2

�

8.9

Insurance

24,354

�

24,626

�

(272

)

�

(1.1

�

2.9

Leasing and advertising

10,802

�

12,072

�

(1,270

)

�

(10.5

�

1.3

Other on-site operating expenses (5)

34,045

�

34,764

�

(719

)

�

(2.1

�

4.1

�

Same store operating expenses

830,697

�

815,865

�

14,832

�

1.8

�

100.0

�

Note: Same store operating results include the stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.

�

(1)

On-site payroll - Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.

�

(2)

Utilities - Represents gross expenses prior to any recoveries under the Resident Utility Billing System ("RUBS"). Recoveries are reflected in rental income.

�

(3)

Repairs and maintenance - Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.

�

(4)

Property management costs - Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology.

�

(5)

Other on-site operating expenses - Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees.



4th Quarter 2014 Earnings Release	�	14

��

Equity Residential

�

Debt Summary as of December�31, 2014

(Amounts in thousands)

�

Weighted
Average
Maturities
(years)

�

Weighted
Average
Rates (1)

�

Amounts (1)

�

% of Total

�

Secured

�

5,086,515

�

46.9

�

4.21

�

7.5

Unsecured

�

5,758,346

�

53.1

�

4.79

�

7.7

�

Total

10,844,861

�

100.0

�

4.52

�

7.6

�

Fixed Rate Debt:

�

Secured Conventional

�

4,351,301

�

40.1

�

4.82

�

5.9

Unsecured Public

�

4,974,154

�

45.9

�

5.45

�

8.3

�

Fixed Rate Debt

9,325,455

�

86.0

�

5.15

�

7.2

�

Floating Rate Debt:

�

Secured Conventional

�

7,985

�

0.1

�

2.08

�

19.1

Secured Tax Exempt

�

727,229

�

6.7

�

0.66

�

16.2

Unsecured Public (2)

�

451,192

�

4.1

�

1.15

�

4.5

Unsecured Revolving Credit Facility

�

333,000

�

3.1

�

0.95

�

3.3

�

Floating Rate Debt

�

1,519,406

�

14.0

�

0.92

�

9.9

�

Total

�

10,844,861

�

100.0

�

4.52

�

7.6

�

(1) Net of the effect of any derivative instruments. Weighted average rates are for the year ended December 31, 2014.

�

(2) Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.

�

Note: The Company capitalized interest of approximately $52.8 million and $47.3 million during the years ended December 31, 2014 and 2013, respectively. The Company capitalized interest of approximately $14.7 million and $14.4 million during the quarters ended December 31, 2014 and 2013, respectively.

______________________________________________________________________________________________________

Debt Maturity Schedule as of December 31, 2014

(Amounts in thousands)

�

Weighted

Average Rates

on Fixed

Rate Debt (1)

�

Weighted

Average

Rates on

Total Debt (1)

�

Fixed

Rate (1)

�

Floating

Rate (1)

�

Year

�

Total

�

% of Total

�

2015

�

408,420

�

408,420

�

3.8

�

6.32

�

6.32

2016

�

1,192,798

�

1,192,798

�

11.0

�

5.34

�

5.34

2017

�

1,346,252

�

456

�

1,346,708

�

12.4

�

6.16

�

6.16

2018

�

83,851

�

430,659

(2)

514,510

�

4.7

�

5.61

�

1.72

2019

�

806,106

�

472,363

1,278,469

�

11.8

�

5.48

�

3.76

2020

�

1,678,020

�

809

�

1,678,829

�

15.5

�

5.49

�

5.49

2021

�

1,194,624

�

856

�

1,195,480

�

11.0

�

4.63

�

4.63

2022

�

228,273

�

905

�

229,178

�

2.1

�

3.16

�

3.17

2023

�

1,331,497

�

956

�

1,332,453

�

12.3

�

3.74

�

3.74

2024

�

2,497

�

1,011

�

3,508

�

0.0

�

4.97

�

5.14

2025+

�

1,022,417

�

673,977

�

1,696,394

�

15.7

�

4.97

�

3.17

Premium/(Discount)

�

30,700

�

(62,586

)

�

(31,886

)

�

(0.3

�

N/A

�

N/A

�

Total

�

9,325,455

�

1,519,406

�

10,844,861

�

100.0

�

5.13

�

4.49

�

(1) Net of the effect of any derivative instruments. Weighted average rates are as of December 31, 2014.

�

(2) Includes $333.0 million outstanding on the Company's unsecured revolving credit facility. As of December 31, 2014, there was approximately $2.12 billion available on this facility.

�



4th Quarter 2014 Earnings Release	�	15

��

Equity Residential

Unsecured Debt Summary as of December 31, 2014

(Amounts in thousands)

�

Unamortized

Premium/(Discount)

�

Coupon

Rate

�

Due

Date

�

Face

Amount

�

Net

Balance

�

Fixed Rate Notes:

�

6.584%

�

04/13/15

�

300,000

�

(27

)

�

299,973

�

5.125%

�

03/15/16

�

500,000

�

(63

)

�

499,937

�

5.375%

�

08/01/16

�

400,000

�

(294

)

�

399,706

�

5.750%

�

06/15/17

�

650,000

�

(1,272

)

�

648,728

�

7.125%

�

10/15/17

�

150,000

�

(181

)

�

149,819

�

2.375%

�

07/01/19

(1)

450,000

�

(405

)

�

449,595

Fair Value Derivative Adjustments

�

(1)

(450,000

)

�

405

�

(449,595

)

�

4.750%

�

07/15/20

�

600,000

�

(2,518

)

�

597,482

�

4.625%

�

12/15/21

�

1,000,000

�

(2,635

)

�

997,365

�

3.000%

�

04/15/23

�

500,000

�

(3,671

)

�

496,329

�

7.570%

�

08/15/26

�

140,000

�

140,000

�

4.500%

�

07/01/44

�

750,000

�

(5,185

)

�

744,815

�

4,990,000

�

(15,846

)

�

4,974,154

Floating Rate Notes:

�

07/01/19

(1)

450,000

�

(405

)

�

449,595

Fair Value Derivative Adjustments

�

07/01/19

(1)

1,597

�

1,597

�

451,597

�

(405

)

�

451,192

�

Revolving Credit Facility:

�

LIBOR+1.05%

�

04/01/18

(2)(3)�

333,000

�

333,000

�

Total Unsecured Debt

�

5,774,597

�

(16,251

)

�

5,758,346

)

Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.

�

)

Facility is private. All other unsecured debt is public.

�

)

Represents the Company's $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The interest rate on advances under the credit facility will generally be LIBOR plus a spread (currently 1.05%) and an annual facility fee (currently 15 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. As of December 31, 2014, there was approximately $2.12 billion available on this facility.



4th Quarter 2014 Earnings Release	�	16

��



Equity Residential
�	�	�	�	�	�
Selected Unsecured Public Debt Covenants
�	�	�	�	�	�
�	�	�	December�31, 2014	�	September�30, 2014
�	�	�	December�31, 2014	�	September�30, 2014
�	�	�	�	�	�
�	Total Debt to Adjusted Total Assets (not to exceed 60%)	�	39.2%	�	39.7%
�	�	�	�	�	�
�	Secured Debt to Adjusted Total Assets (not to exceed 40%)	�	18.4%	�	18.4%
�	�	�	�	�	�
�	Consolidated Income Available for Debt Service to	�	�	�	�
�	Maximum Annual Service Charges	�	�	�	�
�	(must be at least 1.5 to 1)	�	3.38	�	3.23
�	�	�	�	�	�
�	Total Unsecured Assets to Unsecured Debt	�	336.5%	�	329.5%
�	(must be at least 150%)	�	�	�	�
�	�	�	�	�	�
Note:	These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP.
�	�	�	�	�	�
�	�	�	�	�	�
Selected Credit Ratios (1)
�	�	�	�	�	�
�	�	�	December 31, 2014	�	September 30, 2014
�	�	�	�	�	�
�	Total debt to Normalized EBITDA	�	6.45x	�	6.67x
�	Net debt to Normalized EBITDA	�	6.40x	�	6.63x
�	�
�
Note:	See page 25 for the footnote referenced above and the Normalized EBITDA reconciliations.



4th Quarter 2014 Earnings Release	�	17

��

Equity Residential

�

Capital Structure as of December�31, 2014

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

�

Secured Debt

�

5,086,515

�

46.9

�

Unsecured Debt

�

5,758,346

�

53.1

�

Total Debt

�

10,844,861

�

100.0

�

28.5

�

Common Shares (includes Restricted Shares)

�

362,855,454

�

96.2

�

Units (includes OP Units and Restricted Units)

�

14,298,691

�

3.8

�

Total Shares and Units

�

377,154,145

�

100.0

�

Common Share Price at December�31, 2014

�

71.84

�

27,094,754

�

99.8

�

Perpetual Preferred Equity (see below)

�

50,000

�

0.2

�

Total Equity

�

27,144,754

�

100.0

�

71.5

�

Total Market Capitalization

�

37,989,615

�

100.0

__________________________________________________________________________________________________________________________________________

Perpetual Preferred Equity as of December�31, 2014

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

�

Annual

Dividend

Per Share

�

Annual

Dividend

Amount

�

Redemption

Date

�

Outstanding

�

Liquidation

Value

�

Series

�

Preferred Shares:

�

8.29% Series K

�

12/10/26

�

1,000,000

�

50,000

�

4.145

�

4,145

�

Total Perpetual Preferred Equity

�

1,000,000

�

50,000

�

4,145

�



4th Quarter 2014 Earnings Release	�	18

��

Equity Residential

Common Share and Unit

Weighted Average Amounts Outstanding

�

2014

�

2013

�

Q4 2014

�

Q4 2013

�

Weighted Average Amounts Outstanding for Net Income Purposes:

�

Common Shares - basic

�

361,181,497

�

354,305,373

�

362,017,851

�

359,918,500

Shares issuable from assumed conversion/vesting of (1):

�

- OP Units

�

13,717,844

�

13,692,848

�

13,724,142

- long-term compensation shares/units

�

2,836,034

�

3,174,890

�

2,217,058

�

Total Common Shares and Units - diluted (1)

�

377,735,375

�

354,305,373

�

378,885,589

�

375,859,700

�

Weighted Average Amounts Outstanding for FFO and Normalized
FFO Purposes:

�

Common Shares - basic

�

361,181,497

�

354,305,373

�

362,017,851

�

359,918,500

OP Units - basic

�

13,717,844

�

13,733,055

�

13,692,848

�

13,724,142

�

Total Common Shares and OP Units - basic

�

374,899,341

�

368,038,428

�

375,710,699

�

373,642,642

Shares issuable from assumed conversion/vesting of:

�

- long-term compensation shares/units

�

2,836,034

�

2,439,738

�

3,174,890

�

2,217,058

�

Total Common Shares and Units - diluted

�

377,735,375

�

370,478,166

�

378,885,589

�

375,859,700

�

Period Ending Amounts Outstanding:

�

Common Shares (includes Restricted Shares)

�

362,855,454

�

360,479,260

�

Units (includes OP Units and Restricted Units)

�

14,298,691

�

14,180,376

�

Total Shares and Units

�

377,154,145

�

374,659,636

�

(1)

Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations during the year ended December 31, 2013.



4th Quarter 2014 Earnings Release	�	19

��

Equity Residential

Partially Owned Entities as of December 31, 2014

(Amounts in thousands except for project and apartment unit amounts)

�

Consolidated

�

Unconsolidated

�

Development Projects

�

Development Projects

�

Held for
and/or Under
Development (4)

�

Completed, Not Stabilized (5)

�

Operating

�

Operating

�

Total

�

Total

�

Total projects (1)

�

Total apartment units (1)

�

3,771

�

3,771

�

444

�

837

�

1,281

�

Operating information for the year
ended 12/31/14 (at 100%):

�

Operating revenue

�

88,157

�

88,179

�

10,182

�

15,160

�

25,342

Operating expenses

�

25,674

�

25,765

�

3,781

�

6,818

�

10,599

�

Net operating (loss) income

�

(69

)

�

62,483

�

62,414

�

6,401

�

8,342

�

14,743

Depreciation

�

21,679

�

21,679

�

6,512

�

5,800

�

12,312

General and administrative/other

�

116

�

117

�

209

�

210

�

Operating (loss) income

�

(70

)

�

40,688

�

40,618

�

(112

)

�

2,333

�

2,221

Interest and other income

�

Other expenses

�

(54

)

�

(54

)

�

Interest:

�

Expense incurred, net

�

(15,626

)

�

(15,626

)

�

(5,296

)

�

(3,831

)

�

(9,127

)

Amortization of deferred financing costs

�

(355

)

�

(355

)

�

)

�

)

�

(Loss) income before income and other
taxes and (loss) from investments in
unconsolidated entities

�

(70

)

�

24,664

�

24,594

�

(5,408

)

�

(1,500

)

�

(6,908

)

Income and other tax (expense) benefit

�

(36

)

�

(36

)

�

)

�

)

(Loss) from investments in
unconsolidated entities

�

(1,593

)

�

(1,593

)

�

Net (loss) income

�

(70

)

�

23,035

�

22,965

�

(5,415

)

�

(1,500

)

�

(6,915

)

�

Debt - Secured (2):

�

EQR Ownership (3)

�

282,084

�

282,084

�

19,359

�

15,726

�

35,085

Noncontrolling Ownership

�

78,395

�

78,395

�

77,434

�

62,902

�

140,336

�

Total (at 100%)

�

360,479

�

360,479

�

96,793

�

78,628

�

175,421



(1)	Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed.
�	�	�	�	�	�	�	�	�	�
(2)	All debt is non-recourse to the Company.
�	�	�	�	�	�	�	�	�	�
(3)	Represents the Company's current equity ownership interest.
�	�	�	�	�	�	�	�	�	�
(4)	See Consolidated Projects Under Development - Partially Owned on page 21 for further information.								�
�	�
(5)	Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. See Projects Completed, Not Stabilized - Unconsolidated on page 22 for further information.
�	�
Note:	The above table excludes the Company's interests in unconsolidated joint ventures entered into with AvalonBay ("AVB") in connection with the Archstone transaction. These ventures own certain non-core Archstone assets that are held for sale and succeeded to certain residual Archstone liabilities, such as liability for various employment-related matters as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests have an aggregate liquidation value of $74.6 million at December 31, 2014. The ventures are owned 60% by the Company and 40% by AVB.



4th Quarter 2014 Earnings Release	�	20

�

Equity Residential

�

Consolidated Development and Lease-Up Projects as of December 31, 2014

�

(Amounts in thousands except for project and apartment unit amounts)

�

Projects

�

Location

�

No. of
Apartment
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:

�

Residences at Westgate II (formerly Westgate III)

�

Pasadena, CA

�

55,037

�

45,661

�

45,661

�

Q1 2015

�

Q3 2015

�

170 Amsterdam (2)

�

New York, NY

�

236

�

110,892

�

97,372

�

97,372

�

Q1 2015

�

Q1 2016

�

Parc on Powell (formerly 1333 Powell) (3)

�

Emeryville, CA

�

176

�

87,500

�

71,765

�

71,765

�

Q2 2015

�

Q4 2015

�

Azure (at Mission Bay)

�

San Francisco, CA

�

273

�

189,090

�

146,609

�

146,609

�

Q3 2015

�

Q4 2016

�

Junction 47 (formerly West Seattle)

�

Seattle, WA

�

206

�

67,112

�

44,514

�

44,514

�

Q4 2015

�

Q3 2016

�

Tallman

�

Seattle, WA

�

303

�

84,277

�

55,794

�

55,794

�

Q4 2015

�

Q2 2017

�

Village at Howard Hughes

�

Los Angeles, CA

�

545

�

193,231

�

86,642

�

86,642

�

Q2 2016

�

Q2 2017

�

Potrero

�

San Francisco, CA

�

453

�

224,474

�

72,354

�

72,354

�

Q2 2016

�

Q3 2017

�

Millikan

�

Irvine, CA

�

344

�

102,331

�

41,367

�

41,367

�

Q2 2016

�

Q3 2017

�

Tasman

�

San Jose, CA

�

554

�

214,923

�

119,554

�

119,554

�

Q2 2016

�

Q2 2018

�

340 Fremont (formerly Rincon Hill)

�

San Francisco, CA

�

348

�

287,454

�

106,972

�

106,972

�

Q3 2016

�

Q1 2018

�

One Henry Adams

�

San Francisco, CA

�

241

�

164,434

�

39,923

�

39,923

�

Q4 2016

�

Q4 2017

�

Cascade

�

Seattle, WA

�

483

�

158,494

�

34,543

�

34,543

�

Q2 2017

�

Q1 2019

�

2nd & Pine (4)

�

Seattle, WA

�

398

�

214,742

�

40,122

�

40,122

�

Q3 2017

�

Q2 2019

�

Projects Under Development - Wholly Owned

�

4,648

�

2,153,991

�

1,003,192

�

1,003,192

�

Projects Under Development - Partially Owned:

�

Prism at Park Avenue South (5)

�

New York, NY

�

269

�

251,961

�

226,959

�

226,959

�

Q2 2015

�

Q1 2016

�

Projects Under Development - Partially Owned

�

269

�

251,961

�

226,959

�

226,959

�

Projects Under Development

�

4,917

�

2,405,952

�

1,230,151

�

1,230,151

�

Completed Not Stabilized - Wholly Owned (6):

�

Jia (formerly Chinatown Gateway)

�

Los Angeles, CA

�

280

�

92,920

�

89,611

�

Completed

�

Q1 2015

�

1111 Belle Pre (formerly The Madison)

�

Alexandria, VA

�

360

�

112,072

�

111,433

�

Completed

�

Q1 2015

�

Park Aire (formerly Enclave at Wellington)

�

Wellington, FL

�

268

�

49,000

�

48,917

�

Completed

�

Q1 2015

�

Urbana (formerly Market Street Landing)

�

Seattle, WA

�

287

�

88,774

�

86,789

�

Completed

�

Q2 2015

�

Residences at Westgate I (formerly Westgate II)

�

Pasadena, CA

�

252

�

127,292

�

124,606

�

Completed

�

Q2 2015

�

Projects Completed Not Stabilized - Wholly Owned

�

1,447

�

470,058

�

461,356

�

Projects Completed Not Stabilized

�

1,447

�

470,058

�

461,356

�

Completed and Stabilized During the Quarter - Wholly Owned:

�

Elev� (7)

�

Glendale, CA

�

208

�

70,500

�

70,500

�

Completed

�

Stabilized

�

Reserve at Town Center III

�

Mill Creek, WA

�

21,280

�

21,264

�

Completed

�

Stabilized

�

Projects Completed and Stabilized During the Quarter - Wholly Owned

�

303

�

91,780

�

91,764

�

Projects Completed and Stabilized During the Quarter

�

303

�

91,780

�

91,764

�

Total Consolidated Projects

�

6,667

�

2,967,790

�

1,783,271

�

1,230,151

�

Land Held for Development

�

N/A

�

N/A

�

184,556

�

184,556

�

Total Capital
Cost (1)

�

Q4 2014
NOI

�

NOI CONTRIBUTION FROM CONSOLIDATED DEVELOPMENT PROJECTS

�

Projects Under Development

�

2,405,952

�

(73

)

�

Completed Not Stabilized

�

470,058

�

5,871

�

Completed and Stabilized During the Quarter

�

91,780

�

1,128

�

Total Consolidated Development NOI Contribution

�

2,967,790

�

6,926

�

(1)

Total capital cost represents estimated cost for projects under development and/or developed 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)

170 Amsterdam The land under this project is subject to a long term ground lease.

(3)

Parc on Powell During the fourth quarter of 2014, the Company acquired its partner's 95% interest in this unconsolidated development project which was valued at $87.5 million.� In conjunction with the buyout, the outstanding construction loan of $27.2 million was paid off. The project is now wholly-owned.

(4)

2nd & Pine Includes an adjacent land parcel on which certain improvements including a portion of a parking structure will be constructed as part of the development of this project. The Company may eventually construct an additional apartment tower on this site or sell a portion of the garage and the related air rights.

(5)

Prism at Park Avenue South The Company is jointly developing with Toll Brothers (NYSE: TOL) a project at 400 Park Avenue South in New York City with the Company's rental portion on floors 2-22 and Toll's for sale portion on floors 23-40.The total capital cost and total book value to date represent only the Company's portion of the project. Toll Brothers has funded $113.8 million for their allocated share of the project.

(6)

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

(7)

Elev� The Company acquired this project during the second quarter of 2014, prior to stabilization, and has completed lease-up activities.



4th Quarter 2014 Earnings Release	�	21

Equity Residential

Unconsolidated Development and Lease-Up Projects as of December 31, 2014

(Amounts in thousands except for project and apartment unit amounts)

�

Projects

�

Location

�

Percentage Ownership

�

No. of
Apartment
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

�

Completed Not Stabilized - Unconsolidated (2):

�

Domain (3)

�

San Jose, CA

�

20.0%

�

444

�

155,820

�

155,274

�

96,793

�

Completed

�

Q1 2015

Projects Completed Not Stabilized - Unconsolidated

�

444

�

155,820

�

155,274

�

96,793

�

Projects Completed Not Stabilized

�

444

�

155,820

�

155,274

�

96,793

�

Total Unconsolidated Projects

�

444

�

155,820

�

155,274

�

96,793

�

(1)

�

(2)

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

�

(3)

Domain This development project is owned 20% by the Company and 80% by an institutional partner in an unconsolidated joint venture. Total project cost is approximately $155.8 million and construction was predominantly funded with a long-term, non-recourse secured loan from the partner. The Company was responsible for constructing the project and had given certain construction cost overrun guarantees but currently has no further funding obligations. Domain has a maximum debt commitment of $98.6 million, the loan bears interest at 5.75% and matures January 1, 2022.

�



4th Quarter 2014 Earnings Release	�	22

��

Equity Residential

Repairs and Maintenance Expenses and Capital Expenditures to Real Estate

For the Year Ended December 31, 2014

(Amounts in thousands except for apartment unit and per apartment unit amounts)

�

Repairs and Maintenance Expenses

�

Capital Expenditures to Real Estate

�

Total Expenditures

�

Total
Apartment
Units (1)

�

Expense (2)

�

Avg. Per
Apartment
Unit

�

Payroll (3)

�

Avg. Per
Apartment
Unit

�

Total

�

Avg. Per
Apartment
Unit

�

Replacements
(4)

�

Avg. Per
Apartment
Unit

�

Building
Improvements
(5)

�

Avg. Per
Apartment
Unit

�

Total

�

Avg. Per
Apartment
Unit

�

Grand
Total

�

Avg. Per
Apartment
Unit

�

Same Store Properties (6)

97,911

�

100,496

�

1,026

�

87,745

�

896

�

188,241

�

1,922

�

85,045

�

869

�

93,988

�

960

�

179,033

�

1,829

(9)

367,274

�

3,751

�

Non-Same Store Properties (7)

5,000

�

2,714

�

694

�

1,961

�

501

�

4,675

�

1,195

�

236

�

5,513

�

1,410

�

5,749

�

1,470

�

10,424

�

2,665

�

Other (8)

�

2,247

�

1,933

�

4,180

�

920

�

255

�

1,175

�

5,355

�

Total

102,911

�

105,457

�

91,639

�

197,096

�

86,201

�

99,756

�

185,957

�

383,053

�

(1)

Total Apartment Units - Excludes 1,281 unconsolidated apartment units and 5,033 military housing apartment units for which repairs and maintenance expenses and capital expenditures to real estate are self-funded and do not consolidate into the Company's results.

�

(2)

Repairs and Maintenance Expenses - Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.

�

(3)

Maintenance Payroll - Includes payroll and related expenses for maintenance staff.

�

(4)

Replacements - Includes new expenditures inside the apartment units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $51.4 million spent in 2014 on apartment unit renovations/rehabs (primarily kitchens and baths) on 6,111 same store apartment units (equating to approximately $8,400 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. In 2015, the Company expects to spend approximately $60.0 million for all unit renovation/rehab costs (primarily on same store properties) at a weighted average cost of $9,000 per apartment unit rehabbed.

�

(5)

Building Improvements - Includes roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting and siding, major landscaping, vehicles and office and maintenance equipment.

�

(6)

Same Store Properties - Primarily includes all properties acquired or completed and stabilized prior to January 1, 2013, less properties subsequently sold. Also includes 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company.

�

(7)

Non-Same Store Properties - Primarily includes all properties acquired during 2013 and 2014, plus any properties in lease-up and not stabilized as of January 1, 2013, but excludes 18,465 stabilized apartment units acquired in the Archstone acquisition that are owned and managed by the Company. Per apartment unit amounts are based on a weighted average of 3,911 apartment units.

�

(8)

Other - Primarily includes expenditures for properties sold.

�

(9)

For 2015, the Company estimates that it will spend approximately $1,850 per apartment unit of capital expenditures, inclusive of apartment unit renovation/rehab costs, or $1,250 per apartment unit excluding apartment unit renovation/rehab costs.



4th Quarter 2014 Earnings Release	�	23

��

Equity Residential

Discontinued Operations

(Amounts in thousands)

�

Year Ended
December 31,

�

Quarter Ended
December 31,

�

2014

�

2013

�

2014

�

2013

�

REVENUES

�

Rental income

�

1,309

�

121,942

�

2,751

�

Total revenues

�

1,309

�

121,942

�

2,751

�

EXPENSES (1)

�

Property and maintenance

�

(141

)

�

36,792

�

(16

)

�

1,221

Real estate taxes and insurance

�

267

�

11,903

�

121

�

301

Property management

�

Depreciation

�

34,380

�

516

General and administrative

�

Total expenses

�

215

�

83,161

�

135

�

2,046

�

Discontinued operating income (loss)

�

1,094

�

38,781

�

(44

)

�

705

�

Interest and other income

�

317

�

217

�

165

�

Other expenses

�

)

�

Interest (2):

�

Expense incurred, net

�

(1,296

)

�

(20

)

Amortization of deferred financing costs

�

(228

)

�

Income and other tax (expense) benefit

�

)

�

(449

)

�

Discontinued operations

�

1,403

�

37,022

�

126

�

801

Net gain (loss) on sales of discontinued operations

�

179

�

2,036,505

�

(44

)

�

45,928

�

Discontinued operations, net

�

1,582

�

2,073,527

�

46,729

�

Note: The amounts included in discontinued operations for the year and quarter ended December 31, 2014 represent trailing activity for properties sold in 2013 and prior years.

�

(1) Includes expenses paid in the current period for properties sold 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.



4th Quarter 2014 Earnings Release	�	24

��

Equity Residential

Normalized EBITDA Reconciliations

(Amounts in thousands)

�

Normalized EBITDA Reconciliations for Page 17

�

Trailing Twelve Months

�

2014

�

2013

�

December 31, 2014

�

September 30, 2014

�

Net income

658,683

�

547,512

�

227,041

�

231,190

�

117,720

�

82,732

�

115,870

Interest expense incurred, net (includes discontinued operations)

457,191

�

496,646

�

109,967

�

118,251

�

115,924

�

113,049

�

149,422

Amortization of deferred financing costs (includes discontinued operations)

11,088

�

15,115

�

2,534

�

2,628

�

3,134

�

2,792

�

6,561

Depreciation (includes discontinued operations)

758,861

�

749,028

�

193,089

�

190,469

�

190,136

�

185,167

�

183,256

Income and other tax expense (benefit) (includes discontinued operations)

1,402

�

948

�

243

�

260

�

648

�

251

�

(211

)

Archstone direct acquisition costs (other expenses)

)

�

122

�

(30

)

�

123

Property acquisition costs (other expenses)

355

�

388

�

135

�

110

Write-off of pursuit costs (other expenses)

3,607

�

3,282

�

1,540

�

575

�

1,040

�

452

�

1,215

Loss (income) from investments in unconsolidated entities

7,952

�

10,608

�

(2,249

)

�

1,176

�

7,616

�

1,409

�

407

Net (gain) loss on sales of land parcels

(5,277

)

�

(1,894

)

�

(3,431

)

�

(1,052

)

�

(824

)

�

(48

)

(Gain) on sale of investment securities (interest and other income)

(57

)

�

(3,430

)

�

(36

)

�

(21

)

�

(3,373

)

Write-off of unamortized retail lease intangibles (rental income)

(147

)

�

(2,293

)

�

(147

)

�

(2,146

)

Forfeited deposits (interest and other income)

(150

)

�

(150

)

�

Insurance/litigation settlement or reserve income (interest and other income)

(2,793

)

�

(2,761

)

�

(32

)

�

(419

)

�

(1,879

)

�

(463

)

�

Insurance/litigation settlement or reserve expense (other expenses)

4,099

�

4,349

�

4,000

�

250

Other (interest and other income)

(750

)

�

(750

)

�

Net (gain) loss on sales of discontinued operations

(179

)

�

(46,151

)

�

(153

)

�

(71

)

�

(45,928

)

Net (gain) on sales of real estate properties

(212,685

)

�

(128,544

)

�

(84,141

)

�

(113,641

)

�

(14,903

)

�

Normalized EBITDA (1)

1,681,199

�

1,642,925

�

443,782

�

433,579

�

418,492

�

385,346

�

405,508

�

Balance Sheet Items:

�

December 31, 2014

�

September 30, 2014

�

Total debt (1)

�

10,844,861

�

10,957,606

�

Cash and cash equivalents

�

(40,080

)

�

(31,478

)

�

Mortgage principal reserves/sinking funds

�

(41,567

)

�

(39,425

)

�

Net debt (1)

�

10,763,214

�

10,886,703

�

(1) Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are important metrics in evaluating the credit strength of the Company and its ability to service its debt obligations. The Company believes that Normalized EBITDA,�total debt to Normalized EBITDA and net debt to Normalized EBITDA are useful to investors, creditors and rating agencies because they allow investors to compare the Company's credit strength to prior reporting periods and to other companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual credit quality.



4th Quarter 2014 Earnings Release	�	25

��



Equity Residential						�
Normalized FFO Guidance Reconciliations and Non-Comparable Items						�
(Amounts in thousands except per share data)						�
(All per share data is diluted)						�
�	�		�	�		�
Normalized FFO Guidance Reconciliations						�
�	Normalized					�
�	FFO Reconciliations					�
�	Guidance Q4 2014					�
�	to Actual Q4 2014					�
�	�		�	�		�
�	Amounts		�	Per Share		�
Guidance Q4 2014 Normalized FFO - Diluted (2) (3)	$	311,882	�	$	0.824	�
Property NOI	12,715		�	0.034		�
Other	1,110		�	0.002		�
�	�		�	�		�
Actual Q4 2014 Normalized FFO - Diluted (2) (3)	$	325,707	�	$	0.860	�

_________________________________________________________________________________________________

Non-Comparable Items Adjustments from FFO to Normalized FFO (2) (3)

�

Year Ended December 31,

�

Quarter Ended December 31,

�

2014

�

2013

�

Variance

�

2014

�

2013

�

Variance

Impairment

�

Asset impairment and valuation allowances

�

Archstone direct acquisition costs (other expenses) (A)

�

)

�

19,864

�

(19,865

)

�

123

�

(123

)

Archstone indirect costs (loss (income) from investments in unconsolidated entities) (B)

4,287

�

54,004

�

(49,717

)

�

(2,083

)

�

(777

)

�

(1,306

)

Property acquisition costs (other expenses)

�

355

�

313

�

110

�

(33

)

Write-off of pursuit costs (other expenses)

�

3,607

�

5,184

�

(1,577

)

�

1,540

�

1,215

�

325

Property acquisition costs and write-off of pursuit costs

�

8,248

�

79,365

�

(71,117

)

�

(466

)

�

671

�

(1,137

)

�

Prepayment premiums/penalties (interest expense)

�

250

�

222,415

�

(222,165

)

�

250

�

150,972

�

(150,722

)

Write-off of unamortized deferred financing costs (interest expense)

�

614

�

9,853

�

(9,239

)

�

5,727

�

(5,717

)

Write-off of unamortized (premiums)/discounts/OCI (interest expense)

�

(1,883

)

�

(110,538

)

�

108,655

�

(1,883

)

�

(113,789

)

�

111,906

(Gain) due to ineffectiveness of forward starting swaps (interest expense)

�

(91

)

�

(91

)

�

Debt extinguishment (gains) losses, including prepayment penalties, preferred share
redemptions and non-cash convertible debt discounts

�

(1,110

)

�

121,730

�

(122,840

)

�

(1,623

)

�

42,910

�

(44,533

)

�

Net (gain) on sales of land parcels

�

(5,277

)

�

(12,227

)

�

6,950

�

(3,431

)

�

(48

)

�

(3,383

)

Net loss on sales of unconsolidated entities non-operating assets

�

3,468

�

3,468

�

3,468

�

3,468

Net incremental (gain) on sales of condominium units

�

)

�

)

�

(Gain) on sale of Equity Corporate Housing (ECH)

�

(1,470

)

�

1,470

�

(761

)

�

761

(Gain) on sale of investment securities (interest and other income)

(57

)

�

(4,203

)

�

4,146

�

(3,373

)

�

3,373

(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)

�

(1,866

)

�

(17,908

)

�

16,042

�

(4,183

)

�

4,220

�

Write-off of unamortized retail lease intangibles (rental income)

(147

)

�

(2,146

)

�

1,999

�

(2,146

)

�

2,146

Forfeited deposits (interest and other income)

(150

)

�

(150

)

�

(150

)

�

(150

)

Insurance/litigation settlement or reserve income (interest and other income)

(2,793

)

�

(2,793

)

�

(32

)

�

(32

)

Insurance/litigation settlement or reserve expense (other expenses)

4,099

�

3,611

�

488

�

250

�

(250

)

Other (interest and other income)

(750

)

�

(750

)

�

(750

)

�

(750

)

Other miscellaneous non-comparable items

259

�

1,465

�

(1,206

)

�

(932

)

�

(1,896

)

�

964

�

Non-comparable items Adjustments from FFO to Normalized FFO (2) (3)

5,531

�

184,652

�

(179,121

)

�

(2,984

)

�

37,502

�

(40,486

)

�

(A) Archstone direct acquisition costs primarily includes items such as investment banking and legal/accounting fees that were incurred directly by the Company.

�

(B) Archstone indirect costs primarily includes the Company's 60% share of items such as severance and retention obligations, office leases and German operations/sales that were incurred indirectly through the Company's interest in unconsolidated joint ventures with AvalonBay.

�

Note: See page 28 for the definitions, the footnotes referenced above and the reconciliations of EPS to FFO and Normalized FFO.

�



4th Quarter 2014 Earnings Release	�	26

��



Equity Residential						�
Normalized FFO Guidance and Assumptions						�
�						�
The guidance/projections provided below are based on current expectations and are forward-looking. All guidance is given on a Normalized FFO basis. Therefore, certain items excluded from Normalized FFO, such as debt extinguishment costs/prepayment penalties, property acquisition costs and the write-off of pursuit costs, are not included in the estimates provided on this page. See page 28 for the definitions, the footnotes referenced below and the reconciliations of EPS to FFO and Normalized FFO.						�
�						�
2015 Normalized FFO Guidance (per share diluted)						�
�	�	�	�	�	�	�
�	�	�	Q1 2015	�	2015	�
�	�	�	�	�	�	�
Expected Normalized FFO (2) (3)		�	$0.77 to $0.81	�	$3.35 to $3.45	�
�	�	�	�	�	�	�
2015 Same Store Assumptions						�
�	�	�	�	�	�	�
Physical occupancy	�	�	�	�	95.8%	�
Revenue change	�	�	�	�	3.75% to 4.5%	�
Expense change	�	�	�	�	2.5% to 3.5%	�
NOI change	�	�	�	�	4.0% to 5.5%	�
�	�	�	�	�	�	�
(Note: Approximately 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO/Normalized FFO)						�
�						�
2015 Transaction Assumptions						�
�	�	�	�	�	�	�
Consolidated rental acquisitions		�	�	�	$500.0 million	�
Consolidated rental dispositions		�	�	�	$500.0 million	�
Capitalization rate spread		�	�	�	100 basis points	�
�	�	�	�	�	�	�
2015 Debt Assumptions						�
�	�	�	�	�	�	�
Weighted average debt outstanding		�	�	�	$10.8 billion to $11.1 billion	�
Weighted average interest rate (reduced for capitalized interest)				�	4.10%	�
Interest expense, net	�	�	�	�	$442.8 million to $455.1 million	�
�						�
2015 Other Guidance Assumptions						�
�	�	�	�	�	�	�
General and administrative expense (see Note below)		�	�	�	$51.0 million to $53.0 million	�
Interest and other income		�	�	�	$0.5 million	�
Income and other tax expense		�	�	�	$1.0 million to $1.5 million	�
Debt offerings		�	�	�	$950.0 million	�
Equity ATM share offerings		�	�	�	No amounts budgeted	�
Preferred share offerings			�	�	No amounts budgeted	�
Weighted average Common Shares and Units - Diluted			�	�	380.6 million	�
�	�	�	�	�	�	�
�	�	�	�	�	�	�
Note: Normalized FFO guidance excludes a duplicative charge of approximately $11.0 million, of which $9.7 million will be recorded to general and administrative expense and $1.3 million will be recorded to property management expense, related to the Company's revised executive compensation program.						�



4th Quarter 2014 Earnings Release	�	27

��

Equity Residential

�

Additional Reconciliations, Definitions and Footnotes

�

(Amounts in thousands except per share data)

�

(All per share data is diluted)

�

The guidance/projections provided below are based on current expectations and are forward-looking.

�

Reconciliations of EPS to FFO and Normalized FFO for Pages 6, 26 and 27

�

Expected
Q1 2015
Per Share

�

Expected
2015
Per Share

�

Expected Q4 2014

�

Amounts

�

Per Share

�

Expected Earnings - Diluted (5)

220,095

�

0.582

�

$0.70 to $0.74

�

$1.86 to $1.96

�

Add: Expected depreciation expense

192,181

�

0.508

�

0.51

�

2.12

�

Less: Expected net gain on sales (5)

(101,557

)

�

(0.269

)

�

(0.41)

�

(0.64)

�

Expected FFO - Diluted (1) (3)

310,719

�

0.821

�

0.80 to 0.84

�

3.34 to 3.44

�

Asset impairment and valuation allowances

�

Property acquisition costs and write-off of pursuit costs

1,163

�

0.003

�

(0.04)

�

(0.02)

�

Debt extinguishment (gains) losses, including prepayment penalties,
preferred share redemptions and non-cash convertible debt discounts

�

(Gains) losses on sales of non-operating assets, net of income and other tax
expense (benefit)

�

Other miscellaneous non-comparable items

�

0.01

�

0.03

�

Expected Normalized FFO - Diluted (2) (3)

311,882

�

0.824

�

$0.77 to $0.81

�

$3.35 to $3.45

�



Definitions and Footnotes for Pages 6, 26 and 27
�		�	�	�	�	�	�	�	�
(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 and impairment write-downs of depreciable operating properties, 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 apartment units to condominiums, it simultaneously discontinues depreciation of such property.
�		�
(2	)	Normalized funds from operations ("Normalized FFO") begins with FFO and excludes:
�		" the impact of any expenses relating to non-operating asset impairment and valuation allowances;
�		" property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs;
�		" gains and losses from early debt extinguishment, including prepayment penalties, preferred share redemptions and the cost related to the implied option value of non-cash convertible debt discounts;
�		" gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and
�		" other miscellaneous non-comparable items.
�		�	�	�	�	�	�	�	�
(3	)	The Company believes that FFO and FFO available to Common Shares and 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 Units can help compare the operating performance of a company's real estate between periods or as compared to different companies. The Company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company's operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual operating results. FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and 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, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and 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 a measure of liquidity. The Company's calculation of FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and 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.
�		�	�	�	�	�	�	�	�
(4	)	FFO available to Common Shares and Units and Normalized FFO available to Common Shares and Units are 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 "Noncontrolling Interests Operating Partnership". Subject to certain restrictions, the Noncontrolling Interests Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.
�		�	�	�	�	�	�	�	�
(5	)	Earnings represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected earnings is calculated on a basis consistent with actual earnings. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual earnings could differ materially from expected earnings.

��

Same Store NOI Reconciliation for Page 10

�

The following tables present reconciliations of operating income per the consolidated statements of operations to NOI for the 2014 and the Fourth Quarter 2014 Same Store Properties:

�

Year Ended December 31,

�

Quarter Ended December 31,

�

2014

�

2013

�

2014

�

2013

�

Operating income

921,375

�

512,322

�

250,532

�

223,677

Adjustments:

�

Archstone pre-ownership operating results

�

55,694

�

Non-same store operating results

(81,940

)

�

(47,445

)

�

(23,615

)

�

(17,449

)

Fee and asset management revenue

(9,437

)

�

(9,698

)

�

(1,841

)

�

(2,299

)

Fee and asset management expense

5,429

�

6,460

�

1,136

�

1,721

Depreciation

758,861

�

978,973

�

193,089

�

182,740

General and administrative

50,948

�

62,179

�

9,652

�

15,162

�

Same store NOI

1,645,236

�

1,558,485

�

428,953

�

403,552



4th Quarter 2014 Earnings Release	�	28

StreetInsider

Log in to your account:

Form 8-K EQUITY RESIDENTIAL For: Feb 03

Categories

Next Articles