Equity Residential (EQR) filed Quarterly Report for the period ended 2009-09-30.
Equity Residential Prop. is a self-administered and self-managed equity real estate investment trust. The company's subsidiaries include the Operating Partnership a series of management limited partnerships and companies the Financing Partnerships the limited liability companies and certain other entities. Equity Residential has a market cap of $7.82 billion; its shares were traded at around $28.55 with a P/E ratio of 13.1 and P/S ratio of 3.7. The dividend yield of Equity Residential stocks is 4.7%. Equity Residential had an annual average earning growth of 0.9% over the past 10 years.
Highlight of Business Operations:
In response to the recession and liquidity issues prevalent in the debt markets, we took a number of steps to better position ourselves. In early 2008, we began pre-funding our maturing debt obligations with approximately $1.6 billion in secured mortgage financing obtained from Fannie Mae and Freddie Mac. We also significantly reduced our acquisition activity. During the second half of 2008 and through the third quarter of 2009, we only acquired two properties (one of which was the buyout of our partner in an unconsolidated asset) while we continued selling non-core assets. We expect to continue to be a net seller of assets during 2009. During the nine months ended September 30, 2009, the Company sold 50 properties consisting of 9,551 units for $792.2 million, as well as 50 condominium units for $9.8 million. The Company acquired one previously unconsolidated property consisting of 250 units for $18.5 million from its institutional joint venture partner during the nine months ended September 30, 2009. While we believe these sales of non-core assets better positions us for future success, they have resulted and will continue to result in dilution, particularly when the net sales proceeds are initially not reinvested in activities generating equivalent income such as acquisition of rental properties or repayment of debt.
value of one asset. We do not currently anticipate starting any new wholly-owned development projects during 2009 unless market conditions significantly improve. The Company reduced its quarterly common share dividend beginning with the dividend for the third quarter of 2009, from $0.4825 per share (an annual rate of $1.93 per share) to $0.3375 per share (an annual rate of $1.35 per share).
General and administrative expenses from continuing operations, which include corporate operating expenses, decreased approximately $3.6 million or 10.5% primarily due to lower overall payroll-related costs as a result of a decrease in the number of properties in the Company’s portfolio, as well as a $0.9 million decrease in severance related costs in 2009 and decreases in tax consulting costs. The Company anticipates that general and administrative expenses will approximate $40.0 million for the year ending December 31, 2009. The above assumption is based on current expectations and is forward-looking.
Interest and other income from continuing operations increased approximately $4.8 million or 43.6% primarily as a result of a gain of $4.9 million on the sale of investment securities (see Note 11) as well as a $2.0 million gain recognized during the quarter ended March 31, 2009 related to the partial debt extinguishment of the Company’s August 2026 convertible notes (see Note 9). In addition, the Company recognized a $2.4 million gain on early extinguishment of debt during the quarter ended September 30, 2009 (See Note 8). This was partially offset by a decrease in interest earned on cash and cash equivalents due to a decrease in interest rates and overall balances, as well as a decrease in insurance/litigation settlement proceeds and forfeited deposits received in 2009. The Company anticipates that interest and other income will approximate $16.5 million for the year ending December 31, 2009. The above assumption is based on current expectations and is forward-looking.
Interest expense from continuing operations, including amortization of deferred financing costs, increased approximately $2.8 million or 0.8% primarily as a result of lower capitalized interest, partially offset by lower overall effective interest rates on floating rate debt. During the nine months ended September 30, 2009, the Company capitalized interest costs of approximately $28.7 million as compared to $45.1 million for the nine months ended September 30, 2008. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the nine months ended September 30, 2009 was 5.38% as compared to 5.54% for the nine months ended September 30, 2008. The Company anticipates that interest expense will approximate $479.0 million to $484.0 million for the year ending December 31, 2009. The above assumption is based on current expectations and is forward-looking.
Income and other tax expense from continuing operations decreased approximately $3.1 million or 52.1% primarily due to a change in estimate for Texas state taxes and lower overall current state income taxes, partially offset by an increase in business taxes for Washington, D.C. The Company anticipates that income and other tax expense will approximate $3.5 million for the year ending December 31, 2009. The above assumption is based on current expectations and is forward-looking.
EQR is in the portfolios of Dodge & Cox.
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