EX-99.1 2 a4755763ex991.txt PRESS RELEASE Exhibit 99.1 Equity Residential Reports Third Quarter Results CHICAGO--(BUSINESS WIRE)--Nov. 2, 2004--Equity Residential (NYSE:EQR) today reported results for the quarter and nine months ended September 30, 2004. All per share results are reported on a fully diluted basis. Third Quarter 2004 For the quarter ended September 30, 2004, the Company reported earnings of $0.26 per share compared to $0.41 per share in the third quarter of 2003. The quarterly decrease is primarily attributable to $0.07 per share in lower gains on property sales and $0.05 per share in hurricane damage discussed below. Funds from Operations (FFO) for the quarter ended September 30, 2004 were $0.50 per share compared to $0.56 per share in the same period of 2003. These results reflect an expense of $14.1 million, or $0.05 per share, in uninsured property damage at certain of the Company's properties primarily in Florida caused by Hurricanes Frances, Charley, Ivan and Jeanne. On September 8, 2004, the Company issued a press release stating that $9.0 million in uninsured property damage had been incurred as a result of Hurricanes Frances and Charley, and revised guidance downward by $0.03 to $0.50 to $0.51 FFO per share. The Company incurred an additional $5.1 million, or $0.02 per share, in uninsured property damage caused by Hurricanes Ivan and Jeanne subsequent to the September 8 press release. "Business continues to improve in almost all of our markets as evidenced by the second quarter in a row of year over year positive same store revenue growth. This is something we have not experienced since 2001. As a result of the work we have done over the past two years to aggressively reconfigure our portfolio and enhance our operations, we are well positioned to take advantage of the improving economic fundamentals," said Bruce W. Duncan, Equity Residential's President and CEO. Total revenues from continuing operations for the quarter were $491.5 million compared to $438.8 million in the third quarter of 2003. The primary components of this $52.7 million increase in revenues include the properties acquired since October 1, 2003, the interests in the 15 development properties acquired in the first quarter of 2004 from the Company's joint venture partners as well as the properties consolidated due to the adoption of FIN 46 effective March 31, 2004. Nine Months Ended September 30, 2004 For the nine months ended September 30, 2004, the Company reported earnings of $1.00 per share compared to $1.23 per share in the same period of 2003. FFO for the nine months ended September 30, 2004 were $1.58 per share compared to $1.70 per share in the same period of 2003. Total revenues from continuing operations for the nine months ended September 30, 2004 were $1.4 billion compared to $1.3 billion in the same period of 2003. "Same-Store" Results On a "same-store" third quarter to third quarter comparison, which includes 168,063 units, revenues increased 1.5 percent, expenses increased 4.4 percent (excluding hurricane property damage) and NOI decreased 0.4 percent. On a sequential "same-store" comparison for these same 168,063 units from second quarter 2004 to third quarter 2004, revenues increased 0.4 percent, expenses increased 3.9 percent (excluding hurricane property damage) and NOI decreased 2.0 percent. On a "same-store" nine-month to nine-month comparison, which includes 165,905 units, revenues increased 0.7 percent, expenses increased 3.5 percent (excluding hurricane property damage) and NOI decreased 1.2 percent. Acquisitions/Dispositions During the third quarter of 2004, the Company acquired five properties, consisting of 879 units, for an aggregate purchase price of $186.5 million at an average capitalization (cap) rate of 5.9 percent. Also during the quarter, the Company sold eight properties, consisting of 2,274 units, for an aggregate sale price of $133.4 million at an average cap rate of 6.7 percent. In addition, the Company sold 208 condominium units for $38.0 million. In the first nine months of 2004, the Company acquired 18 properties, consisting of 4,419 units, for an aggregate purchase price of $634.5 million at an average cap rate of 5.8 percent and sold 39 properties, consisting of 10,759 units, for an aggregate sale price of $585.6 million at an average cap rate of 6.4 percent. In addition, the Company sold 521 condominium units and two vacant land parcels for $80.4 million and $27.9 million, respectively. Michael J. McHugh Retirement The Company also announced today that Michael J. McHugh, its Chief Accounting Officer and Treasurer, has informed the Company of his intention to retire next year, after a long and distinguished career with Equity Residential and its affiliates. "Mike has been part of the Equity family for over twenty years," said Bruce W. Duncan. "We owe him many thanks for his contributions to Equity's success during that time." To ensure a smooth transition of his responsibilities, Mr. McHugh will retire at a mutually acceptable time next year, not earlier than the filing of the Company's 2004 Form 10-K. Internal candidates have been identified to assume Mr. McHugh's roles as Chief Accounting Officer and Treasurer. Fourth Quarter/ Full Year 2004 Results and 2005 Guidance Equity Residential will announce fourth quarter/ full year 2004 results on Wednesday, February 2, 2005 and host a conference call to discuss those results at 10:00 a.m. CT that day. The Company will provide 2005 earnings guidance at that time. Equity Residential is the largest publicly traded apartment company in America. Nationwide, Equity Residential owns or has investments in 950 properties, in 33 states and the District of Columbia, consisting of 202,256 units. For more information on Equity Residential, please visit our website at www.equityresidential.com. Forward-Looking Statements The Company lists parameters for 2004 results in the final page of this release. 2004 results will depend upon a slowdown in multifamily starts and economic recovery and job growth. The forward-looking statements contained in this news release regarding 2004 results are further subject to certain risks and uncertainties including, without limitation, the risks described under the heading "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityresidential.com. This news release also contains forward-looking statements concerning development properties. The total number of units and cost of development and completion dates reflect the Company's best estimates and are subject to uncertainties arising from changing economic conditions (such as costs of labor and construction materials), completion and local government regulation. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. A live web cast of the Company's conference call discussing these results and outlook for 2004 will take place today at 10:00 a.m. Central. Please visit the Investor Information section of the Company's web site at www.equityresidential.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) Nine Months Ended Quarter Ended September 30, September 30, ----------------------- ------------------- 2004 2003 2004 2003 ----------- ----------- --------- --------- REVENUES Rental income $1,417,819 $1,290,925 $489,185 $435,688 Fee and asset management 8,841 10,961 2,300 3,083 ----------- ----------- --------- --------- Total revenues 1,426,660 1,301,886 491,485 438,771 ----------- ----------- --------- --------- EXPENSES Property and maintenance 396,469 352,093 141,561 121,302 Real estate taxes and insurance 171,768 139,145 66,749 46,680 Property management 56,093 48,450 18,682 16,256 Fee and asset management 6,382 5,508 2,108 1,901 Depreciation 361,618 314,108 125,970 106,152 General and administrative 35,080 29,279 12,044 9,133 Impairment on technology investments - 872 - 291 ----------- ----------- --------- --------- Total expenses 1,027,410 889,455 367,114 301,715 ----------- ----------- --------- --------- Operating income 399,250 412,431 124,371 137,056 Interest and other income 8,178 13,727 3,177 6,609 Interest: Expense incurred, net (252,267) (243,579) (85,957) (81,894) Amortization of deferred financing costs (5,062) (3,905) (2,071) (1,121) ----------- ----------- --------- --------- Income before allocation to Minority Interests, income (loss) from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entities and discontinued operations 150,099 178,674 39,520 60,650 Allocation to Minority Interests: Operating Partnership (21,223) (27,434) (5,485) (9,153) Preference Interests (15,158) (15,159) (5,052) (5,053) Junior Preference Units (67) (243) (5) (81) Partially Owned Properties 1,107 (77) 811 166 Premium on redemption of Preference Interests (1,117) - (1,117) - Income (loss) from investments in unconsolidated entities (7,468) (3,594) 329 (1,850) Net gain (loss) on sales of unconsolidated entities 4,407 4,673 2 (2) ----------- ----------- --------- --------- Income from continuing operations 110,580 136,840 29,003 44,677 Net gain on sales of discontinued operations 207,653 218,975 58,394 77,983 Discontinued operations, net 3,463 37,794 112 9,479 ----------- ----------- --------- --------- Net income 321,696 393,609 87,509 132,139 Preferred distributions (40,671) (57,713) (13,346) (19,564) ----------- ----------- --------- --------- Net income available to Common Shares $281,025 $335,896 $74,163 $112,575 =========== =========== ========= ========= Earnings per share - basic: Income from continuing operations available to Common Shares $0.31 $0.36 $0.07 $0.12 =========== =========== ========= ========= Net income available to Common Shares $1.01 $1.24 $0.26 $0.41 =========== =========== ========= ========= Weighted average Common Shares outstanding 278,876 271,622 280,167 272,787 =========== =========== ========= ========= Earnings per share - diluted: Income from continuing operations available to Common Shares $0.30 $0.36 $0.07 $0.12 =========== =========== ========= ========= Net income available to Common Shares $1.00 $1.23 $0.26 $0.41 =========== =========== ========= ========= Weighted average Common Shares outstanding 302,739 296,184 304,028 297,941 =========== =========== ========= ========= Distributions declared per Common Share outstanding $1.2975 $1.2975 $0.4325 $0.4325 =========== =========== ========= ========= EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (Amounts in thousands except per share data) (Unaudited) Nine Months Ended Quarter Ended September 30, September 30, ----------------------- ------------------- 2004 2003 2004 2003 ----------- ----------- --------- --------- Net income $321,696 $393,609 $87,509 $132,139 Allocation to Minority Interests-Operating Partnership 21,223 27,434 5,485 9,153 Adjustments: Depreciation 361,618 314,108 125,970 106,152 Depreciation - Non- real estate additions (4,025) (6,524) (1,308) (1,926) Depreciation - Partially Owned Properties (6,209) (6,240) (2,038) (2,124) Depreciation - Unconsolidated Properties 9,037 15,618 1,158 5,468 Net (gain) loss on sales of unconsolidated entities (4,407) (4,673) (2) 2 Discontinued operations: Depreciation 6,264 40,790 151 11,354 Net (gain) on sales of discontinued operations (207,653) (218,975) (58,394) (77,983) Net incremental gain on sales of condominium units 15,669 7,487 7,199 4,600 Net gain (loss) on sales of vacant land 5,483 - (53) - ----------- ----------- --------- --------- FFO (1)(2) 518,696 562,634 165,677 186,835 Preferred distributions (40,671) (57,713) (13,346) (19,564) ----------- ----------- --------- --------- FFO available to Common Shares and OP Units - basic $478,025 $504,921 $152,331 $167,271 =========== =========== ========= ========= FFO available to Common Shares and OP Units - diluted $480,901 $508,558 $153,225 $168,476 =========== =========== ========= ========= FFO per share and OP Unit - basic $1.59 $1.72 $0.51 $0.57 =========== =========== ========= ========= FFO per share and OP Unit - diluted $1.58 $1.70 $0.50 $0.56 =========== =========== ========= ========= Weighted average Common Shares and OP Units outstanding - basic 299,929 293,900 300,900 295,032 =========== =========== ========= ========= Weighted average Common Shares and OP Units outstanding - diluted 305,197 299,316 306,315 301,052 =========== =========== ========= ========= (1) The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. (2) The Company believes that FFO is helpful to investors as a supplemental measure of the operating performance of a real estate company, because it is a recognized measure 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 can help compare the operating performance of a company's real estate between periods or as compared to different companies. FFO in and of itself does not represent net income or net cash flows from operating activities in accordance with GAAP. Therefore, FFO should not be exclusively considered as an alternative to net income or to net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO 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. EQUITY RESIDENTIAL CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited) September 30, December 31, 2004 2003 ------------- ------------ ASSETS Investment in real estate Land $2,158,662 $1,845,547 Depreciable property 12,245,745 11,018,326 Construction in progress (including land) 280,229 10,506 ------------- ------------ Investment in real estate 14,684,636 12,874,379 Accumulated depreciation (2,522,644) (2,296,013) ------------- ------------ Investment in real estate, net 12,161,992 10,578,366 Cash and cash equivalents 64,993 49,579 Investments in unconsolidated entities 11,629 473,977 Rents receivable 3,209 426 Deposits - restricted 83,668 133,752 Escrow deposits - mortgage 43,996 41,104 Deferred financing costs, net 34,764 31,135 Goodwill, net 30,000 30,000 Other assets 99,207 128,554 ------------- ------------ Total assets $12,533,458 $11,466,893 ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $3,274,088 $2,693,815 Notes, net 3,071,831 2,656,674 Line of credit - 10,000 Accounts payable and accrued expenses 119,821 55,463 Accrued interest payable 68,557 60,334 Rents received in advance and other liabilities 258,138 189,372 Security deposits 48,741 44,670 Distributions payable 141,873 140,195 ------------- ------------ Total liabilities 6,983,049 5,850,523 ------------- ------------ Commitments and contingencies Minority Interests: Operating Partnership 319,166 342,809 Preference Interests 206,000 246,000 Junior Preference Units 184 2,217 Partially Owned Properties 11,059 9,903 ------------- ------------ Total Minority Interests 536,409 600,929 ------------- ------------ Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 4,726,399 shares issued and outstanding as of September 30, 2004 and 5,496,518 shares issued and outstanding as of December 31, 2003 651,660 670,913 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 282,766,085 shares issued and outstanding as of September 30, 2004 and 277,643,885 shares issued and outstanding as of December 31, 2003 2,828 2,776 Paid in capital 5,055,784 4,956,712 Deferred compensation (859) (3,554) Distributions in excess of accumulated earnings (671,779) (588,005) Accumulated other comprehensive loss (23,634) (23,401) ------------- ------------ Total shareholders' equity 5,014,000 5,015,441 ------------- ------------ Total liabilities and shareholders' equity $12,533,458 $11,466,893 ============= ============ September YTD 2004 vs. September YTD 2003 YTD over YTD Same-Store Results $ in Millions - 165,905 Same-Store Units Description Revenues Expenses NOI(2) (1) ----------- --------- -------- -------- YTD 2004 $1,230.1 $500.0 $730.1 YTD 2003 $1,221.7 $482.9 $738.8 --------- -------- -------- Change $8.4 $17.1 $(8.7) ========= ======== ======== Change 0.7% 3.5% (1.2%) Third Quarter 2004 vs. Third Quarter 2003 Quarter over Quarter Same-Store Results $ in Millions - 168,063 Same-Store Units Description Revenues Expenses NOI(2) (1) ----------- --------- -------- -------- Q3 2004 $421.5 $174.7 $246.8 Q3 2003 $415.1 $167.4 $247.7 --------- -------- -------- Change $6.4 $7.3 $(0.9) ========= ======== ======== Change 1.5% 4.4% (0.4%) Third Quarter 2004 vs. Second Quarter 2004 Sequential Quarter over Quarter Same-Store Results $ in Millions - 168,063 Same-Store Units(a) Description Revenues Expenses NOI(2) (1) ----------- --------- -------- -------- Q3 2004 $421.5 $174.7 $246.8 Q2 2004 $419.8 $168.1 $251.7 --------- -------- -------- Change $1.7 $6.6 $(4.9) ========= ======== ======== Change 0.4% 3.9% (2.0%) (a) Includes the same units as the Third Quarter 2004 vs. Third Quarter 2003 Same Store results for comparability purposes. Same-Store Occupancy Statistics YTD 2004 93.3% Q3 2004 93.5% Q3 2004 93.5% YTD 2003 93.1% Q3 2003 93.5% Q2 2004 93.7% -------- -------- ------- Change 0.2% Change 0.0% Change (0.2%) (1) September YTD 2004 and Third Quarter 2004 expenses exclude the uninsured property damage caused by Hurricanes Frances, Charley, Ivan and Jeanne. (2) The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense, and property management expense. The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Company's apartment communities. Same Store NOI Reconciliation September YTD 2004 vs. September YTD 2003 The following table provides a reconciliation of operating income per the consolidated statements of operations to NOI for the Nine-Month 2004 Same Store Properties: Nine Months Ended September 30, -------------------- 2004 2003 --------- --------- (Amounts in millions) Operating income $399.3 $412.4 Adjustments: Insurance (hurricane property damage) 14.1 - NOI for properties not in same store (77.6) (12.4) Fee and asset management revenue (8.8) (11.0) Fee and asset management expense 6.4 5.5 Depreciation 361.6 314.1 General and administrative 35.1 29.3 Impairment on technology investments - 0.9 --------- --------- Same store NOI $730.1 $738.8 ========= ========= Same Store NOI Reconciliation Third Quarter 2004 vs. Third Quarter 2003 The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Third Quarter 2004 Same Store Properties: Quarter Ended September 30, -------------------- 2004 2003 --------- --------- (Amounts in millions) Operating income $124.4 $137.1 Adjustments: Insurance (hurricane property damage) 14.1 - NOI for properties not in same store (29.5) (3.8) Fee and asset management revenue (2.3) (3.1) Fee and asset management expense 2.1 1.9 Depreciation 126.0 106.2 General and administrative 12.0 9.1 Impairment on technology investments - 0.3 --------- --------- Same store NOI $246.8 $247.7 ========= ========= September YTD 2004 vs. September YTD 2003 Same-Store Results by Market -------------------------------- Increase (Decrease) from Prior Period ------------------------------------------------------------------- 2004 Sep 2004 Sep YTD YTD % of Weighted Actual Average Markets Units NOI Occu- Revenues Expenses NOI Occu- pancy % pancy ------------------------------------------------------------------- 1 Boston 5,526 7.3% 94.9% 0.2% 5.4% (2.5%) 0.2% 2 South Florida 9,895 6.4% 94.4% 3.8% 2.8% 4.6% 0.6% 3 San Francisco Bay Area 5,010 5.2% 94.9% (1.7%) 2.1% (3.5%) (0.2%) 4 Atlanta 10,401 4.8% 93.5% (1.9%) 5.1% (6.7%) 1.3% 5 Phoenix 9,567 4.7% 90.9% 4.7% 2.0% 6.7% 2.3% 6 Los Angeles 3,868 4.5% 95.0% 3.5% 5.5% 2.6% (0.2%) 7 San Diego 4,048 4.4% 94.9% 3.0% 6.3% 1.5% (0.0%) 8 Dallas/ Ft Worth 9,579 4.2% 93.8% (2.2%) 2.3% (6.2%) 0.5% 9 New England (excl Boston) 6,114 4.2% 95.0% 2.4% 4.4% 1.1% (0.9%) 10 Denver 7,187 3.9% 92.7% (3.4%) (0.8%) (4.9%) 0.3% 11 DC Suburban Maryland 5,525 3.9% 93.7% 2.0% 9.3% (1.9%) (1.2%) 12 Seattle/Tacoma 6,610 3.8% 93.7% (0.2%) 6.4% (4.4%) 0.2% 13 New York Metro Area 2,666 3.4% 94.6% 0.2% 5.1% (2.4%) 0.4% 14 Orange Co 3,013 3.2% 94.9% 4.5% 7.1% 3.4% 0.0% 15 Orlando 5,725 3.0% 94.7% 2.1% (0.2%) 3.8% 1.1% 16 Inland Empire, CA 3,252 2.9% 95.3% 7.6% 3.0% 9.8% 0.6% 17 DC Suburban Virginia 3,283 2.9% 94.9% 3.7% 3.8% 3.6% (0.4%) 18 North Florida 6,223 2.8% 92.7% 0.4% 2.2% (0.9%) (1.1%) 19 Houston 4,920 2.3% 91.1% (3.4%) (2.6%) (4.2%) (1.3%) 20 Minn/St Paul 3,826 2.2% 90.8% (1.1%) (3.6%) 1.0% (0.3%) --------------------------------------------------------- Top 20 Markets 116,238 79.8% 93.6% 1.0% 3.3% (0.3%) 0.3% All Other Markets 49,667 20.2% 92.7% (0.5%) 4.4% (4.4%) 0.2% --------------------------------------------------------- Total 165,905 100.0% 93.3% 0.7% 3.5% (1.2%) 0.2% ========================================================= Third Quarter 2004 vs. Third Quarter 2003 Same-Store Results by Market -------------------------------- Increase (Decrease) from Prior Quarter ------------------------------------------------------------------- 3Q04 3Q04 % of Weighted Actual Average Markets Units NOI Occu- Revenues Expenses NOI Occu- pancy % pancy ------------------------------------------------------------------- 1 Boston 5,931 7.7% 95.4% 0.5% 6.8% (2.7%) (0.1%) 2 South Florida 9,895 6.2% 94.1% 4.4% 4.0% 4.8% 0.1% 3 San Francisco Bay Area 5,526 5.5% 94.8% 0.5% 1.8% (0.2%) (0.5%) 4 Atlanta 10,401 4.6% 93.7% (0.4%) 4.5% (4.1%) 1.4% 5 Los Angeles 4,008 4.6% 95.3% 3.7% 6.4% 2.5% (0.5%) 6 Phoenix 9,567 4.5% 91.5% 6.6% 1.6% 10.8% 2.2% 7 San Diego 4,048 4.4% 95.7% 2.9% 5.2% 1.9% (0.9%) 8 New England (excl Boston) 6,114 4.2% 94.3% 2.0% 2.6% 1.7% (1.4%) 9 Dallas/ Ft Worth 9,579 4.0% 93.9% (1.5%) 3.8% (6.6%) 0.2% 10 DC Suburban Maryland 5,525 3.8% 93.1% 2.2% 9.7% (1.9%) (1.7%) 11 DC Suburban Virginia 3,826 3.7% 95.3% 9.5% 8.5% 10.0% 0.6% 12 Seattle/Tacoma 6,610 3.7% 93.7% 0.6% 6.4% (3.3%) (0.1%) 13 Denver 7,187 3.6% 92.7% (4.3%) 1.3% (7.8%) 0.6% 14 New York Metro Area 2,666 3.4% 95.1% 1.7% 6.7% (1.1%) (0.6%) 15 Orange Co 3,013 3.2% 95.1% 4.1% 7.0% 2.9% (0.5%) 16 Orlando 5,725 3.0% 95.7% 3.5% 3.2% 3.6% 1.6% 17 Inland Empire, CA 3,252 2.9% 94.2% 8.6% 6.0% 9.9% 0.3% 18 North Florida 6,223 2.8% 92.9% 0.4% 5.9% (3.2%) (1.4%) 19 Portland 4,374 2.3% 94.1% 5.8% 4.1% 7.2% 2.9% 20 Houston 4,920 2.2% 91.5% (2.2%) (0.2%) (4.2%) (1.3%) --------------------------------------------------------- Top 20 Markets 118,390 80.2% 93.9% 2.1% 4.5% 0.6% 0.2% All Other Markets 49,673 19.8% 92.6% (0.4%) 4.1% (4.3%) (0.5%) --------------------------------------------------------- Total 168,063 100.0% 93.5% 1.5% 4.4% (0.4%) (0.0%) ========================================================= Third Quarter 2004 vs. Second Quarter 2004(a) Sequential Same-Store Results by Market -------------------------------- Increase (Decrease) from Prior Quarter ------------------------------------------------------------------- 3Q04 3Q04 % of Weighted Actual Average Markets Units NOI Occu- Revenues Expenses NOI Occu- pancy % pancy ------------------------------------------------------------------- 1 Boston 5,931 7.7% 95.4% 0.3% 1.2% (0.1%) (0.2%) 2 South Florida 9,895 6.2% 94.1% 0.4% 4.3% (2.3%) (0.2%) 3 San Francisco Bay Area 5,526 5.5% 94.8% (0.4%) 4.1% (2.7%) (0.8%) 4 Atlanta 10,401 4.6% 93.7% (0.6%) 4.0% (4.1%) (0.1%) 5 Los Angeles 4,008 4.6% 95.3% 1.0% 5.0% (0.6%) 0.0% 6 Phoenix 9,567 4.5% 91.5% 0.8% 6.5% (3.2%) 0.9% 7 San Diego 4,048 4.4% 95.7% 2.4% 4.7% 1.3% 0.8% 8 New England (excl Boston) 6,114 4.2% 94.3% (0.0%) (0.5%) 0.2% (1.5%) 9 Dallas/ Ft Worth 9,579 4.0% 93.9% (0.6%) 3.5% (4.6%) (0.5%) 10 DC Suburban Maryland 5,525 3.8% 93.1% (0.3%) 4.4% (3.0%) (1.1%) 11 DC Suburban Virginia 3,826 3.7% 95.3% 3.1% 3.0% 3.1% (0.8%) 12 Seattle/Tacoma 6,610 3.7% 93.7% 0.7% 3.2% (1.1%) (0.5%) 13 Denver 7,187 3.6% 92.7% (2.2%) 9.2% (8.7%) (0.4%) 14 New York Metro Area 2,666 3.4% 95.1% 1.4% 0.9% 1.7% (0.2%) 15 Orange Co 3,013 3.2% 95.1% 0.5% 5.1% (1.5%) (0.7%) 16 Orlando 5,725 3.0% 95.7% 1.8% 6.3% (1.2%) 1.0% 17 Inland Empire, CA 3,252 2.9% 94.2% 0.7% 10.0% (3.2%) (1.7%) 18 North Florida 6,223 2.8% 92.9% 0.5% 4.7% (2.2%) 0.1% 19 Portland 4,374 2.3% 94.1% 1.4% 0.1% 2.4% (1.1%) 20 Houston 4,920 2.2% 91.5% 0.0% 5.0% (4.7%) 0.3% --------------------------------------------------------- Top 20 Markets 118,390 80.2% 93.9% 0.4% 4.0% (1.8%) (0.3%) All Other Markets 49,673 19.8% 92.6% 0.3% 3.7% (2.7%) (0.1%) --------------------------------------------------------- Total 168,063 100.0% 93.5% 0.4% 3.9% (2.0%) (0.2%) ========================================================= (a) Includes the same units as the Third Quarter 2004 vs. Third Quarter 2003 Same Store results for comparability purposes. Portfolio as of September 30, 2004 Proper- Units ties --------- -------- Wholly Owned Properties 851 178,519 Partially Owned Properties (Consolidated) 40 7,445 Unconsolidated Properties 59 16,292 --------- -------- 950 202,256 Portfolio Rollforward 2004 Proper- Units $ Cap ties Millions Rate --------- -------- --------- ------ 12/31/2003 968 207,506 Acquisitions 18 4,419 $634.5 5.8% Dispositions: Rental Properties (39) (10,759) $(585.6) 6.4% Condominium Units (2) (521) $(80.4) Vacant Land - - $(27.9) Completed Developments 5 1,565 Unit Configuration Changes - 46 --------- -------- 9/30/2004 950 202,256 Portfolio Rollforward Q3 2004 Proper- Units $ Cap ties Millions Rate ------------------ --------- ------ 6/30/2004 951 203,012 Acquisitions 5 879 $186.5 5.9% Dispositions: Rental Properties (8) (2,274) $(133.4) 6.7% Condominium Units (1) (208) $(38.0) Completed Developments 3 847 --------- -------- 9/30/2004 950 202,256 Portfolio Summary As of September 30, 2004 Market Properties Units % of % of 2004 Units NOI Budget Boston 35 6,434 3.2% 6.2% DC Northern Virginia 17 5,576 2.8% 5.0% New England (excluding Boston) 45 6,118 3.0% 3.8% New York Metro Area 12 3,404 1.7% 3.9% DC Suburban Maryland 27 5,833 2.9% 3.6% ------------------------------------ Atlantic Region 136 27,365 13.5% 22.5% South Florida 53 11,733 5.8% 6.5% Orlando 32 6,788 3.4% 3.2% North Florida 48 6,852 3.4% 2.6% Tampa/Ft Myers 30 5,283 2.6% 1.8% ------------------------------------ Florida Region 163 30,656 15.2% 14.1% Raleigh/Durham 17 4,201 2.1% 1.4% Charlotte 12 3,701 1.8% 1.1% ------------------------------------ Carolina Region 29 7,902 3.9% 2.5% Atlanta 64 13,410 6.6% 5.4% Birmingham 1 240 0.1% 0.0% ------------------------------------ Georgia Region 65 13,650 6.7% 5.4% Minneapolis/St Paul 18 3,982 2.0% 2.0% Chicago 9 3,469 1.7% 1.6% Southeastern Michigan 22 3,427 1.7% 1.5% Nashville 11 2,729 1.3% 1.0% Columbus 31 3,415 1.7% 0.8% Indianapolis 29 3,056 1.5% 0.7% Northern Ohio 25 2,691 1.3% 0.6% Southern Ohio 22 1,865 0.9% 0.5% St Louis 5 984 0.5% 0.4% Milwaukee 3 686 0.3% 0.4% Lexington 7 656 0.3% 0.2% Louisville 8 608 0.3% 0.2% Memphis 1 568 0.3% 0.1% ------------------------------------ Midwest Region 191 28,136 13.9% 10.0% Lexford Other 50 4,194 2.1% 1.0% Dallas/Ft Worth 37 11,463 5.7% 4.1% Houston 17 5,282 2.6% 2.1% Austin 13 3,867 1.9% 1.3% San Antonio 7 2,146 1.1% 0.6% Tulsa 8 2,036 1.0% 0.5% Kansas City 1 288 0.1% 0.2% ------------------------------------ Texas Region 83 25,082 12.4% 8.8% Phoenix 39 11,005 5.4% 4.2% Las Vegas 1 524 0.3% 0.2% Tucson 2 558 0.3% 0.1% Albuquerque 2 369 0.2% 0.1% ------------------------------------ Arizona Region 44 12,456 6.2% 4.6% Denver 29 8,194 4.1% 3.7% ------------------------------------ Colorado Region 29 8,194 4.1% 3.7% Los Angeles 30 6,528 3.2% 6.1% San Diego 13 4,048 2.0% 4.0% Orange County, CA 8 3,013 1.5% 2.9% Inland Empire, CA 11 3,504 1.7% 2.7% ------------------------------------ Southern Cal Region 62 17,093 8.4% 15.7% San Francisco Bay Area 26 6,249 3.1% 4.9% Central Valley CA 10 1,595 0.8% 0.5% ------------------------------------ Northern Cal Region 36 7,844 3.9% 5.4% Seattle 35 7,267 3.6% 3.4% Portland OR 13 4,678 2.3% 1.8% Tacoma 7 2,341 1.2% 1.1% ------------------------------------ Washington Region 55 14,286 7.1% 6.3% Total 943 196,858 97.3% 100.0% Condominium Conversion 6 1,597 0.8% 0.0% Ft. Lewis - Military Housing 1 3,801 1.9% 0.0% ------------------------------------ Grand Total 950 202,256 100.0% 100.0% Debt Summary as of September 30, 2004 $ Millions Weighted Average Rate (1) ------------- ------------ Secured $3,274 5.42% Unsecured 3,072 5.83% ------------- ------------ Total $6,346 5.62% Fixed Rate $5,104 6.50% Floating Rate 1,242 2.18% ------------- ------------ Total $6,346 5.62% Above Totals Include: --------------------- Tax Exempt: Fixed $327 4.36% Floating 562 1.59% ------------- ------------ Total $889 2.60% Unsecured Revolving Credit Facility $- - (1) Net of the effect of any derivative instruments. Debt Maturity Schedule as of September 30, 2004 Year $ Millions % of Total ------ ------------- ------------- 2004 $137 2.2% 2005 (2) 639 10.1% 2006 (3) 475 7.5% 2007 444 7.0% 2008 627 9.9% 2009 840 13.2% 2010 211 3.3% 2011 706 11.1% 2012 456 7.2% 2013+ 1,811 28.5% ------------- ------------- Total $6,346 100.0% (2) Includes $300 million of unsecured debt with a final maturity of 2015 that is putable/callable in 2005. (3) Includes $150 million of unsecured debt with a final maturity of 2026 that is putable in 2006. Selected Unsecured Public Debt Covenants September 30, 2004 ------------- Total Debt to Adjusted Total Assets (not to exceed 60%) 42.3% Secured Debt to Adjusted Total Assets (not to exceed 40%) 21.8% Consolidated Income Available For Debt Service To Maximum Annual Service Charges (must be at least 1.5 to 1) 2.80 Total Unsecured Assets to Unsecured Debt (must be at least 150%) 294.0% These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP. The terms are defined in the original indenture. Capitalization as of September 30, 2004 Total Debt $6,345,918,729 Common Shares & OP Units 303,454,353 Common Share Equivalents 2,657,519 ------------ Total Outstanding at quarter-end 306,111,872 Common Share Price at September 30, 2004 $31.00 ------------ 9,489,468,032 Perpetual Preferred Shares Liquidation Value 615,000,000 Perpetual Preference Interests Liquidation Value 171,500,000 ------------------------- Total Market Capitalization $16,621,886,761 Total Debt/Total Market Capitalization 38% Common Share and Operating Partnership Unit (OP Unit) Weighted Average Amounts Outstanding YTD 3Q04 YTD 3Q03 3Q04 3Q03 ------------ ------------ ------------ ------------ Weighted Average Amounts Outstanding for Net Income Purposes: Common Shares - basic 278,876,118 271,622,491 280,167,146 272,786,814 Shares issuable from assumed conversion/ vesting of: - OP Units 21,052,706 22,277,751 20,732,726 22,245,483 - share options/ restricted shares 2,809,917 2,283,531 3,127,725 2,908,547 ------------ ------------ ------------ ------------ Total Common Shares and OP Units - diluted 302,738,741 296,183,773 304,027,597 297,940,844 Weighted Average Amounts Outstanding for FFO Purposes: OP Units - basic 21,052,706 22,277,751 20,732,726 22,245,483 Common Shares - basic 278,876,118 271,622,491 280,167,146 272,786,814 ------------ ------------ ------------ ------------ Total Common Shares and OP Units - basic 299,928,824 293,900,242 300,899,872 295,032,297 Shares issuable from assumed conversion/ vesting of: - convertible preferred shares/units 2,458,126 3,132,491 2,287,258 3,111,580 - share options/ restricted shares 2,809,917 2,283,531 3,127,725 2,908,547 ------------ ------------ ------------ ------------ Total Common Shares and OP Units - diluted 305,196,867 299,316,264 306,314,855 301,052,424 Period Ending Amounts Outstanding: OP Units 20,688,268 Common Shares 282,766,085 ------------ Total Common Shares and OP Units 303,454,353 Unconsolidated Entities as of September 30, 2004 (Amounts in thousands except for project and unit amounts) Institutional Lexford / Totals Joint Other Ventures -------------- --------- --------- Total projects 45 13 58 (1) -------------- --------- --------- Total units 10,846 1,645 12,491 (1) -------------- --------- --------- Company's ownership percentage of outstanding debt 25.0% 11.1% Company's share of outstanding debt (2) $121,200 $3,284 $124,484 -------------- --------- --------- Operating information for the nine-months ended 9/30/04 (at 100%) (3): Operating revenue $67,246 $8,201 $75,447 Operating expenses 30,280 4,283 34,563 -------------- --------- --------- Net operating income 36,966 3,918 40,884 Depreciation 15,525 1,762 17,287 Other 270 - 270 -------------- --------- --------- Operating income 21,171 2,156 23,327 Interest and other income 102 17 119 Interest: Expense incurred, net (28,083) (1,949) (30,032) Amortization of deferred financing costs (463) (166) (629) -------------- --------- --------- Net (loss) income $(7,273) $58 $(7,215) ============== ========= ========= (1) Totals exclude Fort Lewis Military Housing consisting of one property and 3,801 units, which is not accounted for under the equity method of accounting, but is included in the Company's property/unit counts at September 30, 2004. (2) All debt is non-recourse to the Company. (3) Excludes approximately $7.3 million of losses from previously unconsolidated development entities. The Company consolidated these development entities during the first quarter of 2004 either through its acquisition of 15 of these projects or through its adoption of FIN 46 effective March 31, 2004. Consolidated Development Projects as of September 30, 2004 (Amounts in thousands except for project and unit amounts) No. of Total Total Units Capital Fundings Cost (1) To Date Projects Location (1) (2) ------------------------------------------- ------ --------- --------- Projects Under Development ------------------------- 2400 M Street (Sovereign at 2400) Washington, D.C. 359 $111,947 $57,040 Union Station Los Angeles, CA 278 57,222 17,383 Indian Ridge Waltham, MA 264 47,032 18,168 1111 25th Street (Sovereign House) Washington, D.C. 141 40,329 35,383 ------ --------- --------- Total Projects Under Development 1,042 256,530 127,974 Completed Not Stabilized: ------------------------- 1210 Massachusetts Ave. Washington, D.C. (Sovereign Park) 144 39,374 38,874 Water Terrace I Marina Del Rey, (Regatta I) (3) CA 450 225,753 225,753 Bella Vista I & II Woodland Hills, (Warner Ridge) (3) CA 315 80,112 77,029 City View at the Highlands (3) Lombard, IL 403 65,539 65,289 Legacy Park Central Concord, CA 259 52,337 50,927 City Place (Westport) (3) Kansas City, MO 288 33,895 33,759 Marina Bay II (3) Quincy, MA 108 23,126 22,976 ------ --------- --------- Total Projects Completed Not Stabilized 1,967 520,136 514,607 Completed And Stabilized: ------------------------- None this quarter Total Projects Completed And Stabilized - - - ------ --------- --------- Total Projects 11 3,009 $776,666 $642,581 ====== ========= ========= Percent- Percent- Percent- Esti- Esti- age age age mated mated Comp- Leased Occupied Comp- Stabil- leted letion ization Projects Location Date Date ---------------------------------------------------------------------- Projects Under Development ---------------- 2400 M Street Washington, 51% - - 1Q 2006 3Q 2007 (Sovereign at D.C. 2400) Union Station Los Angeles, 30% - - 3Q 2005 3Q 2006 CA Indian Ridge Waltham, MA 39% - - 4Q 2005 4Q 2006 1111 25th Street Washington, 88% - - 1Q 2005 4Q 2005 (Sovereign House) D.C. Completed Not Stabilized: ------------------------- 1210 Washington, 100% 13% 8% Completed 3Q 2005 Massachusetts D.C. Ave. (Sovereign Park) Water Terrace I Marina Del 100% 78% 73% Completed 2Q 2005 (Regatta I) (3) Rey, CA Bella Vista I & Woodland 100% 80% 76% Completed 1Q 2005 II (Warner Hills, CA Ridge) (3) City View at the Lombard, IL 100% 75% 74% Completed 2Q 2005 Highlands (3) Legacy Park Concord, CA 100% 97% 92% Completed 4Q 2004 Central City Place Kansas City, MO 100% 79% 75% Completed 2Q 2005 (Westport) (3) Marina Bay II Quincy, MA 100% 59% 56% Completed 1Q 2005 (3) Total Projects 11 Total Capital Q3 2004 NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Cost (1) NOI ---------------- Projects Under Development $256,530 $ - Completed Not Stabilized 520,136 3,649 Completed And Stabilized - - ---------------- Total Development/Newly Stabilized NOI Contribution $776,666 $3,649 ================ (1) Total capital cost represents estimated development cost for projects under development and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all completed projects. Total capital cost and total fundings to date exclude purchase consideration paid to the development partner of $1.8 million and $1.0 million on Water Terrace I and Bella Vista I & II, respectively. (2) Of the total fundings to date, $514.6 million has been transferred to land and depreciable property and $128.0 million is currently reflected as construction in progress ("CIP"). The remaining $152.2 million of CIP represents land held for future development and related costs. Of the $134.1 million remaining to be invested, $128.6 million will be funded through third party construction mortgages. (3) Projects are wholly owned. All others are partially owned. Consolidated Condominium Conversion Projects as of September 30, 2004 (Amounts in thousands except for project and unit amounts) Units ------------------------------- Available for Sale ----------------- Projects Location Project Estimated Total Units Sold Available Start Close Out Closed Not Date Date Closed ---------------------------------------------------------------------- For Sale ---------- Four Lakes Lisle, IL Q4 2001 Q4 2005 714 543 62 109 Country Mill Creek,Q1 2004 Q3 2005 Club WA Estates 151 27 28 96 Sterling Bellevue, Q2 2004 Q3 2005 Heights WA 116 7 13 96 Venetian I Phoenix, Q1 2004 Q3 2005 & II AZ 264 34 42 188 Verona Scottsdale,Q2 2004 Q2 2005 AZ 108 - - 108 Grand Coral Q2 2004 Q1 2005 Oasis Springs, FL 198 - 143 55 Radius at Washington,Q2 2004 Q1 2005 Logan DC Circle (1) 170 48 41 81 Watermarke Irvine, CA Q3 2004 Q4 2006 (1) 535 - - 535 ------------------------------- 2,256 659 329 1,268 Sold Out ---------- Pointe Redmond WA Q4 2002 Q4 2003 East 76 76 - - Preserve Phoenix, Q1 2003 Q1 2004 at Squaw AZ Peak 108 108 - - Barcelona Scottsdale,Q3 2003 Q3 2004 AZ 96 96 - - Balaton Lake Q3 2003 Q3 2004 Forest Park, WA 108 108 - - ------------------------------- 388 388 - - Totals 12 2,644 1,047 329 1,268 =============================== (1) Partially owned projects; FFO incremental gain on sale represents portion attributable to the Company. (2) Excludes interest income and interest expense specific to condominium conversion projects. 2004 YTD Activity ------------------------------- Projects Location Project Estimated Units Sales FFO Start Close Out Closed Price Incremental Date Date Gain on Sale ---------------------------------------------------------------------- For Sale ----------- Four Lakes Lisle, IL Q4 2001 Q4 2005 206 $26,307 $5,527 Country Mill Creek,Q1 2004 Q3 2005 Club WA Estates 27 4,339 732 Sterling Bellevue, Q2 2004 Q3 2005 Heights WA 7 1,171 178 Venetian I Phoenix, Q1 2004 Q3 2005 & II AZ 34 5,032 1,165 Verona Scottsdale,Q2 2004 Q2 2005 AZ - - - Grand Coral Q2 2004 Q1 2005 Oasis Springs, FL - - - Radius at Washington,Q2 2004 Q1 2005 Logan DC Circle (1) 48 14,971 2,318 Watermarke Irvine, CA Q3 2004 Q4 2006 (1) - - - ------------------------------- 322 51,820 9,920 Sold Out ----------- Pointe Redmond WA Q4 2002 Q4 2003 East - - - Preserve Phoenix, AZQ1 2003 Q1 2004 at Squaw Peak 2 171 32 Barcelona Scottsdale,Q3 2003 Q3 2004 AZ 96 13,135 2,883 Balaton Lake Q3 2003 Q3 2004 Forest Park, WA 101 15,310 2,834 ------------------------------- 199 28,616 5,749 Totals 12 521 $80,436 $15,669 =============================== Net incremental gain on sales of condominium units $15,669 Property management and general and administrative expenses (1,969) Discontinued operating (loss) income (303) -------------- Net Income - Condominium Division (2) $13,397 ============== (1) Partially owned projects; FFO incremental gain on sale represents portion attributable to the Company. (2) Excludes interest income and interest expense specific to condominium conversion projects. 3Q 2004 ------------------------------ Projects Location Project Estimated Units Sales FFO Start Close Out Closed Price Incremental Date Date Gain on Sale ---------------------------------------------------------------------- For Sale ---------- Four Lakes Lisle, IL Q4 2001 Q4 2005 84 $11,299 $2,518 Country Mill Creek,Q1 2004 Q3 2005 Club WA Estates 24 3,908 653 Sterling Bellevue, Q2 2004 Q3 2005 Heights WA 7 1,171 178 Venetian I Phoenix, Q1 2004 Q3 2005 & II AZ 34 5,032 1,165 Verona Scottsdale,Q2 2004 Q2 2005 AZ - - - Grand Coral Q2 2004 Q1 2005 Oasis Springs, FL - - - Radius at Washington,Q2 2004 Q1 2005 Logan DC Circle (1) 48 14,971 2,318 Watermarke Irvine, CA Q3 2004 Q4 2006 (1) - - - ------------------------------- 197 36,381 6,832 Sold Out ---------- Pointe Redmond WA Q4 2002 Q4 2003 East - - - Preserve Phoenix, AZQ1 2003 Q1 2004 at Squaw Peak - - - Barcelona Scottsdale,Q3 2003 Q3 2004 AZ 5 730 178 Balaton Lake Q3 2003 Q3 2004 Forest Park, WA 6 903 189 ------------------------------- 11 1,633 367 Totals 12 208 $38,014 $7,199 =============================== Net incremental gain on sales of condominium units $7,199 Property management and general and administrative expenses (774) Discontinued operating (loss) income 442 -------------- Net Income - Condominium Division (2) $6,867 ============== (1) Partially owned projects; FFO incremental gain on sale represents portion attributable to the Company. (2) Excludes interest income and interest expense specific to condominium conversion projects. Maintenance Expenses and Capitalized Improvements to Real Estate For the Nine Months Ended September 30, 2004 (Amounts in thousands except for unit and per unit amounts) ------------------------------------------------- Maintenance Expenses ------------------------------------------------- Total Avg. Avg. Avg. Units Expense Per Payroll Per Per (1) (2) Unit (3) Unit Total Unit ------- ---------------- --------------- ---------------- Established Properties (6) 157,049 $68,119 $434 $61,705 $393 $129,824 $827 New Acqui- sition Proper- ties (7) 19,998 8,557 521 5,666 345 14,223 866 Other (8) 8,917 8,054 7,302 15,356 -------- -------- -------- --------- Total 185,964 $84,730 $74,673 $159,403 ======== ======== ======== ========= ---------------------------------------------------------- Capitalized Improvements to Real Estate ---------------------------------------------------------- Avg. Building Avg. Avg. Replacements Per Improvements Per Per (4) Unit (5) Unit Total Unit ----------------------- ------------------ -------------- Established Properties (6) $43,919 $280 $69,156 $440 $113,075 $720 New Acquisition Properties (7) 2,791 170 7,127 434 9,918 604 Other (8) 10,479 17,019 27,498 ---------------- ---------- --------- Total $57,189 $93,302 $150,491 ================ ========== ========= --------------------------- Total Expenditures --------------------------- Avg. Per Grand Total Unit --------------------------- Established Properties (6) $242,899 $1,547 New Acquisition Properties (7) 24,141 1,470 Other (8) 42,854 ------------- Total $309,894 ============= (1) Total units exclude 16,292 unconsolidated units. (2) Maintenance expenses include general maintenance costs, unit turnover costs including interior painting, regularly scheduled landscaping and tree trimming costs, security, exterminating, fire protection, snow and ice removal, elevator repairs, and other miscellaneous building repair costs. (3) Maintenance payroll includes employee costs for maintenance, cleaning, housekeeping, and landscaping. (4) Replacements include new expenditures inside the units such as carpets, appliances, mechanical equipment, fixtures and vinyl flooring. (5) Building improvements include roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting and siding, major landscaping, vehicles and office and maintenance equipment. (6) Wholly Owned Properties acquired prior to January 1, 2002. (7) Wholly Owned Properties acquired during 2002, 2003 and 2004. Per unit amounts are based on a weighted average of 16,434 units. (8) Includes properties either Partially Owned or sold during the period, commercial space, condominium conversions and $4.5 million included in building improvements spent on nine specific assets related to major renovations and repositioning of these assets. Discontinued Operations (Amounts in thousands) Nine Months Ended Quarter Ended September 30, September 30, ------------------ ---------------- 2004 2003 2004 2003 ------------------ ---------------- REVENUES Rental income $29,807 $153,659 $4,297 $42,255 -------- --------- ------- -------- Total revenues 29,807 153,659 4,297 42,255 -------- --------- ------- -------- EXPENSES (1) Property and maintenance 15,615 53,318 3,248 15,449 Real estate taxes and insurance 3,349 16,051 582 4,105 Property management 73 103 43 (9) Depreciation 6,264 40,790 151 11,354 -------- --------- ------- -------- Total expenses 25,301 110,262 4,024 30,899 -------- --------- ------- -------- Discontinued operating income 4,506 43,397 273 11,356 Interest and other income 96 188 28 56 Interest: Expense incurred, net (752) (5,152) (163) (1,620) Amortization of deferred financing costs (387) (639) (26) (313) -------- --------- ------- -------- Discontinued operations, net $3,463 $37,794 $112 $9,479 ======== ========= ======= ======== (1) Includes expenses paid in the current period for properties sold in prior periods related to the Company's period of ownership. As a result of the Securities and Exchange Commission's Regulation FD, the Company will provide earnings guidance in its quarterly earnings release. These projections are based on current expectations and are forward-looking. 2004 Earnings Guidance (per share diluted) ---------------------------------------------- Q4 YEAR -------------- -------------- Expected EPS (1) $0.30 to $0.31 $1.30 to $1.31 Add: Expected depreciation expense 0.40 1.61 Less: Expected net gain on sales (1) (0.15) (0.78) -------------- -------------- Expected FFO (2) $0.55 to $0.56 $2.13 to $2.14 ============== ============== 2004 Same-Store Assumptions ------------------------------------- Physical occupancy 93.0% Revenue change 0.9% Expense change 3.8% NOI change (1.1%) Acquisitions $900 million Dispositions $800 million (1) Earnings per share ("EPS") represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected EPS is calculated on a basis consistent with actual EPS. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual EPS could differ materially from expected EPS. (2) 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), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. Expected FFO is calculated on a basis consistent with actual FFO. CONTACT: Equity Residential Marty McKenna, 312-928-1901