Equity Residential Reports Full Year 2019 Results

Equity Residential (NYSE: EQR) today reported results for the quarter and year ended December 31, 2019. All per share results are reported as available to common shares/units on a diluted basis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31,

 

 

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

 

 

Earnings Per Share (EPS)

 

$

0.77

 

 

$

0.31

 

 

$

0.46

 

 

 

148.4

%

 

 

Funds from Operations (FFO) per share

 

$

0.86

 

 

$

0.84

 

 

$

0.02

 

 

 

2.4

%

 

 

Normalized FFO per share

 

$

0.91

 

 

$

0.84

 

 

$

0.07

 

 

 

8.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

			Year Ended December 31,
			2019				2018				$ Change				% Change
	Earnings Per Share (EPS)		$	2.60			$	1.77			$	0.83				46.9	%
	Funds from Operations (FFO) per share		$	3.39			$	3.14			$	0.25				8.0	%
	Normalized FFO per share		$	3.49			$	3.25			$	0.24				7.4	%

“Equity Residential had a very good 2019. Strong demand and record resident satisfaction and retention drove same store revenue growth to the high end of our original expectations. Also, Normalized FFO grew by a healthy 7.4%, which was above our expectations. Thanks to the entire Equity Residential team for all they did to accomplish this,” said Mark J. Parrell, Equity Residential’s President and CEO. “We expect a consistently growing economy in 2020 to create steady demand to absorb the continuing elevated levels of new supply that will be delivered in most of our markets. This, combined with the impact of the new rent control regulations in California and New York, leads us to anticipate same store revenue growth slightly below our 2019 result.”

Company Highlights

• Produced same store revenue growth of 3.2% for the fourth quarter of 2019, with Physical Occupancy of 96.1% and Renewal Rate Achieved growth of 4.8%. For the full year 2019, produced same store revenue growth of 3.2% with Physical Occupancy of 96.4% and Renewal Rate Achieved growth of 4.9%.

• Produced Normalized FFO per share growth of 8.3% for the fourth quarter of 2019 and 7.4% for the full year 2019.

• During the fourth quarter of 2019, acquired three apartment properties, totaling 812 apartment units, for an aggregate purchase price of approximately $370.1 million.

• Planned annualized increase of 6.2% in its 2020 common share dividend.

• Continued to enhance its operating platform in 2019, including roll-outs of self-guided tours, application of artificial intelligence to leasing and installation of smart home technology at selected properties, and it plans a significant acceleration of these activities in 2020.

• Enhanced its balance sheet, liquidity and financial flexibility to support its business objectives and growth through increasing the size of its revolving credit facility to $2.5 billion from $2.0 billion and increasing the maximum size of its unsecured commercial paper program from $500.0 million to $1.0 billion.

Results Per Share

The change in EPS for both the quarter and year ended December 31, 2019 compared to the same periods of 2018, are due primarily to higher property and unconsolidated sale gains in the fourth quarter and/or full year of 2019, the various adjustment items listed on page 25 of this release and the items described below.

The per share changes in FFO for both the quarter and year ended December 31, 2019 compared to the same periods of 2018, are due primarily to the various adjustment items listed on page 25 of this release and the items described below.

The per share changes in Normalized FFO are due primarily to:

		Positive/(Negative) Impact
		Fourth Quarter 2019 vs. Fourth Quarter 2018				Full Year 2019 vs. Full Year 2018
Same Store NOI		$	0.04			$	0.13
Lease-Up NOI and other non-same store NOI			0.01				0.07
2019 and 2018 transaction activity impact on NOI			0.02				0.05
Interest expense			0.01				0.02
Other items			(0.01	)			(0.03	)
Net		$	0.07			$	0.24

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 27 through 32 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 29 and 30 of this release and the Company has included guidance for 2020 Normalized FFO per share on page 26 and 2020 FFO per share and 2020 EPS on page 30 of this release.

Same Store Results

The following table shows the increases in same store results for the fourth quarter 2019 to fourth quarter 2018 comparison, which includes 75,816 apartment units, and for the year ended December 31, 2019 to year ended December 31, 2018 comparison, which includes 71,830 apartment units. The Company’s Physical Occupancy was 96.1% compared to 96.2% for the fourth quarter of 2019 and 2018, respectively, and 96.4% compared to 96.2% for the full years 2019 and 2018, respectively.

		Fourth Quarter 2019 vs. Fourth Quarter 2018			Full Year 2019 vs. Full Year 2018
Revenues		3.2%			3.2%
Expenses		3.0%			3.7%
NOI		3.2%			3.0%

Operating Initiatives

In 2020, the Company will accelerate the deployment of the following initiatives aimed at delighting our customers, improving the efficiency of our operating platform and providing enhanced career opportunities for our employees:

• Smart Home Technology: The installation of smart home technology in an additional 10,000 apartment units at a cost of approximately $1,000 per unit (included in the Company’s capital expenditures guidance on page 26). The Company expects to receive a rent premium of approximately $30 per month per apartment unit;
• Sales-Focused Improvements: Full deployment of an AI-enabled sales tool, self-guided tours and a new mobile customer relationship management platform, resulting in efficiencies across the sales function; and
• Service Enhancements: Full deployment of service mobility, creating efficiencies in the service function by driving improved service personnel utilization and enhanced outsourcing decision quality.

The Company expects the impact of these initiatives to deliver approximately $15 million in annual NOI improvements once fully deployed with approximately $5 million of that NOI benefit expected in 2020. These early stage initiatives provide a foundation upon which the Company will build in 2021 and beyond.

Investment Activity

The Company acquired three apartment properties during the fourth quarter of 2019, totaling 812 apartment units, for an aggregate purchase price of approximately $370.1 million at a weighted average Acquisition Capitalization Rate of 4.8%. Two of the properties are located in Seattle and the other in suburban Washington, D.C.

The Company sold two properties during the fourth quarter of 2019, totaling 1,159 apartment units, for an aggregate sale price of approximately $374.0 million at a weighted average Disposition Yield of 4.8%, generating an Unlevered IRR of 7.6%. The properties are located in suburban Washington, D.C.

During 2019, the Company acquired 13 properties, totaling 3,540 apartment units, for an aggregate purchase price of approximately $1.49 billion at a weighted average Acquisition Capitalization Rate of 4.7%.

During 2019, the Company sold 11 wholly-owned properties, totaling 2,361 apartment units, for an aggregate sale price of approximately $1.08 billion at a weighted average Disposition Yield of 4.6%, generating an Unlevered IRR of 7.8%. During 2019, the Company also sold two unconsolidated properties, totaling 945 apartment units, for an aggregate sale price of approximately $394.5 million at a weighted average Disposition Yield of 4.7%, received net proceeds of approximately $78.3 million and recognized a GAAP gain on sale of approximately $69.5 million from these sales.

Capital Markets Activity

On November 1, 2019, the Company’s operating partnership entered into a $2.5 billion multi-currency revolving credit facility, replacing its existing $2.0 billion credit agreement. The new facility matures on November 1, 2024, and can be extended or increased, subject to lender consent and customary conditions. The interest rate and facility fees are based on the operating partnership’s long-term unsecured credit ratings.

In addition, the operating partnership increased the maximum size for its unsecured commercial paper note program from $500.0 million to $1.0 billion. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the other unsecured senior indebtedness of the operating partnership.

On December 6, 2019, the Company redeemed $600.0 million in 4.75% unsecured notes originally due to mature on July 15, 2020. In conjunction with the redemption, the Company incurred approximately $11.6 million in debt extinguishment costs, of which $10.3 million represented cash prepayment penalties and $1.3 million represented non-cash write-offs of unamortized debt discounts and deferred financing costs, all of which are not included in Normalized FFO. The Company's strong liquidity profile as a result of the credit facility and commercial paper program activity discussed above allowed for this early redemption.

2020 Common Share Dividend

The Company expects to declare a common share dividend of $0.6025 per share for the first quarter of 2020, which is an annualized increase of approximately 6.2% over the 2019 dividend. This increase is driven by the Company’s continued strong cash flow performance, solid balance sheet and modest payout ratio. The first quarter dividend and all future dividends remain subject to the discretion of the Company’s Board of Trustees.

First Quarter 2020 Guidance

The Company has established guidance ranges for the first quarter of 2020 EPS, FFO per share and Normalized FFO per share as listed below:

		Q1 2020 Guidance
EPS		$0.98 to $1.02
FFO per share		$0.83 to $0.87
Normalized FFO per share		$0.84 to $0.88

The difference between the fourth quarter 2019 actual EPS of $0.77 and the first quarter 2020 EPS guidance midpoint of $1.00 is due primarily to higher expected property sale gains, lower expected debt extinguishment costs and the items described below.

The difference between the fourth quarter 2019 actual FFO of $0.86 per share and the first quarter 2020 FFO guidance midpoint of $0.85 per share is due primarily to lower expected debt extinguishment costs and the items described below.

The difference between the fourth quarter 2019 actual Normalized FFO of $0.91 per share and the first quarter 2020 Normalized FFO guidance midpoint of $0.86 per share is due primarily to:

		Positive/(Negative) Impact
		First Quarter 2020 vs. Fourth Quarter 2019
Same Store NOI		$	(0.02	)
2020 and 2019 transaction activity impact on NOI			(0.01	)
Interest expense			0.01
Corporate overhead			(0.02	)
Other items			(0.01	)
Net		$	(0.05	)

Full Year 2020 Guidance

The Company has provided guidance for its full year 2020 same store operating performance, EPS, FFO per share, Normalized FFO per share, transactions and debt offerings as listed below:

Same Store:
Physical Occupancy		96.4%
Revenue change		2.3% to 3.3%
Expense change		3.0% to 4.0%
NOI change		1.5% to 3.5%
EPS		$2.64 to $2.74
FFO per share		$3.57 to $3.67
Normalized FFO per share		$3.59 to $3.69
Transactions:
Consolidated rental acquisitions		$1.25 billion
Consolidated rental dispositions		$1.0 billion
Transaction Accretion (Dilution)		(25 basis points)
Debt Offerings		$600.0 million to $1.0 billion

The difference between the Company’s full year 2019 actual EPS of $2.60 and the full year 2020 EPS guidance midpoint of $2.69 is due primarily to lower expected property sale gains, lower expected debt extinguishment costs, lower expected depreciation expense and the items described below.

The difference between the Company’s full year 2019 actual FFO of $3.39 per share and the full year 2020 FFO guidance midpoint of $3.62 per share is due primarily to lower expected debt extinguishment costs and the items described below.

The difference between the Company’s full year 2019 actual Normalized FFO of $3.49 per share and the full year 2020 Normalized FFO guidance midpoint of $3.64 per share is due primarily to:

		Positive/(Negative) Impact
		Full Year 2020 vs. Full Year 2019
Same Store NOI		$	0.11
Lease-Up NOI			0.01
Interest expense			0.07
Corporate overhead			(0.01	)
Other items			(0.03	)
Net		$	0.15

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of rental apartment properties located in urban and high-density suburban communities where today’s renters want to live, work and play. Equity Residential owns or has investments in 309 properties consisting of 79,962 apartment units, primarily located in Boston, New York, Washington, D.C., Seattle, San Francisco, Southern California and Denver. 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 Residential’s 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 management’s 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 Company’s conference call discussing these results will take place tomorrow, Wednesday, January 29, 2020 at 10:00 a.m. CT. Please visit the Investor section of the Company’s 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,
		2019				2018				2019				2018
REVENUES
Rental income		$	2,700,691			$	2,577,681			$	683,895			$	652,553
Fee and asset management			384				753				24				190
Total revenues			2,701,075				2,578,434				683,919				652,743
EXPENSES
Property and maintenance			446,845				429,335				108,348				106,848
Real estate taxes and insurance			366,139				357,814				95,705				89,030
Property management			95,344				92,485				22,639				23,310
General and administrative			52,757				53,813				11,630				12,393
Depreciation			831,083				785,725				214,882				201,856
Total expenses			1,792,168				1,719,172				453,204				433,437
Net gain (loss) on sales of real estate properties			447,637				256,810				178,237				(24	)
Impairment			—				(702	)			—				—
Operating income			1,356,544				1,115,370				408,952				219,282
Interest and other income			2,817				15,317				596				457
Other expenses			(18,177	)			(17,267	)			(6,972	)			(2,396	)
Interest:
Expense incurred, net			(390,076	)			(413,360	)			(100,300	)			(91,906	)
Amortization of deferred financing costs			(11,670	)			(11,310	)			(3,006	)			(2,256	)
Income before income and other taxes, income (loss) from
investments in unconsolidated entities and net gain (loss)
on sales of land parcels			939,438				688,750				299,270				123,181
Income and other tax (expense) benefit			2,281				(878	)			3,030				(111	)
Income (loss) from investments in unconsolidated entities			65,945				(3,667	)			(961	)			(674	)
Net gain (loss) on sales of land parcels			2,044				987				(33	)			(8	)
Net income			1,009,708				685,192				301,306				122,388
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership			(36,034	)			(24,939	)			(10,695	)			(4,422	)
Partially Owned Properties			(3,297	)			(2,718	)			(847	)			(779	)
Net income attributable to controlling interests			970,377				657,535				289,764				117,187
Preferred distributions			(3,090	)			(3,090	)			(772	)			(772	)
Net income available to Common Shares		$	967,287			$	654,445			$	288,992			$	116,415
Earnings per share – basic:
Net income available to Common Shares		$	2.61			$	1.78			$	0.78			$	0.32
Weighted average Common Shares outstanding			370,461				368,052				371,155				368,445
Earnings per share – diluted:
Net income available to Common Shares		$	2.60			$	1.77			$	0.77			$	0.31
Weighted average Common Shares outstanding			386,333				383,695				387,143				384,296
Distributions declared per Common Share outstanding		$	2.27			$	2.16			$	0.5675			$	0.54

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,
		2019				2018				2019				2018
Net income		$	1,009,708			$	685,192			$	301,306			$	122,388
Net (income) loss attributable to Noncontrolling Interests – Partially
Owned Properties			(3,297	)			(2,718	)			(847	)			(779	)
Preferred distributions			(3,090	)			(3,090	)			(772	)			(772	)
Net income available to Common Shares and Units			1,003,321				679,384				299,687				120,837
Adjustments:
Depreciation			831,083				785,725				214,882				201,856
Depreciation – Non-real estate additions			(5,585	)			(4,561	)			(1,350	)			(1,164	)
Depreciation – Partially Owned Properties			(3,599	)			(3,740	)			(899	)			(903	)
Depreciation – Unconsolidated Properties			2,997				4,451				612				1,004
Net (gain) loss on sales of unconsolidated entities - operating
assets			(69,522	)			—				—				—
Net (gain) loss on sales of real estate properties			(447,637	)			(256,810	)			(178,237	)			24
Noncontrolling Interests share of gain (loss) on sales
of real estate properties			—				(284	)			—				—
Impairment – operating assets			—				702				—				—
FFO available to Common Shares and Units			1,311,058				1,204,867				334,695				321,654
Adjustments (see note for additional detail):
Impairment – non-operating assets			—				—				—				—
Write-off of pursuit costs			5,529				4,450				1,431				1,325
Debt extinguishment and preferred share redemption (gains)
losses			23,991				41,335				12,184				193
Non-operating asset (gains) losses			(940	)			(161	)			260				94
Other miscellaneous items			8,430				(1,781	)			1,891				827
Normalized FFO available to Common Shares and Units		$	1,348,068			$	1,248,710			$	350,461			$	324,093
FFO		$	1,314,148			$	1,207,957			$	335,467			$	322,426
Preferred distributions			(3,090	)			(3,090	)			(772	)			(772	)
FFO available to Common Shares and Units		$	1,311,058			$	1,204,867			$	334,695			$	321,654
FFO per share and Unit – basic		$	3.42			$	3.16			$	0.87			$	0.84
FFO per share and Unit – diluted		$	3.39			$	3.14			$	0.86			$	0.84
Normalized FFO		$	1,351,158			$	1,251,800			$	351,233			$	324,865
Preferred distributions			(3,090	)			(3,090	)			(772	)			(772	)
Normalized FFO available to Common Shares and Units		$	1,348,068			$	1,248,710			$	350,461			$	324,093
Normalized FFO per share and Unit – basic		$	3.52			$	3.28			$	0.91			$	0.85
Normalized FFO per share and Unit – diluted		$	3.49			$	3.25			$	0.91			$	0.84
Weighted average Common Shares and Units outstanding – basic			383,368				380,921				384,039				381,306
Weighted average Common Shares and Units outstanding – diluted			386,333				383,695				387,143				384,296

Note: See Adjustments from FFO to Normalized FFO for additional detail regarding the adjustments from FFO to Normalized FFO. See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

Equity Residential Consolidated Balance Sheets (Amounts in thousands except for share amounts) (Unaudited)
		December 31,				December 31,
		2019				2018
ASSETS
Land		$	5,936,188			$	5,875,803
Depreciable property			21,319,101				20,435,901
Projects under development			181,630				109,409
Land held for development			96,688				89,909
Investment in real estate			27,533,607				26,511,022
Accumulated depreciation			(7,276,786	)			(6,696,281	)
Investment in real estate, net			20,256,821				19,814,741
Investments in unconsolidated entities			52,238				58,349
Cash and cash equivalents			45,753				47,442
Restricted deposits			71,246				68,871
Right-of-use assets			512,774				—
Other assets			233,937				404,806
Total assets		$	21,172,769			$	20,394,209
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net		$	1,941,610			$	2,385,470
Notes, net			6,077,513				5,933,286
Line of credit and commercial paper			1,017,833				499,183
Accounts payable and accrued expenses			94,350				102,471
Accrued interest payable			66,852				62,622
Lease liabilities			331,334				—
Other liabilities			346,963				358,563
Security deposits			70,062				67,258
Distributions payable			218,326				206,601
Total liabilities			10,164,843				9,615,454
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership			463,400				379,106
Equity:
Shareholders’ equity:
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 745,600 shares issued and
outstanding as of December 31, 2019 and December 31, 2018			37,280				37,280
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 371,670,884 shares issued
and outstanding as of December 31, 2019 and 369,405,161
shares issued and outstanding as of December 31, 2018			3,717				3,694
Paid in capital			8,965,577				8,935,453
Retained earnings			1,386,495				1,261,763
Accumulated other comprehensive income (loss)			(77,563	)			(64,986	)
Total shareholders’ equity			10,315,506				10,173,204
Noncontrolling Interests:
Operating Partnership			227,837				228,738
Partially Owned Properties			1,183				(2,293	)
Total Noncontrolling Interests			229,020				226,445
Total equity			10,544,526				10,399,649
Total liabilities and equity		$	21,172,769			$	20,394,209

Equity Residential Portfolio Summary As of December 31, 2019
										% of Stabilized				Average
						Apartment				Budgeted				Rental
Markets/Metro Areas		Properties				Units				NOI				Rate
Los Angeles			72				16,603				18.7	%		$	2,634
Orange County			13				4,028				4.3	%			2,271
San Diego			12				3,385				3.8	%			2,437
Subtotal – Southern California			97				24,016				26.8	%			2,545
San Francisco			51				13,606				20.6	%			3,320
Washington DC			48				15,248				16.2	%			2,466
New York			37				9,606				14.4	%			3,937
Seattle			45				9,296				10.7	%			2,459
Boston			25				6,430				9.9	%			3,179
Denver			5				1,624				1.4	%			2,053
Other Markets			1				136				—	%			1,323
Total			309				79,962				100.0	%		$	2,858

		Properties				Apartment Units
Wholly Owned Properties			291				76,265
Master-Leased Properties – Consolidated			1				162
Partially Owned Properties – Consolidated			17				3,535
			309				79,962
Note: Projects under development are not included in the Portfolio Summary until construction has been completed.

Equity Residential
Portfolio Rollforward Q4 2019 ($ in thousands)
				Properties				Apartment Units				Purchase Price				Acquisition Cap Rate
		9/30/2019			308				80,299
Acquisitions:
Consolidated:
Rental Properties					1				270			$	117,750				4.4	%
Rental Properties – Not Stabilized (A)					2				542			$	252,359				5.0	%
												Sales Price				Disposition Yield
Dispositions:
Consolidated Rental Properties					(2	)			(1,159	)		$	(374,000	)			(4.8	%)
Land Parcels					—				—			$	(200	)
Configuration Changes					—				10
		12/31/2019			309				79,962

Portfolio Rollforward 2019 ($ in thousands)
				Properties				Apartment Units				Purchase Price				Acquisition Cap Rate
		12/31/2018			307				79,482
Acquisitions:
Consolidated:
Rental Properties					9				2,412			$	1,039,830				4.6	%
Rental Properties – Not Stabilized (A)					4				1,128			$	454,859				4.9	%
Land Parcels					—				—			$	19,832
												Sales Price				Disposition Yield
Dispositions:
Consolidated:
Rental Properties					(11	)			(2,361	)		$	(1,080,675	)			(4.6	%)
Land Parcels					—				—			$	(2,100	)
Unconsolidated:
Rental Properties (B)					(2	)			(945	)		$	(394,500	)			(4.7	%)
Completed Developments – Consolidated					2				221
Configuration Changes					—				25
		12/31/2019			309				79,962

(A)		The Company acquired four properties during the year ended December 31, 2019, including two properties in the Seattle market in the fourth quarter of 2019, all of which are in the final stages of completing lease-up and are expected to stabilize in the second year of ownership at the Acquisition Cap Rates listed above.
(B)		The Company owned a 20% interest in unconsolidated rental properties located in San Jose, CA and South Florida. Sales price listed is the gross sales price. The Company received net sales proceeds of approximately $78.3 million and recognized a GAAP gain on sale of approximately $69.5 million.

Equity Residential
Fourth Quarter 2019 vs. Fourth Quarter 2018 Same Store Results/Statistics for 75,816 Same Store Apartment Units $ in thousands (except for Average Rental Rate)
		Results												Statistics
Description		Revenues				Expenses				NOI				Average Rental Rate				Physical Occupancy				Turnover
Q4 2019		$	652,391			$	193,494			$	458,897			$	2,875				96.1	%			10.6	%
Q4 2018		$	632,463			$	187,924			$	444,539			$	2,789				96.2	%			10.8	%
Change		$	19,928			$	5,570			$	14,358			$	86				(0.1	%)			(0.2	%)
Change			3.2	%			3.0	%			3.2	%			3.1	%

Fourth Quarter 2019 vs. Third Quarter 2019 Same Store Results/Statistics for 77,148 Same Store Apartment Units $ in thousands (except for Average Rental Rate)
		Results												Statistics
Description		Revenues				Expenses				NOI				Average Rental Rate				Physical Occupancy				Turnover
Q4 2019		$	662,071			$	196,300			$	465,771			$	2,869				96.1	%			10.6	%
Q3 2019		$	665,043			$	200,708			$	464,335			$	2,868				96.5	%			16.1	%
Change		$	(2,972	)		$	(4,408	)		$	1,436			$	1				(0.4	%)			(5.5	%)
Change			(0.4	%)			(2.2	%)			0.3	%			0.0	%

2019 vs. 2018 Same Store Results/Statistics for 71,830 Same Store Apartment Units $ in thousands (except for Average Rental Rate)
		Results												Statistics
Description		Revenues				Expenses				NOI				Average Rental Rate				Physical Occupancy				Turnover
2019		$	2,453,259			$	734,553			$	1,718,706			$	2,843				96.4	%			49.5	%
2018		$	2,377,066			$	708,616			$	1,668,450			$	2,762				96.2	%			51.4	%
Change		$	76,193			$	25,937			$	50,256			$	81				0.2	%			(1.9	%)
Change			3.2	%			3.7	%			3.0	%			2.9	%

Note: See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for reconciliations from operating income.

Equity Residential Fourth Quarter 2019 vs. Fourth Quarter 2018 Same Store Results/Statistics by Market

																						Increase (Decrease) from Prior Year's Quarter
Markets/Metro Areas		Apartment Units				Q4 2019 % of Actual NOI				Q4 2019 Average Rental Rate				Q4 2019 Weighted Average Physical Occupancy %				Q4 2019 Turnover				Revenues				Expenses				NOI				Average Rental Rate				Physical Occupancy				Turnover
Los Angeles			15,968				18.8	%		$	2,631				96.0	%			11.9	%			2.7	%			0.8	%			3.5	%			3.1	%			(0.3	%)			(0.9	%)
Orange County			4,028				4.5	%			2,271				96.6	%			10.4	%			3.8	%			(3.5	%)			6.0	%			3.1	%			0.4	%			(0.1	%)
San Diego			3,385				3.9	%			2,437				96.4	%			12.9	%			2.7	%			1.1	%			3.2	%			2.6	%			0.1	%			(0.9	%)
Subtotal – Southern California			23,381				27.2	%			2,540				96.1	%			11.8	%			2.9	%			0.3	%			3.9	%			3.0	%			(0.1	%)			(0.7	%)
San Francisco			13,082				20.9	%			3,324				95.2	%			12.1	%			3.4	%			4.5	%			3.1	%			3.6	%			(0.4	%)			0.9	%
Washington DC			14,228				15.8	%			2,473				96.5	%			9.4	%			2.4	%			3.5	%			1.9	%			2.6	%			0.1	%			(0.7	%)
New York (1)			9,475				15.0	%			3,941				96.5	%			7.3	%			1.8	%			3.3	%			0.8	%			2.3	%			(0.1	%)			(0.3	%)
Boston			6,346				10.2	%			3,178				96.1	%			9.4	%			4.8	%			3.0	%			5.6	%			3.9	%			0.1	%			0.0	%
Seattle (2)			8,442				10.1	%			2,455				96.4	%			11.1	%			5.6	%			6.5	%			5.2	%			3.9	%			0.4	%			(0.2	%)
Other Markets			862				0.8	%			1,979				96.0	%			13.9	%			2.3	%			(4.6	%)			5.1	%			1.7	%			1.6	%			1.1	%
Total			75,816				100.0	%		$	2,875				96.1	%			10.6	%			3.2	%			3.0	%			3.2	%			3.1	%			(0.1	%)			(0.2	%)

(1)		Quarter over quarter same store revenues in New York were negatively impacted by non-residential related income. Residential-only same store revenues in New York increased 2.2% quarter over quarter.
(2)		Quarter over quarter same store revenues in Seattle were positively impacted by non-residential related income. Residential-only same store revenues in Seattle increased 4.5% quarter over quarter.

Equity Residential Fourth Quarter 2019 vs. Third Quarter 2019 Same Store Results/Statistics by Market

																						Increase (Decrease) from Prior Quarter
Markets/Metro Areas		Apartment Units				Q4 2019 % of Actual NOI				Q4 2019 Average Rental Rate				Q4 2019 Weighted Average Physical Occupancy %				Q4 2019 Turnover				Revenues				Expenses				NOI				Average Rental Rate				Physical Occupancy				Turnover
Los Angeles			15,968				18.5	%		$	2,631				96.0	%			11.9	%			(0.6	%)			(3.3	%)			0.6	%			0.3	%			(0.6	%)			(4.8	%)
Orange County			4,028				4.5	%			2,271				96.6	%			10.4	%			(0.3	%)			(8.7	%)			2.4	%			(0.2	%)			0.0	%			(6.9	%)
San Diego			3,385				3.8	%			2,437				96.4	%			12.9	%			(0.5	%)			(5.3	%)			1.3	%			0.0	%			(0.2	%)			(5.6	%)
Subtotal – Southern California			23,381				26.8	%			2,540				96.1	%			11.8	%			(0.5	%)			(4.3	%)			1.0	%			0.1	%			(0.5	%)			(5.3	%)
San Francisco			13,469				20.9	%			3,310				95.2	%			12.2	%			(0.6	%)			(1.7	%)			(0.3	%)			0.0	%			(0.5	%)			(4.0	%)
Washington DC			14,594				15.9	%			2,463				96.4	%			9.6	%			(0.5	%)			(3.4	%)			0.8	%			(0.1	%)			(0.2	%)			(6.7	%)
New York (1)			9,606				15.0	%			3,937				96.4	%			7.3	%			(1.1	%)			(2.0	%)			(0.5	%)			(0.2	%)			(0.5	%)			(6.0	%)
Seattle			8,616				10.2	%			2,454				96.4	%			11.1	%			0.2	%			3.2	%			(0.8	%)			0.5	%			(0.1	%)			(4.0	%)
Boston			6,346				10.1	%			3,178				96.1	%			9.4	%			0.9	%			(0.7	%)			1.5	%			0.3	%			(0.3	%)			(7.0	%)
Other Markets			1,136				1.1	%			2,056				95.3	%			14.4	%			(2.4	%)			(4.8	%)			(1.5	%)			(1.5	%)			(0.8	%)			(5.8	%)
Total			77,148				100.0	%		$	2,869				96.1	%			10.6	%			(0.4	%)			(2.2	%)			0.3	%			0.0	%			(0.4	%)			(5.5	%)

(1)

Sequential same store revenues in New York were negatively impacted by non-residential related income. Residential-only same store revenues in New York decreased 0.6% sequentially.

Equity Residential 2019 vs. 2018 Same Store Results/Statistics by Market
																						Increase (Decrease) from Prior Year
Markets/Metro Areas		Apartment Units				2019 % of Actual NOI				2019 Average Rental Rate				2019 Weighted Average Physical Occupancy %				2019 Turnover				Revenues				Expenses				NOI				Average Rental Rate				Physical Occupancy				Turnover
Los Angeles			15,371				19.3	%		$	2,612				96.3	%			54.2	%			3.7	%			5.1	%			3.2	%			3.7	%			0.1	%			(3.1	%)
Orange County			4,028				4.7	%			2,249				96.5	%			51.8	%			3.8	%			(0.2	%)			5.1	%			3.4	%			0.4	%			(0.8	%)
San Diego			3,385				4.1	%			2,410				96.5	%			57.8	%			3.3	%			2.5	%			3.6	%			3.2	%			0.2	%			(2.7	%)
Subtotal – Southern California			22,784				28.1	%			2,518				96.4	%			54.3	%			3.7	%			4.0	%			3.6	%			3.6	%			0.2	%			(2.6	%)
San Francisco			12,633				21.2	%			3,254				95.9	%			51.2	%			3.7	%			3.3	%			3.8	%			3.7	%			(0.1	%)			0.0	%
Washington DC			14,228				16.7	%			2,454				96.6	%			46.2	%			2.3	%			1.9	%			2.5	%			2.1	%			0.3	%			(3.5	%)
New York			9,235				15.5	%			3,924				96.7	%			38.7	%			2.3	%			6.0	%			(0.1	%)			2.1	%			0.1	%			0.1	%
Boston			5,714				9.6	%			3,109				96.2	%			47.0	%			4.0	%			2.9	%			4.4	%			3.3	%			0.2	%			(1.8	%)
Seattle			7,100				8.8	%			2,349				96.5	%			53.3	%			3.4	%			0.3	%			4.6	%			2.2	%			0.7	%			(3.4	%)
Other Markets			136				0.1	%			1,295				98.7	%			56.6	%			7.9	%			8.5	%			7.6	%			7.6	%			0.2	%			4.4	%
Total			71,830				100.0	%		$	2,843				96.4	%			49.5	%			3.2	%			3.7	%			3.0	%			2.9	%			0.2	%			(1.9	%)

Equity Residential Same Store Lease Pricing Statistics by Market For 71,830 Same Store Apartment Units
		New Lease Change (1)								Renewal Rate Achieved (1)
Markets/Metro Areas		2019				2018				2019				2018
Los Angeles (2)			(0.4	%)			1.2	%			5.2	%			6.1	%
Orange County			0.1	%			(0.2	%)			5.7	%			5.7	%
San Diego			(0.1	%)			1.6	%			5.5	%			6.1	%
Subtotal – Southern California			(0.3	%)			1.1	%			5.3	%			6.0	%
San Francisco			0.3	%			0.8	%			5.1	%			5.0	%
Washington DC			0.6	%			(1.8	%)			4.7	%			4.4	%
New York			0.5	%			(1.5	%)			3.9	%			3.4	%
Boston			0.1	%			(0.6	%)			5.3	%			4.9	%
Seattle			1.3	%			(2.2	%)			6.0	%			5.8	%
Total			0.3	%			(0.2	%)			4.9	%			4.9	%

(1)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions.
(2)		The Company’s 2019 New Lease Change in Los Angeles was negatively impacted by temporary governmental restrictions put in place in connection with the wildfire emergency. These restrictions affected the Company’s ability to offer premium short-term leases in this market.

Equity Residential
Fourth Quarter 2019 vs. Fourth Quarter 2018 Same Store Operating Expenses for 75,816 Same Store Apartment Units $ in thousands
		Actual Q4 2019				Actual Q4 2018				$ Change (1)				% Change				% of Actual Q4 2019 Operating Expenses
Real estate taxes		$	85,010			$	79,920			$	5,090				6.4	%			43.9	%
On-site payroll			38,925				41,844				(2,919	)			(7.0	%)			20.1	%
Utilities			26,585				25,108				1,477				5.9	%			13.8	%
Repairs and maintenance			23,553				23,405				148				0.6	%			12.2	%
Insurance			5,487				5,004				483				9.7	%			2.8	%
Leasing and advertising			2,749				2,784				(35	)			(1.3	%)			1.4	%
Other on-site operating expenses			11,185				9,859				1,326				13.4	%			5.8	%
Same store operating expenses (2)		$	193,494			$	187,924			$	5,570				3.0	%			100.0	%

2019 vs. 2018 Same Store Operating Expenses for 71,830 Same Store Apartment Units $ in thousands
		Actual 2019				Actual 2018				$ Change (1)				% Change				% of Actual 2019 Operating Expenses
Real estate taxes		$	315,033			$	301,969			$	13,064				4.3	%			42.9	%
On-site payroll			157,120				155,901				1,219				0.8	%			21.4	%
Utilities			98,015				94,949				3,066				3.2	%			13.4	%
Repairs and maintenance			92,361				90,050				2,311				2.6	%			12.6	%
Insurance			20,869				18,973				1,896				10.0	%			2.8	%
Leasing and advertising			9,774				9,883				(109	)			(1.1	%)			1.3	%
Other on-site operating expenses			41,381				36,891				4,490				12.2	%			5.6	%
Same store operating expenses (2)		$	734,553			$	708,616			$	25,937				3.7	%			100.0	%

(1)		Both quarter over quarter and year over year changes (unless otherwise noted) are due primarily to:
		Real estate taxes – Increase above expectations due primarily to fewer recoveries from appeals activity.
		On-site payroll – Year over year increase below expectations. Payroll pressures continue but were offset by lower than expected employee benefit- related costs.
		Utilities – Quarter over quarter growth slightly higher than expected but generally in line with expectations for the year.
		Insurance – Increase due to higher premiums on property insurance renewal as a result of challenging conditions in the insurance market.
		Other on-site operating expenses – Increase primarily driven by higher ground lease costs due to a contractual revaluation at one property along with higher association fees.
(2)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for definitions.

Equity Residential
Debt Summary as of December 31, 2019 ($ in thousands)
		Debt Balances (1)				% of Total				Weighted Average Rates (1)				Weighted Average Maturities (years)
Secured		$	1,941,610				21.5	%			3.84	%			6.5
Unsecured			7,095,346				78.5	%			4.07	%			9.2
Total		$	9,036,956				100.0	%			4.02	%			8.6
Fixed Rate Debt:
Secured – Conventional		$	1,574,699				17.4	%			4.28	%			4.3
Unsecured – Public			6,077,513				67.3	%			4.24	%			10.8
Fixed Rate Debt			7,652,212				84.7	%			4.25	%			9.5
Floating Rate Debt:
Secured – Conventional			7,050				0.1	%			3.28	%			2.5
Secured – Tax Exempt			359,861				4.0	%			1.94	%			16.0
Unsecured – Public			—				—				3.34	%			—
Unsecured – Revolving Credit Facility			20,000				0.2	%			3.12	%			4.8
Unsecured – Commercial Paper Program (2)			997,833				11.0	%			2.42	%			—
Floating Rate Debt			1,384,744				15.3	%			2.49	%			4.3
Total		$	9,036,956				100.0	%			4.02	%			8.6

(1)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.
(2)		At December 31, 2019, the weighted average maturity of commercial paper outstanding was 40 days. The weighted average amount outstanding for the year ended December 31, 2019 was approximately $434.4 million.

Note: The Company capitalized interest of approximately $6.9 million and $6.3 million during the years ended December 31, 2019 and 2018, respectively. The Company capitalized interest of approximately $2.1 million and $1.8 million during the quarters ended December 31, 2019 and 2018, respectively.

Equity Residential
Debt Maturity Schedule as of December 31, 2019 ($ in thousands)
Year		Fixed Rate				Floating Rate				Total				% of Total				Weighted Average Coupons on Fixed Rate Debt (1)				Weighted Average Coupons on Total Debt (1)
2020		$	27,542			$	1,000,000		(2)	$	1,027,542				11.3	%			4.56	%			2.07	%
2021			926,404				—				926,404				10.1	%			4.64	%			4.64	%
2022			264,185				7,650				271,835				3.0	%			3.25	%			3.23	%
2023			1,325,588				3,500				1,329,088				14.5	%			3.74	%			3.73	%
2024			—				26,100		(3)		26,100				0.3	%		N/A					2.37	%
2025			450,000				8,200				458,200				5.0	%			3.38	%			3.34	%
2026			592,025				9,000				601,025				6.6	%			3.58	%			3.56	%
2027			400,000				9,800				409,800				4.5	%			3.25	%			3.21	%
2028			900,000				42,380				942,380				10.3	%			3.79	%			3.70	%
2029			888,120				11,500				899,620				9.9	%			3.30	%			3.28	%
2030+			1,950,850				288,135				2,238,985				24.5	%			3.81	%			3.53	%
Subtotal			7,724,714				1,406,265				9,130,979				100.0	%			3.75	%			3.47	%
Deferred Financing Costs and Unamortized (Discount)			(72,502	)			(21,521	)			(94,023	)		N/A				N/A				N/A
Total		$	7,652,212			$	1,384,744			$	9,036,956				100.0	%			3.75	%			3.47	%

(1)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.
(2)		Represents principal outstanding on the Company’s commercial paper program.
(3)		Includes $20.0 million in principal outstanding on the Company’s revolving credit facility.

Equity Residential
Selected Unsecured Public Debt Covenants
		December 31,			September 30,
		2019			2019
Debt to Adjusted Total Assets (not to exceed 60%)		33.8%			33.9%
Secured Debt to Adjusted Total Assets (not to exceed 40%)		8.2%			8.3%
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1)		5.07			4.75
Total Unencumbered Assets to Unsecured Debt
(must be at least 125%)		386.1%			385.3%

Note: These selected covenants represent the most restrictive financial covenants relating to ERP Operating Limited Partnership's ("ERPOP") outstanding public debt securities. Equity Residential is the general partner of ERPOP.

Selected Credit Ratios
		December 31,				September 30,
		2019				2019
Total debt to Normalized EBITDAre		5.18x				5.22x
Net debt to Normalized EBITDAre		5.14x				5.20x
Unencumbered NOI as a % of total NOI		87.1%				86.9%

Note: See Normalized EBITDAre Reconciliations for detail.

Equity Residential
Capital Structure as of December 31, 2019 (Amounts in thousands except for share/unit and per share amounts)
Secured Debt										$	1,941,610				21.5	%
Unsecured Debt											7,095,346				78.5	%
Total Debt											9,036,956				100.0	%			22.4	%
Common Shares (includes Restricted Shares)			371,670,884				96.4	%
Units (includes OP Units and Restricted Units)			13,731,315				3.6	%
Total Shares and Units			385,402,199				100.0	%
Common Share Price at December 31, 2019		$	80.92
											31,186,746				99.9	%
Perpetual Preferred Equity (see below)											37,280				0.1	%
Total Equity											31,224,026				100.0	%			77.6	%
Total Market Capitalization										$	40,260,982								100.0	%

Perpetual Preferred Equity as of December 31, 2019 (Amounts in thousands except for share and per share amounts)
Series		Call Date		Outstanding Shares				Liquidation Value				Annual Dividend Per Share				Annual Dividend Amount
Preferred Shares:
8.29% Series K		12/10/26			745,600			$	37,280			$	4.145			$	3,091

Equity Residential Common Share and Unit Weighted Average Amounts Outstanding
		2019				2018				Q4 2019				Q4 2018
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares - basic			370,460,884				368,052,312				371,155,240				368,444,736
Shares issuable from assumed conversion/vesting of:
- OP Units			12,907,453				12,868,188				12,883,309				12,860,819
- long-term compensation shares/units			2,965,118				2,774,227				3,104,719				2,990,518
Total Common Shares and Units - diluted			386,333,455				383,694,727				387,143,268				384,296,073
Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:
Common Shares - basic			370,460,884				368,052,312				371,155,240				368,444,736
OP Units - basic			12,907,453				12,868,188				12,883,309				12,860,819
Total Common Shares and OP Units - basic			383,368,337				380,920,500				384,038,549				381,305,555
Shares issuable from assumed conversion/vesting of:
- long-term compensation shares/units			2,965,118				2,774,227				3,104,719				2,990,518
Total Common Shares and Units - diluted			386,333,455				383,694,727				387,143,268				384,296,073
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares)			371,670,884				369,405,161
Units (includes OP Units and Restricted Units)			13,731,315				13,904,035
Total Shares and Units			385,402,199				383,309,196

Equity Residential Development and Lease-Up Projects as of December 31, 2019 (Amounts in thousands except for project and apartment unit amounts)
								Total				Total				Total Book
				No. of				Budgeted				Book				Value Not												Estimated/Actual
				Apartment				Capital				Value				Placed in				Total				Percentage				Initial				Completion		Stabilization		Percentage				Percentage
Projects		Location		Units				Cost				to Date				Service				Debt				Completed				Occupancy				Date		Date		Leased				Occupied
Projects Under Development - Wholly Owned:
Alcott Apartments (fka West End Tower)		Boston, MA			470			$	409,749			$	139,310			$	139,310			$	—			32%				Q2 2021				Q3 2021		Q1 2023			—				—
4885 Edgemoor Lane (A)		Bethesda, MD			154				75,271				10,865				10,865				—			4%				Q3 2021				Q3 2021		Q3 2022			—				—
Projects Under Development - Wholly Owned					624				485,020				150,175				150,175				—
Projects Under Development - Partially Owned:
Aero Apartments (B)		Alameda, CA			200				117,794				31,455				31,455				7,050			11%				Q4 2020				Q2 2021		Q2 2022			—				—
Projects Under Development - Partially Owned					200				117,794				31,455				31,455				7,050
Projects Under Development					824				602,814				181,630				181,630				7,050
Completed Not Stabilized (C):
Lofts at Kendall Square II (fka 249 Third Street)		Cambridge, MA			84				51,447				47,259				—				—							Q3 2019				Q3 2019		Q2 2020		81%				79%
Chloe on Madison (fka 1401 E. Madison)		Seattle, WA			137				65,341				62,995				—				—							Q3 2019				Q3 2019		Q2 2020		81%				75%
Projects Completed Not Stabilized					221				116,788				110,254				—				—
Completed and Stabilized During the Quarter:
100K Apartments		Washington, DC			222				85,273				85,262				—				—							Q3 2018				Q4 2018		Q4 2019		96%				96%
Projects Completed and Stabilized During the Quarter					222				85,273				85,262				—				—
Total Development Projects					1,267			$	804,875			$	377,146			$	181,630			$	7,050
Land Held for Development				N/A				N/A				$	96,688			$	96,688			$	—
NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS																								Total Budgeted Capital Cost				Q4 2019 NOI
Projects Under Development																								$	602,814			$	—
Completed Not Stabilized																									116,788				838
Completed and Stabilized During the Quarter																									85,273				1,097
Total Development NOI Contribution																								$	804,875			$	1,935

(A)		4885 Edgemoor Lane – The land under this project is subject to a long-term ground lease. This project is adjacent to an existing apartment property owned by the Company.
(B)		Aero Apartments – This development project is owned 90% by the Company and 10% by a third party partner in a joint venture consolidated by the Company. Construction is being partially funded with a construction loan that is non-recourse to the Company. The joint venture partner has funded $4.6 million for its allocated share of the project equity and serves as the developer of the project.
(C)		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. Both of these properties are wholly owned by the Company.

Equity Residential Capital Expenditures to Real Estate For the Year Ended December 31, 2019 (Amounts in thousands except for apartment unit and per apartment unit amounts)
			Same Store Properties				Non-Same Store Properties/Other				Total				Same Store Avg. Per Apartment Unit
Total Apartment Units				71,830				8,132				79,962
Building Improvements			$	91,256			$	7,469			$	98,725			$	1,270
Renovation Expenditures (1)				37,466				2,607				40,073				522
Replacements				37,063				2,562				39,625				516
Capital Expenditures to Real Estate (2)			$	165,785			$	12,638			$	178,423			$	2,308

(1)		Renovation Expenditures on 2,415 same store apartment units for the year ended December 31, 2019 approximated $15,515 per apartment unit renovated.
(2)		See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for additional details.

Equity Residential Normalized EBITDAre Reconciliations (Amounts in thousands)
		Trailing Twelve Months								2019																2018
		December 31, 2019				September 30, 2019				Q4				Q3				Q2				Q1				Q4
Net income		$	1,009,708			$	830,790			$	301,306			$	277,846			$	321,299			$	109,257			$	122,388
Interest expense incurred, net			390,076				381,682				100,300				85,936				108,902				94,938				91,906
Amortization of deferred financing costs			11,670				10,920				3,006				2,881				3,647				2,136				2,256
Amortization of above/below market lease intangibles			4,392				4,392				1,098				1,098				1,098				1,098				1,098
Depreciation			831,083				818,057				214,882				211,478				200,508				204,215				201,856
Income and other tax expense (benefit)			(2,281	)			860				(3,030	)			265				246				238				111
EBITDA			2,244,648				2,046,701				617,562				579,504				635,700				411,882				419,615
Net (gain) loss on sales of real estate properties			(447,637	)			(269,376	)			(178,237	)			(130,565	)			(138,856	)			21				24
Net (gain) loss on sales of unconsolidated entities - operating assets			(69,522	)			(69,522	)			—				—				(69,522	)			—				—
EBITDAre			1,727,489				1,707,803				439,325				448,939				427,322				411,903				419,639
Write-off of pursuit costs (other expenses)			5,529				5,423				1,431				1,111				1,539				1,448				1,325
(Income) loss from investments in unconsolidated entities - operations			3,577				3,290				961				1,152				757				707				674
Net (gain) loss on sales of land parcels			(2,044	)			(2,069	)			33				(1,899	)			(177	)			(1	)			8
Insurance/litigation settlement or reserve income (interest and other income)			(384	)			(383	)			(1	)			—				(383	)			—				—
Insurance/litigation/environmental settlement or reserve expense (other expenses)			7,198				1,743				5,229				18				1,701				250				(226	)
Advocacy contributions (other expenses)			270				876				65				5				200				—				671
Data analytics project (other expenses)			4,199				4,581				—				1,416				1,408				1,375				382
Other			391				549				(158	)			682				(83	)			(50	)			—
Normalized EBITDAre		$	1,746,225			$	1,721,813			$	446,885			$	451,424			$	432,284			$	415,632			$	422,473
Balance Sheet Items:		December 31, 2019				September 30, 2019
Total debt		$	9,036,956			$	8,991,936
Cash and cash equivalents			(45,753	)			(28,777	)
Mortgage principal reserves/sinking funds			(9,689	)			(8,758	)
Net debt		$	8,981,514			$	8,954,401

Note: EBITDA, EBITDAre and Normalized EBITDAre do not include any adjustments for the Company’s share of partially owned unconsolidated entities or the minority partner’s share of partially owned consolidated entities due to the immaterial size of the Company’s partially owned portfolio.

Equity Residential Adjustments from FFO to Normalized FFO (Amounts in thousands)
		Year Ended December 31,												Quarter Ended December 31,
		2019				2018				Variance				2019				2018				Variance
Impairment – non-operating assets		$	—			$	—			$	—			$	—			$	—			$	—
Write-off of pursuit costs (other expenses)			5,529				4,450				1,079				1,431				1,325				106
Prepayment premiums/penalties (interest expense)			13,647				22,110				(8,463	)			10,266				—				10,266
Write-off of unamortized deferred financing costs (interest expense)			3,148				2,957				191				875				193				682
Write-off of unamortized (premiums)/discounts/OCI (interest expense)			7,196				16,268				(9,072	)			1,043				—				1,043
Debt extinguishment and preferred share redemption (gains) losses			23,991				41,335				(17,344	)			12,184				193				11,991
Net (gain) loss on sales of land parcels			(2,044	)			(987	)			(1,057	)			33				8				25
(Income) loss from investments in unconsolidated entities ─ non-operating assets			1,104				826				278				227				86				141
Non-operating asset (gains) losses			(940	)			(161	)			(779	)			260				94				166
Insurance/litigation settlement or reserve income (interest and other income)			(384	)			(13,286	)			12,902				(1	)			—				(1	)
Insurance/litigation/environmental settlement or reserve expense (other expenses)			7,198				6,862				336				5,229				(226	)			5,455
Advocacy contributions (other expenses)			270				4,406				(4,136	)			65				671				(606	)
Data analytics project (other expenses)			4,199				510				3,689				—				382				(382	)
Other			(2,853	)			(273	)			(2,580	)			(3,402	)			—				(3,402	)
Other miscellaneous items			8,430				(1,781	)			10,211				1,891				827				1,064
Adjustments from FFO to Normalized FFO		$	37,010			$	43,843			$	(6,833	)		$	15,766			$	2,439			$	13,327

Note: See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

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 and the write-off of pursuit costs, are not included in the estimates provided on this page. See Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

		Q1 2020		Full Year 2020
2020 Normalized FFO Guidance (per share diluted)
Expected Normalized FFO Per Share		$0.84 to $0.88		$3.59 to $3.69
2020 Same Store Assumptions
Physical Occupancy				96.4%
Revenue change				2.3% to 3.3%
Expense change				3.0% to 4.0%
NOI change (1)				1.5% to 3.5%
2020 Transaction Assumptions
Consolidated rental acquisitions				$1.25B
Consolidated rental dispositions				$1.0B
Transaction Accretion (Dilution)				(25 basis points)
2020 Debt Assumptions
Weighted average debt outstanding				$8.8B to $9.0B
Interest expense, net (on a Normalized FFO basis)				$340.0M to $348.0M
Capitalized interest				$12.0M to $14.0M
2020 Capital Expenditures to Real Estate Assumptions for Same Store Properties (2)
Capital Expenditures to Real Estate for Same Store Properties				$195.0M
Capital Expenditures to Real Estate per Same Store Apartment Unit				$2,600
2020 Other Guidance Assumptions
Property management expense (3)				$100.0M to $102.0M
General and administrative expense				$50.0M to $52.0M
Interest and other income				$1.5M to $2.0M
Income and other tax expense				$0.7M to $1.2M
Debt offerings				$600.0M to $1.0B
Equity ATM share offerings				No amounts budgeted
Weighted average Common Shares and Units - Diluted				387.8M

(1)		Approximately 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO per share/Normalized FFO per share.
(2)		During 2020, the Company expects to spend approximately $50.0 million for apartment unit Renovation Expenditures on approximately 2,500 same store apartment units at an average cost of approximately $20,000 per apartment unit renovated and approximately $10.0M on smart home technology upgrades on approximately 10,000 same store apartment units at an average cost of approximately $1,000 per apartment unit, both of which are included in the Capital Expenditures to Real Estate assumptions noted above.
(3)		Includes approximately $1.5 million of additional expenses for the various Operating Initiatives.

Equity Residential Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms (Amounts in thousands except per share and per apartment unit data) (All per share data is diluted)

This Earnings Release and Supplemental Financial Information includes certain non-GAAP financial measures and other terms that management believes are helpful in understanding our business. The definitions and calculations of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other real estate investment trusts (“REIT”) and, accordingly, may not be comparable. These non-GAAP financial measures should not be considered as an alternative to net earnings or any other measurement of performance computed in accordance with accounting principles generally accepted in the United States (“GAAP”) or as an alternative to cash flows from specific operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity.

Acquisition Capitalization Rate or Cap Rate – NOI that the Company anticipates receiving in the next 12 months (or the year two or three stabilized NOI for properties that are in lease-up at acquisition) less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross purchase price of the asset. The weighted average Acquisition Cap Rate for acquired properties is weighted based on the projected NOI streams and the relative purchase price for each respective property.

Average Rental Rate – Total residential rental revenues reflected on a straight-line basis in accordance with GAAP divided by the weighted average occupied apartment units for the reporting period presented.

Capital Expenditures to Real Estate:

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

Renovation Expenditures – Apartment unit renovation costs (primarily kitchens and baths) designed to reposition these units for higher rental levels in their respective markets.

Replacements – Includes appliances, mechanical equipment, fixtures and flooring (including hardwood and carpeting).

Debt Balances:

Commercial Paper Program – The Company may borrow up to a maximum of $1.0 billion under its commercial paper program subject to market conditions. The notes bear interest at various floating rates.

Revolving Credit Facility – The Company’s $2.5 billion unsecured revolving credit facility matures November 1, 2024. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently 0.775%), or based on bids received from the lending group, and an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. In addition, the Company limits its utilization of the facility in order to maintain liquidity to support its $1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility:

		December 31, 2019
Unsecured revolving credit facility commitment		$	2,500,000
Commercial paper balance outstanding			(1,000,000	)
Unsecured revolving credit facility balance outstanding			(20,000	)
Other restricted amounts			(100,929	)
Unsecured revolving credit facility availability		$	1,379,071

Debt Covenant Compliance – Our unsecured debt includes certain financial and operating covenants including, among other things, maintenance of certain financial ratios. These provisions are contained in the indentures applicable to each notes payable or the credit agreement for our line of credit. The Debt Covenant Compliance ratios that are provided show the Company's compliance with certain covenants governing our public unsecured debt. These covenants generally reflect our most restrictive financial covenants. The Company was in compliance with its unsecured debt covenants for all periods presented.

Development Yield – NOI that the Company anticipates receiving in the next 12 months following stabilization less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $50-$150 per apartment unit depending on the type of asset) divided by the Total Budgeted Capital Cost of the asset. The weighted average Development Yield for development properties is weighted based on the projected NOI streams and the relative Total Budgeted Capital Cost for each respective property.

Disposition Yield – NOI that the Company anticipates giving up in the next 12 months less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross sales price of the asset. The weighted average Disposition Yield for sold properties is weighted based on the projected NOI streams and the relative sales price for each respective property.

Earnings Per Share ("EPS") – Net income per share calculated in accordance with GAAP. 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.

EBITDA for Real Estate and Normalized EBITDA for Real Estate:

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) – The National Association of Real Estate Investment Trusts (“Nareit”) defines EBITDAre (September 2017 White Paper) as net income (computed in accordance with GAAP) before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, impairment write-downs of depreciated operating properties, impairment write-downs of investments in unconsolidated entities caused by a decrease in value of depreciated operating properties within the joint venture and adjustments to reflect the Company’s share of EBITDAre of investments in unconsolidated entities.

The Company believes that EBITDAre is useful to investors, creditors and rating agencies as a supplemental measure of the Company’s ability to incur and service debt because it is a recognized measure of performance by the real estate industry, and by excluding gains or losses related to sales or impairment of depreciated operating properties, EBITDAre can help compare the Company’s credit strength between periods or as compared to different companies.

Normalized Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“Normalized EBITDAre”) – Represents net income (computed in accordance with GAAP) before interest expense, income taxes, depreciation and amortization expense, and further adjusted for non-comparable items. Normalized EBITDAre, total debt to Normalized EBITDAre and net debt to Normalized EBITDAre are important metrics in evaluating the credit strength of the Company and its ability to service its debt obligations. The Company believes that Normalized EBITDAre, total debt to Normalized EBITDAre, and net debt to Normalized EBITDAre 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.

Economic Gain (Loss) – Economic Gain (Loss) is calculated as the net gain (loss) on sales of real estate properties in accordance with GAAP, excluding accumulated depreciation. The Company generally considers Economic Gain (Loss) to be an appropriate supplemental measure to net gain (loss) on sales of real estate properties in accordance with GAAP because it is one indication of the gross value created by the Company's acquisition, development, renovation, management and ultimate sale of a property and because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold property. The following table presents a reconciliation of net gain (loss) on sales of real estate properties in accordance with GAAP to Economic Gain (Loss):

		Year Ended December 31, 2019				Quarter Ended December 31, 2019
Net Gain (Loss) on Sales of Real Estate Properties		$	447,637			$	178,237
Accumulated Depreciation Gain			(248,145	)			(109,972	)
Economic Gain (Loss)		$	199,492			$	68,265

FFO and Normalized FFO:

Funds From Operations (“FFO”) – Nareit defines FFO (December 2018 White Paper) as net income (computed in accordance with GAAP), excluding gains or losses from sales and impairment write-downs of depreciable real estate and land when connected to the main business of a REIT, impairment write-downs of investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and depreciation and amortization related to real estate. Adjustments for partially owned consolidated and unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. Expected FFO per share is calculated on a basis consistent with actual FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

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 from sales and impairment write-downs of depreciable real estate and excluding depreciation related to real estate (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.

Normalized Funds From Operations ("Normalized FFO") – Normalized FFO begins with FFO and excludes:

• the impact of any expenses relating to non-operating asset impairment;

• pursuit cost write-offs;

• gains and losses from early debt extinguishment and preferred share redemptions;

• gains and losses from non-operating assets; and

• other miscellaneous items.

Expected Normalized FFO per share is calculated on a basis consistent with actual Normalized FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

The Company 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.

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 GAAP. 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.

The following table presents reconciliations of EPS to FFO per share and Normalized FFO per share for Consolidated Statements of Funds From Operations and Normalized Funds From Operations and Normalized FFO Guidance and Assumptions. The expected guidance/projections provided below are based on current expectations and are forward-looking.

										Actual				Actual				Expected			Expected
		Actual 2019				Actual 2018				Q4 2019				Q4 2018				Q1 2020			2020
		Per Share				Per Share				Per Share				Per Share				Per Share			Per Share
EPS – Diluted		$	2.60			$	1.77			$	0.77			$	0.31			$0.98 to $1.02			$2.64 to $2.74
Depreciation expense			2.13				2.04				0.55				0.53			0.54			2.09
Net (gain) loss on sales			(1.34	)			(0.67	)			(0.46	)			—			(0.69)			(1.16)
Impairment – operating assets		—					—				—				—			—			—
FFO per share – Diluted			3.39				3.14				0.86				0.84			0.83 to 0.87			3.57 to 3.67
Impairment – non-operating assets			—				—				—				—			—			—
Write-off of pursuit costs			0.02				0.01				0.01				—			0.01			0.01
Debt extinguishment and preferred share
redemption (gains) losses			0.06				0.11				0.03				—			—			—
Non-operating asset (gains) losses			—				—				—				—			—			—
Other miscellaneous items			0.02				(0.01	)			0.01				—			—			0.01
Normalized FFO per share – Diluted		$	3.49			$	3.25			$	0.91			$	0.84			$0.84 to $0.88			$3.59 to $3.69

Lease-Up NOI – Represents NOI for development properties: (i) in various stages of lease-up; and (ii) where lease-up has been completed but the properties were not stabilized (defined as having achieved 90% occupancy for three consecutive months) for all of the current and comparable periods presented.

Net Operating Income (“NOI”) – NOI is the Company’s primary financial measure for evaluating each of its apartment properties. NOI is defined as rental income less direct property operating expenses (including real estate taxes and insurance). 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 properties. NOI does not include an allocation of property management expenses either in the current or comparable periods. Rental income for all leases and operating expense for ground leases (for both same store and non-same store properties) are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

The following tables present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store/other results (see Same Store Results):

		Year Ended December 31,								Quarter Ended December 31,
		2019				2018				2019				2018
Operating income		$	1,356,544			$	1,115,370			$	408,952			$	219,282
Adjustments:
Fee and asset management revenue			(384	)			(753	)			(24	)			(190	)
Property management			95,344				92,485				22,639				23,310
General and administrative			52,757				53,813				11,630				12,393
Depreciation			831,083				785,725				214,882				201,856
Net (gain) loss on sales of real estate
properties			(447,637	)			(256,810	)			(178,237	)			24
Impairment			—				702				—				—
Total NOI		$	1,887,707			$	1,790,532			$	479,842			$	456,675
Rental income:
Same store		$	2,453,259			$	2,377,066			$	652,391			$	632,463
Non-same store/other			247,432				200,615				31,504				20,090
Total rental income			2,700,691				2,577,681				683,895				652,553
Operating expenses:
Same store			734,553				708,616				193,494				187,924
Non-same store/other			78,431				78,533				10,559				7,954
Total operating expenses			812,984				787,149				204,053				195,878
NOI:
Same store			1,718,706				1,668,450				458,897				444,539
Non-same store/other			169,001				122,082				20,945				12,136
Total NOI		$	1,887,707			$	1,790,532			$	479,842			$	456,675

New Lease Change – The change in rent for a lease with a new or transferring resident compared to the rent for the prior lease of the identical apartment unit, regardless of lease term and without concessions or discounts being applied.

Non-Same Store Properties – For annual comparisons, primarily includes all properties acquired during 2018 and 2019, plus any properties in lease-up and not stabilized as of January 1, 2018.

Physical Occupancy – The weighted average occupied apartment units for the reporting period divided by the average of total apartment units available for rent for the reporting period.

Renewal Rate Achieved – The change in rent for a new lease on an apartment unit where the lease has been renewed as compared to the rent for the prior lease of the identical apartment unit, regardless of lease term.

Same Store Operating Expenses:

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

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.

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 and maintenance costs.

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

Same Store Properties – For annual comparisons, primarily includes all properties acquired or completed that are stabilized prior to January 1, 2018, less properties subsequently sold. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented.

% of Stabilized Budgeted NOI – Represents budgeted 2020 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.

Total Budgeted Capital Cost – Estimated remaining cost for projects under development and/or developed plus all capitalized costs incurred to date, including land acquisition costs, construction costs, capitalized real estate taxes and insurance, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP.

Total Market Capitalization – The aggregate of the market value of the Company’s outstanding common shares, including restricted shares, the market value of the Company’s operating partnership units outstanding, including restricted units (based on the market value of the Company’s common shares) and the outstanding principal balance of debt. The Company believes this is a useful measure of a real estate operating company’s long-term liquidity and balance sheet strength, because it shows an approximate relationship between a company’s total debt and the current total market value of its assets based on the current price at which the Company’s common shares trade. However, because this measure of leverage changes with fluctuations in the Company’s share price, which occur regularly, this measure may change even when the Company’s earnings, interest and debt levels remain stable.

Transaction Accretion (Dilution) – Represents the spread between the Acquisition Cap Rate and the Disposition Yield.

Turnover – Total residential move-outs (including inter-property and intra-property transfers) divided by total residential apartment units.

Unencumbered NOI % – Represents NOI generated by consolidated real estate assets unencumbered by outstanding secured debt as a percentage of total NOI generated by all of the Company's consolidated real estate assets.

Unlevered Internal Rate of Return (“IRR”) – The Unlevered IRR on sold properties is the compound annual rate of return calculated by the Company based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs incurred by the Company; (ii) total revenues earned during the Company’s ownership period; (iii) total direct property operating expenses (including real estate taxes and insurance) incurred during the Company’s ownership period; (iv) capital expenditures incurred during the Company’s ownership period; and (v) the gross sales price of the property net of selling costs.

The calculation of the Unlevered IRR does not include an adjustment for the Company’s property management expense, general and administrative expense or interest expense (including loan assumption costs and other loan-related costs). Therefore, the Unlevered IRR is not a substitute for net income as a measure of our performance. Management believes that the Unlevered IRR achieved during the period a property is owned by the Company is useful because it is one indication of the gross value created by the Company’s acquisition, development, renovation, management and ultimate sale of a property, before the impact of Company overhead. The Unlevered IRR achieved on the properties as cited in this release should not be viewed as an indication of the gross value created with respect to other properties owned by the Company, and the Company does not represent that it will achieve similar Unlevered IRRs upon the disposition of other properties. The weighted average Unlevered IRR for sold properties is weighted based on all cash flows over the investment period for each respective property, including net sales proceeds.

Weighted Average Coupons – Contractual interest rate for each debt instrument weighted by principal balances as of December 31, 2019. In case of debt for which fair value hedges are in place, the rate payable under the corresponding derivatives is used in lieu of the contractual interest rate.

Weighted Average Rates – Interest expense for each debt instrument for the year ended December 31, 2019 weighted by its average principal balance for the same period. Interest expense includes amortization of premiums, discounts and other comprehensive income on debt and related derivative instruments. In case of debt for which derivatives are in place, the income or expense recognized under the corresponding derivatives is included in the total interest expense for the period.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200128005822/en/