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How Does Equity Residential’s Balance Sheet Look?

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Current debt position

EQR reported higher revenues backed by strong growth in rental income. The company has current debt of $8.992 billion compared to debt of $8.987 billion for 2016. The debt-to-equity ratio stands at 88%.

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Additional debt for EQR

In July 2017, the company included an assumption to issue $500 million worth of debt. To take advantage of the third-year market, it issued ten-year notes. It was four times oversubscribed. This was the lowest third-year issuance ever with an effective rate of 4.1%. The company raised $700 million worth of debt in August 2017, which consisted of $400 million worth of ten-year notes and $300 million worth of 30-year notes. EQR used these proceeds to pay the outstanding commercial paper.

Assumption of debt in 2017

The weighted average debt outstanding for 2017 is in the range of $8.95 billion to $9.05 billion. The average interest rate is at 4.1%, and the interest expense is expected to be in the range of $370.5 million to $374.7 million. The capitalized interest is expected to be in the range of $25 million to $27 million.

The debt-to-equity ratios for EQT’s peers are as follows:

  • AvalonBay Communities (AVB): 69.1%
  • Camden Property (CPT): 82.3%
  • Essex Property (ESS): 89.8%

EQR’s debt-to-equity ratio is in line with its peers. Equity Residential and its peers make up almost ~13.3% of the Vanguard REIT ETF (VNQ). It has a large portfolio and covers a variety of industries like healthcare and self-storage.

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