Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Martin McKenna - Investor Relations

David J. Neithercut - President and Chief Executive Officer

Mark J. Parrell - Executive Vice President, Chief Financial Officer

Frederick C. Tuomi - President, Property Management

David S. Santee - Executive Vice President Operations

Analysts

Robert Stevenson - Fox-Pitt Kelton

David Toti - Citigroup

William Acheson - Benchmark Company

Alexander Goldfarb - Sandler O'Neill

Michael Salinsky - RBC Capital Markets

Scott Kirkpatrick - Teton Capital Advisers

Stephen C. Swett - Keefe Bruyette & Woods Inc.

Equity Residential (EQR) Q1 2009 Earnings Call April 30, 2009 11:00 AM ET

Operator

Good morning. My name is Sylvia and I will be your conference operator today. At this time, I would like to welcome everyone to the Equity Residential First Quarter Earnings Conference Call. All lines have been placed on-mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions).

Thank you. I will now turn the call over to Martin McKenna.

Martin McKenna

Thanks Sylvia. Good morning and thank you for joining us to discuss Equity Residential's first quarter 2009 results. Our featured speakers today are David Neithercut, our President and CEO and Mark Parrell our Chief Financial Officer and Fred Tuomi our EVP of Property Management. David Santee our EVP of Property Operations is also here with us for the Q&A.

Certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the Federal Securities Law. These forward-looking statements are subject to certain economic risks and uncertainties. The company assumes no obligation to update or supplement these statements that become untrue because of subsequent events.

And now I'll turn it over to David.

David J. Neithercut

Thanks, Marty. Good morning, everyone, thank you for joining us for our first quarter earnings call. As noted in last night's press release, we delivered quarterly operating results and we're pretty much right inline with the expectations that we provided you on our earnings call in early February.

And I want to thank our teams across the country four continuing their hard work during this tough time. We know its not easy and we really do appreciate what they're doing for us each and every day, taking care for our properties, keeping our residents satisfied and helping deliver solid operating results for Equity; so thank you to all of them.

The details of our first quarter performance are described in the press release and Mark will discuss them in a little bit more detail in just a few minutes. But I know what you really want to know is where things are going from here and while it's impossible to say with any degree of certainty, I'll try to provide some color for you at least on what we're seeing through today.

Last week in Atlanta, if you rely I was on a panel and a moderator Leonard Wood asked the following question. Is this the worst that you've ever seen? And it was an interesting question because it could be answered in several ways.

The first is, is it the worst economic climate that we've ever seen and I think without question the answer to that is absolutely. Who can really deny that what we've seen and are seeing in our financial system, the extensive government intervention and involvement, a rapid deceleration economic activity, the rate of job loss etcetera, etcetera. I mean who can then deny that what we're experiencing now is anything but the worst economic condition that we've all seen in our careers.

The second way to address that question is, if this is the worst we've ever seen in real estate. I guess my answer to that is, perhaps at the late 80s and the early 90s were certainly a challenging time as well. And lastly, one can answer that -- address that question, is this the worst we ever seen in a multi-family space? And really the answer to that is absolutely not.

We're are far-far cry from that period; really in the late 80s and the early 90s when the savings alone in industry imploded, when we had years and years of new supply being delivered in a very challenging times. And some markets had occupancies in the 70s back in that time. Many assets had insufficient rental income to pay operating expenses well own it to service that as their debt. So no this is certainly not the worst it's been we're far from it.

We're 94% occupied today, we've a couple of large capital resources providing billions of dollars of debt capital to our space; demographics couldn't be better and we all believe that there will be good for many years to come and we don't have an over supply situation. So and in fact many experts think what actually have rental housing deficit in the very near term. So, things are pretty good in the multi-family space.

All that said, on a year-over-year basis, same-store revenues are decreasing and will decrease throughout the year. Revenues are also decreasing sequentially and will continue to do so throughout the year. But that's bad news as we deal or the impact of such savior job loss the economies have been experiencing.

The good news is that our renewal rents on average are holding flat across the portfolio and that really is good news. And there is perhaps more good news but only time will tell us that is impact newsworthy and that has to do with what work we call our net effective new lease rent. And I want to define that as the rates that we are achieving today on our new leases on a net effective basis.

So on a net effective basis what we're realizing on our new leases today. And as I noted in last night's press release, this effective new lease rent has far away from 2008 and that's sort of stating the obvious. But it has remained stable since the beginning of the year. And that's notable because it means rents are not continuing to decline at least not yet.

So we're not essentially chasing the ball down hill so to speak. So while we will continue to report negative same-store revenue numbers, period-over-period and sequentially its because we're marking older leases to a new market level; a market level that is at least for now not showing any further deterioration.

As we enter our primary leasing season 94% occupied we think we're as positioned as well as we can be. And in fact we've even got the markets where we are currently increasing our net effective new lease rents heading into the leasing season again increasing that from the levels in January.

So obviously we continue to be concerned about the job picture and it can certainly worsen which could negatively impact these rental rates. So, I want to make something perfectly clear, we're not calling it bottom; I mean there's way too much uncertainty out there today. We're just trying to let you know how we're seeing things in this field on the ground today.

Now that's a very high level discussion what's going on the portfolio. We know that there are lot of a questions about some of our key markets. So as part of today's call Fred Tuomi who runs our Property Management team will give a little color as part of our prepared remarks and Fred will of course with David Santee our Head of Property Operations will participate in the Q&A following.

On the transaction side during the quarter we did continue to sell assets and much of the info about those sales is contained in the press release in the supplemental information.

But as I had said for several quarters, our strategy is to continue to sell our over non-core assets while there continues to be a bid. And as long as the GSEs are providing financings, which is certainly positively impacting that bid. We are keenly worth of the dilution that results from this activity, but we're not sure we will realize better pricing down the road, so we want to take advantage of the opportunity while we can.

And we think that the cash from these sales is far more valuable to us in our pocket today than in these assets. So during the quarter we sold seven assets in Central Connecticut, we sold one asset each in Dallas, Nashville, Minneapolis and Tampa.

Now there continues to be insufficient transaction activity across all markets and particularly all quality and size of assets to have a definitive picture of asset values but I'll tell you what I can.

You heard me mention over the last several calls that during 2008 we sold our assets at about 100% of how we had valued them in the first quarter of 2007. That's important because we think about first quarter 2007 is somewhat about a high watermark for asset valuations, so through '08 and about 100% of that high water valuation.

Well that begin to change in late 2008 and our fourth quarter '08 sales will add about 85% of that level. And that's a consistent discount that we saw with our first quarter '09 sales as well so about 15% off or 85% of how we valued those in the first quarter of 2007.

On the development side as we discussed on recent calls we have no plans to start any new projects at the present time and our focus is on completing, leasing and stabilizing our existing deals.

During the quarter we were pleased to complete construction on a couple of projects our Third Square project in Cambridge, Massachusetts as well as the Mosaic at Metro and Hyattsville, in Maryland which was a deal that we acquired in the middle of construction.

And we also began pre-leasing, the pre-leasing process on Red Road Commons which is across the University of Miami and our 77 Green Property in Jersey City, New Jersey. So we now have five properties in lease-up like everywhere rents are below our original expectations that shouldn't come as any surprise.

We've got great product, I'm pleased to tell you the leasing velocity is very good and I want to acknowledge the fantastic job the leasing teams doing on this lease-up deals as well as the assets that we recently stabilized which were key Isle in Orlando and also Pacific in Irvine, California. The teams really have done an outstanding job on these lease-ups generating traffic, building great momentum, closing deals and achieving strong leasing velocity.

Now from a return perspective development yields will initially under-perform our original expectations and likely stabilize on average in the mid five yields rather than the underwritten yields in the mid six. Now that's -- this is for all the obvious reasons that we have already talked about. But they are all great assets we're delighted we own them, and they're doing very well for us overtime. And by the end of the year our development pipeline will reduce to five projects with less than about $200 million yet to fund.

So with that I'll turn the call over to Mark.

Mark J. Parrell

Thanks David, good morning everyone. Thank you for joining us on today's call. Our focus continues to be on operating our existing portfolio as efficiently as possible in this tough economy and on maintaining substantial liquidity.

I have a couple of topics I will read this morning. And I want to talk about our first quarter results, and do some accounting housekeeping. I'll give you a bit of color on our second quarter and full year guidance and end with a brief recap of the company's liquidity position and funding requirements.

Our same-store NOI declined 2% in the quarter compared to the first quarter of last year. This was right inline with the expectations we had for the first quarter when we gave you our original guidance for the year in early February '09. For the quarter, our same-store total revenues decreased 0.2% or 20 basis points over the first quarter of 2008 driven by a slight increase in average rental rate which was offset by a 50 basis points or 0.5% decline in occupancy.

Revenues were positively affected by an increasing rental income and negatively affected by an increase in concessions. Same-store moving concessions in the first quarter of 2009 did increase to $3 million from $800,000 in the first quarter of 2008; that is a $2.2 million increase.

However, moving concessions were still only about 70 basis points or 0.7% of total same-store revenue in the first quarter of 2009. So that is up from the 20 basis points or 0.2% of total same-store revenue that these concessions totaled in the first quarter of 2008.

We did see moving concessions levels moderate a bit in March and April and renewal concessions are non-existent. We're trying to be a leader in our markets and stick to net effective pricing. It is difficult in some markets when small owners rushed to offer concessions the second day of given occupancy.

Our same-store expenses were up 2.8% on a quarter-over-quarter basis. Payroll and utilities were each up a bit over 3% and property taxes were up 4.2% all as we expected. These increases were offset by decreases in leasing and advertising grounds and turnover expense. We feel that these are particularly good results on top of a top comparative period expense number of 1.6%.

Sequentially from the fourth quarter of 2008 to the first quarter of 2009, same-store NOI declined 5.9%. For that period same-store revenues were down 2% driven primarily by a 1.5% decrease in rental rate and a 50 basis point or 0.5% decline in occupancy. Same-store expenses for this sequential period were up 5%. Sequential increases in expenses between the fourth and the first quarter are common.

As utility expenses and ground costs are impacted by cold winter weather and snow removal, we also do reset our property tax and real estate tax accrual levels. However, this past winter was exceptionally rough.

On the real estate tax side, we also set our accruals up 4.3% or $2 million. Unfavorable expense trends in property taxes and utilities will continue into 2009, though the sequential impact will flatten or decline. We continue to show good discipline on the G&A side as our G&A spend for the quarter was approximately 16% or $2 million lower than the first quarter of 2008. Spending each dollar of G&A wisely will continue to be a priority at Equity Residential.

We also had a good contribution in the quarter from our lease-up properties, David has spoken about the terrific work of our field personnel in leasing up our development and other names non same-store properties. We anticipate that these properties will contribute an incremental $90 million to our FFO results this year and they exceeded our expectations this quarter.

I'll talk a little bit about some accounting housekeeping we adopted APB 14-1 on January 1, 2009 and as a result we must restate our 2008 FFO results going forward on a comparative basis. The adoption of this new rule resulted in a reduction to FFO of one penny per share in the first quarters of both of 2008 and 2009.

We also added a new line to our income statement titled other expenses. This line will primarily be used to expense transaction cost on successful acquisition and pursuit cost on unsuccessful acquisition and development transaction. New accounting guidance requires that transaction cost on successful acquisitions be expensed. Previously these costs would have been capitalized.

I want to make sure that everyone understands that we are not using this new line item to shift any cost into or out of G&A. If we had not created this new line transaction costs like environmental diligence, legal and title costs from successful acquisitions would have been expensed in the impairments line and would have affected FFO all the same.

On the guidance end I'd like to address our second quarter '09 guidance on page 23 of the release you will find the assumptions underlying our annual FFO guidance. Our second quarter FFO guidance of $0.53 to $0.58 per share is based on three main assumptions that will get you to the mid-point of the guidance range from our first quarter 2009 actual number.

First; property NOI is assumed to be down $0.02 per share due to continuing deterioration in same-store revenue. Though, it will be at a somewhat slower sequential rate of decline than exhibited between the fourth quarter of '08 and the first quarter of '09.

Second; interest expense will be lower as we will have the benefit of an entire quarter's worth of lower debt balances from senior note repurchases and as we use cash on hand to payoff maturing debt.

Third; we have not budgeted any gains from debt repurchases, remember we had 2 million of these gains in the first quarter.

As David just discussed, we expect quarter-over-quarter and sequential revenue to decline throughout 2009 as we write new leases at lower net effective new lease rents than last year; bringing our full year results for revenue and NOI within our previously guided ranges.

Now a bit on liquidity I want to highlight our recent capital markets activities and discuss our sources and uses of capital for the next few years. Being proactive in addressing our debt maturities and development funding needs has been a priority and we're very pleased with what we have accomplished. In late December 2008, we closed on a $543 million secured loan from Fannie Mae, some of the proceeds of which were used to successfully tender for our 2009 and our 2011 unsecured notes and the purchase portions of our convertible notes in the private market.

In January, we purchased at par $105.2 million of the $227.4 million outstanding of our 4.75% notes due 2009, and 185.2 million of the $300 million outstanding of our 6.95% notes due 2011.

Also during the first quarter, we opportunistically purchased 17.5 million of our convertible notes for a price of 15.5 million for 9.3% yield. We are especially pleased to have purchased $119 million of our convertible debt for a cost of only 99 million resulting in $20 million of economic gains in the company since the third quarter of 2008. More detail on these activities are available on page 15 of the release.

Now just briefly on the GSEs. Freddie Mac and Fannie Mae continue to provide well priced and plentiful debt capital to the multi-family market. Rates for 10-year debt today would be between 5% and 5.5%. Our underwriting standards particularly on valuation have tightened and processing times have lengthened as they intensify the underwriting.

On the unsecured public debt side, we have seen recent substantial improvements in issuance levels and investor sentiment. However, the substantial premium to GSE loan rates to access this market continues to be prohibitive at least to us. We will continue monitoring this market and hope for continued improvement here.

As I have done in the past few quarters I'll now going to our cash position and our funding needs for the next few years. This is going to be a pretty familiar with me to many of you as not much has changed since last quarter. But we feel the added transparency here remains beneficial. So let's go ahead and start with sources and uses of capital for the remainder of 2009.

At April 1, 2009 we had $611 million, which includes 10/31 balances in FDIC Guaranteed notes with maturities longer than three months. I'll note these items are not shown in cash and cash equivalents but shown in other places on our balance sheet.

We're also had line availability of 1.31 billion and giving us total liquidity of 1.92 billion today. We expect over the course of 2009 to receive another $315 million in net disposition proceeds as well.

On the use side we'll spend about 1.05 billion during the remainder of 2009. About 868 million we'll spend on debt payoffs including development loan payoffs, about 183 million on existing development projects and other funding requirements. And I note in this discussion I'm assuming no additional debt repurchases in 2009.

As a result, our cash balance at December 31, 2009 will be about $50 million and our line availability will be approximately 1.135 billion. This will give us total liquidity of approximately 1.185 billion and I know that this is a conservatively estimated number as it is before any additional financing activities that company might undertake.

For 2010 we expect to spend 635 million in that year, 363 million of which will be spend on debt payoffs including development loan yet to be for withdrawn, 272 million in development fundings and other fundings and I would like to tell you that of the $500 million term loan that initially comes due in October 2010, we would expect to extend that loan into 2012 pursue into an extension option the company have.

So, it is not included in our refinancing needs for 2010. So therefore at December 31, 2010 we'll have cash on hand of 50 million; line availability with of 500 million and this is all of before disposition proceeds in 2010 and before any financing activity in either 2009 of 2010.

As we look towards addressing 2011 and 2012 funding needs, Equity Residential is fortunate to have many sources of liquidity. As we have proven we have the ability to borrow from the GSEs at low rates and in large amounts. Our enormous pool of unencumbered assets about $12 billion in un-depreciated book value provides us for the ready pool of assets that can be leveraged.

We've also had productive discussions with other traditional non-GSE lenders to our space. We have money available at good rates but at much lower leverage levels than the GSE. As one of the best rated companies in the REIT space, we have access to an unsecured public debt market that as I mentioned earlier is improving.

We also have a ready source of funds available from the sale of non-core assets and we will be paying down debt with a sizable amount of cash we have on hand from prior debt insurances. Finally; our undrawn $1.31 billion line of credit is available to meet maturing debt obligations and funding needs.

As we have proven over the past 18 months, we will continue to be proactive in pre-funding ourselves. And help to access all our resources. Also as David mentioned, development and process which is a big user of cash will decline substantially, by year end as we plan to start no new wholly owned projects and as existing projects are completed.

I also want to point out that we have through our various debt tender and open market repurchased activities already and meaningfully reduced the amount of debt that we have maturing between now and 2012. You can bet that the management team will continue its focus on aggressively addressing debt maturities and other funding needs.

Fred Tuomi will next give an overview of some of our key markets. But before I turn it over to Fred, I want to provide clarity on the difference between the rent numbers Fred will provide and the actual revenue numbers that we report and the projected revenue numbers that are contained in our guidance.

The term that Fred will use and that David has used is net effective new lease rents; meaning rates achieved on new leases today on a full net effective basis. The current reductions in net effective new lease rents are materially different from our guidance revenue numbers in several respects.

First, the impact of lower net effective new lease rents will be spread over the remainder of 2009 and 2010 as we roll through our current rent roll. Until leases roll, existing leases will pay us rent at a higher historical rent levels.

Second, as David noted those residents that renew with us or doing so on average had no change in net effective rent. And this represents 40% of our residents that helps to mitigate the impact of lower net effective lease rents from our new residents.

Third, changes in occupancy and in levels of non-rental income can also impact the revenues we ultimately receive and thus report and are not encompassed in our net effective new lease rents concept.

So with that general understanding in mind now let me turn the call over to Fred.

Frederick C. Tuomi

Thank you, Mark. As most of our markets are performing as expected and as David mentioned earlier, rent levels have declined from 2008 we've seen -- as David mentioned although rent levels have declined from 2008 we have seen steady demand and fairly steady rents since January.

New York is obviously of interest. Its encouraging that we are 95% occupied across this market and we still see no meaningful evidence that moves out due to job loss. So far the rental's chief concern seems to be a lower level of personnel income through bonus or salary reductions versus the actual loss of the job.

Therefore, what is occurring throughout the market is the rotation. People are moving around to secure place that is lower in cost, higher in quality or in some cases a little of both. People of Manhattan are transferring within our buildings moving across neighborhood boundaries and some are now returning from the burrows and this is actually creating a new source of additional demand for Manhattan apartments. In fact our Manhattan occupancy has been running 1 to 1.5 points above last year.

Focusing on Manhattan only, the net effective new lease rents are down about 20% from a year ago. This is primarily driven by market concessions and a loss of premium on choice for Portland. Moderate price units in great locations are faring much better. As expected renewal negotiations are tough but the good news is April renewals were completed at an average of only 5.6% below the prior in-place rent.

I'd like to provide a little more detail around our Q1 results for the New York market. We reported quarter-over-quarter revenue growth of plus 0.5% for the New York market. Now for Manhattan only the first quarter revenue growth was actually plus 2.1%. However, in Manhattan we are under the process of renovating 958 apartment units. And these rehabs are going extremely well in terms of leasing and rate increases. In fact our year-over-year revenues on these projects are between 35% and 50% up over last year.

So excluding these units the remaining Manhattan properties saw a decline of 3.9% in revenue for the first quarter and the overall New York market was a decline of 2.7%.

And other market worthy of note is Seattle. Seattle is clearly going through a reversal approaches. One of the best performances of late, Seattle has recently come under pressures from job losses. These losses have caused a sudden drop in rents and in occupancy, especially in the Downtown CBD market.

Our net effective new lease rents have declined 11% year-over-year and occupancy is down two points to 93%. Now the good news is our April renewal rents are down only 1.3% and the recent velocity is very encouraging.

Another market in swift transition is that of San Francisco. The forecasted job losses there are substantial. And similar to Seattle our net effective new lease rents in the Bay area have fallen 12% year-over-year and occupancy is down two points to 93.6. And again as in Seattle the good news is April renewals are holding only down 1%.

Moving to Southern California, we're doing above what we expected so far. However, in Los Angeles, we slipped a little bit more due to large job loss numbers and some pockets of new supplies which are causing steep concessions. Net effective new lease rents are down 8% in Los Angeles and the good news is the supply pipeline is now almost empty.

San Diego is a bright spot. After a sluggish fourth quarter in 2008, the trend is definitely been positive. Our net effective new lease rents are down only 4.5% year over-year, but it's great to see San Diego rents are actually growing now. It had grown 1% since January and our April renewal rents are also up by 1%.

Other markets are showing positive trends as well. Boston, Maryland, D.C., and Virginia are all performing ahead of our expectation and are maintaining positive growth trends through the first quarter. Our net effective new lease rents were up in January in all of three these markets. They were up 4% in Boston, up 4% in Maryland and April renewal rents are up 2% in the D.C. Virginia market.

So, overall the first quarter was inline with our expectations and while net effective new lease rents dropped across all markets late last year, since January 2009 they have been steady. We have been able to improve our retention rate while achieving flat or better renewals through April.

So we feel good about our occupancy being at 94% and very solid leasing velocity over the past few weeks. This does position us well as we enter this critical leasing season.

David?

David J. Neithercut

Thank you, Fred. Before we open the call to questions, I'd like to briefly address the subject of re-equitizing of lease we've been seeing take place over the last several months.

We have paid and we continue to pay a close attention to this activity and understand how these deals are getting done, for what reasons, as well as a dilution involved and the benefits for the companies that are raising the equity.

As Mark just noted, we are very mindful of our maturity schedule and of our debt covered metrics. We've aggressively raised capital from the agencies in advance of our need and you can expect us to continue to do so.

We'll also closely monitor the senior unsecured marketplace and we'll continue to sell non-core assets to raise capital as well. And we will not hesitate to do what we believe is in the best interest of our shareholders' long-term interest.

So, I'm not saying we will raise equity capital and I'm not saying we won't. What I'm saying is like everything we'll keep our options open and we'll review this situation on a regular basis.

So with that Sylvia, we'll be happy to open the call to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Your first question comes from Rob Stevenson from Fox-Pitt Kelton.

Robert Stevenson - Fox-Pitt Kelton

Hi, good morning guys.

David Neithercut

Good morning Rob.

Robert Stevenson - Fox-Pitt Kelton

Can you talk a little bit about where bad debt in the portfolio is been trending over the quarter versus the fourth quarter and what you've been seeing more recently?

David Santee

Rob, this is David Santee. You know bad debt has run about 1.1% historically, it's in the 70 basis point range and bad debt really has two key drivers. It's obviously write-off of rent but it's also damages. And we have implemented a pretty, let's say consistent but firm program across the country that really focuses on charges relative to quality of the apartment once we get it back from the resident. So, that's one reason for the increase.

The second increase is what we call accelerated rent. Those folks who choose to roll the dice and wait until that apartment is re-rented on the early termination. And the increase in the early termination part of bad debt is really a result of our increase in average backing day. So all-in-all bad debt is for the most part on track as we expect.

Robert Stevenson - Fox-Pitt Kelton

Okay. And then have you guys made any changes in the last few months on your resident underwriting criteria and how you score different things given the way that the markets been changing?

David Santee

This is David Santee again. We have a credit model that we've had in place for two years and simply it puts people into four categories. We haven't changed the model that defines these categories, but we will change how we treat residents that fall into those categories. So a person that falls into the third bucket that has very questionable credit. Previously we may require two to three months additional rent in security. Today we might be willing to take a little more risk and only ask one to one and a half months rent in security.

Robert Stevenson - Fox-Pitt Kelton

Okay. And then last question for Mark. Based on recent conversations with the rating agencies, what's the capacity to continue to access secured debt before you're at risk of a rating agency downgrade?

Mark Parrell

Yeah, two points just to make. First on the covenant side we have about $2.9 billion of covenant room before we had the secured debt limit. Your question related to the rating agencies. I think we would probably start to get rating agency pressure if we did call a 500 to a $1 billion more of secured debt and didn't payoff a similar amount of secured debt. The fortunate thing we have is that this year it's pretty well all secured debt, there is one small unsecured maturity in June Rob.

So I think if I can keep our unsecured or unencumbered NOI near and around $750 million which is our expectation, I don't think I will have a problem on that. But I do think we could get pressured if we move much beyond that.

Robert Stevenson - Fox-Pitt Kelton

Okay. Thanks, guys I appreciate it.

David Neithercut

Yeah Rob.

Operator

Your next question comes from David Toti from Citigroup.

David Toti - Citigroup

Hi good morning guys. And one thing you didn't mention in your discussions where your appetite for acquisitions and where you might see opportunity, and how that might fit into your sources and uses agenda?

David Neithercut

We did not acquire anything in the quarter. And we have acquired very little in the last 18 months. And that is because we've -- really the focus has been on liquidity and the focus has been on dealing with the pending debt maturities. And I'd say two things that have to have happen for us to I think really start getting back into the acquisition game.

Number one we have to feel like value, the prices have dropped so where we believe they'll stabilize and we've to believe that those have represent good values. And the second thing that has to happen we had to have confidence in our ability to finance ourselves on a regular going forward basis.

Mark and his team have done a terrific job of our positioning the company for 2011, 2012 and we'd start taking capital, be it cash on a balance sheet, disposition proceeds that are coming in and going and a lot of creditors are buying today, you're essentially moving that from 2011, 2012 to 2010, 2011.

And so until we have more confidence that we can on a consistent regular basis deal with our pending maturities, I think you can see us out of the acquisition business and continuing to sell assets, keep the cash and really keep cash on hand to deal with pending maturities.

David Toti - Citigroup

Great. And then based on your comments it also seems like you are likely most interested in potentially tapping the unsecured market? Would you say that was valid?

David Neithercut

Well, we I'll say that this is just a constant trade-off in mix between secured and unsecured market. I mean the unsecured market for us is an important source of liquidity. We would love to be in that market, but it just has to present value to us. And just to be clear, we've always issued unsecured debt at a spread to GSE debt.

It's just the spread rate now is pretty substantial and doesn't make sense to us. But there has been some really promising signs in that market and I'm encouraged and hopeful but I don't know yet if it's time to strike. So we're going o continue talking to the GSEs. We're going to continue to have a dialogue with them; we're going to borrow from them as appropriate.

David Toti - Citigroup

David, this is David Toti speaking. Just t follow-up on that point, you talked a little bit about not closing the door to equity, but not putting it completely, I mean not doing it either. And then the unsecured market's getting better, but not... I'm just trying to put it all together in terms of your thinking about all your various capital sources you've been priming the pump on one of them really, really hard.

I am just wondering as you think about the unsecured market, now about your pricing, the equity market doesn't seem that great pricing that you want to issue at. How do you sort of put it all together and sort of keeping a full menu of capital within your stack?

David Neithercut

Well, when we talk about it all everyday, I mean how do we keep it all together, we're constantly monitoring what's going on out there in the capital markets, understanding what our opportunities are on the secured side, unsecured side, equity side. Looking at credit our credit statistics, looking at debt maturities, looking at the coverage ratios and also looking at just what our existing liquidity is and how far that can take us out into years into the future.

And as we sit here today, we're comfortable that we've got everything under control till 2011, if not 2012 and that has given us I think some time to assess the situation and get hurrying this year and start to think about 2010 before we have to make any decision one way or the other.

I know that a lot of companies that have raised equity to this date have done so to get them to a place where we have been for quite some time. So we think that we were obviously keeping our eye on everything and we'll make the appropriate decisions when we believe that the time is right.

David Toti - Citigroup

Great. And then this is David Toti. David just one last question relative to the affordability gap in most of your markets which appear to be closing some of the government stimulus obviously taking affect. Do you see that as a growing trend or something that's still pretty far at the horizon relative to your near-term projections?

David Neithercut

Well, that's a great question and it really has two separate answers I think David. One is -- what's it going to take for people to start buying even if they do see homes really cheap. What kind of confidence they need to have in the economy, what kind of confidence that they have in their job in order to hit that bid. And I think that people are going to be cautious and they'll be cautious for a while just because of the uncertainty in the marketplace.

The other thing is that one has to be very careful in looking at what home affordability is nationally as compared to our home affordability is in our core markets. I mean it's still even though it has come down it's still fairly wide in place like New York and in Orange County and San Francisco and Seattle and some of our other markets. So we do look at that, we do acknowledge that what we've benefited from a move out to buy single family homes level us down significantly from what one would suggest would be a historic sort of run-rate within our portfolio.

So we acknowledge that there is likely to be some pent-up demand for single family homes in our portfolio. But we just -- we believe that people will need to feel little better about their jobs; a little better about that the economy before they step out and satisfy that demand.

As well as let's not forget that for the first time in a while, one needs real equity to actually buy a single family home. So, we certainly watch it and they will impact us in some markets and we'll have to be thoughtful about it, but I don't think that we're having the impact today that some people might have expected.

David Toti - Citigroup

Okay. Thanks for the detail.

David Neithercut

You are very welcome.

Operator

Your next question comes from William Acheson from Benchmark.

William Acheson - Benchmark Company

Thank you. Good afternoon guys.

David Neithercut

Hi, Bill.

William Acheson - Benchmark Company

Listening to your commentary, I have to say you sound not optimistic, but guardedly not too pessimistic. And when I looked at your same-store NOI guidance the midpoint, you would have to average negative 8% for the rest of the year to get to the midpoint of 6.5? And I'm kind of assuming that some of the post retail markets Phoenix, Florida, and Inland Empire are going to start getting better year-over-year comps. So the question is where do you expect NOI is going to be down the most?

Mark Parrell

Well it's Mark Parell. I'm just going to address the beginning of the remark Bill where you sort of talk about where our estimates are. Your implication is right. What's going to go on for the rest of the year is about that number. It's going to happen. The NOI reduction is going to happen differently. It's not to average negative 80 through the next three quarters. It's going to sort of ramp up.

Remember during '08 our revenues went up literally every quarter. So we are on a quarter-over-quarter basis chasing a larger 0number for the whole year. You asked then and I don't know David you want to take that part of it. But you asked if markets may improve here during the course of the year or whether Phoenix would rebound. I would just tell you that rolled up our numbers, we still feel very confident inside of our guidance range.

William Acheson - Benchmark Company

Okay. And then really quickly on the development portfolio; as concessions there, I mean your pro forma rent rates, how much have they come down from say expectations a year ago?

David Neithercut

Well, concessions have been pretty consistent with our underwriting sort of in the one moth range Bill. And then just with respect to the rents, if you think about what Fred's comments were about what's happened to our net affective new lease rents for some of these markets. You can expect that we're seeing rental levels that are low double digit down from what our expectations might have been.

William Acheson - Benchmark Company

Okay. And then lastly on Cambridge; that looks like a property that's doing really great guns here. And I'm just assuming that that's because it has less of a dependence on financial jobs and you have a little bit more biotech and healthcare providers in that market, would that be accurate?

David Neithercut

And education?

William Acheson - Benchmark Company

And education.

David Neithercut

Yes. I mean that market has done very well for us and not just that property but the expansion of our property on the other side of the river to West End has also done exceptionally well. The lease-ups there have been have really exceeded our expectations. For all the reasons you mentioned.

William Acheson - Benchmark Company

Okay. Thanks you very much.

David Neithercut

You're welcome.

Operator

Your next question comes from Sloan Bohlen from Goldman Sachs.

Unidentified Analyst

Good morning. And my name is Jay Habermann. Just quick question about transactions; it looks like first quarter is bit light could you may be give us an update on how deep you think the sales market is how far you probably think buyers and sellers are right now?

David Neithercut

Well, my guess we continue to maintain our guidance of that what we expect to do for the year and our guys continue to be confident that we can do that. And I'll tell you that we've got plenty in the pipeline today either out marketing or under letter of intent to under contract to lead us to believe that we can still get there but again that's all subject to a lots of different things happen.

Bid of our spreads are wide but I'll tell you on the properties that we've been selling so again these lower price point deals Mark had mentioned Freddie in Fannie financing being 5 to 5.5 so there is good financing available to the buyers of these assets. And we've been managing to generally meet our expectations on our dispositions of those assets. Again these are very small price points and sort of assets that are treasury markets.

I will tell you that the bid has spread on larger properties, more core properties and higher absolute ticket properties is a much wider bid aspirant.

Unidentified Analyst

Okay. Thank you. And then I'd apologize if you mentioned this on the call, I jumped on late but, just could you give us an update on what the current yield is on 681 million of completed development that's not yet stabilized and where that ranks?

David Neithercut

I did say that all of our developments of our development pipeline in the business and the things that are under we're expecting at an average to be about mid five yields and that's down from what we had originally underwritten in the mid sixes.

Unidentified Analyst

Okay, great. Thank you.

David Neithercut

You're very welcome.

Operator

Your next question comes from Alexander Goldfarb from Sandler O'Neill.

Alexander Goldfarb - Sandler O'Neill

Good morning.

David Neithercut

Hi Alexander.

Alexander Goldfarb - Sandler O'Neill

Just a question first for Mark on the debt side, as you guys and a number other REITs have been either tendering or buying back your unsecured debt in the market. What do you think that's done? What do you think the affect has been to the unsecured debt market, do you think that's caused like lack of liquidity or pricing to not be may be what the existing holders would like. And what do you think the longer-term impact of the recent tendering or buybacks will be?

Mark Parrell

Sure. Except for some of the distressed REITs, most of those tenders have been at par. So I would suggest that it's generally supportive of the market. I think it is bringing in rate. I think it is supportive of the improvement in the market that we've seen off late. And also frankly, people still have money to put to work and as we and others tender for bonds, we are materially reducing their book and their exposure to REITs.

I got to think that for some of the insurance companies and others that buy our bonds giving an offer at par is one of the few offers at par they have received for debt securities in the last year or so. So, I guess, I feel differently, I think it's helpful to the market.

Alexander Goldfarb - Sandler O'Neill

Okay. And next just goes to Phoenix, just given everything that's going on out there and some of the attributes of that market that we're seeing versus your other, your costal markets. What are you longer term thoughts about Phoenix. I mean you exited Texas would we... should we think about something similar to Phoenix?

Mark Parrell

Well I guess you can think that we're looking at our exposure everywhere and deciding what we think the right long-term plan ought to be. So I am not going to tell you anything particularly about Phoenix. I mean Phoenix is obviously a very challenged market and like all the markets we're in we'll take a look at it and we think time is right to decide and we think it's a place that is should will be a long-term capital investment or not.

Alexander Goldfarb - Sandler O'Neill

Okay. And then just the final question is New York, I think you mentioned about 900 units under rehab and you guys bought a upper Westside in agent portfolio few years ago. Just want to get a sense for how the returns to that are going?

Mark Parrell

Well, I mean I can't say what the absolute return is on the investment, but as Fred mentioned, our rehab business in New York, of the it's 900 or something units where we've got 35-40% same-store revenue growth out of entire portfolio. And then upper Westside portfolio is certainly driving a lot of that.

David Neithercut

And then the acceptance has been fantastic. Since we get the units vacated, we get them turned with the rehab, we can get them leased and occupied at rents that about double of the in place rents.

Alexander Goldfarb - Sandler O'Neill

Okay, thank you.

Mark Parrell

You're welcome.

Operator

Your next question comes from Michael Salinsky from RBC Capital Markets.

Michael Salinsky - RBC Capital Markets

Good morning.

David Neithercut

Good morning.

Mark Parrell

Morning.

Michael Salinsky - RBC Capital Markets

David it's a follow-up to I think David Toti's earlier question. Can you talk about move-outs across the portfolio? Are those still down on a year-over-year basis? And also could talk specifically about Southern California and some of the markets where we've seen just massive contraction home prices, where you're starting to see that tick-up, you're starting to see tick-up there?

Frederick Tuomi

Okay. Yeah, this is Fred Tuomi. In Southern California I talked about Los Angeles already. Orange County and Inland Empire are operating pretty much at same dynamic now. Inland Empire actually defied logic for a while to the housing prices, but once the national economy kind of collapsed and you saw massive job losses on top of the single-family correction there. Inland Empire has started this.

So that's one of the few markets we have seen an uptick in home purchasing, because the prices have gone down significantly. You can now get one for under 250,000. We're seeing some move-outs for home purchasing. We're seeing a little bit of reports for some share market activity there, as more units are being lowered in price and lower the rent there.

But we're still 94.2% occupied, 7% left to lease and our rents are down 10% over the last year, but they've been absolutely rock stable since the beginning of this year. And our real entries are just slightly negative. So it's doing okay, but under a lot of pressure from now as the job loss more than the home situation.

Orange County is kind of a little disappointment there and we've got three years running of job losses which is unusual for Orange County. And the prediction for this year is substantially more job losses from retail, tourism, et cetera. So it's not just about the sub-prime explosion anymore. But the home prices there had come down, but they're still expensive as David mentioned. So I think that market will be okay, because right now what's kind of making it worse are little stirs of demand.

We always typically have 2,500 to 3,200 units coming in Orange County. This year we're getting 4,800 just at the time that we don't want it. But they are highly concentrated in Herbein and Anaheim. So that's causing some concession pressure across the market. Rents were down 10% year-over-year, but they have been fairly stable to slightly negative so far this year.

Michael Salinsky - RBC Capital Markets

And on the operating side, it looks like the rate of sequential decline in the Florida seems a bit slow during the quarter, relative to some of the other markets. Do you still saw this getting close to a bottom and as a follow-up to that. Are there any other markets may be you're looking sort of getting closer to a bottom at this point?

David Santee

Yeah, Florida's got a similar story. It had two waves. The first wave was the single-family issue. Especially, we all know about South Florida, Miami and then later on, Orlando. And they were taking the normal path of a sudden write-down and then some kind of bouncing on the bottom, some stability, getting to a point of recovery as you kind of wrap around the cost period. And we're very close to in fact last year, I think we talked about it for the month of June, in South Florida we actually saw an uptick of positive rent growth and that was pretty much the inflection point we were expecting.

Then what happened in national economy, the recession hit job losses across all sectors, not just the real estate sector set in. So we have the second wave of downturn. But, you didn't have quite the same distance to fall. So yes, in Florida we're seeing, we're not at a recovery point yet, but it's certainly not the kind of declines that you see in these other markets.

Michael Salinsky - RBC Capital Markets

And finally, on the transaction side probably, more question for David. The 71 cap that you had on your 11 asset sales during the quarter I mean is that representative of where the market's going? And secondly in terms of transactions, I mean what is kind of the sweet spot sellers are looking for right now. Is it distressed properties, is there redevelopment, is there properties you are going to have to pull a lot of CapEx in. What kind of -- what are sellers generally looking for?

David Neithercut

Well I think sellers are looking for positive spread to the borrowing rates and a good cash on cash return. And if you can borrow from Freddie Fannie at 5 to 5.5 and buying cap rates in the high sixes low sevens, which is generally kind of what we're seeing in the product we're selling.

All that can translate into a good cash on cash return for those buyers. That cap rate -- weighted average cap rate for the quarter was impacted by the a portfolio that we sold in Central Connecticut, which was sort of older, smaller assets, which was at about 720 cap rate. But I would tell you that the assets that we're selling in high sixes low sevens was generally kind of the sweet spot that we're seeing today and again with Fannie and Freddie borrowing rates where they are, that works for the buyer.

Michael Salinsky - RBC Capital Markets

When are they pricing those -- are they looking on forward cash flow or prior cash flow?

David Neithercut

Well I guess all of the above I mean they're certainly looking at where past cash flow had been, but they're also looking at what's going on in the marketplace and trying to look at something on a forward flow as well.

Michael Salinsky - RBC Capital Markets

Great. Thanks that's very helpful.

David Neithercut

You bet.

Operator

Your next question comes from Scott Kirkpatrick from Teton Capital Advisers.

Scott Kirkpatrick - Teton Capital Advisers

Yeah. Congratulations on a good quarter in a tough environment.

David Neithercut

Thank you.

Scott Kirkpatrick - Teton Capital Advisers

You're welcome. My question is first in terms of the bad debt and delinquencies could you give us a little more color in terms of the actual dollar number on the bad debt? And may be some sequential context by where that was in the December quarter, and kind of may be what your thoughts are there going forward? And if you wouldn't mind doing the same with delinquencies that would be very helpful?

David Santee

Okay this is David Santee. Bad debt in the first quarter bad debt write-off was about $5.6 million, of which half of that is the accelerated rent that we referenced and the other half was based upon damages after a resident moves out. On the delinquency, historically our delinquency runs in the say call it 2.7 range and we do see seasonality in our delinquency in that in January-February as people are trying to pay their Christmas expenses what have you we see delinquency always tick up 40 to 60 basis points. And that's no different than what we've seen this year. And for April we've already reduced back down to normal levels of 2.6.

Scott Kirkpatrick - Teton Capital Advisers

I am sorry. So what was the delinquency percentage for the quarter?

David Santee

The delinquency percentage for the quarter was 3.3.

Scott Kirkpatrick - Teton Capital Advisers

And what was is it in I understand at seasonality point but what was it in December... the December quarter?

David Santee

December quarter it was 3.0.

Scott Kirkpatrick - Teton Capital Advisers

And what was the bad debt in the December quarter?

David Santee

The bad debt in the December quarter was 1.0.

Scott Kirkpatrick - Teton Capital Advisers

And just in terms of that sequential change in bad debt is that also something you see a function of seasonality impacting or is that just more the tough environment?

David Santee

Yes, I mean part of the offset to bad debt is the amount of money that our collection agency provides us and no different than our residents have difficulty paying their bills over the holidays as they are less likely to pay a collection agency over the holidays as well. So, we see reduced collections from our third-party collection agency over the holidays as well.

Scott Kirkpatrick - Teton Capital Advisers

So you're expecting the bad debt and the delinquencies to sort of moderate back to the norm in the current quarter?

David Santee

Yeah, as I said bad debt has remained fairly constant, delinquency was slightly higher in the quarter but for April it's already moderated down to back to the 2.6 which is well within our expectations.

Scott Kirkpatrick - Teton Capital Advisers

What was bad debt for the year last year?

David Neithercut

I don't have that, no reason to think that those percentages for any prior time period should be different in the ranges that we have given.

Scott Kirkpatrick - Teton Capital Advisers

Its just that some other of your peers had bad debt in the first quarter that was greater then the entire last year. So I can simply back online with that. And then you also mentioned that you're reiterating your prior guidance for '09 for the year and I'm assuming that's the FFO guidance of $2 to $2.30 and may be you have mentioned this is beginning the call I apologize for missing. But what were any other metrics for 2009 that you are reiterating?

David Neithercut

Well I guess what I tell you, we've just, we've changed a few of those guidance assumptions from the, on page 23 of the supplemental.

Mark Parrell

Yeah I mean we generally don't make adjustments in this first quarter to our guidance unless we're off track in some substantial way. At this point I think our message to you is all on track but we lack full visibility until we get to the releasing season. So, all of our guidance remained unchanged except for increasing interest and other income that ranged by 2 million; that's because we received $2 million of gains when we bought back our convertible debt that we just in budget for it.

Scott Kirkpatrick - Teton Capital Advisers

Right, right. Okay.

Mark Parrell

And we have also increased income tax expense by a million.

Scott Kirkpatrick - Teton Capital Advisers

Okay. I am not too worried about this; was the FFO range on page 23 in the supplemental of $2 to $2.30 range?

David Neithercut

Yes, it's the same as it was in February of 2009 when we gave our original guidance.

Scott Kirkpatrick - Teton Capital Advisers

And what was the occupancy target for the year?

David Neithercut

93.5% and it remains 93.5%.

Scott Kirkpatrick - Teton Capital Advisers

So you're already tracking slightly ahead of that?

David Neithercut

There is seasonality to our occupancy. It tends to be at lower points in the winter and then there is some tracking and then may be David you want to give some color.

David Santee

Well, there is lower points in the summer as you increase the volatility and the impact of strident properties that's typically what we see as the drop is, the low point is then in the loss.

David Neithercut

So we're comfortable with 93.5 as an average -- weighted average for the year.

Scott Kirkpatrick - Teton Capital Advisers

Okay. And then just lastly and thank you for time; the idea of the employment metrics deteriorating and that impacting your numbers. I guess is there some kind of sensitivity analysis you could give me just kind of back of the envelop, are you looking at a certain level of unemployment this year?

David Neithercut

No. We build our numbers up from the ground up and really look at each individual market in which we operate in the dynamics of each individual market how that may be impacting our property. So it's not as though we dictate to our field personnel please assume this level of unemployment. Certainly within our ranges we do, we can tolerate more unemployment than what we're seeing today.

Scott Kirkpatrick - Teton Capital Advisers

So, what's today around 8.7 and may be you're using a cushion of say a 9 or 10 something like that?

David Neithercut

Well, once again I'd say that's not the way we do. But we've stated there is some cushion in unemployment within the guidance or the ranges of guidance that we provide.

Scott Kirkpatrick - Teton Capital Advisers

Okay. Thank you.

David Neithercut

You're very welcome.

Operator

Your next question comes from Anthony Paolone from J.P. Morgan.

Unidentified Analyst

Hi this is Michael at Anthony's line actually. If I look across your markets and kind of rate them top to bottom over the last few quarters, Seattle and San Francisco already at or near the top of the list. And I was just thinking if you pass 40 year from now given the trends there, are those still the two best markets? Or and if not which ones are going to poise to replace them, is it D.C., Virginia Maryland?

Frederick Tuomi

If you're talking about just short-term current operating conditions, I'd say yes probably Seattle San Francisco have had a great run. They have good supply demand dynamics and now there have been pretty sudden reversal there primarily due to the job loss situation and little bit of pockets of supply in Seattle.

So they're going to be under pressure here for another couple of quarters. And as I mentioned earlier Boston is just doing fantastic in the D.C. market both Maryland and Virginia are just very solid. So, we expect those to be near the top and a lot in the middle. And then it's going to be others are going to be under some pressure.

Unidentified Analyst

Okay. Just one more question and may be I am reading this transaction question to that now, but you've maintained the 250 million of acquisitions guidance. It sounds like at last you will see some price stabilization, may be that comes in a bit low and then if that were the case, does that also affect your choices for your volume at dispositions?

David Neithercut

It might be very well. I think what we have said on the fourth quarter call in February that if we were to get into the acquisition game, again, it would likely be in the latter part of the year. So I think that you can look at sort of a net disposition volume as reasonably constant and if we... if dispositions do increase that might provide some opportunity for us to apply for some assets. We're still looking at that 450 million as a sort of what it dealt with.

Unidentified Analyst

Okay great. Thank you.

David Neithercut

You're welcome.

Operator

Your next question from Steve Swett from KBW.

Stephen Swett - Keefe Bruyette & Woods Inc.

Okay. Can I just turn the flush out this net effective new lease rent numbers just to make sure I understand it?

David Neithercut

Sure.

Stephen Swett - Keefe Bruyette & Woods Inc.

I think I understood you to say that it does not include renewals?

David Neithercut

That's correct. This is just....

Stephen Swett - Keefe Bruyette & Woods Inc.

It was just...

David Neithercut

This is the amount that we're getting at our new leases on a net effective basis. So new residents on a net effective basis, as I mentioned in the remarks, renewals are flat on average and so what we've focused this discussion point earlier was only on the new leases and new residents.

Stephen Swett - Keefe Bruyette & Woods Inc.

And I heard I think I heard Fred's number for some specific markets but did you have a net effective new lease rent over the entire portfolio?

Mark Parrell

Yes, that's year-over-year and April it's down 7.5%. And it's pretty stable.

Stephen Swett - Keefe Bruyette & Woods Inc.

Okay. All right, so if I combine those two for all your leases inked in the quarter be somewhere between the two, 7 negative to 7.5 and flat. And then if I look at the disclosure on page eleven which has the well, your disclosure on the average rental rate that takes those numbers but its only for the leases that were actually rolled in that quarter?

David Neithercut

That's only existing rent roll.

Stephen Swett - Keefe Bruyette & Woods Inc.

Right. I would imagine you roll fewer leases in the first quarter then say your second quarter?

David Neithercut

Yeah, I would expect that to be the case, yes. So, that is the rent roll which includes whatever leases we've written in really over the last year.

Stephen Swett - Keefe Bruyette & Woods Inc.

Right, Okay. And then I think you said that you expect the sequential revenue trend to moderate in the second quarter?

Mark Parrell

Right we expect sequential revenue to decline less but it will continue declining throughout the year.

Stephen Swett - Keefe Bruyette & Woods Inc.

All right. And if I assume that you are rolling more leases in the second quarter than the first quarter, then am I assuming then that you expect an increase in occupancy in the second quarter?

Mark Parrell

Yes. We expect this David again; we expect a slight uptick in occupancy but more importantly less moving concessions.

David Neithercut

And that's already...

Mark Parrell

Up again... less up from moving concessions.

Stephen Swett - Keefe Bruyette & Woods Inc.

Okay. And then if I could just ask perhaps Fred or David can you characterize that the traffic you've seen this spring in terms of your closing ratios and how you feel about the traffic in this environment versus say last year or prior years?

David Santee

Let me say this our foot traffic, those people that are recorded that walk into our office, that number is up 4.6% year-to-date. Now I tribute that to two things number one we have a very focused initiative around sales, our people are doing an excellent job of working with customers, following up that's driving some of that improvements.

But secondly I think there is lot of tire kickers out here, people are shopping right. And I think that evidenced in the unique visitors -- the unique visitor accounts that you see on the major ILS, our equityapartments.com site, our unique visitors are down somewhere around 7% apartments.com down about 8% rent.com all of these ILS is that report their staff they all see a reduction in monthly unit business. So, it's clear that demand is down but yet we are seeing more people shopping our communities and coming to the door each month.

Stephen Swett - Keefe Bruyette & Woods Inc.

Okay. Thanks.

David Neithercut

You're welcome.

Operator

Your next question comes from David Harris (ph) from Royal Capital.

Unidentified Analyst

Thanks. A quick question on the dividend if I may and if I'm doing my math right and using your 925 budget for CapEx, it looks like there is a short, moderate shortfall on covering your dividend, any thoughts you'd like to share with us on size of the dividend payment and cash stock alternatives?

David Neithercut

Well, I think your arithmetic is pretty close. We look at a modest shortfall, not unlike what we saw kind of in '02, '03. And as I said on the last call, our intention is to continue to pay our dividend and pay it in cash. But as we do every quarter David the Board will take a long look it and we'll have discussions and we'll do what we think is the right thing.

Unidentified Analyst

Fair enough. Thanks guys.

David Neithercut

You're very welcome.

Operator

I am showing no further questions at this time. Are there any closing remarks?

David Neithercut

Yes. Thank you all for your time today and we look forward to seeing many of you in June at the earning release. Thank you so much for joining us.

Operator

Ladies and gentlemen, this concludes the Equity Residential first quarter earnings conference call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Equity Residential Q1 2009 Earnings Call Transcript
This Transcript
All Transcripts