Also during the first six months of 2012, the company sold 12 properties with a total of 3,184 apartment units for an aggregate sale price of $336.3 million at a weighted average cap rate of 6.4% generating an unlevered IRR, inclusive of management costs, of 11.0%.
As previously disclosed, on June 6, 2012, Equity Residential received $150 million in termination fees from Bank of America, Barclays Bank PLC (together, the “Sellers”) and Lehman Brothers Holdings Inc. (“Lehman”) as a result of Lehman’s acquisition of the Sellers’ remaining 26.5% interest in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. The company will recognize $70 million of these fees in interest and other income in the third quarter of 2012 and expects to recognize $80 million of these fees in interest and other income in the fourth quarter of 2012, subject to resolution of certain contingencies more fully described in previous disclosures. These termination fees will not be included in the company’s Normalized FFO.
The company previously entered into a new senior unsecured $500 million delayed draw term loan facility that provided for a single draw anytime on or before July 4, 2012 and could have been used for any corporate purpose including to finance an Archstone acquisition. The company elected not to draw on this facility and the facility expired undrawn.
As previously disclosed on July 20, 2012, the company called for redemption, on August 20, 2012, all of its outstanding Series N Depositary Shares (with a liquidation value of $150 million) each representing 1/10 of a 6.48% Series N Cumulative Redeemable Preferred Share of Beneficial Interest. As a result of this redemption, the company will record a non-cash charge of approximately $5.1 million, or approximately $0.02 per share, in the third quarter of 2012 for the write-off of the original issuance costs. This charge will reduce earnings per share and FFO but will not impact Normalized FFO.