This excerpt taken from the EQR 10-K filed Mar 14, 2005.
Acquisition and Development Strategies
The Company anticipates that future property acquisitions and developments will occur within the United States. Acquisitions and developments may be financed from various sources of capital, which may include retained cash flow, issuance of additional equity and debt securities, sales of properties, joint venture agreements and collateralized and uncollateralized borrowings. In addition, the Company may acquire additional properties in transactions that include the issuance of limited partnership interests in the Operating Partnership (OP Units) as consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer, in part, the recognition of taxable income or gain, which might otherwise result from the sales.
When evaluating potential acquisitions and developments, the Company generally considers the following factors:
the geographic area and type of community;
the location, construction quality, condition and design of the property;
the current and projected cash flow of the property and the ability to increase cash flow;
the potential for capital appreciation of the property;
the terms of resident leases, including the potential for rent increases;
income levels and employment growth trends in the relevant market;
employment and household growth and net migration of the relevant markets population;
the potential for economic growth and the tax and regulatory environment of the community in which the property is located;
the occupancy and demand by residents for properties of a similar type in the vicinity (the overall market and submarket);
the prospects for liquidity through sale, financing or refinancing of the property;
the benefits of integration into existing operations;
barriers to entry that would limit competition (zoning laws, building permit availability, supply of undeveloped or developable real estate, local building costs and construction labor costs among other factors);
purchase prices and yields of available existing stabilized communities, if any; and
competition from existing multifamily properties, residential properties under development and the potential for the construction of new multifamily properties in the area.