While the 2003 asset sales were properties with an average age of nearly 20 years, the acquisitions averaged eight years in age, says president and CEO Bruce W. Duncan. Equity Residential made progress on its goal on paring down its markets from 44 to 30 over a three-year period, he says, ending 2003 with a presence in 38 markets. The $800 million in asset sales are expected to involve exits from five more markets, he adds.

"We've got a pretty good start on that," says CFO David J. Neithercut, who oversees acquisitions and sales as head of Equity Residential's corporate strategy group.After launching developments worth less than $150 million last year, Equity Residential plans construction starts totaling $300 million in 2004, Duncan says, with completions expected through 2006. Most of the projects will continue to be in the Southern California, Boston and suburban Washington, D.C. markets, he adds, although a recent completion is the 297-unit, $94.2-million City View at the Highlands development in west suburban Lombard.

New developments are expected to generate a 7.7% yield, Duncan reports. That compares to a 7.4% capitalization rate for the 2003 asset sales, and a 6.5% capitalization rate on Equity Residential's acquisitions, he adds. "2004 will be a year of transition and set the table for a good 2005," Duncan adds, noting most investors believe the multifamily market has either bottomed out or will reach bottom this year.