Item 16. Form 10-K Summary.

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Item 16. Form 10-K Summary.

None.

EXHIBIT INDEX

The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption “Location” indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference. The Commission file numbers for our Exchange Act filings referenced below are 1-12252 (Equity Residential) and 0-24920 (ERP Operating Limited Partnership).

ExhibitDescriptionLocation
3.1Articles of Restatement of Declaration of Trust of Equity Residential dated December 9, 2004.Included as Exhibit 3.1 to Equity Residential’s Form 10-K for the year ended December 31, 2004.
3.2Eighth Amended and Restated Bylaws of Equity Residential, effective as of October 1, 2015.Included as Exhibit 3.1 to Equity Residential’s Form 8-K dated and filed on October 1, 2015.
3.3First Amendment to Eighth Amended and Restated Bylaws of Equity Residential, dated November 20, 2017.Included as Exhibit 3.1 to Equity Residential’s Form 8-K dated and filed on November 20, 2017.
3.4Sixth Amended and Restated Agreement of Limited Partnership for ERP Operating Limited Partnership dated as of March 12, 2009.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated March 12, 2009, filed on March 18, 2009.
4.1Indenture, dated October 1, 1994, between the Operating Partnership and The Bank of New York Mellon Trust Company, N.A., as successor trustee (“Indenture”).Included as Exhibit 4(a) to ERP Operating Limited Partnership’s Form S-3 filed on October 7, 1994. **
4.2First Supplemental Indenture to Indenture, dated as of September 9, 2004.Included as Exhibit 4.2 to ERP Operating Limited Partnership’s Form 8-K, filed on September 10, 2004.
4.3Second Supplemental Indenture to Indenture, dated as of August 23, 2006.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated August 16, 2006, filed on August 23, 2006.
4.4Third Supplemental Indenture to Indenture, dated as of June 4, 2007.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated May 30, 2007, filed on June 1, 2007.
4.5Fourth Supplemental Indenture to Indenture, dated as of December 12, 2011.Included as Exhibit 4.2 to ERP Operating Limited Partnership’s Form 8-K dated December 7, 2011, filed on December 9, 2011.
4.6Fifth Supplemental Indenture to Indenture, dated as of February 1, 2016.Included as Exhibit 4.6 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-K for the year ended December 31, 2015.
4.7Form of 2.375% Note due July 1, 2019.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated June 16, 2014, filed on June 18, 2014.
4.8Form of 4.75% Note due July 15, 2020.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated July 12, 2010, filed on July 15, 2010.
4.9Form of 4.625% Note due December 15, 2021.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated December 7, 2011, filed on December 9, 2011.
4.10Form of 3.00% Note due April 15, 2023.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated April 3, 2013, filed on April 8, 2013.
4.11Form of 3.375% Note due June 1, 2025.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated May 11, 2015, filed on May 13, 2015.
4.12Terms Agreement regarding 7.57% Notes due August 15, 2026.Included as Exhibit 1 to ERP Operating Limited Partnership’s Form 8-K, filed on August 13, 1996.
4.13Form of 2.850% Note due November 1, 2026.Included as Exhibit 4.1 to ERP Operating Limited Partnership’s Form 8-K dated October 4, 2016, filed on October 7, 2016.
4.14Form of 3.250% Note due August 1, 2027.Included as Exhibit 4.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated July 31, 2017, filed on August 2, 2017.
4.15Form of 4.500% Note due July 1, 2044.Included as Exhibit 4.2 to ERP Operating Limited Partnership’s Form 8-K dated June 16, 2014, filed on June 18, 2014.
4.16Form of 4.500% Note due June 1, 2045.Included as Exhibit 4.2 to ERP Operating Limited Partnership’s Form 8-K dated May 11, 2015, filed on May 13, 2015.
4.17Form of 4.000% Note due August 1, 2047.Included as Exhibit 4.2 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated July 31, 2017, filed on August 2, 2017.
ExhibitDescriptionLocation
10.1*Noncompetition Agreement (Zell).Included as an exhibit to Equity Residential’s Form S-11 Registration Statement, File No. 33-63158. **
10.2*Noncompetition Agreement (Spector).Included as an exhibit to Equity Residential’s Form S-11 Registration Statement, File No. 33-63158. **
10.3*Form of Noncompetition Agreement (other officers).Included as an exhibit to Equity Residential’s Form S-11 Registration Statement, File No. 33-63158. **
10.4Revolving Credit Agreement dated as of November 3, 2016 among ERP Operating Limited Partnership, Bank of America, N.A., as Administrative Agent, Wells Fargo Bank, National Association, and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Bookrunners, and a syndicate of other banks (the “Credit Agreement”).Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated and filed November 3, 2016.
10.5Guaranty of Payment made as of November 3, 2016 between Equity Residential and Bank of America, N.A., as administrative agent for the banks party to the Credit Agreement.Included as Exhibit 10.2 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated and filed November 3, 2016.
10.6Amended and Restated Limited Partnership Agreement of Lexford Properties, L.P.Included as Exhibit 10.16 to Equity Residential’s Form 10-K for the year ended December 31, 1999.
10.7*Equity Residential 2011 Share Incentive Plan.Included as Exhibit 99.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated June 16, 2011, filed on June 22, 2011.
10.8*First Amendment to 2011 Share Incentive Plan.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended June 30, 2012.
10.9*Second Amendment to 2011 Share Incentive Plan.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended September 30, 2013.
10.10*Third Amendment to 2011 Share Incentive Plan.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended March 31, 2014.
10.11*Fourth Amendment to 2011 Share Incentive Plan.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended September 30, 2014.
10.12*Fifth Amendment to 2011 Share Incentive Plan.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended June 30, 2016.
10.13*Sixth Amendment to 2011 Share Incentive Plan.Included as Exhibit 10.18 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-K for the year ended December 31, 2016.
10.14*Seventh Amendment to 2011 Share Incentive Plan.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended September 30, 2017.
10.15*Equity Residential Second Restated 2002 Share Incentive Plan dated December 10, 2008.Included as Exhibit 10.15 to Equity Residential’s Form 10-K for the year ended December 31, 2008.
10.16*First Amendment to Second Restated 2002 Share Incentive Plan.Included as Exhibit 10.1 to Equity Residential’s Form 10-Q for the quarterly period ended September 30, 2010.
10.17*Second Amendment to Second Restated 2002 Share Incentive Plan.Included as Exhibit 10.3 to Equity Residential’s Form 10-Q for the quarterly period ended June 30, 2011.
10.18*Third Amendment to Second Restated 2002 Share Incentive Plan.Included as Exhibit 10.2 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended June 30, 2012.
ExhibitDescriptionLocation
10.19*Fourth Amendment to Second Restated 2002 Share Incentive Plan.Included as Exhibit 10.2 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended September 30, 2013.
10.20*Form of 2015 Performance Award Agreement.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended March 31, 2015.
10.21*Form of Change in Control/Severance Agreement between the Company and other executive officers.Included as Exhibit 10.13 to Equity Residential’s Form 10-K for the year ended December 31, 2001.
10.22*Form of First Amendment to Amended and Restated Change in Control/Severance Agreement with each executive officer.Included as Exhibit 10.1 to Equity Residential’s Form 10-Q for the quarterly period ended March 31, 2009.
10.23*Form of Indemnification Agreement between the Company and each trustee and executive officer.Included as Exhibit 10.18 to Equity Residential’s Form 10-K for the year ended December 31, 2003.
10.24*Form of Letter Agreement between Equity Residential and each of David J. Neithercut, Alan W. George and Bruce C. Strohm.Included as Exhibit 10.3 to Equity Residential’s Form 10-Q for the quarterly period ended September 30, 2008.
10.25*Form of Executive Retirement Benefits Agreement.Included as Exhibit 10.24 to Equity Residential’s Form 10-K for the year ended December 31, 2006.
10.26*Retirement Benefits Agreement between Samuel Zell and the Company dated October 18, 2001.Included as Exhibit 10.18 to Equity Residential’s Form 10-K for the year ended December 31, 2001.
10.27*Age 62 Retirement Agreement, dated June 21, 2017, by and between Equity Residential and Bruce C. Strohm.Included as Exhibit 10.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended June 30, 2017.
10.28*Amended and Restated Deferred Compensation Agreement between the Company and Gerald A. Spector dated January 1, 2002.Included as Exhibit 10.17 to Equity Residential’s Form 10-K for the year ended December 31, 2001.
10.29*The Equity Residential Supplemental Executive Retirement Plan as Amended and Restated effective July 1, 2014.Included as Exhibit 10.2 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended September 30, 2014.
10.30*The Equity Residential Supplemental Executive Retirement Plan as Amended and Restated effective April 1, 2017.Included as Exhibit 10.2 to Equity Residential’s and ERP Operating Limited Partnership’s Form 10-Q for the quarterly period ended June 30, 2017.
10.31*The Equity Residential Grandfathered Supplemental Executive Retirement Plan as Amended and Restated effective January 1, 2005.Included as Exhibit 10.2 to Equity Residential’s Form 10-Q for the quarterly period ended March 31, 2008.
10.32Distribution Agreement, dated June 29, 2016, among the Company, the Operating Partnership, J.P. Morgan Securities LLC, Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNY Mellon Capital Markets, LLC, Morgan Stanley & Co. LLC, Mitsubishi UFJ Securities (USA), Inc., Scotia Capital (USA) Inc. and UBS Securities LLC.Included as Exhibit 1.1 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated and filed on June 29, 2016.
10.33Archstone Residual JV, LLC Limited Liability Company Agreement.Included as Exhibit 10.3 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated February 27, 2013, filed on February 28, 2013.
10.34Archstone Parallel Residual JV, LLC Limited Liability Company Agreement.Included as Exhibit 10.4 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated February 27, 2013, filed on February 28, 2013.
10.35Archstone Parallel Residual JV 2, LLC Limited Liability Company Agreement.Included as Exhibit 10.5 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated February 27, 2013, filed on February 28, 2013.
10.36Legacy Holdings JV, LLC Limited Liability Company Agreement.Included as Exhibit 10.6 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated February 27, 2013, filed on February 28, 2013.
12Computation of Ratio of Earnings to Combined Fixed Charges.Attached herein.
ExhibitDescriptionLocation
21List of Subsidiaries of Equity Residential and ERP Operating Limited Partnership.Attached herein.
23.1Consent of Ernst & Young LLP - Equity Residential.Attached herein.
23.2Consent of Ernst & Young LLP - ERP Operating Limited Partnership.Attached herein.
24Power of Attorney.See the signature page to this report.
31.1Equity Residential - Certification of David J. Neithercut, Chief Executive Officer.Attached herein.
31.2Equity Residential - Certification of Mark J. Parrell, Chief Financial Officer.Attached herein.
31.3ERP Operating Limited Partnership - Certification of David J. Neithercut, Chief Executive Officer of Registrant’s General Partner.Attached herein.
31.4ERP Operating Limited Partnership - Certification of Mark J. Parrell, Chief Financial Officer of Registrant’s General Partner.Attached herein.
32.1Equity Residential - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of the Company.Attached herein.
32.2Equity Residential - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of the Company.Attached herein.
32.3ERP Operating Limited Partnership - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of Registrant’s General Partner.Attached herein.
32.4ERP Operating Limited Partnership - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of Registrant’s General Partner.Attached herein.
101XBRL (Extensible Business Reporting Language). The following materials from Equity Residential’s and ERP Operating Limited Partnership’s Annual Report on Form 10-K for the year ended December 31, 2017, formatted in XBRL: (i) consolidated balance sheets, (ii) consolidated statements of operations and comprehensive income, (iii) consolidated statements of cash flows, (iv) consolidated statements of changes in equity (Equity Residential), (v) consolidated statements of changes in capital (ERP Operating Limited Partnership) and (vi) notes to consolidated financial statements.Attached herein.

*Management contracts and compensatory plans or arrangements filed as exhibits to this report are identified by an asterisk.

**Filed on paper – hyperlink is not required pursuant to Rule 105 of Regulation S-T.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EQUITY RESIDENTIAL
By:/s/ David J. Neithercut
David J. Neithercut President and Chief Executive Officer (Principal Executive Officer)
Date:February 22, 2018
ERP OPERATING LIMITED PARTNERSHIP BY: EQUITY RESIDENTIAL ITS GENERAL PARTNER
By:/s/ David J. Neithercut
David J. Neithercut President and Chief Executive Officer (Principal Executive Officer)
Date:February 22, 2018

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

POWER OF ATTORNEY

KNOW ALL MEN/WOMEN BY THESE PRESENTS, that each person whose signature appears below, hereby constitutes and appoints David J. Neithercut, Mark J. Parrell and Ian S. Kaufman, or any of them, his or her attorneys-in-fact and agents, with full power of substitution and resubstitution for him or her in any and all capacities, to do all acts and things which said attorneys and agents, or any of them, deem advisable to enable the company to comply with the Securities Exchange Act of 1934, as amended, and any requirements or regulations of the Securities and Exchange Commission in respect thereof, in connection with the company’s filing of an annual report on Form 10-K for the company’s fiscal year 2017, including specifically, but without limitation of the general authority hereby granted, the power and authority to sign his or her name as a trustee or officer, or both, of the company, as indicated below opposite his or her signature, to the Form 10-K, and any amendment thereto; and each of the undersigned does hereby fully ratify and confirm all that said attorneys and agents, or any of them, or the substitute of any of them, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each registrant and in the capacities set forth below and on the dates indicated:

NameTitleDate
/s/ David J. NeithercutPresident, Chief Executive Officer and TrusteeFebruary 22, 2018
David J. Neithercut(Principal Executive Officer)
/s/ Mark J. ParrellExecutive Vice President and Chief Financial OfficerFebruary 22, 2018
Mark J. Parrell(Principal Financial Officer)
/s/ Ian S. KaufmanSenior Vice President and Chief Accounting OfficerFebruary 22, 2018
Ian S. Kaufman(Principal Accounting Officer)
/s/ John W. AlexanderTrusteeFebruary 22, 2018
John W. Alexander
/s/ Charles L. AtwoodTrusteeFebruary 22, 2018
Charles L. Atwood
/s/ Linda Walker BynoeTrusteeFebruary 22, 2018
Linda Walker Bynoe
/s/ Connie K. DuckworthTrusteeFebruary 22, 2018
Connie K. Duckworth
/s/ Mary Kay HabenTrusteeFebruary 22, 2018
Mary Kay Haben
/s/ Bradley A. KeywellTrusteeFebruary 22, 2018
Bradley A. Keywell
/s/ John E. NealTrusteeFebruary 22, 2018
John E. Neal
/s/ Mark S. ShapiroTrusteeFebruary 22, 2018
Mark S. Shapiro
/s/ Stephen E. SterrettTrusteeFebruary 22, 2018
Stephen E. Sterrett
/s/ Gerald A. SpectorVice Chairman of the Board of TrusteesFebruary 22, 2018
Gerald A. Spector
/s/ Samuel ZellChairman of the Board of TrusteesFebruary 22, 2018
Samuel Zell

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

PAGE
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Report of Independent Registered Public Accounting Firm on the Financial Statements (Equity Residential)F-2
Report of Independent Registered Public Accounting Firm on the Financial Statements (ERP Operating Limited Partnership)F-3
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (Equity Residential)F-4
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (ERP Operating Limited Partnership)F-5
Financial Statements of Equity Residential:
Consolidated Balance Sheets as of December 31, 2017 and 2016F-6
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015F-7 to F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015F-9 to F-12
Consolidated Statements of Changes in Equity for the years ended December 31, 2017, 2016 and 2015F-13 to F-14
Financial Statements of ERP Operating Limited Partnership:
Consolidated Balance Sheets as of December 31, 2017 and 2016F-15
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015F-16 to F-17
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015F-18 to F-21
Consolidated Statements of Changes in Capital for the years ended December 31, 2017, 2016 and 2015F-22 to F-23
Notes to Consolidated Financial Statements of Equity Residential and ERP Operating Limited PartnershipF-24 to F-62
SCHEDULE FILED AS PART OF THIS REPORT
Schedule III – Real Estate and Accumulated Depreciation of Equity Residential and ERP Operating Limited PartnershipS-1 to S-11

All other schedules have been omitted because they are inapplicable, not required or the information is included elsewhere in the consolidated financial statements or notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders

Equity Residential

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Equity Residential (the Company) as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
We have served as the Company’s auditor since 1996.
Chicago, Illinois
February 22, 2018

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

ERP Operating Limited Partnership

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ERP Operating Limited Partnership (the Operating Partnership) as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive income, changes in capital and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2017 and 2016 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Operating Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
We have served as the Operating Partnership’s auditor since 1996.
Chicago, Illinois
February 22, 2018

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders

Equity Residential

Opinion on Internal Control over Financial Reporting

We have audited Equity Residential’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Equity Residential (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 22, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trustees of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
February 22, 2018

F-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

ERP Operating Limited Partnership

Opinion on Internal Control over Financial Reporting

We have audited ERP Operating Limited Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, ERP Operating Limited Partnership (the Operating Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Operating Partnership as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive income, changes in capital and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 22, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

The Operating Partnership’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Operating Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trustees of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
February 22, 2018

F-5

EQUITY RESIDENTIAL

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except for share amounts)

December 31,December 31,
20172016
ASSETS
Investment in real estate
Land$5,996,024$5,899,862
Depreciable property19,768,36218,730,579
Projects under development163,547637,168
Land held for development98,963118,816
Investment in real estate26,026,89625,386,425
Accumulated depreciation(6,040,378)(5,360,389)
Investment in real estate, net19,986,51820,026,036
Cash and cash equivalents50,64777,207
Investments in unconsolidated entities58,25460,141
Restricted deposits50,115141,881
Other assets425,065398,883
Total assets$20,570,599$20,704,148
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net$3,618,722$4,119,181
Notes, net5,038,8124,848,079
Line of credit and commercial paper299,75719,998
Accounts payable and accrued expenses114,766147,482
Accrued interest payable58,03560,946
Other liabilities341,852350,466
Security deposits65,00962,624
Distributions payable192,828192,296
Total liabilities9,729,7819,801,072
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership366,955442,092
Equity:
Shareholders’ equity:
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 745,600 shares issued and outstanding as of December 31, 2017 and December 31, 201637,28037,280
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 368,018,082 shares issued and outstanding as of December 31, 2017 and 365,870,924 shares issued and outstanding as of December 31, 20163,6803,659
Paid in capital8,886,5868,758,422
Retained earnings1,403,5301,543,626
Accumulated other comprehensive income (loss)(88,612)(113,909)
Total shareholders’ equity10,242,46410,229,078
Noncontrolling Interests:
Operating Partnership226,691221,297
Partially Owned Properties4,70810,609
Total Noncontrolling Interests231,399231,906
Total equity10,473,86310,460,984
Total liabilities and equity$20,570,599$20,704,148

See accompanying notes

F-6

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per share data)

Year Ended December 31,
201720162015
REVENUES
Rental income$2,470,689$2,422,233$2,736,578
Fee and asset management7173,5678,387
Total revenues2,471,4062,425,8002,744,965
EXPENSES
Property and maintenance405,281406,823479,160
Real estate taxes and insurance335,495317,387339,802
Property management85,49382,01586,206
General and administrative52,22457,84064,664
Depreciation743,749705,649765,895
Impairment1,693——
Total expenses1,623,9351,569,7141,735,727
Operating income847,471856,0861,009,238
Interest and other income6,13665,7737,372
Other expenses(5,186)(10,368)(2,942)
Interest:
Expense incurred, net(383,890)(482,246)(444,487)
Amortization of deferred financing costs(8,526)(12,633)(10,801)
Income before income and other taxes, income (loss) from investments in unconsolidated entities, net gain (loss) on sales of real estate properties and land parcels and discontinued operations456,005416,612558,380
Income and other tax (expense) benefit(478)(1,613)(917)
Income (loss) from investments in unconsolidated entities(3,370)4,80115,025
Net gain (loss) on sales of real estate properties157,0574,044,055335,134
Net gain (loss) on sales of land parcels19,16715,731(1)
Income from continuing operations628,3814,479,586907,621
Discontinued operations, net—518397
Net income628,3814,480,104908,018
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership(22,604)(171,511)(34,241)
Partially Owned Properties(2,323)(16,430)(3,657)
Net income attributable to controlling interests603,4544,292,163870,120
Preferred distributions(3,091)(3,091)(3,357)
Premium on redemption of Preferred Shares——(3,486)
Net income available to Common Shares$600,363$4,289,072$863,277
Earnings per share – basic:
Income from continuing operations available to Common Shares$1.64$11.75$2.37
Net income available to Common Shares$1.64$11.75$2.37
Weighted average Common Shares outstanding366,968365,002363,498
Earnings per share – diluted:
Income from continuing operations available to Common Shares$1.63$11.68$2.36
Net income available to Common Shares$1.63$11.68$2.36
Weighted average Common Shares outstanding382,678381,992380,620
Distributions declared per Common Share outstanding$2.015$13.015$2.21

See accompanying notes

F-7

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per share data)

Year Ended December 31,
201720162015
Comprehensive income:
Net income$628,381$4,480,104$908,018
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the year6,439(3,915)2,219
Losses reclassified into earnings from other comprehensive income18,85841,75818,244
Other comprehensive income (loss) – foreign currency:
Currency translation adjustments arising during the year—264(327)
Other comprehensive income (loss)25,29738,10720,136
Comprehensive income653,6784,518,211928,154
Comprehensive (income) attributable to Noncontrolling Interests(25,845)(189,411)(38,668)
Comprehensive income attributable to controlling interests$627,833$4,328,800$889,486

See accompanying notes

F-8

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

Year Ended December 31,
201720162015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$628,381$4,480,104$908,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation743,749705,649765,895
Amortization of deferred financing costs8,52612,63310,801
Amortization of above/below market lease intangibles3,8283,4263,382
Amortization of discounts and premiums on debt3,536(17,986)(10,569)
Amortization of deferred settlements on derivative instruments18,84741,68018,075
Impairment1,693——
Write-off of pursuit costs3,1064,0922,878
(Income) loss from investments in unconsolidated entities3,370(4,801)(15,025)
Distributions from unconsolidated entities – return on capital2,6322,8634,741
Net (gain) loss on sales of investment securities and other investments—(58,409)(526)
Net (gain) loss on sales of real estate properties(157,057)(4,044,055)(335,134)
Net (gain) loss on sales of land parcels(19,167)(15,731)1
Net (gain) loss on sales of discontinued operations—(43)—
Net (gain) loss on debt extinguishment12,258114,666—
Realized/unrealized (gain) loss on derivative instruments—743,055
Compensation paid with Company Common Shares24,99730,53034,607
Changes in assets and liabilities:
(Increase) decrease in other assets(449)31,147(41,803)
Increase (decrease) in accounts payable and accrued expenses11,532(6,061)(1,667)
Increase (decrease) in accrued interest payable(2,911)(24,275)(4,319)
Increase (decrease) in other liabilities(23,468)(26,422)12,269
Increase (decrease) in security deposits2,385(14,958)1,949
Net cash provided by operating activities1,265,7881,214,1231,356,628
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions(466,394)(205,880)(331,336)
Investment in real estate – development/other(276,382)(566,825)(653,897)
Capital expenditures to real estate(202,607)(172,177)(182,113)
Non-real estate capital additions(1,506)(5,731)(3,991)
Interest capitalized for real estate under development(26,290)(51,451)(59,885)
Proceeds from disposition of real estate, net384,5836,824,659504,748
Investments in unconsolidated entities(6,034)(5,266)(23,019)
Distributions from unconsolidated entities – return of capital33413,79851,144
Proceeds from sale of investment securities and other investments—72,8152,535
Net cash provided by (used for) investing activities(594,296)5,903,942(695,814)

See accompanying notes

F-9

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs$(6,289)$(13,305)$(6,425)
Mortgage notes payable, net:
Lump sum payoffs(493,420)(583,122)(359,244)
Scheduled principal repayments(10,704)(8,544)(9,275)
Net gain (loss) on debt extinguishment(12,258)(31,732)—
Notes, net:
Proceeds692,466496,705746,391
Lump sum payoffs(497,975)(1,500,000)(300,000)
Net gain (loss) on debt extinguishment—(82,934)—
Line of credit and commercial paper:
Line of credit proceeds1,845,000426,0003,770,000
Line of credit repayments(1,845,000)(426,000)(4,103,000)
Commercial paper proceeds5,066,5091,760,1943,932,304
Commercial paper repayments(4,786,750)(2,127,472)(3,545,028)
Proceeds from (payments on) settlement of derivative instruments1,295(4,662)(13,938)
Proceeds from Employee Share Purchase Plan (ESPP)3,7443,6864,404
Proceeds from exercise of options31,59635,83359,508
Redemption of Preferred Shares——(12,720)
Premium on redemption of Preferred Shares——(3,486)
Payment of offering costs(51)(314)(79)
Other financing activities, net(63)(49)(49)
Contributions – Noncontrolling Interests – Partially Owned Properties125——
Contributions – Noncontrolling Interests – Operating Partnership—13
Distributions:
Common Shares(739,375)(4,771,725)(784,748)
Preferred Shares(3,091)(2,318)(3,357)
Noncontrolling Interests – Operating Partnership(27,291)(188,115)(30,869)
Noncontrolling Interests – Partially Owned Properties(8,286)(36,219)(6,559)
Net cash provided by (used for) financing activities(789,818)(7,054,092)(666,167)
Net increase (decrease) in cash and cash equivalents and restricted deposits(118,326)63,973(5,353)
Cash and cash equivalents and restricted deposits, beginning of year219,088155,115160,468
Cash and cash equivalents and restricted deposits, end of year$100,762$219,088$155,115
Cash and cash equivalents and restricted deposits, end of year
Cash and cash equivalents$50,647$77,207$42,276
Restricted deposits50,115141,881112,839
Total cash and cash equivalents and restricted deposits, end of year$100,762$219,088$155,115

See accompanying notes

F-10

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized$360,273$482,152$436,748
Net cash paid for income and other taxes$640$1,494$1,264
Real estate acquisitions/dispositions/other:
Mortgage loans assumed$—$43,400$—
Amortization of deferred financing costs:
Other assets$2,412$3,366$3,054
Mortgage notes payable, net$2,493$3,978$3,589
Notes, net$3,621$5,289$4,158
Amortization of discounts and premiums on debt:
Mortgage notes payable, net$1,172$(21,158)$(13,126)
Notes, net$2,364$3,172$2,557
Amortization of deferred settlements on derivative instruments:
Other liabilities$(11)$(78)$(169)
Accumulated other comprehensive income$18,858$41,758$18,244
Write-off of pursuit costs:
Investment in real estate, net$2,965$3,586$2,804
Other assets$17$402$74
Accounts payable and accrued expenses$124$104$—
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities$1,955$(6,327)$(17,340)
Other liabilities$1,415$1,526$2,315
Distributions from unconsolidated entities – return on capital:
Investments in unconsolidated entities$2,632$2,863$4,606
Other liabilities$—$—$135
Realized/unrealized (gain) loss on derivative instruments:
Other assets$(4,582)$1,798$(3,573)
Notes, net$(3,454)$(1,798)$2,058
Other liabilities$1,597$3,989$2,351
Accumulated other comprehensive income$6,439$(3,915)$2,219
Investments in unconsolidated entities:
Investments in unconsolidated entities$(3,034)$(2,326)$(1,404)
Other liabilities$(3,000)$(2,940)$(21,615)

See accompanying notes

F-11

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
SUPPLEMENTAL INFORMATION (continued):
Distributions from unconsolidated entities - return of capital:
Investments in unconsolidated entities$334$14,014$51,144
Other assets$—$(216)$—
Debt financing costs:
Other assets$—$(8,553)$—
Mortgage notes payable, net$—$(507)$(35)
Notes, net$(6,289)$(4,245)$(6,390)
Proceeds from (payments on) settlement of derivative instruments:
Other assets$1,295$—$1,848
Other liabilities$—$(4,662)$(15,786)
Other:
Foreign currency translation adjustments$—$(264)$327

See accompanying notes

F-12

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands)

Year Ended December 31,
201720162015
SHAREHOLDERS’ EQUITY
PREFERRED SHARES
Balance, beginning of year$37,280$37,280$50,000
Partial redemption of 8.29% Series K Cumulative Redeemable——(12,720)
Balance, end of year$37,280$37,280$37,280
COMMON SHARES, $0.01 PAR VALUE
Balance, beginning of year$3,659$3,648$3,629
Conversion of OP Units into Common Shares1112
Exercise of share options8814
Employee Share Purchase Plan (ESPP)111
Share-based employee compensation expense:
Restricted shares112
Balance, end of year$3,680$3,659$3,648
PAID IN CAPITAL
Balance, beginning of year$8,758,422$8,572,365$8,536,340
Common Share Issuance:
Conversion of OP Units into Common Shares15,8893,7254,964
Exercise of share options31,58835,82559,494
Employee Share Purchase Plan (ESPP)3,7433,6854,403
Conversion of restricted shares to restricted units——(70)
Share-based employee compensation expense:
Restricted shares9,77615,01515,064
Share options6,8353,4323,756
ESPP discount747650884
Offering costs(51)(314)(79)
Supplemental Executive Retirement Plan (SERP)(594)7481,380
Change in market value of Redeemable Noncontrolling Interests – Operating Partnership41,916115,093(64,378)
Adjustment for Noncontrolling Interests ownership in Operating Partnership18,3158,19810,607
Balance, end of year$8,886,586$8,758,422$8,572,365
RETAINED EARNINGS
Balance, beginning of year$1,543,626$2,009,091$1,950,639
Net income attributable to controlling interests603,4544,292,163870,120
Common Share distributions(740,459)(4,754,537)(804,825)
Preferred Share distributions(3,091)(3,091)(3,357)
Premium on redemption of Preferred Shares – cash charge——(3,486)
Balance, end of year$1,403,530$1,543,626$2,009,091
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of year$(113,909)$(152,016)$(172,152)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the year6,439(3,915)2,219
Losses reclassified into earnings from other comprehensive income18,85841,75818,244
Accumulated other comprehensive income (loss) – foreign currency:
Currency translation adjustments arising during the year—264(327)
Balance, end of year$(88,612)$(113,909)$(152,016)

See accompanying notes

F-13

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
NONCONTROLLING INTERESTS
OPERATING PARTNERSHIP
Balance, beginning of year$221,297$221,379$214,411
Issuance of restricted units to Noncontrolling Interests—13
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner(15,900)(3,726)(4,966)
Conversion of restricted shares to restricted units——70
Equity compensation associated with Noncontrolling Interests10,52318,18021,503
Net income attributable to Noncontrolling Interests22,604171,51134,241
Distributions to Noncontrolling Interests(26,739)(187,448)(31,604)
Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership33,2219,598(1,672)
Adjustment for Noncontrolling Interests ownership in Operating Partnership(18,315)(8,198)(10,607)
Balance, end of year$226,691$221,297$221,379
PARTIALLY OWNED PROPERTIES
Balance, beginning of year$10,609$4,608$124,909
Net income attributable to Noncontrolling Interests2,32316,4303,657
Contributions by Noncontrolling Interests125——
Distributions to Noncontrolling Interests(8,349)(36,268)(6,608)
Deconsolidation of previously consolidated Noncontrolling Interests——(117,350)
Other—25,839—
Balance, end of year$4,708$10,609$4,608

See accompanying notes

F-14

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

December 31,December 31,
20172016
ASSETS
Investment in real estate
Land$5,996,024$5,899,862
Depreciable property19,768,36218,730,579
Projects under development163,547637,168
Land held for development98,963118,816
Investment in real estate26,026,89625,386,425
Accumulated depreciation(6,040,378)(5,360,389)
Investment in real estate, net19,986,51820,026,036
Cash and cash equivalents50,64777,207
Investments in unconsolidated entities58,25460,141
Restricted deposits50,115141,881
Other assets425,065398,883
Total assets$20,570,599$20,704,148
LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net$3,618,722$4,119,181
Notes, net5,038,8124,848,079
Line of credit and commercial paper299,75719,998
Accounts payable and accrued expenses114,766147,482
Accrued interest payable58,03560,946
Other liabilities341,852350,466
Security deposits65,00962,624
Distributions payable192,828192,296
Total liabilities9,729,7819,801,072
Commitments and contingencies
Redeemable Limited Partners366,955442,092
Capital:
Partners’ Capital:
Preference Units37,28037,280
General Partner10,293,79610,305,707
Limited Partners226,691221,297
Accumulated other comprehensive income (loss)(88,612)(113,909)
Total partners’ capital10,469,15510,450,375
Noncontrolling Interests – Partially Owned Properties4,70810,609
Total capital10,473,86310,460,984
Total liabilities and capital$20,570,599$20,704,148

See accompanying notes

F-15

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per Unit data)

Year Ended December 31,
201720162015
REVENUES
Rental income$2,470,689$2,422,233$2,736,578
Fee and asset management7173,5678,387
Total revenues2,471,4062,425,8002,744,965
EXPENSES
Property and maintenance405,281406,823479,160
Real estate taxes and insurance335,495317,387339,802
Property management85,49382,01586,206
General and administrative52,22457,84064,664
Depreciation743,749705,649765,895
Impairment1,693——
Total expenses1,623,9351,569,7141,735,727
Operating income847,471856,0861,009,238
Interest and other income6,13665,7737,372
Other expenses(5,186)(10,368)(2,942)
Interest:
Expense incurred, net(383,890)(482,246)(444,487)
Amortization of deferred financing costs(8,526)(12,633)(10,801)
Income before income and other taxes, income (loss) from investments in unconsolidated entities, net gain (loss) on sales of real estate properties and land parcels and discontinued operations456,005416,612558,380
Income and other tax (expense) benefit(478)(1,613)(917)
Income (loss) from investments in unconsolidated entities(3,370)4,80115,025
Net gain (loss) on sales of real estate properties157,0574,044,055335,134
Net gain (loss) on sales of land parcels19,16715,731(1)
Income from continuing operations628,3814,479,586907,621
Discontinued operations, net—518397
Net income628,3814,480,104908,018
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties(2,323)(16,430)(3,657)
Net income attributable to controlling interests$626,058$4,463,674$904,361
ALLOCATION OF NET INCOME:
Preference Units$3,091$3,091$3,357
Premium on redemption of Preference Units$—$—$3,486
General Partner$600,363$4,289,072$863,277
Limited Partners22,604171,51134,241
Net income available to Units$622,967$4,460,583$897,518
Earnings per Unit – basic:
Income from continuing operations available to Units$1.64$11.75$2.37
Net income available to Units$1.64$11.75$2.37
Weighted average Units outstanding379,869378,829377,074
Earnings per Unit – diluted:
Income from continuing operations available to Units$1.63$11.68$2.36
Net income available to Units$1.63$11.68$2.36
Weighted average Units outstanding382,678381,992380,620
Distributions declared per Unit outstanding$2.015$13.015$2.21

See accompanying notes

F-16

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per Unit data)

Year Ended December 31,
201720162015
Comprehensive income:
Net income$628,381$4,480,104$908,018
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the year6,439(3,915)2,219
Losses reclassified into earnings from other comprehensive income18,85841,75818,244
Other comprehensive income (loss) – foreign currency:
Currency translation adjustments arising during the year—264(327)
Other comprehensive income (loss)25,29738,10720,136
Comprehensive income653,6784,518,211928,154
Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties(2,323)(16,430)(3,657)
Comprehensive income attributable to controlling interests$651,355$4,501,781$924,497

See accompanying notes

F-17

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

Year Ended December 31,
201720162015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$628,381$4,480,104$908,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation743,749705,649765,895
Amortization of deferred financing costs8,52612,63310,801
Amortization of above/below market lease intangibles3,8283,4263,382
Amortization of discounts and premiums on debt3,536(17,986)(10,569)
Amortization of deferred settlements on derivative instruments18,84741,68018,075
Impairment1,693——
Write-off of pursuit costs3,1064,0922,878
(Income) loss from investments in unconsolidated entities3,370(4,801)(15,025)
Distributions from unconsolidated entities – return on capital2,6322,8634,741
Net (gain) loss on sales of investment securities and other investments—(58,409)(526)
Net (gain) loss on sales of real estate properties(157,057)(4,044,055)(335,134)
Net (gain) loss on sales of land parcels(19,167)(15,731)1
Net (gain) loss on sales of discontinued operations—(43)—
Net (gain) loss on debt extinguishment12,258114,666—
Realized/unrealized (gain) loss on derivative instruments—743,055
Compensation paid with Company Common Shares24,99730,53034,607
Changes in assets and liabilities:
(Increase) decrease in other assets(449)31,147(41,803)
Increase (decrease) in accounts payable and accrued expenses11,532(6,061)(1,667)
Increase (decrease) in accrued interest payable(2,911)(24,275)(4,319)
Increase (decrease) in other liabilities(23,468)(26,422)12,269
Increase (decrease) in security deposits2,385(14,958)1,949
Net cash provided by operating activities1,265,7881,214,1231,356,628
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions(466,394)(205,880)(331,336)
Investment in real estate – development/other(276,382)(566,825)(653,897)
Capital expenditures to real estate(202,607)(172,177)(182,113)
Non-real estate capital additions(1,506)(5,731)(3,991)
Interest capitalized for real estate under development(26,290)(51,451)(59,885)
Proceeds from disposition of real estate, net384,5836,824,659504,748
Investments in unconsolidated entities(6,034)(5,266)(23,019)
Distributions from unconsolidated entities – return of capital33413,79851,144
Proceeds from sale of investment securities and other investments—72,8152,535
Net cash provided by (used for) investing activities(594,296)5,903,942(695,814)

See accompanying notes

F-18

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs$(6,289)$(13,305)$(6,425)
Mortgage notes payable, net:
Lump sum payoffs(493,420)(583,122)(359,244)
Scheduled principal repayments(10,704)(8,544)(9,275)
Net gain (loss) on debt extinguishment(12,258)(31,732)—
Notes, net:
Proceeds692,466496,705746,391
Lump sum payoffs(497,975)(1,500,000)(300,000)
Net gain (loss) on debt extinguishment—(82,934)—
Line of credit and commercial paper:
Line of credit proceeds1,845,000426,0003,770,000
Line of credit repayments(1,845,000)(426,000)(4,103,000)
Commercial paper proceeds5,066,5091,760,1943,932,304
Commercial paper repayments(4,786,750)(2,127,472)(3,545,028)
Proceeds from (payments on) settlement of derivative instruments1,295(4,662)(13,938)
Proceeds from EQR’s Employee Share Purchase Plan (ESPP)3,7443,6864,404
Proceeds from exercise of EQR options31,59635,83359,508
Redemption of Preference Units——(12,720)
Premium on redemption of Preference Units——(3,486)
Payment of offering costs(51)(314)(79)
Other financing activities, net(63)(49)(49)
Contributions – Noncontrolling Interests – Partially Owned Properties125——
Contributions – Limited Partners—13
Distributions:
OP Units – General Partner(739,375)(4,771,725)(784,748)
Preference Units(3,091)(2,318)(3,357)
OP Units – Limited Partners(27,291)(188,115)(30,869)
Noncontrolling Interests – Partially Owned Properties(8,286)(36,219)(6,559)
Net cash provided by (used for) financing activities(789,818)(7,054,092)(666,167)
Net increase (decrease) in cash and cash equivalents and restricted deposits(118,326)63,973(5,353)
Cash and cash equivalents and restricted deposits, beginning of year219,088155,115160,468
Cash and cash equivalents and restricted deposits, end of year$100,762$219,088$155,115
Cash and cash equivalents and restricted deposits, end of year
Cash and cash equivalents$50,647$77,207$42,276
Restricted deposits50,115141,881112,839
Total cash and cash equivalents and restricted deposits, end of year$100,762$219,088$155,115

See accompanying notes

F-19

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized$360,273$482,152$436,748
Net cash paid for income and other taxes$640$1,494$1,264
Real estate acquisitions/dispositions/other:
Mortgage loans assumed$—$43,400$—
Amortization of deferred financing costs:
Other assets$2,412$3,366$3,054
Mortgage notes payable, net$2,493$3,978$3,589
Notes, net$3,621$5,289$4,158
Amortization of discounts and premiums on debt:
Mortgage notes payable, net$1,172$(21,158)$(13,126)
Notes, net$2,364$3,172$2,557
Amortization of deferred settlements on derivative instruments:
Other liabilities$(11)$(78)$(169)
Accumulated other comprehensive income$18,858$41,758$18,244
Write-off of pursuit costs:
Investment in real estate, net$2,965$3,586$2,804
Other assets$17$402$74
Accounts payable and accrued expenses$124$104$—
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities$1,955$(6,327)$(17,340)
Other liabilities$1,415$1,526$2,315
Distributions from unconsolidated entities – return on capital:
Investments in unconsolidated entities$2,632$2,863$4,606
Other liabilities$—$—$135
Realized/unrealized (gain) loss on derivative instruments:
Other assets$(4,582)$1,798$(3,573)
Notes, net$(3,454)$(1,798)$2,058
Other liabilities$1,597$3,989$2,351
Accumulated other comprehensive income$6,439$(3,915)$2,219
Investments in unconsolidated entities:
Investments in unconsolidated entities$(3,034)$(2,326)$(1,404)
Other liabilities$(3,000)$(2,940)$(21,615)

See accompanying notes

F-20

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
SUPPLEMENTAL INFORMATION (continued):
Distributions from unconsolidated entities - return of capital:
Investments in unconsolidated entities$334$14,014$51,144
Other assets$—$(216)$—
Debt financing costs:
Other assets$—$(8,553)$—
Mortgage notes payable, net$—$(507)$(35)
Notes, net$(6,289)$(4,245)$(6,390)
Proceeds from (payments on) settlement of derivative instruments:
Other assets$1,295$—$1,848
Other liabilities$—$(4,662)$(15,786)
Other:
Foreign currency translation adjustments$—$(264)$327

See accompanying notes

F-21

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(Amounts in thousands)

Year Ended December 31,
201720162015
PARTNERS’ CAPITAL
PREFERENCE UNITS
Balance, beginning of year$37,280$37,280$50,000
Partial redemption of 8.29% Series K Cumulative Redeemable——(12,720)
Balance, end of year$37,280$37,280$37,280
GENERAL PARTNER
Balance, beginning of year$10,305,707$10,585,104$10,490,608
OP Unit Issuance:
Conversion of OP Units held by Limited Partners into OP Units held by General Partner15,9003,7264,966
Exercise of EQR share options31,59635,83359,508
EQR’s Employee Share Purchase Plan (ESPP)3,7443,6864,404
Conversion of EQR restricted shares to restricted units——(70)
Share-based employee compensation expense:
EQR restricted shares9,77715,01615,066
EQR share options6,8353,4323,756
EQR ESPP discount747650884
Net income available to Units – General Partner600,3634,289,072863,277
OP Units – General Partner distributions(740,459)(4,754,537)(804,825)
Offering costs(51)(314)(79)
Supplemental Executive Retirement Plan (SERP)(594)7481,380
Change in market value of Redeemable Limited Partners41,916115,093(64,378)
Adjustment for Limited Partners ownership in Operating Partnership18,3158,19810,607
Balance, end of year$10,293,796$10,305,707$10,585,104
LIMITED PARTNERS
Balance, beginning of year$221,297$221,379$214,411
Issuance of restricted units to Limited Partners—13
Conversion of OP Units held by Limited Partners into OP Units held by General Partner(15,900)(3,726)(4,966)
Conversion of EQR restricted shares to restricted units——70
Equity compensation associated with Units – Limited Partners10,52318,18021,503
Net income available to Units – Limited Partners22,604171,51134,241
Units – Limited Partners distributions(26,739)(187,448)(31,604)
Change in carrying value of Redeemable Limited Partners33,2219,598(1,672)
Adjustment for Limited Partners ownership in Operating Partnership(18,315)(8,198)(10,607)
Balance, end of year$226,691$221,297$221,379
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of year$(113,909)$(152,016)$(172,152)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the year6,439(3,915)2,219
Losses reclassified into earnings from other comprehensive income18,85841,75818,244
Accumulated other comprehensive income (loss) – foreign currency:
Currency translation adjustments arising during the year—264(327)
Balance, end of year$(88,612)$(113,909)$(152,016)

See accompanying notes

F-22

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)

(Amounts in thousands)

Year Ended December 31,
201720162015
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES
Balance, beginning of year$10,609$4,608$124,909
Net income attributable to Noncontrolling Interests2,32316,4303,657
Contributions by Noncontrolling Interests125——
Distributions to Noncontrolling Interests(8,349)(36,268)(6,608)
Deconsolidation of previously consolidated Noncontrolling Interests——(117,350)
Other—25,839—
Balance, end of year$4,708$10,609$4,608

See accompanying notes

F-23

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Business

Equity Residential (“EQR”), a Maryland real estate investment trust (“REIT”) formed in March 1993, is an S&P 500 company focused on the acquisition, development and management of rental apartment properties in urban and high-density suburban coastal gateway markets. ERP Operating Limited Partnership (“ERPOP”), an Illinois limited partnership, was formed in May 1993 to conduct the multifamily residential property business of Equity Residential. EQR has elected to be taxed as a REIT. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.

EQR is the general partner of, and as of December 31, 2017 owned an approximate 96.4% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues public equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.

As of December 31, 2017, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 305 properties located in 10 states and the District of Columbia consisting of 78,611 apartment units. The ownership breakdown includes (table does not include various uncompleted development properties):

PropertiesApartment Units
Wholly Owned Properties28373,598
Master-Leased Properties – Consolidated3853
Partially Owned Properties – Consolidated173,215
Partially Owned Properties – Unconsolidated2945
30578,611

The “Wholly Owned Properties” are accounted for under the consolidation method of accounting. The “Master-Leased Properties – Consolidated” are wholly owned by the Company but the entire project is leased to a third party corporate housing provider. These properties are consolidated and reflected as real estate assets while the master leases are accounted for as operating leases. The “Partially Owned Properties – Consolidated” are controlled by the Company, but have partners with noncontrolling interests and are accounted for under the consolidation method of accounting and qualify as variable interest entities. The “Partially Owned Properties – Unconsolidated” are controlled by the Company’s partners but the Company has noncontrolling interests and are accounted for under the equity method of accounting.

The Company maintains long-term ground leases for 14 operating properties. The Company owns the building and improvements and leases the land underlying the improvements under long-term ground leases. The expiration dates for these leases range from 2042 through 2113. These properties are consolidated and reflected as real estate assets while the ground leases are accounted for as operating leases.

2.Summary of Significant Accounting Policies

Basis of Presentation

Due to the Company’s ability as general partner to control either through ownership or by contract the Operating Partnership and its subsidiaries, the Operating Partnership and each such subsidiary has been consolidated with the Company for financial reporting purposes, except for two unconsolidated operating properties.

F-24

Real Estate Assets and Depreciation of Investment in Real Estate

Effective January 1, 2017 with the adoption of the new standard which clarified the definition of a business (discussed below in Recently Adopted Accounting Pronouncements), the Company expects that substantially all of its transactions will be accounted for as asset acquisitions. In an asset acquisition, the Company is required to capitalize transaction costs and allocate the purchase price on a relative fair value basis. For the year ended December 31, 2017, all acquisitions were considered asset acquisitions.

For asset acquisitions, the Company allocates the purchase price of the net tangible and identified intangible assets on a relative fair value basis. In making estimates of relative fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the relative fair value of the tangible and intangible assets/liabilities acquired. The Company allocates the purchase price of acquired real estate to various components as follows:

•Land – Based on actual purchase price adjusted to an allocation of the relative fair value (as necessary) if acquired separately or market research/comparables if acquired with an operating property.
•Furniture, Fixtures and Equipment – Ranges between $10,000 and $25,000 per apartment unit acquired as an estimate of the allocation of the relative fair value of the appliances and fixtures inside an apartment unit. The per-apartment unit amount applied depends on the economic age of the apartment building acquired. Depreciation is calculated on the straight-line method over an estimated useful life of five to ten years.
•Lease Intangibles – The Company considers the value of acquired in-place leases and above/below market leases and the amortization period is the average remaining term of each respective acquired lease. In-place residential leases’ average term at acquisition approximates six months. In-place retail leases’ term at acquisition approximates the average remaining term of all acquired retail leases. See Note 4 for more information on above and below market leases.
•Other Intangible Assets – The Company considers whether it has acquired other intangible assets, including any customer relationship intangibles and the amortization period is the estimated useful life of the acquired intangible asset.
•Building – Based on the allocation of the relative fair value determined on an “as-if vacant” basis. Depreciation is calculated on the straight-line method over an estimated useful life of thirty years.
•Site Improvements – Based on replacement cost, which approximates the allocation of the relative fair value. Depreciation is calculated on the straight-line method over an estimated useful life of eight years.
•Long-Term Debt – The Company calculates the allocation of the relative fair value by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings.

Replacements inside an apartment unit such as appliances and carpeting are depreciated over an estimated useful life of five to ten years. Renovation expenditures for ordinary maintenance and repairs are expensed to operations as incurred and significant renovations and improvements that improve and/or extend the useful life of the asset are capitalized over their estimated useful life, generally five to fifteen years. Initial direct leasing costs are expensed as incurred as such expense approximates the deferral and amortization of initial direct leasing costs over the lease terms. Property sales or dispositions are recorded when title transfers to unrelated third parties, contingencies have been removed and sufficient cash consideration has been received by the Company. Upon disposition, the related costs and accumulated depreciation are removed from the respective accounts. Any gain or loss on sale is recognized in accordance with accounting principles generally accepted in the United States.

The Company classifies real estate assets as real estate held for sale when it is probable a property will be disposed of (see below for further discussion).

The Company classifies properties under development and/or expansion and properties in the lease-up phase (including land) as construction-in-progress until construction has been completed and certificates of occupancy permits have been obtained.

F-25

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets, including its investments in real estate, for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment loss is warranted. If impairment indicators exist, the Company performs the following:

•For long-lived operating assets to be held and used, the Company compares the expected future undiscounted cash flows for the long-lived asset against the carrying amount of that asset. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, the Company would record an impairment loss for the difference between the estimated fair value and the carrying amount of the asset.
•For long-lived non-operating assets (projects under development and land held for development), management evaluates major cost overruns, market conditions that could affect lease-up projections, intent and ability to hold the asset and any other indicators of impairment. If any of the indicators were to suggest impairment was present, the carrying value of the asset would be adjusted accordingly to fair value.
•For long-lived assets to be disposed of, an impairment loss is recognized when the estimated fair value of the asset, less the estimated cost to sell, is less than the carrying amount of the asset measured at the time that the Company has determined it will sell the asset. Long-lived assets held for sale and the related liabilities are separately reported, with the long-lived assets reported at the lower of their carrying amounts or their estimated fair values, less their costs to sell, and are not depreciated after reclassification to real estate held for sale.

Cost Capitalization

See the Real Estate Assets and Depreciation of Investment in Real Estate section for a discussion of the Company’s policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs. In addition, the Company capitalizes an allocation of the payroll and associated costs of employees directly responsible for and who spend their time on the execution and supervision of major capital and/or renovation projects. These costs are reflected on the balance sheets as increases to depreciable property.

For all development projects, the Company uses its professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. The Company capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend their time on development activities, with capitalization ceasing no later than 90 days following issuance of the certificate of occupancy. These costs are reflected on the balance sheets as construction-in-progress for each specific property. The Company expenses as incurred all payroll costs of on-site employees working directly at our properties, except as noted above on our development properties prior to certificate of occupancy issuance and on specific major renovations at selected properties when additional incremental employees are hired.

During the years ended December 31, 2017, 2016 and 2015, the Company capitalized $14.7 million, $18.7 million and $22.3 million, respectively, of payroll and associated costs of employees directly responsible for and who spend their time on the execution and supervision of development activities as well as major capital and/or renovation projects.

Cash and Cash Equivalents

The Company considers all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements purchased with a maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances at one or more institutions typically exceed the Federal Depository Insurance Corporation (“FDIC”) insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk is not significant, as the Company does not anticipate the financial institutions’ non-performance.

F-26

Fair Value of Financial Instruments, Including Derivative Instruments

The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company seeks to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The Company may also use derivatives to manage commodity prices in the daily operations of the business.

The Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from these instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives it currently has in place.

The Company recognizes all derivatives as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value. In addition, fair value adjustments will affect either shareholders’ equity/partners’ capital or net income depending on whether the derivative instruments qualify as a hedge for accounting purposes and, if so, the nature of the hedging activity. When the terms of an underlying transaction are modified, or when the underlying transaction is terminated or completed, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income each period until the instrument matures. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market each period. The Company does not use derivatives for trading or speculative purposes.

Revenue Recognition

Rental income attributable to residential leases is recorded on a straight-line basis, which is not materially different than if it were recorded when due from residents and recognized monthly as it was earned. Leases entered into between a resident and a property for the rental of an apartment unit are generally year-to-year, renewable upon consent of both parties on an annual or monthly basis. Rental income attributable to retail/commercial leases is also recorded on a straight-line basis. Retail/commercial leases generally have five to ten year lease terms with market based renewal options. Fee and asset management revenue and interest income are recorded on an accrual basis.

Share-Based Compensation

The Company expenses share-based compensation such as restricted shares, restricted units and share options. Any common share of beneficial interest, $0.01 par value per share (the “Common Shares”) issued pursuant to EQR’s incentive equity compensation and employee share purchase plans will result in ERPOP issuing units of partnership interest (“OP Units”) to EQR on a one-for-one basis, with ERPOP receiving the net cash proceeds of such issuances. See Note 12 for further discussion.

The fair value of the option grants are recognized over the requisite service/vesting period of the options. The fair value for the Company’s share options was estimated at the time the share options were granted using the Black-Scholes option pricing model with the primary grant in each year having the following weighted average assumptions:

201720162015
Expected volatility (1)15.3%26.3%26.6%
Expected life (2)5 years5 years5 years
Expected dividend yield (3)3.08%3.04%3.13%
Risk-free interest rate (4)1.93%1.27%1.29%
Option valuation per share$5.86$13.02$13.68
(1)Expected volatility – For the 2017 grant, estimated based on the historical five-year volatility (the period matching the expected life) of EQR’s share price measured on a monthly basis. For the 2015 and 2016 grants, estimated based on the historical ten-year volatility of EQR’s share price measured on a monthly basis. This change in estimate reflects the Company’s belief that the historical five-year period provides a better estimate of the expected volatility in EQR shares over the expected life of the options.
(2)Expected life – Approximates the actual weighted average life of all share options granted since the Company went public in 1993.
(3)Expected dividend yield – Calculated by averaging the historical annual yield on EQR shares for a period matching the expected life of each grant, with the annual yield calculated by dividing actual regular dividends (excluding any special dividends) by the average price of EQR’s shares in a given year.

F-27

(4)Risk-free interest rate – The most current U.S. Treasury rate available prior to the grant date for a period matching the expected life of each grant.

The valuation method and assumptions are the same as those the Company used in accounting for option expense in its consolidated financial statements. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. This model is only one method of valuing options. Because the Company’s share options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the actual value of the options to the recipient may be significantly different.

Income and Other Taxes

Due to the structure of EQR as a REIT and the nature of the operations of its operating properties, no provision for federal income taxes has been made at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their proportionate share of income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes. The Company has elected Taxable REIT Subsidiary (“TRS”) status for certain of its corporate subsidiaries and as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to be recovered or settled. The effects of changes in tax rates on deferred tax assets and liabilities are recognized in earnings in the period enacted. The Company’s deferred tax assets were generally the result of tax affected suspended interest deductions, net operating losses, differing depreciable lives on capitalized assets and the timing of expense recognition for certain accrued liabilities. The Company elected REIT status for its primary TRS upon filing the 2016 tax return in the third quarter of 2017, with the election retroactive to January 1, 2016. As a result, the Company wrote-off its deferred tax assets, which were fully reserved, in the third quarter of 2017.

In December 2017, the President signed into law H.R. 1, informally titled the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act is not expected to have a material impact on our REIT or subsidiary entities, our ability to continue to qualify as a REIT or on our results of operations. However, the complete impact of the Tax Act is not yet fully known and there can be no assurances that it will have a neutral or favorable impact.

The Company provided for income, franchise and excise taxes allocated as follows in the consolidated statements of operations and comprehensive income for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):

Year Ended December 31,
201720162015
Income and other tax expense (benefit) (1)$478$1,613$917
Discontinued operations, net (2)—1215
Provision for income, franchise and excise taxes (3)$478$1,625$932
(1)Primarily includes state and local income, excise and franchise taxes.
(2)Primarily represents state and local income, excise and franchise taxes on operating properties sold prior to January 1, 2014 and included in discontinued operations. The amounts included in discontinued operations for the years ended December 31, 2016 and 2015 represent trailing activity for properties sold in 2013 and prior years. None of the properties sold during the years ended December 31, 2017, 2016 and 2015 met the criteria for reporting discontinued operations.
(3)All provisions for income tax amounts are current and none are deferred.

F-28

During the years ended December 31, 2017, 2016 and 2015, the Company’s tax treatment of dividends and distributions were as follows (unaudited):

Year Ended December 31,
2017 (1)20162015
Tax treatment of dividends and distributions:
Ordinary dividends$1.22126$0.722$1.591
Qualified dividends——0.037
Long-term capital gain0.189599.1760.443
Unrecaptured section 1250 gain0.100403.1170.139
Dividends and distributions per
Common Share/Unit outstanding$1.51125$13.015$2.210
(1)The Company’s fourth quarter 2017 dividends and distributions of $0.50375 per Common Share/Unit outstanding will be included as taxable income in calendar year 2018.

The unaudited cost of land and depreciable property, net of accumulated depreciation, for federal income tax purposes as of December 31, 2017 and 2016 was approximately $14.8 billion and $15.8 billion, respectively.

Noncontrolling Interests

A noncontrolling interest in a subsidiary (minority interest) is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and separate from the parent company’s equity. In addition, consolidated net income is required to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest and the amount of consolidated net income attributable to the parent and the noncontrolling interest are required to be disclosed on the face of the consolidated statements of operations and comprehensive income. See Note 3 for further discussion.

Operating Partnership: Net income is allocated to noncontrolling interests based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and EQR. Issuance of additional Common Shares and OP Units changes the ownership interests of both the noncontrolling interests and EQR. Such transactions and the related proceeds are treated as capital transactions.

Partially Owned Properties: The Company reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Company that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are generally based on ownership percentage and are reflected as noncontrolling interests in partially owned properties in the consolidated statements of operations and comprehensive income.

Partners’ Capital

The “Limited Partners” of ERPOP include various individuals and entities that contributed their properties to ERPOP in exchange for OP Units. The “General Partner” of ERPOP is EQR. Net income is allocated to the Limited Partners based on their respective ownership percentage of ERPOP. The ownership percentage is calculated by dividing the number of OP Units held by the Limited Partners by the total OP Units held by the Limited Partners and the General Partner. Issuance of additional Common Shares and OP Units changes the ownership interests of both the Limited Partners and EQR. Such transactions and the related proceeds are treated as capital transactions.

Redeemable Noncontrolling Interests – Operating Partnership / Redeemable Limited Partners

The Company classifies Redeemable Noncontrolling Interests – Operating Partnership / Redeemable Limited Partners in the mezzanine section of the consolidated balance sheets for the portion of OP Units that EQR is required, either by contract or securities law, to deliver registered Common Shares to the exchanging OP Unit holder. The redeemable noncontrolling interest units / redeemable limited partner units are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. See Note 3 for further discussion.

Use of Estimates

In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and

F-29

disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Reclassifications

Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year presentation. These reclassifications have not changed the results of operations or equity/capital.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a comprehensive new revenue recognition standard entitled Revenue from Contracts with Customers that will supersede nearly all existing revenue recognition guidance. The new standard specifically excludes lease revenue. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Companies will likely need to use more judgment and make more estimates than under current revenue recognition guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration, if any, to include in the transaction price and allocating the transaction price to each separate performance obligation. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. The Company selected the modified retrospective transition method as of the date of adoption effective January 1, 2018. Approximately 95% of total revenues consist of rental income from leasing arrangements, which is specifically excluded from the standard. The Company analyzed its remaining revenue streams, inclusive of gains and losses on sales, and concluded there are no changes in revenue recognition with the adoption of the new standard. As such, adoption of the standard did not result in a cumulative adjustment recognized as of January 1, 2018, and other than certain changes in disclosures which will be required in 2018, the standard did not have a material impact on the Company’s consolidated financial position, results of operations, equity/capital or cash flows.

In January 2016, the FASB issued a new standard which requires companies to measure all equity securities with readily determinable fair values at fair value on the balance sheet, with changes in fair value recognized in net income. The new standard was effective for the Company beginning on January 1, 2018 and it did not have a material effect on its consolidated results of operations or financial position.

In February 2016, the FASB issued a new leases standard which sets out principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessors and lessees). The new standard requires the following:

•Lessors – Leases will be accounted for using an approach that is substantially equivalent to existing guidance for operating, sales-type and financing leases, but aligned with the new revenue recognition standard. Lessors will be required to allocate lease payments to separate lease and non-lease components of each lease agreement, with the non-lease components evaluated under the new revenue recognition standard.
•Lessees – Leases will be accounted for using a dual approach, classifying leases as either operating or finance based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized on a straight-line basis over the term of the lease (for operating leases) or based on an effective interest method with a front-loaded expense recognition (for finance leases). A lessee is also required to record a right-of-use asset and a lease liability on its balance sheet for all leases with a term of greater than 12 months regardless of their classification as operating or finance leases. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases.

The new standard will be effective for the Company beginning on January 1, 2019, with early adoption permitted, though the Company currently anticipates adopting the new standard on the effective date. The new standard must be adopted using a modified retrospective method, which requires application of the new guidance at the beginning of the earliest comparative period presented and provides for certain practical expedients, which the Company currently anticipates electing. The Company anticipates that its residential and retail/commercial leases where it is the lessor will continue to be accounted for as operating leases under the new standard. Therefore, the Company does not currently anticipate significant changes in the accounting for its lease revenues. The Company is also the lessee under various corporate office and ground leases, which it will be required to recognize right of use assets and related lease liabilities on its consolidated balance sheets upon adoption. The Company currently anticipates that its corporate office leases where it is the lessee will continue to be accounted for as

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operating leases under the new standard. Based on its anticipated election of the practical expedients, the Company would not be required to reassess the classification of existing ground leases and therefore these leases would continue to be accounted for as operating leases. However, in the event we modify existing ground leases and/or enter into new ground leases after adoption of the new standard, such leases will likely be classified as finance leases. The Company will continue to evaluate the impact of adopting the new leases standard on its consolidated results of operations and financial position.

In June 2016, the FASB issued a new standard which requires companies to adopt a new approach for estimating credit losses on certain types of financial instruments, such as trade and other receivables and loans. The standard will require entities to estimate a lifetime expected credit loss for most financial instruments, including trade receivables. The new standard will be effective for the Company beginning on January 1, 2020, with early adoption permitted beginning January 1, 2019. The Company is currently evaluating the impact of adopting the new standard on its consolidated results of operations and financial position.

In February 2017, the FASB issued a new standard which clarifies the accounting treatment for partial sales of nonfinancial assets (i.e. real estate). The standard clarifies that partial sales transactions include contributions of nonfinancial assets to a joint venture or other noncontrolled investee. Companies must recognize a full gain or loss on transfers of nonfinancial assets to equity method investees. The standard requires companies to derecognize distinct nonfinancial assets or distinct in substance nonfinancial assets in partial sale transactions when it does not have a controlling financial interest in the legal entity that holds the asset and transfers control of the asset. Once the distinct nonfinancial asset is transferred, the company is required to measure any non-controlling interest it receives or retains at fair value and recognize a full gain or loss on the transaction. If a company transfers ownership interests in a consolidated subsidiary and continues to maintain a controlling financial interest, the company does not derecognize the assets or liabilities, and accounts for the transaction as an equity transaction and no gain or loss is recognized. The new standard was effective for the Company beginning on January 1, 2018. The Company adopted the new standard concurrently with the new revenue recognition standard. The Company has not had a partial sale of nonfinancial assets in the current or comparative periods, therefore the adoption of this standard did not have a material impact on its consolidated results of operations and financial position.

In August 2017, the FASB issued a final standard which makes changes to the hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The new standard expands an entity’s ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk and eases certain documentation and assessment requirements. The new standard also eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of any hedging instrument to be presented in the same income statement line as the hedged instrument. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard on its consolidated results of operations and financial position.

Recently Adopted Accounting Pronouncements

In February 2015, the FASB issued new consolidation guidance which made changes to both the variable interest model and the voting model. Among other changes, the new standard specifically eliminated the presumption in the current voting model that a general partner controls a limited partnership or similar entity unless that presumption can be overcome. Generally, only a single limited partner that is able to exercise substantive kick-out rights will consolidate. The Company adopted this new standard as required effective January 1, 2016. While adoption of the new standard did not result in any changes to conclusions about whether a joint venture was consolidated or unconsolidated, the Company determined that certain of its joint ventures and the Operating Partnership qualified as variable interest entities (“VIEs”) and therefore required additional disclosures. See Note 6 for further discussion.

In March 2016, the FASB issued a new standard which simplified several aspects of the accounting for employee share-based payment transactions, including income tax consequences, classification of awards as equity or liability, statement of cash flows classification and policy election options for forfeitures. The Company adopted this new standard as required effective January 1, 2017. The Company will continue to estimate the number of awards expected to be forfeited and adjust the estimate when it is no longer probable that the employee will fulfill the service condition, as was required under the old standard. The adoption of this standard did not have a material impact on our consolidated results of operations or financial position.

In August 2016 and October 2016, the FASB issued new standards to clarify how specific transactions are classified and presented on the statement of cash flows. Among other clarifications, the new standards specifically provide guidance for the following items within the statement of cash flows which have required significant judgment in the past:

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•Cash payments related to debt prepayments or extinguishment costs are to be classified within financing activities;
•The portion of the cash payment made to settle a zero-coupon bond or a bond with an insignificant cash coupon attributable to accreted interest related to a debt discount is to be classified as a cash outflow within operating activities, and the portion attributable to the principal is to be classified within financing activities;
•Insurance settlement proceeds are to be classified based on the nature of the loss;
•Companies must elect to classify distributions received from equity method investees using either a cumulative earnings approach or a look-through approach and the election must be disclosed; and
•Restricted cash will be included with cash and cash equivalents on the statement of cash flows. Total cash and cash equivalents and restricted cash are to be reconciled to the related line items on the balance sheet.

The new standards must be applied retrospectively to all periods presented in the consolidated financial statements. The Company adopted the new standard in the fourth quarter of 2017 and will continue to apply the look-through approach for distributions received from equity method investees. While overall cash flows did not change, there are changes between cash flow classifications due primarily to the debt prepayment penalties that the Company has incurred in the comparative period. As of December 31, 2016 and 2015, the following cash flows were reclassified (amounts in thousands):

Year Ended December 31, 2016
As Originally PresentedReclassification AdjustmentsAs Presented Herein
Cash Flows from Operating Activities:
Amortization of discounts and premiums on debt$(17,378)$(608)$(17,986)
Net (gain) loss on debt extinguishment$—$114,666$114,666
(Increase) decrease in deposits - restricted$11,450$(11,450)$—
(Increase) decrease in mortgage deposits$(26)$26$—
Net cash provided by operating activities$1,111,489$102,634$1,214,123
Cash Flows from Investing Activities:
(Increase) decrease in deposits on real estate acquisitions and investments, net$(32,503)$32,503$—
(Increase) decrease in mortgage deposits$534$(534)$—
Net cash provided by investing activities$5,871,973$31,969$5,903,942
Cash Flows from Financing Activities:
Mortgage deposits$(8,497)$8,497$—
Mortgage notes payable, net: Net gain (loss) on debt extinguishment$—$(31,732)$(31,732)
Notes, net: Net gain (loss) on debt extinguishment$—$(82,934)$(82,934)
Line of credit and commercial paper: Commercial paper proceeds$1,759,586$608$1,760,194
Net cash (used for) financing activities$(6,948,531)$(105,561)$(7,054,092)
Cash and cash equivalents, beginning of year$42,276
(adjustments for restricted deposits, beginning of year)$112,839
Cash and cash equivalents and restricted deposits, beginning of year$155,115
Cash and cash equivalents, end of year$77,207
(adjustments for restricted deposits, end of year)$141,881
Cash and cash equivalents and restricted deposits, end of year$219,088

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Year Ended December 31, 2015
As Originally PresentedReclassification AdjustmentsAs Presented Herein
Cash Flows from Operating Activities:
Amortization of discounts and premiums on debt$(9,492)$(1,077)$(10,569)
Write-off of pursuit costs$3,208$(330)$2,878
(Increase) decrease in deposits - restricted$(1,794)$1,794$—
(Increase) decrease in mortgage deposits$258$(258)$—
Net cash provided by operating activities$1,356,499$129$1,356,628
Cash Flows from Investing Activities:
(Increase) decrease in deposits on real estate acquisitions and investments, net$17,874$(17,874)$—
(Increase) decrease in mortgage deposits$(531)$531$—
Net cash (used for) investing activities$(678,471)$(17,343)$(695,814)
Cash Flows from Financing Activities:
Mortgage deposits$(8,588)$8,588$—
Line of credit and commercial paper: Commercial paper proceeds$3,931,227$1,077$3,932,304
Net cash (used for) financing activities$(675,832)$9,665$(666,167)
Cash and cash equivalents, beginning of year$40,080
(adjustments for restricted deposits, beginning of year)$120,388
Cash and cash equivalents and restricted deposits, beginning of year$160,468
Cash and cash equivalents, end of year$42,276
(adjustments for restricted deposits, end of year)$112,839
Cash and cash equivalents and restricted deposits, end of year$155,115

In January 2017, the FASB issued a new standard which clarified the definition of a business. The standard’s objective was to add additional guidance that assists companies in determining whether transactions should be accounted for as an asset acquisition or a business combination. The new standard first requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If this threshold is not met, the entity next evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. Among other differences, transaction costs associated with asset acquisitions are capitalized while those associated with business combinations are expensed as incurred. In addition, purchase price in an asset acquisition is allocated on a relative fair value basis while in a business combination it is generally measured at fair value. The new standard will be applied prospectively to any transactions occurring within the period of adoption. The Company early adopted the new standard as allowed effective January 1, 2017. The Company anticipates that substantially all of its transactions will now be accounted for as asset acquisitions, which means transaction costs will largely be capitalized as noted above.

Other

The Company is the controlling partner in various consolidated partnerships owning 17 properties and 3,215 apartment units having a noncontrolling interest book value of $4.7 million at December 31, 2017. The Company is required to make certain disclosures regarding noncontrolling interests in consolidated limited-life subsidiaries. Of the consolidated entities described above, the Company is the controlling partner in limited-life partnerships owning four properties having a noncontrolling interest deficit balance of $8.8 million. These four partnership agreements contain provisions that require the partnerships to be liquidated through the sale of their assets upon reaching a date specified in each respective partnership agreement. The Company, as controlling partner, has an obligation to cause the property owning partnerships to distribute the proceeds of liquidation to the Noncontrolling Interests in these Partially Owned Properties only to the extent that the net proceeds received by the partnerships from the sale of their assets warrant a distribution based on the partnership agreements. As of December 31, 2017, the Company estimates the value of Noncontrolling Interest distributions for these four properties would have been approximately $65.4 million (“Settlement Value”) had the partnerships been liquidated. This Settlement Value is based on estimated third party consideration realized by the partnerships upon disposition of the four Partially Owned Properties and is net of all other assets and liabilities, including yield maintenance on the mortgages encumbering the properties, that would have been due on December 31, 2017 had those mortgages been prepaid. Due to, among other things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the Noncontrolling Interests in the Company’s Partially Owned Properties is subject to change. To the extent that the partnerships’ underlying assets are

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worth less than the underlying liabilities, the Company has no obligation to remit any consideration to the Noncontrolling Interests in these Partially Owned Properties.

3.Equity, Capital and Other Interests

Equity and Redeemable Noncontrolling Interests of Equity Residential

The following tables present the changes in the Company’s issued and outstanding Common Shares and “Units” (which includes OP Units and restricted units) for the years ended December 31, 2017, 2016 and 2015:

201720162015
Common Shares
Common Shares outstanding at January 1,365,870,924364,755,444362,855,454
Common Shares Issued:
Conversion of OP Units1,149,28488,838208,307
Exercise of share options846,137815,0441,456,363
Employee Share Purchase Plan (ESPP)68,28663,90968,462
Restricted share grants, net83,451147,689168,142
Common Shares Other:
Conversion of restricted shares to restricted units——(1,284)
Common Shares outstanding at December 31,368,018,082365,870,924364,755,444
Units
Units outstanding at January 1,14,626,07514,427,16414,298,691
Restricted unit grants, net291,647287,749335,496
Conversion of restricted shares to restricted units——1,284
Conversion of OP Units to Common Shares(1,149,284)(88,838)(208,307)
Units outstanding at December 31,13,768,43814,626,07514,427,164
Total Common Shares and Units outstanding at December 31,381,786,520380,496,999379,182,608
Units Ownership Interest in Operating Partnership3.6%3.8%3.8%

The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of restricted units, are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain exceptions (including the “book-up” requirements of restricted units), the Noncontrolling Interests – Operating Partnership may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Noncontrolling Interests – Operating Partnership (including redeemable interests) is allocated based on the number of Noncontrolling Interests – Operating Partnership Units in total in proportion to the number of Noncontrolling Interests – Operating Partnership Units in total plus the number of Common Shares. Net income is allocated to the Noncontrolling Interests – Operating Partnership based on the weighted average ownership percentage during the period.

The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Noncontrolling Interests – Operating Partnership Units requesting an exchange of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Noncontrolling Interests – Operating Partnership Units for cash, EQR is obligated to deliver Common Shares to the exchanging holder of the Noncontrolling Interests – Operating Partnership Units.

The Noncontrolling Interests – Operating Partnership Units are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests – Operating Partnership are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership”. Instruments that require settlement in registered shares cannot be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Noncontrolling Interests – Operating Partnership are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Noncontrolling Interests – Operating Partnership Units that are classified in permanent equity at December 31, 2017 and 2016.

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The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership Units in proportion to the number of Noncontrolling Interests – Operating Partnership Units in total. Such percentage of the total carrying value of Units which is ascribed to the Redeemable Noncontrolling Interests – Operating Partnership is then adjusted to the greater of carrying value or fair market value as described above. As of December 31, 2017, the Redeemable Noncontrolling Interests – Operating Partnership have a redemption value of approximately $367.0 million, which represents the value of Common Shares that would be issued in exchange for the Redeemable Noncontrolling Interests – Operating Partnership Units.

The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership for the years ended December 31, 2017, 2016 and 2015, respectively (amounts in thousands):

201720162015
Balance at January 1,$442,092$566,783$500,733
Change in market value(41,916)(115,093)64,378
Change in carrying value(33,221)(9,598)1,672
Balance at December 31,$366,955$442,092$566,783

Net proceeds from EQR Common Share and Preferred Share (see definition below) offerings are contributed by EQR to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the Preferred Shares issued in the equity offering). As a result, the net offering proceeds from Common Shares and Preferred Shares are allocated between shareholders’ equity and Noncontrolling Interests – Operating Partnership to account for the change in their respective percentage ownership of the underlying equity of ERPOP.

The Company’s declaration of trust authorizes it to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares.

The following table presents the Company’s issued and outstanding Preferred Shares as of December 31, 2017 and 2016:

Amounts in thousands
Annual
CallDividend PerDecember 31,December 31,
Date (1)Share (2)20172016
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized:
8.29% Series K Cumulative Redeemable Preferred; liquidation value $50 per share; 745,600 shares issued and outstanding as of December 31, 2017 and 201612/10/26$4.145$37,280$37,280
$37,280$37,280
(1)On or after the call date, redeemable preferred shares may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation price per share, plus accrued and unpaid distributions, if any.
(2)Dividends on Preferred Shares are payable quarterly.

During 2015, the Company repurchased and retired 254,400 Series K Preferred Shares with a par value of $12.7 million for total cash consideration of approximately $16.3 million. As a result of this partial redemption, the Company incurred a cash charge of approximately $3.5 million which was recorded as a premium on the redemption of Preferred Shares.

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Capital and Redeemable Limited Partners of ERP Operating Limited Partnership

The following tables present the changes in the Operating Partnership’s issued and outstanding Units and in the limited partners’ Units for the years ended December 31, 2017, 2016 and 2015:

201720162015
General and Limited Partner Units
General and Limited Partner Units outstanding at January 1,380,496,999379,182,608377,154,145
Issued to General Partner:
Exercise of EQR share options846,137815,0441,456,363
EQR’s Employee Share Purchase Plan (ESPP)68,28663,90968,462
EQR’s restricted share grants, net83,451147,689168,142
Issued to Limited Partners:
Restricted unit grants, net291,647287,749335,496
General and Limited Partner Units outstanding at December 31,381,786,520380,496,999379,182,608
Limited Partner Units
Limited Partner Units outstanding at January 1,14,626,07514,427,16414,298,691
Limited Partner restricted unit grants, net291,647287,749335,496
Conversion of EQR restricted shares to restricted units——1,284
Conversion of Limited Partner OP Units to EQR Common Shares(1,149,284)(88,838)(208,307)
Limited Partner Units outstanding at December 31,13,768,43814,626,07514,427,164
Limited Partner Units Ownership Interest in Operating Partnership3.6%3.8%3.8%

The Limited Partners of the Operating Partnership as of December 31, 2017 include various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of restricted units. Subject to certain exceptions (including the “book-up” requirements of restricted units), Limited Partners may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Limited Partner Units (including redeemable interests) is allocated based on the number of Limited Partner Units in total in proportion to the number of Limited Partner Units in total plus the number of General Partner Units. Net income is allocated to the Limited Partner Units based on the weighted average ownership percentage during the period.

The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Limited Partner Units requesting an exchange of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Limited Partner Units for cash, EQR is obligated to deliver Common Shares to the exchanging limited partner.

The Limited Partner Units are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Limited Partner Units are differentiated and referred to as “Redeemable Limited Partner Units”. Instruments that require settlement in registered shares cannot be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Limited Partner Units are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Limited Partner Units that are classified in permanent equity at December 31, 2017 and 2016.

The carrying value of the Redeemable Limited Partner Units is allocated based on the number of Redeemable Limited Partner Units in proportion to the number of Limited Partner Units in total. Such percentage of the total carrying value of Limited Partner Units which is ascribed to the Redeemable Limited Partner Units is then adjusted to the greater of carrying value or fair market value as described above. As of December 31, 2017, the Redeemable Limited Partner Units have a redemption value of approximately $367.0 million, which represents the value of Common Shares that would be issued in exchange for the Redeemable Limited Partner Units.

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The following table presents the changes in the redemption value of the Redeemable Limited Partners for the years ended December 31, 2017, 2016 and 2015, respectively (amounts in thousands):

201720162015
Balance at January 1,$442,092$566,783$500,733
Change in market value(41,916)(115,093)64,378
Change in carrying value(33,221)(9,598)1,672
Balance at December 31,$366,955$442,092$566,783

EQR contributes all net proceeds from its various equity offerings (including proceeds from exercise of options for Common Shares) to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the preferred shares issued in the equity offering).

The following table presents the Operating Partnership’s issued and outstanding “Preference Units” as of December 31, 2017 and 2016:

Amounts in thousands
Annual
CallDividend PerDecember 31,December 31,
Date (1)Unit (2)20172016
Preference Units:
8.29% Series K Cumulative Redeemable Preference Units; liquidation value $50 per unit; 745,600 units issued and outstanding as of December 31, 2017 and 201612/10/26$4.145$37,280$37,280
$37,280$37,280
(1)On or after the call date, redeemable preference units may be redeemed for cash at the option of the Operating Partnership, in whole or in part, at a redemption price equal to the liquidation price per unit, plus accrued and unpaid distributions, if any, in conjunction with the concurrent redemption of the corresponding Company Preferred Shares.
(2)Dividends on Preference Units are payable quarterly.

During 2015, the Operating Partnership repurchased and retired 254,400 Series K Preference Units with a par value of $12.7 million for total cash consideration of approximately $16.3 million, in conjunction with the concurrent redemption of the corresponding Company Preferred Shares. As a result of this partial redemption, the Operating Partnership incurred a cash charge of approximately $3.5 million which was recorded as a premium of the redemption of Preference Units.

Other

EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC on June 28, 2016 and expires on June 28, 2019. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).

In September 2009, the Company announced the establishment of an At-The-Market (“ATM”) share offering program which would allow EQR to sell Common Shares from time to time into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds from all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis). The program currently has a maturity of June 2019. EQR has the authority to issue 13.0 million shares but has not issued any shares under this program since September 2012.

The Company may repurchase up to 13.0 million Common Shares under its share repurchase program. No shares were repurchased during the years ended December 31, 2017 and 2016. As of December 31, 2017, EQR has remaining authorization to repurchase up to 13.0 million of its shares under the repurchase program.

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  1. Real Estate and Lease Intangibles

The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of December 31, 2017 and 2016 (amounts in thousands):

20172016
Land$5,996,024$5,899,862
Depreciable property:
Buildings and improvements17,743,04216,913,430
Furniture, fixtures and equipment1,548,9611,346,300
In-Place lease intangibles476,359470,849
Projects under development:
Land43,226115,876
Construction-in-progress120,321521,292
Land held for development:
Land62,53884,440
Construction-in-progress36,42534,376
Investment in real estate26,026,89625,386,425
Accumulated depreciation(6,040,378)(5,360,389)
Investment in real estate, net$19,986,518$20,026,036

The following table summarizes the carrying amounts for the Company’s above and below market ground and retail lease intangibles as of December 31, 2017 and 2016 (amounts in thousands):

DescriptionBalance Sheet Location20172016
Assets
Ground lease intangibles – below marketOther Assets$191,918$178,251
Retail lease intangibles – above marketOther Assets1,2601,260
Lease intangible assets193,178179,511
Accumulated amortization(22,434)(17,972)
Lease intangible assets, net$170,744$161,539
Liabilities
Ground lease intangibles – above marketOther Liabilities$2,400$2,400
Retail lease intangibles – below marketOther Liabilities5,2705,270
Lease intangible liabilities7,6707,670
Accumulated amortization(5,143)(4,509)
Lease intangible liabilities, net$2,527$3,161

The following table provides a summary of the effect of the amortization for above and below market ground and retail lease intangibles on the Company’s accompanying consolidated statements of operations and comprehensive income for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):

DescriptionIncome Statement Location201720162015
Ground lease intangible amortizationProperty and Maintenance$(4,369)$(4,321)$(4,321)
Retail lease intangible amortizationRental Income541895939
Total amortization of above/below market lease intangibles$(3,828)$(3,426)$(3,382)

The following table provides a summary of the aggregate amortization for above and below market ground and retail lease intangibles for each of the next five years (amounts in thousands):

20182019202020212022
Ground lease intangibles$(4,463)$(4,463)$(4,463)$(4,463)$(4,463)
Retail lease intangibles7171717127
Total$(4,392)$(4,392)$(4,392)$(4,392)$(4,436)

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Acquisitions and Dispositions

During the year ended December 31, 2017, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):

PropertiesApartment UnitsPurchase Price
Rental Properties – Consolidated (1)4947$468,050
Total4947$468,050
(1)Purchase price includes an allocation of approximately $68.3 million to land, $386.2 million to depreciable property (inclusive of capitalized closing costs) and $13.7 million to ground lease intangible (included in other assets). For one of the property acquisitions, the Company owns the building and improvements and leases the land underlying the improvements under a long-term ground lease that expires in 2113. This property is consolidated and reflected as a real estate asset while the ground lease is accounted for as an operating lease.

During the year ended December 31, 2016, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):

PropertiesApartment UnitsPurchase Price
Rental Properties – Consolidated (1)4573$249,334
Total4573$249,334
(1)Purchase price includes an allocation of approximately $98.0 million to land and $151.3 million to depreciable property.

During the year ended December 31, 2017, the Company disposed of the following to unaffiliated parties (sales price in thousands):

PropertiesApartment UnitsSales Price
Rental Properties – Consolidated51,194$354,950
Land Parcels (one)——33,450
Total51,194$388,400

The Company recognized a net gain on sales of real estate properties of approximately $157.1 million and a net gain on sales of land parcels of approximately $19.2 million on the above sales.

During the year ended December 31, 2016, the Company disposed of the following to unaffiliated parties (sales price in thousands):

PropertiesApartment UnitsSales Price
Consolidated:
Rental Properties (1)9829,440$6,811,503
Land Parcels——57,455
Unconsolidated:
Rental Properties (2)133674,500
Total9929,776$6,943,458
(1)Includes the Starwood Portfolio sale (see further discussion below) representing 72 operating properties consisting of 23,262 apartment units for $5.365 billion.
(2)The Company owned a 20% interest in this unconsolidated rental property. Sale price listed is the gross sale price. The Company’s share of the net sales proceeds approximated $12.4 million.

The Company recognized a net gain on sales of real estate properties of approximately $4.0 billion (inclusive of $3.2 billion on the Starwood Portfolio sale), a net gain on sales of land parcels of approximately $15.7 million and a net gain on sales of unconsolidated entities (included in income (loss) from investments in unconsolidated entities in the consolidated statements of operations and comprehensive income) of approximately $8.9 million on the above sales.

Starwood Disposition

The Company executed an agreement with controlled affiliates of Starwood Capital Group (“Starwood”) on October 23, 2015 to sell a portfolio of 72 operating properties consisting of 23,262 apartment units located in five markets across the United States for $5.365 billion (the “Starwood Transaction” or “Starwood Portfolio”). The Starwood Portfolio included substantially all of the assets in the Company’s South Florida and Denver markets and certain suburban assets in the Washington D.C.,

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Seattle and Los Angeles markets. On January 26 and 27, 2016, the Company closed on the sale of the entire portfolio described above.

The following table provides the operating segments/locations of the properties and apartment units sold in the Starwood Transaction. The sale of these properties represents the continuation of the Company’s long-term strategy of investing in the urban and high-density suburban areas of its coastal gateway markets. See Note 11 for further discussion.

Markets/Metro AreasPropertiesApartment Units
South Florida3310,742
Denver186,635
Washington D.C.103,020
Seattle81,721
Los Angeles31,144
Total7223,262

The Company used proceeds from the Starwood Transaction and other 2016 sales discussed above to pay special dividends of $8.00 per share/unit (approximately $3.0 billion) on March 10, 2016 and $3.00 per share/unit (approximately $1.1 billion) on October 14, 2016. The Company used the majority of the remaining proceeds to reduce aggregate indebtedness in order to make the transaction leverage neutral. See Note 8 for further discussion.

Impairment

During the year ended December 31, 2017, the Company recorded an approximate $1.7 million non-cash asset impairment charge on a land parcel currently being marketed for sale, which is included in land held for development on the consolidated balance sheets and included in the non-same store/other segment discussed in Note 17. The charge was the result of an analysis of the parcel’s estimated fair value (determined using internally developed models based on market assumptions and potential sales data from the marketing process) compared to its current capitalized carrying value. The parcel now has a carrying value of $0.2 million.

Other

In December 2011, the Company and Toll Brothers (NYSE: TOL) jointly acquired a vacant land parcel at 400 Park Avenue South in New York City. The Company’s and Toll Brothers’ allocated portions of the purchase price were approximately $76.1 million and $57.9 million, respectively. The acquisition was financed through contributions by the Company and Toll Brothers of approximately $102.5 million and $75.7 million, respectively, which included the land purchase noted above, restricted deposits and taxes and fees. Until the core and shell of the building were complete, the building and land were owned jointly and were required to be consolidated on the Company’s balance sheets as the Company was the managing member and Toll Brothers did not have substantive kick-out or participating rights. In July 2015, the Company recorded the master condominium declaration for this development project and as a result, the Toll Brothers’ portion of the property was deconsolidated from the Company’s balance sheets. The Company now solely owns the rental portion of the building (floors 2-22) and the ground floor retail and Toll Brothers solely owns the for sale portion of the building (floors 23-40). The joint venture no longer owns any real property. In conjunction with this transaction, the Company reduced investment in real estate by $116.7 million, noncontrolling interests in partially owned properties by $117.3 million and accrued retainage by $1.1 million and increased other liabilities by $1.7 million (to account for Toll Brothers’ restricted cash still held by the Company). The deconsolidation of the Toll Brothers’ portion of the project had no impact on the consolidated results of operations and comprehensive income.

5.Commitments to Acquire/Dispose of Real Estate

The Company has entered into a separate agreement to acquire the following (purchase price in thousands):

PropertiesApartment UnitsPurchase Price
Rental Properties - Consolidated1117$53,700
Total1117$53,700

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In addition to the properties that were subsequently disposed of as discussed in Note 18, the Company has entered into separate agreements to dispose of the following (sales price in thousands):

PropertiesApartment UnitsSales Price
Rental Properties - Consolidated2455$177,020
Land Parcels (one)——2,700
Total2455$179,720

The closings of these pending transactions are subject to certain conditions and restrictions, therefore, there can be no assurance that these transactions will be consummated or that the final terms will not differ in material respects from those summarized above.

6.Investments in Partially Owned Entities

The Company has co-invested in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). The following tables and information summarize the Company’s investments in partially owned entities as of December 31, 2017 (amounts in thousands except for project and apartment unit amounts):

ConsolidatedUnconsolidated
(VIE)(Non-VIE)(VIE) (1)Total
Total properties172—2
Total apartment units3,215945—945
Balance sheet information at 12/31/17 (at 100%):
ASSETS
Investment in real estate$649,777$236,749$172,995$409,744
Accumulated depreciation(236,543)(43,512)(50,045)(93,557)
Investment in real estate, net413,234193,237122,950316,187
Cash and cash equivalents34,9545,245605,305
Investments in unconsolidated entities44,451———
Restricted deposits393258—258
Other assets25,851323395718
Total assets$518,883$199,063$123,405$322,468
LIABILITIES AND EQUITY/CAPITAL
Mortgage notes payable, net (2)$302,347$145,424$—$145,424
Accounts payable & accrued expenses1,110181295476
Accrued interest payable1,037691—691
Other liabilities4652916297
Security deposits2,053485—485
Total liabilities307,012147,072301147,373
Noncontrolling Interests – Partially Owned Properties/Partners’ equity4,70852,85084,302137,152
Company equity/General and Limited Partners’ Capital207,163(859)38,80237,943
Total equity/capital211,87151,991123,104175,095
Total liabilities and equity/capital$518,883$199,063$123,405$322,468

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ConsolidatedUnconsolidated
(VIE)(Non-VIE)(VIE) (1)Total
Operating information for the year ended 12/31/17 (at 100%):
Operating revenue$93,472$26,898$5,243$32,141
Operating expenses22,4128,9362,46311,399
Net operating income71,06017,9622,78020,742
Property management3,40178475859
General and administrative2793—3
Depreciation25,50510,6335,50116,134
Operating income (loss)41,8756,542(2,796)3,746
Interest and other income77———
Interest:
Expense incurred, net(13,316)(8,289)—(8,289)
Amortization of deferred financing costs(270)(1)—(1)
Income (loss) before income and other taxes and income (loss) from investments in unconsolidated entities28,366(1,748)(2,796)(4,544)
Income and other tax (expense) benefit(27)(13)—(13)
Income (loss) from investments in unconsolidated entities(1,549)———
Net income (loss)$26,790$(1,761)$(2,796)$(4,557)
(1)Includes the Company’s unconsolidated interest in an entity that owns the land underlying our Wisconsin Place apartment property and owns and operates the parking facility. This entity is excluded from the property and apartment unit count.
(2)All debt is non-recourse to the Company.

Note: The above tables exclude EQR’s ownership interest in ERPOP, private equity fund investments, and the Company’s interests in unconsolidated joint ventures established in connection with the acquisition of certain real estate related assets from Archstone Enterprise LP (“Archstone”). These ventures owned certain Archstone assets and succeeded to certain residual Archstone liabilities/litigation, as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests had an aggregate liquidation value of $37.3 million at December 31, 2017. The ventures are owned 60% by the Company. See below for further discussion.

Operating Properties

The Company has various equity interests in certain limited partnerships owning 16 properties containing 2,783 apartment units. Each partnership owns a multifamily property. The Company is the general partner of these limited partnerships and is responsible for managing the operations and affairs of the partnerships as well as making all decisions regarding the businesses of the partnerships. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, the partnerships qualify as VIEs. The Company has a controlling financial interest in the VIEs and, thus, is the VIEs’ primary beneficiary. The Company has both the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. As a result, the partnerships are required to be consolidated on the Company’s financial statements.

The Company has a 75% equity interest in the Wisconsin Place joint venture. The project contains a mixed-use site located in Chevy Chase, Maryland consisting of residential, retail, office and accessory uses, including underground parking facilities. The joint venture owns the 432 unit residential component, but has no ownership interest in the retail and office components. At December 31, 2017, the residential component had a net book value of $160.9 million. The Company is the managing member and is responsible for conducting all administrative day-to-day matters and affairs of the joint venture as well as implementing all decisions with respect to the joint venture. The limited partner is not able to exercise substantive kick-out or participating rights. As a result, the joint venture qualifies as a VIE. The Company has a controlling financial interest in the VIE and, thus, is the VIE’s primary beneficiary. The Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the entity that owns the residential component is required to be consolidated on the Company’s financial statements.

The Wisconsin Place joint venture also retains an unconsolidated interest in an entity that owns the land underlying the entire project and owns and operates the parking facility. At December 31, 2017, the basis of this investment was $44.5 million. The joint venture, as a limited partner, does not have substantive kick-out or participating rights in the entity. As a result, the entity qualifies as a VIE. The joint venture does not have a controlling financial interest in the VIE and is not the VIE’s primary beneficiary. The joint venture does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance or the obligation to absorb losses or the right to receive benefits from the VIE that

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could potentially be significant to the VIE. As a result, the entity that owns the land and owns and operates the parking facility is unconsolidated and recorded using the equity method of accounting.

The Company has a 20% equity interest in each of the Nexus Sawgrass and Domain joint ventures. The Nexus Sawgrass joint venture owns a 501 unit apartment property located in Sunrise, Florida and the Company’s interest had a basis of $4.2 million at December 31, 2017. The Domain joint venture owns a 444 unit apartment property located in San Jose, California and the Company’s interest had a basis of $8.2 million at December 31, 2017. Both properties were funded with long-term, non-recourse secured loans from the partner. The mortgage loan on Nexus Sawgrass has a current unconsolidated outstanding balance of $48.6 million, bears interest at 5.60% and matures January 1, 2021. The mortgage loan on Domain has a current unconsolidated outstanding balance of $96.8 million, bears interest at 5.75% and matures January 1, 2022. While the Company is the managing member of both of the joint ventures, the joint venture partner has significant participating rights and has active involvement in the oversight of the operations. As a result, the entities do not qualify as VIEs. The Company alone does not have the power to direct the activities of the entities that most significantly impact the entities’ economic performance and as a result, the entities are unconsolidated and recorded using the equity method of accounting.

Other

As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, ERPOP qualifies as a VIE. EQR has a controlling financial interest in ERPOP and, thus, is ERPOP’s primary beneficiary. EQR has the power to direct the activities of ERPOP that most significantly impact ERPOP’s economic performance as well as the obligation to absorb losses or the right to receive benefits from ERPOP that could potentially be significant to ERPOP. As a result, ERPOP is required to be consolidated on EQR’s financial statements.

The Company agreed to a maximum investment of $5.0 million each for two private equity funds, both of which primarily focus on real estate technology investments. The Company accounts for both investments under the equity method of accounting. As of December 31, 2017, the Company’s interest in these investments had a combined basis of $2.1 million.

On February 27, 2013, in connection with the acquisition of Archstone, subsidiaries of the Company entered into three limited liability company agreements (collectively, the “Residual JV”). The Residual JV owned certain Archstone assets and succeeded to certain residual Archstone liabilities/litigation. The Residual JV is owned 60% by the Company and 40% by its joint venture partner. The Company’s basis at December 31, 2017 was a net obligation of $0.7 million. The Residual JV is managed by a Management Committee consisting of two members from each of the Company and its joint venture partner. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the Residual JV does not qualify as a VIE. The Company alone does not have the power to direct the activities of the Residual JV that most significantly impact the Residual JV’s economic performance and as a result, the Residual JV is unconsolidated and recorded using the equity method of accounting. The Residual JV has sold all of the real estate assets that were acquired as part of the acquisition of Archstone, including all of the German assets, and is in the process of winding down all remaining activities.

On February 27, 2013, in connection with the acquisition of Archstone, a subsidiary of the Company entered into a limited liability company agreement (the “Legacy JV”), through which they assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements. At December 31, 2017, the remaining preferred interests had an aggregate liquidation value of $37.3 million, our share of which is included in other liabilities in the accompanying consolidated balance sheets. Obligations of the Legacy JV are borne 60% by the Company and 40% by its joint venture partner. The Legacy JV is managed by a Management Committee consisting of two members from each of the Company and its joint venture partner. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the Legacy JV does not qualify as a VIE. The Company alone does not have the power to direct the activities of the Legacy JV that most significantly impact the Legacy JV’s economic performance and as a result, the Legacy JV is unconsolidated and recorded using the equity method of accounting.

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7.Restricted Deposits

The following table presents the Company’s restricted deposits as of December 31, 2017 and 2016 (amounts in thousands):

December 31, 2017December 31, 2016
Mortgage escrow deposits:
Real estate taxes and insurance$845$2,003
Replacement reserves8,3473,428
Mortgage principal reserves/sinking funds3,16758,652
Other852852
Mortgage escrow deposits13,21164,935
Restricted cash:
Tax-deferred (1031) exchange proceeds—38,847
Earnest money on pending acquisitions750—
Restricted deposits on real estate investments58733
Resident security and utility deposits35,18337,007
Other913359
Restricted cash36,90476,946
Restricted deposits$50,115$141,881

During the year ended December 31, 2017, the Company received approximately $60.5 million from the return of various mortgage principal reserves/sinking funds on certain tax-exempt mortgage bond deals.

8.Debt

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. EQR guarantees the Operating Partnership’s revolving credit facility up to the maximum amount and for the full term of the facility.

Mortgage Notes Payable

As of December 31, 2017, the Company had outstanding mortgage debt of approximately $3.6 billion.

During the year ended December 31, 2017, the Company:

•Repaid $300.0 million of 5.987% mortgage debt held in a Fannie Mae loan pool maturing in 2019 and incurred a prepayment penalty of approximately $10.8 million;
•Repaid $193.4 million of conventional fixed-rate mortgage loans maturing in 2017 through 2048 and incurred a prepayment penalty of approximately $1.5 million; and
•Repaid $10.7 million of scheduled principal repayments on various mortgage debt.

The Company recorded $0.3 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2017 as additional interest expense related to debt extinguishment of mortgages. The Company also recorded $0.7 million of write-offs of net unamortized premiums during the year ended December 31, 2017 as a reduction of interest expense related to debt extinguishment of mortgages.

As of December 31, 2017, the Company had $598.6 million of secured debt subject to third party credit enhancement.

As of December 31, 2017, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 28, 2061. At December 31, 2017, the interest rate range on the Company’s mortgage debt was 0.10% to 6.90%. During the year ended December 31, 2017, the weighted average interest rate on the Company’s mortgage debt was 4.33%.

The historical cost, net of accumulated depreciation, of encumbered properties was $4.4 billion and $5.0 billion at December 31, 2017 and 2016, respectively.

As of December 31, 2016, the Company had outstanding mortgage debt of approximately $4.1 billion.

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During the year ended December 31, 2016, the Company:

•Repaid $440.8 million of 6.256% mortgage debt held in a Fannie Mae loan pool maturing in 2017 and incurred a prepayment penalty of approximately $29.3 million;
•Repaid $65.5 million of various tax-exempt mortgage bonds maturing in 2026 through 2037 and incurred a prepayment penalty of approximately $0.2 million;
•Repaid $75.9 million of conventional fixed-rate mortgage loans and incurred prepayment penalties of approximately $2.2 million;
•Repaid $0.9 million of conventional floating-rate mortgage loans;
•Repaid $8.5 million of scheduled principal repayments on various mortgage debt; and
•Assumed $43.4 million of mortgage debt on one acquired property.

The Company recorded $1.6 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2016 as additional interest expense related to debt extinguishment of mortgages. The Company also recorded $20.7 million of write-offs of net unamortized premiums during the year ended December 31, 2016 as a reduction of interest expense related to debt extinguishment of mortgages.

As of December 31, 2016, the Company had $601.9 million of secured debt subject to third party credit enhancement.

As of December 31, 2016, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 28, 2061. At December 31, 2016, the interest rate range on the Company’s mortgage debt was 0.10% to 7.20%. During the year ended December 31, 2016, the weighted average interest rate on the Company’s mortgage debt was 4.34%.

Notes

The following tables summarize the Company’s unsecured note balances and certain interest rate and maturity date information as of and for the years ended December 31, 2017 and 2016, respectively:

December 31, 2017 (Amounts in thousands)Net Principal BalanceInterest Rate RangesWeighted Average Interest RateMaturity Date Ranges
Fixed Rate Public Notes (1)$4,591,3732.85% - 7.57%4.61%2020-2047
Floating Rate Public Notes (1)447,439(1)1.82%2019
Totals$5,038,812
December 31, 2016 (Amounts in thousands)Net Principal BalanceInterest Rate RangesWeighted Average Interest RateMaturity Date Ranges
Fixed Rate Public Notes (1)$4,397,8292.85% - 7.57%4.90%2017 - 2045
Floating Rate Public Notes (1)450,250(1)1.28%2019
Totals$4,848,079
(1)Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.

The Company’s unsecured public debt contains certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for both the years ended December 31, 2017 and 2016.

EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC on June 28, 2016 and expires on June 28, 2019. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).

During the year ended December 31, 2017, the Company:

•Repaid $394.1 million of 5.75% unsecured notes at maturity;
•Repaid $103.9 million of 7.125% unsecured notes at maturity;

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•Issued $400.0 million of ten-year 3.25% unsecured notes, receiving net proceeds of approximately $399.3 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of 3.32% after termination of four forward starting swaps in conjunction with the issuance (see Note 9 for further discussion); and
•Issued $300.0 million of thirty-year 4.00% unsecured notes, receiving net proceeds of approximately $293.2 million before underwriting fees and other expenses, at an all-in effective interest rate of 4.11%.

During the year ended December 31, 2016, the Company:

•Repaid $228.9 million of 5.125% unsecured notes maturing in 2016 and incurred a prepayment penalty of approximately $1.4 million and repaid the remaining $271.1 million of 5.125% unsecured notes at maturity;
•Repaid $400.0 million of 5.375% unsecured notes maturing in 2016 and incurred a prepayment penalty of approximately $9.5 million;
•Repaid $255.9 million of 5.750% unsecured notes maturing in 2017 and incurred a prepayment penalty of approximately $16.5 million;
•Repaid $46.1 million of 7.125% unsecured notes maturing in 2017 and incurred a prepayment penalty of approximately $4.6 million;
•Repaid $250.0 million of 4.625% unsecured notes maturing in 2021 and incurred a prepayment penalty of approximately $31.6 million;
•Repaid $48.0 million of 7.570% unsecured notes maturing in 2026 and incurred a prepayment penalty of approximately $19.3 million; and
•Issued $500.0 million of ten-year 2.85% unsecured notes, receiving net proceeds of $496.7 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of approximately 3.10% after termination of a forward starting swap in conjunction with the issuance (see Note 9 for further discussion).

The Company recorded $1.9 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2016 as additional interest expense related to debt extinguishment of unsecured notes. The Company also recorded $25.2 million of write-offs of net unamortized premiums/discounts/OCI/treasury locks during the year ended December 31, 2016 as additional interest expense related to debt extinguishment of unsecured notes.

Line of Credit and Commercial Paper

On November 3, 2016, the Company replaced its existing $2.5 billion facility with a $2.0 billion unsecured revolving credit facility maturing January 10, 2022. The Company has the ability to increase available borrowings by an additional $750.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently 0.825%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 12.5 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company’s long-term debt.

On February 2, 2015, the Company entered into an unsecured commercial paper note program in the United States. The Company may borrow up to a maximum of $500.0 million under this program subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness. As of December 31, 2017, there was a balance of $299.8 million outstanding on the commercial paper program ($300.0 million in principal outstanding net of an unamortized discount of $0.2 million). As of December 31, 2016, there was a balance of $20.0 million on the commercial paper program. The notes bear interest at various floating rates with a weighted average of 1.41% and 0.90% for the years ended December 31, 2017 and 2016, respectively, and a weighted average maturity of 18 days and 4 days as of December 31, 2017 and 2016, respectively.

As of December 31, 2017, the amount available on the revolving credit facility was $1.69 billion (net of $6.6 million which was restricted/dedicated to support letters of credit and net of the $300.0 million in principal outstanding on the commercial paper program). During the year ended December 31, 2017, the weighted average interest rate on the revolving credit facility was 2.00%. As of December 31, 2016, the amount available on the revolving credit facility was $1.96 billion (net of $20.6 million which was restricted/dedicated to support letters of credit and net of the $20.0 million in principal outstanding on the commercial paper program). During the year ended December 31, 2016, the weighted average interest rate on the revolving credit facility was 1.37%.

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Other

On April 24, 2017, the Company executed a new letter of credit facility with a third party financial institution which is not backed or collateralized by borrowings on the Company’s unsecured revolving credit facility. As of December 31, 2017, there was $9.0 million in letters of credit outstanding on this facility.

The following table provides a summary of the aggregate payments of principal on all debt for each of the next five years and thereafter as of December 31, 2017 (amounts in thousands):

YearTotal
2018$446,969
2019975,334
20201,678,992
2021927,806
2022265,741
Thereafter4,776,232
Subtotal9,071,074
Deferred Financing Costs and Unamortized (Discount)(113,783)
Total$8,957,291
9.Derivative and Other Fair Value Instruments

The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company seeks to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The Company may also use derivatives to manage commodity prices in the daily operations of the business.

A three-level valuation hierarchy exists for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

•Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s derivative positions are valued using models developed by the respective counterparty as well as models developed internally by the Company that use as their basis readily observable market parameters (such as forward yield curves and credit default swap data). Employee holdings other than Common Shares within the supplemental executive retirement plan (the “SERP”) are valued using quoted market prices for identical assets and are included in other assets and other liabilities on the consolidated balance sheets. Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners are valued using the quoted market price of Common Shares. The fair values disclosed for mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) were calculated using indicative rates provided by lenders of similar loans in the case of mortgage notes payable and the private unsecured debt (including its commercial paper and line of credit, if applicable) and quoted market prices for each underlying issuance in the case of the public unsecured notes.

The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, commercial paper, line of credit and derivative instruments), including cash and cash equivalents and other financial instruments, approximate their carrying or contract value. The following table provides a summary of the carrying and fair values for the

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Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at December 31, 2017 and 2016, respectively (amounts in thousands):

December 31, 2017December 31, 2016
Estimated Fair Value (Level 2)Carrying ValueEstimated Fair Value (Level 2)Carrying Value
Mortgage notes payable, net$3,615,384$3,618,722$4,161,001$4,119,181
Unsecured debt, net5,619,7445,338,5695,030,3304,868,077
Total debt, net$9,235,128$8,957,291$9,191,331$8,987,258

The following table summarizes the Company’s consolidated derivative instruments at December 31, 2017 (dollar amounts are in thousands):

Fair Value Hedges (1)Forward Starting Swaps (2)
Current Notional Balance$450,000$250,000
Lowest Interest Rate2.375%2.1478%
Highest Interest Rate2.375%2.2895%
Earliest Maturity Date20192028
Latest Maturity Date20192029
(1)Fair Value Hedges – Converts outstanding fixed rate unsecured notes ($450.0 million 2.375% notes due July 1, 2019) to a floating interest rate of 90-Day LIBOR plus 0.61%.
(2)Forward Starting Swaps – Designed to partially fix interest rates in advance of planned future debt issuances. Of the $250.0 million notional balance, $200.0 million of these swaps have mandatory counterparty terminations in 2019 and are targeted for certain 2018 debt issuances while $50.0 million of these swaps have mandatory counterparty terminations in 2020 and are targeted for certain 2019 debt issuances.

The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at December 31, 2017 and 2016, respectively (amounts in thousands):

Fair Value Measurements at Reporting Date Using
DescriptionBalance Sheet Location12/31/2017Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting SwapsOther Assets$5,143$—$5,143$—
Supplemental Executive Retirement PlanOther Assets140,159140,159——
Total$145,302$140,159$5,143$—
Liabilities
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Fair Value HedgesOther Liabilities$1,597$—$1,597$—
Supplemental Executive Retirement PlanOther Liabilities140,159140,159——
Total$141,756$140,159$1,597$—
Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited PartnersMezzanine$366,955$—$366,955$—

F-48

Fair Value Measurements at Reporting Date Using
DescriptionBalance Sheet Location12/31/2016Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Fair Value HedgesOther Assets$1,857$—$1,857$—
Supplemental Executive Retirement PlanOther Assets124,420124,420——
Total$126,277$124,420$1,857$—
Liabilities
Supplemental Executive Retirement PlanOther Liabilities$124,420$124,420$—$—
Total$124,420$124,420$—$—
Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited PartnersMezzanine$442,092$—$442,092$—

The following tables provide a summary of the effect of fair value hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the years ended December 31, 2017, 2016 and 2015, respectively (amounts in thousands):

December 31, 2017 Type of Fair Value HedgeLocation of Gain/(Loss) Recognized in Income on DerivativeAmount of Gain/(Loss) Recognized in Income on DerivativeHedged ItemIncome Statement Location of Hedged Item Gain/(Loss)Amount of Gain/(Loss) Recognized in Income on Hedged Item
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Interest Rate SwapsInterest expense$(3,454)Fixed rate debtInterest expense$3,454
Total$(3,454)$3,454
December 31, 2016 Type of Fair Value HedgeLocation of Gain/(Loss) Recognized in Income on DerivativeAmount of Gain/(Loss) Recognized in Income on DerivativeHedged ItemIncome Statement Location of Hedged Item Gain/(Loss)Amount of Gain/(Loss) Recognized in Income on Hedged Item
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Interest Rate SwapsInterest expense$(1,798)Fixed rate debtInterest expense$1,798
Total$(1,798)$1,798
December 31, 2015 Type of Fair Value HedgeLocation of Gain/(Loss) Recognized in Income on DerivativeAmount of Gain/(Loss) Recognized in Income on DerivativeHedged ItemIncome Statement Location of Hedged Item Gain/(Loss)Amount of Gain/(Loss) Recognized in Income on Hedged Item
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Interest Rate SwapsInterest expense$2,058Fixed rate debtInterest expense$(2,058)
Total$2,058$(2,058)

F-49

The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the years ended December 31, 2017, 2016 and 2015, respectively (amounts in thousands):

Effective PortionIneffective Portion
December 31, 2017 Type of Cash Flow HedgeAmount of Gain/(Loss) Recognized in OCI on DerivativeLocation of Gain/(Loss) Reclassified from Accumulated OCI into IncomeAmount of Gain/(Loss) Reclassified from Accumulated OCI into IncomeLocation of Gain/(Loss) Recognized in Income on DerivativeAmount of Gain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps$6,439Interest expense$(18,858)Interest expense$—
Total$6,439$(18,858)$—
Effective PortionIneffective Portion
December 31, 2016 Type of Cash Flow HedgeAmount of Gain/(Loss) Recognized in OCI on DerivativeLocation of Gain/(Loss) Reclassified from Accumulated OCI into IncomeAmount of Gain/(Loss) Reclassified from Accumulated OCI into IncomeLocation of Gain/(Loss) Recognized in Income on DerivativeAmount of Gain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps$(3,989)Interest expense$(41,758)Interest expense$(74)
Total$(3,989)$(41,758)$(74)
Effective PortionIneffective Portion
December 31, 2015 Type of Cash Flow HedgeAmount of Gain/(Loss) Recognized in OCI on DerivativeLocation of Gain/(Loss) Reclassified from Accumulated OCI into IncomeAmount of Gain/(Loss) Reclassified from Accumulated OCI into IncomeLocation of Gain/(Loss) Recognized in Income on DerivativeAmount of Gain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps$(814)Interest expense$(18,244)Interest expense$(3,033)
Total$(814)$(18,244)$(3,033)

As of December 31, 2017 and 2016, there were approximately $88.6 million and $113.9 million in deferred losses, net, included in accumulated other comprehensive income (loss), respectively, related to derivative instruments. Based on the estimated fair values of the net derivative instruments at December 31, 2017, the Company may recognize an estimated $21.2 million of accumulated other comprehensive income (loss) as additional interest expense during the year ending December 31, 2018.

In August 2017, the Company received $1.3 million to settle four forward starting ten-year swaps in conjunction with the issuance of $400.0 million of ten-year fixed rate public notes. The entire $1.3 million was initially deferred as a component of accumulated other comprehensive income (loss) and will be recognized as a decrease to interest expense over the ten-year term of the notes.

In October 2016, the Company paid $4.7 million to settle a forward starting ten-year swap in conjunction with the issuance of $500.0 million of ten-year fixed rate public notes. The ineffective portion of approximately $74,000 and accrued interest of approximately $9,000 were recorded as increases to interest expense. The remaining amount of approximately $4.6 million will be deferred as a component of accumulated other comprehensive income (loss) and recognized as an increase to interest expense over the approximate term of the notes.

In May 2015, the Company paid a net $15.1 million to settle nine forward starting ten-year swaps in conjunction with the issuance of $450.0 million of ten-year fixed rate public notes. The ineffective portion of approximately $30,000 and accrued interest of approximately $1.2 million were recorded as increases to interest expense. The remaining amount of approximately $13.9 million will be deferred as a component of accumulated other comprehensive income (loss) and recognized as an increase to interest expense over the first 9 years and 10.5 months of the notes.

During the year ended December 31, 2015, the Company recorded approximately $3.0 million of deferred accumulated other comprehensive income (loss) as additional interest expense due to the ineffectiveness of certain forward starting swaps.

F-50

10.Earning Per Share and Earnings Per Unit

Equity Residential

The following tables set forth the computation of net income per share – basic and net income per share – diluted for the Company (amounts in thousands except per share amounts):

Year Ended December 31,
201720162015
Numerator for net income per share – basic:
Income from continuing operations$628,381$4,479,586$907,621
Allocation to Noncontrolling Interests – Operating Partnership, net(22,604)(171,491)(34,226)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties(2,323)(16,430)(3,657)
Preferred distributions(3,091)(3,091)(3,357)
Premium on redemption of Preferred Shares——(3,486)
Income from continuing operations available to Common Shares, net of Noncontrolling Interests600,3634,288,574862,895
Discontinued operations, net of Noncontrolling Interests—498382
Numerator for net income per share – basic$600,363$4,289,072$863,277
Numerator for net income per share – diluted:
Income from continuing operations$628,381$4,479,586$907,621
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties(2,323)(16,430)(3,657)
Preferred distributions(3,091)(3,091)(3,357)
Premium on redemption of Preferred Shares——(3,486)
Income from continuing operations available to Common Shares622,9674,460,065897,121
Discontinued operations, net—518397
Numerator for net income per share – diluted$622,967$4,460,583$897,518
Denominator for net income per share – basic and diluted:
Denominator for net income per share – basic366,968365,002363,498
Effect of dilutive securities:
OP Units12,90113,82713,576
Long-term compensation shares/units2,8093,1633,546
Denominator for net income per share – diluted382,678381,992380,620
Net income per share – basic$1.64$11.75$2.37
Net income per share – diluted$1.63$11.68$2.36
Net income per share – basic:
Income from continuing operations available to Common Shares, net of Noncontrolling Interests$1.64$11.75$2.37
Discontinued operations, net of Noncontrolling Interests———
Net income per share – basic$1.64$11.75$2.37
Net income per share – diluted:
Income from continuing operations available to Common Shares$1.63$11.68$2.36
Discontinued operations, net———
Net income per share – diluted$1.63$11.68$2.36

F-51

ERP Operating Limited Partnership

The following tables set forth the computation of net income per Unit – basic and net income per Unit – diluted for the Operating Partnership (amounts in thousands except per Unit amounts):

Year Ended December 31,
201720162015
Numerator for net income per Unit – basic and diluted:
Income from continuing operations$628,381$4,479,586$907,621
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties(2,323)(16,430)(3,657)
Allocation to Preference Units(3,091)(3,091)(3,357)
Allocation to premium on redemption of Preference Units——(3,486)
Income from continuing operations available to Units622,9674,460,065897,121
Discontinued operations, net—518397
Numerator for net income per Unit – basic and diluted$622,967$4,460,583$897,518
Denominator for net income per Unit – basic and diluted:
Denominator for net income per Unit – basic379,869378,829377,074
Effect of dilutive securities:
Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units2,8093,1633,546
Denominator for net income per Unit – diluted382,678381,992380,620
Net income per Unit – basic$1.64$11.75$2.37
Net income per Unit – diluted$1.63$11.68$2.36
Net income per Unit – basic:
Income from continuing operations available to Units$1.64$11.75$2.37
Discontinued operations, net———
Net income per Unit – basic$1.64$11.75$2.37
Net income per Unit – diluted:
Income from continuing operations available to Units$1.63$11.68$2.36
Discontinued operations, net———
Net income per Unit – diluted$1.63$11.68$2.36
11.Individually Significant Dispositions

The Company concluded that the Starwood Transaction did not qualify for discontinued operations reporting as it did not represent a strategic shift that had a major effect on the Company’s operations and financial results. The Company has been investing only in its coastal gateway markets (Boston, New York, Washington D.C., Southern California, San Francisco and Seattle) and has not been acquiring or developing any new assets in its other markets. Over the past several years, the Company has been repositioning its portfolio by selling its suburban assets located in markets outside its coastal gateway markets. The sale of the Starwood Portfolio represented the continuation of the above strategy. However, the Company concluded that the Starwood Transaction did qualify as an individually significant component of the Company as the amount received upon disposal exceeded 10% of total assets, and NOI (see definition in Note 17) of the Starwood Portfolio represented approximately 1.2% of consolidated NOI (for the approximate one-month period owned in 2016) for the year ended December 31, 2016 and approximately 15.7% of consolidated NOI for the year ended December 31, 2015. As a result, the following table summarizes the results of operations attributable to the Starwood Transaction for the years ended December 31, 2016 and 2015 (amounts in thousands):

F-52

Year Ended December 31,
20162015
REVENUES
Rental income$30,785$427,433
Total revenues30,785427,433
EXPENSES
Property and maintenance7,83878,189
Real estate taxes and insurance2,91248,403
Property management211
General and administrative2338
Depreciation—87,616
Total expenses10,775214,257
Operating income20,010213,176
Interest and other income211
Other expenses—(35)
Interest:
Expense incurred, net(380)(680)
Amortization of deferred financing costs(707)(559)
Income and other tax (expense) benefit(1)(1)
Net gain (loss) on sales of real estate properties3,161,097—
Income from operations attributable to controlling interests – Operating Partnership3,180,040211,902
Income from operations attributable to Noncontrolling Interests – Operating Partnership(122,152)(8,083)
Income from operations attributable to controlling interests – Company$3,057,888$203,819
12.Share Incentive Plans

Any Common Shares issued pursuant to EQR’s incentive equity compensation and employee share purchase plans will result in ERPOP issuing OP Units to EQR on a one-for-one basis with ERPOP receiving the net cash proceeds of such issuances.

On June 16, 2011, the shareholders of EQR approved the Company’s 2011 Share Incentive Plan, as amended (the “2011 Plan”). The 2011 Plan originally reserved 12,980,741 Common Shares for issuance, which was subsequently adjusted to 14,725,321 Common Shares in accordance with the provisions of the 2011 Plan as a result of the option adjustments required for the special dividends paid in conjunction with the Starwood Transaction. In conjunction with the approval of the 2011 Plan, no further awards may be granted under the 2002 Share Incentive Plan. The 2011 Plan expires on June 16, 2021. As of December 31, 2017, 6,913,246 shares were available for future issuance.

Pursuant to the 2011 Plan and the 2002 Share Incentive Plan, as restated and amended (collectively the “Share Incentive Plans”), officers, trustees and key employees of the Company may be granted share options to acquire Common Shares (“Options”) including non-qualified share options (“NQSOs”), incentive share options (“ISOs”) and share appreciation rights (“SARs”), or may be granted restricted or non-restricted shares/units (including long-term incentive plan awards), subject to conditions and restrictions as described in the Share Incentive Plans. Options, SARs, restricted shares (including long-term incentive plan awards) and restricted units (including long-term incentive plan awards) are sometimes collectively referred to herein as “Awards”. The 2002 Share Incentive Plan, as restated and amended, will terminate at such time as all outstanding Awards have expired or have been exercised/vested. The Board of Trustees may at any time amend or terminate the Share Incentive Plans, but termination will not affect Awards previously granted. Any Options which had vested prior to such a termination would remain exercisable by the holder.

The Options are generally granted at the fair market value of the Company’s Common Shares at the date of grant, vest in three equal installments over a three-year period, are exercisable upon vesting and expire ten years from the date of grant (see additional valuation discussion in Note 2). The exercise price for all Options under the Share Incentive Plans is equal to the fair market value of the underlying Common Shares at the time the Option is granted. If employment is terminated prior to vesting, the Options are generally canceled. Options exercised result in new Common Shares being issued on the open market.

F-53

Restricted shares are generally granted at the fair market value of the Company’s Common Shares at the date of grant. Restricted shares that have been awarded through December 31, 2017 generally vest three years from the award date. In addition, the Company’s unvested restricted shareholders have the same voting rights as any other Common Share holder. During the three-year period of restriction, the Company’s unvested restricted shareholders receive quarterly dividend payments on their shares at the same rate and on the same date as any other Common Share holder. As a result, dividends paid on unvested restricted shares are included as a component of retained earnings (included in general partner’s capital in the Operating Partnership’s financial statements) and have not been considered in reducing net income available to Common Shares/Units in a manner similar to the Company’s preferred share/preference unit dividends for the earnings per share/Unit calculation. If employment is terminated prior to the lapsing of the restriction, the shares are generally canceled.

Restricted units are a class of partnership interests that under certain conditions, including vesting, are convertible by the holder into an equal number of OP Units, which are redeemable by the holder for Common Shares on a one-for-one basis or the cash value of such shares at the option of the Company. In connection with the grant of long-term incentive compensation for services provided during a year, officers of the Company are allowed to choose between restricted shares and restricted units. In January 2011, March 2014 and June 2015, certain holders of restricted shares converted these shares into restricted units. Restricted units are generally granted at a 3% discount to the fair market value of the Company’s Common Shares at the date of grant due to the book-up risk associated with restricted units (see below for more details) and generally vest three years from the award date. In addition, restricted unit holders receive quarterly dividend payments on their restricted units at the same rate and on the same date as any other OP Unit holder. As a result, dividends paid on restricted units are included as a component of Noncontrolling Interests – Operating Partnership/Limited Partners’ capital and have not been considered in reducing net income available to Common Shares/Units in a manner similar to the Company’s preferred share/preference unit dividends for the earnings per share/Unit calculation. If employment is terminated prior to vesting, the restricted units are generally canceled. A restricted unit will automatically convert to an OP Unit when the capital account of each restricted unit increases (“books-up”) to a specified target. If the capital target is not attained within ten years following the date of issuance, the restricted unit will automatically be canceled and no compensation will be payable to the holder of such canceled restricted unit.

The Company also allows eligible employees the ability to receive immediately vested Options and allows officers the ability to receive immediately vested restricted units (subject to the book-up provisions described above and a two-year hold restriction) in-lieu of any percentage of their annual cash bonus.

In January 2015, the Company revised its executive compensation program for the Chairman, Chief Executive Officer and certain other Executive Officers. The long-term portion of the revised program will allow these individuals to earn from 0% to 200% of the target number of long-term incentive (“LTI”) plan awards, payable in the form of restricted shares and/or restricted units, as determined by the Company’s relative and absolute Total Shareholder Return (“TSR”) over a forward-looking three-year performance period. The Company’s TSR will be compared to pre-established quantitative performance metrics. In connection with the grant of LTI plan awards, the individuals are allowed to choose between restricted shares and restricted units. The grant date fair value of the awards is estimated using a Monte Carlo model, and the resulting expense is recorded regardless of whether the TSR performance measures are achieved, if the required service is delivered. These awards generally vest three years from the award date. The grant date fair value is amortized into expense over the service period. If the executive is retirement-eligible, the grant date fair value is amortized into expense over the first year. All other awards are amortized into expense over the three year performance/vesting period. In addition, the awards granted as restricted units will receive quarterly partial dividend payments equal to 10% of any common share dividend on the same date as any other OP Unit holder during the three-year performance period. As a result, dividends paid on restricted units are included as a component of Noncontrolling Interests – Operating Partnership/Limited Partners’ capital and have not been considered in reducing net income available to Common Shares/Units in a manner similar to the Company’s preferred share/preference unit dividends for the earnings per share/Unit calculation. The awards granted as restricted shares will not receive dividends during the three-year performance period. At the end of the three-year performance period, cumulative dividends will be paid for the three-year performance period for any restricted shares or restricted units actually earned, less any dividends already paid on the restricted units. If employment is terminated prior to vesting, the restricted shares and restricted units are generally canceled. Once the Company’s absolute and relative TSR is calculated at the end of the three-year performance period, the executive will earn a certain number of restricted shares and/or restricted units. No payout would be made for any return below 50% of the target performance metric.

All Trustees, with the exception of the Company’s non-executive Chairman and employee Trustees, are granted options, restricted shares and/or restricted units that vest one-year from the grant date that corresponds to the term for which he or she has been elected to serve. The non-executive Chairman only receives awards under the LTI plan (see further discussion above).

The Company’s Share Incentive Plans provide for certain benefits upon retirement. For employees hired prior to January 1, 2009, retirement generally means the termination of employment (other than for cause): (i) on or after age 62; or (ii) prior to age 62 after meeting the requirements of the Rule of 70 (described below). For employees hired after January 1,

F-54

2009, retirement generally means the termination of employment (other than for cause) after meeting the requirements of the Rule of 70. For Trustees, retirement generally means termination of service on the Board (other than for cause) on or after age 72.

The Rule of 70 is met when an employee’s years of service with the Company (which must be at least 15 years) plus his or her age (which must be at least 55 years) on the date of termination equals or exceeds 70 years. In addition, the employee must give the Company at least 6 months’ advance written notice of his or her intention to retire and sign a release upon termination of employment, releasing the Company from customary claims and agreeing to ongoing non-competition and employee non-solicitation provisions.

Under the Company’s definitions of retirement, several of its executive officers, including its Chief Executive Officer, and its non-executive Chairman, are retirement eligible.

For employees hired prior to January 1, 2009 who retire at or after age 62 (or for Trustees who retire at or after age 72), such employee’s or Trustee’s unvested restricted shares, restricted units and share options would immediately vest, and share options would continue to be exercisable for the balance of the applicable ten-year option period, as is provided under the Share Incentive Plans. For all other employees (those hired after January 1, 2009 and those hired before such date who choose to retire prior to age 62), upon such retirement under the Rule of 70 definition of retirement of employees, such employee’s unvested restricted shares, restricted units and share options would continue to vest per the original vesting schedule (subject to immediate vesting upon the occurrence of a subsequent change in control of the Company or the employee’s death), and options would continue to be exercisable for the balance of the applicable ten-year option period, subject to the employee’s compliance with the non-competition and employee non-solicitation provisions. The Rule of 70 does not apply to Trustees. For the individuals mentioned above who receive awards under the LTI plan and retire at or after age 62 (age 72 for the Chairman of the Board) or under the Rule of 70, the award would be prorated in proportion to the number of days worked in the first year of the three-year performance period and the award would continue to vest per the original vesting schedule, subject to the individual’s compliance with the non-competition and employee non-solicitation provisions. The individual would not receive any payout of shares or units until the final payout is determined at the end of the three-year performance period. If an employee violates the non-competition and employee non-solicitation provisions after such retirement, all unvested restricted shares, unvested restricted units and unvested and vested share options at the time of the violation would be void, unless otherwise determined by the Compensation Committee of the Board of Trustees.

The following tables summarize compensation information regarding the restricted shares, restricted units, share options and Employee Share Purchase Plan (“ESPP”) for the three years ended December 31, 2017, 2016 and 2015 (amounts in thousands):

Year Ended December 31, 2017
Compensation ExpenseCompensation CapitalizedRestricted Units/Options In-Lieu of Bonus (1)Compensation EquityDividends Incurred
Restricted shares (2)$9,209$568$—$9,777$761
Restricted units (2)10,21411919010,523741
Share options4,8933231,6196,835—
ESPP discount68166—747—
Total$24,997$1,076$1,809$27,882$1,502
Year Ended December 31, 2016
Compensation ExpenseCompensation CapitalizedRestricted Units In-Lieu of Bonus (1)Compensation EquityDividends Incurred
Restricted shares (2)$13,539$1,477$—$15,016$6,494
Restricted units (2)13,5675914,02218,1807,762
Share options2,839593—3,432—
ESPP discount58565—650—
Total$30,530$2,726$4,022$37,278$14,256
Year Ended December 31, 2015
Compensation ExpenseCompensation CapitalizedRestricted Units In-Lieu of Bonus (1)Compensation EquityDividends Incurred
Restricted shares (2)$13,755$1,311$—$15,066$1,160
Restricted units (2)17,3115383,65421,5031,619
Share options2,7461,010—3,756—
ESPP discount79589—884—
Total$34,607$2,948$3,654$41,209$2,779

F-55

(1)Beginning in 2015, the Company allows officers the ability to receive immediately vested restricted units (subject to the book-up provisions described above and a two-year hold restriction) in-lieu of any percentage of their annual cash bonus. Beginning in 2017, the Company allows eligible employees the ability to receive immediately vested share options in-lieu of any percentage of their annual cash bonus.
(2)Includes LTI plan awards granted under the executive compensation program.

Compensation expense is generally recognized for Awards as follows:

•Restricted shares, restricted units and share options – Straight-line method over the vesting period of the options, shares or units regardless of cliff or ratable vesting distinctions.
•LTI plan awards – Target amount is recognized under the straight-line method over the vesting period of the shares or units regardless of cliff or ratable vesting distinctions.
•ESPP discount – Immediately upon the purchase of common shares each quarter.

The Company accelerates the recognition of compensation expense for all Awards for those individuals approaching or meeting the retirement age criteria discussed above. The total compensation expense related to Awards not yet vested at December 31, 2017 is $7.3 million (excluding the accelerated expenses for individuals approaching or meeting the retirement age criteria discussed above), which is expected to be recognized over a weighted average term of 1.31 years.

See Note 2 for additional information regarding the Company’s share-based compensation.

The table below summarizes the Award activity of the Share Incentive Plans for the three years ended December 31, 2017, 2016 and 2015:

Common Shares Subject to OptionsWeighted Average Exercise Price per OptionRestricted SharesWeighted Average Fair Value per Restricted ShareRestricted UnitsWeighted Average Fair Value per Restricted Unit
Balance at December 31, 20147,030,620$46.16482,466$56.89623,948$53.38
Awards granted (1) (5)171,150$80.15174,112$79.65337,505$81.87
Awards exercised/vested (2) (3) (4)(1,456,363)$42.64(127,174)$60.21(72,003)$57.12
Awards forfeited(9,550)$64.53(5,970)$62.11(2,009)$64.39
Awards expired(1,492)$39.86————
Conversion of restricted shares to restricted units——(1,284)—1,284—
Balance at December 31, 20155,734,365$48.04522,150$63.67888,725$63.91
Awards granted (1) (5)154,016$64.99154,296$75.19289,273$81.05
Awards exercised/vested (2) (3) (4)(815,044)$38.01(217,805)$57.75(374,217)$52.73
Awards forfeited(10,512)$63.43(6,607)$70.73(1,524)$86.35
Awards expired(710)$68.40————
Special dividend adjustment (6)960,986N/A————
Balance at December 31, 20166,023,101$42.05452,034$70.35802,257$75.26
Awards granted (1) (5)1,337,898$60.8893,867$61.94291,921$68.57
Awards exercised/vested (2) (3) (4)(846,137)$37.26(165,744)$58.04(192,644)$54.16
Awards forfeited(27,547)$61.85(10,416)$72.44(274)$75.50
Awards expired(3,483)$65.91————
Balance at December 31, 20176,483,832$46.46369,741$73.67901,260$77.61
(1)The weighted average grant date fair value for Options granted during the years ended December 31, 2017, 2016 and 2015 was $5.86 per share, $11.09 per share and $13.67 per share, respectively.
(2)The aggregate intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was $25.6 million, $26.2 million and $52.9 million, respectively. These values were calculated as the difference between the strike price of the underlying awards and the per share price at which each respective award was exercised.
(3)The fair value of restricted shares vested during the years ended December 31, 2017, 2016 and 2015 was $10.2 million, $15.6 million and $10.2 million, respectively.
(4)The fair value of restricted units vested during the years ended December 31, 2017, 2016 and 2015 was $11.7 million, $27.2 million and $5.8 million, respectively.
(5)Includes LTI plan awards granted under the executive compensation program.
(6)In addition to the regular quarterly dividends, the Company paid two special dividends to its shareholders and holders of OP Units of $11.00 per share/unit in the aggregate in 2016. Option holders were not entitled to these special dividends, but pursuant to the terms of the Share Incentive Plans are due equitable adjustments of additional options. The special dividend adjustment’s

F-56

weighted average exercise price per option is reflected in the activity for 2016 for the awards granted, awards exercised/vested, and awards forfeited and the balance at December 31, 2016.

The following table summarizes information regarding options outstanding and exercisable at December 31, 2017 (aggregate intrinsic value is in thousands):

OptionsWeighted Average Remaining Contractual Life in YearsWeighted Average Exercise PriceAggregate Intrinsic Value (1)
Options Outstanding6,483,8324.96$46.06$113,379
Options Exercisable5,336,0434.10$43.24$110,332
Vested and expected to vest6,413,8172.80$34.39$113,201
(1)The aggregate intrinsic values were calculated as the excess, if any, between the Company’s closing share price of $63.77 per share on December 31, 2017 and the strike price of the underlying awards.

As of December 31, 2016 and 2015, 5,610,677 Options (with a weighted average exercise price of $40.91) and 4,436,990 Options (with a weighted average exercise price of $45.11) were exercisable, respectively.

13.Employee Plans

The Company established an Employee Share Purchase Plan to provide each employee and trustee the ability to annually acquire up to $100,000 of Common Shares of EQR. The Company registered 7,000,000 Common Shares under the ESPP, of which 2,837,877 Common Shares remained available for purchase at December 31, 2017. The Common Shares may be purchased quarterly at a price equal to 85% of the lesser of: (a) the closing price for a share on the last day of such quarter; and (b) the greater of: (i) the closing price for a share on the first day of such quarter, and (ii) the average closing price for a share for all the business days in the quarter. The following table summarizes information regarding the Common Shares issued under the ESPP (the net proceeds noted below were contributed to ERPOP in exchange for OP Units):

Year Ended December 31,
201720162015
(Amounts in thousands except share and per share amounts)
Shares issued68,28663,90968,462
Issuance price ranges$52.79 – $58.06$51.85 – $63.37$63.70 – $65.90
Issuance proceeds$3,744$3,686$4,404

The Company established a defined contribution plan (the “401(k) Plan”) to provide retirement benefits for employees that meet minimum employment criteria. The Company matches dollar for dollar up to the first 4% of eligible compensation that a participant contributes to the 401(k) Plan for all employees except those defined as highly compensated employees, whose match is 3%. Participants are vested in the Company’s contributions over five years. The Company recognized an expense in the amount of $4.6 million, $4.9 million and $5.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The Company established the SERP to provide certain officers and trustees an opportunity to defer a portion of their eligible compensation in order to save for retirement. The SERP is restricted to investments in Common Shares, certain marketable securities that have been specifically approved and cash equivalents. The deferred compensation liability represented in the SERP and the securities issued to fund such deferred compensation liability are consolidated by the Company and carried on the Company’s balance sheets, and the Company’s Common Shares held in the SERP are accounted for as a reduction to paid in capital (included in general partner’s capital in the Operating Partnership’s financial statements).

14.Distribution Reinvestment Plan

On September 30, 2014, the Company filed with the SEC a Form S-3 Registration Statement to register 4,790,000 Common Shares pursuant to a Distribution Reinvestment Plan (the “2014 DRIP”), which included the remaining shares available for issuance under a previous registration. The registration was automatically declared effective the same day and will expire when all 4,790,000 shares have been issued. The Company has 4,691,298 Common Shares available for issuance under the 2014 DRIP at December 31, 2017.

The 2014 DRIP provides holders of record and beneficial owners of Common Shares and Preferred Shares with a simple and convenient method of reinvesting cash dividends/distributions in additional Common Shares. Common Shares purchased

F-57

under the 2014 DRIP may, at the option of EQR, be directly issued by EQR or purchased by EQR’s transfer agent in the open market using participants’ funds. The net proceeds from any Common Share issuances are contributed to ERPOP in exchange for OP Units.

15.Transactions with Related Parties

The Company leases its corporate headquarters from an entity controlled by EQR’s Chairman of the Board of Trustees. The lease terminates on January 31, 2022. Amounts incurred for such office space for the years ended December 31, 2017, 2016 and 2015, respectively, were approximately $2.8 million, $2.7 million and $2.6 million. The Company believes these amounts equal market rates for such rental space.

16.Commitments and Contingencies

The Company, as an owner of real estate, is subject to various Federal, state and local environmental laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future. As of December 31, 2017, the Company does have environmental reserves totaling approximately $2.8 million related to two of its properties.

The Company has established a reserve related to various litigation matters associated with its Massachusetts properties and periodically assesses the adequacy of the reserve and makes adjustments as necessary. As of December 31, 2017, the reserve totaled approximately $0.9 million. While no assurances can be given, the Company does not believe that the ultimate resolution of any of these remaining litigation matters, if adversely determined, would have a material adverse effect on the Company.

The Company does not believe there is any litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company.

As of December 31, 2017, the Company has four wholly owned projects totaling 892 apartment units in various stages of development with remaining commitments to fund of approximately $136.1 million and estimated completion dates ranging through December 31, 2019, as well as other completed development projects that are in various stages of lease-up or are stabilized.

As of December 31, 2017, the Company has two unconsolidated operating properties (Nexus Sawgrass and Domain) that are owned with the same third party joint venture partner. The joint venture agreements with this partner are primarily deal-specific regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions. The buy-sell arrangements contain provisions that provide the right, but not the obligation, for the Company to acquire the partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events described in the joint venture agreements. See Note 6 for further discussion.

During the years ended December 31, 2017, 2016 and 2015, total operating lease expense for ground leases and office space, including a portion of real estate taxes, insurance, repairs and utilities, aggregated $26.6 million, $26.2 million and $24.5 million, respectively.

The Company has entered into a retirement benefits agreement with its Chairman of the Board of Trustees and deferred compensation agreements with its Vice Chairman and one former chief executive officer. During the years ended December 31, 2017, 2016 and 2015, the Company recognized compensation expense of $0.4 million, $0.3 million and $0.4 million, respectively, related to these agreements.

The following table summarizes the Company’s contractual obligations for minimum rent payments under operating leases and deferred compensation for the next five years and thereafter as of December 31, 2017:

(Payments)/Receipts Due by Year (in thousands)
20182019202020212022ThereafterTotal
Operating Leases:
Minimum Rent Payments (a)$(16,506)$(16,366)$(15,963)$(15,743)$(13,406)$(878,935)$(956,919)
Minimum Rent Receipts (b)$67,318$61,704$57,913$53,851$49,951$206,151$496,888
Other Long-Term Liabilities:
Deferred Compensation (c)$(1,390)$(1,135)$(1,086)$(1,086)$(1,086)$(4,016)$(9,799)

F-58

(a)Minimum basic rent due for various office space the Company leases and fixed base rent due on ground leases for 12 properties.
(b)Minimum basic rent receipts due for various retail/commercial space where the Company is the lessor.
(c)Estimated payments to the Company’s Chairman, Vice Chairman and one former CEO based on actual and estimated retirement dates.
17.Reportable Segments

Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker decides how resources are allocated and assesses performance on a recurring basis at least quarterly.

The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company’s operating performance geographically by market and both on a same store and non-same store basis. The Company’s same store operating segments located in its coastal gateway markets represent its reportable segments. The Company’s operating segments located in its other markets (Phoenix) that are not material have also been included in the tables presented below.

The Company’s fee and asset management and development activities are other business activities that do not constitute an operating segment and as such, have been aggregated in the “Other” category in the tables presented below.

All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the three years ended December 31, 2017, 2016 or 2015.

The primary financial measure for the Company’s rental real estate segment is net operating income (“NOI”), which represents rental income less: 1) property and maintenance expense and 2) real estate taxes and insurance expense (all as reflected in the accompanying consolidated statements of operations and comprehensive income). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties. Revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

The following table presents a reconciliation of NOI from our rental real estate specific to continuing operations for the years ended December 31, 2017, 2016 and 2015, respectively (amounts in thousands):

Year Ended December 31,
201720162015
Rental income$2,470,689$2,422,233$2,736,578
Property and maintenance expense(405,281)(406,823)(479,160)
Real estate taxes and insurance expense(335,495)(317,387)(339,802)
Total operating expenses(740,776)(724,210)(818,962)
Net operating income$1,729,913$1,698,023$1,917,616

F-59

The following tables present NOI for each segment from our rental real estate specific to continuing operations for the years ended December 31, 2017, 2016 and 2015, respectively, as well as total assets and capital expenditures at December 31, 2017 and 2016, respectively (amounts in thousands):

Year Ended December 31, 2017Year Ended December 31, 2016Year Ended December 31, 2015
Rental IncomeOperating ExpensesNOIRental IncomeOperating ExpensesNOIRental IncomeOperating ExpensesNOI
Same store (1)
Los Angeles$396,375$111,854$284,521$382,425$111,055$271,370$349,285$104,614$244,671
Orange County88,52721,54466,98384,59020,60063,99075,06818,55056,518
San Diego88,50723,07365,43484,64622,36662,28083,49122,93860,553
Subtotal - Southern California573,409156,471416,938551,661154,021397,640507,844146,102361,742
Washington D.C.430,056129,717300,339424,350126,154298,196417,985123,450294,535
New York457,100165,173291,927456,664159,302297,362450,460152,682297,778
San Francisco378,93991,777287,162371,63390,393281,240343,08984,603258,486
Boston228,72463,148165,576225,01462,650162,364232,46267,252165,210
Seattle178,49749,383129,114168,97546,255122,720145,64639,307106,339
Other Markets1,8396521,1871,7975671,2301,6805281,152
Total same store2,248,564656,3211,592,2432,200,094639,3421,560,7522,099,166613,9241,485,242
Non-same store/other (2) (3)
Non-same store207,97472,723135,251117,14341,87775,26672,12327,07845,045
Other (3)14,15111,7322,419104,99642,99162,005565,289177,960387,329
Total non-same store/other222,12584,455137,670222,13984,868137,271637,412205,038432,374
Totals$2,470,689$740,776$1,729,913$2,422,233$724,210$1,698,023$2,736,578$818,962$1,917,616
(1)For the years ended December 31, 2017 and 2016, same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2016, less properties subsequently sold, which represented 70,117 apartment units. For the year ended December 31, 2015, same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2015, less properties subsequently sold, which represented 69,879 apartment units.
(2)For the years ended December 31, 2017 and 2016, non-same store primarily includes properties acquired after January 1, 2016, plus any properties in lease-up and not stabilized as of January 1, 2016. For the year ended December 31, 2015, non-same store primarily includes properties acquired after January 1, 2015, plus any properties in lease-up and not stabilized as of January 1, 2015.
(3)Other includes development, other corporate operations and operations prior to sale for properties sold from 2014 through 2017 that do not meet the discontinued operations criteria.
Year Ended December 31, 2017Year Ended December 31, 2016
Total AssetsCapital ExpendituresTotal AssetsCapital Expenditures
Same store (1)
Los Angeles$2,601,569$26,679$2,678,787$26,335
Orange County328,5939,237336,1956,876
San Diego421,2674,922436,0054,851
Subtotal - Southern California3,351,42940,8383,450,98738,062
Washington D.C.3,803,18535,4233,916,26433,867
New York4,123,84132,2094,256,08725,171
San Francisco2,467,87238,3922,521,72924,455
Boston1,653,99728,6961,702,67518,396
Seattle1,165,03121,4791,191,59114,019
Other Markets12,76810312,90267
Total same store16,578,123197,14017,052,235154,037
Non-same store/other (2) (3)
Non-same store3,221,4684,8492,727,87510,965
Other (3)771,008618924,0387,175
Total non-same store/other3,992,4765,4673,651,91318,140
Totals$20,570,599$202,607$20,704,148$172,177
(1)Same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2016, less properties subsequently sold, which represented 70,117 apartment units.
(2)Non-same store primarily includes properties acquired after January 1, 2016, plus any properties in lease-up and not stabilized as of January 1, 2016.
(3)Other includes development, other corporate operations and capital expenditures for properties sold.

F-60

18.Subsequent Events/Other

Subsequent Events

Subsequent to December 31, 2017, the Company:

•Sold two partially owned properties consisting of 331 apartment units for $113.0 million;
•Entered into $250.0 million of forward starting swaps to hedge changes in interest rates related to future secured or unsecured debt issuances;
•Repaid $550.0 million of 6.08% mortgage debt prior to the March 1, 2020 maturity date, incurred a prepayment penalty of approximately $22.1 million and wrote-off unamortized deferred financing costs of approximately $0.4 million;
•Repaid $43.4 million of 5.75% mortgage debt prior to the April 1, 2018 maturity date;
•Issued $500.0 million of ten-year 3.50% unsecured notes, receiving net proceeds of approximately $497.0 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of 3.61%; and
•Received approximately $1.6 million to settle two forward starting swaps in conjunction with the issuance of the $500.0 million unsecured notes discussed above.

Other

During the year ended December 31, 2014, the Operating Partnership issued the 3.00% Series P Cumulative Redeemable Preference Units with a liquidation value of approximately $18.4 million in conjunction with the buyout of its partner’s 95% interest in a previously unconsolidated development property. The Series P Preference Units were classified as a liability due in part to the fact that the holder could put the units back to the Operating Partnership for cash. Dividends were paid quarterly on the Series P Preference Units. During the year ended December 31, 2016, the Company purchased all of the issued and outstanding Series P Preference Units at a par value of $18.4 million and retired these units in conjunction with the purchase. In conjunction with this transaction, the Company reduced other liabilities by $18.4 million.

During the year ended December 31, 2016, the Company sold its entire interest in the management contracts and related rights associated with the military housing ventures at Joint Base Lewis McChord consisting of 5,161 apartment units for approximately $63.3 million and recognized a gain on sale of approximately $52.4 million, which is included in interest and other income in the accompanying consolidated statements of operations and comprehensive income.

19.Quarterly Financial Data (Unaudited)

Equity Residential

The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. Amounts are in thousands, except for per share amounts.

First QuarterSecond QuarterThird QuarterFourth Quarter
20173/316/309/3012/31
Total revenues$604,100$612,480$624,122$630,704
Operating income204,371210,550217,786214,764
Income from continuing operations149,941204,160144,196130,084
Net income *149,941204,160144,196130,084
Net income available to Common Shares142,969195,268137,457124,669
Earnings per share – basic:
Net income available to Common Shares$0.39$0.53$0.37$0.34
Weighted average Common Shares outstanding366,605366,820366,996367,442
Earnings per share – diluted:
Net income available to Common Shares$0.39$0.53$0.37$0.34
Weighted average Common Shares outstanding382,280382,692382,945383,105

F-61

First QuarterSecond QuarterThird QuarterFourth Quarter
20163/316/309/3012/31
Total revenues$619,083$595,154$606,074$605,489
Operating income216,625206,018209,373224,070
Income from continuing operations3,731,988228,365217,246301,987
Discontinued operations, net(157)35246394
Net income *3,731,831228,400217,492302,381
Net income available to Common Shares3,586,985218,067207,543276,477
Earnings per share – basic:
Net income available to Common Shares$9.84$0.60$0.57$0.76
Weighted average Common Shares outstanding364,592365,047365,109365,256
Earnings per share – diluted:
Net income available to Common Shares$9.76$0.59$0.56$0.75
Weighted average Common Shares outstanding382,243382,065382,373381,860
  • The Company did not have any extraordinary items or cumulative effect of change in accounting principle during the years ended December 31, 2017 and 2016. Therefore, income before extraordinary items and cumulative effect of change in accounting principle is not shown as it was equal to the net income amounts disclosed above.

ERP Operating Limited Partnership

The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. Amounts are in thousands, except for per Unit amounts.

First QuarterSecond QuarterThird QuarterFourth Quarter
20173/316/309/3012/31
Total revenues$604,100$612,480$624,122$630,704
Operating income204,371210,550217,786214,764
Income from continuing operations149,941204,160144,196130,084
Net income *149,941204,160144,196130,084
Net income available to Units148,380202,622142,623129,342
Earnings per Unit – basic:
Net income available to Units$0.39$0.53$0.37$0.34
Weighted average Units outstanding379,504379,733379,906380,325
Earnings per Unit – diluted:
Net income available to Units$0.39$0.53$0.37$0.34
Weighted average Units outstanding382,280382,692382,945383,105
First QuarterSecond QuarterThird QuarterFourth Quarter
20163/316/309/3012/31
Total revenues$619,083$595,154$606,074$605,489
Operating income216,625206,018209,373224,070
Income from continuing operations3,731,988228,365217,246301,987
Discontinued operations, net(157)35246394
Net income *3,731,831228,400217,492302,381
Net income available to Units3,730,294226,847215,896287,546
Earnings per Unit – basic:
Net income available to Units$9.84$0.60$0.57$0.76
Weighted average Units outstanding378,289378,934379,008379,081
Earnings per Unit – diluted:
Net income available to Units$9.76$0.59$0.56$0.75
Weighted average Units outstanding382,243382,065382,373381,860
  • The Operating Partnership did not have any extraordinary items or cumulative effect of change in accounting principle during the years ended December 31, 2017 and 2016. Therefore, income before extraordinary items and cumulative effect of change in accounting principle is not shown as it was equal to the net income amounts disclosed above.

F-62

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

Overall Summary

December 31, 2017

Properties (H)Apartment Units (H)Investment in Real Estate, GrossAccumulated DepreciationInvestment in Real Estate, NetEncumbrances (1)
Wholly Owned Unencumbered21555,954$19,776,737,815$(4,363,244,353)$15,413,493,462$—
Wholly Owned Encumbered7118,4975,600,381,309(1,440,591,113)4,159,790,1963,316,375,422
Wholly Owned Properties28674,45125,377,119,124(5,803,835,466)19,573,283,6583,316,375,422
Partially Owned Unencumbered91,527289,986,862(108,651,639)181,335,223—
Partially Owned Encumbered81,688359,790,405(127,891,086)231,899,319302,346,576
Partially Owned Properties173,215649,777,267(236,542,725)413,234,542302,346,576
Total Unencumbered Properties22457,48120,066,724,677(4,471,895,992)15,594,828,685—
Total Encumbered Properties7920,1855,960,171,714(1,568,482,199)4,391,689,5153,618,721,998
Total Consolidated Investment in Real Estate30377,666$26,026,896,391$(6,040,378,191)$19,986,518,200$3,618,721,998
(1)See attached Encumbrances Reconciliation.

S-1

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

Encumbrances Reconciliation

December 31, 2017

Portfolio/Entity EncumbrancesNumber of Properties Encumbered bySee Properties With Note:Amount
EQR-Wellfan 2008 LP (R)10I$549,547,007
Archstone Master Property Holdings LLC13J797,306,782
Portfolio/Entity Encumbrances231,346,853,789
Individual Property Encumbrances2,271,868,209
Total Encumbrances per Financial Statements$3,618,721,998

S-2

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III – Real Estate and Accumulated Depreciation

(Amounts in thousands)

The changes in total real estate for the years ended December 31, 2017, 2016 and 2015 are as follows:

201720162015
Balance, beginning of year$25,386,425$28,542,697$27,675,383
Acquisitions and development710,960832,803964,645
Improvements204,113174,981186,104
Dispositions and other(274,602)(4,164,056)(283,435)
Balance, end of year (1)$26,026,896$25,386,425$28,542,697

The changes in accumulated depreciation for the years ended December 31, 2017, 2016 and 2015 are as follows:

201720162015
Balance, beginning of year$5,360,389$6,084,616$5,432,805
Depreciation743,749705,649765,895
Dispositions and other(63,760)(1,429,876)(114,084)
Balance, end of year (1)$6,040,378$5,360,389$6,084,616
(1)Balances at December 31, 2015 include assets classified as real estate held for sale.

S-3

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

DescriptionInitial Cost to CompanyCost Capitalized Subsequent to Acquisition (Improvements, net) (E)Gross Amount Carried at Close of Period 12/31/17
Apartment NameLocationRetail/ Commercial SpaceDate of ConstructionApartment Units (H)LandBuilding & FixturesBuilding & FixturesLandBuilding & Fixtures (A)Total (B)Accumulated Depreciation (C)Investment in Real Estate, Net at 12/31/17Encumbrances
Wholly Owned Unencumbered:
100 K StreetWashington, D.C.—(F)—$15,600,000$30,003,159$—$15,600,000$30,003,159$45,603,159$—$45,603,159$—
140 Riverside BoulevardNew York, NYG2003354103,539,10094,082,7258,607,947103,539,100102,690,672206,229,772(44,828,691)161,401,081—
160 Riverside BoulevardNew York, NYG2001455139,933,500190,964,74514,965,349139,933,500205,930,094345,863,594(89,280,987)256,582,607—
170 AmsterdamNew York, NYG2015236—112,081,768135,722—112,217,490112,217,490(11,505,275)100,712,215—
175 KentBrooklyn, NYG201111322,037,83153,962,1691,534,41922,037,83155,496,58877,534,419(14,450,457)63,083,962—
180 Montague (fka Brooklyn Heights)Brooklyn, NYG200019332,400,00092,675,2283,547,99632,400,00096,223,224128,623,224(20,134,074)108,489,150—
180 Riverside BoulevardNew York, NYG1998516144,968,250138,346,68112,874,009144,968,250151,220,690296,188,940(67,181,115)229,007,825—
1111 Belle Pre (fka The Madison)Alexandria, VAG201436018,937,70294,759,478148,95418,937,70294,908,432113,846,134(17,565,898)96,280,236—
1210 MassWashington, D.C.G20041449,213,51336,559,1892,403,4799,213,51338,962,66848,176,181(16,940,349)31,235,832—
1401 E. MadisonSeattle, WAG(F)—10,401,9587,932,051—10,401,9587,932,05118,334,009—18,334,009—
1500 Mass AveWashington, D.C.G195155654,638,29840,361,70214,859,23754,638,29855,220,939109,859,237(24,493,269)85,365,968—
1800 Oak (fka Rosslyn)Arlington, VAG200331431,400,000109,005,7343,172,46431,400,000112,178,198143,578,198(23,997,938)119,580,260—
2201 Pershing DriveArlington, VAG201218811,321,19849,674,1752,176,08911,321,19851,850,26463,171,462(11,636,674)51,534,788—
2201 WilsonArlington, VAG200021921,900,00078,724,6633,493,73121,900,00082,218,394104,118,394(17,067,795)87,050,599—
2400 M StWashington, D.C.G200635930,006,593114,013,7854,296,31430,006,593118,310,099148,316,692(49,487,043)98,829,649—
249 Third Street (fka Kendall Square II)Cambridge, MAG(F)—4,603,3264,330,982—4,603,3264,330,9828,934,308—8,934,308—
315 on ABoston, MAG201320214,450,070115,824,930623,40214,450,070116,448,332130,898,402(14,489,301)116,409,101—
340 Fremont (fka Rincon Hill)San Francisco, CA—201634842,000,000247,606,6314,55142,000,000247,611,182289,611,182(14,159,585)275,451,597—
3003 Van Ness (fka Van Ness)Washington, D.C.—197062556,300,000141,191,5805,117,96656,300,000146,309,546202,609,546(33,088,622)169,520,924—
45 Worthington (CityView II)Boston, MA—(F)——2,349,475——2,349,4752,349,475—2,349,475—
420 East 80th StreetNew York, NY—196115539,277,00023,026,9844,675,29339,277,00027,702,27766,979,277(13,594,720)53,384,557—
425 MassWashington, D.C.G200955928,150,000138,600,0003,974,85628,150,000142,574,856170,724,856(44,144,101)126,580,755—
455 Eye StreetWashington, D.C.G201717411,941,40761,030,786—11,941,40761,030,78672,972,193(1,082,263)71,889,930—
4701 WillardChevy Chase, MDG196651776,921,130153,947,68229,902,77576,921,130183,850,457260,771,587(50,471,131)210,300,456—
4885 Edgemoor LaneBethesda, MD—(F)——1,958,883——1,958,8831,958,883—1,958,883—
4th and HillLos Angeles, CA—(F)—13,131,45613,790,436—13,131,45613,790,43626,921,892—26,921,892—
600 WashingtonNew York, NYG200413532,852,00043,140,551870,87132,852,00044,011,42276,863,422(19,355,357)57,508,065—
660 Washington (fka Boston Common)Boston, MAG2006420106,100,000166,311,6792,888,133106,100,000169,199,812275,299,812(35,392,580)239,907,232—
70 GreeneJersey City, NJG201048028,108,899236,763,5531,657,07028,108,899238,420,623266,529,522(65,784,128)200,745,394—
71 BroadwayNew York, NYG199723822,611,60077,492,17114,064,39422,611,60091,556,565114,168,165(43,472,173)70,695,992—
77 BluxomeSan Francisco, CA—20071025,249,12418,609,876402,2015,249,12419,012,07724,261,201(5,178,232)19,082,969—
77 Park Avenue (fka Hoboken)Hoboken, NJG200030127,900,000168,992,4406,060,18627,900,000175,052,626202,952,626(35,032,130)167,920,496—
777 SixthNew York, NYG200229465,352,70665,747,2943,136,35465,352,70668,883,648134,236,354(26,152,102)108,084,252—
88 HillsideDaly City, CAG2011957,786,80031,587,3252,479,1657,786,80034,066,49041,853,290(8,687,690)33,165,600—
855 BrannanSan Francisco, CAG(F)—41,363,921255,551,89524941,363,921255,552,144296,916,065(1,845,523)295,070,542—
AcappellaPasadena, CA—20021435,839,54829,360,4522,048,1855,839,54831,408,63737,248,185(10,041,304)27,206,881—
Acton CourtyardBerkeley, CAG2003715,550,00015,785,509215,3125,550,00016,000,82121,550,821(6,583,929)14,966,892—
Alban TowersWashington, D.C.—193422918,900,00089,794,2013,280,84218,900,00093,075,043111,975,043(18,879,861)93,095,182—
AlboradaFremont, CA—199944224,310,00059,214,1299,118,03124,310,00068,332,16092,642,160(39,048,480)53,593,680—
Altitude (fka Village at Howard Hughes, The (Lots 1 & 2))Los Angeles, CA—201654543,783,485147,964,00661,89943,783,485148,025,905191,809,390(8,474,037)183,335,353—
Alton, The (fka Millikan)Irvine, CA—201734411,049,02795,745,8324,43311,049,02795,750,265106,799,292(3,470,417)103,328,875—
Arbor TerraceSunnyvale, CA—19791759,057,30018,483,6427,806,3359,057,30026,289,97735,347,277(15,015,023)20,332,254—
Artech BuildingBerkeley, CAG2002271,642,0009,152,518493,4781,642,0009,645,99611,287,996(3,706,713)7,581,283—
Artisan on SecondLos Angeles, CA—20081188,000,40036,074,600880,6958,000,40036,955,29544,955,695(10,464,974)34,490,721—
Artistry Emeryville (fka Emeryville)Emeryville, CA—199426112,300,00061,466,2674,320,13412,300,00065,786,40178,086,401(14,859,853)63,226,548—
AtelierBrooklyn, NY—201512032,401,68047,135,432276,20532,401,68047,411,63779,813,317(4,883,375)74,929,942—
Avenue TwoRedwood City, CA—19721237,995,00018,005,0002,027,4227,995,00020,032,42228,027,422(5,941,287)22,086,135—

S-4

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

DescriptionInitial Cost to CompanyCost Capitalized Subsequent to Acquisition (Improvements, net) (E)Gross Amount Carried at Close of Period 12/31/17
Apartment NameLocationRetail/ Commercial SpaceDate of ConstructionApartment Units (H)LandBuilding & FixturesBuilding & FixturesLandBuilding & Fixtures (A)Total (B)Accumulated Depreciation (C)Investment in Real Estate, Net at 12/31/17Encumbrances
Azure (fka Mission Bay-Block 13)San Francisco, CA—201527332,855,115152,627,844141,81332,855,115152,769,657185,624,772(13,532,368)172,092,404—
Bay HillLong Beach, CA—20021607,600,00027,437,2393,327,4007,600,00030,764,63938,364,639(14,290,928)24,073,711—
Beatrice, TheNew York, NYG2010302114,351,405165,648,5951,368,317114,351,405167,016,912281,368,317(40,862,593)240,505,724—
Belle Arts Condominium Homes, LLCBellevue, WA—2000163,158236,1572,09863,158238,255301,413(75,056)226,357—
Belle FontaineMarina Del Rey, CA—20031029,098,80828,701,192771,3869,098,80829,472,57838,571,386(7,870,020)30,701,366—
Breakwater at Marina Del ReyMarina Del Rey, CA—1964-1969224—73,189,2621,974,133—75,163,39575,163,395(17,008,793)58,154,602—
Briarwood (CA)Sunnyvale, CA—19851929,991,50022,247,2783,973,9279,991,50026,221,20536,212,705(16,926,737)19,285,968—
Bridford Lakes IIGreensboro, NC—(F)—200,000——200,000—200,000—200,000—
Brooklyner, The (fka 111 Lawrence)Brooklyn, NYG201049040,099,922221,438,6312,859,81640,099,922224,298,447264,398,369(53,947,636)210,450,733—
C on PicoLos Angeles, CA—20149417,125,76628,074,23463,49317,125,76628,137,72745,263,493(2,749,575)42,513,918—
Carlyle MillAlexandria, VA—200231710,000,00051,367,9138,305,51610,000,00059,673,42969,673,429(30,572,284)39,101,145—
CascadeSeattle, WAG201747723,751,564145,844,715—23,751,564145,844,715169,596,279(2,364,423)167,231,856—
Centennial (fka Centennial Court & Centennial Tower)Seattle, WAG1991/20014089,700,00070,080,37811,471,7519,700,00081,552,12991,252,129(36,965,435)54,286,694—
Centre Club CombinedOntario, CA—1994 & 20024127,436,00033,014,7898,651,6517,436,00041,666,44049,102,440(23,210,064)25,892,376—
Church CornerCambridge, MAG1987855,220,00016,744,6432,757,2805,220,00019,501,92324,721,923(9,327,871)15,394,052—
City Gate at Cupertino (fka Cupertino)Cupertino, CA—199831140,400,00095,937,0467,063,65240,400,000103,000,698143,400,698(21,491,582)121,909,116—
City PointeFullerton, CAG20041836,863,79236,476,2081,132,7816,863,79237,608,98944,472,781(12,911,899)31,560,882—
City Square Bellevue (fka Bellevue)Bellevue, WAG199819115,100,00041,876,2573,341,27615,100,00045,217,53360,317,533(9,816,078)50,501,455—
CityView at LongwoodBoston, MAG197029514,704,89879,195,10212,908,25314,704,89892,103,355106,808,253(29,583,293)77,224,960—
Clarendon, TheArlington, VAG200529230,400,340103,824,6602,206,29830,400,340106,030,958136,431,298(30,102,780)106,328,518—
Cleo, TheLos Angeles, CA—1989926,615,46714,829,3353,872,8246,615,46718,702,15925,317,626(8,706,067)16,611,559—
Connecticut HeightsWashington, D.C.—197451827,600,000114,002,2956,582,33527,600,000120,584,630148,184,630(24,518,831)123,665,799—
Corcoran House at DuPont Circle (fka DuPont Circle)Washington, D.C.G196113813,500,00026,913,1131,863,27313,500,00028,776,38642,276,386(6,924,238)35,352,148—
Courthouse PlazaArlington, VAG1990396—87,386,0245,468,028—92,854,05292,854,052(21,556,859)71,297,193—
Creekside (San Mateo)San Mateo, CA—19851929,606,60021,193,2314,232,3779,606,60025,425,60835,032,208(16,783,870)18,248,338—
Cronins LandingWaltham, MAG199828132,300,00085,119,3246,002,94132,300,00091,122,265123,422,265(19,414,857)104,007,408—
Crystal PlaceArlington, VA—198618117,200,00047,918,9753,541,44317,200,00051,460,41868,660,418(11,376,670)57,283,748—
Eagle CanyonChino Hills, CA—19852521,808,90016,274,3619,576,3781,808,90025,850,73927,659,639(18,419,631)9,240,008—
Edgemont at Bethesda MetroBethesda, MD—198912213,092,55243,907,4481,433,09813,092,55245,340,54658,433,098(11,970,483)46,462,615—
ElevéGlendale, CAG201320814,080,56056,419,440574,83314,080,56056,994,27371,074,833(9,935,529)61,139,304—
Emerson PlaceBoston, MAG196244414,855,00057,566,63627,713,12514,855,00085,279,761100,134,761(55,294,608)44,840,153—
Encore at Sherman Oaks, TheSherman Oaks, CA—19881748,700,00025,446,0031,503,6758,700,00026,949,67835,649,678(8,805,442)26,844,236—
Fountains at Emerald Park (fka Emerald Park)Dublin, CA—200032425,900,00083,986,2171,101,20925,900,00085,087,426110,987,426(18,972,556)92,014,870—
Fremont CenterFremont, CAG200232225,800,00078,753,1143,691,59325,800,00082,444,707108,244,707(18,108,606)90,136,101—
Gallery, TheHermosa Beach, CA—197116918,144,00046,567,9412,765,22918,144,00049,333,17067,477,170(21,549,332)45,927,838—
Garden GarageBoston, MA—(F)——12,858,392——12,858,39212,858,392—12,858,392—
Gateway at Malden CenterMalden, MAG19882039,209,78025,722,66614,271,5359,209,78039,994,20149,203,981(23,167,536)26,036,445—
Geary Court YardSan Francisco, CA—19901641,722,40015,471,4294,981,3891,722,40020,452,81822,175,218(13,455,847)8,719,371—
GirardBoston, MAG2016160—102,450,329412,971—102,863,300102,863,300(2,991,518)99,871,782—
Hampshire PlaceLos Angeles, CA—198925910,806,00030,335,3305,889,19810,806,00036,224,52847,030,528(16,825,383)30,205,145—
Harbor StepsSeattle, WAG200075859,387,158158,829,43228,544,04259,387,158187,373,474246,760,632(80,511,164)166,249,468—
Helios (fka 2nd+Pine)Seattle, WAG201739818,061,674202,039,273—18,061,674202,039,273220,100,947(3,845,290)216,255,657—
Heritage at Stone RidgeBurlington, MA—200518010,800,00031,808,3352,313,53610,800,00034,121,87144,921,871(15,330,866)29,591,005—
Heritage RidgeLynwood, WA—19991976,895,00018,983,5973,339,0626,895,00022,322,65929,217,659(10,066,945)19,150,714—
HesbyNorth Hollywood, CA—201330823,299,892102,700,108575,82723,299,892103,275,935126,575,827(17,235,969)109,339,858—
Highlands at South PlainfieldSouth Plainfield, NJ—200025210,080,00037,526,9121,968,41010,080,00039,495,32249,575,322(17,281,612)32,293,710—
HikariLos Angeles, CAG20071289,435,76032,564,240813,9139,435,76033,378,15342,813,913(9,383,982)33,429,931—
Hudson CrossingNew York, NYG200325923,420,00069,977,6992,333,44923,420,00072,311,14895,731,148(33,463,902)62,267,246—

S-5

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

DescriptionInitial Cost to CompanyCost Capitalized Subsequent to Acquisition (Improvements, net) (E)Gross Amount Carried at Close of Period 12/31/17
Apartment NameLocationRetail/ Commercial SpaceDate of ConstructionApartment Units (H)LandBuilding & FixturesBuilding & FixturesLandBuilding & Fixtures (A)Total (B)Accumulated Depreciation (C)Investment in Real Estate, Net at 12/31/17Encumbrances
Hudson PointeJersey City, NJ—20031825,350,00041,114,0746,026,9315,350,00047,141,00552,491,005(22,111,343)30,379,662—
Hunt Club IICharlotte, NC—(F)—100,000——100,000—100,000—100,000—
Ivory WoodBothell, WA—20001442,732,80013,888,2821,259,9142,732,80015,148,19617,880,996(7,400,504)10,480,492—
Jia (fka Chinatown Gateway)Los Angeles, CAG201428014,791,83177,426,315281,31314,791,83177,707,62892,499,459(15,513,371)76,986,088—
Junction 47 (fka West Seattle)Seattle, WAG201520611,726,30556,108,98936,26011,726,30556,145,24967,871,554(5,156,854)62,714,700—
Kelvin, The (fka Modera)Irvine, CA—201519415,521,55264,853,448385,46615,521,55265,238,91480,760,466(7,677,409)73,083,057—
Landings at Port ImperialW. New York, NJ—199927627,246,04537,741,05010,790,63627,246,04548,531,68675,777,731(29,235,083)46,542,648—
Lincoln HeightsQuincy, MA—19913365,928,40033,595,26213,797,9045,928,40047,393,16653,321,566(34,170,500)19,151,066—
Lindley ApartmentsEncino, CA—20041295,805,00025,705,0001,086,4105,805,00026,791,41032,596,410(8,393,740)24,202,670—
Lofts 590Arlington, VA—200521220,100,00067,909,023688,57920,100,00068,597,60288,697,602(13,789,656)74,907,946—
Lofts at Kendall Square (fka Kendall Square)Cambridge, MA—199818618,696,67478,445,6575,737,35018,696,67484,183,007102,879,681(17,496,435)85,383,246—
Longacre HouseNew York, NYG200029373,170,04553,962,5102,572,43973,170,04556,534,949129,704,994(22,561,960)107,143,034—
Longfellow PlaceBoston, MAG197571047,096,917150,143,91686,838,64247,096,917236,982,558284,079,475(154,305,979)129,773,496—
MantenaNew York, NYG20129822,346,51361,501,158813,63822,346,51362,314,79684,661,309(13,828,043)70,833,266—
Marina 41 (fka Marina Del Rey)Marina Del Rey, CA—1973623—168,842,4426,492,153—175,334,595175,334,595(40,843,073)134,491,522—
Mariposa at Playa Del Rey (fka Playa Del Rey)Playa Del Rey, CA—200435460,900,00089,311,4825,201,12760,900,00094,512,609155,412,609(21,025,902)134,386,707—
Milano LoftsLos Angeles, CAG1925/2006998,125,21627,378,7841,088,0418,125,21628,466,82536,592,041(6,979,083)29,612,958—
Mosaic at MetroHyattsville, MD—2008260—59,580,898955,743—60,536,64160,536,641(19,462,344)41,074,297—
Mountain View RedevelopmentMountain View, CA—(F)——17,876——17,87617,876—17,876—
Mozaic at Union StationLos Angeles, CA—20072728,500,00052,529,4462,126,2818,500,00054,655,72763,155,727(22,181,465)40,974,262—
Murray Hill Tower (fka Murray Hill)New York, NYG197427075,800,000102,705,4018,886,56775,800,000111,591,968187,391,968(25,690,086)161,701,882—
North Pier at HarborsideJersey City, NJ—20032974,000,15994,290,5904,047,2154,000,15998,337,805102,337,964(46,111,052)56,226,912—
NorthglenValencia, CA—19882349,360,00020,778,5534,506,0949,360,00025,284,64734,644,647(14,197,899)20,446,748—
NorthparkBurlingame, CA—197251038,607,00077,472,21713,899,13138,607,00091,371,348129,978,348(32,707,629)97,270,719—
NorthridgePleasant Hill, CA—19742215,524,00014,691,70510,828,3645,524,00025,520,06931,044,069(18,623,618)12,420,451—
Oak Park CombinedAgoura Hills, CA—1989 & 19904443,390,70030,517,27410,331,7013,390,70040,848,97544,239,675(30,282,737)13,956,938—
Oakwood BostonBoston, MAG19019422,200,00028,672,9791,616,79122,200,00030,289,77052,489,770(7,037,665)45,452,105—
Oakwood Crystal CityArlington, VA—198716215,400,00035,474,3363,757,14915,400,00039,231,48554,631,485(8,406,119)46,225,366—
Oakwood Marina Del ReyMarina Del Rey, CAG1969597—120,795,3592,723,823—123,519,182123,519,182(29,036,612)94,482,570—
OaksSanta Clarita, CA—200052023,400,00061,020,4385,585,78623,400,00066,606,22490,006,224(34,133,995)55,872,229—
Ocean CrestSolana Beach, CA—19861465,111,20011,910,4384,250,6275,111,20016,161,06521,272,265(10,492,882)10,779,383—
Odin (fka Tallman)Seattle, WA—201530116,807,51963,645,4809,23316,807,51963,654,71380,462,232(5,819,185)74,643,047—
Old Town LoftsRedmond, WAG20141497,740,46744,146,181784,7507,740,46744,930,93152,671,398(5,125,092)47,546,306—
One Henry AdamsSan Francisco, CAG201624130,224,393137,031,1686,72430,224,393137,037,892167,262,285(5,417,321)161,844,964—
Pacific PlaceLos Angeles, CA—200843032,250,000110,750,0001,483,64432,250,000112,233,644144,483,644(23,253,190)121,230,454—
Packard BuildingSeattle, WAG2010615,911,04119,954,959226,0505,911,04120,181,00926,092,050(2,148,366)23,943,684—
Parc 77New York, NYG190313740,504,00018,025,6796,041,70040,504,00024,067,37964,571,379(12,290,428)52,280,951—
Parc CameronNew York, NYG192716637,600,0009,855,5977,300,02837,600,00017,155,62554,755,625(10,340,621)44,415,004—
Parc ColiseumNew York, NYG191017752,654,00023,045,7518,978,75152,654,00032,024,50284,678,502(16,948,295)67,730,207—
Parc East TowersNew York, NYG1977324102,163,000108,989,40210,236,255102,163,000119,225,657221,388,657(48,273,891)173,114,766—
Parc on Powell (fka Parkside at Emeryville)Emeryville, CAG201517316,667,05965,071,885224,67616,667,05965,296,56181,963,620(6,675,129)75,288,491—
Park at Pentagon Row (fka Pentagon City)Arlington, VAG199029828,300,00078,838,1841,995,14728,300,00080,833,331109,133,331(17,268,528)91,864,803—
Park ConnecticutWashington, D.C.—200014213,700,00059,087,5191,447,81513,700,00060,535,33474,235,334(12,311,907)61,923,427—
Park Hacienda (fka Hacienda)Pleasanton, CA—200054043,200,000128,753,3592,520,25143,200,000131,273,610174,473,610(29,930,085)144,543,525—
Park West (CA)Los Angeles, CA—1987/19904443,033,50027,302,38310,420,0733,033,50037,722,45640,755,956(27,786,714)12,969,242—
ParksideUnion City, CA—19792086,246,70011,827,4535,452,8466,246,70017,280,29923,526,999(11,589,006)11,937,993—
Pearl, TheSeattle, WAG2008806,972,58526,527,415556,9956,972,58527,084,41034,056,995(2,841,186)31,215,809—

S-6

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

DescriptionInitial Cost to CompanyCost Capitalized Subsequent to Acquisition (Improvements, net) (E)Gross Amount Carried at Close of Period 12/31/17
Apartment NameLocationRetail/ Commercial SpaceDate of ConstructionApartment Units (H)LandBuilding & FixturesBuilding & FixturesLandBuilding & Fixtures (A)Total (B)Accumulated Depreciation (C)Investment in Real Estate, Net at 12/31/17Encumbrances
PegasusLos Angeles, CAG1949/200332218,094,05281,905,9484,943,36018,094,05286,849,308104,943,360(26,155,411)78,787,949—
Playa PacificaHermosa Beach, CA—197228535,100,00033,473,82222,912,64735,100,00056,386,46991,486,469(25,547,975)65,938,494—
PortofinoChino Hills, CA—19891763,572,40014,660,9943,713,2053,572,40018,374,19921,946,599(12,779,600)9,166,999—
Portofino (Val)Valencia, CA—19892168,640,00021,487,1265,380,9998,640,00026,868,12535,508,125(15,359,183)20,148,942—
Portside TowersJersey City, NJG1992-199752722,487,00696,842,91321,767,14622,487,006118,610,059141,097,065(80,249,602)60,847,463—
Potrero 1010San Francisco, CAG201645340,830,011178,932,84316,77540,830,011178,949,618219,779,629(11,563,892)208,215,737—
Prado (fka Glendale)Glendale, CA—1988264—67,977,3133,211,660—71,188,97371,188,973(15,429,230)55,759,743—
Prime, TheArlington, VA—200225632,000,00064,436,5391,417,18632,000,00065,853,72597,853,725(27,697,067)70,156,658—
Prism at Park Avenue South (fka 400 Park Avenue South)New York, NYG201526976,292,169172,553,72390,27276,292,169172,643,995248,936,164(18,802,832)230,133,332—
Promenade at Town Center I & IIValencia, CA—200156428,200,00069,795,9158,077,72428,200,00077,873,639106,073,639(38,490,478)67,583,161—
ProvidenceBothell, WA—20002003,573,62119,055,5052,051,6123,573,62121,107,11724,680,738(10,234,226)14,446,512—
Quarry HillsQuincy, MA—200631626,900,00084,411,1622,089,63226,900,00086,500,794113,400,794(19,076,341)94,324,453—
Radius KoreatownLos Angeles, CA—2014/201630132,494,15484,645,20222,94032,494,15484,668,142117,162,296(2,949,192)114,213,104—
Red 160 (fka Redmond Way)Redmond, WAG201125015,546,37665,320,0101,166,48815,546,37666,486,49882,032,874(16,019,260)66,013,614—
Redmond CourtBellevue, WA—197720610,300,00033,488,745900,43310,300,00034,389,17844,689,178(8,390,947)36,298,231—
Regency PalmsHuntington Beach, CA—19693101,857,40016,713,2546,014,2421,857,40022,727,49624,584,896(17,510,000)7,074,896—
Renaissance VillasBerkeley, CAG1998342,458,0004,542,000184,1922,458,0004,726,1927,184,192(1,859,882)5,324,310—
Reserve at Empire LakesRancho Cucamonga, CA—200546716,345,00073,080,6703,031,63016,345,00076,112,30092,457,300(33,721,496)58,735,804—
Reserve at Mountain View (fka Mountain View)Mountain View, CA—196518027,000,00033,029,6056,606,36827,000,00039,635,97366,635,973(8,901,550)57,734,423—
Reserve at Potomac YardAlexandria, VA—200258811,918,91768,862,64113,703,09111,918,91782,565,73294,484,649(38,310,647)56,174,002—
Reserve at Town Center I-III (WA)Mill Creek, WAG2001, 2009, 201458416,768,70577,511,5233,631,27416,768,70581,142,79797,911,502(30,389,852)67,521,650—
Residences at Westgate I (fka Westgate II)Pasadena, CAG201425217,859,785109,033,369244,72117,859,785109,278,090127,137,875(16,997,966)110,139,909—
Residences at Westgate II (fka Westgate III)Pasadena, CAG20158812,118,24840,420,82850,10812,118,24840,470,93652,589,184(4,259,073)48,330,111—
Rianna ISeattle, WAG2000782,268,16014,864,482594,1522,268,16015,458,63417,726,794(5,412,019)12,314,775—
Rianna IISeattle, WAG2002782,161,84014,433,614387,6242,161,84014,821,23816,983,078(5,134,291)11,848,787—
Ridgewood Village I&IISan Diego, CA—199740811,809,50034,004,0485,628,65111,809,50039,632,69951,442,199(24,659,415)26,782,784—
Riva Terra I (fka Redwood Shores)Redwood City, CA—198630434,963,35584,587,6583,238,24634,963,35587,825,904122,789,259(20,223,427)102,565,832—
Riva Terra II (fka Harborside)Redwood City, CA—198614917,136,64540,536,5312,064,25317,136,64542,600,78459,737,429(9,084,137)50,653,292—
RiverparkRedmond, WAG200932114,355,00080,894,0493,514,53514,355,00084,408,58498,763,584(21,590,814)77,172,770—
Rosecliff IIQuincy, MA—20051304,922,84030,202,1601,107,9434,922,84031,310,10336,232,943(9,015,949)27,216,994—
Sakura CrossingLos Angeles, CAG200923014,641,99042,858,010945,39414,641,99043,803,40458,445,394(13,215,641)45,229,753—
Seventh & JamesSeattle, WA—199296663,8005,974,8033,891,414663,8009,866,21710,530,017(7,394,440)3,135,577—
Sheffield CourtArlington, VA—19865973,342,38131,337,33214,580,0513,342,38145,917,38349,259,764(35,827,987)13,431,777—
SkycrestValencia, CA—199926410,560,00025,574,4574,456,19810,560,00030,030,65540,590,655(17,139,075)23,451,580—
SkylarkUnion City, CA—19861741,781,60016,731,9165,392,5071,781,60022,124,42323,906,023(13,428,913)10,477,110—
Skyline TerraceBurlingame, CA—1967 & 198713816,836,00035,414,0005,163,76416,836,00040,577,76457,413,764(13,281,197)44,132,567—
Skyline TowersFalls Church, VAG197193978,278,20091,485,59143,209,04678,278,200134,694,637212,972,837(72,629,553)140,343,284—
SoMa IISan Francisco, CA—(F)—29,406,6065,393,139—29,406,6065,393,13934,799,745—34,799,745—
Sonterra at Foothill RanchFoothill Ranch, CA—19973007,503,40024,048,5075,811,1347,503,40029,859,64137,363,041(18,657,410)18,705,631—
South City Station (fka South San Francisco)San Francisco, CAG200736068,900,00079,476,8612,784,28668,900,00082,261,147151,161,147(18,547,168)132,613,979—
SouthwoodPalo Alto, CA—19851006,936,60014,324,0694,215,3436,936,60018,539,41225,476,012(12,007,752)13,468,260—
Springbrook EstatesRiverside, CA—(F)—18,200,000——18,200,000—18,200,000—18,200,000—
SpringlineSeattle, WAG20161369,163,66647,910,981149,5709,163,66648,060,55157,224,217(2,733,027)54,491,190—
Summerset Village IIChatsworth, CA—(F)—260,646——260,646—260,646—260,646—
Summit at Sausalito (fka Sausalito)Sausalito, CA—197819826,000,00028,435,0246,286,15326,000,00034,721,17760,721,177(9,412,796)51,308,381—

S-7

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

DescriptionInitial Cost to CompanyCost Capitalized Subsequent to Acquisition (Improvements, net) (E)Gross Amount Carried at Close of Period 12/31/17
Apartment NameLocationRetail/ Commercial SpaceDate of ConstructionApartment Units (H)LandBuilding & FixturesBuilding & FixturesLandBuilding & Fixtures (A)Total (B)Accumulated Depreciation (C)Investment in Real Estate, Net at 12/31/17Encumbrances
Ten23 (fka 500 West 23rd Street)New York, NYG2011111—58,881,873200,907—59,082,78059,082,780(12,278,031)46,804,749—
Terraces, TheSan Francisco, CAG197511714,087,61016,314,1511,262,32714,087,61017,576,47831,664,088(5,789,387)25,874,701—
Third SquareCambridge, MAG2008/200947126,767,171218,822,7286,733,05926,767,171225,555,787252,322,958(70,108,714)182,214,244—
Three20Seattle, WAG20131347,030,76629,005,762729,0457,030,76629,734,80736,765,573(5,577,508)31,188,065—
Town Center South Commercial TractSt. Charles, MD—(F)—1,500,0009,394—1,500,0009,3941,509,394—1,509,394—
Town Square at Mark Center IIAlexandria, VA—200127215,568,46455,029,6073,744,36415,568,46458,773,97174,342,435(19,047,027)55,295,408—
Urbana (fka Market Street Landing)Seattle, WAG201428712,542,41875,766,505346,56412,542,41876,113,06988,655,487(14,010,017)74,645,470—
Uwajimaya VillageSeattle, WA—20021768,800,00022,188,2881,728,0908,800,00023,916,37832,716,378(10,901,158)21,815,220—
Vantage PointeSan Diego, CAG20096799,403,960190,596,0409,156,8679,403,960199,752,907209,156,867(59,435,552)149,721,315—
VeloceRedmond, WAG200932215,322,72476,176,5941,246,51615,322,72477,423,11092,745,834(17,729,126)75,016,708—
Venn at MainBellevue, WAG201635026,626,498151,653,323139,57326,626,498151,792,896178,419,394(3,058,972)175,360,422—
Verde Condominium Homes (fka Mission Verde, LLC)San Jose, CA—19861085,190,7009,679,1094,309,2445,190,70013,988,35319,179,053(9,877,543)9,301,510—
Veridian (fka Silver Spring)Silver Spring, MDG200945718,539,817130,407,3653,078,63918,539,817133,486,004152,025,821(39,137,932)112,887,889—
Villa SolanaLaguna Hills, CA—19842721,665,10014,985,6789,752,8421,665,10024,738,52026,403,620(19,582,595)6,821,025—
Village at Del Mar Heights, The (fka Del Mar Heights)San Diego, CA—198616815,100,00040,859,3961,315,90115,100,00042,175,29757,275,297(9,628,990)47,646,307—
VintageOntario, CA—2005-20073007,059,23047,677,7621,233,4897,059,23048,911,25155,970,481(20,304,558)35,665,923—
Virginia SquareArlington, VAG2002231—85,940,0034,594,826—90,534,82990,534,829(18,797,549)71,737,280—
Vista 99 (fka Tasman)San Jose, CA—201655427,709,329176,023,094113,47927,709,329176,136,573203,845,902(12,631,445)191,214,457—
Vista Del LagoMission Viejo, CA—1986-19886084,525,80040,736,29316,741,7444,525,80057,478,03762,003,837(46,045,156)15,958,681—
Vista on CourthouseArlington, VA—200822015,550,26069,449,7401,823,31715,550,26071,273,05786,823,317(23,435,882)63,387,435—
Walden ParkCambridge, MA—196623212,448,88852,044,4484,293,32712,448,88856,337,77568,786,663(17,603,707)51,182,956—
Water Park TowersArlington, VA—198936234,400,000108,485,8599,546,70234,400,000118,032,561152,432,561(25,460,371)126,972,190—
Watertown SquareWatertown, MAG200513416,800,00034,074,0561,348,26116,800,00035,422,31752,222,317(7,618,267)44,604,050—
West 96thNew York, NYG198720784,800,00067,055,5025,265,24384,800,00072,320,745157,120,745(17,919,572)139,201,173—
West End Apartments (fka Emerson Place/CRP II)Boston, MAG2008310469,546163,123,0222,821,262469,546165,944,284166,413,830(55,691,880)110,721,950—
Westchester at RockvilleRockville, MD—200919210,600,00044,135,207703,33810,600,00044,838,54555,438,545(9,691,644)45,746,901—
WestmontNew York, NYG198616364,900,00061,143,2592,724,37064,900,00063,867,629128,767,629(14,415,326)114,352,303—
WestsideLos Angeles, CA—200420434,200,00056,962,6302,861,83234,200,00059,824,46294,024,462(12,610,533)81,413,929—
Westside Barrington (fka Westside Villas III)Los Angeles, CA—1999363,060,0005,538,871920,2823,060,0006,459,1539,519,153(3,618,136)5,901,017—
Westside Barry (Westside Villas VI)Los Angeles, CA—1989181,530,0003,023,523599,8541,530,0003,623,3775,153,377(2,053,667)3,099,710—
Westside Beloit (fka Westside Villas I)Los Angeles, CA—1999211,785,0003,233,254628,0891,785,0003,861,3435,646,343(2,239,628)3,406,715—
Westside Bundy (fka Westside Villas II)Los Angeles, CA—1999231,955,0003,541,435642,4791,955,0004,183,9146,138,914(2,324,838)3,814,076—
Westside Butler (fka Westside Villas IV)Los Angeles, CA—1999363,060,0005,539,390949,8173,060,0006,489,2079,549,207(3,619,180)5,930,027—
Westside Villas (fka Westside Villas V &VII)Los Angeles, CA—1999 & 20011139,605,00019,983,3852,493,2679,605,00022,476,65232,081,652(12,289,331)19,792,321—
Windridge (CA)Laguna Niguel, CA—19893442,662,90023,985,49710,800,5662,662,90034,786,06337,448,963(25,964,327)11,484,636—
Wood Creek IPleasant Hill, CA—19872569,729,90023,009,7688,661,3469,729,90031,671,11441,401,014(21,717,920)19,683,094—
Management BusinessChicago, IL—(D)———112,328,951—112,328,951112,328,951(92,675,414)19,653,537—
Operating PartnershipChicago, IL—(F)——9,047,067——9,047,0679,047,067—9,047,067—
OtherN/A—————70,353—70,35370,353(15,311)55,042—
Wholly Owned Unencumbered55,9544,618,857,60814,026,732,4121,131,147,7954,618,857,60815,157,880,20719,776,737,815(4,363,244,353)15,413,493,462—
Wholly Owned Encumbered:
101 West EndNew York, NYG2000506190,600,000131,374,7084,465,890190,600,000135,840,598326,440,598(33,939,026)292,501,572103,730,409
1401 Joyce on Pentagon RowArlington, VA—20043269,780,00089,668,1654,811,2159,780,00094,479,380104,259,380(31,540,500)72,718,88057,354,529
2501 PorterWashington, D.C.—198820213,000,00075,271,1794,572,19213,000,00079,843,37192,843,371(16,734,740)76,108,631(J)
300 East 39th (fka East 39th)New York, NYG200125448,900,00096,174,6393,532,46748,900,00099,707,106148,607,106(21,799,732)126,807,37460,451,283
303 East 83rd (fka Camargue)New York, NYG197626179,400,00079,122,6243,673,57479,400,00082,796,198162,196,198(18,995,345)143,200,853(J)
425 BroadwaySanta Monica, CAG200110112,600,00034,394,7723,577,98512,600,00037,972,75750,572,757(8,081,082)42,491,675(J)

S-8

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

DescriptionInitial Cost to CompanyCost Capitalized Subsequent to Acquisition (Improvements, net) (E)Gross Amount Carried at Close of Period 12/31/17
Apartment NameLocationRetail/ Commercial SpaceDate of ConstructionApartment Units (H)LandBuilding & FixturesBuilding & FixturesLandBuilding & Fixtures (A)Total (B)Accumulated Depreciation (C)Investment in Real Estate, Net at 12/31/17Encumbrances
55 West Fifth I & II (fka Townhouse Plaza and Gardens)San Mateo, CA—1964/197224121,041,71071,931,32312,415,91221,041,71084,347,235105,388,945(21,523,119)83,865,82626,356,053
800 Sixth Ave (fka Chelsea)New York, NYG200326659,900,000155,861,6052,180,44659,900,000158,042,051217,942,051(32,855,478)185,086,57377,654,125
929 Mass (fka 929 House)Cambridge, MAG19751273,252,99321,745,5956,801,2413,252,99328,546,83631,799,829(17,379,493)14,420,336578,381
Academy VillageNorth Hollywood, CA—198924825,000,00023,593,1948,511,55125,000,00032,104,74557,104,745(18,102,739)39,002,00619,965,907
AlcyoneSeattle, WAG200416211,379,49749,360,503973,75811,379,49750,334,26161,713,758(7,663,311)54,050,44728,247,417
Arches, TheSunnyvale, CA—197441026,650,00062,850,0001,807,09926,650,00064,657,09991,307,099(20,704,043)70,603,056(I)
Artisan SquareNorthridge, CA—20021407,000,00020,537,3591,462,2047,000,00021,999,56328,999,563(11,523,867)17,475,69622,757,833
AvantiAnaheim, CA—198716212,960,00018,497,6823,682,23912,960,00022,179,92135,139,921(9,463,903)25,676,01825,012,978
Avenir ApartmentsBoston, MAG2009241—114,321,6181,981,881—116,303,499116,303,499(24,093,714)92,209,78588,921,043
Bella Vista I, II, III CombinedWoodland Hills, CA—2003-200757931,682,754121,095,7866,014,38231,682,754127,110,168158,792,922(53,777,824)105,015,09857,907,496
BerkeleyanBerkeley, CAG1998564,377,00016,022,110382,8954,377,00016,405,00520,782,005(6,678,279)14,103,7268,194,316
Calvert WoodleyWashington, D.C.—196213612,600,00043,527,3792,058,22312,600,00045,585,60258,185,602(10,036,657)48,148,945(J)
Carmel TerraceSan Diego, CA—1988-19893842,288,30020,596,28111,891,8832,288,30032,488,16434,776,464(26,616,700)8,159,764(I)
Chelsea SquareRedmond, WA—19911133,397,1009,289,0742,525,8293,397,10011,814,90315,212,003(7,732,982)7,479,0219,219,668
Citrus SuitesSanta Monica, CA—1978709,000,00016,950,3261,886,8469,000,00018,837,17227,837,172(4,064,530)23,772,642(J)
Cleveland HouseWashington, D.C.—195321418,300,00066,392,4143,953,01418,300,00070,345,42888,645,428(15,198,718)73,446,710(J)
Columbia CrossingArlington, VA—199124723,500,00053,045,0732,637,58323,500,00055,682,65679,182,656(12,776,595)66,406,061(J)
Deerwood (SD)San Diego, CA—19903162,082,09518,739,81514,811,4382,082,09533,551,25335,633,348(28,255,938)7,377,410(I)
Del Mar RidgeSan Diego, CA—19981817,801,82436,948,1763,819,6787,801,82440,767,85448,569,678(14,687,909)33,881,76939,502,426
Estancia at Santa Clara (fka Santa Clara)Santa Clara, CA—2000450—123,759,8041,306,632—125,066,436125,066,436(27,568,376)97,498,060(J)
FairchaseFairfax, VA—200739223,500,00087,722,321956,57423,500,00088,678,895112,178,895(18,576,327)93,602,568(J)
FairfieldStamford, CTG19962636,510,20039,690,1207,711,2226,510,20047,401,34253,911,542(32,614,560)21,296,98231,314,687
Fine Arts BuildingBerkeley, CAG20041007,817,00026,462,772379,6307,817,00026,842,40234,659,402(10,821,726)23,837,67615,964,066
Flats at DuPont CircleWashington, D.C.—196730635,200,000108,768,1981,152,02235,200,000109,920,220145,120,220(22,256,517)122,863,703(J)
Gaia BuildingBerkeley, CAG2000917,113,00025,623,826317,1007,113,00025,940,92633,053,926(10,427,553)22,626,37314,501,551
Gaithersburg StationGaithersburg, MDG201338917,500,00074,678,917814,50717,500,00075,493,42492,993,424(15,197,790)77,795,63495,368,543
GloLos Angeles, CAG200820116,047,02248,650,9633,068,23516,047,02251,719,19867,766,220(14,061,824)53,704,39632,031,227
HathawayLong Beach, CA—19873852,512,50022,611,9129,165,5432,512,50031,777,45534,289,955(24,359,922)9,930,03346,479,980
Heights on Capitol HillSeattle, WAG20061045,425,00021,138,0281,483,2845,425,00022,621,31228,046,312(9,090,011)18,956,30125,887,074
Kelvin Court (fka Alta Pacific)Irvine, CA—200813210,752,14534,628,115648,36610,752,14535,276,48146,028,626(11,953,874)34,074,75226,226,033
Kenwood MewsBurbank, CA—199114114,100,00024,662,8833,580,53414,100,00028,243,41742,343,417(12,733,507)29,609,910(I)
La Terrazza at Colma StationColma, CAG2005155—41,251,0441,206,497—42,457,54142,457,541(16,832,082)25,625,45924,987,438
Laguna ClaraSanta Clara, CA—197226413,642,42029,707,4754,969,59613,642,42034,677,07148,319,491(18,383,225)29,936,266(I)
Liberty ParkBraintree, MA—20002025,977,50426,749,1116,357,0105,977,50433,106,12139,083,625(17,080,472)22,003,15324,956,877
Liberty TowerArlington, VAG200823516,382,82283,817,0781,975,31116,382,82285,792,389102,175,211(26,194,514)75,980,69743,515,440
Longview PlaceWaltham, MA—200434820,880,00090,255,5095,422,74520,880,00095,678,254116,558,254(41,854,802)74,703,45270,793,963
Market Street VillageSan Diego, CA—200622913,740,00040,757,3012,123,01313,740,00042,880,31456,620,314(18,041,199)38,579,115(I)
Metro on FirstSeattle, WAG20021028,540,00012,209,9812,141,1188,540,00014,351,09922,891,099(5,948,086)16,943,01322,629,291
Mill CreekMilpitas, CA—199151612,858,69357,168,5039,899,98512,858,69367,068,48879,927,181(33,621,630)46,305,55169,262,254
ModaSeattle, WAG200925112,649,22836,842,0121,017,07312,649,22837,859,08550,508,313(12,489,032)38,019,281(K)
Montierra (CA)San Diego, CA—19902728,160,00029,360,9387,947,4488,160,00037,308,38645,468,386(24,130,197)21,338,189(I)
Olympus TowersSeattle, WAG200032814,752,03473,335,4258,745,32514,752,03482,080,75096,832,784(39,929,257)56,903,52749,788,935
Park Place at San Mateo (fka San Mateo)San Mateo, CAG200157571,900,000211,907,14111,404,92871,900,000223,312,069295,212,069(47,760,787)247,451,282(J)
Reserve at Clarendon Centre, TheArlington, VAG200325210,500,00052,812,9354,599,50610,500,00057,412,44167,912,441(28,603,885)39,308,556(I)
Reserve at Eisenhower, TheAlexandria, VA—20022266,500,00034,585,0603,865,4526,500,00038,450,51244,950,512(19,227,311)25,723,201(I)
Reserve at Fairfax CornerFairfax, VA—200165215,804,05763,129,05111,326,16915,804,05774,455,22090,259,277(38,763,866)51,495,41184,677,136
Siena TerraceLake Forest, CA—19883568,900,00024,083,0247,129,6128,900,00031,212,63640,112,636(20,109,124)20,003,51264,414,512
SkyviewRancho Santa Margarita, CA—19992603,380,00021,952,8635,298,7163,380,00027,251,57930,631,579(16,612,037)14,019,54247,183,965
SoMa Square Apartments (fka South Market)San Francisco, CAG198641079,900,000177,316,9779,300,34979,900,000186,617,326266,517,326(38,289,333)228,227,993(J)

S-9

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

DescriptionInitial Cost to CompanyCost Capitalized Subsequent to Acquisition (Improvements, net) (E)Gross Amount Carried at Close of Period 12/31/17
Apartment NameLocationRetail/ Commercial SpaceDate of ConstructionApartment Units (H)LandBuilding & FixturesBuilding & FixturesLandBuilding & Fixtures (A)Total (B)Accumulated Depreciation (C)Investment in Real Estate, Net at 12/31/17Encumbrances
Square OneSeattle, WA—20141127,222,54426,277,45629,6297,222,54426,307,08533,529,629(4,313,830)29,215,799(K)
Summerset VillageChatsworth, CA—19852802,629,80423,670,8897,787,0162,629,80431,457,90534,087,709(22,465,064)11,622,64538,007,297
TalleyrandTarrytown, NY—1997-199830012,000,00049,838,1606,352,04312,000,00056,190,20368,190,203(31,701,891)36,488,31234,811,455
TeresinaChula Vista, CA—200044028,600,00061,916,6705,715,02728,600,00067,631,69796,231,697(29,443,097)66,788,60038,425,773
ToscanaIrvine, CA—1991/199356339,410,00050,806,07217,577,05239,410,00068,383,124107,793,124(37,833,043)69,960,08198,047,399
Touriel BuildingBerkeley, CAG2004352,736,0007,810,027186,2222,736,0007,996,24910,732,249(3,315,964)7,416,2854,969,645
Town Square at Mark Center I (fka Millbrook I)Alexandria, VA—199640624,360,00086,178,7147,407,81424,360,00093,586,528117,946,528(41,076,185)76,870,34360,225,838
Vantage HollywoodLos Angeles, CA—198729842,580,32656,014,674457,36542,580,32656,472,03999,052,365(7,801,330)91,251,03541,416,137
VersaillesWoodland Hills, CA—199125312,650,00033,656,2927,159,38112,650,00040,815,67353,465,673(21,305,317)32,160,35630,347,501
Versailles (K-Town)Los Angeles, CA—200822510,590,97544,409,0251,547,37710,590,97545,956,40256,547,377(15,658,207)40,889,17045,964,864
Victor on VeniceLos Angeles, CAG200611510,350,00035,433,437797,87210,350,00036,231,30946,581,309(14,701,990)31,879,319(I)
Vintage at 425 Broadway (fka Promenade)Santa Monica, CAG1934/2001609,000,00013,961,5231,555,5589,000,00015,517,08124,517,081(3,564,636)20,952,445(J)
West 54thNew York, NYG200122260,900,00048,193,8373,225,50160,900,00051,419,338112,319,338(12,886,577)99,432,76147,667,759
Westgate (fka Westgate I)Pasadena, CA—201048022,898,848133,484,5732,262,86622,898,848135,747,439158,646,287(32,510,875)126,135,41295,981,749
WoodleafCampbell, CA—19841788,550,60016,988,1835,069,4458,550,60022,057,62830,608,228(14,254,057)16,354,17117,819,380
Portfolio/Entity Encumbrances (1)—————————1,346,853,789
Wholly Owned Encumbered18,4971,401,915,9953,881,590,219316,875,0951,401,915,9954,198,465,3145,600,381,309(1,440,591,113)4,159,790,1963,316,375,422
Partially Owned Unencumbered:
2300 ElliottSeattle, WA—199292796,8007,173,7256,717,795796,80013,891,52014,688,320(10,921,953)3,766,367—
Canyon RidgeSan Diego, CA—19891624,869,44811,955,0643,954,9124,869,44815,909,97620,779,424(10,552,909)10,226,515—
Country OaksAgoura Hills, CA—19852566,105,00029,561,8656,647,9006,105,00036,209,76542,314,765(19,712,219)22,602,546—
Harrison Square (fka Elliot Bay)Seattle, WAG19921667,600,00035,844,3455,069,7307,600,00040,914,07548,514,075(9,358,506)39,155,569—
Monterra in Mill CreekMill Creek, WA—20031392,800,00013,255,1231,003,1012,800,00014,258,22417,058,224(6,620,281)10,437,943—
RosecliffQuincy, MA—19901565,460,00015,721,5703,530,7215,460,00019,252,29124,712,291(12,249,762)12,462,529—
Strayhorse at Arrowhead RanchGlendale, AZ—19981364,400,00012,968,002802,0034,400,00013,770,00518,170,005(6,164,596)12,005,409—
Via Ventura (CA) (fka Ventura)Ventura, CA—20021928,600,00044,308,202845,9408,600,00045,154,14253,754,142(10,983,822)42,770,320—
Wood Creek II (fka Willow Brook (CA))Pleasant Hill, CA—19852285,055,00038,388,6726,551,9445,055,00044,940,61649,995,616(22,087,591)27,908,025—
Partially Owned Unencumbered1,52745,686,248209,176,56835,124,04645,686,248244,300,614289,986,862(108,651,639)181,335,223—
Partially Owned Encumbered:
Bellevue MeadowsBellevue, WA—19831804,507,10012,574,8145,487,6044,507,10018,062,41822,569,518(12,705,342)9,864,17616,504,927
Canyon Creek (CA)San Ramon, CA—19842685,425,00018,812,1207,580,2095,425,00026,392,32931,817,329(16,113,349)15,703,98028,129,557
Lantern CoveFoster City, CA—19852326,945,00023,064,9766,401,0236,945,00029,465,99936,410,999(17,362,236)19,048,76336,410,267
Schooner Bay IFoster City, CA—19851685,345,00020,390,6185,132,5245,345,00025,523,14230,868,142(15,015,057)15,853,08528,825,496
Schooner Bay IIFoster City, CA—19851444,550,00018,064,7644,600,0654,550,00022,664,82927,214,829(13,411,541)13,803,28826,130,631
Surrey DownsBellevue, WA—19861223,057,1007,848,6183,159,1033,057,10011,007,72114,064,821(7,377,616)6,687,2059,810,499
Virgil SquareLos Angeles, CA—19791425,500,00015,216,6132,890,0855,500,00018,106,69823,606,698(8,612,798)14,993,9009,877,693
Wisconsin PlaceChevy Chase, MD—2009432—172,089,3551,148,714—173,238,069173,238,069(37,293,147)135,944,922146,657,506
Partially Owned Encumbered1,68835,329,200288,061,87836,399,32735,329,200324,461,205359,790,405(127,891,086)231,899,319302,346,576
Total Consolidated Investment in Real Estate77,666$6,101,789,051$18,405,561,077$1,519,546,263$6,101,789,051$19,925,107,340$26,026,896,391$(6,040,378,191)$19,986,518,200$3,618,721,998
(1)See attached Encumbrances Reconciliation.

S-10

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2017

NOTES:

(A)The balance of furniture & fixtures included in the total investment in real estate amount was $1,548,960,951 as of December 31, 2017.
(B)The cost, net of accumulated depreciation, for Federal Income Tax purposes as of December 31, 2017 was approximately $14.8 billion (unaudited).
(C)The life to compute depreciation for building is 30 years, for building improvements ranges from 5 to 15 years, for furniture & fixtures, replacements and renovations is 5 to 10 years and for lease intangibles is the average remaining term of each respective lease.
(D)This asset consists of various acquisition dates and largely represents furniture, fixtures and equipment, leasehold improvements and computer equipment and software costs owned by the Management Business, which are generally depreciated over periods ranging from 3 to 7 years.
(E)Primarily represents capital expenditures for building improvements, replacements and renovations incurred subsequent to each property’s acquisition date.
(F)Primarily represents land and/or construction-in-progress on projects either held for future development or projects currently under development.
(G)A portion of these properties includes and/or will include retail/commercial space (including parking garages).
(H)Total properties and apartment units exclude two unconsolidated properties containing 945 apartment units.
(I)Through (J) See Encumbrances Reconciliation schedule.
(K)Boot property for Bond Partnership mortgage pool.

S-11

Previous: Item 15. Exhibits, Financial Statement Schedules.