Vivmark Residential (VMRK) 10-K risk factor changes: FY2021 vs FY2020

Risks Related to the [added: ongoing] COVID-19 Pandemic

The ongoing COVID-19 pandemic and [removed: measures intended to prevent its spread] [added: the pace and degree of recovery, as well as the emergence of new variants,] could have a material adverse effect on our business, results of operations, cash flows and financial condition.

[removed: The outbreak has led] [added: During the early stages of the COVID-19 pandemic,] governments and other authorities around the world, including federal, state and local authorities in the United States, [removed: to impose] [added: imposed] measures intended to control its spread, including restrictions on movement and business operations such as travel bans, border closings, business closures, quarantines, social distancing and shelter-in-place orders.

[removed: The] [added: While many of the most stringent restrictions have been removed throughout our markets, the ongoing] COVID-19 pandemic has [removed: also] caused, and [removed: may likely] [added: could] continue to cause, severe economic, market and other disruptions worldwide.

There can be no assurance that conditions will not [removed: continue to] deteriorate as a result of the pandemic.

The impact of the COVID-19 pandemic [removed: and measures to prevent its spread] could materially negatively impact our business, results of operations, financial condition and liquidity in a number of ways, including:

| | • | The deterioration of global economic conditions as a result of the [removed: pandemic may] [added: pandemic, which could] ultimately decrease occupancy levels and pricing across our [removed: portfolio as residents] [added: portfolio,] reduce or defer [added: our residents’ spending, or negatively impact our residents’ and tenants’ ability to pay] their [removed: spending;] [added: rent on time or at all;] |

| | • | [removed: The risk that local] [added: Local] and national authorities [removed: may expand] [added: expanding] or [removed: extend] [added: extending] certain measures [removed: imposing] [added: that impose] restrictions on our ability to enforce residents’ or tenants’ contractual rental obligations (such as eviction moratoriums or rental forgiveness) and limit our ability to raise rents or charge certain fees; |

| | • | [removed: The risk that] [added: Failure by] local and national authorities [removed: may not pass, extend] [added: to extend, adequately fund] or [removed: may reduce] [added: administer] government stimulus and relief programs which may be providing or would provide benefits to our residents (or employers of our residents) and tenants; [added: and] |

| | • | Restrictions inhibiting our employees’ ability to meet with existing and potential [removed: residents] [added: residents, which] has disrupted and could in the future further disrupt our ability to lease apartments [removed: which] [added: and] could adversely impact our rental rate and occupancy [removed: levels; and] [added: levels.] |

| | • | Our properties may also incur [removed: significant] [added: additional] operating expenses related to [removed: shelter-in-place orders, quarantines and social distancing requirements,] [added: the ongoing pandemic,] such as higher cleaning or other related costs; |

| | • | A general decline in the real estate market or demand for real estate transactions could hinder our ability to acquire or dispose of properties, [added: or obtain financing to develop properties,] including through our joint ventures; |

| | • | The risk of delays in our development and renovation projects due to construction moratoriums, governmental movement restrictions, social distancing requirements, the closure of many permitting and inspection agencies and disruptions in the supply of [added: labor or the supply of] construction materials or other products due to problems in the [added: broader] supply chain or otherwise; |

| | • | A possible [removed: further] decline in the price of our common shares due to a prolonged economic recession or other impacts described herein; |

| | • | Potential inability to maintain adequate staffing at our properties and corporate/regional offices due to [removed: shelter-in-place orders,] an outbreak at one or more of our properties or corporate/regional offices and/or the continued duration or expansion of the pandemic. |

The extent of the [added: ongoing] COVID-19 pandemic’s effect on our operational and financial performance will depend on future [removed: developments] [added: developments,] including the duration, spread and intensity of [added: COVID-19 and its variants;] the [removed: outbreak] [added: distribution, effectiveness] and [added: acceptance of vaccines and testing; and] the [removed: rollout] [added: pace] and [removed: effectiveness] [added: degree] of [removed: vaccines,] [added: recovery from the pandemic,] all of which are uncertain and difficult to predict.

To the extent the COVID-19 pandemic adversely affects our business, results of operations, cash flows and financial condition, it may also [removed: have the effect of heightening] [added: continue to heighten] many of the other risks described below.

| | • | National, regional and local political [added: and regulatory] climates, governmental fiscal health and governmental policies; |

| | • | Increases in our operating [removed: expenses;] [added: expenses due to inflationary or other pressures;] |

[removed: *The] [added: The] geographic concentration of our properties could have an adverse effect on our [removed: operations.*][added: operations.]

If one or more of [removed: our] [added: these] markets is unfavorably impacted by specific economic conditions, local real estate conditions, increases in social unrest, increases in real estate and other taxes, reduced quality of life, deterioration of local or state government health, rent control or stabilization laws, localized environmental issues or natural/man-made disasters, the impact of such conditions may have a more negative impact on our results of operations than if our properties were more geographically diverse.

Within its [removed: primarily coastal] markets, the Company is also [added: predominantly] concentrated in certain dense urban and suburban submarkets.

[removed: Significant expenditures] [added: In addition, operating expenses] associated with each property, such as real estate taxes, insurance, utilities, maintenance costs and employee wages and benefits, may [removed: also negatively impact cash flows, and these expenditures may] not decline as quickly or at the same rate as revenues when circumstances might cause a reduction of those revenues at our properties.

[removed: Competition] [added: *Competition] in multifamily housing may negatively affect operations and demand for the Company’s properties or [removed: residents.][added: residents.*]

Therefore, we may not be able to retain residents or attract new residents if we are unable to identify and cost effectively implement new, relevant technologies and [removed: to] keep up with constantly changing resident demand for the latest innovations.

The short-term nature of apartment leases exposes us more quickly to the effects of declining market rents, potentially making our [removed: revenue] [added: results of operations and cash flows] more volatile.

If the terms of the renewal or [removed: reletting] [added: releasing] are less favorable than current terms, then the Company’s results of operations and financial condition could be negatively affected.

We may [removed: also] overestimate the revenue (or underestimate the expenses) that [removed: a] [added: these] new or repositioned [removed: project] [added: properties] may generate.

The occupancy rates and rents at these properties may [added: also] fail to meet [removed: the expectations underlying] our [removed: investment.][added: expectations for these investments.]

Development and renovations are subject to [added: even] greater uncertainties and risks due to [added: the] complexities and lead time [removed: in estimating costs.][added: to build or complete these projects.]

We may [added: also] underestimate the costs necessary to operate an acquired [added: or developed] property to the [added: standards established for its intended market position.]

We intend to continue to develop multifamily properties [added: through both wholly owned and joint venture arrangements] as part of our business strategy.

We may also experience an increase in costs due to general disruptions that affect the cost of labor and/or materials, such as [added: supply chain disruptions,] trade disputes, tariffs, labor [removed: unrest and/or] [added: unrest,] geopolitical [removed: conflicts.][added: conflicts or other factors that create inflationary pressures.]

[removed: These and other risks inherent in development projects] could result in increased costs or the delay or abandonment of opportunities.

[removed: Because] [added: *Because] real estate investments are illiquid, we may not be able to sell properties when [removed: appropriate.][added: appropriate.*]

[removed: We] [added: As a result, we] may not be able to reconfigure our [added: portfolio, including the diversification of our] portfolio [added: into the expansion markets, as] promptly [added: as planned or] in response to changing economic or other conditions.

We may [added: also] be unable to consummate [removed: such] dispositions in a timely manner, on attractive terms, or at all.

We currently, and may continue to in the future, develop and acquire properties in joint ventures with [removed: other persons or entities.][added: unrelated third parties.]

| | • | The possibility that our partners might refuse or be financially unable to make capital contributions when due [added: or may fail to meet contractual obligations to cover development cost overruns] and therefore we may be forced to make contributions to protect our investments; |

In some instances, [added: our] joint venture partners may also have competing interests or objectives that could create conflicts of interest similar to those noted above.

| | • | Reductions in the demand for multifamily properties within our markets due to changes in resident preferences (including changes resulting from increased employer flexibility to work from home), economic disruptions due to delays in business re-openings or required re-closures, and other factors impacting demand; |

| | • | Elevated costs or concessions required to attract or retain new and existing residents/tenants, release units due to resident or tenant nonpayment, default, or bankruptcy, or other incentives that may be less favorable to us than those that are currently in place; |

While the Company continues to diversify its portfolio with the addition of the expansion markets, the Company’s properties are still predominantly concentrated in our established coastal markets.

Land parcels acquired for development may lose significant value prior to the start of construction.

These and other risks inherent in development projects, including the joint venture risks noted below.

Real estate investments often cannot be sold quickly due to regulatory constraints, market conditions or otherwise.

The capitalization rates/disposition yields at which properties may be sold could also be higher than historic rates, thereby reducing our potential proceeds from sale.

| | • | These projects generally use mortgage debt to finance their activities at a higher leverage level than how we finance the Company as a whole; |

To the extent we have commitments to, on behalf of or are dependent on any such off-balance sheet commitments, or if those commitments or their properties or leases are subject to material contingencies, our liquidity and financial condition could be adversely affected.

In addition, investors may decide to

Rising interest rates can increase costs and impact the value of the Company’s assets.

Higher interest rates could also result in increased capitalization rates, which may lead to reduced valuations of the Company’s assets.

In addition, a

The owner or operator

If we do not dispose of our properties through tax deferred transactions, we may be required to distribute the gain proceeds to shareholders or pay income tax.

affiliate who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the Company’s outstanding voting securities (an “Interested Shareholder”), or with an affiliate of an Interested Shareholder.

attack, of personally identifiable information.

In March 2020, the World Health Organization declared COVID-19 a pandemic.

| --- | --- | --- |

| | • | Our residents’ and tenants’ ability to pay their rent on time or at all; |

| | • | Changes in the demand for multifamily properties within our markets; |

| | • | Our geographic concentrations, especially in our dense urban communities which often makes social distancing more difficult, may experience longer periods of economic disruption due to delays in business re-openings and/or required re-closures, as a result of which we may be more susceptible to the impact of COVID-19; |

| | • | Changes in resident preferences, including changes due to increased employer flexibility to work from home, making current or prospective residents less likely to want to live in dense urban centers where we own many of our properties or to want to live in denser forms of multifamily housing like the high-rise or mid-rise housing the Company owns; |

| | • | The concessions made, and those that continue to be made, to residents’ rent obligations, which may not be on terms as favorable to us as those currently in place; |

| | • | The costs we may incur in protecting our investments and releasing our properties as a result of resident or tenant nonpayment, default or bankruptcy; |

| | • | Non-residential operations in our apartment buildings are particularly vulnerable to the effects from the COVID-19 pandemic, which we expect may adversely impact their operations and, in turn, could result in an increase in tenant/garage operator defaults, rent deferrals/abatements and rent reductions. |

Due to the speed with which the situation is continuing to develop, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, cash flows and financial condition could be material.

The Company’s properties are concentrated in our primarily coastal markets and located in and around dynamic cities that we believe attract high quality long-term renters.

For example, the urban core submarkets of New York City, San Francisco, CA and Boston, MA, have been more adversely impacted by the COVID-19 pandemic in comparison to our other markets.

Due to our concentrations in these submarkets, we have experienced larger decreases in rental income from elevated rent concessions and lower occupancy than we might have otherwise.

Failure to generate sufficient revenue could limit our ability to make financing payments or distributions to security holders.

A decrease in cash flows due to declines in rental revenue could negatively affect our ability to make financing payments and distributions to our security holders.

standards established for its intended market position.

Real estate investments generally cannot be sold quickly.

Rising interest rates can increase costs.

Shareholder.

claims, result in the unintended and/or unauthorized public disclosure or the misappropriation of proprietary, personally identifiable and confidential information and require us to incur significant expenses to address and remediate or otherwise resolve these kinds of issues.

In addition, these forward-looking statements are subject to risks related to the COVID-19 [removed: pandemic,] [added: pandemic and its accompanying variants,] many of which are unknown, including the [removed: duration and] [added: duration,] severity [removed: of the pandemic,] [added: and] the extent of the adverse health impact on the general [removed: population and on] [added: population,] our [removed: residents, customers] [added: residents] and [removed: employees in particular, its impact on] [added: employees,] the [removed: employment rate] [added: distribution, effectiveness] and [removed: the economy] [added: acceptance of vaccines] and [added: testing,] the [removed: corresponding impact on our residents’ and tenants’ ability to pay their rent on time or at all,] [added: overall reopening progress in] the [removed: impact on resident housing] [added: cities in which we operate, the potential long-term changes in customer] preferences [removed: especially] for [removed: urban apartment living, the extent and impact of governmental responses, the rollout and effectiveness of vaccines] [added: living in our communities] and the impact of operational changes we have implemented and may implement in response to the pandemic.

The [removed: 2021] [added: above 2022] guidance assumptions [removed: disclosed throughout this Item 7] are based on current expectations and are forward-looking.

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

2020 and [removed: 2019] [added: 2021] Transactions

In conjunction with our business objectives and operating and investing strategies, the following [removed: tables provide] [added: table provides] a rollforward of the transactions that occurred during the years ended December 31, 2020 and [removed: 2019:][added: 2021:]

| | | [removed: Properties] | | | | [removed: Apartment Units] | | | | Purchase Price | | | | Acquisition Cap Rate | | |

| [added: Consolidated] Rental Properties | | | (6 | ) | | | (2,231 | ) | | $ | (1,066,861 | ) | | | (4.5 | )% |

| (1) | The Company acquired one property [removed: in] [added: during] the [removed: third quarter of] [added: year ended December 31,] 2020 [added: in the Seattle market] that [removed: is] [added: was] in lease-up and is expected to stabilize in its second year of ownership. |

[added: | | • |] The consolidated property acquired [added: in 2020] was located in the Seattle [removed: market.][added: market; |]

[added: | | • |] The consolidated properties disposed of [added: in 2020] were located in the Phoenix, San Diego, San Francisco [added: (3)] and Washington D.C. markets and the sales generated an Unlevered IRR of [removed: 10.2%.][added: 10.2%; and |]

| Completed Developments – Consolidated | | | [removed: 2] [added: 3] | | | | [removed: 221] [added: 824] | | | | | | | | | |

| [removed: (1)] [added: (2)] | The Company acquired four properties during the year ended December 31, [removed: 2019, consisting of two properties in the Denver market and two properties] [added: 2021, one each] in the [added: Denver, Atlanta,] Seattle [removed: market, all of which] [added: and Dallas/Ft. Worth markets, that] are in [removed: the final stages of completing] lease-up and are expected to stabilize in [removed: the] [added: their] second year of ownership at the [added: combined] Acquisition Cap Rate listed above. |

[added: | | • |] The consolidated properties [removed: acquired] [added: disposed of in 2021] were located in the [added: Los Angeles (6),] New York, [removed: Seattle, Washington D.C.,] San [removed: Francisco, Los Angeles] [added: Francisco (5), Seattle] and [removed: Denver markets.][added: Washington D.C. markets and the sales generated an Unlevered IRR of 10.4%. |]

[removed: Finally, the] [added: | | • | The] Company [removed: started] [added: completed] construction on [removed: two] [added: three] consolidated [removed: projects,] [added: apartment properties during 2021,] located in the San [removed: Francisco and] [added: Francisco,] Washington D.C. [added: and Boston] markets, consisting of [removed: 354] [added: 824] apartment units totaling approximately [removed: $193.1] [added: $602.8] million of [removed: expected] development [removed: costs.][added: costs; and |]

[added: | | • |] The Company’s guidance assumes consolidated rental acquisitions [removed: will be] [added: of] approximately [removed: equal to] [added: $2.0 billion and] consolidated rental dispositions [removed: for] [added: of approximately $2.0 billion during] the [removed: full] year ending December 31, [removed: 2021.][added: 2022; and |]

[added: | | • |] We currently [removed: budget] [added: anticipate] spending approximately [removed: $220.0] [added: $200.0] million on development costs during the year ending December 31, [removed: 2021,] [added: 2022,] primarily for [added: consolidated and unconsolidated] properties currently under [removed: construction.][added: construction (amount only includes our share of development costs). |]

Properties that the Company owned and were stabilized [removed: (see definition below)] for all of both [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] (the [removed: “2020] [added: “2021] Same Store Properties”), which represented [removed: 73,585] [added: 74,077] apartment units, [removed: impacted] [added: drove] the Company’s results of operations.

| | | Year Ended December 31, [removed: 2020] | | | | | | | [added: | | | |]

| Other | | | [removed: 1 | | | | 1] [added: (0.05] | [added: )] |

[removed: Note:] Properties are considered “stabilized” when they have achieved 90% occupancy for three consecutive months.

| | | Year Ended December 31, | | | | | | | [added: | 2021 vs. 2020 | | | | | | |]

| | | [added: 2021 | | | |] 2020 | | | | 2019 | | |

| Adjustments: | | | | | | | | | [added: | | | | | | | |]

| Property management | | | [added: 98,155 | | | |] 93,825 | | | | [removed: 95,344] [added: 4,330] | | [added: | | 4.6 | % |]

| General and administrative | | | [added: 56,506 | | | |] 48,305 | | | | [removed: 52,757] [added: 8,201] | | [added: | | 17.0 | % |]

| Depreciation | | | [added: 838,272 | | | |] 820,832 | | | | 831,083 | |

| Net (gain) loss on sales of real estate properties | | | [added: (1,072,183 | ) | | |] (531,807 | ) | | | (447,637 | ) |

| Rental income: | | | | | | | | | [added: | | | | | | | |]

| Total rental income | | | [added: 2,463,997 | | | |] 2,571,705 | | | | [removed: 2,700,691] [added: (107,708] | [added: )] | [added: | | (4.2 | )% |]

| Operating expenses: | | | | | | | | | [added: | | | | | | | |]

| Non-same store/other | | | [removed: 49,081] [added: 46,642] | | | | [removed: 55,482] [added: 42,179] | | [added: | | 4,463 | | | | 10.6 | % |]

| Total operating expenses | | | [added: 850,637 | | | |] 822,560 | | | | [removed: 812,984] [added: 28,077] | | [added: | | 3.4 | % |]

| NOI: | | | | | | | | | [added: | | | | | | | |]

The following table provides comparative total same store results and statistics for the [removed: 2020] [added: 2021] Same Store Properties:

[removed: 2020] [added: 2021] vs. [removed: 2019][added: 2020]

Same Store Results/Statistics Including [removed: 73,585] [added: 74,077] Same Store Apartment Units

| [removed: 2020] | | [removed: | | | | | | | | | | | | | | | |] [added: 2021] | | | | [added: 2020] | | | | 2019 | | | [removed: | | | | | | | | | |]

| (1) | Changes in same store Non-Residential revenues are primarily driven by the [removed: deferral/abatement of rents, higher bad debt, lower parking income and the non-cash] write-off of [removed: $12.9 million of] Non-Residential straight-line lease receivables [removed: predominantly] in [removed: the third quarter of 2020.] [added: 2020 and lower bad debt in 2021.] |

The following table provides results and statistics related to our Residential same store operations for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019:][added: 2020:]

| | | | | | | | | | | | | | | | | | | | | | | Increase (Decrease) from Prior Year | | | | | | | | | | | [removed: | | | | | | | | | | | |]

The Company continues to monitor and respond to the ongoing effects of the COVID-19 pandemic.

Its duration, severity and the extent of its adverse health impact on the general population, our residents and employees, along with the distribution, effectiveness and acceptance of vaccines and testing and pace and degree of recovery from the pandemic are among the many unknowns that have had or could continue to have a significant impact on the Company.

Despite the impact of COVID-19, we continue to believe that the long-term prospects for our business remain strong.

| Consolidated Rental Properties | | | 13 | | | | 3,533 | | | $ | 1,249,679 | | | | 3.7 | % |

| Consolidated Rental Properties – Not Stabilized (2) | | | 4 | | | | 1,214 | | | $ | 459,700 | | | | 4.0 | % |

| Consolidated Rental Properties | | | (14 | ) | | | (3,053 | ) | | $ | (1,716,775 | ) | | | (3.7 | )% |

| 12/31/2021 | | | 310 | | | | 80,407 | | | | | | | | | |

Acquisitions

| | • | The consolidated properties acquired in 2021 are located in the Atlanta (4), Austin (3), Boston, Dallas/Ft. Worth (4), Denver (3), Seattle and Washington D.C. markets. The Atlanta, Austin and Dallas/Ft. Worth acquisitions marked the Company’s re-entry into these markets; |

| | • | Approximately $1.4 billion, or 82.0% of all acquisition activity in 2021, was in expansion markets; and |

| | • | The Company funded the 2021 acquisitions by selling older assets located within established markets that no longer met our long-term investment criteria. |

Dispositions

Developments

| | • | The Company commenced construction on one consolidated and three unconsolidated apartment properties during 2021, located in the Denver (2), New York and Washington D.C. markets, consisting of 1,241 apartment units totaling approximately $452.7 million of expected development costs. |

Investments in Unconsolidated Entities

| | • | The Company entered into six separate unconsolidated joint ventures during 2021 for the purpose of developing vacant land parcels in Texas (3), Colorado (2) and New York. The Company’s total investment in these six joint ventures is approximately $72.2 million as of December 31, 2021. Three of the projects are related to the Company’s joint venture development program with Toll Brothers, Inc. (“Toll”) discussed below; and |

| | • | Pursuant to our strategic partnership with Toll, the Company and Toll entered into three separate joint venture agreements during 2021. The projects have not yet started but are expected to do so in 2022. Toll will act as managing member of each project overseeing approvals, design and construction. See Notes 6 and 16 in the Notes to Consolidated Financial Statements for additional discussion. |

Future Outlook

| Corporate overhead (1) | | | (0.03 | ) |

| Depreciation expense | | | (0.04 | ) |

| (1) | Corporate overhead includes property management and general and administrative expenses. |

| | | 2021 | | | | 2020 | | | | $ Change | | | | % Change | | |

| Operating income | | $ | 1,675,841 | | | $ | 1,317,990 | | | $ | 357,851 | | | | 27.2 | % |

| Depreciation | | | 838,272 | | | | 820,832 | | | | 17,440 | | | | 2.1 | % |

| Impairment | | | 16,769 | | | | — | | | | 16,769 | | | | — | |

| Total NOI | | $ | 1,613,360 | | | $ | 1,749,145 | | | $ | (135,785 | ) | | | (7.8 | )% |

| Same store | | $ | 2,342,257 | | | $ | 2,425,025 | | | $ | (82,768 | ) | | | (3.4 | )% |

| Non-same store/other | | | 121,740 | | | | 146,680 | | | | (24,940 | ) | | | (17.0 | )% |

| Same store | | | 803,995 | | | | 780,381 | | | | 23,614 | | | | 3.0 | % |

| Same store | | | 1,538,262 | | | | 1,644,644 | | | | (106,382 | ) | | | (6.5 | )% |

| Total NOI | | $ | 1,613,360 | | | $ | 1,749,145 | | | $ | (135,785 | ) | | | (7.8 | )% |

| • | The decrease in same store rental income is due primarily to the negative cumulative impact of leasing activity at lower Average Rental Rates, particularly in late 2020 and early 2021. |

| | • | Utilities – A $10.2 million increase due to water, sewer and trash charges (approximately 65% of total) increasing as a result of both higher usage and rate, as well as increases in natural gas and electric charges (approximately 35% of total) due to higher commodity prices; |

| | • | Real estate taxes – A $5.2 million increase due to modest rate growth, partially offset by reduced assessed values in certain locations; and |

| | • | Repairs and maintenance – A $5.2 million increase primarily driven by low comparable period expense growth due to the pandemic along with increases in minimum wage on contract services and maintenance repairs in 2021. |

| • | The decrease in non-same store/other NOI is due primarily to a negative impact of lost NOI from 2020 and 2021 dispositions of $50.2 million, partially offset by a positive impact of higher NOI from non-stabilized properties acquired between 2019 and 2021 of $21.1 million. |

See the *Same Store Results* section below for additional discussion of those results.

The expenses in 2020 were lower than normal due to the impact of COVID-19.

The expenses in 2020 were lower than normal due to the impact of COVID-19.

Impairment increased approximately $16.8 million during the year ended December 31, 2021 as compared to 2020, due to an impairment charge in 2021 on one land parcel held for development compared to no impairment charges taken during 2020.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic.

The continued rapid development and fast-changing nature of the COVID-19 pandemic creates many unknowns that have had and could continue to have a significant future impact on the Company.

Its duration, severity and the extent of the adverse health impact on the general population, our residents and employees, the rollout and effectiveness of vaccines and the potential long-term changes in customer preferences for living in our communities, are among the many unknowns.

We have been supporting our residents and employees during the COVID-19 pandemic by:

| | • | Utilizing technology to allow our property teams to interact remotely with current and prospective residents, including a new touchless leasing process and a service process designed to limit in-person contact; |

| --- | --- | --- |

| | • | Successfully implementing changes to the physical layout of our properties and remaining focused on further enhancing our existing commitment to health and safety during the pandemic; |

| | • | Continuing to provide additional paid leave for employees impacted by the pandemic and in 2020 paid special bonuses to certain on-site employees in recognition of their significant efforts; |

| | • | Continuing to support our corporate and regional employees by allowing them to work remotely during the pandemic; and |

| | • | Offering an extensive outreach process for residents and tenants financially impacted by the pandemic, including creating payment plans to assist them, among other support efforts. |

While the pandemic remains a significant health threat, cities continue to work towards safely re-opening their economies and to managing closures in ways that create the least amount of economic impact.

We expect that employers will bring back employees to their offices deliberately and safely.

We believe proximity to employment and to entertainment and social amenities in urban centers will continue to have value.

Employers also continue to invest in the future, committing to long-term office obligations in our markets where they continue to create collaborative work environments.

During the year ended December 31, 2020, the Company collected approximately 97% of its expected Residential revenues in the second, third and fourth quarters of 2020.

We believe that 2021 will be a year of recovery for the Company.

Operating trends are improving and we believe that the first half of 2021 will be the low point in our financial results.

Our affluent, well-employed resident base remains drawn to our nation’s great cities and we expect demand to accelerate and pricing to continue to improve as vaccines are widely administered and cities become more active.

($ in thousands)

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 12/31/2019 | | | 309 | | | | 79,962 | | | | | | | | | |

| Consolidated: | | | | | | | | | | | | | | | | |

| Land Parcels | | | — | | | | — | | | $ | (55,510 | ) | | | | |

| --- | --- |

Portfolio Rollforward

| 12/31/2018 | | | 307 | | | | 79,482 | | | | | | | | | |

| Rental Properties | | | 9 | | | | 2,412 | | | $ | 1,039,830 | | | | 4.6 | % |

| Rental Properties – Not Stabilized (1) | | | 4 | | | | 1,128 | | | $ | 454,859 | | | | 4.9 | % |

| Land Parcels | | | — | | | | — | | | $ | 19,832 | | | | | |

| Rental Properties | | | (11 | ) | | | (2,361 | ) | | $ | (1,080,675 | ) | | | (4.6 | )% |

| Land Parcels | | | — | | | | — | | | $ | (2,100 | ) | | | | |

| Unconsolidated: | | | | | | | | | | | | | | | | |

| Rental Properties (2) | | | (2 | ) | | | (945 | ) | | $ | (394,500 | ) | | | (4.7 | )% |

| Configuration Changes | | | — | | | | 25 | | | | | | | | | |

| (2) | The Company owned a 20% interest in unconsolidated rental properties located in San Jose, CA and South Florida. Sales price listed is the gross sales price. The Company received net sales proceeds of approximately $78.3 million and recognized a GAAP gain on sale of approximately $69.5 million. |

The consolidated properties disposed of were located in the New York, Washington D.C., San Francisco and Boston markets and the sales generated an Unlevered IRR of 7.8%.

The consolidated properties development completions were located in the Boston and Seattle markets.

Certain of these costs are expected to be funded by third-party construction mortgages and joint venture partner obligations.

Work at all of our development projects continues with no material delays after some construction disruptions due to COVID-19.

The 2020 Same Store Properties are discussed in the following paragraphs.

Our operating results are, therefore, affected by changes in short-term interest rates, primarily [removed: London interbank offered rate (“LIBOR”)] [added: LIBOR] and Securities Industry and Financial Markets Association (“SIFMA”) indices, which directly impact borrowings under our revolving credit facility and interest on secured and unsecured borrowings contractually tied to such rates.

The Company had total variable rate debt of [removed: $0.8] [added: $0.6] billion, representing [removed: 10.0%] [added: 7.3%] of total debt, and [removed: $1.4] [added: $0.8] billion, representing [removed: 15.3%] [added: 10.0%] of total debt, as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively.

If interest rates had been 100 basis points higher in [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and average balances coincided with year end balances, our annual interest expense would have been [removed: $8.1] [added: $6.1] million and [removed: $13.8] [added: $8.1] million higher, respectively.

As of December 31, [removed: 2019,] [added: 2021,] the Company had total outstanding fixed rate debt of $7.7 billion, or [removed: 84.7%] [added: 92.7%] of total debt, with an estimated fair market value of [removed: $8.2] [added: $8.4] billion.

If interest rates had been 100 basis points lower as of December 31, [removed: 2019,] [added: 2021,] the estimated fair market value would have increased by approximately [removed: $664.4] [added: $637.2] million.

In the U.S., the Alternative Rates Reference Committee (the “ARRC”), a group of market participants convened in 2014 to help ensure a successful transition away from USD LIBOR, has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate.

As part of the transition process that is now under way, LIBOR is no longer published for certain tenors and key USD settings are expected to be discontinued by June 2023.

LIBOR is the primary basis for determining interest payments on borrowings on the Company’s $2.5 billion revolving credit facility.

This facility contains provisions that establish a process for entering into an amendment to replace LIBOR under certain circumstances.

We are closely monitoring the evolution of practices in the credit market and we do not expect such transition to have a material impact on the Company’s financial position or cash flows.

See also Note 10 in the Notes to Consolidated Financial Statements for additional discussion of derivative instruments.

The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract [removed: high quality] [added: affluent] long-term renters.

EQR is the general partner of, and as of December 31, [removed: 2020] [added: 2021] owned an approximate [removed: 96.4%] [added: 96.7%] ownership interest in, ERPOP.

The Company’s corporate headquarters is located in Chicago, Illinois and the Company also operates regional property management offices in [removed: each] [added: most] of its markets.

You may access our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, our proxy statements and any amendments to any of those reports/statements we file with [added: or furnish to] the Securities and Exchange Commission (“SEC”) free of charge on our website, www.equityapartments.com.

These [removed: reports] [added: reports/statements] are made available on our website as soon as reasonably practicable after we file them with [added: or furnish them to] the SEC.

The Company is one of the largest U.S. publicly-traded owners and operators of [removed: high-quality] [added: high quality] rental apartment [removed: properties] [added: properties,] with [removed: a portfolio primarily located in urban and dense suburban communities] [added: an established presence] in [removed: and around] Boston, New York, Washington, D.C., Southern California (including Los Angeles, Orange County and San Diego), San [removed: Francisco, Seattle] [added: Francisco] and [removed: Denver.][added: Seattle, and an expanding presence in Denver, Atlanta, Dallas/Ft.]

[removed: Our] [added: We believe our] markets [removed: continue to be the primary] [added: are] knowledge centers of the U.S. economy [removed: drawing the] [added: that draw] talented workers and employers that drive economic growth in the United States.

[removed: Our] [added: We believe the locations of our] properties [removed: are located] in [removed: places that] [added: these markets] are attractive to [added: these] knowledge workers whom we hope to convert into satisfied long-term residents.

We believe we have created [removed: a best-in-class] [added: an industry‐leading] operating platform [added: and balance sheet] to run our properties.

We utilize technology and other innovative methods of engagement [added: with our residents] to foster relationships and community, improve the resident experience and operate our business more efficiently.

[removed: Our] [added: We pair that with] disciplined balance sheet management [added: that] enhances returns and value creation while maintaining flexibility to take advantage of future opportunities.

It drives our [removed: commitment] [added: commitments] to sustainability, diversity and inclusion, [added: the] total [removed: well-being] [added: wellbeing] of our employees and being a responsible corporate citizen in the communities in which we operate, which [removed: is] [added: has been] especially relevant [removed: when] [added: as] we [removed: face] [added: faced] unprecedented challenges like the novel coronavirus (“COVID-19”) pandemic.

Our well-located communities are in and around dynamic cities that we believe will continue to attract [removed: high quality] [added: affluent] long-term renters.

The Company’s long-term strategy is to invest in apartment communities located in strategically targeted markets with the goal of maximizing our risk-adjusted total returns [removed: by] [added: and] balancing current cash flow generation with long-term capital appreciation.

We believe our strategy capitalizes on the preference of renters of all ages to live in the locations where we operate [removed: that] [added: which] typically are near [removed: to] transportation (both public transit and convenient highway access), [removed: entertainment] [added: entertainment, employment centers/universities] and cultural [added: and outdoor] amenities.

[removed: Reports also show a growing trend among aging] [added: | | • |] Baby Boomers, a demographic of more than [removed: 76] [added: 71] million people born between 1946 and 1964, [added: also trend] toward apartment rentals. [added: |]

[removed: Technology] [added: Rapidly evolving technology] continues to drive innovation in the rental [removed: industry and to evolve at a rapid pace.][added: industry.]

Having been a first mover in such important areas as revenue management and online leasing, we are focused on technology that improves our operating margins and customer [removed: experience while also meeting the current needs of our customers, including addressing the challenges of the pandemic.][added: experience.]

While we believe areas such as “smart home” technology and others will provide the foundation for current and future improvements to how we do business, we will continue to consider the cost and longevity of technology capital investments [removed: versus the] [added: and their] benefits.

This needs to be a sustainable endeavor, in which we provide [added: resilient] properties that will stand the test of time and remain attractive to our customers and the community without negatively impacting the environment.

We also design our communities to support amenities such as fitness centers and we select locations near shops, [removed: healthy restaurants] [added: restaurants, outdoor amenities such as bike/running paths] and health [removed: and wellness programs,] [added: clubs,] enabling a low carbon footprint lifestyle for our residents to live, work and play.

As detailed below, we have a commitment to our employees’ engagement, diversity and [added: inclusion and] wellness that is the foundation of our corporate purpose.

For additional information regarding our ESG efforts, see our [removed: November 2020] [added: 2021] Environmental, Social and Governance Report at our website, www.equityapartments.com.

Furthermore, our annual proxy statements contain additional information on our [added: ESG efforts, including detailed information regarding our] corporate governance practices.

Such annual proxy statements and the information contained therein are not part of or incorporated into this [removed: report.][added: report, except as otherwise provided herein.]

At Equity Residential, our team of approximately [removed: 2,600] [added: 2,400] employees is the driving force behind our success.

We believe that our richly diverse work environment captures top talent, cultivates the best ideas and creates the widest possible platform for this success in line with our corporate purpose of “*Creating communities where people [removed: thrive.*”] [added: thrive”.*] Our core principles, affectionately named [removed: “Ten] [added: “*Ten] Ways to Be a [removed: Winner,”] [added: Winner”*,] guide our behavior as individuals and collectively as a team, helping us in our goal to deliver market-leading performance.

One way we live the “Ten Ways” is by enriching our culture through our core “Equity [removed: Values”—Diversity and] [added: Values: Diversity &] Inclusion, Social Responsibility, Sustainability and Total [removed: Well-Being.][added: Wellbeing”.]

We have assembled [removed: an] [added: a cross-functional] employee-led Equity Values Council to lead our efforts on these values by acting as change agents to drive initiatives, [removed: create goals and awareness, and encourage colleagues to participate in community service activities and wellness initiatives.]

In addition, executive compensation is based, in part, on meeting important Equity Values goals, and our Board of [removed: Trustees] [added: Trustees, primarily through its Compensation Committee,] takes an active role in overseeing our efforts in this regard.

[removed: *Diversity] [added: Diversity] and [removed: Inclusion*][added: Inclusion]

| | • | Our commitment to diversity and inclusion starts [removed: at the top] with a highly skilled and diverse Board of Trustees. |

| | • | We are committed to hiring a diverse workforce and also fostering a safe, inclusive and productive workplace for all employees. We believe providing a work environment based on respect, trust and collaboration creates an exceptional employee experience where employees can bring their whole selves to work and thrive in their careers. In recent years, we have created [removed: a Director of] [added: dedicated] Diversity and Inclusion [removed: position] [added: staffing] to oversee this crucial work. |

| | • | We have the benefit of a diverse workforce, of which [removed: 60.0%] [added: 62.0%] currently identify as ethnically diverse. We also continue to focus on improving our female representation, which is now [removed: 37.0%] [added: 36.0%] of our workforce. |

| | • | [removed: Going forward, we plan to continue to] [added: We] strategically identify opportunities to increase the diversity of our talent pipeline at all levels, including by actively [removed: sourcing] [added: seeking to source a pool of] diverse candidates for mid-management and above [removed: positions.] [added: positions in the communities where we serve, such as from Project Destined, Fannie Mae’s Future Housing Leaders, Howard University, Roosevelt University, International Rescue Committee and Evanston Scholars.] |

| | • | During the year-end evaluation process, managers review and calibrate compensation for all employees on their team, in an effort to ensure [removed: equitableness] [added: equity] around our pay practices and allow us to retain and reward our top talent. |

| | • | Senior leaders are assessed annually on their leadership results, which for [removed: 2020 was] [added: 2021 were] measured by [removed: the more frequent] [added: a] pulse survey [removed: scores,] [added: score,] employee retention and diversity and inclusion efforts. |

[removed: *Training] [added: Training] and [removed: Development*][added: Development]

| | • | We believe a successful workplace is one where employees constantly learn and grow. Our internal Organization and Talent Development (“OTD”) team is interspersed throughout our markets and works regularly with employees to expand their knowledge and skills. OTD develops and delivers a wide range of training and development opportunities, from tactical to strategic, face-to-face to virtual, social learning to self-directed learning, and more. In [removed: 2020,] [added: 2021,] each employee [removed: completed an average of 13 hours of dedicated learning at a Company expenditure of over $1,350 per employee.] |

| | • | Equity Residential is committed to providing the tools and resources to help our employees achieve total [removed: well-being.] [added: wellbeing.] Whether physical, financial, career, social or community [removed: well-being,] [added: wellbeing,] Equity Residential offers benefits to help meet our employee needs. |

Worth and Austin.

With the pandemic subsiding and cities reopening, we are seeing strong demand from our affluent resident base, demonstrating the long-term attractiveness of our communities.

| | • | Large and diverse economic drivers. Our markets are some of the largest cities in the United States. They are markets that generally attract a variety of large and diverse industries and businesses. They include a number of submarkets that are attractive for long-term multifamily ownership. |

| | • | Strong high quality job growth. Our markets attract and create high quality jobs that are often focused in growing areas of the knowledge-based economy. These jobs result in the significant presence and growth in renters that work in the highest earning sectors of the economy, are not rent burdened and are attracted to our type of properties. This creates the ability to raise rents more readily in good economic times and reduces risk during downturns. Many of these workers are employed in the fields of Science, Technology, Engineering and Mathematics, or STEM jobs, which experienced significantly lower job loss during the COVID-19 pandemic. |

| | • | Significant apartment demand that meets new apartment supply. We remain focused on owning and operating properties in markets or submarkets where the supply of apartments is balanced with strong demand that supports superior long-term returns. |

| | • | Other favorable performance drivers including high and rapidly rising single-family housing prices that support longer term rentership, a balanced regulatory/political environment relating to housing policy and manageable resiliency/environmental risk. |

Furthermore, we believe that demand for rental housing will continue to be driven primarily through household formations from the younger segments of our population, including both Millennials and Generation Z, and to a lesser extent the aging Baby Boomer generation.

| | • | Millennials are comprised of those individuals born between 1981 and 1996, total approximately 72 million people and continue to be a significant portion of the renter population. They also tend to remain renters longer due to societal trends favoring delays in marriage and having children as well as lower savings for home down payments. |

| | • | Generation Z is comprised of the approximately 67 million people born between 1997 and 2012. This cohort is just now entering the renter population and is expected to continue to be an important source of demand. |

The Company continues to allocate capital in order to optimize performance by balancing current cash flow growth with long-term capital appreciation.

Most recently, we have done so by adding expansion markets to our portfolio allocation that meet the same characteristics listed above.

Expansion into these markets of Denver, Atlanta, Dallas/Ft.

Worth and Austin includes investments in both urban and suburban properties and is generally being funded by reducing exposure in selective established markets.

Development also plays an important role in our capital allocation.

Development activity is focused on our in-house pipeline, our strategic partnership with Toll Brothers, Inc. and joint ventures with other third-party developers in both established and expansion markets.

We focus on the resident experience and leveraging operating efficiency which we believe drives our success in renewing our residents.

This focus has driven strong occupancy and a high percentage of residents renewing that is in line with pre-pandemic levels while achieving strong renewal rate growth.

Equity Residential’s sustainability program actively manages environmental impacts and climate-related risks and opportunities through optimized, financially responsible capital investments and technologies.

We methodically focus on energy, water and emissions to advance the program’s policies, targets and resilience outcomes.

Together, we believe our program drives long-term asset value, responsibly manages risks and engages our communities, residents, employees and shareholders as part of our broader ESG strategy and commitment to good corporate citizenship and maximizing investment performance.

To further strengthen our commitments to ESG initiatives, we issued two sustainable fixed-income instruments (each a “green bond”) designed to support projects that contribute to environmental sustainability.

In 2018, the Company became the first multifamily REIT ever to issue a green bond, with the net proceeds of approximately $396.7 million from the offering allocated to the development of a property in San Francisco certified as LEED Platinum and the acquisition of two properties certified as LEED Silver.

In 2021, the Company issued a second green bond, and the net proceeds of approximately $497.5 million from this offering are intended to be allocated to the development or acquisition of green buildings and/or investments in renewable energy, energy efficiency and sustainable water management.

Additionally, during 2021, the Company began funding its $10.0 million investment in a new fund focused on early stage sustainability and climate change mitigation technology relevant to the built environment.

create goals and awareness, and encourage colleagues to participate in community service activities and wellness initiatives.

| | • | A diversity and inclusion lens is embedded in our talent review process. This includes the development of our *Overcoming Bias in Performance Review Toolkit* designed to provide practical bias interrupters and tweaks to the performance evaluation process that interrupt and correct unconscious bias. |

| | • | We employ interns from the Development School for Youth and local colleges to provide pathways for students of various backgrounds interested in real estate. |

| | • | The Company was named the Gold Nareit 2021 Diversity, Equity and Inclusion award recipient in recognition of the Company’s demonstration of a strong commitment to the advancement of diversity and inclusion both within the Company and in the REIT and publicly traded real estate industry. |

| | • | Employee engagement and experience are extremely important at Equity Residential. In 2021, we transitioned to a new Employee Experience (EX) Survey, measuring employee engagement and diversity & inclusion, among other components of the employee experience. |

| | • | Our 2021 engagement score of 79% favorability is very strong, especially given the pandemic and uncertainty surrounding it. Our Diversity & Inclusion Index score of 83% demonstrated an increase in employee favorability for the initiatives taking place and a greater sense of belonging. |

| | | completed an average of approximately 15 hours of dedicated learning at a Company expenditure of approximately $1,200 per employee. |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| | • | In October 2021, as an effort to do our part in the prevention and severity of the COVID-19 pandemic, we introduced our *COVID-19 Health & Safety Requirement Policy* requiring all employees to be fully vaccinated (or receive an approved accommodation) by January 13, 2022. When implementing this new policy, we took great care by supporting each employee in their decision-making process and providing additional resources, including access to medical professionals. Our efforts resulted in a compliance and employee retention rate of 99%. |

| --- | --- | --- |

| --- | --- | --- |

When the pandemic subsides, we believe urban centers will re-energize and once again provide significant networking and other benefits for current and prospective residents who may have temporarily deferred, but not abandoned, their desire to live in vibrant major U.S. metropolitan areas.

We also consider governmental fiscal health, political/regulatory risk and resiliency of our targeted markets.

| | • | High single-family housing prices relative to rental housing costs leading to less competition from owned or rented single-family housing; |

| | • | Strong generators of economic growth often characterized as centers of the knowledge-based economy, leading to high wage job growth and household formation, which in turn leads to high demand for our apartments; |

| | • | Favorable demographics contributing to a larger pool of target residents with a high propensity or greater preference to rent apartments; |

| | • | Higher barriers to entry where, because of land scarcity or government regulation, it is typically more difficult or costly to build new apartment properties, creating limits on new supply; and |

| | • | Strong other demand drivers. |

Demand for rental housing is driven primarily by household formations from the Millennial segment and increasingly from the Generation Z segment of our population.

Millennials, born between 1981 and 2000, total approximately 78 million people and are disproportionately renters.

They also tend to remain renters longer due to societal trends favoring delays in marriage and having children.

We believe we will continue to see demand from this group, as the largest sub-segment of this cohort is now turning 30 years old while the median age of our resident is 33 years old.

After the Millennials comes Generation Z, which comprises the more than 70 million people born between 2001 and 2014.

Overall, our high-quality resident tends to work in the highest earning sectors of the economy and is not rent burdened, creating the ability to raise rents more readily in good economic times and reducing risk during downturns.

Many of these workers are employed in the fields of Science, Technology, Engineering and Mathematics, or STEM jobs.

They have experienced significantly lower job loss during COVID-19.

Once it subsides, we believe we are extremely well positioned to benefit for many years to come as a result of the significant impact the various generations discussed above will have on rental housing.

Over the last decade, the Company has done an extensive repositioning of its portfolio into urban and highly walkable, close-in suburban assets.

While we continue to look for opportunities to expand our portfolio in these locations, it is our intention over time to further diversify our portfolio into select new markets that share the same characteristics as our current markets and to optimize the mix of our properties located in urban vs. dense suburban submarkets within our existing markets.

We believe our success prior to the pandemic in renewing our residents is due to our focus on the resident experience.

This focus has driven the strong occupancy and renewal rate growth that we have achieved over the last several years prior to the COVID-19 pandemic, which we would expect to return once the pandemic subsides.

Our sustainability goals help us focus efforts and drive outcomes to create a more sustainable future for all.

We are especially focused on energy consumption, water consumption and greenhouse gas emissions.

We invest in developing and renovating our properties, with a focus on reducing waste, energy and water use by investing in energy-saving technology, such as those for irrigation, lighting, HVAC and renewable energy, while positively impacting the experience of our residents and the value of our assets.

In 2018, the Company became the first multifamily REIT ever to issue a “green bond”.

As a result, the net proceeds of approximately $396.7 million from the offering were allocated to eligible green/sustainable certified projects.

| | • | Employee engagement and experience are extremely important at Equity Residential. In 2020, we decided to collect employee engagement feedback through frequent pulse surveys (instead of an annual survey like we have historically done), allowing us to check in more often and respond more immediately on employee feedback gathered, especially in light of hardships experienced by many on a personal level as a result of the COVID-19 pandemic and social unrest. |

| | • | The pulse survey ratings from employees in 2020 demonstrated a favorable attitude toward leadership and highlighted our leaders’ ability to effectively lead through adversity. Furthermore, the survey results reflected strong scores on our diversity and inclusion efforts. |

| | • | For further discussion, please refer to Item 7, *Management’s Discussion and Analysis of Financial Condition and Results of Operations*, for the Company’s responses related to health and safety issues during the COVID-19 pandemic. |

As of December 31, [removed: 2020,] [added: 2021,] 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.

For the Fiscal Year Ended December 31, [removed: 2020][added: 2021]

The aggregate market value of Common Shares held by non-affiliates of the Registrant was approximately [removed: $21.7] [added: $28.5] billion based upon the closing price on June 30, [removed: 2020] [added: 2021] of [removed: $58.82] [added: $77.00] using beneficial ownership of shares rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to exclude voting shares owned by Trustees and Executive Officers, some of whom may not be held to be affiliates upon judicial determination.

The number of Common Shares of Beneficial Interest, $0.01 par value, outstanding on February [removed: 12, 2021] [added: 11, 2022] was [removed: 372,663,215.][added: 375,917,242.]

Part III incorporates by reference certain information that will be contained in Equity Residential’s Proxy Statement relating to its [removed: 2021] [added: 2022] Annual Meeting of Shareholders, which Equity Residential intends to file no later than 120 days after the end of its fiscal year ended December 31, [removed: 2020,] [added: 2021,] and thus these items have been omitted in accordance with General Instruction G(3) to Form 10-K.

Equity Residential is the general partner and [removed: 96.4%] [added: 96.7%] owner of ERP Operating Limited Partnership.

This report combines the annual reports on Form 10-K for the year ended December 31, [removed: 2020] [added: 2021] of Equity Residential and ERP Operating Limited Partnership.

[removed: ][added: ]

EQR is the general partner of, and as of December 31, [removed: 2020] [added: 2021] owned an approximate [removed: 96.4%] [added: 96.7%] ownership interest in, ERPOP.

The remaining [removed: 3.6%] [added: 3.3%] interest is owned by limited partners.

[removed: EQUITY RESIDENTIAL][added: EQUITY RESIDENTIAL]

| Item 3. | | [Legal Proceedings](#ITEM_3_LEGAL_PROCEEDINGS) | | [removed: 23] [added: 24] |

| Item 4. | | [Mine Safety Disclosures](#ITEM_4_MINE_SAFETY_DISCLOSURES) | | [removed: 23] [added: 24] |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU) | | [removed: 24] [added: 25] |

| Item 6. | | [Reserved](#ITEM_6_SELECTED_FINANCIAL_DATA) | | [removed: 24] [added: 25] |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F) | | [removed: 25] [added: 26] |

| Item 7A. | | [Quantitative and Qualitative Disclosures about Market Risk](#ITEM_7A_QUANTITATIVE_QUALITATIVE_DISCLOS) | | [removed: 45] [added: 42] |

| Item 8. | | [Financial Statements and Supplementary Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR) | | [removed: 46] [added: 42] |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC) | | [removed: 46] [added: 42] |

| Item 9A. | | [Controls and Procedures](#ITEM_9A_CONTROLS_PROCEDURES) | | [removed: 46] [added: 42] |

| Item 9B. | | [Other Information](#ITEM_9B_OR_INFORMATION) | | [removed: 47] [added: 44] |

| Item 10. | | [Trustees, Executive Officers and Corporate Governance](#ITEMS_10_11_12_13_14) | | [removed: 48] [added: 45] |

| Item 11. | | [Executive Compensation](#ITEMS_10_11_12_13_14) | | [removed: 48] [added: 45] |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ITEMS_10_11_12_13_14) | | [removed: 48] [added: 45] |

| Item 13. | | [Certain Relationships and Related Transactions, and Trustee Independence](#ITEMS_10_11_12_13_14) | | [removed: 48] [added: 45] |

| Item 14. | | [Principal [removed: Accounting] [added: Accountant] Fees and Services](#ITEMS_10_11_12_13_14) | | [removed: 48] [added: 45] |

| Item 15. | | [removed: [Exhibits,] [added: [Exhibit and] Financial Statement Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH) | | [removed: 49] [added: 46] |

| Item 16. | | [Form 10-K Summary](#ITEM_16_FORM_10K_SUMMARY) | | [removed: 49] [added: 46] |

| Auditor Firm Id: | 42 | Auditor Name: | Ernst and Young LLP | Auditor Location: | Chicago, Illinois, USA |

| --- | --- | --- | --- | --- | --- |

| Item 9C. | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ITEM_9C_DISCLOSURE_REGARDING_FOREIGN_JUR) | | 44 |

| EX-4.3 | | | | |

| | | | | |

| | | | | |

As of December 31, [removed: 2020,] [added: 2021,] the Company, directly or indirectly through investments in title holding entities, owned all or a portion of [removed: 304] [added: 310] properties located in [removed: 9] [added: 10] states and the District of Columbia consisting of [removed: 77,889] [added: 80,407] apartment units.

| Wholly Owned Properties | | | [removed: 287] [added: 294] | | | | [removed: 74,328] [added: 76,861] | |

| Partially Owned Properties – Consolidated | | | 16 | | | | [removed: 3,399] [added: 3,546] | |

The following table sets forth certain information by market relating to the Company’s properties at December 31, [removed: 2020:][added: 2021:]

| Orange County | | | 13 | | | | 4,028 | | | | [removed: 5.4] [added: 5.3] | % | | | [removed: 2,222] [added: 2,427] | |

| San Diego | | | 11 | | | | 2,706 | | | | [removed: 3.8] [added: 3.7] | % | | | [removed: 2,373] [added: 2,598] | |

| (1) | % of Stabilized Budgeted NOI - Represents original budgeted [removed: 2021] [added: 2022] NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up. |

As of December 31, [removed: 2020,] [added: 2021,] the Company’s same store occupancy was [removed: 94.4%] [added: 96.4%] and its total portfolio-wide occupancy, which includes completed development properties in various stages of lease-up, was [removed: 94.2%.][added: 95.7%.]

Garden-style are generally defined as properties with two and/or three story buildings while mid-rise/high-rise are [added: generally] defined as properties with greater than three story buildings.

The properties [removed: currently] in various stages of development and lease-up at December 31, [removed: 2020, all of which are consolidated,] [added: 2021] are included in the following table:

| Development and Lease-Up Projects as of December 31, [removed: 2020 | | | |] [added: 2021] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (Amounts in thousands except for project and apartment unit amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | |]

| | | | | | | | | [removed: Total] | | | | Total | | | | Total [removed: Book] | | | | | | | | | | | | | | | | | | | | | [removed: | | | |]

| | | | | [removed: No. of] | | | | [removed: Budgeted] [added: No. of] | | | | [removed: Book] [added: Budgeted] | | | | [removed: Value Not] [added: Book] | | | | | | | | | | | | Estimated/Actual | | | | | | | | [removed: | | | |] [added: Percentage] |

| | | | | [removed: Apartment] [added: Ownership] | | | | [removed: Capital] [added: Apartment] | | | | [removed: Value] [added: Capital] | | | | [removed: Placed in] [added: Value] | | | | Total | | | | Percentage | | | | [added: Start | |] Initial | | Completion | | Stabilization | | [removed: Percentage | | | | Percentage | |] [added: Leased /] |

| Projects | | Location | | [added: Percentage | | | |] Units | | | | Cost (1) | | | | to Date | | | | [removed: Service | | | |] Debt [added: (2)] | | | | Completed | | | | [removed: Occupancy | |] Date | | [removed: Date] [added: Occupancy] | | [removed: Leased] [added: Date] | | [added: Date] | | Occupied | [removed: | |]

| Projects Under [removed: Development - Wholly Owned: | | | |] [added: Development:] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Alcott Apartments (fka West End Tower) | | Boston, MA | | [added: 100%] | [removed: 470] | | | [removed: $] | [removed: 409,749] [added: 470] | | | [removed: $] | [removed: 267,783] [added: 409,749] | | | [removed: $] | [removed: 267,783] [added: 398,138] | | | [removed: $] | — | | | [added: 98%] | [removed: 67] | [removed: %] | | Q2 [removed: 2021] [added: 2018] | | Q3 2021 | | [removed: Q1 2023 | | | — |] [added: Q4 2021] | | [added: Q1 2023] | [removed: —] | [added: 52% / 43%] |

| The Edge (fka 4885 Edgemoor Lane) [removed: (2)] [added: (3)] | | Bethesda, MD | | [added: 100%] | [removed: 154] | | | | [removed: 75,271] [added: 154] | | | | [removed: 52,312] [added: 75,271] | | | | [removed: 52,312] [added: 73,091] | | | | — | | | [added: 100%] | [removed: 70] | [removed: %] | | Q3 [removed: 2021] [added: 2019] | | Q3 2021 | | Q3 [removed: 2022 | | | — |] [added: 2021] | | [added: Q3 2022] | [removed: —] | [added: 62% / 54%] |

| Projects Under [removed: Development - Partially Owned: | | | |] [added: Development:] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Aero Apartments [removed: (3)] | | Alameda, CA | | [added: 90%] | [removed: 200] | | | | [removed: 117,794] [added: 200] | | | | [removed: 91,039] [added: 117,794] | | | | [removed: 91,039] [added: 113,361] | | | | [removed: 31,494] [added: 61,662] | | | [added: 100%] | [removed: 78] | [removed: %] | | [removed: Q1 2021] [added: Q3 2019] | | Q2 2021 | | Q2 [removed: 2022 | | | — |] [added: 2021] | | [added: Q2 2022] | [removed: —] | [added: 71% / 70%] |

| (1) | Total Budgeted Capital Cost – Estimated remaining cost for projects under development and/or developed plus all capitalized costs incurred to date, including land acquisition costs, construction costs, capitalized real estate taxes and insurance, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP. [added: Amounts for partially owned consolidated and unconsolidated properties are presented at 100% of the project.] |

| Garden | | | 96 | | | | 24,489 | | | | 255 | |

| Mid/High-Rise | | | 214 | | | | 55,918 | | | | 261 | |

| | | | 310 | | | | 80,407 | | | | 259 | |

| | | | 310 | | | | 80,407 | |

| Established Markets: | | | | | | | | | | | | | | | | |

| Los Angeles | | | 66 | | | | 15,259 | | | | 18.6 | % | | $ | 2,673 | |

| Subtotal – Southern California | | | 90 | | | | 21,993 | | | | 27.6 | % | | | 2,619 | |

| San Francisco | | | 44 | | | | 11,830 | | | | 16.0 | % | | | 2,957 | |

| Washington D.C. | | | 48 | | | | 14,851 | | | | 15.5 | % | | | 2,358 | |

| New York | | | 36 | | | | 9,343 | | | | 13.7 | % | | | 3,597 | |

| Boston | | | 27 | | | | 7,170 | | | | 11.4 | % | | | 3,049 | |

| Seattle | | | 46 | | | | 9,525 | | | | 11.0 | % | | | 2,332 | |

| Expansion Markets: | | | | | | | | | | | | | | | | |

| Denver | | | 8 | | | | 2,498 | | | | 2.6 | % | | | 2,197 | |

| Atlanta | | | 4 | | | | 1,215 | | | | 1.0 | % | | | 1,935 | |

| Dallas/Ft. Worth | | | 4 | | | | 1,241 | | | | 0.8 | % | | | 1,868 | |

| Austin | | | 3 | | | | 741 | | | | 0.4 | % | | | 1,694 | |

| | | | | | | | | | | | | | | | | |

| Total | | | 310 | | | | 80,407 | | | | 100.0 | % | | $ | 2,696 | |

The following tables provide a rollforward of the apartment units included in Same Store Properties (please refer to the Definitions section in Item 7, *Management’s Discussion and Analysis of Financial Condition and Results of Operations*) and a reconciliation of apartment units included in Same Store Properties to those included in Total Properties for the year ended December 31, 2021:

| | | Year Ended December 31, 2021 | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Properties | | | | Apartment Units | | |

| Same Store Properties at December 31, 2020 | | | 285 | | | | 73,585 | |

| 2019 acquisitions stabilized | | | 12 | | | | 3,323 | |

| 2021 dispositions | | | (14 | ) | | | (3,053 | ) |

| Lease-up properties stabilized | | | 1 | | | | 222 | |

| Same Store Properties at December 31, 2021 | | | 284 | | | | 74,077 | |

| | | Year Ended December 31, 2021 | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Properties | | | | Apartment Units | | |

| Same Store | | | 284 | | | | 74,077 | |

| Non-Same Store: | | | | | | | | |

| 2021 acquisitions | | | 17 | | | | 4,747 | |

| 2020 acquisitions | | | 1 | | | | 158 | |

| 2019 acquisitions not yet stabilized | | | 1 | | | | 217 | |

| Lease-up properties not yet stabilized (1) | | | 6 | | | | 1,207 | |

| Other | | | 1 | | | | 1 | |

| Total Non-Same Store | | | 26 | | | | 6,330 | |

| Total Properties and Apartment Units | | | 310 | | | | 80,407 | |

| Garden | | | 102 | | | | 25,791 | | | | 253 | |

| Mid/High-Rise | | | 202 | | | | 52,098 | | | | 258 | |

| | | | 304 | | | | 77,889 | | | | 256 | |

| Master-Leased Property – Consolidated | | | 1 | | | | 162 | |

| | | | 304 | | | | 77,889 | |

| Los Angeles | | | 72 | | | | 16,603 | | | | 21.5 | % | | $ | 2,458 | |

| Subtotal – Southern California | | | 96 | | | | 23,337 | | | | 30.7 | % | | | 2,407 | |

| San Francisco | | | 48 | | | | 12,707 | | | | 18.3 | % | | | 3,053 | |

| Washington D.C. | | | 47 | | | | 14,731 | | | | 17.2 | % | | | 2,387 | |

| Seattle | | | 46 | | | | 9,454 | | | | 11.4 | % | | | 2,349 | |

| New York | | | 37 | | | | 9,606 | | | | 11.3 | % | | | 3,617 | |

| Boston | | | 25 | | | | 6,430 | | | | 9.4 | % | | | 2,958 | |

| Denver | | | 5 | | | | 1,624 | | | | 1.7 | % | | | 2,003 | |

| Total | | | 304 | | | | 77,889 | | | | 100.0 | % | | $ | 2,680 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Projects Under Development Wholly Owned | | | | | 624 | | | | 485,020 | | | | 320,095 | | | | 320,095 | | | | — | | | | | | | | | | | | | | | | | | | |

| Projects Under Development Partially Owned | | | | | 200 | | | | 117,794 | | | | 91,039 | | | | 91,039 | | | | 31,494 | | | | | | | | | | | | | | | | | | | |

| Total Projects Under Development | | | | | 824 | | | $ | 602,814 | | | $ | 411,134 | | | $ | 411,134 | | | $ | 31,494 | | | | | | | | | | | | | | | | | | | |

| Land Held for Development | | | | N/A | | | | N/A | | | | $ | 86,170 | | | $ | 86,170 | | | $ | — | | | | | | | | | | | | | | | | | | | |

| (2) | The Edge – The land under this project is subject to a long-term ground lease. This project is adjacent to an existing apartment property owned by the Company. |

| (3) | Aero Apartments – This development project is owned 90% by the Company and 10% by a third-party partner in a joint venture consolidated by the Company. Construction is being partially funded with a construction loan that is non-recourse to the Company. The joint venture partner has funded $4.7 million for its allocated share of the project equity and serves as the developer of the project. |

At February [removed: 12, 2021,] [added: 11, 2022,] the number of record holders of Common Shares was approximately [removed: 1,950] [added: 1,850] and [removed: 372,663,215] [added: 375,917,242] Common Shares were outstanding.

At February [removed: 12, 2021,] [added: 11, 2022,] the number of record holders of Units in the Operating Partnership was approximately 475 and [removed: 386,705,589] [added: 388,789,846] Units were outstanding.

Unregistered Common Shares Issued in the Quarter Ended December 31, [removed: 2020] [added: 2021] (Equity Residential)

During the quarter ended December 31, [removed: 2020,] [added: 2021,] EQR issued [removed: 22,768] [added: 200,245] Common Shares in exchange for [removed: 22,768] [added: 200,245] OP Units held by various limited partners of ERPOP.

The following table provides information as of December 31, [removed: 2020] [added: 2021] with respect to the Company’s Common Shares that may be issued under its existing equity compensation plans.

| (1) | The amounts shown in columns (a) and (b) of the above table do not include [removed: 353,634] [added: 309,876] outstanding Common Shares (all of which are restricted and subject to vesting requirements) that were granted under the Company’s 2011 Share Incentive Plan, as amended (the “2011 Plan”), and 2019 Share Incentive Plan, as amended (the “2019 Plan”), and outstanding Common Shares that have been purchased by employees and trustees under the Company’s ESPP. |

| (2) | Includes [removed: 10,512,390] [added: 9,539,478] Common Shares that may be issued under the 2019 Plan and [removed: 2,624,136] [added: 2,553,434] Common Shares that may be sold to employees and trustees under the ESPP. |

On June 27, 2019, the shareholders of EQR approved the Company's 2019 Plan and the Company [removed: has] filed a Form S-8 registration statement to register 11,331,958 Common Shares under this plan.

As of December 31, [removed: 2020, 10,512,390] [added: 2021, 9,539,478] shares were available for future issuance.

| Equity compensation plans approved by shareholders | | | 4,387,833 | | | $ | 60.65 | | | | 12,092,912 | |

| Equity compensation plans approved by shareholders | | | 5,642,752 | | | $ | 56.91 | | | | 13,136,526 | |

Effective as of December 31, [removed: 2020,] [added: 2021,] the [removed: Company] [added: Operating Partnership] carried out an evaluation, under the supervision and with the participation of the [removed: Company’s] [added: Operating Partnership’s] management, including the Chief Executive Officer and Chief Financial [removed: Officer,] [added: Officer] of [added: EQR, of] the effectiveness of the [removed: Company’s] [added: Operating Partnership’s] disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15.

Based on the Company’s evaluation under the framework in Internal Control – Integrated Framework, management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

Our internal control over financial reporting has been audited as of December 31, [removed: 2020] [added: 2021] by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

[removed: (c)] [added: (c)] Changes in Internal Control over Financial [removed: Reporting:][added: Reporting:]

There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to above that occurred during the fourth quarter of [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Effective as of December 31, [removed: 2020,] [added: 2021,] the [removed: Operating Partnership] [added: Company] carried out an evaluation, under the supervision and with the participation of the [removed: Operating Partnership’s] [added: Company’s] management, including the Chief Executive Officer and Chief Financial [removed: Officer of EQR,] [added: Officer,] of the effectiveness of the [removed: Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15.]

[removed: (b)] [added: (b)] Management’s Report on Internal Control over Financial [removed: Reporting:][added: Reporting:]

Based on the Operating Partnership’s evaluation under the framework in Internal Control – Integrated Framework, management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

There were no changes to the internal control over financial reporting of the Operating Partnership identified in connection with the Operating Partnership’s evaluation referred to above that occurred during the fourth quarter of [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15.

Our internal control over financial reporting has been audited as of December 31, 2021 by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

PART III

Items 10, 11, 12, 13 and 14.

Trustees, Executive Officers and Corporate Governance; Executive Compensation; Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships and Related Transactions, and Trustee Independence; and Principal Accounting Fees and Services

The information required by Item 10, Item 11, Item 12, Item 13 and Item 14 is incorporated by reference to, and will be contained in, Equity Residential’s Proxy Statement, which the Company intends to file no later than 120 days after the end of its fiscal year ended December 31, 2020, and thus these items have been omitted in accordance with General Instruction G(3) to Form 10-K.

Equity Residential is the general partner and 96.4% owner of ERP Operating Limited Partnership.

PART IV

Not applicable.

PART III

Items 10, 11, 12, 13 and 14.

Trustees, Executive Officers and Corporate Governance; Executive Compensation; Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships and Related Transactions, and Trustee Independence; and Principal Accountant Fees and Services

The information required by Item 10, Item 11, Item 12, Item 13 and Item 14 is incorporated by reference to, and will be contained in, Equity Residential’s Proxy Statement, which the Company intends to file no later than 120 days after the end of its fiscal year ended December 31, 2021, and thus these items have been omitted in accordance with General Instruction G(3) to Form 10-K.

Equity Residential is the general partner and 96.7% owner of ERP Operating Limited Partnership.

PART IV

| 3.5 | | [removed: [Sixth] [added: [Seventh] Amended and Restated Agreement of Limited Partnership for ERP Operating Limited [removed: Partnership] [added: Partnership,] dated as of March [removed: 12, 2009.](http://www.sec.gov/Archives/edgar/data/906107/000119312509057691/dex101.htm)] [added: 18, 2021 and effective as of January 1, 2020.](http://www.sec.gov/Archives/edgar/data/906107/000119312521092676/d130340dex101.htm)] | | Included as Exhibit 10.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated March [removed: 12, 2009,] [added: 18, 2021,] filed on March [removed: 18, 2009.] [added: 24, 2021.] |

| 4.3 | | [Description of ERP Operating Limited Partnership OP Units Registered Under Section 12 of the Securities Exchange Act of [removed: 1934.](http://www.sec.gov/Archives/edgar/data/906107/000156459020005562/eqr-ex43_635.htm)] [added: 1934.](https://www.sec.gov/Archives/edgar/data/906107/000156459022005566/eqr-ex43_312.htm)] | | [removed: Included as Exhibit 4.3 to Equity Residential's and ERP Operating Limited Partnership's Form 10-K for the year ended December 31, 2019.] [added: Attached herein.] |

| 4.10 | | [Form of [removed: 4.625%] [added: 3.00%] Note due [removed: December] [added: April] 15, [removed: 2021.](http://www.sec.gov/Archives/edgar/data/931182/000119312511336640/d267714dex41.htm)] [added: 2023.](http://www.sec.gov/Archives/edgar/data/931182/000119312513146173/d517536dex41.htm)] | | Included as Exhibit 4.1 to ERP Operating Limited Partnership's Form 8-K dated [removed: December 7, 2011,] [added: April 3, 2013,] filed on [removed: December 9, 2011.] [added: April 8, 2013.] |

| 4.11 | | [Form of [removed: 3.00%] [added: 3.375%] Note due [removed: April 15, 2023.](http://www.sec.gov/Archives/edgar/data/931182/000119312513146173/d517536dex41.htm)] [added: June 1, 2025.](http://www.sec.gov/Archives/edgar/data/931182/000119312515185895/d925506dex41.htm)] | | Included as Exhibit 4.1 to ERP Operating Limited Partnership's Form 8-K dated [removed: April 3, 2013,] [added: May 11, 2015,] filed on [removed: April 8, 2013.] [added: May 13, 2015.] |

| [removed: 4.12] [added: 4.13] | | [Form of [removed: 3.375%] [added: 2.850%] Note due [removed: June] [added: November] 1, [removed: 2025.](http://www.sec.gov/Archives/edgar/data/931182/000119312515185895/d925506dex41.htm)] [added: 2026.](http://www.sec.gov/Archives/edgar/data/931182/000119312516733856/d241075dex41.htm)] | | Included as Exhibit 4.1 to ERP Operating Limited Partnership's Form 8-K dated [removed: May 11, 2015,] [added: October 4, 2016,] filed on [removed: May 13, 2015.] [added: October 7, 2016.] |

| [removed: 4.13] [added: 4.12] | | [Terms Agreement regarding 7.57% Notes due August 15, 2026.](http://www.sec.gov/Archives/edgar/data/931182/0000950131-96-003872.txt) | | Included as Exhibit 1 to ERP Operating Limited Partnership’s Form 8-K, filed on August 13, 1996. |

| 4.14 | | [Form of [removed: 2.850%] [added: 3.250%] Note due [removed: November] [added: August] 1, [removed: 2026.](http://www.sec.gov/Archives/edgar/data/931182/000119312516733856/d241075dex41.htm)] [added: 2027.](http://www.sec.gov/Archives/edgar/data/906107/000119312517245849/d433744dex41.htm)] | | Included as Exhibit 4.1 to [added: Equity Residential's and] ERP Operating Limited Partnership's Form 8-K dated [removed: October 4, 2016,] [added: July 31, 2017,] filed on [removed: October 7, 2016.] [added: August 2, 2017.] |

| [removed: 4.15] [added: 4.19] | | [Form of [removed: 3.250%] [added: 1.850%] Note due August 1, [removed: 2027.](http://www.sec.gov/Archives/edgar/data/906107/000119312517245849/d433744dex41.htm)] [added: 2031.](http://www.sec.gov/Archives/edgar/data/906107/000119312521237726/d209335dex41.htm)] | | Included as Exhibit 4.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated [removed: July 31, 2017,] [added: August 3, 2021,] filed on August [removed: 2, 2017.] [added: 5, 2021.] |

| [removed: 4.16] [added: 4.15] | | [Form of 3.500% Note due March 1, 2028.](http://www.sec.gov/Archives/edgar/data/906107/000119312518032305/d513291dex41.htm) | | Included as Exhibit 4.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated February 1, 2018, filed on February 6, 2018. |

| [removed: 4.17] [added: 4.16] | | [Form of 4.150% Note due December 1, 2028.](http://www.sec.gov/Archives/edgar/data/906107/000119312518338071/d664437dex41.htm) | | Included as Exhibit 4.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated November 28, 2018, filed on November 29, 2018. |

| [removed: 4.18] [added: 4.17] | | [Form of 3.000% Note due July 1, 2029.](http://www.sec.gov/Archives/edgar/data/906107/000119312519177504/d737088dex41.htm) | | Included as Exhibit 4.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated June 17, 2019, filed on June 20, 2019. |

| [removed: 4.19] [added: 4.18] | | [Form of 2.500% Note due February 15, 2030.](http://www.sec.gov/Archives/edgar/data/906107/000119312519226889/d797062dex41.htm) | | Included as Exhibit 4.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated August 20, 2019, filed on August 22, 2019. |

| [removed: 10.3] [added: 10.4] | | [Amended and Restated Limited Partnership Agreement of Lexford Properties, L.P.](http://www.sec.gov/Archives/edgar/data/906107/000091205700011416/0000912057-00-011416.txt) | | Included as Exhibit 10.16 to Equity Residential's Form 10-K for the year ended December 31, 1999. |

| [removed: 10.4] [added: 10.5] | * | [Equity Residential 2019 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000119312519187395/d26582dex991.htm) | | Included as Exhibit 99.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated June 27, 2019, filed on July 1, 2019. |

| [removed: 10.5] [added: 10.6] | * | [Equity Residential 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000095012311060571/c65161exv99w1.htm) | | 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. |

| [removed: 10.6] [added: 10.7] | * | [First Amendment to 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610712000023/eqr-2012630xexhibit101.htm) | | 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. |

| [removed: 10.7] [added: 10.8] | * | [Second Amendment to 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610713000034/exhibit101.htm) | | 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. |

| [removed: 10.8] [added: 10.9] | * | [Third Amendment to 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610714000012/eqr-2014331xexhibit101.htm) | | 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. |

| [removed: 10.9] [added: 10.10] | * | [Fourth Amendment to 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610714000023/exhibit1013q14.htm) | | 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. |

| [removed: 10.10] [added: 10.11] | * | [Fifth Amendment to 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610716000044/eqr-exhibit101x2q16.htm) | | 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. |

| [removed: 10.11] [added: 10.12] | * | [Sixth Amendment to 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610717000007/exhibit1018eqr-2016.htm) | | 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. |

| [removed: 10.12] [added: 10.13] | * | [Seventh Amendment to 2011 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000156459017020797/eqr-ex101_95.htm) | | 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. |

| [removed: 10.13] [added: 10.15] | * | [removed: [Equity Residential Second Restated 2002 Share Incentive Plan dated December 10, 2008.](http://www.sec.gov/Archives/edgar/data/906107/000119312509038255/dex1015.htm)] [added: [Form of Change in Control/Severance Agreement between the Company and other executive officers.](http://www.sec.gov/Archives/edgar/data/906107/000091205702009068/a2072511zex-10_13.txt)] | | Included as Exhibit [removed: 10.15] [added: 10.13] to Equity Residential's Form 10-K for the year ended December 31, [removed: 2008.] [added: 2001.] |

| [removed: 10.14] [added: 10.16] | * | [removed: [First] [added: [Form of First] Amendment to [removed: Second] [added: Amended and] Restated [removed: 2002 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000095012310100488/c60163exv10w1.htm)] [added: Change in Control/Severance Agreement with each executive officer.](http://www.sec.gov/Archives/edgar/data/906107/000119312509102717/dex101.htm)] | | Included as Exhibit 10.1 to Equity Residential's Form 10-Q for the quarterly period ended [removed: September 30, 2010.] [added: March 31, 2009.] |

| [removed: 10.16] [added: 10.22] | * | [removed: [Third Amendment to Second] [added: [The Equity Residential Supplemental Executive Retirement Plan as Amended and] Restated [removed: 2002 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610712000023/eqr-2012630xexhibit102.htm)] [added: effective April 1, 2017.](http://www.sec.gov/Archives/edgar/data/906107/000156459017015496/eqr-ex102_61.htm)] | | 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, [removed: 2012.] [added: 2017.] |

| [removed: 10.17] [added: 10.23] | * | [removed: [Fourth Amendment] [added: [Amendment] to [removed: Second Restated 2002 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000090610713000034/exhibit102.htm)] [added: the Equity Residential Supplemental Executive Retirement Plan, effective as of June 1, 2020.](http://www.sec.gov/Archives/edgar/data/906107/000156459020035511/eqr-ex101_104.htm)] | | Included as Exhibit [removed: 10.2] [added: 10.1] to Equity Residential's and ERP Operating Limited Partnership's Form 10-Q for the quarterly period ended [removed: September] [added: June] 30, [removed: 2013.] [added: 2020.] |

| [removed: 10.18] [added: 10.14] | * | [Form of 2018 Long-Term Incentive Plan Award Agreement.](http://www.sec.gov/Archives/edgar/data/906107/000156459018010687/eqr-ex101_301.htm) | | 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, 2018. |

| 10.19 | * | [removed: [Form of Change in Control/Severance] [added: [Retirement Benefits] Agreement between [added: Samuel Zell and] the Company [removed: and other executive officers.](http://www.sec.gov/Archives/edgar/data/906107/000091205702009068/a2072511zex-10_13.txt)] [added: dated October 18, 2001.](http://www.sec.gov/Archives/edgar/data/906107/000091205702009068/a2072511zex-10_18.txt)] | | Included as Exhibit [removed: 10.13] [added: 10.18] to Equity Residential's Form 10-K for the year ended December 31, 2001. |

| [removed: 10.20] [added: 10.24] | * | [removed: [Form of First Amendment to] [added: [The Equity Residential Grandfathered Supplemental Executive Retirement Plan as] Amended and Restated [removed: Change in Control/Severance Agreement with each executive officer.](http://www.sec.gov/Archives/edgar/data/906107/000119312509102717/dex101.htm)] [added: effective January 1, 2005.](http://www.sec.gov/Archives/edgar/data/906107/000110465908031090/a08-13376_1ex10d2.htm)] | | Included as Exhibit [removed: 10.1] [added: 10.2] to Equity Residential's Form 10-Q for the quarterly period ended March 31, [removed: 2009.] [added: 2008.] |

| [removed: 10.21] [added: 10.17] | * | [Form of Indemnification Agreement between the Company and each trustee and executive officer.](http://www.sec.gov/Archives/edgar/data/906107/000110465904007155/a04-2963_2ex10d18.htm) | | Included as Exhibit 10.18 to Equity Residential's Form 10-K for the year ended December 31, 2003. |

| [removed: 10.22] [added: 10.21] | * | [removed: [Form of Letter Agreement] [added: [Age 62 Retirement Agreement, dated February 27, 2020, by and] between Equity Residential and Alan W. [removed: George.](http://www.sec.gov/Archives/edgar/data/906107/000119312508227703/dex103.htm)] [added: George.](http://www.sec.gov/Archives/edgar/data/906107/000156459020022867/eqr-ex101_17.htm)] | | Included as Exhibit [removed: 10.3] [added: 10.1] to Equity Residential's [added: and ERP Operating Limited Partnership's] Form 10-Q for the quarterly period ended [removed: September 30, 2008.] [added: March 31, 2020.] |

| [removed: 10.23] [added: 10.18] | * | [Form of Executive Retirement Benefits Agreement.](http://www.sec.gov/Archives/edgar/data/906107/000110465907014819/a07-5259_1ex10d24.htm) | | Included as Exhibit 10.24 to Equity Residential's Form 10-K for the year ended December 31, 2006. |

| [removed: 10.25] [added: 10.20] | * | [Age 62 Retirement Agreement, dated September 4, 2018, by and between Equity Residential and David J. Neithercut.](http://www.sec.gov/Archives/edgar/data/906107/000156459018025620/eqr-ex101_20.htm) | | 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, 2018. |

| [removed: 10.26] [added: 10.3] | [removed: *] | [removed: [Age 62 Retirement] [added: [First Amendment to Revolving Credit] Agreement, dated [removed: February 27, 2020, by and between Equity Residential] [added: as of August 31, 2021, among ERP Operating Limited Partnership, Lexford Properties, L.P.,] and [removed: Alan W. George.](http://www.sec.gov/Archives/edgar/data/906107/000156459020022867/eqr-ex101_17.htm)] [added: Bank of America, N.A., as Administrative Agent.](http://www.sec.gov/Archives/edgar/data/906107/000156459021052952/eqr-ex101_18.htm)] | | Included as Exhibit 10.1 to Equity Residential's and ERP Operating Limited Partnership's Form 10-Q for the quarterly period ended [removed: March 31, 2020.] [added: September 30, 2021.] |

| [removed: 10.30] [added: 10.25] | | [Distribution Agreement, dated June 6, 2019, among the Company, the Operating Partnership, JPMorgan Chase Bank, National Association, London Branch, J.P. Morgan Securities LLC, Barclays Bank PLC, Barclays Capital Inc., Bank of America, N.A., BofA Securities, Inc., The Bank of New York Mellon, BNY Mellon Capital Markets, LLC, Morgan Stanley & Co. LLC, MUFG Securities EMEA plc, MUFG Securities Americas Inc., The Bank of Nova Scotia, Scotia Capital (USA) Inc., UBS AG, London Branch and UBS Securities LLC](http://www.sec.gov/Archives/edgar/data/906107/000119312519166735/d759345dex11.htm). | | Included as Exhibit 1.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated and filed on June 6, 2019. |

| [removed: 10.31] [added: 10.26] | | [Form of Master Forward Sale Confirmation](http://www.sec.gov/Archives/edgar/data/906107/000119312519166735/d759345dex12.htm). | | Included as Exhibit 1.2 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated and filed on June 6, 2019. |

| [removed: 10.32] [added: 10.27] | | [Archstone Residual JV, LLC Limited Liability Company Agreement.](http://www.sec.gov/Archives/edgar/data/906107/000119312513084766/d491312dex103.htm) | | 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. |

| [removed: 10.33] [added: 10.28] | | [Archstone Parallel Residual JV, LLC Limited Liability Company Agreement.](http://www.sec.gov/Archives/edgar/data/906107/000119312513084766/d491312dex104.htm) | | 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. |

| [removed: 10.34] [added: 10.29] | | [Archstone Parallel Residual JV 2, LLC Limited Liability Company Agreement.](http://www.sec.gov/Archives/edgar/data/906107/000119312513084766/d491312dex105.htm) | | 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. |

| [removed: 10.35] [added: 10.30] | | [Legacy Holdings JV, LLC Limited Liability Company Agreement.](http://www.sec.gov/Archives/edgar/data/906107/000119312513084766/d491312dex106.htm) | | 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. |

| | | Date: | | February 17, 2022 |

| | Acquisitions of Investments in Real Estate | |

| Description of the Matter | During the year ended December 31, 2021, the Company acquired 17 consolidated apartment properties for an aggregate purchase price of $1.7 billion. The transactions were accounted for as asset acquisitions and the purchase prices were allocated based on the relative fair values of the tangible and identified intangible assets acquired and liabilities assumed. As more fully described in Note 2 to the consolidated financial statements, the estimates used in determining the relative fair values may be based on appraisals, internal analyses of recently acquired and existing comparable properties in the Company’s portfolio, other market data, and internal marketing and leasing activities. Auditing the Company’s estimate of the fair value of the acquired tangible and identified intangible assets and liabilities is complex and requires a higher degree of auditor judgment due to the judgment used by management in selecting key assumptions based on recent comparable transactions or other internal or market data, which are primarily unobservable inputs. The allocation of purchase price to the components of properties acquired could have an effect on the Company’s net income due to the varying useful lives applicable to each component and the recognition of the related depreciation or amortization expense in the Company’s consolidated statements of operations and comprehensive income. | |

| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating the fair value of acquired assets and liabilities and allocating purchase price to the various components, including controls over management’s determination and review of the significant assumptions used in the analyses described above. We evaluated the use of the key assumptions in the valuation models and recalculated the model’s results. To test the fair values of acquired tangible and intangible assets and liabilities used in the purchase price allocation, we performed procedures to evaluate the valuation methods and significant assumptions used by management. We evaluated the completeness and accuracy of the underlying data supporting the determination of the various inputs. We involved our real estate valuation specialists to assist us in evaluating the Company’s methodology and assumptions, including those related to land and building values, estimated replacement costs, market rental rates and capitalization rates. | |

| February 17, 2022 | | |

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

| | | |

| | | |

| | | |

| | | |

| | Acquisitions of Investments in Real Estate | |

| | | |

| Description of the Matter | During the year ended December 31, 2021, the Operating Partnership acquired 17 consolidated apartment properties for an aggregate purchase price of $1.7 billion. The transactions were accounted for as asset acquisitions and the purchase prices were allocated based on the relative fair values of the tangible and identified intangible assets acquired and liabilities assumed. As more fully described in Note 2 to the consolidated financial statements, the estimates used in determining the relative fair values may be based on appraisals, internal analyses of recently acquired and existing comparable properties in the Operating Partnership’s portfolio, other market data, and internal marketing and leasing activities. Auditing the Operating Partnership’s estimate of the fair value of the acquired tangible and identified intangible assets and liabilities is complex and requires a higher degree of auditor judgment due to the judgment used by management in selecting key assumptions based on recent comparable transactions or other internal or market data, which are primarily unobservable inputs. The allocation of purchase price to the components of properties acquired could have an effect on the Operating Partnership’s net income due to the varying useful lives applicable to each component and the recognition of the related depreciation or amortization expense in the Operating Partnership’s consolidated statements of operations and comprehensive income. | |

| | | |

| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Operating Partnership’s process for estimating the fair value of acquired assets and liabilities and allocating purchase price to the various components, including controls over management’s determination and review of the significant assumptions used in the analyses described above. We evaluated the use of the key assumptions in the valuation models and recalculated the model’s results. To test the fair values of acquired tangible and intangible assets and liabilities used in the purchase price allocation, we performed procedures to evaluate the valuation methods and significant assumptions used by management. We evaluated the completeness and accuracy of the underlying data supporting the determination of the various inputs. We involved our real estate valuation specialists to assist us in evaluating the Operating Partnership’s methodology and assumptions, including those related to land and building values, estimated replacement costs, market rental rates and capitalization rates. | |

| February 17, 2022 | | |

To the Shareholders and the Board of Trustees of Equity Residential

| | | |

| February 17, 2022 | | |

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

| | | |

| February 17, 2022 | | |

| Cash and cash equivalents | | | 123,832 | | | | 42,591 | |

| Impairment | | | (16,769 | ) | | | — | | | | — | |

| Net income | | $ | 1,396,714 | | | $ | 962,501 | | | $ | 1,009,708 | |

| Depreciation | | | 838,272 | | | | 820,832 | | | | 831,083 | |

| Impairment | | | 16,769 | | | | — | | | | — | |

| Realized (gain) loss on sale of investment securities | | | (23,432 | ) | | | — | | | | — | |

| Investments in unconsolidated entities – acquisitions | | | (48,534 | ) | | | — | | | | — | |

| Proceeds from sale of investment securities | | | 191,398 | | | | — | | | | — | |

| Finance ground lease principal payments | | | (365 | ) | | | — | | | | — | |

| Cash and cash equivalents and restricted deposits, end of year | | $ | 360,236 | | | $ | 99,728 | | | $ | 116,999 | |

| Interest capitalized for real estate and unconsolidated entities under development: | | | | | | | | | | | | |

| Investment in real estate, net | | $ | (15,318 | ) | | $ | (10,165 | ) | | $ | (6,884 | ) |

| Investments in unconsolidated entities – other: | | | | | | | | | | | | |

| Investment in real estate, net | | $ | 1,395 | | | $ | — | | | $ | — | |

| Non-cash share distribution from unconsolidated entities: | | | | | | | | | | | | |

| Investments in unconsolidated entities | | $ | 1,430 | | | $ | — | | | $ | — | |

| | | | | |

| 10.15 | * | [Second Amendment to Second Restated 2002 Share Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906107/000095012311073326/c64621exv10w3.htm) | | Included as Exhibit 10.3 to Equity Residential's Form 10-Q for the quarterly period ended June 30, 2011. |

| 10.24 | * | [Retirement Benefits Agreement between Samuel Zell and the Company dated October 18, 2001.](http://www.sec.gov/Archives/edgar/data/906107/000091205702009068/a2072511zex-10_18.txt) | | Included as Exhibit 10.18 to Equity Residential's Form 10-K for the year ended December 31, 2001. |

| 10.27 | * | [The Equity Residential Supplemental Executive Retirement Plan as Amended and Restated effective April 1, 2017.](http://www.sec.gov/Archives/edgar/data/906107/000156459017015496/eqr-ex102_61.htm) | | 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. |

| 10.28 | * | [Amendment to the Equity Residential Supplemental Executive Retirement Plan, effective as of June 1, 2020.](http://www.sec.gov/Archives/edgar/data/906107/000156459020035511/eqr-ex101_104.htm) | | 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, 2020. |

| 10.29 | * | [The Equity Residential Grandfathered Supplemental Executive Retirement Plan as Amended and Restated effective January 1, 2005.](http://www.sec.gov/Archives/edgar/data/906107/000110465908031090/a08-13376_1ex10d2.htm) | | Included as Exhibit 10.2 to Equity Residential's Form 10-Q for the quarterly period ended March 31, 2008. |

| /s/ Bradley A. Keywell | | Trustee | | February 18, 2021 |

| Bradley A. Keywell | | | | |

| February 18, 2021 | | |

To the Partners

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Impairment | | | — | | | | — | | | | (702 | ) |

EQUITY RESIDENTIAL

| Impairment | | | — | | | | — | | | | 702 | |

| Master-Leased Property – Consolidated | | | 1 | | | | 162 | |

| | | | 304 | | | | 77,889 | |

The “Wholly Owned Properties” are accounted for under the consolidation method of accounting.

The “Master-Leased Property – Consolidated” is wholly owned by the Company but the entire project is leased to a third-party corporate housing provider.

This property is consolidated and reflected as a real estate asset while the master lease is accounted for as an operating lease.

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 continued rapid development and fast-changing nature of the novel coronavirus (“COVID-19”) pandemic creates many unknowns that have had and could continue to have a significant future impact on the Company.

Its duration, severity and the extent of the adverse health impact on the general population, our residents and employees, the rollout and effectiveness of vaccines and the potential long-term changes in customer preferences for living in our communities, are among the many unknowns.

For asset acquisitions, the Company allocates the purchase price of the net tangible and identified intangible assets on a relative fair value basis.

| | | and would record an impairment loss for the difference between the estimated fair value and the carrying amount of the asset. In determining the future undiscounted cash flows or the estimated fair value of an asset there is judgment in estimating the expected future rental revenues, operating expenses and discount and capitalization rates. |

See *Recently Adopted Accounting Pronouncements* below for additional details regarding the adoption of this standard.

Rental revenues are recognized on a straight-line basis over the term of the lease when reasonably assured they are collectible.

See Note 8 for additional discussion.

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The CARES Act was enacted to provide economic relief to companies and individuals in response to the COVID-19 pandemic.

Issuance of additional Common Shares

In response to the COVID-19 pandemic, management evaluated whether its estimates, such as lease collectibility (discussed below in *Recently Adopted Accounting Pronouncements*) and impairment, required revised approaches and generally concluded that no revisions were necessary at this time.

The Company is currently evaluating its options with regards to existing contracts and hedging relationships and the impact of adopting this update on its consolidated results of operations and financial position.

In February 2016, the FASB issued a lease 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 Company adopted this standard as required effective January 1, 2019 using a modified retrospective method and the Company applied the guidance as of the adoption date and elected certain practical expedients.

The standard impacted our consolidated balance sheets but did not impact our consolidated statements of operations.

The Company recorded ROU assets and related lease liabilities to its opening balance sheet upon adoption on January 1, 2019 of $434.2 million and $278.3 million, respectively.

The Company elected the practical expedient to not reassess the classification of existing operating leases.

As of January 1, 2019, any new or modified ground leases may be classified as financing leases unless they meet certain conditions.

When there is a material lease modification, the Company is required to reassess the classification and remeasure the lease liability.

In July 2018, the FASB issued an amendment to the lease standard, which includes a practical expedient that provides lessors an option not to separate lease and non-lease components when certain criteria are met and instead account for those components as a single component under the lease standard.