Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number: 1-12252 (Equity Residential)

Commission File Number: 0-24920 (ERP Operating Limited Partnership)

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

Maryland (Equity Residential)		13-3675988 (Equity Residential)
Illinois (ERP Operating Limited Partnership)		36-3894853 (ERP Operating Limited Partnership)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Two North Riverside Plaza**,** Chicago**,** Illinois 60606		(312) 474-1300
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 Par Value (Equity Residential)		EQR		New York Stock Exchange
7.57% Notes due August 15, 2026 (ERP Operating Limited Partnership)		N/A		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Equity Residential Yes ☒ No ☐	ERP Operating Limited Partnership Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Equity Residential Yes ☒ No ☐	ERP Operating Limited Partnership Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Equity Residential:

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
Emerging growth company		☐

l

ERP Operating Limited Partnership:

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☐
Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Equity Residential ☐	ERP Operating Limited Partnership ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Equity Residential Yes ☐ No ☒	ERP Operating Limited Partnership Yes ☐ No ☒

The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on October 26, 2023 was 379,724,934.

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended September 30, 2023 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure:

EQR is the general partner of, and as of September 30, 2023 owned an approximate 97.0% ownership interest in, ERPOP. The remaining 3.0% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of EQR consists of the same members as the management of ERPOP.

The Company is structured as an umbrella partnership REIT (“UPREIT”) and EQR contributes all net proceeds from its various equity offerings to ERPOP. In return for those contributions, EQR receives a number of OP Units (see definition below) in ERPOP equal to the number of Common Shares it has issued in the equity offering. The Company may acquire properties in transactions that include the issuance of OP Units as consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales. This is one of the reasons why the Company is structured in the manner shown above. Based on the terms of ERPOP’s partnership agreement, OP Units can be exchanged with Common Shares on a one-for-one basis because the Company maintains a one-for-one relationship between the OP Units of ERPOP issued to EQR and the outstanding Common Shares.

The Company believes that combining the reports on Form 10-Q of EQR and ERPOP into this single report provides the following benefits:

• enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

• eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

• creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between EQR and ERPOP in the context of how EQR and ERPOP operate as a consolidated company. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR’s primary function is acting as the general partner of ERPOP. EQR also issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by EQR (which are contributed to the capital of ERPOP in exchange for additional partnership interests in ERPOP (“OP Units”) (on a one-for-one Common Share per OP Unit basis) or additional preference units in ERPOP (on a one-for-one preferred share per preference unit basis)), the Operating Partnership generates all remaining capital required by the Company’s business. These sources include the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility and/or commercial paper program, the issuance of secured and unsecured debt and partnership interests, and proceeds received from disposition of certain properties and joint venture interests.

Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and as noncontrolling interests in the Company’s financial statements. The noncontrolling interests in the Operating Partnership’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and limited partner OP Unit holders of the Operating Partnership. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at the Company and Operating Partnership levels.

To help investors understand the differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s debt, noncontrolling interests and shareholders’ equity or partners’ capital, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity.

This report also includes separate Part I, Item 4, Controls and Procedures, sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership.

As general partner with control of ERPOP, EQR consolidates ERPOP for financial reporting purposes, and EQR essentially has no assets or liabilities other than its investment in ERPOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

TABLE OF CONTENTS

	PAGE
PART I.
Item 1. Financial Statements of Equity Residential:
Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	2
Consolidated Statements of Operations and Comprehensive Income for the nine months and quarters ended September 30, 2023 and 2022	3
Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	5
Consolidated Statements of Changes in Equity for the nine months and quarters ended September 30, 2023 and 2022	8
Financial Statements of ERP Operating Limited Partnership:
Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	10
Consolidated Statements of Operations and Comprehensive Income for the nine months and quarters ended September 30, 2023 and 2022	11
Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	13
Consolidated Statements of Changes in Capital for the nine months and quarters ended September 30, 2023 and 2022	16
Notes to Consolidated Financial Statements of Equity Residential and ERP Operating Limited Partnership	18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures about Market Risk	47
Item 4. Controls and Procedures	47
PART II.
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3. Defaults Upon Senior Securities	48
Item 4. Mine Safety Disclosures	48
Item 5. Other Information	48
Item 6. Exhibits	48

EQUITY RESIDENTIAL

CONSOLIDATED B****ALANCE SHEETS

(Amounts in thousands except for share amounts)

(Unaudited)

		September 30,				December 31,
		2023				2022
ASSETS
Land		$	5,593,425			$	5,580,878
Depreciable property			22,911,464				22,334,369
Projects under development			61,411				112,940
Land held for development			62,533				60,567
Investment in real estate			28,628,833				28,088,754
Accumulated depreciation			(9,634,013	)			(9,027,850	)
Investment in real estate, net			18,994,820				19,060,904
Investments in unconsolidated entities			313,225				279,024
Cash and cash equivalents			39,250				53,869
Restricted deposits			87,477				83,303
Right-of-use assets			460,489				462,956
Other assets			213,714				278,206
Total assets		$	20,108,975			$	20,218,262
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net		$	1,634,726			$	1,953,438
Notes, net			5,346,895				5,342,329
Line of credit and commercial paper			497,636				129,955
Accounts payable and accrued expenses			164,975				96,028
Accrued interest payable			47,519				66,310
Lease liabilities			312,781				308,748
Other liabilities			231,652				306,941
Security deposits			69,498				68,940
Distributions payable			259,624				244,621
Total liabilities			8,565,306				8,517,310
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership			277,782				318,273
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value;100,000,000 shares authorized; 745,600 shares issued and outstanding as of September 30, 2023 and December 31, 2022			37,280				37,280
Common Shares of beneficial interest, $0.01 par value;1,000,000,000 shares authorized; 379,723,838 shares issued and outstanding as of September 30, 2023 and 378,429,708 shares issued and outstanding as of December 31, 2022			3,797				3,784
Paid in capital			9,589,057				9,476,085
Retained earnings			1,426,632				1,658,837
Accumulated other comprehensive income (loss)			5,099				(2,547	)
Total shareholders’ equity			11,061,865				11,173,439
Noncontrolling Interests:
Operating Partnership			205,845				209,961
Partially Owned Properties			(1,823	)			(721	)
Total Noncontrolling Interests			204,022				209,240
Total equity			11,265,887				11,382,679
Total liabilities and equity		$	20,108,975			$	20,218,262

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF O****PERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per share data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
REVENUES
Rental income		$	2,146,464			$	2,035,477			$	724,067			$	695,099
EXPENSES
Property and maintenance			391,437				365,277				129,087				124,048
Real estate taxes and insurance			312,607				302,899				102,858				100,361
Property management			90,314				83,035				28,169				25,729
General and administrative			49,135				47,033				14,094				13,372
Depreciation			661,921				667,896				224,736				214,129
Total expenses			1,505,414				1,466,140				498,944				477,639
Net gain (loss) on sales of real estate properties			127,034				304,346				26,912				196,551
Operating income			768,084				873,683				252,035				414,011
Interest and other income			11,296				4,844				7,627				720
Other expenses			(20,517	)			(9,191	)			(4,958	)			(3,755	)
Interest:
Expense incurred, net			(200,882	)			(217,093	)			(68,891	)			(72,412	)
Amortization of deferred financing costs			(7,023	)			(6,421	)			(3,027	)			(2,220	)
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels			550,958				645,822				182,786				336,344
Income and other tax (expense) benefit			(892	)			(725	)			(258	)			(152	)
Income (loss) from investments in unconsolidated entities			(3,847	)			(3,456	)			(1,242	)			(1,027	)
Net income			546,219				641,641				181,286				335,165
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership			(17,174	)			(21,024	)			(5,561	)			(10,997	)
Partially Owned Properties			(5,299	)			(2,726	)			(3,217	)			(1,143	)
Net income attributable to controlling interests			523,746				617,891				172,508				323,025
Preferred distributions			(2,318	)			(2,318	)			(773	)			(773	)
Net income available to Common Shares		$	521,428			$	615,573			$	171,735			$	322,252
Earnings per share – basic:
Net income available to Common Shares		$	1.38			$	1.64			$	0.45			$	0.86
Weighted average Common Shares outstanding			378,614				375,710				378,853				375,850
Earnings per share – diluted:
Net income available to Common Shares		$	1.38			$	1.63			$	0.45			$	0.86
Weighted average Common Shares outstanding			391,135				389,394				391,351				389,300

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIO****NS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per share data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
Comprehensive income:
Net income		$	546,219			$	641,641			$	181,286			$	335,165
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period			4,514				23,413				460				24,672
Losses reclassified into earnings from other comprehensive income			3,132				9,987				931				5,106
Other comprehensive income (loss)			7,646				33,400				1,391				29,778
Comprehensive income			553,865				675,041				182,677				364,943
Comprehensive (income) attributable to Noncontrolling Interests			(22,712	)			(24,853	)			(8,822	)			(13,123	)
Comprehensive income attributable to controlling interests		$	531,153			$	650,188			$	173,855			$	351,820

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEM****ENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	546,219			$	641,641
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			661,921				667,896
Amortization of deferred financing costs			7,023				6,421
Amortization of discounts and premiums on debt			2,815				4,123
Amortization of deferred settlements on derivative instruments			3,123				9,978
Amortization of right-of-use assets			9,572				9,123
Write-off of pursuit costs			2,739				3,296
(Income) loss from investments in unconsolidated entities			3,847				3,456
Distributions from unconsolidated entities – return on capital			436				251
Net (gain) loss on sales of real estate properties			(127,034	)			(304,346	)
Realized (gain) loss on investment securities			(1,511	)			(2,061	)
Unrealized (gain) loss on investment securities			(4,461	)			—
Compensation paid with Company Common Shares			26,948				24,559
Changes in assets and liabilities:
(Increase) decrease in other assets			11,887				20,734
Increase (decrease) in accounts payable and accrued expenses			71,334				76,274
Increase (decrease) in accrued interest payable			(18,791	)			(19,858	)
Increase (decrease) in lease liabilities			(1,077	)			(1,166	)
Increase (decrease) in other liabilities			(7,024	)			(23,199	)
Increase (decrease) in security deposits			558				3,106
Net cash provided by operating activities			1,188,524				1,120,228
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions			(324,497	)			(113,046	)
Investment in real estate – development/other			(60,179	)			(81,889	)
Capital expenditures to real estate			(229,763	)			(141,707	)
Non-real estate capital additions			(1,457	)			(2,232	)
Interest capitalized for real estate and unconsolidated entities under development			(9,579	)			(4,181	)
Proceeds from disposition of real estate, net			191,718				720,302
Investments in unconsolidated entities – acquisitions			(989	)			(49,330	)
Investments in unconsolidated entities – development/other			(34,076	)			(87,129	)
Distributions from unconsolidated entities – return of capital			15				9
Purchase of investment securities and other investments			(2,500	)			(1,045	)
Proceeds from sale of investment securities			2,952				3,584
Net cash provided by (used for) investing activities			(468,355	)			243,336

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2023				2022
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs		$	(4,106	)		$	(373	)
Mortgage notes payable, net:
Proceeds			572,896				37,429
Lump sum payoffs			(932,598	)			(260,874	)
Scheduled principal repayments			(554	)			(3,186	)
Notes, net:
Lump sum payoffs			—				(500,000	)
Line of credit and commercial paper:
Commercial paper proceeds			4,393,568				5,140,685
Commercial paper repayments			(4,025,887	)			(5,266,158	)
Proceeds from (payments on) settlement of derivative instruments			25,169				—
Finance ground lease principal payments			(1,995	)			(1,845	)
Proceeds from Employee Share Purchase Plan (ESPP)			2,591				3,280
Proceeds from exercise of options			11,474				21,021
Payment of offering costs			—				(739	)
Other financing activities, net			(37	)			(31	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(3,737	)			(32,178	)
Contributions – Noncontrolling Interests – Partially Owned Properties			9				603
Contributions – Noncontrolling Interests – Operating Partnership			1				1
Distributions:
Common Shares			(738,584	)			(696,679	)
Preferred Shares			(2,319	)			(2,318	)
Noncontrolling Interests – Operating Partnership			(22,969	)			(22,735	)
Noncontrolling Interests – Partially Owned Properties			(3,536	)			(18,236	)
Net cash provided by (used for) financing activities			(730,614	)			(1,602,333	)
Net increase (decrease) in cash and cash equivalents and restricted deposits			(10,445	)			(238,769	)
Cash and cash equivalents and restricted deposits, beginning of period			137,172				360,236
Cash and cash equivalents and restricted deposits, end of period		$	126,727			$	121,467
Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents		$	39,250			$	44,788
Restricted deposits			87,477				76,679
Total cash and cash equivalents and restricted deposits, end of period		$	126,727			$	121,467

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2023				2022
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized		$	206,080			$	221,218
Net cash paid (received) for income and other taxes		$	1,035			$	728
Real estate acquisitions/dispositions/other:
Mortgage loans assumed		$	42,256			$	—
Amortization of deferred financing costs:
Investment in real estate, net		$	(211	)		$	(380	)
Other assets		$	2,089			$	1,754
Mortgage notes payable, net		$	2,265			$	1,620
Notes, net		$	2,880			$	3,427
Amortization of discounts and premiums on debt:
Mortgage notes payable, net		$	1,129			$	1,865
Notes, net		$	1,686			$	2,258
Amortization of deferred settlements on derivative instruments:
Other liabilities		$	(9	)		$	(9	)
Accumulated other comprehensive income		$	3,132			$	9,987
Write-off of pursuit costs:
Investment in real estate, net		$	421			$	948
Investments in unconsolidated entities		$	1,667			$	2,197
Other assets		$	651			$	151
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities		$	2,909			$	2,517
Other liabilities		$	938			$	939
Realized/unrealized (gain) loss on derivative instruments:
Other assets		$	(3,749	)		$	(23,413	)
Other liabilities		$	(765	)		$	—
Accumulated other comprehensive income		$	4,514			$	23,413
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net		$	(3,468	)		$	(1,312	)
Investments in unconsolidated entities		$	(6,111	)		$	(2,869	)
Investments in unconsolidated entities – development/other:
Investments in unconsolidated entities		$	(32,667	)		$	(85,839	)
Other liabilities		$	(1,409	)		$	(1,290	)
Debt financing costs:
Other assets		$	—			$	(45	)
Mortgage notes payable, net		$	(4,106	)		$	(228	)
Notes, net		$	—			$	(100	)
Proceeds from (payments on) settlement of derivative instruments:
Other assets		$	25,613			$	—
Other liabilities		$	(444	)		$	—
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets		$	(7,105	)		$	(224	)
Lease liabilities		$	7,105			$	224
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities		$	539			$	4,201
Other assets		$	(539	)		$	(4,201	)

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENT****S OF CHANGES IN EQUITY

(Amounts in thousands except per share data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
SHAREHOLDERS’ EQUITY
PREFERRED SHARES
Balance, beginning of period		$	37,280			$	37,280			$	37,280			$	37,280
Balance, end of period		$	37,280			$	37,280			$	37,280			$	37,280
**COMMON SHARES, $**0.01 PAR VALUE
Balance, beginning of period		$	3,784			$	3,755			$	3,790			$	3,761
Conversion of OP Units into Common Shares			9				—				7				—
Exercise of share options			2				4				—				—
Employee Share Purchase Plan (ESPP)			—				1				—				1
Share-based employee compensation expense:
Restricted shares			2				2				—				—
Balance, end of period		$	3,797			$	3,762			$	3,797			$	3,762
PAID IN CAPITAL
Balance, beginning of period		$	9,476,085			$	9,121,122			$	9,472,628			$	9,229,738
Common Share Issuance:
Conversion of OP Units into Common Shares			13,907				1,680				9,250				196
Exercise of share options			11,472				21,017				116				2,093
Employee Share Purchase Plan (ESPP)			2,591				3,279				467				901
Share-based employee compensation expense:
Restricted shares			10,292				9,524				2,349				2,165
Share options			3,904				1,856				779				466
ESPP discount			481				637				83				217
Offering costs			—				(739	)			—				(252	)
Supplemental Executive Retirement Plan (SERP)			32,078				(269	)			31,930				—
Acquisition of Noncontrolling Interests – Partially Owned Properties			(900	)			(27,383	)			—				(28	)
Change in market value of Redeemable Noncontrolling Interests – Operating Partnership			18,613				127,570				57,736				29,430
Adjustment for Noncontrolling Interests ownership in Operating Partnership			20,534				9,156				13,719				2,524
Balance, end of period		$	9,589,057			$	9,267,450			$	9,589,057			$	9,267,450
RETAINED EARNINGS
Balance, beginning of period		$	1,658,837			$	1,827,063			$	1,506,460			$	1,649,960
Net income attributable to controlling interests			523,746				617,891				172,508				323,025
Common Share distributions			(753,633	)			(705,529	)			(251,563	)			(235,105	)
Preferred Share distributions			(2,318	)			(2,318	)			(773	)			(773	)
Balance, end of period		$	1,426,632			$	1,737,107			$	1,426,632			$	1,737,107
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period		$	(2,547	)		$	(34,272	)		$	3,708			$	(30,650	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period			4,514				23,413				460				24,672
Losses reclassified into earnings from other comprehensive income			3,132				9,987				931				5,106
Balance, end of period		$	5,099			$	(872	)		$	5,099			$	(872	)
DISTRIBUTIONS
Distributions declared per Common Share outstanding		$	1.9875			$	1.875			$	0.6625			$	0.625

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)

(Amounts in thousands except per share data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
NONCONTROLLING INTERESTS
OPERATING PARTNERSHIP
Balance, beginning of period		$	209,961			$	214,094			$	207,405			$	216,326
Issuance of restricted units to Noncontrolling Interests			1				1				—				—
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner			(13,916	)			(1,680	)			(9,257	)			(196	)
Equity compensation associated with Noncontrolling Interests			14,205				16,502				3,338				3,343
Net income attributable to Noncontrolling Interests			17,174				21,024				5,561				10,997
Distributions to Noncontrolling Interests			(22,924	)			(23,078	)			(7,284	)			(7,590	)
Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership			21,878				870				19,801				(1,779	)
Adjustment for Noncontrolling Interests ownership in Operating Partnership			(20,534	)			(9,156	)			(13,719	)			(2,524	)
Balance, end of period		$	205,845			$	218,577			$	205,845			$	218,577
PARTIALLY OWNED PROPERTIES
Balance, beginning of period		$	(721	)		$	18,166			$	(4,728	)		$	(1,734	)
Net income attributable to Noncontrolling Interests			5,299				2,726				3,217				1,143
Contributions by Noncontrolling Interests			9				603				—				—
Distributions to Noncontrolling Interests			(3,573	)			(18,267	)			(312	)			(1,004	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(2,837	)			(4,795	)			—				28
Balance, end of period		$	(1,823	)		$	(1,567	)		$	(1,823	)		$	(1,567	)

See accompanying notes

ERP OPERATING LI****MITED PARTNERSHIP

CONSOLIDATED B****ALANCE SHEETS

(Amounts in thousands)

(Unaudited)

		September 30,				December 31,
		2023				2022
ASSETS
Land		$	5,593,425			$	5,580,878
Depreciable property			22,911,464				22,334,369
Projects under development			61,411				112,940
Land held for development			62,533				60,567
Investment in real estate			28,628,833				28,088,754
Accumulated depreciation			(9,634,013	)			(9,027,850	)
Investment in real estate, net			18,994,820				19,060,904
Investments in unconsolidated entities			313,225				279,024
Cash and cash equivalents			39,250				53,869
Restricted deposits			87,477				83,303
Right-of-use assets			460,489				462,956
Other assets			213,714				278,206
Total assets		$	20,108,975			$	20,218,262
LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net		$	1,634,726			$	1,953,438
Notes, net			5,346,895				5,342,329
Line of credit and commercial paper			497,636				129,955
Accounts payable and accrued expenses			164,975				96,028
Accrued interest payable			47,519				66,310
Lease liabilities			312,781				308,748
Other liabilities			231,652				306,941
Security deposits			69,498				68,940
Distributions payable			259,624				244,621
Total liabilities			8,565,306				8,517,310
Commitments and contingencies
Redeemable Limited Partners			277,782				318,273
Capital:
Partners’ Capital:
Preference Units			37,280				37,280
General Partner			11,019,486				11,138,706
Limited Partners			205,845				209,961
Accumulated other comprehensive income (loss)			5,099				(2,547	)
Total partners’ capital			11,267,710				11,383,400
Noncontrolling Interests – Partially Owned Properties			(1,823	)			(721	)
Total capital			11,265,887				11,382,679
Total liabilities and capital		$	20,108,975			$	20,218,262

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERA****TIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per Unit data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
REVENUES
Rental income		$	2,146,464			$	2,035,477			$	724,067			$	695,099
EXPENSES
Property and maintenance			391,437				365,277				129,087				124,048
Real estate taxes and insurance			312,607				302,899				102,858				100,361
Property management			90,314				83,035				28,169				25,729
General and administrative			49,135				47,033				14,094				13,372
Depreciation			661,921				667,896				224,736				214,129
Total expenses			1,505,414				1,466,140				498,944				477,639
Net gain (loss) on sales of real estate properties			127,034				304,346				26,912				196,551
Operating income			768,084				873,683				252,035				414,011
Interest and other income			11,296				4,844				7,627				720
Other expenses			(20,517	)			(9,191	)			(4,958	)			(3,755	)
Interest:
Expense incurred, net			(200,882	)			(217,093	)			(68,891	)			(72,412	)
Amortization of deferred financing costs			(7,023	)			(6,421	)			(3,027	)			(2,220	)
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels			550,958				645,822				182,786				336,344
Income and other tax (expense) benefit			(892	)			(725	)			(258	)			(152	)
Income (loss) from investments in unconsolidated entities			(3,847	)			(3,456	)			(1,242	)			(1,027	)
Net income			546,219				641,641				181,286				335,165
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties			(5,299	)			(2,726	)			(3,217	)			(1,143	)
Net income attributable to controlling interests		$	540,920			$	638,915			$	178,069			$	334,022
ALLOCATION OF NET INCOME:
Preference Units		$	2,318			$	2,318			$	773			$	773
General Partner		$	521,428			$	615,573			$	171,735			$	322,252
Limited Partners			17,174				21,024				5,561				10,997
Net income available to Units		$	538,602			$	636,597			$	177,296			$	333,249
Earnings per Unit – basic:
Net income available to Units		$	1.38			$	1.64			$	0.45			$	0.86
Weighted average Units outstanding			389,991				387,603				390,087				387,745
Earnings per Unit – diluted:
Net income available to Units		$	1.38			$	1.63			$	0.45			$	0.86
Weighted average Units outstanding			391,135				389,394				391,351				389,300

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIO****NS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
Comprehensive income:
Net income		$	546,219			$	641,641			$	181,286			$	335,165
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period			4,514				23,413				460				24,672
Losses reclassified into earnings from other comprehensive income			3,132				9,987				931				5,106
Other comprehensive income (loss)			7,646				33,400				1,391				29,778
Comprehensive income			553,865				675,041				182,677				364,943
Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties			(5,299	)			(2,726	)			(3,217	)			(1,143	)
Comprehensive income attributable to controlling interests		$	548,566			$	672,315			$	179,460			$	363,800

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STA****TEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	546,219			$	641,641
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			661,921				667,896
Amortization of deferred financing costs			7,023				6,421
Amortization of discounts and premiums on debt			2,815				4,123
Amortization of deferred settlements on derivative instruments			3,123				9,978
Amortization of right-of-use assets			9,572				9,123
Write-off of pursuit costs			2,739				3,296
(Income) loss from investments in unconsolidated entities			3,847				3,456
Distributions from unconsolidated entities – return on capital			436				251
Net (gain) loss on sales of real estate properties			(127,034	)			(304,346	)
Realized (gain) loss on investment securities			(1,511	)			(2,061	)
Unrealized (gain) loss on investment securities			(4,461	)			—
Compensation paid with Company Common Shares			26,948				24,559
Changes in assets and liabilities:
(Increase) decrease in other assets			11,887				20,734
Increase (decrease) in accounts payable and accrued expenses			71,334				76,274
Increase (decrease) in accrued interest payable			(18,791	)			(19,858	)
Increase (decrease) in lease liabilities			(1,077	)			(1,166	)
Increase (decrease) in other liabilities			(7,024	)			(23,199	)
Increase (decrease) in security deposits			558				3,106
Net cash provided by operating activities			1,188,524				1,120,228
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions			(324,497	)			(113,046	)
Investment in real estate – development/other			(60,179	)			(81,889	)
Capital expenditures to real estate			(229,763	)			(141,707	)
Non-real estate capital additions			(1,457	)			(2,232	)
Interest capitalized for real estate and unconsolidated entities under development			(9,579	)			(4,181	)
Proceeds from disposition of real estate, net			191,718				720,302
Investments in unconsolidated entities – acquisitions			(989	)			(49,330	)
Investments in unconsolidated entities – development/other			(34,076	)			(87,129	)
Distributions from unconsolidated entities – return of capital			15				9
Purchase of investment securities and other investments			(2,500	)			(1,045	)
Proceeds from sale of investment securities			2,952				3,584
Net cash provided by (used for) investing activities			(468,355	)			243,336

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2023				2022
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs		$	(4,106	)		$	(373	)
Mortgage notes payable, net:
Proceeds			572,896				37,429
Lump sum payoffs			(932,598	)			(260,874	)
Scheduled principal repayments			(554	)			(3,186	)
Notes, net:
Lump sum payoffs			—				(500,000	)
Line of credit and commercial paper:
Commercial paper proceeds			4,393,568				5,140,685
Commercial paper repayments			(4,025,887	)			(5,266,158	)
Proceeds from (payments on) settlement of derivative instruments			25,169				—
Finance ground lease principal payments			(1,995	)			(1,845	)
Proceeds from EQR’s Employee Share Purchase Plan (ESPP)			2,591				3,280
Proceeds from exercise of EQR options			11,474				21,021
Payment of offering costs			—				(739	)
Other financing activities, net			(37	)			(31	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(3,737	)			(32,178	)
Contributions – Noncontrolling Interests – Partially Owned Properties			9				603
Contributions – Limited Partners			1				1
Distributions:
OP Units – General Partner			(738,584	)			(696,679	)
Preference Units			(2,319	)			(2,318	)
OP Units – Limited Partners			(22,969	)			(22,735	)
Noncontrolling Interests – Partially Owned Properties			(3,536	)			(18,236	)
Net cash provided by (used for) financing activities			(730,614	)			(1,602,333	)
Net increase (decrease) in cash and cash equivalents and restricted deposits			(10,445	)			(238,769	)
Cash and cash equivalents and restricted deposits, beginning of period			137,172				360,236
Cash and cash equivalents and restricted deposits, end of period		$	126,727			$	121,467
Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents		$	39,250			$	44,788
Restricted deposits			87,477				76,679
Total cash and cash equivalents and restricted deposits, end of period		$	126,727			$	121,467

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2023				2022
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized		$	206,080			$	221,218
Net cash paid (received) for income and other taxes		$	1,035			$	728
Real estate acquisitions/dispositions/other:
Mortgage loans assumed		$	42,256			$	—
Amortization of deferred financing costs:
Investment in real estate, net		$	(211	)		$	(380	)
Other assets		$	2,089			$	1,754
Mortgage notes payable, net		$	2,265			$	1,620
Notes, net		$	2,880			$	3,427
Amortization of discounts and premiums on debt:
Mortgage notes payable, net		$	1,129			$	1,865
Notes, net		$	1,686			$	2,258
Amortization of deferred settlements on derivative instruments:
Other liabilities		$	(9	)		$	(9	)
Accumulated other comprehensive income		$	3,132			$	9,987
Write-off of pursuit costs:
Investment in real estate, net		$	421			$	948
Investments in unconsolidated entities		$	1,667			$	2,197
Other assets		$	651			$	151
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities		$	2,909			$	2,517
Other liabilities		$	938			$	939
Realized/unrealized (gain) loss on derivative instruments:
Other assets		$	(3,749	)		$	(23,413	)
Other liabilities		$	(765	)		$	—
Accumulated other comprehensive income		$	4,514			$	23,413
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net		$	(3,468	)		$	(1,312	)
Investments in unconsolidated entities		$	(6,111	)		$	(2,869	)
Investments in unconsolidated entities – development/other:
Investments in unconsolidated entities		$	(32,667	)		$	(85,839	)
Other liabilities		$	(1,409	)		$	(1,290	)
Debt financing costs:
Other assets		$	—			$	(45	)
Mortgage notes payable, net		$	(4,106	)		$	(228	)
Notes, net		$	—			$	(100	)
Proceeds from (payments on) settlement of derivative instruments:
Other assets		$	25,613			$	—
Other liabilities		$	(444	)		$	—
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets		$	(7,105	)		$	(224	)
Lease liabilities		$	7,105			$	224
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities		$	539			$	4,201
Other assets		$	(539	)		$	(4,201	)

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENT****S OF CHANGES IN CAPITAL

(Amounts in thousands except per Unit data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
PARTNERS’ CAPITAL
PREFERENCE UNITS
Balance, beginning of period		$	37,280			$	37,280			$	37,280			$	37,280
Balance, end of period		$	37,280			$	37,280			$	37,280			$	37,280
GENERAL PARTNER
Balance, beginning of period		$	11,138,706			$	10,951,940			$	10,982,878			$	10,883,459
OP Unit Issuance:
Conversion of OP Units held by Limited Partners into OP Units held by General Partner			13,916				1,680				9,257				196
Exercise of EQR share options			11,474				21,021				116				2,093
EQR’s Employee Share Purchase Plan (ESPP)			2,591				3,280				467				902
Share-based employee compensation expense:
EQR restricted shares			10,294				9,526				2,349				2,165
EQR share options			3,904				1,856				779				466
EQR ESPP discount			481				637				83				217
Net income available to Units – General Partner			521,428				615,573				171,735				322,252
OP Units – General Partner distributions			(753,633	)			(705,529	)			(251,563	)			(235,105	)
Offering costs			—				(739	)			—				(252	)
Supplemental Executive Retirement Plan (SERP)			32,078				(269	)			31,930				—
Acquisition of Noncontrolling Interests – Partially Owned Properties			(900	)			(27,383	)			—				(28	)
Change in market value of Redeemable Limited Partners			18,613				127,570				57,736				29,430
Adjustment for Limited Partners ownership in Operating Partnership			20,534				9,156				13,719				2,524
Balance, end of period		$	11,019,486			$	11,008,319			$	11,019,486			$	11,008,319
LIMITED PARTNERS
Balance, beginning of period		$	209,961			$	214,094			$	207,405			$	216,326
Issuance of restricted units to Limited Partners			1				1				—				—
Conversion of OP Units held by Limited Partners into OP Units held by General Partner			(13,916	)			(1,680	)			(9,257	)			(196	)
Equity compensation associated with Units – Limited Partners			14,205				16,502				3,338				3,343
Net income available to Units – Limited Partners			17,174				21,024				5,561				10,997
Units – Limited Partners distributions			(22,924	)			(23,078	)			(7,284	)			(7,590	)
Change in carrying value of Redeemable Limited Partners			21,878				870				19,801				(1,779	)
Adjustment for Limited Partners ownership in Operating Partnership			(20,534	)			(9,156	)			(13,719	)			(2,524	)
Balance, end of period		$	205,845			$	218,577			$	205,845			$	218,577
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period		$	(2,547	)		$	(34,272	)		$	3,708			$	(30,650	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period			4,514				23,413				460				24,672
Losses reclassified into earnings from other comprehensive income			3,132				9,987				931				5,106
Balance, end of period		$	5,099			$	(872	)		$	5,099			$	(872	)
DISTRIBUTIONS
Distributions declared per Unit outstanding		$	1.9875			$	1.875			$	0.6625			$	0.625

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES
Balance, beginning of period		$	(721	)		$	18,166			$	(4,728	)		$	(1,734	)
Net income attributable to Noncontrolling Interests			5,299				2,726				3,217				1,143
Contributions by Noncontrolling Interests			9				603				—				—
Distributions to Noncontrolling Interests			(3,573	)			(18,267	)			(312	)			(1,004	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(2,837	)			(4,795	)			—				28
Balance, end of period		$	(1,823	)		$	(1,567	)		$	(1,823	)		$	(1,567	)

See accompanying notes

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.

Business

Equity Residential (“EQR”) is an S&P 500 company focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters, a business that is conducted on its behalf by ERP Operating Limited Partnership (“ERPOP”). EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership formed in May 1993. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.

EQR is the general partner of, and as of September 30, 2023 owned an approximate 97.0% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.

As of September 30, 2023, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 305 properties located in 10 states and the District of Columbia consisting of 80,683 apartment units. The ownership breakdown includes (table does not include any uncompleted development properties):

		Properties				Apartment Units
Wholly Owned Properties			291				77,623
Partially Owned Properties – Consolidated			14				3,060
			305				80,683

2.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The balance sheets at December 31, 2022 have been derived from the audited financial statements at that date but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

For further information, including definitions of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022.

Income and Other Taxes

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

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued an amendment to the debt and equity financial instruments standards which simplifies the accounting for convertible instruments and accounting for contracts in an entity’s own equity. The Company adopted the standard when effective on January 1, 2022 and it had no impact on its consolidated results of operations and financial position.

In March 2020, the FASB issued an amendment to the reference rate reform standard which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. The new standard was effective for the Company upon issuance and elections could be made through December 31, 2024. The Company elected to apply the hedge accounting expedients and application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

3.

Equity, Capital and Other Interests

The Company refers to “Common Shares” and “Units” (which refer to both OP Units and restricted units) as equity securities for EQR and “General Partner Units” and “Limited Partner Units” as equity securities for ERPOP. To provide a streamlined and more readable presentation of the disclosures for the Company and the Operating Partnership, several sections below refer to the respective terminology for each with the same financial information and separate sections are provided, where needed, to further distinguish any differences in financial information and terminology.

The following table presents the changes in the Company’s issued and outstanding Common Shares and Units for the nine months ended September 30, 2023 and 2022:

		2023				2022
Common Shares
Common Shares outstanding at January 1,			378,429,708				375,527,195
Common Shares Issued:
Conversion of OP Units			862,596				37,661
Exercise of share options			234,395				381,384
Employee Share Purchase Plan (ESPP)			48,835				49,662
Restricted share grants, net			148,304				173,351
Common Shares outstanding at September 30,			379,723,838				376,169,253
Units
Units outstanding at January 1,			12,429,737				12,659,027
Restricted unit grants, net			166,344				223,242
Conversion of OP Units to Common Shares			(862,596	)			(37,661	)
Units outstanding at September 30,			11,733,485				12,844,608
Total Common Shares and Units outstanding at September 30,			391,457,323				389,013,861
Units Ownership Interest in Operating Partnership			3.0	%			3.3	%

The following table presents the changes in the Operating Partnership’s issued and outstanding General Partner Units and Limited Partner Units for the nine months ended September 30, 2023 and 2022:

		2023				2022
General and Limited Partner Units
General and Limited Partner Units outstanding at January 1,			390,859,445				388,186,222
Issued to General Partner:
Exercise of EQR share options			234,395				381,384
EQR’s Employee Share Purchase Plan (ESPP)			48,835				49,662
EQR’s restricted share grants, net			148,304				173,351
Issued to Limited Partners:
Restricted unit grants, net			166,344				223,242
General and Limited Partner Units outstanding at September 30,			391,457,323				389,013,861
Limited Partner Units
Limited Partner Units outstanding at January 1,			12,429,737				12,659,027
Limited Partner restricted unit grants, net			166,344				223,242
Conversion of Limited Partner OP Units to EQR Common Shares			(862,596	)			(37,661	)
Limited Partner Units outstanding at September 30,			11,733,485				12,844,608
Limited Partner Units Ownership Interest in Operating Partnership			3.0	%			3.3	%

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

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

The Noncontrolling Interests – Operating Partnership/Limited Partners Capital are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests – Operating Partnership/Limited Partners Capital are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership” and “Redeemable Limited Partners,” respectively. Instruments that require settlement in registered shares cannot be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital that are classified in permanent equity at September 30, 2023 and December 31, 2022.

The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total. Such percentage of the total carrying value of Units/Limited Partner Units which is ascribed to the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is then adjusted to the greater of carrying value or fair market value as described above. As of September 30, 2023 and 2022, the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners have a redemption value of approximately $277.8 million and $370.5 million, respectively, which represents the value of Common Shares that would be issued in exchange for the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners.

The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners for the nine months ended September 30, 2023 and 2022, respectively (amounts in thousands):

		2023				2022
Balance at January 1,		$	318,273			$	498,977
Change in market value			(18,613	)			(127,570	)
Change in carrying value			(21,878	)			(870	)
Balance at September 30,		$	277,782			$	370,537

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

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

The following table presents the Company’s issued and outstanding Preferred Shares/Preference Units as of September 30, 2023 and December 31, 2022:

								Amounts in thousands
				Annual
		Call		Dividend Per				September 30,				December 31,
		Date (1)		Share/Unit (2)				2023				2022
Preferred Shares/Preference Units of beneficial interest, $0.01 par value;100,000,000 shares authorized:
8.29% Series K Cumulative Redeemable Preferred Shares/Preference Units; liquidation value $50 per share/unit; 745,600 shares/units issued and outstanding as of September 30, 2023 and December 31, 2022		12/10/2026		$	4.145			$	37,280			$	37,280
								$	37,280			$	37,280

(1)

On or after the call date, redeemable Preferred Shares/Preference Units may be redeemed for cash at the option of the Company or the Operating Partnership, respectively, in whole or in part, at a redemption price equal to the liquidation price per share/unit, plus accrued and unpaid distributions, if any.

(2)

Dividends on Preferred Shares/Preference Units are payable quarterly.

Other

EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC in May 2022 and expires in May 2025. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).

The Company has an At-The-Market (“ATM”) share offering program which allows EQR to issue Common Shares from time to time into the existing trading market at current market prices or through negotiated transactions, including under forward sale arrangements. The current program matures in May 2025 and gives us the authority to issue up to 13.0 million shares, all of which remain available for issuance as of September 30, 2023.

The Company may repurchase up to 13.0 million Common Shares under its share repurchase program. No open market repurchases have occurred since 2008. As of September 30, 2023, EQR has remaining authorization to repurchase up to 13.0 million of its shares.

During the nine months ended September 30, 2023, ERPOP issued $0.9 million of 3.00% Series Q Cumulative Redeemable Preference Units (the "Series Q Preference Units") in connection with the buyout of the noncontrolling interest in a consolidated operating property. The 933,454 Series Q Preference Units have a liquidation value of $1.00 per unit and pay distributions quarterly at

the annual rate of $0.03 per unit. The Series Q Preference Units can be redeemed for, at EQR's/ERPOP's option, Common Shares, OP Units and/or cash upon the occurrence of specific events laid out in the agreement. If redeemed for Common Shares or OP Units, the number of shares/units issued is based on the Common Share price. The Series Q Preference Units increased the balance of Noncontrolling Interests - Partially Owned Properties in the consolidated balance sheets.

4.

Real Estate

The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of September 30, 2023 and December 31, 2022 (amounts in thousands):

		September 30, 2023				December 31, 2022
Land		$	5,593,425			$	5,580,878
Depreciable property:
Buildings and improvements			19,825,567				19,471,503
Furniture, fixtures and equipment			2,565,554				2,352,050
In-Place lease intangibles			520,343				510,816
Projects under development:
Land			3,201				3,201
Construction-in-progress			58,210				109,739
Land held for development:
Land			46,160				46,160
Construction-in-progress			16,373				14,407
Investment in real estate			28,628,833				28,088,754
Accumulated depreciation			(9,634,013	)			(9,027,850	)
Investment in real estate, net		$	18,994,820			$	19,060,904

During the nine months ended September 30, 2023, the Company acquired the following from unaffiliated parties (purchase price and purchase price allocation in thousands):

														Purchase Price Allocation (1), (2)
		Properties				Apartment Units				Purchase Price (1)				Land				Depreciable Property
Rental Properties – Consolidated			4				1,183			$	366,334			$	41,142			$	325,611
Total			4				1,183			$	366,334			$	41,142			$	325,611

(1)

Purchase price and purchase price allocation are both net of a mark-to-market discount of approximately $11.2 million on a mortgage assumed in connection with the purchase of a property.

(2)

Purchase price allocation includes capitalized closing costs.

During the nine months ended September 30, 2023, the Company disposed of the following to unaffiliated parties (sales price and net gain in thousands):

		Properties				Apartment Units				Sales Price				Net Gain
Rental Properties – Consolidated			8				413			$	195,400			$	127,034
Total			8				413			$	195,400			$	127,034

5.

Commitments to Acquire/Dispose of Real Estate

The Company has not entered into any agreements to acquire or dispose of rental properties or land parcels as of the date of filing.

6.

Investments in Partially Owned Entities

The Company has invested in various entities with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated).

Consolidated Variable Interest Entities (“VIEs”)

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

The Company has various equity interests in certain joint ventures that have been deemed to be VIEs, and the Company is the VIEs’ primary beneficiary. As a result, the joint ventures are required to be consolidated on the Company’s financial statements. The following table summarizes the Company’s consolidated joint ventures as of September 30, 2023:

		Operating Properties (1)
		Properties				Apartment Units
Consolidated Joint Ventures (VIE)			14				3,060

(1)

The land parcel under one of the projects is subject to a long-term ground lease.

The following table provides consolidated assets and liabilities related to the Company's VIEs as of September 30, 2023 and December 31, 2022 (amounts in thousands):

		September 30, 2023				December 31, 2022
Consolidated Assets		$	550,214			$	691,880
Consolidated Liabilities		$	38,969			$	158,932

During the nine months ended September 30, 2023, the Company completed the following transactions:

Acquired its joint venture partner's 10% interest in a 200-unit apartment property for $4.6 million, of which the Company paid $3.7 million in cash and ERPOP issued $0.9 million of 3.00% Series Q Preference Units (see Note 3 for additional discussion). The property is now wholly owned. In connection with the buyout, the carrying amount of the Noncontrolling Interests – Partially Owned Properties totaling $3.7 million was reduced to zero and the remaining $0.9 million was recorded to paid in capital/general partner capital. The Company also repaid $64.7 million of mortgage debt at par prior to maturity in conjunction with the buyout;

Repaid the $67.9 million outstanding principal balance of the variable rate construction mortgage for one of its consolidated development joint ventures; and

Sold one partially owned property consisting of 166 apartment units for approximately $60.1 million.

Investments in Unconsolidated Entities

The Company has various equity interests in certain joint ventures that are unconsolidated and accounted for using the equity method of accounting. Most of these have been deemed to be VIEs and the Company is not the VIEs' primary beneficiary. The remaining have been deemed not to be VIEs and the Company does not have a controlling voting interest.

The following table and information summarizes the Company’s investments in unconsolidated entities as of September 30, 2023 and December 31, 2022 (amounts in thousands except for ownership percentage):

		September 30, 2023				December 31, 2022				Ownership Percentage
Investments in Unconsolidated Entities:
Various Real Estate Holdings (VIE)		$	36,206			$	35,974			Varies
Projects Under Development and Land Held for Development (VIE)			250,880				218,043			62% - 95% (1)
Real Estate Technology Funds/Companies (VIE)			26,392				25,249			Varies
Other			(253	)			(242	)		Varies
Investments in Unconsolidated Entities		$	313,225			$	279,024

(1)

In certain instances, the joint venture agreements contain provisions for promoted interests in favor of our joint venture partner. If the terms of the promoted interest are attained, then our share of the proceeds from a sale or other capital event of the unconsolidated entity may be less than the indicated ownership percentage.

The following table summarizes the Company’s unconsolidated joint ventures that were deemed to be VIEs as of September 30, 2023:

		Real Estate Holdings (1)				Projects Under Development (2), (5)								Projects Held for Development (2), (3)
		Entities				Projects				Apartment Units (4)				Projects				Apartment Units (4)
Unconsolidated Joint Ventures (VIE)			2				6				1,982				4				1,334

(1)

Represents entities that hold various real estate investments.

(2)

Represents separate unconsolidated joint ventures for the purpose of developing multifamily rental properties.

(3)

Represents separate unconsolidated joint ventures that have not yet started.

(4)

Represents the intended number of apartment units to be developed.

(5)

The land parcel under one of the projects is subject to a long-term ground lease.

New Development Joint Ventures

The following table provides information on total unconsolidated development joint ventures entered into during the nine months ended September 30, 2023 (amounts in thousands except for number of unconsolidated joint ventures and apartment units):

Number of unconsolidated joint ventures (1)			1
Apartment units (2)			368
Investments in unconsolidated entities – acquisitions		$	989

(1)

The entities qualify as VIEs, but the Company is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the VIE’s performance. Therefore, the entities are unconsolidated and recorded using the equity method of accounting. See Note 2 of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional discussion.

(2)

Represents the intended number of apartment units to be developed.

7.

Restricted Deposits

The following table presents the Company’s restricted deposits as of September 30, 2023 and December 31, 2022 (amounts in thousands):

		September 30, 2023				December 31, 2022
Mortgage escrow deposits:
Real estate taxes and insurance		$	942			$	—
Replacement reserves			15,037				12,549
Mortgage principal reserves/sinking funds			30,234				25,304
Mortgage escrow deposits			46,213				37,853
Restricted cash:
Earnest money on pending acquisitions			25				4,500
Restricted deposits on real estate investments			182				229
Resident security and utility deposits			39,821				38,432
Other			1,236				2,289
Restricted cash			41,264				45,450
Restricted deposits		$	87,477			$	83,303

8.

Leases

Lessor Accounting

The Company is the lessor for its residential and non-residential leases and these leases are accounted for as operating leases under the lease standard.

The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the nine months ended September 30, 2023 and 2022 (amounts in thousands):

		Nine Months Ended September 30, 2023												Nine Months Ended September 30, 2022
Income Type		Residential Leases				Non-Residential Leases				Total				Residential Leases				Non-Residential Leases				Total
Residential and non-residential rent		$	1,926,869			$	46,642			$	1,973,511			$	1,816,435			$	48,279			$	1,864,714
Utility recoveries (RUBS income) (1)			64,007				662				64,669				59,826				596				60,422
Parking rent			32,955				354				33,309				32,546				322				32,868
Other lease revenue (2)			(19,172	)			330				(18,842	)			(4,016	)			(568	)			(4,584	)
Total lease revenue		$	2,004,659			$	47,988				2,052,647			$	1,904,791			$	48,629				1,953,420
Parking revenue											30,033												27,701
Other revenue											63,784												54,356
Total other rental income (3)											93,817												82,057
Rental income										$	2,146,464											$	2,035,477

(1)

RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)

Other lease revenue consists of the revenue adjustment related to bad debt (see below for further discussion) and other miscellaneous lease revenue.

(3)

Other rental income is accounted for under the revenue recognition standard and primarily consists of third-party transient parking revenue, residential lease settlement income and ancillary income such as cable and laundry revenue.

The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the quarters ended September 30, 2023 and 2022 (amounts in thousands):

		Quarter Ended September 30, 2023												Quarter Ended September 30, 2022
Income Type		Residential Leases				Non-Residential Leases				Total				Residential Leases				Non-Residential Leases				Total
Residential and non-residential rent		$	650,531			$	14,669			$	665,200			$	622,348			$	16,184			$	638,532
Utility recoveries (RUBS income) (1)			21,221				243				21,464				20,243				227				20,470
Parking rent			11,062				129				11,191				10,840				120				10,960
Other lease revenue (2)			(5,752	)			(404	)			(6,156	)			(3,127	)			(371	)			(3,498	)
Total lease revenue		$	677,062			$	14,637				691,699			$	650,304			$	16,160				666,464
Parking revenue											9,638												9,270
Other revenue											22,730												19,365
Total other rental income (3)											32,368												28,635
Rental income										$	724,067											$	695,099

(1)

RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)

Other lease revenue consists of the revenue adjustment related to bad debt (see below for further discussion) and other miscellaneous lease revenue.

(3)

Other rental income is accounted for under the revenue recognition standard and primarily consists of third-party transient parking revenue, residential lease settlement income and ancillary income such as cable and laundry revenue.

The following table presents residential and non-residential accounts receivable and straight-line receivable balances for the Company’s properties as of September 30, 2023 and December 31, 2022 (amounts in thousands):

		Residential								Non-Residential
Balance Sheet (Other assets):		September 30, 2023				December 31, 2022				September 30, 2023				December 31, 2022
Resident/tenant accounts receivable balances		$	25,532			$	35,688			$	2,714			$	2,820
Allowance for doubtful accounts			(20,000	)			(31,405	)			(1,703	)			(2,152	)
Net receivable balances		$	5,532			$	4,283			$	1,011			$	668
Straight-line receivable balances		$	8,604			$	4,398			$	11,851		(1)	$	13,795

(1)

During the third quarter of 2023, the Company recorded a non-cash write-off of approximately $1.5 million in straight-line receivables due to the recent bankruptcy of Rite Aid.

The following table presents residential bad debt for the Company’s properties for the nine months and quarters ended September 30, 2023 and 2022 (amounts in thousands):

		Nine Months Ended September 30,								Quarter Ended September 30,
Income Statement (Rental income):		2023				2022				2023				2022
Bad debt, net (1)		$	28,862			$	14,854			$	9,042			$	6,707
% of rental income			1.4	%			0.8	%			1.3	%			1.0	%

(1)

Bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $2.4 million and $32.3 million for the nine months ended September 30, 2023 and 2022, respectively, and $0.5 million and $7.3 million for the quarters ended September 30, 2023 and 2022, respectively.

9.

Debt

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. Weighted average interest rates noted below for the nine months ended September 30, 2023 include the effect of any derivative instruments and amortization of premiums/discounts/OCI (other comprehensive income) on debt and derivatives.

Mortgage Notes Payable

The following table summarizes the Company’s mortgage notes payable activity for the nine months ended September 30, 2023 (amounts in thousands):

		Mortgage notes payable, net as of December 31, 2022				Proceeds				Assumptions				Lump sum payoffs				Scheduled principal repayments				Amortization of premiums/ discounts				Amortization of deferred financing costs, net (1)				Mortgage notes payable, net as of September 30, 2023
Fixed Rate Debt:
Secured – Conventional		$	1,608,838			$	550,000		(2)	$	42,256		(3)	$	(800,000	)	(2)	$	—			$	200			$	(3,324	)		$	1,397,970
Floating Rate Debt:
Secured – Conventional			108,378				22,896				—				(132,598	)			(54	)			—				1,378				—
Secured – Tax Exempt			236,222				—				—				—				(500	)			929				105				236,756
Floating Rate Debt			344,600				22,896				—				(132,598	)			(554	)			929				1,483				236,756
Total		$	1,953,438			$	572,896			$	42,256			$	(932,598	)		$	(554	)		$	1,129			$	(1,841	)		$	1,634,726

(1)

Represents amortization of deferred financing costs, net of debt financing costs.

(2)

Obtained $200.0 million of 5.18% fixed rate mortgage debt maturing in September 2033 and $350.0 million of 5.25% fixed rate mortgage debt maturing in September 2033. The secured notes totaling $550.0 million have an all-in effective interest rate of approximately 4.7%. The proceeds from these loans were used, along with funding from the Company’s commercial paper note program, to repay $800.0 million of 4.21% fixed rate mortgage debt that was due to mature in November 2023.

(3)

Assumed $53.5 million of 2.24% fixed rate mortgage debt maturing in September 2030 on one acquired property and recorded an initial discount of approximately $11.2 million.

The following table summarizes certain interest rate and maturity date information as of and for the nine months ended September 30, 2023:

		September 30, 2023
Interest Rate Ranges (ending)		0.10% - 5.25%
Weighted Average Interest Rate		3.64%
Maturity Date Ranges		2029-2061

As of September 30, 2023, the Company had $249.5 million of secured tax-exempt bonds subject to third-party credit enhancement.

Notes

The following table summarizes the Company’s notes activity for the nine months ended September 30, 2023 (amounts in thousands):

		Notes, net as of December 31, 2022				Proceeds				Lump sum payoffs				Amortization of premiums/ discounts				Amortization of deferred financing costs, net (1)				Notes, net as of September 30, 2023
Fixed Rate Debt:
Unsecured – Public		$	5,342,329			$	—			$	—			$	1,686			$	2,880			$	5,346,895

(1)

Represents amortization of deferred financing costs, net of debt financing costs.

The following table summarizes certain interest rate and maturity date information as of and for the nine months ended September 30, 2023:

		September 30, 2023
Interest Rate Ranges (ending)		1.85% - 7.57%
Weighted Average Interest Rate		3.52%
Maturity Date Ranges		2025-2047

The Company’s unsecured public notes contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for the nine months ended September 30, 2023.

Line of Credit and Commercial Paper

The Company has a $2.5 billion unsecured revolving credit facility maturing on October 26, 2027. The Company has the ability to increase available borrowings by an additional $750.0 million by adding lenders to the facility, obtaining the agreement of existing lenders to increase their commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be the Secured Overnight Financing Rate ("SOFR") plus a spread (currently 0.725%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. The Company did not borrow any amounts under its revolving credit facility during the nine months ended September 30, 2023.

The Company has an unsecured commercial paper note program under which it may borrow up to a maximum of $1.0 billion subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness.

The following table summarizes certain weighted average interest rate, maturity and amount outstanding information for the commercial paper program as of and for the nine months ended September 30, 2023:

		September 30, 2023
Weighted Average Interest Rate (1)		5.36%
Weighted Average Maturity (in days)		31
Weighted Average Amount Outstanding		$236.4 million

(1)

The notes bear interest at various floating rates.

The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility as of September 30, 2023 (amounts in thousands):

		September 30, 2023
Unsecured revolving credit facility commitment		$	2,500,000
Commercial paper balance outstanding			(500,005	)
Unsecured revolving credit facility balance outstanding			—
Other restricted amounts			(3,415	)
Unsecured revolving credit facility availability		$	1,996,580

Other

The following table summarizes the Company's total debt extinguishment costs recorded as additional expense for the nine months and quarters ended September 30, 2023 and 2022 (amounts in thousands):

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
Write-offs of unamortized deferred financing costs		$	1,143			$	369			$	1,096			$	277
Write-offs of unamortized (premiums)/discounts/OCI			—				3,947				—				3,570
Total		$	1,143			$	4,316			$	1,096			$	3,847

10.

Fair Value Measurements

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

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

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

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following table summarizes the inputs to the valuations for each type of fair value measurement:

Fair Value Measurement Type		Valuation Inputs
Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”)		Quoted market prices for identical assets. These holdings are included in other assets and other liabilities on the consolidated balance sheets.
Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners		Quoted market price of Common Shares.
Mortgage notes payable and private unsecured debt (including its commercial paper and line of credit, if applicable)		Indicative rates provided by lenders of similar loans.
Public unsecured notes		Quoted market prices for each underlying issuance.
Derivatives		Readily observable market parameters such as forward yield curves and credit default swap data.

The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, commercial paper, line of credit and derivative instruments), including cash and cash equivalents and other financial instruments, approximate their carrying or contract value. The following table provides a summary of the carrying and fair values for the Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at September 30, 2023 and December 31, 2022, respectively (amounts in thousands):

		September 30, 2023								December 31, 2022
		Carrying Value				Estimated Fair Value (Level 2)				Carrying Value				Estimated Fair Value (Level 2)
Mortgage notes payable, net		$	1,634,726			$	1,492,128			$	1,953,438			$	1,803,525
Unsecured debt, net			5,844,531				5,126,361				5,472,284				4,874,490
Total debt, net		$	7,479,257			$	6,618,489			$	7,425,722			$	6,678,015

The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at September 30, 2023 and December 31, 2022, respectively (amounts in thousands):

								Fair Value Measurements at Reporting Date Using
Description		Balance Sheet Location		9/30/2023				Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets
Supplemental Executive Retirement Plan		Other Assets		$	99,275			$	99,275			$	—			$	—
Liabilities
Supplemental Executive Retirement Plan		Other Liabilities		$	99,275			$	99,275			$	—			$	—
Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners		Mezzanine		$	277,782			$	—			$	277,782			$	—

								Fair Value Measurements at Reporting Date Using
Description		Balance Sheet Location		12/31/2022				Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps		Other Assets		$	21,864			$	—			$	21,864			$	—
Supplemental Executive Retirement Plan		Other Assets			133,245				133,245				—				—
Total				$	155,109			$	133,245			$	21,864			$	—
Liabilities
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps		Other Liabilities		$	1,210			$	—			$	1,210			$	—
Supplemental Executive Retirement Plan		Other Liabilities			133,245				133,245				—				—
Total				$	134,455			$	133,245			$	1,210			$	—
Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners		Mezzanine		$	318,273			$	—			$	318,273			$	—

The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the nine months ended September 30, 2023 and 2022, respectively (amounts in thousands):

September 30, 2023 Type of Cash Flow Hedge		Amount of Gain/(Loss) Recognized in OCI on Derivative				Location of Gain/(Loss) Reclassified from Accumulated OCI into Income		Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps		$	4,514			Interest expense		$	(3,132	)
Total		$	4,514					$	(3,132	)

September 30, 2022 Type of Cash Flow Hedge		Amount of Gain/(Loss) Recognized in OCI on Derivative				Location of Gain/(Loss) Reclassified from Accumulated OCI into Income		Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps		$	23,413			Interest expense		$	(9,987	)
Total		$	23,413					$	(9,987	)

As of September 30, 2023 and December 31, 2022, there were approximately $5.1 million in deferred gains, net, and $2.5 million in deferred losses, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and unsettled derivative instruments, of which an estimated $2.3 million may be recognized as additional interest expense during the twelve months ending September 30, 2024.

During the quarter ended September 30, 2023, the Company received a net $27.1 million to settle nine forward starting swaps in conjunction with the interest rate lock on $530.0 million of ten-year secured conventional mortgage notes. The Company ultimately closed on $550.0 million of secured notes. The accrued interest of approximately $1.9 million was recorded as a decrease to interest expense. The remaining $25.2 million was initially deferred as a component of accumulated other comprehensive income (loss) and will be recognized as a decrease to interest expense over the first nine years and eight months of the mortgage notes.

Other

The Company has invested in various equity securities without readily determinable fair values and has elected to measure them using the measurement alternative in accordance with the applicable accounting standards for equity securities. These investments are carried at cost less any impairment and adjusted to fair value if there are observable price changes for an identical or similar investment of the same issuer.

The following table summarizes the Company’s real estate technology investment securities included in other assets as of September 30, 2023 and December 31, 2022 (amounts in thousands):

		September 30, 2023				December 31, 2022
Real Estate Technology Investments		$	10,307			$	4,312

During the third quarter of 2023, the Company sold a portion of one of these investment securities for proceeds of approximately $2.5 million and realized a gain on sale of approximately $1.6 million. The Company adjusted the remainder of that investment security to the observable market price of the transaction and recorded an unrealized gain of approximately $4.5 million.

11.

Earnings Per Share and Earnings Per Unit

Equity Residential

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

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
Numerator for net income per share – basic:
Net income		$	546,219			$	641,641			$	181,286			$	335,165
Allocation to Noncontrolling Interests – Operating Partnership			(17,174	)			(21,024	)			(5,561	)			(10,997	)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties			(5,299	)			(2,726	)			(3,217	)			(1,143	)
Preferred distributions			(2,318	)			(2,318	)			(773	)			(773	)
Numerator for net income per share – basic		$	521,428			$	615,573			$	171,735			$	322,252
Numerator for net income per share – diluted:
Net income		$	546,219			$	641,641			$	181,286			$	335,165
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties			(5,299	)			(2,726	)			(3,217	)			(1,143	)
Preferred distributions			(2,318	)			(2,318	)			(773	)			(773	)
Numerator for net income per share – diluted		$	538,602			$	636,597			$	177,296			$	333,249
Denominator for net income per share – basic and diluted:
Denominator for net income per share – basic			378,614				375,710				378,853				375,850
Effect of dilutive securities:
OP Units			11,377				11,893				11,234				11,895
Long-term compensation shares/units			1,144				1,785				1,264				1,555
ATM forward sales			—				6				—				—
Denominator for net income per share – diluted			391,135				389,394				391,351				389,300
Net income per share – basic		$	1.38			$	1.64			$	0.45			$	0.86
Net income per share – diluted		$	1.38			$	1.63			$	0.45			$	0.86

ERP Operating Limited Partnership

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

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
Numerator for net income per Unit – basic and diluted:
Net income		$	546,219			$	641,641			$	181,286			$	335,165
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties			(5,299	)			(2,726	)			(3,217	)			(1,143	)
Allocation to Preference Units			(2,318	)			(2,318	)			(773	)			(773	)
Numerator for net income per Unit – basic and diluted		$	538,602			$	636,597			$	177,296			$	333,249
Denominator for net income per Unit – basic and diluted:
Denominator for net income per Unit – basic			389,991				387,603				390,087				387,745
Effect of dilutive securities:
Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units			1,144				1,785				1,264				1,555
ATM forward sales			—				6				—				—
Denominator for net income per Unit – diluted			391,135				389,394				391,351				389,300
Net income per Unit – basic		$	1.38			$	1.64			$	0.45			$	0.86
Net income per Unit – diluted		$	1.38			$	1.63			$	0.45			$	0.86

12.

Commitments and Contingencies

Commitments

Real Estate Development Commitments

As of September 30, 2023, the Company has both consolidated and unconsolidated real estate projects under development. The following table summarizes the gross remaining total project costs for the Company’s projects under development at September 30, 2023 (total project costs remaining in thousands):

		Projects				Apartment Units				Total Project Costs Remaining (1)
Projects Under Development
Consolidated			1				225			$	91,210
Unconsolidated			6				1,982				186,372
Total Projects Under Development			7				2,207			$	277,582

(1)

The Company’s share of the $277.6 million in total project costs remaining approximates $97.1 million, with the balance funded by the Company’s joint venture partners (approximately $1.9 million) and/or applicable construction loans (approximately $178.6 million).

We have entered into, and may continue in the future to enter into, joint venture agreements with third-party partners for the development of multifamily rental properties. The joint venture agreements with each development partner include buy-sell provisions that provide the right, but not the obligation, for the Company to acquire each respective partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events described in the joint venture agreements. See Note 6 for additional discussion.

Other Commitments

We have entered into, and may continue in the future to enter into, real estate technology and other real estate fund investments. As of September 30, 2023, the Company has invested in ten separate such investments totaling $37.9 million with aggregate remaining commitments of approximately $20.1 million.

Contingencies

Litigation and Legal Matters

The Company, as an owner of real estate, is subject to various federal, state and local laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future.

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.

13.

Reportable Segments

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

The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company’s operating performance geographically by market and both on a same store and non-same store basis. While the Company does maintain a non-residential presence, it accounts for less than 4.0% of total revenues for the nine months ended September 30, 2023 and is designed as an amenity for our residential residents. The chief operating decision maker evaluates the performance of each property on a consolidated residential and non-residential basis. The Company’s geographic consolidated same store operating segments represent its reportable segments.

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

All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the nine months and quarters ended September 30, 2023 and 2022, respectively.

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

The following table presents a reconciliation of NOI from our rental real estate for the nine months and quarters ended September 30, 2023 and 2022, respectively (amounts in thousands):

		Nine Months Ended September 30,								Quarter Ended September 30,
		2023				2022				2023				2022
Rental income		$	2,146,464			$	2,035,477			$	724,067			$	695,099
Property and maintenance expense			(391,437	)			(365,277	)			(129,087	)			(124,048	)
Real estate taxes and insurance expense			(312,607	)			(302,899	)			(102,858	)			(100,361	)
Total operating expenses			(704,044	)			(668,176	)			(231,945	)			(224,409	)
Net operating income		$	1,442,420			$	1,367,301			$	492,122			$	470,690

The following tables present NOI from our rental real estate for each segment for the nine months and quarters ended September 30, 2023 and 2022, respectively, as well as total assets and capital expenditures at September 30, 2023 (amounts in thousands):

		Nine Months Ended September 30, 2023												Nine Months Ended September 30, 2022
		Rental Income				Operating Expenses				NOI				Rental Income				Operating Expenses				NOI
Same store (1)
Los Angeles		$	355,341			$	110,436			$	244,905			$	344,579			$	101,441			$	243,138
Orange County			96,923				21,689				75,234				91,270				19,804				71,466
San Diego			68,904				15,586				53,318				64,540				14,646				49,894
Subtotal - Southern California			521,168				147,711				373,457				500,389				135,891				364,498
San Francisco			325,335				98,848				226,487				312,401				93,778				218,623
Washington, D.C.			329,196				106,687				222,509				310,071				104,515				205,556
New York			356,157				146,415				209,742				318,757				140,696				178,061
Seattle			220,353				62,621				157,732				211,040				59,858				151,182
Boston			215,667				64,156				151,511				200,808				61,934				138,874
Denver			53,324				15,883				37,441				50,284				14,463				35,821
Other Expansion Markets			48,656				22,286				26,370				45,998				20,146				25,852
Total same store			2,069,856				664,607				1,405,249				1,949,748				631,281				1,318,467
Non-same store/other
Non-same store (2)			70,736				26,946				43,790				53,449				22,429				31,020
Other (3)			5,872				12,491				(6,619	)			32,280				14,466				17,814
Total non-same store/other			76,608				39,437				37,171				85,729				36,895				48,834
Totals		$	2,146,464			$	704,044			$	1,442,420			$	2,035,477			$	668,176			$	1,367,301

(1)

For the nine months ended September 30, 2023 and 2022, same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2022, less properties subsequently sold, which represented 76,789 apartment units.

(2)

For the nine months ended September 30, 2023 and 2022, non-same store primarily includes properties acquired after January 1, 2022, plus any properties in lease-up and not stabilized as of January 1, 2022, and any properties undergoing major renovations.

(3)

Other includes development, other corporate operations and operations prior to disposition for properties sold.

		Quarter Ended September 30, 2023												Quarter Ended September 30, 2022
		Rental Income				Operating Expenses				NOI				Rental Income				Operating Expenses				NOI
Same store (1)
Los Angeles		$	121,098			$	36,839			$	84,259			$	116,770			$	34,198			$	82,572
Orange County			33,019				7,316				25,703				31,252				6,792				24,460
San Diego			25,258				5,803				19,455				23,860				5,634				18,226
Subtotal - Southern California			179,375				49,958				129,417				171,882				46,624				125,258
San Francisco			109,215				32,782				76,433				106,382				32,025				74,357
Washington, D.C.			114,748				36,521				78,227				108,667				37,073				71,594
New York			118,326				48,555				69,771				112,595				46,755				65,840
Seattle			73,351				21,575				51,776				73,096				20,258				52,838
Boston			72,541				20,773				51,768				69,029				20,860				48,169
Denver			17,855				5,384				12,471				17,219				5,132				12,087
Other Expansion Markets			18,679				7,926				10,753				17,517				8,008				9,509
Total same store			704,090				223,474				480,616				676,387				216,735				459,652
Non-same store/other
Non-same store (2)			19,035				7,279				11,756				13,343				4,544				8,799
Other (3)			942				1,192				(250	)			5,369				3,130				2,239
Total non-same store/other			19,977				8,471				11,506				18,712				7,674				11,038
Totals		$	724,067			$	231,945			$	492,122			$	695,099			$	224,409			$	470,690

(1)

For the quarters ended September 30, 2023 and 2022, same store primarily includes all properties acquired or completed that were stabilized prior to July 1, 2022, less properties subsequently sold, which represented 77,698 apartment units.

(2)

For the quarters ended September 30, 2023 and 2022, non-same store primarily includes properties acquired after July 1, 2022, plus any properties in lease-up and not stabilized as of July 1, 2022, and any properties undergoing major renovations.

(3)

Other includes development, other corporate operations and operations prior to disposition for properties sold.

		Nine Months Ended September 30, 2023
		Total Assets				Capital Expenditures
Same store (1)
Los Angeles		$	2,509,235			$	38,810
Orange County			345,945				6,611
San Diego			230,902				12,921
Subtotal - Southern California			3,086,082				58,342
San Francisco			3,006,656				36,261
Washington, D.C.			3,023,064				39,086
New York			3,328,321				16,248
Seattle			2,092,677				23,176
Boston			1,762,350				22,430
Denver			832,017				2,547
Other Expansion Markets			790,180				4,117
Total same store			17,921,347				202,207
Non-same store/other
Non-same store (2)			1,502,692				27,291
Other (3)			684,936				265
Total non-same store/other			2,187,628				27,556
Totals		$	20,108,975			$	229,763

(1)

Same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2022, less properties subsequently sold, which represented 76,789 apartment units.

(2)

Non-same store primarily includes properties acquired after January 1, 2022, plus any properties in lease-up and not stabilized as of January 1, 2022, and any properties undergoing major renovations.

(3)

Other includes development, other corporate operations and capital expenditures for properties sold.

14.

Subsequent Events

Subsequent to September 30, 2023, the Company:

Disposed of the following to unaffiliated parties (sales price in thousands):

		Properties				Apartment Units				Sales Price
Rental Properties – Consolidated			3				499			$	184,550
Total			3				499			$	184,550