Cover and table of contents

Cover and table of contents

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Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 June 30, 2024


☐	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:

ERP Operating Limited Partnership:

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 July 25, 2024 was 379,135,883.

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended June 30, 2024 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 June 30, 2024 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 June 30, 2024 and December 31, 2023	2

Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2024 and 2023	3

Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	5

Consolidated Statements of Changes in Equity for the six months and quarters ended June 30, 2024 and 2023	8

Financial Statements of ERP Operating Limited Partnership:

Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	10

Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2024 and 2023	11

Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	13

Consolidated Statements of Changes in Capital for the six months and quarters ended June 30, 2024 and 2023	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	36

Item 3. Quantitative and Qualitative Disclosures about Market Risk	45

Item 4. Controls and Procedures	45

PART II.

Item 1. Legal Proceedings	46

Item 1A. Risk Factors	46

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3. Defaults Upon Senior Securities	46

Item 4. Mine Safety Disclosures	46

Item 5. Other Information	46

Item 6. Exhibits	46

EQUITY RESIDENTIAL

CONSOLIDATED B****ALANCE SHEETS

(Amounts in thousands except for share amounts)

(Unaudited)


	June 30,			December 31,
	2024			2023
ASSETS
Land	$	5,540,352		$	5,581,876
Depreciable property		23,004,377			22,938,426
Projects under development		188,283			78,036
Land held for development		64,781			114,300
Investment in real estate		28,797,793			28,712,638
Accumulated depreciation		(10,163,756	)		(9,810,337	)
Investment in real estate, net		18,634,037			18,902,301
Investments in unconsolidated entities		341,871			282,049
Cash and cash equivalents		38,298			50,743
Restricted deposits		100,123			89,252
Right-of-use assets		450,796			457,266
Other assets		214,443			252,953
Total assets	$	19,779,568		$	20,034,564

LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	1,634,838		$	1,632,902
Notes, net		5,351,461			5,348,417
Line of credit and commercial paper		170,884			409,131
Accounts payable and accrued expenses		114,413			87,377
Accrued interest payable		65,585			65,716
Lease liabilities		309,182			311,640
Other liabilities		292,424			272,596
Security deposits		69,848			69,178
Distributions payable		263,668			259,231
Total liabilities		8,272,303			8,456,188

Commitments and contingencies

Redeemable Noncontrolling Interests – Operating Partnership		327,641			289,248
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value;100,000,000 shares authorized; 343,100 shares issued and outstanding as of June 30, 2024 and 745,600 shares issued and outstanding as of December 31, 2023		17,155			37,280
Common Shares of beneficial interest, $0.01 par value;1,000,000,000 shares authorized; 379,086,882 shares issued and outstanding as of June 30, 2024 and 379,291,417 shares issued and outstanding as of December 31, 2023		3,791			3,793
Paid in capital		9,590,105			9,601,866
Retained earnings		1,357,922			1,437,185
Accumulated other comprehensive income (loss)		6,914			5,704
Total shareholders’ equity		10,975,887			11,085,828
Noncontrolling Interests:
Operating Partnership		204,032			202,306
Partially Owned Properties		(295	)		994
Total Noncontrolling Interests		203,737			203,300
Total equity		11,179,624			11,289,128
Total liabilities and equity	$	19,779,568		$	20,034,564

See accompanying notes

EQUITY RESIDENTIAL

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

(Amounts in thousands except per share data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
REVENUES
Rental income	$	1,464,981		$	1,422,397		$	734,163		$	717,309

EXPENSES
Property and maintenance		261,128			262,350			126,498			124,771
Real estate taxes and insurance		214,498			209,749			105,571			103,080
Property management		68,969			62,145			33,511			30,679
General and administrative		34,351			35,041			18,631			18,876
Depreciation		450,093			437,185			224,398			221,355
Total expenses		1,029,039			1,006,470			508,609			498,761

Net gain (loss) on sales of real estate properties		227,994			100,122			39,809			(87	)
Interest and other income		10,657			3,669			1,328			2,131
Other expenses		(45,123	)		(15,559	)		(13,385	)		(6,564	)
Interest:
Expense incurred, net		(133,040	)		(131,991	)		(65,828	)		(65,590	)
Amortization of deferred financing costs		(3,836	)		(3,996	)		(1,918	)		(2,017	)
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels		492,594			368,172			185,560			146,421
Income and other tax (expense) benefit		(635	)		(634	)		(331	)		(336	)
Income (loss) from investments in unconsolidated entities		(3,372	)		(2,605	)		(1,674	)		(1,223	)
Net income		488,587			364,933			183,555			144,862
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership		(13,278	)		(11,613	)		(5,003	)		(4,554	)
Partially Owned Properties		(2,039	)		(2,082	)		(1,069	)		(1,105	)
Net income attributable to controlling interests		473,270			351,238			177,483			139,203
Preferred distributions		(902	)		(1,545	)		(355	)		(773	)
Premium on redemption of Preferred Shares		(1,444	)		—			—			—
Net income available to Common Shares	$	470,924		$	349,693		$	177,128		$	138,430

Earnings per share – basic:
Net income available to Common Shares	$	1.24		$	0.92		$	0.47		$	0.37
Weighted average Common Shares outstanding		378,699			378,492			378,578			378,642

Earnings per share – diluted:
Net income available to Common Shares	$	1.24		$	0.92		$	0.47		$	0.37
Weighted average Common Shares outstanding		390,548			391,063			390,542			391,187

See accompanying notes

EQUITY RESIDENTIAL

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

(Amounts in thousands except per share data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
Comprehensive income:
Net income	$	488,587		$	364,933		$	183,555		$	144,862
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			4,054			—			13,834
Losses reclassified into earnings from other comprehensive income		1,210			2,201			600			1,106
Other comprehensive income (loss)		1,210			6,255			600			14,940
Comprehensive income		489,797			371,188			184,155			159,802
Comprehensive (income) attributable to Noncontrolling Interests		(15,350	)		(13,890	)		(6,088	)		(6,135	)
Comprehensive income attributable to controlling interests	$	474,447		$	357,298		$	178,067		$	153,667

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEM****ENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	488,587		$	364,933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		450,093			437,185
Amortization of deferred financing costs		3,836			3,996
Amortization of discounts and premiums on debt		2,536			1,740
Amortization of deferred settlements on derivative instruments		1,204			2,195
Amortization of right-of-use assets		6,470			6,357
Write-off of pursuit costs		1,369			1,993
(Income) loss from investments in unconsolidated entities		3,372			2,605
Distributions from unconsolidated entities – return on capital		281			290
Net (gain) loss on sales of real estate properties		(227,994	)		(100,122	)
Realized (gain) loss on investment securities		1,316			87
Unrealized (gain) loss on investment securities		(5,745	)		—
Compensation paid with Company Common Shares		21,350			20,845
Changes in assets and liabilities:
(Increase) decrease in other assets		30,297			(13,258	)
Increase (decrease) in accounts payable and accrued expenses		18,780			25,424
Increase (decrease) in accrued interest payable		(131	)		(72	)
Increase (decrease) in lease liabilities		(1,020	)		(658	)
Increase (decrease) in other liabilities		22,697			(8,047	)
Increase (decrease) in security deposits		670			487
Net cash provided by operating activities		817,968			745,980
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions		(63,507	)		(186,676	)
Investment in real estate – development/other		(55,253	)		(46,815	)
Capital expenditures to real estate		(153,304	)		(135,247	)
Non-real estate capital additions		(921	)		(1,043	)
Interest capitalized for real estate and unconsolidated entities under development		(6,894	)		(6,979	)
Proceeds from disposition of real estate, net		330,128			133,916
Investments in unconsolidated entities – acquisitions		(31,286	)		(989	)
Investments in unconsolidated entities – development/other		(28,793	)		(25,413	)
Distributions from unconsolidated entities – return of capital		16			15
Purchase of investment securities and other investments		—			(2,500	)
Proceeds from sale of investment securities		7,457			452
Net cash provided by (used for) investing activities		(2,357	)		(271,279	)

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage notes payable, net:
Proceeds	$	—		$	22,896
Lump sum payoffs		—			(64,722	)
Scheduled principal repayments		—			(54	)
Line of credit and commercial paper:
Commercial paper proceeds		3,532,753			2,382,619
Commercial paper repayments		(3,771,000	)		(2,328,100	)
Finance ground lease principal payments		(1,438	)		(1,329	)
Proceeds from Employee Share Purchase Plan (ESPP)		2,449			2,124
Proceeds from exercise of options		6,480			11,358
Common Shares repurchased and retired		(38,474	)		—
Redemption of Preferred Shares		(20,125	)		—
Premium on redemption of Preferred Shares		(1,444	)		—
Other financing activities, net		(45	)		(31	)
Acquisition of Noncontrolling Interests – Partially Owned Properties		—			(3,737	)
Contributions – Noncontrolling Interests – Partially Owned Properties		458			9
Contributions – Noncontrolling Interests – Operating Partnership		2			1
Distributions:
Common Shares		(507,111	)		(487,483	)
Preferred Shares		(1,320	)		(2,319	)
Noncontrolling Interests – Operating Partnership		(15,629	)		(15,233	)
Noncontrolling Interests – Partially Owned Properties		(2,741	)		(3,230	)
Net cash provided by (used for) financing activities		(817,185	)		(487,231	)
Net increase (decrease) in cash and cash equivalents and restricted deposits		(1,574	)		(12,530	)
Cash and cash equivalents and restricted deposits, beginning of period		139,995			137,172
Cash and cash equivalents and restricted deposits, end of period	$	138,421		$	124,642

Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents	$	38,298		$	35,701
Restricted deposits		100,123			88,941
Total cash and cash equivalents and restricted deposits, end of period	$	138,421		$	124,642

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	120,955		$	125,518
Net cash paid (received) for income and other taxes	$	877		$	911
Amortization of deferred financing costs:
Investment in real estate, net	$	—		$	(211	)
Other assets	$	1,392		$	1,392
Mortgage notes payable, net	$	524		$	895
Notes, net	$	1,920		$	1,920
Amortization of discounts and premiums on debt:
Mortgage notes payable, net	$	1,412		$	616
Notes, net	$	1,124		$	1,124
Amortization of deferred settlements on derivative instruments:
Other liabilities	$	(6	)	$	(6	)
Accumulated other comprehensive income	$	1,210		$	2,201
Write-off of pursuit costs:
Investment in real estate, net	$	319		$	316
Investments in unconsolidated entities	$	866		$	1,111
Other assets	$	184		$	566
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities	$	2,736		$	1,972
Other liabilities	$	636		$	633
Realized/unrealized (gain) loss on derivative instruments:
Other assets	$	—		$	(3,359	)
Other liabilities	$	—		$	(695	)
Accumulated other comprehensive income	$	—		$	4,054
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net	$	(2,592	)	$	(2,988	)
Investments in unconsolidated entities	$	(4,302	)	$	(3,991	)
Investments in unconsolidated entities – development/other:
Investments in unconsolidated entities	$	(28,133	)	$	(24,633	)
Other liabilities	$	(660	)	$	(780	)
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets	$	—		$	(7,105	)
Lease liabilities	$	—		$	7,105
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities	$	—		$	539
Other assets	$	—		$	(539	)
Non-cash change in Supplemental Executive Retirement Plan (SERP) balances:
Other assets	$	3,437		$	3,110
Other liabilities	$	(2,839	)	$	(3,258	)
Paid in capital	$	(598	)	$	148

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENT****S OF CHANGES IN EQUITY

(Amounts in thousands except per share data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
SHAREHOLDERS’ EQUITY
PREFERRED SHARES
Balance, beginning of period	$	37,280		$	37,280		$	17,155		$	37,280
Partial redemption of 8.29% Series K Cumulative Redeemable		(20,125	)		—			—			—
Balance, end of period	$	17,155		$	37,280		$	17,155		$	37,280
COMMON SHARES, $0.01 PAR VALUE
Balance, beginning of period	$	3,793		$	3,784		$	3,789		$	3,789
Conversion of OP Units into Common Shares		1			2			1			—
Exercise of share options		1			2			—			—
Employee Share Purchase Plan (ESPP)		1			—			1			—
Common Shares repurchased and retired		(7	)		—			—			—
Share-based employee compensation expense:
Restricted shares		2			2			—			1
Balance, end of period	$	3,791		$	3,790		$	3,791		$	3,790
PAID IN CAPITAL
Balance, beginning of period	$	9,601,866		$	9,476,085		$	9,603,743		$	9,488,320
Common Share Issuance:
Conversion of OP Units into Common Shares		5,047			4,657			4,793			986
Exercise of share options		6,479			11,356			2,079			3,246
Employee Share Purchase Plan (ESPP)		2,448			2,124			804			672
Share-based employee compensation expense:
Restricted shares		9,381			7,943			4,887			4,290
Share options		2,507			3,125			1,218			1,628
ESPP discount		501			398			205			138
Supplemental Executive Retirement Plan (SERP)		(598	)		148			(371	)		(343	)
Acquisition of Noncontrolling Interests – Partially Owned Properties		—			(900	)		—			(900	)
Change in market value of Redeemable Noncontrolling Interests – Operating Partnership		(39,058	)		(39,123	)		(30,243	)		(33,177	)
Adjustment for Noncontrolling Interests ownership in Operating Partnership		1,532			6,815			2,990			7,768
Balance, end of period	$	9,590,105		$	9,472,628		$	9,590,105		$	9,472,628
RETAINED EARNINGS
Balance, beginning of period	$	1,437,185		$	1,658,837		$	1,436,671		$	1,619,131
Net income attributable to controlling interests		473,270			351,238			177,483			139,203
Common Share distributions		(511,720	)		(502,070	)		(255,877	)		(251,101	)
Preferred Share distributions		(902	)		(1,545	)		(355	)		(773	)
Premium on redemption of Preferred Shares – cash charge		(1,444	)		—			—			—
Common Shares repurchased and retired		(38,467	)		—			—			—
Balance, end of period	$	1,357,922		$	1,506,460		$	1,357,922		$	1,506,460
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period	$	5,704		$	(2,547	)	$	6,314		$	(11,232	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			4,054			—			13,834
Losses reclassified into earnings from other comprehensive income		1,210			2,201			600			1,106
Balance, end of period	$	6,914		$	3,708		$	6,914		$	3,708

DISTRIBUTIONS
Distributions declared per Common Share outstanding	$	1.35		$	1.325		$	0.675		$	0.6625

See accompanying notes

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)

(Amounts in thousands except per share data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
NONCONTROLLING INTERESTS
OPERATING PARTNERSHIP
Balance, beginning of period	$	202,306		$	209,961		$	207,272		$	211,718
Issuance of restricted units to Noncontrolling Interests		2			1			—			1
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner		(5,048	)		(4,659	)		(4,794	)		(986	)
Equity compensation associated with Noncontrolling Interests		10,236			10,867			6,149			6,213
Net income attributable to Noncontrolling Interests		13,278			11,613			5,003			4,554
Distributions to Noncontrolling Interests		(15,875	)		(15,640	)		(7,429	)		(7,736	)
Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership		665			2,077			821			1,409
Adjustment for Noncontrolling Interests ownership in Operating Partnership		(1,532	)		(6,815	)		(2,990	)		(7,768	)
Balance, end of period	$	204,032		$	207,405		$	204,032		$	207,405
PARTIALLY OWNED PROPERTIES
Balance, beginning of period	$	994		$	(721	)	$	(1,131	)	$	(2,553	)
Net income attributable to Noncontrolling Interests		2,039			2,082			1,069			1,105
Contributions by Noncontrolling Interests		458			9			223			9
Distributions to Noncontrolling Interests		(2,786	)		(3,261	)		(456	)		(452	)
Acquisition of Noncontrolling Interests – Partially Owned Properties		—			(2,837	)		—			(2,837	)
Other		(1,000	)		—			—			—
Balance, end of period	$	(295	)	$	(4,728	)	$	(295	)	$	(4,728	)

See accompanying notes

ERP OPERATING LI****MITED PARTNERSHIP

CONSOLIDATED B****ALANCE SHEETS

(Amounts in thousands)

(Unaudited)


	June 30,			December 31,
	2024			2023
ASSETS
Land	$	5,540,352		$	5,581,876
Depreciable property		23,004,377			22,938,426
Projects under development		188,283			78,036
Land held for development		64,781			114,300
Investment in real estate		28,797,793			28,712,638
Accumulated depreciation		(10,163,756	)		(9,810,337	)
Investment in real estate, net		18,634,037			18,902,301
Investments in unconsolidated entities		341,871			282,049
Cash and cash equivalents		38,298			50,743
Restricted deposits		100,123			89,252
Right-of-use assets		450,796			457,266
Other assets		214,443			252,953
Total assets	$	19,779,568		$	20,034,564

LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net	$	1,634,838		$	1,632,902
Notes, net		5,351,461			5,348,417
Line of credit and commercial paper		170,884			409,131
Accounts payable and accrued expenses		114,413			87,377
Accrued interest payable		65,585			65,716
Lease liabilities		309,182			311,640
Other liabilities		292,424			272,596
Security deposits		69,848			69,178
Distributions payable		263,668			259,231
Total liabilities		8,272,303			8,456,188

Commitments and contingencies

Redeemable Limited Partners		327,641			289,248
Capital:
Partners’ Capital:
Preference Units		17,155			37,280
General Partner		10,951,818			11,042,844
Limited Partners		204,032			202,306
Accumulated other comprehensive income (loss)		6,914			5,704
Total partners’ capital		11,179,919			11,288,134
Noncontrolling Interests – Partially Owned Properties		(295	)		994
Total capital		11,179,624			11,289,128
Total liabilities and capital	$	19,779,568		$	20,034,564

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

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

(Amounts in thousands except per Unit data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
REVENUES
Rental income	$	1,464,981		$	1,422,397		$	734,163		$	717,309

EXPENSES
Property and maintenance		261,128			262,350			126,498			124,771
Real estate taxes and insurance		214,498			209,749			105,571			103,080
Property management		68,969			62,145			33,511			30,679
General and administrative		34,351			35,041			18,631			18,876
Depreciation		450,093			437,185			224,398			221,355
Total expenses		1,029,039			1,006,470			508,609			498,761

Net gain (loss) on sales of real estate properties		227,994			100,122			39,809			(87	)
Interest and other income		10,657			3,669			1,328			2,131
Other expenses		(45,123	)		(15,559	)		(13,385	)		(6,564	)
Interest:
Expense incurred, net		(133,040	)		(131,991	)		(65,828	)		(65,590	)
Amortization of deferred financing costs		(3,836	)		(3,996	)		(1,918	)		(2,017	)
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels		492,594			368,172			185,560			146,421
Income and other tax (expense) benefit		(635	)		(634	)		(331	)		(336	)
Income (loss) from investments in unconsolidated entities		(3,372	)		(2,605	)		(1,674	)		(1,223	)
Net income		488,587			364,933			183,555			144,862
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(2,039	)		(2,082	)		(1,069	)		(1,105	)
Net income attributable to controlling interests	$	486,548		$	362,851		$	182,486		$	143,757
ALLOCATION OF NET INCOME:
Preference Units	$	902		$	1,545		$	355		$	773
Premium on redemption of Preference Units	$	1,444		$	—		$	—		$	—

General Partner	$	470,924		$	349,693		$	177,128		$	138,430
Limited Partners		13,278			11,613			5,003			4,554
Net income available to Units	$	484,202		$	361,306		$	182,131		$	142,984

Earnings per Unit – basic:
Net income available to Units	$	1.24		$	0.92		$	0.47		$	0.37
Weighted average Units outstanding		389,380			389,942			389,271			390,032

Earnings per Unit – diluted:
Net income available to Units	$	1.24		$	0.92		$	0.47		$	0.37
Weighted average Units outstanding		390,548			391,063			390,542			391,187

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

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

(Amounts in thousands except per Unit data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
Comprehensive income:
Net income	$	488,587		$	364,933		$	183,555		$	144,862
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			4,054			—			13,834
Losses reclassified into earnings from other comprehensive income		1,210			2,201			600			1,106
Other comprehensive income (loss)		1,210			6,255			600			14,940
Comprehensive income		489,797			371,188			184,155			159,802
Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties		(2,039	)		(2,082	)		(1,069	)		(1,105	)
Comprehensive income attributable to controlling interests	$	487,758		$	369,106		$	183,086		$	158,697

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STA****TEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	488,587		$	364,933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		450,093			437,185
Amortization of deferred financing costs		3,836			3,996
Amortization of discounts and premiums on debt		2,536			1,740
Amortization of deferred settlements on derivative instruments		1,204			2,195
Amortization of right-of-use assets		6,470			6,357
Write-off of pursuit costs		1,369			1,993
(Income) loss from investments in unconsolidated entities		3,372			2,605
Distributions from unconsolidated entities – return on capital		281			290
Net (gain) loss on sales of real estate properties		(227,994	)		(100,122	)
Realized (gain) loss on investment securities		1,316			87
Unrealized (gain) loss on investment securities		(5,745	)		—
Compensation paid with Company Common Shares		21,350			20,845
Changes in assets and liabilities:
(Increase) decrease in other assets		30,297			(13,258	)
Increase (decrease) in accounts payable and accrued expenses		18,780			25,424
Increase (decrease) in accrued interest payable		(131	)		(72	)
Increase (decrease) in lease liabilities		(1,020	)		(658	)
Increase (decrease) in other liabilities		22,697			(8,047	)
Increase (decrease) in security deposits		670			487
Net cash provided by operating activities		817,968			745,980
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions		(63,507	)		(186,676	)
Investment in real estate – development/other		(55,253	)		(46,815	)
Capital expenditures to real estate		(153,304	)		(135,247	)
Non-real estate capital additions		(921	)		(1,043	)
Interest capitalized for real estate and unconsolidated entities under development		(6,894	)		(6,979	)
Proceeds from disposition of real estate, net		330,128			133,916
Investments in unconsolidated entities – acquisitions		(31,286	)		(989	)
Investments in unconsolidated entities – development/other		(28,793	)		(25,413	)
Distributions from unconsolidated entities – return of capital		16			15
Purchase of investment securities and other investments		—			(2,500	)
Proceeds from sale of investment securities		7,457			452
Net cash provided by (used for) investing activities		(2,357	)		(271,279	)

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage notes payable, net:
Proceeds	$	—		$	22,896
Lump sum payoffs		—			(64,722	)
Scheduled principal repayments		—			(54	)
Line of credit and commercial paper:
Commercial paper proceeds		3,532,753			2,382,619
Commercial paper repayments		(3,771,000	)		(2,328,100	)
Finance ground lease principal payments		(1,438	)		(1,329	)
Proceeds from EQR’s Employee Share Purchase Plan (ESPP)		2,449			2,124
Proceeds from exercise of EQR options		6,480			11,358
OP Units repurchased and retired		(38,474	)		—
Redemption of Preference Units		(20,125	)		—
Premium on redemption of Preference Units		(1,444	)		—
Other financing activities, net		(45	)		(31	)
Acquisition of Noncontrolling Interests – Partially Owned Properties		—			(3,737	)
Contributions – Noncontrolling Interests – Partially Owned Properties		458			9
Contributions – Limited Partners		2			1
Distributions:
OP Units – General Partner		(507,111	)		(487,483	)
Preference Units		(1,320	)		(2,319	)
OP Units – Limited Partners		(15,629	)		(15,233	)
Noncontrolling Interests – Partially Owned Properties		(2,741	)		(3,230	)
Net cash provided by (used for) financing activities		(817,185	)		(487,231	)
Net increase (decrease) in cash and cash equivalents and restricted deposits		(1,574	)		(12,530	)
Cash and cash equivalents and restricted deposits, beginning of period		139,995			137,172
Cash and cash equivalents and restricted deposits, end of period	$	138,421		$	124,642

Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents	$	38,298		$	35,701
Restricted deposits		100,123			88,941
Total cash and cash equivalents and restricted deposits, end of period	$	138,421		$	124,642

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	120,955		$	125,518
Net cash paid (received) for income and other taxes	$	877		$	911
Amortization of deferred financing costs:
Investment in real estate, net	$	—		$	(211	)
Other assets	$	1,392		$	1,392
Mortgage notes payable, net	$	524		$	895
Notes, net	$	1,920		$	1,920
Amortization of discounts and premiums on debt:
Mortgage notes payable, net	$	1,412		$	616
Notes, net	$	1,124		$	1,124
Amortization of deferred settlements on derivative instruments:
Other liabilities	$	(6	)	$	(6	)
Accumulated other comprehensive income	$	1,210		$	2,201
Write-off of pursuit costs:
Investment in real estate, net	$	319		$	316
Investments in unconsolidated entities	$	866		$	1,111
Other assets	$	184		$	566
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities	$	2,736		$	1,972
Other liabilities	$	636		$	633
Realized/unrealized (gain) loss on derivative instruments:
Other assets	$	—		$	(3,359	)
Other liabilities	$	—		$	(695	)
Accumulated other comprehensive income	$	—		$	4,054
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net	$	(2,592	)	$	(2,988	)
Investments in unconsolidated entities	$	(4,302	)	$	(3,991	)
Investments in unconsolidated entities – development/other:
Investments in unconsolidated entities	$	(28,133	)	$	(24,633	)
Other liabilities	$	(660	)	$	(780	)
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets	$	—		$	(7,105	)
Lease liabilities	$	—		$	7,105
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities	$	—		$	539
Other assets	$	—		$	(539	)
Non-cash change in Supplemental Executive Retirement Plan (SERP) balances:
Other assets	$	3,437		$	3,110
Other liabilities	$	(2,839	)	$	(3,258	)
Paid in capital	$	(598	)	$	148

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENT****S OF CHANGES IN CAPITAL

(Amounts in thousands except per Unit data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
PARTNERS’ CAPITAL
PREFERENCE UNITS
Balance, beginning of period	$	37,280		$	37,280		$	17,155		$	37,280
Partial redemption of 8.29% Series K Cumulative Redeemable		(20,125	)		—			—			—
Balance, end of period	$	17,155		$	37,280		$	17,155		$	37,280
GENERAL PARTNER
Balance, beginning of period	$	11,042,844		$	11,138,706		$	11,044,203		$	11,111,240
OP Unit Issuance:
Conversion of OP Units held by Limited Partners into OP Units held by General Partner		5,048			4,659			4,794			986
Exercise of EQR share options		6,480			11,358			2,079			3,246
EQR’s Employee Share Purchase Plan (ESPP)		2,449			2,124			805			672
Share-based employee compensation expense:
EQR restricted shares		9,383			7,945			4,887			4,291
EQR share options		2,507			3,125			1,218			1,628
EQR ESPP discount		501			398			205			138
OP Units repurchased and retired		(38,474	)		—			—			—
Net income available to Units – General Partner		470,924			349,693			177,128			138,430
OP Units – General Partner distributions		(511,720	)		(502,070	)		(255,877	)		(251,101	)
Supplemental Executive Retirement Plan (SERP)		(598	)		148			(371	)		(343	)
Acquisition of Noncontrolling Interests – Partially Owned Properties		—			(900	)		—			(900	)
Change in market value of Redeemable Limited Partners		(39,058	)		(39,123	)		(30,243	)		(33,177	)
Adjustment for Limited Partners ownership in Operating Partnership		1,532			6,815			2,990			7,768
Balance, end of period	$	10,951,818		$	10,982,878		$	10,951,818		$	10,982,878
LIMITED PARTNERS
Balance, beginning of period	$	202,306		$	209,961		$	207,272		$	211,718
Issuance of restricted units to Limited Partners		2			1			—			1
Conversion of OP Units held by Limited Partners into OP Units held by General Partner		(5,048	)		(4,659	)		(4,794	)		(986	)
Equity compensation associated with Units – Limited Partners		10,236			10,867			6,149			6,213
Net income available to Units – Limited Partners		13,278			11,613			5,003			4,554
Units – Limited Partners distributions		(15,875	)		(15,640	)		(7,429	)		(7,736	)
Change in carrying value of Redeemable Limited Partners		665			2,077			821			1,409
Adjustment for Limited Partners ownership in Operating Partnership		(1,532	)		(6,815	)		(2,990	)		(7,768	)
Balance, end of period	$	204,032		$	207,405		$	204,032		$	207,405
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period	$	5,704		$	(2,547	)	$	6,314		$	(11,232	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			4,054			—			13,834
Losses reclassified into earnings from other comprehensive income		1,210			2,201			600			1,106
Balance, end of period	$	6,914		$	3,708		$	6,914		$	3,708

DISTRIBUTIONS
Distributions declared per Unit outstanding	$	1.35		$	1.325		$	0.675		$	0.6625

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES
Balance, beginning of period	$	994		$	(721	)	$	(1,131	)	$	(2,553	)
Net income attributable to Noncontrolling Interests		2,039			2,082			1,069			1,105
Contributions by Noncontrolling Interests		458			9			223			9
Distributions to Noncontrolling Interests		(2,786	)		(3,261	)		(456	)		(452	)
Acquisition of Noncontrolling Interests – Partially Owned Properties		—			(2,837	)		—			(2,837	)
Other		(1,000	)		—			—			—
Balance, end of period	$	(295	)	$	(4,728	)	$	(295	)	$	(4,728	)

See accompanying notes

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 June 30, 2024 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 June 30, 2024, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 299 properties located in 10 states and the District of Columbia consisting of 79,738 apartment units. The ownership breakdown includes (table does not include any uncompleted development properties):


	Properties		Apartment Units
Wholly Owned Properties		284		76,469
Partially Owned Properties – Consolidated		14		3,060
Partially Owned Properties – Unconsolidated		1		209
		299		79,738

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 six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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, 2023 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, 2023.

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 March 2024, the Securities and Exchange Commission ("SEC") adopted final rules that will require certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. The new rules include a requirement to disclose material climate-related risks, descriptions of board and management oversight and risk management activities, the material impacts of these risks on a registrant’s strategy, business model and outlook, and any material climate-related targets or goals, as well as material effects and costs of severe weather events and other natural conditions and greenhouse gas emissions. Prior to the stay of the new rules, they would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosures, which would have been effective for annual periods beginning January 1, 2026. The Company is currently evaluating the impact of the new rules on its disclosures.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued an amendment to the income tax standards which requires disclosure enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. The new standard will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of adopting the standard on its consolidated results of operations and financial position.

In November 2023, the FASB issued an amendment to the segment reporting standards which requires disclosure for each reportable segment, on an interim and annual basis, the significant expense categories and amounts that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. Additionally, it requires disclosure of the title and position of the individual or the name of the group or committee identified as the chief operating decision maker. The new standard will be effective for annual periods beginning January 1, 2024 and interim periods beginning January 1, 2025 on a retrospective basis. The Company is currently evaluating the impact of adopting the standard 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.

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 six months ended June 30, 2024 and 2023:


	2024			2023
Common Shares
Common Shares outstanding at January 1,		379,291,417			378,429,708
Common Shares Issued:
Conversion of OP Units		90,131			180,629
Exercise of share options		119,516			232,317
Employee Share Purchase Plan (ESPP)		47,466			40,346
Restricted share grants, net		190,804			149,722
Common Shares Other:
Repurchased and retired		(652,452	)		—
Common Shares outstanding at June 30,		379,086,882			379,032,722
Units
Units outstanding at January 1,		11,581,306			12,429,737
Restricted unit grants, net		172,667			166,344
Conversion of OP Units to Common Shares		(90,131	)		(180,629	)
Units outstanding at June 30,		11,663,842			12,415,452
Total Common Shares and Units outstanding at June 30,		390,750,724			391,448,174
Units Ownership Interest in Operating Partnership		3.0	%		3.2	%

The following table presents the changes in the Operating Partnership’s issued and outstanding General Partner Units and Limited Partner Units for the six months ended June 30, 2024 and 2023:


	2024			2023
General and Limited Partner Units
General and Limited Partner Units outstanding at January 1,		390,872,723			390,859,445
Issued to General Partner:
Exercise of EQR share options		119,516			232,317
EQR’s Employee Share Purchase Plan (ESPP)		47,466			40,346
EQR’s restricted share grants, net		190,804			149,722
Issued to Limited Partners:
Restricted unit grants, net		172,667			166,344
General Partner Other:
OP Units repurchased and retired		(652,452	)		—
General and Limited Partner Units outstanding at June 30,		390,750,724			391,448,174
Limited Partner Units
Limited Partner Units outstanding at January 1,		11,581,306			12,429,737
Limited Partner restricted unit grants, net		172,667			166,344
Conversion of Limited Partner OP Units to EQR Common Shares		(90,131	)		(180,629	)
Limited Partner Units outstanding at June 30,		11,663,842			12,415,452
Limited Partner Units Ownership Interest in Operating Partnership		3.0	%		3.2	%

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 June 30, 2024 and December 31, 2023.

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 June 30, 2024 and 2023, the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners have a redemption value of approximately $327.6 million and $355.3 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 six months ended June 30, 2024 and 2023, respectively (amounts in thousands):


	2024			2023
Balance at January 1,	$	289,248		$	318,273
Change in market value		39,058			39,123
Change in carrying value		(665	)		(2,077	)
Balance at June 30,	$	327,641		$	355,319

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 June 30, 2024 and December 31, 2023:


				Amounts in thousands
		Annual
	Call	Dividend Per		June 30,		December 31,
	Date (1)	Share/Unit (2)		2024		2023
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; 343,100 shares/units issued and outstanding as of June 30, 2024 and 745,600 shares/units issued and outstanding as of December 31, 2023 (3)	12/10/2026	$	4.145	$	17,155	$	37,280
				$	17,155	$	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.

(3)

During the six months ended June 30, 2024, the Company repurchased and retired 402,500 Series K Preferred Shares/Preference Units with a liquidation value of approximately $20.1 million for total cash consideration of approximately $21.8 million, inclusive of premiums and accrued dividends through the redemption date. As a result of this partial redemption, the Company incurred a cash charge of approximately $1.4 million which was recorded as a premium on the redemption of Preferred Shares/Preference Units.

Other

EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC 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 June 30, 2024.

During the six months ended June 30, 2024, the Company repurchased and subsequently retired approximately $38.5 million (652,452 shares at a weighted average price per share of $58.95) of its Common Shares in the open market under its share repurchase program. Concurrent with these transactions, ERPOP repurchased and retired the same amount of OP Units previously issued to EQR. Prior to the share repurchase activity during the six months ended June 30, 2024, the Company had the authority to repurchase up to 13.0 million Common Shares under its share repurchase program, of which 12,347,548 shares remain authorized to repurchase as of June 30, 2024.

Real Estate

The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of June 30, 2024 and December 31, 2023 (amounts in thousands):


	June 30, 2024			December 31, 2023
Land	$	5,540,352		$	5,581,876
Depreciable property:
Buildings and improvements		19,789,495			19,809,432
Furniture, fixtures and equipment		2,698,109			2,609,600
In-Place lease intangibles		516,773			519,394
Projects under development:
Land		40,049			3,201
Construction-in-progress		148,234			74,835
Land held for development:
Land		46,160			82,026
Construction-in-progress		18,621			32,274
Investment in real estate		28,797,793			28,712,638
Accumulated depreciation		(10,163,756	)		(9,810,337	)
Investment in real estate, net	$	18,634,037		$	18,902,301

During the six months ended June 30, 2024, the Company acquired the following from unaffiliated parties (purchase price and purchase price allocation in thousands):


							Purchase Price Allocation (1)
	Properties		Apartment Units		Purchase Price		Land		Depreciable Property
Rental Properties – Consolidated		1		160	$	62,595	$	6,593	$	56,077

(1)

Purchase price allocation includes capitalized closing costs.

During the six months ended June 30, 2024, 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			5				831			$	334,000			$	227,994

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 June 30, 2024:


	Operating Properties (1)				Projects Under Development (2)
	Properties		Apartment Units		Projects		Apartment Units (3)
Consolidated Joint Ventures (VIE)		14		3,060		1		440

(1)

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

(2)

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

(3)

Represents the intended number of apartment units to be developed.

The following table provides consolidated assets and liabilities related to the Company's VIEs as of June 30, 2024 and December 31, 2023 (amounts in thousands):


	June 30, 2024		December 31, 2023
Consolidated Assets	$	618,439	$	599,788
Consolidated Liabilities	$	47,558	$	41,153

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 June 30, 2024 and December 31, 2023 (amounts in thousands except for ownership percentage):


	June 30, 2024			December 31, 2023			Ownership Percentage
Investments in Unconsolidated Entities:
Various Real Estate Holdings (VIE)	$	35,123		$	35,421		Varies
Projects Under Development and Land Held for Development (VIE)		279,847			220,192		62% - 95% (1)
Real Estate Technology Funds/Companies (VIE)		27,151			26,691		Varies
Other		(250	)		(255	)	Varies
Investments in Unconsolidated Entities	$	341,871		$	282,049

(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 June 30, 2024:


	Operating Properties				Real Estate Holdings (1)		Projects Under Development (2), (5)				Projects Held for Development (2), (3)
	Properties		Apartment Units		Entities		Projects		Apartment Units (4)		Projects		Apartment Units (4)
Unconsolidated Joint Ventures (VIE)		1		209		3		5		1,773		4		1,164

(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.

Restricted Deposits

The following table presents the Company’s restricted deposits as of June 30, 2024 and December 31, 2023 (amounts in thousands):


	June 30, 2024		December 31, 2023
Mortgage escrow deposits:
Real estate taxes and insurance	$	694	$	307
Mortgage principal reserves/sinking funds		33,266		29,270
Mortgage escrow deposits		33,960		29,577
Restricted cash:
Earnest money on pending acquisitions		4,000		524
Restricted deposits on real estate investments		2,228		2,181
Resident security and utility deposits		41,190		40,149
Replacement reserves		16,880		15,571
Other		1,865		1,250
Restricted cash		66,163		59,675
Restricted deposits	$	100,123	$	89,252

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 six months ended June 30, 2024 and 2023 (amounts in thousands):


	Six Months Ended June 30, 2024									Six Months Ended June 30, 2023
Income Type	Residential Leases			Non-Residential Leases			Total			Residential Leases			Non-Residential Leases		Total
Residential and non-residential rent	$	1,308,397		$	33,710		$	1,342,107		$	1,276,338		$	31,973	$	1,308,311
Utility recoveries (RUBS income) (1)		45,456			435			45,891			42,786			419		43,205
Parking rent		23,035			633			23,668			21,893			225		22,118
Other lease revenue (2)		(10,732	)		(481	)		(11,213	)		(13,420	)		734		(12,686	)
Total lease revenue	$	1,366,156		$	34,297			1,400,453		$	1,327,597		$	33,351		1,360,948
Parking revenue								21,715								20,395
Other revenue								42,813								41,054
Total other rental income (3)								64,528								61,449
Rental income							$	1,464,981							$	1,422,397

(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 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 June 30, 2024 and 2023 (amounts in thousands):


	Quarter Ended June 30, 2024									Quarter Ended June 30, 2023
Income Type	Residential Leases			Non-Residential Leases			Total			Residential Leases			Non-Residential Leases		Total
Residential and non-residential rent	$	656,036		$	14,887		$	670,923		$	641,586		$	15,987	$	657,573
Utility recoveries (RUBS income) (1)		22,787			208			22,995			21,403			212		21,615
Parking rent		11,611			413			12,024			11,011			116		11,127
Other lease revenue (2)		(4,787	)		(389	)		(5,176	)		(5,831	)		65		(5,766	)
Total lease revenue	$	685,647		$	15,119			700,766		$	668,169		$	16,380		684,549
Parking revenue								11,037								10,192
Other revenue								22,360								22,568
Total other rental income (3)								33,397								32,760
Rental income							$	734,163							$	717,309

(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 and ancillary income such as cable and laundry revenue.

The following table presents residential accounts receivable and straight-line receivable balances for the Company’s properties as of June 30, 2024 and December 31, 2023 (amounts in thousands):


Balance Sheet (Other assets):	June 30, 2024			December 31, 2023
Residential accounts receivable balances	$	16,657		$	21,477
Allowance for doubtful accounts		(11,380	)		(15,846	)
Net receivable balances	$	5,277		$	5,631

Straight-line receivable balances	$	7,893		$	9,183

The following table presents residential bad debt for the Company’s properties for the six months and quarters ended June 30, 2024 and 2023 (amounts in thousands):


	Six Months Ended June 30,						Quarter Ended June 30,
Income Statement (Rental income):	2024			2023			2024			2023
Bad debt, net (1)	$	17,139		$	19,820		$	7,924		$	9,065
% of residential rental income		1.2	%		1.4	%		1.1	%		1.3	%

(1)

Bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $0.9 million and $1.9 million for the six months ended June 30, 2024 and 2023, respectively, and $0.4 million and $0.7 million for the quarters ended June 30, 2024 and 2023, respectively.

Debt

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. Weighted average interest rates noted below for the six months ended June 30, 2024 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 six months ended June 30, 2024 (amounts in thousands):


	Mortgage notes payable, net as of December 31, 2023		Proceeds		Lump sum payoffs		Scheduled principal repayments		Amortization of premiums/ discounts		Amortization of deferred financing costs, net (1)		Mortgage notes payable, net as of June 30, 2024
Fixed Rate Debt:
Secured – Conventional	$	1,398,598	$	—	$	—	$	—	$	792	$	454	$	1,399,844
Floating Rate Debt:
Secured – Tax Exempt		234,304		—		—		—		620		70		234,994
Total	$	1,632,902	$	—	$	—	$	—	$	1,412	$	524	$	1,634,838

(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 six months ended June 30, 2024:


		June 30, 2024
Interest Rate Ranges (ending)		0.10% - 5.25%
Weighted Average Interest Rate		3.86%
Maturity Date Ranges		2029-2061

As of June 30, 2024, the Company had $246.7 million of secured tax-exempt bonds subject to third-party credit enhancement.

Notes

The following table summarizes the Company’s notes activity for the six months ended June 30, 2024 (amounts in thousands):


	Notes, net as of December 31, 2023		Proceeds		Lump sum payoffs		Amortization of premiums/ discounts		Amortization of deferred financing costs, net (1)		Notes, net as of June 30, 2024
Fixed Rate Debt:
Unsecured – Public	$	5,348,417	$	—	$	—	$	1,124	$	1,920	$	5,351,461

(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 six months ended June 30, 2024:


		June 30, 2024
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 six months ended June 30, 2024.

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 0.715%), 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 and other terms and conditions per the agreement. The Company did not borrow any amounts under its revolving credit facility during the six months ended June 30, 2024.

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 six months ended June 30, 2024:


		June 30, 2024
Weighted Average Interest Rate (1)		5.59%
Weighted Average Maturity (in days)		5
Weighted Average Amount Outstanding		$300.1 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 June 30, 2024 (amounts in thousands):


	June 30, 2024
Unsecured revolving credit facility commitment	$	2,500,000
Commercial paper balance outstanding		(171,000	)
Unsecured revolving credit facility balance outstanding		—
Other restricted amounts		(3,438	)
Unsecured revolving credit facility availability	$	2,325,562

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 the items listed above and the investments disclosed below) 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 June 30, 2024 and December 31, 2023, respectively (amounts in thousands):


	June 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value (Level 2)		Carrying Value		Estimated Fair Value (Level 2)
Mortgage notes payable, net	$	1,634,838	$	1,490,171	$	1,632,902	$	1,509,706
Unsecured debt, net		5,522,345		5,015,807		5,757,548		5,346,488
Total debt, net	$	7,157,183	$	6,505,978	$	7,390,450	$	6,856,194

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 June 30, 2024 and December 31, 2023, respectively (amounts in thousands):


				Fair Value Measurements at Reporting Date Using
Description	Balance Sheet Location	6/30/2024		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	$	105,041	$	105,041	$	—	$	—

Liabilities
Supplemental Executive Retirement Plan	Other Liabilities	$	105,041	$	105,041	$	—	$	—

Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners	Mezzanine	$	327,641	$	—	$	327,641	$	—


				Fair Value Measurements at Reporting Date Using
Description	Balance Sheet Location	12/31/2023		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	$	108,478	$	108,478	$	—	$	—

Liabilities
Supplemental Executive Retirement Plan	Other Liabilities	$	108,478	$	108,478	$	—	$	—

Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners	Mezzanine	$	289,248	$	—	$	289,248	$	—

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 six months ended June 30, 2024 and 2023, respectively (amounts in thousands):


June 30, 2024 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	$	—	Interest expense	$	(1,210	)
Total	$	—		$	(1,210	)


June 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	$	4,054	Interest expense	$	(2,201	)
Total	$	4,054		$	(2,201	)

As of June 30, 2024 and December 31, 2023, there were approximately $6.9 million and $5.7 million in deferred gains, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and/or unsettled derivative instruments, of which an estimated $1.8 million may be recognized as additional interest expense during the twelve months ending June 30, 2025.

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 June 30, 2024 and December 31, 2023 (amounts in thousands):


		June 30, 2024				December 31, 2023
Real Estate Technology Investments		$	16,284			$	19,312

During the six months ended June 30, 2024, the Company sold a portion of one of these investment securities for proceeds of approximately $7.5 million and realized a loss on sale of approximately $1.3 million, which is included in interest and other income in the consolidated statements of operations. During the six months ended June 30, 2024, the Company adjusted certain of these investment securities to observable market prices and recorded a net unrealized gain of approximately $5.7 million, which is included in interest and other income in the consolidated statements of operations.

10.

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):


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
Numerator for net income per share – basic:
Net income	$	488,587		$	364,933		$	183,555		$	144,862
Allocation to Noncontrolling Interests – Operating Partnership		(13,278	)		(11,613	)		(5,003	)		(4,554	)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(2,039	)		(2,082	)		(1,069	)		(1,105	)
Preferred distributions		(902	)		(1,545	)		(355	)		(773	)
Premium on redemption of Preferred Shares		(1,444	)		—			—			—
Numerator for net income per share – basic	$	470,924		$	349,693		$	177,128		$	138,430
Numerator for net income per share – diluted:
Net income	$	488,587		$	364,933		$	183,555		$	144,862
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(2,039	)		(2,082	)		(1,069	)		(1,105	)
Preferred distributions		(902	)		(1,545	)		(355	)		(773	)
Premium on redemption of Preferred Shares		(1,444	)		—			—			—
Numerator for net income per share – diluted	$	484,202		$	361,306		$	182,131		$	142,984
Denominator for net income per share – basic and diluted:
Denominator for net income per share – basic		378,699			378,492			378,578			378,642
Effect of dilutive securities:
OP Units		10,681			11,450			10,693			11,390
Long-term compensation shares/units		1,168			1,121			1,271			1,155
Denominator for net income per share – diluted		390,548			391,063			390,542			391,187
Net income per share – basic	$	1.24		$	0.92		$	0.47		$	0.37
Net income per share – diluted	$	1.24		$	0.92		$	0.47		$	0.37

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):


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
Numerator for net income per Unit – basic and diluted:
Net income	$	488,587		$	364,933		$	183,555		$	144,862
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(2,039	)		(2,082	)		(1,069	)		(1,105	)
Allocation to Preference Units		(902	)		(1,545	)		(355	)		(773	)
Allocation to premium on redemption of Preference Units		(1,444	)		—			—			—
Numerator for net income per Unit – basic and diluted	$	484,202		$	361,306		$	182,131		$	142,984
Denominator for net income per Unit – basic and diluted:
Denominator for net income per Unit – basic		389,380			389,942			389,271			390,032
Effect of dilutive securities:
Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units		1,168			1,121			1,271			1,155
Denominator for net income per Unit – diluted		390,548			391,063			390,542			391,187
Net income per Unit – basic	$	1.24		$	0.92		$	0.47		$	0.37
Net income per Unit – diluted	$	1.24		$	0.92		$	0.47		$	0.37

11.

Commitments and Contingencies

Commitments

Real Estate Development Commitments

As of June 30, 2024, 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 June 30, 2024 (total project costs remaining in thousands):


	Projects		Apartment Units		Total Project Costs Remaining (1)
Projects Under Development
Consolidated		2		665	$	196,510
Unconsolidated		5		1,773		56,154
Total Projects Under Development		7		2,438	$	252,664

(1)

The Company’s share of the $252.7 million in total project costs remaining approximates $196.3 million, with the balance funded by the Company’s joint venture partners (approximately $0.2 million) and/or applicable construction loans (approximately $56.2 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 5 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 June 30, 2024, the Company has invested in ten separate such investments totaling $40.5 million with aggregate remaining commitments of approximately $17.5 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 is involved in various pending and threatened legal proceedings which arise in the ordinary course of business. The Company evaluates these litigation matters on an ongoing basis, but in no event less than quarterly, in assessing the adequacy of its accruals and disclosures. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, the Company records new accruals and/or adjusts existing accruals that represent its best estimate of the loss incurred based on the facts and circumstances known at that time. As of June 30, 2024 and December 31, 2023, the Company’s litigation accruals approximated $50.0 million and $17.1 million, respectively, and are included in other liabilities in the consolidated balance sheets. Actual losses may differ materially from the amounts noted above and the ultimate outcome of these legal proceedings is generally not yet determinable. As of June 30, 2024 and December 31, 2023, the Company does not believe there is any litigation pending or threatened against it that, either individually or in the aggregate and inclusive of the matters accrued for as noted above, may reasonably be expected to have a material adverse effect on the Company and its financial condition.

The Company has been named as a defendant in a number of cases filed in late 2022 and 2023 alleging antitrust violations by RealPage, Inc., a seller of revenue management software products, and various owners and/or operators of multifamily housing, including us, that have utilized these products. The complaints allege collusion among the defendants to illegally fix and inflate the pricing of multifamily rents and seek monetary damages, injunctive relief, fees and costs. All of the cases except for one have been consolidated into a single putative class action in the United States District Court for the Middle District of Tennessee. On December 28, 2023, motions to dismiss this consolidated action, filed by RealPage, Inc. as well as us and our multifamily co-defendants, were denied by the Court and the case is proceeding. Another case with similar allegations has been filed by the District of Columbia against RealPage, Inc. and a number of multifamily owners and/or operators, including us. We believe these various lawsuits are without merit and we intend to vigorously defend against them. As these proceedings are in the early stages, it is not possible for the Company to predict the outcome nor is it possible to estimate the amount of loss, if any, which may be associated with an adverse decision in any of these cases.

The Company is named as a defendant in a class action in the United States District Court for the Northern District of California filed in 2016 which alleges that the amount of late fees charged by the Company were improperly determined under California law. The plaintiffs are seeking monetary damages and other relief. On April 8, 2024, the Court issued certain findings of facts and conclusions of law that are adverse to the Company’s legal position. At this time, the Company is continuing to defend the action. While the resolution of this matter cannot be predicted with certainty, the Company does not believe that the eventual outcome will have a material adverse effect on the Company and its financial condition.

12.

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 six months ended June 30, 2024 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 six months and quarters ended June 30, 2024 and 2023, 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 net income per the consolidated statements of operations to NOI for the six months and quarters ended June 30, 2024 and 2023, respectively (amounts in thousands):


	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
Net income	$	488,587		$	364,933		$	183,555		$	144,862
Adjustments:
Property management		68,969			62,145			33,511			30,679
General and administrative		34,351			35,041			18,631			18,876
Depreciation		450,093			437,185			224,398			221,355
Net (gain) loss on sales of real estate properties		(227,994	)		(100,122	)		(39,809	)		87
Interest and other income		(10,657	)		(3,669	)		(1,328	)		(2,131	)
Other expenses		45,123			15,559			13,385			6,564
Interest:
Expense incurred, net		133,040			131,991			65,828			65,590
Amortization of deferred financing costs		3,836			3,996			1,918			2,017
Income and other tax expense (benefit)		635			634			331			336
(Income) loss from investments in unconsolidated entities		3,372			2,605			1,674			1,223
Total NOI	$	989,355		$	950,298		$	502,094		$	489,458

The following tables present NOI from our rental real estate for each segment for the six months and quarters ended June 30, 2024 and 2023, respectively, as well as total assets and capital expenditures at June 30, 2024 (amounts in thousands):


	Six Months Ended June 30, 2024							Six Months Ended June 30, 2023
	Rental Income		Operating Expenses		NOI			Rental Income		Operating Expenses		NOI
Same store (1)
Los Angeles	$	239,386	$	73,603	$	165,783		$	229,783	$	72,575	$	157,208
Orange County		62,272		13,865		48,407			59,417		13,396		46,021
San Diego		51,815		11,659		40,156			48,925		11,550		37,375
Subtotal - Southern California		353,473		99,127		254,346			338,125		97,521		240,604

Washington, D.C.		231,584		72,407		159,177			220,318		72,109		148,209
San Francisco		217,043		65,700		151,343			213,502		65,735		147,767
New York		246,136		101,320		144,816			237,830		97,137		140,693
Boston		162,532		46,726		115,806			155,729		46,197		109,532
Seattle		148,624		43,291		105,333			145,796		41,172		104,624
Denver		35,810		10,667		25,143			35,469		10,685		24,784
Other Expansion Markets		37,363		16,199		21,164			37,088		16,165		20,923
Total same store		1,432,565		455,437		977,128			1,383,857		446,721		937,136

Non-same store/other
Non-same store (2)		27,547		12,418		15,129			12,400		6,509		5,891
Other (3)		4,869		7,771		(2,902	)		26,140		18,869		7,271
Total non-same store/other		32,416		20,189		12,227			38,540		25,378		13,162

Totals	$	1,464,981	$	475,626	$	989,355		$	1,422,397	$	472,099	$	950,298

(1)

For the six months ended June 30, 2024 and 2023, same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2023, less properties subsequently sold, which represented 77,054 apartment units.

(2)

For the six months ended June 30, 2024 and 2023, non-same store primarily includes properties acquired after January 1, 2023, plus any properties in lease-up and not stabilized as of January 1, 2023, and any properties undergoing major renovations.

(3)

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


	Quarter Ended June 30, 2024						Quarter Ended June 30, 2023
	Rental Income		Operating Expenses		NOI		Rental Income		Operating Expenses		NOI
Same store (1)
Los Angeles	$	120,119	$	35,778	$	84,341	$	116,295	$	35,264	$	81,031
Orange County		31,171		6,937		24,234		30,045		6,703		23,342
San Diego		25,991		5,780		20,211		24,691		5,736		18,955
Subtotal - Southern California		177,281		48,495		128,786		171,031		47,703		123,328

Washington, D.C.		116,465		36,342		80,123		111,220		35,472		75,748
San Francisco		108,731		31,263		77,468		107,288		31,893		75,395
New York		122,172		50,045		72,127		119,785		47,649		72,136
Boston		82,081		22,988		59,093		78,851		22,034		56,817
Seattle		74,792		22,013		52,779		73,018		20,951		52,067
Denver		18,002		5,221		12,781		17,873		5,211		12,662
Other Expansion Markets		18,645		8,158		10,487		18,718		7,768		10,950
Total same store		718,169		224,525		493,644		697,784		218,681		479,103

Non-same store/other
Non-same store (2)		14,599		6,297		8,302		7,497		3,744		3,753
Other (3)		1,395		1,247		148		12,028		5,426		6,602
Total non-same store/other		15,994		7,544		8,450		19,525		9,170		10,355

Totals	$	734,163	$	232,069	$	502,094	$	717,309	$	227,851	$	489,458

(1)

For the quarters ended June 30, 2024 and 2023, same store primarily includes all properties acquired or completed that were stabilized prior to April 1, 2023, less properties subsequently sold, which represented 77,054 apartment units.

(2)

For the quarters ended June 30, 2024 and 2023, non-same store primarily includes properties acquired after April 1, 2023, plus any properties in lease-up and not stabilized as of April 1, 2023, and any properties undergoing major renovations.

(3)

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


	Six Months Ended June 30, 2024
	Total Assets		Capital Expenditures
Same store (1)
Los Angeles	$	2,455,957	$	24,700
Orange County		335,826		8,702
San Diego		336,372		8,283
Subtotal - Southern California		3,128,155		41,685

Washington, D.C.		3,029,979		22,162
San Francisco		3,018,760		28,267
New York		3,240,380		12,363
Boston		2,051,119		12,924
Seattle		2,043,317		16,325
Denver		807,719		2,156
Other Expansion Markets		880,531		3,805
Total same store		18,199,960		139,687

Non-same store/other
Non-same store (2)		756,305		13,153
Other (3)		823,303		464
Total non-same store/other		1,579,608		13,617

Totals	$	19,779,568	$	153,304

(1)

Same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2023, less properties subsequently sold, which represented 77,054 apartment units.

(2)

Non-same store primarily includes properties acquired after January 1, 2023, plus any properties in lease-up and not stabilized as of January 1, 2023, and any properties undergoing major renovations.

(3)

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

13.

Subsequent Events

Subsequent to June 30, 2024, the Company:

Acquired the following from unaffiliated parties (purchase price in thousands):


		Properties				Apartment Units				Purchase Price
Rental Properties – Consolidated			2				644			$	216,750

Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations