EX-99.1 5 discopsexhibit9918-keqrx20.htm EX-99.1 Discops Exhibit 99.1 8-K EQR-2011.12.31-10K
Exhibit 99.1


Item 6.
Selected Financial Data

The following tables set forth selected financial and operating information on a historical basis for the Company and the Operating Partnership. The following information should be read in conjunction with all of the financial statements and notes thereto included elsewhere in this Form 8-K. The historical operating and balance sheet data have been derived from the historical financial statements of the Company and the Operating Partnership. Certain amounts have also been restated in accordance with the guidance on discontinued operations. Certain capitalized terms as used herein are defined in the Notes to Consolidated Financial Statements.

8



Equity Residential
CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
(Financial information in thousands except for per share and property data)
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
 
2008
 
2007
OPERATING DATA:
 
 

 
 

 
 

 
 

 
 

Total revenues from continuing operations
 
$
1,969,269

 
$
1,754,244

 
$
1,620,815

 
$
1,616,474

 
$
1,473,081

Interest and other income
 
$
7,977

 
$
5,166

 
$
16,578

 
$
33,245

 
$
19,360

Income (loss) from continuing operations
 
$
76,443

 
$
(88,299
)
 
$
(63,220
)
 
$
(111,541
)
 
$
(74,999
)
Discontinued operations, net
 
$
858,754

 
$
384,282

 
$
445,249

 
$
547,954

 
$
1,122,355

Net income
 
$
935,197

 
$
295,983

 
$
382,029

 
$
436,413

 
$
1,047,356

Net income available to Common Shares
 
$
879,720

 
$
269,242

 
$
347,794

 
$
393,115

 
$
951,242

Earnings per share – basic:
 
 

 
 

 
 

 
 

 
 

Income (loss) from continuing operations
    available to Common Shares
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
 
$
(0.45
)
 
$
(0.36
)
Net income available to Common Shares
 
$
2.98

 
$
0.95

 
$
1.27

 
$
1.46

 
$
3.40

Weighted average Common Shares outstanding
 
294,856

 
282,888

 
273,609

 
270,012

 
279,406

Earnings per share – diluted:
 
 

 
 

 
 

 
 

 
 

Income (loss) from continuing operations
    available to Common Shares
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
 
$
(0.45
)
 
$
(0.36
)
Net income available to Common Shares
 
$
2.95

 
$
0.95

 
$
1.27

 
$
1.46

 
$
3.40

Weighted average Common Shares outstanding
 
312,065

 
282,888

 
273,609

 
270,012

 
279,406

Distributions declared per Common Share
    outstanding
 
$
1.58

 
$
1.47

 
$
1.64

 
$
1.93

 
$
1.87

BALANCE SHEET DATA (at end of period):
 
 

 
 

 
 

 
 

 
 

Real estate, before accumulated depreciation
 
$
20,407,946

 
$
19,702,371

 
$
18,465,144

 
$
18,690,239

 
$
18,333,350

Real estate, after accumulated depreciation
 
$
15,868,363

 
$
15,365,014

 
$
14,587,580

 
$
15,128,939

 
$
15,163,225

Total assets
 
$
16,659,303

 
$
16,184,194

 
$
15,417,515

 
$
16,535,110

 
$
15,689,777

Total debt
 
$
9,721,061

 
$
9,948,076

 
$
9,392,570

 
$
10,483,942

 
$
9,478,157

Redeemable Noncontrolling Interests –
   Operating Partnership
 
$
416,404

 
$
383,540

 
$
258,280

 
$
264,394

 
$
345,165

Total shareholders’ equity
 
$
5,669,015

 
$
5,090,186

 
$
5,047,339

 
$
4,905,356

 
$
4,917,370

Total Noncontrolling Interests
 
$
193,842

 
$
118,390

 
$
127,174

 
$
163,349

 
$
188,605

OTHER DATA:
 
 

 
 

 
 

 
 

 
 

Total properties (at end of period)
 
427

 
451

 
495

 
548

 
579

Total apartment units (at end of period)
 
121,974

 
129,604

 
137,007

 
147,244

 
152,821

Funds from operations available to Common
   Shares and Units – basic (1) (3) (4)
 
$
752,153

 
$
622,786

 
$
615,505

 
$
618,372

 
$
713,412

Normalized funds from operations available to
   Common Shares and Units – basic (2) (3) (4)
 
$
759,665

 
$
682,422

 
$
661,542

 
$
735,062

 
$
699,029

Cash flow provided by (used for):
 
 

 
 

 
 

 
 

 
 

Operating activities
 
$
798,334

 
$
726,037

 
$
670,812

 
$
755,027

 
$
793,128

Investing activities
 
$
(194,828
)
 
$
(639,458
)
 
$
105,229

 
$
(343,803
)
 
$
(200,645
)
Financing activities
 
$
(650,993
)
 
$
151,541

 
$
(1,473,547
)
 
$
428,739

 
$
(801,929
)









9



ERP Operating Limited Partnership
CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
(Financial information in thousands except for per Unit and property data)

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
 
2008
 
2007
OPERATING DATA:
 
 

 
 

 
 

 
 

 
 

Total revenues from continuing operations
 
$
1,969,269

 
$
1,754,244

 
$
1,620,815

 
$
1,616,474

 
$
1,473,081

Interest and other income
 
$
7,977

 
$
5,166

 
$
16,578

 
$
33,245

 
$
19,360

Income (loss) from continuing operations
 
$
76,443

 
$
(88,299
)
 
$
(63,220
)
 
$
(111,541
)
 
$
(74,999
)
Discontinued operations, net
 
$
858,754

 
$
384,282

 
$
445,249

 
$
547,954

 
$
1,122,355

Net income
 
$
935,197

 
$
295,983

 
$
382,029

 
$
436,413

 
$
1,047,356

Net income available to Units
 
$
920,500

 
$
282,341

 
$
368,099

 
$
419,241

 
$
1,015,769

Earnings per Unit – basic:
 
 

 
 

 
 

 
 

 
 

Income (loss) from continuing operations
   available to Units
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
 
$
(0.45
)
 
$
(0.36
)
Net income available to Units
 
$
2.98

 
$
0.95

 
$
1.27

 
$
1.46

 
$
3.40

Weighted average Units outstanding
 
308,062

 
296,527

 
289,167

 
287,631

 
298,392

Earnings per Unit – diluted:
 
 

 
 

 
 

 
 

 
 

Income (loss) from continuing operations
   available to Units
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
 
$
(0.45
)
 
$
(0.36
)
Net income available to Units
 
$
2.95

 
$
0.95

 
$
1.27

 
$
1.46

 
$
3.40

Weighted average Units outstanding
 
312,065

 
296,527

 
289,167

 
287,631

 
298,392

Distributions declared per Unit outstanding
 
$
1.58

 
$
1.47

 
$
1.64

 
$
1.93

 
$
1.87

BALANCE SHEET DATA (at end of period):
 
 

 
 

 
 

 
 

 
 

Real estate, before accumulated depreciation
 
$
20,407,946

 
$
19,702,371

 
$
18,465,144

 
$
18,690,239

 
$
18,333,350

Real estate, after accumulated depreciation
 
$
15,868,363

 
$
15,365,014

 
$
14,587,580

 
$
15,128,939

 
$
15,163,225

Total assets
 
$
16,659,303

 
$
16,184,194

 
$
15,417,515

 
$
16,535,110

 
$
15,689,777

Total debt
 
$
9,721,061

 
$
9,948,076

 
$
9,392,570

 
$
10,483,942

 
$
9,478,157

Redeemable Limited Partners
 
$
416,404

 
$
383,540

 
$
258,280

 
$
264,394

 
$
345,165

Total partners' capital
 
$
5,788,551

 
$
5,200,585

 
$
5,163,459

 
$
5,043,185

 
$
5,079,739

Noncontrolling Interests – Partially Owned
   Properties
 
$
74,306

 
$
7,991

 
$
11,054

 
$
25,520

 
$
26,236

OTHER DATA:
 
 

 
 

 
 

 
 

 
 

Total properties (at end of period)
 
427

 
451

 
495

 
548

 
579

Total apartment units (at end of period)
 
121,974

 
129,604

 
137,007

 
147,244

 
152,821

Funds from operations available to Units –
   basic (1) (3) (4)
 
$
752,153

 
$
622,786

 
$
615,505

 
$
618,372

 
$
713,412

Normalized funds from operations available to
   Units – basic (2) (3) (4)
 
$
759,665

 
$
682,422

 
$
661,542

 
$
735,062

 
$
699,029

Cash flow provided by (used for):
 
 

 
 

 
 

 
 

 
 

Operating activities
 
$
798,334

 
$
726,037

 
$
670,812

 
$
755,027

 
$
793,128

Investing activities
 
$
(194,828
)
 
$
(639,458
)
 
$
105,229

 
$
(343,803
)
 
$
(200,645
)
Financing activities
 
$
(650,993
)
 
$
151,541

 
$
(1,473,547
)
 
$
428,739

 
$
(801,929
)

(1)
The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales and impairment write-downs of depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property.

10


(2)
Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes:
the impact of any expenses relating to non-operating asset impairment and valuation allowances;
property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs (other expenses);
gains and losses from early debt extinguishment, including prepayment penalties, preferred share/preference unit redemptions and the cost related to the implied option value of non-cash convertible debt discounts;
gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and
other miscellaneous non-comparable items.

(3)
The Company believes that FFO and FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates). FFO and FFO available to Common Shares and Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.
(4)
FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units are calculated on a basis consistent with net income available to Common Shares / Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares/preference units in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.
Note: See Item 7 for a reconciliation of net income to FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units.

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the results of operations and financial condition of the Company and the Operating Partnership should be read in connection with the Consolidated Financial Statements and Notes thereto. Due to the Company's ability to control the Operating Partnership and its subsidiaries, the Operating Partnership and each such subsidiary entity has been consolidated with the Company for financial reporting purposes, except for two unconsolidated developments and our military housing properties. Capitalized terms used herein and not defined are as defined elsewhere in the Annual Report on Form 10-K for the year ended December 31, 2011.

Forward-Looking Statements
Forward-looking statements in this Item 7 as well as elsewhere in the Annual Report on Form 10-K are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, projections and assumptions made by management. While the Company's management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, which could cause actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Many of these uncertainties and risks are difficult to predict and beyond management's control. Forward-looking statements are not guarantees of future performance, results or events. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update or supplement these forward-looking statements. Factors that might cause such differences include, but are not limited to the following:

We intend to actively acquire and/or develop multifamily properties for rental operations as market conditions dictate.

11


We may also acquire multifamily properties that are unoccupied or in the early stages of lease up. We may be unable to lease up these apartment properties on schedule, resulting in decreases in expected rental revenues and/or lower yields due to lower occupancy and rates as well as higher than expected concessions. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or to complete a development property. Additionally, we expect that other real estate investors with capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development and acquisition efforts. This competition (or lack thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. We have acquired in the past and intend to continue to pursue the acquisition of properties and portfolios of properties, including large portfolios, that could increase our size and result in alterations to our capital structure. The total number of apartment units under development, costs of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation;
Debt financing and other capital required by the Company may not be available or may only be available on adverse terms;
Labor and materials required for maintenance, repair, capital expenditure or development may be more expensive than anticipated;
Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new construction and excess inventory of multifamily and single family housing, rental housing subsidized by the government, other government programs that favor single family rental housing or owner occupied housing over multifamily rental housing, slow or negative employment growth and household formation, the availability of low-interest mortgages for single family home buyers, changes in social preferences and the potential for geopolitical instability, all of which are beyond the Company's control; and
Additional factors as discussed in Part I of the Annual Report on Form 10-K, particularly those under “Item 1A. Risk Factors”.
Forward-looking statements and related uncertainties are also included in the Notes to Consolidated Financial Statements in this report.

Overview

Equity Residential (“EQR”), a Maryland real estate investment trust (“REIT”) formed in March 1993, is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top United States growth markets. ERP Operating Limited Partnership (“ERPOP”), an Illinois limited partnership, was formed in May 1993 to conduct the multifamily residential property business of Equity Residential. EQR has elected to be taxed as a REIT. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP.

EQR is the general partner of, and as of December 31, 2011 owned an approximate 95.7% ownership interest in ERPOP. All of the Company's property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues public equity from time to time 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.

The Company's corporate headquarters are located in Chicago, Illinois and the Company also operates property management offices in each of its markets. As of December 31, 2011, the Company had approximately 3,800 employees who provided real estate operations, leasing, legal, financial, accounting, acquisition, disposition, development and other support functions.

Business Objectives and Operating and Investing Strategies
The Company invests in apartment communities located in strategically targeted markets with the goal of maximizing our risk adjusted total return (operating income plus capital appreciation) on invested capital.
Our operating focus is on balancing occupancy and rental rates to maximize our revenue while exercising tight cost control to generate the highest possible return to our shareholders. Revenue is maximized by attracting qualified prospects to our properties, cost-effectively converting these prospects into new residents and keeping our residents satisfied so they will renew

12


their leases upon expiration. While we believe that it is our high-quality, well-located assets that bring our customers to us, it is the customer service and superior value provided by our on-site personnel that keeps them renting with us and recommending us to their friends.
We use technology to engage our customers in the way that they want to be engaged. Many of our residents utilize our web-based resident portal which allows them to sign their lease, review their account and make payments, provide feedback and make service requests on-line.
We seek to maximize capital appreciation of our properties by investing in markets that are characterized by conditions favorable to multifamily property appreciation. These markets generally feature one or more of the following:

High barriers to entry where, because of land scarcity or government regulation, it is difficult or costly to build new apartment properties, creating limits on new supply;
High single family home prices making our apartments a more economical housing choice;
Strong economic growth leading to household formation and job growth, which in turn leads to high demand for our apartments; and
An attractive quality of life leading to high demand and retention that allows us to increase rents.
Acquisitions and developments may be financed from various sources of capital, which may include retained cash flow, issuance of additional equity and debt, sales of properties and joint venture agreements. In addition, the Company may acquire properties in transactions that include the issuance of limited partnership interests in the Operating Partnership (“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. The Company may acquire land parcels to hold and/or sell based on market opportunities. The Company may also seek to acquire properties by purchasing defaulted or distressed debt that encumbers desirable properties in the hope of obtaining title to property through foreclosure or deed-in-lieu of foreclosure proceedings. The Company has also, in the past, converted some of its properties and sold them as condominiums but is not currently active in this line of business.
Over the past several years, the Company has done an extensive repositioning of its portfolio from low barrier to entry/non-core markets to high barrier to entry/core markets. Since 2005, the Company has sold over 124,000 apartment units primarily in its non-core markets for an aggregate sales price of approximately $10.0 billion, acquired over 42,000 apartment units in its core markets for approximately $9.4 billion and began approximately $2.7 billion of development projects in its core markets. We are currently seeking to acquire and develop assets primarily in the following targeted metropolitan areas: Boston, New York, Washington DC, South Florida, Southern California, San Francisco and Seattle. We also have investments (in the aggregate about 19.2% of our NOI at December 31, 2011) in other markets including Denver, Atlanta, Phoenix, New England (excluding Boston), Orlando and Jacksonville but do not currently intend to acquire or develop new assets in these markets.
As part of its strategy, the Company purchases completed and fully occupied apartment properties, partially completed or partially occupied properties or land on which apartment properties can be constructed. We intend to hold a diversified portfolio of assets across our target markets. As of December 31, 2011, no single metropolitan area accounted for more than 15.3% of our NOI, though no guarantee can be made that NOI concentration may not increase in the future.
We endeavor to attract and retain the best employees by providing them with the education, resources and opportunities to succeed. We provide many classroom and on-line training courses to assist our employees in interacting with prospects and residents as well as extensively train our customer service specialists in maintaining the equipment and appliances on our property sites. We actively promote from within and many senior corporate and property leaders have risen from entry level or junior positions. We monitor our employees' engagement by surveying them annually and have consistently received high engagement scores.
We have a commitment to sustainability and consider the environmental impacts of our business activities. We have a dedicated in-house team that initiates and applies sustainable practices in all aspects of our business, including transactions, property operations and property management activities. With its high density, multifamily housing is, by its nature, an environmentally friendly property type. Our recent acquisition and development activities have been primarily concentrated in pedestrian-friendly urban locations near public transportation. When developing and renovating our properties, we strive to reduce energy and water usage by investing in energy saving technology while positively impacting the experience of our residents and the value of our assets. We continue to implement a combination of irrigation, lighting and HVAC improvements at our properties that will reduce energy and water consumption.

13


Current Environment

We expect strong growth in 2012 same store revenue (anticipated increase ranging from 5.0% to 6.0%) and 2012 NOI (anticipated increase ranging from 6.5% to 8.5%) and are optimistic that the strength in fundamentals realized in 2011 will be sustained for the foreseeable future. We believe the key drivers behind the anticipated increases in revenue are base rent pricing, renewal pricing, resident turnover and physical occupancy. Despite extremely slow growth in the overall economy, our business continues to perform well as evidenced by rising base and renewal rents. Our relatively stable turnover and solid occupancy, which we anticipate will continue throughout 2012, provide us with the ability to increase rental rates. The combined forces of demographics, household formations and the continued aversion to home ownership should ensure a continued strong demand for rental housing.

The Company anticipates that 2012 same store expenses will increase 1.5% to 2.5% primarily due to increases in real estate taxes, utilities and payroll. Real estate taxes are expected to increase 4.0% to 5.0% in 2012 most significantly due to the burn off of 421a tax abatements in New York City but also due to expected value and rate increases in some of our jurisdictions. Utilities are expected to grow 1.5% to 2.5% in 2012 as increases in water, sewer and trash are partially offset by decreases in natural gas rates. On-site payroll is expected to increase by approximately 1.0% in 2012 as normal annual merit increases in payroll should be mitigated by improvements in technology and automation. This follows several years of excellent expense control, with a compounded annual growth in same store expenses of approximately 1.0% over the last five years.

The Company continues to sell non-core assets and reduce its exposure to non-core markets as we believe these assets do not fit into our long term plans and we can sell them for prices that we believe are favorable. The Company sold 47 consolidated properties consisting of 14,345 apartment units for $1.48 billion during the year ended December 31, 2011. The Company's decision to accelerate the timing and increase the volume of dispositions combined with reinvestment of the cash proceeds in assets with lower cap rates (see definition below) later in 2011 was dilutive to our 2011 per share results. The Company defines dilution from transactions as the lost NOI from sales proceeds that were not reinvested in other apartment properties or were reinvested in properties with a lower cap rate. The Company anticipates consolidated dispositions of approximately $1.25 billion during the year ended December 31, 2012.

Competition for the properties we are interested in acquiring is significant due to the overall improvement in market fundamentals. We believe our access to capital, our ability to execute large, complex transactions and our ability to efficiently stabilize large scale lease up properties provide us with a competitive advantage. The Company acquired 21 consolidated properties consisting of 6,198 apartment units for $1.38 billion and one commercial building for potential redevelopment for $11.8 million. The Company anticipates consolidated acquisitions of approximately $1.25 billion during the year ended December 31, 2012.
 
The Company also acquired six land parcels and entered into a long-term ground lease on another land parcel for $202.3 million during the year ended December 31, 2011. We acquired these land parcels with the intent to develop them into approximately $725.0 million of new apartment properties. The Company also started construction on six projects representing 2,124 apartment units totaling $656.1 million during the year ended December 31, 2011. The Company expects to start construction on eight projects representing 2,014 apartment units totaling approximately $750.0 million of development costs during the year ended December 31, 2012.

On December 2, 2011, the Company entered into a contract with affiliates of Bank of America and Barclays PLC to acquire, for $1.325 billion, half of their interests - an approximately 26.5% interest overall - in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. On January 20, 2012, Lehman Brothers, the other owner of Archstone, acquired this 26.5% interest pursuant to a right of first offer and as a result, the Company's contract with the sellers was terminated. The Company now has the exclusive right, exercisable on or before April 19, 2012, to contract to purchase the remaining 26.5% interest in Archstone owned by the same sellers for a price, determined by the Company, equal to $1.485 billion or higher. Any purchase of the remaining interest by the Company would also be subject to Lehman's right of first offer, and if Lehman were to exercise such right, the Company would be entitled to a break-up fee of $80.0 million, subject to repayment in certain limited circumstances. In 2011, the Company incurred Archstone-related expenses of approximately $4.4 million. Approximately $2.6 million of this total was financing-related and $1.8 million was pursuit costs.     

We currently have access to multiple sources of capital including the equity markets as well as both the secured and unsecured debt markets. In December 2011, the Company completed a $1.0 billion unsecured ten year note offering with a coupon of 4.625% and an all-in effective interest rate of approximately 6.2%. We also raised $201.9 million in equity under our ATM Common Share offering program in 2011 and raised an additional $123.6 million under this program thus far in 2012. In July 2011, the Company replaced its then existing unsecured revolving credit facility which was due to mature in February 2012 with a new $1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The Company believes that the new facility contains a diversified and strong bank group which increases its

14


balance sheet flexibility going forward. Subsequent to the year ended December 31, 2011, the Company amended this facility to increase available borrowings by $500.0 million to $1.75 billion and entered into a commitment for a new senior unsecured $500.0 million delayed draw term loan facility. The Company arranged these facilities to replace a commitment for a $1.0 billion senior unsecured bridge loan facility and represents access to certain but contingent capital should the Company be successful in its pursuit of Archstone. These facilities are also available for other funding obligations should the Company be unsuccessful in its pursuit of Archstone.

We believe that cash and cash equivalents, securities readily convertible to cash, current availability on our revolving credit facility and delayed draw term loan facility and disposition proceeds for 2012 will provide sufficient liquidity to meet our funding obligations relating to asset acquisitions, including an interest in Archstone, debt maturities and existing development projects through 2012. We expect that our remaining longer-term funding requirements will be met through some combination of new borrowings, equity issuances (including EQR's ATM Common Share offering program), property dispositions, joint ventures and cash generated from operations.

There is significant uncertainty surrounding the futures of Fannie Mae and Freddie Mac (the “Government Sponsored Enterprises” or “GSEs”). Through their lender originator networks, Fannie Mae and Freddie Mac are significant lenders both to the Company and to buyers of the Company's properties. The GSEs have a mandate to support multifamily housing through their financing activities. Any changes to their mandates, reductions in their size or the scale of their activities or loss of key personnel could have a significant impact on the Company and may, among other things, lead to lower values for our disposition assets and higher interest rates on our borrowings. Such changes may also provide an advantage to us by making the cost of financing single family home ownership more expensive and provide us a competitive advantage given the size of our balance sheet and the multiple sources of capital to which we have access.
    
We believe that the Company is well-positioned as of December 31, 2011 because our properties are geographically diverse, were approximately 94.2% occupied (94.7% on a same store basis) and the long-term demographic picture is positive. With the exception of the Washington, D.C. market area, little new multifamily rental supply will be added to our markets over the next several years. We believe our strong balance sheet and ample liquidity will allow us to fund our debt maturities and development costs in the near term, and should also allow us to take advantage of investment opportunities in the future. As economic conditions continue to improve, the short-term nature of our leases and the limited supply of new rental housing being constructed, along with the customer service and superior value provided by our on-site personnel, should allow us to realize even more revenue growth and improvement in our operating results.

The current environment information presented above is based on current expectations and is forward-looking.

Results of Operations
In conjunction with our business objectives and operating strategy, the Company continued to invest in apartment properties located in strategically targeted markets during the years ended December 31, 2011 and December 31, 2010. In summary, we:
Year Ended December 31, 2011:
Acquired $1.3 billion of apartment properties consisting of 20 consolidated properties and 6,103 apartment units at a weighted average cap rate (see definition below) of 5.2% and acquired five land parcels and entered into a long-term ground lease on one land parcel located in New York City for a total of $68.3 million, all of which we deem to be in our strategic targeted markets;
Acquired one vacant land parcel in New York City in a joint venture with Toll Brothers for $134.0 million, consisting of contributions by the Company and Toll Brothers of approximately $76.1 million and $57.9 million, respectively, for future development;
Acquired one unoccupied property in the San Francisco Bay Area in the third quarter of 2011 for $39.5 million consisting of 95 apartment units that is expected to stabilize at a 6.3% yield on cost;
Acquired a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle for $11.8 million for potential redevelopment; and
Sold $1.5 billion of consolidated apartment properties consisting of 47 properties and 14,345 apartment units at a weighted average cap rate of 6.5% generating an unlevered internal rate of return (IRR), inclusive of management costs, of 11.1% and one land parcel for $22.8 million, the majority of which were in exit or less desirable markets.    

15


Year Ended December 31, 2010:
Acquired $1.1 billion of apartment properties consisting of 14 consolidated properties and 3,207 apartment units at a weighted average cap rate of 5.4% and six land parcels for $68.9 million, all of which we deem to be in our strategic targeted markets;
Acquired one unoccupied property in the second quarter of 2010 (425 Mass in Washington, D.C.) for $166.8 million consisting of 559 apartment units that is expected to stabilize at an 8.5% yield on cost and one property in the third quarter of 2010 (Vantage Pointe in San Diego, CA) for $200.0 million consisting of 679 apartment units that was in the early stages of lease up and is expected to stabilize at a 7.0% yield on cost;
Acquired the 75% equity interest it did not own in seven previously unconsolidated properties consisting of 1,811 apartment units at an implied cap rate of 8.4% in exchange for an approximate $30.0 million payment to its joint venture partner;
Sold $718.4 million of consolidated apartment properties consisting of 35 properties and 7,171 apartment units at a weighted average cap rate of 6.7%, 2 condominium units for $0.4 million and one land parcel for $4.0 million, the majority of which was in exit or less desirable markets; and
Sold the last of its 25% equity interests in an institutional joint venture consisting of 27 unconsolidated properties containing 6,275 apartment units. These properties were valued in their entirety at $417.8 million which results in an implied weighted average cap rate of 7.5% (generating cash to the Company, net of debt repayments, of $26.9 million).
The Company's primary financial measure for evaluating each of its apartment communities is net operating income (“NOI”). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense and property management expense. 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 communities. The cap rate is generally the first year NOI yield (net of replacements) on the Company's investment.
Properties that the Company owned for all of both 2011 and 2010 (the “2011 Same Store Properties”), which represented 101,312 apartment units, impacted the Company's results of operations. Properties that the Company owned for all of both 2010 and 2009 (the “2010 Same Store Properties”), which represented 112,042 apartment units, also impacted the Company's results of operations. Both the 2011 Same Store Properties and 2010 Same Store Properties are discussed in the following paragraphs.
The Company's acquisition, disposition and completed development activities also impacted overall results of operations for the years ended December 31, 2011 and 2010. The impacts of these activities are discussed in greater detail in the following paragraphs.
Comparison of the year ended December 31, 2011 to the year ended December 31, 2010
For the year ended December 31, 2011, the Company reported diluted earnings per share of $2.95 compared to $0.95 per share for the year ended December 31, 2010. The difference is primarily due to higher gains from property sales in 2011 vs. 2010, higher total property net operating income driven by the positive impact of the Company’s same store and lease-up activity and $45.4 million in impairment losses in 2010 that did not reoccur in 2011, partially offset by dilution as a result of the net impact of the Company's 2010 and 2011 acquisition and disposition activities.
For the year ended December 31, 2011, income from continuing operations increased approximately $164.7 million when compared to the year ended December 31, 2010. The increase in continuing operations is discussed below.
Revenues from the 2011 Same Store Properties increased $81.9 million primarily as a result of an increase in average rental rates charged to residents and an increase in occupancy. Expenses from the 2011 Same Store Properties increased $3.5 million primarily due to increases in property management costs, real estate taxes and utilities, partially offset by decreases in leasing and advertising costs and insurance. The following tables provide comparative same store results and statistics for the 2011 Same Store Properties:




16


2011 vs. 2010
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) – 101,312 Same Store Apartment Units

 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
Average
Rental
Rate (1)
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI
 
 
Occupancy
 
Turnover
2011
 
$
1,712,428

 
$
617,712

 
$
1,094,716

 
$
1,481

 
95.2
%
 
57.8
%
2010
 
$
1,630,482

 
$
614,210

 
$
1,016,272

 
$
1,417

 
94.8
%
 
56.9
%
Change
 
$
81,946

 
$
3,502

 
$
78,444

 
$
64

 
0.4
%
 
0.9
%
Change
 
5.0
%
 
0.6
%
 
7.7
%
 
4.5
%
 
 
 
 

(1)
Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
The following table provides comparative same store operating expenses for the 2011 Same Store Properties:
2011 vs. 2010
Same Store Operating Expenses
$ in thousands – 101,312 Same Store Apartment Units
 
 
Actual
2011
 
Actual
2010
 
$
Change
 
%
Change
 
% of Actual
2011
Operating
Expenses
Real estate taxes
 
$
169,432

 
$
166,675

 
$
2,757

 
1.7
 %
 
27.4
%
On-site payroll (1)
 
144,346

 
144,878

 
(532
)
 
(0.4
)%
 
23.4
%
Utilities (2)
 
96,702

 
95,083

 
1,619

 
1.7
 %
 
15.7
%
Repairs and maintenance (3)
 
89,549

 
89,128

 
421

 
0.5
 %
 
14.5
%
Property management costs (4)
 
68,497

 
65,219

 
3,278

 
5.0
 %
 
11.1
%
Insurance
 
19,394

 
20,605

 
(1,211
)
 
(5.9
)%
 
3.1
%
Leasing and advertising
 
11,515

 
14,266

 
(2,751
)
 
(19.3
)%
 
1.9
%
Other on-site operating expenses (5)
 
18,277

 
18,356

 
(79
)
 
(0.4
)%
 
2.9
%
Same store operating expenses
 
$
617,712

 
$
614,210

 
$
3,502

 
0.6
 %
 
100.0
%

(1)
On-site payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.
(2)
Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income.
(3)
Repairs and maintenance – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
(4)
Property management costs – Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology.
(5)
Other on-site operating expenses – Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees.
The following table presents a reconciliation of operating income per the consolidated statements of operations included in the original Form 10-K to NOI for the 2011 Same Store Properties (table has not been updated to reflect discontinued operations treatment for properties sold in the first three months of 2012).


17


 
 
Year Ended December 31,
 
 
2011
 
2010
 
 
(Amounts in thousands)
Operating income
 
$
573,332

 
$
376,077

Adjustments:
 
 

 
 

Non-same store operating results
 
(164,438
)
 
(53,734
)
Fee and asset management revenue
 
(9,026
)
 
(9,476
)
Fee and asset management expense
 
4,279

 
4,998

Depreciation
 
646,963

 
613,146

General and administrative
 
43,606

 
39,881

Impairment
 

 
45,380

Same store NOI
 
$
1,094,716

 
$
1,016,272

For properties that the Company acquired prior to January 1, 2011 and expects to continue to own through December 31, 2012, the Company anticipates the following same store results for the full year ending December 31, 2012:

2012 Same Store Assumptions
Physical occupancy
 
95.2%
Revenue change
 
5.0% to 6.0%
Expense change
 
1.5% to 2.5%
NOI change
 
6.5% to 8.5%
The Company anticipates consolidated rental acquisitions of $1.25 billion and consolidated rental dispositions of $1.25 billion and expects that acquisitions will have a 1.25% lower cap rate than dispositions for the full year ending December 31, 2012.
These 2012 assumptions are based on current expectations and are forward-looking.
Non-same store operating results increased approximately $110.7 million and consist primarily of properties acquired in calendar years 2010 and 2011, as well as operations from the Company’s completed development properties. Although the operations of both the non-same store assets and the same store assets have been positively impacted during the year ended December 31, 2011, the non-same store assets have contributed a greater percentage of total NOI to the Company’s overall operating results primarily due to 2010 and 2011 acquisitions, increasing occupancy for properties in lease-up and a longer ownership period in 2011 than 2010. This increase primarily resulted from:
Development and other miscellaneous properties in lease-up of $39.1 million;
Properties acquired in 2010 and 2011 of $53.1 million; and
Newly stabilized development and other miscellaneous properties of $3.0 million.
See also Note 17 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s segment disclosures.
Fee and asset management revenues, net of fee and asset management expenses, increased approximately $0.3 million or 6.0% primarily due to revenues earned on management of the Company’s unconsolidated development joint ventures, an increase in revenue earned on management of the Company's military housing ventures at Fort Lewis and McChord Air Force Base and lower expenses, partially offset by the unwinding of four institutional joint ventures during 2010.
Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third party management companies. These expenses increased approximately $2.0 million or 2.6%. This increase is primarily attributable to an increase in payroll-related costs, which is largely a result of the creation of the Company’s central business group, which moved certain administrative functions off-site, and increases in legal and professional fees and education/conference expenses.
Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased approximately $33.8 million or 5.6% primarily as a result of additional depreciation expense on properties acquired in 2011, development properties placed in service and capital expenditures for all properties owned, partially offset by a decrease in the amortization of furniture, fixtures and equipment that were fully depreciated.

18


General and administrative expenses from continuing operations, which include corporate operating expenses, increased approximately $3.7 million or 9.3% primarily due to an increase in payroll-related costs, which is largely a result of the acceleration of long-term compensation expense for retirement eligible employees. The Company anticipates that general and administrative expenses will approximate $45.0 million to $46.0 million for the year ending December 31, 2012. The above assumption is based on current expectations and is forward-looking.
Impairment from continuing operations decreased approximately $45.4 million due to an impairment charge taken during the fourth quarter of 2010 on land held for development related to two potential development projects that did not reoccur in 2011. See Note 18 in the Notes to Consolidated Financial Statements for further discussion.
Interest and other income from continuing operations increased approximately $2.8 million or 54.4% primarily as a result of interest earned on cash and cash equivalents due to larger overall cash balances during the year ended December 31, 2011 as compared to the same period in 2010, forfeited deposits for terminated disposition transactions and proceeds received from the Company’s final royalty participation in LRO/Rainmaker (a revenue management system), partially offset by insurance/litigation settlement proceeds that occurred during the year ended December 31, 2010 and did not reoccur during the year ended December 31, 2011. The Company anticipates that interest and other income will approximate $0.5 million to $1.0 million for the year ending December 31, 2012. The above assumption is based on current expectations and is forward-looking.
Other expenses from continuing operations increased approximately $2.6 million or 22.0% primarily due to an increase in property acquisition costs incurred in conjunction with the Company’s 2011 acquisitions as well as transaction costs related to the pursuit of Archstone.
Interest expense from continuing operations, including amortization of deferred financing costs, increased approximately $9.4 million or 2.0% primarily as a result of a full year of interest expense on the $600.0 million of unsecured notes that closed in July 2010 and interest expense on forward starting swaps terminated in conjunction with the issuance of $1.0 billion of unsecured notes, partially offset by lower interest expense on mortgage notes payable due to lower balances during the year ended December 31, 2011 as compared to the same period in 2010. During the year ended December 31, 2011, the Company capitalized interest costs of approximately $9.1 million as compared to $13.0 million for the year ended December 31, 2010. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the year ended December 31, 2011 was 5.30% as compared to 5.14% for the year ended December 31, 2010. The Company anticipates that interest expense from continuing operations will approximate $458.0 million to $468.0 million for the year ending December 31, 2012. The above assumption is based on current expectations and is forward-looking.
Income and other tax expense from continuing operations increased approximately $0.4 million primarily due to Tennessee and Texas franchise tax refunds received during the year ended December 31, 2010 that did not reoccur during the year ended December 31, 2011, partially offset by decreases in all other taxes. The Company anticipates that income and other tax expense will approximate $0.5 million to $1.5 million for the year ending December 31, 2012. The above assumption is based on current expectations and is forward-looking.
Loss from investments in unconsolidated entities decreased approximately $0.7 million compared to the year ended December 31, 2010 primarily due to the unwinding of four institutional joint ventures during 2010.
Net gain on sales of unconsolidated entities decreased approximately $28.1 million primarily due to the gain on sale and revaluation of seven previously unconsolidated properties that were acquired from the Company’s joint venture partner and the gain on sale for 27 unconsolidated properties that occurred during the year ended December 31, 2010 that did not reoccur during the year ended December 31, 2011.
Net gain on sales of land parcels increased approximately $5.6 million primarily due to the gain on sale of a land parcel located in suburban Washington, D.C. during the year ended December 31, 2011 and a loss on sale of a land parcel during the same period in 2010.
Discontinued operations, net increased approximately $474.5 million between the periods under comparison. This increase is primarily due to higher gains from property sales during the year ended December 31, 2011 compared to the same period in 2010, partially offset by properties sold in 2011 which reflect operations for none of or a partial period in 2011 in contrast to a full or partial period in 2010. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.
Comparison of the year ended December 31, 2010 to the year ended December 31, 2009
For the year ended December 31, 2010, the Company reported diluted earnings per share of $0.95 compared to $1.27 per share for the year ended December 31, 2009. The difference is primarily due to $37.3 million in lower gains from property sales in 2010 vs. 2009 and $34.3 million in higher impairment losses in 2010 vs. 2009.
For the year ended December 31, 2010, loss from continuing operations increased approximately $25.1 million when

19


compared to the year ended December 31, 2009. The decrease in continuing operations is discussed below.
Revenues from the 2010 Same Store Properties decreased $2.1 million primarily as a result of a decrease in average rental rates charged to residents, partially offset by an increase in occupancy. Expenses from the 2010 Same Store Properties increased $6.2 million primarily due to increases in repairs and maintenance expenses (mostly due to greater storm-related costs such as snow removal and roof repairs incurred during the first quarter of 2010), higher property management costs and increases in utility costs, partially offset by lower real estate taxes and leasing and advertising expenses. The following tables provide comparative same store results and statistics for the 2010 Same Store Properties:

2010 vs. 2009
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) – 112,042 Same Store Apartment Unit
 
 
Results
 
Statistics
 
 
 
 
 
 
 
 
Average
Rental
Rate (1)
 
 
 
 
Description
 
Revenues
 
Expenses
 
NOI
 
 
Occupancy
 
Turnover
2010
 
$
1,728,268

 
$
654,663

 
$
1,073,605

 
$
1,358

 
94.8
%
 
56.7
 %
2009
 
$
1,730,335

 
$
648,508

 
$
1,081,827

 
$
1,375

 
93.7
%
 
61.5
 %
Change
 
$
(2,067
)
 
$
6,155

 
$
(8,222
)
 
$
(17
)
 
1.1
%
 
(4.8
)%
Change
 
(0.1
)%
 
0.9
%
 
(0.8
)%
 
(1.2
)%
 
 

 
 


(1)
Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
The following table provides comparative same store operating expenses for the 2010 Same Store Properties:
2010 vs. 2009
Same Store Operating Expenses
$ in thousands – 112,042 Same Store Apartment Units
 
 
Actual
2010
 
Actual
2009
 
$
Change
 
%
Change
 
% of Actual
2010
Operating
Expenses
Real estate taxes
 
$
174,131

 
$
177,180

 
$
(3,049
)
 
(1.7
%)
 
26.6
%
On-site payroll (1)
 
156,668

 
156,446

 
222

 
0.1
 %
 
23.9
%
Utilities (2)
 
102,553

 
100,441

 
2,112

 
2.1
 %
 
15.7
%
Repairs and maintenance (3)
 
97,166

 
94,223

 
2,943

 
3.1
 %
 
14.8
%
Property management costs (4)
 
69,995

 
64,022

 
5,973

 
9.3
 %
 
10.7
%
Insurance
 
21,545

 
21,525

 
20

 
0.1
 %
 
3.3
%
Leasing and advertising
 
14,892

 
16,029

 
(1,137
)
 
(7.1
%)
 
2.3
%
Other on-site operating expenses (5)
 
17,713

 
18,642

 
(929
)
 
(5.0
%)
 
2.7
%
Same store operating expenses
 
$
654,663

 
$
648,508

 
$
6,155

 
0.9
 %
 
100.0
%

(1)
On-site payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.
(2)
Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income.
(3)
Repairs and maintenance – Includes general maintenance costs, unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
(4)
Property management costs – Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology.
(5)
Other on-site operating expenses – Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees.

Non-same store operating results increased approximately $84.6 million and consist primarily of properties acquired in calendar years 2009 and 2010, as well as operations from the Company's completed development properties and corporate housing

20


business. While the operations of the non-same store assets have been negatively impacted during the year ended December 31, 2010 similar to the same store assets, the non-same store assets have contributed a greater percentage of total NOI to the Company's overall operating results primarily due to increasing occupancy for properties in lease-up and a longer ownership period in 2010 than 2009. This increase primarily resulted from:

Development and other miscellaneous properties in lease-up of $32.4 million;
Newly stabilized development and other miscellaneous properties of $0.2 million;
Properties acquired in 2009 and 2010 of $56.2 million; and
Partially offset by an allocation of property management costs not included in same store results and operating activities from other miscellaneous operations, such as the Company's corporate housing business.
See also Note 17 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company's segment disclosures.

Fee and asset management revenues, net of fee and asset management expenses, increased approximately $1.5 million or 49.2% primarily due to an increase in revenue earned on management of the Company's military housing ventures at Fort Lewis and McChord Air Force Base (primarily due to increased housing redevelopment on the base which earned the Company additional fees) as well as a decrease in asset management expenses, partially offset by the unwinding of the Company's institutional joint ventures during 2010.

Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company's properties as well as management fees paid to any third party management companies. These expenses increased approximately $8.8 million or 12.3%. This increase is primarily attributable to an increase in payroll-related costs (due primarily to higher health insurance and bonus costs, acceleration of long-term compensation expense for retirement eligible employees and the creation of the Company's central business group, which moved administrative functions off-site), legal and professional fees, education/conference expenses, real estate tax consulting fees and travel expenses.

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased approximately $94.4 million or 18.4% primarily as a result of additional depreciation expense on properties acquired in 2009 and 2010, development properties placed in service and capital expenditures for all properties owned.

General and administrative expenses from continuing operations, which include corporate operating expenses, increased approximately $0.9 million or 2.3% primarily due to higher overall payroll-related costs (due primarily to higher bonus costs), partially offset by lower tax compliance fees and office rents.

Impairment from continuing operations increased approximately $34.3 million due to a $45.4 million impairment charge taken during the fourth quarter of 2010 on land held for development related to two potential development projects compared to an $11.1 million impairment charge taken during 2009 on land held for development. See Note 18 in the Notes to Consolidated Financial Statements for further discussion.

Interest and other income from continuing operations decreased approximately $11.4 million or 68.8% primarily as a result of a decrease in interest earned on cash and cash equivalents and investment securities due to lower interest rates during the year ended December 31, 2010 and lower overall balances as well as gains on debt extinguishment and the sale of investment securities recognized during the year ended December 31, 2009 that did not reoccur in 2010, partially offset by an increase in insurance/litigation settlement proceeds.

Other expenses from continuing operations increased approximately $5.5 million or 84.2% primarily due to an increase in the expensing of overhead (pursuit cost write-offs) as a result of the Company's decision to reduce its development activities in prior periods as well as an increase in property acquisition costs incurred in conjunction with the Company's significantly higher acquisition volume in 2010.

Interest expense from continuing operations, including amortization of deferred financing costs, decreased approximately $27.1 million or 5.4% primarily as a result of lower overall debt balances and higher debt extinguishment costs due to the significant debt repurchases in 2009 and lower rates in 2010, partially offset by interest expense on the $500.0 million mortgage pool that closed in 2009, the $600.0 million of unsecured notes that closed in July 2010 and lower capitalized interest. During the year ended December 31, 2010, the Company capitalized interest costs of approximately $13.0 million as compared to $34.9 million for the year ended December 31, 2009. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the year ended December 31, 2010 was 5.14% as compared to 5.62% for the year ended December 31, 2009.

21



Income and other tax expense from continuing operations decreased approximately $2.4 million or 89.2% primarily due to a decrease in franchise taxes for Texas and a decrease in business taxes for Washington, D.C.

Loss from investments in unconsolidated entities decreased approximately $2.1 million or 73.9% as compared to the year ended December 31, 2009 primarily due to the Company's $1.8 million share of defeasance costs incurred in conjunction with the extinguishment of cross-collateralized mortgage debt on one of the Company's partially owned unconsolidated joint ventures taken during the year ended December 31, 2009 that did not reoccur in 2010.

Net gain on sales of unconsolidated entities increased approximately $17.4 million primarily due to larger gains on sale and revaluation of seven previously unconsolidated properties that were acquired from the Company's joint venture partner and the gain on sale for 27 properties sold during the year ended December 31, 2010 compared with unconsolidated properties sold in the same period in 2009.

Net loss on sales of land parcels increased approximately $1.4 million primarily due to the loss on sale of one land parcel during the year ended December 31, 2010.

Discontinued operations, net decreased approximately $61.0 million or 13.7% between the periods under comparison. This decrease is primarily due to lower gains from property sales during the year ended December 31, 2010 compared to the same period in 2009 and the operations of those properties. In addition, properties sold in 2010 reflect operations for none of or a partial period in 2010 in contrast to a full or partial period in 2009. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.

Liquidity and Capital Resources
For the Year Ended December 31, 2011
EQR issues public equity from time to time and guarantees certain debt of ERPOP. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership.
As of January 1, 2011, the Company had approximately $431.4 million of cash and cash equivalents, its restricted 1031 exchange proceeds totaled $103.9 million and it had $1.28 billion available under its then existing revolving credit facility (net of $147.3 million which was restricted/dedicated to support letters of credit and $75.0 million which had been committed by a now bankrupt financial institution and was not available for borrowing). After taking into effect the various transactions discussed in the following paragraphs and the net cash provided by operating activities, the Company’s cash and cash equivalents balance at December 31, 2011 was approximately $383.9 million, its restricted 1031 exchange proceeds totaled $53.7 million and the amount available on its new revolving credit facility was $1.22 billion (net of $31.8 million which was restricted/dedicated to support letters of credit).
During the year ended December 31, 2011, the Company generated proceeds from various transactions, which included the following:
Disposed of 47 consolidated properties and one land parcel, receiving net proceeds of approximately $1.5 billion;
Obtained $190.9 million in new mortgage financing;
Issued $1.0 billion of unsecured notes, receiving net proceeds of $996.2 million before underwriting fees and other expenses; and
Issued approximately 6.9 million Common Shares (including Common Shares issued under the ATM program – see further discussion below) and received net proceeds of $274.1 million, which were contributed to the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis).
During the year ended December 31, 2011, the above proceeds were primarily utilized to:
Acquire 21 rental properties, a 97,000 square foot commercial building, six land parcels and enter into one long-term ground lease for approximately $1.4 billion;
Invest $120.7 million primarily in development projects;
Repay $991.7 million of mortgage loans and $575.6 million of unsecured notes; and
Settle various forward starting swaps, utilizing cash of $147.3 million.
In September 2009, EQR announced the establishment of an At-The-Market (“ATM”) share offering program which

22


would allow EQR to sell up to 17.0 million Common Shares (later increased by 5.7 million Common Shares) from time to time over the next three years into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOP's partnership agreement, EQR contributes the net proceeds from all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis). EQR may, but shall have no obligation to, sell Common Shares through the ATM share offering program in amounts and at times to be determined by EQR. Actual sales will depend on a variety of factors to be determined by EQR from time to time, including (among others) market conditions, the trading price of EQR's Common Shares and determinations of the appropriate sources of funding for EQR. During the year ended December 31, 2011, EQR issued approximately 3.9 million Common Shares at an average price of $52.23 per share for total consideration of approximately $201.9 million through the ATM program. During the year ended December 31, 2010, EQR issued approximately 6.2 million Common Shares at an average price of $47.45 per share for total consideration of approximately $291.9 million through the ATM program. During the year ended December 31, 2009, EQR issued approximately 3.5 million Common Shares at an average price of $35.38 per share for total consideration of approximately $123.7 million through the ATM program. In addition, during the first quarter of 2012 through February 17, 2012, the Company issued approximately 2.1 million Common Shares at an average price of $59.47 per share for total consideration of approximately $123.6 million. Through February 17, 2012, EQR has cumulatively issued approximately 15.6 million Common Shares at an average price of $47.53 per share for total consideration of approximately $741.2 million. EQR has 7.1 million Common Shares remaining available for issuance under the ATM program as of February 17, 2012.
On June 16, 2011, the shareholders of EQR approved the Company's 2011 Share Incentive Plan (the “2011 Plan”). The 2011 Plan reserved 12,980,741 Common Shares for issuance. In conjunction with the approval of the 2011 Plan, no further awards may be granted under the 2002 Share Incentive Plan. The 2011 Plan expires on June 16, 2021. See Note 12 in the Notes to Consolidated Financial Statements for further discussion.
Depending on its analysis of market prices, economic conditions and other opportunities for the investment of available capital, EQR may repurchase its Common Shares pursuant to its existing share repurchase program authorized by the Board of Trustees. As of February 17, 2012, EQR had authorization to repurchase an additional $464.6 million of its shares. No shares were repurchased during 2011. See Note 3 in the Notes to Consolidated Financial Statements for further discussion.
Depending on its analysis of prevailing market conditions, liquidity requirements, contractual restrictions and other factors, the Company may from time to time seek to repurchase and retire its outstanding debt in open market or privately negotiated transactions.
The Company’s total debt summary and debt maturity schedules as of December 31, 2011 are as follows:
Debt Summary as of December 31, 2011
(Amounts in thousands)

 
 
Amounts (1)
 
% of Total
 
Weighted
Average
Rates (1)
 
Weighted
Average
Maturities
(years)
Secured
 
$
4,111,487

 
42.3
%
 
4.84
%
 
8.3

Unsecured
 
5,609,574

 
57.7
%
 
5.15
%
 
5.2

Total
 
$
9,721,061

 
100.0
%
 
5.01
%
 
6.5

Fixed Rate Debt:
 
 

 
 

 
 

 
 

Secured – Conventional
 
$
3,581,203

 
36.8
%
 
5.56
%
 
6.9

Unsecured – Public/Private
 
4,803,191

 
49.4
%
 
5.84
%
 
5.9

Fixed Rate Debt
 
8,384,394

 
86.2
%
 
5.71
%
 
6.3

Floating Rate Debt:
 
 

 
 

 
 

 
 

Secured – Conventional
 
64,428

 
0.7
%
 
3.16
%
 
1.5

Secured – Tax Exempt
 
465,856

 
4.8
%
 
0.23
%
 
20.9

Unsecured – Public/Private
 
806,383

 
8.3
%
 
1.67
%
 
0.9

Unsecured – Revolving Credit Facility (2)
 

 
%
 
1.42
%
 
2.5

Floating Rate Debt
 
1,336,667

 
13.8
%
 
1.36
%
 
7.6

Total
 
$
9,721,061

 
100.0
%
 
5.01
%
 
6.5


(1)
Net of the effect of any derivative instruments. Weighted average rates are for the year ended December 31, 2011.
(2)
On July 13, 2011, the Company replaced its then existing unsecured revolving credit facility with a new $1.25 billion unsecured revolving

23


credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The interest rate on advances under the new credit facility will generally be LIBOR plus a spread (currently 1.15%) and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. Subsequent to year-end, the Company amended this facility to increase available borrowings by $500.0 million to $1.75 billion. The terms did not change, including the July 13, 2014 maturity date.
Note: The Company capitalized interest of approximately $9.1 million and $13.0 million during the years ended December 31, 2011 and 2010, respectively.


Debt Maturity Schedule as of December 31, 2011
(Amounts in thousands)
 
 
Fixed
Rate (1)
 
Floating
Rate (1)
 
 
 
 
 
Weighted Average Rates
on Fixed
 Rate Debt (1)
 
Weighted Average
Rates on
 Total Debt (1)
Year
 
 
 
Total
 
% of Total
 
 
2012
 
$
625,227


$
536,355

(2)
$
1,161,582

 
11.9
%
 
6.04
%
 
3.72
%
2013
 
272,925

 
306,750

 
579,675

 
6.0
%
 
6.71
%
 
4.88
%
2014
 
566,479

 
21,861

 
588,340

 
6.1
%
 
5.32
%
 
5.24
%
2015
 
419,049

 
(149
)
(3)
418,900

 
4.3
%
 
6.31
%
 
6.31
%
2016
 
1,190,187

 
(149
)
(3)
1,190,038

 
12.2
%
 
5.34
%
 
5.34
%
2017
 
1,355,457

 
306

 
1,355,763

 
13.9
%
 
5.87
%
 
5.87
%
2018
 
80,395

 
16,267

 
96,662

 
1.0
%
 
5.72
%
 
4.91
%
2019
 
801,387

 
20,617

 
822,004

 
8.5
%
 
5.49
%
 
5.36
%
2020
 
1,671,455

 
659

 
1,672,114

 
17.2
%
 
5.50
%
 
5.50
%
2021
 
1,165,332

 
706

 
1,166,038

 
12.0
%
 
4.64
%
 
4.64
%
2022+
 
236,501

 
433,444

 
669,945

 
6.9
%
 
6.75
%
 
2.84
%
Total
 
$
8,384,394

 
$
1,336,667

 
$
9,721,061

 
100.0
%
 
5.56
%
 
5.00
%

(1)
Net of the effect of any derivative instruments. Weighted average rates are as of December 31, 2011.
(2)
Effective April 5, 2011, the Company exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012.
(3)
There is no floating rate debt maturing in 2015 and 2016. The amounts above represent amortization of discounts on floating rate debt.

The following table provides a summary of the Company’s unsecured debt as of December 31, 2011:



























24




Unsecured Debt Summary as of December 31, 2011
(Amounts in thousands)

 
 
Coupon
Rate
 
Due
Date
 
 
 
Face
Amount
 
Unamortized
Premium/
(Discount)
 
Net
Balance
Fixed Rate Notes:
 
 
 
 
 
 
 
 

 
 

 
 

 
 
6.625%
 
03/15/12
 
 
 
$
253,858

 
$
(46
)
 
$
253,812

 
 
5.500%
 
10/01/12
 
 
 
222,133

 
(164
)
 
221,969

 
 
5.200%
 
04/01/13
 
(1)
 
400,000

 
(148
)
 
399,852

Fair Value Derivative Adjustments
 
 
 
 
 
(1)
 
(300,000
)
 

 
(300,000
)
 
 
5.250%
 
09/15/14
 
 
 
500,000

 
(167
)
 
499,833

 
 
6.584%
 
04/13/15
 
 
 
300,000

 
(359
)
 
299,641

 
 
5.125%
 
03/15/16
 
 
 
500,000

 
(224
)
 
499,776

 
 
5.375%
 
08/01/16
 
 
 
400,000

 
(850
)
 
399,150

 
 
5.750%
 
06/15/17
 
 
 
650,000

 
(2,797
)
 
647,203

 
 
7.125%
 
10/15/17
 
 
 
150,000

 
(376
)
 
149,624

 
 
4.750%
 
07/15/20
 
 
 
600,000

 
(3,891
)
 
596,109

 
 
4.625%
 
12/15/21
 
 
 
1,000,000

 
(3,778
)
 
996,222

 
 
7.570%
 
08/15/26
 

 
140,000

 

 
140,000

 
 
 
 
 
 
 
 
4,815,991

 
(12,800
)
 
4,803,191

Floating Rate Notes:
 
 
 
 
 
 
 
 

 
 

 
 

 
 
 
 
04/01/13
 
(1)
 
300,000

 

 
300,000

Fair Value Derivative Adjustments
 
 
 
 
 
(1)
 
6,383

 

 
6,383

Term Loan Facility
 
LIBOR+0.50%
 
10/05/12
 
(2)(3)
 
500,000

 

 
500,000

 
 
 
 
 
 
 
 
806,383

 

 
806,383

Revolving Credit Facility:
 
LIBOR+1.15%
 
07/13/14
 
(2)(4)
 

 

 

Total Unsecured Debt
 
 
 
 
 
 
 
$
5,622,374

 
$
(12,800
)
 
$
5,609,574


(1)
Fair value interest rate swaps convert $300.0 million of the 5.200% notes due April 1, 2013 to a floating interest rate.
(2)
Facilities are private. All other unsecured debt is public.
(3)
Effective April 5, 2011, the Company exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012. Subsequent to year-end, the Company entered into a new senior unsecured $500.0 million delayed draw term loan facility that may be drawn anytime on or before July 4, 2012 and is currently undrawn. If the Company elects to draw on this facility, the full amount of the principal will be funded in a single borrowing and the maturity date will be January 4, 2013, subject to two one-year extension options exercisable by the Company. The interest rate on advances under the new term loan facility will generally be LIBOR plus a spread (currently 1.25%), which is dependent on the credit rating of the Company's long term debt.
(4)
On July 13, 2011, the Company replaced its then existing unsecured revolving credit facility with a new $1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The interest rate on advances under the new credit facility will generally be LIBOR plus a spread (currently 1.15%) and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. Subsequent to year-end, the Company amended this facility to increase available borrowings by $500.0 million to $1.75 billion. The terms did not change, including the July 13, 2014 maturity date. As of February 17, 2012, there was approximately $1.72 billion available on the Company's unsecured revolving credit facility.
An unlimited amount of equity and debt securities remains available for issuance by EQR and ERPOP under effective shelf registration statements filed with the SEC. Most recently, EQR and ERPOP filed a universal shelf registration statement for an unlimited amount of equity and debt securities that automatically became effective upon filing with the SEC in October 2010 and expires on October 15, 2013. However, as of February 17, 2012, issuances under the ATM share offering program are limited to 7.1 million additional shares. 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’s “Consolidated Debt-to-Total Market Capitalization Ratio” as of December 31, 2011 is presented in the following table. The Company calculates the equity component of its market capitalization as the sum of (i) the total outstanding Common Shares and assumed conversion of all Units at the equivalent market value of the closing price of the Company’s Common

25


Shares on the New York Stock Exchange and (ii) the liquidation value of all perpetual preferred shares outstanding.

Equity Residential
Capital Structure as of December 31, 2011
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt
 
 

 
 

 
$
4,111,487

 
42.3
%
 
 

Unsecured Debt
 
 

 
 

 
5,609,574

 
57.7
%
 
 

Total Debt
 
 

 
 

 
9,721,061

 
100.0
%
 
35.1
%
Common Shares (includes Restricted Shares)
 
297,508,185

 
95.7
%
 
 

 
 

 
 

Units (includes OP Units and LTIP Units)
 
13,492,543

 
4.3
%
 
 

 
 

 
 

Total Shares and Units
 
311,000,728

 
100.0
%
 
 

 
 

 
 

Common Share Price at December 31, 2011
 
$
57.03

 
 

 
 

 
 

 
 

 
 
 

 
 

 
17,736,372

 
98.9
%
 
 

Perpetual Preferred Equity (see below)
 
 

 
 

 
200,000

 
1.1
%
 
 

Total Equity
 
 

 
 

 
17,936,372

 
100.0
%
 
64.9
%
Total Market Capitalization
 
 

 
 

 
$
27,657,433

 
 

 
100.0
%

Equity Residential
Perpetual Preferred Equity as of December 31, 2011
(Amounts in thousands except for share and per share amounts)
Series
 
Redemption
Date
 
Outstanding
 Shares
 
Liquidation
Value
 
Annual
Dividend
 Per Share
 
Annual
Dividend
 Amount
 
Weighted
Average
 Rate
 
 
 
 
 
 
Preferred Shares:
 
 
 
 

 
 

 
 

 
 

 
 

8.29% Series K
 
12/10/26
 
1,000,000

 
$
50,000

 
$
4.145

 
$
4,145

 
 

6.48% Series N
 
06/19/08
 
600,000

 
150,000

 
16.20

 
9,720

 
 

Total Perpetual Preferred Equity
 
 
 
1,600,000

 
$
200,000

 
 

 
$
13,865

 
6.93
%

The Operating Partnership's “Consolidated Debt-to-Total Market Capitalization Ratio” as of December 31, 2011 is presented in the following table. The Operating Partnership calculates the equity component of its market capitalization as the sum of (i) the total outstanding Units at the equivalent market value of the closing price of the Company's Common Shares on the New York Stock Exchange and (ii) the liquidation value of all perpetual preference units outstanding.

ERP Operating Limited Partnership
Capital Structure as of December 31, 2011
(Amounts in thousands except for unit and per unit amounts)
Secured Debt
 
 

 
 
 
$
4,111,487

 
42.3
%
 
 

Unsecured Debt
 
 

 
 
 
5,609,574

 
57.7
%
 
 

Total Debt
 
 

 
 
 
9,721,061

 
100.0
%
 
35.1
%
Total outstanding Units
 
311,000,728

 
 
 
 

 
 

 
 

Common Share Price at December 31, 2011
 
$
57.03

 
 
 
 

 
 

 
 

 
 
 

 
 
 
17,736,372

 
98.9
%
 
 

Perpetual Preference Units (see below)
 
 

 
 
 
200,000

 
1.1
%
 
 

Total Equity
 
 

 
 
 
17,936,372

 
100.0
%
 
64.9
%
Total Market Capitalization
 
 

 
 
 
$
27,657,433

 
 

 
100.0
%










26



ERP Operating Limited Partnership
Perpetual Preference Units as of December 31, 2011
(Amounts in thousands except for unit and per unit amounts)
Series
 
Redemption
 Date
 
Outstanding
 Units
 
Liquidation Value
 
Annual
Dividend
 Per Unit
 
Annual
Dividend
 Amount
 
Weighted
Average
 Rate
 
 
 
 
 
 
Preference Units:
 
 
 
 

 
 

 
 

 
 

 
 

8.29% Series K
 
12/10/26
 
1,000,000

 
$
50,000

 
$
4.145

 
$
4,145

 
 

6.48% Series N
 
06/19/08
 
600,000

 
150,000

 
16.20

 
9,720

 
 

Total Perpetual Preference Units
 
 
 
1,600,000

 
$
200,000

 
 

 
$
13,865

 
6.93
%
The Company generally expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and certain scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company's revolving credit facility. Under normal operating conditions, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. However, there may be times when the Company experiences shortfalls in its coverage of distributions, which may cause the Company to consider reducing its distributions and/or using the proceeds from property dispositions or additional financing transactions to make up the difference. Should these shortfalls occur for lengthy periods of time or be material in nature, the Company’s financial condition may be adversely affected and it may not be able to maintain its current distribution levels.
During the fourth quarter of 2010, the Company announced a new dividend policy which it believes will generate payouts more closely aligned with the actual annual operating results of the Company’s core business and provide transparency to investors. The Company intends to pay an annual cash dividend equal to approximately 65% of Normalized FFO for the year. During the year ended December 31, 2011, the Company paid $0.3375 per share for each of the first three quarters and $0.5675 per share for the fourth quarter to bring the total payment for the year (an annual rate of $1.58 per share) to approximately 65% of Normalized FFO. The Company anticipates the expected dividend payout will range from $1.74 to $1.81 per share ($0.3375 per share for each of the first three quarters with the balance for the fourth quarter) for the year ending December 31, 2012. All future dividends remain subject to the discretion of the Board of Trustees. The above assumption is based on current expectations and is forward-looking. While our dividend policy makes it less likely we will over distribute, it will also lead to a dividend reduction more quickly than a fixed dividend policy should operating results deteriorate. The Company believes that its expected 2012 operating cash flow will be sufficient to cover capital expenditures and distributions.
The Company also expects to meet its long-term liquidity requirements, such as scheduled unsecured note and mortgage debt maturities, property acquisitions, financing of construction and development activities and capital improvements through the issuance of secured and unsecured debt and equity securities, including additional OP Units, and proceeds received from the disposition of certain properties and joint ventures. In addition, the Company has significant unencumbered properties available to secure additional mortgage borrowings in the event that the public capital markets are unavailable or the cost of alternative sources of capital is too high. The fair value of and cash flow from these unencumbered properties are in excess of the requirements the Company must maintain in order to comply with covenants under its unsecured notes and line of credit. Of the $20.4 billion in investment in real estate on the Company’s balance sheet at December 31, 2011, $13.9 billion or 68.3% was unencumbered. However, there can be no assurances that these sources of capital will be available to the Company in the future on acceptable terms or otherwise.
ERPOP's credit ratings from Standard & Poor’s (“S&P”), Moody’s and Fitch for its outstanding senior debt are BBB+, Baal and BBB+, respectively. EQR's equity ratings from S&P, Moody’s and Fitch for its outstanding preferred equity are BBB+, Baa2 and BBB-, respectively. During the fourth quarter of 2010, Fitch downgraded ERPOP’s credit rating from A- to BBB+ and EQR's equity rating from BBB+ to BBB-, which did not have an effect on EQR's cost of funds. During the first quarter of 2011, Moody’s raised its outlook for both EQR and ERPOP from negative outlook to stable outlook and in the fourth quarter of 2011 revised its outlook from stable outlook to developing outlook.
The Company's $1.425 billion (net of $75.0 million which had been committed by a now bankrupt financial institution and was not available for borrowing) long-term revolving credit facility was replaced with a new $1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The interest rate on advances under the new credit facility will generally be LIBOR plus a spread (currently 1.15%) and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are dependent on the credit rating of the Company's long term debt. Effective January 6, 2012, the Company amended this facility to increase available borrowings by $500.0 million to $1.75 billion. The terms did not change, including the July 13, 2014 maturity date. As of February 17, 2012, there was available borrowings of $1.72 billion (net of $30.8 million which was restricted/dedicated to support letters of credit) on the new revolving credit facility. This facility may, among other potential uses, be used to fund property acquisitions, costs for certain properties

27


under development and short-term liquidity requirements.
In 2010, a portion of the parking garage collapsed at one of the Company’s rental properties (Prospect Towers in Hackensack, New Jersey). Through December 31, 2011, the Company has cumulatively incurred $13.3 million in capitalized costs to rebuild the garage, incurred $7.2 million in expenses for items such as accommodating displaced residents and legal costs and estimates that its lost revenues approximate $2.3 million, and the Company estimates that its total costs will approximate $23.0 million. Through December 31, 2011, the Company has cumulatively received approximately $10.1 million in insurance proceeds and estimates its total insurance reimbursements will approximate $12.0 million. The garage has been rebuilt with costs capitalized as incurred. All other costs, including lost revenue due to a portion of the property being temporarily unavailable for occupancy, reduce earnings as they are incurred. Generally, insurance proceeds are recorded as increases to earnings as they are received. During the year ended December 31, 2011, the Company received approximately $6.1 million in insurance proceeds which offset expenses of $1.7 million that were recorded relating to this loss and are included in real estate taxes and insurance on the consolidated statements of operations. During the year ended December 31, 2010, the Company received approximately $4.0 million in insurance proceeds which fully offset the impairment charge recognized to write-off the net book value of the collapsed garage and partially offset expenses of $5.5 million that were recorded relating to this loss and are included in real estate taxes and insurance on the consolidated statements of operations. In addition, the Company estimates that its lost revenues approximated $0.7 million and $1.6 million during the years ended December 31, 2011 and 2010, respectively, as a result of lost occupancy in the high-rise tower following the collapse. None of the amounts referenced above impact same store results.
See Note 18 in the Notes to Consolidated Financial Statements for discussion of the events which occurred subsequent to December 31, 2011.
Capitalization of Fixed Assets and Improvements to Real Estate
Our policy with respect to capital expenditures is generally to capitalize expenditures that improve the value of the property or extend the useful life of the component asset of the property. We track improvements to real estate in two major categories and several subcategories:
Replacements (inside the apartment unit). These include:
flooring such as carpets, hardwood, vinyl, linoleum or tile;
appliances;
mechanical equipment such as individual furnace/air units, hot water heaters, etc;
furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and
blinds/shades.
All replacements are depreciated over a five to ten-year estimated useful life. We expense as incurred all make-ready maintenance and turnover costs such as cleaning, interior painting of individual apartment units and the repair of any replacement item noted above.
Building improvements (outside the apartment unit). These include:
roof replacement and major repairs;
paving or major resurfacing of parking lots, curbs and sidewalks;
amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems and offices;
major building mechanical equipment systems;
interior and exterior structural repair and exterior painting and siding;
major landscaping and grounds improvement; and
vehicles and office and maintenance equipment.
All building improvements are depreciated over a five to fifteen-year estimated useful life. We capitalize building improvements and upgrades only if the item: (i) exceeds $2,500 (selected projects must exceed $10,000); (ii) extends the useful life of the asset; and (iii) improves the value of the asset.
For the year ended December 31, 2011, our actual improvements to real estate totaled approximately $144.5 million. This includes the following (amounts in thousands except for apartment unit and per apartment unit amounts):



28



Capital Expenditures to Real Estate
For the Year Ended December 31, 2011
 
 
Total
Apartment
Units (1)
 
Replacements (2)
 
Avg. Per
Apartment
Unit
 
Building
Improvements
 
Avg. Per
Apartment
Unit
 
Total
 
Avg. Per
Apartment
Unit
Same Store Properties (3)
 
101,312

 
$
70,937

 
$
700

 
$
49,674

 
$
490

 
$
120,611

 
$
1,190

Non-Same Store Properties (4)
 
15,761

 
7,505

 
658

 
13,827

 
1,211

 
21,332

 
1,869

Other (5)
 

 
2,147

 
 

 
362

 
 

 
2,509

 
 

Total
 
117,073

 
$
80,589

 
 

 
$
63,863

 
 

 
$
144,452

 
 


(1)
Total Apartment Units – Excludes 4,901 military housing apartment units for which repairs and maintenance expenses and capital expenditures to real estate are self-funded and do not consolidate into the Company’s results.
(2)
Replacements – Includes new expenditures inside the apartment units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $38.1 million spent in 2011 on apartment unit renovations/rehabs (primarily kitchens and baths) on 5,416 apartment units (equating to about $7,000 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets.
(3)
Same Store Properties – Primarily includes all properties acquired or completed and stabilized prior to January 1, 2010, less properties subsequently sold.
(4)
Non-Same Store Properties – Primarily includes all properties acquired during 2010 and 2011, plus any properties in lease-up and not stabilized as of January 1, 2010. Per apartment unit amounts are based on a weighted average of 11,414 apartment units.
(5)
Other – Primarily includes expenditures for properties sold during the period.
For the year ended December 31, 2010, our actual improvements to real estate totaled approximately $138.2 million. This includes the following (amounts in thousands except for apartment unit and per apartment unit amounts):
Capital Expenditures to Real Estate
For the Year Ended December 31, 2010
 
 
Total
Apartment
Units (1)
 
Replacements (2)
 
Avg. Per
Apartment
Unit
 
Building
Improvements
 
Avg. Per
Apartment
Unit
 
Total
 
Avg. Per
Apartment
Unit
Same Store Properties (3)
 
112,042

 
$
70,620

 
$
630

 
$
54,118

 
$
483

 
$
124,738

 
$
1,113

Non-Same Store Properties (4)
 
12,824

 
4,180

 
457

 
5,547

 
607

 
9,727

 
1,064

Other (5)
 

 
1,509

 
 

 
2,234

 
 

 
3,743

 
 

Total
 
124,866

 
$
76,309

 
 

 
$
61,899

 
 

 
$
138,208

 
 


(1)
Total Apartment Units – Excludes 4,738 military housing apartment units for which repairs and maintenance expenses and capital expenditures to real estate are self-funded and do not consolidate into the Company’s results.
(2)
Replacements – Includes new expenditures inside the apartment units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $31.7 million spent in 2010 on apartment unit renovations/rehabs (primarily kitchens and baths) on 4,331 apartment units (equating to about $7,300 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets.
(3)
Same Store Properties – Primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties subsequently sold.
(4)
Non-Same Store Properties – Primarily includes all properties acquired during 2009 and 2010, plus any properties in lease-up and not stabilized as of January 1, 2009. Per apartment unit amounts are based on a weighted average of 9,141 apartment units.
(5)
Other – Primarily includes expenditures for properties sold during the period.
For 2012, the Company estimates that it will spend approximately $1,225 per apartment unit of capital expenditures for its same store properties inclusive of apartment unit renovation/rehab costs, or $850 per apartment unit excluding apartment unit renovation/rehab costs. For 2012, the Company estimates that it will spend $39.2 million rehabbing 4,700 apartment units (equating to about $8,300 per apartment unit rehabbed). The above assumptions are based on current expectations and are forward-looking.
During the year ended December 31, 2011, the Company’s total non-real estate capital additions, such as computer software, computer equipment, and furniture and fixtures and leasehold improvements to the Company’s property management offices and its corporate offices, were approximately $7.1 million. The Company expects to fund approximately $6.7 million in total additions to non-real estate property in 2012. The above assumption is based on current expectations and is forward-looking.
Improvements to real estate and additions to non-real estate property are generally funded from net cash provided by operating activities and from investment cash flow.

29


Derivative Instruments
In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company seeks to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.
The Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from these instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives it currently has in place.
See Note 9 in the Notes to Consolidated Financial Statements for additional discussion of derivative instruments at December 31, 2011.
Other
Total distributions paid in January 2012 amounted to $179.5 million (excluding distributions on Partially Owned Properties), which included certain distributions declared during the fourth quarter ended December 31, 2011.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company admitted an 80% institutional partner to two separate entities/transactions (one in December 2010 and the other in August 2011), each owning a developable land parcel, in exchange for $40.1 million in cash and retained a 20% equity interest in both of these entities. These land parcels are now unconsolidated. Total project costs are approximately $232.8 million and construction will be predominantly funded with two separate long-term, non-recourse secured loans from the partner. While the Company is the managing member of both of the joint ventures, is responsible for constructing both of the projects and has given certain construction cost overrun guarantees, all major decisions are made jointly, the large majority of funding is provided by the partner and the partner has significant involvement in and oversight of the ongoing projects. The Company's remaining funding obligations are currently estimated at $5.4 million. The Company's strategy with respect to these ventures was to reduce its financial risk related to the development of the properties. However, management does not believe that these investments have a materially different impact upon the Company's liquidity, cash flows, capital resources, credit or market risk than its other consolidated development activities.

In December 2011, the Company acquired a vacant land parcel at 400 Park Avenue South in New York City in a joint venture with Toll Brothers (NYSE: TOL). Until the core and shell of the building is complete, the building and land will be owned jointly and are required to be consolidated on the Company's balance sheet. Thereafter, the Company will solely own and control the rental portion of the building (floors 2-22) and Toll Brothers will solely own and control the for sale portion of the building (floors 23-40). Once the core and shell are complete, the Toll Brothers' portion of the property will be deconsolidated from the Company's balance sheet. The acquisition was financed through contributions by the Company and Toll Brothers of approximately $102.5 million and $75.7 million, respectively, which included a land purchase price of $76.1 million and $57.9 million, respectively, and taxes and fees of $0.4 million and $0.3 million, respectively. Deposits were made to the venture of $26.0 million and $17.5 million, respectively, to collateralize construction guarantees. Management does not believe that this investment has a materially different impact upon the Company's liquidity, cash flows, capital resources, credit or market risk than its other consolidated development activities.
As of December 31, 2011, the Company has six consolidated projects totaling 1,535 apartment units and two unconsolidated projects totaling 945 apartment units in various stages of development with estimated completion dates ranging through March 31, 2014, as well as other completed development projects that are in various stages of lease up or are stabilized. The development agreements currently in place are discussed in detail in Note 16 of the Company’s Consolidated Financial Statements.
See also Notes 2 and 6 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s investments in partially owned entities.
The following table summarizes the Company’s contractual obligations for the next five years and thereafter as of December 31, 2011:


30


Payments Due by Year (in thousands)
Contractual Obligations
 
2012
 
2013
 
2014
 
2015
 
2016
 
Thereafter
 
Total
Debt:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Principal (a)
 
$
1,161,582

 
$
579,675

 
$
588,340

 
$
418,900

 
$
1,190,038

 
$
5,782,526

 
$
9,721,061

Interest (b)
 
464,758

 
423,376

 
400,244

 
362,446

 
313,695

 
999,636

 
2,964,155

Operating Leases:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Minimum Rent Payments (c)
 
6,445

 
7,159

 
8,550

 
9,241

 
9,196

 
699,959

 
740,550

Other Long-Term Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Deferred Compensation (d)
 
1,767

 
1,480

 
1,672

 
1,671

 
1,671

 
7,472

 
15,733

Total
 
$
1,634,552

 
$
1,011,690

 
$
998,806

 
$
792,258

 
$
1,514,600

 
$
7,489,593

 
$
13,441,499


(a)
Amounts include aggregate principal payments only.
(b)
Amounts include interest expected to be incurred on the Company’s secured and unsecured debt based on obligations outstanding at December 31, 2011 and inclusive of capitalized interest. For floating rate debt, the current rate in effect for the most recent payment through December 31, 2011 is assumed to be in effect through the respective maturity date of each instrument.
(c)
Minimum basic rent due for various office space the Company leases and fixed base rent due on ground leases for five properties/parcels.
(d)
Estimated payments to the Company's Chairman, Vice Chairman and two former CEO’s based on actual and planned retirement dates.

Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or different presentation of our financial statements.
The Company’s significant accounting policies are described in Note 2 in the Notes to Consolidated Financial Statements. These policies were followed in preparing the consolidated financial statements at and for the year ended December 31, 2011 and are consistent with the year ended December 31, 2010.
The Company has identified five significant accounting policies as critical accounting policies. These critical accounting policies are those that have the most impact on the reporting of our financial condition and those requiring significant judgments and estimates. With respect to these critical accounting policies, management believes that the application of judgments and estimates is consistently applied and produces financial information that fairly presents the results of operations for all periods presented. The five critical accounting policies are:
Acquisition of Investment Properties
The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.
Impairment of Long-Lived Assets
The Company periodically evaluates its long-lived assets, including its investments in real estate, for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment loss is warranted.
Depreciation of Investment in Real Estate
The Company depreciates the building component of its investment in real estate over a 30-year estimated useful life, building improvements over a 5-year to 15-year estimated useful life and both the furniture, fixtures and equipment and replacements components over a 5-year to 10-year estimated useful life, all of which are judgmental determinations.

31


Cost Capitalization
See the Capitalization of Fixed Assets and Improvements to Real Estate section for a discussion of the Company’s policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs. In addition, the Company capitalizes an allocation of the payroll and associated costs of employees directly responsible for and who spend their time on the supervision of major capital and/or renovation projects. These costs are reflected on the balance sheet as an increase to depreciable property.
For all development projects, the Company uses its professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. The Company capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend their time on development activities, with capitalization ceasing no later than 90 days following issuance of the certificate of occupancy. These costs are reflected on the balance sheet as construction-in-progress for each specific property. The Company expenses as incurred all payroll costs of on-site employees working directly at our properties, except as noted above on our development properties prior to certificate of occupancy issuance and on specific major renovations at selected properties when additional incremental employees are hired.
Fair Value of Financial Instruments, Including Derivative Instruments
The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

Funds From Operations and Normalized Funds From Operations
For the year ended December 31, 2011, Funds From Operations (“FFO”) available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units increased $129.4 million, or 20.8%, and $77.2 million, or 11.3%, respectively, as compared to the year ended December 31, 2010. For the year ended December 31, 2010, FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units increased $7.3 million, or 1.2%, and $20.9 million, or 3.2%, respectively, as compared to the year ended December 31, 2009.
The following is the Company's and the Operating Partnership's reconciliation of net income to FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units for each of the five years ended December 31, 2011:

















32


Funds From Operations and Normalized Funds From Operations
(Amounts in thousands)
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
 
2008
 
2007
Net income
 
$
935,197

 
$
295,983

 
$
382,029

 
$
436,413

 
$
1,047,356

Adjustments:
 
 

 
 

 
 

 
 

 
 

Net (income) loss attributable to Noncontrolling Interests:
 
 

 
 

 
 

 
 

 
 

Preference Interests and Units
 

 

 
(9
)
 
(15
)
 
(441
)
Partially Owned Properties
 
(832
)
 
726

 
558

 
(2,650
)
 
(2,200
)
Depreciation
 
642,415

 
608,612

 
514,200

 
491,060

 
465,366

Depreciation – Non-real estate additions
 
(5,519
)
 
(6,566
)
 
(7,122
)
 
(8,034
)
 
(8,062
)
Depreciation – Partially Owned and Unconsolidated Properties
 
(3,062
)
 
(1,619
)
 
759

 
4,157

 
4,379

Net (gain) on sales of unconsolidated entities
 

 
(28,101
)
 
(10,689
)
 
(2,876
)
 
(2,629
)
Discontinued operations:
 
 

 
 

 
 

 
 

 
 

Depreciation
 
21,113

 
64,569

 
85,942

 
111,613

 
150,831

Net (gain) on sales of discontinued operations
 
(826,489
)
 
(297,956
)
 
(335,299
)
 
(392,857
)
 
(933,013
)
Net incremental gain (loss) on sales of condominium units
 
1,993

 
1,506

 
(385
)
 
(3,932
)
 
20,771

Gain on sale of Equity Corporate Housing (ECH)
 
1,202

 

 

 

 

FFO (1) (3)
 
766,018

 
637,154

 
629,984

 
632,879

 
742,358

Adjustments:
 
 

 
 

 
 

 
 

 
 

Asset impairment and valuation allowances
 

 
45,380

 
11,124

 
116,418

 

Property acquisition costs and write-off of pursuit costs (other expenses)
 
14,557

 
11,928

 
6,488

 
5,760

 
1,830

Debt extinguishment (gains) losses, including prepayment penalties, preferred
    share/preference unit redemptions and non-cash convertible debt discounts
 
12,300

 
8,594

 
34,333

 
(2,784
)
 
24,004

(Gains) losses on sales of non-operating assets, net of income and other tax
    expense (benefit)
 
(6,976
)
 
(80
)
 
(5,737
)
 
(979
)
 
(34,450
)
Other miscellaneous non-comparable items
 
(12,369
)
 
(6,186
)
 
(171
)
 
(1,725
)
 
(5,767
)
Normalized FFO (2) (3)
 
$
773,530

 
$
696,790

 
$
676,021

 
$
749,569

 
$
727,975

 
 
 
 
 
 
 
 
 
 
 
FFO (1) (3)
 
$
766,018

 
$
637,154

 
$
629,984

 
$
632,879

 
$
742,358

Preferred/preference distributions
 
(13,865
)
 
(14,368
)
 
(14,479
)
 
(14,507
)
 
(22,792
)
Premium on redemption of Preferred Shares/Preference Units
 

 

 

 

 
(6,154
)
FFO available to Common Shares and Units / Units (1) (3) (4)
 
$
752,153

 
$
622,786

 
$
615,505

 
$
618,372

 
$
713,412

 
 
 
 
 
 
 
 
 
 
 
Normalized FFO (2) (3)
 
$
773,530

 
$
696,790

 
$
676,021

 
$
749,569

 
$
727,975

Preferred/preference distributions
 
(13,865
)
 
(14,368
)
 
(14,479
)
 
(14,507
)
 
(22,792
)
Premium on redemption of Preferred Shares/Preference Units
 

 

 

 

 
(6,154
)
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)
 
$
759,665

 
$
682,422

 
$
661,542

 
$
735,062

 
$
699,029


(1)
The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales and impairment write-downs of depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property.

(2) Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes:
the impact of any expenses relating to non-operating asset impairment and valuation allowances;
property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs (other expenses);
gains and losses from early debt extinguishment, including prepayment penalties, preferred share/preference unit redemptions and the cost related to the implied option value of non-cash convertible debt discounts;
gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and
other miscellaneous non-comparable items.

(3)
The Company believes that FFO and FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available

33


to Common Shares and Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

(4)
FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units are calculated on a basis consistent with net income available to Common Shares / Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares/preference units in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.

Item 8. Financial Statements and Supplementary Data
See Index to Consolidated Financial Statements on page F-1.






































34



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP

 
 
PAGE
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
 
 
 
 
 
Report of Independent Registered Public Accounting Firm (Equity Residential)
 
F-2
 
 
 
Report of Independent Registered Public Accounting Firm (ERP Operating Limited Partnership)
 
F-3
 
 
 
Financial Statements of Equity Residential:
 
 
 
 
 
  Consolidated Balance Sheets as of December 31, 2011 and 2010
 
F-4
 
 
 
  Consolidated Statements of Operations for the years ended
      December 31, 2011, 2010 and 2009
 
F-5 to F-6
 
 
 
  Consolidated Statements of Cash Flows for the years ended
      December 31, 2011, 2010 and 2009
 
F-7 to F-9
 
 
 
  Consolidated Statements of Changes in Equity for the years ended
      December 31, 2011, 2010 and 2009
 
F-10 to F-11
 
 
 
Financial Statements of ERP Operating Limited Partnership:
 
 
 
 
 
  Consolidated Balance Sheets as of December 31, 2011 and 2010
 
F-12
 
 
 
  Consolidated Statements of Operations for the years ended
      December 31, 2011, 2010 and 2009
 
F-13 to F-14
 
 
 
  Consolidated Statements of Cash Flows for the years ended
      December 31, 2011, 2010 and 2009
 
F-15 to F-17
 
 
 
  Consolidated Statements of Changes in Capital for the years ended
      December 31, 2011, 2010 and 2009
 
F-18 to F-19
 
 
 
Notes to Consolidated Financial Statements of Equity Residential and ERP Operating
   Limited Partnership
 
F-20 to F-61
 
 
 
SCHEDULE FILED AS PART OF THIS REPORT
 
 
 
 
 
Schedule III – Real Estate and Accumulated Depreciation of Equity Residential and ERP Operating
   Limited Partnership
 
S-1 to S-14

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




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders
Equity Residential
We have audited the accompanying consolidated balance sheets of Equity Residential (the “Company”) as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in equity and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed in the accompanying index to the consolidated financial statements and schedule. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Equity Residential at December 31, 2011 and 2010 and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Equity Residential’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2012 (not provided herein) expressed an unqualified opinion thereon.

 
/s/  ERNST & YOUNG LLP
 
ERNST & YOUNG LLP
 
 
Chicago, Illinois
 
February 24, 2012, except for Notes 10, 11 and 17,
 
as to which the date is June 13, 2012
 


F-2


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
ERP Operating Limited Partnership
We have audited the accompanying consolidated balance sheets of ERP Operating Limited Partnership (the “Operating Partnership”) as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in capital and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed in the accompanying index to the consolidated financial statements and schedule. These financial statements and schedule are the responsibility of the Operating Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of ERP Operating Limited Partnership at December 31, 2011 and 2010 and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ERP Operating Limited Partnership's internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2012 (not provided herein) expressed an unqualified opinion thereon.

 
/s/  ERNST & YOUNG LLP
 
ERNST & YOUNG LLP
 
 
Chicago, Illinois
 
February 24, 2012, except for Notes 10, 11 and 17,
 
as to which the date is June 13, 2012
 



F-3



EQUITY RESIDENTIAL
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
 
 
December 31, 2011
 
December 31, 2010
ASSETS
Investment in real estate
 
 

 
 

Land
 
$
4,367,816

 
$
4,110,275

Depreciable property
 
15,554,740

 
15,226,512

Projects under development
 
160,190

 
130,337

Land held for development
 
325,200

 
235,247

Investment in real estate
 
20,407,946

 
19,702,371

Accumulated depreciation
 
(4,539,583
)
 
(4,337,357
)
Investment in real estate, net
 
15,868,363

 
15,365,014

Cash and cash equivalents
 
383,921

 
431,408

Investments in unconsolidated entities
 
12,327

 
3,167

Deposits – restricted
 
152,237

 
180,987

Escrow deposits – mortgage
 
10,692

 
12,593

Deferred financing costs, net
 
44,608

 
42,033

Other assets
 
187,155

 
148,992

Total assets
 
$
16,659,303

 
$
16,184,194

 
 
 
 
 
LIABILITIES AND EQUITY
Liabilities:
 
 

 
 

Mortgage notes payable
 
$
4,111,487

 
$
4,762,896

Notes, net
 
5,609,574

 
5,185,180

Lines of credit
 

 

Accounts payable and accrued expenses
 
35,206

 
39,452

Accrued interest payable
 
88,121

 
98,631

Other liabilities
 
291,289

 
304,202

Security deposits
 
65,286

 
60,812

Distributions payable
 
179,079

 
140,905

Total liabilities
 
10,380,042

 
10,592,078

 
 
 
 
 
Commitments and contingencies
 


 


 
 
 
 
 
Redeemable Noncontrolling Interests – Operating Partnership
 
416,404

 
383,540

Equity:
 
 

 
 

Shareholders’ equity:
 
 

 
 

Preferred Shares of beneficial interest, $0.01 par value;
 
 

 
 

100,000,000 shares authorized; 1,600,000 shares issued and outstanding as of December 31, 2011 and December 31, 2010
 
200,000

 
200,000

Common Shares of beneficial interest, $0.01 par value;
 
 

 
 

1,000,000,000 shares authorized; 297,508,185 shares issued and outstanding as of December 31, 2011 and 290,197,242 shares issued and outstanding as of December 31, 2010
 
2,975

 
2,902

Paid in capital
 
5,047,186

 
4,741,521

Retained earnings
 
615,572

 
203,581

Accumulated other comprehensive (loss)
 
(196,718
)
 
(57,818
)
Total shareholders’ equity
 
5,669,015

 
5,090,186

Noncontrolling Interests:
 
 

 
 

Operating Partnership
 
119,536

 
110,399

Partially Owned Properties
 
74,306

 
7,991

Total Noncontrolling Interests
 
193,842

 
118,390

Total equity
 
5,862,857

 
5,208,576

Total liabilities and equity
 
$
16,659,303

 
$
16,184,194


See accompanying notes
F-4



EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share data)
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
REVENUES
 
 

 
 

 
 

Rental income
 
$
1,960,243

 
$
1,744,768

 
$
1,610,469

Fee and asset management
 
9,026

 
9,476

 
10,346

Total revenues
 
1,969,269

 
1,754,244

 
1,620,815

 
 
 
 
 
 
 
EXPENSES
 
 

 
 

 
 

Property and maintenance
 
412,233

 
397,573

 
365,448

Real estate taxes and insurance
 
219,743

 
209,023

 
187,895

Property management
 
82,133

 
80,087

 
71,300

Fee and asset management
 
4,279

 
4,998

 
7,345

Depreciation
 
642,415

 
608,612

 
514,200

General and administrative
 
43,606

 
39,881

 
38,985

Impairment
 

 
45,380

 
11,124

Total expenses
 
1,404,409

 
1,385,554

 
1,196,297

 
 
 
 
 
 
 
Operating income
 
564,860

 
368,690

 
424,518

 
 
 
 
 
 
 
Interest and other income
 
7,977

 
5,166

 
16,578

Other expenses
 
(14,557
)
 
(11,928
)
 
(6,477
)
Interest:
 
 

 
 

 
 

Expense incurred, net
 
(468,320
)
 
(465,792
)
 
(490,670
)
Amortization of deferred financing costs
 
(17,006
)
 
(10,114
)
 
(12,327
)
Income (loss) before income and other taxes, (loss) from investments in
   unconsolidated entities, net gain (loss) on sales of unconsolidated entities and
   land parcels and discontinued operations
 
72,954

 
(113,978
)
 
(68,378
)
Income and other tax (expense) benefit
 
(728
)
 
(292
)
 
(2,716
)
(Loss) from investments in unconsolidated entities
 

 
(735
)
 
(2,815
)
Net gain on sales of unconsolidated entities
 

 
28,101

 
10,689

Net gain (loss) on sales of land parcels
 
4,217

 
(1,395
)
 

Income (loss) from continuing operations
 
76,443

 
(88,299
)
 
(63,220
)
Discontinued operations, net
 
858,754

 
384,282

 
445,249

Net income
 
935,197

 
295,983

 
382,029

Net (income) loss attributable to Noncontrolling Interests:
 
 

 
 

 
 

Operating Partnership
 
(40,780
)
 
(13,099
)
 
(20,305
)
Preference Interests and Units
 

 

 
(9
)
Partially Owned Properties
 
(832
)
 
726

 
558

Net income attributable to controlling interests
 
893,585

 
283,610

 
362,273

Preferred distributions
 
(13,865
)
 
(14,368
)
 
(14,479
)
Net income available to Common Shares
 
$
879,720

 
$
269,242

 
$
347,794

 
 
 
 
 
 
 
Earnings per share – basic:
 
 

 
 

 
 

Income (loss) from continuing operations available to Common Shares
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
Net income available to Common Shares
 
$
2.98

 
$
0.95

 
$
1.27

Weighted average Common Shares outstanding
 
294,856

 
282,888

 
273,609

 
 
 
 
 
 
 
Earnings per share – diluted:
 
 

 
 

 
 

Income (loss) from continuing operations available to Common Shares
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
Net income available to Common Shares
 
$
2.95

 
$
0.95

 
$
1.27

Weighted average Common Shares outstanding
 
312,065

 
282,888

 
273,609



See accompanying notes
F-5



EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Amounts in thousands except per share data)

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Comprehensive income:
 
 

 
 

 
 

Net income
 
$
935,197

 
$
295,983

 
$
382,029

Other comprehensive (loss) income:
 
 
 
 
 
 
Other comprehensive (loss) income – derivative instruments:
 
 

 
 

 
 

Unrealized holding (losses) gains arising during the year
 
(143,598
)
 
(65,894
)
 
37,676

Losses reclassified into earnings from other comprehensive income
 
4,343

 
3,338

 
3,724

Other
 

 

 
449

Other comprehensive income (loss) – other instruments:
 
 

 
 

 
 

Unrealized holding gains arising during the year
 
355

 
57

 
3,574

(Gains) realized during the year
 

 

 
(4,943
)
Other comprehensive (loss) income
 
(138,900
)
 
(62,499
)
 
40,480

Comprehensive income
 
796,297

 
233,484

 
422,509

Comprehensive (income) attributable to Noncontrolling Interests
 
(41,612
)
 
(12,373
)
 
(19,756
)
Comprehensive income attributable to controlling interests
 
$
754,685

 
$
221,111

 
$
402,753































See accompanying notes
F-6



EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 

 
 

 
 

Net income
 
$
935,197

 
$
295,983

 
$
382,029

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

 
 

Depreciation
 
663,616

 
673,403

 
600,375

Amortization of deferred financing costs
 
17,846

 
10,406

 
13,127

Amortization of discounts on investment securities
 

 

 
(1,661
)
Amortization of discounts and premiums on debt
 
(1,478
)
 
(471
)
 
5,857

Amortization of deferred settlements on derivative instruments
 
3,808

 
2,804

 
2,228

Impairment
 

 
45,380

 
11,124

Write-off of pursuit costs
 
5,075

 
5,272

 
4,838

Income from technology investments
 
(4,537
)
 

 

Loss from investments in unconsolidated entities
 

 
735

 
2,815

Distributions from unconsolidated entities – return on capital
 
319

 
61

 
153

Net (gain) on sales of investment securities
 

 

 
(4,943
)
Net (gain) on sales of unconsolidated entities
 

 
(28,101
)
 
(10,689
)
Net (gain) loss on sales of land parcels
 
(4,217
)
 
1,395

 

Net (gain) on sales of discontinued operations
 
(826,489
)
 
(297,956
)
 
(335,299
)
Loss on debt extinguishments
 

 
2,457

 
17,525

Unrealized loss (gain) on derivative instruments
 
186

 
1

 
(3
)
Compensation paid with Company Common Shares
 
21,177

 
18,875

 
17,843

Changes in assets and liabilities:
 
 

 
 

 
 

Decrease in deposits – restricted
 
4,523

 
3,316

 
3,117

(Increase) decrease in other assets
 
(2,743
)
 
(9,048
)
 
11,768

Increase (decrease) in accounts payable and accrued expenses
 
332

 
(5,454
)
 
(34,524
)
(Decrease) in accrued interest payable
 
(10,510
)
 
(4,000
)
 
(11,997
)
(Decrease) increase in other liabilities
 
(8,245
)
 
9,972

 
2,220

Increase (decrease) in security deposits
 
4,474

 
1,007

 
(5,091
)
Net cash provided by operating activities
 
798,334

 
726,037

 
670,812

 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

 
 

Investment in real estate – acquisitions
 
(1,441,599
)
 
(1,189,210
)
 
(175,531
)
Investment in real estate – development/other
 
(120,741
)
 
(131,301
)
 
(330,623
)
Improvements to real estate
 
(144,452
)
 
(138,208
)
 
(123,937
)
Additions to non-real estate property
 
(7,110
)
 
(2,991
)
 
(2,028
)
Interest capitalized for real estate and unconsolidated entities under development
 
(9,108
)
 
(13,008
)
 
(34,859
)
Proceeds from disposition of real estate, net
 
1,500,583

 
672,700

 
887,055

Investments in unconsolidated entities
 
(2,021
)
 

 

Distributions from unconsolidated entities – return of capital
 

 
26,924

 
6,521

Purchase of investment securities
 

 

 
(77,822
)
Proceeds from sale of investment securities
 

 
25,000

 
215,753

Proceeds from technology investments
 
4,537

 

 

Decrease (increase) in deposits on real estate acquisitions and investments, net
 
7,631

 
137,106

 
(250,257
)
Decrease in mortgage deposits
 
1,901

 
4,699

 
2,437

Consolidation of previously unconsolidated properties
 

 
(26,854
)
 

Deconsolidation of previously consolidated properties
 
28,360

 
11,708

 

Acquisition of Noncontrolling Interests – Partially Owned Properties
 
(12,809
)
 
(16,023
)
 
(11,480
)
Net cash (used for) provided by investing activities
 
(194,828
)
 
(639,458
)
 
105,229



See accompanying notes
F-7



EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 

 
 

Loan and bond acquisition costs
 
$
(20,421
)
 
$
(8,811
)
 
$
(9,291
)
Mortgage notes payable:
 
 

 
 

 
 

Proceeds
 
190,905

 
173,561

 
738,798

Restricted cash
 
16,596

 
73,232

 
46,664

Lump sum payoffs
 
(974,956
)
 
(635,285
)
 
(939,022
)
Scheduled principal repayments
 
(16,726
)
 
(16,769
)
 
(17,763
)
(Loss) gain on debt extinguishments
 

 
(2,457
)
 
2,400

Notes, net:
 
 

 
 

 
 

Proceeds
 
996,190

 
595,422

 

Lump sum payoffs
 
(575,641
)
 

 
(850,115
)
(Loss) on debt extinguishments
 

 

 
(19,925
)
Lines of credit:
 
 

 
 

 
 

Proceeds
 
1,455,000

 
5,513,125

 

Repayments
 
(1,455,000
)
 
(5,513,125
)
 

(Payments on) proceeds from settlement of derivative instruments
 
(147,306
)
 
(10,040
)
 
11,253

Proceeds from sale of Common Shares
 
173,484

 
329,452

 
86,184

Proceeds from Employee Share Purchase Plan (ESPP)
 
5,262

 
5,112

 
5,292

Proceeds from exercise of options
 
95,322

 
71,596

 
9,136

Common Shares repurchased and retired
 

 
(1,887
)
 
(1,124
)
Redemption of Preferred Shares
 

 
(877
)
 

Payment of offering costs
 
(3,596
)
 
(4,657
)
 
(2,536
)
Other financing activities, net
 
(48
)
 
(48
)
 
(16
)
Contributions – Noncontrolling Interests – Partially Owned Properties
 
75,911

 
222

 
893

Contributions – Noncontrolling Interests – Operating Partnership
 

 

 
78

Distributions:
 
 

 
 

 
 

Common Shares
 
(432,023
)
 
(379,969
)
 
(488,604
)
Preferred Shares
 
(12,829
)
 
(14,471
)
 
(14,479
)
Preference Interests and Units
 

 

 
(12
)
Noncontrolling Interests – Operating Partnership
 
(20,002
)
 
(18,867
)
 
(28,935
)
Noncontrolling Interests – Partially Owned Properties
 
(1,115
)
 
(2,918
)
 
(2,423
)
Net cash (used for) provided by financing activities
 
(650,993
)
 
151,541

 
(1,473,547
)
Net (decrease) increase in cash and cash equivalents
 
(47,487
)
 
238,120

 
(697,506
)
Cash and cash equivalents, beginning of year
 
431,408

 
193,288

 
890,794

Cash and cash equivalents, end of year
 
$
383,921

 
$
431,408

 
$
193,288












See accompanying notes
F-8



EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
SUPPLEMENTAL INFORMATION:
 
 

 
 

 
 

Cash paid for interest, net of amounts capitalized
 
$
477,434

 
$
475,374

 
$
508,847

Net cash paid (received) for income and other taxes
 
$
645

 
$
(2,740
)
 
$
3,968

Real estate acquisitions/dispositions/other:
 
 

 
 

 
 

Mortgage loans assumed
 
$
158,240

 
$
359,082

 
$

Valuation of OP Units issued
 
$

 
$
8,245

 
$
1,034

Mortgage loans (assumed) by purchaser
 
$

 
$
(39,999
)
 
$
(17,313
)
Amortization of deferred financing costs:
 
 

 
 

 
 

Investment in real estate, net
 
$

 
$
(2,768
)
 
$
(3,585
)
Deferred financing costs, net
 
$
17,846

 
$
13,174

 
$
16,712

Amortization of discounts and premiums on debt:
 
 

 
 

 
 

Investment in real estate, net
 
$

 
$

 
$
(3
)
Mortgage notes payable
 
$
(8,260
)
 
$
(9,208
)
 
$
(6,097
)
Notes, net
 
$
6,782

 
$
8,737

 
$
11,957

Amortization of deferred settlements on derivative instruments:
 
 

 
 

 
 

Other liabilities
 
$
(535
)
 
$
(534
)
 
$
(1,496
)
Accumulated other comprehensive income
 
$
4,343

 
$
3,338

 
$
3,724

Unrealized loss (gain) on derivative instruments:
 
 

 
 

 
 

Other assets
 
$
6,826

 
$
13,019

 
$
(33,261
)
Mortgage notes payable
 
$
(612
)
 
$
(163
)
 
$
(1,887
)
Notes, net
 
$
(2,937
)
 
$
7,497

 
$
719

Other liabilities
 
$
140,507

 
$
45,542

 
$
(3,250
)
Accumulated other comprehensive (loss) income
 
$
(143,598
)
 
$
(65,894
)
 
$
37,676

Interest capitalized for real estate and unconsolidated entities under development:
 
 
 
 
 
 
Investment in real estate, net
 
$
(8,785
)
 
$
(13,008
)
 
$
(34,859
)
Investments in unconsolidated entities
 
$
(323
)
 
$

 
$

Consolidation of previously unconsolidated properties:
 
 

 
 

 
 

Investment in real estate, net
 
$

 
$
(105,065
)
 
$

Investments in unconsolidated entities
 
$

 
$
7,376

 
$

Deposits – restricted
 
$

 
$
(42,633
)
 
$

Mortgage notes payable
 
$

 
$
112,631

 
$

Net other assets recorded
 
$

 
$
837

 
$

Deconsolidation of previously consolidated properties:
 
 

 
 

 
 

Investment in real estate, net
 
$
35,495

 
$
14,875

 
$

Investments in unconsolidated entities
 
$
(7,135
)
 
$
(3,167
)
 
$

(Payments on) proceeds from settlement of derivative instruments:
 
 

 
 

 
 

Other assets
 
$

 
$

 
$
11,253

Other liabilities
 
$
(147,306
)
 
$
(10,040
)
 
$

Other:
 
 

 
 

 
 

Receivable on sale of Common Shares
 
$

 
$
37,550

 
$

Transfer from notes, net to mortgage notes payable
 
$

 
$
35,600

 
$






See accompanying notes
F-9



EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)

 
 
Year Ended December 31,
SHAREHOLDERS’ EQUITY
 
2011
 
2010
 
2009
 
 
 
 
 
 
 
PREFERRED SHARES
 
 

 
 

 
 

Balance, beginning of year
 
$
200,000

 
$
208,773

 
$
208,786

Redemption of 7.00% Series E Cumulative Convertible
 

 
(834
)
 

Conversion of 7.00% Series E Cumulative Convertible
 

 
(7,378
)
 
(13
)
Conversion of 7.00% Series H Cumulative Convertible
 

 
(561
)
 

Balance, end of year
 
$
200,000

 
$
200,000

 
$
208,773

 
 
 
 
 
 
 
COMMON SHARES, $0.01 PAR VALUE
 
 

 
 

 
 

Balance, beginning of year
 
$
2,902

 
$
2,800

 
$
2,728

Conversion of Preferred Shares into Common Shares
 

 
3

 

Conversion of OP Units into Common Shares
 
3

 
9

 
27

Issuance of Common Shares
 
39

 
61

 
35

Exercise of share options
 
29

 
25

 
4

Employee Share Purchase Plan (ESPP)
 
1

 
2

 
3

Conversion of restricted shares to LTIP Units
 
(1
)
 

 

Share-based employee compensation expense:
 
 

 
 

 
 

Restricted/performance shares
 
2

 
2

 
3

Balance, end of year
 
$
2,975

 
$
2,902

 
$
2,800

 
 
 
 
 
 
 
PAID IN CAPITAL
 
 

 
 

 
 

Balance, beginning of year
 
$
4,741,521

 
$
4,477,426

 
$
4,273,489

Common Share Issuance:
 
 

 
 

 
 

Conversion of Preferred Shares into Common Shares
 

 
7,936

 
13

Conversion of OP Units into Common Shares
 
8,577

 
19,713

 
48,776

Issuance of Common Shares
 
201,903

 
291,841

 
123,699

Exercise of share options
 
95,293

 
71,571

 
9,132

Employee Share Purchase Plan (ESPP)
 
5,261

 
5,110

 
5,289

Conversion of restricted shares to LTIP Units
 
(3,933
)
 

 

Share-based employee compensation expense:
 
 

 
 

 
 

Performance shares
 

 

 
179

Restricted shares
 
9,100

 
9,779

 
11,129

Share options
 
9,545

 
7,421

 
5,996

ESPP discount
 
1,194

 
1,290

 
1,303

Common Shares repurchased and retired
 

 
(1,887
)
 
(1,124
)
Offering costs
 
(3,596
)
 
(4,657
)
 
(2,536
)
Supplemental Executive Retirement Plan (SERP)
 
10,765

 
8,559

 
27,809

Acquisition of Noncontrolling Interests – Partially Owned Properties
 
(4,784
)
 
(16,888
)
 
(1,496
)
Change in market value of Redeemable Noncontrolling Interests – Operating
   Partnership
 
(22,714
)
 
(129,918
)
 
(14,544
)
Adjustment for Noncontrolling Interests ownership in Operating Partnership
 
(946
)
 
(5,775
)
 
(9,688
)
Balance, end of year
 
$
5,047,186

 
$
4,741,521

 
$
4,477,426






See accompanying notes
F-10



EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)
(Amounts in thousands)
 
 
Year Ended December 31,
SHAREHOLDERS’ EQUITY (continued)
 
2011
 
2010
 
2009
 
 
 
 
 
 
 
RETAINED EARNINGS
 
 

 
 

 
 

Balance, beginning of year
 
$
203,581

 
$
353,659

 
$
456,152

Net income attributable to controlling interests
 
893,585

 
283,610

 
362,273

Common Share distributions
 
(467,729
)
 
(419,320
)
 
(450,287
)
Preferred Share distributions
 
(13,865
)
 
(14,368
)
 
(14,479
)
Balance, end of year
 
$
615,572

 
$
203,581

 
$
353,659

 
 
 
 
 
 
 
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
 
 

 
 

 
 

Balance, beginning of year
 
$
(57,818
)
 
$
4,681

 
$
(35,799
)
Accumulated other comprehensive (loss) income – derivative instruments:
 
 

 
 

 
 

Unrealized holding (losses) gains arising during the year
 
(143,598
)
 
(65,894
)
 
37,676

Losses reclassified into earnings from other comprehensive income
 
4,343

 
3,338

 
3,724

Other
 

 

 
449

Accumulated other comprehensive income (loss) – other instruments:
 
 

 
 

 
 

Unrealized holding gains arising during the year
 
355

 
57

 
3,574

(Gains) realized during the year
 

 

 
(4,943
)
Balance, end of year
 
$
(196,718
)
 
$
(57,818
)
 
$
4,681

 
 
 
 
 
 
 
NONCONTROLLING INTERESTS
 
 

 
 

 
 

 
 
 
 
 
 
 
OPERATING PARTNERSHIP
 
 

 
 

 
 

Balance, beginning of year
 
$
110,399

 
$
116,120

 
$
137,645

Issuance of OP Units to Noncontrolling Interests
 

 
8,245

 
1,034

Issuance of LTIP Units to Noncontrolling Interests
 

 

 
78

Conversion of OP Units held by Noncontrolling Interests into OP Units held by
   General Partner
 
(8,580
)
 
(19,722
)
 
(48,803
)
Conversion of restricted shares to LTIP Units
 
3,934

 

 

Equity compensation associated with Noncontrolling Interests
 
3,641

 
2,524

 
1,194

Net income attributable to Noncontrolling Interests
 
40,780

 
13,099

 
20,305

Distributions to Noncontrolling Interests
 
(21,434
)
 
(20,300
)
 
(25,679
)
Change in carrying value of Redeemable Noncontrolling Interests – Operating
   Partnership
 
(10,150
)
 
4,658

 
20,658

Adjustment for Noncontrolling Interests ownership in Operating Partnership
 
946

 
5,775

 
9,688

Balance, end of year
 
$
119,536

 
$
110,399

 
$
116,120

 
 
 
 
 
 
 
PREFERENCE INTERESTS AND UNITS
 
 

 
 

 
 

Balance, beginning of year
 
$

 
$

 
$
184

Conversion of Series B Junior Preference Units
 

 

 
(184
)
Balance, end of year
 
$

 
$

 
$

 
 
 
 
 
 
 
PARTIALLY OWNED PROPERTIES
 
 

 
 

 
 

Balance, beginning of year
 
$
7,991

 
$
11,054

 
$
25,520

Net income (loss) attributable to Noncontrolling Interests
 
832

 
(726
)
 
(558
)
Contributions by Noncontrolling Interests
 
75,911

 
222

 
893

Distributions to Noncontrolling Interests
 
(1,163
)
 
(2,952
)
 
(2,439
)
Acquisition of Noncontrolling Interests – Partially Owned Properties
 
(8,025
)
 
175

 
(11,705
)
Other
 
(1,240
)
 
218

 
(657
)
Balance, end of year
 
$
74,306

 
$
7,991

 
$
11,054


See accompanying notes
F-11



ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

 
 
December 31, 2011
 
December 31, 2010
ASSETS
Investment in real estate
 
 

 
 

Land
 
$
4,367,816

 
$
4,110,275

Depreciable property
 
15,554,740

 
15,226,512

Projects under development
 
160,190

 
130,337

Land held for development
 
325,200

 
235,247

Investment in real estate
 
20,407,946

 
19,702,371

Accumulated depreciation
 
(4,539,583
)
 
(4,337,357
)
Investment in real estate, net
 
15,868,363

 
15,365,014

Cash and cash equivalents
 
383,921

 
431,408

Investments in unconsolidated entities
 
12,327

 
3,167

Deposits – restricted
 
152,237

 
180,987

Escrow deposits – mortgage
 
10,692

 
12,593

Deferred financing costs, net
 
44,608

 
42,033

Other assets
 
187,155

 
148,992

Total assets
 
$
16,659,303

 
$
16,184,194

 
 
 
 
 
LIABILITIES AND CAPITAL
Liabilities:
 
 

 
 

Mortgage notes payable
 
$
4,111,487

 
$
4,762,896

Notes, net
 
5,609,574

 
5,185,180

Lines of credit
 

 

Accounts payable and accrued expenses
 
35,206

 
39,452

Accrued interest payable
 
88,121

 
98,631

Other liabilities
 
291,289

 
304,202

Security deposits
 
65,286

 
60,812

Distributions payable
 
179,079

 
140,905

Total liabilities
 
10,380,042

 
10,592,078

 
 
 
 
 
Commitments and contingencies
 
 

 
 

 
 
 
 
 
Redeemable Limited Partners
 
416,404

 
383,540

Capital:
 
 

 
 

Partners' Capital:
 
 

 
 

Preference Units
 
200,000

 
200,000

General Partner
 
5,665,733

 
4,948,004

Limited Partners
 
119,536

 
110,399

Accumulated other comprehensive (loss)
 
(196,718
)
 
(57,818
)
Total partners' capital
 
5,788,551

 
5,200,585

Noncontrolling Interests – Partially Owned Properties
 
74,306

 
7,991

Total capital
 
5,862,857

 
5,208,576

Total liabilities and capital
 
$
16,659,303

 
$
16,184,194










See accompanying notes
F-12




ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per Unit data)

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
REVENUES
 
 

 
 
 
 
Rental income
 
$
1,960,243

 
$
1,744,768

 
$
1,610,469

Fee and asset management
 
9,026

 
9,476

 
10,346

Total revenues
 
1,969,269

 
1,754,244

 
1,620,815

 
 
 
 
 
 
 
EXPENSES
 
 

 
 

 
 

Property and maintenance
 
412,233

 
397,573

 
365,448

Real estate taxes and insurance
 
219,743

 
209,023

 
187,895

Property management
 
82,133

 
80,087

 
71,300

Fee and asset management
 
4,279

 
4,998

 
7,345

Depreciation
 
642,415

 
608,612

 
514,200

General and administrative
 
43,606

 
39,881

 
38,985

Impairment
 

 
45,380

 
11,124

Total expenses
 
1,404,409

 
1,385,554

 
1,196,297

 
 
 
 
 
 
 
Operating income
 
564,860

 
368,690

 
424,518

 
 
 
 
 
 
 
Interest and other income
 
7,977

 
5,166

 
16,578

Other expenses
 
(14,557
)
 
(11,928
)
 
(6,477
)
Interest:
 
 

 
 

 
 

Expense incurred, net
 
(468,320
)
 
(465,792
)
 
(490,670
)
Amortization of deferred financing costs
 
(17,006
)
 
(10,114
)
 
(12,327
)
Income (loss) before income and other taxes, (loss) from investments in
   unconsolidated entities, net gain (loss) on sales of unconsolidated entities and
   land parcels and discontinued operations
 
72,954

 
(113,978
)
 
(68,378
)
Income and other tax (expense) benefit
 
(728
)
 
(292
)
 
(2,716
)
(Loss) from investments in unconsolidated entities
 

 
(735
)
 
(2,815
)
Net gain on sales of unconsolidated entities
 

 
28,101

 
10,689

Net gain (loss) on sales of land parcels
 
4,217

 
(1,395
)
 

Income (loss) from continuing operations
 
76,443

 
(88,299
)
 
(63,220
)
Discontinued operations, net
 
858,754

 
384,282

 
445,249

Net income
 
935,197

 
295,983

 
382,029

Net (income) loss attributable to Noncontrolling Interests –
 
 

 
 

 
 

Partially Owned Properties
 
(832
)
 
726

 
558

Net income attributable to controlling interests
 
$
934,365

 
$
296,709

 
$
382,587

 
 
 
 
 
 
 
ALLOCATION OF NET INCOME:
 


 
 
 
 
Preference Units
 
$
13,865

 
$
14,368

 
$
14,479

Preference Interests and Junior Preference Units
 
$

 
$

 
$
9

 
 
 
 
 
 
 
General Partner
 
$
879,720

 
$
269,242

 
$
347,794

Limited Partners
 
40,780

 
13,099

 
20,305

Net income available to Units
 
$
920,500

 
$
282,341

 
$
368,099

 
 
 
 
 
 
 
Earnings per Unit – basic:
 
 

 
 

 
 

Income (loss) from continuing operations available to Units
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
Net income available to Units
 
$
2.98

 
$
0.95

 
$
1.27

Weighted average Units outstanding
 
308,062

 
296,527

 
289,167

 
 
 
 
 
 
 
Earnings per Unit – diluted:
 
 

 
 

 
 

Income (loss) from continuing operations available to Units
 
$
0.20

 
$
(0.34
)
 
$
(0.27
)
Net income available to Units
 
$
2.95

 
$
0.95

 
$
1.27

Weighted average Units outstanding
 
312,065

 
296,527

 
289,167



See accompanying notes
F-13



ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Amounts in thousands except per Unit data)

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Comprehensive income:
 
 

 
 

 
 

Net income
 
$
935,197

 
$
295,983

 
$
382,029

Other comprehensive (loss) income:
 
 
 
 
 
 
Other comprehensive (loss) income – derivative instruments:
 
 

 
 

 
 

Unrealized holding (losses) gains arising during the year
 
(143,598
)
 
(65,894
)
 
37,676

Losses reclassified into earnings from other comprehensive income
 
4,343

 
3,338

 
3,724

Other
 

 

 
449

Other comprehensive income (loss) – other instruments:
 
 

 
 

 
 

Unrealized holding gains arising during the year
 
355

 
57

 
3,574

(Gains) realized during the year
 

 

 
(4,943
)
Other comprehensive (loss) income
 
(138,900
)
 
(62,499
)
 
40,480

Comprehensive income
 
796,297

 
233,484

 
422,509

Comprehensive (income) loss attributable to Noncontrolling Interests –
   Partially Owned Properties
 
(832
)
 
726

 
558

Comprehensive income attributable to controlling interests
 
$
795,465

 
$
234,210

 
$
423,067






























See accompanying notes
F-14



ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 

 
 

 
 

Net income
 
$
935,197

 
$
295,983

 
$
382,029

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

 
 

Depreciation
 
663,616

 
673,403

 
600,375

Amortization of deferred financing costs
 
17,846

 
10,406

 
13,127

Amortization of discounts on investment securities
 

 

 
(1,661
)
Amortization of discounts and premiums on debt
 
(1,478
)
 
(471
)
 
5,857

Amortization of deferred settlements on derivative instruments
 
3,808

 
2,804

 
2,228

Impairment
 

 
45,380

 
11,124

Write-off of pursuit costs
 
5,075

 
5,272

 
4,838

Income from technology investments
 
(4,537
)
 

 

Loss from investments in unconsolidated entities
 

 
735

 
2,815

Distributions from unconsolidated entities – return on capital
 
319

 
61

 
153

Net (gain) on sales of investment securities
 

 

 
(4,943
)
Net (gain) on sales of unconsolidated entities
 

 
(28,101
)
 
(10,689
)
Net (gain) loss on sales of land parcels
 
(4,217
)
 
1,395

 

Net (gain) on sales of discontinued operations
 
(826,489
)
 
(297,956
)
 
(335,299
)
Loss on debt extinguishments
 

 
2,457

 
17,525

Unrealized loss (gain) on derivative instruments
 
186

 
1

 
(3
)
Compensation paid with Company Common Shares
 
21,177

 
18,875

 
17,843

Changes in assets and liabilities:
 
 

 
 

 
 

Decrease in deposits – restricted
 
4,523

 
3,316

 
3,117

(Increase) decrease in other assets
 
(2,743
)
 
(9,048
)
 
11,768

Increase (decrease) in accounts payable and accrued expenses
 
332

 
(5,454
)
 
(34,524
)
(Decrease) in accrued interest payable
 
(10,510
)
 
(4,000
)
 
(11,997
)
(Decrease) increase in other liabilities
 
(8,245
)
 
9,972

 
2,220

Increase (decrease) in security deposits
 
4,474

 
1,007

 
(5,091
)
Net cash provided by operating activities
 
798,334

 
726,037

 
670,812

 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

 
 

Investment in real estate – acquisitions
 
(1,441,599
)
 
(1,189,210
)
 
(175,531
)
Investment in real estate – development/other
 
(120,741
)
 
(131,301
)
 
(330,623
)
Improvements to real estate
 
(144,452
)
 
(138,208
)
 
(123,937
)
Additions to non-real estate property
 
(7,110
)
 
(2,991
)
 
(2,028
)
Interest capitalized for real estate and unconsolidated entities under development
 
(9,108
)
 
(13,008
)
 
(34,859
)
Proceeds from disposition of real estate, net
 
1,500,583

 
672,700

 
887,055

Investments in unconsolidated entities
 
(2,021
)
 

 

Distributions from unconsolidated entities – return of capital
 

 
26,924

 
6,521

Purchase of investment securities
 

 

 
(77,822
)
Proceeds from sale of investment securities
 

 
25,000

 
215,753

Proceeds from technology investments
 
4,537

 

 

Decrease (increase) in deposits on real estate acquisitions and investments, net
 
7,631

 
137,106

 
(250,257
)
Decrease in mortgage deposits
 
1,901

 
4,699

 
2,437

Consolidation of previously unconsolidated properties
 

 
(26,854
)
 

Deconsolidation of previously consolidated properties
 
28,360

 
11,708

 

Acquisition of Noncontrolling Interests – Partially Owned Properties
 
(12,809
)
 
(16,023
)
 
(11,480
)
Net cash (used for) provided by investing activities
 
(194,828
)
 
(639,458
)
 
105,229



See accompanying notes
F-15



ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 

 
 

Loan and bond acquisition costs
 
$
(20,421
)
 
$
(8,811
)
 
$
(9,291
)
Mortgage notes payable:
 
 

 
 

 
 

Proceeds
 
190,905

 
173,561

 
738,798

Restricted cash
 
16,596

 
73,232

 
46,664

Lump sum payoffs
 
(974,956
)
 
(635,285
)
 
(939,022
)
Scheduled principal repayments
 
(16,726
)
 
(16,769
)
 
(17,763
)
(Loss) gain on debt extinguishments
 

 
(2,457
)
 
2,400

Notes, net:
 
 

 
 

 
 

Proceeds
 
996,190

 
595,422

 

Lump sum payoffs
 
(575,641
)
 

 
(850,115
)
(Loss) on debt extinguishments
 

 

 
(19,925
)
Lines of credit:
 
 

 
 

 
 

Proceeds
 
1,455,000

 
5,513,125

 

Repayments
 
(1,455,000
)
 
(5,513,125
)
 

(Payments on) proceeds from settlement of derivative instruments
 
(147,306
)
 
(10,040
)
 
11,253

Proceeds from sale of OP Units
 
173,484

 
329,452

 
86,184

Proceeds from EQR's Employee Share Purchase Plan (ESPP)
 
5,262

 
5,112

 
5,292

Proceeds from exercise of EQR options
 
95,322

 
71,596

 
9,136

OP Units repurchased and retired
 

 
(1,887
)
 
(1,124
)
Redemption of Preference Units
 

 
(877
)
 

Payment of offering costs
 
(3,596
)
 
(4,657
)
 
(2,536
)
Other financing activities, net
 
(48
)
 
(48
)
 
(16
)
Contributions – Noncontrolling Interests – Partially Owned Properties
 
75,911

 
222

 
893

Contributions – Limited Partners
 

 

 
78

Distributions:
 
 

 
 

 
 

OP Units – General Partner
 
(432,023
)
 
(379,969
)
 
(488,604
)
Preference Units
 
(12,829
)
 
(14,471
)
 
(14,479
)
Preference Interests and Junior Preference Units
 

 

 
(12
)
OP Units – Limited Partners
 
(20,002
)
 
(18,867
)
 
(28,935
)
Noncontrolling Interests – Partially Owned Properties
 
(1,115
)
 
(2,918
)
 
(2,423
)
Net cash (used for) provided by financing activities
 
(650,993
)
 
151,541

 
(1,473,547
)
Net (decrease) increase in cash and cash equivalents
 
(47,487
)
 
238,120

 
(697,506
)
Cash and cash equivalents, beginning of year
 
431,408

 
193,288

 
890,794

Cash and cash equivalents, end of year
 
$
383,921

 
$
431,408

 
$
193,288













See accompanying notes
F-16



ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
SUPPLEMENTAL INFORMATION:
 
 

 
 

 
 

Cash paid for interest, net of amounts capitalized
 
$
477,434

 
$
475,374

 
$
508,847

Net cash paid (received) for income and other taxes
 
$
645

 
$
(2,740
)
 
$
3,968

Real estate acquisitions/dispositions/other:
 
 

 
 

 
 

Mortgage loans assumed
 
$
158,240

 
$
359,082

 
$

Valuation of OP Units issued
 
$

 
$
8,245

 
$
1,034

Mortgage loans (assumed) by purchaser
 
$

 
$
(39,999
)
 
$
(17,313
)
Amortization of deferred financing costs:
 
 

 
 

 
 

Investment in real estate, net
 
$

 
$
(2,768
)
 
$
(3,585
)
Deferred financing costs, net
 
$
17,846

 
$
13,174

 
$
16,712

Amortization of discounts and premiums on debt:
 
 

 
 

 
 

Investment in real estate, net
 
$

 
$

 
$
(3
)
Mortgage notes payable
 
$
(8,260
)
 
$
(9,208
)
 
$
(6,097
)
Notes, net
 
$
6,782

 
$
8,737

 
$
11,957

Amortization of deferred settlements on derivative instruments:
 
 

 
 

 
 

Other liabilities
 
$
(535
)
 
$
(534
)
 
$
(1,496
)
Accumulated other comprehensive income
 
$
4,343

 
$
3,338

 
$
3,724

Unrealized loss (gain) on derivative instruments:
 
 

 
 

 
 

Other assets
 
$
6,826

 
$
13,019

 
$
(33,261
)
Mortgage notes payable
 
$
(612
)
 
$
(163
)
 
$
(1,887
)
Notes, net
 
$
(2,937
)
 
$
7,497

 
$
719

Other liabilities
 
$
140,507

 
$
45,542

 
$
(3,250
)
Accumulated other comprehensive (loss) income
 
$
(143,598
)
 
$
(65,894
)
 
$
37,676

Interest capitalized for real estate and unconsolidated entities under development:
 
 
 
 
 
 
Investment in real estate, net
 
$
(8,785
)
 
$
(13,008
)
 
$
(34,859
)
Investments in unconsolidated entities
 
$
(323
)
 
$

 
$

Consolidation of previously unconsolidated properties:
 
 

 
 

 
 

Investment in real estate, net
 
$

 
$
(105,065
)
 
$

Investments in unconsolidated entities
 
$

 
$
7,376

 
$

Deposits – restricted
 
$

 
$
(42,633
)
 
$

Mortgage notes payable
 
$

 
$
112,631

 
$

Net other assets recorded
 
$

 
$
837

 
$

Deconsolidation of previously consolidated properties:
 
 

 
 

 
 

Investment in real estate, net
 
$
35,495

 
$
14,875

 
$

Investments in unconsolidated entities
 
$
(7,135
)
 
$
(3,167
)
 
$

(Payments on) proceeds from settlement of derivative instruments:
 
 

 
 

 
 

Other assets
 
$

 
$

 
$
11,253

Other liabilities
 
$
(147,306
)
 
$
(10,040
)
 
$

Other:
 
 

 
 

 
 

Receivable on sale of OP Units
 
$

 
$
37,550

 
$

Transfer from notes, net to mortgage notes payable
 
$

 
$
35,600

 
$




See accompanying notes
F-17



ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(Amounts in thousands)
 
 
Year Ended December 31,
PARTNERS' CAPITAL
 
2011
 
2010
 
2009
 
 
 
 
 
 
 
PREFERENCE UNITS
 
 

 
 

 
 

Balance, beginning of year
 
$
200,000

 
$
208,773

 
$
208,786

Redemption of 7.00% Series E Cumulative Convertible
 

 
(834
)
 

Conversion of 7.00% Series E Cumulative Convertible
 

 
(7,378
)
 
(13
)
Conversion of 7.00% Series H Cumulative Convertible
 

 
(561
)
 

Balance, end of year
 
$
200,000

 
$
200,000

 
$
208,773

 
 
 
 
 
 
 
PREFERENCE INTERESTS AND JUNIOR PREFERENCE UNITS
 
 

 
 

 
 

Balance, beginning of year
 
$

 
$

 
$
184

Conversion of Series B Junior Preference Units
 

 

 
(184
)
Balance, end of year
 
$

 
$

 
$

 
 
 
 
 
 
 
GENERAL PARTNER
 
 

 
 

 
 

Balance, beginning of year
 
$
4,948,004

 
$
4,833,885

 
$
4,732,369

OP Unit Issuance:
 
 

 
 

 
 

Conversion of Preference Units into OP Units held by General Partner
 

 
7,939

 
13

Conversion of OP Units held by Limited Partners into OP Units held by
 
 
 
 
 
 
General Partner
 
8,580

 
19,722

 
48,803

Issuance of OP Units
 
201,942

 
291,902

 
123,734

Exercise of EQR share options
 
95,322

 
71,596

 
9,136

EQR's Employee Share Purchase Plan (ESPP)
 
5,262

 
5,112

 
5,292

Conversion of EQR restricted shares to LTIP Units
 
(3,934
)
 

 

Share-based employee compensation expense:
 
 

 
 

 
 

EQR performance shares
 

 

 
179

EQR restricted shares
 
9,102

 
9,781

 
11,132

EQR share options
 
9,545

 
7,421

 
5,996

EQR ESPP discount
 
1,194

 
1,290

 
1,303

OP Units repurchased and retired
 

 
(1,887
)
 
(1,124
)
Offering costs
 
(3,596
)
 
(4,657
)
 
(2,536
)
Net income available to Units – General Partner
 
879,720

 
269,242

 
347,794

OP Units – General Partner distributions
 
(467,729
)
 
(419,320
)
 
(450,287
)
Supplemental Executive Retirement Plan (SERP)
 
10,765

 
8,559

 
27,809

Acquisition of Noncontrolling Interests – Partially Owned Properties
 
(4,784
)
 
(16,888
)
 
(1,496
)
Change in market value of Redeemable Limited Partners
 
(22,714
)
 
(129,918
)
 
(14,544
)
Adjustment for Limited Partners ownership in Operating Partnership
 
(946
)
 
(5,775
)
 
(9,688
)
Balance, end of year
 
$
5,665,733

 
$
4,948,004

 
$
4,833,885

 
 
 
 
 
 
 
LIMITED PARTNERS
 
 
 
 
 
 
Balance, beginning of year
 
$
110,399

 
$
116,120

 
$
137,645

Issuance of OP Units
 

 
8,245

 
1,034

Issuance of LTIP Units
 

 

 
78

Conversion of OP Units held by Limited Partners into OP Units held by
   General Partner
 
(8,580
)
 
(19,722
)
 
(48,803
)
Conversion of EQR restricted shares to LTIP Units
 
3,934

 

 

Equity compensation associated with Units – Limited Partners
 
3,641

 
2,524

 
1,194

Net income available to Units – Limited Partners
 
40,780

 
13,099

 
20,305

Units – Limited Partners distributions
 
(21,434
)
 
(20,300
)
 
(25,679
)
Change in carrying value of Redeemable Limited Partners
 
(10,150
)
 
4,658

 
20,658

Adjustment for Limited Partners ownership in Operating Partnership
 
946

 
5,775

 
9,688

Balance, end of year
 
$
119,536

 
$
110,399

 
$
116,120


See accompanying notes
F-18



ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)
(Amounts in thousands)
 
 
Year Ended December 31,
PARTNERS' CAPITAL (continued)
 
2011
 
2010
 
2009
 
 
 
 
 
 
 
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
 
 

 
 

 
 

Balance, beginning of year
 
$
(57,818
)
 
$
4,681

 
$
(35,799
)
Accumulated other comprehensive (loss) income – derivative instruments:
 
 

 
 

 
 

Unrealized holding (losses) gains arising during the year
 
(143,598
)
 
(65,894
)
 
37,676

Losses reclassified into earnings from other comprehensive income
 
4,343

 
3,338

 
3,724

Other
 

 

 
449

Accumulated other comprehensive income (loss) – other instruments:
 
 

 
 

 
 

Unrealized holding gains arising during the year
 
355

 
57

 
3,574

(Gains) realized during the year
 

 

 
(4,943
)
Balance, end of year
 
$
(196,718
)
 
$
(57,818
)
 
$
4,681

 
 
 
 
 
 
 
NONCONTROLLING INTERESTS
 
 

 
 

 
 

 
 
 
 
 
 
 
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES
 
 

 
 

 
 

Balance, beginning of year
 
$
7,991

 
$
11,054

 
$
25,520

Net income (loss) attributable to Noncontrolling Interests
 
832

 
(726
)
 
(558
)
Contributions by Noncontrolling Interests
 
75,911

 
222

 
893

Distributions to Noncontrolling Interests
 
(1,163
)
 
(2,952
)
 
(2,439
)
Acquisition of Noncontrolling Interests – Partially Owned Properties
 
(8,025
)
 
175

 
(11,705
)
Other
 
(1,240
)
 
218

 
(657
)
Balance, end of year
 
$
74,306

 
$
7,991

 
$
11,054






See accompanying notes
F-19



EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.
Business
Equity Residential (“EQR”), a Maryland real estate investment trust (“REIT”) formed in March 1993, is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top United States growth markets. ERP Operating Limited Partnership ("ERPOP"), an Illinois limited partnership, was formed in May 1993 to conduct the multifamily residential property business of Equity Residential. EQR has elected to be taxed as a REIT. References to the "Company," "we," "us" or "our" mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the "Operating Partnership" mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.
EQR is the general partner of, and as of December 31, 2011 owned an approximate 95.7% ownership interest in ERPOP. All of the Company's property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues public equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company's ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.
As of December 31, 2011, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 427 properties located in 15 states and the District of Columbia consisting of 121,974 apartment units. The ownership breakdown includes (table does not include various uncompleted development properties):
            
 
 
Properties
 
Apartment Units
Wholly Owned Properties
 
404

 
113,157

Partially Owned Properties – Consolidated
 
21

 
3,916

Military Housing
 
2

 
4,901

 
 
427

 
121,974

The “Wholly Owned Properties” are accounted for under the consolidation method of accounting. The Company beneficially owns 100% fee simple title to 400 of the 404 Wholly Owned Properties and all but one of its wholly owned development properties and land parcels. The Company owns the building and improvements and leases the land underlying the improvements under long-term ground leases that expire in 2026, 2077, 2101 and 2104 for the four operating properties, respectively, and 2110 for one land parcel. These properties are consolidated and reflected as real estate assets while the ground leases are accounted for as operating leases.
The “Partially Owned Properties – Consolidated” are controlled by the Company but have partners with noncontrolling interests and are accounted for under the consolidation method of accounting. The “Military Housing” properties consist of investments in limited liability companies that, as a result of the terms of the operating agreements, are accounted for as management contract rights with all fees recognized as fee and asset management revenue.

2.
Summary of Significant Accounting Policies
Basis of Presentation
Due to the Company’s ability as general partner to control either through ownership or by contract the Operating Partnership and its subsidiaries, the Operating Partnership and each such subsidiary has been consolidated with the Company for financial reporting purposes, except for two unconsolidated developments and our military housing properties. The consolidated financial statements also include all variable interest entities for which the Company is the primary beneficiary.
Noncontrolling interests represented by EQR's indirect 1% interest in various entities are immaterial and have not been accounted for in the Consolidated Financial Statements of the Operating Partnership. In addition, certain amounts due from EQR for its 1% interest in various entities have not been reflected in the Consolidated Balance Sheets of the Operating Partnership since such amounts are immaterial.

F-20



Real Estate Assets and Depreciation of Investment in Real Estate
Effective for business combinations on or after January 1, 2009, an acquiring entity is required to recognize all assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. In addition, an acquiring entity is required to expense acquisition-related costs as incurred (amounts are included in the other expenses line item in the consolidated statements of operations), value noncontrolling interests at fair value at the acquisition date and expense restructuring costs associated with an acquired business.
The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company allocates the purchase price of acquired real estate to various components as follows:
Land – Based on actual purchase price adjusted to fair value (as necessary) if acquired separately or market research/comparables if acquired with an operating property.
Furniture, Fixtures and Equipment – Ranges between $8,000 and $13,000 per apartment unit acquired as an estimate of the fair value of the appliances and fixtures inside an apartment unit. The per-apartment unit amount applied depends on the type of apartment building acquired. Depreciation is calculated on the straight-line method over an estimated useful life of five years.
In-Place Leases – The Company considers the value of acquired in-place leases and the amortization period is the average remaining term of each respective in-place acquired lease.
Other Intangible Assets – The Company considers whether it has acquired other intangible assets, including any customer relationship intangibles and the amortization period is the estimated useful life of the acquired intangible asset.
Building – Based on the fair value determined on an “as-if vacant” basis. Depreciation is calculated on the straight-line method over an estimated useful life of thirty years.
Replacements inside an apartment unit such as appliances and carpeting are depreciated over an estimated useful life of five to ten years. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred and significant renovations and improvements that improve and/or extend the useful life of the asset are capitalized over their estimated useful life, generally five to fifteen years. Initial direct leasing costs are expensed as incurred as such expense approximates the deferral and amortization of initial direct leasing costs over the lease terms. Property sales or dispositions are recorded when title transfers to unrelated third parties, contingencies have been removed and sufficient cash consideration has been received by the Company. Upon disposition, the related costs and accumulated depreciation are removed from the respective accounts. Any gain or loss on sale is recognized in accordance with accounting principles generally accepted in the United States.
The Company classifies real estate assets as real estate held for disposition when it is certain a property will be disposed of (see further discussion below).
The Company classifies properties under development and/or expansion and properties in the lease-up phase (including land) as construction-in-progress until construction has been completed and all certificates of occupancy permits have been obtained.
Impairment of Long-Lived Assets
The Company periodically evaluates its long-lived assets, including its investments in real estate, for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment loss is warranted.
For long-lived assets to be held and used, the Company compares the expected future undiscounted cash flows for the long-lived asset against the carrying amount of that asset. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, the Company would record an impairment loss for the difference between the estimated fair value and the carrying amount of the asset.

F-21


For long-lived assets to be disposed of, an impairment loss is recognized when the estimated fair value of the asset, less the estimated cost to sell, is less than the carrying amount of the asset measured at the time that the Company has determined it will sell the asset. Long-lived assets held for disposition and the related liabilities are separately reported, with the long-lived assets reported at the lower of their carrying amounts or their estimated fair values, less their costs to sell, and are not depreciated after reclassification to real estate held for disposition.
Cost Capitalization
See the Real Estate Assets and Depreciation of Investment in Real Estate section for a discussion of the Company’s policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs. In addition, the Company capitalizes an allocation of the payroll and associated costs of employees directly responsible for and who spend their time on the supervision of major capital and/or renovation projects. These costs are reflected on the balance sheet as an increase to depreciable property.
For all development projects, the Company uses its professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. The Company capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend their time on development activities, with capitalization ceasing no later than 90 days following issuance of the certificate of occupancy. These costs are reflected on the balance sheet as construction-in-progress for each specific property. The Company expenses as incurred all payroll costs of on-site employees working directly at our properties, except as noted above on our development properties prior to certificate of occupancy issuance and on specific major renovations at selected properties when additional incremental employees are hired.
Cash and Cash Equivalents
The Company considers all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements purchased with a maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances at one or more institutions typically exceed the Federal Depository Insurance Corporation (“FDIC”) insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk is not significant, as the Company does not anticipate the financial institutions’ non-performance.
Investment Securities
Investment securities are included in other assets in the consolidated balance sheets. These securities are classified as held-to-maturity and carried at amortized cost if management has the positive intent and ability to hold the securities to maturity. Otherwise, the securities are classified as available-for-sale and carried at estimated fair value with unrealized gains and losses included in accumulated other comprehensive (loss), a separate component of shareholders’ equity/partners' capital.
Deferred Financing Costs
Deferred financing costs include fees and costs incurred to obtain the Company’s lines of credit and long-term financings. These costs are amortized over the terms of the related debt. Unamortized financing costs are written off when debt is retired before the maturity date. The accumulated amortization of such deferred financing costs was $37.7 million and $43.9 million at December 31, 2011 and 2010, respectively.
Fair Value of Financial Instruments, Including Derivative Instruments
The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.
In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company seeks to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.
The Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from these instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

F-22


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

Revenue Recognition
Rental income attributable to residential leases is recorded on a straight-line basis, which is not materially different than if it were recorded when due from residents and recognized monthly as it was earned. Leases entered into between a resident and a property for the rental of an apartment unit are generally year-to-year, renewable upon consent of both parties on an annual or monthly basis. Fee and asset management revenue and interest income are recorded on an accrual basis.
Share-Based Compensation
The Company expenses share-based compensation such as restricted shares and share options. Any common share of beneficial interest, $0.01 par value per share (the "Common Shares") issued pursuant to EQR's incentive equity compensation and employee share purchase plans will result in ERPOP issuing units of limited partnership interest ("OP Units") to EQR on a one-for-one basis, with ERPOP receiving the net cash proceeds of such issuances.
The fair value of the option grants are recognized over the vesting period of the options. The fair value for the Company's share options was estimated at the time the share options were granted using the Black-Scholes option pricing model with the primary grant in each year having the following weighted average assumptions:

    
 
 
2011
 
2010
 
2009
Expected volatility (1)
 
27.1%
 
32.4%
 
26.8%
Expected life (2)
 
5 years
 
5 years
 
5 years
Expected dividend yield (3)
 
4.56%
 
4.85%
 
4.68%
Risk-free interest rate (4)
 
2.27%
 
2.29%
 
1.89%
Option valuation per share
 
$8.36
 
$6.18
 
$3.38

(1)
Expected volatility – For 2011, estimated based on the historical ten-year volatility of EQR’s share price measured on a monthly basis. Prior to 2011, estimated based on the historical volatility of EQR's share price, on a monthly basis, for a period matching the expected life of each grant. This change in estimate reflects the Company's belief that the historical ten-year period provides a better estimate of the expected volatility in EQR shares over the expected life of the options.
(2)
Expected life – Approximates the actual weighted average life of all share options granted since the Company went public in 1993.
(3)
Expected dividend yield – Calculated by averaging the historical annual yield on EQR shares for a period matching the expected life of each grant, with the annual yield calculated by dividing actual dividends by the average price of EQR’s shares in a given year.
(4)
Risk-free interest rate – The most current U.S. Treasury rate available prior to the grant date for a period matching the expected life of each grant.
The valuation method and assumptions are the same as those the Company used in accounting for option expense in its consolidated financial statements. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. This model is only one method of valuing options and the Company’s use of this model should not be interpreted as an endorsement of its accuracy. Because the Company’s share options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its share options and the actual value of the options may be significantly different.
Income and Other Taxes
Due to the structure of EQR as a REIT and the nature of the operations of its operating properties, no provision for federal income taxes has been made at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their proportionate share of income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes. The Company has elected Taxable REIT Subsidiary (“TRS”) status for certain of its corporate subsidiaries and as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration

F-23


of any net operating losses.
Deferred tax assets and liabilities applicable to the TRS are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to be recovered or settled. The effects of changes in tax rates on deferred tax assets and liabilities are recognized in earnings in the period enacted. The Company’s deferred tax assets are generally the result of tax affected amortization of goodwill, differing depreciable lives on capitalized assets and the timing of expense recognition for certain accrued liabilities. As of December 31, 2011, the Company has recorded a deferred tax asset of approximately $31.7 million, which is fully offset by a valuation allowance due to the uncertainty in forecasting future TRS taxable income.
The Company provided for income, franchise and excise taxes allocated as follows in the consolidated statements of operations for the years ended December 31, 2011, 2010 and 2009 (amounts in thousands):

    
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Income and other tax expense (benefit) (1)
 
$
728

 
$
292

 
$
2,716

Discontinued operations, net (2)
 
(243
)
 
86

 
(1,073
)
Provision for income, franchise and excise taxes (3)
 
$
485

 
$
378

 
$
1,643


(1)
Primarily includes state and local income, excise and franchise taxes.
(2)
Primarily represents federal income taxes (recovered) on the gains on sales of condominium units owned by a TRS and included in discontinued operations. Also represents state and local income, excise and franchise taxes on operating properties sold and included in discontinued operations.
(3)
All provisions for income tax amounts are current and none are deferred.
The Company’s TRSs have approximately $71.4 million of NOL carryforwards available as of January 1, 2012 that will expire between 2028 and 2031.
During the years ended December 31, 2011, 2010 and 2009, the Company’s tax treatment of dividends and distributions were as follows:

    

 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Tax treatment of dividends and distributions:
 
 

 
 

 
 

Ordinary dividends
 
$
0.667

 
$
0.607

 
$
0.807

Long-term capital gain
 
0.629

 
0.622

 
0.558

Unrecaptured section 1250 gain
 
0.284

 
0.241

 
0.275

Dividends and distributions declared per
 
 

 
 

 
 

Common Share/Unit outstanding
 
$
1.580

 
$
1.470

 
$
1.640

The cost of land and depreciable property, net of accumulated depreciation, for federal income tax purposes as of December 31, 2011 and 2010 was approximately $11.4 billion and $10.9 billion, respectively.
Noncontrolling Interests
A noncontrolling interest in a subsidiary (minority interest) is in most cases an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and separate from the parent company's equity. In addition, consolidated net income is required to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest and the amount of consolidated net income attributable to the parent and the noncontrolling interest are required to be disclosed on the face of the Consolidated Statements of Operations. See Note 3 for further discussion.
Operating Partnership: Net income is allocated to noncontrolling interests based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and EQR. Issuance of additional Common Shares and OP Units changes the ownership interests of both the noncontrolling interests and EQR. Such transactions and the related proceeds are treated as capital transactions.

F-24


Partially Owned Properties: The Company reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Company that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of operations.
Partners' Capital
The "Limited Partners" of ERPOP include various individuals and entities that contributed their properties to ERPOP in exchange for OP Units. The "General Partner" of ERPOP is EQR. Net income is allocated to the Limited Partners based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the Limited Partners by the total OP Units held by the Limited Partners and the General Partner. Issuance of additional Common Shares and OP Units changes the ownership interests of both the Limited Partners and EQR. Such transactions and the related proceeds are treated as capital transactions.
Redeemable Noncontrolling Interests – Operating Partnership / Redeemable Limited Partners
The Company classifies Redeemable Noncontrolling Interests – Operating Partnership / Redeemable Limited Partners in the mezzanine section of the consolidated balance sheets for the portion of OP Units that EQR is required, either by contract or securities law, to deliver registered Common Shares to the exchanging OP Unit holder. The redeemable noncontrolling interest units / redeemable limited partner units are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period.
Use of Estimates
In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Reclassifications
Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year presentation. These reclassifications have not changed the results of operations or equity/capital.
Other
In June 2009, the Financial Accounting Standards Board (“FASB”) issued The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, which superseded all then-existing non-SEC accounting and reporting standards and became the source of authoritative U.S. generally accepted accounting principles recognized by the FASB to be applied by non-governmental entities. The Company adopted the codification as required, effective for the quarter ended September 30, 2009. The adoption of the codification had no impact on the Company’s consolidated results of operations or financial position but changed the way we refer to accounting literature in our reports.
Effective January 1, 2010, in an effort to improve financial standards for transfers of financial assets, more stringent conditions for reporting a transfer of a portion of a financial asset as a sale (e.g. loan participations) are required, the concept of a “qualifying special-purpose entity” and special guidance for guaranteed mortgage securitizations are eliminated, other sale-accounting criteria is clarified and the initial measurement of a transferor’s interest in transferred financial assets is changed. This does not have a material effect on the Company’s consolidated results of operations or financial position.
Effective January 1, 2010, the analysis for identifying the primary beneficiary of a Variable Interest Entity (“VIE”) has been simplified by replacing the previous quantitative-based analysis with a framework that is based more on qualitative judgments. The analysis requires the primary beneficiary of a VIE to be identified as the party that both (a) has the power to direct the activities of a VIE that most significantly impact its economic performance and (b) has an obligation to absorb losses or a right to receive benefits that could potentially be significant to the VIE. For the Company, this includes certain consolidated development partnerships as the Company provides substantially all of the capital for these ventures (other than third party mortgage debt, if any). For the Company, these requirements affected only disclosures and had no impact on the Company’s consolidated results of operations or financial position. See Note 6 for further discussion.

The Company is the controlling partner in various consolidated partnerships owning 21 properties and 3,916 apartment units and various completed and uncompleted development properties having a noncontrolling interest book value of $74.3 million

F-25


at December 31, 2011. The Company is required to make certain disclosures regarding noncontrolling interests in consolidated limited-life subsidiaries. Of the consolidated entities described above, the Company is the controlling partner in limited-life partnerships owning six properties. These six partnership agreements contain provisions that require the partnerships to be liquidated through the sale of their assets upon reaching a date specified in each respective partnership agreement. The Company, as controlling partner, has an obligation to cause the property owning partnerships to distribute the proceeds of liquidation to the Noncontrolling Interests in these Partially Owned Properties only to the extent that the net proceeds received by the partnerships from the sale of their assets warrant a distribution based on the partnership agreements. As of December 31, 2011, the Company estimates the value of Noncontrolling Interest distributions for these six properties would have been approximately $33.8 million (“Settlement Value”) had the partnerships been liquidated. This Settlement Value is based on estimated third party consideration realized by the partnerships upon disposition of the six Partially Owned Properties and is net of all other assets and liabilities, including yield maintenance on the mortgages encumbering the properties, that would have been due on December 31, 2011 had those mortgages been prepaid. Due to, among other things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the Noncontrolling Interests in the Company's Partially Owned Properties is subject to change. To the extent that the partnerships' underlying assets are worth less than the underlying liabilities, the Company has no obligation to remit any consideration to the Noncontrolling Interests in these Partially Owned Properties.
Effective January 1, 2011, companies are required to separately disclose purchases, sales, issuances and settlements on a gross basis in the reconciliation of recurring Level 3 fair value measurements. This does not have a material effect on the Company’s consolidated results of operations or financial position. See Note 9 for further discussion.

Effective January 1, 2012, companies will be required to separately disclose the amounts and reasons for any transfers of assets and liabilities into and out of Level 1 and Level 2 of the fair value hierarchy. For fair value measurements using significant unobservable inputs (Level 3), companies will be required to disclose quantitative information about the significant unobservable inputs used for all Level 3 measurements and a description of the Company's valuation processes in determining fair value. In addition, companies will be required to provide a qualitative discussion about the sensitivity of recurring Level 3 measurements to changes in the unobservable inputs disclosed, including the interrelationship between inputs. Companies will also be required to disclose information about when the current use of a non-financial asset measured at fair value differs from its highest and best use and the hierarchy classification for items whose fair value is not recorded on the balance sheet but is disclosed in the notes. The Company does not expect this will have a material effect on its consolidated results of operations or financial position.

Effective January 1, 2009, issuers of certain convertible debt instruments that may be settled in cash on conversion were required to separately account for the liability and equity components of the instrument in a manner that reflects each issuer's nonconvertible debt borrowing rate. As the Company was required to apply this retrospectively, the accounting for its $650.0 million 3.85% convertible unsecured notes that were issued in August 2006 with a final maturity in August 2026 was affected. On August 18, 2011, the Company redeemed these notes at par ($482.5 million was outstanding on August 18, 2011) and no premium was paid. The Company recognized $11.8 million, $18.6 million and $20.6 million in interest expense related to the stated coupon rate of 3.85% for the years ended December 31, 2011, 2010 and 2009, respectively. The amount of the conversion option as of the date of issuance calculated by the Company using a 5.80% effective interest rate was $44.3 million and was amortized to interest expense over the expected life of the convertible notes (through the first put date on August 18, 2011). Total amortization of the cash discount and conversion option discount on the unsecured notes resulted in a reduction to earnings of approximately $5.0 million, $7.8 million and $10.6 million, respectively, or $0.02 per share/Unit, $0.03 per share/Unit and $0.04 per share/Unit, respectively, for the years ended December 31, 2011, 2010 and 2009. In addition, the Company decreased the January 1, 2009 balance of retained earnings (included in general partner's capital in the Operating Partnership's financial statements) by $27.0 million, decreased the January 1, 2009 balance of notes by $17.3 million and increased the January 1, 2009 balance of paid in capital (included in general partner's capital in the Operating Partnership's financial statements) by $44.3 million. The carrying amount of the conversion option remaining in paid in capital (included in general partner's capital in the Operating Partnership's financial statements) was $44.3 million at both December 31, 2011 and 2010. The cash and conversion option discounts were fully amortized at December 31, 2011 and the unamortized cash and conversion option discounts totaled $5.0 million at December 31, 2010.

3.
Equity, Capital and Other Interests

Equity and Redeemable Noncontrolling Interests of Equity Residential
The following tables present the changes in the Company’s issued and outstanding Common Shares and “Units” (which includes OP Units and Long-Term Incentive Plan (“LTIP”) Units) for the years ended December 31, 2011, 2010 and 2009:

    

F-26


 
 
2011
 
2010
 
2009
Common Shares
 
 

 
 

 
 

Common Shares outstanding at January 1,
 
290,197,242

 
279,959,048

 
272,786,760

Common Shares Issued:
 
 

 
 

 
 

Conversion of Series E Preferred Shares
 

 
328,363

 
612

Conversion of Series H Preferred Shares
 

 
32,516

 

Conversion of OP Units
 
341,594

 
884,472

 
2,676,002

Issuance of Common Shares
 
3,866,666

 
6,151,198

 
3,497,300

Exercise of share options
 
2,945,948

 
2,506,645

 
422,713

Employee Share Purchase Plan (ESPP)
 
113,107

 
157,363

 
324,394

Restricted share grants, net
 
145,616

 
235,767

 
298,717

Common Shares Other:
 
 

 
 

 
 

Conversion of restricted shares to LTIP Units
 
(101,988
)
 

 

Repurchased and retired
 

 
(58,130
)
 
(47,450
)
Common Shares outstanding at December 31,
 
297,508,185

 
290,197,242

 
279,959,048

Units
 
 

 
 

 
 

Units outstanding at January 1,
 
13,612,037

 
14,197,969

 
16,679,777

LTIP Units, net
 
120,112

 
92,892

 
154,616

OP Units issued through acquisitions/consolidations
 

 
205,648

 
32,061

Conversion of restricted shares to LTIP Units
 
101,988

 

 

Conversion of Series B Junior Preference Units
 

 

 
7,517

Conversion of OP Units to Common Shares
 
(341,594
)
 
(884,472
)
 
(2,676,002
)
Units outstanding at December 31,
 
13,492,543

 
13,612,037

 
14,197,969

Total Common Shares and Units outstanding at December 31,
 
311,000,728

 
303,809,279

 
294,157,017

Units Ownership Interest in Operating Partnership
 
4.3
%
 
4.5
%
 
4.8
%
LTIP Units Issued:
 
 

 
 

 
 

Issuance – per unit
 

 

 
$0.50
Issuance – contribution valuation
 

 

 
$0.1 million

OP Units Issued:
 
 

 
 

 
 

Acquisitions/consolidations – per unit
 

 
$40.09
 
$26.50
Acquisitions/consolidations – valuation
 

 
$8.2 million

 
$0.8 million

Conversion of Series B Junior Preference Units – per unit
 

 

 
$24.50
Conversion of Series B Junior Preference Units – valuation
 

 

 
$0.2 million

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 LTIP Units, are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain exceptions (including the “book-up” requirements of LTIP Units), the Noncontrolling Interests – Operating Partnership may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Noncontrolling Interests – Operating Partnership (including redeemable interests) is allocated based on the number of Noncontrolling Interests – Operating Partnership Units in total in proportion to the number of Noncontrolling Interests – Operating Partnership Units in total plus the number of Common Shares. Net income is allocated to the Noncontrolling Interests – Operating Partnership based on the weighted average ownership percentage during the period.
The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Noncontrolling Interests – Operating Partnership Units requesting an exchange of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Noncontrolling Interests – Operating Partnership Units for cash, EQR is obligated to deliver Common Shares to the exchanging holder of the Noncontrolling Interests – Operating Partnership Units.
The Noncontrolling Interests – Operating Partnership Units are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests – Operating Partnership are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership”. Instruments that require settlement in registered shares can not 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

F-27


in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Noncontrolling Interests – Operating Partnership are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Noncontrolling Interests – Operating Partnership Units that are classified in permanent equity at December 31, 2011 and 2010.
The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership Units in proportion to the number of Noncontrolling Interests – Operating Partnership Units in total. Such percentage of the total carrying value of Units which is ascribed to the Redeemable Noncontrolling Interests – Operating Partnership is then adjusted to the greater of carrying value or fair market value as described above. As of December 31, 2011, the Redeemable Noncontrolling Interests – Operating Partnership have a redemption value of approximately $416.4 million, which represents the value of Common Shares that would be issued in exchange with the Redeemable Noncontrolling Interests – Operating Partnership Units.
The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership for the years ended December 31, 2011, 2010 and 2009, respectively (amounts in thousands):

        
 
 
2011
 
2010
 
2009
Balance at January 1,
 
$
383,540

 
$
258,280

 
$
264,394

Change in market value
 
22,714

 
129,918

 
14,544

Change in carrying value
 
10,150

 
(4,658
)
 
(20,658
)
Balance at December 31,
 
$
416,404

 
$
383,540

 
$
258,280

Net proceeds from EQR Common Share and Preferred Share (see definition below) offerings are contributed by EQR to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the Preferred Shares issued in the equity offering). As a result, the net offering proceeds from Common Shares and Preferred Shares are allocated between shareholders’ equity and Noncontrolling Interests – Operating Partnership to account for the change in their respective percentage ownership of the underlying equity of ERPOP.
The Company’s declaration of trust authorizes it to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares.
The following table presents the Company’s issued and outstanding Preferred Shares as of December 31, 2011 and 2010:
 
 
 
 
 
 
Amounts in thousands
 
 
Redemption
Date (1)
 
Annual
Dividend per
Share (2)
 
December 31,
2011
 
December 31,
2010
Preferred Shares of beneficial interest, $0.01 par value;
  100,000,000 shares authorized
 
 
 
 
 
 
 
 
8.29% Series K Cumulative Redeemable Preferred; liquidation
  value $50 per share; 1,000,000 shares issued and outstanding
  at December 31, 2011 and December 31, 2010

 
12/10/26
 

$4.145

 
$
50,000

 
$
50,000

6.48% Series N Cumulative Redeemable Preferred; liquidation
  value $250 per share; 600,000 shares issued and outstanding
  at December 31, 2011 and December 31, 2010 (3)

 
06/19/08
 

$16.20

 
150,000

 
150,000

 
 
 
 
 
 
$
200,000

 
$
200,000


(1)
On or after the redemption date, redeemable preferred shares (Series K and N) may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation price per share, plus accrued and unpaid distributions, if any.
(2)
Dividends on all series of Preferred Shares are payable quarterly at various pay dates. The dividend listed for Series N is a Preferred Share rate and the equivalent Depositary Share annual dividend is $1.62 per share.
(3)
The Series N Preferred Shares have a corresponding depositary share that consists of ten times the number of shares and one-tenth the liquidation value and dividend per share.



F-28


Capital and Redeemable Limited Partners of ERP Operating Limited Partnership
The following tables present the changes in the Operating Partnership's issued and outstanding Units and in the limited partners' Units for the years ended December 31, 2011, 2010 and 2009:
    
 
 
2011
 
2010
 
2009
General and Limited Partner Units
 
 

 
 

 
 

General and Limited Partner Units outstanding at January 1,
 
303,809,279

 
294,157,017

 
289,466,537

Issued to General Partner:
 


 


 


Conversion of Series E Preference Units
 

 
328,363

 
612

Conversion of Series H Preference Units
 

 
32,516

 

Issuance of OP Units
 
3,866,666

 
6,151,198

 
3,497,300

Exercise of EQR share options
 
2,945,948

 
2,506,645

 
422,713

EQR's Employee Share Purchase Plan (ESPP)
 
113,107

 
157,363

 
324,394

EQR's restricted share grants, net
 
145,616

 
235,767

 
298,717

Issued to Limited Partners:
 
 
 
 
 
 
LTIP Units, net
 
120,112

 
92,892

 
154,616

OP Units issued through acquisitions/consolidations
 

 
205,648

 
32,061

Conversion of Series B Junior Preference Units
 

 

 
7,517

OP Units Other:
 
 

 
 

 
 

Repurchased and retired
 

 
(58,130
)
 
(47,450
)
General and Limited Partner Units outstanding at December 31,
 
311,000,728

 
303,809,279

 
294,157,017

Limited Partner Units
 
 

 
 

 
 

Limited Partner Units outstanding at January 1,
 
13,612,037

 
14,197,969

 
16,679,777

Limited Partner LTIP Units, net
 
120,112

 
92,892

 
154,616

Limited Partner OP Units issued through acquisitions/consolidations
 

 
205,648

 
32,061

Conversion of EQR restricted shares to LTIP Units
 
101,988

 

 

Conversion of Series B Junior Preference Units
 

 

 
7,517

Conversion of Limited Partner OP Units to EQR Common Shares
 
(341,594
)
 
(884,472
)
 
(2,676,002
)
Limited Partner Units outstanding at December 31,
 
13,492,543

 
13,612,037

 
14,197,969

Limited Partner Units Ownership Interest in Operating Partnership
 
4.3
%
 
4.5
%
 
4.8
%
Limited Partner LTIP Units Issued:
 
 

 
 

 
 

Issuance – per unit
 

 

 
$0.50
Issuance – contribution valuation
 

 

 
$0.1 million

Limited Partner OP Units Issued:
 
 

 
 

 
 

Acquisitions/consolidations – per unit
 

 
$40.09
 
$26.50
Acquisitions/consolidations – valuation
 

 
$8.2 million

 
$0.8 million

Conversion of Series B Junior Preference Units – per unit
 

 

 
$24.50
Conversion of Series B Junior Preference Units – valuation
 

 

 
$0.2 million

The Limited Partners of the Operating Partnership as of December 31, 2011 include various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of LTIP Units. Subject to certain exceptions (including the “book-up” requirements of LTIP Units), Limited Partners may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Limited Partner Units (including redeemable interests) is allocated based on the number of Limited Partner Units in total in proportion to the number of Limited Partner Units in total plus the number of General Partner Units. Net income is allocated to the Limited Partner Units based on the weighted average ownership percentage during the period.
The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Limited Partner Units requesting an exchange of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Limited Partner Units for cash, EQR is obligated to deliver Common Shares to the exchanging limited partner.
The Limited Partner Units are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, Limited Partner Units are differentiated and referred to as

F-29


“Redeemable Limited Partner Units”. Instruments that require settlement in registered shares can not be classified in permanent equity as it is not always completely within an issuer's control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Limited Partner Units are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Limited Partner Units that are classified in permanent equity at December 31, 2011 and 2010.
The carrying value of the Redeemable Limited Partner Units is allocated based on the number of Redeemable Limited Partner Units in proportion to the number of Limited Partner Units in total. Such percentage of the total carrying value of Limited Partner Units which is ascribed to the Redeemable Limited Partner Units is then adjusted to the greater of carrying value or fair market value as described above. As of December 31, 2011, the Redeemable Limited Partner Units have a redemption value of approximately $416.4 million, which represents the value of Common Shares that would be issued in exchange with the Redeemable Limited Partner Units.
The following table presents the changes in the redemption value of the Redeemable Limited Partners for the years ended December 31, 2011, 2010 and 2009, respectively (amounts in thousands):

        
 
 
2011
 
2010
 
2009
Balance at January 1,
 
$
383,540

 
$
258,280

 
$
264,394

Change in market value
 
22,714

 
129,918

 
14,544

Change in carrying value
 
10,150

 
(4,658
)
 
(20,658
)
Balance at December 31,
 
$
416,404

 
$
383,540

 
$
258,280

EQR contributes all net proceeds from its various equity offerings (including proceeds from exercise of options for Common Shares) to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the preferred shares issued in the equity offering).
The following table presents the Operating Partnership's issued and outstanding “Preference Units” as of December 31, 2011 and 2010:
 
 
 
 
 
 
Amounts in thousands
 
 
Redemption
Date (1)
 
Annual
Dividend per
Unit (2)
 
December 31,
2011
 
December 31,
2010
Preference Units:
 
 
 
 

 
 

 
 

8.29% Series K Cumulative Redeemable Preference Units;
  liquidation value $50 per unit; 1,000,000 units issued and
  outstanding at December 31, 2011 and December 31, 2010
 
12/10/26
 

$4.145

 
$
50,000

 
$
50,000

6.48% Series N Cumulative Redeemable Preference Units;
  liquidation value $250 per unit; 600,000 units issued and
  outstanding at December 31, 2011 and December 31, 2010 (3)
 
06/19/08
 

$16.20

 
150,000

 
150,000

 
 
 
 
 

 
$
200,000

 
$
200,000


(1)
On or after the redemption date, redeemable preference units (Series K and N) may be redeemed for cash at the option of the Operating Partnership, in whole or in part, at a redemption price equal to the liquidation price per unit, plus accrued and unpaid distributions, if any, in conjunction with concurrent redemption of the corresponding Company Preferred Shares.
(2)
Dividends on all series of Preference Units are payable quarterly at various pay dates. The dividend listed for Series N is a Preference Unit rate and the equivalent depositary unit annual dividend is $1.62 per unit.
(3)
The Series N Preference Units have a corresponding depositary unit that consists of ten times the number of units and one-tenth the liquidation value and dividend per unit.
Other
An unlimited amount of equity and debt securities remains available for issuance by EQR and ERPOP under effective shelf registration statements filed with the SEC. Most recently, EQR and ERPOP filed a universal shelf registration statement for an unlimited amount of equity and debt securities that became automatically effective upon filing with the SEC in October 2010

F-30


and expires on October 15, 2013. As of December 31, 2011, issuances under the ATM (see definition below) share offering program are limited to 9.2 million additional shares. Per the terms of ERPOP's partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).
In September 2009, the Company announced the establishment of an At-The-Market (“ATM”) share offering program which would allow EQR to sell up to 17.0 million Common Shares (later increased by 5.7 million Common Shares) from time to time over the next three years into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOP's partnership agreement, EQR contributes the net proceeds from all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis). EQR has 9.2 million Common Shares remaining available for issuance under the ATM program as of December 31, 2011. See Note 18 for further discussion on shares available under this program.
During the year ended December 31, 2011, EQR issued approximately 3.9 million Common Shares at an average price of $52.23 per share for total consideration of approximately $201.9 million through the ATM program. Concurrent with these transactions, ERPOP issued approximately 3.9 million OP Units to EQR. As of December 31, 2011, transactions to issue approximately 0.5 million of the 3.9 million Common Shares had not yet settled. As of December 31, 2011, the Company increased the number of Common Shares issued and outstanding by this amount and recorded a receivable of approximately $28.5 million included in other assets on the consolidated balance sheets. During the year ended December 31, 2010, EQR issued approximately 6.2 million Common Shares at an average price of $47.45 per share for total consideration of approximately $291.9 million through the ATM program. Concurrent with these transactions, ERPOP issued approximately 6.2 million OP Units to EQR. During the year ended December 31, 2009, EQR issued approximately 3.5 million Common Shares at an average price of $35.38 per share for total consideration of approximately $123.7 million through the ATM program. Concurrent with these transactions, ERPOP issued approximately 3.5 million OP Units to EQR. As of December 31, 2009, transactions to issue approximately 1.1 million of the 3.5 million Common Shares had not yet settled. As of December 31, 2009, the Company increased the number of Common Shares issued and outstanding by this amount and recorded a receivable of approximately $37.6 million included in other assets on the consolidated balance sheets.
On June 16, 2011, the shareholders of EQR approved the Company's 2011 Share Incentive Plan (the “2011 Plan”). The 2011 Plan reserved 12,980,741 Common Shares for issuance. In conjunction with the approval of the 2011 Plan, no further awards may be granted under the 2002 Share Incentive Plan. The 2011 Plan expires on June 16, 2021. See Note 12 for further discussion.
EQR has a share repurchase program authorized by the Board of Trustees under which it has authorization to repurchase up to $464.6 million of its shares as of December 31, 2011. No shares were repurchased during the year ended December 31, 2011.
During the year ended December 31, 2010, EQR repurchased 58,130 of its Common Shares at an average price of $32.46 per share for total consideration of $1.9 million. These shares were retired subsequent to the repurchases. Concurrent with these transactions, ERPOP repurchased and retired 58,130 OP Units previously issued to EQR. All of the shares repurchased during the year ended December 31, 2010 were repurchased from employees at the then current market prices to cover the minimum statutory tax withholding obligations related to the vesting of employees' restricted shares.
During the year ended December 31, 2009, EQR repurchased 47,450 of its Common Shares at an average price of $23.69 per share for total consideration of $1.1 million. These shares were retired subsequent to the repurchases. Concurrent with these transactions, ERPOP repurchased and retired 47,450 OP Units previously issued to EQR. All of the shares repurchased during the year ended December 31, 2009 were repurchased from employees at the then current market prices to cover the minimum statutory tax withholding obligations related to the vesting of employees' restricted shares.
On July 30, 2009, the Operating Partnership elected to convert all 7,367 Series B Junior Convertible Preference Units into 7,517 OP Units. The actual preference unit dividends declared for the period outstanding in 2009 was $1.17 per unit.
On March 31, 2010, the Operating Partnership issued 188,571 OP Units at a price of $39.15 per OP Unit for total valuation of $7.4 million as partial consideration for the acquisition of one rental property. As the value of the OP Units issued was agreed by contract to be $35.00 per OP Unit, the difference between the contracted value and fair value (the closing price of Common Shares on the closing date) was recorded as an increase to the purchase price.
During the year ended December 31, 2011, the Company acquired all of its partners' interests in three consolidated partially owned properties consisting of 1,351 apartment units for $12.8 million. In conjunction with these transactions, the Company reduced paid in capital (included in general partner's capital in the Operating Partnership's financial statements) by $4.8 million and Noncontrolling Interests – Partially Owned Properties by $8.0 million.
During the year ended December 31, 2010, the Company acquired all of its partners' interests in two consolidated partially owned properties consisting of 432 apartment units, one consolidated partially owned development project and one consolidated

F-31


partially owned land parcel for $0.7 million. One of these partially owned property buyouts was funded through the issuance of 1,129 OP Units valued at $50,000. The Company also increased its ownership in three consolidated partially owned properties through the buyout of certain equity interests which were funded through the issuance of 15,948 OP Units valued at $0.8 million and cash payments of $15.3 million. In conjunction with these transactions, the Company reduced paid in capital (included in general partner's capital in the Operating Partnership's financial statements) by $16.9 million and other liabilities by $0.2 million and increased Noncontrolling Interests – Partially Owned Properties by $0.2 million.
During the year ended December 31, 2009, the Company acquired all of its partners' interests in five consolidated partially owned properties consisting of 1,587 apartment units for $9.2 million. In addition, the Company also acquired a portion of the outside partner interests in two consolidated partially owned properties, one funded using cash of $2.1 million and the other funded through the issuance of 32,061 OP Units valued at $0.8 million. In conjunction with these transactions, the Company reduced paid in capital (included in general partner's capital in the Operating Partnership's financial statements) by $1.5 million and Noncontrolling Interests – Partially Owned Properties by $11.7 million.

4.
Real Estate
The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of December 31, 2011 and 2010 (amounts in thousands):

 
 
2011
 
2010
Land
 
$
4,367,816

 
$
4,110,275

Depreciable property:
 
 

 
 

Buildings and improvements
 
14,262,616

 
13,995,121

Furniture, fixtures and equipment
 
1,292,124

 
1,231,391

Projects under development:
 
 

 
 

Land
 
75,646

 
28,260

Construction-in-progress
 
84,544

 
102,077

Land held for development:
 
 

 
 

Land
 
299,096

 
198,465

Construction-in-progress
 
26,104

 
36,782

Investment in real estate
 
20,407,946

 
19,702,371

Accumulated depreciation
 
(4,539,583
)
 
(4,337,357
)
Investment in real estate, net
 
$
15,868,363

 
$
15,365,014


During the year ended December 31, 2011, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):

 
Properties
 
Apartment Units
 
Purchase Price
 
 
 
 
 
 
Rental Properties – Consolidated
21

 
6,198

 
$
1,383,048

Land Parcels (seven) (1) (2)

 

 
202,313

Other (3)

 

 
11,750

Total
21

 
6,198

 
$
1,597,111


(1)
Includes a vacant land parcel at 400 Park Avenue South in New York City acquired jointly by the Company and Toll Brothers (NYSE: TOL). The Company's and Toll Brothers' allocated portions of the purchase price were approximately $76.1 million and $57.9 million, respectively. Until the core and shell of the building is complete, the building and land will be owned jointly and are required to be consolidated on the Company's balance sheet. Thereafter, the Company will solely own and control the rental portion of the building (floors 2-22) and Toll Brothers will solely own and control the for sale portion of the building (floors 23-40). Once the core and shell are complete, the Toll Brothers' portion of the property will be deconsolidated from the Company's balance sheet.
(2)
Includes entry into a long-term ground lease for a land parcel at 170 Amsterdam Avenue in New York City.
(3)
Represents the acquisition of a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle for potential redevelopment.

During the year ended December 31, 2010, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):

F-32



 
Properties
 
Apartment Units
 
Purchase Price
 
 
 
 
 
 
Rental Properties – Consolidated
16

 
4,445

 
$
1,485,701

Land Parcels (six)

 

 
68,869

Total
16

 
4,445

 
$
1,554,570


In addition to the properties discussed above, the Company acquired the 75% equity interest it did not own in seven previously unconsolidated properties containing 1,811 apartment units with a real estate value of $105.1 million.
During the year ended December 31, 2011, the Company disposed of the following to unaffiliated parties (sales price in thousands):

 
Properties
 
Apartment Units
 
Sales Price
 
 
 
 
 
 
Rental Properties – Consolidated
47

 
14,345

 
$
1,482,239

Land Parcel (one) (1)

 

 
22,786

Total
47

 
14,345

 
$
1,505,025


(1)
Represents the sale of a land parcel, on which the Company no longer planned to develop, in suburban Washington, D.C.
The Company recognized a net gain on sales of discontinued operations of approximately $826.5 million and a net gain on sales of land parcels of approximately $4.2 million on the above sales.
During the year ended December 31, 2010, the Company disposed of the following to unaffiliated parties (sales price in thousands):

 
Properties
 
Apartment Units
 
Sales Price
Rental Properties:
 

 
 

 
 

Consolidated
35

 
7,171

 
$
718,352

Unconsolidated (1)
27

 
6,275

 
417,779

Land Parcel (one)

 

 
4,000

Condominium Conversion Properties
1

 
2

 
360

Total
63

 
13,448

 
$
1,140,491


(1)
The Company owned a 25% interest in these unconsolidated rental properties. Sales price listed is the gross sales price.
The Company recognized a net gain on sales of discontinued operations of approximately $298.0 million, a net gain on sales of unconsolidated entities of approximately $28.1 million and a net loss on sales of land parcels of approximately $1.4 million on the above sales.

5.
Commitments to Acquire/Dispose of Real Estate
In addition to the land parcels that were subsequently acquired as discussed in Note 18, the Company has entered into separate agreements to acquire the following (purchase price in thousands):

        
 
Properties
 
Apartment Units
 
Purchase Price
Rental Properties
2

 
648

 
$
241,000

Land Parcels (three)

 

 
53,200

Total
2

 
648

 
$
294,200

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


F-33


        
 
Properties
 
Apartment Units
 
Sales Price
Rental Properties
6

 
1,169

 
$
127,075

Total
6

 
1,169

 
$
127,075

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

6.
Investments in Partially Owned Entities
The Company has co-invested in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). The following tables and information summarize the Company’s investments in partially owned entities as of December 31, 2011 (amounts in thousands except for project and apartment unit amounts):


F-34


 
 
Consolidated
 
 
Development Projects (VIEs) (4)
 
 
 
 
 
 
Held for
and/or Under
Development
 
Completed
and
Stabilized
 
Other
 
Total
 
 
 
 
 
 
 
 
 
Total projects (1)
 

 
2

 
19

 
21


 

 

 

 

Total apartment units (1)
 

 
441

 
3,475

 
3,916


 

 

 

 

Balance sheet information at 12/31/11 (at 100%):
 

 

 

 

ASSETS
 

 

 

 

Investment in real estate
 
$
160,732

 
$
114,584

 
$
449,140

 
$
724,456

Accumulated depreciation
 

 
(12,228
)
 
(144,305
)
 
(156,533
)
Investment in real estate, net
 
160,732

 
102,356

 
304,835

 
567,923

Cash and cash equivalents
 
1,638

 
1,503

 
15,578

 
18,719

Deposits – restricted
 
43,970

 
2,272

 
15,177

 
61,419

Escrow deposits – mortgage
 

 
60

 

 
60

Deferred financing costs, net
 

 
65

 
1,179

 
1,244

Other assets
 
3,554

 
140

 
144

 
3,838

       Total assets
 
$
209,894

 
$
106,396

 
$
336,913

 
$
653,203


 

 

 

 

LIABILITIES AND EQUITY/CAPITAL
 

 

 

 

Mortgage notes payable
 
$

 
$
33,419

 
$
200,337

 
$
233,756

Accounts payable & accrued expenses
 
202

 
1,073

 
818

 
2,093

Accrued interest payable
 

 
104

 
782

 
886

Other liabilities
 
1,275

 
79

 
1,139

 
2,493

Security deposits
 

 
102

 
1,491

 
1,593

       Total liabilities
 
1,477

 
34,777

 
204,567

 
240,821


 

 

 

 

Noncontrolling Interests – Partially Owned Properties
 
78,090

 
1,079

 
(4,863
)
 
74,306

Company equity/General and Limited Partners' Capital
 
130,327

 
70,540

 
137,209

 
338,076

       Total equity/capital
 
208,417

 
71,619

 
132,346

 
412,382

       Total liabilities and equity/capital
 
$
209,894

 
$
106,396

 
$
336,913

 
$
653,203


 

 

 

 

Debt – Secured (2):
 

 

 

 

       Company/Operating Partnership Ownership (3)
 
$

 
$
33,419

 
$
159,068

 
$
192,487

       Noncontrolling Ownership
 

 

 
41,269

 
41,269

Total (at 100%)
 
$


$
33,419


$
200,337


$
233,756



F-35


 
 
Consolidated
 
 
Development Projects (VIEs) (4)
 
 
 
 
 
 
Held for
and/or Under
Development
 
Completed
and
Stabilized
 
Other
 
Total
Operating information for the year
ended 12/31/11 (at 100%):
 
 

 
 

 
 

 
 

Operating revenue
 
$

 
$
8,961

 
$
57,916

 
$
66,877

Operating expenses
 
249

 
3,868

 
19,115

 
23,232

Net operating (loss) income
 
(249
)
 
5,093

 
38,801

 
43,645

Depreciation
 

 
4,163

 
15,117

 
19,280

General and administrative/other
 
152

 
6

 
123

 
281

Operating (loss) income
 
(401
)
 
924

 
23,561

 
24,084

Interest and other income
 
6

 
6

 
10

 
22

Other expenses
 
(487
)
 

 
(39
)
 
(526
)
Interest:
 
 

 
 

 
 

 
 

Expense incurred, net
 
(399
)
 
(3,229
)
 
(11,295
)
 
(14,923
)
Amortization of deferred financing costs
 

 
(382
)
 
(366
)
 
(748
)
(Loss) income before income and other taxes and net
    gains on sales of land parcels and discontinued
    operations
 
(1,281
)
 
(2,681
)
 
11,871

 
7,909

Income and other tax (expense) benefit
 
(57
)
 

 
(6
)
 
(63
)
Net gain on sales of land parcels
 
4,217

 

 

 
4,217

Net gain on sales of discontinued operations
 
169

 

 
13,259

 
13,428

Net income (loss)
 
$
3,048

 
$
(2,681
)
 
$
25,124

 
$
25,491


(1)
Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed.
(2)
All debt is non-recourse to the Company.
(3)
Represents the Company’s/Operating Partnership's current economic ownership interest.
(4)
A development project with a noncontrolling interest balance of $75.8 million is not a VIE.

The Company admitted an 80% institutional partner to two separate entities/transactions (one in December 2010 and the other in August 2011), each owning a developable land parcel, in exchange for $40.1 million in cash and retained a 20% equity interest in both of these entities. These land parcels are now unconsolidated. Total project costs are approximately $232.8 million and construction will be predominantly funded with two separate long-term, non-recourse secured loans from the partner. While the Company is the managing member of both of the joint ventures, is responsible for constructing both of the projects and has given certain construction cost overrun guarantees, all major decisions are made jointly, the large majority of funding is provided by the partner and the partner has significant involvement in and oversight of the ongoing projects, neither of which is a VIE. The Company's remaining funding obligations are currently estimated at $5.4 million.

In December 2011, the Company and Toll Brothers (NYSE: TOL) jointly acquired a vacant land parcel at 400 Park Avenue South in New York City. The Company's and Toll Brothers' allocated portions of the purchase price were approximately $76.1 million and $57.9 million, respectively. Until the core and shell of the building is complete, the building and land will be owned jointly and are required to be consolidated on the Company's balance sheet. Thereafter, the Company will solely own and control the rental portion of the building (floors 2-22) and Toll Brothers will solely own and control the for sale portion of the building (floors 23-40). Once the core and shell are complete, the Toll Brothers' portion of the property will be deconsolidated from the Company's balance sheet. The acquisition was financed through contributions by the Company and Toll Brothers of approximately $102.5 million and $75.7 million, respectively, which included the land purchase noted above and taxes and fees of $0.4 million and $0.3 million, respectively. Restricted deposits were made to the venture of $26.0 million and $17.5 million, respectively, to collateralize construction guarantees. As of December 31, 2011, Toll Brothers' noncontrolling interest balance totaled $75.8 million.

During the year ended December 31, 2010, the Company acquired the 75% equity interest it did not own in seven previously unconsolidated properties containing 1,811 apartment units in exchange for an approximate $30.0 million payment to its partner. In addition, the Company repaid the net $70.0 million mortgage loan, which was to mature on May 1, 2010, concurrent with closing using proceeds drawn from the Company's line of credit. The Company also sold its 25% equity interest in the remaining 24 unconsolidated properties containing 5,635 apartment units in exchange for an approximate $25.4 million payment

F-36


from its partner and the related $264.8 million in non-recourse mortgage debt was extinguished by the partner at closing.
The Company is the controlling partner in various consolidated partnership properties and development properties having a noncontrolling interest book value of $74.3 million at December 31, 2011. The Company has identified certain development partnerships as VIEs as the Company provides substantially all of the capital for these ventures (other than third party mortgage debt, if any) despite the fact that each partner legally owns 50% of each venture. The Company is the primary beneficiary as it exerts the most significant power over the ventures, absorbs the majority of the expected losses and has the right to receive a majority of the expected residual returns. The assets net of liabilities of the Company’s VIEs are restricted in their use to the specific VIE to which they relate and are not available for general corporate use. The Company does not have any unconsolidated VIEs.

7.
Deposits – Restricted
The following table presents the Company’s restricted deposits as of December 31, 2011 and 2010 (amounts in thousands):

 
 
December 31, 2011
 
December 31, 2010
Tax–deferred (1031) exchange proceeds
 
$
53,668

 
$
103,887

Earnest money on pending acquisitions
 
7,882

 
9,264

Restricted deposits on debt
 
2,370

 
18,966

Restricted deposits on real estate investments
 
43,970

 

Resident security and utility deposits
 
40,403

 
40,745

Other
 
3,944

 
8,125

Totals
 
$
152,237

 
$
180,987


8.
Debt
EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. EQR guarantees the Operating Partnership's $500.0 million unsecured senior term loan and also guarantees the Operating Partnership's revolving credit facility up to the maximum amount and for the full term of the facility.

Mortgage Notes Payable
As of December 31, 2011, the Company had outstanding mortgage debt of approximately $4.1 billion.
During the year ended December 31, 2011, the Company:
Repaid $991.7 million of mortgage loans;
Obtained $190.9 million of new mortgage loan proceeds; and
Assumed $158.2 million of mortgage debt on five acquired properties.
The Company recorded approximately $4.4 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2011 as additional interest expense related to debt extinguishment of mortgages.
As of December 31, 2011, the Company had $455.6 million of secured debt subject to third party credit enhancement.
As of December 31, 2011, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through September 1, 2048. At December 31, 2011, the interest rate range on the Company’s mortgage debt was 0.05% to 11.25%. During the year ended December 31, 2011, the weighted average interest rate on the Company’s mortgage debt was 4.84%.
The historical cost, net of accumulated depreciation, of encumbered properties was $4.9 billion and $5.6 billion at December 31, 2011 and 2010, respectively.
As of December 31, 2010, the Company had outstanding mortgage debt of approximately $4.8 billion.

During the year ended December 31, 2010, the Company:
Repaid $652.1 million of mortgage loans;
Obtained $173.6 million of new mortgage loan proceeds;

F-37


Assumed $359.1 million of mortgage debt on seven acquired properties;
Was released from $40.0 million of mortgage debt assumed by the purchaser on two disposed properties; and
Assumed $112.6 million of mortgage debt on seven previously unconsolidated properties and repaid the net $70.0 million mortgage loan (net of $42.6 million of cash collateral held by the lender) concurrent with closing using proceeds drawn from the Company's line of credit.
The Company recorded approximately $2.5 million and $1.0 million of prepayment penalties and write-offs of unamortized deferred financing costs, respectively, during the year ended December 31, 2010 as additional interest expense related to debt extinguishment of mortgages.
As of December 31, 2010, the Company had $543.4 million of secured debt subject to third party credit enhancement.
As of December 31, 2010, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through September 1, 2048. At December 31, 2010, the interest rate range on the Company’s mortgage debt was 0.21% to 11.25%. During the year ended December 31, 2010, the weighted average interest rate on the Company’s mortgage debt was 4.79%.

Notes
The following tables summarize the Company’s unsecured note balances and certain interest rate and maturity date information as of and for the years ended December 31, 2011 and 2010, respectively:
December 31, 2011
 (Amounts are in thousands)
 
Net Principal Balance
 
Interest Rate Ranges
 
Weighted Average Interest Rate
 
Maturity Date Ranges
Fixed Rate Public/Private Notes (1)
 
$
4,803,191

 
4.625% - 7.57%
 
5.84%
 
2012 - 2026
Floating Rate Public/Private Notes (1)
 
806,383

 
(1)
 
1.67%
 
2012 - 2013
Totals
 
$
5,609,574

 
 
 
 
 
 

December 31, 2010
(Amounts are in thousands)
 
Net Principal Balance
 
Interest Rate Ranges
 
Weighted Average Interest Rate
 
Maturity Date Ranges
Fixed Rate Public/Private Notes (1)
 
$
4,375,860

 
3.85% - 7.57%
 
5.78%
 
2011 - 2026
Floating Rate Public/Private Notes (1)
 
809,320

 
(1)
 
1.72%
 
2011 - 2013
Totals
 
$
5,185,180

 
 
 
 
 
 

(1)
At December 31, 2011 and 2010, $300.0 million in fair value interest rate swaps converts a portion of the $400.0 million face value 5.200% notes due April 1, 2013 to a floating interest rate.
The Company’s unsecured public debt contains certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for both the years ended December 31, 2011 and 2010.
An unlimited amount of equity and debt securities remains available for issuance by EQR and ERPOP under effective shelf registration statements filed with the SEC. Most recently, EQR and ERPOP filed a universal shelf registration statement for an unlimited amount of equity and debt securities that became automatically effective upon filing with the SEC in October 2010 and expires on October 15, 2013. 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 units basis).
During the year ended December 31, 2011, the Company:
Repaid $93.1 million of 6.95% unsecured notes at maturity;
Exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012;
Redeemed $482.5 million of its 3.85% unsecured notes with a final maturity of 2026 at par and no premium was paid; and
Issued $1.0 billion of ten-year 4.625% fixed rate public notes in a public offering, receiving net proceeds of $996.2 million before underwriting fees and other expenses. The notes are at an all-in effective interest rate of approximately 6.2% after termination of various forward starting swaps in conjunction with the issuance (see Note 9 for further

F-38


discussion).
During the year ended December 31, 2010, the Company:
Issued $600.0 million of ten-year 4.75% fixed rate public notes in a public offering at an all-in effective interest rate of 5.09%, receiving net proceeds of $595.4 million before underwriting fees and other expenses.
On December 2, 2011, the Company obtained a commitment for a senior unsecured bridge loan facility in an aggregate principal amount not to exceed $1.0 billion to finance the potential acquisition of an ownership interest in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. The Company paid fees of $2.6 million to structure this facility, which were recorded as deferred financing costs and amortized in 2011. See Note 18 for discussion on the cancellation of this facility.
On October 11, 2007, the Company closed on a $500.0 million senior unsecured term loan. Effective April 5, 2011, the Company exercised the second of its two one-year extension options and as a result, the maturity date is now October 5, 2012. The Company has the ability to increase available borrowings by an additional $250.0 million under certain circumstances. The loan bears interest at variable rates based upon LIBOR plus a spread (currently 0.50%) dependent upon the current credit rating on the Company’s long-term senior unsecured debt.

On August 23, 2006, the Company issued $650.0 million of exchangeable notes that were to mature on August 15, 2026. The notes bore interest at a fixed rate of 3.85%. The notes were exchangeable into Common Shares, at the option of the holders, under specific circumstances or on or after August 15, 2025, at an exchange rate of 16.3934 shares per $1,000 principal amount of notes (equivalent to an exchange price of $61.00 per share). On August 18, 2011 (the "Redemption Date"), the Operating Partnership redeemed all of the outstanding notes for $482.5 million in cash, which was equal to 100% of the principal amount of such notes, plus accrued and unpaid interest up to but excluding the Redemption Date. See Note 2 for more information on the change in the recognition of interest expense for these notes.

Lines of Credit

In July 2011, the Company replaced its then existing unsecured revolving credit facility with a new $1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The Company has the ability to increase available borrowings by an additional $500.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. See Note 18 for discussion on the increase of available borrowings for this facility. The interest rate on advances under the new credit facility will generally be LIBOR plus a spread (currently 1.15%) and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. This facility replaced the Company's $1.425 billion facility which was scheduled to mature in February 2012. The Company wrote-off $0.2 million in unamortized deferred financing costs related to the old facility.

As of December 31, 2011, the amount available on the new credit facility was $1.22 billion (net of $31.8 million which was restricted/dedicated to support letters of credit) and there was no amount outstanding. During the year ended December 31, 2011, the weighted average interest rate was 1.42%. As of December 31, 2010, the amount available on the old credit facility was $1.28 billion (net of $147.3 million which was restricted/dedicated to support letters of credit and net of $75.0 million which had been committed by a now bankrupt financial institution and was not available for borrowing) and there was no amount outstanding. During the year ended December 31, 2010, the weighted average interest rate was 0.66%.

Other

The following table provides a summary of the aggregate payments of principal on all debt for each of the next five years and thereafter (amounts in thousands):
Year
 
Total (1)

 
2012
 
$
1,161,582

(2)
2013
 
579,675

 
2014
 
588,340

 
2015
 
418,900

 
2016
 
1,190,038

 
Thereafter
 
5,782,526

 
Total
 
$
9,721,061

 

F-39



(1)
Principal payments on all debt include amortization of any discounts or premiums related to the debt. Premiums and discounts are amortized over the life of the debt.
(2)
Includes the Company's $500.0 million term loan facility. Effective April 5, 2011, the Company exercised the second of its two one-year extension options and as a result, the maturity date is now October 5, 2012.

9.
Derivative and Other Fair Value Instruments
The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.
The carrying values of the Company’s mortgage notes payable and unsecured notes were approximately $4.1 billion and $5.6 billion, respectively, at December 31, 2011. The fair values of the Company’s mortgage notes payable and unsecured notes were approximately $4.3 billion and $6.0 billion, respectively, at December 31, 2011. The carrying values of the Company’s mortgage notes payable and unsecured notes were approximately $4.8 billion and $5.2 billion, respectively, at December 31, 2010. The fair values of the Company’s mortgage notes payable and unsecured notes were approximately $4.7 billion and $5.5 billion, respectively, at December 31, 2010. The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, derivative instruments and investment securities) including cash and cash equivalents and other financial instruments, approximate their carrying or contract values.
In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company seeks to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.
The following table summarizes the Company’s consolidated derivative instruments at December 31, 2011 (dollar amounts are in thousands):
 
Fair Value
Hedges (1)
 
Forward
Starting
Swaps (2)
Current Notional Balance
$
315,693

 
$
200,000

Lowest Possible Notional
$
315,693

 
$
200,000

Highest Possible Notional
$
317,694

 
$
200,000

Lowest Interest Rate
2.009
%
 
3.478
%
Highest Interest Rate
4.800
%
 
4.695
%
Earliest Maturity Date
2012

 
2023

Latest Maturity Date
2013

 
2023


(1)
Fair Value Hedges – Converts outstanding fixed rate debt to a floating interest rate.
(2)
Forward Starting Swaps – Designed to partially fix the interest rate in advance of a planned future debt issuance. These swaps have mandatory counterparty terminations in 2014 and are targeted to 2013 issuances.
In June 2011, the Company's remaining development cash flow hedge matured.
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.


F-40


The Company’s derivative positions are valued using models developed by the respective counterparty as well as models developed internally by the Company that use as their basis readily observable market parameters (such as forward yield curves and credit default swap data). Employee holdings other than Common Shares within the supplemental executive retirement plan (the “SERP”) are valued using quoted market prices for identical assets and are included in other assets and other liabilities on the consolidated balance sheet. The Company’s investment securities are valued using quoted market prices or readily available market interest rate data. Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners are valued using the quoted market price of Common Shares.
The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying Consolidated Balance Sheets at December 31, 2011 and 2010, respectively (amounts in thousands):
 
 
 
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
 
 
 
 
Quoted Prices in
 
 
 
 
 
 
 
 
 
 
Active Markets for
 
Significant Other
 
Significant
 
 
Balance Sheet
 
 
 
Identical Assets/Liabilities
 
Observable Inputs
 
Unobservable Inputs
Description
 
Location
 
12/31/2011
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
 
 
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
   Interest Rate Contracts:
 
 
 
 
 
 
 
 
 
      Fair Value Hedges
 
Other Assets
 
$
8,972

 
$

 
$
8,972

 
$

Supplemental Executive Retirement Plan
Other Assets
 
71,426

 
71,426

 

 

Available-for-Sale Investment Securities
Other Assets
 
1,550

 
1,550

 

 

Total
 
 
 
$
81,948

 
$
72,976

 
$
8,972

 
$

 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
   Interest Rate Contracts:
 
 
 
 
 
 
 
 
 
      Forward Starting Swaps
Other Liabilities
 
$
32,278

 
$

 
$
32,278

 
$

Supplemental Executive Retirement Plan
Other Liabilities
 
71,426

 
71,426

 

 

Total
 
 
 
$
103,704

 
$
71,426

 
$
32,278

 
$

 
 
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests –
 
 
 
 
 
 
 
 
 
   Operating Partnership/Redeemable
 
 
 
 
 
 
 
 
 
      Limited Partners
Mezzanine
 
$
416,404

 
$

 
$
416,404

 
$




F-41


 
 
 
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
 
 
 
 
Quoted Prices in
 
 
 
 
 
 
 
 
 
 
Active Markets for
 
Significant Other
 
Significant
 
 
Balance Sheet
 
 
 
Identical Assets/Liabilities
 
Observable Inputs
 
Unobservable Inputs
Description
 
Location
 
12/31/2010
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
 
 
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
   Interest Rate Contracts:
 
 
 
 
 
 
 
 
 
      Fair Value Hedges
 
Other Assets
 
$
12,521

 
$

 
$
12,521

 
$

      Forward Starting Swaps
 
Other Assets
 
3,276

 

 
3,276

 

Supplemental Executive Retirement Plan
Other Assets
 
58,132

 
58,132

 

 

Available-for-Sale Investment Securities
Other Assets
 
1,194

 
1,194

 

 

Total
 
 
 
$
75,123

 
$
59,326

 
$
15,797

 
$

 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
   Interest Rate Contracts:
 
 
 
 
 
 
 
 
 
      Forward Starting Swaps
Other Liabilities
 
$
37,756

 
$

 
$
37,756

 
$

      Development Cash Flow Hedges
Other Liabilities
 
1,322

 

 
1,322

 

Supplemental Executive Retirement Plan
Other Liabilities
 
58,132

 
58,132

 

 

Total
 
 
 
$
97,210

 
$
58,132

 
$
39,078

 
$

 
 
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests –
 
 
 
 
 
 
 
 
 
   Operating Partnership/Redeemable
 
 
 
 
 
 
 
 
 
      Limited Partners
Mezzanine
 
383,540

 

 
383,540

 


The following table provides a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2010 (amounts in thousands):
 
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
 
 
 
 
Quoted Prices in
 
 
 
 
 
 
 
 
 
 
Active Markets for
 
Significant Other
 
Significant
 
 
 
 
 
 
Identical Assets/Liabilities
 
Observable Inputs
 
Unobservable Inputs
 
 
Description
 
12/31/2010
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total Gains (Losses)
Assets
 
 
 
 
 
 
 
 
 
 
Long-lived assets
 
$
56,000

 
$

 
$

 
$
56,000

 
$
(45,380
)
Total
 
$
56,000

 
$

 
$

 
$
56,000

 
$
(45,380
)

The Company's real estate asset impairment charges were the result of an analysis of the parcels' estimated fair value (determined using internally developed models that were based on market assumptions and comparable sales data) compared to their current capitalized carrying value. The market assumptions used as inputs to the Company's fair value model include construction costs, leasing assumptions, growth rates, discount rates, terminal capitalization rates and development yields, along with the Company's current plans for each individual asset. The Company uses data on its existing portfolio of properties and its recent acquisition and development properties, as well as similar market data from third party sources, when available, in determining these inputs. The valuation techniques used to measure fair value is consistent with how similar assets were measured in prior periods. See Note 18 for further discussion.
The following tables provide a summary of the effect of fair value hedges on the Company’s accompanying Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009, respectively (amounts in thousands):


F-42


December 31, 2011
Type of Fair Value Hedge
 
Location of Gain/(Loss) Recognized in Income
on Derivative
 
Amount of Gain/(Loss) Recognized in Income
on Derivative
 
 
 
Income Statement Location of Hedged
Item Gain/(Loss)
 
Amount of Gain/(Loss)Recognized in Income
on Hedged Item
 
 
 
Hedged Item
 
 
Derivatives designated as hedging instruments:
 
 
 
 

 
 
 
 
 
 

Interest Rate Contracts:
 
 
 
 

 
 
 
 
 
 

Interest Rate Swaps
 
Interest expense
 
$
(3,549
)
 
Fixed rate debt
 
Interest expense
 
$
3,549

Total
 
 
 
$
(3,549
)
 
 
 
 
 
$
3,549


December 31, 2010
Type of Fair Value Hedge
 
Location of Gain/(Loss) Recognized in Income
on Derivative
 
Amount of Gain/(Loss) Recognized in Income
on Derivative
 
 
 
Income Statement Location of Hedged
Item Gain/(Loss)
 
Amount of Gain/(Loss)Recognized in Income
on Hedged Item
 
 
 
Hedged Item
 
 
Derivatives designated as hedging instruments:
 
 
 
 

 
 
 
 
 
 

Interest Rate Contracts:
 
 
 
 

 
 
 
 
 
 

Interest Rate Swaps
 
Interest expense
 
$
7,335

 
Fixed rate debt
 
Interest expense
 
$
(7,335
)
Total
 
 
 
$
7,335

 
 
 
 
 
$
(7,335
)

December 31, 2009
Type of Fair Value Hedge
 
Location of Gain/(Loss) Recognized in Income
on Derivative
 
Amount of Gain/(Loss) Recognized in Income
on Derivative
 
 
 
Income Statement Location of Hedged
Item Gain/(Loss)
 
Amount of Gain/(Loss)Recognized in Income
on Hedged Item
 
 
 
Hedged Item
 
 
Derivatives designated as hedging instruments:
 
 
 
 

 
 
 
 
 
 

Interest Rate Contracts:
 
 
 
 

 
 
 
 
 
 

Interest Rate Swaps
 
Interest expense
 
$
(1,167
)
 
Fixed rate debt
 
Interest expense
 
$
1,167

Total
 
 
 
$
(1,167
)
 
 
 
 
 
$
1,167


The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009, respectively (amounts in thousands):

 
 
Effective Portion
 
Ineffective Portion
December 31, 2011
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
 
Location of
Gain/(Loss) Recognized in Income
on Derivative
 
Amount of Gain/(Loss)
Reclassified from Accumulated OCI
into Income
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 

 
 
 
 

 
 
 
 

Interest Rate Contracts:
 
 

 
 
 
 

 
 
 
 

Forward Starting Swaps/Treasury Locks
 
$
(145,090
)
 
Interest expense
 
$
(4,343
)
 
Interest expense
 
$
(170
)
Development Interest Rate Swaps/Caps
 
1,322

 
Interest expense
 

 
N/A
 

Total
 
$
(143,768
)
 
 
 
$
(4,343
)
 
 
 
$
(170
)

 
 
Effective Portion
 
Ineffective Portion
December 31, 2010
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
 
Location of
Gain/(Loss) Recognized in Income
on Derivative
 
Amount of Gain/(Loss)
Reclassified from Accumulated
OCI
into Income
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
Interest Rate Contracts:
 
 
 
 
 
 
 
 
 
 
Forward Starting Swaps/Treasury Locks
 
$
(68,149
)
 
Interest expense
 
$
(3,338
)
 
N/A
 
$

Development Interest Rate Swaps/Caps
 
2,255

 
Interest expense
 

 
N/A
 

Total
 
$
(65,894
)
 
 
 
$
(3,338
)
 
 
 
$



F-43


 
 
Effective Portion
 
Ineffective Portion
December 31, 2009
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
 
Location of
Gain/(Loss) Recognized in Income
on Derivative
 
Amount of Gain/(Loss)
Reclassified from Accumulated
OCI
into Income
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
Interest Rate Contracts:
 
 
 
 
 
 
 
 
 
 
Forward Starting Swaps/Treasury Locks
 
$
34,432

 
Interest expense
 
$
(3,724
)
 
N/A
 
$

Development Interest Rate Swaps/Caps
 
3,244

 
Interest expense
 

 
N/A
 

Total
 
$
37,676

 
 
 
$
(3,724
)
 
 
 
$

As of December 31, 2011 and 2010, there were approximately $197.6 million and $58.3 million in deferred losses, net, included in accumulated other comprehensive (loss), respectively, related to derivative instruments. Based on the estimated fair values of the net derivative instruments at December 31, 2011, the Company may recognize an estimated $19.5 million of accumulated other comprehensive (loss) as additional interest expense during the year ending December 31, 2012.
In December 2011, the Company paid approximately $153.2 million to settle various forward starting swaps in conjunction with the issuance of $1.0 billion of ten-year fixed rate public notes. The ineffective portion of $0.2 million and accrued interest of $5.9 million were recorded as interest expense. The remaining amount of $147.1 million will be deferred as a component of accumulated other comprehensive (loss) and is recognized as an increase to interest expense over the approximate term of the notes.
In July 2010, the Company paid approximately $10.0 million to settle a forward starting swap in conjunction with the issuance of $600.0 million of ten-year fixed rate public notes. The entire amount was deferred as a component of accumulated other comprehensive (loss) and is being recognized as an increase to interest expense over the term of the notes.
In January 2009, the Company received approximately $0.4 million to terminate a fair value hedge of interest rates in conjunction with the public tender of the Company’s 4.75% fixed rate public notes due June 15, 2009. Approximately $0.2 million of the settlement received was deferred and recognized as a reduction of interest expense through the maturity on June 15, 2009.
In April and May 2009, the Company received approximately $10.8 million to terminate six treasury locks in conjunction with the issuance of a $500.0 million 11-year mortgage loan. The entire amount was deferred as a component of accumulated other comprehensive income and is recognized as a reduction of interest expense over the first ten years of the mortgage loan.
During the year ended December 31, 2009, the Company sold a majority of its investment securities, receiving proceeds of approximately $215.8 million, and recorded a $4.9 million realized gain on sale (specific identification) which is included in interest and other income.
The following tables set forth the maturity, amortized cost, gross unrealized gains and losses, book/fair value and interest and other income of the various investment securities held as of December 31, 2011 and 2010, respectively (amounts in thousands):
 
 
 
 
Other Assets
 
 
December 31, 2011
Security
 
Maturity
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Book/
Fair Value
 
Interest and
Other Income
 
 
 
 
 
 
Available -for-Sale Investment Securities
 
N/A
 
$
675

 
$
875

 
$

 
$
1,550

 
$

Total
 
 
 
$
675

 
$
875

 
$

 
$
1,550

 
$


 
 
 
 
Other Assets
 
 
December 31, 2010
Security
 
Maturity
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Book/
Fair Value
 
Interest and
Other Income
 
 
 
 
 
 
Available-for-Sale
 
 
 
 

 
 

 
 

 
 

 
 

FDIC-insured certificates of deposit
 
Less than one year
 
$

 
$

 
$

 
$

 
$
61

Other
 
N/A
 
675

 
519

 

 
1,194

 

Total Available-for-Sale and Grand Total
 
$
675

 
$
519

 
$

 
$
1,194

 
$
61


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):

F-44



 
Year Ended December 31,
 
2011
 
2010
 
2009
Numerator for net income per share – basic:
 

 
 

 
 

Income (loss) from continuing operations
$
76,443

 
$
(88,299
)
 
$
(63,220
)
Allocation to Noncontrolling Interests – Operating Partnership, net
(2,738
)
 
4,732

 
4,273

Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties
(832
)
 
726

 
558

Net income attributable to Preference Interests and Units

 

 
(9
)
Preferred distributions
(13,865
)
 
(14,368
)
 
(14,479
)
Income (loss) from continuing operations available to Common Shares, net of
  Noncontrolling Interests
59,008

 
(97,209
)
 
(72,877
)
Discontinued operations, net of Noncontrolling Interests
820,712

 
366,451

 
420,671

Numerator for net income per share – basic
$
879,720

 
$
269,242

 
$
347,794

Numerator for net income per share – diluted (1):
 
 
 
 
 
Income from continuing operations
$
76,443

 
 
 
 
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties
(832
)
 
 
 
 
Preferred distributions
(13,865
)
 
 
 
 
Income from continuing operations available to Common Shares
61,746

 
 
 
 
Discontinued operations, net
858,754

 
 
 
 
Numerator for net income per share – diluted (1)
$
920,500

 
$
269,242

 
$
347,794

Denominator for net income per share – basic and diluted (1):
 
 
 
 
 
Denominator for net income per share – basic
294,856

 
282,888

 
273,609

Effect of dilutive securities:
 
 
 
 
 
OP Units
13,206

 
 
 
 
Long-term compensation shares/units
4,003

 
 
 
 
Denominator for net income per share – diluted (1)
312,065

 
282,888

 
273,609

Net income per share – basic
$
2.98

 
$
0.95

 
$
1.27

Net income per share – diluted
$
2.95

 
$
0.95

 
$
1.27

Net income per share – basic:
 

 
 

 
 

Income (loss) from continuing operations available to Common Shares, net of
  Noncontrolling Interests
$
0.200

 
$
(0.344
)
 
$
(0.266
)
Discontinued operations, net of Noncontrolling Interests
2.784

 
1.296

 
1.537

Net income per share – basic
$
2.984

 
$
0.952

 
$
1.271

Net income per share – diluted (1):
 

 
 

 
 

Income (loss) from continuing operations available to Common Shares
$
0.198

 
$
(0.344
)
 
$
(0.266
)
Discontinued operations, net
2.752

 
1.296

 
1.537

Net income per share – diluted
$
2.950

 
$
0.952

 
$
1.271

Distributions declared per Common Share outstanding
$
1.58

 
$
1.47

 
$
1.64


(1)
Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations for the years ended December 31, 2010 and 2009, respectively.
Convertible preferred shares/units that could be converted into 0, 325,103 and 402,501 weighted average Common Shares for the years ended December 31, 2011, 2010 and 2009, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effects would be anti-dilutive. In addition, the effect of the Common Shares that could ultimately be issued upon the conversion/exchange of the Operating Partnership’s $650.0 million exchangeable senior notes ($482.5 million outstanding were redeemed on August 18, 2011) was not included in the computation of diluted earnings per share because the effects would be anti-dilutive.
For additional disclosures regarding the employee share options and restricted shares, see Notes 2 and 12.
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):

F-45



 
Year Ended December 31,
 
2011
 
2010
 
2009
Numerator for net income per Unit – basic and diluted (1):
 

 
 

 
 

Income (loss) from continuing operations
$
76,443

 
$
(88,299
)
 
$
(63,220
)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties
(832
)
 
726

 
558

Allocation to Preference Units
(13,865
)
 
(14,368
)
 
(14,479
)
Allocation to Preference Interests and Junior Preference Units

 

 
(9
)
Income (loss) from continuing operations available to Units
61,746

 
(101,941
)
 
(77,150
)
Discontinued operations, net
858,754

 
384,282

 
445,249

Numerator for net income per Unit – basic and diluted (1)
$
920,500

 
$
282,341

 
$
368,099

Denominator for net income per Unit – basic and diluted (1):
 
 
 
 
 
Denominator for net income per Unit – basic
308,062

 
296,527

 
289,167

Effect of dilutive securities:
 
 
 
 
 
Dilution for Units issuable upon assumed exercise/vesting of the Company's
    long-term compensation shares/units
4,003

 
 
 
 
Denominator for net income per Unit – diluted (1)
312,065

 
296,527

 
289,167

Net income per Unit – basic
$
2.98

 
$
0.95

 
$
1.27

Net income per Unit – diluted
$
2.95

 
$
0.95

 
$
1.27

Net income per Unit – basic:
 

 
 

 
 

Income (loss) from continuing operations available to Units
$
0.200

 
$
(0.344
)
 
$
(0.266
)
Discontinued operations, net
2.784

 
1.296

 
1.537

Net income per Unit – basic
$
2.984

 
$
0.952

 
$
1.271

Net income per Unit – diluted (1):
 

 
 

 
 

Income (loss) from continuing operations available to Units
$
0.198

 
$
(0.344
)
 
$
(0.266
)
Discontinued operations, net
2.752

 
1.296

 
1.537

Net income per Unit – diluted
$
2.950

 
$
0.952

 
$
1.271

Distributions declared per Unit outstanding
$
1.58

 
$
1.47

 
$
1.64


(1)
Potential Units issuable from the assumed exercise/vesting of the Company's long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per Unit calculation as the Operating Partnership had a loss from continuing operations for the years ended December 31, 2010 and 2009, respectively.
Convertible preference interests/units that could be converted into 0, 325,103 and 402,501 weighted average Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units) for the years ended December 31, 2011, 2010 and 2009, respectively, were outstanding but were not included in the computation of diluted earnings per Unit because the effects would be anti-dilutive. In addition, the effect of the Common Shares/OP Units that could ultimately be issued upon the conversion/exchange of the Company's $650.0 million exchangeable senior notes ($482.5 million outstanding were redeemed on August 18, 2011) was not included in the computation of diluted earnings per Unit because the effects would be anti-dilutive.
For additional disclosures regarding the employee share options and restricted shares, see Notes 2 and 12.

11.
Discontinued Operations

The Company has presented separately as discontinued operations in all periods the results of operations for all consolidated assets disposed of and all properties held for sale, if any. Results are reflective of dispositions through March 31, 2012.

The components of discontinued operations are outlined below and include the results of operations for the respective periods that the Company owned such assets during each of the years ended December 31, 2011, 2010 and 2009 (amounts in thousands).


F-46


 
Year Ended December 31,
 
2011
 
2010
 
2009
REVENUES
 

 
 

 
 

Rental income
$
116,350

 
$
308,945

 
$
395,719

Total revenues
116,350

 
308,945

 
395,719

 
 
 
 
 
 
EXPENSES (1)
 

 
 

 
 

Property and maintenance
52,462

 
119,720

 
148,449

Real estate taxes and insurance
8,836

 
25,904

 
37,229

Depreciation
21,201

 
64,791

 
86,175

General and administrative
53

 
42

 
43

Total expenses
82,552

 
210,457

 
271,896

 
 
 
 
 
 
Discontinued operating income
33,798

 
98,488

 
123,823

 
 
 
 
 
 
Interest and other income
184

 
800

 
127

Other expenses

 

 
(11
)
Interest (2):
 

 
 

 
 

Expense incurred, net
(1,120
)
 
(12,584
)
 
(14,262
)
Amortization of deferred financing costs
(840
)
 
(292
)
 
(800
)
Income and other tax (expense) benefit
243

 
(86
)
 
1,073

 
 
 
 
 
 
Discontinued operations
32,265

 
86,326

 
109,950

Net gain on sales of discontinued operations
826,489

 
297,956

 
335,299

 
 
 
 
 
 
Discontinued operations, net
$
858,754

 
$
384,282

 
$
445,249


(1)
Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership.
(2)
Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale.
For the properties sold during 2011 and the first three months of 2012, the investment in real estate, net of accumulated depreciation, and the mortgage notes payable balances at December 31, 2010 were $732.0 million and $104.4 million, respectively. For the properties sold during the first three months of 2012, the investment in real estate, net of accumulated depreciation at December 31, 2011 was $71.6 million and there were no mortgages outstanding on these properties.

12.
Share Incentive Plans

Any Common Shares issued pursuant to EQR's incentive equity compensation and employee share purchase plans will result in ERPOP issuing OP Units to EQR on a one-for-one basis with ERPOP receiving the net cash proceeds of such issuances.
On June 16, 2011, the shareholders of EQR approved the Company's 2011 Plan. The 2011 Plan reserved 12,980,741 Common Shares for issuance. In conjunction with the approval of the 2011 Plan, no further awards may be granted under the 2002 Share Incentive Plan. The 2011 Plan expires on June 16, 2021. As of December 31, 2011, 12,473,580 shares were available for future issuance.
Pursuant to the 2011 Plan, the 2002 Share Incentive Plan, as restated, and the Amended and Restated 1993 Share Option and Share Award Plan, as amended (collectively the “Share Incentive Plans”), officers, trustees and key employees of the Company may be granted share options to acquire Common Shares (“Options”) including non-qualified share options (“NQSOs”), incentive share options (“ISOs”) and share appreciation rights (“SARs”), or may be granted restricted or non-restricted shares (including performance-based awards), subject to conditions and restrictions as described in the Share Incentive Plans. Prior to 2007, certain executive officers of the Company participated in the Company’s performance-based restricted share plan but the Company has not awarded any performance-based award grants since 2006. Options, SARs, restricted shares, performance shares and LTIP Units (see discussion below) are sometimes collectively referred to herein as “Awards”.
The Options are generally granted at the fair market value of the Company’s Common Shares at the date of grant, vest in three equal installments over a three-year period, are exercisable upon vesting and expire ten years from the date of grant. The exercise price for all Options under the Share Incentive Plans is equal to the fair market value of the underlying Common Shares at the time the Option is granted. Options exercised result in new Common Shares being issued on the open market. The 2002

F-47


Share Incentive Plan and the Amended and Restated 1993 Share Option and Share Award Plan, as amended, will terminate at such time as all outstanding Awards have expired or have been exercised/vested. The Board of Trustees may at any time amend or terminate the Share Incentive Plans, but termination will not affect Awards previously granted. Any Options which had vested prior to such a termination would remain exercisable by the holder.
Restricted shares that have been awarded through December 31, 2011 generally vest three years from the award date. In addition, the Company’s unvested restricted shareholders have the same voting rights as any other Common Share holder. During the three-year period of restriction, the Company’s unvested restricted shareholders receive quarterly dividend payments on their shares at the same rate and on the same date as any other Common Share holder. As a result, dividends paid on unvested restricted shares are included as a component of retained earnings (included in general partner's capital in the Operating Partnership's financial statements) and have not been considered in reducing net income available to Common Shares/Units in a manner similar to the Company’s preferred share/preference unit dividends for the earnings per share/Unit calculation. If employment is terminated prior to the lapsing of the restriction, the shares are generally canceled.
In December 2008, the Company’s then existing 2002 Share Incentive Plan was amended to allow for the issuance of long-term incentive plan units (“LTIP Units”) to officers of the Company as an alternative to the Company’s restricted shares. The 2011 Plan also allows for the issuance of LTIP Units. LTIP Units are a class of partnership interests that under certain conditions, including vesting, are convertible by the holder into an equal number of OP Units, which are redeemable by the holder for Common Shares on a one-for-one basis or the cash value of such shares at the option of the Company. In connection with the grant of long-term incentive compensation for services provided during a year, officers of the Company are allowed to choose, on a one-for-one basis, between restricted shares and LTIP Units. In January 2011, certain holders of restricted shares converted these shares into LTIP Units. Similar to restricted shares, LTIP Units generally vest three years from the award date. In addition, LTIP Unit holders receive quarterly dividend payments on their LTIP Units at the same rate and on the same date as any other OP Unit holder. As a result, dividends paid on LTIP Units are included as a component of Noncontrolling Interests – Operating Partnership/Limited Partners' capital and have not been considered in reducing net income available to Common Shares/Units in a manner similar to the Company’s preferred share/preference unit dividends for the earnings per share/Unit calculation. If employment is terminated prior to vesting, the LTIP Units are generally canceled. An LTIP Unit will automatically convert to an OP Unit when the capital account of each LTIP Unit increases (“books-up”) to a specified target. If the capital target is not attained within ten years following the date of issuance, the LTIP Unit will automatically be canceled and no compensation will be payable to the holder of such canceled LTIP Unit.
All Trustees, with the exception of the Company's non-executive Chairman and employee Trustees, are granted options and restricted shares that vest one-year from the grant date that corresponds to the term for which he or she has been elected to serve. The non-executive Chairman's grants vest over the same term or period as all other employees.
The Company's Share Incentive Plans provide for certain benefits upon retirement. For employees hired prior to January 1, 2009, retirement generally means the termination of employment (other than for cause): (i) on or after age 62; or (ii) prior to age 62 after meeting the requirements of the Rule of 70 (described below). For employees hired after January 1, 2009, retirement generally means the termination of employment (other than for cause) after meeting the requirements of the Rule of 70. For Trustees, retirement generally means termination of service on the Board (other than for cause) on or after age 72.
The Rule of 70 is met when an employee’s years of service with the Company (which must be at least 15 years) plus his or her age (which must be at least 55 years) on the date of termination equals or exceeds 70 years. In addition, the employee must give the Company at least 6 months’ advance written notice of his or her intention to retire and sign a release upon termination of employment, releasing the Company from customary claims and agreeing to ongoing non-competition and employee non-solicitation provisions.
Under the Company's definitions of retirement, several of its executive officers, including its Chief Executive Officer, are retirement eligible. The Company's non-executive Chairman is retirement eligible in 2013.
For employees hired prior to January 1, 2009 who retire at or after age 62 or for Trustees who retire at or after age 72, such employee’s or Trustee's unvested restricted shares, LTIP Units and share options would immediately vest, and share options would continue to be exercisable for the balance of the applicable ten-year option period, as is provided under the Share Incentive Plans. For all other employees (those hired after January 1, 2009 and those hired before such date who choose to retire prior to age 62), upon such retirement under the Rule of 70 definition of retirement of employees, such employee’s unvested restricted shares, LTIP Units and share options would continue to vest per the original vesting schedule (subject to immediate vesting upon the occurrence of a subsequent change in control of the Company or the employee’s death), and options would continue to be exercisable for the balance of the applicable ten-year option period, subject to the employee’s compliance with the non-competition and employee non-solicitation provisions. If an employee violates these provisions after such retirement, all unvested restricted shares, unvested LTIP Units and unvested and vested share options at the time of the violation would be void, unless otherwise determined by the Compensation Committee of the Board of Trustees.

F-48


The following tables summarize compensation information regarding the performance shares, restricted shares, LTIP Units, share options and Employee Share Purchase Plan (“ESPP”) for the three years ended December 31, 2011, 2010 and 2009 (amounts in thousands):
 
Year Ended December 31, 2011
 
Compensation
Expense
 
Compensation
Capitalized
 
Compensation
Equity
 
Dividends
Incurred
Restricted shares
$
8,041

 
$
1,061

 
$
9,102

 
$
1,121

LTIP Units
3,344

 
297

 
3,641

 
199

Share options
8,711

 
834

 
9,545

 

ESPP discount
1,081

 
113

 
1,194

 

Total
$
21,177

 
$
2,305

 
$
23,482

 
$
1,320


 
Year Ended December 31, 2010
 
Compensation
Expense
 
Compensation
Capitalized
 
Compensation
Equity
 
Dividends
Incurred
Restricted shares
$
8,603

 
$
1,178

 
$
9,781

 
$
1,334

LTIP Units
2,334

 
190

 
2,524

 
138

Share options
6,707

 
714

 
7,421

 

ESPP discount
1,231

 
59

 
1,290

 

Total
$
18,875

 
$
2,141

 
$
21,016

 
$
1,472


 
Year Ended December 31, 2009
 
Compensation
Expense
 
Compensation
Capitalized
 
Compensation
Equity
 
Dividends
Incurred
Performance shares
$
103

 
$
76

 
$
179

 
$

Restricted shares
10,065

 
1,067

 
11,132

 
1,627

LTIP Units
1,036

 
158

 
1,194

 
254

Share options
5,458

 
538

 
5,996

 

ESPP discount
1,181

 
122

 
1,303

 

Total
$
17,843

 
$
1,961

 
$
19,804

 
$
1,881

Compensation expense is generally recognized for Awards as follows:
Restricted shares, LTIP Units and share options – Straight-line method over the vesting period of the options or shares regardless of cliff or ratable vesting distinctions.
Performance shares – Accelerated method with each vesting tranche valued as a separate award, with a separate vesting date, consistent with the estimated value of the award at each period end.
ESPP discount – Immediately upon the purchase of common shares each quarter.
The Company accelerates the recognition of compensation expense for all Awards for those individuals approaching or meeting the retirement age criteria discussed above. The total compensation expense related to Awards not yet vested at December 31, 2011 is $22.8 million, which is expected to be recognized over a weighted average term of 1.67 years.
See Note 2 for additional information regarding the Company’s share-based compensation.
The table below summarizes the Award activity of the Share Incentive Plans for the three years ended December 31, 2011, 2010 and 2009:

F-49


 
Common
Shares Subject
to Options
 
Weighted
Average
Exercise Price
per Option
 
Restricted
Shares
 
Weighted
Average Fair
Value per
Restricted Share
 
LTIP
Units
 
Weighted
Average Fair
Value per
LTIP Unit
Balance at December 31, 2008
9,473,259

 

$33.94

 
996,011

 

$44.16

 

 

Awards granted (1)
2,541,005

 

$23.08

 
362,997

 

$22.62

 
155,189

 

$21.11

Awards exercised/vested (2) (3)
(422,713
)
 

$21.62

 
(340,362
)
 

$42.67

 

 

Awards forfeited
(146,151
)
 

$30.07

 
(64,280
)
 

$35.28

 
(573
)
 

$21.11

Awards expired
(95,650
)
 

$32.21

 

 

 

 

Balance at December 31, 2009
11,349,750

 

$32.03

 
954,366

 

$37.10

 
154,616

 

$21.11

Awards granted (1)
1,436,115

 

$33.59

 
270,805

 

$34.85

 
94,096

 

$32.97

Awards exercised/vested (2) (3)
(2,506,645
)
 

$28.68

 
(278,183
)
 

$52.25

 

 

Awards forfeited
(76,275
)
 

$29.43

 
(35,038
)
 

$30.84

 
(1,204
)
 

$21.11

Awards expired
(96,457
)
 

$42.69

 

 

 

 

Balance at December 31, 2010
10,106,488

 

$33.00

 
911,950

 

$32.05

 
247,508

 

$25.62

Awards granted (1)
1,491,311

 

$53.70

 
170,588

 

$53.99

 
223,452

 

$46.64

Awards exercised/vested (2) (3) (4)
(2,945,950
)
 

$32.27

 
(258,068
)
 

$38.32

 
(101,988
)
 

$38.57

Awards forfeited
(41,559
)
 

$35.14

 
(126,960
)
 

$37.19

 
(1,352
)
 

$27.79

Awards expired
(16,270
)
 

$44.13

 

 

 

 

Balance at December 31, 2011
8,594,020

 

$36.81

 
697,510

 

$34.17

 
367,620

 

$34.80


(1)
The weighted average grant date fair value for Options granted during the years ended December 31, 2011, 2010 and 2009 was $8.18 per share, $6.18 per share and $3.38 per share, respectively.
(2)
The aggregate intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $74.8 million, $39.6 million and $2.8 million, respectively. These values were calculated as the difference between the strike price of the underlying awards and the per share price at which each respective award was exercised.
(3)
The fair value of restricted shares vested during the years ended December 31, 2011, 2010 and 2009 was $14.0 million, $9.1 million  and $8.0 million, respectively.
(4)
The fair value of LTIP Units vested during the year ended December 31, 2011 was $5.5 million.
The following table summarizes information regarding options outstanding and exercisable at December 31, 2011:

 
 
Options Outstanding (1)
 
Options Exercisable (2)
Range of Exercise Prices
 
Options
 
Weighted
Average
Remaining
Contractual Life in Years
 
Weighted
Average
Exercise Price
 
Options
 
Weighted
Average
Exercise Price
$18.70 to $24.93
 
2,101,071

 
5.79

 

$23.17

 
1,335,909

 

$23.23

$24.94 to $31.16
 
755,411

 
1.19

 

$28.34

 
755,411

 

$28.34

$31.17 to $37.39
 
1,896,070

 
6.27

 

$32.53

 
1,019,788

 

$32.16

$37.40 to $43.62
 
1,617,066

 
5.14

 

$40.56

 
1,617,066

 

$40.56

$43.63 to $49.86
 
61,397

 
8.52

 

$48.40

 
4,202

 

$45.25

$49.87 to $56.09
 
2,119,010

 
7.93

 

$53.52

 
683,174

 

$53.50

$56.10 to $62.32
 
43,995

 
9.47

 

$59.23

 

 

$18.70 to $62.32
 
8,594,020

 
5.94

 

$36.81

 
5,415,550

 

$34.64

Vested and expected to vest
as of December 31, 2011
 
8,507,188

 
5.91

 

$36.68

 
 

 
 


(1)
The aggregate intrinsic value of options outstanding that are vested and expected to vest as of December 31, 2011 is $173.2 million.
(2)
The aggregate intrinsic value and weighted average remaining contractual life in years of options exercisable as of December 31, 2011 is $121.3 million and 4.5 years, respectively.
Note: The aggregate intrinsic values in Notes (1) and (2) above were both calculated as the excess, if any, between the Company’s closing share price of $57.03 per share on December 31, 2011 and the strike price of the underlying awards.

F-50


As of December 31, 2010 and 2009, 6,786,651 Options (with a weighted average exercise price of $34.89) and 7,974,815 Options (with a weighted average exercise price of $33.55) were exercisable, respectively.

13.
Employee Plans
The Company established an Employee Share Purchase Plan to provide each employee and trustee the ability to annually acquire up to $100,000 of Common Shares of EQR. In 2003, EQR's shareholders approved an increase in the aggregate number of Common Shares available under the ESPP to 7,000,000 (from 2,000,000). The Company has 3,290,863 Common Shares available for purchase under the ESPP at December 31, 2011. The Common Shares may be purchased quarterly at a price equal to 85% of the lesser of: (a) the closing price for a share on the last day of such quarter; and (b) the greater of: (i) the closing price for a share on the first day of such quarter, and (ii) the average closing price for a share for all the business days in the quarter. The following table summarizes information regarding the Common Shares issued under the ESPP (the net proceeds noted below were contributed to ERPOP in exchange for OP Units):
 
Year Ended December 31,
 
2011
 
2010
 
2009
 
(Amounts in thousands except share and per share amounts)
Shares issued
113,107
 
157,363
 
324,394
Issuance price ranges
$44.04 – $51.19
 
$28.26 – $41.16
 
$14.21 – $24.84
Issuance proceeds
$5,262
 
$5,112
 
$5,292

The Company established a defined contribution plan (the “401(k) Plan”) to provide retirement benefits for employees that meet minimum employment criteria. The Company matches dollar for dollar up to the first 3% of eligible compensation that a participant contributes to the 401(k) Plan. Participants are vested in the Company’s contributions over five years. The Company recognized an expense in the amount of $3.7 million, $4.0 million and $3.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.
The Company established a supplemental executive retirement plan (the “SERP”) to provide certain officers and trustees an opportunity to defer a portion of their eligible compensation in order to save for retirement. The SERP is restricted to investments in Common Shares, certain marketable securities that have been specifically approved and cash equivalents. The deferred compensation liability represented in the SERP and the securities issued to fund such deferred compensation liability are consolidated by the Company and carried on the Company’s balance sheet, and the Company’s Common Shares held in the SERP are accounted for as a reduction to paid in capital (included in general partner's capital in the Operating Partnership's financial statements).

14.
Distribution Reinvestment and Share Purchase Plan
On December 16, 2008, the Company filed with the SEC a Form S-3 Registration Statement to register 5,000,000 Common Shares pursuant to a Distribution Reinvestment and Share Purchase Plan (the "DRIP Plan"). The registration statement was automatically declared effective the same day and was to expire at the earlier of the date on which all 5,000,000 shares had been issued or December 16, 2011. On November 18, 2011, the Company filed with the SEC a Form S-3 Registration Statement to register 4,850,000 Common Shares under the DRIP Plan, which included the remaining shares available for issuance under the 2008 registration, which terminated as of such date. The registration statement was automatically declared effective the same day and expires at the earlier of the date on which all 4,850,000 shares have been issued or November 18, 2014. The Company has 4,849,796 Common Shares available for issuance under the DRIP Plan at December 31, 2011.
The DRIP Plan provides holders of record and beneficial owners of Common Shares and Preferred Shares with a simple and convenient method of investing cash distributions in additional Common Shares (which is referred to herein as the “Dividend Reinvestment – DRIP Plan”). Common Shares may also be purchased on a monthly basis with optional cash payments made by participants in the DRIP Plan and interested new investors, not currently shareholders of EQR, at the market price of the Common Shares less a discount ranging between 0% and 5%, as determined in accordance with the DRIP Plan (which is referred to herein as the “Share Purchase – DRIP Plan”). Common Shares purchased under the DRIP Plan may, at the option of EQR, be directly issued by EQR or purchased by EQR's transfer agent in the open market using participants’ funds. The net proceeds from any Common Share issuances are contributed to ERPOP in exchange for OP Units.

15.
Transactions with Related Parties
Pursuant to the terms of the partnership agreement for the Operating Partnership, ERPOP is required to reimburse EQR

F-51


for all expenses incurred by EQR in excess of income earned by EQR through its indirect 1% ownership of various entities. Amounts paid on behalf of EQR are reflected in the consolidated statements of operations as general and administrative expenses.
The Company leases its corporate headquarters from an entity controlled by EQR’s Chairman of the Board of Trustees. The lease terminates on January 31, 2022. Amounts incurred for such office space for the years ended December 31, 2011, 2010 and 2009, respectively, were approximately $2.2 million, $2.7 million and $3.0 million. The Company believes these amounts equal market rates for such rental space.

16.
Commitments and Contingencies
The Company, as an owner of real estate, is subject to various Federal, state and local environmental laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future.

The Company is party to a housing discrimination lawsuit brought by a non-profit civil rights organization in April 2006 in the U.S. District Court for the District of Maryland. The suit alleges that the Company designed and built approximately 300 of its properties in violation of the accessibility requirements of the Fair Housing Act and Americans With Disabilities Act. The suit seeks actual and punitive damages, injunctive relief (including modification of non-compliant properties), costs and attorneys' fees. The Company believes it has a number of viable defenses, including that a majority of the named properties were completed before the operative dates of the statutes in question and/or were not designed or built by the Company. Accordingly, the Company is defending the suit vigorously. Due to the pendency of the Company's defenses and the uncertainty of many other critical factual and legal issues, it is not possible to determine or predict the outcome of the suit or a possible loss or a range of loss, and no amounts have been accrued at December 31, 2011. While no assurances can be given, the Company does not believe that the suit, if adversely determined, would have a material adverse effect on the Company.

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

The Company had established a reserve and recorded a corresponding reduction to its net gain on sales of discontinued operations related to potential liabilities associated with its condominium conversion activities. The reserve covered potential product liability related to each conversion. The Company periodically assessed the adequacy of the reserve and made adjustments as necessary. During the year ended December 31, 2011, the Company recorded additional reserves of approximately $0.1 million, paid approximately $2.3 million in settlements and legal fees and released approximately $1.1 million of remaining reserves. No amounts remain accrued at December 31, 2011 as the Company does not believe it has material exposure remaining for its past condominium conversion activities.

As of December 31, 2011, the Company has six consolidated projects totaling 1,535 apartment units in various stages of development with commitments to fund of approximately $351.2 million and estimated completion dates ranging through March 31, 2014, as well as other completed development projects that are in various stages of lease up or are stabilized. The consolidated projects under development are being developed solely by the Company, while certain completed development projects were either developed solely by the Company or co-developed with various third party development partners. The development venture agreements with partners are primarily deal-specific, with differing terms regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions. The partner is most often the “general” or “managing” partner of the development venture. The typical buy-sell arrangements contain appraisal rights and provisions that provide the right, but not the obligation, for the Company to acquire the partner's interest in the project at fair market value upon the expiration of a negotiated time period (typically two to five years after substantial completion of the project).

As of December 31, 2011, the Company has two unconsolidated projects totaling 945 apartment units under development with commitments to fund of approximately $5.4 million and estimated completion dates ranging through September 30, 2013. While the Company is the managing member of both of the joint ventures, is responsible for constructing both projects and has given certain construction cost overrun guarantees, all major decisions are made jointly, the large majority of funding is provided by the partner and the partner has significant involvement in and oversight of the ongoing projects. The buy-sell arrangements contain provisions that provide the right, but not the obligation, for the Company to acquire the partner's interests or sell its interests at any time following the occurrence of certain pre-defined events (including at stabilization) described in the development venture agreements.

In December 2011, the Company and Toll Brothers (NYSE: TOL) jointly acquired a vacant land parcel at 400 Park Avenue South in New York City. The Company's and Toll Brothers' allocated portions of the purchase price were approximately $76.1 million and $57.9 million, respectively. Until the core and shell of the building is complete, the building and land will be

F-52


owned jointly and are required to be consolidated on the Company's balance sheet. Thereafter, the Company will solely own and control the rental portion of the building (floors 2-22) and Toll Brothers will solely own and control the for sale portion of the building (floors 23-40). Once the core and shell are complete, the Toll Brothers' portion of the property will be deconsolidated from the Company's balance sheet. The acquisition was financed through contributions by the Company and Toll Brothers of approximately $102.5 million and $75.7 million, respectively, which included the land purchase noted above and taxes and fees of $0.4 million and $0.3 million, respectively. Restricted deposits were made to the venture of $26.0 million and $17.5 million, respectively, to collateralize construction guarantees. As of December 31, 2011, Toll Brothers' noncontrolling interest balance totaled $75.8 million.
During the years ended December 31, 2011, 2010 and 2009, total operating lease payments expensed for office space, including a portion of real estate taxes, insurance, repairs and utilities, and including rent due under three ground leases, aggregated $7.1 million, $7.6 million and $8.4 million, respectively.
The Company has entered into a retirement benefits agreement with its Chairman of the Board of Trustees and deferred compensation agreements with its Vice Chairman and two former chief executive officers. During the years ended December 31, 2011, 2010 and 2009, the Company recognized compensation expense of $1.0 million, $0.9 million and $1.2 million, respectively, related to these agreements.
The following table summarizes the Company’s contractual obligations for minimum rent payments under operating leases and deferred compensation for the next five years and thereafter as of December 31, 2011:
Payments Due by Year (in thousands)
 
 
2012
 
2013
 
2014
 
2015
 
2016
 
Thereafter
 
Total
Operating Leases:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Minimum Rent Payments (a)
 
$
6,445

 
$
7,159

 
$
8,550

 
$
9,241

 
$
9,196

 
$
699,959

 
$
740,550

Other Long-Term Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Deferred Compensation (b)
 
1,767

 
1,480

 
1,672

 
1,671

 
1,671

 
7,472

 
15,733


(a)
Minimum basic rent due for various office space the Company leases and fixed base rent due on ground leases for five properties/parcels.
(b)
Estimated payments to EQR's Chairman, Vice Chairman and two former CEOs based on actual and planned retirement dates.

17.
Reportable Segments
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by senior management. Senior management decides how resources are allocated and assesses performance on a monthly basis.
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. Senior management evaluates the performance of each of our apartment communities individually and geographically, and both on a same store and non-same store basis; however, each of our apartment communities generally has similar economic characteristics, residents, products and services. The Company’s operating segments have been aggregated by geography in a manner identical to that which is provided to its chief operating decision maker.
The Company’s fee and asset management, development (including its partially owned properties) and condominium conversion activities are immaterial and do not individually meet the threshold requirements of a reportable segment and as such, have been aggregated in the “Other” segment in the tables presented below.
All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the three years ended December 31, 2011, 2010 or 2009.
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; 2) real estate taxes and insurance expense; and 3) property management expense (all as reflected in the accompanying consolidated statements of operations). 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 communities. Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance. The following tables present NOI for each segment from our rental real estate specific to continuing operations for the years ended December 31, 2011, 2010 and 2009, respectively, as well as total assets for the years ended December 31, 2011 and 2010, respectively (amounts in thousands):


F-53


 
Year Ended December 31, 2011
 
Northeast
 
Northwest
 
Southeast
 
Southwest
 
Other (3)
 
Total
Rental income:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
$
584,405

 
$
344,615

 
$
356,936

 
$
426,472

 
$

 
$
1,712,428

Non-same store/other (2) (3)
157,907

 
42,633

 
16,487

 
45,489

 
5,493

 
268,009

Properties sold – March YTD 2012 (4)

 

 

 

 
(20,194
)
 
(20,194
)
Total rental income
742,312

 
387,248

 
373,423

 
471,961

 
(14,701
)
 
1,960,243

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
211,494

 
120,920

 
140,145

 
145,153

 

 
617,712

Non-same store/other (2) (3)
56,591

 
16,021

 
5,974

 
17,619

 
7,366

 
103,571

Properties sold – March YTD 2012 (4)

 

 

 

 
(7,174
)
 
(7,174
)
Total operating expenses
268,085

 
136,941

 
146,119

 
162,772

 
192

 
714,109

NOI:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
372,911

 
223,695

 
216,791

 
281,319

 

 
1,094,716

Non-same store/other (2) (3)
101,316

 
26,612

 
10,513

 
27,870

 
(1,873
)
 
164,438

Properties sold – March YTD 2012 (4)

 

 

 

 
(13,020
)
 
(13,020
)
Total NOI
$
474,227

 
$
250,307

 
$
227,304

 
$
309,189

 
$
(14,893
)
 
$
1,246,134

 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
6,539,328

 
$
2,885,791

 
$
2,506,330

 
$
3,385,517

 
$
1,342,337

 
$
16,659,303


(1)
Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2010, less properties subsequently sold, which represented 101,312 apartment units.
(2)
Non-same store primarily includes properties acquired after January 1, 2010, plus any properties in lease-up and not stabilized as of January 1, 2010.
(3)
Other includes development, condominium conversion overhead of $0.4 million and other corporate operations.
(4)
Properties sold March YTD 2012 reflects discontinued operations for properties sold during the first three months of 2012.

 
Year Ended December 31, 2010
 
Northeast
 
Northwest
 
Southeast
 
Southwest
 
Other (3)
 
Total
Rental income:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
$
553,561

 
$
322,427

 
$
342,080

 
$
412,414

 
$

 
$
1,630,482

Non-same store/other (2) (3)
95,493

 
18,825

 
9,009

 
13,587

 
(3,604
)
 
133,310

Properties sold – March YTD 2012 (4)

 

 

 

 
(19,024
)
 
(19,024
)
Total rental income
649,054

 
341,252

 
351,089

 
426,001

 
(22,628
)
 
1,744,768

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
207,131

 
119,797

 
139,550

 
147,732

 

 
614,210

Non-same store/other (2) (3)
48,119

 
8,300

 
3,729

 
7,198

 
12,230

 
79,576

Properties sold – March YTD 2012 (4)

 

 

 

 
(7,103
)
 
(7,103
)
Total operating expenses
255,250

 
128,097

 
143,279

 
154,930

 
5,127

 
686,683

NOI:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
346,430

 
202,630

 
202,530

 
264,682

 

 
1,016,272

Non-same store/other (2) (3)
47,374

 
10,525

 
5,280

 
6,389

 
(15,834
)
 
53,734

Properties sold – March YTD 2012 (4)

 

 

 

 
(11,921
)
 
(11,921
)
Total NOI
$
393,804

 
$
213,155

 
$
207,810

 
$
271,071

 
$
(27,755
)
 
$
1,058,085

 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
6,158,908

 
$
2,630,850

 
$
2,495,748

 
$
3,140,153

 
$
1,758,535

 
$
16,184,194


(1)
Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2010, less properties subsequently sold, which represented 101,312 apartment units.
(2)
Non-same store primarily includes properties acquired after January 1, 2010, plus any properties in lease-up and not stabilized as of January 1, 2010.
(3)
Other includes development, condominium conversion overhead of $0.6 million and other corporate operations.
(4)
Properties sold March YTD 2012 reflects discontinued operations for properties sold during the first three months of 2012.

F-54


 
Year Ended December 31, 2009
 
Northeast
 
Northwest
 
Southeast
 
Southwest
 
Other (3)
 
Total
Rental income:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
$
566,518

 
$
357,502

 
$
383,239

 
$
423,076

 
$

 
$
1,730,335

Non-same store/other (2) (3)
23,195

 
2,010

 
4,268

 
16,985

 
69,364

 
115,822

Properties sold in 2011 (4)

 

 

 

 
(216,279
)
 
(216,279
)
Properties sold – March YTD 2012 (5)

 

 

 

 
(19,409
)
 
(19,409
)
Total rental income
589,713

 
359,512

 
387,507

 
440,061

 
(166,324
)
 
1,610,469

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
211,352

 
129,696

 
158,977

 
148,483

 

 
648,508

Non-same store/other (2) (3)
12,798

 
1,851

 
1,727

 
9,418

 
68,692

 
94,486

Properties sold in 2011 (4)

 

 

 

 
(111,589
)
 
(111,589
)
Properties sold – March YTD 2012 (5)

 

 

 

 
(6,762
)
 
(6,762
)
Total operating expenses
224,150

 
131,547

 
160,704

 
157,901

 
(49,659
)
 
624,643

NOI:
 

 
 

 
 

 
 

 
 

 
 

Same store (1)
355,166

 
227,806

 
224,262

 
274,593

 

 
1,081,827

Non-same store/other (2) (3)
10,397

 
159

 
2,541

 
7,567

 
672

 
21,336

Properties sold in 2011 (4)

 

 

 

 
(104,690
)
 
(104,690
)
Properties sold – March YTD 2012 (5)

 

 

 

 
(12,647
)
 
(12,647
)
Total NOI
$
365,563

 
$
227,965

 
$
226,803

 
$
282,160

 
$
(116,665
)
 
$
985,826


(1)
Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties subsequently sold, which represented 112,042 apartment units.
(2)
Non-same store primarily includes properties acquired after January 1, 2009, plus any properties in lease-up and not stabilized as of January 1, 2009.
(3)
Other includes development, condominium conversion overhead of $1.4 million and other corporate operations.
(4)
Reflects discontinued operations for properties sold during 2011.
(5)
Properties sold March YTD 2012 reflects discontinued operations for properties sold during the first three months of 2012.
Note: Markets included in the above geographic segments are as follows:
(a) Northeast – New England (excluding Boston), Boston, New York Metro, DC Northern Virginia and Suburban Maryland.
(b) Northwest – Denver, San Francisco Bay Area and Seattle/Tacoma.
(c) Southeast – Atlanta, Jacksonville, Orlando and South Florida.
(d) Southwest – Inland Empire, Los Angeles, Orange County, Phoenix and San Diego.

The following table presents a reconciliation of NOI from our rental real estate specific to continuing operations for the years ended December 31, 2011, 2010 and 2009, respectively (amounts in thousands):

 
Year Ended December 31,
 
2011
 
2010
 
2009
Rental income
$
1,960,243

 
$
1,744,768

 
$
1,610,469

Property and maintenance expense
(412,233
)
 
(397,573
)
 
(365,448
)
Real estate taxes and insurance expense
(219,743
)
 
(209,023
)
 
(187,895
)
Property management expense
(82,133
)
 
(80,087
)
 
(71,300
)
Total operating expenses
(714,109
)
 
(686,683
)
 
(624,643
)
Net operating income
$
1,246,134

 
$
1,058,085

 
$
985,826


18.
Subsequent Events/Other
Subsequent Events
Subsequent to December 31, 2011, the Company:
Acquired two land parcels for $12.2 million;

F-55


Sold one property consisting of 704 apartment units for $94.8 million;
Repaid $31.5 million in mortgage loans;
Issued 2.1 million Common Shares at an average price of $59.47 per share for total consideration of $123.6 million under the ATM program, leaving 7.1 million shares available for issuance;
Terminated its $1.0 billion bridge loan facility in connection with the amendment to the revolving credit facility and the execution of the term loan facility discussed below;
Amended its $1.25 billion unsecured revolving credit facility to increase available borrowings by $500.0 million to $1.75 billion with all other terms, including the July 13, 2014 maturity date, remaining the same; and
Entered into a new senior unsecured $500.0 million delayed draw term loan facility which is currently undrawn and may be drawn anytime on or before July 4, 2012. If the Company elects to draw on this facility, the full amount of the principal will be funded in a single borrowing and the maturity date will be January 4, 2013, subject to two one-year extension options exercisable by the Company. The interest rate on advances under the new term loan facility will generally be LIBOR plus a spread (currently 1.25%), which is dependent on the credit rating of the Company's long term debt.
Other
During the years ended December 31, 2011, 2010 and 2009, the Company incurred charges of $9.5 million, $6.6 million and $1.7 million, respectively, related to property acquisition costs, such as survey, title and legal fees, on the acquisition of operating properties and $5.1 million, $5.3 million and $4.8 million, respectively, related to the write-off of various pursuit and out-of-pocket costs for terminated acquisition, disposition and development transactions. These costs, totaling $14.6 million, $11.9 million and $6.5 million, respectively, are included in other expenses in the accompanying consolidated statements of operations.
    
During the year ended December 31, 2011, the Company received $4.5 million for the termination of its royalty participation in LRO/Rainmaker, a revenue management system, which is included in interest and other income in the accompanying consolidated statements of operations. During the year ended December 31, 2010, an arbitration panel awarded commissions, interest and costs in the amount of $1.7 million to the listing and marketing agent related to 38 potential condo sales at one of the Company’s properties. In addition, during 2011, 2010 and 2009, the Company received $0.8 million, $5.2 million and $0.2 million, respectively, for the settlement of litigation/insurance claims, which are included in interest and other income in the accompanying consolidated statements of operations.

During the year ended December 31, 2011, the Company disposed of its corporate housing business for a sales price of approximately $4.0 million, of which the Company provided $2.0 million of seller financing to the buyer. At the time of sale, the full amount of the seller financing was reserved against and the related gain was deferred. The Company subsequently collected $0.2 million on this note receivable and has recognized a cumulative net gain on the sale of approximately $1.2 million.
    
On December 2, 2011, the Company entered into a contract with affiliates of Bank of America and Barclays PLC to acquire, for $1.325 billion, half of their interests - an approximately 26.5% interest overall - in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. On January 20, 2012, Lehman Brothers, the other owner of Archstone, acquired this 26.5% interest pursuant to a right of first offer and as a result, the Company's contract with the sellers was terminated. The Company now has the exclusive right, exercisable on or before April 19, 2012, to contract to purchase the remaining 26.5% interest in Archstone owned by the same sellers for a price, determined by the Company, equal to $1.485 billion or higher. Any purchase of the remaining interest by the Company would also be subject to Lehman's right of first offer, and if Lehman were to exercise such right, the Company would be entitled to a break-up fee of $80.0 million, subject to repayment in certain limited circumstances. In 2011, the Company incurred Archstone-related expenses of approximately $4.4 million. Approximately $2.6 million of this total was financing-related and $1.8 million was pursuit costs.     
    
During the year ended December 31, 2010, the Company recorded a $45.4 million non-cash asset impairment charge on two parcels of land held for development as a result of changes in the Company’s future plans for those parcels. The Company now intends to sell one parcel in the near term and contemplated a joint venture structure for the other, necessitating this impairment charge. During the year ended December 31, 2009, the Company recorded an $11.1 million non-cash asset impairment charge on a parcel of land held for development. These charges were the result of an analysis of each parcel’s estimated fair value (determined using internally developed models that were based on market assumptions and comparable sales data) compared to its current capitalized carrying value. The market assumptions used as inputs to the Company’s fair value model include construction costs, leasing assumptions, growth rates, discount rates, terminal capitalization rates and development yields, along with the Company’s current plans for each individual asset. The Company uses data on its existing portfolio of properties and its recent acquisition

F-56


and development properties, as well as similar market data from third party sources, when available, in determining these inputs.
        
In 2010, a portion of the parking garage collapsed at one of the Company’s rental properties (Prospect Towers in Hackensack, New Jersey). The Company estimates that the costs related to such collapse (both expensed and capitalized), including providing for residents' interim needs, lost revenue and garage reconstruction, will be approximately $23.0 million, before insurance reimbursements of $12.0 million. The garage has been rebuilt with costs capitalized as incurred. Other costs, like those to accommodate displaced residents, lost revenue due to a portion of the property being temporarily unavailable for occupancy and legal costs, reduce earnings as they are incurred. Generally, insurance proceeds are recorded as increases to earnings as they are received. During the year ended December 31, 2011, the Company received approximately $6.1 million in insurance proceeds which offset expenses of $1.7 million that were recorded relating to this loss and are included in real estate taxes and insurance on the consolidated statements of operations. During the year ended December 31, 2010, the Company received approximately $4.0 million in insurance proceeds which fully offset the impairment charge recognized to write-off the net book value of the collapsed garage and partially offset expenses of $5.5 million that were recorded relating to this loss and are included in real estate taxes and insurance on the consolidated statements of operations.

19.
Quarterly Financial Data (Unaudited)

Equity Residential
The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. All amounts have also been restated in accordance with the guidance on discontinued operations and reflect dispositions and/or properties held for sale through March 31, 2012. Amounts are in thousands, except for per share amounts.
 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2011
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues (1)
 
$
466,356

 
$
484,290

 
$
504,496

 
$
514,127

Operating income (1)
 
115,953

 
141,104

 
147,850

 
159,953

(Loss) income from continuing operations (1)
 
(8,913
)
 
16,298

 
32,287

 
36,771

Discontinued operations, net (1)
 
141,979

 
565,455

 
80,690

 
70,630

Net income *
 
133,066

 
581,753

 
112,977

 
107,401

Net income available to Common Shares
 
123,865

 
552,457

 
104,382

 
99,016

Earnings per share – basic:
 
 

 
 

 
 

 
 

Net income available to Common Shares
 
$
0.42

 
$
1.88

 
$
0.35

 
$
0.33

Weighted average Common Shares outstanding
 
292,895

 
294,663

 
295,831

 
295,990

Earnings per share – diluted:
 
 

 
 

 
 

 
 

Net income available to Common Shares
 
$
0.42

 
$
1.85

 
$
0.35

 
$
0.33

Weighted average Common Shares outstanding
 
292,895

 
312,199

 
312,844

 
312,731


(1)
The amounts presented for 2011 are not equal to the same amounts previously reported in the Form 10-K filed with the SEC on February 24, 2012 as a result of changes in discontinued operations due to additional property sales which occurred throughout the first three months of 2012. Below is a reconciliation to the amounts previously reported in the Form 10-K:


F-57


 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2011
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues previously reported in 2011 Form 10-K
 
$
471,230

 
$
489,353

 
$
509,623

 
$
519,257

Total revenues subsequently reclassified to discontinued operations
 
(4,874
)
 
(5,063
)
 
(5,127
)
 
(5,130
)
Total revenues disclosed in Form 8-K
 
$
466,356

 
$
484,290

 
$
504,496

 
$
514,127

 
 
 
 
 
 
 
 
 
Operating income previously reported in 2011 Form 10-K
 
$
117,910

 
$
143,295

 
$
149,979

 
$
162,148

Operating income subsequently reclassified to discontinued operations
 
(1,957
)
 
(2,191
)
 
(2,129
)
 
(2,195
)
Operating income disclosed in Form 8-K
 
$
115,953

 
$
141,104

 
$
147,850

 
$
159,953

 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations previously reported in 2011
   Form 10-K
 
$
(7,569
)
 
$
18,185

 
$
34,416

 
$
38,966

Income from continuing operations subsequently reclassified to
   discontinued operations
 
(1,344
)
 
(1,887
)
 
(2,129
)
 
(2,195
)
(Loss) income from continuing operations disclosed in Form 8-K
 
$
(8,913
)
 
$
16,298

 
$
32,287

 
$
36,771

 
 
 
 
 
 
 
 
 
Discontinued operations, net previously reported in 2011 Form 10-K
 
$
140,635

 
$
563,568

 
$
78,561

 
$
68,435

Discontinued operations, net from properties sold subsequent to the
   respective reporting period
 
1,344

 
1,887

 
2,129

 
2,195

Discontinued operations, net disclosed in Form 8-K
 
$
141,979

 
$
565,455

 
$
80,690

 
$
70,630

 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2010
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues (2)
 
$
416,844

 
$
434,499

 
$
446,934

 
$
455,967

Operating income (2)
 
95,837

 
95,644

 
102,631

 
74,578

(Loss) from continuing operations (2)
 
(22,381
)
 
(13,921
)
 
(2,276
)
 
(49,721
)
Discontinued operations, net (2)
 
80,237

 
24,010

 
32,102

 
247,933

Net income *
 
57,856

 
10,089

 
29,826

 
198,212

Net income available to Common Shares
 
51,863

 
6,343

 
25,166

 
185,870

Earnings per share – basic:
 
 

 
 

 
 

 
 

Net income available to Common Shares
 
$
0.18

 
$
0.02

 
$
0.09

 
$
0.65

Weighted average Common Shares outstanding
 
280,645

 
282,217

 
282,717

 
285,916

Earnings per share – diluted:
 
 

 
 

 
 

 
 

Net income available to Common Shares
 
$
0.18

 
$
0.02

 
$
0.09

 
$
0.65

Weighted average Common Shares outstanding
 
280,645

 
282,217

 
282,717

 
285,916


(2)
The amounts presented for 2010 are not equal to the same amounts previously reported in the Form 10-K filed with the SEC on February 24, 2012 as a result of changes in discontinued operations due to additional property sales which occurred throughout the first three months of 2012. Below is a reconciliation to the amounts previously reported in the Form 10-K:


F-58


 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2010
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues previously reported in 2011 Form 10-K
 
$
421,517

 
$
439,258

 
$
451,745

 
$
460,748

Total revenues subsequently reclassified to discontinued operations
 
(4,673
)
 
(4,759
)
 
(4,811
)
 
(4,781
)
Total revenues disclosed in Form 8-K
 
$
416,844

 
$
434,499

 
$
446,934

 
$
455,967

 
 
 
 
 
 
 
 
 
Operating income previously reported in 2011 Form 10-K
 
$
97,540

 
$
97,590

 
$
104,444

 
$
76,503

Operating income subsequently reclassified to discontinued
   operations
 
(1,703
)
 
(1,946
)
 
(1,813
)
 
(1,925
)
Operating income disclosed in Form 8-K
 
$
95,837

 
$
95,644

 
$
102,631

 
$
74,578

 
 
 
 
 
 
 
 
 
(Loss) from continuing operations previously reported in 2011 Form
   10-K
 
$
(21,315
)
 
$
(12,607
)
 
$
(1,088
)
 
$
(48,416
)
Income from continuing operations subsequently reclassified to
    discontinued operations
 
(1,066
)
 
(1,314
)
 
(1,188
)
 
(1,305
)
(Loss) from continuing operations disclosed in Form 8-K
 
$
(22,381
)
 
$
(13,921
)
 
$
(2,276
)
 
$
(49,721
)
 
 
 
 
 
 
 
 
 
Discontinued operations, net previously reported in 2011 Form 10-K
 
$
79,171

 
$
22,696

 
$
30,914

 
$
246,628

Discontinued operations, net from properties sold subsequent to the
    respective reporting period
 
1,066

 
1,314

 
1,188

 
1,305

Discontinued operations, net disclosed in Form 8-K
 
$
80,237

 
$
24,010

 
$
32,102

 
$
247,933

* The Company did not have any extraordinary items or cumulative effect of change in accounting principle during the years ended December 31, 2011 and 2010. Therefore, income before extraordinary items and cumulative effect of change in accounting principle is not shown as it was equal to the net income amounts disclosed above.

ERP Operating Limited Partnership

The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. All amounts have also been restated in accordance with the guidance on discontinued operations and reflect dispositions and/or properties held for sale through March 31, 2012. Amounts are in thousands, except for per Unit amounts.

 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2011
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues (1)
 
$
466,356

 
$
484,290

 
$
504,496

 
$
514,127

Operating income (1)
 
115,953

 
141,104

 
147,850

 
159,953

(Loss) income from continuing operations (1)
 
(8,913
)
 
16,298

 
32,287

 
36,771

Discontinued operations, net (1)
 
141,979

 
565,455

 
80,690

 
70,630

Net income *
 
133,066

 
581,753

 
112,977

 
107,401

Net income available to Units
 
129,640

 
578,215

 
109,124

 
103,521

Earnings per Unit – basic:
 
 

 
 

 
 

 
 

Net income available to Units
 
$
0.42

 
$
1.88

 
$
0.35

 
$
0.33

Weighted average Units outstanding
 
306,248

 
307,954

 
308,884

 
309,120

Earnings per Unit – diluted:
 
 

 
 

 
 

 
 

Net income available to Units
 
$
0.42

 
$
1.85

 
$
0.35

 
$
0.33

Weighted average Units outstanding
 
306,248

 
312,199

 
312,844

 
312,731


(1)
The amounts presented for 2011 are not equal to the same amounts previously reported in the Form 10-K filed with the SEC on February 24, 2012 as a result of changes in discontinued operations due to additional property sales which occurred throughout the first three months of 2012. Below is a reconciliation to the amounts previously reported in the Form 10-K:


F-59


 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2011
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues previously reported in 2011 Form 10-K
 
$
471,230

 
$
489,353

 
$
509,623

 
$
519,257

Total revenues subsequently reclassified to discontinued operations
 
(4,874
)
 
(5,063
)
 
(5,127
)
 
(5,130
)
Total revenues disclosed in Form 8-K
 
$
466,356

 
$
484,290

 
$
504,496

 
$
514,127

 
 
 
 
 
 
 
 
 
Operating income previously reported in 2011 Form 10-K
 
$
117,910

 
$
143,295

 
$
149,979

 
$
162,148

Operating income subsequently reclassified to discontinued operations
 
(1,957
)
 
(2,191
)
 
(2,129
)
 
(2,195
)
Operating income disclosed in Form 8-K
 
$
115,953

 
$
141,104

 
$
147,850

 
$
159,953

 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations previously reported in 2011
   Form 10-K
 
$
(7,569
)
 
$
18,185

 
$
34,416

 
$
38,966

Income from continuing operations subsequently reclassified to
   discontinued operations
 
(1,344
)
 
(1,887
)
 
(2,129
)
 
(2,195
)
(Loss) income from continuing operations disclosed in Form 8-K
 
$
(8,913
)
 
$
16,298

 
$
32,287

 
$
36,771

 
 
 
 
 
 
 
 
 
Discontinued operations, net previously reported in 2011 Form 10-K
 
$
140,635

 
$
563,568

 
$
78,561

 
$
68,435

Discontinued operations, net from properties sold subsequent to the
   respective reporting period
 
1,344

 
1,887

 
2,129

 
2,195

Discontinued operations, net disclosed in Form 8-K
 
$
141,979

 
$
565,455

 
$
80,690

 
$
70,630

 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2010
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues (2)
 
$
416,844

 
$
434,499

 
$
446,934

 
$
455,967

Operating income (2)
 
95,837

 
95,644

 
102,631

 
74,578

(Loss) from continuing operations (2)
 
(22,381
)
 
(13,921
)
 
(2,276
)
 
(49,721
)
Discontinued operations, net (2)
 
80,237

 
24,010

 
32,102

 
247,933

Net income *
 
57,856

 
10,089

 
29,826

 
198,212

Net income available to Units
 
54,486

 
6,656

 
26,397

 
194,802

Earnings per Unit – basic:
 
 

 
 

 
 

 
 

Net income available to Units
 
$
0.18

 
$
0.02

 
$
0.09

 
$
0.65

Weighted average Units outstanding
 
294,450

 
295,898

 
296,348

 
299,363

Earnings per Unit – diluted:
 
 

 
 

 
 

 
 

Net income available to Units
 
$
0.18

 
$
0.02

 
$
0.09

 
$
0.65

Weighted average Units outstanding
 
294,450

 
295,898

 
296,348

 
299,363


(2)
The amounts presented for 2010 are not equal to the same amounts previously reported in the Form 10-K filed with the SEC on February 24, 2012 as a result of changes in discontinued operations due to additional property sales which occurred throughout the first three months of 2012. Below is a reconciliation to the amounts previously reported in the Form 10-K:


F-60


 
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
2010
 
3/31
 
6/30
 
9/30
 
12/31
Total revenues previously reported in 2011 Form 10-K
 
$
421,517

 
$
439,258

 
$
451,745

 
$
460,748

Total revenues subsequently reclassified to discontinued operations
 
(4,673
)
 
(4,759
)
 
(4,811
)
 
(4,781
)
Total revenues disclosed in Form 8-K
 
$
416,844

 
$
434,499

 
$
446,934

 
$
455,967

 
 
 
 
 
 
 
 
 
Operating income previously reported in 2011 Form 10-K
 
$
97,540

 
$
97,590

 
$
104,444

 
$
76,503

Operating income subsequently reclassified to discontinued
   operations
 
(1,703
)
 
(1,946
)
 
(1,813
)
 
(1,925
)
Operating income disclosed in Form 8-K
 
$
95,837

 
$
95,644

 
$
102,631

 
$
74,578

 
 
 
 
 
 
 
 
 
(Loss) from continuing operations previously reported in 2011 Form
   10-K
 
$
(21,315
)
 
$
(12,607
)
 
$
(1,088
)
 
$
(48,416
)
Income from continuing operations subsequently reclassified to
   discontinued operations
 
(1,066
)
 
(1,314
)
 
(1,188
)
 
(1,305
)
(Loss) from continuing operations disclosed in Form 8-K
 
$
(22,381
)
 
$
(13,921
)
 
$
(2,276
)
 
$
(49,721
)
 
 
 
 
 
 
 
 
 
Discontinued operations, net previously reported in 2011 Form 10-K
 
$
79,171

 
$
22,696

 
$
30,914

 
$
246,628

Discontinued operations, net from properties sold subsequent to the
   respective reporting period
 
1,066

 
1,314

 
1,188

 
1,305

Discontinued operations, net disclosed in Form 8-K
 
$
80,237

 
$
24,010

 
$
32,102

 
$
247,933

* The Operating Partnership did not have any extraordinary items or cumulative effect of change in accounting principle during the years ended December 31, 2011 and 2010. Therefore, income before extraordinary items and cumulative effect of change in accounting principle is not shown as it was equal to the net income amounts disclosed above.

F-61





EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
Overall Summary
December 31, 2011
 
Properties (H)
 
Units (H)
 
Investment in Real Estate, Gross
 
Accumulated
Depreciation
 
Investment in Real Estate, Net
 
Encumbrances
Wholly Owned Unencumbered
272

 
75,704

 
$
13,504,684,414

 
$
(2,901,009,678
)
 
$
10,603,674,736

 
$

Wholly Owned Encumbered
132

 
37,453

 
6,178,806,326

 
(1,482,040,971
)
 
4,696,765,355

 
2,547,898,280

Portfolio/Entity Encumbrances (1)

 

 

 

 

 
1,329,833,000

Wholly Owned Properties
404

 
113,157

 
19,683,490,740

 
(4,383,050,649
)
 
15,300,440,091

 
3,877,731,280

 
 
 
 
 
 
 
 
 
 
 
 
Partially Owned Unencumbered
10

 
1,917

 
441,329,067

 
(73,969,422
)
 
367,359,645

 

Partially Owned Encumbered
11

 
1,999

 
283,126,139

 
(82,562,799
)
 
200,563,340

 
233,755,656

Partially Owned Properties
21

 
3,916

 
724,455,206

 
(156,532,221
)
 
567,922,985

 
233,755,656

 
 
 
 
 
 
 
 
 
 
 
 
Total Unencumbered Properties
282

 
77,621

 
13,946,013,481

 
(2,974,979,100
)
 
10,971,034,381

 

Total Encumbered Properties
143

 
39,452

 
6,461,932,465

 
(1,564,603,770
)
 
4,897,328,695

 
4,111,486,936

Total Consolidated Investment in Real Estate
425

 
117,073

 
$
20,407,945,946

 
$
(4,539,582,870
)
 
$
15,868,363,076

 
$
4,111,486,936


(1)
See attached Encumbrances Reconciliation.

S-1



EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
Encumbrances Reconciliation
December 31, 2011
Portfolio/Entity Encumbrances
 
Number of
Properties Encumbered by
 
See Properties With Note:
 
Amount
 
EQR-Bond Partnership
 
6
 
I
 
$
13,695,000

 
EQR-Fanwell 2007 LP
 
7
 
J
 
223,138,000

 
EQR-Wellfan 2008 LP (R)
 
15
 
K
 
550,000,000

 
EQR-SOMBRA 2008 LP
 
19
 
L
 
543,000,000

 
Portfolio/Entity Encumbrances
 
47
 
 
 
1,329,833,000

 
Individual Property Encumbrances
 
 
 
 
 
2,781,653,936

 
Total Encumbrances per Financial Statements
 
 
 
 
 
$
4,111,486,936

 



S-2



EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III – Real Estate and Accumulated Depreciation
(Amounts in thousands)
The changes in total real estate for the years ended December 31, 2011, 2010 and 2009 are as follows:
 
2011
 
2010
 
2009
Balance, beginning of year
$
19,702,371

 
$
18,465,144

 
$
18,690,239

Acquisitions and development
1,721,895

 
1,789,948

 
512,977

Improvements
151,476

 
141,199

 
125,965

Dispositions and other
(1,167,796
)
 
(693,920
)
 
(864,037
)
Balance, end of year
$
20,407,946

 
$
19,702,371

 
$
18,465,144


The changes in accumulated depreciation for the years ended December 31, 2011, 2010 and 2009 are as follows:
 
2011
 
2010
 
2009
Balance, beginning of year
$
4,337,357

 
$
3,877,564

 
$
3,561,300

Depreciation
663,616

 
673,403

 
600,375

Dispositions and other
(461,390
)
 
(213,610
)
 
(284,111
)
Balance, end of year
$
4,539,583

 
$
4,337,357

 
$
3,877,564




S-3


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Wholly Owned Unencumbered:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1210 Mass
Washington, D.C. (G)
 
2004
 
144

 
$
9,213,512

 
$
36,559,189

 
$
316,157

 
$
9,213,512

 
$
36,875,346

 
$
46,088,858

 
$
(8,949,188
)
 
$
37,139,670

 
$

1401 Joyce on Pentagon Row
Arlington, VA
 
2004
 
326

 
9,780,000

 
89,668,165

 
260,729

 
9,780,000

 
89,928,894

 
99,708,894

 
(11,567,038
)
 
88,141,856

 

1500 Mass Ave
Washington, D.C. (G)
 
1951
 
556

 
54,638,298

 
40,361,702

 
1,435,233

 
54,638,298

 
41,796,935

 
96,435,233

 
(5,071,385
)
 
91,363,848

 

1660 Peachtree
Atlanta, GA
 
1999
 
355

 
7,924,126

 
23,533,831

 
2,308,016

 
7,924,126

 
25,841,847

 
33,765,973

 
(8,233,880
)
 
25,532,093

 

170 Amsterdam
New York, NY
 
(F)
 

 

 
3,347,795

 

 

 
3,347,795

 
3,347,795

 

 
3,347,795

 

175 Kent
Brooklyn, NY (G)
 
2011
 
113

 
22,037,831

 
53,962,169

 
4,899

 
22,037,831

 
53,967,068

 
76,004,899

 

 
76,004,899

 

200 N Lemon Street
Anaheim, CA
 
(F)
 

 
5,865,235

 
171,438

 

 
5,865,235

 
171,438

 
6,036,673

 

 
6,036,673

 

2201 Pershing Drive
Arlington, VA
 
(F)
 

 
11,321,198

 
19,605,311

 

 
11,321,198

 
19,605,311

 
30,926,509

 

 
30,926,509

 

2400 M St
Washington, D.C. (G)
 
2006
 
359

 
30,006,593

 
114,013,785

 
821,940

 
30,006,593

 
114,835,725

 
144,842,318

 
(25,913,002
)
 
118,929,316

 

420 East 80th Street
New York, NY
 
1961
 
155

 
39,277,000

 
23,026,984

 
2,670,219

 
39,277,000

 
25,697,203

 
64,974,203

 
(7,346,380
)
 
57,627,823

 

425 Mass
Washington, D.C. (G)
 
2009
 
559

 
28,150,000

 
138,600,000

 
2,306,882

 
28,150,000

 
140,906,882

 
169,056,882

 
(10,753,212
)
 
158,303,670

 

51 University
Seattle, WA (G)
 
1918
 

 
3,640,000

 
8,110,000

 
782,855

 
3,640,000

 
8,892,855

 
12,532,855

 
(207,107
)
 
12,325,748

 

600 Washington
New York, NY (G)
 
2004
 
135

 
32,852,000

 
43,140,551

 
241,280

 
32,852,000

 
43,381,831

 
76,233,831

 
(10,895,304
)
 
65,338,527

 

70 Greene
Jersey City, NJ (G)
 
2010
 
480

 
28,170,659

 
237,020,220

 
298,646

 
28,170,659

 
237,318,866

 
265,489,525

 
(15,466,554
)
 
250,022,971

 

71 Broadway
New York, NY (G)
 
1997
 
238

 
22,611,600

 
77,492,171

 
7,194,824

 
22,611,600

 
84,686,995

 
107,298,595

 
(21,051,383
)
 
86,247,212

 

777 Sixth
New York, NY (G)
 
2002
 
294

 
65,352,706

 
65,747,294

 
760,339

 
65,352,706

 
66,507,633

 
131,860,339

 
(11,220,212
)
 
120,640,127

 

88 Hillside
Daly City, CA (G)
 
2011
 
95

 
7,786,800

 
31,733,200

 
729,871

 
7,786,800

 
32,463,071

 
40,249,871

 
(343,824
)
 
39,906,047

 

Abington Glen
Abington, MA
 
1968
 
90

 
553,105

 
3,697,396

 
2,394,444

 
553,105

 
6,091,840

 
6,644,945

 
(3,160,486
)
 
3,484,459

 

Acacia Creek
Scottsdale, AZ
 
1988-1994
 
304

 
3,663,473

 
21,172,386

 
2,955,147

 
3,663,473

 
24,127,533

 
27,791,006

 
(12,113,624
)
 
15,677,382

 

Arches, The
Sunnyvale, CA
 
1974
 
410

 
26,650,000

 
62,850,000

 
8,347

 
26,650,000

 
62,858,347

 
89,508,347

 
(745,859
)
 
88,762,488

 

Arden Villas
Orlando, FL
 
1999
 
336

 
5,500,000

 
28,600,796

 
3,366,120

 
5,500,000

 
31,966,916

 
37,466,916

 
(9,505,727
)
 
27,961,189

 

Arlington at Perimeter Center
Atlanta, GA
 
1980
 
204

 
2,448,000

 
8,095,484

 
199,927

 
2,448,000

 
8,295,411

 
10,743,411

 
(2,002,871
)
 
8,740,540

 

Artisan on Second
Los Angeles, CA
 
2008
 
118

 
8,000,400

 
36,074,600

 
12,623

 
8,000,400

 
36,087,223

 
44,087,623

 
(1,370,912
)
 
42,716,711

 

Ashton, The
Corona Hills, CA
 
1986
 
492

 
2,594,264

 
33,042,398

 
6,318,737

 
2,594,264

 
39,361,135

 
41,955,399

 
(20,407,980
)
 
21,547,419

 

Auvers Village
Orlando, FL
 
1991
 
480

 
3,808,823

 
29,322,243

 
6,438,957

 
3,808,823

 
35,761,200

 
39,570,023

 
(17,562,711
)
 
22,007,312

 

Avenue Royale
Jacksonville, FL
 
2001
 
200

 
5,000,000

 
17,785,388

 
1,015,551

 
5,000,000

 
18,800,939

 
23,800,939

 
(5,263,233
)
 
18,537,706

 

Avon Place, LLC
Avon, CT
 
1973
 
163

 
1,788,943

 
12,440,003

 
1,826,600

 
1,788,943

 
14,266,603

 
16,055,546

 
(5,868,216
)
 
10,187,330

 

Ball Park Lofts
Denver, CO (G)
 
2003
 
346

 
5,481,556

 
51,658,741

 
3,147,155

 
5,481,556

 
54,805,896

 
60,287,452

 
(15,027,289
)
 
45,260,163

 

Barrington Place
Oviedo, FL
 
1998
 
233

 
6,990,000

 
15,740,825

 
2,656,061

 
6,990,000

 
18,396,886

 
25,386,886

 
(7,143,268
)
 
18,243,618

 

Bay Hill
Long Beach, CA
 
2002
 
160

 
7,600,000

 
27,437,239

 
819,776

 
7,600,000

 
28,257,015

 
35,857,015

 
(8,027,118
)
 
27,829,897

 

Bella Terra I
Mukilteo, WA (G)
 
2002
 
235

 
5,686,861

 
26,070,540

 
743,787

 
5,686,861

 
26,814,327

 
32,501,188

 
(8,186,839
)
 
24,314,349

 

Bella Vista
Phoenix, AZ
 
1995
 
248

 
2,978,879

 
20,641,333

 
3,456,763

 
2,978,879

 
24,098,096

 
27,076,975

 
(12,710,839
)
 
14,366,136

 

Bella Vista I, II, III Combined
Woodland Hills, CA
 
2003-2007
 
579

 
31,682,754

 
121,095,786

 
1,563,367

 
31,682,754

 
122,659,153

 
154,341,907

 
(28,332,758
)
 
126,009,149

 

Belle Arts Condominium Homes, LLC
Bellevue, WA
 
2000
 
1

 
63,158

 
248,929

 
(5,320
)
 
63,158

 
243,609

 
306,767

 

 
306,767

 

Berkeley Land
Berkeley, CA
 
(F)
 

 
13,908,910

 
2,227,866

 

 
13,908,910

 
2,227,866

 
16,136,776

 

 
16,136,776

 

Bermuda Cove
Jacksonville, FL
 
1989
 
350

 
1,503,000

 
19,561,896

 
4,743,553

 
1,503,000

 
24,305,449

 
25,808,449

 
(12,374,482
)
 
13,433,967

 

Bishop Park
Winter Park, FL
 
1991
 
324

 
2,592,000

 
17,990,436

 
3,762,396

 
2,592,000

 
21,752,832

 
24,344,832

 
(11,171,320
)
 
13,173,512

 

Bradford Apartments
Newington, CT
 
1964
 
64

 
401,091

 
2,681,210

 
627,352

 
401,091

 
3,308,562

 
3,709,653

 
(1,443,213
)
 
2,266,440

 

Bradley Park
Puyallup, WA
 
1999
 
155

 
3,813,000

 
18,313,645

 
451,352

 
3,813,000

 
18,764,997

 
22,577,997

 
(5,726,555
)
 
16,851,442

 

Briar Knoll Apts
Vernon, CT
 
1986
 
150

 
928,972

 
6,209,988

 
1,467,900

 
928,972

 
7,677,888

 
8,606,860

 
(3,355,569
)
 
5,251,291

 

Bridford Lakes II
Greensboro, NC
 
(F)
 

 
1,100,564

 
792,508

 

 
1,100,564

 
792,508

 
1,893,072

 

 
1,893,072

 

Bridgewater at Wells Crossing
Orange Park, FL
 
1986
 
288

 
2,160,000

 
13,347,549

 
2,202,929

 
2,160,000

 
15,550,478

 
17,710,478

 
(7,204,309
)
 
10,506,169

 

Brooklyner (fka 111 Lawrence)
Brooklyn, NY (G)
 
2010
 
490

 
40,099,922

 
221,413,464

 
84,680

 
40,099,922

 
221,498,144

 
261,598,066

 
(7,655,279
)
 
253,942,787

 

Camellero
Scottsdale, AZ
 
1979
 
348

 
1,924,900

 
17,324,593

 
5,702,222

 
1,924,900

 
23,026,815

 
24,951,715

 
(14,664,481
)
 
10,287,234

 

Carlyle Mill
Alexandria, VA
 
2002
 
317

 
10,000,000

 
51,367,913

 
3,734,381

 
10,000,000

 
55,102,294

 
65,102,294

 
(17,452,858
)
 
47,649,436

 

Centennial Court
Seattle, WA (G)
 
2001
 
187

 
3,800,000

 
21,280,039

 
389,948

 
3,800,000

 
21,669,987

 
25,469,987

 
(5,773,241
)
 
19,696,746

 


S-4


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
CenterPointe
Beaverton, OR
 
1996
 
264

 
3,421,535

 
15,708,853

 
2,854,171

 
3,421,535

 
18,563,024

 
21,984,559

 
(7,802,200
)
 
14,182,359

 

Centre Club
Ontario, CA
 
1994
 
312

 
5,616,000

 
23,485,891

 
2,737,952

 
5,616,000

 
26,223,843

 
31,839,843

 
(10,900,792
)
 
20,939,051

 

Centre Club II
Ontario, CA
 
2002
 
100

 
1,820,000

 
9,528,898

 
591,236

 
1,820,000

 
10,120,134

 
11,940,134

 
(3,571,632
)
 
8,368,502

 

Chandlers Bay
Kent, WA
 
1980
 
293

 
3,700,000

 
18,961,895

 
284,794

 
3,700,000

 
19,246,689

 
22,946,689

 
(3,172,283
)
 
19,774,406

 

Chatelaine Park
Duluth, GA
 
1995
 
303

 
1,818,000

 
24,489,671

 
2,121,430

 
1,818,000

 
26,611,101

 
28,429,101

 
(12,460,470
)
 
15,968,631

 

Chesapeake Glen Apts (fka Greentree I, II & III)
Glen Burnie, MD
 
1973
 
796

 
8,993,411

 
27,301,052

 
21,729,611

 
8,993,411

 
49,030,663

 
58,024,074

 
(25,384,518
)
 
32,639,556

 

Chestnut Hills
Puyallup, WA
 
1991
 
157

 
756,300

 
6,806,635

 
1,478,004

 
756,300

 
8,284,639

 
9,040,939

 
(4,569,192
)
 
4,471,747

 

Chickasaw Crossing
Orlando, FL
 
1986
 
292

 
2,044,000

 
12,366,832

 
2,026,320

 
2,044,000

 
14,393,152

 
16,437,152

 
(7,087,225
)
 
9,349,927

 

Chinatown Gateway
Los Angeles, CA
 
(F)
 

 
14,791,831

 
20,219,520

 

 
14,791,831

 
20,219,520

 
35,011,351

 

 
35,011,351

 

City View (GA)
Atlanta, GA (G)
 
2003
 
202

 
6,440,800

 
19,993,460

 
1,317,239

 
6,440,800

 
21,310,699

 
27,751,499

 
(5,974,911
)
 
21,776,588

 

Cleo, The
Los Angeles, CA
 
1989
 
92

 
6,615,467

 
14,829,335

 
3,705,284

 
6,615,467

 
18,534,619

 
25,150,086

 
(4,696,293
)
 
20,453,793

 

Coconut Palm Club
Coconut Creek, FL
 
1992
 
300

 
3,001,700

 
17,678,928

 
3,011,144

 
3,001,700

 
20,690,072

 
23,691,772

 
(10,164,773
)
 
13,526,999

 

Cortona at Dana Park
Mesa, AZ
 
1986
 
222

 
2,028,939

 
12,466,128

 
2,545,062

 
2,028,939

 
15,011,190

 
17,040,129

 
(7,883,606
)
 
9,156,523

 

Cove at Boynton Beach I
Boynton Beach, FL
 
1996
 
252

 
12,600,000

 
31,469,651

 
3,289,248

 
12,600,000

 
34,758,899

 
47,358,899

 
(11,006,677
)
 
36,352,222

 

Cove at Boynton Beach II
Boynton Beach, FL
 
1998
 
296

 
14,800,000

 
37,874,719

 

 
14,800,000

 
37,874,719

 
52,674,719

 
(11,305,764
)
 
41,368,955

 

Crown Court
Scottsdale, AZ
 
1987
 
416

 
3,156,600

 
28,414,599

 
8,646,438

 
3,156,600

 
37,061,037

 
40,217,637

 
(19,125,520
)
 
21,092,117

 

Crowntree Lakes
Orlando, FL
 
2008
 
352

 
12,009,630

 
44,407,977

 
236,864

 
12,009,630

 
44,644,841

 
56,654,471

 
(7,065,210
)
 
49,589,261

 

Cypress Lake at Waterford
Orlando, FL
 
2001
 
316

 
7,000,000

 
27,654,816

 
1,621,151

 
7,000,000

 
29,275,967

 
36,275,967

 
(8,974,873
)
 
27,301,094

 

Dartmouth Woods
Lakewood, CO
 
1990
 
201

 
1,609,800

 
10,832,754

 
2,098,370

 
1,609,800

 
12,931,124

 
14,540,924

 
(6,960,459
)
 
7,580,465

 

Dean Estates
Taunton, MA
 
1984
 
58

 
498,080

 
3,329,560

 
644,755

 
498,080

 
3,974,315

 
4,472,395

 
(1,831,109
)
 
2,641,286

 

Deerwood (Corona)
Corona, CA
 
1992
 
316

 
4,742,200

 
20,272,892

 
3,983,156

 
4,742,200

 
24,256,048

 
28,998,248

 
(12,694,215
)
 
16,304,033

 

Defoor Village
Atlanta, GA
 
1997
 
156

 
2,966,400

 
10,570,210

 
2,022,481

 
2,966,400

 
12,592,691

 
15,559,091

 
(6,381,963
)
 
9,177,128

 

Del Mar Ridge
San Diego, CA
 
1998
 
181

 
7,801,824

 
36,948,176

 
2,873,844

 
7,801,824

 
39,822,020

 
47,623,844

 
(4,887,595
)
 
42,736,249

 

Eagle Canyon
Chino Hills, CA
 
1985
 
252

 
1,808,900

 
16,274,361

 
6,201,855

 
1,808,900

 
22,476,216

 
24,285,116

 
(11,710,765
)
 
12,574,351

 

Edgemont at Bethesda Metro
Bethesda, MD
 
1989
 
122

 
13,092,552

 
43,907,448

 
14,551

 
13,092,552

 
43,921,999

 
57,014,551

 
(143,993
)
 
56,870,558

 

Ellipse at Government Center
Fairfax, VA
 
1989
 
404

 
19,433,000

 
56,816,266

 
3,407,457

 
19,433,000

 
60,223,723

 
79,656,723

 
(10,767,112
)
 
68,889,611

 

Emerson Place
Boston, MA (G)
 
1962
 
444

 
14,855,000

 
57,566,636

 
15,461,793

 
14,855,000

 
73,028,429

 
87,883,429

 
(39,453,309
)
 
48,430,120

 

Enclave at Lake Underhill
Orlando, FL
 
1989
 
312

 
9,359,750

 
29,539,650

 
2,285,853

 
9,359,750

 
31,825,503

 
41,185,253

 
(9,090,279
)
 
32,094,974

 

Enclave at Waterways
Deerfield Beach, FL
 
1998
 
300

 
15,000,000

 
33,194,576

 
1,068,582

 
15,000,000

 
34,263,158

 
49,263,158

 
(10,140,629
)
 
39,122,529

 

Enclave at Winston Park
Coconut Creek, FL
 
1995
 
278

 
5,560,000

 
19,939,324

 
2,590,243

 
5,560,000

 
22,529,567

 
28,089,567

 
(8,422,705
)
 
19,666,862

 

Enclave, The
Tempe, AZ
 
1994
 
204

 
1,500,192

 
19,281,399

 
1,446,011

 
1,500,192

 
20,727,410

 
22,227,602

 
(10,245,126
)
 
11,982,476

 

Encore at Sherman Oaks, The
Sherman Oaks, CA
 
1988
 
174

 
8,700,000

 
25,450,000

 
(172
)
 
8,700,000

 
25,449,828

 
34,149,828

 
(102,111
)
 
34,047,717

 

Estates at Wellington Green
Wellington, FL
 
2003
 
400

 
20,000,000

 
64,790,850

 
1,940,468

 
20,000,000

 
66,731,318

 
86,731,318

 
(18,233,852
)
 
68,497,466

 

Eye Street
Washington, D.C.
 
(F)
 

 
13,523,104

 
1,434,731

 

 
13,523,104

 
1,434,731

 
14,957,835

 

 
14,957,835

 

Four Winds
Fall River, MA
 
1987
 
168

 
1,370,843

 
9,163,804

 
2,055,216

 
1,370,843

 
11,219,020

 
12,589,863

 
(4,838,597
)
 
7,751,266

 

Fox Hill Apartments
Enfield, CT
 
1974
 
168

 
1,129,018

 
7,547,256

 
1,542,032

 
1,129,018

 
9,089,288

 
10,218,306

 
(3,874,075
)
 
6,344,231

 

Fox Run (WA)
Federal Way, WA
 
1988
 
144

 
626,637

 
5,765,018

 
1,799,744

 
626,637

 
7,564,762

 
8,191,399

 
(4,799,492
)
 
3,391,907

 

Fox Run II (WA)
Federal Way, WA
 
1988
 
18

 
80,000

 
1,286,139

 
53,086

 
80,000

 
1,339,225

 
1,419,225

 
(435,137
)
 
984,088

 

Gables Grand Plaza
Coral Gables, FL (G)
 
1998
 
195

 

 
44,601,000

 
4,864,473

 

 
49,465,473

 
49,465,473

 
(14,528,653
)
 
34,936,820

 

Gallery, The
Hermosa Beach,CA
 
1971
 
168

 
18,144,000

 
46,567,941

 
1,800,776

 
18,144,000

 
48,368,717

 
66,512,717

 
(11,575,744
)
 
54,936,973

 

Gatehouse at Pine Lake
Pembroke Pines, FL
 
1990
 
296

 
1,896,600

 
17,070,795

 
4,694,859

 
1,896,600

 
21,765,654

 
23,662,254

 
(11,286,379
)
 
12,375,875

 

Gatehouse on the Green
Plantation, FL
 
1990
 
312

 
2,228,200

 
20,056,270

 
6,918,445

 
2,228,200

 
26,974,715

 
29,202,915

 
(13,806,093
)
 
15,396,822

 

Gates of Redmond
Redmond, WA
 
1979
 
180

 
2,306,100

 
12,064,015

 
4,676,955

 
2,306,100

 
16,740,970

 
19,047,070

 
(8,269,321
)
 
10,777,749

 

Gatewood
Pleasanton, CA
 
1985
 
200

 
6,796,511

 
20,249,392

 
4,235,044

 
6,796,511

 
24,484,436

 
31,280,947

 
(7,962,040
)
 
23,318,907

 

Governors Green
Bowie, MD
 
1999
 
478

 
19,845,000

 
73,335,916

 
695,633

 
19,845,000

 
74,031,549

 
93,876,549

 
(14,127,464
)
 
79,749,085

 

Greenfield Village
Rocky Hill , CT
 
1965
 
151

 
911,534

 
6,093,418

 
653,663

 
911,534

 
6,747,081

 
7,658,615

 
(2,908,887
)
 
4,749,728

 

Hamilton Villas
Beverly Hills, CA
 
1990
 
35

 
7,772,000

 
16,864,269

 
1,248,987

 
7,772,000

 
18,113,256

 
25,885,256

 
(2,886,918
)
 
22,998,338

 

Hammocks Place
Miami, FL
 
1986
 
296

 
319,180

 
12,513,467

 
3,756,576

 
319,180

 
16,270,043

 
16,589,223

 
(10,420,561
)
 
6,168,662

 




S-5


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Hampshire Place
Los Angeles, CA
 
1989
 
259

 
10,806,000

 
30,335,330

 
1,975,273

 
10,806,000

 
32,310,603

 
43,116,603

 
(9,342,481
)
 
33,774,122

 

Hamptons
Puyallup, WA
 
1991
 
230

 
1,119,200

 
10,075,844

 
2,181,372

 
1,119,200

 
12,257,216

 
13,376,416

 
(6,502,883
)
 
6,873,533

 

Heritage Ridge
Lynwood, WA
 
1999
 
197

 
6,895,000

 
18,983,597

 
580,309

 
6,895,000

 
19,563,906

 
26,458,906

 
(6,170,097
)
 
20,288,809

 

Heritage, The
Phoenix, AZ
 
1995
 
204

 
1,209,705

 
13,136,903

 
1,445,456

 
1,209,705

 
14,582,359

 
15,792,064

 
(7,351,002
)
 
8,441,062

 

Heron Pointe
Boynton Beach, FL
 
1989
 
192

 
1,546,700

 
7,774,676

 
2,100,353

 
1,546,700

 
9,875,029

 
11,421,729

 
(5,452,706
)
 
5,969,023

 

High Meadow
Ellington, CT
 
1975
 
100

 
583,679

 
3,901,774

 
847,209

 
583,679

 
4,748,983

 
5,332,662

 
(1,998,900
)
 
3,333,762

 

Highland Glen
Westwood, MA
 
1979
 
180

 
2,229,096

 
16,828,153

 
2,377,035

 
2,229,096

 
19,205,188

 
21,434,284

 
(7,889,981
)
 
13,544,303

 

Highland Glen II
Westwood, MA
 
2007
 
102

 

 
19,875,857

 
96,440

 

 
19,972,297

 
19,972,297

 
(3,651,496
)
 
16,320,801

 

Highlands at South Plainfield
South Plainfield, NJ
 
2000
 
252

 
10,080,000

 
37,526,912

 
775,891

 
10,080,000

 
38,302,803

 
48,382,803

 
(9,250,419
)
 
39,132,384

 

Highlands, The
Scottsdale, AZ
 
1990
 
272

 
11,823,840

 
31,990,970

 
2,898,136

 
11,823,840

 
34,889,106

 
46,712,946

 
(9,125,842
)
 
37,587,104

 

Hikari
Los Angeles, CA (G)
 
2007
 
128

 
9,435,760

 
32,564,240

 
459

 
9,435,760

 
32,564,699

 
42,000,459

 
(227,136
)
 
41,773,323

 

Hudson Crossing
New York, NY (G)
 
2003
 
259

 
23,420,000

 
70,086,976

 
788,773

 
23,420,000

 
70,875,749

 
94,295,749

 
(18,595,417
)
 
75,700,332

 

Hudson Pointe
Jersey City, NJ
 
2003
 
182

 
5,148,500

 
41,114,074

 
1,657,246

 
5,148,500

 
42,771,320

 
47,919,820

 
(11,801,705
)
 
36,118,115

 

Hunt Club II
Charlotte, NC
 
(F)
 

 
100,000

 

 

 
100,000

 

 
100,000

 

 
100,000

 

Huntington Park
Everett, WA
 
1991
 
381

 
1,597,500

 
14,367,864

 
4,183,579

 
1,597,500

 
18,551,443

 
20,148,943

 
(11,674,614
)
 
8,474,329

 

Indian Bend
Scottsdale, AZ
 
1973
 
278

 
1,075,700

 
9,800,330

 
3,187,921

 
1,075,700

 
12,988,251

 
14,063,951

 
(8,540,028
)
 
5,523,923

 

Iron Horse Park
Pleasant Hill, CA
 
1973
 
252

 
15,000,000

 
24,335,549

 
7,795,496

 
15,000,000

 
32,131,045

 
47,131,045

 
(9,910,604
)
 
37,220,441

 

Kelvin Court (fka Alta Pacific)
Irvine, CA
 
2008
 
132

 
10,752,145

 
34,628,115

 
58,454

 
10,752,145

 
34,686,569

 
45,438,714

 
(4,720,720
)
 
40,717,994

 

Kenwood Mews
Burbank, CA
 
1991
 
141

 
14,100,000

 
24,662,883

 
2,114,407

 
14,100,000

 
26,777,290

 
40,877,290

 
(6,347,552
)
 
34,529,738

 

Key Isle at Windermere
Ocoee, FL
 
2000
 
282

 
8,460,000

 
31,761,470

 
1,390,677

 
8,460,000

 
33,152,147

 
41,612,147

 
(9,266,266
)
 
32,345,881

 

Key Isle at Windermere II
Ocoee, FL
 
2008
 
165

 
3,306,286

 
24,519,644

 
21,547

 
3,306,286

 
24,541,191

 
27,847,477

 
(2,938,408
)
 
24,909,069

 

Kings Colony (FL)
Miami, FL
 
1986
 
480

 
19,200,000

 
48,379,586

 
3,018,997

 
19,200,000

 
51,398,583

 
70,598,583

 
(14,665,777
)
 
55,932,806

 

La Mirage
San Diego, CA
 
1988/1992
 
1,070

 
28,895,200

 
95,567,943

 
15,389,455

 
28,895,200

 
110,957,398

 
139,852,598

 
(56,328,723
)
 
83,523,875

 

La Mirage IV
San Diego, CA
 
2001
 
340

 
6,000,000

 
47,449,353

 
3,395,835

 
6,000,000

 
50,845,188

 
56,845,188

 
(18,165,863
)
 
38,679,325

 

Laguna Clara
Santa Clara, CA
 
1972
 
264

 
13,642,420

 
29,707,475

 
3,710,137

 
13,642,420

 
33,417,612

 
47,060,032

 
(10,479,322
)
 
36,580,710

 

Lake Buena Vista Combined
Orlando, FL
 
2000/2002
 
672

 
23,520,000

 
75,068,205

 
3,989,075

 
23,520,000

 
79,057,280

 
102,577,280

 
(20,170,142
)
 
82,407,138

 

Landings at Pembroke Lakes
Pembroke Pines, FL
 
1989
 
358

 
17,900,000

 
24,460,989

 
4,965,432

 
17,900,000

 
29,426,421

 
47,326,421

 
(9,344,572
)
 
37,981,849

 

Landings at Port Imperial
W. New York, NJ
 
1999
 
276

 
27,246,045

 
37,741,049

 
6,836,741

 
27,246,045

 
44,577,790

 
71,823,835

 
(17,306,712
)
 
54,517,123

 

LaSalle
Beaverton, OR (G)
 
1998
 
554

 
7,202,000

 
35,877,612

 
2,810,808

 
7,202,000

 
38,688,420

 
45,890,420

 
(13,657,006
)
 
32,233,414

 

Las Colinas at Black Canyon
Phoenix, AZ
 
2008
 
304

 
9,000,000

 
35,917,811

 
159,522

 
9,000,000

 
36,077,333

 
45,077,333

 
(6,297,814
)
 
38,779,519

 

Legacy at Highlands Ranch
Highlands Ranch, CO
 
1999
 
422

 
6,330,000

 
37,557,013

 
1,769,576

 
6,330,000

 
39,326,589

 
45,656,589

 
(11,207,950
)
 
34,448,639

 

Legacy Park Central
Concord, CA
 
2003
 
259

 
6,469,230

 
46,745,854

 
535,142

 
6,469,230

 
47,280,996

 
53,750,226

 
(12,393,957
)
 
41,356,269

 

Lexington Farm
Alpharetta, GA
 
1995
 
352

 
3,521,900

 
22,888,305

 
2,627,912

 
3,521,900

 
25,516,217

 
29,038,117

 
(12,190,060
)
 
16,848,057

 

Lexington Park
Orlando, FL
 
1988
 
252

 
2,016,000

 
12,346,726

 
2,656,043

 
2,016,000

 
15,002,769

 
17,018,769

 
(7,642,248
)
 
9,376,521

 

Little Cottonwoods
Tempe, AZ
 
1984
 
379

 
3,050,133

 
26,991,689

 
4,911,946

 
3,050,133

 
31,903,635

 
34,953,768

 
(15,716,576
)
 
19,237,192

 

Longacre House
New York, NY (G)
 
2000
 
293

 
73,170,045

 
53,962,510

 
714,414

 
73,170,045

 
54,676,924

 
127,846,969

 
(9,897,055
)
 
117,949,914

 

Longfellow Place
Boston, MA (G)
 
1975
 
710

 
53,164,160

 
185,281,065

 
57,736,158

 
53,164,160

 
243,017,223

 
296,181,383

 
(107,939,415
)
 
188,241,968

 

Longwood
Decatur, GA
 
1992
 
268

 
1,454,048

 
13,087,393

 
2,068,198

 
1,454,048

 
15,155,591

 
16,609,639

 
(9,410,160
)
 
7,199,479

 

Madison, The
Alexandria, VA
 
(F)
 

 
18,471,288

 
8,904,782

 

 
18,471,288

 
8,904,782

 
27,376,070

 

 
27,376,070

 

Mariners Wharf
Orange Park, FL
 
1989
 
272

 
1,861,200

 
16,744,951

 
3,434,409

 
1,861,200

 
20,179,360

 
22,040,560

 
(10,561,564
)
 
11,478,996

 

Market Street Landing
Seattle, WA
 
(F)
 

 
12,542,418

 
3,462,522

 

 
12,542,418

 
3,462,522

 
16,004,940

 

 
16,004,940

 

Marquessa
Corona Hills, CA
 
1992
 
336

 
6,888,500

 
21,604,584

 
2,835,419

 
6,888,500

 
24,440,003

 
31,328,503

 
(12,707,309
)
 
18,621,194

 

Martine, The
Bellevue, WA
 
1984
 
67

 
3,200,000

 
9,616,264

 
2,668,310

 
3,200,000

 
12,284,574

 
15,484,574

 
(2,717,288
)
 
12,767,286

 

Midtown 24
Plantation, FL (G)
 
2010
 
247

 
10,129,900

 
58,770,100

 
44,337

 
10,129,900

 
58,814,437

 
68,944,337

 
(2,063,247
)
 
66,881,090

 

Millikan
Irvine, CA
 
(F)
 

 
5,610,247

 
437,421

 

 
5,610,247

 
437,421

 
6,047,668

 

 
6,047,668

 

Mill Pond
Millersville, MD
 
1984
 
240

 
2,880,000

 
8,468,014

 
2,869,551

 
2,880,000

 
11,337,565

 
14,217,565

 
(6,045,891
)
 
8,171,674

 

Mission Bay
Orlando, FL
 
1991
 
304

 
2,432,000

 
21,623,560

 
2,927,456

 
2,432,000

 
24,551,016

 
26,983,016

 
(11,783,502
)
 
15,199,514

 

Mission Bay-Block 13
San Francisco, CA
 
(F)
 

 
32,853,438

 
432,822

 

 
32,853,438

 
432,822

 
33,286,260

 

 
33,286,260

 



S-6


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Mission Verde, LLC
San Jose, CA
 
1986
 
108

 
5,190,700

 
9,679,109

 
3,236,339

 
5,190,700

 
12,915,448

 
18,106,148

 
(6,373,021
)
 
11,733,127

 

Moda
Seattle, WA (G)
 
2009
 
251

 
12,649,228

 
36,842,012

 
17,685

 
12,649,228

 
36,859,697

 
49,508,925

 
(2,499,093
)
 
47,009,832

 

Morningside
Scottsdale, AZ
 
1989
 
160

 
670,470

 
12,607,976

 
1,783,573

 
670,470

 
14,391,549

 
15,062,019

 
(7,289,537
)
 
7,772,482

 

Mosaic at Largo Station
Hyattsville, MD
 
2008
 
242

 
4,120,800

 
42,477,297

 
392,872

 
4,120,800

 
42,870,169

 
46,990,969

 
(6,066,463
)
 
40,924,506

 

Mozaic at Union Station
Los Angeles, CA
 
2007
 
272

 
8,500,000

 
52,529,446

 
778,315

 
8,500,000

 
53,307,761

 
61,807,761

 
(11,231,137
)
 
50,576,624

 

New River Cove
Davie, FL
 
1999
 
316

 
15,800,000

 
46,142,895

 
1,198,681

 
15,800,000

 
47,341,576

 
63,141,576

 
(12,706,013
)
 
50,435,563

 

Northampton 1
Largo, MD
 
1977
 
344

 
1,843,200

 
17,518,161

 
6,045,739

 
1,843,200

 
23,563,900

 
25,407,100

 
(15,171,944
)
 
10,235,156

 

Northampton 2
Largo, MD
 
1988
 
276

 
1,513,500

 
14,257,210

 
3,852,776

 
1,513,500

 
18,109,986

 
19,623,486

 
(11,333,760
)
 
8,289,726

 

Northglen
Valencia, CA
 
1988
 
234

 
9,360,000

 
20,778,553

 
1,805,127

 
9,360,000

 
22,583,680

 
31,943,680

 
(9,104,971
)
 
22,838,709

 

Northlake (MD)
Germantown, MD
 
1985
 
304

 
15,000,000

 
23,142,302

 
10,011,783

 
15,000,000

 
33,154,085

 
48,154,085

 
(11,726,038
)
 
36,428,047

 

Northridge
Pleasant Hill, CA
 
1974
 
221

 
5,527,800

 
14,691,704

 
8,977,443

 
5,527,800

 
23,669,147

 
29,196,947

 
(11,011,193
)
 
18,185,754

 

Oak Park North
Agoura Hills, CA
 
1990
 
220

 
1,706,900

 
15,362,666

 
3,387,039

 
1,706,900

 
18,749,705

 
20,456,605

 
(10,408,032
)
 
10,048,573

 

Oak Park South
Agoura Hills, CA
 
1989
 
224

 
1,683,800

 
15,154,608

 
3,423,630

 
1,683,800

 
18,578,238

 
20,262,038

 
(10,392,724
)
 
9,869,314

 

Oaks at Falls Church
Falls Church, VA
 
1966
 
176

 
20,240,000

 
20,152,616

 
3,597,985

 
20,240,000

 
23,750,601

 
43,990,601

 
(6,823,244
)
 
37,167,357

 

Ocean Crest
Solana Beach, CA
 
1986
 
146

 
5,111,200

 
11,910,438

 
2,156,580

 
5,111,200

 
14,067,018

 
19,178,218

 
(7,079,314
)
 
12,098,904

 

Ocean Walk
Key West, FL
 
1990
 
297

 
2,838,749

 
25,545,009

 
3,350,804

 
2,838,749

 
28,895,813

 
31,734,562

 
(14,702,707
)
 
17,031,855

 

Orchard Ridge
Lynnwood, WA
 
1988
 
104

 
480,600

 
4,372,033

 
1,203,111

 
480,600

 
5,575,144

 
6,055,744

 
(3,511,076
)
 
2,544,668

 

Paces Station
Atlanta, GA
 
1984-1989
 
610

 
4,801,500

 
32,548,053

 
8,467,289

 
4,801,500

 
41,015,342

 
45,816,842

 
(22,459,682
)
 
23,357,160

 

Palm Trace Landings
Davie, FL
 
1995
 
768

 
38,400,000

 
105,693,432

 
3,265,111

 
38,400,000

 
108,958,543

 
147,358,543

 
(28,842,025
)
 
118,516,518

 

Panther Ridge
Federal Way, WA
 
1980
 
260

 
1,055,800

 
9,506,117

 
1,957,972

 
1,055,800

 
11,464,089

 
12,519,889

 
(6,285,344
)
 
6,234,545

 

Parc 77
New York, NY (G)
 
1903
 
137

 
40,504,000

 
18,025,679

 
4,278,417

 
40,504,000

 
22,304,096

 
62,808,096

 
(6,087,382
)
 
56,720,714

 

Parc Cameron
New York, NY (G)
 
1927
 
166

 
37,600,000

 
9,855,597

 
5,465,305

 
37,600,000

 
15,320,902

 
52,920,902

 
(5,085,919
)
 
47,834,983

 

Parc Coliseum
New York, NY (G)
 
1910
 
177

 
52,654,000

 
23,045,751

 
7,255,306

 
52,654,000

 
30,301,057

 
82,955,057

 
(8,238,480
)
 
74,716,577

 

Park at Turtle Run, The
Coral Springs, FL
 
2001
 
257

 
15,420,000

 
36,064,629

 
1,030,466

 
15,420,000

 
37,095,095

 
52,515,095

 
(10,820,264
)
 
41,694,831

 

Park West (CA)
Los Angeles, CA
 
1987/1990
 
444

 
3,033,500

 
27,302,383

 
5,703,492

 
3,033,500

 
33,005,875

 
36,039,375

 
(19,273,051
)
 
16,766,324

 

Parkside
Union City, CA
 
1979
 
208

 
6,246,700

 
11,827,453

 
3,558,423

 
6,246,700

 
15,385,876

 
21,632,576

 
(8,388,169
)
 
13,244,407

 

Pegasus
Los Angeles, CA (G)
 
1949/2003
 
322

 
18,094,052

 
81,905,948

 
346,824

 
18,094,052

 
82,252,772

 
100,346,824

 
(5,441,406
)
 
94,905,418

 

Phillips Park
Wellesley, MA
 
1988
 
49

 
816,922

 
5,460,955

 
966,255

 
816,922

 
6,427,210

 
7,244,132

 
(2,756,961
)
 
4,487,171

 

Playa Pacifica
Hermosa Beach,CA
 
1972
 
285

 
35,100,000

 
33,473,822

 
7,342,285

 
35,100,000

 
40,816,107

 
75,916,107

 
(12,772,538
)
 
63,143,569

 

Polos East
Orlando, FL
 
1991
 
308

 
1,386,000

 
19,058,620

 
2,299,557

 
1,386,000

 
21,358,177

 
22,744,177

 
(10,353,927
)
 
12,390,250

 

Port Royale
Ft. Lauderdale, FL (G)
 
1988
 
252

 
1,754,200

 
15,789,873

 
7,644,246

 
1,754,200

 
23,434,119

 
25,188,319

 
(18,059,650
)
 
7,128,669

 

Port Royale II
Ft. Lauderdale, FL (G)
 
1988
 
161

 
1,022,200

 
9,203,166

 
4,823,127

 
1,022,200

 
14,026,293

 
15,048,493

 
(7,879,025
)
 
7,169,468

 

Port Royale III
Ft. Lauderdale, FL (G)
 
1988
 
324

 
7,454,900

 
14,725,802

 
9,178,900

 
7,454,900

 
23,904,702

 
31,359,602

 
(12,857,701
)
 
18,501,901

 

Port Royale IV
Ft. Lauderdale, FL
 
(F)
 

 

 
1,831,695

 

 

 
1,831,695

 
1,831,695

 

 
1,831,695

 

Portofino
Chino Hills, CA
 
1989
 
176

 
3,572,400

 
14,660,994

 
2,679,877

 
3,572,400

 
17,340,871

 
20,913,271

 
(8,523,434
)
 
12,389,837

 

Portofino (Val)
Valencia, CA
 
1989
 
216

 
8,640,000

 
21,487,126

 
2,363,242

 
8,640,000

 
23,850,368

 
32,490,368

 
(9,740,058
)
 
22,750,310

 

Portside Towers
Jersey City, NJ (G)
 
1992-1997
 
527

 
22,487,006

 
96,842,913

 
15,960,366

 
22,487,006

 
112,803,279

 
135,290,285

 
(51,996,044
)
 
83,294,241

 

Preserve at Deer Creek
Deerfield Beach, FL
 
1997
 
540

 
13,500,000

 
60,011,208

 
4,458,758

 
13,500,000

 
64,469,966

 
77,969,966

 
(19,150,628
)
 
58,819,338

 

Prime, The
Arlington, VA
 
2002
 
256

 
32,000,000

 
64,436,539

 
684,785

 
32,000,000

 
65,121,324

 
97,121,324

 
(14,791,625
)
 
82,329,699

 

Promenade at Aventura
Aventura, FL
 
1995
 
296

 
13,320,000

 
30,353,748

 
5,286,447

 
13,320,000

 
35,640,195

 
48,960,195

 
(13,866,100
)
 
35,094,095

 

Promenade at Town Center I
Valencia, CA
 
2001
 
294

 
14,700,000

 
35,390,278

 
3,021,232

 
14,700,000

 
38,411,510

 
53,111,510

 
(11,845,700
)
 
41,265,810

 

Promenade at Wyndham Lakes
Coral Springs, FL
 
1998
 
332

 
6,640,000

 
26,743,760

 
4,487,114

 
6,640,000

 
31,230,874

 
37,870,874

 
(12,267,084
)
 
25,603,790

 

Promenade Terrace
Corona, CA
 
1990
 
330

 
2,272,800

 
20,546,289

 
4,889,001

 
2,272,800

 
25,435,290

 
27,708,090

 
(14,665,897
)
 
13,042,193

 

Promontory Pointe I & II
Phoenix, AZ
 
1984/1996
 
424

 
2,355,509

 
30,421,840

 
3,871,392

 
2,355,509

 
34,293,232

 
36,648,741

 
(17,574,045
)
 
19,074,696

 

Prospect Towers
Hackensack, NJ
 
1995
 
157

 
3,926,600

 
31,679,339

 
3,891,995

 
3,926,600

 
35,571,334

 
39,497,934

 
(14,860,521
)
 
24,637,413

 

Prospect Towers II
Hackensack, NJ
 
2002
 
203

 
4,500,000

 
40,623,746

 
3,303,318

 
4,500,000

 
43,927,064

 
48,427,064

 
(12,304,870
)
 
36,122,194

 

Ravens Crest
Plainsboro, NJ
 
1984
 
704

 
4,670,850

 
42,080,642

 
12,305,515

 
4,670,850

 
54,386,157

 
59,057,007

 
(33,866,628
)
 
25,190,379

 

Redmond Ridge
Redmond, WA
 
2008
 
321

 
6,975,705

 
46,175,001

 
130,545

 
6,975,705

 
46,305,546

 
53,281,251

 
(6,420,578
)
 
46,860,673

 




S-7


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Red 160 (fka Redmond Way)
Redmond , WA (G)
 
2011
 
250

 
15,546,376

 
65,305,957

 
128,077

 
15,546,376

 
65,434,034

 
80,980,410

 
(1,764,057
)
 
79,216,353

 

Red Road Commons
Miami, FL (G)
 
2009
 
404

 
27,383,547

 
99,656,440

 
88,542

 
27,383,547

 
99,744,982

 
127,128,529

 
(7,014,820
)
 
120,113,709

 

Regency Palms
Huntington Beach, CA
 
1969
 
310

 
1,857,400

 
16,713,253

 
4,662,931

 
1,857,400

 
21,376,184

 
23,233,584

 
(12,370,296
)
 
10,863,288

 

Registry
Northglenn, CO
 
1986
 
208

 
2,000,000

 
10,925,007

 
185,780

 
2,000,000

 
11,110,787

 
13,110,787

 
(1,911,145
)
 
11,199,642

 

Renaissance Villas
Berkeley, CA (G)
 
1998
 
34

 
2,458,000

 
4,542,000

 
66,604

 
2,458,000

 
4,608,604

 
7,066,604

 
(795,642
)
 
6,270,962

 

Reserve at Ashley Lake
Boynton Beach, FL
 
1990
 
440

 
3,520,400

 
23,332,494

 
5,597,846

 
3,520,400

 
28,930,340

 
32,450,740

 
(14,691,506
)
 
17,759,234

 

Reserve at Town Center II (WA)
Mill Creek, WA
 
2009
 
100

 
4,310,417

 
17,165,442

 
24,078

 
4,310,417

 
17,189,520

 
21,499,937

 
(1,244,466
)
 
20,255,471

 

Reserve at Town Center III
Mill Creek, WA
 
(F)
 

 
2,089,388

 
1,111,424

 

 
2,089,388

 
1,111,424

 
3,200,812

 

 
3,200,812

 

Residences at Bayview
Pompano Beach, FL (G)
 
2004
 
225

 
5,783,545

 
39,334,455

 
403,418

 
5,783,545

 
39,737,873

 
45,521,418

 
(3,437,193
)
 
42,084,225

 

Retreat, The
Phoenix, AZ
 
1999
 
480

 
3,475,114

 
27,265,252

 
2,794,986

 
3,475,114

 
30,060,238

 
33,535,352

 
(13,502,357
)
 
20,032,995

 

Rianna I
Seattle, WA (G)
 
2000
 
78

 
2,268,160

 
14,864,482

 
141,808

 
2,268,160

 
15,006,290

 
17,274,450

 
(1,860,348
)
 
15,414,102

 

Ridgewood Village I&II
San Diego, CA
 
1997
 
408

 
11,809,500

 
34,004,048

 
2,924,110

 
11,809,500

 
36,928,158

 
48,737,658

 
(15,531,096
)
 
33,206,562

 

River Tower
New York, NY (G)
 
1982
 
323

 
118,669,441

 
98,880,559

 
1,505,315

 
118,669,441

 
100,385,874

 
219,055,315

 
(16,503,085
)
 
202,552,230

 

Rivers Bend (CT)
Windsor, CT
 
1973
 
373

 
3,325,517

 
22,573,826

 
2,808,444

 
3,325,517

 
25,382,270

 
28,707,787

 
(10,675,715
)
 
18,032,072

 

Riverview Condominiums
Norwalk, CT
 
1991
 
92

 
2,300,000

 
7,406,730

 
2,129,804

 
2,300,000

 
9,536,534

 
11,836,534

 
(4,459,420
)
 
7,377,114

 

Rosecliff II
Quincy, MA
 
2005
 
130

 
4,922,840

 
30,202,160

 
7,250

 
4,922,840

 
30,209,410

 
35,132,250

 
(107,367
)
 
35,024,883

 

Royal Oaks (FL)
Jacksonville, FL
 
1991
 
284

 
1,988,000

 
13,645,117

 
4,491,664

 
1,988,000

 
18,136,781

 
20,124,781

 
(8,638,178
)
 
11,486,603

 

Sabal Palm at Lake Buena Vista
Orlando, FL
 
1988
 
400

 
2,800,000

 
23,687,893

 
5,622,700

 
2,800,000

 
29,310,593

 
32,110,593

 
(13,405,565
)
 
18,705,028

 

Sabal Palm at Metrowest II
Orlando, FL
 
1997
 
456

 
4,560,000

 
33,907,283

 
2,935,939

 
4,560,000

 
36,843,222

 
41,403,222

 
(17,227,183
)
 
24,176,039

 

Sabal Pointe
Coral Springs, FL
 
1995
 
275

 
1,951,600

 
17,570,508

 
4,514,398

 
1,951,600

 
22,084,906

 
24,036,506

 
(12,666,537
)
 
11,369,969

 

Sage
Everett, WA
 
2002
 
123

 
2,500,000

 
12,021,256

 
453,063

 
2,500,000

 
12,474,319

 
14,974,319

 
(3,319,591
)
 
11,654,728

 

Sakura Crossing
Los Angeles, CA (G)
 
2009
 
230

 
14,641,990

 
42,858,010

 
657

 
14,641,990

 
42,858,667

 
57,500,657

 
(321,156
)
 
57,179,501

 

Savannah at Park Place
Atlanta, GA
 
2001
 
416

 
7,696,095

 
34,034,000

 
2,730,835

 
7,696,095

 
36,764,835

 
44,460,930

 
(11,527,618
)
 
32,933,312

 

Savoy III
Aurora, CO
 
(F)
 

 
659,165

 
15,126,173

 

 
659,165

 
15,126,173

 
15,785,338

 

 
15,785,338

 

Scarborough Square
Rockville, MD
 
1967
 
121

 
1,815,000

 
7,608,126

 
2,525,055

 
1,815,000

 
10,133,181

 
11,948,181

 
(5,378,833
)
 
6,569,348

 

Sedona Ridge
Phoenix, AZ
 
1989
 
250

 
3,750,000

 
14,750,000

 
474,406

 
3,750,000

 
15,224,406

 
18,974,406

 
(2,882,082
)
 
16,092,324

 

Seeley Lake
Lakewood, WA
 
1990
 
522

 
2,760,400

 
24,845,286

 
4,653,709

 
2,760,400

 
29,498,995

 
32,259,395

 
(15,612,322
)
 
16,647,073

 

Seventh & James
Seattle, WA
 
1992
 
96

 
663,800

 
5,974,803

 
3,128,846

 
663,800

 
9,103,649

 
9,767,449

 
(5,206,225
)
 
4,561,224

 

Shadow Creek
Winter Springs, FL
 
2000
 
280

 
6,000,000

 
21,719,768

 
1,572,807

 
6,000,000

 
23,292,575

 
29,292,575

 
(7,236,138
)
 
22,056,437

 

Sheridan Lake Club
Dania Beach, FL
 
2001
 
240

 
12,000,000

 
23,170,580

 
1,359,509

 
12,000,000

 
24,530,089

 
36,530,089

 
(6,610,875
)
 
29,919,214

 

Sheridan Ocean Club combined
Dania Beach, FL
 
1991
 
648

 
18,313,414

 
47,091,594

 
14,449,396

 
18,313,414

 
61,540,990

 
79,854,404

 
(24,316,848
)
 
55,537,556

 

Siena Terrace
Lake Forest, CA
 
1988
 
356

 
8,900,000

 
24,083,024

 
3,009,699

 
8,900,000

 
27,092,723

 
35,992,723

 
(12,680,205
)
 
23,312,518

 

Skycrest
Valencia, CA
 
1999
 
264

 
10,560,000

 
25,574,457

 
1,987,885

 
10,560,000

 
27,562,342

 
38,122,342

 
(11,026,671
)
 
27,095,671

 

Skylark
Union City, CA
 
1986
 
174

 
1,781,600

 
16,731,916

 
1,737,878

 
1,781,600

 
18,469,794

 
20,251,394

 
(8,810,822
)
 
11,440,572

 

Skyline Terrace
Burlingame, CA
 
1967 & 1987
 
138

 
16,836,000

 
35,414,000

 
574,744

 
16,836,000

 
35,988,744

 
52,824,744

 
(3,233,204
)
 
49,591,540

 

Skyline Towers
Falls Church, VA (G)
 
1971
 
939

 
78,278,200

 
91,485,591

 
28,949,642

 
78,278,200

 
120,435,233

 
198,713,433

 
(37,194,628
)
 
161,518,805

 

Skyview
Rancho Santa Margarita, CA
 
1999
 
260

 
3,380,000

 
21,952,863

 
1,827,160

 
3,380,000

 
23,780,023

 
27,160,023

 
(10,583,765
)
 
16,576,258

 

Sonoran
Phoenix, AZ
 
1995
 
429

 
2,361,922

 
31,841,724

 
3,086,404

 
2,361,922

 
34,928,128

 
37,290,050

 
(17,405,642
)
 
19,884,408

 

Southwood
Palo Alto, CA
 
1985
 
100

 
6,936,600

 
14,324,069

 
2,518,550

 
6,936,600

 
16,842,619

 
23,779,219

 
(8,121,990
)
 
15,657,229

 

Springbrook Estates
Riverside, CA
 
(F)
 

 
18,200,000

 

 

 
18,200,000

 

 
18,200,000

 

 
18,200,000

 

Springs Colony
Altamonte Springs, FL
 
1986
 
188

 
630,411

 
5,852,157

 
2,472,624

 
630,411

 
8,324,781

 
8,955,192

 
(5,475,003
)
 
3,480,189

 

St. Andrews at Winston Park
Coconut Creek, FL
 
1997
 
284

 
5,680,000

 
19,812,090

 
2,633,219

 
5,680,000

 
22,445,309

 
28,125,309

 
(8,422,121
)
 
19,703,188

 

Stoneleigh at Deerfield
Alpharetta, GA
 
2003
 
370

 
4,810,000

 
29,999,596

 
940,991

 
4,810,000

 
30,940,587

 
35,750,587

 
(8,733,406
)
 
27,017,181

 

Stoney Creek
Lakewood, WA
 
1990
 
231

 
1,215,200

 
10,938,134

 
2,431,476

 
1,215,200

 
13,369,610

 
14,584,810

 
(7,261,625
)
 
7,323,185

 

Summerset Village II
Chatsworth, CA
 
(F)
 

 
260,646

 

 

 
260,646

 

 
260,646

 

 
260,646

 

Summit & Birch Hill
Farmington, CT
 
1967
 
186

 
1,757,438

 
11,748,112

 
2,983,818

 
1,757,438

 
14,731,930

 
16,489,368

 
(6,433,027
)
 
10,056,341

 

Surprise Lake Village
Milton, WA
 
1986
 
338

 
4,162,543

 
21,994,412

 
649,532

 
4,162,543

 
22,643,944

 
26,806,487

 
(3,664,956
)
 
23,141,531

 

Sycamore Creek
Scottsdale, AZ
 
1984
 
350

 
3,152,000

 
19,083,727

 
3,176,046

 
3,152,000

 
22,259,773

 
25,411,773

 
(11,798,644
)
 
13,613,129

 


S-8



EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Ten23 (fka 500 West 23rd Street)
New York, NY (G)
 
2011
 
111

 

 
53,001,730

 

 

 
53,001,730

 
53,001,730

 

 
53,001,730

 

Terraces, The
San Francisco, CA (G)
 
1975
 
117

 
14,087,610

 
16,337,390

 
2,176

 
14,087,610

 
16,339,566

 
30,427,176

 
(66,507
)
 
30,360,669

 

Third Square
Cambridge, MA (G)
 
2008/2009
 
471

 
26,767,171

 
218,232,419

 
993,046

 
26,767,171

 
219,225,465

 
245,992,636

 
(23,830,415
)
 
222,162,221

 

Tortuga Bay
Orlando, FL
 
2004
 
314

 
6,280,000

 
32,121,779

 
1,101,933

 
6,280,000

 
33,223,712

 
39,503,712

 
(9,084,110
)
 
30,419,602

 

Toscana
Irvine, CA
 
1991/1993
 
563

 
39,410,000

 
50,806,072

 
6,734,465

 
39,410,000

 
57,540,537

 
96,950,537

 
(23,926,306
)
 
73,024,231

 

Townes at Herndon
Herndon, VA
 
2002
 
218

 
10,900,000

 
49,216,125

 
687,699

 
10,900,000

 
49,903,824

 
60,803,824

 
(12,452,191
)
 
48,351,633

 

Trump Place, 140 Riverside
New York, NY (G)
 
2003
 
354

 
103,539,100

 
94,082,725

 
1,776,392

 
103,539,100

 
95,859,117

 
199,398,217

 
(23,301,809
)
 
176,096,408

 

Trump Place, 160 Riverside
New York, NY (G)
 
2001
 
455

 
139,933,500

 
190,964,745

 
6,185,491

 
139,933,500

 
197,150,236

 
337,083,736

 
(45,819,143
)
 
291,264,593

 

Trump Place, 180 Riverside
New York, NY (G)
 
1998
 
516

 
144,968,250

 
138,346,681

 
6,290,045

 
144,968,250

 
144,636,726

 
289,604,976

 
(35,545,460
)
 
254,059,516

 

Uwajimaya Village
Seattle, WA
 
2002
 
176

 
8,800,000

 
22,188,288

 
271,647

 
8,800,000

 
22,459,935

 
31,259,935

 
(6,624,216
)
 
24,635,719

 

Valencia Plantation
Orlando, FL
 
1990
 
194

 
873,000

 
12,819,377

 
2,196,462

 
873,000

 
15,015,839

 
15,888,839

 
(7,071,212
)
 
8,817,627

 

Vantage Pointe
San Diego, CA (G)
 
2009
 
679

 
9,403,960

 
190,596,040

 
2,992,384

 
9,403,960

 
193,588,424

 
202,992,384

 
(11,668,707
)
 
191,323,677

 

Veridian (fka Silver Spring)
Silver Spring, MD (G)
 
2009
 
457

 
18,539,817

 
130,407,365

 
200,587

 
18,539,817

 
130,607,952

 
149,147,769

 
(11,516,355
)
 
137,631,414

 

Versailles (K-Town)
Los Angeles, CA
 
2008
 
225

 
10,590,975

 
44,409,025

 
119,893

 
10,590,975

 
44,528,918

 
55,119,893

 
(4,998,525
)
 
50,121,368

 

Victor on Venice
Los Angeles, CA (G)
 
2006
 
115

 
10,350,000

 
35,433,437

 
211,045

 
10,350,000

 
35,644,482

 
45,994,482

 
(7,709,609
)
 
38,284,873

 

Villa Solana
Laguna Hills, CA
 
1984
 
272

 
1,665,100

 
14,985,677

 
6,763,757

 
1,665,100

 
21,749,434

 
23,414,534

 
(13,252,476
)
 
10,162,058

 

Village at Bear Creek
Lakewood, CO
 
1987
 
472

 
4,519,700

 
40,676,390

 
4,709,335

 
4,519,700

 
45,385,725

 
49,905,425

 
(23,047,453
)
 
26,857,972

 

Vista Del Largo
Mission Viejo, CA
 
1986-1988
 
608

 
4,525,800

 
40,736,293

 
12,750,488

 
4,525,800

 
53,486,781

 
58,012,581

 
(32,354,232
)
 
25,658,349

 

Vista Grove
Mesa, AZ
 
1997/1998
 
224

 
1,341,796

 
12,157,045

 
1,350,805

 
1,341,796

 
13,507,850

 
14,849,646

 
(6,719,180
)
 
8,130,466

 

Vista Montana - Residential
San Jose, CA
 
(F)
 

 
27,000,000

 
402,025

 

 
27,000,000

 
402,025

 
27,402,025

 

 
27,402,025

 

Vista on Courthouse
Arlington, VA
 
2008
 
220

 
15,550,260

 
69,449,740

 
321,207

 
15,550,260

 
69,770,947

 
85,321,207

 
(7,990,132
)
 
77,331,075

 

Walden Park
Cambridge, MA
 
1966
 
232

 
12,448,888

 
52,451,112

 
5,623

 
12,448,888

 
52,456,735

 
64,905,623

 
(375,173
)
 
64,530,450

 

Waterford at Deerwood
Jacksonville, FL
 
1985
 
248

 
1,496,913

 
10,659,702

 
3,971,640

 
1,496,913

 
14,631,342

 
16,128,255

 
(7,399,404
)
 
8,728,851

 

Waterford at Orange Park
Orange Park, FL
 
1986
 
280

 
1,960,000

 
12,098,784

 
3,088,273

 
1,960,000

 
15,187,057

 
17,147,057

 
(8,006,263
)
 
9,140,794

 

Waterford Place (CO)
Thornton, CO
 
1998
 
336

 
5,040,000

 
29,946,419

 
1,514,787

 
5,040,000

 
31,461,206

 
36,501,206

 
(10,889,463
)
 
25,611,743

 

Waterside
Reston, VA
 
1984
 
276

 
20,700,000

 
27,474,388

 
7,861,949

 
20,700,000

 
35,336,337

 
56,036,337

 
(10,816,319
)
 
45,220,018

 

Webster Green
Needham, MA
 
1985
 
77

 
1,418,893

 
9,485,006

 
1,040,968

 
1,418,893

 
10,525,974

 
11,944,867

 
(4,303,747
)
 
7,641,120

 

Welleby Lake Club
Sunrise, FL
 
1991
 
304

 
3,648,000

 
17,620,879

 
4,590,765

 
3,648,000

 
22,211,644

 
25,859,644

 
(10,471,643
)
 
15,388,001

 

West End Apartments (fka Emerson Place/CRP II)
Boston, MA (G)
 
2008
 
310

 
469,546

 
163,123,022

 
371,431

 
469,546

 
163,494,453

 
163,963,999

 
(21,595,586
)
 
142,368,413

 

West Seattle
Seattle, WA
 
(F)
 

 
11,726,305

 
134,366

 

 
11,726,305

 
134,366

 
11,860,671

 

 
11,860,671

 

Westerly at Worldgate
Herndon, VA
 
1995
 
320

 
14,568,000

 
43,620,057

 
1,266,145

 
14,568,000

 
44,886,202

 
59,454,202

 
(8,061,110
)
 
51,393,092

 

Westgate Block 2
Pasadena, CA
 
(F)
 

 
17,859,785

 
17,226,268

 

 
17,859,785

 
17,226,268

 
35,086,053

 

 
35,086,053

 

Westgate Block 1
Pasadena, CA
 
(F)
 

 
12,118,061

 
4,402,664

 

 
12,118,061

 
4,402,664

 
16,520,725

 

 
16,520,725

 

Westridge
Tacoma, WA
 
1987 -1991
 
714

 
3,501,900

 
31,506,082

 
7,003,576

 
3,501,900

 
38,509,658

 
42,011,558

 
(20,787,738
)
 
21,223,820

 

Westside Villas I
Los Angeles, CA
 
1999
 
21

 
1,785,000

 
3,233,254

 
274,539

 
1,785,000

 
3,507,793

 
5,292,793

 
(1,444,813
)
 
3,847,980

 

Westside Villas II
Los Angeles, CA
 
1999
 
23

 
1,955,000

 
3,541,435

 
159,881

 
1,955,000

 
3,701,316

 
5,656,316

 
(1,444,271
)
 
4,212,045

 

Westside Villas III
Los Angeles, CA
 
1999
 
36

 
3,060,000

 
5,538,871

 
235,019

 
3,060,000

 
5,773,890

 
8,833,890

 
(2,252,284
)
 
6,581,606

 

Westside Villas IV
Los Angeles, CA
 
1999
 
36

 
3,060,000

 
5,539,390

 
243,466

 
3,060,000

 
5,782,856

 
8,842,856

 
(2,251,558
)
 
6,591,298

 

Westside Villas V
Los Angeles, CA
 
1999
 
60

 
5,100,000

 
9,224,485

 
420,696

 
5,100,000

 
9,645,181

 
14,745,181

 
(3,769,440
)
 
10,975,741

 

Westside Villas VI
Los Angeles, CA
 
1989
 
18

 
1,530,000

 
3,023,523

 
247,685

 
1,530,000

 
3,271,208

 
4,801,208

 
(1,306,921
)
 
3,494,287

 

Westside Villas VII
Los Angeles, CA
 
2001
 
53

 
4,505,000

 
10,758,900

 
407,425

 
4,505,000

 
11,166,325

 
15,671,325

 
(3,777,977
)
 
11,893,348

 

Wimberly at Deerwood
Jacksonville, FL
 
2000
 
322

 
8,000,000

 
30,057,214

 
1,642,086

 
8,000,000

 
31,699,300

 
39,699,300

 
(8,241,714
)
 
31,457,586

 

Winchester Park
Riverside, RI
 
1972
 
416

 
2,822,618

 
18,868,626

 
6,898,312

 
2,822,618

 
25,766,938

 
28,589,556

 
(11,731,473
)
 
16,858,083

 

Winchester Wood
Riverside, RI
 
1989
 
62

 
683,215

 
4,567,154

 
842,944

 
683,215

 
5,410,098

 
6,093,313

 
(2,252,943
)
 
3,840,370

 

Windsor at Fair Lakes
Fairfax, VA
 
1988
 
250

 
10,000,000

 
28,587,109

 
6,385,915

 
10,000,000

 
34,973,024

 
44,973,024

 
(11,053,951
)
 
33,919,073

 

Winston, The (FL)
Pembroke Pines, FL
 
2001/2003
 
464

 
18,561,000

 
49,527,569

 
2,066,953

 
18,561,000

 
51,594,522

 
70,155,522

 
(11,364,025
)
 
58,791,497

 

Wood Creek (CA)
Pleasant Hill, CA
 
1987
 
256

 
9,729,900

 
23,009,768

 
5,486,055

 
9,729,900

 
28,495,823

 
38,225,723

 
(13,857,483
)
 
24,368,240

 

Woodbridge (CT)
Newington, CT
 
1968
 
73

 
498,377

 
3,331,548

 
934,712

 
498,377

 
4,266,260

 
4,764,637

 
(1,835,396
)
 
2,929,241

 



S-9



EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Woodleaf
Campbell, CA
 
1984
 
178

 
8,550,600

 
16,988,183

 
2,525,549

 
8,550,600

 
19,513,732

 
28,064,332

 
(8,858,351
)
 
19,205,981

 

Woodland Park
East Palo Alto, CA (G)
 
1953
 
1,812

 
72,224,518

 
57,775,482

 
11,882

 
72,224,518

 
57,787,364

 
130,011,882

 
(361,821
)
 
129,650,061

 

Management Business
Chicago, IL
 
(D)
 

 

 

 
85,280,456

 

 
85,280,456

 
85,280,456

 
(64,901,959
)
 
20,378,497

 

Operating Partnership
Chicago, IL
 
(F)
 

 

 
1,950,020

 

 

 
1,950,020

 
1,950,020

 

 
1,950,020

 

Wholly Owned Unencumbered
 
 
 
 
75,704

 
3,271,110,872

 
9,313,640,030

 
919,933,512

 
3,271,110,872

 
10,233,573,542

 
13,504,684,414

 
(2,901,009,678
)
 
10,603,674,736

 

Wholly Owned Encumbered:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
929 House
Cambridge, MA (G)
 
1975
 
127

 
3,252,993

 
21,745,595

 
4,619,180

 
3,252,993

 
26,364,775

 
29,617,768

 
(10,267,914
)
 
19,349,854

 
2,771,507

Academy Village
North Hollywood, CA
 
1989
 
248

 
25,000,000

 
23,593,194

 
5,811,441

 
25,000,000

 
29,404,635

 
54,404,635

 
(10,089,093
)
 
44,315,542

 
20,000,000

Acappella
Pasadena, CA
 
2002
 
143

 
5,839,548

 
29,360,452

 
199,588

 
5,839,548

 
29,560,040

 
35,399,588

 
(2,536,777
)
 
32,862,811

 
20,644,023

Acton Courtyard
Berkeley, CA (G)
 
2003
 
71

 
5,550,000

 
15,785,509

 
92,850

 
5,550,000

 
15,878,359

 
21,428,359

 
(3,488,928
)
 
17,939,431

 
9,920,000

Alborada
Fremont, CA
 
1999
 
442

 
24,310,000

 
59,214,129

 
2,426,046

 
24,310,000

 
61,640,175

 
85,950,175

 
(25,283,895
)
 
60,666,280

 
 (J)

Alexander on Ponce
Atlanta, GA
 
2003
 
330

 
9,900,000

 
35,819,022

 
1,574,440

 
9,900,000

 
37,393,462

 
47,293,462

 
(9,591,619
)
 
37,701,843

 
28,880,000

Arbor Terrace
Sunnyvale, CA
 
1979
 
175

 
9,057,300

 
18,483,642

 
2,318,138

 
9,057,300

 
20,801,780

 
29,859,080

 
(9,986,511
)
 
19,872,569

 
 (L)

Arboretum (MA)
Canton, MA
 
1989
 
156

 
4,683,531

 
10,992,751

 
1,954,762

 
4,683,531

 
12,947,513

 
17,631,044

 
(6,525,737
)
 
11,105,307

 
 (I)

Artech Building
Berkeley, CA (G)
 
2002
 
21

 
1,642,000

 
9,152,518

 
92,358

 
1,642,000

 
9,244,876

 
10,886,876

 
(1,795,520
)
 
9,091,356

 
3,200,000

Artisan Square
Northridge, CA
 
2002
 
140

 
7,000,000

 
20,537,359

 
745,265

 
7,000,000

 
21,282,624

 
28,282,624

 
(6,983,871
)
 
21,298,753

 
22,779,715

Avanti
Anaheim, CA
 
1987
 
162

 
12,960,000

 
18,497,683

 
1,066,332

 
12,960,000

 
19,564,015

 
32,524,015

 
(5,101,737
)
 
27,422,278

 
19,850,000

Bachenheimer Building
Berkeley, CA (G)
 
2004
 
44

 
3,439,000

 
13,866,379

 
48,863

 
3,439,000

 
13,915,242

 
17,354,242

 
(2,844,495
)
 
14,509,747

 
8,585,000

Bella Vista Apartments at Boca Del Mar
Boca Raton, FL
 
1985
 
392

 
11,760,000

 
20,190,252

 
13,600,755

 
11,760,000

 
33,791,007

 
45,551,007

 
(15,322,700
)
 
30,228,307

 
26,134,010

Bellagio Apartment Homes
Scottsdale, AZ
 
1995
 
202

 
2,626,000

 
16,025,041

 
1,134,830

 
2,626,000

 
17,159,871

 
19,785,871

 
(5,165,966
)
 
14,619,905

 
 (L)

Berkeleyan
Berkeley, CA (G)
 
1998
 
56

 
4,377,000

 
16,022,110

 
289,057

 
4,377,000

 
16,311,167

 
20,688,167

 
(3,419,440
)
 
17,268,727

 
8,290,000

Briarwood (CA)
Sunnyvale, CA (I)
 
1985
 
192

 
9,991,500

 
22,247,278

 
1,543,294

 
9,991,500

 
23,790,572

 
33,782,072

 
(11,128,707
)
 
22,653,365

 
12,800,000

Brookside (CO)
Boulder, CO
 
1993
 
144

 
3,600,400

 
10,211,159

 
2,108,971

 
3,600,400

 
12,320,130

 
15,920,530

 
(5,588,246
)
 
10,332,284

 
 (L)

Canterbury
Germantown, MD (I)
 
1986
 
544

 
2,781,300

 
32,942,531

 
14,356,360

 
2,781,300

 
47,298,891

 
50,080,191

 
(27,043,148
)
 
23,037,043

 
31,680,000

Cape House I
Jacksonville, FL
 
1998
 
240

 
4,800,000

 
22,484,239

 
577,378

 
4,800,000

 
23,061,617

 
27,861,617

 
(5,851,708
)
 
22,009,909

 
13,542,878

Cape House II
Jacksonville, FL
 
1998
 
240

 
4,800,000

 
22,229,836

 
1,779,613

 
4,800,000

 
24,009,449

 
28,809,449

 
(6,237,002
)
 
22,572,447

 
13,010,713

Carmel Terrace
San Diego, CA
 
1988-1989
 
384

 
2,288,300

 
20,596,281

 
10,072,544

 
2,288,300

 
30,668,825

 
32,957,125

 
(18,109,198
)
 
14,847,927

 
 (K)

Cascade at Landmark
Alexandria, VA
 
1990
 
277

 
3,603,400

 
19,657,554

 
7,662,660

 
3,603,400

 
27,320,214

 
30,923,614

 
(14,152,859
)
 
16,770,755

 
31,921,089

Centennial Tower
Seattle, WA (G)
 
1991
 
221

 
5,900,000

 
48,800,339

 
3,277,474

 
5,900,000

 
52,077,813

 
57,977,813

 
(13,349,202
)
 
44,628,611

 
24,577,505

Chelsea Square
Redmond, WA
 
1991
 
113

 
3,397,100

 
9,289,074

 
1,574,184

 
3,397,100

 
10,863,258

 
14,260,358

 
(5,005,927
)
 
9,254,431

 
 (L)

Church Corner
Cambridge, MA (G)
 
1987
 
85

 
5,220,000

 
16,744,643

 
1,297,417

 
5,220,000

 
18,042,060

 
23,262,060

 
(4,951,855
)
 
18,310,205

 
12,000,000

Cierra Crest
Denver, CO
 
1996
 
480

 
4,803,100

 
34,894,898

 
4,644,644

 
4,803,100

 
39,539,542

 
44,342,642

 
(19,806,595
)
 
24,536,047

 
 (L)

CityView at Longwood
Boston, MA (G)
 
1970
 
295

 
14,704,898

 
79,195,102

 
2,419,758

 
14,704,898

 
81,614,860

 
96,319,758

 
(6,371,361
)
 
89,948,397

 
26,461,565

City Pointe
Fullerton, CA (G)
 
2004
 
183

 
6,863,792

 
36,476,208

 
184,403

 
6,863,792

 
36,660,611

 
43,524,403

 
(4,282,292
)
 
39,242,111

 
23,024,033

Clarendon, The
Arlington, VA (G)
 
2005
 
292

 
30,400,340

 
103,824,660

 
338,226

 
30,400,340

 
104,162,886

 
134,563,226

 
(6,178,258
)
 
128,384,968

 
48,066,590

Colorado Pointe
Denver, CO
 
2006
 
193

 
5,790,000

 
28,815,766

 
492,849

 
5,790,000

 
29,308,615

 
35,098,615

 
(7,693,474
)
 
27,405,141

 
 (K)

Conway Court
Roslindale, MA
 
1920
 
28

 
101,451

 
710,524

 
241,538

 
101,451

 
952,062

 
1,053,513

 
(443,463
)
 
610,050

 
226,295

Copper Canyon
Highlands Ranch, CO
 
1999
 
222

 
1,442,212

 
16,251,114

 
1,380,659

 
1,442,212

 
17,631,773

 
19,073,985

 
(7,981,910
)
 
11,092,075

 
 (K)

Country Brook
Chandler, AZ
 
1986-1996
 
396

 
1,505,219

 
29,542,535

 
5,114,344

 
1,505,219

 
34,656,879

 
36,162,098

 
(16,823,253
)
 
19,338,845

 
 (K)

Country Club Lakes
Jacksonville, FL
 
1997
 
555

 
15,000,000

 
41,055,786

 
4,992,551

 
15,000,000

 
46,048,337

 
61,048,337

 
(13,233,047
)
 
47,815,290

 
31,516,374

Creekside (San Mateo)
San Mateo, CA
 
1985
 
192

 
9,606,600

 
21,193,232

 
2,748,866

 
9,606,600

 
23,942,098

 
33,548,698

 
(10,867,143
)
 
22,681,555

 
 (L)

Crescent at Cherry Creek
Denver, CO
 
1994
 
216

 
2,594,000

 
15,149,470

 
3,226,064

 
2,594,000

 
18,375,534

 
20,969,534

 
(8,864,759
)
 
12,104,775

 
 (K)

Deerwood (SD)
San Diego, CA
 
1990
 
316

 
2,082,095

 
18,739,815

 
13,192,417

 
2,082,095

 
31,932,232

 
34,014,327

 
(19,263,646
)
 
14,750,681

 
 (K)

Estates at Maitland Summit
Orlando, FL
 
1998
 
272

 
9,520,000

 
28,352,160

 
790,374

 
9,520,000

 
29,142,534

 
38,662,534

 
(8,841,396
)
 
29,821,138

 
 (L)

Estates at Tanglewood
Westminster, CO
 
2003
 
504

 
7,560,000

 
51,256,538

 
2,139,241

 
7,560,000

 
53,395,779

 
60,955,779

 
(14,217,883
)
 
46,737,896

 
 (J)

Fairfield
Stamford, CT (G)
 
1996
 
263

 
6,510,200

 
39,690,120

 
5,451,905

 
6,510,200

 
45,142,025

 
51,652,225

 
(21,756,531
)
 
29,895,694

 
34,595,000

Fine Arts Building
Berkeley, CA (G)
 
2004
 
100

 
7,817,000

 
26,462,772

 
79,744

 
7,817,000

 
26,542,516

 
34,359,516

 
(5,605,770
)
 
28,753,746

 
16,215,000

Gaia Building
Berkeley, CA (G)
 
2000
 
91

 
7,113,000

 
25,623,826

 
162,348

 
7,113,000

 
25,786,174

 
32,899,174

 
(5,408,769
)
 
27,490,405

 
14,630,000


S-10


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Gateway at Malden Center
Malden, MA (G)
 
1988
 
203

 
9,209,780

 
25,722,666

 
8,322,590

 
9,209,780

 
34,045,256

 
43,255,036

 
(12,427,280
)
 
30,827,756

 
14,970,000

Geary Court Yard
San Francisco, CA
 
1990
 
164

 
1,722,400

 
15,471,429

 
2,125,987

 
1,722,400

 
17,597,416

 
19,319,816

 
(9,023,938
)
 
10,295,878

 
18,281,425

Glen Meadow
Franklin, MA
 
1971
 
288

 
2,339,330

 
16,133,588

 
3,641,165

 
2,339,330

 
19,774,753

 
22,114,083

 
(8,972,636
)
 
13,141,447

 
353,833

Glo
Los Angeles, CA (G)
 
2008
 
201

 
16,047,022

 
48,652,977

 

 
16,047,022

 
48,652,977

 
64,699,999

 

 
64,699,999

 
31,490,000

Grandeville at River Place
Oviedo, FL
 
2002
 
280

 
6,000,000

 
23,114,693

 
1,723,206

 
6,000,000

 
24,837,899

 
30,837,899

 
(7,801,937
)
 
23,035,962

 
28,890,000

Greenwood Park
Centennial, CO
 
1994
 
291

 
4,365,000

 
38,372,440

 
1,338,988

 
4,365,000

 
39,711,428

 
44,076,428

 
(8,725,623
)
 
35,350,805

 
 (L)

Greenwood Plaza
Centennial, CO
 
1996
 
266

 
3,990,000

 
35,846,708

 
1,921,183

 
3,990,000

 
37,767,891

 
41,757,891

 
(8,360,465
)
 
33,397,426

 
 (L)

Harbor Steps
Seattle, WA (G)
 
2000
 
730

 
59,900,000

 
158,829,432

 
7,329,927

 
59,900,000

 
166,159,359

 
226,059,359

 
(41,014,218
)
 
185,045,141

 
121,360,757

Hathaway
Long Beach, CA
 
1987
 
385

 
2,512,500

 
22,611,912

 
6,617,407

 
2,512,500

 
29,229,319

 
31,741,819

 
(17,010,633
)
 
14,731,186

 
46,517,800

Heights on Capitol Hill
Seattle, WA (G)
 
2006
 
104

 
5,425,000

 
21,138,028

 
145,491

 
5,425,000

 
21,283,519

 
26,708,519

 
(4,885,848
)
 
21,822,671

 
19,320,000

Heritage at Stone Ridge
Burlington, MA
 
2005
 
180

 
10,800,000

 
31,808,335

 
722,215

 
10,800,000

 
32,530,550

 
43,330,550

 
(8,636,359
)
 
34,694,191

 
27,859,574

Heronfield
Kirkland, WA
 
1990
 
202

 
9,245,000

 
27,017,749

 
1,286,663

 
9,245,000

 
28,304,412

 
37,549,412

 
(6,623,206
)
 
30,926,206

 
 (K)

Highlands at Cherry Hill
Cherry Hills, NJ
 
2002
 
170

 
6,800,000

 
21,459,108

 
639,410

 
6,800,000

 
22,098,518

 
28,898,518

 
(5,655,534
)
 
23,242,984

 
14,391,147

Ivory Wood
Bothell, WA
 
2000
 
144

 
2,732,800

 
13,888,282

 
585,457

 
2,732,800

 
14,473,739

 
17,206,539

 
(4,321,190
)
 
12,885,349

 
8,020,000

Jaclen Towers
Beverly, MA
 
1976
 
100

 
437,072

 
2,921,735

 
1,146,926

 
437,072

 
4,068,661

 
4,505,733

 
(1,988,692
)
 
2,517,041

 
1,074,494

La Terrazza at Colma Station
Colma, CA (G) (I)
 
2005
 
153

 

 
41,251,044

 
492,747

 

 
41,743,791

 
41,743,791

 
(8,533,442
)
 
33,210,349

 
25,175,000

Liberty Park
Brain Tree, MA
 
2000
 
202

 
5,977,504

 
26,749,110

 
2,184,890

 
5,977,504

 
28,934,000

 
34,911,504

 
(9,678,494
)
 
25,233,010

 
24,980,280

Liberty Tower
Arlington, VA (G)
 
2008
 
235

 
16,382,822

 
83,817,078

 
500,099

 
16,382,822

 
84,317,177

 
100,699,999

 
(7,455,086
)
 
93,244,913

 
48,586,957

Lindley
Encino, CA
 
2004
 
129

 
5,805,000

 
25,705,000

 
380,221

 
5,805,000

 
26,085,221

 
31,890,221

 
(1,708,719
)
 
30,181,502

 
22,436,908

Lincoln Heights
Quincy, MA
 
1991
 
336

 
5,928,400

 
33,595,262

 
10,702,664

 
5,928,400

 
44,297,926

 
50,226,326

 
(21,483,850
)
 
28,742,476

 
 (L)

Longview Place
Waltham, MA
 
2004
 
348

 
20,880,000

 
90,255,509

 
2,059,321

 
20,880,000

 
92,314,830

 
113,194,830

 
(21,584,039
)
 
91,610,791

 
57,029,000

Market Street Village
San Diego, CA
 
2006
 
229

 
13,740,000

 
40,757,301

 
570,900

 
13,740,000

 
41,328,201

 
55,068,201

 
(9,542,056
)
 
45,526,145

 
 (K)

Marks
Englewood, CO (G)
 
1987
 
616

 
4,928,500

 
44,622,314

 
9,664,858

 
4,928,500

 
54,287,172

 
59,215,672

 
(27,218,142
)
 
31,997,530

 
19,195,000

Metro on First
Seattle, WA (G)
 
2002
 
102

 
8,540,000

 
12,209,981

 
282,559

 
8,540,000

 
12,492,540

 
21,032,540

 
(3,183,956
)
 
17,848,584

 
16,650,000

Mill Creek
Milpitas, CA
 
1991
 
516

 
12,858,693

 
57,168,503

 
3,134,053

 
12,858,693

 
60,302,556

 
73,161,249

 
(19,263,283
)
 
53,897,966

 
69,312,259

Miramar Lakes
Miramar, FL
 
2003
 
344

 
17,200,000

 
51,487,235

 
1,648,442

 
17,200,000

 
53,135,677

 
70,335,677

 
(14,063,001
)
 
56,272,676

 
 (M)

Missions at Sunbow
Chula Vista, CA
 
2003
 
336

 
28,560,000

 
59,287,595

 
1,302,798

 
28,560,000

 
60,590,393

 
89,150,393

 
(17,010,676
)
 
72,139,717

 
55,091,000

Monte Viejo
Phoneix, AZ
 
2004
 
480

 
12,700,000

 
45,926,784

 
1,068,859

 
12,700,000

 
46,995,643

 
59,695,643

 
(14,000,776
)
 
45,694,867

 
40,515,169

Montecito
Valencia, CA
 
1999
 
210

 
8,400,000

 
24,709,146

 
1,830,577

 
8,400,000

 
26,539,723

 
34,939,723

 
(10,567,646
)
 
24,372,077

 
 (K)

Montierra
Scottsdale, AZ
 
1999
 
249

 
3,455,000

 
17,266,787

 
1,542,668

 
3,455,000

 
18,809,455

 
22,264,455

 
(8,591,147
)
 
13,673,308

 
17,858,854

Montierra (CA)
San Diego, CA
 
1990
 
272

 
8,160,000

 
29,360,938

 
6,578,545

 
8,160,000

 
35,939,483

 
44,099,483

 
(15,545,316
)
 
28,554,167

 
 (K)

Mosaic at Metro
Hyattsville, MD
 
2008
 
260

 

 
59,705,367

 
126,999

 

 
59,832,366

 
59,832,366

 
(6,504,822
)
 
53,327,544

 
44,655,135

Mountain Park Ranch
Phoenix, AZ
 
1994
 
240

 
1,662,332

 
18,260,276

 
1,912,961

 
1,662,332

 
20,173,237

 
21,835,569

 
(10,165,770
)
 
11,669,799

 
 (J)

Mountain Terrace
Stevenson Ranch, CA
 
1992
 
510

 
3,966,500

 
35,814,995

 
11,698,615

 
3,966,500

 
47,513,610

 
51,480,110

 
(23,751,369
)
 
27,728,741

 
57,428,472

Northpark
Burlingame, CA
 
1972
 
510

 
38,607,000

 
77,477,449

 
3,452,074

 
38,607,000

 
80,929,523

 
119,536,523

 
(8,379,109
)
 
111,157,414

 
68,776,370

North Pier at Harborside
Jersey City, NJ (J)
 
2003
 
297

 
4,000,159

 
94,290,590

 
1,966,623

 
4,000,159

 
96,257,213

 
100,257,372

 
(25,714,421
)
 
74,542,951

 
76,862,000

Oak Mill I
Germantown, MD
 
1984
 
208

 
10,000,000

 
13,155,522

 
7,318,552

 
10,000,000

 
20,474,074

 
30,474,074

 
(7,501,774
)
 
22,972,300

 
12,066,806

Oak Mill II
Germantown, MD
 
1985
 
192

 
854,133

 
10,233,947

 
6,320,715

 
854,133

 
16,554,662

 
17,408,795

 
(9,400,865
)
 
8,007,930

 
9,600,000

Oaks
Santa Clarita, CA
 
2000
 
520

 
23,400,000

 
61,020,438

 
2,934,000

 
23,400,000

 
63,954,438

 
87,354,438

 
(20,238,980
)
 
67,115,458

 
40,260,939

Olde Redmond Place
Redmond, WA
 
1986
 
192

 
4,807,100

 
14,126,038

 
4,182,775

 
4,807,100

 
18,308,813

 
23,115,913

 
(9,376,336
)
 
13,739,577

 
 (L)

Olympus Towers
Seattle, WA (G)
 
2000
 
328

 
14,752,034

 
73,335,425

 
3,333,107

 
14,752,034

 
76,668,532

 
91,420,566

 
(22,080,839
)
 
69,339,727

 
49,875,780

Parc East Towers
New York, NY (G)
 
1977
 
324

 
102,163,000

 
108,989,402

 
5,871,189

 
102,163,000

 
114,860,591

 
217,023,591

 
(23,094,592
)
 
193,928,999

 
17,081,217

Park Meadow
Gilbert, AZ
 
1986
 
225

 
835,217

 
15,120,769

 
2,364,618

 
835,217

 
17,485,387

 
18,320,604

 
(9,072,518
)
 
9,248,086

 
 (L)

Parkfield
Denver, CO
 
2000
 
476

 
8,330,000

 
28,667,618

 
2,473,044

 
8,330,000

 
31,140,662

 
39,470,662

 
(12,454,063
)
 
27,016,599

 
23,275,000

Promenade at Peachtree
Chamblee, GA
 
2001
 
406

 
10,120,250

 
31,219,739

 
1,765,724

 
10,120,250

 
32,985,463

 
43,105,713

 
(9,938,378
)
 
33,167,335

 
 (K)

Promenade at Town Center II
Valencia, CA
 
2001
 
270

 
13,500,000

 
34,405,636

 
629,459

 
13,500,000

 
35,035,095

 
48,535,095

 
(10,422,317
)
 
38,112,778

 
32,039,955

Providence
Bothell, WA
 
2000
 
200

 
3,573,621

 
19,055,505

 
581,521

 
3,573,621

 
19,637,026

 
23,210,647

 
(6,033,468
)
 
17,177,179

 
 (J)

Reserve at Clarendon Centre, The
Arlington, VA (G)
 
2003
 
252

 
10,500,000

 
52,812,935

 
2,624,457

 
10,500,000

 
55,437,392

 
65,937,392

 
(16,220,530
)
 
49,716,862

 
 (K)




S-11



EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
Reserve at Eisenhower, The
Alexandria, VA
 
2002
 
226

 
6,500,000

 
34,585,059

 
1,115,888

 
6,500,000

 
35,700,947

 
42,200,947

 
(11,325,598
)
 
30,875,349

 
 (K)

Reserve at Empire Lakes
Rancho Cucamonga, CA
 
2005
 
467

 
16,345,000

 
73,080,670

 
1,563,160

 
16,345,000

 
74,643,830

 
90,988,830

 
(18,094,411
)
 
72,894,419

 
 (J)

Reserve at Fairfax Corner
Fairfax, VA
 
2001
 
652

 
15,804,057

 
63,129,051

 
2,789,752

 
15,804,057

 
65,918,803

 
81,722,860

 
(22,334,850
)
 
59,388,010

 
84,778,875

Reserve at Potomac Yard
Alexandria, VA
 
2002
 
588

 
11,918,917

 
68,862,641

 
4,860,030

 
11,918,917

 
73,722,671

 
85,641,588

 
(20,497,931
)
 
65,143,657

 
66,470,000

Reserve at Town Center (WA)
Mill Creek, WA
 
2001
 
389

 
10,369,400

 
41,172,081

 
1,724,572

 
10,369,400

 
42,896,653

 
53,266,053

 
(12,420,185
)
 
40,845,868

 
29,160,000

Rianna II
Seattle, WA (G)
 
2002
 
78

 
2,161,840

 
14,433,614

 
45,932

 
2,161,840

 
14,479,546

 
16,641,386

 
(1,731,383
)
 
14,910,003

 
10,305,157

Rockingham Glen
West Roxbury, MA
 
1974
 
143

 
1,124,217

 
7,515,160

 
1,721,493

 
1,124,217

 
9,236,653

 
10,360,870

 
(4,122,488
)
 
6,238,382

 
1,281,181

Rolling Green (Amherst)
Amherst, MA
 
1970
 
204

 
1,340,702

 
8,962,317

 
3,427,182

 
1,340,702

 
12,389,499

 
13,730,201

 
(5,922,934
)
 
7,807,267

 
1,938,119

Rolling Green (Milford)
Milford, MA
 
1970
 
304

 
2,012,350

 
13,452,150

 
4,468,232

 
2,012,350

 
17,920,382

 
19,932,732

 
(8,147,381
)
 
11,785,351

 
4,131,247

San Marcos Apartments
Scottsdale, AZ
 
1995
 
320

 
20,000,000

 
31,261,609

 
1,509,168

 
20,000,000

 
32,770,777

 
52,770,777

 
(8,842,012
)
 
43,928,765

 
32,900,000

Savannah Lakes
Boynton Beach, FL
 
1991
 
466

 
7,000,000

 
30,263,310

 
5,847,909

 
7,000,000

 
36,111,219

 
43,111,219

 
(13,118,776
)
 
29,992,443

 
36,610,000

Savannah Midtown
Atlanta, GA
 
2000
 
322

 
7,209,873

 
29,371,164

 
2,796,529

 
7,209,873

 
32,167,693

 
39,377,566

 
(9,774,166
)
 
29,603,400

 
17,800,000

Savoy I
Aurora, CO
 
2001
 
444

 
5,450,295

 
38,765,670

 
2,297,824

 
5,450,295

 
41,063,494

 
46,513,789

 
(12,563,141
)
 
33,950,648

 
 (L)

Sheffield Court
Arlington, VA
 
1986
 
597

 
3,342,381

 
31,337,332

 
10,473,862

 
3,342,381

 
41,811,194

 
45,153,575

 
(23,499,476
)
 
21,654,099

 
 (L)

Sonata at Cherry Creek
Denver, CO
 
1999
 
183

 
5,490,000

 
18,130,479

 
1,264,429

 
5,490,000

 
19,394,908

 
24,884,908

 
(7,685,155
)
 
17,199,753

 
19,190,000

Sonterra at Foothill Ranch
Foothill Ranch, CA
 
1997
 
300

 
7,503,400

 
24,048,507

 
1,610,524

 
7,503,400

 
25,659,031

 
33,162,431

 
(12,408,332
)
 
20,754,099

 
 (L)

South Winds
Fall River, MA
 
1971
 
404

 
2,481,821

 
16,780,359

 
4,016,098

 
2,481,821

 
20,796,457

 
23,278,278

 
(9,547,635
)
 
13,730,643

 
3,892,847

Stonegate (CO)
Broomfield, CO
 
2003
 
350

 
8,750,000

 
32,998,775

 
2,848,652

 
8,750,000

 
35,847,427

 
44,597,427

 
(10,226,676
)
 
34,370,751

 
 (J)

Stoney Ridge
Dale City, VA
 
1985
 
264

 
8,000,000

 
24,147,091

 
5,439,826

 
8,000,000

 
29,586,917

 
37,586,917

 
(9,419,073
)
 
28,167,844

 
14,746,374

Stonybrook
Boynton Beach, FL
 
2001
 
264

 
10,500,000

 
24,967,638

 
1,077,280

 
10,500,000

 
26,044,918

 
36,544,918

 
(7,136,693
)
 
29,408,225

 
20,371,693

Summerhill Glen
Maynard, MA
 
1980
 
120

 
415,812

 
3,000,816

 
795,902

 
415,812

 
3,796,718

 
4,212,530

 
(1,787,805
)
 
2,424,725

 
1,044,076

Summerset Village
Chatsworth, CA
 
1985
 
280

 
2,629,804

 
23,670,889

 
4,102,785

 
2,629,804

 
27,773,674

 
30,403,478

 
(14,824,486
)
 
15,578,992

 
38,039,912

Summit at Lake Union
Seattle, WA
 
1995 -1997
 
150

 
1,424,700

 
12,852,461

 
3,752,142

 
1,424,700

 
16,604,603

 
18,029,303

 
(8,410,967
)
 
9,618,336

 
 (L)

Sunforest
Davie, FL
 
1989
 
494

 
10,000,000

 
32,124,850

 
4,492,406

 
10,000,000

 
36,617,256

 
46,617,256

 
(12,704,849
)
 
33,912,407

 
 (L)

Sunforest II
Davie, FL
 
(F)
 

 

 
355,520

 

 

 
355,520

 
355,520

 

 
355,520

 
 (L)

Talleyrand
Tarrytown, NY (I)
 
1997-1998
 
300

 
12,000,000

 
49,838,160

 
3,809,456

 
12,000,000

 
53,647,616

 
65,647,616

 
(19,860,971
)
 
45,786,645

 
35,000,000

Teresina
Chula Vista, CA
 
2000
 
440

 
28,600,000

 
61,916,670

 
1,938,218

 
28,600,000

 
63,854,888

 
92,454,888

 
(16,411,428
)
 
76,043,460

 
43,424,197

Touriel Building
Berkeley, CA (G)
 
2004
 
35

 
2,736,000

 
7,810,027

 
120,712

 
2,736,000

 
7,930,739

 
10,666,739

 
(1,731,390
)
 
8,935,349

 
5,050,000

Town Square at Mark Center I (fka Millbrook I)
Alexandria, VA
 
1996
 
406

 
24,360,000

 
86,178,714

 
2,534,882

 
24,360,000

 
88,713,596

 
113,073,596

 
(22,922,510
)
 
90,151,086

 
64,680,000

Town Square at Mark Center Phase II
Alexandria, VA
 
2001
 
272

 
15,568,464

 
55,029,607

 
194,734

 
15,568,464

 
55,224,341

 
70,792,805

 
(5,679,993
)
 
65,112,812

 
46,013,583

Tradition at Alafaya
Oviedo, FL
 
2006
 
253

 
7,590,000

 
31,881,505

 
289,137

 
7,590,000

 
32,170,642

 
39,760,642

 
(9,148,562
)
 
30,612,080

 
 (K)

Tuscany at Lindbergh
Atlanta, GA
 
2001
 
324

 
9,720,000

 
40,874,023

 
1,915,043

 
9,720,000

 
42,789,066

 
52,509,066

 
(13,014,206
)
 
39,494,860

 
32,360,000

Uptown Square
Denver, CO (G)
 
1999/2001
 
696

 
17,492,000

 
100,696,541

 
2,529,750

 
17,492,000

 
103,226,291

 
120,718,291

 
(28,417,401
)
 
92,300,890

 
88,550,000

Versailles
Woodland Hills, CA
 
1991
 
253

 
12,650,000

 
33,656,292

 
4,126,653

 
12,650,000

 
37,782,945

 
50,432,945

 
(12,624,925
)
 
37,808,020

 
30,372,953

Via Ventura
Scottsdale, AZ
 
1980
 
328

 
1,351,785

 
13,382,006

 
8,124,724

 
1,351,785

 
21,506,730

 
22,858,515

 
(15,047,425
)
 
7,811,090

 
 (K)

Village at Lakewood
Phoenix, AZ
 
1988
 
240

 
3,166,411

 
13,859,090

 
2,288,898

 
3,166,411

 
16,147,988

 
19,314,399

 
(8,345,890
)
 
10,968,509

 
 (L)

Vintage
Ontario, CA
 
2005-2007
 
300

 
7,059,230

 
47,677,762

 
246,411

 
7,059,230

 
47,924,173

 
54,983,403

 
(10,944,256
)
 
44,039,147

 
33,000,000

Warwick Station
Westminster, CO
 
1986
 
332

 
2,274,121

 
21,113,974

 
3,143,399

 
2,274,121

 
24,257,373

 
26,531,494

 
(12,481,108
)
 
14,050,386

 
8,355,000

Westgate Pasadena Apartments
Pasadena, CA
 
2010
 
480

 
22,898,848

 
133,521,158

 
22,444

 
22,898,848

 
133,543,602

 
156,442,450

 
(4,615,636
)
 
151,826,814

 
97,145,000

Westwood Glen
Westwood, MA
 
1972
 
156

 
1,616,505

 
10,806,004

 
1,729,627

 
1,616,505

 
12,535,631

 
14,152,136

 
(4,951,551
)
 
9,200,585

 
223,541

Whisper Creek
Denver, CO
 
2002
 
272

 
5,310,000

 
22,998,558

 
988,597

 
5,310,000

 
23,987,155

 
29,297,155

 
(6,870,894
)
 
22,426,261

 
13,580,000

Wilkins Glen
Medfield, MA
 
1975
 
103

 
538,483

 
3,629,943

 
1,528,761

 
538,483

 
5,158,704

 
5,697,187

 
(2,335,788
)
 
3,361,399

 
882,098

Windridge (CA)
Laguna Niguel, CA
 
1989
 
344

 
2,662,900

 
23,985,497

 
6,723,847

 
2,662,900

 
30,709,344

 
33,372,244

 
(17,637,598
)
 
15,734,646

 
 (I)

Woodlake (WA)
Kirkland, WA
 
1984
 
288

 
6,631,400

 
16,735,484

 
2,897,667

 
6,631,400

 
19,633,151

 
26,264,551

 
(9,764,092
)
 
16,500,459

 
 (L)

Wholly Owned Encumbered
 
 
 
 
37,453

 
1,229,307,164

 
4,561,433,644

 
388,065,518

 
1,229,307,164

 
4,949,499,162

 
6,178,806,326

 
(1,482,040,971
)
 
4,696,765,355

 
2,547,898,280

Partially Owned Unencumbered:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1401 South State (fka City Lofts)
Chicago, IL
 
2008
 
278

 
6,882,467

 
61,577,830

 
74,937

 
6,882,467

 
61,652,767

 
68,535,234

 
(8,211,336
)
 
60,323,898

 

2300 Elliott
Seattle, WA
 
1992
 
92

 
796,800

 
7,173,725

 
6,037,779

 
796,800

 
13,211,504

 
14,008,304

 
(8,320,446
)
 
5,687,858

 



S-12


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
Description
 
 
 
Initial Cost to Company
 
 Cost Capitalized Subsequent to Acquisition(Improvements, net) (E)
 
Gross Amount Carried at Close of Period 12/31/11
 
 
 
 
 
 
 
 
Apartment Name
Location
 
 Date of Construction
 
Units (H)
 
Land
 
 Building & Fixtures
 
 Building & Fixtures
 
Land
 
 Building & Fixtures (A)
 
Total (B)
 
Accumulated Depreciation (C)
Investment in Real Estate, Net at 12/31/11 (B)
Encumbrances
400 Park Avenue South (EQR)
New York, NY
 
(F)
 

 
76,292,169

 
1,273,531

 

 
76,292,169

 
1,273,531

 
77,565,700

 

 
77,565,700

 

400 Park Avenue South (Toll)
New York, NY
 
(F)
 

 
58,090,357

 

 

 
58,090,357

 

 
58,090,357

 

 
58,090,357

 

Butterfield Ranch
Chino Hills, CA
 
(F)
 

 
15,617,709

 
4,458,157

 

 
15,617,709

 
4,458,157

 
20,075,866

 

 
20,075,866

 

Canyon Ridge
San Diego, CA
 
1989
 
162

 
4,869,448

 
11,955,063

 
1,820,884

 
4,869,448

 
13,775,947

 
18,645,395

 
(7,072,766
)
 
11,572,629

 

Copper Creek
Tempe, AZ
 
1984
 
144

 
1,017,400

 
9,158,260

 
1,948,215

 
1,017,400

 
11,106,475

 
12,123,875

 
(6,030,660
)
 
6,093,215

 

Country Oaks
Agoura Hills, CA
 
1985
 
256

 
6,105,000

 
29,561,865

 
3,283,088

 
6,105,000

 
32,844,953

 
38,949,953

 
(11,978,857
)
 
26,971,096

 

Fox Ridge
Englewood, CO
 
1984
 
300

 
2,490,000

 
17,522,114

 
3,513,373

 
2,490,000

 
21,035,487

 
23,525,487

 
(9,051,210
)
 
14,474,277

 

Hudson Crossing II
New York, NY
 
(F)
 

 
5,000,000

 

 

 
5,000,000

 

 
5,000,000

 

 
5,000,000

 

Monterra in Mill Creek
Mill Creek, WA
 
2003
 
139

 
2,800,000

 
13,255,123

 
264,501

 
2,800,000

 
13,519,624

 
16,319,624

 
(3,688,448
)
 
12,631,176

 

Preserve at Briarcliff
Atlanta, GA
 
1994
 
182

 
6,370,000

 
17,766,322

 
701,402

 
6,370,000

 
18,467,724

 
24,837,724

 
(4,701,357
)
 
20,136,367

 

Strayhorse at Arrowhead Ranch
Glendale, AZ
 
1998
 
136

 
4,400,000

 
12,968,001

 
268,668

 
4,400,000

 
13,236,669

 
17,636,669

 
(3,181,411
)
 
14,455,258

 

Willow Brook (CA)
Pleasant Hill, CA
 
1985
 
228

 
5,055,000

 
38,388,672

 
2,571,207

 
5,055,000

 
40,959,879

 
46,014,879

 
(11,732,931
)
 
34,281,948

 

Partially Owned Unencumbered
 
 
 
1,917

 
195,786,350

 
225,058,663

 
20,484,054

 
195,786,350

 
245,542,717

 
441,329,067

 
(73,969,422
)
 
367,359,645

 

Partially Owned Encumbered:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bellevue Meadows
Bellevue, WA
 
1983
 
180

 
4,507,100

 
12,574,814

 
4,168,565

 
4,507,100

 
16,743,379

 
21,250,479

 
(8,102,753
)
 
13,147,726

 
16,538,000

Canyon Creek (CA)
San Ramon, CA
 
1984
 
268

 
5,425,000

 
18,812,121

 
6,048,256

 
5,425,000

 
24,860,377

 
30,285,377

 
(9,367,456
)
 
20,917,921

 
28,200,000

Isle at Arrowhead Ranch
Glendale, AZ
 
1996
 
256

 
1,650,237

 
19,593,123

 
1,820,738

 
1,650,237

 
21,413,861

 
23,064,098

 
(10,657,381
)
 
12,406,717

 
17,700,000

Lantern Cove
Foster City, CA
 
1985
 
232

 
6,945,000

 
23,064,976

 
3,858,408

 
6,945,000

 
26,923,384

 
33,868,384

 
(10,048,742
)
 
23,819,642

 
36,455,000

Montclair Metro
Montclair, NJ
 
2009
 
163

 
2,400,887

 
43,605,687

 
41,720

 
2,400,887

 
43,647,407

 
46,048,294

 
(4,016,385
)
 
42,031,909

 
33,418,656

Rosecliff
Quincy, MA
 
1990
 
156

 
5,460,000

 
15,721,570

 
1,744,506

 
5,460,000

 
17,466,076

 
22,926,076

 
(7,527,276
)
 
15,398,800

 
17,400,000

Schooner Bay I
Foster City, CA
 
1985
 
168

 
5,345,000

 
20,390,618

 
3,819,571

 
5,345,000

 
24,210,189

 
29,555,189

 
(8,765,022
)
 
20,790,167

 
28,870,000

Schooner Bay II
Foster City, CA
 
1985
 
144

 
4,550,000

 
18,064,764

 
3,552,438

 
4,550,000

 
21,617,202

 
26,167,202

 
(7,903,256
)
 
18,263,946

 
26,175,000

Scottsdale Meadows
Scottsdale, AZ
 
1984
 
168

 
1,512,000

 
11,423,349

 
1,695,333

 
1,512,000

 
13,118,682

 
14,630,682

 
(6,778,792
)
 
7,851,890

 
9,270,000

Surrey Downs
Bellevue, WA
 
1986
 
122

 
3,057,100

 
7,848,618

 
2,148,814

 
3,057,100

 
9,997,432

 
13,054,532

 
(4,730,062
)
 
8,324,470

 
9,829,000

Virgil Square
Los Angeles, CA
 
1979
 
142

 
5,500,000

 
15,216,613

 
1,559,212

 
5,500,000

 
16,775,825

 
22,275,825

 
(4,665,674
)
 
17,610,151

 
9,900,000

Partially Owned Encumbered
 
 
 
1,999

 
46,352,324

 
206,316,253

 
30,457,562

 
46,352,324

 
236,773,815

 
283,126,139

 
(82,562,799
)
 
200,563,340

 
233,755,656

Portfolio/Entity Encumbrances (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,329,833,000

Total Consolidated Investment in Real Estate
 
 
 
117,073

 
$
4,742,556,710

 
$
14,306,448,590

 
$
1,358,940,646

 
$
4,742,556,710

 
$
15,665,389,236

 
$
20,407,945,946

 
$
(4,539,582,870
)
 
$
15,868,363,076

 
$
4,111,486,936

(1)
See attached Encumbrances Reconciliation

S-13



EQUITY RESIDENTIAL
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2011
NOTES:
(A)
The balance of furniture & fixtures included in the total investment in real estate amount was $1,292,124,515 as of December 31, 2011.
(B)
The cost, net of accumulated depreciation, for Federal Income Tax purposes as of December 31, 2011 was approximately $11.4 billion.
(C)
The life to compute depreciation for building is 30 years, for building improvements ranges from 5 to 15 years, for furniture & fixtures and replacements is 5 to 10 years, and for in-place leases is the average remaining term of each respective lease.
(D)
This asset consists of various acquisition dates and largely represents furniture, fixtures and equipment, leasehold improvements and capitalized software costs owned by the Management Business, which are generally depreciated over periods ranging from 3 to 7 years.
(E)
Primarily represents capital expenditures for major maintenance and replacements incurred subsequent to each property’s acquisition date.
(F)
Represents land and/or construction-in-progress on projects either held for future development or projects currently under development.
(G)
A portion or all of these properties includes commercial space (retail, parking and/or office space).
(H)
Total properties and units exclude the Military Housing consisting of 2 properties and 4,901 units.
(I)
through (L) See Encumbrances Reconciliation schedule.
(M)
Boot property for Freddie Mac mortgage pool.



S-14