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 March 31, 2016 (amounts in thousands except for property and apartment unit amounts):



	Consolidated			Unconsolidated
	(VIE)			(Non-VIE)			(VIE)			Total

Total properties	18			2			1			3

Total apartment units	3,471			945			336			1,281

Balance sheet information at 3/31/16 (at 100%):
ASSETS
Investment in real estate	$	665,996		$	234,383		$	229,599		$	463,982
Accumulated depreciation	(209,424		)	(24,991		)	(49,194		)	(74,185		)
Investment in real estate, net	456,572			209,392			180,405			389,797
Cash and cash equivalents	15,051			7,836			1,201			9,037
Investments in unconsolidated entities	48,797			—			—			—
Deposits – restricted	351			242			47			289
Other assets	25,948			103			786			889
Total assets	$	546,719		$	217,573		$	182,439		$	400,012

LIABILITIES AND EQUITY/CAPITAL
Mortgage notes payable, net (1)	$	317,801		$	145,423		$	29,269		$	174,692
Accounts payable & accrued expenses	2,786			1,729			351			2,080
Accrued interest payable	1,099			691			—			691
Other liabilities	521			258			216			474
Security deposits	1,939			510			159			669
Total liabilities	324,146			148,611			29,995			178,606

Noncontrolling Interests – Partially Owned Properties/Partners' equity	4,399			63,809			108,968			172,777
Company equity/General and Limited Partners' Capital	218,174			5,153			43,476			48,629
Total equity/capital	222,573			68,962			152,444			221,406
Total liabilities and equity/capital	$	546,719		$	217,573		$	182,439		$	400,012



	Consolidated			Unconsolidated
	(VIE)			(Non-VIE)			(VIE)			Total
Operating information for the quarter ended 3/31/16 (at 100%):
Operating revenue	$	22,997		$	6,528		$	2,913		$	9,441
Operating expenses	5,598			2,196			1,153			3,349

Net operating income	17,399			4,332			1,760			6,092
Property management	811			190			19			209
General and administrative/other	15			—			86			86
Depreciation	5,369			2,621			1,858			4,479

Operating income (loss)	11,204			1,521			(203		)	1,318
Interest and other income	20			—			—			—
Interest:
Expense incurred, net	(4,038		)	(2,072		)	(272		)	(2,344		)
Amortization of deferred financing costs	(147		)	—			—			—

Income (loss) before income and other taxes and (loss) from investments in unconsolidated entities	7,039			(551		)	(475		)	(1,026		)
Income and other tax (expense) benefit	(12		)	—			—			—
(Loss) from investments in unconsolidated entities	(369		)	—			—			—

Net income (loss)	$	6,658		$	(551	)	$	(475	)	$	(1,026	)


(1)	All debt is non-recourse to the Company.

Note: The above tables exclude EQR's ownership interest in ERPOP and the Company's interests in unconsolidated joint ventures entered into with AvalonBay Communities, Inc. (“AVB”) in connection with the acquisition of certain real estate related assets from Archstone Enterprise LP (such assets are referred to herein as "Archstone"). These ventures owned certain Archstone assets and succeeded to certain residual Archstone liabilities/litigation, as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests had an aggregate liquidation value of $42.2 million at March 31, 2016. The ventures are owned 60% by the Company and 40% by AVB. See below for further discussion.

Operating Properties

The Company has various equity interests in certain limited partnerships owning 17 properties containing 3,039 apartment units. Each partnership owns a multifamily property. The Company is the general partner of these limited partnerships and is responsible for managing the operations and affairs of the partnerships as well as making all decisions regarding the businesses of the partnerships. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, the partnerships qualify as VIEs. The Company has a controlling financial interest in the VIEs and, thus, is the VIEs' primary beneficiary. The Company has both the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. As a result, the partnerships are required to be consolidated on the Company's balance sheet.

The Company has a 75% equity interest in the Wisconsin Place joint venture. The project contains a mixed-use site located in Chevy Chase, Maryland consisting of residential, retail, office and accessory uses, including underground parking facilities. The joint venture owns the 432 unit residential component, but has no ownership interest in the retail and office components. At March 31, 2016, the residential component had a net book value of $174.5 million. The Company is the managing member and is responsible for conducting all administrative day-to-day matters and affairs of the joint venture as well as implementing all decisions with respect to the joint venture. The limited partner is not able to exercise substantive kick-out or participating rights. As a result, the joint venture qualifies as a VIE. The Company has a controlling financial interest in the VIE and, thus, is the VIE's primary beneficiary. The Company has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the entity that owns the residential component is required to be consolidated on the Company's balance sheet.

The Wisconsin Place joint venture also retains an unconsolidated interest in an entity that owns the land underlying the entire project and owns and operates the parking facility. At March 31, 2016, the basis of this investment was $48.8 million. The joint venture, as a limited partner, does not have substantive kick-out or participating rights in the entity. As a result, the entity qualifies as a VIE. The joint venture does not have a controlling financial interest in the VIE and is not the VIE's primary beneficiary. The joint venture does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance or the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the entity that owns the land and owns and operates the parking facility is unconsolidated and recorded using the equity method of accounting.

The Company has a 20% equity interest in the Waterton Tenside joint venture which owns a 336 unit apartment property located in Atlanta, Georgia and had a basis of $3.9 million at March 31, 2016. The partner is the managing member and its predecessor by merger developed the project. The project is encumbered by a non-recourse mortgage loan that has a current outstanding balance of $29.3 million, bears interest at 3.66% and matures December 1, 2018. The Company, as the limited partner, does not have substantive kick-out or participating rights. As a result, the entity qualifies as a VIE. The Company does not have a controlling financial interest in the VIE and is not the VIE's primary beneficiary. The Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance or the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the entity is unconsolidated and recorded using the equity method of accounting.

The Company has a 20% equity interest in each of the Nexus Sawgrass and Domain joint ventures. The Nexus Sawgrass joint venture owns a 501 unit apartment property located in Sunrise, Florida and the Company's interest had a basis of $4.9 million at March 31, 2016. The Domain joint venture owns a 444 unit apartment property located in San Jose, California and the Company's interest had a basis of $9.8 million at March 31, 2016. Nexus Sawgrass and Domain were completed and stabilized during the quarters ended September 30, 2014 and March 31, 2015, respectively. Construction on both properties was predominantly funded with long-term, non-recourse secured loans from the partner. The mortgage loan on Nexus Sawgrass has a current unconsolidated outstanding balance of $48.6 million, bears interest at 5.60% and matures January 1, 2021. The mortgage loan on Domain has a current unconsolidated outstanding balance of $96.8 million, bears interest at 5.75% and matures January 1, 2022. While the Company is the managing member of both of the joint ventures, was responsible for constructing both of the properties and gave certain construction cost overrun guarantees, the joint venture partner has significant participating rights and has active involvement in and oversight of the operations. As a result, the entities do not qualify as VIEs. The Company alone does not have the power to direct the activities of the entities that most significantly impact the entities' economic performance and as a result, the entities are unconsolidated and recorded using the equity method of accounting. The Company currently has no further funding obligations related to these properties.

Other

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

On February 27, 2013, in connection with the acquisition of Archstone, subsidiaries of the Company and AVB entered into three limited liability company agreements (collectively, the “Residual JV”). The Residual JV owned certain Archstone assets and succeeded to certain residual Archstone liabilities/litigation. The Residual JV is owned 60% by the Company and 40% by AVB. The Company's initial investment was $147.6 million and the Company's basis at March 31, 2016 was a net obligation of $0.9 million. The Residual JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the Residual JV does not qualify as a VIE. The Company alone does not have the power to direct the activities of the Residual JV that most significantly impact the Residual JV's economic performance and as a result, the Residual JV is unconsolidated and recorded using the equity method of accounting. The Residual JV has sold all of the real estate assets that were acquired as part of the acquisition of Archstone, including all of the German assets, and is in the process of winding down all remaining activities.

On February 27, 2013, in connection with the acquisition of Archstone, a subsidiary of the Company and AVB entered into a limited liability company agreement (the “Legacy JV”), through which they assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements. At March 31, 2016, the remaining preferred interests had an aggregate liquidation value of $42.2 million, our share of which is included in other liabilities in the accompanying consolidated balance sheets. Obligations of the Legacy JV are borne 60% by the Company and 40% by AVB. The Legacy JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the Legacy JV does not qualify as a VIE. The Company alone does not have the power to direct the activities of the Legacy JV that most significantly impact the Legacy JV's economic performance and as a result, the Legacy JV is unconsolidated and recorded using the equity method of accounting.