-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EFz0ydhtOxgfi1Bl4sT3/runpeh56F/FWXJoKD4oiH5S8/2vfFTFEeZbLLVHntkG UBiVUc1JBTQGroB+ymddpw== 0000950131-99-001583.txt : 19990322 0000950131-99-001583.hdr.sgml : 19990322 ACCESSION NUMBER: 0000950131-99-001583 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY RESIDENTIAL PROPERTIES TRUST CENTRAL INDEX KEY: 0000906107 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363877868 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-12252 FILM NUMBER: 99568783 BUSINESS ADDRESS: STREET 1: TWO N RIVERSIDE PLZ STREET 2: STE 400 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124741300 MAIL ADDRESS: STREET 1: TWO N RIVERSIDE PLAZA STREET 2: SUITE 450 CITY: CHICAGO STATE: IL ZIP: 60606 10-K 1 FORM 10K FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended DECEMBER 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-12252 EQUITY RESIDENTIAL PROPERTIES TRUST (Exact Name of Registrant as Specified in Its Charter) MARYLAND 13-3675988 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606 (Address of Principal Executive Offices) (Zip Code) (312) 474-1300 (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, $0.01 Par Value New York Stock Exchange (Title of Class) (Name of Each Exchange on Which Registered) Preferred Shares of Beneficial Interest, $0.01 Par Value New York Stock Exchange (Title of Class) (Name of Each Exchange on Which Registered)
Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ ------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of voting and non-voting shares held by non- affiliates of the Registrant was approximately $4.8 billion based upon the closing price on March 12, 1999 of $40 9/16 using beneficial ownership of shares rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to exclude voting shares owned by Trustees and Officers, some of whom may not be held to be affiliates upon judicial determination. At March 9, 1999, 118,832,901 of the Registrant's Common Shares of Beneficial Interest were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates by reference information to be contained in the Company's definitive proxy statement, which the Company anticipates will be filed no later than March 31, 1999, and thus these items have been omitted in accordance with General Instruction G(3) to Form 10-K. 2 EQUITY RESIDENTIAL PROPERTIES TRUST TABLE OF CONTENTS
PART I. PAGE ---- Item 1. Business 4 Item 2. Properties 27 Item 3. Legal Proceedings 52 Item 4. Submission of Matters to a Vote of Security Holders 52 PART II. Item 5. Market for Registrant's Common Equity and Related Shareholder Matters 53 Item 6. Selected Financial Data 53 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 56 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 68 Item 8. Financial Statements and Supplementary Data 69 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 69 PART III. Item 10. Trustees and Executive Officers of the Registrant 70 Item 11. Executive Compensation 70 Item 12. Security Ownership of Certain Beneficial Owners and Management 70 Item 13. Certain Relationships and Related Transactions 70 PART IV. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 71
3 PART I ITEM 1. BUSINESS GENERAL Equity Residential Properties Trust ("EQR") is a self-administered and self- managed equity real estate investment trust ("REIT"). EQR was organized in March 1993 and commenced operations on August 18, 1993 upon completion of its initial public offering (the "EQR IPO") of 13,225,000 common shares of beneficial interest, $0.01 par value per share ("Common Shares"). EQR was formed to continue the multifamily property business objectives and acquisition strategies of certain affiliated entities controlled by Mr. Samuel Zell, Chairman of the Board of Trustees of the Company. These entities had been engaged in the acquisition, ownership and operation of multifamily residential properties since 1969. As used herein, the term "Company" includes EQR and those entities owned or controlled by it, as the survivor of the mergers between EQR and each of Wellsford Residential Property Trust ("Wellsford") (the "Wellsford Merger"), Evans Withycombe Residential, Inc. ("EWR") (the "EWR Merger") and Merry Land & Investment Company, Inc. ("MRY") (the "MRY Merger") (collectively, the "Mergers"). The Company's subsidiaries include ERP Operating Limited Partnership (the "Operating Partnership"), Equity Residential Properties Management Limited Partnership and Equity Residential Properties Management Limited Partnership II (collectively, the "Management Partnerships"), a series of partnerships (the "Financing Partnerships") and limited liability companies ("LLCs") which beneficially own certain properties encumbered by mortgage indebtedness, and Merry Land DownREIT I LP. As of December 31, 1998, the Company owned or had interests in 681 multifamily properties, of which it controlled a portfolio of 654 multifamily properties (individually, a "Property" and collectively, the "Properties") containing 187,002 units. The remaining 27 properties represent an investment in partnership interests and subordinated mortgages collateralized by 21 properties containing 3,896 units and an investment in six joint ventures consisting of six properties containing 1,297 units (collectively, the "Additional Properties"). The Company's Properties and the Additional Properties are located throughout the United States in the following states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin. In addition, Equity Residential Properties Management Corp. ("Management Corp.") and Equity Residential Properties Management Corp. II ("Management Corp. II") also provide residential property and asset management services to 52 properties containing 12,890 units owned by affiliated entities. The Company is one of the largest publicly traded REIT's (based on the aggregate market value of its outstanding Common Shares) and is the largest publicly traded REIT owner of multifamily properties (based on the number of apartment units wholly-owned and total revenues earned). Since the EQR IPO and through December 31, 1998, the Company, through the Operating Partnership, has acquired direct or indirect interests in 650 properties (which included the debt collateralized by six Properties) containing 180,224 units in the aggregate for a total purchase price of approximately $10.6 billion, including the assumption of approximately $2.6 billion of mortgage indebtedness and $845.9 million of unsecured notes. Since the EQR IPO and through December 31, 1998, the Company has disposed of 38 properties and a portion of one Property, containing 9,754 units, and a vacant land parcel for a total sales price of approximately $306.8 million. The Company's corporate headquarters and executive offices are located in Chicago, Illinois. In addition, the Company has 30 management offices in the following cities: 4 PART I . Chicago, Illinois; . Dallas, Houston and San Antonio, Texas; . Denver, Colorado; . Bethesda, Maryland; . Atlanta and Augusta, Georgia; . Las Vegas, Nevada; . Scottsdale and Tucson, Arizona; . Portland, Oregon; . Ypsilanti, Michigan; . Charlotte and Raleigh, North Carolina; . Tampa, Jacksonville, Ft. Lauderdale and Orlando, Florida; . Irvine, Pleasant Hill and Stockton, California; . Kansas City, Kansas; . Minneapolis, Minnesota; . Louisville, Kentucky; . Tulsa, Oklahoma; . Seattle and Redmond, Washington; and . Nashville and Memphis, Tennessee. The Company has approximately 6,000 employees. An on-site manager, who supervises the on-site employees and is responsible for the day-to-day operations of the Property, directs each of the Company's Properties. A leasing administrator and/or property administrator generally assists the manager. In addition, a maintenance director at each Property supervises a maintenance staff whose responsibilities include a variety of tasks, including responding to service requests, preparing vacant apartments for the next resident and performing preventive maintenance procedures year-round. BUSINESS OBJECTIVES AND OPERATING STRATEGIES The Company seeks to maximize both current income and long-term growth in income, thereby increasing: (a) the value of the Properties; (b) distributions on a per Common Share basis; and (c) shareholders' value. The Company's strategies for accomplishing these objectives are: . maintaining and increasing Property occupancy while increasing rental rates; . controlling expenses, providing regular preventive maintenance, making periodic renovations and enhancing amenities; . maintaining a ratio of consolidated debt-to-total market capitalization of less than 50%; . pursuing acquisitions that: a) are available at prices below estimated replacement costs; b) have potential for rental rate and/or occupancy increases; c) have attractive locations in their respective markets; d) provide anticipated total returns that will increase the Company's distributions per Common Share and shareholders' value; and . purchasing newly developed, as well as co-investing in the development of, multifamily communities in the Company's existing target markets where the market conditions warrant such development. The Company is committed to tenant satisfaction by striving to anticipate industry trends and implementing strategies and policies consistent with providing quality tenant services. In addition, the Company continuously surveys rental rates of competing properties and conducts satisfaction surveys of 5 PART I residents to determine the factors they consider most important in choosing a particular apartment unit. ACQUISITION STRATEGIES The Company anticipates that future property acquisitions will be located in the continental United States. Management will continue to use market information to evaluate acquisition opportunities. The Company's market database allows it to review the primary economic indicators of the markets where the Company currently manages Properties and where it expects to expand its operations. Acquisitions may be financed from various sources of capital, which may include undistributed funds from operations ("FFO"), issuance of additional equity securities, sales of Properties and collateralized and uncollateralized borrowings. In addition, the Company may acquire additional multifamily 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, partially defer the sellers' tax consequences. When evaluating potential acquisitions, the Company will consider: . the geographic area and type of community; . the location, construction quality, condition and design of the property; . the current and projected cash flow of the property and the ability to increase cash flow; . the potential for capital appreciation of the property; . the terms of resident leases, including the potential for rent increases; . the potential for economic growth and the tax and regulatory environment of the community in which the property is located; . the occupancy and demand by residents for properties of a similar type in the vicinity (the overall market and submarket); . the prospects for liquidity through sale, financing or refinancing of the property; . the benefits of integration into existing operations; and . competition from existing multifamily properties and the potential for the construction of new multifamily properties in the area. The Company expects to purchase multifamily properties with physical and market characteristics similar to the Properties. DEVELOPMENT STRATEGIES The Company seeks to acquire newly constructed properties and make investments towards the development of properties in markets where it discerns strong demand, which the Company believes will enable it to achieve superior rates of return. The Company's current communities under development and future developments are in markets or will be in markets where certain market demographics justify the development of high quality multifamily communities. In evaluating whether to develop an apartment community in a particular location, the Company analyzes relevant demographic, economic and financial data. Specifically, the Company considers the following factors, among others, in determining the viability of a potential new apartment community: . income levels and employment growth trends in the relevant market; . uniqueness of location; . household growth and net migration of the relevant market's population; . supply/demand ratio, competitive housing alternatives, sub-market occupancy and rent levels; . barriers to entry that would limit competition; and 6 PART I . the purchase prices and yields of available existing stabilized communities, if any. DISPOSITION STRATEGIES Management will use market information to evaluate dispositions. Factors the Company considers in deciding whether to dispose of its Properties include the following: . potential increases in new construction; . areas where the economy is expected to decline substantially; and . markets where the Company does not intend to establish long-term concentrations. The Company will reinvest the proceeds received from property dispositions primarily to fund property acquisitions. In addition, when feasible the Company may structure these transactions as tax deferred exchanges. FINANCING STRATEGIES The Company intends to maintain a ratio of consolidated debt-to-total market capitalization of 50% or less. At December 31, 1998, the Company had a ratio of approximately 41% based on the closing price of the Company's Common Shares on the New York Stock Exchange and assuming conversion of all OP Units plus the liquidation preference of non-voting preferred shares of beneficial interest, $0.01 par value per share ("Preferred Shares"). It is the Company's policy that EQR shall not incur indebtedness other than short-term trade, employee compensation, dividends payable or similar indebtedness that will be paid in the ordinary course of business, and that indebtedness shall instead be incurred by the Operating Partnership to the extent necessary to fund the business activities conducted by the Operating Partnership and its subsidiaries. Equity Offerings For the Years Ended December 31, 1996, 1997 and 1998 - --------------------------------------------------------------------- In January 1996, the Company completed an offering of 1,725,000 registered Common Shares, which were sold at a net price of $29.375 per share (the "January 1996 Common Share Offering") and received net proceeds of approximately $50.7 million in connection therewith. In February 1996, the Company completed an offering of 2,300,000 registered Common Shares, which were sold at a net price of $29.50 per share (the "February 1996 Common Share Offering") and received net proceeds of approximately $67.8 million in connection therewith. On May 21, 1996, the Company completed an offering of 2,300,000 publicly registered Common Shares, which were sold at a net price of $30.50 per share. On May 28, 1996 the Company completed the sale of 73,287 publicly registered Common Shares to employees of the Company and to employees of Equity Group Investments, Inc. ("EGI") and certain of their respective affiliates and consultants at a net price equal to $30.50 per share. On May 30, 1996, the Company completed an offering of 1,264,400 publicly registered Common Shares, which were sold at a net price of $30.75 per share. The Company received net proceeds of approximately $111.3 million in connection with the sale of the 3,637,687 Common Shares mentioned above (collectively, the "May 1996 Common Share Offerings"). In September 1996, the Company sold 4,600,000 depositary shares (the "Series C Depositary Shares"). Each Series C Depositary Share represents a 1/10 fractional interest in a 9 1/8% Series C Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par value per share (the "Series C Preferred Shares"). The liquidation preference of each of the Series C Preferred Shares is $250.00 (equivalent to $25 per Series C Depositary Share). The Company raised net proceeds of $111.4 million from this offering (the "Series C Preferred Share Offering"). 7 PART I Also in September 1996, the Company completed the sale of 2,272,728 publicly registered Common Shares, which were sold at net price of $33 per share. The Company received net proceeds of approximately $75 million in connection with this offering (the "September 1996 Common Share Offering"). In November 1996, the Company issued 39,458 Common Shares pursuant to the 1996 Nonqualified Employee Share Purchase Plan (the "Employee Share Purchase Plan") at a net price of $30.44 and received net proceeds of approximately $1.2 million. In December 1996, the Company completed offerings of 4,440,000 publicly registered Common Shares, which were sold to the public at a price of $41.25 per share (the "December 1996 Common Share Offerings"). The Company received net proceeds of approximately $177.4 million. In March 1997, the Company completed three separate public offerings relating to an aggregate of 1,921,000 publicly registered Common Shares, which were sold to the public at a price of $46 per share (the "March 1997 Common Share Offerings"). The Company received net proceeds of approximately $88.3 million therefrom. On May 14, 1997, the Company filed with the SEC a Form S-3 Registration Statement to register $500 million of equity securities (the "June 1997 Equity Shelf Registration"). The SEC declared this registration statement effective on June 5, 1997. In May 1997, the Company sold 7,000,000 depositary shares (the "Series D Depositary Shares") pursuant to the June 1997 Equity Shelf Registration. Each Series D Depositary Share represents a 1/10 fractional interest in a 8.60% Series D Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par value per share (the "Series D Preferred Shares"). The liquidation preference of each of the Series D Preferred shares is $250.00 (equivalent to $25 per Series D Depositary Share). The Company received net proceeds of approximately $169.5 million from this offering (the "Series D Preferred Share Offering"). In June 1997, the Company completed five separate public offerings comprising an aggregate of 8,992,023 publicly registered Common Shares, which were sold to the public at prices ranging from $44.06 to $45.88 per share (the "June 1997 Common Share Offerings"). The Company received net proceeds of approximately $398.9 million therefrom. On July 28, 1997, the Company filed with the SEC a Form S-3 Registration Statement to register $750 million of equity securities (the "August 1997 Equity Shelf Registration"). The SEC declared this registration statement effective on August 4, 1997. In September 1997, the Company completed the sale of 498,000 publicly registered Common Shares, which were sold to the public at a price of $51.125 per share. The Company received net proceeds of approximately $24.2 million in connection with this offering (the "September 1997 Common Share Offering"). In September 1997, the Company sold 11,000,000 depositary shares (the "Series G Depositary Shares") pursuant to the August 1997 Equity Shelf Registration. Each Series G Depositary Share represents a 1/10 fractional interest in a 7 1/4% Series G Convertible Cumulative Preferred Share of Beneficial Interest, $0.01 par value per share (the "Series G Preferred Shares"). Series G Depositary Shares representing Series G Preferred Shares are convertible at the option of the holder thereof at any time into Common Shares at a conversion price of $58.58 per Common Share (equivalent to a conversion rate of approximately .4268 Common Shares for each Series G Depositary Share). The liquidation preference of each of the Series G Preferred Shares is $250.00 per share (equivalent to $25 per Series G Depositary Share). The Company 8 PART I received net proceeds of approximately $264 million from this offering (the "Series G Preferred Share Offering"). In addition, in October 1997, the Company sold 1,650,000 additional Series G Depositary Shares pursuant to an over- allotment option granted to the underwriters and received net proceeds of approximately $39.6 million therefrom. In October 1997, in connection with the acquisition of a portfolio of Properties, the Company issued 3,315,500 publicly registered Common Shares, which were issued at a price of $45.25 per share with a value of approximately $150 million (the "October 1997 Common Share Offering"). On November 3, 1997, the Company filed with the SEC a Form S-3 Registration Statement to register 7,000,000 Common Shares pursuant to a Distribution Reinvestment and Share Purchase Plan. This registration statement was declared effective on November 25, 1997. The Distribution Reinvestment and Share Purchase Plan (the "DRIP Plan") of the Company provides holders of record and beneficial owners of Common Shares, Preferred Shares, and limited partnership interests in the Operating Partnership 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 Plan and interested new investors, not currently shareholders of the Company, 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"). In December 1997, in connection with an acquisition of a Property, the Company issued 736,296 publicly registered Common Shares, which were issued at a price of $48.85 per share with a value of approximately $36 million. Also in December 1997, the Company completed the sale of 467,722 publicly registered Common Shares, which were sold at a price of $51.3125 per share. The Company received net proceeds of approximately $22.8 million in connection with this offering (the "December 1997 Common Share Offering"). During 1997, the Company issued 84,183 Common Shares pursuant to the Employee Share Purchase Plan at net prices, which ranged from $35.63 per share to $42.08 per share and raised approximately $3.2 million in connection therewith. On January 27, 1998, the Company completed an offering of 4,000,000 publicly registered Common Shares, which were sold to the public at a price of $50.4375 per share (the "January 1998 Common Share Offering"). The Company received net proceeds of approximately $195.3 million in connection therewith. On February 3, 1998, the Company filed with the SEC a Form S-3 Registration Statement to register $1 billion of equity securities. The SEC declared this registration statement effective on February 27, 1998. On February 18, 1998, the Company completed two offerings of 988,340 publicly registered Common Shares, which were sold to the public at a price of $50.625 per share. On February 23, 1998, the Company completed an offering of 1,000,000 publicly registered Common Shares, which were sold to the public at a price of $48 per share. The Company received net proceeds from these offerings (collectively, the "February 1998 Common Share Offerings") of approximately $95 million. 9 PART I On March 30, 1998, the Company completed an offering of 495,663 publicly registered Common Shares, which were sold at a price of $47.9156 per share (the "March 1998 Common Share Offering"). The Company received net proceeds of approximately $23.7 million in connection therewith. On April 29, 1998, the Company completed an offering of 946,565 publicly registered Common Shares, which were sold at a price of $46.5459 per share (the "April 1998 Common Share Offering"). The Company received net proceeds of approximately $44.1 million in connection therewith. On September 20, 1998, the Company completed its repurchase of 2,367,400 of its Common Shares of beneficial interest, on the open market, for an average price of $40 per share. The purchases were made between August 5 and September 17, 1998. The Company paid approximately $94.7 million in connection therewith. These shares were subsequently retired. During 1998, the Company issued 93,521 Common Shares pursuant to the Employee Share Purchase Plan and received net proceeds of approximately $3.7 million. During 1998, the Company issued 1,023,184 Common Shares pursuant to the Share Purchase-DRIP Plan and received net proceeds of approximately $50.7 million. Debt Offerings For the Years Ended December 31, 1996, 1997 and 1998 - ------------------------------------------------------------------- In August 1996, the Operating Partnership issued $150 million of 7.57% unsecured fixed rate notes (the "2026 Notes") in a public debt offering (the "Third Public Debt Offering"). The Operating Partnership received net proceeds of approximately $149 million in connection with this issuance. On September 18, 1996, the Operating Partnership filed with the SEC a Form S-3 Registration Statement to register $500 million of debt securities (the "1996 Debt Shelf Registration"). In October 1997, the Operating Partnership issued $150 million of unsecured fixed rate notes (the "2017 Notes") in a public debt offering (the "Fourth Public Debt Offering"). The 2017 Notes are due on October 15, 2017 and bear interest at 7.125%, which is payable semiannually in arrears on April 15 and October 15, commencing April 15, 1998. The 2017 Notes are redeemable at any time by the Operating Partnership pursuant to the terms thereof. The Operating Partnership received net proceeds of approximately $147.4 million in connection with this issuance. In November 1997, the Operating Partnership issued $200 million of unsecured fixed rate notes in a public debt offering (the "Fifth Public Debt Offering"). Of the $200 million issued, $150 million of these notes are due November 15, 2001 (the "2001 Notes") and bear interest at a rate of 6.55%, which is payable semiannually in arrears on May 15 and November 15, commencing on May 15, 1998. The remaining $50 million of these notes are due November 15, 2003 (the "2003 Notes") and bear interest at a rate of 6.65%, which is payable semiannually in arrears on May 15 and November 15, commencing on May 15, 1998. The Operating Partnership received net proceeds of approximately $198.5 million in connection with the 2001 Notes and the 2003 Notes. On February 3, 1998, the Operating Partnership filed a Form S-3 Registration Statement to register $1 billion of debt securities. The SEC declared this registration statement effective on February 27, 1998. In April 1998, the Operating Partnership issued $300 million of unsecured fixed rate notes (the "2015 Notes") in a public debt offering (the "Sixth Public Debt Offering"). The 2015 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis. The 2015 Notes are due April 13, 2015. The annual interest rate on the 2015 Notes to April 13, 2005 (the "Remarketing Date") is 6.63%, which is payable semi-annually in arrears on October 13 and April 13, commencing October 13, 10 PART I 1998. The 2015 Notes are subject to mandatory tender to the remarketing agent on the Remarketing Date, at the election of the remarketing dealer and subject to certain limitations. If the remarketing dealer, initially Salomon Brothers Inc., does not purchase all tendered 2015 Notes on the Remarketing Date, or in certain other limited circumstances, the Operating Partnership will be required to repurchase the 2015 Notes at 100% of their principal amount plus accrued interest. If the 2015 Notes are remarketed, the 2015 Notes will bear interest at the rate determined by the remarketing dealer on and after the Remarketing Date. The Operating Partnership received net proceeds of approximately $298.1 million in connection with this issuance. The Operating Partnership also received approximately $8.1 million from the sale of the option to remarket the 2015 Notes on the Remarketing Date, which is being amortized over the term of the 2015 Notes. Prior to the issuance of the 2015 Notes, the Operating Partnership entered into an interest rate protection agreement to effectively fix the interest rate cost of such issuance until the Remarketing Date. The Operating Partnership received a one-time settlement payment from this transaction, which was approximately $0.6 million and is being amortized over seven years. In August 1998, the Operating Partnership issued $100 million of Remarketed Reset Notes (the "August 2003 Notes") in a public debt offering (the "Seventh Public Debt Offering"). The August 2003 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis. The August 2003 Notes are due August 21, 2003. During the period from and including August 21, 1998 to but excluding August 23, 1999 (the "Initial Spread Period") the interest rate on the August 2003 Notes will be reset quarterly, and will equal LIBOR plus an applicable spread. The spread during the Initial Spread Period is .45%. After the Initial Spread Period, the character (i.e. fixed or floating rate) and duration of the interest rate on the notes and the subsequent spread will be agreed to by the Operating Partnership and the remarketing underwriter, initially Merrill Lynch, Pierce, Fenner and Smith Incorporated, on each applicable determination date. Beginning August 23, 1999, the Operating Partnership may elect to redeem the August 2003 Notes on certain dates and in certain circumstances. The Operating Partnership received net proceeds of approximately $99.7 million in connection with this issuance. In September 1998, the Operating Partnership issued $145 million of unsecured fixed rate notes (the "2000 Notes") in a public debt offering (the "Eighth Public Debt Offering"). The 2000 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis. The 2000 Notes are due September 15, 2000. The annual interest rate on the 2000 Notes is 6.15%, which is payable semi-annually in arrears on March 15 and September 15, commencing March 15, 1999. The Operating Partnership received net proceeds of approximately $144.5 million in connection with this issuance. CREDIT FACILITIES The Company has a revolving credit facility with Morgan Guaranty Trust Company of New York ("Morgan Guaranty") and Bank of America Illinois ("Bank of America") as co-agents to provide the Operating Partnership with potential borrowings of up to $500 million. This credit facility matures in November 1999 and borrowings generally will bear interest at a per annum rate of one, two, three or six month LONDON INTERBANK OFFERED RATE ("LIBOR"), plus a certain spread dependent upon the Company's credit rating, which spread is currently 0.45%, and is subject to an annual facility fee of $750,000. As of December 31, 1998, $245 million of borrowings were outstanding on this credit facility, bearing interest at a weighted average rate of 6.04%. In connection with the MRY Merger, the Company assumed an additional revolving credit facility with First Union Bank (as agent) with potential borrowings of up to $120 million. This credit facility matures in September 2000 and borrowings generally will bear interest at a per annum rate of LIBOR, plus a certain spread dependent upon the Company's credit rating, which spread is currently 0.50%, and is subject to an annual facility fee of $120,000. As of December 31, 1998, $45 million was outstanding under this facility, bearing interest at a weighted average rate of 5.74%. 11 PART I BUSINESS COMBINATIONS On May 30, 1997, the Company completed the acquisition of the multifamily property business of Wellsford through the Wellsford Merger. The transaction was valued at approximately $1 billion and included 72 Properties of Wellsford containing 19,004 units. The purchase price consisted of: . 10.8 million Common Shares issued by the Company with a market value, at the date of closing, of $443.7 million; . liquidation value of $157.5 million for the following: a) Wellsford Series A Cumulative Convertible Preferred Shares of Beneficial Interest; b) Wellsford Series B Cumulative Redeemable Preferred Shares of Beneficial Interest; . assumption of mortgage indebtedness and unsecured notes in the amount of $345 million; . assumption of other liabilities of approximately $33.5 million; and . other merger related costs of approximately $23.4 million; In the Wellsford Merger, each outstanding common share of beneficial interest of Wellsford was converted into .625 of a Common Share. In addition, Wellsford Series A Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 3,999,800 Series E Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series E Preferred Shares") and Wellsford's Series B Cumulative Redeemable Preferred Shares of Beneficial Interest were redesignated as the Company's 2,300,000 9.65% Series F Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series F Preferred Shares"). On December 23, 1997, the Company completed the acquisition of the multifamily property business of EWR, through the EWR Merger. The transaction was valued at approximately $1.2 billion and included 53 Properties of EWR containing 15,331 units and three Properties under construction or expansion containing 953 units. The purchase price consisted of: . 10.3 million Common Shares issued by the Company with a market value, at the date of closing, of approximately $501.6 million; . assumption of EWR's minority interest with a market value of approximately $107.3 million; . assumption of mortgage indebtedness and unsecured notes in the amount of $498 million; . assumption of other liabilities of approximately $28.2 million; and . other merger related costs of approximately $16.7 million; In the EWR Merger, each outstanding common share of beneficial interest of EWR was converted into .50 of a Common Share. On October 19, 1998, the Company completed the acquisition of the multifamily property business of MRY, through the MRY Merger. The transaction was valued at approximately $2.2 billion and included 108 Properties containing 32,315 units, four Properties under construction and/or expansion anticipated to contain 1,378 units and six Additional Properties containing 1,297 units that were contributed to six joint ventures. The purchase price consisted of: . 21.8 million Common Shares issued by the Company with a market value, at the date of closing, of approximately $1 billion; . liquidation value of $369.1 million for the following: a) MRY Series A Cumulative Convertible Preferred Shares of Beneficial Interest; b) MRY Series B Cumulative Convertible Preferred Shares of Beneficial Interest; 12 PART 1 c) MRY Series C Cumulative Convertible Preferred Shares of Beneficial Interest; d) MRY Series D Cumulative Redeemable Preferred Shares of Beneficial Interest; and e) MRY Series E Cumulative Redeemable Preferred Shares of Beneficial Interest. . assumption of MRY's minority interest with a market value of approximately $40.2 million. . assumption of mortgage indebtedness, unsecured notes and the outstanding balance under a line of credit in the amount of $723.5 million; . assumption of other liabilities, of approximately $46.5 million; and . other merger related costs of approximately $51.9 million. In the MRY Merger, each outstanding common share of beneficial interest of MRY was converted into 0.53 of a Common Share. In addition, MRY spun-off certain assets and liabilities to Merry Land Properties, Inc. ("MRYP Spinco"). In connection with this spin-off, each holder of MRY common shares received one share of MRYP Spinco for each twenty shares of MRY common held. As partial consideration for the transfer, the Company extended a $25 million, one year, non-revolving Senior Debt Agreement to MRYP Spinco. At December 31, 1998, approximately $18.3 million was outstanding, bearing interest at LIBOR plus 250 basis points. As additional consideration, the Company extended an additional $20 million of indebtedness to MRYP Spinco under a 15-year Subordinated Debt Agreement, bearing interest payable quarterly. The Company also entered into the Preferred Stock Agreement and received 5,000 shares of MRYP Spinco Preferred Stock with a liquidation preference of $1,000 per share. In addition, MRY Series A Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 164,951 Series H Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series H Preferred Shares"), the MRY Series B Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 4,000,000 Series I Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series I Preferred Shares"), the MRY Series C Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 4,599,400 Series J Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series J Preferred Shares"), the MRY Series D Cumulative Redeemable Preferred Shares of Beneficial Interest were redesignated as the Company's 1,000,000 Series K Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series K Preferred Shares") and the MRY Series E Cumulative Redeemable Preferred Shares of Beneficial Interest were redesignated as the Company's 4,000,000 Series L Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series L Preferred Shares"). RECENT TRANSACTIONS From January 1, 1999 through March 12, 1999, the Company acquired three Properties from an affiliated party and two Properties from unaffiliated third parties for a total purchase price of approximately $86.6 million, which included the assumption of mortgage indebtedness of approximately $16.9 million. The three Properties acquired from an affiliated party were Aspen Crossing, a 192-unit property located in Wheaton, Maryland; Fireside Park, a 236-unit property located in Rockville, Maryland; and Mill Pond, a 240-unit property located in Glen Burnie, Maryland. The two Properties acquired from unaffiliated third parties were Copper Canyon, a 222-unit property located in Denver, Colorado; and Siena Terrace, a 356-unit property located in Lake Forest, California. From January 1, 1999 through March 12, 1999, the Company disposed of six Properties for a total sales price of $64 million. 13 PART I COMPETITION All of the Properties are located in developed areas that include other multifamily properties. The number of competitive multifamily properties in a particular area could have a material effect on the Company's ability to lease units at the Properties or at any newly acquired properties and on the rents charged. The Company may be competing with other entities that have greater resources than the Company and whose managers have more experience than the Company's officers and trustees. In addition, other forms of multifamily properties, including multifamily properties and manufactured housing controlled by Mr. Zell, and single-family housing, provide housing alternatives to potential residents of multifamily properties. RISK FACTORS The following Risk Factors omit the use of defined terms used elsewhere herein and contain defined terms that are different from those used in the other sections of this report. Unless otherwise indicated, when used in this section, the terms "we" and "us" refer to Equity Residential Properties Trust and its subsidiaries, including ERP Operating Limited Partnership. Set forth below are the risks that we believe are important to investors who purchase or own our common shares of beneficial interest or preferred shares of beneficial interest (which we refer to collectively as "Shares") or units of limited partnership interest ("Units") of ERP Operating Limited Partnership, our operating partnership, which are redeemable on a one-for-one basis for common shares or their cash equivalent. In this section, we refer to the Shares and the Units together as our "securities," and the investors who own Shares and/or Units as our "security holders." DEBT FINANCING AND PREFERRED SHARES COULD ADVERSELY AFFECT OUR PERFORMANCE General As of December 31, 1998, our multifamily properties were subject to approximately $2.3 billion of mortgage indebtedness and our total debt equaled approximately $4.7 billion. Of our total debt outstanding, $840 million (including the balance of $290 million outstanding on our $620 million unsecured lines of credit) was floating rate debt, which included $684.7 million issued at tax exempt rates. In addition to debt, we have issued preferred shares of beneficial interest. Our use of debt and preferred equity financing creates certain risks, including the following. Scheduled Debt Payments Could Adversely Affect Our Financial Condition In the future, our cash flow could be insufficient to meet required payments of principal and interest or to pay distributions on our securities at expected levels. We may not be able to refinance existing debt (which in virtually all cases requires substantial principal payments at maturity) and, if we can, the terms of such refinancing might not be as favorable as the terms of existing indebtedness. If principal payments due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our cash flow will not be sufficient in all years to repay all maturing debt. As a result, we may be forced to postpone capital expenditures necessary for the maintenance of our properties and may have to dispose of one or more properties on terms that would otherwise be unacceptable to us. Financial Covenants Could Adversely Affect the Company's Financial Condition If a property we own is mortgaged to secure payment of indebtedness and we are unable to meet the mortgage payments, the holder of the mortgage could foreclose on the property, resulting in loss of 14 PART I income and asset value. Foreclosure on mortgaged properties or an inability to refinance existing indebtedness would likely have a negative impact on our financial condition and results of operations. A foreclosure could also result in our recognition of taxable income without our actually receiving cash proceeds from the disposition of the property with which to pay the tax. This could adversely affect our cash flow and could make it more difficult for us to meet our distribution requirements as a real estate investment trust (a "REIT"). The mortgages on our properties contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to discontinue insurance coverage. In addition, our credit facilities contain certain customary restrictions, requirements and other limitations on our ability to incur indebtedness. The indentures under which a substantial portion of our debt was issued contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios, as well as limitations on our ability to incur secured and unsecured indebtedness (including acquisition financing), sell all or substantially all of our assets and engage in mergers, consolidations and certain acquisitions. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these restrictions, our ability to acquire additional properties may be limited. If we are unable to acquire additional properties, our ability to increase the distributions to security holders, as we have done in the past, will be limited to management's ability to increase funds from operations, and thereby cash available for distributions, from the existing properties in our portfolio at such time. Some of the properties were financed with tax-exempt bonds that contain certain restrictive covenants or deed restrictions. We have retained an independent outside consultant to monitor compliance with the restrictive covenants and deed restrictions that affect these properties. If these bond compliance requirements require us to lower our rental rates to attract low or moderate income tenants, or eligible/qualified tenants, then our income from these properties may be limited. Our Degree of Leverage Could Limit Our Ability to Obtain Additional Financing Our debt to market capitalization ratio (total debt as a percentage of total debt plus the market value of the outstanding common and preferred shares and Units) was approximately 41% as of December 31, 1998. We have a policy of incurring indebtedness for borrowed money only through the Operating Partnership and its subsidiaries and only if upon such incurrence our debt to market capitalization ratio would be approximately 50% or less. Our degree of leverage could have important consequences to security holders. For example, the degree of leverage could affect our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, development or other general corporate purposes, making us more vulnerable to a downturn in business or the economy generally. Rising Interest Rates Could Adversely Affect Cash Flow Advances under our credit facilities bear interest at variable rates based upon one, two, three or six month LIBOR, plus a certain spread dependent upon the Company's credit rating. Certain of our senior unsecured debt instruments also, from time to time, bear interest at floating rates. We may also borrow additional money with variable interest rates in the future. Increases in interest rates would increase our interest expenses under these debt instruments and would increase the costs of refinancing existing indebtedness and of issuing new debt. Accordingly, higher interest rates would adversely affect cash flow and our ability to service our debt and to make distributions to security holders. 15 PART I CONTROL AND INFLUENCE BY SIGNIFICANT SHAREHOLDERS COULD BE EXERCISED IN A MANNER ADVERSE TO OTHER SHAREHOLDERS General As of December 31, 1998, (1) Samuel Zell and certain of the current holders of Units issued to affiliates of Mr. Zell, who contributed 33 properties to us at the time of our initial public offering, owned in the aggregate approximately 3.69% of our common shares (Mr. Zell and these affiliates are described herein as the "Zell Original Owners"); (2) certain entities controlled by Starwood Capital Partners LP ("Starwood") and its affiliates, who contributed 23 properties to us at the time of our initial public offering, owned approximately 0.24% of our common shares; and (3) certain of our officers, employees, trustees and consultants, some of whom are affiliated with Mr. Zell, owned approximately 4.31% of our common shares. These percentages assume all options are exercised for common shares and all Units are converted to common shares. In addition, the consent of certain affiliates of Mr. Zell and Starwood is required for certain amendments to the Fifth Amended and Restated ERP Operating Limited Partnership Agreement of Limited Partnership (the "Partnership Agreement"). As a result of their security ownership and rights concerning amendments to the Partnership Agreement, Mr. Zell and the Starwood owners may have substantial influence over the Company. Although these security holders have not agreed to act together on any matter, they would be in a position to exercise even more influence over the Company's affairs if they were to act together in the future. This influence might be exercised in a manner that is inconsistent with the interests of other security holders. Mr. Zell and Others are Exempt from the 5% Ownership Limit Generally Applicable to Securities Holders In order to maintain its qualification as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), not more than 50% of the value of the outstanding Shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities). To assure compliance with this test, our Declaration of Trust restricts the ownership of more than 5% of the lesser of the number or value of the outstanding Shares by any single security holder, subject to certain exceptions. These restrictions do not apply to the ownership of common shares that may be acquired by the holders of Units issued to the Zell Original Owners and the Starwood owners. Additionally, our Declaration of Trust exempts any transferees of such common shares from the 5% ownership limit, provided such transfers do not result in an increased concentration in the ownership. ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND CAN BE COSTLY Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at such property. The owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination. These laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site. Environmental laws also govern the presence, maintenance and removal of asbestos. These laws require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, that they notify and train those who may come into contact with asbestos and that they undertake special precautions, including removal or other abatement, if asbestos would be disturbed 16 PART I during renovation or demolition of a building. These laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers. All of our properties have been the subject of a Phase I, and in certain cases a supplemental, environmental assessment completed by qualified independent environmental consultant companies. Environmental assessments were obtained prior to our acquisition of each of our properties. These environmental assessments have not revealed, nor are we aware of, any environmental liability that our management believes would have a material adverse effect on our business, results of operations, financial condition or liquidity. We cannot assure you that existing environmental assessments of our properties reveal all environmental liabilities, that any prior owner of any of our properties did not create a material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more of our properties. OUR PERFORMANCE AND SHARE VALUE ARE SUBJECT TO RISKS ASSOCIATED WITH THE REAL ESTATE INDUSTRY General Real property investments are subject to varying degrees of risk and are relatively illiquid. Several factors may adversely affect the economic performance and value of our properties. These factors include changes in the national, regional and local economic climate, local conditions such as an oversupply of multifamily properties or a reduction in demand for our multifamily properties, the attractiveness of our properties to tenants, competition from other available multifamily property owners and changes in market rental rates. Our performance also depends on our ability to collect rent from tenants and to pay for adequate maintenance, insurance and other operating costs, including real estate taxes, which could increase over time. Also, the expenses of owning and operating a property are not necessarily reduced when circumstances such as market factors and competition cause a reduction in income from the property. We May be Unable to Renew Leases or Relet Space as Leases Expire When our tenants decide not to renew their leases upon expiration, we may not be able to relet their space. Even if the tenants do renew or we can relet the space, the terms of renewal or reletting may be less favorable than current lease terms. If we are unable to promptly renew the leases or relet the space, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then our results of operations and financial condition will be adversely affected. Consequently, our cash flow and ability to service debt and make distributions to security holders would be reduced. New Acquisitions or Developments May Fail to Perform as Expected and Competition for Acquisitions May Result in Increased Prices for Properties We intend to continue to actively acquire or develop multifamily properties. Newly acquired or developed properties may fail to perform as expected. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or to develop a property. Additionally, we expect other major real estate investors with significant capital will compete with us for attractive investment opportunities. This competition has increased 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. 17 PART I Because Real Estate Investments Are Illiquid, We May Not Be Able To Sell Properties When Appropriate Real estate investments generally cannot be sold quickly. We may not be able to vary our portfolio promptly in response to economic or other conditions. This inability to respond promptly to changes in the performance of our investments could adversely affect our financial condition and ability to make distributions to our security holders. Changes in Laws Could Affect Our Business We are generally not able to pass through to our tenants under existing leases increases in real estate taxes, income taxes and service or other taxes. Consequently, any such increases may adversely affect our financial condition and limit our ability to make distributions to our security holders. Similarly, changes that increase our potential liability under environmental laws or our expenditures on environmental compliance would adversely affect our cash flow and ability to make distributions on our securities. SHAREHOLDERS' ABILITY TO EFFECT CHANGES IN CONTROL OF THE COMPANY IS LIMITED Provisions of Our Declaration of Trust and Bylaws Could Inhibit Changes in Control Certain provisions of our Declaration of Trust and Bylaws may delay or prevent a change in control of the Company or other transactions that could provide the security holders with a premium over the then-prevailing market price of their securities or which might otherwise be in the best interest of our security holders. These include a staggered Board of Trustees and the 5% Ownership Limit described below. See "--We Have a Share Ownership Limit for REIT Tax Purposes." Also, any future series of preferred shares of beneficial interest may have certain voting provisions that could delay or prevent a change of control or other transactions that might otherwise be in the interest of our security holders. We Have a Share Ownership Limit for REIT Tax Purposes To remain qualified as a REIT for federal income tax purposes, not more than 50% in value of our outstanding Shares may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any year. To facilitate maintenance of our REIT qualification, our Declaration of Trust, subject to certain exceptions, prohibits ownership by any single shareholder of more than 5% of the lesser of the number or value of the outstanding class of common or preferred shares. See "--Control and Influence by Significant Shareholders--Mr. Zell and Others are Exempt from the 5% Ownership Limit Generally Applicable to Securities Holders." We refer to this restriction as the "Ownership Limit." Absent any exemption or waiver, securities acquired or held in violation of the Ownership Limit will be transferred to a trust for the exclusive benefit of a designated charitable beneficiary, and the security holder's rights to distributions and to vote would terminate. A transfer of Shares may be void if it causes a person to violate the Ownership Limit. The Ownership Limit could delay or prevent a change in control and, therefore, could adversely affect our security holders' ability to realize a premium over the then-prevailing market price for their Shares. Our Preferred Shares of Beneficial Interest May Affect Changes in Control Our Declaration of Trust authorizes the Board of Trustees to issue up to 100 million preferred shares of beneficial interest, and to establish the preferences and rights (including the right to vote and the right to convert into common shares) of any preferred shares issued. The Board of Trustees may use its powers to issue preferred shares and to set the terms of such securities to delay or prevent a change in 18 PART I control of the Company, even if a change in control were in the interest of security holders. As of December 31, 1998, 29,097,951 preferred shares were issued and outstanding. Inapplicability of Maryland Law Limiting Certain Changes in Control Certain provisions of Maryland law applicable to real estate investment trusts prohibit "business combinations" (including certain issuances of equity securities) with any person who beneficially owns ten percent or more of the voting power of outstanding securities, or with an affiliate who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the trust's outstanding voting securities (an "Interested Shareholder"), or with an affiliate of an Interested Shareholder. These prohibitions last for five years after the most recent date on which the Interested Shareholder became an Interested Shareholder. After the five-year period, a business combination with an Interested Shareholder must be approved by two super-majority shareholder votes unless, among other conditions, the trust's holders of common shares receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the Interested Shareholder for its common shares. As permitted by Maryland law, however, the Board of Trustees of the Company has opted out of these restrictions with respect to any business combination involving the Zell Original Owners and persons acting in concert with any of the Zell Original Owners. Consequently, the five-year prohibition and the super-majority vote requirements will not apply to a business combination involving us and any of them. Such business combinations may not be in the best interest of our security holders. OUR SUCCESS AS A REIT IS DEPENDENT ON COMPLIANCE WITH FEDERAL INCOME TAX REQUIREMENTS Our Failure to Qualify as a REIT Would Have Serious Adverse Consequences to Our Security Holders We believe that we have qualified for taxation as a REIT for federal income tax purposes since our taxable year ended December 31, 1992. We plan to continue to meet the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. We cannot, therefore, guarantee that we have qualified or will qualify in the future as a REIT. The determination that we are a REIT requires an analysis of various factual matters that may not be totally within our control. For example, to qualify as a REIT, at least 95% of our gross income must come from sources that are itemized in the REIT tax laws. We are also required to distribute to security holders at least 95% of our REIT taxable income excluding capital gains. The fact that we hold our assets through ERP Operating Limited Partnership and its subsidiaries further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize our REIT status. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new rulings that make it more difficult, or impossible, for us to remain qualified as a REIT. We do not believe, however, that any pending or proposed tax law changes would jeopardize our REIT status. If we fail to qualify as a REIT, we would be subject to federal income tax at regular corporate rates. Also, unless the IRS granted us relief under certain statutory provisions, we would remain disqualified as a REIT for four years following the year we first failed to qualify. If we fail to qualify as a REIT, we would have to pay significant income taxes. We, therefore, would have less money available for investments or for distributions to security holders. This would likely have a significant adverse affect on the value of our securities. In addition, we would no longer be required to make any distributions to security holders. 19 PART 1 We Could be Disqualified as a REIT or Have to Pay Taxes if Our Merger Partners Did Not Qualify as REIT's If any of our recent merger partners had failed to qualify as a REIT throughout the duration of its existence, then it might have had undistributed "C corporation earnings and profits" at the time of its merger with us. If that was the case and we did not distribute those earnings and profits prior to the end of the year in which the merger took place, we might not qualify as a REIT. We believe that each of our merger partners qualified as a REIT and that, in any event, none of them had any undistributed "C corporation earnings and profits" at the time of its merger with us. If any of our merger partners failed to qualify as a REIT, an additional concern would be that it would have recognized taxable gain at the time it was merged with us. We would be liable for the tax on such gain. In this event, we would have to pay corporate income tax on any gain existing at the time of the applicable merger on assets acquired in the merger if the assets are sold within ten years of the merger. Finally, we could be precluded from electing REIT status for up to four years after the year in which the predecessor entity failed to qualify for REIT status. Other Tax Liabilities Even if we qualify as a REIT, we will be subject to certain federal, state and local taxes on our income and property. In addition, our third-party management operations, which are conducted through subsidiaries, generally will be subject to federal income tax at regular corporate rates. WE DEPEND ON OUR KEY PERSONNEL We depend on the efforts of our executive officers, particularly Samuel Zell and Douglas Crocker II. If they resign, our operations could be temporarily adversely effected. Neither Mr. Crocker nor Mr. Zell has entered into an employment agreement with us. COMPLIANCE WITH REIT DISTRIBUTION REQUIREMENTS MAY AFFECT OUR FINANCIAL CONDITION Distribution Requirements May Increase the Indebtedness of the Company We may be required from time to time, under certain circumstances, to accrue as income for tax purposes interest and rent earned but not yet received. In such event, or upon our repayment of principal on debt, we could have taxable income without sufficient cash to enable us to meet the distribution requirements of a REIT. Accordingly, we could be required to borrow funds or liquidate investments on adverse terms in order to meet these distribution requirements. We Are Dependent on External Sources of Capital Because of our annual REIT distribution requirements, it is not likely that we will be able to fund all future capital needs, including for acquisitions, from income generated by operations. We therefore will have to rely on third- party sources of capital, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including the market's perception of our growth potential and our current and potential future earnings. Moreover, additional equity offerings may result in substantial dilution of security holders' interests, and additional debt financing may substantially increase our leverage. 20 PART I FEDERAL INCOME TAX CONSIDERATIONS General The following discussion summarizes all of the federal income tax considerations material to a holder of common shares. It is not exhaustive of all possible tax considerations. For example, it does not give a detailed discussion of any state, local or foreign tax considerations. The following discussion also does not address all tax matters that may be relevant to prospective shareholders in light of their particular circumstances. Moreover, it does not address all tax matters that may be relevant to shareholders who are subject to special treatment under the tax laws, such as insurance companies, tax-exempt entities, financial institutions or broker-dealers, foreign corporations and persons who are not citizens or residents of the United States. The specific tax attributes of a particular shareholder could have a material impact on the tax considerations associated with the purchase, ownership and disposition of common shares. Therefore, it is essential that each prospective shareholder consult with his or her own tax advisors with regard to the application of the federal income tax laws to the shareholder's personal tax situation, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. Our Taxation We elected REIT status beginning with the year that ended December 31, 1992. In any year in which we qualify as a REIT, we generally will not be subject to federal income tax on the portion of our REIT taxable income or capital gain that we distribute to our shareholders. This treatment substantially eliminates the double taxation that applies to most corporations, which pay a tax on their income and then distribute dividends to shareholders who are in turn taxed on the amount they receive. However, we will be subject to federal income tax at regular corporate rates upon our REIT taxable income or capital gain that we do not distribute to our shareholders. We also may be subject to the corporate "alternate minimum tax" on items of preference under this alternative tax regime. In addition, we will be subject to a 4% excise tax if we do not satisfy specific REIT distribution requirements. Moreover, we may be subject to taxes in certain situations and on certain transactions that we do not presently contemplate. If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to tax on our taxable income at regular corporate rates. We also may be subject to the corporate "alternate minimum tax." As a result, our failure to qualify as a REIT would significantly reduce the cash we have available to distribute to our shareholders. Unless entitled to statutory relief, we would be disqualified from qualification as a REIT for the four taxable years following the year during which qualification was lost. It is not possible to state whether we would be entitled to statutory relief. Our qualification and taxation as a REIT depend on our ability to satisfy various requirements under the Internal Revenue Code. We are required to satisfy these requirements on a continuing basis through actual annual operating and other results. These requirements relate to the sources of our gross income, the composition of our assets, the amount of dividends we pay to shareholders, the diversity of our share ownership, and other aspects of our operations. The purpose of these requirements is to allow the tax benefit of REIT status only to companies that: (a) primarily own, and primarily derive income from, real estate- related assets and certain other assets which are passive in nature, and (b) distribute 95% of the taxable income, computed without regard to net capital gain, to shareholders. We believe that we have qualified as a REIT for all of our taxable years beginning with 1992. We also 21 PART I believe that our current structure and method of operation is such that we will continue to qualify as a REIT. However, we cannot guarantee that the actual results of our operations have satisfied or will satisfy the requirements under the Internal Revenue Code. Hogan & Hartson L.L.P., our special tax counsel, has provided an opinion to the effect that we were organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code for each of our taxable years beginning in 1992. The opinion also provides that our current organization and method of operation should enable us to continue to meet the requirements for qualification and taxation as a REIT. It must be emphasized that the opinion is based on various assumptions and factual representations relating to our organization and our prior and expected operations. In each case, these representations include representations about our predecessors. Hogan & Hartson L.L.P. will not review our compliance with these requirements on a continuing basis. TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS General. If we qualify as a REIT, distributions made to our taxable domestic shareholders with respect to their common shares, other than capital gain distributions, will be treated as ordinary income to the extent that the distributions come out of earnings and profits. These distributions will not be eligible for the dividends received deduction for shareholders that are corporations. In determining whether distributions are out of earnings and profits, we will allocate our earnings and profits first to preferred shares and second to the common shares. We cannot guarantee that we will have sufficient earnings and profits to cover distributions on the preferred shares. Distributions made by us that we properly designate as capital gain dividends will be taxable to taxable domestic shareholders as gain from the sale or exchange of a capital asset held for more than one year. This treatment applies only to the extent that the designated distributions do not exceed our actual net capital gain for the taxable year. It applies regardless of the period for which a domestic shareholder has held his or her common shares. Despite this general rule, corporate shareholders may be required to treat up to 20% of certain capital gain dividends as ordinary income. On November 10, 1997, the IRS issued IRS Notice 97-64, which provides generally that we may classify portions of our designated capital gains dividend as a 20% rate gain distribution, an unrecaptured Section 1250 gain distribution, or a 28% rate gain distribution. If no designation is made, the notice provides that the entire designated capital gain dividend will be treated as a 28% rate gain distribution. As the names suggest, a 20% rate gain distribution would be taxable to taxable domestic shareholders who are individuals, estates or trusts at a maximum rate of 20% and a 28% rate gain distribution would be taxable to taxable domestic shareholders who are individuals, estates or trusts at a maximum rate of 28%. An unrecaptured Section 1250 gain distribution would be taxable to taxable domestic shareholders who are individuals, estates or trusts at a maximum rate of 25%. On July 22, 1998, as part of the IRS Restructuring Act, the holding period requirement for the application of the 20% and 25% capital gain tax rates was reduced to 12 months from 18 months for sales of capital gain assets on or after January 1, 1998. This change effectively eliminated the 28% capital gain tax bracket. It is expected that the IRS will issue clarifying guidance, most likely applying the same principles set forth in Notice 97-64, regarding a REIT's designation of capital gain dividends in light of the new holding period requirements. If, for any taxable year, we elect to designate as capital gain dividends any portion of the dividends paid or made available for the year to holders of all classes of shares of beneficial interest, then the portion of the capital gains dividends that will be allocable to the holders of common shares will be the total capital gain dividends multiplied by a fraction. The numerator of the fraction will be the total dividends paid or made available to the holders of the common shares for the year. The denominator of the fraction will be the total dividends paid or made available to holders of all classes of shares of beneficial interest. To the extent we make distributions in excess of earnings and profits, these distributions will be treated first as a tax-free return of capital to the shareholder, reducing the tax basis 22 PART I of a shareholder's common shares by the amount of the distribution. Distributions in excess of the shareholder's tax basis will be treated as capital gains if the common shares are held as a capital asset. Shareholders may not include in their individual income tax returns any of our net operating losses or capital losses. In general, a shareholder will recognize gain or loss for federal income tax purposes on the sale or other disposition of common shares in an amount equal to the difference between: (a) the amount of cash and the fair market value of any property received in the sale or other disposition, and (b) the shareholder's adjusted tax basis in the common shares. The gain or loss will be capital gain or loss if the common shares were held as a capital asset. Generally, the capital gain or loss will be long-term capital gain or loss if the common shares were held for more than one year. The Taxpayer Relief Act of 1997 allows the IRS to issue regulations relating to the manner in which capital gain rates will apply to sales of capital assets by REIT's and to sales of interests in REIT's. The IRS has not issued these regulations. However, if the IRS does issue these regulations, they could affect the taxation of gain and loss realized on the disposition of common shares. Shareholders are urged to consult with their own tax advisors with respect to the rules contained in the Taxpayer Relief Act. In general, a loss recognized by a shareholder upon the sale of common shares that were held for six months or less, determined after applying certain holding period rules, will be treated as long-term capital loss to the extent that the shareholder received distributions that were treated as long-term capital gains. For shareholders who are individuals, trusts and estates, the long-term capital loss will be apportioned among the applicable long-term capital gain rates to the extent that distributions received by the shareholder were previously so treated. We may elect to require shareholders to include our undistributed net capital gains in their income. If we make this election, shareholders will include in their income as long-term capital gains their proportionate share of these gains. Shareholders will be treated as having paid their proportionate share of the tax paid by us on these gains. Accordingly, they will receive a credit or refund for the amount. Shareholders will increase the basis in their common shares by the difference between the amount of capital gain included in their income and the amount of the tax they are treated as having paid. Our earnings and profits will be adjusted appropriately. TAXATION OF TAX-EXEMPT SHAREHOLDERS Most tax-exempt organizations are not subject to federal income tax except to the extent of their unrelated business taxable income, which is often referred to as UBIT. Unless a tax-exempt shareholder holds its common shares as debt financed property or uses the common shares in an unrelated trade or business, distributions to the shareholder should not constitute UBIT. Similarly, if a tax-exempt shareholder sells common shares, the income from the sale should not constitute UBIT unless the shareholder held the shares as debt financed property or used the shares in a trade or business. However, for tax-exempt shareholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans, income from owning or selling common shares will constitute UBIT unless the organization is able to properly deduct amounts set aside or placed in reserve so as to offset the income generated by its investment in common shares. These shareholders should consult their own tax advisors concerning these set aside and reserve requirements which are set forth in the Internal Revenue Code. In addition, certain pension trusts that own more than 10% of a pension- held REIT must report a portion of the distributions that they receive from the REIT as UBIT. We have not been and do not expect to be treated as a pension-held REIT for purposes of this rule. 23 PART I TAXATION OF FOREIGN SHAREHOLDERS The following is a discussion of certain anticipated United States federal income tax consequences of the ownership and disposition of common shares applicable to a foreign shareholder. It is based on current law and is for general information only. A "foreign shareholder" is any person other than: (a) a citizen or resident of the United States, (b) a corporation or partnership created or organized in the United States or under the laws of the United States or of any state thereof, or (c) an estate or trust whose income is includable in gross income for United States federal income tax purposes regardless of its source. Distributions by Us. Distributions by us to a foreign shareholder that are neither attributable to gain from sales or exchanges by us of United States real property interests nor designated by us as capital gains dividends will be treated as dividends of ordinary income to the extent that they are made out of our earnings and profits. These distributions ordinarily will be subject to withholding of United States federal income tax on a gross basis at a 30% rate, or a lower treaty rate, unless the dividends are treated as effectively connected with the conduct by the foreign shareholder of a United States trade or business. Please note that under certain treaties lower withholding rates generally applicable to dividends do not apply to dividends from REIT's. Dividends that are effectively connected with a United States trade or business will be subject to tax on a net basis at graduated rates, and are generally not subject to withholding. Certification and disclosure requirements must be satisfied before a dividend is exempt from withholding under this exemption. A foreign shareholder that is a corporation also may be subject to an additional branch profits tax at a 30% rate or a lower treaty rate. We expect to withhold United States income tax at the rate of 30% on any distributions made to a foreign shareholder unless: (a) a lower treaty rate applies and any required form or certification evidencing eligibility for that reduced rate is filed with us, or (b) the foreign shareholder files an IRS Form 4224 with us claiming that the distribution is effectively connected income. A distribution in excess of our current or accumulated earnings and profits will not be taxable to a foreign shareholder to the extent that the distribution does not exceed the adjusted basis of the shareholder's common shares. Instead, the distribution will reduce the adjusted basis of the common shares. To the extent that the distribution exceeds the adjusted basis of the common shares, it will give rise to gain from the sale or exchange of the shareholder's common shares. The tax treatment of this gain is described below. As a result of a legislative change made by the Small Business Job Protection Act of 1996, it appears that we will be required to withhold 10% of any distribution in excess of our earnings and profits. Consequently, although we intend to withhold at a rate of 30%, or a lower applicable treaty rate, on the entire amount of any distribution, to the extent that we do not do so, distributions will be subject to withholding at a rate of 10%. However, a foreign shareholder may seek a refund of the withheld amount from the IRS if it subsequently determined that the distribution was, in fact, in excess of our earnings and profits, and the amount withheld exceeded the foreign shareholder's United States tax liability with respect to the distribution. 24 PART I Distributions to a foreign shareholder that we designate at the time of the distributions as capital gain dividends, other than those arising from the disposition of a United States real property interest, generally will not be subject to United States federal income taxation unless: (i) the investment in the common shares is effectively connected with the foreign shareholder's United States trade or business, in which case the foreign shareholder will be subject to the same treatment as domestic shareholders, except that a shareholder that is a foreign corporation may also be subject to the branch profits tax, as discussed above, or (ii) the foreign shareholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a "tax home" in the United States, in which case the nonresident alien individual will be subject to a 30% tax on the individual's capital gains. Under the Foreign Investment in Real Property Tax Act, which is known as FIRPTA, distributions to a foreign shareholder that are attributable to gain from sales or exchanges of United States real property interests will cause the foreign shareholder to be treated as recognizing the gain as income effectively connected with a United States trade or business. This rule applies whether or not a distribution is designated as a capital gain dividend. Accordingly, foreign shareholders generally would be taxed on these distributions at the same rates applicable to U.S. shareholders, subject to a special alternative minimum tax in the case of nonresident alien individuals. In addition, a foreign corporate shareholder might be subject to the branch profits tax discussed above. We are required to withhold 35% of these distributions. The withheld amount can be credited against the foreign shareholder's United States federal income tax liability. Although the law is not entirely clear on the matter, it appears that amounts we designate as undistributed capital gains in respect of the common shares held by U.S. shareholders would be treated with respect to foreign shareholders in the same manner as actual distributions of capital gain dividends. Under that approach, foreign shareholders would be able to offset as a credit against the United States federal income tax liability their proportionate share of the tax paid by us on these undistributed capital gains. In addition, foreign shareholders would be able to receive from the IRS a refund to the extent their proportionate share of the tax paid by us were to exceed their actual United States federal income tax liability. Sales of Common Shares. Gain recognized by a foreign shareholder upon the sale or exchange of common shares generally will not be subject to United States taxation unless the shares constitute a "United States real property interest" within the meaning of FIRPTA. The common shares will not constitute a United States real property interest so long as we are a domestically controlled REIT. A domestically controlled REIT is a REIT in which at all times during a specified testing period less than 50% in value of its stock is held directly or indirectly by foreign shareholders. We believe that we are a domestically controlled REIT. Therefore, we believe that the sale of common shares will not be subject to taxation under FIRPTA. However, because common shares and preferred shares are publicly traded, we cannot guarantee that we will continue to be a domestically controlled REIT. In any event, gain from the sale or exchange of common shares not otherwise subject to FIRPTA will be taxable to a foreign shareholder if either: (i) the investment in the common shares is effectively connected with the foreign shareholder's United States trade or business, in which case the foreign shareholder will be subject to the same treatment as domestic shareholders with respect to the gain, or 25 PART I (ii) the foreign shareholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a tax home in the United States, in which case the nonresident alien individual will be subject to a 30% tax on the individual's capital gains. Even if we do not qualify as or cease to be a domestically controlled REIT, gain arising from the sale or exchange by a foreign shareholder of common shares still would not be subject to United States taxation under FIRPTA as a sale of a United States real property interest if: (i) the class or series of shares being sold is "regularly traded," as defined by applicable IRS regulations, on an established securities market such as the New York Stock Exchange, and (ii) the selling foreign shareholder owned 5% or less of the value of the outstanding class or series of shares being sold throughout the five-year period ending on the date of the sale or exchange. If gain on the sale or exchange of common shares were subject to taxation under FIRPTA, the foreign shareholder would be subject to regular United States income tax with respect to the gain in the same manner as a taxable U.S. shareholder, subject to any applicable alternative minimum tax, a special alternative minimum tax in the case of nonresident alien individuals and the possible application of the branch profits tax in the case of foreign corporations. The purchaser of the common shares would be required to withhold and remit to the IRS 10% of the purchase price. OTHER TAX CONSIDERATIONS Clinton Administration Proposal. The Clinton Administration's fiscal year 2000 budget proposal was announced on February 1, 1999. One part of the proposed budget would amend the tax rules relating to the composition of a REIT's assets. Under current law, a REIT is precluded from owning more than 10% of the outstanding voting securities of any one issuer, other than a wholly owned subsidiary or another REIT. Under the Clinton administration proposal, a REIT would remain subject to the current restriction and would be precluded from owning more than 10% of the value of all classes of stock of any covered issuer. The Clinton proposal also contains an exception to both the 10% asset test described above and a second REIT asset test which precludes any one issuer's securities owned by a REIT to exceed 5% of the REIT's total assets. This exception would allow a REIT to have "qualified independent contractor subsidiaries," which could perform services for tenants and other customers that a REIT currently cannot perform, and "qualified business subsidiaries," which could undertake third-party management and development activities as well as other non-real estate related activities. Collectively, these two types of entities are called "taxable REIT subsidiaries." Under the proposal, no more than 15% of a REIT's total assets could consist of taxable REIT subsidiaries and no more than 5% of a REIT's total assets could consist of qualified independent contractor subsidiaries. In addition, a taxable REIT subsidiary would not be entitled to deduct any interest on debt funded directly or indirectly by the REIT. If the proposal is enacted, a REIT could combine and convert existing corporate subsidiaries into taxable REIT subsidiaries tax-free for a limited period of time. After the effective date of the proposal and any applicable transition period, the 10% vote or value test would apply to our corporate subsidiaries, other than wholly owned corporate subsidiaries, that do not convert into "taxable REIT subsidiaries." It is presently uncertain whether this proposal, or any other proposal regarding REIT subsidiaries, will be enacted. Our Management Company Subsidiaries. A portion of the cash to be used by our operating partnership to fund distributions to us is expected to come from payments of dividends on non-voting 26 PART I stock of management companies held by the Operating Partnership. The management companies pay federal and state income tax at the full applicable corporate rates. They will attempt to minimize the amount of these taxes, but we cannot guarantee whether or the extent to, which measures taken to minimize these taxes, will be successful. To the extent that the management companies are required to pay taxes, the cash available for distribution by us to shareholders will be reduced accordingly. State and Local Taxes. We and our shareholders may be subject to state or local taxation in various jurisdictions, including those in which it or they transact business or reside. The state and local tax treatment of us and our shareholders may not conform to the federal income tax consequences discussed above. Consequently, prospective shareholders should consult their own tax advisors regarding the effect of state and local tax laws on an investment in common shares. ITEM 2. THE PROPERTIES As of December 31, 1998, the Company controlled a portfolio of 654 multifamily Properties, of which six are under development, located in 35 states containing 187,002 apartment units, of which 2,107 units pertain to the development Properties. The average number of units per Property, not including the development Properties, was approximately 285. The units are typically contained in a series of two-story buildings. The Properties contain an aggregate of 166.1 million rentable square feet, with an average unit size of 898 square feet (not including the development Properties). The average rent per unit was $739 and the average rent per square foot was $0.82 (not including the development Properties). As of December 31, 1998, the Properties had an average occupancy rate of 95%. Tenant leases are generally year-to-year and require security deposits. The Properties typically provide residents with attractive amenities, which may include a clubhouse, swimming pool, laundry facilities and cable television access. Certain Properties offer additional amenities such as saunas, whirlpools, spas, sports courts and exercise rooms. The Company believes that the Properties provide amenities and common facilities that create an attractive residence for tenants. It is management's role to monitor compliance with Property policies and to provide preventive maintenance of the Properties including common areas, facilities and amenities. The Company holds periodic meetings of its Property management personnel for training and implementation of the Company's strategies. The Company believes that, due in part to this strategy, the Properties historically have had high occupancy rates. The distribution of the Properties throughout the United States reflects the Company's belief that geographic diversification helps insulate the portfolio from regional and economic influences. At the same time, the Company has sought to create clusters of Properties within each of its primary markets in order to achieve economies of scale in management and operation; however, the Company may acquire additional multifamily properties located anywhere in the United States. The Company beneficially owns fee simple title to 647 of the Properties and holds a 99-year leasehold interest with respect to one Property (Mallgate). Direct fee simple title for certain of the Properties is owned by single-purpose nominee corporations or land trusts that engage in no business other than holding title to the Property for the benefit of the Company. Holding title in such a manner is expected to make it less costly to transfer such Property in the future in the event of a sale and should facilitate financing, since lenders often require title to a Property to be held in a single purpose entity in order to isolate that Property from potential liabilities of other Properties. Direct fee simple title for certain other Properties is owned by an LLC. In addition, with respect to two Properties, the Company owns the debt collateralized by such Properties and with respect to four Properties, the Company owns an interest in the debt collateralized by the Properties. 27 PART I As of December 31, 1998, the Company had an investment in partnership interests and subordinated mortgages collateralized by 21 of the Additional Properties and an investment in six joint ventures consisting of six of the Additional Properties. The Additional Properties contain 5,193 units, located in six states. The following tables include only those Properties and Additional Properties owned by the Company or in which the Company had a direct equity or mortgage interest at December 31, 1998. As such, the properties currently under development by third parties (see discussion in Item 7) are not included in the following tables. In addition, the units for expansion properties are not included in the following tables until the expansion is complete. The following tables set forth certain information relating to the Properties, Properties under development and the Additional Properties: 28 ITEM 2. PROPERTIES PROPERTIES- CONTINUED
Occupancy Average As of Year(s) Square Square Footage December Property Constructed Units Footage Per Unit 31, 1998 - ----------------------------------------------------------------------------------------------------------------------------------- ALABAMA Colony Woods, Birmingham (1) 1991/1994 414 450,892 1,089 99.8% Meadows on the Lake/Park, Birmingham (2 properties) 1986/1987 400 418,452 1,046 95.7% Shoal Run, Birmingham 1986 276 249,300 903 96.0% ARIZONA Acacia Creek, Scottsdale 1988-1994 508 462,280 910 97.8% Arboretum, Tucson (1) 1987 496 402,272 811 94.3% Bay Club, Phoenix 1976 420 257,790 614 93.3% Bayside at the Islands, Gilbert (1) 1989 272 236,640 870 91.9% Bear Canyon, Tucson 1996 238 231,640 973 94.5% Camellero, Scottsdale (1) 1979 344 311,526 906 93.0% Canyon Creek, Tucson 1986 242 169,946 702 97.5% Canyon Sands, Phoenix 1983 412 353,592 858 91.8% Chandler Court, Chandler 1987 311 263,338 847 95.2% Copper Creek, Phoenix 1984 144 146,024 1,014 95.1% Country Brook, Chandler (1) 1986-1996 396 381,333 963 92.2% Crown Court, Phoenix 1987 416 464,582 1,117 97.1% Crystal Creek, Phoenix 1985 273 190,140 696 91.5% Del Coronado, Mesa (1) 1985 419 394,062 940 96.6% Desert Sands, Phoenix 1982 412 353,592 858 91.8% Dos Caminos, Phoenix 1983 264 265,884 1,007 98.5% Flying Sun, Phoenix 1983 108 93,708 868 94.4% Fountain Creek, Phoenix 1984 186 144,374 776 93.0% Gateway Villas, Scottsdale 1995 180 179,664 998 95.5% Greenwood Village, Tempe (1) 1984 270 238,768 884 94.8% Harrison Park, Tucson (1) 1985 360 322,356 895 95.5% Heritage Point, Mesa 1986 148 114,436 773 91.1% Indian Bend, Scottsdale 1973 275 226,444 823 88.0% Ingleside, Phoenix 1995 120 118,664 989 96.7% Isle at Arrowhead Ranch, Glendale 1996 256 244,608 956 94.0% La Mariposa, Mesa (1) 1986 222 206,052 928 97.3% La Reserve Villas, Tucson (1) 1988 240 216,008 900 95.0% La Valencia, Mesa 1997 361 342,946 950 96.7% Ladera, Phoenix 1995 248 243,312 981 97.6% December, 1998 Avg. Monthly Rental Rate Per ------------------------------------ Property Unit Square Foot - --------------------------------------------------------------------------------------------------- ALABAMA Colony Woods, Birmingham (1) $652 $0.60 Meadows on the Lake/Park, Birmingham (2 properties) $630 $0.60 Shoal Run, Birmingham $572 $0.63 ARIZONA Acacia Creek, Scottsdale $773 $0.85 Arboretum, Tucson (1) $589 $0.73 Bay Club, Phoenix $557 $0.91 Bayside at the Islands, Gilbert (1) $743 $0.85 Bear Canyon, Tucson $742 $0.76 Camellero, Scottsdale (1) $740 $0.82 Canyon Creek, Tucson $503 $0.72 Canyon Sands, Phoenix $584 $0.68 Chandler Court, Chandler $651 $0.77 Copper Creek, Phoenix $799 $0.79 Country Brook, Chandler (1) $763 $0.79 Crown Court, Phoenix $869 $0.78 Crystal Creek, Phoenix $605 $0.87 Del Coronado, Mesa (1) $673 $0.72 Desert Sands, Phoenix $584 $0.68 Dos Caminos, Phoenix $794 $0.79 Flying Sun, Phoenix $618 $0.71 Fountain Creek, Phoenix $621 $0.80 Gateway Villas, Scottsdale $830 $0.83 Greenwood Village, Tempe (1) $696 $0.79 Harrison Park, Tucson (1) $623 $0.70 Heritage Point, Mesa $666 $0.86 Indian Bend, Scottsdale $697 $0.85 Ingleside, Phoenix $885 $0.89 Isle at Arrowhead Ranch, Glendale $817 $0.86 La Mariposa, Mesa (1) $648 $0.70 La Reserve Villas, Tucson (1) $651 $0.72 La Valencia, Mesa $675 $0.71 Ladera, Phoenix $871 $0.89
29 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------------ Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ----------------------------------------------------------------------------------------------------------------------------------- Legends at La Paloma, Tucson 1995 312 325,648 1,044 92.9% $804 $0.77 Little Cottonwoods, Tempe (1) 1984 379 389,012 1,026 90.7% $790 $0.77 Mirador, Phoenix 1995 316 311,928 987 98.7% $826 $0.84 Misson Palms, Tucson 1980 360 372,918 1,036 93.1% $681 $0.66 Morningside, Scottsdale (1) 1989 160 163,116 1,019 98.8% $805 $0.79 Mountain Park, Phoenix (1) 1994 240 230,560 961 95.0% $808 $0.84 Orange Grove Village, Tucson (1) 1986-1995 400 339,396 848 92.2% $563 $0.66 Park Meadow, Gilbert (1) 1986 224 197,264 881 90.6% $702 $0.80 Preserve at Squaw Park, Phoenix (1) 1990 108 92,168 853 96.3% $855 $1.00 Promontory Pointe I&II, Phoenix (1) 1984-1996 424 421,446 994 95.7% $778 $0.78 Rancho Murietta, Tempe 1983 292 253,016 866 94.5% $733 $0.85 San Tropez, Phoenix 1989 316 332,080 1,051 95.7% $899 $0.86 Scottsdale Courtyards, Scottsdale (1) 1993 274 284,175 1,037 95.8% $907 $0.87 Scottsdale Meadows, Scottsdale 1984 168 149,520 890 98.2% $739 $0.83 Sedona Ridge, Phoenix 1988 250 235,345 941 96.4% $749 $0.80 Shadow Brook, Scottsdale (1) 1984 224 226,296 1,010 95.5% $859 $0.85 Shores at Andersen Springs, Chandler (1) 1989 299 265,218 887 94.0% $768 $0.87 Silver Creek, Phoenix (1) 1986 174 134,820 775 91.3% $629 $0.81 Skyline Gateway, Tucson 1985 246 179,422 729 95.5% $587 $0.80 Sonoran, Phoenix (1) 1995 429 413,344 964 94.9% $789 $0.82 Southbank, Mesa 1985 113 99,448 880 92.0% $584 $0.66 Southcreek, Mesa (1) 1986-89 528 472,152 894 93.4% $671 $0.75 Sun Creek, Glendale (1) 1985 175 129,661 741 92.5% $605 $0.82 Suntree Village, Tucson (1) 1986 424 345,761 815 92.9% $537 $0.66 Superstition Vista, Mesa 1987 316 300,510 951 91.1% $666 $0.70 Sycamore Creek, Scottsdale (1) 1984 350 335,420 958 97.3% $775 $0.81 The Enclave, Tempe (1) 1994 204 194,142 952 96.5% $866 $0.91 The Hawthorne, Phoenix 1996 276 259,784 941 96.0% $804 $0.85 The Heritage, Phoenix (1) 1995 204 198,276 972 93.6% $821 $0.84 The Meadows, Mesa 1984 306 247,378 808 92.4% $590 $0.73 The Palms, Phoenix (1) 1990 132 135,460 1,026 98.5% $959 $0.93 The Pointe ASM, Phoenix 1988 364 309,548 850 90.9% $677 $0.80 Towne Square, Chandler 1987-1996 584 533,164 913 96.1% $697 $0.76
30 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ---------------------------------------------------------------------------------------------------------------------------------- Via Ventura, Scottsdale 1980 320 279,187 872 99.7% $721 $0.83 Villa Encanto, Phoenix 1983 382 309,982 811 98.0% $636 $0.78 Villa Madeira, Scottsdale 1971 332 291,280 877 90.3% $736 $0.84 Villa Manana, Phoenix 1971-85 816 212,150 816 94.6% $633 $0.78 Villa Serenas, Tucson (1) 1973 611 452,751 741 91.8% $577 $0.78 Village at Lakewood, Phoenix (1) 1988 240 205,752 857 91.2% $761 $0.89 Village at Tanque Verde, Tucson(1) 1984-1994 217 174,668 805 93.5% $559 $0.69 Vista Grove, Mesa 1997-1998 224 204,136 911 93.3% $756 $0.83 Windemere, Mesa (1) 1986 224 187,192 836 93.7% $614 $0.73 ARKANSAS Combined Little Rock Properties(3) 1974-1975 1,039 889,416 856 92.2% $513 $0.60 CALIFORNIA Bay Ridge, San Pedro 1987 60 46,836 781 98.2% $1,264 $1.62 Bramblewood, San Jose 1986 108 86,624 802 92.6% $1,217 $1.52 Briarwood, Sunnyvale (1) 1985 192 157,264 819 97.9% $1,292 $1.58 Canyon Crest Views, Riverside 1982-1983 178 212,292 1,193 89.3% $984 $0.83 Canyon Ridge, San Diego 1989 162 126,000 778 96.9% $952 $1.22 Carmel Terrace, San Diego 1988-89 384 298,588 778 96.1% $863 $1.11 Casa Capricorn & Casa Camino Ruiz, San Diego (2 properties) 1976-1986 388 346,720 894 98.4% $863 $0.97 Creekside, San Mateo (1) 1985 192 142,318 741 96.9% $1,349 $1.82 Deerwood, Corona 1992 316 338,345 1,071 92.7% $899 $0.84 Deerwood, San Diego 1990 316 333,079 1,054 94.9% $1,072 $1.02 Eagle Canyon, Chino Hills 1985 252 252,493 1,002 93.7% $1,021 $1.02 Emerald Place, Bermuda Dunes 1988 240 214,072 892 99.2% $649 $0.73 Esprit Del Sol, Solana Beach 1986 146 135,416 928 91.1% $1,063 $1.15 Geary Courtyard, San Francisco (1) 1990 164 85,675 522 83.0% $1,467 $2.81 Greenhaven, Union City (1) 1983 250 193,764 775 95.2% $977 $1.26 Harborview, San Pedro (1) 1985 160 171,800 1,074 98.2% $1,264 $1.18 Hathaway, Long Beach 1987 385 266,805 693 96.4% $937 $1.35 La Mirage, San Diego 1988-1992 1,070 972,689 909 96.9% $1,151 $1.27 Lakeville Resort, Petaluma (1) 1984 492 461,798 939 97.0% $864 $0.92 Lands End, Pacifica 1974 260 161,121 620 97.3% $1,174 $1.89 Larkspur Woods, Sacramento (1) 1989/1993 232 253,134 1,091 96.1% $1,025 $0.94
31 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per -------------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Lincoln Green I & II, Sunnyvale (1) 1979 174 131,900 758 98.3% $1,304 $1.72 Lincoln Village I & II, Larkspur 1980 342 293,597 858 95.9% $1,359 $1.58 Marquessa, Corona 1992 336 299,744 892 99.4% $ 805 $0.90 Merrimac Woods, Costa Mesa 1970 123 88,160 717 95.1% $ 854 $1.19 Mountain Terrace, Stevenson Ranch 1992 510 425,612 835 92.0% $ 952 $1.14 Northridge, Pleasant Hill 1974 221 236,060 1,068 95.9% $1,075 $1.01 Oak Park North & South, Agoura (1) (2 properties) 1989-1990 444 368,600 830 96.2% $1,100 $1.33 Park West, Los Angeles 1990 444 315,588 711 97.1% $1,061 $1.49 Parkside, Union City 1979 208 143,120 688 96.6% $1,001 $1.45 Parkview Terrace, Redlands (1) 1986 558 446,856 801 95.0% $ 724 $0.90 Portofino, Chino Hills 1989 176 153,708 873 96.6% $ 937 $1.07 Promenade Terrace, Corona Hills (1) 1990 330 360,838 1,093 96.4% $ 918 $0.84 Redlands Lawn and Tennis Club, Redlands (1) 1986 496 394,560 795 95.2% $ 697 $0.88 Regency Palms, Huntington Beach 1969 310 261,634 844 98.7% $ 890 $1.05 Ridgewood Village, San Diego 1997 192 163,336 851 97.9% $ 972 $1.14 Sierra Canyon, Canyon Cnty 1987 232 239,568 1,033 90.9% $ 830 $0.80 Skylark, Union City (1) 1986 174 140,537 808 97.7% $1,016 $1.26 Smoketree Polo Club, Indio (1) 1987-89 288 238,560 828 98.3% $ 528 $0.64 Sonterra at Foothill Ranch, Foothill Ranch (1) 1997 300 278,560 929 97.5% $1,014 $1.09 Southwood, Palo Alto 1985 99 80,084 809 98.0% $1,714 $2.12 Summer Ridge, Riverside 1985 136 104,832 771 97.8% $ 732 $0.95 Summerset Village, Chatsworth 1985 280 286,752 1,024 96.1% $1,180 $1.15 Summerwood, Hayward 1982 162 123,066 760 96.9% $ 878 $1.16 The Ashton, Corona (1) 1986 492 418,284 850 98.3% $ 737 $0.87 Villa Solana, Laguna Hills 1984 272 245,104 901 97.1% $ 984 $1.09 Vista Del Lago, Mission Viejo (1) 1986-88 608 512,200 842 96.5% $ 974 $1.16 Whispering Oaks F.K.A. Creekside Oaks, Walnut Creek (1) 1974 316 237,952 753 97.2% $ 938 $1.25 Windridge, Laguna Niguel (1) 1989 344 375,312 1,091 97.7% $1,122 $1.03 Wood Creek, Pleasant Hill 1987 256 257,632 1,006 95.3% $1,342 $1.33 Woodleaf, Campbell (1) 1984 178 130,400 733 97.2% $1,201 $1.64 COLORADO Brookside, Boulder 1993 144 121,744 845 90.3% $ 914 $1.08 Cheyenne Crest, Colorado Springs 1984 208 175,424 843 97.6% $ 672 $0.80
32 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Cierra Crest, Denver (1) 1996 480 439,498 916 94.2% $ 905 $0.99 Cimmaron Ridge, Denver 1984 296 229,048 774 98.0% $ 607 $0.78 Colinas Pointe, Denver 1986 272 213,984 787 96.7% $ 655 $0.83 Crescent at Cherry Creek, Denver (1) 1994 216 189,191 876 90.2% $ 851 $0.97 Dartmouth Woods, Lakewood (1) 1990 201 165,777 825 92.0% $ 745 $0.90 Glenridge, Colorado Springs (1) 1985 220 176,792 804 94.5% $ 675 $0.84 Highland Pointe, Denver 1984 318 237,886 748 94.7% $ 608 $0.81 Highline Oaks, Denver (1) 1986 220 170,756 776 94.1% $ 703 $0.91 Indian Tree, Arvada 1983 168 140,000 833 93.4% $ 698 $0.84 Ironwood at the Ranch, Denver (1) 1986 226 184,081 815 92.4% $ 752 $0.92 Parkwood East, Fort Collins 1986 259 215,064 830 93.1% $ 697 $0.84 Sterling Point, Denver 1979 143 130,120 910 97.2% $ 752 $0.83 Summer Chase, Aurora 1983 384 302,944 789 97.4% $ 649 $0.82 The Marks, Denver (1) 1987-1996 616 520,712 845 93.8% $ 761 $0.90 The Registry, Denver 1987 208 156,558 753 97.1% $ 700 $0.93 Timberwood, Aurora 1983 336 268,256 798 97.3% $ 597 $0.75 Trails, Aurora 1986 351 286,964 818 94.9% $ 642 $0.79 Turf Club, Littleton 1986 324 256,224 791 96.0% $ 691 $0.87 Village at Bear Creek, Denver (1) 1987-1996 472 464,558 984 94.9% $ 876 $0.89 Warwick Station, Denver (1) 1986 332 250,432 754 93.7% $ 719 $0.95 Willowick, Aurora 1980 100 73,400 734 90.0% $ 621 $0.85 Windmill, Colorado Springs 1985 304 180,640 594 97.0% $ 536 $0.90 Woodridge I, II & III, Aurora (3 properties) 1980-82 584 444,224 761 94.8% $ 563 $0.74 Yuma Court, Colorado Springs 1985 40 37,400 935 97.4% $ 649 $0.69 CONNECTICUT The Classic, Stamford 1990 144 165,727 1,151 96.5% $2,152 $1.87 Fairfield, Stamford 1996 263 223,947 852 98.1% $1,411 $1.66 Rivers Edge, Waterbury 1974 156 134,898 865 89.7% $ 808 $0.93 FLORIDA Audubon Village, Tampa 1990 447 378,871 848 99.1% $ 696 $0.82 Augustine Club, Tallahassee 1988 222 199,700 900 88.2% $ 631 $0.70 Auvers Village, Orlando 1991 480 490,244 1,021 96.9% $ 737 $0.72 Banyan Lake, Boynton Beach 1986 288 264,636 919 97.6% $ 718 $0.78 Beach Club, Fort Myers 1990 320 278,988 872 93.4% $ 634 $0.73
33 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ---------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Beneva Place, Sarasota (1) 1986 192 174,911 911 98.4% $689 $0.76 Bermuda Cove, Jacksonville 1989 350 319,338 912 98.0% $686 $0.75 Bishop Park, Winter Park 1991 324 292,440 903 95.4% $687 $0.76 Heron Pointe, Boynton Beach 1989 192 195,840 1,020 94.3% $728 $0.71 Brierwood, Jacksonville 1974 196 263,052 1,342 95.4% $661 $0.49 Casa Cordoba, Tallahassee 1972-73 168 164,336 978 95.8% $575 $0.59 Casa Cortez, Tallahassee 1970 66 74,916 1,135 97.0% $627 $0.55 Chaparral, Largo 1976 444 451,420 1,017 90.7% $616 $0.61 Chicksaw Crossing, Orlando (1) 1986 292 248,280 850 90.7% $611 $0.72 Claire Pointe, Jacksonville 1986 256 258,560 1,010 93.3% $737 $0.73 Coconut Palm Club, Coconut Creek 1992 300 385,372 1,285 96.3% $822 $0.64 Colony Place, Fort Myers 1991 300 336,576 1,122 93.6% $774 $0.69 Combined Ft. Lauderdale Properties (4) 1988-1991 737 528,591 717 94.7% $893 $1.25 Conway Station, Orlando 1987 242 190,438 787 90.5% $639 $0.81 Copper Terrace, Orlando 1989 300 270,568 902 94.6% $710 $0.79 Country Club Place, Pembroke Pines 1987 152 167,200 1,100 94.7% $863 $0.78 Crosswinds, St. Petersburg 1986 208 154,224 741 95.2% $585 $0.79 Cypress Cove, Melbourne 1990 326 334,680 1,027 95.1% $710 $0.69 Deerbrook, Jacksonville 1983 144 186,188 1,293 90.9% $752 $0.58 Emerald Bay, Winter Park 1972 432 394,837 914 85.0% $610 $0.67 Essex Place, Tampa 1989 148 123,456 834 95.9% $686 $0.82 Falls, Tampa 1985 240 158,016 658 95.4% $549 $0.83 Forest Place, Tampa (1) 1985 244 198,525 814 97.9% $566 $0.70 Gatehouse at Pine Lake, Plantation 1990 296 293,792 993 93.9% $868 $0.87 Gatehouse on the Green, Pembroke Pines 1990 312 310,140 994 97.7% $911 $0.92 Habitat, Orlando 1974 344 334,352 972 91.5% $614 $0.63 Hammock's Place, Miami (1) 1986 296 307,900 1,040 94.9% $754 $0.72 Heron Cove, Coral Springs 1987 198 189,932 959 94.9% $773 $0.81 Heron Landing, Lauderhill 1988 144 151,684 1,053 97.2% $788 $0.75 Heron Run, Plantation 1987 198 185,504 937 94.4% $808 $0.86 Hidden Palms, Tampa (1) 1986 256 201,518 787 94.5% $578 $0.73 Horizon Place, Tampa (1) 1985 304 255,596 841 96.4% $601 $0.71
34 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ----------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Indigo Plantation, Daytona Beach 1989 304 268,128 882 92.4% $612 $0.69 La Costa Brava, Jacksonville (2) 1970-73 464 441,268 951 94.0% $562 $0.59 La Costa Brava, Orlando 1967 194 190,780 983 94.1% $655 $0.67 Lakeridge at Moors, Miami 1991 175 169,725 970 92.0% $850 $0.88 Lexington Park, Orlando 1988 252 201,236 799 97.2% $630 $0.79 Lofton Place, Tampa 1988 280 267,725 956 95.0% $717 $0.75 Madison at Coral Square, Coral Springs 1989 384 429,960 1,120 95.3% $880 $0.79 Marbrisa, Tampa 1984 224 188,544 842 96.0% $610 $0.72 Mariner Club, Pembroke Pines (1) 1988 304 282,696 930 98.0% $837 $0.90 Mariners Wharf, Orange Park 1989 272 305,392 1,123 93.0% $784 $0.70 Mission Bay, Orlando 1991 304 330,368 1,087 90.4% $805 $0.74 Northlake, Jacksonville 1989 240 193,832 808 96.7% $614 $0.76 Oaks of Lakebridge, Ormond Beach 1984 170 120,792 711 94.1% $611 $0.86 Ocean Walk, Key West (1) 1990 296 208,256 704 100.0% $959 $1.36 Paradise Point, Dania 1987-90 320 286,740 896 87.1% $846 $0.94 Pine Harbour, Orlando 1991 366 344,204 940 93.8% $715 $0.76 Pines of Springdale, W. Palm Beach 1986 151 126,975 841 98.7% $650 $0.77 Plantations at Killearn, Tallahassee (1) 1990 184 156,920 853 95.6% $616 $0.72 Polos East, Orlando 1991 308 270,000 877 95.1% $706 $0.81 Polos, Fort Myers 1991 328 301,120 918 96.3% $671 $0.73 Princeton Square, Jacksonville 1984 288 212,640 738 95.1% $566 $0.77 Promenade, St. Petersburg 1994 334 323,688 969 93.1% $817 $0.84 Reserve at Ashley Lake, Boynton Beach (1) 1990 440 432,756 984 95.2% $703 $0.71 River Bend, Tampa 1971 296 333,580 1,127 94.9% $584 $0.52 Royal Oaks, Jacksonville 1991 284 233,700 823 92.2% $641 $0.78 Sabal Palm, Pompano Beach 1989 416 384,032 923 91.5% $783 $0.85 Sabal Palm at Carrollwood Place, Tampa 1995 432 419,040 970 97.7% $731 $0.75 Sabal Palm at Boot Ranch, Palm Harbor (1) 1996 432 437,303 1,012 95.1% $793 $0.78 Sabal Pointe, Coral Springs 1995 275 355,575 1,293 95.3% $911 $0.70 Sawgrass Cove, Bradenton 1991 336 342,880 1,020 95.4% $693 $0.68 Silver Springs, Jacksonville 1985 432 361,372 837 98.1% $568 $0.68 Spicewood Springs, Jacksonville 1986 512 388,800 759 93.9% $560 $0.74 Springs Colony, Altamonte Springs (1) 1986 188 161,168 857 92.6% $625 $0.73
35 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------------ Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ----------------------------------------------------------------------------------------------------------------------------------- Summit Chase, Coral Springs 1985 140 134,586 961 95.0% $ 732 $0.76 Timberwalk, Jacksonville 1987 284 240,304 846 96.1% $ 648 $0.77 Tivoli Lakes, Deerfield Beach 1991 278 247,336 890 94.2% $ 772 $0.87 Valencia Plantation, Orlando 1990 194 213,448 1,100 96.4% $ 742 $0.67 Vinings at Lake Buena Vista, Orlando (1) 1988 400 370,849 927 97.7% $ 688 $0.74 Vinings at Lenox Place, Orlando 1998 456 496,604 1,089 81.1% $ 892 $0.82 Vinings Club at Metrowest, Orlando 1997 411 510,263 1,242 93.6% $1,015 $0.82 Viridian Lake, Fort Myers 1991 320 276,064 863 91.9% $ 692 $0.80 Waterford , Jacksonville 1988 432 460,312 1,066 96.3% $ 706 $0.66 Waterford at Deerwood, Jacksonville (1) 1985 248 246,820 995 94.7% $ 626 $0.63 Waterford at Orange Park, Orange Park (1) 1986 280 236,596 845 94.6% $ 601 $0.71 Waterford at Regency, Jacksonville (1) 1985 159 134,253 844 96.8% $ 548 $0.65 Waterford Village, Delray Beach 1989 236 222,109 941 98.3% $ 816 $0.87 Welleby Lake Club, Sunrise 1991 304 290,972 957 96.0% $ 794 $0.83 Westwood Pines, Tamarac 1991 208 204,460 983 92.8% $ 861 $0.88 Wood Forest, Daytona Beach (1) 1985 144 118,392 822 93.1% $ 574 $0.70 Woodlake at Killearn, Tallahassee 1986-90 352 305,480 868 90.6% $ 608 $0.70 GEORGIA Belmont Crossing, Riverdale 1988 316 323,230 1,023 94.3% $ 675 $0.66 Belmont Landing, Riverdale 1988 424 386,530 912 92.9% $ 650 $0.71 Champions Park, Norcross 1987 252 203,391 807 97.6% $ 692 $0.86 Chatelaine Park, Duluth 1995 303 334,845 1,105 95.3% $ 857 $0.78 Defoor Village, Atlanta 1997 156 149,983 961 94.9% $ 974 $1.01 Frey, Atlanta (1) 1985 489 453,760 928 97.0% $ 679 $0.73 Garden Lake, Riverdale 1991 278 274,256 987 96.0% $ 671 $0.68 Governor's Place, Augusta 1972 190 191,580 1,008 94.1% $ 451 $0.45 Governor's Point, Roswell (1) 1982/1986 468 587,176 1,255 94.0% $ 813 $0.65 Greengate, Marietta 1971 152 157,808 1,038 98.7% $ 661 $0.64 Greystone, Atlanta 1960 150 152,600 1,017 97.3% $ 697 $0.69 Gwinnett Crossing, Duluth 1989/90 574 501,384 873 94.1% $ 651 $0.75 Harvest Grove, Conyers 1986 376 350,432 932 94.9% $ 623 $0.67 Highland Grove, Stone Mountain 1988 268 243,360 908 95.8% $ 666 $0.73 Holcomb Bridge, Atlanta (1) 1985 437 419,150 959 95.9% $ 726 $0.76
36 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per --------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ----------------------------------------------------------------------------------------------------------------------------------- Ivy Place, Atlanta 1978 122 180,830 1,482 98.1% $ 953 $0.64 Lakes at Vinings, Atlanta (1) 1972/1975 464 443,178 955 94.4% $ 782 $0.82 Lexington Glen, Atlanta 1990 480 525,504 1,095 94.8% $ 887 $0.81 Lexington Village, Alpharetta (1) 1995 352 379,046 1,077 95.4% $ 846 $0.79 Longwood, Decatur 1992 268 216,970 810 98.9% $ 762 $0.94 Madison at River Sound , Lawrenceville 1996 586 634,999 1,084 95.0% $ 823 $0.76 Martins Landing, Atlanta (1) 1972 300 423,930 1,413 96.0% $ 876 $0.62 Maxwell House, Augusta 1951 216 97,173 450 94.0% $ 382 $0.85 North Hill, Atlanta (1) 1984 420 481,150 1,146 94.7% $ 778 $0.68 Paces Station Combined, Atlanta (8) 1984-1989 610 592,936 972 97.2% $ 784 $0.81 Park Knoll, Marietta 1983 484 587,250 1,213 93.8% $ 851 $0.70 Plantation Ridge, Atlanta 1975 454 513,068 1,130 95.6% $ 692 $0.61 Preston Lake, Tucker 1984-86 320 338,130 1,057 96.2% $ 693 $0.66 Roswell, Atlanta (1) 1985 236 225,598 956 94.0% $ 750 $0.78 Shadow Lake, Doraville 1989 228 232,120 1,018 95.6% $ 683 $0.67 Sweetwater Glen, Lawrenceville 1986 200 160,400 802 96.0% $ 639 $0.80 The Arboretum, Atlanta 1970 312 301,139 965 98.2% $ 866 $0.90 The Clarion, Decatur 1990 217 211,582 975 94.9% $ 792 $0.81 Trowbridge, Atlanta 1980 210 246,000 1,171 97.0% $ 770 $0.66 Willow Trail, Norcross 1985 224 195,216 872 94.6% $ 627 $0.72 Windridge, Dunwoody 1982 272 229,930 845 95.2% $ 650 $0.77 Woodland Hills, Decatur 1985 228 266,304 1,168 97.8% $ 835 $0.71 Wynbrook, Atlanta 1972/1976 318 322,828 1,015 95.0% $ 663 $0.65 IDAHO The Seasons, Boise 1990 120 108,460 904 96.6% $ 631 $0.70 ILLINOIS Bourbon Square, Palatine (1) 1984-87 612 875,160 1,430 90.0% $1,091 $0.76 Chantecleer Lakes, Naperville (1) 1986 304 280,536 923 97.1% $ 918 $0.99 Four Lakes III-V, Lisle (1) 1968-1988 1,420 1,108,453 781 95.0% $ 806 $1.03 Glengarry Club, Bloomingdale (1) (7) 1989 250 215,098 860 97.2% $ 887 $1.03 Glenlake Club, Glendale Heights (1) 1988 336 268,560 799 99.4% $ 842 $1.05 McDowell Place, Naperville (1) 1988 400 396,320 991 95.5% $ 899 $0.91 INDIANA Idlewood, Indianapolis (1) 1991 320 262,355 820 98.1% $ 605 $0.74
37 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Average Year(s) Square Square Footage Property Constructed Units Footage Per Unit - -------------------------------------------------------------------------------------------------------------------------- IOWA 3000 Grand, Des Moines 1970 186 199,530 1,073 Regency Woods, West Des Moines (1) 1986 200 165,880 829 KANSAS Cedar Crest, Overland Park (1) 1986 466 430,034 923 Concorde Bridge, Overland Park 1973 248 403,808 1,628 Essex Place, Overland Park 1970-84 352 429,048 1,219 Rosehill Pointe, Lenexa (1) 1984 498 459,318 922 Silverwood, Mission (1) 1986 280 234,876 839 Sunnyoak Village, Overland Park (1) 1984 548 492,700 899 KENTUCKY Breckinridge Court, Lexington (1) 1986-1987 382 276,010 723 Cloisters on the Green, Lexington 1974 228 196,560 862 Doral, Louisville 1972 228 293,106 1,286 Mallgate, Louisville 1969 540 535,444 992 Patchen Oaks, Lexington 1990 192 161,760 843 River Oak, Louisville 1989 268 200,056 746 Sonnet Cove I-II, Lexington (2 properties) 1972-1974 331 346,675 1,047 MAINE Coach Lantern, Scarborough 1971/1981 90 97,700 1,086 Foxcroft, Scarborough 1977/1979 104 98,800 950 Junipers of Yarmouth, Yarmouth 1970 225 188,000 836 Tamarlane, Portland 1986 115 101,801 885 Yarmouth Woods, Yarmouth 1972/1978 138 137,800 999 MARYLAND Brookside II (MD), Frederick 1979 204 183,920 902 Canterbury, Germantown (1) 1986 544 481,083 884 Clary's Crossing, Columbia 1984 198 185,718 938 Georgian Woods I, Wheaton 1967 97 111,385 1,148 Georgian Woods II, Wheaton (1) 1968 371 305,693 824 Georgian Woods III, Wheaton 1968 102 89,500 877 Greenwich Woods & Hollyview, Silver Springs (6) (2 properties) 1965-1967 606 546,518 902 Marymont, Laurel 1987-88 308 251,264 816 Northhampton I & II, Largo (1) (2 properties) 1977-1988 620 564,399 910 Oak Mill II, Germantown (1) 1985 192 165,611 863 Overlook Manor I, II & III, Frederick (9) (3 properties) 1980/1985/1986 354 324,420 916 Occupancy December, 1998 As of Avg. Monthly December Rental Rate Per ------------------------------------- Property 31, 1998 Unit Square Foot - ---------------------------------------------------------------------------------------------------------------------- IOWA 3000 Grand, Des Moines 95.1% $ 834 $0.78 Regency Woods, West Des Moines (1) 100.0% $ 589 $0.71 KANSAS Cedar Crest, Overland Park (1) 96.6% $ 650 $0.70 Concorde Bridge, Overland Park 92.3% $ 838 $0.51 Essex Place, Overland Park 95.2% $ 806 $0.66 Rosehill Pointe, Lenexa (1) 95.6% $ 627 $0.68 Silverwood, Mission (1) 96.4% $ 649 $0.77 Sunnyoak Village, Overland Park (1) 96.1% $ 623 $0.69 KENTUCKY Breckinridge Court, Lexington (1) 92.7% $ 516 $0.71 Cloisters on the Green, Lexington 89.9% $ 575 $0.67 Doral, Louisville 92.5% $ 627 $0.49 Mallgate, Louisville 93.7% $ 564 $0.57 Patchen Oaks, Lexington 93.7% $ 579 $0.69 River Oak, Louisville 95.1% $ 574 $0.77 Sonnet Cove I-II, Lexington (2 properties) 93.4% $ 620 $0.59 MAINE Coach Lantern, Scarborough 92.2% $ 763 $0.70 Foxcroft, Scarborough 96.2% $ 714 $0.75 Junipers of Yarmouth, Yarmouth 98.7% $ 697 $0.83 Tamarlane, Portland 95.7% $ 772 $0.87 Yarmouth Woods, Yarmouth 93.5% $ 682 $0.68 MARYLAND Brookside II (MD), Frederick 95.6% $ 614 $0.68 Canterbury, Germantown (1) 95.8% $ 747 $0.84 Clary's Crossing, Columbia 90.9% $ 862 $0.92 Georgian Woods I, Wheaton 95.9% $1,024 $0.89 Georgian Woods II, Wheaton (1) 95.1% $ 781 $0.95 Georgian Woods III, Wheaton 91.2% $ 807 $0.92 Greenwich Woods & Hollyview, Silver Springs (6) (2 properties) 95.5% $ 826 $0.92 Marymont, Laurel 94.1% $ 785 $0.96 Northhampton I & II, Largo (1) (2 properties) 97.9% $ 814 $0.89 Oak Mill II, Germantown (1) 96.4% $ 752 $0.87 Overlook Manor I, II & III, Frederick (9) (3 properties) 97.2% $ 644 $0.70
38 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Average Occupancy December, 1998 Square As of Avg. Monthly Year(s) Square Footage December Rental Rate Per ------------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Scarborough Square, Rockville (1) 1967 121 154,624 1,278 100.0% $1,145 $0.90 Town Centre III & IV, Laurel (1) (2 properties) 1968-1969 562 553,083 984 94.5% $ 724 $0.74 Yorktowne at Olde Mill, Millersville 1974 216 195,100 903 94.4% $ 698 $0.77 MASSACHUSETTS Arboretum, Canton 1989 156 139,944 897 98.7% $1,059 $1.18 Crystal Village, Attleboro 1974 91 92,880 1,021 89.0% $ 957 $0.94 Emerson Place Combined, Boston 1962 462 445,830 965 98.5% $1,485 $1.54 Hall Place, Quincy 1988 90 77,490 861 100.0% $1,098 $1.28 Lincoln Heights, Quincy (1) 1991 336 266,590 793 98.2% $1,194 $1.50 Mill Village, Randolph 1971-77 310 237,755 767 95.1% $ 848 $1.11 Tyrone Gardens, Randolph 1961/1965 165 122,717 744 97.6% $ 817 $1.10 MICHIGAN Arbor Glen, Pittsfield Township 1990 220 195,996 891 96.3% $ 711 $0.80 Burwick Farms, Howell 1991 264 274,540 1,040 95.4% $ 817 $0.79 Country Ridge, Farmington Hills 1986 252 278,060 1,103 97.6% $ 841 $0.76 Hidden Valley, Ann Arbor 1973 324 237,348 733 97.5% $ 723 $0.99 Lake in the Woods, Ypsilanti 1969 1,028 971,873 945 95.2% $ 747 $0.79 Parkcrest, Southfield (1) 1987 210 252,980 1,205 95.7% $ 831 $0.69 Pines of Cloverlane, Pittsfield Township 1975-79 582 471,966 811 92.6% $ 645 $0.80 Townhomes of Meadowbrook, Auburn Hills (1) 1988 230 254,775 1,108 97.8% $ 747 $0.67 Walden Wood, Southfield (1) 1972 210 295,080 1,405 100.0% $ 908 $0.65 Woodcrest Villa, Westland 1970 458 425,200 928 96.3% $ 624 $0.67 Woodland Meadows, Ann Arbor 1987-1989 306 392,930 1,284 94.8% $1,089 $0.85 MINNESOTA 740 River Drive, St. Paul (1) 1962 162 190,388 1,175 96.9% $1,218 $1.04 Cityscape, South Louis Park 1990 156 162,304 1,040 96.2% $ 985 $0.95 Coachman Trails, Plymouth (1) 1987 154 167,140 1,085 97.4% $ 908 $0.84 Fernbrook Townhomes, Plymouth (1) 1993 72 86,400 1,200 94.4% $ 986 $0.82 Fountain Place I, Eden Prairie (1) 1989 332 382,170 1,151 97.3% $ 856 $0.74 Fountain Place II, Eden Prairie (1) 1989 158 162,598 1,029 96.8% $ 847 $0.82 The Gates at Carlson, Minnetonka (1) (7) 1989 435 396,300 911 97.0% $ 888 $0.97 Park Place I & II, Plymouth (1) 1986 500 569,768 1,140 98.6% $ 829 $0.73 Royal Oak, Eagan (1) 1989 231 209,384 906 98.3% $ 812 $0.90 Summer Creek, Plymouth (1) 1985 72 68,616 953 94.4% $ 986 $1.03
39 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy Average As of Year(s) Square Square Footage December Property Constructed Units Footage Per Unit 31, 1998 - ---------------------------------------------------------------------------------------------------------------- Trailway Pond I, Burnsville (1) 1988 75 70,283 937 94.6% Trailway Pond II, Burnsville (1) 1988 165 155,395 942 93.3% Valley Creek I, Woodbury (1) 1989 225 212,100 943 97.3% Valley Creek II, Woodbury (1) 1990 177 168,258 951 96.6% White Bear Woods I, White Bear Lake (1) 1989 225 211,992 942 96.4% Woodlands of Minnetonka, Minnetonka 1988 248 268,640 1,083 97.2% Woodlane Place I, Woodbury (1) 1989 216 297,902 1,379 97.7% Woodridge, Eagan (1) 1986 200 207,271 1,036 99.5% MISSOURI Ethan's Glen III, Kansas City (1) 1990 48 33,600 700 93.8% Ethan's Ridge I, Kansas City (1) 1988 316 283,944 899 94.0% Ethan's Ridge II, Kansas City (1) 1990 242 196,614 812 96.7% Hunters Glen, Chesterfield 1985 192 156,489 815 93.2% Hunters Ridge, St. Louis (1) 1987 198 178,448 901 93.4% Sleepy Hollow, Kansas City (1) 1987 388 325,486 839 93.0% South Pointe, St. Louis (1) 1986 192 155,520 810 97.4% NEVADA Catalina at South Shore, Las Vegas 1989 240 211,200 880 97.5% Catalina Shores, Las Vegas (Wellsford) 1989 256 230,872 902 94.1% Crossing at Green Valley, Las Vegas 1986 384 330,714 861 95.3% Cypress Point, Las Vegas 1989 212 179,800 848 94.8% Desert Park, Las Vegas 1987 368 172,513 469 95.9% Fountains at Flamingo, Las Vegas 1989-91 521 417,870 802 92.9% Grandview I & II, Las Vegas 1980 456 313,400 687 93.4% Reflections at the Lakes, Las Vegas 1989 326 274,992 844 98.8% Silver Shadow, Las Vegas 1992 200 194,656 973 97.0% Sunrise Springs, Las Vegas 1989 192 164,424 856 93.8% Trails, Las Vegas 1988 440 453,656 1,031 93.6% NEW HAMPSHIRE Wellington Hill, Manchester (1) 1987 390 394,627 1,012 96.9% NEW JERSEY Portside Towers Combined, Jersey City (1) 1992/1997 527 564,272 1,071 99.4% Prospect Towers, Hackensack (1) 1995 157 208,603 1,329 98.1% Ravens Crest, Plainsboro (1) 1984 704 583,176 828 95.2% NEW MEXICO Mountain Run, Albuquerque 1985 472 335,744 711 91.7% December, 1998 Avg. Monthly Rental Rate Per ------------------------------ Property Unit Square Foot - ---------------------------------------------------------------------------- Trailway Pond I, Burnsville (1) $ 768 $0.82 Trailway Pond II, Burnsville (1) $ 769 $0.82 Valley Creek I, Woodbury (1) $ 786 $0.83 Valley Creek II, Woodbury (1) $ 792 $0.83 White Bear Woods I, White Bear Lake (1) $ 783 $0.83 Woodlands of Minnetonka, Minnetonka $ 906 $0.84 Woodlane Place I, Woodbury (1) $ 995 $0.72 Woodridge, Eagan (1) $ 786 $0.76 MISSOURI Ethan's Glen III, Kansas City (1) $ 521 $0.74 Ethan's Ridge I, Kansas City (1) $ 592 $0.66 Ethan's Ridge II, Kansas City (1) $ 580 $0.71 Hunters Glen, Chesterfield $ 680 $0.83 Hunters Ridge, St. Louis (1) $ 651 $0.72 Sleepy Hollow, Kansas City (1) $ 562 $0.67 South Pointe, St. Louis (1) $ 626 $0.77 NEVADA Catalina at South Shore, Las Vegas $ 713 $0.81 Catalina Shores, Las Vegas (Wellsford) $ 649 $0.72 Crossing at Green Valley, Las Vegas $ 644 $0.75 Cypress Point, Las Vegas $ 675 $0.80 Desert Park, Las Vegas $ 513 $1.09 Fountains at Flamingo, Las Vegas $ 686 $0.86 Grandview I & II, Las Vegas $ 574 $0.84 Reflections at the Lakes, Las Vegas $ 674 $0.80 Silver Shadow, Las Vegas $ 700 $0.72 Sunrise Springs, Las Vegas $ 686 $0.80 Trails, Las Vegas $ 760 $0.74 NEW HAMPSHIRE Wellington Hill, Manchester (1) $ 796 $0.79 NEW JERSEY Portside Towers Combined, Jersey City (1) $1,852 $1.73 Prospect Towers, Hackensack (1) $1,902 $1.43 Ravens Crest, Plainsboro (1) $ 905 $1.09 NEW MEXICO Mountain Run, Albuquerque $ 549 $0.77
40 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Pueblo Villas, Albuquerque 1975 232 173,118 746 90.9% $542 $0.73 NORTH CAROLINA Adams Farm I & II, Greensboro 1987 500 520,220 1,040 92.0% $704 $0.68 Bainbridge, Durham 1984 216 191,240 885 95.8% $703 $0.79 Berkshire Place, Charlotte 1982 240 211,664 882 93.3% $645 $0.73 Bridgeport, Raleigh 1990 276 252,190 914 94.1% $742 $0.81 Chatham Woods, High Point 1986 208 168,688 811 99.0% $569 $0.70 Creekwood, Charlotte 1987-1990 384 322,868 841 92.8% $625 $0.74 Cross Creek, Charlotte (1) 1989 420 412,020 981 91.6% $651 $0.66 Deerwood Meadows, Greensboro 1986 297 217,757 733 92.2% $575 $0.78 Duraleigh Woods, Raleigh 1987 362 283,856 784 96.9% $641 $0.82 East Pointe, Charlotte (1) 1987 310 301,560 973 94.5% $657 $0.68 English Hills, Charlotte 1984 280 193,100 690 92.5% $570 $0.83 Hidden Oaks & Northwoods Village, Cary (5) 1986-1988 444 345,358 778 91.9% $663 $0.85 Hunt Club, Charlotte 1990 300 267,192 891 96.7% $674 $0.76 Kimmerly Glen, Charlotte 1986 260 195,000 750 93.8% $582 $0.78 Lake Point, Charlotte 1984 296 271,700 918 97.0% $614 $0.67 Laurel Ridge, Chapel Hill 1975 160 158,964 994 98.0% $764 $0.77 Madison at Bridford Lake I, Greensboro 1998 320 353,783 1,106 72.4% $822 $0.74 McAlpine Ridge, Charlotte 1989-90 320 238,125 744 94.4% $604 $0.81 Misty Woods, Cary 1984 360 275,716 766 95.3% $615 $0.80 Pine Meadow, Greensboro (1) 1974 204 226,600 1,111 91.2% $614 $0.55 Rock Creek, Corrboro 1986 188 153,548 817 92.6% $710 $0.87 Sailboat Bay, Raleigh 1986 192 123,004 641 97.4% $573 $0.89 Sommerset Place, Raleigh 1983 144 112,248 780 97.2% $637 $0.82 Steeplechase, Charlotte 1986 247 178,851 724 96.8% $572 $0.79 The Atrium, Durham 1989 208 196,596 945 95.2% $673 $0.71 The Cardinal, Greensboro (1) 1994 256 237,727 929 97.3% $595 $0.64 The Cedars, Charlotte 1983 360 312,400 868 92.2% $621 $0.72 The Chimneys, Charlotte 1974 214 150,152 702 98.6% $533 $0.76 The Oaks, Charlotte 1996 318 280,948 883 97.8% $741 $0.84 The Pointe, Charlotte 1996 340 300,582 884 94.4% $753 $0.85 The Regency, Charlotte 1986 178 178,276 1,002 92.7% $749 $0.75
41 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per --------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Timber Hollow, Chapel Hill 1986 198 145,478 735 96.5% $685 $0.93 Willow Brook, Durham 1986 176 139,860 795 88.1% $701 $0.88 Winterwood, Charlotte (1) 1986 384 369,260 962 94.8% $682 $0.71 Woodbridge, Cary (1) 1993-95 344 315,624 918 90.4% $745 $0.81 Woodscape & Woods of North Bend, Raleigh 1979-1983 475 430,167 906 96.0% $654 $0.72 OHIO Olentangy, Columbus 1972 827 981,190 1,186 98.4% $797 $0.67 Orchard of Landen, Maineville (1) 1985-1988 312 288,514 925 92.3% $712 $0.77 Reserve Square, Cleveland 1973 765 631,803 826 84.1% $932 $1.13 University Park, Toledo 1965 99 49,950 505 96.9% $440 $0.87 Village of Hampshire Heights, Toledo 1950 304 187,624 617 96.0% $422 $0.68 OKLAHOMA Brittany Square, Tulsa 1982 212 170,516 804 98.1% $548 $0.68 Huntington Hollow, Tulsa 1981 288 180,648 627 98.6% $399 $0.64 Lincoln Oaks, Tulsa 1991 300 216,368 721 99.7% $575 $0.80 One Eton Square, Tulsa 1985 448 313,904 701 97.5% $557 $0.79 Riverside Park, Tulsa (1) 1994 288 237,283 824 98.6% $615 $0.75 Silver Springs & Woodland Oaks, Tulsa 1983-1984 428 323,977 757 99.1% $526 $0.69 The Lodge, Tulsa 1979 208 152,240 732 97.6% $453 $0.62 OREGON Bridgecreek, Wilsonville 1987 315 274,236 871 95.5% $673 $0.77 Club at Tanasbourne, Hillsboro 1990 352 302,902 861 95.1% $693 $0.81 Club at the Green, Beaverton 1991 254 238,850 940 94.2% $699 $0.74 Country Gables, Beaverton (1) 1991 288 275,463 956 93.4% $735 $0.77 Kempton Downs, Gresham 1990 278 277,536 998 92.4% $718 $0.72 Boulder Creek, Wilsonville 1991 296 251,627 850 95.6% $650 $0.76 Meadowcreek, Tigard (1) 1985 304 247,690 815 95.4% $664 $0.81 Portland Center, Portland (1) 1965 525 429,371 818 79.3% $925 $1.13 Tanasbourne Terrace, Hillsboro 1986-89 373 363,758 975 94.6% $733 $0.75 Tanglewood, Lake Oswego 1976 158 200,660 1,270 96.2% $836 $0.66 Watermark Square, Portland (1) 1990 390 350,945 900 90.2% $655 $0.73 Woodcreek, Beaverton (1) 1982-84 440 335,120 762 95.7% $609 $0.80 SOUTH CAROLINA Carolina Crossing, Greenville 1967 156 121,200 777 92.3% $451 $0.58
42 Item 2. Properties PROPERTIES- Continued
Occupancy Average As of Year(s) Square Square Footage December Property Constructed Units Footage Per Unit 31, 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Gleneagle, Greenville 1990 192 177,264 923 95.3% Greyeagle, Greenville 1991 156 154,624 991 97.4% Haywood Pointe, Greenville 1985 216 183,136 848 94.9% Hickory Ridge, Greenville 1968 90 72,392 804 97.8% Hollows, Columbia 1987 212 161,636 762 95.3% Mallard Cove, Greenville 1983 211 264,187 1,252 91.9% Tamarind at Stoneridge, Columbia 1985 240 200,976 837 92.9% TENNESSEE Arbors at Century Center 1988/1990 420 386,912 921 96.7% Arbors of Brentwood, Nashville (1) 1986-87 346 320,993 928 93.0% Arbors of Hickory Hollow, Nashville (1) 1986 336 337,260 1,004 96.7% Brixworth, Nashville 1985 216 144,912 671 93.5% Cambridge at Hickory Hollow, Nashville 1997 360 358,776 997 95.8% Canterchase, Nashville (1) 1985 235 170,140 724 90.6% Cherry Creek I & II, Hermitage 1986/96 407 393,100 966 95.1% Farmington Gates, Germantown 1976 182 192,428 1,057 96.2% Preakness, Antioch (1) 1986 260 193,500 744 98.5% Ridgeway Commons, Memphis 1970 127 168,650 1,328 95.3% Spinnaker Cove, Nashville (1) 1986 278 238,524 858 93.9% The Landings, Memphis 1986 292 229,376 786 93.8% The Willows, Knoxville (1) 1987-1988 250 219,760 879 94.4% Trinity Lakes & Autumn Creek, Cordova (1) (2 properties) 1985-1991 540 484,374 897 91.6% Village of Sycamore Ridge, Memphis 1977 114 148,560 1,303 95.6% Waterford Place, Nashville 1994 180 184,850 1,027 95.5% Wyndridge II & III, Memphis (1) 1988 568 527,924 929 92.4% TEXAS 7979 Westheimer, Houston 1973 459 401,571 875 97.8% Altamonte, San Antonio (1) 1985 432 322,928 748 96.7% Arbors of Las Colinas, Irving 1985 408 334,556 820 97.8% Balcones Club, Austin 1984 312 262,940 843 98.4% Blue Swan, San Antonio (1) 1985-1994 285 226,036 793 94.4% Breton Mill, Houston (1) 1986 392 294,152 750 96.9% Broadway, Garland (1) 1983 288 227,032 788 93.0% Burn Brae, Dallas 1984 282 221,966 787 96.8% December, 1998 Avg. Monthly Rental Rate Per ------------------------------------ Property Unit Square Foot - -------------------------------------------------------------------------------------------------- Gleneagle, Greenville $544 $0.59 Greyeagle, Greenville $569 $0.57 Haywood Pointe, Greenville $570 $0.67 Hickory Ridge, Greenville $456 $0.57 Hollows, Columbia $536 $0.70 Mallard Cove, Greenville $611 $0.49 Tamarind at Stoneridge, Columbia $576 $0.69 TENNESSEE Arbors at Century Center $586 $0.64 Arbors of Brentwood, Nashville (1) $679 $0.73 Arbors of Hickory Hollow, Nashville (1) $619 $0.62 Brixworth, Nashville $732 $1.09 Cambridge at Hickory Hollow, Nashville $667 $0.67 Canterchase, Nashville (1) $555 $0.77 Cherry Creek I & II, Hermitage $773 $0.80 Farmington Gates, Germantown $692 $0.65 Preakness, Antioch (1) $534 $0.72 Ridgeway Commons, Memphis $694 $0.52 Spinnaker Cove, Nashville (1) $664 $0.77 The Landings, Memphis $586 $0.75 The Willows, Knoxville (1) $619 $0.70 Trinity Lakes & Autumn Creek, Cordova (1) (2 properties) $610 $0.68 Village of Sycamore Ridge, Memphis $694 $0.53 Waterford Place, Nashville $770 $0.75 Wyndridge II & III, Memphis (1) $618 $0.66 TEXAS 7979 Westheimer, Houston $671 $0.77 Altamonte, San Antonio (1) $542 $0.73 Arbors of Las Colinas, Irving $706 $0.86 Balcones Club, Austin $650 $0.77 Blue Swan, San Antonio (1) $551 $0.69 Breton Mill, Houston (1) $584 $0.78 Broadway, Garland (1) $531 $0.67 Burn Brae, Dallas $576 $0.73
43 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy Dcember, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ---------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Calais, Dallas 1986 264 206,210 781 98.5% $ 602 $0.77 Cambridge Village, Lewisville 1987 200 160,036 800 98.5% $ 678 $0.85 Cedar Ridge, Arlington (1) 1980 121 127,808 1,056 98.3% $ 715 $0.68 Celebration at Westchase, Houston 1979 367 305,609 833 98.4% $ 584 $0.70 Champion Oaks, Houston (1) 1984 252 190,628 756 96.4% $ 587 $0.78 Chartwell Court, Houston 1995 243 253,553 1,043 95.1% $ 822 $0.79 Copper Hill, Bedford 1983 204 155,764 764 95.1% $ 552 $0.72 Copperfield, San Antonio 1984 258 197,736 766 97.7% $ 522 $0.68 Countryside, San Antonio 1980 220 159,214 724 95.4% $ 491 $0.68 Coventry at City View, Fort Worth 1996 360 351,921 978 95.5% $ 832 $0.85 Creekside Homes at Legacy, Plano 1998 380 375,245 987 93.9% $1,028 $1.04 Dawntree, Carrollton 1982 400 370,152 925 96.2% $ 623 $0.67 Estate on Quarry Lake, Austin (1) 1995 302 269,889 894 96.0% $ 812 $0.91 Farnham Park, Houston (1) 1996 216 226,260 1,048 97.7% $ 933 $0.89 Fielder Crossing, Arlington (1) 1980 119 103,293 868 95.8% $ 626 $0.72 Forest Ridge, Arlington 1984-85 660 555,364 841 96.1% $ 633 $0.75 Forest Valley, San Antonio 1983 185 149,493 808 96.8% $ 548 $0.68 Fountainhead I-III, San Antonio (1) 1985-87 688 457,616 665 95.5% $ 529 $0.80 Foxchase, Grand Prairie 1983 260 243,218 935 95.0% $ 616 $0.66 Hampton Green, San Antonio 1979 293 222,341 759 92.8% $ 488 $0.64 Harbour Landing, Corpus Christi 1985 284 193,288 681 96.5% $ 555 $0.82 Hearthstone, San Antonio 1982 252 167,464 665 99.6% $ 443 $0.67 Hidden Lakes, Haltom City 1996 312 289,620 928 92.0% $ 763 $0.82 Hunter's Green, Fort Worth (1) 1981 248 188,720 761 96.4% $ 516 $0.68 Jefferson at Walnut Creek, Austin (1) 1994 342 286,188 837 95.3% $ 764 $0.91 Keystone, Austin (1) 1981 166 111,440 671 99.4% $ 579 $0.86 Kingswood Manor, San Antonio 1983 129 109,996 853 86.0% $ 521 $0.61 Kirby Place, Houston (1) 1994 362 359,931 994 98.9% $1,063 $1.07 La Tour Fontaine, Houston (1) 1994 162 170,334 1,051 96.9% $1,181 $1.12 Lakeshore at Preston, Plano (1) 1992 302 253,690 840 99.0% $ 745 $0.89 Lakewood Greens, Dallas (1) 1986 252 186,252 739 96.4% $ 605 $0.82 Lakewood Oaks, Dallas 1987 352 257,606 732 95.7% $ 715 $0.98
44 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ---------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Landera, San Antonio 1983 184 168,176 914 93.5% $575 $0.63 Lincoln Green I-III, San Antonio 1984-86 680 465,664 685 96.8% $491 $0.72 Madison at Cedar Springs, Dallas 1995 380 334,474 880 92.9% $936 $1.06 Madison at Chase Oaks, Plano 1995 470 420,734 895 93.8% $784 $0.88 Madison at Round Grove, Lewisville 1995 404 358,774 888 94.0% $783 $0.88 Madison at Stone Creek, Austin 1995 390 336,094 862 95.9% $756 $0.88 Madison at the Arboretum, Austin 1995 161 150,836 937 96.9% $832 $0.89 Madison on Melrose, Richardson 1995 200 189,478 947 94.5% $897 $0.95 Madison on the Parkway, Dallas 1995 376 339,796 904 94.4% $822 $0.91 Northgate Village, San Antonio 1984 264 214,928 814 95.8% $519 $0.64 Palms at South Shore, League City 1990 240 190,872 795 91.6% $756 $0.95 Parc Royale, Houston (1) 1994 171 166,859 976 98.2% $986 $1.01 Park Place, Houston (1) 1996 229 206,918 904 95.6% $781 $0.86 Parkridge Place, Irving 1985 536 455,496 850 97.6% $684 $0.80 Parkwest, Austin 1985 196 179,046 914 94.4% $752 $0.82 Plantation, Houston 1969 232 214,432 924 96.0% $721 $0.78 Pleasant Ridge, Arlington (1) 1982 63 57,600 914 96.8% $636 $0.70 Prairie Creek I , Richardson 1998 236 237,002 1,004 93.2% $924 $0.92 Preston Bend, Dallas (1) 1986 255 185,364 727 96.9% $635 $0.87 Preston in Willow Bend, Plano 1985 229 233,893 1,021 93.4% $781 $0.76 Ranchstone, Houston 1996 220 193,088 878 94.5% $773 $0.88 Regatta, San Antonio 1983 200 171,634 858 96.5% $581 $0.68 Richmond Townhomes, Houston (1) 1995 188 183,883 978 96.3% $920 $0.94 Ridgetree, Dallas 1983 798 597,642 749 93.7% $547 $0.73 Rincon, Houston 1996 288 240,787 836 95.1% $954 $1.14 River Hill, Grand Prairie 1996 334 297,214 890 91.5% $779 $0.88 River Park, Fort Worth (1) 1984 280 219,660 785 95.0% $550 $0.70 Rolido Parque, Houston (1) 1978 369 262,930 713 97.8% $521 $0.73 Saddle Creek, Carrollton 1980 238 244,488 1,027 96.2% $703 $0.68 Sandstone, Euless (1) 1988 40 38,236 956 95.0% $747 $0.78 Sedona Springs, Austin 1995 396 389,138 983 97.3% $844 $0.86 Songbird, San Antonio (1) 1981 262 277,720 1,060 96.9% $640 $0.60 Sutton Place, Dallas 1985 456 301,440 661 95.8% $617 $0.93
45 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square are Footage December Rental Rate Per --------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ----------------------------------------------------------------------------------------------------------------------------------- The Lodge, San Antonio 1979 384 259,512 676 99.0% $ 505 $0.75 The Overlook, San Antonio 1985 411 298,133 725 97.2% $ 466 $0.64 The Trails, Arlington 1984 208 141,696 681 94.7% $ 537 $0.79 Town Center, Kingwood 1994 258 220,630 855 95.3% $ 777 $0.91 Trails at Briar Forest, Houston (1) 1990 476 426,724 896 95.6% $ 692 $0.77 Trails at Dominion, Houston (1) 1992-1995 843 766,592 909 95.7% $ 711 $0.78 Trails End, San Antonio 1983 308 202,376 657 92.9% $ 475 $0.72 Trails of Valley Ranch, Irving 1986 216 174,365 807 96.3% $ 727 $0.90 Village Oaks, Austin (1) 1984 280 199,152 711 97.5% $ 703 $0.99 Villas at Josey Ranch, Carrollton (1) 1986 198 168,020 849 97.0% $ 692 $0.82 Villas of Oak Creste, San Antonio 1979 280 208,446 744 97.5% $ 474 $0.64 Vista Pointe, Irving 1996 231 237,985 1,030 94.8% $1,001 $0.97 Walker's Mark, Dallas 1982 164 133,448 814 96.3% $ 644 $0.79 Waterford, San Antonio 1983 133 87,376 657 93.2% $ 502 $0.76 Wimberly, Dallas 1996 372 340,987 917 93.5% $ 840 $0.92 Wimbledon Oaks, Arlington (1) 1985 248 189,960 766 96.0% $ 578 $0.75 Woodmoor, Austin 1981 208 151,348 728 96.8% $ 603 $0.83 UTAH Brookfield, Salt Lake City 1985 128 101,424 792 93.7% $ 613 $0.77 Quail Cove, Salt Lake City 1987 420 362,580 863 89.7% $ 583 $0.68 Settlers Point, Salt Lake City 1986 288 263,040 913 93.7% $ 613 $0.67 Springs of Country Woods, Salt Lake City 1982 590 486,648 825 94.7% $ 628 $0.76 VIRGINIA Amberton, Manassas (1) 1986 190 143,402 755 96.3% $ 736 $0.98 Brookridge, Centreville (1) 1989 252 252,353 1,001 98.8% $ 864 $0.86 Carriage Homes at Wyndham, Glen Allen 1998 264 309,351 1,172 61.7% $1,061 $0.91 Cascade at Landmark, Alexandria 1990 277 272,720 985 95.3% $ 983 $1.00 Champions Club, Glen Allen 1988 212 164,580 776 97.2% $ 641 $0.83 Hickory Creek, Richmond 1984 294 250,068 851 96.5% $ 669 $0.79 Kingsport, Alexandria 1985 416 285,793 687 97.8% $ 712 $1.04 Park West End, Richmond (1) 1985 312 224,768 720 96.5% $ 591 $0.82 Saddle Ridge, Ashburn 1989 216 194,142 899 97.7% $ 894 $0.99 Sheffield Court, Arlington 1986 597 356,822 598 96.5% $ 872 $1.46
46 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ Tanglewood, Manassas (1) 1987 432 388,704 900 94.0% $751 $0.83 Wilde Lake, Richmond (1) 1989 189 172,980 915 97.9% $697 $0.76 Woodside, Lorton 1987 252 231,781 920 92.9% $825 $0.90 WASHINGTON 2300 Elliott, Seattle 1992 91 67,403 741 95.6% $938 $1.27 2900 on First, Seattle 1989-91 135 87,320 647 93.2% $915 $1.41 Alderwood Park, Lynnwood (1) 1982 188 143,696 764 96.8% $715 $0.94 Bellevue Meadows, Bellevue 1983 180 144,208 801 93.9% $891 $1.11 Brentwood, Vancouver 1990 296 286,132 967 89.2% $681 $0.70 Chandler's Bay I, Kent 1989 293 278,874 952 93.5% $784 $0.82 Charter Club, Everett 1991 201 172,773 860 97.5% $779 $0.91 Chelsea Square, Redmond 1991 113 107,912 955 96.5% $979 $1.03 Cherry Hill, Seattle 1991 108 101,390 939 99.1% $860 $0.92 Chestnut Hills, Tacoma 1991 157 143,236 912 91.1% $650 $0.71 Country Club Village, Seattle 1991 151 157,898 1,046 93.6% $922 $0.88 Creekside, Mountlake Terrace (1) 1987 512 407,296 796 94.1% $751 $0.94 Eagle Rim, Redmond 1986-88 156 137,920 884 94.9% $858 $0.97 Edgewood, Woodinville (1) 1986 203 166,299 819 96.1% $785 $0.96 Firdale Village, Seattle 1986 386 323,522 838 96.6% $772 $0.92 Fox Run, Federal Way 1988 143 127,960 895 98.6% $700 $0.78 Gates of Redmond I & II, Redmond (1) (2 properties) 1979-1989 280 249,728 892 95.7% $936 $1.05 Highland Creste, Seattle 1989 198 192,556 973 95.7% $682 $0.70 Huntington Park, Everett 1991 381 307,793 808 95.5% $743 $0.92 Indigo Springs, Kent (1) 1991 278 255,360 919 92.8% $767 $0.84 James Street Crossing, Kent (1) 1989 300 250,368 835 96.0% $726 $0.87 Martha Lake, Seattle 1991 155 135,662 875 97.6% $742 $0.85 Merrill Creek, Tacoma 1994 149 138,867 932 94.0% $681 $0.73 Metropolitan Park, Seattle 1991 82 49,702 606 98.8% $850 $1.40 Newport Heights, Seattle 1985 80 59,056 738 92.5% $760 $1.03 North Creek Heights, Seattle 1990 114 104,306 915 95.6% $854 $0.93 North Creek, Everett (1) 1986 264 227,568 862 99.2% $689 $0.80 Olde Redmond Place, Redmond (1) 1986 192 160,632 837 95.8% $898 $1.07 Orchard Ridge, Lynnwood 1988 104 86,548 832 98.1% $741 $0.89
47 ITEM 2. PROPERTIES PROPERTIES - CONTINUED
Occupancy December, 1998 Average As of Avg. Monthly Square Square Footage December Rental Rates Per ----------------------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ---------------------------------------------------------------------------------------------------------------------------------- Panther Ridge, Seattle 1980 260 221,000 850 95.3% $616 $0.72 Plum Tree Park, Seattle 1991 196 174,310 889 98.0% $782 $0.88 Pointe East, Redmond 1988 76 83,280 1,096 97.4% $1,102 $1.01 Ridgegate, Seattle 1990 153 141,594 925 97.5% $764 $0.83 Seventh and James, Seattle 1992 96 61,282 638 96.9% $866 $1.36 Stoney Creek, Tacoma 1990 231 211,580 916 95.7% $669 $0.73 Summit at Lake Union 1995-1997 150 109,352 729 91.1% $997 $1.37 Surprise Lake Village, Tacoma 1986 338 328,032 971 95.0% $725 $0.75 Surry Downs, Bellevue 1986 122 94,360 773 97.7% $864 $1.12 The Hamptons, Tacoma (1) 1991 230 202,324 880 95.6% $667 $0.76 The Ridgetop, Tacoma 1988 221 197,250 893 93.0% $642 $0.72 The Village at Seeley Lake, Tacoma 1990 522 469,180 899 90.8% $675 $0.75 Village of Newport, Federal Way 1987 100 76,890 769 98.0% $651 $0.85 Waterford at the Lakes, Kent 1990 344 313,514 911 92.1% $767 $0.84 Waterstone Place, Federal Way 1990 750 616,436 822 94.9% $653 $0.79 Wellington, Silverdale (1) 1990 240 214,024 892 93.8% $640 $0.72 Westridge, Tacoma 1987-1991 714 686,675 962 93.3% $694 $0.72 Woodlake, Kirkland (1) 1984 288 233,280 810 96.5% $798 $0.99 WISCONSIN Harbor Pointe, Milwaukee (1) 1970/1990 595 537,068 903 91.7% $644 $0.71 Plum Tree I, II & III, Hales Corner (1) (7) 1987-1989 332 355,074 1,070 95.5% $867 $0.87 Greenfield (1) (7) 1991 206 219,932 1,068 97.6% $851 $0.80 Brookfield (1) (7) 1990 148 185,320 1,252 95.9% $1,171 $0.94 ------------------------------------------------------------------------------------ TOTAL PROPERTIES: 184,895 166,096,925 ------------------------------------------------------------------------------------ AVERAGE: 285 256,322 898 95% $739 $0.82 ====================================================================================
(1) Encumbered by a third party mortgage. (2) Includes La Costa Brava (JAX) and Cedar Cove. (3) Includes Fox Run, Greenwood Forest, Walnut Ridge, and Williamsburg. (4) Includes Port Royale I, Port Royale II, and Port Royale III. Port Royale III is encumbered by a third party mortgage. (5) Northwoods Village is encumbered by a third party mortgage. (6) Greenwich Woods is encumbered by a third party mortgage. (7) As of 12/31/97, the Company had an investment in six mortgage loans collateralized by these properties and they were include in the Form 10-K as "Additional Properties". On 4/1/98, the Company purchased these five properties and they are therefore no longer considered "Additional Properties". (8) Includes Paces Station and Paces on the Green. (9) Overlook Manor II is encumbered by a third party mortgage. 48 ITEM 2. PROPERTIES PROPERTIES - CONTINUED DEVELOPMENT AND CONSTRUCTION ACTIVITY The apartment communities under construction and/or in lease up are listed below:
Construction Estimated Cost Funded at Actual Date of Total Average Unit Construction 12/31/98 Construction Name City Units Size (Sq. Ft.) Cost (Millions) (Millions)*** Commencement* - ----------------------------------------------------------------------------------------------------------------------------------- ARIZONA Montierra Scottsdale 249 1,052 $ 21 $ 20 3/97 The Retreat, Phase I Phoenix 240 973 $ 14 $ 30 1/97 The Retreat, Phase II Phoenix 240 973 $ 17 ** 9/97 GEORGIA Merritt Lake (aka Satellite Place) Duluth 424 1,036 $ 35 $ 28 2/98 TENNESSEE Cherry Creek III Hermitage 220 1,085 $ 16 $ 12 12/97 TEXAS Prairie Creek II Richardson 228 994 $ 20 $ - 5/98 VIRGINIA Madison at Spring Oak (10) Richmond 506 997 $ 48 $ 9 11/97 -------- ------------------------- TOTAL 2,107 $ 171 $ 99 ======== ========================= Actual or Estimated Estimated Date of Commencement of Stabilized Name City Lease-Up* Occupancy* - ---------------------------------------------------------------------------------------------------- ARIZONA Montierra Scottsdale 6/98 4/99 The Retreat, Phase I Phoenix 7/97 3/99 The Retreat, Phase II Phoenix 3/98 3/99 GEORGIA Merritt Lake (aka Satellite Place) Duluth 9/98 9/99 TENNESSEE Cherry Creek III Hermitage 9/98 1/00 TEXAS Prairie Creek II Richardson 1/99 9/99 VIRGINIA Madison at Spring Oak (10) Richmond 1/00 3/02
(10) Development of this project is currently on hold. * The actual date of construction commencement represents the date the Company began development of the first building/phase. The actual or estimated commencement of lease-up represents the date the Company began or estimates to begin lease-up of the first building/phase. The estimated date of stabilized occupancy represents the date the Company estimates to reach 93% physical occupancy for all buildings/phases or two months after the certificate of occupancy is received on the final building/phase. ** Combined with The Retreat, Phase I. *** Amounts represent the total development cost to date at December 31, 1998. of this amount, $29 million was funded by EWR prior to the EWR Merger (for Montierra and The Retreat) and $42 million was funded by MRY prior to the MRY Merger (for Merritt Lake, Cherry Creek III, Prairie Creek II and Madison at Spring Oak). 49 ITEM 2. PROPERTIES PROPERTIES - CONTINUED ADDITIONAL PROPERTIES
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------------- Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ---------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA Brookside Place, Stockton (11) 1981 90 96,664 1,074 93% $ 752 $0.70 Canyon Creek, San Ramon (11) 1984 268 257,676 961 97% $1,197 $1.24 Cobblestone Village, Fresno (11) 1983 162 153,118 945 97% $ 584 $0.62 Country Oaks, Agoura (11) 1985 256 258,558 1,010 95% $1,329 $1.32 Edgewater, Bakersfield (11) 1984 258 240,322 931 93% $ 673 $0.72 Feather River, Stockton (11) 1981 128 97,328 760 96% $ 562 $0.74 Hidden Lake, Sacramento (11 1985 272 261,808 963 93% $ 738 $0.77 Lakeview, Lodi (11) 1983 138 136,972 993 98% $ 732 $0.74 Lantern Cove, Foster City (11) 1985 232 228,432 985 94% $1,723 $1.75 Schooner Bay I, Foster City (11) 1985 168 167,345 996 94% $1,847 $1.85 Schooner Bay II, Foster City (11) 1985 144 143,442 996 93% $1,830 $1.84 South Shore, Stockton (11) 1979 129 141,055 1,093 96% $ 803 $0.74 Waterfield Square I, Stockton (11) 1984 170 160,100 942 95% $ 604 $0.64 Waterfield Square II, Stockton (1) 1984 158 151,488 959 96% $ 622 $0.65 Willow Brook, Pleasant Hill (11) 1985 228 234,840 1,030 96% $1,360 $1.32 Willow Creek, Fresno (11) 1984 116 118,422 1,021 97% $ 671 $0.66 COLORADO Deerfield, Denver (11) 1983 158 146,380 926 97% $ 745 $0.80 Foxridge, Englewood (11) 1984 300 292,992 977 96% $ 816 $0.84 GEORGIA Woodcrest, Augusta (12) 1982 248 217,064 875 84% $ 586 $0.67 Hammoncks at Long Point, Savannah (12) 1997 308 323,844 1,051 97% $ 824 $0.78 Huntington, Savannah (12) 1986 147 119,452 813 97% $ 564 $0.69 Magnolia Villas, Savannah (12) 1986 144 161,200 1,119 89% $ 640 $0.57 NEW MEXICO Mesa Del Oso, Albuquerque (11) 1983 221 252,169 1,141 94% $ 865 $0.76 Tierra Antigua, Albuquerque (11) 1985 148 152,241 1,029 93% $ 728 $0.71
50 ITEM 2. PROPERTIES PROPERTIES - CONTINUED ADDITIONAL PROPERTIES
Occupancy December, 1998 Average As of Avg. Monthly Year(s) Square Square Footage December Rental Rate Per ------------------------- Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot - ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA Lakewood, Tulsa (11) 1985 152 157,372 1,035 99% $719 $0.69 SOUTH CAROLINA Windsor Place, Goose Creek (12) 1984 224 213,440 953 98% $577 $0.61 Summit Place, North Charleston (12) 1985 226 201,818 893 98% $575 $0.64 -------------------------------------------------------------------------------- TOTAL ADDITIONAL PROPERTIES: 5,193 5,085,542 -------------------------------------------------------------------------------- AVERAGE: 192 188,353 979 95% $894 $0.91 ================================================================================
(11) All of these Additional Properties are encumbered by mortgages, of which the Company has an investment in the second and third mortgages (which are subordinate to first mortgages owned by third party unaffiliated entities). (12) The Company has a 50% equity investment in each of these properties, but receives preferential returns ranging from 9.50% to 10.25% until its investment is recovered. 51 PART I ITEM 3. LEGAL PROCEEDINGS Only ordinary routine litigation incidental to the business, which is not deemed material, was initiated during the year ended December 31, 1998. As of December 31, 1998, the Company does not believe there is any other litigation threatened against the Company other than routine litigation arising out of the ordinary course of business, some of which is expected to be covered by liability insurance, none of which is expected to have a material adverse effect on the consolidated financial statements of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On October 15, 1998, a special meeting of shareholders was held whereby the shareholders were asked to approve the MRY Merger. Of the votes that were collected, there were 72,608,401 votes for the MRY Merger, 1,198,684 votes against the MRY Merger and 105,928 abstentions; and, therefore, the MRY Merger was approved by the shareholders. At this special meeting, a separate proposal was introduced whereby the shareholders were asked to approve an increase in the Company's authorized Common Shares. Of the votes that were collected, there were 81,986,055 votes for the Common Share increase, 3,401,289 votes against the Common Share increase and 123,729 abstentions; and, therefore, this increase was approved by the shareholders. 52 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The following table sets forth, for the periods indicated, the high and low sales prices for and the distributions paid on the Company's Common Shares which trade on the New York Stock Exchange under the trading symbol EQR.
Sales Price -------------------- High Low Distributions ---- --- ------------- Fiscal Year 1998 Fourth Quarter Ended December 31, 1998 $43 3/16 $38 7/8 $0.71 Third Quarter Ended September 30, 1998 $47 1/2 $34 11/16 $0.67 Second Quarter Ended June 30, 1998 $52 9/16 $44 1/2 $0.67 First Quarter Ended March 31, 1998 $52 7/16 $47 $0.67 Sales Price -------------------- High Low Distributions ---- --- ------------- Fiscal Year 1997 Fourth Quarter Ended December 31, 1997 $55 $47 3/8 $0.67 Third Quarter Ended September 30, 1997 $54 9/16 $47 1/8 $0.625 Second Quarter Ended June 30, 1997 $47 1/2 $41 1/4 $0.625 First Quarter Ended March 31, 1997 $48 7/8 $39 3/4 $0.625
In addition, on February 24, 1999, the Company declared a $0.71 distribution per Common Share payable on April 9, 1999 to shareholders of record on March 19, 1999. The number of beneficial holders of Common Shares at December 31, 1998, were approximately 55,217. The number of outstanding Common Shares as of December 31, 1998 was 118,230,009. ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial and operating information on a historical basis for the Company. The following information should be read in conjunction with all of the financial statements and notes thereto included elsewhere in this Form 10-K. The historical operating data for the years ended December 31, 1995 and 1994 have been derived from the historical Financial Statements of the Company audited by Grant Thornton L.L.P., independent accountants. The historical operating data for the years ended December 31, 1998, 1997 and 1996 have been derived from the historical Financial Statements of the Company audited by Ernst & Young LLP, independent auditors. The net income per weighted average Common Share amounts have been presented and, where appropriate, restated as required to comply with Statement of Financial Accounting Standards No. 128, Earnings Per Share. For a further discussion of net income per weighted average Common Share and the impact of Statement No. 128, see Note 9 of Notes to the Consolidated Financial Statements as included elsewhere in this Form 10-K. Certain capitalized terms as used herein, are defined in the Notes to the Consolidated Financial Statements. 53 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED HISTORICAL FINANCIAL INFORMATION (Financial information in thousands except for per share and property data)
Year Ended December 31, ---------------------------------------------------------- 1998 1997 1996 ----------------- ------------------ ---------------- OPERATING DATA: Total revenues $ 1,337,449 $ 747,321 $ 478,385 ================= ================== ================ Income before gain on disposition of properties, extraordinary items and allocation to Minority Interests $ 255,032 $ 176,014 $ 97,033 ================= ================== ================ Net income $ 258,206 $ 176,592 $ 101,624 ================= ================== ================ Net income available to Common Shares $ 165,289 $ 117,580 $ 72,609 ================= ================== ================ Net income per weighted average Common Share outstanding $ 1.65 $ 1.79 $ 1.70 ================= ================== ================ Net income per weighted average Common Share outstanding - assuming dilution $ 1.63 $ 1.76 $ 1.69 ================= ================== ================ Weighted average Common Shares outstanding 100,370 65,729 42,586 ================= ================== ================ Weighted average Common Shares outstanding-assuming dilution 112,578 74,281 51,102 ================= ================== ================ Distributions declared per Common Share outstanding $ 2.72 $ 2.55 $ 2.40 ================= ================== ================ BALANCE SHEET DATA (at end of period): Real estate, before accumulated depreciation (1) $ 10,942,063 $ 7,121,435 $ 2,983,510 Real estate, after accumulated depreciation (1) $ 10,223,572 $ 6,676,673 $ 2,681,998 Total assets $ 10,700,260 $ 7,094,631 $ 2,986,127 Total debt $ 4,680,527 $ 2,948,323 $ 1,254,274 Minority Interests $ 431,374 $ 273,404 $ 150,637 Shareholders' equity $ 5,330,447 $ 3,689,991 $ 1,458,830 OTHER DATA: Total properties (at end of period) (2) 654 463 218 Total apartment units (at end of period) (2) 187,002 135,200 67,705 Funds from operations available to Common Shares and OP Units(3) $ 458,841 $ 270,763 $ 160,267 Cash flow provided by (used for): Operating activities $ 533,163 $ 338,035 $ 210,930 Investing activities $ (1,047,376) $ (1,550,224) $ (635,655) Financing activities $ 484,883 $ 1,098,213 $ 558,568 Year Ended December 31, --------------------------------- 1995 1994 ---------------- --------------- OPERATING DATA: Total revenues $ 390,384 $ 231,034 ================ =============== Income before gain on disposition of properties, extraordinary items and allocation to Minority Interests $ 59,738 $ 45,988 ================ =============== Net income $ 67,719 $ 34,418 ================ =============== Net income available to Common Shares $ 57,610 $ 34,418 ================ =============== Net income per weighted average Common Share outstanding $ 1.68 $ 1.34 ================ =============== Net income per weighted average Common Share outstanding - assuming dilution $ 1.67 $ 1.34 ================ =============== Weighted average Common Shares outstanding 34,358 25,621 ================ =============== Weighted average Common Shares outstanding-assuming dilution 43,983 34,206 ================ =============== Distributions declared per Common Share outstanding $ 2.18 $ 2.01 ================ =============== BALANCE SHEET DATA (at end of period): Real estate, before accumulated depreciation (1) $ 2,188,939 $ 1,963,476 Real estate, after accumulated depreciation (1) $ 1,970,600 $ 1,770,735 Total assets $ 2,141,260 $ 1,847,685 Total debt $ 1,002,219 $ 994,746 Minority Interests $ 168,963 $ 177,438 Shareholders' equity $ 884,517 $ 609,936 OTHER DATA: Total properties (at end of period) (2) 174 163 Total apartment units (at end of period) (2) 53,294 50,704 Funds from operations available to Common Shares and OP Units(3) $ 120,965 $ 83,886 Cash flow provided by (used for): Operating activities $ 141,534 $ 93,997 Investing activities $ (324,018) $ (896,515) Financing activities $ 175,874 $ 808,495
54 PART II ITEM 6. SELECTED FINANCIAL DATA (CONSOLIDATED HISTORICAL (CONTINUED)) (1) Includes approximately $96.3 million and $36 million of construction in progress as of December 31, 1998 and 1997, respectively. (2) In August 1995 the Company also made its $89 million mortgage note investment collateralized by 21 of the Additional Properties. In April 1997, the Company made its $88 million mortgage note investment collateralized by five of the Additional Properties. In 1998, these properties were acquired and are no longer included as Additional Properties, but now are included as Properties. In addition, in October 1998, the Company contributed six of the Additional Properties having a value of $52.7 million to six respective joint ventures. These 27 Additional Properties consisted of 5,193 units at December 31, 1998. These 26 Additional Properties consisted of 5,267 units at December 31, 1997. The Additional Properties are not included in these numbers. (3) The Company generally considers FFO to be one measure of the performance of real estate companies, including an equity REIT. The new definition of FFO adopted in March 1995 by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss) (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. The Company believes that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flows from operating activities, financing activities and investing activities, it provides investors an understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO, in and of itself, does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indication of the Company's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. The Company's calculation of FFO represents net income available to Common Shares, excluding gains on dispositions of properties, gains on early extinguishment of debt, and write-off of unamortized costs on refinanced debt, plus depreciation on real estate assets, income allocated to Minority Interests and amortization of deferred financing costs related to the Predecessor Business. The Company's calculation of FFO may differ from the methodology for calculating FFO utilized by other REIT's and, accordingly, may not be comparable to such other REIT's. The Company's calculation of FFO for 1995 and 1994 has been restated to reflect the effects of the new definition as mentioned above. FFO for the year ended December 31, 1994 includes the effect of a one-time charge of approximately $879,000 for the relocation of the property management headquarters to Chicago. 55 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 7. OVERVIEW The following discussion and analysis of the results of operations and financial condition of the Company should be read in conjunction with "Selected Financial Data" and the historical Consolidated Financial Statements thereto appearing elsewhere in this Form 10-K. Due to the Company's ability to control the Operating Partnership, the Management Partnerships, the Financing Partnerships and the LLCs, and Merry Land DownREIT I LP, each entity has been consolidated with the Company for financial reporting purposes. Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believes", "expects" and "anticipates" and other similar expressions which are predictions of or indicate future events and trends and which do not relate solely to historical matters, identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, 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. Factors that might cause such differences include, but are not limited to, the following: . alternative sources of capital to the Company are higher than anticipated; . occupancy levels and market rents may be adversely affected by local economic and market conditions, which are beyond the Company's control; and . additional factors as discussed in Part I of this Annual Report on Form 10- K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. RESULTS OF OPERATIONS Since EQR's IPO and through December 31, 1998, the Company has acquired direct interests in 623 properties, of which six are under development (the "Acquired Properties"), containing 175,031 units in the aggregate for a total purchase price of approximately $10.4 billion, including the assumption of approximately $2.6 billion of mortgage indebtedness and $845.9 million of unsecured notes. The Company's interest in six of the Acquired Properties at the time of acquisition thereof consisted solely of ownership of the debt collateralized by such Acquired Properties. The Acquired Properties are presented in the Consolidated Financial Statements of the Company from the date of each acquisition or the closing dates of the Mergers. In addition, in August 1995, the Company made its $89 million mortgage note investment collateralized by 21 of the Additional Properties and in October 1998, the Company contributed 6 of the Additional Properties having a value of $52.7 million to six joint ventures. The following table summarizes the number of Acquired Properties and related units acquired by year: 56 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED)
Number of Number of Number of Properties Under Number of Units Under YEAR OF ACQUISITION Properties Development Units Development --------------------------------------------------------------------------------------------------- 1993 10 2,694 1994 84 26,286 1995 17 5,035 1996 49 15,665 1997 250 2 68,101 729 1998 207 4 55,143 1,378 ---------------------------------------------------------------- TOTAL ACQUIRED PROPERTIES 617 6 172,924 2,107 ================================================================
From the IPO and through December 31, 1998, the Company disposed of 38 Properties and a portion of one Property, including five properties containing 1,254 units during 1996 (the "1996 Disposed Properties"); seven properties, a portion of one property and a vacant land parcel containing 1,336 units during 1997 (the "1997 Disposed Properties"); and twenty properties containing 4,719 units during 1998 (the "1998 Disposed Properties"). The Company's overall results of operations for the three years ended December 31, 1998 have been significantly impacted by the Company's acquisition activity. The significant changes in rental revenues, property and maintenance expenses, real estate taxes and insurance, depreciation expense, property management and interest expense can all primarily be attributed to the acquisition of the Acquired Properties. The impact of the Acquired Properties is discussed in greater detail in the following paragraphs. Properties that the Company owned for all of both 1998 and 1997 (the "1998 Same Store Properties") and Properties that the Company owned for all of both 1997 and 1996 (the "1997 Same Store Properties") also impacted the Company's results of operations and are discussed as well in the following paragraphs. COMPARISON OF THE YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31, 1997 For the year ended December 31, 1998, income before gain on disposition of properties and allocation to Minority Interests increased by $79 million when compared to the year ended December 31, 1997. This increase was primarily due to increases in rental revenues net of increases in property and maintenance expenses, real estate taxes and insurance, property management expenses, depreciation expense, interest expense and general and administrative expenses. In regard to the full year 1998 Same Store Properties, which represents 63,243 units, rental income increased by approximately $23.1 million to $527.3 million or 4.59% primarily as a result of higher rental rates charged to new tenants and tenant renewals, a 1.01% increase in average economic occupancy levels and an increase in income from billing tenants for their share of utility costs. Overall, property operating expenses, which include property and maintenance, real estate taxes and insurance and an allocation of property management expenses increased approximately $5.3 million or 2.65%. This increase was primarily the result of higher compensation costs, leasing and advertising costs, utilities, and maintenance charges. 57 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Property management represents expenses associated with the self-management of the Company's Properties. These expenses increased by approximately $25.9 million primarily due to the continued expansion of the Company's property management business. The 1998 amounts include a full year effect of the various offices the Company opened in 1997, including the Scottsdale Office, which had a significant expansion resulting from the EWR Merger. During 1998, the Company opened new management offices in Jacksonville and Orlando, Florida and the Company assumed a management office in Augusta, Georgia, related to the MRY Merger. Fee and asset management revenues and fee and asset management expenses are associated with the management of properties not owned by the Company that are managed for affiliates. These net revenues decreased by $0.9 million due to the disposition of certain of these properties, resulting in the Company no longer providing fee and asset management services to such properties. Interest expense, including amortization of deferred financing costs, increased by approximately $125.5 million. This increase was primarily the result of an increase in the Company's average indebtedness outstanding which increased by $1.9 billion. However, the Company's effective interest costs decreased from 7.50% for the year ended December 31, 1997 to 7.10% for the year ended December 31, 1998. General and administrative expenses, which include corporate operating expenses, increased approximately $6.7 million between the periods under comparison. This increase was primarily due to the addition of corporate personnel in the Company's Human Resources, Accounting, Legal and Management Information Systems groups, as well as higher compensation costs, shareholder reporting costs and professional fees. However, by gaining certain economies of scale with a much larger operation these expenses as a percentage of total revenues were 1.62% for the year ended December 31, 1998 compared to 2.02% of total revenues for the year ended December 31, 1997. COMPARISON OF THE YEAR ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER 31, 1996 For the year ended December 31, 1997, income before gain on disposition of properties, extraordinary item and allocation to Minority Interests increased by $79 million when compared to the year ended December 31, 1996. This increase was primarily due to increases in rental revenues net of increases in property and maintenance expenses, real estate taxes and insurance, property management expenses, depreciation, interest expense and general and administrative expenses. All of the increases in the various line item accounts mentioned above can be primarily attributed to the 1997 Acquired Properties and 1996 Acquired Properties. These increases were partially offset by the 1997 Disposed Properties and the 1996 Disposed Properties. The increase in interest income of $7.5 million earned on the Company's mortgage note investments is primarily attributable to its $88 million mortgage note investment as well as an increase in interest income earned on its $89 million mortgage note investment. In regard to the 1997 Same Store Properties, which represents 49,805 units, rental revenues increased by approximately $11.9 million or 3.1% primarily as a result of higher rental rates charged to new tenants and tenant renewals. Overall property operating expenses which include property and maintenance, real estate taxes and insurance and an allocation of property management expenses decreased approximately $1.5 million or 0.9%. This decrease was primarily the result of lower medical and health care insurance costs, which resulted in lower payroll costs. In addition, the Company was successful in reducing its costs for leasing and advertising as well as building, maintenance and grounds costs by consolidating its vendor services in selected sub-markets in order to obtain volume pricing discounts and by consolidating its 58 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED) personnel in selected sub-markets where Properties were centrally located. With respect to the lower medical and health care insurance costs, the Company believes this is not a sustainable trend but only benefited the 1997 results. Property management represents expenses associated with the management of the Company's Properties. These expenses increased by approximately $9.3 million primarily due to the continued expansion of the Company's property management business to facilitate the management of the Company's Additional Properties. During 1997, the Company opened new management offices in Houston, Texas; Ypsilanti, Michigan; Kansas City, Kansas; Irvine, California; Minneapolis, Minnesota; Charlotte, North Carolina; and Louisville, Kentucky. In addition, the Company assumed a management office in Tulsa, Oklahoma, related to the Wellsford Merger and significantly expanded a management office in Scottsdale, Arizona related to the EWR Merger. Fee and asset management revenues and fee and asset management expenses are associated with the management of properties not owned by the Company that are managed for affiliates. These net revenues decreased by $0.6 million due to the disposition of certain of these properties, resulting in the Company no longer providing fee and asset management services to such properties. Interest expense, including amortization of deferred financing costs, increased by approximately $38.3 million. This increase was primarily the result of an increase in the Company's average indebtedness outstanding which increased by $564.5 million, primarily due to the Wellsford Merger. However, the Company's effective interest costs decreased from 7.87% in 1996 to 7.5% in 1997. General and administrative expenses, which include corporate operating expenses, increased approximately $5.2 million between the years under comparison. This increase was primarily due to adding corporate personnel, higher salary costs and shareholder reporting costs as well as an increase in professional fees. General and administrative expenses as a percentage of total revenues were 2.02% for the year ended December 31, 1997, which was a slight decrease from 2.06% in 1996. LIQUIDITY AND CAPITAL RESOURCES FOR THE YEAR ENDED DECEMBER 31, 1998 As of January 1, 1998, the Company had approximately $33.3 million of cash and cash equivalents and $265 million available on its line of credit of which $24.7 million was restricted. After taking into effect the various transactions discussed in the following paragraphs, cash and cash equivalents at December 31, 1998 were approximately $4 million and the amounts available on the Company's lines of credit were $330 million of which $12 million was restricted. The following discussion also explains the changes in net cash provided by operating activities, net cash (used for) investing activities and net cash provided by financing activities, all of which are presented in the Company's Consolidated Statements of Cash Flows. Part of the Company's strategy in funding the purchase of multifamily properties, funding its Properties in the development stage and the funding of the Company's investment in a joint venture with a multifamily real estate developer, excluding those Properties acquired through the Mergers, is to utilize its line of credit and to subsequently repay the line of credit from the issuance of additional equity or debt securities or the disposition of Properties. Utilizing this strategy during 1998 the Company: 59 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) . issued a total of approximately 8.5 million Common Shares through various offerings and received total net proceeds of $412.5 million; . issued the 2015 Notes, the August 2003 Notes and the 2000 Notes and received net proceeds of $542.3 million; . mortgaged fifteen previously unencumbered Properties and received net proceeds of $223.5 million; and . disposed of twenty properties, which generated net proceeds of approximately $177 million. All of these proceeds were utilized to either: . purchase additional properties; . provide funding for properties in the development stage; and/or . repay the lines of credit and mortgage indebtedness on certain Properties. With respect to the 1998 Acquired Properties, the Company issued 21.8 million Common Shares having a value of $1.0 billion and issued the following preferred shares having a combined liquidation value of $369.1 million: . Series H Preferred Shares; . Series I Preferred Shares; . Series J Preferred Shares; . Series K Preferred Shares; and . Series L Preferred Shares. The Company also assumed mortgage indebtedness, unsecured notes and a line of credit of approximately $1.2 billion, issued OP Units having a value of approximately $205.2 million and issued Junior Convertible Preference Units having a value of approximately $4.8 million. The cash portion of these acquisitions were primarily funded from amounts drawn on the Company's lines of credit and proceeds received in connection with the transactions mentioned in the previous paragraphs. In December 1997, the Company entered into a joint venture agreement with a multifamily residential real estate developer whereby the Company will make investments in a limited partnership to fund its portion of the project cost. During 1997 and 1998, the Company funded a total of $6.9 million and $23.9 million and during 1999 the Company expects to fund approximately $74.9 million in connection with this agreement. Subsequent to December 31, 1998, the Company has funded approximately $1 million. In addition, the Company also funded $20 million to guarantee third party construction financing and is obligated to fund up to an additional $20 million. In regards to certain other properties that were under development and/or expansion in 1998, the Company funded $31.6 million. In 1999, the Company expects to fund $53.9 million related to the continued development and/or expansion of as many as five Properties. In regards to certain properties that were under earnout/development agreements in 1998, no amounts were funded. The Company expects to fund $60.4 million related to three earnout/development projects expected to be finished during 1999. Subsequent to December 31, 1998, the Company has funded $16.2 million relating to the completion/acquisition of Copper Canyon. In addition, the Company may be required to fund an additional $1 million earnout payment to the developer for Copper Canyon if certain specified operation levels are met. 60 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) As of December 31, 1998, the Company had total indebtedness of approximately $4.7 billion, which included mortgage indebtedness of $2.3 billion (including premiums of $4.5 million), of which $878.3 million represented tax- exempt bond indebtedness, and unsecured debt of $2.3 billion (net of a $5.3 million discount), of which $35.6 million represented tax-exempt bond indebtedness. During the year, the Company repaid an aggregate of $63.8 million of mortgage indebtedness on nine of its Properties. These repayments were funded from the Company's line of credit or from proceeds received from the various capital transactions mentioned in the previous paragraphs. The Company has, from time to time, entered into interest rate protection agreements (financial instruments) to reduce the potential impact of increases in interest rates but believes it has limited exposure to the extent of non- performance by the counterparties of each protection agreement since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non-performance. No such financial instrument has been used for trading purposes. In February 1996, the Company entered into a Forward Starting Swap agreement that will hedge the Company's interest rate risk at maturity of $125 million of indebtedness. This agreement hedged the interest rate risk of the Operating Partnership's 1999 Notes by locking the effective four-year Treasury Rate commencing May 15, 1999. In August 1996, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of the Company's 2026 Notes. The agreement was for a notional amount of $150 million with a locked in treasury rate of 7.57%. In July 1997, the Company entered into two interest rate protection agreements to effectively fix the interest rate cost of the Company's 2001 Notes and 2003 Notes. One agreement was for a notional amount of $100 million with a locked in treasury rate of 6.134%. The second agreement was for a notional amount of $75 million with a locked in treasury rate of 6.287%. In April 1998, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of the Company's 2015 Notes. The agreement was for a notional amount of $300 million with a locked in treasury rate of 6.63%. In May 1998, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of the Evans Withycombe Financing Limited Partnership indebtedness to within a range of 5.6% to 6.0% upon its refinancing. The agreement was for a notional amount of $131 million with a settlement date of August 2001. There was no initial cost to the Company for entering into this agreement. In August 1998, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of the Company's planned financing in the fourth quarter of 1998. This agreement was cancelled in November at a cost of approximately $3.7 million. This cost is being amortized over the life of the financing for the 15 previously unencumbered Properties that occurred in November 1998. In August 1998, the Company entered into an interest rate swap agreement that fixed the Company's interest rate risk on a portion of the Operating Partnership's variable rate tax-exempt bond indebtedness at a rate of 3.65125%. This agreement was for a notional amount of $150 million with a termination date of August 2003. In August 1998, the Company entered into an interest rate swap agreement that fixed the 61 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) Company's interest rate risk on a portion of the Operating Partnership's variable rate tax-exempt bond indebtedness at a rate of 3.683%. This agreement was for a notional amount of $150 million with a termination date of August 2005. The fair value of these instruments, discussed above, as of December 31, 1998 approximates their carrying or contract values. The Company has a policy of capitalizing expenditures made for new assets, including newly acquired properties and the costs associated with placing these assets into service. Expenditures for improvements and renovations that significantly enhance the value of existing assets or substantially extend the useful life of an asset are also capitalized. Capital spent for replacement- type items such as appliances, draperies, carpeting and floor coverings, mechanical equipment and certain furniture and fixtures is also capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. With respect to acquired properties, the Company has determined that it generally spends $1,000 per unit during its first three years of ownership to fully improve and enhance these properties to meet the Company's standards. In regard to replacement-type items described above, the Company generally expects to spend $250 per unit on an annual recurring basis. During the year ended December 31, 1998, total capital expenditures for the Company approximated $102 million. Of this amount, approximately $34.1 million related to capital improvements and major repairs for the 1996, 1997 and 1998 Acquired Properties. Capital improvements and major repairs for all of the Company's pre-EQR IPO properties and 1993, 1994 and 1995 Acquired Properties approximated $17.1 million, or $338 per unit. Capital spent for replacement- type items approximated $39.4 million, or $257 per unit, which is in line with the Company's expected annual recurring per unit cost. Also included in total capital expenditures was approximately $11.4 million expended for non-real estate additions such as computer software, computer equipment, and furniture and fixtures and leasehold improvements for the Company's property management offices and its corporate headquarters. Such capital expenditures were primarily funded from working capital reserves and from net cash provided by operating activities. Total capital expenditures for 1999 are budgeted to be approximately $110 million for all properties or $588 per unit. Minority Interests as of December 31, 1998 increased by $158 million when compared to December 31, 1997. The primary factors that impacted this account during the year were distributions declared to Minority Interests, which amounted to $30.8 million for the year, the allocation of its income from operations in the amount of $18.5 million, the conversion of OP Units into Common Shares, the assumption of MRY's minority interest with a market value of $40.2 million, and issuances of Common Shares and OP Units during the year. Total distributions paid in 1998 amounted to $404.5 million, which included certain distributions declared in the fourth quarters of 1997 and 1998. The Company paid a $0.71 per Common Share distribution on December 31, 1998 for the quarter ended December 31, 1998 to Common Shareholders and Minority Interest holders of record as of December 20, 1998. Subsequent to December 31, 1998 and through March 12, 1999, the Company acquired five additional properties representing 1,246 units for a total purchase price of approximately $86.6 million, including the assumption of approximately $16.9 million of mortgage indebtedness. These acquisitions were primarily funded from the proceeds obtained from the sale of certain Properties in 1998 and 1999. The Company is always seeking to acquire additional multifamily properties with physical and market 62 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) characteristics similar to the Properties. Subsequent to December 31, 1998 and through March 12, 1999, the Company disposed of six Properties for a total sales price of $64 million. These proceeds will be utilized to purchase additional Properties. The Company anticipates that it will continue to sell certain Properties in the portfolio. The Company expects to meet its short-term liquidity requirements, including capital expenditures relating to maintaining its existing Properties and the funding of Properties in the development stage, generally through its working capital, net cash provided by operating activities and borrowings under its lines of credit. The Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. The Company also expects to meet its long-term liquidity requirements, such as scheduled mortgage debt maturities, reduction of outstanding amounts under its lines of credit, property acquisitions, financing of construction and development activities and capital improvements through the issuance of unsecured notes and equity securities including additional OP Units as well as from undistributed FFO and proceeds received from the disposition of certain Properties. In addition, the Company has certain uncollateralized Properties available for additional mortgage borrowings in the event that the public capital markets are unavailable to the Company or the cost of alternative sources of capital to the Company is too high. The Company has a revolving credit facility with Morgan Guaranty and Bank of America (as co-agents) to provide the Operating Partnership, with potential borrowings of up to $500 million. This credit facility matures in November 1999 and will continue to be used to fund property acquisitions and short term liquidity requirements. As of March 12, 1999, $145 million was outstanding under this facility. In connection with the MRY Merger, the Company assumed a second revolving credit facility with First Union Bank (as agent) with potential borrowings of up to $120 million. This credit facility matures in September 2000 and will also be used to fund property acquisitions, costs for certain Properties under development and short term liquidity requirements. As of March 12, 1999, $35 million was outstanding under this facility. In connection with the Wellsford Merger, the Company provided a $14.8 million credit enhancement with respect to bonds issued to finance certain public improvements at a multifamily development project. Pursuant to the terms of a Stock Purchase Agreement with Wellsford Real Properties, Inc. ("WRP Newco"), the Company will agree to purchase up to 1,000,000 shares of WRP Newco Series A Preferred at $25.00 per share over a three-year period ending on May 30, 2000. As of March 12, 1999, no shares of WRP Newco Series A Preferred had been acquired by the Company. In conjunction with the MRY Merger in October 1998, the Company entered into six joint venture agreements with MRYP Spinco, the entity spun-off in the MRY Merger. The Company contributed six properties with an initial value of $52.7 million in return for a 50% ownership interest in each joint venture. In return for the spin-off of certain assets and liabilities to MRYP Spinco, the Company received (from MRYP Spinco) a Subordinated Note receivable totaling $20 million, a preferred stock investment with an initial value of $5 million and a $25 million, one year, non-revolving Senior Note receivable. At December 31, 1998 approximately $18.3 million was outstanding on the Senior Note, bearing interest at LIBOR plus 250 basis points. The Company has a potential obligation to fund up to an additional $6.7 million under the Senior Note. 63 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 1997 As of January 1, 1997, the Company had approximately $147.3 million of cash and cash equivalents and $250 million available on its line of credit. After taking into effect the various transactions discussed in the following paragraphs, cash and cash equivalents at December 31, 1997 were approximately $33.3 million and the amounts available on the Company's line of credit were $265 million, of which $24.7 million is restricted. In addition, the Company had $6.6 million of proceeds from a property sale included in deposits- restricted. The following discussion also explains the changes in net cash provided by operating activities, net cash (used for) investing activities and net cash provided by financing activities, all of which are presented in the Company's Consolidated Statements of Cash Flows. Part of the Company's strategy in funding the purchase of multifamily properties, excluding those Properties acquired through the Mergers, is to utilize its line of credit and to subsequently repay the line of credit from the issuance of additional equity or debt securities. Utilizing this strategy during 1997 the Company: . issued a total of approximately 11.9 million Common Shares through various offerings, other than issuances in connection with the acquisitions of Properties and received total net proceeds of approximately $536.8 million; . completed the offerings of the Series D Preferred Shares and the Series G Preferred Shares and received net proceeds of approximately $473.1 million; and . issued the 2017 Notes, the 2001 Notes and the 2003 Notes and received net proceeds of approximately $345.9 million. With respect to Property acquisitions during 1997, including the effects of the Mergers, the Company purchased 252 Properties containing 68,830 units for a total purchase price of approximately $4.1 billion, including the issuances of 25.1 million Common Shares, the assumption of EWR's minority interest with a market value of approximately $107.3 million, the liquidation value of $157.5 million for the Series E Preferred Shares and Series F Preferred Shares, the assumption of mortgage indebtedness and unsecured notes of approximately $1.3 billion and issuance of OP Units with a value of approximately $5.3 million. The cash portion of these acquisitions were primarily funded from amounts drawn on the Company's line of credit and proceeds received in connection with the transactions mentioned in the previous paragraph. During the year ended December 31, 1997, the Company also disposed of seven properties, a portion of one Property and a vacant land parcel, which generated net proceeds of approximately $35.8 million. Proceeds from the dispositions were ultimately applied to purchase additional Properties. As of December 31, 1997, the Company had total indebtedness of approximately $2.9 billion, which included mortgage indebtedness of $1.6 billion (including premiums of $3.9 million), of which $723 million represented tax exempt bond indebtedness, and unsecured debt of $1.4 billion (including net discounts and premiums in the amount of $5.7 million). During the year, the Company repaid an aggregate of $113.4 million of mortgage indebtedness on 29 of its Properties. In addition, the $100 million of floating rate notes due December 22, 1997 were repaid at maturity. These repayments were funded from the Company's line of credit or from proceeds received from the various capital transactions mentioned in previous paragraphs. 64 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) During the year ended December 31, 1997, total capital expenditures for the Company approximated $60 million. Of this amount, approximately $9.5 million related to capital improvements and major repairs for certain of the 1995, 1996 and 1997 Acquired Properties. Capital improvements and major repairs for all of the Company's pre- EQR IPO properties and certain Acquired Properties approximated $19.4 million, or $217 per unit. Capital spent for replacement- type items approximated $21.4 million, or $239 per unit, which is in line with the Company's expected annual recurring per unit cost. Also included in total capital expenditures was approximately $9.7 million expended for non-real estate additions such as computer software, computer equipment, and furniture and fixtures and leasehold improvements for the Company's property management offices and its corporate headquarters. Such capital expenditures were primarily funded from working capital reserves and from net cash provided by operating activities. Minority Interests as of December 31, 1997 increased by $122.8 million when compared to December 31, 1996. The primary factors that impacted this account during the year were the assumption of the EWR minority interest having a market value of $107.3 million, distributions declared to Minority Interests, which amounted to $19.1 million for the year, the allocation of its income from operations in the amount of $13.3 million, the conversion of OP Units into Common Shares and issuances of Common Shares during the year. YEAR 2000 ISSUE The year 2000 issue ("Year 2000") is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's computer programs that have time-sensitive hardware and software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, collect rents, or engage in similar normal business activities. The Company believes that it has identified all of its information technology ("IT") and non-IT systems to assess their Year 2000 readiness. Critical systems include, but are not limited to: accounts receivable and rent collections, accounts payable and general ledger, human resources and payroll (both property and corporate levels), cash management, fixed assets, all IT hardware (such as desktop/laptop computers, data networking equipment, telephone systems, fax machines, copy machines, etc.) and software, and property environmental, health safety and security systems (such as elevators and alarm systems). The Company anticipates that previously scheduled system upgrades to many of its IT systems will remediate any existing Year 2000 problems. The Company is currently in the process of testing and implementing the majority of its Year 2000 IT and non-IT system projects with completion anticipated during the second or third quarter of 1999. The Company has estimated that the total Year 2000 project cost will approximate $1 million, of which approximately 70% has been incurred as of December 31, 1998. During the fourth quarter of 1998, the primary focus of the Year 2000 remediation efforts was on testing and implementing existing and new IT systems and on assessing the Company's exposure regarding non-IT systems at property sites. Of the remaining $300,000 budgeted to complete the Company's Year 2000 remediation project, approximately $150,000 has been allocated to engage Year 2000 consultants to help the Company monitor its IT compliance progress and to complete final IT testing and implementation. The remaining $150,000 has been allocated to remediate non-IT systems at various property sites. The estimates are based on management's best estimates, which were derived utilizing numerous assumptions of 65 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS YEAR 2000 ISSUE (CONTINUED) future events, and there can be no guarantees that these estimates will be achieved. In some cases, various third party vendors have been queried on their Year 2000 readiness. The Company continues to query its significant suppliers and vendors to determine the extent to which the Company's interface systems are vulnerable to those third parties' failure to remediate their own Year 2000 issues. To date, the Company is not aware of any significant suppliers or vendors with a Year 2000 issue that would materially impact the Company's results of operations, liquidity, or capital resources. However, there can be no assurances that the systems of other companies, on which the Company's systems rely, will be timely converted and would not have an adverse effect on the Company's systems. Management of the Company believes it has an effective program in place to resolve the Year 2000 issue in a timely manner. In addition, the Company has commenced its contingency planning for critical operational areas that might be affected by the Year 2000 issue if compliance by the Company is delayed. Aside from catastrophic failure of banks or governmental agencies, the Company believes that it could continue its normal business operations if compliance by the Company is delayed. The Company does not believe that the Year 2000 issue will materially impact its results of operations, liquidity or capital resources. FUNDS FROM OPERATIONS Commencing in 1996, the Company implemented the new definition of FFO adopted by the Board of Governors of NAREIT in March 1995. The new definition primarily eliminates the amortization of deferring financing costs and depreciation of non-real estate assets as items added back to net income when calculating FFO. The Company generally considers FFO to be one measure of the performance of real estate companies including an equity REIT. The resolution adopted by the Board of Governors of NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. The Company believes that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flows from operating activities, financing activities and investing activities, it provides investors an understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO in and of itself does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indication of the Company's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. The Company's calculation of FFO represents net income available to Common Shares, excluding gains on dispositions of properties, gains on early extinguishment of debt, and write-off of unamortized costs on refinanced debt, plus depreciation on real estate assets, income allocated to Minority Interests and amortization of deferred financing costs related to the Predecessor Business. The Company's calculation of FFO may differ from the methodology for calculating FFO utilized by other REIT's and, accordingly, may not be comparable to such other REIT's. For the year ended December 31, 1998, FFO increased $188.1 million representing a 69.5% increase when compared to the year ended December 31, 1997. For the year ended December 31, 1997, FFO increased by $110.5 million representing a 69% increase when compared to the year ended 66 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FUNDS FROM OPERATIONS (CONTINUED) December 31, 1996. The following is a reconciliation of net income available to Common Shares to FFO available to Common Shares and OP Units for the years ended December 31, 1998, 1997 and 1996 (amounts are in thousands):
---------------------------------------------------------------------------------------------------------------- Year Year Year Ended Ended Ended 12/31/98 12/31/97 12/31/96 ---------------------------------------------------------------------------------------------------------------- Net income available to Common Shares $ 165,289 $ 117,580 $ 72,609 Adjustments: Income allocated to Minority Interests 18,529 13,260 14,299 Depreciation on real estate assets* 296,691 153,526 91,174 Amortization of deferred financing costs related to predecessor business 35 235 1,075 Write-off of unamortized costs on refinanced debt -- -- 3,512 Gain on disposition of properties (21,703) (13,838) (22,402) ---------------------------------------------------------------------------------------------------------------- FFO available to Common Shares and OP Units $ 458,841 $ 270,763 $ 160,267 ----------------------------------------------------------------------------------------------------------------
* Includes $183,000 related to the Company's share of depreciation from unconsolidated joint ventures for the year ended December 31, 1998. 67 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company's future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. The Company manages its market risk by matching projected cash inflows from operating properties, financing activities and investing activities with projected cash outflows to fund debt payments, acquisitions, capital expenditures, distributions and other cash requirements. The Company also utilizes certain derivative financial instruments to limit market risk. Interest rate protection agreements are used to convert floating rate debt to a fixed rate basis. Derivatives are used for hedging purposes rather than speculation. The Company does not enter into financial instruments for trading purposes. The Company has total outstanding debt of approximately $4.7 billion at December 31, 1998, of which approximately $840 million, or 18%, is floating rate debt, including the effects of any interest rate protector agreements. If market rates of interest on the Company's floating rate debt increase by 54 basis points (a 10% increase), the increase in interest expense on the Company's floating rate debt would decrease future earnings and cash flows by approximately $4.5 million. If market rates of interest on the Company's floating rate debt decrease by 54 basis points (a 10% decrease), the decrease in interest expense on the Company's floating rate debt would increase future earnings and cash flows by approximately $4.5 million. These amounts were determined by considering the impact of hypothetical interest rates and equity prices on the Company's financial instruments. These analyses do not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in the Company's financial structure. 68 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Index to Consolidated Financial Statements on page F-1 of this Form 10- K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 69 PART III ITEMS 10, 11, 12 AND 13. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT, EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS. The information required by Item 10, Item 11, Item 12 and Item 13 are incorporated by reference to, and will be contained in, the Company's definitive proxy statement, which the Company anticipates will be filed no later than March 31, 1999, and thus these items have been omitted in accordance with General Instruction G(3) to Form 10-K. 70 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a) (1 & 2) See Index to Financial Statements and Schedules on page F-1 of this Form 10-K. (3) Exhibits: 2.1++++ Agreement and Plan of Merger by and between Equity Residential Properties Trust and Wellsford Residential Property Trust dated as of January 16, 1997 2.2# Articles of Merger by and between Equity Residential Properties Trust and Wellsford Residential Property Trust 2.3## Agreement and Plan of Merger by and between Equity Residential Properties Trust and Evans Withycombe Residential, Inc. dated as of August 27, 1997 2.4### Articles of Merger by and between Equity Residential Properties Trust and Evans Withycombe Residential, Inc. 2.5/\ Agreement and Plan of Merger and First Amendment Thereto by and between Equity Residential Properties Trust and Merry Land & Investment Company, Inc. dated as of July 8, 1998 and September 4, 1998, respectively. 2.6/\/\ Articles of Merger by and between Equity Residential Properties Trust and Merry Land & Investment Company, Inc. 3.1+++ Second Amended and Restated Declaration of Trust of Equity Residential Properties Trust dated May 30, 1997 3.2+++ Second Amended and Restated Bylaws of Equity Residential Properties Trust 4.1** Indenture, dated as of May 16, 1994, by and among the Operating Partnership, as obligor, the Company, as guarantor and The First National Bank of Chicago, as trustee in connection with 81/2% senior notes due May 15, 1999 4.2** Indenture, dated October 1, 1994, between the Operating Partnership, as obligor and The First National Bank of Chicago, as trustee in connection with up to $500 million of debt securities 10.1*** Fifth Amended and Restated Agreement of Limited Partnership of ERP Operating Limited Partnership 10.2* Agreement of Limited Partnership of Equity Residential Properties Management Limited Partnership 10.3**** Agreement of Limited Partnership of Equity Residential Properties Management Limited Partnership II 10.4* Noncompetition Agreement (Zell) 10.5* Noncompetition Agreement (Crocker) 10.6* Noncompetition Agreement (Spector) 10.7* Form of Noncompetition Agreement (other officers) 10.8* Services Agreement between Equity Residential Properties Trust and Equity Group Investments, Inc. 10.9* Form of Property Management Agreement (REIT properties) 10.10** Form of Property Management Agreement (Non-REIT properties) 10.11+ Amended and Restated Master Reimbursement Agreement, dated as of November 1, 1996 by and between Federal National Mortgage Association and EQR-Bond Partnership 10.12++ Second Amended and Restated Revolving Credit Agreement, dated as of September 9, 1997 among the Operating Partnership and Morgan Guaranty Trust Company of New York, as lead agent, Bank of America National Trust and Savings Association, as co-lead agent, The First National Bank of Chicago, as co-agent, U.S. Bank National Association f/k/a and d/b/a First Bank National Association, as co- agent and NationsBank of Texas, N.A., as co-agent 10.13#### Consulting Agreement dated August 27, 1997 between Equity Residential Properties Management Limited Partnership and Stephen O. Evans 71 PART IV 10.14#### Employment Agreement dated August 27, 1997 between Equity Residential Properties Management Limited Partnership and Richard G. Berry 10.15 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Evans Withycombe Residential, LP 12 Computation of Ratio of Earnings to Fixed Charges 21 List of Subsidiaries of Equity Residential Properties Trust 23.1 Consent of Ernst & Young LLP. 24.1 Power of Attorney for John W. Alexander dated March 12, 1999 24.2 Power of Attorney for James D. Harper, Jr. dated March 12, 1999 24.3 Power of Attorney for Errol R. Halperin dated March 12, 1999 24.4 Power of Attorney for B. Joseph White dated March 12, 1999 24.5 Power of Attorney for Henry H. Goldberg dated March 12, 1999 24.6 Power of Attorney for Edward Lowenthal dated March 12, 1999 24.7 Power of Attorney for Jeffrey H. Lynford dated March 12, 1999 24.8 Power of Attorney for Stephen O. Evans dated March 12, 1999 24.9 Power of Attorney for Boone A. Knox dated March 12, 1999 24.10 Power of Attorney for Michael N. Thompson dated March 12, 1999 _______________ * Included as an exhibit to the Company's Form S-11 Registration Statement, File No. 33-63158, and incorporated herein by reference. ** Included as an exhibit to the Operating Partnership's Form 10/A, dated December 12, 1994, File No. 0-24920, and incorporated herein by reference. *** Included as an exhibit to the Operating Partnership's Form 8-K/A dated July 23, 1998, filed on August 18, 1998. **** Included as an exhibit to the Company's Form 10-K for the year ended December 31, 1994. + Included as an exhibit to the Company's Form 10-K for the year ended December 31, 1996. ++ Included as an exhibit to the Company's Form 8-K dated September 10, 1997, filed on September 10, 1997. +++ Included as an exhibit to the Company's Form 8-K dated May 30, 1997, filed on June 5, 1997. ++++ Included as an exhibit to the Company's Form 8-K dated January 16, 1997, filed on January 17, 1997. # Included as Appendix B in the Company's Form S-4 filed on April 29, 1997. ## Included as an exhibit to the Company's Form 8-K dated August 27, 1997, filed on August 29, 1997. ### Included as Appendix B in the Company's Form S-4 filed on September 18, 1997. #### Included as an exhibit to the Company's Form S-4 filed on September 18, 1997. /\ Included as Appendix A in the Company's Form S-4 filed on September 14, 1998. /\/\ Included as Appendix B in the Company's Form S-4 filed on September 14, 1998. (b) Reports on Form 8-K: A Report on Form 8-K dated October 19, 1998, reporting the approval of and the completion of the merger between Equity Residential Properties Trust and Merry Land & Investment Company, Inc. (c) Exhibits: See Item 14(a)(3) above. (d) Financial Statement Schedules: See Index to Financial Statements attached hereto on page F-1 of this Form 10-K. 72 PART IV SIGNATURES ---------- Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized. EQUITY RESIDENTIAL PROPERTIES TRUST Date: March 12, 1999 By: /s/ Douglas Crocker II -------------- ---------------------------------- Douglas Crocker II President, Chief Executive Officer, Trustee and *Attorney-in-Fact Date: March 12, 1999 By: /s/ David J. Neithercut -------------- ---------------------------------- David J. Neithercut Executive Vice-President and Chief Financial Officer Date: March 12, 1999 By: /s/ Michael J. McHugh -------------- ---------------------------------- Michael J. McHugh Executive Vice-President, Chief Accounting Officer, Treasurer and *Attorney-in-fact Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 12, 1999 By: /s/ Samuel Zell --------------- --------------------------------- Samuel Zell Chairman of the Board of Trustees Date: March 12, 1999 By: /s/ Gerald A. Spector -------------- --------------------------------- Gerald A. Spector Executive Vice-President, Chief Operating Officer and Trustee Date: March 12, 1999 By: /s/ Sheli Z. Rosenberg -------------- --------------------------------- Sheli Z. Rosenberg Trustee 73 PART IV SIGNATURES-CONTINUED -------------------- Date: March 12, 1999 By: /s/ James D. Harper -------------- --------------------------------- James D. Harper Trustee Date: March 12, 1999 By: /s/ Errol R. Halperin -------------- --------------------------------- Errol R. Halperin Trustee Date: March 12, 1999 By: /s/ John W. Alexander -------------- --------------------------------- John W. Alexander Trustee Date: March 12, 1999 By: /s/ B. Joseph White -------------- --------------------------------- B. Joseph White Trustee Date: March 12, 1999 By: /s/ Henry H. Goldberg -------------- --------------------------------- Henry H. Goldberg Trustee Date: March 12, 1999 By: /s/ Jeffrey H. Lynford -------------- --------------------------------- Jeffrey H. Lynford Trustee Date: March 12, 1999 By: /s/ Edward Lowenthal -------------- --------------------------------- Edward Lowenthal Trustee Date: March 12, 1999 By: /s/ Stephen O. Evans -------------- --------------------------------- Stephen O. Evans Trustee Date: March 12, 1999 By: /s/ Boone A. Knox -------------- --------------------------------- Boone A. Knox Trustee Date: March 12, 1999 By: /s/ Michael N. Thompson -------------- --------------------------------- Michael N. Thompson Trustee 74 INDEX TO FINANCIAL STATEMENTS AND SCHEDULE EQUITY RESIDENTIAL PROPERTIES TRUST PAGE ---- FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT Report of Independent Auditors.............................. F-2 Consolidated Balance Sheets as of December 31, 1998 and 1997............................... F-3 Consolidated Statements of Operations for the years ended December 31, 1998, 1997 and 1996......... F-4 Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996......... F-5 to F-6 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1998, 1997 and 1996..... F-7 Notes to Consolidated Financial Statements.................. F-8 to F-52 SCHEDULE FILED AS PART OF THIS REPORT Schedule III - Real Estate and Accumulated Depreciation..... S-1 to S-12 F-1 REPORT OF INDEPENDENT AUDITORS To the Board of Trustees and Shareholders Equity Residential Properties Trust We have audited the accompanying consolidated balance sheets of Equity Residential Properties Trust (the "Company") as of December 31, 1998 and 1997 and the related consolidated statements of operations, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 1998. Our audits also included the financial statement schedule listed in the Index at Item 14(a). 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 generally accepted auditing standards. 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 Properties Trust at December 31, 1998 and 1997, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Chicago, Illinois February 17, 1999 except for Note 24, as to which the date is March 5, 1999 F-2 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS EXCEPT FOR SHARE AMOUNTS)
DECEMBER 31, DECEMBER 31, 1998 1997 ------------------- ----------------- ASSETS Investment in real estate Land $ 1,326,148 $ 791,980 Depreciable property 9,519,579 6,293,415 Construction in progress 96,336 36,040 ------------------- --------------- 10,942,063 7,121,435 Accumulated depreciation (718,491) (444,762) ------------------- --------------- Investment in real estate, net of accumulated depreciation 10,223,572 6,676,673 Real estate held for disposition 29,886 - Cash and cash equivalents 3,965 33,295 Investment in mortgage notes, net 88,041 176,063 Rents receivable 4,758 3,302 Deposits - restricted 69,339 36,374 Escrow deposits - mortgage, net 68,725 44,864 Deferred financing costs, net 27,569 23,092 Other assets 184,405 100,968 ------------------- --------------- TOTAL ASSETS $ 10,700,260 $ 7,094,631 =================== =============== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 2,341,011 $ 1,582,559 Notes, net 2,049,516 1,130,764 Lines of credit 290,000 235,000 Accounts payable and accrued expenses 100,926 67,699 Accrued interest payable 46,176 28,048 Rents received in advance and other liabilities 54,616 38,750 Security deposits 37,439 28,193 Distributions payable 18,755 20,223 ------------------- --------------- Total liabilities 4,938,439 3,131,236 ------------------- --------------- Commitments and contingencies Minority Interests 431,374 273,404 ------------------- --------------- Shareholders' equity: Preferred Shares of beneficial interest, $.01 par value; 100,000,000 shares authorized, 29,097,951 shares issued and outstanding as of December 31, 1998 and 15,343,500 shares issued and outstanding as of December 31, 1997 1,410,574 1,041,713 Common Shares of beneficial interest, $.01 par value, 350,000,000 shares authorized, 118,230,009 shares issued and outstanding as of December 31, 1998 and 89,085,265 shares issued and outstanding as of December 31, 1997 1,182 891 Paid in capital 4,169,102 2,785,661 Employee notes (4,873) (5,145) Distributions in excess of accumulated earnings (245,538) (133,129) ------------------- --------------- Total shareholders' equity 5,330,447 3,689,991 ------------------- --------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,700,260 $ 7,094,631 =================== ===============
See accompanying notes. F-3 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------- 1998 1997 1996 ----------------------------------------------------------------- REVENUES Rental income $ 1,293,560 $ 707,733 $ 454,412 Fee and asset management 5,622 5,697 6,749 Interest income - investment in mortgage notes 18,564 20,366 12,819 Interest and other income 19,703 13,525 4,405 ----------------- ----------------- ------------------ Total revenues 1,337,449 747,321 478,385 ----------------- ----------------- ------------------ EXPENSES Property and maintenance 326,567 176,075 127,172 Real estate taxes and insurance 126,009 69,520 44,128 Property management 52,705 26,793 17,512 Fee and asset management 4,207 3,364 3,837 Depreciation 301,869 156,644 93,253 Interest: Expense incurred 246,585 121,324 81,351 Amortization of deferred financing costs 2,757 2,523 4,242 General and administrative 21,718 15,064 9,857 ----------------- ----------------- ------------------ Total expenses 1,082,417 571,307 381,352 ----------------- ----------------- ------------------ Income before gain on disposition of properties, extraordinary item and allocation to Minority Interests 255,032 176,014 97,033 Gain on disposition of properties, net 21,703 13,838 22,402 ----------------- ----------------- ------------------ Income before extraordinary item and allocation to Minority Interests 276,735 189,852 119,435 Write-off of unamortized costs on refinanced debt - - (3,512) ----------------- ----------------- ------------------ Income before allocation to Minority Interests 276,735 189,852 115,923 Income allocated to Minority Interests (18,529) (13,260) (14,299) ----------------- ----------------- ------------------ Net income 258,206 176,592 101,624 Preferred distributions (92,917) (59,012) (29,015) ----------------- ----------------- ------------------ Net income available to Common Shares $ 165,289 $ 117,580 $ 72,609 ================= ================= ================== Weighted average Common Shares outstanding 100,370 65,729 42,586 ================= ================= ================== Distributions declared per Common Share outstanding $ 2.72 $ 2.55 $ 2.40 ================= ================= ================== Tax treatment of distributions (unaudited) Ordinary income $ 2.14 $ 2.24 $ 1.88 ================= ================= ================== Return of capital $ 0.52 $ 0.26 $ 0.43 ================= ================= ================== Long-term capital gain $ 0.01 $ 0.05 $ 0.09 ================= ================= ================== Unrecaptured section 1250 gain $ 0.05 $ - $ - ================= ================= ================== Net income per weighted average Common Share outstanding $ 1.65 $ 1.79 $ 1.70 ================= ================= ================== Net income per weighted average Common Share outstanding - assuming dilution $ 1.63 $ 1.76 $ 1.69 ================= ================= ==================
See accompanying notes. F-4 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS)
YEAR ENDED DECEMBER 31, -------------------------------------- 1998 1997 1996 -------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 258,206 $ 176,592 $101,624 Adjustments to reconcile net income to net cash provided by operating activities: Income allocated to Minority Interests 18,529 13,260 14,299 Depreciation 301,869 156,644 93,253 Amortization of deferred financing costs (including discounts and premiums on debt) 799 2,170 4,558 Amortization of discount on investment in mortgage notes (3,015) (3,100) (613) Gain on disposition of properties, net (21,703) (13,838) (22,402) Write-off of unamortized costs on refinanced debt - - 3,512 Changes in assets and liabilities: (Increase) in rents receivable (1,456) (1,373) (409) (Increase) in deposits - restricted (13,147) (23,183) (556) (Increase) decrease in other assets (8,787) (13,708) 158 (Decrease) increase in accounts payable and accrued expenses (3,601) 20,235 9,901 Increase in accrued interest payable 7,546 12,224 4,383 (Decrease) increase in rents received in advance and other liabilities (2,077) 12,112 3,222 ------------ ----------- ---------- Net cash provided by operating activities 533,163 338,035 210,930 ------------ ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate, net (992,348) (1,190,380) (641,015) Improvements to real estate (90,608) (50,246) (33,001) Additions to non-real estate property (11,412) (9,754) (2,347) Net proceeds from disposition of real estate 174,796 35,758 40,093 Purchase of management contract rights (119) (5,000) - (Increase) decrease in mortgage deposits (20,499) (25,521) 1,311 Deposits on real estate acquisitions (18,451) 7,946 (1,809) Decrease (increase) in investment in mortgage notes, net 2,853 (86,367) 1,171 Investment in limited partnerships (23,946) (6,900) - Costs related to Mergers (50,139) (176,908) - Other investing activities (17,503) (42,852) (58) ------------ ----------- ---------- Net cash (used for) investing activities (1,047,376) (1,550,224) (635,655) ------------ ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of Common Shares 426,058 540,010 489,139 Common Shares repurchased (94,705) - - Proceeds from sale of Preferred Shares - 491,250 115,000 Proceeds from exercise of options 14,482 4,999 4,028 Proceeds from sale of 2026 Notes - - 150,000 Proceeds from sale of 2001 Notes, net of discount - 149,684 - Proceeds from sale of 2003 Notes, net of discount - 49,916 - Proceeds from sale of 2017 Notes, net of discount - 148,703 - Proceeds from sale of 2015 Notes, net of discount 298,125 - - Proceeds from sale of August 2003 Notes, net of discount 99,650 - - Proceeds from sale of 2000 Notes, net of discount 144,452 - - Proceeds from option to remarket the 2015 Notes 8,130 - - Net proceeds from mortgage note issuance 223,491 - - Payoff MRY unsecured notes (120,000) - - Principal repayment on the Floating Rate Notes (100,000) - Redemption of Preference Units - - (1,083) Payment of offering costs (12,370) (22,470) (10,415) Distributions to Common Share and Preferred Share owners (373,767) (267,253) (121,860) Distributions to Minority Interests (30,752) (24,829) (20,444) Principal receipts on employee notes 272 269 76 Proceeds from restructuring of tax-exempt bond investments - 9,350 112,209 Repayments on line of credit (881,000) (207,500) (342,000) Proceeds from line of credit 859,000 442,500 250,000 Principal payments on mortgage notes payable (76,409) (120,546) (60,706) Loan and bond acquisition costs (7,372) (10,799) (9,111) Increase in security deposits 7,598 7,819 3,735 Other financing activities - 7,110 - ------------ ----------- ---------- Net cash provided by financing activities 484,883 1,098,213 558,568 ------------ ----------- ---------- Net (decrease) increase in cash and cash equivalents (29,330) (113,976) 133,843 Cash and cash equivalents, beginning of year 33,295 147,271 13,428 ------------ ----------- ---------- Cash and cash equivalents, end of year $ 3,965 $ 33,295 $147,271 ============ =========== ==========
See accompanying notes. F-5 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (AMOUNTS IN THOUSANDS)
YEAR ENDED DECEMBER 31, --------------------------------------------- 1998 1997 1996 --------------------------------------------- SUPPLEMENTAL INFORMATION: Cash paid during the year for interest $ 234,318 $ 109,100 $ 76,968 =========== =========== =========== Interest capitalized to real estate developments $ 1,620 $ - $ - =========== =========== =========== Mortgage loans assumed and/or entered into through acquisitions of real estate $ 459,820 $ 597,245 $ 142,237 =========== =========== =========== Net real estate contributed in exchange for Common Shares $ - $ 185,994 $ - =========== =========== =========== Net real estate contributed in exchange for OP Units or Preference Units $ 169,834 $ 5,335 $ 440 =========== =========== =========== Real estate assumed through foreclosure $ - $ - $ 10,854 =========== =========== =========== Transfers to real estate held for disposition $ 29,886 $ - $ - =========== =========== =========== Investment in mortgage notes converted to investment in real estate $ 88,184 $ - $ - =========== =========== =========== Refinancing of mortgage notes payable in favor of notes, net $ 35,600 $ - $ - =========== =========== =========== Liabilities assumed net of assets acquired through Mergers $ 42,955 $ 33,237 $ - =========== =========== =========== Mortgage loans assumed through Mergers $ 184,587 $ 333,966 $ - =========== =========== =========== Unsecured notes assumed through Mergers $ 461,956 $ 383,954 $ - =========== =========== =========== Line of credit assumed through Mergers $ 77,000 $ - $ - =========== =========== =========== Market value of Common Shares issued through Mergers $1,010,723 $ 945,312 $ - =========== =========== =========== Market value of OP Units issued through Mergers $ 40,155 $ 107,270 $ - =========== =========== =========== Liquidation value of Preferred Shares redesignated through Mergers $ 369,109 $ 157,495 $ - =========== =========== ===========
See accompanying notes. F-6 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (AMOUNTS IN THOUSANDS)
YEAR ENDED DECEMBER 31, ----------------------------------------------------- 1998 1997 1996 ----------------------------------------------------- PREFERRED SHARES Balance, beginning of year $ 1,041,713 $ 393,000 $ 278,000 Issuance of 9 1/8% Series C Cumulative Redeemable - - 115,000 Issuance of 8.60% Series D Cumulative Redeemable - 175,000 - Issuance of Series E Cumulative Convertible - 99,995 - Issuance of 9.65% Series F Cumulative Redeemable - 57,500 - Issuance of 7 1/4% Series G Convertible Cumulative - 316,250 - Issuance of 7.00% Series H Cumulative Convertible 4,124 - - Issuance of 8.82% Series I Cumulative Convertible 100,000 - - Issuance of 8.60% Series J Cumulative Convertible 114,985 - - Issuance of 8.29% Series K Cumulative Redeemable 50,000 - - Issuance of 7.625% Series L Cumulative Redeemable 100,000 - - Conversion of Series E Cumulative Convertible (38) (32) - Conversion of 7.00% Series H Cumulative Convertible (210) - - -------------- ------------ ------------- Balance, end of year $ 1,410,574 $ 1,041,713 $ 393,000 ============== ============ ============= COMMON SHARES, $.01 PAR VALUE Balance, beginning of year $ 891 $ 512 $ 350 Issuance of Common Shares through proceeds from offerings 74 159 144 Issuance of Common Shares in connection with Mergers and acquisitions 218 211 - Issuance of Common Shares through conversion of OP Units into Common Shares 7 6 16 Issuance of Common Shares through exercise of options and restricted share grants 5 2 2 Issuance of Common Shares through Share Purchase - DRIP Plan 10 - - Issuance of Common Shares through Employee Share Purchase Plan 1 1 - Common Shares repurchased (24) - - -------------- ------------ ------------- Balance, end of year $ 1,182 $ 891 $ 512 ============== ============ ============= PAID IN CAPITAL Balance, beginning of year $ 2,785,661 $ 1,147,214 $ 652,829 Issuance of Common Shares through proceeds from offerings, net 358,016 533,111 481,390 Issuance of Common Shares in connection with Mergers and acquisitions 1,010,505 1,131,095 - Issuance of Common Shares through conversion of OP Units into Common Shares 19,799 11,267 27,651 Issuance of Common Shares through exercise of options and restricted share grants 14,477 6,739 4,026 Issuance of Common Shares through Share Purchase - DRIP Plan 50,674 - - Issuance of Common Shares through Employee Share Purchase Plan 3,691 3,245 1,201 Issuance of Common Shares through Dividend Reinvestment - DRIP Plan 419 - - Issuance of Common Shares through 401(k) Plan 803 583 327 Issuance of Common Shares through conversion of Preferred Shares into Common Shares 248 32 - Common Shares repurchased (94,681) - - Offering costs associated with Preferred Shares - (18,976) (4,011) Adjustment for Minority Interests ownership in Operating Partnership 19,490 (28,649) (16,199) -------------- ------------ ------------- Balance, end of year $ 4,169,102 $ 2,785,661 $ 1,147,214 ============== ============ ============= EMPLOYEE NOTES Balance, beginning of year $ (5,145) $ (5,255) $ (5,331) Principal receipts 272 110 76 -------------- ------------ ------------- Balance, end of year $ (4,873) $ (5,145) $ (5,255) ============== ============ ============= DISTRIBUTIONS IN EXCESS OF ACCUMULATED EARNINGS Balance, beginning of year $ (133,129) $ (76,641) $ (41,331) Net income 258,206 176,592 101,624 Preferred distributions (92,917) (59,012) (29,015) Distributions on Common Shares (277,698) (174,068) (107,919) -------------- ------------ ------------- Balance, end of year $ (245,538) $ (133,129) $ (76,641) ============== ============ =============
See accompanying notes. F-7 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND FORMATION OF THE COMPANY Equity Residential Properties Trust, formed in March 1993, ("EQR"), is a self-administered and self-managed equity real estate investment trust ("REIT"). As used herein, the term "Company" means EQR, and its subsidiaries, as the survivor of the mergers between EQR and each of Wellsford Residential Property Trust ("Wellsford") (the "Wellsford Merger"), Evans Withycombe Residential, Inc. ("EWR") (the "EWR Merger") and Merry Land & Investment Company, Inc. ("MRY") (the "MRY Merger") (see Note 3). The Company has elected to be taxed as a REIT under Section 856(c) of the Internal Revenue Code 1986, as amended (the "Code"). As a result, the Company generally will not be subject to Federal income tax to the extent it distributes 95% of its taxable income to its shareholders. REIT's are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any year, its taxable income may be subject to income tax at regular corporate rates (including any applicable alternative minimum tax). Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and excise taxes on its undistributed income. The Company is engaged in the acquisition, disposition, ownership, management and operation of multifamily properties. As of December 31, 1998, the Company controlled a portfolio of 654 multifamily properties (individually a "Property" and collectively the "Properties") containing 187,002 apartment units. The Company's interest in six of these Properties at the time of acquisition thereof consisted solely of ownership of debt collateralized by such Properties. The Company also has an investment in partnership interests and subordinated mortgages collateralized by 21 properties and an investment in six joint ventures consisting of six properties (collectively, the "Additional Properties"). The Properties and Additional Properties are located throughout the United States in the following 35 states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin. The Company has formed a series of partnerships (the "Financing Partnerships") which beneficially own certain Properties encumbered by mortgage indebtedness. In general, these are structured so that ERP Operating Limited Partnership (the "Operating Partnership"), a subsidiary of EQR, owns a 1% limited partner interest and a 98% general partner interest in each with the remaining 1% general partner interest in each Financing Partnership is owned by various qualified REIT subsidiaries wholly owned by the Company (each a "QRS Corporation"). Rental income from the Properties that are beneficially owned by a Financing Partnership is used first to service the applicable mortgage debt and pay other operating expenses and any excess is then distributed 1% to the applicable QRS Corporation, as the general partner of such Financing Partnership, and 99% to the Operating Partnership, as the sole 1% limited partner and as the 98% general partner. The Company has also formed a series of limited liability companies that own certain Properties and one that has an investment in partnership interests and subordinated mortgages collateralized by 21 of the Additional Properties (collectively, the "LLCs"). The Operating Partnership is a 99% managing member of each LLC and a QRS Corporation is a 1% member of each LLC. F-8 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) As of December 31, 1998, 700 Properties were managed by either Equity Residential Properties Management Limited Partnership, the successor to the multifamily residential management services (the "Management Business") contributed by Equity Properties Management Corp. ("EPMC") contemporaneously with the Company's initial public offering (the "EQR IPO"), or Equity Residential Properties Management Limited Partnership II (collectively, the "Management Partnerships"). The Management Partnerships collect a property management fee consistent with a reasonable arms-length charge for the performance of such services. The sole general partner of the Management Partnerships with a 1% interest is the Operating Partnership. The sole limited partners of the Management Partnerships are Equity Residential Properties Management Corp. ("Management Corp.") and Equity Residential Properties Management Corp. II ("Management Corp. II"), respectively, and each has a 99% interest in the respective partnership. 2. BASIS OF PRESENTATION The Wellsford Merger, the EWR Merger and the MRY Merger (collectively, the "Mergers") were treated as purchases in accordance with Accounting Principles Board Opinion No. 16. The fair value of the consideration given by the Company in the Mergers was used as the valuation basis for each of the combinations. The assets acquired and the liabilities assumed of Wellsford were recorded at their relative fair values as of May 30, 1997 (the "Wellsford Closing Date"). The assets acquired and the liabilities assumed of EWR were recorded at their relative fair values as of December 23, 1997 (the "EWR Closing Date"). The assets acquired and the liabilities assumed of MRY were recorded at their relative fair values as of October 19, 1998 (the "MRY Closing Date"). The accompanying consolidated statements of operations and cash flows include the results of the Properties purchased through the Mergers from their respective closing dates. Due to the Company's ability as general partner to control either through ownership or by contract the Operating Partnership, the Management Partnerships, the Financing Partnerships, the LLCs and Merry Land DownREIT I LP, each such entity has been consolidated with the Company for financial reporting purposes. In regard to Management Corp., Management Corp. II, Evans Withycombe Management, Inc. and ML Services, Inc., the Company does not have legal control; however, these entities are consolidated for financial reporting purposes, the effects of which are immaterial. Certain reclassifications have been made to the prior year's financial statements in order to conform to the current year presentation. 3. BUSINESS COMBINATIONS In connection with the Wellsford Merger each outstanding common share of beneficial interest of Wellsford was converted into .625 of a Common Share of the Company. In addition, Wellsford's Series A Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 3,999,800 Series E Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series E Preferred Shares") and Wellsford's Series B Cumulative Redeemable Preferred Shares of Beneficial Interest were redesignated as the Company's 2,300,000 9.65% Series F Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series F Preferred Shares"). On the Wellsford Closing Date, 72 Properties containing 19,004 units and other related assets were acquired for a total purchase price of approximately $1 billion. The purchase price consisted of 10.8 million common shares of beneficial interest, $.01 par value per share ("Common Shares") issued by the Company with a market value of $443.7 million, the liquidation value of $157.5 million for the Series E Preferred Shares and the Series F Preferred Shares, the assumption of mortgage indebtedness and unsecured notes in F-9 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) the amount of $345 million, the assumption of other liabilities of approximately $33.5 million and other merger related costs of approximately $23.4 million. On the EWR Closing Date, 53 Properties containing 15,331 units and three Properties under construction or expansion containing 953 units and other related assets were acquired for a total purchase price of approximately $1.2 billion. In connection with the EWR Merger, as of the EWR Closing Date, each outstanding common share of beneficial interest of EWR was converted into .50 of a Common Share of the Company. The purchase price consisted of 10.3 million Common Shares issued by the Company with a total market value of approximately $501.6 million, the assumption of EWR's minority interest with a market value of approximately $107.3 million, the assumption of mortgage indebtedness and unsecured notes in the amount of $498 million, the assumption of other liabilities of approximately $28.2 million and other EWR Merger related costs of approximately $16.7 million. In connection with the MRY Merger, each outstanding common share of beneficial interest of MRY was converted into 0.53 of a Common Share of the Company. In addition, MRY spun-off certain assets and liabilities to Merry Land Properties, Inc. ("MRYP Spinco"). As partial consideration for the transfer, the Company extended a $25 million, one year, non-revolving Senior Debt Agreement to MRYP Spinco. At December 31, 1998, approximately $18.3 million was outstanding, bearing interest at LIBOR plus 250 basis points. In addition, MRY Series A Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 164,951 Series H Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series H Preferred Shares"), the MRY Series B Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 4,000,000 Series I Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series I Preferred Shares"), the MRY Series C Cumulative Convertible Preferred Shares of Beneficial Interest were redesignated as the Company's 4,599,400 Series J Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series J Preferred Shares"), the MRY Series D Cumulative Redeemable Preferred Shares of Beneficial Interest were redesignated as the Company's 1,000,000 Series K Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series K Preferred Shares") and the MRY Series E Cumulative Redeemable Preferred Shares of Beneficial Interest were redesignated as the Company's 4,000,000 Series L Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the "Series L Preferred Shares"). On the MRY Closing Date, 108 Properties containing 32,315 units, four Properties under construction or expansion expected to contain 1,378 units, six Additional Properties that represent an investment in six joint ventures containing 1,297 units and other related assets were acquired for a total purchase price of approximately $2.2 billion. The purchase price consisted of 21.8 million Common Shares issued by the Company with a market value of $1 billion, the assumption of MRY's minority interest with a market value of approximately $40.2 million, the liquidation value of $369.1 million for the Series H Preferred Shares, the Series I Preferred Shares, the Series J Preferred Shares, the Series K Preferred Shares and the Series L Preferred Shares, the assumption of mortgage indebtedness, unsecured notes and a line of credit in the amount of $723.5 million, the assumption of other liabilities of approximately $46.5 million and other merger related costs of approximately $52 million. All of the amounts stated in the previous paragraphs are based on management's current best estimates, which are subject to adjustment within one year of the respective closing dates. F-10 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 4. SHAREHOLDERS' EQUITY AND MINORITY INTERESTS In January 1996, the Company completed an offering of 1,725,000 registered Common Shares, which were sold at a net price of $29.375 per share (the "January 1996 Common Share Offering") and received net proceeds of approximately $50.7 million in connection therewith. Also in January 1996, the Company filed with the SEC a Form S-3 Registration Statement to register 1,676,423 Common Shares which may be sold by the holders thereof or by holders of partnership interests ("OP Units") upon the issuance of Common Shares in exchange for such OP Units. In February 1996, the Company completed an offering of 2,300,000 registered Common Shares, which were sold at a net price of $29.50 per share (the "February 1996 Common Share Offering") and received net proceeds of approximately $67.8 million in connection therewith. On May 21, 1996, the Company completed an offering of 2,300,000 publicly registered Common Shares, which were sold at a net price of $30.50 per share. On May 28, 1996, the Company completed the sale of 73,287 publicly registered Common Shares to employees of the Company and to employees of Equity Group Investments, Inc. and certain of its subsidiaries ("EGI") and certain of their respective affiliates and consultants at a net price equal to $30.50 per share. On May 30, 1996, the Company completed an offering of 1,264,400 publicly registered Common Shares, which were sold at a net price of $30.75 per share. The Company received net proceeds of approximately $111.3 million in connection with the sale of the 3,637,687 Common Shares mentioned above (collectively, the "May 1996 Common Share Offerings"). On June 26, 1996, the Company filed with the SEC a Form S-3 Registration Statement to register 608,665 Common Shares which may be issued by the Company to holders of 608,665 OP Units. The SEC declared this Registration effective on September 6, 1996. On September 18, 1996, the Company filed with the SEC a Form S-3 Registration Statement to register $500 million of equity securities (the "1996 Equity Shelf Registration"). The SEC declared this Registration effective on September 23, 1996. In September 1996, the Company completed the sale of 2,272,728 publicly registered Common Shares, which were sold at a net price of $33 per share. The Company received net proceeds of approximately $75 million in connection with this offering (the "September 1996 Common Share Offering"). On September 27, 1996, the Company filed with the SEC a Form S-3 Registration Statement to register 1,182,835 Common Shares which may be issued by the Company to holders of 1,182,835 OP Units. The SEC declared this Registration effective on October 3, 1996. In December 1996, the Company completed offerings of 4,440,000 publicly registered Common Shares, which were sold to the public at a price of $41.25 per share (the "December 1996 Common Share Offerings"). The Company received net proceeds of approximately $177.4 million in connection therewith. In March 1997, the Company completed three separate public offerings relating to an aggregate of 1,921,000 publicly registered Common Shares, which were sold to the public at a price of $46 per share (the "March 1997 Common Share Offerings"). The Company received net proceeds of approximately $88.3 million therefrom. F-11 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) On May 14, 1997, the Company filed with the SEC a Form S-3 Registration Statement to register $500 million of equity securities (the "June 1997 Equity Shelf Registration"). The SEC declared this registration statement effective on June 5, 1997. In June 1997, the Company completed five separate public offerings comprising an aggregate of 8,992,023 publicly registered Common Shares, which were sold to the public at prices ranging from $44.06 to $45.88 per share (the "June 1997 Common Share Offerings"). The Company received net proceeds of approximately $398.9 million therefrom. On July 28, 1997, the Company filed with the SEC a Form S-3 Registration Statement to register $750 million of equity securities (the "August 1997 Equity Shelf Registration"). The SEC declared this registration statement effective on August 4, 1997. In September 1997, the Company completed the sale of 498,000 publicly registered Common Shares, which were sold to the public at a price of $51.125 per share. The Company received net proceeds of approximately $24.2 million in connection with this offering (the "September 1997 Common Share Offering"). In October 1997, in connection with the acquisition of a portfolio of Properties, the Company issued 3,315,500 publicly registered Common Shares, which were issued at a price of $45.25 per share with a value of approximately $150 million (the "October 1997 Common Share Offering"). On November 3, 1997, the Company filed with the SEC a Form S-3 Registration Statement to register 7,000,000 Common Shares pursuant to a Distribution Reinvestment and Share Purchase Plan. This registration statement was declared effective on November 25, 1997. The Distribution Reinvestment and Share Purchase Plan (the "DRIP Plan") of the Company provides holders of record and beneficial owners of Common Shares, Preferred Shares, and limited partnership interests in the Operating Partnership 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 the Company, 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"). On December 11, 1997, in connection with the acquisition of one Property, the Company issued 736,296 publicly registered Common Shares, which were issued at a price of $48.85 per share with a value of approximately $36 million. On December 23, 1997, the Company completed an offering of 467,722 publicly registered Common Shares, which were sold to the public at a price of $51.3125 per share and received net proceeds of approximately $22.8 million in connection therewith. The sale of the 1,204,018 Common Shares mentioned above is collectively, the "December 1997 Common Share Offerings". During 1998, the Company issued 93,521 Common Shares pursuant to the Employee Share Purchase Plan and received net proceeds of approximately $3.7 million. During 1998, the Company issued 1,023,184 Common Shares pursuant to the Share Purchase DRIP Plan and received net proceeds of approximately $50.7 million. F-12 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) On January 27, 1998, the Company completed an offering of 4,000,000 publicly registered Common Shares, which were sold to the public at a price of $50.4375 per share (the "January 1998 Common Share Offering"). The Company received net proceeds of approximately $195.3 million in connection therewith. On February 3, 1998, the Company filed with the SEC a Form S-3 Registration Statement to register $1 billion of equity securities. The SEC declared this registration statement effective on February 27, 1998. On February 18, 1998, the Company completed offerings of 988,340 publicly registered Common Shares, which were sold to the public at a price of $50.625 per share. On February 23, 1998, the Company completed an offering of 1,000,000 publicly registered Common Shares, which were sold to the public at a price of $48 per share. The Company received net proceeds from these offerings (collectively, the "February 1998 Common Share Offerings") of approximately $95 million. On March 30, 1998, the Company completed an offering of 495,663 publicly registered Common Shares, which were sold at a price of $47.9156 per share (the "March 1998 Common Share Offering"). The Company received net proceeds of approximately $23.7 million in connection therewith. On April 29, 1998, the Company completed an offering of 946,565 publicly registered Common Shares, which were sold at a price of $46.5459 per share (the "April 1998 Common Share Offering"). The Company received net proceeds of approximately $44.1 million in connection therewith. On September 20, 1998, the Company completed its repurchase of 2,367,400 of its Common Shares of beneficial interest, on the open market, for an average price of $40 per share. The purchases were made between August 5 and September 17, 1998. The Company paid approximately $94.7 million in connection therewith. These shares were subsequently retired. The following table presents the changes in the Company's issued and outstanding Common Shares for the years ended December 31, 1998, 1997 and 1996 (excluding OP Units and Junior Convertible Preference Units of 13,286,555, 9,592,590 and 7,858,228 outstanding at December 31, 1998, 1997 and 1996, respectively): F-13 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------------- 1998 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Common Shares outstanding at January 1, 89,085,265 51,154,836 35,011,715 Common Shares Issued: - -------------------- January 1998 Common Share Offering 4,000,000 -- -- February 1998 Common Share Offerings 1,988,340 -- -- March 1998 Common Share Offering 495,663 -- -- April 1998 Common Share Offering 946,565 -- -- Conversion of MRY common shares 21,801,612 -- -- March 1997 Common Share Offerings -- 1,921,000 -- June 1997 Common Share Offerings -- 8,992,023 -- September 1997 Common Share Offering -- 498,000 -- October 1997 Common Share Offering -- 3,315,500 -- December 1997 Common Share Offerings -- 1,204,018 -- Conversion of Wellsford common shares -- 10,823,016 -- Conversion of EWR common shares -- 10,288,583 -- Conversion of Series E Preferred Shares 834 723 -- Conversion of Series H Preferred Shares 6,078 -- -- January 1996 Common Share Offering -- -- 1,725,000 February 1996 Common Share Offering -- -- 2,300,000 May 1996 Common Share Offerings -- -- 3,637,687 September 1996 Common Share Offering -- -- 2,272,728 December 1996 Common Share Offerings -- -- 4,440,000 Employee Share Purchase Plan 93,521 84,183 39,458 Dividend Reinvestment - DRIP Plan 10,230 -- -- Share Purchase - DRIP Plan 1,023,184 -- -- Exercise of options 431,174 180,138 150,840 Restricted share grants 59,060 28,246 21,879 Conversion of OP Units 640,337 582,185 1,545,866 Profit-sharing contribution/401(k) Plan 15,980 13,140 10,001 Common Shares Other: - ------------------- Common Shares repurchased (2,367,400) -- -- Common Shares other (434) (326) (338) - --------------------------------------------------------------------------------------------------------------------------- COMMON SHARES OUTSTANDING AT DECEMBER 31, 118,230,009 89,085,265 51,154,836 - ---------------------------------------------------------------------------------------------------------------------------
Assuming conversion of all OP Units and Junior Convertible Preference Units, total Common Shares outstanding at December 31, 1998 would have been 131,516,564. As of December 31, 1998, the Minority Interests held 13,286,555 OP Units, which includes units held by minority interest owners in Merry Land Down REIT I LP, which were converted to 180,585 OP Units subsequent to December 31, 1998. This amount represented a 10.10% interest in the Operating Partnership. As of December 31, 1997, the Minority Interests held 9,592,590 OP Units, which represented a 9.72% interest in the Operating Partnership The Company paid a $0.67, $0.67, $0.67 and $0.71 per Common Share distribution on April 10, July 10, October 9 and December 31, 1998, respectively, for the quarters ended March 31, June 30, September 30 and December 31, 1998, to Common Share holders of record on March 27, June 26, September 16 and December 20, 1998, respectively. F-14 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The declaration of trust of the Company provides that the Company may issue up to 100,000,000 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. Under certain circumstances, the issuance of Preferred Shares may require shareholder approval pursuant to the rules and the regulations of the New York Stock Exchange. In June 1995, the Company sold 6,120,000 of its 9 3/8% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (liquidation preference $25 per share) (the "Series A Preferred Shares"). The net proceeds of approximately $148.2 million from the Series A Preferred Share Offering were contributed by the Company to the Operating Partnership in exchange for 6,120,000 of the Operating Partnership's 9 3/8% Series A cumulative redeemable preference units. The Series A Preferred Shares are cumulative from the date of original issue and distributions are payable quarterly on or about the fifteenth day of January, April, July and October of each year, at the annual rate of 9 3/8% of the liquidation preference of $25 per share. The Series A Preferred Shares are not redeemable prior to June 1, 2000. On or after June 1, 2000, the Preferred Shares may be redeemed for cash at the option of the Company in whole or in part, at a redemption price of $25 per share, plus accrued and unpaid distributions, if any, thereon. In November 1995, the Company sold 5,000,000 depositary shares (the "Series B Depositary Shares"). Each Series B Depositary Share represents a 1/10 fractional interest in a 9 1/8% Series B Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par value per share (the "Series B Preferred Shares"). The liquidation preference of each of the Series B Preferred Shares is $250.00 (equivalent to $25 per Series B Depositary Share). The net proceeds of approximately $121 million from the Series B Preferred Share Offering were contributed by the Company to the Operating Partnership in exchange for 500,000 of the Operating Partnership's 9 1/8% Series B cumulative redeemable preference units. The Series B Preferred Shares are cumulative from the date of original issue and distributions are payable quarterly on or about the fifteenth day of January, April, July and October of each year, commencing on January 15, 1996, at the annual rate of 9 1/8% of the liquidation preference of $25 per Series B Depositary Share. The Series B Preferred Shares are not redeemable prior to October 15, 2005. On and after October 15, 2005, the Series B Preferred Shares may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $250 per share (equivalent to $25 per Series B Depositary Share), plus accrued and unpaid distributions, if any, thereon. In September 1996 the Company sold 4,600,000 depositary shares (the "Series C Depositary Shares"). Each Series C Depositary Share represents a 1/10 fractional interest in a 9 1/8% Series C Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par value per share (the "Series C Preferred Shares"). The liquidation preference of each of the Series C Preferred Shares is $250.00 (equivalent to $25 per Series C Depositary Share). The Company raised gross proceeds of $115 million from this offering (the "Series C Preferred Share Offering"). The Company contributed the net proceeds of approximately $111.4 million from the Series C Preferred Share Offering to the Operating Partnership in exchange for 460,000 of the Operating Partnership's 9 1/8% Series C cumulative redeemable preference units. The Series C Preferred Shares are cumulative from the date of original issue and distributions are payable quarterly on or about the fifteenth day of January, April, July and October of each year, commencing on October 15, 1996, at the annual rate of 9 1/8% of the liquidation preference of $25 per Series C Depositary Share. The Series C Preferred Shares are not redeemable prior to September 9, 2006. On and after September 9, 2006, the Series C Preferred Shares may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $250 per share (equivalent to $25 per Series C Depositary Share), plus accrued and unpaid distributions, if any, thereon. F-15 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In May 1997, the Company sold 7,000,000 depositary shares (the "Series D Depositary Shares"). Each Series D Depositary Share represents a 1/10 fractional interest in a 8.60% Series D Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par value per share (the "Series D Preferred Shares"). The liquidation preference of each of the Series D Preferred shares is $250.00 (equivalent to $25 per Series D Depositary Share). The Company received net proceeds of approximately $169.5 million from this offering (the "Series D Preferred Share Offering"). The Company contributed the net proceeds of approximately $169.5 million from the Series D Preferred Share Offering to the Operating Partnership in exchange for 700,000 of the Operating Partnership's 8.60% Series D cumulative redeemable preference units. The Series D Preferred Shares are cumulative from the date of original issue and distributions are payable quarterly on or about the fifteenth day of January, April, July and October of each year, commencing on July 15, 1997, at the annual rate of 8.60% of the liquidation preference of $25 per Series D Depositary Share. The Series E Preferred Shares are cumulative and distributions are payable quarterly on January 1, April 1, July 1 and October 1 in an amount equal to $1.75 per share per annum. Each Series E Preferred Share is convertible at the option of the holder thereof at any time into Common Shares at a conversion price of $44.93 per Common Share (equivalent to a conversion rate of approximately .5564 Common Share for each Series E Preferred Share). The Series E Preferred Shares are not redeemable prior to November 1, 1998. On and after November 1, 1998, the Series E Preferred Shares may be redeemed at the option of the Company, in whole or in part, initially at $25.875 per share and thereafter at prices declining to $25.00 per share on and after November 1, 2003, plus accrued and unpaid distributions, if any, thereon. During 1997, 1,300 of the Series E Preferred Shares were converted into 723 Common Shares of the Company. During 1998, 1,500 of the Series E Preferred Shares were converted into 834 Common Shares of the Company. The Series F Preferred Shares are cumulative and distributions are payable quarterly on or about the fifteenth day of January, April, July and October of each year at the rate of 9.65% of the liquidation preference of $25 per share. The Series F Preferred Shares are not redeemable prior to August 24, 2000. On or after August 24, 2000, the Series F Preferred Shares may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $25.00 per share, plus accrued and unpaid distributions, if any, thereon. In September 1997, the Company sold 11,000,000 depositary shares (the "Series G Depositary Shares"). Each Series G Depositary Share represents a 1/10 fractional interest in a 7 1/4% Series G Convertible Cumulative Preferred Share of Beneficial Interest, $0.01 par value per share (the "Series G Preferred Shares"). Series G Depositary Shares representing Series G Preferred Shares are convertible at the option of the holder thereof at any time into Common Shares at a conversion price of $58.58 per Common Share (equivalent to a conversion rate of approximately .4268 Common Shares for each Series G Depositary Share). The liquidation preference of each of the Series G Preferred Shares is $250.00 per share (equivalent to $25 per Series G Depositary Share). The Company received net proceeds of approximately $264 million from this offering (the "Series G Preferred Share Offering"). In addition, in October 1997, the Company sold 1,650,000 additional Series G Depositary Shares pursuant to an over- allotment option granted to the underwriters and received net proceeds of approximately $39.6 million therefrom. The Company contributed the net proceeds of approximately $303.6 million from the Series G Preferred Share Offering to the Operating Partnership in exchange for 1,265,000 of the Operating Partnership's 7 1/4% Series G convertible cumulative preference units. The Series G Preferred Shares are cumulative from the date of original issue and distributions are payable quarterly on or about the fifteenth day of January, April, July and October of each year, commencing on October 15, 1997, at the annual rate of 7 1/4% of the liquidation preference of $25 per Series G Depositary Share. The Series G Preferred Shares are not redeemable prior to September 15, 2002. On and after September 15, 2002, the Series G Preferred Shares may be redeemed at the option of the Company, in whole or in part, initially at $25.90625 per Depositary Share and thereafter at prices declining to $25.00 per Depositary Share on and after September 15, 2007, plus in each case accrued and unpaid distributions, if any, to the redemption date. The Series H Preferred Shares are cumulative and distributions are payable quarterly in arrears on the last day of March, June, September and December of each year in an amount equivalent to $1.75 per annum per share. Each Series H Preferred Share is convertible at the option of the holder thereof at any time into Common Shares at a conversion price of $34.53 per Common Share (equivalent to a conversion rate of approximately .7240 Common Share for each Series H Preferred Share). The Series H Preferred Shares may be redeemed, in whole or in part, at the option of the Company for Common Shares only, provided the Common Shares F-16 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) are trading above $34.53 (subject to adjustment in certain circumstances). During 1998, 8,400 of the Series H Preferred Shares were converted into 6,078 Common Shares of the Company. The Series I Preferred Shares are cumulative and distributions are payable quarterly in arrears on the last day of March, June, September and December of each year in an amount equivalent to $2.205 per annum per share. Each Series I Preferred Share is convertible at the option of the holder thereof at any time into Common Shares at a conversion price of $38.96 per Common Share (equivalent to a conversion rate of approximately .6417 Common Share for each Series I Preferred Share). The Series I Preferred Shares are not redeemable prior to October 31, 1999. On or after October 31, 1999, the Series I Preferred Shares may be redeemed, in whole or in part, at the option of the Company for Common Shares only, provided the Common Shares are trading above $38.96 (subject to adjustment in certain circumstances). The Series J Preferred Shares are cumulative and distributions are payable quarterly in arrears on the last day of March, June, September and December of each year in an amount equivalent to $2.15 per annum per share. Each Series J Preferred Share is convertible at the option of the holder thereof at any time into Common Shares at a conversion price of $40.74 per Common Share (equivalent to a conversion rate of approximately .6136 Common Share for each Series J Preferred Share). The Series J Preferred Shares are not redeemable prior to March 31, 2000. On or after March 31, 2000, the Series J Preferred Shares may be redeemed, in whole or in part, at the option of the Company for Common Shares only, provided the Common Shares are trading above $40.74 (subject to adjustment in certain circumstances). The Series K Preferred Shares are cumulative and distributions are payable quarterly on the last day of March, June, September and December of each year at the rate of 8.29% of the liquidation preference per annum (equivalent to $4.145 per annum per share). The Series K Preferred Shares are not redeemable prior to December 10, 2026. On or after December 10, 2026, the Series K Preferred Shares may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $50.00 per share, plus accrued and unpaid distributions, if any, thereon. The Series L Preferred Shares are cumulative and distributions are payable quarterly on the last day of March, June, September and December of each year at the rate of 7.625% of the liquidation preference per annum (equivalent to $1.906 per annum per share). The Series L Preferred Shares are not redeemable prior to February 13, 2003. On or after February 13, 2003, the Series L Preferred Shares may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $25.00 per share, plus accrued and unpaid distributions, if any, thereon. The following table presents the Company's issued and outstanding Preferred Shares as of December 31, 1998 and 1997: F-17 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
---------------------------------------------------------------------------------------------------------------- 1998 1997 ---------------------------------------------------------------------------------------------------------------- Preferred Shares of beneficial interest, $.01 par value; 100,000,000 shares authorized: 9 3/8% Series A Cumulative Redeemable Preferred $ 153,000 $ 153,000 $25 per share, 6,120,000 shares issued and outstanding at December 31, 1998 and 1997 9 1/8% Series B Cumulative Redeemable Preferred 125,000 125,000 $250 per share, 500,000 shares issued and outstanding at December 31, 1998 and 1997 9 1/8% Series C Cumulative Redeemable Preferred 115,000 115,000 $250 per share, 460,000 shares issued and outstanding at December 31, 1998 and 1997 8.60% Series D Cumulative Redeemable Preferred 175,000 175,000 $250 per share, 700,000 shares issued and outstanding at December 31, 1998 and 1997 Series E Cumulative Convertible Preferred 99,925 99,963 $25 per share, 3,997,000 and 3,998,500 shares issued and outstanding at December 31, 1998 and 1997, respectively 9.65% Series F Cumulative Redeemable Preferred 57,500 57,500 $25 per share, 2,300,000 shares issued and outstanding at December 31, 1998 and 1997 7 1/4% Series G Convertible Cumulative Preferred 316,250 316,250 $250 per share, 1,265,000 shares issued and outstanding at December 31, 1998 and 1997 7.00% Series H Cumulative Convertible Preferred 3,914 - $25 per share, 156,551 shares issued and outstanding at December 31, 1998 8.82% Series I Cumulative Convertible Preferred 100,000 - $25 per share, 4,000,000 shares issued and outstanding at December 31, 1998 8.60% Series J Cumulative Convertible Preferred 114,985 - $25 per share, 4,599,400 shares issued and outstanding at December 31, 1998 8.29% Series K Cumulative Redeemable Preferred 50,000 - $50 per share, 1,000,000 shares issued and outstanding at December 31, 1998 7.625% Series L Cumulative Redeemable Preferred 100,000 - $25 per share, 4,000,000 shares issued and outstanding at December 31, 1998 ---------------------------------------------------------------------------------------------------------------- Preferred Shares outstanding at December 31, $ 1,410,574 $ 1,041,713 ----------------------------------------------------------------------------------------------------------------
Net proceeds from the Company's Common Share offerings are contributed by the Company to the Operating Partnership in return for an increased ownership percentage and are treated as capital transactions in the Company's Consolidated Financial Statements. As a result, the net offering proceeds are allocated between shareholders' equity and the equity position of the limited partners of the Operating Partnership (collectively, the "Minority Interests") (to the extent represented by OP Units), to account for the change in their respective percentage ownership of the underlying equity of the Operating Partnership. F-18 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table summarizes the distributions paid to Preferred Share and Depositary Share holders related to the year ended December 31, 1998:
For the Dividend Amount Date Paid Quarter or Period ended Record Date - ----------------------------------------------------------------------------------------------------------- Series A Preferred Share holders $0.5859380 04/15/98 03/31/98 03/27/98 0.5859370 07/15/98 06/30/98 06/26/98 0.5859380 10/15/98 09/30/98 09/16/98 0.5859370 01/15/99 12/31/98 12/20/98 Series B Depositary Share holders $0.5703130 04/15/98 03/31/98 03/27/98 0.5703120 07/15/98 06/30/98 06/26/98 0.5703130 10/15/98 09/30/98 09/16/98 0.5703120 01/15/99 12/31/98 12/20/98 Series C Depositary Share holders $0.5703130 04/15/98 03/31/98 03/27/98 0.5703120 07/15/98 06/30/98 06/26/98 0.5703130 10/15/98 09/30/98 09/16/98 0.5703120 01/15/99 12/31/98 12/20/98 Series D Depositary Share holders $0.5375000 04/15/98 03/31/98 03/27/98 0.5375000 07/15/98 06/30/98 06/26/98 0.5375000 10/15/98 09/30/98 09/16/98 0.5375000 01/15/99 12/31/98 12/20/98 Series E Preferred Share holders $0.4375000 04/01/98 03/31/98 03/13/98 0.4375000 07/01/98 06/30/98 06/15/98 0.4375000 10/01/98 09/30/98 09/16/98 0.4375000 01/04/99 12/31/98 12/20/98 Series F Preferred Share holders $0.6031250 04/15/98 03/31/98 03/27/98 0.6031250 07/15/98 06/30/98 06/26/98 0.6031250 10/15/98 09/30/98 09/16/98 0.6031250 01/15/99 12/31/98 12/20/98 Series G Depositary Share holders $0.4531250 04/15/98 03/31/98 03/27/98 0.4531250 07/15/98 06/30/98 06/26/98 0.4531250 10/15/98 09/30/98 09/16/98 0.4531250 01/15/99 12/31/98 12/20/98 Series H Preferred Share holders $0.4375000 12/31/98 12/31/98 12/20/98 Series I Preferred Share holders $0.5512500 12/31/98 12/31/98 12/20/98 Series J Preferred Share holders $0.5375000 12/31/98 12/31/98 12/20/98 Series K Preferred Share holders $1.0362500 12/31/98 12/31/98 12/20/98 Series L Preferred Share holders $0.4765625 12/31/98 12/31/98 12/20/98
F-19 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Real estate assets and depreciation Real Estate is recorded at cost less accumulated depreciation less an adjustment, if any, for impairment. For rental properties to be disposed of, an impairment loss is recognized when the fair value of the real estate, less the estimated cost to sell, is less than the carrying amount of the real estate measured at the time the Company has a commitment to sell the property and/or is actively marketing the property for sale. Real estate to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Depreciation is not recorded during the period in which assets are held for disposal. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The Company uses a 30-year estimated life for buildings, a ten-year estimated life for land improvements and up to a seven-year estimated life for furniture, fixtures and equipment. 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. Initial direct leasing costs are expensed as incurred and 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 and sufficient consideration has been received by the Company. Upon disposition, the related costs and accumulated deprecation are removed from the respective accounts. Any gain or loss on sale or disposition is recognized in accordance with generally accepted accounting principles. The Company classifies Properties under development and/or expansion and lease-up properties as construction-in-progress until construction on the apartment community has been completed and all certificates of occupancy permits have been obtained. The Company also classifies land relating to construction- in-progress as land on its balance sheet. Land associated with construction-in- progress was $19.4 million and $8.3 million as of December 31, 1998 and 1997, respectively. (b) 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 each institution periodically 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 their non- performance. (c) Deferred Financing Costs Deferred financing costs include fees and costs incurred to obtain the Company's lines of credit, long-term financing and costs for certain interest rate protection agreements. 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 $8.2 million and $4.2 million at December 31, 1998 and 1997, respectively. F-20 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (d) Interest Rate Protection Agreements The Company from time to time enters into interest rate protection agreements to effectively convert floating rate debt to a fixed rate basis, as well as to hedge anticipated financing transactions. Net amounts paid or received under these agreements are recognized as an adjustment to interest expense when such amounts are incurred or earned. Settlement amounts paid or received in connection with terminated interest rate protection agreements are deferred and amortized over the remaining term of the related financing transaction on the straight-line method. The Company believes it has limited exposure to the extent of non-performance by the counterparties of each protection agreement since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non-performance. (e) Derivative Instruments and Hedging Activities In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("Statement No. 133"). Statement No. 133 requires recording all derivative instruments as assets or liabilities, measured at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Statement No. 133 is effective for fiscal years beginning after June 15, 1999. The Company is planning to adopt Statement No. 133 effective January 1, 2000 and does not anticipate that the adoption will have a material impact on the Company's financial condition and results of operations. (f) Fair Value of Financial Instruments The fair values of the Company's financial instruments, including cash and cash equivalents, and mortgage notes payable, other notes payable, lines of credit and other financial instruments, approximate their carrying or contract values. With respect to the Company's investment in mortgage notes, the fair value as of December 31, 1998 and 1997 was estimated to be approximately $91.8 million and $184.8 million, respectively, compared to the Company's carrying value of $88 million and $176.1 million, respectively. The estimated fair value of the Company's investment in mortgage notes represents the estimated net present value based on the expected future property level cash flows and an estimated current market discount rate. (g) Revenue Recognition Rental income attributable to leases is recorded when due from tenants and is recognized monthly as it is earned, which is not materially different than on a straight-line basis. Interest income is recorded on an accrual basis. (h) Lease Agreements The majority of the leases entered into between a tenant and a Property for the rental of an apartment unit are year-to-year, renewable upon consent of both parties on a year-to-year or month-to-month basis. F-21 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (i) Income Taxes Due to the structure of the Company as a REIT and the nature of the operations of the Properties and Management Business, the results of operations contain no provision for Federal income taxes. However, the Company is subject to certain state and local income, excise or franchise taxes. The aggregate cost of land and depreciable property for Federal income tax purposes as of December 31, 1998 and 1997 was approximately $9.1 billion and $6.2 billion, respectively. (j) Minority Interests Net income is allocated to the Minority Interests based on their respective ownership percentage of the Operating Partnership. Ownership percentage is represented by dividing the number of OP Units held by the Minority Interests by the total OP Units held by Minority Interests and EQR. Issuance of additional Common Shares or OP Units changes the ownership interests of both the Minority Interests and EQR. Such transactions and the proceeds therefrom are treated as capital transactions and result in an allocation between shareholders' equity and Minority Interests to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership. (k) Use of Estimates In preparation of the Company's financial statements in conformity with generally accepted accounting principles, 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. (l) Reportable Segments During the fourth quarter of 1998, the Company adopted Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("Statement No. 131"). Statement No. 131 superseded FASB Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise ("Statement No. 14"). Statement No. 131 establishes standards for the way that public business enterprises report information regarding reportable operating segments. The adoption of Statement No. 131 did not affect the Company's results of operations or financial position. The Company has one primary reportable business segment, which consists of investment in rental real estate. The Company's primary business is owning, managing and operating multifamily residential properties which includes the generation of rental and other related income through the leasing of apartment units to tenants. The Company also has a segment for corporate level activity including such items as interest income earned on short-term investments, interest income earned on investment in mortgage notes, general and administrative expenses, and interest expense on mortgage notes payable and unsecured note issuances. In addition, the Company has a segment for third party management activity that is immaterial and does not meet the threshold requirements of Statement No. 131 as a reportable segment. The Company evaluates performance and allocates resources primarily based on the rental and other income generated from each property less property and maintenance expenses, real estate taxes and insurance, and property management expenses, which is considered net operating income ("NOI"). However, all other segment measurements are disclosed in the Company's consolidated financial statements, and accordingly the accounting policies of the reportable segments are the same as those described elsewhere in the Summary of Significant Accounting Policies. The Company also considers funds from operations ("FFO") to be a primary measure of the performance of real estate companies including an equity REIT. The Company believes that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flows from operating activities, financing activities and investing activities, it provides investors an F-22 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO in and of itself does not represent cash generated from operating activities in accordance with generally accepted accounting principles ("GAAP") and therefore should not be considered an alternative to net income as an indication of the Company's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. The Company's calculation of FFO represents net income available to Common Shares, excluding gains on dispositions of properties, gains on early extinguishment of debt, and write-off of unamortized costs on refinanced debt, plus depreciation on real estate assets, income allocated to Minority Interests and amortization of deferred financing costs related to the predecessor business. The Company's calculation of FFO may differ from the methodology for calculating FFO utilized by other REIT's and, accordingly, may not be comparable to such other REIT's. All revenues are from external customers and no revenues are generated from transactions with other segments. There are no tenants who contributed 10% or more of the Company's total revenues during 1998, 1997 or 1996. Interest expense on debt is not allocated to individual Properties, even if the Properties secure such debt. Further, minority interest in consolidated subsidiaries is not allocated to the Properties. There is no provision for income taxes as the Company is organized as a REIT under the Internal Revenue Code. 6. REAL ESTATE The following table summarizes the carrying amounts for investment in real estate as of December 31, 1998 and 1997 (Amounts are in thousands):
------------------------------------------------------------------------------------ 1998 1997 ------------------------------------------------------------------------------------ Land $ 1,326,148 $ 791,980 Buildings and Improvements 9,186,220 6,060,779 Furniture, Fixtures and Equipment 333,359 232,636 Construction in Progress 96,336 36,040 ------------------------------------------------------------------------------------ Real Estate 10,942,063 7,121,435 Accumulated Depreciation (718,491) (444,762) ------------------------------------------------------------------------------------ Real Estate, net $10,223,572 $6,676,673 ------------------------------------------------------------------------------------
F-23 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table summarizes the carrying amounts for the real estate held for disposition as of December 31, 1998 and 1997 (Amounts are in thousands):
------------------------------------------------------------------------ 1998 1997 ------------------------------------------------------------------------ Land $ 4,189 $ -- Buildings and Improvements 35,620 -- Furniture, Fixtures and Equipment 4,389 -- Construction in Progress -- -- ------------------------------------------------------------------------ Real Estate 44,198 -- Accumulated Depreciation (14,312) -- ------------------------------------------------------------------------ Real Estate Held for Disposition $ 29,886 $ -- ------------------------------------------------------------------------
In addition to the MRY Merger, during the year ended December 31, 1998, the Company acquired the 99 Properties listed below, of which 96 were acquired from unaffiliated third parties and 3 were acquired from an affiliated party. In connection with certain of the acquisitions listed below, the Company assumed and/or entered into mortgage indebtedness of approximately $459.8 million, issued OP Units having a value of approximately $165 million and issued Junior Convertible Preference Units having a value of approximately $4.8 million. The cash portion of these transactions was funded primarily from proceeds raised from the various capital transactions as discussed in Note 4 of the Notes to Consolidated Financial Statements, the various debt offerings as discussed in Note 13 of the Notes to Consolidated Financial Statements, the Company's line of credit, proceeds received from the disposition of certain Properties and working capital.
--------------------------------------------------------------------------------------------------------------- Total Date Number Acquisition Acquired Property Location of Units Cost (in thousands) --------------------------------------------------------------------------------------------------------------- 01/07/98 Cityscape St. Louis Park, MN 156 $12,469 01/09/98 740 River Drive St. Paul, MN 162 13,181 01/13/98 Prospect Towers Hackensack, NJ 157 36,399 01/16/98 Park Place Houston, TX 229 13,612 01/16/98 Park Westend Richmond, VA 312 13,453 01/29/98 Emerald Bay at Winter Park Winter Park, FL 432 15,984 02/05/98 Farnham Park Houston, TX 216 15,811 02/25/98 Plantation Houston, TX 232 10,322 02/27/98 Balcones Club Austin, TX 312 12,556 03/02/98 Coach Lantern Scarborough, ME 90 4,917 03/02/98 Foxcroft Scarborough, ME 104 5,094 03/02/98 Yarmouth Woods Yarmouth, ME 138 6,862 03/20/98 Rolido Parque Houston, TX 369 11,070 03/26/98 The Fairfield Stamford, CT 263 46,018 03/26/98 Trails of Valley Ranch Irving, TX 216 10,868 04/01/98 Sonterra at Foothill Ranch Foothill Ranch, CA 300 31,590 04/01/98 Harbor Pointe Milwaukee, WI 595 25,566 04/01/98 Gates at Carlson Center Minnetonka, MN 435 28,296 04/01/98 GlenGarry Club Bloomingdale, IL 250 19,278 04/01/98 Plum Tree I II III Hales Corners, WI 332 22,466 04/01/98 Ravinia Greenfield, WI 206 13,445 ---------------------------------------------------------------------------------------------------------------
F-24 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------------------------------------- Total Date Number Acquisition Acquired Property Location of Units Cost (in thousands) --------------------------------------------------------------------------------------------------------------- 04/01/98 The Woodlands of Brookfield Brookfield, WI 148 15,572 04/07/98 Vista Pointe at the Valley Irving, TX 231 19,167 04/23/98 Emerson Place Boston, MA 462 72,520 05/13/98 Sierra Canyon Santa Clarita, CA 232 16,465 05/14/98 Northridge Pleasant Hill, CA 221 20,329 05/22/98 The Arboretum Canton, MA 156 15,721 05/28/98 Woodridge Eagan, MN 200 12,097 05/28/98 Townhomes of Meadowbrook Auburn Hills, MI 230 13,851 06/01/98 Brookside Boulder, CO 144 13,811 06/10/98 The Greystone Atlanta, GA 150 7,501 06/11/98 Coconut Palm Club Coconut Creek, FL 300 20,782 06/11/98 Portside Towers Jersey City, NJ 527 119,302 06/16/98 Defoor Village Atlanta, GA 156 13,543 06/16/98 Plantation Ridge Marietta, GA 454 23,652 06/18/98 Wynbrook Norcross, GA 318 13,643 06/24/98 Cross Creek Matthews, NC 420 23,530 06/26/98 Copper Hill Bedford, TX 204 7,068 06/26/98 Walker's Mark Dallas, TX 164 7,055 06/26/98 Royal Crest Estates Waterbury, CT 156 7,350 06/26/98 Tyrone Gardens Randolph, MA 165 10,771 07/01/98 Trowbridge Atlanta, GA 210 12,033 07/01/98 Bellevue Meadows Bellevue, WA 180 17,153 07/01/98 Chelsea Square Redmond, WA 113 12,733 07/01/98 Olde Redmond Place Redmond, WA 192 18,985 07/01/98 Surry Downs Bellevue, WA 122 10,948 07/01/98 Woodlake Kirkland, WA 288 23,476 07/01/98 Bramblewood San Jose, CA 108 14,883 07/01/98 Creekside San Mateo, CA 192 30,890 07/01/98 Grandview I & II Las Vegas, NV 456 18,040 07/01/98 Lincoln Green I & II Sunnyvale, CA 174 27,586 07/01/98 Lincoln Village I & II Larkspur, CA 342 48,637 07/01/98 Mountain Shadows Las Vegas, NV 300 9,413 07/01/98 Parkside Union City, CA 208 18,399 07/01/98 Summerwood Hayward, CA 162 11,857 07/01/98 Timberwood Aurora, CO 336 16,354 07/01/98 Turf Club Littleton, CO 324 17,921 07/01/98 Willowick Aurora, CO 100 4,734 07/01/98 Woodleaf Campbell, CA 178 25,605 07/08/98 Parkcrest Southfield, MI 210 11,704 07/08/98 Broadway Garland, TX 288 9,334 07/08/98 Cedar Ridge Townhomes Arlington, TX 121 4,865 07/08/98 Fielder Crossing Arlington, TX 119 4,668 07/08/98 Lakeshore at Preston Plano, TX 302 18,584 07/08/98 Lakewood Greens Dallas, TX 252 11,085 07/08/98 River Park Fort Worth, TX 280 11,107 ---------------------------------------------------------------------------------------------------------------
F-25 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------------------------------------- Total Date Number Acquisition Acquired Property Location of Units Cost (in thousands) --------------------------------------------------------------------------------------------------------------- 07/08/98 Villas of Josey Ranch Carrollton, TX 198 8,877 07/08/98 Wimbledon Oaks Arlington, TX 248 10,359 07/08/98 Pleasant Ridge Arlington, TX 63 2,451 07/08/98 Sandstone Euless, TX 40 1,846 07/09/98 Woodridge I Aurora, CO 212 8,693 07/09/98 Woodridge II Aurora, CO 116 4,756 07/09/98 Woodridge III Aurora, CO 256 10,497 07/09/98 Southwood Palo Alto, CA 99 21,340 07/10/98 Martins Landing Roswell, GA 300 17,809 07/10/98 The Lakes at Vinings Atlanta, GA 464 28,370 07/14/98 Summer Creek Plymouth, MN 72 4,467 07/15/98 Patchen Oaks Lexington, KY 192 9,541 07/15/98 Lexington Village Alpharetta, GA 352 24,607 07/15/98 Overlook Manor I Frederick, MD 108 5,236 07/15/98 Overlook Manor II Frederick, MD 182 8,491 07/15/98 Overlook Manor III Frederick, MD 64 4,063 07/15/98 Brookside II Frederick, MD 204 9,494 07/16/98 Coachman Trails Plymouth, MN 154 10,807 07/21/98 Colony Woods Birmingham, AL 414 23,504 07/22/98 Arbors at Century Center Memphis, TN 420 17,821 07/31/98 Briarwood Sunnyvale, CA 192 32,273 07/31/98 Skylark Union City, CA 174 18,389 07/31/98 Greenhaven Union City, CA 250 22,727 07/31/98 Alderwood Park Lynnwood , WA 188 11,914 08/05/98 Fernbrook Townhomes Plymouth, MN 72 7,255 08/14/98 North Creek Everett, WA 264 16,436 08/21/98 Esprit Del Sol Solana Beach, CA 146 17,054 09/25/98 Smoketree Polo Club Indio, CA 288 7,846 09/29/98 Georgian Woods I Wheaton, MD 97 5,751 09/29/98 Georgian Woods III Wheaton, MD 102 6,021 12/01/98 Portland Center Portland, OR 525 49,597 12/11/98 Hall Place Quincy, MA 90 8,267 12/22/98 Scarborough Square Rockville, MD 121 9,026 --------------------------------------------------------------------------------------------------------------- 22,768 $1,679,566 ---------------------------------------------------------------------------------------------------------------
During 1997, the Company acquired 124 Properties, excluding the Wellsford Merger and the EWR Merger, for a total acquisition cost of $1.98 billion. Each Property was purchased from an unaffiliated third party, except for 12 of the Properties, which were purchased from certain affiliates of the Company, including Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership ("Zell/Merrill I") and subsidiaries of Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership II ("Zell/Merrill II"). The total purchase price for the Properties acquired from Zell/Merrill I and Zell/Merrill II was approximately $162.2 million. In connection with these acquisitions, the Company assumed mortgage indebtedness of approximately $597.2 million and issued OP Units and Common Shares having a value of approximately $191.3 million. F-26 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 7. INVESTMENT IN LIMITED PARTNERSHIPS In December 1997, the Company entered into a joint venture agreement with a multifamily residential real estate developer whereby the Company will make investments in limited partnerships to fund a portion of the total project development cost of new multifamily developments in certain of the Company's target markets (the "Joint Venture Agreement"). During the years ended December 31, 1998 and 1997, the Company has funded approximately $23.9 million and $6.9 million, respectively, in connection with this agreement. The amounts invested are included in other assets on the balance sheet. For additional information see Notes 15 and 20. 8. REAL ESTATE DISPOSITIONS During 1998, the Company disposed of the properties listed below. Each property was sold to an unaffiliated third party. The Company recognized a net gain of approximately $21.7 million on the disposition of these twenty Properties.
---------------------------------------------------------------------------------------------------------------- Disposition Date Number Price (in Disposed Property Location Of Units thousands) ---------------------------------------------------------------------------------------------------------------- 03/12/98 Mountain Brook/Ridgemont Chattanooga, TN 506 $16,700 05/01/98 The Place Fort Myers, FL 230 8,500 05/15/98 Terraces at Peachtree Atlanta, GA 96 7,225 06/02/98 Stonelake Club Ocala, FL 240 8,680 07/31/98 Country Club I & II Silver Springs, MD 376 20,750 09/04/98 Miramonte Scottsdale, AZ 151 9,500 09/30/98 Gold Pointe Tacoma, WA 84 5,700 10/06/98 Windridge Lakewood, WA 80 3,400 10/07/98 Augusta Oklahoma City, OK 197 8,536 10/07/98 Heritage Park Oklahoma City, OK 452 12,996 10/07/98 Invitational Oklahoma City, OK 344 11,299 10/07/98 Raindance Oklahoma City, OK 504 11,214 10/07/98 Windrush Oklahoma City, OK 160 5,805 10/29/98 Newport Cove Henderson, NV 140 8,485 12/09/98 Eastland on the Lake Columbus, OH 376 7,400 12/10/98 Mountain Shadows Las Vegas, NV 300 10,125 12/14/98 Marina Club Fort Worth, TX 387 13,802 12/14/98 Whitedove Point Kent, WA 96 6,916 ---------------------------------------------------------------------------------------------------------------- 4,719 $177,033 ----------------------------------------------------------------------------------------------------------------
During 1997, the Company received sales proceeds of $36.5 million and recognized a total gain of approximately $13.8 million on the disposition of seven Properties, the portion of one Property and a vacant land parcel. 9. CALCULATION OF NET INCOME PER WEIGHTED AVERAGE COMMON SHARE The following tables sets forth the computation of net income per weighted average Common Share outstanding and net income per weighted average Common Share outstanding - assuming dilution. F-27 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 ------------------------------------------------------ (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) NUMERATOR: Income before gain on disposition of properties, net, extraordinary item, allocation of income to Minority Interests and preferred distributions $ 255,032 $ 176,014 $ 97,033 Allocation of income to Minority Interests (18,529) (13,260) (14,299) Distributions to preferred shareholders (92,917) (59,012) (29,015) ------------ ------------ ---------- Income before gain on disposition of properties, net and extraordinary item 143,586 103,742 53,719 Gain on disposition of properties, net 21,703 13,838 22,402 Extraordinary item - - (3,512) ------------ ------------ ---------- Numerator for net income per weighted average Common Share outstanding 165,289 117,580 72,609 Effect of dilutive securities: Allocation of income to Minority Interests 18,529 13,260 14,299 ------------ ------------ ---------- Numerator for net income per weighted average Common Share outstanding - assuming dilution $ 183,818 $ 130,840 $ 86,908 ============ ============ ========== DENOMINATOR: Denominator for net income per weighted average Common Share outstanding 100,370 65,729 42,586 Effect of dilutive securities: Contingent incremental employee share options 865 1,099 412 OP Units 11,343 7,453 8,104 ------------ ------------ ---------- Denominator for net income per weighted average Common Share outstanding - assuming dilution 112,578 74,281 51,102 ============ ============ ========== Net income per weighted average Common Share outstanding $ 1.65 $ 1.79 $ 1.70 ============ ============ ========== Net income per weighted average Common Share outstanding - assuming dilution $ 1.63 $ 1.76 $ 1.69 ============ ============= ==========
F-28 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, ------------------------------------------------ 1998 1997 1996 ------------------------------------------------ (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) NET INCOME PER WEIGHTED AVERAGE COMMON SHARE OUTSTANDING: Income before gain on disposition of properties, net and extraordinary item per weighted average Common Share outstanding $ 1.43 $ 1.58 $ 1.26 Gain on disposition of properties, net 0.22 0.21 0.52 Extraordinary item - - (0.08) ------ ------ ------ Net income per weighted average Common Share outstanding $ 1.65 $ 1.79 $ 1.70 ====== ====== ====== NET INCOME WEIGHTED AVERAGE COMMON SHARE OUTSTANDING - ASSUMING DILUTION: Income before gain on disposition of properties, net and extraordinary item per weighted average Common Share outstanding - assuming dilution $ 1.42 $ 1.55 $ 1.25 Gain on disposition of properties, net 0.21 0.21 0.52 Extraordinary item - - (0.08) ------ ------ ------ Net income per weighted average Common Share outstanding - assuming dilution $ 1.63 $ 1.76 $ 1.69 ====== ====== ======
For additional disclosures regarding the employee share options, see Note 17. Convertible Preferred Shares that could be converted into 8,739,688 and 2,763,898 weighted shares of Common Shares were outstanding at December 31, 1998 and 1997, respectively, but were not included in the computation of diluted earnings per share because the effects would be anti-dilutive. F-29 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10. INVESTMENT IN MORTGAGE NOTES, NET In 1995, the Company made an $89 million investment in partnership interests and subordinated mortgages collateralized by 21 of the Additional Properties. These 21 Additional Properties consist of 3,896 units, located in California, Colorado, New Mexico and Oklahoma. This included an $87.1 million investment in second and third mortgages (net of an original discount of approximately $12.7 million to their face amount), $1.6 million represented a one time payment for an interest rate protection agreement and $0.3 million represented an investment for primarily a 49.5% limited partnership interest in the title-holding entities. As the Company does not control the general partners of the title-holding entities and substantially all of the Company's investment is in second and third mortgages (which are subordinate to first mortgages owned by third party unaffiliated entities), the $87.1 million investment is accounted for as an investment in mortgage notes. The $1.6 million payment made for the interest rate protection agreement is included in deferred financing costs and is being amortized over the term of the related debt. The investment in limited partnership interests is accounted for under the equity method and is included in other assets on the balance sheet. As of December 31, 1998 and 1997, the second mortgage notes had a combined principal balance of approximately $21.7 million and $25.5 million, respectively, and currently accrue interest at a rate of 9.45% per annum, receive principal amortization from excess cash flow and have a stated maturity date of December 31, 2019. As of December 31, 1998 and 1997, the third mortgage notes had a combined principal balance of approximately $71.1 million and $71.1 million, respectively, and currently accrue interest at a rate of 6.15% per annum, plus up to an additional 3% per annum to the extent of available cash flow. Contingent interest on the third mortgage notes is recognized to the extent it is received. The third mortgage notes have a stated maturity of December 31, 2024. Receipt of principal and interest on the second and third mortgage notes is subordinated to the receipt of all interest on the first mortgage notes. With respect to the discount on these notes, the unamortized balance at December 31, 1998 and 1997 was $6 million and $9 million, respectively. During 1998, 1997 and 1996, the Company amortized $3 million, $3.1 million and $0.6 million, respectively, which is included in interest income- investment in mortgage notes in the consolidated statements of operations. This discount is being amortized utilizing the effective yield method based on the expected life of the investment. On April 28, 1997, the Company made an $88 million investment in six mortgage loans collateralized by five multifamily properties. On April 1, 1998, the Company purchased these five multifamily Properties and no longer has an investment in the mortgage loans, but has assumed $50 million in debt in connection with this acquisition. These five Properties are no longer included in the Additional Properties, but are now included in the Properties. 11. MORTGAGE NOTES PAYABLE As of December 31, 1998, the Company had outstanding mortgage indebtedness of approximately $2.3 billion encumbering 216 of the Properties. The carrying value of such Properties (net of accumulated depreciation of $250 million) was approximately $3.8 billion. The mortgage notes payables are generally due in monthly installments of principal and interest. In connection with the Properties acquired during the year ended December 31, 1998, including the effects of the MRY Merger, the Company assumed the outstanding mortgage balances on 58 Properties in the aggregate amount of $608.9 million, which includes a premium of approximately $1.5 million recorded in connection with the MRY Merger. As of December 31, 1998, scheduled maturities for the Company's outstanding mortgage indebtedness are at various dates through October 1, 2033. During the year ended December 31, 1998, the F-30 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) effective interest cost calculated for all the Company's debt was 7.10%. During the year ended December 31, 1998, the Company repaid the outstanding mortgage balances on nine Properties in the aggregate amount of $63.8 million. Aggregate payments of principal on mortgage notes payable for each of the next five years and thereafter are as follows:
------------------------------------------------------ Year Total ------------------------------------------------------ (in thousands) 1999 $ 25,489 2000 52,304 2001 249,754 2002 225,221 2003 83,003 Thereafter 1,700,744 Net Unamortized Premiums 4,496 ------------------------------------------------------ Total $2,341,011 ------------------------------------------------------
As of December 31, 1997, the Company had outstanding mortgage indebtedness of approximately $1.6 billion encumbering 152 of the Properties. The carrying value of such Properties (net of accumulated depreciation of $145.1 million) was approximately $2.6 billion. The mortgage notes payables are generally due in monthly installments of principal and interest. In connection with the Properties acquired during the year ended December 31, 1997, including the effects of the Mergers, the Company assumed the outstanding mortgage balances on 90 Properties in the aggregate amount of $931 million, which includes a premium of approximately $3.9 million recorded in connection with the EWR Merger. During the year ended December 31, 1997, the effective interest cost calculated for all the Company's debt was 7.5%. During the year ended December 31, 1997, the Company repaid the outstanding mortgage balances on 29 Properties in the aggregate amount of $113.4 million. The Company has, from time to time, entered into interest rate protection agreements (financial instruments) to reduce the potential impact of increases in interest rates but believes it has limited exposure to the extent of non- performance by the counterparties of each protection agreement since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non-performance. No such financial instrument has been used for trading purposes. During 1996 the Company terminated two interest rate protection agreements that were initially entered into in connection with two mortgage loans with notional amounts totaling $64.2 million. These two agreements effectively converted these two mortgage loans to fixed rate instruments based on the London Interbank Offered Rate ("LIBOR"). Upon the termination of these agreements the Company received settlement payments of approximately $230,000. Concurrent with the refinancing of certain tax-exempt bonds and as a requirement of the credit provider of the bonds, the Financing Partnership, which owns certain of the Properties, entered into interest rate protection agreements, which were assigned to the credit provider as additional security. The Financing Partnership pays interest based on a fixed interest rate and the counterparty of the agreement pays interest to the Company at a floating rate that is calculated based on the Public Securities Association Index for F-31 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) municipal bonds ("PSA Municipal Index"). As of December 31, 1998 and 1997, the aggregate notional amounts of these agreements were approximately $172.1 million and $174.3 million, respectively. The fixed interest rates for these agreements were 4.81%, 4.528% and 4.90%. The termination dates are October 1, 2003, January 1, 2004 and April 1, 2004. The Company simultaneously entered into substantially identical reverse interest rate protection agreements. Under these agreements the Company pays interest monthly at a floating rate based on the PSA Municipal Index and the counterparty pays interest to the Company based on a fixed interest rate. As of December 31, 1998 and 1997, the aggregate notional amount of these agreements was approximately $172.1 million and $174.3 million, respectively. The fixed interest rates received by the Company in exchange for paying interest based on the PSA Municipal Index for these agreements were 4.74%, 4.458% and 4.83%. The termination dates are October 1, 2003, January 1, 2004 and April 1, 2004. Collectively, these agreements effectively cost the Company 0.07% per annum on the current outstanding aggregate notional amount. The Company also has an interest rate swap agreement for a notional amount of $228 million, for which it will receive payments if the PSA index exceeds 5.75%, that terminates on December 1, 1999. Any payments by the counterparty under this agreement have been collaterally assigned to the provider of certain sureties related to the tax-exempt bonds secured by certain of its Properties. The Company has no payment obligations to the counterparty with respect to this agreement. In May 1998, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of the Evans Withycombe Financing Limited Partnership indebtedness to within a range of 5.6% to 6.0% upon its refinancing. The agreement was for a notional amount of $131 million with a settlement date of August 2001. There was no initial cost to the Company for entering into this agreement. In August 1998, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of the Company's planned financing in the fourth quarter of 1998. This agreement was cancelled in November at a cost of approximately $3.7 million. This cost is being amortized over the life of the financing for the fifteen previously unencumbered Properties that occurred in November 1998. In August 1998, the Company entered into an interest rate swap agreement that fixed the Company's interest rate risk on a portion of the Operating Partnership's variable rate tax-exempt bond indebtedness at a rate of 3.65125%. This agreement was for a notional amount of $150 million with a termination date of August 2003. In August 1998, the Company entered into an interest rate swap agreement that fixed the Company's interest rate risk on a portion of the Operating Partnership's variable rate tax-exempt bond indebtedness at a rate of 3.683%. This agreement was for a notional amount of $150 million with a termination date of August 2005. The Company believes that it has limited exposure to the extent of non- performance by the counterparties of the agreements, mentioned in the previous paragraphs, since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non-performance. The fair value of these instruments, discussed above, as of December 31, 1998 approximates their carrying or contract values. F-32 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 12. LINES OF CREDIT The Company has a revolving credit facility with Morgan Guaranty Trust Company of New York ("Morgan Guaranty") and Bank of America Illinois ("Bank of America") as co-agents to provide the Operating Partnership with potential borrowings of up to $500 million. This credit facility matures in November 1999 and borrowings generally will bear interest at a per annum rate of one, two, three or six month LIBOR, plus a certain spread dependent upon the Company's credit rating, which spread is currently at 0.45%, and is subject to an annual facility fee of $750,000. As of December 31, 1998 and 1997, $245 million and $235 million of borrowings were outstanding on this credit facility, bearing interest at a weighted average rate of 6.04% and 6.46%, respectively. In connection with the MRY Merger, the Company assumed an additional credit facility with First Union Bank (as agent) with potential borrowings of up to $120 million. This revolving credit facility matures in September 2000 and borrowings generally will bear interest at a per annum rate of LIBOR, plus a certain spread dependent upon the Company's credit rating, which spread is currently at 0.50%, and is subject to an annual facility fee of $120,000. As of December 31, 1998, $45 million was outstanding under this facility, bearing interest at a weighted average rate of 5.74%. 13. NOTES On May 16, 1994, the Operating Partnership issued $125 million of unsecured senior notes (the "1999 Notes") in a private placement (the "Debt Offering") to qualified institutional buyers. The 1999 Notes were issued at a discount, which is being amortized over the life of the 1999 Notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized discount balance was $65,156 and $0.2 million, respectively. The 1999 Notes are due May 15, 1999 and bear interest at a rate of 8.5%, which is payable semiannually in arrears on May 15 and November 15. In February 1996 the Company entered into an interest rate protection agreement that hedged the interest rate risk of the 1999 Notes by locking the effective four-year Treasury Rate, commencing May 15, 1999. There was no current cost to the Company for entering into this agreement. In December 1994, the Operating Partnership registered $500 million in debt securities pursuant to a debt shelf registration statement (the "Debt Shelf Registration") of which $100 million of unsecured floating rate notes (the "Floating Rate Notes") were issued by the Operating Partnership on December 22, 1994 (the "Public Debt Offering"). The Floating Rate Notes were repaid at maturity on December 22, 1997. In April 1995, the Operating Partnership issued $125 million of unsecured fixed rate notes (the "2002 Notes") in a public debt offering (the "Second Public Debt Offering"). The 2002 Notes were issued at a discount, which is being amortized over the life of the 2002 Notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized discount balance was approximately $0.5 million and $0.6 million, respectively. The 2002 Notes are due on April 15, 2002 and bear interest at 7.95%, which is payable semiannually on each October 15 and April 15. Prior to the issuance of the 2002 Notes, the Operating Partnership entered into an interest rate protection agreement to effectively fix the interest rate cost of such issuance. The Operating Partnership made a one-time settlement payment of this protection transaction, which was approximately $0.8 million and is being amortized over the term of the 2002 Notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized balance of this cost was approximately $0.4 million and $0.5 million, respectively. F-33 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In August 1996, the Operating Partnership issued $150 million of unsecured fixed rate notes (the "2026 Notes") in a public debt offering (the "Third Public Debt Offering"). The 2026 Notes are due on August 15, 2026 and bear interest at 7.57%, which is payable semiannually in arrears on February 15 and August 15, commencing February 15, 1997. The 2026 Notes are redeemable at any time after August 15, 2006 by the Operating Partnership pursuant to the terms thereof. Prior to the issuance of the 2026 Notes, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of this issuance to 7.5%. The Operating Partnership received a one-time settlement payment from this transaction, which was approximately $0.6 million, which amount is being amortized over ten years on a straight-line basis. As of December 31, 1998 and 1997, the unamortized balance was approximately $0.4 million and $0.5 million, respectively. In October 1997, the Operating Partnership issued $150 million of unsecured fixed rate notes (the "2017 Notes") in a public debt offering (the "Fourth Public Debt Offering"). The 2017 Notes were issued at a discount, which is being amortized over the life of the 2017 Notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized discount balance was approximately $1.2 million and $1.2 million, respectively. The 2017 Notes are due on October 15, 2017 and bear interest at 7.125%, which is payable semiannually in arrears on April 15 and October 15, commencing April 15, 1998. The 2017 Notes are redeemable at any time by the Operating Partnership pursuant to the terms thereof. In November 1997, the Operating Partnership issued $200 million of unsecured fixed rate notes in a public debt offering (the "Fifth Public Debt Offering"). Of the $200 million issued, $150 million of these notes are due November 15, 2001 (the "2001 Notes") and bear interest at a rate of 6.55%, which is payable semiannually in arrears on May 15 and November 15, commencing on May 15, 1998. The remaining $50 million of these notes are due November 15, 2003 (the "2003 Notes") and bear interest at a rate of 6.65%, which is payable semiannually in arrears on May 15 and November 15, commencing on May 15, 1998. The 2001 Notes were issued at a discount, which is being amortized over the life of the 2001 Notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized discount balance was approximately $0.2 million and $0.3 million, respectively. The 2003 Notes were issued at a discount, which is being amortized over the life of the 2003 Notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized discount balance was approximately $0.1 million and $0.1 million, respectively. Prior to the issuance of the 2001 and 2003 Notes, the Operating Partnership entered into two interest rate protection agreements to effectively fix the interest rate costs of such issuances. The Operating Partnership made a one time settlement payment of each protection transaction, which was approximately $5 million and $1.7 million, respectively, which are being amortized over the term of the Notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized balance of these costs were approximately $3.6 million and $4.9 million and $1.4 million and $1.6 million, respectively. On February 3, 1998, the Operating Partnership filed a Form S-3 Registration Statement to register $1 billion of debt securities. The SEC declared this registration statement effective on February 27, 1998. In April 1998, the Operating Partnership issued $300 million of unsecured fixed rate notes (the "2015 Notes") in a public debt offering (the "Sixth Public Debt Offering"). The 2015 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis. As of December 31, 1998 the unamortized discount balance was approximately $1.8 million. The 2015 Notes are due April 13, 2015. The annual interest rate on the 2015 Notes to April 13, 2005 (the "Remarketing Date") is 6.63%, which is payable semi-annually in arrears on October 13 and April 13, commencing October 13, 1998. The 2015 Notes are subject to mandatory tender to the remarketing agent on the Remarketing Date, at the election of the remarketing dealer and subject to certain limitations. If the remarketing dealer, initially Salomon Brothers Inc., does not purchase all tendered 2015 Notes on the Remarketing Date, or in certain F-34 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) other limited circumstances, the Operating Partnership will be required to repurchase the 2015 Notes at 100% of their principal amount plus accrued interest. If the 2015 Notes are remarketed, the 2015 Notes will bear interest at the rate determined by the remarketing dealer on and after the Remarketing Date. The Operating Partnership received approximately $8.1 million from the sale of the option to remarket the 2015 Notes on the Remarketing Date, which is being amortized over the term of the 2015 Notes. As of December 31, 1998 the unamortized balance was approximately $7.8 million. Prior to the issuance of the 2015 Notes, the Operating Partnership entered into an interest rate protection agreement to effectively fix the interest rate cost of such issuance until the Remarketing Date. The Operating Partnership received a one-time settlement payment from this transaction, which was approximately $0.6 million and is being amortized over seven years. As of December 31, 1998 the unamortized balance was approximately $0.6 million. In August 1998, the Operating Partnership issued $100 million of Remarketed Reset Notes (the "August 2003 Notes") in a public debt offering (the "Seventh Public Debt Offering"). The August 2003 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis. As of December 31, 1998 the unamortized discount balance was approximately $0.3 million. The August 2003 Notes are due August 21, 2003. During the period from and including August 21, 1998 to but excluding August 23, 1999 (the "Initial Spread Period") the interest rate on the August 2003 Notes will be reset quarterly, and will equal LIBOR plus an applicable spread. The spread during the Initial Spread Period is .45%. After the Initial Spread Period, the character (i.e. fixed or floating rate) and duration of the interest rate on the notes and the subsequent spread will be agreed to by the Operating Partnership and the remarketing underwriter, initially Merrill Lynch, Pierce, Fenner and Smith, Inc., on each applicable determination date. Beginning August 23, 1999, the Operating Partnership may elect to redeem the August 2003 Notes on certain dates and in certain circumstances. In September 1998, the Operating Partnership issued $145 million of unsecured fixed rate notes (the "2000 Notes") in a public debt offering (the "Eighth Public Debt Offering"). The 2000 Notes were issued at a discount, which is being amortized over the life of the notes on a straight-line basis. As of December 31, 1998 the unamortized discount balance was approximately $0.5 million. The 2000 Notes are due September 15, 2000. The annual interest rate on the 2000 Notes is 6.15%, which is payable semi-annually in arrears on March 15 and September 15, commencing March 15, 1999. The Operating Partnership received net proceeds of approximately $144.5 million in connection with this issuance. Included in the note balance are four unsecured note issuances assumed in connection with the Wellsford Merger. These are discussed in the following three paragraphs. In January 1995, $100 million of senior unsecured notes due February 1, 2002 (the "2002-A Notes") were issued. The 2002-A Notes bear interest at a rate of 9.375%, which is payable semiannually in arrears on August 1 and February 1. In connection with the assumption of the 2002-A Notes, the Company recorded a premium in the amount of $5.6 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized premium balance relating to the 2002 -A Notes was approximately $3.7 million and $4.9 million, respectively. In August 1995, $125 million of senior unsecured notes were issued. Of the $125 million issued, $55 million of these notes are due August 15, 2000 (the "2000 Notes") and bear interest at a rate of 7.25%, which is payable semiannually in arrears on February 15 and August 15. The remaining $70 million of these notes are due August 15, 2005 (the "2005 Notes") and bear interest at a rate of 7.75%, which is payable semiannually in arrears on February 1 and August 1. F-35 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In November 1996, $25 million of medium term unsecured floating rate notes due November 24, 1999 (the "1999-A Notes") were issued. The 1999-A Notes bear interest at 90 day LIBOR plus 0.32%, which is payable quarterly in arrears on the 25th day of each February, May, August and November. Also included in the note balance are two unsecured note issuances assumed in connection with the EWR Merger. These are discussed in the following two paragraphs. In April 1997, $75 million of senior unsecured notes due April 15, 2004 (the "2004 Notes") were issued. The 2004 Notes bear interest at a rate of 7.5%, which is payable semiannually in arrears on October 15 and April 15. In connection with the assumption of the 2004 Notes, the Company recorded a premium in the amount of $1.7 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized premium balance relating to the 2004 Notes was approximately $1.5 million and $1.7 million, respectively. In April 1997, $50 million of senior unsecured notes due April 15, 2007 (the "2007 Notes") were issued. The 2007 Notes bear interest at a rate of 7.625%, which is payable semiannually in arrears on October 15 and April 15. In connection with the assumption of the 2007 Notes, the Company recorded a premium in the amount of $1.6 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998 and 1997, the unamortized premium balance relating to the 2007 Notes was approximately $1.4 million and $1.6 million, respectively. Also included in the note balance are six unsecured note issuances assumed in connection with the MRY Merger. These are discussed in the following six paragraphs. In August 1995, $40 million of senior unsecured notes due October 1, 2002 (the "2002 MRY Notes") were issued. The 2002 MRY Notes bear interest at a rate of 7.25%, which is payable semiannually in arrears on April 1 and October 1. In connection with the assumption of the 2002 MRY Notes, the Company recorded a premium in the amount of $0.5 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998, the unamortized premium balance relating to the 2002 MRY Notes was approximately $0.5 million. In November 1995, $40 million of senior unsecured notes due November 1, 2003 (the "2003 MRY Notes") were issued. The 2003 MRY Notes bear interest at a rate of 6.875%, which is payable semiannually in arrears on May 1 and November 1. In connection with the assumption of the 2003 MRY Notes, the Company recorded a premium in the amount of $0.3 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998, the unamortized premium balance relating to the 2003 MRY Notes was approximately $0.3 million. In November 1995, $40 million of senior unsecured notes due November 1, 2004 (the "2004 MRY Notes") were issued. The 2004 MRY Notes bear interest at a rate of 6.875%, which is payable semiannually in arrears on May 1 and November 1. In connection with the assumption of the 2004 MRY Notes, the Company recorded a premium in the amount of $0.2 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998, the unamortized premium balance relating to the 2004 MRY Notes was approximately $0.2 million. In June 1995, $120 million of senior unsecured notes due June 15, 2005 (the "2005 MRY Notes") were issued. The 2005 MRY Notes bear interest at a rate of 7.25%, which is payable semiannually in arrears on June 15 and December 15. In connection with the assumption of the 2005 MRY Notes, the Company recorded a premium in the amount of $1.6 million, which is being amortized over the remaining F-36 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) life of the notes on a straight-line basis. As of December 31, 1998, the unamortized premium balance relating to the 2005 MRY Notes was approximately $1.6 million. In October 1997, $50 million of senior unsecured notes due October 30, 2006 (the "2006 MRY Notes") were issued. The 2006 MRY Notes bear interest at a rate of 6.69%, which is payable semiannually in arrears on May 1 and November 1. In connection with the assumption of the 2006 MRY Notes, the Company recorded a discount in the amount of $0.4 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998, the unamortized discount balance relating to the 2006 MRY Notes was approximately $0.4 million. In July 1997, $50 million of senior unsecured notes due August 1, 2007 (the "2007 MRY Notes") were issued. The 2007 MRY Notes bear interest at a rate of 6.90%, which is payable semiannually in arrears on February 1 and August 1. In connection with the assumption of the 2007 MRY Notes, the Company recorded a discount in the amount of $0.2 million, which is being amortized over the remaining life of the notes on a straight-line basis. As of December 31, 1998, the unamortized discount balance relating to the 2007 MRY Notes was approximately $0.2 million. In regard to all of the interest rate protection agreements mentioned in the previous paragraphs, the Company believes that it has limited exposure to the extent of non-performance by the counterparties of each agreement since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non-performance. 14. EMPLOYEE TRANSACTIONS Douglas Crocker II, President and Chief Executive Officer of the Company, and three other officers had purchased an aggregate of 190,000 Common Shares at prices which range from $26 to $31.625 per Common Share. These purchases were financed by loans made by the Company in the aggregate amount of approximately $5.3 million. The employee notes accrue interest, payable in arrears, at rates that range from 6.15% per annum to 7.93% per annum. Scheduled maturities are at various dates through March 2005. The employee notes are recourse to Mr. Crocker and the three other officers and are collateralized by pledges of the 190,000 Common Shares purchased. In addition, as of December 31, 1998, the outstanding principal balance on additional notes issued to Mr. Crocker and four other officers was approximately $1.1 million. These notes accrue interest, payable in arrears, at one month LIBOR plus 2% per annum. Scheduled maturities are at various dates through March 2003. Subsequent to December 31, 1998, Mr. Crocker paid a principal installment on his note in the amount of $80,570. The notes are recourse to Mr. Crocker and the four other officers and are collateralized by pledges of options and share awards. Mr. Crocker has a deferred compensation agreement (the "Deferred Compensation Agreement") which Deferred Compensation Agreement will provide Mr. Crocker with a salary benefit after his termination of employment with the Company. If Mr. Crocker's employment is terminated without cause, he would be entitled to annual deferred compensation for a ten-year period commencing on the termination date in an amount equal to $500,000 (increased by a CPI index each year beginning January 1, 1997), multiplied by a percentage equal to 10% per year since December 31, 1995. In the event Mr. Crocker's employment is terminated as a result of his death, permanent disability or incapacity, he would be entitled to a similar amount except the annual percentage would be 15% and the maximum paid per year would not exceed 100% of his average base salary. Should Mr. Crocker be terminated for cause or should he choose to leave voluntarily without good reason, he would not be entitled to any deferred compensation. The F-37 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Company recognized approximately $0.3 million, $0.3 million and $0.3 million of compensation expense for the years ended 1998, 1997 and 1996, respectively, related to this Deferred Compensation Agreement. In addition, Gerald Spector, Executive Vice President and Chief Operating Officer of the Company, entered into a Deferred Compensation Agreement in 1997, which agreement provides Mr. Spector with a salary benefit after his termination of employment with the Company. If Mr. Spector's employment is terminated without cause, he would be entitled to annual deferred compensation for a 15- year period commencing on the termination date in an amount equal to 75% of his average annual base compensation (before bonus) for the prior five calendar years, multiplied by a percentage equal to 6.67% per each year since December 31, 1996. In the event Mr. Spector's employment is terminated as a result of his death, permanent disability or incapacity, he would be entitled to a similar amount except that the annual percentage would be 10%, not 6.67%. Should Mr. Spector be terminated for cause or should he choose to leave voluntarily without good reason, he would not be entitled to any deferred compensation. The Company has recognized approximately $0.2 million and $0.2 million of compensation expense for the years ended 1998 and 1997, respectively, related to this Deferred Compensation Agreement. The Board of Trustees also approved a share distributions agreement (the "Share Distributions Agreement") for Mr. Crocker. On January 18, 1996, Mr. Crocker was issued options to purchase 100,000 Common Shares at the then current market price of the Common Shares, which vest over a three-year period and are effective for ten years. Pursuant to the terms of the Share Distributions Agreement, upon the exercise of any of these options, Mr. Crocker would be entitled to an amount equal to the amount of Common Share dividends that would have been paid on these shares being exercised had he owned these shares for the period from January 18, 1996 until the date of the exercise of the options in question. Mr. Crocker's death or termination of employment would not affect the Share Distributions Agreement. The Company recognized approximately $0.3 million, $0.2 million and $0.2 million of compensation expense for the years ended 1998, 1997 and 1996, respectively, related to this Share Distributions Agreement. The Company has established a defined contribution plan (the "401(k) Plan") that provides retirement benefits for employees that meet minimum employment criteria. The Company contributes 100% of the first 4% 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 made contributions in the amount of $0.8 million and $1.4 million for the years ended December 31, 1996 and 1997, respectively, and expects to make contributions in the amount of approximately $2.3 million for the year ended December 31, 1998. 15. DEPOSITS-RESTRICTED Deposits-restricted as of December 31, 1998 primarily included the following: . a deposit in the amount of $20 million held in a third party escrow account to provide collateral for third party construction financing in connection with the Joint Venture Agreement; . approximately $22.2 million held in third party escrow accounts representing proceeds received in connection with the Company's disposition of four properties; F-38 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) . approximately $15.3 million for tenant security and utility deposits for certain of the Company's Properties; and . approximately $11.8 million of other deposits. Deposits-restricted as of December 31, 1997 primarily included the following: . a deposit in the amount of $20 million held in a third party escrow account to provide collateral for third party construction financing in connection with the Joint Venture Agreement; . approximately $7.6 million for tenant security and utility deposits for certain of the Company's Properties; and . approximately $8.8 million of other deposits. 16. SUMMARIZED PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED) The following Summarized Pro Forma Condensed Statement of Operations has been prepared as if the following had occurred on January 1, 1998 (as described in Note 3, Note 4, Note 6, Note 8, Note 11 and Note 13 of Notes to Consolidated Financial Statements): . the January 1998 Common Share Offering; . the February 1998 Common Share Offerings; . the March 1998 Common Share Offering; . the April 1998 Common Share Offering; . the repurchase of Common Shares in August and September 1998; . the Sixth Public Debt Offering; . the Seventh Public Debt Offering; . the Eighth Public Debt Offering; . the mortgage financing of 15 previously unencumbered Properties for $226 million; . the acquisition of an additional 99 Properties, including the related assumption of $459.8 million of mortgage indebtedness, the issuance of Junior Convertible Preference Units with a value of $4.8 million and the issuance of OP Units with a value of $165 million; . the acquisition of the 118 MRY properties, including the related assumption of $723.5 million of debt, the issuance of Common Shares with a market value of $1 billion, the assumption of MRY's minority interest with a market value of $40.2 million, and the redesignation of Preferred Shares with a liquidation value of $369.1 million; . the disposition of 20 properties; and . the repayment of the outstanding mortgage balances on nine properties totaling $63.8 million. This would result in 117,174,120 Common Shares outstanding on January 1, 1998. In management's opinion, the Summarized Pro Forma Condensed Statement of Operations does not purport to present what actual results would have been had the above transactions occurred on January 1, 1998, or to project results for any future period. The amounts presented in the following statement are in thousands except for share amounts: F-39 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Summarized Pro Forma Condensed Statement Of Operations For the Twelve Months Ended December 31, 1998 ------------------------------------------------------------- ------------------------------------ Total Revenues $ 1,616,499 --------- Total Expenses 1,323,525 Pro Forma income before allocation to Minority Interests 292,974 --------- Pro Forma net income 274,589 Preferred distributions 117,535 --------- Pro Forma net income available for Common Shares $ 157,054 ========= Pro Forma net income per Common Share $ 1.34 =========
17. SHARE OPTION PLAN Pursuant to the Company's Fourth Amended and Restated 1993 Share Option and Share Award Plan (the "Fourth Amended Option and Award Plan") officers, directors, key employees and consultants of the Company may be offered the opportunity to acquire Common Shares through the grant of share options ("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. Additionally, under the Fourth Amended Option and Award Plan, certain officers of the Company may be awarded Common Shares, subject to conditions and restrictions as described in the Fourth Amended Option and Award Plan. Options and SARs are sometimes referred to herein as "Awards". As to the Options that have been granted through December 31, 1998, generally, one-third are exercisable one year after the initial grant, one-third are exercisable two years following the date such Options were granted and the remaining one-third are exercisable three years following the date such Options were granted. The Company has reserved 8,000,000 Common Shares for issuance under the Fourth Amended Option and Award Plan. The Options generally are granted at the fair market value of the Company's Common Shares at the date of grant, vest 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 Fourth Amended Option and Award Plan shall not be less than the fair market value of the underlying Common Shares at the time the Option is granted. The Fourth Amended Option and Award Plan will terminate at such time as no further Common Shares are available for issuance upon the exercise of Options and all outstanding Options have expired or been exercised. The Board of Trustees may at any time amend or terminate the Fourth Amended Option and Award Plan, but termination will not affect Awards previously granted. Any Options, which had vested prior to such a termination, would remain exercisable by the holder thereof. Pursuant to the MRY Merger, the Company assumed MRY's Stock Option and Incentive Plan. As to the Options that have been granted through October 18, 1998, generally, one-fifth are exercisable one year after the initial grant, one-fifth are exercisable two years following the date such Options were granted, one-fifth are exercisable three years following the date such Options were granted, one-fifth are exercisable four years following the date such Options were granted and the remaining one-fifth are exercisable five years following the date such Options were granted. F-40 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Company will not issue common shares under the MRY Stock Option and Incentive Plan. The Options already granted under the plan were assumed with the original grant dates. The number of original MRY Options and the original MRY grant prices were converted to the Company's equivalent using a conversion ratio of 0.54. They will vest over a five-year period, are exercisable upon vesting and expire ten years from the date of grant. The MRY Stock Option and Incentive Plan will terminate at such time all outstanding Options have expired or been exercised. Any Options, which had vested prior to such assumption, would remain exercisable by the holder thereof. The Company has elected to apply the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25"), in the computation of compensation expense. Under APB No. 25's intrinsic value method, compensation expense is determined by computing the excess of the market price of the shares over the exercise price on the measurement date. For the Company's share options, the intrinsic value on the measurement date (or grant date) is zero, and no compensation expense is recognized. FASB Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("Statement No. 123"), requires the Company to disclose pro forma net income and income per share as if a fair value based accounting method had been used in the computation of compensation expense. The fair value of the options computed under Statement No. 123 would be recognized over the vesting period of the options. The fair value for the Company's options was estimated at the time the options were granted using the Black Scholes option pricing model with the following weighted-average assumptions for 1996, 1997 and 1998, respectively: risk-free interest rates of 6.35%, 6.33% and 5.37%; dividend yields of 6.98%, 5.32% and 5.98%; volatility factors of the expected market price of the Company's Common Shares of 0.226, 0.218 and 0.212; and a weighted-average expected life of the option of seven years. 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. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's 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 Options. For purposes of pro forma disclosures, the estimated fair value of the Options is amortized to expense over the Options' vesting period. The following is the pro forma information for the three years ended December 31, 1998, 1997 and 1996 (unaudited):
----------------------------------------------------------------------------------------------------- 1998 1997 1996 ----------------------------------------------------------------------------------------------------- Pro forma net income available to Common Shares $ 155,855 $ 112,482 $ 70,905 Pro forma income per weighted Average Common Share Outstanding $ 1.55 $ 1.71 $ 1.66 -----------------------------------------------------------------------------------------------------
The table below summarizes the Option activity of the Fourth Amended Option and Award Plan and the MRY Stock Option and Incentive Plan for the three years ended December 31, 1998, 1997 and 1996: F-41 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
COMMON WEIGHTED AVERAGE SHARES SUBJECT TO EXERCISE PRICE OPTIONS OR AWARDS PER COMMON SHARE - -------------------------------------------------------------------------------------------------- Balance at January 1, 1996 1,359,648 $26.97 Options granted 1,195,962 $30.54 Options cancelled (74,519) $29.00 Options exercised (151,178) $26.64 --------- ------ Balance at December 31, 1996 2,329,913 $28.76 Options granted 2,025,321 $44.00 Options cancelled (68,258) $34.50 Options exercised (180,138) $27.78 --------- ------ Balance at December 31, 1997 4,106,838 $36.22 Options granted 1,962,050 $50.30 MRY Options granted (assumed) 925,830 $38.53 Options cancelled (321,418) $47.19 MRY Options cancelled -- -- Options exercised (194,021) $29.20 MRY Options exercised (237,153) $37.22 ------------------------------------------------------- BALANCE AT DECEMBER 31, 1998 6,242,126 $40.60 ========= ======
As of December 31, 1998, 1997 and 1996, 2,865,214 shares, 1,329,516 shares and 898,075 shares were exercisable, respectively. Exercise prices for Options outstanding as of December 31, 1998 ranged from $26 to $54.8125. Expiration dates ranged from July 12, 2003 to October 19, 2008. The remaining weighted-average contractual life of those Options was 7.85 years. The weighted- average grant date fair value of Options granted during 1998 was $6.28. 18. EMPLOYEE SHARE PURCHASE PLAN Under the Company's Employee Share Purchase Plan certain eligible officers, trustees and employees of the Company may annually acquire up to $100,000 of Common Shares of the Company. The aggregate number of Common Shares available under the Employee Share Purchase Plan shall not exceed 1,000,000, subject to adjustment by the Board of Trustees. 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. During 1996, the Company issued 39,458 Common Shares at a net price of $30.44 per share. During 1997, the Company issued 84,183 Common Shares at net prices that ranged from $335.63 per share to $42.08 per share and raised approximately $3.2 million in connection therewith. During 1998, the Company issued 93,521 Common Shares at net prices that ranged from $35.70 per share to $42.71 per share and raised approximately $3.7 million in connection therewith. 19. DISTRIBUTION REINVESTMENT AND SHARE PURCHASE PLAN On November 3, 1997 the Company filed with the SEC a Form S-3 Registration Statement to register 7,000,000 Common Shares pursuant to a Distribution Reinvestment and Share Purchase Plan. The registration statement was declared effective on November 25, 1997. F-42 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The DRIP Plan of the Company provides holders of record and beneficial owners of Common Shares, Preferred Shares, and limited partnership interests in the Operating Partnership with a simple and convenient method of investing cash distributions in additional Common Shares. Common Shares may also be purchased on a monthly basis with optional cash payments made by participants in the Plan and interested new investors, not currently shareholders of the Company, at the market price of the Common Shares less a discount ranging between 0% and 5% (as determined in accordance with the DRIP Plan). 20. COMMITMENTS AND CONTINGENCIES The Company, as an owner of real estate, is subject to various environmental laws of Federal and local governments. Compliance by the Company with existing laws has not had a material adverse effect on the Company's financial condition and results of operations. However, the Company cannot predict the impact of new or changed laws or regulations on its current Properties or on properties that it may acquire in the future. The Company does not believe there is any litigation threatened against the Company other than routine litigation arising out of the ordinary course of business, some of which is expected to be covered by liability insurance, none of which is expected to have a material adverse effect on the consolidated financial statements of the Company. In December 1997, the Company entered into a joint venture agreement with a multifamily residential real estate developer whereby the Company will make investments in a limited partnership to fund its portion of the project cost. During 1997 and 1998, the Company funded a total of $6.9 million and $23.9 million, respectively, and during 1999 the Company expects to fund approximately $74.9 million in connection with this agreement. Subsequent to December 31, 1998, the Company has funded approximately $1 million. In addition, the Company also funded $20 million to guarantee third party construction financing and is obligated to fund up to an additional $20 million. In regards to certain properties that were under development and/or expansion in 1998, the Company funded $31.6 million. In 1999, the Company expects to fund $53.9 million related to the continued development and/or expansion of as many as five Properties. In regards to certain properties that were under earnout/development agreements in 1998, no amounts were funded. The Company expects to fund $60.4 million related to three earnout/development projects expected to be finished during 1999. Subsequent to December 31, 1998, the Company has funded $16.2 million relating to the completion/acquisition of Copper Canyon. In addition, the Company may be required to fund an additional $1 million earnout payment to the developer for Copper Canyon if certain specified operation levels are met. In connection with the Wellsford Merger, the Company has provided a $14.8 million credit enhancement with respect to bonds issued to finance certain public improvements at a multifamily development project. Pursuant to the terms of a Stock Purchase Agreement with Wellsford Real Properties, Inc. ("WRP Newco"), the Company will agree to purchase up to 1,000,000 shares of WRP Newco Series A Preferred at $25.00 per share over a three-year period ending on May 30, 2000. As of December 31, 1998, no shares of WRP Newco Series A Preferred had been acquired by the Company. F-43 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In connection with the MRY Merger, the Company extended a $25 million, one year, non-revolving Senior Debt Agreement to MRYP Spinco. At December 31, 1998, approximately $18.3 million was outstanding, bearing interest at LIBOR plus 250 basis points. The Company has a potential obligation to fund up to an additional $6.7 million under the Senior Debt Agreement. The Company has lease agreements with an affiliated party covering office space occupied by the management offices located in Tampa, Florida (the "Tampa Office"), Atlanta, Georgia (the "Atlanta Office"); and Chicago, Illinois (the "Chicago Office"). The Tampa Office agreement expires on October 31, 2001, the Atlanta Office agreement expires on June 20, 2001 and the Chicago Office agreement expires on July 11, 2000. The Company also has six additional lease agreements with unaffiliated parties covering space occupied by the management offices located in Dallas, Texas (the "Dallas Office"); Bethesda, Maryland (the "Bethesda Office"); Denver, Colorado (the "Denver Office"); Seattle, Washington (the "Seattle Office"); Scottsdale, Arizona (the "Scottsdale Office") and Irvine, California (the "Irvine Office"). The lease agreement for the Dallas Office expires on September 30, 2005, the lease agreement for the Bethesda Office expires on February 1, 2004, the lease agreement for the Denver Office expires on December 31, 2002, the lease agreement for the Seattle Office expires on June 30, 2003, the lease agreement for the Scottsdale Office expires on July 31, 2004 and the lease agreement for the Irvine Office expires on July 31, 2000. The Company also has a lease agreement with an affiliated party covering office space occupied by the corporate headquarters located in Chicago, Illinois. This agreement, as amended, expires on July 31, 2001. In addition, commencing June 15, 1998, the Company increased the office space occupied by its corporate personnel. The lease agreement covering the additional space expires on December 31, 2004. Subsequent to December 31, 1998, the Company is planning on increasing its office space again with leasing terms to be determined. During the years ended December 31, 1998, 1997 and 1996, total rentals, including a portion of real estate taxes, insurance, repairs and utilities, aggregated $2,528,150, $1,491,766 and $1,020,311, respectively. The minimum basic aggregate rental commitment under the above described leases in years succeeding December 31, 1998 is as follows: ------------------------------ Year Amount ------------------------------ 1999 $ 2,689,662 2000 2,764,818 2001 2,515,258 2002 2,238,029 2003 1,979,775 ------------------------------ Total $12,187,542 ------------------------------ 21. TRANSACTIONS WITH RELATED PARTIES In connection with the Wellsford Merger, Jeffrey Lynford and Edward Lowenthal (trustees of the Company) each executed a consulting agreement with the Company. Each consulting agreement has a term of five years from May 30, 1997, the closing date of the Wellsford Merger. Pursuant to the consulting F-44 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) agreements, each of Messrs. Lynford and Lowenthal will serve as a senior management consultant to the Company and will receive compensation at the rate of $200,000 per year plus reimbursement for reasonable out-of-pocket expenses. In connection with the EWR Merger, in December 1997, Stephen Evans (a trustee of the Company) executed a consulting agreement with an affiliate of the Company. The consulting agreement has a term of two years and expires on December 31, 1999. Pursuant to the consulting agreement, Mr. Evans will serve as a senior management consultant to the Company and will receive compensation at the rate of $225,000 per year. Mr. Evans also received an option to purchase 115,500 Common Shares that will vest in three equal annual installments and will have an exercise price equal to $50.125 per Common Share. Mr. Evans will also be eligible to participate in all of the Company's employee benefit plans in which persons in comparable positions participate, treating Mr. Evans as an employee. In connection with the affiliated lease agreements discussed in Note 20, the Company paid Equity Office Holdings, L.L.C. ("EOH") $114,539, $145,511 and $118,919 in connection with the Chicago Office, $194,506, $177,793 and $137,638 in connection with the Tampa Office and $772,320, $632,693 and $409,392 in connection with the space occupied by the corporate headquarters for the years ended December 31, 1998, 1997 and 1996, respectively. Also, the Company paid $55,117 in connection with the Atlanta Office for the year ended December 31, 1998. Amounts due to EOH were $136,000 and $59,675 as of December 31, 1998 and 1997, respectively. Equity Group Investments, Inc. and certain of its subsidiaries, including, Equity Properties & Development, L.P. and Equity Properties Management Corp. (collectively, "EGI"), have provided certain services to the Company which include, but are not limited to, investor relations, corporate secretarial, real estate tax evaluation services and market consulting and research services. Fees paid to EGI for these services amounted to approximately $1.1 million, $1.1 million and $1.3 million for the years ended December 31, 1998, 1997 and 1996, respectively. Amounts due to EGI were $57,408 and $74,578 as of December 31, 1998 and 1997, respectively. Artery Property Management, Inc., a real estate property management company ("APMI") in which Mr. Goldberg, a trustee of the Company, is a two- thirds owner and chairman of the board of directors, provided the Company consulting services with regard to property acquisitions and additional business opportunities. Fees paid for those services and reimbursed expenses amounted to approximately $0.2 million for the year ended December 31, 1996. In connection with the acquisition of certain Properties from Mr. Goldberg and his affiliates during 1995, the Company made a loan to Mr. Goldberg and APMI of $15,212,000 evidenced by two notes and secured by 465,541 OP Units. At December 31, 1998, approximately $14.6 million was outstanding and 445,540 OP Units secured this loan. In connection with the acquisition of certain Properties from Mr. Goldberg and his affiliates during 1998, the Company made a $12,000,000 revolving loan to Mr. Goldberg and his wife in September 1998. At December 31, 1998, approximately $3.9 million was outstanding. F-45 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Certain related entities provided services to the Company. These included, but were not limited to, Rosenberg & Liebentritt, P.C., which provided legal services, and Arthur A. Greenberg, which provided tax advisory services. Fees paid to these related entities in the aggregate amounted to approximately $1.3 million and $0.7 million for the years ended December 31, 1997 and 1996, respectively. In addition, The Riverside Agency, Inc., which provided insurance brokerage services, was paid fees and reimbursed premiums and loss claims in the amount of $0.3 million and $4.1 million for the years ended December 31, 1997 and 1996. As of December 31, 1997, $643,519 was owed to Rosenberg & Liebentritt, P.C. for legal fees incurred in connection with securities offerings, litigation matters, property acquisitions and other general corporate matters. Rudnick & Wolfe, a law firm in which Mr. Errol Halperin, a trustee of the Company, is a partner, provided legal services to the Company. Fees paid to this firm amounted to approximately $2.2 million, $2.3 million and $4,300 for the years ended December 31, 1998, 1997 and 1996, respectively. Seyfarth, Shaw, Fairweather & Geraldson, a law firm in which Ms. Sheli Rosenberg's (a trustee of the Company) husband is a partner, provided legal services to the Company. Fees paid to this firm amounted to $29,146 for the year ended December 31, 1998. In addition, the Company has provided acquisitions, asset and property management services to certain related entities for properties not owned by the Company. Fees received for providing such services were approximately $5.6 million, $5.7 million and $6.7 million for the years ended December 31, 1998, 1997 and 1996, respectively. 22. QUARTERLY FINANCIAL DATA (UNAUDITED) The following unaudited quarterly data has been prepared on the basis of a December 31 year end. The 1998 and 1997 net income per weighted average Common Share amounts have been presented and, where appropriate, restated to comply with Statement of Financial Accounting Standards No. 128, Earnings Per Share. For further discussion of net income per weighted average Common Share outstanding and impact of Statement No. 128, see Note 9 of Notes to Consolidated Financial Statements. Amounts are in thousands, except for per share amounts. F-46 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
First Second Third Fourth 1998 Quarter 3/31 Quarter 6/30 Quarter 9/30 Quarter 12/31 ----------------------------------------------------------------------------------------------------------------- Total revenues $286,341 $307,050 $339,299 $ 404,759 ======== ======== ========= ========= Income before allocation to Minority Interests $ 61,275 $ 72,357 $ 61,102 $ 82,001 ======== ======== ======== ========= Net income $ 57,587 $ 67,735 $ 56,572 $ 76,312 ======== ======== ======== ========= Net income available to Common Shares $ 35,895 $ 46,043 $ 34,881 $ 48,470 ======== ======== ======== ========= Weighted average Common Shares outstanding 93,361 97,405 97,089 113,440 ====== ====== ====== ======= Net income per weighted average Common Share outstanding $ 0.38 $ 0.47 $ 0.36 $ 0.43 ======== ======== ======== ========= Net income per weighted average Common Share outstanding - assuming dilution $ 0.38 $ 0.47 $ 0.36 $ 0.42 ======== ======== ======== ========= First Second Third Fourth 1997 Quarter 3/31 Quarter 6/30 Quarter 9/30 Quarter 12/31 - ------------------------------------------------------------------------------------------------------------------ Total revenues $141,387 $164,937 $203,354 $ 237,643 ======== ======== ======== ========= Income before allocation to Minority Interests $ 36,388 $ 38,628 $ 50,320 $ 64,516 ======== ======== ======== ========= Net income $ 32,962 $ 35,709 $ 47,234 $ 60,687 ======== ======== ======== ========= Net income available to Common Shares $ 23,901 $ 23,831 $ 30,886 $ 38,962 ======== ======== ======== ========= Weighted average Common Shares outstanding 51,791 58,940 73,757 78,050 ====== ====== ====== ======= Net income per weighted average Common Share outstanding $ 0.46 $ 0.40 $ 0.42 $ 0.50 ======== ======== ======== ========= Net income per weighted Average Common Share Outstanding - assuming dilution $ 0.45 $ 0.40 $ 0.41 $ 0.49 ======== ======== ======== =========
F-47 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 23. REPORTABLE SEGMENTS The following tables set forth the reconciliation of net income and total assets for the Company's reportable segments for the years ended December 31, 1998, 1997 and 1996 (see also Note 5 for further discussion).
RENTAL REAL CORPORATE/ 1998 (AMOUNTS IN THOUSANDS) ESTATE (1) OTHER (2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------ Rental income $ 1,293,560 $ - $ 1,293,560 Property and maintenance expense (326,567) - (326,567) Real estate tax and insurance expense (126,009) (126,009) Property management expense (52,705) - (52,705) --------------------------------------------------- Net operating income 788,279 - 788,279 Fee and asset management income - 5,622 5,622 Interest income - investment in mortgage notes - 18,564 18,564 Interest and other income - 19,703 19,703 Fee and asset management expense - (4,207) (4,207) Depreciation expense on non-real estate assets - (5,361) (5,361) Interest expense: Expense incurred - (246,585) (246,585) Amortization of deferred financing costs - (2,757) (2,757) General and administrative expense - (21,718) (21,718) Preferred distributions - (92,917) (92,917) Adjustment for amortization of deferred financing costs - 35 35 related to predecessor business Adjustment for depreciation expense related to equity in - 183 183 unconsolidated joint ventures ---------------------------------------------------- Funds from operations available to Common Shares and OP Units (unaudited) 788,279 (329,438) 458,841 Depreciation expense on real estate assets (296,508) - (296,508) Gain on disposition of properties, net 21,703 - 21,703 Income allocated to Minority Interests - (18,529) (18,529) Adjustment for amortization of deferred financing costs - (35) (35) related to predecessor business Adjustment for depreciation expense related to equity in - (183) (183) unconsolidated joint ventures -------------------------------------------------- Net income available to Common Shares $ 513,474 $(348,185) $ 165,289 ================================================== Investment in real estate, net of accumulated depreciation $ 10,208,113 $ 15,459 $ 10,223,572 ================================================== Total assets $ 10,237,999 $ 462,261 $ 10,700,260 ==================================================
F-48 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RENTAL REAL CORPORATE/ 1997 (AMOUNTS IN THOUSANDS) ESTATE (1) OTHER (2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------ Rental income $ 707,733 $ - $ 707,733 Property and maintenance expense (176,075) - (176,075) Real estate tax and insurance expense (69,520) - (69,520) Property management expense (26,793) - (26,793) ----------------------------------------------- Net operating income 435,345 - 435,345 Fee and asset management income - 5,697 5,697 Interest income - investment in mortgage notes - 20,366 20,366 Interest and other income - 13,525 13,525 Fee and asset management expense - (3,364) (3,364) Depreciation expense on non-real estate assets - (3,118) (3,118) Interest expense: Expense incurred - (121,324) (121,324) Amortization of deferred financing costs - (2,523) (2,523) General and administrative expense - (15,064) (15,064) Preferred distributions - (59,012) (59,012) Adjustment for amortization of deferred financing costs - 235 235 related to predecessor business ----------------------------------------------- Funds from operations available to Common Shares and 435,345 (164,582) 270,763 OP Units (unaudited) Depreciation expense on real estate assets (153,526) - (153,526) Gain on disposition of properties, net 13,838 - 13,838 Income allocated to Minority Interests - (13,260) (13,260) Adjustment for amortization of deferred financing costs - (235) (235) related to predecessor business ----------------------------------------------- Net income available to Common Shares $ 295,657 $(178,077) $ 117,580 =============================================== Investment in real estate, net of accumulated depreciation $6,666,925 $ 9,748 $6,676,673 =============================================== Total assets $6,666,925 $ 427,706 $7,094,631 ===============================================
F-49 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RENTAL REAL CORPORATE/ 1996 (AMOUNTS IN THOUSANDS) ESTATE (1) OTHER (2) CONSOLIDATED - ---------------------------------------------------------------------------------------------------------------- Rental income $ 454,412 $ - $ 454,412 Property and maintenance expense (127,172) - (127,172) Real estate tax and insurance expense (44,128) - (44,128) Property management expense (17,512) - (17,512) ----------------------------------------------- Net operating income 265,600 - 265,600 Fee and asset management income - 6,749 6,749 Interest income - investment in mortgage notes - 12,819 12,819 Interest and other income - 4,405 4,405 Fee and asset management expense - (3,837) (3,837) Depreciation expense on non-real estate assets - (2,079) (2,079) Interest expense: Expense incurred - (81,351) (81,351) Amortization of deferred financing costs - (4,242) (4,242) General and administrative expense - (9,857) (9,857) Preferred distributions - (29,015) (29,015) Adjustment for amortization of deferred financing - 1,075 1,075 related to predecessor business ----------------------------------------------- Funds from operations available to Common Shares and 265,600 (105,333) 160,267 OP units (unaudited) Depreciation expense on real estate assets (91,174) - (91,174) Gain on disposition of properties, net 22,402 - 22,402 Write-off of unamortized costs on refinanced debt - (3,512) (3,512) Income allocated to Minority Interests - (14,299) (14,299) Adjustment for amortization of deferred financing costs - (1,075) (1,075) related to predecessor business ----------------------------------------------- Net income available to Common Shares $ 196,828 $(124,219) $ 72,609 ===============================================
(1) The Company has one primary reportable business segment, which consists of investment in rental real estate. The Company's primary business is owning, managing, and operating multifamily residential properties which includes the generation of rental and other related income through the leasing of apartment units to tenants. (2) The Company has a segment for corporate level activity including such items as interest income earned on short-term investments, interest income earned on investment in mortgage notes, general and administrative expenses, and interest expense on mortgage notes payable and unsecured note issuances. In addition, the Company has a segment for third party management activity that is immaterial and does not meet the threshold requirements of a reportable segment as provided for in Statement No. 131. Interest expense on debt is not allocated to individual Properties, even if the Properties secure such debt. Further, income allocated to Minority Interests is not allocated to the Properties. 24. SUBSEQUENT EVENTS On January 6, 1999 the Company disposed of Fox Run Apartments, a 337-unit multifamily property located in Little Rock, Arkansas, to an unaffiliated third party for a total sales price of $10.6 F-50 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) million. This Property was classified as real estate held for disposition at December 31, 1998. On January 6, 1999 the Company disposed of Greenwood Forest Apartments, a 239-unit multifamily property located in Little Rock, Arkansas, to an unaffiliated third party for a total sales price of $7.5 million. This Property was classified as real estate held for disposition at December 31, 1998. On January 6, 1999 the Company disposed of Walnut Ridge Apartments, a 252- unit multifamily property located in Little Rock, Arkansas, to an unaffiliated third party for a total sales price of $7.9 million. This Property was classified as real estate held for disposition at December 31, 1998. On January 6, 1999 the Company disposed of Williamsburg Apartments, a 211- unit multifamily property located in Little Rock, Arkansas, to an unaffiliated third party for a total sales price of $6.7 million. This Property was classified as real estate held for disposition at December 31, 1998. On January 22, 1999, the Company acquired Fireside Park Apartments, a 236- unit multifamily property located in Rockville, Maryland, from an affiliated party for a purchase price of approximately $14.3 million, which included the assumption of mortgage indebtedness of approximately $8.9 million. On January 22, 1999, the Company acquired Mill Pond Apartments, a 240-unit multifamily property located in Glen Burnie, Maryland, from an affiliated party for a purchase price of approximately $11.7 million, which included the assumption of mortgage indebtedness of approximately $8 million. On January 27, 1999 the Company disposed of The Hawthorne Apartments, a 276-unit multifamily property located in Phoenix, Arizona, to an unaffiliated third party for a total sales price of $20.5 million. This Property was classified as real estate held for disposition at December 31, 1998. On January 28, 1999, the Company acquired Aspen Crossing Apartments, a 192- unit multifamily property located in Wheaton, Maryland, from an affiliated party for a purchase price of approximately $11.4 million. On February 24, 1999, the Company acquired Copper Canyon Apartments, a 222- unit multifamily property located in Denver, Colorado, from an unaffiliated third party for a purchase price of approximately $16.2 million. On February 24, 1999, the Company declared a $0.71 distribution per Common Share, $0.585938 per Series A Preferred Share, $0.570313 per Series B Depositary Share and per Series C Depositary Share, $0.5375 per Series D Depositary Share, $0.4375 per Series E Preferred Share, $0.603125 per Series F Preferred Share, $0.453125 per Series G Depositary Share, $0.4375 per Series H Preferred Share, $0.55125 per Series I Preferred Share, $0.5375 per Series J Preferred Share, $1.03625 per Series K Preferred Share and $0.4765625 per Series L Preferred Share for the quarter ended March 31, 1999 to shareholders of record on March 19, 1999. On February 25, 1999, the Company filed with the SEC a Form S-3 Registration Statement to register 1,262,264 Common Shares (the "Resale Shelf Registration") of which 1,262,264 Common Shares may be issued by the Company to holders of 1,262,264 OP Units. The SEC declared the Resale Shelf Registration effective as of March 5, 1999. On March 2, 1999 the Company disposed of The Atrium Apartments, a 208-unit multifamily F-51 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) property located in Durham, North Carolina, to an unaffiliated third party for a total sales price of $10.8 million. On March 4, 1999, the Company acquired Siena Terrace Apartments, a 356-unit multifamily property located in Lake Forest, California, from an unaffiliated third party for a purchase price of approximately $33 million. F-52 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Cost Capitalized Subsequent to Initial Cost to Acquisition Description Company (Improvements, net) (I) - ------------------------------------------------------------------------------------------------------------------------------- Building & Building & Apartment Name Location Encumbrances Land Fixtures Land Fixtures - ------------------------------------------------------------------------------------------------------------------------------- 2300 Elliott Seattle, WA $ 0 $ 796,700 $ 7,170,461 $ 100 $ 332,080 2900 on First Combined Seattle, WA 0 1,176,400 10,588,096 1,300 311,213 3000 Grand Des Moines, IA 0 858,305 7,827,336 0 1,302,538 740 River Drive St. Paul, MN 6,826,903 1,620,000 11,179,212 6,700 375,571 7979 Westheimer Houston, TX 0 1,388,400 12,495,280 1,700 1,176,884 Acacia Creek Scottsdale, AZ 0 6,121,856 35,379,595 0 545,288 Adams Farm Greensboro, NC 0 2,350,000 30,871,672 0 11,244 Alderwood Park Lynnwood, WA 4,187,662 3,760,000 8,016,867 7,400 129,997 Altamonte San Antonio, TX (T) 1,663,100 14,968,079 1,970 835,771 Amberton Manassas, VA 10,597,067 888,800 8,352,507 11,800 1,013,019 Arbor Glen Pittsfield Twp, MI 0 1,092,300 9,830,191 3,764 281,452 Arboretum (AZ) Tucson, AZ (Q) 3,453,446 19,021,517 0 372,905 Arboretum (GA) Atlanta, GA 0 4,679,400 15,927,313 2,900 348,582 Arboretum (MA) Canton, MA 0 4,680,000 10,961,320 5,900 73,688 Arbors at Century Center Memphis, TN 0 2,520,000 15,239,044 1,700 59,958 Arbors of Brentwood Nashville, TN (D) 404,570 13,189,508 100 1,121,432 Arbors of Hickory Hollow Nashville, TN (D) 202,285 6,594,754 700 1,792,378 Arbors of Las Colinas Irving, TX 0 1,662,300 14,960,709 1,600 1,230,194 Ashton, The Corona Hills, CA 17,300,000 2,594,264 33,082,047 0 145,793 Atrium Durham, NC 0 1,122,600 10,103,027 2,400 119,775 Audubon Village Tampa, FL 0 3,576,000 26,433,022 0 12,826 Augustine Club Tallahassee, FL 0 1,110,000 8,920,213 0 8,096 Autumn Creek Cordova, TN (E) 1,680,000 9,330,921 1,900 155,799 Auvers Village Orlando, FL 0 3,840,000 29,676,167 0 17,001 Bainbridge Durham, NC 0 1,042,900 9,385,579 33,400 1,035,966 Balcones Club Austin, TX 0 2,184,000 10,114,399 1,500 256,401 Banyan Lake Boynton Beach, FL 0 2,736,000 11,204,508 2,600 430,319 Bay Club Phoenix, AZ 0 828,100 5,821,759 100 1,628,084 Bay Ridge San Pedro, CA 0 2,385,399 2,180,081 15,901 32,599 Bayside at the Islands Gilbert, AZ (P) 3,306,484 15,577,472 0 137,378 Beach Club Fort Myers, FL 0 2,080,000 14,967,104 0 64,631 Bear Canyon Tucson, AZ 0 1,660,608 11,228,097 0 31,203 Bear Creek Village Denver, CO 21,400,000 4,519,700 40,677,102 0 150,659 Bellevue Meadows Bellevue, WA 0 4,500,000 12,535,945 7,100 110,913 Belmont Crossing Riverdale, GA 0 1,580,000 18,753,653 0 5,297 Belmont Landing Riverdale, GA 0 2,120,000 22,001,656 0 11,264 Beneva Place Sarasota, FL 8,700,000 1,344,000 9,752,633 0 7,604 Berkshire Place Charlotte, NC 0 805,550 12,812,210 0 9,049 Bermuda Cove Jacksonville, FL 0 1,503,000 19,800,377 0 11,172 Bishop Park Winter Park, FL 0 2,592,000 18,211,899 0 9,711 Blue Swan San Antonio, TX (E) 1,424,800 7,589,821 700 119,365 Boulder Creek Wilsonville, OR 0 3,552,000 11,462,403 2,400 451,855 Bourbon Square Combined Palatine, IL 27,414,677 3,982,600 35,843,025 2,700 4,776,878 Bramblewood San Jose, CA 0 5,184,000 9,608,154 6,700 83,660 Breckenridge Lexington, KY 9,385,180 1,645,800 14,812,310 2,500 319,657 Brentwood Vancouver, WA 0 1,318,200 11,863,517 39,021 1,055,320 Breton Mill Houston, TX (F) 212,720 8,154,404 100 847,338 Briarwood (CA) Sunnyvale, CA 14,249,668 9,984,000 22,178,614 7,500 102,538 Bridge Creek Wilsonville, OR 0 1,294,600 11,651,108 5,290 1,396,556 Bridgeport Raleigh, NC 0 1,296,200 11,665,351 500 465,422 Brierwood Jacksonville, FL 0 546,100 4,914,681 5,800 499,241 Brittany Square Tulsa, OK 0 625,000 4,220,662 0 595,214 Brixworth Nashville, TN 0 1,172,100 10,549,371 1,700 279,322 Broadway Garland, TX 6,167,239 1,440,000 7,766,166 3,700 124,227 Brookfield Salt Lake City, UT 0 1,152,000 5,673,250 1,000 111,804 Brookridge Centreville, VA (E) 2,520,000 15,993,105 1,500 140,629 Brookside (CO) Boulder, CO 0 3,600,000 10,200,045 400 10,443 Brookside II (MD) Frederick, MD 0 2,448,000 6,912,403 2,800 131,060 Burn Brae Dallas, TX 0 1,255,000 11,294,815 0 151,697 Burwick Farms Howell, MI 0 1,102,200 9,919,799 2,400 164,452 Calais Dallas, TX 0 1,118,900 10,070,076 0 177,245 Cambridge at Hickory Hollow Nashville, TN 0 3,240,000 17,908,952 800 108,544 Cambridge Village Lewisville, TX 0 800,000 8,751,405 1,300 198,599 Camellero Scottsdale, AZ 11,725,485 1,923,600 17,312,869 1,300 811,189 Canterbury Germantown, MD 31,363,911 2,781,300 26,656,574 0 2,617,807 Canterchase Nashville, TN 5,701,841 862,200 7,759,711 1,400 440,174 Canyon Creek (AZ) Tucson, AZ 0 834,313 5,840,188 100 530,246 Canyon Crest Views Riverside, CA 0 1,744,640 17,392,607 0 136,490 Canyon Ridge San Diego, CA 0 4,869,448 12,002,216 0 114,064 Canyon Sands Phoenix, AZ 0 1,475,900 13,282,737 16,850 657,278 Cardinal, The Greensboro, NC 7,401,384 1,280,000 11,838,616 1,200 115,779 Gross Amount Carried Life Used to at Close of Compute Period 12/31/98 Depreciation in - --------------------------------------------------------------------------------------------------------------- Building & Accumulated Date of Latest Income Apartment Name Land Fixtures (A) Total (B) Depreciation Construction Statement (C) - --------------------------------------------------------------------------------------------------------------------------------- 2300 Elliott $ 796,800 $ 7,502,541 $ 8,299,341 $ 417,256 1992 30 Years 2900 on First Combined 1,177,700 10,899,309 12,077,009 1,097,670 1989-91 30 Years 3000 Grand 858,305 9,129,874 9,988,179 4,929,785 1970 30 Years 740 River Drive 1,626,700 11,554,783 13,181,483 408,559 1962 30 Years 7979 Westheimer 1,390,100 13,672,164 15,062,264 1,832,847 1973 30 Years Acacia Creek 6,121,856 35,924,883 42,046,739 1,337,306 1988-1994 30 Years Adams Farm 2,350,000 30,882,916 33,232,916 260,335 1987 30 Years Alderwood Park 3,767,400 8,146,864 11,914,264 125,590 1982 30 Years Altamonte 1,665,070 15,803,850 17,468,920 2,590,221 1985 30 Years Amberton 900,600 9,365,526 10,266,126 1,340,814 1986 30 Years Arbor Glen 1,096,064 10,111,643 11,207,708 394,386 1990 30 Years Arboretum (AZ) 3,453,446 19,394,422 22,847,868 762,350 1987 30 Years Arboretum (GA) 4,682,300 16,275,894 20,958,194 594,299 1970 30 Years Arboretum (MA) 4,685,900 11,035,008 15,720,908 240,324 1989 30 Years Arbors at Century Center 2,521,700 15,299,001 17,820,701 256,760 1988/1990 30 Years Arbors of Brentwood 404,670 14,310,940 14,715,610 2,828,235 1986 30 Years Arbors of Hickory Hollow 202,985 8,387,132 8,590,117 1,926,949 1986 30 Years Arbors of Las Colinas 1,663,900 16,190,903 17,854,803 3,001,553 1984/85 30 Years Ashton, The 2,594,264 33,227,840 35,822,104 1,225,795 1986 30 Years Atrium 1,125,000 10,222,803 11,347,803 465,771 1989 30 Years Audubon Village 3,576,000 26,445,848 30,021,848 223,446 1990 30 Years Augustine Club 1,110,000 8,928,309 10,038,309 79,228 1988 30 Years Autumn Creek 1,681,900 9,486,720 11,168,620 424,230 1991 30 Years Auvers Village 3,840,000 29,693,168 33,533,168 249,926 1991 30 Years Bainbridge 1,076,300 10,421,545 11,497,845 1,871,029 1984 30 Years Balcones Club 2,185,500 10,370,800 12,556,300 324,244 1984 30 Years Banyan Lake 2,738,600 11,634,827 14,373,427 713,658 1986 30 Years Bay Club 828,200 7,449,843 8,278,043 1,601,411 1976 30 Years Bay Ridge 2,401,300 2,212,680 4,613,980 137,403 1987 30 Years Bayside at the Islands 3,306,484 15,714,850 19,021,334 586,883 1989 30 Years Beach Club 2,080,000 15,031,735 17,111,735 129,109 1990 30 Years Bear Canyon 1,660,608 11,259,300 12,919,908 425,332 1996 30 Years Bear Creek Village 4,519,700 40,827,761 45,347,461 2,289,393 1987 30 Years Bellevue Meadows 4,507,100 12,646,857 17,153,957 224,589 1983 30 Years Belmont Crossing 1,580,000 18,758,950 20,338,950 158,605 1988 30 Years Belmont Landing 2,120,000 22,012,920 24,132,920 188,103 1988 30 Years Beneva Place 1,344,000 9,760,237 11,104,237 83,483 1986 30 Years Berkshire Place 805,550 12,821,259 13,626,809 109,352 1982 30 Years Bermuda Cove 1,503,000 19,811,549 21,314,549 168,051 1989 30 Years Bishop Park 2,592,000 18,221,609 20,813,609 154,528 1991 30 Years Blue Swan 1,425,500 7,709,186 9,134,686 368,781 1985-1994 30 Years Boulder Creek 3,554,400 11,914,257 15,468,657 767,819 1991 30 Years Bourbon Square Combined 3,985,300 40,619,903 44,605,203 7,286,143 1984-87 30 Years Bramblewood 5,190,700 9,691,814 14,882,514 169,574 1986 30 Years Breckenridge 1,648,300 15,131,966 16,780,266 599,171 1986-1987 30 Years Brentwood 1,357,221 12,918,837 14,276,058 1,815,610 1990 30 Years Breton Mill 212,820 9,001,742 9,214,562 1,728,698 1986 30 Years Briarwood (CA) 9,991,500 22,281,152 32,272,652 322,353 1985 30 Years Bridge Creek 1,299,890 13,047,664 14,347,554 2,341,275 1987 30 Years Bridgeport 1,296,700 12,130,773 13,427,473 2,212,393 1990 30 Years Brierwood 551,900 5,413,921 5,965,821 523,522 1974 30 Years Brittany Square 625,000 4,815,876 5,440,876 2,443,264 1982 30 Years Brixworth 1,173,800 10,828,692 12,002,492 952,926 1985 30 Years Broadway 1,443,700 7,890,393 9,334,093 149,778 1983 30 Years Brookfield 1,153,000 5,785,054 6,938,054 268,634 1985 30 Years Brookridge 2,521,500 16,133,734 18,655,234 699,362 1989 30 Years Brookside (CO) 3,600,400 10,210,488 13,810,888 212,273 1993 30 Years Brookside II (MD) 2,450,800 7,043,464 9,494,264 122,730 1979 30 Years Burn Brae 1,255,000 11,446,512 12,701,512 693,394 1984 30 Years Burwick Farms 1,104,600 10,084,251 11,188,851 467,353 1991 30 Years Calais 1,118,900 10,247,321 11,366,221 627,211 1986 30 Years Cambridge at Hickory Hollow 3,240,800 18,017,496 21,258,296 832,203 1997 30 Years Cambridge Village 801,300 8,950,004 9,751,304 475,652 1987 30 Years Camellero 1,924,900 18,124,058 20,048,958 2,373,643 1979 30 Years Canterbury 2,781,300 29,274,381 32,055,681 4,191,193 1986 30 Years Canterchase 863,600 8,199,885 9,063,485 775,416 1985 30 Years Canyon Creek (AZ) 834,413 6,370,434 7,204,847 1,305,549 1986 30 Years Canyon Crest Views 1,744,640 17,529,097 19,273,737 629,914 1982-1983 30 Years Canyon Ridge 4,869,448 12,116,280 16,985,728 438,489 1989 30 Years Canyon Sands 1,492,750 13,940,016 15,432,766 1,425,632 1983 30 Years Cardinal, The 1,281,200 11,954,395 13,235,595 807,778 1994 30 Years
S-1 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Cost Capitalized Subsequent to Initial Cost to Acquisition Description Company (Improvement, net)(1) - --------------------------------------------------------------------------------------------------------------------------- Building & Building & Apartment Name Location Encumbrances Land Fixtures Land Fixtures - --------------------------------------------------------------------------------------------------------------------------- Carmel Terrace San Diego, CA $ 0 $2,288,300 $20,632,540 $ 0 $ 353,202 Carolina Crossing Greenville, SC 0 547,800 4,930,347 2,400 122,451 Carriage Homes at Wyndham Glen Allen, VA 0 1,736,000 27,787,623 0 0 Casa Capricorn San Diego, CA 0 1,260,100 11,341,085 2,600 228,859 Casa Cordoba Tallahassee, FL 0 307,055 2,732,177 0 908,477 Casa Cortez Tallahassee, FL 0 120,590 1,196,857 0 569,147 Casa Ruiz San Diego, CA 0 3,920,000 9,390,192 2,400 140,496 Cascade at Landmark Alexandria, VA 0 3,601,000 19,649,825 2,400 179,089 Catalina at South Shore Las Vegas, NV 0 1,222,200 10,999,974 4,800 539,249 Catalina Shores (WRP) Las Vegas, NV 0 1,427,200 12,844,577 0 86,306 Cedar Crest Overland Park, KS 14,300,000 2,159,800 19,438,107 900 1,325,918 Cedar Ridge (TX) Arlington, TX 3,597,980 605,000 4,204,079 3,600 52,498 Cedars, The Charlotte, NC 0 2,025,300 18,139,423 2,879 236,772 Celebration Westchase Houston, TX 0 2,204,590 6,312,399 100 1,112,662 Champion Oaks Houston, TX 6,828,595 931,900 8,519,479 0 375,333 Champions Club Glen Allen, VA 0 954,000 12,695,097 0 7,442 Champion's Park Norcross, GA 0 1,134,000 14,853,350 0 8,740 Chandler Court Chandler, AZ 0 1,352,600 12,172,974 500 728,875 Chandler's Bay Kent, WA 0 1,503,400 13,530,223 3,500 822,695 Chantecleer Lakes Naperville, IL (E) 6,688,000 16,327,809 1,400 283,260 Chaparral Largo, FL 0 303,100 6,169,465 (0) 3,038,367 Charter Club Everett, WA 0 998,700 8,988,560 2,400 305,184 Chartwell Court Houston, TX 0 1,215,000 12,820,142 700 30,587 Chatelaine Park Duluth, GA 0 1,818,000 24,990,774 0 11,461 Chatham Wood High Point, NC 0 700,000 8,617,470 0 80,584 Chelsea Square Redmond, WA 0 3,390,000 9,237,211 7,100 99,093 Cherry Creek I&II (TN) Hermitage, TN 0 1,832,445 30,041,332 0 559 Cherry Creek III (TN) Hermitage, TN 0 1,109,900 10,705,791 0 0 Cherry Hill Seattle, WA 0 700,100 6,301,194 0 58,600 Chestnut Hills Tacoma, WA 0 756,300 6,806,382 0 122,343 Cheyenne Crest Colorado Springs, CO 0 73,950 3,936,559 100 856,409 Chicksaw Crossing Orlando, FL 11,714,673 2,044,000 12,517,747 0 19,721 Chimneys Charlotte, NC 0 904,700 8,141,844 2,400 195,920 Cierra Crest Denver, CO 21,700,000 4,800,000 34,825,500 3,100 66,090 Cimarron Ridge Denver, CO 0 1,591,100 14,319,997 0 782,362 Cityscape South Louis Park, MN 0 1,560,000 10,764,118 3,200 141,619 Claire Point Jacksonville, FL 0 2,048,000 14,845,563 0 33,631 Clarion Decatur, GA 0 1,501,900 13,517,171 2,400 85,292 Clarys Crossing Columbia, MD 0 891,000 15,897,696 0 5,618 Classic, The Stamford, CT 0 2,880,000 19,881,820 3,500 138,827 Cloisters on the Green Lexington, KY 0 187,074 2,193,726 0 1,685,407 Club at Tanasbourne Hillsboro, OR 0 3,520,000 16,259,589 1,300 531,449 Club at the Green Beaverton, OR 0 2,030,150 12,601,596 800 503,583 Coach Lantern Scarborough, ME 0 450,000 4,383,823 2,900 80,669 Coachman Trails Plymouth, MN 6,553,047 1,224,000 9,501,210 3,000 78,920 Coconut Palm Club Coconut Creek, GA 0 3,000,000 17,665,036 1,700 115,310 Colinas Pointe Denver, CO 0 1,587,400 14,287,051 0 116,204 Colony Place Fort Myers, FL 0 1,500,000 21,108,033 0 32,201 Colony Woods Birmingham, AL 12,800,000 1,656,000 21,811,535 1,300 35,431 Combined Ft. Lauderdale Properties (U) Ft. Lauderdale, FL 10,000,000 10,222,700 39,790,005 8,600 1,361,139 Concorde Bridge Overland Park, KS 0 1,972,400 17,751,898 2,400 293,973 Conway Station Orlando, FL 0 1,936,000 11,011,693 0 14,815 Copper Creek Phoenix, AZ 0 1,017,400 9,156,964 0 115,306 Copper Hill Bedford, TX 0 1,020,000 5,985,527 1,800 60,962 Copper Terrace Orlando, FL 0 1,200,000 18,086,977 0 10,815 Copperfield San Antonio, TX 0 791,200 7,121,171 0 318,927 Country Brook Chandler, AZ (P) 1,505,219 29,544,872 0 110,306 Country Club Place (FL) Pembroke Pines, FL 0 912,000 10,059,337 0 20,694 Country Club Village Seattle, WA 0 1,150,500 10,354,697 0 156,501 Country Gables Beaverton, OR 8,390,691 1,580,500 14,240,626 1,200,000 373,622 Country Ridge Farmington Hills, MI 0 1,605,800 14,452,066 16,150 629,695 Countryside San Antonio, TX 0 667,500 6,007,294 100 265,085 Coventry at Cityview Fort Worth, TX 0 2,160,000 23,174,595 0 7,329 Creekside (San Mateo) San Mateo, CA 14,700,000 9,600,000 21,159,532 6,600 123,431 Creekside Homes at Legacy Plano. TX 0 4,560,000 32,595,373 0 7,238 Creekside Village Mountlake Terrace, WA 15,222,818 2,802,900 25,226,096 4,700 927,041 Creekwood Charlotte, NC 0 1,859,300 16,733,418 2,400 177,007 Crescent at Cherry Creek Denver, CO (E) 2,592,000 15,119,233 2,000 30,775 Cross Creek Charlotte, NC 12,800,000 3,150,000 20,292,137 1,600 86,325 Crossing at Green Valley Las Vegas, NV 0 2,408,500 21,676,899 0 129,958 Crosswinds St. Petersburg, FL 0 1,561,200 5,789,894 0 276,952 Gross Amount Carried Life Used to at Close of Compute Description Period 12/31/98 Depreciation - ----------------------------------------------------------------------------------------------------------------------- Building & Accumulated Date of in Latest Apartment Name Location Land Fixtures (A) Total (B) Depreciation Construction Income - ----------------------------------------------------------------------------------------------------------------------------------- Carmel Terrace San Diego, CA $ 2,288,300 $20,985,742 $23,274,042 $3,115,053 1988-89 30 Years Carolina Crossing Greenville, SC 550,200 5,052,798 5,602,998 241,856 1988-89 30 Years Carriage Homes at Wyndham Glen Allen, VA 1,736,000 27,787,623 29,523,623 226,694 1998 30 Years Casa Capricorn San Diego, CA 1,262,700 11,569,944 12,832,644 952,476 1981 30 Years Casa Cordoba Tallahassee, FL 307,055 3,640,654 3,947,709 2,744,326 1972/1973 30 Years Casa Cortez Tallahassee, FL 120,590 1,766,004 1,886,594 1,225,737 1970 30 Years Casa Ruiz San Diego, CA 3,922,400 9,530,688 13,453,088 462,106 1976-1986 30 Years Cascade at Landmark Alexandria, VA 3,603,400 19,828,914 23,432,314 1,153,918 1990 30 Years Catalina at South Shore Las Vegas, NV 1,227,000 11,539,223 12,766,223 1,940,275 1989 30 Years Catalina Shores (WRP) Las Vegas, NV 1,427,200 12,930,883 14,358,083 754,855 1989 30 Years Cedar Crest Overland Park, KS 2,160,700 20,764,024 22,924,724 1,830,081 1986 30 Years Cedar Ridge (TX) Arlington, TX 608,600 4,256,577 4,865,177 78,094 1980 30 Years Cedars, The Charlotte, NC 2,028,179 18,376,195 20,404,374 543,516 1983 30 Years Celebration Westchase Houston, TX 2,204,690 7,425,061 9,629,751 1,742,547 1979 30 Years Champion Oaks Houston, TX 931,900 8,894,812 9,826,712 1,458,130 1984 30 Years Champions Club Glen Allen, VA 954,000 12,702,538 13,656,538 107,280 1988 30 Years Champion's Park Norcross, GA 1,134,000 14,862,089 15,996,089 125,702 1987 30 Years Chandler Court Chandler, AZ 1,353,100 12,901,848 14,254,948 1,306,590 1987 30 Years Chandler's Bay Kent, WA 1,506,900 14,352,918 15,859,818 2,299,096 1989 30 Years Chantecleer Lakes Naperville, IL 6,689,400 16,611,068 23,300,468 733,549 1986 30 Years Chaparral Largo, FL 303,100 9,207,832 9,510,931 6,083,759 1976 30 Years Charter Club Everett, WA 1,001,100 9,293,744 10,294,844 1,667,474 1991 30 Years Chartwell Court Houston, TX 1,215,700 12,850,729 14,066,429 482,228 1995 30 Years Chatelaine Park Duluth, GA 1,818,000 25,002,236 26,820,236 206,718 1995 30 Years Chatham Wood High Point, NC 700,000 8,698,053 9,398,053 75,327 1986 30 Years Chelsea Square Redmond, WA 3,397,100 9,336,304 12,733,404 163,845 1991 30 Years Cherry Creek I&II (TN) Hermitage, TN 1,832,445 30,041,890 31,874,335 250,233 1986/96 30 Years Cherry Creek III (TN) Hermitage, TN 1,109,900 10,705,791 11,815,691 0 (S) 30 Years Cherry Hill Seattle, WA 700,100 6,359,794 7,059,894 366,186 1991 30 Years Chestnut Hills Tacoma, WA 756,300 6,928,725 7,685,025 419,014 1991 30 Years Cheyenne Crest Colorado Springs, CO 74,050 4,792,968 4,867,018 1,090,158 1984 30 Years Chicksaw Crossing Orlando, FL 2,044,000 12,537,467 14,581,467 108,935 1986 30 Years Chimneys Charlotte, NC 907,100 8,337,764 9,244,864 387,319 1974 30 Years Cierra Crest Denver, CO 4,803,100 34,891,590 39,694,690 1,315,229 1996 30 Years Cimarron Ridge Denver, CO 1,591,100 15,102,359 16,693,459 869,720 1984 30 Years Cityscape South Louis Park, MN 1,563,200 10,905,737 12,468,937 382,216 1990 30 Years Claire Point Jacksonville, FL 2,048,000 14,879,194 16,927,194 125,631 1986 30 Years Clarion Decatur, GA 1,504,300 13,602,463 15,106,763 604,440 1990 30 Years Clarys Crossing Columbia, MD 891,000 15,903,314 16,794,314 131,748 1984 30 Years Classic, The Stamford, CT 2,883,500 20,020,647 22,904,147 871,790 1990 30 Years Cloisters on the Green Lexington, KY 187,074 3,879,133 4,066,207 2,742,874 1974 30 Years Club at Tanasbourne Hillsboro, OR 3,521,300 16,791,038 20,312,338 998,077 1990 30 Years Club at the Green Beaverton, OR 2,030,950 13,105,180 15,136,130 841,276 1991 30 Years Coach Lantern Scarborough, ME 452,900 4,464,492 4,917,392 135,860 1971/1981 30 Years Coachman Trails Plymouth, MN 1,227,000 9,580,130 10,807,130 158,448 1987 30 Years Coconut Palm Club Coconut Creek, GA 3,001,700 17,780,346 20,782,046 357,359 1992 30 Years Colinas Pointe Denver, CO 1,587,400 14,403,255 15,990,655 838,392 1986 30 Years Colony Place Fort Myers, FL 1,500,000 21,140,234 22,640,234 176,381 1991 30 Years Colony Woods Birmingham, AL 1,657,300 21,846,966 23,504,266 355,969 1991/1994 30 Years Combined Ft. Lauderdale Properties (U) Ft. Lauderdale, FL 10,231,300 41,151,144 51,382,444 4,509,903 1988 30 Years Concorde Bridge Overland Park, KS 1,974,800 18,045,872 20,020,672 794,379 1973 30 Years Conway Station Orlando, FL 1,936,000 11,026,509 12,962,509 95,215 1987 30 Years Copper Creek Phoenix, AZ 1,017,400 9,272,271 10,289,671 534,049 1984 30 Years Copper Hill Bedford, TX 1,021,800 6,046,489 7,068,289 121,045 1983 30 Years Copper Terrace Orlando, FL 1,200,000 18,097,792 19,297,792 152,799 1989 30 Years Copperfield San Antonio, TX 791,200 7,440,099 8,231,299 487,775 1984 30 Years Country Brook Chandler, AZ 1,505,219 29,655,178 31,160,397 1,079,189 1986-1996 30 Years Country Club Place (FL) Pembroke Pines, FL 912,000 10,080,031 10,992,031 84,404 1987 30 Years Country Club Village Seattle, WA 1,150,500 10,511,197 11,661,697 600,207 1991 30 Years Country Gables Beaverton, OR 2,780,500 14,614,248 17,394,748 968,767 1991 30 Years Country Ridge Farmington Hills, MI 1,621,950 15,081,761 16,703,711 1,463,402 1986 30 Years Countryside San Antonio, TX 667,600 6,272,378 6,939,978 405,720 1980 30 Years Coventry at Cityview Fort Worth, TX 2,160,000 23,181,923 25,341,923 194,769 1996 30 Years Creekside (San Mateo) San Mateo, CA 9,606,600 21,282,963 30,889,563 369,130 1985 30 Years Creekside Homes at Legacy Plano. TX 4,560,000 32,602,611 37,162,611 268,802 1998 30 Years Creekside Village Mountlake Terrace, WA 2,807,600 26,153,137 28,960,737 4,013,013 1987 30 Years Creekwood Charlotte, NC 1,861,700 16,910,426 18,772,126 776,667 1987-1990 30 Years Crescent at Cherry Creek Denver, CO 2,594,000 15,150,007 17,744,007 647,996 1994 30 Years Cross Creek Charlotte, NC 3,151,600 20,378,462 23,530,062 388,850 1989 30 Years Crossing at Green Valley Las Vegas, NV 2,408,500 21,806,857 24,215,357 1,261,589 1986 30 Years Crosswinds St. Petersburg, FL 1,561,200 6,066,845 7,628,045 305,004 1986 30 Years
EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Initial Cost to Description Company - ------------------------------------------------------------------------------------------------------------------------------------ Building & Apartment Name Location Encumbrances Land Fixtures - ------------------------------------------------------------------------------------------------------------------------------------ Crown Court Phoenix, AZ $ 0 $ 3,156,600 $28,409,516 Crystal Creek Phoenix, AZ 0 952,900 8,576,084 Crystal Village Attleboro, MA 0 1,365,000 4,956,700 Cypress Cove Melbourne, FL 0 1,630,000 19,265,657 Cypress Point Las Vegas, NV 0 953,800 8,583,719 Dartmouth Woods Denver, CO 4,346,802 1,608,000 10,815,913 Dawntree Carrollton, TX 0 1,204,600 10,841,783 Deerbrook Jacksonville, FL 0 1,008,000 8,957,019 Deerwood (Corona) Corona, CA 0 4,740,000 20,295,433 Deerwood (SD) San Diego, CA 0 2,075,700 18,680,801 Deerwood Meadows Greensboro, NC 0 986,643 6,906,503 Defoor Village Atlanta, GA 0 2,964,000 10,549,072 Del Coronado Mesa, AZ (O) 1,963,200 17,669,207 Desert Park Las Vegas, NV 0 1,085,400 9,401,015 Desert Sands Phoenix, AZ 0 1,464,200 13,177,336 Doral Louisville, KY 0 96,607 1,526,628 Dos Caminos Phoenix, AZ 0 1,727,900 15,551,044 Duraleigh Woods Raleigh, NC 0 1,629,000 20,342,931 Eagle Canyon Chino Hills, CA 0 1,806,800 16,261,336 Eagle Rim Redmond, WA 0 976,200 8,785,605 East Pointe Charlotte, NC 9,485,561 1,364,100 12,276,563 Edgewood Woodinville, WA 5,919,966 1,068,200 9,613,388 Emerald Bay Winter Park, FL 0 2,160,000 13,535,527 Emerald Place Bermuda Dunes, CA 0 954,400 8,589,110 Emerson Place Combined Boston, MA 0 14,850,000 57,546,530 Enclave, The Tempe, AZ (Q) 1,500,192 19,302,059 English Hills Charlotte, NC 0 1,260,000 12,866,368 Esprit Del Sol Solana Beach, CA 0 5,110,000 11,898,100 Essex Place Overland Park, KS 0 1,831,900 16,486,600 Essex Place (FL) Tampa, FL 0 1,188,000 7,183,244 Estate at Quarry Lake Austin, TX 12,556,746 1,963,000 19,058,959 Ethans Glen III Kansas City, MO 2,366,364 244,100 2,197,138 Ethans Ridge I Kansas City, MO 16,232,216 1,945,900 17,513,216 Ethans Ridge II Kansas City, MO 10,991,981 1,465,500 13,189,192 Fairfield Combined Stamford, CT 0 6,500,000 39,320,917 Falls Tampa, FL 0 1,440,000 8,589,001 Farmington Gates Germantown, TN 0 969,700 8,727,328 Farnham Park Houston, TX 11,463,097 1,512,000 14,226,229 Fernbrook Townhomes Plymouth, MN 5,232,796 576,000 6,636,774 Fielder Crossing Arlington, TX 3,414,402 714,000 3,896,081 Firdale Village Seattle, WA 0 2,279,400 20,514,917 Flying Sun Phoenix, AZ 0 87,120 2,035,537 Forest Place Tampa, FL 10,633,001 1,708,000 8,778,517 Forest Ridge Arlington, TX 0 2,339,300 21,053,447 Forest Valley San Antonio, TX 0 590,000 5,310,328 Fountain Creek Phoenix, AZ 0 686,000 6,173,818 Fountain Place I Eden Prairie, MN 24,676,652 2,399,900 21,599,215 Fountain Place II Eden Prairie, MN 12,612,600 1,226,500 11,038,139 Fountainhead Combined San Antonio, TX (T) 3,617,449 13,446,560 Fountains at Flamingo Las Vegas, NV 0 3,180,900 28,628,533 Four Lakes Lisle, IL 10,344,569 2,465,000 13,178,449 Four Lakes 5 Lisle, IL (T) 600,000 16,530,115 Fox Run (WA) Federal Way, WA 0 638,500 5,746,956 Foxchase Grand Prairie, TX 0 781,500 7,559,700 Foxcroft Scarborough, ME 0 520,000 4,500,118 Garden Lake Riverdale, GA 0 1,464,500 13,180,548 Gatehouse at Pine Lake Plantation , FL 0 1,886,200 16,975,382 Gatehouse on the Green Pembroke Pines, FL 0 2,216,800 19,951,085 Gates at Carlson Center Minnetonka, MN (R) 4,350,000 23,737,155 Gates of Redmond Combined Redmond, WA 9,823,367 3,603,100 18,867,454 Gateway Villas Scottsdale, AZ 0 1,431,048 14,933,020 Geary Court Yard San Francisco, CA 17,709,692 1,719,400 15,474,355 Georgian Woods Combined Wheaton, MD 10,385,719 5,034,000 27,835,267 Glen Eagle Greenville, SC 0 833,500 7,503,698 GlenGarry Club Bloomingdale, IL (R) 3,125,000 15,757,266 Glenlake Glendale Heights. IL 14,845,000 5,040,000 16,663,439 Glenridge Colorado Springs, CO (F) 884,688 4,466,900 Governor's Place Augusta, GA 0 347,355 2,518,146 Governor's Pointe Roswell, GA (E) 3,744,000 24,480,337 Grandview I & II Las Vegas, NV 0 2,325,600 12,795,591 Greengate Marietta, GA 0 132,979 1,476,005 Cost Capitalized Subsequent to Gross Amount Carried Acquisition at close of (Improvements, net) (I) Period 12/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ Building & Building & Apartment Name Land Fixtures Land Fixtures (A) - ------------------------------------------------------------------------------------------------------------------------------------ Crown Court $ 0 $ 422,213 $ 3,156,600 $ 28,831,729 Crystal Creek 600 495,929 953,500 9,072,013 Crystal Village 4,000 70,760 1,369,000 5,027,460 Cypress Cove 0 5,086 1,630,000 19,270,743 Cypress Point 5,890 596,251 959,690 9,179,970 Dartmouth Woods 1,800 116,030 1,609,800 10,931,943 Dawntree 900 1,246,579 1,205,500 12,088,362 Deerbrook 0 105,574 1,008,000 9,062,593 Deerwood (Corona) 2,200 299,935 4,742,200 20,595,368 Deerwood (SD) 6,395 3,017,495 2,082,095 21,698,296 Deerwood Meadows 100 837,808 986,743 7,744,311 Defoor Village 2,400 27,901 2,966,400 10,576,973 Del Coronado 1,200 526,455 1,964,400 18,195,662 Desert Park 0 853,083 1,085,400 10,254,098 Desert Sands 16,850 763,120 1,481,050 13,940,456 Doral 0 3,043,148 96,607 4,569,776 Dos Caminos 0 227,008 1,727,900 15,778,052 Duraleigh Woods 0 18,362 1,629,000 20,361,293 Eagle Canyon 2,100 250,448 1,808,900 16,511,784 Eagle Rim 1,600 500,991 977,800 9,286,596 East Pointe 1,800 1,117,435 1,365,900 13,393,998 Edgewood 1,900 434,324 1,070,100 10,047,712 Emerald Bay 1,600 286,397 2,161,600 13,821,924 Emerald Place 2,100 601,776 956,500 9,190,886 Emerson Place Combined 5,000 118,283 14,855,000 57,664,813 Enclave, The 0 24,393 1,500,192 19,326,452 English Hills 0 4,166 1,260,000 12,870,535 Esprit Del Sol 1,200 44,965 5,111,200 11,943,065 Essex Place 3,500 1,720,768 1,835,400 18,207,368 Essex Place (FL) 0 8,521 1,188,000 7,191,765 Estate at Quarry Lake 0 49,400 1,963,000 19,108,360 Ethans Glen III 2,400 85,976 246,500 2,283,114 Ethans Ridge I 2,400 498,252 1,948,300 18,011,468 Ethans Ridge II 2,635 117,104 1,468,135 13,306,295 Fairfield Combined 10,200 186,422 6,510,200 39,507,338 Falls 0 14,136 1,440,000 8,603,138 Farmington Gates 4,098 174,662 973,798 8,901,990 Farnham Park 1,900 71,320 1,513,900 14,297,549 Fernbrook Townhomes 4,100 37,859 580,100 6,674,633 Fielder Crossing 4,100 53,596 718,100 3,949,677 Firdale Village 0 247,771 2,279,400 20,762,688 Flying Sun 100 231,803 87,220 2,267,340 Forest Place 0 15,022 1,708,000 8,793,538 Forest Ridge 23,400 1,233,734 2,362,700 22,287,181 Forest Valley 0 117,310 590,000 5,427,637 Fountain Creek 500 323,928 686,500 6,497,746 Fountain Place I 5,168 295,696 2,405,068 21,894,911 Fountain Place II 4,850 119,864 1,231,350 11,158,003 Fountainhead Combined 0 1,509,653 3,617,449 14,956,213 Fountains at Flamingo 2,200 641,955 3,183,100 29,270,488 Four Lakes 0 7,579,815 2,465,000 20,758,264 Four Lakes 5 0 3,371,911 600,000 19,902,026 Fox Run (WA) 1,200 510,135 639,700 6,257,091 Foxchase 200 353,430 781,700 7,913,130 Foxcroft 3,400 70,289 523,400 4,570,408 Garden Lake 2,400 165,319 1,466,900 13,345,867 Gatehouse at Pine Lake 10,400 488,935 1,896,600 17,464,317 Gatehouse on the Green 11,400 607,575 2,228,200 20,558,660 Gates at Carlson Center 5,200 203,335 4,355,200 23,940,489 Gates of Redmond Combined 500 158,707 3,603,600 19,026,162 Gateway Villas 0 27,078 1,431,048 14,960,098 Geary Court Yard 3,000 77,113 1,722,400 15,551,467 Georgian Woods Combined 4,400 2,639,447 5,038,400 30,474,714 Glen Eagle 2,400 90,655 835,900 7,594,353 GlenGarry Club 4,700 390,582 3,129,700 16,147,848 Glenlake 1,700 449,309 5,041,700 17,112,748 Glenridge 100 677,047 884,788 5,143,947 Governor's Place 0 907,804 347,355 3,425,950 Governor's Pointe 2,600 436,853 3,746,600 24,917,190 Grandview I & II 7,700 2,910,755 2,333,300 15,706,346 Greengate (0) 1,290,093 132,979 2,766,098 Life Used to Compute Depreciation in - ----------------------------------------------------------------------------------------------------------- Accumulated Date of Latest Income Apartment Name Total (B) Depreciation Construction Statement (C) - ------------------------------------------------------------------------------------------------------------------------------------ Crown Court $31,988,329 $ 1,672,388 1987 30 Years Crystal Creek 10,025,513 1,277,192 1985 30 Years Crystal Village 6,396,460 190,898 1974 30 Years Cypress Cove 20,900,743 162,961 1990 30 Years Cypress Point 10,139,660 1,572,407 1989 30 Years Dartmouth Woods 12,541,743 704,278 1990 30 Years Dawntree 13,293,862 2,039,128 1982 30 Years Deerbrook 10,070,593 75,513 1983 30 Years Deerwood (Corona) 25,337,568 906,350 1992 30 Years Deerwood (SD) 23,780,391 3,909,102 1990 30 Years Deerwood Meadows 8,731,054 1,660,722 1986 30 Years Defoor Village 13,543,373 203,790 1997 30 Years Del Coronado 20,160,062 2,383,019 1985 30 Years Desert Park 11,339,498 1,244,851 1987 30 Years Desert Sands 15,421,506 1,418,665 1982 30 Years Doral 4,666,383 2,216,272 1972 30 Years Dos Caminos 17,505,952 917,932 1983 30 Years Duraleigh Woods 21,990,293 172,843 1987 30 Years Eagle Canyon 18,320,684 1,374,137 1985 30 Years Eagle Rim 10,264,396 1,465,453 1986-88 30 Years East Pointe 14,759,898 2,549,694 1987 30 Years Edgewood 11,117,812 1,608,579 1986 30 Years Emerald Bay 15,983,524 496,310 1972 30 Years Emerald Place 10,147,386 1,739,960 1988 30 Years Emerson Place Combined 72,519,813 1,372,671 1962 30 Years Enclave, The 20,826,644 696,297 1994 30 Years English Hills 14,130,535 111,289 1984 30 Years Esprit Del Sol 17,054,265 152,935 1986 30 Years Essex Place 20,042,768 3,250,413 1970-84 30 Years Essex Place (FL) 8,379,765 61,778 1989 30 Years Estate at Quarry Lake 21,071,360 160,294 1995 30 Years Ethans Glen III 2,529,614 87,584 1990 30 Years Ethans Ridge I 19,959,768 691,694 1988 30 Years Ethans Ridge II 14,774,430 512,989 1990 30 Years Fairfield Combined 46,017,538 1,042,453 1996 30 Years Falls 10,043,138 76,338 1985 30 Years Farmington Gates 9,875,788 346,779 1976 30 Years Farnham Park 15,811,449 462,286 1996 30 Years Fernbrook Townhomes 7,254,733 94,229 1993 30 Years Fielder Crossing 4,667,777 72,616 1980 30 Years Firdale Village 23,042,088 1,220,866 1986 30 Years Flying Sun 2,354,560 525,702 1983 30 Years Forest Place 10,501,538 77,929 1985 30 Years Forest Ridge 24,649,881 2,314,291 1984/85 30 Years Forest Valley 6,017,637 342,791 1983 30 Years Fountain Creek 7,184,246 894,187 1984 30 Years Fountain Place I 24,299,979 828,257 1989 30 Years Fountain Place II 12,389,353 420,777 1989 30 Years Fountainhead Combined 18,573,662 6,201,720 1985/1987 30 Years Fountains at Flamingo 32,453,588 4,436,638 1989-91 30 Years Four Lakes 23,223,264 10,427,067 1968/1988* 30 Years Four Lakes 5 20,502,026 7,130,309 1968/1988* 30 Years Fox Run (WA) 6,896,791 1,063,775 1988 30 Years Foxchase 8,694,830 478,785 1983 30 Years Foxcroft 5,093,808 140,653 1977/1979 30 Years Garden Lake 14,812,767 604,717 1991 30 Years Gatehouse at Pine Lake 19,360,917 1,326,298 1990 30 Years Gatehouse on the Green 22,786,860 1,551,859 1990 30 Years Gates at Carlson Center 28,295,689 652,565 1989 30 Years Gates of Redmond Combined 22,629,762 954,489 1979/1982-1989 30 Years Gateway Villas 16,391,146 542,531 1995 30 Years Geary Court Yard 17,273,867 577,362 1990 30 Years Georgian Woods Combined 35,513,114 3,260,449 1967 30 Years Glen Eagle 8,430,253 352,969 1990 30 Years GlenGarry Club 19,277,548 430,718 1989 30 Years Glenlake 22,154,448 631,864 1988 30 Years Glenridge 6,028,735 1,119,899 1985 30 Years Governor's Place 3,773,305 2,359,752 1972 30 Years Governor's Pointe 28,663,790 1,070,498 1982-1986 30 Years Grandview I & II 18,039,646 70,601 1980 30 Years Greengate 2,899,077 1,577,623 1971 30 Years
S-3 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Initial Cost to Description Company - ------------------------------------------------------------------------------------------------------------------------------------ Building & Apartment Name Location Encumbrances Land Fixtures - ------------------------------------------------------------------------------------------------------------------------------------ Greenhaven Union City, CA $10,975,000 $7,500,000 $15,124,124 Greenhouse - Frey Road Atlanta, GA (T) 2,464,900 22,183,783 Greenhouse - Holcomb Bridge Atlanta, GA (T) 2,142,400 19,281,704 Greenhouse - Roswell Atlanta, GA (T) 1,217,500 10,957,845 Greenwich Woods Silver Spring, MD 17,546,219 3,095,700 29,073,395 Greenwood Village Tempe, AZ (P) 2,118,781 17,259,157 Grey Eagle Greenville, SC 0 725,200 6,527,253 Greystone Atlanta, GA 0 2,250,000 5,188,574 Gwinnett Crossing Duluth, GA 0 2,632,000 32,681,854 Habitat Orlando, FL 0 600,000 494,032 Hall Place Quincy, MA 0 3,150,000 5,109,688 Hammock's Place Miami, FL (F) 319,080 12,216,608 Hampton Green San Antonio, TX 0 1,561,830 2,962,670 Hamptons Tacoma, WA 5,945,448 1,119,200 10,072,905 Harbor Pointe Milwaukee, WI 12,000,000 2,975,000 22,043,008 Harborview San Pedro, CA 12,316,661 6,400,000 12,608,900 Harbour Landing Corpus Christi, TX 0 761,600 6,854,524 Harrison Park Tucson, AZ (P) 1,265,094 16,348,242 Harvest Grove Conyers, GA 0 752,000 19,083,685 Hathaway Long Beach, CA 0 2,512,200 22,609,720 Haywood Pointe Greenville, SC 0 480,000 9,303,521 Hearthstone San Antonio, TX 0 1,035,700 3,375,132 Heritage, The Phoenix, AZ (P) 1,211,205 13,135,703 Heron Cove Coral Springs, FL 0 823,000 7,997,360 Heron Landing (K) Lauderhill, FL 0 707,100 6,363,784 Heron Pointe Boynton Beach, FL 0 1,546,700 7,883,775 Heron Run Plantation, FL 0 917,800 8,854,001 Hickory Creek Richmond, VA 0 1,323,000 18,873,059 Hickory Ridge Greenville, SC 0 285,800 2,571,956 Hidden Lakes Haltom City, TX 0 1,872,000 20,468,035 Hidden Oaks Cary, NC 0 1,176,200 10,593,460 Hidden Palms Tampa, FL (E) 2,048,000 6,365,313 Hidden Valley Club Ann Arbor, MI 0 915,000 7,583,653 Highland Creste Seattle, WA 0 935,200 8,416,381 Highland Grove Stone Mt., GA 0 1,665,700 14,996,293 Highland Point Denver, CO 0 1,631,900 14,686,971 Highline Oaks Denver, CO 7,100,000 1,055,000 9,651,649 Hollows Columbia, SC 0 450,000 8,995,706 Hollyview Silver Springs, MD 0 189,000 1,484,475 Horizon Place Tampa, FL 12,540,460 2,128,000 12,281,750 Hunt Club Charlotte, NC 0 1,090,000 18,358,632 Hunter's Glen Chesterfield, MO 0 913,500 8,221,026 Hunter's Green Fort Worth, TX (F) 524,200 3,404,622 Hunters Ridge/South Pointe St. Louis, MO 18,765,250 1,950,000 17,852,118 Huntington Hollow Tulsa, OK 0 668,600 6,017,211 Huntington Park Everett, WA 0 1,594,500 14,350,001 Idlewood Indianapolis, IN (E) 2,560,000 11,456,641 Indian Bend Phoenix, AZ 0 1,072,500 9,652,385 Indian Tree Arvada, CO 0 881,125 4,868,332 Indigo Plantation Daytona Beach, FL 0 1,520,000 14,890,270 Indigo Springs Kent, WA 7,927,695 1,270,000 11,438,562 Ingleside, The Phoenix, AZ 0 1,203,600 10,685,582 Ironwood at the Ranch Wesminster, CO 5,896,001 1,493,300 13,439,783 Isle at Arrowhead Ranch Glendale, AZ 0 1,650,237 19,774,074 Ivy Place (L) Atlanta, GA 0 793,200 7,139,200 James Street Crossing Kent, WA 16,395,379 2,078,600 18,707,436 Jefferson at Walnut Creek Austin, TX (E) 2,736,000 14,581,785 Junipers at Yarmouth Yarmouth, ME 0 1,350,000 7,807,113 Kempton Downs Gresham, OR 0 1,182,200 10,639,993 Keystone Austin, TX 2,850,747 498,000 4,482,306 Kimmerly Glen Charlotte, NC 0 1,040,000 12,701,846 Kingsport Alexandria, VA 0 1,262,250 11,454,606 Kingswood Manor San Antonio, TX 0 293,900 2,061,996 Kirby Place Houston, TX (E) 3,620,000 25,898,825 La Costa Brava (JAX) Jacksonville, FL (J 0 835,757 8,102,211 La Costa Brava (ORL) Orlando, FL 0 206,626 1,380,505 La Mariposa Mesa, AZ (P) 2,047,539 12,453,801 La Mirage San Diego, CA 0 6,005,200 122,982,486 La Reserve Oro Valley, AZ (P) 3,264,562 4,939,545 La Tour Fontaine Houston, TX 9,727,749 2,916,000 15,922,304 La Valencia Mesa, AZ 0 3,553,350 20,544,429 Cost Capitalized Subsequent to Gross Amount Carried Acquisition at Close of Description (Improvements, net) (I) Period 12/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ Building & Building & Apartment Name Location Land Fixtures Land Fixtures (A) - ------------------------------------------------------------------------------------------------------------------------------------ Greenhaven Union City, CA $ 7,000 $ 96,346 $7,507,000 $15,220,469 Greenhouse - Frey Road Atlanta, GA 2,300 1,256,475 2,467,200 23,440,258 Greenhouse - Holcomb Bridge Atlanta, GA 900 1,218,288 2,143,300 20,499,992 Greenhouse - Roswell Atlanta, GA 2,500 801,582 1,220,000 11,759,427 Greenwich Woods Silver Spring, MD 5,300 2,029,605 3,101,000 31,103,000 Greenwood Village Tempe, AZ 0 330,230 2,118,781 17,589,387 Grey Eagle Greenville, SC 2,400 94,313 727,600 6,621,566 Greystone Atlanta, GA 2,000 59,995 2,252,000 5,248,569 Gwinnett Crossing Duluth, GA 0 24,545 2,632,000 32,706,399 Habitat Orlando, FL 0 6,207,998 600,000 6,702,030 Hall Place Quincy, MA 800 6,936 3,150,800 5,116,623 Hammock's Place Miami, FL 100 836,568 319,180 13,053,176 Hampton Green San Antonio, TX 0 2,145,545 1,561,830 5,108,215 Hamptons Tacoma, WA 0 178,855 1,119,200 10,251,760 Harbor Pointe Milwaukee, WI 4,800 543,213 2,979,800 22,586,220 Harborview San Pedro, CA 2,500 190,774 6,402,500 12,799,674 Harbour Landing Corpus Christi, TX 3,400 927,104 765,000 7,781,628 Harrison Park Tucson, AZ 0 63,040 1,265,094 16,411,282 Harvest Grove Conyers, GA 0 12,927 752,000 19,096,611 Hathaway Long Beach, CA 300 638,954 2,512,500 23,248,674 Haywood Pointe Greenville, SC 0 16,630 480,000 9,320,151 Hearthstone San Antonio, TX 200 622,678 1,035,900 3,997,810 Heritage, The Phoenix, AZ 0 35,954 1,211,205 13,171,657 Heron Cove Coral Springs, FL 0 600,414 823,000 8,597,774 Heron Landing (K) Lauderhill, FL 4,700 447,319 711,800 6,811,103 Heron Pointe Boynton Beach, FL 0 379,949 1,546,700 8,263,724 Heron Run Plantation, FL 0 837,523 917,800 9,691,524 Hickory Creek Richmond, VA 0 99,506 1,323,000 18,972,565 Hickory Ridge Greenville, SC 2,400 78,303 288,200 2,650,259 Hidden Lakes Haltom City, TX 0 3,330 1,872,000 20,471,364 Hidden Oaks Cary, NC 2,400 411,961 1,178,600 11,005,420 Hidden Palms Tampa, FL 1,600 226,720 2,049,600 6,592,033 Hidden Valley Club Ann Arbor, MI 0 933,661 915,000 8,517,314 Highland Creste Seattle, WA 0 264,418 935,200 8,680,799 Highland Grove Stone Mt., GA 2,400 136,780 1,668,100 15,133,073 Highland Point Denver, CO 0 123,779 1,631,900 14,810,751 Highline Oaks Denver, CO 2,400 155,509 1,057,400 9,807,158 Hollows Columbia, SC 0 13,546 450,000 9,009,252 Hollyview Silver Springs, MD 2,400 47,105 191,400 1,531,580 Horizon Place Tampa, FL 0 33,539 2,128,000 12,315,289 Hunt Club Charlotte, NC 0 14,319 1,090,000 18,372,951 Hunter's Glen Chesterfield, MO 1,700 472,573 915,200 8,693,599 Hunter's Green Fort Worth, TX 100 847,599 524,300 4,252,221 Hunters Ridge/South Pointe St. Louis, MO 5,600 497,893 1,955,600 18,350,011 Huntington Hollow Tulsa, OK 0 102,656 668,600 6,119,867 Huntington Park Everett, WA 3,000 612,550 1,597,500 14,962,551 Idlewood Indianapolis, IN 1,800 371,211 2,561,800 11,827,851 Indian Bend Phoenix, AZ 3,200 707,524 1,075,700 10,359,909 Indian Tree Arvada, CO 100 512,219 881,225 5,380,551 Indigo Plantation Daytona Beach, FL 0 11,019 1,520,000 14,901,289 Indigo Springs Kent, WA 500 530,895 1,270,500 11,969,457 Ingleside, The Phoenix, AZ 0 19,150 1,203,600 10,704,732 Ironwood at the Ranch Wesminster, CO 0 151,417 1,493,300 13,591,199 Isle at Arrowhead Ranch Glendale, AZ 0 (148,013) 1,650,237 19,626,061 Ivy Place (L) Atlanta, GA 9,750 314,496 802,950 7,453,696 James Street Crossing Kent, WA 2,654 155,487 2,081,254 18,862,923 Jefferson at Walnut Creek Austin, TX 1,600 139,508 2,737,600 14,721,293 Junipers at Yarmouth Yarmouth, ME 5,700 305,644 1,355,700 8,112,756 Kempton Downs Gresham, OR 35,149 1,038,147 1,217,349 11,678,140 Keystone Austin, TX 500 608,330 498,500 5,090,636 Kimmerly Glen Charlotte, NC 0 6,747 1,040,000 12,708,593 Kingsport Alexandria, VA 0 632,015 1,262,250 12,086,621 Kingswood Manor San Antonio, TX 100 1,552,690 294,000 3,614,686 Kirby Place Houston, TX 1,600 76,259 3,621,600 25,975,084 La Costa Brava (JAX) Jacksonville, FL (J) (1) 3,092,861 835,756 11,195,072 La Costa Brava (ORL) Orlando, FL 0 5,510,964 206,626 6,891,469 La Mariposa Mesa, AZ 0 227,622 2,047,539 12,681,422 La Mirage San Diego, CA 0 653,113 6,005,200 123,635,599 La Reserve Oro Valley, AZ 0 115,178 3,264,562 5,054,723 La Tour Fontaine Houston, TX 0 9,382 2,916,000 15,931,686 La Valencia Mesa, AZ 0 241,927 3,553,350 20,786,356 Life Used to Compute Depreciation in - -------------------------------------------------------------------------------------------------------------- Accumulated Date of Latest Income Apartment Name Location Total (B) Depreciation Construction Statement (C) - ----------------------------------------------------------------------------------------------------------------------------------- Greenhaven Union City, CA $22,727,469 $ 229,042 1983 30 Years Greenhouse - Frey Road Atlanta, GA 25,907,458 3,843,772 1985 30 Years Greenhouse - Holcomb Bridge Atlanta, GA 22,643,292 3,420,109 1985 30 Years Greenhouse - Roswell Atlanta, GA 12,979,427 1,969,470 1985 30 Years Greenwich Woods Silver Spring, MD 34,204,000 4,748,175 1967 30 Years Greenwood Village Tempe, AZ 19,708,168 654,182 1984 30 Years Grey Eagle Greenville, SC 7,349,166 305,082 1991 30 Years Greystone Atlanta, GA 7,500,569 111,588 1960 30 Years Gwinnett Crossing Duluth, GA 35,338,399 277,465 1989/90 30 Years Habitat Orlando, FL 7,302,030 4,241,101 1974 30 Years Hall Place Quincy, MA 8,267,423 10,663 1998 30 Years Hammock's Place Miami, FL 13,372,356 2,524,109 1986 30 Years Hampton Green San Antonio, TX 6,670,045 1,268,962 1979 30 Years Hamptons Tacoma, WA 11,370,960 613,771 1991 30 Years Harbor Pointe Milwaukee, WI 25,566,020 638,054 1970/1990 30 Years Harborview San Pedro, CA 19,202,174 863,489 1985 30 Years Harbour Landing Corpus Christi, TX $ 8,546,628 $1,536,466 1985 30 Years Harrison Park Tucson, AZ 17,676,376 622,119 1985 30 Years Harvest Grove Conyers, GA 19,848,611 163,652 1986 30 Years Hathaway Long Beach, CA 25,761,174 2,813,859 1987 30 Years Haywood Pointe Greenville, SC 9,800,151 81,040 1985 30 Years Hearthstone San Antonio, TX 5,033,710 867,029 1982 30 Years Heritage, The Phoenix, AZ 14,382,862 484,873 1995 30 Years Heron Cove Coral Springs, FL 9,420,774 1,369,939 1987 30 Years Heron Landing (K) Lauderhill, FL 7,522,903 775,811 1988 30 Years Heron Pointe Boynton Beach, FL 9,810,424 461,259 1989 30 Years Heron Run Plantation, FL 10,609,324 1,512,817 1987 30 Years Hickory Creek Richmond, VA 20,295,565 158,665 1984 30 Years Hickory Ridge Greenville, SC 2,938,459 127,539 1968 30 Years Hidden Lakes Haltom City, TX 22,343,364 171,872 1996 30 Years Hidden Oaks Cary, NC 12,184,020 495,384 1988 30 Years Hidden Palms Tampa, FL 8,641,633 308,103 1986 30 Years Hidden Valley Club Ann Arbor, MI 9,432,314 4,858,571 1973 30 Years Highland Creste Seattle, WA 9,615,999 557,192 1989 30 Years Highland Grove Stone Mt., GA 16,801,173 678,853 1988 30 Years Highland Point Denver, CO 16,442,651 873,920 1984 30 Years Highline Oaks Denver, CO 10,864,558 555,862 1986 30 Years Hollows Columbia, SC 9,459,252 78,579 1987 30 Years Hollyview Silver Springs, MD 1,722,980 62,582 1965 30 Years Horizon Place Tampa, FL 14,443,289 107,541 1985 30 Years Hunt Club Charlotte, NC 19,462,951 154,998 1990 30 Years Hunter's Glen Chesterfield, MO 9,608,799 767,597 1985 30 Years Hunter's Green Fort Worth, TX 4,776,521 968,355 1981 30 Years Hunters Ridge/South Pointe St. Louis, MO 20,305,611 1,038,928 1986-1987 30 Years Huntington Hollow Tulsa, OK 6,788,467 405,769 1981 30 Years Huntington Park Everett, WA 16,560,051 2,655,577 1991 30 Years Idlewood Indianapolis, IN 14,389,651 525,765 1991 30 Years Indian Bend Phoenix, AZ 11,435,609 1,826,515 1973 30 Years Indian Tree Arvada, CO 6,261,776 1,297,882 1983 30 Years Indigo Plantation Daytona Beach, FL 16,421,289 128,007 1989 30 Years Indigo Springs Kent, WA 13,239,957 813,955 1991 30 Years Ingleside, The Phoenix, AZ 11,908,332 385,914 1995 30 Years Ironwood at the Ranch Wesminster, CO 15,084,499 797,447 1986 30 Years Isle at Arrowhead Ranch Glendale, AZ 21,276,298 717,949 1996 30 Years Ivy Place (L) Atlanta, GA 8,256,646 729,974 1978 30 Years James Street Crossing Kent, WA 20,944,176 719,489 1989 30 Years Jefferson at Walnut Creek Austin, TX 17,458,893 645,560 1994 30 Years Junipers at Yarmouth Yarmouth, ME 9,468,456 533,173 1970 30 Years Kempton Downs Gresham, OR 12,895,489 1,649,856 1990 30 Years Keystone Austin, TX 5,589,136 799,550 1981 30 Years Kimmerly Glen Charlotte, NC 13,748,593 109,244 1986 30 Years Kingsport Alexandria, VA 13,348,871 2,035,858 1986 30 Years Kingswood Manor San Antonio, TX 3,908,686 536,838 1983 30 Years Kirby Place Houston, TX 29,596,684 1,080,862 1994 30 Years La Costa Brava (JAX) Jacksonville, FL (J) 12,030,829 6,530,247 1970/1973 30 Years La Costa Brava (ORL) Orlando, FL 7,098,095 3,841,225 1967 30 Years La Mariposa Mesa, AZ 14,728,961 477,406 1986 30 Years La Mirage San Diego, CA 129,640,799 6,274,402 1988/1992 30 Years La Reserve Oro Valley, AZ 8,319,285 217,759 1988 30 Years La Tour Fontaine Houston, TX 18,847,686 130,277 1994 30 Years La Valencia Mesa, AZ 24,339,706 778,595 1998 30 Years
S-4 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Cost Capitalized Subsequent to Initial Cost to Acquisition Description Company (Improvements, net) (I) - ----------------------------------------------------------------------------------------------------------------------------------- Building & Building & Apartment Name Location Encumbrances Land Fixtures Land Fixtures Land - ----------------------------------------------------------------------------------------------------------------------------------- Ladera Mesa, AZ $ 0 $2,978,879 $20,643,003 $ 0 $ 28,461 $2,978,879 Lake in the Woods (MI) Ypsilanti, MI 0 1,859,625 16,314,064 0 6,631,660 1,859,625 Lake Point Charlotte, NC 0 1,058,975 13,904,172 0 19,183 1,058,975 Lakeridge at Moors Miami, FL 0 2,100,000 9,134,273 0 7,648 2,100,000 Lakes at Vinings Atlanta, GA 22,420,082 6,496,000 21,821,861 2,000 50,216 6,498,000 Lakeshore at Preston Plano, TX 13,083,226 3,322,000 15,177,406 3,800 81,141 3,325,800 Lakeville Resort Petaluma, CA 20,523,132 2,734,100 24,773,523 2,400 320,134 2,736,500 Lakewood Greens Dallas, TX 8,385,077 2,016,000 8,997,910 3,600 67,778 2,019,600 Lakewood Oaks Dallas, TX 0 1,630,200 14,671,813 1,400 749,835 1,631,600 Landera San Antonio, TX 0 766,300 6,896,811 0 173,701 766,300 Landings (TN) Memphis, TN 0 1,314,000 14,221,751 0 7,774 1,314,000 Lands End Pacifica, CA 0 1,824,500 16,423,435 2,000 1,134,938 1,826,500 Larkspur Woods Sacramento, CA (E) 5,800,000 14,512,065 2,900 272,127 5,802,900 Laurel Ridge Chapel Hill, NC 0 160,000 3,434,635 22,001 1,338,976 182,001 Legends Tucson, AZ 0 2,729,788 17,905,915 0 103,532 2,729,788 Lexington Glen Atlanta, GA 0 5,760,000 41,097,486 0 7,067 5,760,000 Lexington Park Orlando, FL 0 2,016,000 12,464,122 0 17,940 2,016,000 Lexington Village Alpharetta, GA 18,672,575 3,520,000 21,030,169 1,900 55,275 3,521,900 Lincoln Green I San Antonio, TX 0 947,366 2,133,002 0 3,753,956 947,366 Lincoln Green I & II (CA) Sunnyvale, CA 12,900,000 9,048,000 18,419,243 9,300 109,486 9,057,300 Lincoln Green II San Antonio, TX 0 1,052,340 5,828,311 0 90,343 1,052,340 Lincoln Green III San Antonio, TX 0 536,010 2,069,688 0 32,629 536,010 Lincoln Heights Quincy, MA 21,700,000 5,925,000 33,575,000 3,400 117,191 5,928,400 Lincoln Oaks Tulsa, OK 0 1,310,500 11,794,290 0 97,102 1,310,500 Lincoln Village I & II (CA) Larkspur, CA 0 17,100,000 31,363,631 7,300 166,166 17,107,300 Little Cottonwoods Tempe, AZ (P) 3,050,133 27,039,173 0 42,916 3,050,133 Lodge (OK), The Tulsa, OK 0 313,571 2,677,951 (200) 1,145,535 313,371 Lodge (TX), The San Antonio, TX 0 1,363,636 5,496,784 0 3,775,750 1,363,636 Lofton Place Tampa, FL 0 2,240,000 16,890,077 0 23,916 2,240,000 Longwood Decatur, GA 0 1,452,000 13,067,523 2,048 493,235 1,454,048 Madison at Bridford Lake Greensboro, NC 0 2,265,314 26,415,436 0 0 2,265,314 Madison at Cedar Springs Dallas, TX 0 2,470,000 33,331,339 0 4,649 2,470,000 Madison at Chase Oaks Plano, TX 0 3,055,000 29,002,581 0 10,638 3,055,000 Madison at Coral Square Coral Springs, FL 0 4,800,000 26,087,012 0 26,455 4,800,000 Madison at River Sound Lawrenceville, GA 0 3,666,999 48,136,692 0 8,495 3,666,999 Madison at Round Grove Austin, TX 0 2,626,000 25,843,457 0 12,279 2,626,000 Madison at Stone Creek Lewisville, TX 0 2,535,000 22,665,256 0 16,533 2,535,000 Madison at the Arboretum Austin, TX 0 1,046,500 9,669,201 0 19,939 1,046,500 Madison on Melrose Richardson, TX 0 1,300,000 15,115,309 0 3,846 1,300,000 Madison on the Parkway Dallas, TX 0 2,444,000 22,514,520 0 5,477 2,444,000 Mallard Cove Greenville, SC 0 803,700 7,233,160 9,650 638,498 813,350 Mallgate Louisville, KY 0 0 6,162,515 0 4,784,159 0 Marbrisa Tampa, FL 0 811,500 7,303,334 2,000 836,637 813,500 Mariner Club (FL) Pembroke Pines, FL 9,586,405 1,824,000 20,912,452 500 16,773 1,824,500 Mariners Wharf Orange Park, FL 0 1,858,800 16,733,097 2,400 107,211 1,861,200 Marks Denver, CO 20,830,000 4,928,500 44,356,994 0 741,053 4,928,500 Marquessa Corona Hills, CA 0 6,888,500 21,823,966 0 298,447 6,888,500 Martha Lake Seattle, WA 0 823,200 7,409,199 (2,000) 62,852 821,200 Martins Landing Roswell, GA 12,902,947 4,800,000 12,913,715 2,000 93,488 4,802,000 Marymont (MD) Laurel, MD 0 1,901,800 17,116,593 2,000 595,136 1,903,800 Maxwell House Augusta, GA 0 216,000 1,846,772 0 795,390 216,000 McAlpine Ridge Charlotte, NC 0 1,283,400 11,550,225 600 748,260 1,284,000 McDowell Place Naperville, IL 16,000,000 2,578,900 23,210,030 1,500 660,187 2,580,400 Meadow Creek Tigard, OR 8,424,069 1,298,100 11,682,684 1,000 1,026,991 1,299,100 Meadows (AZ), The Mesa, AZ 0 650,000 15,438,616 0 264,739 650,000 Meadows in the Park Birmingham, AL 0 1,000,000 8,525,000 900 135,704 1,000,900 Meadows on the Lake Birmingham, AL 0 1,000,000 8,521,175 900 23,089 1,000,900 Merrill Creek Tacoma, WA 0 814,200 7,327,478 0 42,678 814,200 Merrimac Woods Costa Mesa, CA 0 673,300 6,059,722 2,400 364,456 675,700 Merritt Lake Duluth, GA 0 3,400,000 25,089,339 0 0 3,400,000 Metropolitan Park Seattle, WA 0 493,200 4,438,977 0 72,181 493,200 Mill Village Randolph, MA 0 6,200,000 13,249,725 (14,700) 63,493 6,185,300 Mirador Phoenix, AZ 0 2,597,518 23,417,575 0 51,011 2,597,518 Mission Bay Orlando, FL 0 2,432,000 21,864,876 0 11,695 2,432,000 Mission Palms Tucson, AZ 0 2,023,400 18,210,383 0 308,852 2,023,400 Misty Woods Cary, NC 0 720,790 18,446,473 0 32,918 720,790 Montierra Scottsdale, AZ 0 3,455,000 16,059,325 0 0 3,455,000 Morningside Scottsdale, AZ (P) 670,470 12,616,599 0 71,928 670,470 Mountain Park Ranch Phoenix, AZ (Q) 1,662,332 18,261,617 0 216,502 1,662,332 Mountain Run Albuquerque, NM 0 2,023,400 20,735,983 280,600 451,013 2,304,000 Mountain Terrace Stevenson Ranch, CA 0 3,977,200 35,794,729 1,800 353,995 3,979,000 Gross Amount Carried Life Used to at Close of Compute Period 12/31/98 Depreciation in - ------------------------------------------------------------------------------------------------------------------ Building & Accumulated Date of Latest Income Apartment Name Fixtures (A) Total (B) Depreciation Construction Statement (C) - ------------------------------------------------------------------------------------------------------------------------------------ Ladera $20,671,464 $23,650,343 $ 748,331 1995 30 Years Lake in the Woods (MI) 22,945,724 24,805,349 12,192,377 1969 30 Years Lake Point 13,923,355 14,982,330 120,073 1984 30 Years Lakeridge at Moors 9,141,921 11,241,921 77,914 1991 30 Years Lakes at Vinings 21,872,077 28,370,077 384,185 1972/1975 30 Years Lakeshore at Preston 15,258,547 18,584,347 268,684 1992 30 Years Lakeville Resort 25,093,657 27,830,157 2,041,036 1984 30 Years Lakewood Greens 9,065,689 11,085,289 165,577 1986 30 Years Lakewood Oaks 15,421,648 17,053,248 2,547,680 1987 30 Years Landera 7,070,513 7,836,813 433,120 1983 30 Years Landings (TN) 14,229,525 15,543,525 122,329 1986 30 Years Lands End 17,558,373 19,384,873 1,660,591 1974 30 Years Larkspur Woods 14,784,191 20,587,091 634,415 1989/1993 30 Years Laurel Ridge 4,773,611 4,955,612 2,430,260 1975 30 Years Legends 18,009,446 20,739,234 673,666 1995 30 Years Lexington Glen 41,104,553 46,864,553 338,924 1990 30 Years Lexington Park 12,482,062 14,498,062 106,977 1988 30 Years Lexington Village 21,085,443 24,607,343 352,265 1995 30 Years Lincoln Green I 5,886,958 6,834,324 2,897,048 1984/1986 30 Years Lincoln Green I & II (CA) 18,528,729 27,586,029 322,275 1979 30 Years Lincoln Green II 5,918,654 6,970,994 2,413,452 1984/1986 30 Years Lincoln Green III 2,102,317 2,638,327 884,364 1984/1986 30 Years Lincoln Heights 33,692,191 39,620,591 1,211,608 1991 30 Years Lincoln Oaks 11,891,392 13,201,892 715,734 1991 30 Years Lincoln Village I & II (CA) 31,529,797 48,637,097 552,174 1980 30 Years Little Cottonwoods 27,082,089 30,132,222 990,964 1984 30 Years Lodge (OK), The 3,823,486 4,136,857 2,167,383 1979 30 Years Lodge (TX), The 9,272,534 10,636,170 3,428,267 1979(#) 30 Years Lofton Place 16,913,993 19,153,993 142,634 1988 30 Years Longwood 13,560,758 15,014,806 2,358,769 1992 30 Years Madison at Bridford Lake 26,415,436 28,680,750 212,365 (S) 30 Years Madison at Cedar Springs 33,335,988 35,805,988 274,712 1995 30 Years Madison at Chase Oaks 29,013,219 32,068,219 244,441 1995 30 Years Madison at Coral Square 26,113,467 30,913,467 218,152 1989 30 Years Madison at River Sound 48,145,186 51,812,186 398,420 1996 30 Years Madison at Round Grove 25,855,736 28,481,736 217,324 1995 30 Years Madison at Stone Creek 22,681,789 25,216,789 191,826 1995 30 Years Madison at the Arboretum 9,689,140 10,735,640 81,638 1995 30 Years Madison on Melrose 15,119,155 16,419,155 125,697 1995 30 Years Madison on the Parkway 22,519,997 24,963,997 190,086 1995 30 Years Mallard Cove 7,871,658 8,685,008 765,864 1983 30 Years Mallgate 10,946,674 10,946,674 6,606,790 1969 30 Years Marbrisa 8,139,971 8,953,471 694,912 1984 30 Years Mariner Club (FL) 20,929,225 22,753,725 174,964 1988 30 Years Mariners Wharf 16,840,309 18,701,509 750,312 1989 30 Years Marks 45,098,047 50,026,547 2,569,934 1987 30 Years Marquessa 22,122,413 29,010,913 806,672 1992 30 Years Martha Lake 7,472,051 8,293,251 440,024 1991 30 Years Martins Landing 13,007,203 17,809,203 229,367 1972 30 Years Marymont (MD) 17,711,729 19,615,529 2,751,765 1987-88 30 Years Maxwell House 2,642,162 2,858,162 1,248,345 1951 30 Years McAlpine Ridge 12,298,485 13,582,485 1,925,716 1989-90 30 Years McDowell Place 23,870,217 26,450,617 1,822,982 1988 30 Years Meadow Creek 12,709,675 14,008,775 2,091,069 1985 30 Years Meadows (AZ), The 15,703,355 16,353,355 599,678 1984 30 Years Meadows in the Park 8,660,704 9,661,604 338,365 1986 30 Years Meadows on the Lake 8,544,264 9,545,164 331,222 1987 30 Years Merrill Creek 7,370,156 8,184,356 429,585 1994 30 Years Merrimac Woods 6,424,177 7,099,877 550,388 1970 30 Years Merritt Lake 25,089,339 28,489,339 0 (S) 30 Years Metropolitan Park 4,511,158 5,004,358 263,175 1991 30 Years Mill Village 13,313,218 19,498,518 518,244 1971/1977 30 Years Mirador 23,468,586 26,066,104 856,200 1995 30 Years Mission Bay 21,876,571 24,308,571 182,297 1991 30 Years Mission Palms 18,519,235 20,542,635 1,092,658 1980 30 Years Misty Woods 18,479,391 19,200,181 158,021 1984 30 Years Montierra 16,059,325 19,514,325 0 (S) 30 Years Morningside 12,688,527 13,358,997 464,025 1989 30 Years Mountain Park Ranch 18,478,120 20,140,452 680,537 1994 30 Years Mountain Run 21,186,996 23,490,996 1,251,274 1985 30 Years Mountain Terrace 36,148,724 40,127,724 2,624,731 1992 30 Years
S-5 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Cost Capitalized Subsequent to Initial Cost to Acquisition Description Company (Improvements, net) (I) - ----------------------------------------------------------------------------------------------------------------------------------- Building & Building & Apartment Name Location Encumbrances Land Fixtures Land Fixtures - ----------------------------------------------------------------------------------------------------------------------------------- Newport Heights Seattle, WA $ 0 $ 390,700 $ 3,516,229 $ 500 $ 268,372 North Creek (Everett) Evertt, WA 8,242,891 3,960,000 12,085,772 7,500 383,213 North Creek Heights Seattle, WA 0 753,800 6,784,170 0 66,194 North Hill Atlanta, GA 16,252,184 2,520,000 18,501,949 5,300 3,134,657 Northampton 1 Largo, MD 13,042,769 1,843,200 17,318,363 0 2,278,241 Northampton 2 Largo, MD 0 1,494,100 14,279,723 19,400 633,133 Northgate Village San Antonio, TX 0 660,000 5,753,724 100 706,216 Northlake (FL) Jacksonville, FL 0 1,166,000 10,494,125 2,400 93,707 Northridge Pleasant Hill, CA 0 5,525,000 14,669,757 2,800 131,052 Northwoods Village Cary, NC (E) 1,368,000 11,443,857 1,700 435,629 Oak Mill 2 Germantown, MD 9,507,486 854,000 8,187,169 133 1,043,938 Oak Park North Agoura Hills, CA (O) 1,706,500 15,358,942 400 125,182 Oak Park South Agoura Hills, CA (O) 1,683,400 15,150,835 400 187,533 Oaks (NC) Charlotte, NC 0 2,196,744 24,031,587 0 7,017 Oaks of Lakebridge Ormond Beach, FL 0 413,700 3,742,503 2,100 565,993 Ocean Walk Key West, FL 21,099,078 2,834,900 25,517,673 3,849 163,592 Olde Redmond Place Redmond, WA 9,400,000 4,800,000 14,073,460 7,100 104,045 Olentangy Commons (OH) Columbus, OH 0 3,032,336 20,862,191 (0) 8,890,595 One Eton Square Tulsa, OK 0 1,570,100 14,130,762 0 352,845 Orange Grove Village Tucson, AZ (P) 1,813,154 14,899,780 0 109,073 Orchard of Landen Maineville, OH (E) 2,496,000 17,720,225 2,400 172,678 Orchard Ridge Seattle, WA 0 482,600 4,343,826 3,000 251,695 Overlook San Antonio, TX 0 1,100,000 9,900,000 200 241,128 Overlook Manor Frederick, MD 0 1,296,000 3,896,628 3,100 40,128 Overlook Manor II Frederick, MD 5,877,338 2,184,000 6,271,649 2,300 33,224 Overlook Manor III Frederick, MD 0 1,024,000 3,008,998 2,300 27,952 Paces Station Atlanta, GA 0 4,801,500 32,630,170 0 538,550 Palms at South Shore League City, TX 0 1,200,000 16,601,152 0 7,041 Palms, The Phoenix, AZ (P) 3,285,226 11,269,891 0 170,132 Panther Ridge Seattle, WA 0 1,055,800 9,501,841 0 327,290 Paradise Pointe Dania, FL 0 1,493,800 16,714,317 419,614 1,658,986 Parc Royale Houston, TX 8,850,805 2,223,000 11,921,433 0 7,374 Park Knoll Atlanta, GA 0 2,904,500 26,140,219 4,300 1,612,513 Park Meadow Gilbert, AZ (P) 835,217 15,124,555 0 75,202 Park Place (TX) Houston, TX 10,088,744 1,603,000 11,961,084 0 48,402 Park Place I & II Plymouth, MN 17,678,878 2,428,200 21,853,006 7,800 937,147 Park West (CA) Los Angeles, CA 0 3,033,300 27,299,323 200 775,858 Park West (TX) Austin, TX 0 648,605 4,541,683 100 610,176 Park West End (VA) Richmond, VA 7,168,169 1,560,000 11,849,159 2,500 41,285 Parkcrest Southfield, MI 7,230,684 1,260,000 10,366,615 5,000 72,767 Parkridge Place Las Colinas, TX 0 6,430,800 17,073,584 2,100 278,799 Parkside Union City, CA 0 6,240,000 11,809,198 6,700 342,653 Parkview Terrace Redlands, CA 22,650,000 4,969,200 35,729,978 0 143,539 Parkwood East Fort Collins, CO 0 1,644,000 14,796,301 0 144,849 Patchen Oaks Lexington, KY 0 1,344,000 8,121,317 1,300 74,332 Pine Harbour Orlando, FL 0 1,661,000 14,948,625 3,300 968,258 Pine Meadow Greensboro, NC 4,777,745 719,300 6,474,036 1,350 593,336 Pines at Cloverlane Pittsfield Township, MI 0 1,906,600 17,159,269 1,200 3,252,603 Pines of Springdale West Palm Beach, FL 0 471,200 4,240,800 2,667 518,699 Plantation (TX) Houston, TX 0 2,320,000 7,690,000 2,900 309,026 Plantation Ridge Marietta, GA 0 4,086,000 19,178,927 2,900 383,733 Plantations at Killearn Tallahassee, FL 5,061,305 828,000 7,646,210 0 11,174 Pleasant Ridge Arlington, TX 1,656,463 441,000 1,959,866 4,100 45,544 Plum Tree Corner, WI (R) 1,992,000 20,259,729 4,700 209,236 Plum Tree Park Seattle, WA 0 1,133,400 10,200,420 0 99,787 Point (NC) Charlotte, NC 0 1,700,000 25,876,312 0 9,798 Pointe at South Mountain Phoenix, AZ 0 2,228,800 20,058,955 0 421,967 Pointe East Redmond, WA 0 601,800 5,416,489 800 190,178 Polos Fort Myers, FL 0 1,640,000 18,668,025 0 46,063 Polos East Orlando, FL 0 1,386,000 19,296,136 0 11,499 Portland Center Combined Portland, OR 22,147,692 6,028,000 43,503,133 4,900 61,261 Portofino Chino Hills, CA 0 3,572,400 14,662,928 0 97,036 Portside Towers Combined Jersey City, NJ 58,253,929 22,440,000 96,678,525 15,700 167,992 Prairie Creek I&II Richardson, TX 0 2,832,000 20,207,544 0 0 Preakness Antioch, TN (E) 1,560,000 7,653,521 1,900 921,368 Preserve at Squaw Peak Phoenix, AZ (P) 517,788 8,535,598 0 119,166 Preston at Willowbend Plano, TX 0 872,500 7,852,675 0 1,489,454 Preston Bend Dallas, TX 8,719,000 1,083,000 9,925,055 2,200 185,044 Preston Lake Atlanta, GA 0 1,430,900 12,877,986 34,993 1,152,176 Princeton Square Jacksonville, FL 0 864,000 12,129,072 0 6,034 Promenade (FL) St. Petersburg, FL 0 2,124,193 25,969,392 0 17,450 Gross Amount Carried Life Used to at Close of Compute Description Period 12/31/98 Depreciation in - ------------------------------------------------------------------------------------------------------------------- Building & Accumulated Date of Latest Income Apartment Name Land Fixtures (A) Total (B) Depreciation Construction Statement (C) - ----------------------------------------------------------------------------------------------------------------------------------- Newport Heights $ 391,200 $ 3,784,601 $ 4,175,801 $ 642,415 1985 30 Years North Creek (Everett) 3,967,500 12,468,984 16,436,484 171,059 1986 30 Years North Creek Heights 753,800 6,850,364 7,604,164 399,608 1990 30 Years North Hill 2,525,300 21,636,606 24,161,906 1,157,351 1984 30 Years Northampton 1 1,843,200 19,596,604 21,439,804 3,314,135 1977 30 Years Northampton 2 1,513,500 14,912,856 16,426,356 2,140,454 1988 30 Years Northgate Village 660,100 6,459,940 7,120,040 1,461,952 1984 30 Years Northlake (FL) 1,168,400 10,587,833 11,756,233 484,058 1989 30 Years Northridge 5,527,800 14,800,809 20,328,609 335,709 1974 30 Years Northwoods Village 1,369,700 11,879,486 13,249,186 519,451 1986 30 Years Oak Mill 2 854,133 9,231,107 10,085,240 1,243,406 1985 30 Years Oak Park North 1,706,900 15,484,124 17,191,024 1,714,877 1990 30 Years Oak Park South 1,683,800 15,338,368 17,022,168 1,838,381 1989 30 Years Oaks (NC) 2,196,744 24,038,604 26,235,348 199,692 1996 30 Years Oaks of Lakebridge 415,800 4,308,496 4,724,296 896,364 1984 30 Years Ocean Walk 2,838,749 25,681,265 28,520,013 959,073 1990 30 Years Olde Redmond Place 4,807,100 14,177,504 18,984,604 251,198 1986 30 Years Olentangy Commons (OH) 3,032,336 29,752,786 32,785,122 17,445,753 1972 30 Years One Eton Square 1,570,100 14,483,607 16,053,707 917,323 1985 30 Years Orange Grove Village 1,813,154 15,008,854 16,822,008 578,822 1986/1995 30 Years Orchard of Landen 2,498,400 17,892,902 20,391,302 776,517 1985/1988 30 Years Orchard Ridge 485,600 4,595,521 5,081,121 785,794 1988 30 Years Overlook 1,100,200 10,141,128 11,241,328 654,566 1985 30 Years Overlook Manor 1,299,100 3,936,756 5,235,856 68,456 1980/1985 30 Years Overlook Manor II 2,186,300 6,304,873 8,491,173 110,701 1980/1985 30 Years Overlook Manor III 1,026,300 3,036,950 4,063,250 51,336 1980/1985 30 Years Paces Station 4,801,500 33,168,720 37,970,220 1,649,641 1984-1988/1989 30 Years Palms at South Shore 1,200,000 16,608,194 17,808,194 138,906 1990 30 Years Palms, The 3,285,226 11,440,023 14,725,249 419,328 1990 30 Years Panther Ridge 1,055,800 9,829,131 10,884,931 604,524 1980 30 Years Paradise Pointe 1,913,414 18,373,302 20,286,717 2,555,797 1987-90 30 Years Parc Royale 2,223,000 11,928,807 14,151,807 99,492 1994 30 Years Park Knoll 2,908,800 27,752,732 30,661,532 5,150,343 1983 30 Years Park Meadow 835,217 15,199,757 16,034,974 559,438 1986 30 Years Park Place (TX) 1,603,000 12,009,486 13,612,486 421,993 1996 30 Years Park Place I & II 2,436,000 22,790,153 25,226,153 2,073,725 1986 30 Years Park West (CA) 3,033,500 28,075,181 31,108,681 3,415,094 1987/90 30 Years Park West (TX) 648,705 5,151,859 5,800,564 1,051,788 1985 30 Years Park West End (VA) 1,562,500 11,890,445 13,452,945 431,512 1985 30 Years Parkcrest 1,265,000 10,439,382 11,704,382 184,587 1987 30 Years Parkridge Place 6,432,900 17,352,383 23,785,283 741,369 1985 30 Years Parkside 6,246,700 12,151,851 18,398,551 214,752 1979 30 Years Parkview Terrace 4,969,200 35,873,518 40,842,718 1,319,693 1986 30 Years Parkwood East 1,644,000 14,941,150 16,585,150 862,762 1986 30 Years Patchen Oaks 1,345,300 8,195,650 9,540,950 140,271 1990 30 Years Pine Harbour 1,664,300 15,916,883 17,581,183 2,916,928 1991 30 Years Pine Meadow 720,650 7,067,372 7,788,022 715,199 1974 30 Years Pines at Cloverlane 1,907,800 20,411,872 22,319,672 2,607,112 1975-79 30 Years Pines of Springdale 473,867 4,759,499 5,233,366 876,398 1985/87(x) 30 Years Plantation (TX) 2,322,900 7,999,026 10,321,926 265,099 1969 30 Years Plantation Ridge 4,088,900 19,562,659 23,651,559 389,346 1975 30 Years Plantations at Killearn 828,000 7,657,385 8,485,385 67,650 1990 30 Years Pleasant Ridge 445,100 2,005,410 2,450,510 36,657 1982 30 Years Plum Tree 1,996,700 20,468,965 22,465,665 552,298 1989 30 Years Plum Tree Park 1,133,400 10,300,207 11,433,607 602,359 1991 30 Years Point (NC) 1,700,000 25,886,110 27,586,110 215,100 1996 30 Years Pointe at South Mountain 2,228,800 20,480,922 22,709,722 1,187,642 1988 30 Years Pointe East 602,600 5,606,667 6,209,267 849,394 1988 30 Years Polos 1,640,000 18,714,088 20,354,088 158,462 1991 30 Years Polos East 1,386,000 19,307,635 20,693,635 162,504 1991 30 Years Portland Center Combined 6,032,900 43,564,393 49,597,293 128,134 1965 30 Years Portofino 3,572,400 14,759,964 18,332,364 533,039 1989 30 Years Portside Towers Combined 22,455,700 96,846,517 119,302,217 1,838,332 1992/1997 30 Years Prairie Creek I&II 2,832,000 20,207,544 23,039,544 166,908 1998/99 30 Years Preakness 1,561,900 8,574,888 10,136,788 386,777 1986 30 Years Preserve at Squaw Peak 517,788 8,654,764 9,172,552 319,358 1990 30 Years Preston at Willowbend 872,500 9,342,129 10,214,629 1,802,923 1985 30 Years Preston Bend 1,085,200 10,110,100 11,195,300 577,882 1986 30 Years Preston Lake 1,465,893 14,030,162 15,496,055 2,660,435 1984-86 30 Years Princeton Square 864,000 12,135,106 12,999,106 105,842 1984 30 Years Promenade (FL) 2,124,193 25,986,843 28,111,036 215,668 1994 30 Years
S-6 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Cost Capitalized Subsequent to Initial Cost to Acquisition Description Company (Improvements, net) (I) - ------------------------------------------------------------------------------------------------------------------------------------ Building & Building & Apartment Name Location Encumbrances Land Fixtures Land Fixtures - ------------------------------------------------------------------------------------------------------------------------------------ Promenade Terrace Corona Hills, CA $15,952,012 $2,281,000 $20,529,476 $ 1,800 $ 285,946 Promontory Pointe I & II Phoenix, AZ (P) 2,355,509 30,450,580 0 98,159 Prospect Towers Hackensack, NJ 14,774,318 8,425,000 27,891,710 1,600 176,246 Pueblo Villas Albuquerque, NM 0 854,300 7,688,783 1,300 639,184 Quail Cove Salt Lake City, UT 0 2,271,800 20,446,430 0 378,250 Rancho Murietta Tempe, AZ 0 1,766,282 17,585,287 0 102,299 Ranchstone Houston, TX 0 770,000 15,395,149 0 5,445 Ravens Crest Plainsboro, NJ (O) 4,673,000 42,057,149 2,850 1,928,046 Ravinia Greenfield, WI (R) 1,236,000 12,034,764 4,100 170,609 Redlands Lawn and Tennis Redlands, CA 24,050,000 4,822,320 26,373,194 0 229,969 Reflections at the Lakes Las Vegas, NV 0 1,896,000 17,063,715 0 126,145 Regatta San Antonio, TX 0 818,500 7,366,677 0 172,596 Regency Charlotte, NC 0 890,000 12,003,614 0 17,603 Regency Palms Huntington Beach, CA 0 1,856,500 16,708,950 900 535,399 Regency Woods Des Moines, IA 6,351,345 745,100 6,705,430 8,380 189,023 Registry Denver, CO 0 1,303,100 11,727,649 0 151,286 Reserve at Ashley Lake Boynton Beach, FL 24,150,000 3,519,900 23,340,219 500 231,249 Reserve Square Combined Cleveland, OH 0 2,618,352 23,565,022 500 10,401,164 Retreat, The Phoenix, AZ 0 3,475,114 26,544,281 0 0 Richmond Townhomes Houston, TX 9,316,217 940,000 13,881,949 0 43,054 Ridgegate Seattle, WA 0 805,800 7,251,986 0 151,473 Ridgetop Tacoma, WA 0 811,500 7,082,500 0 269,585 Ridgetree I & II Dallas, TX 0 2,094,600 18,851,177 20,600 1,381,212 Ridgeway Commons Memphis, TN 0 568,400 5,115,501 14,840 198,793 Ridgewood Village San Diego, CA 0 5,760,000 14,019,345 1,500 20,847 Rincon Houston, TX 0 4,400,000 16,725,229 1,900 64,450 River Bend Tampa, FL 0 602,945 2,161,915 0 2,286,450 River Hill Grand Prairie, TX 0 2,004,000 19,375,832 0 8,139 River Oak Louisville, KY 0 1,253,900 11,285,573 2,700 238,961 River Park Fort Worth, TX 7,721,103 2,240,000 8,769,069 5,400 92,735 Rivers Edge Waterbury, CT 0 780,000 6,544,410 1,900 23,899 Riverside Park Tulsa, OK (E) 1,440,000 12,374,977 1,400 81,122 Rock Creek Corrboro, NC 0 895,100 8,056,360 600 189,346 Rolido Parque Houston, TX 7,190,666 2,950,000 7,882,070 5,900 232,225 Rosehill Pointe Lenexa, KS 13,100,000 2,073,400 18,660,475 22,600 1,649,297 Royal Oak Eagan, MN 13,148,135 1,598,200 14,383,478 4,704 204,504 Royal Oaks (FL) Jacksonville, FL 0 1,988,000 13,845,479 0 11,341 Sabal Palm Pompano Beach, FL 0 3,536,000 20,167,175 2,600 516,806 Sabal Palm at Boot Ranch Palm Harbor, FL 16,736,610 3,888,000 29,106,931 0 26,613 Sabal Palm at Carrollwood Place Tampa, FL 0 3,888,000 27,051,346 0 11,468 Sabal Pointe (M) Coral Springs, FL 0 1,941,900 17,477,592 9,700 337,037 Saddle Creek Carrollton, TX 0 703,300 6,329,899 4,800 3,158,856 Saddle Ridge Loudoun County, VA 0 1,351,800 12,165,984 13,000 319,230 Sailboat Bay Raleigh, NC 0 960,000 9,012,118 0 6,255 San Tropez Phoenix, AZ 0 2,738,000 24,641,839 0 178,192 Sandstone Euless, TX 1,359,266 240,000 1,560,399 3,600 42,252 Sawgrass Cove Bradenton, FL 0 1,671,200 15,041,179 2,950 1,100,691 Scarborough Square Rockville, MD 4,162,256 1,815,000 7,210,774 0 0 Scottsdale Courtyards Scottsdale, AZ (P) 2,979,269 25,060,431 0 197,011 Scottsdale Meadows Scottsdale, AZ 0 1,512,000 11,407,058 0 75,409 Seasons, The Boise, ID 0 604,400 5,439,624 3,600 379,840 Sedona Ridge Ahwatukee, AZ 0 5,508,000 9,700,530 0 197,861 Sedona Springs Austin, TX 0 2,574,000 23,478,175 0 15,243 Settler's Point Salt Lake City, UT 0 1,715,100 15,436,275 0 285,970 Seventh & James Seattle, WA 0 663,800 5,974,099 0 70,560 Shadow Brook Phoenix, AZ (P) 3,065,496 18,369,234 0 156,671 Shadow Lake Doraville, GA 0 1,140,000 13,377,068 0 5,840 Sheffield Court Arlington, VA 0 3,349,350 30,246,228 0 2,141,204 Shoal Run Birmingham, AL 0 1,380,000 12,540,007 0 11,202 Shores at Andersen Springs Chandler, AZ (P) 2,743,816 22,781,351 0 170,641 Sierra Canyon Canyon Cnty, CA 0 3,480,000 12,515,590 4,200 465,377 Silver Creek Phoenix, AZ (P) 712,102 6,705,954 0 57,100 Silver Shadow Las Vegas, NV 0 952,100 8,568,921 1,340 344,145 Silver Springs (FL) Jacksonville, FL 0 1,828,700 16,458,192 2,400 322,798 Silver Springs (OK) Tulsa, OK 0 672,500 6,052,669 0 92,874 Silverwood Mission, KS (T) 1,230,000 11,196,244 0 589,245 Skylark Union City, CA 11,790,000 1,775,000 16,660,175 6,600 (52,387) Skyline Gateway Tucson, AZ 0 1,128,400 10,155,997 0 188,382 Sleepy Hollow Kansas City, MO (T) 2,193,547 13,689,443 (0) 1,707,643 Smoketree Polo Club Indio, CA 9,325,000 864,000 7,139,689 3,200 (160,530) Sommerset Place Raleigh, NC 0 360,000 7,979,167 0 8,410 Gross Amount Carried Life Used to at Close of Compute Description Period 12/31/98 Depreciation in - -------------------------------------------------------------------------------------------------------------------- Building & Accumulated Date of Latest Income Apartment Name Land Fixtures (A) Total (B) Depreciation Construction Statement (C) - ------------------------------------------------------------------------------------------------------------------------------------ Promenade Terrace $2,282,800 $20,815,422 $23,098,222 $1,870,429 1990 30 Years Promontory Pointe I & II 2,355,509 30,548,739 32,904,248 1,120,143 1984/1996 30 Years Prospect Towers 8,426,600 28,067,956 36,494,556 922,709 1995 30 Years Pueblo Villas 855,600 8,327,967 9,183,567 771,363 1975 30 Years Quail Cove 2,271,800 20,824,680 23,096,480 1,227,031 1987 30 Years Rancho Murietta 1,766,282 17,687,586 19,453,868 657,596 1983 30 Years Ranchstone 770,000 15,400,595 16,170,595 128,681 1996 30 Years Ravens Crest 4,675,850 43,985,195 48,661,045 7,206,475 1984 30 Years Ravinia 1,240,100 12,205,373 13,445,473 326,931 1991 30 Years Redlands Lawn and Tennis 4,822,320 26,603,163 31,425,483 989,172 1986 30 Years Reflections at the Lakes 1,896,000 17,189,860 19,085,860 1,001,726 1989 30 Years Regatta 818,500 7,539,273 8,357,773 455,368 1983 30 Years Regency 890,000 12,021,217 12,911,217 100,588 1986 30 Years Regency Palms 1,857,400 17,244,349 19,101,749 1,821,991 1969 30 Years Regency Woods 753,480 6,894,453 7,647,933 276,730 1986 30 Years Registry 1,303,100 11,878,935 13,182,035 688,044 1987 30 Years Reserve at Ashley Lake 3,520,400 23,571,468 27,091,868 898,311 1990 30 Years Reserve Square Combined 2,618,852 33,966,186 36,585,038 6,174,688 1973 30 Years Retreat, The 3,475,114 26,544,281 30,019,395 0 (S) 30 Years Richmond Townhomes 940,000 13,925,003 14,865,003 115,497 1995 30 Years Ridgegate 805,800 7,403,459 8,209,259 438,612 1990 30 Years Ridgetop 811,500 7,352,085 8,163,585 451,474 1988 30 Years Ridgetree I & II 2,115,200 20,232,389 22,347,589 2,071,686 1983 30 Years Ridgeway Commons 583,240 5,314,293 5,897,533 210,631 1970 30 Years Ridgewood Village 5,761,500 14,040,192 19,801,692 519,276 1997 30 Years Rincon 4,401,900 16,789,679 21,191,579 1,067,294 1996 30 Years River Bend 602,945 4,448,365 5,051,310 3,297,277 1971 30 Years River Hill 2,004,000 19,383,970 21,387,970 164,058 1996 30 Years River Oak 1,256,600 11,524,533 12,781,133 453,970 1989 30 Years River Park 2,245,400 8,861,804 11,107,204 164,553 1984 30 Years Rivers Edge 781,900 6,568,309 7,350,209 125,628 1974 30 Years Riverside Park 1,441,400 12,456,099 13,897,499 557,219 1994 30 Years Rock Creek 895,700 8,245,706 9,141,406 645,889 1986 30 Years Rolido Parque 2,955,900 8,114,295 11,070,195 260,186 1978 30 Years Rosehill Pointe 2,096,000 20,309,772 22,405,772 2,181,785 1984 30 Years Royal Oak 1,602,904 14,587,982 16,190,886 555,780 1989 30 Years Royal Oaks (FL) 1,988,000 13,856,820 15,844,820 118,974 1991 30 Years Sabal Palm 3,538,600 20,683,982 24,222,582 1,264,275 1989 30 Years Sabal Palm at Boot Ranch 3,888,000 29,133,544 33,021,544 243,856 1996 30 Years Sabal Palm at Carrollwood Place 3,888,000 27,062,814 30,950,814 227,623 1995 30 Years Sabal Pointe (M) 1,951,600 17,814,628 19,766,228 1,852,893 1995 30 Years Saddle Creek 708,100 9,488,755 10,196,855 2,693,363 1980 30 Years Saddle Ridge 1,364,800 12,485,214 13,850,014 1,449,349 1989 30 Years Sailboat Bay 960,000 9,018,373 9,978,373 77,810 1986 30 Years San Tropez 2,738,000 24,820,030 27,558,030 1,405,570 1989 30 Years Sandstone 243,600 1,602,651 1,846,251 28,313 1988 30 Years Sawgrass Cove 1,674,150 16,141,870 17,816,020 2,853,554 1991 30 Years Scarborough Square 1,815,000 7,210,774 9,025,774 7,138 1967 30 Years Scottsdale Courtyards 2,979,269 25,257,442 28,236,711 912,998 1993 30 Years Scottsdale Meadows 1,512,000 11,482,466 12,994,466 420,796 1984 30 Years Seasons, The 608,000 5,819,464 6,427,464 995,851 1990 30 Years Sedona Ridge 5,508,000 9,898,391 15,406,391 625,605 1988 30 Years Sedona Springs 2,574,000 23,493,419 26,067,419 198,341 1995 30 Years Settler's Point 1,715,100 15,722,245 17,437,345 912,770 1986 30 Years Seventh & James 663,800 6,044,659 6,708,459 347,503 1992 30 Years Shadow Brook 3,065,496 18,525,905 21,591,401 675,011 1984 30 Years Shadow Lake 1,140,000 13,382,908 14,522,908 113,217 1989 30 Years Sheffield Court 3,349,350 32,387,432 35,736,782 4,402,412 1986 30 Years Shoal Run 1,380,000 12,551,210 13,931,210 108,569 1986 30 Years Shores at Andersen Springs 2,743,816 22,951,992 25,695,808 841,280 1989 30 Years Sierra Canyon 3,484,200 12,980,967 16,465,167 291,565 1987 30 Years Silver Creek 712,102 6,763,053 7,475,155 261,766 1986 30 Years Silver Shadow 953,440 8,913,066 9,866,506 1,592,098 1992 30 Years Silver Springs (FL) 1,831,100 16,780,990 18,612,090 784,691 1985 30 Years Silver Springs (OK) 672,500 6,145,543 6,818,043 380,309 1984 30 Years Silverwood 1,230,000 11,785,489 13,015,489 1,965,748 1986 30 Years Skylark 1,781,600 16,607,788 18,389,388 234,131 1986 30 Years Skyline Gateway 1,128,400 10,344,378 11,472,778 615,634 1985 30 Years Sleepy Hollow 2,193,547 15,397,086 17,590,633 5,504,753 1987 30 Years Smoketree Polo Club 867,200 6,979,159 7,846,359 71,497 1987-89 30 Years Sommerset Place 360,000 7,987,577 8,347,577 67,916 1983 30 Years
S-7 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Cost Capitalized Subsequent to Initial Cost to Acquisition Description Company (Improvements, net) (1) - ------------------------------------------------------------------------------------------------------------------------------------ Building & Building & Apartment Name Location Encumbrances Land Fixtures Land Fixtures - ------------------------------------------------------------------------------------------------------------------------------------ Songbird San Antonio, TX $ 6,716,744 $1,080,500 $ 9,724,928 $ 2,000 $ 393,734 Sonnet Cove I Lexington, KY 0 183,407 2,422,860 0 1,995,895 Sonnet Cove II Lexington, KY 0 100,000 1,108,405 0 1,133,760 Sonoran Phoenix, AZ (P) 2,361,922 31,825,903 0 194,670 Sonterra at Foothill Ranch Orange Cnty, CA 16,600,000 7,500,000 24,046,385 3,400 39,835 South Creek Mesa, AZ 15,930,389 2,669,300 24,023,758 2,000 578,419 Southbank Mesa, AZ 0 319,600 2,876,874 10,900 399,846 Southwood Palo Alto, CA 0 6,930,000 14,294,270 6,600 109,319 Spicewood Springs Jacksonville, FL 0 1,536,000 21,469,073 0 16,668 Spinnaker Cove Hermitage, TN 14,205,000 1,420,500 12,789,873 41,231 738,228 Spring Oak Richmond, VA 0 3,803,700 5,567,830 0 0 Springs Colony Orlando, FL (T) 631,900 5,687,010 8,500 768,577 Springs of Country Woods Salt Lake City, UT 0 3,547,400 31,926,882 0 419,097 Steeplechase Charlotte, NC 0 1,111,500 10,438,435 0 7,488 Sterling Point Denver, CO 0 935,500 8,419,865 0 96,378 Stoney Creek Tacoma, WA 0 1,215,200 10,937,144 0 76,743 Summer Chase Denver, CO 0 1,708,000 15,371,641 1,200 1,018,395 Summer Creek Plymouth, MN 2,344,470 576,000 3,782,049 3,600 105,165 Summer Ridge Riverside, CA 0 600,500 5,404,571 1,900 110,794 Summerset Village Chatsworth, CA 0 2,628,500 23,656,668 2,200 202,070 Summerwood Hayward, CA 0 4,860,000 6,901,739 6,600 89,116 Summit at Lake Union Seattle, WA 0 1,424,600 12,821,002 100 150,077 Summit Chase Coral Springs, FL 0 1,120,000 4,413,035 2,100 288,169 Sun Creek Glendale, AZ (P) 896,929 7,062,603 0 46,175 Sunny Oak Village Overland Park, KS 15,100,000 2,222,600 20,003,050 25,150 2,017,200 Sunrise Springs Las Vegas, NV 0 972,600 8,753,491 2,700 341,005 Suntree Village Oro Valley, AZ (P) 1,571,745 13,099,483 0 155,103 Superstition Vista Mesa, AZ 0 2,307,357 28,537,628 0 309,276 Surprise Lake Village Tacoma, WA 0 1,830,200 16,471,470 0 270,710 Surrey Downs Bellevue, WA 0 3,050,000 7,797,215 7,100 93,448 Sutton Place Dallas, TX 0 1,316,500 11,848,717 41,900 2,669,891 Sweetwater Glen Lawrenceville, GA 0 500,000 10,692,558 0 1,635 Sycamore Creek Scottsdale, AZ (E) 3,150,000 19,068,201 2,000 135,050 Tamarind at Stoneridge Columbia, SC 0 1,053,800 9,490,859 2,400 112,763 Tamarlane Portland, ME 0 690,000 5,143,970 900 59,840 Tanasbourne Terrace Hillsboro, OR 0 1,873,000 16,857,220 3,700 1,062,822 Tanglewood (OR) Portland, OR 0 760,000 6,839,589 3,000 1,509,852 Tanglewood (VA) Manassas, VA 24,855,587 2,103,400 19,559,772 4,895 1,951,542 Timber Hollow Chapel Hill, NC 0 800,000 11,441,423 0 8,928 Timberwalk Jacksonville, FL 0 1,988,000 13,400,767 0 21,018 Timberwood Aurora, CO 0 1,512,000 14,583,672 6,600 251,723 Tivoli Lakes Club Deerfield Beach, FL 0 1,804,200 16,237,641 2,400 131,915 Town Center (TX) Kingwood, TX 0 1,290,000 11,517,230 1,300 92,587 Town Centre III & IV Laurel, MD 15,456,090 2,546,500 24,089,192 4,700 1,752,434 Towne Square Chandler, AZ 0 1,924,710 36,439,239 0 (93,514) Townhomes of Meadowbrook Auburn Hills, MI 10,184,661 1,380,000 12,343,234 2,600 125,526 Trails (CO), The Aurora, CO 0 1,217,800 8,525,346 100 1,444,276 Trails (NV), The Las Vegas, NV 0 3,076,200 27,685,764 3,000 996,449 Trails (TX), The Arlington, TX 0 616,700 5,550,590 21,300 721,314 Trails at Briar Forest Houston, TX 14,458,059 2,380,000 25,108,895 0 28,588 Trails at Dominion Park Houston, TX 25,484,338 2,529,000 35,693,699 2,800 730,990 Trail's End San Antonio, TX 0 951,300 8,561,640 0 96,510 Trails of Valley Ranch Irving, TX 0 2,808,000 7,910,908 1,400 147,242 Trailway Pond I Burnsville, MN 4,913,909 476,800 4,291,344 2,484 99,574 Trailway Pond II Burnsville, MN 11,365,354 1,104,700 9,942,611 2,588 89,679 Trinity Lakes Cordova, TN (E) 1,980,000 14,937,161 2,000 249,542 Trowbridge Atlanta, GA 0 2,520,000 9,481,990 1,000 30,048 Turf Club Littleton, CO 0 2,100,000 15,479,404 7,300 333,828 Tyrone Gardens Randolph, MA 0 4,950,000 5,773,893 3,000 44,236 University Park Toledo, OH 0 70,000 834,378 0 1,480,386 Valencia Plantation Orlando, FL 0 873,000 12,963,869 0 4,006 Valley Creek I Woodbury, MN 12,827,815 1,622,600 14,603,730 4,115 353,919 Valley Creek II Woodbury, MN 10,110,100 1,229,500 11,065,355 3,159 74,890 Via Ventura Phoenix, AZ 0 1,476,500 13,288,894 10,100 4,715,757 Villa Encanto Phoenix, AZ 0 2,884,447 22,140,113 0 476,796 Villa Madeira Phoenix, AZ 0 1,580,000 14,219,907 2,100 910,748 Villa Manana Phoenix, AZ 0 951,400 8,562,443 3,900 981,507 Villa Serenas Tucson, AZ 9,210,613 2,424,900 14,418,493 1,800 149,583 Villa Solana Laguna Hills, CA 0 1,663,500 14,971,366 1,600 1,079,407 Village at Lakewood Phoenix, AZ (Q) 3,166,411 13,844,094 0 319,410 Village at Seeley Lake Tacoma, WA 0 2,760,400 24,843,439 0 174,558 Gross Amount Carried Life Used to at Close of Compete Description Period 12/31/98 Depreciation - ------------------------------------------------------------------------------------------------------------------- Buildings & Accumulated Date of in Latest Income Apartment Name Location Land Fixtures (A) Total (B) Depreciation Construction Statement(C) - -------------------------------------------------------------------------------------------------------------------------------- Songbird San Antonio, TX $1,082,500 $10,118,662 $11,201,162 $ 910,976 1981 30 Years Sonnet Cove I Lexington, KY 183,407 4,418,755 4,602,162 3,122,166 1972 30 Years Sonnet Cove II Lexington, KY 100,000 2,242,165 2,342,165 1,475,001 1974 30 Years Sonoran Phoenix, AZ 2,361,922 32,020,572 34,382,494 1,173,925 1995 30 Years Sonterra at Foothill Ranch Orange Cnty, CA 7,503,400 24,086,220 31,589,620 639,167 1997 30 Years South Creek Mesa, AZ 2,671,300 24,602,177 27,273,477 2,285,177 1986-89 30 Years Southbank Mesa, AZ 330,500 3,276,720 3,607,220 660,549 1985 30 Years Southwood Palo Alto, CA 6,936,600 14,403,589 21,340,189 230,864 1985 30 Years Spicewood Springs Jacksonville, FL 1,536,000 21,485,741 23,021,741 187,497 1986 30 Years Spinnaker Cove Hermitage, TN 1,461,731 13,528,101 14,989,832 806,926 1986 30 Years Spring Oak Richmond, VA 3,803,700 5,567,830 9,371,530 0 (S) 30 Years Springs Colony Orlando, FL 640,400 6,455,587 7,095,987 1,228,258 1986 30 Years Springs of Country Woods Salt Lake City, UT 3,547,400 32,345,979 35,893,379 1,878,269 1982 30 Years Steeplechase Charlotte, NC 1,111,500 10,445,922 11,557,422 91,036 1986 30 Years Sterling Point Denver, CO 935,500 8,516,243 9,451,743 493,541 1979 30 Years Stoney Creek Tacoma, WA 1,215,200 11,013,887 12,229,087 644,241 1990 30 Years Summer Chase Denver, CO 1,709,200 16,390,036 18,099,236 1,488,539 1983 30 Years Summer Creek Plymouth, MN 579,600 3,887,213 4,466,813 64,870 1985 30 Years Summer Ridge Riverside, CA 602,400 5,515,365 6,117,765 514,021 1985 30 Years Summerset Village Chatsworth, CA 2,630,700 23,858,737 26,489,437 1,942,692 1985 30 Years Summerwood Hayward, CA 4,866,600 6,990,855 11,857,455 128,908 1982 30 Years Summit at Lake Union Seattle, WA 1,424,700 12,971,079 14,395,779 734,696 1995-97 30 Years Summit Chase Coral Springs, FL 1,122,100 4,701,204 5,823,304 317,110 1985 30 Years Sun Creek Glendale, AZ 896,929 7,108,778 8,005,707 274,232 1985 30 Years Sunny Oak Village Overland Park, KS 2,247,750 22,020,250 24,268,000 2,228,846 1984 30 Years Sunrise Springs Las Vegas, NV 975,300 9,094,496 10,069,796 1,445,279 1989 30 Years Suntree Village Oro Valley, AZ 1,571,745 13,254,586 14,826,331 528,183 1986 30 Years Superstition Vista Mesa, AZ 2,307,357 28,846,904 31,154,261 1,073,092 1987 30 Years Surprise Lake Village Tacoma, WA 1,830,200 16,742,179 18,572,379 992,712 1986 30 Years Surrey Downs Bellevue, WA 3,057,100 7,890,664 10,947,764 140,737 1986 30 Years Sutton Place Dallas, TX 1,358,400 14,518,608 15,877,008 3,050,334 1985 30 Years Sweetwater Glen Lawrenceville, GA 500,000 10,694,193 11,194,193 91,284 1986 30 Years Sycamore Creek Scottsdale, AZ 3,152,000 19,203,251 22,355,251 838,947 1984 30 Years Tamarind at Stoneridge Columbia, SC 1,056,200 9,603,622 10,659,822 448,239 1985 30 Years Tamarlane Portland, ME 690,900 5,203,810 5,894,710 297,714 1986 30 Years Tanasbourne Terrace Hillsboro, OR 1,876,700 17,920,042 19,796,742 2,976,124 1986-89 30 Years Tanglewood (OR) Portland, OR 763,000 8,349,441 9,112,441 1,573,962 1976 30 Years Tanglewood (VA) Manassas, VA 2,108,295 21,511,314 23,619,609 3,148,554 1987 30 Years Timber Hollow Chapel Hill, NC 800,000 11,450,351 12,250,351 96,991 1986 30 Years Timberwalk Jacksonville, FL 1,988,000 13,421,785 15,409,785 115,581 1987 30 Years Timberwood Aurora, CO 1,518,600 14,835,394 16,353,994 272,118 1983 30 Years Tivoli Lakes Club Deerfield Beach, FL 1,806,600 16,369,556 18,176,156 731,691 1991 30 Years Town Center (TX) Kingwood, TX 1,291,300 11,609,817 12,901,117 822,732 1994 30 Years Town Centre III & IV Laurel, MD 2,551,200 25,841,626 28,392,826 3,911,974 1968,1969 30 Years Towne Square Chandler, AZ 1,924,710 36,345,725 38,270,435 1,350,135 1987-1996 30 Years Townhomes of Meadowbrook Auburn Hills, MI 1,382,600 12,468,760 13,851,360 269,617 1988 30 Years Trails (CO), The Aurora, CO 1,217,900 9,969,622 11,187,522 2,234,382 1986 30 Years Trails (NV), The Las Vegas, NV 3,079,200 28,682,213 31,761,413 4,447,219 1988 30 Years Trails (TX), The Arlington, TX 638,000 6,271,904 6,909,904 1,169,450 1984 30 Years Trails at Briar Forest Houston, TX 2,380,000 25,137,483 27,517,483 214,305 1990 30 Years Trails at Dominion Park Houston, TX 2,531,800 36,424,690 38,956,490 2,466,563 1992 30 Years Trail's End San Antonio, TX 951,300 8,658,150 9,609,450 544,248 1983 30 Years Trails of Valley Ranch Irving, TX 2,809,400 8,058,150 10,867,550 236,474 1986 30 Years Trailway Pond I Burnsville, MN 479,284 4,390,918 4,870,202 167,328 1988 30 Years Trailway Pond II Burnsville, MN 1,107,288 10,032,289 11,139,577 383,829 1988 30 Years Trinity Lakes Cordova, TN 1,982,000 15,186,703 17,168,703 679,454 1985 30 Years Trowbridge Atlanta, GA 2,521,000 9,512,038 12,033,038 175,515 1980 30 Years Turf Club Littleton, CO 2,107,300 15,813,232 17,920,532 285,496 1986 30 Years Tyrone Gardens Randolph, MA 4,953,000 5,818,130 10,771,130 113,205 1961/1965 30 Years University Park Toledo, OH 70,000 2,314,764 2,384,764 1,361,238 1965 30 Years Valencia Plantation Orlando, FL 873,000 12,967,875 13,840,875 108,688 1990 30 Years Valley Creek I Woodbury, MN 1,626,715 14,957,649 16,584,364 559,948 1989 30 Years Valley Creek II Woodbury, MN 1,232,659 11,140,244 12,372,903 424,790 1990 30 Years Via Ventura Phoenix, AZ 1,486,600 18,004,651 19,491,251 3,149,935 1980 30 Years Villa Encanto Phoenix, AZ 2,884,447 22,616,910 25,501,357 848,752 1983 30 Years Villa Madeira Phoenix, AZ 1,582,100 15,130,655 16,712,755 2,565,253 1971 30 Years Villa Manana Phoenix, AZ 955,300 9,543,950 10,499,250 1,694,791 1971-85 30 Years Villa Serenas Tucson, AZ 2,426,700 14,568,076 16,994,776 662,760 1973 30 Years Villa Solana Laguna Hills, CA 1,665,100 16,050,773 17,715,873 2,838,943 1984 30 Years Village at Lakewood Phoenix, AZ 3,166,411 14,163,504 17,329,915 538,265 1988 30 Years Village at Seeley Lake Tacoma, WA 2,760,400 25,017,997 27,778,397 1,464,619 1990 30 Years
S-8 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Cost Capitalized Subsequent to Initial Cost to Acquisition Description Company (Improvements, net) (I) - ----------------------------------------------------------------------------------------------------------------------------------- Building & Building & Apartment Name Location Encumbrances Land Fixtures Land Fixtures - ---------------------------------------------------------------------------------------------------------------------------------- Village at Tanque Verde Tucson, AZ (Q) $1,434,838 $ 7,143,388 $ 0 $ 208,513 Village Oaks Austin, TX 5,175,576 1,184,400 10,659,432 1,600 430,822 Village of Hampshire Toledo, OH 0 151,912 1,320,453 (0) 7,137,172 Village of Newport Federal Way, WA 0 414,900 3,733,899 1,400 294,818 Village of Sycamore Ridge Memphis, TN 0 621,300 5,591,828 2,600 203,946 Villas at Josey Ranch Carrollton, TX 6,799,379 1,584,000 7,228,196 3,700 60,634 Villas of Oak Creste San Antonio, TX 0 905,800 8,151,738 0 369,057 Vinings at Lake Buena Vista Orlando, FL 21,170,000 2,800,000 23,859,775 0 30,211 Vinings at Lenox Place Orlando, FL 0 4,560,000 34,601,683 0 346 Vinings Club at Metrowest Orlando, FL 0 4,110,000 38,552,886 0 16,240 Viridian Lake Fort Myers, FL 0 960,000 18,005,760 0 2,849 Vista Del Lago Mission Viejo, CA 31,504,979 4,524,400 41,357,681 1,400 1,371,543 Vista Grove Mesa, AZ 0 1,341,796 12,137,222 0 0 Vista Pointe Irving, TX 0 2,079,000 17,012,647 1,800 73,454 Walden Wood Southfield, MI 5,804,346 833,300 7,499,662 1,400 1,240,947 Walker's Mark Dallas, TX 0 984,000 6,021,752 800 47,982 Warwick Station Denver, CO 9,968,000 2,281,900 20,537,450 100 129,254 Waterford San Antonio, TX 0 457,000 4,112,840 0 42,475 Waterford (Jax) Jacksonville, FL 0 3,024,000 23,967,147 0 184,412 Waterford at Deerwood Jacksonville, FL 10,621,531 1,736,000 10,803,663 0 10,773 Waterford at Orange Park Orange Park, FL 9,540,000 1,960,000 12,300,406 0 87,402 Waterford at Regency Jacksonville, FL 7,100,630 1,113,000 5,284,699 0 37,557 Waterford at the Lakes Kent, WA 0 3,100,200 16,343,191 0 120,920 Waterford Place (TN) Nashville, TN 0 900,000 12,154,387 0 6,410 Waterford Village (Broward) Delray Beach, FL 0 1,888,000 15,496,595 0 99,705 Watermark Square Portland, OR 8,334,615 1,580,000 14,239,426 500 363,214 Waterstone Place Seattle, WA 0 2,950,900 26,558,353 13,100 2,724,349 Welleby Lake Club Sunrise, FL 0 3,648,000 17,726,342 0 16,165 Wellington (WA) Silverdale, WA 8,171,488 1,097,300 9,876,034 2,000 509,181 Wellington Hill Manchester, NH (T) 1,872,500 16,852,955 17,700 1,966,145 Westridge Tacoma, WA 0 3,501,900 31,517,540 0 297,973 Westwood Pines Tamarac, FL 0 1,526,200 13,735,152 2,400 148,373 Whispering Oaks Walnut Creek, CA 11,191,482 2,167,300 19,505,628 3,500 889,988 White Bear Woods White Bear Lake, MN 14,184,170 1,621,300 14,591,904 3,441 213,842 Wilde Lake Richmond, VA 4,440,000 934,600 8,411,613 12,600 293,064 Willow Brook (NC) Durham, NC 0 1,408,000 7,105,081 1,500 144,764 Willow Trail Norcross, GA 0 1,120,000 11,662,382 0 2,393 Willowick Aurora, CO 0 500,000 4,122,331 6,900 105,108 Willows (TN) Knoxville, TN 8,007,915 1,100,000 9,906,909 1,300 130,198 Wimberly Dallas, TX 0 2,232,000 27,992,123 0 8,615 Wimbledon Oaks Arlington, TX 7,505,424 1,488,000 8,815,023 3,700 52,736 Windemere Mesa, AZ 6,134,479 949,000 8,653,152 300 328,801 Windmill Colorado Springs, CO 0 395,544 4,953,156 100 612,003 Windridge (CA) Laguna Niguel, CA (O) 2,660,800 23,947,096 2,100 726,174 Windridge (GA) Dunwoody, GA 0 1,224,000 14,002,428 0 13,671 Winterwood Charlotte, NC 11,939,752 1,720,100 15,481,455 1,900 1,409,783 Wood Creek (CA) Pleasant Hill, CA 0 9,728,000 22,992,918 1,900 207,145 Wood Crest Villa Westland, MI 0 925,900 8,333,827 7,922 632,764 Wood Forest Daytona Beach, FL 6,147,044 1,008,000 5,028,880 0 2,997 Wood Lane Place Woodbury, MN 14,014,000 2,003,300 18,029,538 5,847 335,393 Woodbridge (N) Cary, NC 4,745,414 1,981,900 17,839,380 100 330,735 Woodcreek Beaverton, OR 11,119,787 1,753,700 15,783,764 2,100 1,579,346 Woodlake (WA) Kirkland, WA 11,800,000 6,624,000 16,427,124 7,400 417,295 Woodlake at Killearn Tallahassee, FL 0 1,404,300 12,638,426 3,855 1,033,554 Woodland Hills Decatur, GA 0 1,223,900 11,017,542 700 427,622 Woodland Meadows Ann Arbor, MI 0 2,003,600 18,032,640 2,400 202,265 Woodland Oaks Tulsa, OK 0 893,100 8,038,166 0 155,808 Woodlands of Brookfield Brookfield, WI (R) 1,480,000 13,986,442 4,600 101,275 Woodlands of Minnetonka Minnetonka, MN 0 2,392,500 13,557,500 2,000 225,210 Woodleaf Campbell, CA 11,700,000 8,544,000 16,944,339 6,600 109,858 Woodmoor Austin, TX 0 649,300 5,843,200 4,500 1,105,805 Woodridge (CO) Aurora, CO 0 2,774,000 20,974,636 6,700 190,065 Woodridge (MN) Eagan, MN 7,784,303 1,600,000 10,408,740 2,300 86,126 Woods of North Bend Raleigh, NC 0 1,039,000 9,350,616 500 907,431 Woodscape Raleigh, NC 0 956,000 8,603,550 1,300 225,871 Woodside Lorton, VA 0 1,308,100 12,503,220 17,900 381,594 Wynbrook Atlanta, GA 0 2,544,000 10,993,900 2,500 102,267 Wyndridge 2 Memphis, TN 14,135,000 1,486,000 13,586,157 2,000 537,255 Wyndridge 3 Memphis, TN 10,855,000 1,500,000 13,505,510 2,500 309,751 Yarmouth Woods Yarmouth, ME 0 690,000 6,076,673 2,800 92,869 Yorktowne at Olde Mill Millersville, MD 0 216,000 1,330,710 0 4,781,195 Gross Amount Carried at Close of Life Used to Description Period 12/31/98 Compute - ------------------------------------------------------------------------------------------------------------------- Depreciation in Building & Accumulated Date of Latest Income Apartment Name Location Land Fixtures (A) Total (B) Depreciation Construction Statement (C) - ------------------------------------------------------------------------------------------------------------------------------------ Village at Tanque Verde Tucson, AZ $1,434,838 $ 7,351,900 $ 8,786,738 $ 298,882 1984-1994 30 Years Village Oaks Austin, TX 1,186,000 11,090,254 12,276,254 906,277 1984 30 Years Village of Hampshire Toledo, OH 151,912 8,457,625 8,609,537 3,339,648 1950 30 Years Village of Newport Federal Way, WA 416,300 4,028,717 4,445,017 686,113 1987 30 Years Village of Sycamore Ridge Memphis, TN 623,900 5,795,774 6,419,674 264,662 1977 30 Years Villas at Josey Ranch Carrollton, TX 1,587,700 7,288,830 8,876,530 132,840 1986 30 Years Villas of Oak Creste San Antonio, TX 905,800 8,520,795 9,426,595 522,350 1979 30 Years Vinings at Lake Buena Vista Orlando, FL 2,800,000 23,889,986 26,689,986 201,584 1988 30 Years Vinings at Lenox Place Orlando, FL 4,560,000 34,602,030 39,162,030 287,651 1998 30 Years Vinings Club at Metrowest Orlando, FL 4,110,000 38,569,125 42,679,125 316,570 1997 30 Years Viridian Lake Fort Myers, FL 960,000 18,008,609 18,968,609 153,055 1991 30 Years Vista Del Lago Mission Viejo, CA 4,525,800 42,729,224 47,255,024 7,568,800 1986-88 30 Years Vista Grove Mesa, AZ 1,341,796 12,137,222 13,479,018 275,076 1997-1998 30 Years Vista Pointe Irving, TX 2,080,800 17,086,101 19,166,901 444,549 1996 30 Years Walden Wood Southfield, MI 834,700 8,740,609 9,575,309 1,700,255 1972 30 Years Walker's Mark Dallas, TX 984,800 6,069,734 7,054,534 117,747 1982 30 Years Warwick Station Denver, CO 2,282,000 20,666,704 22,948,704 1,188,568 1986 30 Years Waterford San Antonio, TX 457,000 4,155,316 4,612,316 256,882 1983 30 Years Waterford (Jax) Jacksonville, FL 3,024,000 24,151,559 27,175,559 203,652 1988 30 Years Waterford at Deerwood Jacksonville, FL 1,736,000 10,814,436 12,550,436 93,896 1985 30 Years Waterford at Orange Park Orange Park, FL 1,960,000 12,387,808 14,347,808 107,338 1986 30 Years Waterford at Regency Jacksonville, FL 1,113,000 5,322,256 6,435,256 47,349 1985 30 Years Waterford at the Lakes Kent, WA 3,100,200 16,464,110 19,564,310 1,084,618 1990 30 Years Waterford Place (TN) Nashville, TN 900,000 12,160,797 13,060,797 101,823 1994 30 Years Waterford Village (Broward) Delray Beach, FL 1,888,000 15,596,300 17,484,300 129,996 1989 30 Years Watermark Square Portland, OR 1,580,500 14,602,640 16,183,140 991,463 1990 30 Years Waterstone Place Seattle, WA 2,964,000 29,282,702 32,246,702 5,757,244 1990 30 Years Welleby Lake Club Sunrise, FL 3,648,000 17,742,507 21,390,507 149,861 1991 30 Years Wellington (WA) Silverdale, WA 1,099,300 10,385,215 11,484,515 1,470,639 1990 30 Years Wellington Hill Manchester, NH 1,890,200 18,819,100 20,709,300 3,328,126 1987 30 Years Westridge Tacoma, WA 3,501,900 31,815,513 35,317,413 1,884,733 1987/1991 30 Years Westwood Pines Tamarac, FL 1,528,600 13,883,525 15,412,125 528,020 1991 30 Years Whispering Oaks Walnut Creek, CA 2,170,800 20,395,615 22,566,415 1,576,700 1974 30 Years White Bear Woods White Bear Lake, MN 1,624,741 14,805,746 16,430,487 557,703 1989 30 Years Wilde Lake Richmond, VA 947,200 8,704,677 9,651,877 668,750 1989 30 Years Willow Brook (NC) Durham, NC 1,409,500 7,249,846 8,659,346 445,201 1986 30 Years Willow Trail Norcross, GA 1,120,000 11,664,775 12,784,775 99,720 1985 30 Years Willowick Aurora, CO 506,900 4,227,439 4,734,339 77,835 1980 30 Years Willows (TN) Knoxville, TN 1,101,300 10,037,107 11,138,407 623,349 1987-1988 30 Years Wimberly Dallas, TX 2,232,000 28,000,738 30,232,738 232,852 1996 30 Years Wimbledon Oaks Arlington, TX 1,491,700 8,867,759 10,359,459 162,112 1985 30 Years Windemere Mesa, AZ 949,300 8,981,952 9,931,252 497,073 1986 30 Years Windmill Colorado Springs, CO 395,644 5,565,159 5,960,803 1,427,951 1985 30 Years Windridge (CA) Laguna Niguel, CA 2,662,900 24,673,270 27,336,170 3,660,971 1989 30 Years Windridge (GA) Dunwoody, GA 1,224,000 14,016,099 15,240,099 119,832 1982 30 Years Winterwood Charlotte, NC 1,722,000 16,891,238 18,613,238 3,176,053 1986 30 Years Wood Creek (CA) Pleasant Hill, CA 9,729,900 23,200,063 32,929,963 1,265,382 1987 30 Years Wood Crest Villa Westland, MI 933,822 8,966,591 9,900,413 409,776 1970 30 Years Wood Forest Daytona Beach, FL 1,008,000 5,031,877 6,039,877 44,752 1985 30 Years Wood Lane Place Woodbury, MN 2,009,147 18,364,931 20,374,077 684,847 1989 30 Years Woodbridge (N) Cary, NC 1,982,000 18,170,115 20,152,115 1,931,990 1993-95 30 Years Woodcreek Beaverton, OR 1,755,800 17,363,110 19,118,910 3,041,111 1982-84 30 Years Woodlake (WA) Kirkland, WA 6,631,400 16,844,420 23,475,820 303,913 1984 30 Years Woodlake at Killearn Tallahassee, FL 1,408,155 13,671,980 15,080,135 2,517,124 1986 30 Years Woodland Hills Decatur, GA 1,224,600 11,445,164 12,669,764 1,169,015 1985 30 Years Woodland Meadows Ann Arbor, MI 2,006,000 18,234,905 20,240,905 811,464 1987-1989 30 Years Woodland Oaks Tulsa, OK 893,100 8,193,975 9,087,075 502,272 1983 30 Years Woodlands of Brookfield Brookfield, WI 1,484,600 14,087,717 15,572,317 217,174 1990 30 Years Woodlands of Minnetonka Minnetonka, MN 2,394,500 13,782,710 16,177,210 515,997 1988 30 Years Woodleaf Campbell, CA 8,550,600 17,054,197 25,604,797 297,985 1984 30 Years Woodmoor Austin, TX 653,800 6,949,005 7,602,805 1,354,595 1981 30 Years Woodridge (CO) Aurora, CO 2,780,700 21,164,701 23,945,401 383,078 1980-82 30 Years Woodridge (MN) Eagan, MN 1,602,300 10,494,865 12,097,165 228,166 1986 30 Years Woods of North Bend Raleigh, NC 1,039,500 10,258,047 11,297,547 1,341,487 1983 30 Years Woodscape Raleigh, NC 957,300 8,829,421 9,786,721 734,106 1979 30 Years Woodside Lorton, VA 1,326,000 12,884,814 14,210,814 1,885,850 1987 30 Years Wynbrook Atlanta, GA 2,546,500 11,096,167 13,642,667 224,163 1972/1976 30 Years Wyndridge 2 Memphis, TN 1,488,000 14,123,412 15,611,412 835,702 1988 30 Years Wyndridge 3 Memphis, TN 1,502,500 13,815,261 15,317,761 842,170 1988 30 Years Yarmouth Woods Yarmouth, ME 692,800 6,169,541 6,862,341 189,251 1971/1978 30 Years Yorktowne at Olde Mill Millersville, MD 216,000 6,111,905 6,327,905 4,292,629 1974 30 Years
S-9 EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998
Initial Cost to Description Company - --------------------------------------------------------------------------------------------------------------------------------- Building & Apartment Name Location Encumbrances Land Fixtures - --------------------------------------------------------------------------------------------------------------------------------- Yuma Court Colorado Springs, CO $ 0 $ 113,163 $ 836,429 Miscellaneous 0 3,100,100 5,557,176 Operating Partnership Chicago, IL 0 0 88,566 Management Business Chicago, IL 0 0 3,442,962 --------------- --------------- --------------- Total Investment in Real Estate $1,765,973,005 $1,322,723,071 $9,256,895,218 =============== =============== =============== Real Estate Held For Disposition Fox Run (AR) Little Rock, AR $ 0 $ 422,014 $ 4,053,552 Greenwood Forest Little Rock, AR 0 559,038 1,736,549 Walnut Ridge Little Rock, AR 0 196,079 2,424,631 Williamsburg Little Rock, AR 0 315,000 1,745,958 Hawthorne Phoenix, AZ 0 2,697,050 15,669,963 --------------- --------------- --------------- Total Real Estate Held For Disposition $ 0 $ 4,189,181 $ 25,630,653 =============== =============== =============== Total Real Estate $1,765,973,005 $1,326,912,252 $9,282,525,871 =============== =============== =============== Cost Capitalized Subsequent to Gross Amount Carried Acquisition at Close of (Improvements, net) (I) Period 12/31/98 - ---------------------------------------------------------------------------------------------------------------------------------- Building & Building & Apartment Name Location Land Fixtures Land Fixtures (A) - ---------------------------------------------------------------------------------------------------------------------------------- Yuma Court Colorado Springs, CO $ 100 $ 138,674 $ 113,263 $ 975,103 Miscellaneous 0 1,290,355 3,100,100 6,847,530 Operating Partnership Chicago, IL 0 0 0 88,566 Management Business Chicago, IL 1,000 25,801,308 1,000 29,244,270 ---------- ------------ -------------- -------------- Total Investment in Real Estate $3,424,616 $359,020,229 $1,326,147,687 $9,615,915,445 ========== ============ ============== ============== Real Estate Held For Disposition Fox Run (AR) Little Rock, AR $ 0 $ 4,997,960 $ 422,014 $ 9,051,512 Greenwood Forest Little Rock, AR 0 2,794,166 559,038 4,530,715 Walnut Ridge Little Rock, AR 0 3,155,217 196,079 5,579,848 Williamsburg Little Rock, AR 0 3,449,424 315,000 5,195,382 Hawthorne Phoenix, AZ 0 (18,590) 2,697,050 15,651,373 ---------- ------------ -------------- -------------- Total Real Estate Held For Disposition $ 0 $ 14,378,177 $ 4,189,181 $ 40,008,830 ========== ============ ============== ============== Total Real Estate $3,424,617 $373,398,406 $1,330,336,868 $9,655,924,276 ========== ============ ============== ============== Life Used to Compute Depreciation in - ------------------------------------------------------------------------------------------------------------------ Accumulated Date of Latest Income Apartment Name Location Total (B) Depreciation Construction Statement (C) - --------------------------------------------------------------------------------------------------------------------------------- Yuma Court Colorado Springs, CO $ 1,088,366 $ 215,244 1985 30 Years Miscellaneous 9,947,630 58,968 Operating Partnership Chicago, IL 88,566 55,470 (H) Management Business Chicago, IL 29,245,270 13,786,394 (G) ---------------- ------------- Total Investment in Real Estate $10,942,063,132 $718,491,400 ================ ============= Real Estate Held For Disposition Fox Run (AR) Little Rock, AR $ 9,473,526 $ 5,252,326 1974 30 Years Greenwood Forest Little Rock, AR 5,089,753 2,628,938 1975 30 Years Walnut Ridge Little Rock, AR 5,775,928 3,109,736 1975 30 Years Williamsburg Little Rock, AR 5,510,382 2,736,573 1974 30 Years Hawthorne Phoenix, AZ 18,348,423 584,198 1996 30 Years ---------------- ------------- Total Real Estate Held For Disposition $ 44,198,012 $ 14,311,771 ================ ============= Total Real Estate $10,986,261,144 $732,803,171 ================ =============
S-10 SCHEDULE III EQUITY RESIDENTIAL PROPERTIES TRUST Real Estate and Accumulated Depreciation December 31, 1998 NOTES: (A) The balance of furniture & fixtures included in the total investment in real estate amount was $333,358,567 as of December 31, 1998. The balance of furniture & fixtures included in the total real estate held for disposition amount was $4,388,863 as of December 31, 1998. (B) The aggregate cost for Federal Income Tax purposes as of December 31, 1998 was approximately $9.1 billion. (C) The life to compute depreciation for furniture & fixtures is 5 to 7 years. (D) These two properties are encumbered by $14,700,888 in bonds. (E) These 17 properties are encumbered by $136,000,000 in bonds. (F) These four properties are encumbered by $15,500,000 in bonds. (G) This asset consists of various acquisition dates and represents furniture, fixtures and equipment owned by the Management Business. (H) This asset consists of various acquisition dates and represents furniture, fixtures and equipment owned by the Operating Partnership. (I) Improvements are net of write-off of fully depreciated assets which are no longer in service. (J) Combined with Cedar Cove (K) Formerly known as Oxford & Sussex (L) Formerly known as Post Place (M) Formerly known as The Vinings at Coral Springs (N) Formerly known as The Plantations (NC) (O) These five properties are pledged as additional collateral in connection with the tax-exempt bond refinancing of $176,375,000. (P) These 21 properties are encumbered by $132,936,821 in bonds. (Q) These 5 properties are encumbered by a $49,525,506 note payable. (R) These 5 properties are encumbered by $50,000,000 of mortgage debt. (S) These properties are currently under development and will be completed subsequent to December 31, 1998. (T) These ten properties are encumbered by $176,375,000 in bonds. (U) Includes Port Royale I, Port Royale II and Port Royale III. Port Royale III is encumbered by a third party mortgage. * Four Lakes was constructed in phases between 1968 & 1988. (#) The Lodge-Texas was struck by a tornado that destroyed most of the property. The property was reconstructed during 1989 & 1990. (x) Pines of Springdale was constructed in phases between 1985 & 1987. S-11 SCHEDULE III EQUITY RESIDENTIAL PROPERTIES TRUST REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED) (AMOUNTS IN THOUSANDS) The changes in total real estate for the years ended December 31, 1998, 1997, and 1996 are as follows:
1998 1997 1996 ------------------- -------------------- -------------------- Balance, beginning of year $7,121,435 $ 2,983,510 $ 2,188,939 Acquisitions 3,927,768 4,112,126 789,056 Improvements 102,020 60,043 33,001 Write-off of fully depreciated assets which are no longer in service (25) (930) (20) Dispositions and other (164,937) (33,314) (27,466) =================== ==================== ==================== Balance, end of year $10,986,261 $ 7,121,435 $ 2,983,510 =================== ==================== ====================
The changes in accumulated depreciation for the years ended December 31, 1998, 1997, and 1996 are as follows:
1998 1997 1996 ------------------- -------------------- -------------------- Balance, beginning of year $ 444,762 $ 301,512 $ 218,339 Depreciation 301,869 156,644 93,253 Write-off of fully depreciated assets which are no longer in service (25) (930) (20) Dispositions and other (13,803) (12,464) (10,060) =================== ==================== ==================== Balance, end of year $ 732,803 $ 444,762 $ 301,512 =================== ==================== ====================
S-12 EX-12 2 COMPUTATION OF RATIO OF EARNINGS Exhibit 12 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED AND COMBINED HISTORICAL, INCLUDING PREDECESSOR BUSINESS EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS RATIO
HISTORICAL ---------------------------------------------------------------------------- 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94 ------------- ------------- ------------- ------------- ------------- (Amounts in thousands) REVENUES Rental income $ 1,293,560 $ 707,733 $ 454,412 $ 73,919 $ 220,727 Fee income - outside managed 5,622 5,697 6,749 7,030 4,739 Interest income - investment in mortgage notes 18,564 20,366 12,819 4,862 - Interest and other income 19,703 13,525 4,405 4,573 5,568 ------------- ------------ --------------- -------------- ------------- Total revenues 1,337,449 747,321 478,385 390,384 231,034 ------------- ------------ --------------- -------------- ------------- EXPENSES Property and maintenance 326,567 176,075 127,172 112,186 66,534 Real estate taxes and insurance 126,009 69,520 44,128 37,002 23,028 Property management 52,705 26,793 17,512 15,213 10,249 Property management - non-recurring - - - - 879 Fee and asset management 4,207 3,364 3,837 3,887 2,056 Depreciation 301,869 156,644 93,253 72,410 37,273 Interest: Expense incurred 246,585 121,324 81,351 78,375 37,044 Amortization of deferred financing costs 2,757 2,523 4,242 3,444 1,930 Refinancing costs - - - - - General and administrative 21,718 15,064 9,857 8,129 6,053 ------------- ------------ --------------- -------------- ------------- Total expenses 1,082,417 571,307 381,352 330,646 185,046 ------------- ------------ --------------- -------------- ------------- Income (loss) before extraordinary items $ 255,032 176,014 $ 97,033 $ 59,738 $ 45,988 ============= ============ =============== ============== ============= Combined Fixed Charges and Preferred Distributions: Interest and other financing costs $ 246,585 121,324 $ 81,351 $ 78,375 $ 37,044 Refinancing costs - - - - - Amortization of deferred financing costs 2,757 2,523 4,242 3,444 1,930 Preferred distributions 92,917 59,012 29,015 10,109 - ------------- ------------ --------------- -------------- ------------- TOTAL COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS $ 342,259 182,859 $ 114,608 $ 91,928 $ 38,974 ============= ============ =============== ============== ============= EARNINGS BEFORE COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS $ 504,374 299,861 $ 182,626 $ 141,557 $ 84,962 ============= ============ =============== ============== ============= FUNDS FROM OPERATIONS BEFORE COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS $ 806,243 456,505 $ 275,879 $ 213,967 $ 123,114 ============= ============ =============== ============== ============= RATIO OF EARNINGS BEFORE COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS TO COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS 1.47 1.64 1.59 1.54 2.18 ============= ============ =============== ============== ============= RATIO OF FUNDS FROM OPERATIONS BEFORE COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS TO COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS 2.36 2.50 2.41 2.33 3.16 ============= ============ =============== ============== =============
EX-21 3 LIST OF SUBSIDIARIES Exhibit 21 ----------------------------------------------------- EQUITY RESIDENTIAL PROPERTIES TRUST SUBSIDARIES ---------------------------------------------------- 1 ERP OPERATING LIMITED PARTNERSHIP 2 EVANS WITHYCOMBE RESIDENTIAL LIMITED PARTNERSHIP 3 MERRY LAND DOWNREIT I LP 4 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT CORP 5 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT L.P. 6 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT CORP II 7 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT L.P. II 8 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT CORP III 9 EVANS WITHYCOMBE MANAGEMENT INC. 10 WADLINGTON INVESTMENTS GENERAL PARTNERSHIP 11 ARTERY NORTHAMPTON LIMITED PARTNERSHIP 12 BUENA VISTA PLACE ASSOCIATES 13 Capital Realty Investors Tax Exempt Fund, L.P. 14 CAPREIT Arbor Glen L.P. 15 CAPREIT ATRIUM, L.P. 16 CAPREIT BOTANY ARMS, L.P. 17 CAPREIT BRECKENRIDGE 18 CAPREIT BURWICK FARMS, L.P. 19 CAPREIT Cedars L.P. 20 CAPREIT CHIMNEYS, L.P. 21 CAPREIT CLARION, L.P. 22 CAPREIT CONCORDE BRIDGE, L.P. 23 CAPREIT CREEKWOOD, L.P. 24 CAPREIT EASTLAND ON THE LAKE, L.P. 25 CAPREIT Farmington Gates L.P. 26 CAPREIT GARDEN LAKE, L.P. 27 CAPREIT GLENEAGLE, L.P. 28 CAPREIT GREYEAGLE, L.P. 29 CAPREIT HAMPTON ARMS, L.P. 30 CAPREIT HIDDEN OAKS, L.P. 31 CAPREIT HIGHLAND GROVE, L.P. 32 CAPREIT MARINER'S WHARF, L.P. 33 CAPREIT NORTHLAKE, L.P. 34 CAPREIT Ridgeway Commons L.P. 35 CAPREIT River Oak L.P. 36 CAPREIT SILVER SPRINGS, L.P. 37 CAPREIT SYCAMORE RIDGE, L.P. 38 CAPREIT TARMARIND AT STONEBRIDGE, L.P. 39 CAPREIT TIVOLI LAKES CLUB, L.P. 40 CAPREIT Westwood Pines L.P. 41 CAPREIT Woodcrest Villa L.P. 42 CAPREIT WOODLAND MEADOWS, L.P. 43 CARROLLWOOD LP 44 CEDAR CREST GENERAL PARTNERSHIP 45 COUNTRY CLUB ASSOCIATES LIMITED PARTNERSHIP 46 COUNTRY RIDGE GENERAL PARTNERSHIP 47 CRICO of Trailway Pond II, L.P. 48 CRICO of White Bear Woods I, L.P. 49 CRICO of Ethan's I, L.P. 50 CRICO of Ethan's II, L.P. 51 CRICO of Fountain Place, L.P. 52 CRICO of James Street Crossing, L.P. 53 CRICO of Ocean Walk, L.P. 54 CRICO of Regency Woods, L.P. 55 CRICO of Trailway Pond I, L.P. 56 CRICO of Valley Creek I, L.P. 57 CRICO of Valley Creek II, L.P. 58 CRICO of Woodlane Place, L.P. 59 CRICO Royal Oaks, L.P. 60 E-G-ONE ASSOCIATES 61 E-G-TWO ASSOCIATES 62 E-LODGE ASSOCIATES LIMITED PARTNERSHIP 63 EQR- ARBORS FINANCING LIMITED PARTNERSHIP 64 EQR- IRONWOOD, L.L.C. ----------------------------------------------------- EQUITY RESIDENTIAL PROPERTIES TRUST SUBSIDARIES ---------------------------------------------------- 65 EQR- WYNDRIDGE II, L.L.C. 66 EQR-740 RIVER DRIVE, LLC 67 EQR-ALDERWOOD LP 68 EQR-ARBORETUM, LLC 69 EQR-ARIZONA, L.L.C. 70 EQR-ARTBHOLDER, L.L.C. 71 EQR-ARTCAPLOAN, L.L.C. 72 EQR-BELLEVUE MEADOW GP LP 73 EQR-BELLEVUE MEADOW LP 74 EQR-BOND PARTNERSHIP 75 EQR-BRAMBLEWOOD GP LP 76 EQR-BRAMBLEWOOD LP 77 EQR-BRETON HAMMOCKS FINANCING LIMITED PARTNERSHIP 78 EQR-BRIARWOOD GP LP 79 EQR-BRIARWOOD LP 80 EQR-BROADWAY LP 81 EQR-BROOKSIDE, LLC 82 EQR-BS FINANCING LIMITED PARTNERSHIP 83 EQR-CALIFORNIA, L.L.C 84 EQR-CAMELLERO FINANCING LIMITED PARTNERSHIP 85 EQR-CANTER CHASE GENERAL PARTNERSHIP 86 EQR-CEDAR POINTE GP LP 87 EQR-CEDAR POINTE LP 88 EQR-CEDAR RIDGE GP, LLC 89 EQR-CEDAR RIDGE LP 90 EQR-CHARDONNAY PARK, L.L.C. 91 EQR-CHELSEA SQUARE GP LP 92 EQR-CHELSEA SQUARE LP 93 EQR-COACHMAN TRIALS, LLC 94 EQR-CONNOR, LLC 95 EQR-CONTINENTAL VILLAS FINANCING LIMITED PARTNERSHIP 96 EQR-CREEKSIDE GP LP 97 EQR-CREEKSIDE LP 98 EQR-CREEKSIDE OAKS GENERAL PARTNERSHIP 99 EQR-DARTMOUTH WOODS GENERAL PARTNERSHIP 100 EQR-DORAL FINANCING LIMITED PARTNERSHIP 101 EQR-EMERALD PLACE FINANCING LIMITED PARTNERSHIP 102 EQR-EOI FINANCING LIMITED PARTNERSHIP 103 EQR-ESSEX PLACE FINANCING LIMITED PARTNERSHIP 104 EQR-FAIRFIELD, LLC 105 EQR-FERNBROOK, LLC 106 EQR-FIELDERS CROSSING GP, LLC 107 EQR-FIELDERS CROSSING LP 108 EQR-FIRESIDE, LLC 109 EQR-FLATLANDS, LLC 110 EQR-GOVERNOR'S PLACE FINANCING LIMITED PARTNERSHIP 111 EQR-GRANDVIEW I GP LP 112 EQR-GRANDVIEW I LP 113 EQR-GRANDVIEW II GP LP 114 EQR-GRANDVIEW II LP 115 EQR-GREENHAVEN GP LP 116 EQR-GREENHAVEN LP 117 EQR-HIGHLINE OAKS, L.L.C. 118 EQR-IRONWOOD, LLC 119 EQR-KEYSTONE FINANCING GENERAL PARTNERSHIP 120 EQR-LAKESHORE AT PRESTON LP 121 EQR-LAKEVILLE RESORT GENERAL PARTNERSHIP 122 EQR-LAKEWOOD GREENS GP, LLC 123 EQR-LAKEWOOD GREENS LP 124 EQR-LEXINGTON FARM, LLC 125 EQR-LINCOLN GREEN I AND II GP LIMITED PARTNERSHIP 126 EQR-LINCOLN VILLAGE (CA) I LP 127 EQR-LINCOLN VILLAGE (CA) II LP 128 EQR-LODGE (OK) GP LIMITED PARTNERSHIP 129 EQR-MARKS A, L.L.C. ------------------------------------------------- EQUITY RESIDENTIAL PROPERTIES TRUST SUBSIDIARIES ------------------------------------------------- 130 EQR-MARKS B, L.L.C. 131 EQR-MARTINS LANDING, LLC 132 EQR-MET CA FINANCING LIMITED PARTNERSHIP 133 EQR-MET FINANCING LIMITED PARTNERSHIP 134 EQR-MILL POND, LLC 135 EQR-MISSOURI, L.L.C. 136 EQR-MOUNTAIN SHADOWS GP LP 137 EQR-MOUNTAIN SHADOWS LP 138 EQR-MUIRFIELD, LLC 139 EQR-NORTH CREEK, LLC 140 EQR-NORTH HILL, L.L.C. 141 EQR-OLDE REDMOND GP LP 142 EQR-OLDE REDMOND LP 143 EQR-OLDE REDMOND LP LP 144 EQR-OREGON, L.L.C. 145 EQR-OVERLOOK MANOR II, LLC 146 EQR-PARK PLACE I GENERAL PARTNERSHIP 147 EQR-PARK PLACE II GENERAL PARTNERSHIP 148 EQR-PARKCREST, LLC 149 EQR-PARKSIDE LP 150 EQR-PINE MEADOWS GARDEN GENERAL PARTNERSHIP 151 EQR-PLANTATION FINANCING LIMITED PARTNERSHIP 152 EQR-PLANTATION, L.L.C. 153 EQR-PLEASANT RIDGE LP 154 EQR-PORTLAND CENTER, LLC 155 EQR-PRESTON BEND, G.P. 156 EQR-RESERVE SQUARE LIMITED PARTNERSHIP 157 EQR-RIDGEMONT/MOUNTAIN BROOK, L.L.C. 158 EQR-RIVER PARK LP 159 EQR-SANDSTONE LP 160 EQR-SMOKETREE, LLC 161 EQR-SONTERRA AT FOOTHILLS RANCH LP 162 EQR-SOUTHWOOD GP LP 163 EQR-SOUTHWOOD LP 164 EQR-SOUTHWOOD LP I LP 165 EQR-SOUTHWOOD LP II LP 166 EQR-SPINNAKER COVE, L.L.C. 167 EQR-SUMMER CREEK, LLC 168 EQR-SUMMERWOOD LP 169 EQR-SURREY DOWNS GP LP 170 EQR-SURREY DOWNS LP 171 EQR-SURREY DOWNS LP LP 172 EQR-SWN LINE FINANCING LIMITED PARTNERSHIP 173 EQR-TANASBOURNE TERRACE FINANCING LIMITED PARTNERSHIP 174 EQR-THE LAKES AT VININGS, LLC 175 EQR-TIMBERWOOD GP LP 176 EQR-TIMBERWOOD LP 177 EQR-TOWNHOMES OF MEADOWBROOK, LLC 178 EQR-TRAILS AT DOMINION GENERAL PARTNERSHIP 179 EQR-VALLEY PARK SOUTH FINANCING LIMITED PARTNERSHIP 180 EQR-VILLA SERENAS GENERAL PARTNERSHIP 181 EQR-VILLAGE OAKS GENERAL PARTNERSHIP 182 EQR-VILLAS OF JOSEY RANCH GP, LLC 183 EQR-VILLAS OF JOSEY RANCH LP 184 EQR-VININGS AT ASHLEY LAKE, L.L.C. 185 EQR-VIRGINIA, L.L.C. 186 EQR-WARWICK, L.L.C. 187 EQR-WASHINGTON, L.L.C. 188 EQR-WATERFALL, L.L.C. 189 EQR-WATSON G.P. 190 EQR-WELLINGTON, L.L.C. 191 EQR-WEST COAST PORTFOLIO GP, LLC 192 EQR-WIMBLEDON OAKS LP 193 EQR-WOODLAKE GP LP 194 EQR-WOODLAKE LP ------------------------------------------------- EQUITY RESIDENTIAL PROPERTIES TRUST SUBSIDIARIES ------------------------------------------------- 195 EQR-WOODLEAF GP LP 196 EQR-WOODLEAF LP 197 EQR-WOODRIDGE I LP 198 EQR-WOODRIDGE II LP 199 EQR-WOODRIDGE III LP 200 EQR-WOODRIDGE, LLC 201 EQR-WYNDRIDGE III, L.L.C. 202 EQR-YORKTOWNE FINANCING LIMITED PARTNERSHIP 203 EQUITY-GREEN I VENTURE LIMITED PARTNERSHIP 204 EQUITY-GREEN II VENTURE LIMITED PARTNERSHIP 205 EQUITY-LODGE VENTURE LTD. 206 ERP-SOUTHEAST PROPERTIES, LLC 207 EVANS WITHYCOMBE FINANCE, L.P. 208 EW CHANDLER, L.P. 209 FOREST PLACE ASSOCIATES 210 FOURTH TOWNE CENTRE LIMITED PARTNERSHIP 211 FPAII, L.P. 212 Geary Courtyard Associates 213 GEORGIAN WOODS ANNEX ASSOCIATES 214 GLENLAKE CLUB L.P. 215 GREENWICH WOODS LIMITED PARTNERSHIP 216 HAMMOCKS AT LONG POINT, LLC 217 HORIZON PLACE ASSOCIATES 218 HUNTERS'S GLEN GENERAL PARTNERSHIP 219 HUNTINGTON, LLC 220 LANDON LEGACY PARTNERS LIMITED 221 LANDON PRAIRIE CREEK PARTNERS LIMITED 222 LENOX PLACE LP 223 MAGNOLIA VILLA, LLC 224 MCCASLIN HIDDEN LAKES, LTD. 225 MCCASLIN RIVERHILL, LTD. 226 MCKINLEY HILLS PARTNERS-85, 227 MERRY LAND, LLC 228 ML NORTH CAROLINA APARTMENTS LP 229 ML TENNESSEE APARTMENTS LP 230 ML TEXAS APARTMENTS LP 231 NORTHRIDGE LAKES LP 232 NRL ASSOCIATES LP 233 OAKS AT BAYMEADOWS ASSOCIATES 234 OAKS AT REGENCY ASSOCIATES 235 ROLIDO PARQUE GP 236 ROSEHILL POINTE GENERAL PARTNERSHIP 237 SARASOTA BENEVA PLACE ASSOICATES, LTD. 238 SEAGULL DRIVE JOINT VENTURE 239 SECOND COUNRTY CLUB ASSOCIATES LIMITED PARTNERSHIP 240 SECOND GEORGIAN WOODS LIMITED PARTNERSHIP 241 SONGBIRD GENERAL PARTNERSHIP 242 SUMMIT PLACE, LLC 243 SUNNY OAK VILLAGE GENERAL PARTNERSHIP 244 THE CROSSINGS ASSOCIATES 245 THE GATES OF REDMOND, L.L.C. 246 THE WIMBERLY APARTMENT HOMES, LTD. 247 THIRD TOWNE CENTRE LIMITED PARTNERSHIP 248 TOWERS AT PORTSIDE URBAN RENEWAL COMPANY, LLC 249 VININGS CLUB AT METROWEST LP 250 WINDSOR PLACE, LLC 251 WOOD FOREST ASSOCIATES 252 WOODCREST (AUGUSTA), LLC QUALIFIED REIT SUBSIDIARIES: ---------------------------- 1 EQR-QRS HIGHLINE OAKS, INC 2 EQR-QRS RIDGEMONT/MOUNTAIN BROOK, INC 3 EQR-QRS SPINNAKER COVE, INC. 4 EQR-QRS WYNDRIDGE II, INC. 5 EQR-QRS WYNDRIDGE III, INC. 6 ERP-QRS ARBORS, INC. 7 ERP-QRS BRETON HAMMOCKS, INC. 8 ERP-QRS BS, INC. 9 ERP-QRS CAMELLERO, INC. 10 ERP-QRS CANTER CHASE, INC. 11 ERP-QRS CEDAR CREST, INC. 12 ERP-QRS CEDAR RIDGE, INC. 13 ERP-QRS CHAPARRAL CREEK, INC. 14 ERP-QRS CONTINENTAL VILLAS, INC. 15 ERP-QRS COUNTRY CLUB I, INC. 16 ERP-QRS COUNTRY CLUB II, INC. 17 ERP-QRS COUNTRY RIDGE, INC. 18 ERP-QRS CPRT II, INC. 19 ERP-QRS CPRT, INC. 20 ERP-QRS CREEKSIDE OAKS, INC. 21 ERP-QRS DARTMOUTH WOODS, INC. 22 ERP-QRS DORAL, INC. 23 ERP-QRS EMERALD PLACE, INC. 24 ERP-QRS EOI, INC. 25 ERP-QRS ESSEX PLACE, INC. 26 ERP-QRS FAIRFIELD, INC. 27 ERP-QRS FLATLANDS, INC. 28 ERP-QRS GEORGIAN WOODS ANNEX, INC. 29 ERP-QRS GLENLAKE CLUB, INC. 30 ERP-QRS GOVERNOR'S PLACE, INC. 31 ERP-QRS GREENWICH WOODS, INC. 32 ERP-QRS HARBOR POINTE, INC. 33 ERP-QRS HUNTER'S GLEN, INC. 34 ERP-QRS LAKEVILLE RESORT, INC. 35 ERP-QRS LAKEWOOD GREENS, INC. 36 ERP-QRS LINCOLN GREEN, INC. 37 ERP-QRS LODGE (OK), INC. 38 ERP-QRS MAGNUM, INC. 39 ERP-QRS MET CA, INC. 40 ERP-QRS MET, INC. 41 ERP-QRS NORTHAMPTON I, INC. 42 ERP-QRS PARK PLACE I, INC. 43 ERP-QRS PARK PLACE II, INC. 44 ERP-QRS PINE MEADOWS GARDEN, INC. 45 ERP-QRS PLANTATION, INC. 46 ERP-QRS PRESTON BEND, INC. 47 ERP-QRS RESERVE SQUARE, INC. 48 ERP-QRS ROLIDO PARQUE, INC. 49 ERP-QRS ROSEHILL POINTE, INC. 50 ERP-QRS SLEEPY HOLLOW, INC. 51 ERP-QRS SONGBIRD, INC. 52 ERP-QRS SONTERRA AT FOOTHILLS RANCH, INC. 53 ERP-QRS STONEBROOK, INC. 54 ERP-QRS SUNNY OAK VILLAGE, INC. 55 ERP-QRS SWN LINE, INC. 56 ERP-QRS TANASBOURNE TERRACE, INC. 57 ERP-QRS TOWNE CENTRE III, INC. 58 ERP-QRS TOWNE CENTRE IV, INC. 59 ERP-QRS TRAILS AT DOMINION, INC. 60 ERP-QRS VALLEY PARK SOUTH, INC. 61 ERP-QRS VILLA SERENAS, INC. 62 ERP-QRS VILLAGE OAKS, INC. 63 ERP-QRS WATSON, INC. 64 ERP-QRS WELLINGTON HILL, INC. 65 ERP-QRS YORKTOWNE, INC. 66 EVANS WITHYCOMBE FINANCE, INC 67 MERRY LAND APARTMENT COMMUNITIES, INC. 68 ML SERVICES, INC. 69 QRS IRONWOOD, INC. 70 QRS MARKS A, INC. 71 QRS MARKS B, INC. 72 QRS MISSOURI, INC. 73 QRS WARWICK, INC. 74 QRS-740 RIVER DRIVE, INC. 75 QRS-ARBORETUM, INC. 76 QRS-ARTBHOLDER, INC. 77 QRS-ARTCAPLOAN, INC. 78 QRS-BOND, INC. 79 QRS-CHARDONNAY PARK, INC 80 QRS-CONNOR, INC. 81 QRS-FERNBROOK, INC. 82 QRS-GATES OF REDMOND, INC 83 QRS-LLC, INC. 84 QRS-MUIRFIELD, INC. 85 QRS-NORTH HILL, INC 86 QRS-PORTLAND CENTER, INC. 87 QRS-SCARBOROUGH, INC. 88 QRS-SMOKETREE, INC. 89 QRS-TOWERS AT PORTSIDE, INC. 90 QRS-TOWNHOMES OF MEADOWBROOK, INC. 91 QRS-VININGS AT ASHLEY LAKE, INC. 92 QRS-WATERFALL, INC. 93 QRS-WOODRIDGE, INC. 94 WADLINGTON, INC. EX-23.1 4 CONSENT OF ERNST & YOUNG Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Forms S-3 No. 333-72961, No. 333-45533, No. 333-39289, No. 333-12983, No. 333-06873, No. 33-97680, No. 33-84974 and Forms S-8 No. 333-66257, No. 333-56165 and No. 333-06869) of Equity Residential Properties Trust and in the related Prospectuses of our report dated February 17, 1999, except for Note 24, as to which the date is March 5, 1999, with respect to the consolidated financial statements and schedule of Equity Residential Properties Trust included in this Annual Report (Form 10-K) for the year ended December 31, 1998. /s/ Ernst & Young LLP Ernst & Young LLP Chicago, Illinois March 18, 1999 EX-24.1 5 POWER OF ATTORNEY JOHN ALEXANDER EXHIBIT 24.1 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that John W. Alexander, having an address at 255 Colville Rd, Charolotte, NC, 28207 has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney- in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, John W. Alexander, has hereunto set his hand this 12 /th/ day of March, 1999. /s/ John W. Alexander --------------------------- John W. Alexander I, Lisa Currie , a Notary Public in and for said County in the State of aforesaid, do hereby certify that John W. Alexander, personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12 /th/ day of March, 1999. Lisa Currie [OFFICIAL SEAL APPEARS HERE] --------------------------- (Notary Public) My Commission Expires:____________________ EX-24.2 6 POWER OF ATTORNEY JAMES HARPER EXHIBIT 24.2 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that James D. Harper, Jr., having an address at 1120 McCanin Road, Amity, OR, 97101 has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney- in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, James D. Harper, Jr., has hereunto set his hand this 12/th/ day of March, 1999. /S/ James D. Harper --------------------- James D. Harper, Jr . I, Lisa Currie a Notary Public in and for said County in the State of aforesaid, do hereby certify that James D. Harper, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12/th/ day of March, 1999. /s/ lisa currie [OFFICIAL SEAL APPEARS HERE] -------------------------- (Notary Public) My Commission Expires:____________________ EX-24.3 7 POWER OF ATTORNEY ERROL HALPERIN EXHIBIT 24.3 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that Errol R. Halperin, having an address at 107 W. Delaware, Unit F, Chicago, IL 60610, has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in- Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney-in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, Errol R. Halperin, has hereunto set his hand this 12/th/ day of March, 1999. /s/ Errol R. Halperin ------------------------------ Errol R. Halperin I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that Errol R. Halperin, personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12/th/ day of March, 1999. /s/ Lisa Currie [OFFICIAL SEAL APPEARS HERE] ---------------------- (Notary Public) My Commission Expires:____________________ EX-24.4 8 POWER OF ATTORNEY B. JOSEPH WHITE EXHIBIT 24.4 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that B. Joseph White, having an address at 3000 Hunting Valley, Ann Arbor, MI, 48104 has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney- in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, B. Joseph White, has hereunto set his hand this 12/th/ day of March, 1999. /s/ B. Joseph White ----------------------------- B. Joseph White I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that B. Joseph White, personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12/th/ day of March, 1999. [OFFICIAL SEAL APPEARS HERE] /s/ Lisa Currie --------------------- (Notary Public) My Commission Expires:____________________ EX-24.5 9 POWER OF ATTORNEY HENRY GOLDBERG EXHIBIT 24.5 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that Henry H. Goldberg, having an address at c/o Artery Properties Inc. 4733 Bethesda Ave #410, Bethesda, MD 20814, has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney-in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, Henry H. Goldberg, has hereunto set his hand this 12 /th/ day of March, 1999. /s/ Henry H. Goldberg ------------------------------ Henry H. Goldberg I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that Henry H. Goldberg, personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12 /th/ day of March, 1999. /s/ Lisa Currie [OFFICIAL SEAL APPEARS HERE] ------------------------------ (Notary Public) My Commission Expires:____________________ EX-24.6 10 POWER OF ATTORNEY EDWARD LOWENTHAL EXHIBIT 24.6 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that Edward Lowenthal, having an address at 13 Ackerman Road, Saddle River, NJ 07458 has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney- in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, Edward Lowenthal, has hereunto set his hand this 12/th/ day of March, 1999. /s/ Edward Lowenthal ------------------------------ Edward Lowenthal I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that Edward Lowenthal, personally known to me to be he same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12/th/ day of March, 1999. /s/ Lisa Currie ------------------------------ (Notary Public) [OFFICIAL SEAL APPEARS HERE] My Commission Expires:____________________ EX-24.7 11 POWER OF ATTORNEY JEFFERY LYNFORD EXHIBIT 24.7 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that Jeffrey H. Lynford, having an address at 10 Holly Branch Road, Katonah, NY 10536 has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney- in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, Jeffrey H. Lynford, has hereunto set his hand this 12/th/ day of March, 1999. /s/ Jeffery H. Lynford ----------------------- Jeffrey H. Lynford I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that Jeffrey H. Lynford, personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12/th/ day of March, 1999. /s/ Lisa Currie -------------------- (Notary Public) My Commission Expires: 02/07/01 EX-24.8 12 POWER OF ATTORNEY STEPHEN EVANS EXHIBIT 24.8 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that Stephen O. Evans, having an address at 5825 E. Starlight Way, Paradise Valley, AZ 85253, has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in- Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney-in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, Stephen O. Evans, has hereunto set his hand this 12 /th/ day of March, 1999. /s/ Stephen O. Evans -------------------------------- Stephen O. Evans I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that Stephen O. Evans, personally known to me to be he same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12 /th/ day of March, 1999. /s/ Lisa Currie -------------------------------- (Notary Public) My Commission Expires: 02/07/01 ------------------ EX-24.9 13 POWER OF ATTORNEY BOONE KNOX EXHIBIT 24.9 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that Boone A. Knox, having an address at 3133 Washington Rd, Thompson, GA 30824, has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney- in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, Boone A. Knox, has hereunto set his hand this 12/th/ day of March, 1999. /s/ Boone A. Knox ---------------------- Boone A. Knox I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that Boone A. Knox, personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12/th/ day of March, 1999. /s/ Lisa Currie ----------------------- (Notary Public) My Commission Expires: 02/07/01 EX-24.10 14 POWER OF ATTORNEY MICHAEL THOMPSON Exhibith 24.10 POWER OF ATTORNEY ----------------- STATE OF ILLINOIS COUNTY OF COOK KNOW ALL MEN BY THESE PRESENTS that Michael N. Thompson, having an address at 5 Brigartine Court, Savannah, GA 31410 has made, constituted and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his name, place and stead to sign and execute in any and all capacities this Annual Report on Form 10-K and any or all amendments to this Annual Report granting unto each of such, Attorney-in-Fact, full power and authority to do and perform each and every act and thing,requisite and necessary to be done in an about the premises, as fully, to all intents and purposes as he might or could do if personally present at the doing thereof, with full power of substitution and revocation, hereby ratifying and confirming all that each of such Attorney- in-Fact or his substitutes shall lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until terminated by the undersigned through the instrumentality of a signed writing. IN WITNESS WHEREOF, Michael N. Thompson, has hereunto set his hand this 12/th/ day of March, 1999. /s/ Michael N. Thompson ------------------------------ Michael N. Thompson I, Lisa Currie, a Notary Public in and for said County in the State of aforesaid, do hereby certify that Michael N. Thompson, personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free voluntary act for the uses and purposes therein set forth. Given under my hand and notarial seal this 12/th/ day of March, 1999. /s/ Lisa Currie [OFFICIAL SEAL APPEARS HERE] ------------------------------ (Notary Public) My Commission Expires:____________________ EX-27 15 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 3,965 0 4,758 0 0 289,422 10,942,063 718,491 10,700,260 257,912 4,680,527 0 1,410,574 0 0 10,700,260 1,317,746 1,337,449 0 509,488 21,718 0 249,342 255,032 0 255,032 21,703 0 0 183,818 1.65 1.63
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