EX-99.1 2 a5262689ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Equity Residential Reports Third Quarter Results Third Quarter Same-Store NOI Increases 9.1 Percent CHICAGO--(BUSINESS WIRE)--Oct. 31, 2006--Equity Residential (NYSE: EQR) today reported results for the quarter and nine months ended September 30, 2006. All per share results are reported on a fully diluted basis. "We had an excellent third quarter, with our same-store portfolio generating 9.1 percent NOI growth and our 2003, 2004 and 2005 acquisitions generating average NOI growth of 12.5 percent. Complimenting this terrific operating performance were acquisitions of high quality assets in our target markets and the completion of the sale of our Lexford portfolio in early October," said David J. Neithercut, Equity Residential's President and CEO. "Although we have expectations for continued strong same-store performance for the remainder of the year, we are revising our FFO guidance range for the full year to $2.32 to $2.35 per share, from our previous guidance toward the middle of a $2.30 to $2.50 per share range, due primarily to slightly higher than expected debt prepayment costs from the sale of Lexford as well as a lower than expected contribution from our condominium business." Third Quarter 2006 For the quarter ended September 30, 2006, the company reported earnings of $0.19 per share compared to $0.87 per share in the third quarter of 2005. The quarterly decrease is primarily attributable to higher gains on sales of properties in the third quarter of 2005 as well as the items discussed below. Funds from Operations (FFO) for the quarter ended September 30, 2006 were $0.62 per share compared to $0.56 per share in the same period of 2005. The increase is primarily attributable to continued improvement in same store net operating income and excellent growth from new acquisitions. Total revenues from continuing operations for the quarter were $513.9 million compared to $430.8 million in the third quarter of 2005. The primary components of this $83.1 million increase in revenues are the properties acquired in 2005 and 2006 as well as strong same-store performance. Nine Months Ended September 30, 2006 For the nine months ended September 30, 2006, the company reported earnings of $1.95 per share compared to $2.05 per share in the same period of 2005. FFO for the nine months ended September 30, 2006 were $1.78 per share compared to $1.86 per share in the same period of 2005. Total revenues from continuing operations for the nine months ended September 30, 2006 were $1.5 billion compared to $1.2 billion in the same period of 2005. Same-Store Results On a same-store third quarter to third quarter comparison, which includes 133,526 units, revenues increased 5.9 percent, expenses increased 1.4 percent and NOI increased 9.1 percent. The increase in same-store revenues was driven primarily by continued increases in rental rate. On a same-store nine-month to nine-month comparison, which includes 129,965 units, revenues increased 6.0 percent, expenses increased 3.2 percent and NOI increased 7.8 percent. All same-store results exclude the Lexford Housing Division. Portfolio Transformation During the third quarter of 2006, the company acquired ten properties, consisting of 2,558 units, for an aggregate purchase price of $504.8 million at an average capitalization (cap) rate of 5.1 percent, and one land parcel for $17.0 million. Also during the quarter, the company sold two properties, consisting of 133 units, for an aggregate sale price of $3.0 million at an average cap rate of 7.6 percent. In addition, the company sold 315 condominium units for $65.4 million and one land parcel for $0.7 million. In the first nine months of 2006, the company acquired 28 properties, consisting of 7,480 units, for an aggregate purchase price of $1.4 billion at an average cap rate of 5.0 percent, and six land parcels for $93.5 million. During the nine months ended September 30, 2006, the company sold 40 properties, consisting of 10,661 units, for an aggregate sale price of $1.0 billion at an average cap rate of 5.5 percent generating an unlevered internal rate of return (IRR) of 12.2 percent. In addition, the company sold 840 condominium units for $172.6 million and two land parcels for $1.6 million. Lexford Housing Division Sale On October 5, 2006, Equity Residential completed the previously announced sale of its Lexford Housing Division, comprised of 289 properties consisting of 27,115 apartment units, for a cash purchase price of $1.086 billion. Fourth Quarter/Full Year 2006 Results Equity Residential expects to announce results for the fourth quarter and full year 2006 on Tuesday, February 6, 2007 and host a conference call to discuss those results and the company's outlook for 2007 at 10:00 a.m. CT on Wednesday, February 7, 2007. Equity Residential is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top U.S. growth markets. Equity Residential owns or has investments in 616 properties totaling 166,577 units. For more information on Equity Residential, please visit our website at www.equityresidential.com. Forward-Looking Statements In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential's management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction materials, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityresidential.com. Many of these uncertainties and risks are difficult to predict and are beyond management's control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. A live web cast of the company's conference call discussing these results will take place Wednesday, November 1, at 1:00 p.m. CT. Please visit the Investor Information section of the company's web site at www.equityresidential.com for the link. A replay of the web cast will be available for two weeks at this site. EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands except per share data) (Unaudited) Nine Months Ended Quarter Ended September 30, September 30, ----------------------- ---------------------- 2006 2005 2006 2005 ----------- ----------- ---------- ----------- REVENUES Rental income $1,470,705 $1,237,279 $511,794 $428,357 Fee and asset management 6,878 7,763 2,071 2,401 ----------- ----------- ---------- ----------- Total revenues 1,477,583 1,245,042 513,865 430,758 ----------- ----------- ---------- ----------- EXPENSES Property and maintenance 390,732 338,810 138,285 121,562 Real estate taxes and insurance 148,604 136,813 51,525 50,181 Property management 70,081 63,351 23,417 21,944 Fee and asset management 6,477 6,358 2,151 2,182 Depreciation 415,179 323,608 143,255 111,370 General and administrative 37,638 45,944 14,448 14,442 ----------- ----------- ---------- ----------- Total expenses 1,068,711 914,884 373,081 321,681 ----------- ----------- ---------- ----------- Operating income 408,872 330,158 140,784 109,077 Interest and other income 11,668 64,824 7,303 2,554 Interest: Expense incurred, net (319,236) (266,063) (110,187) (92,335) Amortization of deferred financing costs (6,419) (4,832) (1,906) (1,602) ----------- ----------- ---------- ----------- Income before allocation to Minority Interests, loss from investments in unconsolidated entities, net gain on sales of unconsolidated entities and land parcels and discontinued operations 94,885 124,087 35,994 17,694 Allocation to Minority Interests: Operating Partnership, net (3,891) (5,509) (1,627) 183 Preference Interests and Units (1,779) (6,442) (223) (1,163) Partially Owned Properties (2,550) 672 (482) (1,624) Premium on redemption of Preference Interests (684) (4,134) (1) (22) Loss from investments in unconsolidated entities (565) (450) (190) (235) Net gain on sales of unconsolidated entities 370 124 18 - Net gain on sales of land parcels 3,183 10,366 2,937 - ----------- ----------- ---------- ----------- Income from continuing operations, net of minority interests 88,969 118,714 36,426 14,833 Discontinued operations, net of minority interests 518,814 517,193 33,385 252,691 ----------- ----------- ---------- ----------- Net income 607,783 635,907 69,811 267,524 Preferred distributions (29,682) (39,004) (9,514) (12,961) Premium on redemption of Preferred Shares (3,941) (4,316) (3,941) (4,316) ----------- ----------- ---------- ----------- Net income available to Common Shares $574,160 $592,587 $56,356 $250,247 =========== =========== ========== =========== Earnings per share - basic: Income (loss) from continuing operations available to Common Shares $0.19 $0.26 $0.08 $(0.01) =========== =========== ========== =========== Net income available to Common Shares $1.98 $2.08 $0.19 $0.87 =========== =========== ========== =========== Weighted average Common Shares outstanding 289,463 285,331 290,036 286,182 =========== =========== ========== =========== Earnings per share - diluted: Income (loss) from continuing operations available to Common Shares $0.19 $0.26 $0.08 $(0.01) =========== =========== ========== =========== Net income available to Common Shares $1.95 $2.05 $0.19 $0.87 =========== =========== ========== =========== Weighted average Common Shares outstanding 314,982 310,211 315,886 286,182 =========== =========== ========== =========== Distributions declared per Common Share outstanding $1.3275 $1.2975 $0.4425 $0.4325 =========== =========== ========== =========== EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (Amounts in thousands except per share data) (Unaudited) Nine Months Ended Quarter Ended September 30, September 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Net income $607,783 $635,907 $69,811 $267,524 Allocation to Minority Interests - Operating Partnership, net 3,891 5,509 1,627 (183) Adjustments: Depreciation 415,179 323,608 143,255 111,370 Depreciation - Non-real estate additions (5,615) (3,928) (1,933) (1,243) Depreciation - Partially Owned and Unconsolidated Properties 3,473 2,136 910 2,774 Net gain on sales of unconsolidated entities (370) (124) (18) - Discontinued operations: Depreciation 25,429 67,543 - 20,513 Gain on sales of discontinued operations, net of minority interests (3) (487,607) (468,999) (18,404) (237,047) Net incremental gain on sales of condominium units 31,431 56,667 12,878 27,631 Minority Interests - Operating Partnership 1,881 3,497 740 1,130 --------- --------- --------- --------- FFO (1)(2) 595,475 621,816 208,866 192,469 Preferred distributions (29,682) (39,004) (9,514) (12,961) Premium on redemption of Preferred Shares (3,941) (4,316) (3,941) (4,316) --------- --------- --------- --------- FFO available to Common Shares and OP Units - basic $561,852 $578,496 $195,411 $175,192 ========= ========= ========= ========= FFO available to Common Shares and OP Units - diluted $562,551 $579,432 $195,634 $175,466 ========= ========= ========= ========= FFO per share and OP Unit - basic $1.81 $1.89 $0.63 $0.57 ========= ========= ========= ========= FFO per share and OP Unit - diluted $1.78 $1.86 $0.62 $0.56 ========= ========= ========= ========= Weighted average Common Shares and OP Units outstanding - basic 310,012 306,171 310,671 306,915 ========= ========= ========= ========= Weighted average Common Shares and OP Units outstanding - diluted 315,584 311,015 316,462 312,272 ========= ========= ========= ========= (1) The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. (2) The Company believes that FFO is helpful to investors as a supplemental measure of the operating performance of a real estate company, because it is a recognized measure of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help compare the operating performance of a company's real estate between periods or as compared to different companies. FFO in and of itself does not represent net income or net cash flows from operating activities in accordance with GAAP. Therefore, FFO should not be exclusively considered as an alternative to net income or to net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. (3) Gain on sales of discontinued operations, net of minority interests, has been reduced by approximately $4.5 million in one-time accrued retention benefits for both the nine months and quarter ended September 30, 2006, related to the previously announced October 5, 2006 closing of the Lexford Housing Division disposition. EQUITY RESIDENTIAL CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited) September 30, December 31, 2006 2005 ------------- -------------- ASSETS Investment in real estate Land $3,118,538 $2,848,601 Depreciable property 13,195,156 13,336,636 Projects under development 335,227 240,980 Land held for development 199,369 164,153 ------------- -------------- Investment in real estate 16,848,290 16,590,370 Accumulated depreciation (2,911,481) (2,888,140) ------------- -------------- Investment in real estate, net 13,936,809 13,702,230 Real estate held for sale 646,155 - Cash and cash equivalents 76,324 88,828 Investments in unconsolidated entities 4,528 6,838 Rents receivable 1,452 789 Deposits - restricted 96,567 77,093 Escrow deposits - mortgage 32,410 35,225 Deferred financing costs, net 43,957 40,636 Goodwill, net 30,000 30,000 Other assets 101,864 117,306 ------------- -------------- Total assets $14,970,066 $14,098,945 ============= ============== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $3,157,088 $3,379,289 Mortgage notes payable, held for sale 196,325 - Notes, net 4,469,043 3,442,784 Lines of credit 506,000 769,000 Accounts payable and accrued expenses 146,091 108,855 Accrued interest payable 73,174 78,441 Rents received in advance and other liabilities 292,515 302,418 Security deposits 63,901 54,823 Distributions payable 144,758 145,812 ------------- -------------- Total liabilities 9,048,895 8,281,422 ------------- -------------- Commitments and contingencies Minority Interests: Operating Partnership 361,060 345,034 Preference Interests and Units 11,684 60,184 Partially Owned Properties 23,842 16,965 ------------- -------------- Total Minority Interests 396,586 422,183 ------------- -------------- Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 2,794,050 shares issued and outstanding as of September 30, 2006 and 3,323,830 shares issued and outstanding as of December 31, 2005 387,351 504,096 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 292,132,743 shares issued and outstanding as of September 30, 2006 and 289,536,344 shares issued and outstanding as of December 31, 2005 2,921 2,895 Paid in capital 5,311,347 5,253,188 Distributions in excess of accumulated earnings (162,408) (350,367) Accumulated other comprehensive loss (14,626) (14,472) ------------- -------------- Total shareholders' equity 5,524,585 5,395,340 ------------- -------------- Total liabilities and shareholders' equity $14,970,066 $14,098,945 ============= ============== Third Quarter 2006 vs. Third Quarter 2005 Quarter over Quarter Same-Store Results $ in Millions - 133,526 Same-Store Units (excludes Lexford) Description Revenues Expenses NOI (1) --------------- --------------- --------------- --------------- Q3 2006 $423.7 $165.9 $257.8 Q3 2005 $399.9 $163.6 $236.3 --------------- --------------- --------------- Change $23.8 $2.3 $21.5 =============== =============== =============== Change 5.9% 1.4% 9.1% Third Quarter 2006 vs. Second Quarter 2006 Sequential Quarter over Quarter Same-Store Results $ in Millions - 143,169 Same-Store Units (excludes Lexford) Description Revenues Expenses NOI (1) --------------- --------------- --------------- --------------- Q3 2006 $468.6 $182.5 $286.1 Q2 2006 $459.7 $176.4 $283.3 --------------- --------------- --------------- Change $8.9 $6.1 $2.8 =============== =============== =============== Change 1.9% 3.4% 1.0% September YTD 2006 vs. September YTD 2005 YTD over YTD Same-Store Results $ in Millions - 129,965 Same-Store Units (excludes Lexford) Description Revenues Expenses NOI (1) --------------- --------------- --------------- --------------- YTD 2006 $1,214.5 $474.5 $740.0 YTD 2005 $1,146.1 $459.9 $686.2 --------------- --------------- --------------- Change $68.4 $14.6 $53.8 =============== =============== =============== Change 6.0% 3.2% 7.8% Same-Store Statistics (excludes Lexford) Occupancy Turnover Occupancy Turnover ---------- ---------- ---------- ---------- Q3 2006 94.6% 18.8% Q3 2006 94.6% 18.8% Q3 2005 95.2% 18.7% Q2 2006 94.6% 16.5% ---------- ---------- ---------- ---------- Change (0.6%) 0.1% Change 0.0% 2.3% Occupancy Turnover ---------- -------- YTD 2006 94.6% 49.3% YTD 2005 94.7% 50.4% ---------- -------- Change (0.1%) (1.1%) (1) The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense, and property management expense. The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Company's apartment communities. All same-store results exclude the Lexford Housing Division. Same-Store NOI Reconciliation Third Quarter 2006 vs. Third Quarter 2005 The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Third Quarter 2006 Same-Store Properties: Quarter Ended September 30, ------------------------------- 2006 2005 --------------- --------------- (Amounts in millions) Operating income $140.8 $109.1 Adjustments: Non-same-store operating results (40.8) 1.6 Fee and asset management revenue (2.1) (2.4) Fee and asset management expense 2.2 2.2 Depreciation 143.3 111.4 General and administrative 14.4 14.4 --------------- --------------- Same-store NOI $257.8 $236.3 =============== =============== Same-Store NOI Reconciliation September YTD 2006 vs. September YTD 2005 The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Nine-Month 2006 Same-Store Properties: Nine Months Ended September 30, ------------------------------- 2006 2005 --------------- --------------- (Amounts in millions) Operating income $408.9 $330.2 Adjustments: Non-same-store operating results (121.3) (12.1) Fee and asset management revenue (6.9) (7.8) Fee and asset management expense 6.5 6.4 Depreciation 415.2 323.6 General and administrative 37.6 45.9 --------------- --------------- Same-store NOI $740.0 $686.2 =============== =============== Third Quarter 2006 vs. Third Quarter 2005 Same-Store Results by Market ------------------------------------------------------------------- 3Q 2006 3Q 2006 % of Weighted Actual Average Markets Units NOI Occupancy % ------------------------------------------------------------------- 1 Los Angeles 6,221 7.6% 95.4% 2 Boston 5,761 6.5% 94.6% 3 South Florida 7,662 6.5% 92.1% 4 San Francisco Bay Area 5,990 6.4% 95.7% 5 DC Northern Virginia 5,183 5.8% 94.8% 6 New York Metro Area 3,576 5.7% 96.7% 7 Phoenix 9,247 5.6% 94.6% 8 Seattle/Tacoma 7,802 5.4% 92.8% 9 Atlanta 8,945 4.9% 95.5% 10 Denver 7,425 4.3% 94.8% 11 Dallas/Ft Worth 8,339 4.0% 94.7% 12 Orlando 5,465 3.9% 95.0% 13 San Diego 3,486 3.9% 95.5% 14 New England (excl Boston) 5,823 3.7% 94.7% 15 Orange County 3,013 3.3% 96.0% 16 Inland Empire, CA 3,504 3.2% 94.0% 17 DC Suburban Maryland 4,325 3.0% 92.6% 18 Houston 5,282 2.6% 93.8% 19 Portland 3,409 2.0% 95.7% 20 Jacksonville 3,337 1.9% 94.3% --------------------------------------- Top 20 Markets 113,795 90.2% 94.5% All Other Markets 19,731 9.8% 94.7% --------------------------------------- Total 133,526 100.0% 94.6% ======================================= -------------------------------------------- Increase (Decrease) from Prior Quarter ------------------------------------------------------------------- Markets Revenues Expenses NOI Occupancy ------------------------------------------------------------------- 1 Los Angeles 6.5% 2.6% 8.5% (0.9%) 2 Boston 2.8% 5.3% 1.3% (0.3%) 3 South Florida 8.3% 4.2% 11.2% (2.7%) 4 San Francisco Bay Area 6.2% (1.3%) 10.7% (0.8%) 5 DC Northern Virginia 6.4% (3.5%) 11.3% (0.4%) 6 New York Metro Area 7.8% (3.6%) 14.8% 0.3% 7 Phoenix 12.7% 1.8% 20.9% (0.1%) 8 Seattle/Tacoma 6.6% 3.2% 9.0% (2.5%) 9 Atlanta 4.5% (1.0%) 9.0% (0.2%) 10 Denver 4.7% 0.0% 7.7% (0.3%) 11 Dallas/Ft Worth 4.3% (7.2%) 17.8% (0.1%) 12 Orlando 7.5% 6.0% 8.4% (1.5%) 13 San Diego 4.5% 8.4% 2.6% (0.4%) 14 New England (excl Boston) 3.5% 5.0% 2.3% 0.8% 15 Orange County 7.3% 7.9% 7.0% 0.3% 16 Inland Empire, CA 3.4% 6.7% 1.6% (0.4%) 17 DC Suburban Maryland 1.8% 2.3% 1.6% (0.6%) 18 Houston 6.0% (6.2%) 20.7% (1.1%) 19 Portland 7.5% 2.1% 11.6% 1.2% 20 Jacksonville 3.6% (1.0%) 7.0% (0.4%) -------------------------------------------- Top 20 Markets 6.0% 1.2% 9.2% (0.6%) All Other Markets 5.8% 2.8% 8.5% (0.5%) -------------------------------------------- Total 5.9% 1.4% 9.1% (0.6%) ============================================ Note: All same store results exclude the Lexford Housing Division. Third Quarter 2006 vs. Second Quarter 2006 Same-Store Results by Market ------------------------------------------------------------------- 3Q 2006 3Q 2006 % of Weighted Actual Average Markets Units NOI Occupancy % ------------------------------------------------------------------- 1 New York Metro Area 5,288 8.8% 96.7% 2 Los Angeles 6,469 7.0% 95.4% 3 DC Northern Virginia 6,662 6.4% 94.3% 4 Boston 6,109 6.3% 94.6% 5 South Florida 8,210 6.2% 92.1% 6 Seattle/Tacoma 8,708 6.2% 93.0% 7 San Francisco Bay Area 5,990 5.8% 95.7% 8 Phoenix 9,247 5.1% 94.6% 9 Atlanta 9,833 5.0% 95.4% 10 Denver 8,111 4.2% 94.8% 11 Orlando 6,473 4.2% 94.9% 12 San Diego 3,822 3.8% 95.4% 13 Dallas/Ft Worth 8,489 3.6% 94.7% 14 New England (excl Boston) 5,823 3.4% 94.7% 15 Inland Empire, CA 3,712 3.0% 94.1% 16 Orange County 3,013 3.0% 96.0% 17 DC Suburban Maryland 4,837 3.0% 91.9% 18 Houston 5,282 2.3% 93.8% 19 Jacksonville 3,659 1.9% 94.5% 20 Portland 3,409 1.8% 95.7% --------------------------------------- Top 20 Markets 123,146 91.0% 94.5% All Other Markets 20,023 9.0% 94.7% --------------------------------------- Total 143,169 100.0% 94.6% ======================================= -------------------------------------------- Increase (Decrease) from Prior Quarter ------------------------------------------------------------------- Markets Revenues Expenses NOI Occupancy ------------------------------------------------------------------- 1 New York Metro Area 2.6% 0.8% 3.6% (0.1%) 2 Los Angeles 2.8% 6.2% 1.2% 1.5% 3 DC Northern Virginia 2.0% (1.4%) 3.7% (1.4%) 4 Boston 1.4% (2.0%) 3.6% 0.6% 5 South Florida 1.0% 6.8% (2.6%) (1.3%) 6 Seattle/Tacoma 0.7% 4.3% (1.5%) (2.9%) 7 San Francisco Bay Area 2.1% 3.5% 1.4% (0.6%) 8 Phoenix 3.5% 5.8% 2.1% 0.4% 9 Atlanta 1.6% 3.7% 0.1% 0.3% 10 Denver 2.4% 4.0% 1.5% 0.3% 11 Orlando 2.9% 5.8% 1.2% 0.5% 12 San Diego 2.3% 9.7% (1.3%) 2.0% 13 Dallas/Ft Worth 1.1% 1.3% 0.8% (0.1%) 14 New England (excl Boston) 2.5% (3.7%) 7.9% 0.8% 15 Inland Empire, CA 1.1% 12.9% (4.6%) 1.3% 16 Orange County 2.6% 11.0% (1.2%) 1.8% 17 DC Suburban Maryland (1.2%) 0.1% (1.9%) (0.8%) 18 Houston 2.3% (3.6%) 8.6% 0.4% 19 Jacksonville 0.2% 1.7% (0.7%) (0.5%) 20 Portland 4.0% 1.1% 6.1% 0.6% -------------------------------------------- Top 20 Markets 1.9% 3.0% 1.2% 0.0% All Other Markets 2.2% 6.8% (1.5%) 0.0% -------------------------------------------- Total 1.9% 3.4% 1.0% 0.0% ============================================ Note: All same store results exclude the Lexford Housing Division. September YTD 2006 vs. September YTD 2005 Same-Store Results by Market ------------------------------------------------------------------- Sep YTD 2006 Sep YTD 2006 % of Weighted Actual Average Markets Units NOI Occupancy % ------------------------------------------------------------------- 1 Los Angeles 6,079 7.7% 94.6% 2 Boston 5,761 6.7% 94.0% 3 South Florida 7,398 6.6% 93.9% 4 San Francisco Bay Area 5,990 6.4% 95.7% 5 DC Northern Virginia 5,183 5.9% 95.3% 6 Phoenix 9,247 5.8% 94.9% 7 New York Metro Area 3,406 5.6% 96.4% 8 Seattle/Tacoma 7,153 4.9% 94.4% 9 Atlanta 8,743 4.9% 95.1% 10 Denver 6,921 4.1% 94.8% 11 San Diego 3,486 4.1% 94.5% 12 Dallas/Ft Worth 8,152 4.0% 94.6% 13 Orlando 5,151 3.8% 94.8% 14 New England (excl Boston) 5,823 3.6% 93.2% 15 Orange County 3,013 3.5% 95.2% 16 Inland Empire, CA 3,504 3.4% 93.1% 17 DC Suburban Maryland 4,325 3.1% 93.1% 18 Houston 5,282 2.6% 93.8% 19 Portland 3,409 2.0% 95.2% 20 Austin 3,671 1.6% 95.5% --------------------------------------- Top 20 Markets 111,697 90.3% 94.6% All Other Markets 18,268 9.9% 94.4% --------------------------------------- Total 129,965 100.2% 94.6% ======================================= -------------------------------------------- Increase (Decrease) from Prior Year ------------------------------------------------------------------- Markets Revenues Expenses NOI Occupancy ------------------------------------------------------------------- 1 Los Angeles 6.9% 3.6% 8.6% (0.6%) 2 Boston 2.9% 5.6% 1.1% (0.1%) 3 South Florida 9.8% 4.0% 13.9% (1.1%) 4 San Francisco Bay Area 5.6% 2.8% 7.2% 0.0% 5 DC Northern Virginia 6.3% 2.0% 8.4% 0.3% 6 Phoenix 11.5% 2.1% 18.1% 0.6% 7 New York Metro Area 8.2% 0.2% 12.9% 0.3% 8 Seattle/Tacoma 6.8% 4.5% 8.5% (0.9%) 9 Atlanta 3.6% 2.6% 4.3% (0.2%) 10 Denver 3.6% 1.9% 4.6% 0.2% 11 San Diego 4.8% 7.0% 3.8% (0.7%) 12 Dallas/Ft Worth 4.2% (2.4%) 11.2% (0.3%) 13 Orlando 9.6% 4.9% 12.5% (0.8%) 14 New England (excl Boston) 1.8% 6.8% (2.3%) (0.3%) 15 Orange County 7.2% 6.2% 7.7% (0.1%) 16 Inland Empire, CA 4.4% 5.2% 4.1% (1.1%) 17 DC Suburban Maryland 3.1% 6.7% 1.0% (0.3%) 18 Houston 6.6% 0.7% 13.1% 1.3% 19 Portland 4.6% 3.7% 5.3% 0.9% 20 Austin 7.3% 4.2% 10.8% 0.2% -------------------------------------------- Top 20 Markets 6.0% 3.3% 7.8% (0.2%) All Other Markets 5.4% 1.9% 8.2% 0.3% -------------------------------------------- Total 6.0% 3.2% 7.8% (0.1%) ============================================ Note: All same store results exclude the Lexford Housing Division. Portfolio Summary After Lexford Housing As of September 30, 2006 Division Sale ------------------------- ------------------------- Properties Units Properties Units ------------ ------------ ------------ ------------ Wholly Owned Properties 825 173,313 545 147,215 Partially Owned Properties: Consolidated 34 5,890 25 4,873 Unconsolidated 45 10,846 45 10,846 Military Housing (Fee Managed) 1 3,643 1 3,643 ------------ ------------ ------------ ------------ 905 193,692 616 166,577 Portfolio Rollforward Q3 2006 Properties Units $ Millions Cap Rate ------------ ------------ ------------ ------------ 6/30/2006 898 191,582 Acquisitions: Rental Properties 10 2,558 $504.8 5.1% Land Parcels (one) - - $17.0 Dispositions: Rental Properties (1) (2) (133) $(3.0) 7.6% Condominium Units (1) (315) $(65.4) Land Parcels (one) - - $(0.7) ------------ ------------ 9/30/2006 905 193,692 (1) Represents the sale of two Lexford ranch properties which were not part of the larger portfolio sale. Portfolio Rollforward 2006 Properties Units $ Millions Cap Rate ------------ ------------ ------------ ------------ 12/31/2005 926 197,404 Acquisitions: Rental Properties 28 7,480 $1,442.0 5.0% Land Parcels (six) - - $93.5 Dispositions: Rental Properties (40) (10,661) $(1,032.5) 5.5% Condominium Units (5) (840) $(172.6) Land Parcels (two) - - $(1.6) Completed Developments 1 359 Configuration Changes (5) (50) ------------ ------------ 9/30/2006 905 193,692 Portfolio Summary As of September 30, 2006 % of 2006 % of Total Stabilized Markets Properties Units Units NOI (1) ------------------ ----------- ----------- ----------- ----------- 1 New York Metro Area 17 5,288 2.7% 8.1% 2 DC Northern Virginia 23 8,045 4.1% 7.3% 3 South Florida 31 9,779 5.0% 7.1% 4 Los Angeles 33 7,012 3.6% 6.9% 5 Seattle/Tacoma 47 10,979 5.7% 6.4% 6 Boston 37 6,889 3.6% 5.7% 7 San Francisco Bay Area 27 6,501 3.4% 5.1% 8 Atlanta 35 11,017 5.7% 5.0% 9 Phoenix 36 10,381 5.4% 4.9% 10 Denver 29 9,547 4.9% 4.8% 11 Orlando 22 6,959 3.6% 4.4% 12 San Diego 12 3,822 2.0% 3.9% 13 Inland Empire CA 14 4,355 2.2% 3.6% 14 Dallas/Ft Worth 34 9,919 5.1% 3.5% 15 DC Suburban Maryland 21 5,145 2.7% 3.1% 16 New England (excl Boston) 41 5,823 3.0% 3.1% 17 Orange County 8 3,013 1.6% 3.0% 18 Houston 17 5,282 2.7% 2.1% 19 Jacksonville 13 3,899 2.0% 2.0% 20 Portland OR 11 3,713 1.9% 1.7% ----------- ----------- ----------- ----------- Top 20 Total 508 137,368 70.9% 91.7% 21 Raleigh/Durham 17 4,392 2.3% 1.6% 22 Tampa/Ft Myers 10 3,141 1.6% 1.4% 23 Austin 12 3,671 1.9% 1.3% 24 Charlotte 11 3,391 1.8% 1.0% 25 Nashville 8 2,325 1.2% 0.9% 26 Central Valley CA 10 1,595 0.8% 0.5% 27 Minneapolis/St Paul 6 817 0.4% 0.4% 28 Other EQR 18 4,355 2.2% 1.2% ----------- ----------- ----------- ----------- Total 600 161,055 83.1% 100.0% Lexford Portfolio 289 27,115 14.0% 0.0% Condominium Conversion 15 1,879 1.0% 0.0% Military Housing 1 3,643 1.9% 0.0% ----------- ----------- ----------- ----------- Grand Total 905 193,692 100.0% 100.0% =========== =========== =========== =========== (1) Excludes the Lexford Portfolio, which was reclassified as held for sale and included in discontinued operations at June 30, 2006. As previously disclosed, Equity Residential completed the disposition of the Lexford Portfolio on October 5, 2006. Debt Summary as of September 30, 2006 (Amounts in thousands) Weighted Weighted Average Average Maturities Amounts (1) % of Total Rates (1) (years) ----------- ----------- ----------- ----------- Secured $3,353,413 40.3% 5.83% 6.3 Unsecured 4,975,043 59.7% 5.91% 6.7 ----------- ----------- ----------- ----------- Total $8,328,456 100.0% 5.87% 6.5 =========== =========== =========== =========== Fixed Rate Debt: Secured - Conventional $2,495,958 30.0% 6.33% 4.3 Secured - Tax Exempt 18,289 0.2% 6.40% 18.5 Unsecured - Public/Private 4,207,653 50.5% 6.00% 7.0 Unsecured - Tax Exempt 111,390 1.3% 5.07% 22.6 ----------- ----------- ----------- ----------- Fixed Rate Debt 6,833,290 82.0% 6.12% 6.3 ----------- ----------- ----------- ----------- Floating Rate Debt: Secured - Conventional 304,008 3.7% 6.24% 2.0 Secured - Tax Exempt 535,158 6.4% 3.43% 17.6 Unsecured - Public 150,000 1.8% 6.03% 2.7 Unsecured - Revolving Credit Facilities 506,000 6.1% 5.34% 1.4 ----------- ----------- ----------- ----------- Floating Rate Debt 1,495,166 18.0% 4.84% 7.4 ----------- ----------- ----------- ----------- Total $8,328,456 100.0% 5.87% 6.5 =========== =========== =========== =========== (1) Net of the effect of any derivative instruments. Weighted average rates are for the nine months ended September 30, 2006. Debt Maturity Schedule as of September 30, 2006 (Amounts in thousands) Weighted Weighted Average Average Rates Rates Floating on Fixed on Total Fixed Rate Rate % of Rate Debt Year (1) (1) Total (5) Total Debt (1) (1) ------ ----------- ----------- ----------- ------ -------- -------- 2006 $227,510 $28,578 $256,088 3.1% 7.03% 7.02% 2007 (2) 325,525 249,202 574,727 6.9% 6.88% 6.52% 2008 (3) 556,308 359,334 915,642 11.0% 6.73% 6.23% 2009 480,003 382,029 862,032 10.3% 6.43% 5.34% 2010 279,768 - 279,768 3.4% 7.05% 7.05% 2011 (4) 1,450,123 24,150 1,474,273 17.7% 5.52% 5.49% 2012 558,522 - 558,522 6.7% 6.48% 6.48% 2013 567,485 - 567,485 6.8% 5.93% 5.93% 2014 504,291 - 504,291 6.1% 5.27% 5.27% 2015 316,638 - 316,638 3.8% 6.53% 6.53% 2016+ 1,567,117 451,873 2,018,990 24.2% 5.74% 5.44% ----------- ----------- ----------- ------ -------- -------- Total $6,833,290 $1,495,166 $8,328,456 100.0% 6.05% 5.84% =========== =========== =========== ====== ======== ======== (1) Net of the effect of any derivative instruments. Weighted average rates are as of September 30, 2006. (2) Includes $176.0 million outstanding on the Company's short-term $500.0 million unsecured revolving credit facility. This facility was terminated by the Company on October 13, 2006. (3) Includes $330.0 million outstanding on the Company's long-term $1.0 billion unsecured revolving credit facility, which matures on May 29, 2008. (4) Includes $650.0 million of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. (5) The above table includes the following maturity amounts (in thousands) related to the Lexford Portfolio, all of which was repaid in full in October 2006: 2006 - $94,981; 2007 - $28,618; 2008 - $44,152; 2009 - $27,459; 2010 - $515; 2011 - $600. Unsecured Debt Summary as of September 30, 2006 (Amounts in thousands) Unamortized Coupon Due Face Premium/ Net Rate Date Amount (Discount) Balance -------------------------------------------------------- Fixed Rate Notes: 6.690% 11/01/06 $50,000 $(4) $49,996 7.625% 04/15/07 50,000 94 50,094 6.900% 08/01/07 50,000 (21) 49,979 7.540% 09/01/07 (1) 4,286 - 4,286 4.861% 11/30/07 50,000 - 50,000 7.500% 08/15/08 (1) 130,000 - 130,000 4.750% 06/15/09 (2) 300,000 (743) 299,257 6.950% 03/02/11 300,000 3,817 303,817 6.625% 03/15/12 400,000 (1,603) 398,397 5.200% 04/01/13 400,000 (770) 399,230 5.250% 09/15/14 500,000 (489) 499,511 6.584% 04/13/15 300,000 (946) 299,054 5.125% 03/15/16 500,000 (507) 499,493 5.375% 08/01/16 400,000 (1,824) 398,176 7.125% 10/15/17 150,000 (716) 149,284 7.570% 08/15/26 140,000 - 140,000 3.850% 08/15/26 (3) 650,000 (8,091) 641,909 Floating Rate Adjustments (2) (150,000) - (150,000) FAS 133 Adjustments - net (2) (4,830) - (4,830) ----------------------------------- 4,219,456 (11,803) 4,207,653 ----------------------------------- Fixed Rate Tax Exempt Notes: 4.750% 12/15/28 (1) 35,600 - 35,600 5.200% 06/15/29 (1) 75,790 - 75,790 ----------------------------------- 111,390 - 111,390 ----------------------------------- Floating Rate Notes: 06/15/09 (2) 150,000 - 150,000 ----------------------------------- Revolving Credit Facilities: 05/29/08 (4) 506,000 - 506,000 ----------------------------------- Total Unsecured Debt $4,986,846 $(11,803) $4,975,043 =================================== (1) Notes are private. All other unsecured debt is public. (2) $150.0 million in fair value interest rate swaps converts 50% of the 4.750% Notes due June 15, 2009 to a floating interest rate. (3) Convertible notes mature on August 15, 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. (4) Includes $176.0 million and $330.0 million outstanding on the Company's short-term $500.0 million and long-term $1.0 billion unsecured revolving credit facilities, respectively. The short- term facility was terminated on October 13, 2006. Selected Unsecured Public Debt Covenants September 30, December 31, 2006 2005 --------------- --------------- Total Debt to Adjusted Total Assets (not to exceed 60%) 46.2% 44.9% Secured Debt to Adjusted Total Assets (not to exceed 40%) 18.6% 20.0% Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1) 2.58 2.89 Total Unsecured Assets to Unsecured Debt (must be at least 150%) 239.7% 261.4% These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP. Capital Structure as of September 30, 2006 (Amounts in thousands except for share and per share amounts) Secured Debt $3,157,088 38% Secured Debt - Properties Held for Sale 196,325 2% Unsecured Debt 4,469,043 54% Lines of Credit 506,000 6% ------------ ---- Total Debt 8,328,456 100% 34% Common Shares 292,132,743 93% OP Units 20,531,951 7% ------------ ---- Total Shares and OP Units 312,664,694 100% Common Share Equivalents (see below) 891,646 ------------ Total outstanding at quarter-end 313,556,340 Common Share Price at September 30, 2006 $50.58 ------------ 15,859,680 98% Perpetual Preferred Equity (see below) 375,000 2% ------------ ---- Total Equity 16,234,680 100% 66% Total Market Capitalization $24,563,136 100% Convertible Preferred Equity as of September 30, 2006 (Amounts in thousands except for share and per share amounts) Annual Dividend Redemption Outstanding Liquidation Per Series Date Shares/Units Value Share/Unit --------------------- ---------- ------------- ----------- ----------- Preferred Shares: 7.00% Series E 11/1/98 464,616 $11,615 $1.75 7.00% Series H 6/30/98 29,434 736 1.75 Preference Interests: 7.625% Series J 12/14/06 230,000 11,500 3.8125 Junior Preference Units: 8.00% Series B 7/29/09 7,367 184 2.00 ------------- ----------- Total Convertible Preferred Equity 731,417 $24,035 Annual Weighted Common Dividend Average Conversion Share Series Amount Rate Ratio Equivalents --------------------- ---------- ------------- ----------- ----------- Preferred Shares: 7.00% Series E $813 1.1128 517,025 7.00% Series H 52 1.4480 42,620 Preference Interests: 7.625% Series J 877 1.4108 324,484 Junior Preference Units: 8.00% Series B 15 1.020408 7,517 ---------- ----------- Total Convertible Preferred Equity $1,757 7.31% 891,646 Perpetual Preferred Equity as of September 30, 2006 (Amounts in thousands except for share and per share amounts) Redemption Outstanding Liquidation Series Date Shares/Units Value ------------------------------ ----------- -------------- ------------ Preferred Shares: 8.60% Series D 7/15/07 700,000 $175,000 8.29% Series K 12/10/26 1,000,000 50,000 6.48% Series N 6/19/08 600,000 150,000 -------------- ------------ Total Perpetual Preferred Equity 2,300,000 $375,000 Annual Dividend Annual Weighted Per Dividend Average Series Share/Unit Amount Rate ------------------------------ ------------ ------------- ------------ Preferred Shares: 8.60% Series D $21.50 $15,050 8.29% Series K 4.145 4,145 6.48% Series N 16.20 9,720 ------------- Total Perpetual Preferred Equity $28,915 7.71% Common Share and Operating Partnership Unit (OP Unit) Weighted Average Amounts Outstanding YTD 3Q06 YTD 3Q05 3Q06 3Q05 (1) ------------ ------------ ------------ ------------ Weighted Average Amounts Outstanding for Net Income Purposes: Common Shares - basic 289,462,778 285,331,211 290,035,523 286,181,532 Shares issuable from assumed conversion/ vesting of: - OP Units 20,549,456 20,839,532 20,635,182 - - share options/ restricted shares 4,970,074 4,040,522 5,215,312 - ------------ ------------ ------------ ------------ Total Common Shares and OP Units - diluted 314,982,308 310,211,265 315,886,017 286,181,532 Weighted Average Amounts Outstanding for FFO Purposes: Common Shares - basic 289,462,778 285,331,211 290,035,523 286,181,532 OP Units - basic 20,549,456 20,839,532 20,635,182 20,733,194 ------------ ------------ ------------ ------------ Total Common Shares and OP Units - basic 310,012,234 306,170,743 310,670,705 306,914,726 Shares issuable from assumed conversion/ vesting of: - convertible preferred shares/units 601,388 803,417 576,318 708,559 - share options/ restricted shares 4,970,074 4,040,522 5,215,312 4,648,912 ------------ ------------ ------------ ------------ Total Common Shares and OP Units - diluted 315,583,696 311,014,682 316,462,335 312,272,197 Period Ending Amounts Outstanding: Common Shares 292,132,743 OP Units 20,531,951 ------------ Total Common Shares and OP Units 312,664,694 (1) In accordance with SFAS No. 128, Earnings Per Share, potential common shares issuable from the assumed conversion of OP Units, the exercise of share options and the vesting of restricted shares are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations for the third quarter ended September 30, 2005. Partially Owned Entities as of September 30, 2006 (Amounts in thousands except for project and unit amounts) Consolidated ----------------------------------------------------- Development Projects ------------------------ Held for and/or Completed Under and Development Stabilized Lexford Other Total ------------ ----------- -------- --------- --------- Total projects(1) - 4 9 21 34 ------------ ----------- -------- --------- --------- Total units (1) - 977 1,017 3,896 5,890 ------------ ----------- -------- --------- --------- Operating information for the nine months ended 9/30/06 (at 100%): Operating revenue $- $11,951 $4,791 $39,998 $56,740 Operating expenses 726 4,304 2,365 13,883 21,278 ------------ ----------- -------- --------- --------- Net operating income (loss) (726) 7,647 2,426 26,115 35,462 Depreciation - 4,349 641 10,666 15,656 Other 1 - - 1,492 1,493 ------------ ----------- -------- --------- --------- Operating income (loss) (727) 3,298 1,785 13,957 18,313 Interest and other income 2,085 86 9 854 3,034 Interest: Expense incurred, net (724) (2,547) (760) (15,062) (19,093) Amortization of deferred financing costs - (36) (3) (83) (122) ------------ ----------- -------- --------- --------- Net income (loss) $634 $801 $1,031 $(334) $2,132 ============ =========== ======== ========= ========= Debt - Secured (2): EQR Ownership (3) $142,099 $61,000 $13,994 $287,086 $504,179 Minority Ownership - - 415 13,321 13,736 ------------ ----------- -------- --------- --------- Total (at 100%) $142,099 $61,000 $14,409 $300,407 $517,915 ============ =========== ======== ========= ========= Unconsolidated --------------------- Institutional Joint Ventures --------------------- Total projects 45 --------------------- Total units 10,846 --------------------- Operating information for the nine months ended 9/30/06 (at 100%): Operating revenue $74,468 Operating expenses 33,601 --------------------- Net operating income (loss) 40,867 Depreciation 15,716 Other 222 --------------------- Operating income (loss) 24,929 Interest and other income 491 Interest: Expense incurred, net (28,083) Amortization of deferred financing costs (463) --------------------- Net income (loss) $(3,126) ===================== Debt - Secured (2): EQR Ownership (3) $121,200 Minority Ownership 363,600 --------------------- Total (at 100%) $484,800 ===================== (1) Project and unit counts exclude all uncompleted development projects until those projects are completed. See the Consolidated Development Projects schedule for more detail. (2) All debt is non-recourse to the Company with the exception of $28.3 million in mortgage bonds on one development project. (3) Represents the Company's economic ownership interest. Consolidated Development Projects as of September 30, 2006 (Amounts in thousands except for project and unit amounts) Total Book Value Total Not Total Book Placed No. of Capital Value To in Total Projects Location Units Cost (1) Date (1) Service Debt ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: -------------------------- Bella Vista Woodland III Hills, CA 264 $72,370 $52,875 $52,875 $- Highland Glen Westwood, II MA 102 21,620 5,110 5,110 - Emerson/CRP II Boston, MA 310 161,309 34,521 34,521 - Redmond Ridge Redmond, WA 321 53,536 10,174 10,174 - 77 Hudson Jersey City, NJ 481 242,129 36,563 36,563 - -------------------------------------------- Projects Under Development - Wholly Owned 1,478 550,964 139,243 139,243 - Projects Under Development- Partially Owned: -------------------------- Union Station Los Angeles, CA 278 69,661 61,286 61,286 36,583 Vintage Ontario, CA 300 53,810 34,134 34,134 32,610 Silver Spring Silver Spring, MD 457 147,454 34,319 34,319 - 303 Third Cambridge, Street MA 531 242,969 38,674 38,674 - City Lofts Chicago, IL 278 71,109 9,749 9,749 - Alta Pacific Irvine, (2) CA 132 39,380 17,822 17,822 28,260 -------------------------------------------- Projects Under Development - Partially Owned 1,976 624,383 195,984 195,984 97,453 -------------------------------------------- Projects Under Development3,454 1,175,347 335,227 335,227 97,453 -------------------------------------------- Land Held for Development N/A - 199,369 199,369 44,646 -------------------------------------------- Land/Projects Held for and/or Under Development 3,454 1,175,347 534,596 534,596 142,099 -------------------------------------------- Completed Not Stabilized: -------------------------- 2400 M St (3) Washington, D.C. 359 111,947 107,454 - 75,163 -------------------------------------------- Projects Completed Not Stabilized 359 111,947 107,454 - 75,163 -------------------------------------------- Completed and Stabilized During the Quarter: -------------------------- -------------------------------------------- Projects Completed and Stabilized During the Quarter - - - - - -------------------------------------------- Total Projects 3,813 $1,287,294 $642,050 $534,596 $217,262 ============================================ NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Projects Under Development Completed Not Stabilized Completed and Stabilized During the Quarter Total Development/Newly Stabilized NOI Contribution Percentage Percentage Percentage Projects Location Completed Leased Occupied ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: -------------------------------------- Bella Vista III Woodland Hills, CA 71% - - Highland Glen II Westwood, MA 24% - - Emerson/CRP II Boston, MA 22% - - Redmond Ridge Redmond, WA 6% - - 77 Hudson Jersey City, NJ 4% - - Projects Under Development - Wholly Owned Projects Under Development- Partially Owned: -------------------------------------- Union Station Los Angeles, CA 97% - - Vintage Ontario, CA 61% - - Silver Spring Silver Spring, MD 9% - - 303 Third Street Cambridge, MA 2% - - City Lofts Chicago, IL 2% - - Alta Pacific (2) Irvine, CA 11% - - Projects Under Development - Partially Owned Projects Under Development Land Held for Development Land/Projects Held for and/or Under Development Completed Not Stabilized: -------------------------------------- 2400 M St (3) Washington, D.C. 100% 55% 51% Projects Completed Not Stabilized Completed and Stabilized During the Quarter: -------------------------------------- Projects Completed and Stabilized During the Quarter Total Projects Total NOI CONTRIBUTION FROM DEVELOPMENT Capital PROJECTS Cost (1) Q3 2006 NOI ---------------------- Projects Under Development $1,175,347 $(87) Completed Not Stabilized 111,947 340 Completed and Stabilized During the Quarter - - ---------------------- Total Development/Newly Stabilized NOI Contribution $1,287,294 $253 ====================== Estimated Estimated Completion Stabilization Projects Location Date Date ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: --------------------------------------------- Bella Vista III Woodland Hills, CA 1Q 2007 4Q 2007 Highland Glen II Westwood, MA 1Q 2007 4Q 2007 Emerson/CRP II Boston, MA 2Q 2008 1Q 2009 Redmond Ridge Redmond, WA 1Q 2008 2Q 2010 77 Hudson Jersey City, NJ 2Q 2009 4Q 2010 Projects Under Development - Wholly Owned Projects Under Development- Partially Owned: --------------------------------------------- Union Station Los Angeles, CA 1Q 2007 1Q 2008 Vintage Ontario, CA 3Q 2007 1Q 2008 Silver Spring Silver Spring, MD 3Q 2008 2Q 2010 303 Third Street Cambridge, MA 3Q 2008 1Q 2010 City Lofts Chicago, IL 3Q 2008 2Q 2009 Alta Pacific (2) Irvine, CA 3Q 2007 2Q 2008 Projects Under Development - Partially Owned Projects Under Development Land Held for Development Land/Projects Held for and/or Under Development Completed Not Stabilized: --------------------------------------------- 2400 M St (3) Washington, D.C. Completed 3Q 2007 Projects Completed Not Stabilized Completed and Stabilized During the Quarter: --------------------------------------------- Projects Completed and Stabilized During the Quarter Total Projects NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Projects Under Development Completed Not Stabilized Completed and Stabilized During the Quarter Total Development/Newly Stabilized NOI Contribution (1) Total capital cost represents estimated development cost for projects under development and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects. (2) Debt is primarily tax-exempt bonds that are entirely outstanding, with $19.2 million unfunded and classified as deposits - restricted in the consolidated balance sheets at 9/30/06. (3) EQR acquired its partner's interest on 4/28/2006 and now wholly- owns the property. Total Book Value to Date does not include additional purchase consideration of $30.7M. Consolidated Condominium Conversion Projects as of September 30, 2006 (Amounts in thousands except for project and unit amounts) Units -------------------------- Available for Sale ------------- Project Start Estimated Sold Date Close Units Not Avail- Projects Location (1) Out Date Total Closed Closed able ------------------------------------------- -------------------------- For Sale --------------- Fairway Pembroke Q1 2005 Q4 2006 Greens Pines, FL 152 148 - 4 Timber Woodinville,Q1 2005 Q1 2007 Ridge WA 203 175 13 15 Milano Scottsdale, Q2 2005 Q2 2007 Terrace AZ 224 125 12 87 Braewood Bothell, WA Q2 2005 Q4 2006 84 70 5 9 South Palm Tamarac, FL Q2 2005 Q3 2007 Place 208 81 28 99 Chantecleer Naperville, Q4 2005 Q4 2007 Lakes IL 304 152 34 118 Fifth Seattle, WA Q2 2005 Q1 2007 Avenue North (2) 62 50 5 7 Parkside Seattle, WA Q4 2005 Q1 2007 44 28 1 15 Bella Phoenix, AZ Q4 2005 Vista (5) 248 11 8 229 Oaks at Falls Q4 2005 Falls Church, VA Church (5) 176 - 19 157 Regency Centreville,Q4 2005 Park VA (5) 252 - 26 226 Park Blooming- Blooming- Q2 2006 Q1 2008 dale dale, IL 250 - 43 207 Alameda Ranch Scottsdale, Q4 2005 AZ (5) 272 - - 272 Azure Creek Phoenix, AZ Q2 2006 (5) 160 - - 160 Pacific Cove Playa Del Q3 2006 Q4 2007 Ray, CA 80 - - 80 -------------------------- 2,719 840 194 1,685 Closed Out --------------- Tuscany Scottsdale, Q4 2004 Q1 2006 Villas AZ 180 180 - - Venetian Phoenix, AZ Q1 2004 Q1 2006 I & II 264 264 - - Four Lakes Lisle, IL Q4 2001 Q2 2006 942 942 - - Atlas (3) Washington, Q4 2004 Q2 2006 DC 141 141 - - Grand Marquis Plantation, Q4 2004 Q2 2006 FL 198 198 - - Magnuson Seattle, WA Q1 2005 Q3 2006 Pointe 105 105 - - Projects closed out prior to 2006 1,914 1,914 - - -------------------------- 3,744 3,744 - - Totals 21 6,463 4,584 194 1,685 ========================== Gross incremental gain on sales of condominium units Provision for income taxes Net incremental gain on sales of condominium units Property management and general and administrative expenses Discontinued operating income (loss) Net Income - Condominium Division (4) 2006 YTD Activity ---------------------------- Project FFO Start Estimated Incremental Date Close Units Sales Gain on Projects Location (1) Out Date Closed Price Sale ---------------------------------------- ---------------------------- For Sale ------------ Fairway Pembroke Q1 2005 Q4 2006 Greens Pines, FL 45 $9,085 $2,323 Timber Woodinville,Q1 2005 Q1 2007 Ridge WA 147 27,385 7,774 Milano Scottsdale, Q2 2005 Q2 2007 Terrace AZ 115 27,128 7,881 Braewood Bothell, WA Q2 2005 Q4 2006 70 15,281 4,454 South Palm Tamarac, FL Q2 2005 Q3 2007 Place 81 14,909 2,366 Chantecleer Naperville, Q4 2005 Q4 2007 Lakes IL 152 23,329 3,882 Fifth Seattle, WA Q2 2005 Q1 2007 Avenue North (2) 50 13,970 3,201 Parkside Seattle, WA Q4 2005 Q1 2007 28 6,950 1,328 Bella Phoenix, AZ Q4 2005 Vista (5) 11 1,972 180 Oaks at Falls Q4 2005 Falls Church, VA Church (5) - - - Regency Centreville,Q4 2005 Park VA (5) - - - Park Blooming- Q2 2006 Q1 2008 Blooming- dale, IL dale - - - Alameda Scottsdale, Q4 2005 Ranch AZ (5) - - - Azure Creek Phoenix, AZ Q2 2006 (5) - - - Pacific CovePlaya Del Q3 2006 Q4 2007 Ray, CA - - - ---------------------------- 699 140,009 33,389 Closed Out ------------ Tuscany Scottsdale, Q4 2004 Q1 2006 Villas AZ 2 331 99 Venetian Phoenix, AZ Q1 2004 Q1 2006 I & II 1 204 (166) Four Lakes Lisle, IL Q4 2001 Q2 2006 46 7,688 889 Atlas (3) Washington, Q4 2004 Q2 2006 DC 6 3,006 416 Grand Plantation, Q4 2004 Q2 2006 Marquis FL 16 2,998 517 Magnuson Seattle, WA Q1 2005 Q3 2006 Pointe 70 18,397 6,240 Projects closed out prior to 2006 - - 1,213 ---------------------------- 141 32,624 9,208 Totals 21 840 $172,633 $42,597 ============================ Gross incremental gain on sales of condominium units $42,597 Provision for income taxes (11,166) ------------ Net incremental gain on sales of condominium units 31,431 Property management and general and administrative expenses (4,444) Discontinued operating income (loss) (525) ------------ Net Income - Condominium Division (4) $26,462 ============ 3Q 2006 --------------------------- Project FFO Start Estimated Incremental Date Close Units Sales Gain on Projects Location (1) Out Date Closed Price Sale ----------------------------------------- --------------------------- For Sale ------------- Fairway Pembroke Q1 2005 Q4 2006 Greens Pines, FL 3 $637 $62 Timber Woodinville,Q1 2005 Q1 2007 Ridge WA 50 10,048 3,185 Milano Scottsdale, Q2 2005 Q2 2007 Terrace AZ 35 8,584 2,270 Braewood Bothell, WA Q2 2005 Q4 2006 37 8,502 2,529 South Palm Tamarac, FL Q2 2005 Q3 2007 Place 45 8,447 1,213 Chantecleer Naperville, Q4 2005 Q4 2007 Lakes IL 82 13,092 2,188 Fifth Seattle, WA Q2 2005 Q1 2007 Avenue North (2) 15 3,978 1,001 Parkside Seattle, WA Q4 2005 Q1 2007 12 3,204 555 Bella Phoenix, AZ Q4 2005 Vista (5) 11 1,972 180 Oaks at Falls Q4 2005 Falls Church, VA Church (5) - - - Regency Centreville,Q4 2005 Park VA (5) - - - Park Blooming- Q2 2006 Q1 2008 Blooming- dale, IL dale - - - Alameda RanchScottsdale, Q4 2005 AZ (5) - - - Azure Creek Phoenix, AZ Q2 2006 (5) - - - Pacific Cove Playa Del Q3 2006 Q4 2007 Ray, CA - - - --------------------------- 290 58,464 13,183 Closed Out ------------- Tuscany Scottsdale, Q4 2004 Q1 2006 Villas AZ - - (1) Venetian Phoenix, AZ Q1 2004 Q1 2006 I & II - - (14) Four Lakes Lisle, IL Q4 2001 Q2 2006 - - (3) Atlas (3) Washington, Q4 2004 Q2 2006 DC - - - Grand MarquisPlantation, Q4 2004 Q2 2006 FL - - - Magnuson Seattle, WA Q1 2005 Q3 2006 Pointe 25 7,013 2,582 Projects closed out prior to 2006 - - 157 --------------------------- 25 7,013 2,721 Totals 21 315 $65,477 $15,904 =========================== Gross incremental gain on sales of condominium units $15,904 Provision for income taxes (3,026) ------------ Net incremental gain on sales of condominium units 12,878 Property management and general and administrative expenses (1,470) Discontinued operating income (loss) (1,241) ------------ Net Income - Condominium Division (4) $10,167 ============ (1) Project start date represents the date that each respective property was acquired by the taxable REIT subsidiary and included in discontinued operations. (2) Includes the sale of 3,744 square feet of retail space, which amounted to a gain of $89,100 on proceeds of $956,500. (3) Partially owned project; incremental gain on sale represents portion attributable to the Company. (4) Excludes interest income and interest expense specific to condominium conversion projects. (5) Due to the continued softening of condominium markets, these projects will continue to be operated as rental properties and no further conversion activities will be undertaken. Maintenance Expenses and Capitalized Improvements to Real Estate For the Nine Months Ended September 30, 2006 (Amounts in thousands except for unit and per unit amounts) ---------------------------------------------- Maintenance Expenses ---------------------------------------------- Total Avg. Avg. Avg. Units Expense Per Payroll Per Per (1) (2) Unit (3) Unit Total Unit -------- -------------- -------------- ---------------- Established Properties (6) 116,680 $59,699 $512 $53,133 $455 $112,832 $967 New Acquisition Properties (7) 28,352 15,230 622 10,633 434 25,863 1,056 Properties Held for Sale (8) 27,115 10,852 400 7,007 258 17,859 658 Other (9) 7,056 6,952 6,395 13,347 -------- -------- -------- --------- Total 179,203 $92,733 $77,168 $169,901 ======== ======== ======== ========= ------------------------------------------------------- Capitalized Improvements to Real Estate ------------------------------------------------------- Avg. Building Avg. Avg. Replacements Per Improvements Per Per (4) Unit (5) Unit Total Unit ------------------- ------------------ ---------------- Established Properties (6) $34,665 $297 $57,681 $494 $92,346 $791 New Acquisition Properties (7) 6,746 275 22,117 903 28,863 1,178 Properties Held for Sale (8) 8,723 322 6,383 235 15,106 557 Other (9) 15,978 28,933 44,911 ------------- ------------ --------- Total $66,112 $115,114 $181,226 ============= ============ ========= ------------------------- Total Expenditures ------------------------- Avg. Grand Per Total Unit ------------------------- Established Properties (6) $205,178 $1,758 New Acquisition Properties (7) 54,726 2,234 Properties Held for Sale (8) 32,965 1,215 Other (9) 58,258 ------------ Total $351,127 ============ (1) Total units exclude 10,846 unconsolidated units and 3,643 military housing (fee managed) units. (2) Maintenance expenses include general maintenance costs, unit turnover costs including interior painting, regularly scheduled landscaping and tree trimming costs, security, exterminating, fire protection, snow and ice removal, elevator repairs, and other miscellaneous building repair costs. (3) Maintenance payroll includes employee costs for maintenance, cleaning, housekeeping, and landscaping. (4) Replacements include new expenditures inside the units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. (5) Building improvements include roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting and siding, major landscaping, vehicles and office and maintenance equipment. (6) Wholly Owned Properties acquired prior to January 1, 2004. (7) Wholly Owned Properties acquired during 2004, 2005 and 2006. Per unit amounts are based on a weighted average of 24,498 units. (8) Properties held for sale include the entire Lexford Portfolio, which was sold on October 5, 2006. (9) Includes properties either Partially Owned or sold during the period, commercial space, condominium conversions and $12.7 million included in building improvements spent on fourteen specific assets related to major renovations and repositioning of these assets. Discontinued Operations (Amounts in thousands) Nine Months Ended Quarter Ended September 30, September 30, ------------------- ------------------- 2006 2005 2006 2005 ------------------- ------------------- REVENUES Rental income $163,033 $275,982 $46,710 $85,445 Fee and asset management - 693 - 229 --------- --------- --------- --------- Total revenues 163,033 276,675 46,710 85,674 --------- --------- --------- --------- EXPENSES (1) Property and maintenance 61,084 89,467 18,615 27,392 Real estate taxes and insurance 19,452 34,656 5,568 11,006 Property management 8,894 7,835 2,960 2,717 Depreciation 25,548 67,543 - 20,513 General and administrative 5,555 924 4,729 218 --------- --------- --------- --------- Total expenses 120,533 200,425 31,872 61,846 --------- --------- --------- --------- Discontinued operating income 42,500 76,250 14,838 23,828 Interest and other income 1,519 857 504 388 Interest (2): Expense incurred, net (14,803) (24,778) (4,126) (7,077) Amortization of deferred financing costs (673) (638) (40) (365) --------- --------- --------- --------- Discontinued operations 28,543 51,691 11,176 16,774 Minority Interests - Operating Partnership (1,881) (3,497) (740) (1,130) --------- --------- --------- --------- Discontinued operations, net of minority interests 26,662 48,194 10,436 15,644 --------- --------- --------- --------- Net gain on sales of discontinued operations 526,873 503,053 24,576 254,178 Minority Interests - Operating Partnership (34,721) (34,054) (1,627) (17,131) --------- --------- --------- --------- Gain on sales of discontinued operations, net of minority interests 492,152 468,999 22,949 237,047 --------- --------- --------- --------- Discontinued operations, net of minority interests $518,814 $517,193 $33,385 $252,691 ========= ========= ========= ========= Note: Discontinued operations includes the Lexford Housing Division. (1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company's period of ownership. (2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. As a result of the Securities and Exchange Commission's Regulation FD, the Company will provide earnings guidance in its quarterly earnings release. These projections are based on current expectations and are forward-looking. 2006 Earnings Guidance (per share diluted) ---------------------------------------------------------------------- Q4 2006 2006 --------------- --------------- Expected EPS (1) $1.42 to $1.45 $3.37 to $3.40 Add: Expected depreciation expense 0.47 1.87 Less: Expected net gain on sales (1) (1.35) (2.92) --------------- --------------- Expected FFO (2) $0.54 to $0.57 $2.32 to $2.35 =============== =============== Same-Store Assumptions ------------------------------------------------------ 2006 --------------- Physical occupancy 94.5% Revenue change 5.75% Expense change 3.50% NOI change 7.20% Acquisitions $2.2 billion Dispositions $2.2 billion (1) Earnings per share ("EPS") represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected EPS is calculated on a basis consistent with actual EPS. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual EPS could differ materially from expected EPS. (2) The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. Expected FFO is calculated on a basis consistent with actual FFO. CONTACT: Equity Residential Marty McKenna, 312-928-1901