-----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, RVHwf67/82xjDW82252Cxl4/k5YJQ3lJMItNye6hwi5pOANPCYXHfKRbbUUPpHsc Z6rZVMjM+zs8+MLNY+CouA== 0001157523-07-007578.txt : 20070801 0001157523-07-007578.hdr.sgml : 20070801 20070731201551 ACCESSION NUMBER: 0001157523-07-007578 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070731 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070801 DATE AS OF CHANGE: 20070731 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY RESIDENTIAL 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12252 FILM NUMBER: 071014046 BUSINESS ADDRESS: STREET 1: EQUITY RESIDENTIAL STREET 2: 2 N RIVERSIDE PLAZA, STE 400 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129281178 MAIL ADDRESS: STREET 1: TWO N RIVERSIDE PLAZA STREET 2: SUITE 450 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY RESIDENTIAL PROPERTIES TRUST DATE OF NAME CHANGE: 19930524 8-K 1 a5460646.txt EQUITY RESIDENTIAL 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): July 31, 2007 EQUITY RESIDENTIAL (Exact Name of Registrant as Specified in its Charter) Maryland 1-12252 13-3675988 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation or organization) File Number) Identification No.) Two North Riverside Plaza Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (312) 474-1300 Not applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On July 31, 2007, Equity Residential issued a press release announcing its results of operations and financial condition as of June 30, 2007 and for the six months and quarter then ended. The press release is attached hereto as Exhibit 99.1. The information contained in this report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Equity Residential under the Securities Act of 1933, as amended. Item 9.01. Financial Statements and Exhibits. Exhibit Number Exhibit ----------- ------------------------------------------------------------ 99.1 Press Release dated July 31, 2007, announcing the results of operations and financial condition of Equity Residential as of June 30, 2007 and for the six months and quarter then ended. - -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EQUITY RESIDENTIAL Date: July 31, 2007 By: /s/ Ian S. Kaufman ------------------------------------------------- Name: Ian S. Kaufman ------------------------------------------------- Its: First Vice President and Chief Accounting Officer ------------------------------------------------- EXHIBIT INDEX Exhibit Number Exhibit ----------- ------------------------------------------------------------ 99.1 Press Release dated July 31, 2007, announcing the results of operations and financial condition of Equity Residential as of June 30, 2007 and for the six months and quarter then ended. EX-99.1 2 a5460646-ex991.txt EXHIBIT 99.1 EXHIBIT 99.1 Equity Residential Reports Second Quarter Results CHICAGO--(BUSINESS WIRE)--July 31, 2007--Equity Residential (NYSE:EQR) today reported results for the quarter and six months ended June 30, 2007. All per share results are reported on a fully diluted basis. "The first half of 2007 produced good operating results with same-store revenue growth of 4.8 percent and net operating income (NOI) growth of 5.4 percent," said David J. Neithercut, Equity Residential's President and CEO. "And we will put more money in the bank in the second half of the year than the first half of the year. But our revenue growth will slow in the second half of the year because we will not see the same pick up that we saw in the second half of 2006, caused primarily by markets negatively impacted by excessive condominium construction and/or reversion and high single family home inventories, specifically Florida, Phoenix, the Inland Empire and Washington, D.C. As a result, we have lowered our guidance for same-store performance, which should produce $0.05 per share less in Funds from Operations (FFO) than expected for the full year. However, we are leaving our full year FFO guidance range of $2.25 to $2.35 per share unchanged because lower than expected G&A costs and a land sale, which combined, will offset the same-store shortfall." Second Quarter 2007 For the quarter ended June 30, 2007, the company reported earnings of $0.95 per share compared to $0.51 per share in the second quarter of 2006. The increase is primarily attributable to higher gains on property sales in the second quarter of 2007. FFO for the quarter ended June 30, 2007 were $0.60 per share compared to $0.61 per share in the same period of 2006. The decrease is primarily attributable to lower gains on sales of condominium units and higher debt extinguishment costs in the second quarter of 2007 than in the second quarter of 2006, partially offset by higher gains on the sale of a land parcel in the second quarter of 2007. The company's FFO of $0.60 per share exceeded its second quarter guidance range of $0.54 to $0.58 per share primarily for the following reasons: -- A $4.5 million gain on the sale of a land parcel in New York City that had not been included in guidance; -- Approximately $3.0 million higher gains than expected from the company's condominium division; and -- Approximately $1.5 million lower than projected debt prepayment penalties and write-offs of unamortized financing costs. These and other items describing the difference between actual FFO per share for the quarter and the midpoint of the company's original guidance range are listed on page 26 of this release. Six Months Ended June 30, 2007 For the six months ended June 30, 2007, the company reported earnings of $1.35 per share compared to $1.76 per share in the same period of 2006. FFO for the six months ended June 30, 2007 were $1.15 per share compared to $1.17 per share in the same period of 2006. Same-Store Results On a same-store second quarter to second quarter comparison, revenues increased 4.3 percent, expenses increased 2.6 percent and NOI increased 5.4 percent. The increase in same-store revenues was driven primarily by increases in average rental rates and a slight increase in occupancy. On a same-store six-month to six-month comparison, revenues increased 4.8 percent, expenses increased 3.8 percent and NOI increased 5.4 percent. Acquisitions/Dispositions "Through the first half of the year we continued to see very stable pricing for property transactions with little or no movement in cap rates on both assets we were acquiring or selling. As a result, we were able to continue to exit non-core markets and increase our investments in our core markets at a 100 basis point cap rate spread. However, we are revising our acquisition and disposition targets for the full year to $1.75 billion each due to an expectation that the recent pull back in the debt markets will cause a reduction in transaction activity," said Mr. Neithercut. During the second quarter of 2007, the company acquired 15 properties, consisting of 2,310 apartment units, for an aggregate purchase price of $551.6 million at an average capitalization (cap) rate of 4.1 percent. Included in the acquisitions for the quarter were three rent stabilized properties on the Upper West Side of Manhattan. This $180.0 million portfolio was acquired at a cap rate of 2.7 percent and is projected to produce a year two yield in excess of 4.0 percent. Excluding these properties, the average cap rate would have been 4.8 percent for the quarter ended June 30, 2007. The company also acquired two land parcels for $23.0 million during the quarter. Also during the quarter, the company sold 25 properties, consisting of 6,307 apartment units, for an aggregate sale price of $536.7 million at an average cap rate of 5.7 percent generating an unlevered internal rate of return (IRR) of 11.8 percent. In addition, the company sold 226 condominium units for $65.8 million and one land parcel for $40.7 million. In the first six months of 2007, the company acquired 28 properties, consisting of 6,209 apartment units, for an aggregate purchase price of $1.2 billion at an average cap rate of 4.8 percent. Excluding the acquisition of three rent stabilized properties on the Upper West Side of Manhattan, the average cap rate would have been 5.2 percent for the six months ended June 30, 2007. The company also acquired five land parcels for $65.5 million during the first six months of 2007. During the six months ended June 30, 2007, the company sold 37 properties, consisting of 10,018 apartment units, for an aggregate sale price of $790.6 million at an average cap rate of 5.8 percent generating an unlevered IRR of 11.2 percent. In addition, the company sold 383 condominium units for $103.1 million and one land parcel for $40.7 million. Share Repurchase During the second quarter of 2007, the company repurchased and retired 14,319,952 of its common shares at an average price of $46.38 per share for an aggregate purchase of approximately $664.2 million. Through the first six months of 2007, the company repurchased and retired 18,460,206 of its common shares at an average price of $46.91 per share for an aggregate purchase of approximately $866.0 million. Since the end of the second quarter, the company has repurchased and retired 1,137,900 of its common shares at an average price of $45.35 per share for an aggregate purchase of approximately $51.6 million. The company currently has $284.2 million remaining under its share repurchase program. Preferred Share Redemption On July 16, 2007, the company redeemed its 8.60 percent Series D Preferred Shares at its cash liquidation value of $175.0 million plus accrued and unpaid dividends. As a result of this redemption, the company will record an expense of approximately $6.1 million, or approximately $0.02 per share, in the third quarter of 2007 for the write-off of the original issuance costs. Debt Offerings On June 4, 2007, the company issued $650.0 million of unsecured notes maturing June 15, 2017 and $350.0 million of unsecured notes maturing October 1, 2012. The all-in effective interest rates are 5.89 percent and 5.74 percent, respectively. Proceeds from the issuances were used to pay down the company's unsecured revolving credit facility. On July 19, 2007, the company issued $300.0 million of mortgage notes maturing February 1, 2019. The all-in effective interest rate is 6.0 percent. Proceeds from the issuance were used to pay down the company's unsecured revolving credit facility. Third Quarter 2007 Guidance The company's actual FFO of $0.60 per share for the second quarter of 2007 is higher than the guidance range of $0.54 to $0.58 per share projected for the third quarter of 2007 primarily as a result of the following items: -- Lower expected property NOI, which will be partially offset by lower debt extinguishment costs and higher interest and other income; -- Lower anticipated gains on sales of condos in the third quarter; -- The $6.1 million expense that the company will record in the third quarter of 2007 for the write-off of the original issuance costs related to the redemption of the Series D Preferred Shares; and -- The $4.5 million gain on the sale of the land parcel in New York City during the second quarter of 2007. Equity Residential expects to announce third quarter 2007 results on Tuesday, October 30, 2007 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, October 31, 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 608 properties located in 24 states and the District of Columbia, consisting of 162,532 apartment 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 material, 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 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 and outlook for 2007 will take place tomorrow, Wednesday, August 1, at 10:00 a.m. Central. 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) Six Months Ended Quarter Ended June 30, June 30, ---------------------- --------------------- 2007 2006 2007 2006 ----------- ---------- ---------- ---------- REVENUES Rental income $1,037,668 $910,242 $529,310 $465,213 Fee and asset management 4,703 4,807 2,436 2,320 ----------- ---------- ---------- ---------- Total revenues 1,042,371 915,049 531,746 467,533 ----------- ---------- ---------- ---------- EXPENSES Property and maintenance 273,801 238,594 136,682 120,823 Real estate taxes and insurance 112,017 88,963 55,302 45,132 Property management 47,254 46,661 22,412 23,077 Fee and asset management 4,504 4,326 2,163 2,158 Depreciation 304,052 257,683 155,032 132,771 General and administrative 21,515 22,378 11,549 9,338 Impairment 394 805 158 239 ----------- ---------- ---------- ---------- Total expenses 763,537 659,410 383,298 333,538 ----------- ---------- ---------- ---------- Operating income 278,834 255,639 148,448 133,995 Interest and other income 6,228 4,246 3,784 1,894 Interest: Expense incurred, net (233,075) (203,862) (122,019) (103,120) Amortization of deferred financing costs (6,162) (4,383) (3,615) (1,752) ----------- ---------- ---------- ---------- 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 45,825 51,640 26,598 31,017 Allocation to Minority Interests: Operating Partnership, net (2,097) (1,828) (1,449) (1,317) Preference Interests and Units (434) (1,556) (211) (457) Partially Owned Properties (779) (2,068) (187) (547) Premium on redemption of Preference Interests - (683) - (9) Loss from investments in unconsolidated entities (363) (375) (134) (145) Net gain on sales of unconsolidated entities - 352 - 23 Net gain on sales of land parcels 4,516 246 4,516 246 ----------- ---------- ---------- ---------- Income from continuing operations, net of minority interests 46,668 45,728 29,133 28,811 Discontinued operations, net of minority interests 361,970 492,244 253,268 131,346 ----------- ---------- ---------- ---------- Net income 408,638 537,972 282,401 160,157 Preferred distributions (14,840) (20,168) (7,416) (10,073) ----------- ---------- ---------- ---------- Net income available to Common Shares $393,798 $517,804 $274,985 $150,084 =========== ========== ========== ========== Earnings per share - basic: Income from continuing operations available to Common Shares $0.11 $0.09 $0.08 $0.07 =========== ========== ========== ========== Net income available to Common Shares $1.37 $1.79 $0.97 $0.52 =========== ========== ========== ========== Weighted average Common Shares outstanding 288,316 289,172 284,424 289,460 =========== ========== ========== ========== Earnings per share - diluted: Income from continuing operations available to Common Shares $0.11 $0.09 $0.08 $0.06 =========== ========== ========== ========== Net income available to Common Shares $1.35 $1.76 $0.95 $0.51 =========== ========== ========== ========== Weighted average Common Shares outstanding 311,963 314,420 307,631 314,698 =========== ========== ========== ========== Distributions declared per Common Share outstanding $0.9250 $0.8850 $0.4625 $0.4425 =========== ========== ========== ========== EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (Amounts in thousands except per share data) (Unaudited) Six Months Ended Quarter Ended June 30, June 30, --------------------- --------------------- 2007 2006 2007 2006 ---------- ---------- ---------- ---------- Net income $408,638 $537,972 $282,401 $160,157 Allocation to Minority Interests - Operating Partnership, net 2,097 1,828 1,449 1,317 Adjustments: Depreciation 304,052 257,683 155,032 132,771 Depreciation - Non-real estate additions (4,173) (3,682) (2,138) (1,886) Depreciation - Partially Owned and Unconsolidated Properties 2,081 2,563 1,138 1,013 Net gain on sales of unconsolidated entities - (352) - (23) Discontinued operations: Depreciation 7,689 39,670 2,035 17,859 Gain on sales of discontinued operations, net of minority interests (361,356) (469,246) (256,568) (121,281) Net incremental gain on sales of condominium units 13,594 18,553 8,902 11,426 Provision for income taxes - Non-condo sales (187) - - - Minority Interests - Operating Partnership 41 1,620 (218) 707 ---------- ---------- ---------- ---------- FFO (1)(2) 372,476 386,609 192,033 202,060 Preferred distributions (14,840) (20,168) (7,416) (10,073) ---------- ---------- ---------- ---------- FFO available to Common Shares and OP Units - basic (1) (2) $357,636 $366,441 $184,617 $191,987 ========== ========== ========== ========== FFO available to Common Shares and OP Units - diluted (1) (2) $358,035 $366,917 $184,811 $192,217 ========== ========== ========== ========== FFO per share and OP Unit - basic $1.16 $1.18 $0.61 $0.62 ========== ========== ========== ========== FFO per share and OP Unit - diluted $1.15 $1.17 $0.60 $0.61 ========== ========== ========== ========== Weighted average Common Shares and OP Units outstanding - basic 307,582 309,678 303,511 310,017 ========== ========== ========== ========== Weighted average Common Shares and OP Units outstanding - diluted 312,478 315,034 308,131 315,289 ========== ========== ========== ========== (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. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis. (2) The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company's real estate between periods or as compared to different companies. FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. EQUITY RESIDENTIAL CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited) June 30, December 31, 2007 2006 ------------ ------------ ASSETS Investment in real estate Land $3,582,455 $3,217,672 Depreciable property 13,855,981 13,376,359 Projects under development 392,616 399,131 Land held for development 313,360 242,013 ------------ ------------ Investment in real estate 18,144,412 17,235,175 Accumulated depreciation (3,125,555) (3,022,480) ------------ ------------ Investment in real estate, net 15,018,857 14,212,695 Cash and cash equivalents 66,266 260,277 Investments in unconsolidated entities 4,225 4,448 Deposits - restricted 350,934 391,825 Escrow deposits - mortgage 21,214 25,528 Deferred financing costs, net 54,889 43,384 Other assets 152,279 124,062 ------------ ------------ Total assets $15,668,664 $15,062,219 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $3,188,395 $3,178,223 Notes, net 5,363,139 4,419,433 Lines of credit 780,000 460,000 Accounts payable and accrued expenses 111,140 96,699 Accrued interest payable 95,183 91,172 Other liabilities 332,927 311,557 Security deposits 62,812 58,072 Distributions payable 145,112 151,382 ------------ ------------ Total liabilities 10,078,708 8,766,538 ------------ ------------ Commitments and contingencies Minority Interests: Operating Partnership 333,056 372,961 Preference Interests and Units 184 11,684 Partially Owned Properties 23,392 26,814 ------------ ------------ Total Minority Interests 356,632 411,459 ------------ ------------ Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 2,727,250 shares issued and outstanding as of June 30, 2007 and 2,762,950 shares issued and outstanding as of December 31, 2006 385,681 386,574 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 277,134,550 shares issued and outstanding as of June 30, 2007 and 293,551,633 shares issued and outstanding as of December 31, 2006 2,771 2,936 Paid in capital 4,563,630 5,349,194 Retained earnings 288,109 159,528 Accumulated other comprehensive loss (6,867) (14,010) ------------ ------------ Total shareholders' equity 5,233,324 5,884,222 ------------ ------------ Total liabilities and shareholders' equity $15,668,664 $15,062,219 ============ ============ EQUITY RESIDENTIAL Portfolio Summary As of June 30, 2007 % of 2007 Average % of Total Stabilized Rental Markets Properties Units Units NOI Rate (1) -------------- ---------- -------- ---------- ---------- ---------- New York Metro 1 Area 21 5,922 3.6% 9.0% $2,473 2 South Florida 37 12,193 7.5% 8.7% 1,305 3 Los Angeles 38 7,973 4.9% 7.4% 1,719 DC Northern 4 Virginia 25 8,473 5.2% 7.4% 1,567 5 Seattle/Tacoma 49 11,285 6.9% 6.9% 1,214 6 Boston 37 6,826 4.2% 6.3% 1,501 7 Phoenix 40 11,640 7.2% 5.7% 949 San Francisco 8 Bay Area 34 6,920 4.3% 5.4% 1,622 9 Orlando 25 7,825 4.8% 4.8% 1,042 10 Denver 28 9,327 5.7% 4.6% 929 11 Atlanta 33 9,862 6.1% 4.3% 914 12 San Diego 14 4,491 2.8% 4.0% 1,575 Inland Empire 13 CA 15 4,655 2.9% 3.4% 1,391 Dallas/Ft 14 Worth 31 8,731 5.4% 3.1% 846 15 Orange County 9 3,175 1.9% 3.0% 1,535 Suburban 16 Maryland 21 5,145 3.2% 2.9% 1,082 New England 17 (excl Boston) 38 5,597 3.4% 2.9% 1,077 18 Portland OR 11 3,713 2.3% 1.7% 905 19 Jacksonville 11 3,471 2.1% 1.6% 910 20 Raleigh/Durham 16 4,032 2.5% 1.5% 752 ---------- -------- ---------- ---------- ---------- Top 20 Total 533 141,256 86.9% 94.6% 1,248 21 Tampa/Ft Myers 10 3,141 1.9% 1.3% 926 22 Austin 12 3,671 2.3% 1.3% 822 23 Charlotte 11 3,391 2.1% 0.9% 683 24 Nashville 7 1,989 1.2% 0.7% 869 Central Valley 25 CA 10 1,595 1.0% 0.5% 1,060 26 Other 14 3,088 1.9% 0.7% 930 ---------- -------- ---------- ---------- ---------- Total 597 158,131 97.3% 100.0% 1,206 Condominium Conversion 10 780 0.5% - - Military Housing 1 3,621 2.2% - - ---------- -------- ---------- ---------- ---------- Grand Total 608 162,532 100.0% 100.0% $1,206 ========== ======== ========== ========== ========== (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the month of June 2007. EQUITY RESIDENTIAL Portfolio as of June 30, 2007 Properties Units ---------- ----------- Wholly Owned Properties 535 142,620 Partially Owned Properties: Consolidated 27 5,445 Unconsolidated 45 10,846 Military Housing (Fee Managed) 1 3,621 ---------- ----------- 608 162,532 Portfolio Rollforward Q2 2007 Properties Units $ Thousands Cap Rate ---------- ---------- ----------- ---------- 3/31/2007 618 166,324 Acquisitions: Rental Properties 15 2,310 $551,629 4.1% (1) Land Parcels (two) - - $23,000 Dispositions: Rental Properties (25) (6,307) $(536,699) 5.7% Condominium Units (2) (226) $(65,778) Land Parcel (one) - - $(40,662) Completed Developments 2 366 Configuration Changes - 65 ---------- ---------- 6/30/2007 608 162,532 Portfolio Rollforward 2007 Properties Units $ Thousands Cap Rate ---------- ---------- ----------- ---------- 12/31/2006 617 165,716 Acquisitions: Rental Properties 28 6,209 $1,225,785 4.8% (1) Land Parcels (five) - - $65,450 Dispositions: Rental Properties (37) (10,018) $(790,629) 5.8% Condominium Units (4) (383) $(103,058) Land Parcel (one) - - $(40,662) Completed Developments 4 938 Configuration Changes - 70 ---------- ---------- 6/30/2007 608 162,532 (1) Excluding the acquisition of three rent stabilized properties on the Upper West Side of Manhattan, the cap rates would have been 4.8% and 5.2% for the quarter and six months ended June 30, 2007, respectively. The cap rate on this $180.0 million portfolio acquisition was 2.7%. EQUITY RESIDENTIAL Second Quarter 2007 vs. Second Quarter 2006 Quarter over Quarter Same-Store Results/Statistics $ in Thousands (except for Average Rental Rate) - 130,175 Same-Store Units Results Statistics ------------------------------ -------------------------- Average Rental Rate Description Revenues Expenses NOI (1) (2) Occupancy Turnover - ------------ --------- ---------- --------- ------- --------- -------- Q2 2007 $447,480 $166,226 $281,254 $1,210 94.8% (16.5%) Q2 2006 $428,832 $162,078 $266,754 $1,162 94.7% (16.6%) --------- ---------- --------- ------- --------- -------- Change $18,648 $4,148 $14,500 $48 0.1% 0.1% ========= ========== ========= ======= ========= ======== Change 4.3% 2.6% 5.4% 4.1% Second Quarter 2007 vs. First Quarter 2007 Sequential Quarter over Quarter Same-Store Results/Statistics $ in Thousands (except for Average Rental Rate) - 136,234 Same-Store Units Results Statistics ------------------------------ -------------------------- Average Rental Rate Description Revenues Expenses NOI (1) (2) Occupancy Turnover - ------------ --------- ---------- --------- ------- --------- -------- Q2 2007 $471,000 $174,972 $296,028 $1,218 94.8% (16.5%) Q1 2007 $466,144 $180,496 $285,648 $1,206 94.7% (13.6%) --------- ---------- --------- ------- --------- -------- Change $4,856 $(5,524) $10,380 $12 0.1% (2.9%) ========= ========== ========= ======= ========= ======== Change 1.0% (3.1%) 3.6% 1.0% June YTD 2007 vs. June YTD 2006 YTD over YTD Same-Store Results/Statistics $ in Thousands (except for Average Rental Rate) - 127,396 Same-Store Units Results Statistics ------------------------------ -------------------------- Average Rental Rate Description Revenues Expenses NOI (1) (2) Occupancy Turnover - ------------ --------- ---------- --------- ------- --------- -------- YTD 2007 $869,998 $329,496 $540,502 $1,202 94.8% (30.0%) YTD 2006 $830,284 $317,287 $512,997 $1,149 94.7% (30.6%) --------- ---------- --------- ------- --------- -------- Change $39,714 $12,209 $27,505 $53 0.1% 0.6% ========= ========== ========= ======= ========= ======== Change 4.8% 3.8% 5.4% 4.6% (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. (2) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL Same-Store NOI Reconciliation Second Quarter 2007 vs. Second Quarter 2006 The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Second Quarter 2007 Same-Store Properties: Quarter Ended June 30, ------------------------- 2007 2006 ------------ ------------ (Amounts in thousands) Operating income $148,448 $133,995 Adjustments: Non-same-store operating results (33,660) (9,427) Fee and asset management revenue (2,436) (2,320) Fee and asset management expense 2,163 2,158 Depreciation 155,032 132,771 General and administrative 11,549 9,338 Impairment 158 239 ------------ ------------ Same-store NOI $281,254 $266,754 ============ ============ Same-Store NOI Reconciliation June YTD 2007 vs. June YTD 2006 The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Six-Month 2007 Same-Store Properties: Six Months Ended June 30, ------------------------- 2007 2006 ------------ ------------ (Amounts in thousands) Operating income $278,834 $255,639 Adjustments: Non-same-store operating results (64,094) (23,027) Fee and asset management revenue (4,703) (4,807) Fee and asset management expense 4,504 4,326 Depreciation 304,052 257,683 General and administrative 21,515 22,378 Impairment 394 805 ------------ ------------ Same-store NOI $540,502 $512,997 ============ ============ EQUITY RESIDENTIAL Second Quarter 2007 vs. Second Quarter 2006 Same-Store Results by Market ------------------------------------------------------------------ 2Q 2007 2Q 2007 2Q 2007 % of Average Weighted Actual Rental Average Markets Units NOI Rate (1) Occupancy % ------------------------------------------------------------------ New York Metro 1 Area 5,288 9.6% $2,585 96.5% 2 Los Angeles 6,469 7.7% 1,680 95.4% 3 Seattle/Tacoma 8,708 6.9% 1,232 94.8% 4 South Florida 8,210 6.5% 1,306 93.5% DC Northern 5 Virginia 6,662 6.3% 1,428 95.0% San Francisco 6 Bay Area 5,990 6.3% 1,523 96.0% 7 Boston 5,596 6.1% 1,727 95.0% 8 Phoenix 9,023 5.5% 934 93.8% 9 Atlanta 8,496 4.7% 928 95.1% 10 Denver 7,891 4.5% 859 95.5% 11 San Diego 3,822 4.2% 1,589 94.8% 12 Orlando 6,473 4.2% 1,033 93.4% Dallas/Ft 13 Worth 7,301 3.6% 881 95.0% 14 Orange County 3,013 3.3% 1,541 95.5% New England 15 (excl Boston) 5,597 3.3% 1,077 94.7% Suburban 16 Maryland 4,041 2.7% 1,077 93.6% Inland Empire 17 CA 3,712 2.3% 1,331 93.9% 18 Portland OR 3,409 1.9% 913 96.1% 19 Jacksonville 3,231 1.8% 913 94.5% 20 Raleigh/Durham 3,640 1.7% 762 95.2% ---------------------------------------------------- Top 20 Markets 116,572 93.1% 1,249 94.8% All Other Markets 13,603 6.9% 880 94.8% ---------------------------------------------------- Total 130,175 100.0% $1,210 94.8% ==================================================== -------------------------------------------- Increase (Decrease) from Prior Quarter ------------------------------------------------------------------ Average Rental Markets Units Revenues Expenses NOI Rate (1) Occupancy ------------------------------------------------------------------ New York Metro 1 Area 5,288 6.7% 0.7% 9.8% 7.0% (0.4%) 2 Los Angeles 6,469 5.9% 0.5% 8.6% 4.3% 1.4% 3 Seattle/Tacoma 8,708 5.8% 3.9% 6.9% 7.0% (1.2%) 4 South Florida 8,210 1.9% 4.0% 0.6% 1.6% 0.1% DC Northern 5 Virginia 6,662 2.1% 6.4% 0.0% 3.0% (0.8%) San Francisco 6 Bay Area 5,990 6.1% 3.3% 7.6% 6.4% (0.3%) 7 Boston 5,596 2.7% 2.5% 2.8% 1.9% 0.8% 8 Phoenix 9,023 5.7% 0.2% 9.0% 6.2% (0.5%) 9 Atlanta 8,496 4.0% 5.8% 2.7% 4.1% 0.0% 10 Denver 7,891 5.1% 0.2% 7.9% 4.0% 1.0% 11 San Diego 3,822 4.4% (0.7%) 7.0% 2.8% 1.4% 12 Orlando 6,473 0.5% 5.1% (2.1%) 1.5% (1.0%) Dallas/Ft 13 Worth 7,301 3.3% (1.0%) 7.1% 2.9% 0.3% 14 Orange County 3,013 4.6% 2.9% 5.4% 3.2% 1.2% New England 15 (excl Boston) 5,597 4.9% 3.9% 5.7% 3.8% 1.0% Suburban 16 Maryland 4,041 1.8% 3.8% 0.6% 1.5% 0.2% Inland Empire 17 CA 3,712 4.0% 3.3% 4.3% 2.6% 1.2% 18 Portland OR 3,409 8.1% 1.0% 13.3% 7.2% 0.8% 19 Jacksonville 3,231 2.6% 2.1% 2.9% 3.0% (0.5%) 20 Raleigh/Durham 3,640 4.5% 3.5% 5.2% 4.5% (0.1%) ---------------------------------------------------- Top 20 Markets 116,572 4.3% 2.6% 5.3% 4.1% 0.1% All Other Markets 13,603 4.9% 2.0% 7.1% 4.7% 0.1% ---------------------------------------------------- Total 130,175 4.3% 2.6% 5.4% 4.1% 0.1% ==================================================== (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL Second Quarter 2007 vs. First Quarter 2007 Sequential Same-Store Results by Market ------------------------------------------------------------------ 2Q 2007 2Q 2007 2Q 2007 % of Average Weighted Actual Rental Average Markets Units NOI Rate (1) Occupancy % ------------------------------------------------------------------ New York Metro 1 Area 5,443 9.2% $2,575 96.3% 2 Los Angeles 7,063 7.9% 1,688 95.3% 3 South Florida 9,347 7.0% 1,305 93.2% 4 Seattle/Tacoma 9,060 6.8% 1,229 94.8% DC Northern 5 Virginia 7,286 6.7% 1,448 95.1% 6 Boston 6,124 6.3% 1,733 95.1% San Francisco 7 Bay Area 6,242 6.1% 1,508 95.9% 8 Phoenix 9,343 5.4% 937 93.7% 9 Denver 8,587 4.8% 877 95.4% 10 Orlando 7,231 4.5% 1,040 93.7% 11 Atlanta 8,496 4.4% 928 95.1% 12 San Diego 3,822 4.0% 1,589 94.8% 13 Dallas/Ft Worth 7,301 3.4% 881 95.0% 14 Orange County 3,013 3.1% 1,541 95.5% New England 15 (excl Boston) 5,597 3.1% 1,077 94.7% Inland Empire 16 CA 4,355 2.9% 1,343 93.8% Suburban 17 Maryland 4,041 2.6% 1,077 93.6% 18 Portland OR 3,409 1.9% 913 96.1% 19 Jacksonville 3,231 1.8% 913 94.5% 20 Raleigh/Durham 3,640 1.6% 762 95.2% --------------------------------------------------- Top 20 Markets 122,631 93.5% 1,255 94.8% All Other Markets 13,603 6.5% 880 94.8% --------------------------------------------------- Total 136,234 100.0% $1,218 94.8% =================================================== --------------------------------------------- Increase (Decrease) from Prior Quarter ------------------------------------------------------------------ Average Rental Markets Units Revenues Expenses NOI Rate (1) Occupancy ------------------------------------------------------------------ New York Metro 1 Area 5,443 2.0% (6.5%) 6.8% 1.7% 0.3% 2 Los Angeles 7,063 1.8% (4.7%) 5.1% 1.3% 0.4% 3 South Florida 9,347 (1.3%) (3.1%) 0.0% (0.1%) (1.1%) 4 Seattle/Tacoma 9,060 2.8% (1.7%) 5.6% 2.5% 0.3% DC Northern 5 Virginia 7,286 0.1% (4.5%) 2.7% (0.1%) 0.2% 6 Boston 6,124 1.2% (3.3%) 4.4% (0.8%) 2.0% San Francisco 7 Bay Area 6,242 2.0% (4.0%) 5.4% 1.5% 0.5% 8 Phoenix 9,343 (0.1%) (4.4%) 2.4% 0.5% (0.6%) 9 Denver 8,587 1.6% (3.5%) 4.6% 1.3% 0.3% 10 Orlando 7,231 (1.1%) (1.5%) (0.8%) (0.8%) (0.2%) 11 Atlanta 8,496 1.2% (0.1%) 2.2% 1.3% (0.1%) 12 San Diego 3,822 1.5% (3.7%) 4.1% 1.1% 0.4% Dallas/Ft 13 Worth 7,301 1.5% (1.7%) 4.4% 1.2% 0.3% 14 Orange County 3,013 1.4% (1.1%) 2.5% 1.5% (0.1%) New England 15 (excl Boston) 5,597 2.0% (1.0%) 4.7% 1.0% 0.9% Inland Empire 16 CA 4,355 0.8% (3.9%) 3.0% 1.1% (0.3%) Suburban 17 Maryland 4,041 1.6% (10.5%) 10.9% 1.4% 0.2% 18 Portland OR 3,409 1.6% (0.1%) 2.6% 0.6% 0.9% 19 Jacksonville 3,231 1.0% (3.4%) 4.0% 1.1% (0.1%) 20 Raleigh/Durham 3,640 0.9% 1.1% 0.8% 0.9% 0.0% ---------------------------------------------------- Top 20 Markets 122,631 1.1% (3.3%) 3.8% 0.9% 0.1% All Other Markets 13,603 0.4% (0.1%) 0.8% 1.2% (0.8%) ---------------------------------------------------- Total 136,234 1.0% (3.1%) 3.6% 1.0% 0.1% ==================================================== (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL June YTD 2007 vs. June YTD 2006 Same-Store Results by Market ------------------------------------------------------------------ Jun YTD 07 Jun YTD 07 Jun YTD 07 % of Average Weighted Actual Rental Average Markets Units NOI Rate (1) Occupancy % ------------------------------------------------------------------ New York Metro 1 Area 5,153 9.2% $2,544 96.3% 2 Los Angeles 6,221 7.6% 1,682 95.4% 3 Seattle/Tacoma 8,532 6.8% 1,213 94.7% DC Northern 4 Virginia 6,662 6.4% 1,429 94.9% 5 South Florida 7,662 6.3% 1,314 93.9% San Francisco Bay 6 Area 5,990 6.2% 1,514 95.8% 7 Boston 5,596 6.1% 1,733 94.1% 8 Phoenix 9,023 5.6% 931 94.0% 9 Atlanta 7,938 4.4% 902 95.5% 10 Denver 7,555 4.4% 854 95.4% 11 Orlando 6,473 4.3% 1,038 93.7% 12 San Diego 3,486 3.9% 1,575 94.6% 13 Dallas/Ft Worth 7,151 3.5% 868 94.9% 14 Inland Empire CA 3,712 3.4% 1,321 94.1% 15 Orange County 3,013 3.4% 1,529 95.5% New England (excl 16 Boston) 5,597 3.3% 1,072 94.3% 17 Suburban Maryland 4,041 2.7% 1,070 93.5% 18 Portland OR 3,409 2.0% 910 95.6% 19 Jacksonville 3,231 1.9% 908 94.6% 20 Austin 3,671 1.6% 815 96.0% ------------------------------------------------- Top 20 Markets 114,116 93.0% 1,242 94.8% All Other Markets 13,280 7.0% 861 95.0% ------------------------------------------------- Total 127,396 100.0% $1,202 94.8% ================================================= --------------------------------------------- Increase (Decrease) from Prior Year ------------------------------------------------------------------ Average Rental Markets Units Revenues Expenses NOI Rate (1) Occupancy ------------------------------------------------------------------ New York Metro 1 Area 5,153 6.8% 2.6% 9.1% 6.7% 0.1% 2 Los Angeles 6,221 5.9% 1.3% 8.2% 4.6% 1.2% 3 Seattle/Tacoma 8,532 6.1% 3.5% 7.8% 6.8% (0.7%) DC Northern 4 Virginia 6,662 4.0% 10.5% 0.7% 4.2% (0.1%) 5 South Florida 7,662 2.1% 6.3% (0.6%) 3.0% (0.9%) San Francisco 6 Bay Area 5,990 7.0% 3.5% 9.0% 7.0% 0.0% 7 Boston 5,596 2.2% 1.2% 2.8% 1.9% 0.3% 8 Phoenix 9,023 6.4% 4.6% 7.5% 7.6% (1.0%) 9 Atlanta 7,938 5.1% 3.7% 6.1% 4.5% 0.5% 10 Denver 7,555 4.9% 5.5% 4.5% 4.1% 0.7% 11 Orlando 6,473 2.2% 8.0% (1.1%) 3.1% (0.9%) 12 San Diego 3,486 4.2% 0.6% 6.0% 3.6% 0.6% Dallas/Ft 13 Worth 7,151 3.2% 1.4% 4.8% 2.8% 0.4% Inland Empire 14 CA 3,712 4.5% 4.8% 4.4% 2.9% 1.4% 15 Orange County 3,013 4.7% 2.4% 5.7% 3.8% 0.8% New England 16 (excl Boston) 5,597 6.0% 2.3% 9.6% 3.8% 2.0% Suburban 17 Maryland 4,041 1.4% 8.4% (2.9%) 1.9% (0.5%) 18 Portland OR 3,409 8.2% 2.1% 12.7% 7.7% 0.4% 19 Jacksonville 3,231 2.6% 3.7% 1.9% 3.0% (0.4%) 20 Austin 3,671 7.7% (0.4%) 16.7% 6.8% 0.8% ---------------------------------------------------- Top 20 Markets 114,116 4.8% 3.8% 5.3% 4.6% 0.1% All Other Markets 13,280 4.8% 3.9% 5.5% 4.4% 0.4% ---------------------------------------------------- Total 127,396 4.8% 3.8% 5.4% 4.6% 0.1% ==================================================== (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL Debt Summary as of June 30, 2007 (Amounts in thousands) Weighted Weighted Average Average Maturities Amounts (1) % of Total Rates (1) (years) ----------- ---------- ---------- ---------- Secured $3,188,395 34.2% 5.73% 7.4 Unsecured 6,143,139 65.8% 5.65% 6.7 ----------- ---------- ---------- ---------- Total $9,331,534 100.0% 5.68% 6.9 =========== ========== ========== ========== Fixed Rate Debt: Secured - Conventional $2,135,082 22.9% 6.13% 4.2 Unsecured - Public/Private 5,106,127 54.7% 5.64% 6.8 Unsecured - Tax Exempt 111,390 1.2% 5.06% 21.8 ----------- ---------- ---------- ---------- Fixed Rate Debt 7,352,599 78.8% 5.79% 6.3 ----------- ---------- ---------- ---------- Floating Rate Debt: Secured - Conventional 435,516 4.7% 7.13% 6.0 Secured - Tax Exempt 617,797 6.6% 3.20% 20.2 Unsecured - Public 145,622 1.5% 6.60% 1.9 Unsecured - Revolving Credit Facility 780,000 8.4% 5.65% 4.7 ----------- ---------- ---------- ---------- Floating Rate Debt 1,978,935 21.2% 5.33% 9.4 ----------- ---------- ---------- ---------- Total $9,331,534 100.0% 5.68% 6.9 =========== ========== ========== ========== (1) Net of the effect of any derivative instruments. Weighted average rates are for the six months ended June 30, 2007. Note: The Company capitalized interest of approximately $17.9 million and $7.8 million during the six months ended June 30, 2007 and 2006, respectively. The Company capitalized interest of approximately $10.0 million and $3.8 million during the quarters ended June 30, 2007 and 2006, respectively. Debt Maturity Schedule as of June 30, 2007 (Amounts in thousands) Weighted Weighted Average Average Rates Rates Floating on Fixed on Total Fixed Rate Rate % of Rate Debt Year (1) (1) Total Total Debt (1) (1) - ------ ----------- ----------- ---------- ------ -------- ---------- 2007 $156,908 $40,946 $197,854 2.1% 6.11% 6.30% 2008 470,272 136,471 606,743 6.5% 6.65% 6.56% 2009 457,504 386,711 844,215 9.0% 6.35% 5.37% 2010 279,484 1,654 281,138 3.0% 7.05% 7.05% 2011 (2) 1,475,336 24,150 1,499,486 16.1% 5.55% 5.52% 2012 (3) 890,335 780,000 1,670,335 17.9% 6.09% 5.87% 2013 565,655 - 565,655 6.1% 5.93% 5.93% 2014 504,708 - 504,708 5.4% 5.27% 5.27% 2015 355,491 - 355,491 3.8% 6.41% 6.41% 2016 1,089,241 - 1,089,241 11.7% 5.32% 5.32% 2017+ 1,107,665 609,003 1,716,668 18.4% 6.14% 5.66% ----------- ----------- ---------- ------ -------- ---------- Total $7,352,599 $1,978,935 $9,331,534 100.0% 5.91% 5.75% =========== =========== ========== ====== ======== ========== (1) Net of the effect of any derivative instruments. Weighted average rates are as of June 30, 2007. (2) 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. (3) Includes $780.0 million outstanding on the Company's $1.5 billion unsecured revolving credit facility, which matures on February 28, 2012. EQUITY RESIDENTIAL Unsecured Debt Summary as of June 30, 2007 (Amounts in thousands) Unamortized Coupon Due Face Premium/ Net Rate Date Amount (Discount) Balance ------------------------------------------------------ Fixed Rate Notes: 6.900% 08/01/07 $50,000 $(2) $49,998 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 (537) 299,463 6.950% 03/02/11 300,000 3,254 303,254 6.625% 03/15/12 400,000 (1,382) 398,618 5.500% 10/01/12 350,000 (1,812) 348,188 5.200% 04/01/13 400,000 (681) 399,319 5.250% 09/15/14 500,000 (443) 499,557 6.584% 04/13/15 300,000 (865) 299,135 5.125% 03/15/16 500,000 (466) 499,534 5.375% 08/01/16 400,000 (1,685) 398,315 5.750% 06/15/17 650,000 (5,086) 644,914 7.125% 10/15/17 150,000 (668) 149,332 7.570% 08/15/26 140,000 - 140,000 3.850% 08/15/26(3) 650,000 (7,786) 642,214 Floating Rate Adjustments (2) (150,000) - (150,000) ----------------------------------- 5,124,286 (18,159) 5,106,127 ----------------------------------- 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 FAS 133 Adjustments - net (2) (4,378) - (4,378) ----------------------------------- 145,622 - 145,622 ----------------------------------- Revolving Credit Facility: 02/28/12(4) 780,000 - 780,000 ----------------------------------- Total Unsecured Debt $6,161,298 $(18,159) $6,143,139 =================================== (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) Represents amount outstanding on the Company's $1.5 billion unsecured revolving credit facility which matures on February 28, 2012. EQUITY RESIDENTIAL Selected Unsecured Public Debt Covenants June 30, December 31, 2007 2006 -------------- ------------ Total Debt to Adjusted Total Assets (not to exceed 60%) 49.7% 44.6% Secured Debt to Adjusted Total Assets (not to exceed 40%) 17.0% 17.6% Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1) 2.28 2.54 Total Unsecured Assets to Unsecured Debt (must be at least 150%) 208.9% 250.6% These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP. EQUITY RESIDENTIAL Capital Structure as of June 30, 2007 (Amounts in thousands except for share and per share amounts) Secured Debt $3,188,395 34.2% Unsecured Debt 5,363,139 57.5% Revolving Credit Facility 780,000 8.3% ----------- -------- Total Debt 9,331,534 100.0% 40.1% Common Shares 277,134,550 93.6% OP Units 19,040,440 6.4% ----------- -------- Total Shares and OP Units 296,174,990 100.0% Common Share Equivalents (see below) 491,520 ----------- Total outstanding at quarter-end 296,666,510 Common Share Price at June 30, 2007 $45.63 ----------- 13,536,893 97.3% Perpetual Preferred Equity (see below) 375,000 2.7% ----------- -------- Total Equity 13,911,893 100.0% 59.9% Total Market Capitalization $23,243,427 100.0% Convertible Preferred Equity as of June 30, 2007 (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 11/1/98 401,716 $10,043 $1.75 7.00% Series H 6/30/98 25,534 638 1.75 Junior Preference Units: 8.00% Series B 7/29/09 7,367 184 2.00 ------------ ----------- Total Convertible Preferred Equity 434,617 $10,865 Annual Weighted Common Dividend Average Conversion Share Series Amount Rate Ratio Equivalents - ---------------------- ----------- ----------- ----------- ----------- Preferred Shares: 7.00% Series E $703 1.1128 447,030 7.00% Series H 45 1.4480 36,973 Junior Preference Units: 8.00% Series B 15 1.020408 7,517 ----------- ----------- Total Convertible Preferred Equity $763 7.02% 491,520 Perpetual Preferred Equity as of June 30, 2007 (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: 8.60% Series D (1) 7/15/07 700,000 $175,000 $21.50 8.29% Series K 12/10/26 1,000,000 50,000 4.145 6.48% Series N 6/19/08 600,000 150,000 16.20 ------------ ----------- Total Perpetual Preferred Equity 2,300,000 $375,000 Annual Weighted Dividend Average Series Amount Rate - --------------------- ----------- ----------- Preferred Shares: 8.60% Series D (1) $15,050 8.29% Series K 4,145 6.48% Series N 9,720 ----------- Total Perpetual Preferred Equity $28,915 7.71% (1) The Company redeemed its Series D Preferred Shares on July 16, 2007 at its cash liquidation value of $175.0 million. EQUITY RESIDENTIAL Common Share and Operating Partnership Unit (OP Unit) Weighted Average Amounts Outstanding YTD 2Q07 YTD 2Q06 2Q07 2Q06 ----------- ----------- ----------- ----------- Weighted Average Amounts Outstanding for Net Income Purposes: Common Shares - basic 288,316,068 289,171,660 284,424,108 289,459,922 Shares issuable from assumed conversion/ vesting of: - OP Units 19,265,714 20,505,880 19,087,151 20,556,844 - share options/ restricted shares 4,381,549 4,742,794 4,119,457 4,680,985 ----------- ----------- ----------- ----------- Total Common Shares and OP Units - diluted 311,963,331 314,420,334 307,630,716 314,697,751 Weighted Average Amounts Outstanding for FFO Purposes: Common Shares - basic 288,316,068 289,171,660 284,424,108 289,459,922 OP Units - basic 19,265,714 20,505,880 19,087,151 20,556,844 ----------- ----------- ----------- ----------- Total Common Shares and OP Units - basic 307,581,782 309,677,540 303,511,259 310,016,766 Shares issuable from assumed conversion/vesting of: - convertible preferred shares/units 514,384 614,125 500,257 591,694 - share options/ restricted shares 4,381,549 4,742,794 4,119,457 4,680,985 ----------- ----------- ----------- ----------- Total Common Shares and OP Units - diluted 312,477,715 315,034,459 308,130,973 315,289,445 Period Ending Amounts Outstanding: Common Shares - basic 277,134,550 OP Units - basic 19,040,440 ----------- Total Common Shares and OP Units - basic 296,174,990 EQUITY RESIDENTIAL Partially Owned Entities as of June 30, 2007 (Amounts in thousands except for project and unit amounts) Consolidated ---------------------------------------------------- Development Projects -------------------------------- Held for Completed, Completed and/or Not and Under Stabi- Stabi- Development lized (4) lized Other Total ----------- ---------- --------- --------- --------- Total projects(1) - 2 4 21 27 ----------- ---------- --------- --------- --------- Total units(1) - 572 977 3,896 5,445 ----------- ---------- --------- --------- --------- Operating information for the six months ended 6/30/07 (at 100%): Operating revenue $5 $1,317 $8,093 $27,801 $37,216 Operating expenses 312 1,552 2,808 9,622 14,294 ----------- ---------- --------- --------- --------- Net operating income (loss) (307) (235) 5,285 18,179 22,922 Depreciation - 1,383 2,919 6,847 11,149 Other 1 - - 65 66 ----------- ---------- --------- --------- --------- Operating income (loss) (308) (1,618) 2,366 11,267 11,707 Interest and other income 28 8 75 600 711 Interest: Expense incurred, net (406) (1,651) (1,684) (10,035) (13,776) Amortization of deferred financing costs (12) - (24) (55) (91) ----------- ---------- --------- --------- --------- Net income (loss) $(698) $(3,261) $733 $1,777 $(1,449) =========== ========== ========= ========= ========= Debt - Secured (2): EQR Ownership (3) $262,878 $97,596 $61,000 $286,891 $708,365 Minority Ownership - - - 13,321 13,321 ----------- ---------- --------- --------- --------- Total (at 100%) $262,878 $97,596 $61,000 $300,212 $721,686 =========== ========== ========= ========= ========= Unconsolidated -------------- Institutional Joint Ventures -------------- Total projects(1) 45 -------------- Total units(1) 10,846 -------------- Operating information for the six months ended 6/30/07 (at 100%): Operating revenue $52,274 Operating expenses 24,571 -------------- Net operating income (loss) 27,703 Depreciation 10,790 Other 191 -------------- Operating income (loss) 16,722 Interest and other income 269 Interest: Expense incurred, net (18,722) Amortization of deferred financing costs (308) -------------- Net income (loss) $(2,039) ============== 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 substantially 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 current economic ownership interest. (4) Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. EQUITY RESIDENTIAL Consolidated Development Projects as of June 30, 2007 (Amounts in thousands except for project and unit amounts) Total Book Value Not Total Total Book Placed No. of Capital Value To in Total Projects Location Units Cost (1) Date Service Debt - ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: - ------------------------ West End Boston, MA Apartments (a.k.a. Emerson/CRP II) 310 167,953 82,245 82,245 - Redmond Redmond, WA Ridge 321 55,457 23,534 23,534 - 77 Hudson Jersey City, NJ 480 269,958 57,702 57,702 - Crowntree Orlando, FL Lakes 352 58,628 20,350 20,350 - Key Isle at Orlando, FL Windermere II 165 29,058 10,474 10,474 - ---------------------------------------------- Projects Under Development - Wholly Owned 1,628 581,054 194,305 194,305 - Projects Under Development - Partially Owned: - ------------------------ Silver Silver Spring Spring, MD 457 147,454 58,680 58,680 26,035 303 Third Cambridge, Street MA 531 248,307 79,685 79,685 1,654 City Lofts Chicago, IL 278 71,109 27,842 27,842 7,827 Alta Pacific Irvine, CA (2) 132 46,416 32,104 32,104 28,260 ---------------------------------------------- Projects Under Development - Partially Owned 1,398 513,286 198,311 198,311 63,776 ---------------------------------------------- Projects Under Development 3,026 1,094,340 392,616 392,616 63,776 ---------------------------------------------- Land Held for Development N/A - 313,360 313,360 199,102 ---------------------------------------------- Land/Projects Held for and/or Under Development 3,026 1,094,340 705,976 705,976 262,878 ---------------------------------------------- Completed Not Stabilized - Wholly Owned: - ------------------------ 2400 M St Washington, (3) D.C. 359 111,947 107,880 - - Bella Vista Woodland III (4) Hills, CA 264 73,336 71,220 - - Highland Westwood, Glen II (4) MA 102 21,620 17,220 - 5,000 ---------------------------------------------- Projects Completed Not Stabilized - Wholly Owned 725 206,903 196,320 - 5,000 Completed Not Stabilized - Partially Owned (4): - ------------------------ Mozaic Los (a.k.a. Angeles, Union CA Station) 272 69,661 68,732 - 43,788 Vintage Ontario, CA 300 54,013 54,013 - 53,808 ---------------------------------------------- Projects Completed Not Stabilized - Partially Owned 572 123,674 122,745 - 97,596 ---------------------------------------------- Projects Completed Not Stabilized 1,297 330,577 319,065 - 102,596 ---------------------------------------------- Completed and Stabilized During the Quarter: - ------------------------ ---------------------------------------------- Projects Completed and Stabilized During the Quarter - - - - - ---------------------------------------------- Total Projects 4,323 $1,424,917 $1,025,041 $705,976 $365,474 ============================================== 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: - --------------------------------------- West End Apartments Boston, MA (a.k.a. Emerson/CRP II) 66% - - Redmond Ridge Redmond, WA 38% - - 77 Hudson Jersey City, NJ 17% - - Crowntree Lakes Orlando, FL 14% - - Key Isle at Orlando, FL Windermere II 10% - - Projects Under Development - Wholly Owned Projects Under Development - Partially Owned: - --------------------------------------- Silver Spring Silver Spring, MD 30% - - 303 Third Street Cambridge, MA 23% - - City Lofts Chicago, IL 38% - - Alta Pacific (2) Irvine, CA 56% - - Projects Under Development - Partially Owned Projects Under Development Land Held for Development Land/Projects Held for and/or Under Development Completed Not Stabilized - Wholly Owned: - --------------------------------------- 2400 M St (3) Washington, D.C. 91% 84% Bella Vista III (4) Woodland Hills, CA 20% 16% Highland Glen II (4) Westwood, MA 6% 4% Projects Completed Not Stabilized - Wholly Owned Completed Not Stabilized - Partially Owned (4): - --------------------------------------- Mozaic (a.k.a. Union Los Angeles, CA Station) 64% 55% Vintage Ontario, CA 73% 58% Projects Completed Not Stabilized - Partially Owned Projects Completed Not Stabilized Completed and Stabilized During the Quarter: - --------------------------------------- Projects Completed and Stabilized During the Quarter Total Projects Total Q2 2007 Capital NOI CONTRIBUTION FROM DEVELOPMENT Cost (1) NOI PROJECTS --------------------- Projects Under Development $1,094,340 $(3) Completed Not Stabilized 330,577 1,911 Completed and Stabilized During the Quarter - - --------------------- Total Development/ Newly Stabilized NOI Contribution $1,424,917 $1,908 ===================== Estimated Estimated Completion Stabilization Projects Location Date Date - ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: - ------------------------------------------ West End Apartments Boston, MA 2Q 2008 1Q 2009 (a.k.a. Emerson/CRP II) Redmond Ridge Redmond, WA 2Q 2008 3Q 2010 77 Hudson Jersey City, NJ 3Q 2009 4Q 2010 Crowntree Lakes Orlando, FL 3Q 2008 3Q 2009 Key Isle at Orlando, FL 4Q 2008 1Q 2009 Windermere II Projects Under Development - Wholly Owned Projects Under Development - Partially Owned: - ------------------------------------------ Silver Spring Silver Spring, MD 4Q 2008 3Q 2010 303 Third Street Cambridge, MA 3Q 2008 1Q 2010 City Lofts Chicago, IL 3Q 2008 2Q 2009 Alta Pacific (2) Irvine, CA 4Q 2007 3Q 2008 Projects Under Development - Partially Owned Projects Under Development Land Held for Development Land/Projects Held for and/or Under Development Completed Not Stabilized - Wholly Owned: - ------------------------------------------ 2400 M St (3) Washington, D.C. Completed 3Q 2007 Bella Vista III (4) Woodland Hills, CA Completed 1Q 2008 Highland Glen II (4) Westwood, MA Completed 1Q 2008 Projects Completed Not Stabilized - Wholly Owned Completed Not Stabilized - Partially Owned (4): - ------------------------------------------ Mozaic (a.k.a. Union Los Angeles, CA Completed 1Q 2008 Station) Vintage Ontario, CA Completed 1Q 2008 Projects Completed Not Stabilized - Partially Owned 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, all in accordance with GAAP. (2) Debt is primarily tax-exempt bonds that are entirely outstanding, with $15.0 million held in escrow by the lender and released as draw requests are made. This amount is classified as deposits - restricted in the consolidated balance sheets at 6/30/07. (3) EQR acquired its partner's interest on 4/28/06 and now wholly-owns the property. Total Book Value to Date does not include additional purchase consideration of $30.7 million. (4) Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. EQUITY RESIDENTIAL Consolidated Condominium Conversion Projects as of June 30, 2007 (Amounts in thousands except for project and unit amounts) Units ------------------------------- Available for Sale ----------------- Project Start Estimated Sold Date Close Units Not Projects Location (1) Out Date Total Closed Closed Available - ---------------------------------------------------------------------- For Sale - ---------- Milano Scotts- Q2 2005 Q4 2007 Terrace dale, AZ 224 192 8 24 South Palm Tamarac, Q2 2005 Q4 2007 Place FL 208 180 7 21 Chante- Naper- Q4 2005 Q4 2007 cleer ville, IL Lakes 304 265 4 35 Parkside Seattle, Q4 2005 Q3 2007 WA 44 43 - 1 Park Blooming- Q2 2006 Q1 2008 Blooming- dale, IL dale 250 133 13 104 Belle Arts Bellevue, Q4 2006 Q1 2008 WA 128 81 3 44 Pacific Playa Del Q3 2006 Q4 2007 Cove Ray, CA 80 57 18 5 Arrington Issaquah, Q1 2007 Q3 2008 Place WA 130 - 26 104 Dania Dania Q2 2007 Q1 2009 Beach Beach, Club FL 240 - - 240 Sage Everett, Q2 2007 Q3 2008 WA 123 - - 123 ------------------------------- 1,731 951 79 701 Closed Out - ---------- Timber Woodin- Q1 2005 Q1 2007 Ridge ville, WA 203 203 - - Braewood Bothell, Q2 2005 Q1 2007 WA 84 84 - - Fairway Pembroke Q1 2005 Q2 2007 Greens Pines, FL 152 152 - - Fifth Seattle, Q2 2005 Q2 2007 Avenue WA North 62 62 - - Projects closed out prior to 2007 3,744 3,744 - - ------------------------------- 4,245 4,245 - - Totals 14 5,976 5,196 79 701 =============================== Gross incremental gain on sales of condominium units (3) Provision for income taxes Net incremental gain on sales of condominium units (3) Corporate overhead (property management expense) Other expenses Discontinued operating income (loss) Operating income of halted conversions Net Income - Condominium Division (2) 2007 YTD Activity -------------------------------------- FFO Incremental Gain on Projects Location Units Closed Sales Price Sale (3) - ---------------------------------------------------------------------- For Sale - ------------ Milano Scotts- Terrace dale, AZ 39 $ 9,498 $ 1,612 South Palm Tamarac, FL Place 71 14,428 892 Chante- Naper- cleer Lakes ville, IL 59 9,298 1,508 Parkside Seattle, WA 7 2,680 33 Park Blooming- Blooming- dale, IL dale 55 8,469 887 Belle Arts Bellevue, WA 81 26,886 3,707 Pacific Cove Playa Del Ray, CA 57 27,756 4,094 Arrington Issaquah, WA Place - - - Dania Beach Dania Beach, FL Club - - - Sage Everett, WA - - - -------------------------------------- 369 99,015 12,733 Closed Out - ------------ Timber Ridge Woodin- ville, WA 4 1,059 435 Braewood Bothell, WA 2 573 22 Fairway Pembroke Pines, FL Greens 2 410 142 Fifth Avenue Seattle, WA North 6 2,001 311 Projects closed out prior to 2007 - - (56) -------------------------------------- 14 4,043 854 Totals 383 $ 103,058 $ 13,587 ====================================== Gross incremental gain on sales of condominium units (3) $ 13,587 Provision for income taxes 7 ----------- Net incremental gain on sales of condominium units (3) 13,594 Corporate overhead (property management expense) (2,442) Other expenses (218) Discontinued operating income (loss) (2,578) Operating income of halted conversions 1,170 ----------- Net Income - Condominium Division (2) $ 9,526 =========== 2Q 2007 --------------------------------------- FFO Incremental Gain on Projects Location Units Closed Sales Price Sale (3) - ---------------------------------------------------------------------- For Sale - ------------ Milano Scotts- Terrace dale, AZ 10 $ 2,490 $ 355 South Palm Tamarac, FL Place 37 7,554 367 Chante- Naper- cleer Lakes ville, IL 44 7,001 1,186 Parkside Seattle, WA 1 470 (3) Park Blooming- Blooming- dale, IL dale 29 4,477 564 Belle Arts Bellevue, WA 45 15,159 2,242 Pacific Cove Playa Del Ray, CA 57 27,756 4,094 Arrington Issaquah, WA Place - - - Dania Beach Dania Beach, FL Club - - - Sage Everett, WA - - - --------------------------------------- 223 64,907 8,805 Closed Out - ------------ Timber Ridge Woodin- ville, WA - - (16) Braewood Bothell, WA - - (69) Fairway Pembroke Pines, Greens FL 2 410 146 Fifth Avenue Seattle, WA North 1 461 89 Projects closed out prior to 2007 - - (52) --------------------------------------- 3 871 98 Totals 226 $ 65,778 $ 8,903 ======================================= Gross incremental gain on sales of condominium units (3) $ 8,903 Provision for income taxes (1) ----------- Net incremental gain on sales of condominium units (3) 8,902 Corporate overhead (property management expense) (1,216) Other expenses (147) Discontinued operating income (loss) (1,223) Operating income of halted conversions 1,083 ----------- Net Income - Condominium Division (2) $ 7,399 =========== (1)Project start date represents the date that each respective property was acquired by the taxable REIT subsidiary and included in discontinued operations. (2)Excludes interest income, interest expense and certain other items specific to condominium conversion projects that ultimately eliminate in consolidation. Also excludes depreciation expense on halted conversions (active conversions are not depreciated). (3)Amounts are net of $1,191,000 and $732,000 in reserves for potential homeowners' disputes for the six months and quarter ended June 30, 2007, respectively. EQUITY RESIDENTIAL Maintenance Expenses and Capitalized Improvements to Real Estate For the Six Months Ended June 30, 2007 (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) 114,823 $42,472 $370 $36,949 $322 $79,421 $692 New Acquisition Properties (7) 25,909 9,810 412 7,976 335 17,786 747 Other (8) 7,333 6,730 6,100 12,830 ------- ------- ------- -------- Total 148,065 $59,012 $51,025 $110,037 ======= ======= ======= ======== ----------------------------------------------------- Capitalized Improvements to Real Estate ----------------------------------------------------- Avg. Building Avg. Avg. Replacements Per Improvements Per Per (4) Unit (5) Unit Total Unit ------------------- ------------------ -------------- Established Properties (6) $19,495 $170 $37,141 $323 $56,636 $493 New Acquisition Properties (7) 4,096 172 27,987 1,176 32,083 1,348 Other (8) 9,486 19,640 29,126 ------------- ------------ -------- Total $33,077 $84,768 $117,845 ============= ============ ======== ------------------ Total Expenditures ------------------ Avg. Per Grand Total Unit ------------------ Established Properties (6) $136,057 $1,185 New Acquisition Properties (7) 49,869 2,095 Other (8) 41,956 ----------- Total $227,882 =========== (1) Total units exclude 10,846 unconsolidated units and 3,621 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, 2005. (7) Wholly Owned Properties acquired during 2005, 2006 and 2007. Per unit amounts are based on a weighted average of 23,807 units. (8) Includes properties either partially owned or sold during the period, commercial space, corporate housing, condominium conversions and $9.8 million included in building improvements spent on fifteen specific assets related to major renovations and repositioning of these assets. EQUITY RESIDENTIAL Discontinued Operations (Amounts in thousands) Six Months Ended, Quarter Ended June 30, June 30, ------------------- ------------------- 2007 2006 2007 2006 ------------------- ------------------- REVENUES Rental income $31,880 $164,992 $8,591 $75,261 --------- --------- --------- --------- Total revenues 31,880 164,992 8,591 75,261 --------- --------- --------- --------- EXPENSES (1) Property and maintenance 15,469 56,322 6,523 26,571 Real estate taxes and insurance 4,695 22,000 1,224 10,014 Property management 272 5,937 69 3,146 Depreciation 7,689 39,789 2,035 17,930 General and administrative 11 482 9 271 Impairment - 351 - 125 --------- --------- --------- --------- Total expenses 28,136 124,881 9,860 58,057 --------- --------- --------- --------- Discontinued operating income (loss) 3,744 40,111 (1,269) 17,204 Interest and other income 130 1,134 43 154 Interest (2): Expense incurred, net (1,897) (15,864) (987) (5,982) Amortization of deferred financing costs (1,322) (763) (1,305) (604) --------- --------- --------- --------- Discontinued operations 655 24,618 (3,518) 10,772 Minority Interests - Operating Partnership (41) (1,620) 218 (707) --------- --------- --------- --------- Discontinued operations, net of minority interests 614 22,998 (3,300) 10,065 --------- --------- --------- --------- Net gain on sales of discontinued operations 385,323 502,297 273,556 129,796 Minority Interests - Operating Partnership (23,967) (33,051) (16,988) (8,515) --------- --------- --------- --------- Gain on sales of discontinued operations, net of minority interests 361,356 469,246 256,568 121,281 --------- --------- --------- --------- Discontinued operations, net of minority interests $361,970 $492,244 $253,268 $131,346 ========= ========= ========= ========= (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. EQUITY RESIDENTIAL Additional Reconciliations and Non-Comparable Items (Amounts in thousands except per share data) (All per share data is diluted) FFO Reconciliations FFO Reconciliations Guidance Midpoint Q2 2007 to Actual Q2 2007 ---------------------- Amounts Per Share ------------ --------- Guidance midpoint Q2 2007 FFO - Diluted (1) (2) $177,245 $0.564 Property NOI (1,923) (0.006) General and administrative expense 518 0.002 Florida litigation reserve reduction (general and administrative expense) 42 - Interest and other income 2,245 0.007 Interest expense (excluding debt extinguishment): Share repurchase and transaction timing (2,851) (0.009) Capitalized interest, floating rates and other 425 0.001 Amortization of deferred financing costs (excluding debt extinguishment) (78) - Prepayment penalties on debt extinguishment 619 0.002 Write-off of unamortized deferred financing costs on debt extinguishment 861 0.003 Net income - Condominium division (after taxes/overhead/operations) 3,000 0.010 Gain on sale of vacant land 4,516 0.015 Other (primarily ECH NOI and impairment) 192 - Weighted average share count adjustment - 0.011 ------------ --------- Actual Q2 2007 FFO - Diluted (1) (2) $184,811 $0.600 ============ ========= Non-Comparable Items (3) Six Months Ended Quarter Ended June 30, June 30, ----------------- ----------------- 2007 2006 2007 2006 -------- -------- -------- -------- Florida litigation reserve reduction (general and administrative expense) $1,667 $2,843 $42 $2,843 Performance shares (general and administrative expense) (219) (1,571) (179) (140) Impairment (including discontinued operations) (394) (1,156) (158) (364) Prepayment penalties on debt extinguishment (3,041) (2,892) (2,900) (25) Write-off of unamortized deferred financing costs on debt extinguishment (3,828) (1,542) (3,110) (555) Gain on debt extinguishment - 782 - - Premium on redemption of Preference Interests - (683) - (9) Net gain on sales of land parcels 4,516 246 4,516 246 Net incremental gain on sales of condominium units 13,594 18,553 8,902 11,426 -------- -------- -------- -------- Net non-comparable items (3) $12,295 $14,580 $7,113 $13,422 ======== ======== ======== ======== Note: See page 28 for definitions, footnotes and reconciliations of EPS to FFO. EQUITY RESIDENTIAL The earnings guidance/projections provided below are based on current expectations and are forward-looking. 2007 Earnings Guidance (per share diluted) - ---------------------------------------------------------------------- Q3 2007 2007 --------------- --------------- Expected FFO (1) (2) $0.54 to $0.58 $2.25 to $2.35 2007 Same-Store Assumptions - ---------------------------------------------------------------------- Physical occupancy 95.0% Revenue change 3.75% to 4.25% Expense change 2.50% to 3.00% NOI change 4.50% to 5.25% (Note: 30 basis point change in NOI percentage = $0.01 per share change in EPS/FFO) 2007 Transaction Assumptions - ---------------------------------------------------------------------- Acquisitions $1.75 billion Dispositions $1.75 billion Capitalization rate spread 100 basis points 2007 Debt Assumptions - ---------------------------------------------------------------------- Weighted average debt outstanding $9.2 billion - $9.6 billion Weighted average interest rate (reduced for capitalized interest and including prepayment penalties) 5.35% Interest expense (including $495.0 million discontinued operations) - $510.0 million 2007 Preferred Share Assumptions - ---------------------------------------------------------------------- Series D Preferred Shares: - --------------------------------------- Redemption timing July 2007 Liquidation value $175.0 million Premium on redemption (non-cash) $6.1 million 2007 Condominium Conversion Assumptions - ---------------------------------------------------------------------- Net incremental gain on sales of $19.6 million - condominium units $25.9 million Net income - Condominium division $12.6 million - (after taxes/overhead/operations) $21.0 million Number of condominium unit sales 600 units - 850 units 2007 Other Guidance Assumptions - ---------------------------------------------------------------------- General and administrative expense $46.0 million - $49.0 million Interest and other income $20.0 million - $25.0 million Net gain (loss) on sales of land $4.5 million parcels (all recorded in Q2 2007) Weighted average Common Shares and OP 306.0 million Units - Diluted Note: See page 28 for definitions, footnotes and reconciliations of EPS to FFO. EQUITY RESIDENTIAL The earnings guidance/projections provided below are based on current expectations and are forward-looking. Reconciliations of EPS to FFO for Pages 26 and 27 (Amounts in thousands except per share data) (All per share data is diluted) Expected Expected Expected Q2 2007 Q3 2007 2007 Amounts Per Share Per Share Per Share --------- --------- --------- --------- $1.79 to $3.35 to Expected EPS - Diluted (4) $306,700 $0.975 $1.83 $3.45 Add: Expected depreciation expense 154,530 0.492 0.52 2.05 Less: Expected net gain on sales (4) (283,985) (0.903) (1.77) (3.15) --------- --------- --------- --------- $0.54 to $2.25 to Expected FFO - Diluted (1) (2) $177,245 $0.564 $0.58 $2.35 ========= ========= ========= ========= Definitions and Footnotes for Pages 26 and 27 (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. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis. (2) The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company's real estate between periods or as compared to different companies. FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. (3) Non-comparable items are those items included in FFO that by their nature are not comparable from period to period, such as net incremental gain on sales of condominium units, impairment charges, debt extinguishment costs and redemption premiums on Preferred Shares/Preference Interests. (4) 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. CONTACT: Equity Residential Marty McKenna, 312-928-1901 -----END PRIVACY-ENHANCED MESSAGE-----